ROSEMONT, Ill., April 15, 2019 (GLOBE NEWSWIRE) -- Wintrust Financial Corporation (“Wintrust” or “the Company”) (Nasdaq: WTFC) announced net income of $89.1 million or $1.52 per diluted common share for the first quarter of 2019, an increase in diluted earnings per share of 13% compared to the prior quarter and 9% compared to the first quarter of 2018.

Highlights of the First Quarter of 2019:           

  • Net interest margin increased by nine basis points from the prior quarter as the yield on earning assets increased by 16 basis points partially offset by a seven basis point increase on the rate paid on interest bearing liabilities.
  • Total loans increased by $394 million from the prior quarter.
  • Total deposits increased by $710 million from the prior quarter.
  • Non-performing assets to total assets declined by one basis point and now comprise 0.43% of total assets.
  • Recorded nine basis points of annualized net charge-offs down from 12 basis points in the prior quarter.
  • Market and interest rate volatility resulted in the following items impacting first quarter 2019 pre-tax earnings:
    °  An $8.7 million negative fair value adjustment recognized on mortgage servicing rights related to changes in valuation assumptions.
    °  Recognized unrealized gains on equity securities of $1.4 million.
    °  Recognized a $464,000 foreign currency remeasurement gain, primarily related to changes in the Canadian currency.
  • Incurred a $1.0 million non-tax-deductible settlement recorded within miscellaneous non-interest expense.
  • Mortgage banking revenue declined by $6.0 million primarily due to lower production revenue and mortgage servicing rights capitalization as mortgage originations for sale totaled $678.5 million in the first quarter of 2019 as compared to $927.8 million in the fourth quarter of 2018.
  • Opened branches in Naples, Florida and the Fulton Market neighborhood of Chicago, as well as completed the acquisition of a Milwaukee branch from PyraMax Bank, FSB.
  • Announced an agreement to buy Rush-Oak Corporation, the parent company of Oak Bank.

Edward J. Wehmer, President and Chief Executive Officer, commented, "Wintrust reported net income of $89.1 million for the first quarter of 2019, up from $79.7 million in the fourth quarter of 2018.  The Company experienced strong balance sheet growth as total assets were $1.1 billion higher than the prior quarter end and $3.9 billion higher than the first quarter of 2018.  The first quarter was characterized by net interest margin expansion, loan and deposit growth, stable credit quality, market volatility impacting the mortgage division and cost control."

Mr. Wehmer continued, "Net interest margin for the Company increased considerably as earning assets benefited  from the increase in short term interest rates in late 2018.  Additionally, the Company managed deposits costs which continued to moderate as the rate paid on interest bearing deposits increased by nine basis points from the prior quarter or a calculated beta of 36% on the December 2018 rate hike. While this quarter demonstrates the benefit of Wintrust having maintained a rate sensitive position, the Company has taken action in recent quarters to reduce the asset sensitivity of its balance sheet given the recent increase in rates.  Given the shape of the interest rate curve and projected interest rate environment, we expect some pressure on net interest margin in the upcoming quarter.  Growing low cost deposits in our market area remains a significant focus of the Company which we believe will be the key in mitigating net interest margin compression."

Mr. Wehmer added, "We experienced strong loan growth in our commercial and commercial premium finance receivables portfolios during the first quarter, increasing our total loans outstanding by $394 million.  Our loan pipelines remain consistently strong, and reflect opportunities to continue to grow loans across most of our portfolio segments.  Deposits grew by $710 million in the first quarter, lowering our loans to deposits ratio to 90.3%.  We expect that we will be able to grow our retail and commercial deposit base while further supplementing deposit growth with deposits generated from the 1031 exchanges facilitated by our Chicago Deferred Exchange Company subsidiary."

Commenting on credit quality, Mr. Wehmer noted, "During the first quarter of 2019, the Company continued its practice of addressing and resolving non-performing credits in a timely fashion.  Total non-performing assets increased slightly by $1.0 million during the first quarter, but declined to 0.43% of total assets. Non-performing loans increased by $4.4 million while other real-estate owned declined by $3.3 million during the quarter.  Additionally, near-term 60 to 89 day delinquent loans declined to $19.2 million or only 0.1% of total loans in the first quarter of 2019.  The allowance for loan losses as a percentage of non-performing loans remained flat to the prior quarter at 135%.  As a percentage of average total loans, annualized net charge-offs for the first quarter were nine basis points down from 12 basis points in the prior quarter.  We believe that the Company’s reserves remain appropriate and we remain diligent in our review of credit."

Mr. Wehmer further commented, “Our mortgage banking business was impacted by seasonal demand in the first quarter as loan volumes originated for sale decreased to $678.5 million, down from $927.8 million in the fourth quarter of 2018.  The decline in origination volume resulted in lower production revenue and a decrease in mortgage servicing rights capitalization revenue. Declining long-term interest rates led to an increase in refinance activity, however home purchase activity continues to make up the majority of our originations accounting for 67% of loan volumes originated for sale in the first quarter. The decrease in long-term mortgage rates resulted in a negative fair value adjustment on our mortgage servicing rights portfolio of $8.7 million related to changes in valuation assumptions as compared to a $7.6 million negative fair value adjustment in the fourth quarter of 2018.  These valuation adjustments negatively impacted the net overhead ratio by 11 basis points in the first quarter of 2019 and 10 basis points in the fourth quarter of 2018.  We continue to focus on efficiencies in our delivery channels and our operating costs in our mortgage banking area. We believe that the lower mortgage rate outlook bodes well for mortgage origination demand in future quarters."

Turning to the future, Mr. Wehmer stated, “We believe 2019 got off to a strong start as we grew assets significantly while expanding net interest margin, maintaining strong credit quality and managing operating costs.  We expect continued organic growth in all areas of our businesses.  We will remain diligent in monitoring changes to the interest rate environment and managing the balance sheet to maximize net interest margin and net income.  We will continue to take a steady and measured approach to achieving our main objectives of growing franchise value, increasing profitability, leveraging our expense infrastructure and continuing to increase shareholder value.  Evaluating strategic acquisitions, like the announced acquisition of Oak Bank, and organic branch growth will also be a part of our overall growth strategy with the continued goal of becoming Chicago’s bank and Wisconsin’s bank.  We believe our opportunities for both internal growth and external growth remain consistently strong."

The graphs below illustrate certain highlights of the first quarter of 2019.

http://ml.globenewswire.com/Resource/Download/00fe74d7-f93f-4e19-ab97-d67e97fd6911

Wintrust’s key operating measures and growth rates for the first quarter of 2019, as compared to the fourth quarter of 2018 (sequential quarter) and first quarter of 2018 (linked quarter), are shown in the table below:

          
       % or(4)
basis point (bp)
change from

4th Quarter
2018
 % or
basis point (bp)
change from
1st Quarter
2018
 Three Months Ended  
(Dollars in thousands)March 31,
2019
 December 31,
2018
 March 31,
2018
  
Net income$89,146  $79,657  $81,981  12 % 9 %
Net income per common share – diluted$1.52  $1.35  $1.40  13 % 9 %
Net revenue (1)$343,643  $329,396  $310,761  4 % 11 %
Net interest income261,986  254,088  225,082  3 % 16 %
Net interest margin3.70% 3.61% 3.54% 9 bp 16 bp
Net interest margin - fully taxable equivalent (non-GAAP) (2)3.72% 3.63% 3.56% 9 bp 16 bp
Net overhead ratio (3)1.72% 1.79% 1.58% (7) bp 14 bp
Return on average assets1.16% 1.05% 1.20% 11 bp (4) bp
Return on average common equity11.09% 10.01% 11.29% 108 bp (20) bp
Return on average tangible common equity (non-GAAP) (2)14.14% 12.48% 14.02% 166 bp 12 bp
At end of period           
Total assets$32,358,621  $31,244,849  $28,456,772  14 % 14 %
Total loans (5)24,214,629  23,820,691  22,062,134  7 % 10 %
Total deposits26,804,742  26,094,678  23,279,327  11 % 15 %
Total shareholders’ equity3,371,972  3,267,570  3,031,250  13 % 11 %
(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) Period-end balance sheet percentage changes are annualized.
(5) Excludes mortgage loans held-for-sale.
 

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 website at www.wintrust.com by choosing “Financial Reports” under the “Investor Relations” heading, and then choosing “Financial Highlights.”

 
WINTRUST FINANCIAL CORPORATION
Selected Financial Highlights
 
 Three Months Ended
(Dollars in thousands, except per share data)March 31,
2019
 December 31,
2018
 March 31,
2018
Selected Financial Condition Data (at end of period):     
Total assets$32,358,621  $31,244,849  $28,456,772 
Total loans (1)24,214,629  23,820,691  22,062,134 
Total deposits26,804,742  26,094,678  23,279,327 
Junior subordinated debentures253,566  253,566  253,566 
Total shareholders’ equity3,371,972  3,267,570  3,031,250 
Selected Statements of Income Data:     
Net interest income$261,986  $254,088  $225,082 
Net revenue (2)343,643  329,396  310,761 
Net income89,146  79,657  81,981 
Net income per common share – Basic$1.54  $1.38  $1.42 
Net income per common share – Diluted$1.52  $1.35  $1.40 
Selected Financial Ratios and Other Data:     
Performance Ratios:     
Net interest margin3.70% 3.61% 3.54%
Net interest margin - fully taxable equivalent (non-GAAP) (3)3.72% 3.63% 3.56%
Non-interest income to average assets1.06% 0.99% 1.25%
Non-interest expense to average assets2.79% 2.78% 2.83%
Net overhead ratio (4)1.72% 1.79% 1.58%
Return on average assets1.16% 1.05% 1.20%
Return on average common equity11.09% 10.01% 11.29%
Return on average tangible common equity (non-GAAP) (3)14.14% 12.48% 14.02%
Average total assets$31,216,171  $30,179,887  $27,809,597 
Average total shareholders’ equity3,309,078  3,200,654  2,995,592 
Average loans to average deposits ratio92.7% 92.4% 95.2%
Period-end loans to deposits ratio90.3% 91.3% 94.8%
Common Share Data at end of period:     
Market price per common share$67.33  $66.49  $86.05 
Book value per common share$57.33  $55.71  $51.66 
Tangible book value per common share (non-GAAP) (3)$46.38  $44.67  $42.17 
Common shares outstanding56,638,968  56,407,558  56,256,498 
Other Data at end of period:     
Leverage Ratio (5)9.1% 9.1% 9.3%
Tier 1 capital to risk-weighted assets (5)9.7% 9.7% 10.0%
Common equity Tier 1 capital to risk-weighted assets (5)9.3% 9.3% 9.5%
Total capital to risk-weighted assets (5)11.6% 11.6% 12.0%
Allowance for credit losses (6)$159,622  $154,164  $140,746 
Non-performing loans117,586  113,234  89,690 
Allowance for credit losses to total loans (6)0.66% 0.65% 0.64%
Non-performing loans to total loans0.49% 0.48% 0.41%
Number of:     
Bank subsidiaries15  15  15 
Banking offices170  167  157 
(1)  Excludes mortgage loans held-for-sale.
(2) Net revenue includes net interest income and non-interest income.
(3) See “Supplemental Financial Measures/Ratios” for additional information on this performance measure/ratio.
(4)  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.
(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.
 

