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

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8-K - 8-K - WINTRUST FINANCIAL CORP	a8-kq22018.htm

Exhibit 99.1

Wintrust Financial Corporation

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

News Release




FOR IMMEDIATE RELEASE		July 17, 2018

FOR MORE INFORMATION CONTACT:

Edward J. Wehmer, President & Chief Executive Officer

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

(847) 939-9000

Web site address: www.wintrust.com

Wintrust Financial Corporation Reports Record Second Quarter 2018 Net Income, an Increase of 38% Over Prior Year, and Year-to-Date Net Income of $171.6 million, an Increase of 39% Over Prior Year

ROSEMONT, ILLINOIS – Wintrust Financial Corporation (“Wintrust” or “the Company”) (Nasdaq: WTFC) announced net income of $89.6 million or $1.53 per diluted common share for the second quarter of 2018 compared to net income of $82.0 million or $1.40 per diluted common share for the first quarter of 2018 and $64.9 million or $1.11 per diluted common share for the second quarter of 2017. The Company recorded net income of $171.6 million or $2.93 per diluted common share for the first six months of 2018 compared to net income of $123.3 million or $2.11 per diluted common share for the same period of 2017.

Highlights of the Second Quarter of 2018 *:


•	Total assets increased by $1.0 billion from the prior quarter and now total $29.5 billion.


•	Total deposits increased $1.1 billion from the prior quarter to $24.4 billion with non-interest bearing deposit accounts comprising 27% of total deposits.


•	Total loans increased by $548 million from the prior quarter.


•	Non-performing loans as a percentage of total loans decreased to 0.37% from 0.41% at the end of the prior quarter.


•	Allowance for loan losses as a percentage of total non-performing loans remained strong, increasing to 172%.


•	Net charge-offs decreased to $1.1 million, or two basis points of average total loans for the period.


•	Provision for credit losses totaled $5.0 million in the second quarter compared to $8.3 million in the prior quarter.


•	Net interest margin increased seven basis points and net interest income increased $13.1 million over the prior quarter.


•	Return on average assets increased to 1.26% from 1.20% in the first quarter. Return on average common equity increased to 11.94% from 11.29% in the first quarter.

•

Mortgage banking revenue increased to $39.8 million, up $8.9 million over the first quarter of 2018 due to higher originations during the traditional spring purchase market and a full quarter's impact from the iFreedom Direct Corporation DBA Veterans First Mortgage ("Veterans First") acquisition, offset by lower production margins and smaller positive fair market value adjustment to mortgage servicing rights.


•	Salaries and employee benefits increased $9.2 million from the most recent quarter due to a full quarter impact from the Veterans First acquisition as well as higher incentive compensation on variable pay based arrangements, commissions on mortgage originations and salaries due to the Company's growth.


•	Opened five new branches, including three locations in Illinois and two locations in Wisconsin.

* See "Supplemental Financial Measures/Ratios" on pages 11-12 for more information on non-GAAP measures.

Edward J. Wehmer, President and Chief Executive Officer, commented, "Wintrust reported net income of $89.6 million for the second quarter of 2018, the tenth consecutive quarter of record net income, and net income of $171.6 million for the first six months of 2018. These results were driven by strong loan and deposit growth and an increased net interest margin as we continue to benefit from rising interest rates. The second quarter of 2018 was also characterized by good credit quality metrics and increased mortgage banking revenue."

Mr. Wehmer continued, "We experienced strong loan growth within the commercial portfolio and premium finance receivables portfolios during the period. The commercial real estate portfolio remained relatively flat during the second quarter as elevated payoffs and paydowns offset new loan growth within the portfolio. We continue to take a measured approach in

evaluating new commercial real estate loan opportunities due to supply and demand issues in the market place, pricing competition and easing of underwriting standards by some competitors. Overall, we grew our loan portfolio by $548 million during the second quarter of 2018. Our loan pipelines improved to the highest levels since the second quarter of 2017. The increased loan volume, continued improvement in net interest margin from rising interest rates and an additional day in the second quarter compared to the first quarter helped net interest income increase by $13.1 million in the second quarter of 2018. Deposit growth was strong in the second quarter of 2018 as deposits increased $1.1 billion and exceeded $24 billion as of the end of the quarter. Our deposit growth was primarily the result of growth in money market accounts and retail certificate of deposit accounts as active marketing campaigns began to take effect. Five branches added during the second quarter of 2018 contributed $134 million of retail deposit balances to this growth."

Commenting on credit quality, Mr. Wehmer noted, "During the second quarter of 2018, the Company continued its practice of addressing and resolving non-performing credits in a timely fashion. Net charge-offs totaled $1.1 million in the current quarter, decreasing $5.6 million from the first quarter of 2018. Additionally, net charge-offs as a percentage of average total loans decreased to two basis points from 13 basis points in the first quarter. Total non-performing assets decreased $7.5 million during the second quarter of 2018 resulting in non-performing assets as a percentage of total assets dropping from 0.44% to 0.40% during the period. Total non-performing loans decreased $6.4 million in the second quarter of 2018 and now total $83.3 million, or 0.37% of total loans. As a percentage of non-performing loans, the allowance for loan losses increased to 172% at the end of the second quarter of 2018 from 156% at the end of the first quarter of 2018. We believe that the Company's reserves remain appropriate."

Mr. Wehmer further commented, "Mortgage banking revenue in the second quarter of 2018 totaled $39.8 million, an increase of $8.9 million compared to the first quarter of 2018. Mortgage loan origination volumes in the second quarter of 2018 increased to $1.1 billion from $779 million in the first quarter of 2018 as a result of higher purchase originations during the traditional spring purchase market and a full quarter's impact from the Veterans First acquisition. The increase in mortgage banking revenue from higher originations was tempered by lower production margins and smaller positive fair market value adjustment to mortgage servicing rights as interest rates increased less during the second quarter of 2018 when compared to the first quarter of 2018. Home purchases activity represented 80% of the volume for the second quarter of 2018 compared to 73% in the first quarter of 2018. Our mortgage pipeline remains relatively strong. With respect to production margin, we anticipate that it will decline slightly in the third quarter with stabilization in future periods. We continue to focus on efficiencies in our delivery channels and operating costs in our mortgage banking area."

Turning to the future, Mr. Wehmer stated, "Our growth engine continued its momentum into the second quarter of 2018 and we expect that to continue for the second half of the year. Loan growth at the end of the second quarter of 2018 should add to this momentum as period-end loan balances exceeded the second quarter average balance by $327 million. Wintrust continues to take a steady and measured approach to achieving our main objectives of growing franchise value, increasing profitability, leveraging our expense infrastructure and continuing to increase shareholder value. As our growth engine continues its momentum, we expect continued organic growth while still focusing on expense control. We remain well-positioned for a rising interest rate environment in the future, which, coupled with this loan growth, should continue to grow net interest income. Evaluating strategic acquisitions and organic branch growth will also be a part of our overall growth strategy with the goal of becoming Chicago’s bank and Wisconsin’s bank. To that end, the Company opened five new branches in the second quarter of 2018 and will continue to evaluate future locations in our market area including four expected branch openings in the third quarter of 2018. Our opportunities for both internal growth and external growth remain consistently strong."

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

Wintrust’s key operating measures and growth rates for the second quarter of 2018, as compared to the sequential and linked quarters, are shown in the table below:



										% or⁽⁴⁾ basis point (bp) change from 1st Quarter 2018			% or basis point (bp) change from 2nd Quarter 2017
	Three Months Ended
(Dollars in thousands)	June 30, 2018			March 31, 2018			June 30, 2017
Net income	$	89,580		$	81,981		$	64,897		9		%	38	%
Net income per common share – diluted	$	1.53		$	1.40		$	1.11		9		%	38	%
Net revenue ⁽¹⁾	$	333,403		$	310,761		$	294,381		7		%	13	%
Net interest income	238,170			225,082			204,409			6		%	17	%
Net interest margin	3.61		%	3.54		%	3.41		%	7		bp	20	bp
Net interest margin - fully taxable equivalent (non-GAAP) ⁽²⁾	3.63		%	3.56		%	3.43		%	7		bp	20	bp
Net overhead ratio ⁽³⁾	1.57		%	1.58		%	1.44		%	(1	)	bp	13	bp
Return on average assets	1.26		%	1.20		%	1.00		%	6		bp	26	bp
Return on average common equity	11.94		%	11.29		%	9.55		%	65		bp	239	bp
Return on average tangible common equity (non-GAAP) ⁽²⁾	14.72		%	14.02		%	12.02		%	70		bp	270	bp
At end of period
Total assets	$	29,464,588		$	28,456,772		$	26,929,265		14		%	9	%
Total loans, excluding covered loans	22,610,560			22,062,134			20,743,332			10		%	9	%
Total deposits	24,365,479			23,279,327			22,605,692			19		%	8	%
Total shareholders’ equity	3,106,871			3,031,250			2,839,458			10		%	9	%


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


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


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


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

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

WINTRUST FINANCIAL CORPORATION

Selected Financial Highlights



	Three Months Ended									Six Months Ended
(Dollars in thousands, except per share data)	June 30, 2018			March 31, 2018			June 30, 2017			June 30, 2018			June 30, 2017
Selected Financial Condition Data (at end of period):
Total assets	$	29,464,588		$	28,456,772		$	26,929,265
Total loans, excluding covered loans	22,610,560			22,062,134			20,743,332
Total deposits	24,365,479			23,279,327			22,605,692
Junior subordinated debentures	253,566			253,566			253,566
Total shareholders’ equity	3,106,871			3,031,250			2,839,458
Selected Statements of Income Data:
Net interest income	$	238,170		$	225,082		$	204,409		$	463,252		$	396,989
Net revenue ⁽¹⁾	333,403			310,761			294,381			644,164			555,726
Net income	89,580			81,981			64,897			171,561			123,275
Net income per common share – Basic	$	1.55		$	1.42		$	1.15		$	2.98		$	2.20
Net income per common share – Diluted	$	1.53		$	1.40		$	1.11		$	2.93		$	2.11
Selected Financial Ratios and Other Data:
Performance Ratios:
Net interest margin	3.61		%	3.54		%	3.41		%	3.58		%	3.38		%
Net interest margin - fully taxable equivalent (non-GAAP) ⁽²⁾	3.63		%	3.56		%	3.43		%	3.60		%	3.41		%
Non-interest income to average assets	1.34		%	1.25		%	1.39		%	1.29		%	1.25		%
Non-interest expense to average assets	2.90		%	2.83		%	2.83		%	2.87		%	2.77		%
Net overhead ratio ⁽³⁾	1.57		%	1.58		%	1.44		%	1.58		%	1.52		%
Return on average assets	1.26		%	1.20		%	1.00		%	1.23		%	0.97		%
Return on average common equity	11.94		%	11.29		%	9.55		%	11.62		%	9.24		%
Return on average tangible common equity (non-GAAP) ⁽²⁾	14.72		%	14.02		%	12.02		%	14.38		%	11.74		%
Average total assets	$	28,567,579		$	27,809,597		$	26,050,949		$	28,190,683		$	25,632,004
Average total shareholders’ equity	3,064,154			2,995,592			2,800,905			3,030,062			2,771,768
Average loans to average deposits ratio (excluding covered loans)	95.5		%	95.2		%	94.1		%	95.3		%	93.3		%
Period-end loans to deposits ratio (excluding covered loans)	92.8		%	94.8		%	91.8		%
Common Share Data at end of period:
Market price per common share	$	87.05		$	86.05		$	76.44
Book value per common share ⁽²⁾	$	52.94		$	51.66		$	48.73
Tangible common book value per share ⁽²⁾	$	43.50		$	42.17		$	39.40
Common shares outstanding	56,329,276			56,256,498			55,699,927
Other Data at end of period:⁽⁶⁾
Leverage Ratio ⁽⁴⁾	9.4		%	9.3		%	9.2		%
Tier 1 capital to risk-weighted assets ⁽⁴⁾	10.0		%	10.0		%	9.8		%
Common equity Tier 1 capital to risk-weighted assets ⁽⁴⁾	9.5		%	9.5		%	9.3		%
Total capital to risk-weighted assets ⁽⁴⁾	12.0		%	12.0		%	12.0		%
Allowance for credit losses ⁽⁵⁾	$	144,645		$	140,746		$	131,296
Non-performing loans	83,282			89,690			69,050
Allowance for credit losses to total loans ⁽⁵⁾	0.64		%	0.64		%	0.63		%
Non-performing loans to total loans	0.37		%	0.41		%	0.33		%
Number of:
Bank subsidiaries	15			15			15
Banking offices	162			157			153


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


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


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


(4)	Capital ratios for current quarter-end are estimated.


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


(6)	Asset quality ratios exclude covered loans.

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CONDITION



	(Unaudited)						(Unaudited)
(In thousands)	June 30, 2018			December 31, 2017			June 30, 2017
Assets
Cash and due from banks	$	304,580		$	277,534		$	296,105
Federal funds sold and securities purchased under resale agreements	62			57			56
Interest bearing deposits with banks	1,221,407			1,063,242			1,011,635
Available-for-sale securities, at fair value	1,940,787			1,803,666			1,649,636
Held-to-maturity securities, at amortized cost	890,834			826,449			793,376
Trading account securities	862			995			1,987
Equity securities with readily determinable fair value	37,839			—			—
Federal Home Loan Bank and Federal Reserve Bank stock	96,699			89,989			80,812
Brokerage customer receivables	16,649			26,431			23,281
Mortgage loans held-for-sale	455,712			313,592			382,837
Loans, net of unearned income, excluding covered loans	22,610,560			21,640,797			20,743,332
Covered loans	—			—			50,119
Total loans	22,610,560			21,640,797			20,793,451
Allowance for loan losses	(143,402		)	(137,905		)	(129,591		)
Allowance for covered loan losses	—			—			(1,074		)
Net loans	22,467,158			21,502,892			20,662,786
Premises and equipment, net	639,345			621,895			605,211
Lease investments, net	194,160			212,335			191,248
Accrued interest receivable and other assets	666,673			567,374			577,359
Trade date securities receivable	450			90,014			133,130
Goodwill	509,957			501,884			500,260
Other intangible assets	21,414			17,621			19,546
Total assets	$	29,464,588		$	27,915,970		$	26,929,265
Liabilities and Shareholders’ Equity
Deposits:
Non-interest bearing	$	6,520,724		$	6,792,497		$	6,294,052
Interest bearing	17,844,755			16,390,850			16,311,640
Total deposits	24,365,479			23,183,347			22,605,692
Federal Home Loan Bank advances	667,000			559,663			318,270
Other borrowings	255,701			266,123			277,710
Subordinated notes	139,148			139,088			139,029
Junior subordinated debentures	253,566			253,566			253,566
Trade date securities payable	—			—			5,151
Accrued interest payable and other liabilities	676,823			537,244			490,389
Total liabilities	26,357,717			24,939,031			24,089,807
Shareholders’ Equity:
Preferred stock	125,000			125,000			125,000
Common stock	56,437			56,068			55,802
Surplus	1,547,511			1,529,035			1,511,080
Treasury stock	(5,355		)	(4,986		)	(4,884		)
Retained earnings	1,464,494			1,313,657			1,198,997
Accumulated other comprehensive loss	(81,216		)	(41,835		)	(46,537		)
Total shareholders’ equity	3,106,871			2,976,939			2,839,458
Total liabilities and shareholders’ equity	$	29,464,588		$	27,915,970		$	26,929,265

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)



