19/04/2017 00:14:55

Wintrust Financial Corporation Reports Record First Quarter 2017 Net Income, an Increase of 19% Over Prior Year

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ROSEMONT, Ill., April 18, 2017 (GLOBE NEWSWIRE) -- Wintrust Financial Corporation (“Wintrust” or “the Company”) (Nasdaq:WTFC) announced net income of $58.4 million or $1.00 per diluted common share for the first quarter of 2017 compared to net income of $54.6 million or $0.94 per diluted common share for the fourth quarter of 2016 and $49.1 million or $0.90 per diluted common share for the first quarter of 2016.

Highlights of the First Quarter of 2017*:

  • Net interest margin increased substantially as a result of the recent rate increase in December 2016 and better utilization of excess liquidity in the first quarter of 2017. Net interest income increased $1.8 million from the prior quarter as the improvement in net interest margin more than offset two less days in the quarter.
  • Return on average assets increased to 0.94% from 0.85% in the fourth quarter of 2016. Return on average common equity increased to 8.93% from 8.32% in the fourth quarter of 2016.
  • Net charge-offs, excluding covered loans, decreased to $1.6 million. Net charge-offs as a percentage of average total loans, excluding covered loans, decreased to three basis points, the lowest ratio since the second quarter of 2004.
  • Non-performing loans as a percentage of total loans, excluding covered loans, decreased to 0.40% from 0.44% in the fourth quarter of 2016 and the allowance for loan losses as a percentage of total non-performing loans, excluding covered loans, increased to 159% from 140% in the prior quarter.
  • Total loans, excluding covered loans, mortgage loans held-for-sale and mortgage warehouse lines of credit, increased by $278 million from the prior quarter.
  • Total assets increased by $110 million from the prior quarter and now total $25.8 billion.
  • Reduced operating expenses by $12.3 million from the prior quarter to $168.1 million.
  • Acquired American Homestead Mortgage, LLC ("AHM") located in Montana's Flathead Valley, which will supplement our existing mortgage banking operations in the Rocky Mountain region and continue to diversify our current product mix.

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

Edward J. Wehmer, President and Chief Executive Officer, commented, “Wintrust reported record net income of $58.4 million for the first quarter of 2017. These results were driven by our momentum from 2016 carrying into 2017 with continued steady loan growth in the first quarter. The first quarter of 2017 was also characterized by our increased net interest margin, improved credit quality metrics and reduced operating costs, while offsetting an expected decrease in mortgage banking revenue. As we saw in the first quarter, the structure of our balance sheet is well positioned to take advantage of higher interest rates, and is designed to provide an internal hedge to offset lower earnings from our mortgage banking operations and from reduced revenue from our covered call option program."

Mr. Wehmer continued, “Excluding covered loans, mortgage loans held-for-sale and mortgage warehouse lines of credit, we grew our loan portfolio by $278 million during the first quarter, which was driven by steady growth in the commercial portfolio and life insurance premium finance receivables portfolio. The substantial improvement in net interest margin during the period was primarily attributable to the increase in interest rates by the Federal Reserve Bank in December, which added eight basis points. We remain well positioned for the March interest rate increase and expected rising rates in the future. The net interest margin was also positively impacted by six basis points in the first quarter of 2017 from investing excess liquidity held at year-end. The increased loan volumes and improved net interest margin along with the continued momentum from loan growth at the very end of 2016 resulted in an increase in net interest income of $1.8 million despite two less days in the quarter. Our loan pipelines remain consistently strong."

Commenting on credit quality, Mr. Wehmer noted, “During the first quarter of 2017, the Company continued its practice of timely addressing and resolving non-performing credits. Excluding covered loans, low net charge-offs continued in the current quarter with net charge-offs totaling $1.6 million in the first quarter of 2017 compared to $2.8 million in the prior quarter. Additionally, net charge-offs as a percentage of average total loans decreased to 0.03% from 0.06% in the fourth quarter. Total non-performing assets, excluding covered assets, as a percentage of total assets decreased to 0.46% compared to 0.50% as of the prior quarter-end. Excluding covered loans, non-performing loans as a percentage of total loans decreased to 0.40% at the end of first quarter of 2017 compared to 0.44% at the end of the fourth quarter of 2016.  As a percentage of non-performing loans, the allowance for loan losses, excluding covered loans, remained strong at 159%. We believe that the Company's reserves remain appropriate."

Mr. Wehmer further commented, “Mortgage banking revenue in the first quarter of 2017 totaled $21.9 million, a decrease of $13.6 million compared to the fourth quarter of 2016 and a slight increase of $203,000 compared to the first quarter of 2016. The decreased revenue from the fourth quarter of 2016 resulted from origination volumes declining to $722 million from $1.2 billion as a result of the recent rise in interest rates and typical seasonality in January and February. Our mortgage pipeline strengthened in March and is expected to continue to strengthen in the second quarter. We continue to look for opportunities to further enhance the mortgage banking business both organically and through acquisitions. To that end, in the first quarter, we added to our mortgage banking business with the acquisition of AHM."

Turning to the future, Mr. Wehmer stated, “Our growth engine continued its momentum into 2017 and we anticipate the positive momentum realized in the first quarter to continue in all areas of our business for the remainder of 2017. Loan growth at the end of the current quarter should add to this momentum as period-end loan balances, excluding covered loans, mortgage loans held-for-sale and mortgage warehouse lines of credit, exceeded the first quarter average balances by approximately $240 million. Wintrust continues to take a steady and measured approach to achieve our main objectives of growing franchise value, increasing profitability, leveraging our expense infrastructure and increasing shareholder value. Evaluating strategic acquisitions and organic branch growth will continue to be a part of our overall growth strategy with the goal of becoming Chicago’s bank and Wisconsin’s bank. Our opportunities for both internal growth and external growth remain consistently strong."

The graphs below illustrate certain highlights of the first quarter of 2017.

http://www.globenewswire.com/NewsRoom/AttachmentNg/32dff03e-6e37-407b-aee8-ba4cd9878c75

Wintrust’s key operating measures and growth rates for the first quarter of 2017, as compared to the sequential and linked quarters, are shown in the table below:

        

% or(4)

basis point  (bp)change from

4th Quarter

2016

 

% or

basis point  (bp)

change from

1st Quarter

2016

  

Three Months Ended

  

(Dollars in thousands)

 

March 31,

 2017

 December 31,

 2016

 March 31,

 2016

  
Net income 

$

58,378

  $54,608  $49,111  7 % 19 %
Net income per common share – diluted 

$

1.00

  $0.94  $0.90  6 % 11 %
Net revenue (1) 

$

261,345

  $276,053  $240,261  (5)% 9 %
Net interest income 

$

192,580

  $190,778  $171,509  1 % 12 %
Net interest margin 

3.36

%

 3.21% 3.29% 15 bp 7 bp
Net interest margin - fully taxable equivalent (non-GAAP) (2) 

3.39

%

 3.23% 3.32% 16 bp 7 bp
Net overhead ratio (3) 

1.60

%

 1.48% 1.49% 12 bp 11 bp
Return on average assets 

0.94

%

 0.85% 0.86% 9 bp 8 bp
Return on average common equity 

8.93

%

 8.32% 8.55% 61 bp 38 bp
Return on average tangible common equity (non-GAAP) (2) 

11.44

%

 10.68% 11.33% 76 bp 11 bp

At end of period

            
Total assets 

$

25,778,893

  $25,668,553  $23,488,168  2 % 10 %
Total loans, excluding loans held-for-sale, excluding covered loans 

19,931,058

  19,703,172  17,446,413  5 % 14 %
Total loans, including loans held-for-sale, excluding covered loans 

20,220,022

  20,121,546  17,760,967  2 % 14 %
Total deposits 

21,730,441

  21,658,632  19,217,071  1 % 13 %
Total shareholders’ equity 

2,764,983

  2,695,617  2,418,442  10 % 14 %

(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

(Dollars in thousands, except per share data)

 

March 31,

 2017

 December 31,

 2016

 March 31,

 2016

Selected Financial Condition Data (at end of period):

      
Total assets 

$

25,778,893

  $25,668,553  $23,488,168 
Total loans, excluding loans held-for-sale and covered loans 

19,931,058

  19,703,172  17,446,413 
Total deposits 

21,730,441

  21,658,632  19,217,071 
Junior subordinated debentures 

253,566

  253,566  253,566 
Total shareholders’ equity 

2,764,983

  2,695,617  2,418,442 

Selected Statements of Income Data:

      
Net interest income 

$

192,580

  $190,778  $171,509 
Net revenue (1) 

261,345

  276,053  240,261 
Net income 

58,378

  54,608  49,111 
Net income per common share – Basic 

$

1.05

  $0.98  $0.94 
Net income per common share – Diluted 

$

1.00

  $0.94  $0.90 

Selected Financial Ratios and Other Data:

      

Performance Ratios:

      
Net interest margin 

3.36

%

 3.21% 3.29%
Net interest margin - fully taxable equivalent (non-GAAP) (2) 

3.39

%

 3.23% 3.32%
Non-interest income to average assets 

1.11

%

 1.32% 1.21%
Non-interest expense to average assets 

2.70

%

 2.80% 2.70%
Net overhead ratio (3) 

1.60

%

 1.48% 1.49%
Return on average assets 

0.94

%

 0.85% 0.86%
Return on average common equity 

8.93

%

 8.32% 8.55%
Return on average tangible common equity (non-GAAP) (2) 

11.44

%

 10.68% 11.33%
Average total assets 

$

25,207,348

  $25,611,060  $22,902,913 
Average total shareholders’ equity 

2,739,050

  2,689,876  2,389,770 
Average loans to average deposits ratio (excluding loans held-for-sale, excluding covered loans) 

92.5

%

 89.6% 92.2%
Average loans to average deposits ratio (excluding loans held-for-sale, including covered loans) 

92.7

%

 89.9% 93.0%

Common Share Data at end of period:

      
Market price per common share 

$

69.12

  $72.57  $44.34 
Book value per common share (2) 

$

47.88

  $47.12  $44.67 
Tangible common book value per share (2) 

$

37.97

  $37.08  $34.20 
Common shares outstanding 

52,503,663

  51,880,540  48,518,998 

Other Data at end of period:(6)

      
Leverage Ratio (4) 

9.3

%

 8.9% 8.7%
Tier 1 capital to risk-weighted assets (4) 

9.9

%

 9.7% 9.6%
Common equity Tier 1 capital to risk-weighted assets (4) 

8.9

%

 8.6% 8.4%
Total capital to risk-weighted assets (4) 

12.1

%

 11.9% 12.1%
Allowance for credit losses (5) 

$

127,630

  $123,964  $111,201 
Non-performing loans 

78,979

  87,454  89,499 
Allowance for credit losses to total loans (5) 

0.64

%

 0.63% 0.64%
Non-performing loans to total loans 

0.40

%

 0.44% 0.51%
Number of:      
Bank subsidiaries 

15

  15  15 
Banking offices 

155

  155  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.  As of January 1, 2015 capital ratios are calculated under the requirements of Basel III.

