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Wintrust Financial Corporation Reports Record Second Quarter 2016 Net Income, an Increase of 14% Over Prior Year, and Year-to-Date 2016 Net Income of $99.2 million, an Increase of 20% Over Prior Year

ROSEMONT, Ill., July 19, 2016 (GLOBE NEWSWIRE) -- Wintrust Financial Corporation (“Wintrust” or “the Company”) (Nasdaq:WTFC) announced net income of $50.0 million or $0.90 per diluted common share for the second quarter of 2016 compared to net income of $49.1 million or $0.90 per diluted common share for the first quarter of 2016 and $43.8 million or $0.85 per diluted common share for the second quarter of 2015. The Company recorded net income of $99.2 million or $1.80 per diluted common share for the first six months of 2016 compared to net income of $82.9 million or $1.61 per diluted common share for the same period of 2015.

Highlights compared with the First Quarter of 2016 *:

  • Total assets increased by 16% on an annualized basis to $24.4 billion.
  • Total loans, excluding covered loans and mortgage loans held-for-sale, increased by $728 million, or 17% on annualized basis, to $18.2 billion.
  • Total deposits increased by $825 million, or 17% on an annualized basis, to $20.0 billion. Non-interest bearing deposit accounts comprise 27% of total deposits.
  • Mortgage banking revenue increased $15.1 million to $36.8 million.
  • Fees from covered call options increased $2.9 million to $4.6 million. Additionally, gains on investment securities increased $115,000 to $1.4 million. Included in the second quarter gains on investment securities was $912,000 recognized on securities called as part of the Company's written call option strategy, which was partially offset by a reduction to interest income from approximately $316,000 of accelerated premium amortization on the called mortgage backed securities.
  • Net overhead ratio decreased to 1.46% from 1.49% remaining below our stated goal of 1.50%.
  • Non-performing loans as a percentage of total loans, excluding covered loans, decreased to 0.48% from 0.51% and the allowance for loan losses as a percentage of total non-performing loans, excluding covered loans, increased to 130% from 123%.
  • Completed a public offering of 3,000,000 shares of common stock resulting in net proceeds of $152.8 million.
  • Net interest income increased $3.8 million primarily as a result of earning assets growth, partially offset by a 5 basis point reduction in net interest margin.
  • Acquisition and non-operating charges increased $963,000 to $1.2 million for the second quarter.

* See "Supplemental Financial Measures/Ratios" on pages 10-11 for more information on non-GAAP measures.

Edward J. Wehmer, President and Chief Executive Officer, commented, “The second quarter results reflected the strength of the internal growth engine at Wintrust as we recorded just under $1 billion of organic asset growth. The results also reflect our commitment to grow into our infrastructure while controlling operating expenses as our net overhead ratio dropped to 1.46% for the quarter, well on our way to being under the goal of 1.50% for the entire year. Our record level of net income in the second quarter is attributable to both our growth and a very strong residential mortgage banking environment. Given the economic volatility experienced during the quarter, we are pleased with this quarter's results and the year-to-date results."

Mr. Wehmer continued, “We experienced strong loan growth among our various loan categories, specifically the commercial, commercial real estate and premium finance receivables portfolios. As a result, the Company grew total loans, excluding covered loans and mortgages held-for-sale, by $728 million in the second quarter. The increased loan volumes offset compression in the net interest margin during the quarter due to lower accretion on purchased loans and a reduction in yield on liquidity management assets, resulting in an increase in net interest income of $3.8 million. Our loan pipelines remain consistently strong. Strong deposit growth continued in the second quarter of 2016 as total deposits increased $825 million and exceeded $20 billion as of the end of the second quarter. Demand deposits accounted for $162 million of this increase and comprise 27% of our overall deposit base."

Commenting on credit quality, Mr. Wehmer noted, “Credit quality metrics remained stable during the second quarter as total non-performing assets, excluding covered assets, decreased with the allowance for loan losses, excluding covered loans, exhibiting greater coverage for these non-performing credits. During the second quarter of 2016, the Company has continued its practice of timely addressing and resolving non-performing credits. We believe that the Company's reserves remain appropriate."

Mr. Wehmer further commented, “The wealth management business units continued their growth with record fee income during the second quarter of 2016. The mortgage banking business unit's contribution to net income increased during the second quarter as mortgage banking revenue totaled $36.8 million, an increase of $15.1 million compared to the first quarter of 2016. The increased revenue from the first quarter of 2016 resulted from growth in origination volumes to $1.2 billion during the second quarter of 2016 compared to $736.6 million during the first quarter of 2016. The increased volume is the result of higher purchase originations during the traditional spring purchase market as purchases represented 65% of volume for the second quarter of 2016. Our mortgage loan pipelines remain strong. We believe that our mortgage banking business remains well positioned for growth both organically and through acquisitions."

Turning to the future, Mr. Wehmer stated, “As in the past, Wintrust continues to take a determined approach to achieve our main objectives of growing franchise value, increasing profitability, leveraging our expense infrastructure and increasing shareholder value. We expect our wealth management and mortgage banking business units to continue their strong performance from the second quarter. Loan growth at the end of the current quarter should provide added momentum heading into the next quarter with period-end loan balances exceeding the second quarter average by approximately $500 million. Additionally, in the third quarter of 2016, we expect to complete the previously announced acquisition of certain performing loans from an affiliate of GE Capital Franchise Finance. Also, the previously announced acquisition of First Community Financial Corporation located in Elgin, Illinois is expected to be completed by late third quarter or early fourth quarter of 2016. Net proceeds from the common stock offering during the second quarter of 2016 will provide support for these acquisitions and our continued growth. All of these aspects result in great momentum without a commensurate increase in expense as we enter the second half of the year. Evaluating strategic acquisitions and organic branch growth will continue to be a part of our overall growth strategy with the goal of becoming Chicago’s bank and Wisconsin’s bank. Our opportunities for both internal growth and external growth remain consistently strong."

The graphs below illustrate certain highlights of the second quarter of 2016.

http://www.globenewswire.com/NewsRoom/AttachmentNg/8d9457b4-5589-4298-baeb-7ecd6d2335cd

Wintrust’s key operating measures and growth rates for the second quarter of 2016, as compared to the sequential and linked quarters, are shown in the table below:

% or(3)
basis point (bp) change from
1st Quarter
2016
% or
basis point (bp)
change from
2nd Quarter
2015
Three Months Ended
(Dollars in thousands) June 30,
2016
March 31,
2016
June 30,
2015
Net income $50,041 $49,111 $43,831 2 % 14 %
Net income per common share – diluted $0.90 $0.90 $0.85 % 6 %
Net revenue (1) $260,069 $240,261 $233,905 8 % 11 %
Net interest income $175,270 $171,509 $156,892 2 % 12 %
Net overhead ratio (2) 1.46% 1.49% 1.53% (3)bp (7)bp
Return on average assets 0.85% 0.86% 0.87% (1)bp (2)bp
Return on average common equity 8.43% 8.55% 8.38% (12)bp 5 bp
Return on average tangible common equity 11.12% 11.33% 10.86% (21)bp 26 bp
At end of period
Total assets $24,420,616 $23,488,168 $20,790,202 16 % 17 %
Total loans, excluding loans held-for-sale, excluding covered loans 18,174,655 17,446,413 15,513,650 17 % 17 %
Total loans, including loans held-for-sale, excluding covered loans 18,728,911 17,760,967 16,010,933 22 % 17 %
Total deposits 20,041,750 19,217,071 17,082,418 17 % 17 %
Total shareholders’ equity 2,623,595 2,418,442 2,264,982 34 % 16 %

(1) Net revenue is net interest income plus non-interest income.

(2) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period's average total assets. A lower ratio indicates a higher degree of efficiency.

(3) 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, 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 web site at www.wintrust.com by choosing “Financial Reports” under the “Investor Relations” heading, and then choosing “Financial Highlights.”

WINTRUST FINANCIAL CORPORATION
Selected Financial Highlights

Three Months Ended Six Months Ended
(Dollars in thousands, except per share data) June 30,
2016
March 31,
2016
June 30,
2015
June 30,
2016
June 30,
2015
Selected Financial Condition Data (at end of period):
Total assets $24,420,616 $23,488,168 $20,790,202
Total loans, excluding loans held-for-sale and covered loans 18,174,655 17,446,413 15,513,650
Total deposits 20,041,750 19,217,071 17,082,418
Junior subordinated debentures 253,566 253,566 249,493
Total shareholders’ equity 2,623,595 2,418,442 2,264,982
Selected Statements of Income Data:
Net interest income $175,270 $171,509 $156,892 $346,779 308,783
Net revenue (1) 260,069 240,261 233,905 500,330 450,337
Net income 50,041 49,111 43,831 99,152 82,883
Net income per common share – Basic $0.94 $0.94 $0.89 $1.88 $1.68
Net income per common share – Diluted $0.90 $0.90 $0.85 $1.80 $1.61
Selected Financial Ratios and Other Data:
Performance Ratios:
Non-interest income to average assets 1.44% 1.21% 1.52% 1.32% 1.43%
Non-interest expense to average assets 2.89% 2.70% 3.06% 2.80% 3.04%
Net overhead ratio (3) 1.46% 1.49% 1.53% 1.48% 1.61%
Return on average assets 0.85% 0.86% 0.87% 0.85% 0.83%
Return on average common equity 8.43% 8.55% 8.38% 8.49% 8.02%
Return on average tangible common equity (2) 11.12% 11.33% 10.86% 11.22% 10.42%
Average total assets $23,754,755 $22,902,913 $20,246,614 $23,328,834 $20,031,803
Average total shareholders’ equity 2,465,732 2,389,770 2,156,128 2,427,751 2,135,357
Average loans to average deposits ratio (excluding loans held-for-sale, excluding covered loans) 92.4% 92.2% 90.3% 92.3% 89.9%
Average loans to average deposits ratio (excluding loans held-for-sale, including covered loans) 92.9% 93.0% 91.5% 93.0% 91.1%
Common Share Data at end of period:
Market price per common share $51.00 $44.34 $53.38
Book value per common share (2) $45.96 $44.67 $42.24
Tangible common book value per share (2) $36.12 $34.20 $33.02
Common shares outstanding 51,619,155 48,518,998 47,677,257
Other Data at end of period:(6)
Leverage Ratio (4) 9.2% 8.7% 9.8%
Tier 1 capital to risk-weighted assets (4) 10.0% 9.6% 10.7%
Common equity Tier 1 capital to risk-weighted assets (4) 8.9% 8.4% 9.0%
Total capital to risk-weighted assets (4) 12.4% 12.1% 13.1%
Allowance for credit losses (5) $115,426 $111,201 $101,088
Non-performing loans $88,119 $89,499 $76,554
Allowance for credit losses to total loans (5) 0.64% 0.64% 0.65%
Non-performing loans to total loans 0.48% 0.51% 0.49%
Number of:
Bank subsidiaries 15 15 15
Banking offices 153 153 147

(1) Net revenue includes net interest income and non-interest income

(2) See “Supplemental Financial Measures/Ratios” for additional information on this performance measure/ratio.

(3) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period’s total average assets. A lower ratio indicates a higher degree of efficiency.

(4) Capital ratios for current quarter-end are estimated. As of January 1, 2015 capital ratios are calculated under the requirements of Basel III.

(5) The allowance for credit losses includes both the allowance for loan losses and the allowance for unfunded lending-related commitments, but excludes the allowance for covered loan losses.

(6) Asset quality ratios exclude covered loans.

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION

(In thousands) (Unaudited)
June 30,
2016
December 31,
2015
(Unaudited)
June 30,
2015
Assets
Cash and due from banks $267,551 $271,454 $248,094
Federal funds sold and securities purchased under resale agreements 4,024 4,341 4,115
Interest bearing deposits with banks 693,269 607,782 591,721
Available-for-sale securities, at fair value 637,663 1,716,388 2,162,061
Held-to-maturity securities, at amortized cost 992,211 884,826
Trading account securities 3,613 448 1,597
Federal Home Loan Bank and Federal Reserve Bank stock 121,319 101,581 89,818
Brokerage customer receivables 26,866 27,631 29,753
Mortgage loans held-for-sale 554,256 388,038 497,283
Loans, net of unearned income, excluding covered loans 18,174,655 17,118,117 15,513,650
Covered loans 105,248 148,673 193,410
Total loans 18,279,903 17,266,790 15,707,060
Allowance for loan losses (114,356) (105,400) (100,204)
Allowance for covered loan losses (2,412) (3,026) (2,215)
Net loans 18,163,135 17,158,364 15,604,641
Premises and equipment, net 595,792 592,256 571,498
Lease investments, net 103,749 63,170 13,447
FDIC indemnification asset 3,429
Accrued interest receivable and other assets 670,014 597,099 533,175
Trade date securities receivable 1,079,238
Goodwill 486,095 471,761 421,646
Other intangible assets 21,821 24,209 17,924
Total assets $24,420,616 $22,909,348 $20,790,202
Liabilities and Shareholders’ Equity
Deposits:
Non-interest bearing $5,367,672 $4,836,420 $3,910,310
Interest bearing 14,674,078 13,803,214 13,172,108
Total deposits 20,041,750 18,639,634 17,082,418
Federal Home Loan Bank advances 588,055 853,431 435,721
Other borrowings 252,611 265,785 261,674
Subordinated notes 138,915 138,861 138,808
Junior subordinated debentures 253,566 268,566 249,493
Trade date securities payable 40,000 538
Accrued interest payable and other liabilities 482,124 390,259 357,106
Total liabilities 21,797,021 20,557,074 18,525,220
Shareholders’ Equity:
Preferred stock 251,257 251,287 251,312
Common stock 51,708 48,469 47,763
Surplus 1,350,751 1,190,988 1,159,052
Treasury stock (4,145) (3,973) (3,964)
Retained earnings 1,008,464 928,211 872,690
Accumulated other comprehensive loss (34,440) (62,708) (61,871)
Total shareholders’ equity 2,623,595 2,352,274 2,264,982
Total liabilities and shareholders’ equity $24,420,616 $22,909,348 $20,790,202

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

Three Months Ended Six Months Ended
(In thousands, except per share data)June 30
2016
March 31,
2016
June 30,
2015
June 30,
2016
June 30,
2015
Interest income
Interest and fees on loans$178,530 $173,127 $159,823 $351,657 $314,499
Interest bearing deposits with banks793 746 305 1,539 621
Federal funds sold and securities purchased under resale agreements1 1 1 2 3
Investment securities16,398 17,190 14,071 33,588 28,471
Trading account securities14 11 51 25 64
Federal Home Loan Bank and Federal Reserve Bank stock1,112 937 785 2,049 1,554
Brokerage customer receivables216 219 205 435 386
Total interest income197,064 192,231 175,241 389,295 345,598
Interest expense
Interest on deposits13,594 12,781 11,996 26,375 23,810
Interest on Federal Home Loan Bank advances2,984 2,886 1,812 5,870 3,968
Interest on other borrowings1,086 1,058 787 2,144 1,575
Interest on subordinated notes1,777 1,777 1,777 3,554 3,552
Interest on junior subordinated debentures2,353 2,220 1,977 4,573 3,910
Total interest expense21,794 20,722 18,349 42,516 36,815
Net interest income175,270 171,509 156,892 346,779 308,783
Provision for credit losses9,129 8,034 9,482 17,163 15,561
Net interest income after provision for credit losses166,141 163,475 147,410 329,616 293,222
Non-interest income
Wealth management18,852 18,320 18,476 37,172 36,576
Mortgage banking36,807 21,735 36,007 58,542 63,807
Service charges on deposit accounts7,726 7,406 6,474 15,132 12,771
Gains (losses) on investment securities, net1,440 1,325 (24) 2,765 500
Fees from covered call options4,649 1,712 4,565 6,361 8,925
Trading (losses) gains, net(316) (168) 160 (484) (317)
Operating lease income, net4,005 2,806 77 6,811 142
Other11,636 15,616 11,278 27,252 19,150
Total non-interest income84,799 68,752 77,013 153,551 141,554
Non-interest expense
Salaries and employee benefits100,894 95,811 94,421 196,705 184,551
Equipment9,307 8,767 7,855 18,074 15,634
Operating lease equipment depreciation3,385 2,050 59 5,435 116
Occupancy, net11,943 11,948 11,401 23,891 23,752
Data processing7,138 6,519 6,081 13,657 11,529
Advertising and marketing6,941 3,779 6,406 10,720 10,313
Professional fees5,419 4,059 5,074 9,478 9,738
Amortization of other intangible assets1,248 1,298 934 2,546 1,947
FDIC insurance4,040 3,613 3,047 7,653 6,034
OREO expense, net1,348 560 841 1,908 2,252
Other19,306 15,326 18,178 34,632 35,749
Total non-interest expense170,969 153,730 154,297 324,699 301,615
Income before taxes79,971 78,497 70,126 158,468 133,161
Income tax expense29,930 29,386 26,295 59,316 50,278
Net income$50,041 $49,111 $43,831 $99,152 $82,883
Preferred stock dividends and discount accretion3,628 3,628 1,580 7,256 3,161
Net income applicable to common shares$46,413 $45,483 $42,251 $91,896 $79,722
Net income per common share - Basic$0.94 $0.94 $0.89 $1.88 $1.68
Net income per common share - Diluted$0.90 $0.90 $0.85 $1.80 $1.61
Cash dividends declared per common share$0.12 $0.12 $0.11 $0.24 $0.22
Weighted average common shares outstanding49,140 48,448 47,567 48,794 47,404
Dilutive potential common shares3,965 3,820 4,156 3,887 4,220
Average common shares and dilutive common shares53,105 52,268 51,723 52,681 51,624

