WTFC Wintrust Financial Corporation

LAKE FOREST, Ill., July 29 /PRNewswire-FirstCall/ -- Wintrust Financial Corporation ("Wintrust" or "the Company") (NASDAQ:WTFC) announced net income of $6.5 million, or $0.06 per diluted share, for the quarter ended June 30, 2009, essentially unchanged when compared to $6.4 million of net income, or $0.06 per diluted common share, recorded in the first quarter of 2009. Compared to the second quarter of 2008, earnings per diluted common share decreased $0.41, on a $4.7 million decrease in net income. Contributing to the decrease in earnings per diluted common share in the second quarter of 2009 compared to the second quarter of 2008 were preferred stock dividends including discount accretion, related to our issuances of preferred stock in the second half of 2008, reducing net income available to common shareholders by $5.0 million, or $0.21 per diluted common share. Edward J. Wehmer, President and Chief Executive Officer, commented, "We are pleased to report net income of $6.5 million in the second quarter of 2009. This level of net income attained was possible despite higher credit costs and the significant industry-wide special assessment by the FDIC. In the second quarter our net interest margin improved as expected by 20 basis points over the first quarter of 2009 aided by lower re-pricing of the Company's deposit portfolio. The positive impact of deposit re-pricing coupled with improvements in loan pricing spreads on new volumes more than offset the negative impact of both interest reversed on loans placed in non-accrual status and the accumulation of liquidity on each bank's balance sheet throughout the second quarter to accommodate the purchase of the life insurance premium finance loan portfolio." Mr. Wehmer noted, "Non-performing loans increased in the second quarter as weak economic conditions persisted. The legal process to obtain control of the collateral is lengthy and resale activity for distressed properties remains slow. As a result, we recorded $12.8 million of net loan charge-offs and $23.7 million in provision for credit losses in the second quarter bringing our allowance for credit losses to 1.14% of total loans. We remain committed to resolving these problems credits as quickly as possible." Mr. Wehmer added, "Residential mortgage originations for the secondary market continued to be strong in the second quarter, with $1.5 billion in originations. This follows a then record level of $1.2 billion originated in the first quarter of 2009. These originations continue to be primarily residential mortgage loan re-financings. Wealth management revenue rebounded in the second quarter as equity market conditions improved and new client development efforts generated additional assets under management. Coupled with the first quarter, we have now extended more than $5.6 billion of credit to new and existing borrowers in the first six months of 2009 subsequent to the investment by the U.S. Treasury Department. Excluding the reclassification of $520 million of premium finance receivables to held-for-sale at June 30, 2009, our outstanding loan balances have increased by $494 million from year-end." Mr. Wehmer summarized, "We are prepared for the challenges that lie ahead for the remainder of 2009. The positioning of our balance sheet during the first half of 2009 and our capital levels will allow us to take advantage of unique opportunities in the market place." Net income for the six months ended June 30, 2009 was $12.9 million, or $0.12 per diluted common share compared to $21.0 million or $0.87 per diluted common share for the same period in 2008. Contributing to the decrease in earnings per diluted common share in the first six months of 2009 compared to the first six months of 2008 were preferred share dividends including discount accretion, related to our issuances of preferred stock in the second half of 2008, reducing net income available to common shareholders by $10.0 million, or $0.41 per diluted common share. Total assets of $11.4 billion at June 30, 2009 increased $541 million from March 31, 2009 and $1.4 billion from June 30, 2008. The $541 million of asset growth in the second quarter of 2009 was concentrated in $151 million of commercial and commercial real estate loans and $172 million of premium finance receivables. Total deposits as of June 30, 2009 were $9.2 billion, an increase of $565 million from March 31, 2009 and $1.4 billion from June 30, 2008. The $565 million of deposit growth in the second quarter of 2009 was well distributed amongst all deposit types with $302 million from certificates of deposit, $128 million from NOW, savings and money markets, $87 million from wealth management and $48 million of non-interest bearing deposits. Only $9 million of the certificate of deposit growth was due to an increase in brokered certificates of deposits. Subject to market and other conditions, the Company intends to complete a sale of approximately $700 million of premium finance receivables in September 2009. As a result of this anticipated sale, the Company at the end of the second quarter of 2009 reclassified $520 million of premium finance receivables to a held-for-sale classification to comply with accounting requirements related to assets that are held with the intent to sell. At the end of the second quarter, the Company's loans held-for-sale included $301 million of residential mortgages and $520 million of premium finance receivables. Total loans, including loans held for sale, grew to $8.4 billion as of June 30, 2009, an increase of $356 million, over the $8.1 billion balance as of March 31, 2009 and an increase of $1.1 billion over the June 30, 2008 balance of $7.3 billion. The Company's loan portfolio includes a wide variety of loan types, of which approximately 8% are commercial real estate construction and land development related and 4% are residential real estate construction and land development related. These projects are being carefully monitored on an individual credit basis at each bank. Balances of both of these loan types have decreased as a percent of the total loan portfolio since the previous quarter-end. Total shareholders' equity is $1.1 billion, or a book value of $32.59 per common share, at June 30, 2009, compared to $1.1 billion, or a book value of $32.64 per common share, at March 31, 2009 and $749 million, or a book value of $31.70 per common share, at June 30, 2008. Wintrust's key operating measures and growth rates for the second quarter of 2009 as compared to the sequential and linked quarters are shown in the table below: % or % or basis basis point (bp) point (bp) Change Change From From Three Months Ended 1st 2nd June 30, March 31, June 30, Quarter Quarter 2009 2009 2008 2009(4) 2008 ($ in thousands, except per share data) Net income $6,549 $6,358 $11,276 3% (42)% Net income per common share - diluted $0.06 $0.06 $0.47 -% (87)% Net revenue(1) $117,949 $101,209 $93,004 17% 27% Net interest income $72,497 $64,782 $59,400 12% 22% Net interest margin (2) 2.91% 2.71% 2.77% 20 bp 14 bp Net overhead ratio (3) 1.41% 1.53% 1.31% (12) bp 10 bp Return on average assets 0.24% 0.24% 0.47% - bp (23) bp Return on average common equity 0.79% 0.71% 5.97% 8 bp (518) bp At end of period Total assets $11,359,536 $10,818,941 $9,923,077 20% 14% Total loans $7,595,476 $7,841,447 $7,153,603 (13)% 6% Total loans, including loans held-for-sale $8,416,576 $8,060,154 $7,271,982 18% 16% Total deposits $9,191,332 $8,625,977 $7,761,367 26% 18% Total equity $1,065,076 $1,063,227 $749,025 1% 42% (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 total average assets. A lower ratio indicates a higher degree of efficiency. (4) Period-end balance sheet percentage changes are annualized. Certain returns, yields, performance ratios, or quarterly growth rates are "annualized" in this presentation to represent an annual time period. This is done for analytical purposes to better discern for decision-making purposes underlying performance trends when compared to full-year or year-over-year amounts. For example, balance sheet growth rates are most often expressed in terms of an annual rate like 20%. As such, 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 http://www.wintrust.com/ by choosing "Financial Reports" and then choosing "Supplemental Financial Info." Impacting Comparative Financial Results: Acquisitions, Stock Offerings/Regulatory Capital and New Location Acquisitions On July 28, 2009 the Company announced that First Insurance Funding Corp. ("FIFC") completed the purchase of a majority of the U.S. life insurance premium finance assets of A.I. Credit Corp. and A.I. Credit Consumer Discount Company ("A.I. Credit"), subsidiaries of American International Group, Inc. FIFC acquired one of the largest life insurance premium finance portfolios in the industry, as well as certain other assets related to the life insurance premium finance business and the assumption of certain related liabilities for a purchase price of approximately $679.5 million in cash. On April 20, 2009 Wayne Hummer Asset Management Company completed its previously announced agreement to purchase certain assets and assume certain liabilities of Advanced Investment Partners, LLC ("AIP"). AIP is an investment management firm specializing in the active management of domestic equity investment strategies. The impact related to the AIP transaction is included in Wintrust's consolidated financial results only since the effective date of acquisition. On December 23, 2008, the Company announced the acquisition by Wintrust Mortgage Corporation of certain assets and the assumption of certain liabilities of the mortgage banking business of Professional Mortgage Partners ("PMP") of Downers Grove, Illinois. PMP was founded in 1999 and had approximately $1.6 billion in annual mortgage originations in 2008. The terms of the cash transaction were not disclosed, however, a significant portion of the net purchase price for the PMP assets is conditioned upon certain future profitability measures. The impact related to the PMP transaction is included in Wintrust's consolidated financial results only since the effective date of acquisition. Stock Offerings/Regulatory Capital The Company announced on December 19, 2008 that it had received the proceeds from the $250 million investment in Wintrust by the U.S. Treasury Department. The investment was made as part of the U.S. Treasury Department's Capital Purchase Program, which is designed to infuse capital into the nation's healthy banks in order to expand the flow of credit to U.S. consumers and businesses on competitive terms to promote the sustained growth and vitality of the U.S. economy. The investment by the U.S. Treasury Department was comprised of $250 million in preferred shares, with a warrant to purchase 1,643,295 shares of Wintrust common stock at a per share exercise price of $22.82 and a term of 10 years. If declared, dividends on the senior preferred stock are payable quarterly in arrears at a rate of 5% annually for the first five years and 9% thereafter. This investment can, with the approval of the Federal Reserve, be repurchased. The Company filed a shelf registration statement to fulfill the requirement of the Capital Purchase Program that the U.S. Department of Treasury be able to publicly sell the preferred shares and warrant it purchased from Wintrust. On August 26, 2008, the Company sold $50 million ($49.4 million net of issuance costs) of non-cumulative perpetual convertible preferred stock in a private transaction. If declared, dividends