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

(6) Asset quality ratios exclude covered loans.

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CONDITION

  

(Unaudited)

   (Unaudited)

(In thousands)

 

March 31,

 2017

 December 31,

 2016

 March 31,

 2016

Assets

      
Cash and due from banks 

$

214,102

  $267,194  $208,480 
Federal funds sold and securities purchased under resale agreements 

3,046

  2,851  3,820 
Interest bearing deposits with banks 

1,007,468

  980,457  817,013 
Available-for-sale securities, at fair value 

1,803,733

  1,724,667  770,983 
Held-to-maturity securities, at amortized cost 

667,764

  635,705  911,715 
Trading account securities 

714

  1,989  2,116 
Federal Home Loan Bank and Federal Reserve Bank stock 

78,904

  133,494  113,222 
Brokerage customer receivables 

23,171

  25,181  28,266 
Mortgage loans held-for-sale 

288,964

  418,374  314,554 
Loans, net of unearned income, excluding covered loans 

19,931,058

  19,703,172  17,446,413 
Covered loans 

52,359

  58,145  138,848 
Total loans 

19,983,417

  19,761,317  17,585,261 
Allowance for loan losses 

(125,819

)

 (122,291) (110,171)
Allowance for covered loan losses 

(1,319

)

 (1,322) (2,507)
Net loans 

19,856,279

  19,637,704  17,472,583 
Premises and equipment, net 

598,746

  597,301  591,608 
Lease investments, net 

155,233

  129,402  89,337 
Accrued interest receivable and other assets 

560,741

  593,796  647,853 
Trade date securities receivable 

    1,008,613 
Goodwill 

499,341

  498,587  484,280 
Other intangible assets 

20,687

  21,851  23,725 

   Total assets

 

$

25,778,893

  $25,668,553  $23,488,168 

Liabilities and Shareholders’ Equity

      
Deposits:      
Non-interest bearing 

$

5,790,579

  $5,927,377  $5,205,410 
Interest bearing 

15,939,862

  15,731,255  14,011,661 
 Total deposits 

21,730,441

  21,658,632  19,217,071 
Federal Home Loan Bank advances 

227,585

  153,831  799,482 
Other borrowings 

238,787

  262,486  253,126 
Subordinated notes 

138,993

  138,971  138,888 
Junior subordinated debentures 

253,566

  253,566  253,566 
Accrued interest payable and other liabilities 

424,538

  505,450  407,593 
   Total liabilities 

23,013,910

  22,972,936  21,069,726 
Shareholders’ Equity:      
Preferred stock 

251,257

  251,257  251,257 
Common stock 

52,605

  51,978  48,608 
Surplus 

1,381,886

  1,365,781  1,194,750 
Treasury stock 

(4,884

)

 (4,589) (4,145)
Retained earnings 

1,143,943

  1,096,518  967,882 
Accumulated other comprehensive loss 

(59,824

)

 (65,328) (39,910)
   Total shareholders’ equity 

2,764,983

  2,695,617  2,418,442 

   Total liabilities and shareholders’ equity

 

$

25,778,893

  $25,668,553  $23,488,168 

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

 

 

Three Months Ended

(In thousands, except per share data)

March 31,

 2017

 December 31,

 2016

 March 31,

 2016

Interest income

     
Interest and fees on loans

$

199,314

  $199,155  $173,127 
Interest bearing deposits with banks

1,623

  1,541  746 
Federal funds sold and securities purchased under resale agreements

1

  1  1 
Investment securities

13,573

  12,954  17,190 
Trading account securities

11

  32  11 
Federal Home Loan Bank and Federal Reserve Bank stock

1,070

  1,144  937 
Brokerage customer receivables

167

  186  219 
  Total interest income

215,759

  215,013  192,231 

Interest expense

     
Interest on deposits

16,270

  16,413  12,781 
Interest on Federal Home Loan Bank advances

1,590

  2,439  2,886 
Interest on other borrowings

1,139

  1,074  1,058 
Interest on subordinated notes

1,772

  1,779  1,777 
Interest on junior subordinated debentures

2,408

  2,530  2,220 
  Total interest expense

23,179

  24,235  20,722 

Net interest income

192,580

  190,778  171,509 
Provision for credit losses

5,209

  7,350  8,034 
Net interest income after provision for credit losses

187,371

  183,428  163,475 

Non-interest income

     
Wealth management

20,148

  19,512  18,320 
Mortgage banking

21,938

  35,489  21,735 
Service charges on deposit accounts

8,265

  8,054  7,406 
(Losses) gains on investment securities, net

(55

)

 1,575  1,325 
Fees from covered call options

759

  1,476  1,712 
Trading (losses) gains, net

(320

)

 1,007  (168)
Operating lease income, net

5,782

  5,171  2,806 
Other

12,248

  12,991  15,616 
  Total non-interest income

68,765

  85,275  68,752 

Non-interest expense

     
Salaries and employee benefits

99,316

  104,735  95,811 
Equipment

9,002

  9,532  8,767 
Operating lease equipment depreciation

4,636

  4,219  2,050 
Occupancy, net

13,101

  14,254  11,948 
Data processing

7,925

  7,687  6,519 
Advertising and marketing

5,150

  6,691  3,779 
Professional fees

4,660

  5,425  4,059 
Amortization of other intangible assets

1,164

  1,158  1,298 
FDIC insurance

4,156

  4,726  3,613 
OREO expense, net

1,665

  1,843  560 
Other

17,343

  20,101  15,326 
  Total non-interest expense

168,118

  180,371  153,730 
Income before taxes

88,018

  88,332  78,497 
Income tax expense

29,640

  33,724  29,386 

Net income

$

58,378

  $54,608  $49,111 
Preferred stock dividends

3,628

  3,629  3,628 

Net income applicable to common shares

$

54,750

  $50,979  $45,483 

Net income per common share - Basic

$

1.05

  $0.98  $0.94 

Net income per common share - Diluted

$

1.00

  $0.94  $0.90 

Cash dividends declared per common share

$

0.14

  $0.12  $0.12 
Weighted average common shares outstanding

52,267

  51,812  48,448 
Dilutive potential common shares

4,160

  4,152  3,820 
Average common shares and dilutive common shares

56,427

  55,964  52,268 

EARNINGS PER SHARE

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

   

Three Months Ended

(In thousands, except per share data)

  

March 31,

 2017

 December 31,

 2016

 March 31,

 2016

Net income  

$

58,378

  $54,608  $49,111 
Less: Preferred stock dividends  

3,628

  3,629  3,628 
Net income applicable to common shares—Basic

(A)

 

54,750

  50,979  45,483 
Add: Dividends on convertible preferred stock, if dilutive  

1,578

  1,578  1,578 
Net income applicable to common shares—Diluted

(B)

 

56,328

  52,557  47,061 
Weighted average common shares outstanding

(C)

 

52,267

  51,812  48,448 
Effect of dilutive potential common shares:       
Common stock equivalents  

1,060

  1,052  750 
Convertible preferred stock, if dilutive  

3,100

  3,100  3,070 
Weighted average common shares and effect of dilutive potential common shares

(D)

 

56,427

  55,964  52,268 
Net income per common share:       
Basic

(A/C)

 

$

1.05

  $0.98  $0.94 
Diluted

(B/D)

 

$

1.00

  $0.94  $0.90 

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 17, 2017, the Company delivered notice to the holders of the outstanding 5.00% Non-Cumulative Perpetual Convertible Preferred Stock, Series C (“Series C Preferred Stock”) that the Series C Preferred Stock will mandatorily convert on April 27, 2017 (the “Mandatory Conversion Date”).  On the Mandatory Conversion Date, 126,257 shares of Series C Preferred Stock will be converted to shares of the Company’s common stock, no par value (“Common Stock”).  Holders of the Series C Preferred Stock will receive 24.72 shares of Common Stock for each share of Series C Preferred Stock converted.  Cash (computed to the nearest cent) will be paid in lieu of fractional shares of Common Stock.  The last dividend with respect to the Series C Preferred Stock was paid on April 17, 2017 to holders of record on April 1, 2017.

SUPPLEMENTAL FINANCIAL MEASURES/RATIOS

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

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

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

 

Three Months Ended

 

March 31,

 December 31, September 30, June 30, March 31,

(Dollars and shares in thousands)

2017

 2016 2016 2016 2016

Calculation of Net Interest Margin and Efficiency Ratio

         

(A) Interest Income (GAAP)

$

215,759

  $215,013  $208,149  $197,064  $192,231 
Taxable-equivalent adjustment:         
- Loans

790

  666  584  523  509 
- Liquidity Management Assets

907

  815  963  932  920 
- Other Earning Assets

5

  17  9  8  6 

(B) Interest Income - FTE

$

217,461

  $216,511  $209,705  $198,527  $193,666 

(C) Interest Expense (GAAP)

23,179

  24,235  23,513  21,794  20,722 

(D) Net Interest Income - FTE (B minus C)

$

194,282

  $192,276  $186,192  $176,733  $172,944 

(E) Net Interest Income (GAAP) (A minus C)

$

192,580

  $190,778  $184,636  $175,270  $171,509 

Net interest margin (GAAP-derived)

3.36

%

 3.21% 3.21% 3.24% 3.29%
Net interest margin - FTE

3.39

%

 3.23% 3.24% 3.27% 3.32%
(F) Non-interest income

$

68,765

  $85,275  $86,604  $84,799  $68,752 
(G) Gains (losses) on investment securities, net

(55

)

 1,575  3,305  1,440  1,325 
(H) Non-interest expense

168,118

  180,371  176,615  170,969  153,730 

Efficiency ratio (H/(E+F-G))

64.31

%

 65.71% 65.92% 66.11% 64.34%

Efficiency ratio - FTE (H/(D+F-G))

63.90

%

 65.36% 65.54% 65.73% 63.96%

Calculation of Tangible Common Equity ratio (at period end)

