updated 1/24/2011 7:16:57 AM ET 2011-01-24T12:16:57

LAKE FOREST, Ill., Jan. 24, 2011 (GLOBE NEWSWIRE) -- Wintrust Financial Corporation ("Wintrust" or "the Company") (Nasdaq:WTFC) announced net income of $14.2 million or $(0.06) per diluted common share for the quarter ended December 31, 2010, and $63.3 million or $1.02 per diluted common share for the full year of 2010. The fourth quarter of 2010 and full year 2010 results include a non-cash deemed preferred stock dividend of $11.4 million. Fourth quarter 2010 net income per diluted common share was reduced by $0.33 as a result, while full year 2010 net income per diluted common share was reduced by $0.36. This was recorded as a result of the Company's full repurchase of its TARP Capital Purchase Program preferred stock ("TARP") (see "Capital" section later in this document) on December 22, 2010.

The Company's total assets of $14.0 billion at December 31, 2010 increased $1.8 billion from December 31, 2009. Total deposits as of December 31, 2010 were $10.8 billion, an increase of $886.6 million from December 31, 2009. Noninterest bearing deposits increased by $336.9 million or 39% since December 31, 2009, while NOW, money market and savings deposits increased $553.5 million or 16% during the same time period. Total loans, including loans held for sale and excluding covered loans, were $10.0 billion as of December 31, 2010, an increase of $1.3 billion over December 31, 2009. Commercial real-estate loans as a percentage of total loans declined to 34% at December 31, 2010, down from 39% at December 31, 2009.

Edward J. Wehmer, President and Chief Executive Officer, commented, "We are pleased to report net income of $14.2 million for the fourth quarter of 2010 and $63.3 million for the full year 2010. Core pre-tax earnings increased 60% in 2010, to $196.5 million from $122.8 million in 2009. The annualized run rate of core pre-tax earnings, based on fourth quarter results, improved to $232.7 million.

"The fourth quarter of 2010 was an extremely active time for the Company. In December, we completed a capital offering that generated $327.5 million of net cash proceeds and added $284.2 million to our capital base. This allowed us to fully repurchase our $250 million of TARP securities from the U.S. Treasury in December. Coupled with our March 2010 capital offering that raised $210.3 million, we increased our total risk-based capital ratio to 13.9% while increasing our asset size by $1.8 billion."

Mr. Wehmer noted, "The Company's net interest margin for the quarter improved to 3.46% from 3.22% in the third quarter of 2010. For the full year of 2010, the Company's net interest margin increased to 3.37% from 3.01% in 2009. The 36 basis point improvement was primarily caused by:

  • 58 basis point improvement from lower re-pricing of retail deposits
  • 23 basis point improvement due to an increase in the accretion on the purchased life insurance premium finance portfolio as a result of prepayments
  • 10 basis point improvement as a result of lower wholesale funding costs

Partially offset by:

  • 33 basis point reduction due to the combination of higher levels of liquidity management assets and lower yields on those assets due to a higher than normal short-term liquidity position during this challenging interest rate environment
  • 17 basis point reduction due to lower yield on loans
  • Five basis point reduction due to lower contribution from net free funds."

Commenting on credit, Mr. Wehmer said, "The Company continues to aggressively identify potential non-performing credits and take actions on existing non-performing credits." Mr. Wehmer continued, commenting that excluding the impact of the covered loans acquired in the FDIC-assisted transactions: "total non-performing assets as a percent of total assets has remained at very stable levels for the past 5 quarters. During the fourth quarter, the Company recorded a provision for credit losses of $28.8 million, net charge-offs of $23.5 million, and OREO losses on sales and valuation adjustments of $5.5 million. Our allowance for loan losses increased to $113.9 million or 1.19% of total loans." Commenting on the Company's deposit base, Mr. Wehmer noted that, "the Company's deposit mix is more balanced and less reliant on single product retail certificate of deposit customers and wholesale deposits than it was at December 31, 2009."

In closing, Mr. Wehmer added, "In 2010 we strategically increased our market expansion through FDIC-assisted transactions and other branch purchase decisions into desirable markets. We strengthened our capital base which brought our tangible book value up to $25.80 at year-end. Our core pre-tax earnings run rate on an annualized basis for the fourth quarter is substantially higher than our core pre-tax earnings for all of 2010. We will continue to evaluate opportunities in all of our lines of business as the Company is well positioned for opportunities in 2011."

Analysis for the following financial metrics and respective time periods is presented below: core pre-tax earnings by year (last 5 year-ends), core pre-tax earnings by quarter on an annualized basis (last 5 quarter-ends), non-performing loans as a percent of total loans (last 5 year-ends), non-performing assets as a percent of total assets (last 5 year-ends), and tangible common book value per share (last 5 year-ends).

Graphs accompanying this release are available at https://media.globenewswire.com/cache/11955/file/9466.pdf

See "Acquisitions" and "Securitizations" later in this document for additional explanations of loan balance changes between comparable periods. The Company's loan portfolio is diversified among a wide variety of loan types. Please see the tables included in the remainder of this document for additional disclosures regarding the components of the commercial and commercial real estate portfolio, the allowance for credit losses, loan portfolio aging statistics and purchased loans subject to loss sharing agreements with the FDIC (which we refer to as "covered loans").

Wintrust's key operating measures and growth rates for the fourth quarter of 2010, as compared to the sequential and linked quarters are shown in the table below:

 
        % or (4) % or 
        basis point (bp) basis point (bp)
        change change
  Three Months Ended from from
  December 31, September 30, December 31, 3rd Quarter 4th Quarter
  2010 2010 2009 2010 2009
               
Net income  $ 14,205  $ 20,098  $ 28,167  (29) %  (50) %
Net income (loss) per common share – diluted   $ (0.06)  $ 0.47  $ 0.90  (113) %  (107) %
               
Core pre-tax earnings (2)  $ 58,666  $ 48,074  $ 39,931  22 %  47 %
Net revenue (1)  $ 157,138  $ 157,636  $ 172,022  --  %  (9) %
Net interest income  $ 112,677  $ 102,980  $ 86,934  9 %  30 %
               
Net interest margin (2)  3.46%  3.22%  3.10%  24 bp  36 bp
Net overhead ratio (3)  1.73%  1.28%  0.17%  45 bp  156 bp
Return on average assets  0.40%  0.57%  0.92%  (17) bp  (52) bp
Return on average common equity  (0.66)%  5.44%  10.97%  (610) bp  (1,163) bp
 
               
At end of period              
Total assets  $ 13,968,074  $ 14,100,368  $ 12,215,620  (4) %  14 %
Total loans, excluding covered loans  $ 9,599,886  $ 9,461,155  $ 8,411,771  6 %  14 %
Total loans, including loans held-for-sale, excluding covered loans  $ 9,971,333  $ 9,781,595  $ 8,687,486  8 %  15 %
Total deposits  $ 10,803,673  $ 10,962,239  $ 9,917,074  (6) %  9 %
Total shareholders' equity  $ 1,436,549  $ 1,398,912  $ 1,138,639  11 %  26 %
 
(1)  Net revenue is net interest income plus 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 average total assets. A lower ratio indicates a higher degree of efficiency.
(4) 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 "Supplemental Financial Info."

Items Impacting Comparative Financial Results: Acquisitions, Securitization and Capital

Acquisitions

On August 17, 2010, the Company announced that its wholly-owned subsidiary bank, Wheaton Bank & Trust Company ("Wheaton") signed a Branch Purchase and Assumption Agreement whereby it agreed to acquire a branch of First National Bank of Brookfield ("Naperville") located in Naperville, Illinois. The transaction closed on October 22, 2010 and the acquired operations are operating as Naperville Bank & Trust. Through this transaction, Wheaton Bank & Trust Company acquired approximately $23 million of deposits, approximately $11 million of performing loans, the property, bank facility and various other assets.

On August 6, 2010, the Company announced that its wholly-owned subsidiary bank, Northbrook Bank & Trust Company ("Northbrook"), in an FDIC-assisted transaction, had acquired certain assets and liabilities and the banking operations of Ravenswood Bank ("Ravenswood"). Ravenswood operated one location in Chicago, Illinois and one in Mount Prospect, Illinois. 

On April 23, 2010, the Company announced that Northbrook and Wheaton, in two FDIC-assisted transactions, had acquired certain assets and liabilities and the banking operations of Lincoln Park Savings Bank ("Lincoln Park") and Wheatland Bank ("Wheatland"), respectively. Lincoln Park operated four locations in Chicago, Illinois. Wheatland had one location in Naperville, Illinois. 

In summary, in the FDIC-assisted transactions:

  • Northbrook assumed approximately $120 million of the outstanding deposits and approximately $188 million of assets of Ravenswood, prior to purchase accounting adjustments. 
  • Northbrook assumed approximately $160 million of the outstanding deposits and approximately $170 million of assets of Lincoln Park, prior to purchase accounting adjustments. 
  • Wheaton assumed approximately $400 million of the outstanding deposits and approximately $370 million of assets of Wheatland, prior to purchase accounting adjustments.

The Company recognized a gain of $6.6 million in the third quarter of 2010 and $250,000 in the fourth quarter of 2010 (due to final valuation adjustments) on the Ravenswood acquisition. The Company recognized gains of $22.3 million and $4.2 million in the second quarter of 2010 on the Wheatland and Lincoln Park acquisitions, respectively. These gains are shown as a gain on bargain purchases, which is a component of non-interest income, on the Company's statements of income. The Company recorded goodwill of $1.6 million on the Naperville acquisition.

Loans comprise the majority of the assets acquired in the three FDIC-assisted transactions and are subject to loss sharing agreements with the FDIC where the FDIC has agreed to reimburse the Company for 80% of losses incurred on the purchased loans. We refer to the loans subject to these loss-sharing agreements as "covered loans." Covered assets include covered loans, covered OREO and certain other covered assets. The agreements with the FDIC require that the Company follow certain servicing procedures or risk losing FDIC reimbursement of losses related to covered assets. 

In 2009, the Company announced that its indirect, wholly-owned subsidiary, First Insurance Funding Corp. ("FIFC") completed the purchase of a majority of the U.S. life insurance premium finance assets of A.I. Credit Corp. and A.I. Credit Consumer Discount Company ("the seller"), subsidiaries of American International Group, Inc. In doing so, FIFC acquired one of the largest life insurance premium finance portfolios in the industry, as well as certain other assets related to the life insurance premium finance business and assumed certain related liabilities. An aggregate unpaid principal balance of $1.0 billion was purchased for $745.9 million in cash. 

