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Section 1: 8-K (8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
Current Report
Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 16, 2019
 
WINTRUST FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
 
 
 
 
 
 
 
 
Illinois
001-35077
 
36-3873352
(State or other jurisdiction of Incorporation)
(Commission File Number)
 
(I.R.S. Employer
Identification No.)
 
 
 
 
9700 W. Higgins Road, Suite 800
Rosemont
Illinois
 
60018
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code (847939-9000
Not Applicable
(Former name or former address, if changed since last year)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Title of Each Class
 Ticker Symbol
Name of Each Exchange on Which Registered
Common Stock, no par value
 WTFC
The NASDAQ Global Select Market
Series D Preferred Stock, no par value
WTFCM
The NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company     
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     





Item 2.02. Results of Operations and Financial Condition
The information in this Current Report is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.
On October 16, 2019, Wintrust Financial Corporation (the “Company”) announced earnings for the third quarter of 2019 and posted on its website the Third Quarter 2019 Earnings Release Presentation. Copies of the press release relating to the Company’s earnings results and the related presentation are attached hereto as Exhibit 99.1 and Exhibit 99.2, respectively. Certain supplemental information relating to non-GAAP financial measures reported in the attached press release and presentation is included on pages 33 through 34 of Exhibit 99.1 and page 12 of Exhibit 99.2.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
 
Exhibit
  

2



Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
WINTRUST FINANCIAL CORPORATION
(Registrant)
 
 
 
By:
/s/ David L. Stoehr
 
 
David L. Stoehr
Executive Vice President and
    Chief Financial Officer
Date: October 16, 2019

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INDEX TO EXHIBITS
 
 
 
Exhibit
  

4
(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit

Exhibit 99.1
Wintrust Financial Corporation
9700 W. Higgins Road, Suite 800, Rosemont, Illinois 60018
News Release
 
 
 
FOR IMMEDIATE RELEASE
  
October 16, 2019
FOR MORE INFORMATION CONTACT:
Edward J. Wehmer, President & Chief Executive Officer
David A. Dykstra, Senior Executive Vice President & Chief Operating Officer
(847) 939-9000
Web site address: www.wintrust.com

Wintrust Financial Corporation Reports Record Third Quarter 2019 Net Income of $99.1 million and Year-to-Date Net Income of $269.7 million


ROSEMONT, ILLINOIS – Wintrust Financial Corporation (“Wintrust” or “the Company”) (Nasdaq: WTFC) announced net income of $99.1 million or $1.69 per diluted common share for the third quarter of 2019, an increase in diluted earnings per common share of 22.5% compared to the prior quarter and 7.6% compared to the third quarter of 2018. The Company recorded net income of $269.7 million or $4.60 per diluted common share for the first nine months of 2019 compared to net income of $263.5 million or $4.50 per diluted common share for the same period of 2018.

Highlights of the Third Quarter of 2019:
Comparative information to the second quarter of 2019
Total assets increased by $1.3 billion or 15% on an annualized basis.
Total loans increased by $406 million or 6% on an annualized basis.
Total deposits increased by $1.2 billion or 17% on an annualized basis, the increase was net of a $552 million reduction in brokered deposits.
Mortgage banking production revenue increased by $12.8 million as mortgage loans originated for sale totaled $1.4 billion in the third quarter of 2019 as compared to $1.2 billion in the second quarter of 2019.
Net interest income decreased by $1.3 million as a 25 basis point decline in net interest margin was partially offset by a $1.7 billion increase in average earning assets.
The net overhead ratio declined by 24 basis points to 1.40%, effectively offsetting the impact of the net interest margin decline.
Recorded net charge-offs of $9.4 million in the third quarter of 2019 as compared to $22.3 million in the second quarter of 2019. The $9.4 million includes $4.0 million of additional net charge-offs related to the three non-performing credits disclosed in the second quarter of 2019.
The ratio of non-performing assets to total assets declined by two basis points to 0.38%.

Other highlights of the third quarter of 2019
Total period end loans were $364 million higher than average total loans in the current quarter.
Loans to deposits ratio ended the period at 89.6%.
Recorded a $3.9 million reduction to FDIC insurance expense related to assessment credits received from the FDIC.
Recorded a reduction in value of mortgage servicing rights related to changes in fair value model assumptions, net of derivative contract activity held as an economic hedge, of $4.0 million.
Recorded acquisition related costs of $1.3 million in the third quarter of 2019 as compared to $238,000 in the second quarter of 2019.

Expansion activity
Opened two new branches in the city of Chicago.
Completed the previously announced acquisition of STC Bancshares Corp., the parent company of STC Capital Bank, early in the fourth quarter of 2019. STC Capital Bank had approximately $190 million in loans and approximately $244 million in deposits as of June 30, 2019.




Announced an agreement to acquire SBC, Incorporated, the parent company of Countryside Bank, which is expected to close in the fourth quarter of 2019. Countryside Bank had approximately $420 million in loans and approximately $511 million in deposits as of June 30, 2019.

Edward J. Wehmer, President and Chief Executive Officer, commented, "Wintrust reported record net income of $99.1 million for the third quarter of 2019, up from $81.5 million in the second quarter of 2019. The Company experienced strong balance sheet growth as total assets were $1.3 billion higher than the prior quarter end and $4.8 billion higher than at the third quarter of 2018. The third quarter was characterized by strong balance sheet growth, decreased net interest margin, increased mortgage banking revenue, improved credit quality, and a continued focus to increase franchise value in our market area."