 

 
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
 
 (Unaudited)   (Unaudited)
(In thousands)March 31,
2019
 December 31,
2018
 March 31,
2018
Assets     
Cash and due from banks$270,765  $392,142  $231,407 
Federal funds sold and securities purchased under resale agreements58  58  57 
Interest bearing deposits with banks1,609,852  1,099,594  980,380 
Available-for-sale securities, at fair value2,185,782  2,126,081  1,895,688 
Held-to-maturity securities, at amortized cost1,051,542  1,067,439  892,937 
Trading account securities559  1,692  1,682 
Equity securities with readily determinable fair value47,653  34,717  37,832 
Federal Home Loan Bank and Federal Reserve Bank stock89,013  91,354  104,956 
Brokerage customer receivables14,219  12,609  24,531 
Mortgage loans held-for-sale248,557  264,070  411,505 
Loans, net of unearned income24,214,629  23,820,691  22,062,134 
Allowance for loan losses(158,212) (152,770) (139,503)
Net loans24,056,417  23,667,921  21,922,631 
Premises and equipment, net676,037  671,169  626,687 
Lease investments, net224,240  233,208  190,775 
Accrued interest receivable and other assets888,492  696,707  601,794 
Trade date securities receivable375,211  263,523   
Goodwill573,658  573,141  511,497 
Other intangible assets46,566  49,424  22,413 
Total assets$32,358,621  $31,244,849  $28,456,772 
Liabilities and Shareholders’ Equity     
Deposits:     
Non-interest bearing$6,353,456  $6,569,880  $6,612,319 
Interest bearing20,451,286  19,524,798  16,667,008 
Total deposits26,804,742  26,094,678  23,279,327 
Federal Home Loan Bank advances576,353  426,326  915,000 
Other borrowings372,194  393,855  247,092 
Subordinated notes139,235  139,210  139,111 
Junior subordinated debentures253,566  253,566  253,566 
Accrued interest payable and other liabilities840,559  669,644  591,426 
Total liabilities28,986,649  27,977,279  25,425,522 
Shareholders’ Equity:     
Preferred stock125,000  125,000  125,000 
Common stock56,765  56,518  56,364 
Surplus1,565,185  1,557,984  1,540,673 
Treasury stock(6,650) (5,634) (5,355)
Retained earnings1,682,016  1,610,574  1,387,663 
Accumulated other comprehensive loss(50,344) (76,872) (73,095)
Total shareholders’ equity3,371,972  3,267,570  3,031,250 
Total liabilities and shareholders’ equity$32,358,621  $31,244,849  $28,456,772 
 
 

 

 
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
 Three Months Ended
(In thousands, except per share data)March 31,
2019
 December 31,
2018
 March 31,
2018
Interest income     
Interest and fees on loans$296,987  $283,311  $234,994 
Mortgage loans held-for-sale2,209  3,409  2,818 
Interest bearing deposits with banks5,300  5,628  2,796 
Federal funds sold and securities purchased under resale agreements     
Investment securities27,956  26,656  19,128 
Trading account securities8  14  14 
Federal Home Loan Bank and Federal Reserve Bank stock1,355  1,343  1,298 
Brokerage customer receivables155  235  157 
Total interest income333,970  320,596  261,205 
Interest expense     
Interest on deposits60,976  55,975  26,549 
Interest on Federal Home Loan Bank advances2,450  2,563  3,639 
Interest on other borrowings3,633  3,199  1,699 
Interest on subordinated notes1,775  1,788  1,773 
Interest on junior subordinated debentures3,150  2,983  2,463 
Total interest expense71,984  66,508  36,123 
Net interest income261,986  254,088  225,082 
Provision for credit losses10,624  10,401  8,346 
Net interest income after provision for credit losses251,362  243,687  216,736 
Non-interest income     
Wealth management23,977  22,726  22,986 
Mortgage banking18,158  24,182  30,960 
Service charges on deposit accounts8,848  9,065  8,857 
Gains (losses) on investment securities, net1,364  (2,649) (351)
Fees from covered call options1,784  626  1,597 
Trading (losses) gains, net(171) (155) 103 
Operating lease income, net10,796  10,882  9,691 
Other16,901  10,631  11,836 
Total non-interest income81,657  75,308  85,679 
Non-interest expense     
Salaries and employee benefits125,723  122,111  112,436 
Equipment11,770  11,523  10,072 
Operating lease equipment depreciation8,319  8,462  6,533 
Occupancy, net16,245  15,980  13,767 
Data processing7,525  8,447  8,493 
Advertising and marketing9,858  9,414  8,824 
Professional fees5,556  9,259  6,649 
Amortization of other intangible assets2,942  1,407  1,004 
FDIC insurance3,576  4,044  4,362 
OREO expense, net632  1,618  2,926 
Other22,228  19,068  19,283 
Total non-interest expense214,374  211,333  194,349 
Income before taxes118,645  107,662  108,066 
Income tax expense29,499  28,005  26,085 
Net income$89,146  $79,657  $81,981 
Preferred stock dividends2,050  2,050  2,050 
Net income applicable to common shares$87,096  $77,607  $79,931 
Net income per common share - Basic$1.54  $1.38  $1.42 
Net income per common share - Diluted$1.52  $1.35  $1.40 
Cash dividends declared per common share$0.25  $0.19  $0.19 
Weighted average common shares outstanding56,529  56,395  56,137 
Dilutive potential common shares699  892  888 
Average common shares and dilutive common shares57,228  57,287  57,025 
 
 

EARNINGS PER SHARE

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

 
  Three Months Ended
(In thousands, except per share data) March 31,
2019
 December 31,
2018
 March 31,
2018
Net income $89,146  $79,657  $81,981 
Less: Preferred stock dividends 2,050  2,050  2,050 
Net income applicable to common shares(A)87,096  77,607  79,931 
Weighted average common shares outstanding(B)56,529  56,395  56,137 
Effect of dilutive potential common shares:      
Common stock equivalents 699  892  888 
Weighted average common shares and effect of dilutive potential common shares(C)57,228  57,287  57,025 
Net income per common share:      
Basic(A/B)$1.54  $1.38  $1.42 
Diluted(A/C)$1.52  $1.35  $1.40 
 
 

Potentially dilutive common shares can result from stock options, restricted stock unit awards, stock warrants, 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.

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), taxable-equivalent net interest margin (including its individual components), the taxable-equivalent efficiency ratio, tangible common equity ratio, tangible book value per common share and return on average tangible common equity. Management believes that these measures and ratios provide users of the Company’s financial information a more meaningful view of the performance of the Company's 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 basis. In this non-GAAP presentation, net interest income is adjusted to reflect tax-exempt interest income on an equivalent before-tax basis using tax rates effective as of the end of the period. This measure ensures comparability of net interest income arising from both taxable and tax-exempt sources. Net interest income on a fully taxable-equivalent 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.

The following table presents a reconciliation of certain non-GAAP performance measures and ratios used by the Company to evaluate and measure the Company’s performance to the most directly comparable GAAP financial measures for the last five quarters.

 
 Three Months Ended
 March 31, December 31, September 30, June 30, March 31,
(Dollars and shares in thousands)2019 2018 2018 2018 2018
Calculation of Net Interest Margin and Efficiency Ratio         
(A) Interest Income (GAAP)$333,970  $320,596  $304,962  $284,047  $261,205 
Taxable-equivalent adjustment:         
- Loans1,034  980  941  812  670 
- Liquidity Management Assets565  586  575  566  531 
- Other Earning Assets2  4  3  1  3 
(B) Interest Income (non-GAAP)$335,571  $322,166  $306,481  $285,426  $262,409 
(C) Interest Expense (GAAP)$71,984  $66,508  $57,399  $45,877  $36,123 
(D) Net Interest Income (GAAP) (A minus C)$261,986  $254,088  $247,563  $238,170  $225,082 
(E) Net Interest Income (non-GAAP) (B minus C)$263,587  $255,658  $249,082  $239,549  $226,286 
Net interest margin (GAAP)3.70% 3.61% 3.59% 3.61% 3.54%
Net interest margin (non-GAAP)3.72% 3.63% 3.61% 3.63% 3.56%
(F) Non-interest income$81,657  $75,308  $99,930  $95,233  $85,679 
(G) Gains (losses) on investment securities, net1,364  (2,649) 90  12  (351)
(H) Non-interest expense214,374  211,333  213,637  206,769  194,349 
Efficiency ratio (H/(D+F-G))62.63% 63.65% 61.50% 62.02% 62.47%
Efficiency ratio (non-GAAP) (H/(E+F-G))62.34% 63.35% 61.23% 61.76% 62.23%
          
Calculation of Tangible Common Equity Ratio (at period end)         
Total shareholders’ equity$3,371,972  $3,267,570  $3,179,822  $3,106,871  $3,031,250 
Less: Non-convertible preferred stock(125,000) (125,000) (125,000) (125,000) (125,000)
Less: Intangible assets(620,224) (622,565) (564,938) (531,371) (533,910)
(I) Total tangible common shareholders’ equity$2,626,748  $2,520,005  $2,489,884  $2,450,500  $2,372,340 
(J) Total assets$32,358,621  $31,244,849  $30,142,731  $29,464,588  $28,456,772 
Less: Intangible assets(620,224) (622,565) (564,938) (531,371) (533,910)
(K) Total tangible assets$31,738,397  $30,622,284  $29,577,793  $28,933,217  $27,922,862 
Common equity to assets ratio (GAAP) (L/J)10.0% 10.1% 10.1% 10.1% 10.2%
Tangible common equity ratio (non-GAAP) (I/K)8.3% 8.2% 8.4% 8.5% 8.5%
          
Calculation of Tangible Book Value per Common Share         
Total shareholders’ equity$3,371,972  $3,267,570  $3,179,822  $3,106,871  $3,031,250 
Less: Preferred stock(125,000) (125,000) (125,000) (125,000) (125,000)
(L) Total common equity$3,246,972  $3,142,570  $3,054,822  $2,981,871  $2,906,250 
(M) Actual common shares outstanding56,639  56,408  56,377  56,329  56,256 
Book value per common share (L/M)$57.33  $55.71  $54.19  $52.94  $51.66 
Tangible book value per common share (non-GAAP) (I/M)$46.38  $44.67  $44.16  $43.50  $42.17 

 

Calculation of Return on Average Tangible Common Equity         
(N) Net income applicable to common shares$87,096  $77,607  $89,898  $87,530  $79,931 
Add: Intangible asset amortization2,942  1,407  1,163  997  1,004 
Less: Tax effect of intangible asset amortization(731) (366) (292) (263) (243)
After-tax intangible asset amortization2,211  1,041  871  734  761 
(O) Tangible net income applicable to common shares (non-GAAP)$89,307  $78,648  $90,769  $88,264  $80,692 
Total average shareholders' equity$3,309,078  $3,200,654  $3,131,943  $3,064,154  $2,995,592 
Less: Average preferred stock(125,000) (125,000) (125,000) (125,000) (125,000)
(P) Total average common shareholders' equity$3,184,078  $3,075,654  $3,006,943  $2,939,154  $2,870,592 
Less: Average intangible assets(622,240) (574,757) (547,552) (533,496) (536,676)
(Q) Total average tangible common shareholders’ equity (non-GAAP)$2,561,838  $2,500,897  $2,459,391  $2,405,658  $2,333,916 
Return on average common equity, annualized  (N/P)11.09% 10.01% 11.86% 11.94% 11.29%
Return on average tangible common equity, annualized (non-GAAP) (O/Q)14.14% 12.48% 14.64% 14.72% 14.02%
 

BUSINESS UNIT SUMMARY

Community Banking

Through its community banking unit, the Company provides banking and financial services primarily to individuals, small to mid-sized businesses, local governmental units and institutional clients residing primarily in the local areas the Company services. In the first quarter of 2019, revenue within this unit was primarily driven by increased net interest income due to increased earning assets and a higher net interest margin, partially offset by the impact of having two fewer days in the period. The net interest margin increased in the first quarter of 2019 compared to the fourth quarter of 2018 primarily as a result of higher yields within the loan portfolio. Mortgage banking revenue decreased by $6.0 million from $24.2 million for the fourth quarter of 2018 to $18.2 million for the first quarter of 2019. The lower revenue was primarily due to to lower origination volumes, negative fair value adjustments recognized on mortgage servicing rights related to changes in valuation assumptions and pay-offs, partially offset by higher production margins. Mortgage loans originated for sale during the current period decreased to $678.5 million from $927.8 million in the fourth quarter of 2018. Home purchases represented 67% of loan volume originated for sale for the first quarter of 2019. The Company's gross commercial and commercial real estate loan pipelines remain strong. Before the impact of scheduled payments and prepayments, at March 31, 2019, gross commercial and commercial real estate loan pipelines totaled $1.3 billion, or $812.9 million when adjusted for the probability of closing, compared to $1.1 billion, or $671.1 million when adjusted for the probability of closing, at December 31, 2018.

