LAKE FOREST, Ill., July 23 /PRNewswire-FirstCall/ -- Wintrust Financial
Corporation ("Wintrust" or "the Company") (Nasdaq: WTFC) announced
quarterly net income of $11.3 million, or $0.47 per diluted share, for the
period ended June 30, 2008, an increase of $0.07, or 18%, compared to the
$9.7 million, or $0.40 per diluted share, recorded in the first quarter of
2008. Compared to the second quarter of 2007, earnings per diluted share
decreased $0.15, or 24%, on a $4.1 million decrease in net income.
Edward J. Wehmer, President and Chief Executive Officer, commented,
"The results for the quarter were generally in line with our expectations.
The second quarter showed strong balance sheet growth. Core deposits and
core loans both experienced solid expansion. Our loan pipelines are strong
and sensible pricing continues to return to the market."
Mr. Wehmer went on to say, "Compression in the net interest margin
brought about by the deep rate cuts made in the first quarter was
effectively offset, as has consistently been the case, by our covered call
hedging strategy. Barring additional rate cuts, we expect the margin to
recover during the remainder of 2008."
On the credit quality front, Mr. Wehmer noted, "The level of
non-performing loans remained steady at approximately $87 million. Although
additional loans were classified as non-performing during the quarter, many
of our prior problem credits were resolved. Three larger loan relationships
inherited with the Hinsbrook Bank acquisition make up $35.3 million of the
non-performing loan total. We continue to work diligently on problem and
potential problem loans." Mr. Wehmer added, "Net loan charge-offs were a
bit over our normal range but we continued to build our loan loss reserves
which are supported by our continuous and detailed analysis of the credit
portfolio."
Mr. Wehmer summarized, "At this time in the cycle, there are tremendous
opportunities for institutions that have positioned themselves prudently.
We intend to take advantage of these opportunities in a measured and
disciplined way."
Net income for the six months ended June 30, 2008 was $21.0 million, or
$0.87 per diluted common share compared to $30.1 million, or $1.18 per
diluted common share in the first half of 2007. Total assets of $9.9
billion at June 30, 2008 increased $575 million from June 30, 2007. Total
deposits as of June 30, 2008 were $7.8 billion, an increase of $212 million
as compared to $7.5 billion at June 30, 2007.
Total loans grew to $7.2 billion as of June 30, 2008, an increase of
$433 million, or 6%, over the $6.7 billion balance as of June 30, 2007. The
Company's loan portfolio includes a wide variety of loan types, of which
approximately 9% are commercial real estate construction and land
development related and 6% are residential real estate construction and
land development related. These projects are being carefully monitored on
an individual credit basis at each bank.
Shareholders' equity increased to $749 million, or a book value of
$31.70 per share, at June 30, 2008, compared to $721 million, or a book
value of $29.82 per share, at June 30, 2007.
Wintrust's key operating measures and growth rates for the second quarter
of 2008 as compared to the sequential and linked quarters are shown in the
table below:
% or % or
basis basis
point(bp) point(bp)
Change Change
From From
Three Months Ended 1st 2nd
($ in thousands, June 30, March 31, June 30, Quarter Quarter
except per share data) 2008 2008 2007 2008 (5) 2007
Net income $11,276 $9,705 $15,410 16 % (27)%
Net income per common
share - diluted $0.47 $0.40 $0.62 18 % (24)%
Net revenue (1) $92,408 $86,298 $86,105 7 % 7 %
Net interest income $59,400 $61,742 $65,255 (4)% (9)%
Net interest margin (4) 2.77% 2.98% 3.13% (21)bp (36)bp
Core net interest
margin (2) (4) 3.02% 3.26% 3.40% (24)bp (38)bp
Net overhead ratio (3) 1.31% 1.64% 1.68% (33)bp (37)bp
Return on average assets 0.47% 0.42% 0.66% 5 bp (19)bp
Return on average equity 5.97% 5.25% 8.52% 72 bp (255)bp
At end of period
Total assets $9,923,077 $9,732,466 $9,348,460 8 % 6 %
Total loans $7,153,603 $6,874,916 $6,720,960 16 % 6 %
Total deposits $7,761,367 $7,483,582 $7,549,562 15 % 3 %
Total equity $749,025 $753,293 $720,628 (2)% 4 %
(1) Net revenue is net interest income plus non-interest income.
(2) Core net interest margin excludes interest expense associated with
Wintrust's junior subordinated debentures and the interest expense
incurred to fund common stock repurchases.
(3) The net overhead ratio is calculated by netting total non-interest
expense and total non-interest income, annualizing this amount, and
dividing by that period's total average assets. A lower ratio
indicates a higher degree of efficiency.
(4) See "Supplemental Financial Measures/Ratios" for additional
information on this performance measure/ratio.
(5) Period-end balance sheet percentage changes are annualized.
Certain returns, yields, performance ratios, or quarterly growth rates
are "annualized" in this presentation to represent an annual time period.
This is done for analytical purposes to better discern for decision-making
purposes underlying performance trends when compared to full-year or
year-over-year amounts. For example, balance sheet growth rates are most
often expressed in terms of an annual rate like 20%. As such, 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 http://www.wintrust.com by choosing
"Investor News" and then choosing "Supplemental Financial Info."
Acquisitions, Stock Offering/Regulatory Capital and New Locations -
Impacting Comparative Financial Results
Acquisitions
On November 1, 2007, the Company completed its previously announced
acquisition of 100% of the ownership interests of Broadway Premium Funding
Corporation ("Broadway"). Broadway was founded in 1999 and had
approximately $60 million of premium finance receivables outstanding at the
date of acquisition. Broadway provides financing for commercial property
and casualty insurance premiums, mainly through insurance agents and
brokers in the northeastern portion of the United States and California.
The results of operations of Broadway are included in Wintrust's
consolidated financial results only since the effective date of
acquisition.
Stock Offering/Regulatory Capital
The Company did not repurchase any of its outstanding common stock
during the first half of 2008.
De Novo/Acquired Banking Locations Activity
Over the past 12 months, Wintrust opened the following banking locations:
- Vernon Hills, Illinois (Libertyville Bank & Trust Company) - opened
second quarter 2008
- Deerfield, Illinois (Northbrook Bank & Trust Company) - opened first
quarter 2008
Financial Performance Overview
For the second quarter of 2008, net interest income totaled $59.4
million, down $5.9 million compared to the second quarter of 2007. Average
earning assets for the second quarter of 2008 increased by $240 million
compared to the second quarter of 2007. Average loans increased by $386
million while liquidity management assets decreased by $143 million over
the past 12 months. A shift in the mix of retail funding over the last 12
months was evidenced as a decrease in the average balance of retail
certificates of deposits of approximately $378 million was offset by a $362
million increase in the average balance of savings, NOW, money market and
wealth management deposits.
The net interest margin for the second quarter of 2008 was 2.77%,
compared to 3.13% in the second quarter of 2007 and 2.98% in the first
quarter of 2008. Core net interest margin, which excludes both the impact
of the Company's junior subordinated debentures and the common stock
repurchases on the net interest margin, was 3.02% in the second quarter of
2008, down compared to 3.40% in the second quarter of 2007 and a decrease
from the 3.26% in the first quarter of 2008.
The decrease in the core net interest margin in the second quarter of
2008 when compared to the second quarter of 2007 is directly attributable
to interest rate compression as certain variable rate retail deposit rates
are unable to decline at the same magnitude as variable rate earning
assets. The compression in the net interest margin was effectively offset,
as has consistently been the case, by the Company's covered call hedging
strategy. An illustration of the effectiveness of this strategy is shown in
the Supplemental Financial Information section (see page titled "Net
Interest Margin (Including Call Option Income)."
In the second quarter of 2008, the yield on loans decreased 167 basis
points and the rate on interest-bearing deposits decreased 115 basis points
compared to the second quarter of 2007. Repricing of maturing retail
certificates of deposit over the next 12 months coupled with a more stable
rate environment from the Federal Reserve Bank should mitigate additional
compression of net interest margin. Additionally, the Company has been
working to position the balance sheet to take advantage of a higher rate
environment and will continue to do so.
Non-interest income totaled $33.0 million in the second quarter of
2008, increasing $12.2 million, or 58%, compared to the second quarter of
2007. The increase was primarily attributable to an additional $11.6
million from fees on covered call option contracts written against certain
U.S. Treasury and agency securities held in the Company's portfolio for
liquidity and other purposes. Mortgage banking revenue and service charges
on deposit accounts increased $782,000 and $494,000 in the second quarter
of 2008 compared to the second quarter of 2007, respectively.
Administrative services revenue growth continues to be hampered by
competitive pricing and the current economic conditions.
Non-interest expense totaled $64.6 million in the second quarter of
2008, increasing $4.4 million, or 7%, compared to the second quarter of
2007. Salary and employee benefits expense increased $1.9 million, or 5%,
while equipment costs increased $219,000, data processing costs increased
$340,000, occupancy costs increased $91,000, professional fees increased
$542,000 and the increase in FDIC insurance premiums added $503,000 of
additional expense.
Non-performing assets totaled $96.0 million, or 0.97% of total assets,
at June 30, 2008, compared to $91.4 million, or 0.94% of total assets, at
March 31, 2008 and $75.7 million, or 0.81% of total assets, at December 31,
2007. Total non-performing assets increased by $4.6 million since March 31,
2008. The $4.6 million was comprised of an increase in non-performing loans
of $0.2 million and an increase in other real estate acquired in
foreclosure of $4.4 million.
The $67.7 million of non-performing assets classified as residential
real estate and home equity, commercial, consumer, and other consumer
($64.1 million of commercial, consumer and other loans and $3.6 million of
residential and home equity loans) consists of $26.2 million of residential
real estate construction and land development related loans, $6.6 million
of commercial related loans, $11.5 million of commercial real estate
related loans, $16.5 million of commercial real estate construction and
land development related loans, $6.8 million of residential real estate and
home equity related loans and $209,000 of consumer related loans. Seven of
these relationships exceed $2.5 million in outstanding balances,
approximating $48.9 million in total outstanding balances.
The provision for credit losses totaled $10.3 million for the second
quarter of 2008 compared to $8.6 million for the first quarter of 2008 and
$2.5 million in the second quarter of 2007. Net charge-offs for the second
quarter totaled 36 basis points on an annualized basis compared to 30 basis
points on an annualized basis in the first quarter of 2008 and 10 basis
points on an annualized basis in the second quarter of 2007.
The provision for credit losses in the first half of 2008 reflects the
Company's current net charge-offs and credit quality levels. Annualized
net-charge-offs as a percentage of average loans for the first half of 2008
were 33 basis points, compared to nine basis points on an annualized basis
in the first half of 2007.
WINTRUST FINANCIAL CORPORATION
SELECTED FINANCIAL HIGHLIGHTS
Three Months Ended Six Months Ended
(Dollars in thousands, June 30, June 30,
except per share data) 2008 2007 2008 2007
Selected Financial
Condition Data
(at end of period):
Total assets $9,923,077 $9,348,460
Total loans 7,153,603 6,720,960
Total deposits 7,761,367 7,549,562
Junior subordinated
debentures 249,579 249,745
Total shareholders'
equity 749,025 720,628
Selected Statements
of Income Data:
Net interest income $59,400 $65,255 $121,142 $129,925
Net revenue (1) 92,408 86,105 178,706 170,508
Income before taxes 17,522 23,477 32,432 46,329
Net income 11,276 15,410 20,981 30,091
Net income per common
share - Basic 0.48 0.64 0.89 1.22
Net income per common
share - Diluted 0.47 0.62 0.87 1.18
Selected Financial Ratios
and Other Data:
Performance Ratios:
Net interest margin (6) 2.77% 3.13% 2.88% 3.11%
Core net interest
margin (2) (6) 3.02 3.40 3.14 3.37
Non-interest income to
average assets 1.37 0.89 1.22 0.87
Non-interest expense to
average assets 2.68 2.57 2.69 2.57
Net overhead ratio (3) 1.31 1.68 1.47 1.70
Efficiency ratio (4) (6) 69.34 69.29 70.20 69.79
Return on average assets 0.47 0.66 0.44 0.64
Return on average equity 5.97 8.52 5.61 8.23
Average total assets $9,682,454 $9,395,532 $9,526,832 $9,423,975
Average total
shareholders' equity 760,253 725,465 752,104 737,490
Average loans to average
deposits ratio 94.6% 89.8% 94.7% 87.7%
Common Share Data at
end of period:
Market price per common
share $23.85 $43.85
Book value per common
share $31.70 $29.82
Common shares
outstanding 23,625,841 24,163,280
Other Data at end of
period:
Allowance for credit
losses (5) $58,126 $47,849
Non-performing assets $96,039 $36,326
Allowance for credit
losses to total
loans (5) 0.81% 0.71%
Non-performing assets to
total assets 0.97% 0.39%
Number of:
Bank subsidiaries 15 15
Non-bank subsidiaries 8 8
Banking offices 79 78
(1) Net revenue is net interest income plus non-interest income.
