Market Overview

Wintrust Financial Corporation Reports Record First Quarter 2016 Net Income, an Increase of 26% Over Prior Year

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ROSEMONT, Ill., April 18, 2016 (GLOBE NEWSWIRE) -- Wintrust Financial Corporation ("Wintrust" or "the Company") (Nasdaq: WTFC) announced net income of $49.1 million or $0.90 per diluted common share for the first quarter of 2016 compared to net income of $35.5 million or $0.64 per diluted common share for the fourth quarter of 2015 and $39.1 million or $0.76 per diluted common share for the first quarter of 2015. 

Highlights compared with the Fourth Quarter of 2015*: 

  • Total loans, excluding covered loans and mortgage loans held-for-sale, increased by $328 million, or 8% on annualized basis, to $17.4 billion.
  • Total assets increased by 10% on an annualized basis to $23.5 billion.
  • Total deposits increased by $577 million, or 12% on an annualized basis, to $19.2 billion. Non-interest bearing deposit accounts now comprise 27% of total deposits compared to 26% of total deposits at the prior quarter end.
  • Net interest margin increased 3 basis points primarily as a result of higher yields on earning assets.
  • Net charge-offs, excluding covered loans, decreased by $3.1 million to $3.5 million. Net charge-offs as a percentage of average total loans, excluding covered loans, decreased to 8 bps.
  • Maintained strong capital ratios with a tangible common equity ratio, assuming full conversion of convertible preferred stock, of 7.8%.
  • Completed the acquisition of Generations Bancorp, Inc. ("Generations") at the end of March, adding $123 million in assets prior to purchase accounting adjustments.
  • Extinguished $15.0 million of junior subordinated debentures resulting in a $4.3 million pre-tax gain, or $2.6 million on an after-tax basis.
  • Net overhead ratio decreased to 1.49% from 1.82%. Excluding the impact of the gain from the extinguishment of junior subordinated debentures, the net overhead ratio was 1.57%. 

* See "Supplemental Financial Measures/Ratios" on pages 13-14 for more information on non-GAAP measures. 

Edward J. Wehmer, President and Chief Executive Officer, commented, "Wintrust reported record net income of $49.1 million for the first quarter of 2016, a 38% increase over the fourth quarter of 2015 and a 26% increase over the first quarter of 2015. Excluding a $4.3 million gain from the extinguishment of debt and $285,000 of acquisition related charges, net income totaled $46.7 million for the quarter. The first quarter of 2016 was characterized by positive momentum from continued loan and deposit growth, improvement in the net interest margin, stable credit quality metrics, the acquisition of Generations and decreased operating costs, including those related to recent acquisitions." 

Mr. Wehmer continued, "Excluding covered loans and mortgage loans held-for-sale, we grew our loan portfolio by $328 million in the first quarter, which included $73 million of loans, prior to purchase accounting adjustments, acquired in relation to the acquisition of Generations. This increased loan volume along with improvement in net interest margin during the quarter resulted in an increase in net interest income of $4.3 million. Our loan pipelines remain consistently strong. Deposit growth continued in the first quarter of 2016 as total deposits increased $577 million, which included $100 million, prior to purchase accounting adjustments, assumed from the acquisition of Generations. Demand deposits increased $369 million and now comprise 27% of our overall deposit base compared to 26% at the end of the fourth quarter of 2015." 

Commenting on credit quality, Mr. Wehmer noted, "During the quarter, the Company has continued its practice of timely addressing and resolving non-performing credits. Excluding covered loans, low net charge-offs continued in the current quarter with net charge-offs totaling $3.5 million in the first quarter compared to $6.6 million in the fourth quarter. Additionally, net charge-offs as a percentage of average total loans decreased to 0.08% from 0.15% in the fourth quarter of 2015. Total non-performing assets, excluding covered assets, as a percentage of total assets remained stable at 0.56%. Excluding covered loans, non-performing loans as a percentage of total loans was 0.51% at the end of the first quarter. The allowance for loan losses as a percentage of total loans, excluding covered loans, increased to 0.63% compared to 0.62% at the end of the fourth quarter of 2015. As a percentage of non-performing loans, the allowance for loan losses, excluding covered loans, remained strong at 123%. We believe that the Company's reserves remain appropriate." 

Mr. Wehmer further commented, "Mortgage banking revenue in the first quarter totaled $21.7 million, a decrease of $1.6 million compared to the fourth quarter of 2015 and decrease of $6.1 million compared to the first quarter of 2015. The decreased revenue from the fourth quarter resulted from origination volumes declining to $736.6 million from $808.9 million as a result of unfavorable changes in product and channel mix, more competitive pricing and seasonally slower sales in January and February.  Our mortgage pipeline strengthened considerably in March and is expected to continue strong throughout the second quarter. We believe that our mortgage banking business remains well positioned for growth both organically and through acquisitions." 

Turning to the future, Mr. Wehmer stated, "We anticipate the positive momentum realized in the first quarter to continue into the remainder of 2016. We have realized the expected cost savings from the acquisitions in 2015 and continue to monitor other opportunities to leverage our existing infrastructure in all areas of our business lines. Evaluating strategic acquisitions and organic branch growth will continue to be a part of our overall growth strategy with the goal of becoming Chicago's bank and Wisconsin's bank. Our opportunities for both internal growth and external growth remain consistently strong. 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." 

The graphs below illustrate certain highlights of the first quarter of 2016. 

http://resource.globenewswire.com/Resource/Download/abd60ed6-8ee8-4846-8700-30eab7fd53a5?size=o  

Wintrust's key operating measures and growth rates for the first quarter of 2016, as compared to the sequential and linked quarters, are shown in the table below: 

           
        % or(5)
basis point  (bp) change from
4nd Quarter
2015
 % or
basis point  (bp)
 change from
1st Quarter
2015
  Three Months Ended  
(Dollars in thousands) March 31,
2016
 December 31,
2015
 March 31,
2015
  
Net income $49,111  $35,512  $39,052  38 % 26 %
Net income per common share – diluted $0.90  $0.64  $0.76  41 % 18 %
Net revenue (1) $240,261  $232,296  $216,432  3 % 11 %
Net interest income $171,509  $167,206  $151,891  3 % 13 %
Net interest margin (2) 3.32% 3.29% 3.42% 3 bp (10)bp
Net overhead ratio (2) (3) 1.49% 1.82% 1.69% (33)bp (20)bp
Efficiency ratio (2) (4) 63.96% 71.39% 67.90% (743)bp (394)bp
Return on average assets 0.86% 0.63% 0.80% 23 bp 6 bp
Return on average common equity 8.55% 6.03% 7.64% 252 bp 91 bp
Return on average tangible common equity 11.33% 8.12% 9.96% 321 bp 137 bp
At end of period            
Total assets $23,488,168  $22,909,348  $20,371,566  10 % 15 %
Total loans, excluding loans held-for-sale, excluding covered loans $17,446,413  $17,118,117  $14,953,059  8 % 17 %
Total loans, including loans held-for-sale, excluding covered loans $17,760,967  $17,506,155  $15,399,414  6 % 15 %
Total deposits $19,217,071  $18,639,634  $16,938,769  12 % 13 %
Total shareholders' equity $2,418,442  $2,352,274  $2,131,074  11 % 13 %
                     

(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 "Financial Highlights." 

Financial Performance Overview – First Quarter 2016 

For the first quarter of 2016, net interest income totaled $171.5 million, an increase of $4.3 million as compared to the fourth quarter of 2015 and an increase of $19.6 million as compared to the first quarter of 2015.  The changes in net interest income on both a sequential and linked quarter basis are the result of the following: 

  • Net interest income increased $4.3 million in the first quarter of 2016 compared to the fourth quarter of 2015, due to: 
    • An increase in total interest income of $4.7 million resulting primarily from loan growth during the period and an increase in the yield on earning assets, partially offset by one less day in the quarter.
    • Interest expense increased $441,000 primarily as a result of an increase in the average balance of interest-bearing liabilities, partially offset by one less day in the quarter.
    • Combined, the increase in interest income of $4.7 million and the increase in interest expense of $441,000 created the $4.3 million increase in net interest income.
  • Net interest income increased $19.6 million in the first quarter of 2016 compared to the first quarter of 2015, due to:
    • Average loans, excluding covered loans, increased by $2.5 billion compared to the first quarter of 2015.  The growth in average loans, excluding covered loans, as well as one additional day in the quarter was partially offset by a 12 basis point decline in the yield on earning assets, resulting in an increase in total interest income of $21.9 million.
    • An increase in interest bearing deposits, an increase in FHLB advances and borrowings under the Company's term credit facility at the end of the second quarter of 2015 resulted in a $2.3 million increase in interest expense.
    • Combined, the increase in interest income of $21.9 million and the increase in interest expense of $2.3 million created the $19.6 million increase in net interest income in the first quarter of 2016 compared to the first quarter of 2015. 

The net interest margin, on a fully taxable equivalent basis, for the first quarter of 2016 was 3.32% compared to 3.29% for the fourth quarter of 2015 and 3.42% for the first quarter of 2015 (see "Net Interest Income" section later in this release for further detail). 

Non-interest income totaled $68.8 million in the first quarter of 2016, increasing $3.7 million, or 6%, compared to the fourth quarter of 2015 and increasing $4.2 million, or 7%, compared to the first quarter of 2015. The increase in non-interest income in the first quarter of 2016 compared to the fourth quarter of 2015 is primarily attributable to gains on sales of investment securities, increased operating lease income and a $4.3 million gain from an extinguishment of debt, partially offset by decreased mortgage banking revenue and decreased fees from covered call options.  The increase in non-interest income in the first quarter of 2016 compared to the first quarter of 2015 was primarily attributable to gains on sales of investments securities, increased operating lease income, higher service charges on deposits and a $4.3 million gain from an extinguishment of debt, partially offset by decreased mortgage banking revenue and decreased fees from covered call options (see "Non-Interest Income" section later in this release for further detail).  

Non-interest expense totaled $153.7 million in the first quarter of 2016, decreasing $13.1 million, or 8%, compared to the fourth quarter of 2015 and increasing $6.4 million, or 4%, compared to the first quarter of 2015.  The decrease in the current quarter compared to the fourth quarter of 2015 can be primarily attributed to lower salary and employee benefit costs, lower advertising and marketing expenses and a decrease in OREO expenses.  The increase in the first quarter of 2016 compared to the first quarter of 2015 was primarily attributable to higher salary and employee benefit costs caused by the addition of employees from the various acquisitions and higher staffing levels as the Company grows as well as higher commissions and incentive compensation, increased equipment and data processing, 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 March 31, 2016, compared to 0.56% at December 31, 2015, and 0.61% at March 31, 2015.  Non-performing assets, excluding covered assets, totaled $130.7 million at March 31, 2016, compared to $128.2 million at December 31, 2015 and $124.3 million at March 31, 2015. 

Non-performing loans, excluding covered loans, totaled $89.5 million, or 0.51% of total loans, at March 31, 2016, compared to $84.1 million, or 0.49% of total loans, at December 31, 2015 and $81.8 million, or 0.55% of total loans, at March 31, 2015.  The increase in non-performing loans, excluding covered loans, compared to December 31, 2015 is primarily the result of a $2.5 million increase in the home equity portfolio and a $1.6 million increase in the life insurance premium finance receivables portfolio. Compared to March 31, 2015, the increase is primarily the result of a $7.1 million increase in the commercial loan portfolio and a $1.6 million increase in the life insurance premium finance receivables portfolio. OREO, excluding covered OREO, of $41.0 million at March 31, 2016 decreased $2.9 million compared to $43.9 million at December 31, 2015 and decreased $1.3 million compared to $42.3 million at March 31, 2015. 

