Wintrust Financial Corporation ("Wintrust" or "the Company")
(Nasdaq:WTFC) announced net income of $30.1 million or $0.61 per
diluted common share for the fourth quarter of 2012 compared to net
income of $32.3 million or $0.66 per common diluted share for the
third quarter of 2012 and $19.2 million or $0.41 per common diluted
share for the fourth quarter of 2011. The Company recorded net
income of $111.2 million or $2.31 per common diluted share for the
full year of 2012 compared to net income of $77.6 million or $1.67
per common diluted share for the full year of 2011.
Highlights compared with the Third Quarter of
2012*:
- 12% annualized growth rate in total assets to $17.5
billion
- 12% annualized growth rate in total loans to $11.8 billion,
excluding covered loans and loans held for sale
- 17% annualized growth rate in total deposits to $14.4 billion,
with non-interest bearing deposits increasing to 16.6% of total
deposits at year-end, up from 15.6% at the start of the
quarter
- Pre-tax adjusted earnings increased $3.1 million as: net
interest income increased $0.2 million, pre-tax adjusted
non-interest income increased $4.5 million and acquisition-related
pre-tax adjusted non-interest expense increased $1.6 million
- Efficiency Ratio, based on pre-tax adjusted earnings, improved
to 62.75%
- Net overhead ratio, based on pre-tax adjusted earnings,
improved to 1.40%
- Recorded $2.6 million in securities gains as a result of
Management's decision to sell certain securities in conjunction
with recording $2.1 million in breakage fees for the termination of
approximately $68.4 million longer-term, higher rate repurchase
agreements.
- Net interest margin declined by ten basis points, with six
basis points of the decline related to a larger portion of our
earning assets being comprised of liquidity management assets
- At year end, the Company's loan pipeline remained strong as
evidenced by total period end loans, excluding covered loans and
loans held for sale, increasing $339.0 million from the start
of the quarter, while total average loans, excluding covered loans
and loans held for sale, increased $164.6 million during the
quarter
- Decrease in total non-performing assets as a percentage of
total assets to 1.03%, down from 1.09%, with an allowance coverage
ratio of 91%
- Tangible common book value per share of $29.28, up from $28.93,
resulting in 9% and 10% annual compound growth rates in tangible
common book value per share over the past five and ten year
periods, respectively.
- Completed the acquisition of Hyde Park Bank & Trust Company
in December
* See "Supplemental Financial Measures/Ratios"
on page 14/15 for more information on non-GAAP measures.
The Company's total assets of $17.5 billion at December 31, 2012
increased $1.6 billion from December 31, 2011. Total deposits as of
December 31, 2012 were $14.4 billion, an increase of $2.1 billion
from December 31, 2011. Non-interest bearing deposits increased by
$611 million, or 34%, since December 31, 2011, providing further
evidence of the success of the Company's commercial lending
initiative. NOW, wealth management, money market and savings
deposits increased $1.4 billion, or 25%, during the same time
period. Total time certificates of deposit at December 31, 2012
increased $98 million, or 2%, compared to December 31, 2011. Total
loans, excluding covered loans and loans held for sale, were $11.8
billion as of December 31, 2012, an increase of $1.3 billion, or
12%, over December 31, 2011.
Edward J. Wehmer, President and Chief Executive Officer,
commented, "Our fourth quarter results cap our second consecutive
year of record earnings. Full year 2012 net income of $111.2
million represents an increase of 43% over 2011, which in turn was
a 22% increase over 2010. The fourth quarter of 2012 was
highlighted by strong loan and deposit growth, continued
improvement in our credit quality measures, earning asset growth
offsetting margin compression, another strong quarter of mortgage
banking results, stable expense metrics and the completion of one
non-FDIC assisted bank acquisition."
Mr. Wehmer continued, "Total loans outstanding, excluding
covered loans and loans held for sale, increased $339 million in
the fourth quarter compared to the third quarter. Approximately
$118 million of this growth was attributable to the acquisition of
Hyde Park Bank & Trust in early December. Excluding this
acquisition, loan growth for the quarter was especially strong in
the commercial portfolio, increasing $140 million, commercial
real-estate, increasing $58 million, and premium finance
receivables - life, increasing $60 million. We experienced most of
this loan growth near the end of the current quarter, as evidenced
by average loan balances remaining relatively stable in the fourth
quarter compared to the third quarter. Funding for loan growth
continues to be provided by strong deposit growth. Total deposits
increased $581 million in the fourth quarter, with approximately
$244 million attributable to the acquisition of Hyde Park Bank
& Trust."
Mr. Wehmer further commented, "Pre-tax adjusted earnings
improved by $3.1 million over the previous quarter despite
essentially no change in net interest income. The increase is
primarily attributable to another strong quarter of mortgage
banking revenue partially offset by a $1.6 million increase in
pre-tax adjusted non-interest expense. Our net interest margin
declined by ten basis points while average earning assets increased
by $488 million, which combined created the slight increase in net
interest income. The largest contributor to the decline in net
interest margin was a larger portion of our earning assets
comprised of liquidity management assets, causing a six basis point
decline in the margin. A portion of this excess liquidity position
will be kept in place through the planned divestiture of the
deposits and banking operations of Second Federal Savings and Loan
Association of Chicago in February 2013."
Commenting on credit quality, Mr. Wehmer noted, "Our ratio of
non-performing loans to total loans, excluding covered loans and
loans held for sale, reached 1.00% at the end of the year. This is
the lowest reported level since the end of the third quarter in
2007. During the fourth quarter of 2012, our commercial premium
finance receivable portfolio experienced a temporary increase in
past due balances of approximately $4 million as emergency orders
preventing insurance carriers from canceling policies were issued
by states affected by Superstorm Sandy. We do not expect to incur
any material additional losses as a result of this event and
anticipate the higher past due balances to decline during the first
quarter of 2013, with levels of past due loans in this segment
returning to historical levels."
Turning to the future, Mr. Wehmer stated, "We are excited about
the addition of Hyde Park Bank & Trust to the Wintrust family.
Strategic acquisitions of this nature and organic branch growth
will continue to be an important piece of our long-term strategy.
We will continue to maintain discipline with regards to acquisition
opportunities, both FDIC-assisted and non-assisted. Our loan
pipeline remains consistently strong, allowing us to leverage our
existing expense infrastructure and expand where it makes the most
sense. We look forward to continuing our earnings growth while
growing franchise value and increasing tangible book value."
The graphs below illustrate the Company's five year Compound
Annual Growth Rate ("CAGR") in total assets, total loans excluding
covered loans and loans held for sale, total deposits and tangible
common book value per share indicating how Wintrust has fared
during the credit crisis.
Graphs accompanying this release are available at
http://media.globenewswire.com/cache/11955/file/17631.pdf.
The graphs below depict the Company's five year CAGR in net
income and pre-tax adjusted earnings. See "Supplemental Financial
Measures/Ratios" for additional information on pre-tax adjusted
earnings.
Additional graphs accompanying this release are available at
http://media.globenewswire.com/cache/11955/file/17632.pdf.
Wintrust's key operating measures and growth rates for the
fourth quarter of 2012, as compared to the sequential and linked
quarters are shown in the table below:
|
|
|
|
|
|
% or(5) basis point
(bp) change |
% or basis point
(bp) change |
|
Three Months
Ended |
from |
from |
|
December 31, |
September 30, |
December 31, |
3rd Quarter |
4th Quarter |
(Dollars in thousands) |
2012 |
2012 |
2011 |
2012 |
2011 |
Net income |
$30,089 |
$32,302 |
$19,221 |
(7)% |
57% |
Net income per common share – diluted |
$0.61 |
$0.66 |
$0.41 |
(8)% |
49% |
Pre-tax adjusted earnings (2) |
$72,034 |
$68,923 |
$59,362 |
5% |
21% |
Net revenue (1) |
$197,965 |
$195,520 |
$169,559 |
1% |
17% |
Net interest income |
$132,776 |
$132,575 |
$124,647 |
—% |
7% |
Net interest margin (2) |
3.40% |
3.50% |
3.45% |
(10) bp |
(5) bp |
Net overhead ratio (2) (3) |
1.48% |
1.47% |
1.83% |
1 bp |
(35) bp |
Net overhead ratio, based on pre-tax adjusted
earnings (2) (3) |
1.40% |
1.52% |
1.62% |
(12) bp |
(22) bp |
Efficiency ratio (2) (4) |
66.13% |
63.67% |
69.99% |
246 bp |
(386) bp |
Efficiency ratio, based on pre-tax adjusted
earnings (2) (4) |
62.75% |
63.48% |
64.76% |
(73) bp |
(201) bp |
Return on average assets |
0.69% |
0.77% |
0.48% |
(8) bp |
21 bp |
Return on average common equity |
6.79% |
7.57% |
4.87% |
(78) bp |
192 bp |
At end of period |
|
|
|
|
|
Total assets |
$17,519,613 |
$17,018,592 |
$15,893,808 |
12% |
10% |
Total loans, excluding loans held-for-sale,
excluding covered loans |
$11,828,943 |
$11,489,900 |
$10,521,377 |
12% |
12% |
Total loans, including loans held-for-sale,
excluding covered loans |
$12,241,143 |
$12,059,885 |
$10,841,901 |
6% |
13% |
Total deposits |
$14,428,544 |
$13,847,965 |
$12,307,267 |
17% |
17% |
Total shareholders' equity |
$1,804,705 |
$1,761,300 |
$1,543,533 |
10% |
17% |
|
(1) Net revenue is net
interest income plus non-interest income. |
(2) See "Supplemental
Financial Measures/Ratios" for additional information on this
performance measure/ratio. |
(3) The net overhead ratio is
calculated by netting total non-interest expense and total
non-interest income, annualizing this amount, and dividing by that
period's average total assets. A lower ratio indicates a higher
degree of efficiency. |
(4) The efficiency ratio is
calculated by dividing total non-interest expense by tax-equivalent
net revenue (less securities gains or losses). A lower ratio
indicates more efficient revenue generation. |
(5) Period-end balance sheet
percentage changes are annualized. |
Certain returns, yields, performance ratios, or quarterly growth
rates are "annualized" in this presentation to represent an annual
time period. This is done for analytical purposes to better discern
for decision-making purposes underlying performance trends when
compared to full-year or year-over-year amounts. For example, a 5%
growth rate for a quarter would represent an annualized 20% growth
rate. Additional supplemental financial information showing
quarterly trends can be found on the Company's web site at
www.wintrust.com by choosing "Financial Reports" under the
"Investor Relations" heading, and then choosing "Supplemental
Financial Information."
Items Impacting Comparative Financial Results:
Acquisitions and Capital
Acquisitions - completed in the past twelve
months
On December 12, 2012, the Company completed its acquisition of
HPK Financial Corporation ("HPK"). HPK is the parent company
of Hyde Park Bank & Trust Company, an Illinois state bank,
("Hyde Park Bank"), which operated two banking locations in the
Hyde Park neighborhood of Chicago, Illinois. As part of the
transaction, Hyde Park Bank merged into the Company's wholly-owned
subsidiary bank, Beverly Bank & Trust Company, N.A. ("Beverly
Bank"), and the two acquired banking locations are operating as
branches of Beverly Bank under the brand name Hyde Park
Bank. HPK had approximately $358 million in assets and $243
million in deposits as of the acquisition date, prior to purchase
accounting adjustments. The Company recorded goodwill of $14.1
million on the acquisition.
On September 28, 2012, the Company's wholly-owned subsidiary
bank Old Plank Trail Community Bank, N.A. ("Old Plank Trail Bank"),
acquired certain assets and liabilities and the banking operations
of First United Bank of Crete, Illinois ("First United Bank") in an
FDIC-assisted transaction. First United Bank operated four
locations in Illinois; one in Crete, two in Frankfort and one in
Steger, as well as one location in St. John, Indiana which was
subsequently closed.
On July 20, 2012, the Company's wholly-owned subsidiary bank,
Hinsdale Bank and Trust Company ("Hinsdale Bank"), assumed the
deposits and banking operations of Second Federal Savings and Loan
Association of Chicago ("Second Federal") in an FDIC-assisted
transaction. Second Federal operated three locations in Illinois;
two in Chicago (Brighton Park and Little Village neighborhoods) and
one in Cicero. The Company has entered into an agreement to
sell the deposits and banking operations of Second
Federal. See "Divestiture of Previous FDIC-Assisted
Acquisition" on page 7 for more information.
On June 8, 2012, the Company's wholly-owned subsidiary bank Lake
Forest Bank and Trust Company ("Lake Forest Bank"), completed its
acquisition of Macquarie Premium Funding Inc., the Canadian
insurance premium funding business of Macquarie Group. Through this
transaction, Lake Forest Bank acquired approximately $213 million
of gross premium finance receivables outstanding. The Company
recorded goodwill of approximately $22 million on the
acquisition.
On April 13, 2012, the Company's wholly-owned subsidiary bank,
Old Plank Trail Bank, completed its acquisition of a branch of
Suburban Bank & Trust Company ("Suburban") located in Orland
Park, Illinois. Through this transaction, Old Plank Trail Bank
acquired approximately $52 million of deposits and $3 million of
loans. The Company recorded goodwill of $1.5 million on the
branch acquisition.
On March 30, 2012, the Company's wholly-owned subsidiary bank,
The Chicago Trust Company, N.A. ("CTC"), completed its acquisition
of the trust operations of Suburban. Through this transaction, CTC
acquired trust accounts having assets under administration of
approximately $160 million, in addition to land trust accounts and
various other assets. The Company recorded goodwill of $1.8
million on the acquisition.
On February 10, 2012, the Company's wholly-owned subsidiary,
Barrington Bank and Trust Company, N.A. ("Barrington"), acquired
certain assets and liabilities and the banking operations of
Charter National Bank and Trust ("Charter National") in an
FDIC-assisted transaction. Charter National operated two locations:
one in Hoffman Estates and one in Hanover Park.
Summary of FDIC-assisted transactions in the past twelve
months
- Old Plank Trail Bank assumed approximately $316 million of the
outstanding deposits and approximately $310 million of assets of
First United Bank on September 28, 2012, prior to purchase
accounting adjustments. A bargain purchase gain of $6.7
million was recognized on this transaction.
- Hinsdale Bank assumed approximately $169 million of the
outstanding deposits and approximately $10 million of assets of
Second Federal on July 20, 2012, prior to purchase accounting
adjustments. A bargain purchase gain of $43,000 was recognized
on this transaction.
- Barrington assumed approximately $89 million of the outstanding
deposits and approximately $94 million of assets of Charter
National on February 10, 2012, prior to purchase accounting
adjustments. A bargain purchase gain of $785,000 was
recognized on this transaction.
Loans comprise the majority of the assets acquired in the
FDIC-assisted transactions and are subject to loss sharing
agreements with the FDIC where the FDIC has agreed to reimburse the
Company for 80% of losses incurred on the purchased
loans. Additionally, the loss share agreements with the FDIC
require the Company to reimburse the FDIC in the event that actual
losses on covered assets are lower than the original loss estimates
agreed upon with the FDIC with respect to such assets in the loss
share agreements. We refer to the loans subject to these
loss-sharing agreements as "covered loans." We use the term
"covered assets" to refer to the total of covered loans, covered
OREO and certain other covered assets. The agreements with the
FDIC require that the Company follow certain servicing procedures
or risk losing FDIC reimbursement of losses related to covered
assets.
Divestiture of Previous FDIC-Assisted
Acquisition
On November 28, 2012, the Company announced that Hinsdale Bank
had entered into a definitive agreement to sell the deposits and
the current banking operations of Second Federal, which were
acquired in an FDIC-assisted transaction described above, to
Self-Help Federal Credit Union. The Company expects that this
transaction will be completed in February 2013.
Stock Offerings
In March 2012, the Company issued and sold 126,500 shares, or
$126,500,000 aggregate liquidation preference, of Non-Cumulative
Perpetual Convertible Preferred Stock, Series C ("Preferred Stock")
in an equity offering.
Capital Ratios
As of December 31, 2012, the Company's estimated capital ratios
were 13.0% for total risk-based capital, 12.0% for tier 1
risk-based capital and 10.1% for leverage, above the well
capitalized guidelines. Additionally, the Company's tangible
common equity ratio was 7.4% at December 31, 2012. Assuming
full conversion of both classes of preferred stock, the tangible
common equity ratio was 8.4% at December 31, 2012.
In June 2012, the U.S. banking regulators released notices of
proposed rulemaking (the "NPRs") that would substantially revise
the current risk-based capital standards to reflect the
requirements of the Dodd-Frank Wall Street Reform and Consumer
Protection Act as well as the Basel III international capital
standards. It is generally expected that once the proposed
rulemakings are finalized, U.S. banks will be required to hold
higher amounts of capital, especially common equity, relative to
their risk-weighted assets. Under the current proposal, the
calculations of risk-weighted assets would
change. Risk-weighted assets would be calculated using new and
expanded risk-weighting categories, applying a more risk sensitive
treatment to certain "high volatility" commercial real estate
loans, residential mortgage loans, past due and nonaccrual loans
and unfunded commitments of less than one year. In addition,
if adopted as proposed, the NPRs would change the capital
requirements by, among other things, establishing a new capital
standard consisting of common tier 1 capital, increasing the
minimum capital ratios for certain existing capital categories and
adding a required capital conservation buffer. Additionally,
trust preferred securities are phased out as a component of Tier 1
Capital as required under the Dodd Frank Act. The Company has
estimated that it would be "well-capitalized" if the fully
phased-in capital requirements as proposed in the NPRs were adopted
today. Until the proposals are finalized and the final
implementation dates are determined, however, the impact of the
final rules cannot be fully calculated with a high degree of
certainty.
Financial Performance Overview – Fourth Quarter
2012
For the fourth quarter of 2012, net interest income totaled
$132.8 million, an increase of $0.2 million as compared to the
third quarter of 2012 and $8.1 million as compared to the fourth
quarter of 2011. The increases in net interest income on both
a sequential and linked quarter basis are the result of the
following:
- Net interest income increased $0.2 million in the fourth
quarter of 2012 compared to the third quarter of 2012, due
to:
- Average earning assets for the fourth quarter of 2012 increased
by $488 million compared to the third quarter of 2012. This
was comprised of average loan growth, excluding covered loans, of
$79 million, an increase of $29 million in the average balance of
covered loans and an increase of $380 million in the average
balance of liquidity management and other
assets.
- The growth in average total loans, excluding covered loans,
included an increase of $84 million in commercial, $75 million in
commercial real-estate, $22 million in Canada-originated commercial
premium finance receivables, partially offset by a decrease of $16
million in U.S.-originated commercial premium finance receivables
and a $86 million decrease in mortgage loans held-for-sale.
- The earning asset growth of $488 million in the fourth quarter
of 2012 did not fully offset a 17 basis point decline in the yield
on earning assets, creating a decrease in total interest income of
$1.6 million in the fourth quarter of 2012 compared to the third
quarter of 2012.
- Funding for the average earning asset growth of $488 million
was provided by an increase in total average interest bearing
liabilities of $215 million (an increase in interest-bearing
deposits of $448 million partially offset by a decrease of $233
million of wholesale funding) and an increase of $273 million in
the average balance of net free funds.
- A seven basis point decline in the rate paid on total
interest-bearing liabilities more than offset the increase in
average balance, creating a $1.8 million reduction in interest
expense in the fourth quarter of 2012 compared to the third quarter
of 2012.
- Combined, the reduction of interest expense by $1.8 million and
the decrease in interest income of $1.6 million created the $0.2
million increase in net interest income in the fourth quarter of
2012 compared to the third quarter of 2012.
- Net interest income increased $8.1 million in the fourth
quarter of 2012 compared to the fourth quarter of 2011, due
to:
- Average earning assets for the fourth quarter of 2012 increased
by $1.2 billion compared to the fourth quarter of 2011. This
was comprised of average loan growth, excluding covered loans, of
$1.3 billion partially offset by a decrease of $103 million in the
average balance of liquidity management assets and a decrease of
$26 million in the average balance of covered loans.
- The growth in average total loans, excluding covered loans,
included an increase of $362 million in commercial loans, $252
million in commercial real-estate loans, $292 million in
U.S.-originated commercial premium finance receivables, $268
million in Canadian-originated commercial premium finance
receivables, $13 million in life premium finance receivables and
$185 million in mortgage loans held-for-sale.
- The average earning asset growth of $1.2 billion in the fourth
quarter of 2012 compared to the fourth quarter of 2011 did not
fully offset a 35 basis point decline in the yield on earning
assets, creating a decrease in total interest income of $973,000 in
the fourth quarter of 2012.
- Funding for the average earning asset growth of $1.2 billion
was provided by an increase in total average interest bearing
liabilities of $392 million (an increase in interest-bearing
deposits of $1.1 billion partially offset by a decrease of $754
million of wholesale funding) and an increase of $817 million in
the average balance of net free funds.
- A 31 basis point decline in the rate paid on total
interest-bearing liabilities more than offset the increase in
average balance, creating a $9.1 million reduction in interest
expense in the fourth quarter of 2012 compared to the fourth
quarter of 2011.
- Combined, the reduction of interest expense by $9.1 million and
the decrease in interest income of $973,000 created the $8.1
million increase in net interest income in the fourth quarter of
2012 compared to the fourth quarter of 2011.
The net interest margin for the fourth quarter of 2012 was 3.40%
compared to 3.50% in the third quarter of 2012 and 3.45% in the
fourth quarter of 2011. The changes in net interest margin on
both a sequential and linked quarter basis are the result of the
following:
- The net interest margin in the fourth quarter of 2012 declined
by ten basis points when compared to the third quarter of 2012, due
to:
- The yield on total average earning assets declined 17 basis
points while the rate on total average interest-bearing liabilities
decreased seven basis points.
- Liquidity management assets represented a larger portion of
earnings assets in the fourth quarter of 2012 compared to the third
quarter of 2012 resulting in a six basis point decline in the
margin.
- The contribution from re-pricing retail deposits and maturing
wholesale funding has diminished when compared to previous
quarters. Pressure on the net interest margin will be more
from the pricing/re-pricing of loan volumes as the low rate
environment prohibits further declines in interest-bearing deposits
of the same magnitude.
- The net interest margin in the fourth quarter of 2012 declined
by five basis points when compared to the fourth quarter of 2011,
due to:
- The yield on total average earning assets declined 35 basis
points while the rate on total average interest-bearing liabilities
decreased 31 basis points.
- The contribution from net free funds declined by one basis
point.
- Combined, this caused the net interest margin to decrease by
five basis points in the fourth quarter of 2012 when compared to
the fourth quarter of 2011.
Non-interest income totaled $65.2 million in the fourth quarter
of 2012, increasing $2.2 million compared to the third quarter of
2012 and $20.3 million, or 45%, compared to the fourth quarter of
2011. The increase in non-interest income in the fourth quarter of
2012 compared to the third quarter of 2012 is primarily
attributable to higher mortgage banking revenues, higher gains on
available-for-sale securities and favorable foreign currency
remeasurements at the Company's Canadian subsidiary, partially
offset by a decrease in bargain purchase gains. The increase
in non-interest income in the fourth quarter of 2012 compared to
the fourth quarter of 2011 was primarily attributable to higher
mortgage banking and wealth management revenues and higher gains on
available-for-sale securities. Mortgage banking revenue
increased $3.6 million when compared to the third quarter of 2012
and increased $16.7 million when compared to the fourth quarter of
2011. The increase in mortgage banking revenue resulted primarily
from an increase in gains on sales of loans, which was driven by
higher origination volumes in the current quarter due to a
favorable mortgage interest rate environment. Loans originated
and sold to the secondary market were $1.2 billion in the fourth
quarter of 2012 compared to $1.1 billion in the third quarter of
2012 and $883 million in the fourth quarter of 2011 (see
"Non-Interest Income" section later in this release for further
detail).
