ROSEMONT, Ill., April 21, 2020 (GLOBE NEWSWIRE) -- Wintrust Financial Corporation (“Wintrust” or “the Company”) (Nasdaq: WTFC) announced net income of $62.8 million or $1.04 per diluted common share for the first quarter of 2020, a decrease in diluted earnings per common share of 27.8% compared to the prior quarter and a decrease of 31.6% compared to the first quarter of 2019.

Highlights of the First Quarter of 2020:
Comparative information to the fourth quarter of 2019

  • Total assets increased by $2.2 billion.
  • Total loans increased by $1.0 billion.
  • Total deposits increased by $1.4 billion.
  • Net interest income decreased by $436,000 as the impact of a five basis point decline in net interest margin and one less day was partially offset by a $925 million increase in average earning assets.
  • The allowance for credit losses increased by $95.0 million to $253.5 million as of March 31, 2020 as compared to $158.5 million as of December 31, 2019.  The change in allowance for credit losses was due to:
    • An increase of $47.4 million related to the cumulative effect adjustment from the adoption of the Current Expected Credit Loss ("CECL") standard effective as of January 1, 2020.
    • Provision for credit losses of $53.0 million in the current quarter.  Provision for credit losses increased by $45.2 million from a provision for credit losses of $7.8 million in the fourth quarter of 2019 primarily related to the implementation of CECL and the economic conditions created by the COVID-19 pandemic.
    • Net charge-offs of $5.3 million in the first quarter of 2020 as compared to $12.7 million in the fourth quarter of 2019.

Other highlights of the first quarter of 2020

  • Recorded $17.4 million of derivative income associated with mandatory commitments to fund mortgage originations for sale in the current quarter as compared to a $1.0 million derivative loss in the fourth quarter of 2019. Mandatory commitments to fund mortgage originations for sale were $1.4 billion at the end of the first quarter of 2020 as compared to $372 million at the end of the fourth quarter of 2019.
  • Recorded a decrease in the value of mortgage servicing rights related to changes in fair value model assumptions, net of derivative contract activity held as an economic hedge, of $10.4 million.
  • Recognized $4.4 million of net losses on investment securities, primarily as a result of unrealized losses on market sensitive securities.
  • Incurred acquisition related costs of $1.7 million in the first quarter of 2020 as compared to $2.4 million in the fourth quarter of 2019.
  • Total period end loans were $871 million higher than average total loans in current quarter.
  • Repurchased 576,469 shares of common stock at a cost of $37.1 million. At this time, we have temporarily suspended our common stock repurchase program, as an additional prudential measure.

Edward J. Wehmer, Founder and Chief Executive Officer, commented, "I would like to start by thanking all Wintrust employees for their passion and commitment during this difficult time. As the challenges of COVID-19 affect our customers and our communities, we stand ready to be responsive and supportive. I am extremely proud of our successful efforts earlier this month to timely launch the Paycheck Protection Program ("PPP") to provide much needed funding to our small business customers so that they can continue to operate and pay their employees. Our teams worked tirelessly to process approximately 8,900 applications with a median loan size of approximately $87,500, totaling loan approvals of nearly $3.3 billion through April 17th. We are honored to be part of the solution to the complex problems faced by our clients during the COVID-19 pandemic. We will continue to answer their call throughout this crisis and into the eventual recovery.  Please see our previous releases regarding our PPP activity to date. We expect to further participate in the program if additional government funding is approved."

With respect to the current quarter, Mr Wehmer remarked, "Wintrust reported net income of $62.8 million for the first quarter of 2020, down from $86.0 million in the fourth quarter of 2019. However, pre-tax income, excluding provision for credit losses and MSR valuation adjustments (non-GAAP), increased by $27.8 million over the previous quarter and $12.4 million over the first quarter of 2019. The Company experienced strong balance sheet growth as total assets were $2.2 billion higher than the prior quarter end and $6.4 billion higher than the end of the first quarter of 2019. The first quarter was characterized by significant balance sheet growth, stable net interest income, strong mortgage banking revenue, increased provision for credit losses primarily related to the implementation of CECL and the economic conditions created by the COVID-19 pandemic, and a continued focus to increase franchise value in our market area."

Mr. Wehmer continued, "The Company grew total loans by $1.0 billion in the current quarter with growth diversified primarily across various loan portfolios including the commercial, commercial real estate and life insurance premium finance receivable portfolios. Management estimates that nearly half of the growth in the commercial category during the quarter was a result of customer draws on unfunded commitments primarily occurring toward the end of the quarter. We have seen this activity abate after quarter end. Total deposits increased by $1.4 billion as compared to the fourth quarter of 2019 as strong retail deposit growth, including growth in our MaxSafe product, was supplemented by an increase in brokered deposits. Our loans to deposits ratio ended the quarter at 88.4% and we are confident that we have sufficient liquidity to meet customer loan demand."

Mr. Wehmer commented, "Despite one less day in the quarter and modest net interest margin compression, net interest income stayed relatively flat in the first quarter of 2020 as compared to the fourth quarter of 2019.  We believe that our ability to increase market share and grow the balance sheet will continue to help mitigate the pressures presented by a lower interest rate environment. The declining interest rate environment contributed to a reduction in loan yields of 17 basis points; however that impact was partially offset by a 13 basis point improvement in the rate paid on interest bearing deposits. As always, we will strive to grow without a commensurate increase in expenses to enhance our net overhead ratio which was 1.33% in the first quarter of 2020."

Mr. Wehmer noted, “Our mortgage banking business delivered a record quarter in increased pipeline in light of the demand associated with historically low long term interest rates. Loan volumes originated for sale in the current quarter were $1.2 billion, similar to the fourth quarter of 2019.  However, due to record mortgage applications and interest rate lock volume near the end of the quarter, mandatory commitments to fund mortgage originations for sale were $1.4 billion at the end of the first quarter of 2020 as compared to $372 million at the end of the fourth quarter of 2019.  Additionally, the Company recorded a $10.4 million decrease in the value of mortgage servicing rights related to changes in fair value model assumptions, net of derivative contract activity held as an economic hedge. We are leveraging efficiencies in our delivery channels and staffing strategies to keep pace with unprecedented demand. We believe the second quarter of 2020 will provide another strong quarter for mortgage banking production."

Commenting on credit quality, Mr. Wehmer stated, "The Company recorded net charge-offs of $5.3 million in the first quarter of 2020 as compared to $12.7 million in the fourth quarter of 2019.  However, provision for credit losses totaled $53.0 million in the first quarter of 2020 as compared to $7.8 million in the fourth quarter of 2019. The elevated provision expense in the current quarter was primarily related to the implementation of the CECL standard and the economic conditions created by the COVID-19 pandemic. Non-performing assets as of the current quarter end totaled $190.4 million, an increase of $57.6 million from the previous quarter end.  Due to the adoption of CECL, $35.4 million of the $57.6 million increase relates to purchased financial assets with credit deterioration that were not previously required to be reported as non-performing assets but are now included in non-performing assets. We believe that the Company’s reserves remain appropriate and we remain diligent in our review of credit."

Mindful of the challenges ahead, Mr Wehmer noted, "We leverage robust capital and liquidity management frameworks, which include stress testing processes, to assess and monitor risk and inform decision making. We believe the Company has adequate liquidity and capital to effectively manage through the COVID-19 pandemic. However, we will continue to prudently evaluate and expand liquidity sources, including the possible utilization of the PPP liquidity facility, if necessary."

Mr. Wehmer continued, "Wintrust will continue to practice what we preach in our unwavering commitment to our communities by serving customers via drive up branches, by appointment, telephonically and through digital tools. We believe that we are uniquely positioned by being technologically on par with the big banks, as demonstrated by our PPP efforts, while maintaining the agility and high-touch, personalized service nature of a community bank. We have executed our existing business continuity plan successfully across the Wintrust enterprise and I am proud of our Company's effectiveness in seamlessly adapting to a remote working environment. In addition to our efforts to support our customers, we are also focused on the wellbeing of our colleagues, modifying certain health care programs to provide additional benefits during the COVID-19 pandemic, as well as offering other pandemic benefits and compensation premiums to eligible employees."

Mr. Wehmer concluded, "We have experienced significant growth in recent quarters and believe that our opportunities for both internal and external growth remain consistently strong, while we continue to carefully monitor the COVID-19 pandemic and evaluate the impact that it could have on the economy, our customers and our business. We remain focused on navigating the current environment by actively monitoring and managing our credit portfolio."

Graphs available at the following link:
http://ml.globenewswire.com/Resource/Download/828bdbfd-a9ad-4684-b6e6-46d21509f781

SUMMARY OF RESULTS:

BALANCE SHEET

Total asset growth of $2.2 billion in the first quarter of 2020 was primarily comprised of a $1.0 billion increase in loans and a $465 million increase in available for sale securities. The Company believes that the $1.9 billion of interest bearing deposits with banks held as of March 31, 2020 provides sufficient liquidity to operate its business plan.

Total liabilities grew by $2.2 billion in the first quarter of 2020 primarily comprised of a $1.4 billion increase in total deposits. The Company successfully grew deposits in the first quarter through organic retail channels, including $282.7 million of growth in our MaxSafe products, that was supplemented by an increase in brokered deposits. Our loans to deposits ratio ended the quarter at 88.4%. Management believes in substantially funding the Company's balance sheet with core deposits and utilizes brokered or wholesale funding sources as appropriate to manage its liquidity position as well as for interest rate risk management purposes.

For more information regarding changes in the Company’s balance sheet, see Consolidated Statements of Condition and Tables 1 through 3 in this report.

NET INTEREST INCOME

For the first quarter of 2020, net interest income totaled $261.4 million, a decrease of $436,000 as compared to the fourth quarter of 2019 and a decrease of $543,000 as compared to the first quarter of 2019. The $436,000 decrease in net interest income in the first quarter of 2020 compared to the fourth quarter of 2019 was attributable to the impact of a five basis point decline in net interest margin and one less day.  This impact was partially offset by $924.8 million of growth in average earning assets.

Net interest margin was 3.12% (3.14% on a fully taxable-equivalent basis, non-GAAP) during the first quarter of 2020 compared to 3.17% (3.19% on a fully taxable-equivalent basis, non-GAAP) during the fourth quarter of 2019 and 3.70% (3.72% on a fully taxable-equivalent basis, non-GAAP) during the first quarter of 2019. The five basis point decrease in net interest margin in the first quarter of 2020 as compared to the fourth quarter of 2019 was attributable to a 12 basis point decline in the yield on earnings assets and a four basis point decrease in the net free funds contribution partially offset by an 11 basis point decrease in the rate paid on interest bearing liabilities. The 12 basis point decline in the yield on earning assets in the current quarter as compared to the fourth quarter of 2019 was primarily due to a 17 basis point decline in the yield on loans along with lower yields on interest bearing cash. The 11 basis point decrease in the rate paid on interest bearing liabilities in the current quarter as compared to the prior quarter is primarily due to a 13 basis point decrease in the rate paid on interest bearing deposits as management initiated various deposit rate reductions given the recent decrease in the interest rate environment.

For more information regarding net interest income, see Tables 4 through 8 in this report.

