Exhibit 99.1
Wintrust Financial Corporation
9700 W. Higgins Road, Suite 800, Rosemont, Illinois 60018
News Release
FOR IMMEDIATE RELEASE | January 17, 2013 | |
FOR MORE INFORMATION CONTACT:
Edward J. Wehmer, President & Chief Executive Officer
David A. Dykstra, Senior Executive Vice President & Chief Operating Officer
(847) 939-9000
Web site address: www.wintrust.com
Wintrust Financial Corporation Reports Fourth Quarter 2012 Net Income of $30.1 Million, an Increase of 57% and Record Full Year 2012 Net Income of $111.2 Million, an Increase of 43%
ROSEMONT, ILLINOIS – Wintrust Financial Corporation (“Wintrust” or “the Company”) (Nasdaq: WTFC) announced net income of $30.1 million or $0.61 per diluted common share for the fourth quarter of 2012 compared to net income of $32.3 million or $0.66 per common diluted share for the third quarter of 2012 and $19.2 million or $0.41 per common diluted share for the fourth quarter of 2011. The Company recorded net income of $111.2 million or $2.31 per common diluted share for the full year of 2012 compared to net income of $77.6 million or $1.67 per common diluted share for the full year of 2011.
Highlights compared with the Third Quarter of 2012*:
• | 12% annualized growth rate in total assets to $17.5 billion |
• | 12% annualized growth rate in total loans to $11.8 billion, excluding covered loans and loans held for sale |
• | 17% annualized growth rate in total deposits to $14.4 billion, with non-interest bearing deposits increasing to 16.6% of total deposits at year-end, up from 15.6% at the start of the quarter |
• | Pre-tax adjusted earnings increased $3.1 million as: net interest income increased $0.2 million, pre-tax adjusted non-interest income increased $4.5 million and acquisition-related pre-tax adjusted non-interest expense increased $1.6 million |
• | Efficiency Ratio, based on pre-tax adjusted earnings, improved to 62.75% |
• | Net overhead ratio, based on pre-tax adjusted earnings, improved to 1.40% |
• | Recorded $2.6 million in securities gains as a result of Management's decision to sell certain securities in conjunction with recording $2.1 million in breakage fees for the termination of approximately $68.4 million longer-term, higher rate repurchase agreements. |
• | Net interest margin declined by ten basis points, with six basis points of the decline related to a larger portion of our earning assets being comprised of liquidity management assets |
• | At year end, the Company's loan pipeline remained strong as evidenced by total period end loans, excluding covered loans and loans held for sale, increasing $339.0 million from the start of the quarter, while total average loans, excluding covered loans and loans held for sale, increased $164.6 million during the quarter |
• | Decrease in total non-performing assets as a percentage of total assets to 1.03%, down from 1.09%, with an allowance coverage ratio of 91% |
• | Tangible common book value per share of $29.28, up from $28.93, resulting in 9% and 10% annual compound growth rates in tangible common book value per share over the past five and ten year periods, respectively. |
• | Completed the acquisition of Hyde Park Bank & Trust Company in December |
* See "Supplemental Financial Measures/Ratios" on page 14/15 for more information on non-GAAP measures.
The Company's total assets of $17.5 billion at December 31, 2012 increased $1.6 billion from December 31, 2011. Total deposits as of December 31, 2012 were $14.4 billion, an increase of $2.1 billion from December 31, 2011. Non-interest bearing deposits increased by $611 million, or 34%, since December 31, 2011, providing further evidence of the success of the Company's commercial lending initiative. NOW, wealth management, money market and savings deposits increased $1.4 billion, or 25%, during the same time period. Total time certificates of deposit at December 31, 2012 increased $98 million, or 2%, compared to December 31, 2011. Total loans, excluding covered loans and loans held for sale, were $11.8 billion as of December 31, 2012, an increase of $1.3 billion, or 12%, over December 31, 2011.
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Edward J. Wehmer, President and Chief Executive Officer, commented, “Our fourth quarter results cap our second consecutive year of record earnings. Full year 2012 net income of $111.2 million represents an increase of 43% over 2011, which in turn was a 22% increase over 2010. The fourth quarter of 2012 was highlighted by strong loan and deposit growth, continued improvement in our credit quality measures, earning asset growth offsetting margin compression, another strong quarter of mortgage banking results, stable expense metrics and the completion of one non-FDIC assisted bank acquisition.”
Mr. Wehmer continued, “Total loans outstanding, excluding covered loans and loans held for sale, increased $339 million in the fourth quarter compared to the third quarter. Approximately $118 million of this growth was attributable to the acquisition of Hyde Park Bank & Trust in early December. Excluding this acquisition, loan growth for the quarter was especially strong in the commercial portfolio, increasing $140 million, commercial real-estate, increasing $58 million, and premium finance receivables - life, increasing $60 million. We experienced most of this loan growth near the end of the current quarter, as evidenced by average loan balances remaining relatively stable in the fourth quarter compared to the third quarter. Funding for loan growth continues to be provided by strong deposit growth. Total deposits increased $581 million in the fourth quarter, with approximately $244 million attributable to the acquisition of Hyde Park Bank & Trust.”
Mr. Wehmer further commented, “Pre-tax adjusted earnings improved by $3.1 million over the previous quarter despite essentially no change in net interest income. The increase is primarily attributable to another strong quarter of mortgage banking revenue partially offset by a $1.6 million increase in pre-tax adjusted non-interest expense. Our net interest margin declined by ten basis points while average earning assets increased by $488 million, which combined created the slight increase in net interest income. The largest contributor to the decline in net interest margin was a larger portion of our earning assets comprised of liquidity management assets, causing a six basis point decline in the margin. A portion of this excess liquidity position will be kept in place through the planned divestiture of the deposits and banking operations of Second Federal Savings and Loan Association of Chicago in February 2013."
Commenting on credit quality, Mr. Wehmer noted, “Our ratio of non-performing loans to total loans, excluding covered loans and loans held for sale, reached 1.00% at the end of the year. This is the lowest reported level since the end of the third quarter in 2007. During the fourth quarter of 2012, our commercial premium finance receivable portfolio experienced a temporary increase in past due balances of approximately $4 million as emergency orders preventing insurance carriers from canceling policies were issued by states affected by Superstorm Sandy. We do not expect to incur any material additional losses as a result of this event and anticipate the higher past due balances to decline during the first quarter of 2013, with levels of past due loans in this segment returning to historical levels."
Turning to the future, Mr. Wehmer stated, “We are excited about the addition of Hyde Park Bank & Trust to the Wintrust family. Strategic acquisitions of this nature and organic branch growth will continue to be an important piece of our long-term strategy. We will continue to maintain discipline with regards to acquisition opportunities, both FDIC-assisted and non-assisted. Our loan pipeline remains consistently strong, allowing us to leverage our existing expense infrastructure and expand where it makes the most sense. We look forward to continuing our earnings growth while growing franchise value and increasing tangible book value.”
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The graphs below illustrate the Company's five year Compound Annual Growth Rate ("CAGR") in total assets, total loans excluding covered loans and loans held for sale, total deposits and tangible common book value per share indicating how Wintrust has fared during the credit crisis.
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The graphs below depict the Company's five year CAGR in net income and pre-tax adjusted earnings. See “Supplemental Financial Measures/Ratios” for additional information on pre-tax adjusted earnings.
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Wintrust’s key operating measures and growth rates for the fourth quarter of 2012, as compared to the sequential and linked quarters are shown in the table below:
% or(5) basis point (bp) change from 3rd Quarter 2012 | % or basis point (bp) change from 4th Quarter 2011 | |||||||||||||||||||
Three Months Ended | ||||||||||||||||||||
(Dollars in thousands) | December 31, 2012 | September 30, 2012 | December 31, 2011 | |||||||||||||||||
Net income | $ | 30,089 | $ | 32,302 | $ | 19,221 | (7 | ) | % | 57 | % | |||||||||
Net income per common share – diluted | $ | 0.61 | $ | 0.66 | $ | 0.41 | (8 | ) | % | 49 | % | |||||||||
Pre-tax adjusted earnings (2) | $ | 72,034 | $ | 68,923 | $ | 59,362 | 5 | % | 21 | % | ||||||||||
Net revenue (1) | $ | 197,965 | $ | 195,520 | $ | 169,559 | 1 | % | 17 | % | ||||||||||
Net interest income | $ | 132,776 | $ | 132,575 | $ | 124,647 | — | % | 7 | % | ||||||||||
Net interest margin (2) | 3.40 | % | 3.50 | % | 3.45 | % | (10 | ) | bp | (5 | ) | bp | ||||||||
Net overhead ratio (2) (3) | 1.48 | % | 1.47 | % | 1.83 | % | 1 | bp | (35 | ) | bp | |||||||||
Net overhead ratio, based on pre-tax adjusted earnings (2) (3) | 1.40 | % | 1.52 | % | 1.62 | % | (12 | ) | bp | (22 | ) | bp | ||||||||
Efficiency ratio (2) (4) | 66.13 | % | 63.67 | % | 69.99 | % | 246 | bp | (386 | ) | bp | |||||||||
Efficiency ratio, based on pre-tax adjusted earnings (2) (4) | 62.75 | % | 63.48 | % | 64.76 | % | (73 | ) | bp | (201 | ) | bp | ||||||||
Return on average assets | 0.69 | % | 0.77 | % | 0.48 | % | (8 | ) | bp | 21 | bp | |||||||||
Return on average common equity | 6.79 | % | 7.57 | % | 4.87 | % | (78 | ) | bp | 192 | bp | |||||||||
At end of period | ||||||||||||||||||||
Total assets | $ | 17,519,613 | $ | 17,018,592 | $ | 15,893,808 | 12 | % | 10 | % | ||||||||||
Total loans, excluding loans held-for-sale, excluding covered loans | $ | 11,828,943 | $ | 11,489,900 | $ | 10,521,377 | 12 | % | 12 | % | ||||||||||
Total loans, including loans held-for-sale, excluding covered loans | $ | 12,241,143 | $ | 12,059,885 | $ | 10,841,901 | 6 | % | 13 | % | ||||||||||
Total deposits | $ | 14,428,544 | $ | 13,847,965 | $ | 12,307,267 | 17 | % | 17 | % | ||||||||||
Total shareholders’ equity | $ | 1,804,705 | $ | 1,761,300 | $ | 1,543,533 | 10 | % | 17 | % | ||||||||||
(1) | Net revenue is net interest income plus non-interest income. |
(2) | See “Supplemental Financial Measures/Ratios” for additional information on this performance measure/ratio. |
(3) | The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period's average total assets. A lower ratio indicates a higher degree of efficiency. |
(4) | The efficiency ratio is calculated by dividing total non-interest expense by tax-equivalent net revenue (less securities gains or losses). A lower ratio indicates more efficient revenue generation. |
(5) | Period-end balance sheet percentage changes are annualized. |
Certain returns, yields, performance ratios, or quarterly growth rates are “annualized” in this presentation to represent an annual time period. This is done for analytical purposes to better discern for decision-making purposes underlying performance trends when compared to full-year or year-over-year amounts. For example, a 5% growth rate for a quarter would represent an annualized 20% growth rate. Additional supplemental financial information showing quarterly trends can be found on the Company’s web site at www.wintrust.com by choosing “Financial Reports” under the “Investor Relations” heading, and then choosing “Supplemental Financial Information.”
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Items Impacting Comparative Financial Results: Acquisitions and Capital
Acquisitions - completed in the past twelve months
On December 12, 2012, the Company completed its acquisition of HPK Financial Corporation (“HPK”). HPK is the parent company of Hyde Park Bank & Trust Company, an Illinois state bank, (“Hyde Park Bank”), which operated two banking locations in the Hyde Park neighborhood of Chicago, Illinois. As part of the transaction, Hyde Park Bank merged into the Company's wholly-owned subsidiary bank, Beverly Bank & Trust Company, N.A. (“Beverly Bank”), and the two acquired banking locations are operating as branches of Beverly Bank under the brand name Hyde Park Bank. HPK had approximately $358 million in assets and $243 million in deposits as of the acquisition date, prior to purchase accounting adjustments. The Company recorded goodwill of $14.1 million on the acquisition.
On September 28, 2012, the Company's wholly-owned subsidiary bank Old Plank Trail Community Bank, N.A. (“Old Plank Trail Bank”), acquired certain assets and liabilities and the banking operations of First United Bank of Crete, Illinois ("First United Bank") in an FDIC-assisted transaction. First United Bank operated four locations in Illinois; one in Crete, two in Frankfort and one in Steger, as well as one location in St. John, Indiana which was subsequently closed.
On July 20, 2012, the Company's wholly-owned subsidiary bank, Hinsdale Bank and Trust Company (“Hinsdale Bank”), assumed the deposits and banking operations of Second Federal Savings and Loan Association of Chicago ("Second Federal") in an FDIC-assisted transaction. Second Federal operated three locations in Illinois; two in Chicago (Brighton Park and Little Village neighborhoods) and one in Cicero. The Company has entered into an agreement to sell the deposits and banking operations of Second Federal. See "Divestiture of Previous FDIC-Assisted Acquisition" on page 7 for more information.
On June 8, 2012, the Company's wholly-owned subsidiary bank Lake Forest Bank and Trust Company (“Lake Forest Bank”), completed its acquisition of Macquarie Premium Funding Inc., the Canadian insurance premium funding business of Macquarie Group. Through this transaction, Lake Forest Bank acquired approximately $213 million of gross premium finance receivables outstanding. The Company recorded goodwill of approximately $22 million on the acquisition.
On April 13, 2012, the Company's wholly-owned subsidiary bank, Old Plank Trail Bank, completed its acquisition of a branch of Suburban Bank & Trust Company (“Suburban”) located in Orland Park, Illinois. Through this transaction, Old Plank Trail Bank acquired approximately $52 million of deposits and $3 million of loans. The Company recorded goodwill of $1.5 million on the branch acquisition.
On March 30, 2012, the Company's wholly-owned subsidiary bank, The Chicago Trust Company, N.A. (“CTC”), completed its acquisition of the trust operations of Suburban. Through this transaction, CTC acquired trust accounts having assets under administration of approximately $160 million, in addition to land trust accounts and various other assets. The Company recorded goodwill of $1.8 million on the acquisition.
On February 10, 2012, the Company's wholly-owned subsidiary, Barrington Bank and Trust Company, N.A. (“Barrington”), acquired certain assets and liabilities and the banking operations of Charter National Bank and Trust (“Charter National”) in an FDIC-assisted transaction. Charter National operated two locations: one in Hoffman Estates and one in Hanover Park.
Summary of FDIC-assisted transactions in the past twelve months
• Old Plank Trail Bank assumed approximately $316 million of the outstanding deposits and approximately $310 million of assets of First United Bank on September 28, 2012, prior to purchase accounting adjustments. A bargain purchase gain of $6.7 million was recognized on this transaction.
• Hinsdale Bank assumed approximately $169 million of the outstanding deposits and approximately $10 million of assets of Second Federal on July 20, 2012, prior to purchase accounting adjustments. A bargain purchase gain of $43,000 was recognized on this transaction.
• Barrington assumed approximately $89 million of the outstanding deposits and approximately $94 million of assets of Charter National on February 10, 2012, prior to purchase accounting adjustments. A bargain purchase gain of $785,000 was recognized on this transaction.
Loans comprise the majority of the assets acquired in the FDIC-assisted transactions and are subject to loss sharing agreements with the FDIC where the FDIC has agreed to reimburse the Company for 80% of losses incurred on the purchased loans. Additionally, the loss share agreements with the FDIC require the Company to reimburse the FDIC in the event that actual losses on covered assets are lower than the original loss estimates agreed upon with the FDIC with respect to such assets in the
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loss share agreements. We refer to the loans subject to these loss-sharing agreements as “covered loans.” We use the term “covered assets” to refer to the total of covered loans, covered OREO and certain other covered assets. The agreements with the FDIC require that the Company follow certain servicing procedures or risk losing FDIC reimbursement of losses related to covered assets.
Divestiture of Previous FDIC-Assisted Acquisition
On November 28, 2012, the Company announced that Hinsdale Bank had entered into a definitive agreement to sell the deposits and the current banking operations of Second Federal, which were acquired in an FDIC-assisted transaction described above, to Self-Help Federal Credit Union. The Company expects that this transaction will be completed in February 2013.
Stock Offerings
In March 2012, the Company issued and sold 126,500 shares, or $126,500,000 aggregate liquidation preference, of Non-Cumulative Perpetual Convertible Preferred Stock, Series C (“Preferred Stock”) in an equity offering.
Capital Ratios
As of December 31, 2012, the Company's estimated capital ratios were 13.0% for total risk-based capital, 12.0% for tier 1 risk-based capital and 10.1% for leverage, above the well capitalized guidelines. Additionally, the Company's tangible common equity ratio was 7.4% at December 31, 2012. Assuming full conversion of both classes of preferred stock, the tangible common equity ratio was 8.4% at December 31, 2012.
In June 2012, the U.S. banking regulators released notices of proposed rulemaking (the “NPRs”) that would substantially revise the current risk-based capital standards to reflect the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act as well as the Basel III international capital standards. It is generally expected that once the proposed rulemakings are finalized, U.S. banks will be required to hold higher amounts of capital, especially common equity, relative to their risk-weighed assets. Under the current proposal, the calculations of risk-weighted assets would change. Risk-weighted assets would be calculated using new and expanded risk-weighting categories, applying a more risk sensitive treatment to certain “high volatility” commercial real estate loans, residential mortgage loans, past due and nonaccrual loans and unfunded commitments of less than one year. In addition, if adopted as proposed, the NPRs would change the capital requirements by, among other things, establishing a new capital standard consisting of common tier 1 capital, increasing the minimum capital ratios for certain existing capital categories and adding a required capital conservation buffer. Additionally, trust preferred securities are phased out as a component of Tier 1 Capital as required under the Dodd Frank Act. The Company has estimated that it would be “well-capitalized” if the fully phased-in capital requirements as proposed in the NPRs were adopted today. Until the proposals are finalized and the final implementation dates are determined, however, the impact of the final rules cannot be fully calculated with a high degree of certainty.
Financial Performance Overview – Fourth Quarter 2012
For the fourth quarter of 2012, net interest income totaled $132.8 million, an increase of $0.2 million as compared to the third quarter of 2012 and $8.1 million as compared to the fourth quarter of 2011. The increases in net interest income on both a sequential and linked quarter basis are the result of the following:
• | Net interest income increased $0.2 million in the fourth quarter of 2012 compared to the third quarter of 2012, due to: |
◦ | Average earning assets for the fourth quarter of 2012 increased by $488 million compared to the third quarter of 2012. This was comprised of average loan growth, excluding covered loans, of $79 million, an increase of $29 million in the average balance of covered loans and an increase of $380 million in the average balance of liquidity management and other assets. |
◦ | The growth in average total loans, excluding covered loans, included an increase of $84 million in commercial, $75 million in commercial real-estate, $22 million in Canada-originated commercial premium finance receivables, partially offset by a decrease of $16 million in U.S.-originated commercial premium finance receivables and a $86 million decrease in mortgage loans held-for-sale. |
◦ | The earning asset growth of $488 million in the fourth quarter of 2012 did not fully offset a 17 basis point decline in the yield on earning assets, creating a decrease in total interest income of $1.6 million in the fourth quarter of 2012 compared to the third quarter of 2012. |
◦ | Funding for the average earning asset growth of $488 million was provided by an increase in total average interest bearing liabilities of $215 million (an increase in interest-bearing deposits of $448 million partially |
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offset by a decrease of $233 million of wholesale funding) and an increase of $273 million in the average balance of net free funds.
◦ | A seven basis point decline in the rate paid on total interest-bearing liabilities more than offset the increase in average balance, creating a $1.8 million reduction in interest expense in the fourth quarter of 2012 compared to the third quarter of 2012. |
◦ | Combined, the reduction of interest expense by $1.8 million and the decrease in interest income of $1.6 million created the $0.2 million increase in net interest income in the fourth quarter of 2012 compared to the third quarter of 2012. |
• | Net interest income increased $8.1 million in the fourth quarter of 2012 compared to the fourth quarter of 2011, due to: |
◦ | Average earning assets for the fourth quarter of 2012 increased by $1.2 billion compared to the fourth quarter of 2011. This was comprised of average loan growth, excluding covered loans, of $1.3 billion partially offset by a decrease of $103 million in the average balance of liquidity management assets and a decrease of $26 million in the average balance of covered loans. |
◦ | The growth in average total loans, excluding covered loans, included an increase of $362 million in commercial loans, $252 million in commercial real-estate loans, $292 million in U.S.-originated commercial premium finance receivables, $268 million in Canadian-originated commercial premium finance receivables, $13 million in life premium finance receivables and $185 million in mortgage loans held-for-sale. |
◦ | The average earning asset growth of $1.2 billion in the fourth quarter of 2012 compared to the fourth quarter of 2011 did not fully offset a 35 basis point decline in the yield on earning assets, creating a decrease in total interest income of $973,000 in the fourth quarter of 2012. |
◦ | Funding for the average earning asset growth of $1.2 billion was provided by an increase in total average interest bearing liabilities of $392 million (an increase in interest-bearing deposits of $1.1 billion partially offset by a decrease of $754 million of wholesale funding) and an increase of $817 million in the average balance of net free funds. |
◦ | A 31 basis point decline in the rate paid on total interest-bearing liabilities more than offset the increase in average balance, creating a $9.1 million reduction in interest expense in the fourth quarter of 2012 compared to the fourth quarter of 2011. |
◦ | Combined, the reduction of interest expense by $9.1 million and the decrease in interest income of $973,000 created the $8.1 million increase in net interest income in the fourth quarter of 2012 compared to the fourth quarter of 2011. |
The net interest margin for the fourth quarter of 2012 was 3.40% compared to 3.50% in the third quarter of 2012 and 3.45% in the fourth quarter of 2011. The changes in net interest margin on both a sequential and linked quarter basis are the result of the following:
• | The net interest margin in the fourth quarter of 2012 declined by ten basis points when compared to the third quarter of 2012, due to: |
◦ | The yield on total average earning assets declined 17 basis points while the rate on total average interest-bearing liabilities decreased seven basis points. |
◦ | Liquidity management assets represented a larger portion of earnings assets in the fourth quarter of 2012 compared to the third quarter of 2012 resulting in a six basis point decline in the margin. |
◦ | The contribution from re-pricing retail deposits and maturing wholesale funding has diminished when compared to previous quarters. Pressure on the net interest margin will be more from the pricing/re-pricing of loan volumes as the low rate environment prohibits further declines in interest-bearing deposits of the same magnitude. |
• | The net interest margin in the fourth quarter of 2012 declined by five basis points when compared to the fourth quarter of 2011, due to: |
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◦ | The yield on total average earning assets declined 35 basis points while the rate on total average interest-bearing liabilities decreased 31 basis points. |
◦ | The contribution from net free funds declined by one basis point. |
◦ | Combined, this caused the net interest margin to decrease by five basis points in the fourth quarter of 2012 when compared to the fourth quarter of 2011. |
Non-interest income totaled $65.2 million in the fourth quarter of 2012, increasing $2.2 million compared to the third quarter of 2012 and $20.3 million, or 45%, compared to the fourth quarter of 2011. The increase in non-interest income in the fourth quarter of 2012 compared to the third quarter of 2012 is primarily attributable to higher mortgage banking revenues, higher gains on available-for-sale securities and favorable foreign currency remeasurements at the Company's Canadian subsidiary, partially offset by a decrease in bargain purchase gains. The increase in non-interest income in the fourth quarter of 2012 compared to the fourth quarter of 2011 was primarily attributable to higher mortgage banking and wealth management revenues and higher gains on available-for-sale securities. Mortgage banking revenue increased $3.6 million when compared to the third quarter of 2012 and increased $16.7 million when compared to the fourth quarter of 2011. The increase in mortgage banking revenue resulted primarily from an increase in gains on sales of loans, which was driven by higher origination volumes in the current quarter due to a favorable mortgage interest rate environment. Loans originated and sold to the secondary market were $1.2 billion in the fourth quarter of 2012 compared to $1.1 billion in the third quarter of 2012 and $883 million in the fourth quarter of 2011 (see “Non-Interest Income” section later in this release for further detail).
Non-interest expense totaled $129.5 million in the fourth quarter of 2012, increasing $5.0 million compared to the third quarter of 2012 and increasing $10.8 million, or 9%, compared to the fourth quarter of 2011. The increase in the current quarter compared to the third quarter of 2012 was primarily attributable to $2.1 million of fees paid on the termination of longer-term, higher rate repurchase agreements, a $1.5 million increase in OREO expense primarily related higher valuation adjustments of properties held in OREO, a $1.0 million increase in occupancy and equipment expenses, $861,000 increase in salaries and employee benefits and a $736,000 increase in postage, partially offset by a $1.5 million reduction in professional fees.
Financial Performance Overview – Full Year 2012
The net interest margin for 2012 was 3.49% compared to 3.42% in 2011. Average earnings assets for 2012 totaled $15.0 billion, an increase of $1.4 billion compared to 2011. This average earning asset growth is primarily a result of the $1.4 billion increase in average loans, excluding covered loans, and $117.1 million of average covered loan growth from the FDIC-assisted bank acquisitions partially offset by a $75.6 million decrease in liquidity management and other earning assets. The majority of the increase in average loans consisted of increases of $487.4 million in commercial loans, $230.3 million in commercial real estate loans, $223.1 million in U.S.-originated commercial premium finance receivables, $140.4 million in Canadian-originated commercial premium finance receivables, $65.3 million in life premium finance receivables and $239.6 million in mortgage loans held-for-sale, partially offset by a $61.0 million decrease in home equity loans. The average earning asset growth of $1.4 billion in 2012 compared to 2011 was primarily funded by a $1.1 billion increase in the average balances of interest-bearing deposits and an increase in the average balance of net free funds of $643.6 million, partially offset by a decrease of $283.7 million of wholesale funding.