         
Total shareholders’ equity

$

2,764,983

  $2,695,617  $2,674,474  $2,623,595  $2,418,442 
(I) Less: Convertible preferred stock

(126,257

)

 (126,257) (126,257) (126,257) (126,257)
Less:  Non-convertible preferred stock

(125,000

)

 (125,000) (125,000) (125,000) (125,000)
Less: Intangible assets

(520,028

)

 (520,438) (506,674) (507,916) (508,005)
(J) Total tangible common shareholders’ equity

$

1,993,698

  $1,923,922  $1,916,543  $1,864,422  $1,659,180 
Total assets

$

25,778,893

  $25,668,553  $25,321,759  $24,420,616  $23,488,168 
Less: Intangible assets

(520,028

)

 (520,438) (506,674) (507,916) (508,005)
(K) Total tangible assets

$

25,258,865

  $25,148,115  $24,815,085  $23,912,700  $22,980,163 

Tangible common equity ratio (J/K)

7.9

%

 7.7% 7.7% 7.8% 7.2%

Tangible common equity ratio, assuming full conversion of convertible preferred stock ((J-I)/K)

8.4

%

 8.2% 8.2% 8.3% 7.8%

Calculation of book value per share

         
Total shareholders’ equity

$

2,764,983

  $2,695,617  $2,674,474  $2,623,595  $2,418,442 
Less: Preferred stock

(251,257

)

 (251,257) (251,257) (251,257) (251,257)
(L) Total common equity

$

2,513,726

  $2,444,360  $2,423,217  $2,372,338  $2,167,185 
(M) Actual common shares outstanding

52,504

  51,881  51,715  51,619  48,519 

Book value per common share (L/M)

$

47.88

  $47.12  $46.86  $45.96  $44.67 

Tangible common book value per share (J/M)

$

37.97

  $37.08  $37.06  $36.12  $34.20 
          

Calculation of return on average common equity

         
(N) Net income applicable to common shares

54,750

  50,979  49,487  46,413  45,483 
Add: After-tax intangible asset amortization

771

  716  677  781  812 
(O) Tangible net income applicable to common shares

55,521

  51,695  50,164  47,194  46,295 
Total average shareholders' equity

2,739,050

  2,689,876  2,651,684  2,465,732  2,389,770 
Less: Average preferred stock

(251,257

)

 (251,257) (251,257) (251,257) (251,262)
(P) Total average common shareholders' equity

2,487,793

  2,438,619  2,400,427  2,214,475  2,138,508 
Less: Average intangible assets

(520,346

)

 (513,017) (508,812) (507,439) (495,594)
(Q) Total average tangible common shareholders’ equity

1,967,447

  1,925,602  1,891,615  1,707,036  1,642,914 

Return on average common equity, annualized  (N/P)

8.93

%

 8.32% 8.20% 8.43% 8.55%

Return on average tangible common equity, annualized (O/Q)

11.44

%

 10.68% 10.55% 11.12% 11.33%

BUSINESS UNIT SUMMARY

Community Banking

Through its community banking franchise, the Company provides banking and financial services primarily to individuals, small to mid-sized businesses, local governmental units and institutional clients residing primarily in the local areas the Company services. In the first quarter of 2017, profitability within this franchise was primarily driven by increased net interest income due to a higher net interest margin, partially offset by lower revenue from the mortgage banking business. The net interest margin increased in the first quarter of 2017 compared to the fourth quarter of 2016 primarily as a result of higher yields on the commercial (excluding lease loans) and commercial real-estate loan portfolios as well as liquidity management assets, and an improved funding mix related to the Company's interest-bearing liabilities. The increased net interest margin was offset by a $13.6 million decrease in mortgage banking revenue in the first quarter of 2017 compared to the fourth quarter of 2016. The lower revenue was due to originations during the current period decreasing to $722.5 million from $1.2 billion in the fourth quarter of 2016 due to typical seasonality in the first quarter, as well as rising interest rates in the market. The Company's gross commercial and commercial real estate loan pipelines remain strong. Before the impact of scheduled payments and prepayments, at March 31, 2017, gross commercial and commercial real estate loan pipelines totaled $1.5 billion, or $934 million when adjusted for the probability of closing, compared to $1.4 billion, or $895 million when adjusted for the probability of closing, at December 31, 2016.

Specialty Finance

Through its specialty finance unit, the Company offers financing of insurance premiums for businesses and individuals, accounts receivable financing, value-added, out-sourced administrative services, and other specialty finance businesses. In the first quarter of 2017, the specialty finance unit experienced higher revenue as a result of increased volumes and higher yields within its insurance premium financing receivables portfolio. Originations of $1.6 billion during the first quarter of 2017 resulted in a $214 million increase in average balance and $1.4 million increase in interest income attributed to this portfolio. The Company's leasing business continued to grow during the first quarter of 2017, increasing its portfolio of assets, including capital leases, loans and equipment on operating leases, by $64 million since the end of the fourth quarter of 2016. Revenues from the Company's out-sourced administrative services business remained steady, totaling $1.0 million and $1.1 million in the first quarter of 2017 and fourth quarter of 2016, respectively.

Wealth Management

Through its wealth management unit, the Company offers a full range of wealth management services through three separate subsidiaries: trust and investment services, asset management, securities brokerage services and 401(k) and retirement plan services. At March 31, 2017, the Company’s wealth management subsidiaries had approximately $22.9 billion of assets under administration, which includes $2.5 billion of assets owned by the Company and its subsidiary banks, representing a $978 million increase from the $21.9 billion of assets under administration at December 31, 2016.

LOANS

Loan Portfolio Mix and Growth Rates

        % Growth

(Dollars in thousands)

 

March 31,

 2017

 December 31,

 2016

 March 31,

 2016

 From (1)

December 31,

2016

 From

March 31,

2016

Balance:

          
Commercial 

$

6,081,489

  $6,005,422  $4,890,246  5% 24%
Commercial real estate 

6,261,682

  6,196,087  5,737,959  4  9 
Home equity 

708,258

  725,793  774,342  (10) (9)
Residential real estate 

720,608

  705,221  626,043  9  15 
Premium finance receivables - commercial 

2,446,946

  2,478,581  2,320,987  (5) 5 
Premium finance receivables - life insurance 

3,593,563

  3,470,027  2,976,934  14  21 
Consumer and other 

118,512

  122,041  119,902  (12) (1)
Total loans, net of unearned income, excluding covered loans 

$

19,931,058

  $19,703,172  $17,446,413  5% 14%
Covered loans 

52,359

  58,145  138,848  (40) (62)
Total loans, net of unearned income 

$

19,983,417

  $19,761,317  $17,585,261  5% 14%

Mix:

          
Commercial 

30

%

 30% 28%    
Commercial real estate 

31

  31  32     
Home equity 

4

  4  4     
Residential real estate 

4

  4  4     
Premium finance receivables - commercial 

12

  12  13     
Premium finance receivables - life insurance 

18

  18  17     
Consumer and other 

1

  1  1     
Total loans, net of unearned income, excluding covered loans 

100

%

 100% 99%    
Covered loans 

    1     
Total loans, net of unearned income 

100

%

 100% 100%    

(1) 

Annualized

Commercial and Commercial Real Estate Loan Portfolios

  

As of March 31, 2017

    

% of

Total

Balance

 

Nonaccrual

 

> 90 Days

Past Due

and Still

Accruing

 

Allowance

For Loan

Losses

Allocation

    

(Dollars in thousands)

 

Balance

 

Commercial:

          
Commercial, industrial and other $3,891,075  31.5% $12,036  $100  $31,693 
Franchise 823,734  6.7  323    4,675 
Mortgage warehouse lines of credit 154,180  1.3      1,178 
Asset-based lending 881,004  7.1  1,378    7,262 
Leases 320,010  2.6  570    1,132 
PCI - commercial loans (1) 11,486  0.1    1,368  642 

Total commercial

 

$

6,081,489

  

49.3

%

 

$

14,307

  

$

1,468

  

$

46,582

 

Commercial Real Estate:

          
Construction $655,333  5.3% $2,408  $  $7,908 
Land 105,079  0.8  350    3,658 
Office 870,666  7.1  3,513    5,822 
Industrial 792,962  6.4  7,004    6,728 
Retail 911,786  7.4  589    5,981 
Multi-family 804,776  6.5  668    8,101 
Mixed use and other 1,963,744  15.9  6,277    14,375 
PCI - commercial real estate (1) 157,336  1.3    12,559  60 

Total commercial real estate

 

$

6,261,682

  

50.7

%

 

$

20,809

  

$

12,559

  

$

52,633

 

Total commercial and commercial real estate

 

$

12,343,171

  

100.0

%

 

$

35,116

  

$

14,027

  

$

99,215

 
           
Commercial real estate - collateral location by state:          
Illinois $4,943,266  79.0%      
Wisconsin 670,936  10.7       

Total primary markets

 

$

5,614,202

  

89.7

%

      
Indiana 125,233  2.0       
Florida 79,554  1.2       
Arizona 55,069  0.9       
California 41,989  0.7       
Other (no individual state greater than 0.7%) 345,635  5.5       

Total

 

$

6,261,682

  

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)

 

March 31,

 2017

 December 31,

 2016

 March 31,

 2016

 From (1)

December 31,

2016

 From

March 31,

2016

Balance:

          
Non-interest bearing 

$

5,790,579

  $5,927,377  $5,205,410  (9)% 11%
NOW and interest bearing demand deposits 

2,484,676

  2,624,442  2,369,474  (22) 5 
Wealth management deposits (2) 

2,390,464

  2,209,617  1,761,710  33  36 
Money market 

4,555,752

  4,441,811  4,157,083  10  10 
Savings 

2,287,958

  2,180,482  1,766,552  20  30 
Time certificates of deposit 

4,221,012

  4,274,903  3,956,842  (5) 7 
Total deposits 

$

21,730,441

  $21,658,632  $19,217,071  1% 13%

Mix:

          
Non-interest bearing 

27

%

 27% 27%    
NOW and interest bearing demand deposits 

11

  12  12     
Wealth management deposits (2) 

11

  10  9     
Money market 

21

  21  22     
Savings 

11

  10  9     
Time certificates of deposit 

19

  20  21     
Total deposits 

100

%

 100% 100%    

(1) Annualized

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

Time Certificates of Deposit

Maturity/Re-pricing Analysis

As of March 31, 2017

(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 $43,578  $47,371  $132,858  $673,994  

$

897,801

  

0.62

%

4-6 months 535  30,294    597,665  

628,494

  

