Wintrust Financial Corporation Reports Fourth Quarter and Full Year 2015 Net Income


ROSEMONT, Ill., Jan. 19, 2016 (GLOBE NEWSWIRE) -- Wintrust Financial Corporation (“Wintrust” or “the Company”) (Nasdaq:WTFC) announced net income of $35.5 million or $0.64 per diluted common share for the fourth quarter of 2015 compared to net income of $38.4 million or $0.69 per diluted common share for the third quarter of 2015 and $38.1 million or $0.75 per diluted common share for the fourth quarter of 2014.  The Company recorded record net income of $156.7 million or $2.93 per diluted common share for the year ended 2015 compared to net income of $151.4 million or $2.98 per diluted common share for the year ended 2014.

Operating net income was $39.5 million or $0.71 per diluted common share for the fourth quarter of 2015 compared to $41.9 million or $0.75 per diluted common share in the third quarter of 2015. Operating net income excludes acquisition and non-operating compensation charges totaling $6.5 million and $5.7 million in the fourth quarter of 2015 and third quarter of 2015, respectively. Operating net income was $165.7 million or $3.10 per diluted common share for the year ended 2015 compared to $151.4 million or $2.98 per diluted common share for the year ended 2014. Operating net income excludes acquisition and non-operating compensation charges totaling $14.0 million for the year ended 2015. A table reconciling net income as reported to operating net income is set forth below and additional detail is shown in the "Supplemental Financial Measures/Ratios" section.

Highlights compared with the Third Quarter of 2015*:         

  • Total loans, excluding covered loans and mortgage loans held-for-sale, increased by $802 million, or 19% on an annualized basis, to $17.1 billion with $499 million occurring in December, creating positive average balance growth momentum for the first quarter of 2016.
  • Total assets increased by 16% on an annualized basis to nearly $23 billion.
  • Total deposits increased by $411 million, or 9% on an annualized basis, to $18.6 billion. Non-interest bearing deposit accounts now comprise 26% of total deposits.
  • Net interest margin decreased 4 basis points primarily as a result of lower yields on earning assets. Lower accretion on covered loans and competitive pricing on commercial premium finance and commercial real estate loans impacted the net interest margin the most during the quarter. The lower accretion on covered loans is expected to continue to have a slight negative impact on the net interest margin in 2016.
  • Non-performing loans as a percentage of total loans, excluding covered loans, decreased to 0.49% from 0.53% and the allowance for loan losses as a percentage of total non-performing loans, excluding covered loans, increased to 125% from 120%. OREO expenses increased by $3.0 million in the current quarter due to operating expenses (net of rental income) increasing $716,000, recognized gains on sales decreasing $1.1 million and valuation write-downs increasing $1.1 million.
  • Maintained strong capital ratios with a tangible common equity ratio, assuming full conversion of convertible preferred stock stock, of 7.7%.
  • Acquisition and non-operating compensation charges totaling $6.5 million reduced earnings per diluted common share by $0.07 per share. Exceeded targeted amounts as an additional $2.2 million of non-operating compensation charges were incurred in the fourth quarter relating to pension and additional severance costs.
  • Transferred approximately $866 million in available-for-sale securities to held-to-maturity securities classification.
  • Opened the newly renovated space in 231 S. LaSalle, in the heart of Chicago's financial district.
  • Closed six banking locations previously acquired from Suburban Illinois Bancorp, Inc. as a part of the integration of operations.
  Three Months Ended,  Year Ended,
  December 31, September 30, June 30, March 31,  December 31,
(Dollars in thousands, except per share data) 2015 2015 2015 2015  2015
Key Operating Measures, Adjusted for Acquisition and Non-Operating Compensation Charges           
Net income per common share – diluted $0.71  $0.75  $0.86  $0.77   $3.10 
Net overhead ratio 1.70% 1.63% 1.51% 1.68%  1.63%
Efficiency ratio 68.70% 66.67% 65.16% 67.56%  67.01%
Return on average assets 0.70% 0.77% 0.88% 0.81%  0.79%
Return on average common equity 6.79% 7.29% 8.55% 7.77%  7.59%
Return on average tangible common equity 9.10% 9.78% 11.07% 10.12%  10.01
%
Net income, as reported $35,512  $38,355  $43,831  $39,052   $156,749 
Acquisition and Non-Operating Compensation Charges           
Salaries and employee benefits:           
Salaries $1,113  $1,355  $  $12   $2,480 
Commissions and incentive compensation 144  264    3   411 
Benefits 1,550  107       1,657 
Total salaries and employee benefits 2,807  1,726    15   4,548 
Equipment 5  36  32     73 
Occupancy, net 605  201    16   822 
Data processing 1,504  2,692  653  130   4,979 
Advertising and marketing 66  1    5   72 
Professional fees(1) 145  335  417  568   1,465 
Other expense 757  5  21  4   787 
Other income (572) (674)      (1,246)
Total Acquisition and Non-Operating Compensation Charges $6,461  $5,670  $1,123  $738   $13,992 
Income tax benefit on acquisition and non-operating compensation charges $2,486  $2,112  $276
  $131
   $5,005 
Acquisition and non-operating compensation charges, net of tax $3,975  $3,558  $847
  $607
   $8,987 
Operating net income $39,487  $41,913  $44,678  $39,659   $165,736 

(1) Acquisition related legal fees are non-deductible for income tax purposes.

* See "Supplemental Financial Measures/Ratios" on pages 16-18 for more information on non-GAAP measures.

Edward J. Wehmer, President and Chief Executive Officer, commented, “Wintrust reported record annual net income in 2015 even with additional acquisition and non-operating compensation charges during the year.  The Company grew significantly during the year as total assets increased by 15%, reaching nearly $23 billion.  Operating net income totaled $39.5 million for the fourth quarter of 2015 and $165.7 million for the full year as earnings were impacted by acquisition and non-operating compensation charges totaling $6.5 million pre-tax in the fourth quarter of 2015 and $14.0 million pre-tax for the full year. Additionally, the fourth quarter of 2015 was highlighted by continued strong loan and deposit growth, improvement in non-performing assets and decreased mortgage banking revenue."

Mr. Wehmer continued, “The expected positive impact from the increase in interest rates announced by the Federal Reserve Bank in late December will be realized throughout 2016.  The company is well positioned to benefit from future increases in interest rates should they occur, barring significant changes in spreads due to competitive pressures or changes in the shape of the yield curve."

Commenting on credit quality, Mr. Wehmer noted, “Total non-performing assets, excluding covered assets, decreased by $9.9 million during the fourth quarter of 2015 resulting in non-performing assets as a percentage of total assets dropping from 0.63% to 0.56% during the period. Additionally, the allowance for loan losses as a percentage of non-performing loans, excluding covered loans, increased to 125%, exhibiting greater coverage for those non-performing credits. During the quarter, the Company has continued its practice of timely addressing and resolving non-performing credits. We believe the Company's reserves remain appropriate."

Mr. Wehmer further commented, “Mortgage banking revenue totaled $23.3 million in the fourth quarter of 2015, a decrease of $4.6 million from the third quarter of 2015 and a decrease of $1.4 million from the fourth quarter of 2014.  The decrease during the current quarter compared to the third quarter of 2015 resulted primarily from origination volumes declining to $808.9 million from $973.7 million due to typical seasonality. Our mortgage pipeline remains strong. We believe that our mortgage banking business remains well positioned to grow both organically and through acquisitions. The Company’s newly created Wintrust Commercial Finance leasing operations grew outstandings by $220 million since its inception in April of this year.  This new venture is positioned to continue to expand in 2016, enhancing our earning asset growth and adding to further asset diversification."

Commenting further, Mr. Wehmer stated, “2015 was a year marked by long-term investments by the Company.  We completed four bank acquisitions adding $1.1 billion in assets while already driving out approximately $19.6 million of annual legacy operating costs.  Additionally, we  recently announced plans to acquire Generations Bancorp, Inc. another cost saving opportunity.  We invested in a new leasing operation which is off to a fast start.  Two major investments in 2015 were in the new classic bank facility in the heart of Chicago’s financial district to house our middle market commercial lending and wealth management operations and multi-year branding sponsorships with multiple iconic sporting and cultural organizations in order to secure our position as Chicago and Wisconsin’s bank.  The bank acquisitions came with a cost as evidenced by the $14 million of acquisition and non-operating compensation charges experienced in 2015.  That being said, we recorded record net income for the year and operating net income as defined increased by 9% year over year.  These investments are expected to pay substantial dividends in the coming year and beyond.  Our lending pipelines remain strong, our momentum is very good and our balance sheet is well positioned for potential rising rates.  We are very excited about the coming year."

In conclusion, Mr. Wehmer noted, “2016 marks the 25th anniversary of the beginning of Wintrust as an organization.  Throughout our life to date we have never wavered from our basic operating tenets that were established on day one.  These centered on serving our customers, communities, employees and shareholders.  While in our wildest dreams in 1991 we never would have thought we would be where we are right now, while never losing sight of our objectives, we continue to take a steady and measured approach to achieve our main objectives of growing franchise value, increasing profitability, leveraging our expense infrastructure and increasing shareholder value."

Graphs accompanying this release are available at http://www.globenewswire.com/NewsRoom/AttachmentNg/b6aa53c2-2243-4937-afad-bb1caca58745

Wintrust’s key operating measures and growth rates for the fourth quarter of 2015, as compared to the sequential and linked quarters are shown in the table below:

        % or(5)
basis point  (bp)
change
from
3rd Quarter
2015
  % or
basis point  (bp)
change
from
4th Quarter
2014
 
  Three Months Ended    
(Dollars in thousands) December 31, 2015 September 30, 2015 December 31, 2014    
Net income $35,512  $38,355  $38,133  (7)% (7)%
Net income per common share – diluted $0.64  $0.69  $0.75  (7)% (15)%
Net revenue (1) $232,296  $230,493  $211,376  1 % 10 %
Net interest income $167,206  $165,540  $153,719  1 % 9 %
Net interest margin (2) 3.29% 3.33% 3.46% (4)bp (17)bp
Net overhead ratio (2) (3) 1.82% 1.74% 1.76% 8 bp 6 bp
Efficiency ratio (2) (4) 71.39% 69.02% 67.59% 237 bp 380 bp
Return on average assets 0.63% 0.70% 0.78% (7)bp (15)bp
Return on average common equity 6.03% 6.60% 7.51% (57)bp (148)bp
Return on average tangible common equity 8.12% 8.88% 9.82% (76)bp (170)bp
At end of period            
Total assets $22,917,166  $22,043,930  $20,010,727  16 % 15 %
Total loans, excluding loans held-for-sale, excluding covered loans $17,118,117  $16,316,211  $14,409,398  19 % 19 %
Total loans, including loans held-for-sale, excluding covered loans $17,506,155  $16,663,216  $14,760,688  20 % 19 %
Total deposits $18,639,634  $18,228,469  $16,281,844  9 % 14 %
Total shareholders’ equity $2,352,274  $2,335,736  $2,069,822  3 % 14 %

(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.”

Financial Performance Overview – Fourth Quarter 2015

For the fourth quarter of 2015, net interest income totaled $167.2 million, an increase of $1.7 million as compared to the third quarter of 2015 and an increase of $13.5 million as compared to the fourth quarter of 2014.  The changes in net interest income on both a sequential and linked quarter basis are the result of the following:

  • Net interest income increased $1.7 million in the fourth quarter of 2015 compared to the third quarter of 2015, due to:
    • An increase in total interest income of $2.1 million resulting primarily from loan growth during the period, partially offset by by a reduction in yield on earning assets.
    • Interest expense increased $442,000 primarily as a result of an increase in the average balance of interest-bearing liabilities and a one basis point increase in the rate on average interest bearing liabilities.
    • Combined, the increase in interest income of $2.1 million and the increase in interest expense of $442,000 created the $1.7 million increase in net interest income.
  • Net interest income increased $13.5 million in the fourth quarter of 2015 compared to the fourth quarter of 2014, due to:
    • Average loans, excluding covered loans, increased by $2.4 billion compared to the fourth quarter of 2014.  The growth in average loans, excluding covered loans, was partially offset by a 20 basis point decline in the yield on earning assets, resulting in an increase in total interest income of $14.8 million.
    • An increase in interest bearing deposits, an increase in borrowings under the Company's term credit facility at the end of the second quarter of 2015 and the completion of the Canadian secured borrowing transaction at the end of the fourth quarter of 2014 resulted in a $1.3 million increase in interest expense.
    • Combined, the increase in interest income of $14.8 million and the increase of interest expense of $1.3 million created the $13.5 million increase in net interest income in the fourth quarter of 2015 compared to the fourth quarter of 2014.

The net interest margin, on a fully taxable equivalent basis, for the fourth quarter of 2015 was 3.29% compared to 3.33% for the third quarter of 2015 and 3.46% for the fourth quarter of 2014. The reduction in net interest margin, on a fully taxable equivalent basis, compared to the third quarter of 2015 and the fourth quarter of 2014 is primarily the result of a decline in yield on non-covered and covered loans (see "Net Interest Income" section later in this release for further detail).

Non-interest income totaled $65.1 million in the fourth quarter of 2015, relatively steady compared to the third quarter of 2015 and increasing $7.4 million, or 13%, compared to the fourth quarter of 2014. The increase in non-interest income in the fourth quarter of 2015 compared to the fourth quarter of 2014 was primarily attributable to higher customer interest rate swap fees, increased income on operating leases through our leasing division and lower FDIC indemnification asset amortization. (see “Non-Interest Income” section later in this release for further detail).

Non-interest expense totaled $166.8 million in the fourth quarter of 2015, increasing $6.9 million, or 4%, compared to the third quarter of 2015 and increasing $23.4 million, or 16%, compared to the fourth quarter of 2014.  The increase in the current quarter compared to the third quarter of 2015 can be primarily attributed to an increase in acquisition and non-operating compensation charges, higher salary and employee benefit costs caused by the addition of employees from the various acquisitions and higher staffing levels as the Company grows, higher OREO expense and increased equipment and occupancy expense. The increase in the fourth quarter of 2015 compared to the fourth quarter of 2014 was primarily related to acquisition and non-operating compensation charges in the current quarter, higher salary and employee benefit costs caused by the addition of employees from the various acquisitions and higher staffing levels as the Company grows, increased equipment and occupancy, data processing and professional fees and higher marketing expenses (see "Non-Interest Expense" section later in this release for further detail).

Financial Performance Overview – Full Year 2015

For the full year of 2015, net interest income totaled $641.5 million, an increase of $43.0 million as compared to 2014 as a result of the following:  

  • Average earning assets increased by $2.2 billion primarily comprised of average loan growth, excluding covered loans, of $2.1 billion and an increase of $231.1 million in the average balance of liquidity management assets, partially offset by a decrease of $94.5 million in the average balance of covered loans.  The growth in average total loans, excluding covered loans, included an increase of $691.3 million in commercial loans, $622.3 million in commercial real estate loans, $505.8 million in life insurance premium finance receivables, $106.0 million in home equity and other loans, $72.3 million in mortgage loans held-for-sale and $65.8 million in commercial premium finance receivables.
  • The average earning asset growth of $2.2 billion, partially offset by a 20 basis point decrease in yield on earning assets, resulted in an increase in total interest income of $47.2 million.
  • Funding mix remained consistent as average demand deposits increased $1.1 billion, average interest bearing deposits increased $800.7 million and average wholesale borrowings increased $173.7 million. The increase in average interest bearing liabilities, partially offset by a one basis point decline in rate during the current year, resulted in a $4.2 million increase in interest expense.
  • Combined, the increase in interest income of $47.2 million and the increase in interest expense of $4.2 million created the $43.0 million increase in net interest income. 

The net interest margin, on a fully taxable equivalent basis, for 2015 was 3.36%, compared to 3.53% for 2014 (see "Net Interest Income" section later in this release for further detail).

Non-interest income totaled $271.6 million in 2015, increasing $56.4 million, or 26%, compared to 2014. The increase in non-interest income in 2015 compared to 2014 is primarily attributable to an increase in mortgage banking and wealth management revenues, fees from covered call options, the recognition of $2.1 million in BOLI death benefits, increased service charges, higher fees on customer interest rate swap transactions, increased income on operating leases through our leasing division and lower FDIC indemnification asset amortization (see "Non-Interest Income" section later in this release for further detail). 

Non-interest expense totaled $628.4 million in 2015, increasing $81.6 million, or 15%, compared to 2014. The increase in 2015 compared to 2014 was primarily attributable to acquisition and non-operating compensation charges during the current year, higher salary and employee benefit costs caused by the addition of employees from the various acquisitions and larger staffing as the Company grows as well as higher commissions and incentive compensation, and increased equipment, occupancy, data processing and professional fees,  and increased marketing expenses, partially offset by a decrease in OREO expenses (see "Non-Interest Expense" section later in this release for further detail).