Non-interest income totaled $226.1 million in 2012, increasing $36.4 million, or 19%, compared to 2011. The change is primarily attributable to higher mortgage banking and wealth management revenues, partially offset by lower bargain purchase gains recorded in 2012 relating to FDIC-assisted acquisitions than during the prior year. Mortgage banking revenue increased $53.0 million when compared to 2011. The increase in 2012 results primarily from an increase in gains on sales of loans, which in turn was driven by higher origination volumes due to a favorable mortgage interest rate environment in 2012. Loans sold to the secondary market were $3.9 billion in 2012 compared to $2.5 billion in 2011.
Non-interest expense totaled $489.0 million in 2012, increasing $68.6 million compared to 2011. The increase compared to 2011 was primarily attributable to a $50.8 million increase in salaries and employee benefits. Salaries and employee benefits expense increased primarily as a result of a $28.5 million increase in bonus and commissions primarily attributable to the increase in variable pay based revenue and the Company's long-term incentive program, a $17.3 million increase in salaries caused by the addition of employees from the various acquisitions and larger staffing as the Company grows and a $5.0 million increase from employee benefits (primarily health plan and payroll taxes related). Additionally, the Company had an increase of $8.5 million in occupancy and equipment expenses, incurred $2.1 million in fees paid for the termination of longer-term, higher rate repurchase agreements and had a $1.9 million increase in covered asset expenses, partially offset by a $4.2 million decrease in OREO expenses related to lower valuation adjustments on properties held in OREO and lower losses realized on the sale of OREO properties and a $1.6 million reduction in professional fees.
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Financial Performance Overview – Credit Quality
The ratio of non-performing assets to total assets decreased in the current quarter to 1.03% as compared 1.09% at September 30, 2012 and 1.30% at December 31, 2011. Non-performing assets, excluding covered assets, totaled $181.0 million at December 31, 2012, compared to $185.3 million at September 30, 2012 and $206.6 million at December 31, 2011.
Non-performing loans, excluding covered loans, totaled $118.2 million, or 1.00% of total loans, at December 31, 2012, compared to $117.9 million, or 1.03% of total loans, at September 30, 2012 and $120.1 million, or 1.14% of total loans, at December 31, 2011. OREO, excluding covered OREO, of $62.9 million at December 31, 2012 decreased $4.5 million compared to $67.4 million at September 30, 2012 and decreased $23.6 million compared to $86.5 million at December 31, 2011.
The provision for credit losses, excluding the provision for covered loan losses, totaled $20.7 million for the fourth quarter of 2012 compared to $18.2 million for the third quarter of 2012 and $16.6 million in the fourth quarter of 2011. Net charge-offs as a percentage of loans, excluding covered loans, for the fourth quarter of 2012 totaled 83 basis points on an annualized basis compared to 60 basis points on an annualized basis in the third quarter of 2012 and 93 basis points on an annualized basis in the fourth quarter of 2011. The provision for credit losses, excluding the provision for covered loan losses, totaled $72.4 million for the full year of 2012 compared to $97.9 in the full year of 2011. Net charge-offs, excluding covered loans, for the full year of 2012 totaled $74.8 million or 65 basis points compared to $103.3 million or 102 basis points in 2011.
Excluding the allowance for covered loan losses, the allowance for credit losses at December 31, 2012 totaled $122.0 million, or 1.03% of total loans, compared to $123.6 million, or 1.17% of total loans at December 31, 2011 and $124.9 million, or 1.09% of total loans at September 30, 2012.
Financial Performance Overview – Earnings Per Share
The following table shows the computation of basic and diluted earnings per share for the periods indicated:
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||||
(In thousands, except per share data) | 2012 | 2011 | 2012 | 2011 | |||||||||||||
Net income | $ | 30,089 | $ | 19,221 | $ | 111,196 | $ | 77,575 | |||||||||
Less: Preferred stock dividends and discount accretion | 2,616 | 1,032 | 9,093 | 4,128 | |||||||||||||
Net income applicable to common shares—Basic | (A) | 27,473 | 18,189 | 102,103 | 73,447 | ||||||||||||
Add: Dividends on convertible preferred stock, if dilutive | 2,581 | — | 8,955 | — | |||||||||||||
Net income applicable to common shares—Diluted | (B) | 30,054 | 18,189 | 111,058 | 73,447 | ||||||||||||
Weighted average common shares outstanding | (C) | 36,543 | 35,958 | 36,365 | 35,355 | ||||||||||||
Effect of dilutive potential common shares: | |||||||||||||||||
Common stock equivalents | 7,438 | 8,480 | 7,313 | 8,636 | |||||||||||||
Convertible preferred stock, if dilutive | 5,020 | — | 4,356 | — | |||||||||||||
Weighted average common shares and effect of dilutive potential common shares | (D) | 49,001 | 44,438 | 48,034 | 43,991 | ||||||||||||
Net income per common share: | |||||||||||||||||
Basic | (A/C) | $ | 0.75 | $ | 0.51 | $ | 2.81 | $ | 2.08 | ||||||||
Diluted | (B/D) | $ | 0.61 | $ | 0.41 | $ | 2.31 | $ | 1.67 | ||||||||
Potentially dilutive common shares can result from stock options, restricted stock unit awards, stock warrants, the Company’s convertible preferred stock, tangible equity unit shares and shares to be issued under the Employee Stock Purchase Plan and the Directors Deferred Fee and Stock Plan, being treated as if they had been either exercised or issued, computed by application of the treasury stock method. While potentially dilutive common shares are typically included in the computation of diluted earnings per share, potentially dilutive common shares are excluded from this computation in periods in which the effect would reduce the loss per share or increase the income per share. For diluted earnings per share, net income applicable to common shares can be affected by the conversion of the Company’s convertible preferred stock. Where the effect of this conversion would reduce the loss per share or increase the income per share, net income applicable to common shares is not adjusted by the associated preferred dividends.
10
WINTRUST FINANCIAL CORPORATION
Selected Financial Highlights
Three months ended December 31, | Years Ended December 31, | |||||||||||||||
(Dollars in thousands, except per share data) | 2012 | 2011 | 2012 | 2011 | ||||||||||||
Selected Financial Condition Data (at end of period): | ||||||||||||||||
Total assets | $ | 17,519,613 | $ | 15,893,808 | ||||||||||||
Total loans, excluding covered loans | 11,828,943 | 10,521,377 | ||||||||||||||
Total deposits | 14,428,544 | 12,307,267 | ||||||||||||||
Junior subordinated debentures | 249,493 | 249,493 | ||||||||||||||
Total shareholders’ equity | 1,804,705 | 1,543,533 | ||||||||||||||
Selected Statements of Income Data: | ||||||||||||||||
Net interest income | $ | 132,776 | $ | 124,647 | $ | 519,516 | $ | 461,377 | ||||||||
Net revenue (1) | 197,965 | 169,559 | 745,608 | 651,075 | ||||||||||||
Pre-tax adjusted earnings (2) | 72,034 | 59,362 | 273,376 | 220,778 | ||||||||||||
Net income | 30,089 | 19,221 | 111,196 | 77,575 | ||||||||||||
Net income per common share – Basic | $ | 0.75 | $ | 0.51 | $ | 2.81 | $ | 2.08 | ||||||||
Net income per common share – Diluted | $ | 0.61 | $ | 0.41 | $ | 2.31 | $ | 1.67 | ||||||||
Selected Financial Ratios and Other Data: | ||||||||||||||||
Performance Ratios: | ||||||||||||||||
Net interest margin (2) | 3.40 | % | 3.45 | % | 3.49 | % | 3.42 | % | ||||||||
Non-interest income to average assets | 1.50 | % | 1.11 | % | 1.37 | % | 1.27 | % | ||||||||
Non-interest expense to average assets | 2.99 | % | 2.94 | % | 2.96 | % | 2.82 | % | ||||||||
Net overhead ratio (2) (3) | 1.48 | % | 1.83 | % | 1.59 | % | 1.55 | % | ||||||||
Net overhead ratio, based on pre-tax adjusted earnings (2) (3) | 1.40 | % | 1.62 | % | 1.49 | % | 1.61 | % | ||||||||
Efficiency ratio (2) (4) | 66.13 | % | 69.99 | % | 65.85 | % | 64.58 | % | ||||||||
Efficiency ratio, based on pre-tax adjusted earnings (2) (4) | 62.75 | % | 64.76 | % | 62.50 | % | 63.75 | % | ||||||||
Return on average assets | 0.69 | % | 0.48 | % | 0.67 | % | 0.52 | % | ||||||||
Return on average common equity | 6.79 | % | 4.87 | % | 6.60 | % | 5.12 | % | ||||||||
Average total assets | $ | 17,248,650 | $ | 16,014,209 | $ | 16,529,617 | $ | 14,920,160 | ||||||||
Average total shareholders’ equity | 1,786,824 | 1,531,936 | 1,696,276 | 1,484,720 | ||||||||||||
Average loans to average deposits ratio (excluding covered loans) | 85.6 | % | 86.6 | % | 87.8 | % | 88.3 | % | ||||||||
Average loans to average deposits ratio (including covered loans) | 90.0 | % | 91.9 | % | 92.6 | % | 92.8 | % | ||||||||
Common Share Data at end of period: | ||||||||||||||||
Market price per common share | $ | 36.70 | $ | 28.05 | ||||||||||||
Book value per common share (2) | $ | 37.78 | $ | 34.23 | ||||||||||||
Tangible common book value per share (2) | $ | 29.28 | $ | 26.72 | ||||||||||||
Common shares outstanding | 36,861,956 | 35,978,349 | ||||||||||||||
Other Data at end of period:(8) | ||||||||||||||||
Leverage Ratio (5) | 10.1 | % | 9.4 | % | ||||||||||||
Tier 1 capital to risk-weighted assets (5) | 12.0 | % | 11.8 | % | ||||||||||||
Total capital to risk-weighted assets (5) | 13.0 | % | 13.0 | % | ||||||||||||
Tangible common equity ratio (TCE) (2)(7) | 7.4 | % | 7.5 | % | ||||||||||||
Tangible common equity ratio, assuming full conversion of preferred stock (2) (7) | 8.4 | % | 7.8 | % | ||||||||||||
Allowance for credit losses (6) | $ | 121,988 | $ | 123,612 | ||||||||||||
Non-performing loans | $ | 118,083 | $ | 120,084 | ||||||||||||
Allowance for credit losses to total loans (6) | 1.03 | % | 1.17 | % | ||||||||||||
Non-performing loans to total loans | 1.00 | % | 1.14 | % | ||||||||||||
Number of: | ||||||||||||||||
Bank subsidiaries | 15 | 15 | ||||||||||||||
Non-bank subsidiaries | 8 | 7 | ||||||||||||||
Banking offices | 111 | 99 | ||||||||||||||
(1) | Net revenue includes net interest income and non-interest income |
(2) | See “Supplemental Financial Measures/Ratios” for additional information on this performance measure/ratio. |
(3) | The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period’s total average assets. A lower ratio indicates a higher degree of efficiency. |
(4) | The efficiency ratio is calculated by dividing total non-interest expense by tax-equivalent net revenue (less securities gains or losses). A lower ratio indicates more efficient revenue generation. |
(5) | Capital ratios for current quarter-end are estimated. |
(6) | The allowance for credit losses includes both the allowance for loan losses and the allowance for unfunded lending-related commitments, but excludes the allowance for covered loan losses. |
(7) | Total shareholders’ equity minus preferred stock and total intangible assets divided by total assets minus total intangible assets. |
(8) | Asset quality ratios exclude covered loans. |
11
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(In thousands) | (Unaudited) December 31, 2012 | (Unaudited) September 30, 2012 | December 31, 2011 | |||||||||
Assets | ||||||||||||
Cash and due from banks | $ | 284,731 | $ | 186,752 | $ | 148,012 | ||||||
Federal funds sold and securities purchased under resale agreements | 30,297 | 26,062 | 21,692 | |||||||||
Interest-bearing deposits with other banks | 1,035,743 | 934,430 | 749,287 | |||||||||
Available-for-sale securities, at fair value | 1,796,076 | 1,256,768 | 1,291,797 | |||||||||
Trading account securities | 583 | 635 | 2,490 | |||||||||
Federal Home Loan Bank and Federal Reserve Bank stock, at cost | 79,564 | 80,687 | 100,434 | |||||||||
Brokerage customer receivables | 24,864 | 30,633 | 27,925 | |||||||||
Mortgage loans held-for-sale, at fair value | 385,033 | 548,300 | 306,838 | |||||||||
Mortgage loans held-for-sale, at lower of cost or market | 27,167 | 21,685 | 13,686 | |||||||||
Loans, net of unearned income, excluding covered loans | 11,828,943 | 11,489,900 | 10,521,377 | |||||||||
Covered loans | 560,087 | 657,525 | 651,368 | |||||||||
Total loans | 12,389,030 | 12,147,425 | 11,172,745 | |||||||||
Less: Allowance for loan losses | 107,351 | 112,287 | 110,381 | |||||||||
Less: Allowance for covered loan losses | 13,454 | 21,926 | 12,977 | |||||||||
Net loans | 12,268,225 | 12,013,212 | 11,049,387 | |||||||||
Premises and equipment, net | 501,205 | 461,905 | 431,512 | |||||||||
FDIC indemnification asset | 208,160 | 238,305 | 344,251 | |||||||||
Accrued interest receivable and other assets | 511,617 | 557,884 | 444,912 | |||||||||
Trade date securities receivable | — | 307,295 | 634,047 | |||||||||
Goodwill | 345,401 | 331,634 | 305,468 | |||||||||
Other intangible assets | 20,947 | 22,405 | 22,070 | |||||||||
Total assets | $ | 17,519,613 | $ | 17,018,592 | $ | 15,893,808 | ||||||
Liabilities and Shareholders’ Equity | ||||||||||||
Deposits: | ||||||||||||
Non-interest bearing | $ | 2,396,264 | $ | 2,162,215 | 1,785,433 | |||||||
Interest bearing | 12,032,280 | 11,685,750 | 10,521,834 | |||||||||
Total deposits | 14,428,544 | 13,847,965 | 12,307,267 | |||||||||
Notes payable | 2,093 | 2,275 | 52,822 | |||||||||
Federal Home Loan Bank advances | 414,122 | 414,211 | 474,481 | |||||||||
Other borrowings | 274,411 | 377,229 | 443,753 | |||||||||
Secured borrowings - owed to securitization investors | — | — | 600,000 | |||||||||
Subordinated notes | 15,000 | 15,000 | 35,000 | |||||||||
Junior subordinated debentures | 249,493 | 249,493 | 249,493 | |||||||||
Trade date securities payable | — | 412 | 47 | |||||||||
Accrued interest payable and other liabilities | 331,245 | 350,707 | 187,412 | |||||||||
Total liabilities | 15,714,908 | 15,257,292 | 14,350,275 | |||||||||
Shareholders’ Equity: | ||||||||||||
Preferred stock | 176,406 | 176,371 | 49,768 | |||||||||
Common stock | 37,108 | 36,647 | 35,982 | |||||||||
Surplus | 1,036,295 | 1,018,417 | 1,001,316 | |||||||||
Treasury stock | (7,838 | ) | (7,490 | ) | (112 | ) | ||||||
Retained earnings | 555,023 | 527,550 | 459,457 | |||||||||
Accumulated other comprehensive income (loss) | 7,711 | 9,805 | (2,878 | ) | ||||||||
Total shareholders’ equity | 1,804,705 | 1,761,300 | 1,543,533 | |||||||||
Total liabilities and shareholders’ equity | $ | 17,519,613 | $ | 17,018,592 | $ | 15,893,808 | ||||||
12
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED, except for the year ended December 31, 2011)
Three months ended December 31, | Years Ended December 31, | |||||||||||||||
(In thousands, except per share data) | 2012 | 2011 | 2012 | 2011 | ||||||||||||
Interest income | ||||||||||||||||
Interest and fees on loans | $ | 146,946 | $ | 143,514 | $ | 583,872 | $ | 552,938 | ||||||||
Interest bearing deposits with banks | 739 | 696 | 1,552 | 3,419 | ||||||||||||
Federal funds sold and securities purchased under resale agreements | 13 | 33 | 38 | 116 | ||||||||||||
Securities | 8,086 | 12,574 | 38,134 | 46,219 | ||||||||||||
Trading account securities | 6 | 6 | 28 | 44 | ||||||||||||
Federal Home Loan Bank and Federal Reserve Bank stock | 656 | 591 | 2,550 | 2,297 | ||||||||||||
Brokerage customer receivables | 197 | 203 | 847 | 760 | ||||||||||||
Total interest income | 156,643 | 157,617 | 627,021 | 605,793 | ||||||||||||
Interest expense | ||||||||||||||||
Interest on deposits | 16,208 | 19,685 | 68,305 | 87,938 | ||||||||||||
Interest on Federal Home Loan Bank advances | 2,835 | 4,186 | 12,103 | 16,320 | ||||||||||||
Interest on notes payable and other borrowings | 1,566 | 2,804 | 8,966 | 11,023 | ||||||||||||
Interest on secured borrowings - owed to securitization investors | — | 3,076 | 5,087 | 12,113 | ||||||||||||
Interest on subordinated notes | 66 | 176 | 428 | 750 | ||||||||||||
Interest on junior subordinated debentures | 3,192 | 3,043 | 12,616 | 16,272 | ||||||||||||
Total interest expense | 23,867 | 32,970 | 107,505 | 144,416 | ||||||||||||
Net interest income | 132,776 | 124,647 | 519,516 | 461,377 | ||||||||||||
Provision for credit losses | 19,546 | 18,817 | 76,436 | 102,638 | ||||||||||||
Net interest income after provision for credit losses | 113,230 | 105,830 | 443,080 | 358,739 | ||||||||||||
Non-interest income | ||||||||||||||||
Wealth management | 13,634 | 11,686 | 52,680 | 44,517 | ||||||||||||
Mortgage banking | 34,702 | 18,025 | 109,970 | 56,942 | ||||||||||||
Service charges on deposit accounts | 4,534 | 3,973 | 16,971 | 14,963 | ||||||||||||
Gains on available-for-sale securities, net | 2,561 | 309 | 4,895 | 1,792 | ||||||||||||
Gain on bargain purchases, net | 85 | — | 7,503 | 37,974 | ||||||||||||
Trading (losses) gains, net | (120 | ) | 216 | (1,900 | ) | 337 | ||||||||||
Other | 9,793 | 10,703 | 35,973 | 33,173 | ||||||||||||
Total non-interest income | 65,189 | 44,912 | 226,092 | 189,698 | ||||||||||||
Non-interest expense | ||||||||||||||||
Salaries and employee benefits | 76,140 | 66,744 | 288,589 | 237,785 | ||||||||||||
Equipment | 6,468 | 5,093 | 23,222 | 18,267 | ||||||||||||
Occupancy, net | 8,480 | 7,975 | 32,294 | 28,764 | ||||||||||||
Data processing | 4,178 | 4,062 | 15,739 | 14,568 | ||||||||||||
Advertising and marketing | 2,725 | 3,207 | 9,438 | 8,380 | ||||||||||||
Professional fees | 3,158 | 3,710 | 15,262 | 16,874 | ||||||||||||
Amortization of other intangible assets | 1,108 | 1,062 | 4,324 | 3,425 | ||||||||||||
FDIC insurance | 3,039 | 3,244 | 13,422 | 14,143 | ||||||||||||
OREO expenses, net | 5,269 | 8,821 | 22,103 | 26,340 | ||||||||||||
Other | 18,983 | 14,850 | 64,647 | 51,858 | ||||||||||||
Total non-interest expense | 129,548 | 118,768 | 489,040 | 420,404 | ||||||||||||
Income before taxes | 48,871 | 31,974 | 180,132 | 128,033 | ||||||||||||
Income tax expense | 18,782 | 12,753 | 68,936 | 50,458 | ||||||||||||
Net income | $ | 30,089 | $ | 19,221 | $ | 111,196 | $ | 77,575 | ||||||||
Preferred stock dividends and discount accretion | $ | 2,616 | $ | 1,032 | $ | 9,093 | $ | 4,128 | ||||||||
Net income applicable to common shares | $ | 27,473 | $ | 18,189 | $ | 102,103 | $ | 73,447 | ||||||||
Net income per common share - Basic | $ | 0.75 | $ | 0.51 | $ | 2.81 | $ | 2.08 | ||||||||
Net income per common share - Diluted | $ | 0.61 | $ | 0.41 | $ | 2.31 | $ | 1.67 | ||||||||
Cash dividends declared per common share | $ | — | $ | — | $ | 0.18 | $ | 0.18 | ||||||||
Weighted average common shares outstanding | 36,543 | 35,958 | 36,365 | 35,355 | ||||||||||||
Dilutive potential common shares | 12,458 | 8,480 | 11,669 | 8,636 | ||||||||||||
Average common shares and dilutive common shares | 49,001 | 44,438 | 48,034 | 43,991 | ||||||||||||
13
SUPPLEMENTAL FINANCIAL MEASURES/RATIOS
The accounting and reporting policies of Wintrust conform to generally accepted accounting principles (“GAAP”) in the United States and prevailing practices in the banking industry. However, certain non-GAAP performance measures and ratios are used by management to evaluate and measure the Company’s performance. These include taxable-equivalent net interest income (including its individual components), net interest margin (including its individual components), the efficiency ratio, tangible common equity ratio, tangible common book value per share and pre-tax adjusted earnings. Management believes that these measures and ratios provide users of the Company’s financial information a more meaningful view of the performance of the interest-earning assets and interest-bearing liabilities and of the Company’s operating efficiency. Other financial holding companies may define or calculate these measures and ratios differently.
Management reviews yields on certain asset categories and the net interest margin of the Company and its banking subsidiaries on a fully taxable-equivalent (“FTE”) basis. In this non-GAAP presentation, net interest income is adjusted to reflect tax-exempt interest income on an equivalent before-tax basis. This measure ensures comparability of net interest income arising from both taxable and tax-exempt sources. Net interest income on a FTE basis is also used in the calculation of the Company’s efficiency ratio. The efficiency ratio, which is calculated by dividing non-interest expense by total taxable-equivalent net revenue (less securities gains or losses), measures how much it costs to produce one dollar of revenue. Securities gains or losses are excluded from this calculation to better match revenue from daily operations to operational expenses. Management considers the tangible common equity ratio and tangible book value per common share as useful measurements of the Company’s equity. Pre-tax adjusted earnings is a significant metric in assessing the Company’s operating performance. Pre-tax adjusted earnings is calculated by adjusting income before taxes to exclude the provision for credit losses and certain significant items.
The net overhead ratio and the efficiency ratio are primarily reviewed by the Company based on pre-tax adjusted earnings. The Company believes that these measures provide a more meaningful view of the Company’s operating efficiency and expense management. The net overhead ratio, based on pre-tax adjusted earnings, is calculated by netting total adjusted non-interest expense and total adjusted non-interest income, annualizing this amount, and dividing it by total average assets. Adjusted non-interest expense is calculated by subtracting OREO expenses, covered loan collection expense, defeasance cost, seasonal payroll tax fluctuation and fees to terminate repurchase agreements. Adjusted non-interest income is calculated by adding back the recourse obligation on loans previously sold and subtracting gains or adding back losses on foreign currency remeasurement, investment partnerships, bargain purchase, trading and available-for-sale securities activity.
The efficiency ratio, based on pre-tax adjusted earnings, is calculated by dividing adjusted non-interest expense by adjusted taxable-equivalent net revenue. Adjusted taxable-equivalent net revenue is comprised of fully taxable equivalent net interest income and adjusted non-interest income.