The provision for credit losses, excluding the provision for covered loan losses, totaled $8.4 million for the first quarter of 2016 compared to $9.2 million for the fourth quarter of 2015 and $6.2 million for the first quarter of 2015. The higher provision for credit losses in the first quarter of 2016 compared to the same period of 2015 was primarily due to increased reserves on the additional non-performing loans during the period.  

Net charge-offs as a percentage of loans, excluding covered loans, for the first quarter of 2016 totaled 8 basis points on an annualized basis compared to 15 basis points on an annualized basis in the fourth quarter of 2015 and 8 basis points on an annualized basis in the first quarter of 2015.  Net charge-offs totaled $3.5 million in the first quarter of 2016, a $3.1 million decrease from $6.6 million in the fourth quarter of 2015 and a $410,000 increase from $3.1 million in the first quarter of 2015. 

Excluding the allowance for covered loan losses, the allowance for credit losses at March 31, 2016 totaled $111.2 million, or 0.64% of total loans, compared to $106.3 million, or 0.62% of total loans, at December 31, 2015 and $95.3 million, or 0.64% of total loans, at March 31, 2015. 

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
(In thousands, except per share data)  March 31,
2016
 December 31,
2015
 March 31,
2015
Net income  $49,111  $35,512  $39,052 
Less: Preferred stock dividends and discount accretion  3,628  3,629  1,581 
Net income applicable to common shares—Basic(A) 45,483  31,883  37,471 
Add: Dividends on convertible preferred stock, if dilutive  1,578  1,579  1,581 
Net income applicable to common shares—Diluted(B) 47,061  33,462  39,052 
Weighted average common shares outstanding(C) 48,448  48,371  47,239 
Effect of dilutive potential common shares:       
Common stock equivalents  750  935  1,158 
Convertible preferred stock, if dilutive  3,070  3,070  3,075 
Weighted average common shares and effect of dilutive potential common shares(D) 52,268  52,376  51,472 
Net income per common share:       
Basic(A/C) $0.94  $0.66  $0.79 
Diluted(B/D) $0.90  $0.64  $0.76 
              

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. 

WINTRUST FINANCIAL CORPORATION
Selected Financial Highlights 

   
  Three Months Ended
(Dollars in thousands, except per share data) March 31,
2016
 December 31,
2015
 March 31,
2015
Selected Financial Condition Data (at end of period):      
Total assets $23,488,168  $22,909,348  $20,371,566 
Total loans, excluding loans held-for-sale and covered loans 17,446,413  17,118,117  14,953,059 
Total deposits 19,217,071  18,639,634  16,938,769 
Junior subordinated debentures 253,566  268,566  249,493 
Total shareholders' equity 2,418,442  2,352,274  2,131,074 
Selected Statements of Income Data:      
Net interest income $171,509  $167,206  $151,891 
Net revenue (1) 240,261  232,296  216,432 
Net income 49,111  35,512  39,052 
Net income per common share – Basic $0.94  $0.66  $0.79 
Net income per common share – Diluted $0.90  $0.64  $0.76 
Selected Financial Ratios and Other Data:      
Performance Ratios:      
Net interest margin (2) 3.32% 3.29% 3.42%
Non-interest income to average assets 1.21% 1.16% 1.32%
Non-interest expense to average assets 2.70% 2.98% 3.02%
Net overhead ratio (2) (3) 1.49% 1.82% 1.69%
Efficiency ratio (2) (4) 63.96% 71.39% 67.90%
Return on average assets 0.86% 0.63% 0.80%
Return on average common equity 8.55% 6.03% 7.64%
Return on average tangible common equity (2) 11.33% 8.12% 9.96%
Average total assets $22,902,913  $22,225,112  $19,814,606 
Average total shareholders' equity 2,389,770  2,347,545  2,114,356 
Average loans to average deposits ratio (excluding covered loans) 93.8% 91.9% 91.4%
Average loans to average deposits ratio (including covered loans) 94.6% 92.7% 92.7%
Common Share Data at end of period:      
Market price per common share $44.34  $48.52  $47.68 
Book value per common share (2) $44.67  $43.42  $42.30 
Tangible common book value per share (2) $34.20  $33.17  $33.04 
Common shares outstanding 48,518,998  48,383,279  47,389,608 
Other Data at end of period:(8)      
Leverage Ratio (5) 8.7% 9.1% 9.2%
Tier 1 capital to risk-weighted assets (5) 9.5% 10.0% 10.1%
Common equity Tier 1 capital to risk-weighted assets (5) 8.3% 8.4% 9.1%
Total capital to risk-weighted assets (5) 12.0% 12.2% 12.5%
Tangible common equity ratio (TCE) (2)(7) 7.2% 7.2% 7.9%
Tangible common equity ratio, assuming full conversion of convertible preferred stock (2) (7) 7.8% 7.7% 8.5%
Allowance for credit losses (6) $111,201  $106,349  $95,334 
Non-performing loans $89,499  $84,057  $81,772 
Allowance for credit losses to total loans (6) 0.64% 0.62% 0.64%
Non-performing loans to total loans 0.51% 0.49% 0.55%
Number of:      
Bank subsidiaries 15  15  15 
Banking offices 153  152  146 
          

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

(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)
March 31,
2016
 December 31,
2015
 (Unaudited)
March 31,
2015
Assets      
Cash and due from banks $208,480  $271,454  $286,743 
Federal funds sold and securities purchased under resale agreements 3,820  4,341  4,129 
Interest bearing deposits with banks 817,013  607,782  697,799 
Available-for-sale securities, at fair value 770,983  1,716,388  1,721,030 
Held-to-maturity securities, at amortized cost 911,715  884,826   
Trading account securities 2,116  448  7,811 
Federal Home Loan Bank and Federal Reserve Bank stock 113,222  101,581  92,948 
Brokerage customer receivables 28,266  27,631  25,287 
Mortgage loans held-for-sale 314,554  388,038  446,355 
Loans, net of unearned income, excluding covered loans 17,446,413  17,118,117  14,953,059 
Covered loans 138,848  148,673  209,694 
Total loans 17,585,261  17,266,790  15,162,753 
Less: Allowance for loan losses 110,171  105,400  94,446 
Less: Allowance for covered loan losses 2,507  3,026  1,878 
Net loans 17,472,583  17,158,364  15,066,429 
Premises and equipment, net 591,608  592,256  559,281 
Lease investments, net 89,337  63,170  383 
FDIC indemnification asset     10,224 
Accrued interest receivable and other assets 647,853  597,099  526,029 
Trade date securities receivable 1,008,613    488,063 
Goodwill 484,280  471,761  420,197 
Other intangible assets 23,725  24,209  18,858 
Total assets $23,488,168  $22,909,348  $20,371,566 
Liabilities and Shareholders' Equity      
Deposits:      
Non-interest bearing $5,205,410  $4,836,420  $3,779,609 
Interest bearing 14,011,661  13,803,214  13,159,160 
Total deposits 19,217,071  18,639,634  16,938,769 
Federal Home Loan Bank advances 799,482  853,431  406,839 
Other borrowings 253,126  265,785  186,716 
Subordinated notes 138,888  138,861  138,782 
Junior subordinated debentures 253,566  268,566  249,493 
Trade date securities payable   538  2,929 
Accrued interest payable and other liabilities 407,593  390,259  316,964 
Total liabilities 21,069,726  20,557,074  18,240,492 
Shareholders' Equity:      
Preferred stock 251,257  251,287  126,427 
Common stock 48,608  48,469  47,475 
Surplus 1,194,750  1,190,988  1,156,542 
Treasury stock (4,145) (3,973) (3,948)
Retained earnings 967,882  928,211  835,669 
Accumulated other comprehensive loss (39,910) (62,708) (31,091)
Total shareholders' equity 2,418,442  2,352,274  2,131,074 
Total liabilities and shareholders' equity $23,488,168  $22,909,348  $20,371,566 

 

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

 
 Three Months Ended
(In thousands, except per share data)March 31
2016
 December 31,
2015
 March 31,
2015
Interest income     
Interest and fees on loans$173,127  $169,501  $154,676 
Interest bearing deposits with banks746  493  316 
Federal funds sold and securities purchased under resale agreements1    2 
Investment securities17,190  16,405  14,400 
Trading account securities11  25  13 
Federal Home Loan Bank and Federal Reserve Bank stock937  857  769 
Brokerage customer receivables219  206  181 
Total interest income192,231  187,487  170,357 
Interest expense     
Interest on deposits12,781  12,617  11,814 
Interest on Federal Home Loan Bank advances2,886  2,684  2,156 
Interest on other borrowings1,058  1,007  788 
Interest on subordinated notes1,777  1,777  1,775 
Interest on junior subordinated debentures2,220  2,196  1,933 
Total interest expense20,722  20,281  18,466 
Net interest income171,509  167,206  151,891 
Provision for credit losses8,034  9,059  6,079 
Net interest income after provision for credit losses163,475  158,147  145,812 
Non-interest income     
Wealth management18,320  18,634  18,100 
Mortgage banking21,735  23,317  27,800 
Service charges on deposit accounts7,406  7,210  6,297 
Gains (losses) on available-for-sale securities, net1,325  (79) 524 
Fees from covered call options1,712  3,629  4,360 
Trading (losses) gains, net(168) 205  (477)
Operating lease income, net2,806  1,973  65 
Other15,616  10,201  7,872 
Total non-interest income68,752  65,090  64,541 
Non-interest expense     
Salaries and employee benefits95,811  99,780  90,130 
Equipment8,767  8,799  7,779 
Operating lease equipment depreciation2,050  1,202  57 
Occupancy, net11,948  13,062  12,351 
Data processing6,519  7,284  5,448 
Advertising and marketing3,779  5,373  3,907 
Professional fees4,059  4,387  4,664 
Amortization of other intangible assets1,298  1,324  1,013 
FDIC insurance3,613  3,317  2,987 
OREO expense, net560  2,598  1,411 
Other15,326  19,703  17,571 
Total non-interest expense153,730  166,829  147,318 
Income before taxes78,497  56,408  63,035 
Income tax expense29,386  20,896  23,983 
Net income$49,111  $35,512  $39,052 
Preferred stock dividends and discount accretion3,628  3,629  1,581 
Net income applicable to common shares$45,483  $31,883  $37,471 
Net income per common share - Basic$0.94  $0.66  $0.79 
Net income per common share - Diluted$0.90  $0.64  $0.76 
Cash dividends declared per common share$0.12  $0.11  $0.11 
Weighted average common shares outstanding48,448  48,371  47,239 
Dilutive potential common shares3,820  4,005  4,233 
Average common shares and dilutive common shares52,268  52,376  51,472 
         

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. 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. 