	Three Months Ended								Six Months Ended
(In thousands, except per share data)	June 30, 2018		March 31, 2018			June 30, 2017			June 30, 2018			June 30, 2017
Interest income
Interest and fees on loans	255,063		234,994			209,289			490,057			406,205
Mortgage loans held-for-sale	4,226		2,818			3,420			7,044			5,818
Interest bearing deposits with banks	3,243		2,796			1,634			6,039			3,257
Federal funds sold and securities purchased under resale agreements	1		—			1			1			2
Investment securities	19,888		19,128			15,524			39,016			29,097
Trading account securities	4		14			4			18			15
Federal Home Loan Bank and Federal Reserve Bank stock	1,455		1,298			1,153			2,753			2,223
Brokerage customer receivables	167		157			156			324			323
Total interest income	284,047		261,205			231,181			545,252			446,940
Interest expense
Interest on deposits	35,293		26,549			18,471			61,842			34,741
Interest on Federal Home Loan Bank advances	4,263		3,639			2,933			7,902			4,523
Interest on other borrowings	1,698		1,699			1,149			3,397			2,288
Interest on subordinated notes	1,787		1,773			1,786			3,560			3,558
Interest on junior subordinated debentures	2,836		2,463			2,433			5,299			4,841
Total interest expense	45,877		36,123			26,772			82,000			49,951
Net interest income	238,170		225,082			204,409			463,252			396,989
Provision for credit losses	5,043		8,346			8,891			13,389			14,100
Net interest income after provision for credit losses	233,127		216,736			195,518			449,863			382,889
Non-interest income
Wealth management	22,617		22,986			19,905			45,603			40,053
Mortgage banking	39,834		30,960			35,939			70,794			57,877
Service charges on deposit accounts	9,151		8,857			8,696			18,008			16,961
Gains (losses) on investment securities, net	12		(351		)	47			(339		)	(8		)
Fees from covered call options	669		1,597			890			2,266			1,649
Trading gains (losses), net	124		103			(420		)	227			(740		)
Operating lease income, net	8,746		9,691			6,805			18,437			12,587
Other	14,080		11,836			18,110			25,916			30,358
Total non-interest income	95,233		85,679			89,972			180,912			158,737
Non-interest expense
Salaries and employee benefits	121,675		112,436			106,502			234,111			205,818
Equipment	10,527		10,072			9,909			20,599			18,911
Operating lease equipment depreciation	6,940		6,533			5,662			13,473			10,298
Occupancy, net	13,663		13,767			12,586			27,430			25,687
Data processing	8,752		8,493			7,804			17,245			15,729
Advertising and marketing	11,782		8,824			8,726			20,606			13,876
Professional fees	6,484		6,649			7,510			13,133			12,170
Amortization of other intangible assets	997		1,004			1,141			2,001			2,305
FDIC insurance	4,598		4,362			3,874			8,960			8,030
OREO expense, net	980		2,926			739			3,906			2,404
Other	20,371		19,283			19,091			39,654			36,434
Total non-interest expense	206,769		194,349			183,544			401,118			351,662
Income before taxes	121,591		108,066			101,946			229,657			189,964
Income tax expense	32,011		26,085			37,049			58,096			66,689
Net income	$	89,580	$	81,981		$	64,897		$	171,561		$	123,275
Preferred stock dividends	2,050		2,050			2,050			4,100			5,678
Net income applicable to common shares	$	87,530	$	79,931		$	62,847		$	167,461		$	117,597
Net income per common share - Basic	$	1.55	$	1.42		$	1.15		$	2.98		$	2.20
Net income per common share - Diluted	$	1.53	$	1.40		$	1.11		$	2.93		$	2.11
Cash dividends declared per common share	$	0.19	$	0.19		$	0.14		$	0.38		$	0.28
Weighted average common shares outstanding	56,299		56,137			54,775			56,218			53,528
Dilutive potential common shares	928		888			1,812			909			2,981
Average common shares and dilutive common shares	57,227		57,025			56,587			57,127			56,509

EARNINGS PER SHARE

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



		Three Months Ended						Six Months Ended
(In thousands, except per share data)		June 30, 2018		March 31, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Net income		$	89,580	$	81,981	$	64,897	$	171,561	$	123,275
Less: Preferred stock dividends		2,050		2,050		2,050		4,100		5,678
Net income applicable to common shares—Basic	(A)	87,530		79,931		62,847		167,461		117,597
Add: Dividends on convertible preferred stock, if dilutive		—		—		—		—		1,578
Net income applicable to common shares—Diluted	(B)	87,530		79,931		62,847		167,461		119,175
Weighted average common shares outstanding	(C)	56,299		56,137		54,775		56,218		53,528
Effect of dilutive potential common shares:
Common stock equivalents		928		888		927		909		994
Convertible preferred stock, if dilutive		—		—		885		—		1,987
Weighted average common shares and effect of dilutive potential common shares	(D)	57,227		57,025		56,587		57,127		56,509
Net income per common share:
Basic	(A/C)	$	1.55	$	1.42	$	1.15	$	2.98	$	2.20
Diluted	(B/D)	$	1.53	$	1.40	$	1.11	$	2.93	$	2.11

Potentially dilutive common shares can result from stock options, restricted stock unit awards, stock warrants, the Company’s convertible preferred stock and shares to be issued under the Employee Stock Purchase Plan and the Directors Deferred Fee and Stock Plan, being treated as if they had been either exercised or issued, computed by application of the treasury stock method. While potentially dilutive common shares are typically included in the computation of diluted earnings per share, potentially dilutive common shares are excluded from this computation in periods in which the effect would reduce the loss per share or increase the income per share. For diluted earnings per share, net income applicable to common shares can be affected by the conversion of the Company’s convertible preferred stock. Where the effect of this conversion would reduce the loss per share or increase the income per share for a period, net income applicable to common shares is not adjusted by the associated preferred dividends. On April 25, 2017, 2,073 shares of the Series C Preferred Stock were converted at the option of the respective holder into 51,244 shares of the Company's common stock, pursuant to the terms of the Series C Preferred Stock. On April 27, 2017, the Company caused a mandatory conversion of its outstanding 124,184 shares of Series C Preferred Stock into 3,069,828 shares of the Company's common stock at a conversion rate of 24.72 shares of common stock per share of Series C Preferred Stock. Cash was paid in lieu of fractional shares for an amount considered insignificant.

SUPPLEMENTAL FINANCIAL MEASURES/RATIOS

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

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

The following table presents a reconciliation of certain non-GAAP performance measures and ratios used by the Company to evaluate and measure the Company’s performance to the most directly comparable GAAP financial measures for the last five quarters.



	Three Months Ended															Six Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,			June 30,			June 30,
(Dollars and shares in thousands)	2018			2018			2017			2017			2017			2018			2017
Calculation of Net Interest Margin and Efficiency Ratio
(A) Interest Income (GAAP)	$	284,047		$	261,205		$	251,840		$	247,688		$	231,181		$	545,252		$	446,940
Taxable-equivalent adjustment:
- Loans	812			670			1,106			1,033			831			1,482			1,621
- Liquidity Management Assets	566			531			1,019			921			866			1,097			1,773
- Other Earning Assets	1			3			2			5			2			4			7
(B) Interest Income - FTE	$	285,426		$	262,409		$	253,967		$	249,647		$	232,880		$	547,835		$	450,341
(C) Interest Expense (GAAP)	45,877			36,123			32,741			31,700			26,772			82,000			49,951
(D) Net Interest Income - FTE (B minus C)	$	239,549		$	226,286		$	221,226		$	217,947		$	206,108		$	465,835		$	400,390
(E) Net Interest Income (GAAP) (A minus C)	$	238,170		$	225,082		$	219,099		$	215,988		$	204,409		$	463,252		$	396,989
Net interest margin (GAAP-derived)	3.61		%	3.54		%	3.45		%	3.43		%	3.41		%	3.58		%	3.38		%
Net interest margin - FTE	3.63		%	3.56		%	3.49		%	3.46		%	3.43		%	3.60		%	3.41		%
(F) Non-interest income	$	95,233		$	85,679		$	81,038		$	79,731		$	89,972		$	180,912		$	158,737
(G) Gains (losses) on investment securities, net	12			(351		)	14			39			47			(339		)	(8		)
(H) Non-interest expense	206,769			194,349			196,580			183,575			183,544			401,118			351,662
Efficiency ratio (H/(E+F-G))	62.02		%	62.47		%	65.50		%	62.09		%	62.36		%	62.24		%	63.28		%
Efficiency ratio - FTE (H/(D+F-G))	61.76		%	62.23		%	65.04		%	61.68		%	62.00		%	61.99		%	62.89		%
Calculation of Tangible Common Equity ratio (at period end)
Total shareholders’ equity	$	3,106,871		$	3,031,250		$	2,976,939		$	2,908,925		$	2,839,458
Less: Non-convertible preferred stock	(125,000		)	(125,000		)	(125,000		)	(125,000		)	(125,000		)
Less: Intangible assets	(531,371		)	(533,910		)	(519,505		)	(520,672		)	(519,806		)
(I) Total tangible common shareholders’ equity	$	2,450,500		$	2,372,340		$	2,332,434		$	2,263,253		$	2,194,652
Total assets	$	29,464,588		$	28,456,772		$	27,915,970		$	27,358,162		$	26,929,265
Less: Intangible assets	(531,371		)	(533,910		)	(519,505		)	(520,672		)	(519,806		)
(J) Total tangible assets	$	28,933,217		$	27,922,862		$	27,396,465		$	26,837,490		$	26,409,459
Tangible common equity ratio (I/J)	8.5		%	8.5		%	8.5		%	8.4		%	8.3		%
Calculation of book value per share
Total shareholders’ equity	$	3,106,871		$	3,031,250		$	2,976,939		$	2,908,925		$	2,839,458
Less: Preferred stock	(125,000		)	(125,000		)	(125,000		)	(125,000		)	(125,000		)
(K) Total common equity	$	2,981,871		$	2,906,250		$	2,851,939		$	2,783,925		$	2,714,458
(L) Actual common shares outstanding	56,329			56,256			55,965			55,838			55,700
Book value per common share (K/L)	$	52.94		$	51.66		$	50.96		$	49.86		$	48.73
Tangible common book value per share (I/L)	$	43.50		$	42.17		$	41.68		$	40.53		$	39.40



Calculation of return on average common equity
(M) Net income applicable to common shares	$	87,530		$	79,931		$	66,731		$	63,576		$	62,847		$	167,461		$	117,597
Add: After-tax intangible asset amortization	734			761			738			672			726			1,495			1,497
(N) Tangible net income applicable to common shares	$	88,264		$	80,692		$	67,469		$	64,248		$	63,573		$	168,956		$	119,094
Total average shareholders' equity	$	3,064,154		$	2,995,592		$	2,942,999		$	2,882,682		$	2,800,905		$	3,030,062		$	2,771,768
Less: Average preferred stock	(125,000		)	(125,000		)	(125,000		)	(125,000		)	(161,028		)	(125,000		)	(205,893		)
(O) Total average common shareholders' equity	$	2,939,154		$	2,870,592		$	2,817,999		$	2,757,682		$	2,639,877		$	2,905,062		$	2,565,875
Less: Average intangible assets	(533,496		)	(536,676		)	(519,626		)	(520,333		)	(519,340		)	(535,077		)	(519,840		)
(P) Total average tangible common shareholders’ equity	$	2,405,658		$	2,333,916		$	2,298,373		$	2,237,349		$	2,120,537		$	2,369,985		$	2,046,035
Return on average common equity, annualized (M/O)	11.94		%	11.29		%	9.39		%	9.15		%	9.55		%	11.62		%	9.24		%
Return on average tangible common equity, annualized (N/P)	14.72		%	14.02		%	11.65		%	11.39		%	12.02		%	14.38		%	11.74		%

BUSINESS UNIT SUMMARY

Community Banking

Through its community banking unit, the Company provides banking and financial services primarily to individuals, small to mid-sized businesses, local governmental units and institutional clients residing primarily in the local areas the Company services. In the second quarter of 2018, revenue within this unit was primarily driven by increased net interest income due to a higher net interest margin, increased earning assets and one additional day in the second quarter. The net interest margin increased in the second quarter of 2018 compared to the first quarter of 2018 primarily as a result of higher yields on the commercial and commercial real estate loan portfolios (excluding lease loans) and the liquidity management assets portfolio, partially offset by higher rates on interest-bearing liabilities. Mortgage banking revenue increased by $8.9 million from $31.0 million for the first quarter of 2018 to $39.8 million for the second quarter of 2018. The higher revenue was primarily due to originations during the current period increasing to $1.1 billion from $778.9 million in the first quarter of 2018 as a result of typical seasonality in our primary markets and one full quarter's impact of Veterans First. Home purchases represented 80% of loan origination volume for the second quarter of 2018. The increase in revenue from higher originations was tempered by lower production margins and smaller positive fair market value adjustment to mortgage servicing rights as interest rates increased less during the second quarter of 2018 when compared to the first quarter of 2018. The Company's gross commercial and commercial real estate loan pipelines remain strong. Before the impact of scheduled payments and prepayments, at June 30, 2018, gross commercial and commercial real estate loan pipelines totaled $1.3 billion, or $847.4 million when adjusted for the probability of closing, compared to $1.1 billion, or $688.4 million when adjusted for the probability of closing, at March 31, 2018.

Specialty Finance

Through its specialty finance unit, the Company offers financing of insurance premiums for businesses and individuals, equipment financing through structured loans and lease products to customers in a variety of industries and accounts receivable financing, value-added, out-sourced administrative services, and other services. In the second quarter of 2018, the specialty finance unit experienced higher revenue as a result of increased volumes and higher yields within its insurance premium financing receivables portfolio. Originations of $2.1 billion during the second quarter of 2018 resulted in a $232.2 million increase in average balances. The increase in average balances along with higher yields on these loans resulted in a $5.3 million increase in interest income attributed to this portfolio. The Company's leasing business remained steady during the second quarter of 2018, with its portfolio of assets, including capital leases, loans and equipment on operating leases, totaling $1.0 billion at the end of the second quarter of 2018. Revenues from the Company's out-sourced administrative services business remained steady, totaling approximately $1.2 million in the second quarter of 2018 and $1.1 million in the first quarter of 2018.

Wealth Management

Through three separate subsidiaries within its wealth management unit, the Company offers a full range of wealth management services, including trust and investment services, asset management, securities brokerage services and 401(k) and retirement plan services. Wealth management revenue slightly decreased in the second quarter of 2018 to $22.6 million from $23.0 million in the first quarter of 2018. The decrease in revenue was primarily due to a decrease in brokerage fees due to a reduction in trading activity during the period. At June 30, 2018, the Company’s wealth management subsidiaries had approximately $24.6 billion of assets under administration, which includes $2.9 billion of assets owned by the Company and its subsidiary banks, representing a $299.0 million increase from the $24.3 billion of assets under administration at March 31, 2018. This increase in assets under administration was primarily driven by new customers and market appreciation. Starting in August, our brokerage services subsidiary, Wayne Hummer Investments, LLC, will be renamed to Wintrust Investments, LLC to better align with our Wintrust brand.