Non-interest expense totaled $129.5 million in the fourth
quarter of 2012, increasing $5.0 million compared to the third
quarter of 2012 and increasing $10.8 million, or 9%, compared to
the fourth quarter of 2011. The increase in the current
quarter compared to the third quarter of 2012 was primarily
attributable to $2.1 million of fees paid on the termination of
longer-term, higher rate repurchase agreements, a $1.5 million
increase in OREO expense primarily related higher valuation
adjustments of properties held in OREO, a $1.0 million increase in
occupancy and equipment expenses, $861,000 increase in salaries and
employee benefits and a $736,000 increase in postage, partially
offset by a $1.5 million reduction in professional fees.
Financial Performance Overview – Full Year
2012
The net interest margin for 2012 was 3.49% compared to 3.42% in
2011. Average earnings assets for 2012 totaled $15.0 billion,
an increase of $1.4 billion compared to 2011. This average
earning asset growth is primarily a result of the $1.4 billion
increase in average loans, excluding covered loans, and $117.1
million of average covered loan growth from the FDIC-assisted bank
acquisitions partially offset by a $75.6 million decrease in
liquidity management and other earning assets. The majority of
the increase in average loans consisted of increases of $487.4
million in commercial loans, $230.3 million in commercial real
estate loans, $223.1 million in U.S.-originated commercial premium
finance receivables, $140.4 million in Canadian-originated
commercial premium finance receivables, $65.3 million in life
premium finance receivables and $239.6 million in mortgage loans
held-for-sale, partially offset by a $61.0 million decrease in home
equity loans. The average earning asset growth of $1.4 billion
in 2012 compared to 2011 was primarily funded by a $1.1 billion
increase in the average balances of interest-bearing deposits and
an increase in the average balance of net free funds of $643.6
million, partially offset by a decrease of $283.7 million of
wholesale funding.
Non-interest income totaled $226.1 million in 2012, increasing
$36.4 million, or 19%, compared to 2011. The change is
primarily attributable to higher mortgage banking and wealth
management revenues, partially offset by lower bargain purchase
gains recorded in 2012 relating to FDIC-assisted acquisitions than
during the prior year. Mortgage banking revenue increased $53.0
million when compared to 2011. The increase in 2012 results
primarily from an increase in gains on sales of loans, which in
turn was driven by higher origination volumes due to a favorable
mortgage interest rate environment in 2012. Loans sold to the
secondary market were $3.9 billion in 2012 compared to $2.5 billion
in 2011.
Non-interest expense totaled $489.0 million in 2012, increasing
$68.6 million compared to 2011. The increase compared to 2011 was
primarily attributable to a $50.8 million increase in salaries and
employee benefits. Salaries and employee benefits expense
increased primarily as a result of a $28.5 million increase in
bonus and commissions primarily attributable to the increase in
variable pay based revenue and the Company's long-term incentive
program, a $17.3 million increase in salaries caused by the
addition of employees from the various acquisitions and larger
staffing as the Company grows and a $5.0 million increase from
employee benefits (primarily health plan and payroll taxes
related). Additionally, the Company had an increase of $8.5
million in occupancy and equipment expenses, incurred $2.1 million
in fees paid for the termination of longer-term, higher rate
repurchase agreements and had a $1.9 million increase in covered
asset expenses, partially offset by a $4.2 million decrease in OREO
expenses related to lower valuation adjustments on properties held
in OREO and lower losses realized on the sale of OREO properties
and a $1.6 million reduction in professional fees.
Financial Performance Overview – Credit
Quality
The ratio of non-performing assets to total assets decreased in
the current quarter to 1.03% as compared 1.09% at September 30,
2012 and 1.30% at December 31, 2011. Non-performing assets,
excluding covered assets, totaled $181.0 million at December 31,
2012, compared to $185.3 million at September 30, 2012 and $206.6
million at December 31, 2011.
Non-performing loans, excluding covered loans, totaled $118.2
million, or 1.00% of total loans, at December 31, 2012, compared to
$117.9 million, or 1.03% of total loans, at September 30, 2012 and
$120.1 million, or 1.14% of total loans, at December 31,
2011. OREO, excluding covered OREO, of $62.9 million at
December 31, 2012 decreased $4.5 million compared to $67.4 million
at September 30, 2012 and decreased $23.6 million compared to $86.5
million at December 31, 2011.
The provision for credit losses, excluding the provision for
covered loan losses, totaled $20.7 million for the fourth quarter
of 2012 compared to $18.2 million for the third quarter of 2012 and
$16.6 million in the fourth quarter of 2011. Net charge-offs
as a percentage of loans, excluding covered loans, for the fourth
quarter of 2012 totaled 83 basis points on an annualized basis
compared to 60 basis points on an annualized basis in the third
quarter of 2012 and 93 basis points on an annualized basis in the
fourth quarter of 2011. The provision for credit losses,
excluding the provision for covered loan losses, totaled $72.4
million for the full year of 2012 compared to $97.9 in the full
year of 2011. Net charge-offs, excluding covered loans, for
the full year of 2012 totaled $74.8 million or 65 basis points
compared to $103.3 million or 102 basis points in 2011.
Excluding the allowance for covered loan losses, the allowance
for credit losses at December 31, 2012 totaled $122.0 million, or
1.03% of total loans, compared to $123.6 million, or 1.17% of total
loans at December 31, 2011 and $124.9 million, or 1.09% of total
loans at September 30, 2012.
Financial Performance Overview – Earnings Per
Share
The following table shows the computation of basic and diluted
earnings per share for the periods indicated:
|
|
Three Months
Ended December 31, |
Years
Ended December 31, |
(In thousands, except per share data) |
|
2012 |
2011 |
2012 |
2011 |
Net income |
|
$30,089 |
$19,221 |
$111,196 |
$77,575 |
Less: Preferred stock dividends and discount
accretion |
|
2,616 |
1,032 |
9,093 |
4,128 |
Net income applicable to common
shares—Basic |
(A) |
27,473 |
18,189 |
102,103 |
73,447 |
Add: Dividends on convertible preferred
stock, if dilutive |
|
2,581 |
— |
8,955 |
— |
Net income applicable to common
shares—Diluted |
(B) |
30,054 |
18,189 |
111,058 |
73,447 |
Weighted average common shares
outstanding |
(C) |
36,543 |
35,958 |
36,365 |
35,355 |
Effect of dilutive potential common
shares: |
|
|
|
|
|
Common stock equivalents |
|
7,438 |
8,480 |
7,313 |
8,636 |
Convertible preferred stock, if
dilutive |
|
5,020 |
— |
4,356 |
— |
Weighted average common shares and effect of
dilutive potential common shares |
(D) |
49,001 |
44,438 |
48,034 |
43,991 |
Net income per common share: |
|
|
|
|
|
Basic |
(A/C) |
$0.75 |
$0.51 |
$2.81 |
$2.08 |
Diluted |
(B/D) |
$0.61 |
$0.41 |
$2.31 |
$1.67 |
Potentially dilutive common shares can result from stock
options, restricted stock unit awards, stock warrants, the
Company's convertible preferred stock, tangible equity unit shares
and shares to be issued under the Employee Stock Purchase Plan and
the Directors Deferred Fee and Stock Plan, being treated as if they
had been either exercised or issued, computed by application of the
treasury stock method. While potentially dilutive common shares are
typically included in the computation of diluted earnings per
share, potentially dilutive common shares are excluded from this
computation in periods in which the effect would reduce the loss
per share or increase the income per share. For diluted earnings
per share, net income applicable to common shares can be affected
by the conversion of the Company's convertible preferred stock.
Where the effect of this conversion would reduce the loss per share
or increase the income per share, net income applicable to common
shares is not adjusted by the associated preferred dividends.
WINTRUST FINANCIAL
CORPORATION |
Selected Financial
Highlights |
|
|
Three months
ended December 31, |
Years Ended
December 31, |
(Dollars in thousands, except per share
data) |
2012 |
2011 |
2012 |
2011 |
Selected Financial Condition Data (at
end of period): |
|
|
|
|
Total assets |
$17,519,613 |
$15,893,808 |
|
|
Total loans, excluding covered loans |
11,828,943 |
10,521,377 |
|
|
Total deposits |
14,428,544 |
12,307,267 |
|
|
Junior subordinated debentures |
249,493 |
249,493 |
|
|
Total shareholders' equity |
1,804,705 |
1,543,533 |
|
|
Selected Statements of Income
Data: |
|
|
|
|
Net interest income |
$132,776 |
$124,647 |
$519,516 |
$461,377 |
Net revenue (1) |
197,965 |
169,559 |
745,608 |
651,075 |
Pre-tax adjusted earnings (2) |
72,034 |
59,362 |
273,376 |
220,778 |
Net income |
30,089 |
19,221 |
111,196 |
77,575 |
Net income per common share – Basic |
$0.75 |
$0.51 |
$2.81 |
$2.08 |
Net income per common share – Diluted |
$0.61 |
$0.41 |
$2.31 |
$1.67 |
Selected Financial Ratios and Other
Data: |
|
|
|
|
Performance Ratios: |
|
|
|
|
Net interest margin (2) |
3.40% |
3.45% |
3.49% |
3.42% |
Non-interest income to average assets |
1.50% |
1.11% |
1.37% |
1.27% |
Non-interest expense to average assets |
2.99% |
2.94% |
2.96% |
2.82% |
Net overhead ratio (2) (3) |
1.48% |
1.83% |
1.59% |
1.55% |
Net overhead ratio, based on pre-tax adjusted
earnings (2) (3) |
1.40% |
1.62% |
1.49% |
1.61% |
Efficiency ratio (2) (4) |
66.13% |
69.99% |
65.85% |
64.58% |
Efficiency ratio, based on pre-tax adjusted
earnings (2) (4) |
62.75% |
64.76% |
62.50% |
63.75% |
Return on average assets |
0.69% |
0.48% |
0.67% |
0.52% |
Return on average common equity |
6.79% |
4.87% |
6.60% |
5.12% |
Average total assets |
$17,248,650 |
$16,014,209 |
$16,529,617 |
$14,920,160 |
Average total shareholders' equity |
1,786,824 |
1,531,936 |
1,696,276 |
1,484,720 |
Average loans to average deposits ratio
(excluding covered loans) |
85.6% |
86.6% |
87.8% |
88.3% |
Average loans to average deposits ratio
(including covered loans) |
90.0% |
91.9% |
92.6% |
92.8% |
Common Share Data at end of
period: |
|
|
|
|
Market price per common share |
$36.70 |
$28.05 |
|
|
Book value per common share (2) |
$37.78 |
$34.23 |
|
|
Tangible common book value per share (2) |
$29.28 |
$26.72 |
|
|
Common shares outstanding |
36,861,956 |
35,978,349 |
|
|
Other Data at end of
period:(8) |
|
|
|
|
Leverage Ratio (5) |
10.1% |
9.4% |
|
|
Tier 1 capital to risk-weighted assets
(5) |
12.0% |
11.8% |
|
|
Total capital to risk-weighted assets
(5) |
13.0% |
13.0% |
|
|
Tangible common equity ratio (TCE)
(2)(7) |
7.4% |
7.5% |
|
|
Tangible common equity ratio, assuming full
conversion of preferred stock (2) (7) |
8.4% |
7.8% |
|
|
Allowance for credit losses (6) |
$121,988 |
$123,612 |
|
|
Non-performing loans |
$118,083 |
$120,084 |
|
|
Allowance for credit losses to total loans
(6) |
1.03% |
1.17% |
|
|
Non-performing loans to total loans |
1.00% |
1.14% |
|
|
Number of: |
|
|
|
|
Bank subsidiaries |
15 |
15 |
|
|
Non-bank subsidiaries |
8 |
7 |
|
|
Banking offices |
111 |
99 |
|
|
(1) Net revenue includes net
interest income and non-interest income |
(2) See "Supplemental
Financial Measures/Ratios" for additional information on this
performance measure/ratio. |
(3) The net overhead ratio is
calculated by netting total non-interest expense and total
non-interest income, annualizing this amount, and dividing by that
period's total average assets. A lower ratio indicates a higher
degree of efficiency. |
(4) The efficiency ratio is
calculated by dividing total non-interest expense by tax-equivalent
net revenue (less securities gains or losses). A lower ratio
indicates more efficient revenue generation. |
(5) Capital ratios for
current quarter-end are estimated. |
(6) The allowance for credit
losses includes both the allowance for loan losses and the
allowance for unfunded lending-related commitments, but excludes
the allowance for covered loan losses. |
(7) Total shareholders'
equity minus preferred stock and total intangible assets divided by
total assets minus total intangible assets. |
(8) Asset quality ratios
exclude covered loans. |
|
|
|
|
WINTRUST FINANCIAL
CORPORATION AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS
OF CONDITION |
|
|
(Unaudited) |
(Unaudited) |
|
|
December 31, |
September 30, |
December 31, |
(In thousands) |
2012 |
2012 |
2011 |
Assets |
|
|
|
Cash and due from banks |
$ 284,731 |
$ 186,752 |
$ 148,012 |
Federal funds sold and securities purchased
under resale agreements |
30,297 |
26,062 |
21,692 |
Interest-bearing deposits with other
banks |
1,035,743 |
934,430 |
749,287 |
Available-for-sale securities, at fair
value |
1,796,076 |
1,256,768 |
1,291,797 |
Trading account securities |
583 |
635 |
2,490 |
Federal Home Loan Bank and Federal Reserve
Bank stock, at cost |
79,564 |
80,687 |
100,434 |
Brokerage customer receivables |
24,864 |
30,633 |
27,925 |
Mortgage loans held-for-sale, at fair
value |
385,033 |
548,300 |
306,838 |
Mortgage loans held-for-sale, at lower of
cost or market |
27,167 |
21,685 |
13,686 |
Loans, net of unearned income, excluding
covered loans |
11,828,943 |
11,489,900 |
10,521,377 |
Covered loans |
560,087 |
657,525 |
651,368 |
Total loans |
12,389,030 |
12,147,425 |
11,172,745 |
Less: Allowance for loan
losses |
107,351 |
112,287 |
110,381 |
Less: Allowance for covered
loan losses |
13,454 |
21,926 |
12,977 |
Net loans |
12,268,225 |
12,013,212 |
11,049,387 |
Premises and equipment, net |
501,205 |
461,905 |
431,512 |
FDIC indemnification asset |
208,160 |
238,305 |
344,251 |
Accrued interest receivable and other
assets |
511,617 |
557,884 |
444,912 |
Trade date securities receivable |
— |
307,295 |
634,047 |
Goodwill |
345,401 |
331,634 |
305,468 |
Other intangible assets |
20,947 |
22,405 |
22,070 |
Total
assets |
$ 17,519,613 |
$ 17,018,592 |
$ 15,893,808 |
Liabilities and Shareholders'
Equity |
|
|
|
Deposits: |
|
|
|
Non-interest bearing |
$ 2,396,264 |
$ 2,162,215 |
$ 1,785,433 |
Interest bearing |
12,032,280 |
11,685,750 |
10,521,834 |
Total deposits |
14,428,544 |
13,847,965 |
12,307,267 |
Notes payable |
2,093 |
2,275 |
52,822 |
Federal Home Loan Bank advances |
414,122 |
414,211 |
474,481 |
Other borrowings |
274,411 |
377,229 |
443,753 |
Secured borrowings - owed to securitization
investors |
— |
— |
600,000 |
Subordinated notes |
15,000 |
15,000 |
35,000 |
Junior subordinated debentures |
249,493 |
249,493 |
249,493 |
Trade date securities payable |
— |
412 |
47 |
Accrued interest payable and other
liabilities |
331,245 |
350,707 |
187,412 |
Total liabilities |
15,714,908 |
15,257,292 |
14,350,275 |
Shareholders' Equity: |
|
|
|
Preferred stock |
176,406 |
176,371 |
49,768 |
Common stock |
37,108 |
36,647 |
35,982 |
Surplus |
1,036,295 |
1,018,417 |
1,001,316 |
Treasury stock |
(7,838) |
(7,490) |
(112) |
Retained earnings |
555,023 |
527,550 |
459,457 |
Accumulated other comprehensive
income (loss) |
7,711 |
9,805 |
(2,878) |
Total shareholders' equity |
1,804,705 |
1,761,300 |
1,543,533 |
Total liabilities and
shareholders' equity |
$ 17,519,613 |
$ 17,018,592 |
$ 15,893,808 |
|
|
|
|
|
WINTRUST FINANCIAL
CORPORATION AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS
OF INCOME (UNAUDITED, except for the year ended December 31,
2011) |
|
|
Three Months
Ended December 31, |
Years Ended
December 31, |
(In thousands, except per share data) |
2012 |
2011 |
2012 |
2011 |
Interest income |
|
|
|
|
Interest and fees on loans |
$ 146,946 |
$ 143,514 |
$ 583,872 |
$ 552,938 |
Interest bearing deposits with
banks |
739 |
696 |
1,552 |
3,419 |
Federal funds sold and
securities purchased under resale agreements |
13 |
33 |
38 |
116 |
Securities |
8,086 |
12,574 |
38,134 |
46,219 |
Trading account securities |
6 |
6 |
28 |
44 |
Federal Home Loan Bank and
Federal Reserve Bank stock |
656 |
591 |
2,550 |
2,297 |
Brokerage customer
receivables |
197 |
203 |
847 |
760 |
Total interest income |
156,643 |
157,617 |
627,021 |
605,793 |
Interest expense |
|
|
|
|
Interest on deposits |
16,208 |
19,685 |
68,305 |
87,938 |
Interest on Federal Home Loan
Bank advances |
2,835 |
4,186 |
12,103 |
16,320 |
Interest on notes payable and
other borrowings |
1,566 |
2,804 |
8,966 |
11,023 |
Interest on secured
borrowings—owed to securitization investors |
— |
3,076 |
5,087 |
12,113 |
Interest on subordinated
notes |
66 |
176 |
428 |
750 |
Interest on junior subordinated
debentures |
3,192 |
3,043 |
12,616 |
16,272 |
Total interest expense |
23,867 |
32,970 |
107,505 |
144,416 |
Net interest income |
132,776 |
124,647 |
519,516 |
461,377 |
Provision for credit losses |
19,546 |
18,817 |
76,436 |
102,638 |
Net interest income after provision for
credit losses |
113,230 |
105,830 |
443,080 |
358,739 |
Non-interest income |
|
|
|
|
Wealth management |
13,634 |
11,686 |
52,680 |
44,517 |
Mortgage banking |
34,702 |
18,025 |
109,970 |
56,942 |
Service charges on deposit
accounts |
4,534 |
3,973 |
16,971 |
14,963 |
Gains on available-for-sale
securities, net |
2,561 |
309 |
4,895 |
1,792 |
Gain on bargain purchases,
net |
85 |
— |
7,503 |
37,974 |
Trading (losses) gains,
net |
(120) |
216 |
(1,900) |
337 |
Other |
9,793 |
10,703 |
35,973 |
33,173 |
Total non-interest income |
65,189 |
44,912 |
226,092 |
189,698 |
Non-interest expense |
|
|
|
|
Salaries and employee
benefits |
76,140 |
66,744 |
288,589 |
237,785 |
Equipment |
6,468 |
5,093 |
23,222 |
18,267 |
Occupancy, net |
8,480 |
7,975 |
32,294 |
28,764 |
Data processing |
4,178 |
4,062 |
15,739 |
14,568 |
Advertising and marketing |
2,725 |
3,207 |
9,438 |
8,380 |
Professional fees |
3,158 |
3,710 |
15,262 |
16,874 |
Amortization of other
intangible assets |
1,108 |
1,062 |
4,324 |
3,425 |
FDIC insurance |
3,039 |
3,244 |
13,422 |
14,143 |
OREO expenses, net |
5,269 |
8,821 |
22,103 |
26,340 |
Other |
18,983 |
14,850 |
64,647 |
51,858 |
Total non-interest expense |
129,548 |
118,768 |
489,040 |
420,404 |
Income before taxes |
48,871 |
31,974 |
180,132 |
128,033 |
Income tax expense |
18,782 |
12,753 |
68,936 |
50,458 |
Net income |
$ 30,089 |
$ 19,221 |
$ 111,196 |
$ 77,575 |
Preferred stock dividends and discount
accretion |
$ 2,616 |
$ 1,032 |
$ 9,093 |
$ 4,128 |
Net income applicable to common
shares |
$ 27,473 |
$ 18,189 |
$ 102,103 |
$ 73,447 |
Net income per common
share—Basic |
$ 0.75 |
$ 0.51 |
$ 2.81 |
$ 2.08 |
Net income per common
share—Diluted |
$ 0.61 |
$ 0.41 |
$ 2.31 |
$ 1.67 |
Cash dividends declared per common
share |
$ — |
$ — |
$ 0.18 |
$ 0.18 |
Weighted average common shares
outstanding |
36,543 |
35,958 |
36,365 |
35,355 |
Dilutive potential common shares |
12,458 |
8,480 |
11,669 |
8,636 |
Average common shares and dilutive common
shares |
49,001 |
44,438 |
48,034 |
43,991 |
SUPPLEMENTAL FINANCIAL MEASURES/RATIOS
The accounting and reporting policies of Wintrust conform to
generally accepted accounting principles ("GAAP") in the United
States and prevailing practices in the banking industry. However,
certain non-GAAP performance measures and ratios are used by
management to evaluate and measure the Company's performance. These
include taxable-equivalent net interest income (including its
individual components), net interest margin (including its
individual components), the efficiency ratio, tangible common
equity ratio, tangible common book value per share and pre-tax
adjusted earnings. Management believes that these measures and
ratios provide users of the Company's financial information a more
meaningful view of the performance of the interest-earning assets
and interest-bearing liabilities and of the Company's operating
efficiency. Other financial holding companies may define or
calculate these measures and ratios differently.
Management reviews yields on certain asset categories and the
net interest margin of the Company and its banking subsidiaries on
a fully taxable-equivalent ("FTE") basis. In this non-GAAP
presentation, net interest income is adjusted to reflect tax-exempt
interest income on an equivalent before-tax basis. This measure
ensures comparability of net interest income arising from both
taxable and tax-exempt sources. Net interest income on a FTE basis
is also used in the calculation of the Company's efficiency ratio.
The efficiency ratio, which is calculated by dividing non-interest
expense by total taxable-equivalent net revenue (less securities
gains or losses), measures how much it costs to produce one dollar
of revenue. Securities gains or losses are excluded from this
calculation to better match revenue from daily operations to
operational expenses. Management considers the tangible common
equity ratio and tangible book value per common share as useful
measurements of the Company's equity. Pre-tax adjusted earnings is
a significant metric in assessing the Company's operating
performance. Pre-tax adjusted earnings is calculated by adjusting
income before taxes to exclude the provision for credit losses and
certain significant items.