Specialty Finance

Through its specialty finance unit, the Company offers financing of insurance premiums for businesses and individuals, equipment financing through structured loans and lease products to customers in a variety of industries and accounts receivable financing, value-added, out-sourced administrative services, and other services. In the first quarter of 2019, the specialty finance unit experienced higher revenue as a result of increased volumes and higher yields within its insurance premium financing receivables portfolio. Originations within the insurance premium financing receivables portfolio were $2.1 billion during the first quarter of 2019 and average balances increased by $186.1 million. The increase in average balances along with higher yields on these loans resulted in a $5.9 million increase in interest income attributed to this portfolio. The Company's leasing business showed steady growth during the first quarter of 2019, with its portfolio of assets, including capital leases, loans and equipment on operating leases, increasing $65.4 million to $1.3 billion at the end of the first quarter of 2019. Revenues from the Company's out-sourced administrative services business remained relatively steady, totaling approximately $1.0 million in the first quarter of 2019 and $1.3 million in the fourth quarter of 2018.

Wealth Management

Through four separate subsidiaries within its wealth management unit, the Company offers a full range of wealth management services, including trust and investment services, tax-deferred like-kind exchange services, asset management, securities brokerage services and 401(k) and retirement plan services. Wealth management revenue increased by $1.3 million in the first quarter of 2019 compared to the fourth quarter of 2018, totaling $24.0 million in the current period. At March 31, 2019, the Company’s wealth management subsidiaries had approximately $25.1 billion of assets under administration, which includes $3.7 billion of assets owned by the Company and its subsidiary banks, representing a $883.1 million increase from the $24.2 billion of assets under administration at December 31, 2018. The increase in the first quarter of 2019 was primarily due to the impact of market conditions on the value of assets under administration. Tax-deferred like-kind exchange services provided by CDEC, our Qualified Intermediary for taxpayers seeking to structure tax-deferred like-kind exchanges under Internal Revenue Code Section 1031, resulted in average deposit balances from these transactions totaling $821.1 million during the first quarter of 2019.

LOANS

Loan Portfolio Mix and Growth Rates

 
       % Growth
(Dollars in thousands)March 31,
2019
 December 31,
2018
 March 31,
2018
 From (1)
December 31,
2018
 From
March 31,
2018
Balance:         
Commercial$7,994,191  $7,828,538  $7,060,871  9% 13%
Commercial real estate6,973,505  6,933,252  6,633,520  2  5 
Home equity528,448  552,343  626,547  (18) (16)
Residential real estate1,053,524  1,002,464  869,104  21  21 
Premium finance receivables - commercial2,988,788  2,841,659  2,576,150  21  16 
Premium finance receivables - life insurance4,555,369  4,541,794  4,189,961  1  9 
Consumer and other120,804  120,641  105,981  1  14 
Total loans, net of unearned income$24,214,629  $23,820,691  $22,062,134  7% 10%
Mix:         
Commercial33% 33% 32%    
Commercial real estate29  29  30     
Home equity2  2  3     
Residential real estate4  4  4     
Premium finance receivables - commercial12  12  12     
Premium finance receivables - life insurance19  19  19     
Consumer and other1  1       
Total loans, net of unearned income100% 100% 100%    
(1) Annualized.


Commercial and Commercial Real Estate Loan Portfolios

 
 As of March 31, 2019
   % of
Total
Balance
 Nonaccrual > 90 Days
Past Due
and Still
Accruing
 Allowance
For Loan
Losses
Allocation
   
(Dollars in thousands)Balance 
Commercial:         
Commercial, industrial and other$5,250,953  35.0% $38,858  $  $50,178 
Franchise879,906  5.9  15,799    12,055 
Mortgage warehouse lines of credit174,284  1.2      1,399 
Asset-based lending1,040,834  7.0  1,135    8,868 
Leases622,884  4.2      1,675 
PCI - commercial loans (1)25,330  0.1    2,499  463 
Total commercial$7,994,191  53.4% $55,792  $2,499  $74,638 
Commercial Real Estate:         
Construction$803,669  5.4% $1,030  $  $9,142 
Land147,701  1.0  54    4,194 
Office926,375  6.2  4,482    6,267 
Industrial964,960  6.4  267    6,534 
Retail895,267  6.0  7,645    6,065 
Multi-family1,117,385  7.5  303    10,875 
Mixed use and other2,007,487  13.4  2,152    14,653 
PCI - commercial real estate (1)110,661  0.7    4,265  120 
Total commercial real estate$6,973,505  46.6% $15,933  $4,265  $57,850 
Total commercial and commercial real estate$14,967,696  100.0% $71,725  $6,764  $132,488 
          
Commercial real estate - collateral location by state:         
Illinois$5,331,784  76.5%      
Wisconsin758,097  10.9       
Total primary markets$6,089,881  87.4%      
Indiana175,350  2.5       
Florida55,528  0.8       
Arizona61,375  0.9       
Michigan35,650  0.5       
California67,545  1.0       
Other488,176  6.9       
Total$6,973,505  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)March 31,
2019
 December 31,
2018
 March 31,
2018
 From (1)
December 31,
2018
 From
March 31,
2018
Balance:         
Non-interest bearing$6,353,456  $6,569,880  $6,612,319  (13)% (4)%
NOW and interest bearing demand deposits2,948,576  2,897,133  2,315,122  7  27 
Wealth management deposits (2)3,328,781  2,996,764  2,495,134  45  33 
Money market6,093,596  5,704,866  4,617,122  28  32 
Savings2,729,626  2,665,194  2,901,504  10  (6)
Time certificates of deposit5,350,707  5,260,841  4,338,126  7  23 
Total deposits$26,804,742  $26,094,678  $23,279,327  11% 15%
Mix:         
Non-interest bearing24% 25% 28%    
NOW and interest bearing demand deposits11  11  10     
Wealth management deposits (2)12  12  11     
Money market23  22  20     
Savings10  10  12     
Time certificates of deposit20  20  19     
Total deposits100% 100% 100%    
(1) Annualized.
(2) Represents deposit balances of the Company’s subsidiary banks from brokerage customers of Wintrust Investments, CDEC, trust and asset management customers of the Company and brokerage customers from unaffiliated companies which have been placed into deposit accounts.
 

 

 
Time Certificates of Deposit
Maturity/Re-pricing Analysis
As of March 31, 2019
 
(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$249  $32,771  $99,466  $874,080  $1,006,566  1.52%
4-6 months75,064  30,871    701,663  807,598  1.74%
7-9 months  13,019    583,211  596,230  1.80%
10-12 months  22,078    686,059  708,137  1.98%
13-18 months  7,181    909,809  916,990  2.24%
19-24 months  15,942    459,659  475,601  2.70%
24+ months1,000  9,496    829,089  839,585  2.65%
Total$76,313  $131,358  $99,466  $5,043,570  $5,350,707  2.05%
(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 first quarter of 2019 compared to the fourth quarter of 2018 (sequential quarter) and first quarter of 2018 (linked quarter), respectively:

 
 Average Balance
for three months ended,
 Interest
for three months ended,
 Yield/Rate
for three months ended,
(Dollars in thousands)March 31,
2019
 December 31,
2018
 March 31,
2018
 March 31,
2019
 December 31,
2018
 March 31,
2018
 March 31,
2019
 December 31,
2018
 March 31,
2018
Interest-bearing deposits with banks and cash equivalents (1)$897,629  $1,042,860  $749,973  $5,300  $5,628  $2,796  2.39% 2.14% 1.51%
Investment securities (2)3,630,577  3,347,496  2,892,617  28,521  27,242  19,659  3.19  3.23  2.76 
FHLB and FRB stock94,882  98,084  105,414  1,355  1,343  1,298  5.79  5.43  4.99 
Liquidity management assets (3)(8)$4,623,088  $4,488,440  $3,748,004  $35,176  $34,213  $23,753  3.09% 3.02% 2.57%
Other earning assets (3)(4)(8)13,591  16,204  27,571  165  253  174  4.91  6.19  2.56 
Mortgage loans held-for-sale188,190  265,717  281,181  2,209  3,409  2,818  4.76  5.09  4.06 
Loans, net of unearned income (3)(5)(8)23,880,916  23,164,154  21,711,342  298,021  284,291  235,664  5.06  4.87  4.40 
Total earning assets (8)$28,705,785  $27,934,515  $25,768,098  $335,571  $322,166  $262,409  4.74% 4.58% 4.13%
Allowance for loan losses(157,782) (154,438) (143,108)            
Cash and due from banks283,019  271,403  254,489             
Other assets2,385,149  2,128,407  1,930,118             
Total assets$31,216,171  $30,179,887  $27,809,597             
                  
NOW and interest bearing demand deposits$2,803,338  $2,671,283  $2,255,692  $4,613  $4,007  $1,386  0.67% 0.60% 0.25%
Wealth management deposits2,614,035  2,289,904  2,250,139  7,000  7,119  5,441  1.09  1.23  0.98 
Money market accounts5,915,525  5,632,268  4,520,620  19,460  16,936  4,667  1.33  1.19  0.42 
Savings accounts2,715,422  2,553,133  2,813,772  4,249  3,096  2,732  0.63  0.48  0.39 
Time deposits5,267,796  5,381,029  4,322,111  25,654  24,817  12,323  1.98  1.83  1.16 
Interest-bearing deposits$19,316,116  $18,527,617  $16,162,334  $60,976  $55,975  $26,549  1.29% 1.20% 0.67%
Federal Home Loan Bank advances594,335  551,846  872,811  2,450  2,563  3,639  1.67  1.84  1.69 
Other borrowings465,571  385,878  263,125  3,633  3,199  1,699  3.16  3.29  2.62 
Subordinated notes139,217  139,186  139,094  1,775  1,788  1,773  5.10  5.14  5.10 
Junior subordinated debentures253,566  253,566  253,566  3,150  2,983  2,463  4.97  4.60  3.89 
Total interest-bearing liabilities$20,768,805  $19,858,093  $17,690,930  $71,984  $66,508  $36,123  1.40% 1.33% 0.83%
Non-interest bearing deposits6,444,378  6,542,228  6,639,845             
Other liabilities693,910  578,912  483,230             
Equity3,309,078  3,200,654  2,995,592             
Total liabilities and shareholders’ equity$31,216,171  $30,179,887  $27,809,597             
Interest rate spread (6)(8)            3.34% 3.25% 3.30%
Less:  Fully tax-equivalent adjustment      (1,601) (1,570) (1,204) (0.02) (0.02) (0.02)
Net free funds/contribution (7)$7,936,980  $8,076,422  $8,077,168        0.38  0.38  0.26 
Net interest income/ margin (GAAP) (8)      $261,986  $254,088  $225,082  3.70% 3.61% 3.54%
Fully tax-equivalent adjustment      1,601  1,570  1,204  0.02  0.02  0.02 
Net interest income/ margin (non-GAAP) (8)      $263,587  $255,658  $226,286  3.72% 3.63% 3.56%
(1) Includes interest-bearing deposits from banks, federal funds sold and securities purchased under resale agreements.
(2) Investment securities includes investment securities classified as available-for-sale and held-to-maturity, and equity securities with readily determinable fair values. Equity securities without readily determinable fair values are included within other assets.
(3) Interest income on tax-advantaged loans, trading securities and investment securities reflects a tax-equivalent adjustment based on the marginal federal corporate tax rate in effect as of the applicable period. The total adjustments for the three months ended March 31, 2019, December 31, 2018 and March 31, 2018 were $1.6 million, $1.6 million and $1.2 million, respectively.
(4) Other earning assets include brokerage customer receivables and trading account securities.
(5) Loans, net of unearned income, include non-accrual loans.
(6) Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.
(7) 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.
(8) See “Supplemental Financial Measures/Ratios” for additional information on this performance ratio.
 


