Shareholders’ Equity and Earnings Per Share

Series D Preferred Stock

In June 2015, the Company issued and sold 5,000,000 shares of fixed-to-floating non-cumulative perpetual preferred stock, Series D, liquidation preference $25 per share (the “Series D Preferred Stock”) for $125.0 million in a public offering. When, as and if declared, dividends on the Series D Preferred Stock are payable quarterly in arrears at a fixed rate of 6.50% per annum from the original issuance date to, but excluding, July 15, 2025, and from (and including) that date at a floating rate equal to three-month LIBOR plus a spread of 4.06% per annum.

Series C Preferred Stock

In March 2012, the Company issued and sold 126,500 shares of non-cumulative perpetual convertible preferred stock, Series C, liquidation preference $1,000 per share (the “Series C Preferred Stock”) for $126.5 million in a public offering. When, as and if declared, dividends on the Series C Preferred Stock were payable quarterly in arrears at a rate of 5.00% per annum. The Series C Preferred Stock was convertible into common stock at the option of the holder subject to customary anti-dilution adjustments. Additionally, on and after April 15, 2017, the Company had the right under certain circumstances to cause the Series C Preferred Stock to be converted into common stock if the closing price of the Company’s common stock exceeded a certain amount. On April 25, 2017, 2,073 shares of the Series C Preferred Stock were converted at the option of the respective holder into 51,244 shares of the Company's common stock, pursuant to the terms of the Series C Preferred Stock. On April 27, 2017, the Company caused a mandatory conversion of its remaining 124,184 shares of Series C Preferred Stock into 3,069,828 shares of the Company's common stock at a conversion rate of 24.72 shares of common stock per share of Series C Preferred Stock. Cash was paid in lieu of fractional shares for an amount considered insignificant.

Common Stock Warrant

Pursuant to the U.S. Department of the Treasury’s (the “U.S. Treasury”) Capital Purchase Program, on December 19, 2008, the Company issued to the U.S. Treasury a warrant to exercise 1,643,295 warrant shares of Wintrust common stock with a term of 10 years. The exercise price, subject to customary anti-dilution, was $22.57 at September 30, 2018. In February 2011, the U.S. Treasury sold all of its interest in the warrant issued to it in a secondary underwritten public offering. During the first nine months of 2018 15,951 warrant shares were exercised, which resulted in 11,764 shares of common stock issued. At September 30, 2018, all remaining holders of the interest in the warrant were able to exercise 7,410 warrant shares.

Other

At the January 2018 Board of Directors meeting, a quarterly cash dividend of $0.19 per share ($0.76 on an annualized basis) was declared. It was paid on February 22, 2018 to shareholders of record as of February 8, 2018. At the April 2018 Board of Directors meeting, a quarterly cash dividend of $0.19 per share ($0.76 on an annualized basis) was declared. It was paid on May 24, 2018 to shareholders of record as of May 10, 2018. At the July 2018 Board of Directors meeting, a quarterly cash dividend of $0.19 per share ($0.76 on an annualized basis) was declared. It was paid on August 23, 2018 to shareholders of record as of August 9, 2018.

Accumulated Other Comprehensive Income (Loss)

The following tables summarize the components of other comprehensive income (loss), including the related income tax effects, and the related amount reclassified to net income for the periods presented (in thousands).



	Accumulated Unrealized Losses on Securities			Accumulated Unrealized Gains on Derivative Instruments			Accumulated Foreign Currency Translation Adjustments			Total Accumulated Other Comprehensive Loss
Balance at July 1, 2018	$	(54,885	)	$	11,748		$	(38,079	)	$	(81,216	)
Other comprehensive (loss) income during the period, net of tax, before reclassifications	(13,277		)	1,851			1,942			(9,484		)
Amount reclassified from accumulated other comprehensive loss into net income, net of tax	(730		)	(1,696		)	—			(2,426		)
Amount reclassified from accumulated other comprehensive loss related to amortization of unrealized losses on investment securities transferred to held-to-maturity from available-for-sale, net of tax	(24		)	—			—			(24		)
Net other comprehensive (loss) income during the period, net of tax	$	(14,031	)	$	155		$	1,942		$	(11,934	)
Balance at September 30, 2018	$	(68,916	)	$	11,903		$	(36,137	)	$	(93,150	)

Balance at January 1, 2018	$	(15,813	)	$	7,164		$	(33,186	)	$	(41,835	)
Cumulative effect adjustment from the adoption of:
ASU 2016-01	(1,880		)	—			—			(1,880		)
ASU 2018-02	(4,517		)	1,543			—			(2,974		)
Other comprehensive (loss) income during the period, net of tax, before reclassifications	(46,665		)	6,368			(2,951		)	(43,248		)
Amount reclassified from accumulated other comprehensive income (loss) into net income, net of tax	(5		)	(3,172		)	—			(3,177		)
Amount reclassified from accumulated other comprehensive loss related to amortization of unrealized losses on investment securities transferred to held-to-maturity from available-for-sale, net of tax	(36		)	—			—			(36		)
Net other comprehensive (loss) income during the period, net of tax	$	(46,706	)	$	3,196		$	(2,951	)	$	(46,461	)
Balance at September 30, 2018	$	(68,916	)	$	11,903		$	(36,137	)	$	(93,150	)