The net overhead ratio and the efficiency ratio are primarily
reviewed by the Company based on pre-tax adjusted earnings. The
Company believes that these measures provide a more meaningful view
of the Company's operating efficiency and expense management. The
net overhead ratio, based on pre-tax adjusted earnings, is
calculated by netting total adjusted non-interest expense and total
adjusted non-interest income, annualizing this amount, and dividing
it by total average assets. Adjusted non-interest expense is
calculated by subtracting OREO expenses, covered loan collection
expense, defeasance cost, seasonal payroll tax fluctuation and fees
to terminate repurchase agreements. Adjusted non-interest income is
calculated by adding back the recourse obligation on loans
previously sold and subtracting gains or adding back losses on
foreign currency remeasurement, investment partnerships, bargain
purchase, trading and available-for-sale securities activity.
The efficiency ratio, based on pre-tax adjusted earnings, is
calculated by dividing adjusted non-interest expense by adjusted
taxable-equivalent net revenue. Adjusted taxable-equivalent net
revenue is comprised of fully taxable equivalent net interest
income and adjusted non-interest income.
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 5 quarters:
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
Years
Ended |
|
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
December
31, |
(Dollars and shares in thousands) |
2012 |
2012 |
2012 |
2012 |
2011 |
2012 |
2011 |
Calculation of Net Interest Margin
and Efficiency Ratio |
|
|
|
|
|
|
|
(A) Interest Income
(GAAP) |
$ 156,643 |
$ 158,201 |
$ 155,691 |
$ 156,486 |
$ 157,617 |
$ 627,021 |
$ 605,793 |
Taxable-equivalent adjustment: |
|
|
|
|
|
|
|
—Loans |
159 |
148 |
135 |
134 |
132 |
576 |
458 |
—Liquidity management assets |
349 |
352 |
333 |
329 |
320 |
1,363 |
1,224 |
—Other earning assets |
1 |
1 |
3 |
3 |
2 |
8 |
12 |
Interest Income—FTE |
$ 157,152 |
$ 158,702 |
$ 156,162 |
$ 156,952 |
$ 158,071 |
$ 628,968 |
$ 607,487 |
(B) Interest Expense
(GAAP) |
23,867 |
25,626 |
27,421 |
30,591 |
32,970 |
107,505 |
144,416 |
Net interest income—FTE |
$ 133,285 |
$ 133,076 |
$ 128,741 |
$ 126,361 |
$ 125,101 |
$ 521,463 |
$ 463,071 |
(C) Net Interest Income (GAAP) (A
minus B) |
$ 132,776 |
$ 132,575 |
$ 128,270 |
$ 125,895 |
$ 124,647 |
$ 519,516 |
$ 461,377 |
(D) Net interest margin
(GAAP) |
3.39 % |
3.49 % |
3.49 % |
3.54 % |
3.44 % |
3.47 % |
3.41 % |
Net interest margin—FTE |
3.40 % |
3.50 % |
3.51 % |
3.55 % |
3.45 % |
3.49 % |
3.42 % |
(E) Efficiency ratio
(GAAP) |
66.30 % |
63.83 % |
65.80 % |
68.42 % |
70.17 % |
66.02 % |
64.75 % |
Efficiency
ratio—FTE |
66.13 % |
63.67 % |
65.63 % |
68.24 % |
69.99 % |
65.85 % |
64.58 % |
Efficiency ratio—Based on pre-tax
adjusted earnings |
62.75 % |
63.48 % |
61.38 % |
62.31 % |
64.76 % |
62.50 % |
63.75 % |
(F) Net Overhead ratio
(GAAP) |
1.48 % |
1.47 % |
1.63 % |
1.80 % |
1.83 % |
1.59 % |
1.55 % |
Net Overhead ratio—Based on
pre-tax adjusted earnings |
1.40 % |
1.52 % |
1.46 % |
1.58 % |
1.62 % |
1.49 % |
1.61 % |
Calculation of Tangible Common Equity
ratio (at period end) |
|
|
|
|
|
|
|
Total shareholders' equity |
$ 1,804,705 |
$ 1,761,300 |
$ 1,722,074 |
$ 1,687,921 |
$ 1,543,533 |
|
|
(G) Less: Preferred stock |
(176,406) |
(176,371) |
(176,337) |
(176,302) |
(49,768) |
|
|
Less: Intangible assets |
(366,348) |
(354,039) |
(352,109) |
(329,396) |
(327,538) |
|
|
(H) Total tangible common shareholders'
equity |
$ 1,261,951 |
$ 1,230,890 |
$ 1,193,628 |
$ 1,182,223 |
$ 1,166,227 |
|
|
Total assets |
$ 17,519,613 |
$ 17,018,592 |
$ 16,576,282 |
$ 16,172,018 |
$ 15,893,808 |
|
|
Less: Intangible assets |
(366,348) |
(354,039) |
(352,109) |
(329,396) |
(327,538) |
|
|
(I) Total tangible assets |
$ 17,153,265 |
$ 16,664,553 |
$ 16,224,173 |
$ 15,842,622 |
$ 15,566,270 |
|
|
Tangible common equity ratio
(H/I) |
7.4 % |
7.4 % |
7.4 % |
7.5 % |
7.5 % |
|
|
Tangible common equity ratio,
assuming full conversion of preferred stock ((H-G)/I) |
8.4 % |
8.4 % |
8.4 % |
8.6 % |
7.8 % |
|
|
Calculation of Pre-Tax Adjusted
Earnings |
|
|
|
|
|
|
|
Income before taxes |
$ 48,871 |
$ 52,173 |
$ 41,329 |
$ 37,759 |
$ 31,974 |
$ 180,132 |
$ 128,033 |
Add: Provision for credit losses |
19,546 |
18,799 |
20,691 |
17,400 |
18,817 |
76,436 |
102,638 |
Add: OREO expenses, net |
5,269 |
3,808 |
5,848 |
7,178 |
8,821 |
22,103 |
26,340 |
Add: Recourse obligation on loans previously
sold |
— |
— |
(36) |
36 |
986 |
— |
439 |
Add: Covered loan collection expense |
836 |
1,201 |
1,323 |
1,399 |
944 |
4,759 |
2,831 |
Add: Defeasance cost |
— |
— |
148 |
848 |
— |
996 |
— |
Add: Seasonal payroll tax fluctuation |
(873) |
(1,121) |
(271) |
2,265 |
(932) |
— |
— |
Add: (Gain) loss on foreign currency
remeasurement |
(826) |
825 |
— |
— |
— |
(1) |
— |
Add: Fees for Termination of Repurchase
Agreements |
2,110 |
— |
— |
— |
— |
2,110 |
— |
Less: (Gain) loss from investment
partnerships |
(373) |
(718) |
(65) |
(1,395) |
(723) |
(2,551) |
600 |
Less: Gain on bargain purchases, net |
(85) |
(6,633) |
55 |
(840) |
— |
(7,503) |
(37,974) |
Less: Trading losses (gains), net |
120 |
998 |
928 |
(146) |
(216) |
1,900 |
(337) |
Less: Gains on available-for-sale securities,
net |
(2,561) |
(409) |
(1,109) |
(816) |
(309) |
(4,895) |
(1,792) |
Pre-tax adjusted
earnings |
$ 72,034 |
$ 68,923 |
$ 68,841 |
$ 63,688 |
$ 59,362 |
$ 273,486 |
$ 220,778 |
Calculation of book value per
share |
|
|
|
|
|
|
|
Total shareholders' equity |
$ 1,804,705 |
$ 1,761,300 |
$ 1,722,074 |
$ 1,687,921 |
$ 1,543,533 |
|
|
Less: Preferred stock |
(176,406) |
(176,371) |
(176,337) |
(176,302) |
(49,768) |
|
|
(J) Total common equity |
$ 1,628,299 |
$ 1,584,929 |
$ 1,545,737 |
$ 1,511,619 |
$ 1,493,765 |
|
|
Actual common shares outstanding |
36,862 |
36,411 |
36,341 |
36,289 |
35,978 |
|
|
Add: TEU conversion shares |
6,241 |
6,133 |
6,760 |
6,593 |
7,666 |
|
|
(K) Common shares used for book value
calculation |
43,103 |
42,544 |
43,101 |
42,882 |
43,644 |
|
|
Book value per share
(J/K) |
$ 37.78 |
$ 37.25 |
$ 35.86 |
$ 35.25 |
$ 34.23 |
|
|
Tangible common book value per share
(H/K) |
$ 29.28 |
$ 28.93 |
$ 27.69 |
$ 27.57 |
$ 26.72 |
|
|
|
|
|
|
|
|
|
|
LOANS
Loan Portfolio Mix and Growth Rates
|
|
|
|
% Growth |
(Dollars in thousands) |
December
31, 2012 |
September 30, 2012 |
December 31, 2011 |
From (1) September 30, 2012 |
From December 31,
2011 |
Balance: |
|
|
|
|
|
Commercial |
$2,914,798 |
$2,771,053 |
$2,498,313 |
21% |
17% |
Commercial real-estate |
3,864,118 |
3,699,712 |
3,514,261 |
18 |
10 |
Home equity |
788,474 |
807,592 |
862,345 |
(9) |
(9) |
Residential real-estate |
367,213 |
376,678 |
350,289 |
(10) |
5 |
Premium finance receivables -
commercial |
1,987,856 |
1,982,945 |
1,412,454 |
1 |
41 |
Premium finance receivables - life
insurance |
1,725,166 |
1,665,620 |
1,695,225 |
14 |
2 |
Indirect consumer (2) |
77,333 |
77,378 |
64,545 |
— |
20 |
Consumer and other |
103,985 |
108,922 |
123,945 |
(18) |
(16) |
Total loans, net of unearned
income, excluding covered loans |
$11,828,943 |
$11,489,900 |
$10,521,377 |
12% |
12% |
Covered loans |
560,087 |
657,525 |
651,368 |
(59) |
(14) |
Total loans, net of unearned income |
$12,389,030 |
$12,147,425 |
$11,172,745 |
8% |
11% |
Mix: |
|
|
|
|
|
Commercial |
24% |
23% |
22% |
|
|
Commercial real-estate |
31 |
30 |
31 |
|
|
Home equity |
6 |
7 |
8 |
|
|
Residential real-estate |
3 |
3 |
3 |
|
|
Premium finance receivables -
commercial |
16 |
16 |
13 |
|
|
Premium finance receivables - life
insurance |
14 |
14 |
15 |
|
|
Indirect consumer (2) |
1 |
1 |
1 |
|
|
Consumer and other |
1 |
1 |
1 |
|
|
Total loans, net of unearned
income, excluding covered loans |
96% |
95% |
94% |
|
|
Covered loans |
4 |
5 |
6 |
|
|
Total loans, net of unearned income |
100% |
100% |
100% |
|
|
|
(1) Annualized |
(2) Includes autos, boats,
snowmobiles and other indirect consumer loans. |
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
2012 |
|
|
|
|
|
|
|
% of |
|
> 90 Days Past
Due |
Allowance For
Loan |
|
|
Total |
|
and Still |
Losses |
(Dollars in thousands) |
Balance |
Balance |
Nonaccrual |
Accruing |
Allocation |
Commercial: |
|
|
|
|
|
Commercial and industrial |
$ 1,628,203 |
24.0 % |
$ 19,409 |
$ — |
$ 17,040 |
Franchise |
196,395 |
2.9 |
1,792 |
— |
2,880 |
Mortgage warehouse lines of credit |
215,076 |
3.2 |
— |
— |
2,134 |
Community Advantage—homeowner
associations |
81,496 |
1.2 |
— |
— |
204 |
Aircraft |
17,364 |
0.3 |
— |
— |
44 |
Asset-based lending |
572,438 |
8.4 |
536 |
— |
5,066 |
Municipal |
91,824 |
1.4 |
— |
— |
1,041 |
Leases |
90,443 |
1.3 |
— |
— |
248 |
Other |
16,549 |
0.2 |
— |
— |
137 |
Purchased non-covered commercial loans
(1) |
5,010 |
0.1 |
— |
496 |
— |
Total
commercial |
$ 2,914,798 |
43.0 % |
$ 21,737 |
$ 496 |
$ 28,794 |
Commercial Real-Estate: |
|
|
|
|
|
Residential construction |
$ 40,401 |
0.6 % |
$ 3,110 |
$ — |
$ 1,301 |
Commercial construction |
170,955 |
2.5 |
2,159 |
— |
3,194 |
Land |
134,197 |
2.0 |
11,299 |
— |
4,829 |
Office |
569,711 |
8.4 |
4,196 |
— |
5,446 |
Industrial |
577,937 |
8.5 |
2,089 |
— |
5,516 |
Retail |
568,896 |
8.4 |
7,792 |
— |
5,292 |
Multi-family |
396,691 |
5.9 |
2,586 |
— |
10,644 |
Mixed use and other |
1,349,254 |
19.9 |
16,742 |
— |
15,913 |
Purchased non-covered commercial
real-estate (1) |
56,076 |
0.8 |
— |
749 |
— |
Total commercial
real-estate |
$ 3,864,118 |
57.0 % |
$ 49,973 |
$ 749 |
$ 52,135 |
Total commercial and commercial
real-estate |
$ 6,778,916 |
100.0 % |
$ 71,710 |
$ 1,245 |
$ 80,929 |
|
|
|
|
|
|
Commercial real-estate—collateral location by
state: |
|
|
|
|
|
Illinois |
$ 3,094,376 |
80.1 % |
|
|
|
Wisconsin |
321,070 |
8.3 |
|
|
|
Total primary
markets |
$ 3,415,446 |
88.4 % |
|
|
|
Florida |
70,316 |
1.8 |
|
|
|
Arizona |
38,262 |
1.0 |
|
|
|
Indiana |
49,675 |
1.3 |
|
|
|
Other (no individual state greater than
0.5%) |
290,419 |
7.5 |
|
|
|
Total |
$ 3,864,118 |
100.0 % |
|
|
|
|
|
|
|
(1) Purchased loans
represent loans acquired with evidence of credit quality
deterioration since origination, in accordance with ASC 310-30.
Loan agings are based upon contractually required payments. |
|
DEPOSITS
Deposit Portfolio Mix and Growth Rates
|
|
|
|
% Growth |
(Dollars in thousands) |
December 31,
2012 |
September 30, 2012 |
December 31, 2011 |
From (1) September 30, 2012 |
From December 31, 2011 |
Balance: |
|
|
|
|
|
Non-interest bearing |
$ 2,396,264 |
$ 2,162,215 |
$ 1,785,433 |
43 % |
34 % |
NOW |
2,022,957 |
1,841,743 |
1,698,778 |
39 |
19 |
Wealth management deposits (2) |
991,902 |
979,306 |
788,311 |
5 |
26 |
Money market |
2,761,498 |
2,596,702 |
2,263,253 |
25 |
22 |
Savings |
1,275,012 |
1,156,466 |
888,592 |
41 |
43 |
Time certificates of deposit |
4,980,911 |
5,111,533 |
4,882,900 |
(10) |
2 |
Total deposits |
$ 14,428,544 |
$ 13,847,965 |
$ 12,307,267 |
17 % |
17 % |
Mix: |
|
|
|
|
|
Non-interest bearing |
17 % |
16 % |
15 % |
|
|
NOW |
14 |
13 |
14 |
|
|
Wealth management deposits (2) |
7 |
7 |
6 |
|
|
Money market |
19 |
19 |
18 |
|
|
Savings |
9 |
8 |
7 |
|
|
Time certificates of deposit |
34 |
37 |
40 |
|
|
Total deposits |
100 % |
100 % |
100 % |
|
|
|
|
|
|
|
|
(1) Annualized |
(2) Represents deposit
balances of the Company's subsidiary banks from brokerage customers
of Wayne Hummer Investments, trust and asset management customers
of The Chicago Trust Company and brokerage customers from
unaffiliated companies which have been placed into deposit accounts
of the Banks. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time Certificates of
Deposit |
|
|
|
|
|
|
Maturity/Re-pricing
Analysis |
|
|
|
|
|
|
As of December 31, 2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 |
$ 120,508 |
$ 55,738 |
$ 159,590 |
$ 690,665 |
$ 1,026,501 |
0.71 % |
4-6 months |
145,665 |
47,960 |
— |
788,347 |
981,972 |
0.68 % |
7-9 months |
124,002 |
37,779 |
— |
608,649 |
770,430 |
0.86 % |
10-12 months |
4,590 |
43,088 |
— |
492,607 |
540,285 |
0.77 % |
13-18 months |
40,000 |
31,958 |
— |
380,288 |
452,246 |
1.03 % |
19-24 months |
18,367 |
13,548 |
— |
271,035 |
302,950 |
1.10 % |
24+ months |
95,574 |
51,494 |
— |
759,459 |
906,527 |
1.71 % |
Total |
$ 548,706 |
$ 281,565 |
$ 159,590 |
$ 3,991,050 |
$ 4,980,911 |
0.97 % |
|
(1) This category of
certificates of deposit is shown by contractual maturity date. |
(2) This category includes
variable rate certificates of deposit and savings certificates with
the majority repricing on at least a monthly basis. |
(3) Weighted-average rate
excludes the impact of purchase accounting fair value
adjustments. |
NET INTEREST INCOME
The following table presents a summary of Wintrust's average
balances, net interest income and related net interest margins,
calculated on a fully tax-equivalent basis, for the fourth quarter
of 2012 compared to the fourth quarter of 2011 (linked
quarters):
|
|
|
|
|
|
|
|
Three months
ended December 31, 2012 |
Three months ended
December 31, 2011 |
(Dollars in thousands) |
Average |
Interest |
Rate |
Average |
Interest |
Rate |
Liquidity management assets (1) (2)
(7) |
$ 2,949,034 |
$ 9,844 |
1.33% |
$ 3,051,850 |
$ 14,215 |
1.85% |
Other earning assets (2) (3) (7) |
27,482 |
203 |
2.95 |
28,828 |
210 |
2.90 |
Loans, net of unearned income (2) (4)
(7) |
12,001,433 |
134,347 |
4.45 |
10,662,516 |
128,518 |
4.78 |
Covered loans |
626,449 |
12,758 |
8.10 |
652,157 |
15,128 |
9.20 |
Total earning assets (7) |
$ 15,604,398 |
$ 157,152 |
4.01% |
$ 14,395,351 |
$ 158,071 |
4.36% |
Allowance for loan and covered loan
losses |
(135,156) |
|
|
(137,423) |
|
|
Cash and due from banks |
206,914 |
|
|
130,437 |
|
|
Other assets |
1,572,494 |
|
|
1,625,844 |
|
|
Total assets |
$ 17,248,650 |
|
|
$ 16,014,209 |
|
|
|
|
|
|
|
|
|
Interest-bearing deposits |
$ 11,709,058 |
$ 16,209 |
0.55% |
$ 10,563,090 |
$ 19,685 |
0.74% |
Federal Home Loan Bank advances |
414,289 |
2,835 |
2.72 |
474,549 |
4,186 |
3.50 |
Notes payable and other borrowings |
397,807 |
1,565 |
1.57 |
468,139 |
2,804 |
2.38 |
Secured borrowings—owed to securitization
investors |
— |
— |
— |
600,000 |
3,076 |
2.03 |
Subordinated notes |
15,000 |
66 |
1.72 |
38,370 |
176 |
1.79 |
Junior subordinated notes |
249,493 |
3,192 |
5.01 |
249,493 |
3,043 |
4.77 |
Total interest-bearing
liabilities |
$ 12,785,647 |
$ 23,867 |
0.74% |
$ 12,393,641 |
$ 32,970 |
1.05% |
Non-interest bearing deposits |
2,314,935 |
|
|
1,755,446 |
|
|
Other liabilities |
361,244 |
|
|
333,186 |
|
|
Equity |
1,786,824 |
|
|
1,531,936 |
|
|
Total liabilities and
shareholders' equity |
$ 17,248,650 |
|
|
$ 16,014,209 |
|
|
Interest rate spread (5) (7) |
|
|
3.27% |
|
|
3.31% |
Net free funds/contribution (6) |
$ 2,818,751 |
|
0.13% |
$ 2,001,710 |
|
0.14% |
Net interest income/Net interest margin
(7) |
|
$ 133,285 |
3.40% |
|
$ 125,101 |
3.45% |
|
(1) Liquidity
management assets include available-for-sale securities, interest
earning deposits with banks, federal funds sold and securities
purchased under resale agreements. |
(2) Interest
income on tax-advantaged loans, trading securities and securities
reflects a tax-equivalent adjustment based on a marginal federal
corporate tax rate of 35%. The total adjustments for the three
months ended December 31, 2012 and 2011 were $509,000 and $454,000,
respectively. |
(3) Other
earning assets include brokerage customer receivables and trading
account securities. |
(4) Loans,
net of unearned income, include loans held-for-sale and non-accrual
loans. |
(5) Interest
rate spread is the difference between the yield earned on earning
assets and the rate paid on interest-bearing liabilities. |
(6) Net free
funds are the difference between total average earning assets and
total average interest-bearing liabilities. The estimated
contribution to net interest margin from net free funds is
calculated using the rate paid for total interest-bearing
liabilities. |
(7) See
"Supplemental Financial Measures/Ratios" for additional information
on this performance ratio. |
The following table presents a summary of Wintrust's average
balances, net interest income and related net interest margins,
calculated on a fully tax-equivalent basis, for the fourth quarter
of 2012 compared to the third quarter of 2012 (sequential
quarters):
|
Three months
ended December 31, 2012 |
Three months ended
September 30, 2012 |
(Dollars in thousands) |
Average |
Interest |
Rate |
Average |
Interest |
Rate |
Liquidity management assets (1) (2)
(7) |
$ 2,949,034 |
$ 9,844 |
1.33% |
$ 2,565,151 |
$ 9,061 |
1.41% |
Other earning assets (2) (3) (7) |
27,482 |
203 |
2.95 |
31,142 |
222 |
2.83 |
Loans, net of unearned income (2) (4)
(7) |
12,001,433 |
134,347 |
4.45 |
11,922,450 |
137,022 |
4.57 |
Covered loans |
626,449 |
12,758 |
8.10 |
597,518 |
12,397 |
8.25 |
Total earning assets (7) |
$ 15,604,398 |
$ 157,152 |
4.01% |
$ 15,116,261 |
$ 158,702 |
4.18% |
Allowance for loan and covered loan
losses |
(135,156) |
|
|
(138,740) |
|
|
Cash and due from banks |
206,914 |
|
|
185,435 |
|
|
Other assets |
1,572,494 |
|
|
1,542,473 |
|
|
Total assets |
$ 17,248,650 |
|
|
$ 16,705,429 |
|
|
|
|
|
|
|
|
|
Interest-bearing deposits |
$ 11,709,058 |
$ 16,209 |
0.55% |
$ 11,261,184 |
$ 16,794 |
0.59% |
Federal Home Loan Bank advances |
414,289 |
2,835 |
2.72 |
441,445 |
2,817 |
2.54 |
Notes payable and other borrowings |
397,807 |
1,565 |
1.57 |
426,675 |
2,024 |
1.89 |
Secured borrowings—owed to securitization
investors |
— |
— |
— |
176,904 |
795 |
1.79 |
Subordinated notes |
15,000 |
66 |
1.72 |
15,000 |
67 |
1.75 |
Junior subordinated notes |
249,493 |
3,192 |
5.01 |
249,493 |
3,129 |
4.91 |
Total interest-bearing
liabilities |
$ 12,785,647 |
$ 23,867 |
0.74% |
$ 12,570,701 |
$ 25,626 |
0.81% |
Non-interest bearing deposits |
2,314,935 |
|
|
2,092,028 |
|
|
Other liabilities |
361,244 |
|
|
305,960 |
|
|
Equity |
1,786,824 |
|
|
1,736,740 |
|
|
Total liabilities and
shareholders' equity |
$ 17,248,650 |
|
|
$ 16,705,429 |
|
|
Interest rate spread (5) (7) |
|
|
3.27% |
|
|
3.37% |
Net free funds/contribution (6) |
$ 2,818,751 |
|
0.13% |
$ 2,545,560 |
|
0.13% |
Net interest income/Net interest margin
(7) |
|
$ 133,285 |
3.40% |
|
$ 133,076 |
3.50% |
|
(1) Liquidity
management assets include available-for-sale securities, interest
earning deposits with banks, federal funds sold and securities
purchased under resale agreements. |
(2) Interest
income on tax-advantaged loans, trading securities and securities
reflects a tax-equivalent adjustment based on a marginal federal
corporate tax rate of 35%. The total adjustments for the three
months ended December 31, 2012 was $509,000 and for the three
months ended September 30, 2012 was $501,000. |
(3) Other
earning assets include brokerage customer receivables and trading
account securities. |
(4) Loans,
net of unearned income, include loans held-for-sale and non-accrual
loans. |
(5) Interest
rate spread is the difference between the yield earned on earning
assets and the rate paid on interest-bearing liabilities. |
(6) Net free
funds are the difference between total average earning assets and
total average interest-bearing liabilities. The estimated
contribution to net interest margin from net free funds is
calculated using the rate paid for total interest-bearing
liabilities. |
(7) See
"Supplemental Financial Measures/Ratios" for additional information
on this performance ratio. |
The following table presents a summary of Wintrust's average
balances, net interest income and related net interest margins,
calculated on a fully tax-equivalent basis, for the twelve months
ended December 31, 2012 compared to the twelve months ended
December 31, 2011:
|
Year Ended
December 31, 2012 |
Year Ended December 31,
2011 |
(Dollars in thousands) |
Average |
Interest |
Rate |
Average |
Interest |
Rate |
Liquidity management assets (1) (2)
(7) |
$ 2,763,154 |
$ 43,638 |
1.58% |
$ 2,840,157 |
$ 53,275 |
1.88% |
Other earning assets (2) (3) (7) |
29,967 |
882 |
2.94 |
28,570 |
816 |
2.86 |
Loans, net of unearned income (2) (4)
(7) |
11,520,499 |
530,446 |
4.60 |
10,145,462 |
509,870 |
5.03 |
Covered loans |
637,607 |
54,002 |
8.47 |
520,550 |
43,526 |
8.36 |
Total earning assets (7) |
$ 14,951,227 |
$ 628,968 |
4.21% |
$ 13,534,739 |
$ 607,487 |
4.49% |
Allowance for loan and covered loan
losses |
(134,946) |
|
|
(127,660) |
|
|
Cash and due from banks |
172,215 |
|
|
138,795 |
|
|
Other assets |
1,541,121 |
|
|
1,374,286 |
|
|
Total assets |
$ 16,529,617 |
|
|
$ 14,920,160 |
|
|
Interest-bearing deposits |
$ 11,069,056 |
$ 68,305 |
0.62% |
$ 10,012,522 |
$ 87,938 |
0.88% |
Federal Home Loan Bank advances |
459,972 |
12,104 |
2.63 |
449,874 |
16,320 |
3.63 |
Notes payable and other borrowings |
437,970 |
8,965 |
2.05 |
384,256 |
11,023 |
2.87 |
Secured borrowings—owed to securitization
investors |
273,753 |
5,087 |
1.86 |
600,000 |
12,113 |
2.02 |
Subordinated notes |
22,158 |
428 |
1.90 |
43,411 |
750 |
1.70 |
Junior subordinated notes |
249,493 |
12,616 |
4.97 |
249,493 |
16,272 |
6.43 |
Total interest-bearing
liabilities |
$ 12,512,402 |
$ 107,505 |
0.86% |
$ 11,739,556 |
$ 144,416 |
1.23% |
Non-interest bearing deposits |
2,059,160 |
|
|
1,481,594 |
|
|
Other liabilities |
261,779 |
|
|
214,290 |
|
|
Equity |
1,696,276 |
|
|
1,484,720 |
|
|
Total liabilities and
shareholders' equity |
$ 16,529,617 |
|
|
$ 14,920,160 |
|
|
Interest rate spread (5) (7) |
|
|
3.35% |
|
|
3.26% |
Net free funds/contribution (6) |
$ 2,438,825 |
|
0.14% |
$ 1,795,183 |
|
0.16% |
Net interest income/Net interest margin
(7) |
|
$ 521,463 |
3.49% |
|
$ 463,071 |
3.42% |
|
(1) Liquidity
management assets include available-for-sale securities, interest
earning deposits with banks, federal funds sold and securities
purchased under resale agreements |
(2) Interest
income on tax-advantaged loans, trading securities and securities
reflects a tax-equivalent adjustment based on a marginal federal
corporate tax rate of 35%. The total adjustments for both of the
twelve months ended December 31, 2012 and 2011 were $1.9 million
and $1.7 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. |
NON-INTEREST INCOME
For the fourth quarter of 2012, non-interest income totaled
$65.2 million, an increase of $20.3 million, or 45%, compared to
the fourth quarter of 2011. The increase was primarily
attributable to higher mortgage banking and wealth management
revenues, higher gains on available-for-sale securities and
favorable foreign currency remeasurements at the Company's Canadian
subsidiary, partially offset by a decrease in fees from covered
call options. For the full year, non-interest income for 2012
totaled $226.1 million and increased $36.4 million, or 19%,
compared to 2011.