Mr. Wehmer continued, "The Company experienced significant growth in retail deposits demonstrating the value of our local brand and branch network. We are pleased to now have the largest deposit base in the Chicago market area among locally headquartered banks. Total deposits increased by $1.2 billion in the third quarter of 2019 which was net of a reduction of $552 million in brokered deposits to optimize our funding base. Non-brokered deposits now comprise approximately 96% of total deposits. Additionally, the Company grew total loans by $406 million with growth diversified across various loan portfolios including the commercial real estate, commercial premium finance receivables, life insurance premium finance receivables and residential real estate portfolios. We remain aggressive in growing quality assets that meet our standards and will seek to fund that by expanding deposit market share and household penetration."

Mr. Wehmer commented, "Net interest margin declined by 25 basis points in the third quarter of 2019 as compared to the second quarter of 2019 primarily due to downward repricing of variable rate loans and increased levels of interest bearing cash. However, net interest income only decreased slightly as compared to the prior quarter due to growth in earning assets. We expect to begin to realize the benefit of declining deposit rates in the fourth quarter of 2019 as this typically lags changes in the interest rate environment. We plan to deploy the excess liquidity gathered in the third quarter of 2019 to enhance net interest income and also believe that the announced acquisitions will be accretive to net interest margin. As always, we will strive to grow without a commensurate increase in expenses and will primarily measure that with the net overhead ratio which improved to 1.40%, or by 24 basis points in the third quarter compared to the prior quarter."

Mr. Wehmer noted, “Our mortgage banking business production increased in the current quarter as loan volumes originated for sale increased to $1.4 billion from $1.2 billion in the second quarter of 2019. The favorable increase in origination volumes was primarily a result of increased refinancing activity due to the declining interest rate environment. Additionally, production margin expanded due to strategic efforts to enhance our origination channel mix. Declining long-term interest rates also contributed to a $7.2 million reduction in our mortgage servicing rights portfolio related to payoffs and paydowns as well as a $4.0 million reduction due to changes in fair value assumptions, net of hedging gain. However, those declines were more than offset by capitalization of retained servicing rights of $14.0 million in the current quarter. We continue to focus on efficiencies in our delivery channels and our operating costs in our mortgage banking area. We believe that the mortgage rate outlook bodes well for mortgage origination demand in future quarters."

Commenting on credit quality, Mr. Wehmer stated, "Overall credit quality metrics improved in the third quarter of 2019. The Company recorded net charge-offs of $9.4 million in the third quarter of 2019 as compared to $22.3 million in the second quarter of 2019. The $9.4 million includes $4.0 million of additional net charge-offs (which were substantially reserved for in prior quarters) related to the three non-performing credits disclosed in the second quarter of 2019 and represents a return to lower levels of net charge-offs. These three credits are substantially resolved and are not expected to materially impact future quarters. The ratio of non-performing assets as a percent of total assets declined by two basis points to a historically low level of 0.38%. We believe that the Company’s reserves remain appropriate and we remain diligent in our review of credit."

Turning to the future, Mr. Wehmer stated, “We have experienced significant franchise growth in 2019 and believe that our opportunities for both internal and external growth remain consistently strong. We plan to continue our steady and measured approach to achieve our main objectives of growing franchise value, increasing profitability, leveraging our expense infrastructure and continuing to increase shareholder value. Evaluating strategic acquisitions, like the recently completed acquisition of STC Bancshares Corp. and the announced acquisition of SBC, Incorporated, as well as focusing on organic branch growth will continue to be a part of our overall growth strategy with the goal of becoming Chicago’s bank and Wisconsin’s bank."




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

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SUMMARY OF RESULTS:

BALANCE SHEET

Total assets grew by $1.3 billion in the third quarter of 2019 primarily due to an $823.7 million increase in interest bearing deposits with banks and $405.5 million of loan growth. There were no material additions to the Company's investment portfolio during the current quarter due to the lack of acceptable financial returns given the current interest rate environment. The Company believes that the $2.3 billion of interest bearing deposits with banks held as of September 30, 2019 is more than sufficient liquidity to operate its business plan. Excess liquidity is expected to be deployed in future quarters to enhance net interest income.

Total liabilities grew by $1.2 billion in the third quarter of 2019 primarily comprised of a $1.2 billion increase in total deposits. The Company successfully leveraged its retail deposit base in the third quarter of 2019 to generate new deposits. In addition, the total deposit growth was net of a $552 million reduction in brokered deposits. 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. Non-brokered deposits now comprise approximately 96% of total deposits.

For more information regarding changes in the Company’s balance sheet, see Consolidated Statements of Condition and Tables 1 through 4 in this report.

NET INTEREST INCOME

For the third quarter of 2019, net interest income totaled $264.9 million, a decrease of $1.3 million as compared to the second quarter of 2019 and an increase of $17.3 million as compared to the third quarter of 2018. The $1.3 million decrease in net interest income in the third quarter of 2019 compared to the second quarter of 2019 was attributable to a $16.3 million decrease due to a reduction in net interest margin partially offset by a $12.1 million increase related to balance sheet growth and a $2.9 million increase from one more day in the quarter.

Net interest margin was 3.37% (3.39% on a fully taxable-equivalent basis, non-GAAP) during the third quarter of 2019 compared to 3.62% (3.64% on a fully taxable-equivalent basis, non-GAAP) during the second quarter of 2019 and 3.59% (3.61% on a fully taxable-equivalent basis, non-GAAP) during the third quarter of 2018. The 25 basis point decrease in net interest margin in the third quarter of 2019 as compared to the second quarter of 2019 was attributable to a 21 basis point decline in the yield on earnings assets and a five basis point increase in the rate paid on interest bearing liabilities, partially offset by a one basis point increase in the net free funds contribution. The 21 basis point decline in the yield on earning assets in the current quarter as compared to the second quarter of 2019 was primarily due to a 14 basis point decline in the yield on loans along with the impact of a higher average balance of interest bearing cash. The five basis point increase in the rate paid on interest bearing liabilities in the current quarter as compared to the prior quarter is primarily due to a six basis point increase on the rate paid on interest bearing deposits largely due to retail deposit promotions.