Financial Performance Overview – Credit Quality

The ratio of non-performing assets to total assets was 0.56% as of December 31, 2015, compared to 0.63% at September 30, 2015 and 0.62% at December 31, 2014.  Non-performing assets, excluding covered assets, totaled $128.2 million at December 31, 2015, compared to $138.0 million at September 30, 2015 and $124.6 million at December 31, 2014.

Non-performing loans, excluding covered loans, totaled $84.1 million, or 0.49% of total loans, at December 31, 2015, compared to $86.0 million, or 0.53% of total loans, at September 30, 2015 and $78.7 million, or 0.55% of total loans, at December 31, 2014.  The decrease in non-performing loans, excluding covered loans, compared to September 30, 2015 is primarily the result of a $2.0 million decrease in the commercial real estate loan portfolio and a $4.0 million decrease in the home equity and residential real estate loan portfolios, partially offset by a $2.9 million increase in the commercial insurance premium finance receivables loan portfolio.  OREO, excluding covered OREO, of $43.9 million at December 31, 2015 decreased $7.9 million compared to $51.9 million at September 30, 2015 and decreased $1.7 million compared to $45.6 million at December 31, 2014.

Net charge-offs as a percentage of loans, excluding covered loans, for the fourth quarter of 2015 totaled 15 basis points on an annualized basis compared to 14 basis points on an annualized basis in the third quarter of 2015 and 16 basis points on an annualized basis in the fourth quarter of 2014.  Net charge-offs totaled $6.6 million in the fourth quarter of 2015, an $884,000 increase from $5.7 million in the third quarter of 2015 and a $694,000 increase from $5.9 million in the fourth quarter of 2014.

The provision for credit losses, excluding the provision for covered loan losses, totaled $9.2 million for the fourth quarter of 2015 compared to $8.7 million for the third quarter of 2015 and $6.7 million in the fourth quarter of 2014.  The higher provision for credit losses in the fourth quarter of 2015 compared to the same period of 2014 was partially due to the loan growth in the current period.

Excluding the allowance for covered loan losses, the allowance for credit losses at December 31, 2015 totaled $106.3 million, or 0.62% of total loans, compared to $103.9 million, or 0.64% of total loans at September 30, 2015 and $92.5 million, or 0.64% of total loans at December 31, 2014. The allowance for unfunded lending-related commitments totaled $949,000 as of December 31, 2015 compared to $926,000 as of September 30, 2015 and $775,000 as of December 31, 2014.

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 Years Ended
(In thousands, except per share data)  December 31, 2015 September 30, 2015 December 31, 2014 December 31, 2015 December 31, 2014
Net income  $35,512  $38,355  $38,133  $156,749  $151,398 
Less: Preferred stock dividends and discount accretion  3,629  4,079  1,580  10,869  6,323 
Net income applicable to common shares—Basic(A) 31,883  34,276  36,553  145,880  145,075 
Add: Dividends on convertible preferred stock, if dilutive  1,579  1,579  1,580  6,314  6,323 
Net income applicable to common shares—Diluted(B) 33,462  35,855  38,133  152,194  151,398 
Weighted average common shares outstanding(C) 48,371  48,158  46,734  47,838  46,524 
Effect of dilutive potential common shares:           
Common stock equivalents  935  978  1,168  1,029  1,246 
Convertible preferred stock, if dilutive  3,070  3,071  3,075  3,070  3,075 
Weighted average common shares and effect of dilutive potential common shares(D) 52,376  52,207  50,977  51,937  50,845 
Net income per common share:           
Basic(A/C) $0.66  $0.71  $0.78  $3.05  $3.12 
Diluted(B/D) $0.64  $0.69  $0.75  $2.93  $2.98 

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, net income applicable to common shares is not adjusted by the associated preferred dividends. Due to weighted average share differences, when stated on a quarter and year-to-date basis, the earnings per share for the year-to-date period may not equal the sum of the respective earnings per share for the respective quarters then ended.

WINTRUST FINANCIAL CORPORATION
Selected Financial Highlights
 
 Three Months Ended Years Ended
(Dollars in thousands, except per share data)December 31, 2015 September 30, 2015 December 31, 2014 December 31, 2015 December 31, 2014
Selected Financial Condition Data (at end of period):         
Total assets$22,917,166  $22,043,930  $20,010,727     
Total loans, excluding loans held-for-sale and covered loans17,118,117  16,316,211  14,409,398     
Total deposits18,639,634  18,228,469  16,281,844     
Junior subordinated debentures268,566  268,566  249,493     
Total shareholders’ equity2,352,274  2,335,736  2,069,822     
Selected Statements of Income Data:         
Net interest income$167,206  $165,540  $153,719  $641,529  $598,575 
Net revenue (1)232,296  230,493  211,376  913,126  813,815 
Net income35,512  38,355  38,133  156,749  151,398 
Net income per common share – Basic$0.66  $0.71  $0.78  $3.05  $3.12 
Net income per common share – Diluted$0.64  $0.69  $0.75  $2.93  $2.98 
Selected Financial Ratios and Other Data:         
Performance Ratios:         
Net interest margin (2)3.29% 3.33% 3.46% 3.36% 3.53%
Non-interest income to average assets1.16% 1.19% 1.18% 1.29% 1.15%
Non-interest expense to average assets2.98% 2.93% 2.94% 2.99% 2.92%
Net overhead ratio (2) (3)1.82% 1.74% 1.76% 1.70% 1.77%
Efficiency ratio (2) (4)71.39% 69.02% 67.59% 68.49% 66.89%
Return on average assets0.63% 0.70% 0.78% 0.75% 0.81%
Return on average common equity6.03% 6.60% 7.51% 7.15% 7.77%
Return on average tangible common equity (2)8.12% 8.88% 9.82% 9.44% 10.14%
Average total assets$22,233,492  $21,688,450  $19,366,670  $21,009,773  $18,699,458 
Average total shareholders’ equity2,347,545  2,310,511  2,057,855  2,232,989  1,993,959 
Average loans to average deposits ratio (excluding covered loans)91.9% 91.9% 89.5% 92.0% 89.9%
Average loans to average deposits ratio (including covered loans)92.7% 92.9% 91.0% 93.1% 91.7%
Common Share Data at end of period:         
Market price per common share$48.52  $53.43  $46.76     
Book value per common share (2)$43.42  $43.12  $41.52     
Tangible common book value per share (2)$33.17  $32.83  $32.45     
Common shares outstanding48,383,279  48,336,870  46,805,055     
Other Data at end of period:(8)         
Leverage Ratio (5)9.1% 9.2% 10.2%    
Tier 1 capital to risk-weighted assets (5)10.0% 10.3% 11.6%    
Common equity Tier 1 capital to risk-weighted assets(5)8.4% 8.6%  N/A     
Total capital to risk-weighted assets (5)12.2% 12.6% 13.0%    
Tangible common equity ratio (TCE) (2)(7)7.2% 7.4% 7.8%    
Tangible common equity ratio, assuming full conversion of preferred stock (2) (7)7.7% 8.0% 8.4%    
Allowance for credit losses (6)$106,349  $103,922  $92,480     
Non-performing loans$84,057  $85,976  $78,677     
Allowance for credit losses to total loans (6)0.62% 0.64% 0.64%    
Non-performing loans to total loans0.49% 0.53% 0.55%    
Number of:         
Bank subsidiaries15  15  15     
Banking offices152  160  140     

(1) Net revenue includes net interest income and non-interest income.
(2) See “Supplemental Financial Measures/Ratios” for additional information on this performance measure/ratio.
(3) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period’s total average assets. A lower ratio indicates a higher degree of efficiency.
(4) The efficiency ratio is calculated by dividing total non-interest expense by tax-equivalent net revenue (less securities gains or losses). A lower ratio indicates more efficient revenue generation.
(5) Capital ratios for current quarter-end are estimated.
(6) The allowance for credit losses includes both the allowance for loan losses and the allowance for unfunded lending-related commitments, but excludes the allowance for covered loan losses.
(7) Total shareholders’ equity minus preferred stock and total intangible assets divided by total assets minus total intangible assets.
(8) Asset quality ratios exclude covered loans.

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
 
(In thousands) (Unaudited)
December 31,
2015
 (Unaudited)
September 30,
2015
 December 31,
2014
Assets      
Cash and due from banks $252,227  $247,341  $225,136 
Federal funds sold and securities purchased under resale agreements 4,341  3,314  5,571 
Interest bearing deposits with banks 627,009  701,106  998,437 
Available-for-sale securities, at fair value 1,716,388  2,214,281  1,792,078 
Held-to-maturity securities, at amortized cost 884,826     
Trading account securities 448  3,312  1,206 
Federal Home Loan Bank and Federal Reserve Bank stock 101,581  90,308  91,582 
Brokerage customer receivables 27,631  28,293  24,221 
Mortgage loans held-for-sale 388,038  347,005  351,290 
Loans, net of unearned income, excluding covered loans 17,118,117  16,316,211  14,409,398 
Covered loans 148,673  168,609  226,709 
Total loans 17,266,790  16,484,820  14,636,107 
Less: Allowance for loan losses 105,400  102,996  91,705 
Less: Allowance for covered loan losses 3,026  2,918  2,131 
Net loans 17,158,364  16,378,906  14,542,271 
Premises and equipment, net 592,256  587,348  555,228 
Lease investments, net 63,170  29,111  426 
FDIC indemnification asset     11,846 
Accrued interest receivable and other assets 604,917  637,925  501,456 
Trade date securities receivable   277,981  485,534 
Goodwill 471,761  472,166  405,634 
Other intangible assets 24,209  25,533  18,811 
Total assets $22,917,166  $22,043,930  $20,010,727 
Liabilities and Shareholders’ Equity      
Deposits:      
Non-interest bearing $4,836,420  $4,705,994  3,518,685 
Interest bearing 13,803,214  13,522,475  12,763,159 
Total deposits 18,639,634  18,228,469  16,281,844 
Federal Home Loan Bank advances 859,876  451,330  733,050 
Other borrowings 266,019  259,978  196,465 
Subordinated notes 140,000  140,000  140,000 
Junior subordinated debentures 268,566  268,566  249,493 
Trade date securities payable 538  617  3,828 
Accrued interest payable and other liabilities 390,259  359,234  336,225 
Total liabilities 20,564,892  19,708,194  17,940,905 
Shareholders’ Equity:      
Preferred stock 251,287  251,312  126,467 
Common stock 48,469  48,422  46,881 
Surplus 1,190,988  1,187,407  1,133,955 
Treasury stock (3,973) (3,964) (3,549)
Retained earnings 928,211  901,652  803,400 
Accumulated other comprehensive loss (62,708) (49,093) (37,332)
Total shareholders’ equity 2,352,274  2,335,736  2,069,822 
Total liabilities and shareholders’ equity $22,917,166  $22,043,930  $20,010,727 


WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED, except for the year ended December 31, 2014)
 
  Three Months Ended Years Ended
(In thousands, except per share data) December 31, 2015 September 30, 2015 December 31, 2014 December 31, 2015 December 31, 2014
Interest income          
Interest and fees on loans $169,501  $167,831  $157,476  $651,831  $613,024 
Interest bearing deposits with banks 493  372  495  1,486  1,472 
Federal funds sold and securities purchased under resale agreements   1  3  4  25 
Investment securities 16,405  16,130  13,761  61,006  52,951 
Trading account securities 25  19  45  108  79 
Federal Home Loan Bank and Federal Reserve Bank stock 857  821  749  3,232  2,920 
Brokerage customer receivables 206  205  186  797  796 
Total interest income 187,487  185,379  172,715  718,464  671,267 
Interest expense          
Interest on deposits 12,617  12,436  12,431  48,863  48,411 
Interest on Federal Home Loan Bank advances 2,684  2,458  2,534  9,110  10,523 
Interest on other borrowings 1,007  1,045  313  3,627  1,773 
Interest on subordinated notes 1,777  1,776  1,776  7,105  3,906 
Interest on junior subordinated debentures 2,196  2,124  1,942  8,230  8,079 
Total interest expense 20,281  19,839  18,996  76,935  72,692 
Net interest income 167,206  165,540  153,719  641,529  598,575 
Provision for credit losses 9,059  8,322  6,133  32,942  20,537 
Net interest income after provision for credit losses 158,147  157,218  147,586  608,587  578,038 
Non-interest income          
Wealth management 18,634  18,243  18,649  73,452  71,343 
Mortgage banking 23,317  27,887  24,694  115,011  91,617 
Service charges on deposit accounts 7,210  7,403  6,189  27,384  23,307 
(Losses) gains on available-for-sale securities, net (79) (98) 18  323  (504)
Fees from covered call options 3,629  2,810  2,966  15,364  7,859 
Trading gains (losses), net 205  (135) (507) (247) (1,609)
Operating lease income, net 1,973  613  67  2,728  163 
Other 10,201  8,230  5,581  37,582  23,064 
Total non-interest income 65,090  64,953  57,657  271,597  215,240 
Non-interest expense          
Salaries and employee benefits 99,780  97,749  87,633  382,080  335,506 
Equipment 8,772  8,414  7,502  32,812  29,609 
Equipment on operating lease 1,229  473  53  1,826  142 
Occupancy, net 13,062  12,066  11,600  48,880  42,889 
Data processing 7,284  8,127  5,313  26,940  19,336 
Advertising and marketing 5,373  6,237  3,669  21,924  13,571 
Professional fees 4,387  4,100  4,039  18,225  15,574 
Amortization of other intangible assets 1,324  1,350  1,171  4,621  4,692 
FDIC insurance 3,317  3,035  2,810  12,386  12,168 
OREO expenses, net 2,598  (367) 2,320  4,483  9,367 
Other 19,703  18,790  17,331  74,242  63,993 
Total non-interest expense 166,829  159,974  143,441  628,419  546,847 
Income before taxes 56,408  62,197  61,802  251,765  246,431 
Income tax expense 20,896  23,842  23,669  95,016  95,033 
Net income $35,512  $38,355  $38,133  $156,749  $151,398 
Preferred stock dividends and discount accretion $3,629  $4,079  $1,580  $10,869  $6,323 
Net income applicable to common shares $31,883  $34,276  $36,553  $145,880  $145,075 
Net income per common share - Basic $0.66  $0.71  $0.78  $3.05  $3.12 
Net income per common share - Diluted $0.64  $0.69  $0.75  $2.93  $2.98 
Cash dividends declared per common share $0.11  $0.11  $0.10  $0.44  $0.40 
Weighted average common shares outstanding 48,371  48,158  46,734  47,838  46,524 
Dilutive potential common shares 4,005  4,049  4,243  4,099  4,321 
Average common shares and dilutive common shares 52,376  52,207  50,977  51,937  50,845 

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 return on average tangible common equity. In addition, certain operating measures and ratios are adjusted for acquisition and non-operating compensation charges. These operating measures and ratios include operating net income, the efficiency ratio, the net overhead ratio, return on average assets, return on average common equity, return on average tangible common equity and net income per diluted common share. 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.  The Company references the return on average tangible common equity as a measurement of profitability. Management considers operating net income, which is reported net income excluding acquisition and non-operating compensation charges, as a useful measure of operating performance.  Acquisition related charges are specific costs incurred by the Company as a result of an acquisition that are not expected to continue in subsequent periods. Non-operating compensation charges are certain salary and employee benefit costs incurred that are not related to current operating services provided by employees of the Company. The Company excludes acquisition and non-operating compensation charges from reported net income as well as certain operating measures and ratios noted above to provide better comparability between periods.