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

 Three Months Ended
 March 31, December 31, September 30, June 30, March 31,
(Dollars and shares in thousands)2016 2015 2015 2015 2015
Calculation of Net Interest Margin and Efficiency Ratio         
(A) Interest Income (GAAP)$192,231  $187,487  $185,379  $175,241  $170,357 
Taxable-equivalent adjustment:         
 - Loans509  430  346  328  327 
 - Liquidity Management Assets920  866  841  787  727 
 - Other Earning Assets6  13  10  27  7 
Interest Income - FTE$193,666  $188,796  $186,576  $176,383  $171,418 
(B) Interest Expense (GAAP)20,722  20,281  19,839  18,349  18,466 
Net interest income - FTE$172,944  $168,515  $166,737  $158,034  $152,952 
(C) Net Interest Income (GAAP) (A minus B)$171,509  $167,206  $165,540  $156,892  $151,891 
(D) Net interest margin (GAAP-derived)3.29% 3.26% 3.31% 3.39% 3.40%
Net interest margin - FTE3.32% 3.29% 3.33% 3.41% 3.42%
(E) Efficiency ratio (GAAP-derived)64.34% 71.79% 69.38% 65.96% 68.23%
Efficiency ratio - FTE63.96% 71.39% 69.02% 65.64% 67.90%
(F) Net Overhead Ratio (GAAP-derived)1.49% 1.82% 1.74% 1.53% 1.69%
Calculation of Tangible Common Equity ratio (at period end)         
Total shareholders' equity$2,418,442  $2,352,274  $2,335,736  $2,264,982  $2,131,074 
(G) Less: Convertible preferred stock(126,257) (126,287) (126,312) (126,312) (126,427)
Less:  Non-convertible preferred stock(125,000) (125,000) (125,000) (125,000)  
Less: Intangible assets(508,005) (495,970) (497,699) (439,570) (439,055)
(H) Total tangible common shareholders' equity$1,659,180  $1,605,017  $1,586,725  $1,574,100  $1,565,592 
Total assets$23,488,168  $22,909,348  $22,035,216  $20,790,202  $20,371,566 
Less: Intangible assets(508,005) (495,970) (497,699) (439,570) (439,055)
(I) Total tangible assets$22,980,163  $22,413,378  $21,537,517  $20,350,632  $19,932,511 
Tangible common equity ratio (H/I)7.2% 7.2% 7.4% 7.7% 7.9%
Tangible common equity ratio, assuming full conversion of convertible preferred stock ((H-G)/I)7.8% 7.7% 8.0% 8.4% 8.5%
Calculation of book value per share         
Total shareholders' equity$2,418,442  $2,352,274  $2,335,736  $2,264,982  $2,131,074 
Less: Preferred stock(251,257) (251,287) (251,312) (251,312) (126,427)
(J) Total common equity$2,167,185  $2,100,987  $2,084,424  $2,013,670  $2,004,647 
(K) Actual common shares outstanding48,519  48,383  48,337  47,677  47,390 
Book value per common share (J/K)$44.67  $43.42  $43.12  $42.24  $42.30 
Tangible common book value per share (H/K)$34.20  $33.17  $32.83  $33.02  $33.04 
          
Calculation of return on average common equity         
(L) Net income applicable to common shares45,483  31,883  34,276  42,251  37,471 
Add: After-tax intangible asset amortization812  834  833  597  615 
(M) Tangible net income applicable to common shares46,295  32,717  35,109  42,848  38,086 
Total average shareholders' equity2,389,770  2,347,545  2,310,511  2,156,128  2,114,356 
Less: Average preferred stock(251,262) (251,293) (251,312) (134,586) (126,445)
(N) Total average common shareholders' equity2,138,508  2,096,252  2,059,199  2,021,542  1,987,911 
Less: Average intangible assets(495,594) (497,199) (490,583) (439,455) (436,456)
(O) Total average tangible common shareholders' equity1,642,914  1,599,053  1,568,616  1,582,087  1,551,455 
Return on average common equity, annualized  (L/N)8.55% 6.03% 6.60% 8.38% 7.64%
Return on average tangible common equity, annualized (M/O)11.33% 8.12% 8.88% 10.86% 9.96%
               

LOANS 

Loan Portfolio Mix and Growth Rates 

         
        % Growth
(Dollars in thousands) March 31,
2016
 December 31,
2015
 March 31,
2015
 From (1)
December 31,
2015
 From
March 31,
2015
Balance:          
Commercial $4,890,246  $4,713,909  $4,211,932  15% 16%
Commercial real estate 5,737,959  5,529,289  4,710,486  15  22 
Home equity 774,342  784,675  709,283  (5) 9 
Residential real estate 626,043  607,451  495,925  12  26 
Premium finance receivables - commercial 2,320,987  2,374,921  2,319,623  (9)  
Premium finance receivables - life insurance 2,976,934  2,961,496  2,375,654  2  25 
Consumer and other 119,902  146,376  130,156  (73) (8)
Total loans, net of unearned income, excluding covered loans $17,446,413  $17,118,117  $14,953,059  8% 17%
Covered loans 138,848  148,673  209,694  (27) (34)
Total loans, net of unearned income $17,585,261  $17,266,790  $15,162,753  7% 16%
Mix:          
Commercial 28% 27% 28%    
Commercial real estate 32  32  31     
Home equity 4  5  5     
Residential real estate 4  3  3     
Premium finance receivables - commercial 13  14  15     
Premium finance receivables - life insurance 17  17  16     
Consumer and other 1  1  1     
Total loans, net of unearned income, excluding covered loans 99% 99% 99%    
Covered loans 1  1  1     
Total loans, net of unearned income 100% 100% 100%    
              

(1) Annualized 

           
As of March 31, 2016   % of
Total
Balance
 Nonaccrual > 90 Days
Past Due
and Still
Accruing
 Allowance
For Loan
Losses
Allocation
    
(Dollars in thousands) Balance 
Commercial:          
Commercial, industrial and other $3,404,555  32.0% $12,370  $338  $26,932 
Franchise 274,558  2.6      3,213 
Mortgage warehouse lines of credit 193,735  1.8      1,411 
Asset-based lending 747,901  7.0  3    5,963 
Leases 249,418  2.3      248 
PCI - commercial loans (1) 20,079  0.2    1,893  668 
Total commercial $4,890,246  45.9% $12,373  $2,231  $38,435 
Commercial Real Estate:          
Construction $391,322  3.7% $273  $  $4,236 
Land 95,580  0.9  1,746    3,233 
Office 888,494  8.4  7,729  1,260  5,824 
Industrial 742,956  7.0  10,960    6,440 
Retail 897,467  8.4  1,633    5,829 
Multi-family 763,073  7.2  287    7,581 
Mixed use and other 1,795,717  17.0  4,368    12,116 
PCI - commercial real estate (1) 163,350  1.5    24,738  4 
Total commercial real estate $5,737,959  54.1% $26,996  $25,998  $45,263 
Total commercial and commercial real estate $10,628,205  100.0% $39,369  $28,229  $83,698 
           
Commercial real estate - collateral location by state:          
Illinois $4,533,361  79.0%      
Wisconsin 585,809  10.2       
Total primary markets $5,119,170  89.2%      
Florida 52,649  0.9       
California 59,877  1.0       
Arizona 39,705  0.7       
Indiana 131,762  2.3       
Other (no individual state greater than 0.6%) 334,796  5.9       
Total $5,737,959  100.0%      
              

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


DEPOSITS
 

Deposit Portfolio Mix and Growth Rates 

         
        % Growth
(Dollars in thousands) March 31,
2016
 December 31,
2015
 March 31,
2015
 From (1)
December 31,
2015
 From
March 31,
2015
Balance:          
Non-interest bearing $5,205,410  $4,836,420  $3,779,609  31% 38%
NOW and interest bearing demand deposits 2,369,474  2,390,217  2,262,928  (3) 5 
Wealth management deposits (2) 1,761,710  1,643,653  1,528,963  29  15 
Money market 4,157,083  4,041,300  3,791,762  12  10 
Savings 1,766,552  1,723,367  1,563,752  10  13 
Time certificates of deposit 3,956,842  4,004,677  4,011,755  (5) (1)
Total deposits $19,217,071  $18,639,634  $16,938,769  12% 13%
Mix:          
Non-interest bearing 27% 26% 22%    
NOW and interest bearing demand deposits 12  13  13     
Wealth management deposits (2) 9  9  9     
Money market 22  22  23     
Savings 9  9  9     
Time certificates of deposit 21  21  24     
Total deposits 100% 100% 100%    
              

(1) Annualized 

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

Time Certificates of Deposit
Maturity/Re-pricing Analysis
As of March 31, 2016 

             
(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 $39,008  $55,793  $149,291  $651,559  $895,651  0.51%
4-6 months 165,622  43,096    618,340  827,058  0.75%
7-9 months   40,380    555,172  595,552  0.78%
10-12 months   21,783    516,014  537,797  0.79%
13-18 months 43,836  10,977    565,103  619,916  0.95%
19-24 months 2,743  6,161    171,296  180,200  0.92%
24+ months 3,197  14,895    282,576  300,668  1.27%
Total $254,406  $193,085  $149,291  $3,360,060  $3,956,842  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 first quarter of 2016 compared to the fourth quarter of 2015 (sequential quarters) and first quarter of 2015 (linked quarters), respectively: 

      
 Average Balance 
for three months ended,
 Interest 
for three months ended,
 Yield/Rate 
for three months ended,
(Dollars in thousands)March 31,
 2016
 December 31,
2015
 March 31,
 2015
 March 31,
2016
 December 31,
2015
 March 31,
2015
 March 31,
2016
 December 31,
2015
 March 31,
2015
Liquidity management assets(1)(2)(7)$3,300,138  $3,245,393  $2,868,906  $19,794  $18,621  $16,214  2.41% 2.28% 2.29%
Other earning assets(2)(3)(7)28,731  29,792  27,717  236  244  201  3.31  3.26  2.94 
Loans, net of unearned income(2)(4)(7)17,508,593  16,889,922  15,031,917  171,625  168,060  151,316  3.94  3.95  4.08 
Covered loans141,351  154,846  214,211  2,011  1,871  3,687  5.72  4.79  6.98 
Total earning assets(7)$20,978,813  $20,319,953  $18,142,751  $193,666  $188,796  $171,418  3.71% 3.69% 3.83%
Allowance for loan and covered loan losses(112,028) (109,448) (96,918)            
Cash and due from banks259,343  260,593  249,687             
Other assets1,776,785  1,754,014  1,519,086             
Total assets$22,902,913  $22,225,112  $19,814,606             
                  
Interest-bearing deposits$13,717,333  $13,606,046  $12,863,507  $12,781  $12,617  $11,814  0.37% 0.37% 0.37%
Federal Home Loan Bank advances825,104  441,669  347,456  2,886  2,684  2,156  1.41  2.41  2.52 
Other borrowings257,384  269,738  194,663  1,058  1,007  788  1.65  1.48  1.64 
Subordinated notes138,870  138,852  138,773  1,777  1,777  1,775  5.12  5.12  5.12 
Junior subordinated debentures257,687  268,566  249,493  2,220  2,196  1,933  3.41  3.20  3.10 
Total interest-bearing liabilities$15,196,378  $14,724,871  $13,793,892  $20,722  $20,281  $18,466  0.55% 0.55% 0.54%
Non-interest bearing deposits4,939,746  4,776,977  3,584,452             
Other liabilities377,019  375,719  321,906             
Equity2,389,770  2,347,545  2,114,356             
Total liabilities and shareholders' equity$22,902,913  $22,225,112  $19,814,606             
Interest rate spread(5)(7)            3.16% 3.14% 3.29%
Net free funds/contribution(6)$5,782,435  $5,595,082  $4,348,859        0.16% 0.15% 0.13%
Net interest income/ margin(7)      $172,944  $168,515  $152,952  3.32% 3.29% 3.42%
                           

(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 available-for-sale securities reflects a tax-equivalent adjustment based on a marginal federal corporate tax rate of 35%. The total adjustments for the three months ended March 31, 2016, December 31, 2015 and March 31, 2015 were $1.4 million, $1.3 million and $1.1 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 by modeling many different interest rate scenarios. 