For the first nine months of 2019, net interest income totaled $793.0 million, an increase of $82.2 million as compared to the first nine months of 2018. Net interest margin was 3.56% (3.58% on a fully taxable-equivalent basis, non-GAAP) for the first nine months of 2019 compared to 3.58% (3.60% on a fully taxable-equivalent basis, non-GAAP) for the first nine months of 2018.

For more information regarding net interest income, see Tables 5 through 10 in this report.

ASSET QUALITY

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

Net charge-offs as a percentage of average total loans, in the third quarter of 2019 totaled 15 basis points on an annualized basis compared to 36 basis points on an annualized basis in the second quarter of 2019 and eight basis points on an annualized basis in the third quarter of 2018. Net charge-offs totaled $9.4 million in the third quarter of 2019, a $12.8 million decrease from $22.3 million in the second quarter of 2019 and a $4.8 million increase from $4.7 million in the third quarter of 2018. The $9.4 million of net charge-offs in the current quarter includes $4.0 million of additional net charge-offs (which were substantially reserved for

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in prior quarters) related to the three non-performing credits disclosed in the second quarter of 2019 and represents a return to lower levels of net charge-offs. These three credits are substantially resolved and are not expected to materially impact future quarters. The provision for credit losses totaled $10.8 million for the third quarter of 2019 compared to $24.6 million for the second quarter of 2019 and $11.0 million for the third quarter of 2018. For more information regarding net charge-offs, see Table 11 in this report.

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

As part of the regular quarterly review performed by management to determine if the Company’s allowance for loan losses is appropriate, an analysis is prepared on the loan portfolio based upon a breakout of core loans and consumer, niche and purchased loans. A summary of the allowance for loan losses calculated for the loan components in both the core loan portfolio and the consumer, niche and purchased loan portfolio as of September 30, 2019 and June 30, 2019 is shown on Table 12 of this report.

As of September 30, 2019, $51.1 million of all loans, or 0.2%, were 60 to 89 days past due and $134.2 million, or 0.5%, were 30 to 59 days (or one payment) past due. As of June 30, 2019, $54.9 million of all loans, or 0.2%, were 60 to 89 days past due and $129.1 million, or 0.5%, 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 ratios. Home equity loans at September 30, 2019 that are current with regard to the contractual terms of the loan agreement represent 97.8% of the total home equity portfolio. Residential real estate loans at September 30, 2019 that are current with regards to the contractual terms of the loan agreements comprise 98.4% of total residential real estate loans outstanding. For more information regarding past due loans, see Table 13 in this report.

Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date. In accordance with accounting guidance, credit deterioration on purchased loans is recorded as a credit discount at the time of purchase. In addition to the $161.8 million of allowance for loan losses, there was $6.8 million of non-accretable credit discount on purchased loans reported in accordance with ASC 310-30 that is available to absorb credit losses as of September 30, 2019.

The ratio of non-performing assets to total assets was 0.38% as of September 30, 2019, compared to 0.40% at June 30, 2019, and 0.52% at September 30, 2018. Non-performing assets, excluding PCI loans, totaled $132.0 million at September 30, 2019, compared to $133.5 million at June 30, 2019 and $155.8 million at September 30, 2018. Non-performing loans, excluding PCI loans, totaled $114.3 million, or 0.44% of total loans, at September 30, 2019 compared to $113.4 million, or 0.45% of total loans, at June 30, 2019 and $127.2 million, or 0.55% of total loans, at September 30, 2018. Other real estate owned ("OREO") of $17.5 million at September 30, 2019 decreased $2.3 million compared to $19.8 million at June 30, 2019 and decreased $10.8 million compared to $28.3 million at September 30, 2018. Management is pursuing the resolution of all non-performing assets. At this time, management believes reserves are appropriate to absorb inherent losses and OREO is appropriately valued at the lower of carrying value or fair value less estimated costs to sell. For more information regarding non-performing assets, see Table 14 in this report.


NON-INTEREST INCOME

Wealth management revenue decreased by $140,000 during the third quarter of 2019 as compared to the second quarter of 2019 primarily due to decreased 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 $13.5 million in the third quarter of 2019 as compared to the second quarter of 2019 primarily as a result of higher production revenues and an increase in the fair value of the mortgage servicing rights portfolio in the third quarter of 2019. Production revenue increased by $12.8 million in the third quarter of 2019 as compared to the second quarter of 2019 primarily due to an increase in origination volumes as a result of increased refinancing activity. The percentage of origination volume from refinancing activities was 52% in the third quarter of 2019 as compared to 37% in the second quarter

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of 2019. Additionally, production margin improved from 2.59% in the second quarter of 2019 to 3.01% in the third quarter of 2019 primarily due to a favorable shift in origination channel mix. Mortgage banking revenue includes revenue from activities related to originating, selling and servicing residential real estate loans for the secondary market.

During the third quarter of 2019, the fair value of the mortgage servicing rights portfolio increased as retained servicing rights led to the capitalization of $14.0 million partially offset by negative fair value adjustments of $4.1 million and a reduction in value of $7.2 million due to payoffs and paydowns of the existing portfolio. The Company purchased an option at the beginning of the third 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 option was exercised during the current quarter resulting in a net gain of $82,000 which was recorded in mortgage banking revenue.

The net gains recognized on investment securities in the third quarter of 2019 and second quarter of 2019, respectively, were primarily due to gains on investment securities that were called and unrealized gains recognized on equity securities held by the Company.

Other non-interest income increased by $3.4 million in the third quarter of 2019 as compared to the second quarter of 2019 primarily due to increased income from investments in partnerships and interest rate swaps.

For more information regarding non-interest income, see Tables 15 and 16 in this report.