14
The following table presents a reconciliation of certain non-GAAP performance measures and ratios used by the Company to evaluate and measure the Company’s performance to the most directly comparable GAAP financial measures for the last 5 quarters:
Three Months Ended | Years Ended | |||||||||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | December 31, | |||||||||||||||||||||||
(Dollars and shares in thousands) | 2012 | 2012 | 2012 | 2012 | 2011 | 2012 | 2011 | |||||||||||||||||||||
Calculation of Net Interest Margin and Efficiency Ratio | ||||||||||||||||||||||||||||
(A) Interest Income (GAAP) | $ | 156,643 | $ | 158,201 | $ | 155,691 | $ | 156,486 | $ | 157,617 | $ | 627,021 | $ | 605,793 | ||||||||||||||
Taxable-equivalent adjustment: | ||||||||||||||||||||||||||||
- Loans | 159 | 148 | 135 | 134 | 132 | 576 | 458 | |||||||||||||||||||||
- Liquidity Management Assets | 349 | 352 | 333 | 329 | 320 | 1,363 | 1,224 | |||||||||||||||||||||
- Other Earning Assets | 1 | 1 | 3 | 3 | 2 | 8 | 12 | |||||||||||||||||||||
Interest Income - FTE | $ | 157,152 | $ | 158,702 | $ | 156,162 | $ | 156,952 | $ | 158,071 | $ | 628,968 | $ | 607,487 | ||||||||||||||
(B) Interest Expense (GAAP) | 23,867 | 25,626 | 27,421 | 30,591 | 32,970 | 107,505 | 144,416 | |||||||||||||||||||||
Net interest income - FTE | $ | 133,285 | $ | 133,076 | $ | 128,741 | $ | 126,361 | $ | 125,101 | $ | 521,463 | $ | 463,071 | ||||||||||||||
(C) Net Interest Income (GAAP) (A minus B) | $ | 132,776 | $ | 132,575 | $ | 128,270 | $ | 125,895 | $ | 124,647 | $ | 519,516 | $ | 461,377 | ||||||||||||||
(D) Net interest margin (GAAP) | 3.39 | % | 3.49 | % | 3.49 | % | 3.54 | % | 3.44 | % | 3.47 | % | 3.41 | % | ||||||||||||||
Net interest margin - FTE | 3.40 | % | 3.50 | % | 3.51 | % | 3.55 | % | 3.45 | % | 3.49 | % | 3.42 | % | ||||||||||||||
(E) Efficiency ratio (GAAP) | 66.30 | % | 63.83 | % | 65.80 | % | 68.42 | % | 70.17 | % | 66.02 | % | 64.75 | % | ||||||||||||||
Efficiency ratio - FTE | 66.13 | % | 63.67 | % | 65.63 | % | 68.24 | % | 69.99 | % | 65.85 | % | 64.58 | % | ||||||||||||||
Efficiency ratio - Based on pre-tax adjusted earnings | 62.75 | % | 63.48 | % | 61.38 | % | 62.31 | % | 64.76 | % | 62.50 | % | 63.75 | % | ||||||||||||||
(F) Net Overhead Ratio (GAAP) | 1.48 | % | 1.47 | % | 1.63 | % | 1.80 | % | 1.83 | % | 1.59 | % | 1.55 | % | ||||||||||||||
Net Overhead ratio - Based on pre-tax adjusted earnings | 1.40 | % | 1.52 | % | 1.46 | % | 1.58 | % | 1.62 | % | 1.49 | % | 1.61 | % | ||||||||||||||
Calculation of Tangible Common Equity ratio (at period end) | ||||||||||||||||||||||||||||
Total shareholders’ equity | $ | 1,804,705 | $ | 1,761,300 | $ | 1,722,074 | $ | 1,687,921 | $ | 1,543,533 | ||||||||||||||||||
(G) Less: Preferred stock | (176,406 | ) | (176,371 | ) | (176,337 | ) | (176,302 | ) | (49,768 | ) | ||||||||||||||||||
Less: Intangible assets | (366,348 | ) | (354,039 | ) | (352,109 | ) | (329,396 | ) | (327,538 | ) | ||||||||||||||||||
(H) Total tangible common shareholders’ equity | $ | 1,261,951 | $ | 1,230,890 | $ | 1,193,628 | $ | 1,182,223 | $ | 1,166,227 | ||||||||||||||||||
Total assets | $ | 17,519,613 | $ | 17,018,592 | $ | 16,576,282 | $ | 16,172,018 | $ | 15,893,808 | ||||||||||||||||||
Less: Intangible assets | (366,348 | ) | (354,039 | ) | (352,109 | ) | (329,396 | ) | (327,538 | ) | ||||||||||||||||||
(I) Total tangible assets | $ | 17,153,265 | $ | 16,664,553 | $ | 16,224,173 | $ | 15,842,622 | $ | 15,566,270 | ||||||||||||||||||
Tangible common equity ratio (H/I) | 7.4 | % | 7.4 | % | 7.4 | % | 7.5 | % | 7.5 | % | ||||||||||||||||||
Tangible common equity ratio, assuming full conversion of preferred stock ((H-G)/I) | 8.4 | % | 8.4 | % | 8.4 | % | 8.6 | % | 7.8 | % | ||||||||||||||||||
Calculation of Pre-Tax Adjusted Earnings | ||||||||||||||||||||||||||||
Income before taxes | $ | 48,871 | $ | 52,173 | $ | 41,329 | $ | 37,759 | $ | 31,974 | $ | 180,132 | $ | 128,033 | ||||||||||||||
Add: Provision for credit losses | 19,546 | 18,799 | 20,691 | 17,400 | 18,817 | 76,436 | 102,638 | |||||||||||||||||||||
Add: OREO expenses, net | 5,269 | 3,808 | 5,848 | 7,178 | 8,821 | 22,103 | 26,340 | |||||||||||||||||||||
Add: Recourse obligation on loans previously sold | — | — | (36 | ) | 36 | 986 | — | 439 | ||||||||||||||||||||
Add: Covered loan collection expense | 836 | 1,201 | 1,323 | 1,399 | 944 | 4,759 | 2,831 | |||||||||||||||||||||
Add: Defeasance cost | — | — | 148 | 848 | — | 996 | — | |||||||||||||||||||||
Add: Seasonal payroll tax fluctuation | (873 | ) | (1,121 | ) | (271 | ) | 2,265 | (932 | ) | — | — | |||||||||||||||||
Add: (Gain) loss on foreign currency remeasurement | (826 | ) | 825 | — | — | — | (1 | ) | — | |||||||||||||||||||
Add: Fees for Termination of Repurchase Agreements | 2,110 | — | — | — | — | 2,110 | — | |||||||||||||||||||||
Less: (Gain) loss from investment partnerships | (373 | ) | (718 | ) | (65 | ) | (1,395 | ) | (723 | ) | (2,551 | ) | 600 | |||||||||||||||
Less: Gain on bargain purchases, net | (85 | ) | (6,633 | ) | 55 | (840 | ) | — | (7,503 | ) | (37,974 | ) | ||||||||||||||||
Less: Trading losses (gains), net | 120 | 998 | 928 | (146 | ) | (216 | ) | 1,900 | (337 | ) | ||||||||||||||||||
Less: Gains on available-for-sale securities, net | (2,561 | ) | (409 | ) | (1,109 | ) | (816 | ) | (309 | ) | (4,895 | ) | (1,792 | ) | ||||||||||||||
Pre-tax adjusted earnings | $ | 72,034 | $ | 68,923 | $ | 68,841 | $ | 63,688 | $ | 59,362 | $ | 273,486 | $ | 220,778 | ||||||||||||||
Calculation of book value per share | ||||||||||||||||||||||||||||
Total shareholders’ equity | $ | 1,804,705 | $ | 1,761,300 | $ | 1,722,074 | $ | 1,687,921 | $ | 1,543,533 | ||||||||||||||||||
Less: Preferred stock | (176,406 | ) | (176,371 | ) | (176,337 | ) | (176,302 | ) | (49,768 | ) | ||||||||||||||||||
(J) Total common equity | $ | 1,628,299 | $ | 1,584,929 | $ | 1,545,737 | $ | 1,511,619 | $ | 1,493,765 | ||||||||||||||||||
Actual common shares outstanding | 36,862 | 36,411 | 36,341 | 36,289 | 35,978 | |||||||||||||||||||||||
Add: TEU conversion shares | 6,241 | 6,133 | 6,760 | 6,593 | 7,666 | |||||||||||||||||||||||
(K) Common shares used for book value calculation | 43,103 | 42,544 | 43,101 | 42,882 | 43,644 | |||||||||||||||||||||||
Book value per share (J/K) | $ | 37.78 | $ | 37.25 | $ | 35.86 | $ | 35.25 | $ | 34.23 | ||||||||||||||||||
Tangible common book value per share (H/K) | $ | 29.28 | $ | 28.93 | $ | 27.69 | $ | 27.57 | $ | 26.72 | ||||||||||||||||||
15
LOANS
Loan Portfolio Mix and Growth Rates
% Growth | ||||||||||||||||||
(Dollars in thousands) | December 31, 2012 | September 30, 2012 | December 31, 2011 | From (1) September 30, 2012 | From December 31, 2011 | |||||||||||||
Balance: | ||||||||||||||||||
Commercial | $ | 2,914,798 | $ | 2,771,053 | $ | 2,498,313 | 21 | % | 17 | % | ||||||||
Commercial real-estate | 3,864,118 | 3,699,712 | 3,514,261 | 18 | 10 | |||||||||||||
Home equity | 788,474 | 807,592 | 862,345 | (9 | ) | (9 | ) | |||||||||||
Residential real-estate | 367,213 | 376,678 | 350,289 | (10 | ) | 5 | ||||||||||||
Premium finance receivables - commercial | 1,987,856 | 1,982,945 | 1,412,454 | 1 | 41 | |||||||||||||
Premium finance receivables - life insurance | 1,725,166 | 1,665,620 | 1,695,225 | 14 | 2 | |||||||||||||
Indirect consumer (2) | 77,333 | 77,378 | 64,545 | — | 20 | |||||||||||||
Consumer and other | 103,985 | 108,922 | 123,945 | (18 | ) | (16 | ) | |||||||||||
Total loans, net of unearned income, excluding covered loans | $ | 11,828,943 | $ | 11,489,900 | $ | 10,521,377 | 12 | % | 12 | % | ||||||||
Covered loans | 560,087 | 657,525 | 651,368 | (59 | ) | (14 | ) | |||||||||||
Total loans, net of unearned income | $ | 12,389,030 | $ | 12,147,425 | $ | 11,172,745 | 8 | % | 11 | % | ||||||||
Mix: | ||||||||||||||||||
Commercial | 24 | % | 23 | % | 22 | % | ||||||||||||
Commercial real-estate | 31 | 30 | 31 | |||||||||||||||
Home equity | 6 | 7 | 8 | |||||||||||||||
Residential real-estate | 3 | 3 | 3 | |||||||||||||||
Premium finance receivables - commercial | 16 | 16 | 13 | |||||||||||||||
Premium finance receivables - life insurance | 14 | 14 | 15 | |||||||||||||||
Indirect consumer (2) | 1 | 1 | 1 | |||||||||||||||
Consumer and other | 1 | 1 | 1 | |||||||||||||||
Total loans, net of unearned income, excluding covered loans | 96 | % | 95 | % | 94 | % | ||||||||||||
Covered loans | 4 | 5 | 6 | |||||||||||||||
Total loans, net of unearned income | 100 | % | 100 | % | 100 | % | ||||||||||||
(1) | Annualized |
(2) | Includes autos, boats, snowmobiles and other indirect consumer loans. |
16
As of December 31, 2012 | % of Total Balance | Nonaccrual | > 90 Days Past Due and Still Accruing | Allowance For Loan Losses Allocation | |||||||||||||||
(Dollars in thousands) | Balance | ||||||||||||||||||
Commercial: | |||||||||||||||||||
Commercial and industrial | $ | 1,628,203 | 24.0 | % | $ | 19,409 | $ | — | $ | 17,040 | |||||||||
Franchise | 196,395 | 2.9 | 1,792 | — | 2,880 | ||||||||||||||
Mortgage warehouse lines of credit | 215,076 | 3.2 | — | — | 2,134 | ||||||||||||||
Community Advantage - homeowner associations | 81,496 | 1.2 | — | — | 204 | ||||||||||||||
Aircraft | 17,364 | 0.3 | — | — | 44 | ||||||||||||||
Asset-based lending | 572,438 | 8.4 | 536 | — | 5,066 | ||||||||||||||
Municipal | 91,824 | 1.4 | — | — | 1,041 | ||||||||||||||
Leases | 90,443 | 1.3 | — | — | 248 | ||||||||||||||
Other | 16,549 | 0.2 | — | — | 137 | ||||||||||||||
Purchased non-covered commercial loans (1) | 5,010 | 0.1 | — | 496 | — | ||||||||||||||
Total commercial | $ | 2,914,798 | 43.0 | % | $ | 21,737 | $ | 496 | $ | 28,794 | |||||||||
Commercial Real-Estate: | |||||||||||||||||||
Residential construction | $ | 40,401 | 0.6 | % | $ | 3,110 | $ | — | $ | 1,301 | |||||||||
Commercial construction | 170,955 | 2.5 | 2,159 | — | 3,194 | ||||||||||||||
Land | 134,197 | 2.0 | 11,299 | — | 4,829 | ||||||||||||||
Office | 569,711 | 8.4 | 4,196 | — | 5,446 | ||||||||||||||
Industrial | 577,937 | 8.5 | 2,089 | — | 5,516 | ||||||||||||||
Retail | 568,896 | 8.4 | 7,792 | — | 5,292 | ||||||||||||||
Multi-family | 396,691 | 5.9 | 2,586 | — | 10,644 | ||||||||||||||
Mixed use and other | 1,349,254 | 19.9 | 16,742 | — | 15,913 | ||||||||||||||
Purchased non-covered commercial real-estate (1) | 56,076 | 0.8 | — | 749 | — | ||||||||||||||
Total commercial real-estate | $ | 3,864,118 | 57.0 | % | $ | 49,973 | $ | 749 | $ | 52,135 | |||||||||
Total commercial and commercial real-estate | $ | 6,778,916 | 100.0 | % | $ | 71,710 | $ | 1,245 | $ | 80,929 | |||||||||
Commercial real-estate - collateral location by state: | |||||||||||||||||||
Illinois | $ | 3,094,376 | 80.1 | % | |||||||||||||||
Wisconsin | 321,070 | 8.3 | |||||||||||||||||
Total primary markets | $ | 3,415,446 | 88.4 | % | |||||||||||||||
Florida | 70,316 | 1.8 | |||||||||||||||||
Arizona | 38,262 | 1.0 | |||||||||||||||||
Indiana | 49,675 | 1.3 | |||||||||||||||||
Other (no individual state greater than 0.5%) | 290,419 | 7.5 | |||||||||||||||||
Total | $ | 3,864,118 | 100.0 | % | |||||||||||||||
(1) | Purchased loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. Loan agings are based upon contractually required payments. |
17
DEPOSITS
Deposit Portfolio Mix and Growth Rates
% Growth | ||||||||||||||||||
(Dollars in thousands) | December 31, 2012 | September 30, 2012 | December 31, 2011 | From (1) September 30, 2012 | From December 31, 2011 | |||||||||||||
Balance: | ||||||||||||||||||
Non-interest bearing | $ | 2,396,264 | $ | 2,162,215 | $ | 1,785,433 | 43 | % | 34 | % | ||||||||
NOW | 2,022,957 | 1,841,743 | 1,698,778 | 39 | 19 | |||||||||||||
Wealth Management deposits (2) | 991,902 | 979,306 | 788,311 | 5 | 26 | |||||||||||||
Money Market | 2,761,498 | 2,596,702 | 2,263,253 | 25 | 22 | |||||||||||||
Savings | 1,275,012 | 1,156,466 | 888,592 | 41 | 43 | |||||||||||||
Time certificates of deposit | 4,980,911 | 5,111,533 | 4,882,900 | (10 | ) | 2 | ||||||||||||
Total deposits | $ | 14,428,544 | $ | 13,847,965 | $ | 12,307,267 | 17 | % | 17 | % | ||||||||
Mix: | ||||||||||||||||||
Non-interest bearing | 17 | % | 16 | % | 15 | % | ||||||||||||
NOW | 14 | 13 | 14 | |||||||||||||||
Wealth Management deposits (2) | 7 | 7 | 6 | |||||||||||||||
Money Market | 19 | 19 | 18 | |||||||||||||||
Savings | 9 | 8 | 7 | |||||||||||||||
Time certificates of deposit | 34 | 37 | 40 | |||||||||||||||
Total deposits | 100 | % | 100 | % | 100 | % | ||||||||||||
(1) | Annualized |
(2) | Represents deposit balances of the Company’s subsidiary banks from brokerage customers of Wayne Hummer Investments, trust and asset management customers of The Chicago Trust Company and brokerage customers from unaffiliated companies which have been placed into deposit accounts of the Banks. |
Time Certificates of Deposit
Maturity/Re-pricing Analysis
As of December 31, 2012
(Dollars in thousands) | CDARs & Brokered Certificates of Deposit (1) | MaxSafe Certificates of Deposit (1) | Variable Rate Certificates of Deposit (2) | Other Fixed Rate Certificates of Deposit (1) | Total Time Certificates of Deposit | Weighted-Average Rate of Maturing Time Certificates of Deposit (3) | |||||||||||||||||
1-3 months | $ | 120,508 | $ | 55,738 | $ | 159,590 | $ | 690,665 | $ | 1,026,501 | 0.71 | % | |||||||||||
4-6 months | 145,665 | 47,960 | — | 788,347 | 981,972 | 0.68 | % | ||||||||||||||||
7-9 months | 124,002 | 37,779 | — | 608,649 | 770,430 | 0.86 | % | ||||||||||||||||
10-12 months | 4,590 | 43,088 | — | 492,607 | 540,285 | 0.77 | % | ||||||||||||||||
13-18 months | 40,000 | 31,958 | — | 380,288 | 452,246 | 1.03 | % | ||||||||||||||||
19-24 months | 18,367 | 13,548 | — | 271,035 | 302,950 | 1.10 | % | ||||||||||||||||
24+ months | 95,574 | 51,494 | — | 759,459 | 906,527 | 1.71 | % | ||||||||||||||||
Total | $ | 548,706 | $ | 281,565 | $ | 159,590 | $ | 3,991,050 | 4,980,911 | 0.97 | % | ||||||||||||
(1) | This category of certificates of deposit is shown by contractual maturity date. |
(2) | This category includes variable rate certificates of deposit and savings certificates with the majority repricing on at least a monthly basis. |
(3) | Weighted-average rate excludes the impact of purchase accounting fair value adjustments. |
18
NET INTEREST INCOME
The following table presents a summary of Wintrust’s average balances, net interest income and related net interest margins, calculated on a fully tax-equivalent basis, for the fourth quarter of 2012 compared to the fourth quarter of 2011 (linked quarters):
Three months ended December 31, 2012 | Three months ended December 31, 2011 | |||||||||||||||||||||
(Dollars in thousands) | Average | Interest | Rate | Average | Interest | Rate | ||||||||||||||||
Liquidity management assets (1) (2) (7) | $ | 2,949,034 | $ | 9,844 | 1.33 | % | $ | 3,051,850 | $ | 14,215 | 1.85 | % | ||||||||||
Other earning assets (2) (3) (7) | 27,482 | 203 | 2.95 | 28,828 | 210 | 2.90 | ||||||||||||||||
Loans, net of unearned income (2) (4) (7) | 12,001,433 | 134,347 | 4.45 | 10,662,516 | 128,518 | 4.78 | ||||||||||||||||
Covered loans | 626,449 | 12,758 | 8.10 | 652,157 | 15,128 | 9.20 | ||||||||||||||||
Total earning assets (7) | $ | 15,604,398 | $ | 157,152 | 4.01 | % | $ | 14,395,351 | $ | 158,071 | 4.36 | % | ||||||||||
Allowance for loan and covered loan losses | (135,156 | ) | (137,423 | ) | ||||||||||||||||||
Cash and due from banks | 206,914 | 130,437 | ||||||||||||||||||||
Other assets | 1,572,494 | 1,625,844 | ||||||||||||||||||||
Total assets | $ | 17,248,650 | $ | 16,014,209 | ||||||||||||||||||
Interest-bearing deposits | $ | 11,709,058 | $ | 16,209 | 0.55 | % | $ | 10,563,090 | $ | 19,685 | 0.74 | % | ||||||||||
Federal Home Loan Bank advances | 414,289 | 2,835 | 2.72 | 474,549 | 4,186 | 3.50 | ||||||||||||||||
Notes payable and other borrowings | 397,807 | 1,565 | 1.57 | 468,139 | 2,804 | 2.38 | ||||||||||||||||
Secured borrowings - owed to securitization investors | — | — | — | 600,000 | 3,076 | 2.03 | ||||||||||||||||
Subordinated notes | 15,000 | 66 | 1.72 | 38,370 | 176 | 1.79 | ||||||||||||||||
Junior subordinated notes | 249,493 | 3,192 | 5.01 | 249,493 | 3,043 | 4.77 | ||||||||||||||||
Total interest-bearing liabilities | $ | 12,785,647 | $ | 23,867 | 0.74 | % | $ | 12,393,641 | $ | 32,970 | 1.05 | % | ||||||||||
Non-interest bearing deposits | 2,314,935 | 1,755,446 | ||||||||||||||||||||
Other liabilities | 361,244 | 333,186 | ||||||||||||||||||||
Equity | 1,786,824 | 1,531,936 | ||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 17,248,650 | $ | 16,014,209 | ||||||||||||||||||
Interest rate spread (5) (7) | 3.27 | % | 3.31 | % | ||||||||||||||||||
Net free funds/contribution (6) | $ | 2,818,751 | 0.13 | % | $ | 2,001,710 | 0.14 | % | ||||||||||||||
Net interest income/Net interest margin (7) | $ | 133,285 | 3.40 | % | $ | 125,101 | 3.45 | % | ||||||||||||||
(1) | Liquidity management assets include available-for-sale securities, interest earning deposits with banks, federal funds sold and securities purchased under resale agreements. |
(2) | Interest income on tax-advantaged loans, trading securities and securities reflects a tax-equivalent adjustment based on a marginal federal corporate tax rate of 35%. The total adjustments for the three months ended December 31, 2012 and 2011 were $509,000 and $454,000, respectively. |
(3) | Other earning assets include brokerage customer receivables and trading account securities. |
(4) | Loans, net of unearned income, include loans held-for-sale and non-accrual loans. |
(5) | Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities. |
(6) | Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities. |
(7) | See “Supplemental Financial Measures/Ratios” for additional information on this performance ratio. |
19
The following table presents a summary of Wintrust’s average balances, net interest income and related net interest margins, calculated on a fully tax-equivalent basis, for the fourth quarter of 2012 compared to the third quarter of 2012 (sequential quarters):
Three months ended December 31, 2012 | Three months ended September 30, 2012 | |||||||||||||||||||||
(Dollars in thousands) | Average | Interest | Rate | Average | Interest | Rate | ||||||||||||||||
Liquidity management assets (1) (2) (7) | $ | 2,949,034 | $ | 9,844 | 1.33 | % | $ | 2,565,151 | $ | 9,061 | 1.41 | % | ||||||||||
Other earning assets (2) (3) (7) | 27,482 | 203 | 2.95 | 31,142 | 222 | 2.83 | ||||||||||||||||
Loans, net of unearned income (2) (4) (7) | 12,001,433 | 134,347 | 4.45 | 11,922,450 | 137,022 | 4.57 | ||||||||||||||||
Covered loans | 626,449 | 12,758 | 8.10 | 597,518 | 12,397 | 8.25 | ||||||||||||||||
Total earning assets (7) | $ | 15,604,398 | $ | 157,152 | 4.01 | % | $ | 15,116,261 | $ | 158,702 | 4.18 | % | ||||||||||
Allowance for loan and covered loan losses | (135,156 | ) | (138,740 | ) | ||||||||||||||||||
Cash and due from banks | 206,914 | 185,435 | ||||||||||||||||||||
Other assets | 1,572,494 | 1,542,473 | ||||||||||||||||||||
Total assets | $ | 17,248,650 | $ | 16,705,429 | ||||||||||||||||||
Interest-bearing deposits | $ | 11,709,058 | $ | 16,209 | 0.55 | % | $ | 11,261,184 | $ | 16,794 | 0.59 | % | ||||||||||
Federal Home Loan Bank advances | 414,289 | 2,835 | 2.72 | 441,445 | 2,817 | 2.54 | ||||||||||||||||
Notes payable and other borrowings | 397,807 | 1,565 | 1.57 | 426,675 | 2,024 | 1.89 | ||||||||||||||||
Secured borrowings - owed to securitization investors | — | — | — | 176,904 | 795 | 1.79 | ||||||||||||||||
Subordinated notes | 15,000 | 66 | 1.72 | 15,000 | 67 | 1.75 | ||||||||||||||||
Junior subordinated notes | 249,493 | 3,192 | 5.01 | 249,493 | 3,129 | 4.91 | ||||||||||||||||
Total interest-bearing liabilities | $ | 12,785,647 | $ | 23,867 | 0.74 | % | $ | 12,570,701 | $ | 25,626 | 0.81 | % | ||||||||||
Non-interest bearing deposits | 2,314,935 | 2,092,028 | ||||||||||||||||||||
Other liabilities | 361,244 | 305,960 | ||||||||||||||||||||
Equity | 1,786,824 | 1,736,740 | ||||||||||||||||||||
Total liabilities and shareholders’equity | $ | 17,248,650 | $ | 16,705,429 | ||||||||||||||||||
Interest rate spread (5) (7) | 3.27 | % | 3.37 | % | ||||||||||||||||||
Net free funds/contribution (6) | $ | 2,818,751 | 0.13 | % | $ | 2,545,560 | 0.13 | % | ||||||||||||||
Net interest income/Net interest margin (7) | $ | 133,285 | 3.40 | % | $ | 133,076 | 3.50 | % | ||||||||||||||
(1) | Liquidity management assets include available-for-sale securities, interest earning deposits with banks, federal funds sold and securities purchased under resale agreements. |
(2) | Interest income on tax-advantaged loans, trading securities and securities reflects a tax-equivalent adjustment based on a marginal federal corporate tax rate of 35%. The total adjustments for the three months ended December 31, 2012 was $509,000 and for the three months ended September 30, 2012 was $501,000. |
(3) | Other earning assets include brokerage customer receivables and trading account securities. |
(4) | Loans, net of unearned income, include loans held-for-sale and non-accrual loans. |
(5) | Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities. |
(6) | Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities. |
(7) | See “Supplemental Financial Measures/Ratios” for additional information on this performance ratio. |
20
The following table presents a summary of Wintrust’s average balances, net interest income and related net interest margins, calculated on a fully tax-equivalent basis, for the twelve months ended December 31, 2012 compared to the twelve months ended December 31, 2011:
Year Ended December 31, 2012 | Year Ended December 31, 2011 | |||||||||||||||||||||
(Dollars in thousands) | Average | Interest | Rate | Average | Interest | Rate | ||||||||||||||||
Liquidity management assets (1) (2) (7) | $ | 2,763,154 | $ | 43,638 | 1.58 | % | $ | 2,840,157 | $ | 53,275 | 1.88 | % | ||||||||||
Other earning assets (2) (3) (7) | 29,967 | 882 | 2.94 | 28,570 | 816 | 2.86 | ||||||||||||||||
Loans, net of unearned income (2) (4) (7) | 11,520,499 | 530,446 | 4.60 | 10,145,462 | 509,870 | 5.03 | ||||||||||||||||
Covered loans | 637,607 | 54,002 | 8.47 | 520,550 | 43,526 | 8.36 | ||||||||||||||||
Total earning assets (7) | $ | 14,951,227 | $ | 628,968 | 4.21 | % | $ | 13,534,739 | $ | 607,487 | 4.49 | % | ||||||||||
Allowance for loan and covered loan losses | (134,946 | ) | (127,660 | ) | ||||||||||||||||||
Cash and due from banks | 172,215 | 138,795 | ||||||||||||||||||||
Other assets | 1,541,121 | 1,374,286 | ||||||||||||||||||||
Total assets | $ | 16,529,617 | $ | 14,920,160 | ||||||||||||||||||
Interest-bearing deposits | $ | 11,069,056 | $ | 68,305 | 0.62 | % | $ | 10,012,522 | $ | 87,938 | 0.88 | % | ||||||||||
Federal Home Loan Bank advances | 459,972 | 12,104 | 2.63 | 449,874 | 16,320 | 3.63 | ||||||||||||||||
Notes payable and other borrowings | 437,970 | 8,965 | 2.05 | 384,256 | 11,023 | 2.87 | ||||||||||||||||
Secured borrowings - owed to securitization investors | 273,753 | 5,087 | 1.86 | 600,000 | 12,113 | 2.02 | ||||||||||||||||
Subordinated notes | 22,158 | 428 | 1.90 | 43,411 | 750 | 1.70 | ||||||||||||||||
Junior subordinated notes | 249,493 | 12,616 | 4.97 | 249,493 | 16,272 | 6.43 | ||||||||||||||||
Total interest-bearing liabilities | $ | 12,512,402 | $ | 107,505 | 0.86 | % | $ | 11,739,556 | $ | 144,416 | 1.23 | % | ||||||||||
Non-interest bearing deposits | 2,059,160 | 1,481,594 | ||||||||||||||||||||
Other liabilities | 261,779 | 214,290 | ||||||||||||||||||||
Equity | 1,696,276 | 1,484,720 | ||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 16,529,617 | $ | 14,920,160 | ||||||||||||||||||
Interest rate spread (5) (7) | 3.35 | % | 3.26 | % | ||||||||||||||||||
Net free funds/contribution (6) | $ | 2,438,825 | 0.14 | % | $ | 1,795,183 | 0.16 | % | ||||||||||||||
Net interest income/Net interest margin (7) | $ | 521,463 | 3.49 | % | $ | 463,071 | 3.42 | % | ||||||||||||||
(1) | Liquidity management assets include available-for-sale securities, interest earning deposits with banks, federal funds sold and securities purchased under resale agreements |
(2) | Interest income on tax-advantaged loans, trading securities and securities reflects a tax-equivalent adjustment based on a marginal federal corporate tax rate of 35%. The total adjustments for both of the twelve months ended December 31, 2012 and 2011 were $1.9 million and $1.7 million, respectively. |
(3) | Other earning assets include brokerage customer receivables and trading account securities. |
(4) | Loans, net of unearned income, include loans held-for-sale and non-accrual loans. |
(5) | Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities. |
(6) | Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities. |
(7) | See “Supplemental Financial Measures/Ratios” for additional information on this performance ratio. |
21
NON-INTEREST INCOME
For the fourth quarter of 2012, non-interest income totaled $65.2 million, an increase of $20.3 million, or 45%, compared to the fourth quarter of 2011. The increase was primarily attributable to higher mortgage banking and wealth management revenues, higher gains on available-for-sale securities and favorable foreign currency remeasurements at the Company's Canadian subsidiary, partially offset by a decrease in fees from covered call options. For the full year, non-interest income for 2012 totaled $226.1 million and increased $36.4 million, or 19%, compared to 2011.