The following interest rate scenarios display the percentage change in net interest income over a one-year time horizon assuming increases of 100 and 200 basis points and a decrease of 100 basis points. The Static Shock Scenario results incorporate actual cash flows and repricing characteristics for balance sheet instruments following an instantaneous, parallel change in market rates based upon a static (i.e. no growth or constant) balance sheet.  Conversely, the Ramp Scenario results incorporate management's projections of future volume and pricing of each of the product lines following a gradual, parallel change in market rates over twelve months.  Actual results may differ from these simulated results due to timing, magnitude, and frequency of interest rate changes as well as changes in market conditions and management strategies. The interest rate sensitivity for both the Static Shock and Ramp Scenario at March 31, 2016, December 31, 2015 and March 31, 2015 is as follows: 

      
Static Shock Scenario +200
Basis 
Points
 +100
 Basis
 Points
 -100
Basis
 Points
March 31, 2016 16.4% 8.9% (8.7)%
December 31, 2015 16.1% 8.7% (10.6)%
March 31, 2015 16.7% 8.4% (9.3)%

  

Ramp Scenario+200
Basis
Points
 +100
Basis
Points
 -100
Basis
Points
March 31, 20167.5% 3.7% (3.7)%
December 31, 20157.3% 3.9% (4.4)%
March 31, 20156.8% 3.0% (3.7)%

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

NON-INTEREST INCOME 

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

  Three Months Ended        
  March 31, December 31, March 31, Q1 2016 compared to
Q4 2015
 Q1 2016 compared to
Q1 2015
(Dollars in thousands) 2016 2015 2015 $ Change % Change $ Change % Change
Brokerage $6,057  $6,850  $6,852  $(793) (12)% $(795) (12)%
Trust and asset management 12,263  11,784  11,248  479  4  1,015  9 
Total wealth management 18,320  18,634  18,100  (314) (2) 220  1 
Mortgage banking 21,735  23,317  27,800  (1,582) (7) (6,065) (22)
Service charges on deposit accounts 7,406  7,210  6,297  196  3  1,109  18 
Gains (losses) on available-for-sale securities, net 1,325  (79) 524  1,404  NM  801  NM  
Fees from covered call options 1,712  3,629  4,360  (1,917) (53) (2,648) (61)
Trading (losses) gains, net (168) 205  (477) (373) NM  309  NM 
Operating lease income, net 2,806  1,973  65  833  42  2,741  NM 
Other:              
Interest rate swap fees 4,438  2,343  2,191  2,095  89  2,247  NM 
BOLI 472  1,463  766  (991) (68) (294) (38)
Administrative services 1,069  1,101  1,026  (32) (3) 43  4 
Gain on extinguishment of debt 4,305      4,305  NM  4,305  NM 
Miscellaneous 5,332  5,294  3,889  38  1  1,443  37 
Total Other 15,616  10,201  7,872  5,415  53  7,744  98 
Total Non-Interest Income $68,752  $65,090  $64,541  $3,662  6% $4,211  7%

NM - Not Meaningful 

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

The decrease in wealth management revenue during the current period as compared to the fourth quarter of 2015 is primarily attributable to volatile market conditions and lower customer activity in the current quarter.  The increase during the current period as compared to the first quarter of 2015 is primarily attributable to growth in assets under management due to new customers.  Wealth management revenue is comprised of the trust and asset management revenue of The Chicago Trust Company and Great Lakes Advisors and the brokerage commissions, managed money fees and insurance product commissions at Wayne Hummer Investments. 

The decrease in mortgage banking revenue in the current quarter as compared to the prior quarters resulted primarily from lower origination volumes in the current quarter. Mortgage loans originated or purchased for sale were $736.6 million in the current quarter as compared to $808.9 million in the fourth quarter of 2015 and $941.7 million in the first quarter of 2015. Mortgage banking revenue includes revenue from activities related to originating, selling and servicing residential real estate loans for the secondary market. 

The increase in service charges on deposit accounts in the current quarter is mostly 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. 

The increase in net gains on available-for-sale securities in the current quarter primarily relate to the sale of mortgage-backed securities that were held in the Company's available-for-sale securities portfolio. 

The Company has typically written call options with terms of less than three months against certain U.S. Treasury and agency securities held in its portfolio for liquidity and other purposes. Management has effectively entered into these transactions with the goal of economically hedging security positions and enhancing its overall return on its investment portfolio by using fees generated from these options to compensate for net interest margin compression. These option transactions are designed to mitigate overall interest rate risk and do not qualify as hedges pursuant to accounting guidance. Fees from covered call options decreased in the current quarter compared to the fourth and first quarters of 2015 primarily as a result of selling call options against a smaller value of underlying securities resulting in lower premiums received by the Company. There were no outstanding call option contracts at March 31, 2016, December 31, 2015 and March 31, 2015. 

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

The increase in other non-interest income in the current quarter as compared to the prior quarters is primarily due to the gain on the extinguishment of junior subordinated debentures, higher swap fee revenues resulting from interest rate hedging transactions related to both customer-based trades and the related matched trades with inter-bank dealer counterparties and higher foreign currency re-measurement gains, partially offset by net losses on partnership investments and lower income on bank-owned life insurance. 

NON-INTEREST EXPENSE 

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

  Three Months Ended        
  March 31, December 31, March 31, Q1 2016 compared to
Q4 2015
 Q1 2016 compared to
Q1 2015
(Dollars in thousands) 2016 2015 2015 $ Change % Change $ Change % Change
Salaries and employee benefits:              
Salaries $50,282  $50,982  $46,848  $(700) (1)% $3,434  7%
Commissions and incentive compensation 26,375  31,222  25,494  (4,847) (16) 881  3 
Benefits 19,154  17,576  17,788  1,578  9  1,366  8 
Total salaries and employee benefits 95,811  99,780  90,130  (3,969) (4) 5,681  6 
Equipment 8,767  8,799  7,779  (32)   988  13 
Operating lease equipment depreciation 2,050  1,202  57  848  71  1,993  NM 
Occupancy, net 11,948  13,062  12,351  (1,114) (9) (403) (3)
Data processing 6,519  7,284  5,448  (765) (11) 1,071  20 
Advertising and marketing 3,779  5,373  3,907  (1,594) (30) (128) (3)
Professional fees 4,059  4,387  4,664  (328) (7) (605) (13)
Amortization of other intangible assets 1,298  1,324  1,013  (26) (2) 285  28 
FDIC insurance 3,613  3,317  2,987  296  9  626  21 
OREO expense, net 560  2,598  1,411  (2,038) (78) (851) (60)
Other:              
Commissions - 3rd party brokers 1,310  1,321  1,386  (11) (1) (76) (5)
Postage 1,302  1,892  1,633  (590) (31) (331) (20)
Miscellaneous 12,714  16,490  14,552  (3,776) (23) (1,838) (13)
Total other 15,326  19,703  17,571  (4,377) (22) (2,245) (13)
Total Non-Interest Expense $153,730  $166,829  $147,318  $(13,099) (8)% $6,412  4%


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

Salaries and employee benefits expense decreased in the current quarter compared to the fourth quarter of 2015 primarily as a result of lower commissions and incentive compensation on variable pay based arrangements and lower acquisition-related expenses and severance charges, partially offset by an increase in employee benefits (primarily a $3.7 million increase related to payroll taxes).  Salaries and employee benefits expense increased in the current quarter compared to the first quarter of 2015 primarily as a result of the addition of employees from acquisitions, increased staffing as the Company grows and an increase in employee benefits (primarily health plan and payroll taxes related). 

Operating lease equipment depreciation increased in the current quarter compared to the prior periods as a result of growth in business from the Company's leasing divisions. 

The decrease in occupancy expenses in the current quarter compared to the fourth quarter of 2015 is primarily as result of acquisition-related charges incurred in the fourth quarter of 2015 to exit certain banking locations.  There were no acquisition-related charges incurred in the current quarter.  The decrease in occupancy expenses in the current quarter compared to the first quarter of 2015 is primarily related to higher rental income for leased premises in the current quarter.  Occupancy expense includes depreciation on premises, real estate taxes, utilities and maintenance of premises, as well as net rent expense for leased premises. 

Excluding the effect of acquisition-related charges, the amount of data processing expenses incurred increased in the current quarter compared to the prior quarters due to the overall growth of loan and deposit accounts. 

The decrease in advertising and marketing expenses during the current quarter compared to the fourth quarter of 2015 is primarily related to lower expenses for mass market media promotions and printing costs.  Marketing costs are incurred to promote the Company's brand, commercial banking capabilities, the Company's various products, to attract loans and deposits and to announce new branch openings as well as the expansion of the Company's non-bank businesses. The level of marketing expenditures depends on the type of marketing programs utilized which are determined based on the market area, targeted audience, competition and various other factors. 

The decrease in OREO expense in the current quarter compared to the prior quarters is primarily the result of higher gains recorded on OREO sales, fewer negative valuation adjustments of OREO properties and lower expenses to maintain OREO properties.  OREO costs include all costs related to obtaining, maintaining and selling other real estate owned properties and are shown net of any gains from the sale of such properties. 

The decrease in miscellaneous expenses in the current quarter as compared to the fourth quarter of 2015 is primarily a result of lower travel and entertainment expenses, loan expenses, supplies and donations. The decrease in miscellaneous expenses in the current quarter as compared to the first quarter of 2015 is primarily a result of lower loan expenses, covered asset expenses and operating losses.  Miscellaneous expense includes ATM expenses, correspondent bank charges, directors' fees, telephone, travel and entertainment, corporate insurance, dues and subscriptions, problem loan expenses, operating losses and lending origination costs that are not deferred. 

ASSET QUALITY 

Allowance for Credit Losses, excluding covered loans 

  Three Months Ended
  March 31, December 31, March 31,
(Dollars in thousands) 2016 2015 2015
Allowance for loan losses at beginning of period $105,400  $102,996  $91,705 
Provision for credit losses 8,423  9,196  6,185 
Other adjustments (78) (243) (248)
Reclassification (to) from allowance for unfunded lending-related commitments (81) 13  (113)
Charge-offs:      
Commercial 671  1,369  677 
Commercial real estate 671  2,734  1,005 
Home equity 1,052  680  584 
Residential real estate 493  211  631 
Premium finance receivables - commercial 2,480  2,676  1,263 
Premium finance receivables - life insurance      
Consumer and other 107  179  111 
Total charge-offs 5,474  7,849  4,271 
Recoveries:      
Commercial 629  315  370 
Commercial real estate 369  491  312 
Home equity 48  183  48 
Residential real estate 112  55  76 
Premium finance receivables - commercial 787  223  329 
Premium finance receivables - life insurance      
Consumer and other 36  20  53 
Total recoveries 1,981  1,287  1,188 
Net charge-offs (3,493) (6,562) (3,083)
Allowance for loan losses at period end $110,171  $105,400  $94,446 
Allowance for unfunded lending-related commitments at period end 1,030  949  888 
Allowance for credit losses at period end $111,201  $106,349  $95,334 
Annualized net charge-offs by category as a percentage of its own respective category's average:      
Commercial 0.00% 0.09% 0.03%
Commercial real estate 0.02  0.16  0.06 
Home equity 0.52  0.25  0.30 
Residential real estate 0.17  0.07  0.28 
Premium finance receivables - commercial 0.29  0.41  0.16 
Premium finance receivables - life insurance      
Consumer and other 0.20  0.37  0.13 
Total loans, net of unearned income, excluding covered loans 0.08% 0.15% 0.08%
Net charge-offs as a percentage of the provision for credit losses 41.47% 71.35% 49.87%
Loans at period-end, excluding covered loans $17,446,413  $17,118,117  $14,953,059 
Allowance for loan losses as a percentage of loans at period end 0.63% 0.62% 0.63%
Allowance for credit losses as a percentage of loans at period end 0.64% 0.62% 0.64%
          

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

Net charge-offs as a percentage of loans, excluding covered loans, for the first quarter of 2016 totaled 8 basis points on an annualized basis compared to 15 basis points on an annualized basis in the fourth quarter of 2015 and 8 basis points on an annualized basis in the first quarter of 2015.  Net charge-offs totaled $3.5 million in the first quarter of 2016, a $3.1 million decrease from $6.6 million in the fourth quarter of 2015 and a $410,000 increase from $3.1 million in the first quarter of 2015. 

The provision for credit losses, excluding the provision for covered loan losses, totaled $8.4 million for the first quarter of 2016 compared to $9.2 million for the fourth quarter of 2015 and $6.2 million for the first quarter of 2015 primarily due to increased reserves on additional non-performing loans during the period. 