EARNINGS PER SHARE

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

Three Months Ended Six Months Ends
(In thousands, except per share data) June 30,
2016
March 30,
2016
June 30,
2015
June 30,
2016
June 30,
2015
Net income $50,041 $49,111 $43,831 $99,152 $82,883
Less: Preferred stock dividends and discount accretion 3,628 3,628 1,580 7,256 3,161
Net income applicable to common shares—Basic(A) 46,413 45,483 42,251 91,896 79,722
Add: Dividends on convertible preferred stock, if dilutive 1,578 1,578 1,580 3,156 3,161
Net income applicable to common shares—Diluted(B) 47,991 47,061 43,831 95,052 82,883
Weighted average common shares outstanding(C) 49,140 48,448 47,567 48,794 47,404
Effect of dilutive potential common shares:
Common stock equivalents 856 750 1,085 778 1,149
Convertible preferred stock, if dilutive 3,109 3,070 3,071 3,109 3,071
Weighted average common shares and effect of dilutive potential common shares(D) 53,105 52,268 51,723 52,681 51,624
Net income per common share:
Basic(A/C) $0.94 $0.94 $0.89 $1.88 $1.68
Diluted(B/D) $0.90 $0.90 $0.85 $1.80 $1.61

Potentially dilutive common shares can result from stock options, restricted stock unit awards, stock warrants, the Company’s convertible preferred stock and shares to be issued under the Employee Stock Purchase Plan and the Directors Deferred Fee and Stock Plan, being treated as if they had been either exercised or issued, computed by application of the treasury stock method. While potentially dilutive common shares are typically included in the computation of diluted earnings per share, potentially dilutive common shares are excluded from this computation in periods in which the effect would reduce the loss per share or increase the income per share. For diluted earnings per share, net income applicable to common shares can be affected by the conversion of the Company’s convertible preferred stock. Where the effect of this conversion would reduce the loss per share or increase the income per share, net income applicable to common shares is not adjusted by the associated preferred dividends.

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), the efficiency ratio, tangible common equity ratio, tangible common book value per share and return on average tangible common equity. Management believes that these measures and ratios provide users of the Company’s financial information a more meaningful view of the performance of the interest-earning assets and interest-bearing liabilities and of the Company’s operating efficiency. Other financial holding companies may define or calculate these measures and ratios differently.

Management reviews yields on certain asset categories and the net interest margin of the Company and its banking subsidiaries on a fully taxable-equivalent (“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 considers the tangible common equity ratio and tangible book value per common share as useful measurements of the Company’s equity. The Company references the return on average tangible common equity as a measurement of profitability.

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

Three Months Ended Six Months Ended
June 30, March 31, December 31, September 30, June 30, June 30, June 30,
(Dollars and shares in thousands)2016 2016 2015 2015 2015 2016 2015
Calculation of Net Interest Margin and Efficiency Ratio
(A) Interest Income (GAAP)$197,064 $192,231 $187,487 $185,379 $175,241 $389,295 $345,598
Taxable-equivalent adjustment:
- Loans523 509 430 346 328 1,032 655
- Liquidity Management Assets932 920 866 841 787 1,852 1,514
- Other Earning Assets8 6 13 10 27 14 34
(B) Interest Income - FTE$198,527 $193,666 $188,796 $186,576 $176,383 $392,193 $347,801
(C) Interest Expense (GAAP)21,794 20,722 20,281 19,839 18,349 42,516 36,815
(D) Net Interest Income - FTE (B minus C)$176,733 $172,944 $168,515 $166,737 $158,034 $349,677 $310,986
(E) Net Interest Income (GAAP) (A minus C)$175,270 $171,509 $167,206 $165,540 $156,892 $346,779 $308,783
Net interest margin (GAAP-derived)3.24% 3.29% 3.26% 3.31% 3.39% 3.26% 3.39%
Net interest margin - FTE3.27% 3.32% 3.29% 3.33% 3.41% 3.29% 3.42%
(F) Non-interest income$84,799 $68,752 $65,090 $64,953 $77,013 $153,551 $141,554
(G) Gains (losses) on investment securities, net1,440 1,325 (79) (98) (24) 2,765 500
(H) Non-interest expense170,969 153,730 166,829 159,974 154,297 324,699 301,615
Efficiency ratio (H/(E+F-G))66.11% 64.34% 71.79% 69.38% 65.96% 65.26% 67.05%
Efficiency ratio - FTE (H/(D+F-G))65.73% 63.96% 71.39% 69.02% 65.64% 64.88% 66.72%
Calculation of Tangible Common Equity ratio (at period end)
Total shareholders’ equity$2,623,595 $2,418,442 $2,352,274 $2,335,736 $2,264,982
(I) Less: Convertible preferred stock(126,257) (126,257) (126,287) (126,312) (126,312)
Less: Non-convertible preferred stock(125,000) (125,000) (125,000) (125,000) (125,000)
Less: Intangible assets(507,916) (508,005) (495,970) (497,699) (439,570)
(J) Total tangible common shareholders’ equity$1,864,422 $1,659,180 $1,605,017 $1,586,725 $1,574,100
Total assets$24,420,616 $23,488,168 $22,909,348 $22,035,216 $20,790,202
Less: Intangible assets(507,916) (508,005) (495,970) (497,699) (439,570)
(K) Total tangible assets$23,912,700 $22,980,163 $22,413,378 $21,537,517 $20,350,632
Tangible common equity ratio (J/K)7.8% 7.2% 7.2% 7.4% 7.7%
Tangible common equity ratio, assuming full conversion of convertible preferred stock ((J-I)/K)8.3% 7.8% 7.7% 8.0% 8.4%
Calculation of book value per share
Total shareholders’ equity$2,623,595 $2,418,442 $2,352,274 $2,335,736 $2,264,982
Less: Preferred stock(251,257) (251,257) (251,287) (251,312) (251,312)
(L) Total common equity$2,372,338 $2,167,185 $2,100,987 $2,084,424 $2,013,670
(M) Actual common shares outstanding51,619 48,519 48,383 48,337 47,677
Book value per common share (L/M)$45.96 $44.67 $43.42 $43.12 $42.24
Tangible common book value per share (J/M)$36.12 $34.20 $33.17 $32.83 $33.02
Calculation of return on average common equity
(N) Net income applicable to common shares46,413 45,483 31,883 34,276 42,251 91,896 79,722
Add: After-tax intangible asset amortization781 812 834 833 597 1,593 1,212
(O) Tangible net income applicable to common shares47,194 46,295 32,717 35,109 42,848 93,489 80,934
Total average shareholders' equity2,465,732 2,389,770 2,347,545 2,310,511 2,156,128 2,427,751 2,135,357
Less: Average preferred stock(251,257) (251,262) (251,293) (251,312) (134,586) (251,259) (130,538)
(P) Total average common shareholders' equity2,214,475 2,138,508 2,096,252 2,059,199 2,021,542 2,176,492 2,004,819
Less: Average intangible assets(507,439) (495,594) (497,199) (490,583) (439,455) (501,516) (437,964)
(Q) Total average tangible common shareholders’ equity1,707,036 1,642,914 1,599,053 1,568,616 1,582,087 1,674,976 1,566,855
Return on average common equity, annualized (N/P)8.43% 8.55% 6.03% 6.60% 8.38% 8.49% 8.02%
Return on average tangible common equity, annualized (O/Q)11.12% 11.33% 8.12% 8.88% 10.86% 11.22% 10.42%

LOANS

Loan Portfolio Mix and Growth Rates

% Growth
(Dollars in thousands) June 30,
2016
December 31,
2015
June 30,
2015
From (1)
December 31,
2015
From
June 30,
2015
Balance:
Commercial $5,144,533 $4,713,909 $4,330,344 18% 19%
Commercial real estate 5,848,334 5,529,289 4,850,590 12 21
Home equity 760,904 784,675 712,350 (6) 7
Residential real estate 653,664 607,451 503,015 15 30
Premium finance receivables - commercial 2,478,280 2,374,921 2,460,408 9 1
Premium finance receivables - life insurance 3,161,562 2,961,496 2,537,475 14 25
Consumer and other 127,378 146,376 119,468 (26) 7
Total loans, net of unearned income, excluding covered loans $18,174,655 $17,118,117 $15,513,650 12% 17%
Covered loans 105,248 148,673 193,410 (59) (46)
Total loans, net of unearned income $18,279,903 $17,266,790 $15,707,060 12% 16%
Mix:
Commercial 28% 27% 27%
Commercial real estate 31 32 31
Home equity 4 5 5
Residential real estate 4 3 3
Premium finance receivables - commercial 14 14 16
Premium finance receivables - life insurance 17 17 16
Consumer and other 1 1 1
Total loans, net of unearned income, excluding covered loans 99% 99% 99%
Covered loans 1 1 1
Total loans, net of unearned income 100% 100% 100%

(1) Annualized

Commercial and Commercial Real Estate Loan Portfolios

As of June 30, 2016 % of
Total
Balance
Nonaccrual > 90 Days
Past Due
and Still
Accruing
Allowance
For Loan
Losses
Allocation
(Dollars in thousands) Balance
Commercial:
Commercial, industrial and other $3,456,575 31.3% $16,414 $ $28,133
Franchise 289,905 2.6 3,337
Mortgage warehouse lines of credit 270,586 2.5 1,976
Asset-based lending 842,667 7.7 235 6,735
Leases 268,074 2.4 387 807
PCI - commercial loans (1) 16,726 0.2 1,956 666
Total commercial $5,144,533 46.7% $16,801 $2,191 $41,654
Commercial Real Estate:
Construction $404,905 3.7% $673 $ $4,322
Land 105,881 1.0 1,725 3,455
Office 909,453 8.3 6,274 6,099
Industrial 766,769 7.0 10,295 6,443
Retail 897,846 8.2 916 6,060
Multi-family 778,517 7.1 90 7,746
Mixed use and other 1,812,665 16.5 4,442 12,662
PCI - commercial real estate (1) 172,298 1.5 27,228 37
Total commercial real estate $5,848,334 53.3% $24,415 $27,228 $46,824
Total commercial and commercial real estate $10,992,867 100.0% $41,216 $29,419 $88,478
Commercial real estate - collateral location by state:
Illinois $4,622,897 79.1%
Wisconsin 597,531 10.2
Total primary markets $5,220,428 89.3%
Florida 77,829 1.3
California 62,920 1.1
Arizona 43,409 0.7
Indiana 125,210 2.1
Other (no individual state greater than 0.6%) 318,538 5.5
Total $5,848,334 100.0%

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

DEPOSITS

Deposit Portfolio Mix and Growth Rates

% Growth
(Dollars in thousands) June 30,
2016
December 31,
2015
June 30,
2015
From (1)
December 31,
2015
From
June 30,
2015
Balance:
Non-interest bearing $5,367,672 $4,836,420 $3,910,310 22% 37%
NOW and interest bearing demand deposits 2,450,710 2,390,217 2,240,832 5 9
Wealth management deposits (2) 1,904,121 1,643,653 1,591,251 32 20
Money market 4,384,134 4,041,300 3,898,495 17 12
Savings 1,851,863 1,723,367 1,504,654 15 23
Time certificates of deposit 4,083,250 4,004,677 3,936,876 4 4
Total deposits $20,041,750 $18,639,634 $17,082,418 15% 17%
Mix:
Non-interest bearing 27% 26% 23%
NOW and interest bearing demand deposits 12 13 13
Wealth management deposits (2) 10 9 9
Money market 22 22 23
Savings 9 9 9
Time certificates of deposit 20 21 23
Total deposits 100% 100% 100%

(1) Annualized

(2) Represents deposit balances of the Company’s subsidiary banks from brokerage customers of Wayne Hummer Investments, trust and asset management customers of the Company and brokerage customers from unaffiliated companies which have been placed into deposit accounts of the Banks.

Time Certificates of Deposit
Maturity/Re-pricing Analysis
As of June 30, 2016

(Dollars in thousands) CDARs &
Brokered
Certificates
of Deposit (1)
MaxSafe
Certificates
of Deposit (1)
Variable Rate
Certificates
of Deposit (2)
Other Fixed
Rate
Certificates
of Deposit (1)
Total Time
Certificates of
Deposit
Weighted-
Average

Rate of
Maturing

Time
Certificates

of Deposit (3)
1-3 months $165,624 $49,940 $145,604 $657,498 $1,018,666 0.65%
4-6 months 48,652 621,054 669,706 0.74%
7-9 months 28,455 547,756 576,211 0.78%
10-12 months 43,812 22,381 495,291 561,484 0.75%
13-18 months 1,779 6,964 780,460 789,203 1.06%
19-24 months 4,511 6,284 167,534 178,329 0.91%
24+ months 1,249 15,822 272,580 289,651 1.28%
Total $216,975 $178,498 $145,604 $3,542,173 $4,083,250 0.83%

(1) This category of certificates of deposit is shown by contractual maturity date.

(2) This category includes variable rate certificates of deposit and savings certificates with the majority repricing on at least a monthly basis.

(3) Weighted-average rate excludes the impact of purchase accounting fair value adjustments.