The following table presents non-interest income by category for
the periods presented:
|
Three months
ended December 31, |
$ |
% |
(Dollars in thousands) |
2012 |
2011 |
Change |
Change |
Brokerage |
$ 6,404 |
$ 5,960 |
$ 444 |
7 |
Trust and asset management |
7,230 |
5,726 |
1,504 |
26 |
Total wealth management |
13,634 |
11,686 |
1,948 |
17 |
Mortgage banking |
34,702 |
18,025 |
16,677 |
93 |
Service charges on deposit accounts |
4,534 |
3,973 |
561 |
14 |
Gains on available-for-sale securities,
net |
2,561 |
309 |
2,252 |
NM |
Gain on bargain purchases, net |
85 |
— |
85 |
NM |
Trading (losses) gains, net |
(120) |
216 |
(336) |
NM |
Other: |
|
|
|
|
Fees from covered call
options |
2,156 |
5,377 |
(3,221) |
(60) |
Interest rate swap fees |
2,178 |
1,587 |
591 |
37 |
Bank Owned Life Insurance |
686 |
681 |
5 |
1 |
Administrative services |
867 |
789 |
78 |
10 |
Miscellaneous |
3,906 |
2,269 |
1,637 |
72 |
Total Other |
9,793 |
10,703 |
(910) |
(9) |
Total Non-Interest Income |
$ 65,189 |
$ 44,912 |
$ 20,277 |
45 |
NM - Not Meaningful |
|
|
|
|
|
|
|
|
|
|
Years Ended
December 31, |
$ |
% |
(Dollars in thousands) |
2012 |
2011 |
Change |
Change |
Brokerage |
$ 25,477 |
$ 24,601 |
$ 876 |
4 |
Trust and asset management |
27,203 |
19,916 |
7,287 |
37 |
Total wealth management |
52,680 |
44,517 |
8,163 |
18 |
Mortgage banking |
109,970 |
56,942 |
53,028 |
93 |
Service charges on deposit accounts |
16,971 |
14,963 |
2,008 |
13 |
Gains on available-for-sale securities,
net |
4,895 |
1,792 |
3,103 |
173 |
Gain on bargain purchases, net |
7,503 |
37,974 |
(30,471) |
(80) |
Trading (losses) gains, net |
(1,900) |
337 |
(2,237) |
NM |
Other: |
|
|
|
|
Fees from covered call
options |
10,476 |
13,570 |
(3,094) |
(23) |
Interest rate swap fees |
9,381 |
6,770 |
2,611 |
39 |
Bank Owned Life Insurance |
2,920 |
2,569 |
351 |
14 |
Administrative services |
3,281 |
3,071 |
210 |
7 |
Miscellaneous |
9,915 |
7,193 |
2,722 |
38 |
Total Other |
35,973 |
33,173 |
2,800 |
8 |
Total Non-Interest Income |
$ 226,092 |
$ 189,698 |
$ 36,394 |
19 |
NM - Not Meaningful |
|
|
|
|
The significant changes in non-interest income for the quarter
ended December 31, 2012 compared to the quarter ended December 31,
2011 are discussed below.
Wealth management revenue totaled $13.6 million in the fourth
quarter of 2012 and $11.7 million in the fourth quarter of
2011, an increase of 17%. The increase is mostly attributable
to additional revenues resulting from the acquisition of a
community bank trust operation on March 30, 2012 as well as
continued growth within the existing business. Wealth
management revenue is comprised of the trust and asset management
revenue of The Chicago Trust Company and Great Lakes Advisors and
the brokerage commissions, money managed fees and insurance product
commissions at Wayne Hummer Investments.
For the quarter ended December 31, 2012, mortgage banking
revenue totaled $34.7 million, an increase of $16.7 million when
compared to the fourth quarter of 2011. The increase in
mortgage banking revenue in the fourth quarter of 2012 as compared
to the fourth quarter of 2011 resulted primarily from an increase
in gain on sales of loans, which were driven by higher origination
volumes due to a favorable mortgage interest rate environment in
2012 and better pricing in the current quarter. Mortgage
banking revenue includes revenue from activities related to
originating, selling and servicing residential real estate loans
for the secondary market.
A summary of mortgage banking components is shown below:
Mortgage banking
revenue |
|
|
|
|
|
|
|
Three Months Ended |
Years Ended |
|
December 31, |
September 30, |
December 31, |
December 31, |
December 31, |
(Dollars in thousands) |
2012 |
2012 |
2011 |
2012 |
2011 |
Mortgage loans originated and
sold |
$ 1,178,010 |
$ 1,119,762 |
$ 883,017 |
$ 3,866,012 |
$ 2,545,385 |
Mortgage loans serviced for
others |
$ 1,005,372 |
$ 997,235 |
$ 958,749 |
|
|
Fair value of mortgage servicing
rights (MSRs) |
$ 6,750 |
$ 6,276 |
$ 6,700 |
|
|
MSRs as a percentage of loans
serviced |
0.67% |
0.63% |
0.70% |
|
|
The Company recognized $2.6 million of net gains on
available-for-sale securities in the fourth quarter of 2012
compared to net gains of $309,000 in the fourth quarter of
2011. The increase in net gains resulted from Management's
decision to sell certain securities in conjunction with the
termination of longer-term, higher rate repurchase agreements in
the fourth quarter of 2012. See the "Non-Interest Expense"
section of this release for more information on the termination of
the repurchase agreements.
Other non-interest income for the fourth quarter of 2012 totaled
$9.8 million, a decrease of $910,000 compared to the fourth quarter
of 2011. Fees from certain covered call option transactions
decreased by $3.2 million in the fourth quarter of 2012 as compared
to the same period in the prior year. Historically,
compression in the net interest margin was effectively offset by
the Company's covered call strategy. An illustration of the
past effectiveness of this strategy is shown in the Supplemental
Financial Information section (see page titled "Net Interest Margin
(Including Call Option Income)"). Interest rate swap fee
revenue totaled $2.2 million for the fourth quarter of 2012 an
increase of $591,000 over the $1.6 million recorded in the fourth
quarter of 2011. Miscellaneous income increased in the fourth
quarter of 2012 compared to the prior year quarter as a result of
an $826,000 foreign currency remeasurement gain recorded at the
Company's Canadian subsidiary and a $310,000 gain recognized on the
non-exercise of a value appreciation instrument ("VAI") issued to
the FDIC as part of the FDIC-assisted acquisition of First United
Bank.
NON-INTEREST EXPENSE
Non-interest expense for the fourth quarter of 2012 totaled
$129.5 million and increased approximately $10.8 million, or 9%,
compared to the fourth quarter of 2011. On a full year basis,
non-interest expense for 2012 totaled $489.0 million and increased
$68.6 million, or 16%, compared to 2011.
The following table presents non-interest expense by category
for the periods presented:
|
Three months
ended December 31, |
$ |
% |
(Dollars in thousands) |
2012 |
2011 |
Change |
Change |
Salaries and employee benefits: |
|
|
|
|
Salaries |
$ 40,457 |
$ 36,676 |
$ 3,781 |
10 |
Commissions and bonus |
23,968 |
19,263 |
4,705 |
24 |
Benefits |
11,715 |
10,805 |
910 |
8 |
Total salaries and employee
benefits |
76,140 |
66,744 |
9,396 |
14 |
Equipment |
6,468 |
5,093 |
1,375 |
27 |
Occupancy, net |
8,480 |
7,975 |
505 |
6 |
Data processing |
4,178 |
4,062 |
116 |
3 |
Advertising and marketing |
2,725 |
3,207 |
(482) |
(15) |
Professional fees |
3,158 |
3,710 |
(552) |
(15) |
Amortization of other intangible assets |
1,108 |
1,062 |
46 |
4 |
FDIC insurance |
3,039 |
3,244 |
(205) |
(6) |
OREO expenses, net |
5,269 |
8,821 |
(3,552) |
(40) |
Other: |
|
|
|
|
Commissions—3rd party
brokers |
944 |
872 |
72 |
8 |
Postage |
1,856 |
1,322 |
534 |
40 |
Stationery and supplies |
1,095 |
1,186 |
(91) |
(8) |
Miscellaneous |
15,088 |
11,470 |
3,618 |
32 |
Total other |
18,983 |
14,850 |
4,133 |
28 |
Total Non-Interest
Expense |
$ 129,548 |
$ 118,768 |
$ 10,780 |
9 |
|
|
|
|
|
|
Years Ended
December 31, |
$ |
% |
(Dollars in thousands) |
2012 |
2011 |
Change |
Change |
Salaries and employee benefits: |
|
|
|
|
Salaries |
$ 155,800 |
$ 138,452 |
$ 17,348 |
13 |
Commissions and bonus |
84,199 |
55,721 |
28,478 |
51 |
Benefits |
48,590 |
43,612 |
4,978 |
11 |
Total salaries and employee benefits |
288,589 |
237,785 |
50,804 |
21 |
Equipment |
23,222 |
18,267 |
4,955 |
27 |
Occupancy, net |
32,294 |
28,764 |
3,530 |
12 |
Data processing |
15,739 |
14,568 |
1,171 |
8 |
Advertising and marketing |
9,438 |
8,380 |
1,058 |
13 |
Professional fees |
15,262 |
16,874 |
(1,612) |
(10) |
Amortization of other intangible assets |
4,324 |
3,425 |
899 |
26 |
FDIC insurance |
13,422 |
14,143 |
(721) |
(5) |
OREO expenses, net |
22,103 |
26,340 |
(4,237) |
(16) |
Other: |
|
|
|
|
Commissions—3rd party
brokers |
4,140 |
3,829 |
311 |
8 |
Postage |
5,729 |
4,672 |
1,057 |
23 |
Stationery and supplies |
4,003 |
3,818 |
185 |
5 |
Miscellaneous |
50,775 |
39,539 |
11,236 |
28 |
Total other |
64,647 |
51,858 |
12,789 |
25 |
Total Non-Interest
Expense |
$ 489,040 |
$ 420,404 |
$ 68,636 |
16 |
The significant changes in non-interest expense for the quarter
ended December 31, 2012 compared to the quarter ended December 31,
2011 are discussed below.
Salaries and employee benefits expense increased $9.4 million,
or 14%, in the fourth quarter of 2012 compared to the fourth
quarter of 2011 primarily as a result of a $3.8 million increase in
salaries caused by the addition of employees from the various
acquisitions and larger staffing as the Company grows, a $4.7
million increase in bonus and commissions primarily attributable to
the increase in variable pay based revenue and the Company's
long-term incentive program and a $910,000 increase from employee
benefits (primarily health plan and payroll taxes related).
Equipment expense totaled $6.5 million for the fourth quarter of
2012, an increase of $1.4 million compared to the fourth quarter
of 2011. The increase is primarily the result of
additional equipment depreciation as well as maintenance and repair
costs associated with the increasing number of facilities due to
acquisition activity. Equipment expense includes depreciation
on equipment, maintenance and repairs, equipment rental and
software license fees.
Occupancy expense for the fourth quarter of 2012 was $8.5
million, an increase of $505,000, or 6%, compared to the same
period in 2011. The increase is primarily the result of
depreciation and property taxes on owned locations. Occupancy
expense includes depreciation on premises, real estate taxes,
utilities and maintenance of premises, as well as net rent expense
for leased premises.
OREO expense totaled $5.3 million in the fourth quarter of 2012,
a decrease of $3.5 million compared to $8.8 million in the fourth
quarter of 2011. The decrease in total OREO expenses is
primarily related to lower valuation adjustments on properties held
in OREO and lower losses realized on the sale of OREO properties in
the fourth quarter of 2012 as compared to the fourth quarter of
2011. OREO costs include all costs related to obtaining,
maintaining and selling other real estate owned
properties.
Miscellaneous expenses in the fourth quarter of 2012 increased
$3.6 million, or 32%, compared to the same period in the prior
year. The increase in the fourth quarter of 2012 compared to
the same period in the prior year is primarily attributable to $2.1
million of fees paid on the termination of approximately $68.4
million longer-term, higher rate repurchase agreements in the
current quarter as well as increased expenses related to postage
and general growth in the Company's business. Miscellaneous
expense includes ATM expenses, correspondent bank charges,
directors' fees, telephone, travel and entertainment, corporate
insurance, dues and subscriptions, problem loan expenses and
lending origination costs that are not deferred.
As previously discussed in this release, the accounting and
reporting policies of Wintrust conform to 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. One significant metric that is used by the
Company in assessing operating performance is pre-tax adjusted
earnings. Pre-tax adjusted earnings is calculated by adjusting
income before taxes to exclude the provision for credit losses and
certain significant items. Two ratios the Company uses to
measure expense management are the efficiency ratio and the net
overhead ratio. The efficiency ratio, which is calculated by
dividing non-interest expense by total taxable-equivalent net
revenue (less securities gains and losses), measures how much it
costs to produce one dollar of revenue. The net overhead ratio
is calculated by netting total non-interest expense and total
non-interest income and dividing by total average assets. In
both cases, a lower ratio indicates a higher degree of
efficiency. See "Supplemental Financial Measures/Ratios"
section earlier in this document for further detail on these
non-GAAP measures/ratios.
The efficiency ratio and net overhead ratio are primarily
reviewed by the Company based on pre-tax adjusted
earnings. The Company believes that these measures provide a
more meaningful view of the Company's operating efficiency and
expense management. The efficiency ratio, based on pre-tax adjusted
earnings, was 62.75% for the fourth quarter of 2012, compared to
64.76% in the fourth quarter of 2011. The net overhead ratio,
based on pre-tax adjusted earnings, was 1.40% for the fourth
quarter of 2012, compared to 1.62% in the fourth quarter of
2011. These lower ratios indicate a higher degree of
efficiency in the fourth quarter of 2012 as compared to the prior
year quarter as the Company has leveraged its existing
infrastructure.
ASSET QUALITY
Allowance for Credit Losses, excluding covered loans
|
Three months
ended |
Years
ended |
|
December
31, |
December
31, |
(Dollars in thousands) |
2012 |
2011 |
2012 |
2011 |
Allowance for loan losses at
beginning of period |
$ 112,287 |
$ 118,649 |
$ 110,381 |
$ 113,903 |
Provision for credit
losses |
20,672 |
16,615 |
72,412 |
97,920 |
Other adjustments |
(289) |
— |
(1,333) |
— |
Reclassification from/(to) allowance
for unfunded lending-related commitments |
(260) |
171 |
693 |
1,904 |
Charge-offs: |
|
|
|
|
Commercial |
9,782 |
6,377 |
22,405 |
31,951 |
Commercial real estate |
9,084 |
13,931 |
43,539 |
62,698 |
Home equity |
3,496 |
1,876 |
9,361 |
5,020 |
Residential real estate |
2,470 |
1,632 |
4,060 |
4,115 |
Premium finance
receivables—commercial |
1,284 |
1,479 |
3,751 |
6,617 |
Premium finance
receivables—life insurance |
13 |
— |
29 |
275 |
Indirect consumer |
64 |
56 |
221 |
244 |
Consumer and other |
570 |
824 |
1,024 |
1,532 |
Total charge-offs |
26,763 |
26,175 |
84,390 |
112,452 |
Recoveries: |
|
|
|
|
Commercial |
368 |
541 |
1,220 |
1,258 |
Commercial real estate |
978 |
286 |
6,635 |
1,386 |
Home equity |
43 |
5 |
428 |
64 |
Residential real estate |
9 |
2 |
22 |
10 |
Premium finance
receivables—commercial |
250 |
204 |
871 |
6,006 |
Premium finance
receivables—life insurance |
15 |
— |
69 |
12 |
Indirect consumer |
27 |
37 |
103 |
220 |
Consumer and other |
14 |
46 |
240 |
150 |
Total recoveries |
1,704 |
1,121 |
9,588 |
9,106 |
Net
charge-offs |
(25,059) |
(25,054) |
(74,802) |
(103,346) |
Allowance for loan
losses at period end |
$ 107,351 |
$ 110,381 |
$ 107,351 |
$ 110,381 |
Allowance for unfunded
lending-related commitments at period end |
14,647 |
13,231 |
14,647 |
13,231 |
Allowance for credit
losses at period end |
$ 121,998 |
$ 123,612 |
$ 121,998 |
$ 123,612 |
Annualized net
charge-offs by category as a percentage of its own respective
category's average: |
|
|
|
|
Commercial |
1.35% |
0.96% |
0.81% |
1.44% |
Commercial real estate |
0.86 |
1.56 |
1.02 |
1.80 |
Home equity |
1.72 |
0.85 |
1.08 |
0.56 |
Residential real estate |
1.19 |
1.07 |
0.51 |
0.79 |
Premium finance
receivables—commercial |
0.21 |
0.35 |
0.16 |
0.04 |
Premium finance
receivables—life insurance |
— |
— |
— |
0.02 |
Indirect consumer |
0.19 |
0.12 |
0.16 |
0.04 |
Consumer and other |
1.86 |
2.35 |
0.66 |
1.21 |
Total loans, net
of unearned income, excluding covered loans |
0.83% |
0.93% |
0.65% |
1.02% |
Net charge-offs as a
percentage of the provision for credit losses |
121.22% |
150.79% |
103.30% |
105.54% |
Loans at
period-end |
|
|
$ 11,828,943 |
$ 10,521,377 |
Allowance for loan
losses as a percentage of loans at period end |
|
|
0.91% |
1.05% |
Allowance for credit
losses as a percentage of loans at period end |
|
|
1.03% |
1.17% |
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).
The provision for credit losses, excluding the provision for
covered loan losses, totaled $20.7 million for the fourth quarter
of 2012, $18.2 million for the third quarter of 2012 and $16.6
million for the fourth quarter of 2011. For the quarter ended
December 31, 2012, net charge-offs, excluding covered loans,
totaled $25.1 million compared to $17.9 million in the third
quarter of 2012 and $25.1 million recorded in the fourth quarter of
2011. Annualized net charge-offs as a percentage of average loans,
excluding covered loans, were 0.83% in the fourth quarter of 2012,
0.60% in the third quarter of 2012 and 0.93% in the fourth quarter
of 2011. The lower level of the allowance for credit losses in
2012, reflect the improvements in credit quality metrics compared
to 2011.