0.76

%

7-9 months 1,252  19,845    701,548  

722,645

  

0.94

%

10-12 months 1,494  19,652    709,879  

731,025

  

0.97

%

13-18 months 3,034  14,025    797,334  

814,393

  

1.08

%

19-24 months   8,905    126,543  

135,448

  

0.99

%

24+ months 1,249  20,362    269,595  

291,206

  

1.36

%

Total $51,142  $160,454  $132,858  $3,876,558  

$

4,221,012

  

0.91

%

(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 first quarter of 2017 compared to the fourth quarter of 2016 (sequential quarters) and first quarter of 2016 (linked quarters), respectively:

 

Average Balance 

for three months ended,

 

Interest 

for three months ended,

 

Yield/Rate

for three months ended,

(Dollars in thousands)

March 31,

 2017

 December 31,

 2016

 March 31,

 2016

 

March 31,

 2017

 December 31,

 2016

 March 31,

 2016

 

March 31,

 2017

 December 31,

 2016

 March 31,

 2016

Liquidity management assets(1)(2)(7)

$

3,270,467

  $3,860,616  $3,300,138  

$

17,174

  $16,455  $19,794  

2.13

%

 1.70% 2.41%
Other earning assets(2)(3)(7)

25,236

  27,608  28,731  

183

  235  236  

2.95

  3.37  3.31 
Loans, net of unearned income(2)(4)(7)

19,923,606

  19,711,504  17,508,593  

199,186

  198,861  171,625  

4.05

  4.01  3.94 
Covered loans

56,872

  59,827  141,351  

918

  960  2,011  

6.55

  6.38  5.72 
Total earning assets(7)

$

23,276,181

  $23,659,555  $20,978,813  

$

217,461

  $216,511  $193,666  

3.79

%

 3.64% 3.71%
Allowance for loan and covered loan losses

(127,425

)

 (122,665) (112,028)            
Cash and due from banks

229,588

  221,892  259,343             
Other assets

1,829,004

  1,852,278  1,776,785             
Total assets

$

25,207,348

  $25,611,060  $22,902,913             
                  
Interest-bearing deposits

$

15,466,670

  $15,567,263  $13,717,333  

$

16,270

  $16,413  $12,781  

0.43

%

 0.42% 0.37%
Federal Home Loan Bank advances

181,338

  388,780  825,104  

1,590

  2,439  2,886  

3.55

  2.50  1.41 
Other borrowings

255,012

  240,174  257,384  

1,139

  1,074  1,058  

1.81

  1.78  1.65 
Subordinated notes

138,980

  138,953  138,870  

1,772

  1,779  1,777  

5.10

  5.12  5.12 
Junior subordinated debentures

253,566

  253,566  257,687  

2,408

  2,530  2,220  

3.80

  3.90  3.41 
Total interest-bearing liabilities

$

16,295,566

  $16,588,736  $15,196,378  

$

23,179

  $24,235  $20,722  

0.58

%

 0.58% 0.55%
Non-interest bearing deposits

5,787,034

  5,902,439  4,939,746             
Other liabilities

385,698

  430,009  377,019             
Equity

2,739,050

  2,689,876  2,389,770             
Total liabilities and shareholders’ equity

$

25,207,348

  $25,611,060  $22,902,913             
Interest rate spread(5)(7)            

3.21

%

 3.06% 3.16%
Less:  Fully tax-equivalent adjustment      

(1,702

)

 (1,498) (1,435) 

(0.03

)

 (0.02) (0.03)
Net free funds/

contribution(6)

$

6,980,615

  $7,070,819  $5,782,435        

0.18

  0.17  0.16 
Net interest income/ margin(7)  (GAAP)      

$

192,580

  $190,778  $171,509  

3.36

%

 3.21% 3.29%
Fully tax-equivalent adjustment      

1,702

  1,498  1,435  

0.03

  0.02  0.03 
Net interest income/ margin - FTE (7)      

$

194,282

  $192,276  $172,944  

3.39

%

 3.23% 3.32%

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

(2) Interest income on tax-advantaged loans, trading securities and investment securities reflects a tax-equivalent adjustment based on a marginal federal corporate tax rate of 35%. The total adjustments for the three months ended March 31, 2017, December 31, 2016 and March 31, 2016 were $1.7 million, $1.5 million and $1.4 million, respectively.

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

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

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

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

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

For the first quarter of 2017, net interest income totaled $192.6 million, an increase of $1.8 million as compared to the fourth quarter of 2016 and an increase of $21.1 million as compared to the first quarter of 2016. Net interest margin was 3.36% (3.39% on a fully tax-equivalent basis) during the first quarter of 2017 compared to 3.21% (3.23% on a fully tax-equivalent basis) during the fourth quarter of 2016 and 3.29% (3.32% on a fully tax-equivalent basis) during the first quarter of 2016.

Interest Rate Sensitivity

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

The following interest rate scenarios display the percentage change in net interest income over a one-year time horizon assuming increases of 100 and 200 basis points and a decrease of 100 basis points. The Static Shock Scenario results incorporate actual cash flows and repricing characteristics for balance sheet instruments following an instantaneous, parallel change in market rates based upon a static (i.e. no growth or constant) balance sheet. Conversely, the Ramp Scenario results incorporate management’s projections of future volume and pricing of each of the product lines following a gradual, parallel change in market rates over twelve months.  Actual results may differ from these simulated results due to timing, magnitude, and frequency of interest rate changes as well as changes in market conditions and management strategies. The interest rate sensitivity for both the Static Shock and Ramp Scenario at March 31, 2017, December 31, 2016 and March 31, 2016 is as follows:

      

Static Shock Scenario

 

+200

Basis 

Points

 

+100

 Basis

 Points

 

-100

Basis

 Points

March 31, 2017

 

17.7

%

 

9.3

%

 

(13.2

)%

December 31, 2016 18.5% 9.6% (13.2)%
March 31, 2016 16.4% 8.9% (8.7)%

Ramp Scenario

+200

Basis

Points

 

+100

Basis

Points

 

-100

Basis

Points

March 31, 2017

7.3

%

 

3.9

%

 

(4.8

)%

December 31, 20167.6% 4.0% (5.0)%
March 31, 20167.5% 3.7% (3.7)%

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, excluding covered loans, at March 31, 2017 by date at which the loans reprice or mature, and the type of rate exposure:

As of March 31, 2017

One year or less

 

From one to five years

 

Over five years

  

(Dollars in thousands)

   

Total

Commercial       
Fixed rate

$

103,508

  

$

700,701

  

$

477,141

  

$

1,281,350

 
Variable rate

4,788,750

  

9,426

  

1,963

  

4,800,139

 
Total commercial

$

4,892,258

  

$

710,127

  

$

479,104

  

$

6,081,489

 
Commercial real estate       
Fixed rate

386,082

  

1,706,877

  

272,040

  

2,364,999

 
Variable rate

3,862,571

  

32,513

  

1,599

  

3,896,683

 
Total commercial real estate

$

4,248,653

  

$

1,739,390

  

$

273,639

  

$

6,261,682

 
Home Equity       
Fixed rate

4,803

  

3,284

  

66,264

  

74,351

 
Variable rate

633,439

  

75

  

393

  

633,907

 
Total home equity

$

638,242

  

$

3,359

  

$

66,657

  

$

708,258

 
Residential real estate       
Fixed rate

47,885

  

41,106

  

140,076

  

229,067

 
Variable rate

60,869

  

177,311

  

253,361

  

491,541

 
Total residential real estate

$

108,754

  

$

218,417

  

$

393,437

  

$

720,608

 
Premium finance receivables - commercial       
Fixed rate

2,364,859

  

82,087

  

  

2,446,946

 
Variable rate

  

  

  

 
Total premium finance receivables - commercial

$

2,364,859

  

$

82,087

  

$

  

$

2,446,946

 
Premium finance receivables - life insurance       
Fixed rate

14,387

  

36,404

  

1,377

  

52,168

 
Variable rate

3,541,395

  

  

  

3,541,395

 
Total premium finance receivables - life insurance

$

3,555,782

  

$

36,404

  

$

1,377

  

$

3,593,563

 
Consumer and other       
Fixed rate

59,400

  

12,480

  

3,321

  

75,201

 
Variable rate

43,311

  

  

  

43,311

 
Total consumer and other

$

102,711

  

$

12,480

  

$

3,321

  

$

118,512

 
Total per category       
Fixed rate

2,980,924

  

2,582,939

  

960,219

  

6,524,082

 
Variable rate

12,930,335

  

219,325

  

257,316

  

13,406,976

 
Total loans, net of unearned income, excluding covered loans

$

15,911,259

  

$

2,802,264

  

$

1,217,535

  

$

19,931,058

 

Variable Rate Loan Pricing by Index:

       
Prime

$

2,999,998

       
One- month LIBOR

6,104,386

       
Three- month LIBOR

522,109

       
Twelve- month LIBOR

3,341,513

       
Other

438,970

       
Total variable rate

$

13,406,976

       

NON-INTEREST INCOME

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

  

Three Months Ended

        
  

March 31,

 December 31, March 31, Q1 2017 compared to

Q4 2016

 Q1 2017 compared to

Q1 2016

(Dollars in thousands)

 

2017

 2016 2016 $ Change % Change $ Change % Change
Brokerage 

$

6,220

  $6,408  $6,057  $(188) (3)% $163  3%
Trust and asset management 

13,928

  13,104  12,263  824  6  1,665  14 
Total wealth management 

20,148

  19,512  18,320  636  3  1,828  10 
Mortgage banking 

21,938

  35,489  21,735  (13,551) (38) 203  1 
Service charges on deposit accounts 

8,265

  8,054  7,406  211  3  859  12 
(Losses) gains on investment securities, net 

(55

)

 1,575  1,325  (1,630) NM  (1,380) NM 
Fees from covered call options 

759

  1,476  1,712  (717) (49) (953) (56)
Trading (losses) gains, net 

(320

)

 1,007  (168) (1,327) NM  (152) 90 
Operating lease income, net 

5,782

  5,171  2,806  611  12  2,976  NM 
Other:              
Interest rate swap fees 

1,433

  2,870  4,438  (1,437) (50) (3,005) (68)
BOLI 

985

  981  472  4    513  NM 
Administrative services 

1,024

  1,115  1,069  (91) (8) (45) (4)
(Loss) gain on extinguishment of debt 

  (717) 4,305  717  NM  (4,305) NM 
Early pay-offs of leases 

1,211

  728    483  66  1,211  NM 
Miscellaneous 

7,595

  8,014  5,332  (419) (5) 2,263  42 
Total Other 

12,248

  12,991  15,616  (743) (6) (3,368) (22)
Total Non-Interest Income 

$

68,765

  $85,275  $68,752  $(16,510) (19)% $13  %

NM - Not Meaningful

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

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

The decrease in mortgage banking revenue in the current quarter as compared to the most recent quarter resulted primarily from lower origination volumes in the current quarter. The lower origination volume was a result of typical seasonality in the first quarter and a higher interest rate environment. Mortgage loans originated or purchased for sale decreased during the current quarter, totaling $722.5 million in the first quarter of 2017 as compared to $1.2 billion in the fourth quarter of 2016 and $736.6 million in the first quarter of 2016. Mortgage banking revenue includes revenue from activities related to originating, selling and servicing residential real estate loans for the secondary market. Mortgage revenue is also impacted by changes in the fair value of MSRs as the Company does not hedge this change in fair value. The Company typically originates mortgage loans held-for-sale with associated MSRs either retained or released. The Company records MSRs at fair value on a recurring basis.