(2) The core net interest margin excludes the effect of the net interest
expense associated with Wintrust's junior subordinated debentures and
the interest expense incurred to fund common stock repurchases.
(3) The net overhead ratio is calculated by netting total non-interest
expense and total non-interest income, annualizing this amount, and
dividing by that period's total average assets. A lower ratio
indicates a higher degree of efficiency.
(4) The efficiency ratio is calculated by dividing total non-interest
expense by tax-equivalent net revenues (less securities gains or
losses). A lower ratio indicates more efficient revenue generation.
(5) The allowance for credit losses includes both the allowance for loan
losses and the allowance for lending-related commitments.
(6) See "Supplemental Financial Measures/Ratios" for additional
information on this performance measure/ratio.
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(Unaudited) (Unaudited)
June 30, December 31, June 30,
(In thousands) 2008 2007 2007
Assets
Cash and due from banks $166,857 $170,190 $153,209
Federal funds sold and securities
purchased under resale agreements 73,311 90,964 15,092
Interest bearing deposits with
banks 6,438 10,410 14,308
Available-for-sale securities,
at fair value 1,590,648 1,303,837 1,515,223
Trading account securities 1,877 1,571 919
Brokerage customer receivables 19,661 24,206 23,842
Mortgage loans held-for-sale 118,379 109,552 135,543
Loans, net of unearned income 7,153,603 6,801,602 6,720,960
Less: Allowance for loan losses 57,633 50,389 47,392
Net loans 7,095,970 6,751,213 6,673,568
Premises and equipment, net 348,881 339,297 329,498
Accrued interest receivable and
other assets 208,574 273,678 198,609
Goodwill 276,311 276,204 268,983
Other intangible assets 16,170 17,737 19,666
Total assets $9,923,077 $9,368,859 $9,348,460
Liabilities and Shareholders' Equity
Deposits:
Non-interest bearing $688,512 $664,264 $655,074
Interest bearing 7,072,855 6,807,177 6,894,488
Total deposits 7,761,367 7,471,441 7,549,562
Notes payable 41,975 60,700 50,550
Federal Home Loan Bank advances 438,983 415,183 403,203
Other borrowings 383,009 254,434 231,783
Subordinated notes 75,000 75,000 75,000
Junior subordinated debentures 249,579 249,662 249,745
Accrued interest payable and
other liabilities 224,139 102,884 67,989
Total liabilities 9,174,052 8,629,304 8,627,832
Shareholders' equity:
Preferred stock - - -
Common stock 26,478 26,281 26,012
Surplus 547,333 539,127 528,916
Treasury stock (122,258) (122,196) (84,559)
Common stock warrants 459 459 649
Retained earnings 325,314 309,556 287,741
Accumulated other comprehensive
loss (28,301) (13,672) (38,131)
Total shareholders' equity 749,025 739,555 720,628
Total liabilities and
shareholders' equity $9,923,077 $9,368,859 $9,348,460
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Six Months Ended
(In thousands, except June 30, June 30,
per share data) 2008 2007 2008 2007
Interest income
Interest and fees on
loans $108,803 $131,279 $227,756 $259,144
Interest bearing
deposits with banks 68 223 188 488
Federal funds sold and
securities purchased
under resale agreements 472 435 1,106 3,261
Securities 16,553 20,434 32,634 41,319
Trading account
securities 15 11 46 18
Brokerage customer
receivables 249 506 606 965
Total interest income 126,160 152,888 262,336 305,195
Interest expense
Interest on deposits 53,862 73,735 115,292 149,625
Interest on Federal Home
Loan Bank advances 4,557 4,400 9,113 8,529
Interest on notes payable
and other borrowings 2,900 3,562 5,670 5,290
Interest on subordinated
notes 843 1,273 1,930 2,568
Interest on junior
subordinated debentures 4,598 4,663 9,189 9,258
Total interest expense 66,760 87,633 141,194 175,270
Net interest income 59,400 65,255 121,142 129,925
Provision for credit
losses 10,301 2,490 18,856 4,297
Net interest income after
provision for credit
losses 49,099 62,765 102,286 125,628
Non-interest income
Wealth management 7,771 7,771 15,636 15,390
Mortgage banking 7,536 6,754 13,632 12,217
Service charges on deposit
accounts 2,565 2,071 4,938 3,959
Gain on sales of premium
finance receivables 566 175 1,707 444
Administrative services 755 1,048 1,468 2,061
(Losses) gains on
available-for-sale
securities, net (140) 192 (1,473) 239
Other 13,955 2,839 21,656 6,273
Total non-interest
income 33,008 20,850 57,564 40,583
Non-interest expense
Salaries and employee
benefits 36,976 35,060 73,648 70,977
Equipment 4,048 3,829 7,974 7,419
Occupancy, net 5,438 5,347 11,305 10,782
Data processing 2,918 2,578 5,716 5,054
Advertising and marketing 1,368 1,513 2,367 2,591
Professional fees 2,227 1,685 4,295 3,288
Amortization of other
intangible assets 779 964 1,567 1,933
Other 10,831 9,162 20,546 17,838
Total non-interest
expense 64,585 60,138 127,418 119,882
Income before taxes 17,522 23,477 32,432 46,329
Income tax expense 6,246 8,067 11,451 16,238
Net income $11,276 $15,410 $20,981 $30,091
Net income per common
share - Basic $0.48 $0.64 $0.89 $1.22
Net income per common
share - Diluted $0.47 $0.62 $0.87 $1.18
Cash dividends declared
per common share $- $- $0.18 $0.16
Weighted average common
shares outstanding 23,608 24,154 23,563 24,589
Dilutive potential common
shares 531 806 555 810
Average common shares and
dilutive common shares 24,139 24,960 24,118 25,399
SUPPLEMENTAL FINANCIAL MEASURES/RATIOS
The accounting and reporting policies of Wintrust conform to generally
accepted accounting principles ("GAAP") in the United States and prevailing
practices in the banking industry. However, certain non-GAAP performance
measures and ratios are used by management to evaluate and measure the
Company's performance. These include taxable-equivalent net interest income
(including its individual components), net interest margin (including its
individual components), core net interest margin and the efficiency ratio.
Management believes that these measures and ratios provide users of the
Company's financial information a more meaningful view of the performance
of the interest-earning and interest-bearing liabilities and of the
Company's operating efficiency. Other financial holding companies may
define or calculate these measures and ratios differently.
Management reviews yields on certain asset categories and the net
interest margin of the Company and its banking subsidiaries on a fully
taxable-equivalent ("FTE") basis. In this non-GAAP presentation, net
interest income is adjusted to reflect tax-exempt interest income on an
equivalent before-tax basis. This measure ensures comparability of net
interest income arising from both taxable and tax-exempt sources. Net
interest income on a FTE basis is also used in the calculation of the
Company's efficiency ratio. The efficiency ratio, which is calculated by
dividing non-interest expense by total taxable-equivalent net revenue (less
securities gains or losses), measures how much it costs to produce one
dollar of revenue. Securities gains or losses are excluded from this
calculation to better match revenue from daily operations to operational
expenses.
Management also evaluates the net interest margin excluding the net
interest expense associated with the Company's junior subordinated
debentures and the interest expense incurred to fund common stock
repurchases ("Core Net Interest Margin"). Because junior subordinated
debentures are utilized by the Company primarily as capital instruments and
the cost incurred to fund common stock repurchases is capital utilization
related, management finds it useful to view the net interest margin
excluding these expenses and deems it to be a more meaningful view of the
operational net interest margin of the Company.
A reconciliation of certain non-GAAP performance measures and ratios
used by the Company to evaluate and measure the Company's performance to
the most directly comparable GAAP financial measures is shown below:
Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in thousands) 2008 2007 2008 2007
(A) Interest income
(GAAP) $126,160 $152,888 $262,336 $305,195
Taxable-equivalent
adjustment:
- Loans 158 273 357 403
- Liquidity
management assets 428 607 939 1,100
- Other earning
assets 6 4 19 5
Interest income - FTE $126,752 $153,772 $263,651 $306,703
(B) Interest expense
(GAAP) 66,760 87,633 141,194 175,270
Net interest income -
FTE $59,992 $66,139 $122,457 $131,433
(C) Net interest income
(GAAP)(A minus B) $59,400 $65,255 $121,142 $129,925
Net interest income -
FTE $59,992 $66,139 $122,457 $131,433
Add: Net interest expense
on junior subordinated
debentures and interest
cost incurred for common
stock repurchases (1) 5,470 5,821 11,283 10,908
Core net interest income -
FTE (2) $65,462 $71,960 $133,740 $142,341
(D) Net interest margin
(GAAP) 2.74% 3.08% 2.84% 3.07%
Net interest margin -
FTE 2.77% 3.13% 2.88% 3.11%
Core net interest margin -
FTE (2) 3.02% 3.40% 3.14% 3.37%
(E) Efficiency ratio (GAAP) 69.79% 70.00% 70.72% 70.41%
Efficiency ratio - FTE 69.34% 69.29% 70.20% 69.79%
(1) Interest expense from the junior subordinated debentures are net of
the interest income on the Common Securities owned by the Trusts and
included in interest income. Interest cost incurred for common stock
repurchases is estimated using current period average rates on certain
debt obligations.
(2) Core net interest income and core net interest margin are by
definition a non-GAAP measure/ratio. The GAAP equivalents are the net
interest income and net interest margin determined in accordance with
GAAP (lines C and D in the table).
LOANS, NET OF UNEARNED INCOME
% Growth
From From
June December June December June
30, 31, 30, 31, 30,
(Dollars in thousands) 2008 2007 2007 2007 (1) 2007
Balance:
Commercial and commercial
real estate (3) $4,610,550 $4,408,661 $4,186,308 9% 10%
Home equity 770,748 678,298 638,941 27 21
Residential real estate 243,400 226,686 222,312 15 9
Premium finance
receivables 1,145,986 1,078,185 1,306,321 13 (12)
Indirect consumer
loans (2) 221,511 241,393 248,788 (17) (11)
Tricom finance receivables 22,676 27,719 34,177 (37) (34)
Other loans (3) 138,732 140,660 84,113 (3) 65
Total loans, net of
unearned income $7,153,603 $6,801,602 $6,720,960 10% 6%
Mix:
Commercial and commercial
real estate 65% 65% 62%
Home equity 11 10 10
Residential real estate 3 3 3
Premium finance
receivables 16 16 19
Indirect consumer
loans (2) 3 3 4
Tricom finance receivables - 1 1
Other loans (3) 2 2 1
Total loans, net of
unearned income 100% 100% 100%
(1) Annualized
(2) Includes autos, boats, snowmobiles and other indirect consumer loans
(3) Approximately $56.2 million of loans originally reported as commercial
and commercial real estate ($53.6 million) and home equity
($2.6 million) were reclassified in the third quarter of 2007 and are
now included in other.