ASSET QUALITY

The allowance for credit losses totaled $253.5 million as of March 31, 2020 an increase of $95.0 million as compared to $158.5 million as of December 31, 2019. The increase in allowance for credit losses includes a $47.4 million increase related to the cumulative effect adjustment from the adoption of the CECL standard on January 1, 2020.

The provision for credit losses totaled $53.0 million for the first quarter of 2020 compared to $7.8 million for the fourth quarter of 2019 and $10.6 million for the first quarter of 2019.  The elevated provision expense in the current quarter was primarily related to the implementation of the CECL standard and the economic conditions created by the COVID-19 pandemic. Management believes the allowance for credit losses is appropriate to provide for inherent losses in the portfolio. The CECL standard requires the Company to estimate expected credit losses over the life of the Company’s financial assets at a certain point in time.  There can be no assurances, however, that future losses will not significantly exceed the amounts provided for, thereby affecting future results of operations. For more information regarding the provision for credit losses, see Table 10 in this report.

Net charge-offs totaled $5.3 million in the first quarter of 2020, a $7.4 million decrease from $12.7 million in the fourth quarter of 2019 and a $146,000 increase from $5.1 million in the first quarter of 2019. Net charge-offs as a percentage of average total loans, in the first quarter of 2020 totaled eight basis points on an annualized basis compared to 19 basis points on an annualized basis in the fourth quarter of 2019 and nine basis points on an annualized basis in the first quarter of 2019. For more information regarding net charge-offs, see Table 9 in this report.

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, niche and consumer loans and purchased loans. A summary of the allowance for loan losses calculated for the loan components in the core loan portfolio, the niche and consumer loan portfolio and purchased loan portfolio as of March 31, 2020 and December 31, 2019 is shown on Table 11 of this report.

As of March 31, 2020, $33.0 million of all loans, or 0.1%, were 60 to 89 days past due and $262.7 million, or 0.9%, were 30 to 59 days (or one payment) past due. As of December 31, 2019, $50.5 million of all loans, or 0.2%, were 60 to 89 days past due and $248.2 million, or 0.9%, 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.

The Company’s home equity and residential loan portfolios continue to exhibit low delinquency rates as of March 31, 2020. Home equity loans at March 31, 2020 that are current with regard to the contractual terms of the loan agreement represent 98.1% of the total home equity portfolio. Residential real estate loans at March 31, 2020 that are current with regards to the contractual terms of the loan agreements comprised 96.4% of total residential real estate loans outstanding. For more information regarding past due loans, see Table 12 in this report.

Prior to January 1, 2020, purchased credit impaired ("PCI") loans were aggregated into pools by common risk characteristics for accounting purposes, including recognition of interest income on a pool basis. Measurement of any allowance for loan losses on these loans were offset by the remaining discount related to the pool.  As a result of the implementation of CECL, beginning in the first quarter of 2020, PCI loans transitioned to a classification of purchased financial assets with credit deterioration ("PCD"), which no longer maintains the prior pools and related accounting concepts. Measurement of any allowance for loan losses on PCD loans is no longer offset by the remaining discount, resulting in additional allowance being recognized at January 1, 2020 through a cumulative effect adjustment to retained earnings. See Table 9 for information on this increase at transition. Additionally, recognition of interest income on PCD loans is considered at the individual asset level following the Company's accrual policies, instead of based upon the entire pool of loans.  Due to the first quarter of 2020 adoption of CECL, the Company included $35.4 million in non-performing PCD loans in total non-performing loans as of March 31, 2020.

The ratio of non-performing assets, excluding PCD assets, to total assets was 0.40% as of March 31, 2020, compared to 0.36% at December 31, 2019, and 0.43% at March 31, 2019. Non-performing assets, excluding PCD assets, totaled $155.0 million at March 31, 2020, compared to $132.8 million at December 31, 2019 and $139.4 million at March 31, 2019. Non-performing loans, excluding PCD loans, totaled $143.9 million, or 0.53% of total loans, at March 31, 2020 compared to $117.6 million, or 0.44% of total loans, at December 31, 2019 and $117.6 million, or 0.49% of total loans, at March 31, 2019.  This increase includes a $5.0 million increase in premium finance receivable balances that are past due greater than 90 days and still accruing. The level of past due premium finance receivables is impacted by emergency orders issued by states which extend the grace period for nonpayment of insurance premiums to carriers. Other real estate owned ("OREO") of $11.0 million at March 31, 2020 decreased by $4.2 million compared to $15.2 million at December 31, 2019 and decreased $10.5 million compared to $21.5 million at March 31, 2019. Management is pursuing the resolution of all non-performing assets. At this time, management believes OREO is appropriately valued at the lower of carrying value or fair value less estimated costs to sell. For more information regarding non-performing assets, see Table 13 in this report.

NON-INTEREST INCOME

Wealth management revenue increased by $942,000 during the first quarter of 2020 as compared to the fourth quarter of 2019 primarily due to increased trust fees and brokerage commissions. 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 the Chicago Deferred Exchange Company.

Mortgage banking revenue increased by $466,000 in the first quarter of 2020 as compared to the fourth quarter of 2019, primarily as a result of increased derivative income associated with mandatory commitments to fund originations for sale, partially offset by a decrease in the fair value of the mortgage servicing rights portfolio.  Mandatory commitments to fund originations for sale were $1.4 billion at the end of the first quarter of 2020 as compared to $372.4 million at the end of the fourth quarter of 2019. The percentage of origination volume from refinancing activities was 63% in the first quarter of 2020 as compared to 60% in the fourth quarter of 2019. Mortgage banking revenue includes revenue from activities related to originating, selling and servicing residential real estate loans for the secondary market.

During the first quarter of 2020, the fair value of the mortgage servicing rights portfolio decreased primarily due to a negative fair value adjustment of $14.6 million as well as a reduction in value of $7.0 million due to payoffs and paydowns of the existing portfolio. The Company entered into interest rate swaps at the beginning of the fourth quarter of 2019 to economically hedge a portion of the potential negative fair value changes recorded in earnings related to its mortgage servicing rights portfolio. The Company recorded a gain of $4.2 million on the interest rate swaps held as economic hedges against the mortgage servicing rights primarily related to the mark to market valuation adjustment at quarter end which was recorded in mortgage banking revenue.

The net losses recognized on investment securities in the first quarter of 2020 were $4.4 million as compared to a gain of $587,000 in the fourth quarter of 2019. The losses recorded in the first quarter of 2020 primarily relate to unrealized losses on market sensitive securities held by the Company.

Other non-interest income increased by $4.2 million in the first quarter of 2020 as compared to the fourth quarter of 2019 primarily due to increased income from interest rate swap fees and net gains related to the sales of loans and leases. These increases were partially offset by market losses on BOLI investments related to non-qualified deferred compensation accounts recorded in BOLI income.

For more information regarding non-interest income, see Tables 14 and 15 in this report.

NON-INTEREST EXPENSE

Salaries and employee benefits expense decreased by $9.2 million in the first quarter of 2020 as compared to the fourth quarter of 2019. The $9.2 million decrease is comprised of a decrease of $8.7 million in commissions and incentive compensation and a decrease of $1.6 million in salaries expense partially offset by $1.1 million increase in employee benefits expense. The decrease in commissions and incentive compensation is primarily due to lower expenses associated with the Company's long term incentive program.

Data processing expenses totaled $8.4 million in the first quarter of 2020, an increase of $804,000 as compared to the fourth quarter of 2019. The increase in the current quarter relates primarily to conversion costs associated with the Countryside Bank acquisition.

Advertising and marketing expenses in the first quarter of 2020 decreased by $1.7 million as compared to the fourth quarter of 2019 primarily related to lower media advertising costs. Marketing costs are incurred to promote the Company's brand, commercial banking capabilities, the Company's various products, to attract loans and deposits and to announce new branch openings as well as the expansion of the Company's non-bank businesses. The level of marketing expenditures depends on the timing of sponsorship programs utilized which are determined based on the market area, targeted audience, competition and various other factors.

FDIC insurance expense totaled $4.1 million in the first quarter of 2020, an increase of $2.8 million as compared to the fourth quarter of 2019. In the prior quarter, the Company recorded a $2.8 million reduction to FDIC insurance expense related to assessment credits received from the FDIC.

In the first quarter of 2020, the Company recorded a $1.3 million gain on sale of an OREO property resulting in net OREO income of $876,000 in the first quarter of 2020. This compares to OREO expense of $536,000 in the prior quarter.

Miscellaneous expense in the first quarter of 2020 decreased $5.3 million as compared to the fourth quarter of 2019. The decrease in the current quarter as compared to the fourth quarter of 2019 is primarily due to charges recognized in the fourth quarter including a litigation settlement, contingent consideration related to previous acquisitions of certain mortgage businesses and overlapping telecommunication charges. Miscellaneous expense includes ATM expenses, correspondent bank charges, directors' fees, telephone, travel and entertainment, corporate insurance, dues and subscriptions, problem loan expenses and lending origination costs that are not deferred.

For more information regarding non-interest expense, see Table 16 in this report.

INCOME TAXES

The Company recorded income tax expense of $24.3 million in the first quarter of 2020 compared to $30.7 million in the fourth quarter of 2019 and $29.5 million in the first quarter of 2019. The effective tax rates were 27.87% in the first quarter of 2020 compared to 26.33% in the fourth quarter of 2019 and 24.86% in the first quarter of 2019.

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 2020, this unit expanded its loan and deposit portfolios.  However, the banking segment also experienced net interest margin compression in part due to current market conditions.

Mortgage banking revenue was $48.3 million for the first quarter of 2020 an increase from $47.9 million for the fourth quarter of 2019. Services charges on deposit accounts totaled $11.3 million in the first quarter of 2020 an increase of $292,000 as compared to the fourth quarter of 2019 primarily due to higher account analysis fees. The Company's gross commercial and commercial real estate loan pipelines remained strong as of March 31, 2020. Before the impact of scheduled payments and prepayments, gross commercial and commercial real estate loan pipelines were estimated to be approximately $1.0 billion to $1.1 billion at March 31, 2020. When adjusted for the probability of closing, the pipelines were estimated to be approximately $590 million to $650 million at March 31, 2020.

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. Originations within the insurance premium financing receivables portfolio were $2.5 billion during the first quarter of 2020 and average balances increased by $231.4 million as compared to the fourth quarter of 2019. The increase in average balances was more than offset by margin compression in this portfolio resulting in a $3.0 million decrease in interest income attributed to the lower market rates of interest associated with the insurance premium finance receivables portfolio. The Company's leasing business grew during the first quarter of 2020, with its portfolio of assets, including capital leases, loans and equipment on operating leases, increasing by $174.4 million to $1.8 billion at the end of the first quarter of 2020. Revenues from the Company's out-sourced administrative services business were $1.1 million in the first quarter of 2020, unchanged from the fourth quarter of 2019.

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 $942,000 in the first quarter of 2020 compared to the fourth quarter of 2019, totaling $25.9 million in the current period. At March 31, 2020, the Company’s wealth management subsidiaries had approximately $25.0 billion of assets under administration, which included $4.8 billion of assets owned by the Company and its subsidiary banks, representing a $2.6 billion decrease from the $27.6 billion of assets under administration at December 31, 2019. Increased trust fees contributed to the growth in wealth management revenue, while unfavorable equity market performance in the first quarter of 2020 contributed to the decline of assets under administration.

