Market Overview

Wintrust Financial Corporation Reports Fourth Quarter and Full Year 2015 Net Income

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ROSEMONT, Ill., Jan. 19, 2016 (GLOBE NEWSWIRE) -- Wintrust Financial Corporation ("Wintrust" or "the Company") (Nasdaq: WTFC) announced net income of $35.5 million or $0.64 per diluted common share for the fourth quarter of 2015 compared to net income of $38.4 million or $0.69 per diluted common share for the third quarter of 2015 and $38.1 million or $0.75 per diluted common share for the fourth quarter of 2014.  The Company recorded record net income of $156.7 million or $2.93 per diluted common share for the year ended 2015 compared to net income of $151.4 million or $2.98 per diluted common share for the year ended 2014.

Operating net income was $39.5 million or $0.71 per diluted common share for the fourth quarter of 2015 compared to $41.9 million or $0.75 per diluted common share in the third quarter of 2015. Operating net income excludes acquisition and non-operating compensation charges totaling $6.5 million and $5.7 million in the fourth quarter of 2015 and third quarter of 2015, respectively. Operating net income was $165.7 million or $3.10 per diluted common share for the year ended 2015 compared to $151.4 million or $2.98 per diluted common share for the year ended 2014. Operating net income excludes acquisition and non-operating compensation charges totaling $14.0 million for the year ended 2015. A table reconciling net income as reported to operating net income is set forth below and additional detail is shown in the "Supplemental Financial Measures/Ratios" section.

Highlights compared with the Third Quarter of 2015*:         

  • Total loans, excluding covered loans and mortgage loans held-for-sale, increased by $802 million, or 19% on an annualized basis, to $17.1 billion with $499 million occurring in December, creating positive average balance growth momentum for the first quarter of 2016.

  • Total assets increased by 16% on an annualized basis to nearly $23 billion.

  • Total deposits increased by $411 million, or 9% on an annualized basis, to $18.6 billion. Non-interest bearing deposit accounts now comprise 26% of total deposits.

  • Net interest margin decreased 4 basis points primarily as a result of lower yields on earning assets. Lower accretion on covered loans and competitive pricing on commercial premium finance and commercial real estate loans impacted the net interest margin the most during the quarter. The lower accretion on covered loans is expected to continue to have a slight negative impact on the net interest margin in 2016.

  • Non-performing loans as a percentage of total loans, excluding covered loans, decreased to 0.49% from 0.53% and the allowance for loan losses as a percentage of total non-performing loans, excluding covered loans, increased to 125% from 120%. OREO expenses increased by $3.0 million in the current quarter due to operating expenses (net of rental income) increasing $716,000, recognized gains on sales decreasing $1.1 million and valuation write-downs increasing $1.1 million.

  • Maintained strong capital ratios with a tangible common equity ratio, assuming full conversion of convertible preferred stock stock, of 7.7%.

  • Acquisition and non-operating compensation charges totaling $6.5 million reduced earnings per diluted common share by $0.07 per share. Exceeded targeted amounts as an additional $2.2 million of non-operating compensation charges were incurred in the fourth quarter relating to pension and additional severance costs.

  • Transferred approximately $866 million in available-for-sale securities to held-to-maturity securities classification.

  • Opened the newly renovated space in 231 S. LaSalle, in the heart of Chicago's financial district.

  • Closed six banking locations previously acquired from Suburban Illinois Bancorp, Inc. as a part of the integration of operations.

  Three Months Ended,  Year Ended,
  December 31, September 30, June 30, March 31,  December 31,
(Dollars in thousands, except per share data) 2015 2015 2015 2015  2015
Key Operating Measures, Adjusted for Acquisition and Non-Operating Compensation Charges           
Net income per common share – diluted $0.71  $0.75  $0.86  $0.77   $3.10 
Net overhead ratio 1.70% 1.63% 1.51% 1.68%  1.63%
Efficiency ratio 68.70% 66.67% 65.16% 67.56%  67.01%
Return on average assets 0.70% 0.77% 0.88% 0.81%  0.79%
Return on average common equity 6.79% 7.29% 8.55% 7.77%  7.59%
Return on average tangible common equity 9.10% 9.78% 11.07% 10.12%  10.01

%
Net income, as reported $35,512  $38,355  $43,831  $39,052   $156,749 
Acquisition and Non-Operating Compensation Charges           
Salaries and employee benefits:           
Salaries $1,113  $1,355  $  $12   $2,480 
Commissions and incentive compensation 144  264    3   411 
Benefits 1,550  107       1,657 
Total salaries and employee benefits 2,807  1,726    15   4,548 
Equipment 5  36  32     73 
Occupancy, net 605  201    16   822 
Data processing 1,504  2,692  653  130   4,979 
Advertising and marketing 66  1    5   72 
Professional fees(1) 145  335  417  568   1,465 
Other expense 757  5  21  4   787 
Other income (572) (674)      (1,246)
Total Acquisition and Non-Operating Compensation Charges $6,461  $5,670  $1,123  $738   $13,992 
Income tax benefit on acquisition and non-operating compensation charges $2,486  $2,112  $276

  $131

   $5,005 
Acquisition and non-operating compensation charges, net of tax $3,975  $3,558  $847

  $607

   $8,987 
Operating net income $39,487  $41,913  $44,678  $39,659   $165,736 

(1) Acquisition related legal fees are non-deductible for income tax purposes.

* See "Supplemental Financial Measures/Ratios" on pages 16-18 for more information on non-GAAP measures.

Edward J. Wehmer, President and Chief Executive Officer, commented, "Wintrust reported record annual net income in 2015 even with additional acquisition and non-operating compensation charges during the year.  The Company grew significantly during the year as total assets increased by 15%, reaching nearly $23 billion.  Operating net income totaled $39.5 million for the fourth quarter of 2015 and $165.7 million for the full year as earnings were impacted by acquisition and non-operating compensation charges totaling $6.5 million pre-tax in the fourth quarter of 2015 and $14.0 million pre-tax for the full year. Additionally, the fourth quarter of 2015 was highlighted by continued strong loan and deposit growth, improvement in non-performing assets and decreased mortgage banking revenue."

Mr. Wehmer continued, "The expected positive impact from the increase in interest rates announced by the Federal Reserve Bank in late December will be realized throughout 2016.  The company is well positioned to benefit from future increases in interest rates should they occur, barring significant changes in spreads due to competitive pressures or changes in the shape of the yield curve."

Commenting on credit quality, Mr. Wehmer noted, "Total non-performing assets, excluding covered assets, decreased by $9.9 million during the fourth quarter of 2015 resulting in non-performing assets as a percentage of total assets dropping from 0.63% to 0.56% during the period. Additionally, the allowance for loan losses as a percentage of non-performing loans, excluding covered loans, increased to 125%, exhibiting greater coverage for those non-performing credits. During the quarter, the Company has continued its practice of timely addressing and resolving non-performing credits. We believe the Company's reserves remain appropriate."

Mr. Wehmer further commented, "Mortgage banking revenue totaled $23.3 million in the fourth quarter of 2015, a decrease of $4.6 million from the third quarter of 2015 and a decrease of $1.4 million from the fourth quarter of 2014.  The decrease during the current quarter compared to the third quarter of 2015 resulted primarily from origination volumes declining to $808.9 million from $973.7 million due to typical seasonality. Our mortgage pipeline remains strong. We believe that our mortgage banking business remains well positioned to grow both organically and through acquisitions. The Company's newly created Wintrust Commercial Finance leasing operations grew outstandings by $220 million since its inception in April of this year.  This new venture is positioned to continue to expand in 2016, enhancing our earning asset growth and adding to further asset diversification."

Commenting further, Mr. Wehmer stated, "2015 was a year marked by long-term investments by the Company.  We completed four bank acquisitions adding $1.1 billion in assets while already driving out approximately $19.6 million of annual legacy operating costs.  Additionally, we  recently announced plans to acquire Generations Bancorp, Inc. another cost saving opportunity.  We invested in a new leasing operation which is off to a fast start.  Two major investments in 2015 were in the new classic bank facility in the heart of Chicago's financial district to house our middle market commercial lending and wealth management operations and multi-year branding sponsorships with multiple iconic sporting and cultural organizations in order to secure our position as Chicago and Wisconsin's bank.  The bank acquisitions came with a cost as evidenced by the $14 million of acquisition and non-operating compensation charges experienced in 2015.  That being said, we recorded record net income for the year and operating net income as defined increased by 9% year over year.  These investments are expected to pay substantial dividends in the coming year and beyond.  Our lending pipelines remain strong, our momentum is very good and our balance sheet is well positioned for potential rising rates.  We are very excited about the coming year."

In conclusion, Mr. Wehmer noted, "2016 marks the 25th anniversary of the beginning of Wintrust as an organization.  Throughout our life to date we have never wavered from our basic operating tenets that were established on day one.  These centered on serving our customers, communities, employees and shareholders.  While in our wildest dreams in 1991 we never would have thought we would be where we are right now, while never losing sight of our objectives, we continue to take a steady and measured approach to achieve our main objectives of growing franchise value, increasing profitability, leveraging our expense infrastructure and increasing shareholder value."

Graphs accompanying this release are available at http://www.globenewswire.com/NewsRoom/AttachmentNg/b6aa53c2-2243-4937-afad-bb1caca58745

Wintrust's key operating measures and growth rates for the fourth quarter of 2015, as compared to the sequential and linked quarters are shown in the table below:

        % or(5)
basis point  (bp)
change
from
3rd Quarter
2015




  % or
basis point  (bp)
change
from
4th Quarter
2014




 
  Three Months Ended    
(Dollars in thousands) December 31, 2015 September 30, 2015 December 31, 2014    
Net income $35,512  $38,355  $38,133  (7)% (7)%
Net income per common share – diluted $0.64  $0.69  $0.75  (7)% (15)%
Net revenue (1) $232,296  $230,493  $211,376  1 % 10 %
Net interest income $167,206  $165,540  $153,719  1 % 9 %
Net interest margin (2) 3.29% 3.33% 3.46% (4)bp (17)bp
Net overhead ratio (2) (3) 1.82% 1.74% 1.76% 8 bp 6 bp
Efficiency ratio (2) (4) 71.39% 69.02% 67.59% 237 bp 380 bp
Return on average assets 0.63% 0.70% 0.78% (7)bp (15)bp
Return on average common equity 6.03% 6.60% 7.51% (57)bp (148)bp
Return on average tangible common equity 8.12% 8.88% 9.82% (76)bp (170)bp
At end of period            
Total assets $22,917,166  $22,043,930  $20,010,727  16 % 15 %
Total loans, excluding loans held-for-sale, excluding covered loans $17,118,117  $16,316,211  $14,409,398  19 % 19 %
Total loans, including loans held-for-sale, excluding covered loans $17,506,155  $16,663,216  $14,760,688  20 % 19 %
Total deposits $18,639,634  $18,228,469  $16,281,844  9 % 14 %
Total shareholders' equity $2,352,274  $2,335,736  $2,069,822  3 % 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) The efficiency ratio is calculated by dividing total non-interest expense by tax-equivalent net revenue (less securities gains or losses).  A lower ratio indicates more efficient revenue generation.
(5) 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 web site at www.wintrust.com by choosing "Financial Reports" under the "Investor Relations" heading, and then choosing "Supplemental Financial Information."