In connection with the purchase of the life insurance premium finance business, the Company recognized a $10.9 million gain in the first quarter of 2010, a $43.0 million gain in the fourth quarter of 2009 and a $113.1 million gain in the third quarter of 2009. As of March 31, 2010, the full amount of bargain purchase gain was recognized into income. The following table presents a summary of the discount components for the life insurance premium finance portfolio purchase as of December 31, 2010 and shows the changes in the balances from December 31, 2009:

 
Purchased Loan Portfolio    
Summary of Acquisition   Credit
    discounts -
    non-
  Accretable accretable
(Dollars in thousands) discounts discounts
     
 Balances at December 31, 2009  $ 65,026  $ 37,323
- Accretion (effective yield method)  (5,418)  -- 
- Accretion recognized as accounts prepay  (1,427)  (2,289)
- Discount used for loans written off  (144)  (1,044)
 Balances at March 31, 2010  $ 58,037  $ 33,990
- Accretion (effective yield method)  (4,810)  -- 
- Accretion recognized as accounts prepay  (3,434)  (3,418)
- Reclassification from nonaccretable to accretable  1,986  (1,986)
- Discount used for loans written off  --   (369)
 Balances at June 30, 2010  $ 51,779  $ 28,217
- Accretion (effective yield method)  (5,139)  -- 
- Accretion recognized as accounts prepay  (1,672)  (1,680)
- Reclassification from accretable to nonaccretable  (52)  52
- Discount used for loans written off  --   (190)
 Balances at September 30, 2010  $ 44,916  $ 26,399
- Accretion (effective yield method)  (6,873)  -- 
- Accretion recognized as accounts prepay  (4,591)  (3,181)
- Reclassification from accretable to nonaccretable  (137)  137
- Discount used for loans written off  --   (128)
 Balances at December 31, 2010  $ 33,315  $ 23,227

On April 20, 2009, Wintrust Capital Management (formerly known as Wayne Hummer Asset Management Company) completed its purchase and assumption of certain assets and liabilities of Advanced Investment Partners, LLC ("AIP"). AIP is an investment management firm specializing in the active management of domestic equity investment strategies. The impact related to the AIP transaction is included in Wintrust's consolidated financial results only since the effective date of acquisition.

Securitization

Sale of Loans

On September 11, 2009, Wintrust's indirect, wholly-owned subsidiary, FIFC Premium Funding I, LLC (the "Issuer"), sold $600,000,000 aggregate principal amount of its Series 2009-A Premium Finance Asset Backed Notes, Class A (the "Notes"). The Notes were issued in a securitization transaction sponsored by First Insurance Funding Corp. 

The Notes bear interest at an annual rate equal to one-month LIBOR plus 1.45% and have an expected average term of 2.93 years; provided, however, that the entire unpaid balance of the Notes shall be due and payable in full on February 17, 2014. At the time of issuance, the Notes were eligible collateral under the Federal Reserve Bank of New York's Term Asset-Backed Securities Loan Facility ("TALF"). The Issuer's obligations under the Notes are secured by revolving loans made to buyers of property and casualty insurance policies to finance the related premiums payable by the buyers to the insurance companies for the policies. The premium finance loans will be transferred from time to time by FIFC to FIFC Funding I, LLC (the "Depositor") and by the Depositor to the Issuer.

Change in Accounting Treatment

During 2009, the securitization facility qualified for sales treatment. At December 31, 2009, approximately $594 million of commercial premium finance loans were held in the securitization facility and were not reflected on the Company's balance sheet. In accordance with newly applicable accounting guidance, and anticipated by the Company, effective January 1, 2010 the securitization facility was recorded on the balance sheet of the Company as a secured borrowing. As a result of this new guidance, the Company's balance sheet since January 1, 2010 reflects all loans outstanding in the securitization facility, the $600 million of secured borrowing notes issued to the securitization investors and cash in the securitization facility. 

Capital

On December 22, 2010, the Company repurchased all 250,000 shares of its Fixed Rate Cumulative Perpetual Preferred Stock, Series B (the "Preferred Stock"), which it issued to the U.S. Department of Treasury under the TARP Capital Purchase Program. The Preferred Stock was repurchased at a price of $251.3 million, which included accrued and unpaid dividends of $1.3 million. The repurchase of the Preferred Stock resulted in a non-cash charge that reduced net income applicable to common shares in the fourth quarter of 2010 by approximately $11.4 million. This amount represents the difference between the repurchase price and the carrying amount of the Preferred Stock, or the accelerated accretion of the applicable discount on the preferred shares.

In December 2010, the Company sold 3.66 million shares of common stock at $30.00 per share in a public offering. The Company received net proceeds of $104.8 million after deducting underwriting discounts and commissions and estimated offering expenses. At the same time the Company sold 4.6 million 7.50% tangible equity units ("TEU") at a public offering price of $50.00 per unit. The Company received net proceeds of $222.7 million after deducting underwriting discounts and commissions and estimated offering expenses. In total, the Company received net proceeds of $327.5 million from the December offerings.

In March 2010, the Company sold 6.67 million shares of common stock at $33.25 per share in a public offering. The Company received net proceeds of $210.3 million after deducting underwriting discounts and commissions and estimated offering expenses.

As of December 31, 2010, the Company's estimated capital ratios were 13.9% for total risk-based capital, 12.6% for tier 1 risk-based capital and 10.6% for leverage, well above the well capitalized guidelines.   Additionally, the Company's tangible common equity ratio was 8.0% at December 31, 2010.

Financial Performance Overview – Fourth Quarter of 2010

For the fourth quarter of 2010, net interest income totaled $112.7 million, an increase of $25.7 million as compared to the fourth quarter of 2009 and an increase of $9.7 million as compared to the third quarter of 2010. Average earning assets for the fourth quarter of 2010 increased by $1.8 billion compared to the fourth quarter of 2009. Average earning asset growth over the past 12 months was primarily a result of the $1.2 billion increase in average loans and $274.8 million increase in average liquidity management assets. Growth in the life insurance premium finance portfolio and a change in accounting for the commercial premium finance securitization facility accounted for $844 million of the total average loan growth over the past 12 months, while the three FDIC-assisted acquisitions accounted for $338 million of average covered loan growth. The average earning asset growth of $1.8 billion over the past 12 months was funded by a $473 million increase in the average balances of savings, NOW, MMA and Wealth Management deposits, an increase in the average balance of net free funds of $384 million, an increase in the average balance of retail certificates of deposit of $273 million, an increase of $600 million due to the secured borrowing notes to the securitization investors and an increase in the average balance of brokered certificates of deposit and other wholesale borrowings of $60 million.  

The net interest margin for the fourth quarter of 2010 was 3.46%, compared to 3.10% in the fourth quarter of 2009 and 3.22% in the third quarter of 2010. The 24 basis point increase in net interest margin in the fourth quarter of 2010 compared to the third quarter of 2010 was primarily caused by an additional $6.2 million increase in the accretion on the purchased life insurance portfolio resulting from increased prepayments in the fourth quarter (increased net interest margin by 19 basis points), lower costs for interest-bearing deposits (increased net interest margin by 12 basis points), lower yields on loans (reduced net interest margin by five basis points), lower yields on liquidity management assets (reduced net interest margin by one basis point), and a lower contribution from net free funds (decreased net interest margin by one basis point).

Non-interest income totaled $44.5 million in the fourth quarter of 2010, decreasing $40.6 million, or 48%, compared to the fourth quarter of 2009 and decreasing $10.2 million, or 19%, compared to the third quarter of 2010. Mortgage banking revenue increased $6.2 million when compared to the fourth quarter of 2009 as loans originated and sold to the secondary market were $1.3 billion in the fourth quarter of 2010 compared to $953 million in the fourth quarter of 2009 and $1.1 billion in the third quarter of 2010 (see "Non-Interest Income" section later in this document for further detail). Also, net gains on available-for-sale securities decreased $483,000 in the fourth quarter of 2010 compared to the prior year quarter and decreased $9.1 million compared to the third quarter of 2010, primarily related to the sale during the earlier period of certain collateralized mortgage obligations. Early in July 2010, we liquidated approximately $160 million of collateralized mortgage obligations, recognizing a $7.7 million gain on available-for-sale securities in the third quarter of 2010.  Trading income decreased by $3.8 million in the fourth quarter of 2010 when compared to the fourth quarter of 2009 primarily due to the realization in the prior year of larger market value increases on certain collateralized mortgage obligations held in trading.

Non-interest expense totaled $106.2 million in the fourth quarter of 2010, increasing $15.9 million, or 18%, compared to the fourth quarter of 2009 and increasing $6.5 million compared to the third quarter of 2010. The increase compared to the fourth quarter of 2009 was primarily attributable to an $11.1 million increase in salaries and employee benefits. The increase in salaries and employee benefits was attributable to a $6.3 million increase in bonus and commissions as variable pay based revenue increased (primarily in our mortgage banking and wealth management businesses), a $3.5 million increase in salaries caused by the additional employees from the three FDIC-assisted transactions and larger staffing related to Company growth, and a $1.3 million increase from employee benefits (primarily related to health plans and payroll taxes). Additionally, OREO related expenses increased $2.1 million and professional fees increased $1.2 million, primarily related to increased legal costs related to non-performing assets and recent bank acquisitions. 

Financial Performance Overview – Full Year 2010

The net interest margin for 2010 was 3.37%, compared to 3.01% in 2009. The increase in the net interest margin in 2010 compared to 2009 was primarily caused by lower costs for interest-bearing deposits (increased net interest margin by 58 basis points), an additional $24.4 million of accretion on the purchased life insurance portfolio as more prepayments occurred throughout 2010 (increased net interest margin by 23 basis points) and lower costs for wholesale funding (increased net interest margin by 10 basis points), offset by higher balances and lower yields on liquidity management assets, including the negative impact of selling certain collateralized mortgage obligations, (reduced net interest margin by 33 basis points), lower yields on loans (reduced net interest margin by 17 basis points) and lower contribution from net free funds (reduced net interest margin by five basis points). Average earning assets for 2010 increased by $2.0 billion compared to 2009. Average earning asset growth for 2010 compared to 2009 was primarily a result of the $1.1 billion increase in average loans, a $567 million increase in liquidity management assets and $232 million of covered loans. The acquisition of a life insurance premium finance portfolio and subsequent growth in this product accounted for $819 million of the total average loan growth for 2010 compared to 2009. The average earning asset growth of $2.0 billion was funded by a $653 million increase in the average balances of savings, NOW, MMA and Wealth Management deposits, an increase in the average balance of net free funds of $422 million, an increase in the average balance of retail certificates of deposit of $284 million, and an increase of $600 million due to the secured borrowing notes to the securitization investors.

Non-interest income totaled $192.2 million in 2010, decreasing $125.5 million, or 40%, compared to 2009. The decrease was primarily attributable to the inclusion of the $156.0 million of bargain purchase gains recorded during 2009 relating to life insurance premium finance loan acquisition in 2009. In comparison, during 2010, the Company recorded bargain purchase gains of $44.2 million as described earlier under "Acquisitions." Wealth management revenue contributed an $8.6 million increase in non-interest income as improvements in the equity markets overall has led to a 30% increase in wealth management revenue during 2010 compared to 2009. Mortgage banking revenue decreased $7.1 million when compared to 2009. Expenses recognized for the estimated liability associated with mortgage loans previously sold with recourse to the secondary market were higher in the current year due to increased repurchase demands from investors. The Company recognized $11.0 million of recourse obligation expense in 2010 compared to $900,000 in 2009. Also, net gains on available-for-sale securities increased $10.1 million in the current year, primarily related to the sale of certain collateralized mortgage obligations. Trading gains decreased by $21.6 million in the current year primarily due to realizing larger market value increases in the prior year on certain collateralized mortgage obligations held in trading, that were sold in July 2010.       