For the first quarter of 2019, net interest income totaled $262.0 million, an increase of $7.9 million as compared to the fourth quarter of 2018 and an increase of $36.9 million as compared to the first quarter of 2018. Net interest margin was 3.70% (3.72% on a fully taxable-equivalent basis, non-GAAP) during the first quarter of 2019 compared to 3.61% (3.63% on a fully taxable-equivalent basis, non-GAAP) during the fourth quarter of 2018 and 3.54% (3.56% on a fully taxable-equivalent basis, non-GAAP) during the first quarter of 2018. The $7.9 million increase in net interest income in the first quarter of 2019 compared to the fourth quarter of 2018 was attributable to a $5.5 million increase from higher levels of earning assets and a $8.0 million increase due to a higher net interest margin, partially offset by a $5.6 million decrease due to two less days in the quarter.

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 by 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 Scenario at March 31, 2019, December 31, 2018 and March 31, 2018 is as follows:

      
Static Shock Scenario +200
Basis 
Points
 +100
 Basis
 Points
 -100
Basis
 Points
March 31, 2019 14.9% 7.8% (8.5)%
December 31, 2018 15.6% 7.9% (8.6)%
March 31, 2018 18.8% 9.7% (11.6)%

 

Ramp Scenario+200
Basis
Points
 +100
Basis
Points
 -100
Basis
Points
March 31, 20196.7% 3.5% (3.3)%
December 31, 20187.4% 3.8% (3.6)%
March 31, 20189.0% 4.6% (4.8)%

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).

Maturities and Sensitivities of Loans to Changes in Interest Rates

The following table classifies the loan portfolio at March 31, 2019 by date at which the loans reprice or mature, and the type of rate exposure:

 
As of March 31, 2019One year or less From one to five years Over five years  
(Dollars in thousands)   Total
Commercial       
Fixed rate$164,370  $1,149,701  $755,402  $2,069,473 
Variable rate5,917,650  6,923  145  5,924,718 
Total commercial$6,082,020  $1,156,624  $755,547  $7,994,191 
Commercial real estate       
Fixed rate419,045  1,956,704  332,469  2,708,218 
Variable rate4,237,177  28,102  8  4,265,287 
Total commercial real estate$4,656,222  $1,984,806  $332,477  $6,973,505 
Home equity       
Fixed rate16,272  12,934  4,981  34,187 
Variable rate494,261      494,261 
Total home equity$510,533  $12,934  $4,981  $528,448 
Residential real estate       
Fixed rate30,648  20,501  235,107  286,256 
Variable rate49,860  314,090  403,318  767,268 
Total residential real estate$80,508  $334,591  $638,425  $1,053,524 
Premium finance receivables - commercial       
Fixed rate2,928,872  59,916    2,988,788 
Variable rate       
Total premium finance receivables - commercial$2,928,872  $59,916  $  $2,988,788 
Premium finance receivables - life insurance       
Fixed rate19,925  66,737  6,087  92,749 
Variable rate4,462,620      4,462,620 
Total premium finance receivables - life insurance$4,482,545  $66,737  $6,087  $4,555,369 
Consumer and other       
Fixed rate80,068  11,236  2,072  93,376 
Variable rate27,387  41    27,428 
Total consumer and other$107,455  $11,277  $2,072  $120,804 
Total per category       
Fixed rate3,659,200  3,277,729  1,336,118  8,273,047 
Variable rate15,188,955  349,156  403,471  15,941,582 
Total loans, net of unearned income$18,848,155  $3,626,885  $1,739,589  $24,214,629 
Variable Rate Loan Pricing by Index:       
Prime$2,307,308       
One- month LIBOR8,188,860       
Three- month LIBOR381,204       
Twelve- month LIBOR4,836,490       
Other227,720       
Total variable rate$15,941,582       

http://ml.globenewswire.com/Resource/Download/56f85e52-e126-403a-9736-e900730297bc

Source: Bloomberg

As noted in the table on the previous page, the majority of the Company’s portfolio is tied to LIBOR indices which, as shown in the table above, do not mirror the same increases as the Prime rate when the Federal Reserve raises interest rates.  Specifically, the Company has $8.2 billion of variable rate loans tied to one-month LIBOR and $4.8 billion of variable rate loans tied to twelve-month LIBOR. The above chart shows:

 Changes in
 Prime 1-month
LIBOR
 12-month
LIBOR
Second Quarter 2018+25 bps +21 bps +10 bps
Third Quarter 2018+25 bps +17 bps +16 bps
Fourth Quarter 2018+25 bps +24 bps +9 bps
First Quarter 2019+0 bps -1 bps -30 bps
 

 

NON-INTEREST INCOME

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

 
  Three Months Ended        
  March 31, December 31, March 31, Q1 2019 compared to
Q4 2018
 Q1 2019 compared to
Q1 2018
(Dollars in thousands) 2019 2018 2018 $ Change % Change $ Change % Change
Brokerage $4,516  $4,997  $6,031  $(481) (10)% $(1,515) (25)%
Trust and asset management 19,461  17,729  16,955  1,732  10  2,506  15 
Total wealth management $23,977  $22,726  $22,986  $1,251  6% $991  4%
Mortgage banking 18,158  24,182  30,960  (6,024) (25) (12,802) (41)
Service charges on deposit accounts 8,848  9,065  8,857  (217) (2) (9)  
Gains (losses) on investment securities, net 1,364  (2,649) (351) 4,013  NM 1,715  NM
Fees from covered call options 1,784  626  1,597  1,158  NM 187  12 
Trading (losses) gains, net (171) (155) 103  (16) 10  (274) NM
Operating lease income, net 10,796  10,882  9,691  (86) (1) 1,105  11 
Other:              
Interest rate swap fees 2,831  2,602  2,237  229  9  594  27 
BOLI 1,591  (466) 714  2,057  NM 877  NM
Administrative services 1,030  1,260  1,061  (230) (18) (31) (3)
Foreign currency remeasurement gains (losses) 464  (1,149) (328) 1,613  NM 792  NM
Early pay-offs of capital leases 5  3  33  2  67  (28) (85)
Miscellaneous 10,980  8,381  8,119  2,599  31  2,861  35 
Total Other $16,901  $10,631  $11,836  $6,270  59% $5,065  43%
Total Non-Interest Income $81,657  $75,308  $85,679  $6,349  8% $(4,022) (5)%
NM - Not meaningful.
 


Notable contributions to the change in non-interest income are as follows:

The increase in wealth management revenue during the current period as compared to the fourth quarter of 2018 is primarily attributable to higher fees on tax-deferred like-kind exchange services and market appreciation related to managed money accounts with fees based on assets under management. Wealth management revenue is comprised of the trust and asset management revenue of The Chicago Trust Company and Great Lakes Advisors, the brokerage commissions, managed money fees and insurance product commissions at Wintrust Investments and fees from tax-deferred like-kind exchange services provided by CDEC.

The decrease in mortgage banking revenue in the first quarter of 2019 as compared to the fourth quarter of 2018 resulted primarily from lower origination volumes and negative fair value adjustments recognized on mortgage servicing rights related to changes in valuation assumptions and pay-offs, partially offset by higher production margins.  Mortgage loans originated for sale totaled $678.5 million in the first quarter of 2019 as compared to $927.8 million in the fourth quarter of 2018 and $778.9 million in the first quarter of 2018. Mortgage banking revenue includes revenue from activities related to originating, selling and servicing residential real estate loans for the secondary market. Mortgage revenue is also impacted by changes in the fair value of mortgage servicing rights ("MSRs") as the Company does not hedge this change in fair value. The Company records MSRs at fair value on a recurring basis. The table below presents additional selected information regarding mortgage banking revenue for the respective periods.

 
 Three Months Ended
(Dollars in thousands)March 31,
2019
 December 31,
2018
 March 31,
2018
  
Originations:  
Retail originations$365,602  $463,196  $539,911 
Correspondent originations148,100  289,101  126,464 
Veterans First originations164,762  175,483  112,477 
Total originations for sale (A)$678,464  $927,780  $778,852 
Originations for investment93,689
  93,275
  43,249
 
Total originations$772,153  $1,021,055  $822,101 
      
Purchases as a percentage of originations for sale67% 71% 73%
Refinances as a percentage of originations for sale33  29  27 
Total100% 100% 100%
      
Production Margin:     
Production revenue (B) (1)$16,606  $18,657  $20,526 
Production margin (B / A)2.45% 2.01% 2.64%
      
Mortgage Servicing:     
Loans serviced for others (C)$7,014,269  $6,545,870  $4,795,335 
MSRs, at fair value (D)71,022  75,183  54,572 
Percentage of MSRs to loans serviced for others (D / C)1.01% 1.15% 1.14%
      
Components of Mortgage Banking Revenue:     
Production revenue$16,606  $18,657  $20,526 
MSR - current period capitalization6,580  9,683  4,159 
MSR - collection of expected cash flows - paydowns(505) (496) (443)
MSR - collection of expected cash flows - payoffs(1,492) (896) (759)
MSR - changes in fair value model assumptions(8,744) (7,638) 4,133 
Servicing income5,460  4,917  2,905 
Other253  (45) 439 
Total mortgage banking revenue$18,158  $24,182  $30,960 
(1) Production revenue represents revenue earned from the origination and subsequent sale of mortgages, including gains on loans sold and fees from originations, processing and other related activities, and excludes servicing fees, changes in the fair value of servicing rights and changes to the mortgage recourse obligation.
 


The net gains and net losses recognized on investment securities in the first quarter of 2019 and fourth quarter of 2018, respectively, were primarily due to unrealized gains and losses recognized on equity securities held by the Company, including a large cap value mutual fund.

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 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 mitigate overall interest rate risk and do not qualify as hedges pursuant to accounting guidance. There were no outstanding call option contracts at March 31, 2019, December 31, 2018 or March 31, 2018.

The increase in BOLI income was primarily the result of higher market returns during the first quarter of 2019 on certain investments supporting deferred compensation plan benefits.