NET INTEREST INCOME

The following table presents a summary of Wintrust’s average balances, net interest income and related net interest margins, calculated on a fully tax-equivalent basis, for the second quarter of 2016 compared to the first quarter of 2016 (sequential quarters) and second quarter of 2015 (linked quarters), respectively:

Average Balance
for three months ended,
Interest
for three months ended,
Yield/Rate
for three months ended,
(Dollars in thousands)June 30,
2016
March 31,
2016
June 30,
2015
June 30,
2016
March 31,
2016
June 30,
2015
June 30,
2016
March 31,
2016
June 30,
2015
Liquidity management assets(1)(2)(7)$3,413,113 $3,300,138 $2,709,176 $19,236 $19,794 $15,949 2.27% 2.41% 2.36%
Other earning assets(2)(3)(7)29,759 28,731 32,115 238 236 283 3.21 3.31 3.54
Loans, net of unearned income(2)(4)(7)18,204,552 17,508,593 15,632,875 177,571 171,625 156,970 3.92 3.94 4.03
Covered loans109,533 141,351 202,663 1,482 2,011 3,181 5.44 5.72 6.30
Total earning assets(7)$21,756,957 $20,978,813 $18,576,829 $198,527 $193,666 $176,383 3.67% 3.71% 3.81%
Allowance for loan and covered loan losses(116,984) (112,028) (101,211)
Cash and due from banks272,935 259,343 236,242
Other assets1,841,847 1,776,785 1,534,754
Total assets$23,754,755 $22,902,913 $20,246,614
Interest-bearing deposits$14,065,995 $13,717,333 $13,115,453 $13,594 $12,781 $11,996 0.39% 0.37% 0.37%
Federal Home Loan Bank advances946,081 825,104 338,768 2,984 2,886 1,812 1.27 1.41 2.15
Other borrowings248,233 257,384 193,367 1,086 1,058 787 1.76 1.65 1.63
Subordinated notes138,898 138,870 138,799 1,777 1,777 1,777 5.12 5.12 5.12
Junior subordinated debentures253,566 257,687 249,493 2,353 2,220 1,977 3.67 3.41 3.13
Total interest-bearing liabilities$15,652,773 $15,196,378 $14,035,880 $21,794 $20,722 $18,349 0.56% 0.55% 0.52%
Non-interest bearing deposits5,223,384 4,939,746 3,725,728
Other liabilities412,866 377,019 328,878
Equity2,465,732 2,389,770 2,156,128
Total liabilities and shareholders’ equity$23,754,755 $22,902,913 $20,246,614
Interest rate spread(5)(7) 3.11% 3.16% 3.29%
Less: Fully tax-equivalent adjustment (1,463) (1,435) (1,142) (0.03) (0.03) (0.02)
Net free funds/contribution(6)$6,104,184 $5,782,435 $4,540,949 0.16 0.16 0.12
Net interest income/ margin(7) (GAAP) $175,270 $171,509 $156,892 3.24% 3.29% 3.39%
Fully tax-equivalent adjustment 1,463 1,435 1,142 0.03 0.03 0.02
Net interest income/ margin - FTE (7) $176,733 $172,944 $158,034 3.27% 3.32% 3.41%

(1) Liquidity management assets include available-for-sale and held-to-maturity securities, interest earning deposits with banks, federal funds sold and securities purchased under resale agreements.

(2) Interest income on tax-advantaged loans, trading securities and available-for-sale 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, 2016, March 31, 2016 and June 30, 2015 were $1.5 million, $1.4 million and $1.1 million, respectively.

(3) Other earning assets include brokerage customer receivables and trading account securities.

(4) Loans, net of unearned income, include loans 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) See “Supplemental Financial Measures/Ratios” for additional information on this performance ratio.

For the second quarter of 2016, net interest income totaled $175.3 million, an increase of $3.8 million as compared to the first quarter of 2016 and an increase of $18.4 million as compared to the second quarter of 2015. The reduction in net interest margin compared to the prior periods is primarily the result of a decline in loan yields and an increase on the rate of interest bearing liabilities. Specifically, the five basis point decline in net interest margin in the second quarter of 2016 compared to the first quarter of 2016 was primarily the result of a two basis point reduction due to lower yields on liquidity management assets, a one basis point reduction due to accelerated premium amortization on called mortgage backed securities, a one basis point reduction due to lower accretion on purchased loans and a one basis point reduction due to an increase on the rate of interest bearing liabilities.

The following table presents a summary of Wintrust's average balances, net interest income and related interest margins, calculated on a fully tax-equivalent basis, for the six months ended June 30, 2016 compared to the six months ended June 30, 2015:

Average Balance
for six months ended,
Interest
for six months ended,
Yield/Rate
for six months ended,
(Dollars in thousands)June 30,
2016
June 30,
2015
June 30,
2016
June 30,
2015
June 30,
2016
June 30,
2015
Liquidity management assets(1)(2)(7)$3,356,625 $2,788,600 $39,030 $32,163 2.34% 2.33%
Other earning assets(2)(3)(7)29,246 29,928 474 484 3.26 3.26
Loans, net of unearned income(2)(4)(7)17,856,572 15,334,056 349,196 308,285 3.93 4.05
Covered loans125,442 208,405 3,493 6,869 5.60 6.65
Total earning assets(7)$21,367,885 $18,360,989 $392,193 $347,801 3.69% 3.82%
Allowance for loan and covered loan losses(114,506) (99,077)
Cash and due from banks266,139 242,927
Other assets1,809,316 1,526,964
Total assets$23,328,834 $20,031,803
Interest-bearing deposits$13,891,664 $12,990,176 $26,375 $23,810 0.38% 0.37%
Federal Home Loan Bank advances885,592 343,088 5,870 3,968 1.33 2.33
Other borrowings252,809 194,011 2,144 1,575 1.71 1.64
Subordinated notes138,884 138,786 3,554 3,552 5.12 5.12
Junior subordinated debentures255,626 249,493 4,573 3,910 3.54 3.12
Total interest-bearing liabilities$15,424,575 $13,915,554 $42,516 $36,815 0.55% 0.53%
Non-interest bearing deposits5,081,565 3,655,480
Other liabilities394,943 325,412
Equity2,427,751 2,135,357
Total liabilities and shareholders’ equity$23,328,834 $20,031,803
Interest rate spread(5)(7) 3.14% 3.29%
Less: Fully tax-equivalent adjustment (2,898) (2,203) (0.03) (0.03)
Net free funds/contribution(6)$5,943,310 $4,445,435 0.15 0.13
Net interest income/ margin(7) (GAAP) $346,779 $308,783 3.26% 3.39%
Fully tax-equivalent adjustment 2,898 2,203 0.03 0.03
Net interest income/ margin - FTE (7) $349,677 $310,986 3.29% 3.42%

(1) Liquidity management assets include available-for-sale and held-to-maturity securities, interest earning deposits with banks, federal funds sold and securities purchased under resale agreements.

(2) Interest income on tax-advantaged loans, trading securities and available-for-sale 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, 2016 and June 30, 2015 were $2.9 million and $2.2 million respectively.

(3) Other earning assets include brokerage customer receivables and trading account securities.

(4) Loans, net of unearned income, include loans 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) See “Supplemental Financial Measures/Ratios” for additional information on this performance ratio.

For the first six months of 2016, net interest income totaled $346.8 million, an increase of $38.0 million as compared to the first six months of 2015. The reduction in net interest margin compared to the first six months of 2015 is primarily the result of a decline in loan yields, including less accretion recognized on purchased loans, and an increase on the rate of interest bearing liabilities.

Interest Rate Sensitivity

As an ongoing part of its financial strategy, the Company attempts to manage the impact of fluctuations in market interest rates on net interest income. Management measures its exposure to changes in interest rates by modeling many different interest rate scenarios.

The following interest rate scenarios display the percentage change in net interest income over a one-year time horizon assuming increases of 100 and 200 basis points and a decrease of 100 basis points. The Static Shock Scenario results incorporate actual cash flows and repricing characteristics for balance sheet instruments following an instantaneous, parallel change in market rates based upon a static (i.e. no growth or constant) balance sheet. Conversely, the Ramp Scenario results incorporate management’s projections of future volume and pricing of each of the product lines following a gradual, parallel change in market rates over twelve months. Actual results may differ from these simulated results due to timing, magnitude, and frequency of interest rate changes as well as changes in market conditions and management strategies. The interest rate sensitivity for both the Static Shock and Ramp Scenario at June 30, 2016, March 31, 2016 and June 30, 2015 is as follows:

Static Shock Scenario +200
Basis
Points
+100
Basis
Points
-100
Basis
Points
June 30, 2016 16.9% 8.9% (8.9)%
March 31, 2016 16.4% 8.9% (8.7)%
June 30, 2015 14.8% 7.3% (10.5)%


Ramp Scenario+200
Basis
Points
+100
Basis
Points
-100
Basis
Points
June 30, 20167.0% 3.5% (3.7)%
March 31, 20167.5% 3.7% (3.7)%
June 30, 20156.4% 3.3% (4.0)%

These results indicate that the Company has positioned its balance sheet to benefit from a rise in interest rates. This analysis also indicates that the Company would benefit to a greater magnitude should a rise in interest rates be significant (i.e., 200 basis points) and immediate (Static Shock Scenario).

NON-INTEREST INCOME

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

Three Months Ended
June 30, March 31, June 30, Q2 2016 compared to
Q1 2016
Q2 2016 compared to
Q2 2015
(Dollars in thousands) 2016 2016 2015 $ Change % Change $ Change % Change
Brokerage $6,302 $6,057 $6,750 $245 4% $(448) (7)%
Trust and asset management 12,550 12,263 11,726 287 2 824 7
Total wealth management 18,852 18,320 18,476 532 ��3 376 2
Mortgage banking 36,807 21,735 36,007 15,072 69 800 2
Service charges on deposit accounts 7,726 7,406 6,474 320 4 1,252 19
Gains (losses) on investment securities, net 1,440 1,325 (24) 115 9 1,464 NM
Fees from covered call options 4,649 1,712 4,565 2,937 NM 84 2
Trading (losses) gains, net (316) (168) 160 (148) 88 (476) NM
Operating lease income, net 4,005 2,806 77 1,199 43 3,928 NM
Other:
Interest rate swap fees 1,835 4,438 2,347 (2,603) (59) (512) (22)
BOLI 1,257 472 2,180 785 NM (923) (42)
Administrative services 1,074 1,069 1,053 5 21 2
Gain on extinguishment of debt 4,305 (4,305) NM NM
Miscellaneous 7,470 5,332 5,698 2,138 40 1,772 31
Total Other 11,636 15,616 11,278 (3,980) (25) 358 3
Total Non-Interest Income $84,799 $68,752 $77,013 $16,047 23% $7,786 10%

NM - Not Meaningful

Six Months Ended
June 30, June 30, $ %
(Dollars in thousands) 2016 2015 Change Change
Brokerage $12,359 $13,602 $(1,243) (9)%
Trust and asset management 24,813 22,974 1,839 8
Total wealth management 37,172 36,576 596 2
Mortgage banking 58,542 63,807 (5,265) (8)
Service charges on deposit accounts 15,132 12,771 2,361 18
Gains on investment securities, net 2,765 500 2,265 NM
Fees from covered call options 6,361 8,925 (2,564) (29)
Trading losses, net (484) (317) (167) 53
Operating lease income, net 6,811 142 6,669 NM
Other:
Interest rate swap fees 6,273 4,538 1,735 38
BOLI 1,729 2,946 (1,217) (41)
Administrative services 2,143 2,079 64 3
Gain on extinguishment of debt 4,305 4,305 NM
Miscellaneous 12,802 9,587 3,215 34
Total Other 27,252 19,150 8,102 42
Total Non-Interest Income $153,551 $141,554 $11,997 8%

NM - Not Meaningful

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

The increase in wealth management revenue during the current period as compared to the first quarter of 2016 and second quarter of 2015 is primarily attributable to growth in assets under management due to new customers. Wealth management revenue is comprised of the trust and asset management revenue of The Chicago Trust Company and Great Lakes Advisors and the brokerage commissions, managed money fees and insurance product commissions at Wayne Hummer Investments.

The increase in mortgage banking revenue in the current quarter as compared to the most recent quarter resulted primarily from higher origination volumes in the current quarter. Mortgage loans originated or purchased for sale were $1.2 billion in the current quarter as compared to $736.6 million in the first quarter of 2016 and $1.2 billion in the second quarter of 2015. Mortgage banking revenue includes revenue from activities related to originating, selling and servicing residential real estate loans for the secondary market. Mortgage revenue is also impacted by changes in the fair value of MSRs as the Company does not hedge this change in fair value. The Company typically originates mortgage loans held-for-sale with associated MSRs either retained or released. The Company records MSRs at fair value on a recurring basis. The table below presents additional selected information regarding mortgage banking revenue for the respective periods.

Three Months Ended Six Months Ended
(Dollars in thousands) June 30,
2016
March 31,
2016
June 30,
2015
June 30,
2016
June 30,
2015
Retail originations $1,135,082 $704,990 $1,111,424 $1,840,072 $2,003,965
Correspondent originations 77,160 31,658 65,921 108,818 115,031
(A) Total originations $1,212,242 $736,648 $1,177,345 $1,948,890 $2,118,996
Purchases as a percentage of originations 65% 56% 62% 62% 54%
Refinances as a percentage of originations 35 44 38 38 46
Total 100% 100% 100% 100% 100%
(B) Production revenue (1) $32,221 $19,930 $35,092 $52,151 $63,429
Production margin (B / A) 2.66% 2.71% 2.98% 2.68% 2.99%
Loans serviced for others (C) $1,250,062 $1,044,745 $882,270
Mortgage servicing rights, at fair value (D) 13,382 10,128 7,852
Percentage of mortgage servicing rights to loans serviced for others (D/C) 1.07% 0.97% 0.89%

(1) Production revenue represents revenue earned from the origination and subsequent sale of mortgages, including gains on loans sold and fees from originations, processing and other related activities, and excludes servicing fees, changes in the fair value of servicing rights and changes to the mortgage recourse obligation.

The increase in service charges on deposit accounts in the current quarter is mostly a result of higher account analysis fees on deposit accounts which have increased as a result of the Company's commercial banking initiative as well as additional service charges on deposit accounts from acquired institutions.

The Company has typically written call options with terms of less than three months against certain U.S. Treasury and agency securities held in its portfolio for liquidity and other purposes. Management has effectively entered into these transactions with the goal of economically hedging security positions and enhancing its overall return on its investment portfolio by using fees generated from these options to compensate for net interest margin compression. These option transactions are designed to mitigate overall interest rate risk and do not qualify as hedges pursuant to accounting guidance. Fees from covered call options increased in the current quarter compared to the first quarter of 2016 primarily as a result of selling call options against a larger value of underlying securities resulting in higher premiums received by the Company. There were no outstanding call option contracts at June 30, 2016, March 31, 2016 and June 30, 2015.

The increase in operating lease income in the current quarter compared to the prior period quarters is primarily related to growth in business from the Company's leasing divisions.

The decrease in other non-interest income in the current quarter as compared to the first quarter of 2016 is primarily due to the $4.3 million gain on the extinguishment of junior subordinated debentures recognized in the prior quarter and lower swap fee revenues resulting from interest rate hedging transactions related to both customer-based trades and the related matched trades with inter-bank dealer counterparties, partially offset by net gains on partnership investments.

NON-INTEREST EXPENSE

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

Three Months Ended
June 30, March 31, June 30, Q2 2016 compared to
Q1 2016
Q2 2016 compared to
Q2 2015
(Dollars in thousands) 2016 2016 2015 $ Change % Change $ Change % Change
Salaries and employee benefits:
Salaries $52,924 $50,282 $46,617 $2,642 5% $6,307 14%
Commissions and incentive compensation 32,531 26,375 33,387 6,156 23 (856) (3)
Benefits 15,439 19,154 14,417 (3,715) (19) 1,022 7
Total salaries and employee benefits 100,894 95,811 94,421 5,083 5 6,473 7
Equipment 9,307 8,767 7,855 540 6 1,452 18
Operating lease equipment depreciation 3,385 2,050 59 1,335 65 3,326 NM
Occupancy, net 11,943 11,948 11,401 (5) 542 5
Data processing 7,138 6,519 6,081 619 9 1,057 17
Advertising and marketing 6,941 3,779 6,406 3,162 84 535 8
Professional fees 5,419 4,059 5,074 1,360 34 345 7
Amortization of other intangible assets 1,248 1,298 934 (50) (4) 314 34
FDIC insurance 4,040 3,613 3,047 427 12 993 33
OREO expense, net 1,348 560 841 788 NM 507 60
Other:
Commissions - 3rd party brokers 1,324 1,310 1,403 14 1 (79) (6)
Postage 2,038 1,302 1,578 736 57 460 29
Miscellaneous 15,944 12,714 15,197 3,230 25 747 5
Total other 19,306 15,326 18,178 3,980 26 1,128 6
Total Non-Interest Expense $170,969 $153,730 $154,297 $17,239 11% $16,672 11%


Six Months Ended
June 30, June 30, $ %
(Dollars in thousands) 2016 2015 Change Change
Salaries and employee benefits:
Salaries $103,206 $93,465 $9,741 10%
Commissions and incentive compensation 58,906 58,881 25
Benefits 34,593 32,205 2,388 7
Total salaries and employee benefits 196,705 184,551 12,154 7
Equipment 18,074 15,634 2,440 16
Operating lease equipment depreciation 5,435 116 5,319 NM
Occupancy, net 23,891 23,752 139 1
Data processing 13,657 11,529 2,128 18
Advertising and marketing 10,720 10,313 407 4
Professional fees 9,478 9,738 (260) (3)
Amortization of other intangible assets 2,546 1,947 599 31
FDIC insurance 7,653 6,034 1,619 27
OREO expense, net 1,908 2,252 (344) (15)
Other:
Commissions - 3rd party brokers 2,634 2,789 (155) (6)
Postage 3,340 3,211 129 4
Miscellaneous 28,658 29,749 (1,091) (4)
Total other 34,632 35,749 (1,117) (3)
Total Non-Interest Expense $324,699 $301,615 $23,084 8%

NM - Not Meaningful

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

Salaries and employee benefits expense increased in the current quarter compared to the first quarter of 2016 primarily as a result of higher commissions and incentive compensation on variable pay based arrangements primarily as a result of increased mortgage banking activity, partially offset by a decrease in employee benefits (primarily a $3.3 million decrease related to payroll taxes). Salaries and employee benefits expense increased in the current quarter compared to the second quarter of 2015 primarily as a result of the addition of employees from acquisitions, increased staffing as the Company grows and an increase in employee benefits (primarily health plan and payroll taxes related).