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-derived 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) 2015 2015 2015 2015 2014(1) 2015 2014(1)
Calculation of Net Interest Margin and Efficiency Ratio              
(A) Interest Income (GAAP) $187,487  $185,379  $175,241  $170,357  $172,715  $718,464  $671,267 
Taxable-equivalent adjustment:              
 - Loans 430  346  328  327  301  1,431  1,128 
 - Liquidity Management Assets 866  841  787  727  555  3,221  2,000 
 - Other Earning Assets 13  10  27  7  24  57  41 
Interest Income - FTE $188,796  $186,576  $176,383  $171,418  $173,595  $723,173  $674,436 
(B) Interest Expense (GAAP) 20,281  19,839  18,349  18,466  18,996  76,935  72,692 
Net interest income - FTE $168,515  $166,737  $158,034  $152,952  $154,599  $646,238  $601,744 
(C) Net Interest Income (GAAP) (A minus B) $167,206  $165,540  $156,892  $151,891  $153,719  $641,529  $598,575 
(D) Net interest margin (GAAP-derived) 3.26% 3.31% 3.39% 3.40% 3.44% 3.34% 3.51%
Net interest margin - FTE 3.29% 3.33% 3.41% 3.42% 3.46% 3.36% 3.53%
(E) Efficiency ratio (GAAP-derived) 71.79% 69.38% 65.96% 68.23% 67.87% 68.84% 67.15%
Efficiency ratio - FTE 71.39% 69.02% 65.64% 67.90% 67.59% 68.49% 66.89%
Efficiency ratio - Adjusted for acquisition and non-operating compensation charges 68.70% 66.67% 65.16% 67.56% 67.59% 67.01% 66.89%
(F) Net Overhead Ratio (GAAP-derived) 1.82% 1.74% 1.53% 1.69% 1.76% 1.70% 1.77%
Net Overhead Ratio - Adjusted for acquisition and non-operating compensation charges 1.70% 1.63% 1.51% 1.68% 1.76% 1.63% 1.77%
Calculation of Tangible Common Equity ratio (at period end)              
Total shareholders’ equity $2,352,274  $2,335,736  $2,264,982  $2,131,074  $2,069,822     
(G) Less: Convertible preferred stock (126,287) (126,312) (126,312) (126,427) (126,467)    
Less: Non-convertible preferred stock (125,000) (125,000) (125,000)        
Less: Intangible assets (495,970) (497,699) (439,570) (439,055) (424,445)    
(H) Total tangible common shareholders’ equity $1,605,017  $1,586,725  $1,574,100  $1,565,592  $1,518,910     
Total assets $22,917,166  $22,043,930  $20,799,924  $20,382,271  $20,010,727     
Less: Intangible assets (495,970) (497,699) (439,570) (439,055) (424,445)    
(I) Total tangible assets $22,421,196  $21,546,231  $20,360,354  $19,943,216  $19,586,282     
Tangible common equity ratio (H/I) 7.2% 7.4% 7.7% 7.9% 7.8%    
Tangible common equity ratio, assuming full conversion of preferred stock ((H-G)/I) 7.7% 8.0% 8.4% 8.5% 8.4%    
Calculation of book value per share              
Total shareholders’ equity $2,352,274  $2,335,736  $2,264,982  $2,131,074  $2,069,822     
Less: Preferred stock (251,287) (251,312) (251,312) (126,427) (126,467)    
(J) Total common equity $2,100,987  $2,084,424  $2,013,670  $2,004,647  $1,943,355     
(K) Actual common shares outstanding 48,383  48,337  47,677  47,390  46,805     
Book value per share (J/K) $43.42  $43.12  $42.24  $42.30  $41.52     
Tangible common book value per share (H/K) $33.17  $32.83  $33.02  $33.04  $32.45     


  Three Months Ended Years Ended
  December 31, September 30, June 30, March 31, December 31, December 31,
(Dollars and shares in thousands) 2015 2015 2015 2015 2014 (1) 2015 2014 (1)
Calculation of return on average assets              
(L) Net income $35,512  $38,355  $43,831  $39,052  $38,133  $156,749  $151,398 
Add: Acquisition and non-operating compensation charges, net of tax 3,975  3,558  847  607    8,987   
(M) Operating net income 39,487  41,913  44,678  39,659  38,133  165,736  151,398 
(N) Total average assets 22,233,492  21,688,450  20,256,996  19,826,240  19,366,670  21,009,773  18,699,458 
Return on average assets, annualized (L/N) 0.63% 0.70% 0.87% 0.80% 0.78% 0.75% 0.81%
Return on average assets, adjusted for acquisition and non-operating compensation charges, annualized (M/N) 0.70% 0.77% 0.88% 0.81% 0.78% 0.79% 0.81%
Calculation of return on average common equity              
(O) Net income applicable to common shares $31,883  34,276  42,251  37,471  36,553  $145,880  145,075 
(P) Add: Acquisition and non-operating compensation charges, net of tax 3,975  3,558  847  607
    8,987   
(Q) Add: After-tax intangible asset amortization 834  833  597  615  722  2,879  2,881 
(R) Tangible operating net income applicable to common shares $36,692  38,667  43,695  38,693  37,275  $157,746  147,956 
Total average shareholders' equity $2,347,545  2,310,511  2,156,128  2,114,356  2,057,855  $2,232,989  1,993,959 
Less: Average preferred stock (251,293) (251,312) (134,586) (126,445) (126,467) (191,416) (126,471)
(S) Total average common shareholders' equity $2,096,252  2,059,199  2,021,542  1,987,911  1,931,388  $2,041,573  1,867,488 
Less: Average intangible assets (497,199) (490,583) (439,455) (436,456) (425,834) (466,225) (408,642)
(T) Total average tangible common shareholders’ equity $1,599,053  1,568,616  1,582,087  1,551,455  1,505,554  $1,575,348  1,458,846 
Return on average common equity, annualized (O/S) 6.03% 6.60% 8.38% 7.64% 7.51% 7.15% 7.77%
Return on average common equity, adjusted for acquisition and non-operating compensation charges, annualized  ((O+P)/S) 6.79% 7.29% 8.55% 7.77% 7.51% 7.59% 7.77%
Return on average tangible common equity, annualized ((O+Q)/T) 8.12% 8.88% 10.86% 9.96% 9.82% 9.44% 10.14%
Return on average tangible common equity, adjusted for acquisition and non-operating compensation charges, annualized  (R/T) 9.10% 9.78% 11.07% 10.12% 9.82% 10.01
% 10.14%
Calculation of net income per common share - diluted              
(U) Net income applicable to common shares - Diluted 33,462  35,855  43,831  39,052  38,133  152,199  151,398 
Add: Acquisition and non-operating compensation charges, net of tax 3,975  3,558  847
  607
    8,987   
(V) Net income applicable to common shares - Diluted, adjusted for acquisition and non-operating compensation charges 37,437  39,413  44,678  39,659  38,133  161,186  151,398 
Weighted average common shares and effect of dilutive potential common shares (W) 52,376  52,207  51,723  51,472  50,977  51,937  50,845 
Net income per common share - Diluted (U/W) $0.64  $0.69  $0.85  $0.76  $0.75  $2.93  $2.98 
Net income per common share - Diluted, adjusted for acquisition and non-operating compensation charges (V/W) 0.71  0.75  0.86  0.77  0.75  3.10  2.98 

(1) The Company considers acquisition and non-operating compensation charges incurred prior to 2015 to be insignificant.

LOANS
Loan Portfolio Mix and Growth Rates
 
        % Growth
(Dollars in thousands) December 31,
2015
 September 30,
2015
 December 31,
2014
 From (1)
September 30,
2015
 From
December 31,
2014
Balance:          
Commercial $4,713,909  $4,400,185  $3,924,394  28% 20%
Commercial real estate 5,529,289  5,307,566  4,505,753  17  23 
Home equity 784,675  797,465  716,293  (6) 10 
Residential real estate 607,451  571,743  483,542  25  26 
Premium finance receivables - commercial 2,374,921  2,407,075  2,350,833  (5) 1 
Premium finance receivables - life insurance 2,961,496  2,700,275  2,277,571  38  30 
Consumer and other 146,376  131,902  151,012  44  (3)
Total loans, net of unearned income, excluding covered loans $17,118,117  $16,316,211  $14,409,398  19% 19%
Covered loans 148,673  168,609  226,709  (47) (34)
Total loans, net of unearned income $17,266,790  $16,484,820  $14,636,107  19% 18%
Mix:          
Commercial 27% 27% 26%    
Commercial real estate 32  32  31     
Home equity 5  5  5     
Residential real estate 3  3  3     
Premium finance receivables - commercial 14  15  16     
Premium finance receivables - life insurance 17  16  16     
Consumer and other 1  1  1     
Total loans, net of unearned income, excluding covered loans 99% 99% 98%    
Covered loans 1  1  2     
Total loans, net of unearned income 100% 100% 100%    

(1) Annualized

           
As of December 31, 2015   % of
Total
Balance
 Nonaccrual > 90 Days
Past Due
and Still
Accruing
 Allowance
For Loan
Losses
Allocation
    
(Dollars in thousands) Balance 
Commercial:          
Commercial and industrial $2,851,354  27.8% $12,416  $6  $23,457 
Franchise 245,228  2.4      3,086 
Mortgage warehouse lines of credit 222,806  2.2      1,628 
Community Advantage - homeowner associations 130,986  1.3      3 
Aircraft 5,327  0.1  288    7 
Asset-based lending 742,684  7.3  8    5,859 
Tax exempt 267,273  2.6      1,759 
Leases 226,074  2.2    535  232 
Other 3,588        20 
PCI - commercial loans (1) 18,589  0.2    892  84 
Total commercial $4,713,909  46.1% $12,712  $1,433  $36,135 
Commercial Real Estate:          
Residential construction $70,381  0.7% $273  $  $895 
Commercial construction 288,279  2.8  33    3,018 
Land 78,417  0.8  1,751    2,467 
Office 863,001  8.4  4,619    5,890 
Industrial 727,648  7.1  9,564    6,377 
Retail 868,399  8.5  1,760    5,597 
Multi-family 742,349  7.2  1,954    7,356 
Mixed use and other 1,732,816  16.9  6,691    11,809 
PCI - commercial real estate (1) 157,999  1.5    22,111  349 
Total commercial real estate $5,529,289  53.9% $26,645  $22,111  $43,758 
Total commercial and commercial real estate $10,243,198  100.0% $39,357  $23,544  $79,893 
           
Commercial real estate - collateral location by state:          
Illinois $4,455,287  80.6%      
Wisconsin 581,844  10.5       
Total primary markets $5,037,131  91.1%      
Florida 55,631  1.0       
California 64,018  1.2       
Indiana 129,467  2.3       
Other (no individual state greater than 0.7%) 243,042  4.4       
Total $5,529,289  100.0%      
           

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

DEPOSITS
Deposit Portfolio Mix and Growth Rates
 
        % Growth
(Dollars in thousands) December 31, 2015 September 30, 2015 December 31, 2014 From (1)
September 30,
2015
 From
December 31,
2014
Balance:          
Non-interest bearing $4,836,420  $4,705,994  $3,518,685  11% 37%
NOW and interest bearing demand deposits 2,390,217  2,231,258  2,236,089  28  7 
Wealth Management deposits (2) 1,643,653  1,469,920  1,226,916  47  34 
Money Market 4,041,300  4,001,518  3,651,467  4  11 
Savings 1,723,367  1,684,007  1,508,877  9  14 
Time certificates of deposit 4,004,677  4,135,772  4,139,810  (13) (3)
Total deposits $18,639,634  $18,228,469  $16,281,844  9% 14%
Mix:          
Non-interest bearing 26% 26% 22%    
NOW and interest bearing demand deposits 13  12  14     
Wealth Management deposits (2) 9  8  8     
Money Market 22  22  22     
Savings 9  9  9     
Time certificates of deposit 21  23  25     
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, 2015
 
(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 $  $54,940  $147,210  $700,606  $902,756  0.58%
4-6 months 36,506  42,643    577,555  656,704  0.60%
7-9 months 165,621  31,803    536,680  734,104  0.78%
10-12 months   37,691    523,806  561,497  0.80%
13-18 months 43,307  16,608    580,093  640,008  0.91%
19-24 months 1,525  4,666    196,065  202,256  1.02%
24+ months 3,438  15,069    288,845  307,352  1.24%
Total $250,397  $203,420  $147,210  $3,403,650  $4,004,677  0.78%

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

NET INTEREST INCOME

The following table presents a summary of Wintrust’s average balances, net interest income and related net interest margins, calculated on a fully tax-equivalent basis, for the fourth quarter of 2015 compared to the third quarter of 2015 (sequential quarters)and fourth quarter of 2014 (linked quarters):

 Average Balance for three months ended, Interest for three months ended, Yield/Rate for three months ended,
(Dollars in thousands)December 31,
2015
 September 30,
2015
 December 31,
2014
 December 31,
2015
 September 30,
2015
 December 31,
2014
 December 31,
2015
 September 30,
2015
 December 31,
2014
Liquidity management
assets (1) (2) (7)
$3,245,393  $3,140,782  $2,972,220  $18,621  $18,165  $15,563  2.28% 2.29% 2.08%
Other earning assets (2) (3) (7)29,792  30,990  29,699  244  234  255  3.26  3.00  3.40 
Loans, net of unearned income (2) (4) (7)16,889,922  16,509,001  14,469,745  168,060  165,572  153,590  3.95  3.98  4.21 
Covered loans154,846  174,768  244,139  1,871  2,605  4,187  4.79  5.91  6.80 
Total earning assets (7)$20,319,953  $19,855,541  $17,715,803  $188,796  $186,576  $173,595  3.69% 3.73% 3.89%
Allowance for loan and covered loan losses(109,448) (106,091) (97,506)            
Cash and due from banks260,593  251,289  243,080             
Other assets1,762,394  1,687,711  1,505,293             
Total assets$22,233,492  $21,688,450  $19,366,670             
                  
Interest-bearing deposits$13,606,046  $13,489,651  $12,771,359  $12,617  $12,436  $12,431  0.37% 0.37% 0.39%
Federal Home Loan Bank advances448,725  402,646  335,198  2,684  2,458  2,534  2.37  2.42  3.00 
Other borrowings269,914  272,782  84,795  1,007  1,045  313  1.48  1.52  1.47 
Subordinated notes140,000  140,000  140,000  1,777  1,776  1,776  5.08  5.08  5.07 
Junior subordinated debentures268,566  264,974  249,493  2,196  2,124  1,942  3.20  3.14  3.04 
Total interest-bearing liabilities$14,733,251  $14,570,053  $13,580,845  $20,281  $19,839  $18,996  0.55% 0.54% 0.55%
Non-interest bearing deposits4,776,977  4,473,632  3,398,774             
Other liabilities375,719  334,254  329,196             
Equity2,347,545  2,310,511  2,057,855             
Total liabilities and shareholders’ equity$22,233,492  $21,688,450  $19,366,670             
Interest rate spread (5) (7)            3.14% 3.19% 3.34%
Net free funds/contribution(6)$5,586,702  $5,285,488  $4,134,958        0.15% 0.14% 0.12%
Net interest income/margin (7)      $168,515  $166,737  $154,599  3.29% 3.33% 3.46%

(1) Liquidity management assets include available-for-sale and held-to-maturity 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, 2015, September 30, 2015 and December 31, 2014 were $1.3 million, $1.2 million and $880,000, respectively.
(3) Other earning assets include brokerage customer receivables and trading account securities.
(4) Loans, net of unearned income, include loans held-for-sale and non-accrual loans.
(5) Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.
(6) Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.
(7) See “Supplemental Financial Measures/Ratios” for additional information on this performance ratio.

The following table presents a summary of Wintrust’s average balances, net interest income and related net interest margins, calculated on a fully tax-equivalent basis, for the year ended December 31, 2015 compared to the year ended December 31, 2014:

 Average Balance for Year Ended, Interest for Year Ended, Yield/Rate for Year Ended,
(Dollars in thousands)December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014 December 31, 2015 December 31, 2014
Liquidity management assets (1) (2) (7)$2,992,506  $2,761,450  $68,949  $59,368  2.30% 2.15%
Other earning assets (2) (3) (7)30,161  28,699  962  916  3.19  3.19 
Loans, net of unearned income (2) (4) (7)16,022,371  13,958,842  641,917  590,620  4.01  4.23 
Covered loans186,427  280,946  11,345  23,532  6.09  8.38 
Total earning assets (7)$19,231,465  $17,029,937  $723,173  $674,436  3.76% 3.96%
Allowance for loan and covered loan losses(103,459) (100,586)        
Cash and due from banks249,488  234,194         
Other assets1,632,279  1,535,913         
Total assets$21,009,773  $18,699,458         
            
Interest-bearing deposits$13,271,304  $12,470,597  $48,863  $48,411  0.37% 0.39%
Federal Home Loan Bank advances389,426  387,591  9,110  10,523  2.34  2.71 
Other borrowings233,152  132,479  3,627  1,773  1.56  1.34 
Subordinated notes140,000  77,479  7,105  3,906  5.07  5.04 
Junior subordinated debentures258,203  249,493  8,230  8,079  3.14  3.19 
Total interest-bearing liabilities$14,292,085  $13,317,639  $76,935  $72,692  0.54% 0.55%
Non-interest bearing deposits4,144,378  3,062,338         
Other liabilities340,321  325,522         
Equity2,232,989  1,993,959         
Total liabilities and shareholders’ equity$21,009,773  $18,699,458         
Interest rate spread (5) (7)        3.22% 3.41%
Net free funds/contribution (6)$4,939,380  $3,712,298      0.14% 0.12%
Net interest income/margin (7)    $646,238  $601,744  3.36% 3.53%

(1) Liquidity management assets include available-for-sale and held-to-maturity 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 years ended December 31, 2015 and 2014 were $4.7 million and $3.2 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.