Non-interest expense totaled $382.5 million in 2010, increasing $38.4 million, or 11%, compared to 2009. The increase compared to 2009 was primarily attributable to a $28.9 million increase in salaries and employee benefits. The increase in salaries and employee benefits was attributable to a $12.6 million increase in bonus and commissions as variable pay based revenue increased (primarily in our mortgage banking and wealth management businesses), a $11.4 million increase in salaries caused by the additional employees from the three FDIC-assisted transactions and larger staffing as the Company grows, and a $4.9 million increase from employee benefits (primarily related to health plan and payroll taxes). Additionally, professional fees increased $3.0 million primarily related to increased legal costs related to non-performing assets and recent bank acquisitions, and miscellaneous expenses increased $4.0 million. Data processing expense increased $2.4 million as a result of higher volumes and conversion related expenses associated with FDIC-assisted transactions. These increases were partially offset by a $3.2 million reduction in FDIC insurance expenses as the FDIC imposed an industry-wide special assessment on financial institutions in the prior year second quarter.

Financial Performance Overview – Credit Quality

Non-performing loans, excluding covered loans, totaled $141.8 million, or 1.48% of total loans, at December 31, 2010, compared to $134.3 million, or 1.42% of total loans, at September 30, 2010 and $131.8 million, or 1.57% of total loans, at December 31, 2009. OREO, excluding covered OREO, of $71.2 million at December 31, 2010 decreased $5.5 million compared to $76.7 million at September 30, 2010 and decreased $9.0 million compared to $80.2 million at December 31, 2009. 

Since the latter half of 2009, management has focused on significantly lowering the Company's level of non-performing loans. This was accomplished through a focus on gaining control or obtaining possession of collateral from borrowers whose loans were in non-accrual status. Progress towards this goal enabled a number of these properties to be transferred to OREO. The properties the Company obtains via foreclosure or via deed in lieu of foreclosure are aggressively marketed for sale. Additionally, beginning in the third quarter of 2009, management has worked with certain borrowers to restructure current loans. These actions help these borrowers maintain their homes or businesses and keep these loans in an accruing status for the Company. As of December 31, 2010, a total of $101.2 million of outstanding loan balances qualified as restructured loans, with $81.1 million of these modified loans in an accruing status.

The provision for credit losses totaled $28.8 million for the fourth quarter of 2010 compared to $25.5 million for the third quarter of 2010 and $38.6 million in the fourth quarter of 2009. Net charge-offs as a percentage of loans, excluding covered loans, for the fourth quarter of 2010 totaled 96 basis points on an annualized basis compared to 161 basis points on an annualized basis in the fourth quarter of 2009 and 89 basis points on an annualized basis in the third quarter of 2010. In the second quarter of 2010, a fraud perpetrated against a number of premium finance companies in the industry, including the property and casualty division of our premium financing subsidiary, increased both our net charge-offs and our provision for loan losses by $15.7 million. 

The allowance for credit losses at December 31, 2010 totaled $118.0 million, or 1.23% of total loans, excluding covered loans, compared to $112.8 million, or 1.19% of total loans, at September 30, 2010 and $101.8 million, or 1.21% of total loans, at December 31, 2009.

     
WINTRUST FINANCIAL CORPORATION Three Months Ended Twelve Months Ended
Selected Financial Highlights December 31, December 31,
  2010 2009 2010 2009
Selected Financial Condition Data (at end of period):        
Total assets  $ 13,968,074  $ 12,215,620    
Total loans, excluding covered loans  9,599,886  8,411,771    
Total deposits  10,803,673  9,917,074    
Junior subordinated debentures  249,493  249,493    
Total shareholders' equity  1,436,549  1,138,639    
Selected Statements of Income Data:        
Net interest income  $ 112,677  $ 86,934  $ 415,836  $ 311,876
Net revenue (1)  157,138  172,022  607,996  629,523
Core pre-tax earnings (2)  58,666  39,931  196,544  122,804
Net income  14,205  28,167  63,329  73,069
Net income (loss) per common share – Basic  $ (0.06)  $ 0.96  $ 1.08  $ 2.23
Net income (loss) per common share – Diluted   $ (0.06)  $ 0.90  $ 1.02  $ 2.18
Selected Financial Ratios and Other Data:        
Performance Ratios:        
Net interest margin (2)  3.46%  3.10%  3.37%  3.01%
Non-interest income to average assets  1.24%  2.77%  1.42%  2.78%
Non-interest expense to average assets   2.97%  2.94%  2.82%  3.01%
Net overhead ratio (3)  1.73%  0.17%  1.40%  0.23%
Efficiency ratio (2) (4)  67.48%  52.54%  63.77%  54.44%
Return on average assets  0.40%  0.92%  0.47%  0.64%
Return on average common equity  (0.66)%  10.97%  3.01%  6.70%
Average total assets  $ 14,199,351  $ 12,189,096  $ 13,556,612  $ 11,415,322
Average total shareholders' equity  1,442,754  1,126,594  1,352,135  1,081,792
Average loans to average deposits ratio (excluding covered loans)  89.0%  86.9%  91.1%  90.5%
Average loans to average deposits ratio (including covered loans)  92.1%  86.9%  93.4%  90.5%
Common Share Data at end of period:        
Market price per common share  $ 33.03  $ 30.79    
Book value per common share (2)  $ 32.73  $ 35.27    
Tangible common book value per share (2)  $ 25.80  $ 23.22    
Common shares outstanding 34,864,068 24,206,819    
Other Data at end of period:(9)        
Leverage Ratio (5)  10.6%  9.3%    
Tier 1 capital to risk-weighted assets (5)  12.6%  11.0%    
Total capital to risk-weighted assets (5)  13.9%  12.4%    
Tangible common equity ratio (TCE) (2) (8)  8.0%  4.7%    
Allowance for credit losses (6)  $ 118,037  $ 101,831    
Credit discounts on purchased premium finance receivables - life insurance (7)  $ 23,227  $ 37,323    
Non-performing loans  $ 142,132  $ 131,804    
Allowance for credit losses to total loans (6)  1.23%  1.21%    
Non-performing loans to total loans  1.48%  1.57%    
Number of:        
Bank subsidiaries 15 15    
Non-bank subsidiaries 8 8    
Banking offices 86 78    
(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) The efficiency ratio is calculated by dividing total non-interest expense by tax-equivalent net revenue (less securities gains or losses). A lower ratio indicates more efficient revenue generation.
(5) Capital ratios for current quarter-end are estimated.
(6) The allowance for credit losses includes both the allowance for loan losses and the allowance for unfunded lending-related commitments.
(7) Represents the credit discounts on purchased life insurance premium finance loans.
(8) Total shareholders' equity minus preferred stock and total intangible assets divided by total assets minus total intangible assets.
(9) Asset quality ratios exclude covered loans.
 
 
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
       
  (Unaudited) (Unaudited)  
  December 31, September 30, December 31,
(In thousands) 2010 2010 2009
Assets      
Cash and due from banks  $ 153,690  $ 155,067  $ 135,133
Federal funds sold and securities purchased under resale agreements 18,890 88,913 23,483
Interest-bearing deposits with other banks 865,575 1,224,584 1,025,663
Available-for-sale securities, at fair value 1,496,302 1,324,179 1,255,066
Trading account securities 4,879 4,935 33,774
Brokerage customer receivables 24,549 25,442 20,871
Federal Home Loan Bank and Federal Reserve Bank stock, at cost 82,407 80,445 73,749
Loans held-for-sale 371,447 320,440 275,715
Loans, net of unearned income, excluding covered loans 9,599,886 9,461,155 8,411,771
Covered loans 334,353 353,840  -- 
Total loans 9,934,239 9,814,995 8,411,771
Less: Allowance for loan losses 113,903 110,432 98,277
Net loans 9,820,336 9,704,563 8,313,494
Premises and equipment, net 363,696  353,445  350,345
FDIC indemnification asset 118,182  161,640  -- 
Accrued interest receivable and other assets 354,356  365,496  416,678
Goodwill 281,190  278,025 278,025
Other intangible assets 12,575  13,194 13,624
Total assets  $ 13,968,074  $ 14,100,368  $ 12,215,620
       
Liabilities and Shareholders' Equity      
Deposits:      
Non-interest bearing  $ 1,201,194  $ 1,042,730  $ 864,306
Interest bearing 9,602,479 9,919,509 9,052,768
Total deposits 10,803,673 10,962,239 9,917,074
Notes payable 1,000 1,000 1,000
Federal Home Loan Bank advances 415,643 414,832 430,987
Other borrowings 260,619 241,522 247,437
Secured borrowings - owed to securitization investors 600,000 600,000  -- 
Subordinated notes 50,000 55,000 60,000
Junior subordinated debentures  249,493 249,493  249,493
Trade date securities payable  --  2,045  -- 
Accrued interest payable and other liabilities  151,097 175,325  170,990
Total liabilities  12,531,525  12,701,456  11,076,981
       
Shareholders' Equity:      
Preferred stock  49,640 287,234  284,824
Common stock  34,864 31,145  27,079
Surplus 965,203 682,318 589,939
Treasury stock  --   (51)  (122,733)
Retained earnings 392,354 394,323  366,152
Accumulated other comprehensive (loss) income  (5,512) 3,943  (6,622)
Total shareholders' equity 1,436,549 1,398,912 1,138,639
Total liabilities and shareholders' equity  $ 13,968,074  $ 14,100,368  $ 12,215,620
 