Operating lease equipment depreciation increased in the current quarter compared to the prior periods as a result of growth in business from the Company's leasing divisions.

The amount of data processing expenses incurred increased in the current quarter compared to the prior quarters due to acquisition-related charges and the overall growth of loan and deposit accounts.

The increase in advertising and marketing expenses during the current quarter compared to the first quarter of 2016 is primarily related to higher expenses from community-related advertisements and sponsorships. Marketing costs are incurred to promote the Company's brand, commercial banking capabilities, the Company's various products, to attract loans and deposits and to announce new branch openings as well as the expansion of the Company's non-bank businesses. The level of marketing expenditures depends on the type of marketing programs utilized which are determined based on the market area, targeted audience, competition and various other factors.

The increase in professional fees during the current quarter compared to the first quarter of 2016 is primarily related to legal and consulting fees, including those fees incurred in connection with recent acquisitions. Professional fees include legal, audit and tax fees, external loan review costs and normal regulatory exam assessments.

The increase in miscellaneous expenses in the current quarter as compared to the fourth quarter of 2015 is primarily a result of higher travel and entertainment expenses, loan expenses, supplies and donations. Miscellaneous expense includes ATM expenses, correspondent bank charges, directors' fees, telephone, travel and entertainment, corporate insurance, dues and subscriptions, problem loan expenses, operating losses and lending origination costs that are not deferred.

ASSET QUALITY

Allowance for Credit Losses, excluding covered loans

Three Months Ended Six Months Ended
June 30, March 31 June 30, June 30 June 30,
(Dollars in thousands) 2016 2016 2015 2016 2015
Allowance for loan losses at beginning of period $110,171 $105,400 $94,446 $105,400 $91,705
Provision for credit losses 9,269 8,423 9,701 17,692 15,886
Other adjustments (134) (78) (93) (212) (341)
Reclassification (to) from allowance for unfunded lending-related commitments (40) (81) 4 (121) (109)
Charge-offs:
Commercial 721 671 1,243 1,392 1,920
Commercial real estate 502 671 856 1,173 1,861
Home equity 2,046 1,052 1,847 3,098 2,431
Residential real estate 693 493 923 1,186 1,554
Premium finance receivables - commercial 1,911 2,480 1,526 4,391 2,789
Premium finance receivables - life insurance
Consumer and other 224 107 115 331 226
Total charge-offs 6,097 5,474 6,510 11,571 10,781
Recoveries:
Commercial 121 629 285 750 655
Commercial real estate 296 369 1,824 665 2,136
Home equity 71 48 39 119 87
Residential real estate 31 112 16 143 92
Premium finance receivables - commercial 633 787 458 1,420 787
Premium finance receivables - life insurance
Consumer and other 35 36 34 71 87
Total recoveries 1,187 1,981 2,656 3,168 3,844
Net charge-offs (4,910) (3,493) (3,854) (8,403) (6,937)
Allowance for loan losses at period end $114,356 $110,171 $100,204 $114,356 $100,204
Allowance for unfunded lending-related commitments at period end 1,070 1,030 884 1,070 884
Allowance for credit losses at period end $115,426 $111,201 $101,088 $115,426 $101,088
Annualized net charge-offs by category as a percentage of its own respective category’s average:
Commercial 0.05% 0.00% 0.09% 0.03% 0.06%
Commercial real estate 0.01 0.02 (0.08) 0.02 (0.01)
Home equity 1.03 0.52 1.01 0.77 0.66
Residential real estate 0.26 0.17 0.39 0.22 0.34
Premium finance receivables - commercial 0.21 0.29 0.18 0.25 0.17
Premium finance receivables - life insurance
Consumer and other 0.57 0.20 0.23 0.38 0.17
Total loans, net of unearned income, excluding covered loans 0.11% 0.08% 0.10% 0.09% 0.09%
Net charge-offs as a percentage of the provision for credit losses 52.97% 41.47% 39.73% 47.50% 43.68%
Loans at period-end, excluding covered loans $18,174,655 $17,446,413 $15,513,650
Allowance for loan losses as a percentage of loans at period end 0.63% 0.63% 0.65%
Allowance for credit losses as a percentage of loans at period end 0.64% 0.64% 0.65%

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

Net charge-offs as a percentage of loans, excluding covered loans, for the second quarter of 2016 totaled 11 basis points on an annualized basis compared to 8 basis points on an annualized basis in the first quarter of 2016 and 10 basis points on an annualized basis in the second quarter of 2015. Net charge-offs totaled $4.9 million in the second quarter of 2016, a $1.4 million increase from $3.5 million in the first quarter of 2016 and a $1.1 million increase from $3.9 million in the second quarter of 2015. Compared to first quarter of 2016, net charge-offs increased primarily as a result of a $1.0 million and $558,000 increase in net charge-offs within the home equity and commercial loan portfolios, respectively. Compared to second quarter of 2015, net charge-offs increased primarily as a result of a $1.2 million increase in net charge-offs within the commercial real estate loan portfolio.

The provision for credit losses, excluding the provision for covered loan losses, totaled $9.3 million for the second quarter of 2016 compared to $8.4 million for the first quarter of 2016 and $9.7 million for the second quarter of 2015. The higher provision for credit losses in the second quarter of 2016 compared to the first quarter of 2016 was partly due to the $728.2 million in loan growth, excluding covered loans and mortgage loans held-for-sale, during the second quarter of 2016.

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

The Company also provides a provision for covered loan losses on covered loans and maintains an allowance for covered loan losses on covered loans. Please see “Covered Assets” later in this document for more detail.

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

Three months ended Six months ended
June 30, March 31, June 30, June 30, June 30,
(Dollars in thousands) 2016 2016 2015 2016 2015
Provision for loan losses $9,229 $8,342 $9,705 $17,571 $15,777
Provision for unfunded lending-related commitments 40 81 (4) 121 109
Provision for covered loan losses (140) (389) (219) (529) (325)
Provision for credit losses $9,129 $8,034 $9,482 $17,163 $15,561
Period End
June 30, March 31, June 30,
2016 2016 2015
Allowance for loan losses $114,356 $110,171 $100,204
Allowance for unfunded lending-related commitments 1,070 1,030 884
Allowance for covered loan losses 2,412 2,507 2,215
Allowance for credit losses $117,838 $113,708 $103,303

The tables below summarize the calculation of allowance for loan losses for the Company’s core loan portfolio and consumer, niche and purchased loan portfolio as of June 30, 2016 and March 31, 2016.

As of June 30, 2016
Recorded Calculated As a percentage
of its own respective
(Dollars in thousands) Investment Allowance category’s balance
Commercial:(1)
Commercial and industrial $2,986,178 $26,037 0.87%
Asset-based lending 841,028 6,735 0.80
Tax exempt 288,091 2,027 0.70
Leases 267,686 807 0.30
Commercial real estate:(1)
Residential construction 67,006 768 1.15
Commercial construction 336,486 3,551 1.06
Land 100,187 3,455 3.45
Office 856,193 6,099 0.71
Industrial 717,313 6,439 0.90
Retail 830,284 6,040 0.73
Multi-family 732,449 7,736 1.06
Mixed use and other 1,678,829 12,622 0.75
Home equity(1) 673,741 11,367 1.69
Residential real estate(1) 599,262 5,333 0.89
Total core loan portfolio $10,974,733 $99,016 0.90%
Commercial:
Franchise $289,905 $3,337 1.15%
Mortgage warehouse lines of credit 270,586 1,976 0.73
Community Advantage - homeowner associations 134,273 3 0.00
Aircraft 4,597 54 1.17
Purchased non-covered commercial loans (2) 62,189 678 1.09
Commercial real estate:
Purchased non-covered commercial real estate (2) 529,587 114 0.02
Purchased non-covered home equity (2) 87,163 16 0.02
Purchased non-covered residential real estate (2) 54,402 72 0.13
Premium finance receivables
U.S. commercial insurance loans 2,181,222 5,776 0.26
Canada commercial insurance loans (2) 297,058 598 0.20
Life insurance loans (1) 2,869,960 1,440 0.05
Purchased life insurance loans (2) 291,602
Consumer and other (1) 123,944 1,275 1.03
Purchased non-covered consumer and other (2) 3,434 1 0.03
Total consumer, niche and purchased loan portfolio $7,199,922 $15,340 0.21%
Total loans, net of unearned income, excluding covered loans $18,174,655 $114,356 0.63%
Non-accretable credit discounts on purchased loans reported in accordance with ASC 310-30, excluding covered loans $27,039
Total allowance for loan losses and non-accretable credit discounts on purchased loans, excluding covered loans $141,395 0.78%

(1) Excludes purchased loans reported in accordance with ASC 310-20 and ASC 310-30.
(2) Purchased loans represent loans reported in accordance with ASC 310-20 and ASC 310-30.

As of March 31, 2016
Recorded Calculated As a percentage
of its own respective
(Dollars in thousands) Investment Allowance category’s balance
Commercial:(1)
Commercial and industrial $2,918,955 $24,926 0.85%
Asset-based lending 743,033 5,963 0.80
Tax exempt 294,741 1,993 0.68
Leases 249,114 248 0.10
Commercial real estate:(1)
Residential construction 69,161 876 1.27
Commercial construction 317,969 3,360 1.06
Land 89,353 3,233 3.62
Office 823,774 5,824 0.71
Industrial 691,811 6,436 0.93
Retail 823,925 5,829 0.71
Multi-family 713,724 7,573 1.06
Mixed use and other 1,645,810 12,116 0.74
Home equity(1) 680,077 12,899 1.90
Residential real estate(1) 567,541 5,097 0.90
Total core loan portfolio $10,628,988 $96,373 0.91%
Commercial:
Franchise $274,558 $3,213 1.17%
Mortgage warehouse lines of credit 193,735 1,411 0.73
Community Advantage - homeowner associations 130,044 3 0.00
Aircraft 5,088 9 0.18
Purchased non-covered commercial loans (2) 80,978 669 0.83
Commercial real estate:
Purchased non-covered commercial real estate (2) 562,432 16
Purchased non-covered home equity (2) 94,265 16 0.02
Purchased non-covered residential real estate (2) 58,502 67 0.11
Premium finance receivables
U.S. commercial insurance loans 2,041,307 5,570 0.27
Canada commercial insurance loans (2) 279,680 598 0.21
Life insurance loans (1) 2,680,796 1,037 0.04
Purchased life insurance loans (2) 296,138
Consumer and other (1) 115,324 1,188 1.03
Purchased non-covered consumer and other (2) 4,578 1 0.02
Total consumer, niche and purchased loan portfolio $6,817,425 $13,798 0.20%
Total loans, net of unearned income, excluding covered loans $17,446,413 $110,171 0.63%
Non-accretable credit discounts on purchased loans reported in accordance with ASC 310-30, excluding covered loans $26,405
Total allowance for loan losses and non-accretable credit discounts on purchased loans, excluding covered loans $136,576 0.78%

(1) Excludes purchased loans reported in accordance with ASC 310-20 and ASC 310-30.
(2) Purchased loans represent loans reported in accordance with ASC 310-20 and ASC 310-30.

As part of the regular quarterly review performed by management to determine if the Company’s allowance for loan losses is appropriate, an analysis is prepared on the loan portfolio based upon a breakout of core loans and consumer, niche and purchased loans. A summary of the allowance for loan losses calculated for the loan components in both the core loan portfolio and the consumer, niche and purchased loan portfolio was shown on the previous pages as of June 30, 2016 and March 31, 2016.

The increase in the allowance for loan losses to core loans in the second quarter of 2016 compared to the first quarter of 2016 was attributable to $345.7 million core loan portfolio growth.

Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date. In accordance with accounting guidance, credit deterioration on purchased loans is recorded as a credit discount at the time of purchase instead of as an increase to the allowance for loan losses. For analysis purposes, the Company has combined the non-accretable credit discounts recorded on purchased loans with the total allowance for loan losses in the previous tables to present the total credit reserves available on its loan portfolio. The total allowance for loan losses and non-accretable credit discounts on purchased loans was 0.78% of the total loan portfolio as of June 30, 2016 and March 31, 2016. The Company expects the total allowance for loan losses and non-accretable credit discounts on purchased loans to total loans ratio to increase in periods that have acquisitions and decrease in periods without acquisitions, based on the performance of the purchased loan portfolios.

The tables below show the aging of the Company’s loan portfolio at June 30, 2016 and March 31, 2016:

90+ days 60-89 30-59
As of June 30, 2016 and still days past days past
(Dollars in thousands) Nonaccrual accruing due due Current Total Loans
Loan Balances:
Commercial
Commercial, industrial and other $16,414 $ $1,412 $22,317 $3,416,432 $3,456,575
Franchise 560 87 289,258 289,905
Mortgage warehouse lines of credit 270,586 270,586
Asset-based lending 235 1,899 6,421 834,112 842,667
Leases 387 48 267,639 268,074
PCI - commercial (1) 1,956 630 1,426 12,714 16,726
Total commercial 16,801 2,191 4,549 30,251 5,090,741 5,144,533
Commercial real estate
Construction 673 46 7,922 396,264 404,905
Land 1,725 340 103,816 105,881
Office 6,274 5,452 4,936 892,791 909,453
Industrial 10,295 1,108 719 754,647 766,769
Retail 916 535 6,450 889,945 897,846
Multi-family 90 2,077 1,275 775,075 778,517
Mixed use and other 4,442 4,285 8,007 1,795,931 1,812,665
PCI - commercial real estate (1) 27,228 1,663 2,608 140,799 172,298
Total commercial real estate 24,415 27,228 15,166 32,257 5,749,268 5,848,334
Home equity 8,562 380 4,709 747,253 760,904
Residential real estate, including PCI 12,413 1,479 1,367 299 638,106 653,664
Premium finance receivables
Commercial insurance loans 14,497 10,558 6,966 9,456 2,436,803 2,478,280
Life insurance loans 46,651 11,953 2,811,356 2,869,960
PCI - life insurance loans (1) 291,602 291,602
Consumer and other, including PCI 475 226 610 1,451 124,616 127,378
Total loans, net of unearned income, excluding covered loans $77,163 $41,682 $75,689 $90,376 $17,889,745 $18,174,655
Covered loans 2,651 6,810 697 1,610 93,480 105,248
Total loans, net of unearned income $79,814 $48,492 $76,386 $91,986 $17,983,225 $18,279,903