LOANS

Loan Portfolio Mix and Growth Rates



										% Growth
(Dollars in thousands)	June 30, 2018			December 31, 2017			June 30, 2017			From ⁽¹⁾December 31, 2017		From June 30, 2017
Balance:
Commercial	$	7,289,060		$	6,787,677		$	6,406,289		15	%	14	%
Commercial real estate	6,575,084			6,580,618			6,402,494			—		3
Home equity	593,500			663,045			689,483			(21	)	(14	)
Residential real estate	895,470			832,120			762,810			15		17
Premium finance receivables - commercial	2,833,452			2,634,565			2,648,386			15		7
Premium finance receivables - life insurance	4,302,288			4,035,059			3,719,043			13		16
Consumer and other	121,706			107,713			114,827			26		6
Total loans, net of unearned income, excluding covered loans	$	22,610,560		$	21,640,797		$	20,743,332		9	%	9	%
Covered loans	—			—			50,119			—		(100	)
Total loans, net of unearned income	$	22,610,560		$	21,640,797		$	20,793,451		9	%	9	%
Mix:
Commercial	32		%	31		%	31		%
Commercial real estate	29			30			31
Home equity	3			3			3
Residential real estate	4			4			3
Premium finance receivables - commercial	12			12			13
Premium finance receivables - life insurance	19			19			18
Consumer and other	1			1			1
Total loans, net of unearned income, excluding covered loans	100		%	100		%	100		%
Covered loans	—			—			—
Total loans, net of unearned income	100		%	100		%	100		%


(1)	Annualized

Commercial and Commercial Real Estate Loan Portfolios



	As of June 30, 2018
			% of Total Balance		Nonaccrual		> 90 Days Past Due and Still Accruing		Allowance For Loan Losses Allocation

(Dollars in thousands)	Balance
Commercial:
Commercial, industrial and other	$	4,621,789	33.2	%	$	13,543	$	—	$	39,704
Franchise	957,339		6.9		2,438		—		8,743
Mortgage warehouse lines of credit	200,060		1.4		—		—		1,598
Asset-based lending	1,042,755		7.5		2,158		—		8,958
Leases	458,614		3.3		249		—		1,237
PCI - commercial loans ⁽¹⁾	8,503		0.1		—		882		487
Total commercial	$	7,289,060	52.4	%	$	18,388	$	882	$	60,727
Commercial Real Estate:
Construction	$	807,235	5.8	%	$	1,554	$	—	$	9,337
Land	115,357		0.8		228		—		3,716
Office	894,349		6.5		1,333		—		5,971
Industrial	882,525		6.4		185		—		5,902
Retail	867,639		6.3		11,540		—		8,085
Multi-family	952,048		6.9		342		—		9,688
Mixed use and other	1,949,242		14.1		4,013		—		14,859
PCI - commercial real estate ⁽¹⁾	106,689		0.8		—		3,194		102
Total commercial real estate	$	6,575,084	47.6	%	$	19,195	$	3,194	$	57,660
Total commercial and commercial real estate	$	13,864,144	100.0	%	$	37,583	$	4,076	$	118,387

Commercial real estate - collateral location by state:
Illinois	$	5,100,132	77.6	%
Wisconsin	726,874		11.1
Total primary markets	$	5,827,006	88.7	%
Indiana	153,807		2.3
Florida	51,143		0.8
Arizona	55,171		0.8
Michigan	45,670		0.7
California	68,459		1.0
Other (no individual state greater than 0.6%)	373,828		5.7
Total	$	6,575,084	100.0	%


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

DEPOSITS

Deposit Portfolio Mix and Growth Rates



										% Growth
(Dollars in thousands)	June 30, 2018			December 31, 2017			June 30, 2017			From ⁽¹⁾December 31, 2017		From June 30, 2017
Balance:
Non-interest bearing	$	6,520,724		$	6,792,497		$	6,294,052		(8	)%	4	%
NOW and interest bearing demand deposits	2,452,474			2,315,055			2,459,238			12		—
Wealth management deposits ⁽²⁾	2,523,572			2,323,699			2,464,162			17		2
Money market	5,205,678			4,515,353			4,449,385			31		17
Savings	2,763,062			2,829,373			2,419,463			(5	)	14
Time certificates of deposit	4,899,969			4,407,370			4,519,392			23		8
Total deposits	$	24,365,479		$	23,183,347		$	22,605,692		10	%	8	%
Mix:
Non-interest bearing	27		%	29		%	28		%
NOW and interest bearing demand deposits	10			10			11
Wealth management deposits ⁽²⁾	11			10			11
Money market	21			20			19
Savings	11			12			11
Time certificates of deposit	20			19			20
Total deposits	100		%	100		%	100		%


(1)	Annualized


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

Time Certificates of Deposit

Maturity/Re-pricing Analysis

As of June 30, 2018



(Dollars in thousands)	CDARs & Brokered Certificates of Deposit ⁽¹⁾		MaxSafe Certificates of Deposit ⁽¹⁾		Variable Rate Certificates of Deposit ⁽²⁾		Other Fixed Rate Certificates of Deposit ⁽¹⁾		Total Time Certificates of Deposit		Weighted-Average Rate of Maturing Time Certificates of Deposit ⁽³⁾
1-3 months	$	—	$	36,755	$	112,055	$	698,040	$	846,850	1.02	%
4-6 months	75,008		25,935		—		735,477		836,420		1.31	%
7-9 months	—		16,035		—		715,993		732,028		1.40	%
10-12 months	249		21,114		—		761,277		782,640		1.59	%
13-18 months	—		22,937		—		706,818		729,755		1.61	%
19-24 months	—		13,810		—		631,437		645,247		2.18	%
24+ months	1,000		9,124		—		316,905		327,029		1.87	%
Total	$	76,257	$	145,710	$	112,055	$	4,565,947	$	4,899,969	1.52	%


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


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


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

NET INTEREST INCOME

The following table presents a summary of Wintrust’s average balances, net interest income and related net interest margins, calculated on a fully tax-equivalent basis, for the second quarter of 2018 compared to the first quarter of 2018 (sequential quarters) and second quarter of 2017 (linked quarters), respectively:



	Average Balance for three months ended,									Interest for three months ended,									Yield/Rate for three months ended,
(Dollars in thousands)	June 30, 2018			March 31, 2018			June 30, 2017			June 30, 2018			March 31, 2018			June 30, 2017			June 30, 2018		March 31, 2018		June 30, 2017
Interest-bearing deposits with banks and cash equivalents⁽¹⁾	$	759,425		$	749,973		$	722,349		$	3,244		$	2,796		$	1,635		1.71	%	1.51	%	0.91	%
Investment securities⁽²⁾	2,890,828			2,892,617			2,572,619			20,454			19,659			16,390			2.84		2.76		2.55
FHLB and FRB stock	115,119			105,414			99,438			1,455			1,298			1,153			5.07	%	4.99		4.66
Liquidity management assets⁽³⁾⁽⁸⁾	$	3,765,372		$	3,748,004		$	3,394,406		$	25,153		$	23,753		$	19,178		2.68	%	2.57	%	2.27	%
Other earning assets^(3)(4)(8)	21,244			27,571			25,749			172			174			162			3.24		2.56		2.53
Mortgage loans held-for-sale	403,967			281,181			334,843			4,226			2,818			3,420			4.20		4.06		4.10
Loans, net of unearned income^(3)(5)(8)	22,283,541			21,711,342			20,264,875			255,875			235,664			209,472			4.61		4.40		4.15
Covered loans	—			—			51,823			—			—			648			—		—		5.01
Total earning assets⁽⁸⁾	$	26,474,124		$	25,768,098		$	24,071,696		$	285,426		$	262,409		$	232,880		4.32	%	4.13	%	3.88	%
Allowance for loan and covered loan losses	(147,192		)	(143,108		)	(132,053		)
Cash and due from banks	270,240			254,489			242,495
Other assets	1,970,407			1,930,118			1,868,811
Total assets	$	28,567,579		$	27,809,597		$	26,050,949

NOW and interest bearing demand deposits	$	2,295,268		$	2,255,692		$	2,470,130		$	1,901		$	1,386		$	1,214		0.33	%	0.25	%	0.20	%
Wealth management deposits	2,365,191			2,250,139			2,091,251			6,992			5,441			2,867			1.19		0.98		0.55
Money market accounts	4,883,645			4,520,620			4,435,670			8,111			4,667			2,707			0.67		0.42		0.24
Savings accounts	2,702,665			2,813,772			2,329,195			2,709			2,732			1,508			0.40		0.39		0.26
Time deposits	4,557,187			4,322,111			4,295,428			15,580			12,323			10,175			1.37		1.16		0.95
Interest-bearing deposits	$	16,803,956		$	16,162,334		$	15,621,674		$	35,293		$	26,549		$	18,471		0.84	%	0.67	%	0.47	%
Federal Home Loan Bank advances	1,006,407			872,811			689,600			4,263			3,639			2,933			1.70		1.69		1.71
Other borrowings	240,066			263,125			240,547			1,698			1,699			1,149			2.84		2.62		1.92
Subordinated notes	139,125			139,094			139,007			1,787			1,773			1,786			5.14		5.10		5.14
Junior subordinated debentures	253,566			253,566			253,566			2,836			2,463			2,433			4.42		3.89		3.80
Total interest-bearing liabilities	$	18,443,120		$	17,690,930		$	16,944,394		$	45,877		$	36,123		$	26,772		1.00	%	0.83	%	0.63	%
Non-interest bearing deposits	6,539,731			6,639,845			5,904,679
Other liabilities	520,574			483,230			400,971
Equity	3,064,154			2,995,592			2,800,905
Total liabilities and shareholders’ equity	$	28,567,579		$	27,809,597		$	26,050,949
Interest rate spread⁽⁶⁾⁽⁸⁾																			3.32	%	3.30	%	3.25	%
Less: Fully tax-equivalent adjustment										(1,379		)	(1,204		)	(1,699		)	(0.02	)	(0.02	)	(0.02	)
Net free funds/contribution⁽⁷⁾	$	8,031,004		$	8,077,168		$	7,127,302											0.31		0.26		0.18
Net interest income/ margin⁽⁸⁾(GAAP)										$	238,170		$	225,082		$	204,409		3.61	%	3.54	%	3.41	%
Fully tax-equivalent adjustment										1,379			1,204			1,699			0.02		0.02		0.02
Net interest income/ margin - FTE ⁽⁸⁾										$	239,549		$	226,286		$	206,108		3.63	%	3.56	%	3.43	%


(1)	Includes interest-bearing deposits from banks, federal funds sold and securities purchased under resale agreements.


(2)	Investment securities includes investment securities classified as available-for-sale and held-to-maturity, and equity securities with readily determinable fair values. Equity securities without readily determinable fair values are included within other assets.


(3)	Interest income on tax-advantaged loans, trading securities and investment securities reflects a tax-equivalent adjustment based on the marginal federal corporate tax rate in effect as of the applicable period. The total adjustments for the three months ended June 30, 2018, March 31, 2018 and June 30, 2017 were $1.4 million, $1.2 million and $1.7 million, respectively.


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


(5)	Loans, net of unearned income, include non-accrual loans.


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


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


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

For the second quarter of 2018, net interest income totaled $238.2 million, an increase of $13.1 million as compared to the first quarter of 2018 and an increase of $33.8 million as compared to the second quarter of 2017. Net interest margin was 3.61% (3.63% on a fully tax-equivalent basis) during the second quarter of 2018 compared to 3.54% (3.56% on a fully tax-equivalent basis) during the first quarter of 2018 and 3.41% (3.43% on a fully tax-equivalent basis) during the second quarter of 2017. The $13.1 million increase in net interest income in the second quarter of 2018 compared to the first quarter of 2018 was attributable to a $6.2 million increase from higher levels of earning assets, a $4.4 million increase from rising rates and a $2.5 million increase due to one more day in the quarter.

The following table presents a summary of Wintrust's average balances, net interest income and related interest margins, calculated on a fully tax-equivalent basis, for six months ended June 30, 2018 compared to six months ended June 30, 2017:



	Average Balance for six months ended,						Interest for six months ended,						Yield/Rate for six months ended,
(Dollars in thousands)	June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017			June 30, 2018		June 30, 2017
Interest-bearing deposits with banks and cash equivalents ⁽¹⁾	$	754,725		$	751,389		$	6,040		$	3,259		1.61	%	0.87	%
Investment securities ⁽²⁾	2,891,718			2,484,611			40,113			30,870			2.80		2.51
FHLB and FRB stock	110,293			96,779			2,753			2,223			5.04		4.64
Liquidity management assets⁽³⁾⁽⁸⁾	$	3,756,736		$	3,332,779		$	48,906		$	36,352		2.63	%	2.20	%
Other earning assets^(3)(4)(8)	24,390			25,494			346			345			2.86		2.73
Mortgage loans held-for-sale	342,914			302,021			7,044			5,818			4.14		3.88
Loans, net of unearned income^(3)(5)(8)	21,999,022			19,961,821			491,539			406,260			4.51		4.10
Covered loans	—			54,505			—			1,566			—		5.79
Total earning assets⁽⁸⁾	$	26,123,062		$	23,676,620		$	547,835		$	450,341		4.23	%	3.84	%
Allowance for loan and covered loan losses	(145,161		)	(129,751		)
Cash and due from banks	262,408			236,077
Other assets	1,950,374			1,849,058
Total assets	$	28,190,683		$	25,632,004

NOW and interest bearing demand deposits	$	2,275,589		$	2,491,247		$	3,286		$	2,307		0.29	%	0.19	%
Wealth management deposits	2,307,983			2,086,793			12,433			5,179			1.09		0.50
Money market accounts	4,703,135			4,421,863			12,778			4,928			0.55		0.22
Savings accounts	2,757,911			2,278,392			5,440			2,837			0.40		0.25
Time deposits	4,440,299			4,266,308			27,905			19,490			1.27		0.92
Interest-bearing deposits	$	16,484,917		$	15,544,603		$	61,842		$	34,741		0.76	%	0.45	%
Federal Home Loan Bank advances	939,978			436,873			7,902			4,523			1.70		2.09
Other borrowings	251,532			247,740			3,397			2,288			2.72		1.86
Subordinated notes	139,110			138,994			3,560			3,558			5.12		5.12
Junior subordinated debentures	253,566			253,566			5,299			4,841			4.16		3.80
Total interest-bearing liabilities	$	18,069,103		$	16,621,776		$	82,000		$	49,951		0.91	%	0.60	%
Non-interest bearing deposits	6,589,511			5,845,083
Other liabilities	502,007			393,377
Equity	3,030,062			2,771,768
Total liabilities and shareholders’ equity	$	28,190,683		$	25,632,004
Interest rate spread⁽⁶⁾⁽⁸⁾													3.32	%	3.24	%
Less: Fully tax-equivalent adjustment							(2,583		)	(3,401		)	(0.02	)	(0.03	)
Net free funds/contribution⁽⁷⁾	$	8,053,959		$	7,054,844								0.28		0.17
Net interest income/ margin⁽⁸⁾(GAAP)							$	463,252		$	396,989		3.58	%	3.38	%
Fully tax-equivalent adjustment							2,583			3,401			0.02		0.03
Net interest income/ margin - FTE ⁽⁸⁾							$	465,835		$	400,390		3.60	%	3.41	%


(1)	Includes interest-bearing deposits from banks, federal funds sold and securities purchased under resale agreements.


(2)	Investment securities includes investment securities classified as available-for-sale and held-to-maturity, and equity securities with readily determinable fair values. Equity securities without readily determinable fair values are included within other assets.


(3)	Interest income on tax-advantaged loans, trading securities and investment securities reflects a tax-equivalent adjustment based on a marginal federal corporate tax rate in effect as of the applicable period. The total adjustments for the six months ended June 30, 2018 and 2017 were $2.6 million and $3.4 million respectively.


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


(5)	Loans, net of unearned income, include non-accrual loans.


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


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


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

For the first six months of 2018 net interest income totaled $463.3 million, an increase of $66.3 million as compared to the first six months of 2017. Net interest margin was 3.58% (3.60% on a fully tax-equivalent basis) for the first six months of 2018 compared

to 3.38% (3.41% on a fully tax-equivalent basis) for the first six months of 2017. The $66.3 million increase in net interest income in the first six months of 2018 compared to the same period of 2017 was attributable to a $39.0 million increase from higher levels of earning assets and a $27.3 million increase from rising rates.

