Market Overview

Wintrust Financial Corporation Reports Record Second Quarter 2017 Net Income, an Increase of 30% Over Prior Year, and Year-to-Date 2017 Net Income of $123.3 million, an Increase of 24% Over Prior Year

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ROSEMONT, Ill., July 18, 2017 (GLOBE NEWSWIRE) -- Wintrust Financial Corporation ("Wintrust" or "the Company") (NASDAQ:WTFC) announced net income of $64.9 million or $1.11 per diluted common share for the second quarter of 2017 compared to net income of $58.4 million or $1.00 per diluted common share for the first quarter of 2017 and $50.0 million or $0.90 per diluted common share for the second quarter of 2016. The Company recorded net income of $123.3 million or $2.11 per diluted common share for the first six months of 2017 compared to net income of $99.2 million or $1.80 per diluted common share for the same period of 2016.

Highlights of the Second Quarter of 2017 *      

  • Total assets increased by $1.2 billion from the prior quarter and now total $26.9 billion.
  • Total loans, excluding covered loans and mortgage loans held-for-sale, increased by $812 million from the prior quarter.
  • Total deposits increased $875 million to $22.6 billion. Non-interest bearing deposit accounts now comprise 28% of total deposits.
  • Mortgage banking revenue increased $14.0 million to $35.9 million.
  • Net interest margin increased primarily as a result of the recent rate increases in March and June of 2017. This increase as well as growth in earning assets drove the $11.8 million increase in net interest income over the prior quarter.
  • Return on average assets increased to 1.00% from 0.94%.
  • Net overhead ratio decreased to 1.44% from 1.60%, below our stated goal of 1.50%.
  • Non-performing loans as a percentage of total loans, excluding covered loans, decreased to 0.33% from 0.40% in the first quarter of 2017.  The allowance for loan losses as a percentage of total non-performing loans, excluding covered loans, increased to 188% from 159% in the prior quarter.
  • The return on average common equity in the current quarter increased to 9.55% from 8.93% in the first quarter of 2017. On April 27, 2017, the Company caused the mandatory conversion of the remaining shares of the Company's Series C preferred stock into 3.1 million shares of the Company's common stock.
  • Reduced the estimated FDIC indemnification liability by $4.9 million primarily as a result of an adjustment related to clawback provisions within certain loss-sharing agreements.

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

Edward J. Wehmer, President and Chief Executive Officer, commented, "Wintrust reported record net income of $64.9 million for the second quarter of 2017 and net income of $123.3 million for the first six months of 2017. These results reflected the continued strength of the internal growth engine at Wintrust as we grew assets organically by over $1 billion while still controlling operating expenses with our net overhead ratio dropping to 1.44%. The second quarter of 2017 was also characterized by our strong deposit growth, increased net interest margin, improved credit quality metrics and strength in our mortgage banking business."
               
Mr. Wehmer continued, "We experienced strong loan growth among our various loan categories, including the commercial, commercial real-estate and premium finance receivables portfolios. Excluding covered loans and mortgage loans held-for-sale, we grew our loan portfolio by $812 million during the second quarter. The increased loan volume and continued improvement in net interest margin from recent interest rate increases during the period helped net interest income increase by $11.8 million. Our loan pipelines remain consistently strong and we remain well positioned for expected rising rates in the future. Deposit growth was strong in the second quarter of 2017 as deposits increased $875 million and exceeded $22 billion as of the end of the second quarter. Total deposit growth included $503 million of growth from demand deposits, which now total $6.3 billion and comprise 28% of our overall deposit base."

Commenting on credit quality, Mr. Wehmer noted, "During the second quarter of 2017, the Company continued its practice of timely addressing and resolving non-performing credits. Excluding covered assets, total non-performing assets decreased $10.4 million during the second quarter of 2017 resulting in non-performing assets as a percentage of total assets dropping from 0.46% to 0.40% during the period. Non-performing loans as a percentage of total loans, excluding covered loans, decreased to 0.33% at the end of the second quarter of 2017 compared to 0.40% at the end of the first quarter of 2017.  As a percentage of non-performing loans, the allowance for loan losses, excluding covered loans, increased to 188% during the second quarter of 2017. Net charge-offs remained at historically low levels with net charge-offs as a percentage of total average loans, excluding covered loans, of 0.10% during the second quarter of 2017. We believe that the Company's reserves remain appropriate."

Mr. Wehmer further commented, "Mortgage banking revenue in the second quarter of 2017 totaled $35.9 million, an increase of $14.0 million compared to the first quarter of 2017. The mortgage banking business unit's contribution to increased net income during the second quarter primarily resulted from origination volumes growing to $1.1 billion from $722 million in the previous quarter as a result of higher purchase originations during the traditional spring purchase market.  Purchases represented 84% of volume for the second quarter of 2017. Our mortgage pipeline remains strong. We continue to look for opportunities to further enhance the mortgage banking business both organically and through acquisitions."

Turning to the future, Mr. Wehmer stated, "Our growth engine continued into the second quarter of 2017 with strong momentum. Loan growth at the end of the second quarter should add to momentum into the third quarter as period-end loan balances, excluding covered loans and mortgage loans held-for-sale, exceeded the second quarter average balances by approximately $478 million. We continue to take a steady and measured approach to achieving our main objectives of growing franchise value, increasing profitability, leveraging our expense infrastructure and increasing shareholder value. Evaluating strategic acquisitions and organic branch growth will continue to be a part of our overall growth strategy with the goal of becoming Chicago's bank and Wisconsin's bank. Our opportunities for both internal growth and external growth remain consistently strong."

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

http://www.globenewswire.com/NewsRoom/AttachmentNg/8f666adb-511a-4063-97a1-52811e9ae59a

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

                % or(4)
basis point  (bp)
change from

1st Quarter
2017
  % or
basis point  (bp)
change from
2nd Quarter
2016
    Three Months Ended    
(Dollars in thousands)   June 30,
 2017
  March 31,
 2017
  June 30,
 2016
   
Net income   $ 64,897     $ 58,378     $ 50,041     11   %   30   %
Net income per common share – diluted   $ 1.11     $ 1.00     $ 0.90     11   %   23   %
Net revenue (1)   $ 294,381     $ 261,345     $ 260,069     13   %   13   %
Net interest income   $ 204,409     $ 192,580     $ 175,270     6   %   17   %
Net interest margin   3.41 %   3.36 %   3.24 %   5   bp   17   bp
Net interest margin - fully taxable equivalent (non-GAAP) (2)   3.43 %   3.39 %   3.27 %   4   bp   16   bp
Net overhead ratio (3)   1.44 %   1.60 %   1.46 %   (16 ) bp   (2 ) bp
Return on average assets   1.00 %   0.94 %   0.85 %   6   bp   15   bp
Return on average common equity   9.55 %   8.93 %   8.43 %   62   bp   112   bp
Return on average tangible common equity (non-GAAP) (2)   12.02 %   11.44 %   11.12 %   58   bp   90   bp
At end of period                        
Total assets   $ 26,929,265     $ 25,778,893     $ 24,420,616     18   %   10   %
Total loans, excluding loans held-for-sale, excluding covered loans   20,743,332     19,931,058     18,174,655     16   %   14   %
Total loans, including loans held-for-sale, excluding covered loans   21,126,169     20,220,022     18,728,911     18   %   13   %
Total deposits   22,605,692     21,730,441     20,041,750     16   %   13   %
Total shareholders' equity   2,839,458     2,764,983     2,623,595     11   %   8   %

(1) Net revenue is net interest income plus non-interest income.
(2) See "Supplemental Financial Measures/Ratios" for additional information on this performance measure/ratio.
(3) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period's average total assets. A lower ratio indicates a higher degree of efficiency.
(4) Period-end balance sheet percentage changes are annualized.

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


WINTRUST FINANCIAL CORPORATION
Selected Financial Highlights

    Three Months Ended   Six Months Ended
(Dollars in thousands, except per share data)   June 30,
 2017
  March 31,
 2017
  June 30,
 2016
  June 30,
 2017
  June 30,
 2016
Selected Financial Condition Data (at end of period):                    
Total assets   $ 26,929,265     $ 25,778,893     $ 24,420,616          
Total loans, excluding loans held-for-sale and covered loans   20,743,332     19,931,058     18,174,655          
Total deposits   22,605,692     21,730,441     20,041,750          
Junior subordinated debentures   253,566     253,566     253,566          
Total shareholders' equity   2,839,458     2,764,983     2,623,595          
Selected Statements of Income Data:                    
Net interest income   $ 204,409     $ 192,580     $ 175,270     $ 396,989     $ 346,779  
Net revenue (1)   294,381     261,345     260,069     555,726     500,330  
Net income   64,897     58,378     50,041     123,275     99,152  
Net income per common share – Basic   $ 1.15     $ 1.05     $ 0.94     $ 2.20     $ 1.88  
Net income per common share – Diluted   $ 1.11     $ 1.00     $ 0.90     $ 2.11     $ 1.80  
Selected Financial Ratios and Other Data:                    
Performance Ratios:                    
Net interest margin   3.41 %   3.36 %   3.24 %   3.38 %   3.26 %
Net interest margin - fully taxable equivalent (non-GAAP) (2)   3.43 %   3.39 %   3.27 %   3.41 %   3.29 %
Non-interest income to average assets   1.39 %   1.11 %   1.44 %   1.25 %   1.32 %
Non-interest expense to average assets   2.83 %   2.70 %   2.89 %   2.77 %   2.80 %
Net overhead ratio (3)   1.44 %   1.60 %   1.46 %   1.52 %   1.48 %
Return on average assets   1.00 %   0.94 %   0.85 %   0.97 %   0.85 %
Return on average common equity   9.55 %   8.93 %   8.43 %   9.24 %   8.49 %
Return on average tangible common equity (non-GAAP) (2)   12.02 %   11.44 %   11.12 %   11.74 %   11.22 %
Average total assets   $ 26,050,949     $ 25,207,348     $ 23,754,755     $ 25,632,004     $ 23,328,834  
Average total shareholders' equity   2,800,905     2,739,050     2,465,732     2,771,768     2,427,751  
Average loans to average deposits ratio (excluding loans held-for-sale, excluding covered loans)   94.1 %   92.5 %   92.4 %   93.3 %   92.3 %
Average loans to average deposits ratio (excluding loans held-for-sale, including covered loans)   94.4 %   92.7 %   92.9 %   93.6 %   93.0 %
Common Share Data at end of period:                    
Market price per common share   $ 76.44     $ 69.12     $ 51.00          
Book value per common share (2)   $ 48.73     $ 47.88     $ 45.96          
Tangible common book value per share (2)   $ 39.40     $ 37.97     $ 36.12          
Common shares outstanding   55,699,927     52,503,663     51,619,155          
Other Data at end of period:(6)                    
Leverage Ratio (4)   9.2 %   9.3 %   9.2 %        
Tier 1 capital to risk-weighted assets (4)   9.8 %   10.0 %   10.1 %        
Common equity Tier 1 capital to risk-weighted assets (4)   9.3 %   8.9 %   8.9 %        
Total capital to risk-weighted assets (4)   12.0 %   12.2 %   12.4 %        
Allowance for credit losses (5)   $ 131,296     $ 127,630     $ 115,426          
Non-performing loans   69,050     78,979     88,119          
Allowance for credit losses to total loans (5)   0.63 %   0.64 %   0.64 %        
Non-performing loans to total loans   0.33 %   0.40 %   0.48 %        
Number of:                    
Bank subsidiaries   15     15     15          
Banking offices   153     155     153          

(1) Net revenue includes net interest income and non-interest income.
(2) See "Supplemental Financial Measures/Ratios" for additional information on this performance measure/ratio.
(3) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period's total average assets. A lower ratio indicates a higher degree of efficiency.
(4) Capital ratios for current quarter-end are estimated.  As of January 1, 2015 capital ratios are calculated under the requirements of Basel III.
(5) The allowance for credit losses includes both the allowance for loan losses and the allowance for unfunded lending-related commitments, but excludes the allowance for covered loan losses.
(6) Asset quality ratios exclude covered loans.


WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION

    (Unaudited)       (Unaudited)
(In thousands)   June 30,
 2017
  December 31,
 2016
  June 30,
 2016
Assets            
Cash and due from banks   $ 296,105     $ 267,194     $ 267,551  
Federal funds sold and securities purchased under resale agreements   56     2,851     4,024  
Interest bearing deposits with banks   1,011,635     980,457     693,269  
Available-for-sale securities, at fair value   1,649,636     1,724,667     637,663  
Held-to-maturity securities, at amortized cost   793,376     635,705     992,211  
Trading account securities   1,987     1,989     3,613  
Federal Home Loan Bank and Federal Reserve Bank stock   80,812     133,494     121,319  
Brokerage customer receivables   23,281     25,181     26,866  
Mortgage loans held-for-sale   382,837     418,374     554,256  
Loans, net of unearned income, excluding covered loans   20,743,332     19,703,172     18,174,655  
Covered loans   50,119     58,145     105,248  
Total loans   20,793,451     19,761,317     18,279,903  
Allowance for loan losses   (129,591 )   (122,291 )   (114,356 )
Allowance for covered loan losses   (1,074 )   (1,322 )   (2,412 )
Net loans   20,662,786     19,637,704     18,163,135  
Premises and equipment, net   605,211     597,301     595,792  
Lease investments, net   191,248     129,402     103,749  
Accrued interest receivable and other assets   577,359     593,796     670,014  
Trade date securities receivable   133,130         1,079,238  
Goodwill   500,260     498,587     486,095  
Other intangible assets   19,546     21,851     21,821  
Total assets   $ 26,929,265     $ 25,668,553     $ 24,420,616  
Liabilities and Shareholders' Equity            
Deposits:            
Non-interest bearing   $ 6,294,052     $ 5,927,377     $ 5,367,672  
Interest bearing   16,311,640     15,731,255     14,674,078  
 Total deposits   22,605,692     21,658,632     20,041,750  
Federal Home Loan Bank advances   318,270     153,831     588,055  
Other borrowings   277,710     262,486     252,611  
Subordinated notes   139,029     138,971     138,915  
Junior subordinated debentures   253,566     253,566     253,566  
Trade date securities payable   5,151         40,000  
Accrued interest payable and other liabilities   490,389     505,450     482,124  
Total liabilities   24,089,807     22,972,936     21,797,021  
Shareholders' Equity:            
Preferred stock   125,000     251,257     251,257  
Common stock   55,802     51,978     51,708  
Surplus   1,511,080     1,365,781     1,350,751  
Treasury stock   (4,884 )   (4,589 )   (4,145 )
Retained earnings   1,198,997     1,096,518     1,008,464  
Accumulated other comprehensive loss   (46,537 )   (65,328 )   (34,440 )
Total shareholders' equity   2,839,458     2,695,617     2,623,595  
Total liabilities and shareholders' equity   $ 26,929,265     $ 25,668,553     $ 24,420,616  



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

 
  Three Months Ended   Six Months Ended
(In thousands, except per share data) June 30,
 2017
  March 31,
 2017
  June 30,
 2016
  June 30,
 2017
  June 30,
 2016
Interest income                  
Interest and fees on loans $ 212,709     $ 199,314     $ 178,530     $ 412,023     $ 351,657  
Interest bearing deposits with banks 1,634     1,623     793     3,257     1,539  
Federal funds sold and securities purchased under resale agreements 1     1     1     2     2  
Investment securities 15,524     13,573     16,398     29,097     33,588  
Trading account securities 4     11     14     15     25  
Federal Home Loan Bank and Federal Reserve Bank stock 1,153     1,070     1,112     2,223     2,049  
Brokerage customer receivables 156     167     216     323     435  
Total interest income 231,181     215,759     197,064     446,940     389,295  
Interest expense                  
Interest on deposits 18,471     16,270     13,594     34,741     26,375  
Interest on Federal Home Loan Bank advances 2,933     1,590     2,984     4,523     5,870  
Interest on other borrowings 1,149     1,139     1,086     2,288     2,144  
Interest on subordinated notes 1,786     1,772     1,777     3,558     3,554  
Interest on junior subordinated debentures 2,433     2,408     2,353     4,841     4,573  
Total interest expense 26,772     23,179     21,794     49,951     42,516  
Net interest income 204,409     192,580     175,270     396,989     346,779  
Provision for credit losses 8,891     5,209     9,129     14,100     17,163  
Net interest income after provision for credit losses 195,518     187,371     166,141     382,889     329,616  
Non-interest income                  
Wealth management 19,905     20,148     18,852     40,053     37,172  
Mortgage banking 35,939     21,938     36,807     57,877     58,542  
Service charges on deposit accounts 8,696     8,265     7,726     16,961     15,132  
Gains (losses) on investment securities, net 47     (55 )   1,440     (8 )   2,765  
Fees from covered call options 890     759     4,649     1,649     6,361  
Trading losses, net (420 )   (320 )   (316 )   (740 )   (484 )
Operating lease income, net 6,805     5,782     4,005     12,587     6,811  
Other 18,110     12,248     11,636     30,358     27,252  
Total non-interest income 89,972     68,765     84,799     158,737     153,551  
Non-interest expense                  
Salaries and employee benefits 106,502     99,316     100,894     205,818     196,705  
Equipment 9,909     9,002     9,307     18,911     18,074  
Operating lease equipment depreciation 5,662     4,636     3,385     10,298     5,435  
Occupancy, net 12,586     13,101     11,943     25,687     23,891  
Data processing 7,804     7,925     7,138     15,729     13,657  
Advertising and marketing 8,726     5,150     6,941     13,876     10,720  
Professional fees 7,510     4,660     5,419     12,170     9,478  
Amortization of other intangible assets 1,141     1,164     1,248     2,305     2,546  
FDIC insurance 3,874     4,156     4,040     8,030     7,653  
OREO expense, net 739     1,665     1,348     2,404     1,908  
Other 19,091     17,343     19,306     36,434     34,632  
Total non-interest expense 183,544     168,118     170,969     351,662     324,699  
Income before taxes 101,946     88,018     79,971     189,964     158,468  
Income tax expense 37,049     29,640     29,930     66,689     59,316  
Net income $ 64,897     $ 58,378     $ 50,041     $ 123,275     $ 99,152  
Preferred stock dividends 2,050     3,628     3,628     5,678     7,256  
Net income applicable to common shares $ 62,847     $ 54,750     $ 46,413     $ 117,597     $ 91,896  
Net income per common share - Basic $ 1.15     $ 1.05     $ 0.94     $ 2.20     $ 1.88  
Net income per common share - Diluted $ 1.11     $ 1.00     $ 0.90     $ 2.11     $ 1.80  
Cash dividends declared per common share $ 0.14     $ 0.14     $ 0.12     $ 0.28     $ 0.24  
Weighted average common shares outstanding 54,775     52,267     49,140     53,528     48,794  
Dilutive potential common shares 1,812     4,160     3,965     2,981     3,887  
Average common shares and dilutive common shares 56,587     56,427     53,105     56,509     52,681  


EARNINGS PER SHARE

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

      Three Months Ended   Six Months Ended
(In thousands, except per share data)     June 30,
 2017
  March 31,
 2017
  June 30,
 2016
  June 30,
 2017
  June 30,
 2016
Net income     $ 64,897     $ 58,378     $ 50,041     $ 123,275     $ 99,152  
Less: Preferred stock dividends     2,050     3,628     3,628     5,678     7,256  
Net income applicable to common shares—Basic (A)   62,847     54,750     46,413     117,597     91,896  
Add: Dividends on convertible preferred stock, if dilutive         1,578     1,578     1,578     3,156  
Net income applicable to common shares—Diluted (B)   62,847     56,328     47,991     119,175     95,052  
Weighted average common shares outstanding (C)   54,775     52,267     49,140     53,528     48,794  
Effect of dilutive potential common shares:                      
Common stock equivalents     927     1,060     856     994     778  
Convertible preferred stock, if dilutive     885     3,100     3,109     1,987     3,109  
Weighted average common shares and effect of dilutive potential common shares (D)   56,587     56,427     53,105     56,509     52,681  
Net income per common share:                      
Basic (A/C)   $ 1.15     $ 1.05     $ 0.94     $ 2.20     $ 1.88  
Diluted (B/D)   $ 1.11     $ 1.00     $ 0.90     $ 2.11     $ 1.80  

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

SUPPLEMENTAL FINANCIAL MEASURES/RATIOS

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

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

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

  Three Months Ended   Six Months Ended
  June 30,   March 31,   December 31,   September 30,   June 30,   June 30,   June 30,
(Dollars and shares in thousands) 2017   2017   2016   2016   2016   2017   2016
Calculation of Net Interest Margin and Efficiency Ratio                          
(A) Interest Income (GAAP) $ 231,181     $ 215,759     $ 215,013     $ 208,149     $ 197,064     $ 446,940     $ 389,295  
Taxable-equivalent adjustment:                          
- Loans 831     790     666     584     523     1,621     1,032  
- Liquidity Management Assets 866     907     815     963     932     1,773     1,852  
- Other Earning Assets 2     5     17     9     8     7     14  
(B) Interest Income - FTE $ 232,880     $ 217,461     $ 216,511     $ 209,705     $ 198,527     $ 450,341     $ 392,193  
(C) Interest Expense (GAAP) 26,772     23,179     24,235     23,513     21,794     49,951     42,516  
(D) Net Interest Income - FTE (B minus C) $ 206,108     $ 194,282     $ 192,276     $ 186,192     $ 176,733     $ 400,390     $ 349,677  
(E) Net Interest Income (GAAP) (A minus C) $ 204,409     $ 192,580     $ 190,778     $ 184,636     $ 175,270     $ 396,989     $ 346,779  
Net interest margin (GAAP-derived) 3.41 %   3.36 %   3.21 %   3.21 %   3.24 %   3.38 %   3.26 %
Net interest margin - FTE 3.43 %   3.39 %   3.23 %   3.24 %   3.27 %   3.41 %   3.29 %
(F) Non-interest income $ 89,972     $ 68,765     $ 85,275     $ 86,604     $ 84,799     $ 158,737     $ 153,551  
(G) Gains (losses) on investment securities, net 47     (55 )   1,575     3,305     1,440     (8 )   2,765  
(H) Non-interest expense 183,544     168,118     180,371     176,615     170,969     351,662     324,699  
Efficiency ratio (H/(E+F-G)) 62.36 %   64.31 %   65.71 %   65.92 %   66.11 %   63.28 %   65.26 %
Efficiency ratio - FTE (H/(D+F-G)) 62.00 %   63.90 %   65.36 %   65.54 %   65.73 %   62.89 %   64.88 %
Calculation of Tangible Common Equity ratio (at period end)                          
Total shareholders' equity $ 2,839,458     $ 2,764,983     $ 2,695,617     $ 2,674,474     $ 2,623,595          
(I) Less: Convertible preferred stock     (126,257 )   (126,257 )   (126,257 )   (126,257 )        
Less:  Non-convertible preferred stock (125,000 )   (125,000 )   (125,000 )   (125,000 )   (125,000 )        
Less: Intangible assets (519,806 )   (520,028 )   (520,438 )   (506,674 )   (507,916 )        
(J) Total tangible common shareholders' equity $ 2,194,652     $ 1,993,698     $ 1,923,922     $ 1,916,543     $ 1,864,422          
Total assets $ 26,929,265     $ 25,778,893     $ 25,668,553     $ 25,321,759     $ 24,420,616          
Less: Intangible assets (519,806 )   (520,028 )   (520,438 )   (506,674 )   (507,916 )        
(K) Total tangible assets $ 26,409,459     $ 25,258,865     $ 25,148,115     $ 24,815,085     $ 23,912,700          
Tangible common equity ratio (J/K) 8.3 %   7.9 %   7.7 %   7.7 %   7.8 %        
Tangible common equity ratio, assuming full conversion of convertible preferred stock ((J-I)/K) 8.3 %   8.4 %   8.2 %   8.2 %   8.3 %        
Calculation of book value per share                          
Total shareholders' equity $ 2,839,458     $ 2,764,983     $ 2,695,617     $ 2,674,474     $ 2,623,595          
Less: Preferred stock (125,000 )   (251,257 )   (251,257 )   (251,257 )   (251,257 )        
(L) Total common equity $ 2,714,458     $ 2,513,726     $ 2,444,360     $ 2,423,217     $ 2,372,338          
(M) Actual common shares outstanding 55,700     52,504     51,881     51,715     51,619          
Book value per common share (L/M) $ 48.73     $ 47.88     $ 47.12     $ 46.86     $ 45.96          
Tangible common book value per share (J/M) $ 39.40     $ 37.97     $ 37.08     $ 37.06     $ 36.12          