DEPOSITS
% Growth
From From
June December June December June
30, 31, 30, 31, 30,
(Dollars in thousands) 2008 2007 2007 2007 (1) 2007
Balance:
Non-interest bearing $688,512 $664,264 $655,074 7% 5%
NOW 1,064,792 1,014,780 964,714 10 10
Wealth Management
deposits (2) 599,451 599,426 515,223 - 16
Money market 900,482 701,972 704,534 57 28
Savings 326,869 297,586 302,000 20 8
Time certificates of
deposit 4,181,261 4,193,413 4,408,017 (1) (5)
Total deposits $7,761,367 $7,471,441 $7,549,562 8% 3%
Mix:
Non-interest bearing 9% 9% 9%
NOW 14 14 13
Wealth Management
deposits (2) 8 8 7
Money market 12 9 9
Savings 4 4 4
Time certificates of
deposit 53 56 58
Total deposits 100% 100% 100%
(1) Annualized
(2) Represents deposit balances from brokerage customers of Wayne Hummer
Investments and trust and asset management customers of Wayne Hummer
Trust Company at the Company's subsidiary banks
NET INTEREST INCOME
The following table presents a summary of Wintrust's average balances,
net interest income and related net interest margins, calculated on a fully
tax- equivalent basis, for the second quarter of 2008 compared to the
second quarter of 2007 (linked quarters):
For the Three Months Ended For the Three Months Ended
(Dollars in June 30, 2008 June 30, 2007
thousands) Average Interest Rate Average Interest Rate
Liquidity
management
assets (1)
(2) (8) $1,543,795 $17,521 4.56% $1,686,596 $21,699 5.16%
Other earning
assets (2)
(3) (8) 22,519 270 4.83 25,791 521 8.10
Loans, net of
unearned
income (2)
(4) (8) 7,158,317 108,961 6.12 6,772,512 131,552 7.79
Total
earning
assets (8) $8,724,631 $126,752 5.84% $8,484,899 $153,772 7.27%
Allowance
for loan
losses (53,798) (47,982)
Cash and
due from banks 125,806 132,216
Other assets 885,815 826,399
Total assets $9,682,454 $9,395,532
Interest-
bearing
deposits $6,906,437 $53,862 3.14% $6,896,118 $73,735 4.29%
Federal Home
Loan Bank
advances 437,642 4,557 4.19 400,918 4,400 4.40
Notes payable
and other
borrowings 439,130 2,900 2.66 322,811 3,562 4.42
Subordinated
notes 75,000 843 4.45 75,000 1,273 6.72
Junior
subordinated
debentures 249,594 4,598 7.29 249,760 4,663 7.39
Total interest-
bearing
liabilities $8,107,803 $66,760 3.31% $7,944,607 $87,633 4.42%
Non-interest
bearing
deposits 663,526 646,278
Other
liabilities 150,872 79,182
Equity 760,253 725,465
Total
liabilities
and
shareholders'
equity $9,682,454 $9,395,532
Interest
rate spread
(5) (8) 2.53% 2.85%
Net free
funds/
contribution
(6) $616,828 0.24 $540,292 0.28
Net interest
income/Net
interest margin
(8) $59,992 2.77% $66,139 3.13%
Core net interest
margin (7) (8) 3.02% 3.40%
(1) Liquidity management assets include available-for-sale securities,
interest earning deposits with banks, federal funds sold and
securities purchased under resale agreements.
(2) Interest income on tax-advantaged loans, trading account securities
and securities reflects a tax-equivalent adjustment based on a
marginal federal corporate tax rate of 35%. The total adjustments
for the three months ended June 30, 2008 and 2007 were $592,000 and
$884,000, respectively.
(3) Other earning assets include brokerage customer receivables and
trading account securities.
(4) Loans, net of unearned income, include mortgages held-for-sale and
non-accrual loans.
(5) Interest rate spread is the difference between the yield earned on
earning assets and the rate paid on interest-bearing liabilities.
(6) Net free funds are the difference between total average earning
assets and total average interest-bearing liabilities. The
estimated contribution to net interest margin from net free funds is
calculated using the rate paid for total interest-bearing
liabilities.
(7) The core net interest margin excludes the effect of the net interest
expense associated with Wintrust's junior subordinated debentures
and the interest expense incurred to fund common stock repurchases.
(8) See "Supplemental Financial Measures/Ratios" for additional
information on this performance measure/ratio.
Net interest income, which is the difference between interest income
and fees on earning assets and interest expense on deposits and borrowings,
is the major source of earnings for Wintrust. Tax-equivalent net interest
income for the quarter ended June 30, 2008 totaled $60.0 million, a
decrease of $6.1 million, or 9%, as compared to the $66.1 million recorded
in the same quarter of 2007.
Net interest margin represents tax-equivalent net interest income as a
percentage of the average earning assets during the period. For the second
quarter of 2008, the net interest margin was 2.77%, down 36 basis points
when compared to the second quarter of 2007. The core net interest margin,
which excludes the net interest expense related to Wintrust's junior
subordinated debentures and the interest expense related to the common
stock repurchases, was 3.02% for the second quarter of 2008 and 3.40% for
the second quarter of 2007.
The yield on total earning assets for the second quarter of 2008 was
5.84% as compared to 7.27% in the second quarter of 2007. The second
quarter 2008 yield on loans was 6.12%, a 167 basis point decrease when
compared to the prior year second quarter yield of 7.79%. The liquidity
management assets yield in the second quarter of 2008 was 4.56% compared to
5.16% in the second quarter of 2007.
The rate paid on interest-bearing liabilities decreased to 3.31% in the
second quarter of 2008 as compared to 4.42% in the second quarter of 2007.
The cost of interest-bearing deposits decreased in the second quarter of
2008 to 3.14% compared to 4.29% in the second quarter of 2007. The rate
paid on wholesale funding, consisting of Federal Home Loan Bank of Chicago
advances, notes payable, subordinated notes, other borrowings and junior
subordinated debentures, decreased to 4.29% in the second quarter of 2008
compared to 5.29% in the second quarter of 2007. The Company utilizes
certain borrowing sources to fund the additional capital requirements of
the subsidiary banks, manage its capital, manage its interest rate risk
position and for general corporate purposes.
The lower levels of net interest income and net interest margin in the
second quarter of 2008 were caused by margin compression. The Company has
made progress in shifting its mix of retail deposits away from certificates
of deposit into lower cost, more variable rate NOW, savings, money market
and wealth management deposits. Interest rate compression on large portions
of NOW, savings and money market accounts as the Federal Reserve quickly
lowered rates prevented these deposits from repricing at the same magnitude
as variable rate earning assets. Repricing of maturing retail certificates
of deposit over the next 12 months coupled with a more stable rate
environment from the Federal Reserve Bank should mitigate additional
compression of net interest margin. The average loan-to-average deposit
ratio increased to 94.6% in the second quarter of 2008 from 89.8% in the
second quarter of 2007. In the fourth quarter of 2007 the Company
reinstated its program of selling premium finance receivables as the
average loan-to-average deposit ratio was above the target of 85% to 90%.
The Company lowered the period-end loan-to- deposit ratio as of June 30,
2008 to 92.2% by selling $69 million of outstanding balances at the end of
the second quarter of 2008. The higher nature of this ratio is primarily a
result of the strong commercial and commercial real estate loan growth
combined with a somewhat restricted market for loan sales and
securitizations.
The following table presents a summary of Wintrust's average balances,
net interest income and related net interest margins, calculated on a fully
tax- equivalent basis, for the second quarter of 2008 compared to the first
quarter of 2008 (sequential quarters):
For the Three Months Ended For the Three Months Ended
(Dollars in June 30, 2008 March 31, 2008
thousands) Average Interest Rate Average Interest Rate
Liquidity
management
assets (1)
(2) (8) $1,543,795 $17,521 4.56% $1,391,400 $17,346 5.01%
Other earning
assets (2)
(3) (8) 22,519 270 4.83 26,403 401 6.10
Loans, net of
unearned income
(2) (4) (8) 7,158,317 108,961 6.12 7,012,642 119,153 6.83
Total earning
assets (8) $8,724,631 $126,752 5.84% $8,430,445 $136,900 6.53%
Allowance for
loan losses (53,798) (51,364)
Cash and due
from banks 125,806 124,745
Other assets 885,815 869,713
Total assets $9,682,454 $9,373,539
Interest-
bearing
deposits $6,906,437 $53,862 3.14% $6,747,980 $61,430 3.66%
Federal Home
Loan Bank
advances 437,642 4,557 4.19 426,911 4,556 4.29
Notes payable
and other
borrowings 439,130 2,900 2.66 332,019 2,770 3.36
Subordinated
notes 75,000 843 4.45 75,000 1,087 5.73
Junior
subordinated
debentures 249,594 4,598 7.29 249,635 4,591 7.28
Total interest-
bearing
liabilities $8,107,803 $66,760 3.31% $7,831,545 $74,434 3.82%
Non-interest
bearing
deposits 663,526 642,917
Other
liabilities 150,872 155,080
Equity 760,253 743,997
Total
liabilities
and
shareholders'
equity $9,682,454 $9,373,539
Interest rate
spread (5) (8) 2.53% 2.71%
Net free
funds/
contribution
(6) $616,828 0.24 $598,900 0.27
Net interest
income/Net
interest
margin (8) $59,992 2.77% $62,466 2.98%
Core net
interest margin
(7) (8) 3.02% 3.26%
(1) Liquidity management assets include available-for-sale securities,
interest earning deposits with banks, federal funds sold and
securities purchased under resale agreements.
(2) Interest income on tax-advantaged loans, trading account securities
and securities reflects a tax-equivalent adjustment based on a
marginal federal corporate tax rate of 35%. The total adjustments
for the three months ended June 30, 2008 was $592,000 and for the
three months ended March 31, 2008 was $724,000.
(3) Other earning assets include brokerage customer receivables and
trading account securities.
(4) Loans, net of unearned income, include mortgages held-for-sale and
non-accrual loans.
(5) Interest rate spread is the difference between the yield earned on
earning assets and the rate paid on interest-bearing liabilities.
(6) Net free funds are the difference between total average earning
assets and total average interest-bearing liabilities. The
estimated contribution to net interest margin from net free funds is
calculated using the rate paid for total interest-bearing
liabilities.
(7) The core net interest margin excludes the effect of the net interest
expense associated with Wintrust's junior subordinated debentures
and the interest expense incurred to fund common stock repurchases.
(8) See "Supplemental Financial Measures/Ratios" for additional
information on this performance measure/ratio.
Net interest income, which is the difference between interest income
and fees on earning assets and interest expense on deposits and borrowings,
is the major source of earnings for Wintrust. Tax-equivalent net interest
income for the quarter ended June 30, 2008 totaled $60.0 million, a
decrease of $2.5 million, or 4%, as compared to the $62.5 million recorded
in the first quarter of 2008.
Net interest margin represents tax-equivalent net interest income as a
percentage of the average earning assets during the period. For the second
quarter of 2008, the net interest margin was 2.77%, down 21 basis points
when compared to the first quarter of 2008. The core net interest margin,
which excludes the net interest expense related to Wintrust's junior
subordinated debentures and the interest expense related to the common
stock repurchases, was 3.02% for the second quarter of 2008 and 3.26% for
the first quarter of 2008.
The yield on total earning assets for the second quarter of 2008 was
5.84% as compared to 6.53% in the first quarter of 2008. The second quarter
2008 yield on loans was 6.12%, a 71 basis point decrease when compared to
the first quarter 2008 yield of 6.83%. The liquidity management assets
yield in the second quarter of 2008 was 4.56% compared to 5.01% in the
first quarter of 2008.
The rate paid on interest-bearing liabilities decreased to 3.31% in the
second quarter of 2008 as compared to 3.82% in the first quarter of 2008.
The cost of interest-bearing deposits decreased in the second quarter of
2008 to 3.14% compared to 3.66% in the first quarter of 2008. The rate paid
on wholesale funding, consisting of Federal Home Loan Bank of Chicago
advances, notes payable, subordinated notes, other borrowings and junior
subordinated debentures, decreased to 4.29% in the second quarter of 2008
compared to 4.79% in the first quarter of 2008. The Company utilizes
certain borrowing sources to fund the additional capital requirements of
the subsidiary banks, manage its capital, manage its interest rate risk
position and for general corporate purposes.
The lower levels of net interest income and net interest margin in the
second quarter of 2008 were caused by margin compression. The average
balance of savings, NOW, money market and wealth management deposits
increased $157 million compared to the first quarter of 2008, accounting
for essentially all of the interest-bearing retail deposit increase.
Interest rate compression on large portions of NOW, savings and money
market accounts as the Federal Reserve quickly lowered rates prevented
these deposits from repricing at the same magnitude as variable rate
earning assets. During the second quarter, the cost of these deposits
declined 55 basis points while the yield on total loans decreased 71 basis
points. The short-term fixed rate nature of the premium finance receivables
in a steep declining interest rate environment and the built in repricing
delay in home equity lines of credit were felt fully in the second quarter.