ITEMS IMPACTING COMPARATIVE FINANCIAL RESULTS

Acquisitions

On November 1, 2019, the Company completed its acquisition of SBC, Incorporated (“SBC”).  SBC was the parent company of Countryside Bank. Through this business combination, the Company acquired Countryside Bank's six banking offices located in Countryside, Burbank, Darien, Homer Glen, Oak Brook and Chicago, Illinois. As of the acquisition date, the Company acquired approximately $620 million in assets, including approximately $423 million in loans, and approximately $508 million in deposits. The Company recorded goodwill of approximately $40 million on the acquisition.

On October 7, 2019, the Company completed its acquisition of STC Bancshares Corp. (“STC”).  STC was the parent company of STC Capital Bank. Through this business combination, the Company acquired STC Capital Bank's five banking offices located in the communities of St. Charles, Geneva and South Elgin, Illinois. As of the acquisition date, the Company acquired approximately $250 million in assets, including approximately $174 million in loans, and approximately $201 million in deposits. The Company recorded goodwill of approximately $19 million on the acquisition.

On May 24, 2019, the Company completed its acquisition of Rush-Oak Corporation ("ROC"). ROC was the parent company of Oak Bank. Through this business combination, the Company acquired Oak Bank's one banking location in Chicago, Illinois. As of the acquisition date, the Company acquired approximately $223 million in assets, including approximately $125 million in loans, and approximately $161 million in deposits. The Company recorded goodwill of approximately $12 million on the acquisition.

Adoption of New Credit Losses Accounting Standard

Beginning in 2020, the Company adopted the new current expected credit losses standard, or CECL, which impacted the measurement of the Company’s allowance for credit losses (including the allowance for unfunded lending-related commitments). CECL replaced the previous incurred loss methodology, which delayed recognition until such loss was probable, with a methodology that reflects an estimate of lifetime expected credit losses considering current economic condition and forecasts. Though other assets, including investment securities and other receivables, were considered in-scope of the standard and required a measurement of the allowance for credit loss, the most significant impact of CECL remains within the Company’s loan portfolios and related lending commitments. For more information regarding the adoption of CECL, see the "Asset Quality" section and the asset quality Tables 9-13 in this report.

WINTRUST FINANCIAL CORPORATION
Key Operating Measures

Wintrust’s key operating measures and growth rates for the first quarter of 2020, as compared to the fourth quarter of 2019 (sequential quarter) and first quarter of 2019 (linked quarter), are shown in the table below:

       % or(4)
basis point (bp)
change from
4th Quarter
2019
 % or
basis point (bp)
change from
1st Quarter
2019
  Three Months Ended 
(Dollars in thousands, except per share data) Mar 31, 2020 Dec 31, 2019 Mar 31, 2019 
Net income $62,812  $85,964  $89,146 (27)% (30)%
Pre-tax income, excluding provision for credit losses (non-GAAP) (2) 140,044  124,508  129,269 12   8  
Pre-tax income, excluding provision for credit losses and MSR valuation adjustments (non-GAAP) (2) 150,441  122,662  138,013 23   9  
Net income per common share – diluted 1.04  1.44  1.52 (28)  (32) 
Net revenue (1) 374,685  374,099  343,643    9  
Net interest income 261,443  261,879  261,986      
Net interest margin 3.12% 3.17% 3.70%(5)bp (58)bp
Net interest margin - fully taxable equivalent (non-GAAP) (2) 3.14  3.19  3.72 (5)  (58) 
Net overhead ratio (3) 1.33  1.53  1.72 (20)  (39) 
Return on average assets 0.69  0.96  1.16 (27)  (47) 
Return on average common equity 6.82  9.52  11.09 (270)  (427) 
Return on average tangible common equity (non-GAAP) (2) 8.73  12.17  14.14 (344)  (541) 
At end of period           
Total assets $38,799,847  $36,620,583  $32,358,621 24 % 20 %
Total loans (5) 27,807,321  26,800,290  24,214,629 15   15  
Total deposits 31,461,660  30,107,138  26,804,742 18   17  
Total shareholders’ equity 3,700,393  3,691,250  3,371,972 1   10  

(1) Net revenue is net interest income plus non-interest income.
(2) See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 17 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)  Mar 31,
2020
   Dec 31,
2019
   Sep 30,
2019
   Jun 30,
2019
   Mar 31,
2019
 
Selected Financial Condition Data (at end of period):                    
Total assets $38,799,847  $36,620,583  $34,911,902  $33,641,769  $32,358,621 
Total loans (1) 27,807,321  26,800,290  25,710,171  25,304,659  24,214,629 
Total deposits 31,461,660  30,107,138  28,710,379  27,518,815  26,804,742 
Junior subordinated debentures 253,566  253,566  253,566  253,566  253,566 
Total shareholders’ equity 3,700,393  3,691,250  3,540,325  3,446,950  3,371,972 
Selected Statements of Income Data:
Net interest income $261,443  $261,879  $264,852  $266,202  $261,986 
Net revenue (2) 374,685  374,099  379,989  364,360  343,643 
Net income 62,812  85,964  99,121  81,466  89,146 
Pre-tax income, excluding provision for credit losses (non-GAAP) (3) 140,044  124,508  145,435  134,753  129,269 
Pre-tax income, excluding provision for credit losses and MSR valuation adjustments (non-GAAP) (3) 150,441  122,662  149,411  138,138  138,013 
Net income per common share – Basic 1.05  1.46  1.71  1.40  1.54 
Net income per common share – Diluted 1.04  1.44  1.69  1.38  1.52 
Selected Financial Ratios and Other Data:
Performance Ratios:
Net interest margin 3.12% 3.17% 3.37% 3.62% 3.70%
Net interest margin - fully taxable equivalent (non-GAAP) (3) 3.14  3.19  3.39  3.64  3.72 
Non-interest income to average assets 1.24  1.25  1.35  1.23  1.06 
Non-interest expense to average assets 2.58  2.78  2.74  2.87  2.79 
Net overhead ratio (4) 1.33  1.53  1.40  1.64  1.72 
Return on average assets 0.69  0.96  1.16  1.02  1.16 
Return on average common equity 6.82  9.52  11.42  9.68  11.09 
Return on average tangible common equity (non-GAAP) (3) 8.73  12.17  14.36  12.28  14.14 
Average total assets $36,625,490  $35,645,190  $33,954,592  $32,055,769  $31,216,171 
Average total shareholders’ equity 3,710,169  3,622,184  3,496,714  3,414,340  3,309,078 
Average loans to average deposits ratio 90.1% 88.8% 90.6% 93.9% 92.7%
Period-end loans to deposits ratio 88.4  89.0  89.6  92.0  90.3 
Common Share Data at end of period:
Market price per common share $32.86  $70.90  $64.63  $73.16  $67.33 
Book value per common share 62.13  61.68  60.24  58.62  57.33 
Tangible book value per common share (non-GAAP) (3) 50.18  49.70  49.16  47.48  46.38 
Common shares outstanding 57,545,352  57,821,891  56,698,429  56,667,846  56,638,968 
Other Data at end of period:
Tier 1 leverage ratio (5) 8.5% 8.7% 8.8% 9.1% 9.1%
Risk-based capital ratios:          
Tier 1 capital ratio (5) 9.3  9.6  9.7  9.6  9.8 
Common equity tier 1 capital ratio(5) 8.9  9.2  9.3  9.2  9.3 
Total capital ratio (5) 11.9  12.2  12.4  12.4  11.7 
Allowance for credit losses (6) $253,482  $158,461  $163,273  $161,901  $159,622 
Allowance for loan and unfunded lending-related commitment losses to total loans 0.91% 0.59% 0.64% 0.64% 0.66%
Number of:          
Bank subsidiaries 15  15  15  15  15 
Banking offices 187  187  174  172  170 

(1) Excludes mortgage loans held-for-sale.
(2) Net revenue includes net interest income and non-interest income.
(3) See “Supplemental Non-GAAP Financial Measures/Ratios” at Table 17 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.Effective January 1, 2020, the allowance for credit losses also includes the allowance for investment securities as a result of the adoption of Accounting Standard Update ("ASU") 2016-13, Financial Instruments - Credit Losses.

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION

   (Unaudited)       (Unaudited)   (Unaudited)   (Unaudited) 
   Mar 31,   Dec 31,   Sep 30,   Jun 30,   Mar 31,  
(In thousands)  2020   2019   2019   2019    2019 
Assets                    
Cash and due from banks $349,118  $286,167  $448,755  $300,934  $270,765 
Federal funds sold and securities purchased under resale agreements 309  309  59  58  58 
Interest bearing deposits with banks 1,943,743  2,164,560  2,260,806  1,437,105  1,609,852 
Available-for-sale securities, at fair value 3,570,959  3,106,214  2,270,059  2,186,154  2,185,782 
Held-to-maturity securities, at amortized cost 865,376  1,134,400  1,095,802  1,191,634  1,051,542 
Trading account securities 2,257  1,068  3,204  2,430  559 
Equity securities with readily determinable fair value 47,310  50,840  46,086  44,319  47,653 
Federal Home Loan Bank and Federal Reserve Bank stock 134,546  100,739  92,714  92,026  89,013 
Brokerage customer receivables 16,293  16,573  14,943  13,569  14,219 
Mortgage loans held-for-sale 656,934  377,313  464,727  394,975  248,557 
Loans, net of unearned income 27,807,321  26,800,290  25,710,171  25,304,659  24,214,629 
Allowance for loan losses (216,050) (156,828) (161,763) (160,421) (158,212)
Net loans 27,591,271  26,643,462  25,548,408  25,144,238  24,056,417 
Premises and equipment, net 764,583  754,328  721,856  711,214  676,037 
Lease investments, net 207,147  231,192  228,647  230,111  224,240 
Accrued interest receivable and other assets 1,460,168  1,061,141  1,087,864  1,023,896  888,492 
Trade date securities receivable 502,207      237,607  375,211 
Goodwill 643,441  645,220  584,315  584,911  573,658 
Other intangible assets 44,185  47,057  43,657  46,588  46,566 
     Total assets $38,799,847  $36,620,583  $34,911,902  $33,641,769  $32,358,621 
Liabilities and Shareholders’ Equity          
Deposits:          
Non-interest bearing $7,556,755  $7,216,758  $7,067,960  $6,719,958  $6,353,456 
Interest bearing 23,904,905  22,890,380  21,642,419  20,798,857  20,451,286 
 Total deposits 31,461,660  30,107,138  28,710,379  27,518,815  26,804,742 
Federal Home Loan Bank advances 1,174,894  674,870  574,847  574,823  576,353 
Other borrowings 487,503  418,174  410,488  418,057  372,194 
Subordinated notes 436,179  436,095  435,979  436,021  139,235 
Junior subordinated debentures 253,566  253,566  253,566  253,566  253,566 
Trade date securities payable     226     
Accrued interest payable and other liabilities 1,285,652  1,039,490  986,092  993,537  840,559 
Total liabilities 35,099,454  32,929,333  31,371,577  30,194,819  28,986,649 
Shareholders’ Equity:          
Preferred stock 125,000  125,000  125,000  125,000  125,000 
Common stock 58,266  57,951  56,825  56,794  56,765 
Surplus 1,652,063  1,650,278  1,574,011  1,569,969  1,565,185 
Treasury stock (44,891) (6,931) (6,799) (6,650) (6,650)
Retained earnings 1,917,558  1,899,630  1,830,165  1,747,266  1,682,016 
Accumulated other comprehensive loss (7,603) (34,678) (38,877) (45,429) (50,344)
Total shareholders’ equity 3,700,393  3,691,250  3,540,325  3,446,950  3,371,972 
     Total liabilities and shareholders’ equity $38,799,847  $36,620,583  $34,911,902  $33,641,769  $32,358,621 


WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

 Three Months Ended

(In thousands, except per share data)
 Mar 31,
2020
   Dec 31,
2019
   Sep 30,
2019
   Jun 30,
2019
   Mar 31,
2019
 
Interest income                   
Interest and fees on loans$301,839  $308,055  $314,277  $309,161  $296,987 
Mortgage loans held-for-sale3,165  3,201  3,478  3,104  2,209 
Interest bearing deposits with banks4,768  8,971  10,326  5,206  5,300 
Federal funds sold and securities purchased under resale agreements86  390  310     
Investment securities32,467  27,611  24,758  27,721  27,956 
Trading account securities7  6  20  5  8 
Federal Home Loan Bank and Federal Reserve Bank stock1,577  1,328  1,294  1,439  1,355 
Brokerage customer receivables158  169  164  178  155 
Total interest income344,067  349,731  354,627  346,814  333,970 
Interest expense         
Interest on deposits67,435  74,724  76,168  67,024  60,976 
Interest on Federal Home Loan Bank advances3,360  1,461  1,774  4,193  2,450 
Interest on other borrowings3,546  3,273  3,466  3,525  3,633 
Interest on subordinated notes5,472  5,504  5,470  2,806  1,775 
Interest on junior subordinated debentures2,811  2,890  2,897  3,064  3,150 
Total interest expense82,624  87,852  89,775  80,612  71,984 
Net interest income261,443  261,879  264,852  266,202  261,986 
Provision for credit losses52,961  7,826  10,834  24,580  10,624 
Net interest income after provision for credit losses208,482  254,053  254,018  241,622  251,362 
Non-interest income         
Wealth management25,941  24,999  23,999  24,139  23,977 
Mortgage banking48,326  47,860  50,864  37,411  18,158 
Service charges on deposit accounts11,265  10,973  9,972  9,277  8,848 
(Losses) gains on investment securities, net(4,359) 587  710  864  1,364 
Fees from covered call options2,292  1,243    643  1,784 
Trading (losses) gains, net(451) 46  11  (44) (171)
Operating lease income, net11,984  12,487  12,025  11,733  10,796 
Other18,244  14,025  17,556  14,135  16,901 
Total non-interest income113,242  112,220  115,137  98,158  81,657 
Non-interest expense         
Salaries and employee benefits136,762  145,941  141,024  133,732  125,723 
Equipment14,834  14,485  13,314  12,759  11,770 
Operating lease equipment9,260  9,766  8,907  8,768  8,319 
Occupancy, net17,547  17,132  14,991  15,921  16,245 
Data processing8,373  7,569  6,522  6,204  7,525 
Advertising and marketing10,862  12,517  13,375  12,845  9,858 
Professional fees6,721  7,650  8,037  6,228  5,556 
Amortization of other intangible assets2,863  3,017  2,928  2,957  2,942 
FDIC insurance4,135  1,348  148  4,127  3,576 
OREO expense, net(876) 536  1,170  1,290  632 
Other24,160  29,630  24,138  24,776  22,228 
Total non-interest expense234,641  249,591  234,554  229,607  214,374 
Income before taxes87,083  116,682  134,601  110,173  118,645 
Income tax expense24,271  30,718  35,480  28,707  29,499 
Net income$62,812  $85,964  $99,121  $81,466  $89,146 
Preferred stock dividends2,050  2,050  2,050  2,050  2,050 
Net income applicable to common shares$60,762  $83,914  $97,071  $79,416  $87,096 
Net income per common share - Basic$1.05  $1.46  $1.71  $1.40  $1.54 
Net income per common share - Diluted$1.04  $1.44  $1.69  $1.38  $1.52 
Cash dividends declared per common share$0.28  $0.25  $0.25  $0.25  $0.25 
Weighted average common shares outstanding57,620  57,538  56,690  56,662  56,529 
Dilutive potential common shares575  874  773  699  699 
Average common shares and dilutive common shares58,195  58,412  57,463  57,361  57,228 

 

TABLE 1: LOAN PORTFOLIO MIX AND GROWTH RATES AND COMMERCIAL REAL ESTATE BY STATE

          % Growth From
(Dollars in thousands)Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019Dec 31, 2019(1) Mar 31, 2019
Balance:            
Commercial            
Commercial, industrial, and other$8,999,728  $8,257,614  $8,180,070  $8,246,449  $7,968,861 36% 13%
Commercial, industrial, and other - PCD (2)26,158  28,306  15,532  24,325  25,330 (31) 3 
Commercial real estate            
Construction and development1,237,274  1,200,783  1,025,961  984,138  951,370 12  30 
Non-construction6,736,706  6,582,053  6,305,423  6,165,115  5,911,474 9  14 
Commercial real estate - PCD (2)211,551  237,440  117,283  126,991  110,661 (44) 91 
Home equity494,655  513,066  512,303  527,370  528,448 (14) (6)
Home equity - PCD (2)            
Residential real estate1,359,971  1,336,093  1,208,706  1,107,911  1,044,739 7  30 
Residential real estate - PCD (2)17,418  18,128  9,960  10,267  8,785 (16)   NM
Premium Finance receivables            
Commercial insurance3,465,055  3,442,027  3,449,950  3,368,423  2,988,788 3  16 
Life insurance5,084,695  4,935,320  4,654,588  4,487,921  4,389,599 12  16 
Premium finance receivables - PCD (2)136,944  139,282  140,908  146,557  165,770 (7) (17)
Consumer and other35,546  107,962  87,161  106,547  118,129   NM (70)
Consumer and other - PCD (2)1,620  2,216  2,326  2,645  2,675 (108) (39)
Total loans, net of unearned income$27,807,321  $26,800,290  $25,710,171  $25,304,659  $24,214,629 15% 15%
Mix:            
Commercial            
Commercial, industrial, and other32% 31% 32% 33% 33%   
Commercial, industrial, and other - PCD (2)0  0  0  0  0    
Commercial real estate            
Construction and development4  4  4  4  4    
Non-construction24  25  25  24  24    
Commercial real estate - PCD (2)1  1  0  1  1    
Home equity2  2  2  2  2    
Home equity - PCD (2)            
Residential real estate5  5  5  4  4    
Residential real estate - PCD (2)0  0  0  0  0    
Premium Finance receivables            
Commercial insurance13  13  13  13  12    
Life insurance18  18  18  18  18    
Premium finance receivables - PCD (2)1  1  1  1  1    
Consumer and other0  0  0  0  1    
Consumer and other - PCD (2)0  0  0  0  0    
Total loans, net of unearned income100% 100% 100% 100% 100%   

(1) Annualized.
(2) As a result of the adoption of ASU 2016-13, the Company transitioned all previously classified purchase credit impaired ("PCI") loans to purchased credit deteriorated ("PCD") loans effective January 1, 2020. For prior periods presented, the previously classified PCI loans are presented with the PCD loans in their respective class.

 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019


(Dollars in thousands)
 Balance % of
Total
Balance
   Balance % of
Total
Balance
   Balance % of
Total
Balance
   Balance % of
Total
Balance
   Balance % of
Total
Balance
 
Commercial real estate - collateral location by state:                             
Illinois$6,171,606 75.4% $6,176,353 77.0% $5,654,827 75.9% $5,505,290 75.7% $5,331,784 76.5%
Wisconsin793,145 9.7  744,975 9.3  744,577 10.0  740,288 10.2  758,097 10.9 
Total primary markets$6,964,751 85.1% $6,921,328 86.3% $6,399,404 85.9% $6,245,578 85.9% $6,089,881 87.4%
Indiana249,680 3.1  218,963 2.7  193,350 2.6  179,977 2.5  175,350 2.5 
Florida126,786 1.5  114,629 1.4  80,120 1.1  60,343 0.8  55,528 0.8 
Arizona72,214 0.9  64,022 0.8  62,657 0.8  62,607 0.9  61,375 0.9 
California63,883 0.8  64,345 0.8  67,999 0.9  68,497 0.9  67,545 1.0 
Other708,217 8.6  636,989 8.0  645,137 8.7  659,242 9.0  523,826 7.4 
Total commercial real estate$8,185,531 100.0% $8,020,276 100.0% $7,448,667 100.0% $7,276,244 100.0% $6,973,505 100.0%


TABLE 2: DEPOSIT PORTFOLIO MIX AND GROWTH RATES

          % Growth From
(Dollars in thousands)Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019Dec 31, 2019 (1) Mar 31, 2019
Balance:            
Non-interest bearing$7,556,755  $7,216,758  $7,067,960  $6,719,958  $6,353,456 19% 19%
NOW and interest bearing demand deposits3,181,159  3,093,159  2,966,098  2,788,976  2,948,576 11  8 
Wealth management deposits (2)3,936,968  3,123,063  2,795,838  3,220,256  3,328,781 105  18 
Money market8,114,659  7,854,189  7,326,899  6,460,098  6,093,596 13  33 
Savings3,282,340  3,196,698  2,934,348  2,823,904  2,729,626 11  20 
Time certificates of deposit5,389,779  5,623,271  5,619,236  5,505,623  5,350,707 (17) 1 
Total deposits$31,461,660  $30,107,138  $28,710,379  $27,518,815  $26,804,742 18% 17%
Mix:            
Non-interest bearing24% 24% 25% 24% 24%   
NOW and interest bearing demand deposits10  10  10  10  11    
Wealth management deposits (2)13  10  10  12  12    
Money market26  26  25  24  23    
Savings10  11  10  10  10    
Time certificates of deposit17  19  20  20  20    
Total deposits100% 100% 100% 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.

TABLE 3: TIME CERTIFICATES OF DEPOSIT MATURITY/RE-PRICING ANALYSIS
As of March 31, 2020

(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$1,424  $22,260  $66,464  $1,270,123  $1,360,271  2.00%
4-6 months1,686  23,324    627,255  652,265  1.88 
7-9 months609  20,482    506,943  528,034  1.70 
10-12 months  9,319    762,874  772,193  1.98 
13-18 months1,401  18,348    1,503,823  1,523,572  2.31 
19-24 months  6,631    368,831  375,462  2.00 
24+ months88  2,794    175,100  177,982  1.75 
Total$5,208  $103,158  $66,464  $5,214,949  $5,389,779  2.03%

(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.