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

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

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

  Three months ended
  March 31, December 31, March 31,
(Dollars in thousands) 2016 2015 2015
Provision for loan losses $8,342  $9,209  $6,072 
Provision for unfunded lending-related commitments 81  (13) 113 
Provision for covered loan losses (389) (137) (106)
Provision for credit losses $8,034  $9,059  $6,079 
       
  Period End
  March 31, December 31, March 31,
  2016 2015 2015
Allowance for loan losses $110,171  $105,400  $94,446 
Allowance for unfunded lending-related commitments 1,030  949  888 
Allowance for covered loan losses 2,507  3,026  1,878 
Allowance for credit losses $113,708  $109,375  $97,212 


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 March 31, 2016 and December 31, 2015. 

  As of March 31, 2016
  Recorded Calculated As a percentage
of its own respective
(Dollars in thousands) Investment Allowance category's balance
Commercial:(1)      
Commercial and industrial $2,918,955  $24,926  0.85%
Asset-based lending 743,033  5,963  0.80 
Tax exempt 294,741  1,993  0.68 
Leases 249,114  248  0.10 
Commercial real estate:(1)      
Residential construction 69,161  876  1.27 
Commercial construction 317,969  3,360  1.06 
Land 89,353  3,233  3.62 
Office 823,774  5,824  0.71 
Industrial 691,811  6,436  0.93 
Retail 823,925  5,829  0.71 
Multi-family 713,724  7,573  1.06 
Mixed use and other 1,645,810  12,116  0.74 
Home equity(1) 680,077  12,899  1.90 
Residential real estate(1) 567,541  5,097  0.90 
Total core loan portfolio $10,628,988  $96,373  0.91%
Commercial:      
Franchise $274,558  $3,213  1.17%
Mortgage warehouse lines of credit 193,735  1,411  0.73 
Community Advantage - homeowner associations 130,044  3  0.00 
Aircraft 5,088  9  0.18 
Purchased non-covered commercial loans (2) 80,978  669  0.83 
Commercial real estate:      
Purchased non-covered commercial real estate (2) 562,432  16  0.00 
Purchased non-covered home equity (2) 94,265  16  0.02 
Purchased non-covered residential real estate (2) 58,502  67  0.11 
Premium finance receivables      
U.S. commercial insurance loans 2,041,307  5,570  0.27 
Canada commercial insurance loans (2) 279,680  598  0.21 
Life insurance loans (1) 2,680,796  1,037  0.04 
Purchased life insurance loans (2) 296,138     
Consumer and other (1) 115,324  1,188  1.03 
Purchased non-covered consumer and other (2) 4,578  1  0.02 
Total consumer, niche and purchased loan portfolio $6,817,425  $13,798  0.20%
Total loans, net of unearned income, excluding covered loans $17,446,413  $110,171  0.63%
Non-accretable credit discounts on purchased loans reported in accordance with ASC 310-30, excluding covered loans   $26,405   
Total allowance for loan losses and non-accretable credit discounts on purchased loans, excluding covered loans   $136,576  0.78%

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

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

 
  As of December 31, 2015
  Recorded Calculated As a percentage
of its own respective
(Dollars in thousands) Investment Allowance category's balance
Commercial:(1)      
Commercial and industrial $2,796,584  $23,475  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 
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 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 March 31, 2016 and December 31, 2015. 

The increase in the allowance for loan losses to core loans in the first quarter of 2016 compared to the fourth quarter of 2015 was attributable to a larger population of core loans requiring ASC 310 reserves (specific reserves). Loans requiring ASC 310 reserves typically have higher reserve factors as compared to core loans requiring ASC 450 reserves (general 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 0.78% of the total loan portfolio as of March 31, 2016 as compared to 0.79% as of December 31, 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 March 31, 2016: 

    90+ days 60-89 30-59    
As of March 31, 2016   and still days past days past    
(Dollars in thousands) Nonaccrual accruing due due Current Total Loans
Loan Balances:            
Commercial            
Commercial, industrial and other $12,370  $338  $3,228  $25,608  $3,363,011  $3,404,555 
Franchise       1,400  273,158  274,558 
Mortgage warehouse lines of credit       1,491  192,244  193,735 
Asset-based lending 3    117  10,597  737,184  747,901 
Leases       5,177  244,241  249,418 
PCI - commercial (1)   1,893    128  18,058  20,079 
Total commercial 12,373  2,231  3,345  44,401  4,827,896  4,890,246 
Commercial real estate            
Construction 273      2,023  389,026  391,322 
Land 1,746        93,834  95,580 
Office 7,729  1,260  980  12,571  865,954  888,494 
Industrial 10,960      3,935  728,061  742,956 
Retail 1,633    2,397  2,657  890,780  897,467 
Multi-family 287    655  2,047  760,084  763,073 
Mixed use and other 4,368    187  12,312  1,778,850  1,795,717 
PCI - commercial real estate (1)   24,738  1,573  10,344  126,695  163,350 
Total commercial real estate 26,996  25,998  5,792  45,889  5,633,284  5,737,959 
Home equity 9,365    791  4,474  759,712  774,342 
Residential real estate, including PCI 11,964  406  193  10,108  603,372  626,043 
Premium finance receivables            
Commercial insurance loans 15,350  9,548  5,583  15,086  2,275,420  2,320,987 
Life insurance loans   1,641  3,432  198  2,675,525  2,680,796 
PCI - life insurance loans (1)         296,138  296,138 
Consumer and other, including PCI 484  245  118  364  118,691  119,902 
Total loans, net of unearned income, excluding covered loans $76,532  $40,069  $19,254  $120,520  $17,190,038  $17,446,413 
Covered loans 5,324  7,995  349  6,491  118,689  138,848 
Total loans, net of unearned income $81,856  $48,064  $19,603  $127,011  $17,308,727  $17,585,261 

  

As of March 31, 2016
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, industrial and other 0.4% % 0.1% 0.8% 98.7% 100.0%
Franchise       0.5  99.5  100.0 
Mortgage warehouse lines of credit       0.8  99.2  100.0 
Asset-based lending       1.4  98.6  100.0 
Leases       2.1  97.9  100.0 
PCI - commercial(1)   9.4    0.6  90.0  100.0 
Total commercial 0.3    0.1  0.9  98.7  100.0 
Commercial real estate            
Construction 0.1      0.5  99.4  100.0 
Land 1.8        98.2  100.0 
Office 0.9  0.1  0.1  1.4  97.5  100.0 
Industrial 1.5      0.5  98.0  100.0 
Retail 0.2    0.3  0.3  99.2  100.0 
Multi-family     0.1  0.3  99.6  100.0 
Mixed use and other 0.2      0.7  99.1  100.0 
PCI - commercial real estate (1)   15.1  1.0  6.3  77.6  100.0 
Total commercial real estate 0.5  0.5  0.1  0.8  98.1  100.0 
Home equity 1.2    0.1  0.6  98.1  100.0 
Residential real estate, including PCI 1.9  0.1    1.6  96.4  100.0 
Premium finance receivables            
Commercial insurance loans 0.7  0.5  0.2  0.6  98.0  100.0 
Life insurance loans   0.1  0.1    99.8  100.0 
PCI - life insurance loans (1)         100.0  100.0 
Consumer and other, including PCI 0.4  0.2  0.1  0.3  99.0  100.0 
Total loans, net of unearned income, excluding covered loans 0.4% 0.2% 0.1% 0.7% 98.6% 100.0%
Covered loans 3.8  5.8  0.3  4.7  85.4  100.0 
Total loans, net of unearned income 0.5% 0.3% 0.1% 0.7% 98.4% 100.0%

(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. 

As of March 31, 2016, $19.3 million of all loans, excluding covered loans, or 0.1%, were 60 to 89 days past due and $120.5 million, or 0.7%, were 30 to 59 days (or one payment) past due. 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 $104.1 million, or 0.6%, were 30 to 59 days (or one payment) past due. The majority of the commercial and commercial real estate loans shown as 60 to 89 days and 30 to 59 days past due are included on the Company's internal problem loan reporting system. Loans on this system are closely monitored by management on a monthly basis. 

The Company's home equity and residential loan portfolios continue to exhibit low delinquency ratios. Home equity loans at March 31, 2016 that are current with regard to the contractual terms of the loan agreement represent 98.1% of the total home equity portfolio. Residential real estate loans at March 31, 2016 that are current with regards to the contractual terms of the loan agreements comprise 96.4% of total residential real estate loans outstanding. 

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, industrial and other $12,704  $6  $6,749  $12,930  $3,226,139  $3,258,528 
Franchise         245,228  245,228 
Mortgage warehouse lines of credit         222,806  222,806 
Asset-based lending 8    3,864  1,844  736,968  742,684 
Leases   535  748  4,192  220,599  226,074 
PCI - commercial(1)   892    2,510  15,187  18,589 
Total commercial 12,712  1,433  11,361  21,476  4,666,927  4,713,909 
Commercial real estate            
Construction 306    1,371  1,645  355,338  358,660 
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  7,215  1,712,187  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  39,243  5,424,863  5,529,289 
Home equity 6,848    1,889  5,517  770,421  784,675 
Residential real estate, including PCI 12,043  488  2,166  3,903  588,851  607,451 
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  $104,122  $16,864,283  $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  $109,896  $16,993,266  $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. 

As of December 31, 2015
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, industrial and other 0.4% % 0.2% 0.4% 99.0% 100.0%
Franchise         100.0  100.0 
Mortgage warehouse lines of credit         100.0  100.0 
Asset-based lending     0.5  0.3  99.2  100.0 
Leases   0.2  0.3  1.9  97.6  100.0 
PCI - commercial(1)   4.8    13.5  81.7  100.0 
Total commercial 0.3    0.2  0.5  99.0  100.0 
Commercial real estate            
Construction 0.1    0.4  0.5  99.0  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  0.4  98.8  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  0.7  98.1  100.0 
Home equity 0.9    0.2  0.7  98.2  100.0 
Residential real estate, including PCI 2.0  0.1  0.4  0.6  96.9  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% 0.6% 98.6% 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% 0.6% 98.5% 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. 

  March 31, December 31, March 31,
(Dollars in thousands) 2016 2015 2015
Loans past due greater than 90 days and still accruing(1):            
Commercial $338  $541  $ 
Commercial real estate 1,260     
Home equity      
Residential real estate      
Premium finance receivables - commercial 9,548  10,294  8,062 
Premium finance receivables - life insurance 1,641     
Consumer and other 180  150  91 
Total loans past due greater than 90 days and still accruing 12,967  10,985  8,153 
Non-accrual loans(2):      
Commercial 12,373  12,712  5,586 
Commercial real estate 26,996  26,645  29,982 
Home equity 9,365  6,848  7,665 
Residential real estate 11,964  12,043  14,248 
Premium finance receivables - commercial 15,350  14,561  15,902 
Premium finance receivables - life insurance      
Consumer and other 484  263  236 
Total non-accrual loans 76,532  73,072  73,619 
Total non-performing loans:      
Commercial 12,711  13,253  5,586 
Commercial real estate 28,256  26,645  29,982 
Home equity 9,365  6,848  7,665 
Residential real estate 11,964  12,043  14,248 
Premium finance receivables - commercial 24,898  24,855  23,964 
Premium finance receivables - life insurance 1,641     
Consumer and other 664  413  327 
Total non-performing loans $89,499  $84,057  $81,772 
Other real estate owned 24,022  26,849  33,131 
Other real estate owned - from acquisitions 16,980  17,096  9,126 
Other repossessed assets 171  174  259 
Total non-performing assets $130,672  $128,176  $124,288 
TDRs performing under the contractual terms of the loan agreement $34,949  $42,744  $54,687 
Total non-performing loans by category as a percent of its own respective category's period-end balance:      
Commercial 0.26% 0.28% 0.13%
Commercial real estate 0.49  0.48  0.64 
Home equity 1.21  0.87  1.08 
Residential real estate 1.91  1.98  2.87 
Premium finance receivables - commercial 1.07  1.05  1.03 
Premium finance receivables - life insurance 0.06     
Consumer and other 0.55  0.28  0.25 
Total loans, net of unearned income 0.51% 0.49% 0.55%
Total non-performing assets as a percentage of total assets 0.56% 0.56% 0.61%
Allowance for loan losses as a percentage of total non-performing loans 123.10% 125.39% 115.50%

(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 $17.6 million, $9.1 million, and $12.5 million as of March 31, 2016, December 31, 2015, and March 31, 2015, respectively. 

