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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): April 21, 2020
 
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 April 21, 2020, Wintrust Financial Corporation (the “Company”) announced earnings for the first quarter of 2020 and posted on its website the First Quarter 2020 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 14 of Exhibit 99.2.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
 
Exhibit
  

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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: April 21, 2020

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INDEX TO EXHIBITS
 
 
 
Exhibit
  

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(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
  
April 21, 2020
FOR MORE INFORMATION CONTACT:
Edward J. Wehmer, Founder & Chief Executive Officer
David A. Dykstra, Vice Chairman & Chief Operating Officer
(847) 939-9000
Web site address: www.wintrust.com

Wintrust Financial Corporation Reports First Quarter 2020 Net Income of $62.8 million

ROSEMONT, ILLINOIS – 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,

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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."

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The graphs below illustrate certain financial highlights of the first quarter of 2020.

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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

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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

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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.


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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.



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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.


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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.”



13



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.

14



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


15



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-sale
3,165

 
3,201

 
3,478

 
3,104

 
2,209

Interest bearing deposits with banks
4,768

 
8,971

 
10,326

 
5,206

 
5,300

Federal funds sold and securities purchased under resale agreements
86

 
390

 
310

 

 

Investment securities
32,467

 
27,611

 
24,758

 
27,721

 
27,956

Trading account securities
7

 
6

 
20

 
5

 
8

Federal Home Loan Bank and Federal Reserve Bank stock
1,577

 
1,328

 
1,294

 
1,439

 
1,355

Brokerage customer receivables
158

 
169

 
164

 
178

 
155

Total interest income
344,067

 
349,731

 
354,627

 
346,814

 
333,970

Interest expense
 
 
 
 
 
 
 
 
 
Interest on deposits
67,435

 
74,724

 
76,168

 
67,024

 
60,976

Interest on Federal Home Loan Bank advances
3,360

 
1,461

 
1,774

 
4,193

 
2,450

Interest on other borrowings
3,546

 
3,273

 
3,466

 
3,525

 
3,633

Interest on subordinated notes
5,472

 
5,504

 
5,470

 
2,806

 
1,775

Interest on 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

Net interest income
261,443

 
261,879

 
264,852

 
266,202

 
261,986

Provision for credit losses
52,961

 
7,826

 
10,834

 
24,580

 
10,624

Net interest income after provision for credit losses
208,482

 
254,053

 
254,018

 
241,622

 
251,362

Non-interest income
 
 
 
 
 
 
 
 
 
Wealth management
25,941

 
24,999

 
23,999

 
24,139

 
23,977

Mortgage banking
48,326

 
47,860

 
50,864

 
37,411

 
18,158

Service charges on deposit accounts
11,265

 
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 options
2,292

 
1,243

 

 
643

 
1,784

Trading (losses) gains, net
(451
)
 
46

 
11

 
(44
)
 
(171
)
Operating lease income, net
11,984

 
12,487

 
12,025

 
11,733

 
10,796

Other
18,244

 
14,025

 
17,556

 
14,135

 
16,901

Total non-interest income
113,242

 
112,220

 
115,137

 
98,158

 
81,657

Non-interest expense
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
136,762

 
145,941

 
141,024

 
133,732

 
125,723

Equipment
14,834

 
14,485

 
13,314

 
12,759

 
11,770

Operating lease equipment
9,260

 
9,766

 
8,907

 
8,768

 
8,319

Occupancy, net
17,547

 
17,132

 
14,991

 
15,921

 
16,245

Data processing
8,373

 
7,569

 
6,522

 
6,204

 
7,525

Advertising and marketing
10,862

 
12,517

 
13,375

 
12,845

 
9,858

Professional fees
6,721

 
7,650

 
8,037

 
6,228

 
5,556

Amortization of other intangible assets
2,863

 
3,017

 
2,928

 
2,957

 
2,942

FDIC insurance
4,135

 
1,348

 
148

 
4,127

 
3,576

OREO expense, net
(876
)
 