Financial Performance Overview – Fourth Quarter 2015

For the fourth quarter of 2015, net interest income totaled $167.2 million, an increase of $1.7 million as compared to the third quarter of 2015 and an increase of $13.5 million as compared to the fourth quarter of 2014.  The changes in net interest income on both a sequential and linked quarter basis are the result of the following:

  • Net interest income increased $1.7 million in the fourth quarter of 2015 compared to the third quarter of 2015, due to:
    • An increase in total interest income of $2.1 million resulting primarily from loan growth during the period, partially offset by by a reduction in yield on earning assets.
    • Interest expense increased $442,000 primarily as a result of an increase in the average balance of interest-bearing liabilities and a one basis point increase in the rate on average interest bearing liabilities.
    • Combined, the increase in interest income of $2.1 million and the increase in interest expense of $442,000 created the $1.7 million increase in net interest income.

  • Net interest income increased $13.5 million in the fourth quarter of 2015 compared to the fourth quarter of 2014, due to:
    • Average loans, excluding covered loans, increased by $2.4 billion compared to the fourth quarter of 2014.  The growth in average loans, excluding covered loans, was partially offset by a 20 basis point decline in the yield on earning assets, resulting in an increase in total interest income of $14.8 million.
    • An increase in interest bearing deposits, an increase in borrowings under the Company's term credit facility at the end of the second quarter of 2015 and the completion of the Canadian secured borrowing transaction at the end of the fourth quarter of 2014 resulted in a $1.3 million increase in interest expense.
    • Combined, the increase in interest income of $14.8 million and the increase of interest expense of $1.3 million created the $13.5 million increase in net interest income in the fourth quarter of 2015 compared to the fourth quarter of 2014.

The net interest margin, on a fully taxable equivalent basis, for the fourth quarter of 2015 was 3.29% compared to 3.33% for the third quarter of 2015 and 3.46% for the fourth quarter of 2014. The reduction in net interest margin, on a fully taxable equivalent basis, compared to the third quarter of 2015 and the fourth quarter of 2014 is primarily the result of a decline in yield on non-covered and covered loans (see "Net Interest Income" section later in this release for further detail).

Non-interest income totaled $65.1 million in the fourth quarter of 2015, relatively steady compared to the third quarter of 2015 and increasing $7.4 million, or 13%, compared to the fourth quarter of 2014. The increase in non-interest income in the fourth quarter of 2015 compared to the fourth quarter of 2014 was primarily attributable to higher customer interest rate swap fees, increased income on operating leases through our leasing division and lower FDIC indemnification asset amortization. (see "Non-Interest Income" section later in this release for further detail).

Non-interest expense totaled $166.8 million in the fourth quarter of 2015, increasing $6.9 million, or 4%, compared to the third quarter of 2015 and increasing $23.4 million, or 16%, compared to the fourth quarter of 2014.  The increase in the current quarter compared to the third quarter of 2015 can be primarily attributed to an increase in acquisition and non-operating compensation charges, higher salary and employee benefit costs caused by the addition of employees from the various acquisitions and higher staffing levels as the Company grows, higher OREO expense and increased equipment and occupancy expense. The increase in the fourth quarter of 2015 compared to the fourth quarter of 2014 was primarily related to acquisition and non-operating compensation charges in the current quarter, higher salary and employee benefit costs caused by the addition of employees from the various acquisitions and higher staffing levels as the Company grows, increased equipment and occupancy, data processing and professional fees and higher marketing expenses (see "Non-Interest Expense" section later in this release for further detail).

Financial Performance Overview – Full Year 2015

For the full year of 2015, net interest income totaled $641.5 million, an increase of $43.0 million as compared to 2014 as a result of the following:  

  • Average earning assets increased by $2.2 billion primarily comprised of average loan growth, excluding covered loans, of $2.1 billion and an increase of $231.1 million in the average balance of liquidity management assets, partially offset by a decrease of $94.5 million in the average balance of covered loans.  The growth in average total loans, excluding covered loans, included an increase of $691.3 million in commercial loans, $622.3 million in commercial real estate loans, $505.8 million in life insurance premium finance receivables, $106.0 million in home equity and other loans, $72.3 million in mortgage loans held-for-sale and $65.8 million in commercial premium finance receivables.

  • The average earning asset growth of $2.2 billion, partially offset by a 20 basis point decrease in yield on earning assets, resulted in an increase in total interest income of $47.2 million.

  • Funding mix remained consistent as average demand deposits increased $1.1 billion, average interest bearing deposits increased $800.7 million and average wholesale borrowings increased $173.7 million. The increase in average interest bearing liabilities, partially offset by a one basis point decline in rate during the current year, resulted in a $4.2 million increase in interest expense.

  • Combined, the increase in interest income of $47.2 million and the increase in interest expense of $4.2 million created the $43.0 million increase in net interest income. 

The net interest margin, on a fully taxable equivalent basis, for 2015 was 3.36%, compared to 3.53% for 2014 (see "Net Interest Income" section later in this release for further detail).

Non-interest income totaled $271.6 million in 2015, increasing $56.4 million, or 26%, compared to 2014. The increase in non-interest income in 2015 compared to 2014 is primarily attributable to an increase in mortgage banking and wealth management revenues, fees from covered call options, the recognition of $2.1 million in BOLI death benefits, increased service charges, higher fees on customer interest rate swap transactions, increased income on operating leases through our leasing division and lower FDIC indemnification asset amortization (see "Non-Interest Income" section later in this release for further detail). 

Non-interest expense totaled $628.4 million in 2015, increasing $81.6 million, or 15%, compared to 2014. The increase in 2015 compared to 2014 was primarily attributable to acquisition and non-operating compensation charges during the current year, higher salary and employee benefit costs caused by the addition of employees from the various acquisitions and larger staffing as the Company grows as well as higher commissions and incentive compensation, and increased equipment, occupancy, data processing and professional fees,  and increased marketing expenses, partially offset by a decrease in OREO expenses (see "Non-Interest Expense" section later in this release for further detail).

Financial Performance Overview – Credit Quality

The ratio of non-performing assets to total assets was 0.56% as of December 31, 2015, compared to 0.63% at September 30, 2015 and 0.62% at December 31, 2014.  Non-performing assets, excluding covered assets, totaled $128.2 million at December 31, 2015, compared to $138.0 million at September 30, 2015 and $124.6 million at December 31, 2014.

Non-performing loans, excluding covered loans, totaled $84.1 million, or 0.49% of total loans, at December 31, 2015, compared to $86.0 million, or 0.53% of total loans, at September 30, 2015 and $78.7 million, or 0.55% of total loans, at December 31, 2014.  The decrease in non-performing loans, excluding covered loans, compared to September 30, 2015 is primarily the result of a $2.0 million decrease in the commercial real estate loan portfolio and a $4.0 million decrease in the home equity and residential real estate loan portfolios, partially offset by a $2.9 million increase in the commercial insurance premium finance receivables loan portfolio.  OREO, excluding covered OREO, of $43.9 million at December 31, 2015 decreased $7.9 million compared to $51.9 million at September 30, 2015 and decreased $1.7 million compared to $45.6 million at December 31, 2014.

Net charge-offs as a percentage of loans, excluding covered loans, for the fourth quarter of 2015 totaled 15 basis points on an annualized basis compared to 14 basis points on an annualized basis in the third quarter of 2015 and 16 basis points on an annualized basis in the fourth quarter of 2014.  Net charge-offs totaled $6.6 million in the fourth quarter of 2015, an $884,000 increase from $5.7 million in the third quarter of 2015 and a $694,000 increase from $5.9 million in the fourth quarter of 2014.

The provision for credit losses, excluding the provision for covered loan losses, totaled $9.2 million for the fourth quarter of 2015 compared to $8.7 million for the third quarter of 2015 and $6.7 million in the fourth quarter of 2014.  The higher provision for credit losses in the fourth quarter of 2015 compared to the same period of 2014 was partially due to the loan growth in the current period.

Excluding the allowance for covered loan losses, the allowance for credit losses at December 31, 2015 totaled $106.3 million, or 0.62% of total loans, compared to $103.9 million, or 0.64% of total loans at September 30, 2015 and $92.5 million, or 0.64% of total loans at December 31, 2014. The allowance for unfunded lending-related commitments totaled $949,000 as of December 31, 2015 compared to $926,000 as of September 30, 2015 and $775,000 as of December 31, 2014.

Financial Performance Overview – Earnings Per Share

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

   Three Months Ended Years Ended
(In thousands, except per share data)  December 31, 2015 September 30, 2015 December 31, 2014 December 31, 2015 December 31, 2014
Net income  $35,512  $38,355  $38,133  $156,749  $151,398 
Less: Preferred stock dividends and discount accretion  3,629  4,079  1,580  10,869  6,323 
Net income applicable to common shares—Basic(A) 31,883  34,276  36,553  145,880  145,075 
Add: Dividends on convertible preferred stock, if dilutive  1,579  1,579  1,580  6,314  6,323 
Net income applicable to common shares—Diluted(B) 33,462  35,855  38,133  152,194  151,398 
Weighted average common shares outstanding(C) 48,371  48,158  46,734  47,838  46,524 
Effect of dilutive potential common shares:           
Common stock equivalents  935  978  1,168  1,029  1,246 
Convertible preferred stock, if dilutive  3,070  3,071  3,075  3,070  3,075 
Weighted average common shares and effect of dilutive potential common shares(D) 52,376  52,207  50,977  51,937  50,845 
Net income per common share:           
Basic(A/C) $0.66  $0.71  $0.78  $3.05  $3.12 
Diluted(B/D) $0.64  $0.69  $0.75  $2.93  $2.98 

Potentially dilutive common shares can result from stock options, restricted stock unit awards, stock warrants, the Company's convertible preferred stock and shares to be issued under the Employee Stock Purchase Plan and the Directors Deferred Fee and Stock Plan, being treated as if they had been either exercised or issued, computed by application of the treasury stock method. While potentially dilutive common shares are typically included in the computation of diluted earnings per share, potentially dilutive common shares are excluded from this computation in periods in which the effect would reduce the loss per share or increase the income per share. For diluted earnings per share, net income applicable to common shares can be affected by the conversion of the Company's convertible preferred stock. Where the effect of this conversion would reduce the loss per share or increase the income per share, net income applicable to common shares is not adjusted by the associated preferred dividends. Due to weighted average share differences, when stated on a quarter and year-to-date basis, the earnings per share for the year-to-date period may not equal the sum of the respective earnings per share for the respective quarters then ended.