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

Nonperforming Loans Rollforward

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

  Three Months Ended
  March 31, December 31, March 31,
(Dollars in thousands) 2016 2015 2015
Balance at beginning of period $84,057  $85,976  $78,677 
Additions, net 12,166  5,983  8,980 
Return to performing status (2,006) (1,152) (716)
Payments received (3,308) (6,387) (4,369)
Transfer to OREO and other repossessed assets (2,080) (1,903) (2,540)
Charge-offs (533) (1,882) (1,801)
Net change for niche loans (1) 1,203  3,422  3,541 
Balance at end of period $89,499  $84,057  $81,772 

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

TDRs

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

  March 31, December 31, March 31,
(Dollars in thousands) 2016 2015 2015
Accruing TDRs:      
Commercial $5,143  $5,613  $6,273 
Commercial real estate 25,548  32,777  45,417 
Residential real estate and other 4,258  4,354  2,997 
Total accrual $34,949  $42,744  $54,687 
Non-accrual TDRs: (1)      
Commercial $82  $134  $184 
Commercial real estate 14,340  5,930  8,229 
Residential real estate and other 3,184  3,045  4,118 
Total non-accrual $17,606  $9,109  $12,531 
Total TDRs:      
Commercial $5,225  $5,747  $6,457 
Commercial real estate 39,888  38,707  53,646 
Residential real estate and other 7,442  7,399  7,115 
Total TDRs $52,555  $51,853  $67,218 
Weighted-average contractual interest rate of TDRs 4.35% 4.13% 4.04%

(1) Included in total non-performing loans.

At March 31, 2016, the Company had $52.6 million in loans modified in TDRs.  The $52.6 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 increased slightly from $51.9 million representing 102 credits at December 31, 2015 and decreased from $67.2 million representing 125 credits at March 31, 2015.

The table below presents a summary of TDRs as of March 31, 2016 and March 31, 2015, and shows the changes in the balance during the periods presented:

Three Months Ended March 31, 2016

(Dollars in thousands) Commercial Commercial
Real Estate
 Residential
Real Estate
and Other
 Total
Balance at beginning of period $5,747  $38,707  $7,399  $51,853 
Additions during the period 42  8,521  160  8,723 
Reductions:        
Charge-offs (20) (424)   (444)
Transferred to OREO and other repossessed assets        
Removal of TDR loan status (1)   (4,417)   (4,417)
Payments received, net (544) (2,499) (117) (3,160)
Balance at period end $5,225  $39,888  $7,442  $52,555 


Three Months Ended March 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  $82,275 
Additions during the period     294  294 
Reductions:        
Charge-offs (397) (1) (33) (431)
Transferred to OREO and other repossessed assets (562) (1,519)   (2,081)
Removal of TDR loan status (1) (76) (8,382)   (8,458)
Payments received, net (84) (4,075) (222) (4,381)
Balance at period end $6,457  $53,646  $7,115  $67,218 

(1) Loan was previously classified as a troubled debt restructuring and subsequently performed in compliance with the loan's modified terms for a period of six months (including over a calendar year-end) at a modified interest rate which represented a market rate at the time of restructuring. Per our TDR policy, the TDR classification is removed.

Each TDR was reviewed for impairment at March 31, 2016 and approximately $3.1 million of impairment was present and appropriately reserved for through the Company's normal reserving methodology in the Company's allowance for loan losses.  For TDRs in which impairment is calculated by the present value of future cash flows, the Company records interest income representing the decrease in impairment resulting from the passage of time during the respective period, which differs from interest income from contractually required interest on these specific loans.  For the three months ended March 31, 2016 and 2015, the Company recorded $90,000 and $193,000, respectively, in interest income representing this decrease in impairment.

Other Real Estate Owned

The table below presents a summary of other real estate owned, excluding covered other real estate owned, as of March 31, 2016, December 31, 2015 and March 31, 2015, and shows the activity for the respective period and the balance for each property type:

  Three Months Ended
  March 31, December 31, March 31,
(Dollars in thousands) 2016 2015 2015
Balance at beginning of period $43,945  $51,880  $45,642 
Disposals/resolved (6,766) (9,156) (6,846)
Transfers in at fair value, less costs to sell 3,291  2,345  3,831 
Transfers in from covered OREO subsequent to loss share expiration   69   
Additions from acquisition 1,064    761 
Fair value adjustments (532) (1,193) (1,131)
Balance at end of period $41,002  $43,945  $42,257 
       
  Period End
  March 31, December 31, March 31,
Balance by Property Type 2016 2015 2015
Residential real estate $11,006  $11,322  $7,250 
Residential real estate development 2,320  2,914  2,687 
Commercial real estate 27,676  29,709  32,320 
Total $41,002  $43,945  $42,257 


Covered Assets

In conjunction with FDIC-assisted transactions, the Company entered into loss share agreements with the FDIC. These agreements cover realized losses on loans, foreclosed real estate and certain other assets and require the Company to record loss share assets and liabilities that are measured separately from the loan portfolios because they are not contractually embedded in the loans and are not transferable with the loans should the Company choose to dispose of them. Fair values at the acquisition dates were estimated based on projected cash flows available for loss-share based on the credit adjustments estimated for each loan pool and the loss share percentages. The loss share assets and liabilities are also separately measured from the related loans and foreclosed real estate and recorded on the Consolidated Statements of Condition. Subsequent to the acquisition date, reimbursements received from the FDIC for actual incurred losses will reduce any loss share assets. Reductions to expected losses, to the extent such reductions to expected losses are the result of an improvement to the actual or expected cash flows from the covered assets, will also reduce any loss share asset and, if necessary, increase any loss share liability when necessary reductions exceed the current value of the loss share asset. The increases in cash flows for the purchased loans are recognized as interest income prospectively. In accordance with clawback provisions included in loss share agreements with the FDIC, the Company may be required to reimburse the FDIC when actual losses are less than certain thresholds established for each loss share agreement. The balance of these estimated reimbursements in accordance with clawback provisions and any related amortization are adjusted periodically for changes in the expected losses on covered assets. Estimated reimbursements from clawback provisions are recorded as a reduction to the loss share asset or, if necessary, an increase to the loss share liability on the Consolidated Statements of Condition. The allowance for loan losses for loans acquired in FDIC-assisted transactions is determined without giving consideration to the amounts recoverable through loss share agreements (since the loss share agreements are separately accounted for and thus presented "gross" on the balance sheet). On the Consolidated Statements of Income, the provision for credit losses is reported net of changes in the amount recoverable under the loss share agreements.

The following table provides a comparative analysis for the period end balances of covered assets and any changes in the allowance for covered loan losses. The Company expects covered assets and the allowance for covered loan losses to continue to decrease in periods without FDIC-assisted acquisitions.

  March 31, December 31, March 31,
(Dollars in thousands) 2016 2015 2015
Period End Balances:      
Loans $138,848  $148,673  $209,694 
Other real estate owned 17,976  21,383  38,785 
Other assets 296  411  757 
FDIC Indemnification (liability) asset (10,029) (6,100) 10,224 
Total net covered assets $147,091  $164,367  $259,460 
Allowance for Covered Loan Losses Rollforward:      
Balance at beginning of quarter: $3,026  $2,918  $2,131 
Provision for covered loan losses before benefit attributable to FDIC loss share agreements (1,946) (2,011) (529)
Benefit attributable to FDIC loss share agreements 1,557  1,874  423 
Net provision for covered loan losses (389) (137) (106)
Decrease in FDIC indemnification asset (1,557) (1,874) (423)
Loans charged-off (230) (163) (237)
Recoveries of loans charged-off 1,657  2,282  513 
Net recoveries 1,427  2,119  276 
Balance at end of quarter $2,507  $3,026  $1,878 


Changes in Accretable Yield

The excess of cash flows expected to be collected over the carrying value of loans accounted for under ASC 310-30 is referred to as the accretable yield and is recognized in interest income using an effective yield method over the remaining life of the pool of loans. The accretable yield is affected by:

  • Changes in interest rate indices for variable rate loans accounted for under ASC 310-30 – Expected future cash flows are based on the variable rates in effect at the time of the regular evaluations of cash flows expected to be collected;
  • Changes in prepayment assumptions – Prepayments affect the estimated life of loans accounted for under ASC 310-30 which may change the amount of interest income, and possibly principal, expected to be collected; and
  • Changes in the expected principal and interest payments over the estimated life – Updates to expected cash flows are driven by the credit outlook and actions taken with borrowers. Changes in expected future cash flows from loan modifications are included in the regular evaluations of cash flows expected to be collected.

The following table provides activity for the accretable yield of loans accounted for under ASC 310-30.

  Three Months Ended
  March 31, March 31,
(Dollars in thousands) 2016 2015
Accretable yield, beginning balance $63,902  $79,102 
Acquisitions 1,141  898 
Accretable yield amortized to interest income (5,457) (6,105)
Accretable yield amortized to indemnification asset(1) (2,171) (3,576)
Reclassification from non-accretable difference(2) 4,193  1,103 
(Decreases) increases in interest cash flows due to payments and changes in interest rates (2,390) (1,224)
Accretable yield, ending balance (3) $59,218  $70,198 

(1) Represents the portion of the current period accreted yield, resulting from lower expected losses, applied to reduce the loss share indemnification asset.
(2) Reclassification is the result of subsequent increases in expected principal cash flows.
(3) As of March 31, 2016, the Company estimates that the remaining accretable yield balance to be amortized to the indemnification asset for the bank acquisitions is $4.8 million. The remainder of the accretable yield related to bank acquisitions is expected to be amortized to interest income.

Accretion to interest income accounted for under ASC 310-30 totaled $5.5 million and $6.1 million in the first quarter of 2016 and 2015, respectively. These amounts include accretion from both covered and non-covered loans, and are included together within interest and fees on loans in the Consolidated Statements of Income.

Items Impacting Comparative Financial Results:

Acquisitions

On March 31, 2016, the Company completed its acquisition of Generations Bancorp. Inc. ("Generations"). Generations was the parent company of Foundations Bank ("Foundations").  Through this transaction, prior to purchase accounting adjustments, the Company acquired Foundations' banking location in Pewaukee, Wisconsin, approximately $123 million in assets and approximately $100 million in deposits.  

On July 24, 2015, the Company completed its acquisition of Community Financial Shares, Inc ("CFIS"). CFIS was the parent company of Community Bank - Wheaton/Glen Ellyn ("CBWGE"). Through this transaction, the Company acquired CBWGE's four banking locations in Wheaton and Glen Ellyn, Illinois, approximately $351 million in assets and approximately $290 million in deposits.

On July 17, 2015, the Company completed its acquisition of Suburban Illinois Bancorp, Inc. ("Suburban"). Suburban was the parent company of Suburban Bank & Trust Company ("SBT"). Through this transaction, the Company acquired SBT's ten banking locations in Chicago and its suburbs, approximately $495 million in assets and approximately $417 million in deposits.

On July 1, 2015, the Company, through its wholly-owned subsidiary Wintrust Bank, completed its acquisition of North Bank.  Through this transaction, Wintrust Bank acquired two banking locations, $118 million in assets and approximately $101 million in deposits.

On January 16, 2015, the Company completed its acquisition of Delavan Bancshares, Inc. ("Delavan"). Delavan was the parent company of Community Bank CBD. Through this transaction, Town Bank acquired four banking locations, approximately $224 million in assets and approximately $170 million in deposits.    