 
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
         
  Three Months Ended Years Ended
  December 31, December 31,
(In thousands, except per share data) 2010 2009 2010 2009
Interest income        
Interest and fees on loans  $ 144,652  $ 122,140  $ 547,896  $ 465,777
Interest bearing deposits with banks  1,342  1,369  5,170  3,574
Federal funds sold and securities purchased under resale agreements  39  38  157  271
Securities  7,236  12,672  36,904  55,649
Trading account securities  11  20  394  106
Brokerage customer receivables  170  143  655  515
Federal Home Loan Bank and Federal Reserve Bank stock  512  447  1,931  1,722
Total interest income  153,962  136,829  593,107  527,614
Interest expense        
Interest on deposits  27,853  38,998  123,779  171,259
Interest on Federal Home Loan Bank advances  4,038  4,510  16,520  18,002
Interest on notes payable and other borrowings  1,631  1,663  5,943  7,064
Interest on secured borrowings - owed to securitization investors  3,089  --   12,366  -- 
Interest on subordinated notes  233  286  995  1,627
Interest on junior subordinated debentures  4,441  4,438  17,668  17,786
Total interest expense  41,285  49,895  177,271  215,738
Net interest income  112,677  86,934  415,836  311,876
Provision for credit losses  28,795  38,603  124,664  167,932
Net interest income after provision for credit losses  83,882  48,331  291,172  143,944
Non-interest income        
Wealth management  10,108  8,047  36,941  28,357
Mortgage banking  22,686  16,495  61,378  68,527
Service charges on deposit accounts  3,346  3,437  13,433  13,037
Gain on sales of commercial premium finance receivables  --   4,429  --  8,576
Gains (losses) on available-for-sale securities, net  159  642  9,832  (268)
Gain on bargain purchases  250  42,951  44,231  156,013
Trading gains   611  4,411  5,165  26,788
Other  7,301  4,676  21,180  16,617
Total non-interest income  44,461  85,088  192,160  317,647
Non-interest expense        
Salaries and employee benefits  59,031  47,955  215,766  186,878
Equipment  4,384  4,097  16,529  16,119
Occupancy, net  5,927  6,124  24,444  23,806
Data processing  4,388  3,404  15,355  12,982
Advertising and marketing  1,881  1,366  6,315  5,369
Professional fees  4,775  3,556  16,394  13,399
Amortization of other intangible assets  719  744  2,739  2,784
FDIC insurance  4,572  4,731  18,028  21,199
OREO expenses, net  7,384  5,293  19,331  18,963
Other  13,140  13,047  47,624  42,588
Total non-interest expense  106,201  90,317  382,525  344,087
Income before taxes  22,142  43,102  100,807  117,504
Income tax expense  7,937  14,935  37,478  44,435
Net income  $ 14,205  $ 28,167  $ 63,329  $ 73,069
Preferred stock dividends and discount accretion  $ 16,175  $ 4,888  31,004  $ 19,556
Net income (loss) applicable to common shares  $ (1,970)  $ 23,279  $ 32,325  $ 53,513
Net income (loss) per common share - Basic  $ (0.06)  $ 0.96  $ 1.08  $ 2.23
Net income (loss) per common share - Diluted  $ (0.06)  $ 0.90  $ 1.02  $ 2.18
Cash dividends declared per common share  $ --   $ --   $ 0.18  $ 0.27
Weighted average common shares outstanding  32,015  24,166  30,057  24,010
Dilutive potential common shares  --   2,845  1,513  2,335
Average common shares and dilutive common shares  32,015  27,011  31,570  26,345

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 and core pre-tax earnings. 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. Core pre-tax earnings is adjusted to exclude the provision for credit losses and certain significant items.

A reconciliation of certain non-GAAP performance measures and ratios used by the Company to evaluate and measure the Company's performance to the most directly comparable GAAP financial measures is shown below:

 
  Three Months Ended Years Ended
  December 31, September 30, June 30, March 31, December 31, December 31,
(Dollars and shares in thousands) 2010 2010 2010 2010 2009 2010 2009
Calculation of Net Interest Margin and Efficiency Ratio            
(A) Interest Income (GAAP)  $ 153,962  $ 147,401  $ 149,248  $ 142,496  $ 136,829  $ 593,107  $ 527,614
Taxable-equivalent adjustment:              
- Loans  79  85  90  80  99  334  462
- Liquidity management assets  326  324  366  361  406  1,377  1,720
- Other earning assets  --   7  5  5  9  17  38
Interest Income - FTE  $ 154,367  $ 147,817  $ 149,709  $ 142,942  $ 137,343  $ 594,835  $ 529,834
(B) Interest Expense (GAAP)  $ 41,285  $ 44,421  $ 44,934  $ 46,631  $ 49,895  $ 177,271  $ 215,738
Net interest income - FTE  113,082  103,396  104,775  96,311  87,448  417,564  314,096
(C) Net Interest Income (GAAP) (A minus B)  $ 112,677  $ 102,980  $ 104,314  $ 95,865  $ 86,934  $ 415,836  $ 311,876
(D) Net interest margin (GAAP)  3.44%  3.20%  3.42%  3.36%  3.08%  3.35%  2.99%
Net interest margin - FTE  3.46%  3.22%  3.43%  3.38%  3.10%  3.37%  3.01%
(E) Efficiency ratio (GAAP)  67.65%  67.20%  59.90%  60.79%  52.70%  63.95%  54.64%
Efficiency ratio - FTE  67.48%  67.01%  59.72%  60.59%  52.54%  63.77%  54.44%
               
Calculation of Tangible Common Equity ratio (at period end)            
Total shareholders' equity  $ 1,436,549  $ 1,398,912  $ 1,384,736  $ 1,364,832  $ 1,138,639    
Less: Preferred stock  (49,640)  (287,234)  (286,460)  (285,642)  (284,824)    
Less: Intangible assets  (293,765)  (291,219)  (291,300)  (291,003)  (291,649)    
(F) Total tangible common shareholders' equity  $ 1,093,144  $ 820,459  $ 806,976  $ 788,187  $ 562,166    
               
Total assets  $ 13,968,074  $ 14,100,368  $ 13,708,560  $ 12,839,978  $ 12,215,620    
Less: Intangible assets  (293,765)  (291,219)  (291,300)  (291,003)  (291,649)    
(G) Total tangible assets  $ 13,674,309  $ 13,809,149  $ 13,417,260  $ 12,548,975  $ 11,923,971    
               
Tangible common equity ratio (F/G) 8.0% 5.9% 6.0% 6.3% 4.7%    
               
Calculation of Core Pre-Tax Earnings              
Income before taxes  $ 22,142  $ 32,385  $ 20,790  $ 25,490  $ 43,102  $ 100,807  $ 117,504
Add: Provision for credit losses  28,795  25,528  41,297  29,044  38,603  124,664  167,932
Add: OREO expenses, net  7,384  4,767  5,843  1,337  5,293  19,331  18,963
Add: Recourse obligation on loans previously sold  1,365  1,432  4,721  3,452  937  10,970  937
Less: Gain on bargain purchases  (250)  (6,593)  (26,494)  (10,894)  (42,951)  (44,231)  (156,013)
Less: Trading (gains) losses  (611)  (210)  1,617  (5,961)  (4,411)  (5,165)  (26,788)
Less: (Gains) losses on available-for-sale securities, net  (159)  (9,235)  (46)  (392)  (642)  (9,832)  268
Core pre-tax earnings  $ 58,666  $ 48,074  $ 47,728  $ 42,076  $ 39,931  $ 196,544  $ 122,803
               
Calculation of book value per share              
Total shareholders' equity  $ 1,436,549  $ 1,398,912  $ 1,384,736  $ 1,364,832  $ 1,138,639    
Less: Preferred stock  (49,640)  (287,234)  (286,460)  (285,642)  (284,824)    
(H) Total common equity  $ 1,386,909  $ 1,111,678  $ 1,098,276  $ 1,079,190  $ 853,815    
               
Actual common shares outstanding  34,864  31,144  31,084  31,044  24,207    
Add: TEU conversion shares  7,512  --  --  --  --    
(I) Common shares used for book value calculation  42,376  31,144  31,084  31,044  24,207    
               
Book value per share (H/I)  $ 32.73  $ 35.70  $ 35.33  $ 34.76  $ 35.27    
Tangible common book value per share (F/I)  $ 25.80  $ 26.34  $ 25.96  $ 25.39  $ 23.22    
 
 
 
LOANS
Loan Portfolio Mix and Growth Rates       % Growth
        From (1) From
  December 31, September 30, December 31, September 30, December 31,
(Dollars in thousands) 2010 2010 2009 2010 2009
Balance:          
Commercial   $ 2,049,326  $ 1,952,791  $ 1,743,208  20%  18%
Commercial real-estate  3,338,007  3,331,498  3,296,698  1  1
Home equity  914,412  919,824  930,482  (2)  (2)
Residential real-estate  353,336  342,009  306,296  13  15
Premium finance receivables - commercial  1,265,500  1,323,934  730,144  (18)  73
Premium finance receivables - life insurance  1,521,886  1,434,994  1,197,893  24  27
Indirect consumer (2)  51,147  56,575  98,134  (38)  (48)
Consumer and other  106,272  99,530  108,916  27  (2)
Total loans, net of unearned income, excluding covered loans  $ 9,599,886  $ 9,461,155  $ 8,411,771  6%  14%
Covered loans  334,353  353,840  --   (22)  100
Total loans, net of unearned income  $ 9,934,239  $ 9,814,995  $ 8,411,771  5%  18%
           
Mix:          
Commercial  21%  20%  21%    
Commercial real-estate  34  34  39    
Home equity  9  9  11    
Residential real-estate  3  3  4    
Premium finance receivables - commercial  13  13  9    
Premium finance receivables - life insurance  15  15  14    
Indirect consumer (2)  1  1  1    
Consumer and other  1  1  1    
Total loans, net of unearned income, excluding covered loans  97%  96%  100%    
Covered loans  3  4  --     
Total loans, net of unearned income  100%  100%  100%    
           
(1) Annualized          
(2) Includes autos, boats, snowmobiles and other indirect consumer loans.
 
 
Commercial and Real-Estate Loans, excluding covered loans     > 90 Days Allowance
As of December 31, 2010   % of   Past Due For Loan
    Total   and Still Losses
(Dollars in thousands) Balance Loans Nonaccrual Accruing Allocation
Commercial:            
Commercial and industrial  $ 1,653,394  30.7%  $ 16,339  $ 478  $ 28,316
Franchise  119,488  2.2  --   --   1,153
Mortgage warehouse lines of credit  131,306  2.4  --   --   1,177
Community Advantage - homeowner associations  75,542  1.4  --   --   323
Aircraft  24,618  0.5  --   --   315
Other  44,978  0.8  43  --   493
Total commercial  $ 2,049,326  38.0%  $ 16,382  $ 478  $ 31,777
           
Commercial Real-Estate:          
Residential construction  $ 95,947  1.8%  $ 10,010  $ --   $ 2,597
Commercial construction  131,672  2.4  1,820  --   4,035
Land  260,189  4.8  37,602  --   14,261
Office  535,331  9.9  12,718  --   8,005
Industrial  500,301  9.3  3,480  --   5,213
Retail  510,527  9.5  3,265  --   5,985
Multi-family  290,954  5.4  4,794  --   5,479
Mixed use and other  1,013,086  18.9  20,274  --   16,915
Total commercial real-estate  $ 3,338,007  62.0%  $ 93,963  $ --   $ 62,490
Total commercial and commercial real-estate  $ 5,387,333  100.0%  $ 110,345  $ 478  $ 94,267
 
Commercial real-estate - collateral location by state:          
Illinois  $ 2,695,581  80.8%      
Wisconsin  356,696  10.7      
Total primary markets  $ 3,052,277  91.5%      
Florida  52,457  1.6      
Arizona  42,100  1.3      
Indiana  47,828  1.4      
Other (no individual state greater than 0.5%)  143,345  4.2      
Total  $ 3,338,007  100.0%      
 
 
 
DEPOSITS
Deposit Portfolio Mix and Growth Rates       % Growth
        From (1) From
  December 31, September 30, December 31, September 30, December 31,
(Dollars in thousands) 2010 2010 2009 2010 2009
Balance:          
Non-interest bearing  $ 1,201,194  $ 1,042,730  $ 864,306  60%  39%
NOW  1,561,507  1,551,749  1,415,856  2  10
Wealth Management deposits (2)  658,660  710,435  971,113  (29)  (32)
Money Market  1,759,866  1,746,168  1,534,632  3  15
Savings  744,534  713,823  561,916  17  32
Time certificates of deposit  4,877,912  5,197,334  4,569,251  (24)  7
Total deposits  $ 10,803,673  $ 10,962,239  $ 9,917,074  (6)%  9%
           
Mix:          
Non-interest bearing  11%  10%  9%    
NOW  15  14  14    
Wealth Management deposits (2)  6  6  10    
Money Market  16  16  15    
Savings  7  7  6    
Time certificates of deposit  45  47  46    
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 Chicago Trust Company and brokerage customers from unaffiliated companies which have been placed into deposit accounts of the Banks.
 