Calculation of return on average common equity                          
(N) Net income applicable to common shares 62,847     54,750     50,979     49,487     46,413     117,597     91,896  
Add: After-tax intangible asset amortization 726     771     716     677     781     1,497     1,593  
(O) Tangible net income applicable to common shares 63,573     55,521     51,695     50,164     47,194     119,094     93,489  
Total average shareholders' equity 2,800,905     2,739,050     2,689,876     2,651,684     2,465,732     2,771,768     2,427,751  
Less: Average preferred stock (161,028 )   (251,257 )   (251,257 )   (251,257 )   (251,257 )   (205,893 )   (251,259 )
(P) Total average common shareholders' equity 2,639,877     2,487,793     2,438,619     2,400,427     2,214,475     2,565,875     2,176,492  
Less: Average intangible assets (519,340 )   (520,346 )   (513,017 )   (508,812 )   (507,439 )   (519,840 )   (501,516 )
(Q) Total average tangible common shareholders' equity 2,120,537     1,967,447     1,925,602     1,891,615     1,707,036     2,046,035     1,674,976  
Return on average common equity, annualized  (N/P) 9.55 %   8.93 %   8.32 %   8.20 %   8.43 %   9.24 %   8.49 %
Return on average tangible common equity, annualized (O/Q) 12.02 %   11.44 %   10.68 %   10.55 %   11.12 %   11.74 %   11.22 %


BUSINESS UNIT SUMMARY

Community Banking

Through its community banking franchise, the Company provides banking and financial services primarily to individuals, small to mid-sized businesses, local governmental units and institutional clients residing primarily in the local areas the Company services. In the second quarter of 2017, profitability within this franchise was primarily driven by increased net interest income due to a higher net interest margin and higher revenue from the mortgage banking business. The net interest margin increased in the second quarter of 2017 compared to the first quarter of 2017 primarily as a result of higher yields on the commercial (excluding lease loans) and commercial real-estate loan portfolios as well as liquidity management assets, partially offset by higher rates on interest-bearing deposits. Mortgage banking revenue increased by $14.0 million from $21.9 million for the first quarter of 2017 to $35.9 million for the second quarter of 2017. The higher revenue was due to originations during the current period increasing to $1.1 billion from $722.5 million in the first quarter of 2017 as a result of higher purchase originations during the traditional spring purchase market. Purchases represented 84% of volume for the second quarter of 2017. The Company's gross commercial and commercial real estate loan pipelines remain strong. Before the impact of scheduled payments and prepayments, at June 30, 2017, gross commercial and commercial real estate loan pipelines totaled $1.2 billion, or $796.8 million when adjusted for the probability of closing, compared to $1.5 billion, or $934 million when adjusted for the probability of closing, at March 31, 2017.

Specialty Finance

Through its specialty finance unit, the Company offers financing of insurance premiums for businesses and individuals, accounts receivable financing, value-added, out-sourced administrative services, and other specialty finance businesses. In the second quarter of 2017, the specialty finance unit experienced higher revenue as a result of increased volumes and higher yields within its insurance premium financing receivables portfolio. Originations of $1.9 billion during the second quarter of 2017 resulted in a $214.7 million increase in average balances. The increase in average balances along with higher yields on these loans resulted in a $4.2 million increase in interest income attributed to this portfolio. The Company's leasing business continued to grow during the second quarter of 2017, increasing its portfolio of assets, including capital leases, loans and equipment on operating leases, by $129.5 million since the end of the first quarter of 2017. Revenues from the Company's out-sourced administrative services business remained steady, totaling approximately $1.0 million in the second quarter of 2017 and first quarter of 2017.

Wealth Management

Through its wealth management unit, the Company offers a full range of wealth management services through three separate subsidiaries: trust and investment services, asset management, securities brokerage services and 401(k) and retirement plan services. At June 30, 2017, the Company's wealth management subsidiaries had approximately $23.3 billion of assets under administration, which includes $2.6 billion of assets owned by the Company and its subsidiary banks, representing a $364.2 million increase from the $22.9 billion of assets under administration at March 31, 2017.

LOANS

Loan Portfolio Mix and Growth Rates

                % Growth
(Dollars in thousands)   June 30,
 2017
  December 31,
 2016
  June 30,
 2016
  From (1)
December 31,
2016
  From
June 30,
2016
Balance:                    
Commercial   $ 6,406,289     $ 6,005,422     $ 5,144,533     13 %   25 %
Commercial real estate   6,402,494     6,196,087     5,848,334     7     9  
Home equity   689,483     725,793     760,904     (10 )   (9 )
Residential real estate   762,810     705,221     653,664     16     17  
Premium finance receivables - commercial   2,648,386     2,478,581     2,478,280     14     7  
Premium finance receivables - life insurance   3,719,043     3,470,027     3,161,562     14     18  
Consumer and other   114,827     122,041     127,378     (12 )   (10 )
Total loans, net of unearned income, excluding covered loans   $ 20,743,332     $ 19,703,172     $ 18,174,655     11 %   14 %
Covered loans   50,119     58,145     105,248     (28 )   (52 )
Total loans, net of unearned income   $ 20,793,451     $ 19,761,317     $ 18,279,903     11 %   14 %
Mix:                    
Commercial   31 %   30 %   28 %        
Commercial real estate   31     31     31          
Home equity   3     4     4          
Residential real estate   3     4     4          
Premium finance receivables - commercial   13     12     14          
Premium finance receivables - life insurance   18     18     17          
Consumer and other   1     1     1          
Total loans, net of unearned income, excluding covered loans   100 %   100 %   99 %        
Covered loans           1          
Total loans, net of unearned income   100 %   100 %   100 %        

(1)     Annualized

Commercial and Commercial Real Estate Loan Portfolios

    As of June 30, 2017
        % of
Total
Balance
  Nonaccrual   > 90 Days
Past Due
and Still
Accruing
  Allowance
For Loan
Losses
Allocation
       
(Dollars in thousands)   Balance  
Commercial:                    
Commercial, industrial and other   $ 4,094,532     32.0 %   $ 8,720     $     $ 35,542  
Franchise   838,394     6.5             5,305  
Mortgage warehouse lines of credit   234,643     1.8             1,719  
Asset-based lending   871,906     6.8     936         8,004  
Leases   356,604     2.8     535         1,150  
PCI - commercial loans (1)   10,210     0.1         1,572     638  
Total commercial   $ 6,406,289     50.0 %   $ 10,191     $ 1,572     $ 52,358  
Commercial Real Estate:                    
Construction   $ 709,587     5.5 %   $ 2,408     $     $ 9,187  
Land   112,153     0.9     202         3,596  
Office   887,684     6.9     4,806         5,740  
Industrial   792,791     6.2     2,193         5,201  
Retail   920,494     7.2     1,635         5,971  
Multi-family   814,598     6.4     354         8,226  
Mixed use and other   2,018,950     15.8     5,382         14,299  
PCI - commercial real estate (1)   146,237     1.1         8,768     119  
Total commercial real estate   $ 6,402,494     50.0 %   $ 16,980     $ 8,768     $ 52,339  
Total commercial and commercial real estate   $ 12,808,783     100.0 %   $ 27,171     $ 10,340     $ 104,697  
                     
Commercial real estate - collateral location by state:                    
Illinois   $ 4,988,746     77.9 %            
Wisconsin   689,007     10.8              
Total primary markets   $ 5,677,753     88.7 %            
Indiana   142,137     2.2              
Florida   105,897     1.7              
Arizona   57,219     0.9              
Ohio   46,652     0.7              
Michigan   45,541     0.7              
California   38,626     0.6              
Other (no individual state greater than 0.6%)   288,669     4.5              
Total   $ 6,402,494     100.0 %            

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

DEPOSITS

Deposit Portfolio Mix and Growth Rates

                % Growth
(Dollars in thousands)   June 30,
 2017
  December 31,
 2016
  June 30,
 2016
  From (1)
December 31,
2016
  From
June 30,
2016
Balance:                    
Non-interest bearing   $ 6,294,052     $ 5,927,377     $ 5,367,672     12 %   17 %
NOW and interest bearing demand deposits   2,459,238     2,624,442     2,450,710     (13 )    
Wealth management deposits (2)   2,464,162     2,209,617     1,904,121     23     29  
Money market   4,449,385     4,441,811     4,384,134         1  
Savings   2,419,463     2,180,482     1,851,863     22     31  
Time certificates of deposit   4,519,392     4,274,903     4,083,250     12     11  
Total deposits   $ 22,605,692     $ 21,658,632     $ 20,041,750     9 %   13 %
Mix:                    
Non-interest bearing   28 %   27 %   27 %        
NOW and interest bearing demand deposits   11     12     12          
Wealth management deposits (2)   11     10     10          
Money market   19     21     22          
Savings   11     10     9          
Time certificates of deposit   20     20     20          
Total deposits   100 %   100 %   100 %        

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


Time Certificates of Deposit
Maturity/Re-pricing Analysis
As of June 30, 2017

(Dollars in thousands)   CDARs &
Brokered
Certificates
  of Deposit (1)
  MaxSafe
Certificates
  of Deposit (1)
  Variable Rate
Certificates
  of Deposit (2)
  Other Fixed
Rate Certificates
  of Deposit (1)
  Total Time
Certificates of
Deposit
  Weighted-
Average

Rate of
Maturing

Time
Certificates

  of Deposit (3)
1-3 months   $ 537     $ 37,577     $ 128,018     $ 637,354     $ 803,486     0.67 %
4-6 months   1,252     30,757         792,236     824,245     0.91 %
7-9 months   1,494     25,237         826,270     853,001     0.99 %
10-12 months   59,732     15,749         714,749     790,230     1.04 %
13-18 months       17,213         737,219     754,432     1.17 %
19-24 months   249     10,922         179,144     190,315     1.25 %
24+ months   1,000     17,467         285,216     303,683     1.45 %
Total   $ 64,264     $ 154,922     $ 128,018     $ 4,172,188     $ 4,519,392     1.00 %

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


NET INTEREST INCOME

The following table presents a summary of Wintrust's average balances, net interest income and related net interest margins, calculated on a fully tax-equivalent basis, for the second quarter of 2017 compared to the first quarter of 2017 (sequential quarters) and second quarter of 2016 (linked quarters), respectively:

  Average Balance 
for three months ended,
  Interest 
for three months ended,
  Yield/Rate 
for three months ended,
(Dollars in thousands) June 30,
 2017
  March 31,
 2017
  June 30,
 2016
  June 30,
 2017
  March 31,
 2017
  June 30,
 2016
  June 30,
 2017
  March 31,
 2017
  June 30,
 2016
Interest-bearing deposits with banks and cash equivalents(1) $ 722,349     $ 780,752     $ 639,753     $ 1,635     $ 1,624     $ 794     0.91 %   0.84 %   0.50 %
Investment securities 2,572,619     2,395,625     2,656,654     16,390     14,480     17,330     2.55     2.45     2.62  
FHLB and FRB stock 99,438     94,090     116,706     1,153     1,070     1,112     4.66     4.61     3.83  
Liquidity management assets(2)(7) $ 3,394,406     $ 3,270,467     $ 3,413,113     $ 19,178     $ 17,174     $ 19,236     2.27 %   2.13 %   2.27 %
Other earning assets(2)(3)(7) 25,749     25,236     29,759     162     183     238     2.53     2.95     3.21  
Loans, net of unearned income(2)(4)(7) 20,599,718     19,923,606     18,204,552     212,892     199,186     177,571     4.15     4.05     3.92  
Covered loans 51,823     56,872     109,533     648     918     1,482     5.01     6.55     5.44  
Total earning assets(7) $ 24,071,696     $ 23,276,181     $ 21,756,957     $ 232,880     $ 217,461     $ 198,527     3.88 %   3.79 %   3.67 %
Allowance for loan and covered loan losses (132,053 )   (127,425 )   (116,984 )                        
Cash and due from banks 242,495     229,588     272,935                          
Other assets 1,868,811     1,829,004     1,841,847                          
Total assets $ 26,050,949     $ 25,207,348     $ 23,754,755                          
                                   