The following table presents non-interest income by category for the periods presented:
Three months ended December 31, | $ | % | |||||||||||||
(Dollars in thousands) | 2012 | 2011 | Change | Change | |||||||||||
Brokerage | $ | 6,404 | $ | 5,960 | $ | 444 | 7 | ||||||||
Trust and asset management | 7,230 | 5,726 | 1,504 | 26 | |||||||||||
Total wealth management | 13,634 | 11,686 | 1,948 | 17 | |||||||||||
Mortgage banking | 34,702 | 18,025 | 16,677 | 93 | |||||||||||
Service charges on deposit accounts | 4,534 | 3,973 | 561 | 14 | |||||||||||
Gains on available-for-sale securities, net | 2,561 | 309 | 2,252 | NM | |||||||||||
Gain on bargain purchases, net | 85 | — | 85 | NM | |||||||||||
Trading (losses) gains, net | (120 | ) | 216 | (336 | ) | NM | |||||||||
Other: | |||||||||||||||
Fees from covered call options | 2,156 | 5,377 | (3,221 | ) | (60 | ) | |||||||||
Interest rate swap fees | 2,178 | 1,587 | 591 | 37 | |||||||||||
Bank Owned Life Insurance | 686 | 681 | 5 | 1 | |||||||||||
Administrative services | 867 | 789 | 78 | 10 | |||||||||||
Miscellaneous | 3,906 | 2,269 | 1,637 | 72 | |||||||||||
Total Other | 9,793 | 10,703 | (910 | ) | (9 | ) | |||||||||
Total Non-Interest Income | $ | 65,189 | $ | 44,912 | $ | 20,277 | 45 | ||||||||
NM - Not Meaningful | |||||||||||||||
Years Ended December 31, | |||||||||||||||
$ | % | ||||||||||||||
(Dollars in thousands) | 2012 | 2011 | Change | Change | |||||||||||
Brokerage | $ | 25,477 | $ | 24,601 | $ | 876 | 4 | ||||||||
Trust and asset management | 27,203 | 19,916 | 7,287 | 37 | |||||||||||
Total wealth management | 52,680 | 44,517 | 8,163 | 18 | |||||||||||
Mortgage banking | 109,970 | 56,942 | 53,028 | 93 | |||||||||||
Service charges on deposit accounts | 16,971 | 14,963 | 2,008 | 13 | |||||||||||
Gains on available-for-sale securities, net | 4,895 | 1,792 | 3,103 | 173 | |||||||||||
Gain on bargain purchases, net | 7,503 | 37,974 | (30,471 | ) | (80 | ) | |||||||||
Trading (losses) gains, net | (1,900 | ) | 337 | (2,237 | ) | NM | |||||||||
Other: | |||||||||||||||
Fees from covered call options | 10,476 | 13,570 | (3,094 | ) | (23 | ) | |||||||||
Interest rate swap fees | 9,381 | 6,770 | 2,611 | 39 | |||||||||||
Bank Owned Life Insurance | 2,920 | 2,569 | 351 | 14 | |||||||||||
Administrative services | 3,281 | 3,071 | 210 | 7 | |||||||||||
Miscellaneous | 9,915 | 7,193 | 2,722 | 38 | |||||||||||
Total Other | 35,973 | 33,173 | 2,800 | 8 | |||||||||||
Total Non-Interest Income | $ | 226,092 | $ | 189,698 | $ | 36,394 | 19 | ||||||||
NM - Not Meaningful | |||||||||||||||
22
The significant changes in non-interest income for the quarter ended December 31, 2012 compared to the quarter ended December 31, 2011 are discussed below.
Wealth management revenue totaled $13.6 million in the fourth quarter of 2012 and $11.7 million in the fourth quarter of 2011, an increase of 17%. The increase is mostly attributable to additional revenues resulting from the acquisition of a community bank trust operation on March 30, 2012 as well as continued growth within the existing business. Wealth management revenue is comprised of the trust and asset management revenue of The Chicago Trust Company and Great Lakes Advisors and the brokerage commissions, money managed fees and insurance product commissions at Wayne Hummer Investments.
For the quarter ended December 31, 2012, mortgage banking revenue totaled $34.7 million, an increase of $16.7 million when compared to the fourth quarter of 2011. The increase in mortgage banking revenue in the fourth quarter of 2012 as compared to the fourth quarter of 2011 resulted primarily from an increase in gain on sales of loans, which were driven by higher origination volumes due to a favorable mortgage interest rate environment in 2012 and better pricing in the current quarter. Mortgage banking revenue includes revenue from activities related to originating, selling and servicing residential real estate loans for the secondary market.
A summary of mortgage banking components is shown below:
Mortgage banking revenue
Three Months Ended | Years Ended | |||||||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||||||
(Dollars in thousands) | 2012 | 2012 | 2011 | 2012 | 2011 | |||||||||||||||
Mortgage loans originated and sold | $ | 1,178,010 | $ | 1,119,762 | $ | 883,017 | $ | 3,866,012 | $ | 2,545,385 | ||||||||||
Mortgage loans serviced for others | $ | 1,005,372 | $ | 997,235 | $ | 958,749 | ||||||||||||||
Fair value of mortgage servicing rights (MSRs) | $ | 6,750 | $ | 6,276 | $ | 6,700 | ||||||||||||||
MSRs as a percentage of loans serviced | 0.67 | % | 0.63 | % | 0.70 | % | ||||||||||||||
The Company recognized $2.6 million of net gains on available-for-sale securities in the fourth quarter of 2012 compared to net gains of $309,000 in the fourth quarter of 2011. The increase in net gains resulted from Management's decision to sell certain securities in conjunction with the termination of longer-term, higher rate repurchase agreements in the fourth quarter of 2012. See the “Non-Interest Expense” section of this release for more information on the termination of the repurchase agreements.
Other non-interest income for the fourth quarter of 2012 totaled $9.8 million, a decrease of $910,000 compared to the fourth quarter of 2011. Fees from certain covered call option transactions decreased by $3.2 million in the fourth quarter of 2012 as compared to the same period in the prior year. Historically, compression in the net interest margin was effectively offset by the Company's covered call strategy. An illustration of the past effectiveness of this strategy is shown in the Supplemental Financial Information section (see page titled “Net Interest Margin (Including Call Option Income)”). Interest rate swap fee revenue totaled $2.2 million for the fourth quarter of 2012 an increase of $591,000 over the $1.6 million recorded in the fourth quarter of 2011. Miscellaneous income increased in the fourth quarter of 2012 compared to the prior year quarter as a result of an $826,000 foreign currency remeasurement gain recorded at the Company's Canadian subsidiary and a $310,000 gain recognized on the non-exercise of a value appreciation instrument (“VAI”) issued to the FDIC as part of the FDIC-assisted acquisition of First United Bank.
23
NON-INTEREST EXPENSE
Non-interest expense for the fourth quarter of 2012 totaled $129.5 million and increased approximately $10.8 million, or 9%, compared to the fourth quarter of 2011. On a full year basis, non-interest expense for 2012 totaled $489.0 million and increased $68.6 million, or 16%, compared to 2011.
The following table presents non-interest expense by category for the periods presented:
Three months ended December 31, | $ Change | % Change | |||||||||||||
(Dollars in thousands) | 2012 | 2011 | |||||||||||||
Salaries and employee benefits: | |||||||||||||||
Salaries | $ | 40,457 | $ | 36,676 | 3,781 | 10 | |||||||||
Commissions and bonus | 23,968 | 19,263 | 4,705 | 24 | |||||||||||
Benefits | 11,715 | 10,805 | 910 | 8 | |||||||||||
Total salaries and employee benefits | 76,140 | 66,744 | 9,396 | 14 | |||||||||||
Equipment | 6,468 | 5,093 | 1,375 | 27 | |||||||||||
Occupancy, net | 8,480 | 7,975 | 505 | 6 | |||||||||||
Data processing | 4,178 | 4,062 | 116 | 3 | |||||||||||
Advertising and marketing | 2,725 | 3,207 | (482 | ) | (15 | ) | |||||||||
Professional fees | 3,158 | 3,710 | (552 | ) | (15 | ) | |||||||||
Amortization of other intangible assets | 1,108 | 1,062 | 46 | 4 | |||||||||||
FDIC insurance | 3,039 | 3,244 | (205 | ) | (6 | ) | |||||||||
OREO expenses, net | 5,269 | 8,821 | (3,552 | ) | (40 | ) | |||||||||
Other: | |||||||||||||||
Commissions - 3rd party brokers | 944 | 872 | 72 | 8 | |||||||||||
Postage | 1,856 | 1,322 | 534 | 40 | |||||||||||
Stationery and supplies | 1,095 | 1,186 | (91 | ) | (8 | ) | |||||||||
Miscellaneous | 15,088 | 11,470 | 3,618 | 32 | |||||||||||
Total other | 18,983 | 14,850 | 4,133 | 28 | |||||||||||
Total Non-Interest Expense | $ | 129,548 | $ | 118,768 | $ | 10,780 | 9 | ||||||||
Years Ended December 31, | |||||||||||||||
$ Change | % Change | ||||||||||||||
(Dollars in thousands) | 2012 | 2011 | |||||||||||||
Salaries and employee benefits: | |||||||||||||||
Salaries | $ | 155,800 | $ | 138,452 | 17,348 | 13 | |||||||||
Commissions and bonus | 84,199 | 55,721 | 28,478 | 51 | |||||||||||
Benefits | 48,590 | 43,612 | 4,978 | 11 | |||||||||||
Total salaries and employee benefits | 288,589 | 237,785 | 50,804 | 21 | |||||||||||
Equipment | 23,222 | 18,267 | 4,955 | 27 | |||||||||||
Occupancy, net | 32,294 | 28,764 | 3,530 | 12 | |||||||||||
Data processing | 15,739 | 14,568 | 1,171 | 8 | |||||||||||
Advertising and marketing | 9,438 | 8,380 | 1,058 | 13 | |||||||||||
Professional fees | 15,262 | 16,874 | (1,612 | ) | (10 | ) | |||||||||
Amortization of other intangible assets | 4,324 | 3,425 | 899 | 26 | |||||||||||
FDIC insurance | 13,422 | 14,143 | (721 | ) | (5 | ) | |||||||||
OREO expenses, net | 22,103 | 26,340 | (4,237 | ) | (16 | ) | |||||||||
Other: | |||||||||||||||
Commissions - 3rd party brokers | 4,140 | 3,829 | 311 | 8 | |||||||||||
Postage | 5,729 | 4,672 | 1,057 | 23 | |||||||||||
Stationery and supplies | 4,003 | 3,818 | 185 | 5 | |||||||||||
Miscellaneous | 50,775 | 39,539 | 11,236 | 28 | |||||||||||
Total other | 64,647 | 51,858 | 12,789 | 25 | |||||||||||
Total Non-Interest Expense | $ | 489,040 | $ | 420,404 | $ | 68,636 | 16 | ||||||||
24
The significant changes in non-interest expense for the quarter ended December 31, 2012 compared to the quarter ended December 31, 2011 are discussed below.
Salaries and employee benefits expense increased $9.4 million, or 14%, in the fourth quarter of 2012 compared to the fourth quarter of 2011 primarily as a result of a $3.8 million increase in salaries caused by the addition of employees from the various acquisitions and larger staffing as the Company grows, a $4.7 million increase in bonus and commissions primarily attributable to the increase in variable pay based revenue and the Company's long-term incentive program and a $910,000 increase from employee benefits (primarily health plan and payroll taxes related).
Equipment expense totaled $6.5 million for the fourth quarter of 2012, an increase of $1.4 million compared to the fourth quarter of 2011. The increase is primarily the result of additional equipment depreciation as well as maintenance and repair costs associated with the increasing number of facilities due to acquisition activity. Equipment expense includes depreciation on equipment, maintenance and repairs, equipment rental and software license fees.
Occupancy expense for the fourth quarter of 2012 was $8.5 million, an increase of $505,000, or 6%, compared to the same period in 2011. The increase is primarily the result of depreciation and property taxes on owned locations. Occupancy expense includes depreciation on premises, real estate taxes, utilities and maintenance of premises, as well as net rent expense for leased premises.
OREO expense totaled $5.3 million in the fourth quarter of 2012, a decrease of $3.5 million compared to $8.8 million in the fourth quarter of 2011. The decrease in total OREO expenses is primarily related to lower valuation adjustments on properties held in OREO and lower losses realized on the sale of OREO properties in the fourth quarter of 2012 as compared to the fourth quarter of 2011. OREO costs include all costs related to obtaining, maintaining and selling other real estate owned properties.
Miscellaneous expenses in the fourth quarter of 2012 increased $3.6 million, or 32%, compared to the same period in the prior year. The increase in the fourth quarter of 2012 compared to the same period in the prior year is primarily attributable to $2.1 million of fees paid on the termination of approximately $68.4 million longer-term, higher rate repurchase agreements in the current quarter as well as increased expenses related to postage and general growth in the Company's business. Miscellaneous expense includes ATM expenses, correspondent bank charges, directors' fees, telephone, travel and entertainment, corporate insurance, dues and subscriptions, problem loan expenses and lending origination costs that are not deferred.
As previously discussed in this release, the accounting and reporting policies of Wintrust conform to GAAP in the United States and prevailing practices in the banking industry. However, certain non-GAAP performance measures and ratios are used by management to evaluate and measure the Company's performance. One significant metric that is used by the Company in assessing operating performance is pre-tax adjusted earnings. Pre-tax adjusted earnings is calculated by adjusting income before taxes to exclude the provision for credit losses and certain significant items. Two ratios the Company uses to measure expense management are the efficiency ratio and the net overhead ratio. The efficiency ratio, which is calculated by dividing non-interest expense by total taxable-equivalent net revenue (less securities gains and losses), measures how much it costs to produce one dollar of revenue. The net overhead ratio is calculated by netting total non-interest expense and total non-interest income and dividing by total average assets. In both cases, a lower ratio indicates a higher degree of efficiency. See “Supplemental Financial Measures/Ratios” section earlier in this document for further detail on these non-GAAP measures/ratios.
The efficiency ratio and net overhead ratio are primarily reviewed by the Company based on pre-tax adjusted earnings. The Company believes that these measures provide a more meaningful view of the Company's operating efficiency and expense management. The efficiency ratio, based on pre-tax adjusted earnings, was 62.75% for the fourth quarter of 2012, compared to 64.76% in the fourth quarter of 2011. The net overhead ratio, based on pre-tax adjusted earnings, was 1.40% for the fourth quarter of 2012, compared to 1.62% in the fourth quarter of 2011. These lower ratios indicate a higher degree of efficiency in the fourth quarter of 2012 as compared to the prior year quarter as the Company has leveraged its existing infrastructure.
25
ASSET QUALITY
Allowance for Credit Losses, excluding covered loans
Three months ended December 31, | Years Ended December 31, | |||||||||||||||
(Dollars in thousands) | 2012 | 2011 | 2012 | 2011 | ||||||||||||
Allowance for loan losses at beginning of period | $ | 112,287 | $ | 118,649 | $ | 110,381 | $ | 113,903 | ||||||||
Provision for credit losses | 20,672 | 16,615 | 72,412 | 97,920 | ||||||||||||
Other adjustments | (289 | ) | — | (1,333 | ) | — | ||||||||||
Reclassification from/(to) allowance for unfunded lending-related commitments | (260 | ) | 171 | 693 | 1,904 | |||||||||||
Charge-offs: | ||||||||||||||||
Commercial | 9,782 | 6,377 | 22,405 | 31,951 | ||||||||||||
Commercial real estate | 9,084 | 13,931 | 43,539 | 62,698 | ||||||||||||
Home equity | 3,496 | 1,876 | 9,361 | 5,020 | ||||||||||||
Residential real estate | 2,470 | 1,632 | 4,060 | 4,115 | ||||||||||||
Premium finance receivables - commercial | 1,284 | 1,479 | 3,751 | 6,617 | ||||||||||||
Premium finance receivables - life insurance | 13 | — | 29 | 275 | ||||||||||||
Indirect consumer | 64 | 56 | 221 | 244 | ||||||||||||
Consumer and other | 570 | 824 | 1,024 | 1,532 | ||||||||||||
Total charge-offs | 26,763 | 26,175 | 84,390 | 112,452 | ||||||||||||
Recoveries: | ||||||||||||||||
Commercial | 368 | 541 | 1,220 | 1,258 | ||||||||||||
Commercial real estate | 978 | 286 | 6,635 | 1,386 | ||||||||||||
Home equity | 43 | 5 | 428 | 64 | ||||||||||||
Residential real estate | 9 | 2 | 22 | 10 | ||||||||||||
Premium finance receivables - commercial | 250 | 204 | 871 | 6,006 | ||||||||||||
Premium finance receivables - life insurance | 15 | — | 69 | 12 | ||||||||||||
Indirect consumer | 27 | 37 | 103 | 220 | ||||||||||||
Consumer and other | 14 | 46 | 240 | 150 | ||||||||||||
Total recoveries | 1,704 | 1,121 | 9,588 | 9,106 | ||||||||||||
Net charge-offs | (25,059 | ) | (25,054 | ) | (74,802 | ) | (103,346 | ) | ||||||||
Allowance for loan losses at period end | $ | 107,351 | $ | 110,381 | $ | 107,351 | $ | 110,381 | ||||||||
Allowance for unfunded lending-related commitments at period end | 14,647 | 13,231 | 14,647 | 13,231 | ||||||||||||
Allowance for credit losses at period end | $ | 121,998 | $ | 123,612 | $ | 121,998 | $ | 123,612 | ||||||||
Annualized net charge-offs by category as a percentage of its own respective category’s average: | ||||||||||||||||
Commercial | 1.35 | % | 0.96 | % | 0.81 | % | 1.44 | % | ||||||||
Commercial real estate | 0.86 | 1.56 | 1.02 | 1.80 | ||||||||||||
Home equity | 1.72 | 0.85 | 1.08 | 0.56 | ||||||||||||
Residential real estate | 1.19 | 1.07 | 0.51 | 0.79 | ||||||||||||
Premium finance receivables - commercial | 0.21 | 0.35 | 0.16 | 0.04 | ||||||||||||
Premium finance receivables - life insurance | — | — | — | 0.02 | ||||||||||||
Indirect consumer | 0.19 | 0.12 | 0.16 | 0.04 | ||||||||||||
Consumer and other | 1.86 | 2.35 | 0.66 | 1.21 | ||||||||||||
Total loans, net of unearned income, excluding covered loans | 0.83 | % | 0.93 | % | 0.65 | % | 1.02 | % | ||||||||
Net charge-offs as a percentage of the provision for credit losses | 121.22 | % | 150.79 | % | 103.30 | % | 105.54 | % | ||||||||
Loans at period-end | $ | 11,828,943 | $ | 10,521,377 | ||||||||||||
Allowance for loan losses as a percentage of loans at period end | 0.91 | % | 1.05 | % | ||||||||||||
Allowance for credit losses as a percentage of loans at period end | 1.03 | % | 1.17 | % | ||||||||||||
26
The allowance for credit losses, excluding the allowance for covered loan losses, is comprised of the allowance for loan losses and the allowance for unfunded lending-related commitments. The allowance for loan losses is a reserve against loan amounts that are actually funded and outstanding while the allowance for unfunded lending-related commitments (separate liability account) relates to certain amounts that Wintrust is committed to lend but for which funds have not yet been disbursed. The provision for credit losses, excluding the provision for covered loan losses, may contain both a component related to funded loans (provision for loan losses) and a component related to lending-related commitments (provision for unfunded loan commitments and letters of credit).
The provision for credit losses, excluding the provision for covered loan losses, totaled $20.7 million for the fourth quarter of 2012, $18.2 million for the third quarter of 2012 and $16.6 million for the fourth quarter of 2011. For the quarter ended December 31, 2012, net charge-offs, excluding covered loans, totaled $25.1 million compared to $17.9 million in the third quarter of 2012 and $25.1 million recorded in the fourth quarter of 2011. Annualized net charge-offs as a percentage of average loans, excluding covered loans, were 0.83% in the fourth quarter of 2012, 0.60% in the third quarter of 2012 and 0.93% in the fourth quarter of 2011. The lower level of the allowance for credit losses in 2012, reflect the improvements in credit quality metrics compared to 2011.
Management believes the allowance for credit losses is appropriate to provide for inherent losses in the portfolio. There can be no assurances however, that future losses will not exceed the amounts provided for, thereby affecting future results of operations. The amount of future additions to the allowance for credit losses will be dependent upon management’s assessment of the appropriateness of the allowance based on its evaluation of economic conditions, changes in real estate values, interest rates, the regulatory environment, the level of past-due and non-performing loans, and other factors.
The Company also provides a provision for covered loan losses on covered loans and maintains an allowance for covered loan losses on covered loans. Please see “Covered Assets” later in this document for more detail.
27
The tables below summarizes the calculation of allowance for loan losses for the Company’s core loan portfolio and niche and purchased loan portfolio as of December 31, 2012 and September 30, 2012.