As of June 30, 2016
Aging as a % of Loan Balance
Nonaccrual 90+ days
and still
accruing
60-89
days past
due
30-59
days past
due
Current Total Loans
Commercial
Commercial, industrial and other 0.5% % % 0.6% 98.9% 100.0%
Franchise 0.2 99.8 100.0
Mortgage warehouse lines of credit 100.0 100.0
Asset-based lending 0.2 0.8 99.0 100.0
Leases 0.1 99.9 100.0
PCI - commercial(1) 11.7 3.8 8.5 76.0 100.0
Total commercial 0.3 0.1 0.6 99.0 100.0
Commercial real estate
Construction 0.2 2.0 97.8 100.0
Land 1.6 0.3 98.1 100.0
Office 0.7 0.6 0.5 98.2 100.0
Industrial 1.3 0.1 0.1 98.5 100.0
Retail 0.1 0.1 0.7 99.1 100.0
Multi-family 0.3 0.2 99.5 100.0
Mixed use and other 0.2 0.2 0.4 99.2 100.0
PCI - commercial real estate (1) 15.8 1.0 1.5 81.7 100.0
Total commercial real estate 0.4 0.5 0.3 0.6 98.2 100.0
Home equity 1.1 0.6 98.3 100.0
Residential real estate, including PCI 1.9 0.2 0.2 97.7 100.0
Premium finance receivables
Commercial insurance loans 0.6 0.4 0.3 0.4 98.3 100.0
Life insurance loans 1.6 0.4 98.0 100.0
PCI - life insurance loans (1) 100.0 100.0
Consumer and other, including PCI 0.4 0.2 0.5 1.1 97.8 100.0
Total loans, net of unearned income, excluding covered loans 0.4% 0.2% 0.4% 0.5% 98.5% 100.0%
Covered loans 2.5 6.5 0.7 1.5 88.8 100.0
Total loans, net of unearned income 0.4% 0.3% 0.4% 0.5% 98.4% 100.0%

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

90+ days 60-89 30-59
As of March 31, 2016 and still days past days past
(Dollars in thousands) Nonaccrual accruing due due Current Total Loans
Loan Balances:
Commercial
Commercial, industrial and other $12,370 $338 $3,228 $25,608 $3,363,011 $3,404,555
Franchise 1,400 273,158 274,558
Mortgage warehouse lines of credit 1,491 192,244 193,735
Asset-based lending 3 117 10,597 737,184 747,901
Leases 5,177 244,241 249,418
PCI - commercial(1) 1,893 128 18,058 20,079
Total commercial 12,373 2,231 3,345 44,401 4,827,896 4,890,246
Commercial real estate
Construction 273 2,023 389,026 391,322
Land 1,746 93,834 95,580
Office 7,729 1,260 980 12,571 865,954 888,494
Industrial 10,960 3,935 728,061 742,956
Retail 1,633 2,397 2,657 890,780 897,467
Multi-family 287 655 2,047 760,084 763,073
Mixed use and other 4,368 187 12,312 1,778,850 1,795,717
PCI - commercial real estate (1) 24,738 1,573 10,344 126,695 163,350
Total commercial real estate 26,996 25,998 5,792 45,889 5,633,284 5,737,959
Home equity 9,365 791 4,474 759,712 774,342
Residential real estate, including PCI 11,964 406 193 10,108 603,372 626,043
Premium finance receivables
Commercial insurance loans 15,350 9,548 5,583 15,086 2,275,420 2,320,987
Life insurance loans 1,641 3,432 198 2,675,525 2,680,796
PCI - life insurance loans (1) 296,138 296,138
Consumer and other, including PCI 484 245 118 364 118,691 119,902
Total loans, net of unearned income, excluding covered loans $76,532 $40,069 $19,254 $120,520 $17,190,038 $17,446,413
Covered loans 5,324 7,995 349 6,491 118,689 138,848
Total loans, net of unearned income $81,856 $48,064 $19,603 $127,011 $17,308,727 $17,585,261


As of March 31, 2016
Aging as a % of Loan Balance:
Nonaccrual 90+ days
and still
accruing
60-89
days past
due
30-59
days past
due
Current Total Loans
Commercial
Commercial, industrial and other 0.4% % 0.1% 0.8% 98.7% 100.0%
Franchise 0.5 99.5 100.0
Mortgage warehouse lines of credit 0.8 99.2 100.0
Asset-based lending 1.4 98.6 100.0
Leases 2.1 97.9 100.0
PCI - commercial(1) 9.4 0.6 90.0 100.0
Total commercial 0.3 0.1 0.9 98.7 100.0
Commercial real estate
Construction 0.1 0.5 99.4 100.0
Land 1.8 98.2 100.0
Office 0.9 0.1 0.1 1.4 97.5 100.0
Industrial 1.5 0.5 98.0 100.0
Retail 0.2 0.3 0.3 99.2 100.0
Multi-family 0.1 0.3 99.6 100.0
Mixed use and other 0.2 0.7 99.1 100.0
PCI - commercial real estate (1) 15.1 1.0 6.3 77.6 100.0
Total commercial real estate 0.5 0.5 0.1 0.8 98.1 100.0
Home equity 1.2 0.1 0.6 98.1 100.0
Residential real estate, including PCI 1.9 0.1 1.6 96.4 100.0
Premium finance receivables
Commercial insurance loans 0.7 0.5 0.2 0.6 98.0 100.0
Life insurance loans 0.1 0.1 99.8 100.0
PCI - life insurance loans (1) 100.0 100.0
Consumer and other, including PCI 0.4 0.2 0.1 0.3 99.0 100.0
Total loans, net of unearned income, excluding covered loans 0.4% 0.2% 0.1% 0.7% 98.6% 100.0%
Covered loans 3.8 5.8 0.3 4.7 85.4 100.0
Total loans, net of unearned income 0.5% 0.3% 0.1% 0.7% 98.4% 100.0%

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

As of June 30, 2016, $75.7 million of all loans, excluding covered loans, or 0.4%, were 60 to 89 days past due and $90.4 million, or 0.5%, were 30 to 59 days (or one payment) past due. As of March 31, 2016, $19.3 million of all loans, excluding covered loans, or 0.1%, were 60 to 89 days past due and $120.5 million, or 0.7%, were 30 to 59 days (or one payment) past due. The majority of the commercial and commercial real estate loans shown as 60 to 89 days and 30 to 59 days past due are included on the Company’s internal problem loan reporting system. Loans on this system are closely monitored by management on a monthly basis.

The Company’s home equity and residential loan portfolios continue to exhibit low delinquency ratios. Home equity loans at June 30, 2016 that are current with regard to the contractual terms of the loan agreement represent 98.3% of the total home equity portfolio. Residential real estate loans at June 30, 2016 that are current with regards to the contractual terms of the loan agreements comprise 97.7% of total residential real estate loans outstanding.

Non-performing Assets, excluding covered assets

The following table sets forth Wintrust’s non-performing assets and troubled debt restructurings ("TDRs") performing under the contractual terms of the loan agreement, excluding covered assets and non-covered PCI loans, at the dates indicated.

June 30, March 31, June 30,
(Dollars in thousands) 2016 2016 2015
Loans past due greater than 90 days and still accruing(1):
Commercial $235 $338 $
Commercial real estate 1,260 701
Home equity
Residential real estate
Premium finance receivables - commercial 10,558 9,548 9,053
Premium finance receivables - life insurance 1,641 351
Consumer and other 163 180 110
Total loans past due greater than 90 days and still accruing 10,956 12,967 10,215
Non-accrual loans(2):
Commercial 16,801 12,373 5,394
Commercial real estate 24,415 26,996 23,183
Home equity 8,562 9,365 5,695
Residential real estate 12,413 11,964 16,631
Premium finance receivables - commercial 14,497 15,350 15,156
Premium finance receivables - life insurance
Consumer and other 475 484 280
Total non-accrual loans 77,163 76,532 66,339
Total non-performing loans:
Commercial 17,036 12,711 5,394
Commercial real estate 24,415 28,256 23,884
Home equity 8,562 9,365 5,695
Residential real estate 12,413 11,964 16,631
Premium finance receivables - commercial 25,055 24,898 24,209
Premium finance receivables - life insurance 1,641 351
Consumer and other 638 664 390
Total non-performing loans $88,119 $89,499 $76,554
Other real estate owned 22,154 24,022 33,044
Other real estate owned - from acquisitions 15,909 16,980 9,036
Other repossessed assets 420 171 231
Total non-performing assets $126,602 $130,672 $118,865
TDRs performing under the contractual terms of the loan agreement $33,310 $34,949 $52,174
Total non-performing loans by category as a percent of its own respective category’s period-end balance:
Commercial 0.33% 0.26% 0.12%
Commercial real estate 0.42 0.49 0.49
Home equity 1.13 1.21 0.80
Residential real estate 1.90 1.91 3.31
Premium finance receivables - commercial 1.01 1.07 0.98
Premium finance receivables - life insurance 0.06 0.01
Consumer and other 0.50 0.55 0.33
Total loans, net of unearned income 0.48% 0.51% 0.49%
Total non-performing assets as a percentage of total assets 0.52% 0.56% 0.57%
Allowance for loan losses as a percentage of total non-performing loans 129.78% 123.10% 130.89%

(1) As of the dates shown, no TDRs were past due greater than 90 days and still accruing interest.
(2) Non-accrual loans included TDRs totaling $16.3 million, $17.6 million, and $10.6 million as of June 30, 2016, March 31, 2016, and June 30, 2015, respectively.

The ratio of non-performing assets to total assets was 0.52% as of June 30, 2016, compared to 0.56% at March 31, 2016, and 0.57% at June 30, 2015. Non-performing assets, excluding covered assets, totaled $126.6 million at June 30, 2016, compared to $130.7 million at March 31, 2016 and $118.9 million at June 30, 2015. Non-performing loans, excluding covered loans, totaled $88.1 million, or 0.48% of total loans, at June 30, 2016, compared to $89.5 million, or 0.51% of total loans, at March 31, 2016 and $76.6 million, or 0.49% of total loans, at June 30, 2015. The decrease in non-performing loans, excluding covered loans, compared to March 31, 2016 is primarily the result of a $3.8 million decrease in the commercial real estate loan portfolio and a $1.6 million decrease in the life insurance premium finance receivables portfolio, partially offset by a $4.3 million increase in the commercial loan portfolio. Compared to June 30, 2015, the increase is primarily the result of a $11.6 million increase in the commercial loan portfolio. OREO, excluding covered OREO, of $38.1 million at June 30, 2016 decreased $2.9 million compared to $41.0 million at March 31, 2016 and decreased $4.0 million compared to $42.1 million at June 30, 2015.

Management is pursuing the resolution of all credits in this category. At this time, management believes reserves are appropriate to absorb inherent losses that are expected upon the ultimate resolution of these credits.

Nonperforming Loans Rollforward

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

Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
(Dollars in thousands) 2016 2016 2015 2016 2015
Balance at beginning of period $89,499 $84,057 $81,772 $84,057 $78,677
Additions, net 10,351 12,166 8,828 22,517 17,808
Return to performing status (873) (2,006) (847) (2,879) (1,563)
Payments received (4,810) (3,308) (6,580) (8,118) (10,949)
Transfer to OREO and other repossessed assets (1,818) (2,080) (4,365) (3,898) (6,905)
Charge-offs (2,943) (533) (2,755) (3,476) (4,556)
Net change for niche loans (1) (1,287) 1,203 501 (84) 4,042
Balance at end of period $88,119 $89,499 $76,554 $88,119 $76,554

(1) This includes activity for premium finance receivables and indirect consumer loans.

TDRs

The table below presents a summary of TDRs as of the respective date, presented by loan category and accrual status:

June 30, March 31, June 30,
(Dollars in thousands) 2016 2016 2015
Accruing TDRs:
Commercial $3,931 $5,143 $6,039
Commercial real estate 24,450 25,548 42,210
Residential real estate and other 4,929 4,258 3,925
Total accrual $33,310 $34,949 $52,174
Non-accrual TDRs: (1)
Commercial $1,477 $82 $165
Commercial real estate 12,240 14,340 6,240
Residential real estate and other 2,608 3,184 4,197
Total non-accrual $16,325 $17,606 $10,602
Total TDRs:
Commercial $5,408 $5,225 $6,204
Commercial real estate 36,690 39,888 48,450
Residential real estate and other 7,537 7,442 8,122
Total TDRs $49,635 $52,555 $62,776
Weighted-average contractual interest rate of TDRs 4.31% 4.35% 4.05%

(1) Included in total non-performing loans.

At June 30, 2016, the Company had $49.6 million in loans modified in TDRs. The $49.6 million in TDRs represents 97 credits in which economic concessions were granted to certain borrowers to better align the terms of their loans with their current ability to pay. The balance decreased from $52.6 million representing 102 credits at March 31, 2016 and decreased from $62.8 million representing 122 credits at June 30, 2015.

The table below presents a summary of TDRs as of June 30, 2016 and June 30, 2015, and shows the changes in the balance during the periods presented:

Three Months Ended June 30, 2016

(Dollars in thousands) Commercial Commercial
Real Estate
Residential
Real Estate
and Other
Total
Balance at beginning of period $5,225 $39,888 $7,442 $52,555
Additions during the period 275 380 655
Reductions:
Charge-offs (410) (212) (622)
Transferred to OREO and other repossessed assets (684) (684)
Removal of TDR loan status (1) (739) (739)
Payments received, net (92) (1,365) (73) (1,530)
Balance at period end $5,408 $36,690 $7,537 $49,635

(1) Loan was previously classified as a troubled debt restructuring and subsequently performed in compliance with the loan’s modified terms for a period of six months (including over a calendar year-end) at a modified interest rate which represented a market rate at the time of restructuring. Per our TDR policy, the TDR classification is removed.

Three Months Ended June 30, 2015

(Dollars in thousands) Commercial Commercial
Real Estate
Residential
Real Estate
and Other
Total
Balance at beginning of period $6,457 $53,646 $7,115 $67,218
Additions during the period 169 1,148 1,317
Reductions:
Charge-offs (7) (7)
Transferred to OREO and other repossessed assets (771) (104) (875)
Removal of TDR loan status (1) (161) (188) (349)
Payments received, net (92) (4,406) (30) (4,528)
Balance at period end $6,204 $48,450 $8,122 $62,776

Six Months Ended June 30, 2016

(Dollars in thousands) Commercial Commercial
Real Estate
Residential
Real Estate
and Other
Total
Balance at beginning of period $5,747 $38,707 $7,399 $51,853
Additions during the period 317 8,521 540 9,378
Reductions:
Charge-offs (20) (834) (212) (1,066)
Transferred to OREO and other repossessed assets (684) (684)
Removal of TDR loan status (1) (5,156) (5,156)
Payments received, net (636) (3,864) (190) (4,690)
Balance at period end $5,408 $36,690 $7,537 $49,635

Six Months Ended June 30, 2015

(Dollars in thousands) Commercial Commercial
Real Estate
Residential
Real Estate
and Other
Total
Balance at beginning of period $7,576 $67,623 $7,076 $82,275
Additions during the period 169 1,442 1,611
Reductions:
Charge-offs (397) (1) (40) (438)
Transferred to OREO and other repossessed assets (562) (2,290) (104) (2,956)
Removal of TDR loan status (1) (237) (8,570) (8,807)
Payments received, net (176) (8,481) (252) (8,909)
Balance at period end $6,204 $48,450 $8,122 $62,776

(1) Loan was previously classified as a troubled debt restructuring and subsequently performed in compliance with the loan’s modified terms for a period of six months (including over a calendar year-end) at a modified interest rate which represented a market rate at the time of restructuring. Per our TDR policy, the TDR classification is removed.

Each TDR was reviewed for impairment at June 30, 2016 and approximately $3.2 million of impairment was present and appropriately reserved for through the Company’s normal reserving methodology in the Company’s allowance for loan losses. For TDRs in which impairment is calculated by the present value of future cash flows, the Company records interest income representing the decrease in impairment resulting from the passage of time during the respective period, which differs from interest income from contractually required interest on these specific loans. For the three months ended June 30, 2016 and 2015, the Company recorded $135,000 and $94,000, respectively, in interest income representing this decrease in impairment. For the six months ended June 30, 2016 and 2015, the Company recorded $225,000 and $287,000, respectively, in interest income.