The table below presents additional selected information regarding mortgage banking revenue for the respective periods.

  

Three Months Ended

(Dollars in thousands)

 

March 31,

 2017

 December 31,

 2016

 March 31,

 2016

Retail originations 

$

624,971

  1,042,145  $704,990 
Correspondent originations 

97,496

  135,726  31,658 
(A) Total originations 

$

722,467

  1,177,871  $736,648 
       
Purchases as a percentage of originations 

66

%

 52% 56%
Refinances as a percentage of originations 

34

  48  44 
Total 

100

%

 100% 100%
       
(B) Production revenue (1) 

$

17,677

  $28,320  $19,930 
Production margin (B / A) 

2.45

%

 2.40% 2.71%
       
Loans serviced for others (C) 

$

1,972,592

  $1,784,760  $1,044,745 
MSRs, at fair value (D) 

21,596

  19,103  10,128 
Percentage of mortgage servicing rights to loans serviced for others (D/C) 

1.09

%

 1.07% 0.97%

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

The Company has typically written call options with terms of less than three months against certain U.S. Treasury and agency securities held in its portfolio for liquidity and other purposes. Management has effectively entered into these transactions with the goal of economically hedging security positions and enhancing its overall return on its investment portfolio by using fees generated from these options to compensate for net interest margin compression. These option transactions are designed to mitigate overall interest rate risk and do not qualify as hedges pursuant to accounting guidance. Fees from covered call options decreased in the current quarter compared to the fourth quarter of 2016 primarily as a result of selling call options against a smaller value of underlying securities resulting in lower premiums received by the Company. There were no outstanding call option contracts at March 31, 2017, December 31, 2016 and March 31, 2016.

The Company recognized $320,000 of trading losses in the first quarter of 2017 compared to trading gains of $1.0 million in the fourth quarter of 2016 and trading losses of $168,000 in the first quarter of 2016. Trading gains and losses recorded by the Company primarily result from fair value adjustments related to interest rate derivatives not designated as hedges.

The increase in operating lease income in the current quarter compared to the prior period quarters is primarily related to growth in business from the Company's leasing divisions during the first quarter of 2017.

The decrease in other non-interest income in the current quarter as compared to the fourth quarter of 2016 is primarily due to lower swap fee revenues resulting from interest rate hedging transactions related to both customer-based trades and the related matched trades with inter-bank dealer counterparties, partially offset by the loss on extinguishment of debt recognized in previous quarter.

NON-INTEREST EXPENSE

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

  

Three Months Ended

        
  

March 31,

 December 31, March 31, Q1 2017 compared to

Q4 2016

 Q1 2017 compared to

Q1 2016

(Dollars in thousands)

 

2017

 2016 2016 $ Change % Change $ Change % Change
Salaries and employee benefits:              
Salaries 

$

55,008

  $53,108  $50,282  $1,900  4% $4,726  9%
Commissions and incentive compensation 

26,643

  35,744  26,375  (9,101) (25) 268  1 
Benefits 

17,665

  15,883  19,154  1,782  11  (1,489) (8)
Total salaries and employee benefits 

99,316

  104,735  95,811  (5,419) (5) 3,505  4 
Equipment 

9,002

  9,532  8,767  (530) (6) 235  3 
Operating lease equipment depreciation 

4,636

  4,219  2,050  417  10  2,586  NM 
Occupancy, net 

13,101

  14,254  11,948  (1,153) (8) 1,153  10 
Data processing 

7,925

  7,687  6,519  238  3  1,406  22 
Advertising and marketing 

5,150

  6,691  3,779  (1,541) (23) 1,371  36 
Professional fees 

4,660

  5,425  4,059  (765) (14) 601  15 
Amortization of other intangible assets 

1,164

  1,158  1,298  6  1  (134) (10)
FDIC insurance 

4,156

  4,726  3,613  (570) (12) 543  15 
OREO expense, net 

1,665

  1,843  560  (178) (10) 1,105  NM 
Other:              
Commissions - 3rd party brokers 

1,098

  1,165  1,310  (67) (6) (212) (16)
Postage 

1,442

  1,955  1,302  (513) (26) 140  11 
Miscellaneous 

14,803

  16,981  12,714  (2,178) (13) 2,089  16 
Total other 

17,343

  20,101  15,326  (2,758) (14) 2,017  13 

Total Non-Interest Expense

 

$

168,118

  $180,371  $153,730  $(12,253) (7)% $14,388  9%

NM - Not Meaningful

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

Salaries and employee benefits expense decreased in the current quarter compared to the fourth quarter of 2016 primarily as a result of lower incentive compensation on variable pay based arrangements (including mortgage banking commissions), partially offset by higher salaries and benefits.

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

The decrease in advertising and marketing expenses during the current quarter compared to the fourth quarter of 2016 is primarily related to the lower expenses for mass market media promotions and printing costs. 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 type of marketing programs utilized which are determined based on the market area, targeted audience, competition and various other factors.

The decrease in miscellaneous expenses during the current quarter compared to the fourth quarter of 2016 is primarily a result of lower travel and entertainment expenses. Miscellaneous expense includes ATM expenses, correspondent bank charges, directors' fees, telephone, travel and entertainment, corporate insurance, dues and subscriptions, problem loan expenses, operating losses and lending origination costs that are not deferred.

INCOME TAXES

The Company recorded income tax expense of $29.6 million in the first quarter of 2017 compared to $33.7 million in the fourth quarter of 2016. The effective tax rates were 33.67% in first quarter of 2017 and 38.18% in the fourth quarter of 2016. The lower effective tax rate in the first quarter of 2017 was primarily a result of recording $3.4 million of excess tax benefits related to the adoption of new accounting rules over income taxes attributed to share-based compensation that became effective on January 1, 2017. These 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

  

March 31,

 December 31, March 31,

(Dollars in thousands)

 

2017

 2016 2016

Allowance for loan losses at beginning of period

 

$

122,291

  $117,693  $105,400 

Provision for credit losses

 

5,316

  7,357  8,423 

Other adjustments

 

(56

)

 33  (78)

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

 

(138

)

 (25) (81)

Charge-offs:

      
Commercial 

641

  3,054  671 
Commercial real estate 

261

  375  671 
Home equity 

625

  326  1,052 
Residential real estate 

329

  410  493 
Premium finance receivables - commercial 

1,427

  1,843  2,480 
Premium finance receivables - life insurance 

     
Consumer and other 

134

  205  107 
Total charge-offs 

3,417

  6,213  5,474 

Recoveries:

      
Commercial 

273

  668  629 
Commercial real estate 

554

  1,916  369 
Home equity 

65

  300  48 
Residential real estate 

178

  21  112 
Premium finance receivables - commercial 

612

  498  787 
Premium finance receivables - life insurance 

     
Consumer and other 

141

  43  36 
Total recoveries 

1,823

  3,446  1,981 

Net charge-offs

 

(1,594

)

 (2,767) (3,493)

Allowance for loan losses at period end

 

$

125,819

  $122,291  $110,171 

Allowance for unfunded lending-related commitments at period end

 

1,811

  1,673  1,030 

Allowance for credit losses at period end

 

$

127,630

  $123,964  $111,201 

Annualized net charge-offs (recoveries) by category as a percentage of its own respective category’s average:

      
Commercial 

0.03

%

 0.16% 0.00%
Commercial real estate 

(0.02

)

 (0.10) 0.02 
Home equity 

0.32

  0.01  0.52 
Residential real estate 

0.06

  0.13  0.17 
Premium finance receivables - commercial 

0.13

  0.22  0.29 
Premium finance receivables - life insurance 

0.00

  0.00  0.00 
Consumer and other 

(0.02

)

 0.47  0.20 
Total loans, net of unearned income, excluding covered loans 

0.03

%

 0.06% 0.08%

Net charge-offs as a percentage of the provision for credit losses

 

29.98

%

 37.61% 41.47%

Loans at period-end, excluding covered loans

 

$

19,931,058

  $19,703,172  $17,446,413 

Allowance for loan losses as a percentage of loans at period end

 

0.63

%

 0.62% 0.63%

Allowance for credit losses as a percentage of loans at period end

 

0.64

%

 0.63% 0.64%

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 first quarter of 2017 totaled three basis points on an annualized basis compared to six basis points on an annualized basis in the fourth quarter of 2016 and eight basis points on an annualized basis in the first quarter of 2016.  Net charge-offs totaled $1.6 million in the first quarter of 2017, a $1.2 million decrease from $2.8 million in the fourth quarter of 2016 and a $1.9 million decrease from $3.5 million in the first quarter of 2016. The provision for credit losses, excluding the provision for covered loan losses, totaled $5.3 million for the first quarter of 2017 compared to $7.4 million for the fourth quarter of 2016 and $8.4 million for the first quarter of 2016.

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

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

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

  

Three Months Ended

  

March 31,

 December 31, March 31,

(Dollars in thousands)

 

2017

 2016 2016
Provision for loan losses 

$

5,178

  $7,332  $8,342 
Provision for unfunded lending-related commitments 

138

  25  81 
Provision for covered loan losses 

(107

)

 (7) (389)
Provision for credit losses 

$

5,209

  $7,350  $8,034 
       
  

Period End

  

March 31,

 December 31, March 31,
  

2017

 2016 2016
Allowance for loan losses 

$

125,819

  $122,291  $110,171 
Allowance for unfunded lending-related commitments 

1,811

  1,673  1,030 
Allowance for covered loan losses 

1,319

  1,322  2,507 
Allowance for credit losses 

$

128,949

  $125,286  $113,708 

The tables below summarize the calculation of allowance for loan losses for the Company’s core loan portfolio and consumer, niche and purchased loan portfolio, excluding covered loans, as of March 31, 2017 and December 31, 2016.