As of December 31, 2012 | |||||||||||
Recorded | Calculated | As a percentage of its own respective | |||||||||
(Dollars in thousands) | Investment | Allowance | category’s balance | ||||||||
Commercial: | |||||||||||
Commercial and industrial (1) | $ | 1,616,045 | $ | 17,040 | 1.05 | % | |||||
Asset-based lending (1) | 571,009 | 5,066 | 0.89 | ||||||||
Municipal | 91,824 | 1,041 | 1.13 | ||||||||
Leases (1) | 89,674 | 248 | 0.28 | ||||||||
Other (1) | 16,246 | 137 | 0.84 | ||||||||
Commercial real-estate: | |||||||||||
Residential construction | 40,401 | 1,301 | 3.22 | ||||||||
Commercial construction (1) | 169,922 | 3,194 | 1.88 | ||||||||
Land | 134,197 | 4,829 | 3.60 | ||||||||
Office (1) | 557,520 | 5,446 | 0.98 | ||||||||
Industrial (1) | 571,455 | 5,516 | 0.97 | ||||||||
Retail (1) | 562,480 | 5,292 | 0.94 | ||||||||
Multi-family (1) | 392,289 | 10,644 | 2.71 | ||||||||
Mixed use and other (1) | 1,232,592 | 15,913 | 1.29 | ||||||||
Home equity (1) | 773,525 | 12,734 | 1.65 | ||||||||
Residential real-estate (1) | 361,089 | 5,560 | 1.54 | ||||||||
Total core loan portfolio | $ | 7,180,268 | $ | 93,961 | 1.31 | % | |||||
Commercial: | |||||||||||
Franchise | $ | 196,395 | $ | 2,880 | 1.47 | % | |||||
Mortgage warehouse lines of credit | 215,076 | 2,134 | 0.99 | ||||||||
Community Advantage - homeowner associations | 81,496 | 204 | 0.25 | ||||||||
Aircraft | 17,364 | 44 | 0.25 | ||||||||
Purchased non-covered commercial loans (2) | 19,669 | — | — | ||||||||
Commercial real-estate: | |||||||||||
Purchased non-covered commercial real-estate (2) | 203,262 | — | — | ||||||||
Purchased non-covered home equity (2) | 14,949 | — | — | ||||||||
Purchased non-covered residential real-estate (2) | 6,124 | — | — | ||||||||
Premium finance receivables | |||||||||||
U.S. commercial insurance loans | 1,737,613 | 5,402 | 0.31 | ||||||||
Canada commercial insurance loans (2) | 250,243 | 128 | 0.05 | ||||||||
Life insurance loans (1) | 1,188,134 | 566 | 0.05 | ||||||||
Purchased life insurance loans (2) | 537,032 | — | — | ||||||||
Indirect consumer | 77,333 | 267 | 0.35 | ||||||||
Consumer and other (1) | 97,731 | 1,639 | 1.68 | ||||||||
Purchased non-covered consumer and other (2) | 6,254 | 126 | 2.01 | ||||||||
Total niche and purchased loan portfolio | $ | 4,648,675 | $ | 13,390 | 0.29 | % | |||||
Total loans, net of unearned income, excluding covered loans | $ | 11,828,943 | $ | 107,351 | 0.91 | % | |||||
(1) | Excludes purchased loans reported in accordance with ASC 310-20 and ASC 310-30. |
(2) | Purchased loans represent loans reported in accordance with ASC 310-20 and ASC 310-30. |
28
As of September 30, 2012 | |||||||||||
Recorded | Calculated | As a percentage of its own respective | |||||||||
(Dollars in thousands) | Investment | Allowance | category’s balance | ||||||||
Commercial: | |||||||||||
Commercial and industrial (1) | $ | 1,546,042 | $ | 17,137 | 1.11 | % | |||||
Asset-based lending (1) | 531,976 | 5,064 | 0.95 | ||||||||
Municipal | 90,404 | 1,020 | 1.13 | ||||||||
Leases | 83,351 | 247 | 0.30 | ||||||||
Other | 1,576 | 12 | 0.76 | ||||||||
Commercial real-estate: | |||||||||||
Residential construction | 44,255 | 1,453 | 3.28 | ||||||||
Commercial construction (1) | 168,503 | 3,965 | 2.35 | ||||||||
Land | 133,486 | 5,376 | 4.03 | ||||||||
Office (1) | 570,919 | 5,856 | 1.03 | ||||||||
Industrial (1) | 569,191 | 5,555 | 0.98 | ||||||||
Retail (1) | 554,193 | 5,993 | 1.08 | ||||||||
Multi-family (1) | 362,215 | 10,511 | 2.90 | ||||||||
Mixed use and other (1) | 1,193,594 | 16,376 | 1.37 | ||||||||
Home equity (1) | 797,792 | 13,600 | 1.70 | ||||||||
Residential real-estate (1) | 372,706 | 7,553 | 2.03 | ||||||||
Total core loan portfolio | $ | 7,020,203 | $ | 99,718 | 1.42 | % | |||||
Commercial: | |||||||||||
Franchise | $ | 179,706 | $ | 1,909 | 1.06 | % | |||||
Mortgage warehouse lines of credit | 225,295 | 1,968 | 0.87 | ||||||||
Community Advantage - homeowner associations | 73,881 | 185 | 0.25 | ||||||||
Aircraft | 21,444 | 199 | 0.93 | ||||||||
Purchased non-covered commercial loans (2) | 17,378 | — | — | ||||||||
Commercial real-estate: | |||||||||||
Purchased non-covered commercial real-estate (2) | 103,356 | — | — | ||||||||
Purchased non-covered home equity (2) | 9,800 | — | — | ||||||||
Purchased non-covered residential real-estate (2) | 3,972 | — | — | ||||||||
Premium finance receivables | |||||||||||
U.S. commercial insurance loans | 1,703,525 | 5,911 | 0.35 | ||||||||
Canada commercial insurance loans (2) | 279,420 | 524 | 0.19 | ||||||||
Life insurance loans (1) | 1,128,588 | 452 | 0.04 | ||||||||
Purchased life insurance loans (2) | 537,032 | — | — | ||||||||
Indirect consumer | 77,378 | 269 | 0.35 | ||||||||
Consumer and other (1) | 106,151 | 1,124 | 1.06 | ||||||||
Purchased non-covered consumer and other (2) | 2,771 | 28 | 1.01 | ||||||||
Total niche and purchased loan portfolio | $ | 4,469,697 | $ | 12,569 | 0.28 | % | |||||
Total loans, net of unearned income, excluding covered loans | $ | 11,489,900 | $ | 112,287 | 0.98 | % | |||||
(1) | Excludes purchased loans reported in accordance with ASC 310-20 and ASC 310-30. |
(2) | Purchased loans represent loans reported in accordance with ASC 310-20 and ASC 310-30. |
29
As part of a quarterly review performed by Management to determine if the Company’s allowance for loan losses is appropriate, an analysis is prepared on the loan portfolio based upon a breakout of core loans and niche loans. A summary of the allowance for loan losses calculated for the loan components in both the core loan portfolio and the niche loan portfolio was shown on the previous pages as of December 31, 2012 and September 30, 2012. The allowance for loan losses to core loans was 1.31% compared to 0.29% for niche loans and 0.91% for the entire loan portfolio as of December 31, 2012. As of September 30, 2012, the allowance for loan losses to core loans was 1.42% compared to 0.28% for niche loans and 0.98% for the entire loan portfolio.
The decline in the total allowance for loan losses to total loans, and the decline in the allowance for loan losses to core loans in the fourth quarter of 2012 was attributable to a $28 million reduction in impaired loans in the core portfolio and a $6.7 million decrease in ASC 310 reserves (specific reserves on impaired loans) on the core portfolio. The ASC 310 reserve component declined primarily as calculated impairments provided in prior periods were charged-off and to a lesser extent the calculated impairments on certain loans were reduced in the fourth quarter.
ASC 450 reserve (general reserves) as a percentage of core loans was 1.17% at December 31, 2012 and 1.19% at September 30, 2012. This decrease was attributable to a positive migration of the Company's historical loss rates used in determining this portion of the allowance for loan losses.
30
The table below shows the aging of the Company’s loan portfolio, excluding covered loans, at December 31, 2012:
90+ days | 60-89 | 30-59 | ||||||||||||||||||||||
As of December 31, 2012 | and still | days past | days past | |||||||||||||||||||||
(Dollars in thousands) | Nonaccrual | accruing | due | due | Current | Total Loans | ||||||||||||||||||
Loan Balances: | ||||||||||||||||||||||||
Commercial | ||||||||||||||||||||||||
Commercial and industrial | $ | 19,409 | $ | — | $ | 5,520 | $ | 15,410 | $ | 1,587,864 | $ | 1,628,203 | ||||||||||||
Franchise | 1,792 | — | — | — | 194,603 | 196,395 | ||||||||||||||||||
Mortgage warehouse lines of credit | — | — | — | — | 215,076 | 215,076 | ||||||||||||||||||
Community Advantage - homeowners association | — | — | — | — | 81,496 | 81,496 | ||||||||||||||||||
Aircraft | — | — | 148 | — | 17,216 | 17,364 | ||||||||||||||||||
Asset-based lending | 536 | — | 1,126 | 6,622 | 564,154 | 572,438 | ||||||||||||||||||
Municipal | — | — | — | — | 91,824 | 91,824 | ||||||||||||||||||
Leases | — | — | — | 896 | 89,547 | 90,443 | ||||||||||||||||||
Other | — | — | — | — | 16,549 | 16,549 | ||||||||||||||||||
Purchased non-covered commercial (1) | — | 496 | 432 | 7 | 4,075 | 5,010 | ||||||||||||||||||
Total commercial | 21,737 | 496 | 7,226 | 22,935 | 2,862,404 | 2,914,798 | ||||||||||||||||||
Commercial real-estate | ||||||||||||||||||||||||
Residential construction | 3,110 | — | 4 | 41 | 37,246 | 40,401 | ||||||||||||||||||
Commercial construction | 2,159 | — | 885 | 386 | 167,525 | 170,955 | ||||||||||||||||||
Land | 11,299 | — | 632 | 9,014 | 113,252 | 134,197 | ||||||||||||||||||
Office | 4,196 | — | 1,889 | 3,280 | 560,346 | 569,711 | ||||||||||||||||||
Industrial | 2,089 | — | 6,042 | 4,512 | 565,294 | 577,937 | ||||||||||||||||||
Retail | 7,792 | — | 1,372 | 998 | 558,734 | 568,896 | ||||||||||||||||||
Multi-family | 2,586 | — | 3,949 | 1,040 | 389,116 | 396,691 | ||||||||||||||||||
Mixed use and other | 16,742 | — | 6,660 | 13,349 | 1,312,503 | 1,349,254 | ||||||||||||||||||
Purchased non-covered commercial real-estate (1) | — | 749 | 2,663 | 2,508 | 50,156 | 56,076 | ||||||||||||||||||
Total commercial real-estate | 49,973 | 749 | 24,096 | 35,128 | 3,754,172 | 3,864,118 | ||||||||||||||||||
Home equity | 13,423 | 100 | 1,592 | 5,043 | 768,316 | 788,474 | ||||||||||||||||||
Residential real estate | 11,728 | — | 2,763 | 8,250 | 343,616 | 366,357 | ||||||||||||||||||
Purchased non-covered residential real estate (1) | — | — | 200 | — | 656 | 856 | ||||||||||||||||||
Premium finance receivables | ||||||||||||||||||||||||
Commercial insurance loans | 9,302 | 10,008 | 6,729 | 19,597 | 1,942,220 | 1,987,856 | ||||||||||||||||||
Life insurance loans | 25 | — | — | 5,531 | 1,205,151 | 1,210,707 | ||||||||||||||||||
Purchased life insurance loans (1) | — | — | — | — | 514,459 | 514,459 | ||||||||||||||||||
Indirect consumer | 55 | 189 | 51 | 442 | 76,596 | 77,333 | ||||||||||||||||||
Consumer and other | 1,511 | 32 | 167 | 433 | 99,010 | 101,153 | ||||||||||||||||||
Purchased non-covered consumer and other (1) | — | 66 | 32 | 101 | 2,633 | 2,832 | ||||||||||||||||||
Total loans, net of unearned income, excluding covered loans | $ | 107,754 | $ | 11,640 | $ | 42,856 | $ | 97,460 | $ | 11,569,233 | $ | 11,828,943 | ||||||||||||
Covered loans | 1,988 | 122,350 | 16,108 | 7,999 | 411,642 | 560,087 | ||||||||||||||||||
Total loans, net of unearned income | $ | 109,742 | $ | 133,990 | $ | 58,964 | $ | 105,459 | $ | 11,980,875 | $ | 12,389,030 | ||||||||||||
(1) | Purchased loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. Loan agings are based upon contractually required payments. |
31
Aging as a % of Loan Balance: | Nonaccrual | 90+ days and still accruing | 60-89 days past due | 30-59 days past due | Current | Total Loans | ||||||||||||
Commercial | ||||||||||||||||||
Commercial and industrial | 1.2 | % | — | % | 0.3 | % | 1.0 | % | 97.5 | % | 100.0 | % | ||||||
Franchise | 0.9 | — | — | — | 99.1 | 100.0 | ||||||||||||
Mortgage warehouse lines of credit | — | — | — | — | 100.0 | 100.0 | ||||||||||||
Community Advantage - homeowners association | — | — | — | — | 100.0 | 100.0 | ||||||||||||
Aircraft | — | — | 0.9 | — | 99.1 | 100.0 | ||||||||||||
Asset-based lending | 0.1 | — | 0.2 | 1.2 | 98.5 | 100.0 | ||||||||||||
Municipal | — | — | — | — | 100.0 | 100.0 | ||||||||||||
Leases | — | — | — | 1.0 | 99.0 | 100.0 | ||||||||||||
Other | — | — | — | — | 100.0 | 100.0 | ||||||||||||
Purchased non-covered commercial (1) | — | 9.9 | 8.6 | 0.1 | 81.4 | 100.0 | ||||||||||||
Total commercial | 0.8 | — | 0.3 | 0.8 | 98.1 | 100.0 | ||||||||||||
Commercial real-estate | ||||||||||||||||||
Residential construction | 7.7 | — | — | 0.1 | 92.2 | 100.0 | ||||||||||||
Commercial construction | 1.3 | — | 0.5 | 0.2 | 98.0 | 100.0 | ||||||||||||
Land | 8.4 | — | 0.5 | 6.7 | 84.4 | 100.0 | ||||||||||||
Office | 0.7 | — | 0.3 | 0.6 | 98.4 | 100.0 | ||||||||||||
Industrial | 0.4 | — | 1.1 | 0.8 | 97.7 | 100.0 | ||||||||||||
Retail | 1.4 | — | 0.2 | 0.2 | 98.2 | 100.0 | ||||||||||||
Multi-family | 0.7 | — | 1.0 | 0.3 | 98.0 | 100.0 | ||||||||||||
Mixed use and other | 1.2 | — | 0.5 | 1.0 | 97.3 | 100.0 | ||||||||||||
Purchased non-covered commercial real-estate (1) | — | 1.3 | 4.8 | 4.5 | 89.4 | 100.0 | ||||||||||||
Total commercial real-estate | 1.3 | — | 0.6 | 0.9 | 97.2 | 100.0 | ||||||||||||
Home equity | 1.7 | — | 0.2 | 0.6 | 97.5 | 100.0 | ||||||||||||
Residential real estate | 3.2 | — | 0.8 | 2.3 | 93.7 | 100.0 | ||||||||||||
Purchased non-covered residential real estate(1) | — | — | 23.4 | — | 76.6 | 100.0 | ||||||||||||
Premium finance receivables | ||||||||||||||||||
Commercial insurance loans | 0.5 | 0.5 | 0.3 | 1.0 | 97.7 | 100.0 | ||||||||||||
Life insurance loans | — | — | — | 0.5 | 99.5 | 100.0 | ||||||||||||
Purchased life insurance loans (1) | — | — | — | — | 100.0 | 100.0 | ||||||||||||
Indirect consumer | 0.1 | 0.2 | 0.1 | 0.6 | 99.0 | 100.0 | ||||||||||||
Consumer and other | 1.5 | — | 0.2 | 0.4 | 97.9 | 100.0 | ||||||||||||
Purchased non-covered consumer and other(1) | — | 2.3 | 1.1 | 3.6 | 93.0 | 100.0 | ||||||||||||
Total loans, net of unearned income, excluding covered loans | 0.9 | % | 0.1 | % | 0.4 | % | 0.8 | % | 97.8 | % | 100.0 | % | ||||||
Covered loans | 0.4 | 21.8 | 2.9 | 1.4 | 73.5 | 100.0 | ||||||||||||
Total loans, net of unearned income | 0.9 | % | 1.1 | % | 0.5 | % | 0.9 | % | 96.6 | % | 100.0 | % | ||||||
As of December 31, 2012, $42.9 million of all loans, excluding covered loans, or 0.4%, were 60 to 89 days past due and $97.5 million, or 0.8%, were 30 to 59 days (or one payment) past due. As of September 30, 2012, $50.2 million of all loans, excluding covered loans, or 0.4%, were 60 to 89 days past due and $92.2 million, or 0.8%, were 30 to 59 days (or one payment) past due. The majority of the commercial and commercial real estate loans shown as 60 to 89 days and 30 to 59 days past due are included on the Company’s internal problem loan reporting system. Loans on this system are closely monitored by management on a monthly basis.
The Company’s home equity and residential loan portfolios continue to exhibit low delinquency ratios. Home equity loans at December 31, 2012 that are current with regard to the contractual terms of the loan agreement represent 97.5% of the total home equity portfolio. Residential real estate loans at December 31, 2012 that are current with regards to the contractual terms of the loan agreements comprise 93.7% of total residential real estate loans outstanding, which includes purchased non-covered residential real-estate.
32
The table below shows the aging of the Company’s loan portfolio, excluding covered loans, at September 30, 2012:
90+ days | 60-89 | 30-59 | ||||||||||||||||||||||
As of September 30, 2012 | and still | days past | days past | |||||||||||||||||||||
(Dollars in thousands) | Nonaccrual | accruing | due | due | Current | Total Loans | ||||||||||||||||||
Loan Balances: | ||||||||||||||||||||||||
Commercial | ||||||||||||||||||||||||
Commercial and industrial | $ | 15,163 | $ | — | $ | 5,985 | $ | 16,631 | $ | 1,518,596 | $ | 1,556,375 | ||||||||||||
Franchise | 1,792 | — | — | — | 177,914 | 179,706 | ||||||||||||||||||
Mortgage warehouse lines of credit | — | — | — | — | 225,295 | 225,295 | ||||||||||||||||||
Community Advantage - homeowners association | — | — | — | — | 73,881 | 73,881 | ||||||||||||||||||
Aircraft | 428 | — | — | 150 | 20,866 | 21,444 | ||||||||||||||||||
Asset-based lending | 328 | — | 1,211 | 5,556 | 525,966 | 533,061 | ||||||||||||||||||
Municipal | — | — | — | — | 90,404 | 90,404 | ||||||||||||||||||
Leases | — | — | — | — | 83,351 | 83,351 | ||||||||||||||||||
Other | — | — | — | — | 1,576 | 1,576 | ||||||||||||||||||
Purchased non-covered commercial (1) | — | 499 | — | — | 5,461 | 5,960 | ||||||||||||||||||
Total commercial | 17,711 | 499 | 7,196 | 22,337 | 2,723,310 | 2,771,053 | ||||||||||||||||||
Commercial real-estate | ||||||||||||||||||||||||
Residential construction | 2,141 | — | 3,008 | — | 39,106 | 44,255 | ||||||||||||||||||
Commercial construction | 3,315 | — | 163 | 13,072 | 152,993 | 169,543 | ||||||||||||||||||
Land | 10,629 | — | 3,033 | 3,017 | 116,807 | 133,486 | ||||||||||||||||||
Office | 6,185 | — | 5,717 | 7,237 | 565,182 | 584,321 | ||||||||||||||||||
Industrial | 1,885 | — | 645 | 1,681 | 570,114 | 574,325 | ||||||||||||||||||
Retail | 10,133 | — | 1,853 | 5,617 | 543,066 | 560,669 | ||||||||||||||||||
Multi-family | 3,314 | — | 3,062 | — | 357,047 | 363,423 | ||||||||||||||||||
Mixed use and other | 20,859 | — | 9,779 | 14,990 | 1,175,222 | 1,220,850 | ||||||||||||||||||
Purchased non-covered commercial real-estate (1) | — | 1,066 | 150 | 389 | 47,235 | 48,840 | ||||||||||||||||||
Total commercial real-estate | 58,461 | 1,066 | 27,410 | 46,003 | 3,566,772 | 3,699,712 | ||||||||||||||||||
Home equity | 11,504 | — | 5,905 | 5,642 | 784,541 | 807,592 | ||||||||||||||||||
Residential real estate | 15,393 | — | 3,281 | 2,637 | 354,711 | 376,022 | ||||||||||||||||||
Purchased non-covered residential real estate (1) | — | — | — | — | 656 | 656 | ||||||||||||||||||
Premium finance receivables | ||||||||||||||||||||||||
Commercial insurance loans | 7,488 | 5,533 | 5,881 | 14,369 | 1,949,674 | 1,982,945 | ||||||||||||||||||
Life insurance loans | 29 | — | — | — | 1,128,559 | 1,128,588 | ||||||||||||||||||
Purchased life insurance loans (1) | — | — | — | — | 537,032 | 537,032 | ||||||||||||||||||
Indirect consumer | 72 | 215 | 74 | 344 | 76,673 | 77,378 | ||||||||||||||||||
Consumer and other | 1,485 | — | 429 | 849 | 106,092 | 108,855 | ||||||||||||||||||
Purchased non-covered consumer and other (1) | — | — | — | — | 67 | 67 | ||||||||||||||||||
Total loans, net of unearned income, excluding covered loans | $ | 112,143 | $ | 7,313 | $ | 50,176 | $ | 92,181 | $ | 11,228,087 | $ | 11,489,900 | ||||||||||||
Covered loans | 910 | 129,257 | 6,521 | 14,571 | 506,266 | 657,525 | ||||||||||||||||||
Total loans, net of unearned income | $ | 113,053 | $ | 136,570 | $ | 56,697 | $ | 106,752 | $ | 11,734,353 | $ | 12,147,425 | ||||||||||||
(1) | Purchased loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. Loan agings are based upon contractually required payments. |
33
Aging as a % of Loan Balance: | Nonaccrual | 90+ days and still accruing | 60-89 days past due | 30-59 days past due | Current | Total Loans | ||||||||||||
Commercial | ||||||||||||||||||
Commercial and industrial | 1.0 | % | — | 0.4 | % | 1.1 | % | 97.5 | % | 100.0 | % | |||||||
Franchise | 1.0 | — | — | — | 99.0 | 100.0 | ||||||||||||
Mortgage warehouse lines of credit | — | — | — | — | 100.0 | 100.0 | ||||||||||||
Community Advantage - homeowners association | — | — | — | — | 100.0 | 100.0 | ||||||||||||
Aircraft | 2.0 | — | — | 0.7 | 97.3 | 100.0 | ||||||||||||
Asset-based lending | 0.1 | — | 0.2 | 1.0 | 98.7 | 100.0 | ||||||||||||
Municipal | — | — | — | — | 100.0 | 100.0 | ||||||||||||
Leases | — | — | — | — | 100.0 | 100.0 | ||||||||||||
Other | — | — | — | — | 100.0 | 100.0 | ||||||||||||
Purchased non-covered commercial(1) | — | 8.4 | — | — | 91.6 | 100.0 | ||||||||||||
Total commercial | 0.6 | — | 0.3 | 0.8 | 98.3 | 100.0 | ||||||||||||
Commercial real-estate | ||||||||||||||||||
Residential construction | 4.8 | — | 6.8 | — | 88.4 | 100.0 | ||||||||||||
Commercial construction | 2.0 | — | 0.1 | 7.7 | 90.2 | 100.0 | ||||||||||||
Land | 8.0 | — | 2.3 | 2.3 | 87.4 | 100.0 | ||||||||||||
Office | 1.1 | — | 1.0 | 1.2 | 96.7 | 100.0 | ||||||||||||
Industrial | 0.3 | — | 0.1 | 0.3 | 99.3 | 100.0 | ||||||||||||
Retail | 1.8 | — | 0.3 | 1.0 | 96.9 | 100.0 | ||||||||||||
Multi-family | 0.9 | — | 0.8 | — | 98.3 | 100.0 | ||||||||||||
Mixed use and other | 1.7 | — | 0.8 | 1.2 | 96.3 | 100.0 | ||||||||||||
Purchased non-covered commercial real-estate (1) | — | 2.2 | 0.3 | 0.8 | 96.7 | 100.0 | ||||||||||||
Total commercial real-estate | 1.6 | — | 0.7 | 1.2 | 96.5 | 100.0 | ||||||||||||
Home equity | 1.4 | — | 0.7 | 0.7 | 97.2 | 100.0 | ||||||||||||
Residential real estate | 4.1 | — | 0.9 | 0.7 | 94.3 | 100.0 | ||||||||||||
Purchased non-covered residential real estate (1) | — | — | — | — | 100.0 | 100.0 | ||||||||||||
Premium finance receivables | ||||||||||||||||||
Commercial insurance loans | 0.4 | 0.3 | 0.3 | 0.7 | 98.3 | 100.0 | ||||||||||||
Life insurance loans | — | — | — | — | 100.0 | 100.0 | ||||||||||||
Purchased life insurance loans (1) | — | — | — | — | 100.0 | 100.0 | ||||||||||||
Indirect consumer | 0.1 | 0.3 | 0.1 | 0.4 | 99.1 | 100.0 | ||||||||||||
Consumer and other | 1.4 | — | 0.4 | 0.8 | 97.4 | 100.0 | ||||||||||||
Purchased non-covered consumer and other (1) | — | — | — | — | 100.0 | 100.0 | ||||||||||||
Total loans, net of unearned income, excluding covered loans | 1.0 | % | 0.1 | % | 0.4 | % | 0.8 | % | 97.7 | % | 100.0 | % | ||||||
Covered loans | 0.1 | 19.7 | 1.0 | 2.2 | 77.0 | 100.0 | ||||||||||||
Total loans, net of unearned income | 0.9 | % | 1.1 | % | 0.5 | % | 0.9 | % | 96.6 | % | 100.0 | % | ||||||
34
Non-performing Assets, excluding covered assets
The following table sets forth Wintrust’s non-performing assets, excluding covered assets and purchased non-covered loans acquired with evidence of credit quality deterioration since origination, at the dates indicated.
December 31, | September 30, | December 31, | ||||||||||
(Dollars in thousands) | 2012 | 2012 | 2011 | |||||||||
Loans past due greater than 90 days and still accruing: | ||||||||||||
Commercial | $ | — | $ | — | $ | — | ||||||
Commercial real-estate | — | — | — | |||||||||
Home equity | 100 | — | — | |||||||||
Residential real-estate | — | — | — | |||||||||
Premium finance receivables - commercial | 10,008 | 5,533 | 5,281 | |||||||||
Premium finance receivables - life insurance | — | — | — | |||||||||
Indirect consumer | 189 | 215 | 314 | |||||||||
Consumer and other | 32 | — | — | |||||||||
Total loans past due greater than 90 days and still accruing | 10,329 | 5,748 | 5,595 | |||||||||
Non-accrual loans: | ||||||||||||
Commercial | 21,737 | 17,711 | 19,018 | |||||||||
Commercial real-estate | 49,973 | 58,461 | 66,508 | |||||||||
Home equity | 13,423 | 11,504 | 14,164 | |||||||||
Residential real-estate | 11,728 | 15,393 | 6,619 | |||||||||
Premium finance receivables - commercial | 9,302 | 7,488 | 7,755 | |||||||||
Premium finance receivables - life insurance | 25 | 29 | 54 | |||||||||
Indirect consumer | 55 | 72 | 138 | |||||||||
Consumer and other | 1,511 | 1,485 | 233 | |||||||||
Total non-accrual loans | 107,754 | 112,143 | 114,489 | |||||||||
Total non-performing loans: | ||||||||||||
Commercial | 21,737 | 17,711 | 19,018 | |||||||||
Commercial real-estate | 49,973 | 58,461 | 66,508 | |||||||||
Home equity | 13,523 | 11,504 | 14,164 | |||||||||
Residential real-estate | 11,728 | 15,393 | 6,619 | |||||||||
Premium finance receivables - commercial | 19,310 | 13,021 | 13,036 | |||||||||
Premium finance receivables - life insurance | 25 | 29 | 54 | |||||||||
Indirect consumer | 244 | 287 | 452 | |||||||||
Consumer and other | 1,543 | 1,485 | 233 | |||||||||
Total non-performing loans | $ | 118,083 | $ | 117,891 | $ | 120,084 | ||||||
Other real estate owned | 56,174 | 61,897 | 79,093 | |||||||||
Other real estate owned - obtained in acquisition | 6,717 | 5,480 | 7,430 | |||||||||
Total non-performing assets | $ | 180,974 | $ | 185,268 | $ | 206,607 | ||||||
Total non-performing loans by category as a percent of its own respective category’s period-end balance: | ||||||||||||
Commercial | 0.75 | % | 0.64 | % | 0.76 | % | ||||||
Commercial real-estate | 1.29 | 1.58 | 1.89 | |||||||||
Home equity | 1.72 | 1.42 | 1.64 | |||||||||
Residential real-estate | 3.19 | 4.09 | 1.89 | |||||||||
Premium finance receivables - commercial | 0.97 | 0.66 | 0.92 | |||||||||
Premium finance receivables - life insurance | — | — | — | |||||||||
Indirect consumer | 0.32 | 0.37 | 0.70 | |||||||||
Consumer and other | 1.48 | 1.36 | 0.19 | |||||||||
Total loans, net of unearned income | 1.00 | % | 1.03 | % | 1.14 | % | ||||||
Total non-performing assets as a percentage of total assets | 1.03 | % | 1.09 | % | 1.30 | % | ||||||
Allowance for loan losses as a percentage of total non-performing loans | 90.91 | % | 95.25 | % | 91.92 | % | ||||||
35
Non-performing Commercial and Commercial Real Estate
Commercial non-performing loans totaled $21.7 million as of December 31, 2012 compared to $17.7 million as of September 30, 2012 and $19.0 million as of December 31, 2011. Commercial real estate non-performing loans totaled $50.0 million as of December 31, 2012 compared to $58.5 million as of September 30, 2012 and $66.5 million as of December 31, 2011.