WINTRUST SUBSIDIARIES AND LOCATIONS

Wintrust is a financial holding company whose common stock is traded on the Nasdaq Global Select Market (Nasdaq: WTFC). Its 15 community bank subsidiaries are: Lake Forest Bank & Trust Company, Hinsdale Bank & Trust Company, Wintrust Bank in Chicago, Libertyville Bank & Trust Company, Barrington Bank & Trust Company, N.A., Crystal Lake Bank & Trust Company, N.A., Northbrook Bank & Trust Company, Schaumburg Bank & Trust Company, N.A., Village Bank & Trust in Arlington Heights, Beverly Bank & Trust Company, N.A. in Chicago, Wheaton Bank & Trust Company, State Bank of The Lakes in Antioch, Old Plank Trail Community Bank, N.A. in New Lenox, St. Charles Bank & Trust Company and Town Bank in Hartland, Wisconsin. The banks also operate facilities in Illinois in Algonquin, Aurora, Bloomingdale, Buffalo Grove, Cary, Chicago, Clarendon Hills, Crete, Deerfield, Des Plaines, Downers Grove, Elgin, Elk Grove Village, Elmhurst, Evergreen Park, Frankfort, Geneva, Glen Ellyn, Glencoe, Glenview, Gurnee, Grayslake, Hanover Park, Highland Park, Highwood, Hoffman Estates, Island Lake, Itasca, Joliet, Lake Bluff, Lake Villa, Lansing, Lemont, Lindenhurst, Lynwood, Markham, McHenry, Mokena, Mount Prospect, Mundelein, Naperville, North Chicago, Northfield, Norridge, Oak Lawn, Orland Park, Palatine, Park Ridge, Plainfield, Prospect Heights, Ravinia, Riverside, Rogers Park, Roselle, Round Lake Beach, Shorewood, Skokie, South Holland, Spring Grove, Steger, Stone Park, Vernon Hills, Wauconda, Western Springs, Willowbrook, Wilmette, Winnetka and Wood Dale and in Albany, Burlington, Clinton, Darlington, Delafield, Delavan, Elm Grove, Genoa City, Kenosha, Lake Geneva, Madison, Menomenee Falls, Monroe, Pewaukee, Sharon, Wales, Walworth and Wind Lake, Wisconsin and Dyer, Indiana.

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

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

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements within the meaning of federal securities laws. Forward-looking information can be identified through the use of words such as "intend," "plan," "project," "expect," "anticipate," "believe," "estimate," "contemplate," "possible," "point," "will," "may," "should," "would" and "could." Forward-looking statements and information are not historical facts, are premised on many factors and assumptions, and represent only management's expectations, estimates and projections regarding future events. Similarly, these statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict, which may include, but are not limited to, those listed below and the Risk Factors discussed under Item 1A of the Company's 2015 Annual Report on Form 10-K and in any of the Company's subsequent SEC filings. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of invoking these safe harbor provisions. Such forward-looking statements may be deemed to include, among other things, statements relating to the Company's future financial performance, the performance of its loan portfolio, the expected amount of future credit reserves and charge-offs, delinquency trends, growth plans, regulatory developments, securities that the Company may offer from time to time, and management's long-term performance goals, as well as statements relating to the anticipated effects on financial condition and results of operations from expected developments or events, the Company's business and growth strategies, including future acquisitions of banks, specialty finance or wealth management businesses, internal growth and plans to form additional de novo banks or branch offices. Actual results could differ materially from those addressed in the forward-looking statements as a result of numerous factors, including the following:

  • difficult economic conditions have adversely affected our company and the financial services industry in general and further deterioration in economic conditions may materially adversely affect our business, financial condition, results of operations and cash flows;
  • since our business is concentrated in the Chicago metropolitan and southern Wisconsin market areas, further declines in the economy of this region could adversely affect our business;
  • if our allowance for loan losses is not sufficient to absorb losses that may occur in our loan portfolio, our financial condition and liquidity could suffer;
  • a significant portion of our loan portfolio is comprised of commercial loans, the repayment of which is largely dependent upon the financial success and economic viability of the borrower;
  • a substantial portion of our loan portfolio is secured by real estate, in particular commercial real estate. Deterioration in the real estate markets could lead to additional losses, which could have a material adverse effect on our financial condition and results of operations;
  • any inaccurate assumptions in our analytical and forecasting models could cause us to miscalculate our projected revenue or losses, which could adversely affect our financial condition;
  • unanticipated changes in prevailing interest rates and the effects of changing regulation could adversely affect our net interest income, which is our largest source of income;
  • our liquidity position may be negatively impacted if economic conditions continue to suffer;
  • the financial services industry is very competitive, and if we are not able to compete effectively, we may lose market share and our business could suffer;
  • if we are unable to compete effectively, we will lose market share and income from deposits, loans and other products may be reduced. This could adversely affect our profitability and have a material adverse effect on our business, financial condition and results of operations;
  • if we are unable to continue to identify favorable acquisitions or successfully integrate our acquisitions, our growth may be limited and our results of operations could suffer;
  • our participation in FDIC-assisted acquisitions may present additional risks to our financial condition and results of operations;
  • an actual or perceived reduction in our financial strength may cause others to reduce or cease doing business with us, which could result in a decrease in our net interest income and fee revenues;
  • if our growth requires us to raise additional capital, that capital may not be available when it is needed or the cost of that capital may be very high;
  • disruption in the financial markets could result in lower fair values for our investment securities portfolio;
  • our controls and procedures may fail or be circumvented;
  • new lines of business and new products and services are essential to our ability to compete but may subject us to additional risks;
  • failures of our information technology systems may adversely affect our operations;
  • failures by or of our vendors may adversely affect our operations;
  • we issue debit cards, and debit card transactions pose a particular cybersecurity risk that is outside of our control;
  • we depend on the accuracy and completeness of information we receive about our customers and counterparties to make credit decisions;
  • if we are unable to attract and retain experienced and qualified personnel, our ability to provide high quality service will be diminished, we may lose key customer relationships, and our results of operations may suffer;
  • we are subject to environmental liability risk associated with lending activities;
  • we are subject to claims and legal actions which could negatively affect our results of operations or financial condition;
  • losses incurred in connection with actual or projected repurchases and indemnification payments related to mortgages that we have sold into the secondary market may exceed our financial statement reserves and we may be required to increase such reserves in the future. Increases to our reserves and losses incurred in connection with actual loan repurchases and indemnification payments could have a material adverse effect on our business, financial condition, results of operations or cash flows;
  • consumers may decide not to use banks to complete their financial transactions, which could adversely affect our business and results of operations;
  • we may be adversely impacted by the soundness of other financial institutions;
  • de novo operations often involve significant expenses and delayed returns and may negatively impact Wintrust's profitability;
  • we are subject to examinations and challenges by tax authorities, and changes in federal and state tax laws and changes in interpretation of existing laws can impact our financial results;
  • changes in accounting policies or accounting standards could materially adversely affect how we report our financial results and financial condition;
  • we are a bank holding company, and our sources of funds, including to pay dividends, are limited;
  • anti-takeover provisions could negatively impact our shareholders;
  • if we fail to meet our regulatory capital ratios, we may be forced to raise capital or sell assets;
  • if our credit rating is lowered, our financing costs could increase;
  • changes in the United States' monetary policy may restrict our ability to conduct our business in a profitable manner;
  • legislative and regulatory actions taken now or in the future regarding the financial services industry may significantly increase our costs or limit our ability to conduct our business in a profitable manner;
  • financial reform legislation and increased regulatory rigor around mortgage-related issues may reduce our ability to market our products to consumers and may limit our ability to profitably operate our mortgage business;
  • federal, state and local consumer lending laws may restrict our ability to originate certain mortgage loans or increase our risk of liability with respect to such loans and could increase our cost of doing business;
  • regulatory initiatives regarding bank capital requirements may require heightened capital;
  • our FDIC insurance premiums may increase, which could negatively impact our results of operations;
  • non-compliance with the USA PATRIOT Act, Bank Secrecy Act or other laws and regulations could result in fines or sanctions;
  • our premium finance business may involve a higher risk of delinquency or collection than our other lending operations, and could expose us to losses;
  • widespread financial difficulties or credit downgrades among commercial and life insurance providers could lessen the value of the collateral securing our premium finance loans and impair the financial condition and liquidity of FIFC and FIFC Canada;
  • proposed regulatory changes could significantly reduce loan volume and impair the financial condition of FIFC; and
  • our wealth management business in general, and WHI's brokerage operation, in particular, exposes us to certain risks associated with the securities industry.

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

CONFERENCE CALL, WEB CAST AND REPLAY

The Company will hold a conference call at 1:00 p.m. (CT) Tuesday, April 19, 2016 regarding first quarter 2016 results. Individuals interested in listening should call (877) 363-5049 and enter Conference ID #81087974. A simultaneous audio-only web cast and replay of the conference call may be accessed via the Company's web site at (http://www.wintrust.com), Investor Relations, Investor News and Events, Presentations & Conference Calls. The text of the first quarter 2016 earnings press release will be available on the home page of the Company's website at (http://www.wintrust.com) and at the Investor Relations, Investor News and Events, Press Releases link on its website.


WINTRUST FINANCIAL CORPORATION

Supplemental Financial Information

5 Quarter Trends

WINTRUST FINANCIAL CORPORATION - Supplemental Financial Information
Selected Financial Highlights - 5 Quarter Trends
(Dollars in thousands, except per share data)
 
  Three Months Ended
  March 31, December 31, September 30, June 30, March 31,
  2016 2015 2015 2015 2015
Selected Financial Condition Data (at end of period):          
Total assets $23,488,168  $22,909,348  $22,035,216  $20,790,202  $20,371,566 
Total loans, excluding loans held-for-sale and covered loans 17,446,413  17,118,117  16,316,211  15,513,650  14,953,059 
Total deposits 19,217,071  18,639,634  18,228,469  17,082,418  16,938,769 
Junior subordinated debentures 253,566  268,566  268,566  249,493  249,493 
Total shareholders' equity 2,418,442  2,352,274  2,335,736  2,264,982  2,131,074 
Selected Statements of Income Data:          
Net interest income 171,509  167,206  165,540  156,892  151,891 
Net revenue (1) 240,261  232,296  230,493  233,905  216,432 
Net income 49,111  35,512  38,355  43,831  39,052 
Net income per common share – Basic $0.94  $0.66  $0.71  $0.89  $0.79 
Net income per common share – Diluted $0.90  $0.64  $0.69  $0.85  $0.76 
Selected Financial Ratios and Other Data:          
Performance Ratios:          
Net interest margin (2) 3.32% 3.29% 3.33% 3.41% 3.42%
Non-interest income to average assets 1.21% 1.16% 1.19% 1.52% 1.32%
Non-interest expense to average assets 2.70% 2.98% 2.93% 3.06% 3.02%
Net overhead ratio (2) (3) 1.49% 1.82% 1.74% 1.53% 1.69%
Efficiency ratio - FTE (2) (4) 63.96% 71.39% 69.02% 65.64% 67.90%
Return on average assets 0.86% 0.63% 0.70% 0.87% 0.80%
Return on average common equity 8.55% 6.03% 6.60% 8.38% 7.64%
Return on average tangible common equity 11.33% 8.12% 8.88% 10.86% 9.96%
Average total assets $22,902,913  $22,225,112  $21,679,062  $20,246,614  $19,814,606 
Average total shareholders' equity 2,389,770  2,347,545  2,310,511  2,156,128  2,114,356 
Average loans to average deposits ratio (excluding covered loans) 93.8% 91.9% 91.9% 92.8% 91.4%
Average loans to average deposits ratio (including covered loans) 94.6  92.7  92.9  94.0  92.7 
Common Share Data at end of period:          
Market price per common share $44.34  $48.52  $53.43  $53.38  $47.68 
Book value per common share (2) $44.67  $43.42  $43.12  $42.24  $42.30 
Tangible common book value per share (2) $34.20  $33.17  $32.83  $33.02  $33.04 
Common shares outstanding 48,518,998  48,383,279  48,336,870  47,677,257  47,389,608 
Other Data at end of period:(8)          
Leverage Ratio(5) 8.7% 9.1% 9.2% 9.8% 9.2%
Tier 1 Capital to risk-weighted assets (5) 9.5% 10.0% 10.3% 10.7% 10.1%
Common equity Tier 1 capital to risk-weighted assets (5) 8.3% 8.4% 8.6% 9.0% 9.1%
Total capital to risk-weighted assets (5) 12.0% 12.2% 12.6% 13.1% 12.5%
Tangible common equity ratio (TCE) (2) (7) 7.2% 7.2% 7.4% 7.7% 7.9%
Tangible common equity ratio, assuming full conversion of convertible preferred stock (2) (7) 7.8% 7.7% 8.0% 8.4% 8.5%
Allowance for credit losses (6) $111,201  $106,349  $103,922  $101,088  $95,334 
Non-performing loans 89,499  84,057  85,976  76,554  81,772 
Allowance for credit losses to total loans (6) 0.64% 0.62% 0.64% 0.65% 0.64%
Non-performing loans to total loans 0.51% 0.49% 0.53% 0.49% 0.55%
Number of:          
Bank subsidiaries 15  15  15  15  15 
Banking offices 153  152  160  147  146 