The increase in miscellaneous non-interest income in the first quarter of 2019 as compared to the fourth quarter of 2018 is primarily due to income from investments in partnerships and positive adjustments from foreign currency remeasurement of the Company's Canadian subsidiary.

NON-INTEREST EXPENSE

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

          
 Three Months Ended        
 March 31, December 31, March 31, Q1 2019 compared to
Q4 2018
 Q1 2019 compared to
Q1 2018
(Dollars in thousands)2019 2018 2018 $ Change % Change $ Change % Change
Salaries and employee benefits:             
Salaries$74,037  $67,708  $61,986  $6,329  9% $12,051  19%
Commissions and incentive compensation31,599  33,656  31,949  (2,057) (6) (350) (1)
Benefits20,087  20,747  18,501  (660) (3) 1,586  9 
Total salaries and employee benefits125,723  122,111  112,436  3,612  3  13,287  12 
Equipment11,770  11,523  10,072  247  2  1,698  17 
Operating lease equipment depreciation8,319  8,462  6,533  (143) (2) 1,786  27 
Occupancy, net16,245  15,980  13,767  265  2  2,478  18 
Data processing7,525  8,447  8,493  (922) (11) (968) (11)
Advertising and marketing9,858  9,414  8,824  444  5  1,034  12 
Professional fees5,556  9,259  6,649  (3,703) (40) (1,093) (16)
Amortization of other intangible assets2,942  1,407  1,004  1,535  NM 1,938  NM
FDIC insurance3,576  4,044  4,362  (468) (12) (786) (18)
OREO expense, net632  1,618  2,926  (986) (61) (2,294) (78)
Other:             
Commissions - 3rd party brokers718  779  1,252  (61) (8) (534) (43)
Postage2,450  2,047  1,866  403  20  584  31 
Miscellaneous19,060  16,242  16,165  2,818  17  2,895  18 
Total other22,228  19,068  19,283  3,160  17  2,945  15 
Total Non-Interest Expense$214,374  $211,333  $194,349  $3,041  1% $20,025  10%
NM - Not meaningful.
 


Notable contributions to the change in non-interest expense are as follows:

Salaries and employee benefits expense increased in the first quarter of 2019 compared to the fourth quarter of 2018 primarily as a result of lower salary deferrals related to loan origination costs and an increase in costs related to deferred compensation plans impacted by market returns of related BOLI investments.

Professional fees decreased in the first quarter of 2019 compared to the fourth quarter of 2018 primarily due to lower legal and consulting fees during the current period.

The increase in amortization of intangible assets in the first quarter of 2019 compared to the fourth quarter of 2018 was primarily due to the amortization of certain acquired intangible assets related to the acquisition of CDEC in mid-December of 2018.

Other miscellaneous expense increased during the first quarter of 2019 compared to the fourth quarter of 2018 as a result of various other expenses, including a $1.0 million non-tax-deductible settlement in the first quarter of 2019.

INCOME TAXES

The Company recorded income tax expense of $29.5 million in the first quarter of 2019 compared to $28.0 million in the fourth quarter of 2018 and $26.1 million in the first quarter of 2018. The effective tax rates were 24.86% in the first quarter of 2019, 26.01% in the fourth quarter of 2018 and 24.14% in the first quarter of 2018. The effective tax rates were impacted by excess tax benefits related to share-based compensation. These excess tax benefits were $1.6 million in the first quarter of 2019 compared to $160,000 in the fourth quarter of 2018 and $2.6 million in the first quarter of 2018. Excess tax benefits are expected to be higher in the first quarter when the majority of the Company's shared-based awards vest, and will fluctuate throughout the year based on the Company's stock price and timing of employee stock option exercises and vesting of other share-based awards.

 
ASSET QUALITY
 
Allowance for Credit Losses
  
 Three Months Ended
 March 31, December 31,  March 31,
(Dollars in thousands)2019  2018  2018
Allowance for loan losses at beginning of period$152,770   $149,756  $137,905 
Provision for credit losses10,624  10,401  8,346 
Other adjustments(27) (79) (40)
Reclassification (to) from allowance for unfunded lending-related commitments(16) (150) 26 
Charge-offs:     
Commercial503  6,416  2,687 
Commercial real estate3,734  219  813 
Home equity88  715  357 
Residential real estate3  267  571 
Premium finance receivables - commercial2,210  1,741  4,721 
Premium finance receivables - life insurance     
Consumer and other102  148  129 
Total charge-offs6,640  9,506  9,278 
Recoveries:     
Commercial318  225  262 
Commercial real estate480  1,364  1,687 
Home equity62  105  123 
Residential real estate29  47  40 
Premium finance receivables - commercial556  567  385 
Premium finance receivables - life insurance     
Consumer and other56  40  47 
Total recoveries1,501  2,348  2,544 
Net charge-offs(5,139) (7,158) (6,734)
Allowance for loan losses at period end$158,212  $152,770  $139,503 
Allowance for unfunded lending-related commitments at period end1,410  1,394  1,243 
Allowance for credit losses at period end$159,622  $154,164  $140,746 
      
Annualized net charge-offs (recoveries) by category as a percentage of its own respective category’s average:     
Commercial0.01% 0.33% 0.14%
Commercial real estate0.19  (0.07) (0.05)
Home equity0.02  0.43  0.15 
Residential real estate(0.01) 0.10  0.26 
Premium finance receivables - commercial0.23  0.16  0.68 
Premium finance receivables - life insurance0.00  0.00  0.00 
Consumer and other0.16  0.30  0.26 
Total loans, net of unearned income0.09% 0.12% 0.13%
Net charge-offs as a percentage of the provision for credit losses48.37% 68.82% 80.69%
      
Loans at period-end$24,214,629  $23,820,691  $22,062,134 
Allowance for loan losses as a percentage of loans at period end0.65% 0.64% 0.63%
Allowance for credit losses as a percentage of loans at period end0.66% 0.65% 0.64%
 

The allowance for credit 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 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, for the first quarter of 2019 totaled nine basis points on an annualized basis compared to 12 basis points on an annualized basis in the fourth quarter of 2018 and 13 basis points on an annualized basis in the first quarter of 2018.  Net charge-offs totaled $5.1 million in the first quarter of 2019, a $2.0 million decrease from $7.2 million in the fourth quarter of 2018 and a $1.6 million decrease from $6.7 million in the first quarter of 2018. The decrease in net charge-offs in the first quarter of 2019 compared to fourth quarter of 2018 is primarily the result of lower charge-offs within the commercial portfolio, partially offset by an increase in charge-offs within the commercial real estate portfolio, during the current period. The provision for credit losses, totaled $10.6 million for the first quarter of 2019 compared to $10.4 million for the fourth quarter of 2018 and $8.3 million for the first quarter of 2018.

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

  
 Three Months Ended
 March 31,  December 31,  March 31,
(Dollars in thousands)2019  2018  2018
Provision for loan losses$10,608  $10,251  $8,372 
Provision for unfunded lending-related commitments16  150  (26)
Provision for credit losses$10,624  $10,401  $8,346 
 

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 March 31, 2019 and December 31, 2018.

 
 As of March 31, 2019
 Recorded Calculated As a percentage
of its own respective
(Dollars in thousands)Investment Allowance category’s balance
Commercial:(1)     
Commercial and industrial$4,460,202  $46,436  1.04%
Asset-based lending1,037,632  8,868  0.85 
Tax exempt514,789  3,255  0.63 
Leases615,015  1,675  0.27 
Commercial real estate:(1)     
Residential construction38,986  879  2.25 
Commercial construction759,826  8,240  1.08 
Land146,654  4,194  2.86 
Office891,365  6,266  0.70 
Industrial931,343  6,532  0.70 
Retail863,435  6,065  0.70 
Multi-family1,073,431  10,874  1.01 
Mixed use and other1,931,079  14,641  0.76 
Home equity(1)500,636  8,584  1.71 
Residential real estate(1)1,027,586  7,524  0.73 
Total core loan portfolio$14,791,979  $134,033  0.91%
Commercial:     
Franchise$834,911  $11,975  1.43%
Mortgage warehouse lines of credit174,284  1,399  0.80 
Community Advantage - homeowner associations185,488  465  0.25 
Aircraft11,491  15  0.13 
Purchased commercial loans (2)160,379  550  0.34 
Commercial real estate:     
Purchased commercial real estate (2)337,386  159  0.05 
Purchased home equity (2)27,812  43  0.15 
Purchased residential real estate (2)25,938  106  0.41 
Premium finance receivables     
U.S. commercial insurance loans2,620,703  6,251  0.24 
Canada commercial insurance loans (2)368,085  592  0.16 
Life insurance loans (1)4,389,599  1,376  0.03 
Purchased life insurance loans (2)165,770     
Consumer and other (1)117,561  1,246  1.06 
Purchased consumer and other (2)3,243  2  0.06 
Total consumer, niche and purchased loan portfolio$9,422,650  $24,179  0.26%
Total loans, net of unearned income$24,214,629  $158,212  0.65%
(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 December 31, 2018
 Recorded Calculated As a percentage
of its own respective
(Dollars in thousands)Investment Allowance category’s balance
Commercial:(1)     
Commercial and industrial$4,339,618  $42,948  0.99%
Asset-based lending1,025,805  9,138  0.89 
Tax exempt495,896  3,150  0.64 
Leases556,808  1,502  0.27 
Commercial real estate:(1)     
Residential construction39,569  773  1.95 
Commercial construction715,260  8,203  1.15 
Land140,409  3,953  2.82 
Office903,559  6,235  0.69 
Industrial867,676  6,083  0.70 
Retail856,114  9,312  1.09 
Multi-family933,362  9,386  1.01 
Mixed use and other2,120,361  16,183  0.76 
Home equity(1)518,814  8,428  1.62 
Residential real estate(1)975,750  7,001  0.72 
Total core loan portfolio$14,489,001  $132,295  0.91%
Commercial:     
Franchise$885,882  $8,772  0.99%
Mortgage warehouse lines of credit144,199  1,162  0.81 
Community Advantage - homeowner associations180,757  453  0.25 
Aircraft12,218  17  0.14 
Purchased commercial loans (2)187,355  684  0.37 
Commercial real estate:     
Purchased commercial real estate (2)356,942  139  0.04 
Purchased home equity (2)33,529  79  0.24 
Purchased residential real estate (2)26,714  193  0.72 
Premium finance receivables     
U.S. commercial insurance loans2,504,515  5,629  0.22 
Canada commercial insurance loans (2)337,144  515  0.15 
Life insurance loans (1)4,373,891  1,571  0.04 
Purchased life insurance loans (2)167,903     
Consumer and other (1)117,251  1,258  1.07 
Purchased consumer and other (2)3,390  3  0.09 
Total consumer, niche and purchased loan portfolio$9,331,690  $20,475  0.22%
Total loans, net of unearned income$23,820,691  $152,770  0.64%
(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 preceding tables as of March 31, 2019 and December 31, 2018.

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.

In addition to the $158.2 million of allowance for loan losses, there is $6.1 million of non-accretable credit discount on purchased loans reported in accordance with ASC 310-30 that is available to absorb credit losses.