Repricing of maturing retail certificates of deposit over the next 12
months coupled with a more stable rate environment from the Federal Reserve
Bank should mitigate additional compression of net interest margin. The
average loan-to-average deposit ratio was 94.6% in the second quarter of
2008 compared to 94.9% in the first quarter of 2008. The higher nature of
this ratio is primarily a result of the strong commercial and commercial
real estate loan growth combined with a somewhat restricted market for loan
sales and securitizations.
The following table presents a summary of Wintrust's average balances,
net interest income and related net interest margins, calculated on a fully
tax-equivalent basis, for the six months ended June 30, 2008 compared to
the six months ended June 30, 2007:
Six Months Ended Six Months Ended
(Dollars in June 30, 2008 June 30, 2007
thousands) Average Interest Rate Average Interest Rate
Liquidity
management
assets (1)
(2) (8) $1,467,768 $34,867 4.78% $1,799,433 $46,168 5.17%
Other earning
assets (2)
(3) (8) 24,461 671 5.51 25,593 988 7.79
Loans, net of
unearned income
(2) (4) (8) 7,084,189 228,113 6.48 6,696,689 259,547 7.82
Total
earning
assets (8) $8,576,418 $263,651 6.18% $8,521,715 $306,703 7.26%
Allowance for
loan losses (52,605) (47,729)
Cash and due
from banks 125,274 131,834
Other assets 877,745 818,155
Total assets $9,526,832 $9,423,975
Interest-
bearing
deposits $6,827,209 $115,292 3.40% $6,987,838 $149,625 4.32%
Federal Home
Loan Bank
advances 432,276 9,113 4.24 393,453 8,529 4.37
Notes payable
and other
borrowings 385,319 5,670 2.96 253,944 5,290 4.20
Subordinated
notes 75,000 1,930 5.09 75,000 2,568 6.81
Junior
subordinated
debentures 249,615 9,189 7.28 249,781 9,258 7.37
Total
interest-
bearing
liabilities $7,969,419 $141,194 3.56% $7,960,016 $175,270 4.44%
Non-interest
bearing
deposits 653,232 645,206
Other
liabilities 152,077 81,263
Equity 752,104 737,490
Total
liabilities
and
shareholders'
equity $9,526,832 $9,423,975
Interest rate
spread (5) (8) 2.62% 2.82%
Net free funds/
contribution
(6) $606,999 0.26 $561,699 0.29
Net interest
income/Net
interest
margin (8) $122,457 2.88% $131,433 3.11%
Core net interest
margin (7) (8) 3.14% 3.37%
(1) Liquidity management assets include available-for-sale securities,
interest earning deposits with banks, federal funds sold and
securities purchased under resale agreements.
(2) Interest income on tax-advantaged loans, trading account securities
and securities reflects a tax-equivalent adjustment based on a
marginal federal corporate tax rate of 35%. The total adjustments
for the six months ended June 30, 2008 and 2007 were $1.3 million
and $1.5 million, respectively.
(3) Other earning assets include brokerage customer receivables and
trading account securities.
(4) Loans, net of unearned income, include mortgages held-for-sale and
non-accrual loans.
(5) Interest rate spread is the difference between the yield earned on
earning assets and the rate paid on interest-bearing liabilities.
(6) Net free funds are the difference between total average earning
assets and total average interest-bearing liabilities. The
estimated contribution to net interest margin from net free funds is
calculated using the rate paid for total interest-bearing
liabilities.
(7) The core net interest margin excludes the effect of the net interest
expense associated with Wintrust's junior subordinated debentures
and the interest expense incurred to fund common stock repurchases.
(8) See "Supplemental Financial Measures/Ratios" for additional
information on this performance measure/ratio.
Net interest income, which is the difference between interest income
and fees on earning assets and interest expense on deposits and borrowings,
is the major source of earnings for Wintrust. Tax-equivalent net interest
income for the six months ended June 30, 2008 totaled $122.5 million, a
decrease of $8.9 million, or 7%, as compared to the $131.4 million recorded
in the first half of 2007.
Net interest margin represents tax-equivalent net interest income as a
percentage of the average earning assets during the period. For the first
half of 2008, the net interest margin was 2.88%, down 23 basis points when
compared to the first half of 2007. The core net interest margin, which
excludes the net interest expense related to Wintrust's junior subordinated
debentures and the interest expense related to the common stock
repurchases, was 3.14% for the first half of 2008 and 3.37% for the first
half of 2007.
The yield on total earning assets for the first half of 2008 was 6.18%
as compared to 7.26% in the first half of 2007. The first six months of
2008 yield on loans was 6.48%, a 134 basis point decrease when compared to
the prior year first six months yield of 7.82%. The liquidity management
assets yield in the first half of 2008 was 4.78% compared to 5.17% in the
first half of 2007.
The rate paid on interest-bearing liabilities decreased to 3.56% in the
first half of 2008 as compared to 4.44% in the first half of 2007. The cost
of interest-bearing deposits decreased in the first half of 2008 to 3.40%
compared to 4.32% in the first half of 2007. The rate paid on wholesale
funding, consisting of Federal Home Loan Bank of Chicago advances, notes
payable, subordinated notes, other borrowings and junior subordinated
debentures, decreased to 4.53% in the first half of 2008 compared to 5.29%
in the first half of 2007. The Company utilizes certain borrowing sources
to fund the additional capital requirements of the subsidiary banks, manage
its capital, manage its interest rate risk position and for general
corporate purposes.
The lower levels of net interest income and net interest margin in the
first half of 2008 were caused by margin compression. The first half of
2008 reflects the shifting mix of retail deposits away from certificates of
deposit into lower cost, more variable rate NOW, savings, money market and
wealth management deposits. The average balance of savings, NOW, money
market and wealth management deposits increased $328 million compared to
the first half of 2007 while retail CDs decreased by $468 million. Interest
rate compression on large portions of NOW, savings and money market
accounts as the Federal Reserve quickly lowered rates prevented these
deposits from repricing at the same magnitude as variable rate earning
assets. During the first half of 2008, the cost of these deposits declined
118 basis points while the yield on total loans decreased 134 basis points.
Repricing of maturing retail certificates of deposit over the next 12
months coupled with a more stable rate environment from the Federal Reserve
Bank should mitigate additional compression of net interest margin.
NON-INTEREST INCOME
For the second quarter of 2008, non-interest income totaled $33.0
million and increased $12.2 million compared to the second quarter of 2007.
The increase was primarily attributable to fees from covered call options,
mortgage banking revenue, service charges on deposit accounts and gain on
sales of premium finance receivables.
The following table presents non-interest income by category for the
three months ended June 30, 2008 and 2007:
Three Months Ended
June 30, $ %
(Dollars in thousands) 2008 2007 Change Change
Brokerage $4,948 $5,084 (136) (3)
Trust and asset
management 2,823 2,687 136 5
Total wealth
management 7,771 7,771 - -
Mortgage banking 7,536 6,754 782 12
Service charges on
deposit accounts 2,565 2,071 494 24
Gain on sales of premium
finance receivables 566 175 391 N/M
Administrative services 755 1,048 (293) (28)
(Losses) gains on
available-for-sale
securities, net (140) 192 (332) N/M
Other:
Fees from covered call
options 12,083 443 11,640 N/M
Bank Owned Life
Insurance 851 992 (141) (14)
Miscellaneous 1,021 1,404 (383) (27)
Total other 13,955 2,839 11,116 N/M
Total non-interest
income $33,008 $20,850 12,158 58
N/M = Not Meaningful
Wealth management is comprised of the trust and asset management
revenue of Wayne Hummer Trust Company and the asset management fees,
brokerage commissions, trading commissions and insurance product
commissions at Wayne Hummer Investments and Wayne Hummer Asset Management
Company. Wealth management totaled $7.8 million in both the second quarter
of 2008 and 2007.
Mortgage banking includes revenue from activities related to
originating, selling and servicing residential real estate loans for the
secondary market. For the quarter ended June 30, 2008, this revenue source
totaled $7.5 million, an increase of $782,000, or 12%, when compared to the
second quarter of 2007. Future growth of mortgage banking is impacted by
the interest rate environment and will continue to be dependent upon the
relative level of long-term interest rates. A continuation of the existing
depressed residential real-estate environment may hamper mortgage banking
production growth.
Service charges on deposit accounts totaled $2.6 million for the second
quarter of 2008, an increase of $494,000, or 24%, when compared to the same
quarter of 2007. The majority of deposit service charges relates to
customary fees on overdrawn accounts and returned items. The level of
service charges received is substantially below peer group levels, as
management believes in the philosophy of providing high quality service
without encumbering that service with numerous activity charges.
Wintrust sold $69 million of premium finance receivables in the second
quarter of 2008, recognizing $566,000 of net gains. This compares to
$175,000 of recognized gains in the second quarter of 2007 on clean-up
calls of previous sales. Sales of these receivables in future quarters are
dependent upon core loan growth in relation to retail deposit growth and
capital management considerations.
The administrative services revenue contributed by Tricom added
$755,000 to total non-interest income in the second quarter of 2008 and
$1.0 million in the second quarter of 2007. This revenue comprises income
from administrative services, such as data processing of payrolls, billing
and cash management services, to temporary staffing service clients located
throughout the United States. Tricom also earns interest and fee income
from providing high-yielding, short-term accounts receivable financing to
this same client base, which is included in the net interest income
category. Growth of this revenue source continues to be hampered by
competitive pricing and the current economic conditions.
Other non-interest income for the second quarter of 2008 totaled $14.0
million compared to $2.8 million in the second quarter of 2007. The largest
components of the increase in other income were fees from certain covered
call option transactions increasing $11.6 million in the second quarter of
2008 compared the same period of 2007. Management has been able to
effectively use the proceeds from selling covered call options to offset
net interest margin compression and administers such sales in a coordinated
process with the Company's overall asset/liability management. The covered
call option contracts are written against certain U.S. Treasury and agency
securities held in the Company's portfolio for liquidity and other
purposes. The interest rate environment in the second quarter of 2008 was
conducive to increased covered call option transaction revenue. To date,
the Company has recorded $2.7 million of covered call option income in the
third quarter of 2008.
The following table presents non-interest income by category for the
six months ended June 30, 2008 and 2007:
Six Months Ended
June 30, $ %
(Dollars in thousands) 2008 2007 Change Change
Brokerage $9,986 $10,155 (169) (2)
Trust and asset
management 5,650 5,235 415 8
Total wealth
management 15,636 15,390 246 2
Mortgage banking 13,632 12,217 1,415 12
Service charges on
deposit accounts 4,938 3,959 979 25
Gain on sales of premium
finance receivables 1,707 444 1,263 N/M
Administrative services 1,468 2,061 (593) (29)
(Losses) gains on
available-for-sale
securities, net (1,473) 239 (1,712) N/M
Other:
Fees from covered
call options 18,863 879 17,984 N/M
Bank Owned Life
Insurance 1,464 1,801 (337) (19)
Miscellaneous 1,329 3,593 (2,264) (63)
Total other 21,656 6,273 15,383 N/M
Total non-interest
income $57,564 $40,583 16,981 42
N/M = Not Meaningful
For the six months ended June 30, 2008, non-interest income totaled
$57.6 million and increased $17.0 million compared to the same period in
2007. The increase was primarily attributable to fees from covered call
options, mortgage banking revenue, service charges on deposit accounts,
gain on sales of premium finance receivables offset by lower administrative
services revenue and the $1.9 million non-cash other-than-temporary
impairment charge on certain corporate investments and a $0.9 million
non-cash other-than-temporary impairment charge on certain investment
partnerships recorded in the first quarter of 2008. The Company also
recorded a $0.2 million non-cash other-than-temporary impairment charge on
certain corporate investments in the second quarter of 2008.
Other non-interest income in the first half of 2008 totaled $21.7
million compared to $6.3 million in the first half of 2007. The large
increase is attributable to the $18.0 million increase in fees from covered
call options.
NON-INTEREST EXPENSE
Non-interest expense for the second quarter of 2008 totaled $64.6
million and increased approximately $4.5 million, or 7%, from the second
quarter 2007 total of $60.1 million.