Management is pursuing the resolution of all credits in this category. At this time, management believes reserves are appropriate to absorb inherent losses that are expected to occur upon the ultimate resolution of these credits.
Non-performing Residential Real Estate and Home Equity
Non-performing home equity and residential real estate loans totaled $25.3 million as of December 31, 2012. The balance decreased $1.6 million from September 30, 2012 and increased $4.5 million from December 31, 2011. The December 31, 2012 non-performing balance is comprised of $11.7 million of residential real estate (54 individual credits) and $13.5 million of home equity loans (53 individual credits). On average, this is approximately 7 non-performing residential real estate loans and home equity loans per chartered bank within the Company. The Company believes control and collection of these loans is very manageable. At this time, management believes reserves are adequate to absorb inherent losses that may occur upon the ultimate resolution of these credits.
Non-performing Commercial Insurance Premium Finance Receivables
The table below presents the level of non-performing property and casualty premium finance receivables as of December 31, 2012 and 2011, and the amount of net charge-offs for the quarters then ended.
December 31, | December 31, | |||||||
(Dollars in thousands) | 2012 | 2011 | ||||||
Non-performing premium finance receivables - commercial | $ | 19,310 | $ | 13,036 | ||||
- as a percent of premium finance receivables - commercial outstanding | 0.97 | % | 0.92 | % | ||||
Net charge-offs (recoveries) of premium finance receivables - commercial | $ | 1,034 | $ | 1,275 | ||||
- annualized as a percent of average premium finance receivables - commercial | 0.21 | % | 0.35 | % | ||||
Fluctuations in this category may occur due to timing and nature of account collections from insurance carriers. The Company’s underwriting standards, regardless of the condition of the economy, have remained consistent. We anticipate that net charge-offs and non-performing asset levels in the near term will continue to be at levels that are within acceptable operating ranges for this category of loans. Management is comfortable with administering the collections at this level of non-performing property and casualty premium finance receivables and believes reserves are adequate to absorb inherent losses that may occur upon the ultimate resolution of these credits.
Due to the nature of collateral for commercial premium finance receivables, it customarily takes 60-150 days to convert the collateral into cash. Accordingly, the level of non-performing commercial premium finance receivables is not necessarily indicative of the loss inherent in the portfolio. In the event of default, Wintrust has the power to cancel the insurance policy and collect the unearned portion of the premium from the insurance carrier. In the event of cancellation, the cash returned in payment of the unearned premium by the insurer should generally be sufficient to cover the receivable balance, the interest and other charges due. Due to notification requirements and processing time by most insurance carriers, many receivables will become delinquent beyond 90 days while the insurer is processing the return of the unearned premium. Management continues to accrue interest until maturity as the unearned premium is ordinarily sufficient to pay-off the outstanding balance and contractual interest due.
During the fourth quarter of 2012, our commercial premium finance receivable portfolio experienced a temporary increase in past due balances of approximately $4 million as emergency orders preventing insurance carriers from canceling policies were issued by states affected by Superstorm Sandy. We do not expect to incur any material additional losses as a result of this event and anticipate the higher past due balances to decline during the first quarter of 2013, with levels of past due loans in this segment returning to historical levels.
36
Nonperforming Loans Rollforward
The table below presents a summary of the changes in the balance of non-performing loans, excluding covered loans, for the three and twelve month periods ending December 31, 2012 and 2011:
Three Months Ended | Years Ended | |||||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
(Dollars in thousands) | 2012 | 2011 | 2012 | 2011 | ||||||||||||
Balance at beginning of period | $ | 117,891 | $ | 133,976 | $ | 120,084 | $ | 141,958 | ||||||||
Additions, net | 28,199 | 25,049 | 109,378 | 166,459 | ||||||||||||
Return to performing status | (94 | ) | (2,285 | ) | (3,137 | ) | (7,800 | ) | ||||||||
Payments received | (12,014 | ) | (10,426 | ) | (41,250 | ) | (44,804 | ) | ||||||||
Transfer to OREO | (7,359 | ) | (6,182 | ) | (25,275 | ) | (59,203 | ) | ||||||||
Charge-offs | (14,848 | ) | (18,614 | ) | (48,408 | ) | (68,608 | ) | ||||||||
Net change for niche loans (1) | 6,308 | (1,434 | ) | 6,691 | (7,918 | ) | ||||||||||
Balance at end of period | $ | 118,083 | $ | 120,084 | $ | 118,083 | $ | 120,084 | ||||||||
(1) | This includes activity for premium finance receivables and indirect consumer loans. |
Restructured Loans
The table below presents a summary of restructured loans for the respective period, presented by loan category and accrual status:
December 31, | September 30, | December 31, | ||||||||||
(Dollars in thousands) | 2012 | 2012 | 2011 | |||||||||
Accruing: | ||||||||||||
Commercial | $ | 11,871 | $ | 21,126 | $ | 9,270 | ||||||
Commercial real estate | 89,906 | 102,251 | 104,864 | |||||||||
Residential real estate and other | 4,342 | 5,014 | 5,786 | |||||||||
Total accrual | $ | 106,119 | $ | 128,391 | $ | 119,920 | ||||||
Non-accrual: (1) | ||||||||||||
Commercial | $ | 6,124 | $ | 924 | $ | 1,564 | ||||||
Commercial real estate | 12,509 | 15,399 | 7,932 | |||||||||
Residential real estate and other | 1,721 | 2,482 | 1,102 | |||||||||
Total non-accrual | $ | 20,354 | $ | 18,805 | $ | 10,598 | ||||||
Total restructured loans: | ||||||||||||
Commercial | $ | 17,995 | $ | 22,050 | $ | 10,834 | ||||||
Commercial real estate | 102,415 | 117,650 | 112,796 | |||||||||
Residential real estate and other | 6,063 | 7,496 | 6,888 | |||||||||
Total restructured loans | $ | 126,473 | $ | 147,196 | $ | 130,518 | ||||||
Weighted-average contractual interest rate of restructured loans | 4.11 | % | 4.21 | % | 4.23 | % | ||||||
(1) | Included in total non-performing loans. |
At December 31, 2012, the Company had $126.5 million in loans with modified terms representing 165 credits in which economic concessions were granted to certain borrowers to better align the terms of their loans with their current ability to pay.
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The table below presents a summary of restructured loans as of December 31, 2012 and December 31, 2011, and shows the changes in the balance during the periods presented:
Three Months Ended December 31, 2012
(Dollars in thousands) | Commercial | Commercial Real Estate | Residential Real Estate and Other | Total | ||||||||||||
Balance at beginning of period | $ | 22,050 | $ | 117,650 | $ | 7,496 | $ | 147,196 | ||||||||
Additions during the period | 987 | 1,547 | 126 | 2,660 | ||||||||||||
Reductions: | ||||||||||||||||
Charge-offs | (4,361 | ) | (1,723 | ) | (764 | ) | (6,848 | ) | ||||||||
Transferred to OREO | — | (955 | ) | (449 | ) | (1,404 | ) | |||||||||
Removal of restructured loan status (1) | — | (4,488 | ) | — | (4,488 | ) | ||||||||||
Payments received | (681 | ) | (9,616 | ) | (346 | ) | (10,643 | ) | ||||||||
Balance at period end | $ | 17,995 | $ | 102,415 | $ | 6,063 | $ | 126,473 | ||||||||
Three Months Ended December 31, 2011
(Dollars in thousands) | Commercial | Commercial Real Estate | Residential Real Estate and Other | Total | ||||||||||||
Balance at beginning of period | $ | 11,519 | $ | 87,629 | $ | 5,244 | $ | 104,392 | ||||||||
Additions during the period | 1,837 | 40,251 | 2,455 | 44,543 | ||||||||||||
Reductions: | ||||||||||||||||
Charge-offs | (2,178 | ) | (3,370 | ) | (749 | ) | (6,297 | ) | ||||||||
Transferred to OREO | — | (1,545 | ) | — | (1,545 | ) | ||||||||||
Removal of restructured loan status (1) | — | (3,941 | ) | — | (3,941 | ) | ||||||||||
Payments received | (344 | ) | (6,228 | ) | (62 | ) | (6,634 | ) | ||||||||
Balance at period end | $ | 10,834 | $ | 112,796 | $ | 6,888 | $ | 130,518 | ||||||||
(1) | Loan was previously classified as a troubled debt restructuring and subsequently performed in compliance with the loan’s modified terms for a period of six months (including over a calendar year-end) at a modified interest rate which represented a market rate at the time of restructuring. Per our TDR policy, the TDR classification is removed. |
Year Ended December 31, 2012
(Dollars in thousands) | Commercial | Commercial Real Estate | Residential Real Estate and Other | Total | ||||||||||||
Balance at beginning of period | $ | 10,834 | $ | 112,796 | $ | 6,888 | $ | 130,518 | ||||||||
Additions during the period | 14,312 | 56,564 | 1,672 | 72,548 | ||||||||||||
Reductions: | ||||||||||||||||
Charge-offs | (5,160 | ) | (13,259 | ) | (1,396 | ) | (19,815 | ) | ||||||||
Transferred to OREO | — | (4,096 | ) | (449 | ) | (4,545 | ) | |||||||||
Removal of restructured loan status (1) | (363 | ) | (6,365 | ) | (273 | ) | (7,001 | ) | ||||||||
Payments received | (1,628 | ) | (43,225 | ) | (379 | ) | (45,232 | ) | ||||||||
Balance at period end | $ | 17,995 | $ | 102,415 | $ | 6,063 | $ | 126,473 | ||||||||
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Year Ended December 31, 2011
(Dollars in thousands) | Commercial | Commercial Real Estate | Residential Real Estate and Other | Total | ||||||||||||
Balance at beginning of period | $ | 18,028 | $ | 81,366 | $ | 1,796 | $ | 101,190 | ||||||||
Additions during the period | 6,956 | 87,656 | 5,916 | 100,528 | ||||||||||||
Reductions: | ||||||||||||||||
Charge-offs | (5,959 | ) | (16,396 | ) | (753 | ) | (23,108 | ) | ||||||||
Transferred to OREO | — | (8,288 | ) | — | (8,288 | ) | ||||||||||
Removal of restructured loan status (1) | (6,588 | ) | (9,537 | ) | — | (16,125 | ) | |||||||||
Payments received | (1,603 | ) | (22,005 | ) | (71 | ) | (23,679 | ) | ||||||||
Balance at period end | $ | 10,834 | $ | 112,796 | $ | 6,888 | $ | 130,518 | ||||||||
(1) | Loan was previously classified as a troubled debt restructuring and subsequently performed in compliance with the loan’s modified terms for a period of six months (including over a calendar year-end) at a modified interest rate which represented a market rate at the time of restructuring. Per our TDR policy, the TDR classification is removed. |
The Company’s approach to restructuring loans is built on its credit risk rating system which requires credit management personnel to assign a credit risk rating to each loan. In each case, the loan officer is responsible for recommending a credit risk rating for each loan and ensuring the credit risk ratings are appropriate. These credit risk ratings are then reviewed and approved by the bank’s chief credit officer or the director’s loan committee. Credit risk ratings are determined by evaluating a number of factors including a borrower’s financial strength, cash flow coverage, collateral protection and guarantees. The Company’s credit risk rating scale is one through ten with higher scores indicating higher risk. In the case of loans rated six or worse following modification, the Company’s Managed Assets Division evaluates the loan and the credit risk rating and determines that the loan has been restructured to be reasonably assured of repayment and of performance according to the modified terms and is supported by a current, well-documented credit assessment of the borrower’s financial condition and prospects for repayment under the revised terms.
A modification of a loan with an existing credit risk rating of six or worse or a modification of any other credit, which will result in a restructured credit risk rating of six or worse must be reviewed for troubled debt restructuring (“TDR”) classification. In that event, our Managed Assets Division conducts an overall credit and collateral review. A modification of a loan is considered to be a TDR if both (1) the borrower is experiencing financial difficulty and (2) for economic or legal reasons, the bank grants a concession to a borrower that it would not otherwise consider. The modification of a loan where the credit risk rating is five or better both before and after such modification are not reviewed for TDR status. Based on the Company’s credit risk rating system, it considers that borrowers whose credit risk rating is five or better are not experiencing financial difficulties and therefore, are not considered TDRs.
TDRs are reviewed at the time of modification and on a quarterly basis to determine if a specific reserve is needed. The carrying amount of the loan is compared to the expected payments to be received, discounted at the loan’s original rate, or for collateral dependent loans, to the fair value of the collateral. Any shortfall is recorded as a specific reserve.
All credits determined to be a TDR will continue to be classified as a TDR in all subsequent periods, unless the borrower has been in compliance with the loan’s modified terms for a period of six months (including over a calendar year-end) and the modified interest rate represented a market rate at the time of a restructuring. The Managed Assets Division, in consultation with the respective loan officer, determines whether the modified interest rate represented a current market rate at the time of restructuring. Using knowledge of current market conditions and rates, competitive pricing on recent loan originations, and an assessment of various characteristics of the modified loan (including collateral position and payment history), an appropriate market rate for a new borrower with similar risk is determined. If the modified interest rate meets or exceeds this market rate for a new borrower with similar risk, the modified interest rate represents a market rate at the time of restructuring. Additionally, before removing a loan from TDR classification, a review of the current or previously measured impairment on the loan and any concerns related to future performance by the borrower is conducted. If concerns exist about the future ability of the borrower to meet its obligations under the loans based on a credit review by the Managed Assets Division, the TDR classification is not removed from the loan.
Each restructured loan was reviewed for impairment at December 31, 2012 and approximately $2.2 million of impairment was present and appropriately reserved for through the Company’s normal reserving methodology in the Company’s allowance for loan losses.
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Other Real Estate Owned
The table below presents a summary of other real estate owned, excluding covered other real estate owned, as of December 31, 2012 and shows the activity for the respective period and the balance for each property type:
Three Months Ended | ||||||||||||
December 31, | September 30, | December 31, | ||||||||||
(Dollars in thousands) | 2012 | 2012 | 2011 | |||||||||
Balance at beginning of period | $ | 67,377 | $ | 72,553 | $ | 96,924 | ||||||
Disposals/resolved | (12,516 | ) | (10,604 | ) | (7,722 | ) | ||||||
Transfers in at fair value, less costs to sell | 8,030 | 6,895 | 6,084 | |||||||||
Additions from acquisition | 2,923 | — | — | |||||||||
Fair value adjustments | (2,923 | ) | (1,467 | ) | (8,763 | ) | ||||||
Balance at end of period | $ | 62,891 | $ | 67,377 | $ | 86,523 | ||||||
Period End | ||||||||||||
December 31, | September 30, | December 31, | ||||||||||
Balance by Property Type | 2012 | 2012 | 2011 | |||||||||
Residential real estate | $ | 9,077 | $ | 8,241 | $ | 7,327 | ||||||
Residential real estate development | 12,144 | 13,872 | 19,923 | |||||||||
Commercial real estate | 41,670 | 45,264 | 59,273 | |||||||||
Total | $ | 62,891 | $ | 67,377 | $ | 86,523 | ||||||
Covered Assets
In conjunction with FDIC-assisted transactions, the Company entered into loss share agreements with the FDIC. These agreements cover realized losses on loans, foreclosed real estate and certain other assets. These loss share assets are measured separately from the loan portfolios because they are not contractually embedded in the loans and are not transferable with the loans should the Company choose to dispose of them. Fair values at the acquisition dates were estimated based on projected cash flows available for loss-share based on the credit adjustments estimated for each loan pool and the loss share percentages. The loss share assets are also separately measured from the related loans and foreclosed real estate and recorded separately on the Consolidated Statements of Condition. Subsequent to the acquisition date, reimbursements received from the FDIC for actual incurred losses will reduce the loss share assets. Additional expected losses, to the extent such expected losses result in the recognition of an allowance for loan losses, will increase the loss share assets. The loss share agreements with the FDIC require the Company to reimburse the FDIC in the event that actual losses on covered assets are lower than the original loss estimates agreed upon with the FDIC with respect of such assets in the loss share agreements. The allowance for loan losses for loans acquired in FDIC-assisted transactions is determined without giving consideration to the amounts recoverable through loss share agreements (since the loss share agreements are separately accounted for and thus presented “gross” on the balance sheet). On the Consolidated Statements of Income, the provision for credit losses is reported net of changes in the amount recoverable under the loss share agreements. Reductions to expected losses, to the extent such reductions to expected losses are the result of an improvement to the actual or expected cash flows from the covered assets, will reduce the loss share assets. The increases in cash flows for the purchased loans are recognized as interest income prospectively.
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The following table provides a comparative analysis for the period end balances of the covered asset components and any changes in the allowance for covered loan losses.
December 31, | September 30, | December 31, | ||||||||||
(Dollars in thousands) | 2012 | 2012 | 2011 | |||||||||
Period End Balances: | ||||||||||||
Loans | $ | 560,087 | $ | 657,525 | $ | 651,368 | ||||||
Other real estate owned | 82,908 | 49,623 | 47,459 | |||||||||
Other assets | 1,097 | 915 | — | |||||||||
FDIC Indemnification asset | 208,160 | 238,305 | 344,251 | |||||||||
Total covered assets | $ | 852,252 | $ | 946,368 | $ | 1,043,078 | ||||||
Allowance for Covered Loan Losses Rollforward: | ||||||||||||
Balance at beginning of quarter: | $ | 21,926 | $ | 20,560 | $ | 12,496 | ||||||
Provision for covered loan losses before benefit attributable to FDIC loss share agreements | (5,634 | ) | 3,096 | 10,693 | ||||||||
Benefit attributable to FDIC loss share agreements | 4,508 | (2,489 | ) | (8,554 | ) | |||||||
Net provision for covered loan losses | (1,126 | ) | 607 | 2,139 | ||||||||
(Decrease) increase in FDIC indemnification asset | (4,508 | ) | 2,489 | 8,554 | ||||||||
Loans charged-off | (2,869 | ) | (1,736 | ) | (10,212 | ) | ||||||
Recoveries of loans charged-off | 31 | 6 | — | |||||||||
Net charge-offs | (2,838 | ) | (1,730 | ) | (10,212 | ) | ||||||
Balance at end of quarter | $ | 13,454 | $ | 21,926 | $ | 12,977 | ||||||
Changes in Accretable Yield
The excess of cash flows expected to be collected over the carrying value of loans accounted for under ASC 310-30 is referred to as the accretable yield and is recognized in interest income using an effective yield method over the remaining life of the pool of loans. The accretable yield is affected by:
• | Changes in interest rate indices for variable rate loans accounted for under ASC 310-30 – Expected future cash flows are based on the variable rates in effect at the time of the regular evaluations of cash flows expected to be collected; |
• | Changes in prepayment assumptions – Prepayments affect the estimated life of loans accounted for under ASC 310-30 which may change the amount of interest income, and possibly principal, expected to be collected; and |
• | Changes in the expected principal and interest payments over the estimated life – Updates to expected cash flows are driven by the credit outlook and actions taken with borrowers. Changes in expected future cash flows from loan modifications are included in the regular evaluations of cash flows expected to be collected. |
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The following table provides activity for the accretable yield of loans accounted for under ASC 310-30.
Three Months Ended December 31, 2012 | Three Months Ended December 31, 2011 | |||||||||||||||
Bank | Life Insurance Premium | Bank | Life Insurance Premium | |||||||||||||
(Dollars in thousands) | Acquisitions | Finance Loans | Acquisitions | Finance Loans | ||||||||||||
Accretable yield, beginning balance | $ | 151,800 | $ | 15,426 | $ | 86,497 | $ | 20,196 | ||||||||
Acquisitions | (878 | ) | — | (350 | ) | — | ||||||||||
Accretable yield amortized to interest income | (11,556 | ) | (2,646 | ) | (14,302 | ) | (2,808 | ) | ||||||||
Accretable yield amortized to indemnification asset(1) | (10,886 | ) | — | (20,843 | ) | — | ||||||||||
Reclassification from non-accretable difference(2) | 10,776 | — | 110,583 | 1,358 | ||||||||||||
Increases in interest cash flows due to payments and changes in interest rates | 3,213 | 275 | 11,535 | 115 | ||||||||||||
Accretable yield, ending balance (3) | $ | 142,469 | $ | 13,055 | $ | 173,120 | $ | 18,861 | ||||||||
Year Ended | Year Ended | |||||||||||||||
December 31, 2012 | December 31, 2011 | |||||||||||||||
Life Insurance | Life Insurance | |||||||||||||||
Bank | Premium | Bank | Premium | |||||||||||||
(Dollars in thousands) | Acquisitions | Finance Loans | Acquisitions | Finance Loans | ||||||||||||
Accretable yield, beginning balance | $ | 173,120 | $ | 18,861 | $ | 39,809 | $ | 33,315 | ||||||||
Acquisitions | 7,462 | — | 29,447 | — | ||||||||||||
Accretable yield amortized to interest income | (52,101 | ) | (11,441 | ) | (39,171 | ) | (22,109 | ) | ||||||||
Accretable yield amortized to indemnification asset(1) | (66,798 | ) | — | (37,888 | ) | — | ||||||||||
Reclassification from non-accretable difference(2) | 64,603 | 4,096 | 163,403 | 5,215 | ||||||||||||
Increases in interest cash flows due to payments and changes in interest rates | 16,183 | 1,539 | 17,520 | 2,440 | ||||||||||||
Accretable yield, ending balance (3) | $ | 142,469 | $ | 13,055 | $ | 173,120 | $ | 18,861 | ||||||||
(1) | Represents the portion of the current period accreted yield, resulting from lower expected losses, applied to reduce the loss share indemnification asset. |
(2) | Reclassification is the result of subsequent increases in expected principal cash flows. |
(3) | As of December 31, 2012, the Company estimates that the remaining accretable yield balance to be amortized to the indemnification asset for the bank acquisitions is $54.5 million. The remainder of the accretable yield related to bank acquisitions is expected to be amortized to interest income. |
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WINTRUST SUBSIDIARIES AND LOCATIONS
Wintrust is a financial holding company whose common stock is traded on the Nasdaq Global Select Market (Nasdaq: WTFC). Its 15 community bank subsidiaries are: Lake Forest Bank & Trust Company, Hinsdale Bank & Trust Company, North Shore Community Bank & Trust Company in Wilmette, Libertyville Bank & Trust Company, Barrington Bank & Trust Company, Crystal Lake Bank & Trust Company, Northbrook Bank & Trust Company, Schaumburg Bank & Trust Company, N.A., Village Bank & Trust in Arlington Heights, Beverly Bank & Trust Company in Chicago, Wheaton Bank & Trust Company, State Bank of The Lakes in Antioch, Old Plank Trail Community Bank, N.A. in New Lenox, St. Charles Bank & Trust Company and Town Bank in Hartland, Wisconsin. The banks also operate facilities in Illinois in Algonquin, Bloomingdale, Buffalo Grove, Cary, Chicago, Cicero, Clarendon Hills, Crete, Deerfield, Downers Grove, Elgin, Frankfort, Geneva, Glencoe, Glen Ellyn, Gurnee, Grayslake, Hanover Park, Highland Park, Highwood, Hoffman Estates, Island Lake, Itasca, Lake Bluff, Lake Villa, Lindenhurst, McHenry, Mokena, Mount Prospect, Mundelein, Naperville, North Chicago, Northfield, Norridge, Orland Park, Palatine, Park Ridge, Prospect Heights, Ravinia, Riverside, Rogers Park, Roselle, Skokie, Spring Grove, Steger, Vernon Hills, Wauconda, Western Springs, Willowbrook, Winnetka and Wood Dale and in Delafield, Elm Grove, Madison, Menomenee Falls and Wales, Wisconsin.