 
Deposit Maturity Analysis           Weighted--
As of December 31, 2010 Non--         Average
  Interest Savings       Rate of
  Bearing and   Time   Maturing Time
  and Money Wealth Certificates Total Certificates
(Dollars in thousands) NOW (1) Market (1) Mgt (1) (2) of Deposit Deposits of Deposit
1-3 months  $ 2,762,701  $ 2,504,400  $ 658,660  $ 1,111,151  $ 7,036,912  1.33%
4-6 months        791,731  $ 791,731  1.64
7-9 months        583,365  $ 583,365  1.55
10-12 months        613,914  $ 613,914  1.40
13-18 months        583,424  $ 583,424  1.79
19-24 months        437,184  $ 437,184  1.81
24+ months        757,143  $ 757,143  2.33
Total deposits  $ 2,762,701  $ 2,504,400  $ 658,660  $ 4,877,912  $ 10,803,673  1.67%
 
(1) Balances of non-contractual maturity deposits are shown as maturing in the earliest time frame. These deposits do not have contractual maturities and re-price in varying degrees to changes in interest rates.
(2) Wealth management deposit balances from unaffiliated companies are shown maturing in the period in which the current contractual obligation to hold these funds matures. 

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 fourth quarter of 2010 compared to the fourth quarter of 2009 (linked quarters):

 
  For the Three Months Ended For the Three Months Ended
  December 31, 2010 December 31, 2009
(Dollars in thousands) Average Interest Rate Average Interest Rate
             
Liquidity management assets (1) (2) (7)  $ 2,844,351  $ 9,455  1.32%  $ 2,569,584  $ 14,932  2.31%
Other earning assets (2) (3) (7)  29,676  183  2.45  26,167  171  2.59
Loans, net of unearned income (2) (4) (7)  9,777,435  140,689  5.71  8,604,006  122,240  5.64
Covered loans  337,690  4,042  4.75  --   --   -- 
Total earning assets (7)  $ 12,989,152  $ 154,369  4.72%  $ 11,199,757  $ 137,343  4.87%
Allowance for loan losses  (116,447)      (97,269)    
Cash and due from banks  151,562      124,219    
Other assets  1,175,084      962,389    
Total assets  $ 14,199,351      $ 12,189,096    
             
Interest-bearing deposits  $ 9,839,223  $ 27,853  1.12%  $ 9,016,863  $ 38,998  1.72%
Federal Home Loan Bank advances  415,260  4,038  3.86  432,028  4,510  4.14
Notes payable and other borrowings  244,044  1,631  2.65  234,754  1,663  2.81
Secured borrowings - owed to securitization investors  600,000  3,089  2.04  --   --   -- 
Subordinated notes  53,369  233  1.71  63,261  286  1.77
Junior subordinated notes  249,493  4,441  6.97  249,493  4,438  6.96
Total interest-bearing liabilities  $ 11,401,389  $ 41,285  1.43%  $ 9,996,399  $ 49,895  1.98%
Non-interest bearing deposits  1,148,208      886,988    
Other liabilities  207,000      179,115    
Equity  1,442,754      1,126,594    
Total liabilities and shareholders' equity  $ 14,199,351      $ 12,189,096    
             
Interest rate spread (5) (7)      3.29%      2.89%
Net free funds/contribution (6)  $ 1,587,763    0.17%  $ 1,203,358    0.21%
Net interest income/Net interest margin (7)    $ 113,084  3.46%    $ 87,448  3.10%
 
(1) Liquidity management assets include available-for-sale securities, interest earning deposits with banks, federal funds sold and securities purchased under resale agreements.
(2) Interest income on tax-advantaged loans, trading securities and securities reflects a tax-equivalent adjustment based on a marginal federal corporate tax rate of 35%. The total adjustments for the three months ended December 31, 2010 and 2009 were $405,000 and $513,000, 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.

The higher level of net interest income recorded in the fourth quarter of 2010 compared to the fourth quarter of 2009 was primarily attributable to a $1.2 billion increase in the average balance of loans and $338 million of FDIC covered loans. The bulk of this growth was funded by an $822 million increase in interest-bearing deposits, the $600 million securitization funding and a $384 million increase in net free funds (of which $261 million was non-interest bearing deposits). 

The net interest margin increased 36 basis points in the fourth quarter of 2010 compared to the fourth quarter of 2009. The yield on total average earnings assets declined by 15 basis points as the loss of yield on liquidity management assets more than offset the slightly higher yield on loans. The net interest margin improvement can primarily be attributed to a 60 basis point reduction in the cost of interest-bearing deposits, leading to a 55 basis point reduction in the total cost of average interest-bearing liabilities.

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 fourth quarter of 2010 compared to the third quarter of 2010 (sequential quarters):

 
  For the Three Months Ended For the Three Months Ended
  December 31, 2010 September 30, 2010
(Dollars in thousands) Average Interest Rate Average Interest Rate
             
Liquidity management assets (1) (2) (7)  $ 2,844,351  $ 9,455  1.32%  $ 2,802,964  $ 9,625  1.36%
Other earning assets (2) (3) (7)  29,676  183  2.45  34,263  205  2.37
Loans, net of unearned income (2) (4) (7)  9,777,435  140,689  5.71  9,603,561  134,016  5.54
Covered loans  337,690  4,042  4.75  325,751  3,971  4.84
Total earning assets (7)  $ 12,989,152  $ 154,369  4.72%  $ 12,766,539  $ 147,817  4.59%
Allowance for loan losses  (116,447)      (113,631)    
Cash and due from banks  151,562      154,078    
Other assets  1,175,084      1,208,771    
Total assets  $ 14,199,351      $ 14,015,757    
             
Interest-bearing deposits  $ 9,839,223  $ 27,853  1.12%  $ 9,823,525  $ 31,088  1.26%
Federal Home Loan Bank advances  415,260  4,038  3.86  414,789  4,042  3.87
Notes payable and other borrowings  244,044  1,631  2.65  232,991  1,411  2.40
Secured borrowings - owed to securitization investors  600,000  3,089  2.04  600,000  3,167  2.09
Subordinated notes  53,369  233  1.71  55,000  265  1.89
Junior subordinated notes  249,493  4,441  6.97  249,493  4,448  6.98
Total interest-bearing liabilities  $ 11,401,389  $ 41,285  1.43%  $ 11,375,798  $ 44,421  1.55%
Non-interest bearing deposits  1,148,208      1,005,170    
Other liabilities  207,000      243,282    
Equity  1,442,754      1,391,507    
Total liabilities and shareholders' equity  $ 14,199,351      $ 14,015,757    
             
Interest rate spread (5) (7)      3.29%      3.04%
Net free funds/contribution (6)  $ 1,587,763    0.17%  $ 1,390,741    0.18%
Net interest income/Net interest margin (7)    $ 113,084  3.46%    $ 103,396  3.22%
 
(1) Liquidity management assets include available-for-sale securities, interest earning deposits with banks, federal funds sold and securities purchased under resale agreements.
(2) Interest income on tax-advantaged loans, trading securities and securities reflects a tax-equivalent adjustment based on a marginal federal corporate tax rate of 35%. The total adjustments for the three months ended December 31, 2010 was $405,000 and for the three months ended September 30, 2010 was $416,000.
(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.

The increase in net interest margin in the fourth quarter of 2010 compared to the third quarter of 2010 was primarily caused by an additional $6.2 million of accretion on the purchased life insurance portfolio resulting from increased prepayments in the fourth quarter (increased net interest margin by 19 basis points), lower costs for interest-bearing deposits (increased net interest margin by 12 basis points), lower yields on loans (reduced net interest margin by four basis points), lower yields on liquidity management assets (reduced net interest margin by one basis point), and a lower contribution from net free funds (decreased net interest margin by one basis point).

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 year ended December 31, 2010 compared to the year ended December 31, 2009:

 
  For the Year Ended For the Year Ended
  December 31, 2010 December 31, 2009
(Dollars in thousands) Average Interest Rate Average Interest Rate
             
Liquidity management assets (1) (2) (7)  $ 2,654,013  $ 45,539  1.72%  $ 2,086,653  $ 62,936  3.02%
Other earning assets (2) (3) (7)  45,021  1,067  2.37  23,979  659  2.75
Loans, net of unearned income (2) (4) (7)  9,473,589  537,534  5.67  8,335,421  466,239  5.59
Covered loans  232,206  10,695  4.61  --   --   -- 
Total earning assets (7)  $ 12,404,829  $ 594,835  4.80%  $ 10,446,053  $ 529,834  5.07%
Allowance for loan losses  (11,503)      (82,029)    
Cash and due from banks  137,547      108,471    
Other assets  1,125,739      942,827    
Total assets  $ 13,656,612      $ 11,415,322    
             
Interest-bearing deposits  $ 9,409,950  $ 123,779  1.32%  $ 8,419,081  $ 171,259  2.03%
Federal Home Loan Bank advances  418,981  16,520  3.94  434,520  18,002  4.14
Notes payable and other borrowings  229,569  5,943  2.59  258,322  7,064  2.73
Secured borrowings - owed to securitization investors  600,000  12,365  2.06  --   --   -- 
Subordinated notes  56,370  995  1.74  66,205  1,627  2.42
Junior subordinated notes  249,493  17,668  6.98  249,497  17,786  7.03
Total interest-bearing liabilities  $ 10,964,363  $ 177,270  1.61%  $ 9,427,625  $ 215,738  2.29%
Non-interest bearing deposits  984,416      788,034    
Other liabilities  255,698      117,871    
Equity  1,352,135      1,081,792    
Total liabilities and shareholders' equity  $ 13,556,612      $ 11,415,322    
             
Interest rate spread (5) (7)      3.19%      2.78%
Net free funds/contribution (6)  $ 1,440,466    0.18%  $ 1,018,428    0.23%
Net interest income/Net interest margin (7)    $ 417,565  3.37%    $ 314,096  3.01%
 
(1) Liquidity management assets include available-for-sale securities, interest earning deposits with banks, federal funds sold and securities purchased under resale agreements.
(2) Interest income on tax-advantaged loans, trading securities and securities reflects a tax-equivalent adjustment based on a marginal federal corporate tax rate of 35%. The total adjustments for the year ended December 31, 2010 and 2009 were $1.7 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.