536

 
1,170

 
1,290

 
632

Other
24,160

 
29,630

 
24,138

 
24,776

 
22,228

Total non-interest expense
234,641

 
249,591

 
234,554

 
229,607

 
214,374

Income before taxes
87,083

 
116,682

 
134,601

 
110,173

 
118,645

Income tax expense
24,271

 
30,718

 
35,480

 
28,707

 
29,499

Net income
$
62,812

 
$
85,964

 
$
99,121

 
$
81,466

 
$
89,146

Preferred stock dividends
2,050

 
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 outstanding
57,620

 
57,538

 
56,690

 
56,662

 
56,529

Dilutive potential common shares
575

 
874

 
773

 
699

 
699

Average common shares and dilutive common shares
58,195

 
58,412

 
57,463

 
57,361

 
57,228


16



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, 2019
Dec 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 development
1,237,274

 
1,200,783

 
1,025,961

 
984,138

 
951,370

12

 
30

Non-construction
6,736,706

 
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 equity
494,655

 
513,066

 
512,303

 
527,370

 
528,448

(14
)
 
(6
)
Home equity - PCD (2)

 

 

 

 


 

Residential real estate
1,359,971

 
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 insurance
3,465,055

 
3,442,027

 
3,449,950

 
3,368,423

 
2,988,788

3

 
16

Life insurance
5,084,695

 
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 other
35,546

 
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 other
32
%
 
31
%
 
32
%
 
33
%
 
33
%
 
 
 
Commercial, industrial, and other - PCD (2)
0

 
0

 
0

 
0

 
0

 
 
 
Commercial real estate
 
 
 
 
 
 
 
 
 
 
 
 
Construction and development
4

 
4

 
4

 
4

 
4

 
 
 
Non-construction
24

 
25

 
25

 
24

 
24

 
 
 
Commercial real estate - PCD (2)
1

 
1

 
0

 
1

 
1

 
 
 
Home equity
2

 
2

 
2

 
2

 
2

 
 
 
Home equity - PCD (2)

 

 

 

 

 
 
 
Residential real estate
5

 
5

 
5

 
4

 
4

 
 
 
Residential real estate - PCD (2)
0

 
0

 
0

 
0

 
0

 
 
 
Premium Finance receivables
 
 
 
 
 
 
 
 
 
 
 
 
Commercial insurance
13

 
13

 
13

 
13

 
12

 
 
 
Life insurance
18

 
18

 
18

 
18

 
18

 
 
 
Premium finance receivables - PCD (2)
1

 
1

 
1

 
1

 
1

 
 
 
Consumer and other
0

 
0

 
0

 
0

 
1

 
 
 
Consumer and other - PCD (2)
0

 
0

 
0

 
0

 
0

 
 
 
Total loans, net of unearned income
100
%
 
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
 
 
% of
Total
Balance
 
 
% of
Total
Balance
 
 
% of
Total
Balance
 
 
% of
Total
Balance
 
 
% of
Total
Balance
(Dollars in thousands)
Balance
 
Balance
 
Balance
 
Balance
 
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
%
Wisconsin
793,145

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
%
Indiana
249,680

3.1

 
218,963

2.7

 
193,350

2.6

 
179,977

2.5

 
175,350

2.5

Florida
126,786

1.5

 
114,629

1.4

 
80,120

1.1

 
60,343

0.8

 
55,528

0.8

Arizona
72,214

0.9

 
64,022

0.8

 
62,657

0.8

 
62,607

0.9

 
61,375

0.9

California
63,883

0.8

 
64,345

0.8

 
67,999

0.9

 
68,497

0.9

 
67,545

1.0

Other
708,217

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
%



17



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, 2019
Dec 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 deposits
3,181,159

 
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 market
8,114,659

 
7,854,189

 
7,326,899

 
6,460,098

 
6,093,596

13

 
33

Savings
3,282,340

 
3,196,698

 
2,934,348

 
2,823,904

 
2,729,626

11

 
20

Time certificates of deposit
5,389,779

 
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 bearing
24
%
 
24
%
 
25
%
 
24
%
 
24
%
 
 
 
NOW and interest bearing demand deposits
10

 
10

 
10

 
10

 
11

 
 
 
Wealth management deposits (2)
13

 
10

 
10

 
12

 
12

 
 
 
Money market
26

 
26

 
25

 
24

 
23

 
 
 
Savings
10

 
11

 
10

 
10

 
10

 
 
 
Time certificates of deposit
17

 
19

 
20

 
20

 
20

 
 
 
Total deposits
100
%
 
100
%
 
100
%