NON-INTEREST EXPENSE

Salaries and employee benefits expense increased by $7.3 million in the third quarter of 2019 as compared to the second quarter of 2019. The $7.3 million increase is comprised of an increase of $2.7 million in salaries expense, $3.8 million in commissions and incentive compensation and $782,000 in benefits expense. The increase in salaries expense is primarily due to increased staffing as the Company grows and acquisition related expenses. Commissions and incentive compensation increased in the current quarter primarily related to the increased volume of mortgage originations for sale. The increase in benefits expense relates primarily to increases in employee insurance expense in the current quarter.

Equipment expense totaled $13.3 million in the third quarter of 2019, an increase of $555,000 as compared to the second quarter of 2019. The increase in the current quarter relates primarily to increased software licensing expenses.

Advertising and marketing expenses in the third quarter of 2019 increased by $530,000 as compared to the second quarter of 2019 primarily related to higher corporate sponsorship costs as well as increased spending related to deposit generation and brand awareness to grow our loan and deposit portfolios. 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 $148,000 in the third quarter of 2019, a decrease of $4.0 million as compared to the second quarter of 2019. The decrease in the current quarter relates primarily to FDIC assessment credits received by the 15 Wintrust affiliate banks.

Professional fees expense totaled $8.0 million in the third quarter of 2019, an increase of $1.8 million as compared to the second quarter of 2019. The increase in the current quarter relates primarily to increased fees on consulting services and legal fees. Professional fees include legal, audit, and tax fees, external loan review costs, consulting arrangements and normal regulatory exam assessments.

For more information regarding non-interest expense, see Table 17 in this report.

INCOME TAXES

The Company recorded income tax expense of $35.5 million in the third quarter of 2019 compared to $28.7 million in the second quarter of 2019 and $30.9 million in the third quarter of 2018. The effective tax rates were 26.36% in the third quarter of 2019 compared to 26.06% in the second quarter of 2019 and 25.13% in the third quarter of 2018. During the first nine months of 2019, the Company recorded income tax expense of $93.7 million compared to $89.0 million for the first nine months of 2018. The effective tax rates were 25.78% for the first nine months of 2019 and 25.24% for the first nine months of 2018.

The year-to-date effective tax rates were impacted by excess tax benefits related to share-based compensation. These excess tax benefits were $1.7 million in the first nine months of 2019 and $3.7 million in the first nine months of 2018. Excess tax benefits are expected to be higher in the first quarter when the majority of the Company's shared-based awards vest, and will fluctuate

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throughout the year based on the Company's stock price and timing of employee stock option exercises and vesting of other share-based awards.

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 third quarter of 2019, this unit generated significant retail deposit growth. However, the banking segment also experienced net interest margin compression in part due to current market conditions.

Mortgage banking revenue increased from $37.4 million for the second quarter of 2019 to $50.9 million for the third quarter of 2019. Services charges on deposit accounts totaled $10.0 million in the third quarter of 2019 an increase of $695,000 as compared to the second quarter of 2019 primarily due to higher account analysis fees. The Company's gross commercial and commercial real estate loan pipelines remain strong. Before the impact of scheduled payments and prepayments, gross commercial and commercial real estate loan pipelines were estimated to be approximately $1.2 billion to $1.3 billion at September 30, 2019. When adjusted for the probability of closing, the pipelines were estimated to be approximately $730 million to $810 million at September 30, 2019.

Specialty Finance

Through its specialty finance unit, the Company offers financing of insurance premiums for businesses and individuals, equipment financing through structured loans and lease products to customers in a variety of industries and accounts receivable financing, value-added, out-sourced administrative services, and other services. In the third quarter of 2019, the specialty finance unit experienced higher revenue primarily as a result of increased volumes within its insurance premium financing receivables portfolio. Originations within the insurance premium financing receivables portfolio were $2.4 billion during the third quarter of 2019 and average balances increased by $446.4 million as compared to the second quarter of 2019. The increase in average balances primarily resulted in a $6.5 million increase in interest income attributed to the insurance premium finance receivables portfolio. The Company's leasing business grew during the third quarter of 2019, with its portfolio of assets, including capital leases, loans and equipment on operating leases, increasing $98.0 million to $1.5 billion at the end of the third quarter of 2019. Revenues from the Company's out-sourced administrative services business increased to $1.1 million in the third quarter of 2019 as compared to $1.0 million in the second 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 decreased by $140,000 in the third quarter of 2019 compared to the second quarter of 2019, totaling $24.0 million in the current period. At September 30, 2019, the Company’s wealth management subsidiaries had approximately $26.1 billion of assets under administration, which included $3.3 billion of assets owned by the Company and its subsidiary banks, representing a $188.4 million increase from the $25.9 billion of assets under administration at June 30, 2019. The increase in the third quarter of 2019 was primarily due to increased business.



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ITEMS IMPACTING COMPARATIVE FINANCIAL RESULTS

Acquisitions

On May 24, 2019, the Company completed the Oak Bank Acquisition. Through this business combination, the Company acquired Oak Bank's one banking location in Chicago, Illinois, as well as approximately $223.8 million in assets, including approximately $126.1 million in loans, and approximately $161.2 million in deposits. The Company recorded goodwill of $10.7 million on the acquisition.

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

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

On August 1, 2018, the Company completed its acquisition of Chicago Shore Corporation ("CSC"). CSC was the parent company of Delaware Place Bank. Through this business combination, the Company acquired Delaware Place Bank's one banking location in Chicago, Illinois as well as approximately $282.8 million in assets, including approximately $152.7 million in loans, and approximately $213.1 million in deposits. The Company recorded goodwill of $26.6 million on the acquisition.

On January 4, 2018, the Company acquired iFreedom Direct Corporation DBA Veterans First Mortgage ("Veterans First") with assets including mortgage-servicing-rights on approximately 10,000 loans, totaling an estimated $1.6 billion in unpaid principal balance. The Company recorded goodwill of $9.1 million on the acquisition.