Interest Rate Sensitivity

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

The following interest rate scenarios display the percentage change in net interest income over a one-year time horizon assuming increases of 100 and 200 basis points and a decrease of 100 basis points. The Static Shock Scenario results incorporate actual cash flows and repricing characteristics for balance sheet instruments following an instantaneous, parallel change in market rates based upon a static (i.e. no growth or constant) balance sheet.  Conversely, the Ramp Scenario results incorporate management’s projections of future volume and pricing of each of the product lines following a gradual, parallel change in market rates over twelve months.  Actual results may differ from these simulated results due to timing, magnitude, and frequency of interest rate changes as well as changes in market conditions and management strategies. The interest rate sensitivity for both the Static Shock and Ramp Scenarios at December 31, 2015, September 30, 2015 and December 31, 2014 is as follows:

      
Static Shock Scenarios +200
Basis 
Points
 +100
 Basis
 Points
 -100
Basis
 Points
December 31, 2015             16.1% 8.7% (10.6)%
September 30, 2015 15.6% 8.0% (11.1)%
December 31, 2014 13.4% 6.4% (10.1)%


Ramp Scenarios+200
Basis
Points
 +100
Basis
Points
 -100
Basis
Points
December 31, 2015              7.3% 3.9% (4.4)%
September 30, 20156.7% 3.6% (4.0)%
December 31, 20145.4% 2.5% (3.9)%

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

NON-INTEREST INCOME

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

  Three Months Ended        
  December 31, September 30, December 31, Q4 2015 compared to
Q3 2015
 Q4 2015 compared to
Q4 2014
(Dollars in thousands) 2015 2015 2014 $ Change % Change $ Change % Change
Brokerage $6,850  $6,579  $7,892  $271  4% $(1,042) (13)%
Trust and asset management 11,784  11,664  10,757  120  1  1,027  10 
Total wealth management 18,634  18,243  18,649  391  2  (15) 0 
Mortgage banking 23,317  27,887  24,694  (4,570) (16) (1,377) (6)
Service charges on deposit accounts 7,210  7,403  6,189  (193) (3) 1,021  16 
(Losses) gains on available-for-sale securities, net (79) (98) 18  19  NM  (97) NM 
Fees from covered call options 3,629  2,810  2,966  819  29  663  22 
Trading gains (losses), net 205  (135) (507) 340  NM  712  NM 
Operating lease income, net 1,973  613  67  1,360  NM  1,906  NM 
Other:              
Interest rate swap fees 2,343  2,606  1,119  (263) (10) 1,224  NM 
BOLI 1,463  212  661  1,251  NM  802  NM 
Administrative services 1,101  1,072  1,107  29  3  (6) (1)
Miscellaneous 5,294  4,340  2,694  954  22  2,600  97 
Total Other 10,201  8,230  5,581  1,971  24  4,620  83 
Total Non-Interest Income $65,090  $64,953  $57,657  $137  0% $7,433  13%


  Years Ended December 31, $ %
(Dollars in thousands) 2015 2014 Change Change
Brokerage $27,030  $30,438  $(3,408) (11)%
Trust and asset management 46,422  40,905  5,517  13 
Total wealth management 73,452  71,343  2,109  3 
Mortgage banking 115,011  91,617  23,394  26 
Service charges on deposit accounts 27,384  23,307  4,077  17 
Gains (losses) on available-for-sale securities, net 323  (504) 827  NM 
Fees from covered call options 15,364  7,859  7,505  95 
Trading (losses) gains, net (247) (1,609) 1,362  NM 
Operating lease income, net 2,728  163  2,565  NM 
Other:        
Interest rate swap fees 9,487  4,469  5,018  NM 
BOLI 4,622  2,700  1,922  71 
Administrative services 4,252  3,893  359  9 
Miscellaneous 19,221  12,002  7,219  60 
Total Other 37,582  23,064  14,518  63 
Total Non-Interest Income $271,597  $215,240  $56,357  26%
NM - Not Meaningful        

The significant changes in non-interest income for the quarter ended December 31, 2015 compared to the quarters ended September 30, 2015 and December 31, 2014 are discussed below.

Wealth management revenue totaled $18.6 million in the fourth quarter of 2015 as compared to $18.2 million in the third quarter of 2015 and $18.6 million in the fourth quarter of 2014.  The increase as compared to the third quarter of 2015 is mostly attributable to growth in assets from new customers and new financial advisors, as well as an increase in existing customer activity and market appreciation. 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, 2015, mortgage banking revenue totaled $23.3 million, a decrease of $4.6 million as compared to the third quarter of 2015 and a decrease of $1.4 million when compared to the fourth quarter of 2014.  The decrease in mortgage banking revenue in the fourth quarter of 2015, when compared to the third quarter of 2015 and the fourth quarter of 2014, resulted primarily from lower origination volumes in the current quarter.  Mortgage loans originated or purchased for sale were $808.9 million in the current quarter as compared to $973.7 million in the third quarter of 2015 and $838.3 million in the prior year quarter.  Mortgage banking revenue includes revenue from activities related to originating, selling and servicing residential real estate loans for the secondary market.

Service charges on deposit accounts totaled $7.2 million in the fourth quarter of 2015, a slight decrease compared to the third quarter of 2015 and an increase of $1.0 million compared to the prior year quarter.  The increase in the current quarter as compared to the fourth quarter of 2014 is primarily a result of higher account analysis fees on deposit accounts which have increased as a result of the Company's commercial banking initiative as well as additional service charges on deposit accounts from acquired institutions.

Fees from covered call option transactions totaled $3.6 million for the fourth quarter 2015, compared to $2.8 million for the third quarter of 2015 and $3.0 million for the fourth quarter of 2014. The Company has typically written call options with terms of less than three months against certain U.S. Treasury and agency securities held in its portfolio for liquidity and other purposes. Management has effectively entered into these transactions with the goal of economically hedging security positions and enhancing its overall return on its investment portfolio by using fees generated from these options to compensate for net interest margin compression. These option transactions are designed to increase the total return associated with holding certain investment securities and do not qualify as hedges pursuant to accounting guidance. Fees from covered call options increased in the current quarter compared to prior year periods primarily as a result of selling call options against a larger value of underlying securities resulting in higher premiums received by the Company. There were no outstanding call option contracts at December 31, 2015, September 30, 2015 and December 31, 2014.

The Company recognized $205,000 of trading gains in the fourth quarter of 2015 compared to trading losses of $135,000 in the third quarter of 2015 and trading losses of $507,000 in the fourth quarter of 2014. Trading gains and losses recorded by the Company primarily result from fair value adjustments related to interest rate derivatives not designated as hedges, primarily interest rate cap instruments that the Company uses to manage interest rate risk, specifically in the event of future increases in short-term interest rates.  The change in value of the cap derivatives reflects the present value of expected cash flows over the remaining life of the caps.  These expected cash flows are derived from the expected path for and a measure of volatility for short-term interest rates.

Other non-interest income totaled $10.2 million for the quarter ended December 31, 2015, an increase of $2.0 million compared to the third quarter of 2015 and an increase of $4.6 million compared to the fourth quarter of 2014.  The increase in the current quarter as compared to the third quarter of 2015 and the fourth quarter of 2014, is primarily due to an increase in net gains on partnership investments, greater interest rate swap revenues resulting from interest rate hedging transactions related to both customer-based trades and the related matched trades with inter-bank counterparties and the recognition of a $0.6 million BOLI death benefit.

NON-INTEREST EXPENSE

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

  Three Months Ended        
  December 31, September 30, December 31, Q4 2015 compared to
Q3 2015
 Q4 2015 compared to
Q4 2014
(Dollars in thousands) 2015 2015 2014 $ Change % Change $ Change % Change
Salaries and employee benefits:              
Salaries $50,982  $53,028  $45,255  $(2,046) (4)% $5,727  13%
Commissions and incentive compensation 31,222  30,035  28,369  1,187  4  2,853  10 
Benefits 17,576  14,686  14,009  2,890  20  3,567  25 
Total salaries and employee benefits 99,780  97,749  87,633  2,031  2  12,147  14 
Equipment 8,772  8,414  7,502  358  4  1,270  17 
Equipment on operating lease 1,229  473  53  756  NM  1,176  NM 
Occupancy, net 13,062  12,066  11,600  996  8  1,462  13 
Data processing 7,284  8,127  5,313  (843) (10) 1,971  37 
Advertising and marketing 5,373  6,237  3,669  (864) (14) 1,704  46 
Professional fees 4,387  4,100  4,039  287  7  348  9 
Amortization of other intangible assets 1,324  1,350  1,171  (26) (2) 153  13 
FDIC insurance 3,317  3,035  2,810  282  9  507  18 
OREO expense, net 2,598  (367) 2,320  2,965  NM  278  12 
Other:              
Commissions - 3rd party brokers 1,321  1,364  1,470  (43) (3) (149) (10)
Postage 1,892  1,927  1,724  (35) (2) 168  10 
Miscellaneous 16,490  15,499  14,137  991  6  2,353  17 
Total other 19,703  18,790  17,331  913  5  2,372  14 
Total Non-Interest Expense $166,829  $159,974  $143,441  $6,855  4% $23,388  16%


  Years Ended December 31, $
Change
 %
Change
(Dollars in thousands) 2015 2014 
Salaries and employee benefits:        
Salaries $197,475  $177,811  19,664  11%
Commissions and incentive compensation 120,138  103,185  16,953  16 
Benefits 64,467  54,510  9,957  18 
Total salaries and employee benefits 382,080  335,506  46,574  14 
Equipment 32,812  29,609  3,203  11 
Equipment on operating lease 1,826  142  1,684  NM 
Occupancy, net 48,880  42,889  5,991  14 
Data processing 26,940  19,336  7,604  39 
Advertising and marketing 21,924  13,571  8,353  62 
Professional fees 18,225  15,574  2,651  17 
Amortization of other intangible assets 4,621  4,692  (71) (2)
FDIC insurance 12,386  12,168  218  2 
OREO expenses, net 4,483  9,367  (4,884) (52)
Other:        
Commissions - 3rd party brokers 5,474  6,381  (907) (14)
Postage 7,030  6,045  985  16 
Miscellaneous 61,738  51,567  10,171  20 
Total other 74,242  63,993  10,249  16 
Total Non-Interest Expense $628,419  $546,847  $81,572  15%

The significant changes in non-interest expense for the quarter ended December 31, 2015 compared to the quarters ended September 30, 2015 and December 31, 2014 are discussed below.

Salaries and employee benefits expense increased $12.1 million, or 14%, in the fourth quarter of 2015 compared to the fourth quarter of 2014 , and increased $2.0 million compared to the third quarter of 2015. The increase compared to the prior year period is primarily due to a $5.7 million increase in salaries caused by the addition of employees from acquisitions, increased staffing as the Company grows, acquisition-related and severance charges, along with a $2.8 million increase in commissions and incentive compensation and a $3.6 million increase in employee benefits resulting from higher insurance costs and the $1.4 million adjustment of pension obligations assumed in previous acquisitions.

Equipment on operating lease expense totaled $1.2 million for the fourth quarter of 2015, an increase of $756,000 compared to the third quarter of 2015 and an increase of $1.2 million compared to the fourth quarter of 2014. The increase in the current quarter compared to the prior periods is primarily related to growth in business from the Company's leasing divisions.

Occupancy expense for the fourth quarter of 2015 was $13.1 million, an increase of $1.0 million, or 8% compared to the third quarter of 2015 and an increase of $1.5 million, or 13%, compared to the same period in 2014. The increase in the current quarter as compared to the prior year quarter is primarily the result of increased rent expense on leased properties as well as additional depreciation expenses on owned locations including those obtained in the Company's acquisitions. Occupancy expense includes depreciation on premises, real estate taxes, utilities and maintenance of premises, as well as net rent expense for leased premises.

Data processing expenses decreased in the fourth quarter of 2015 totaling $7.3 million as compared to $8.1 million in the third quarter of 2015 and increased $2.0 million compared to the fourth quarter of 2014. The amount of data processing expenses incurred decreased compared to third quarter of 2015 primarily due to lower acquisition related expenses recorded in the fourth quarter of 2015 than were recorded in the third quarter related to recent bank acquisition transactions. 

OREO expense totaled $2.6 million in the fourth quarter of 2015, an increase of $3.0 million compared to the third quarter of 2015 and an increase of $278,000 compared to the fourth quarter of 2014.  The increase in total OREO expense in the current quarter is due to operating expenses (net of rental income) increasing $716,000, recognized gains on sales decreasing $1.1 million and OREO valuation write-downs increasing $1.1 million.  OREO costs include all costs related to obtaining, maintaining and selling other real estate owned properties.    

Miscellaneous expenses in the fourth quarter of 2015 increased $1.0 million as compared to the third quarter of 2015 and increased $2.4 million, or 17%, compared to the quarter ended December 31, 2014. Miscellaneous expense includes ATM expenses, correspondent bank charges, directors' fees, telephone, travel and entertainment, corporate insurance, operating losses, dues and subscriptions, problem loan expenses and lending origination costs that are not deferred. 

ASSET QUALITY
Allowance for Credit Losses, excluding covered loans
 
  Three Months Ended Years Ended
(Dollars in thousands) December 31, 2015 September 30, 2015 December 31, 2014 December 31, 2015 December 31, 2014
Allowance for loan losses at beginning of period $102,996  $100,204  $91,019  $91,705  $96,922 
Provision for credit losses 9,196  8,665  6,744  33,747  22,889 
Other adjustments (243) (153) (236) (737) (824)
Reclassification from/(to) allowance for unfunded lending-related commitments 13  (42) 46  (138) (56)
Charge-offs:          
Commercial 1,369  964  289  4,253  4,153 
Commercial real estate 2,734  1,948  4,434  6,543  15,788 
Home equity 680  1,116  150  4,227  3,895 
Residential real estate 211  1,138  630  2,903  1,750 
Premium finance receivables - commercial 2,676  1,595  1,463  7,060  5,722 
Premium finance receivables - life insurance     4    4 
Consumer and other 179  116  156  521  792 
Total charge-offs 7,849  6,877  7,126  25,507  32,104 
Recoveries:          
Commercial 315  462  315  1,432  1,198 
Commercial real estate 491  213  572  2,840  1,334 
Home equity 183  42  57  312  535 
Residential real estate 55  136  19  283  335 
Premium finance receivables - commercial 223  278  219  1,288  1,139 
Premium finance receivables - life insurance   16  6  16  11 
Consumer and other 20  52  70  159  326 
Total recoveries 1,287  1,199  1,258  6,330  4,878 
Net charge-offs (6,562) (5,678) (5,868) (19,177) (27,226)
Allowance for loan losses at period end $105,400  $102,996  $91,705  $105,400  $91,705 
Allowance for unfunded lending-related commitments at period end 949  926  775  949  775 
Allowance for credit losses at period end $106,349  $103,922  $92,480  $106,349  $92,480 
Annualized net charge-offs by category as a percentage of its own respective category’s average:          
Commercial 0.09% 0.05% % 0.07% 0.08%
Commercial real estate 0.16  0.13  0.34  0.07  0.33 
Home equity 0.25  0.55  0.05  0.52  0.47 
Residential real estate 0.07  0.42  0.30  0.29  0.19 
Premium finance receivables - commercial 0.41  0.21  0.21  0.24  0.19 
Premium finance receivables - life insurance          
Consumer and other 0.37  0.17  0.19  0.23  0.28 
Total loans, net of unearned income, excluding covered loans 0.15% 0.14% 0.16% 0.12% 0.20%
Net charge-offs as a percentage of the provision for credit losses 71.35% 65.53% 86.98% 56.83% 118.94%
Loans at period-end $17,118,117  $16,316,211  $14,409,398     
Allowance for loan losses as a percentage of loans at period end 0.62% 0.63% 0.64%    
Allowance for credit losses as a percentage of loans at period end 0.62% 0.64% 0.64%    

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

Net charge-offs as a percentage of loans, excluding covered loans, for the fourth quarter of 2015 totaled 15 basis points on an annualized basis compared to 14 basis points on an annualized basis in the third quarter of 2015 and 16 basis points on an annualized basis in the fourth quarter of 2014.  Net charge-offs totaled $6.6 million in the fourth quarter of 2015, an $884,000 increase from $5.7 million in the third quarter of 2015 and a $694,000 increase from $5.9 million in the fourth quarter of 2014.

The provision for credit losses, excluding the provision for covered loan losses, totaled $9.2 million for the fourth quarter of 2015, as compared to $8.7 million for the third quarter of 2015 and $6.7 million for the fourth quarter of 2014. The higher provision for credit losses in the fourth quarter of 2015 compared to the same period of 2014 was partly due to the loan growth in the current period.

The allowance for unfunded lending-related commitments totaled $949,000 as of December 31, 2015 compared to $926,000 as of September 30, 2015 and $775,000 as of December 31, 2014. 

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

The Company also provides a provision for covered loan losses on covered loans and maintains an allowance for covered loan losses on covered loans. Please see “Covered Assets” later in this document for more detail.