WINTRUST FINANCIAL CORPORATION
Selected Financial Highlights
 
 Three Months Ended Years Ended
(Dollars in thousands, except per share data)December 31, 2015 September 30, 2015 December 31, 2014 December 31, 2015 December 31, 2014
Selected Financial Condition Data (at end of period):         
Total assets$22,917,166  $22,043,930  $20,010,727     
Total loans, excluding loans held-for-sale and covered loans17,118,117  16,316,211  14,409,398     
Total deposits18,639,634  18,228,469  16,281,844     
Junior subordinated debentures268,566  268,566  249,493     
Total shareholders' equity2,352,274  2,335,736  2,069,822     
Selected Statements of Income Data:         
Net interest income$167,206  $165,540  $153,719  $641,529  $598,575 
Net revenue (1)232,296  230,493  211,376  913,126  813,815 
Net income35,512  38,355  38,133  156,749  151,398 
Net income per common share – Basic$0.66  $0.71  $0.78  $3.05  $3.12 
Net income per common share – Diluted$0.64  $0.69  $0.75  $2.93  $2.98 
Selected Financial Ratios and Other Data:         
Performance Ratios:         
Net interest margin (2)3.29% 3.33% 3.46% 3.36% 3.53%
Non-interest income to average assets1.16% 1.19% 1.18% 1.29% 1.15%
Non-interest expense to average assets2.98% 2.93% 2.94% 2.99% 2.92%
Net overhead ratio (2) (3)1.82% 1.74% 1.76% 1.70% 1.77%
Efficiency ratio (2) (4)71.39% 69.02% 67.59% 68.49% 66.89%
Return on average assets0.63% 0.70% 0.78% 0.75% 0.81%
Return on average common equity6.03% 6.60% 7.51% 7.15% 7.77%
Return on average tangible common equity (2)8.12% 8.88% 9.82% 9.44% 10.14%
Average total assets$22,233,492  $21,688,450  $19,366,670  $21,009,773  $18,699,458 
Average total shareholders' equity2,347,545  2,310,511  2,057,855  2,232,989  1,993,959 
Average loans to average deposits ratio (excluding covered loans)91.9% 91.9% 89.5% 92.0% 89.9%
Average loans to average deposits ratio (including covered loans)92.7% 92.9% 91.0% 93.1% 91.7%
Common Share Data at end of period:         
Market price per common share$48.52  $53.43  $46.76     
Book value per common share (2)$43.42  $43.12  $41.52     
Tangible common book value per share (2)$33.17  $32.83  $32.45     
Common shares outstanding48,383,279  48,336,870  46,805,055     
Other Data at end of period:(8)         
Leverage Ratio (5)9.1% 9.2% 10.2%    
Tier 1 capital to risk-weighted assets (5)10.0% 10.3% 11.6%    
Common equity Tier 1 capital to risk-weighted assets(5)8.4% 8.6%  N/A     
Total capital to risk-weighted assets (5)12.2% 12.6% 13.0%    
Tangible common equity ratio (TCE) (2)(7)7.2% 7.4% 7.8%    
Tangible common equity ratio, assuming full conversion of preferred stock (2) (7)7.7% 8.0% 8.4%    
Allowance for credit losses (6)$106,349  $103,922  $92,480     
Non-performing loans$84,057  $85,976  $78,677     
Allowance for credit losses to total loans (6)0.62% 0.64% 0.64%    
Non-performing loans to total loans0.49% 0.53% 0.55%    
Number of:         
Bank subsidiaries15  15  15     
Banking offices152  160  140     

(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) The efficiency ratio is calculated by dividing total non-interest expense by tax-equivalent net revenue (less securities gains or losses). A lower ratio indicates more efficient revenue generation.
(5) Capital ratios for current quarter-end are estimated.
(6) The allowance for credit losses includes both the allowance for loan losses and the allowance for unfunded lending-related commitments, but excludes the allowance for covered loan losses.
(7) Total shareholders' equity minus preferred stock and total intangible assets divided by total assets minus total intangible assets.
(8) Asset quality ratios exclude covered loans.






WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
 
(In thousands) (Unaudited)
December 31,
2015

 (Unaudited)
September 30,
2015

 December 31,
2014
Assets      
Cash and due from banks $252,227  $247,341  $225,136 
Federal funds sold and securities purchased under resale agreements 4,341  3,314  5,571 
Interest bearing deposits with banks 627,009  701,106  998,437 
Available-for-sale securities, at fair value 1,716,388  2,214,281  1,792,078 
Held-to-maturity securities, at amortized cost 884,826     
Trading account securities 448  3,312  1,206 
Federal Home Loan Bank and Federal Reserve Bank stock 101,581  90,308  91,582 
Brokerage customer receivables 27,631  28,293  24,221 
Mortgage loans held-for-sale 388,038  347,005  351,290 
Loans, net of unearned income, excluding covered loans 17,118,117  16,316,211  14,409,398 
Covered loans 148,673  168,609  226,709 
Total loans 17,266,790  16,484,820  14,636,107 
Less: Allowance for loan losses 105,400  102,996  91,705 
Less: Allowance for covered loan losses 3,026  2,918  2,131 
Net loans 17,158,364  16,378,906  14,542,271 
Premises and equipment, net 592,256  587,348  555,228 
Lease investments, net 63,170  29,111  426 
FDIC indemnification asset     11,846 
Accrued interest receivable and other assets 604,917  637,925  501,456 
Trade date securities receivable   277,981  485,534 
Goodwill 471,761  472,166  405,634 
Other intangible assets 24,209  25,533  18,811 
Total assets $22,917,166  $22,043,930  $20,010,727 
Liabilities and Shareholders' Equity      
Deposits:      
Non-interest bearing $4,836,420  $4,705,994  3,518,685 
Interest bearing 13,803,214  13,522,475  12,763,159 
Total deposits 18,639,634  18,228,469  16,281,844 
Federal Home Loan Bank advances 859,876  451,330  733,050 
Other borrowings 266,019  259,978  196,465 
Subordinated notes 140,000  140,000  140,000 
Junior subordinated debentures 268,566  268,566  249,493 
Trade date securities payable 538  617  3,828 
Accrued interest payable and other liabilities 390,259  359,234  336,225 
Total liabilities 20,564,892  19,708,194  17,940,905 
Shareholders' Equity:      
Preferred stock 251,287  251,312  126,467 
Common stock 48,469  48,422  46,881 
Surplus 1,190,988  1,187,407  1,133,955 
Treasury stock (3,973) (3,964) (3,549)
Retained earnings 928,211  901,652  803,400 
Accumulated other comprehensive loss (62,708) (49,093) (37,332)
Total shareholders' equity 2,352,274  2,335,736  2,069,822 
Total liabilities and shareholders' equity $22,917,166  $22,043,930  $20,010,727 



WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED, except for the year ended December 31, 2014)
 
  Three Months Ended Years Ended
(In thousands, except per share data) December 31, 2015 September 30, 2015 December 31, 2014 December 31, 2015 December 31, 2014
Interest income          
Interest and fees on loans $169,501  $167,831  $157,476  $651,831  $613,024 
Interest bearing deposits with banks 493  372  495  1,486  1,472 
Federal funds sold and securities purchased under resale agreements   1  3  4  25 
Investment securities 16,405  16,130  13,761  61,006  52,951 
Trading account securities 25  19  45  108  79 
Federal Home Loan Bank and Federal Reserve Bank stock 857  821  749  3,232  2,920 
Brokerage customer receivables 206  205  186  797  796 
Total interest income 187,487  185,379  172,715  718,464  671,267 
Interest expense          
Interest on deposits 12,617  12,436  12,431  48,863  48,411 
Interest on Federal Home Loan Bank advances 2,684  2,458  2,534  9,110  10,523 
Interest on other borrowings 1,007  1,045  313  3,627  1,773 
Interest on subordinated notes 1,777  1,776  1,776  7,105  3,906 
Interest on junior subordinated debentures 2,196  2,124  1,942  8,230  8,079 
Total interest expense 20,281  19,839  18,996  76,935  72,692 
Net interest income 167,206  165,540  153,719  641,529  598,575 
Provision for credit losses 9,059  8,322  6,133  32,942  20,537 
Net interest income after provision for credit losses 158,147  157,218  147,586  608,587  578,038 
Non-interest income          
Wealth management 18,634  18,243  18,649  73,452  71,343 
Mortgage banking 23,317  27,887  24,694  115,011  91,617 
Service charges on deposit accounts 7,210  7,403  6,189  27,384  23,307 
(Losses) gains on available-for-sale securities, net (79) (98) 18  323  (504)
Fees from covered call options 3,629  2,810  2,966  15,364  7,859 
Trading gains (losses), net 205  (135) (507) (247) (1,609)
Operating lease income, net 1,973  613  67  2,728  163 
Other 10,201  8,230  5,581  37,582  23,064 
Total non-interest income 65,090  64,953  57,657  271,597  215,240 
Non-interest expense          
Salaries and employee benefits 99,780  97,749  87,633  382,080  335,506 
Equipment 8,772  8,414  7,502  32,812  29,609 
Equipment on operating lease 1,229  473  53  1,826  142 
Occupancy, net 13,062  12,066  11,600  48,880  42,889 
Data processing 7,284  8,127  5,313  26,940  19,336 
Advertising and marketing 5,373  6,237  3,669  21,924  13,571 
Professional fees 4,387  4,100  4,039  18,225  15,574 
Amortization of other intangible assets 1,324  1,350  1,171  4,621  4,692 
FDIC insurance 3,317  3,035  2,810  12,386  12,168 
OREO expenses, net 2,598  (367) 2,320  4,483  9,367 
Other 19,703  18,790  17,331  74,242  63,993 
Total non-interest expense 166,829  159,974  143,441  628,419  546,847 
Income before taxes 56,408  62,197  61,802  251,765  246,431 
Income tax expense 20,896  23,842  23,669  95,016  95,033 
Net income $35,512  $38,355  $38,133  $156,749  $151,398 
Preferred stock dividends and discount accretion $3,629  $4,079  $1,580  $10,869  $6,323 
Net income applicable to common shares $31,883  $34,276  $36,553  $145,880  $145,075 
Net income per common share - Basic $0.66  $0.71  $0.78  $3.05  $3.12 
Net income per common share - Diluted $0.64  $0.69  $0.75  $2.93  $2.98 
Cash dividends declared per common share $0.11  $0.11  $0.10  $0.44  $0.40 
Weighted average common shares outstanding 48,371  48,158  46,734  47,838  46,524 
Dilutive potential common shares 4,005  4,049  4,243  4,099  4,321 
Average common shares and dilutive common shares 52,376  52,207  50,977  51,937  50,845 

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), net interest margin (including its individual components), the efficiency ratio, tangible common equity ratio, tangible common book value per share and return on average tangible common equity. In addition, certain operating measures and ratios are adjusted for acquisition and non-operating compensation charges. These operating measures and ratios include operating net income, the efficiency ratio, the net overhead ratio, return on average assets, return on average common equity, return on average tangible common equity and net income per diluted common share. Management believes that these measures and ratios provide users of the Company's financial information a more meaningful view of the performance of the 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. Management considers operating net income, which is reported net income excluding acquisition and non-operating compensation charges, as a useful measure of operating performance.  Acquisition related charges are specific costs incurred by the Company as a result of an acquisition that are not expected to continue in subsequent periods. Non-operating compensation charges are certain salary and employee benefit costs incurred that are not related to current operating services provided by employees of the Company. The Company excludes acquisition and non-operating compensation charges from reported net income as well as certain operating measures and ratios noted above to provide better comparability between periods.