on the preferred stock are payable quarterly in arrears at a rate of 8.00% per annum. The shares are convertible into common stock at the option of the holder at a price per share of $27.38. On and after August 26, 2010, the preferred stock will be subject to mandatory conversion into common stock under certain circumstances. De Novo Banking Location Activity In the second quarter of 2008, Wintrust opened a banking location in Vernon Hills, Illinois (Libertyville Bank & Trust Company). Financial Performance Overview - Second Quarter of 2009 For the second quarter of 2009, net interest income totaled $72.5 million, an increase of $13.1 million as compared to the second quarter of 2008 and an increase of $7.7 million as compared to the first quarter of 2009. Average earning assets for the second quarter of 2009 increased by $1.4 billion compared to the second quarter of 2008. Earning asset growth over the past 12 months was primarily a result of the $1.1 billion increase in average loans and $307 million increase in liquidity management assets. The average earning asset growth of $1.4 billion over the past 12 months was funded by a $916 million increase in the average balances of Savings, NOW, MMA and Wealth Management deposits, an increase in the average balance of net free funds of $371 million, an increase in the average balance of brokered certificates of deposit of $5 million, an increase in the average balance of retail certificates of deposit of $270 million offset by a decrease in the average balance of wholesale borrowings of $200 million. At June 30, 2009, $772 million of retail deposits were held in the Company's MaxSafe suite of products (certificates of deposit, MMA and NOW). MaxSafe is an innovative investment alternative that provides up to 15 times the FDIC insurance security of a traditional banking deposit or a total of $3.75 million for interest-bearing accounts, by capitalizing on the Company's multiple banking charters and depositing a customer's funds across all 15 of the Company's community banks. The net interest margin for the second quarter of 2009 was 2.91%, compared to 2.77% in the second quarter of 2008 and 2.71% in the first quarter of 2009. The increase in the net interest margin in the second quarter of 2009 when compared to the first quarter of 2009 is directly attributable to lower costs of interest-bearing deposits. The rate paid on total interest-bearing deposits decreased by 26 basis points in the second quarter of 2009. Additionally, in the second quarter of 2009, management's decision to not engage in covered call option activity due to lower than acceptable security yields resulted in the elimination of revenue from the Company's covered call strategy. Historically, compression in the net interest margin was effectively offset, as has consistently been the case, by the Company's covered call strategy. It is expected that during periods of margin expansion, this revenue source will be limited. 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).") In the second quarter of 2009, the yield on loans decreased nine basis points and the rate on interest-bearing deposits decreased 26 basis points compared to the first quarter of 2009. The bulk of the decrease in yield on loans is attributable to premium finance receivables. Overall rates offered on this product were lower in the second quarter of 2009 than they were in the 2008. The majority of the impact of the most recent lowering of interest rates by the Federal Reserve, totaling 175 basis points in the fourth quarter of 2008, should now be fully incorporated in this portfolio. Management believes opportunities during the remainder of 2009 for increasing credit spreads in commercial loan portfolio and re-pricing of maturities of retail certificates of deposits should contribute to continued net interest margin expansion. Non-interest income totaled $45.5 million in the second quarter of 2009, increasing $11.8 million, or 35%, compared to the second quarter of 2008 and increasing $9.0 million, or 99% on an annualized basis, compared to the first quarter of 2009. The increase, in comparison to both prior periods, was primarily attributable to increases in mortgage banking revenue and net available-for-sale security gains. Mortgage banking revenue increased $15.0 million when compared to the second quarter of 2008 and $6.4 million when compared to the first quarter of 2009. This was primarily attributable to a significant increase in mortgage loans originated for sale to the secondary market. Mortgages originated for sale totaled over $1.5 billion in the second quarter of 2009 compared to $1.2 billion in the first quarter of 2009 and $484 million in the second quarter of 2008. In the second quarter of 2009 Wintrust did not record any other-than-temporary impairment ("OTTI") charges on certain corporate debt investment securities compared to OTTI charges of $2.1 million in the first quarter of 2009 and $212,000 in the second quarter of 2008 resulting in net securities gains of $1.5 million in the second quarter of 2009 compared to net securities losses of $140,000 in the second quarter of 2008 and $2.0 million in the first quarter of 2009. Offsetting the increase in securities gains, when compared to the first quarter of 2009, was a decrease of $2.0 million on fees from covered call options. Non-interest expense totaled $84.2 million in the second quarter of 2009, increasing $19.1 million, or 29%, compared to the second quarter of 2008 and $7.3 million, or 38% on an annualized basis, compared to the first quarter of 2009. The increase compared to the first quarter of 2009 was attributable to a $1.2 million increase in salaries and employee benefits and the $6.1 million increase in the FDIC deposit insurance expense related to the industry-wide special assessment and growth in the assessable deposit base. The $1.2 million increase in salaries and employee benefits is attributable to an increase in variable pay (commissions) of $1.9 million, primarily as a result of the higher mortgage loan origination volumes. Financial Performance Overview - First Six Months of 2009 The net interest margin for the first six months of 2009 was 2.81%, compared to 2.88% in the first six months of 2008. The decrease in the net interest margin in the first six months of 2009 when compared to the first six months of 2008 is directly attributable to the negative impact of an increased balance of non-performing assets. The yield on earning assets decreased by 110 basis points compared to the first six months of 2008 while the rate paid on total interest-bearing deposits decreased by 112 basis points compared to the first six months of 2008. Additionally, in 2009, higher than acceptable security pricing restricted revenue from the Company's covered call strategy. Historically, compression in the net interest margin was effectively offset, as has consistently been the case, by the Company's covered call strategy. It is expected that during periods of margin expansion, this revenue source will be limited. 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).") Non-interest income totaled $81.9 million in the first six months of 2009, increasing $23.7 million, or 41%, compared to the first six months of 2008. The increase was attributable to increases in mortgage banking revenue and trading income offset by lower fees from covered call options and lower wealth management revenues. Mortgage banking revenue increased $25.2 million when compared to the first six months of 2008. This increase is primarily attributable to a significant increase in mortgage loans originated and sold to the secondary market. Mortgages originated for sale totaled over $2.7 billion in the first six months of 2009 compared to $947 million in the first six months of 2008. During the first six months of 2009, the Company recognized an increase of $16.9 million in trading income, primarily resulting from the increase in market value of certain securities held as trading assets. Offsetting the increase in trading income was a decrease of $16.9 million on fees from covered call options compared to the first six months of 2008. The majority of the increase in trading income resulted from an increase in the market value of certain collateralized mortgage obligations. The Company purchased these securities at a significant discount during the first quarter of 2009. These securities have increased in value since their purchase due to market spreads tightening, increased mortgage prepayments due to favorable mortgage rate environment and the resultant refinancing activity taking place in the market and lower than projected default rates. Non-interest expense totaled $161.2 million in the first six months of 2009, increasing $33.2 million, or 26%, compared to the first six months of 2008. The change compared to the first six months of 2008 was attributable to a $17.2 million increase in salaries and employee benefits and a $9.6 million increase in FDIC insurance expense related to deposit insurance rate increases, the one-time industry-wide FDIC deposit insurance special assessment in the second quarter of 2009 and growth in the assessable deposit base. Additionally, $3.0 million of increased expenses related to other real-estate owned and $1.5 million from increased professional fees, primarily as a result of the elevated level of non-performing assets contributed to the $33.2 million non-interest expense growth. The $17.2 million increase in salaries and employee benefits is largely attributable to an increase in variable pay (commissions) of $11.0 million primarily as a result of the higher mortgage loan origination volumes. Non-performing loans totaled $238.2 million, or 3.1% of total loans, at June 30, 2009, compared to $175.9 million, or 2.24% of total loans, at March 31, 2009 and $86.8 million, or 1.21% of total loans, at June 30, 2008. OREO of $41.4 million at June 30, 2009 was essentially unchanged compared to March 31, 2009 and increased $32.2 million compared to June 30, 2008. During the second quarter of 2009, 27 individual properties, representing 4 lending relationships, were acquired by the Company via foreclosure or deed in lieu of foreclosure. The fair value of these properties totaled $4.7 million. Changes in fair value of properties held and properties sold reduced the OREO balance by $4.8 million during the second quarter of 2009. The $206.2 million of non-performing loans as of June 30, 2009 classified as residential real estate and home equity, commercial, consumer, and other consumer consists of $27.8 million of residential real estate construction and land development related loans, $95.2 million of commercial real estate construction and land development related loans, $33.4 million of residential real estate and home equity related loans, $31.1 million of commercial real estate related loans, $9.8 million of commercial related loans, and $8.9 million of consumer related loans. Of these relationships, 27 exceed $2.5 million in outstanding balances, approximating $137.4 million of the $206.2 million in total outstanding balances. 