Interest Rate Sensitivity

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

The following interest rate scenarios display the percentage change in net interest income over a one-year time horizon assuming increases of 100 and 200 basis points and a decrease of 100 basis points. The Static Shock Scenario results incorporate actual cash flows and repricing characteristics for balance sheet instruments following an instantaneous, parallel change in market rates based upon a static (i.e. no growth or constant) balance sheet. Conversely, the Ramp Scenario results incorporate management’s projections of future volume and pricing of each of the product lines following a gradual, parallel change in market rates over twelve months. Actual results may differ from these simulated results due to timing, magnitude, and frequency of interest rate changes as well as changes in market conditions and management strategies. The interest rate sensitivity for both the Static Shock and Ramp Scenario at June 30, 2018, March 31, 2018 and June 30, 2017 is as follows:




Static Shock Scenario	+200 Basis Points		+100 Basis Points		-100 Basis Points
June 30, 2018	19.3	%	9.7	%	(10.7	)%
March 31, 2018	18.8	%	9.7	%	(11.6	)%
June 30, 2017	19.3	%	10.4	%	(13.5	)%



Ramp Scenario	+200 Basis Points		+100 Basis Points		-100 Basis Points
June 30, 2018	8.7	%	4.5	%	(4.4	)%
March 31, 2018	9.0	%	4.6	%	(4.8	)%
June 30, 2017	7.8	%	4.0	%	(4.6	)%

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

Maturities and Sensitivities of Loans to Changes in Interest Rates

The following table classifies the loan portfolio at June 30, 2018 by date at which the loans reprice or mature, and the type of rate exposure:



As of June 30, 2018	One year or less		From one to five years		Over five years
(Dollars in thousands)	One year or less		From one to five years		Over five years		Total
Commercial
Fixed rate	$	146,138	$	919,964	$	611,043	$	1,677,145
Variable rate	5,608,722		3,193		—		5,611,915
Total commercial	$	5,754,860	$	923,157	$	611,043	$	7,289,060
Commercial real estate
Fixed rate	391,292		1,793,231		267,142		2,451,665
Variable rate	4,093,746		29,522		151		4,123,419
Total commercial real estate	$	4,485,038	$	1,822,753	$	267,293	$	6,575,084
Home equity
Fixed rate	10,778		7,900		25,751		44,429
Variable rate	549,071		—		—		549,071
Total home equity	$	559,849	$	7,900	$	25,751	$	593,500
Residential real estate
Fixed rate	39,358		26,430		197,436		263,224
Variable rate	62,023		246,611		323,612		632,246
Total residential real estate	$	101,381	$	273,041	$	521,048	$	895,470
Premium finance receivables - commercial
Fixed rate	2,755,795		77,657		—		2,833,452
Variable rate	—		—		—		—
Total premium finance receivables - commercial	$	2,755,795	$	77,657	$	—	$	2,833,452
Premium finance receivables - life insurance
Fixed rate	12,778		2,855		3,937		19,570
Variable rate	4,282,718		—		—		4,282,718
Total premium finance receivables - life insurance	$	4,295,496	$	2,855	$	3,937	$	4,302,288
Consumer and other
Fixed rate	68,038		11,498		2,496		82,032
Variable rate	39,674		—		—		39,674
Total consumer and other	$	107,712	$	11,498	$	2,496	$	121,706
Total per category
Fixed rate	3,424,177		2,839,535		1,107,805		7,371,517
Variable rate	14,635,954		279,326		323,763		15,239,043
Total loans, net of unearned income	$	18,060,131	$	3,118,861	$	1,431,568	$	22,610,560
Variable Rate Loan Pricing by Index:
Prime	$	2,596,588
One- month LIBOR	7,538,044
Three- month LIBOR	482,723
Twelve- month LIBOR	4,384,194
Other	237,494
Total variable rate	$	15,239,043

Source: Bloomberg

As noted in the table on the previous page, the majority of the Company’s portfolio is tied to LIBOR indices which, as shown in the table above, do not mirror the same increases as the Prime rate when the Federal Reserve raises interest rates. Specifically, the Company has $7.5 billion of variable rate loans tied to one-month LIBOR and $4.4 billion of variable rate loans tied to twelve-month LIBOR. The above chart shows:



	Changes in
	Prime	1-month LIBOR	12-month LIBOR
Third Quarter 2017	0 bps	+1 bps	+4 bps
Fourth Quarter 2017	+25 bps	+33 bps	+33 bps
First Quarter 2018	+25 bps	+32 bps	+55 bps
Second Quarter 2018	+25 bps	+21 bps	+10 bps

NON-INTEREST INCOME

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



	Three Months Ended
	June 30,		March 31,			June 30,			Q2 2018 compared to Q1 2018					Q2 2018 compared to Q2 2017
(Dollars in thousands)	2018		2018			2017			$ Change			% Change		$ Change			% Change
Brokerage	$	5,784	$	6,031		$	5,449		$	(247	)	(4	)%	$	335		6	%
Trust and asset management	16,833		16,955			14,456			(122		)	(1	)	2,377			16
Total wealth management	22,617		22,986			19,905			(369		)	(2	)	2,712			14
Mortgage banking	39,834		30,960			35,939			8,874			29		3,895			11
Service charges on deposit accounts	9,151		8,857			8,696			294			3		455			5
Gains (losses) on investment securities, net	12		(351		)	47			363			NM		(35		)	(74	)
Fees from covered call options	669		1,597			890			(928		)	(58	)	(221		)	(25	)
Trading gains (losses), net	124		103			(420		)	21			20		544			NM
Operating lease income, net	8,746		9,691			6,805			(945		)	(10	)	1,941			29
Other:
Interest rate swap fees	3,829		2,237			2,221			1,592			71		1,608			72
BOLI	1,544		714			888			830			NM		656			74
Administrative services	1,205		1,061			986			144			14		219			22
Early pay-offs of capital leases	554		33			10			521			NM		544			NM
Miscellaneous	6,948		7,791			14,005			(843		)	(11	)	(7,057		)	(50	)
Total Other	14,080		11,836			18,110			2,244			19		(4,030		)	(22	)
Total Non-Interest Income	$	95,233	$	85,679		$	89,972		$	9,554		11	%	$	5,261		6	%



	Six Months Ended
	June 30,		June 30,		$			%
(Dollars in thousands)	2018		2017		Change			Change
Brokerage	11,815		11,669		$	146		1	%
Trust and asset management	33,788		28,384		5,404			19
Total wealth management	45,603		40,053		5,550			14
Mortgage banking	70,794		57,877		12,917			22
Service charges on deposit accounts	18,008		16,961		1,047			6
Losses on investment securities, net	(339	)	(8	)	(331		)	NM
Fees from covered call options	2,266		1,649		617			37
Trading gains (losses), net	227		(740	)	967			NM
Operating lease income, net	18,437		12,587		5,850			46
Other:
Interest rate swap fees	6,066		3,654		2,412			66
BOLI	2,258		1,873		385			21
Administrative services	2,266		2,010		256			13
Early pay-offs of capital leases	587		1,221		(634		)	(52	)
Miscellaneous	14,739		21,600		(6,861		)	(32	)
Total Other	25,916		30,358		(4,442		)	(15	)
Total Non-Interest Income	180,912		158,737		$	22,175		14	%

NM - Not meaningful

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

The increase in wealth management revenue during the current period as compared to the same period of 2017 is primarily attributable to growth in assets under management along with market appreciation related to managed money accounts with fees based on assets under management. Wealth management revenue is comprised of the trust and asset management revenue of The Chicago Trust Company and Great Lakes Advisors and the brokerage commissions, managed money fees and insurance product commissions at Wayne Hummer Investments.

The increase in mortgage banking revenue in the current quarter as compared to the first quarter of 2018 resulted primarily from higher origination volumes as a result of typical seasonality in our primary markets and one full quarter's impact of Veterans First. Mortgage loans originated or purchased for sale totaled $1.1 billion in the second quarter of 2018 as compared to $778.9 million in the first quarter of 2018 and $1.1 billion in the second quarter of 2017. The increase from higher originations was tempered by lower production margins and smaller positive fair market value adjustment to mortgage servicing rights as interest rates increased less during the second quarter of 2018 when compared to the first quarter of 2018. Mortgage banking revenue includes revenue from activities related to originating, selling and servicing residential real estate loans for the secondary market. Mortgage revenue is also impacted by changes in the fair value of mortgage servicing rights as the Company does not hedge this change in fair value. The Company typically originates mortgage loans held-for-sale with associated mortgage servicing rights ("MSRs") retained or released. Additionally, through the acquisition of Veterans First, the Company acquired approximately $13.8 million of MSRs in the first quarter of 2018. The Company records MSRs at fair value on a recurring basis. The table below presents additional selected information regarding mortgage banking revenue for the respective periods.



	Three Months Ended									Six Months Ended
(Dollars in thousands)	June 30, 2018			March 31, 2018			June 30, 2017			June 30, 2018			June 30, 2017
Originations:
Retail originations	$	769,279		539,911			$	963,396		$	1,309,190		$	1,588,367
Correspondent originations	122,986			126,464			170,862			249,450			268,358
Veterans First originations	204,108			112,477			—			316,585			—
Total originations (A)	$	1,096,373		778,852			$	1,134,258		$	1,875,225		$	1,856,725

Purchases as a percentage of originations	80		%	73		%	84		%	77		%	77		%
Refinances as a percentage of originations	20			27			16			23			23
Total	100		%	100		%	100		%	100		%	100		%

Production Margin:
Production revenue (B) ⁽¹⁾	$	27,814		$	20,526		$	28,140		$	48,340		$	45,817
Production margin (B / A)	2.54		%	2.64		%	2.48		%	2.58		%	2.47		%

Mortgage Servicing:
Loans serviced for others (C)	$	5,228,699		$	4,795,335		$	2,303,435
MSRs, at fair value (D)	63,194			54,572			27,307
Percentage of MSRs to loans serviced for others (D / C)	1.21		%	1.14		%	1.19		%

Components of Mortgage Banking Revenue:
Production revenue	$	27,814		$	20,526		$	28,140		$	48,340		$	45,817
MSR capitalization, net of payoffs and paydowns	6,525			2,957			4,886			9,482			7,223
MSR fair value adjustments	2,097			4,133			825			6,230			981
Servicing income	3,505			2,905			1,457			6,410			2,773
Other	(107		)	439			631			332			1,083
Total mortgage banking revenue	$	39,834		$	30,960		$	35,939		$	70,794		$	57,877


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

The Company has typically written call options with terms of less than three months against certain U.S. Treasury and agency securities held in its portfolio for liquidity and other purposes. Management has entered into these transactions with the goal of economically hedging security positions and enhancing its overall return on its investment portfolio by using fees generated from

these options to compensate for net interest margin compression. These option transactions are designed to mitigate overall interest rate risk and do not qualify as hedges pursuant to accounting guidance. Fees from covered call options decreased in the current quarter primarily as a result of selling call options against a smaller value of underlying securities resulting in lower premiums received by Company. There were no outstanding call option contracts at June 30, 2018, March 31, 2018 or June 30, 2017.

The decrease in operating lease income in the current quarter compared to the first quarter of 2018 is primarily related to a $1.1 million gain realized in the prior quarter from the sale of certain equipment held on operating leases.

NON-INTEREST EXPENSE

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



	Three Months Ended
	June 30,		March 31,		June 30,		Q2 2018 compared to Q1 2018					Q2 2018 compared to Q2 2017
(Dollars in thousands)	2018		2018		2017		$ Change			% Change		$ Change			% Change
Salaries and employee benefits:
Salaries	$	66,976	$	61,986	$	55,215	$	4,990		8	%	$	11,761		21	%
Commissions and incentive compensation	35,907		31,949		34,050		3,958			12		1,857			5
Benefits	18,792		18,501		17,237		291			2		1,555			9
Total salaries and employee benefits	121,675		112,436		106,502		9,239			8		15,173			14
Equipment	10,527		10,072		9,909		455			5		618			6
Operating lease equipment depreciation	6,940		6,533		5,662		407			6		1,278			23
Occupancy, net	13,663		13,767		12,586		(104		)	(1	)	1,077			9
Data processing	8,752		8,493		7,804		259			3		948			12
Advertising and marketing	11,782		8,824		8,726		2,958			34		3,056			35
Professional fees	6,484		6,649		7,510		(165		)	(2	)	(1,026		)	(14	)
Amortization of other intangible assets	997		1,004		1,141		(7		)	(1	)	(144		)	(13	)
FDIC insurance	4,598		4,362		3,874		236			5		724			19
OREO expense, net	980		2,926		739		(1,946		)	(67	)	241			33
Other:
Commissions - 3rd party brokers	1,174		1,252		1,033		(78		)	(6	)	141			14
Postage	2,567		1,866		2,080		701			38		487			23
Miscellaneous	16,630		16,165		15,978		465			3		652			4
Total other	20,371		19,283		19,091		1,088			6		1,280			7
Total Non-Interest Expense	$	206,769	$	194,349	$	183,544	$	12,420		6	%	$	23,225		13	%



	Six Months Ended
	June 30,		June 30,		$			%
(Dollars in thousands)	2018		2017		Change			Change
Salaries and employee benefits:
Salaries	$	128,962	$	110,223	$	18,739		17	%
Commissions and incentive compensation	67,856		60,693		7,163			12
Benefits	37,293		34,902		2,391			7
Total salaries and employee benefits	234,111		205,818		28,293			14
Equipment	20,599		18,911		1,688			9
Operating lease equipment depreciation	13,473		10,298		3,175			31
Occupancy, net	27,430		25,687		1,743			7
Data processing	17,245		15,729		1,516			10
Advertising and marketing	20,606		13,876		6,730			49
Professional fees	13,133		12,170		963			8
Amortization of other intangible assets	2,001		2,305		(304		)	(13	)
FDIC insurance	8,960		8,030		930			12
OREO expense, net	3,906		2,404		1,502			62
Other:
Commissions - 3rd party brokers	2,426		2,131		295			14
Postage	4,433		3,522		911			26
Miscellaneous	32,795		30,781		2,014			7
Total other	39,654		36,434		3,220			9
Total Non-Interest Expense	$	401,118	$	351,662	$	49,456		14	%

NM - Not meaningful

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

Salaries and employee benefits expense increased in the current quarter compared to the first quarter of 2018 primarily as a result of higher salaries and commissions and incentive compensation. The increase in salaries is primarily due to additional salaries from the Veterans First acquisition as well as increases from merit-based salary increases for current employees effective in February and an increase of the minimum wage for eligible hourly employees effective in March. The increase in commissions and incentive compensation is the result of higher commissions due to increased production in mortgage banking and an increase in bonus and long-term performance-based incentive compensation recognized in the second quarter of 2018 due to higher earnings.

The increase in advertising and marketing expenses during the current quarter compared to the first quarter of 2018 and the second quarter of 2017 is primarily related to higher corporate sponsorship costs, which are typically higher in the spring and summer due to our marketing efforts with the Chicago Cubs and Chicago White Sox, as well as increased spending related to deposit generation and brand awareness to grow our loan and deposit portfolios. Marketing costs are incurred to promote the Company's brand, commercial banking capabilities, the Company's various products, to attract loans and deposits and to announce new branch openings as well as the expansion of the Company's non-bank businesses. The level of marketing expenditures depends on the timing of sponsorship programs and type of marketing programs utilized which are determined based on the market area, targeted audience, competition and various other factors.

The decrease in OREO expense in the current quarter compared to the first quarter of 2018 was primarily the result of negative valuation adjustments and realized losses on the sale of certain OREO properties recognized in the previous quarter from our continuing efforts to address and resolve non-performing assets in a timely fashion. OREO expenses include all costs associated with obtaining, maintaining and selling other real estate owned properties as well as valuation adjustments.