The net interest margin for 2010 was 3.37%, compared to 3.01% in 2009. The increase in the net interest margin in 2010 compared to 2009 was primarily caused by an additional $24.4 million of accretion on the purchased life insurance portfolio as more prepayments occurred throughout 2010 (increased net interest margin by 23 basis points), lower costs for interest-bearing deposits (increased net interest margin by 58 basis points), and lower costs for wholesale funding (increased net interest margin by 10 basis points), offset by higher balances and lower yields on liquidity management assets, including the negative impact of selling certain collateralized mortgage obligations, (reduced net interest margin by 33 basis points), lower yields on loans (reduced net interest margin by 17 basis points) and lower contribution from net free funds (reduced net interest margin by five basis points).

NON-INTEREST INCOME

For the fourth quarter of 2010, non-interest income totaled $44.5 million, a decrease of $40.6 million, or 48%, compared to the fourth quarter of 2009. The decrease was primarily attributable to the bargain purchase gain related to income attributable to the life insurance premium finance loan acquisition in 2009, the lack of gains recognized in 2010 on loans moved into the premium finance securitizations as compared to $4.4 million of such gains in the prior period, and lower trading gains, partially offset by increases in both mortgage banking revenue and wealth management revenue.

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

 
  Three Months Ended    
  December 31 $ %
(Dollars in thousands) 2010 2009 Change Change
Brokerage  $ 6,641  $ 5,034  $ 1,607  32
Trust and asset management  3,467  3,013  454  15
Total wealth management  10,108  8,047  2,061  26
Mortgage banking  22,686  16,495  6,191  38
Service charges on deposit accounts  3,346  3,437  (91)  (3)
Gains on sales of premium finance receivables  --   4,429  (4,429)  (100)
Gains on available-for-sale securities  159  642  (483)  (75)
Gain on bargain purchases  250  42,951  (42,701)  (99)
Trading gains  611  4,411  (3,800)  (86)
Other:        
Fees from covered call options  1,074  --   1,074  100
Bank Owned Life Insurance  811  642  169  26
Administrative services  715  511  204  40
Miscellaneous  4,701  3,523  1,178  33
Total Other  7,301  4,676  2,625  56
         
Total Non-Interest Income  $ 44,461  $ 85,088  $ (40,627)  (48)
 
  Years Ended    
  December 31 $ %
(Dollars in thousands) 2010 2009 Change Change
Brokerage  $ 23,713  $ 17,726  $ 5,987  34
Trust and asset management  13,228  10,631  2,597  24
Total wealth management  36,941  28,357  8,584  30
Mortgage banking  61,378  68,527  (7,149)  (10)
Service charges on deposit accounts  13,433  13,037  396  3
Gains on sales of premium finance receivables  --   8,576  (8,576)  (100)
Gains (losses) on available-for-sale securities  9,832  (268)  10,100  NM 
Gain on bargain purchases  44,231  156,013  (111,782)  (72)
Trading gains  5,165  26,788  (21,623)  (81)
Other:        
Fees from covered call options  2,235  1,998  237  12
Bank Owned Life Insurance  2,404  2,044  360  18
Administrative services  2,749  1,975  774  39
Miscellaneous  13,792  10,600  3,192  30
Total Other  21,180  16,617  4,563  27
         
Total Non-Interest Income  $ 192,160  $ 317,647  $ (125,487)  (40)
 

NM = Not Meaningful

Wealth management revenue is comprised of the trust and asset management revenue of The Chicago Trust Company and the asset management fees, brokerage commissions, trading commissions and insurance product commissions at Wayne Hummer Investments and Wintrust Capital Management. Wealth management revenue totaled $10.1 million in the fourth quarter of 2010 and $8.0 million in the fourth quarter of 2009, an increase of 26%. Increased asset valuations due to equity market improvements have helped revenue growth from trust and asset management activities. Additionally, the improvement in the equity markets overall have led to the increase of the brokerage component of wealth management revenue as customer trading activity has increased. 

Mortgage banking revenue includes revenue from activities related to originating, selling and servicing residential real estate loans for the secondary market. For the quarter ended December 31, 2010, this revenue source totaled $22.7 million, an increase of $6.2 million when compared to the fourth quarter of 2009. Mortgages originated and sold totaled $1.3 billion in the fourth quarter of 2010 compared to $1.1 billion in the third quarter of 2010 and $953 million in the fourth quarter of 2009. The increase in mortgage banking revenue in the fourth quarter of 2010 as compared to the fourth quarter of 2009 resulted primarily from an increase in gains on sales of loans, which was driven by higher origination volumes and better pricing realized as a result of the Company utilizing mandatory execution of forward commitments with investors in 2010. The increase in gains on sales was partially offset by an increase in loss indemnification claims by purchasers of the Company's loans. The Company enters into residential mortgage loan sale agreements with investors in the normal course of business.  These agreements provide recourse to investors through certain representations concerning credit information, loan documentation, collateral and insurability.  Investors request the Company to indemnify them against losses on certain loans or to repurchase loans which the investors believe do not comply with applicable representations.  An increase in requests for loss indemnification can negatively impact mortgage banking revenue as additional recourse expense. The Company recognized $1.4 million of expense in the fourth quarter of 2010, a decrease of $68,000 compared to the third quarter of 2010, and has recognized $11.0 million of expense in 2010. This liability for loans expected to be repurchased is based on trends in repurchase and indemnification requests, actual loss experience, known and inherent risks in the loans that have been sold, and current economic conditions.

A summary of the mortgage banking revenue components is shown below:

 
Mortgage banking revenue        
         
  Three Months Ended Years Ended
  December 31, December 31,
(Dollars in thousands) 2010 2009 2010 2009
         
Mortgage loans originated and sold  $ 1,250,193  $ 952,624  $ 3,746,073  $ 4,666,507
         
Mortgage loans serviced  $ 937,725  $ 738,372    
Fair value of mortgage servicing rights (MSRs)  $ 8,762  $ 6,745    
MSRs as a percentage of loans serviced 0.93% 0.91%    
         
Gain on sales of loans  $ 23,216  $ 17,406  $ 75,303  $ 71,495
Mortgage servicing rights fair value adjustments  835  26  (2,955)  (2,031)
Recourse obligation on loans previously sold  (1,365)  (937)  (10,970)  (937)
Total mortgage banking revenue  $ 22,686  $ 16,495  $ 61,378  $ 68,527
         
Gain on sales of loans as a percentage of loans sold  1.86% 1.83% 2.01% 1.53%
 

As a result of the new accounting requirements beginning January 1, 2010 that now require loans sold and transferred into the securitization facility be accounted for as secured borrowings with the securitization investors, the Company no longer recognizes gains on sales of premium finance receivables (see "Securitization - Sale of Loans")

The Company recognized $159,000 of net gains on available-for-sale securities in the fourth quarter of 2010 compared to net gains of $642,000 in the prior year quarter. The net gains in the full year of 2010 were primarily related to the sale of certain collateralized mortgage obligations in the third quarter.

The gain on bargain purchase of $250,000 recognized in the fourth quarter of 2010 relates to final valuation adjustments on the FDIC-assisted bank acquisition of Ravenswood. The gain on bargain purchase of $43.0 million in the fourth quarter of 2009 is related to the life insurance premium finance loan acquisition. See "Acquisitions" for a discussion of these transactions. 

Trading gains of $611,000 were recognized by the Company in the fourth quarter of 2010 compared to gains of $4.4 million in the fourth quarter of 2009. Lower trading gains in 2010 resulted primarily from realizing larger market value increases in the prior year on certain collateralized mortgage obligations held in trading which were sold in July 2010.

Other non-interest income for the fourth quarter of 2010 totaled $7.3 million, compared to $4.7 million in the fourth quarter of 2009. Fees from certain covered call option transactions increased by $1.1 million in the fourth quarter of 2010 as compared to the same period in the prior year. Historically, compression in the net interest margin was effectively offset, as has consistently been the case, by the Company's covered call strategy. An illustration of the past effectiveness of this strategy is shown in the Supplemental Financial Information section (see page titled "Net Interest Margin (Including Call Option Income)").

NON-INTEREST EXPENSE

Non-interest expense for the fourth quarter of 2010 totaled $106.2 million and increased approximately $15.9 million, or 18%, compared to the fourth quarter 2009.   

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

 
  Three Months Ended    
  December 31 $ %
(Dollars in thousands) 2010 2009 Change Change
Salaries and employee benefits:        
Salaries  $ 31,876  $ 28,426  3,450  12
Commissions and bonus  18,043  11,752  6,291  54
Benefits  9,112  7,777  1,335  17
Total salaries and employee benefits  59,031  47,955  11,076  23
Equipment  4,384  4,097  287  7
Occupancy, net  5,927  6,124  (197)  (3)
Data processing  4,388  3,404  984  29
Advertising and marketing  1,881  1,366  515  38
Professional fees  4,775  3,556  1,219  34
Amortization of other intangible assets  719  744  (25)  (3)
FDIC insurance  4,572  4,731  (159)  (3)
OREO expenses, net  7,384  5,293  2,091  40
Other:        
Commissions - 3rd party brokers  965  757  208  27
Postage  1,220  1,367  (147)  (11)
Stationery and supplies  1,069  859  210  24
Miscellaneous  9,886  10,064  (178)  (2)
Total other  13,140  13,047  93  1
         
Total Non-Interest Expense  $ 106,201  $ 90,317  $ 15,884  18
 
  Years Ended    
  December 31 $ %
(Dollars in thousands) 2010 2009 Change Change
Salaries and employee benefits:        
Salaries  $ 120,210  $ 108,847  11,363  10
Commissions and bonus  58,107  45,503  12,604  28
Benefits  37,449  32,528  4,921  15
Total salaries and employee benefits  215,766  186,878  28,888  15
Equipment  16,529  16,119  410  3
Occupancy, net  24,444  23,806  638  3
Data processing  15,355  12,982  2,373  18
Advertising and marketing  6,315  5,369  946  18
Professional fees  16,394  13,399  2,995  22
Amortization of other intangible assets  2,739  2,784  (45)  (2)
FDIC insurance  18,028  21,199  (3,171)  (15)
OREO expenses, net  19,331  18,963  368  2
Other:        
Commissions - 3rd party brokers  4,003  3,095  908  29
Postage  4,813  4,833  (20)  (0)
Stationery and supplies  3,374  3,189  185  6
Miscellaneous  35,434  31,471  3,963  13
Total other  47,624  42,588  5,036  12
         
Total Non-Interest Expense  $ 382,525  $ 344,087  $ 38,438  11
 

Salaries and employee benefits comprised 56% of total non-interest expense in the fourth quarter of 2010 and 53% in the fourth quarter of 2009. Salaries and employee benefits expense increased $11.1 million, or 23%, in the fourth quarter of 2010 compared to the fourth quarter of 2009 primarily as a result of a $6.3 million increase in bonus and commissions as variable pay based revenue increased (primarily our mortgage banking and wealth management businesses), a $3.5 million increase in salaries caused by the additional employees from the three FDIC-assisted transactions and larger staffing as the Company grows and a $1.3 million increase from employee benefits (primarily health plan and payroll taxes related).       