Interest-bearing deposits $ 15,621,674     $ 15,466,670     $ 14,065,995     $ 18,471     $ 16,270     $ 13,594     0.47 %   0.43 %   0.39 %
Federal Home Loan Bank advances 689,600     181,338     946,081     2,933     1,590     2,984     1.71     3.55     1.27  
Other borrowings 240,547     255,012     248,233     1,149     1,139     1,086     1.92     1.81     1.76  
Subordinated notes 139,007     138,980     138,898     1,786     1,772     1,777     5.14     5.10     5.12  
Junior subordinated debentures 253,566     253,566     253,566     2,433     2,408     2,353     3.80     3.80     3.67  
Total interest-bearing liabilities $ 16,944,394     $ 16,295,566     $ 15,652,773     $ 26,772     $ 23,179     $ 21,794     0.63 %   0.58 %   0.56 %
Non-interest bearing deposits 5,904,679     5,787,034     5,223,384                          
Other liabilities 400,971     385,698     412,866                          
Equity 2,800,905     2,739,050     2,465,732                          
Total liabilities and shareholders' equity $ 26,050,949     $ 25,207,348     $ 23,754,755                          
Interest rate spread(5)(7)                         3.25 %   3.21 %   3.11 %
Less:  Fully tax-equivalent adjustment             (1,699 )   (1,702 )   (1,463 )   (0.02 )   (0.03 )   (0.03 )
Net free funds/contribution(6) $ 7,127,302     $ 6,980,615     $ 6,104,184                 0.18     0.18     0.16  
Net interest income/ margin(7)  (GAAP)             $ 204,409     $ 192,580     $ 175,270     3.41 %   3.36 %   3.24 %
Fully tax-equivalent adjustment             1,699     1,702     1,463     0.02     0.03     0.03  
Net interest income/ margin - FTE (7)             $ 206,108     $ 194,282     $ 176,733     3.43 %   3.39 %   3.27 %

(1) Includes interest-bearing deposits from banks, federal funds sold and securities purchased under resale agreements.
(2) Interest income on tax-advantaged loans, trading securities and investment securities reflects a tax-equivalent adjustment based on a marginal federal corporate tax rate of 35%. The total adjustments for the three months ended June 30, 2017, March 31, 2017 and June 30, 2016 were $1.7 million, $1.7 million and $1.5 million, respectively.
(3) Other earning assets include brokerage customer receivables and trading account securities.
(4) Loans, net of unearned income, include loans held-for-sale and non-accrual loans.
(5) Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.
(6) Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.
(7) See "Supplemental Financial Measures/Ratios" for additional information on this performance ratio.

For the second quarter of 2017, net interest income totaled $204.4 million, an increase of $11.8 million as compared to the first quarter of 2017 and an increase of $29.1 million as compared to the second quarter of 2016. Net interest margin was 3.41% (3.43% on a fully tax-equivalent basis) during the second quarter of 2017 compared to 3.36% (3.39% on a fully tax-equivalent basis) during the first quarter of 2017 and 3.24% (3.27% on a fully tax-equivalent basis) during the second quarter of 2016.

The following table presents a summary of Wintrust's average balances, net interest income and related interest margins, calculated on a fully tax-equivalent basis, for six months ended June 30, 2017 compared to six months ended June 30, 2016:

  Average Balance   
for six months ended,
  Interest
  for six months ended,
  Yield/Rate
for six months ended,
(Dollars in thousands) June 30,
 2017
  June 30,
 2016
  June 30,
 2017
  June 30,
 2016
  June 30,
 2017
  June 30,
 2016
Interest-bearing deposits with banks and cash equivalents (1) $ 751,389     $ 605,724     $ 3,259     $ 1,541     0.87 %   0.51 %
Investment securities 2,484,611     2,638,911     30,870     35,440     2.51     2.70  
FHLB and FRB stock 96,779     111,990     2,223     2,049     4.64     3.68  
Liquidity management assets(2)(7) $ 3,332,779     $ 3,356,625     $ 36,352     $ 39,030     2.20 %   2.34 %
Other earning assets(2)(3)(7) 25,494     29,246     345     474     2.73     3.26  
Loans, net of unearned income(2)(4)(7) 20,263,842     17,856,572     412,078     349,196     4.10     3.93  
Covered loans 54,505     125,442     1,566     3,493     5.79     5.60  
Total earning assets(7) $ 23,676,620     $ 21,367,885     $ 450,341     $ 392,193     3.84 %   3.69 %
Allowance for loan and covered loan losses (129,751 )   (114,506 )                
Cash and due from banks 236,077     266,139                  
Other assets 1,849,058     1,809,316                  
Total assets $ 25,632,004     $ 23,328,834                  
                       
Interest-bearing deposits $ 15,544,603     $ 13,891,664     $ 34,741     $ 26,375     0.45 %   0.38 %
Federal Home Loan Bank advances 436,873     885,592     4,523     5,870     2.09     1.33  
Other borrowings 247,740     252,809     2,288     2,144     1.86     1.71  
Subordinated notes 138,994     138,884     3,558     3,554     5.12     5.12  
Junior subordinated debentures 253,566     255,626     4,841     4,573     3.80     3.54  
Total interest-bearing liabilities $ 16,621,776     $ 15,424,575     $ 49,951     $ 42,516     0.60 %   0.55 %
Non-interest bearing deposits 5,845,083     5,081,565                  
Other liabilities 393,377     394,943                  
Equity 2,771,768     2,427,751                  
Total liabilities and shareholders' equity $ 25,632,004     $ 23,328,834                  
Interest rate spread(5)(7)                 3.24 %   3.14 %
Less:  Fully tax-equivalent adjustment         (3,401 )   (2,898 )   (0.03 )   (0.03 )
Net free funds/contribution(6) $ 7,054,844     $ 5,943,310             0.17     0.15  
Net interest income/ margin(7)  (GAAP)         $ 396,989     $ 346,779     3.38 %   3.26 %
Fully tax-equivalent adjustment         3,401     2,898     0.03     0.03  
Net interest income/ margin - FTE (7)         $ 400,390     $ 349,677     3.41 %   3.29 %

(1) Includes interest-bearing deposits from banks, federal funds sold and securities purchased under resale agreements.
(2) Interest income on tax-advantaged loans, trading securities and investment securities reflects a tax-equivalent adjustment based on a marginal federal corporate tax rate of 35%. The total adjustments for six months ended June 30, 2017 and 2016 were $3.4 million and $2.9 million respectively.
(3) Other earning assets include brokerage customer receivables and trading account securities.
(4) Loans, net of unearned income, include loans held-for-sale and non-accrual loans.
(5) Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.
(6) Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.
(7) See "Supplemental Financial Measures/Ratios" for additional information on this performance ratio.

For the first six months of 2017 net interest income totaled $397.0 million, an increase of $50.2 million as compared to the first six months of 2016. Net interest margin was 3.38% (3.41% on a fully tax-equivalent basis) for the first six months of 2017 compared to 3.26% (3.29% on a fully tax-equivalent basis) for the first six months of 2016.

Interest Rate Sensitivity

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

The following interest rate scenarios display the percentage change in net interest income over a one-year time horizon assuming increases of 100 and 200 basis points and a decrease of 100 basis points. The Static Shock Scenario results incorporate actual cash flows and repricing characteristics for balance sheet instruments following an instantaneous, parallel change in market rates based upon a static (i.e. no growth or constant) balance sheet. Conversely, the Ramp Scenario results incorporate management's projections of future volume and pricing of each of the product lines following a gradual, parallel change in market rates over twelve months.  Actual results may differ from these simulated results due to timing, magnitude, and frequency of interest rate changes as well as changes in market conditions and management strategies. The interest rate sensitivity for both the Static Shock and Ramp Scenario at June 30, 2017, March 31, 2017 and June 30, 2016 is as follows:

           
Static Shock Scenario   +200
Basis 
Points
  +100
 Basis
 Points
  -100
Basis
 Points
June 30, 2017   19.3 %   10.4 %   (13.5 )%
March 31, 2017   17.7 %   9.3 %   (13.2 )%
June 30, 2016   16.9 %   8.9 %   (8.9 )%


Ramp Scenario +200
Basis
Points
  +100
Basis
Points
  -100
Basis
Points
June 30, 2017 7.8 %   4.0 %   (4.6 )%
March 31, 2017 7.3 %   3.9 %   (4.8 )%
June 30, 2016 7.0 %   3.5 %   (3.7 )%

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

Maturities and Sensitivities of Loans to Changes in Interest Rates

The following table classifies the loan portfolio, excluding covered loans, at June 30, 2017 by date at which the loans reprice or mature, and the type of rate exposure:

As of June 30, 2017 One year or less   From one to five
years
  Over five years    
(Dollars in thousands)       Total
Commercial              
Fixed rate $ 155,364     $ 703,707     $ 470,295     $ 1,329,366  
Variable rate 5,067,733     7,288     1,902     5,076,923  
Total commercial $ 5,223,097     $ 710,995     $ 472,197     $ 6,406,289  
Commercial real estate              
Fixed rate 404,454     1,735,009     252,118     2,391,581  
Variable rate 3,978,265     31,068     1,580     4,010,913  
Total commercial real estate $ 4,382,719     $ 1,766,077     $ 253,698     $ 6,402,494  
Home Equity              
Fixed rate 5,962     4,657     63,208     73,827  
Variable rate 611,581     4,075         615,656  
Total home equity $ 617,543     $ 8,732     $ 63,208     $ 689,483  
Residential real estate              
Fixed rate 40,593     38,946     145,978     225,517  
Variable rate 54,493     180,457     302,343     537,293  
Total residential real estate $ 95,086     $ 219,403     $ 448,321     $ 762,810  
Premium finance receivables - commercial              
Fixed rate 2,560,924     87,462         2,648,386  
Variable rate              
Total premium finance receivables - commercial $ 2,560,924     $ 87,462     $     $ 2,648,386  
Premium finance receivables - life insurance              
Fixed rate 17,174     34,370     1,370     52,914  
Variable rate 3,666,129             3,666,129  
Total premium finance receivables - life insurance $ 3,683,303     $ 34,370     $ 1,370     $ 3,719,043  
Consumer and other              
Fixed rate 54,315     13,124     3,536     70,975  
Variable rate 43,852             43,852  
Total consumer and other $ 98,167     $ 13,124     $ 3,536     $ 114,827  
Total per category              
Fixed rate 3,238,786     2,617,275     936,505     6,792,566  
Variable rate 13,422,053     222,888     305,825     13,950,766  
Total loans, net of unearned income, excluding covered loans $ 16,660,839     $ 2,840,163     $ 1,242,330     $ 20,743,332  
Variable Rate Loan Pricing by Index:              
Prime $ 2,957,739              
One- month LIBOR 6,514,657              
Three- month LIBOR 500,408              
Twelve- month LIBOR 3,525,934              
Other 452,028              
Total variable rate $ 13,950,766              

A table accompanying this announcement can be found at: 

http://www.globenewswire.com/NewsRoom/AttachmentNg/70320b5d-ceba-4871-96ef-5a079570adfc

As noted in the table on the previous page, the majority of the Company's portfolio is tied to LIBOR indices which, as shown in the table above, do not simulate the same increases as the prime rate or the federal funds rate when the Federal Reserve raises interest rates.  Specifically, the Company has $6.5 billion of variable rate loans tied to one-month LIBOR and $3.5 billion of variable rate loans tied to twelve-month LIBOR. The above chart shows that the Federal Reserve raised interest rates by 25 bps in the fourth quarter of 2016, and the first and second quarters of 2017, and during those periods one-month LIBOR increased by 24 bps, 21 bps and 24 bps respectively, while twelve-month LIBOR increased by 14 bps and 11 bps and then decreased by 6 bps in the most recent period.  As a result of longer term rates remaining relatively flat in recent months, the Company's repricing benefit on variable rates loans tied to twelve-month LIBOR has been limited.