Other Real Estate Owned

The table below presents a summary of other real estate owned, excluding covered other real estate owned, as of June 30, 2016, March 31, 2016 and June 30, 2015, and shows the activity for the respective period and the balance for each property type:

Three Months Ended
June 30, March 31, June 30,
(Dollars in thousands) 2016 2016 2015
Balance at beginning of period $41,002 $43,945 $42,257
Disposals/resolved (6,591) (6,766) (6,075)
Transfers in at fair value, less costs to sell 1,309 3,291 6,412
Transfers in from covered OREO subsequent to loss share expiration 3,300
Additions from acquisition 1,064
Fair value adjustments (957) (532) (514)
Balance at end of period $38,063 $41,002 $42,080
Period End
June 30, March 31, June 30,
Balance by Property Type 2016 2016 2015
Residential real estate $9,153 $11,006 $6,408
Residential real estate development 2,133 2,320 3,031
Commercial real estate 26,777 27,676 32,641
Total $38,063 $41,002 $42,080

Covered Assets

In conjunction with FDIC-assisted transactions, the Company entered into loss share agreements with the FDIC. These agreements cover realized losses on loans, foreclosed real estate and certain other assets and require the Company to record loss share assets and liabilities that are measured separately from the loan portfolios because they are not contractually embedded in the loans and are not transferable with the loans should the Company choose to dispose of them. Fair values at the acquisition dates were estimated based on projected cash flows available for loss-share based on the credit adjustments estimated for each loan pool and the loss share percentages. The loss share assets and liabilities are also separately measured from the related loans and foreclosed real estate and recorded on the Consolidated Statements of Condition. Subsequent to the acquisition date, reimbursements received from the FDIC for actual incurred losses will reduce any loss share assets. Reductions to expected losses, to the extent such reductions to expected losses are the result of an improvement to the actual or expected cash flows from the covered assets, will also reduce any loss share asset and, if necessary, increase any loss share liability when necessary reductions exceed the current value of the loss share asset. The increases in cash flows for the purchased loans are recognized as interest income prospectively. In accordance with clawback provisions included in loss share agreements with the FDIC, the Company may be required to reimburse the FDIC when actual losses are less than certain thresholds established for each loss share agreement. The balance of these estimated reimbursements in accordance with clawback provisions and any related amortization are adjusted periodically for changes in the expected losses on covered assets. Estimated reimbursements from clawback provisions are recorded as a reduction to the loss share asset or, if necessary, an increase to the loss share liability on the Consolidated Statements of Condition. The allowance for loan losses for loans acquired in FDIC-assisted transactions is determined without giving consideration to the amounts recoverable through loss share agreements (since the loss share agreements are separately accounted for and thus presented “gross” on the balance sheet). On the Consolidated Statements of Income, the provision for credit losses is reported net of changes in the amount recoverable under the loss share agreements.

The following table provides a comparative analysis for the period end balances of covered assets and any changes in the allowance for covered loan losses. The Company expects covered assets and the allowance for covered loan losses to continue to decrease in periods without FDIC-assisted acquisitions.

June 30, March 31, June 30,
(Dollars in thousands) 2016 2016 2015
Period End Balances:
Loans $105,248 $138,848 $193,410
Other real estate owned 12,983 17,976 35,419
Other assets 238 296 686
FDIC Indemnification (liability) asset (11,729) (10,029) 3,429
Total net covered assets $106,740 $147,091 $232,944
Allowance for Covered Loan Losses Rollforward:
Balance at beginning of quarter: $2,507 $3,026 $1,878
Provision for covered loan losses before benefit attributable to FDIC loss share agreements (702) (1,946) (1,094)
Benefit attributable to FDIC loss share agreements 562 1,557 875
Net provision for covered loan losses (140) (389) (219)
Increase/decrease in FDIC indemnification liability/asset (562) (1,557) (875)
Loans charged-off (143) (230) (140)
Recoveries of loans charged-off 750 1,657 1,571
Net recoveries 607 1,427 1,431
Balance at end of quarter $2,412 $2,507 $2,215

Changes in Accretable Yield

The excess of cash flows expected to be collected over the carrying value of loans accounted for under ASC 310-30 is referred to as the accretable yield and is recognized in interest income using an effective yield method over the remaining life of the pool of loans. The accretable yield is affected by:

  • Changes in interest rate indices for variable rate loans accounted for under ASC 310-30 – Expected future cash flows are based on the variable rates in effect at the time of the regular evaluations of cash flows expected to be collected;
  • Changes in prepayment assumptions – Prepayments affect the estimated life of loans accounted for under ASC 310-30 which may change the amount of interest income, and possibly principal, expected to be collected; and
  • Changes in the expected principal and interest payments over the estimated life – Updates to expected cash flows are driven by the credit outlook and actions taken with borrowers. Changes in expected future cash flows from loan modifications are included in the regular evaluations of cash flows expected to be collected.

The following table provides activity for the accretable yield of loans accounted for under ASC 310-30.

Three Months Ended
June 30, June 30,
(Dollars in thousands) 2016 2015
Accretable yield, beginning balance $59,218 $70,198
Acquisitions 125
Accretable yield amortized to interest income (5,199) (6,315)
Accretable yield amortized to indemnification asset/liability (1) (1,624) (4,089)
Reclassification from non-accretable difference(2) 2,536 1,753
Increases in interest cash flows due to payments and changes in interest rates 574 2,096
Accretable yield, ending balance (3) $55,630 $63,643


Six Months Ended
June 30, June 30,
(Dollars in thousands) 2016 2015
Accretable yield, beginning balance $63,902 $79,102
Acquisitions 1,266 898
Accretable yield amortized to interest income (10,656) (12,420)
Accretable yield amortized to indemnification asset/liability (1) (3,795) (7,665)
Reclassification from non-accretable difference(2) 6,729 2,856
(Decreases) increases in interest cash flows due to payments and changes in interest rates (1,816) 872
Accretable yield, ending balance (3) $55,630 $63,643

(1) Represents the portion of the current period accreted yield, resulting from lower expected losses, applied to reduce the loss share indemnification asset.
(2) Reclassification is the result of subsequent increases in expected principal cash flows.
(3) As of June 30, 2016, the Company estimates that the remaining accretable yield balance to be amortized to the indemnification asset for the bank acquisitions is $3.3 million. The remainder of the accretable yield related to bank acquisitions is expected to be amortized to interest income.

Accretion to interest income accounted for under ASC 310-30 totaled $5.2 million and $6.3 million in the second quarter of 2016 and 2015, respectively. For the six months ended June 30, 2016 and 2015, the Company recorded accretion to interest income of $10.7 million and $12.4 million, respectively. These amounts include accretion from both covered and non-covered loans, and are included together within interest and fees on loans in the Consolidated Statements of Income.

Items Impacting Comparative Financial Results:

Acquisitions

On March 31, 2016, the Company completed its acquisition of Generations Bancorp. Inc. ("Generations"). Generations was the parent company of Foundations Bank ("Foundations"). Through this transaction, the Company acquired Foundations' banking location in Pewaukee, Wisconsin, approximately $131 million in assets and approximately $100 million in deposits.

On July 24, 2015, the Company completed its acquisition of Community Financial Shares, Inc ("CFIS"). CFIS was the parent company of Community Bank - Wheaton/Glen Ellyn ("CBWGE"). Through this transaction, the Company acquired CBWGE's four banking locations in Wheaton and Glen Ellyn, Illinois, approximately $351 million in assets and approximately $290 million in deposits.

On July 17, 2015, the Company completed its acquisition of Suburban Illinois Bancorp, Inc. ("Suburban"). Suburban was the parent company of Suburban Bank & Trust Company ("SBT"). Through this transaction, the Company acquired SBT's ten banking locations in Chicago and its suburbs, approximately $495 million in assets and approximately $417 million in deposits.

On July 1, 2015, the Company, through its wholly-owned subsidiary Wintrust Bank, completed its acquisition of North Bank. Through this transaction, Wintrust Bank acquired two banking locations, $118 million in assets and approximately $101 million in deposits.

On January 16, 2015, the Company completed its acquisition of Delavan Bancshares, Inc. ("Delavan"). Delavan was the parent company of Community Bank CBD. Through this transaction, Town Bank acquired four banking locations, approximately $224 million in assets and approximately $170 million in deposits.

Announced Acquisitions

On July 6, 2016, the Company announced the signing of a definitive agreement to acquire First Community Financial Corporation ("FCFC"). FCFC is the parent company of First Community Bank, an Illinois state-chartered bank, which operates two banking locations in Elgin, Illinois. As of March 31, 2016, First Community Bank had approximately $178 million in assets, approximately $79 million in loans and approximately $155 million in deposits.

On June 27, 2016, the Company announced the signing of a definitive agreement to acquire approximately $581 million in performing loans and related relationships from an affiliate of GE Capital Franchise Finance. The loans are to franchise operators (primarily quick service restaurant concepts) in the Midwest and in the Western portion of the United States.

WINTRUST SUBSIDIARIES AND LOCATIONS

Wintrust is a financial holding company whose common stock is traded on the Nasdaq Global Select Market (Nasdaq:WTFC). Its 15 community bank subsidiaries are: Lake Forest Bank & Trust Company, Hinsdale Bank & Trust Company, Wintrust Bank in Chicago, Libertyville Bank & Trust Company, Barrington Bank & Trust Company, N.A., Crystal Lake Bank & Trust Company, N.A., Northbrook Bank & Trust Company, Schaumburg Bank & Trust Company, N.A., Village Bank & Trust in Arlington Heights, Beverly Bank & Trust Company, N.A. in Chicago, Wheaton Bank & Trust Company, State Bank of The Lakes in Antioch, Old Plank Trail Community Bank, N.A. in New Lenox, St. Charles Bank & Trust Company and Town Bank in Hartland, Wisconsin. The banks also operate facilities in Illinois in Algonquin, Aurora, Bloomingdale, Buffalo Grove, Cary, Chicago, Clarendon Hills, Crete, Deerfield, Des Plaines, Downers Grove, Elgin, Elk Grove Village, Elmhurst, Evergreen Park, Frankfort, Geneva, Glen Ellyn, Glencoe, Glenview, Gurnee, Grayslake, Hanover Park, Highland Park, Highwood, Hoffman Estates, Island Lake, Itasca, Joliet, Lake Bluff, Lake Villa, Lansing, Lemont, Lindenhurst, Lynwood, Markham, McHenry, Mokena, Mount Prospect, Mundelein, Naperville, North Chicago, Northfield, Norridge, Oak Lawn, Orland Park, Palatine, Park Ridge, Prospect Heights, Ravinia, Riverside, Rogers Park, Roselle, Round Lake Beach, Shorewood, Skokie, South Holland, Spring Grove, Steger, Stone Park, Vernon Hills, Wauconda, Western Springs, Willowbrook, Wilmette, Winnetka and Wood Dale and in Albany, Burlington, Clinton, Darlington, Delafield, Delavan, Elm Grove, Genoa City, Kenosha, Lake Geneva, Madison, Menomenee Falls, Monroe, Pewaukee, Sharon, Wales, Walworth and Wind Lake, Wisconsin and Dyer, Indiana.

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

  • First Insurance Funding Corporation, one of the largest insurance premium finance companies operating in the United States, serves commercial and life insurance loan customers throughout the country.
  • First Insurance Funding of Canada serves commercial insurance loan customers throughout Canada
  • Tricom, Inc. of Milwaukee provides high-yielding, short-term accounts receivable financing and value-added out-sourced administrative services, such as data processing of payrolls, billing and cash management services, to temporary staffing service clients located throughout the United States.
  • Wintrust Mortgage, a division of Barrington Bank & Trust Company, 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.
  • 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.
  • Great Lakes Advisors LLC provides money management services and advisory services to individual accounts.
  • The Chicago Trust Company, a trust subsidiary, allows Wintrust to service customers’ trust and investment needs at each banking location.
  • Wintrust Asset Finance which offers direct leasing opportunities.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements within the meaning of federal securities laws. Forward-looking information can be identified through the use of words such as “intend,” “plan,” “project,” “expect,” “anticipate,” “believe,” “estimate,” “contemplate,” “possible,” “point,” “will,” “may,” “should,” “would” and “could.” Forward-looking statements and information are not historical facts, are premised on many factors and assumptions, and represent only management’s expectations, estimates and projections regarding future events. Similarly, these statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict, which may include, but are not limited to, those listed below and the Risk Factors discussed under Item 1A of the Company’s 2015 Annual Report on Form 10-K and in any of the Company’s subsequent SEC filings. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of invoking these safe harbor provisions. Such forward-looking statements may be deemed to include, among other things, statements relating to the Company’s future financial performance, the performance of its loan portfolio, the expected amount of future credit reserves and charge-offs, delinquency trends, growth plans, regulatory developments, securities that the Company may offer from time to time, and management’s long-term performance goals, as well as statements relating to the anticipated effects on financial condition and results of operations from expected developments or events, the Company’s business and growth strategies, including future acquisitions of banks, specialty finance or wealth management businesses, internal growth and plans to form additional de novo banks or branch offices. Actual results could differ materially from those addressed in the forward-looking statements as a result of numerous factors, including the following:

  • difficult economic conditions have adversely affected our company and the financial services industry in general and further deterioration in economic conditions may materially adversely affect our business, financial condition, results of operations and cash flows;
  • since our business is concentrated in the Chicago metropolitan and southern Wisconsin market areas, further declines in the economy of this region could adversely affect our business;
  • if our allowance for loan losses is not sufficient to absorb losses that may occur in our loan portfolio, our financial condition and liquidity could suffer;
  • a significant portion of our loan portfolio is comprised of commercial loans, the repayment of which is largely dependent upon the financial success and economic viability of the borrower;
  • a substantial portion of our loan portfolio is secured by real estate, in particular commercial real estate. Deterioration in the real estate markets could lead to additional losses, which could have a material adverse effect on our financial condition and results of operations;
  • any inaccurate assumptions in our analytical and forecasting models could cause us to miscalculate our projected revenue or losses, which could adversely affect our financial condition;
  • unanticipated changes in prevailing interest rates and the effects of changing regulation could adversely affect our net interest income, which is our largest source of income;
  • our liquidity position may be negatively impacted if economic conditions continue to suffer;
  • the financial services industry is very competitive, and if we are not able to compete effectively, we may lose market share and our business could suffer;
  • if we are unable to compete effectively, we will lose market share and income from deposits, loans and other products may be reduced. This could adversely affect our profitability and have a material adverse effect on our business, financial condition and results of operations;
  • if we are unable to continue to identify favorable acquisitions or successfully integrate our acquisitions, our growth may be limited and our results of operations could suffer;
  • our participation in FDIC-assisted acquisitions may present additional risks to our financial condition and results of operations;
  • an actual or perceived reduction in our financial strength may cause others to reduce or cease doing business with us, which could result in a decrease in our net interest income and fee revenues;
  • if our growth requires us to raise additional capital, that capital may not be available when it is needed or the cost of that capital may be very high;
  • disruption in the financial markets could result in lower fair values for our investment securities portfolio;
  • our controls and procedures may fail or be circumvented;
  • new lines of business and new products and services are essential to our ability to compete but may subject us to additional risks;
  • failures of our information technology systems may adversely affect our operations;
  • failures by or of our vendors may adversely affect our operations;
  • we issue debit cards, and debit card transactions pose a particular cybersecurity risk that is outside of our control;
  • we depend on the accuracy and completeness of information we receive about our customers and counterparties to make credit decisions;
  • if we are unable to attract and retain experienced and qualified personnel, our ability to provide high quality service will be diminished, we may lose key customer relationships, and our results of operations may suffer;
  • we are subject to environmental liability risk associated with lending activities;
  • we are subject to claims and legal actions which could negatively affect our results of operations or financial condition;
  • losses incurred in connection with actual or projected repurchases and indemnification payments related to mortgages that we have sold into the secondary market may exceed our financial statement reserves and we may be required to increase such reserves in the future. Increases to our reserves and losses incurred in connection with actual loan repurchases and indemnification payments could have a material adverse effect on our business, financial condition, results of operations or cash flows;
  • consumers may decide not to use banks to complete their financial transactions, which could adversely affect our business and results of operations;
  • we may be adversely impacted by the soundness of other financial institutions;
  • de novo operations often involve significant expenses and delayed returns and may negatively impact Wintrust's profitability;
  • we are subject to examinations and challenges by tax authorities, and changes in federal and state tax laws and changes in interpretation of existing laws can impact our financial results;
  • changes in accounting policies or accounting standards could materially adversely affect how we report our financial results and financial condition;
  • we are a bank holding company, and our sources of funds, including to pay dividends, are limited;
  • anti-takeover provisions could negatively impact our shareholders;
  • if we fail to meet our regulatory capital ratios, we may be forced to raise capital or sell assets;
  • if our credit rating is lowered, our financing costs could increase;
  • changes in the United States’ monetary policy may restrict our ability to conduct our business in a profitable manner;
  • legislative and regulatory actions taken now or in the future regarding the financial services industry may significantly increase our costs or limit our ability to conduct our business in a profitable manner;
  • financial reform legislation and increased regulatory rigor around mortgage-related issues may reduce our ability to market our products to consumers and may limit our ability to profitably operate our mortgage business;
  • federal, state and local consumer lending laws may restrict our ability to originate certain mortgage loans or increase our risk of liability with respect to such loans and could increase our cost of doing business;
  • regulatory initiatives regarding bank capital requirements may require heightened capital;
  • our FDIC insurance premiums may increase, which could negatively impact our results of operations;
  • non-compliance with the USA PATRIOT Act, Bank Secrecy Act or other laws and regulations could result in fines or sanctions;
  • our premium finance business may involve a higher risk of delinquency or collection than our other lending operations, and could expose us to losses;
  • widespread financial difficulties or credit downgrades among commercial and life insurance providers could lessen the value of the collateral securing our premium finance loans and impair the financial condition and liquidity of FIFC and FIFC Canada;
  • regulatory changes could significantly reduce loan volume and impair the financial condition of FIFC; and
  • our wealth management business in general, and WHI's brokerage operation, in particular, exposes us to certain risks associated with the securities industry.