Management believes the allowance for credit losses is
appropriate to provide for inherent losses in the portfolio. There
can be no assurances however, that future losses will not exceed
the amounts provided for, thereby affecting future results of
operations. The amount of future additions to the allowance for
credit losses will be dependent upon management's assessment of the
appropriateness of the allowance based on its evaluation of
economic conditions, changes in real estate values, interest rates,
the regulatory environment, the level of past-due and
non-performing loans, and other factors.
The Company also provides a provision for covered loan losses on
covered loans and maintains an allowance for covered loan losses on
covered loans. Please see "Covered Assets" later in this document
for more detail.
The tables below summarizes the calculation of allowance for
loan losses for the Company's core loan portfolio and niche and
purchased loan portfolio as of December 31, 2012 and
September 30, 2012.
|
As of December
31, 2012 |
|
|
|
As a percentage |
|
Recorded |
Calculated |
of its own respective |
(Dollars in thousands) |
Investment |
Allowance |
category's
balance |
Commercial: |
|
|
|
Commercial and industrial
(1) |
$ 1,616,045 |
$ 17,040 |
1.05% |
Asset-based lending (1) |
571,009 |
5,066 |
0.89 |
Municipal |
91,824 |
1,041 |
1.13 |
Leases (1) |
89,674 |
248 |
0.28 |
Other (1) |
16,246 |
137 |
0.84 |
Commercial real-estate: |
|
|
|
Residential construction |
40,401 |
1,301 |
3.22 |
Commercial construction
(1) |
169,922 |
3,194 |
1.88 |
Land |
134,197 |
4,829 |
3.60 |
Office (1) |
557,520 |
5,446 |
0.98 |
Industrial (1) |
571,455 |
5,516 |
0.97 |
Retail (1) |
562,480 |
5,292 |
0.94 |
Multi-family (1) |
392,289 |
10,644 |
2.71 |
Mixed use and other (1) |
1,232,592 |
15,913 |
1.29 |
Home equity (1) |
773,525 |
12,734 |
1.65 |
Residential real-estate (1) |
361,089 |
5,560 |
1.54 |
Total core loan
portfolio |
$ 7,180,268 |
$ 93,961 |
1.31% |
Commercial: |
|
|
|
Franchise |
$ 196,395 |
$ 2,880 |
1.47% |
Mortgage warehouse lines of
credit |
215,076 |
2,134 |
0.99 |
Community Advantage - homeowner
associations |
81,496 |
204 |
0.25 |
Aircraft |
17,364 |
44 |
0.25 |
Purchased non-covered
commercial loans (2) |
19,669 |
— |
— |
Commercial real-estate: |
|
|
|
Purchased non-covered
commercial real-estate (2) |
203,262 |
— |
— |
Purchased non-covered home equity (2) |
14,949 |
— |
— |
Purchased non-covered residential real-estate
(2) |
6,124 |
— |
— |
Premium finance receivables |
|
|
|
U.S. commercial insurance
loans |
1,737,613 |
5,402 |
0.31 |
Canada commercial insurance
loans (2) |
250,243 |
128 |
0.05 |
Life insurance loans (1) |
1,188,134 |
566 |
0.05 |
Purchased life insurance loans
(2) |
537,032 |
— |
— |
Indirect consumer |
77,333 |
267 |
0.35 |
Consumer and other (1) |
97,731 |
1,639 |
1.68 |
Purchased non-covered consumer and other
(2) |
6,254 |
126 |
2.01 |
Total niche and
purchased loan portfolio |
$ 4,648,675 |
$ 13,390 |
0.29% |
Total loans, net of
unearned income, excluding covered loans |
$ 11,828,943 |
$ 107,351 |
0.91% |
|
|
|
|
(1) Excludes
purchased loans reported in accordance with ASC 310-20 and ASC
310-30. |
(2) Purchased
loans represent loans reported in accordance with ASC 310-20 and
ASC 310-30. |
|
|
|
|
|
As of September
30, 2012 |
|
|
|
As a percentage |
|
Recorded |
Calculated |
of its own respective |
(Dollars in thousands) |
Investment |
Allowance |
category's
balance |
Commercial: |
|
|
|
Commercial and industrial
(1) |
$ 1,546,042 |
$ 17,137 |
1.11% |
Asset-based lending (1) |
531,976 |
5,064 |
0.95 |
Municipal |
90,404 |
1,020 |
1.13 |
Leases |
83,351 |
247 |
0.30 |
Other |
1,576 |
12 |
0.76 |
Commercial real-estate: |
|
|
|
Residential construction |
44,255 |
1,453 |
3.28 |
Commercial construction
(1) |
168,503 |
3,965 |
2.35 |
Land |
133,486 |
5,376 |
4.03 |
Office (1) |
570,919 |
5,856 |
1.03 |
Industrial (1) |
569,191 |
5,555 |
0.98 |
Retail (1) |
554,193 |
5,993 |
1.08 |
Multi-family (1) |
362,215 |
10,511 |
2.90 |
Mixed use and other (1) |
1,193,594 |
16,376 |
1.37 |
Home equity (1) |
797,792 |
13,600 |
1.70 |
Residential real-estate (1) |
372,706 |
7,553 |
2.03 |
Total core loan
portfolio |
$ 7,020,203 |
$ 99,718 |
1.42% |
Commercial: |
|
|
|
Franchise |
$ 179,706 |
$ 1,909 |
1.06 % |
Mortgage warehouse lines of
credit |
225,295 |
1,968 |
0.87 |
Community Advantage - homeowner
associations |
73,881 |
185 |
0.25 |
Aircraft |
21,444 |
199 |
0.93 |
Purchased non-covered
commercial loans (2) |
17,378 |
— |
— |
Commercial real-estate: |
|
|
|
Purchased non-covered
commercial real-estate (2) |
103,356 |
— |
— |
Purchased non-covered home equity (2) |
9,800 |
— |
— |
Purchased non-covered residential real-estate
(2) |
3,972 |
— |
— |
Premium finance receivables |
|
|
|
U.S. commercial insurance
loans |
1,703,525 |
5,911 |
0.35 |
Canada commercial insurance
loans (2) |
279,420 |
524 |
0.19 |
Life insurance loans (1) |
1,128,588 |
452 |
0.04 |
Purchased life insurance loans
(2) |
537,032 |
— |
— |
Indirect consumer |
77,378 |
269 |
0.35 |
Consumer and other (1) |
106,151 |
1,124 |
1.06 |
Purchased non-covered consumer and other
(2) |
2,771 |
28 |
1.01 |
Total niche and
purchased loan portfolio |
$ 4,469,697 |
$ 12,569 |
0.28% |
Total loans, net of
unearned income, excluding covered loans |
$ 11,489,900 |
$ 112,287 |
0.98% |
|
|
|
|
(1) Excludes
purchased loans reported in accordance with ASC 310-20 and ASC
310-30. |
(2) Purchased
loans represent loans reported in accordance with ASC 310-20 and
ASC 310-30. |
As part of a 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 niche loans. A summary of the
allowance for loan losses calculated for the loan components in
both the core loan portfolio and the niche loan portfolio was shown
on the previous pages as of December 31, 2012 and
September 30, 2012. The allowance for loan losses to core
loans was 1.31% compared to 0.29% for niche loans and 0.91% for the
entire loan portfolio as of December 31, 2012. As of
September 30, 2012, the allowance for loan losses to core
loans was 1.42% compared to 0.28% for niche loans and 0.98% for the
entire loan portfolio.
The decline in the total allowance for loan losses to total
loans, and the decline in the allowance for loan losses to core
loans in the fourth quarter of 2012 was attributable to a $28
million reduction in impaired loans in the core portfolio and a
$6.7 million decrease in ASC 310 reserves (specific reserves on
impaired loans) on the core portfolio. The ASC 310 reserve
component declined primarily as calculated impairments provided in
prior periods were charged-off and to a lesser extent the
calculated impairments on certain loans were reduced in the fourth
quarter.
ASC 450 reserve (general reserves) as a percentage of core loans
was 1.17% at December 31, 2012 and 1.19% at September 30,
2012. This decrease was attributable to a positive migration
of the Company's historical loss rates used in determining this
portion of the allowance for loan losses.
The table below shows the aging of the Company's loan portfolio,
excluding covered loans, at December 31, 2012:
|
|
|
|
|
|
|
(Dollars in thousands) |
Nonaccrual |
90+ days and still
accruing |
60-89 days
past due |
30-59 days
past due |
Current |
Total
Loans |
Loan Balances: |
|
|
|
|
|
|
Commercial |
|
|
|
|
|
|
Commercial and industrial |
$ 19,409 |
$ — |
$ 5,520 |
$ 15,410 |
$ 1,587,864 |
$ 1,628,203 |
Franchise |
1,792 |
— |
— |
— |
194,603 |
196,395 |
Mortgage warehouse lines of
credit |
— |
— |
— |
— |
215,076 |
215,076 |
Community Advantage—homeowners
association |
— |
— |
— |
— |
81,496 |
81,496 |
Aircraft |
— |
— |
148 |
— |
17,216 |
17,364 |
Asset-based lending |
536 |
— |
1,126 |
6,622 |
564,154 |
572,438 |
Municipal |
— |
— |
— |
— |
91,824 |
91,824 |
Leases |
— |
— |
— |
896 |
89,547 |
90,443 |
Other |
— |
— |
— |
— |
16,549 |
16,549 |
Purchased non-covered
commercial (1) |
— |
496 |
432 |
7 |
4,075 |
5,010 |
Total commercial |
21,737 |
496 |
7,226 |
22,935 |
2,862,404 |
2,914,798 |
Commercial real-estate |
|
|
|
|
|
|
Residential construction |
3,110 |
— |
4 |
41 |
37,246 |
40,401 |
Commercial construction |
2,159 |
— |
885 |
386 |
167,525 |
170,955 |
Land |
11,299 |
— |
632 |
9,014 |
113,252 |
134,197 |
Office |
4,196 |
— |
1,889 |
3,280 |
560,346 |
569,711 |
Industrial |
2,089 |
— |
6,042 |
4,512 |
565,294 |
577,937 |
Retail |
7,792 |
— |
1,372 |
998 |
558,734 |
568,896 |
Multi-family |
2,586 |
— |
3,949 |
1,040 |
389,116 |
396,691 |
Mixed use and other |
16,742 |
— |
6,660 |
13,349 |
1,312,503 |
1,349,254 |
Purchased non-covered
commercial real-estate (1) |
— |
749 |
2,663 |
2,508 |
50,156 |
56,076 |
Total commercial
real-estate |
49,973 |
749 |
24,096 |
35,128 |
3,754,172 |
3,864,118 |
Home equity |
13,423 |
100 |
1,592 |
5,043 |
768,316 |
788,474 |
Residential real estate |
11,728 |
— |
2,763 |
8,250 |
343,616 |
366,357 |
Purchased non-covered residential real estate
(1) |
— |
— |
200 |
— |
656 |
856 |
Premium finance receivables |
|
|
|
|
|
|
Commercial insurance loans |
9,302 |
10,008 |
6,729 |
19,597 |
1,942,220 |
1,987,856 |
Life insurance loans |
25 |
— |
— |
5,531 |
1,205,151 |
1,210,707 |
Purchased life insurance loans
(1) |
— |
— |
— |
— |
514,459 |
514,459 |
Indirect consumer |
55 |
189 |
51 |
442 |
76,596 |
77,333 |
Consumer and other |
1,511 |
32 |
167 |
433 |
99,010 |
101,153 |
Purchased non-covered consumer and other
(1) |
— |
66 |
32 |
101 |
2,633 |
2,832 |
Total loans, net of unearned
income, excluding covered loans |
$ 107,754 |
$ 11,640 |
$ 42,856 |
$ 97,460 |
$ 11,569,233 |
$ 11,828,943 |
Covered loans |
1,988 |
122,350 |
16,108 |
7,999 |
411,642 |
560,087 |
Total loans, net of unearned
income |
$ 109,742 |
$ 133,990 |
$ 58,964 |
$ 105,459 |
$ 11,980,875 |
$ 12,389,030 |
|
|
|
|
|
|
|
(1) Purchased
loans represent loans acquired with evidence of credit quality
deterioration since origination, in accordance with ASC 310-30.
Loan agings are based upon contractually required payments. |
|
|
|
|
|
|
|
Aging as a % of Loan
Balance: |
Nonaccrual |
90+ days and still
accruing |
60-89 days past
due |
30-59 days past
due |
Current |
Total
Loans |
Commercial |
|
|
|
|
|
|
Commercial and industrial |
1.2% |
—% |
0.3% |
1.0% |
97.5% |
100.0% |
Franchise |
0.9 |
— |
— |
— |
99.1 |
100.0 |
Mortgage warehouse lines of
credit |
— |
— |
— |
— |
100.0 |
100.0 |
Community Advantage—homeowners
association |
— |
— |
— |
— |
100.0 |
100.0 |
Aircraft |
— |
— |
0.9 |
— |
99.1 |
100.0 |
Asset-based lending |
0.1 |
— |
0.2 |
1.2 |
98.5 |
100.0 |
Municipal |
— |
— |
— |
— |
100.0 |
100.0 |
Leases |
— |
— |
— |
1.0 |
99.0 |
100.0 |
Other |
— |
— |
— |
— |
100.0 |
100.0 |
Purchased non-covered
commercial (1) |
— |
9.9 |
8.6 |
0.1 |
81.4 |
100.0 |
Total commercial |
0.8 |
— |
0.3 |
0.8 |
98.1 |
100.0 |
Commercial real-estate |
|
|
|
|
|
|
Residential construction |
7.7 |
— |
— |
0.1 |
92.2 |
100.0 |
Commercial construction |
1.3 |
— |
0.5 |
0.2 |
98.0 |
100.0 |
Land |
8.4 |
— |
0.5 |
6.7 |
84.4 |
100.0 |
Office |
0.7 |
— |
0.3 |
0.6 |
98.4 |
100.0 |
Industrial |
0.4 |
— |
1.1 |
0.8 |
97.7 |
100.0 |
Retail |
1.4 |
— |
0.2 |
0.2 |
98.2 |
100.0 |
Multi-family |
0.7 |
— |
1.0 |
0.3 |
98.0 |
100.0 |
Mixed use and other |
1.2 |
— |
0.5 |
1.0 |
97.3 |
100.0 |
Purchased non-covered
commercial real-estate (1) |
— |
1.3 |
4.8 |
4.5 |
89.4 |
100.0 |
Total commercial
real-estate |
1.3 |
— |
0.6 |
0.9 |
97.2 |
100.0 |
Home equity |
1.7 |
— |
0.2 |
0.6 |
97.5 |
100.0 |
Residential real estate |
3.2 |
— |
0.8 |
2.3 |
93.7 |
100.0 |
Purchased non-covered residential real estate
(1) |
— |
— |
23.4 |
— |
76.6 |
100.0 |
Premium finance receivables |
|
|
|
|
|
|
Commercial insurance loans |
0.5 |
0.5 |
0.3 |
1.0 |
97.7 |
100.0 |
Life insurance loans |
— |
— |
— |
0.5 |
99.5 |
100.0 |
Purchased life insurance loans
(1) |
— |
— |
— |
— |
100.0 |
100.0 |
Indirect consumer |
0.1 |
0.2 |
0.1 |
0.6 |
99.0 |
100.0 |
Consumer and other |
1.5 |
— |
0.2 |
0.4 |
97.9 |
100.0 |
Purchased non-covered consumer and other
(1) |
— |
2.3 |
1.1 |
3.6 |
93.0 |
100.0 |
Total loans, net of unearned
income, excluding covered loans |
0.9% |
0.1% |
0.4% |
0.8% |
97.8% |
100.0% |
Covered loans |
0.4 |
21.8 |
2.9 |
1.4 |
73.5 |
100.0 |
Total loans, net of unearned
income |
0.9% |
1.1% |
0.5% |
0.9% |
96.6% |
100.0% |
As of December 31, 2012, $42.9 million of all loans,
excluding covered loans, or 0.4%, were 60 to 89 days past due and
$97.5 million, or 0.8%, were 30 to 59 days (or one payment) past
due. As of September 30, 2012, $50.2 million of all loans,
excluding covered loans, or 0.4%, were 60 to 89 days past due and
$92.2 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
December 31, 2012 that are current with regard to the
contractual terms of the loan agreement represent 97.5% of the
total home equity portfolio. Residential real estate loans at
December 31, 2012 that are current with regards to the
contractual terms of the loan agreements comprise 93.7% of total
residential real estate loans outstanding, which includes purchased
non-covered residential real-estate.
The table below shows the aging of the Company's loan portfolio,
excluding covered loans, at September 30, 2012:
|
|
90+ days |
60-89 |
30-59 |
|
|
As of September 30,
2012 |
|
and still |
days past |
days past |
|
|
(Dollars in thousands) |
Nonaccrual |
accruing |
due |
due |
Current |
Total Loans |
Loan Balances: |
|
|
|
|
|
|
Commercial |
|
|
|
|
|
|
Commercial and industrial |
$ 15,163 |
$ — |
$ 5,985 |
$ 16,631 |
$ 1,518,596 |
$ 1,556,375 |
Franchise |
1,792 |
— |
— |
— |
177,914 |
179,706 |
Mortgage warehouse lines of
credit |
— |
— |
— |
— |
225,295 |
225,295 |
Community Advantage—homeowners
association |
— |
— |
— |
— |
73,881 |
73,881 |
Aircraft |
428 |
— |
— |
150 |
20,866 |
21,444 |
Asset-based lending |
328 |
— |
1,211 |
5,556 |
525,966 |
533,061 |
Municipal |
— |
— |
— |
— |
90,404 |
90,404 |
Leases |
— |
— |
— |
— |
83,351 |
83,351 |
Other |
— |
— |
— |
— |
1,576 |
1,576 |
Purchased non-covered
commercial (1) |
— |
499 |
— |
— |
5,461 |
5,960 |
Total commercial |
17,711 |
499 |
7,196 |
22,337 |
2,723,310 |
2,771,053 |
Commercial real-estate |
|
|
|
|
|
|
Residential construction |
2,141 |
— |
3,008 |
— |
39,106 |
44,255 |
Commercial construction |
3,315 |
— |
163 |
13,072 |
152,993 |
169,543 |
Land |
10,629 |
— |
3,033 |
3,017 |
116,807 |
133,486 |
Office |
6,185 |
— |
5,717 |
7,237 |
565,182 |
584,321 |
Industrial |
1,885 |
— |
645 |
1,681 |
570,114 |
574,325 |
Retail |
10,133 |
— |
1,853 |
5,617 |
543,066 |
560,669 |
Multi-family |
3,314 |
— |
3,062 |
— |
357,047 |
363,423 |
Mixed use and other |
20,859 |
— |
9,779 |
14,990 |
1,175,222 |
1,220,850 |
Purchased non-covered
commercial real-estate (1) |
— |
1,066 |
150 |
389 |
47,235 |
48,840 |
Total commercial
real-estate |
58,461 |
1,066 |
27,410 |
46,003 |
3,566,772 |
3,699,712 |
Home equity |
11,504 |
— |
5,905 |
5,642 |
784,541 |
807,592 |
Residential real estate |
15,393 |
— |
3,281 |
2,637 |
354,711 |
376,022 |
Purchased non-covered residential real estate
(1) |
— |
— |
— |
— |
656 |
656 |
Premium finance receivables |
|
|
|
|
|
|
Commercial insurance loans |
7,488 |
5,533 |
5,881 |
14,369 |
1,949,674 |
1,982,945 |
Life insurance loans |
29 |
— |
— |
— |
1,128,559 |
1,128,588 |
Purchased life insurance loans
(1) |
— |
— |
— |
— |
537,032 |
537,032 |
Indirect consumer |
72 |
215 |
74 |
344 |
76,673 |
77,378 |
Consumer and other |
1,485 |
— |
429 |
849 |
106,092 |
108,855 |
Purchased non-covered consumer and other
(1) |
— |
— |
— |
— |
67 |
67 |
Total loans, net of unearned
income, excluding covered loans |
$ 112,143 |
$ 7,313 |
$ 50,176 |
$ 92,181 |
$ 11,228,087 |
$ 11,489,900 |
Covered loans |
910 |
129,257 |
6,521 |
14,571 |
506,266 |
657,525 |
Total loans, net of unearned
income |
$ 113,053 |
$ 136,570 |
$ 56,697 |
$ 106,752 |
$ 11,734,353 |
$ 12,147,425 |
|
(1) Purchased
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 |
|
|
|
|
and still |
days past |
days past |
|
|
Aging as a % of Loan
Balance: |
Nonaccrual |
accruing |
due |
due |
Current |
Total Loans |
Commercial |
|
|
|
|
|
|
Commercial and industrial |
1.0% |
—% |
0.4% |
1.1% |
97.5% |
100.0% |
Franchise |
1.0 |
— |
— |
— |
99.0 |
100.0 |
Mortgage warehouse lines of
credit |
— |
— |
— |
— |
100.0 |
100.0 |
Community Advantage—homeowners
association |
— |
— |
— |
— |
100.0 |
100.0 |
Aircraft |
2.0 |
— |
— |
0.7 |
97.3 |
100.0 |
Asset-based lending |
0.1 |
— |
0.2 |
1.0 |
98.7 |
100.0 |
Municipal |
— |
— |
— |
— |
100.0 |
100.0 |
Leases |
— |
— |
— |
— |
100.0 |
100.0 |
Other |
— |
— |
— |
— |
100.0 |
100.0 |
Purchased non-covered
commercial (1) |
— |
8.4 |
— |
— |
91.6 |
100.0 |
Total commercial |
0.6 |
— |
0.3 |
0.8 |
98.3 |
100.0 |
Commercial real-estate |
|
|
|
|
|
|
Residential construction |
4.8 |
— |
6.8 |
— |
88.4 |
100.0 |
Commercial construction |
2.0 |
— |
0.1 |
7.7 |
90.2 |
100.0 |
Land |
8.0 |
— |
2.3 |
2.3 |
87.4 |
100.0 |
Office |
1.1 |
— |
1.0 |
1.2 |
96.7 |
100.0 |
Industrial |
0.3 |
— |
0.1 |
0.3 |
99.3 |
100.0 |
Retail |
1.8 |
— |
0.3 |
1.0 |
96.9 |
100.0 |
Multi-family |
0.9 |
— |
0.8 |
— |
98.3 |
100.0 |
Mixed use and other |
1.7 |
— |
0.8 |
1.2 |
96.3 |
100.0 |
Purchased non-covered
commercial real-estate (1) |
— |
2.2 |
0.3 |
0.8 |
96.7 |
100.0 |
Total commercial
real-estate |
1.6 |
— |
0.7 |
1.2 |
96.5 |
100.0 |
Home equity |
1.4 |
— |
0.7 |
0.7 |
97.2 |
100.0 |
Residential real estate |
4.1 |
— |
0.9 |
0.7 |
94.3 |
100.0 |
Purchased non-covered residential real estate
(1) |
— |
— |
— |
— |
100.0 |
100.0 |
Premium finance receivables |
|
|
|
|
|
|
Commercial insurance loans |
0.4 |
0.3 |
0.3 |
0.7 |
98.3 |
100.0 |
Life insurance loans |
— |
— |
— |
— |
100.0 |
100.0 |
Purchased life insurance loans
(1) |
— |
— |
— |
— |
100.0 |
100.0 |
Indirect consumer |
0.1 |
0.3 |
0.1 |
0.4 |
99.1 |
100.0 |
Consumer and other |
1.4 |
— |
0.4 |
0.8 |
97.4 |
100.0 |
Purchased non-covered consumer and other
(1) |
— |
— |
— |
— |
100.0 |
100.0 |
Total loans, net of unearned
income, excluding covered loans |
1.0% |
0.1% |
0.4% |
0.8% |
97.7% |
100.0% |
Covered loans |
0.1 |
19.7 |
1.0 |
2.2 |
77.0 |
100.0 |
Total loans, net of unearned
income |
0.9% |
1.1% |
0.5% |
0.9% |
96.6% |
100.0% |
Non-performing Assets, excluding covered assets
The following table sets forth Wintrust's non-performing assets,
excluding covered assets and purchased non-covered loans acquired
with evidence of credit quality deterioration since origination, at
the dates indicated.