The tables below show the aging of the Company’s loan portfolio at March 31, 2019 and December 31, 2018:

            
   90+ days 60-89 30-59    
As of March 31, 2019  and still days past days past    
(Dollars in thousands)Nonaccrual accruing due due Current Total Loans
Loan Balances:                       
Commercial (1)$55,792  $2,499  $1,787  $49,700  $7,884,413  $7,994,191 
Commercial real estate (1)15,933  4,265  5,612  54,872  6,892,823  6,973,505 
Home equity7,885    810  4,315  515,438  528,448 
Residential real estate (1)15,879  1,481  509  11,112  1,024,543  1,053,524 
Premium finance receivables - commercial14,797  6,558  5,628  20,767  2,941,038  2,988,788 
Premium finance receivables - life insurance (1)  168  4,788  35,046  4,515,367  4,555,369 
Consumer and other (1)326  280  47  350  119,801  120,804 
Total loans, net of unearned income$110,612  $15,251  $19,181  $176,162  $23,893,423  $24,214,629 

 

As of March 31, 2019
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 (1)0.7% 0.0% 0.0% 0.6% 98.7% 100.0%
Commercial real estate (1)0.2  0.1  0.1  0.8  98.8  100.0 
Home equity1.5    0.2  0.8  97.5  100.0 
Residential real estate (1)1.5  0.1  0.0  1.1  97.3  100.0 
Premium finance receivables - commercial0.5  0.2  0.2  0.7  98.4  100.0 
Premium finance receivables - life insurance (1)  0.0  0.1  0.8  99.1  100.0 
Consumer and other (1)0.3  0.2  0.0  0.3  99.2  100.0 
Total loans, net of unearned income0.5% 0.1% 0.1% 0.7% 98.6% 100.0%
(1) Including PCI loans. 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.

 

 
   90+ days 60-89 30-59    
As of December 31, 2018  and still days past days past    
(Dollars in thousands)Nonaccrual accruing due due Current Total Loans
Loan Balances:                       
Commercial (1)$50,984  $3,313  $1,651  $34,861  $7,737,729  $7,828,538 
Commercial real estate (1)19,129  6,241  10,826  51,566  6,845,490  6,933,252 
Home equity7,147    131  3,105  541,960  552,343 
Residential real estate (1)16,383  1,292  1,692  6,171  976,926  1,002,464 
Premium finance receivables - commercial11,335  7,799  11,382  15,085  2,796,058  2,841,659 
Premium finance receivables - life insurance (1)    8,407  24,628  4,508,759  4,541,794 
Consumer and other (1)348  227  87  733  119,246  120,641 
Total loans, net of unearned income$105,326  $18,872  $34,176  $136,149  $23,526,168  $23,820,691 

 

As of December 31, 2018
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 (1)0.7% 0.0% 0.0% 0.4% 98.9% 100.0%
Commercial real estate (1)0.3  0.1  0.2  0.7  98.7  100.0 
Home equity1.3    0.0  0.6  98.1  100.0 
Residential real estate (1)1.6  0.1  0.2  0.6  97.5  100.0 
Premium finance receivables - commercial0.4  0.3  0.4  0.5  98.4  100.0 
Premium finance receivables - life insurance (1)    0.2  0.5  99.3  100.0 
Consumer and other (1)0.3  0.2  0.1  0.6  98.8  100.0 
Total loans, net of unearned income0.4% 0.1% 0.1% 0.6% 98.8% 100.0%
(1) Including PCI loans. 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.
 


As of March 31, 2019, $19.2 million of all loans, or 0.1%, were 60 to 89 days past due and $176.2 million, or 0.7%, were 30 to 59 days (or one payment) past due. As of December 31, 2018, $34.2 million of all loans, or 0.1%, were 60 to 89 days past due and $136.1 million, or 0.6%, were 30 to 59 days (or one payment) past due. Many 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. All loans within the life insurance premium financing portfolio shown as 60 to 89 days and 30 to 59 days past due (four and nine credits, respectively) remain fully secured.

The Company’s home equity and residential loan portfolios continue to exhibit low delinquency ratios. Home equity loans at March 31, 2019 that are current with regard to the contractual terms of the loan agreement represent 97.5% of the total home equity portfolio. Residential real estate loans at March 31, 2019 that are current with regards to the contractual terms of the loan agreements comprise 97.3% of total residential real estate loans outstanding.

Non-performing 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 PCI loans, at the dates indicated.

      
 March 31, December 31, March 31,
(Dollars in thousands) 2019 2018 2018 
 Loans past due greater than 90 days and still accruing(1): 
Commercial$  $  $ 
Commercial real estate     
Home equity     
Residential real estate30     
Premium finance receivables - commercial6,558  7,799  8,547 
Premium finance receivables - life insurance168     
Consumer and other218  109  207 
Total loans past due greater than 90 days and still accruing6,974  7,908  8,754 
Non-accrual loans(2):     
Commercial55,792  50,984  14,007 
Commercial real estate15,933  19,129  21,825 
Home equity7,885  7,147  9,828 
Residential real estate15,879  16,383  17,214 
Premium finance receivables - commercial14,797  11,335  17,342 
Premium finance receivables - life insurance     
Consumer and other326  348  720 
Total non-accrual loans110,612  105,326  80,936 
Total non-performing loans:     
Commercial55,792  50,984  14,007 
Commercial real estate15,933  19,129  21,825 
Home equity7,885  7,147  9,828 
Residential real estate15,909  16,383  17,214 
Premium finance receivables - commercial21,355  19,134  25,889 
Premium finance receivables - life insurance168     
Consumer and other544  457  927 
Total non-performing loans$117,586  $113,234  $89,690 
Other real estate owned9,154  11,968  18,481 
Other real estate owned - from acquisitions12,366  12,852  18,117 
Other repossessed assets270  280  113 
Total non-performing assets$139,376  $138,334  $126,401 
TDRs performing under the contractual terms of the loan agreement$48,305  $33,281  $39,562 
Total non-performing loans by category as a percent of its own respective category’s period-end balance:     
Commercial0.70% 0.65% 0.20%
Commercial real estate0.23  0.28  0.33 
Home equity1.49  1.29  1.57 
Residential real estate1.51  1.63  1.98 
Premium finance receivables - commercial0.71  0.67  1.00 
Premium finance receivables - life insurance0.00     
Consumer and other0.45  0.38  0.87 
Total loans, net of unearned income0.49% 0.48% 0.41%
Total non-performing assets as a percentage of total assets0.43% 0.44% 0.44%
Allowance for loan losses as a percentage of total non-performing loans134.55% 134.92% 155.54%
(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 $40.1 million, $32.8 million and $8.1 million as of March 31, 2019, December 31, 2018 and March 31, 2018, respectively.
 

The ratio of non-performing assets to total assets was 0.43% as of March 31, 2019, compared to 0.44% at December 31, 2018, and 0.44% at March 31, 2018. Non-performing assets, excluding PCI loans, totaled $139.4 million at March 31, 2019, compared to $138.3 million at December 31, 2018 and $126.4 million at March 31, 2018. Non-performing loans, excluding PCI loans, totaled $117.6 million, or 0.49% of total loans, at March 31, 2019 compared to $113.2 million, or 0.48% of total loans, at December 31, 2018 and $89.7 million, or 0.41% of total loans, at March 31, 2018. OREO of $21.5 million at March 31, 2019 decreased $3.3 million compared to $24.8 million at December 31, 2018 and decreased $15.1 million compared to $36.6 million at March 31, 2018.

Management is pursuing the resolution of all credits in this category. At this time, management believes reserves are appropriate to absorb inherent losses and OREO is appropriately valued at the lower of carrying value or fair value less estimated costs to sell.

Nonperforming Loans Rollforward

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

   
 Three Months Ended
 March 31, December 31, March 31,
(Dollars in thousands)2019 2018 2018
Balance at beginning of period$113,234  $127,227  $90,162 
Additions, net 24,030   18,553   6,608 
Return to performing status (14,077)  (6,155)  (3,753)
Payments received (4,024)  (16,437)  (2,569)
Transfer to OREO and other repossessed assets (82)  (970)  (1,981)
Charge-offs (3,992)  (7,161)  (3,555)
Net change for niche loans (1) 2,497   (1,823)  4,778 
Balance at end of period$117,586  $113,234  $89,690 
(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:

      
 March 31, December 31, March 31,
(Dollars in thousands)2019 2018 2018
Accruing TDRs:     
Commercial$19,650  $8,545  $19,803 
Commercial real estate14,123  13,895  16,087 
Residential real estate and other14,532  10,841  3,672 
Total accrual$48,305  $33,281  $39,562 
Non-accrual TDRs: (1)     
Commercial$34,390  $27,774  $1,741 
Commercial real estate1,517  1,552  1,304 
Residential real estate and other4,150  3,495  5,069 
Total non-accrual$40,057  $32,821  $8,114 
Total TDRs:     
Commercial$54,040  $36,319  $21,544 
Commercial real estate15,640  15,447  17,391 
Residential real estate and other18,682  14,336  8,741 
Total TDRs$88,362  $66,102  $47,676 
(1) Included in total non-performing loans.
            


Other Real Estate Owned

The table below presents a summary of other real estate owned, as of March 31, 2019, December 31, 2018 and March 31, 2018, and shows the activity for the respective period and the balance for each property type:

  
 Three Months Ended
 March 31, December 31, March 31,
(Dollars in thousands)2019 2018 2018
Balance at beginning of period$24,820  $28,303  $40,646 
Disposals/resolved (2,758)  (3,848)  (3,679)
Transfers in at fair value, less costs to sell 32   997   1,789 
Additions from acquisition    160    
Fair value adjustments (574)  (792)  (2,158)
Balance at end of period$21,520  $24,820  $36,598 
         
 Period End
 March 31, December 31, March 31,
Balance by Property Type2019 2018 2018
Residential real estate$3,037  $3,446  $6,407 
Residential real estate development 1,139   1,426   2,229 
Commercial real estate 17,344   19,948   27,962 
Total$21,520  $24,820  $36,598 
 


Items Impacting Comparative Financial Results:

Acquisitions

On December 14, 2018, the Company acquired Elektra Holding Company, LLC ("Elektra"), the parent company of Chicago Deferred Exchange Company, LLC ("CDEC"). CDEC is a provider of Qualified Intermediary services (as defined by U.S. Treasury regulations) for taxpayers seeking to structure tax-deferred like-kind exchanges under Internal Revenue Code Section 1031.  CDEC has successfully facilitated more than 8,000 like-kind exchanges in the past decade for taxpayers nationwide.  These transactions typically generate customer deposits during the period following the sale of the property until such proceeds are used to purchase a replacement property.  The Company recorded goodwill of $37.6 million on the acquisition.

On December 7, 2018, the Company completed its acquisition of certain assets and the assumption of certain liabilities of American Enterprise Bank ("AEB"). Through this asset acquisition, the Company acquired approximately $164.0 million in assets, including approximately $119.3 million in loans, and approximately $150.8 million in deposits.

On August 1, 2018, the Company completed its acquisition of Chicago Shore Corporation ("CSC"). CSC was the parent company of Delaware Place Bank. Through this business combination, the Company acquired Delaware Place Bank's one banking location in Chicago, Illinois, approximately $282.8 million in assets, including approximately $152.7 million in loans, and approximately $213.1 million in deposits. The Company recorded goodwill of $26.5 million on the acquisition.

On January 4, 2018, the Company acquired certain assets and assumed certain liabilities of the mortgage banking business of Veterans First, in a business combination. The Company also acquired mortgage servicing rights assets from Veterans First on approximately 10,000 loans, totaling an estimated $1.6 billion in unpaid principal balance. Veterans First is a consumer direct lender with two offices, operating one in Salt Lake City and one in San Diego. The Company recorded goodwill of $9.1 million on the acquisition.