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

  Three Months Ended Years Ended
(Dollars in thousands) December 31, 2015 September 30, 2015 December 31, 2014 December 31, 2015 December 31, 2014
Provision for loan losses $9,209  $8,623  $6,790  $33,609  $22,833 
Provision for unfunded lending-related commitments (13) 42  (46) 138  56 
Provision for covered loan losses (137) (343) (611) (805) (2,352)
Provision for credit losses $9,059  $8,322  $6,133  $32,942  $20,537 
           
      Period End
      December 31, 2015 September 30, 2015 December 31, 2014
Allowance for loan losses     $105,400  $102,996  $91,705 
Allowance for unfunded lending-related commitments     949  926  775 
Allowance for covered loan losses     3,026  2,918  2,131 
Allowance for credit losses     $109,375  $106,840  $94,611 

The tables below summarize the calculation of allowance for loan losses for the Company’s core loan portfolio and consumer, niche and purchased loan portfolio as of December 31, 2015 and September 30, 2015.

  As of December 31, 2015
  Recorded Calculated As a percentage
of its own respective
(Dollars in thousands) Investment Allowance category’s balance
Commercial: (1)      
Commercial and industrial $2,793,794  $23,455  0.84%
Asset-based lending 740,234  5,859  0.79 
Tax exempt 265,264  1,759  0.66 
Leases 225,805  232  0.10 
Other 2,790  20  0.73 
Commercial real estate: (1)      
Residential construction 69,407  895  1.29 
Commercial construction 286,777  3,018  1.05 
Land 72,114  2,467  3.42 
Office 802,274  5,890  0.73 
Industrial 679,538  6,373  0.94 
Retail 794,442  5,597  0.70 
Multi-family 685,217  7,348  1.07 
Mixed use and other 1,581,024  11,809  0.75 
Home equity (1) 688,160  11,993  1.74 
Residential real estate (1) 559,532  4,726  0.84 
Total core loan portfolio $10,246,372  $91,441  0.89%
Commercial:      
Franchise $245,228  $3,086  1.26%
Mortgage warehouse lines of credit 222,806  1,628  0.73 
Community Advantage - homeowner associations 130,986  3   
Aircraft 5,327  7  0.13 
Purchased non-covered commercial loans (2) 81,675  86  0.11 
Commercial real estate:      
Purchased non-covered commercial real estate (2) 558,496  361  0.06 
Purchased non-covered home equity (2) 96,515  19  0.02 
Purchased non-covered residential real estate (2) 47,919  8  0.02 
Premium finance receivables      
U.S. commercial insurance loans 2,096,604  5,449  0.26 
Canada commercial insurance loans (2) 278,317  567  0.20 
Life insurance loans (1) 2,593,204  1,217  0.05 
Purchased life insurance loans (2) 368,292     
Consumer and other (1) 141,743  1,527  1.08 
Purchased non-covered consumer and other (2) 4,633  1  0.02 
Total consumer, niche and purchased loan portfolio $6,871,745  $13,959  0.20%
Total loans, net of unearned income, excluding covered loans $17,118,117  $105,400  0.62%
Non-accretable credit discounts on purchased loans reported in accordance with ASC 310-30, excluding covered loans   29,502   
Total allowance for loan losses and non-accretable credit discounts on purchased loans, excluding covered loans   $134,902  0.79%

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

  As of September 30, 2015
  Recorded Calculated As a percentage
of its own respective
(Dollars in thousands) Investment Allowance category’s balance
Commercial: (1)      
Commercial and industrial $2,579,208  $21,875  0.85%
Asset-based lending 797,301  6,282  0.79 
Tax exempt 230,878  1,303  0.56 
Leases 205,612  169  0.08 
Other 1,953  12  0.61 
Commercial real estate: (1)      
Residential construction 60,072  753  1.25 
Commercial construction 283,689  2,995  1.06 
Land 73,923  2,550  3.45 
Office 762,734  7,154  0.94 
Industrial 614,619  5,515  0.90 
Retail 753,009  5,254  0.70 
Multi-family 650,287  6,951  1.07 
Mixed use and other 1,517,265  12,077  0.80 
Home equity (1) 694,203  12,205  1.76 
Residential real estate (1) 518,756  4,580  0.88 
Total core loan portfolio $9,743,509  $89,675  0.92%
Commercial:      
Franchise $222,001  $3,145  1.42%
Mortgage warehouse lines of credit 136,614  1,022  0.75 
Community Advantage - homeowner associations 123,209  3   
Aircraft 6,371  8  0.13 
Purchased non-covered commercial loans (2) 97,038  171  0.18 
Commercial real estate:      
Purchased non-covered commercial real estate (2) 591,968  812  0.14 
Purchased non-covered home equity (2) 103,262  18  0.02 
Purchased non-covered residential real-estate (2) 52,987  6  0.01 
Premium finance receivables      
U.S. commercial insurance loans 2,127,969  5,458  0.26 
Canada commercial insurance loans (2) 279,106  583  0.21 
Life insurance loans (1) 2,326,689  1,040  0.04 
Purchased life insurance loans (2) 373,586     
Consumer and other (1) 127,011  1,054  0.83 
Purchased non-covered consumer and other (2) 4,891  1  0.02 
Total consumer, niche and purchased loan portfolio $6,572,702  $13,321  0.20%
Total loans, net of unearned income, excluding covered loans $16,316,211  $102,996  0.63%
Non-accretable credit discounts on purchased loans reported in accordance with ASC 310-30, excluding covered loans   30,405   
Total allowance for loan losses and non-accretable credit discounts on purchased loans, excluding covered loans   $133,401  0.82%

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

As part of the regular quarterly review performed by management to determine if the Company’s allowance for loan losses is appropriate, an analysis is prepared on the loan portfolio based upon a breakout of core loans and consumer, niche and purchased loans. A summary of the allowance for loan losses calculated for the loan components in both the core loan portfolio and the consumer, niche and purchased loan portfolio was shown on the previous pages as of December 31, 2015 and September 30, 2015.

The decrease in the allowance for loan losses to core loans in the fourth quarter of 2015 compared to the third quarter of 2015 was attributable to a smaller population of core loans requiring ASC 310 reserves (specific reserves). Loans requiring ASC 450 reserves typically have lower reserve factors as compared to core loans requiring ASC 310 reserves. ASC 310 reserves are maintained on impaired loans.

Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date.  In accordance with accounting guidance, credit deterioration on purchased loans is recorded as a credit discount at the time of purchase instead of as an increase to the allowance for loan losses.  For analysis purposes, the Company has combined the non-accretable credit discounts recorded on purchased loans with the total allowance for loan losses in the previous tables to present the total credit reserves available on its loan portfolio.  The total allowance for loan losses and non-accretable credit discounts on purchased loans was 0.79% of the total loan portfolio as of December 31, 2015 as compared to 0.82% as of September 30, 2015.  The Company expects the total allowance for loan losses and non-accretable credit discounts on purchased loans to total loans ratio to increase in periods that have acquisitions and decrease in periods without acquisitions, based on the performance of the purchased loan portfolios.

The table below shows the aging of the Company’s loan portfolio at December 31, 2015:

    90+ days 60-89 30-59    
As of December 31, 2015   and still days past days past    
(Dollars in thousands) Nonaccrual accruing due due Current Total Loans
Loan Balances:            
Commercial            
Commercial and industrial $12,416  $6  $6,749  $33,680  $2,798,503  $2,851,354 
Franchise         245,228  245,228 
Mortgage warehouse lines of credit         222,806  222,806 
Community Advantage - homeowners association         130,986  130,986 
Aircraft 288        5,039  5,327 
Asset-based lending 8    3,864  1,844  736,968  742,684 
Tax exempt         267,273  267,273 
Leases   535  748  4,192  220,599  226,074 
Other         3,588  3,588 
PCI - commercial (1)   892    2,510  15,187  18,589 
Total commercial 12,712  1,433  11,361  42,226  4,646,177  4,713,909 
Commercial real estate            
Residential construction 273      45  70,063  70,381 
Commercial construction 33    1,371  1,600  285,275  288,279 
Land 1,751      120  76,546  78,417 
Office 4,619    764  3,817  853,801  863,001 
Industrial 9,564    1,868  1,009  715,207  727,648 
Retail 1,760    442  2,310  863,887  868,399 
Multi-family 1,954    597  6,568  733,230  742,349 
Mixed use and other 6,691    6,723  18,835  1,700,567  1,732,816 
PCI - commercial real estate (1)   22,111  4,662  16,559  114,667  157,999 
Total commercial real estate 26,645  22,111  16,427  50,863  5,413,243  5,529,289 
Home equity 6,848    1,889  5,517  770,421  784,675 
Residential real estate 12,043    1,964  3,824  586,154  603,985 
PCI - residential real estate (1)   488  202  79  2,697  3,466 
Premium finance receivables            
Commercial insurance loans 14,561  10,294  6,624  21,656  2,321,786  2,374,921 
Life insurance loans     3,432  11,140  2,578,632  2,593,204 
PCI - life insurance loans (1)         368,292  368,292 
Consumer and other, including PCI 263  211  204  1,187  144,511  146,376 
Total loans, net of unearned income, excluding covered loans $73,072  $34,537  $42,103  $136,492  $16,831,913  $17,118,117 
Covered loans 5,878  7,335  703  5,774  128,983  148,673 
Total loans, net of unearned income $78,950  $41,872  $42,806  $142,266  $16,960,896  $17,266,790 

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

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 0.4% % 0.2% 1.2% 98.2% 100.0%
Franchise         100.0  100.0 
Mortgage warehouse lines of credit         100.0  100.0 
Community Advantage - homeowners association         100.0  100.0 
Aircraft 5.4        94.6  100.0 
Asset-based lending     0.5  0.3  99.2  100.0 
Tax exempt         100.0  100.0 
Leases   0.2  0.3  1.9  97.6  100.0 
Other         100.0  100.0 
PCI - commercial (1)   4.8    13.5  81.7  100.0 
Total commercial 0.3    0.2  0.9  98.6  100.0 
Commercial real estate            
Residential construction 0.4      0.1  99.5  100.0 
Commercial construction     0.5  0.6  98.9  100.0 
Land 2.2      0.2  97.6  100.0 
Office 0.5    0.1  0.4  99.0  100.0 
Industrial 1.3    0.3  0.1  98.3  100.0 
Retail 0.2    0.1  0.3  99.4  100.0 
Multi-family 0.3    0.1  0.9  98.7  100.0 
Mixed use and other 0.4    0.4  1.1  98.1  100.0 
PCI - commercial real estate (1)   14.0  3.0  10.5  72.5  100.0 
Total commercial real estate 0.5  0.4  0.3  0.9  97.9  100.0 
Home equity 0.9    0.2  0.7  98.2  100.0 
Residential real estate 2.0    0.3  0.6  97.1  100.0 
PCI - residential real estate(1)   14.1  5.8  2.3  77.8  100.0 
Premium finance receivables            
Commercial insurance loans 0.6  0.4  0.3  0.9  97.8  100.0 
Life insurance loans     0.1  0.4  99.5  100.0 
PCI - life insurance loans (1)         100.0  100.0 
Consumer and other, including PCI 0.2  0.1  0.1  0.8  98.8  100.0 
Total loans, net of unearned income, excluding covered loans 0.4% 0.2% 0.2% 0.8% 98.4% 100.0%
Covered loans 4.0  4.9  0.5  3.9  86.7  100.0 
Total loans, net of unearned income 0.5% 0.2% 0.2% 0.8% 98.3% 100.0%

As of December 31, 2015, $42.1 million of all loans, excluding covered loans, or 0.2%, were 60 to 89 days past due and $136.5 million, or 0.8%, were 30 to 59 days (or one payment) past due. As of September 30, 2015, $39.0 million of all loans, excluding covered loans, or 0.2%, were 60 to 89 days past due and $57.4 million, or 0.4%, 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, 2015 that are current with regard to the contractual terms of the loan agreement represent 98.2% of the total home equity portfolio. Residential real estate loans at December 31, 2015 that are current with regards to the contractual terms of the loan agreements comprise 96.9% of total residential real estate loans outstanding, which includes purchased non-covered residential real-estate.

The table below shows the aging of the Company’s loan portfolio at September 30, 2015:

    90+ days 60-89 30-59    
As of September 30, 2015   and still days past days past    
(Dollars in thousands) Nonaccrual accruing due due Current Total Loans
Loan Balances:            
Commercial            
Commercial and industrial $12,006  $  $2,731  $9,331  $2,622,207  $2,646,275 
Franchise     80  376  221,545  222,001 
Mortgage warehouse lines of credit         136,614  136,614 
Community Advantage - homeowners association     44    123,165  123,209 
Aircraft       378  5,993  6,371 
Asset-based lending 12    1,313  247  800,798  802,370 
Tax exempt         232,667  232,667 
Leases       89  205,697  205,786 
Other         1,953  1,953 
PCI - commercial (1)   217    39  22,683  22,939 
Total commercial 12,018  217  4,168  10,460  4,373,322  4,400,185 
Commercial real estate            
Residential construction       1,141  60,130  61,271 
Commercial construction 31      2,394  283,538  285,963 
Land 1,756      2,207  75,113  79,076 
Office 4,045    10,861  2,362  773,043  790,311 
Industrial 11,637    786  897  622,804  636,124 
Retail 2,022    1,536  821  781,463  785,842 
Multi-family 1,525    512  744  684,878  687,659 
Mixed use and other 7,601    2,340  12,871  1,797,516  1,820,328 
PCI - commercial real estate (1)   13,547  299  583  146,563  160,992 
Total commercial real estate 28,617  13,547  16,334  24,020  5,225,048  5,307,566 
Home equity 8,365    811  4,124  784,165  797,465 
Residential real estate 14,557    1,017  1,195  551,292  568,061 
PCI - residential real estate (1)   424  323  411  2,524  3,682 
Premium finance receivables            
Commercial insurance loans 13,751  8,231  6,664  13,659  2,364,770  2,407,075 
Life insurance loans     9,656  2,627  2,314,406  2,326,689 
PCI - life insurance loans (1)         373,586  373,586 
Consumer and other, including PCI 297  140  56  935  130,474  131,902 
Total loans, net of unearned income, excluding covered loans $77,605  $22,559  $39,029  $57,431  $16,119,587  $16,316,211 
Covered loans 6,540  7,626  1,392  802  152,249  168,609 
Total loans, net of unearned income $84,145  $30,185  $40,421  $58,233  $16,271,836  $16,484,820 

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

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 0.5% % 0.1% 0.4% 99.0% 100.0%
Franchise       0.2  99.8  100.0 
Mortgage warehouse lines of credit         100.0  100.0 
Community Advantage - homeowners association         100.0  100.0 
Aircraft       5.9  94.1  100.0 
Asset-based lending     0.2    99.8  100.0 
Tax exempt         100.0  100.0 
Leases         100.0  100.0 
Other         100.0  100.0 
PCI - commercial(1)   0.9    0.2  98.9  100.0 
Total commercial 0.3    0.1  0.2  99.4  100.0 
Commercial real estate            
Residential construction       1.9  98.1  100.0 
Commercial construction       0.8  99.2  100.0 
Land 2.2      2.8  95.0  100.0 
Office 0.5    1.4  0.3  97.8  100.0 
Industrial 1.8    0.1  0.1  98.0  100.0 
Retail 0.3    0.2  0.1  99.4  100.0 
Multi-family 0.2    0.1  0.1  99.6  100.0 
Mixed use and other 0.4    0.1  0.7  98.8  100.0 
PCI - commercial real estate (1)   8.4  0.2  0.4  91.0  100.0 
Total commercial real estate 0.5  0.3  0.3  0.5  98.4  100.0 
Home equity 1.0    0.1  0.5  98.4  100.0 
Residential real estate 2.6    0.2  0.2  97.0  100.0 
PCI - residential real estate (1)   11.5  8.8  11.2  68.5  100.0 
Premium finance receivables            
Commercial insurance loans 0.6  0.4  0.3  0.6  98.1  100.0 
Life insurance loans     0.4  0.1  99.5  100.0 
PCI - life insurance loans (1)         100.0  100.0 
Consumer and other, including PCI 0.2  0.1    0.7  99.0  100.0 
Total loans, net of unearned income, excluding covered loans 0.5% 0.1% 0.2% 0.4% 98.8% 100.0%
Covered loans 3.9  4.5  0.8  0.5  90.3  100.0 
Total loans, net of unearned income 0.5% 0.2% 0.2% 0.4% 98.7% 100.0%

Non-performing Assets, excluding covered assets

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

  December 31, September 30, December 31,
(Dollars in thousands) 2015 2015 2014
Loans past due greater than 90 days and still accruing (1):      
Commercial $541  $  $474 
Commercial real estate      
Home equity      
Residential real estate      
Premium finance receivables - commercial 10,294  8,231  7,665 
Premium finance receivables - life insurance      
Consumer and other 150  140  119 
Total loans past due greater than 90 days and still accruing 10,985  8,371  8,258 
Non-accrual loans (2):      
Commercial 12,712  12,018  9,157 
Commercial real estate 26,645  28,617  26,605 
Home equity 6,848  8,365  6,174 
Residential real estate 12,043  14,557  15,502 
Premium finance receivables - commercial 14,561  13,751  12,705 
Premium finance receivables - life insurance      
Consumer and other 263  297  277 
Total non-accrual loans 73,072  77,605  70,420 
Total non-performing loans:      
Commercial 13,253  12,018  9,631 
Commercial real estate 26,645  28,617  26,605 
Home equity 6,848  8,365  6,174 
Residential real estate 12,043  14,557  15,502 
Premium finance receivables - commercial 24,855  21,982  20,370 
Premium finance receivables - life insurance      
Consumer and other 413  437  395 
Total non-performing loans $84,057  $85,976  $78,677 
Other real estate owned 26,849  29,053  36,419 
Other real estate owned - from acquisition 17,096  22,827  9,223 
Other repossessed assets $174  $193  $303 
Total non-performing assets $128,176  $138,049  $124,622 
TDRs performing under the contractual terms of the loan agreement $42,744  $49,173  $69,697 
Total non-performing loans by category as a percent of its own respective category’s period-end balance:      
Commercial 0.28% 0.27% 0.25%
Commercial real estate 0.48  0.54  0.59 
Home equity 0.87  1.05  0.86 
Residential real estate 1.98  2.55  3.21 
Premium finance receivables - commercial 1.05  0.91  0.87 
Premium finance receivables - life insurance      
Consumer and other 0.28  0.33  0.26 
Total loans, net of unearned income 0.49% 0.53% 0.55%
Total non-performing assets as a percentage of total assets 0.56% 0.63% 0.62%
Allowance for loan losses as a percentage of total non-performing loans 125.39% 119.79% 116.56%

(1) As of the dates shown, no TDRs were past due greater than 90 days and still accruing interest.
(2) Non-accrual loans included TDRs totaling $9.1 million, $10.1 million and $12.6 million as of December 31, 2015, September 30, 2015 and December 31, 2014, respectively.