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WINTRUST FINANCIAL CORPORATION
Key Operating Measures

Wintrust’s key operating measures and growth rates for the third quarter of 2019, as compared to the second quarter of 2019 (sequential quarter) and third quarter of 2018 (linked quarter), are shown in the table below:
 
 
 
 
 
 
 
% or(4)
basis point  (bp) change from
2nd Quarter
2019
 
% or
basis point  (bp)
change from
3rd Quarter
2018
  
 
Three Months Ended
 
(Dollars in thousands, except per share data)
 
Sep 30, 2019
 
Jun 30, 2019
 
Sep 30, 2018
 
Net income
 
$
99,121

 
$
81,466

 
$
91,948

22

 
8

Net income per common share – diluted
 
1.69

 
1.38

 
1.57

22

 
 
8

 
Net revenue (1)
 
379,989

 
364,360

 
347,493

4

 
 
9

 
Net interest income
 
264,852

 
266,202

 
247,563

(1
)
 
 
7

 
Net interest margin
 
3.37
%
 
3.62
%
 
3.59
%
(25
)
bp 
 
(22
)
bp 
Net interest margin - fully taxable equivalent (non-GAAP) (2)
 
3.39

 
3.64

 
3.61

(25
)
 
 
(22
)
 
Net overhead ratio (3)
 
1.40

 
1.64

 
1.53

(24
)
 
 
(13
)
 
Return on average assets
 
1.16

 
1.02

 
1.24

14

 
 
(8
)
 
Return on average common equity
 
11.42

 
9.68

 
11.86

174

 
 
(44
)
 
Return on average tangible common equity (non-GAAP) (2)
 
14.36

 
12.28

 
14.64

208

 
 
(28
)
 
At end of period
 
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
34,911,902

 
$
33,641,769

 
$
30,142,731

15

 
16

Total loans (5)
 
25,710,171

 
25,304,659

 
23,123,951

6

 
 
11

 
Total deposits
 
28,710,379

 
27,518,815

 
24,916,715

17

 
 
15

 
Total shareholders’ equity
 
3,540,325

 
3,446,950

 
3,179,822

11

 
 
11

 
(1)
Net revenue is net interest income plus non-interest income.
(2)
See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 18 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.”



12



WINTRUST FINANCIAL CORPORATION
Selected Financial Highlights
 
 
Three Months Ended
Nine Months Ended
(Dollars in thousands, except per share data)
 
Sep 30, 2019
 
Jun 30, 2019
 
Mar 31, 2019
 
Dec 31, 2018
 
Sep 30, 2018
Sep 30, 2019
 
Sep 30, 2018
Selected Financial Condition Data (at end of period):
 
 
 
Total assets
 
$
34,911,902


$
33,641,769


$
32,358,621


$
31,244,849


$
30,142,731

 
 
 
Total loans (1)
 
25,710,171


25,304,659


24,214,629


23,820,691


23,123,951

 
 
 
Total deposits
 
28,710,379

 
27,518,815

 
26,804,742

 
26,094,678

 
24,916,715

 
 
 
Junior subordinated debentures
 
253,566

 
253,566

 
253,566

 
253,566

 
253,566

 
 
 
Total shareholders’ equity
 
3,540,325

 
3,446,950

 
3,371,972

 
3,267,570

 
3,179,822

 
 
 
Selected Statements of Income Data:
 
 
 
Net interest income
 
$
264,852

 
$
266,202

 
$
261,986

 
$
254,088

 
$
247,563

$
793,040

 
$
710,815

Net revenue (2)
 
379,989

 
364,360

 
343,643

 
329,396

 
347,493

1,087,992

 
991,657

Net income
 
99,121


81,466


89,146

 
79,657

 
91,948

269,733


263,509

Net income per common share – Basic
 
1.71

 
1.40

 
1.54

 
1.38

 
1.59

4.65

 
4.57

Net income per common share – Diluted
 
1.69


1.38


1.52

 
1.35

 
1.57

4.60


4.50

Selected Financial Ratios and Other Data:
 
 
 
Performance Ratios:
 
 
 
Net interest margin
 
3.37
%
 
3.62
%
 
3.70
%
 
3.61
%
 
3.59
%
3.56
%
 
3.58
%
Net interest margin - fully taxable equivalent (non-GAAP) (3)
 
3.39


3.64


3.72

 
3.63

 
3.61

3.58


3.60

Non-interest income to average assets
 
1.35

 
1.23

 
1.06

 
0.99

 
1.34

1.22

 
1.31

Non-interest expense to average assets
 
2.74

 
2.87

 
2.79

 
2.78

 
2.87

2.80

 
2.87

Net overhead ratio (4)
 
1.40


1.64

 
1.72

 
1.79

 
1.53

1.58


1.56

Return on average assets
 
1.16


1.02


1.16

 
1.05

 
1.24

1.11


1.23

Return on average common equity
 
11.42


9.68


11.09

 
10.01

 
11.86

10.74


11.71

Return on average tangible common equity (non-GAAP) (3)
 
14.36


12.28


14.14

 
12.48

 
14.64

13.60


14.47

Average total assets
 
$
33,954,592

 
$
32,055,769

 
$
31,216,171

 
$
30,179,887

 
$
29,525,109

$
32,418,875

 
$
28,640,380

Average total shareholders’ equity
 
3,496,714

 
3,414,340

 
3,309,078

 
3,200,654

 
3,131,943

3,407,398

 
3,064,396

Average loans to average deposits ratio
 
90.6
%

93.9
%

92.7
%

92.4
%

92.2
%
92.4
%
 
94.2
%
Period-end loans to deposits ratio
 
89.6


92.0


90.3


91.3


92.8

 
 
 
Common Share Data at end of period:
 
 
 