|
December 31, |
September 30, |
December 31, |
(Dollars in thousands) |
2012 |
2012 |
2011 |
Loans past due greater than 90 days
and still accruing: |
|
|
|
Commercial |
$ — |
$ — |
$ — |
Commercial real-estate |
— |
— |
— |
Home equity |
100 |
— |
— |
Residential real-estate |
— |
— |
— |
Premium finance
receivables—commercial |
10,008 |
5,533 |
5,281 |
Premium finance
receivables—life insurance |
— |
— |
— |
Indirect consumer |
189 |
215 |
314 |
Consumer and other |
32 |
— |
— |
Total loans past due greater
than 90 days and still accruing |
10,329 |
5,748 |
5,595 |
Non-accrual loans: |
|
|
|
Commercial |
21,737 |
17,711 |
19,018 |
Commercial real-estate |
49,973 |
58,461 |
66,508 |
Home equity |
13,423 |
11,504 |
14,164 |
Residential real-estate |
11,728 |
15,393 |
6,619 |
Premium finance
receivables—commercial |
9,302 |
7,488 |
7,755 |
Premium finance
receivables—life insurance |
25 |
29 |
54 |
Indirect consumer |
55 |
72 |
138 |
Consumer and other |
1,511 |
1,485 |
233 |
Total non-accrual loans |
107,754 |
112,143 |
114,489 |
Total non-performing
loans: |
|
|
|
Commercial |
21,737 |
17,711 |
19,018 |
Commercial real-estate |
49,973 |
58,461 |
66,508 |
Home equity |
13,523 |
11,504 |
14,164 |
Residential real-estate |
11,728 |
15,393 |
6,619 |
Premium finance
receivables—commercial |
19,310 |
13,021 |
13,036 |
Premium finance
receivables—life insurance |
25 |
29 |
54 |
Indirect consumer |
244 |
287 |
452 |
Consumer and other |
1,543 |
1,485 |
233 |
Total non-performing loans |
$ 118,083 |
$ 117,891 |
$ 120,084 |
Other real estate owned |
56,174 |
61,897 |
79,093 |
Other real estate
owned—obtained in acquisition |
6,717 |
5,480 |
7,430 |
Total non-performing
assets |
$ 180,974 |
$ 185,268 |
$ 206,607 |
Total non-performing
loans by category as a percent of its own respective
category's period-end balance: |
|
|
|
Commercial |
0.75% |
0.64% |
0.76% |
Commercial real-estate |
1.29 |
1.58 |
1.89 |
Home equity |
1.72 |
1.42 |
1.64 |
Residential real-estate |
3.19 |
4.09 |
1.89 |
Premium finance
receivables—commercial |
0.97 |
0.66 |
0.92 |
Premium finance
receivables—life insurance |
— |
— |
— |
Indirect consumer |
0.32 |
0.37 |
0.70 |
Consumer and other |
1.48 |
1.36 |
0.19 |
Total loans, net of unearned
income |
1.00% |
1.03% |
1.14% |
Total non-performing
assets, as a percentage of total assets |
1.03% |
1.09% |
1.30% |
Allowance for loan
losses as a percentage of total non-performing
loans |
90.91% |
95.25% |
91.92% |
Non-performing Commercial and Commercial Real Estate
Commercial non-performing loans totaled $21.7 million as of
December 31, 2012 compared to $17.7 million as of
September 30, 2012 and $19.0 million as of December 31,
2011. Commercial real estate non-performing loans totaled $50.0
million as of December 31, 2012 compared to $58.5 million as
of September 30, 2012 and $66.5 million as of
December 31, 2011.
Management is pursuing the resolution of all credits in this
category. At this time, management believes reserves are
appropriate to absorb inherent losses that are expected to occur
upon the ultimate resolution of these credits.
Non-performing Residential Real Estate and Home Equity
Non-performing home equity and residential real estate loans
totaled $25.3 million as of December 31, 2012. The
balance decreased $1.6 million from September 30, 2012 and
increased $4.5 million from December 31, 2011. The
December 31, 2012 non-performing balance is comprised of $11.7
million of residential real estate (54 individual credits) and
$13.5 million of home equity loans (53 individual credits). On
average, this is approximately 7 non-performing residential real
estate loans and home equity loans per chartered bank within the
Company. The Company believes control and collection of these loans
is very manageable. At this time, management believes reserves are
adequate to absorb inherent losses that may occur upon the ultimate
resolution of these credits.
Non-performing Commercial Insurance Premium Finance
Receivables
The table below presents the level of non-performing property
and casualty premium finance receivables as of December 31,
2012 and 2011, and the amount of net charge-offs for the quarters
then ended.
|
December 31, |
December 31, |
(Dollars in thousands) |
2012 |
2011 |
Non-performing premium finance
receivables—commercial |
$ 19,310 |
$ 13,036 |
- as a percent of premium
finance receivables—commercial outstanding |
0.97% |
0.92% |
Net charge-offs (recoveries) of premium
finance receivables—commercial |
$ 1,034 |
$ 1,275 |
- annualized as a percent
of average premium finance receivables—commercial |
0.21% |
0.35% |
Fluctuations in this category may occur due to timing and nature
of account collections from insurance carriers. The Company's
underwriting standards, regardless of the condition of the economy,
have remained consistent. We anticipate that net charge-offs and
non-performing asset levels in the near term will continue to be at
levels that are within acceptable operating ranges for this
category of loans. Management is comfortable with administering the
collections at this level of non-performing property and casualty
premium finance receivables and believes reserves are adequate to
absorb inherent losses that may occur upon the ultimate resolution
of these credits.
Due to the nature of collateral for commercial premium finance
receivables, it customarily takes 60-150 days to convert the
collateral into cash. Accordingly, the level of non-performing
commercial premium finance receivables is not necessarily
indicative of the loss inherent in the portfolio. In the event of
default, Wintrust has the power to cancel the insurance policy and
collect the unearned portion of the premium from the insurance
carrier. In the event of cancellation, the cash returned in payment
of the unearned premium by the insurer should generally be
sufficient to cover the receivable balance, the interest and other
charges due. Due to notification requirements and processing time
by most insurance carriers, many receivables will become delinquent
beyond 90 days while the insurer is processing the return of the
unearned premium. Management continues to accrue interest until
maturity as the unearned premium is ordinarily sufficient to
pay-off the outstanding balance and contractual interest due.
During the fourth quarter of 2012, our commercial premium
finance receivable portfolio experienced a temporary increase in
past due balances of approximately $4 million as emergency orders
preventing insurance carriers from canceling policies were issued
by states affected by Superstorm Sandy. We do not expect to
incur any material additional losses as a result of this event and
anticipate the higher past due balances to decline during the first
quarter of 2013, with levels of past due loans in this segment
returning to historical levels.
Nonperforming Loans Rollforward
The table below presents a summary of the changes in the balance
of non-performing loans, excluding covered loans, for the three and
twelve month periods ending December 31, 2012 and 2011:
|
Three Months
Ended |
Years
Ended |
|
December 31, |
December 31, |
December 31, |
December 31, |
(Dollars in thousands) |
2012 |
2011 |
2012 |
2011 |
Balance at beginning of period |
$ 117,891 |
$ 133,976 |
$ 120,084 |
$ 141,958 |
Additions, net |
28,199 |
25,049 |
109,378 |
166,459 |
Return to performing
status |
(94) |
(2,285) |
(3,137) |
(7,800) |
Payments received |
(12,014) |
(10,426) |
(41,250) |
(44,804) |
Transfer to OREO |
(7,359) |
(6,182) |
(25,275) |
(59,203) |
Charge-offs |
(14,848) |
(18,614) |
(48,408) |
(68,608) |
Net change for niche loans
(1) |
6,308 |
(1,434) |
6,691 |
(7,918) |
Balance at end of
period |
$ 118,083 |
$ 120,084 |
$ 118,083 |
$ 120,084 |
|
(1) This
includes activity for premium finance receivables and indirect
consumer loans. |
Restructured Loans
The table below presents a summary of restructured loans for the
respective period, presented by loan category and accrual
status:
|
December 31, |
September 30, |
December 31, |
(Dollars in thousands) |
2012 |
2012 |
2011 |
Accruing: |
|
|
|
Commercial |
$ 11,871 |
$ 21,126 |
$ 9,270 |
Commercial real estate |
89,906 |
102,251 |
104,864 |
Residential real estate and
other |
4,342 |
5,014 |
5,786 |
Total accrual |
$ 106,119 |
$ 128,391 |
$ 119,920 |
Non-accrual: (1) |
|
|
|
Commercial |
$ 6,124 |
$ 924 |
$ 1,564 |
Commercial real estate |
12,509 |
15,399 |
7,932 |
Residential real estate and
other |
1,721 |
2,482 |
1,102 |
Total non-accrual |
$ 20,354 |
$ 18,805 |
$ 10,598 |
Total restructured
loans: |
|
|
|
Commercial |
$ 17,995 |
$ 22,050 |
$ 10,834 |
Commercial real estate |
102,415 |
117,650 |
112,796 |
Residential real estate and
other |
6,063 |
7,496 |
6,888 |
Total restructured loans |
$ 126,473 |
$ 147,196 |
$ 130,518 |
Weighted-average contractual interest
rate of restructured loans |
4.11% |
4.21% |
4.23% |
|
(1) Included
in total non-performing loans. |
At December 31, 2012, the Company had $126.5 million in
loans with modified terms representing 165 credits in which
economic concessions were granted to certain borrowers to better
align the terms of their loans with their current ability to
pay.
The table below presents a summary of restructured loans as of
December 31, 2012 and December 31, 2011, and shows the
changes in the balance during the periods presented:
Three Months Ended
December 31, 2012 |
|
|
|
Residential |
|
|
|
Commercial |
Real estate |
|
(Dollars in thousands) |
Commercial |
Real estate |
and Other |
Total |
Balance at beginning of period |
$ 22,050 |
$ 117,650 |
$ 7,496 |
$ 147,196 |
Additions during the period |
987 |
1,547 |
126 |
2,660 |
Reductions: |
|
|
|
|
Charge-offs |
(4,361) |
(1,723) |
(764) |
(6,848) |
Transferred to OREO |
— |
(955) |
(449) |
(1,404) |
Removal of restructured loan
status (1) |
— |
(4,488) |
— |
(4,488) |
Payments received |
(681) |
(9,616) |
(346) |
(10,643) |
Balance at period end |
$ 17,995 |
$ 102,415 |
$ 6,063 |
$ 126,473 |
|
|
|
|
|
Three Months Ended
December 31, 2011 |
|
|
|
Residential |
|
|
|
Commercial |
Real estate |
|
(Dollars in thousands) |
Commercial |
Real estate |
and Other |
Total |
Balance at beginning of period |
$ 11,519 |
$ 87,629 |
$ 5,244 |
$ 104,392 |
Additions during the period |
1,837 |
40,251 |
2,455 |
44,543 |
Reductions: |
|
|
|
|
Charge-offs |
(2,178) |
(3,370) |
(749) |
(6,297) |
Transferred to OREO |
— |
(1,545) |
— |
(1,545) |
Removal of restructured loan
status (1) |
— |
(3,941) |
— |
(3,941) |
Payments received |
(344) |
(6,228) |
(62) |
(6,634) |
Balance at period end |
$ 10,834 |
$ 112,796 |
$ 6,888 |
$ 130,518 |
|
(1) Loan was
previously classified as a troubled debt restructuring and
subsequently performed in compliance with the loan's modified terms
for a period of six months (including over a calendar year-end) at
a modified interest rate which represented a market rate at the
time of restructuring. Per our TDR policy, the TDR classification
is removed. |
|
|
|
|
|
Year Ended December 31,
2012 |
|
|
|
Residential |
|
|
|
Commercial |
Real estate |
|
(Dollars in thousands) |
Commercial |
Real estate |
and Other |
Total |
Balance at beginning of period |
$ 10,834 |
$ 112,796 |
$ 6,888 |
$ 130,518 |
Additions during the period |
14,312 |
56,564 |
1,672 |
72,548 |
Reductions: |
|
|
|
|
Charge-offs |
(5,160) |
(13,259) |
(1,396) |
(19,815) |
Transferred to OREO |
— |
(4,096) |
(449) |
(4,545) |
Removal of restructured loan
status (1) |
(363) |
(6,365) |
(273) |
(7,001) |
Payments received |
(1,628) |
(43,225) |
(379) |
(45,232) |
Balance at period end |
$ 17,995 |
$ 102,415 |
$ 6,063 |
$ 126,473 |
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
2011 |
|
|
|
Residential |
|
|
|
Commercial |
Real estate |
|
(Dollars in thousands) |
Commercial |
Real estate |
and Other |
Total |
Balance at beginning of period |
$ 18,028 |
$ 81,366 |
$ 1,796 |
$ 101,190 |
Additions during the period |
6,956 |
87,656 |
5,916 |
100,528 |
Reductions: |
|
|
|
|
Charge-offs |
(5,959) |
(16,396) |
(753) |
(23,108) |
Transferred to OREO |
— |
(8,288) |
— |
(8,288) |
Removal of restructured loan
status (1) |
(6,588) |
(9,537) |
— |
(16,125) |
Payments received |
(1,603) |
(22,005) |
(71) |
(23,679) |
Balance at period end |
$ 10,834 |
$ 112,796 |
$ 6,888 |
$ 130,518 |
|
(1) Loan was
previously classified as a troubled debt restructuring and
subsequently performed in compliance with the loan's modified terms
for a period of six months (including over a calendar year-end) at
a modified interest rate which represented a market rate at the
time of restructuring. Per our TDR policy, the TDR classification
is removed. |
The Company's approach to restructuring loans is built on its
credit risk rating system which requires credit management
personnel to assign a credit risk rating to each loan. In each
case, the loan officer is responsible for recommending a credit
risk rating for each loan and ensuring the credit risk ratings are
appropriate. These credit risk ratings are then reviewed and
approved by the bank's chief credit officer or the director's loan
committee. Credit risk ratings are determined by evaluating a
number of factors including a borrower's financial strength, cash
flow coverage, collateral protection and guarantees. The Company's
credit risk rating scale is one through ten with higher scores
indicating higher risk. In the case of loans rated six or worse
following modification, the Company's Managed Assets Division
evaluates the loan and the credit risk rating and determines that
the loan has been restructured to be reasonably assured of
repayment and of performance according to the modified terms and is
supported by a current, well-documented credit assessment of the
borrower's financial condition and prospects for repayment under
the revised terms.
A modification of a loan with an existing credit risk rating of
six or worse or a modification of any other credit, which will
result in a restructured credit risk rating of six or worse must be
reviewed for troubled debt restructuring ("TDR") classification. In
that event, our Managed Assets Division conducts an overall credit
and collateral review. A modification of a loan is considered to be
a TDR if both (1) the borrower is experiencing financial
difficulty and (2) for economic or legal reasons, the bank
grants a concession to a borrower that it would not otherwise
consider. The modification of a loan where the credit risk rating
is five or better both before and after such modification are not
reviewed for TDR status. Based on the Company's credit risk rating
system, it considers that borrowers whose credit risk rating is
five or better are not experiencing financial difficulties and
therefore, are not considered TDRs.
TDRs are reviewed at the time of modification and on a quarterly
basis to determine if a specific reserve is needed. The carrying
amount of the loan is compared to the expected payments to be
received, discounted at the loan's original rate, or for collateral
dependent loans, to the fair value of the collateral. Any shortfall
is recorded as a specific reserve.
All credits determined to be a TDR will continue to be
classified as a TDR in all subsequent periods, unless the borrower
has been in compliance with the loan's modified terms for a period
of six months (including over a calendar year-end) and the modified
interest rate represented a market rate at the time of a
restructuring. The Managed Assets Division, in consultation with
the respective loan officer, determines whether the modified
interest rate represented a current market rate at the time of
restructuring. Using knowledge of current market conditions and
rates, competitive pricing on recent loan originations, and an
assessment of various characteristics of the modified loan
(including collateral position and payment history), an appropriate
market rate for a new borrower with similar risk is determined. If
the modified interest rate meets or exceeds this market rate for a
new borrower with similar risk, the modified interest rate
represents a market rate at the time of restructuring.
Additionally, before removing a loan from TDR classification, a
review of the current or previously measured impairment on the loan
and any concerns related to future performance by the borrower is
conducted. If concerns exist about the future ability of the
borrower to meet its obligations under the loans based on a credit
review by the Managed Assets Division, the TDR classification is
not removed from the loan.
Each restructured loan was reviewed for impairment at
December 31, 2012 and approximately $2.2 million of impairment
was present and appropriately reserved for through the Company's
normal reserving methodology in the Company's allowance for loan
losses.
Other Real Estate Owned
The table below presents a summary of other real estate owned,
excluding covered other real estate owned, as of December 31,
2012 and shows the activity for the respective period and the
balance for each property type:
|
Three Months Ended |
|
December 31, |
September 30, |
December 31, |
(Dollars in thousands) |
2012 |
2012 |
2011 |
Balance at beginning of period |
$ 67,377 |
$ 72,553 |
$ 96,924 |
Disposals/resolved |
(12,516) |
(10,604) |
(7,722) |
Transfers in at fair value,
less costs to sell |
8,030 |
6,895 |
6,084 |
Additions from acquisition |
2,923 |
— |
— |
Fair value adjustments |
(2,923) |
(1,467) |
(8,763) |
Balance at end of period |
$ 62,891 |
$ 67,377 |
$ 86,523 |
|
|
|
|
|
Period End |
|
December 31, |
September 30, |
December 31, |
Balance by Property Type |
2012 |
2012 |
2011 |
Residential real estate |
$ 9,077 |
$ 8,241 |
$ 7,327 |
Residential real estate development |
12,144 |
13,872 |
19,923 |
Commercial real estate |
41,670 |
45,264 |
59,273 |
Total |
$ 62,891 |
$ 67,377 |
$ 86,523 |
Covered Assets
In conjunction with FDIC-assisted transactions, the Company
entered into loss share agreements with the FDIC. These agreements
cover realized losses on loans, foreclosed real estate and certain
other assets. These loss share assets are measured separately from
the loan portfolios because they are not contractually embedded in
the loans and are not transferable with the loans should the
Company choose to dispose of them. Fair values at the acquisition
dates were estimated based on projected cash flows available for
loss-share based on the credit adjustments estimated for each loan
pool and the loss share percentages. The loss share assets are also
separately measured from the related loans and foreclosed real
estate and recorded separately on the Consolidated Statements of
Condition. Subsequent to the acquisition date, reimbursements
received from the FDIC for actual incurred losses will reduce the
loss share assets. Additional expected losses, to the extent such
expected losses result in the recognition of an allowance for loan
losses, will increase the loss share assets. The loss share
agreements with the FDIC require the Company to reimburse the FDIC
in the event that actual losses on covered assets are lower than
the original loss estimates agreed upon with the FDIC with respect
of such assets in the loss share agreements. The allowance for loan
losses for loans acquired in FDIC-assisted transactions is
determined without giving consideration to the amounts recoverable
through loss share agreements (since the loss share agreements are
separately accounted for and thus presented "gross" on the balance
sheet). On the Consolidated Statements of Income, the provision for
credit losses is reported net of changes in the amount recoverable
under the loss share agreements. Reductions to expected losses, to
the extent such reductions to expected losses are the result of an
improvement to the actual or expected cash flows from the covered
assets, will reduce the loss share assets. The increases in cash
flows for the purchased loans are recognized as interest income
prospectively.
The following table provides a comparative analysis for the
period end balances of the covered asset components and any changes
in the allowance for covered loan losses.
|
December 31, |
September 30, |
December 31, |
(Dollars in thousands) |
2012 |
2012 |
2011 |
Period End Balances: |
|
|
|
Loans |
$ 560,087 |
$ 657,525 |
$ 651,368 |
Other real estate owned |
82,908 |
49,623 |
47,459 |
Other assets |
1,097 |
915 |
— |
FDIC indemnification asset |
208,160 |
238,305 |
344,251 |
Total covered assets |
$ 852,252 |
$ 946,368 |
$ 1,043,078 |
Allowance for Covered Loan Losses
Rollforward |
|
|
|
Balance at beginning of
quarter: |
$ 21,926 |
$ 20,560 |
$ 12,496 |
Provision for
covered loan losses before benefit attributable to FDIC loss share
agreements |
(5,634) |
3,096 |
10,693 |
Benefit
attributable to FDIC loss share agreements |
4,508 |
(2,489) |
(8,554) |
Net provision for
covered loan losses |
(1,126) |
607 |
2,139 |
(Decrease)
increase in FDIC indemnification asset |
(4,508) |
2,489 |
8,554 |
Loans
charged-off |
(2,869) |
(1,736) |
(10,212) |
Recoveries of
loans charged-off |
31 |
6 |
— |
Net
charge-offs |
(2,838) |
(1,730) |
(10,212) |
Balance at end of quarter |
$ 13,454 |
$ 21,926 |
$ 12,977 |
Changes in Accretable Yield
The excess of cash flows expected to be collected over the
carrying value of loans accounted for under ASC 310-30 is referred
to as the accretable yield and is recognized in interest income
using an effective yield method over the remaining life of the pool
of loans. The accretable yield is affected by:
- Changes in interest rate indices for variable rate loans
accounted for under ASC 310-30 – Expected future cash flows are
based on the variable rates in effect at the time of the regular
evaluations of cash flows expected to be collected;
- Changes in prepayment assumptions – Prepayments affect the
estimated life of loans accounted for under ASC 310-30 which may
change the amount of interest income, and possibly principal,
expected to be collected; and
- Changes in the expected principal and interest payments over
the estimated life – Updates to expected cash flows are driven by
the credit outlook and actions taken with borrowers. Changes in
expected future cash flows from loan modifications are included in
the regular evaluations of cash flows expected to be
collected.