Non-performing Commercial and Commercial Real Estate

Non-performing commercial and commercial real estate totaled $39.9 million as of December 31, 2015 compared to $40.6 million as of September 30, 2015 and $36.2 million as of December 31, 2014.

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 $18.9 million as of December 31, 2015. The balance decreased  $4.0 million from September 30, 2015 and decreased $2.8 million from December 31, 2014. The December 31, 2015 non-performing balance is comprised of $12.0 million of residential real estate (61 individual credits) and $6.8 million of home equity loans (45 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, 2015, September 30, 2015 and December 31, 2014 and the amount of net charge-offs for the quarters then ended.

  December 31, September 30, December 31,
(Dollars in thousands) 2015 2015 2014
Non-performing premium finance receivables - commercial $24,855  $21,982  $20,370 
- as a percent of premium finance receivables - commercial outstanding 1.05% 0.91% 0.87%
Net charge-offs (recoveries) of premium finance receivables - commercial $2,453  $1,317  $1,244 
- annualized as a percent of average premium finance receivables - commercial 0.41% 0.21% 0.21%

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 are expected 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. 

Nonperforming Loans Rollforward

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

  Three Months Ended Years Ended
  December 31, September 30, December 31, December 31, December 31,
(Dollars in thousands) 2015 2015 2014 2015 2014
Balance at beginning of period $85,976  $76,554  $81,070  $78,677  $103,334 
Additions, net 5,983  24,333  6,797  48,124  37,984 
Return to performing status (1,152) (1,028) (1,533) (3,743) (8,345)
Payments received (6,387) (5,468) (3,426) (22,804) (15,031)
Transfer to OREO and other repossessed assets (1,903) (1,773) (866) (10,581) (23,402)
Charge-offs (1,882) (4,081) (3,032) (10,519) (17,159)
Net change for niche loans (1) 3,422  (2,561) (333) 4,903  1,296 
Balance at end of period $84,057  $85,976  $78,677  $84,057  $78,677 

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

TDRs

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

  December 31, September 30, December 31,
(Dollars in thousands) 2015 2015 2014
Accruing TDRs:      
Commercial $5,613  $5,717  $6,654 
Commercial real estate 32,777  39,867  60,120 
Residential real estate and other 4,354  3,589  2,923 
Total accrual $42,744  $49,173  $69,697 
Non-accrual TDRs: (1)      
Commercial $134  $147  $922 
Commercial real estate 5,930  5,778  7,503 
Residential real estate and other 3,045  4,222  4,153 
Total non-accrual $9,109  $10,147  $12,578 
Total TDRs:      
Commercial $5,747  $5,864  $7,576 
Commercial real estate 38,707  45,645  67,623 
Residential real estate and other 7,399  7,811  7,076 
Total TDRs $51,853  $59,320  $82,275 
Weighted-average contractual interest rate of TDRs 4.13% 4.04% 4.09%

(1) Included in total non-performing loans.

At December 31, 2015, the Company had $51.9 million in loans classified as TDRs.  The $51.9 million in TDRs represents 102 credits in which economic concessions were granted to certain borrowers to better align the terms of their loans with their current ability to pay.  The balance decreased from $59.3 million representing 114 credits at September 30, 2015 and decreased from $82.3 million representing 145 credits at December 31, 2014.

The table below presents a summary of TDRs as of December 31, 2015 and December 31, 2014, and shows the changes in the balance during the periods presented:

Three Months Ended December 31, 2015
 
(Dollars in thousands) Commercial Commercial
Real Estate
 Residential
Real Estate
and Other
 Total
Balance at beginning of period $5,864  $45,645  $7,811  $59,320 
Additions during the period   201    201 
Reductions:        
Charge-offs   (1,707) (48) (1,755)
Transferred to OREO and other repossessed assets     (135) (135)
Removal of TDR loan status (1) (19) (2,868)   (2,887)
Payments received (98) (2,564) (229) (2,891)
Balance at period end $5,747  $38,707  $7,399  $51,853 


Three Months Ended December 31, 2014
 
(Dollars in thousands) Commercial Commercial
Real Estate
 Residential
Real Estate
and Other
 Total
Balance at beginning of period $6,444  $70,441  $6,500  $83,385 
Additions during the period 1,461  1,405  949  3,815 
Reductions:        
Charge-offs   (559)   (559)
Transferred to OREO and other repossessed assets        
Removal of TDR loan status (1)        
Payments received (329) (3,664) (373) (4,366)
Balance at period end $7,576  $67,623  $7,076  $82,275 


Year Ended December 31, 2015
 
(Dollars in thousands) Commercial Commercial
Real Estate
 Residential
Real Estate
and Other
 Total
Balance at beginning of period $7,576  $67,623  $7,076  $82,275 
Additions during the period   370  1,664  2,034 
Reductions:        
Charge-offs (397) (1,975) (140) (2,512)
Transferred to OREO and other repossessed assets (562) (2,290) (414) (3,266)
Removal of TDR loan status (1) (490) (13,019)   (13,509)
Payments received (380) (12,002) (787) (13,169)
Balance at period end $5,747  $38,707  $7,399  $51,853 

(1) Loan was previously classified as a TDR 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 at the time of a subsequent modification.

Year Ended December 31, 2014
 
(Dollars in thousands) Commercial Commercial
Real Estate
 Residential
Real Estate
and Other
 Total
Balance at beginning of period $7,388  $93,535  $6,180  $107,103 
Additions during the period 1,549  8,582  1,836  11,967 
Reductions:        
Charge-offs (51) (6,875) (479) (7,405)
Transferred to OREO and other repossessed assets (252) (16,057)   (16,309)
Removal of TDR loan status (1) (383)     (383)
Payments received (675) (11,562) (461) (12,698)
Balance at period end $7,576  $67,623  $7,076  $82,275 

(1) Loan was previously classified as a TDR 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 at the time of a subsequent modification.

Each TDR was reviewed for impairment at December 31, 2015 and approximately $1.8 million of impairment was present and appropriately reserved for through the Company’s normal reserving methodology in the Company’s allowance for loan losses.  For TDRs in which impairment is calculated by the present value of future cash flows, the Company records interest income representing the decrease in impairment resulting from the passage of time during the respective period, which differs from interest income from contractually required interest on these specific loans.  For the three months ended December 31, 2015 and 2014, the Company recorded $188,000 and $195,000, respectively, in interest income representing this decrease in impairment.  For the year ended December 31, 2015 and 2014, the Company recorded $573,000 and $724,000, respectively, in interest income representing this decrease in impairment.

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, 2015, September 30, 2015 and December 31, 2014, 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) 2015 2015 2014
Balance at beginning of period $51,880  $42,080  $50,377 
Disposals/resolved (9,156) (7,611) (4,367)
Transfers in at fair value, less costs to sell 2,345  6,159  1,641 
Transfers in from covered OREO subsequent to loss share expiration 69  7,316   
Additions from acquisition   4,617   
Fair value adjustments (1,193) (681) (2,009)
Balance at end of period $43,945  $51,880  $45,642 
       
  Period End
  December 31, September 30, December 31,
Balance by Property Type 2015 2015 2014
Residential real estate $11,322  $12,577  $7,779 
Residential real estate development 2,914  3,147  3,245 
Commercial real estate 29,709  36,156  34,618 
Total $43,945  $51,880  $45,642 

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 and require the Company to record loss share assets and liabilities that 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 and liabilities are also separately measured from the related loans and foreclosed real estate and recorded on the Consolidated Statements of Condition. Subsequent to the acquisition date, reimbursements received from the FDIC for actual incurred losses will reduce any loss share assets. 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 also reduce any loss share asset and, if necessary, increase any loss share liability when necessary reductions exceed the current value of the loss share asset. The increases in cash flows for the purchased loans are recognized as interest income prospectively. In accordance with clawback provisions included in loss share agreements with the FDIC, the Company may be required to reimburse the FDIC when actual losses are less than certain thresholds established for each loss share agreement. The balance of these estimated reimbursements in accordance with clawback provisions and any related amortization are adjusted periodically for changes in the expected losses on covered assets. Estimated reimbursements from clawback provisions are recorded as a reduction to the loss share asset or, if necessary, an increase to the loss share liability on the Consolidated Statements of Condition. 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.

The following table provides a comparative analysis for the period end balances of covered assets and any changes in the allowance for covered loan losses.  The Company expects covered assets and the allowance for covered loan losses to continue to decrease in periods without FDIC-assisted acquisitions.

  December 31, September 30, December 31,
(Dollars in thousands) 2015 2015 2014
Period End Balances:      
Loans $148,673  $168,609  $226,709 
Other real estate owned 21,383  28,644  42,283 
Other assets 411  686  757 
FDIC Indemnification (liability) asset (6,100) (3,033) 11,846 
Total covered assets $164,367  $194,906  $281,595 
Allowance for Covered Loan Losses Rollforward:      
Balance at beginning of quarter: $2,918  $2,215  $2,655 
Provision for covered loan losses before benefit attributable to FDIC loss share agreements (2,011) (1,716) (3,059)
Benefit attributable to FDIC loss share agreements 1,874  1,373  2,448 
Net provision for covered loan losses (137) (343) (611)
Decrease in FDIC indemnification asset (1,874) (1,373) (2,448)
Loans charged-off (163) (287) (175)
Recoveries of loans charged-off 2,282  2,706  2,710 
Net recoveries 2,119  2,419  2,535 
Balance at end of quarter $3,026  $2,918  $2,131 

Changes in Accretable Yield

The excess of cash flows expected to be collected over the carrying value of loans accounted for under ASC 310-30 is referred to as the accretable yield and is recognized in interest income using an effective yield method over the remaining life of the pool of loans. The accretable yield is affected by:

  • Changes in interest rate indices for variable rate loans accounted for under ASC 310-30 – Expected future cash flows are based on the variable rates in effect at the time of the regular evaluations of cash flows expected to be collected;
  • Changes in prepayment assumptions – Prepayments affect the estimated life of loans accounted for under ASC 310-30 which may change the amount of interest income, and possibly principal, expected to be collected; and
  • Changes in the expected principal and interest payments over the estimated life – Updates to expected cash flows are driven by the credit outlook and actions taken with borrowers. Changes in expected future cash flows from loan modifications are included in the regular evaluations of cash flows expected to be collected.

The following table provides activity for the accretable yield of loans accounted for under ASC 310-30.

  Three Months Ended Year Ended
  December 31, December 31, December 31, December 31,
(Dollars in thousands) 2015 2014 2015 2014
Accretable yield, beginning balance $65,207  $87,031  $79,102  $115,909 
Acquisitions     9,993   
Accretable yield amortized to interest income (5,756) (7,454) (24,115) (36,956)
Accretable yield amortized to indemnification asset(1) (2,550) (5,098) (13,495) (30,691)
Reclassification from non-accretable difference(2) 2,236  6,690  7,390  35,967 
(Decreases) increases in interest cash flows due to payments and changes in interest rates 4,765  (2,067) 5,027  (5,127)
Accretable yield, ending balance (3) $63,902  $79,102  $63,902  $79,102 

(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, 2015, the Company estimates that the remaining accretable yield balance to be amortized to the indemnification asset for the bank acquisitions is $6.6 million. The remainder of the accretable yield related to bank acquisitions is expected to be amortized to interest income.

Accretion to interest income accounted for under ASC 310-30 totaled $5.8 million and $7.5 million in the fourth quarter of 2015 and 2014, respectively. For the years ended December 31, 2015 and 2014, the Company recorded accretion to interest income of $24.1 million and $37.0 million, respectively. These amounts include accretion from both covered and non-covered loans, and are included together within interest and fees on loans in the Consolidated Statements of Income.

Items Impacting Comparative Financial Results:

Acquisitions

On July 24, 2015, the Company completed its acquisition of Community Financial Shares, Inc ("CFIS"). CFIS was the parent company of Community Bank - Wheaton/Glen Ellyn ("CBWGE"). Through this transaction, prior to purchase accounting adjustments, the Company acquired CBWGE's four banking locations in Wheaton and Glen Ellyn, Illinois, approximately $327 million in assets and approximately $301 million in deposits.

On July 17, 2015, the Company completed its acquisition of Suburban Illinois Bancorp, Inc. ("Suburban"). Suburban was the parent company of Suburban Bank & Trust Company ("SBT"). Through this transaction, prior to purchase accounting adjustments, the Company acquired SBT's ten banking locations in Chicago and its suburbs, approximately $480 million in assets and approximately $417 million in deposits.

On July 1, 2015, the Company, through its wholly-owned subsidiary Wintrust Bank, completed its acquisition of North Bank.  Through this transaction, prior to purchase accounting adjustments, Wintrust Bank acquired two banking locations, $112 million in assets and approximately $100 million in deposits.

On January 16, 2015, the Company completed its acquisition of Delavan Bancshares, Inc. ("Delavan"). Delavan was the parent company of Community Bank CBD. Through this transaction, Town Bank acquired four banking locations, approximately $224 million in assets and approximately $170 million in deposits.

On August 8, 2014, the Company, through its subsidiary Town Bank, completed its acquisition of certain branch offices and deposits of Talmer Bank & Trust. Through this transaction, Town Bank acquired 11 branch offices and approximately $355 million in deposits.

On July 11, 2014, the Company, through its subsidiary Town Bank, completed its acquisition of the Pewaukee, Wisconsin branch of THE National Bank. In addition to the banking facility,  Town Bank acquired approximately $75 million in loans and approximately $36 million in deposits.

On May 16, 2014, the Company, through its subsidiary Hinsdale Bank and Trust Company ("Hinsdale Bank"), completed its acquisition of the Stone Park branch office and certain related deposits of Urban Partnership Bank.

On April 28, 2014, the Company, through its subsidiary First Insurance Funding of Canada, Inc., completed its acquisition of 100% of the shares of each of Policy Billing Services Inc. and Equity Premium Finance Inc., two affiliated Canadian insurance premium funding and payment services companies.

On February 28, 2014, the Company, through its subsidiary Lake Forest Bank and Trust Company ("Lake Forest Bank"), completed its acquisition of a bank branch from Baytree National Bank & Trust Company.  In addition to the banking facility, Lake Forest Bank acquired certain assets and approximately $15 million of deposits.

Announced Acquisition

On January 14, 2016, the Company announced the signing of a definitive agreement to acquire Generations Bancorp, Inc. ("Generations"), subject to regulatory approval and other closing conditions. Generations is the parent company of Foundations Bank which operated one banking location in Pewaukee, Wisconsin.  As of September 30, 2015, Foundations had approximately $72 million in loans and approximately $97 million in deposits.