The following table presents non-interest expense by category for the
three months ended June 30, 2008 and 2007:
Three Months Ended
June 30, $ %
(Dollars in thousands) 2008 2007 Change Change
Salaries and employee
benefits $36,976 $35,060 1,916 5
Equipment 4,048 3,829 219 6
Occupancy, net 5,438 5,347 91 2
Data processing 2,918 2,578 340 13
Advertising and
marketing 1,368 1,513 (145) (10)
Professional fees 2,227 1,685 542 32
Amortization of other
intangible assets 779 964 (185) (19)
Other:
Commissions - 3rd party
brokers 997 999 (2) -
Postage 1,055 974 81 8
Stationery and supplies 756 798 (42) (5)
FDIC insurance 1,289 786 503 64
Miscellaneous 6,734 5,605 1,129 20
Total other 10,831 9,162 1,669 18
Total non-interest
expense $64,585 $60,138 4,447 7
Salary and employee benefits expense increased $1.9 million, or 5%, in
the second quarter of 2008 when compared to the second quarter of 2007.
Base salary increases and Company sponsored health and dental insurance
premium increases made up the largest portion of this increase. The second
quarter of 2008 also included a one-time charge of approximately $0.5
million for net contractual long-term disability payments due to a former
officer under terms of an employment contract.
Equipment, occupancy and data processing have all been directly
impacted by the additional and expanded banking locations in the past 12
months. In the second quarter of 2008, equipment cost increased $219,000,
or 6%, while occupancy cost increased $91,000, or 2%, over the second
quarter of 2007. Additionally, data processing increased $340,000, or 13%,
while professional fees increased $542,000, or 32%, primarily as a result
of increased legal costs related to non-performing assets.
Total other expenses increased $1.7 million in the second quarter of
2008 compared to the second quarter of 2007. In addition to the components
listed in the table above, this category is comprised of expenses such as
ATM expenses, correspondent banking charges, directors fees, telephone,
travel and entertainment, corporate insurance and dues and subscriptions.
Increased FDIC insurance due to a higher rate structure imposed on all
financial institutions by the FDIC in the first quarter 2007 accounted for
$503,000 of the increase. The Company's banks, like most banks, received
credits for overcharges by the FDIC in the past few years, effectively
reducing their premiums. While most of the Company's banks received and
used these credits during the first two quarters of 2007, the total amount
of credits received by the Company was less than other bank holding
companies related to the fact that most of the Company's banks are de novo
operations started in the last 16 years.
The following table presents non-interest expense by category for the
six months ended June 30, 2008 and 2007:
Six Months Ended
June 30, $ %
(Dollars in thousands) 2008 2007 Change Change
Salaries and employee
benefits $73,648 $70,977 2,671 4
Equipment 7,974 7,419 555 7
Occupancy, net 11,305 10,782 523 5
Data processing 5,716 5,054 662 13
Advertising and
marketing 2,367 2,591 (224) (9)
Professional fees 4,295 3,288 1,007 31
Amortization of other
intangible assets 1,567 1,933 (366) (19)
Other:
Commissions - 3rd
party brokers 1,982 2,025 (43) (2)
Postage 2,041 1,819 222 12
Stationery and
supplies 1,498 1,569 (71) (5)
FDIC Insurance 2,575 1,390 1,185 85
Miscellaneous 12,450 11,035 1,415 13
Total other 20,546 17,838 2,708 15
Total non-interest
expense $127,418 $119,882 7,536 6
Non-interest expense for the first half of 2008 totaled $127.4 million
and increased approximately $7.5 million, or 6%, from the 2007 total of
$119.9 million. Salary and employee benefits, professional fees, FDIC
insurance and other expenses recorded the largest increases.
ASSET QUALITY
Allowance for Credit Losses
Three Months Ended Six Months Ended
June 30, June 30,
(Dollars in thousands) 2008 2007 2008 2007
Allowance for loan
losses at beginning of
period $53,758 $46,526 $50,389 $46,055
Provision for credit
losses 10,301 2,490 18,856 4,297
Charge-offs:
Commercial and
commercial real
estate loans 5,430 1,743 9,387 2,690
Home equity loans 25 82 25 133
Residential real
estate loans - 147 219 147
Consumer and other
loans 150 165 219 398
Premium finance
receivables 913 610 1,796 1,135
Indirect consumer
loans 271 181 529 280
Tricom finance
receivables 52 25 77 50
Total charge-offs 6,841 2,953 12,252 4,833
Recoveries:
Commercial and
commercial real
estate loans 29 1,073 69 1,416
Home equity loans - 42 - 60
Residential real
estate loans - - - -
Consumer and other
loans 52 34 64 63
Premium finance
receivables 273 133 400 251
Indirect consumer
loans 61 44 107 80
Tricom finance
receivables - 3 - 3
Total recoveries 415 1,329 640 1,873
Net charge-offs (6,426) (1,624) (11,612) (2,960)
Allowance for loan
losses at period end $57,633 $47,392 $57,633 $47,392
Allowance for unfunded
loan commitments at
period end $493 $457 $493 $457
Allowance for credit
losses at period end $58,126 $47,849 $58,126 $47,849
Annualized net charge-
offs by category as a
percentage of its own
respective category's
average:
Commercial and
commercial real
estate loans 0.48% 0.07% 0.42% 0.06%
Home equity loans 0.01 0.02 0.01 0.02
Residential real
estate loans - 0.16 0.13 0.09
Consumer and other
loans 0.29 0.60 0.23 0.74
Premium finance
receivables 0.23 0.15 0.25 0.14
Indirect consumer
loans 0.38 0.22 0.37 0.16
Tricom finance
receivables 0.82 0.27 0.62 0.27
Total loans, net of
unearned income 0.36% 0.10% 0.33% 0.09%
Net charge-offs as a
percentage of the
provision for loan
losses 62.38% 65.25% 61.58% 68.91%
Loans at period-end $7,153,603 $6,720,960
Allowance for loan
losses as a percentage
of loans at period-end 0.81% 0.71%
Allowance for credit
losses as a percentage
of loans at period-end 0.81% 0.71%
The allowance for credit losses is comprised of the allowance for loan
losses and the allowance for lending-related commitments. The allowance for
loan losses is a reserve against loan amounts that are actually funded and
outstanding while the allowance for lending-related commitments relates to
certain amounts that Wintrust is committed to lend but for which funds have
not yet been disbursed. The allowance for lending-related commitments
(separate liability account) represents the portion of the provision for
credit losses that was associated with unfunded lending-related
commitments. 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).
Non-performing Assets
The following table sets forth Wintrust's non-performing assets at the
dates indicated.
June 30, March 31, December 31, June 30,
(Dollars in thousands) 2008 2008 2007 2007
Loans past due
greater than 90 days
and still accruing:
Residential real
estate and home
equity (1) $200 $387 $51 $755
Commercial, consumer
and other 2,259 8,557 14,742 279
Premium finance
receivables 5,180 8,133 8,703 5,162
Indirect consumer
loans 471 635 517 176
Tricom finance
receivables - - - -
Total past due
greater than 90
days and still
accruing 8,110 17,712 24,013 6,372
Non-accrual loans:
Residential real
estate and home
equity (1) 3,384 3,655 3,215 5,712
Commercial, consumer
and other 61,878 51,184 33,267 12,558
Premium finance
receivables 13,005 13,542 10,725 9,406
Indirect consumer
loans 389 399 560 500
Tricom finance
receivables 40 49 74 274
Total non-accrual 78,696 68,829 47,841 28,450
Total non-performing
loans:
Residential real
estate and home
equity (1) 3,584 4,042 3,266 6,467
Commercial, consumer
and other 64,137 59,741 48,009 12,837
Premium finance
receivables 18,185 21,675 19,428 14,568
Indirect consumer
loans 860 1,034 1,077 676
Tricom finance
receivables 40 49 74 274
Total non-
performing loans 86,806 86,541 71,854 34,822
Other real estate
owned 9,233 4,873 3,858 1,504
Total non-performing
assets $96,039 $91,414 $75,712 $36,326
Total non-performing
loans by category as a
percent of its own
respective category's
period-end balance:
Residential real
estate and home
equity (1) 0.35% 0.44% 0.36% 0.75%
Commercial, consumer
and other 1.35 1.28 1.06 0.30
Premium finance
receivables 1.59 2.13 1.80 1.12
Indirect consumer
loans 0.39 0.45 0.45 0.27
Tricom finance
receivables 0.18 0.21 0.27 0.80
Total non-performing
loans 1.21% 1.26% 1.06% 0.52%
Total non-performing
assets as a
percentage of
total assets 0.97% 0.94% 0.81% 0.39%
Allowance for loan
losses as a percentage
of non-performing
loans 66.39% 62.12% 70.13% 136.10%
(1) Non-accrual and past due greater than 90 days and still accruing
residential mortgage loans held for sale are excluded from the
non-performing balances presented above. These balances totaled
$0.2 million as of June 30, 2008, $2.1 million as of March 31, 2008
and $2.0 million as of December 31, 2007. Residential mortgage
loans held for sale are accounted for at lower of aggregate cost or
fair value, with valuation changes included as adjustments to
non-interest income.
The provision for credit losses totaled $10.3 million for the second
quarter of 2008, $8.6 million in the first quarter of 2008 and $2.5 million
for the second quarter of 2007. For the quarter ended June 30, 2008, net
charge-offs totaled $6.4 million compared to $5.2 million in the first
quarter of 2008 and $1.6 million recorded in the second quarter of 2007. On
a ratio basis, annualized net charge-offs as a percentage of average loans
were 0.36% in the second quarter of 2008, 0.30% in the first quarter of
2008 and 0.10% in the second quarter of 2007.
On a year-to-date basis, provision for credit losses totaled $18.9
million for the first half of 2008 compared to $4.3 million in the first
half of 2007. Net charge-offs totaled $11.6 million, or 0.33% of average
loans on an annualized basis in the first half of 2008, compared to $3.0
million, or 0.09% of average loans on an annualized basis in the first half
of 2007.
Management believes the allowance for loan losses is adequate 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 loan losses will be dependent upon
management's assessment of the adequacy 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.
Non-performing Residential Real Estate and Home Equity
The non-performing residential real estate and home equity loans
totaled $3.6 million as of June 30, 2008 compared to $4.0 million at March
31, 2008 and $6.5 million as of June 30, 2007. The June 30, 2008
non-performing balance is comprised of $2.6 million of residential real
estate (10 individual credits) and $997,000 of home equity loans (10
individual credits). The average balance of loans in this category is
approximately $180,000. On average, this is less than two non-performing
residential real estate loans and home equity loans per chartered bank
within the Company. The Company believes control and collection of these
loans is very manageable. Management does not expect any material losses
from the resolution of any of the credits in this category.
Non-performing Commercial, Consumer and Other
The commercial, consumer and other non-performing loan category totaled
$64.1 million as of June 30, 2008 compared to $59.7 million as of March 31,
2008 and $12.8 million as of June 30, 2007.
Management is pursuing the resolution of all credits in this category.
However, given the current state of the residential real estate market,
resolution of certain credits could span a lengthy period of time until
market conditions stabilize. However, management believes reserves are
adequate to absorb potential losses that may occur upon the ultimate
resolution of these credits.
Non-performing Loan Composition
The $67.7 million of non-performing assets classified as residential
real estate and home equity, commercial, consumer, and other consumer
($64.1 million of commercial, consumer and other loans and $3.6 million of
residential and home equity loans) consists of $26.2 million of residential
real estate construction and land development related loans, $6.6 million
of commercial related loans, $11.5 million of commercial real estate
related loans, $16.5 million of commercial real estate construction and
land development related loans, $6.8 million of residential real estate and
home equity related loans and $209,000 of consumer related loans. Seven of
these relationships exceed $2.5 million in outstanding balances,
approximating $48.9 million in total outstanding balances.
Non-performing Premium Finance Receivables
The table below presents the level of non-performing premium finance
receivables as of June 30, 2008 and 2007, and the amount of net charge-offs
for the quarters then ended.
(Dollars in thousands) June 30, 2008 June 30, 2007
Non-performing premium finance receivables $18,185 $14,568
- as a percent of premium finance receivables
outstanding 1.59% 1.12%
Net charge-offs of premium finance receivables $640 $477
- annualized as a percent of average premium
finance receivables 0.23% 0.15%
As noted below, fluctuations in this category may occur due to timing
and nature of account collections from insurance carriers. Although non-
performing balances and net charge-offs in this category have increased
over the past 12 months, the Company's underwriting standards, regardless
of the condition of the economy, have remained consistent. We anticipate
that net charge-offs and non-performing asset levels in the near term will
continue to be at levels that are within acceptable operating ranges for
this category of loans. Management is comfortable with administering the
collections at this level of non-performing premium finance receivables.