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 are estimated to occur upon the ultimate resolution of these credits. The provision for credit losses totaled $23.7 million for the second quarter of 2009 compared to $14.5 million for the first quarter of 2009 and $10.3 million in the second quarter of 2008. Net charge-offs for the second quarter totaled 63 basis points on an annualized basis compared to 36 basis points on an annualized basis in the second quarter of 2008 and 51 basis points on an annualized basis in the first quarter of 2009. The provision for credit losses totaled $38.1 million for the first six months of 2009 compared to $18.9 million for the first six months of 2008. Net charge-offs for the first six months totaled 57 basis points on an annualized basis compared to 33 basis points on an annualized basis in the first six months of 2008. The allowance for credit losses at June 30, 2009 totaled $86.7 million and increased to 1.14% of total loans compared $75.8 million or 0.97% of average loans at March 31, 2009 and $58.1 million, or 0.81% of total loans at June 30, 2008. WINTRUST FINANCIAL CORPORATION SELECTED FINANCIAL HIGHLIGHTS (Dollars in thousands, Three Months Ended Six Months Ended except per June 30, June 30, share data) 2009 2008 2009 2008 Selected Financial Condition Data (at end of period): Total assets $11,359,536 $9,923,077 Total loans 7,595,476 7,153,603 Total deposits 9,191,332 7,761,367 Junior subordinated debentures 249,493 249,579 Total shareholders' equity 1,065,076 749,025 Selected Statements of Income Data: Net interest income $72,497 $59,400 $137,279 $121,142 Net revenue (1) 117,949 93,004 219,158 179,318 Income before taxes 10,041 17,522 19,815 32,432 Net income 6,549 11,276 12,907 20,981 Net income per common share - Basic 0.06 0.48 0.12 0.89 Net income per common share - Diluted 0.06 0.47 0.12 0.87 Selected Financial Ratios and Other Data: Performance Ratios: Net interest margin (2) 2.91 % 2.77 % 2.81 % 2.88 % Non-interest income to average assets 1.65 1.40 1.52 1.23 Non-interest expense to average assets 3.06 2.71 2.99 2.70 Net overhead ratio (3) 1.41 1.31 1.47 1.47 Efficiency ratio (2) (4) 72.02 69.54 73.00 70.30 Return on average assets 0.24 0.47 0.24 0.44 Return on average equity 0.79 5.97 0.75 5.61 Average total assets $11,037,468 $9,682,454 $10,881,525 $9,526,832 Average total shareholders' equity 1,067,395 760,253 1,064,588 752,104 Average loans to average deposits ratio 92.8 % 94.6 % 93.1 % 94.7 % Common Share Data at end of period: Market price per common share $16.08 $23.85 Book value per common share $32.59 $31.70 Common shares outstanding 23,979,804 23,625,841 Other Data at end of period: Leverage ratio (5) 7.9 % 7.8 % Tier 1 capital to risk-weighted assets (5) 8.9 % 8.7 % Total capital to risk-weighted assets (5) 12.3 % 10.2 % Allowance for credit losses (6) $86,699 $58,126 Non-performing loans $238,219 $86,806 Allowance for credit losses to total loans (6) 1.14 % 0.81 % Non-performing loans to total loans 3.14 % 1.21 % Number of: Bank subsidiaries 15 15 Non-bank subsidiaries 8 8 Banking offices 79 79 (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 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 revenues (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 lending-related commitments. WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CONDITION (Unaudited) (Unaudited) June 30, December 31, June 30, (In thousands) 2009 2008 2008 Assets Cash and due from banks $122,382 $219,794 $166,857 Federal funds sold and securities purchased under resale agreements 41,450 226,110 73,311 Interest bearing deposits with banks 655,759 123,009 6,438 Available-for-sale securities, at fair value 1,267,410 784,673 1,590,648 Trading account securities 22,973 4,399 1,877 Brokerage customer receivables 17,701 17,901 19,661 Loans held-for-sale 821,100 61,116 118,379 Loans, net of unearned income 7,595,476 7,621,069 7,153,603 Less: Allowance for loan losses 85,113 69,767 57,633 Net loans 7,510,363 7,551,302 7,095,970 Premises and equipment, net 350,447 349,875 348,881 Accrued interest receivable and other assets 260,182 240,664 208,574 Trade date securities receivable - 788,565 - Goodwill 276,525 276,310 276,311 Other intangible assets 13,244 14,608 16,170 Total assets $11,359,536 $10,658,326 $9,923,077 Liabilities and Shareholders' Equity Deposits: Non-interest bearing $793,173 $757,844 $688,512 Interest bearing 8,398,159 7,618,906 7,072,855 Total deposits 9,191,332 8,376,750 7,761,367 Notes payable 1,000 1,000 41,975 Federal Home Loan Bank advances 435,980 435,981 438,983 Other borrowings 244,286 336,764 383,009 Subordinated notes 65,000 70,000 75,000 Junior subordinated debentures 249,493 249,515 249,579 Trade date securities payable - - 97,898 Accrued interest payable and other liabilities 107,369 121,744 126,241 Total liabilities 10,294,460 9,591,754 9,174,052 Shareholders' equity: Preferred stock 283,518 281,873 - Common stock 26,835 26,611 26,478 Surplus 577,473 571,887 547,792 Treasury stock (122,302) (122,290) (122,258) Retained earnings 317,713 318,793 325,314 Accumulated other comprehensive loss (18,161) (10,302) (28,301) Total shareholders' equity 1,065,076 1,066,572 749,025 Total liabilities and shareholders' equity $11,359,536 $10,658,326 $9,923,077 WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended Six Months Ended (In thousands, except June 30, June 30, per share data) 2009 2008 2009 2008 Interest income Interest and fees on loans $110,302 $108,803 $217,189 $227,756 Interest bearing deposits with banks 767 68 1,427 188 Federal funds sold and securities purchased under resale agreements 66 472 127 1,106 Securities 15,819 16,553 30,146 32,634 Trading account securities 55 15 79 46 Brokerage customer receivables 120 249 240 606 Total interest income 127,129 126,160 249,208 262,336 Interest expense Interest on deposits 43,502 53,862 89,455 115,292 Interest on Federal Home Loan Bank advances 4,503 4,557 8,956 9,113 Interest on notes payable and other borrowings 1,752 2,900 3,622 5,670 Interest on subordinated notes 428 843 1,008 1,930 Interest on junior subordinated debentures 4,447 4,598 8,888 9,189 Total interest expense 54,632 66,760 111,929 141,194 Net interest income 72,497 59,400 137,279 121,142 Provision for credit losses 23,663 10,301 38,136 18,856 Net interest income after provision for credit losses 48,834 49,099 99,143 102,286 Non-interest income Wealth management 6,883 7,771 12,809 15,636 Mortgage banking 22,596 7,536 38,828 13,632 Service charges on deposit accounts 3,183 2,565 6,153 4,938 Gain on sales of premium finance receivables 196 566 518 1,707 Gains (losses) on available-for-sale securities, net 1,540 (140) (498) (1,473) Other 11,054 15,306 24,069 23,736 Total non-interest income 45,452 33,604 81,879 58,176 Non-interest expense Salaries and employee benefits 46,015 36,976 90,835 73,648 Equipment 4,015 4,048 7,953 7,974 Occupancy, net 5,608 5,438 11,798 11,305 Data processing 3,216 2,918 6,352 5,716 Advertising and marketing 1,420 1,368 2,515 2,367 Professional fees 2,871 2,227 5,754 4,295 Amortization of other intangible assets 676 779 1,363 1,567 Other 20,424 11,427 34,637 21,158 Total non-interest expense 84,245 65,181 161,207 128,030 Income before taxes 10,041 17,522 19,815 32,432 Income tax expense 3,492 6,246 6,908 11,451 Net income $6,549 $11,276 $12,907 $20,981 Preferred stock dividends and discount accretion 5,000 - 10,000 - Net income applicable to common shares $1,549 $11,276 $2,907 $20,981 Net income per common share - Basic $0.06 $0.48 $0.12 $0.89 Net income per common share - Diluted $0.06 $0.47 $0.12 $0.87 Cash dividends declared per common share $- $- $0.18 $0.18 Weighted average common shares outstanding 23,964 23,608 23,910 23,563 Dilutive potential common shares 300 531 269 555 Average common shares and dilutive common shares 24,264 24,139 24,179 24,118 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) and the efficiency ratio. 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 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. 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 is shown below: Three Months Ended Six Months Ended (Dollars in June 30, June 30, thousands) 2009 2008 2009 2008 (A) Interest income (GAAP) $127,129 $126,160 $249,208 $262,336 Taxable-equivalent adjustment: - Loans 110 158 267 357 - Liquidity management assets 450 428 902 939 - Other earning assets 10 6 21 19 Interest income - FTE $127,699 $126,752 $250,398 $263,651 (B) Interest expense (GAAP) 54,632 66,760 111,929 141,194 Net interest income - FTE $73,067 $59,992 $138,469 $122,457 (C) Net interest income (GAAP) (A minus B) $72,497 $59,400 $137,279 $121,142 (D) Net interest margin (GAAP) 2.88% 2.74% 2.79% 2.84% Net interest margin - FTE 2.91% 2.77% 2.81% 2.88% (E) Efficiency ratio (GAAP) 72.37% 69.98% 73.39% 70.82% Efficiency ratio - FTE 72.02% 69.54% 73.00% 70.30% LOANS, NET OF UNEARNED INCOME % Growth From From (Dollars in June 30, December 31, June 30, December 31, June 30, thousands) 2009 2008 2008 2008 (1) 2008 Balance: Commercial and commercial real estate $5,083,917 $4,778,664 $4,610,550 13% 10% Home equity 912,399 896,438 770,748 4 18 Residential real estate 279,345 262,908 243,400 12 15 Premium finance receivables (3) 1,070,514 1,346,586 1,145,986 (41) (7) Indirect consumer loans (2) 133,808 175,955 221,511 (48) (40) Other loans 115,493 160,518 161,408 (57) (28) Total loans, net of unearned income $7,595,476 $7,621,069 $7,153,603 (1)% 6% Mix: Commercial and commercial real estate 67% 63% 65% Home equity 12 12 11 Residential real estate 3 3 3 Premium finance receivables(3) 14 18 16 Indirect consumer loans (2) 2 2 3 Other loans 2 2 2 - - - Total loans, net of unearned income 100% 100% 100% (1) Annualized (2) Includes autos, boats, snowmobiles and other indirect consumer loans. (3) Excludes $520 million of premium finance receivables reclassified to held-for-sale in the second quarter of 2009. DEPOSITS % Growth From From (Dollars in June 30, December 31, June 30, December 31, June 30, thousands) 2009 2008 2008 2008 (1) 2008 Balance: Non-interest bearing $793,173 $757,844 $688,512 9% 15% NOW 1,072,255 1,040,105 1,064,792 6 1 Wealth Management deposits (2) 919,968 716,178 599,451 57 53 Money market 1,379,164 1,124,068 900,482 46 53 Savings 461,377 337,808 326,869 74 41 Time certificates of deposit 4,565,395 4,400,747 4,181,261 8 9 Total deposits $9,191,332 $8,376,750 $7,761,367 20% 18% Mix: Non-interest bearing 9% 9% 9% NOW 11 12 14 Wealth Management deposits (2) 10 9 8 Money market 15 13 12 Savings 5 4 4 Time certificates of deposit 50 53 53 Total deposits 100% 100% 100% (1) Annualized (2) Represents deposit balances at the Company's subsidiary banks from brokerage customers of Wayne Hummer Investments, trust and asset management customers of Wayne Hummer Trust Company and brokerage customers from unaffiliated companies which have been placed into deposit accounts of the Banks. NET INTEREST INCOME The following table presents a summary of Wintrust's average balances, net interest income and related net interest margins, calculated on a fully tax-equivalent basis, for the second quarter of 2009 compared to the second quarter of 2008 (linked quarters): For the Three Months Ended For the Three Months Ended (Dollars June 30, 2009 June 30, 2008 in thousands) Average Interest Rate Average Interest Rate Liquidity management assets (1) (2) (7) $1,851,179 $17,102 3.71% $1,543,795 $17,521 4.56% Other earning assets (2) (3) (7) 22,694 185 3.27 22,519 270 4.83 Loans, net of unearned income (2) (4) (7) 8,212,572 110,412 5.39 7,158,317 108,961 6.12 Total earning assets (7) $10,086,445 $127,699 5.08% $8,724,631 $126,752 5.84% Allowance for loan losses (72,990) (53,798) Cash and due from banks 118,402 125,806 Other assets 905,611 885,815 Total assets $11,037,468 $9,682,454 Interest- bearing deposits $8,097,096 $43,502 2.15% $6,906,437 $53,862 3.14% Federal Home Loan Bank advances 435,983 4,503 4.14 437,642 4,557 4.19 Notes payable and other borrowings 249,123 1,752 2.82 439,130 2,900 2.66 Subordinated