Professional fees include legal, audit and tax fees, external loan review costs and normal regulatory exam assessments. Professional fees for the fourth quarter of 2010 were $4.8 million, an increase of $1.2 million, or 34%, compared to the same period in 2009. These increases are primarily a result of increased legal costs related to non-performing assets and recent bank acquisitions. 

FDIC insurance expense was $4.6 million in the fourth quarter of 2010, a decrease of $159,000 compared to $4.7 million in the fourth quarter of 2009. The decrease in FDIC insurance expense was a result of an industry-wide special assessment on financial institutions in 2009.

OREO expenses include all costs related to obtaining, maintaining and selling of other real estate owned properties. This expense totaled $7.4 million in the fourth quarter of 2010, an increase of $2.1 million compared to $5.3 million in the fourth quarter of 2009. The increase in OREO expenses primarily related to higher valuation adjustments of properties held in OREO in the fourth quarter of 2010 as compared to fourth quarter of 2009.  

ASSET QUALITY

Allowance for Credit Losses

 
         
  Three Months Ended Years Ended
  December 31, December 31,
(Dollars in thousands) 2010 2009 2010 2009
         
Allowance for loan losses at beginning of period  $ 110,432  $ 95,096  $ 98,277  $ 69,767
Provision for credit losses  28,795  38,603  124,664  167,932
Other adjustments  --   --   1,943  -- 
Reclassification to allowance for unfunded lending-related commitments  (1,781)  (494)  (1,301)  (2,037)
         
Charge-offs:        
Commercial  6,060  8,894  18,592  35,022
Commercial real estate  13,591  22,894  61,873  89,114
Home equity  1,322  1,572  5,926  4,605
Residential real estate  311  385  1,143  1,067
Premium finance receivables - commercial  1,820  2,532  23,005  8,153
Premium finance receivables - life insurance  154  --   233  -- 
Indirect consumer  239  427  967  1,848
Consumer and other  565  148  1,141  644
Total charge-offs  24,062  36,852  112,880  140,453
         
Recoveries:        
Commercial  268  237  1,140  450
Commercial real estate  57  552  914  792
Home equity  2  812  24  815
Residential real estate  2  --   12  -- 
Premium finance receivables - commercial  144  194  781  651
Premium finance receivables - life insurance  --   --   --   -- 
Indirect consumer  38  44  198  179
Consumer and other  8  85  131  181
Total recoveries  519  1,924  3,200  3,068
Net charge-offs, excluding covered loans  (23,543)  (34,928)  (109,680)  (137,385)
Covered loans  --   --   --   -- 
Net charge-offs  (23,543)  (34,928)  (109,680)  (137,385)
         
Allowance for loan losses at period end  $ 113,903  $ 98,277  $ 113,903  $ 98,277
         
Allowance for unfunded lending-related commitments at period end  4,134  3,554  4,134  3,554
         
Allowance for credit losses at period end  $ 118,037  $ 101,831  $ 118,037  $ 101,831
         
Annualized net charge-offs by category as a percentage of its own respective category's average:        
Commercial  1.11%  2.04%  0.95%  2.18%
Commercial real estate  1.66  2.62  1.83  2.59
Home equity  0.57  0.32  0.64  0.41
Residential real estate  0.17  0.28  0.19  0.21
Premium finance receivables - commercial  0.54  1.38  1.74  0.67
Premium finance receivables - life insurance  0.04  --   0.02  -- 
Indirect consumer  1.51  1.43  1.09  1.24
Consumer and other  1.98  0.22  0.93  0.35
Total loans, net of unearned income, excluding covered loans  0.96%  1.61%  1.16%  1.65%
Covered loans  --   --   --   -- 
Total loans, net of unearned income  0.92%  1.61%  1.13%  1.65%
         
Net charge-offs as a percentage of the provision for credit losses 81.76% 90.48% 87.98% 81.81%
         
Excluding covered loans:        
Loans at period-end      $ 9,599,886  $ 8,411,771
Allowance for loan losses as a percentage of loans at period end     1.19% 1.17%
Allowance for credit losses as a percentage of loans at period end     1.23% 1.21%
         
Including covered loans:        
Loans at period-end      $ 9,934,239  $ 8,411,771
Allowance for loan losses as a percentage of loans at period end      1.15% 1.17%
Allowance for credit losses as a percentage of loans at period end      1.19% 1.21%
 

The allowance for credit losses is comprised of the allowance for loan losses and the allowance for unfunded lending-related commitments. The allowance for loan losses is a reserve against loan amounts that are actually funded and outstanding while the allowance for unfunded lending-related commitments relates to certain amounts that Wintrust is committed to lend but for which funds have not yet been disbursed. The allowance for unfunded lending-related commitments (separate liability account) represents the portion of the provision for credit losses that was associated with unfunded lending-related commitments. The provision for credit losses may contain both a component related to funded loans (provision for loan losses) and a component related to lending-related commitments (provision for unfunded loan commitments and letters of credit). Total credit-related reserves also include the credit discounts on the purchased life insurance premium finance receivables which are netted with the loan balance. Additionally, on January 1, 2010, in conjunction with recording the securitization facility on its balance sheet, the Company established an allowance for loan losses totaling $1.9 million. This addition to the allowance for loan losses is shown as an "other adjustment to the allowance for loan losses". As of December 31, 2010, there was no allowance for loan losses for covered loans.

The provision for credit losses totaled $28.8 million for the fourth quarter of 2010, $25.5 million in the third quarter of 2010 and $38.6 million for the fourth quarter of 2009. For the quarter ended December 31, 2010, net charge-offs, excluding covered loans, totaled $23.5 million compared to $21.4 million in the third quarter of 2010 and $34.9 million recorded in the fourth quarter of 2009. In the second quarter of 2010, a fraud perpetrated against a number of premium finance companies in the industry, including the property and casualty division of our premium financing subsidiary, increased both our net charge-offs and our provision for loan losses by $15.7 million. On a ratio basis, annualized net charge-offs as a percentage of average loans, excluding covered loans, were 0.96% in the fourth quarter of 2010, 0.89% in the third quarter of 2010, and 1.61% in the fourth quarter of 2009.  Beginning in the third quarter of 2009, the Company committed to resolving problem credits as quickly as possible. Actions taken during this time increased OREO, net charge-offs and the provision for loan losses expenses required to maintain an appropriate level of reserves. The fourth quarter of 2010 amounts recorded for both net charge-offs and provision for credit losses reflect a continuation of the Company's commitment to maintain a low level of non-performing assets.

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 increase in the allowance for credit losses from the end of the prior quarter reflects the continued changes in real estate values on certain types of credits, specifically credits with residential development collateral valuation exposure.

The table below shows the aging of the Company's loan portfolio at December 31, 2010:

 
As of December 31, 2010   90+ days 60-89 30-59    
    and still days past days past    
(Dollars in thousands) Nonaccrual accruing due due Current Total Loans
Loan Balances:            
Commercial  $ 16,382  $ 478  $ 4,755  $ 16,024  $ 2,011,687  $ 2,049,326
Commercial real-estate:            
Residential construction  10,010  --   96  1,801  84,040  95,947
Commercial construction  1,820  --   --  1,481  128,371  131,672
Land  37,602  --   6,815  11,915  203,857  260,189
Office  12,718  --   9,121  3,202  510,290  535,331
Industrial  3,480  --   686  2,276  493,859  500,301
Retail  3,265  --   4,088  3,839  499,335  510,527
Multi-family  4,794  --   1,573  3,062  281,525  290,954
Mixed use and other  20,274  --   8,481  15,059  969,272  1,013,086
Total commercial real-estate  93,963  --   30,860  42,635  3,170,549  3,338,007
Total commercial and commercial real-estate  110,345  478  35,615  58,659  5,182,236  5,387,333
Home equity  7,425  --   2,181  7,098  897,708  914,412
Residential real estate  6,085  --   1,836  8,224  337,191  353,336
Premium finance receivables - commercial  8,587  8,096  6,076  16,584  1,226,157  1,265,500
Premium finance receivables - life insurance  354  --   --   --   1,521,532  1,521,886
Indirect consumer  191  318  301  918  49,419  51,147
Consumer and other  252  1  109  379  105,531  106,272
Total loans, net of unearned income, excluding covered loans  $ 133,239  $ 8,893  $ 46,118  $ 91,862  $ 9,319,774  $ 9,599,886
             
Aging as a % of Loan Balance:            
Commercial  0.8%  --%   0.2%  0.8%  98.2%  100.0%
Commercial real-estate:            
Residential construction  10.4  --   0.1  1.9  87.6  100.0
Commercial construction  1.4  --   --   1.1  97.5  100.0
Land  14.5  --   2.6  4.6  78.3  100.0
Office  2.4  --   1.7  0.6  95.3  100.0
Industrial  0.7  --   0.1  0.5  98.7  100.0
Retail  0.6  --   0.8  0.8  97.8  100.0
Multi-family  1.6  --   0.5  1.1  96.8  100.0
Mixed use and other  2.0  --   0.8  1.5  95.7  100.0
Total commercial real-estate  2.8  --   0.9  1.3  95.0  100.0
Total commercial and commercial real-estate  2.0  --   0.7  1.1  96.2  100.0
Home equity  0.8  --   0.2  0.8  98.2  100.0
Residential real estate  1.7  --   0.5  2.3  95.5  100.0
Premium finance receivables - commercial  0.7 0.6  0.5  1.3  96.9  100.0
Premium finance receivables - life insurance  0.0  --  0.0 0.0  100.0  100.0
Indirect consumer  0.4 0.6  0.6  1.8  96.6  100.0
Consumer and other  0.2  --   0.1  0.4  99.3  100.0
Total loans, net of unearned income, excluding covered loans  1.4%  0.1%  0.5%  1.0%  97.0%  100.0%
 

tre

As of December 31, 2010, $46.1 million of all loans, excluding covered loans, or 0.5%, were 60 to 89 days past due and $91.9 million, or 1.0%, were 30 to 59 days (or one payment) past due.  As of September 30, 2010, $64.8 million of all loans, excluding covered loans, or 0.7%, were 60 to 89 days past due and $85.1 million, or 0.9%, 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 December 31, 2010 that are current with regard to the contractual terms of the loan agreement represent 98.2% of the total home equity portfolio. Residential real estate loans at December 31, 2010 that are current with regards to the contractual terms of the loan agreements comprise 95.5% of total residential real estate loans outstanding.