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

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

(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 - SUPPLEMENTAL FINANCIAL INFORMATION
Consolidated Statements of Condition - 5 Quarter Trends
 
  (Unaudited)   (Unaudited) (Unaudited) (Unaudited)
  March 31, December 31, September 30, June 30, March 31,
(In thousands) 2016 2015 2015 2015 2015
Assets          
Cash and due from banks $208,480  $271,454  $247,341  $248,094  $286,743 
Federal funds sold and securities purchased under resale agreements 3,820  4,341  3,314  4,115  4,129 
Interest bearing deposits with banks 817,013  607,782  701,106  591,721  697,799 
Available-for-sale securities, at fair value 770,983  1,716,388  2,214,281  2,162,061  1,721,030 
Held-to-maturity securities, at amortized cost 911,715  884,826       
Trading account securities 2,116  448  3,312  1,597  7,811 
Federal Home Loan Bank and Federal Reserve Bank stock 113,222  101,581  90,308  89,818  92,948 
Brokerage customer receivables 28,266  27,631  28,293  29,753  25,287 
Mortgage loans held-for-sale 314,554  388,038  347,005  497,283  446,355 
Loans, net of unearned income, excluding covered loans 17,446,413  17,118,117  16,316,211  15,513,650  14,953,059 
Covered loans 138,848  148,673  168,609  193,410  209,694 
Total loans 17,585,261  17,266,790  16,484,820  15,707,060  15,162,753 
Less: Allowance for loan losses 110,171  105,400  102,996  100,204  94,446 
Less: Allowance for covered loan losses 2,507  3,026  2,918  2,215  1,878 
Net loans 17,472,583  17,158,364  16,378,906  15,604,641  15,066,429 
Premises and equipment, net 591,608  592,256  587,348  571,498  559,281 
Lease investments, net 89,337  63,170  29,111  13,447  383 
FDIC indemnification asset       3,429  10,224 
Accrued interest receivable and other assets 647,853  597,099  629,211  533,175  526,029 
Trade date securities receivable 1,008,613    277,981    488,063 
Goodwill 484,280  471,761  472,166  421,646  420,197 
Other intangible assets 23,725  24,209  25,533  17,924  18,858 
Total assets $23,488,168  $22,909,348  $22,035,216  $20,790,202  $20,371,566 
Liabilities and Shareholders' Equity          
Deposits:          
Non-interest bearing $5,205,410  $4,836,420  $4,705,994  $3,910,310  $3,779,609 
Interest bearing 14,011,661  13,803,214  13,522,475  13,172,108  13,159,160 
Total deposits 19,217,071  18,639,634  18,228,469  17,082,418  16,938,769 
Federal Home Loan Bank advances 799,482  853,431  443,955  435,721  406,839 
Other borrowings 253,126  265,785  259,805  261,674  186,716 
Subordinated notes 138,888  138,861  138,834  138,808  138,782 
Junior subordinated debentures 253,566  268,566  268,566  249,493  249,493 
Trade date securities payable   538  617    2,929 
Accrued interest payable and other liabilities 407,593  390,259  359,234  357,106  316,964 
Total liabilities 21,069,726  20,557,074  19,699,480  18,525,220  18,240,492 
Shareholders' Equity:          
Preferred stock 251,257  251,287  251,312  251,312  126,427 
Common stock 48,608  48,469  48,422  47,763  47,475 
Surplus 1,194,750  1,190,988  1,187,407  1,159,052  1,156,542 
Treasury stock (4,145) (3,973) (3,964) (3,964) (3,948)
Retained earnings 967,882  928,211  901,652  872,690  835,669 
Accumulated other comprehensive loss (39,910) (62,708) (49,093) (61,871) (31,091)
Total shareholders' equity 2,418,442  2,352,274  2,335,736  2,264,982  2,131,074 
Total liabilities and shareholders' equity $23,488,168  $22,909,348  $22,035,216  $20,790,202  $20,371,566 


WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Consolidated Statements of Income (Unaudited) - 5 Quarter Trends
 
  Three Months Ended
  March 31, December 31, September 30, June 30, March 31,
(In thousands, except per share data) 2016 2015 2015 2015 2015
Interest income          
Interest and fees on loans $173,127  $169,501  $167,831  $159,823  $154,676 
Interest bearing deposits with banks 746  493  372  305  316 
Federal funds sold and securities purchased under resale agreements 1    1  1  2 
Investment securities 17,190  16,405  16,130  14,071  14,400 
Trading account securities 11  25  19  51  13 
Federal Home Loan Bank and Federal Reserve Bank stock 937  857  821  785  769 
Brokerage customer receivables 219  206  205  205  181 
Total interest income 192,231  187,487  185,379  175,241  170,357 
Interest expense          
Interest on deposits 12,781  12,617  12,436  11,996  11,814 
Interest on Federal Home Loan Bank advances 2,886  2,684  2,458  1,812  2,156 
Interest on other borrowings 1,058  1,007  1,045  787  788 
Interest on subordinated notes 1,777  1,777  1,776  1,777  1,775 
Interest on junior subordinated debentures 2,220  2,196  2,124  1,977  1,933 
Total interest expense 20,722  20,281  19,839  18,349  18,466 
Net interest income 171,509  167,206  165,540  156,892  151,891 
Provision for credit losses 8,034  9,059  8,322  9,482  6,079 
Net interest income after provision for credit losses 163,475  158,147  157,218  147,410  145,812 
Non-interest income          
Wealth management 18,320  18,634  18,243  18,476  18,100 
Mortgage banking 21,735  23,317  27,887  36,007  27,800 
Service charges on deposit accounts 7,406  7,210  7,403  6,474  6,297 
Gains (losses) on available-for-sale securities, net 1,325  (79) (98) (24) 524 
Fees from covered call options 1,712  3,629  2,810  4,565  4,360 
Trading (losses) gains, net (168) 205  (135) 160  (477)
Operating lease income, net 2,806  1,973  613  77  65 
Other 15,616  10,201  8,230  11,278  7,872 
Total non-interest income 68,752  65,090  64,953  77,013  64,541 
Non-interest expense          
Salaries and employee benefits 95,811  99,780  97,749  94,421  90,130 
Equipment 8,767  8,799  8,456  7,855  7,779 
Operating lease equipment depreciation 2,050  1,202  431  59  57 
Occupancy, net 11,948  13,062  12,066  11,401  12,351 
Data processing 6,519  7,284  8,127  6,081  5,448 
Advertising and marketing 3,779  5,373  6,237  6,406  3,907 
Professional fees 4,059  4,387  4,100  5,074  4,664 
Amortization of other intangible assets 1,298  1,324  1,350  934  1,013 
FDIC insurance 3,613  3,317  3,035  3,047  2,987 
OREO expense, net 560  2,598  (367) 841  1,411 
Other 15,326  19,703  18,790  18,178  17,571 
Total non-interest expense 153,730  166,829  159,974  154,297  147,318 
Income before taxes 78,497  56,408  62,197  70,126  63,035 
Income tax expense 29,386  20,896  23,842  26,295  23,983 
Net income $49,111  $35,512  $38,355  $43,831  $39,052 
Preferred stock dividends and discount accretion 3,628  3,629  4,079  1,580  1,581 
Net income applicable to common shares $45,483  $31,883  $34,276  $42,251  $37,471 
Net income per common share - Basic $0.94  $0.66  $0.71  $0.89  $0.79 
Net income per common share - Diluted $0.90  $0.64  $0.69  $0.85  $0.76 
Cash dividends declared per common share $0.12  $0.11  $0.11  $0.11  $0.11 
Weighted average common shares outstanding 48,448  48,371  48,158  47,567  47,239 
Dilutive potential common shares 3,820  4,005  4,049  4,156  4,233 
Average common shares and dilutive common shares 52,268  52,376  52,207  51,723  51,472 


WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Period End Loan Balances - 5 Quarter Trends
 
  March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands) 2016 2015 2015 2015 2015
Balance:          
Commercial $4,890,246  $4,713,909  $4,400,185  $4,330,344  $4,211,932 
Commercial real estate 5,737,959  5,529,289  5,307,566  4,850,590  4,710,486 
Home equity 774,342  784,675  797,465  712,350  709,283 
Residential real estate 626,043  607,451  571,743  503,015  495,925 
Premium finance receivables - commercial 2,320,987  2,374,921  2,407,075  2,460,408  2,319,623 
Premium finance receivables - life insurance 2,976,934  2,961,496  2,700,275  2,537,475  2,375,654 
Consumer and other (1) 119,902  146,376  131,902  119,468  130,156 
Total loans, net of unearned income, excluding covered loans $17,446,413  $17,118,117  $16,316,211  $15,513,650  $14,953,059 
Covered loans 138,848  148,673  168,609  193,410  209,694 
Total loans, net of unearned income $17,585,261  $17,266,790  $16,484,820  $15,707,060  $15,162,753 
Mix:          
Commercial 28% 27% 27% 27% 28%
Commercial real estate 32  32  32  31  31 
Home equity 4  5  5  5  5 
Residential real estate 4  3  3  3  3 
Premium finance receivables - commercial 13  14  15  16  15 
Premium finance receivables - life insurance 17  17  16  16  16 
Consumer and other (1) 1  1  1  1  1 
Total loans, net of unearned income, excluding covered loans 99% 99% 99% 99% 99%
Covered loans 1  1  1  1  1 
Total loans, net of unearned income 100% 100% 100% 100% 100%

(1) Includes autos, boats, snowmobiles and other indirect consumer loans as well as short-term accounts receivable financing.

 
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Period End Deposits Balances - 5 Quarter Trends
 
  March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands) 2016 2015 2015 2015 2015
Balance:          
Non-interest bearing $5,205,410  $4,836,420  $4,705,994  $3,910,310  $3,779,609 
NOW and interest bearing demand deposits 2,369,474  2,390,217  2,231,258  2,240,832  2,262,928 
Wealth management deposits (1) 1,761,710  1,643,653  1,469,920  1,591,251  1,528,963 
Money market 4,157,083  4,041,300  4,001,518  3,898,495  3,791,762 
Savings 1,766,552  1,723,367  1,684,007  1,504,654  1,563,752 
Time certificates of deposit 3,956,842  4,004,677  4,135,772  3,936,876  4,011,755 
Total deposits $19,217,071  $18,639,634  $18,228,469  $17,082,418  $16,938,769 
Mix:          
Non-interest bearing 27%