notes 66,648 428 2.54 75,000 843 4.45 Junior subordinated debentures 249,494 4,447 7.05 249,594 4,598 7.29 Total interest- bearing liabilities $9,098,344 $54,632 2.41% $8,107,803 $66,760 3.31% Non-interest bearing deposits 754,479 663,526 Other liabilities 117,250 150,872 Equity 1,067,395 760,253 Total liabilities and shareholders' equity $11,037,468 $9,682,454 Interest rate spread (5) (7) 2.67% 2.53% Net free funds/ contribution (6) $988,101 0.24 $616,828 0.24 Net interest income/Net interest margin (7) $73,067 2.91% $59,992 2.77% (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 account 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 June 30, 2009 and 2008 were $570,000 and $592,000, 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 measure/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 second quarter of 2009 compared to the first quarter of 2009 (sequential quarters): For the Three Months Ended For the Three Months Ended (Dollars June 30, 2009 March 31, 2009 in thousands) Average Interest Rate Average Interest Rate Liquidity management assets (1) (2) (7) $1,851,179 $17,102 3.71% $1,839,161 $15,499 3.42% Other earning assets (2) (3) (7) 22,694 185 3.27 22,128 155 2.85 Loans, net of unearned income (2) (4) (7) 8,212,572 110,412 5.39 7,924,849 107,045 5.48 Total earning assets (7) $10,086,445 $127,699 5.08% $9,786,138 $122,699 5.08% Allowance for loan losses (72,990) (72,044) Cash and due from banks 118,402 107,550 Other assets 905,611 903,322 Total assets $11,037,468 $10,724,966 Interest- bearing deposits $8,097,096 $43,502 2.15% $7,747,879 $45,953 2.41% Federal Home Loan Bank advances 435,983 4,503 4.14 435,982 4,453 4.14 Notes payable and other borrowings 249,123 1,752 2.82 301,894 1,870 2.51 Subordinated notes 66,648 428 2.54 70,000 580 3.31 Junior subordinated debentures 249,494 4,447 7.05 249,506 4,441 7.12 Total interest- bearing liabilities $9,098,344 $54,632 2.41% $8,805,261 $57,297 2.64% Non-interest bearing deposits 754,479 733,911 Other liabilities 117,250 124,140 Equity 1,067,395 1,061,654 Total liabilities and shareholders' equity $11,037,468 $10,724,966 Interest rate spread (5) (7) 2.67% 2.44% Net free funds/ contribution (6) $988,101 0.24 $980,877 0.27 Net interest income/Net interest margin (7) $73,067 2.91% $65,402 2.71% (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 account 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 June 30, 2009 was $570,000 and for the three months ended March 31, 2009 was $620,000. (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 measure/ratio. The higher level of net interest income recorded in the second quarter of 2009 compared to the first quarter of 2009 was attributable to increasing credit spreads on new loan volumes and the ability to raise interest-bearing deposits at more reasonable rates and strong earning asset growth. Average earning asset growth of $300 million in the second quarter of 2009 compared to the first quarter of 2009 was comprised of $288 million of loan growth and $12 million of liquid management asset growth. The $300 million of earning asset growth was primarily funded by a $349 million increase in the average balances of interest-bearing liabilities and an increase in the average balance of net free funds of $7 million partially offset by a decrease in the average balance of total wholesale borrowings of $56 million. In the second quarter of 2009, the yield on loans decreased nine basis points and the rate on interest-bearing deposits decreased 26 basis points compared to the first quarter of 2009. The bulk of the decrease in yield on loans is attributable to premium finance receivables. Overall rates offered on this product were lower in the second quarter of 2009 than they were in the 2008. The majority of the impact of the most recent lowering of interest rates by the Federal Reserve, totaling 175 basis points in the fourth quarter of 2008, should now be fully incorporated in this portfolio. Management believes opportunities during the remainder of 2009 for increasing credit spreads in commercial loan portfolio and re-pricing of maturities of retail certificates of deposits should contribute to continued net interest margin expansion. 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 six months ended June 30, 2009 compared to the six months ended June 30, 2008: For the Six Months Ended For the Six Months Ended (Dollars June 30, 2009 June 30, 2008 in thousands) Average Interest Rate Average Interest Rate Liquidity management assets (1) (2) (7) $1,845,283 $32,602 3.56% $1,467,768 $34,867 4.78% Other earning assets (2) (3) (7) 22,412 340 3.06 24,461 671 5.51 Loans, net of unearned income (2) (4) (7) 8,065,058 217,456 5.44 7,084,189 228,113 6.48 Total earning assets (7) $9,932,753 $250,398 5.08% $8,576,418 $263,651 6.18% Allowance for loan losses (72,537) (52,605) Cash and due from banks 117,615 125,274 Other assets 903,694 877,745 Total assets $10,881,525 $9,526,832 Interest-bearing deposits $7,921,810 $89,455 2.28% $6,827,209 $115,292 3.40% Federal Home Loan Bank advances 435,983 8,956 4.14 432,276 9,113 4.24 Notes payable and other borrowings 276,893 3,622 2.64 385,319 5,670 2.96 Subordinated notes 68,315 1,008 2.93 75,000 1,930 5.09 Junior subordinated debentures 249,500 8,888 7.09 249,615 9,189 7.28 Total interest- bearing liabilities $8,952,501 $111,929 2.52% $7,969,419 $141,194 3.56% Non- interest bearing deposits 744,251 653,232 Other liabilities 120,185 152,077 Equity 1,064,588 752,104 Total liabilities and shareholders' equity $10,881,525 $9,526,832 Interest rate spread (5) (7) 2.56% 2.62% Net free funds/ contribution (6) $980,252 0.25 $606,999 0.26 Net interest income/Net interest margin (7) $138,469 2.81% $122,457 2.88% (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 account securities and securities reflects a tax-equivalent adjustment based on a marginal federal corporate tax rate of 35%. The total adjustments for the six months ended June 30, 2009 and 2008 were $1.2 million and $1.3 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 measure/ratio. NON-INTEREST INCOME For the second quarter of 2009, non-interest income totaled $45.5 million, an increase of $11.8 million compared to the second quarter of 2008. The increase was primarily attributable to an increase in mortgage banking revenue and trading income offset by lower levels of fees from covered call options. For the first six months of 2009, non-interest income totaled $81.9 million, an increase of $23.7 million compared to the first six months of 2008. This increase was primarily attributable to increases in mortgage banking revenue and trading income offset by lower levels of fees from covered call options. The following table presents non-interest income by category for the periods presented: Three Months Ended June 30, (Dollars in $ % thousands) 2009 2008 Change Change Brokerage $4,280 $4,948 (668) (14) Trust and asset management 2,603 2,823 (220) (8) Total wealth management 6,883 7,771 (888) (11) Mortgage banking 22,596 7,536 15,060 NM Service charges on deposit accounts 3,183 2,565 618 24 Gain on sales of premium finance receivables 196 566 (370) (65) Gains (losses) on available-for-sale securities, net 1,540 (140) 1,680 NM Other: Fees from covered call options - 12,083 (12,083) (100) Bank Owned Life Insurance 565 851 (286) (34) Trading income 8,274 76 8,198 NM Administrative services 454 755 (301) (40) Miscellaneous 1,761 1,541 220 14 Total other 11,054 15,306 (4,252) (28) Total non-interest income $45,452 $33,604 11,848 35 Six Months Ended June 30, (Dollars in $ % thousands) 2009 2008 Change Change Brokerage $8,099 $9,986 (1,887) (19) Trust and asset management 4,710 5,650 (940) (17) Total wealth management 12,809 15,636 (2,827) (18) Mortgage banking 38,828 13,632 25,196 NM Service charges on deposit accounts 6,153 4,938 1,215 25 Gain on sales of premium finance receivables 518 1,707 (1,189) (70) Losses on available-for-sale securities, net (498) (1,473) 975 66 Other: Fees from covered call options 1,998 18,863 (16,865) (89) Bank Owned Life Insurance 851 1,464 (613) (42) Trading income 17,018 109 16,909 NM Administrative services 937 1,469 (532) (36) Miscellaneous 3,265 1,831 1,434 78 Total other 24,069 23,736 333 1 Total non-interest income $81,879 $58,176 23,703 41 NM = Not Meaningful Wealth management is comprised of the trust and asset management revenue of Wayne Hummer Trust Company and the asset management fees, brokerage commissions, trading commissions and insurance product commissions at Wayne Hummer Investments and Wayne Hummer Asset Management Company. Wealth management totaled $6.9 million in the second quarter of 2009 and $7.8 million in the second quarter of 2008. Decreased asset valuations due to the equity market declines over the past 12 months have hindered the revenue growth from trust and asset management activities. Continued uncertainties surrounding the equity markets overall have slowed the growth of the brokerage component of wealth management revenue. With equity markets improving in the second quarter of 2009, wealth management did increase $957,000, or 65% on an annualized basis, over the first quarter of 2009. On a year-to-date basis, wealth management totaled $12.8 million, down $2.8 million, or 18% when compared to the same period in 2008. Mortgage banking includes revenue from activities related to originating, selling and servicing residential real estate loans for the secondary market. For the quarter ended June 30, 2009, this revenue source totaled $22.6 million, an increase of $15.1 million when compared to the second quarter of 2008. The increase was primarily attributable to $14.4 million from gains recognized on loans sold to the secondary market offset by $683,000 from changes in the fair market value of mortgage servicing rights, valuation fluctuations of mortgage banking derivatives, fair value accounting for certain residential mortgage loans held for sale and increased recourse obligation for loans previously sold. Future growth of mortgage banking is impacted by the interest rate environment and current residential housing conditions and will continue to be dependent upon both. Mortgages originated and sold totaled over $1.5 billion in the second quarter of 2009 compared to $1.2 billion in the first quarter of 2009 and $484 million in the second quarter of 2008. The positive impact of the PMP transaction, completed at the end of 2008, contributed to mortgage banking revenue growth in both quarters of 2009. On a year-to-date basis, mortgage banking totaled $38.8 million, increasing $25.2 million when compared to the same period in 2008. Service charges on deposit accounts totaled $3.2 million for the second quarter of 2009, an increase of $618,000, or 24%, when compared to the same quarter of 2008. The majority of deposit service charges relates to customary fees on overdrawn accounts and returned items. The level of service charges received is substantially below peer group levels, as management believes in the philosophy of providing high quality service without encumbering that service with numerous activity charges. Wintrust did not sell any premium finance receivables in the second quarter of 2009 but recognized $196,000 of gains in the second quarter of 2009 on clean-up calls of previous sales. Wintrust sold $70 million of premium finance receivables in the second quarter of 2008, recognizing $566,000 of net gains. Subject to market and other conditions, the Company intends to complete a sale of approximately $700 million of premium finance receivables in September 