Additionally, the Company operates various non-bank business units:
• | First Insurance Funding Corporation, one of the largest insurance premium finance companies operating in the United States, serves commercial and life insurance loan customers throughout the country. |
• | First Insurance Funding of Canada serves commercial insurance loan customers throughout Canada |
• | Tricom, Inc. of Milwaukee provides high-yielding, short-term accounts receivable financing and value-added out-sourced administrative services, such as data processing of payrolls, billing and cash management services, to temporary staffing service clients located throughout the United States. |
• | Wintrust Mortgage, a division of Barrington Bank & Trust Company, engages primarily in the origination and purchase of residential mortgages for sale into the secondary market through origination offices located throughout the United States. Loans are also originated nationwide through relationships with wholesale and correspondent offices. |
• | Wayne Hummer Investments, LLC is a broker-dealer providing a full range of private client and brokerage services to clients and correspondent banks located primarily in the Midwest. |
• | Great Lakes Advisors LLC provides money management services and advisory services to individual accounts. |
• | Advanced Investment Partners, LLC is an investment management firm specializing in the active management of domestic equity investment strategies. |
• | The Chicago Trust Company, a trust subsidiary, allows Wintrust to service customers’ trust and investment needs at each banking location. |
FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements within the meaning of federal securities laws. Forward-looking information can be identified through the use of words such as “intend,” “plan,” “project,” “expect,” “anticipate,” “believe,” “estimate,” “contemplate,” “possible,” “point,” “will,” “may,” “should,” “would” and “could.” Forward-looking statements and information are not historical facts, are premised on many factors and assumptions, and represent only management’s expectations, estimates and projections regarding future events. Similarly, these statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict, which may include, but are not limited to, those listed below and the Risk Factors discussed under Item 1A of the Company’s 2011 Annual Report on Form 10-K and in any of the Company’s subsequent SEC filings. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of invoking these safe harbor provisions. Such forward-looking statements may be deemed to include, among other things, statements relating to the Company’s future financial performance, the performance of its loan portfolio, the expected amount of future credit reserves and charge-offs, delinquency trends, growth plans, regulatory developments, securities that the Company may offer from time to time, and management’s long-term performance goals, as well as statements relating to the anticipated effects on financial condition and results of operations from expected developments or events, the Company’s business and growth strategies, including future acquisitions of banks, specialty finance or wealth management businesses, internal growth and plans to form additional de novo banks or branch offices. Actual results could differ materially from those addressed in the forward-looking statements as a result of numerous factors, including the following:
• | negative economic conditions that adversely affect the economy, housing prices, the job market and other factors that may affect the Company’s liquidity and the performance of its loan portfolios, particularly in the markets in which it operates; |
• | the extent of defaults and losses on the Company’s loan portfolio, which may require further increases in its allowance for credit losses; |
43
• | estimates of fair value of certain of the Company’s assets and liabilities, which could change in value significantly from period to period; |
• | the financial success and economic viability of the borrowers of our commercial loans; |
• | the extent of commercial and consumer delinquencies and declines in real estate values, which may require further increases in the Company’s allowance for loan and lease losses; |
• | changes in the level and volatility of interest rates, the capital markets and other market indices that may affect, among other things, the Company’s liquidity and the value of its assets and liabilities; |
• | competitive pressures in the financial services business which may affect the pricing of the Company’s loan and deposit products as well as its services (including wealth management services); |
• | failure to identify and complete favorable acquisitions in the future or unexpected difficulties or developments related to the integration of the Company’s recent or future acquisitions; |
• | unexpected difficulties and losses related to FDIC-assisted acquisitions, including those resulting from our loss- sharing arrangements with the FDIC; |
• | any negative perception of the Company’s reputation or financial strength; |
• | ability of the Company to raise capital on acceptable terms when needed; |
• | disruption in capital markets, which may lower fair values for the Company’s investment portfolio; |
• | ability of the Company to use technology to provide products and services that will satisfy customer demands and create efficiencies in operations; |
• | adverse effects on our information technology systems resulting from failures, human error or tampering; |
• | accuracy and completeness of information the Company receives about customers and counterparties to make credit decisions; |
• | the ability of the Company to attract and retain senior management experienced in the banking and financial services industries; |
• | environmental liability risk associated with lending activities; |
• | losses incurred in connection with repurchases and indemnification payments related to mortgages; |
• | the loss of customers as a result of technological changes allowing consumers to complete their financial transactions without the use of a bank; |
• | the soundness of other financial institutions; |
• | the possibility that certain European Union member states will default on their debt obligations, which may affect the Company’s liquidity, financial conditions and results of operations; |
• | examinations and challenges by tax authorities; |
• | changes in accounting standards, rules and interpretations and the impact on the Company’s financial statements; |
• | the ability of the Company to receive dividends from its subsidiaries; |
• | a decrease in the Company’s regulatory capital ratios, including as a result of further declines in the value of its loan portfolios, or otherwise; |
• | legislative or regulatory changes, particularly changes in regulation of financial services companies and/or the products and services offered by financial services companies, including those resulting from the Dodd-Frank Act; |
• | restrictions on our ability to market our products to consumers and limitations on our ability to profitably operate our mortgage business resulting from the Dodd-Frank Act; |
• | increased costs of compliance, heightened regulatory capital requirements and other risks associated with changes in regulation and the current regulatory environment, including the Dodd-Frank Act; |
• | changes in capital requirements resulting from Basel II and III initiatives; |
• | increases in the Company’s FDIC insurance premiums, or the collection of special assessments by the FDIC; |
• | delinquencies or fraud with respect to the Company’s premium finance business; |
• | credit downgrades among commercial and life insurance providers that could negatively affect the value of collateral securing the Company’s premium finance loans; |
• | the Company’s ability to comply with covenants under its credit facility; |
• | fluctuations in the stock market, which may have an adverse impact on the Company’s wealth management business and brokerage operation; and |
• | significant litigation involving the Company. |
Therefore, there can be no assurances that future actual results will correspond to these forward-looking statements. The reader is cautioned not to place undue reliance on any forward-looking statement made by the Company. Any such statement speaks only as of the date the statement was made or as of such date that may be referenced within the statement. The Company undertakes no obligation to update any forward-looking statement to reflect the impact of circumstances after the date of the press release. Persons are advised, however, to consult further disclosures management makes on related subjects in its reports filed with the Securities and Exchange Commission and in its press releases.
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CONFERENCE CALL, WEB CAST AND REPLAY
The Company will hold a conference call at 12:00 p.m. (CT) Friday, January 18, 2013 regarding fourth quarter 2012 results. Individuals interested in listening should call (877) 363-5049 and enter Conference ID #88754309. A simultaneous audio-only web cast and replay of the conference call may be accessed via the Company’s web site at (http://www.wintrust.com), Investor Relations, Investor News and Events, Presentations & Conference Calls. The text of the fourth quarter 2012 earnings press release will be available on the home page of the Company’s website at (http://www.wintrust.com) and at the Investor Relations, Investor News and Events, Press Releases link on its website.
45
WINTRUST FINANCIAL CORPORATION
Supplemental Financial Information
5 Quarter Trends
46
WINTRUST FINANCIAL CORPORATION - Supplemental Financial Information
Selected Financial Highlights - 5 Quarter Trends
(Dollars in thousands, except per share data)
Three Months Ended | ||||||||||||||||||||
December 31, 2012 | September 30, 2012 | June 30, 2012 | March 31, 2012 | December 31, 2011 | ||||||||||||||||
Selected Financial Condition Data (at end of period): | ||||||||||||||||||||
Total assets | $ | 17,519,613 | $ | 17,018,592 | $ | 16,576,282 | $ | 16,172,018 | $ | 15,893,808 | ||||||||||
Total loans, excluding covered loans | 11,828,943 | 11,489,900 | 11,202,842 | 10,717,384 | 10,521,377 | |||||||||||||||
Total deposits | 14,428,544 | 13,847,965 | 13,057,581 | 12,665,853 | 12,307,267 | |||||||||||||||
Junior subordinated debentures | 249,493 | 249,493 | 249,493 | 249,493 | 249,493 | |||||||||||||||
Total shareholders’ equity | 1,804,705 | 1,761,300 | 1,722,074 | 1,687,921 | 1,543,533 | |||||||||||||||
Selected Statements of Income Data: | ||||||||||||||||||||
Net interest income | 132,776 | 132,575 | 128,270 | 125,895 | 124,647 | |||||||||||||||
Net revenue (1) | 197,965 | 195,520 | 179,205 | 172,918 | 169,559 | |||||||||||||||
Pre-tax adjusted earnings (2) | 72,034 | 68,923 | 68,841 | 63,688 | 59,362 | |||||||||||||||
Net income | 30,089 | 32,302 | 25,595 | 23,210 | 19,221 | |||||||||||||||
Net income per common share – Basic | $ | 0.75 | $ | 0.82 | $ | 0.63 | $ | 0.61 | $ | 0.51 | ||||||||||
Net income per common share – Diluted | $ | 0.61 | $ | 0.66 | $ | 0.52 | $ | 0.50 | $ | 0.41 | ||||||||||
Selected Financial Ratios and Other Data: | ||||||||||||||||||||
Performance Ratios: | ||||||||||||||||||||
Net interest margin (2) | 3.40 | % | 3.50 | % | 3.51 | % | 3.55 | % | 3.45 | % | ||||||||||
Non-interest income to average assets | 1.50 | % | 1.50 | % | 1.26 | % | 1.19 | % | 1.11 | % | ||||||||||
Non-interest expense to average assets | 2.99 | % | 2.97 | % | 2.89 | % | 2.99 | % | 2.94 | % | ||||||||||
Net overhead ratio (2) (3) | 1.48 | % | 1.47 | % | 1.63 | % | 1.80 | % | 1.83 | % | ||||||||||
Net overhead ratio - pre-tax adjusted earnings (2) (3) | 1.40 | % | 1.52 | % | 1.46 | % | 1.58 | % | 1.62 | % | ||||||||||
Efficiency ratio - FTE (2) (4) | 66.13 | % | 63.67 | % | 65.63 | % | 68.24 | % | 69.99 | % | ||||||||||
Efficiency ratio - pre-tax adjusted earnings (2) (4) | 62.75 | % | 63.48 | % | 61.38 | % | 62.31 | % | 64.76 | % | ||||||||||
Return on average assets | 0.69 | % | 0.77 | % | 0.63 | % | 0.59 | % | 0.48 | % | ||||||||||
Return on average common equity | 6.79 | % | 7.57 | % | 6.08 | % | 5.90 | % | 4.87 | % | ||||||||||
Average total assets | $ | 17,248,650 | $ | 16,705,429 | $ | 16,319,207 | $ | 15,835,350 | $ | 16,014,209 | ||||||||||
Average total shareholders’ equity | 1,786,824 | 1,736,740 | 1,695,440 | 1,564,662 | 1,531,936 | |||||||||||||||
Average loans to average deposits ratio | 85.6 | % | 89.3 | % | 88.2 | % | 88.1 | % | 86.6 | % | ||||||||||
Average loans to average deposits ratio (including covered loans) | 90.0 | 93.8 | 93.4 | 93.5 | 91.9 | |||||||||||||||
Common Share Data at end of period: | ||||||||||||||||||||
Market price per common share | $ | 36.70 | $ | 37.57 | $ | 35.50 | $ | 35.79 | $ | 28.05 | ||||||||||
Book value per common share (2) | $ | 37.78 | $ | 37.25 | $ | 35.86 | $ | 35.25 | $ | 34.23 | ||||||||||
Tangible common book value per share (2) | $ | 29.28 | $ | 28.93 | $ | 27.69 | $ | 27.57 | $ | 26.72 | ||||||||||
Common shares outstanding | 36,861,956 | 36,411,382 | 36,340,843 | 36,289,380 | 35,978,349 | |||||||||||||||
Other Data at end of period:(8) | ||||||||||||||||||||
Leverage Ratio(5) | 10.1 | % | 10.2 | % | 10.2 | % | 10.5 | % | 9.4 | % | ||||||||||
Tier 1 Capital to risk-weighted assets (5) | 12.0 | % | 12.2 | % | 12.2 | % | 12.7 | % | 11.8 | % | ||||||||||
Total capital to risk-weighted assets (5) | 13.0 | % | 13.3 | % | 13.4 | % | 13.9 | % | 13.0 | % | ||||||||||
Tangible common equity ratio (TCE) (2) (7) | 7.4 | % | 7.4 | % | 7.4 | % | 7.5 | % | 7.5 | % | ||||||||||
Tangible common equity ratio, assuming full conversion of preferred stock (2) (7) | 8.4 | % | 8.4 | % | 8.4 | % | 8.6 | % | 7.8 | % | ||||||||||
Allowance for credit losses (6) | $ | 121,988 | $ | 124,914 | $ | 124,823 | $ | 124,101 | $ | 123,612 | ||||||||||
Non-performing loans | 118,083 | 117,891 | 120,920 | 113,621 | 120,084 | |||||||||||||||
Allowance for credit losses to total loans (6) | 1.03 | % | 1.09 | % | 1.11 | % | 1.16 | % | 1.17 | % | ||||||||||
Non-performing loans to total loans | 1.00 | % | 1.03 | % | 1.08 | % | 1.06 | % | 1.14 | % | ||||||||||
Number of: | ||||||||||||||||||||
Bank subsidiaries | 15 | 15 | 15 | 15 | 15 | |||||||||||||||
Non-bank subsidiaries | 8 | 8 | 8 | 7 | 7 | |||||||||||||||
Banking offices | 111 | 109 | 100 | 98 | 99 | |||||||||||||||
(1) | Net revenue includes net interest income and non-interest income |
(2) | See “Supplemental Financial Measures/Ratios” for additional information on this performance measure/ratio. |
(3) | The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period’s total average assets. A lower ratio indicates a higher degree of efficiency. |
(4) | The efficiency ratio is calculated by dividing total non-interest expense by tax-equivalent net revenue (less securities gains or losses). A lower ratio indicates more efficient revenue generation. |
(5) | Capital ratios for current quarter-end are estimated. |
(6) | The allowance for credit losses includes both the allowance for loan losses and the allowance for unfunded lending-related commitments, but excluding the allowance for covered loan losses. |
(7) | Total shareholders’ equity minus preferred stock and total intangible assets divided by total assets minus total intangible assets |
(8) | Asset quality ratios exclude covered loans. |
47
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Consolidated Statements of Condition - 5 Quarter Trends
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
(In thousands) | 2012 | 2012 | 2012 | 2012 | 2011 | |||||||||||||||
Assets | ||||||||||||||||||||
Cash and due from banks | $ | 284,731 | $ | 186,752 | $ | 176,529 | $ | 146,014 | $ | 148,012 | ||||||||||
Federal funds sold and securities purchased under resale agreements | 30,297 | 26,062 | 15,227 | 14,588 | 21,692 | |||||||||||||||
Interest-bearing deposits with other banks | 1,035,743 | 934,430 | 1,117,888 | 900,755 | 749,287 | |||||||||||||||
Available-for-sale securities, at fair value | 1,796,076 | 1,256,768 | 1,196,702 | 1,869,344 | 1,291,797 | |||||||||||||||
Trading account securities | 583 | 635 | 608 | 1,140 | 2,490 | |||||||||||||||
Federal Home Loan Bank and Federal Reserve Bank stock, at cost | 79,564 | 80,687 | 92,792 | 88,216 | 100,434 | |||||||||||||||
Brokerage customer receivables | 24,864 | 30,633 | 31,448 | 31,085 | 27,925 | |||||||||||||||
Mortgage loans held-for-sale, at fair value | 385,033 | 548,300 | 511,566 | 339,600 | 306,838 | |||||||||||||||
Mortgage loans held-for-sale, at lower of cost or market | 27,167 | 21,685 | 14,538 | 10,728 | 13,686 | |||||||||||||||
Loans, net of unearned income, excluding covered loans | 11,828,943 | 11,489,900 | 11,202,842 | 10,717,384 | 10,521,377 | |||||||||||||||
Covered loans | 560,087 | 657,525 | 614,062 | 691,220 | 651,368 | |||||||||||||||
Total loans | 12,389,030 | 12,147,425 | 11,816,904 | 11,408,604 | 11,172,745 | |||||||||||||||
Less: Allowance for loan losses | 107,351 | 112,287 | 111,920 | 111,023 | 110,381 | |||||||||||||||
Less: Allowance for covered loan losses | 13,454 | 21,926 | 20,560 | 17,735 | 12,977 | |||||||||||||||
Net loans | 12,268,225 | 12,013,212 | 11,684,424 | 11,279,846 | 11,049,387 | |||||||||||||||
Premises and equipment, net | 501,205 | 461,905 | 449,608 | 434,700 | 431,512 | |||||||||||||||
FDIC indemnification asset | 208,160 | 238,305 | 222,568 | 263,212 | 344,251 | |||||||||||||||
Accrued interest receivable and other assets | 511,617 | 557,884 | 710,275 | 463,394 | 444,912 | |||||||||||||||
Trade date securities receivable | — | 307,295 | — | — | 634,047 | |||||||||||||||
Goodwill | 345,401 | 331,634 | 330,896 | 307,295 | 305,468 | |||||||||||||||
Other intangible assets | 20,947 | 22,405 | 21,213 | 22,101 | 22,070 | |||||||||||||||
Total assets | $ | 17,519,613 | $ | 17,018,592 | $ | 16,576,282 | $ | 16,172,018 | $ | 15,893,808 | ||||||||||
Liabilities and Shareholders’ Equity | ||||||||||||||||||||
Deposits: | ||||||||||||||||||||
Non-interest bearing | $ | 2,396,264 | $ | 2,162,215 | $ | 2,047,715 | $ | 1,901,753 | $ | 1,785,433 | ||||||||||
Interest bearing | 12,032,280 | 11,685,750 | 11,009,866 | 10,764,100 | 10,521,834 | |||||||||||||||
Total deposits | 14,428,544 | 13,847,965 | 13,057,581 | 12,665,853 | 12,307,267 | |||||||||||||||
Notes payable | 2,093 | 2,275 | 2,457 | 52,639 | 52,822 | |||||||||||||||
Federal Home Loan Bank advances | 414,122 | 414,211 | 564,301 | 466,391 | 474,481 | |||||||||||||||
Other borrowings | 274,411 | 377,229 | 375,523 | 411,037 | 443,753 | |||||||||||||||
Secured borrowings - owed to securitization investors | — | — | 360,825 | 428,000 | 600,000 | |||||||||||||||
Subordinated notes | 15,000 | 15,000 | 15,000 | 35,000 | 35,000 | |||||||||||||||
Junior subordinated debentures | 249,493 | 249,493 | 249,493 | 249,493 | 249,493 | |||||||||||||||
Trade date securities payable | — | 412 | 19,025 | — | 47 | |||||||||||||||
Accrued interest payable and other liabilities | 331,245 | 350,707 | 210,003 | 175,684 | 187,412 | |||||||||||||||
Total liabilities | 15,714,908 | 15,257,292 | 14,854,208 | 14,484,097 | 14,350,275 | |||||||||||||||
Shareholders’ Equity: | ||||||||||||||||||||
Preferred stock | 176,406 | 176,371 | 176,337 | 176,302 | 49,768 | |||||||||||||||
Common stock | 37,108 | 36,647 | 36,573 | 36,522 | 35,982 | |||||||||||||||
Surplus | 1,036,295 | 1,018,417 | 1,013,428 | 1,008,326 | 1,001,316 | |||||||||||||||
Treasury stock | (7,838 | ) | (7,490 | ) | (7,374 | ) | (6,559 | ) | (112 | ) | ||||||||||
Retained earnings | 555,023 | 527,550 | 501,139 | 478,160 | 459,457 | |||||||||||||||
Accumulated other comprehensive income (loss) | 7,711 | 9,805 | 1,971 | (4,830 | ) | (2,878 | ) | |||||||||||||
Total shareholders’ equity | 1,804,705 | 1,761,300 | 1,722,074 | 1,687,921 | 1,543,533 | |||||||||||||||
Total liabilities and shareholders’ equity | $ | 17,519,613 | $ | 17,018,592 | $ | 16,576,282 | $ | 16,172,018 | $ | 15,893,808 | ||||||||||
48
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Consolidated Statements of Income (Unaudited) - 5 Quarter Trends
Three Months Ended | ||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
(In thousands, except per share data) | 2012 | 2012 | 2012 | 2012 | 2011 | |||||||||||||||
Interest income | ||||||||||||||||||||
Interest and fees on loans | $ | 146,946 | $ | 149,271 | $ | 144,100 | $ | 143,555 | $ | 143,514 | ||||||||||
Interest bearing deposits with banks | 739 | 362 | 203 | 248 | 696 | |||||||||||||||
Federal funds sold and securities purchased under resale agreements | 13 | 7 | 6 | 12 | 33 | |||||||||||||||
Securities | 8,086 | 7,691 | 10,510 | 11,847 | 12,574 | |||||||||||||||
Trading account securities | 6 | 3 | 10 | 9 | 6 | |||||||||||||||
Federal Home Loan Bank and Federal Reserve Bank stock | 656 | 649 | 641 | 604 | 591 | |||||||||||||||
Brokerage customer receivables | 197 | 218 | 221 | 211 | 203 | |||||||||||||||
Total interest income | 156,643 | 158,201 | 155,691 | 156,486 | 157,617 | |||||||||||||||
Interest expense | ||||||||||||||||||||
Interest on deposits | 16,208 | 16,794 | 17,273 | 18,030 | 19,685 | |||||||||||||||
Interest on Federal Home Loan Bank advances | 2,835 | 2,817 | 2,867 | 3,584 | 4,186 | |||||||||||||||
Interest on notes payable and other borrowings | 1,566 | 2,024 | 2,274 | 3,102 | 2,804 | |||||||||||||||
Interest on secured borrowings - owed to securitization investors | — | 795 | 1,743 | 2,549 | 3,076 | |||||||||||||||
Interest on subordinated notes | 66 | 67 | 126 | 169 | 176 | |||||||||||||||
Interest on junior subordinated debentures | 3,192 | 3,129 | 3,138 | 3,157 | 3,043 | |||||||||||||||
Total interest expense | 23,867 | 25,626 | 27,421 | 30,591 | 32,970 | |||||||||||||||
Net interest income | 132,776 | 132,575 | 128,270 | 125,895 | 124,647 | |||||||||||||||
Provision for credit losses | 19,546 | 18,799 | 20,691 | 17,400 | 18,817 | |||||||||||||||
Net interest income after provision for credit losses | 113,230 | 113,776 | 107,579 | 108,495 | 105,830 | |||||||||||||||
Non-interest income | ||||||||||||||||||||
Wealth management | 13,634 | 13,252 | 13,393 | 12,401 | 11,686 | |||||||||||||||
Mortgage banking | 34,702 | 31,127 | 25,607 | 18,534 | 18,025 | |||||||||||||||
Service charges on deposit accounts | 4,534 | 4,235 | 3,994 | 4,208 | 3,973 | |||||||||||||||
Gains on available-for-sale securities, net | 2,561 | 409 | 1,109 | 816 | 309 | |||||||||||||||
Gain on bargain purchases, net | 85 | 6,633 | (55 | ) | 840 | — | ||||||||||||||
Trading (losses) gains, net | (120 | ) | (998 | ) | (928 | ) | 146 | 216 | ||||||||||||
Other | 9,793 | 8,287 | 7,815 | 10,078 | 10,703 | |||||||||||||||
Total non-interest income | 65,189 | 62,945 | 50,935 | 47,023 | 44,912 | |||||||||||||||
Non-interest expense | ||||||||||||||||||||
Salaries and employee benefits | 76,140 | 75,280 | 68,139 | 69,030 | 66,744 | |||||||||||||||
Equipment | 6,468 | 5,888 | 5,466 | 5,400 | 5,093 | |||||||||||||||
Occupancy, net | 8,480 | 8,024 | 7,728 | 8,062 | 7,975 | |||||||||||||||
Data processing | 4,178 | 4,103 | 3,840 | 3,618 | 4,062 | |||||||||||||||