INCOME TAXES

The Company recorded income tax expense of $32.0 million in the second quarter of 2018 compared to $26.1 million in the first quarter of 2018 and $37.0 million in the second quarter of 2017. The effective tax rates were 26.33% in the second quarter of 2018, 24.14% in the first quarter of 2018 and 36.34% in the second quarter of 2017. During the six months ended June 30, 2018, the Company recorded income tax expense of $58.1 million (25.30% effective tax rate) compared to $66.7 million (35.11% effective tax rate) for the same period of 2017. The lower effective tax rates for the 2018 quarterly and year-to-date periods as compared to 2017 were primarily due to the reduction of the federal corporate income tax rate effective in 2018 as a result of the enactment of the Tax Cuts and Jobs Act on December 22, 2017. The Company recorded $712,000 of excess tax benefits in the second quarter of 2018 related to share-based compensation and $2.6 million in the first quarter of 2018, compared to $456,000 in the second quarter of 2017 and $3.4 million in the first quarter of 2017. Excess tax benefits are expected to be higher in the first quarter when the majority of the Company's share-based awards vest, and will fluctuate throughout the year based on the Company's stock price and timing of employee stock option exercises and vesting of other share-based awards.

ASSET QUALITY

Allowance for Credit Losses, excluding covered loans



	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
(Dollars in thousands)	2018			2018			2017			2018			2017
Allowance for loan losses at beginning of period	$	139,503		$	137,905		$	125,819		$	137,905		$	122,291
Provision for credit losses	5,043			8,346			8,952			13,389			14,268
Other adjustments ⁽¹⁾	(44		)	(40		)	(30		)	(84		)	(86		)
Reclassification (to) from allowance for unfunded lending-related commitments	—			26			106			26			(32		)
Charge-offs:
Commercial	2,210			2,687			913			4,897			1,554
Commercial real estate	155			813			1,985			968			2,246
Home equity	612			357			1,631			969			2,256
Residential real estate	180			571			146			751			475
Premium finance receivables - commercial	3,254			4,721			1,878			7,975			3,305
Premium finance receivables - life insurance	—			—			—			—			—
Consumer and other	459			129			175			588			309
Total charge-offs	6,870			9,278			6,728			16,148			10,145
Recoveries:
Commercial	666			262			561			928			834
Commercial real estate	2,387			1,687			276			4,074			830
Home equity	171			123			144			294			209
Residential real estate	1,522			40			54			1,562			232
Premium finance receivables - commercial	975			385			404			1,360			1,016
Premium finance receivables - life insurance	—			—			—			—			—
Consumer and other	49			47			33			96			174
Total recoveries	5,770			2,544			1,472			8,314			3,295
Net charge-offs	(1,100		)	(6,734		)	(5,256		)	(7,834		)	(6,850		)
Allowance for loan losses at period end	$	143,402		$	139,503		$	129,591		$	143,402		$	129,591
Allowance for unfunded lending-related commitments at period end	1,243			1,243			1,705			1,243			1,705
Allowance for credit losses at period end	$	144,645		$	140,746		$	131,296		$	144,645		$	131,296
Annualized net charge-offs (recoveries) by category as a percentage of its own respective category’s average:
Commercial	0.09		%	0.14		%	0.02		%	0.11		%	0.02		%
Commercial real estate	(0.14		)	(0.05		)	0.11			(0.09		)	0.05
Home equity	0.29			0.15			0.85			0.22			0.58
Residential real estate	(0.64		)	0.26			0.05			(0.20		)	0.07
Premium finance receivables - commercial	0.34			0.68			0.23			0.51			0.19
Premium finance receivables - life insurance	0.00			0.00			0.00			0.00			0.00
Consumer and other	1.21			0.26			0.45			0.76			0.22
Total loans, net of unearned income, excluding covered loans	0.02		%	0.13		%	0.10		%	0.07		%	0.07		%
Net charge-offs as a percentage of the provision for credit losses	21.80		%	80.69		%	58.71		%	58.51		%	48.01		%
Loans at period-end, excluding covered loans	$	22,610,560		$	22,062,134		$	20,743,332
Allowance for loan losses as a percentage of loans at period end	0.63		%	0.63		%	0.62		%
Allowance for credit losses as a percentage of loans at period end	0.64		%	0.64		%	0.63		%


(1)	Includes $742,000 of allowance for covered loan losses reclassified as a result of the termination of all existing loss share agreements with the FDIC during the fourth quarter of 2017.

The allowance for credit losses, excluding the allowance for covered loan losses, is comprised of the allowance for loan losses and the allowance for unfunded lending-related commitments. The allowance for loan losses is a reserve against loan amounts

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

Net charge-offs as a percentage of loans, excluding covered loans, for the second quarter of 2018 totaled two basis points on an annualized basis compared to 13 basis points on an annualized basis in the first quarter of 2018 and 10 basis points on an annualized basis in the second quarter of 2017. Net charge-offs totaled $1.1 million in the second quarter of 2018, a $5.6 million decrease from $6.7 million in the first quarter of 2018 and a $4.2 million decrease from $5.3 million in the second quarter of 2017. The decrease in the second quarter of 2018 compared to first quarter of 2018 is primarily the result of decreased net charge-offs within the commercial real estate, residential real estate and commercial insurance premium finance receivables portfolios. The decrease in the second quarter of 2018 compared to second quarter of 2017 is primarily the result of decreased net charge-offs within the commercial real estate and residential real estate portfolios. The provision for credit losses, excluding the provision for covered loan losses, totaled $5.0 million for the second quarter of 2018 compared to $8.3 million for the first quarter of 2018 and $9.0 million for the second quarter of 2017.

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

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

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



	Three Months Ended								Six Months Ended
	June 30,		March 31,			June 30,			June 30,			June 30,
(Dollars in thousands)	2018		2018			2017			2018			2017
Provision for loan losses	$	5,043	$	8,372		$	9,058		$	13,415		$	14,236
Provision for unfunded lending-related commitments	—		(26		)	(106		)	(26		)	32
Provision for covered loan losses	—		—			(61		)	—			(168		)
Provision for credit losses	$	5,043	$	8,346		$	8,891		$	13,389		$	14,100

						June 30,			March 31,			June 30,
						2018			2018			2017
Allowance for loan losses						$	143,402		$	139,503		$	129,591
Allowance for unfunded lending-related commitments						1,243			1,243			1,705
Allowance for covered loan losses						—			—			1,074
Allowance for credit losses						$	144,645		$	140,746		$	132,370

The tables below summarize the calculation of allowance for loan losses for the Company’s core loan portfolio and consumer, niche and purchased loan portfolio, excluding covered loans, as of June 30, 2018 and March 31, 2018.



	As of June 30, 2018
	Recorded		Calculated		As a percentage of its own respective
(Dollars in thousands)	Investment		Allowance		category’s balance
Commercial:⁽¹⁾
Commercial and industrial	$	4,000,272	$	36,381	0.91	%
Asset-based lending	1,041,894		8,957		0.86
Tax exempt	432,435		2,856		0.66
Leases	456,906		1,237		0.27
Commercial real estate:⁽¹⁾
Residential construction	34,350		709		2.06
Commercial construction	770,314		8,606		1.12
Land	113,937		3,714		3.26
Office	863,448		5,967		0.69
Industrial	851,584		5,896		0.69
Retail	836,901		8,047		0.96
Multi-family	926,475		9,679		1.04
Mixed use and other	1,876,807		14,811		0.79
Home equity⁽¹⁾	547,836		9,437		1.72
Residential real estate⁽¹⁾	854,176		6,199		0.73
Total core loan portfolio	$	13,607,335	$	122,496	0.90	%
Commercial:
Franchise	$	881,921	$	8,661	0.98	%
Mortgage warehouse lines of credit	200,060		1,598		0.80
Community Advantage - homeowner associations	169,443		424		0.25
Aircraft	2,586		3		0.12
Purchased non-covered commercial loans ⁽²⁾	103,543		610		0.59
Commercial real estate:
Purchased non-covered commercial real estate ⁽²⁾	301,268		231		0.08
Purchased non-covered home equity ⁽²⁾	45,664		114		0.25
Purchased non-covered residential real estate ⁽²⁾	41,294		137		0.33
Premium finance receivables
U.S. commercial insurance loans	2,487,886		5,759		0.23
Canada commercial insurance loans ⁽²⁾	345,566		513		0.15
Life insurance loans ⁽¹⁾	4,118,666		1,462		0.04
Purchased life insurance loans ⁽²⁾	183,622		—		—
Consumer and other ⁽¹⁾	119,143		1,390		1.17
Purchased non-covered consumer and other ⁽²⁾	2,563		4		0.14
Total consumer, niche and purchased loan portfolio	$	9,003,225	$	20,906	0.23	%
Total loans, net of unearned income, excluding covered loans	$	22,610,560	$	143,402	0.63	%


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


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



	As of March 31, 2018
	Recorded		Calculated		As a percentage of its own respective
(Dollars in thousands)	Investment		Allowance		category’s balance
Commercial:⁽¹⁾
Commercial and industrial	$	3,989,211	$	36,092	0.90	%
Asset-based lending	977,063		8,315		0.85
Tax exempt	380,264		2,602		0.68
Leases	412,786		1,222		0.30
Commercial real estate:⁽¹⁾
Residential construction	44,328		860		1.94
Commercial construction	769,330		8,723		1.13
Land	121,005		3,988		3.30
Office	853,839		5,795		0.68
Industrial	872,761		5,895		0.68
Retail	861,249		8,101		0.94
Multi-family	903,778		9,599		1.06
Mixed use and other	1,866,691		14,319		0.77
Home equity⁽¹⁾	571,925		9,719		1.70
Residential real estate⁽¹⁾	823,322		6,073		0.74
Total core loan portfolio	$	13,447,552	$	121,303	0.90	%
Commercial:
Franchise	$	852,166	$	7,032	0.83	%
Mortgage warehouse lines of credit	163,470		1,297		0.79
Community Advantage - homeowner associations	168,656		422		0.25
Aircraft	2,904		42		1.45
Purchased non-covered commercial loans ⁽²⁾	114,351		612		0.54
Commercial real estate:
Purchased non-covered commercial real estate ⁽²⁾	340,539		201		0.06
Purchased non-covered home equity ⁽²⁾	54,622		141		0.26
Purchased non-covered residential real estate ⁽²⁾	45,782		205		0.45
Premium finance receivables
U.S. commercial insurance loans	2,263,019		5,415		0.24
Canada commercial insurance loans ⁽²⁾	313,131		491		0.16
Life insurance loans ⁽¹⁾	4,002,726		1,427		0.04
Purchased life insurance loans ⁽²⁾	187,235		—		—
Consumer and other ⁽¹⁾	103,312		911		0.88
Purchased non-covered consumer and other ⁽²⁾	2,669		4		0.15
Total consumer, niche and purchased loan portfolio	$	8,614,582	$	18,200	0.21	%
Total loans, net of unearned income, excluding covered loans	$	22,062,134	$	139,503	0.63	%


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


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

As part of the regular quarterly review performed by management to determine if the Company’s allowance for loan losses is appropriate, an analysis is prepared on the loan portfolio based upon a breakout of core loans and consumer, niche and purchased loans. A summary of the allowance for loan losses calculated for the loan components in both the core loan portfolio and the consumer, niche and purchased loan portfolio was shown on the preceding tables as of June 30, 2018 and March 31, 2018.

Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date. In accordance with accounting guidance, credit deterioration on purchased loans is recorded as a credit discount at the time of purchase instead of as an increase to the allowance for loan losses.

In addition to the $143.4 million of allowance for loan losses, there is $2.9 million of non-accretable credit discount on purchased loans reported in accordance with ASC 310-30 that is available to absorb credit losses.

The tables below show the aging of the Company’s loan portfolio at June 30, 2018 and March 31, 2018:



			90+ days		60-89		30-59
As of June 30, 2018			and still		days past		days past
(Dollars in thousands)	Nonaccrual		accruing		due		due		Current		Total Loans
Loan Balances:
Commercial ⁽¹⁾	$	18,388	$	882	$	3,064	$	15,923	$	7,250,803	$	7,289,060
Commercial real estate ⁽¹⁾	19,195		3,194		4,119		27,682		6,520,894		6,575,084
Home equity	9,096		—		—		3,226		581,178		593,500
Residential real estate ⁽¹⁾	15,825		1,472		3,637		1,534		873,002		895,470
Premium finance receivables - commercial	14,832		5,159		8,848		10,535		2,794,078		2,833,452
Premium finance receivables - life insurance ⁽¹⁾	—		—		26,770		17,211		4,258,307		4,302,288
Consumer and other ⁽¹⁾	563		286		150		310		120,397		121,706
Total loans, net of unearned income	$	77,899	$	10,993	$	46,588	$	76,421	$	22,398,659	$	22,610,560



As of June 30, 2018 Aging as a % of Loan Balance	Nonaccrual		90+ days and still accruing		60-89 days past due		30-59 days past due		Current		Total Loans
Commercial ⁽¹⁾	0.3	%	—	%	—	%	0.2	%	99.5	%	100.0	%
Commercial real estate ⁽¹⁾	0.3		—		0.1		0.4		99.2		100.0
Home equity	1.5		—		—		0.5		98.0		100.0
Residential real estate ⁽¹⁾	1.8		0.2		0.4		0.2		97.4		100.0
Premium finance receivables - commercial	0.5		0.2		0.3		0.4		98.6		100.0
Premium finance receivables - life insurance ⁽¹⁾	—		—		0.6		0.4		99.0		100.0
Consumer and other ⁽¹⁾	0.5		0.2		0.1		0.3		98.9		100.0
Total loans, net of unearned income	0.3	%	—	%	0.2	%	0.3	%	99.2	%	100.0	%


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



			90+ days		60-89		30-59
As of March 31, 2018			and still		days past		days past
(Dollars in thousands)	Nonaccrual		accruing		due		due		Current		Total Loans
Loan Balances:
Commercial ⁽¹⁾	$	14,007	$	856	$	771	$	54,233	$	6,991,004	$	7,060,871
Commercial real estate ⁽¹⁾	21,825		3,107		3,563		58,469		6,546,556		6,633,520
Home equity	9,828		—		1,505		4,033		611,181		626,547
Residential real estate ⁽¹⁾	17,214		1,437		229		8,808		841,416		869,104
Premium finance receivables - commercial	17,342		8,547		6,543		17,756		2,525,962		2,576,150
Premium finance receivables - life insurance ⁽¹⁾	—		—		5,125		11,420		4,173,416		4,189,961
Consumer and other ⁽¹⁾	720		269		216		291		104,485		105,981
Total loans, net of unearned income	$	80,936	$	14,216	$	17,952	$	155,010	$	21,794,020	$	22,062,134



As of March 31, 2018 Aging as a % of Loan Balance:	Nonaccrual		90+ days and still accruing		60-89 days past due		30-59 days past due		Current		Total Loans
Commercial ⁽¹⁾	0.2	%	—	%	—	%	0.8	%	99.0	%	100.0	%
Commercial real estate ⁽¹⁾	0.3		—		0.1		0.9		98.7		100.0
Home equity	1.6		—		0.2		0.6		97.6		100.0
Residential real estate ⁽¹⁾	2.0		0.2		—		1.0		96.8		100.0
Premium finance receivables - commercial	0.7		0.3		0.3		0.7		98.0		100.0
Premium finance receivables - life insurance ⁽¹⁾	—		—		0.1		0.3		99.6		100.0
Consumer and other ⁽¹⁾	0.7		0.3		0.2		0.3		98.5		100.0
Total loans, net of unearned income	0.4	%	0.1	%	0.1	%	0.7	%	98.7	%	100.0	%


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

As of June 30, 2018, $46.6 million of all loans, or 0.2%, were 60 to 89 days past due and $76.4 million, or 0.3%, were 30 to 59 days (or one payment) past due. As of March 31, 2018, $18.0 million of all loans, or 0.1%, were 60 to 89 days past due and $155.0 million, or 0.7%, were 30 to 59 days (or one payment) past due. The majority of the commercial and commercial real estate loans shown as 60 to 89 days and 30 to 59 days past due are included on the Company’s internal problem loan reporting system. Loans on this system are closely monitored by management on a monthly basis. All loans within the life insurance premium financing portfolio shown as 60 to 89 days and 30 to 59 days past due (four and nine credits, respectively) remain fully secured.