The ratio of non-performing premium finance receivables fluctuates
throughout the year due to the nature and timing of canceled account
collections from insurance carriers. Due to the nature of collateral for
premium finance receivables it customarily takes 60-150 days to convert the
collateral into cash collections. Accordingly, the level of non-performing
premium finance receivables is not necessarily indicative of the loss
inherent in the portfolio. In the event of default, Wintrust has the power
to cancel the insurance policy and collect the unearned portion of the
premium from the insurance carrier. In the event of cancellation, the cash
returned in payment of the unearned premium by the insurer should generally
be sufficient to cover the receivable balance, the interest and other
charges due. Due to notification requirements and processing time by most
insurance carriers, many receivables will become delinquent beyond 90 days
while the insurer is processing the return of the unearned premium.
Management continues to accrue interest until maturity as the unearned
premium is ordinarily sufficient to pay-off the outstanding balance and
contractual interest due.
Non-performing Indirect Consumer Loans
Total non-performing indirect consumer loans were $860,000 at June 30,
2008, compared to $1.0 million at March 31, 2008 and $676,000 at June 30,
2007. The ratio of these non-performing loans to total indirect consumer
loans was 0.39% at June 30, 2008 compared to 0.45% at March 31, 2008 and
0.27% at June 30, 2007. As noted in the Allowance for Credit Losses table,
net charge-offs as a percent of total indirect consumer loans were 0.38%
for the quarter ended June 30, 2008 compared to 0.22% in the same period in
2007. The level of non-performing and net charge-offs of indirect consumer
loans continue to be below standard industry ratios for this type of
lending.
Subsequent to quarter-end, the Company ceased the origination of
indirect automobile loans. This niche business has served the Company well
over the past 12 years in helping de-novo banks quickly, and profitably,
grow into their physical structures. Competitive pricing pressures have
significantly reduced the long-term potential profitably of this niche
business. Given the current economic environment, the retirement of the
founder of this niche business and the distinct possibility of rising
interest rates over the longer-term, exiting the origination of this
business was deemed to be in the best interest of the Company at this time.
The Company will continue to service its existing portfolio during the
duration of the credits and does not anticipate any change in historical
credit trends for this niche business given this decision.
WINTRUST SUBSIDIARIES AND LOCATIONS
Wintrust is a financial holding company whose common stock is traded on
the Nasdaq Stock Market(R) (Nasdaq: WTFC). Its 15 community bank
subsidiaries are: Lake Forest Bank & Trust Company, Hinsdale Bank & Trust
Company, North Shore Community Bank & Trust Company in Wilmette,
Libertyville Bank & Trust Company, Barrington Bank & Trust Company, Crystal
Lake Bank & Trust Company, Northbrook Bank & Trust Company, Advantage
National Bank in Elk Grove Village, Village Bank & Trust in Arlington
Heights, Beverly Bank & Trust Company in Chicago, Wheaton Bank & Trust
Company, State Bank of The Lakes in Antioch, Old Plank Trail Community
Bank, N.A. in New Lenox, St. Charles Bank & Trust Company and Town Bank in
Hartland, Wisconsin. The banks also operate facilities in Illinois in
Algonquin, Bloomingdale, Buffalo Grove, Cary, Chicago, Clarendon Hills,
Darien, Deerfield, Downers Grove, Frankfort, Geneva, Glencoe, Glen Ellyn,
Gurnee, Grayslake, Highland Park, Highwood, Hoffman Estates, Island Lake,
Lake Bluff, Lake Villa, Lindenhurst, McHenry, Mokena, Mundelein, North
Chicago, Northfield, Palatine, Prospect Heights, Ravinia, Riverside,
Roselle, Sauganash, Skokie, Spring Grove, Vernon Hills, Wauconda, Western
Springs, Willowbrook and Winnetka, and in Delafield, Elm Grove, Madison and
Wales, Wisconsin.
Additionally, the Company operates various non-bank subsidiaries. First
Insurance Funding Corporation, one of the largest commercial insurance
premium finance companies operating in the United States, serves commercial
loan customers throughout the country. Tricom, Inc. of Milwaukee provides
high-yielding, short-term accounts receivable financing and value-added
out-sourced administrative services, such as data processing of payrolls,
billing and cash management services, to temporary staffing service clients
located throughout the United States. WestAmerica Mortgage Company engages
primarily in the origination and purchase of residential mortgages for sale
into the secondary market through origination offices located throughout
the United States. Loans are also originated nationwide through
relationships with wholesale and correspondent offices. Guardian Real
Estate Services, Inc. of Oakbrook Terrace provides document preparation and
other loan closing services to WestAmerica Mortgage Company and its network
of mortgage brokers. Wayne Hummer Investments, LLC is a broker-dealer
providing a full range of private client and brokerage services to clients
and correspondent banks located primarily in the Midwest. Wayne Hummer
Asset Management Company provides money management services and advisory
services to individual accounts. Wayne Hummer Trust Company, a trust
subsidiary, allows Wintrust to service customers' trust and investment
needs at each banking location. Wintrust Information Technology Services
Company provides information technology support, item capture and statement
preparation services to the Wintrust subsidiaries.
FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements within the meaning of
federal securities laws. Forward-looking information in this document can
be identified through the use of words such as "may," "will," "intend,"
"plan," "project," "expect," "anticipate," "should," "would," "believe,"
"estimate," "contemplate," "possible," and "point." The forward-looking
information is premised on many factors, some of which are outlined below.
The Company intends such forward-looking statements to be covered by the
safe harbor provisions for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995, and is including this
statement for purposes of invoking these safe harbor provisions. Such
forward-looking statements may be deemed to include, among other things,
statements relating to the Company's projected growth, anticipated
improvements in earnings, earnings per share and other financial
performance measures, and management's long-term performance goals, as well
as statements relating to the anticipated effects on financial results of
condition from expected developments or events, the Company's business and
growth strategies, including anticipated internal growth, plans to form
additional de novo banks and to open new branch offices, and to pursue
additional potential development or acquisitions of banks, wealth
management entities or specialty finance businesses. Actual results could
differ materially from those addressed in the forward-looking statements as
a result of numerous factors, including the following:
-- Competitive pressures in the financial services business which may
affect the pricing of the Company's loan and deposit products as
well as its services (including wealth management services).
-- Changes in the interest rate environment, which may influence, among
other things, the growth of loans and deposits, the quality of the
Company's loan portfolio, the pricing of loans and deposits and
interest income.
-- The extent of defaults and losses on our loan portfolio.
-- Unexpected difficulties or unanticipated developments related to the
Company's strategy of de novo bank formations and openings. De novo
banks typically require 13 to 24 months of operations before
becoming profitable, due to the impact of organizational and
overhead expenses, the startup phase of generating deposits and the
time lag typically involved in redeploying deposits into
attractively priced loans and other higher yielding earning assets.
-- The ability of the Company to obtain liquidity and income from the
sale of premium finance receivables in the future and the unique
collection and delinquency risks associated with such loans.
-- Failure to identify and complete acquisitions in the future or
unexpected difficulties or unanticipated developments related to the
integration of acquired entities with the Company.
-- Legislative or regulatory changes or actions, or significant
litigation involving the Company.
-- Changes in general economic conditions in the markets in which the
Company operates.
-- The ability of the Company to receive dividends from its
subsidiaries.
-- The loss of customers as a result of technological changes allowing
consumers to complete their financial transactions without the use
of a bank.
-- The ability of the Company to attract and retain senior management
experienced in the banking and financial services industries.
Therefore, there can be no assurances that future actual results will
correspond to these forward-looking statements. The reader is cautioned not
to place undue reliance on any forward looking statement made by or on
behalf of Wintrust. Any such statement speaks only as of the date the
statement was made or as of such date that may be referenced within the
statement. The Company undertakes no obligation to release revisions to
these forward-looking statements or reflect events or circumstances after
the date of this press release. Persons are advised, however, to consult
further disclosures management makes on related subjects in its reports
filed with the Securities and Exchange Commission and in its press
releases.
ADD: /FIRST AND FINAL ADD -- AQW019 -- Wintrust Financial Corporation
Earnings/
CONFERENCE CALL AND WEBCAST
The Company will hold a conference call at 12:00 p.m. (Central Daylight
Time) Wednesday, July 23, 2008, regarding second quarter 2008 earnings.
Individuals interested in listening should call (877) 365-7575 and enter
Conference ID #55546253. A simultaneous audio-only web cast of the
conference call may be accessed via the Company's web site at
(http://www.wintrust.com), Presentations & Conference Calls, Conference
Calls, Second Quarter 2008 Earnings Release Conference Call.
A replay of the call will be available beginning at 1:00 p.m. (Central
Daylight Time) on July 23, 2008 and will run through 10:59 p.m. (Central
Daylight Time) August 6, 2008, by calling (800) 642-1687 and entering
Conference ID #55546253.
WINTRUST FINANCIAL CORPORATION
Supplemental Financial Information
5 Quarter Trends
Selected Financial Highlights
Consolidated Statements of Condition
Consolidated Statements of Income
Period End Loan and Deposit Balances
Quarterly Average Balances and Net Interest Margin
Net Interest Margin (Including Call Option Income)
Non-Interest Income and Expense
Allowance for Credit Losses
Non-Performing Assets
WINTRUST FINANCIAL CORPORATION
Selected Financial Highlights - 5 Quarter Trends
(Dollars in thousands,
except per share data)
Selected Three Months Ended
Financial
Condition June 30, March 31, December 31, September 30, June 30,
Data 2008 2008 2007 2007 2007
(at end of
period):
Total assets $9,923,077 $9,732,466 $9,368,859 $9,465,114 $9,348,460
Total loans 7,153,603 6,874,916 6,801,602 6,808,359 6,720,960
Total deposits 7,761,367 7,483,582 7,471,441 7,578,064 7,549,562
Long-term debt
- trust
preferred
securities 249,579 249,621 249,662 249,704 249,745
Total
shareholders'
equity 749,025 753,293 739,555 721,973 720,628
Selected
Statements of
Income Data:
Net interest
income $59,400 $61,742 $65,438 $66,187 $65,255
Net revenue (1) 92,408 86,298 93,406 77,724 86,105
Income before
taxes 17,522 14,910 23,623 13,872 23,477
Net income 11,276 9,705 15,643 9,919 15,410
Net income per
common share -
Basic 0.48 0.41 0.67 0.42 0.64
Net income per
common share -
Diluted 0.47 0.40 0.65 0.40 0.62
Selected Financial
Ratios and Other
Data:
Performance
Ratios:
Net interest
margin (6) 2.77% 2.98% 3.08% 3.14% 3.13%
Core net
interest
margin (2) (6) 3.02 3.26 3.37 3.43 3.40
Non-interest
income to
average assets 1.37 1.05 1.17 0.49 0.89
Non-interest
expense to
average assets 2.68 2.70 2.66 2.52 2.57
Net overhead
ratio (3) 1.31 1.64 1.49 2.03 1.68
Efficiency
ratio (4) (6) 69.34 71.11 69.44 75.73 69.29
Return on average
assets 0.47 0.42 0.65 0.42 0.66
Return on average
equity 5.97 5.25 8.56 5.53 8.52
Average total
assets $9,682,454 $9,373,539 $9,497,111 $9,382,060 $9,395,532
Average total
shareholders'
equity 760,253 743,997 725,145 712,115 725,465
Average loans to
average deposits
ratio 94.6% 94.9% 93.1% 91.3% 89.8%
Common Share Data
at end of period:
Market price per
common share $23.85 $34.95 $33.13 $42.69 $43.85
Book value per
common share $31.70 $31.97 $31.56 $30.5 $29.82
Common
shares
outstanding 23,625,841 23,563,958 23,430,490 23,631,673 24,163,280
Other Data at
end of period:
Allowance for
credit
losses (5) $58,126 $54,251 $50,882 $49,214 $47,849
Non-performing
assets $96,039 $91,414 $75,712 $48,692 $36,326
Allowance for
credit losses
to total
loans (5) 0.81% 0.79% 0.75% 0.72% 0.71%
Non-performing
assets to total
assets 0.97% 0.94% 0.81% 0.51% 0.39%
Number of:
Bank
subsidiaries 15 15 15 15 15
Non-bank
subsidiaries 8 8 8 8 8
Banking offices 79 78 77 78 78
(1) Net revenue includes net interest income and non-interest income.