NON-INTEREST INCOME

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

    Three Months Ended                
    June 30,   March 31,   June 30,   Q2 2017 compared to
Q1 2017
  Q2 2017 compared to
Q2 2016
(Dollars in thousands)   2017   2017   2016   $ Change   % Change   $ Change   % Change
Brokerage   $ 5,449     $ 6,220     $ 6,302     $ (771 )   (12 )%   $ (853 )   (14 )%
Trust and asset management   14,456     13,928     12,550     528     4     1,906     15  
Total wealth management   19,905     20,148     18,852     (243 )   (1 )   1,053     6  
Mortgage banking   35,939     21,938     36,807     14,001     64     (868 )   (2 )
Service charges on deposit accounts   8,696     8,265     7,726     431     5     970     13  
Gains (losses) on investment securities, net   47     (55 )   1,440     102     NM   (1,393 )   (97 )
Fees from covered call options   890     759     4,649     131     17     (3,759 )   (81 )
Trading losses, net   (420 )   (320 )   (316 )   (100 )   (31 )   (104 )   33  
Operating lease income, net   6,805     5,782     4,005     1,023     18     2,800     70  
Other:                            
Interest rate swap fees   2,221     1,433     1,835     788     55     386     21  
BOLI   888     985     1,257     (97 )   (10 )   (369 )   (29 )
Administrative services   986     1,024     1,074     (38 )   (4 )   (88 )   (8 )
Early pay-offs of leases   10     1,211         (1,201 )   (99 )   10     NM
Miscellaneous   14,005     7,595     7,470     6,410     84     6,535     87  
Total Other   18,110     12,248     11,636     5,862     48     6,474     56  
Total Non-Interest Income   $ 89,972     $ 68,765     $ 84,799     $ 21,207     31 %   $ 5,173     6 %

NM - Not Meaningful

    Six Months Ended        
    June 30,   June 30,   $   %
(Dollars in thousands)   2017   2016   Change   Change
Brokerage   $ 11,669     $ 12,359     $ (690 )   (6 )%
Trust and asset management   28,384     24,813     3,571     14  
Total wealth management   40,053     37,172     2,881     8  
Mortgage banking   57,877     58,542     (665 )   (1 )
Service charges on deposit accounts   16,961     15,132     1,829     12  
(Losses) gains on investment securities, net   (8 )   2,765     (2,773 )   NM
Fees from covered call options   1,649     6,361     (4,712 )   (74 )
Trading losses, net   (740 )   (484 )   (256 )   53  
Operating lease income, net   12,587     6,811     5,776     85  
Other:                
Interest rate swap fees   3,654     6,273     (2,619 )   (42 )
BOLI   1,873     1,729     144     8  
Administrative services   2,010     2,143     (133 )   (6 )
Gain on extinguishment of debt       4,305     (4,305 )   NM
Early pay-offs of leases   1,221         1,221     NM
Miscellaneous   21,600     12,802     8,798     69  
Total Other   30,358     27,252     3,106     11  
Total Non-Interest Income   $ 158,737     $ 153,551     $ 5,186     3 %

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 first quarter of 2017 resulted from lower customer trading activity in the current quarter. The increase in wealth management revenue during the current period as compared to the second quarter of 2016 is primarily attributable to growth in assets under management due to new customers.  Wealth management revenue is comprised of the trust and asset management revenue of The Chicago Trust Company and Great Lakes Advisors and the brokerage commissions, managed money fees and insurance product commissions at Wayne Hummer Investments.

The increase in mortgage banking revenue in the current quarter as compared to the first quarter of 2017 resulted primarily from higher origination volumes in the current quarter. Mortgage loans originated or purchased for sale increased during the current quarter, totaling $1.1 billion in the second quarter of 2017 as compared to $722.5 million in the first quarter of 2017 and $1.2 billion in the second quarter of 2016. Mortgage banking revenue includes revenue from activities related to originating, selling and servicing residential real estate loans for the secondary market. Mortgage revenue is also impacted by changes in the fair value of mortgage servicing rights ("MSRs") as the Company does not hedge this change in fair value. The Company typically originates mortgage loans held-for-sale with associated MSRs either retained or released. The Company records MSRs at fair value on a recurring basis. The table below presents additional selected information regarding mortgage banking revenue for the respective periods.

    Three Months Ended   Six Months Ended
(Dollars in thousands)   June 30,
 2017
  March 31,
 2017
  June 30,
 2016
  June 30,
 2017
  June 30,
 2016
Retail originations   $ 963,396     624,971     $ 1,135,082     $ 1,588,367     $ 1,840,072  
Correspondent originations   170,862     97,496     77,160     268,358     108,818  
Total originations (A)   $ 1,134,258     722,467     $ 1,212,242     $ 1,856,725     $ 1,948,890  
                     
Purchases as a percentage of originations   84 %   66 %   65 %   77 %   62 %
Refinances as a percentage of originations   16     34     35     23     38  
Total   100 %   100 %   100 %   100 %   100 %
                     
Production revenue (B) (1)   $ 28,140     $ 17,677     $ 32,221     $ 45,817     $ 52,151  
Production margin (B / A)   2.48 %   2.45 %   2.66 %   2.47 %   2.68 %
                     
Loans serviced for others (C)   $ 2,303,435     $ 1,972,592     $ 1,250,062          
MSRs, at fair value (D)   27,307     21,596     13,382          
Percentage of mortgage servicing rights to loans serviced for others (D / C)   1.19 %   1.09 %   1.07 %        

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

The Company has typically written call options with terms of less than three months against certain U.S. Treasury and agency securities held in its portfolio for liquidity and other purposes. Management has entered into these transactions with the goal of economically hedging security positions and enhancing its overall return on its investment portfolio by using fees generated from these options to compensate for net interest margin compression. These option transactions are designed to mitigate overall interest rate risk and do not qualify as hedges pursuant to accounting guidance. Fees from covered call options decreased in the current quarter compared to the second quarter of 2016, primarily as a result of selling call options against a smaller value of underlying securities resulting in lower premiums received by the Company. There were no outstanding call option contracts at June 30, 2017, March 31, 2017 or June 30, 2016.

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

The increase in other non-interest income in the current quarter as compared to the first quarter of 2017 is primarily due to a reduction in the estimated FDIC indemnification liability of $4.9 million and higher interest rate swap fees, partially offset by lower gains on early pay-offs of leases.

NON-INTEREST EXPENSE

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

    Three Months Ended                
    June 30,   March 31,   June 30,   Q2 2017 compared to
Q1 2017
  Q2 2017 compared to
Q2 2016
(Dollars in thousands)   2017   2017   2016   $ Change   % Change   $ Change   % Change
Salaries and employee benefits:                            
Salaries   $ 55,215     $ 55,008     $ 52,924     $ 207     %   $ 2,291     4 %
Commissions and incentive compensation   34,050     26,643     32,531     7,407     28     1,519     5  
Benefits   17,237     17,665     15,439     (428 )   (2 )   1,798     12  
Total salaries and employee benefits   106,502     99,316     100,894     7,186     7     5,608     6  
Equipment   9,909     9,002     9,307     907     10     602     6  
Operating lease equipment depreciation   5,662     4,636     3,385     1,026     22     2,277     67  
Occupancy, net   12,586     13,101     11,943     (515 )   (4 )   643     5  
Data processing   7,804     7,925     7,138     (121 )   (2 )   666     9  
Advertising and marketing   8,726     5,150     6,941     3,576     69     1,785     26  
Professional fees   7,510     4,660     5,419     2,850     61     2,091     39  
Amortization of other intangible assets   1,141     1,164     1,248     (23 )   (2 )   (107 )   (9 )
FDIC insurance   3,874     4,156     4,040     (282 )   (7 )   (166 )   (4 )
OREO expense, net   739     1,665     1,348     (926 )   (56 )   (609 )   (45 )
Other:                            
Commissions - 3rd party brokers   1,033     1,098     1,324     (65 )   (6 )   (291 )   (22 )
Postage   2,080     1,442     2,038     638     44     42     2  
Miscellaneous   15,978     14,803     15,944     1,175     8     34      
Total other   19,091     17,343     19,306     1,748     10     (215 )   (1 )
Total Non-Interest Expense   $ 183,544     $ 168,118     $ 170,969     $ 15,426     9 %   $ 12,575     7 %

NM - Not Meaningful

    Six Months Ended        
    June 30,   June 30,   $   %
(Dollars in thousands)   2017   2016   Change   Change
Salaries and employee benefits:                
Salaries   $ 110,223     $ 103,206     $ 7,017     7 %
Commissions and incentive compensation   60,693     58,906     1,787     3  
Benefits   34,902     34,593     309     1  
Total salaries and employee benefits   205,818     196,705     9,113     5  
Equipment   18,911     18,074     837     5  
Operating lease equipment depreciation   10,298     5,435     4,863     89  
Occupancy, net   25,687     23,891     1,796     8  
Data processing   15,729     13,657     2,072     15  
Advertising and marketing   13,876     10,720     3,156     29  
Professional fees   12,170     9,478     2,692     28  
Amortization of other intangible assets   2,305     2,546     (241 )   (9 )
FDIC insurance   8,030     7,653     377     5  
OREO expense, net   2,404     1,908     496     26  
Other:                
Commissions - 3rd party brokers   2,131     2,634     (503 )   (19 )
Postage   3,522     3,340     182     5  
Miscellaneous   30,781     28,658     2,123     7  
Total other   36,434     34,632     1,802     5  
Total Non-Interest Expense   $ 351,662     $ 324,699     $ 26,963     8 %

NM - Not Meaningful

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

Salaries and employee benefits expense increased in the current quarter compared to the first quarter of 2017 primarily as a result of higher incentive compensation on variable pay based arrangements (including mortgage banking commissions), partially offset by lower benefits.

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

The increase in advertising and marketing expenses during the current quarter compared to the first quarter of 2017 is primarily related to the higher expenses for community advertisements and sponsorships 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 timing of sponsorship programs and type of marketing programs utilized which are determined based on the market area, targeted audience, competition and various other factors.

The increase in professional fees during the current quarter compared to the first quarter of 2017 is primarily related to legal and consulting fees. Professional fees include legal, audit and tax fees, external loan review costs, consulting arrangements and normal regulatory exam assessments.

The increase in miscellaneous expenses during the current quarter compared to the first quarter of 2017 is primarily a result of higher travel and entertainment expenses. Miscellaneous expense includes ATM expenses, correspondent bank charges, directors' fees, telephone, travel and entertainment, corporate insurance, dues and subscriptions, problem loan expenses, operating losses and lending origination costs that are not deferred.

INCOME TAXES

The Company recorded income tax expense of $37.0 million in the second quarter of 2017 compared to $29.6 million in the first quarter of 2017 and $29.9 million in the second quarter of 2016. The effective tax rates were 36.34% in second quarter of 2017, 33.67% in the first quarter of 2017 and 37.43% in the second quarter of 2016. The lower effective tax rate in the first quarter of 2017 was primarily a result of recording $3.4 million of excess tax benefits related to the adoption of new accounting rules over income taxes attributed to share-based compensation that became effective on January 1, 2017. These excess tax benefits are expected to be higher in the first quarter when the majority of the Company's share-based awards vest, and will fluctuate throughout the year based on the Company's stock price and timing of employee stock option exercises and vesting of other share-based awards.