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-derived financial measures for the last 5 quarters:

  Three Months Ended Years Ended
  December 31, September 30, June 30, March 31, December 31, December 31,
(Dollars and shares in thousands) 2015 2015 2015 2015 2014(1) 2015 2014(1)
Calculation of Net Interest Margin and Efficiency Ratio              
(A) Interest Income (GAAP) $187,487  $185,379  $175,241  $170,357  $172,715  $718,464  $671,267 
Taxable-equivalent adjustment:              
 - Loans 430  346  328  327  301  1,431  1,128 
 - Liquidity Management Assets 866  841  787  727  555  3,221  2,000 
 - Other Earning Assets 13  10  27  7  24  57  41 
Interest Income - FTE $188,796  $186,576  $176,383  $171,418  $173,595  $723,173  $674,436 
(B) Interest Expense (GAAP) 20,281  19,839  18,349  18,466  18,996  76,935  72,692 
Net interest income - FTE $168,515  $166,737  $158,034  $152,952  $154,599  $646,238  $601,744 
(C) Net Interest Income (GAAP) (A minus B) $167,206  $165,540  $156,892  $151,891  $153,719  $641,529  $598,575 
(D) Net interest margin (GAAP-derived) 3.26% 3.31% 3.39% 3.40% 3.44% 3.34% 3.51%
Net interest margin - FTE 3.29% 3.33% 3.41% 3.42% 3.46% 3.36% 3.53%
(E) Efficiency ratio (GAAP-derived) 71.79% 69.38% 65.96% 68.23% 67.87% 68.84% 67.15%
Efficiency ratio - FTE 71.39% 69.02% 65.64% 67.90% 67.59% 68.49% 66.89%
Efficiency ratio - Adjusted for acquisition and non-operating compensation charges 68.70% 66.67% 65.16% 67.56% 67.59% 67.01% 66.89%
(F) Net Overhead Ratio (GAAP-derived) 1.82% 1.74% 1.53% 1.69% 1.76% 1.70% 1.77%
Net Overhead Ratio - Adjusted for acquisition and non-operating compensation charges 1.70% 1.63% 1.51% 1.68% 1.76% 1.63% 1.77%
Calculation of Tangible Common Equity ratio (at period end)              
Total shareholders' equity $2,352,274  $2,335,736  $2,264,982  $2,131,074  $2,069,822     
(G) Less: Convertible preferred stock (126,287) (126,312) (126,312) (126,427) (126,467)    
Less: Non-convertible preferred stock (125,000) (125,000) (125,000)        
Less: Intangible assets (495,970) (497,699) (439,570) (439,055) (424,445)    
(H) Total tangible common shareholders' equity $1,605,017  $1,586,725  $1,574,100  $1,565,592  $1,518,910     
Total assets $22,917,166  $22,043,930  $20,799,924  $20,382,271  $20,010,727     
Less: Intangible assets (495,970) (497,699) (439,570) (439,055) (424,445)    
(I) Total tangible assets $22,421,196  $21,546,231  $20,360,354  $19,943,216  $19,586,282     
Tangible common equity ratio (H/I) 7.2% 7.4% 7.7% 7.9% 7.8%    
Tangible common equity ratio, assuming full conversion of preferred stock ((H-G)/I) 7.7% 8.0% 8.4% 8.5% 8.4%    
Calculation of book value per share              
Total shareholders' equity $2,352,274  $2,335,736  $2,264,982  $2,131,074  $2,069,822     
Less: Preferred stock (251,287) (251,312) (251,312) (126,427) (126,467)    
(J) Total common equity $2,100,987  $2,084,424  $2,013,670  $2,004,647  $1,943,355     
(K) Actual common shares outstanding 48,383  48,337  47,677  47,390  46,805     
Book value per share (J/K) $43.42  $43.12  $42.24  $42.30  $41.52     
Tangible common book value per share (H/K) $33.17  $32.83  $33.02  $33.04  $32.45     



  Three Months Ended Years Ended
  December 31, September 30, June 30, March 31, December 31, December 31,
(Dollars and shares in thousands) 2015 2015 2015 2015 2014 (1) 2015 2014 (1)
Calculation of return on average assets              
(L) Net income $35,512  $38,355  $43,831  $39,052  $38,133  $156,749  $151,398 
Add: Acquisition and non-operating compensation charges, net of tax 3,975  3,558  847  607    8,987   
(M) Operating net income 39,487  41,913  44,678  39,659  38,133  165,736  151,398 
(N) Total average assets 22,233,492  21,688,450  20,256,996  19,826,240  19,366,670  21,009,773  18,699,458 
Return on average assets, annualized (L/N) 0.63% 0.70% 0.87% 0.80% 0.78% 0.75% 0.81%
Return on average assets, adjusted for acquisition and non-operating compensation charges, annualized (M/N) 0.70% 0.77% 0.88% 0.81% 0.78% 0.79% 0.81%
Calculation of return on average common equity              
(O) Net income applicable to common shares $31,883  34,276  42,251  37,471  36,553  $145,880  145,075 
(P) Add: Acquisition and non-operating compensation charges, net of tax 3,975  3,558  847  607

    8,987   
(Q) Add: After-tax intangible asset amortization 834  833  597  615  722  2,879  2,881 
(R) Tangible operating net income applicable to common shares $36,692  38,667  43,695  38,693  37,275  $157,746  147,956 
Total average shareholders' equity $2,347,545  2,310,511  2,156,128  2,114,356  2,057,855  $2,232,989  1,993,959 
Less: Average preferred stock (251,293) (251,312) (134,586) (126,445) (126,467) (191,416) (126,471)
(S) Total average common shareholders' equity $2,096,252  2,059,199  2,021,542  1,987,911  1,931,388  $2,041,573  1,867,488 
Less: Average intangible assets (497,199) (490,583) (439,455) (436,456) (425,834) (466,225) (408,642)
(T) Total average tangible common shareholders' equity $1,599,053  1,568,616  1,582,087  1,551,455  1,505,554  $1,575,348  1,458,846 
Return on average common equity, annualized (O/S) 6.03% 6.60% 8.38% 7.64% 7.51% 7.15% 7.77%
Return on average common equity, adjusted for acquisition and non-operating compensation charges, annualized  ((O+P)/S) 6.79% 7.29% 8.55% 7.77% 7.51% 7.59% 7.77%
Return on average tangible common equity, annualized ((O+Q)/T) 8.12% 8.88% 10.86% 9.96% 9.82% 9.44% 10.14%
Return on average tangible common equity, adjusted for acquisition and non-operating compensation charges, annualized  (R/T) 9.10% 9.78% 11.07% 10.12% 9.82% 10.01

% 10.14%
Calculation of net income per common share - diluted              
(U) Net income applicable to common shares - Diluted 33,462  35,855  43,831  39,052  38,133  152,199  151,398 
Add: Acquisition and non-operating compensation charges, net of tax 3,975  3,558  847

  607

    8,987   
(V) Net income applicable to common shares - Diluted, adjusted for acquisition and non-operating compensation charges 37,437  39,413  44,678  39,659  38,133  161,186  151,398 
Weighted average common shares and effect of dilutive potential common shares (W) 52,376  52,207  51,723  51,472  50,977  51,937  50,845 
Net income per common share - Diluted (U/W) $0.64  $0.69  $0.85  $0.76  $0.75  $2.93  $2.98 
Net income per common share - Diluted, adjusted for acquisition and non-operating compensation charges (V/W) 0.71  0.75  0.86  0.77  0.75  3.10  2.98 

(1) The Company considers acquisition and non-operating compensation charges incurred prior to 2015 to be insignificant.

LOANS
Loan Portfolio Mix and Growth Rates
 
        % Growth
(Dollars in thousands) December 31,
2015
 September 30,
2015
 December 31,
2014
 From (1)
September 30,
2015

 From
December 31,
2014

Balance:          
Commercial $4,713,909  $4,400,185  $3,924,394  28% 20%
Commercial real estate 5,529,289  5,307,566  4,505,753  17  23 
Home equity 784,675  797,465  716,293  (6) 10 
Residential real estate 607,451  571,743  483,542  25  26 
Premium finance receivables - commercial 2,374,921  2,407,075  2,350,833  (5) 1 
Premium finance receivables - life insurance 2,961,496  2,700,275  2,277,571  38  30 
Consumer and other 146,376  131,902  151,012  44  (3)
Total loans, net of unearned income, excluding covered loans $17,118,117  $16,316,211  $14,409,398  19% 19%
Covered loans 148,673  168,609  226,709  (47) (34)
Total loans, net of unearned income $17,266,790  $16,484,820  $14,636,107  19% 18%
Mix:          
Commercial 27% 27% 26%    
Commercial real estate 32  32  31     
Home equity 5  5  5     
Residential real estate 3  3  3     
Premium finance receivables - commercial 14  15  16     
Premium finance receivables - life insurance 17  16  16     
Consumer and other 1  1  1     
Total loans, net of unearned income, excluding covered loans 99% 99% 98%    
Covered loans 1  1  2     
Total loans, net of unearned income 100% 100% 100%    

(1) Annualized

           
As of December 31, 2015   % of
Total
Balance

 Nonaccrual > 90 Days
Past Due
and Still
Accruing


 Allowance
For Loan
Losses
Allocation


    
(Dollars in thousands) Balance 
Commercial:          
Commercial and industrial $2,851,354  27.8% $12,416  $6  $23,457 
Franchise 245,228  2.4      3,086 
Mortgage warehouse lines of credit 222,806  2.2      1,628 
Community Advantage - homeowner associations 130,986  1.3      3 
Aircraft 5,327  0.1  288    7 
Asset-based lending 742,684  7.3  8    5,859 
Tax exempt 267,273  2.6      1,759 
Leases 226,074  2.2    535  232 
Other 3,588        20 
PCI - commercial loans (1) 18,589  0.2    892  84 
Total commercial $4,713,909  46.1% $12,712  $1,433  $36,135 
Commercial Real Estate:          
Residential construction $70,381  0.7% $273  $  $895 
Commercial construction 288,279  2.8  33    3,018 
Land 78,417  0.8  1,751    2,467 
Office 863,001  8.4  4,619    5,890 
Industrial 727,648  7.1  9,564    6,377 
Retail 868,399  8.5  1,760    5,597 
Multi-family 742,349  7.2  1,954    7,356 
Mixed use and other 1,732,816  16.9  6,691    11,809 
PCI - commercial real estate (1) 157,999  1.5    22,111  349 
Total commercial real estate $5,529,289  53.9% $26,645  $22,111  $43,758 
Total commercial and commercial real estate $10,243,198  100.0% $39,357  $23,544  $79,893 
           
Commercial real estate - collateral location by state:          
Illinois $4,455,287  80.6%      
Wisconsin 581,844  10.5       
Total primary markets $5,037,131  91.1%      
Florida 55,631  1.0       
California 64,018  1.2       
Indiana 129,467  2.3       
Other (no individual state greater than 0.7%) 243,042  4.4       
Total $5,529,289  100.0%      
           

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

DEPOSITS
Deposit Portfolio Mix and Growth Rates
 
        % Growth
(Dollars in thousands) December 31, 2015 September 30, 2015 December 31, 2014 From (1)
September 30,
2015

 From
December 31,
2014

Balance:          
Non-interest bearing $4,836,420  $4,705,994  $3,518,685  11% 37%
NOW and interest bearing demand deposits 2,390,217  2,231,258  2,236,089  28  7 
Wealth Management deposits (2) 1,643,653  1,469,920  1,226,916  47  34 
Money Market 4,041,300  4,001,518  3,651,467  4  11 
Savings 1,723,367  1,684,007  1,508,877  9  14 
Time certificates of deposit 4,004,677  4,135,772  4,139,810  (13) (3)
Total deposits $18,639,634  $18,228,469  $16,281,844  9% 14%
Mix:          
Non-interest bearing 26% 26% 22%    
NOW and interest bearing demand deposits 13  12  14     
Wealth Management deposits (2) 9  8  8     
Money Market 22  22  22     
Savings 9  9  9     
Time certificates of deposit 21  23  25     
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 Chicago Trust Company and brokerage customers from unaffiliated companies which have been placed into deposit accounts of the Banks.

Time Certificates of Deposit
Maturity/Re-pricing Analysis
As of December 31, 2015
 
(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 $  $54,940  $147,210  $700,606  $902,756  0.58%
4-6 months 36,506  42,643    577,555  656,704  0.60%
7-9 months 165,621  31,803    536,680  734,104  0.78%
10-12 months   37,691    523,806  561,497  0.80%
13-18 months 43,307  16,608    580,093  640,008  0.91%
19-24 months 1,525  4,666    196,065  202,256  1.02%
24+ months 3,438  15,069    288,845  307,352  1.24%
Total $250,397  $203,420  $147,210  $3,403,650  $4,004,677  0.78%

(1) This category of certificates of deposit is shown by contractual maturity date.
(2) This category includes variable rate certificates of deposit and savings certificates with the majority repricing on at least a monthly basis.
(3) Weighted-average rate excludes the impact of purchase accounting fair value adjustments.