WINTRUST SUBSIDIARIES AND LOCATIONS

Wintrust is a financial holding company whose common stock is traded on the Nasdaq Global Select Market (Nasdaq:WTFC). Its 15 community bank subsidiaries are: Lake Forest Bank & Trust Company, Hinsdale Bank & Trust Company, Wintrust Bank in Chicago, Libertyville Bank & Trust Company, Barrington Bank & Trust Company, N.A., Crystal Lake Bank & Trust Company, N.A., Northbrook Bank & Trust Company, Schaumburg Bank & Trust Company, N.A., Village Bank & Trust in Arlington Heights, Beverly Bank & Trust Company, N.A. in Chicago, Wheaton Bank & Trust Company, State Bank of The Lakes in Antioch, Old Plank Trail Community Bank, N.A. in New Lenox, St. Charles Bank & Trust Company and Town Bank in Hartland, Wisconsin. The banks also operate facilities in Illinois in Algonquin, Aurora, Bloomingdale, Buffalo Grove, Cary, Chicago, Clarendon Hills, Crete, Deerfield, Des Plaines, Downers Grove, Elgin, Elk Grove Village, Elmhurst, Evergreen Park, Frankfort, Geneva, Glen Ellyn, Glencoe, Glenview, Gurnee, Grayslake, Hanover Park, Highland Park, Highwood, Hoffman Estates, Island Lake, Itasca, Joliet, Lake Bluff, Lake Villa, Lansing, Lemont, Lindenhurst, Lynwood, Markham, McHenry, Mokena, Mount Prospect, Mundelein, Naperville, North Chicago, Northfield, Norridge, Oak Lawn, Orland Park, Palatine, Park Ridge, Plainfield, Prospect Heights, Ravinia, Riverside, Rogers Park, Roselle, Round Lake Beach, Shorewood, Skokie, South Holland, Spring Grove, Steger, Stone Park, Vernon Hills, Wauconda, Western Springs, Willowbrook, Wilmette, Winnetka and Wood Dale and in Albany, Burlington, Clinton, Darlington, Delafield, Delavan, Elm Grove, Genoa City, Kenosha, Lake Geneva, Madison, Menomenee Falls, Milwaukee, Monroe, Pewaukee, Sharon, Wales, Walworth and Wind Lake, Wisconsin and Dyer, Indiana.

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

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

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 2014 Annual Report on Form 10-K and in any of the Company’s subsequent SEC filings. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of invoking these safe harbor provisions. Such forward-looking statements may be deemed to include, among other things, statements relating to the Company’s future financial performance, the performance of its loan portfolio, the expected amount of future credit reserves and charge-offs, delinquency trends, growth plans, regulatory developments, securities that the Company may offer from time to time, and management’s long-term performance goals, as well as statements relating to the anticipated effects on financial condition and results of operations from expected developments or events, the Company’s business and growth strategies, including future acquisitions of banks, specialty finance or wealth management businesses, internal growth and plans to form additional de novo banks or branch offices. Actual results could differ materially from those addressed in the forward-looking statements as a result of numerous factors, including the following:

  • negative economic conditions that adversely affect the economy, housing prices, the job market and other factors that may affect the Company’s liquidity and the performance of its loan portfolios, particularly in the markets in which it operates;
  • the extent of defaults and losses on the Company’s loan portfolio, which may require further increases in its allowance for credit losses;
  • estimates of fair value of certain of the Company’s assets and liabilities, which could change in value significantly from period to period;
  • the financial success and economic viability of the borrowers of our commercial loans;
  • market conditions in the commercial real estate market in the Chicago metropolitan area and southern Wisconsin;
  • the extent of commercial and consumer delinquencies and declines in real estate values, which may require further increases in the Company’s allowance for loan and lease losses;
  • inaccurate assumptions in our analytical and forecasting models used to manage our loan portfolio;
  • changes in the level and volatility of interest rates, the capital markets and other market indices that may affect, among other things, the Company’s liquidity and the value of its assets and liabilities;
  • competitive pressures in the financial services business which may affect the pricing of the Company’s loan and deposit products as well as its services (including wealth management services);
  • 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 to raise additional capital on acceptable terms when needed;
  • disruption in capital markets, which may lower fair values for the Company’s investment portfolio;
  • ability 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;
  • adverse effects of failures by our vendors to provide agreed upon services in the manner and at the cost agreed, particularly our information technology vendors;
  • increased costs as a result of protecting our customers from the impact of stolen debit card information;
  • accuracy and completeness of information the Company receives about customers and counterparties to make credit decisions;
  • ability of the Company to attract and retain senior management experienced in the banking and financial services industries;
  • environmental liability risk associated with lending activities;
  • the impact of any claims or legal actions, including any effect on our reputation;
  • 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 expenses and delayed returns inherent in opening new branches and de novo banks;
  • examinations and challenges by tax authorities;
  • changes in accounting standards, rules and interpretations and the impact on the Company’s financial statements;
  • the ability of the Company to receive dividends from its subsidiaries;
  • a decrease in the Company’s regulatory capital ratios, including as a result of further declines in the value of its loan portfolios, or otherwise;
  • legislative or regulatory changes, particularly changes in regulation of financial services companies and/or the products and services offered by financial services companies, including those resulting from the Dodd-Frank Act;
  • a lowering of our credit rating;
  • changes in U.S. monetary policy;
  • restrictions upon our ability to market our products to consumers and limitations on our ability to profitably operate our mortgage business resulting from the Dodd-Frank Act;
  • increased costs of compliance, heightened regulatory capital requirements and other risks associated with changes in regulation and the current regulatory environment, including the Dodd-Frank Act;
  • the impact of heightened capital requirements;
  • increases in the Company’s FDIC insurance premiums, or the collection of special assessments by the FDIC;
  • delinquencies or fraud with respect to the Company’s premium finance business;
  • credit downgrades among commercial and life insurance providers that could negatively affect the value of collateral securing the Company’s premium finance loans;
  • delinquencies or fraud with respect to the Company's commercial equipment finance and leasing business;
  • the Company’s ability to comply with covenants under its credit facility; and
  • fluctuations in the stock market, which may have an adverse impact on the Company’s wealth management business and brokerage operation. 

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

CONFERENCE CALL, WEB CAST AND REPLAY

The Company will hold a conference call at 2:00 p.m. (CT) Tuesday, January 19, 2016 regarding fourth quarter and year-to-date 2015 results. Individuals interested in listening should call (877) 363-5049 and enter Conference ID #16980114. 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 and year-to-date 2015 earnings press release will be available on the home page of the Company’s website at (http://www.wintrust.com) and at the Investor Relations, Investor News and Events, Press Releases link on its website.

WINTRUST FINANCIAL CORPORATION

Supplemental Financial Information

5 Quarter Trends

WINTRUST FINANCIAL CORPORATION - Supplemental Financial Information
Selected Financial Highlights - 5 Quarter Trends
(Dollars in thousands, except per share data)
 
  Three Months Ended
  December 31, 2015 September 30, 2015 June 30,
2015
 March 31,
2015
 December 31, 2014
Selected Financial Condition Data (at end of period):          
Total assets $22,917,166  $22,043,930  $20,799,924  $20,382,271  $20,010,727 
Total loans, excluding loans held-for-sale and covered loans 17,118,117  16,316,211  15,513,650  14,953,059  14,409,398 
Total deposits 18,639,634  18,228,469  17,082,418  16,938,769  16,281,844 
Junior subordinated debentures 268,566  268,566  249,493  249,493  249,493 
Total shareholders’ equity 2,352,274  2,335,736  2,264,982  2,131,074  2,069,822 
Selected Statements of Income Data:          
Net interest income 167,206  165,540  156,892  151,891  153,719 
Net revenue (1) 232,296  230,493  233,905  216,432  211,376 
Net income 35,512  38,355  43,831  39,052  38,133 
Net income per common share – Basic $0.66  $0.71  $0.89  $0.79  $0.78 
Net income per common share – Diluted $0.64  $0.69  $0.85  $0.76  $0.75 
Selected Financial Ratios and Other Data:          
Performance Ratios:          
Net interest margin (2) 3.29% 3.33% 3.41% 3.42% 3.46%
Non-interest income to average assets 1.16% 1.19% 1.52% 1.32% 1.18%
Non-interest expense to average assets 2.98% 2.93% 3.06% 3.01% 2.94%
Net overhead ratio (2) (3) 1.82% 1.74% 1.53% 1.69% 1.76%
Efficiency ratio - FTE (2) (4) 71.39% 69.02% 65.64% 67.90% 67.59%
Return on average assets 0.63% 0.70% 0.87% 0.80% 0.78%
Return on average common equity 6.03% 6.60% 8.38% 7.64% 7.51%
Return on average tangible common equity (2) 8.12% 8.88% 10.86% 9.96% 9.82%
Average total assets $22,233,492  $21,688,450  $20,256,996  $19,826,240  $19,366,670 
Average total shareholders’ equity 2,347,545  2,310,511  2,156,128  2,114,356  2,057,855 
Average loans to average deposits ratio (excluding covered loans) 91.9% 91.9% 92.8% 91.4% 89.5%
Average loans to average deposits ratio (including covered loans) 92.7  92.9  94.0  92.7  91.0 
Common Share Data at end of period:          
Market price per common share $48.52  $53.43  $53.38  $47.68  $46.76 
Book value per common share (2) $43.42  $43.12  $42.24  $42.30  $41.52 
Tangible common book value per share (2) $33.17  $32.83  $33.02  $33.04  $32.45 
Common shares outstanding 48,383,279  48,336,870  47,677,257  47,389,608  46,805,055 
Other Data at end of period:(8)          
Leverage Ratio(5) 9.1% 9.2% 9.8% 9.2% 10.2%
Tier 1 Capital to risk-weighted assets (5) 10.0% 10.3% 10.7% 10.1% 11.6%
Common equity Tier 1 capital to risk-weighted assets (5) 8.4% 8.6% 9.0% 9.1%  N/A 
Total capital to risk-weighted assets (5) 12.2% 12.6% 13.1% 12.5% 13.0%
Tangible common equity ratio (TCE) (2) (7) 7.2% 7.4% 7.7% 7.9% 7.8%
Tangible common equity ratio, assuming full conversion of preferred stock (2) (7) 7.7% 8.0% 8.4% 8.5% 8.4%
Allowance for credit losses (6) $106,349  $103,922  $101,088  $95,334  $92,480 
Non-performing loans 84,057  85,976  76,554  81,772  78,677 
Allowance for credit losses to total loans (6) 0.62% 0.64% 0.65% 0.64% 0.64%
Non-performing loans to total loans 0.49% 0.53% 0.49% 0.55% 0.55%
Number of:          
Bank subsidiaries 15  15  15  15  15 
Banking offices 152  160  147  146  140 

(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. As of January 1, 2015 capital ratios are calculated under the requirements of Basel III
(6) The allowance for credit losses includes both the allowance for loan losses and the allowance for unfunded lending-related commitments, but excluding the allowance for covered loan losses.
(7) Total shareholders’ equity minus preferred stock and total intangible assets divided by total assets minus total intangible assets.
(8) Asset quality ratios exclude covered loans.

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Consolidated Statements of Condition - 5 Quarter Trends
 
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)  
  December 31, September 30, June 30, March 31, December 31,
(In thousands) 2015 2015 2015 2015 2014
Assets          
Cash and due from banks $252,227  $247,341  $248,094  $286,743  $225,136 
Federal funds sold and securities purchased under resale agreements 4,341  3,314  4,115  4,129  5,571 
Interest bearing deposits with banks 627,009  701,106  591,721  697,799  998,437 
Available-for-sale securities, at fair value 1,716,388  2,214,281  2,162,061  1,721,030  1,792,078 
Held-to-maturity securities, at amortized cost 884,826         
Trading account securities 448  3,312  1,597  7,811  1,206 
Federal Home Loan Bank and Federal Reserve Bank stock 101,581  90,308  89,818  92,948  91,582 
Brokerage customer receivables 27,631  28,293  29,753  25,287  24,221 
Mortgage loans held-for-sale 388,038  347,005  497,283  446,355  351,290 
Loans, net of unearned income, excluding covered loans 17,118,117  16,316,211  15,513,650  14,953,059  14,409,398 
Covered loans 148,673  168,609  193,410  209,694  226,709 
Total loans 17,266,790  16,484,820  15,707,060  15,162,753  14,636,107 
Less: Allowance for loan losses 105,400  102,996  100,204  94,446  91,705 
Less: Allowance for covered loan losses 3,026  2,918  2,215  1,878  2,131 
Net loans 17,158,364  16,378,906  15,604,641  15,066,429  14,542,271 
Premises and equipment, net 592,256  587,348  571,498  559,281  555,228 
Lease investments, net 63,170  29,111  13,447  383  426 
FDIC indemnification asset     3,429  10,224  11,846 
Accrued interest receivable and other assets 604,917  637,925  542,897  536,734  501,456 
Trade date securities receivable   277,981    488,063  485,534 
Goodwill 471,761  472,166  421,646  420,197  405,634 
Other intangible assets 24,209  25,533  17,924  18,858  18,811 
Total assets $22,917,166  $22,043,930  $20,799,924  $20,382,271  $20,010,727 
Liabilities and Shareholders’ Equity          
Deposits:          
Non-interest bearing $4,836,420  $4,705,994  $3,910,310  $3,779,609  $3,518,685 
Interest bearing 13,803,214  13,522,475  13,172,108  13,159,160  12,763,159 
Total deposits 18,639,634  18,228,469  17,082,418  16,938,769  16,281,844 
Federal Home Loan Bank advances 859,876  451,330  444,017  416,036  733,050 
Other borrowings 266,019  259,978  261,908  187,006  196,465 
Subordinated notes 140,000  140,000  140,000  140,000  140,000 
Junior subordinated debentures 268,566  268,566  249,493  249,493  249,493 
Trade date securities payable 538  617    2,929  3,828 
Accrued interest payable and other liabilities 390,259  359,234  357,106  316,964  336,225 
Total liabilities 20,564,892  19,708,194  18,534,942  18,251,197  17,940,905 
Shareholders’ Equity:          
Preferred stock 251,287  251,312  251,312  126,427  126,467 
Common stock 48,469  48,422  47,763  47,475  46,881 
Surplus 1,190,988  1,187,407  1,159,052  1,156,542  1,133,955 
Treasury stock (3,973) (3,964) (3,964) (3,948) (3,549)
Retained earnings 928,211  901,652  872,690  835,669  803,400 
Accumulated other comprehensive loss (62,708) (49,093) (61,871) (31,091) (37,332)
Total shareholders’ equity 2,352,274  2,335,736  2,264,982  2,131,074  2,069,822 
Total liabilities and shareholders’ equity $22,917,166  $22,043,930  $20,799,924  $20,382,271  $20,010,727 


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) 2015 2015 2015 2015 2014
Interest income          
Interest and fees on loans $169,501  $167,831  $159,823  $154,676  $157,476 
Interest bearing deposits with banks 493  372  305  316  495 
Federal funds sold and securities purchased under resale agreements   1  1  2  3 
Investment securities 16,405  16,130  14,071  14,400  13,761 
Trading account securities 25  19  51  13  45 
Federal Home Loan Bank and Federal Reserve Bank stock 857  821  785  769  749 
Brokerage customer receivables 206  205  205  181  186 
Total interest income 187,487  185,379  175,241  170,357  172,715 
Interest expense          
Interest on deposits 12,617  12,436  11,996  11,814  12,431 
Interest on Federal Home Loan Bank advances 2,684  2,458  1,812  2,156  2,534 
Interest on other borrowings 1,007  1,045  787  788  313 
Interest on subordinated notes 1,777  1,776  1,777  1,775  1,776 
Interest on junior subordinated debentures 2,196  2,124  1,977  1,933  1,942 
Total interest expense 20,281  19,839  18,349  18,466  18,996 
Net interest income 167,206  165,540  156,892  151,891  153,719 
Provision for credit losses 9,059  8,322  9,482  6,079  6,133 
Net interest income after provision for credit losses 158,147  157,218  147,410  145,812  147,586 
Non-interest income          
Wealth management 18,634  18,243  18,476  18,100  18,649 
Mortgage banking 23,317  27,887  36,007  27,800  24,694 
Service charges on deposit accounts 7,210  7,403  6,474  6,297  6,189 
(Losses) gains on available-for-sale securities, net (79) (98) (24) 524  18 
Fees from covered call options 3,629  2,810  4,565  4,360  2,966 
Trading gains (losses), net 205  (135) 160  (477) (507)
Operating lease income, net 1,973  613  77  65  67 
Other 10,201  8,230  11,278  7,872  5,581 
Total non-interest income 65,090  64,953  77,013  64,541  57,657 
Non-interest expense          
Salaries and employee benefits 99,780  97,749  94,421  90,130  87,633 
Equipment 8,772  8,414  7,847  7,779  7,502 
Equipment on operating lease 1,229  473  67  57  53 
Occupancy, net 13,062  12,066  11,401  12,351  11,600 
Data processing 7,284  8,127  6,081  5,448  5,313 
Advertising and marketing 5,373  6,237  6,406  3,907  3,669 
Professional fees 4,387  4,100  5,074  4,664  4,039 
Amortization of other intangible assets 1,324  1,350  934  1,013  1,171 
FDIC insurance 3,317  3,035  3,047  2,987  2,810 
OREO expenses, net 2,598  (367) 841  1,411  2,320 
Other 19,703  18,790  18,178  17,571  17,331 
Total non-interest expense 166,829  159,974  154,297  147,318  143,441 
Income before taxes 56,408  62,197  70,126  63,035  61,802 
Income tax expense 20,896  23,842  26,295  23,983  23,669 
Net income $35,512  $38,355  $43,831  $39,052  $38,133 
Preferred stock dividends and discount accretion $3,629  $4,079  $1,580  $1,581  $1,580 
Net income applicable to common shares $31,883  $34,276  $42,251  $37,471  $36,553 
Net income per common share - Basic $0.66  $0.71  $0.89  $0.79  $0.78 
Net income per common share - Diluted $0.64  $0.69  $0.85  $0.76  $0.75 
Cash dividends declared per common share $0.11  $0.11  $0.11  $0.11  $0.10 
Weighted average common shares outstanding 48,371  48,158  47,567  47,239  46,734 
Dilutive potential common shares 4,005  4,049  4,156  4,233  4,243 
Average common shares and dilutive common shares 52,376  52,207  51,723  51,472  50,977 