ASSET QUALITY

Allowance for Credit Losses, excluding covered loans

    Three Months Ended   Six Months Ended
    June 30,   March 31,   June 30,   June 30,   June 30,
(Dollars in thousands)   2017   2017   2016   2017   2016
Allowance for loan losses at beginning of period   $ 125,819     $ 122,291     $ 110,171     $ 122,291     $ 105,400  
Provision for credit losses   8,952     5,316     9,269     14,268     17,692  
Other adjustments   (30 )   (56 )   (134 )   (86 )   (212 )
Reclassification (to) from allowance for unfunded lending-related commitments   106     (138 )   (40 )   (32 )   (121 )
Charge-offs:                    
Commercial   913     641     721     1,554     1,392  
Commercial real estate   1,985     261     502     2,246     1,173  
Home equity   1,631     625     2,046     2,256     3,098  
Residential real estate   146     329     693     475     1,186  
Premium finance receivables - commercial   1,878     1,427     1,911     3,305     4,391  
Premium finance receivables - life insurance                    
Consumer and other   175     134     224     309     331  
Total charge-offs   6,728     3,417     6,097     10,145     11,571  
Recoveries:                    
Commercial   561     273     121     834     750  
Commercial real estate   276     554     296     830     665  
Home equity   144     65     71     209     119  
Residential real estate   54     178     31     232     143  
Premium finance receivables - commercial   404     612     633     1,016     1,420  
Premium finance receivables - life insurance                    
Consumer and other   33     141     35     174     71  
Total recoveries   1,472     1,823     1,187     3,295     3,168  
Net charge-offs   (5,256 )   (1,594 )   (4,910 )   (6,850 )   (8,403 )
Allowance for loan losses at period end   $ 129,591     $ 125,819     $ 114,356     $ 129,591     $ 114,356  
Allowance for unfunded lending-related commitments at period end   1,705     1,811     1,070     1,705     1,070  
Allowance for credit losses at period end   $ 131,296     $ 127,630     $ 115,426     $ 131,296     $ 115,426  
Annualized net charge-offs (recoveries) by category as a percentage of its own respective category's average:                    
Commercial   0.02 %   0.03 %   0.05 %   0.02 %   0.03 %
Commercial real estate   0.11     (0.02 )   0.01     0.05     0.02  
Home equity   0.85     0.32     1.03     0.58     0.77  
Residential real estate   0.03     0.06     0.26     0.05     0.22  
Premium finance receivables - commercial   0.23     0.13     0.21     0.19     0.25  
Premium finance receivables - life insurance   0.00     0.00     0.00     0.00     0.00  
Consumer and other   0.45     (0.02 )   0.57     0.22     0.38  
Total loans, net of unearned income, excluding covered loans   0.10 %   0.03 %   0.11 %   0.07 %   0.09 %
Net charge-offs as a percentage of the provision for credit losses   58.71 %   29.98 %   52.97 %   48.01 %   47.50 %
Loans at period-end, excluding covered loans   $ 20,743,332     $ 19,931,058     $ 18,174,655          
Allowance for loan losses as a percentage of loans at period end   0.62 %   0.63 %   0.63 %        
Allowance for credit losses as a percentage of loans at period end   0.63 %   0.64 %   0.64 %        

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

Net charge-offs as a percentage of loans, excluding covered loans, for the second quarter of 2017 totaled ten basis points on an annualized basis compared to three basis points on an annualized basis in the first quarter of 2017 and eleven basis points on an annualized basis in the second quarter of 2016.  Net charge-offs totaled $5.3 million in the second quarter of 2017, a $3.7 million increase from $1.6 million in the first quarter of 2017 and a $346,000 increase from $4.9 million in the second quarter of 2016. The provision for credit losses, excluding the provision for covered loan losses, totaled $9.0 million for the second quarter of 2017 compared to $5.3 million for the first quarter of 2017 and $9.3 million for the second quarter of 2016.

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

The Company also provides a provision for covered loan losses on covered loans and maintains an allowance for covered loan losses on covered loans.

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

    Three Months Ended   Six Months Ended
    June 30,   March 31,   June 30,   June 30,   June 30,
(Dollars in thousands)   2017   2017   2016   2017   2016
Provision for loan losses   $ 9,058     $ 5,178     $ 9,229     $ 14,236     $ 17,571  
Provision for unfunded lending-related commitments   (106 )   138     40     32     121  
Provision for covered loan losses   (61 )   (107 )   (140 )   (168 )   (529 )
Provision for credit losses   $ 8,891     $ 5,209     $ 9,129     $ 14,100     $ 17,163  
                     
            Period End
            June 30,   March 31,   June 30,
            2017   2017   2016
Allowance for loan losses           $ 129,591     $ 125,819     $ 114,356  
Allowance for unfunded lending-related commitments           1,705     1,811     1,070  
Allowance for covered loan losses           1,074     1,319     2,412  
Allowance for credit losses           $ 132,370     $ 128,949     $ 117,838  

The tables below summarize the calculation of allowance for loan losses for the Company's core loan portfolio and consumer, niche and purchased loan portfolio, excluding covered loans, as of June 30, 2017 and March 31, 2017.

    As of June 30, 2017
    Recorded   Calculated   As a percentage
of its own respective
(Dollars in thousands)   Investment   Allowance   category's balance
Commercial:(1)            
Commercial and industrial   $ 3,562,482     $ 32,496     0.91 %
Asset-based lending   869,031     8,004     0.92  
Tax exempt   357,872     2,638     0.74  
Leases   355,383     1,150     0.32  
Commercial real estate:(1)            
Residential construction   41,640     892     2.14  
Commercial construction   667,269     8,295     1.24  
Land   107,506     3,594     3.34  
Office   838,897     5,729     0.68  
Industrial   748,142     5,188     0.69  
Retail   878,908     5,952     0.68  
Multi-family   780,360     8,207     1.05  
Mixed use and other   1,904,331     14,225     0.75  
Home equity(1)   627,178     11,134     1.78  
Residential real estate(1)   724,161     6,063     0.84  
Total core loan portfolio   $ 12,463,160     $ 113,567     0.91 %
Commercial:            
Franchise   $ 622,301     $ 5,222     0.84 %
Mortgage warehouse lines of credit   234,643     1,719     0.73  
Community Advantage - homeowner associations   145,494     364     0.25  
Aircraft   3,156     17     0.54  
Purchased non-covered commercial loans (2)   255,927     748     0.29  
Commercial real estate:            
Purchased non-covered commercial real estate (2)   435,441     257     0.06  
Purchased non-covered home equity (2)   62,305          
Purchased non-covered residential real estate (2)   38,649     80     0.21  
Premium finance receivables            
U.S. commercial insurance loans   2,342,428     4,526     0.19  
Canada commercial insurance loans (2)   305,958     483     0.16  
Life insurance loans (1)   3,492,709     1,343     0.04  
Purchased life insurance loans (2)   226,334          
Consumer and other (1)   112,337     1,264     1.13  
Purchased non-covered consumer and other (2)   2,490     1     0.04  
Total consumer, niche and purchased loan portfolio   $ 8,280,172     $ 16,024     0.19 %
Total loans, net of unearned income, excluding covered loans   $ 20,743,332     $ 129,591     0.62 %

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

    As of March 31, 2017
    Recorded   Calculated   As a percentage
of its own respective
(Dollars in thousands)   Investment   Allowance   category's balance
Commercial:(1)            
Commercial and industrial   $ 3,396,191     $ 29,088     0.86 %
Asset-based lending   875,403     7,262     0.83  
Tax exempt   315,487     2,206     0.70  
Leases   318,943     1,132     0.35  
Commercial real estate:(1)            
Residential construction   46,956     1,091     2.32  
Commercial construction   607,507     6,817     1.12  
Land   100,056     3,655     3.65  
Office   817,239     5,810     0.71  
Industrial   742,844     6,711     0.90  
Retail   863,804     5,963     0.69  
Multi-family   765,933     8,082     1.06  
Mixed use and other   1,835,745     14,302     0.78  
Home equity(1)   639,399     12,194     1.91  
Residential real estate(1)   678,978     5,461     0.80  
Total core loan portfolio   $ 12,004,485     $ 109,774     0.91 %
Commercial:            
Franchise   $ 560,532     $ 4,595     0.82 %
Mortgage warehouse lines of credit   154,180     1,178     0.76  
Community Advantage - homeowner associations   145,233     363     0.25  
Aircraft   3,250     17     0.52  
Purchased non-covered commercial loans (2)   312,270     741     0.24  
Commercial real estate:            
Purchased non-covered commercial real estate (2)   481,598     202     0.04  
Purchased non-covered home equity (2)   68,859     9     0.01  
Purchased non-covered residential real estate (2)   41,630     69     0.17  
Premium finance receivables            
U.S. commercial insurance loans   2,167,524     5,389     0.25  
Canada commercial insurance loans (2)   279,422     572     0.20  
Life insurance loans (1)   3,352,857     1,598     0.05  
Purchased life insurance loans (2)   240,706          
Consumer and other (1)   115,710     1,310     1.13  
Purchased non-covered consumer and other (2)   2,802     2     0.07  
Total consumer, niche and purchased loan portfolio   $ 7,926,573     $ 16,045     0.20 %
Total loans, net of unearned income, excluding covered loans   $ 19,931,058     $ 125,819     0.63 %

(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.

In addition to the $129.6 million of allowance for loan losses, there is $6.7 million of non-accretable credit discount on purchased loans reported in accordance with ASC 310-30, excluding covered loans, that is available to absorb credit losses.

As part of the regular quarterly review performed by management to determine if the Company's allowance for loan losses is appropriate, an analysis is prepared on the loan portfolio based upon a breakout of core loans and consumer, niche and purchased loans. A summary of the allowance for loan losses calculated for the loan components in both the core loan portfolio and the consumer, niche and purchased loan portfolio was shown on the preceding tables as of June 30, 2017 and March 31, 2017.

The increase in the allowance for loan losses to core loans in the second quarter of 2017 compared to the first quarter of 2017 was primarily attributable to $458.7 million core loan portfolio growth.

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.

The tables below show the aging of the Company's loan portfolio at June 30, 2017 and March 31, 2017:

        90+ days   60-89   30-59        
As of June 30, 2017       and still   days past   days past        
(Dollars in thousands)   Nonaccrual   accruing   due   due   Current   Total Loans
Loan Balances:                        
Commercial (1)   $ 10,191     $ 1,572     $ 7,062     $ 22,372     $ 6,365,092     $ 6,406,289  
Commercial real estate (1)   16,980     8,768     1,642     42,049     6,333,055     6,402,494  
Home equity   9,482         855     2,858     676,288     689,483  
Residential real estate (1)   14,292     775     1,273     300     746,170     762,810  
Premium finance receivables - commercial   10,456     5,922     4,951     11,713     2,615,344     2,648,386  
Premium finance receivables - life insurance (1)       1,046         16,977     3,701,020     3,719,043  
Consumer and other (1)   439     125     331     515     113,417     114,827  
Total loans, net of unearned income, excluding covered loans   $ 61,840     $ 18,208     $ 16,114     $ 96,784     $ 20,550,386     $ 20,743,332  
Covered loans   1,961     2,504     113     598     44,943     50,119  
Total loans, net of unearned income   $ 63,801     $ 20,712     $ 16,227     $ 97,382     $ 20,595,329     $ 20,793,451  


As of June 30, 2017
Aging as a % of Loan Balance
  Nonaccrual   90+ days
and still
accruing
  60-89
days past
due
  30-59
days past
due
  Current   Total Loans
Commercial (1)   0.2 %   %   0.1 %   0.3 %   99.4 %   100.0 %
Commercial real estate (1)   0.3     0.1         0.7     98.9     100.0  
Home equity   1.4         0.1     0.4     98.1     100.0  
Residential real estate (1)   1.9     0.1     0.2         97.8     100.0  
Premium finance receivables - commercial   0.4     0.2     0.2     0.4     98.8     100.0  
Premium finance receivables - life insurance (1)               0.5     99.5     100.0  
Consumer and other (1)   0.4     0.1     0.3     0.4     98.8     100.0  
Total loans, net of unearned income, excluding covered loans   0.3 %   0.1 %   0.1 %   0.5 %   99.0 %   100.0 %
Covered loans   3.9     5.0     0.2     1.2     89.7     100.0  
Total loans, net of unearned income   0.3 %   0.1 %   0.1 %   0.5 %   99.0 %   100.0 %