2009. As a result of this anticipated sale, the Company at the end of the second quarter of 2009 reclassified $520 million of premium finance receivables to a loans held-for-sale classification to comply with accounting requirements related to assets that are held with the intent to sell. Other non-interest income for the second quarter of 2009 totaled $11.1 million, a decrease of $4.2 million, compared to $15.3 million in the second quarter of 2008. Trading income increased $8.2 million as the Company recognized $8.3 million in trading income resulting primarily from the increase in market value of certain collateralized mortgage obligations. The Company purchased these securities at a significant discount during the first quarter of 2009. These securities have increased in value since their purchase due to market spreads tightening, increased mortgage prepayments due to favorable mortgage rate environment and the resultant refinancing activity taking place in the market and lower than projected default rates. More than offsetting the increase in trading income were fees from certain covered call option transactions decreasing by $12.1 million, as no income was recorded from this activity in the second quarter of 2009. Historically, compression in the net interest margin was effectively offset, as has consistently been the case, by the Company's covered call strategy. Management has been able to effectively use the proceeds from selling covered call options to offset net interest margin compression and administers such sales in a coordinated process with the Company's overall asset/liability management. The covered call option contracts are written against certain U.S. Treasury and agency securities held in the Company's portfolio for liquidity and other purposes. In the second quarter of 2009, as the Company's net interest margin expanded management chose to not engage in covered call option activity due to lower than acceptable security yields which resulted in the elimination of revenue from 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)."). NON-INTEREST EXPENSE Non-interest expense for the second quarter of 2009 totaled $84.2 million and increased approximately $19 million, or 29%, from the second quarter 2008 total of $65.2 million. On a year-to-date basis, non-interest expense for 2009 totaled $161.2 million and increased $33.2 million, or 26% over the same period in 2008. The following table presents non-interest expense by category for the periods presented: Three Months Ended June 30, (Dollars in $ % thousands) 2009 2008 Change Change Salaries and employee benefits $46,015 $36,976 9,039 24 Equipment 4,015 4,048 (33) (1) Occupancy, net 5,608 5,438 170 3 Data processing 3,216 2,918 298 10 Advertising and marketing 1,420 1,368 52 4 Professional fees 2,871 2,227 644 29 Amortization of other intangible assets 676 779 (103) (13) Other: Commissions - 3rd party brokers 791 997 (206) (21) Postage 1,146 1,055 91 9 Stationery and supplies 793 756 37 5 FDIC insurance 9,121 1,289 7,832 NM OREO expenses, net 1,072 837 235 28 Miscellaneous 7,501 6,493 1,008 16 Total other 20,424 11,427 8,997 79 Total non-interest expense $84,245 $65,181 19,064 29 Six Months Ended June 30, (Dollars in $ % thousands) 2009 2008 Change Change Salaries and employee benefits $90,835 $73,648 17,187 23 Equipment 7,953 7,974 (21) - Occupancy, net 11,798 11,305 493 4 Data processing 6,352 5,716 636 11 Advertising and marketing 2,515 2,367 148 6 Professional fees 5,754 4,295 1,459 34 Amortization of other intangible assets 1,363 1,567 (204) (13) Other: Commissions - 3rd party brokers 1,495 1,982 (487) (25) Postage 2,327 2,041 286 14 Stationery and supplies 1,561 1,498 63 4 FDIC Insurance 12,134 2,575 9,559 NM OREO expenses, net 3,428 452 2,976 NM Miscellaneous 13,692 12,610 1,082 9 Total other 34,637 21,158 13,479 64 Total non-interest expense $161,207 $128,030 33,177 26 NM = Not Meaningful Salaries and employee benefits comprised 55% of total non-interest expense in the second quarter of 2009 and 57% in the second quarter of 2008. Salaries and employee benefits expense increased $9.0 million, or 24%, in the second quarter of 2009 compared to the second quarter of 2008 primarily as a result of higher commission and incentive compensation expenses related to mortgage banking activities and the incremental costs of the PMP staff. The large increase in salaries and employee benefits is primarily attributable to an increase in variable pay (commissions) of $6.3 million as a result of the higher mortgage loan origination volumes. On a year-to-date basis, salaries and employee benefits increased $17.2 million, or 23% compared to the same period in 2008. Of this increase, $11.0 million was attributable to an increase in variable pay (commissions) as a result of the higher mortgage loan origination volumes. Professional fees include legal, audit and tax fees, external loan review costs and normal regulatory exam assessments. Professional fees for the second quarter of 2009 were $2.9 million, an increase of $644,000, or 29%, compared to the same period in 2008. On a year-to-date basis, professional fees were $5.8 million, an increase of $1.5 million, or 34%, compared to the same period in 2008. These increases are primarily a result of increased legal costs related to non-performing assets. FDIC insurance totaled $9.1 million in the second quarter of 2009, an increase of $7.8 million compared to $1.3 million in the second quarter of 2008. On a year-to-date basis, FDIC insurance totaled $12.1 million in 2009, an increase of $9.5 million compared to $2.6 million in 2008. The increase in FDIC insurance rates at the beginning of 2009, the industry-wide special assessment on financial institutions in the second quarter of 2009 and growth in the assessable deposit base contributed to the significant increases in FDIC insurance costs for the second quarter of 2009 and the first six months of 2009. Miscellaneous expense includes expenses such as ATM expenses, net OREO expenses, correspondent bank charges, directors' fees, telephone, travel and entertainment, corporate insurance, dues and subscriptions and lending origination costs that are not deferred. Miscellaneous expenses in the second quarter of 2009 increased $1.0 million, or 16%, compared to the same period in the prior year. On year-to-date basis, miscellaneous expenses increased $1.1 million, or 9%, compared to the same period in the prior year. ASSET QUALITY Allowance for Credit Losses Three Months Ended Six Months Ended June 30, June 30, (Dollars in thousands) 2009 2008 2009 2008 Allowance for loan losses at beginning of period $74,248 $53,758 $69,767 $50,389 Provision for credit losses 23,663 10,301 38,136 18,856 Charge-offs: Commercial and commercial real estate loans 9,846 5,430 17,735 9,387 Home equity loans 795 25 1,306 25 Residential real estate loans 108 - 260 219 Premium finance receivables 1,792 913 3,144 1,796 Indirect consumer loans 473 271 834 529 Consumer and other loans 130 202 251 296 Total charge-offs 13,144 6,841 23,530 12,252 Recoveries: Commercial and commercial real estate loans 107 29 315 69 Home equity loans 1 - 2 - Residential real estate loans - - - - Premium finance receivables 155 273 296 400 Indirect consumer loans 44 61 73 107 Consumer and other loans 39 52 54 64 Total recoveries 346 415 740 640 Net charge-offs (12,798) (6,426) (22,790) (11,612) Allowance for loan losses at period end $85,113 $57,633 $85,113 $57,633 Allowance for unfunded loan commitments at period end $1,586 $493 $1,586 $493 Allowance for credit losses at period end $86,699 $58,126 $86,699 $58,126 Annualized net charge-offs by category as a percentage of its own respective category's average: Commercial and commercial real estate loans 0.78% 0.48% 0.72% 0.42% Home equity loans 0.35 0.01 0.29 0.01 Residential real estate loans 0.09 - 0.11 0.13 Premium finance receivables 0.43 0.23 0.39 0.25 Indirect consumer loans 1.20 0.38 0.99 0.37 Consumer and other loans 0.25 0.37 0.26 0.29 Total loans, net of unearned income 0.63% 0.36% 0.57% 0.33% Net charge-offs as a percentage of the provision for loan losses 54.08% 62.38% 59.76% 61.58% Loans at period-end $7,595,476 $7,153,603 Allowance for loan losses as a percentage of loans at period-end 1.12% 0.81% Allowance for credit losses as a percentage of loans at period-end 1.14% 0.81% The allowance for credit losses is comprised of the allowance for loan losses and the allowance for lending-related commitments. The allowance for loan losses is a reserve against loan amounts that are actually funded and outstanding while the allowance for lending-related commitments relates to certain amounts that Wintrust is committed to lend but for which funds have not yet been disbursed. The allowance for lending-related commitments (separate liability account) represents the portion of the provision for credit losses that was associated with unfunded lending-related commitments. The provision for credit 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). Non-performing Loans The following table sets forth Wintrust's non-performing loans at the dates indicated. June March December June (Dollars in thousands) 30, 2009 31, 2009 31, 2008 30, 2008 Loans past due greater than 90 days and still accruing: Residential real estate and home equity (1) $1,447 $726 $617 $200 Commercial, consumer and other 7,860 4,958 14,750 2,259 Premium finance receivables 14,301 9,722 9,339 5,180 Indirect consumer loans 695 1,076 679 471 Total past due greater than 90 days and still accruing 24,303 16,482 25,385 8,110 Non-accrual loans: Residential real estate and home equity (1) 11,925 9,209 6,528 3,384 Commercial, consumer and other 184,960 136,397 91,814 61,918 Premium finance receivables 15,806 12,694 11,454 13,005 Indirect consumer loans 1,225 1,084 913 389 Total non-accrual 213,916 159,384 110,709 78,696 Total non-performing loans: Residential real estate and home equity (1) 13,372 9,935 7,145 3,584 Commercial, consumer and other 192,820 141,355 106,564 64,177 Premium finance receivables 30,107 22,416 20,793 18,185 Indirect consumer loans 1,920 2,160 1,592 860 Total non-performing loans $238,219 175,866 $136,094 $86,806 Total non-performing loans by category as a percent of its own respective category's period-end balance: Residential real estate and home equity (1) 1.12% 0.83% 0.62% 0.35% Commercial, consumer and other 3.71 2.79 2.16 1.34 Premium finance receivables 2.81 1.58 1.54 1.59 Indirect consumer loans 1.44 1.40 0.90 0.39 Total non-performing loans 3.14% 2.24% 1.79% 1.21% Allowance for loan losses as a percentage of non-performing loans 35.73% 42.22% 51.26% 66.39% (1)Residential real estate and home equity loans that are non-accrual and past due greater than 90 days and still accruing do not include non-performing mortgage loans held-for-sale. These balances totaled $0 as of June 30, 2009, March 31, 2009 and December 31, 2008 and $0.2 million as of June 30, 2008. Mortgage loans held-for sale are carried at either fair value or at the lower of cost or market applied on an aggregate basis by loan type. Charges related to adjustments to record the loans at fair value are recognized in mortgage banking revenue. The provision for credit losses totaled $23.7 million for the second quarter of 2009, $14.5 million in the first quarter of 2009 and $10.3 million for the second quarter of 2008. For the quarter ended June 30, 2009, net charge-offs totaled $12.8 million compared to $10.0 million in the first quarter of 2009 and $6.4 million recorded in the second quarter of 2008. On a ratio basis, annualized net