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) 2015 2015 2015 2015 2014
Balance:          
Commercial $4,713,909  $4,400,185  $4,330,344  $4,211,932  $3,924,394 
Commercial real estate 5,529,289  5,307,566  4,850,590  4,710,486  4,505,753 
Home equity 784,675  797,465  712,350  709,283  716,293 
Residential real estate 607,451  571,743  503,015  495,925  483,542 
Premium finance receivables - commercial 2,374,921  2,407,075  2,460,408  2,319,623  2,350,833 
Premium finance receivables - life insurance 2,961,496  2,700,275  2,537,475  2,375,654  2,277,571 
Consumer and other 146,376  131,902  119,468  130,156  151,012 
Total loans, net of unearned income, excluding covered loans $17,118,117  $16,316,211  $15,513,650  $14,953,059  $14,409,398 
Covered loans 148,673  168,609  193,410  209,694  226,709 
Total loans, net of unearned income $17,266,790  $16,484,820  $15,707,060  $15,162,753  $14,636,107 
Mix:          
Commercial 27% 27% 27% 28% 26%
Commercial real estate 32  32  31  31  31 
Home equity 5  5  5  5  5 
Residential real estate 3  3  3  3  3 
Premium finance receivables - commercial 14  15  16  15  16 
Premium finance receivables - life insurance 17  16  16  16  16 
Consumer and other 1  1  1  1  1 
Total loans, net of unearned income, excluding covered loans 99% 99% 99% 99% 98%
Covered loans 1  1  1  1  2 
Total loans, net of unearned income 100% 100% 100% 100% 100%


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) 2015 2015 2015 2015 2014
Balance:          
Non-interest bearing $4,836,420  $4,705,994  $3,910,310  $3,779,609  $3,518,685 
NOW and interest bearing demand deposits 2,390,217  2,231,258  2,240,832  2,262,928  2,236,089 
Wealth Management deposits (1) 1,643,653  1,469,920  1,591,251  1,528,963  1,226,916 
Money Market 4,041,300  4,001,518  3,898,495  3,791,762  3,651,467 
Savings 1,723,367  1,684,007  1,504,654  1,563,752  1,508,877 
Time certificates of deposit 4,004,677  4,135,772  3,936,876  4,011,755  4,139,810 
Total deposits $18,639,634  $18,228,469  $17,082,418  $16,938,769  $16,281,844 
Mix:          
Non-interest bearing 26% 26% 23% 22% 22%
NOW and interest bearing demand deposits 13  12  13  13  14 
Wealth Management deposits (1) 9  8  9  9  8 
Money Market 22  22  23  23  22 
Savings 9  9  9  9  9 
Time certificates of deposit 21  23  23  24  25 
Total deposits 100% 100% 100% 100% 100%

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

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Net Interest Margin (Including Call Option Income) - 5 Quarter Trends
 
  Three Months Ended
  December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands) 2015 2015 2015 2015 2014
Net interest income $168,515  $166,737  $158,034  $152,952  $154,599 
Call option income 3,629  2,810  4,565  4,360  2,966 
Net interest income including call option income $172,144  $169,547  $162,599  $157,312  $157,565 
Yield on earning assets 3.69% 3.73% 3.81% 3.83% 3.89%
Rate on interest-bearing liabilities 0.55  0.54  0.52  0.54  0.55 
Rate spread 3.14% 3.19% 3.29% 3.29% 3.34%
Net free funds contribution 0.15  0.14  0.12  0.13  0.12 
Net interest margin 3.29  3.33  3.41  3.42  3.46 
Call option income 0.07  0.06  0.10  0.10  0.07 
Net interest margin including call option income 3.36% 3.39% 3.51% 3.52% 3.53%


WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Net Interest Margin (Including Call Option Income - YTD Trends)
 
  Years Ended
December 31,
(Dollars in thousands) 2015 2014 2013 2012 2011
Net interest income $646,238  $601,744  $552,887  $521,463  $463,071 
Call option income 15,364  7,859  4,773  10,476  13,570 
Net interest income including call option income $661,602  $609,603  $557,660  $531,939  $476,641 
Yield on earning assets 3.76% 3.96% 4.01% 4.21% 4.49%
Rate on interest-bearing liabilities 0.54  0.55  0.62  0.86  1.23 
Rate spread 3.22% 3.41% 3.39% 3.35% 3.26%
Net free funds contribution 0.14  0.12  0.11  0.14  0.16 
Net interest margin 3.36  3.53  3.50  3.49  3.42 
Call option income 0.08  0.05  0.03  0.07  0.10 
Net interest margin including call option income 3.44% 3.58% 3.53% 3.56% 3.52%


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) 2015 2015 2015 2015 2014
Liquidity management assets $3,245,393  $3,140,782  $2,709,176  $2,868,906  $2,972,220 
Other earning assets 29,792  30,990  32,115  27,717  29,699 
Loans, net of unearned income 16,889,922  16,509,001  15,632,875  15,031,917  14,469,745 
Covered loans 154,846  174,768  202,663  214,211  244,139 
Total earning assets $20,319,953  $19,855,541  $18,576,829  $18,142,751  $17,715,803 
Allowance for loan and covered loan losses (109,448) (106,091) (101,211) (96,918) (97,506)
Cash and due from banks 260,593  251,289  236,242  249,687  243,080 
Other assets 1,762,394  1,687,711  1,545,136  1,530,720  1,505,293 
Total assets $22,233,492  $21,688,450  $20,256,996  $19,826,240  $19,366,670 
Interest-bearing deposits $13,606,046  $13,489,651  $13,115,453  $12,863,507  $12,771,359 
Federal Home Loan Bank advances 448,725  402,646  347,656  357,532  335,198 
Other borrowings 269,914  272,782  193,660  194,994  84,795 
Subordinated notes 140,000  140,000  140,000  140,000  140,000 
Junior subordinated notes 268,566  264,974  249,493  249,493  249,493 
Total interest-bearing liabilities $14,733,251  $14,570,053  $14,046,262  $13,805,526  $13,580,845 
Non-interest bearing deposits 4,776,977  4,473,632  3,725,728  3,584,452  3,398,774 
Other liabilities 375,719  334,254  328,878  321,906  329,196 
Equity 2,347,545  2,310,511  2,156,128  2,114,356  2,057,855 
Total liabilities and shareholders’ equity $22,233,492  $21,688,450  $20,256,996  $19,826,240  $19,366,670 


WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Net Interest Margin - 5 Quarter Trends
 
  Three Months Ended
  December 31, 2015 September 30, 2015 June 30, 2015 March 31, 2015 December 31, 2014
Yield earned on:          
Liquidity management assets 2.28% 2.29% 2.36% 2.29% 2.08%
Other earning assets 3.26  3.00  3.54  2.94  3.40 
Loans, net of unearned income 3.95  3.98  4.03  4.08  4.21 
Covered loans 4.79  5.91  6.30  6.98  6.80 
Total earning assets 3.69% 3.73% 3.81% 3.83% 3.89%
Rate paid on:          
Interest-bearing deposits 0.37% 0.37% 0.37% 0.37% 0.39%
Federal Home Loan Bank advances 2.37  2.42  2.09  2.45  3.00 
Other borrowings 1.48  1.52  1.63  1.64  1.47 
Subordinated notes 5.08  5.08  5.07  5.07  5.07 
Junior subordinated debentures 3.20  3.14  3.13  3.10  3.04 
Total interest-bearing liabilities 0.55% 0.54% 0.52% 0.54% 0.55%
Interest rate spread 3.14% 3.19% 3.29% 3.29% 3.34%
Net free funds/contribution 0.15  0.14  0.12  0.13  0.12 
Net interest income/margin 3.29% 3.33% 3.41% 3.42% 3.46%


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) 2015 2015 2015 2015 2014
Brokerage $6,850  $6,579  $6,750  $6,852  $7,892 
Trust and asset management 11,784  11,664  11,726  11,248  10,757 
Total wealth management 18,634  18,243  18,476  18,100  18,649 
Mortgage banking 23,317  27,887  36,007  27,800  24,694 
Service charges on deposit accounts 7,210  7,403  6,474  6,297  6,189 
(Losses) gains on available-for-sale securities, net (79) (98) (24) 524  18 
Fees from covered call options 3,629  2,810  4,565  4,360  2,966 
Trading gains (losses), net 205  (135) 160  (477) (507)
Operating lease income, net 1,973  613  77  65  67 
Other:          
Interest rate swap fees 2,343  2,606  2,347  2,191  1,119 
BOLI 1,463  212  2,180  766  661 
Administrative services 1,101  1,072  1,053  1,026  1,107 
Miscellaneous 5,294  4,340  5,698  3,889  2,694 
Total other income 10,201  8,230  11,278  7,872  5,581 
Total Non-Interest Income $65,090  $64,953  $77,013  $64,541  $57,657 


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) 2015 2015 2015 2015 2014
Salaries and employee benefits:          
Salaries $50,982  $53,028  $46,617  $46,848  $45,255 
Commissions and incentive compensation 31,222  30,035  33,387  25,494  28,369 
Benefits 17,576  14,686  14,417  17,788  14,009 
Total salaries and employee benefits 99,780  97,749  94,421  90,130  87,633 
Equipment 8,772  8,414  7,847  7,779  7,502 
Equipment on operating lease 1,229  473  67  57  53 
Occupancy, net 13,062  12,066  11,401  12,351  11,600 
Data processing 7,284  8,127  6,081  5,448  5,313 
Advertising and marketing 5,373  6,237  6,406  3,907  3,669 
Professional fees 4,387  4,100  5,074  4,664  4,039 
Amortization of other intangible assets 1,324  1,350  934  1,013  1,171 
FDIC insurance 3,317  3,035  3,047  2,987  2,810 
OREO expenses, net 2,598  (367) 841  1,411  2,320 
Other:          
Commissions - 3rd party brokers 1,321  1,364  1,403  1,386  1,470 
Postage 1,892  1,927  1,578  1,633  1,724 
Miscellaneous 16,490  15,499  15,197  14,552  14,137 
Total other expense 19,703  18,790  18,178  17,571  17,331 
Total Non-Interest Expense $166,829  $159,974  $154,297  $147,318  $143,441 


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) 2015 2015 2015 2015 2014
Allowance for loan losses at beginning of period $102,996  $100,204  $94,446  $91,705  $91,019 
Provision for credit losses 9,196  8,665  9,701  6,185  6,744 
Other adjustments (243) (153) (93) (248) (236)
Reclassification from/(to) allowance for unfunded lending-related commitments 13  (42) 4  (113) 46 
Charge-offs:          
Commercial 1,369  964  1,243  677  289 
Commercial real estate 2,734  1,948  856  1,005  4,434 
Home equity 680  1,116  1,847  584  150 
Residential real estate 211  1,138  923  631  630 
Premium finance receivables - commercial 2,676  1,595  1,526  1,263  1,463 
Premium finance receivables - life insurance         4 
Consumer and other 179  116  115  111  156 
Total charge-offs 7,849  6,877  6,510  4,271  7,126 
Recoveries:          
Commercial 315  462  285  370  315 
Commercial real estate 491  213  1,824  312  572 
Home equity 183  42  39  48  57 
Residential real estate 55  136  16  76  19 
Premium finance receivables - commercial 223  278  458  329  219 
Premium finance receivables - life insurance   16      6 
Consumer and other 20  52  34  53  70 
Total recoveries 1,287  1,199  2,656  1,188  1,258 
Net charge-offs (6,562) (5,678) (3,854) (3,083) (5,868)
Allowance for loan losses at period end $105,400  $102,996  $100,204  $94,446  $91,705 
Allowance for unfunded lending-related commitments at period end 949  926  884  888  775 
Allowance for credit losses at period end $106,349  $103,922  $101,088  $95,334  $92,480 
Annualized net charge-offs by category as a percentage of its own respective category’s average:          
Commercial 0.09% 0.05% 0.09% 0.03% %
Commercial real estate 0.16  0.13  (0.08) 0.06  0.34 
Home equity 0.25  0.55  1.01  0.30  0.05 
Residential real estate 0.07  0.42  0.39  0.28  0.30 
Premium finance receivables - commercial 0.41  0.21  0.18  0.16  0.21 
Premium finance receivables - life insurance          
Consumer and other 0.37  0.17  0.23  0.13  0.19 
Total loans, net of unearned income, excluding covered loans 0.15% 0.14% 0.10% 0.08% 0.16%
Net charge-offs as a percentage of the provision for credit losses 71.35% 65.53% 39.73% 49.87% 86.98%
Loans at period-end $17,118,117  $16,316,211  $15,513,650  $14,953,059  $14,409,398 
Allowance for loan losses as a percentage of loans at period end 0.62% 0.63% 0.65% 0.63% 0.64%
Allowance for credit losses as a percentage of loans at period end 0.62% 0.64% 0.65% 0.64% 0.64%


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) 2015 2015 2015 2015 2014
Loans past due greater than 90 days and still accruing (1):          
Commercial $541  $  $  $  $474 
Commercial real estate     701     
Home equity          
Residential real estate          
Premium finance receivables - commercial 10,294  8,231  9,053  8,062  7,665 
Premium finance receivables - life insurance     351     
Consumer and other 150  140  110  91  119 
Total loans past due greater than 90 days and still accruing 10,985  8,371  10,215  8,153  8,258 
Non-accrual loans (2):          
Commercial 12,712  12,018  5,394  5,586  9,157 
Commercial real estate 26,645  28,617  23,183  29,982  26,605 
Home equity 6,848  8,365  5,695  7,665  6,174 
Residential real estate 12,043  14,557  16,631  14,248  15,502 
Premium finance receivables - commercial 14,561  13,751  15,156  15,902  12,705 
Premium finance receivables - life insurance          
Consumer and other 263  297  280  236  277 
Total non-accrual loans 73,072  77,605  66,339  73,619  70,420 
Total non-performing loans:          
Commercial 13,253  12,018  5,394  5,586  9,631 
Commercial real estate 26,645  28,617  23,884  29,982  26,605 
Home equity 6,848  8,365  5,695  7,665  6,174 
Residential real estate 12,043  14,557  16,631  14,248  15,502 
Premium finance receivables - commercial 24,855  21,982  24,209  23,964  20,370 
Premium finance receivables - life insurance     351     
Consumer and other 413  437  390  327  395 
Total non-performing loans $84,057  $85,976  $76,554  $81,772  $78,677 
Other real estate owned 26,849  29,053  33,044  33,131  36,419 
Other real estate owned - from acquisition 17,096  22,827  9,036  9,126  9,223 
Other repossessed assets $174  $193  $231  $259  $303 
Total non-performing assets $128,176  $138,049  $118,865  $124,288  $124,622 
TDRs performing under the contractual terms of the loan agreement 42,744  49,173  52,174  54,687  69,697 
Total non-performing loans by category as a percent of its own respective category’s period-end balance:          
Commercial 0.28% 0.27% 0.12% 0.13% 0.25%
Commercial real estate 0.48  0.54  0.49  0.64  0.59 
Home equity 0.87  1.05  0.80  1.08  0.86 
Residential real estate 1.98  2.55  3.31  2.87  3.21 
Premium finance receivables - commercial 1.05  0.91  0.98  1.03  0.87 
Premium finance receivables - life insurance     0.01     
Consumer and other 0.28  0.33  0.33  0.25  0.26 
Total loans, net of unearned income 0.49% 0.53% 0.49% 0.55% 0.55%
Total non-performing assets as a percentage of total assets 0.56% 0.63% 0.57% 0.61% 0.62%
Allowance for loan losses as a percentage of total non-performing loans 125.39% 119.79% 130.89% 115.50% 116.56%

(1)  As of the dates shown, no TDRs were past due greater than 90 days and still accruing interest.
(2)  Non-accrual loans included in TDRs totaling $9.1 million, $10.1 million, $10.6 million, $12.5 million and $12.6 million as of December 31, 2015, September 30, 2015, June 30, 2015, March 31, 2015 and December 31, 2014.


            

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Wintrust Graphs 4QFY 2015

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