NET INTEREST INCOME

The following table presents a summary of Wintrust's average balances, net interest income and related net interest margins, calculated on a fully tax-equivalent basis, for the fourth quarter of 2015 compared to the third quarter of 2015 (sequential quarters)and fourth quarter of 2014 (linked quarters):

 Average Balance for three months ended, Interest for three months ended, Yield/Rate for three months ended,
(Dollars in thousands)December 31,
2015
 September 30,
2015
 December 31,
2014
 December 31,
2015
 September 30,
2015
 December 31,
2014
 December 31,
2015
 September 30,
2015
 December 31,
2014
Liquidity management
assets (1) (2) (7)
$3,245,393  $3,140,782  $2,972,220  $18,621  $18,165  $15,563  2.28% 2.29% 2.08%
Other earning assets (2) (3) (7)29,792  30,990  29,699  244  234  255  3.26  3.00  3.40 
Loans, net of unearned income (2) (4) (7)16,889,922  16,509,001  14,469,745  168,060  165,572  153,590  3.95  3.98  4.21 
Covered loans154,846  174,768  244,139  1,871  2,605  4,187  4.79  5.91  6.80 
Total earning assets (7)$20,319,953  $19,855,541  $17,715,803  $188,796  $186,576  $173,595  3.69% 3.73% 3.89%
Allowance for loan and covered loan losses(109,448) (106,091) (97,506)            
Cash and due from banks260,593  251,289  243,080             
Other assets1,762,394  1,687,711  1,505,293             
Total assets$22,233,492  $21,688,450  $19,366,670             
                  
Interest-bearing deposits$13,606,046  $13,489,651  $12,771,359  $12,617  $12,436  $12,431  0.37% 0.37% 0.39%
Federal Home Loan Bank advances448,725  402,646  335,198  2,684  2,458  2,534  2.37  2.42  3.00 
Other borrowings269,914  272,782  84,795  1,007  1,045  313  1.48  1.52  1.47 
Subordinated notes140,000  140,000  140,000  1,777  1,776  1,776  5.08  5.08  5.07 
Junior subordinated debentures268,566  264,974  249,493  2,196  2,124  1,942  3.20  3.14  3.04 
Total interest-bearing liabilities$14,733,251  $14,570,053  $13,580,845  $20,281  $19,839  $18,996  0.55% 0.54% 0.55%
Non-interest bearing deposits4,776,977  4,473,632  3,398,774             
Other liabilities375,719  334,254  329,196             
Equity2,347,545  2,310,511  2,057,855             
Total liabilities and shareholders' equity$22,233,492  $21,688,450  $19,366,670             
Interest rate spread (5) (7)            3.14% 3.19% 3.34%
Net free funds/contribution(6)$5,586,702  $5,285,488  $4,134,958        0.15% 0.14% 0.12%
Net interest income/margin (7)      $168,515  $166,737  $154,599  3.29% 3.33% 3.46%

(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 securities reflects a tax-equivalent adjustment based on a marginal federal corporate tax rate of 35%. The total adjustments for the three months ended December 31, 2015, September 30, 2015 and December 31, 2014 were $1.3 million, $1.2 million and $880,000, respectively.
(3) Other earning assets include brokerage customer receivables and trading account securities.
(4) Loans, net of unearned income, include loans held-for-sale and non-accrual loans.
(5) Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.
(6) Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.
(7) See "Supplemental Financial Measures/Ratios" for additional information on this performance ratio.





The 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 year ended December 31, 2015 compared to the year ended December 31, 2014:

 Average Balance for Year Ended, Interest for Year Ended, Yield/Rate for Year Ended,
(Dollars in thousands)December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014
Liquidity management assets (1) (2) (7)$2,992,506  $2,761,450  $68,949  $59,368  2.30% 2.15%
Other earning assets (2) (3) (7)30,161  28,699  962  916  3.19  3.19 
Loans, net of unearned income (2) (4) (7)16,022,371  13,958,842  641,917  590,620  4.01  4.23 
Covered loans186,427  280,946  11,345  23,532  6.09  8.38 
Total earning assets (7)$19,231,465  $17,029,937  $723,173  $674,436  3.76% 3.96%
Allowance for loan and covered loan losses(103,459) (100,586)        
Cash and due from banks249,488  234,194         
Other assets1,632,279  1,535,913         
Total assets$21,009,773  $18,699,458         
            
Interest-bearing deposits$13,271,304  $12,470,597  $48,863  $48,411  0.37% 0.39%
Federal Home Loan Bank advances389,426  387,591  9,110  10,523  2.34  2.71 
Other borrowings233,152  132,479  3,627  1,773  1.56  1.34 
Subordinated notes140,000  77,479  7,105  3,906  5.07  5.04 
Junior subordinated debentures258,203  249,493  8,230  8,079  3.14  3.19 
Total interest-bearing liabilities$14,292,085  $13,317,639  $76,935  $72,692  0.54% 0.55%
Non-interest bearing deposits4,144,378  3,062,338         
Other liabilities340,321  325,522         
Equity2,232,989  1,993,959         
Total liabilities and shareholders' equity$21,009,773  $18,699,458         
Interest rate spread (5) (7)        3.22% 3.41%
Net free funds/contribution (6)$4,939,380  $3,712,298      0.14% 0.12%
Net interest income/margin (7)    $646,238  $601,744  3.36% 3.53%

(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 securities reflects a tax-equivalent adjustment based on a marginal federal corporate tax rate of 35%. The total adjustments for the years ended December 31, 2015 and 2014 were $4.7 million and $3.2 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.





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 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 Scenarios at December 31, 2015, September 30, 2015 and December 31, 2014 is as follows:

      
Static Shock Scenarios +200
Basis 
Points

 +100
 Basis
 Points

 -100
Basis
 Points

December 31, 2015             16.1% 8.7% (10.6)%
September 30, 2015 15.6% 8.0% (11.1)%
December 31, 2014 13.4% 6.4% (10.1)%



Ramp Scenarios+200
Basis
Points

 +100
Basis
Points

 -100
Basis
Points

December 31, 2015              7.3% 3.9% (4.4)%
September 30, 20156.7% 3.6% (4.0)%
December 31, 20145.4% 2.5% (3.9)%

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

NON-INTEREST INCOME

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

  Three Months Ended        
  December 31, September 30, December 31, Q4 2015 compared to
Q3 2015
 Q4 2015 compared to
Q4 2014
(Dollars in thousands) 2015 2015 2014 $ Change % Change $ Change % Change
Brokerage $6,850  $6,579  $7,892  $271  4% $(1,042) (13)%
Trust and asset management 11,784  11,664  10,757  120  1  1,027  10 
Total wealth management 18,634  18,243  18,649  391  2  (15) 0 
Mortgage banking 23,317  27,887  24,694  (4,570) (16) (1,377) (6)
Service charges on deposit accounts 7,210  7,403  6,189  (193) (3) 1,021  16 
(Losses) gains on available-for-sale securities, net (79) (98) 18  19  NM  (97) NM 
Fees from covered call options 3,629  2,810  2,966  819  29  663  22 
Trading gains (losses), net 205  (135) (507) 340  NM  712  NM 
Operating lease income, net 1,973  613  67  1,360  NM  1,906  NM 
Other:              
Interest rate swap fees 2,343  2,606  1,119  (263) (10) 1,224  NM 
BOLI 1,463  212  661  1,251  NM  802  NM 
Administrative services 1,101  1,072  1,107  29  3  (6) (1)
Miscellaneous 5,294  4,340  2,694  954  22  2,600  97 
Total Other 10,201  8,230  5,581  1,971  24  4,620  83 
Total Non-Interest Income $65,090  $64,953  $57,657  $137  0% $7,433  13%



  Years Ended December 31, $ %
(Dollars in thousands) 2015 2014 Change Change
Brokerage $27,030  $30,438  $(3,408) (11)%
Trust and asset management 46,422  40,905  5,517  13 
Total wealth management 73,452  71,343  2,109  3 
Mortgage banking 115,011  91,617  23,394  26 
Service charges on deposit accounts 27,384  23,307  4,077  17 
Gains (losses) on available-for-sale securities, net 323  (504) 827  NM 
Fees from covered call options 15,364  7,859  7,505  95 
Trading (losses) gains, net (247) (1,609) 1,362  NM 
Operating lease income, net 2,728  163  2,565  NM 
Other:        
Interest rate swap fees 9,487  4,469  5,018  NM 
BOLI 4,622  2,700  1,922  71 
Administrative services 4,252  3,893  359  9 
Miscellaneous 19,221  12,002  7,219  60 
Total Other 37,582  23,064  14,518  63 
Total Non-Interest Income $271,597  $215,240  $56,357  26%
NM - Not Meaningful        

The significant changes in non-interest income for the quarter ended December 31, 2015 compared to the quarters ended September 30, 2015 and December 31, 2014 are discussed below.

Wealth management revenue totaled $18.6 million in the fourth quarter of 2015 as compared to $18.2 million in the third quarter of 2015 and $18.6 million in the fourth quarter of 2014.  The increase as compared to the third quarter of 2015 is mostly attributable to growth in assets from new customers and new financial advisors, as well as an increase in existing customer activity and market appreciation. 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, money managed fees and insurance product commissions at Wayne Hummer Investments.

For the quarter ended December 31, 2015, mortgage banking revenue totaled $23.3 million, a decrease of $4.6 million as compared to the third quarter of 2015 and a decrease of $1.4 million when compared to the fourth quarter of 2014.  The decrease in mortgage banking revenue in the fourth quarter of 2015, when compared to the third quarter of 2015 and the fourth quarter of 2014, resulted primarily from lower origination volumes in the current quarter.  Mortgage loans originated or purchased for sale were $808.9 million in the current quarter as compared to $973.7 million in the third quarter of 2015 and $838.3 million in the prior year quarter.  Mortgage banking revenue includes revenue from activities related to originating, selling and servicing residential real estate loans for the secondary market.

Service charges on deposit accounts totaled $7.2 million in the fourth quarter of 2015, a slight decrease compared to the third quarter of 2015 and an increase of $1.0 million compared to the prior year quarter.  The increase in the current quarter as compared to the fourth quarter of 2014 is primarily a result of higher account analysis fees on deposit accounts which have increased as a result of the Company's commercial banking initiative as well as additional service charges on deposit accounts from acquired institutions.

Fees from covered call option transactions totaled $3.6 million for the fourth quarter 2015, compared to $2.8 million for the third quarter of 2015 and $3.0 million for the fourth quarter of 2014. 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 increase the total return associated with holding certain investment securities and do not qualify as hedges pursuant to accounting guidance. Fees from covered call options increased in the current quarter compared to prior year periods primarily as a result of selling call options against a larger value of underlying securities resulting in higher premiums received by the Company. There were no outstanding call option contracts at December 31, 2015, September 30, 2015 and December 31, 2014.

The Company recognized $205,000 of trading gains in the fourth quarter of 2015 compared to trading losses of $135,000 in the third quarter of 2015 and trading losses of $507,000 in the fourth quarter of 2014. Trading gains and losses recorded by the Company primarily result from fair value adjustments related to interest rate derivatives not designated as hedges, primarily interest rate cap instruments that the Company uses to manage interest rate risk, specifically in the event of future increases in short-term interest rates.  The change in value of the cap derivatives reflects the present value of expected cash flows over the remaining life of the caps.  These expected cash flows are derived from the expected path for and a measure of volatility for short-term interest rates.