The Company’s home equity and residential loan portfolios continue to exhibit low delinquency ratios. Home equity loans at June 30, 2018 that are current with regard to the contractual terms of the loan agreement represent 98.0% of the total home equity portfolio. Residential real estate loans at June 30, 2018 that are current with regards to the contractual terms of the loan agreements comprise 97.4% of total residential real estate loans outstanding.

Non-performing Assets, excluding covered assets

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



	June 30,			March 31,			June 30,
(Dollars in thousands)	2018			2018			2017
Loans past due greater than 90 days and still accruing⁽¹⁾:
Commercial	$	—		$	—		$	—
Commercial real estate	—			—			—
Home equity	—			—			—
Residential real estate	—			—			179
Premium finance receivables - commercial	5,159			8,547			5,922
Premium finance receivables - life insurance	—			—			1,046
Consumer and other	224			207			63
Total loans past due greater than 90 days and still accruing	5,383			8,754			7,210
Non-accrual loans⁽²⁾:
Commercial	18,388			14,007			10,191
Commercial real estate	19,195			21,825			16,980
Home equity	9,096			9,828			9,482
Residential real estate	15,825			17,214			14,292
Premium finance receivables - commercial	14,832			17,342			10,456
Premium finance receivables - life insurance	—			—			—
Consumer and other	563			720			439
Total non-accrual loans	77,899			80,936			61,840
Total non-performing loans:
Commercial	18,388			14,007			10,191
Commercial real estate	19,195			21,825			16,980
Home equity	9,096			9,828			9,482
Residential real estate	15,825			17,214			14,471
Premium finance receivables - commercial	19,991			25,889			16,378
Premium finance receivables - life insurance	—			—			1,046
Consumer and other	787			927			502
Total non-performing loans	$	83,282		$	89,690		$	69,050
Other real estate owned	18,925			18,481			16,853
Other real estate owned - from acquisitions	16,406			18,117			22,508
Other repossessed assets	305			113			532
Total non-performing assets	$	118,918		$	126,401		$	108,943
TDRs performing under the contractual terms of the loan agreement	$	57,249		$	39,562		$	28,008
Total non-performing loans by category as a percent of its own respective category’s period-end balance:
Commercial	0.25		%	0.20		%	0.16		%
Commercial real estate	0.29			0.33			0.27
Home equity	1.53			1.57			1.38
Residential real estate	1.77			1.98			1.90
Premium finance receivables - commercial	0.71			1.00			0.62
Premium finance receivables - life insurance	—			—			0.03
Consumer and other	0.65			0.87			0.44
Total loans, net of unearned income	0.37		%	0.41		%	0.33		%
Total non-performing assets as a percentage of total assets	0.40		%	0.44		%	0.40		%
Allowance for loan losses as a percentage of total non-performing loans	172.19		%	155.54		%	187.68		%


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


(2)	Non-accrual loans included TDRs totaling $8.1 million, $8.1 million and $5.1 million as of June 30, 2018, March 31, 2018 and June 30, 2017, respectively.

The ratio of non-performing assets to total assets was 0.40% as of June 30, 2018, compared to 0.44% at March 31, 2018, and 0.40% at June 30, 2017. Non-performing assets, excluding covered assets and non-covered PCI loans, totaled $118.9 million at June 30, 2018, compared to $126.4 million at March 31, 2018 and $108.9 million at June 30, 2017. Non-performing loans, excluding covered loans and non-covered PCI loans, totaled $83.3 million, or 0.37% of total loans, at June 30, 2018 compared to $89.7 million, or 0.41% of total loans, at March 31, 2018 and $69.1 million, or 0.33% of total loans, at June 30, 2017. OREO, excluding covered OREO, of $35.3 million at June 30, 2018 decreased $1.3 million compared to $36.6 million at March 31, 2018 and decreased $4.0 million compared to $39.4 million at June 30, 2017.

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

Nonperforming Loans Rollforward

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



	Three Months Ended									Six Months Ended
	June 30,			March 31,			June 30,			June 30,			June 30,
(Dollars in thousands)	2018			2018			2017			2018			2017
Balance at beginning of period	$	89,690		$	90,162		$	78,979		$	90,162		$	87,454
Additions, net, from non-covered portfolio	10,403			6,608			10,888			17,011			19,497
Return to performing status	(759		)	(3,753		)	(975		)	(4,512		)	(2,567		)
Payments received	(4,589		)	(2,569		)	(10,684		)	(7,158		)	(16,298		)
Transfer to OREO and other repossessed assets	(3,528		)	(1,981		)	(2,543		)	(5,509		)	(4,204		)
Charge-offs	(1,968		)	(3,555		)	(4,344		)	(5,523		)	(5,624		)
Net change for niche loans ⁽¹⁾	(5,967		)	4,778			(2,271		)	(1,189		)	(9,208		)
Balance at end of period	$	83,282		$	89,690		$	69,050		$	83,282		$	69,050


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

TDRs

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



	June 30,			March 31,			June 30,
(Dollars in thousands)	2018			2018			2017
Accruing TDRs:
Commercial	$	37,560		$	19,803		$	3,886
Commercial real estate	15,086			16,087			17,349
Residential real estate and other	4,603			3,672			6,773
Total accrual	$	57,249		$	39,562		$	28,008
Non-accrual TDRs: ⁽¹⁾
Commercial	$	1,671		$	1,741		$	1,110
Commercial real estate	1,362			1,304			1,839
Residential real estate and other	5,028			5,069			2,134
Total non-accrual	$	8,061		$	8,114		$	5,083
Total TDRs:
Commercial	$	39,231		$	21,544		$	4,996
Commercial real estate	16,448			17,391			19,188
Residential real estate and other	9,631			8,741			8,907
Total TDRs	$	65,310		$	47,676		$	33,091
Weighted-average contractual interest rate of TDRs	5.46		%	4.84		%	4.28		%


(1)	Included in total non-performing loans.

Other Real Estate Owned

The table below presents a summary of other real estate owned, excluding covered other real estate owned, as of June 30, 2018, March 31, 2018 and June 30, 2017, and shows the activity for the respective period and the balance for each property type:



	Three Months Ended
	June 30,			March 31,			June 30,
(Dollars in thousands)	2018			2018			2017
Balance at beginning of period	$	36,598		$	40,646		$	39,864
Disposals/resolved	(4,557		)	(3,679		)	(4,270		)
Transfers in at fair value, less costs to sell	4,801			1,789			3,965
Fair value adjustments	(1,511		)	(2,158		)	(198		)
Balance at end of period	$	35,331		$	36,598		$	39,361

	Period End
	June 30,			March 31,			June 30,
Balance by Property Type	2018			2018			2017
Residential real estate	$	5,155		$	6,407		$	7,684
Residential real estate development	2,205			2,229			755
Commercial real estate	27,971			27,962			30,922
Total	$	35,331		$	36,598		$	39,361

Items Impacting Comparative Financial Results:

Acquisitions

On January 4, 2018, the Company acquired certain assets and assumed certain liabilities of the mortgage banking business of Veterans First, in a business combination. The Company also acquired mortgage servicing rights assets from Veterans First on approximately 10,000 loans, totaling an estimated $1.6 billion in unpaid principal balance. Veterans First is a consumer direct lender with three offices, operating two in Salt Lake City and one in San Diego, and originated in excess of $800 million in loans in 2017.

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

Termination of Loss Share Agreements

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

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

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

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

WINTRUST SUBSIDIARIES AND LOCATIONS

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

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

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


•	FIRST Insurance Funding, a division of Lake Forest Bank & Trust Company, N.A., and Wintrust Life Finance, a division of Lake Forest Bank & Trust Company, N.A., serve commercial and life insurance loan customers, respectively, throughout the United States.


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


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


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


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


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


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


•	Wintrust Asset Finance which offers direct leasing opportunities.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements within the meaning of federal securities laws. Forward-looking information can be identified through the use of words such as “intend,” “plan,” “project,” “expect,” “anticipate,” “believe,” “estimate,” “contemplate,” “possible,” “will,” “may,” “should,” “would” and “could.” Forward-looking statements and information are not historical facts, are premised on many factors and assumptions, and represent only management’s expectations, estimates and projections regarding future events. Similarly, these statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict, which may include, but are not limited to, those listed below and the Risk Factors discussed under Item 1A of the Company’s 2017 Annual Report on Form 10-K and in any of the Company’s subsequent SEC filings. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of invoking these safe harbor provisions. Such forward-looking statements may be deemed to include, among other things, statements relating to the Company’s future financial performance, the performance of its loan portfolio, the expected amount of future credit reserves and charge-offs, delinquency trends, growth plans, regulatory developments, securities that the Company may offer from time to time, and management’s long-term performance goals, as well as statements relating to the anticipated effects on financial condition and results of operations from expected developments or events, the Company’s business and growth strategies, including future acquisitions of banks, specialty finance or wealth management businesses, internal growth and plans to form additional de novo banks or branch offices. Actual results could differ materially from those addressed in the forward-looking statements as a result of numerous factors, including the following:


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

affect the Company’s liquidity and the performance of its loan portfolios, particularly in the markets in which it operates;


•	the extent of defaults and losses on the Company’s loan portfolio, which may require further increases in its allowance for credit losses;


•	estimates of fair value of certain of the Company’s assets and liabilities, which could change in value significantly from period to period;


•	the financial success and economic viability of the borrowers of our commercial loans;


•	commercial real estate market conditions in the Chicago metropolitan area and southern Wisconsin;


•	the extent of commercial and consumer delinquencies and declines in real estate values, which may require further increases in the Company’s allowance for loan and lease losses;


•	inaccurate assumptions in our analytical and forecasting models used to manage our loan portfolio;


•	changes in the level and volatility of interest rates, the capital markets and other market indices that may affect, among other things, the Company’s liquidity and the value of its assets and liabilities;


•	competitive pressures in the financial services business which may affect the pricing of the Company’s loan and deposit products as well as its services (including wealth management services), which may result in loss of market share and reduced income from deposits, loans, advisory fees and income from other products;


•	failure to identify and complete favorable acquisitions in the future or unexpected difficulties or developments related to the integration of the Company’s recent or future acquisitions;


•	unexpected difficulties and losses related to FDIC-assisted acquisitions;


•	harm to the Company’s reputation;


•	any negative perception of the Company’s financial strength;


•	ability of the Company to raise additional capital on acceptable terms when needed;


•	disruption in capital markets, which may lower fair values for the Company’s investment portfolio;


•	ability of the Company to use technology to provide products and services that will satisfy customer demands and create efficiencies in operations and to manage risks associated therewith;


•	failure or breaches of our security systems or infrastructure, or those of third parties;


•	security breaches, including denial of service attacks, hacking, social engineering attacks, malware intrusion or data corruption attempts and identity theft;


•	adverse effects on our information technology systems resulting from failures, human error or cyberattacks;


•	adverse effects of failures by our vendors to provide agreed upon services in the manner and at the cost agreed, particularly our information technology vendors;


•	increased costs as a result of protecting our customers from the impact of stolen debit card information;


•	accuracy and completeness of information the Company receives about customers and counterparties to make credit decisions;


•	ability of the Company to attract and retain senior management experienced in the banking and financial services industries;


•	environmental liability risk associated with lending activities;


•	the impact of any claims or legal actions to which the Company is subject, including any effect on our reputation;


•	losses incurred in connection with repurchases and indemnification payments related to mortgages and increases in reserves associated therewith;


•	the loss of customers as a result of technological changes allowing consumers to complete their financial transactions without the use of a bank;


•	the soundness of other financial institutions;


•	the expenses and delayed returns inherent in opening new branches and de novo banks;


•	examinations and challenges by tax authorities, and any unanticipated impact of the Tax Act;


•	changes in accounting standards, rules and interpretations such as the new CECL standard, and the impact on the Company’s financial statements;


•	the ability of the Company to receive dividends from its subsidiaries;


•	uncertainty about the future of LIBOR;


•	a decrease in the Company’s capital ratios, including as a result of declines in the value of its loan portfolios, or otherwise;


•	legislative or regulatory changes, particularly changes in regulation of financial services companies and/or the products and services offered by financial services companies;


•	a lowering of our credit rating;


•	changes in U.S. monetary policy and changes to the Federal Reserve’s balance sheet as a result of the end of its program of quantitative easing or otherwise;


•	restrictions upon our ability to market our products to consumers and limitations on our ability to profitably operate our mortgage business resulting from the Dodd-Frank Act;


•	increased costs of compliance, heightened regulatory capital requirements and other risks associated with changes in regulation and the regulatory environment;


•	the impact of heightened capital requirements;


•	increases in the Company’s FDIC insurance premiums, or the collection of special assessments by the FDIC;


•	delinquencies or fraud with respect to the Company’s premium finance business;


•	credit downgrades among commercial and life insurance providers that could negatively affect the value of collateral securing the Company’s premium finance loans;


•	the Company’s ability to comply with covenants under its credit facility; and


•	fluctuations in the stock market, which may have an adverse impact on the Company’s wealth management business and brokerage operation.

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

CONFERENCE CALL, WEB CAST AND REPLAY

The Company will hold a conference call at 10:00 a.m. (Central Time) on Wednesday, July 18, 2018 regarding second quarter and year-to-date 2018 results. Individuals interested in listening should call (877) 363-5049 and enter Conference ID #2188524. A simultaneous audio-only web cast and replay of the conference call may be accessed via the Company’s website at http://www.wintrust.com, Investor Relations, Investor News and Events, Presentations & Conference Calls. The text of the second quarter and year-to-date 2018 earnings press release will be available on the home page of the Company’s website at http://www.wintrust.com and at the Investor Relations, Investor News and Events, Press Releases link on its website.