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, N.A., 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 Addison, Algonquin, Aurora, Bloomingdale, Buffalo Grove, Cary, Clarendon Hills, Crete, Deerfield, Des Plaines, Downers Grove, Elgin, Elk Grove Village, Elmhurst, Evanston, 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, Prospect Heights, Ravinia, Riverside, Rogers Park, Rolling Meadows, Roselle, Round Lake Beach, Shorewood, Skokie, South Holland, Spring Grove, Steger, Stone Park, Vernon Hills, Wauconda, Western Springs, Willowbrook, Wilmette, Winnetka and Wood Dale, in Albany, Burlington, Clinton, Darlington, Delafield, Delavan, Elm Grove, Genoa City, Kenosha, Lake Geneva, Madison, Menomonee Falls, Milwaukee, Monroe, Pewaukee, Racine, Sharon, Wales, Walworth and Wind Lake, Wisconsin, in Dyer, Indiana and in Naples, Florida.

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

  • FIRST Insurance Funding, a division of Lake Forest Bank & Trust Company, N.A., and Wintrust Life Finance, a division of Lake Forest Bank & Trust Company, N.A., serve commercial and life insurance loan customers, respectively, throughout the United States.
  • 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, N.A., 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.
  • Wintrust 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.
  • Wintrust Asset Finance offers direct leasing opportunities.
  • CDEC provides Qualified Intermediary services (as defined by U.S. Treasury regulations) for taxpayers seeking to structure tax-deferred like-kind exchanges under Internal Revenue Code Section 1031.

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,” “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 2018 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:

  • economic conditions that affect the economy, housing prices, the job market and other factors that may adversely affect the Company’s liquidity and the performance of its loan portfolios, particularly in the markets in which it operates;
  • negative effects suffered by us or our customers resulting from changes in U.S. trade policies;
  • 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;
  • commercial real estate market conditions 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), which may result in loss of market share and reduced income from deposits, loans, advisory fees and income from other products;
  • 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;
  • harm to the Company’s reputation;
  • any negative perception of the Company’s financial strength;
  • ability of the Company 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 of the Company to use technology to provide products and services that will satisfy customer demands and create efficiencies in operations and to manage risks associated therewith;
  • failure or breaches of our security systems or infrastructure, or those of third parties;
  • security breaches, including denial of service attacks, hacking, social engineering attacks, malware intrusion or data corruption attempts and identity theft;
  • adverse effects on our information technology systems resulting from failures, human error or cyberattacks;
  • 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 to which the Company is subject, including any effect on our reputation;
  • losses incurred in connection with repurchases and indemnification payments related to mortgages and increases in reserves associated therewith;
  • 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, and any unanticipated impact of the Tax Act;
  • changes in accounting standards, rules and interpretations such as the new CECL standard, and the impact on the Company’s financial statements;
  • the ability of the Company to receive dividends from its subsidiaries;
  • uncertainty about the future of LIBOR;
  • a decrease in the Company’s capital ratios, including as a result of 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;
  • a lowering of our credit rating;
  • changes in U.S. monetary policy and changes to the Federal Reserve’s balance sheet as a result of the end of its program of quantitative easing or otherwise;
  • 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 regulatory environment;
  • 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;
  • 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 or events 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, WEBCAST AND REPLAY

The Company will hold a conference call at 2:00 p.m. (Central Time) on Tuesday, April 16, 2019 regarding first quarter 2019 results. Individuals interested in listening should call (877) 363-5049 and enter Conference ID #5868367. A simultaneous audio-only webcast and replay of the conference call may be accessed via the Company’s website at https://www.wintrust.com, Investor Relations, Investor News and Events, Presentations & Conference Calls. The text of the first quarter 2019 earnings press release will be available on the home page of the Company’s website at https://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
 March 31, December 31, September 30, June 30, March 31,
 2019 2018 2018 2018 2018
Selected Financial Condition Data (at end of period):                   
Total assets$32,358,621  $31,244,849  $30,142,731  $29,464,588  $28,456,772 
Total loans (1)24,214,629  23,820,691  23,123,951  22,610,560  22,062,134 
Total deposits26,804,742  26,094,678  24,916,715  24,365,479  23,279,327 
Junior subordinated debentures253,566  253,566  253,566  253,566  253,566 
Total shareholders’ equity3,371,972  3,267,570  3,179,822  3,106,871  3,031,250 
Selected Statements of Income Data:         
Net interest income261,986  254,088  247,563  238,170  225,082 
Net revenue (2)343,643  329,396  347,493  333,403  310,761 
Net income89,146  79,657  91,948  89,580  81,981 
Net income per common share – Basic$1.54  $1.38  $1.59  $1.55  $1.42 
Net income per common share – Diluted$1.52  $1.35  $1.57  $1.53  $1.40 
Selected Financial Ratios and Other Data:         
Performance Ratios:         
Net interest margin3.70% 3.61% 3.59% 3.61% 3.54%
Net interest margin - fully taxable equivalent (non-GAAP) (3)3.72% 3.63% 3.61% 3.63% 3.56%
Non-interest income to average assets1.06% 0.99% 1.34% 1.34% 1.25%
Non-interest expense to average assets2.79% 2.78% 2.87% 2.90% 2.83%
Net overhead ratio (4)1.72% 1.79% 1.53% 1.57% 1.58%
Return on average assets1.16% 1.05% 1.24% 1.26% 1.20%
Return on average common equity11.09% 10.01% 11.86% 11.94% 11.29%
Return on average tangible common equity (non-GAAP) (3)14.14% 12.48% 14.64% 14.72% 14.02%
Average total assets$31,216,171  $30,179,887  $29,525,109  $28,567,579  $27,809,597 
Average total shareholders’ equity3,309,078  3,200,654  3,131,943  3,064,154  2,995,592 
Average loans to average deposits ratio92.7% 92.4% 92.2% 95.5% 95.2%
Period-end loans to deposits ratio90.3  91.3  92.8  92.8  94.8 
Common Share Data at end of period:         
Market price per common share$67.33  $66.49  $84.94  $87.05  $86.05 
Book value per common share$57.33  $55.71  $54.19  $52.94  $51.66 
Tangible common book value per share (3)$46.38  $44.67  $44.16  $43.50  $42.17 
Common shares outstanding56,638,968  56,407,558  56,377,169  56,329,276  56,256,498 
Other Data at end of period:         
Leverage Ratio(5)9.1% 9.1% 9.3% 9.4% 9.3%
Tier 1 Capital to risk-weighted assets (5)9.7% 9.7% 10.0% 10.0% 10.0%
Common equity Tier 1 capital to risk-weighted assets (5)9.3% 9.3% 9.5% 9.6% 9.5%
Total capital to risk-weighted assets (5)11.6% 11.6% 12.0% 12.1% 12.0%
Allowance for credit losses (6)$159,622  $154,164  $151,001  $144,645  $140,746 
Non-performing loans117,586  113,234  127,227  83,282  89,690 
Allowance for credit losses to total loans (6)0.66% 0.65% 0.65% 0.64% 0.64%
Non-performing loans to total loans0.49% 0.48% 0.55% 0.37% 0.41%
Number of:         
Bank subsidiaries15  15  15  15  15 
Banking offices170  167  166  162  157 
(1)  Excludes mortgage loans held-for-sale.
(2) Net revenue includes net interest income and non-interest income.
(3) See “Supplemental Financial Measures/Ratios” for additional information on this performance measure/ratio.
(4) 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.
(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.
 

 

 
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Consolidated Statements of Condition - 5 Quarter Trends
 
 (Unaudited)   (Unaudited) (Unaudited) (Unaudited)
 March 31, December 31, September 30, June 30, March 31,
(In thousands)2019 2018 2018 2018 2018
Assets                   
Cash and due from banks$270,765  $392,142  $279,936  $304,580  $231,407 
Federal funds sold and securities purchased under resale agreements58  58  57  62  57 
Interest bearing deposits with banks1,609,852  1,099,594  1,137,044  1,221,407  980,380 
Available-for-sale securities, at fair value2,185,782  2,126,081  2,164,985  1,940,787  1,895,688 
Held-to-maturity securities, at amortized cost1,051,542  1,067,439  966,438  890,834  892,937 
Trading account securities559  1,692  688  862  1,682 
Equity securities with readily determinable fair value47,653  34,717  36,414  37,839  37,832 
Federal Home Loan Bank and Federal Reserve Bank stock89,013  91,354  99,998  96,699  104,956 
Brokerage customer receivables14,219  12,609  15,649  16,649  24,531 
Mortgage loans held-for-sale248,557  264,070  338,111  455,712  411,505 
Loans, net of unearned income24,214,629  23,820,691  23,123,951  22,610,560  22,062,134 
Allowance for loan losses(158,212) (152,770) (149,756) (143,402) (139,503)
Net loans24,056,417  23,667,921  22,974,195  22,467,158  21,922,631 
Premises and equipment, net676,037  671,169  664,469  639,345  626,687 
Lease investments, net224,240  233,208  199,241  194,160  190,775 
Accrued interest receivable and other assets888,492  696,707  700,568  666,673  601,794 
Trade date securities receivable375,211  263,523    450   
Goodwill573,658  573,141  537,560  509,957  511,497 
Other intangible assets46,566  49,424  27,378  21,414  22,413 
Total assets$32,358,621  $31,244,849  $30,142,731  $29,464,588  $28,456,772 
Liabilities and Shareholders’ Equity         
Deposits:         
Non-interest bearing$6,353,456  $6,569,880  $6,399,213  $6,520,724  $6,612,319 
Interest bearing20,451,286  19,524,798  18,517,502  17,844,755  16,667,008 
Total deposits26,804,742  26,094,678  24,916,715  24,365,479  23,279,327 
Federal Home Loan Bank advances576,353  426,326  615,000  667,000  915,000 
Other borrowings372,194  393,855  373,571  255,701  247,092 
Subordinated notes139,235  139,210  139,172  139,148  139,111 
Junior subordinated debentures253,566  253,566  253,566  253,566  253,566 
Accrued interest payable and other liabilities840,559  669,644  664,885  676,823  591,426 
Total liabilities28,986,649  27,977,279  26,962,909  26,357,717  25,425,522 
Shareholders’ Equity:         
Preferred stock125,000  125,000  125,000  125,000  125,000 
Common stock56,765  56,518  56,486  56,437  56,364 
Surplus1,565,185  1,557,984  1,553,353  1,547,511  1,540,673 
Treasury stock(6,650) (5,634) (5,547) (5,355) (5,355)
Retained earnings1,682,016  1,610,574  1,543,680  1,464,494  1,387,663 
Accumulated other comprehensive loss(50,344) (76,872) (93,150) (81,216) (73,095)
Total shareholders’ equity3,371,972  3,267,570  3,179,822  3,106,871  3,031,250 
Total liabilities and shareholders’ equity$32,358,621  $31,244,849  $30,142,731  $29,464,588  $28,456,772 
 

 

 
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Consolidated Statements of Income (Unaudited) - 5 Quarter Trends
  