Market price per common share
 
$
64.63

 
$
73.16

 
$
67.33

 
$
66.49

 
$
84.94

 
 
 
Book value per common share
 
60.24

 
58.62

 
57.33

 
55.71

 
54.19

 
 
 
Tangible book value per common share (non-GAAP) (3)
 
49.16


47.48

 
46.38

 
44.67

 
44.16

 
 
 
Common shares outstanding
 
56,698,429

 
56,667,846

 
56,638,968

 
56,407,558

 
56,377,169

 
 
 
Other Data at end of period:
 
 
 
Tier 1 leverage ratio (5)
 
8.8
%
 
9.1
%
 
9.1
%
 
9.1
%
 
9.3
%
 
 
 
Risk-based capital ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1 capital ratio (5)
 
9.7

 
9.6

 
9.8

 
9.7

 
10.0

 
 
 
Common equity tier 1 capital ratio(5)
 
9.3

 
9.2

 
9.3

 
9.3

 
9.5

 
 
 
Total capital ratio (5)
 
12.4

 
12.4

 
11.7

 
11.6

 
12.0

 
 
 
Allowance for credit losses (6)
 
$
163,273

 
$
161,901

 
$
159,622

 
$
154,164

 
$
151,001

 
 
 
Non-performing loans
 
114,284

 
113,447

 
117,586

 
113,234

 
127,227

 
 
 
Allowance for credit losses to total loans (6)
 
0.64
%
 
0.64
%
 
0.66
%
 
0.65
%
 
0.65
%
 
 
 
Non-performing loans to total loans
 
0.44

 
0.45

 
0.49

 
0.48

 
0.55

 
 
 
Number of:
 
 
 
 
 
 
 
 
 
 
 
 
 
Bank subsidiaries
 
15

 
15

 
15

 
15

 
15

 
 
 
Banking offices
 
174

 
172

 
170

 
167

 
166

 
 
 
(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 18 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.

13



WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
 


(Unaudited)

(Unaudited)

(Unaudited)



(Unaudited)


Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,
(In thousands)

2019

2019

2019

2018

2018
Assets










Cash and due from banks

$
448,755


$
300,934


$
270,765


$
392,142


$
279,936

Federal funds sold and securities purchased under resale agreements

59


58


58


58


57

Interest bearing deposits with banks

2,260,806


1,437,105


1,609,852


1,099,594


1,137,044

Available-for-sale securities, at fair value

2,270,059


2,186,154


2,185,782


2,126,081


2,164,985

Held-to-maturity securities, at amortized cost

1,095,802


1,191,634


1,051,542


1,067,439


966,438

Trading account securities

3,204


2,430


559


1,692


688

Equity securities with readily determinable fair value

46,086


44,319


47,653


34,717


36,414

Federal Home Loan Bank and Federal Reserve Bank stock

92,714


92,026


89,013


91,354


99,998

Brokerage customer receivables

14,943


13,569


14,219


12,609


15,649

Mortgage loans held-for-sale

464,727


394,975


248,557


264,070


338,111

Loans, net of unearned income

25,710,171


25,304,659


24,214,629


23,820,691


23,123,951

Allowance for loan losses

(161,763
)

(160,421
)

(158,212
)

(152,770
)

(149,756
)
Net loans

25,548,408


25,144,238


24,056,417


23,667,921


22,974,195

Premises and equipment, net

721,856


711,214


676,037


671,169


664,469

Lease investments, net

228,647


230,111


224,240


233,208


199,241

Accrued interest receivable and other assets

1,087,864


1,023,896


888,492


696,707


700,568

Trade date securities receivable



237,607


375,211


263,523



Goodwill

584,315


584,911


573,658


573,141


537,560

Other intangible assets

43,657


46,588


46,566


49,424


27,378

Total assets

$
34,911,902


$
33,641,769


$
32,358,621


$
31,244,849


$
30,142,731

Liabilities and Shareholders’ Equity










Deposits:










Non-interest bearing

$
7,067,960


$
6,719,958


$
6,353,456


$
6,569,880


$
6,399,213

Interest bearing

21,642,419


20,798,857


20,451,286


19,524,798


18,517,502

 Total deposits

28,710,379


27,518,815


26,804,742


26,094,678


24,916,715

Federal Home Loan Bank advances

574,847


574,823


576,353


426,326


615,000

Other borrowings

410,488


418,057


372,194


393,855


373,571

Subordinated notes

435,979


436,021


139,235


139,210


139,172

Junior subordinated debentures

253,566


253,566


253,566


253,566


253,566

Trade date securities payable

226









Accrued interest payable and other liabilities

986,092


993,537


840,559


669,644


664,885

Total liabilities

31,371,577


30,194,819


28,986,649


27,977,279


26,962,909

Shareholders’ Equity:





 




Preferred stock

125,000


125,000


125,000


125,000


125,000

Common stock

56,825


56,794


56,765


56,518


56,486

Surplus

1,574,011


1,569,969


1,565,185


1,557,984


1,553,353

Treasury stock

(6,799
)

(6,650
)

(6,650
)

(5,634
)

(5,547
)
Retained earnings

1,830,165


1,747,266


1,682,016


1,610,574


1,543,680

Accumulated other comprehensive loss

(38,877
)

(45,429
)

(50,344
)

(76,872
)

(93,150
)
Total shareholders’ equity

3,540,325


3,446,950


3,371,972


3,267,570


3,179,822

Total liabilities and shareholders’ equity

$
34,911,902


$
33,641,769


$
32,358,621


$
31,244,849


$
30,142,731



14



WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

 
Three Months Ended
 
Nine Months Ended
(In thousands, except per share data)
Sep 30, 2019
 
Jun 30,
2019
 
Mar 31,
2019
 
Dec 31, 2018
 
Sep 30, 2018
 
Sep 30, 2019
 
Sep 30, 2018
Interest income
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest and fees on loans
$
314,277