charge-offs as a percentage of average loans were 0.63% in the second quarter of 2009, 0.51% in the first quarter of 2009, and 0.36% in the second quarter of 2008. On a year-to-date basis, the provision for credit losses totaled $38.1 million for 2009 and $18.9 million for the same period in 2008. Net charge-offs totaled $22.8 million in 2009 compared to $11.6 million recorded in 2008. On a ratio basis, annualized net charge-offs as a percentage of average loans were 0.57% in 2009 and 0.33% in 2008. Management believes the allowance for loan losses is adequate 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 loan losses will be dependent upon management's assessment of the adequacy 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 increase from the end of the prior quarter reflects the continued economic weaknesses in the Company's markets and is the result of an individual review of a significant number of individual credits as well as the overall risk factors impacting certain types of credits, specifically credits with residential development collateral valuation exposure. Non-performing Residential Real Estate and Home Equity The non-performing residential real estate and home equity loans totaled $13.4 million as of June 30, 2009. The balance increased $9.8 million from June 30, 2008 and increased $3.5 million from March 31, 2009. The June 30, 2009 non-performing balance is comprised of $6.1 million of residential real estate (22 individual credits) and $7.3 million of home equity loans (30 individual credits). On average, this is approximately 3 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, Consumer and Other The commercial, consumer and other non-performing loan category totaled $192.8 million as of June 30, 2009 compared to $141.4 million as of March 31, 2009 and $64.2 million as of June 30, 2008. Management is pursuing the resolution of all credits in this category. However, given the current state of the residential real estate market, resolution of certain credits could span a lengthy period of time until market conditions stabilize. At this time, management believes reserves are adequate to absorb inherent losses that may occur upon the ultimate resolution of these credits. Non-performing Loan Composition The $206.2 million of non-performing loans as of June 30, 2009 classified as residential real estate and home equity, commercial, consumer, and other consumer consists of $27.8 million of residential real estate construction and land development related loans, $95.2 million of commercial real estate construction and land development related loans, $33.4 million of residential real estate and home equity related loans, $31.1 million of commercial real estate related loans, $9.8 million of commercial related loans and $8.9 million of consumer related loans. 27 of these relationships exceed $2.5 million in outstanding balances, approximating $137.4 million in total outstanding balances. At this time, management believes reserves are adequate to absorb inherent losses that may occur upon the ultimate resolution of these credits. Non-performing Premium Finance Receivables The table below presents the level of non-performing premium finance receivables as of June 30, 2009 and 2008, and the amount of net charge-offs for the quarters then ended. (Dollars in thousands) June 30, 2009 June 30, 2008 Non-performing premium finance receivables $30,107 $18,185 - as a percent of premium finance receivables outstanding 2.81% 1.59% Net charge-offs of premium finance receivables $1,637 $640 - annualized as a percent of average premium finance receivables 0.43% 0.23% As noted below, 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 premium finance receivables. The ratio of non-performing premium finance receivables fluctuates throughout the year due to the nature and timing of canceled account collections from insurance carriers. Due to the nature of collateral for premium finance receivables it customarily takes 60-150 days to convert the collateral into cash collections. Accordingly, the level of non-performing 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. At the end of the second quarter, the Company reclassified $520 million of premium finance receivables to a held-for-sale classification. This reclassification is a result of complying with accounting requirements related to assets that are held with the intent to sell. The Company estimated that $520 million of premium finance receivables held at June 30, 2009 would be part of the estimated $700 million of premium finance receivables expected to be sold, subject to market and other conditions, in September of 2009. Non-performing premium finance receivables as a percent of outstanding premium finance receivables, including the reclassified balances, was 1.89%, compared to the 2.81% shown above. None of the loans in the $520 million reclassified are in a non-performing status. Non-performing Indirect Consumer Loans Total non-performing indirect consumer loans were $1.9 million at June 30, 2009, compared to $2.2 million at March 31, 2009 and $860,000 at June 30, 2008. The ratio of these non-performing loans to total indirect consumer loans was 1.44% at June 30, 2009 compared to 1.40% at March 31, 2009 and 0.39% at June 30, 2008. As noted in the Allowance for Credit Losses table, net charge-offs as a percent of total indirect consumer loans were 1.20% for the quarter ended June 30, 2009 compared to 0.38% in the same period in 2008. Given the 40% decline in outstanding balances in the indirect consumer loan portfolio since June 30, 2008, the 1.20% charge-off ratio represents only $429,000 of total net charge-offs in the second quarter of 2009. At the beginning of the third quarter of 2008, the Company ceased the origination of indirect automobile loans. This niche business served the Company well over the past 12 years in helping de-novo banks quickly, and profitably, grow into their physical structures. Competitive pricing pressures significantly reduced the long-term potential profitably of this niche business. Given the current economic environment and the retirement of the founder of this niche business, exiting the origination of this business was deemed to be in the best interest of the Company. The Company will continue to service its existing portfolio during the duration of the credits. Other Real Estate Owned The table below presents a summary of other real estate owned as of June 30, 2009 and shows the changes in the balance from March 31, 2009 for each property type: Residential Residential Real Estate Commercial Total Real Estate Development Real Estate Balance (Dollars in thousands $ # R $ # R $ # R $ # R Balance at March 31, 2009 $8,281 7 7 $28,422 45 13 $4,814 8 5 $41,517 60 25 Transfers at fair value 376 2 2 3,548 24 1 788 1 1 4,712 27 4 Fair value adjustments - - - 28 - - - - - 28 - - Resolved (784) (3) (3) (3,090) (18) (3) (945) (1) (1) (4,819) (22) (7) Balance at June 30, 2009 $7,873 6 6 28,908 51 11 4,657 8 5 41,438 65 22 Balance at June 30, 2008 $9,233 $ - balance # - number of properties R - number of relationships WINTRUST SUBSIDIARIES AND LOCATIONS Wintrust is a financial holding company whose common stock is traded on the Nasdaq Stock 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, Advantage National Bank in Elk Grove Village, 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, Clarendon Hills, Darien, Deerfield, Downers Grove, Frankfort, Geneva, Glencoe, Glen Ellyn, Gurnee, Grayslake, Highland Park, Highwood, Hoffman Estates, Island Lake, Lake Bluff, Lake Villa, Lindenhurst, McHenry, Mokena, Mundelein, North Chicago, Northfield, Palatine, Prospect Heights, Ravinia, Riverside, Roselle, Sauganash, Skokie, Spring Grove, Vernon Hills, Wauconda, Western Springs, Willowbrook and Winnetka, and in Delafield, Elm Grove, Madison and Wales, Wisconsin. Additionally, the Company operates various non-bank subsidiaries. First Insurance Funding Corporation, one of the largest commercial insurance premium finance companies operating in the United States, serves commercial loan customers throughout the country. 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 Corporation (formerly known as WestAmerica Mortgage 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. Wayne Hummer Asset Management Company 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. Wayne Hummer Trust Company, a trust subsidiary, allows Wintrust to service customers' trust and investment needs at each banking location. Wintrust Information Technology Services Company provides information technology support, item capture and statement preparation services to the Wintrust subsidiaries. FORWARD-LOOKING STATEMENTS This document contains forward-looking statements within the meaning of federal securities laws. Forward-looking information in this document can be identified through the use of words such as "may," "will," "intend," "plan," "project," "expect," "anticipate," "should," "would," "believe," "estimate," "contemplate," "possible," and "point." Forward-looking statements and information are not historical facts, are premised on many factors, 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 in Item 1A on page 20 of the Company's 2008 Form 10-K. 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 projected growth, anticipated improvements in earnings, earnings per share and other financial performance measures, and management's long-term performance goals, as well as statements relating to the anticipated effects on financial results of condition from expected developments or events, the Company's business and growth strategies, including anticipated internal growth, plans to form additional de novo banks and to open new branch offices, and to pursue additional potential development or acquisitions of banks, wealth management entities or specialty finance businesses. Actual results could differ materially from those addressed in the forward-looking statements as a result of numerous factors, including the following: -- 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). -- Changes in the interest rate environment, which may influence, among other things, the growth of loans and deposits, the quality of the Company's loan portfolio, the pricing of loans and deposits and net interest income. -- The extent of defaults and losses on the Company's loan portfolio, which may require further increases in its allowance for credit losses. -- Distressed global credit and capital markets. -- The ability of the Company to obtain liquidity and income from the sale of premium finance receivables in the future and the unique collection and delinquency risks associated with such loans. -- Legislative or regulatory changes, particularly changes in regulation of financial services companies and/or the products and services offered by financial services companies. -- Failure to identify and complete acquisitions in the future or unexpected difficulties or unanticipated developments related to the integration of acquired entities with the Company. -- Significant litigation involving the Company. -- Changes in general economic conditions in the markets in which the Company operates. -- The ability of the Company to receive dividends from its subsidiaries. -- Unexpected difficulties or unanticipated developments related to the Company's strategy of de novo bank formations and openings. De novo banks typically require over 13 months of operations before becoming profitable, due to the impact of organizational and overhead expenses, the startup phase of generating deposits and the time lag typically involved in redeploying deposits into attractively priced loans and other higher yielding earning assets. -- The loss of customers as a result of technological changes allowing consumers to complete their financial transactions without the use of a bank. -- The ability of the Company to attract and retain senior management experienced in the banking and financial services industries. -- The risk that the terms of the U.S. Treasury Department's Capital Purchase Program could change. -- The effect of continued margin pressure on the Company's financial results. -- Additional deterioration in asset quality. -- Additional charges related to asset impairments. -- The other risk factors set forth in the Company's filings with the Securities and Exchange Commission. 