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

        90+ days   60-89   30-59        
As of March 31, 2017       and still   days past   days past        
(Dollars in thousands)   Nonaccrual   accruing   due   due   Current   Total Loans
Loan Balances:                        
Commercial (1)   $ 14,307     $ 1,468     $ 19     $ 39,440     $ 6,026,255     $ 6,081,489  
Commercial real estate (1)   20,809     12,559     5,426     56,712     6,166,176     6,261,682  
Home equity   11,722         430     4,884     691,222     708,258  
Residential real estate (1)   11,943     900     3,410     5,262     699,093     720,608  
Premium finance receivables - commercial   12,629     4,991     6,383     23,775     2,399,168     2,446,946  
Premium finance receivables - life insurance (1)       2,024     2,535     32,208     3,556,796     3,593,563  
Consumer and other (1)   350     167     323     543     117,129     118,512  
Total loans, net of unearned income, excluding covered loans   $ 71,760     $ 22,109     $ 18,526     $ 162,824     $ 19,655,839     $ 19,931,058  
Covered loans   1,592     2,808     268     1,570     46,121     52,359  
Total loans, net of unearned income   $ 73,352     $ 24,917     $ 18,794     $ 164,394     $ 19,701,960     $ 19,983,417  


As of March 31, 2017
Aging as a % of Loan Balance:
  Nonaccrual   90+ days
and still
accruing
  60-89
days past
due
  30-59
days past
due
  Current   Total Loans
Commercial (1)   0.2 %   %   %   0.6 %   99.2 %   100.0 %
Commercial real estate (1)   0.3     0.2     0.1     0.9     98.5     100.0  
Home equity   1.7         0.1     0.7     97.5     100.0  
Residential real estate (1)   1.7     0.1     0.5     0.7     97.0     100.0  
Premium finance receivables - commercial   0.5     0.2     0.3     1.0     98.0     100.0  
Premium finance receivables - life insurance (1)       0.1     0.1     0.9     98.9     100.0  
Consumer and other (1)   0.3     0.1     0.3     0.5     98.8     100.0  
Total loans, net of unearned income, excluding covered loans   0.4 %   0.1 %   0.1 %   0.8 %   98.6 %   100.0 %
Covered loans   3.0     5.4     0.5     3.0     88.1     100.0  
Total loans, net of unearned income   0.4 %   0.1 %   0.1 %   0.8 %   98.6 %   100.0 %

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

As of June 30, 2017, $16.1 million of all loans, excluding covered loans, or 0.1%, were 60 to 89 days past due and $96.8 million, or 0.5%, were 30 to 59 days (or one payment) past due. As of March 31, 2017, $18.5 million of all loans, excluding covered loans, or 0.1%, were 60 to 89 days past due and $162.8 million, or 0.8%, were 30 to 59 days (or one payment) past due. 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 June 30, 2017 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 June 30, 2017 that are current with regards to the contractual terms of the loan agreements comprise 97.8% of total residential real estate loans outstanding.

Non-performing Assets, excluding covered assets

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

    June 30,   March 31,   June 30,
(Dollars in thousands)   2017   2017   2016
Loans past due greater than 90 days and still accruing(1):            
Commercial   $     $ 100     $ 235  
Commercial real estate            
Home equity            
Residential real estate   179          
Premium finance receivables - commercial   5,922     4,991     10,558  
Premium finance receivables - life insurance   1,046     2,024      
Consumer and other   63     104     163  
Total loans past due greater than 90 days and still accruing   7,210     7,219     10,956  
Non-accrual loans (2):            
Commercial   10,191     14,307     16,801  
Commercial real estate   16,980     20,809     24,415  
Home equity   9,482     11,722     8,562  
Residential real estate   14,292     11,943     12,413  
Premium finance receivables - commercial   10,456     12,629     14,497  
Premium finance receivables - life insurance            
Consumer and other   439     350     475  
Total non-accrual loans   61,840     71,760     77,163  
Total non-performing loans:            
Commercial   10,191     14,407     17,036  
Commercial real estate   16,980     20,809     24,415  
Home equity   9,482     11,722     8,562  
Residential real estate   14,471     11,943     12,413  
Premium finance receivables - commercial   16,378     17,620     25,055  
Premium finance receivables - life insurance   1,046     2,024      
Consumer and other   502     454     638  
Total non-performing loans   $ 69,050     $ 78,979     $ 88,119  
Other real estate owned   16,853     17,090     22,154  
Other real estate owned - from acquisitions   22,508     22,774     15,909  
Other repossessed assets   532     544     420  
Total non-performing assets   $ 108,943     $ 119,387     $ 126,602  
TDRs performing under the contractual terms of the loan agreement   $ 28,008     $ 28,392     $ 33,310  
Total non-performing loans by category as a percent of its own respective category's period-end balance:            
Commercial   0.16 %   0.24 %   0.33 %
Commercial real estate   0.27     0.33     0.42  
Home equity   1.38     1.66     1.13  
Residential real estate   1.90     1.66     1.90  
Premium finance receivables - commercial   0.62     0.72     1.01  
Premium finance receivables - life insurance   0.03     0.06      
Consumer and other   0.44     0.38     0.50  
Total loans, net of unearned income   0.33 %   0.40 %   0.48 %
Total non-performing assets as a percentage of total assets   0.40 %   0.46 %   0.52 %
Allowance for loan losses as a percentage of total non-performing loans   187.68 %   159.31 %   129.78 %

(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 $5.1 million, $11.3 million and $16.3 million as of June 30, 2017, March 31, 2017 and June 30, 2016, respectively.

The ratio of non-performing assets to total assets was 0.40% as of June 30, 2017, compared to 0.46% at March 31, 2017, and 0.52% at June 30, 2016. Non-performing assets, excluding covered assets and non-covered PCI loans, totaled $108.9 million at June 30, 2017, compared to $119.4 million at March 31, 2017 and $126.6 million at June 30, 2016. Non-performing loans, excluding covered loans and non-covered PCI loans, totaled $69.1 million, or 0.33% of total loans, at June 30, 2017 compared to $79.0 million, or 0.40% of total loans, at March 31, 2017 and $88.1 million, or 0.48% of total loans, at June 30, 2016. The decrease in non-performing loans, excluding covered loans and non-covered PCI loans, compared to March 31, 2017 is primarily the result of a $4.2 million decrease in the commercial portfolio and a $3.8 million decrease in the commercial real estate portfolio. OREO, excluding covered OREO, of $39.4 million at June 30, 2017 decreased $503,000 compared to $39.9 million at March 31, 2017 and increased $1.3 million compared to $38.1 million at June 30, 2016.

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

Nonperforming Loans Rollforward

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

    Three Months Ended   Six Months Ended
  June 30,   March 31,   June 30,   June 30,   June 30,
(Dollars in thousands) 2017   2017   2016   2017   2016
Balance at beginning of period $   78,979   $ 87,454   $ 89,499   $   87,454   $ 84,057
Additions, net   10,888     8,609     10,351     19,497     22,517  
Return to performing status   (975 )   (1,592 )   (873 )   (2,567 )   (2,879 )
Payments received   (10,684 )   (5,614 )   (4,810 )   (16,298 )   (8,118 )
Transfer to OREO and other repossessed assets   (2,543 )   (1,661 )   (1,818 )   (4,204 )   (3,898 )
Charge-offs   (4,344 )   (1,280 )   (2,943 )   (5,624 )   (3,476 )
Net change for niche loans (1)   (2,271 )   (6,937 )   (1,287 )   (9,208 )   (84 )
Balance at end of period   $ 69,050     $ 78,979     $ 88,119     $ 69,050     $ 88,119  

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

TDRs

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

    June 30,   March 31,   June 30,
 (Dollars in thousands) 2017   2017   2016
Accruing TDRs:
Commercial   $ 3,886     $ 4,607     $ 3,931  
Commercial real estate   17,349     18,923     24,450  
Residential real estate and other   6,773     4,862     4,929  
Total accrual   $ 28,008     $ 28,392     $ 33,310  
Non-accrual TDRs: (1)            
Commercial   $ 1,110     $ 1,424     $ 1,477  
Commercial real estate   1,839     7,338     12,240  
Residential real estate and other   2,134     2,515     2,608  
Total non-accrual   $ 5,083     $ 11,277     $ 16,325  
Total TDRs:            
Commercial   $ 4,996     $ 6,031     $ 5,408  
Commercial real estate   19,188     26,261     36,690  
Residential real estate and other   8,907     7,377     7,537  
Total TDRs   $ 33,091     $ 39,669     $ 49,635  
Weighted-average contractual interest rate of TDRs   4.28 %   4.37 %   4.31 %

(1)  Included in total non-performing loans.

Other Real Estate Owned

The table below presents a summary of other real estate owned, excluding covered other real estate owned, as of June 30, 2017, March 31, 2017 and June 30, 2016, and shows the activity for the respective period and the balance for each property type:

    Three Months Ended
  June 30,   March 31,   June 30,
(Dollars in thousands) 2017   2017   2016
 
Balance at beginning of period $ 39,864   $ 40,282   $ 41,002
Disposals/resolved   (4,270 )   (2,644 )   (6,591 )
Transfers in at fair value, less costs to sell   3,965     2,268     1,309  
Transfers in from covered OREO subsequent to loss share expiration       760     3,300  
Additions from acquisition            
Fair value adjustments   (198 )   (802 )   (957 )
Balance at end of period   $ 39,361     $ 39,864     $ 38,063  
             
    Period End
  June 30,   March 31,   June 30,
Balance by Property Type 2017   2017   2016
Residential real estate $ 7,684   $ 7,597   $ 9,153
Residential real estate development   755     1,240     2,133  
Commercial real estate   30,922     31,027     26,777  
Total   $ 39,361     $ 39,864     $ 38,063  


Items Impacting Comparative Financial Results:

Acquisitions

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

On November 18, 2016, the Company completed its acquisition of First Community Financial Corporation ("FCFC"). FCFC was the parent company of First Community Bank.  Through this transaction, the Company acquired First Community Bank's two banking locations in Elgin, Illinois, approximately $187 million in assets and approximately $150 million in deposits.         
                               
On August 19, 2016, the Company, through its wholly-owned subsidiary Lake Forest Bank & Trust Company, completed its acquisition of approximately $561 million in select performing loans and related relationships from an affiliate of GE Capital Franchise Finance. The loans are to franchise operators (primarily quick service restaurant concepts) in the Midwest and in the Western portion of the United States.

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

WINTRUST SUBSIDIARIES AND LOCATIONS

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

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

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

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

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements within the meaning of federal securities laws. Forward-looking information can be identified through the use of words such as "intend," "plan," "project," "expect," "anticipate," "believe," "estimate," "contemplate," "possible," "point," "will," "may," "should," "would" and "could." Forward-looking statements and information are not historical facts, are premised on many factors and assumptions, and represent only management's expectations, estimates and projections regarding future events. Similarly, these statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict, which may include, but are not limited to, those listed below and the Risk Factors discussed under Item 1A of the Company's 2016 Annual Report on Form 10-K and in any of the Company's subsequent SEC filings. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of invoking these safe harbor provisions. Such forward-looking statements may be deemed to include, among other things, statements relating to the Company's future financial performance, the performance of its loan portfolio, the expected amount of future credit reserves and charge-offs, delinquency trends, growth plans, regulatory developments, securities that the Company may offer from time to time, and management's long-term performance goals, as well as statements relating to the anticipated effects on financial condition and results of operations from expected developments or events, the Company's business and growth strategies, including future acquisitions of banks, specialty finance or wealth management businesses, internal growth and plans to form additional de novo banks or branch offices. Actual results could differ materially from those addressed in the forward-looking statements as a result of numerous factors, including the following:

  • negative economic conditions that adversely affect the economy, housing prices, the job market and other factors that may affect the Company's liquidity and the performance of its loan portfolios, particularly in the markets in which it operates;
  • the extent of defaults and losses on the Company's loan portfolio, which may require further increases in its allowance for credit losses;
  • estimates of fair value of certain of the Company's assets and liabilities, which could change in value significantly from period to period;
  • the financial success and economic viability of the borrowers of our commercial loans;
  • commercial real estate market conditions in the Chicago metropolitan area and southern Wisconsin;
  • the extent of commercial and consumer delinquencies and declines in real estate values, which may require further increases in the Company's allowance for loan and lease losses;
  • inaccurate assumptions in our analytical and forecasting models used to manage our loan portfolio;
  • changes in the level and volatility of interest rates, the capital markets and other market indices that may affect, among other things, the Company's liquidity and the value of its assets and liabilities;
  • competitive pressures in the financial services business which may affect the pricing of the Company's loan and deposit products as well as its services (including wealth management services), which may result in loss of market share and reduced income from deposits, loans, advisory fees and income from other products;
  • failure to identify and complete favorable acquisitions in the future or unexpected difficulties or developments related to the integration of the Company's recent or future acquisitions;
  • unexpected difficulties and losses related to FDIC-assisted acquisitions, including those resulting from our loss-sharing arrangements with the FDIC;
  • any negative perception of the Company's reputation or financial strength;
  • ability of the Company to raise additional capital on acceptable terms when needed;
  • disruption in capital markets, which may lower fair values for the Company's investment portfolio;
  • ability of the Company to use technology to provide products and services that will satisfy customer demands and create efficiencies in operations and to manage risks associated therewith;
  • adverse effects on our information technology systems resulting from failures, human error or cyberattack, any of which could result in an information or security breach, the disclosure or misuse of confidential or proprietary information, significant legal and financial losses and reputational harm;
  • adverse effects of failures by our vendors to provide agreed upon services in the manner and at the cost agreed, particularly our information technology vendors;
  • increased costs as a result of protecting our customers from the impact of stolen debit card information;
  • accuracy and completeness of information the Company receives about customers and counterparties to make credit decisions;
  • ability of the Company to attract and retain senior management experienced in the banking and financial services industries;
  • environmental liability risk associated with lending activities;
  • the impact of any claims or legal actions to which the Company is subject, including any effect on our reputation;
  • losses incurred in connection with repurchases and indemnification payments related to mortgages and increases in reserves associated therewith;
  • the loss of customers as a result of technological changes allowing consumers to complete their financial transactions without the use of a bank;
  • the soundness of other financial institutions;
  • the expenses and delayed returns inherent in opening new branches and de novo banks;
  • examinations and challenges by tax authorities;
  • changes in accounting standards, rules and interpretations and the impact on the Company's financial statements;
  • the ability of the Company to receive dividends from its subsidiaries;
  • a decrease in the Company's regulatory capital ratios, including as a result of further declines in the value of its loan portfolios, or otherwise;
  • legislative or regulatory changes, particularly changes in regulation of financial services companies and/or the products and services offered by financial services companies, including those resulting from the Dodd-Frank Act;
  • a lowering of our credit rating;
  • changes in U.S. monetary policy;
  • uncertainty regarding future legislative and regulatory actions, which could be disruptive to our operations;
  • restrictions upon our ability to market our products to consumers and limitations on our ability to profitably operate our mortgage business resulting from the Dodd-Frank Act;
  • increased costs of compliance, heightened regulatory capital requirements and other risks associated with changes in regulation and the current regulatory environment, including the Dodd-Frank Act;
  • the impact of heightened capital requirements;
  • increases in the Company's FDIC insurance premiums, or the collection of special assessments by the FDIC;
  • delinquencies or fraud with respect to the Company's premium finance business;
  • credit downgrades among commercial and life insurance providers that could negatively affect the value of collateral securing the Company's premium finance loans;
  • the Company's ability to comply with covenants under its credit facility; and
  • fluctuations in the stock market, which may have an adverse impact on the Company's wealth management business and brokerage operation.

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

CONFERENCE CALL, WEB CAST AND REPLAY

The Company will hold a conference call at 10:00 a.m. (CT) Wednesday, July 19, 2017 regarding second quarter and year-to-date 2017 results. Individuals interested in listening should call (877) 363-5049 and enter Conference ID #50312103. A simultaneous audio-only web cast and replay of the conference call may be accessed via the Company's website at (http://www.wintrust.com), Investor Relations, Investor News and Events, Presentations & Conference Calls. The text of the second quarter and year-to-date 2017 earnings press release will be available on the home page of the Company's website at (http://www.wintrust.com) and at the Investor Relations, Investor News and Events, Press Releases link on its website.


WINTRUST FINANCIAL CORPORATION

Supplemental Financial Information

5 Quarter Trends


WINTRUST FINANCIAL CORPORATION - Supplemental Financial Information
Selected Financial Highlights - 5 Quarter Trends
(Dollars in thousands, except per share data)

    Three Months Ended
  June 30,   March 31,   December 31,   September 30,   June 30,
  2017   2017   2016   2016   2016
Selected Financial Condition Data (at end of period):
Total assets   $ 26,929,265     $ 25,778,893     $ 25,668,553     $ 25,321,759     $ 24,420,616  
Total loans, excluding loans held-for-sale and covered loans   20,743,332     19,931,058     19,703,172     19,101,261     18,174,655  
Total deposits   22,605,692     21,730,441     21,658,632     21,147,655     20,041,750  
Junior subordinated debentures   253,566     253,566     253,566     253,566     253,566  
Total shareholders' equity   2,839,458     2,764,983     2,695,617     2,674,474     2,623,595  
Selected Statements of Income Data:                    
Net interest income   204,409     192,580     190,778     184,636     175,270  
Net revenue (1)   294,381     261,345     276,053     271,240     260,069  
Net income   64,897     58,378     54,608     53,115     50,041  
Net income per common share – Basic   $ 1.15     $ 1.05     $ 0.98     $ 0.96     $ 0.94  
Net income per common share – Diluted   $ 1.11     $ 1.00     $ 0.94     $ 0.92     $ 0.90  
Selected Financial Ratios and Other Data:                    
Performance Ratios:                    
Net interest margin   3.41 %   3.36 %   3.21 %   3.21 %   3.24 %
Net interest margin - fully taxable equivalent (non-GAAP) (2)   3.43 %   3.39 %   3.23 %   3.24 %   3.27 %
Non-interest income to average assets   1.39 %   1.11 %   1.32 %   1.38 %   1.44 %
Non-interest expense to average assets   2.83 %   2.70 %   2.80 %   2.82 %   2.89 %
Net overhead ratio (3)   1.44 %   1.60 %   1.48 %   1.44 %   1.46 %
Return on average assets   1.00 %   0.94 %   0.85 %   0.85 %   0.85 %
Return on average common equity   9.55 %   8.93 %   8.32 %   8.20 %   8.43 %
Return on average tangible common equity (non-GAAP) (2)   12.02 %   11.44 %   10.68 %   10.55 %   11.12 %
Average total assets   $ 26,050,949     $ 25,207,348     $ 25,611,060     $ 24,879,252     $ 23,754,755  
Average total shareholders' equity   2,800,905     2,739,050     2,689,876     2,651,684     2,465,732  
Average loans to average deposits ratio (excluding loans held-for-sale, excluding covered loans)   94.1 %   92.5 %   89.6 %   89.8 %   92.4 %
Average loans to average deposits ratio (excluding loans held-for-sale, including covered loans)   94.4     92.7     89.9     90.3     92.9  
Common Share Data at end of period:                    
Market price per common share   $ 76.44     $ 69.12     $ 72.57     $ 55.57     $ 51.00  
Book value per common share (2)   $ 48.73     $ 47.88     $ 47.12     $ 46.86     $ 45.96  
Tangible common book value per share (2)   $ 39.40     $ 37.97     $ 37.08     $ 37.06     $ 36.12  
Common shares outstanding   55,699,927     52,503,663     51,880,540     51,714,683     51,619,155  
Other Data at end of period:(6)                    
Leverage Ratio(4)   9.2 %   9.3 %   8.9 %   9.0 %   9.2 %
Tier 1 Capital to risk-weighted assets (4)   9.8 %   10.0 %   9.7 %   9.8 %   10.1 %
Common equity Tier 1 capital to risk-weighted assets (4)   9.3 %   8.9 %   8.6 %   8.7 %   8.9 %
Total capital to risk-weighted assets (4)   12.0 %   12.2 %   11.9 %   12.1 %   12.4 %
Allowance for credit losses (5)   $ 131,296     $ 127,630     $ 123,964     $ 119,341     $ 115,426  
Non-performing loans   69,050     78,979     87,454     83,128     88,119  
Allowance for credit losses to total loans (5)   0.63 %   0.64 %   0.63 %   0.62 %   0.64 %
Non-performing loans to total loans   0.33 %   0.40 %   0.44 %   0.44 %   0.48 %
Number of:                    
Bank subsidiaries   15     15     15     15     15  
Banking offices   153     155     155     152     153  

(1) Net revenue includes net interest income and non-interest income.
(2) See "Supplemental Financial Measures/Ratios" for additional information on this performance measure/ratio.
(3) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period's total average assets. A lower ratio indicates a higher degree of efficiency.
(4) Capital ratios for current quarter-end are estimated. As of January 1, 2015 capital ratios are calculated under the requirements of Basel III.
(5) The allowance for credit losses includes both the allowance for loan losses and the allowance for unfunded lending-related commitments, but excluding the allowance for covered loan losses.
(6) Asset quality ratios exclude covered loans.


WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Consolidated Statements of Condition - 5 Quarter Trends

    (Unaudited)   (Unaudited)       (Unaudited)   (Unaudited)
  June 30,   March 31,   December 31,   September 30,   June 30,
 (In thousands) 2017   2017   2016   2016   2016
Assets
Cash and due from banks   $ 296,105     $ 214,102     $ 267,194     $ 242,825     $ 267,551  
Federal funds sold and securities purchased under resale agreements   56     3,046     2,851     4,122     4,024  
Interest bearing deposits with banks   1,011,635     1,007,468     980,457     816,104     693,269  
Available-for-sale securities, at fair value   1,649,636     1,803,733     1,724,667     1,650,096     637,663  
Held-to-maturity securities, at amortized cost   793,376     667,764     635,705     932,767     992,211  
Trading account securities   1,987     714     1,989     1,092     3,613  
Federal Home Loan Bank and Federal Reserve Bank stock   80,812     78,904     133,494     129,630     121,319  
Brokerage customer receivables   23,281     23,171     25,181     25,511     26,866  
Mortgage loans held-for-sale   382,837     288,964     418,374     559,634     554,256  
Loans, net of unearned income, excluding covered loans   20,743,332     19,931,058     19,703,172     19,101,261     18,174,655  
Covered loans   50,119     52,359     58,145     95,940     105,248  
Total loans   20,793,451     19,983,417     19,761,317     19,197,201     18,279,903  
Allowance for loan losses   (129,591 )   (125,819 )   (122,291 )   (117,693 )   (114,356 )
Allowance for covered loan losses   (1,074 )   (1,319 )   (1,322 )   (1,422 )   (2,412 )
Net loans   20,662,786     19,856,279     19,637,704     19,078,086     18,163,135  
Premises and equipment, net   605,211     598,746     597,301     597,263     595,792  
Lease investments, net   191,248     155,233     129,402     116,355     103,749  
Accrued interest receivable and other assets   577,359     560,741     593,796     660,923     670,014  
Trade date securities receivable   133,130             677     1,079,238  
Goodwill   500,260     499,341     498,587     485,938     486,095  
Other intangible assets   19,546     20,687     21,851     20,736     21,821  
Total assets   $ 26,929,265     $ 25,778,893     $ 25,668,553     $ 25,321,759     $ 24,420,616  
Liabilities and Shareholders' Equity                    
Deposits:                    
Non-interest bearing   $ 6,294,052     $ 5,790,579     $ 5,927,377     $ 5,711,042     $ 5,367,672  
Interest bearing   16,311,640     15,939,862     15,731,255     15,436,613     14,674,078  
Total deposits   22,605,692     21,730,441     21,658,632     21,147,655     20,041,750  
Federal Home Loan Bank advances   318,270     227,585     153,831     419,632     588,055  
Other borrowings   277,710     238,787     262,486     241,366     252,611  
Subordinated notes   139,029     138,993     138,971     138,943     138,915  
Junior subordinated debentures   253,566     253,566     253,566     253,566     253,566  
Trade date securities payable   5,151                 40,000  
Accrued interest payable and other liabilities   490,389     424,538     505,450     446,123     482,124  
Total liabilities   24,089,807     23,013,91