The following table provides activity for the accretable yield
of loans accounted for under ASC 310-30.
|
Three months
ended |
Three months ended |
|
December 31,
2012 |
December 31, 2011 |
|
|
Life Insurance |
|
Life Insurance |
|
Bank |
Premium |
Bank |
Premium |
(Dollars in thousands) |
Acquisitions |
Finance Loans |
Acquisitions |
Finance Loans |
Accretable yield, beginning balance |
$ 151,800 |
$ 15,426 |
$ 86,497 |
$ 20,196 |
Acquisitions |
(878) |
— |
(350) |
— |
Accretable yield amortized to interest
income |
(11,556) |
(2,646) |
(14,302) |
(2,808) |
Accretable yield amortized to indemnification
asset (1) |
(10,886) |
— |
(20,843) |
— |
Reclassification from non-accretable
difference (2) |
10,776 |
— |
110,583 |
1,358 |
Increases in interest cash flows due to
payments and changes in interest rates |
3,213 |
275 |
11,535 |
115 |
Accretable yield, ending balance (3) |
$ 142,469 |
$ 13,055 |
$ 173,120 |
$ 18,861 |
|
|
|
|
|
|
Year
ended |
Year ended |
|
December 31,
2012 |
December 31, 2011 |
|
|
Life Insurance |
|
Life Insurance |
|
Bank |
Premium |
Bank |
Premium |
(Dollars in thousands) |
Acquisitions |
Finance Loans |
Acquisitions |
Finance Loans |
Accretable yield, beginning balance |
$ 173,120 |
$ 18,861 |
$ 39,809 |
$ 33,315 |
Acquisitions |
7,462 |
— |
29,447 |
— |
Accretable yield amortized to interest
income |
(52,101) |
(11,441) |
(39,171) |
(22,109) |
Accretable yield amortized to indemnification
asset (1) |
(66,798) |
— |
(37,888) |
— |
Reclassification from non-accretable
difference (2) |
64,603 |
4,096 |
163,403 |
5,215 |
Increases in interest cash flows due to
payments and changes in interest rates |
16,183 |
1,539 |
17,520 |
2,440 |
Accretable yield, ending balance (3) |
$ 142,469 |
$ 13,055 |
$ 173,120 |
$ 18,861 |
|
(1) Represents the portion
of the current period accreted yield, resulting from lower expected
losses, applied to reduce the loss share indemnification
asset. |
(2) Reclassification is the
result of subsequent increases in expected principal cash
flows. |
(3) As of December 31,
2012, the Company estimates that the remaining accretable yield
balance to be amortized to the indemnification asset for the bank
acquisitions is $54.5 million. The remainder of the accretable
yield related to bank acquisitions is expected to be amortized to
interest income. |
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, North Shore
Community Bank & Trust Company in Wilmette, Libertyville
Bank & Trust Company, Barrington Bank & Trust
Company, Crystal Lake Bank & Trust Company, Northbrook
Bank & Trust Company, Schaumburg Bank & Trust
Company, N.A., Village Bank & Trust in Arlington Heights,
Beverly Bank & Trust Company 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,
Bloomingdale, Buffalo Grove, Cary, Chicago, Cicero, Clarendon
Hills, Crete, Deerfield, Downers Grove, Elgin, Frankfort, Geneva,
Glencoe, Glen Ellyn, Gurnee, Grayslake, Hanover Park, Highland
Park, Highwood, Hoffman Estates, Island Lake, Itasca, Lake Bluff,
Lake Villa, Lindenhurst, McHenry, Mokena, Mount Prospect,
Mundelein, Naperville, North Chicago, Northfield, Norridge, Orland
Park, Palatine, Park Ridge, Prospect Heights, Ravinia, Riverside,
Rogers Park, Roselle, Skokie, Spring Grove, Steger, Vernon Hills,
Wauconda, Western Springs, Willowbrook, Winnetka and Wood Dale and
in Delafield, Elm Grove, Madison, Menomenee Falls and Wales,
Wisconsin.
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.
- Advanced Investment Partners, LLC is an investment management
firm specializing in the active management of domestic equity
investment strategies.
- The Chicago Trust Company, a trust subsidiary, allows Wintrust
to service customers' trust and investment needs at each banking
location.
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 2011 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;
- 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;
- 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);
- 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 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;
- adverse effects on our information technology systems resulting
from failures, human error or tampering;
- accuracy and completeness of information the Company receives
about customers and counterparties to make credit decisions;
- the 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;
- losses incurred in connection with repurchases and
indemnification payments related to mortgages;
- 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 possibility that certain European Union member states will
default on their debt obligations, which may affect the Company's
liquidity, financial conditions and results of operations;
- 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;
- restrictions on 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;
- changes in capital requirements resulting from Basel II and III
initiatives;
- 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;
- fluctuations in the stock market, which may have an adverse
impact on the Company's wealth management business and brokerage
operation; and
- significant litigation involving the Company.
Therefore, there can be no assurances that future actual results
will correspond to these forward-looking statements. The reader is
cautioned not to place undue reliance on any forward-looking
statement made by the Company. Any such statement speaks only as of
the date the statement was made or as of such date that may be
referenced within the statement. The Company undertakes no
obligation to update any forward-looking statement to reflect the
impact of circumstances after the date of the press release.
Persons are advised, however, to consult further disclosures
management makes on related subjects in its reports filed with the
Securities and Exchange Commission and in its press releases.
CONFERENCE CALL, WEB CAST AND REPLAY
The Company will hold a conference call at 12:00 p.m. (CT)
Friday, January 18, 2013 regarding fourth quarter 2012
results. Individuals interested in listening should call
(877) 363-5049 and enter Conference ID #88754309. A
simultaneous audio-only web cast and replay of the conference call
may be accessed via the Company's web site at
(http://www.wintrust.com), Investor Relations, Investor News and
Events, Presentations & Conference Calls. The text of the
fourth quarter 2012 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 |
|
December 31,
2012 |
September 30, 2012 |
June 30, 2012 |
March 31, 2012 |
December 31, 2011 |
Selected Financial Condition Data (at
end of period): |
|
|
|
|
|
Total assets |
$ 17,519,613 |
$ 17,018,592 |
$ 16,576,282 |
$ 16,172,018 |
$ 15,893,808 |
Total loans, excluding covered loans |
11,828,943 |
11,489,900 |
11,202,842 |
10,717,384 |
10,521,377 |
Total deposits |
14,428,544 |
13,847,965 |
13,057,581 |
12,665,853 |
12,307,267 |
Junior subordinated debentures |
249,493 |
249,493 |
249,493 |
249,493 |
249,493 |
Total shareholders' equity |
1,804,705 |
1,761,300 |
1,722,074 |
1,687,921 |
1,543,533 |
Selected Statements of Income
Data: |
|
|
|
|
|
Net interest income |
132,776 |
132,575 |
128,270 |
125,895 |
124,647 |
Net revenue (1) |
197,965 |
195,520 |
179,205 |
172,918 |
169,559 |
Pre-tax adjusted earnings (2) |
72,034 |
68,923 |
68,841 |
63,688 |
59,362 |
Net income |
30,089 |
32,302 |
25,595 |
23,210 |
19,221 |
Net income per common share – Basic |
$ 0.75 |
$ 0.82 |
$ 0.63 |
$ 0.61 |
$ 0.51 |
Net income per common share – Diluted |
$ 0.61 |
$ 0.66 |
$ 0.52 |
$ 0.50 |
$ 0.41 |
Selected Financial Ratios and Other
Data: |
|
|
|
|
|
Performance Ratios: |
|
|
|
|
|
Net interest margin (2) |
3.40 % |
3.50 % |
3.51 % |
3.55 % |
3.45 % |
Non-interest income to average assets |
1.50 % |
1.50 % |
1.26 % |
1.19 % |
1.11 % |
Non-interest expense to average assets |
2.99 % |
2.97 % |
2.89 % |
2.99 % |
2.94 % |
Net overhead ratio (2) (3) |
1.48 % |
1.47 % |
1.63 % |
1.80 % |
1.83 % |
Net overhead ratio - pre-tax adjusted
earnings (2) (3) |
1.40 % |
1.52 % |
1.46 % |
1.58 % |
1.62 % |
Efficiency ratio - FTE (2) (4) |
66.13 % |
63.67 % |
65.63 % |
68.24 % |
69.99 % |
Efficiency ratio - pre-tax adjusted earnings
(2) (4) |
62.75 % |
63.48 % |
61.38 % |
62.31 % |
64.76 % |
Return on average assets |
0.69 % |
0.77 % |
0.63 % |
0.59 % |
0.48 % |
Return on average common equity |
6.79 % |
7.57 % |
6.08 % |
5.90 % |
4.87 % |
Average total assets |
$ 17,248,650 |
$ 16,705,429 |
$ 16,319,207 |
$ 15,835,350 |
$ 16,014,209 |
Average total shareholders' equity |
1,786,824 |
1,736,740 |
1,695,440 |
1,564,662 |
1,531,936 |
Average loans to average deposits ratio |
85.6 % |
89.3 % |
88.2 % |
88.1 % |
86.6 % |
Average loans to average deposits ratio
(including covered loans) |
90.0 |
93.8 |
93.4 |
93.5 |
91.9 |
Common Share Data at end of
period: |
|
|
|
|
|
Market price per common share |
$ 36.70 |
$ 37.57 |
$ 35.50 |
$ 35.79 |
$ 28.05 |
Book value per common share (2) |
$ 37.78 |
$ 37.25 |
$ 35.86 |
$ 35.25 |
$ 34.23 |
Tangible common book value per share (2) |
$ 29.28 |
$ 28.93 |
$ 27.69 |
$ 27.57 |
$ 26.72 |
Common shares outstanding |
36,861,956 |
36,411,382 |
36,340,843 |
36,289,380 |
35,978,349 |
Other Data at end of
period:(8) |
|
|
|
|
|
Leverage Ratio(5) |
10.1 % |
10.2 % |
10.2 % |
10.5 % |
9.4 % |
Tier 1 Capital to risk-weighted assets
(5) |
12.0 % |
12.2 % |
12.2 % |
12.7 % |
11.8 % |
Total capital to risk-weighted assets
(5) |
13.0 % |
13.3 % |
13.4 % |
13.9 % |
13.0 % |
Tangible common equity ratio (TCE) (2)
(7) |
7.4 % |
7.4 % |
7.4 % |
7.5 % |
7.5 % |
Tangible common equity ratio, assuming full
conversion of preferred stock (2) (7) |
8.4 % |
8.4 % |
8.4 % |
8.6 % |
7.8 % |
Allowance for credit losses (6) |
$ 121,988 |
$ 124,914 |
$ 124,823 |
$ 124,101 |
$ 123,612 |
Non-performing loans |
118,083 |
117,891 |
120,920 |
113,621 |
120,084 |
Allowance for credit losses to total loans
(6) |
1.03 % |
1.09 % |
1.11 % |
1.16 % |
1.17 % |
Non-performing loans to total loans |
1.00 % |
1.03 % |
1.08 % |
1.06 % |
1.14 % |
Number of: |
|
|
|
|
|
Bank subsidiaries |
15 |
15 |
15 |
15 |
15 |
Non-bank subsidiaries |
8 |
8 |
8 |
7 |
7 |
Banking offices |
111 |
109 |
100 |
98 |
99 |
|
|
|
|
|
|
(1) Net revenue includes
net interest income and non-interest income |
(2) See "Supplemental
Financial Measures/Ratios" for additional information on this
performance measure/ratio. |
(3) The net overhead ratio
is calculated by netting total non-interest expense and total
non-interest income, annualizing this amount, and dividing by that
period's total average assets. A lower ratio indicates a higher
degree of efficiency. |
(4) The efficiency ratio is
calculated by dividing total non-interest expense by tax-equivalent
net revenue (less securities gains or losses). A lower ratio
indicates more efficient revenue generation. |
(5) Capital ratios for
current quarter-end are estimated. |
(6) The allowance for
credit losses includes both the allowance for loan losses and the
allowance for unfunded lending-related commitments, but excluding
the allowance for covered loan losses. |
(7) Total shareholders'
equity minus preferred stock and total intangible assets divided by
total assets minus total intangible assets |
(8) Asset quality ratios
exclude covered loans. |
|
|
WINTRUST FINANCIAL
CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION |
Consolidated Statements
of Condition - 5 Quarter Trends |
|
|
|
|
|
|
|
(Unaudited) |
(Unaudited) |
(Unaudited) |
(Unaudited) |
|
(In thousands) |
December 31,
2012 |
September 30, 2012 |
June 30, 2012 |
March 31, 2012 |
December 31, 2011 |
Assets |
|
|
|
|
|
Cash and due from banks |
$ 284,731 |
$ 186,752 |
$ 176,529 |
$ 146,014 |
$ 148,012 |
Federal funds sold and securities purchased
under resale agreements |
30,297 |
26,062 |
15,227 |
14,588 |
21,692 |
Interest-bearing deposits with other
banks |
1,035,743 |
934,430 |
1,117,888 |
900,755 |
749,287 |
Available-for-sale securities, at fair
value |
1,796,076 |
1,256,768 |
1,196,702 |
1,869,344 |
1,291,797 |
Trading account securities |
583 |
635 |
608 |
1,140 |
2,490 |
Federal Home Loan Bank and Federal Reserve
Bank stock, at cost |
79,564 |
80,687 |
92,792 |
88,216 |
100,434 |
Brokerage customer receivables |
24,864 |
30,633 |
31,448 |
31,085 |
27,925 |
Mortgage loans held-for-sale, at fair
value |
385,033 |
548,300 |
511,566 |
339,600 |
306,838 |
Mortgage loans held-for-sale, at lower of
cost or market |
27,167 |
21,685 |
14,538 |
10,728 |
13,686 |
Loans, net of unearned income, excluding
covered loans |
11,828,943 |
11,489,900 |
11,202,842 |
10,717,384 |
10,521,377 |
Covered loans |
560,087 |
657,525 |
614,062 |
691,220 |
651,368 |
Total loans |
12,389,030 |
12,147,425 |
11,816,904 |
11,408,604 |
11,172,745 |
Less: Allowance for loan losses |
107,351 |
112,287 |
111,920 |
111,023 |
110,381 |
Less: Allowance for covered loan
losses |
13,454 |
21,926 |
20,560 |
17,735 |
12,977 |
Net loans |
12,268,225 |
12,013,212 |
11,684,424 |
11,279,846 |
11,049,387 |
Premises and equipment, net |
501,205 |
461,905 |
449,608 |
434,700 |
431,512 |
FDIC indemnification asset |
208,160 |
238,305 |
222,568 |
263,212 |
344,251 |
Accrued interest receivable and other
assets |
511,617 |
557,884 |
710,275 |
463,394 |
444,912 |
Trade date securities receivable |
— |
307,295 |
— |
— |
634,047 |
Goodwill |
345,401 |
331,634 |
330,896 |
307,295 |
305,468 |
Other intangible assets |
20,947 |
22,405 |
21,213 |
22,101 |
22,070 |
Total assets |
$ 17,519,613 |
$ 17,018,592 |
$ 16,576,282 |
$ 16,172,018 |
$ 15,893,808 |
Liabilities and Shareholders'
Equity |
|
|
|
|
|
Deposits: |
|
|
|
|
|
Non-interest bearing |
$ 2,396,264 |
$ 2,162,215 |
$ 2,047,715 |
$ 1,901,753 |
$ 1,785,433 |
Interest bearing |
12,032,280 |
11,685,750 |
11,009,866 |
10,764,100 |
10,521,834 |
Total deposits |
14,428,544 |
13,847,965 |
13,057,581 |
12,665,853 |
12,307,267 |
Notes payable |
2,093 |
2,275 |
2,457 |
52,639 |
52,822 |
Federal Home Loan Bank advances |
414,122 |
414,211 |
564,301 |
466,391 |
474,481 |
Other borrowings |
274,411 |
377,229 |
375,523 |
411,037 |
443,753 |
Secured borrowings—owed to securitization
investors |
— |
— |
360,825 |
428,000 |
600,000 |
Subordinated notes |
15,000 |
15,000 |
15,000 |
35,000 |
35,000 |
Junior subordinated debentures |
249,493 |
249,493 |
249,493 |
249,493 |
249,493 |
Trade date securities payable |
— |
412 |
19,025 |
— |
47 |
Accrued interest payable and other
liabilities |
331,245 |
350,707 |
210,003 |
175,684 |
187,412 |
Total liabilities |
15,714,908 |
15,257,292 |
14,854,208 |
14,484,097 |
14,350,275 |
Shareholders' Equity: |
|
|
|
|
|
Preferred stock |
176,406 |
176,371 |
176,337 |
176,302 |
49,768 |
Common stock |
37,108 |
36,647 |
36,573 |
36,522 |
35,982 |
Surplus |
1,036,295 |
1,018,417 |
1,013,428 |
1,008,326 |
1,001,316 |
Treasury stock |
(7,838) |
(7,490) |
(7,374) |
(6,559) |
(112) |
Retained earnings |
555,023 |
527,550 |
501,139 |
478,160 |
459,457 |
Accumulated other comprehensive income
(loss) |
7,711 |
9,805 |
1,971 |
(4,830) |
(2,878) |
Total shareholders' equity |
1,804,705 |
1,761,300 |
1,722,074 |
1,687,921 |
1,543,533 |
Total liabilities and
shareholders' equity |
$ 17,519,613 |
$ 17,018,592 |
$ 16,576,282 |
$ 16,172,018 |
$ 15,893,808 |
|
|
WINTRUST FINANCIAL
CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION |
Consolidated Statements
of Income (Unaudited) - 5 Quarter Trends |
|
|
|
|
|
|
|
Three Months Ended |
|
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
(In thousands, except per share data) |
2012 |
2012 |
2012 |
2012 |
2011 |
Interest income |
|
|
|
|
|
Interest and fees on loans |
$ 146,946 |
$ 149,271 |
$ 144,100 |
$ 143,555 |
$ 143,514 |
Interest bearing deposits with banks |
739 |
362 |
203 |
248 |
696 |
Federal funds sold and securities
purchased under resale agreements |
13 |
7 |
6 |
12 |
33 |
Securities |
8,086 |
7,691 |
10,510 |
11,847 |
12,574 |
Trading account securities |
6 |
3 |
10 |
9 |
6 |
Federal Home Loan Bank and Federal
Reserve Bank stock |
656 |
649 |
641 |
604 |
591 |
Brokerage customer receivables |
197 |
218 |
221 |
211 |
203 |
Total interest income |
156,643 |
158,201 |
155,691 |
156,486 |
157,617 |
Interest expense |
|
|
|
|
|
Interest on deposits |
16,208 |
16,794 |
17,273 |
18,030 |
19,685 |
Interest on Federal Home Loan Bank
advances |
2,835 |
2,817 |
2,867 |
3,584 |
4,186 |
Interest on notes payable and other
borrowings |
1,566 |
2,024 |
2,274 |
3,102 |
2,804 |
Interest on secured borrowings—owed to
securitization investors |
— |
795 |
1,743 |
2,549 |
3,076 |
Interest on subordinated notes |
66 |
67 |
126 |
169 |
176 |
Interest on junior subordinated
debentures |
3,192 |
3,129 |
3,138 |
3,157 |
3,043 |
Total interest expense |
23,867 |
25,626 |
27,421 |
30,591 |
32,970 |
Net interest income |
132,776 |
132,575 |
128,270 |
125,895 |
124,647 |
Provision for credit losses |
19,546 |
18,799 |
20,691 |
17,400 |
18,817 |
Net interest income after provision for
credit losses |
113,230 |
113,776 |
107,579 |
108,495 |
105,830 |
Non—interest income |
|
|
|
|
|
Wealth management |
13,634 |
13,252 |
13,393 |
12,401 |
11,686 |
Mortgage banking |
34,702 |
31,127 |
25,607 |
18,534 |
18,025 |
Service charges on deposit accounts |
4,534 |
4,235 |
3,994 |
4,208 |
3,973 |
Gains on available-for-sale securities,
net |
2,561 |
409 |
1,109 |
816 |
309 |
Gain on bargain purchases, net |
85 |
6,633 |
(55) |
840 |
— |
Trading (losses) gains, net |
(120) |
(998) |
(928) |
146 |
216 |
Other |
9,793 |
8,287 |
7,815 |
10,078 |
10,703 |
Total non—interest income |
65,189 |
62,945 |
50,935 |
47,023 |
44,912 |
Non-interest expense |
|
|
|
|
|
Salaries and employee benefits |
76,140 |
75,280 |
68,139 |
69,030 |
66,744 |
Equipment |
6,468 |
5,888 |
5,466 |
5,400 |
5,093 |
Occupancy, net |
8,480 |
8,024 |
7,728 |
8,062 |
7,975 |
Data processing |
4,178 |
4,103 |
3,840 |
3,618 |
4,062 |
Advertising and marketing |
2,725 |
2,528 |
2,179 |
2,006 |
3,207 |
Professional fees |
3,158 |
4,653 |
3,847 |
3,604 |
3,710 |
Amortization of other intangible
assets |
1,108 |
1,078 |
1,089 |
1,049 |
1,062 |
FDIC insurance |
3,039 |
3,549 |
3,477 |
3,357 |
3,244 |
OREO expenses, net |
5,269 |
3,808 |
5,848 |
7,178 |
8,821 |
Other |
18,983 |
15,637 |
15,572 |
14,455 |
14,850 |
Total non—interest expense |
129,548 |
124,548 |
117,185 |
117,759 |
118,768 |
Income before taxes |
48,871 |
52,173 |
41,329 |
37,759 |
31,974 |
Income tax expense |
18,782 |
19,871 |
15,734 |
14,549 |
12,753 |
Net income |
$ 30,089 |
$ 32,302 |
$ 25,595 |
$ 23,210 |
$ 19,221 |
Preferred stock dividends and discount
accretion |
$ 2,616 |
$ 2,616 |
$ 2,644 |
$ 1,246 |
$ 1,032 |
Net income applicable to common
shares |
$ 27,473 |
$ 29,686 |
$ 22,951 |
$ 21,964 |
$ 18,189 |
Net income per common
share—Basic |
$ 0.75 |
$ 0.82 |
$ 0.63 |
$ 0.61 |
$ 0.51 |
Net income per common
share—Diluted |
$ 0.61 |