  

As of March 31, 2017

  

Recorded

 

Calculated

 

As a percentage

of its own respective

(Dollars in thousands)

 

Investment

 

Allowance

 

category’s balance

Commercial:(1)      
Commercial and industrial $3,396,191  $29,088  0.86%
Asset-based lending 875,403  7,262  0.83 
Tax exempt 315,487  2,206  0.70 
Leases 318,943  1,132  0.35 
Commercial real estate:(1)      
Residential construction 46,956  1,091  2.32 
Commercial construction 607,507  6,817  1.12 
Land 100,056  3,655  3.65 
Office 817,239  5,810  0.71 
Industrial 742,844  6,711  0.90 
Retail 863,804  5,963  0.69 
Multi-family 765,933  8,082  1.06 
Mixed use and other 1,835,745  14,302  0.78 
Home equity(1) 639,399  12,194  1.91 
Residential real estate(1) 678,978  5,461  0.80 

Total core loan portfolio

 

$

12,004,485

  

$

109,774

  

0.91

%

Commercial:      
Franchise $560,532  $4,595  0.82%
Mortgage warehouse lines of credit 154,180  1,178  0.76 
Community Advantage - homeowner associations 145,233  363  0.25 
Aircraft 3,250  17  0.52 
Purchased non-covered commercial loans (2) 312,270  741  0.24 
Commercial real estate:      
Purchased non-covered commercial real estate (2) 481,598  202  0.04 
Purchased non-covered home equity (2) 68,859  9  0.01 
Purchased non-covered residential real estate (2) 41,630  69  0.17 
Premium finance receivables      
U.S. commercial insurance loans 2,167,524  5,389  0.25 
Canada commercial insurance loans (2) 279,422  572  0.20 
Life insurance loans (1) 3,352,857  1,598  0.05 
Purchased life insurance loans (2) 240,706     
Consumer and other (1) 115,710  1,310  1.13 
Purchased non-covered consumer and other (2) 2,802  2  0.07 

Total consumer, niche and purchased loan portfolio

 

$

7,926,573

  

$

16,045

  

0.20

%

Total loans, net of unearned income, excluding covered loans

 

$

19,931,058

  

$

125,819

  

0.63

%

Non-accretable credit discounts on purchased loans reported in accordance with ASC 310-30, excluding covered loans   $8,315   

Total allowance for loan losses and non-accretable credit discounts on purchased loans, excluding covered loans

   

$

134,134

  

0.67

%

(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 December 31, 2016

  

Recorded

 

Calculated

 

As a percentage

of its own respective

(Dollars in thousands)

 

Investment

 

Allowance

 

category’s balance

Commercial:(1)      
Commercial and industrial $3,234,629  $27,112  0.84%
Asset-based lending 867,697  6,859  0.79 
Tax exempt 327,694  2,299  0.70 
Leases 294,124  858  0.29 
Commercial real estate:(1)      
Residential construction 46,235  1,045  2.26 
Commercial construction 563,001  6,259  1.11 
Land 99,194  3,677  3.71 
Office 808,322  5,757  0.71 
Industrial 716,480  6,643  0.93 
Retail 855,787  5,928  0.69 
Multi-family 766,146  8,052  1.05 
Mixed use and other 1,815,573  13,867  0.76 
Home equity(1) 649,129  11,767  1.81 
Residential real estate(1) 658,487  5,634  0.86 

Total core loan portfolio

 

$

11,702,498

  

$

105,757

  

0.90

%

Commercial:      
Franchise $565,588  $4,744  0.84%
Mortgage warehouse lines of credit 204,225  1,548  0.76 
Community Advantage - homeowner associations 145,717  365  0.25 
Aircraft 3,356  42  1.25 
Purchased non-covered commercial loans (2) 362,392  666  0.18 
Commercial real estate:      
Purchased non-covered commercial real estate (2) 525,349  194  0.04 
Purchased non-covered home equity (2) 76,664  7  0.01 
Purchased non-covered residential real estate (2) 46,734  80  0.17 
Premium finance receivables      
U.S. commercial insurance loans 2,170,844  5,521  0.25 
Canada commercial insurance loans (2) 307,737  604  0.20 
Life insurance loans (1) 3,220,370  1,500  0.05 
Purchased life insurance loans (2) 249,657     
Consumer and other (1) 119,073  1,261  1.06 
Purchased non-covered consumer and other (2) 2,968  2  0.07 

Total consumer, niche and purchased loan portfolio

 

$

8,000,674

  

$

16,534

  

0.21

%

Total loans, net of unearned income, excluding covered loans

 

$

19,703,172

  

$

122,291

  

0.62

%

Non-accretable credit discounts on purchased loans reported in accordance with ASC 310-30, excluding covered loans   $12,324   

Total allowance for loan losses and non-accretable credit discounts on purchased loans, excluding covered loans

   

$

134,615

  

0.68

%

(1) 

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

(2) 

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

As part of the regular quarterly review performed by management to determine if the Company’s allowance for loan losses is appropriate, an analysis is prepared on the loan portfolio based upon a breakout of core loans and consumer, niche and purchased loans. A summary of the allowance for loan losses calculated for the loan components in both the core loan portfolio and the consumer, niche and purchased loan portfolio was shown on the preceding tables as of March 31, 2017 and December 31, 2016.

The increase in the allowance for loan losses to core loans in the first quarter of 2017 compared to the fourth quarter of 2016 was primarily attributable to higher ASC 310 reserves (specific reserves) on the core portfolio as of March 31, 2017.

Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date. In accordance with accounting guidance, credit deterioration on purchased loans is recorded as a credit discount at the time of purchase instead of as an increase to the allowance for loan losses. For analysis purposes, the Company has combined the non-accretable credit discounts recorded on purchased loans with the total allowance for loan losses in the previous tables to present the total credit reserves available on its loan portfolio. The total allowance for loan losses and non-accretable credit discounts on purchased loans was 0.67% of the total loan portfolio as of March 31, 2017 and 0.68% of the total loan portfolio as of December 31, 2016.

The tables below show the aging of the Company’s loan portfolio at March 31, 2017 and December 31, 2016:

    

90+ days

 

60-89

 

30-59

    

As of March 31, 2017

   

and still

 

days past

 

days past

    

(Dollars in thousands)

 

Nonaccrual

 

accruing

 

due

 

due

 

Current

 

Total Loans

Loan Balances:

            
Commercial (1) 

$

14,307

  

$

1,468

  

$

19

  

$

39,440

  

$

6,026,255

  

$

6,081,489

 
Commercial real estate (1) 

20,809

  

12,559

  

5,426

  

56,712

  

6,166,176

  

6,261,682

 
Home equity 

11,722

  

  

430

  

4,884

  

691,222

  

708,258

 
Residential real estate (1) 

11,943

  

900

  

3,410

  

5,262

  

699,093

  

720,608

 
Premium finance receivables - commercial 

12,629

  

4,991

  

6,383

  

23,775

  

2,399,168

  

2,446,946

 
Premium finance receivables - life insurance (1) 

  

2,024

  

2,535

  

32,208

  

3,556,796

  

3,593,563

 
Consumer and other (1) 

350

  

167

  

323

  

543

  

117,129

  

118,512

 
Total loans, net of unearned income, excluding covered loans 

$

71,760

  

$

22,109

  

$

18,526

  

$

162,824

  

$

19,655,839

  

$

19,931,058

 
Covered loans 

1,592

  

2,808

  

268

  

1,570

  

46,121

  

52,359

 
Total loans, net of unearned income 

$

73,352

  

$

24,917

  

$

18,794

  

$

164,394

  

$

19,701,960

  

$

19,983,417

 

As of March 31, 2017

 

Nonaccrual

 

90+ days

and still

accruing

 

60-89

days past

due

 

30-59

days past

due

 

Current

 

Total Loans

Aging as a % of Loan Balance                  
Commercial (1) 

0.2

%

 

%

 

%

 

0.6

%

 

99.2

%

 

100.0

%

Commercial real estate (1) 

0.3

  

0.2

  

0.1

  

0.9

  

98.5

  

100.0

 
Home equity 

1.7

  

  

0.1

  

0.7

  

97.5

  

100.0

 
Residential real estate (1) 

1.7

  

0.1

  

0.5

  

0.7

  

97.0

  

100.0

 
Premium finance receivables - commercial 

0.5

  

0.2

  

0.3

  

1.0

  

98.0

  

100.0

 
Premium finance receivables - life insurance (1) 

  

0.1

  

0.1

  

0.9

  

98.9

  

100.0

 
Consumer and other (1) 

0.3

  

0.1

  

0.3

  

0.5

  

98.8

  

100.0

 
Total loans, net of unearned income, excluding covered loans 

0.4

%

 

0.1

%

 

0.1

%

 

0.8

%

 

98.6

%

 

100.0

%

Covered loans 

3.0

  

5.4

  

0.5

  

3.0

  

88.1

  

100.0

 
Total loans, net of unearned income 

0.4

%

 

0.1

%

 

0.1

%

 

0.8

%

 

98.6

%

 

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 December 31, 2016

   

and still

 

days past

 

days past

    

(Dollars in thousands)

 

Nonaccrual

 

accruing

 

due

 

due

 

Current

 

Total Loans

Loan Balances:

            
Commercial (1) $15,875  $1,863  $2,576  $17,640  $5,967,468  $6,005,422 
Commercial real estate (1) 21,924  16,188  15,253  31,723  6,110,999  6,196,087 
Home equity 9,761    1,630  6,515  707,887  725,793 
Residential real estate (1) 12,749  1,309  936  8,271  681,956  705,221 
Premium finance receivables - commercial 14,709  7,962  5,646  14,580  2,435,684  2,478,581 
Premium finance receivables - life insurance (1)   3,717  17,514  16,204  3,432,592  3,470,027 
Consumer and other (1) 439  207  100  887  120,408  122,041 
Total loans, net of unearned income, excluding covered loans $75,457  $31,246  $43,655  $95,820  $19,456,994  $19,703,172 
Covered loans 2,121  2,492  225  1,553  51,754  58,145 
Total loans, net of unearned income $77,578  $33,738  $43,880  $97,373  $19,508,748  $19,761,317 