Advertising and marketing | 2,725 | 2,528 | 2,179 | 2,006 | 3,207 | |||||||||||||||
Professional fees | 3,158 | 4,653 | 3,847 | 3,604 | 3,710 | |||||||||||||||
Amortization of other intangible assets | 1,108 | 1,078 | 1,089 | 1,049 | 1,062 | |||||||||||||||
FDIC insurance | 3,039 | 3,549 | 3,477 | 3,357 | 3,244 | |||||||||||||||
OREO expenses, net | 5,269 | 3,808 | 5,848 | 7,178 | 8,821 | |||||||||||||||
Other | 18,983 | 15,637 | 15,572 | 14,455 | 14,850 | |||||||||||||||
Total non-interest expense | 129,548 | 124,548 | 117,185 | 117,759 | 118,768 | |||||||||||||||
Income before taxes | 48,871 | 52,173 | 41,329 | 37,759 | 31,974 | |||||||||||||||
Income tax expense | 18,782 | 19,871 | 15,734 | 14,549 | 12,753 | |||||||||||||||
Net income | $ | 30,089 | $ | 32,302 | $ | 25,595 | $ | 23,210 | $ | 19,221 | ||||||||||
Preferred stock dividends and discount accretion | $ | 2,616 | $ | 2,616 | $ | 2,644 | $ | 1,246 | $ | 1,032 | ||||||||||
Net income applicable to common shares | $ | 27,473 | $ | 29,686 | $ | 22,951 | $ | 21,964 | $ | 18,189 | ||||||||||
Net income per common share - Basic | $ | 0.75 | $ | 0.82 | $ | 0.63 | $ | 0.61 | $ | 0.51 | ||||||||||
Net income per common share - Diluted | $ | 0.61 | $ | 0.66 | $ | 0.52 | $ | 0.50 | $ | 0.41 | ||||||||||
Cash dividends declared per common share | $ | — | $ | 0.09 | $ | — | $ | 0.09 | $ | — | ||||||||||
Weighted average common shares outstanding | 36,543 | 36,381 | 36,329 | 36,207 | 35,958 | |||||||||||||||
Dilutive potential common shares | 12,458 | 12,295 | 7,770 | 7,530 | 8,480 | |||||||||||||||
Average common shares and dilutive common shares | 49,001 | 48,676 | 44,099 | 43,737 | 44,438 | |||||||||||||||
49
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Period End Loan Balances - 5 Quarter Trends
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
(Dollars in thousands) | 2012 | 2012 | 2012 | 2012 | 2011 | |||||||||||||||
Balance: | ||||||||||||||||||||
Commercial | $ | 2,914,798 | $ | 2,771,053 | $ | 2,673,181 | $ | 2,544,456 | $ | 2,498,313 | ||||||||||
Commercial real estate | 3,864,118 | 3,699,712 | 3,666,519 | 3,585,760 | 3,514,261 | |||||||||||||||
Home equity | 788,474 | 807,592 | 820,991 | 840,364 | 862,345 | |||||||||||||||
Residential real-estate | 367,213 | 376,678 | 375,494 | 361,327 | 350,289 | |||||||||||||||
Premium finance receivables - commercial | 1,987,856 | 1,982,945 | 1,830,044 | 1,512,630 | 1,412,454 | |||||||||||||||
Premium finance receivables - life insurance | 1,725,166 | 1,665,620 | 1,656,200 | 1,693,763 | 1,695,225 | |||||||||||||||
Indirect consumer (1) | 77,333 | 77,378 | 72,482 | 67,445 | 64,545 | |||||||||||||||
Consumer and other | 103,985 | 108,922 | 107,931 | 111,639 | 123,945 | |||||||||||||||
Total loans, net of unearned income, excluding covered loans | $ | 11,828,943 | $ | 11,489,900 | $ | 11,202,842 | $ | 10,717,384 | $ | 10,521,377 | ||||||||||
Covered loans | 560,087 | 657,525 | 614,062 | 691,220 | 651,368 | |||||||||||||||
Total loans, net of unearned income | $ | 12,389,030 | $ | 12,147,425 | $ | 11,816,904 | $ | 11,408,604 | $ | 11,172,745 | ||||||||||
Mix: | ||||||||||||||||||||
Commercial | 24 | % | 23 | % | 23 | % | 22 | % | 22 | % | ||||||||||
Commercial real estate | 31 | 30 | 31 | 32 | 31 | |||||||||||||||
Home equity | 6 | 7 | 7 | 7 | 8 | |||||||||||||||
Residential real-estate | 3 | 3 | 3 | 3 | 3 | |||||||||||||||
Premium finance receivables - commercial | 16 | 16 | 15 | 13 | 13 | |||||||||||||||
Premium finance receivables - life insurance | 14 | 14 | 14 | 15 | 15 | |||||||||||||||
Indirect consumer (1) | 1 | 1 | 1 | 1 | 1 | |||||||||||||||
Consumer and other | 1 | 1 | 1 | 1 | 1 | |||||||||||||||
Total loans, net of unearned income, excluding covered loans | 96 | % | 95 | % | 95 | % | 94 | % | 94 | % | ||||||||||
Covered loans | 4 | 5 | 5 | 6 | 6 | |||||||||||||||
Total loans, net of unearned income | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||
(1) | Includes autos, boats, snowmobiles and other indirect consumer loans. |
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Period End Deposits Balances - 5 Quarter Trends
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
(Dollars in thousands) | 2012 | 2012 | 2012 | 2012 | 2011 | |||||||||||||||
Balance: | ||||||||||||||||||||
Non-interest bearing | $ | 2,396,264 | $ | 2,162,215 | $ | 2,047,715 | $ | 1,901,753 | $ | 1,785,433 | ||||||||||
NOW | 2,022,957 | 1,841,743 | 1,780,872 | 1,756,313 | 1,698,778 | |||||||||||||||
Wealth Management deposits (1) | 991,902 | 979,306 | 954,319 | 933,609 | 788,311 | |||||||||||||||
Money Market | 2,761,498 | 2,596,702 | 2,335,238 | 2,306,726 | 2,263,253 | |||||||||||||||
Savings | 1,275,012 | 1,156,466 | 958,295 | 943,066 | 888,592 | |||||||||||||||
Time certificates of deposit | 4,980,911 | 5,111,533 | 4,981,142 | 4,824,386 | 4,882,900 | |||||||||||||||
Total deposits | $ | 14,428,544 | $ | 13,847,965 | $ | 13,057,581 | $ | 12,665,853 | $ | 12,307,267 | ||||||||||
Mix: | ||||||||||||||||||||
Non-interest bearing | 17 | % | 16 | % | 16 | % | 15 | % | 15 | % | ||||||||||
NOW | 14 | 13 | 14 | 14 | 14 | |||||||||||||||
Wealth Management deposits (1) | 7 | 7 | 7 | 7 | 6 | |||||||||||||||
Money Market | 19 | 19 | 18 | 18 | 18 | |||||||||||||||
Savings | 9 | 8 | 7 | 8 | 7 | |||||||||||||||
Time certificates of deposit | 34 | 37 | 38 | 38 | 40 | |||||||||||||||
Total deposits | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||
(1) | Represents deposit balances of the Company’s subsidiary banks from brokerage customers of Wayne Hummer Investments, trust and asset management customers of The Chicago Trust Company and brokerage customers from unaffiliated companies which have been placed into deposit accounts of the Banks. |
50
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Net Interest Margin (Including Call Option Income) - 5 Quarter Trends
Three Months Ended | ||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
(Dollars in thousands) | 2012 | 2012 | 2012 | 2012 | 2011 | |||||||||||||||
Net interest income | $ | 133,285 | $ | 133,076 | $ | 128,741 | $ | 126,361 | $ | 125,101 | ||||||||||
Call option income | 2,156 | 2,083 | 3,114 | 3,123 | 5,377 | |||||||||||||||
Net interest income including call option income | $ | 135,441 | $ | 135,159 | $ | 131,855 | $ | 129,484 | $ | 130,478 | ||||||||||
Yield on earning assets | 4.01 | % | 4.18 | % | 4.25 | % | 4.41 | % | 4.36 | % | ||||||||||
Rate on interest-bearing liabilities | 0.74 | 0.81 | 0.89 | 1.00 | 1.05 | |||||||||||||||
Rate spread | 3.27 | % | 3.37 | % | 3.36 | % | 3.41 | % | 3.31 | % | ||||||||||
Net free funds contribution | 0.13 | 0.13 | 0.15 | 0.14 | 0.14 | |||||||||||||||
Net interest margin | 3.40 | 3.50 | 3.51 | 3.55 | 3.45 | |||||||||||||||
Call option income | 0.05 | 0.05 | 0.08 | 0.09 | 0.15 | |||||||||||||||
Net interest margin including call option income | 3.45 | % | 3.55 | % | 3.59 | % | 3.64 | % | 3.60 | % | ||||||||||
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Net Interest Margin (Including Call Option Income - YTD Trends)
Years Ended December 31, | ||||||||||||||||||||
(Dollars in thousands) | 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||
Net interest income | $ | 521,463 | $ | 463,071 | $ | 417,564 | $ | 314,096 | $ | 247,054 | ||||||||||
Call option income | 10,476 | 13,570 | 2,235 | 1,998 | 29,024 | |||||||||||||||
Net interest income including call option income | $ | 531,939 | $ | 476,641 | $ | 419,799 | $ | 316,094 | $ | 276,078 | ||||||||||
Yield on earning assets | 4.21 | % | 4.49 | % | 4.80 | % | 5.07 | % | 5.88 | % | ||||||||||
Rate on interest-bearing liabilities | 0.86 | 1.23 | 1.61 | 2.29 | 3.31 | |||||||||||||||
Rate spread | 3.35 | % | 3.26 | % | 3.19 | % | 2.78 | % | 2.57 | % | ||||||||||
Net free funds contribution | 0.14 | 0.16 | 0.18 | 0.23 | 0.24 | |||||||||||||||
Net interest margin | 3.49 | 3.42 | 3.37 | 3.01 | 2.81 | |||||||||||||||
Call option income | 0.07 | 0.10 | 0.02 | 0.02 | 0.33 | |||||||||||||||
Net interest margin including call option income | 3.56 | % | 3.52 | % | 3.39 | % | 3.03 | % | 3.14 | % | ||||||||||
51
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Quarterly Average Balances - 5 Quarter Trends
Three Months Ended | ||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
(In thousands) | 2012 | 2012 | 2012 | 2012 | 2011 | |||||||||||||||
Liquidity management assets | $ | 2,949,034 | $ | 2,565,151 | $ | 2,781,730 | $ | 2,756,833 | $ | 3,051,850 | ||||||||||
Other earning assets | 27,482 | 31,142 | 30,761 | 30,499 | 28,828 | |||||||||||||||
Loans, net of unearned income | 12,001,433 | 11,922,450 | 11,300,395 | 10,848,016 | 10,662,516 | |||||||||||||||
Covered loans | 626,449 | 597,518 | 659,783 | 667,242 | 652,157 | |||||||||||||||
Total earning assets | $ | 15,604,398 | $ | 15,116,261 | $ | 14,772,669 | $ | 14,302,590 | $ | 14,395,351 | ||||||||||
Allowance for loan and covered loan losses | (135,156 | ) | (138,740 | ) | (134,077 | ) | (131,769 | ) | (137,423 | ) | ||||||||||
Cash and due from banks | 206,914 | 185,435 | 152,118 | 143,869 | 130,437 | |||||||||||||||
Other assets | 1,572,494 | 1,542,473 | 1,528,497 | 1,520,660 | 1,625,844 | |||||||||||||||
Total assets | $ | 17,248,650 | $ | 16,705,429 | $ | 16,319,207 | $ | 15,835,350 | $ | 16,014,209 | ||||||||||
Interest-bearing deposits | $ | 11,709,058 | $ | 11,261,184 | $ | 10,815,018 | $ | 10,481,822 | $ | 10,563,090 | ||||||||||
Federal Home Loan Bank advances | 414,289 | 441,445 | 514,513 | 470,345 | 474,549 | |||||||||||||||
Notes payable and other borrowings | 397,807 | 426,716 | 422,146 | 505,814 | 468,139 | |||||||||||||||
Secured borrowings - owed to securitization investors | — | 176,904 | 407,259 | 514,923 | 600,000 | |||||||||||||||
Subordinated notes | 15,000 | 15,000 | 23,791 | 35,000 | 38,370 | |||||||||||||||
Junior subordinated notes | 249,493 | 249,493 | 249,493 | 249,493 | 249,493 | |||||||||||||||
Total interest-bearing liabilities | $ | 12,785,647 | $ | 12,570,742 | $ | 12,432,220 | $ | 12,257,397 | $ | 12,393,641 | ||||||||||
Non-interest bearing deposits | 2,314,935 | 2,092,028 | 1,993,880 | 1,832,627 | 1,755,446 | |||||||||||||||
Other liabilities | 361,244 | 305,919 | 197,667 | 180,664 | 333,186 | |||||||||||||||
Equity | 1,786,824 | 1,736,740 | 1,695,440 | 1,564,662 | 1,531,936 | |||||||||||||||
Total liabilities and shareholders’ equity | $ | 17,248,650 | $ | 16,705,429 | $ | 16,319,207 | $ | 15,835,350 | $ | 16,014,209 | ||||||||||
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Net Interest Margin - 5 Quarter Trends
Three Months Ended | |||||||||||||||
December 31, 2012 | September 30, 2012 | June 30, 2012 | March 31, 2012 | December 31, 2011 | |||||||||||
Yield earned on: | |||||||||||||||
Liquidity management assets | 1.33 | % | 1.41 | % | 1.69 | % | 1.90 | % | 1.85 | % | |||||
Other earning assets | 2.95 | 2.83 | 3.04 | 2.96 | 2.90 | ||||||||||
Loans, net of unearned income | 4.45 | 4.57 | 4.64 | 4.77 | 4.78 | ||||||||||
Covered loans | 8.10 | 8.25 | 8.50 | 8.98 | 9.20 | ||||||||||
Total earning assets | 4.01 | % | 4.18 | % | 4.25 | % | 4.41 | % | 4.36 | % | |||||
Rate paid on: | |||||||||||||||
Interest-bearing deposits | 0.55 | % | 0.59 | % | 0.64 | % | 0.69 | % | 0.74 | % | |||||
Federal Home Loan Bank advances | 2.72 | 2.54 | 2.24 | 3.06 | 3.50 | ||||||||||
Notes payable and other borrowings | 1.57 | 1.89 | 2.17 | 2.47 | 2.38 | ||||||||||
Secured borrowings - owed to securitization investors | — | 1.79 | 1.72 | 1.99 | 2.03 | ||||||||||
Subordinated notes | 1.72 | 1.75 | 2.10 | 1.91 | 1.79 | ||||||||||
Junior subordinated notes | 5.01 | 4.91 | 4.97 | 5.01 | 4.77 | ||||||||||
Total interest-bearing liabilities | 0.74 | % | 0.81 | % | 0.89 | % | 1.00 | % | 1.05 | % | |||||
Interest rate spread | 3.27 | % | 3.37 | % | 3.36 | % | 3.41 | % | 3.31 | % | |||||
Net free funds/contribution | 0.13 | 0.13 | 0.15 | 0.14 | 0.14 | ||||||||||
Net interest income/Net interest margin | 3.40 | % | 3.50 | % | 3.51 | % | 3.55 | % | 3.45 | % | |||||
52
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Non-Interest Income - 5 Quarter Trends
Three Months Ended | ||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
(In thousands) | 2012 | 2012 | 2012 | 2012 | 2011 | |||||||||||||||
Brokerage | $ | 6,404 | $ | 6,355 | $ | 6,396 | $ | 6,322 | $ | 5,960 | ||||||||||
Trust and asset management | 7,230 | 6,897 | 6,997 | 6,079 | 5,726 | |||||||||||||||
Total wealth management | 13,634 | 13,252 | 13,393 | 12,401 | 11,686 | |||||||||||||||
Mortgage banking | 34,702 | 31,127 | 25,607 | 18,534 | 18,025 | |||||||||||||||
Service charges on deposit accounts | 4,534 | 4,235 | 3,994 | 4,208 | 3,973 | |||||||||||||||
Gains on available-for-sale securities, net | 2,561 | 409 | 1,109 | 816 | 309 | |||||||||||||||
Gain on bargain purchases, net | 85 | 6,633 | (55 | ) | 840 | — | ||||||||||||||
Trading (losses) gains, net | (120 | ) | (998 | ) | (928 | ) | 146 | 216 | ||||||||||||
Other: | ||||||||||||||||||||
Fees from covered call options | 2,156 | 2,083 | 3,114 | 3,123 | 5,377 | |||||||||||||||
Interest rate swap fees | 2,178 | 2,355 | 2,337 | 2,511 | 1,587 | |||||||||||||||
Bank Owned Life Insurance | 686 | 810 | 505 | 919 | 681 | |||||||||||||||
Administrative services | 867 | 825 | 823 | 766 | 789 | |||||||||||||||
Miscellaneous | 3,906 | 2,214 | 1,036 | 2,759 | 2,269 | |||||||||||||||
Total other income | 9,793 | 8,287 | 7,815 | 10,078 | 10,703 | |||||||||||||||
Total Non-Interest Income | $ | 65,189 | $ | 62,945 | $ | 50,935 | $ | 47,023 | $ | 44,912 | ||||||||||
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Non-Interest Expense - 5 Quarter Trends
Three Months Ended | ||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
(In thousands) | 2012 | 2012 | 2012 | 2012 | 2011 | |||||||||||||||
Salaries and employee benefits: | ||||||||||||||||||||
Salaries | $ | 40,457 | $ | 40,173 | $ | 37,237 | $ | 37,933 | $ | 36,676 | ||||||||||
Commissions and bonus | 23,968 | 24,041 | 19,388 | 16,802 | 19,263 | |||||||||||||||
Benefits | 11,715 | 11,066 | 11,514 | 14,295 | 10,805 | |||||||||||||||
Total salaries and employee benefits | 76,140 | 75,280 | 68,139 | 69,030 | 66,744 | |||||||||||||||
Equipment | 6,468 | 5,888 | 5,466 | 5,400 | 5,093 | |||||||||||||||
Occupancy, net | 8,480 | 8,024 | 7,728 | 8,062 | 7,975 | |||||||||||||||
Data processing | 4,178 | 4,103 | 3,840 | 3,618 | 4,062 | |||||||||||||||
Advertising and marketing | 2,725 | 2,528 | 2,179 | 2,006 | 3,207 | |||||||||||||||
Professional fees | 3,158 | 4,653 | 3,847 | 3,604 | 3,710 | |||||||||||||||
Amortization of other intangible assets | 1,108 | 1,078 | 1,089 | 1,049 | 1,062 | |||||||||||||||
FDIC insurance | 3,039 | 3,549 | 3,477 | 3,357 | 3,244 | |||||||||||||||
OREO expenses, net | 5,269 | 3,808 | 5,848 | 7,178 | 8,821 | |||||||||||||||
Other: | ||||||||||||||||||||
Commissions - 3rd party brokers | 944 | 1,106 | 1,069 | 1,021 | 872 | |||||||||||||||
Postage | 1,856 | 1,120 | 1,330 | 1,423 | 1,322 | |||||||||||||||
Stationery and supplies | 1,095 | 954 | 1,035 | 919 | 1,186 | |||||||||||||||
Miscellaneous | 15,088 | 12,457 | 12,138 | 11,092 | 11,470 | |||||||||||||||
Total other expense | 18,983 | 15,637 | 15,572 | 14,455 | 14,850 | |||||||||||||||
Total Non-Interest Expense | $ | 129,548 | $ | 124,548 | $ | 117,185 | $ | 117,759 | $ | 118,768 | ||||||||||
53
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Allowance for Credit Losses, excluding covered loans - 5 Quarter Trends
Three Months Ended | ||||||||||||||||||||
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
(Dollars in thousands) | 2012 | 2012 | 2012 | 2012 | 2011 | |||||||||||||||
Allowance for loan losses at beginning of period | $ | 112,287 | $ | 111,920 | $ | 111,023 | $ | 110,381 | $ | 118,649 | ||||||||||
Provision for credit losses | 20,672 | 18,192 | 18,394 | 15,154 | 16,615 | |||||||||||||||
Other adjustments | (289 | ) | (534 | ) | (272 | ) | (238 | ) | — | |||||||||||
Reclassification from/(to) allowance for unfunded lending-related commitments | (260 | ) | 626 | 175 | 152 | 171 | ||||||||||||||
Charge-offs: | ||||||||||||||||||||
Commercial | 9,782 | 3,315 | 6,046 | 3,262 | 6,377 | |||||||||||||||
Commercial real estate | 9,084 | 17,000 | 9,226 | 8,229 | 13,931 | |||||||||||||||
Home equity | 3,496 | 1,543 | 1,732 | 2,590 | 1,876 | |||||||||||||||
Residential real estate | 2,470 | 1,027 | 388 | 175 | 1,632 | |||||||||||||||
Premium finance receivables - commercial | 1,284 | 886 | 744 | 837 | 1,479 | |||||||||||||||
Premium finance receivables - life insurance | 13 | — | 3 | 13 | — | |||||||||||||||
Indirect consumer | 64 | 73 | 33 | 51 | 56 | |||||||||||||||
Consumer and other | 570 | 93 | 51 | 310 | 824 | |||||||||||||||
Total charge-offs | 26,763 | 23,937 | 18,223 | 15,467 | 26,175 | |||||||||||||||
Recoveries: | ||||||||||||||||||||
Commercial | 368 | 349 | 246 | 257 | 541 | |||||||||||||||
Commercial real estate | 978 | 5,352 | 174 | 131 | 286 | |||||||||||||||
Home equity | 43 | 52 | 171 | 162 | 5 | |||||||||||||||
Residential real estate | 9 | 8 | 3 | 2 | 2 | |||||||||||||||
Premium finance receivables - commercial | 250 | 191 | 153 | 277 | 204 | |||||||||||||||
Premium finance receivables - life insurance | 15 | 15 | 18 | 21 | — | |||||||||||||||
Indirect consumer | 27 | 25 | 21 | 30 | 37 | |||||||||||||||
Consumer and other | 14 | 28 | 37 | 161 | 46 | |||||||||||||||
Total recoveries | 1,704 | 6,020 | 823 | 1,041 | 1,121 | |||||||||||||||
Net charge-offs | (25,059 | ) | (17,917 | ) | (17,400 | ) | (14,426 | ) | (25,054 | ) | ||||||||||
Allowance for loan losses at period end | $ | 107,351 | $ | 112,287 | $ | 111,920 | $ | 111,023 | $ | 110,381 | ||||||||||
Allowance for unfunded lending-related commitments at period end | 14,647 | 12,627 | 12,903 | 13,078 | 13,231 | |||||||||||||||
Allowance for credit losses at period end | $ | 121,998 | $ | 124,914 | $ | 124,823 | $ | 124,101 | $ | 123,612 | ||||||||||
Annualized net charge-offs by category as a percentage of its own respective category’s average: | ||||||||||||||||||||
Commercial | 1.35 | % | 0.44 | % | 0.91 | % | 0.49 | % | 0.96 | % | ||||||||||
Commercial real estate | 0.86 | 1.27 | 1.01 | 0.92 | 1.56 | |||||||||||||||
Home equity | 1.72 | 0.73 | 0.76 | 1.15 | 0.85 | |||||||||||||||
Residential real estate | 1.19 | 0.44 | 0.20 | 0.11 | 1.07 | |||||||||||||||
Premium finance receivables - commercial | 0.21 | 0.14 | 0.14 | 0.15 | 0.35 | |||||||||||||||
Premium finance receivables - life insurance | — | — | — | — | — | |||||||||||||||
Indirect consumer | 0.19 | 0.25 | 0.07 | 0.13 | 0.12 | |||||||||||||||
Consumer and other | 1.86 | 0.22 | 0.05 | 0.49 | 2.35 | |||||||||||||||
Total loans, net of unearned income, excluding covered loans | 0.83 | % | 0.60 | % | 0.62 | % | 0.53 | % | 0.93 | % | ||||||||||
Net charge-offs as a percentage of the provision for credit losses | 121.22 | % | 98.49 | % | 94.60 | % | 95.20 | % | 150.79 | % | ||||||||||
Loans at period-end | $ | 11,828,943 | $ | 11,489,900 | $ | 11,202,842 | $ | 10,717,384 | $ | 10,521,377 | ||||||||||
Allowance for loan losses as a percentage of loans at period end | 0.91 | % | 0.98 | % | 1.00 | % | 1.04 | % | 1.05 | % | ||||||||||
Allowance for credit losses as a percentage of loans at period end | 1.03 | % | 1.09 | % | 1.11 | % | 1.16 | % | 1.17 | % | ||||||||||
54
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Non-Performing Assets, excluding covered assets - 5 Quarter Trends
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||||||||||||
(Dollars in thousands) | 2012 | 2012 | 2012 | 2012 | 2011 | |||||||||||||||
Loans past due greater than 90 days and still accruing: | ||||||||||||||||||||
Commercial | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Commercial real-estate | — | — | — | 73 | — | |||||||||||||||
Home equity | 100 | — | — | — | — | |||||||||||||||
Residential real-estate | — | — | — | — | — | |||||||||||||||
Premium finance receivables - commercial | 10,008 | 5,533 | 5,184 | 4,619 | 5,281 | |||||||||||||||
Premium finance receivables - life insurance | — | — | — | — | — | |||||||||||||||
Indirect consumer | 189 | 215 | 234 | 257 | 314 | |||||||||||||||
Consumer and other | 32 | — | — | — | — | |||||||||||||||
Total loans past due greater than 90 days and still accruing | 10,329 | 5,748 | 5,418 | 4,949 | 5,595 | |||||||||||||||
Non-accrual loans: | ||||||||||||||||||||
Commercial | 21,737 | 17,711 | 30,473 | 19,835 | 19,018 | |||||||||||||||
Commercial real-estate | 49,973 | 58,461 | 56,077 | 62,704 | 66,508 | |||||||||||||||
Home equity | 13,423 | 11,504 | 10,583 | 12,881 | 14,164 | |||||||||||||||
Residential real-estate | 11,728 | 15,393 | 9,387 | 5,329 | 6,619 | |||||||||||||||
Premium finance receivables - commercial | 9,302 | 7,488 | 7,404 | 7,650 | 7,755 | |||||||||||||||
Premium finance receivables - life insurance | 25 | 29 | — | — | 54 | |||||||||||||||
Indirect consumer | 55 | 72 | 132 | 152 | 138 | |||||||||||||||
Consumer and other | 1,511 | 1,485 | 1,446 | 121 | 233 | |||||||||||||||
Total non-accrual loans | 107,754 | 112,143 | 115,502 | 108,672 | 114,489 | |||||||||||||||
Total non-performing loans: | ||||||||||||||||||||
Commercial | 21,737 | 17,711 | 30,473 | 19,835 | 19,018 | |||||||||||||||
Commercial real-estate | 49,973 | 58,461 | 56,077 | 62,777 | 66,508 | |||||||||||||||
Home equity | 13,523 | 11,504 | 10,583 | 12,881 | 14,164 | |||||||||||||||
Residential real-estate | 11,728 | 15,393 | 9,387 | 5,329 | 6,619 | |||||||||||||||
Premium finance receivables - commercial | 19,310 | 13,021 | 12,588 | 12,269 | 13,036 | |||||||||||||||
Premium finance receivables - life insurance | 25 | 29 | — | — | 54 | |||||||||||||||
Indirect consumer | 244 | 287 | 366 | 409 | 452 | |||||||||||||||
Consumer and other | 1,543 | 1,485 | 1,446 | 121 | 233 | |||||||||||||||
Total non-performing loans | $ | 118,083 | $ | 117,891 | $ | 120,920 | $ | 113,621 | $ | 120,084 | ||||||||||
Other real estate owned | 56,174 | 61,897 | 66,532 | 69,575 | 79,093 | |||||||||||||||
Other real estate owned - obtained in acquisition | 6,717 | 5,480 | 6,021 | 6,661 | 7,430 | |||||||||||||||
Total non-performing assets | $ | 180,974 | $ | 185,268 | $ | 193,473 | $ | 189,857 | $ | 206,607 | ||||||||||
Total non-performing loans by category as a percent of its own respective category’s period-end balance: | ||||||||||||||||||||
Commercial | 0.75 | % | 0.64 | % | 1.14 | % | 0.78 | % | 0.76 | % | ||||||||||
Commercial real-estate | 1.29 | 1.58 | 1.53 | 1.75 | 1.89 | |||||||||||||||
Home equity | 1.72 | 1.42 | 1.29 | 1.53 | 1.64 | |||||||||||||||
Residential real-estate | 3.19 | 4.09 | 2.50 | 1.47 | 1.89 | |||||||||||||||
Premium finance receivables - commercial | 0.97 | 0.66 | 0.69 | 0.81 | 0.92 | |||||||||||||||
Premium finance receivables - life insurance | — | — | — | — | — | |||||||||||||||
Indirect consumer | 0.32 | 0.37 | 0.51 | 0.61 | 0.70 | |||||||||||||||
Consumer and other | 1.48 | 1.36 | 1.34 | 0.11 | 0.19 | |||||||||||||||
Total loans, net of unearned income | 1.00 | % | 1.03 | % | 1.08 | % | 1.06 | % | 1.14 | % | ||||||||||
Total non-performing assets as a percentage of total assets | 1.03 | % | 1.09 | % | 1.17 | % | 1.17 | % | 1.30 | % | ||||||||||
Allowance for loan losses as a percentage of total non-performing loans | 90.91 | % | 95.25 | % | 92.56 | % | 97.71 | % | 91.92 | % | ||||||||||
55