(2) The core net interest margin excludes the effect of the net interest
expense associated with Wintrust's junior subordinated debentures
and the interest expense incurred to fund common stock repurchases.
(3) The net overhead ratio is calculated by netting total non-interest
expense and total non-interest income, annualizing this amount, and
dividing by that period's total average assets. A lower ratio
indicates a higher degree of efficiency.
(4) The efficiency ratio is calculated by dividing total non-interest
expense by tax-equivalent net revenue (less securities gains or
losses). A lower ratio indicates more efficient revenue generation.
(5) The allowance for credit losses includes both the allowance for loan
losses and the allowance for lending-related commitments.
(6) See "Supplemental Financial Measures/Ratios" for additional
information on this performance measure/ratio.
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Condition - 5 Quarter Trends
(Unaudited)(Unaudited) (Unaudited) (Unaudited)
June 30, March 31, December 31, September 30, June 30,
(In thousands) 2008 2008 2007 2007 2007
Assets
Cash and due
from banks $166,857 $160,890 $170,190 $149,970 $153,209
Federal funds
sold and
securities
purchased
under resale
agreements 73,311 280,408 90,964 62,297 15,092
Interest-bearing
deposits with
banks 6,438 11,280 10,410 9,740 14,308
Available-for-
sale securities,
at fair
value 1,590,648 1,110,854 1,303,837 1,536,027 1,515,223
Trading
account
securities 1,877 1,185 1,571 1,350 919
Brokerage
customer
receivables 19,661 22,786 24,206 23,800 23,842
Mortgage loans
held-for-sale 118,379 102,324 109,552 104,951 135,543
Loans, net of
unearned
income 7,153,603 6,874,916 6,801,602 6,808,359 6,720,960
Less:
Allowance
for loan
losses 57,633 53,758 50,389 48,757 47,392
Net loans 7,095,970 6,821,158 6,751,213 6,759,602 6,673,568
Premises and
equipment,
net 348,881 344,863 339,297 336,755 329,498
Accrued
interest
receivable
and other
assets 208,574 583,648 273,678 192,938 198,609
Goodwill 276,311 276,121 276,204 268,983 268,983
Other
intangible
assets 16,170 16,949 17,737 18,701 19,666
Total
assets $9,923,077 $9,732,466 $9,368,859 $9,465,114 $9,348,460
Liabilities
and Shareholders'
Equity
Deposits:
Non-interest
bearing $688,512 $670,433 $664,264 $658,214 $655,074
Interest
bearing 7,072,855 6,813,149 6,807,177 6,919,850 6,894,488
Total
deposits 7,761,367 7,483,582 7,471,441 7,578,064 7,549,562
Notes payable 41,975 70,300 60,700 71,900 50,550
Federal Home
Loan Bank
advances 438,983 434,482 415,183 408,192 403,203
Other
borrowings 383,009 293,091 254,434 271,106 231,783
Subordinated
notes 75,000 75,000 75,000 75,000 75,000
Junior
subordinated
debentures 249,579 249,621 249,662 249,704 249,745
Accrued
interest
payable and
other
liabilities 224,139 373,097 102,884 89,175 67,989
Total
liabilities 9,174,052 8,979,173 8,629,304 8,743,141 8,627,832
Shareholders'
equity:
Preferred
stock - - - - -
Common
stock 26,478 26,416 26,281 26,060 26,012
Surplus 547,333 544,135 539,127 532,407 528,916
Treasury
stock (122,258) (122,252) (122,196) (107,742) (84,559)
Common
stock
warrants 459 459 459 618 649
Retained
earnings 325,314 314,038 309,556 293,913 287,741
Accumulated
other
comprehensive
loss (28,301) (9,503) (13,672) (23,283) (38,131)
Total
shareholders'
equity 749,025 753,293 739,555 721,973 720,628
Total
liabilities
and
shareholders'
equity $9,923,077 $9,732,466 $9,368,859 $9,465,114 $9,348,460
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited) - 5 Quarter Trends
Three Months Ended
(In thousands,
except per June 30, March 31, December 31, September 30, June 30,
share data) 2008 2008 2007 2007 2007
Interest income
Interest and
fees on
loans $108,803 $118,953 $131,888 $134,578 $131,279
Interest
bearing
deposits
with banks 68 120 150 203 223
Federal funds
sold and
securities
purchased under
resale
agreements 472 634 275 238 435
Securities 16,553 16,081 18,979 19,104 20,434
Trading
account
securities 15 31 10 27 11
Brokerage
customer
receivables 249 357 415 495 506
Total
interest
income 126,160 136,176 151,717 154,645 152,888
Interest
expense
Interest on
deposits 53,862 61,430 70,965 74,324 73,735
Interest on
Federal Home
Loan Bank
advances 4,557 4,556 4,550 4,479 4,400
Interest on
notes payable
and other
borrowings 2,900 2,770 4,783 3,721 3,562
Interest on
subordinated
notes 843 1,087 1,308 1,305 1,273
Interest on
junior
subordinated
debentures 4,598 4,591 4,673 4,629 4,663
Total
interest
expense 66,760 74,434 86,279 88,458 87,633
Net interest
income 59,400 61,742 65,438 66,187 65,255
Provision for
credit losses 10,301 8,555 6,217 4,365 2,490
Net interest
income after
provision for
credit losses 49,099 53,187 59,221 61,822 62,765
Non-interest
income
Wealth
management 7,771 7,865 8,320 7,631 7,771
Mortgage
banking 7,536 6,096 5,793 (3,122) 6,754
Service
charges on
deposit
accounts 2,565 2,373 2,288 2,139 2,071
Gain on sale
of premium
finance
receivables 566 1,141 1,596 - 175
Administrative
services 755 713 965 980 1,048
Gains (losses)
on available-
for-sale
securities,
net (140) (1,333) 2,834 (76) 192
Other 13,955 7,701 6,172 3,985 2,839
Total non-
interest
income 33,008 24,556 27,968 11,537 20,850
Non-interest
expense
Salaries and
employee
benefits 36,976 36,672 36,583 34,256 35,060
Equipment 4,048 3,926 4,034 3,910 3,829
Occupancy,
net 5,438 5,867 5,902 5,303 5,347
Data
processing 2,918 2,798 2,721 2,645 2,578
Advertising
and
marketing 1,368 999 1,212 1,515 1,513
Professional
fees 2,227 2,068 2,045 1,757 1,685
Amortization
of other
intangible
assets 779 788 964 964 964
Other 10,831 9,715 10,105 9,137 9,162
Total non-
interest
expense 64,585 62,833 63,566 59,487 60,138
Income before
income taxes 17,522 14,910 23,623 13,872 23,477
Income tax
expense 6,246 5,205 7,980 3,953 8,067
Net income $11,276 $9,705 $15,643 $9,919 $15,410
Net income per
common share -
Basic $0.48 $0.41 $0.67 $0.42 $0.64
Net income per
common share -
Diluted $0.47 $0.40 $0.65 $0.40 $0.62
Cash dividends
declared per
common share $- $0.18 $- $0.16 $-
Weighted average
common shares
outstanding 23,608 23,518 23,471 23,797 24,154
Dilutive
potential
common shares 531 582 699 795 806
Average common
shares and
dilutive
common shares 24,139 24,100 24,170 24,592 24,960
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
Period End Loan Balances - 5 Quarter Trends
(Dollars in June 30, March 31, December 31, September 30, June 30,
thousands) 2008 2008 2007 2007 2007
Balance:
Commercial and
commercial
real
estate(2) $4,610,550 $4,534,383 $4,408,661 $4,219,320 $4,186,308
Home equity 770,748 695,446 678,298 654,022 638,941
Residential
real estate 243,400 233,556 226,686 220,084 222,312
Premium
finance
receivables 1,145,986 1,017,011 1,078,185 1,289,920 1,306,321
Indirect
consumer
loans (1) 221,511 230,771 241,393 253,058 248,788
Tricom
finance
receivables 22,676 23,478 27,719 33,342 34,177
Other
loans (2) 138,732 140,271 140,660 138,613 84,113
Total loans,
net of
unearned
income $7,153,603 $6,874,916 $6,801,602 $6,808,359 $6,720,960
Mix:
Commercial and
commercial
real
estate(2) 64.5% 66.0% 64.8% 62.0% 62.3%
Home equity 10.8 10.1 10.0 9.6 9.5
Residential
real estate 3.4 3.4 3.3 3.2 3.3
Premium
finance
receivables 16.0 14.8 15.9 18.9 19.4
Indirect
consumer
loans (1) 3.1 3.4 3.5 3.7 3.7
Tricom
finance
receivables 0.3 0.3 0.4 0.5 0.5
Other loans (3) 1.9 2.0 2.1 2.1 1.3
Total loans,
net of
unearned
income 100.0% 100.0% 100.0% 100.0% 100.0%
(1) Includes autos, boats, snowmobiles and other indirect consumer loans
(2) Approximately $56.2 million of loans originally reported as commercial
and commercial real estate ($53.6 million) and home equity ($2.6
million) were reclassified in the third quarter of 2007 and are now
included in other.
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
Period End Deposit Balances - 5 Quarter Trends
(Dollars in June 30, March 31, December 31, September 30, June 30,
thousands) 2008 2008 2007 2007 2007
Balance:
Non-interest
bearing $688,512 $670,433 $664,264 $658,214 $655,074
NOW 1,064,792 1,013,603 1,014,780 1,005,002 964,714
Wealth
Management
deposits (1) 599,451 647,798 599,426 563,003 515,223
Money market 900,482 797,215 701,972 690,798 704,534
Savings 326,869 325,096 297,586 291,466 302,000
Time
certificates
of deposit 4,181,261 4,029,437 4,193,413 4,369,581 4,408,017
Total
deposits $7,761,367 $7,483,582 $7,471,441 $7,578,064 $7,549,562
Mix:
Non-
interest
bearing 8.9% 9.0% 8.9% 8.7% 8.7%
NOW 13.7 13.5 13.6 13.3 12.8
Wealth
Management
deposits (1) 7.7 8.7 8.0 7.4 6.8
Money market 11.6 10.7 9.4 9.1 9.3
Savings 4.2 4.3 4.0 3.8 4.0
Time
certificates
of deposit 53.9 53.8 56.1 57.7 58.4
Total
deposits 100.0% 100.0% 100.0% 100.0% 100.0%
(1) Represents deposit balances from brokerage customers of Wayne Hummer
Investments and trust and asset management customers of Wayne Hummer
TrustCompany at the Company's subsidiary banks.