 
$
309,161

 
$
296,987

 
$
283,311

 
$
271,134

 
$
920,425

 
$
761,191

Mortgage loans held-for-sale
3,478

 
3,104

 
2,209

 
3,409

 
5,285

 
8,791

 
12,329

Interest bearing deposits with banks
10,326

 
5,206

 
5,300

 
5,628

 
5,423

 
20,832

 
11,462

Federal funds sold and securities purchased under resale agreements
310

 

 

 

 

 
310

 
1

Investment securities
24,758

 
27,721

 
27,956

 
26,656

 
21,710

 
80,435

 
60,726

Trading account securities
20

 
5

 
8

 
14

 
11

 
33

 
29

Federal Home Loan Bank and Federal Reserve Bank stock
1,294

 
1,439

 
1,355

 
1,343

 
1,235

 
4,088

 
3,988

Brokerage customer receivables
164

 
178

 
155

 
235

 
164

 
497

 
488

Total interest income
354,627

 
346,814

 
333,970

 
320,596

 
304,962

 
1,035,411

 
850,214

Interest expense
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest on deposits
76,168

 
67,024

 
60,976

 
55,975

 
48,736

 
204,168

 
110,578

Interest on Federal Home Loan Bank advances
1,774

 
4,193

 
2,450

 
2,563

 
1,947

 
8,417

 
9,849

Interest on other borrowings
3,466

 
3,525

 
3,633

 
3,199

 
2,003

 
10,624

 
5,400

Interest on subordinated notes
5,470

 
2,806

 
1,775

 
1,788

 
1,773

 
10,051

 
5,333

Interest on junior subordinated debentures
2,897

 
3,064

 
3,150

 
2,983

 
2,940

 
9,111

 
8,239

Total interest expense
89,775

 
80,612

 
71,984

 
66,508

 
57,399

 
242,371

 
139,399

Net interest income
264,852

 
266,202

 
261,986

 
254,088

 
247,563

 
793,040

 
710,815

Provision for credit losses
10,834

 
24,580

 
10,624

 
10,401

 
11,042

 
46,038

 
24,431

Net interest income after provision for credit losses
254,018

 
241,622

 
251,362

 
243,687

 
236,521

 
747,002

 
686,384

Non-interest income
 
 
 
 
 
 
 
 
 
 
 
 
 
Wealth management
23,999

 
24,139

 
23,977

 
22,726

 
22,634

 
72,115

 
68,237

Mortgage banking
50,864

 
37,411

 
18,158

 
24,182

 
42,014

 
106,433

 
112,808

Service charges on deposit accounts
9,972

 
9,277

 
8,848

 
9,065

 
9,331

 
28,097

 
27,339

Gains (losses) on investment securities, net
710

 
864

 
1,364

 
(2,649
)
 
90

 
2,938

 
(249
)
Fees from covered call options

 
643

 
1,784

 
626

 
627

 
2,427

 
2,893

Trading gains (losses), net
11

 
(44
)
 
(171
)
 
(155
)
 
(61
)
 
(204
)
 
166

Operating lease income, net
12,025

 
11,733

 
10,796

 
10,882

 
9,132

 
34,554

 
27,569

Other
17,556

 
14,135

 
16,901

 
10,631

 
16,163

 
48,592

 
42,079

Total non-interest income
115,137

 
98,158

 
81,657

 
75,308

 
99,930

 
294,952

 
280,842

Non-interest expense
 
 
 
 
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
141,024

 
133,732

 
125,723

 
122,111

 
123,855

 
400,479

 
357,966

Equipment
13,314

 
12,759

 
11,770

 
11,523

 
10,827

 
37,843

 
31,426

Operating lease equipment depreciation
8,907

 
8,768

 
8,319

 
8,462

 
7,370

 
25,994

 
20,843

Occupancy, net
14,991

 
15,921

 
16,245

 
15,980

 
14,404

 
47,157

 
41,834

Data processing
6,522

 
6,204

 
7,525

 
8,447

 
9,335

 
20,251

 
26,580

Advertising and marketing
13,375

 
12,845

 
9,858

 
9,414

 
11,120

 
36,078

 
31,726

Professional fees
8,037

 
6,228

 
5,556

 
9,259

 
9,914

 
19,821

 
23,047

Amortization of other intangible assets
2,928

 
2,957

 
2,942

 
1,407

 
1,163

 
8,827

 
3,164

FDIC insurance
148

 
4,127

 
3,576

 
4,044

 
4,205

 
7,851

 
13,165

OREO expense, net
1,170

 
1,290

 
632

 
1,618

 
596

 
3,092

 
4,502

Other
24,138

 
24,776

 
22,228

 
19,068

 
20,848

 
71,142

 
60,502

Total non-interest expense
234,554

 
229,607

 
214,374

 
211,333

 
213,637

 
678,535

 
614,755

Income before taxes
134,601


110,173


118,645

 
107,662

 
122,814

 
363,419


352,471

Income tax expense
35,480


28,707


29,499

 
28,005

 
30,866

 
93,686


88,962

Net income
$
99,121

 
$
81,466

 
$
89,146

 
$
79,657

 
$
91,948

 
$
269,733

 
$
263,509

Preferred stock dividends
2,050


2,050


2,050

 
2,050

 
2,050

 
6,150


6,150

Net income applicable to common shares
$
97,071

 
$
79,416

 
$
87,096

 
$
77,607

 
$
89,898

 
$
263,583

 
$
257,359

Net income per common share - Basic
$
1.71

 
$
1.40

 
$
1.54

 
$
1.38

 
$
1.59

 
$
4.65

 
$
4.57

Net income per common share - Diluted
$
1.69

 
$
1.38

 
$
1.52

 
$
1.35

 
$
1.57

 
$
4.60

 
$
4.50

Cash dividends declared per common share
$
0.25

 
$
0.25

 
$
0.25

 
$
0.19

 
$
0.19

 
$
0.75

 
$
0.57

Weighted average common shares outstanding
56,690

 
56,662

 
56,529

 
56,395

 
56,366

 
56,627

 
56,268

Dilutive potential common shares
773

 
699

 
699

 
892

 
918

 
724

 
912

Average common shares and dilutive common shares
57,463


57,361


57,228

 
57,287

 
57,284

 
57,351


57,180


15



TABLE 1: LOAN PORTFOLIO MIX AND GROWTH RATES
 
 
 