Other non-interest income totaled $10.2 million for the quarter ended December 31, 2015, an increase of $2.0 million compared to the third quarter of 2015 and an increase of $4.6 million compared to the fourth quarter of 2014.  The increase in the current quarter as compared to the third quarter of 2015 and the fourth quarter of 2014, is primarily due to an increase in net gains on partnership investments, greater interest rate swap revenues resulting from interest rate hedging transactions related to both customer-based trades and the related matched trades with inter-bank counterparties and the recognition of a $0.6 million BOLI death benefit.

NON-INTEREST EXPENSE

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

  Three Months Ended        
  December 31, September 30, December 31, Q4 2015 compared to
Q3 2015
 Q4 2015 compared to
Q4 2014
(Dollars in thousands) 2015 2015 2014 $ Change % Change $ Change % Change
Salaries and employee benefits:              
Salaries $50,982  $53,028  $45,255  $(2,046) (4)% $5,727  13%
Commissions and incentive compensation 31,222  30,035  28,369  1,187  4  2,853  10 
Benefits 17,576  14,686  14,009  2,890  20  3,567  25 
Total salaries and employee benefits 99,780  97,749  87,633  2,031  2  12,147  14 
Equipment 8,772  8,414  7,502  358  4  1,270  17 
Equipment on operating lease 1,229  473  53  756  NM  1,176  NM 
Occupancy, net 13,062  12,066  11,600  996  8  1,462  13 
Data processing 7,284  8,127  5,313  (843) (10) 1,971  37 
Advertising and marketing 5,373  6,237  3,669  (864) (14) 1,704  46 
Professional fees 4,387  4,100  4,039  287  7  348  9 
Amortization of other intangible assets 1,324  1,350  1,171  (26) (2) 153  13 
FDIC insurance 3,317  3,035  2,810  282  9  507  18 
OREO expense, net 2,598  (367) 2,320  2,965  NM  278  12 
Other:              
Commissions - 3rd party brokers 1,321  1,364  1,470  (43) (3) (149) (10)
Postage 1,892  1,927  1,724  (35) (2) 168  10 
Miscellaneous 16,490  15,499  14,137  991  6  2,353  17 
Total other 19,703  18,790  17,331  913  5  2,372  14 
Total Non-Interest Expense $166,829  $159,974  $143,441  $6,855  4% $23,388  16%



  Years Ended December 31, $
Change
 %
Change
(Dollars in thousands) 2015 2014 
Salaries and employee benefits:        
Salaries $197,475  $177,811  19,664  11%
Commissions and incentive compensation 120,138  103,185  16,953  16 
Benefits 64,467  54,510  9,957  18 
Total salaries and employee benefits 382,080  335,506  46,574  14 
Equipment 32,812  29,609  3,203  11 
Equipment on operating lease 1,826  142  1,684  NM 
Occupancy, net 48,880  42,889  5,991  14 
Data processing 26,940  19,336  7,604  39 
Advertising and marketing 21,924  13,571  8,353  62 
Professional fees 18,225  15,574  2,651  17 
Amortization of other intangible assets 4,621  4,692  (71) (2)
FDIC insurance 12,386  12,168  218  2 
OREO expenses, net 4,483  9,367  (4,884) (52)
Other:        
Commissions - 3rd party brokers 5,474  6,381  (907) (14)
Postage 7,030  6,045  985  16 
Miscellaneous 61,738  51,567  10,171  20 
Total other 74,242  63,993  10,249  16 
Total Non-Interest Expense $628,419  $546,847  $81,572  15%

The significant changes in non-interest expense for the quarter ended December 31, 2015 compared to the quarters ended September 30, 2015 and December 31, 2014 are discussed below.

Salaries and employee benefits expense increased $12.1 million, or 14%, in the fourth quarter of 2015 compared to the fourth quarter of 2014 , and increased $2.0 million compared to the third quarter of 2015. The increase compared to the prior year period is primarily due to a $5.7 million increase in salaries caused by the addition of employees from acquisitions, increased staffing as the Company grows, acquisition-related and severance charges, along with a $2.8 million increase in commissions and incentive compensation and a $3.6 million increase in employee benefits resulting from higher insurance costs and the $1.4 million adjustment of pension obligations assumed in previous acquisitions.

Equipment on operating lease expense totaled $1.2 million for the fourth quarter of 2015, an increase of $756,000 compared to the third quarter of 2015 and an increase of $1.2 million compared to the fourth quarter of 2014. The increase in the current quarter compared to the prior periods is primarily related to growth in business from the Company's leasing divisions.

Occupancy expense for the fourth quarter of 2015 was $13.1 million, an increase of $1.0 million, or 8% compared to the third quarter of 2015 and an increase of $1.5 million, or 13%, compared to the same period in 2014. The increase in the current quarter as compared to the prior year quarter is primarily the result of increased rent expense on leased properties as well as additional depreciation expenses on owned locations including those obtained in the Company's acquisitions. Occupancy expense includes depreciation on premises, real estate taxes, utilities and maintenance of premises, as well as net rent expense for leased premises.

Data processing expenses decreased in the fourth quarter of 2015 totaling $7.3 million as compared to $8.1 million in the third quarter of 2015 and increased $2.0 million compared to the fourth quarter of 2014. The amount of data processing expenses incurred decreased compared to third quarter of 2015 primarily due to lower acquisition related expenses recorded in the fourth quarter of 2015 than were recorded in the third quarter related to recent bank acquisition transactions. 

OREO expense totaled $2.6 million in the fourth quarter of 2015, an increase of $3.0 million compared to the third quarter of 2015 and an increase of $278,000 compared to the fourth quarter of 2014.  The increase in total OREO expense in the current quarter is due to operating expenses (net of rental income) increasing $716,000, recognized gains on sales decreasing $1.1 million and OREO valuation write-downs increasing $1.1 million.  OREO costs include all costs related to obtaining, maintaining and selling other real estate owned properties.    

Miscellaneous expenses in the fourth quarter of 2015 increased $1.0 million as compared to the third quarter of 2015 and increased $2.4 million, or 17%, compared to the quarter ended December 31, 2014. Miscellaneous expense includes ATM expenses, correspondent bank charges, directors' fees, telephone, travel and entertainment, corporate insurance, operating losses, dues and subscriptions, problem loan expenses and lending origination costs that are not deferred. 

ASSET QUALITY
Allowance for Credit Losses, excluding covered loans
 
  Three Months Ended Years Ended
(Dollars in thousands) December 31, 2015 September 30, 2015 December 31, 2014 December 31, 2015 December 31, 2014
Allowance for loan losses at beginning of period $102,996  $100,204  $91,019  $91,705  $96,922 
Provision for credit losses 9,196  8,665  6,744  33,747  22,889 
Other adjustments (243) (153) (236) (737) (824)
Reclassification from/(to) allowance for unfunded lending-related commitments 13  (42) 46  (138) (56)
Charge-offs:          
Commercial 1,369  964  289  4,253  4,153 
Commercial real estate 2,734  1,948  4,434  6,543  15,788 
Home equity 680  1,116  150  4,227  3,895 
Residential real estate 211  1,138  630  2,903  1,750 
Premium finance receivables - commercial 2,676  1,595  1,463  7,060  5,722 
Premium finance receivables - life insurance     4    4 
Consumer and other 179  116  156  521  792 
Total charge-offs 7,849  6,877  7,126  25,507  32,104 
Recoveries:          
Commercial 315  462  315  1,432  1,198 
Commercial real estate 491  213  572  2,840  1,334 
Home equity 183  42  57  312  535 
Residential real estate 55  136  19  283  335 
Premium finance receivables - commercial 223  278  219  1,288  1,139 
Premium finance receivables - life insurance   16  6  16  11 
Consumer and other 20  52  70  159  326 
Total recoveries 1,287  1,199  1,258  6,330  4,878 
Net charge-offs (6,562) (5,678) (5,868) (19,177) (27,226)
Allowance for loan losses at period end $105,400  $102,996  $91,705  $105,400  $91,705 
Allowance for unfunded lending-related commitments at period end 949  926  775  949  775 
Allowance for credit losses at period end $106,349  $103,922  $92,480  $106,349  $92,480 
Annualized net charge-offs by category as a percentage of its own respective category's average:          
Commercial 0.09% 0.05% % 0.07% 0.08%
Commercial real estate 0.16  0.13  0.34  0.07  0.33 
Home equity 0.25  0.55  0.05  0.52  0.47 
Residential real estate 0.07  0.42  0.30  0.29  0.19 
Premium finance receivables - commercial 0.41  0.21  0.21  0.24  0.19 
Premium finance receivables - life insurance          
Consumer and other 0.37  0.17  0.19  0.23  0.28 
Total loans, net of unearned income, excluding covered loans 0.15% 0.14% 0.16% 0.12% 0.20%
Net charge-offs as a percentage of the provision for credit losses 71.35% 65.53% 86.98% 56.83% 118.94%
Loans at period-end $17,118,117  $16,316,211  $14,409,398     
Allowance for loan losses as a percentage of loans at period end 0.62% 0.63% 0.64%    
Allowance for credit losses as a percentage of loans at period end 0.62% 0.64% 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 fourth quarter of 2015 totaled 15 basis points on an annualized basis compared to 14 basis points on an annualized basis in the third quarter of 2015 and 16 basis points on an annualized basis in the fourth quarter of 2014.  Net charge-offs totaled $6.6 million in the fourth quarter of 2015, an $884,000 increase from $5.7 million in the third quarter of 2015 and a $694,000 increase from $5.9 million in the fourth quarter of 2014.

The provision for credit losses, excluding the provision for covered loan losses, totaled $9.2 million for the fourth quarter of 2015, as compared to $8.7 million for the third quarter of 2015 and $6.7 million for the fourth quarter of 2014. The higher provision for credit losses in the fourth quarter of 2015 compared to the same period of 2014 was partly due to the loan growth in the current period.

The allowance for unfunded lending-related commitments totaled $949,000 as of December 31, 2015 compared to $926,000 as of September 30, 2015 and $775,000 as of December 31, 2014. 

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

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

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

  Three Months Ended Years Ended
(Dollars in thousands) December 31, 2015 September 30, 2015 December 31, 2014 December 31, 2015 December 31, 2014
Provision for loan losses $9,209  $8,623  $6,790  $33,609  $22,833 
Provision for unfunded lending-related commitments (13) 42  (46) 138  56 
Provision for covered loan losses (137) (343) (611) (805) (2,352)
Provision for credit losses $9,059  $8,322  $6,133  $32,942  $20,537 
           
      Period End
      December 31, 2015 September 30, 2015 December 31, 2014
Allowance for loan losses     $105,400  $102,996  $91,705 
Allowance for unfunded lending-related commitments     949  926  775 
Allowance for covered loan losses     3,026  2,918  2,131 
Allowance for credit losses     $109,375  $106,840  $94,611 

The tables below summarize the calculation of allowance for loan losses for the Company's core loan portfolio and consumer, niche and purchased loan portfolio as of December 31, 2015 and September 30, 2015.