TABLE 4: QUARTERLY AVERAGE BALANCES

 Average Balance for three months ended,
  Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
(In thousands) 2020
 2019 20192019 2019
Interest-bearing deposits with banks and cash equivalents (1) $ 1,418,809  $  2,206,251  $  1,960,898  $  893,332  $  897,629 
Investment securities (2) 4,780,709  3,909,699  3,410,090  3,653,580  3,630,577 
FHLB and FRB stock 114,829  94,843  92,583  105,491  94,882 
Liquidity management assets (6) 6,314,347  6,210,793  5,463,571  4,652,403  4,623,088 
Other earning assets (3)(6) 19,166  18,353  17,809  15,719  13,591 
Mortgage loans held-for-sale 403,262  381,878  379,870  281,732  188,190 
Loans, net of unearned income (4)(6) 26,936,728  26,137,722  25,346,290  24,553,263  23,880,916 
Total earning assets (6) 33,673,503  32,748,746  31,207,540  29,503,117  28,705,785 
Allowance for loan and investment security losses (7) (176,291) (167,759) (168,423) (164,231) (157,782)
Cash and due from banks 321,982  316,631  297,475  273,679  283,019 
Other assets 2,806,296  2,747,572  2,618,000  2,443,204  2,385,149 
Total assets $36,625,490  $35,645,190  $33,954,592  $32,055,769  $31,216,171 
           
NOW and interest bearing demand deposits $3,113,733  $3,016,991  $2,912,961  $2,878,021  $2,803,338 
Wealth management deposits 2,838,719  2,934,292  2,888,817  2,605,690  2,614,035 
Money market accounts 7,990,775  7,647,635  6,956,755  6,095,285  5,915,525 
Savings accounts 3,189,835  3,028,763  2,837,039  2,752,828  2,715,422 
Time deposits 5,526,407  5,682,449  5,590,228  5,322,384  5,267,796 
Interest-bearing deposits 22,659,469  22,310,130  21,185,800  19,654,208  19,316,116 
Federal Home Loan Bank advances 951,613  596,594  574,833  869,812  594,335 
Other borrowings 469,577  415,092  416,300  419,064  465,571 
Subordinated notes 436,119  436,025  436,041  220,771  139,217 
Junior subordinated debentures 253,566  253,566  253,566  253,566  253,566 
Total interest-bearing liabilities 24,770,344  24,011,407  22,866,540  21,417,421  20,768,805 
Non-interest bearing deposits 7,235,177  7,128,166  6,776,786  6,487,627  6,444,378 
Other liabilities 909,800  883,433  814,552  736,381  693,910 
Equity 3,710,169  3,622,184  3,496,714  3,414,340  3,309,078 
Total liabilities and shareholders’ equity $36,625,490  $35,645,190  $33,954,592  $32,055,769  $31,216,171 
           
Net free funds/contribution (5) $8,903,159  $8,737,339  $8,341,000  $8,085,696  $7,936,980 

(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) Other earning assets include brokerage customer receivables and trading account securities.
(4) Loans, net of unearned income, include non-accrual loans.
(5) 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.
(6) See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 17 for additional information on this performance measure/ratio.
(7) Effective January 1, 2020 this includes the allowance for investment security losses as a result of the adoption of ASU 2016-13, Financial Instruments - Credit Losses.

TABLE 5: QUARTERLY NET INTEREST INCOME

  Net Interest Income for three months ended,
(In thousands)   Mar 31,   Dec 31,   Sep 30,   Jun 30,   Mar 31, 
Interest income:  2020   2019   2019   2019   2019 
Interest-bearing deposits with banks and cash equivalents $4,854  $9,361  $10,636  $5,206  $5,300 
Investment securities 33,018  28,184  25,332  28,290  28,521 
FHLB and FRB stock 1,577  1,328  1,294  1,439  1,355 
Liquidity management assets (2) 39,449  38,873  37,262  34,935  35,176 
Other earning assets (2) 167  176  189  184  165 
Mortgage loans held-for-sale 3,165  3,201  3,478  3,104  2,209 
Loans, net of unearned income (2) 302,699  308,947  315,255  310,191  298,021 
Total interest income $345,480  $351,197  $356,184  $348,414  $335,571 
           
Interest expense:          
NOW and interest bearing demand deposits $3,665  $4,622  $5,291  $5,553  $4,613 
Wealth management deposits 6,935  7,867  9,163  7,091  7,000 
Money market accounts 22,363  25,603  25,426  21,451  19,460 
Savings accounts 5,790  6,145  5,622  4,959  4,249 
Time deposits 28,682  30,487  30,666  27,970  25,654 
Interest-bearing deposits 67,435  74,724  76,168  67,024  60,976 
Federal Home Loan Bank advances 3,360  1,461  1,774  4,193  2,450 
Other borrowings 3,546  3,273  3,466  3,525  3,633 
Subordinated notes 5,472  5,504  5,470  2,806  1,775 
Junior subordinated debentures 2,811  2,890  2,897  3,064  3,150 
Total interest expense $82,624  $87,852  $89,775  $80,612  $71,984 
           
Less:  Fully taxable-equivalent adjustment (1,413) (1,466) (1,557) (1,600) (1,601)
Net interest income (GAAP) (1) 261,443  261,879  264,852  266,202  261,986 
Fully taxable-equivalent adjustment 1,413  1,466  1,557  1,600  1,601 
Net interest income, fully taxable-equivalent (non-GAAP) (1) $262,856  $263,345  $266,409  $267,802  $263,587 

(1) See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 17 for additional information on this performance measure/ratio.
(2) Interest income on tax-advantaged loans, trading securities and investment securities reflects a taxable-equivalent adjustment based on the marginal federal corporate tax rate in effect as of the applicable period.

TABLE 6: QUARTERLY NET INTEREST MARGIN

  Net Interest Margin for three months ended,
  Mar 31,
2020
 Dec 31,
2019
 Sep 30,
2019
 Jun 30,
2019
 Mar 31,
2019
Yield earned on:          
Interest-bearing deposits with banks and cash equivalents 1.38% 1.68% 2.15% 2.34% 2.39%
Investment securities 2.78  2.86  2.95  3.11  3.19 
FHLB and FRB stock 5.52  5.55  5.55  5.47  5.79 
Liquidity management assets 2.51  2.48  2.71  3.01  3.09 
Other earning assets 3.50  3.83  4.20  4.68  4.91 
Mortgage loans held-for-sale 3.16  3.33  3.63  4.42  4.76 
Loans, net of unearned income 4.52  4.69  4.93  5.07  5.06 
Total earning assets 4.13% 4.25% 4.53% 4.74% 4.74%
           
Rate paid on:          
NOW and interest bearing demand deposits 0.47% 0.61% 0.72% 0.77% 0.67%
Wealth management deposits 0.98  1.06  1.26  1.09  1.09 
Money market accounts 1.13  1.33  1.45  1.41  1.33 
Savings accounts 0.73  0.80  0.79  0.72  0.63 
Time deposits 2.09  2.13  2.18  2.11  1.98 
Interest-bearing deposits 1.20  1.33  1.43  1.37  1.29 
Federal Home Loan Bank advances 1.42  0.97  1.22  1.93  1.67 
Other borrowings 3.04  3.13  3.30  3.37  3.16 
Subordinated notes 5.02  5.05  5.02  5.08  5.10 
Junior subordinated debentures 4.39  4.46  4.47  4.78  4.97 
Total interest-bearing liabilities 1.34% 1.45% 1.56% 1.51% 1.40%
           
Interest rate spread (1)(3) 2.79% 2.80% 2.97% 3.23% 3.34%
Less: Fully taxable-equivalent adjustment (0.02) (0.02) (0.02) (0.02) (0.02)
Net free funds/contribution (2) 0.35  0.39  0.42  0.41  0.38 
Net interest margin (GAAP) (3) 3.12% 3.17% 3.37% 3.62% 3.70%
Fully taxable-equivalent adjustment 0.02  0.02  0.02  0.02  0.02 
Net interest margin, fully taxable-equivalent (non-GAAP) (3) 3.14% 3.19% 3.39% 3.64% 3.72%

(1) Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.
(2) 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.
(3) See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 17 for additional information on this performance measure/ratio.

TABLE 7: 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 is as follows:

Static Shock Scenario +200
Basis 
Points
 +100
 Basis
 Points
 -100
Basis
 Points
Mar 31, 2020 22.5% 10.6% (9.4)%
Dec 31, 2019 18.6  9.7  (10.9)
Sep 30, 2019 20.7  10.5  (11.9)
Jun 30, 2019 17.3  8.9  (10.2)
Mar 31, 2019 14.9  7.8  (8.5)

 

Ramp Scenario+200
Basis
Points
 +100
Basis
Points
 -100
Basis
Points
Mar 31, 20207.7% 3.7% (3.8)%
Dec 31, 20199.3  4.8  (5.0)
Sep 30, 201910.1  5.2  (5.6)
Jun 30, 20198.3  4.3  (4.6)
Mar 31, 20196.7  3.5  (3.3)


TABLE 8: MATURITIES AND SENSITIVITIES TO CHANGES IN INTEREST RATES

 Loans repricing or maturity period
As of March 31, 2020               

(In thousands)
 One year or less   From one to
five years
   Over five years   Total 
Commercial               
Fixed rate$295,238  $1,747,321  $808,067  $2,850,626 
Variable rate6,153,781  21,347  132  6,175,260 
Total commercial$6,449,019  $1,768,668  $808,199  $9,025,886 
Commercial real estate       
Fixed rate518,259  2,242,979  434,901  3,196,139 
Variable rate4,952,584  36,808    4,989,392 
Total commercial real estate$5,470,843  $2,279,787  $434,901  $8,185,531 
Home equity       
Fixed rate24,813  4,070  570  29,453 
Variable rate465,202      465,202 
Total home equity$490,015  $4,070  $570  $494,655 
Residential real estate       
Fixed rate40,814  15,607  398,189  454,610 
Variable rate90,205  338,495  494,079  922,779 
Total residential real estate$131,019  $354,102  $892,268  $1,377,389 
Premium finance receivables - commercial       
Fixed rate3,378,077  86,978    3,465,055 
Variable rate       
Total premium finance receivables - commercial$3,378,077  $86,978  $  $3,465,055 
Premium finance receivables - life insurance       
Fixed rate16,164  142,886  23,785  182,835 
Variable rate5,038,804      5,038,804 
Total premium finance receivables - life insurance$5,054,968  $142,886  $23,785  $5,221,639 
Consumer and other       
Fixed rate8,478  8,304  1,669  18,451 
Variable rate18,715      18,715 
Total consumer and other$27,193  $8,304  $1,669  $37,166 
        
Total per category       
Fixed rate4,281,843  4,248,145  1,667,181  10,197,169 
Variable rate16,719,291  396,650  494,211  17,610,152 
Total loans, net of unearned income$21,001,134  $4,644,795  $2,161,392  $27,807,321 
        
Variable Rate Loan Pricing by Index:       
Prime      $2,431,566 
One- month LIBOR      8,888,190 
Three- month LIBOR      332,833 
Twelve- month LIBOR      5,696,796 
Other      260,767 
Total variable rate      $17,610,152 

Graph available at the following link:
http://ml.globenewswire.com/Resource/Download/9d852691-bc59-4848-97f4-cd852d9eceab

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 changes as the Prime rate which has historically moved when the Federal Reserve raises or lowers interest rates.  Specifically, the Company has $8.9 billion of variable rate loans tied to one-month LIBOR and $5.7 billion of variable rate loans tied to twelve-month LIBOR. The above chart shows:

  Basis Points (bps) Change in
  Prime 1-month
LIBOR
 12-month
LIBOR
 
First Quarter 2020 -150bps-77bps-100bps
Fourth Quarter 2019 -25 -26 -3 
Third Quarter 2019 -50 -38 -15 
Second Quarter 2019 0 -9 -53 
First Quarter 2019 0 -1 -30 

TABLE 9: ALLOWANCE FOR CREDIT LOSSES

 Three Months Ended
  Mar 31, Dec 31,  Sep 30,  Jun 30,  Mar 31, 
(Dollars in thousands)  2020 2019  2019  2019  2019 
Allowance for credit losses at beginning of period $ 158,461  $  163,273  $  161,901  $  159,622  $  154,164 
Cumulative effect adjustment from the adoption of ASU 2016-13 47,418         
Provision for credit losses 52,961  7,826  10,834  24,580  10,624 
Other adjustments (73) 30  (13) (11) (27)
Charge-offs:          
Commercial 2,153  11,222  6,775  17,380  503 
Commercial real estate 85  533  809  326  3,734 
Home equity 1,001  1,330  1,594  690  88 
Residential real estate 356  483  25  287  3 
Premium finance receivables 3,184  3,817  1,866  5,009  2,210 
Consumer and other 128  167  117  136  102 
PCD (1) 530         
Total charge-offs 7,437  17,552  11,186  23,828  6,640 
Recoveries:          
Commercial 356  1,871  367  289  318 
Commercial real estate 79  1,404  385  247  480 
Home equity 294  166  183  68  62 
Residential real estate 60  50  203  140  29 
Premium finance receivables 1,110  1,350  563  734  556 
Consumer and other 39  43  36  60  56 
PCD (1) 214         
Total recoveries 2,152  4,884  1,737  1,538  1,501 
Net charge-offs (5,285) (12,668) (9,449) (22,290) (5,139)
Allowance for credit losses at period end $253,482  $158,461  $163,273  $161,901  $159,622 
           

 

Annualized net charge-offs by category as a percentage of its own respective category’s average:
Commercial 0.09% 0.46% 0.31% 0.85% 0.01%
Commercial real estate 0.00  (0.04) 0.02  0.00  0.19 
Home equity 0.57  0.89  1.08  0.47  0.02 
Residential real estate 0.10  0.14  (0.07) 0.06  (0.01)
Premium finance receivables 0.10  0.28  0.15  0.55  0.23 
Consumer and other 0.59  0.41  0.27  0.30  0.16 
PCD (1) 0.32         
Total loans, net of unearned income 0.08% 0.19% 0.15% 0.36% 0.09%
           
Net charge-offs as a percentage of the provision for credit losses 9.98% 161.87% 87.22% 90.68% 48.37%
Loans at period-end $27,807,321  $26,800,290  $25,710,171  $25,304,659  $24,214,629 
Allowance for loan losses as a percentage of loans at period end 0.78% 0.59% 0.63% 0.63% 0.65%
Allowance for loan and unfunded lending-related commitment losses as a percentage of loans at period end 0.91  0.59  0.64  0.64  0.66 

(1) As a result of the adoption of ASU 2016-13, the Company transitioned all previously classified PCI loans to PCD loans effective January 1, 2020. For prior periods presented, the previously classified PCI charge-offs and recoveries are presented with the non-PCI charge-offs and recoveries in their respective class.

TABLE 10: ALLOWANCE AND PROVISION FOR CREDIT LOSSES BY COMPONENT

  Three Months Ended 
  Mar 31,  Dec 31,  Sep 30,  Jun 30,  Mar 31, 
(In thousands)  2020  2019  2019  2019  2019 
Provision for loan losses  $ 50,396  $  7,704  $  10,804  $  24,510  $  10,608 
Provision for unfunded lending-related commitments losses 2,569  122  30  70  16 
Provision for held-to-maturity securities losses (4)        
Provision for credit losses $52,961  $7,826  $10,834  $24,580  $10,624 
           
Allowance for loan losses $216,050  156,828  161,763  $160,421  $158,212 
Allowance for unfunded lending-related commitments losses 37,362  1,633  1,510  1,480  1,410 
Allowance for held-to-maturity securities losses 70         
Allowance for credit losses $253,482  $158,461  $163,273  $161,901  $159,622 

TABLE 11: ALLOWANCE BY LOAN PORTFOLIO

The table below summarizes the calculation of allowance for loan losses and allowance for unfunded lending-related commitments losses for the Company’s core, niche and consumer and purchased loan portfolios, as of March 31, 2020 and December 31, 2019.

 As of March 31, 2020As of December 31, 2019 

(Dollars in thousands) 
Recorded
Investment
 Calculated
Allowance
 % of its
category’s balance
Recorded
Investment
 Calculated
Allowance
 % of its
category’s balance
Commercial: (1)          
Commercial, industrial and other$8,888,342  $104,754  1.18%$8,121,584  $64,829  0.80%
Commercial real estate: (1)          
Construction and development1,113,863  31,687  2.84 1,075,545  16,418  1.53 
Non-construction6,388,142  68,914  1.08 6,199,042  51,935  0.84 
Home equity (1)451,804  11,844  2.62 469,498  3,860  0.82 
Residential real estate (1)1,274,351  11,621  0.91 1,246,829  9,736  0.78 
Total core loan portfolio$18,116,502  $228,820  1.26%$17,112,498  $146,778  0.86%
Premium finance receivables (1)          
Commercial insurance loans$3,465,055  $7,426  0.21 $3,442,027  $8,132  0.24%
Life insurance loans5,084,695  454  0.01 4,935,321  1,515  0.03 
Consumer and other (1)34,111  331  0.97 107,053  1,704  1.59 
Total niche and consumer loan portfolio$8,583,861  $8,211  0.10%$8,484,401  $11,351  0.13%
Purchased commercial (2)$137,544  $2,592  1.88 $164,336  $91  0.06%
Purchased commercial real estate (2)683,526  12,195  1.78 745,689  158  0.02 
Purchased home equity (2)42,851  550  1.28 43,568  18  0.04 
Purchased residential real estate (2)103,038  929  0.90 107,392  64  0.06 
Purchased life insurance loans (2)136,944     139,281     
Purchased consumer and other (2)3,055  115  3.76 3,125  1  0.03 
Total purchased loan portfolio$1,106,958  $16,381  1.48 $1,203,391  $332  0.03%
Total loans, net of unearned income$27,807,321  $253,412  0.91 $26,800,290  158,461  0.59%

(1) As a result of the adoption of ASU 2016-13, the Company transitioned all previously classified PCI loans to PCD loans effective January 1, 2020. Excludes PCD loans.
(2) Includes PCD loans.

TABLE 12: LOAN PORTFOLIO AGING

 As of March 31, 2020 December 31, 2019 
(Dollars in thousands)  Non-PCD PCD (1) Total Loans Non-PCD PCD (1) Total Loans 
Loan Balances:             
Commercial                        
Nonaccrual $47,661  $2,255  $49,916  $37,224  $  $37,224 
90+ days and still accruing 3  1,238  1,241    1,855  1,855 
60-89 days past due 8,541  332  8,873  2,852  423  3,275 
30-59 days past due 86,129    86,129  70,010  7,314  77,324 
Current 8,857,394  22,333  8,879,727  8,147,528  18,714  8,166,242 
Total Commercial $8,999,728  $26,158  $9,025,886  $8,257,614  $28,306  $8,285,920 
Commercial real estate            
Nonaccrual $36,904  $25,926  $62,830  $26,113  $  $26,113 
90+ days and still accruing 516    516    14,946  14,946 
60-89 days past due 7,415  2,797  10,212  23,573  7,973  31,546 
30-59 days past due 65,578  9,490  75,068  66,442  31,125  97,567 
Current 7,863,567  173,338  8,036,905  7,666,708  183,396  7,850,104 
Total Commercial real estate $7,973,980  $211,551  $8,185,531  $7,782,836  $237,440  $8,020,276 
Home equity            
Nonaccrual $7,243  $  $7,243  $7,363  $  $7,363 
90+ days and still accruing            
60-89 days past due 214    214  454    454 
30-59 days past due 2,096    2,096  3,533    3,533 
Current 485,102    485,102  501,716    501,716 
Total Home equity $494,655  $  $494,655  $513,066  $  $513,066 
Residential real estate            
Nonaccrual $13,132  $5,833  $18,965  $13,797  $  $13,797 
90+ days and still accruing 605    605    5,771  5,771 
60-89 days past due 345    345  2,474  615  3,089 
30-59 days past due 26,437  2,546  28,983  16,664  1,377  18,041 
Current 1,319,452  9,039  1,328,491  1,303,158  10,365  1,313,523 
Total Residential real estate $1,359,971  $17,418  $1,377,389  $1,336,093  $18,128  $1,354,221 
Premium finance receivables            
Nonaccrual $21,058  $  $21,058  $21,180  $  $21,180 
90+ days and still accruing 16,505    16,505  11,517    11,517 
60-89 days past due 12,730    12,730  12,119    12,119 
30-59 days past due 70,185    70,185  51,342    51,342 
Current 8,429,272  136,944  8,566,216  8,281,189  139,282  8,420,471 
Total Premium finance receivables $8,549,750  $136,944  $8,686,694  $8,377,347  $139,282  $8,516,629 
Consumer and other            
Nonaccrual $232  $171  $403  $231  $  $231 
90+ days and still accruing 78    78  163  124  287 
60-89 days past due 607  18  625  40    40 
30-59 days past due 188  19  207  344    344 
Current 34,441  1,412  35,853  107,184  2,092  109,276 
Total Consumer and other $35,546  $1,620  $37,166  $107,962  $2,216  $110,178 
Total loans, net of unearned income            
Nonaccrual $126,230  $34,185  $160,415  $105,908  $  $105,908 
90+ days and still accruing 17,707  1,238  18,945  11,680  22,696  34,376 
60-89 days past due 29,852  3,147  32,999  41,512  9,011  50,523 
30-59 days past due 250,613  12,055  262,668  208,335  39,816  248,151 
Current 26,989,228  343,066  27,332,294  26,007,483  353,849  26,361,332 
Total loans, net of unearned income $27,413,630  $393,691  $27,807,321  $26,374,918  $425,372  $26,800,290 

(1) As a result of the adoption of ASU 2016-13, the Company transitioned all previously classified PCI loans to PCD loans effective January 1, 2020. For prior periods presented, the previously classified PCI loans are presented with the PCD loans in their respective class.