 
 
 
 
 
 
 
% Growth From
(Dollars in thousands)
Sep 30, 2019
 
Jun 30, 2019
 
Mar 31, 2019
 
Dec 31, 2018
 
Sep 30, 2018
Dec 31, 2018 (1)
 
Sep 30, 2018
Balance:
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
$
8,195,602

 
$
8,270,774

 
$
7,994,191

 
$
7,828,538

 
$
7,473,958

6
 %
 
10
 %
Commercial real estate
7,448,667

 
7,276,244

 
6,973,505

 
6,933,252

 
6,746,774

10

 
10

Home equity
512,303

 
527,370

 
528,448

 
552,343

 
578,844

(10
)
 
(11
)
Residential real estate
1,218,666

 
1,118,178

 
1,053,524

 
1,002,464

 
924,250

29

 
32

Premium finance receivables - commercial
3,449,950

 
3,368,423

 
2,988,788

 
2,841,659

 
2,885,327

29

 
20

Premium finance receivables - life insurance
4,795,496

 
4,634,478

 
4,555,369

 
4,541,794

 
4,398,971

7

 
9

Consumer and other
89,487

 
109,192

 
120,804

 
120,641

 
115,827

(35
)
 
(23
)
Total loans, net of unearned income
$
25,710,171

 
$
25,304,659

 
$
24,214,629

 
$
23,820,691

 
$
23,123,951

11
 %
 
11
 %
Mix:
 
 
 
 
 
 
 
 
 
 
 
 
Commercial
32
%
 
33
%
 
33
%
 
33
%
 
32
%
 
 
 
Commercial real estate
29

 
29

 
29

 
29

 
29

 
 
 
Home equity
2

 
2

 
2

 
2

 
3

 
 
 
Residential real estate
5

 
4

 
4

 
4

 
4

 
 
 
Premium finance receivables - commercial
13

 
13

 
12

 
12

 
12

 
 
 
Premium finance receivables - life insurance
19

 
18

 
19

 
19

 
19

 
 
 
Consumer and other
0

 
1

 
1

 
1

 
1

 
 
 
Total loans, net of unearned income
100
%
 
100
%
 
100
%
 
100
%
 
100
%
 
 
 
(1)
Annualized.

TABLE 2: COMMERCIAL AND COMMERCIAL REAL ESTATE LOAN PORTFOLIOS
 
As of September 30, 2019
 
 
 
% of
Total
Balance
 
Nonaccrual
 
> 90 Days
Past Due
and Still
Accruing
 
Allowance
For Loan
Losses
Allocation
  
 
 
(Dollars in thousands)
Balance
 
Commercial:
 
 
 
 
 
 
 
 
 
Commercial, industrial and other
$
5,150,567

 
32.9
%
 
$
34,397

 
$

 
$
51,463

Franchise
914,774

 
5.9

 
3,752

 

 
8,308

Mortgage warehouse lines of credit
314,697

 
2.0

 

 

 
2,481

Asset-based lending
1,045,869

 
6.7

 
5,782

 

 
8,445

Leases
754,163

 
4.8

 

 

 
2,069

PCI - commercial loans (1)
15,532

 
0.1

 

 
382

 
361

Total commercial
$
8,195,602

 
52.4
%
 
$
43,931

 
$
382

 
$
73,127

Commercial Real Estate:
 
 
 
 
 
 
 
 
 
Construction
$
850,575

 
5.4
%
 
$
1,030

 
$

 
$
9,405

Land
175,386

 
1.1

 
994

 

 
4,801

Office
996,931

 
6.4

 
8,158

 

 
10,066

Industrial
1,009,680

 
6.5

 
100

 

 
7,021

Retail
1,004,720

 
6.4

 
7,174

 

 
6,718

Multi-family
1,291,825

 
8.3

 
690

 

 
12,504

Mixed use and other
2,002,267

 
12.8

 
3,411

 

 
14,370

PCI - commercial real estate (1)
117,283

 
0.7

 

 
4,992

 
53

Total commercial real estate
$
7,448,667

 
47.6
%
 
$
21,557

 
$
4,992

 
$
64,938

Total commercial and commercial real estate
$
15,644,269

 
100.0
%
 
$
65,488

 
$
5,374

 
$
138,065

 
 
 
 
 
 
 
 
 
 
Commercial real estate - collateral location by state:
 
 
 
 
 
 
 
 
 
Illinois
$
5,654,827

 
75.9
%
 
 
 
 
 
 
Wisconsin
744,577

 
10.0

 
 
 
 
 
 
Total primary markets
$
6,399,404

 
85.9
%
 
 
 
 
 
 
Indiana
193,350

 
2.6

 
 
 
 
 
 
Florida
80,120

 
1.1

 
 
 
 
 
 
Arizona
62,657

 
0.8

 
 
 
 
 
 
California
67,999

 
0.9

 
 
 
 
 
 
Other
645,137

 
8.7

 
 
 
 
 
 
Total commercial real estate
$
7,448,667

 
100.0
%
 
 
 
 
 
 
(1)
Purchased credit impaired ("PCI") loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. Loan agings are based upon contractually required payments.

16



TABLE 3: DEPOSIT PORTFOLIO MIX AND GROWTH RATES