  As of December 31, 2015
  Recorded Calculated As a percentage
of its own respective
(Dollars in thousands) Investment Allowance category's balance
Commercial: (1)      
Commercial and industrial $2,793,794  $23,455  0.84%
Asset-based lending 740,234  5,859  0.79 
Tax exempt 265,264  1,759  0.66 
Leases 225,805  232  0.10 
Other 2,790  20  0.73 
Commercial real estate: (1)      
Residential construction 69,407  895  1.29 
Commercial construction 286,777  3,018  1.05 
Land 72,114  2,467  3.42 
Office 802,274  5,890  0.73 
Industrial 679,538  6,373  0.94 
Retail 794,442  5,597  0.70 
Multi-family 685,217  7,348  1.07 
Mixed use and other 1,581,024  11,809  0.75 
Home equity (1) 688,160  11,993  1.74 
Residential real estate (1) 559,532  4,726  0.84 
Total core loan portfolio $10,246,372  $91,441  0.89%
Commercial:      
Franchise $245,228  $3,086  1.26%
Mortgage warehouse lines of credit 222,806  1,628  0.73 
Community Advantage - homeowner associations 130,986  3   
Aircraft 5,327  7  0.13 
Purchased non-covered commercial loans (2) 81,675  86  0.11 
Commercial real estate:      
Purchased non-covered commercial real estate (2) 558,496  361  0.06 
Purchased non-covered home equity (2) 96,515  19  0.02 
Purchased non-covered residential real estate (2) 47,919  8  0.02 
Premium finance receivables      
U.S. commercial insurance loans 2,096,604  5,449  0.26 
Canada commercial insurance loans (2) 278,317  567  0.20 
Life insurance loans (1) 2,593,204  1,217  0.05 
Purchased life insurance loans (2) 368,292     
Consumer and other (1) 141,743  1,527  1.08 
Purchased non-covered consumer and other (2) 4,633  1  0.02 
Total consumer, niche and purchased loan portfolio $6,871,745  $13,959  0.20%
Total loans, net of unearned income, excluding covered loans $17,118,117  $105,400  0.62%
Non-accretable credit discounts on purchased loans reported in accordance with ASC 310-30, excluding covered loans   29,502   
Total allowance for loan losses and non-accretable credit discounts on purchased loans, excluding covered loans   $134,902  0.79%

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

  As of September 30, 2015
  Recorded Calculated As a percentage
of its own respective
(Dollars in thousands) Investment Allowance category's balance
Commercial: (1)      
Commercial and industrial $2,579,208  $21,875  0.85%
Asset-based lending 797,301  6,282  0.79 
Tax exempt 230,878  1,303  0.56 
Leases 205,612  169  0.08 
Other 1,953  12  0.61 
Commercial real estate: (1)      
Residential construction 60,072  753  1.25 
Commercial construction 283,689  2,995  1.06 
Land 73,923  2,550  3.45 
Office 762,734  7,154  0.94 
Industrial 614,619  5,515  0.90 
Retail 753,009  5,254  0.70 
Multi-family 650,287  6,951  1.07 
Mixed use and other 1,517,265  12,077  0.80 
Home equity (1) 694,203  12,205  1.76 
Residential real estate (1) 518,756  4,580  0.88 
Total core loan portfolio $9,743,509  $89,675  0.92%
Commercial:      
Franchise $222,001  $3,145  1.42%
Mortgage warehouse lines of credit 136,614  1,022  0.75 
Community Advantage - homeowner associations 123,209  3   
Aircraft 6,371  8  0.13 
Purchased non-covered commercial loans (2) 97,038  171  0.18 
Commercial real estate:      
Purchased non-covered commercial real estate (2) 591,968  812  0.14 
Purchased non-covered home equity (2) 103,262  18  0.02 
Purchased non-covered residential real-estate (2) 52,987  6  0.01 
Premium finance receivables      
U.S. commercial insurance loans 2,127,969  5,458  0.26 
Canada commercial insurance loans (2) 279,106  583  0.21 
Life insurance loans (1) 2,326,689  1,040  0.04 
Purchased life insurance loans (2) 373,586     
Consumer and other (1) 127,011  1,054  0.83 
Purchased non-covered consumer and other (2) 4,891  1  0.02 
Total consumer, niche and purchased loan portfolio $6,572,702  $13,321  0.20%
Total loans, net of unearned income, excluding covered loans $16,316,211  $102,996  0.63%
Non-accretable credit discounts on purchased loans reported in accordance with ASC 310-30, excluding covered loans   30,405   
Total allowance for loan losses and non-accretable credit discounts on purchased loans, excluding covered loans   $133,401  0.82%

(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 previous pages as of December 31, 2015 and September 30, 2015.

The decrease in the allowance for loan losses to core loans in the fourth quarter of 2015 compared to the third quarter of 2015 was attributable to a smaller population of core loans requiring ASC 310 reserves (specific reserves). Loans requiring ASC 450 reserves typically have lower reserve factors as compared to core loans requiring ASC 310 reserves. ASC 310 reserves are maintained on impaired loans.

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 0.79% of the total loan portfolio as of December 31, 2015 as compared to 0.82% as of September 30, 2015.  The Company expects the total allowance for loan losses and non-accretable credit discounts on purchased loans to total loans ratio to increase in periods that have acquisitions and decrease in periods without acquisitions, based on the performance of the purchased loan portfolios.

The table below shows the aging of the Company's loan portfolio at December 31, 2015:

    90+ days 60-89 30-59    
As of December 31, 2015   and still days past days past    
(Dollars in thousands) Nonaccrual accruing due due Current Total Loans
Loan Balances:            
Commercial            
Commercial and industrial $12,416  $6  $6,749  $33,680  $2,798,503  $2,851,354 
Franchise         245,228  245,228 
Mortgage warehouse lines of credit         222,806  222,806 
Community Advantage - homeowners association         130,986  130,986 
Aircraft 288        5,039  5,327 
Asset-based lending 8    3,864  1,844  736,968  742,684 
Tax exempt         267,273  267,273 
Leases   535  748  4,192  220,599  226,074 
Other         3,588  3,588 
PCI - commercial (1)   892    2,510  15,187  18,589 
Total commercial 12,712  1,433  11,361  42,226  4,646,177  4,713,909 
Commercial real estate            
Residential construction 273      45  70,063  70,381 
Commercial construction 33    1,371  1,600  285,275  288,279 
Land 1,751      120  76,546  78,417 
Office 4,619    764  3,817  853,801  863,001 
Industrial 9,564    1,868  1,009  715,207  727,648 
Retail 1,760    442  2,310  863,887  868,399 
Multi-family 1,954    597  6,568  733,230  742,349 
Mixed use and other 6,691    6,723  18,835  1,700,567  1,732,816 
PCI - commercial real estate (1)   22,111  4,662  16,559  114,667  157,999 
Total commercial real estate 26,645  22,111  16,427  50,863  5,413,243  5,529,289 
Home equity 6,848    1,889  5,517  770,421  784,675 
Residential real estate 12,043    1,964  3,824  586,154  603,985 
PCI - residential real estate (1)   488  202  79  2,697  3,466 
Premium finance receivables            
Commercial insurance loans 14,561  10,294  6,624  21,656  2,321,786  2,374,921 
Life insurance loans     3,432  11,140  2,578,632  2,593,204 
PCI - life insurance loans (1)         368,292  368,292 
Consumer and other, including PCI 263  211  204  1,187  144,511  146,376 
Total loans, net of unearned income, excluding covered loans $73,072  $34,537  $42,103  $136,492  $16,831,913  $17,118,117 
Covered loans 5,878  7,335  703  5,774  128,983  148,673 
Total loans, net of unearned income $78,950  $41,872  $42,806  $142,266  $16,960,896  $17,266,790 

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

Aging as a % of Loan Balance: Nonaccrual 90+ days
and still
accruing

 60-89
days past
due

 30-59
days past
due

 Current Total Loans
Commercial            
Commercial and industrial 0.4% % 0.2% 1.2% 98.2% 100.0%
Franchise         100.0  100.0 
Mortgage warehouse lines of credit         100.0  100.0 
Community Advantage - homeowners association         100.0  100.0 
Aircraft 5.4        94.6  100.0 
Asset-based lending     0.5  0.3  99.2  100.0 
Tax exempt         100.0  100.0 
Leases   0.2  0.3  1.9  97.6  100.0 
Other         100.0  100.0 
PCI - commercial (1)   4.8    13.5  81.7  100.0 
Total commercial 0.3    0.2  0.9  98.6  100.0 
Commercial real estate            
Residential construction 0.4      0.1  99.5  100.0 
Commercial construction     0.5  0.6  98.9  100.0 
Land 2.2      0.2  97.6  100.0 
Office 0.5    0.1  0.4  99.0  100.0 
Industrial 1.3    0.3  0.1  98.3  100.0 
Retail 0.2    0.1  0.3  99.4  100.0 
Multi-family 0.3    0.1  0.9  98.7  100.0 
Mixed use and other 0.4    0.4  1.1  98.1  100.0 
PCI - commercial real estate (1)   14.0  3.0  10.5  72.5  100.0 
Total commercial real estate 0.5  0.4  0.3  0.9  97.9  100.0 
Home equity 0.9    0.2  0.7  98.2  100.0 
Residential real estate 2.0    0.3  0.6  97.1  100.0 
PCI - residential real estate(1)   14.1  5.8  2.3  77.8  100.0 
Premium finance receivables            
Commercial insurance loans 0.6  0.4  0.3  0.9  97.8  100.0 
Life insurance loans     0.1  0.4  99.5  100.0 
PCI - life insurance loans (1)         100.0  100.0 
Consumer and other, including PCI 0.2  0.1  0.1  0.8  98.8  100.0 
Total loans, net of unearned income, excluding covered loans 0.4% 0.2% 0.2% 0.8% 98.4% 100.0%
Covered loans 4.0  4.9  0.5  3.9  86.7  100.0 
Total loans, net of unearned income 0.5% 0.2% 0.2% 0.8% 98.3% 100.0%

As of December 31, 2015, $42.1 million of all loans, excluding covered loans, or 0.2%, were 60 to 89 days past due and $136.5 million, or 0.8%, were 30 to 59 days (or one payment) past due. As of September 30, 2015, $39.0 million of all loans, excluding covered loans, or 0.2%, were 60 to 89 days past due and $57.4 million, or 0.4%, were 30 to 59 days (or one payment) past due. The majority of the commercial and commercial real estate loans shown as 60 to 89 days and 30 to 59 days past due are included on the Company's internal problem loan reporting system. Loans on this system are closely monitored by management on a monthly basis.

The Company's home equity and residential loan portfolios continue to exhibit low delinquency ratios. Home equity loans at December 31, 2015 that are current with regard to the contractual terms of the loan agreement represent 98.2% of the total home equity portfolio. Residential real estate loans at December 31, 2015 that are current with regards to the contractual terms of the loan agreements comprise 96.9% of total residential real estate loans outstanding, which includes purchased non-covered residential real-estate.