 Three Months Ended
 March 31, December 31, September 30, June 30, March 31,
(In thousands, except per share data)2019 2018 2018 2018 2018
Interest income                   
Interest and fees on loans$296,987  $283,311  $271,134  $255,063  $234,994 
Mortgage loans held-for-sale2,209  3,409  5,285  4,226  2,818 
Interest bearing deposits with banks5,300  5,628  5,423  3,243  2,796 
Federal funds sold and securities purchased under resale agreements      1   
Investment securities27,956  26,656  21,710  19,888  19,128 
Trading account securities8  14  11  4  14 
Federal Home Loan Bank and Federal Reserve Bank stock1,355  1,343  1,235  1,455  1,298 
Brokerage customer receivables155  235  164  167  157 
Total interest income333,970  320,596  304,962  284,047  261,205 
Interest expense         
Interest on deposits60,976  55,975  48,736  35,293  26,549 
Interest on Federal Home Loan Bank advances2,450  2,563  1,947  4,263  3,639 
Interest on other borrowings3,633  3,199  2,003  1,698  1,699 
Interest on subordinated notes1,775  1,788  1,773  1,787  1,773 
Interest on junior subordinated debentures3,150  2,983  2,940  2,836  2,463 
Total interest expense71,984  66,508  57,399  45,877  36,123 
Net interest income261,986  254,088  247,563  238,170  225,082 
Provision for credit losses10,624  10,401  11,042  5,043  8,346 
Net interest income after provision for credit losses251,362  243,687  236,521  233,127  216,736 
Non-interest income         
Wealth management23,977  22,726  22,634  22,617  22,986 
Mortgage banking18,158  24,182  42,014  39,834  30,960 
Service charges on deposit accounts8,848  9,065  9,331  9,151  8,857 
Gains (losses) on investment securities, net1,364  (2,649) 90  12  (351)
Fees from covered call options1,784  626  627  669  1,597 
Trading (losses) gains, net(171) (155) (61) 124  103 
Operating lease income, net10,796  10,882  9,132  8,746  9,691 
Other16,901  10,631  16,163  14,080  11,836 
Total non-interest income81,657  75,308  99,930  95,233  85,679 
Non-interest expense         
Salaries and employee benefits125,723  122,111  123,855  121,675  112,436 
Equipment11,770  11,523  10,827  10,527  10,072 
Operating lease equipment depreciation8,319  8,462  7,370  6,940  6,533 
Occupancy, net16,245  15,980  14,404  13,663  13,767 
Data processing7,525  8,447  9,335  8,752  8,493 
Advertising and marketing9,858  9,414  11,120  11,782  8,824 
Professional fees5,556  9,259  9,914  6,484  6,649 
Amortization of other intangible assets2,942  1,407  1,163  997  1,004 
FDIC insurance3,576  4,044  4,205  4,598  4,362 
OREO expense, net632  1,618  596  980  2,926 
Other22,228  19,068  20,848  20,371  19,283 
Total non-interest expense214,374  211,333  213,637  206,769  194,349 
Income before taxes118,645  107,662  122,814  121,591  108,066 
Income tax expense29,499  28,005  30,866  32,011  26,085 
Net income$89,146  $79,657  $91,948  $89,580  $81,981 
Preferred stock dividends2,050  2,050  2,050  2,050  2,050 
Net income applicable to common shares$87,096  $77,607  $89,898  $87,530  $79,931 
Net income per common share - Basic$1.54  $1.38  $1.59  $1.55  $1.42 
Net income per common share - Diluted$1.52  $1.35  $1.57  $1.53  $1.40 
Cash dividends declared per common share$0.25  $0.19  $0.19  $0.19  $0.19 
Weighted average common shares outstanding56,529  56,395  56,366  56,299  56,137 
Dilutive potential common shares699  892  918  928  888 
Average common shares and dilutive common shares57,228  57,287  57,284  57,227  57,025 
 

 

 
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Period End Loan Balances - 5 Quarter Trends
 
 March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands)2019 2018 2018 2018 2018
Balance:                   
Commercial$7,994,191  $7,828,538  $7,473,958  $7,289,060  $7,060,871 
Commercial real estate6,973,505  6,933,252  6,746,774  6,575,084  6,633,520 
Home equity528,448  552,343  578,844  593,500  626,547 
Residential real estate1,053,524  1,002,464  924,250  895,470  869,104 
Premium finance receivables - commercial2,988,788  2,841,659  2,885,327  2,833,452  2,576,150 
Premium finance receivables - life insurance4,555,369  4,541,794  4,398,971  4,302,288  4,189,961 
Consumer and other120,804  120,641  115,827  121,706  105,981 
Total loans, net of unearned income$24,214,629  $23,820,691  $23,123,951  $22,610,560  $22,062,134 
Mix:         
Commercial33% 33% 32% 32% 32%
Commercial real estate29  29  29  29  30 
Home equity2  2  3  3  3 
Residential real estate4  4  4  4  4 
Premium finance receivables - commercial12  12  12  12  12 
Premium finance receivables - life insurance19  19  19  19  19 
Consumer and other1  1  1  1   
Total loans, net of unearned income100% 100% 100% 100% 100%
 

 

 
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Period End Deposits Balances - 5 Quarter Trends
 
 March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands)2019 2018 2018 2018 2018
Balance:                   
Non-interest bearing$6,353,456  $6,569,880  $6,399,213  $6,520,724  $6,612,319 
NOW and interest bearing demand deposits2,948,576  2,897,133  2,512,259  2,452,474  2,315,122 
Wealth management deposits (1)3,328,781  2,996,764  2,520,120  2,523,572  2,495,134 
Money market6,093,596  5,704,866  5,429,921  5,205,678  4,617,122 
Savings2,729,626  2,665,194  2,595,164  2,763,062  2,901,504 
Time certificates of deposit5,350,707  5,260,841  5,460,038  4,899,969  4,338,126 
Total deposits$26,804,742  $26,094,678  $24,916,715  $24,365,479  $23,279,327 
Mix:         
Non-interest bearing24% 25% 26% 27% 28%
NOW and interest bearing demand deposits11  11  10  10  10 
Wealth management deposits (1)12  12  10  11  11 
Money market23  22  22  21  20 
Savings10  10  10  11  12 
Time certificates of deposit20  20  22  20  19 
Total deposits100% 100% 100% 100% 100%
(1) Represents deposit balances of the Company’s subsidiary banks from brokerage customers of Wintrust Investments, CDEC, trust and asset management customers of the 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
 March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands)2019 2018 2018 2018 2018
Net interest income (non-GAAP)$263,587  $255,658  $249,082  $239,549  $226,286 
Call option income1,784  626  627  669  1,597 
Net interest income (non-GAAP), including call option income$265,371  $256,284  $249,709  $240,218  $227,883 
Yield on earning assets4.74% 4.58% 4.45% 4.32% 4.13%
Rate on interest-bearing liabilities1.40  1.33  1.17  1.00  0.83 
Rate spread3.34% 3.25% 3.28% 3.32% 3.30%
Less:  Fully tax-equivalent adjustment(0.02) (0.02) (0.02) (0.02) (0.02)
Net free funds contribution0.38  0.38  0.33  0.31  0.26 
Net interest margin (GAAP)3.70% 3.61% 3.59% 3.61% 3.54%
Fully tax-equivalent adjustment0.02  0.02  0.02  0.02  0.02 
Net interest margin (non-GAAP)3.72% 3.63% 3.61% 3.63% 3.56%
Call option income0.03  0.01  0.01  0.01  0.03 
Net interest margin (non-GAAP), including call option income3.75% 3.64% 3.62% 3.64% 3.59%
 

 

 
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION   
Net Interest Margin (Including Call Option Income) - YTD Trends 
 
  Three Months Ended  
  March 31,  Years Ended December 31,
(Dollars in thousands) 2019 2018 2017 2016 2015
Net interest income (non-GAAP) $263,587  $970,575  $839,563  $728,145  $646,238 
Call option income 1,784  3,519  4,402  11,470  15,364 
Net interest income (non-GAAP), including call option income $265,371  $974,094  $843,965  $739,615  $661,602 
Yield on earning assets 4.74% 4.38% 3.91% 3.67% 3.76%
Rate on interest-bearing liabilities 1.40  1.09  0.67  0.57  0.54 
Rate spread 3.34% 3.29% 3.24% 3.10% 3.22%
Less:  Fully tax-equivalent adjustment (0.02) (0.02) (0.03) (0.02) (0.02)
Net free funds contribution 0.38  0.32  0.20  0.16  0.14 
Net interest margin (GAAP) 3.70% 3.59% 3.41% 3.24% 3.34%
Fully tax-equivalent adjustment 0.02  0.02  0.03  0.02  0.02 
Net interest margin (non-GAAP) 3.72% 3.61% 3.44% 3.26% 3.36%
Call option income 0.03  0.01  0.02  0.05  0.08 
Net interest margin (non-GAAP), including call option income 3.75% 3.62% 3.46% 3.31% 3.44%
 

 

 
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Quarterly Average Balances - 5 Quarter Trends
 
 Three Months Ended
 March 31, December 31, September 30, June 30, March 31,
(In thousands)2019 2018 2018 2018 2018
Interest-bearing deposits with banks and cash equivalents$897,629  $1,042,860  $998,004  $759,425  $749,973 
Investment securities3,630,577  3,347,496  3,046,272  2,890,828  2,892,617 
FHLB and FRB stock94,882  98,084  88,335  115,119  105,414 
Liquidity management assets$4,623,088  $4,488,440  $4,132,611  $3,765,372  $3,748,004 
Other earning assets13,591  16,204  17,862  21,244  27,571 
Mortgage loans held-for-sale188,190  265,717  380,235  403,967  281,181 
Loans, net of unearned income23,880,916  23,164,154  22,823,378  22,283,541  21,711,342 
Total earning assets$28,705,785  $27,934,515  $27,354,086  $26,474,124  $25,768,098 
Allowance for loan losses(157,782) (154,438) (148,503) (147,192) (143,108)
Cash and due from banks283,019  271,403  268,006  270,240  254,489 
Other assets2,385,149  2,128,407  2,051,520  1,970,407  1,930,118 
Total assets$31,216,171  $30,179,887  $29,525,109  $28,567,579  $27,809,597 
NOW and interest bearing demand deposits$2,803,338  $2,671,283  $2,519,445  $2,295,268  $2,255,692 
Wealth management deposits2,614,035  2,289,904  2,517,141  2,365,191  2,250,139 
Money market accounts5,915,525  5,632,268  5,369,324  4,883,645  4,520,620 
Savings accounts2,715,422  2,553,133  2,672,077  2,702,665  2,813,772 
Time deposits5,267,796  5,381,029  5,214,637  4,557,187  4,322,111 
Interest-bearing deposits$19,316,116  $18,527,617  $18,292,624  $16,803,956  $16,162,334 
Federal Home Loan Bank advances594,335  551,846  429,739  1,006,407  872,811 
Other borrowings465,571  385,878  268,278  240,066  263,125 
Subordinated notes139,217  139,186  139,155  139,125  139,094 
Junior subordinated debentures253,566  253,566  253,566  253,566  253,566 
Total interest-bearing liabilities$20,768,805  $19,858,093  $19,383,362  $18,443,120  $17,690,930 
Non-interest bearing deposits6,444,378  6,542,228  6,461,195  6,539,731  6,639,845 
Other liabilities693,910  578,912  548,609  520,574  483,230 
Equity3,309,078  3,200,654  3,131,943  3,064,154  2,995,592 
Total liabilities and shareholders’ equity$31,216,171  $30,179,887  $29,525,109  $28,567,579  $27,809,597 
 

 

 
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Net Interest Margin - 5 Quarter Trends
 
 Three Months Ended
 March 31,
 2019
 December 31,
 2018
 September 30,
 2018
 June 30,
 2018
 March 31,
 2018
Yield earned on:         
Interest-bearing deposits with banks and cash equivalents2.39% 2.14% 2.16% 1.71% 1.51%
Investment securities3.19  3.23