TABLE 13: NON-PERFORMING ASSETS AND TROUBLED DEBT RESTRUCTURINGS ("TDRs")

 Mar 31,  Dec 31, Sep 30,Jun 30,Mar 31, 
(Dollars in thousands) 2020  2019 2019 2019 2019
Loans past due greater than 90 days and still accruing (1): Non-PCD PCD(2)                 
Commercial$3 $1,238  $  $  $488  $ 
Commercial real estate516          
Home equity          
Residential real estate605         30 
Premium finance receivables16,505   11,517  10,612  6,940  6,726 
Consumer and other78   163  53  172  218 
Total loans past due greater than 90 days and still accruing17,707 1,238  11,680  10,665  7,600  6,974 
Non-accrual loans:          
Commercial47,661 2,255  37,224  43,931  47,604  55,792 
Commercial real estate36,904 25,926  26,113  21,557  20,875  15,933 
Home equity7,243   7,363  7,920  8,489  7,885 
Residential real estate13,132 5,833  13,797  13,447  14,236  15,879 
Premium finance receivables21,058   21,180  16,540  14,423  14,797 
Consumer and other232 171  231  224  220  326 
Total non-accrual loans126,230 34,185  105,908  103,619  105,847  110,612 
Total non-performing loans:          
Commercial47,664 3,493  37,224  43,931  48,092  55,792 
Commercial real estate37,420 25,926  26,113  21,557  20,875  15,933 
Home equity7,243   7,363  7,920  8,489  7,885 
Residential real estate13,737 5,833  13,797  13,447  14,236  15,909 
Premium finance receivables37,563   32,697  27,152  21,363  21,523 
Consumer and other310 171  394  277  392  544 
Total non-performing loans$143,937 $35,423  $117,588  $114,284  $113,447  $117,586 
Other real estate owned2,701   5,208  8,584  9,920  9,154 
Other real estate owned - from acquisitions8,325   9,963  8,898  9,917  12,366 
Other repossessed assets   4  257  263  270 
Total non-performing assets$154,963 $35,423  $132,763  $132,023  $133,547  $139,376 
Accruing TDRs not included within non-performing assets$46,995 $54  $36,725  $45,178  $45,862  $48,305 
Total non-performing loans by category as a percent of its own respective category’s period-end balance:          
Commercial0.53%13.35% 0.45% 0.54% 0.58% 0.70%
Commercial real estate0.47 12.26  0.33  0.29  0.29  0.23 
Home equity1.46   1.44  1.55  1.61  1.49 
Residential real estate1.01 33.49  1.02  1.10  1.27  1.51 
Premium finance receivables0.44   0.39  0.34  0.27  0.29 
Consumer and other0.87 10.56  0.36  0.31  0.36  0.45 
Total loans, net of unearned income0.53%9.00% 0.44% 0.44% 0.45% 0.49%
Total non-performing assets as a percentage of total assets0.49%  0.36% 0.38% 0.40% 0.43%
Allowance for loan losses as a percentage of total non-performing loans120.46%  133.37% 141.54% 141.41% 134.55%

(1) As of March 31, 2020, December 31, 2019, September 30, 2019, June 30, 2019, and March 31, 2019, no TDRs were past due greater than 90 days and still accruing interest.
(2) As a result of the adoption of ASU 2016-13, the Company transitioned all previously classified PCI loans to PCD loans effective January 1, 2020.

Non-performing Loans Rollforward

 Three Months Ended 
 Mar 31,  Dec 31,   Sep 30,   Jun 30,   Mar 31,  
(In thousands) 2020  2019   2019   2019   2019 
 Non-PCDPCD(2)                
Balance at beginning of period$117,588 $  $114,284  $113,447  $117,586  $113,234 
Additions, net30,390 1,805  30,977  20,781  20,567  24,030 
Additions from the adoption of ASU 2016-13 37,285         
Return to performing status(317)(169) (243) (407) (47) (14,077)
Payments received(4,451)(3,498) (19,380) (16,326) (5,438) (4,024)
Transfer to OREO and other repossessed assets(1,297)    (1,493) (1,486) (82)
Charge-offs(2,551)  (11,798) (6,984) (16,817) (3,992)
Net change for niche loans (1)4,575   3,748  5,266  (918) 2,497 
Balance at end of period$143,937 $35,423  $117,588  $114,284  $113,447  $117,586 

(1) This includes activity for premium finance receivables and indirect consumer loans.
(2) As a result of the adoption of ASU 2016-13, the Company transitioned all previously classified PCI loans to PCD loans effective January 1, 2020.

TDRs

 Mar 31,  Dec 31, Sep 30, Jun 30, Mar 31, 
(In thousands) 2020  2019 2019 2019 2019
Accruing TDRs:                    
Commercial$6,500  $4,905  $14,099  $15,923  $19,650 
Commercial real estate18,043  9,754  10,370  12,646  14,123 
Residential real estate and other22,506  22,066  20,709  17,293  14,532 
Total accrual$47,049  $36,725  $45,178  $45,862  $48,305 
Non-accrual TDRs: (1)         
Commercial$17,206  $13,834  $7,451  $21,850  $34,390 
Commercial real estate14,420  7,119  7,673  2,854  1,517 
Residential real estate and other4,962  6,158  6,006  5,435  4,150 
Total non-accrual$36,588  $27,111  $21,130  $30,139  $40,057 
Total TDRs:         
Commercial$23,706  $18,739  $21,550  $37,773  $54,040 
Commercial real estate32,463  16,873  18,043  15,500  15,640 
Residential real estate and other27,468  28,224  26,715  22,728  18,682 
Total TDRs$83,637  $63,836  $66,308  $76,001  $88,362 

(1) Included in total non-performing loans.

Other Real Estate Owned

 Three Months Ended 
 Mar 31,  Dec 31,  Sep 30,  Jun 30,  Mar 31, 
(In thousands) 2020  2019  2019  2019  2019 
Balance at beginning of period $ 15,171  $  17,482  $  19,837  $  21,520  $  24,820 
Disposals/resolved(4,793) (4,860) (4,501) (2,397) (2,758)
Transfers in at fair value, less costs to sell954  936  3,008  1,746  32 
Additions from acquisition  2,179       
Fair value adjustments(306) (566) (862) (1,032) (574)
Balance at end of period$11,026  $15,171  $17,482  $19,837  $21,520 
          
 Period End
 Mar 31,  Dec 31,  Sep 30,  Jun 30,  Mar 31, 
 2020  2019  2019  2019  2019 
Balance by Property Type:               
Residential real estate $ 1,684  $  1,016  $  1,250  $  1,312  $  3,037 
Residential real estate development  810  1,282  1,282  1,139 
Commercial real estate9,342  13,345  14,950  17,243  17,344 
Total$11,026  $15,171  $17,482  $19,837  $21,520 

 

TABLE 14: NON-INTEREST INCOME

 Three Months Ended Q1 2020 compared to Q1 2020 compared to
  Mar 31,   Dec 31,   Sep 30,   Jun 30,   Mar 31,  Q4 2019 Q1 2019
(Dollars in thousands) 2020   2019   2019   2019   2019  $ Change % Change $ Change % Change
Brokerage$5,281  $4,859  $4,686  $4,764  $4,516  $422  9% $765  17%
Trust and asset management20,660  20,140  19,313  19,375  19,461  520  3  1,199  6 
Total wealth management25,941  24,999  23,999  24,139  23,977  942  4  1,964  8 
Mortgage banking48,326  47,860  50,864  37,411  18,158  466  1  30,168  NM 
Service charges on deposit accounts11,265  10,973  9,972  9,277  8,848  292  3  2,417  27 
(Losses) gains on investment securities, net(4,359) 587  710  864  1,364  (4,946) NM  (5,723) NM 
Fees from covered call options2,292  1,243    643  1,784  1,049  84  508  28 
Trading (losses) gains, net(451) 46  11  (44) (171) (497) NM  (280) NM 
Operating lease income, net11,984  12,487  12,025  11,733  10,796  (503) (4) 1,188  11 
Other:                  
Interest rate swap fees6,066  2,206  4,811  3,224  2,831  3,860  NM  3,235  NM 
BOLI(1,284) 1,377  830  1,149  1,591  (2,661) NM  (2,875) NM 
Administrative services1,112  1,072  1,086  1,009  1,030  40  4  82  8 
Foreign currency remeasurement (losses) gains(151) 261  (55) 113  464  (412) NM  (615) NM 
Early pay-offs of capital leases74  24  6    5  50  NM  69  NM 
Miscellaneous12,427  9,085  10,878  8,640  10,980  3,342  37  1,447  13 
Total Other18,244  14,025  17,556  14,135  16,901  4,219  30  1,343  8 
Total Non-Interest Income$113,242  $112,220  $115,137  $98,158  $81,657  $1,022  1% $31,585  39%

NM - Not meaningful.

TABLE 15: MORTGAGE BANKING

 Three Months Ended
(Dollars in thousands)Mar 31,
2020
  Dec 31,
 2019
 Sep 30,
 2019
 Jun 30,
 2019
 Mar 31,
 2019
Originations and Commitments:                    
Retail originations$773,144  $782,122  $913,631  $669,510  $365,602 
Correspondent originations  4,024  50,639  182,966  148,100 
Veterans First originations442,957  459,236  456,005  301,324  164,762 
Total originations for sale (A)$1,216,101  $1,245,382  $1,420,275  $1,153,800  $678,464 
Originations for investment73,727  105,911  154,897  106,237  93,689 
Total originations$1,289,828  $1,351,293  $1,575,172  $1,260,037  $772,153 
          
Purchases as a percentage of originations for sale37% 40% 48% 63% 67%
Refinances as a percentage of originations for sale63  60  52  37  33 
Total100% 100% 100% 100% 100%
          
Mandatory commitments to fund originations for sale (1)$1,375,162  $372,357  $433,009  $475,618  $285,917 
          
Production Margin:         
Production revenue (B) (2)$31,964  $35,600  $39,881  $29,905  $16,942 
Production margin (B / A)2.63% 2.86% 2.81% 2.59% 2.50%
          
Mortgage Servicing:         
Loans serviced for others (C)$8,314,634  $8,243,251  $7,901,045  $7,515,186  $7,014,269 
MSRs, at fair value (D)73,504  85,638  75,585  72,850  71,022 
Percentage of MSRs to loans serviced for others (D / C)0.88% 1.04% 0.96% 0.97% 1.01%
Servicing income$7,031  $6,247  $5,989  $5,460  $5,460 
          
Components of MSRs:         
MSR - current period capitalization$9,447  $14,532  $14,029  $9,802  $6,580 
MSR - collection of expected cash flows - paydowns(547) (483) (456) (457) (505)
MSR - collection of expected cash flows - payoffs(6,476) (6,325) (6,781) (3,619) (1,492)
Valuation:         
MSR - changes in fair value model assumptions(14,557) 2,329  (4,058) (4,305) (8,744)
Gain (loss) on derivative contract held as an economic hedge, net4,160  (483) 82  920   
MSR valuation adjustment, net of (loss)/gain on derivative contract held as an economic hedge$(10,397) $1,846  $(3,976) $(3,385) $(8,744)

(1) Certain volume adjusted for the estimated pull-through rate of the loan, which represents the Company’s best estimate of the likelihood that a committed loan will ultimately fund.
(2) 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. Excludes changes to the mortgage recourse obligation, derivative income from interest rate lock commitments and other non-production revenue.