Therefore, there can be no assurances that future actual results will correspond to these forward-looking statements. The reader is cautioned not to place undue reliance on any forward-looking statement made by the Company. Any such statement speaks only as of the date the statement was made or as of such date that may be referenced within the statement. The Company undertakes no obligation to update any forward-looking statement to reflect the impact of circumstances after the date of the press release. Persons are advised, however, to consult further disclosures management makes on related subjects in its reports filed with the Securities and Exchange Commission and in its press releases.

CONFERENCE CALL, WEB CAST AND REPLAY

The Company will hold a conference call at 1:00 p.m. (CT) Wednesday, July 20, 2016 regarding second quarter and year-to-date 2016 results. Individuals interested in listening should call (877) 363-5049 and enter Conference ID #45959439. A simultaneous audio-only web cast and replay of the conference call may be accessed via the Company’s web site at (http://www.wintrust.com), Investor Relations, Investor News and Events, Presentations & Conference Calls. The text of the second quarter and year-to-date 2016 earnings press release will be available on the home page of the Company’s website at (http://www.wintrust.com) and at the Investor Relations, Investor News and Events, Press Releases link on its website.


WINTRUST FINANCIAL CORPORATION

Supplemental Financial Information

5 Quarter Trends


WINTRUST FINANCIAL CORPORATION - Supplemental Financial Information
Selected Financial Highlights - 5 Quarter Trends
(Dollars in thousands, except per share data)

Three Months Ended
June 30, March 31, December 31, September 30, June 30,
2016 2016 2015 2015 2015
Selected Financial Condition Data (at end of period):
Total assets $24,420,616 $23,488,168 $22,909,348 $22,035,216 $20,790,202
Total loans, excluding loans held-for-sale and covered loans 18,174,655 17,446,413 17,118,117 16,316,211 15,513,650
Total deposits 20,041,750 19,217,071 18,639,634 18,228,469 17,082,418
Junior subordinated debentures 253,566 253,566 268,566 268,566 249,493
Total shareholders’ equity 2,623,595 2,418,442 2,352,274 2,335,736 2,264,982
Selected Statements of Income Data:
Net interest income 175,270 171,509 167,206 165,540 156,892
Net revenue (1) 260,069 240,261 232,296 230,493 233,905
Net income 50,041 49,111 35,512 38,355 43,831
Net income per common share – Basic $0.94 $0.94 $0.66 $0.71 $0.89
Net income per common share – Diluted $0.90 $0.90 $0.64 $0.69 $0.85
Selected Financial Ratios and Other Data:
Performance Ratios:
Non-interest income to average assets 1.44% 1.21% 1.16% 1.19% 1.52%
Non-interest expense to average assets 2.89% 2.70% 2.98% 2.93% 3.06%
Net overhead ratio (3) 1.46% 1.49% 1.82% 1.74% 1.53%
Return on average assets 0.85% 0.86% 0.63% 0.70% 0.87%
Return on average common equity 8.43% 8.55% 6.03% 6.60% 8.38%
Return on average tangible common equity 11.12% 11.33% 8.12% 8.88% 10.86%
Average total assets $23,754,755 $22,902,913 $22,225,112 $21,679,062 $20,246,614
Average total shareholders’ equity 2,465,732 2,389,770 2,347,545 2,310,511 2,156,128
Average loans to average deposits ratio (excluding loans held-for-sale, excluding covered loans) 92.4% 92.2% 90.2% 89.7% 90.3%
Average loans to average deposits ratio (excluding loans held-for-sale, including covered loans) 92.9 93.0 91.0 90.6 91.5
Common Share Data at end of period:
Market price per common share $51.00 $44.34 $48.52 $53.43 $53.38
Book value per common share (2) $45.96 $44.67 $43.42 $43.12 $42.24
Tangible common book value per share (2) $36.12 $34.20 $33.17 $32.83 $33.02
Common shares outstanding 51,619,155 48,518,998 48,383,279 48,336,870 47,677,257
Other Data at end of period:(6)
Leverage Ratio(4) 9.2% 8.7% 9.1% 9.2% 9.8%
Tier 1 Capital to risk-weighted assets (4) 10.0% 9.6% 10.0% 10.3% 10.7%
Common equity Tier 1 capital to risk-weighted assets (4) 8.9% 8.4% 8.4% 8.6% 9.0%
Total capital to risk-weighted assets (4) 12.4% 12.1% 12.2% 12.6% 13.1%
Allowance for credit losses (5) $115,426 $111,201 $106,349 $103,922 $101,088
Non-performing loans 88,119 89,499 84,057 85,976 76,554
Allowance for credit losses to total loans (5) 0.64% 0.64% 0.62% 0.64% 0.65%
Non-performing loans to total loans 0.48% 0.51% 0.49% 0.53% 0.49%
Number of:
Bank subsidiaries 15 15 15 15 15
Banking offices 153 153 152 160 147

(1) Net revenue includes net interest income and non-interest income

(2) See “Supplemental Financial Measures/Ratios” for additional information on this performance measure/ratio.

(3) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period’s total average assets. A lower ratio indicates a higher degree of efficiency.

(4) Capital ratios for current quarter-end are estimated. As of January 1, 2015 capital ratios are calculated under the requirements of Basel III.

(5) The allowance for credit losses includes both the allowance for loan losses and the allowance for unfunded lending-related commitments, but excluding the allowance for covered loan losses.

(6) Asset quality ratios exclude covered loans.

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Consolidated Statements of Condition - 5 Quarter Trends

(Unaudited) (Unaudited) (Unaudited) (Unaudited)
June 30, March 31, December 31, September 30, June 30,
(In thousands) 2016 2016 2015 2015 2015
Assets
Cash and due from banks $267,551 $208,480 $271,454 $247,341 $248,094
Federal funds sold and securities purchased under resale agreements 4,024 3,820 4,341 3,314 4,115
Interest bearing deposits with banks 693,269 817,013 607,782 701,106 591,721
Available-for-sale securities, at fair value 637,663 770,983 1,716,388 2,214,281 2,162,061
Held-to-maturity securities, at amortized cost 992,211 911,715 884,826
Trading account securities 3,613 2,116 448 3,312 1,597
Federal Home Loan Bank and Federal Reserve Bank stock 121,319 113,222 101,581 90,308 89,818
Brokerage customer receivables 26,866 28,266 27,631 28,293 29,753
Mortgage loans held-for-sale 554,256 314,554 388,038 347,005 497,283
Loans, net of unearned income, excluding covered loans 18,174,655 17,446,413 17,118,117 16,316,211 15,513,650
Covered loans 105,248 138,848 148,673 168,609 193,410
Total loans 18,279,903 17,585,261 17,266,790 16,484,820 15,707,060
Allowance for loan losses (114,356) (110,171) (105,400) (102,996) (100,204)
Allowance for covered loan losses (2,412) (2,507) (3,026) (2,918) (2,215)
Net loans 18,163,135 17,472,583 17,158,364 16,378,906 15,604,641
Premises and equipment, net 595,792 591,608 592,256 587,348 571,498
Lease investments, net 103,749 89,337 63,170 29,111 13,447
FDIC indemnification asset 3,429
Accrued interest receivable and other assets 670,014 647,853 597,099 629,211 533,175
Trade date securities receivable 1,079,238 1,008,613 277,981
Goodwill 486,095 484,280 471,761 472,166 421,646
Other intangible assets 21,821 23,725 24,209 25,533 17,924
Total assets $24,420,616 $23,488,168 $22,909,348 $22,035,216 $20,790,202
Liabilities and Shareholders’ Equity
Deposits:
Non-interest bearing $5,367,672 $5,205,410 $4,836,420 $4,705,994 $3,910,310
Interest bearing 14,674,078 14,011,661 13,803,214 13,522,475 13,172,108
Total deposits 20,041,750 19,217,071 18,639,634 18,228,469 17,082,418
Federal Home Loan Bank advances 588,055 799,482 853,431 443,955 435,721
Other borrowings 252,611 253,126 265,785 259,805 261,674
Subordinated notes 138,915 138,888 138,861 138,834 138,808
Junior subordinated debentures 253,566 253,566 268,566 268,566 249,493
Trade date securities payable 40,000 538 617
Accrued interest payable and other liabilities 482,124 407,593 390,259 359,234 357,106
Total liabilities 21,797,021 21,069,726 20,557,074 19,699,480 18,525,220
Shareholders’ Equity:
Preferred stock 251,257 251,257 251,287 251,312 251,312
Common stock 51,708 48,608 48,469 48,422 47,763
Surplus 1,350,751 1,194,750 1,190,988 1,187,407 1,159,052
Treasury stock (4,145) (4,145) (3,973) (3,964) (3,964)
Retained earnings 1,008,464 967,882 928,211 901,652 872,690
Accumulated other comprehensive loss (34,440) (39,910) (62,708) (49,093) (61,871)
Total shareholders’ equity 2,623,595 2,418,442 2,352,274 2,335,736 2,264,982
Total liabilities and shareholders’ equity $24,420,616 $23,488,168 $22,909,348 $22,035,216 $20,790,202

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Consolidated Statements of Income (Unaudited) - 5 Quarter Trends

Three Months Ended
June 30, March 31, December 31, September 30, June 30,
(In thousands, except per share data) 2016 2016 2015 2015 2015
Interest income
Interest and fees on loans $178,530 $173,127 $169,501 $167,831 $159,823
Interest bearing deposits with banks 793 746 493 372 305
Federal funds sold and securities purchased under resale agreements 1 1 1 1
Investment securities 16,398 17,190 16,405 16,130 14,071
Trading account securities 14 11 25 19 51
Federal Home Loan Bank and Federal Reserve Bank stock 1,112 937 857 821 785
Brokerage customer receivables 216 219 206 205 205
Total interest income 197,064 192,231 187,487 185,379 175,241
Interest expense
Interest on deposits 13,594 12,781 12,617 12,436 11,996
Interest on Federal Home Loan Bank advances 2,984 2,886 2,684 2,458 1,812
Interest on other borrowings 1,086 1,058 1,007 1,045 787
Interest on subordinated notes 1,777 1,777 1,777 1,776 1,777
Interest on junior subordinated debentures 2,353 2,220 2,196 2,124 1,977
Total interest expense 21,794 20,722 20,281 19,839 18,349
Net interest income 175,270 171,509 167,206 165,540 156,892
Provision for credit losses 9,129 8,034 9,059 8,322 9,482
Net interest income after provision for credit losses 166,141 163,475 158,147 157,218 147,410
Non-interest income
Wealth management 18,852 18,320 18,634 18,243 18,476
Mortgage banking 36,807 21,735 23,317 27,887 36,007
Service charges on deposit accounts 7,726 7,406 7,210 7,403 6,474
Gains (losses) on investment securities, net 1,440 1,325 (79) (98) (24)
Fees from covered call options 4,649 1,712 3,629 2,810 4,565
Trading (losses) gains, net (316) (168) 205 (135) 160
Operating lease income, net 4,005 2,806 1,973 613 77
Other 11,636 15,616 10,201 8,230 11,278
Total non-interest income 84,799 68,752 65,090 64,953 77,013
Non-interest expense
Salaries and employee benefits 100,894 95,811 99,780 97,749 94,421
Equipment 9,307 8,767 8,799 8,456 7,855
Operating lease equipment depreciation 3,385 2,050 1,202 431 59
Occupancy, net 11,943 11,948 13,062 12,066 11,401
Data processing 7,138 6,519 7,284 8,127 6,081
Advertising and marketing 6,941 3,779 5,373 6,237 6,406
Professional fees 5,419 4,059 4,387 4,100 5,074
Amortization of other intangible assets 1,248 1,298 1,324 1,350 934
FDIC insurance 4,040 3,613 3,317 3,035 3,047
OREO expense, net 1,348 560 2,598 (367) 841
Other 19,306 15,326 19,703 18,790 18,178
Total non-interest expense 170,969 153,730 166,829 159,974 154,297
Income before taxes 79,971 78,497 56,408 62,197 70,126
Income tax expense 29,930 29,386 20,896 23,842 26,295
Net income $50,041 $49,111 $35,512 $38,355 $43,831
Preferred stock dividends and discount accretion 3,628 3,628 3,629 4,079 1,580
Net income applicable to common shares $46,413 $45,483 $31,883 $34,276 $42,251
Net income per common share - Basic $0.94 $0.94 $0.66 $0.71 $0.89
Net income per common share - Diluted $0.90 $0.90 $0.64 $0.69 $0.85
Cash dividends declared per common share $0.12 $0.12 $0.11 $0.11 $0.11
Weighted average common shares outstanding 49,140 48,448 48,371 48,158 47,567
Dilutive potential common shares 3,965 3,820 4,005 4,049 4,156
Average common shares and dilutive common shares 53,105 52,268 52,376 52,207 51,723

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Period End Loan Balances - 5 Quarter Trends

June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands) 2016 2016 2015 2015 2015
Balance:
Commercial $5,144,533 $4,890,246 $4,713,909 $4,400,185 $4,330,344
Commercial real estate 5,848,334 5,737,959 5,529,289 5,307,566 4,850,590
Home equity 760,904 774,342 784,675 797,465 712,350
Residential real estate 653,664 626,043 607,451 571,743 503,015
Premium finance receivables - commercial 2,478,280 2,320,987 2,374,921 2,407,075 2,460,408
Premium finance receivables - life insurance 3,161,562 2,976,934 2,961,496 2,700,275 2,537,475
Consumer and other 127,378 119,902 146,376 131,902 119,468
Total loans, net of unearned income, excluding covered loans $18,174,655 $17,446,413 $17,118,117 $16,316,211 $15,513,650
Covered loans 105,248 138,848 148,673 168,609 193,410
Total loans, net of unearned income $18,279,903 $17,585,261 $17,266,790 $16,484,820 $15,707,060
Mix:
Commercial 28% 28% 27% 27% 27%
Commercial real estate 31 32 32 32 31
Home equity 4 4 5 5 5
Residential real estate 4 4 3 3 3
Premium finance receivables - commercial 14 13 14 15 16
Premium finance receivables - life insurance 17 17 17 16 16
Consumer and other 1 1 1 1 1
Total loans, net of unearned income, excluding covered loans 99% 99% 99% 99% 99%
Covered loans 1 1 1 1 1
Total loans, net of unearned income 100% 100% 100% 100% 100%

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Period End Deposits Balances - 5 Quarter Trends

June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands) 2016 2016 2015 2015 2015
Balance:
Non-interest bearing $5,367,672 $5,205,410 $4,836,420 $4,705,994 $3,910,310
NOW and interest bearing demand deposits 2,450,710 2,369,474 2,390,217 2,231,258 2,240,832
Wealth management deposits (1) 1,904,121 1,761,710 1,643,653 1,469,920 1,591,251
Money market 4,384,134 4,157,083 4,041,300 4,001,518 3,898,495
Savings 1,851,863 1,766,552 1,723,367 1,684,007 1,504,654
Time certificates of deposit 4,083,250 3,956,842 4,004,677 4,135,772 3,936,876
Total deposits $20,041,750 $19,217,071 $18,639,634 $18,228,469 $17,082,418
Mix:
Non-interest bearing 27% 27% 26% 26% 23%
NOW and interest bearing demand deposits 12 12 13 12 13
Wealth management deposits (1) 10 9 9 8 9
Money market 22 22 22 22 23
Savings 9 9 9 9 9
Time certificates of deposit 20 21 21 23 23
Total deposits 100% 100% 100% 100% 100%

(1) Represents deposit balances of the Company’s subsidiary banks from brokerage customers of Wayne Hummer Investments, trust and asset management customers of the Company and brokerage customers from unaffiliated companies which have been placed into deposit accounts of the Banks.