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 or on behalf of Wintrust. 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 release revisions to these forward-looking statements or reflect events or circumstances after the date of this press release. Persons are advised, however, to consult further disclosures management makes on related subjects in its reports filed with the Securities and Exchange Commission and in its press releases. CONFERENCE CALL, WEB CAST AND REPLAY The Company will hold a conference call at 1:00 p.m. (CDT) Wednesday, July 29, 2009 regarding second quarter 2009 results. Individuals interested in listening should call (877) 365-7575 and enter Conference ID #21329783. 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 News and Events, Presentations & Conference Calls. The text of the second quarter 2009 earnings press release will be available on the Company's web site at (http://www.wintrust.com/), Investor News and Events, Press Releases. 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 Selected Financial Condition Data (at end of June 30, March 31, December 31, September 30, June 30, period): 2009 2009 2008 2008 2008 Total assets $11,359,536 $10,818,941 $10,658,326 $9,864,920 $9,923,077 Total loans 7,595,476 7,841,447 7,621,069 7,322,545 7,153,603 Total deposits 9,191,332 8,625,977 8,376,750 7,829,527 7,761,367 Junior subordinated debentures 249,493 249,502 249,515 249,537 249,579 Total shareholders' equity 1,065,076 1,063,227 1,066,572 809,331 749,025 Selected Statements of Income Data: Net interest income $72,497 $64,782 $62,745 $60,680 $59,400 Net revenue (1) 117,949 101,209 82,117 82,810 93,004 Income (loss) before taxes 10,041 9,774 2,727 (4,518) 17,522 Net income (loss) 6,549 6,358 1,955 (2,448) 11,276 Net income (loss) per common share - Basic 0.06 0.06 0.02 (0.13) 0.48 Net income (loss) per common share - Diluted 0.06 0.06 0.02 (0.13) 0.47 Selected Financial Ratios and Other Data: Performance Ratios: Net interest margin (2) 2.91% 2.71% 2.78% 2.74% 2.77% Non-interest income to average assets 1.65 1.38 0.77 0.89 1.40 Non-interest expense to average assets 3.06 2.91 2.57 2.54 2.71 Net overhead ratio(3) 1.41 1.53 1.80 1.65 1.31 Efficiency ratio(2)(4) 72.02 74.10 75.22 76.64 69.54 Return on average assets 0.24 0.24 0.08 (0.10) 0.47 Return on average equity 0.79 0.71 0.22 (1.59) 5.97 Average total assets $11,037,468 $10,724,966 $10,060,206 $9,881,554 $9,682,454 Average total shareholders' equity 1,067,395 1,061,654 846,982 765,892 760,253 Average loans to average deposits ratio 92.8% 93.4% 93.5% 94.1% 94.6% Common Share Data at end of period: Market price per common share $16.08 $12.30 $20.57 $29.35 $23.85 Book value per common share $32.59 $32.64 $33.03 $32.07 $31.70 Common shares outstanding 23,979,804 23,910,983 23,756,674 23,693,799 23,625,841 Other Data at end of period: Leverage ratio (5) 7.9% 8.0% 8.6% 8.1% 7.8% Tier 1 capital to risk-weighted assets (5) 8.9% 9.1% 9.5% 9.2% 8.7% Total capital to risk-weighted assets (5) 12.3% 12.6% 13.1% 10.7% 10.2% Allowance for credit losses (6) $86,699 $75,834 $71,352 $66,820 $58,126 Non-performing loans $238,219 $175,866 $136,094 $113,041 $86,806 Allowance for credit losses to total loans (6) 1.14% 0.97% 0.94% 0.91% 0.81% Non-performing loans to total loans 3.14% 2.24% 1.79% 1.54% 1.21% Number of: Bank subsidiaries 15 15 15 15 15 Non-bank subsidiaries 8 7 7 8 8 Banking offices 79 79 79 79 79 (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 lending-related commitments. WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION Consolidated Statements of Condition - 5 Quarter Trends (Unaudited) (Unaudited) (Unaudited) (Unaudited) June March December September June (In thousands) 30, 2009 31, 2009 31, 2008 30, 2008 30, 2008 Assets Cash and due from banks $122,382 $122,207 $219,794 $158,201 $166,857 Federal funds sold and securities purchased under resale agreements 41,450 98,454 226,110 35,181 73,311 Interest-bearing deposits with banks 655,759 266,512 123,009 4,686 6,438 Available-for-sale securities, at fair value 1,267,410 1,413,576 784,673 1,469,500 1,590,648 Trading account securities 22,973 13,815 4,399 2,243 1,877 Brokerage customer receivables 17,701 15,850 17,901 19,436 19,661 Mortgage loans held-for-sale 821,100 218,707 61,116 68,398 118,379 Loans, net of unearned income 7,595,476 7,841,447 7,621,069 7,322,545 7,153,603 Less: Allowance for loan losses 85,113 74,248 69,767 66,327 57,633 Net loans 7,510,363 7,767,199 7,551,302 7,256,218 7,095,970 Premises and equipment, net 350,447 349,245 349,875 349,388 348,881 Accrued interest receivable and other assets 260,182 263,145 240,664 209,970 208,574 Trade date Securities receivable - - 788,565 - - Goodwill 276,525 276,310 276,310 276,310 276,311 Other intangible assets 13,244 13,921 14,608 15,389 16,170 Total assets $11,359,536 $10,818,941 $10,658,326 $9,864,920 $9,923,077 Liabilities and Shareholders' Equity Deposits: Non-interest bearing $793,173 $745,194 $757,844 $717,587 $688,512 Interest bearing 8,398,159 7,880,783 7,618,906 7,111,940 7,072,855 Total deposits 9,191,332 8,625,977 8,376,750 7,829,527 7,761,367 Notes payable 1,000 1,000 1,000 42,025 41,975 Federal Home Loan Bank advances 435,980 435,981 435,981 438,983 438,983 Other borrowings 244,286 250,488 336,764 296,391 383,009 Subordinated notes 65,000 70,000 70,000 75,000 75,000 Junior subordinated debentures 249,493 249,502 249,515 249,537 249,579 Trade date securities payable - 7,170 - 2,000 97,898 Accrued interest payable and other liabilities 107,369 115,596 121,744 122,126 126,241 Total liabilities 10,294,460 9,755,714 9,591,754 9,055,589 9,174,052 Shareholders' equity: Preferred stock 283,518 282,662 281,873 49,379 - Common stock 26,835 26,766 26,611 26,548 26,478 Surplus 577,473 575,166 571,887 551,453 547,792 Treasury stock (122,302) (122,302) (122,290) (122,290) (122,258) Retained earnings 317,713 315,855 318,793 318,066 325,314 Accumulated other comprehensive loss (18,161) (14,920) (10,302) (13,825) (28,301) Total shareholders' equity 1,065,076 1,063,227 1,066,572 809,331 749,025 Total liabilities And shareholders' equity $11,359,536 $10,818,941 $10,658,326 $9,864,920 $9,923,077 WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION Consolidated Statements of Income (Unaudited) - 5 Quarter Trends Three Months Ended (In thousands, except per share June March December September June data) 30, 2009 31, 2009 31, 2008 30, 2008 30, 2008 Interest income Interest and fees on loans $110,302 $106,887 $107,598 $108,495 $108,803 Interest bearing deposits with banks 767 660 125 27 68 Federal funds sold and securities purchased under resale agreements 66 61 30 197 472 Securities 15,819 14,327 17,868 17,599 16,553 Trading account securities 55 24 33 23 15 Brokerage customer receivables 120 120 164 228 249 Total interest income 127,129 122,079 125,818 126,569 126,160 Interest expense Interest on deposits 43,502 45,953 50,740 53,405 53,862 Interest on Federal Home Loan Bank advances 4,503 4,453 4,570 4,583 4,557 Interest on notes payable and other borrowings 1,752 1,870 2,387 2,661 2,900 Interest on subordinated notes 428 580 770 786 843 Interest on junior subordinated debentures 4,447 4,441 4,606 4,454 4,598 Total interest expense 54,632 57,297 63,073 65,889 66,760 Net interest income 72,497 64,782 62,745 60,680 59,400 Provision for credit losses 23,663 14,473 14,456 24,129 10,301 Net interest income after provision for credit losses 48,834 50,309 48,289 36,551 49,099 Non-interest income Wealth management 6,883 5,926 6,705 7,044 7,771 Mortgage banking 22,596 16,232 3,138 4,488 7,536 Service charges on deposit accounts 3,183 2,970 2,684 2,674 2,565 Gain on sale of premium finance receivables 196 322 361 456 566 Gains (losses) on available-for-sale securities, net 1,540 (2,038) (3,618) 920 (140) Other 11,054 13,015 10,102 6,548 15,306 Total non-interest income 45,452 36,427 19,372 22,130 33,604 Non-interest expense Salaries and employee benefits 46,015 44,820 35,616 35,823 36,976 Equipment 4,015 3,938 4,190 4,050 4,048 Occupancy, net 5,608 6,190 5,947 5,666 5,438 Data processing 3,216 3,136 3,007 2,850 2,918 Advertising and marketing 1,420 1,095 1,642 1,343 1,368 Professional fees 2,871 2,883 2,334 2,195 2,227 Amortization of other intangible assets 676 687 781 781 779 Other 20,424 14,213 11,417 10,491 11,427 Total non-interest expense 84,245 76,962 64,934 63,199 65,181 Income (loss) before income taxes 10,041 9,774 2,727 (4,518) 17,522 Income tax expense (benefit) 3,492 3,416 772 (2,070) 6,246 Net income (loss) $6,549 $6,358 $1,955 $(2,448) $11,276 Preferred stock dividends and discount accretion 5,000 5,000 1,532 544 - Net income (loss) applicable to common shares $1,549 $1,358 $423 $(2,992) $11,276 Net income (loss) per common share - Basic $0.06 $0.06 $0.02 $(0.13) $0.48 Net income (loss) per common share - Diluted $0.06 $0.06 $0.02 $(0.13) $0.47 Cash dividends declared per common share $- $0.18 $- $0.18 $- Weighted average common shares outstanding 23,964 23,855 23,726 23,644 23,608 Dilutive potential common shares 300 221 447 - 531 Average common shares and dilutive common shares 24,264 24,076 24,173 23,644 24,139 WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION Period End Loan Balances - 5 Quarter Trends (Dollars in June March December September June thousands) 30, 2009 31, 2009 31, 2008 30, 2008 30, 2008 Balance: Commercial and commercial real estate $5,083,917 $4,933,355 $4,778,664 $4,673,682 $4,610,550 Home equity 912,399 920,412 896,438 837,127 770,748 Residential real estate 279,345 280,808 262,908 247,203 243,400 Premium finance receivables(2) 1,070,514 1,418,156 1,346,586 1,205,376 1,145,986 Indirect consumer loans(1) 133,808 154,257 175,955 199,845 221,511 Other Loans 115,493 134,459 160,518 159,312 161,408 Total loans, net of unearned income $7,595,476 $7,841,447 $7,621,069 $7,322,545 $7,153,603 Mix: Commercial and commercial real estate 67% 63% 63% 64% 65% Home equity 12 12 12 11 11 Residential real estate 3 4 3 4 3 Premium finance receivables(2) 14 18 18 17 16 Indirect consumer loans(1) 2 2 2 3 3 Other loans 2 1 2 1 2 Total loans, net of unearned income 100% 100% 100% 100% 100% (1) Includes autos, boats, snowmobiles and other indirect consumer loans. (2) Excludes $520 million of premium finance receivables reclassified to held-for-sale in the second quarter of 2009. WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION Period End Deposit Balances - 5 Quarter Trends (Dollars in June 30, March 31, December 31, September 30, June 30, thousands) 2009 2009 2008 2008 2008 Balance: Non-interest bearing $793,173 $745,194 $757,844 $717,587 $688,512 NOW 1,072,255 1,064,663 1,040,105 1,012,393 1,064,792 Wealth management deposits(1) 919,968 833,291 716,178 583,715 599,451 Money market 1,379,164 1,313,157 1,124,068 997,638 