WINTRUST FINANCIAL CORPORATION

Supplemental Financial Information

5 Quarter Trends

WINTRUST FINANCIAL CORPORATION - Supplemental Financial Information

Selected Financial Highlights - 5 Quarter Trends

(Dollars in thousands, except per share data)



	Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
	2018			2018			2017			2017			2017
Selected Financial Condition Data (at end of period):
Total assets	$	29,464,588		$	28,456,772		$	27,915,970		$	27,358,162		$	26,929,265
Total loans, excluding covered loans	22,610,560			22,062,134			21,640,797			20,912,781			20,743,332
Total deposits	24,365,479			23,279,327			23,183,347			22,895,063			22,605,692
Junior subordinated debentures	253,566			253,566			253,566			253,566			253,566
Total shareholders’ equity	3,106,871			3,031,250			2,976,939			2,908,925			2,839,458
Selected Statements of Income Data:
Net interest income	238,170			225,082			219,099			215,988			204,409
Net revenue ⁽¹⁾	333,403			310,761			300,137			295,719			294,381
Net income	89,580			81,981			68,781			65,626			64,897
Net income per common share – Basic	$	1.55		$	1.42		$	1.19		$	1.14		$	1.15
Net income per common share – Diluted	$	1.53		$	1.40		$	1.17		$	1.12		$	1.11
Selected Financial Ratios and Other Data:
Performance Ratios:
Net interest margin	3.61		%	3.54		%	3.45		%	3.43		%	3.41		%
Net interest margin - fully taxable equivalent (non-GAAP) ⁽²⁾	3.63		%	3.56		%	3.49		%	3.46		%	3.43		%
Non-interest income to average assets	1.34		%	1.25		%	1.18		%	1.17		%	1.39		%
Non-interest expense to average assets	2.90		%	2.83		%	2.87		%	2.70		%	2.83		%
Net overhead ratio ⁽³⁾	1.57		%	1.58		%	1.69		%	1.53		%	1.44		%
Return on average assets	1.26		%	1.20		%	1.00		%	0.96		%	1.00		%
Return on average common equity	11.94		%	11.29		%	9.39		%	9.15		%	9.55		%
Return on average tangible common equity (non-GAAP) ⁽²⁾	14.72		%	14.02		%	11.65		%	11.39		%	12.02		%
Average total assets	$	28,567,579		$	27,809,597		$	27,179,484		$	27,012,295		$	26,050,949
Average total shareholders’ equity	3,064,154			2,995,592			2,942,999			2,882,682			2,800,905
Average loans to average deposits ratio (excluding covered loans)	95.5		%	95.2		%	92.3		%	91.8		%	94.1		%
Period-end loans to deposits ratio (excluding covered loans)	92.8			94.8			93.3			91.3			91.8
Common Share Data at end of period:
Market price per common share	$	87.05		$	86.05		$	82.37		$	78.31		$	76.44
Book value per common share ⁽²⁾	$	52.94		$	51.66		$	50.96		$	49.86		$	48.73
Tangible common book value per share ⁽²⁾	$	43.50		$	42.17		$	41.68		$	40.53		$	39.40
Common shares outstanding	56,329,276			56,256,498			55,965,207			55,838,063			55,699,927
Other Data at end of period:⁽⁶⁾
Leverage Ratio⁽⁴⁾	9.4		%	9.3		%	9.3		%	9.2		%	9.2		%
Tier 1 Capital to risk-weighted assets ⁽⁴⁾	10.0		%	10.0		%	9.9		%	10.0		%	9.8		%
Common equity Tier 1 capital to risk-weighted assets ⁽⁴⁾	9.5		%	9.5		%	9.4		%	9.5		%	9.3		%
Total capital to risk-weighted assets ⁽⁴⁾	12.0		%	12.0		%	12.0		%	12.2		%	12.0		%
Allowance for credit losses ⁽⁵⁾	$	144,645		$	140,746		$	139,174		$	134,395		$	131,296
Non-performing loans	83,282			89,690			90,162			77,983			69,050
Allowance for credit losses to total loans ⁽⁵⁾	0.64		%	0.64		%	0.64		%	0.64		%	0.63		%
Non-performing loans to total loans	0.37		%	0.41		%	0.42		%	0.37		%	0.33		%
Number of:
Bank subsidiaries	15			15			15			15			15
Banking offices	162			157			157			156			153


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


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


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


(4)	Capital ratios for current quarter-end are estimated.


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


(6)	Asset quality ratios exclude covered loans.

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Consolidated Statements of Condition - 5 Quarter Trends



	(Unaudited)			(Unaudited)						(Unaudited)			(Unaudited)
	June 30,			March 31,			December 31,			September 30,			June 30,
(In thousands)	2018			2018			2017			2017			2017
Assets
Cash and due from banks	$	304,580		$	231,407		$	277,534		$	251,896		$	296,105
Federal funds sold and securities purchased under resale agreements	62			57			57			56			56
Interest bearing deposits with banks	1,221,407			980,380			1,063,242			1,218,728			1,011,635
Available-for-sale securities, at fair value	1,940,787			1,895,688			1,803,666			1,665,903			1,649,636
Held-to-maturity securities, at amortized cost	890,834			892,937			826,449			819,340			793,376
Trading account securities	862			1,682			995			643			1,987
Equity securities with readily determinable fair value	37,839			37,832			—			—			—
Federal Home Loan Bank and Federal Reserve Bank stock	96,699			104,956			89,989			87,192			80,812
Brokerage customer receivables	16,649			24,531			26,431			23,631			23,281
Mortgage loans held-for-sale	455,712			411,505			313,592			370,282			382,837
Loans, net of unearned income, excluding covered loans	22,610,560			22,062,134			21,640,797			20,912,781			20,743,332
Covered loans	—			—			—			46,601			50,119
Total loans	22,610,560			22,062,134			21,640,797			20,959,382			20,793,451
Allowance for loan losses	(143,402		)	(139,503		)	(137,905		)	(133,119		)	(129,591		)
Allowance for covered loan losses	—			—			—			(758		)	(1,074		)
Net loans	22,467,158			21,922,631			21,502,892			20,825,505			20,662,786
Premises and equipment, net	639,345			626,687			621,895			609,978			605,211
Lease investments, net	194,160			190,775			212,335			193,828			191,248
Accrued interest receivable and other assets	666,673			601,794			567,374			580,612			577,359
Trade date securities receivable	450			—			90,014			189,896			133,130
Goodwill	509,957			511,497			501,884			502,021			500,260
Other intangible assets	21,414			22,413			17,621			18,651			19,546
Total assets	$	29,464,588		$	28,456,772		$	27,915,970		$	27,358,162		$	26,929,265
Liabilities and Shareholders’ Equity
Deposits:
Non-interest bearing	$	6,520,724		$	6,612,319		$	6,792,497		$	6,502,409		$	6,294,052
Interest bearing	17,844,755			16,667,008			16,390,850			16,392,654			16,311,640
Total deposits	24,365,479			23,279,327			23,183,347			22,895,063			22,605,692
Federal Home Loan Bank advances	667,000			915,000			559,663			468,962			318,270
Other borrowings	255,701			247,092			266,123			251,680			277,710
Subordinated notes	139,148			139,111			139,088			139,052			139,029
Junior subordinated debentures	253,566			253,566			253,566			253,566			253,566
Trade date securities payable	—			—			—			880			5,151
Accrued interest payable and other liabilities	676,823			591,426			537,244			440,034			490,389
Total liabilities	26,357,717			25,425,522			24,939,031			24,449,237			24,089,807
Shareholders’ Equity:
Preferred stock	125,000			125,000			125,000			125,000			125,000
Common stock	56,437			56,364			56,068			55,940			55,802
Surplus	1,547,511			1,540,673			1,529,035			1,519,596			1,511,080
Treasury stock	(5,355		)	(5,355		)	(4,986		)	(4,884		)	(4,884		)
Retained earnings	1,464,494			1,387,663			1,313,657			1,254,759			1,198,997
Accumulated other comprehensive loss	(81,216		)	(73,095		)	(41,835		)	(41,486		)	(46,537		)
Total shareholders’ equity	3,106,871			3,031,250			2,976,939			2,908,925			2,839,458
Total liabilities and shareholders’ equity	$	29,464,588		$	28,456,772		$	27,915,970		$	27,358,162		$	26,929,265

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Consolidated Statements of Income (Unaudited) - 5 Quarter Trends



	Three Months Ended
	June 30,		March 31,			December 31,		September 30,			June 30,
(In thousands, except per share data)	2018		2018			2017		2017			2017
Interest income
Interest and fees on loans	255,063		234,994			226,447		223,897			209,289
Mortgage loans held-for-sale	4,226		2,818			3,291		3,223			3,420
Interest bearing deposits with banks	3,243		2,796			2,723		3,272			1,634
Federal funds sold and securities purchased under resale agreements	1		—			—		—			1
Investment securities	19,888		19,128			18,160		16,058			15,524
Trading account securities	4		14			2		8			4
Federal Home Loan Bank and Federal Reserve Bank stock	1,455		1,298			1,067		1,080			1,153
Brokerage customer receivables	167		157			150		150			156
Total interest income	284,047		261,205			251,840		247,688			231,181
Interest expense
Interest on deposits	35,293		26,549			24,930		23,655			18,471
Interest on Federal Home Loan Bank advances	4,263		3,639			2,124		2,151			2,933
Interest on other borrowings	1,698		1,699			1,600		1,482			1,149
Interest on subordinated notes	1,787		1,773			1,786		1,772			1,786
Interest on junior subordinated debentures	2,836		2,463			2,301		2,640			2,433
Total interest expense	45,877		36,123			32,741		31,700			26,772
Net interest income	238,170		225,082			219,099		215,988			204,409
Provision for credit losses	5,043		8,346			7,772		7,896			8,891
Net interest income after provision for credit losses	233,127		216,736			211,327		208,092			195,518
Non-interest income
Wealth management	22,617		22,986			21,910		19,803			19,905
Mortgage banking	39,834		30,960			27,411		28,184			35,939
Service charges on deposit accounts	9,151		8,857			8,907		8,645			8,696
Gains (losses) on investment securities, net	12		(351		)	14		39			47
Fees from covered call options	669		1,597			1,610		1,143			890
Trading gains (losses), net	124		103			24		(129		)	(420		)
Operating lease income, net	8,746		9,691			8,598		8,461			6,805
Other	14,080		11,836			12,564		13,585			18,110
Total non-interest income	95,233		85,679			81,038		79,731			89,972
Non-interest expense
Salaries and employee benefits	121,675		112,436			118,009		106,251			106,502
Equipment	10,527		10,072			9,500		9,947			9,909
Operating lease equipment depreciation	6,940		6,533			7,015		6,794			5,662
Occupancy, net	13,663		13,767			14,154		13,079			12,586
Data processing	8,752		8,493			7,915		7,851			7,804
Advertising and marketing	11,782		8,824			7,382		9,572			8,726
Professional fees	6,484		6,649			8,879		6,786			7,510
Amortization of other intangible assets	997		1,004			1,028		1,068			1,141
FDIC insurance	4,598		4,362			4,324		3,877			3,874
OREO expense, net	980		2,926			599		590			739
Other	20,371		19,283			17,775		17,760			19,091
Total non-interest expense	206,769		194,349			196,580		183,575			183,544
Income before taxes	121,591		108,066			95,785		104,248			101,946
Income tax expense	32,011		26,085			27,004		38,622			37,049
Net income	$	89,580	$	81,981		$	68,781	$	65,626		$	64,897
Preferred stock dividends	2,050		2,050			2,050		2,050			2,050
Net income applicable to common shares	$	87,530	$	79,931		$	66,731	$	63,576		$	62,847
Net income per common share - Basic	$	1.55	$	1.42		$	1.19	$	1.14		$	1.15
Net income per common share - Diluted	$	1.53	$	1.40		$	1.17	$	1.12		$	1.11
Cash dividends declared per common share	$	0.19	$	0.19		$	0.14	$	0.14		$	0.14
Weighted average common shares outstanding	56,299		56,137			55,924		55,796			54,775
Dilutive potential common shares	928		888			1,010		966			1,812
Average common shares and dilutive common shares	57,227		57,025			56,934		56,762			56,587

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Period End Loan Balances - 5 Quarter Trends



	June 30,			March 31,			December 31,			September 30,			June 30,
(Dollars in thousands)	2018			2018			2017			2017			2017
Balance:
Commercial	$	7,289,060		$	7,060,871		$	6,787,677		$	6,456,034		$	6,406,289
Commercial real estate	6,575,084			6,633,520			6,580,618			6,400,781			6,402,494
Home equity	593,500			626,547			663,045			672,969			689,483
Residential real estate	895,470			869,104			832,120			789,499			762,810
Premium finance receivables - commercial	2,833,452			2,576,150			2,634,565			2,664,912			2,648,386
Premium finance receivables - life insurance	4,302,288			4,189,961			4,035,059			3,795,474			3,719,043
Consumer and other	121,706			105,981			107,713			133,112			114,827
Total loans, net of unearned income, excluding covered loans	$	22,610,560		$	22,062,134		$	21,640,797		$	20,912,781		$	20,743,332
Covered loans	—			—			—			46,601			50,119
Total loans, net of unearned income	$	22,610,560		$	22,062,134		$	21,640,797		$	20,959,382		$	20,793,451
Mix:
Commercial	32		%	32		%	31		%	31		%	31		%
Commercial real estate	29			30			30			31			31
Home equity	3			3			3			3			3
Residential real estate	4			4			4			3			3
Premium finance receivables - commercial	12			12			12			13			13
Premium finance receivables - life insurance	19			19			19			18			18
Consumer and other	1			—			1			1			1
Total loans, net of unearned income, excluding covered loans	100		%	100		%	100		%	100		%	100		%
Covered loans	—			—			—			—			—
Total loans, net of unearned income	100		%	100		%	100		%	100		%	100		%

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Period End Deposits Balances - 5 Quarter Trends



	June 30,			March 31,			December 31,			September 30,			June 30,
(Dollars in thousands)	2018			2018			2017			2017			2017
Balance:
Non-interest bearing	$	6,520,724		$	6,612,319		$	6,792,497		$	6,502,409		$	6,294,052
NOW and interest bearing demand deposits	2,452,474			2,315,122			2,315,055			2,273,025			2,459,238
Wealth management deposits ⁽¹⁾	2,523,572			2,495,134			2,323,699			2,171,758			2,464,162
Money market	5,205,678			4,617,122			4,515,353			4,607,995			4,449,385
Savings	2,763,062			2,901,504			2,829,373			2,673,201			2,419,463
Time certificates of deposit	4,899,969			4,338,126			4,407,370			4,666,675			4,519,392
Total deposits	$	24,365,479		$	23,279,327		$	23,183,347		$	22,895,063		$	22,605,692
Mix:
Non-interest bearing	27		%	28		%	29		%	28		%	28		%
NOW and interest bearing demand deposits	10			10			10			10			11
Wealth management deposits ⁽¹⁾	11			11			10			10			11
Money market	21			20			20			20			19
Savings	11			12			12			12			11
Time certificates of deposit	20			19			19			20			20
Total deposits	100		%	100		%	100		%	100		%	100		%


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

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

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



	Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
(Dollars in thousands)	2018			2018			2017			2017			2017
Net interest income - FTE	$	239,549		$	226,286		$	221,226		$	217,947		$	206,108
Call option income	669			1,597			1,610			1,143			890
Net interest income including call option income	$	240,218		$	227,883		$	222,836		$	219,090		$	206,998
Yield on earning assets	4.32		%	4.13		%	4.00		%	3.96		%	3.88		%
Rate on interest-bearing liabilities	1.00			0.83			0.75			0.73			0.63
Rate spread	3.32		%	3.30		%	3.25		%	3.23		%	3.25		%
Less: Fully tax-equivalent adjustment	(0.02		)	(0.02		)	(0.04		)	(0.03		)	(0.02		)
Net free funds contribution	0.31			0.26			0.24			0.23			0.18
Net interest margin (GAAP-derived)	3.61		%	3.54		%	3.45		%	3.43		%	3.41		%
Fully tax-equivalent adjustment	0.02			0.02			0.04			0.03			0.02
Net interest margin - FTE	3.63		%	3.56		%	3.49		%	3.46		%	3.43		%
Call option income	0.01			0.03			0.03			0.02			0.01
Net interest margin - FTE, including call option income	3.64		%	3.59		%	3.52		%	3.48		%	3.44		%