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Net Interest Margin (Including Call Option Income) - 5 Quarter Trends

Three Months Ended
June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands) 2016 2016 2015 2015 2015
Net interest income - FTE $176,733 $172,944 $168,515 $166,737 $158,034
Call option income 4,649 1,712 3,629 2,810 4,565
Net interest income including call option income $181,382 $174,656 $172,144 $169,547 $162,599
Yield on earning assets 3.67% 3.71% 3.69% 3.73% 3.81%
Rate on interest-bearing liabilities 0.56 0.55 0.55 0.54 0.52
Rate spread 3.11% 3.16% 3.14% 3.19% 3.29%
Less: Fully tax-equivalent adjustment (0.03) (0.03) (0.03) (0.02) (0.02)
Net free funds contribution 0.16 0.16 0.15 0.14 0.12
Net interest margin (GAAP-derived) 3.24% 3.29% 3.26% 3.31% 3.39%
Fully tax-equivalent adjustment 0.03 0.03 0.03 0.02 0.02
Net interest margin - FTE 3.27% 3.32% 3.29% 3.33% 3.41%
Call option income 0.09 0.03 0.07 0.06 0.10
Net interest margin - FTE, including call option income 3.36% 3.35% 3.36% 3.39% 3.51%

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Net Interest Margin (Including Call Option Income - YTD Trends)

Six Months Ended
June 30,
Years Ended
December 31,
(Dollars in thousands) 2016 2015 2014 2013 2012
Net interest income - FTE $349,677 $646,238 $601,744 $552,887 $521,463
Call option income 6,361 15,364 7,859 4,773 10,476
Net interest income including call option income $356,038 $661,602 $609,603 $557,660 $531,939
Yield on earning assets 3.69% 3.76% 3.96% 4.01% 4.21%
Rate on interest-bearing liabilities 0.55 0.54 0.55 0.63 0.86
Rate spread 3.14% 3.22% 3.41% 3.38% 3.35%
Less: Fully tax-equivalent adjustment (0.03) (0.02) (0.02) (0.01) (0.02)
Net free funds contribution 0.15 0.14 0.12 0.12 0.14
Net interest margin (GAAP-derived) 3.26% 3.34% 3.51% 3.49% 3.47%
Fully tax-equivalent adjustment 0.03 0.02 0.02 0.01 0.02
Net interest margin - FTE 3.29% 3.36% 3.53% 3.50% 3.49%
Call option income 0.06 0.08 0.05 0.03 0.07
Net interest margin - FTE, including call option income 3.35% 3.44% 3.58% 3.53% 3.56%

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Quarterly Average Balances - 5 Quarter Trends

Three Months Ended
June 30, March 31, December 31, September 30, June 30,
(In thousands) 2016 2016 2015 2015 2015
Liquidity management assets $3,413,113 $3,300,138 $3,245,393 $3,140,782 $2,709,176
Other earning assets 29,759 28,731 29,792 30,990 32,115
Loans, net of unearned income 18,204,552 17,508,593 16,889,922 16,509,001 15,632,875
Covered loans 109,533 141,351 154,846 174,768 202,663
Total earning assets $21,756,957 $20,978,813 $20,319,953 $19,855,541 $18,576,829
Allowance for loan and covered loan losses (116,984) (112,028) (109,448) (106,091) (101,211)
Cash and due from banks 272,935 259,343 260,593 251,289 236,242
Other assets 1,841,847 1,776,785 1,754,014 1,678,323 1,534,754
Total assets $23,754,755 $22,902,913 $22,225,112 $21,679,062 $20,246,614
Interest-bearing deposits $14,065,995 $13,717,333 $13,606,046 $13,489,651 $13,115,453
Federal Home Loan Bank advances 946,081 825,104 441,669 394,666 338,768
Other borrowings 248,233 257,384 269,738 272,549 193,367
Subordinated notes 138,898 138,870 138,852 138,825 138,799
Junior subordinated debentures 253,566 257,687 268,566 264,974 249,493
Total interest-bearing liabilities $15,652,773 $15,196,378 $14,724,871 $14,560,665 $14,035,880
Non-interest bearing deposits 5,223,384 4,939,746 4,776,977 4,473,632 3,725,728
Other liabilities 412,866 377,019 375,719 334,254 328,878
Equity 2,465,732 2,389,770 2,347,545 2,310,511 2,156,128
Total liabilities and shareholders’ equity $23,754,755 $22,902,913 $22,225,112 $21,679,062 $20,246,614

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Net Interest Margin - 5 Quarter Trends

Three Months Ended
June 30, 2016 March 31, 2016 December 31, 2015 September 30, 2015 June 30, 2015
Yield earned on:
Liquidity management assets 2.27% 2.41% 2.28% 2.29% 2.36%
Other earning assets 3.21 3.31 3.26 3.00 3.54
Loans, net of unearned income 3.92 3.94 3.95 3.98 4.03
Covered loans 5.44 5.72 4.79 5.91 6.30
Total earning assets 3.67% 3.71% 3.69% 3.73% 3.81%
Rate paid on:
Interest-bearing deposits 0.39% 0.37% 0.37% 0.37% 0.37%
Federal Home Loan Bank advances 1.27 1.41 2.41 2.47 2.15
Other borrowings 1.76 1.65 1.48 1.52 1.63
Subordinated notes 5.12 5.12 5.12 5.12 5.12
Junior subordinated debentures 3.67 3.41 3.20 3.14 3.13
Total interest-bearing liabilities 0.56% 0.55% 0.55% 0.54% 0.52%
Interest rate spread 3.11% 3.16% 3.14% 3.19% 3.29%
Less: Fully tax-equivalent adjustment (0.03) (0.03) (0.03) (0.02) (0.02)
Net free funds/contribution 0.16 0.16 0.15 0.14 0.12
Net interest income/Net interest margin (GAAP) 3.24% 3.29% 3.26% 3.31% 3.39%
Fully tax-equivalent adjustment 0.03 0.03 0.03 0.02 0.02
Net interest income/Net interest margin - FTE 3.27% 3.32% 3.29% 3.33% 3.41%

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Non-Interest Income - 5 Quarter Trends

Three Months Ended
June 30, March 31, December 31, September 30, June 30,
(In thousands) 2016 2016 2015 2015 2015
Brokerage $6,302 $6,057 $6,850 $6,579 $6,750
Trust and asset management 12,550 12,263 11,784 11,664 11,726
Total wealth management 18,852 18,320 18,634 18,243 18,476
Mortgage banking 36,807 21,735 23,317 27,887 36,007
Service charges on deposit accounts 7,726 7,406 7,210 7,403 6,474
Gains (losses) on investment securities, net 1,440 1,325 (79) (98) (24)
Fees from covered call options 4,649 1,712 3,629 2,810 4,565
Trading (losses) gains, net (316) (168) 205 (135) 160
Operating lease income, net 4,005 2,806 1,973 613 77
Other:
Interest rate swap fees 1,835 4,438 2,343 2,606 2,347
BOLI 1,257 472 1,463 212 2,180
Administrative services 1,074 1,069 1,101 1,072 1,053
Gain on extinguishment of debt 4,305
Miscellaneous 7,470 5,332 5,294 4,340 5,698
Total other income 11,636 15,616 10,201 8,230 11,278
Total Non-Interest Income $84,799 $68,752 $65,090 $64,953 $77,013

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Non-Interest Expense - 5 Quarter Trends

Three Months Ended
June 30, March 31, December 31, September 30, June 30,
(In thousands) 2016 2016 2015 2015 2015
Salaries and employee benefits:
Salaries $52,924 $50,282 $50,982 $53,028 $46,617
Commissions and incentive compensation 32,531 26,375 31,222 30,065 33,387
Benefits 15,439 19,154 17,576 14,686 14,417
Total salaries and employee benefits 100,894 95,811 99,780 97,749 94,421
Equipment 9,307 8,767 8,799 8,456 7,855
Operating lease equipment depreciation 3,385 2,050 1,202 431 59
Occupancy, net 11,943 11,948 13,062 12,066 11,401
Data processing 7,138 6,519 7,284 8,127 6,081
Advertising and marketing 6,941 3,779 5,373 6,237 6,406
Professional fees 5,419 4,059 4,387 4,100 5,074
Amortization of other intangible assets 1,248 1,298 1,324 1,350 934
FDIC insurance 4,040 3,613 3,317 3,035 3,047
OREO expense, net 1,348 560 2,598 (367) 841
Other:
Commissions - 3rd party brokers 1,324 1,310 1,321 1,364 1,403
Postage 2,038 1,302 1,892 1,927 1,578
Miscellaneous 15,944 12,714 16,490 15,499 15,197
Total other expense 19,306 15,326 19,703 18,790 18,178
Total Non-Interest Expense $170,969 $153,730 $166,829 $159,974 $154,297

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Allowance for Credit Losses, excluding covered loans - 5 Quarter Trends

Three Months Ended
June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands) 2016 2016 2015 2015 2015
Allowance for loan losses at beginning of period $110,171 $105,400 $102,996 $100,204 $94,446
Provision for credit losses 9,269 8,423 9,196 8,665 9,701
Other adjustments (134) (78) (243) (153) (93)
Reclassification (to) from allowance for unfunded lending-related commitments (40) (81) 13 (42) 4
Charge-offs:
Commercial 721 671 1,369 964 1,243
Commercial real estate 502 671 2,734 1,948 856
Home equity 2,046 1,052 680 1,116 1,847
Residential real estate 693 493 211 1,138 923
Premium finance receivables - commercial 1,911 2,480 2,676 1,595 1,526
Premium finance receivables - life insurance
Consumer and other 224 107 179 116 115
Total charge-offs 6,097 5,474 7,849 6,877 6,510
Recoveries:
Commercial 121 629 315 462 285
Commercial real estate 296 369 491 213 1,824
Home equity 71 48 183 42 39
Residential real estate 31 112 55 136 16
Premium finance receivables - commercial 633 787 223 278 458
Premium finance receivables - life insurance 16
Consumer and other 35 36 20 52 34
Total recoveries 1,187 1,981 1,287 1,199 2,656
Net charge-offs (4,910) (3,493) (6,562) (5,678) (3,854)
Allowance for loan losses at period end $114,356 $110,171 $105,400 $102,996 $100,204
Allowance for unfunded lending-related commitments at period end 1,070 1,030 949 926 884
Allowance for credit losses at period end $115,426 $111,201 $106,349 $103,922 $101,088
Annualized net charge-offs by category as a percentage of its own respective category’s average:
Commercial 0.05% 0.00% 0.09% 0.05% 0.09%
Commercial real estate 0.01 0.02 0.16 0.13 (0.08)
Home equity 1.03 0.52 0.25 0.55 1.01
Residential real estate 0.26 0.17 0.07 0.42 0.39
Premium finance receivables - commercial 0.21 0.29 0.41 0.21 0.18
Premium finance receivables - life insurance
Consumer and other 0.57 0.20 0.37 0.17 0.23
Total loans, net of unearned income, excluding covered loans 0.11% 0.08% 0.15% 0.14% 0.10%
Net charge-offs as a percentage of the provision for credit losses 52.97% 41.47% 71.35% 65.53% 39.73%
Loans at period-end $18,174,655 $17,446,413 $17,118,117 $16,316,211 $15,513,650
Allowance for loan losses as a percentage of loans at period end 0.63% 0.63% 0.62% 0.63% 0.65%
Allowance for credit losses as a percentage of loans at period end 0.64% 0.64% 0.62% 0.64% 0.65%

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Non-Performing Assets, excluding covered assets - 5 Quarter Trends

June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands)2016 2016 2015 2015 2015
Loans past due greater than 90 days and still accruing(1):
Commercial$235 $338 $541 $ $
Commercial real estate 1,260 701
Home equity
Residential real estate
Premium finance receivables - commercial10,558 9,548 10,294 8,231 9,053
Premium finance receivables - life insurance 1,641 351
Consumer and other163 180 150 140 110
Total loans past due greater than 90 days and still accruing10,956 12,967 10,985 8,371 10,215
Non-accrual loans(2):
Commercial16,801 12,373 12,712 12,018 5,394
Commercial real estate24,415 26,996 26,645 28,617 23,183
Home equity8,562 9,365 6,848 8,365 5,695
Residential real estate12,413 11,964 12,043 14,557 16,631
Premium finance receivables - commercial14,497 15,350 14,561 13,751 15,156
Premium finance receivables - life insurance
Consumer and other475 484 263 297 280
Total non-accrual loans77,163 76,532 73,072 77,605 66,339
Total non-performing loans:
Commercial17,036 12,711 13,253 12,018 5,394
Commercial real estate24,415 28,256 26,645 28,617 23,884
Home equity8,562 9,365 6,848 8,365 5,695
Residential real estate12,413 11,964 12,043 14,557 16,631
Premium finance receivables - commercial25,055 24,898 24,855 21,982 24,209
Premium finance receivables - life insurance 1,641 351
Consumer and other638 664 413 437 390
Total non-performing loans$88,119 $89,499 $84,057 $85,976 $76,554
Other real estate owned22,154 24,022 26,849 29,053 33,044
Other real estate owned - from acquisitions15,909 16,980 17,096 22,827 9,036
Other repossessed assets420 171 174 193 231
Total non-performing assets$126,602 $130,672 $128,176 $138,049 $118,865
TDRs performing under the contractual terms of the loan agreement33,310 34,949 42,744 49,173 52,174
Total non-performing loans by category as a percent of its own respective category’s period-end balance:
Commercial0.33% 0.26% 0.28% 0.27% 0.12%
Commercial real estate0.42 0.49 0.48 0.54 0.49
Home equity1.13 1.21 0.87 1.05 0.80
Residential real estate1.90 1.91 1.98 2.55 3.31
Premium finance receivables - commercial1.01 1.07 1.05 0.91 0.98
Premium finance receivables - life insurance 0.06 0.01
Consumer and other0.50 0.55 0.28 0.33 0.33
Total loans, net of unearned income0.48% 0.51% 0.49% 0.53% 0.49%
Total non-performing assets as a percentage of total assets0.52% 0.56% 0.56% 0.63% 0.57%
Allowance for loan losses as a percentage of total non-performing loans129.78% 123.10% 125.39% 119.79% 130.89%

(1) As of the dates shown, no TDRs were past due greater than 90 days and still accruing interest.

(2) Non-accrual loans included TDRs totaling $16.3 million, $17.6 million, $9.1 million, $10.1 million and $10.6 million as of June 30, 2016, March 31, 2016, December 31, 2015, September 30, 2015 and June 30, 2015, respectively.

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

Source:Wintrust Financial Corporation

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