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
Quarterly Average Balances - 5 Quarter Trends
Three Months Ended
(Dollars in June 30, March 31, December 31, September 30, June 30,
thousands) 2008 2008 2007 2007 2007
Liquidity
management
assets $1,543,795 $1,391,400 $1,552,675 $1,551,389 $1,686,596
Other
earning
assets 22,519 26,403 23,875 23,882 25,791
Loans, net
of unearned
income 7,158,317 7,012,642 6,985,850 6,879,856 6,772,512
Total
earning
assets $8,724,631 $8,430,445 $8,562,400 $8,455,127 $8,484,899
Allowance
for loan
losses (53,798) (51,364) (50,190) (48,839) (47,982)
Cash and due
from banks 125,806 124,745 131,240 129,904 132,216
Other assets 885,815 869,713 853,661 845,868 826,399
Total
assets $9,682,454 $9,373,539 $9,497,111 $9,382,060 $9,395,532
Interest-
bearing
deposits $6,906,437 $6,747,980 $6,845,466 $6,892,110 $6,896,118
Federal Home
Loan Bank
advances 437,642 426,911 411,480 403,590 400,918
Notes payable
and other
borrowings 439,130 332,019 433,983 330,184 322,811
Subordinated
notes 75,000 75,000 75,000 75,000 75,000
Junior
subordinated
debentures 249,594 249,635 249,677 249,719 249,760
Total
interest-
bearing
liabilities $8,107,803 $7,831,545 $8,015,606 $7,950,603 $7,944,607
Non-interest
bearing
deposits 663,526 642,917 657,029 643,338 646,278
Other
liabilities 150,872 155,080 99,331 76,004 79,182
Equity 760,253 743,997 725,145 712,115 725,465
Total
liabilities
and
shareholders'
equity $9,682,454 $9,373,539 $9,497,111 $9,382,060 $9,395,532
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
Net Interest Margin - 5 Quarter Trends
Three Months Ended
June 30, March 31, December 31, September 30, June 30,
Yield earned on: 2008 2008 2007 2007 2007
Liquidity
management
assets 4.56% 5.01% 5.15% 5.13% 5.16%
Other earning
assets 4.83 6.10 7.09 8.76 8.10
Loans, net of
unearned income 6.12 6.83 7.50 7.77 7.79
Total earning
assets 5.84% 6.53% 7.07% 7.29% 7.27%
Rate paid on:
Interest-
bearing
deposits 3.14% 3.66% 4.11% 4.28% 4.29%
Federal Home
Loan Bank
advances 4.19 4.29 4.39 4.40 4.40
Notes payable
and other
borrowings 2.66 3.36 4.37 4.47 4.42
Subordinated notes 4.45 5.73 6.82 6.81 6.72
Junior
subordinated
debentures 7.29 7.28 7.32 7.25 7.39
Total interest-
bearing
liabilities 3.31% 3.82% 4.27% 4.41% 4.42%
Rate Spread 2.53% 2.71% 2.80% 2.88% 2.85%
Net Free Funds
Contribution 0.24 0.27 0.28 0.26 0.28
Net Interest
Margin 2.77% 2.98% 3.08% 3.14% 3.13%
Core Net
Interest Margin 3.02% 3.26% 3.37% 3.43% 3.40%
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
Net Interest Margin (Including Call Option Income) - 5 Quarter Trends
Three Months Ended
June 30, March 31, December 31, September 30, June 30,
2008 2008 2007 2007 2007
Net
Interest
Income $59,992 $62,466 $66,402 $66,941 $66,139
Call Option
Income 12,083 6,780 1,693 56 443
Adjusted Net
Interest
Income $72,075 $69,246 $68,095 $66,997 $66,582
Yield on
Earning Assets 5.84% 6.53% 7.07% 7.29% 7.27%
Rate on
Interest-bearing
Liabilities 3.31 3.82 4.27 4.41 4.42
Rate Spread 2.53% 2.71% 2.80% 2.88% 2.85%
Net Free Funds
Contribution 0.24 0.27 0.28 0.26 0.28
Net Interest
Margin 2.77% 2.98% 3.08% 3.14% 3.13%
Call Option
Income 0.56 0.31 0.08 - 0.02
Net Interest
Margin including
Call Option
Income 3.33% 3.29% 3.16% 3.14% 3.15%
Core Net
Interest
Margin
Including Call
Option Income 3.58% 3.57% 3.45% 3.43% 3.42%
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
Net Interest Margin (Including Call Option Income) - YTD Trends
YTD YTD
June 30, December 31,
2008 2007 2006 2005 2004
Net Interest
Income $122,457 $264,777 $250,507 $218,086 $158,609
Call Option
Income 18,863 2,628 3,157 11,434 11,121
Adjusted Net
Interest
Income $141,320 $267,405 $253,664 $229,520 $169,730
Yield on
Earning Assets 6.18% 7.21% 6.91% 5.92% 5.24%
Rate on Interest-
bearing
Liabilities 3.56 4.39 4.11 3.00 2.28
Rate Spread 2.62% 2.82% 2.80% 2.92% 2.96%
Net Free Funds
Contribution 0.26 0.29 0.30 0.24 0.21
Net Interest
Margin 2.88% 3.11% 3.10% 3.16% 3.17%
Call Option
Income 0.44 0.03 0.04 0.17 0.16
Net Interest
Margin including
Call Option
Income 3.32% 3.14% 3.14% 3.33% 3.33%
Core Net
Interest Margin
Including Call
Option Income 3.58% 3.41% 3.36% 3.54% 3.47%
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
Non-Interest Income - 5 Quarter Trends
Three Months Ended
(Dollars in June 30, March 31, December 31, September 30, June 30,
thousands) 2008 2008 2007 2007 2007
Brokerage $4,948 $5,038 $5,464 $4,727 $5,084
Trust and asset
management 2,823 2,827 2,856 2,904 2,687
Total wealth
management 7,771 7,865 8,320 7,631 7,771
Mortgage banking 7,536 6,096 5,793 (3,122) 6,754
Service charges
on deposit
accounts 2,565 2,373 2,288 2,139 2,071
Gain on sale of
premium finance
receivables 566 1,141 1,596 - 175
Administrative
services 755 713 965 980 1,048
(Losses) gains
on available-for-
sale securities,
net (140) (1,333) 2,834 (76) 192
Other:
Fees from
covered call
options 12,083 6,780 1,693 56 443
Bank Owned
Life
Insurance 851 613 903 2,205 992
Miscellaneous 1,021 308 3,576 1,724 1,404
Total other
income 13,955 7,701 6,172 3,985 2,839
Total non-
interest
income $33,008 $24,556 $27,968 $11,537 $20,850
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
Non-Interest Expense - 5 Quarter Trends
Three Months Ended
(Dollars in June 30, March 31, December 31, September 30, June 30,
thousands) 2008 2008 2007 2007 2007
Salaries and
employee
benefits $36,976 $36,672 $36,583 $34,256 $35,060
Equipment 4,048 3,926 4,034 3,910 3,829
Occupancy, net 5,438 5,867 5,902 5,303 5,347
Data processing 2,918 2,798 2,721 2,645 2,578
Advertising and
marketing 1,368 999 1,212 1,515 1,513
Professional
fees 2,227 2,068 2,045 1,757 1,685
Amortization of
other
intangibles 779 788 964 964 964
Other:
Commissions -
3rd party
brokers 997 985 905 924 999
Postage 1,055 986 1,074 948 974
Stationery
and supplies 756 742 849 741 798
FDIC Insurance 1,289 1,286 1,257 1,067 786
Miscellaneous 6,734 5,716 6,020 5,457 5,605
Total other
expense 10,831 9,715 10,105 9,137 9,162
Total non-
interest
expense $64,585 $62,833 $63,566 $59,487 $60,138
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
Allowance for Credit Losses - 5 Quarter Trends
Three Months Ended
(Dollars in June 30, March 31, December 31, September 30, June 30,
thousands) 2008 2008 2007 2007 2007
Balance at
beginning of
period $53,758 $50,389 $48,757 $47,392 $46,526
Provision for
credit
losses 10,301 8,555 6,217 4,365 2,490
Allowance
acquired in
business
combinations - - 362 - -
Reclassification
to allowance
for lending-
related
commitments - - (36) - -
Charge-offs:
Commercial
and commercial
real estate
loans 5,430 3,957 4,029 2,239 1,743
Home equity
loans 25 - 156 - 82
Residential
real estate
loans - 219 - - 147
Consumer and
other loans 150 69 130 65 165
Premium finance
receivables 913 883 665 625 610
Indirect
consumer
loans 271 258 346 247 181
Tricom
finance
receivables 52 25 100 102 25
Total
charge-
offs 6,841 5,411 5,426 3,278 2,953
Recoveries:
Commercial and
commercial
real estate
loans 29 40 234 82 1,073
Home equity
loans - - 1 - 42
Residential
real estate
loans - - 6 - -
Consumer and
other loans 52 12 78 37 34
Premium
finance
receivables 273 128 148 115 133
Indirect
consumer
loans 61 45 48 44 44
Tricom
finance
receivables - - - - 3
Total
recoveries 415 225 515 278 1,329
Net charge-
offs (6,426) (5,186) (4,911) (3,000) (1,624)
Allowance for
loan losses
at end of
period $57,633 $53,758 $50,389 $48,757 $47,392
Allowance for
lending-
related
commitments at
end of period $493 $493 $493 $457 $457
Allowance for
credit losses
at end of
period $58,126 $54,251 $50,882 $49,214 $47,849
Annualized net
charge-offs
(recoveries)
by category
as a percentage
of its own
respective
category's
average:
Commercial
and
commercial
real estate
loans 0.48% 0.35% 0.35% 0.21% 0.07%
Home equity
loans 0.01 - 0.09 - 0.02
Residential
real estate
loans - 0.27 (0.01) - 0.16
Consumer and
other loans 0.29 0.16 0.14 0.11 0.60
Premium
finance
receivables 0.23 0.27 0.16 0.16 0.15
Indirect
consumer
loans 0.38 0.36 0.48 0.32 0.22
Tricom
finance
receivables 0.82 0.41 1.23 1.30 0.27
Total loans,
net of
unearned
income 0.36% 0.30% 0.28% 0.17% 0.10%
Net charge-offs
as a percentage
of the provision
for loan
losses 62.38% 60.62% 78.99% 68.72% 65.25%
Loans at
period-
end $7,153,603 $6,874,916 $6,801,602 $6,808,359 $6,720,960
Allowance
for loan
losses as a
percentage of
loans at period-
end 0.81% 0.78% 0.74% 0.72% 0.71%
Allowance for
credit losses
as a percentage
of loans at
period-end 0.81% 0.79% 0.75% 0.72% 0.71%
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
Non-Performing Assets - 5 Quarter Trends
(Dollars in June 30, March 31, December 31, September 30, June 30,
thousands) 2008 2008 2007 2007 2007
Loans past due
greater than
90 days and
still accruing:
Residential
real estate
and home
equity (1) $200 $387 $51 $85 $755
Commercial,
consumer and
other 2,259 8,557 14,742 2,207 279
Premium
finance
receivables 5,180 8,133 8,703 7,204 5,162
Indirect
consumer
loans 471 635 517 279 176
Tricom
finance
receivables - - - - -
Total past
due greater
than 90
days and
still
accruing 8,110 17,712 24,013 9,775 6,372
Non-accrual
loans:
Residential
real estate
and home
equity (1) 3,384 3,655 3,215 4,465 5,712
Commercial,
consumer
and other 61,878 51,184 33,267 20,452 12,558
Premium
finance
receivables 13,005 13,542 10,725 11,400 9,406
Indirect
consumer
loans 389 399 560 592 500
Tricom
finance
receivables 40 49 74 174 274
Total
non-
accrual 78,696 68,829 47,841 37,083 28,450
Total non-performing
loans:
Residential
real estate
and home
equity (1) 3,584 4,042 3,266 4,550 6,467
Commercial,
consumer
and other 64,137 59,741 48,009 22,659 12,837
Premium
finance
receivables 18,185 21,675 19,428 18,604 14,568
Indirect
consumer
loans 860 1,034 1,077 871 676
Tricom
finance
receivables 40 49 74 174 274
Total non-
performing
loans 86,806 86,541 71,854 46,858 34,822
Other real
estate
owned 9,233 4,873 3,858 1,834 1,504
Total non-
performing
assets $96,039 $91,414 $75,712 $48,692 $36,326
Total non-
performing
loans by
category as
a percent
of its own
respective
category's
period-end
balance:
Residential
real estate
and home
equity (1) 0.35% 0.44% 0.36% 0.52% 0.75%
Commercial,
consumer
and other 1.35 1.28 1.06 0.52 0.30
Premium
finance
receivables 1.59 2.13 1.80 1.44 1.12
Indirect
consumer
loans 0.39 0.45 0.45 0.34 0.27
Tricom
finance
receivables 0.18 0.21 0.27 0.52 0.80
Total non-
performing
loans 1.21% 1.26% 1.06% 0.69% 0.52%
Total non-
performing
assets as a
percentage
of total
assets 0.97% 0.94% 0.81% 0.51% 0.39%
Allowance for
loan losses
as a
percentage
of non-
performing
loans 66.39% 2.12% 70.13% 104.05% 136.10%
(1) Non-accrual and past due greater than 90 days and still accruing
residential mortgage loans held for sale accounted for at lower of
cost or market are excluded from the non-performing balances
presented above. These balances totaled $200,000 as of June 30,
2008, $2.1 million as of March 31, 2008 and $2.0 million as of
December 31, 2007.
SOURCE Wintrust Financial Corporation
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Related links:
http://www.wintrust.com
CONTACT:
Edward J. Wehmer, President & Chief Executive
Officer, or David A. Dykstra, Senior Executive Vice President &
Chief Operating Officer, both of Wintrust Financial Corporation,
+1-847-615-4096/ /FIRST ADD -- TABULAR MATERIAL AND CONFERENCE
CALL INFO -- TO FOLLOW
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