As of December 31, 2016

 

Nonaccrual

 

90+ days

and still

accruing

 

60-89

days past

due

 

30-59

days past

due

 

Current

 

Total Loans

Aging as a % of Loan Balance:                  
Commercial (1) 0.3% % % 0.3% 99.4% 100.0%
Commercial real estate (1) 0.4  0.3  0.2  0.5  98.6  100.0 
Home equity 1.3    0.2  0.9  97.6  100.0 
Residential real estate (1) 1.8  0.2  0.1  1.2  96.7  100.0 
Premium finance receivables - commercial 0.6  0.3  0.2  0.6  98.3  100.0 
Premium finance receivables - life insurance (1)   0.1  0.5  0.5  98.9  100.0 
Consumer and other (1) 0.4  0.2  0.1  0.7  98.6  100.0 
Total loans, net of unearned income, excluding covered loans 0.4% 0.2% 0.2% 0.5% 98.7% 100.0%
Covered loans 3.6  4.3  0.4  2.7  89.0  100.0 
Total loans, net of unearned income 0.4% 0.2% 0.2% 0.5% 98.7% 100.0%

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

As of March 31, 2017, $18.5 million of all loans, excluding covered loans, or 0.1%, were 60 to 89 days past due and $162.8 million, or 0.8%, were 30 to 59 days (or one payment) past due. As of December 31, 2016, $43.7 million of all loans, excluding covered loans, or 0.2%, were 60 to 89 days past due and $95.8 million, or 0.5%, were 30 to 59 days (or one payment) past due. The majority of the commercial and commercial real estate loans shown as 60 to 89 days and 30 to 59 days past due are included on the Company’s internal problem loan reporting system. Loans on this system are closely monitored by management on a monthly basis.

The Company’s home equity and residential loan portfolios continue to exhibit low delinquency ratios. Home equity loans at March 31, 2017 that are current with regard to the contractual terms of the loan agreement represent 97.5% of the total home equity portfolio. Residential real estate loans at March 31, 2017 that are current with regards to the contractual terms of the loan agreements comprise 97.0% 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.

  

March 31,

 December 31, March 31,

(Dollars in thousands)

 

2017

 2016 2016

Loans past due greater than 90 days and still accruing(1):

      
Commercial 

$

100

  $174  $338 
Commercial real estate 

    1,260 
Home equity 

     
Residential real estate 

     
Premium finance receivables - commercial 

4,991

  7,962  9,548 
Premium finance receivables - life insurance 

2,024

  3,717  1,641 
Consumer and other 

104

  144  180 
Total loans past due greater than 90 days and still accruing 

7,219

  11,997  12,967 

Non-accrual loans (2):

      
Commercial 

14,307

  15,875  12,373 
Commercial real estate 

20,809

  21,924  26,996 
Home equity 

11,722

  9,761  9,365 
Residential real estate 

11,943

  12,749  11,964 
Premium finance receivables - commercial 

12,629

  14,709  15,350 
Premium finance receivables - life insurance 

     
Consumer and other 

350

  439  484 
Total non-accrual loans 

71,760

  75,457  76,532 

Total non-performing loans:

      
Commercial 

14,407

  16,049  12,711 
Commercial real estate 

20,809

  21,924  28,256 
Home equity 

11,722

  9,761  9,365 
Residential real estate 

11,943

  12,749  11,964 
Premium finance receivables - commercial 

17,620

  22,671  24,898 
Premium finance receivables - life insurance 

2,024

  3,717  1,641 
Consumer and other 

454

  583  664 
Total non-performing loans 

$

78,979

  $87,454  $89,499 
Other real estate owned 

17,090

  17,699  24,022 
Other real estate owned - from acquisitions 

22,774

  22,583  16,980 
Other repossessed assets 

544

  581  171 
Total non-performing assets 

$

119,387

  $128,317  $130,672 
TDRs performing under the contractual terms of the loan agreement 

$

28,392

  $29,911  $34,949 

Total non-performing loans by category as a percent of its own respective category’s period-end balance:

      
Commercial 

0.24

%

 0.27% 0.26%
Commercial real estate 

0.33

  0.35  0.49 
Home equity 

1.66

  1.34  1.21 
Residential real estate 

1.66

  1.81  1.91 
Premium finance receivables - commercial 

0.72

  0.91  1.07 
Premium finance receivables - life insurance 

0.06

  0.11  0.06 
Consumer and other 

0.38

  0.48  0.55 
Total loans, net of unearned income 

0.40

%

 0.44% 0.51%

Total non-performing assets as a percentage of total assets

 

0.46

%

 0.50% 0.56%

Allowance for loan losses as a percentage of total non-performing loans

 

159.31

%

 139.83% 123.10%

(1) 

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

(2) 

Non-accrual loans included TDRs totaling $11.3 million, $11.8 million and $17.6 million as of March 31, 2017, December 31, 2016 and March 31, 2016, respectively.

The ratio of non-performing assets to total assets was 0.46% as of March 31, 2017, compared to 0.50% at December 31, 2016, and 0.56% at  March 31, 2016. Non-performing assets, excluding covered assets and non-covered PCI loans, totaled $119.4 million at March 31, 2017, compared to $128.3 million at December 31, 2016 and $130.7 million at March 31, 2016. Non-performing loans, excluding covered loans and non-covered PCI loans, totaled $79.0 million, or 0.40% of total loans, at March 31, 2017 compared to $87.5 million, or 0.44% of total loans, at December 31, 2016 and $89.5 million, or 0.51% of total loans, at March 31, 2016. The decrease in non-performing loans, excluding covered loans and non-covered PCI loans, compared to December 31, 2016 is primarily the result of a $5.1 million decrease in the commercial premium finance receivable portfolio, a $1.7 million decrease in the life premium finance receivable portfolio and a $1.6 million decrease in the commercial portfolio, partially offset by a $2.0 million  increase in the home equity portfolio. OREO, excluding covered OREO, of $39.9 million at March 31, 2017 decreased $418,000 compared to $40.3 million at December 31, 2016 and decreased $1.1 million compared to $41.0 million at March 31, 2016.

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

Nonperforming Loans Rollforward

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

  

Three Months Ended

  

March 31,

 December 31, March 31,

(Dollars in thousands)

 

2017

 2016 2016
Balance at beginning of period 

$

87,454

  $83,128  $84,057 
Additions, net 

8,609

  10,969  12,166 
Return to performing status 

(1,592

)

 (150) (2,006)
Payments received 

(5,614

)

 (6,623) (3,308)
Transfer to OREO and other repossessed assets 

(1,661

)

 (878) (2,080)
Charge-offs 

(1,280

)

 (3,494) (533)
Net change for niche loans (1) 

(6,937

)

 4,502  1,203 

Balance at end of period

 

$

78,979

  $87,454  $89,499 

(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:

  

March 31,

 December 31, March 31,

(Dollars in thousands)

 

2017

 2016 2016

Accruing TDRs:

      
Commercial 

$

4,607

  $4,643  $5,143 
Commercial real estate 

18,923

  19,993  25,548 
Residential real estate and other 

4,862

  5,275  4,258 
Total accrual 

$

28,392

  $29,911  $34,949 

Non-accrual TDRs: (1)

      
Commercial 

$

1,424

  $1,487  $82 
Commercial real estate 

7,338

  8,153  14,340 
Residential real estate and other 

2,515

  2,157  3,184 
Total non-accrual 

$

11,277

  $11,797  $17,606 

Total TDRs:

      
Commercial 

$

6,031

  $6,130  $5,225 
Commercial real estate 

26,261

  28,146  39,888 
Residential real estate and other 

7,377

  7,432  7,442 
Total TDRs 

$

39,669

  $41,708  $52,555 

Weighted-average contractual interest rate of TDRs

 

4.37

%

 4.33% 4.35%

(1) 

Included in total non-performing loans.

Other Real Estate Owned

The table below presents a summary of other real estate owned, excluding covered other real estate owned, as of March 31, 2017, December 31, 2016 and March 31, 2016, and shows the activity for the respective period and the balance for each property type:

  Three Months Ended
  

March 31,

 December 31, March 31,

(Dollars in thousands)

 

2017

 2016 2016
Balance at beginning of period 

$

40,282

  $35,050  $43,945 
Disposals/resolved 

(2,644

)

 (5,850) (6,766)
Transfers in at fair value, less costs to sell 

2,268

  667  3,291 
Transfers in from covered OREO subsequent to loss share expiration 

760

  4,213   
Additions from acquisition 

  7,230  1,064 
Fair value adjustments 

(802

)

 (1,028) (532)
Balance at end of period 

$

39,864

  $40,282  $41,002 
       
  Period End
  

March 31,

 December 31, March 31,

Balance by Property Type

 

2017

 2016 2016
Residential real estate 

$

7,597

  $8,063  $11,006 
Residential real estate development 

1,240

  1,349  2,320 
Commercial real estate 

31,027

  30,870  27,676 
Total 

$

39,864

  $40,282  $41,002 

Items Impacting Comparative Financial Results:

Acquisitions

On February 14, 2017, the Company acquired certain assets and assumed certain liabilities of the mortgage banking business of AHM. AHM is located in Montana's Flathead Valley and originated approximately $55 million of residential mortgage loans in 2016.

On November 18, 2016, the Company completed its acquisition of First Community Financial Corporation ("FCFC"). FCFC was the parent company of First Community Bank.  Through this transaction, the Company acquired First Community Bank's two banking locations in Elgin, Illinois, approximately $187 million in assets and approximately $150 million in deposits.         

                               

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

On March 31, 2016, the Company completed its acquisition of Generations Bancorp. Inc. ("Generations"). Generations was the parent company of Foundations Bank ("Foundations").  Through this transaction, the Company acquired Foundations' banking location in Pewaukee, Wisconsin, approximately $134 million in assets and approximately $100 million in deposits.