TABLE 16: NON-INTEREST EXPENSE

 Three Months Ended Q1 2020 compared to Q1 2020 compared to
 Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, Q4 2019 Q1 2019
(Dollars in thousands)2020 2019 2019  2019  2019  $ Change % Change $ Change % Change
 Salaries and employee benefits:                                 
Salaries$81,286  $82,888  $78,067  $75,360  $74,037  $(1,602) (2)% $7,249  10%
Commissions and incentive compensation31,575  40,226  40,289  36,486  31,599  (8,651) (22) (24)  
Benefits23,901  22,827  22,668  21,886  20,087  1,074  5  3,814  19 
Total salaries and employee benefits136,762  145,941  141,024  133,732  125,723  (9,179) (6) 11,039  9 
Equipment14,834  14,485  13,314  12,759  11,770  349  2  3,064  26 
Operating lease equipment9,260  9,766  8,907  8,768  8,319  (506) (5) 941  11 
Occupancy, net17,547  17,132  14,991  15,921  16,245  415  2  1,302  8 
Data processing8,373  7,569  6,522  6,204  7,525  804  11  848  11 
Advertising and marketing10,862  12,517  13,375  12,845  9,858  (1,655) (13) 1,004  10 
Professional fees6,721  7,650  8,037  6,228  5,556  (929) (12) 1,165  21 
Amortization of other intangible assets2,863  3,017  2,928  2,957  2,942  (154) (5) (79) (3)
FDIC insurance4,135  1,348  148  4,127  3,576  2,787  NM  559  16 
OREO expense, net(876) 536  1,170  1,290  632  (1,412) NM  (1,508) NM 
Other:                 
Commissions - 3rd party brokers865  717  734  749  718  148  21  147  20 
Postage1,949  2,220  2,321  2,606  2,450  (271) (12) (501) (20)
Miscellaneous21,346  26,693  21,083  21,421  19,060  (5,347) (20) 2,286  12 
Total other24,160  29,630  24,138  24,776  22,228  (5,470) (18) 1,932  9 
Total Non-Interest Expense$234,641  $249,591  $234,554  $229,607  $214,374  $(14,950) (6)% $20,267  9%

NM - Not meaningful.

TABLE 17: SUPPLEMENTAL NON-GAAP 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, return on average tangible common equity, pre-tax income, excluding provision for credit losses and pre-tax income, excluding provision for credit losses and MSR valuation adjustment. 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. Management considers pre-tax income, excluding provision for credit losses and pre-tax income, excluding provision for credit losses and MSR valuation adjustment as useful measurements of the Company's core net income.

 Three Months Ended
 Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
(Dollars and shares in thousands) 2020  2019   2019   2019   2019 
Reconciliation of Non-GAAP Net Interest Margin and Efficiency Ratio:                   
(A) Interest Income (GAAP)$344,067  $349,731  $354,627  $346,814  $333,970 
Taxable-equivalent adjustment:         
 - Loans860  892  978  1,031  1,034 
 - Liquidity Management Assets551  573  574  568  565 
 - Other Earning Assets2  1  5  1  2 
(B) Interest Income (non-GAAP)$345,480  $351,197  $356,184  $348,414  $335,571 
(C) Interest Expense (GAAP)$82,624  $87,852  $89,775  $80,612  $71,984 
(D) Net Interest Income (GAAP) (A minus C)$261,443  $261,879  $264,852  $266,202  $261,986 
(E) Net Interest Income (non-GAAP) (B minus C)$262,856  $263,345  $266,409  $267,802  $263,587 
Net interest margin (GAAP)3.12% 3.17% 3.37% 3.62% 3.70%
Net interest margin, fully taxable-equivalent (non-GAAP)3.14% 3.19% 3.39% 3.64% 3.72%
(F) Non-interest income$113,242  $112,220  $115,137  $98,158  $81,657 
(G) (Losses) gains on investment securities, net(4,359) 587  710  864  1,364 
(H) Non-interest expense234,641  249,591  234,554  229,607  214,374 
Efficiency ratio (H/(D+F-G))61.90% 66.82% 61.84% 63.17% 62.63%
Efficiency ratio (non-GAAP) (H/(E+F-G))61.67% 66.56% 61.59% 62.89% 62.34%
          
Reconciliation of Non-GAAP Tangible Common Equity Ratio:
Total shareholders’ equity (GAAP)$3,700,393  $3,691,250  $3,540,325  $3,446,950  $3,371,972 
Less: Non-convertible preferred stock (GAAP)(125,000) (125,000) (125,000) (125,000) (125,000)
Less: Intangible assets (GAAP)(687,626) (692,277) (627,972) (631,499) (620,224)
(I) Total tangible common shareholders’ equity (non-GAAP)$2,887,767  $2,873,973  $2,787,353  $2,690,451  $2,626,748 
(J) Total assets (GAAP)$38,799,847  $36,620,583  $34,911,902  $33,641,769  $32,358,621 
Less: Intangible assets (GAAP)(687,626) (692,277) (627,972) (631,499) (620,224)
(K) Total tangible assets (non-GAAP)$38,112,221  $35,928,306  $34,283,930  $33,010,270  $31,738,397 
Common equity to assets ratio (GAAP) (L/J)9.2% 9.7% 9.8% 9.9% 10.0%
Tangible common equity ratio (non-GAAP) (I/K)7.6% 8.0% 8.1% 8.2% 8.3%

 

 Three Months Ended 
 Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
(Dollars and shares in thousands) 2020 2019 2019 2019 2019
Reconciliation of Non-GAAP Tangible Book Value per Common Share:                   
Total shareholders’ equity$3,700,393  $3,691,250  $3,540,325  $3,446,950  $3,371,972 
Less: Preferred stock(125,000) (125,000) (125,000) (125,000) (125,000)
(L) Total common equity$3,575,393  $3,566,250  $3,415,325  $3,321,950  $3,246,972 
(M) Actual common shares outstanding57,545  57,822  56,698  56,668  56,639 
Book value per common share (L/M)$62.13  $61.68  $60.24  $58.62  $57.33 
Tangible book value per common share (non-GAAP) (I/M)$50.18  $49.70  $49.16  $47.48  $46.38 
          
Reconciliation of Non-GAAP Return on Average Tangible Common Equity:
(N) Net income applicable to common shares$60,762  $83,914  $97,071  $79,416  $87,096 
Add: Intangible asset amortization2,863  3,017  2,928  2,957  2,942 
Less: Tax effect of intangible asset amortization(799) (793) (773) (771) (731)
After-tax intangible asset amortization2,064  2,224  2,155  2,186  2,211 
(O) Tangible net income applicable to common shares (non-GAAP)$62,826  $86,138  $99,226  $81,602  $89,307 
Total average shareholders' equity$3,710,169  $3,622,184  $3,496,714  $3,414,340  $3,309,078 
Less: Average preferred stock(125,000) (125,000) (125,000) (125,000) (125,000)
(P) Total average common shareholders' equity$3,585,169  $3,497,184  $3,371,714  $3,289,340  $3,184,078 
Less: Average intangible assets(690,777) (689,286) (630,279) (624,794) (622,240)
(Q) Total average tangible common shareholders’ equity (non-GAAP)$2,894,392  $2,807,898  $2,741,435  $2,664,546  $2,561,838 
Return on average common equity, annualized (N/P)6.82% 9.52% 11.42% 9.68% 11.09%
Return on average tangible common equity, annualized (non-GAAP) (O/Q)8.73% 12.17% 14.36% 12.28% 14.14%
          
Reconciliation of Non-GAAP Pre-Tax, Pre-Provision Income and Pre-Tax, Pre-Provision, Pre-MSR Adjustment Income:  
Income before taxes$87,083  $116,682  $134,601  $110,173  $118,645 
Add: Provision for credit losses52,961  7,826  10,834  24,580  10,624 
Pre-tax income, excluding provision for credit losses (non-GAAP)$140,044  $124,508  $145,435  $134,753  $129,269 
Less: MSR valuation adjustment, net of (loss)/gain on derivative contract held as an economic hedge$(10,397) $1,846  $(3,976) $(3,385) $(8,744)
Pre-tax income, excluding provision for credit losses and MSR valuation adjustments (non-GAAP)$150,441  $122,662  $149,411  $138,138  $138,013 

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, N.A., Wintrust Bank, N.A., in Chicago, Libertyville Bank & Trust Company, N.A., Barrington Bank & Trust Company, N.A., Crystal Lake Bank & Trust Company, N.A., Northbrook Bank & Trust Company, N.A., Schaumburg Bank & Trust Company, N.A., Village Bank & Trust, N.A., in Arlington Heights, Beverly Bank & Trust Company, N.A. in Chicago, Wheaton Bank & Trust Company, N.A., State Bank of The Lakes, N.A., in Antioch, Old Plank Trail Community Bank, N.A. in New Lenox, St. Charles Bank & Trust Company, N.A. and Town Bank, N.A., in Hartland, Wisconsin.

In addition to the locations noted above, the banks also operate facilities in Illinois in Addison, Algonquin, Aurora, Bloomingdale, Buffalo Grove, Burbank, Cary, Clarendon Hills, Crete, Countryside, Darien, 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, Homer Glen, Island Lake, Itasca, Joliet, Lake Bluff, Lake Villa, Lansing, Lemont, Lindenhurst, Lynwood, Markham, Maywood, McHenry, Mokena, Mount Prospect, Mundelein, Naperville, North Chicago, Northfield, Norridge, Oak Lawn, Oak Brook, Orland Park, Palatine, Park Ridge, Prospect Heights, Ravinia, Riverside, Rolling Meadows, Roselle, Round Lake Beach, Shorewood, Skokie, South Holland, South Elgin, Spring Grove, Steger, Stone Park, Vernon Hills, Wauconda, Waukegan, Western Springs, Willowbrook, Wilmette, Winnetka and Wood Dale, and in Wisconsin 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, and 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, N.A., 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, such as the potential impacts of the COVID-19 pandemic, and which may include, but are not limited to, those listed below and the Risk Factors discussed under Item 1A of the Company’s 2019 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:

  • the severity, magnitude and duration of the COVID-19 pandemic and the direct and indirect impact of such pandemic, as well as responses to the pandemic by the government, businesses and consumers, on our operations and personnel, commercial activity and demand across our business and our customers’ businesses;
  • the disruption of global, national, state and local economies associated with the COVID-19 pandemic, which could affect the Company’s liquidity and capital positions, impair the ability of our borrowers to repay outstanding loans, impair collateral values and further increase our allowance for credit losses;
  • the impact of the COVID-19 pandemic on our financial results, including possible lost revenue and increased expenses (including the cost of capital), as well as possible goodwill impairment charges;
  • 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 credit 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 (including developments and volatility arising from or related to the COVID-19 pandemic) 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 related changes to address the impact of COVID-19, and the impact on the Company’s financial statements;
  • the ability of the Company to receive dividends from its subsidiaries;
  • uncertainty about the discontinued use of LIBOR and transition to an alternative rate;
  • 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, including those changes that are in response to the COVID-19 pandemic, including without limitation the CARES Act and the rules and regulations that may be promulgated thereunder;
  • a lowering of our credit rating;
  • changes in U.S. monetary policy and changes to the Federal Reserve’s balance sheet, including changes in response to the COVID-19 pandemic or otherwise;
  • regulatory restrictions upon our ability to market our products to consumers and limitations on our ability to profitably operate our mortgage business;
  • 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 on Wednesday, April 22, 2020 at 10:00 a.m. (Central Time) regarding first quarter 2020 results. Individuals interested in listening should call (877) 363-5049 and enter Conference ID #6554248. A simultaneous audio-only webcast and replay of the conference call as well as an accompanying slide presentation 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 2020 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.