$ 0.66 |
$ 0.52 |
$ 0.50 |
$ 0.41 |
Cash dividends declared per common
share |
$ — |
$ 0.09 |
$ — |
$ 0.09 |
$ — |
Weighted average common shares
outstanding |
36,543 |
36,381 |
36,329 |
36,207 |
35,958 |
Dilutive potential common shares |
12,458 |
12,295 |
7,770 |
7,530 |
8,480 |
Average common shares and dilutive common
shares |
49,001 |
48,676 |
44,099 |
43,737 |
44,438 |
|
|
WINTRUST FINANCIAL
CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION |
Period End Loan Balances
- 5 Quarter Trends |
|
|
|
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
(Dollars in thousands) |
2012 |
2012 |
2012 |
2012 |
2011 |
Balance: |
|
|
|
|
|
Commercial |
$ 2,914,798 |
2,771,053 |
$ 2,673,181 |
$ 2,544,456 |
$ 2,498,313 |
Commercial real estate |
3,864,118 |
3,699,712 |
3,666,519 |
3,585,760 |
3,514,261 |
Home equity |
788,474 |
807,592 |
820,991 |
840,364 |
862,345 |
Residential real estate |
367,213 |
376,678 |
375,494 |
361,327 |
350,289 |
Premium finance
receivables—commercial |
1,987,856 |
1,982,945 |
1,830,044 |
1,512,630 |
1,412,454 |
Premium finance receivables—life
insurance |
1,725,166 |
1,665,620 |
1,656,200 |
1,693,763 |
1,695,225 |
Indirect consumer (1) |
77,333 |
77,378 |
72,482 |
67,445 |
64,545 |
Consumer and other |
103,985 |
108,922 |
107,931 |
111,639 |
123,945 |
Total loans, net of unearned income,
excluding covered loans |
$ 11,828,943 |
$ 11,489,900 |
$ 11,202,842 |
$ 10,717,384 |
$ 10,521,377 |
Covered loans |
560,087 |
657,525 |
614,062 |
691,220 |
651,368 |
Total loans, net of unearned income |
$ 12,389,030 |
$ 12,147,425 |
$ 11,816,904 |
$ 11,408,604 |
$ 11,172,745 |
Mix: |
|
|
|
|
|
Commercial |
24 % |
23 % |
23 % |
22 % |
22 % |
Commercial real estate |
31 |
30 |
31 |
32 |
31 |
Home equity |
6 |
7 |
7 |
7 |
8 |
Residential real estate |
3 |
3 |
3 |
3 |
3 |
Premium finance
receivables—commercial |
16 |
16 |
15 |
13 |
13 |
Premium finance receivables—life
insurance |
14 |
14 |
14 |
15 |
15 |
Indirect consumer (1) |
1 |
1 |
1 |
1 |
1 |
Consumer and other |
1 |
1 |
1 |
1 |
1 |
Total loans, net of unearned income,
excluding covered loans |
96 % |
95 % |
95 % |
94 % |
94 % |
Covered loans |
4 |
5 |
5 |
6 |
6 |
Total loans, net of unearned income |
100 % |
100 % |
100 % |
100 % |
100 % |
|
|
|
|
|
|
(1) Includes autos, boats,
snowmobiles and other indirect consumer loans. |
|
|
WINTRUST FINANCIAL
CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION |
Period End Deposits
Balances - 5 Quarter Trends |
|
|
(Dollars in thousands) |
December 31,
2012 |
September 30, 2012 |
June 30, 2012 |
March 31, 2012 |
December 31, 2011 |
Balance: |
|
|
|
|
|
Non-interest bearing |
$ 2,396,264 |
$ 2,162,215 |
$ 2,047,715 |
$ 1,901,753 |
$ 1,785,433 |
NOW |
2,022,957 |
1,841,743 |
1,780,872 |
1,756,313 |
1,698,778 |
Wealth management deposits (1) |
991,902 |
979,306 |
954,319 |
933,609 |
788,311 |
Money market |
2,761,498 |
2,596,702 |
2,335,238 |
2,306,726 |
2,263,253 |
Savings |
1,275,012 |
1,156,466 |
958,295 |
943,066 |
888,592 |
Time certificates of deposit |
4,980,911 |
5,111,533 |
4,981,142 |
4,824,386 |
4,882,900 |
Total deposits |
$ 14,428,544 |
$ 13,847,965 |
$ 13,057,581 |
$ 12,665,853 |
$ 12,307,267 |
Mix: |
|
|
|
|
|
Non-interest bearing |
17 % |
16 % |
16 % |
15 % |
15 % |
NOW |
14 |
13 |
14 |
14 |
14 |
Wealth management deposits (1) |
7 |
7 |
7 |
7 |
6 |
Money market |
19 |
19 |
18 |
18 |
18 |
Savings |
9 |
8 |
7 |
8 |
7 |
Time certificates of deposit |
34 |
37 |
38 |
38 |
40 |
Total deposits |
100 % |
100 % |
100 % |
100 % |
100 % |
|
|
|
|
|
|
(1) Represents deposit
balances of the Company's subsidiary banks from brokerage customers
of Wayne Hummer Investments, trust and asset management customers
of The Chicago Trust Company and brokerage customers from
unaffiliated companies which have been placed into deposit accounts
of the Banks. |
|
|
WINTRUST FINANCIAL
CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION |
Net Interest Margin
(Including Call Option Income) - 5 Quarter Trends |
|
|
|
|
|
|
|
Three Months Ended |
|
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
(Dollars in thousands) |
2012 |
2012 |
2012 |
2012 |
2011 |
Net interest income |
$ 133,285 |
$ 133,076 |
$ 128,741 |
$ 126,361 |
$ 125,101 |
Call option income |
2,156 |
2,083 |
3,114 |
3,123 |
5,377 |
Net interest income including call option
income |
$ 135,441 |
$ 135,159 |
$ 131,855 |
$ 129,484 |
$ 130,478 |
Yield on earning assets |
4.01 % |
4.18 % |
4.25 % |
4.41 % |
4.36 % |
Rate on interest-bearing liabilities |
0.74 |
0.81 |
0.89 |
1.00 |
1.05 |
Rate spread |
3.27 % |
3.37 % |
3.36 % |
3.41 % |
3.31 % |
Net free funds contribution |
0.13 |
0.13 |
0.15 |
0.14 |
0.14 |
Net interest margin |
3.40 |
3.50 |
3.51 |
3.55 |
3.45 |
Call option income |
0.05 |
0.05 |
0.08 |
0.09 |
0.15 |
Net interest margin including call option
income |
3.45 % |
3.55 % |
3.59 % |
3.64 % |
3.60 % |
|
|
WINTRUST FINANCIAL
CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION |
Net Interest Margin
(Including Call Option Income - YTD Trends) |
|
|
|
|
|
|
|
|
Years Ended December
31, |
(Dollars in thousands) |
2012 |
2011 |
2010 |
2009 |
2008 |
Net interest income |
$ 521,463 |
$ 463,071 |
$ 417,564 |
$ 314,096 |
$ 247,054 |
Call option income |
10,476 |
13,570 |
2,235 |
1,998 |
29,024 |
Net interest income including call option
income |
$ 531,939 |
$ 476,641 |
$ 419,799 |
$ 316,094 |
$ 276,078 |
Yield on earning assets |
4.21 % |
4.49 % |
4.80 % |
5.07 % |
5.88 % |
Rate on interest-bearing liabilities |
0.86 |
1.23 |
1.61 |
2.29 |
3.31 |
Rate spread |
3.35 % |
3.26 % |
3.19 % |
2.78 % |
2.57 % |
Net free funds contribution |
0.14 |
0.16 |
0.18 |
0.23 |
0.24 |
Net interest margin |
3.49 |
3.42 |
3.37 |
3.01 |
2.81 |
Call option income |
0.07 |
0.10 |
0.02 |
0.02 |
0.33 |
Net interest margin including call option
income |
3.56 % |
3.52 % |
3.39 % |
3.03 % |
3.14 % |
|
|
WINTRUST FINANCIAL
CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION |
Quarterly Average
Balances - 5 Quarter Trends |
|
|
|
|
|
|
|
Three Months Ended |
|
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
(In thousands) |
2012 |
2012 |
2012 |
2012 |
2011 |
Liquidity management assets |
$ 2,949,034 |
$ 2,565,151 |
$ 2,781,730 |
$ 2,756,833 |
$ 3,051,850 |
Other earning assets |
27,482 |
31,142 |
30,761 |
30,499 |
28,828 |
Loans, net of unearned income |
12,001,433 |
11,922,450 |
11,300,395 |
10,848,016 |
10,662,516 |
Covered loans |
626,449 |
597,518 |
659,783 |
667,242 |
652,157 |
Total earning assets |
$ 15,604,398 |
$ 15,116,261 |
$ 14,772,669 |
$ 14,302,590 |
$ 14,395,351 |
Allowance for loan and covered loan
losses |
(135,156) |
(138,740) |
(134,077) |
(131,769) |
(137,423) |
Cash and due from banks |
206,914 |
185,435 |
152,118 |
143,869 |
130,437 |
Other assets |
1,572,494 |
1,542,473 |
1,528,497 |
1,520,660 |
1,625,844 |
Total assets |
$ 17,248,650 |
$ 16,705,429 |
$ 16,319,207 |
$ 15,835,350 |
$ 16,014,209 |
Interest-bearing deposits |
$ 11,709,058 |
$ 11,261,184 |
$ 10,815,018 |
$ 10,481,822 |
$ 10,563,090 |
Federal Home Loan Bank advances |
414,289 |
441,445 |
514,513 |
470,345 |
474,549 |
Notes payable and other borrowings |
397,807 |
426,716 |
422,146 |
505,814 |
468,139 |
Secured borrowings - owed to securitization
investors |
— |
176,904 |
407,259 |
514,923 |
600,000 |
Subordinated notes |
15,000 |
15,000 |
23,791 |
35,000 |
38,370 |
Junior subordinated notes |
249,493 |
249,493 |
249,493 |
249,493 |
249,493 |
Total interest-bearing liabilities |
$ 12,785,647 |
$ 12,570,742 |
$ 12,432,220 |
$ 12,257,397 |
$ 12,393,641 |
Non-interest bearing deposits |
2,314,935 |
2,092,028 |
1,993,880 |
1,832,627 |
1,755,446 |
Other liabilities |
361,244 |
305,919 |
197,667 |
180,664 |
333,186 |
Equity |
1,786,824 |
1,736,740 |
1,695,440 |
1,564,662 |
1,531,936 |
Total liabilities and shareholders'
equity |
$ 17,248,650 |
$ 16,705,429 |
$ 16,319,207 |
$ 15,835,350 |
$ 16,014,209 |
|
|
WINTRUST FINANCIAL
CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION |
Net Interest Margin - 5
Quarter Trends |
|
|
|
|
|
|
|
Three Months Ended |
|
December 31,
2012 |
September 30, 2012 |
June 30, 2012 |
March 31, 2012 |
December 31, 2011 |
Yield earned on: |
|
|
|
|
|
Liquidity management assets |
1.33 % |
1.41 % |
1.69 % |
1.90 % |
1.85 % |
Other earning assets |
2.95 |
2.83 |
3.04 |
2.96 |
2.90 |
Loans, net of unearned income |
4.45 |
4.57 |
4.64 |
4.77 |
4.78 |
Covered loans |
8.10 |
8.25 |
8.50 |
8.98 |
9.20 |
Total earning assets |
4.01 % |
4.18 % |
4.25 % |
4.41 % |
4.36 % |
Rate paid on: |
|
|
|
|
|
Interest-bearing deposits |
0.55 % |
0.59 % |
0.64 % |
0.69 % |
0.74 % |
Federal Home Loan Bank advances |
2.72 |
2.54 |
2.24 |
3.06 |
3.50 |
Notes payable and other borrowings |
1.57 |
1.89 |
2.17 |
2.47 |
2.38 |
Secured borrowings - owed to securitization
investors |
— |
1.79 |
1.72 |
1.99 |
2.03 |
Subordinated notes |
1.72 |
1.75 |
2.10 |
1.91 |
1.79 |
Junior subordinated notes |
5.01 |
4.91 |
4.97 |
5.01 |
4.77 |
Total interest-bearing liabilities |
0.74 % |
0.81 % |
0.89 % |
1.00 % |
1.05 % |
Interest rate spread |
3.27 % |
3.37 % |
3.36 % |
3.41 % |
3.31 % |
Net free funds/contribution |
0.13 |
0.13 |
0.15 |
0.14 |
0.14 |
Net interest income/Net interest margin |
3.40 % |
3.50 % |
3.51 % |
3.55 % |
3.45 % |
|
|
WINTRUST FINANCIAL
CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION |
Non-Interest Income - 5
Quarter Trends |
|
|
Three months ended |
|
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
(In thousands) |
2012 |
2012 |
2012 |
2012 |
2011 |
Brokerage |
$ 6,404 |
$ 6,355 |
$ 6,396 |
$ 6,322 |
$ 5,960 |
Trust and asset management |
7,230 |
6,897 |
6,997 |
6,079 |
5,726 |
Total wealth management |
13,634 |
13,252 |
13,393 |
12,401 |
11,686 |
Mortgage banking |
34,702 |
31,127 |
25,607 |
18,534 |
18,025 |
Service charges on deposit accounts |
4,534 |
4,235 |
3,994 |
4,208 |
3,973 |
Gains on available-for-sale securities,
net |
2,561 |
409 |
1,109 |
816 |
309 |
Gain on bargain purchases, net |
85 |
6,633 |
(55) |
840 |
— |
Trading (losses) gains, net |
(120) |
(998) |
(928) |
146 |
216 |
Other: |
|
|
|
|
|
Fees from covered call options |
2,156 |
2,083 |
3,114 |
3,123 |
5,377 |
Interest rate swap fees |
2,178 |
2,355 |
2,337 |
2,511 |
1,587 |
Bank Owned Life Insurance |
686 |
810 |
505 |
919 |
681 |
Administrative services |
867 |
825 |
823 |
766 |
789 |
Miscellaneous |
3,906 |
2,214 |
1,036 |
2,759 |
2,269 |
Total other income |
9,793 |
8,287 |
7,815 |
10,078 |
10,703 |
Total Non-Interest
Income |
$ 65,189 |
$ 62,945 |
$ 50,935 |
$ 47,023 |
$ 44,912 |
|
|
WINTRUST FINANCIAL
CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION |
Non-Interest Expense - 5
Quarter Trends |
|
|
|
|
|
|
|
Three months ended |
|
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
(In thousands) |
2012 |
2012 |
2012 |
2012 |
2011 |
Salaries and employee benefits: |
|
|
|
|
|
Salaries |
$ 40,457 |
$ 40,173 |
$ 37,237 |
$ 37,933 |
$ 36,676 |
Commissions and bonus |
23,968 |
24,041 |
19,388 |
16,802 |
19,263 |
Benefits |
11,715 |
11,066 |
11,514 |
14,295 |
10,805 |
Total salaries and employee benefits |
76,140 |
75,280 |
68,139 |
69,030 |
66,744 |
Equipment |
6,468 |
5,888 |
5,466 |
5,400 |
5,093 |
Occupancy, net |
8,480 |
8,024 |
7,728 |
8,062 |
7,975 |
Data processing |
4,178 |
4,103 |
3,840 |
3,618 |
4,062 |
Advertising and marketing |
2,725 |
2,528 |
2,179 |
2,006 |
3,207 |
Professional fees |
3,158 |
4,653 |
3,847 |
3,604 |
3,710 |
Amortization of other intangible assets |
1,108 |
1,078 |
1,089 |
1,049 |
1,062 |
FDIC insurance |
3,039 |
3,549 |
3,477 |
3,357 |
3,244 |
OREO expenses, net |
5,269 |
3,808 |
5,848 |
7,178 |
8,821 |
Other: |
|
|
|
|
|
Commissions—3rd party brokers |
944 |
1,106 |
1,069 |
1,021 |
872 |
Postage |
1,856 |
1,120 |
1,330 |
1,423 |
1,322 |
Stationery and supplies |
1,095 |
954 |
1,035 |
919 |
1,186 |
Miscellaneous |
15,088 |
12,457 |
12,138 |
11,092 |
11,470 |
Total other expense |
18,983 |
15,637 |
15,572 |
14,455 |
14,850 |
Total Non-Interest
Expense |
$ 129,548 |
$ 124,548 |
$ 117,185 |
$ 117,759 |
$ 118,768 |
|
|
WINTRUST FINANCIAL
CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION |
Allowance for Credit
Losses, excluding covered loans - 5 Quarter Trends |
|
|
|
|
|
|
|
Three months ended |
|
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
(Dollars in thousands) |
2012 |
2012 |
2012 |
2012 |
2011 |
Allowance for loan losses at
beginning of period |
$ 112,287 |
$ 111,920 |
$ 111,023 |
$ 110,381 |
$ 118,649 |
Provision for credit
losses |
20,672 |
18,192 |
18,394 |
15,154 |
16,615 |
Other adjustments |
(289) |
(534) |
(272) |
(238) |
— |
Reclassification from/(to) allowance
for unfunded lending-related commitments |
(260) |
626 |
175 |
152 |
171 |
Charge-offs: |
|
|
|
|
|
Commercial |
9,782 |
3,315 |
6,046 |
3,262 |
6,377 |
Commercial real estate |
9,084 |
17,000 |
9,226 |
8,229 |
13,931 |
Home equity |
3,496 |
1,543 |
1,732 |
2,590 |
1,876 |
Residential real estate |
2,470 |
1,027 |
388 |
175 |
1,632 |
Premium finance
receivables—commercial |
1,284 |
886 |
744 |
837 |
1,479 |
Premium finance receivables—life
insurance |
13 |
— |
3 |
13 |
— |
Indirect consumer |
64 |
73 |
33 |
51 |
56 |
Consumer and other |
570 |
93 |
51 |
310 |
824 |
Total charge-offs |
26,763 |
23,937 |
18,223 |
15,467 |
26,175 |
Recoveries: |
|
|
|
|
|
Commercial |
368 |
349 |
246 |
257 |
541 |
Commercial real estate |
978 |
5,352 |
174 |
131 |
286 |
Home equity |
43 |
52 |
171 |
162 |
5 |
Residential real estate |
9 |
8 |
3 |
2 |
2 |
Premium finance
receivables—commercial |
250 |
191 |
153 |
277 |
204 |
Premium finance receivables—life
insurance |
15 |
15 |
18 |
21 |
— |
Indirect consumer |
27 |
25 |
21 |
30 |
37 |
Consumer and other |
14 |
28 |
37 |
161 |
46 |
Total recoveries |
1,704 |
6,020 |
823 |
1,041 |
1,121 |
Net charge-offs |
(25,059) |
(17,917) |
(17,400) |
(14,426) |
(25,054) |
Allowance for loan losses at
period end |
$ 107,351 |
$ 112,287 |
$ 111,920 |
$ 111,023 |
$ 110,381 |
Allowance for unfunded
lending-related commitments at period end |
14,647 |
12,627 |
12,903 |
13,078 |
13,231 |
Allowance for credit losses at
period end |
$ 121,998 |
$ 124,914 |
$ 124,823 |
$ 124,101 |
$ 123,612 |
Annualized net charge-offs by
category as a percentage of its own respective
category's average: |
|
|
|
|
|
Commercial |
1.35 % |
0.44 % |
0.91 % |
0.49 % |
0.96 % |
Commercial real estate |
0.86 |
1.27 |
1.01 |
0.92 |
1.56 |
Home equity |
1.72 |
0.73 |
0.76 |
1.15 |
0.85 |
Residential real estate |
1.19 |
0.44 |
0.20 |
0.11 |
1.07 |
Premium finance
receivables—commercial |
0.21 |
0.14 |
0.14 |
0.15 |
0.35 |
Premium finance receivables—life
insurance |
— |
— |
— |
— |
— |
Indirect consumer |
0.19 |
0.25 |
0.07 |
0.13 |
0.12 |
Consumer and other |
1.86 |
0.22 |
0.05 |
0.49 |
2.35 |
Total loans, net of unearned income,
excluding covered loans |
0.83 % |
0.60 % |
0.62 % |
0.53 % |
0.93 % |
Net charge-offs as a percentage
of the provision for credit losses |
121.22 % |
98.49 % |
94.60 % |
95.20 % |
150.79 % |
Loans at period-end |
$ 11,828,943 |
$ 11,489,900 |
$ 11,202,842 |
$ 10,717,384 |
$ 10,521,377 |
Allowance for loan losses as a
percentage of loans at period end |
0.91 % |
0.98 % |
1.00 % |
1.04 % |
1.05 % |
Allowance for credit losses as a
percentage of loans at period end |
1.03 % |
1.09 % |
1.11 % |
1.16 % |
1.17 % |
|
|
WINTRUST FINANCIAL
CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION |
Non-Performing Assets,
excluding covered assets - 5 Quarter Trends |
|
|
|
|
|
|
|
|
|
(Dollars in thousands) |
December 31,
2012 |
September 30, 2012 |
June 30, 2012 |
March 31, 2012 |
December 31, 2011 |
Loans past due greater than 90 days
and still accruing: |
|
|
|
|
|
Commercial |
$ — |
$ — |
$ — |
$ — |
$ — |
Commercial real-estate |
— |
— |
— |
73 |
— |
Home equity |
100 |
— |
— |
— |
— |
Residential real-estate |
— |
— |
— |
— |
— |
Premium finance
receivables—commercial |
10,008 |
5,533 |
5,184 |
4,619 |
5,281 |
Premium finance receivables—life
insurance |
— |
— |
— |
— |
— |
Indirect consumer |
189 |
215 |
234 |
257 |
314 |
Consumer and other |
32 |
— |
— |
— |
— |
Total loans past due greater than 90 days
and still accruing |
10,329 |
5,748 |
5,418 |
4,949 |
5,595 |
Non-accrual loans: |
|
|
|
|
|
Commercial |
21,737 |
17,711 |
30,473 |
19,835 |
19,018 |
Commercial real-estate |
49,973 |
58,461 |
56,077 |
62,704 |
66,508 |
Home equity |
13,423 |
11,504 |
10,583 |
12,881 |
14,164 |
Residential real-estate |
11,728 |
15,393 |
9,387 |
5,329 |
6,619 |
Premium finance
receivables—commercial |
9,302 |
7,488 |
7,404 |
7,650 |
7,755 |
Premium finance receivables—life
insurance |
25 |
29 |
— |
— |
54 |
Indirect consumer |
55 |
72 |
132 |
152 |
138 |
Consumer and other |
1,511 |
1,485 |
1,446 |
121 |
233 |
Total non-accrual loans |
107,754 |
112,143 |
115,502 |
108,672 |
114,489 |
Total non-performing
loans: |
|
|
|
|
|
Commercial |
21,737 |
17,711 |
30,473 |
19,835 |
19,018 |
Commercial real-estate |
49,973 |
58,461 |
56,077 |
62,777 |
66,508 |
Home equity |
13,523 |
11,504 |
10,583 |
12,881 |
14,164 |
Residential real-estate |
11,728 |
15,393 |
9,387 |
5,329 |
6,619 |
Premium finance
receivables—commercial |
19,310 |
13,021 |
12,588 |
12,269 |
13,036 |
Premium finance receivables—life
insurance |
25 |
29 |
— |
— |
54 |
Indirect consumer |
244 |
287 |
366 |
409 |
452 |
Consumer and other |
1,543 |
1,485 |
1,446 |
121 |
233 |
Total non-performing loans |
$ 118,083 |
$ 117,891 |
$ 120,920 |
$ 113,621 |
$ 120,084 |
Other real estate owned |
56,174 |
61,897 |
66,532 |
69,575 |
79,093 |
Other real estate owned—obtained in
acquisition |
6,717 |
5,480 |
6,021 |
6,661 |
7,430 |
Total non-performing assets |
$ 180,974 |
$ 185,268 |
$ 193,473 |
$ 189,857 |
$ 206,607 |
Total non-performing loans by
category as a percent of its own respective category's
period-end balance: |
|
|
|
|
|
Commercial |
0.75 % |
0.64 % |
1.14 % |
0.78 % |
0.76 % |
Commercial real-estate |
1.29 |
1.58 |
1.53 |
1.75 |
1.89 |
Home equity |
1.72 |
1.42 |
1.29 |
1.53 |
1.64 |
Residential real-estate |
3.19 |
4.09 |
2.50 |
1.47 |
1.89 |
Premium finance
receivables—commercial |
0.97 |
0.66 |
0.69 |
0.81 |
0.92 |
Premium finance receivables—life
insurance |
— |
— |
— |
— |
— |
Indirect consumer |
0.32 |
0.37 |
0.51 |
0.61 |
0.70 |
Consumer and other |
1.48 |
1.36 |
1.34 |
0.11 |
0.19 |
Total loans, net of unearned income |
1.00 % |
1.03 % |
1.08 % |
1.06 % |
1.14 % |
Total non-performing assets as a
percentage of total assets |
1.03 % |
1.09 % |
1.17 % |
1.17 % |
1.30 % |
Allowance for loan losses as a
percentage of total non-performing loans |
90.91 % |
95.25 % |
92.56 % |
97.71 % |
91.92 % |
CONTACT: Edward J. Wehmer, President & Chief Executive Officer
David A. Dykstra, Senior Executive Vice President &
Chief Operating Officer
(847) 939-9000
Web site address: www.wintrust.com
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