WINTRUST SUBSIDIARIES AND LOCATIONS

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

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

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

  • First Insurance Funding Corporation, one of the largest insurance premium finance companies operating in the United States, serves commercial and life insurance loan customers throughout the country.
  • First Insurance Funding of Canada serves commercial insurance loan customers throughout Canada.
  • Tricom, Inc. of Milwaukee provides high-yielding, short-term accounts receivable financing and value-added out-sourced administrative services, such as data processing of payrolls, billing and cash management services, to temporary staffing service clients located throughout the United States.
  • Wintrust Mortgage, a division of Barrington Bank & Trust Company, engages primarily in the origination and purchase of residential mortgages for sale into the secondary market through origination offices located throughout the United States. Loans are also originated nationwide through relationships with wholesale and correspondent offices.
  • Wayne Hummer Investments, LLC is a broker-dealer providing a full range of private client and brokerage services to clients and correspondent banks located primarily in the Midwest.
  • Great Lakes Advisors LLC provides money management services and advisory services to individual accounts.
  • The Chicago Trust Company, a trust subsidiary, allows Wintrust to service customers’ trust and investment needs at each banking location.
  • Wintrust Asset Finance which offers direct leasing opportunities.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements within the meaning of federal securities laws. Forward-looking information can be identified through the use of words such as “intend,” “plan,” “project,” “expect,” “anticipate,” “believe,” “estimate,” “contemplate,” “possible,” “point,” “will,” “may,” “should,” “would” and “could.” Forward-looking statements and information are not historical facts, are premised on many factors and assumptions, and represent only management’s expectations, estimates and projections regarding future events. Similarly, these statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict, which may include, but are not limited to, those listed below and the Risk Factors discussed under Item 1A of the Company’s 2016 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 calculate our projected revenue and losses, and 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, including those resulting from our loss-sharing arrangements with the FDIC;
  • any negative perception of the Company’s reputation or 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;
  • failure or circumvention of our controls and procedures;
  • 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;
  • adverse effects on our information technology systems resulting from failures, human error or cyberattack, any of which could result in an information or security breach, the disclosure or misuse of confidential or proprietary information, significant legal and financial losses and reputational harm;
  • 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;
  • changes in accounting standards, rules and interpretations and the impact on the Company’s financial statements;
  • the ability of the Company to receive dividends from its subsidiaries;
  • anti-takeover provisions could negatively impact our shareholders;
  • a decrease in the Company’s regulatory capital ratios, including as a result of further 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, including those resulting from the Dodd-Frank Act;
  • a lowering of our credit rating;
  • changes in U.S. monetary policy;
  • uncertainty regarding future legislative and regulatory actions, which could be disruptive to our operations;
  • 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 current regulatory environment, including the Dodd-Frank Act;
  • the impact of heightened capital requirements;
  • increases in the Company’s FDIC insurance premiums, or the collection of special assessments by the FDIC;
  • non-compliance with the USA PATRIOT Act, Bank Secrecy Act or other laws or regulations could result in fines and sanctions;
  • 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 2:30 p.m. (CT) Wednesday, April 19, 2017 regarding first quarter 2017 results. Individuals interested in listening should call (877) 363-5049 and enter Conference ID #99783626. A simultaneous audio-only web cast and replay of the conference call may be accessed via the Company’s website at (http://www.wintrust.com), Investor Relations, Investor News and Events, Presentations & Conference Calls. The text of the first quarter 2017 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
  

March 31,

 December 31, September 30, June 30, March 31,
  

2017

 2016 2016 2016 2016

Selected Financial Condition Data (at end of period):

          
Total assets 

$

25,778,893

  $25,668,553  $25,321,759  $24,420,616  $23,488,168 
Total loans, excluding loans held-for-sale and covered loans 

19,931,058

  19,703,172  19,101,261  18,174,655  17,446,413 
Total deposits 

21,730,441

  21,658,632  21,147,655  20,041,750  19,217,071 
Junior subordinated debentures 

253,566

  253,566  253,566  253,566  253,566 
Total shareholders’ equity 

2,764,983

  2,695,617  2,674,474  2,623,595  2,418,442 

Selected Statements of Income Data:

          
Net interest income 

192,580

  190,778  184,636  175,270  171,509 
Net revenue (1) 

261,345

  276,053  271,240  260,069  240,261 
Net income 

58,378

  54,608  53,115  50,041  49,111 
Net income per common share – Basic 

$

1.05

  $0.98  $0.96  $0.94  $0.94 
Net income per common share – Diluted 

$

1.00

  $0.94  $0.92  $0.90  $0.90 

Selected Financial Ratios and Other Data:

          

Performance Ratios:

          
Net interest margin 

3.36

%

 3.21% 3.21% 3.24% 3.29%
Net interest margin - fully taxable equivalent (non-GAAP) (2) 

3.39

%

 3.23% 3.24% 3.27% 3.32%
Non-interest income to average assets 

1.11

%

 1.32% 1.38% 1.44% 1.21%
Non-interest expense to average assets 

2.70

%

 2.80% 2.82% 2.89% 2.70%
Net overhead ratio (3) 

1.60

%

 1.48% 1.44% 1.46% 1.49%
Return on average assets 

0.94

%

 0.85% 0.85% 0.85% 0.86%
Return on average common equity 

8.93

%

 8.32% 8.20% 8.43% 8.55%
Return on average tangible common equity (non-GAAP) (2) 

11.44

%

 10.68% 10.55% 11.12% 11.33%
Average total assets 

$

25,207,348

  $25,611,060  $24,879,252  $23,754,755  $22,902,913 
Average total shareholders’ equity 

2,739,050

  2,689,876  2,651,684  2,465,732  2,389,770 
Average loans to average deposits ratio (excluding loans held-for-sale, excluding covered loans) 

92.5

%

 89.6% 89.8% 92.4% 92.2%
Average loans to average deposits ratio (excluding loans held-for-sale, including covered loans) 

92.7

  89.9  90.3  92.9  93.0 

Common Share Data at end of period:

          
Market price per common share 

$

69.12

  $72.57  $55.57  $51.00  $44.34 
Book value per common share (2) 

$

47.88

  $47.12  $46.86  $45.96  $44.67 
Tangible common book value per share (2) 

$

37.97

  $37.08  $37.06  $36.12  $34.20 
Common shares outstanding 

52,503,663

  51,880,540  51,714,683  51,619,155  48,518,998 

Other Data at end of period:

(6)

          
Leverage Ratio(4) 

9.3

%

 8.9% 9.0% 9.2% 8.7%
Tier 1 Capital to risk-weighted assets (4) 

9.9

%

 9.7% 9.8% 10.1% 9.6%
Common equity Tier 1 capital to risk-weighted assets (4) 

8.9

%

 8.6% 8.7% 8.9% 8.4%
Total capital to risk-weighted assets (4) 

12.1

%

 11.9% 12.1% 12.4% 12.1%
Allowance for credit losses (5) 

$

127,630

  $123,964  $119,341  $115,426  $111,201 
Non-performing loans 

78,979

  87,454  83,128  88,119  89,499 
Allowance for credit losses to total loans (5) 

0.64

%

 0.63% 0.62% 0.64% 0.64%
Non-performing loans to total loans 

0.40

%

 0.44% 0.44% 0.48% 0.51%
Number of:          
Bank subsidiaries 

15

  15  15  15  15 
Banking offices 

155

  155  152  153  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. As of January 1, 2015 capital ratios are calculated under the requirements of Basel III.

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

(6) Asset quality ratios exclude covered loans.

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Consolidated Statements of Condition - 5 Quarter Trends

  

(Unaudited)

   (Unaudited) (Unaudited) (Unaudited)
  

March 31,

 December 31, September 30, June 30, March 31,

(In thousands)

 

2017

 2016 2016 2016 2016

Assets

          
Cash and due from banks 

$

214,102

  $267,194  $242,825  $267,551  $208,480 
Federal funds sold and securities purchased under resale agreements 

3,046

  2,851  4,122  4,024  3,820 
Interest bearing deposits with banks 

1,007,468

  980,457  816,104  693,269  817,013 
Available-for-sale securities, at fair value 

1,803,733

  1,724,667  1,650,096  637,663  770,983 
Held-to-maturity securities, at amortized cost 

667,764

  635,705  932,767  992,211  911,715 
Trading account securities 

714

  1,989  1,092  3,613  2,116 
Federal Home Loan Bank and Federal Reserve Bank stock 

78,904

  133,494  129,630  121,319  113,222 
Brokerage customer receivables 

23,171

  25,181  25,511  26,866  28,266 
Mortgage loans held-for-sale 

288,964

  418,374  559,634  554,256  314,554 
Loans, net of unearned income, excluding covered loans 

19,931,058

  19,703,172  19,101,261  18,174,655  17,446,413 
Covered loans 

52,359

  58,145  95,940  105,248  138,848 
Total loans 

19,983,417

  19,761,317  19,197,201  18,279,903  17,585,261 
Allowance for loan losses 

(125,819

)

 (122,291) (117,693) (114,356) (110,171)
Allowance for covered loan losses 

(1,319

)

 (1,322) (1,422) (2,412) (2,507)
Net loans 

19,856,279

  19,637,704  19,078,086  18,163,135  17,472,583 
Premises and equipment, net 

598,746

  597,301  597,263  595,792  591,608 
Lease investments, net 

155,233

  129,402  116,355  103,749  89,337 
Accrued interest receivable and other assets 

560,741

  593,796  660,923  670,014  647,853 
Trade date securities receivable 

    677  1,079,238  1,008,613 
Goodwill 

499,341

  498,587  485,938  486,095  484,280 
Other intangible assets 

20,687

  21,851  20,736  21,821  23,725 

Total assets

 

$

25,778,893

  $25,668,553  $25,321,759  $24,420,616  $23,488,168 

Liabilities and Shareholders’ Equity

          
Deposits:          
Non-interest bearing 

$

5,790,579

  $5,927,377  $5,711,042  $5,367,672  $5,205,410 
Interest bearing 

15,939,862

  15,731,255  15,436,613  14,674,078  14,011,661 
Total deposits 

21,730,441

  21,658,632  21,147,655  20,041,750  19,217,071 
Federal Home Loan Bank advances 

227,585

  153,831  419,632  588,055  799,482 
Other borrowings 

238,787

  262,486  241,366  252,611  253,126 
Subordinated notes 

138,993

  138,971  138,943  138,915  138,888 
Junior subordinated debentures 

253,566

  253,566  253,566  253,566  253,566 
Trade date securities payable 

      40,000   
Accrued interest payable and other liabilities 

424,538

  505,450  446,123  482,124  407,593 
Total liabilities 

23,013,910

  22,972,936  22,647,285  21,797,021  21,069,726 
Shareholders’ Equity:          
Preferred stock 

251,257

  251,257  251,257  251,257  251,257 
Common stock 

52,605

  51,978  51,811  51,708  48,608 
Surplus 

1,381,886

  1,365,781  1,356,759  1,350,751  1,194,750 
Treasury stock 

(4,884

)

 (4,589)