The table below shows the aging of the Company's loan portfolio at September 30, 2015:

    90+ days 60-89 30-59    
As of September 30, 2015   and still days past days past    
(Dollars in thousands) Nonaccrual accruing due due Current Total Loans
Loan Balances:            
Commercial            
Commercial and industrial $12,006  $  $2,731  $9,331  $2,622,207  $2,646,275 
Franchise     80  376  221,545  222,001 
Mortgage warehouse lines of credit         136,614  136,614 
Community Advantage - homeowners association     44    123,165  123,209 
Aircraft       378  5,993  6,371 
Asset-based lending 12    1,313  247  800,798  802,370 
Tax exempt         232,667  232,667 
Leases       89  205,697  205,786 
Other         1,953  1,953 
PCI - commercial (1)   217    39  22,683  22,939 
Total commercial 12,018  217  4,168  10,460  4,373,322  4,400,185 
Commercial real estate            
Residential construction       1,141  60,130  61,271 
Commercial construction 31      2,394  283,538  285,963 
Land 1,756      2,207  75,113  79,076 
Office 4,045    10,861  2,362  773,043  790,311 
Industrial 11,637    786  897  622,804  636,124 
Retail 2,022    1,536  821  781,463  785,842 
Multi-family 1,525    512  744  684,878  687,659 
Mixed use and other 7,601    2,340  12,871  1,797,516  1,820,328 
PCI - commercial real estate (1)   13,547  299  583  146,563  160,992 
Total commercial real estate 28,617  13,547  16,334  24,020  5,225,048  5,307,566 
Home equity 8,365    811  4,124  784,165  797,465 
Residential real estate 14,557    1,017  1,195  551,292  568,061 
PCI - residential real estate (1)   424  323  411  2,524  3,682 
Premium finance receivables            
Commercial insurance loans 13,751  8,231  6,664  13,659  2,364,770  2,407,075 
Life insurance loans     9,656  2,627  2,314,406  2,326,689 
PCI - life insurance loans (1)         373,586  373,586 
Consumer and other, including PCI 297  140  56  935  130,474  131,902 
Total loans, net of unearned income, excluding covered loans $77,605  $22,559  $39,029  $57,431  $16,119,587  $16,316,211 
Covered loans 6,540  7,626  1,392  802  152,249  168,609 
Total loans, net of unearned income $84,145  $30,185  $40,421  $58,233  $16,271,836  $16,484,820 

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

Aging as a % of Loan Balance: Nonaccrual 90+ days
and still
accruing

 60-89
days past
due

 30-59
days past
due

 Current Total Loans
Commercial            
Commercial and industrial 0.5% % 0.1% 0.4% 99.0% 100.0%
Franchise       0.2  99.8  100.0 
Mortgage warehouse lines of credit         100.0  100.0 
Community Advantage - homeowners association         100.0  100.0 
Aircraft       5.9  94.1  100.0 
Asset-based lending     0.2    99.8  100.0 
Tax exempt         100.0  100.0 
Leases         100.0  100.0 
Other         100.0  100.0 
PCI - commercial(1)   0.9    0.2  98.9  100.0 
Total commercial 0.3    0.1  0.2  99.4  100.0 
Commercial real estate            
Residential construction       1.9  98.1  100.0 
Commercial construction       0.8  99.2  100.0 
Land 2.2      2.8  95.0  100.0 
Office 0.5    1.4  0.3  97.8  100.0 
Industrial 1.8    0.1  0.1  98.0  100.0 
Retail 0.3    0.2  0.1  99.4  100.0 
Multi-family 0.2    0.1  0.1  99.6  100.0 
Mixed use and other 0.4    0.1  0.7  98.8  100.0 
PCI - commercial real estate (1)   8.4  0.2  0.4  91.0  100.0 
Total commercial real estate 0.5  0.3  0.3  0.5  98.4  100.0 
Home equity 1.0    0.1  0.5  98.4  100.0 
Residential real estate 2.6    0.2  0.2  97.0  100.0 
PCI - residential real estate (1)   11.5  8.8  11.2  68.5  100.0 
Premium finance receivables            
Commercial insurance loans 0.6  0.4  0.3  0.6  98.1  100.0 
Life insurance loans     0.4  0.1  99.5  100.0 
PCI - life insurance loans (1)         100.0  100.0 
Consumer and other, including PCI 0.2  0.1    0.7  99.0  100.0 
Total loans, net of unearned income, excluding covered loans 0.5% 0.1% 0.2% 0.4% 98.8% 100.0%
Covered loans 3.9  4.5  0.8  0.5  90.3  100.0 
Total loans, net of unearned income 0.5% 0.2% 0.2% 0.4% 98.7% 100.0%

Non-performing Assets, excluding covered assets

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

  December 31, September 30, December 31,
(Dollars in thousands) 2015 2015 2014
Loans past due greater than 90 days and still accruing (1):      
Commercial $541  $  $474 
Commercial real estate      
Home equity      
Residential real estate      
Premium finance receivables - commercial 10,294  8,231  7,665 
Premium finance receivables - life insurance      
Consumer and other 150  140  119 
Total loans past due greater than 90 days and still accruing 10,985  8,371  8,258 
Non-accrual loans (2):      
Commercial 12,712  12,018  9,157 
Commercial real estate 26,645  28,617  26,605 
Home equity 6,848  8,365  6,174 
Residential real estate 12,043  14,557  15,502 
Premium finance receivables - commercial 14,561  13,751  12,705 
Premium finance receivables - life insurance      
Consumer and other 263  297  277 
Total non-accrual loans 73,072  77,605  70,420 
Total non-performing loans:      
Commercial 13,253  12,018  9,631 
Commercial real estate 26,645  28,617  26,605 
Home equity 6,848  8,365  6,174 
Residential real estate 12,043  14,557  15,502 
Premium finance receivables - commercial 24,855  21,982  20,370 
Premium finance receivables - life insurance      
Consumer and other 413  437  395 
Total non-performing loans $84,057  $85,976  $78,677 
Other real estate owned 26,849  29,053  36,419 
Other real estate owned - from acquisition 17,096  22,827  9,223 
Other repossessed assets $174  $193  $303 
Total non-performing assets $128,176  $138,049  $124,622 
TDRs performing under the contractual terms of the loan agreement $42,744  $49,173  $69,697 
Total non-performing loans by category as a percent of its own respective category's period-end balance:      
Commercial 0.28% 0.27% 0.25%
Commercial real estate 0.48  0.54  0.59 
Home equity 0.87  1.05  0.86 
Residential real estate 1.98  2.55  3.21 
Premium finance receivables - commercial 1.05  0.91  0.87 
Premium finance receivables - life insurance      
Consumer and other 0.28  0.33  0.26 
Total loans, net of unearned income 0.49% 0.53% 0.55%
Total non-performing assets as a percentage of total assets 0.56% 0.63% 0.62%
Allowance for loan losses as a percentage of total non-performing loans 125.39% 119.79% 116.56%

(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 $9.1 million, $10.1 million and $12.6 million as of December 31, 2015, September 30, 2015 and December 31, 2014, respectively.

Non-performing Commercial and Commercial Real Estate

Non-performing commercial and commercial real estate totaled $39.9 million as of December 31, 2015 compared to $40.6 million as of September 30, 2015 and $36.2 million as of December 31, 2014.

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 to occur upon the ultimate resolution of these credits.

Non-performing Residential Real Estate and Home Equity

Non-performing home equity and residential real estate loans totaled $18.9 million as of December 31, 2015. The balance decreased  $4.0 million from September 30, 2015 and decreased $2.8 million from December 31, 2014. The December 31, 2015 non-performing balance is comprised of $12.0 million of residential real estate (61 individual credits) and $6.8 million of home equity loans (45 individual credits). On average, this is approximately 7 non-performing residential real estate loans and home equity loans per chartered bank within the Company. The Company believes control and collection of these loans is very manageable. At this time, management believes reserves are adequate to absorb inherent losses that may occur upon the ultimate resolution of these credits.

Non-performing Commercial Insurance Premium Finance Receivables

The table below presents the level of non-performing property and casualty premium finance receivables as of December 31, 2015, September 30, 2015 and December 31, 2014 and the amount of net charge-offs for the quarters then ended.

  December 31, September 30, December 31,
(Dollars in thousands) 2015 2015 2014
Non-performing premium finance receivables - commercial $24,855  $21,982  $20,370 
- as a percent of premium finance receivables - commercial outstanding 1.05% 0.91% 0.87%
Net charge-offs (recoveries) of premium finance receivables - commercial $2,453  $1,317  $1,244 
- annualized as a percent of average premium finance receivables - commercial 0.41% 0.21% 0.21%

Fluctuations in this category may occur due to timing and nature of account collections from insurance carriers. The Company's underwriting standards, regardless of the condition of the economy, have remained consistent. We anticipate that net charge-offs and non-performing asset levels in the near term will continue to be at levels that are within acceptable operating ranges for this category of loans. Management is comfortable with administering the collections at this level of non-performing property and casualty premium finance receivables and believes reserves are adequate to absorb inherent losses that are expected upon the ultimate resolution of these credits.

Due to the nature of collateral for commercial premium finance receivables, it customarily takes 60-150 days to convert the collateral into cash. Accordingly, the level of non-performing commercial premium finance receivables is not necessarily indicative of the loss inherent in the portfolio. In the event of default, Wintrust has the power to cancel the insurance policy and collect the unearned portion of the premium from the insurance carrier. In the event of cancellation, the cash returned in payment of the unearned premium by the insurer should generally be sufficient to cover the receivable balance, the interest and other charges due. Due to notification requirements and processing time by most insurance carriers, many receivables will become delinquent beyond 90 days while the insurer is processing the return of the unearned premium. Management continues to accrue interest until maturity as the unearned premium is ordinarily sufficient to pay-off the outstanding balance and contractual interest due. 

Nonperforming Loans Rollforward

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

  Three Months Ended Years Ended
  December 31, September 30, December 31, December 31, December 31,
(Dollars in thousands) 2015 2015 2014 2015 2014
Balance at beginning of period $85,976  $76,554  $81,070  $78,677  $103,334 
Additions, net 5,983  24,333  6,797  48,124  37,984 
Return to performing status (1,152) (1,028) (1,533) (3,743) (8,345)
Payments received (6,387) (5,468) (3,426) (22,804) (15,031)
Transfer to OREO and other repossessed assets (1,903) (1,773) (866) (10,581) (23,402)
Charge-offs (1,882) (4,081) (3,032) (10,519) (17,159)
Net change for niche loans (1) 3,422  (2,561) (333) 4,903  1,296 
Balance at end of period $84,057  $85,976  $78,677  $84,057  $78,677 

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

TDRs

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

  December 31, September 30, December 31,
(Dollars in thousands) 2015 2015 2014
Accruing TDRs:      
Commercial $5,613  $5,717  $6,654 
Commercial real estate 32,777  39,867  60,120 
Residential real estate and other 4,354  3,589  2,923 
Total accrual $42,744  $49,173  $69,697 
Non-accrual TDRs: (1)      
Commercial $134  $147  $922 
Commercial real estate 5,930  5,778  7,503 
Residential real estate and other 3,045  4,222  4,153 
Total non-accrual $9,109  $10,147  $12,578 
Total TDRs:      
Commercial $5,747  $5,864  $7,576 
Commercial real estate 38,707  45,645  67,623 
Residential real estate and other 7,399  7,811  7,076 
Total TDRs $51,853  $59,320  $82,275 
Weighted-average contractual interest rate of TDRs 4.13% 4.04% 4.09%

(1) Included in total non-performing loans.

At December 31, 2015, the Company had $51.9 million in loans classified as TDRs.  The $51.9 million in TDRs represents 102 credits in which economic concessions were granted to certain borrowers to better align the terms of their loans with their current ability to pay.  The balance decreased from $59.3 million representing 114 credits at September 30, 2015 and decreased from $82.3 million representing 145 credits at December 31, 2014.

The table below presents a summary of TDRs as of December 31, 2015 and December 31, 2014, and shows the changes in the balance during the periods presented:

Three Months Ended December 31, 2015
 
(Dollars in thousands) Commercial Commercial
Real Estate
 Residential
Real Estate
and Other

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



Three Months Ended December 31, 2014
 
(Dollars in thousands) Commercial Commercial
Real Estate
 Residential
Real Estate
and Other

 Total
Balance at beginning of period $6,444  $70,441  $6,500  $83,385 
Additions during the period 1,461  1,405  949  3,815 
Reductions:        
Charge-offs   (559)   (559)
Transferred to OREO and other repossessed assets        
Removal of TDR loan status (1)        
Payments received (329) (3,664) (373) (4,366)
Balance at period end $7,576  $67,623  $7,076  $82,275 



Year Ended December 31, 2015
 
(Dollars in thousands) Commercial Commercial
Real Estate
 Residential
Real Estate
and Other

 Total
Balance at beginning of period $7,576  $67,623  $7,076