900,482 Savings 461,377 406,376 337,808 317,108 326,869 Time certificates of deposit 4,565,395 4,263,296 4,400,747 4,201,086 4,181,261 Total deposits $9,191,332 $8,625,977 $8,376,750 $7,829,527 $7,761,367 Mix: Non-interest bearing 9% 9% 9% 9% 9% NOW 11 12 12 13 14 Wealth management deposits(1) 10 10 9 7 8 Money market 15 15 13 13 11 Savings 5 5 4 4 4 Time certificates of deposit 50 49 53 54 54 Total deposits 100% 100% 100% 100% 100% (1) Represents deposit balances at the Company's subsidiary banks from brokerage customers of Wayne Hummer Investments, the trust and asset management customers of Wayne Hummer Trust Company and brokerage customers from unaffiliated companies which have been placed into deposit accounts of the Banks. WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION Quarterly Average Balances - 5 Quarter Trends Three Months Ended (Dollars in June 30, March 31, December 31, September 30, June 30, thousands) 2009 2009 2008 2008 2008 Liquidity management assets $1,851,179 $1,839,161 $1,607,707 $1,544,465 $1,543,795 Other earning assets 22,694 22,128 21,630 21,687 22,519 Loans, net of unearned income 8,212,572 7,924,849 7,455,418 7,343,845 7,158,317 Total earning assets $10,086,445 $9,786,138 $9,084,755 $8,909,997 $8,724,631 Allowance for loan losses (72,990) (72,044) (67,342) (57,751) (53,798) Cash and due from banks 118,402 107,550 127,700 133,527 125,806 Other assets 905,611 903,322 915,093 895,781 885,815 Total assets $11,037,468 $10,724,966 $10,060,206 $9,881,554 $9,682,454 Interest-bearing deposits $8,097,096 $7,747,879 $7,271,505 $7,127,065 $6,906,437 Federal Home Loan Bank advances 435,983 435,982 439,432 438,983 437,642 Notes payable and other borrowings 249,123 301,894 379,914 398,911 439,130 Subordinated notes 66,648 70,000 73,364 75,000 75,000 Junior subordinated debentures 249,494 249,506 249,520 249,552 249,594 Total interest- bearing liabilities $9,098,344 $8,805,261 $8,413,735 $8,289,511 $8,107,803 Non-interest bearing deposits 754,479 733,911 705,616 678,651 663,526 Other liabilities 117,250 124,140 93,873 147,500 150,872 Equity 1,067,395 1,061,654 846,982 765,892 760,253 Total liabilities and shareholders' equity $11,037,468 $10,724,966 $10,060,206 $9,881,554 $9,682,454 WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION Net Interest Margin - 5 Quarter Trends Three Months Ended Yield June March December September June earned on: 30, 2009 31, 2009 31, 2008 30, 2008 30, 2008 Liquidity management assets 3.71% 3.42% 4.57% 4.70% 4.56% Other earning assets 3.27 2.85 3.94 4.81 4.83 Loans, net of unearned income 5.39 5.48 5.75 5.89 6.12 Total earning assets 5.08% 5.08% 5.54% 5.68% 5.84% Rate paid on: Interest-bearing deposits 2.15% 2.41% 2.78% 2.98% 3.14% Federal Home Loan Bank advances 4.14 4.14 4.14 4.15 4.19 Notes payable and other borrowings 2.82 2.51 2.50 2.65 2.66 Subordinated notes 2.54 3.31 4.11 4.10 4.45 Junior subordinated debentures 7.05 7.12 7.22 6.98 7.29 Total interest- bearing liabilities 2.41% 2.64% 2.98% 3.16% 3.31% Rate Spread 2.67% 2.44% 2.56% 2.52% 2.53% Net Free Funds Contribution 0.24 0.27 0.22 0.22 0.24 Net Interest Margin 2.91% 2.71% 2.78% 2.74% 2.77% WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION Net Interest Margin (Including Call Option Income) - 5 Quarter Trends Three Months Ended June 30, March 31, December 31, September 30, June 30, 2009 2009 2008 2008 2008 Net Interest Income $73,067 $65,402 $63,340 $61,257 $59,992 Call Option Income - 1,998 7,438 2,723 12,083 Net Interest Income Including Call Option Income $73,067 $67,400 $70,778 $63,980 $72,075 Yield on Earning Assets 5.08% 5.08% 5.54% 5.68% 5.84% Rate on Interest-bearing Liabilities 2.41 2.64 2.98 3.16 3.31 Rate Spread 2.67% 2.44% 2.56% 2.52% 2.53% Net Free Funds Contribution 0.24 0.27 0.22 0.22 0.24 Net Interest Margin 2.91% 2.71% 2.78% 2.74% 2.77% Call Option Income - 0.08 0.33 0.12 0.56 Net Interest Margin including Call Option Income 2.91% 2.79% 3.11% 2.86% 3.33% WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION Net Interest Margin (Including Call Option Income) - YTD Trends Six Months Ended Years Ended June 30, December 31, 2009 2008 2007 2006 2005 Net Interest Income $138,469 $247,054 $264,777 $250,507 $218,086 Call Option Income 1,998 29,024 2,628 3,157 11,434 Net Interest Income Including Call Option Income $140,467 $276,078 $267,405 $253,664 $229,520 Yield on Earning Assets 5.08% 5.88% 7.21% 6.91% 5.92% Rate on Interest-bearing Liabilities 2.52 3.31 4.39 4.11 3.00 Rate Spread 2.56% 2.57% 2.82% 2.80% 2.92% Net Free Funds Contribution 0.25 0.24 0.29 0.30 0.24 Net Interest Margin 2.81% 2.81% 3.11% 3.10% 3.16% Call Option Income 0.04 0.33 0.03 0.04 0.17 Net Interest Margin including Call Option Income 2.85% 3.14% 3.14% 3.14% 3.33% WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION Non-Interest Income - 5 Quarter Trends Three Months Ended (Dollars in June March December September June thousands) 30, 2009 31, 2009 31, 2008 30, 2008 30, 2008 Brokerage $4,280 $3,819 $4,310 $4,354 $4,948 Trust and asset management 2,603 2,107 2,395 2,690 2,823 Total wealth management 6,883 5,926 6,705 7,044 7,771 Mortgage banking 22,596 16,232 3,138 4,488 7,536 Service charges on deposit accounts 3,183 2,970 2,684 2,674 2,565 Gain on sale of premium finance receivables 196 322 361 456 566 (Losses) gains on available-for-sale securities, net 1,540 (2,038) (3,618) 920 (140) Other: Fees from covered call options - 1,998 7,438 2,723 12,083 Bank Owned Life Insurance 565 286 (319) 478 851 Trading income 8,274 8,744 (105) 286 77 Administrative services 454 482 670 803 755 Miscellaneous 1,761 1,505 2,418 2,258 1,540 Total other income 11,054 13,015 10,102 6,548 15,306 Total non-interest income $45,452 36,427 19,372 22,130 33,604 WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION Non-Interest Expense - 5 Quarter Trends Three Months Ended (Dollars in June March December September June thousands) 30, 2009 31, 2009 31, 2008 30, 2008 30, 2008 Salaries and employee benefits $46,015 $44,820 $35,616 $35,823 $36,976 Equipment 4,015 3,938 4,190 4,050 4,048 Occupancy, net 5,608 6,190 5,947 5,666 5,438 Data processing 3,216 3,136 3,007 2,850 2,918 Advertising and marketing 1,420 1,095 1,642 1,343 1,368 Professional fees 2,871 2,883 2,334 2,195 2,227 Amortization of other intangibles 676 687 781 781 779 Other: Commissions - 3rd party brokers 791 704 802 985 997 Postage 1,146 1,180 1,012 1,067 1,055 Stationery and supplies 793 768 757 750 756 FDIC Insurance 9,121 3,013 1,681 1,344 1,289 OREO expenses, net 1,072 2,356 641 487 837 Miscellaneous 7,501 6,192 6,524 5,858 6,493 Total other expense 20,424 14,213 11,417 10,491 11,427 Total non-interest expense $84,245 76,962 64,934 63,199 65,181 WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION Allowance for Credit Losses - 5 Quarter Trends Three Months Ended (Dollars in June 30, March 31, December 31, September 30, June 30, thousands) 2009 2009 2008 2008 2008 Balance at beginning of period $74,248 $69,767 $66,327 $57,633 $53,758 Provision for credit losses 23,663 14,473 14,456 24,129 10,301 Reclassification to allowance for lending- related commitments - - (1,093) - - Charge-offs: Commercial and commercial real estate loans 9,846 7,890 7,539 13,543 5,430 Home equity loans 795 511 231 28 25 Residential real estate loans 108 152 627 786 - Premium finance receivables 1,792 1,351 1,275 1,002 913 Indirect consumer Loans 473 361 501 292 271 Consumer and other loans 130 121 157 165 202 Total charge-offs 13,144 10,386 10,330 15,816 6,841 Recoveries: Commercial and commercial real estate loans 107 208 211 216 29 Home equity loans 1 1 1 - - Residential real estate loans - - - - - Premium finance receivables 155 141 144 118 273 Indirect consumer loans 44 29 38 29 61 Consumer and other loans 39 15 13 18 52 Total recoveries 346 394 407 381 415 Net charge-offs (12,798) (9,992) (9,923) (15,435) (6,426) Allowance for loan losses at end of period $85,113 $74,248 $69,767 $66,327 $57,633 Allowance for lending-related commitments at end of period $1,586 $1,586 $1,586 $493 $493 Allowance for credit losses at end of period $86,699 $75,834 $71,353 $66,820 $58,126 Annualized net charge-offs (recoveries) by category as a percentage of its own respective category's average: Commercial and commercial real estate loans 0.78% 0.65% 0.62% 1.15% 0.48% Home equity loans 0.35 0.23 0.11 0.01 0.01 Residential real estate loans 0.09 0.14 0.79 0.92 - Premium finance receivables 0.43 0.35 0.37 0.29 0.23 Indirect consumer loans 1.20 0.81 0.98 0.49 0.38 Consumer and other loans 0.25 0.27 0.35 0.36 0.37 Total loans, net of unearned income 0.63% 0.51% 0.53% 0.84% 0.36% Net charge-offs as a percentage of the provision for loan losses 54.08% 69.04% 68.64% 63.97% 62.38% Loans at period-end $7,595,476 $7,841,447 $7,621,068 $7,322,545 $7,153,603 Allowance for loan losses as a percentage of loans at period-end 1.12% 0.95% 0.92% 0.91% 0.81% Allowance for credit losses as a percentage of loans at period-end 1.14% 0.97% 0.94% 0.91% 0.81% WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION - Non-Performing Loans - 5 Quarter Trends (Dollars in June March December September June thousands) 30, 2009 31, 2009 31, 2008 30, 2008 30, 2008 Loans past due greater than 90 days and still accruing: Residential real estate and home equity (1) $1,447 $726 $617 $1,084 $200 Commercial, consumer and other 7,860 4,958 14,750 6,100 2,259 Premium finance receivables 14,301 9,722 9,339 5,903 5,180 Indirect consumer loans 695 1,076 679 877 471 Total past due greater than 90 days and still accruing 24,303 16,482 25,385 13,964 8,110 Non-accrual loans: Residential real estate and home equity (1) 11,925 9,209 6,528 6,214 3,384 Commercial, consumer and other 184,960 136,397 91,814 81,997 61,918 Premium finance receivables 15,806 12,694 11,454 10,239 13,005 Indirect consumer loans 1,225 1,084 913 627 389 Total non-accrual 213,916 159,384 110,709 99,077 78,696 Total non-performing loans: Residential real estate and home equity (1) 13,372 9,935 7,145 7,298 3,584 Commercial, consumer and other 192,820 141,355 106,564 88,097 64,177 Premium finance receivables 30,107 22,416 20,793 16,142 18,185 Indirect consumer loans 1,920 2,160 1,592 1,504 860 Total non-performing loans $238,219 $175,866 $136,094 $113,041 $86,806 Total non-performing loans by category as a percent of its own respective category's period-end balance: Residential real estate and home equity (1) 1.12% 0.83% 0.62% 0.67% 0.35% Commercial, consumer and other 3.71 2.79 2.16 1.82 1.34 Premium finance receivables 2.81 1.58 1.54 1.34 1.59 Indirect consumer loans 1.44 1.40 0.90 0.75 0.39 Total non-performing loans 3.14% 2.24% 1.79% 1.54% 1.21% Allowance for loan losses as a percentage of non-performing loans 35.73% 42.22% 51.26% 58.67% 66.39% (1) Residential real estate and home equity loans that are non-accrual and past due greater than 90 days and still accruing do not include non-performing mortgage loans held-for-sale. These balances totaled $0 as of June 30, 2009, March 31, 2009, December 31, 2008 and September 30, 2008 and $0.2 million as of June 30, 2008. Mortgage loans held-for sale are carried at either fair value or at the lower of cost or market applied on an aggregate basis by loan type. Charges related to adjustments to record the loans at fair value are recognized in mortgage banking revenue. DATASOURCE: Wintrust Financial Corporation CONTACT: Edward J. Wehmer, President & Chief Executive Officer, or David A. Dykstra, Senior Executive Vice President & Chief Operating Officer, both of Wintrust Financial Corporation, +1-847-615-4096 Web Site: http://www.wintrust.com/

Copyright