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

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



	Six Months Ended June 30,			Years Ended December 31,
(Dollars in thousands)	2018			2017			2016			2015			2014
Net interest income - FTE	$	465,835		$	839,563		$	728,145		$	646,238		$	601,744
Call option income	2,266			4,402			11,470			15,364			7,859
Net interest income including call option income	$	468,101		$	843,965		$	739,615		$	661,602		$	609,603
Yield on earning assets	4.23		%	3.91		%	3.67		%	3.76		%	3.96		%
Rate on interest-bearing liabilities	0.91			0.67			0.57			0.54			0.55
Rate spread	3.32		%	3.24		%	3.10		%	3.22		%	3.41		%
Less: Fully tax-equivalent adjustment	(0.02		)	(0.03		)	(0.02		)	(0.02		)	(0.02		)
Net free funds contribution	0.28			0.20			0.16			0.14			0.12
Net interest margin (GAAP-derived)	3.58		%	3.41		%	3.24		%	3.34		%	3.51		%
Fully tax-equivalent adjustment	0.02			0.03			0.02			0.02			0.02
Net interest margin - FTE	3.60		%	3.44		%	3.26		%	3.36		%	3.53		%
Call option income	0.02			0.02			0.05			0.08			0.05
Net interest margin - FTE, including call option income	3.62		%	3.46		%	3.31		%	3.44		%	3.58		%

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Quarterly Average Balances - 5 Quarter Trends



	Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
(In thousands)	2018			2018			2017			2017			2017
Interest-bearing deposits with banks and cash equivalents	$	759,425		$	749,973		$	914,319		$	1,003,572		$	722,349
Investment securities	2,890,828			2,892,617			2,736,253			2,652,119			2,572,619
FHLB and FRB stock	115,119			105,414			82,092			81,928			99,438
Liquidity management assets	$	3,765,372		$	3,748,004		$	3,732,664		$	3,737,619		$	3,394,406
Other earning assets	21,244			27,571			26,955			25,844			25,749
Mortgage loans held-for-sale	403,967			281,181			335,385			336,604			334,843
Loans, net of unearned income	22,283,541			21,711,342			21,080,984			20,858,618			20,264,875
Covered loans	—			—			6,025			48,415			51,823
Total earning assets	$	26,474,124		$	25,768,098		$	25,182,013		$	25,007,100		$	24,071,696
Allowance for loan and covered loan losses	(147,192		)	(143,108		)	(138,584		)	(135,519		)	(132,053		)
Cash and due from banks	270,240			254,489			244,097			242,186			242,495
Other assets	1,970,407			1,930,118			1,891,958			1,898,528			1,868,811
Total assets	$	28,567,579		$	27,809,597		$	27,179,484		$	27,012,295		$	26,050,949
NOW and interest bearing demand deposits	$	2,295,268		$	2,255,692		$	2,284,576		$	2,344,848		$	2,470,130
Wealth management deposits	2,365,191			2,250,139			2,005,197			2,320,674			2,091,251
Money market accounts	4,883,645			4,520,620			4,611,515			4,471,342			4,435,670
Savings accounts	2,702,665			2,813,772			2,741,621			2,581,946			2,329,195
Time deposits	4,557,187			4,322,111			4,581,464			4,573,081			4,295,428
Interest-bearing deposits	$	16,803,956		$	16,162,334		$	16,224,373		$	16,291,891		$	15,621,674
Federal Home Loan Bank advances	1,006,407			872,811			324,748			324,996			689,600
Other borrowings	240,066			263,125			255,972			268,850			240,547
Subordinated notes	139,125			139,094			139,065			139,035			139,007
Junior subordinated debentures	253,566			253,566			253,566			253,566			253,566
Total interest-bearing liabilities	$	18,443,120		$	17,690,930		$	17,197,724		$	17,278,338		$	16,944,394
Non-interest bearing deposits	6,539,731			6,639,845			6,605,553			6,419,326			5,904,679
Other liabilities	520,574			483,230			433,208			431,949			400,971
Equity	3,064,154			2,995,592			2,942,999			2,882,682			2,800,905
Total liabilities and shareholders’ equity	$	28,567,579		$	27,809,597		$	27,179,484		$	27,012,295		$	26,050,949

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Net Interest Margin - 5 Quarter Trends



	Three Months Ended
	June 30, 2018		March 31, 2018		December 31, 2017		September 30, 2017		June 30, 2017
Yield earned on:
Interest-bearing deposits with banks and cash equivalents	1.71	%	1.51	%	1.18	%	1.29	%	0.91	%
Investment securities	2.84		2.76		2.78		2.54		2.55
FHLB and FRB stock	5.07		4.99		5.15		5.23		4.66
Liquidity management assets	2.68	%	2.57	%	2.44	%	2.26	%	2.27	%
Other earning assets	3.24		2.56		2.27		2.49		2.53
Mortgage loans held-for-sale	4.20		4.06		3.89		3.80		4.10
Loans, net of unearned income	4.61		4.40		4.28		4.27		4.15
Covered loans	—		—		5.66		4.91		5.01
Total earning assets	4.32	%	4.13	%	4.00	%	3.96	%	3.88	%
Rate paid on:
NOW and interest bearing demand deposits	0.33	%	0.25	%	0.24	%	0.22	%	0.20	%
Wealth management deposits	1.19		0.98		0.80		0.81		0.55
Money market accounts	0.67		0.42		0.36		0.31		0.24
Savings accounts	0.40		0.39		0.39		0.33		0.26
Time deposits	1.37		1.16		1.09		1.04		0.95
Interest-bearing deposits	0.84	%	0.67	%	0.61	%	0.58	%	0.47	%
Federal Home Loan Bank advances	1.70		1.69		2.59		2.63		1.71
Other borrowings	2.84		2.62		2.48		2.19		1.92
Subordinated notes	5.14		5.10		5.14		5.10		5.14
Junior subordinated debentures	4.42		3.89		3.55		4.07		3.80
Total interest-bearing liabilities	1.00	%	0.83	%	0.75	%	0.73	%	0.63	%
Interest rate spread	3.32	%	3.30	%	3.25	%	3.23	%	3.25	%
Less: Fully tax-equivalent adjustment	(0.02	)	(0.02	)	(0.04	)	(0.03	)	(0.02	)
Net free funds/contribution	0.31		0.26		0.24		0.23		0.18
Net interest margin (GAAP)	3.61	%	3.54	%	3.45	%	3.43	%	3.41	%
Fully tax-equivalent adjustment	0.02		0.02		0.04		0.03		0.02
Net interest margin - FTE	3.63	%	3.56	%	3.49	%	3.46	%	3.43	%

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Non-Interest Income - 5 Quarter Trends



	Three Months Ended
	June 30,		March 31,			December 31,		September 30,			June 30,
(In thousands)	2018		2018			2017		2017			2017
Brokerage	$	5,784	$	6,031		$	6,067	$	5,127		$	5,449
Trust and asset management	16,833		16,955			15,843		14,676			14,456
Total wealth management	22,617		22,986			21,910		19,803			19,905
Mortgage banking	39,834		30,960			27,411		28,184			35,939
Service charges on deposit accounts	9,151		8,857			8,907		8,645			8,696
Gains (losses) on investment securities, net	12		(351		)	14		39			47
Fees from covered call options	669		1,597			1,610		1,143			890
Trading gains (losses), net	124		103			24		(129		)	(420		)
Operating lease income, net	8,746		9,691			8,598		8,461			6,805
Other:
Interest rate swap fees	3,829		2,237			1,963		1,762			2,221
BOLI	1,544		714			754		897			888
Administrative services	1,205		1,061			1,103		1,052			986
Early pay-offs of capital leases	554		33			7		—			10
Miscellaneous	6,948		7,791			8,737		9,874			14,005
Total other income	14,080		11,836			12,564		13,585			18,110
Total Non-Interest Income	$	95,233	$	85,679		$	81,038	$	79,731		$	89,972

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Non-Interest Expense - 5 Quarter Trends



	Three Months Ended
	June 30,		March 31,		December 31,		September 30,		June 30,
(In thousands)	2018		2018		2017		2017		2017
Salaries and employee benefits:
Salaries	$	66,976	$	61,986	$	58,239	$	57,689	$	55,215
Commissions and incentive compensation	35,907		31,949		40,723		32,095		34,050
Benefits	18,792		18,501		19,047		16,467		17,237
Total salaries and employee benefits	121,675		112,436		118,009		106,251		106,502
Equipment	10,527		10,072		9,500		9,947		9,909
Operating lease equipment depreciation	6,940		6,533		7,015		6,794		5,662
Occupancy, net	13,663		13,767		14,154		13,079		12,586
Data processing	8,752		8,493		7,915		7,851		7,804
Advertising and marketing	11,782		8,824		7,382		9,572		8,726
Professional fees	6,484		6,649		8,879		6,786		7,510
Amortization of other intangible assets	997		1,004		1,028		1,068		1,141
FDIC insurance	4,598		4,362		4,324		3,877		3,874
OREO expense, net	980		2,926		599		590		739
Other:
Commissions - 3rd party brokers	1,174		1,252		1,057		990		1,033
Postage	2,567		1,866		1,427		1,814		2,080
Miscellaneous	16,630		16,165		15,291		14,956		15,978
Total other expense	20,371		19,283		17,775		17,760		19,091
Total Non-Interest Expense	$	206,769	$	194,349	$	196,580	$	183,575	$	183,544

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

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



	Three Months Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
(Dollars in thousands)	2018			2018			2017			2017			2017
Allowance for loan losses at beginning of period	$	139,503		$	137,905		$	133,119		$	129,591		$	125,819
Provision for credit losses	5,043			8,346			7,772			7,942			8,952
Other adjustments ⁽¹⁾	(44		)	(40		)	698			(39		)	(30		)
Reclassification (to) from allowance for unfunded lending-related commitments	—			26			7			94			106
Charge-offs:
Commercial	2,210			2,687			1,340			2,265			913
Commercial real estate	155			813			1,001			989			1,985
Home equity	612			357			728			968			1,631
Residential real estate	180			571			542			267			146
Premium finance receivables - commercial	3,254			4,721			2,314			1,716			1,878
Premium finance receivables - life insurance	—			—			—			—			—
Consumer and other	459			129			207			213			175
Total charge-offs	6,870			9,278			6,132			6,418			6,728
Recoveries:
Commercial	666			262			235			801			561
Commercial real estate	2,387			1,687			1,037			323			276
Home equity	171			123			359			178			144
Residential real estate	1,522			40			165			55			54
Premium finance receivables - commercial	975			385			613			499			404
Premium finance receivables - life insurance	—			—			—			—			—
Consumer and other	49			47			32			93			33
Total recoveries	5,770			2,544			2,441			1,949			1,472
Net charge-offs	(1,100		)	(6,734		)	(3,691		)	(4,469		)	(5,256		)
Allowance for loan losses at period end	$	143,402		$	139,503		$	137,905		$	133,119		$	129,591
Allowance for unfunded lending-related commitments at period end	1,243			1,243			1,269			1,276			1,705
Allowance for credit losses at period end	$	144,645		$	140,746		$	139,174		$	134,395		$	131,296
Annualized net charge-offs (recoveries) by category as a percentage of its own respective category’s average:
Commercial	0.09		%	0.14		%	0.07		%	0.09		%	0.02		%
Commercial real estate	(0.14		)	(0.05		)	0.00			0.04			0.11
Home equity	0.29			0.15			0.22			0.46			0.85
Residential real estate	(0.64		)	0.26			0.18			0.11			0.05
Premium finance receivables - commercial	0.34			0.68			0.26			0.18			0.23
Premium finance receivables - life insurance	0.00			0.00			0.00			0.00			0.00
Consumer and other	1.21			0.26			0.52			0.37			0.45
Total loans, net of unearned income, excluding covered loans	0.02		%	0.13		%	0.07		%	0.08		%	0.10		%
Net charge-offs as a percentage of the provision for credit losses	21.81		%	80.69		%	47.49		%	56.27		%	58.71		%
Loans at period-end	$	22,610,560		$	22,062,134		$	21,640,797		$	20,912,781		$	20,743,332
Allowance for loan losses as a percentage of loans at period end	0.63		%	0.63		%	0.64		%	0.64		%	0.62		%
Allowance for credit losses as a percentage of loans at period end	0.64		%	0.64		%	0.64		%	0.64		%	0.63		%


(1)	Includes $742,000 of allowance for covered loan losses reclassified as a result of the termination of all existing loss share agreements with the FDIC during the fourth quarter of 2017.

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

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



	June 30,			March 31,			December 31,			September 30,			June 30,
(Dollars in thousands)	2018			2018			2017 ⁽³⁾			2017			2017
Loans past due greater than 90 days and still accruing⁽¹⁾:
Commercial	$	—		$	—		$	—		$	—		$	—
Commercial real estate	—			—			—			—			—
Home equity	—			—			—			—			—
Residential real estate	—			—			3,278			—			179
Premium finance receivables - commercial	5,159			8,547			9,242			9,584			5,922
Premium finance receivables - life insurance	—			—			—			6,740			1,046
Consumer and other	224			207			40			159			63
Total loans past due greater than 90 days and still accruing	5,383			8,754			12,560			16,483			7,210
Non-accrual loans⁽²⁾:
Commercial	18,388			14,007			15,696			13,931			10,191
Commercial real estate	19,195			21,825			22,048			14,878			16,980
Home equity	9,096			9,828			8,978			7,581			9,482
Residential real estate	15,825			17,214			17,977			14,743			14,292
Premium finance receivables - commercial	14,832			17,342			12,163			9,827			10,456
Premium finance receivables - life insurance	—			—			—			—			—
Consumer and other	563			720			740			540			439
Total non-accrual loans	77,899			80,936			77,602			61,500			61,840
Total non-performing loans:
Commercial	18,388			14,007			15,696			13,931			10,191
Commercial real estate	19,195			21,825			22,048			14,878			16,980
Home equity	9,096			9,828			8,978			7,581			9,482
Residential real estate	15,825			17,214			21,255			14,743			14,471
Premium finance receivables - commercial	19,991			25,889			21,405			19,411			16,378
Premium finance receivables - life insurance	—			—			—			6,740			1,046
Consumer and other	787			927			780			699			502
Total non-performing loans	$	83,282		$	89,690		$	90,162		$	77,983		$	69,050
Other real estate owned	18,925			18,481			20,244			17,312			16,853
Other real estate owned - from acquisitions	16,406			18,117			20,402			20,066			22,508
Other repossessed assets	305			113			153			301			532
Total non-performing assets	$	118,918		$	126,401		$	130,961		$	115,662		$	108,943
TDRs performing under the contractual terms of the loan agreement	$	57,249		$	39,562		$	39,683		$	26,972		$	28,008
Total non-performing loans by category as a percent of its own respective category’s period-end balance:
Commercial	0.25		%	0.20		%	0.23		%	0.22		%	0.16		%
Commercial real estate	0.29			0.33			0.34			0.23			0.27
Home equity	1.53			1.57			1.35			1.13			1.38
Residential real estate	1.77			1.98			2.55			1.87			1.90
Premium finance receivables - commercial	0.71			1.00			0.81			0.73			0.62
Premium finance receivables - life insurance	—			—			—			0.18			0.03
Consumer and other	0.65			0.87			0.72			0.53			0.44
Total loans, net of unearned income	0.37		%	0.41		%	0.42		%	0.37		%	0.33		%
Total non-performing assets as a percentage of total assets	0.40		%	0.44		%	0.47		%	0.42		%	0.40		%
Allowance for loan losses as a percentage of total non-performing loans	172.19		%	155.54		%	152.95		%	170.70		%	187.68		%


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


(2)	Non-accrual loans included TDRs totaling $8.1 million, $8.1 million, $10.1 million, $6.2 million and $5.1 million as of June 30, 2018, March 31, 2018, December 31, 2017, September 30, 2017 and June 30, 2017, respectively.


(3)	Includes $2.6 million of non-performing loans and $2.9 million of other real estate owned reclassified from covered assets as a result of the termination of all existing loss share agreements with the FDIC during the fourth quarter of 2017.

WINTRUST FINANCIAL CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - July 17, 2018

Attached files