	Accumulated Unrealized Losses on Securities			Accumulated Unrealized Gains on Derivative Instruments		Accumulated Foreign Currency Translation Adjustments			Total Accumulated Other Comprehensive Loss
Balance at July 1, 2017	$	(15,022	)	$	4,959	$	(36,474	)	$	(46,537	)
Other comprehensive income during the period, net of tax, before reclassifications	653			228		4,206			5,087
Amount reclassified from accumulated other comprehensive income into net income, net of tax	(24		)	8		—			(16		)
Amount reclassified from accumulated other comprehensive loss related to amortization of unrealized losses on investment securities transferred to held-to-maturity from available-for-sale, net of tax	(20		)	—		—			(20		)
Net other comprehensive income during the period, net of tax	$	609		$	236	$	4,206		$	5,051
Balance at September 30, 2017	$	(14,413	)	$	5,195	$	(32,268	)	$	(41,486	)

Balance at January 1, 2017	$	(29,309	)	$	4,165	$	(40,184	)	$	(65,328	)
Other comprehensive income during the period, net of tax, before reclassifications	15,815			393		7,916			24,124
Amount reclassified from accumulated other comprehensive income into net income, net of tax	(19		)	637		—			618
Amount reclassified from accumulated other comprehensive loss related to amortization of unrealized losses on investment securities transferred to held-to-maturity from available-for-sale, net of tax	(900		)	—		—			(900		)
Net other comprehensive income during the period, net of tax	$	14,896		$	1,030	$	7,916		$	23,842
Balance at September 30, 2017	$	(14,413	)	$	5,195	$	(32,268	)	$	(41,486	)



	Amount Reclassified from Accumulated Other Comprehensive Income for the
Details Regarding the Component of Accumulated Other Comprehensive Income	Three Months Ended						Nine Months Ended						Impacted Line on the Consolidated Statements of Income
	September 30,						September 30,
	2018			2017			2018			2017
Accumulated unrealized losses on securities
Gains included in net income	$	1,001		$	39		$	6		$	31		Gains (losses) on investment securities, net
	1,001			39			6			31			Income before taxes
Tax effect	$	(271	)	$	(15	)	$	(1	)	$	(12	)	Income tax expense
Net of tax	$	730		$	24		$	5		$	19		Net income

Accumulated unrealized losses on derivative instruments
Amount reclassified to interest expense on deposits	$	(2,319	)	$	(380	)	$	(4,338	)	$	(15	)	Interest on deposits
Amount reclassified to interest expense on junior subordinated debentures	—			394			—			1,066			Interest on junior subordinated debentures
	2,319			(14		)	4,338			(1,051		)	Income before taxes
Tax effect	$	(623	)	$	6		$	(1,166	)	$	414		Income tax expense
Net of tax	$	1,696		$	(8	)	$	3,172		$	(637	)	Net income

Earnings per Share

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



		Three Months Ended				Nine Months Ended
(In thousands, except per share data)		September 30, 2018		September 30, 2017		September 30, 2018		September 30, 2017
Net income		$	91,948	$	65,626	$	263,509	$	188,901
Less: Preferred stock dividends		2,050		2,050		6,150		7,728
Net income applicable to common shares—Basic	(A)	89,898		63,576		257,359		181,173
Add: Dividends on convertible preferred stock, if dilutive		—		—		—		1,578
Net income applicable to common shares—Diluted	(B)	89,898		63,576		257,359		182,751
Weighted average common shares outstanding	(C)	56,366		55,796		56,268		54,292
Effect of dilutive potential common shares
Common stock equivalents		918		966		912		988
Convertible preferred stock, if dilutive		—		—		—		1,317
Total dilutive potential common shares		918		966		912		2,305
Weighted average common shares and effect of dilutive potential common shares	(D)	57,284		56,762		57,180		56,597
Net income per common share:
Basic	(A/C)	$	1.59	$	1.14	$	4.57	$	3.34
Diluted	(B/D)	$	1.57	$	1.12	$	4.50	$	3.23

Potentially dilutive common shares can result from stock options, restricted stock unit awards, stock warrants, the Company’s convertible preferred stock and shares to be issued under the Employee Stock Purchase Plan and the Directors Deferred Fee and Stock Plan, being treated as if they had been either exercised or issued, computed by application of the treasury stock method. While potentially dilutive common shares are typically included in the computation of diluted earnings per share, potentially dilutive common shares are excluded from this computation in periods in which the effect would reduce the loss per share or increase the income per share. For diluted earnings per share, net income applicable to common shares can be affected by the conversion of the Company’s convertible preferred stock. Where the effect of this conversion would reduce the loss per share or increase the income per share for a period, net income applicable to common shares is not adjusted by the associated preferred dividends.