The table below shows the aging of the Company's loan portfolio at September 30, 2010:

 
             
As of September 30, 2010   90+ days 60-89 30-59    
    and still days past days past    
(Dollars in thousands) Nonaccrual accruing due due Current Total Loans
Loan Balances:            
Commercial  $ 19,444  $ --   $ 5,797  $ 16,790  $ 1,910,760  $ 1,952,791
Commercial real-estate:             
Residential construction  4,921  --   3,029  3,942  91,019  102,911
Commercial construction  11,230  --   1,665  947  165,825  179,667
Land  27,134  --   13,033  3,971  219,225  263,363
Office  5,745  --   4,186  1,467  526,470  537,868
Industrial  3,565  --   1,014  6,658  461,319  472,556
Retail  2,084  --   4,254  5,079  481,216  492,633
Multi-family  9,339  --   8,023  1,966  259,799  279,127
Mixed use and other  19,322  --   7,373  6,916  969,762  1,003,373
Total commercial real-estate  83,340  --   42,577  30,946  3,174,635  3,331,498
Total commercial and commercial real-estate  102,784  --   48,374  47,736  5,085,395  5,284,289
Home equity  6,144  --   2,215  6,596  904,869  919,824
Residential real estate  6,644  --   718  1,765  332,882  342,009
Premium finance receivables - commercial  9,082  6,853  6,723  13,409  1,287,867  1,323,934
Premium finance receivables - life insurance  222  1,222  6,244  13,567  1,413,739  1,434,994
Indirect consumer  446  355  210  1,420  54,144  56,575
Consumer and other  569  2  356  565  98,038  99,530
Total loans, net of unearned income, excluding covered loans  $ 125,891  $ 8,432  $ 64,840  $ 85,058  $ 9,176,934  $ 9,461,155
             
Aging as a % of Loan Balance:            
Commercial  1.0%  --%   0.3%  0.9%  97.8%  100.0%
Commercial real-estate:            
Residential construction  4.8  --   2.9  3.8  88.5  100.0
Commercial construction  6.3  --   0.9  0.5  92.3  100.0
Land  10.3  --   5.0  1.5  83.2  100.0
Office  1.1  --   0.8  0.3  97.8  100.0
Industrial  0.8  --   0.2  1.4  97.6  100.0
Retail  0.4  --   0.9  1.0  97.7  100.0
Multi-family  3.3  --   2.9  0.7  93.1  100.0
Mixed use and other  1.9  --   0.7  0.7  96.7  100.0
Total commercial real-estate  2.5  --   1.3  0.9  95.3  100.0
Total commercial and commercial real-estate  2.0  --   0.9  0.9  96.2  100.0
Home equity  0.7  --   0.2  0.7  98.4  100.0
Residential real estate  1.9  --   0.2  0.6  97.3  100.0
Premium finance receivables - commercial  0.7  0.5  0.5  1.0  97.3  100.0
Premium finance receivables - life insurance  0.0  0.1  0.4  1.0  98.5  100.0
Indirect consumer  0.8  0.6  0.4  2.5  95.7  100.0
Consumer and other  0.6  0.0  0.3  0.6  98.5  100.0
Total loans, net of unearned income, excluding covered loans  1.3%  0.1%  0.7%  0.9%  97.0%  100.0%
 

The ratio of non-performing commercial premium finance receivables fluctuates throughout the year due to the nature and timing of canceled account collections from insurance carriers. Due to the nature of collateral for commercial premium finance receivables, it customarily takes 60-150 days to convert the collateral into cash. Accordingly, the level of non-performing commercial premium finance receivables is not necessarily indicative of the loss inherent in the portfolio. In the event of default, Wintrust has the power to cancel the insurance policy and collect the unearned portion of the premium from the insurance carrier. In the event of cancellation, the cash returned in payment of the unearned premium by the insurer should generally be sufficient to cover the receivable balance, the interest and other charges due. Due to notification requirements and processing time by most insurance carriers, many receivables will become delinquent beyond 90 days while the insurer is processing the return of the unearned premium. Management continues to accrue interest until maturity as the unearned premium is ordinarily sufficient to pay-off the outstanding balance and contractual interest due.

Non-performing Assets, excluding covered assets

The following table sets forth Wintrust's non-performing assets, excluding covered assets, at the dates indicated. 

 
       
  December 31, September 30, December 31,
(Dollars in thousands) 2010 2010 2009
       
Loans past due greater than 90 days and still accruing:      
Commercial  $ 478  $ --   $ 561
Commercial real-estate  --   --   -- 
Home equity  --   --   -- 
Residential real-estate  --   --   412
Premium finance receivables - commercial  8,096  6,853  6,271
Premium finance receivables - life insurance  --   1,222  -- 
Indirect consumer  318  355  461
Consumer and other  1  2  95
Total loans past due greater than 90 days and still accruing   8,893  8,432  7,800
       
Non-accrual loans:      
Commercial   16,382  19,444  16,509
Commercial real-estate  93,963  83,340  80,639
Home equity  7,425  6,144  8,883
Residential real-estate  6,085  6,644  3,779
Premium finance receivables - commercial  8,587  9,082  11,878
Premium finance receivables - life insurance  354  222  704
Indirect consumer  191  446  995
Consumer and other  252  569  617
Total non-accrual loans  133,239  125,891  124,004
       
Total non-performing loans:      
Commercial  16,860  19,444  17,070
Commercial real-estate  93,963  83,340  80,639
Home equity  7,425  6,144  8,883
Residential real-estate  6,085  6,644  4,191
Premium finance receivables - commercial  16,683  15,935  18,149
Premium finance receivables - life insurance  354  1,444  704
Indirect consumer  509  801  1,456
Consumer and other  253  571  712
Total non-performing loans  $ 142,132  $ 134,323  $ 131,804
Other real estate owned  71,214  76,654  80,163
Total non-performing assets  $ 213,346  $ 210,977  $ 211,967
       
Total non-performing loans by category as a percent of its own respective category's period-end balance:      
Commercial  0.82%  1.00%  0.98%
Commercial real-estate  2.81  2.50  2.45
Home equity  0.81  0.67  0.95
Residential real-estate  1.72  1.94  1.37
Premium finance receivables - commercial  1.32  1.20  2.49
Premium finance receivables - life insurance  0.02  0.10  0.06
Indirect consumer  0.99  1.42  1.48
Consumer and other  0.24  0.57  0.65
Total loans, net of unearned income   1.48%  1.42%  1.57%
       
 Total non-performing assets as a percentage of total assets 1.58% 1.56% 1.74%
       
Allowance for loan losses as a percentage total non-performing loans 80.14% 82.21% 74.56%
 

Non-performing Commercial and Commercial Real Estate

The commercial non-performing loan category totaled $16.9 million as of December 31, 2010 compared to $19.4 million as of September 30, 2010 and $17.1 million as of December 31, 2009. The commercial real estate non-performing loan category totaled $94.0 million as of December 31, 2010 compared to $83.3 million as of September 30, 2010 and $80.6 million as of December 31, 2009. 

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 to occur upon the ultimate resolution of these credits.

Non-performing Residential Real Estate and Home Equity

Non-performing home equity and residential real estate loans totaled $13.5 million as of December 31, 2010. The balance increased $436,000 from December 31, 2009 and $722,000 from September 30, 2010. The December 31, 2010 non-performing balance is comprised of $6.1 million of residential real estate (22 individual credits) and $7.4 million of home equity loans (26 individual credits). On average, this is approximately three non-performing residential real estate loans and home equity loans per chartered bank within the Company. The Company believes control and collection of these loans is very manageable. At this time, management believes reserves are adequate to absorb inherent losses that may occur upon the ultimate resolution of these credits.

Non-performing Commercial Premium Finance Receivables

The table below presents the level of non-performing property and casualty premium finance receivables as of December 31, 2010 and 2009, and the amount of net charge-offs for the quarters then ended. 

 
  December 31, December 31,
(Dollars in thousands) 2010 2009
Non-performing premium finance receivables - commercial  $ 16,683  $ 18,149
- as a percent of premium finance receivables - commercial outstanding  1.32%  2.49%
     
Net charge-offs of premium finance receivables - commercial  $ 1,676  $ 2,338
- annualized as a percent of average premium finance receivables - commercial  0.54%  1.38%
 

Fluctuations in this category may occur due to timing and nature of account collections from insurance carriers. The Company's underwriting standards, regardless of the condition of the economy, have remained consistent. We anticipate that net charge-offs and non-performing asset levels in the near term will continue to be at levels that are within acceptable operating ranges for this category of loans. Management is comfortable with administering the collections at this level of non-performing property and casualty premium finance receivables and believes reserves are adequate to absorb inherent losses that may occur upon the ultimate resolution of these credits. 

Nonperforming Loans Rollforward

The table below presents a summary of non-performing loans, excluding covered loans, as of December 31, 2010 and shows the changes in the balance during 2010:

 
         
  Three Months Ended
  December 31, September 30, June 30, March 31,
(Dollars in thousands) 2010 2010 2010 2010
Balance at beginning of period  $ 134,323  $ 135,401  $ 140,960  $ 131,804
Additions, net  47,789  40,539  39,330  45,803
Return to performing status  (20)   (19)   (1,788)  (3,087)
Payments received  (6,419)  (17,160)  (5,634)  (1,300)
Transfer to OREO  (17,929)  (10,011)  (13,477)  (27,246)
Charge-offs  (14,328)  (12,212)  (16,481)  (12,199)
Net change for niche loans (1)  (1,284)  (2,215)  (7,509) 7,185 
Balance at end of period  $ 142,132  $ 134,323  $ 135,401  $ 140,960
         
(1) This includes activity for premium finance receivables, mortgages held for investment by Wintrust Mortgage and indirect consumer loans.

Restructured Loans

The table below presents a summary of restructured loans for the respective period, presented by loan category and accrual status:

 
   
  December 31,  September 30, December 31,
(Dollars in thousands) 2010 2010 2009
Accruing:      
Commercial  $ 14,163  $ 7,690  $ 10,946
Commercial real estate  65,419  65,149  20,573
Residential real estate  1,562  1,121  234
Total accrual  $ 81,144  $ 73,960  $ 31,753
       
Non-accrual: (1)      
Commercial  $ 3,865  $ 3,959  $ --
Commercial real estate  15,947  13,812  679
Residential real estate  234  1,935  --
Total non-accrual  $ 20,046  $ 19,706  $ 679
       
Total restructured loans:      
Commercial  $ 18,028  $ 11,649  $ 10,946
Commercial real estate  81,366  78,961  21,252
Residential real estate  1,796  3,056  234
Total restructured loans  $ 101,190  $ 93,666  $ 32,432
       
(1) Included in total non-performing loans.
 

At December 31, 2010, the Company had $101.2 million in loans with modified terms. The $101.2 million in modified loans represents 129 credit relationships in which economic concessions were granted to certain borrowers to better align the terms of their loans with their current ability to pay. These actions were taken on a case-by-case basis working with these borrowers to find a concession that would assist them in retaining their businesses or their homes and attempt to keep these loans in an accruing status for the Company.  

Subsequent to its restructuring, any restructured loan with a below market rate concession will remain classified by the Company as a restructured loan for its duration. Each restructured loan was reviewed for collateral impairment at December 31, 2010 and approximately $11.3 million of collateral impairment was present and appropriately reserved for through the Company's normal reserving methodology in the Company's allowance for loan losses.

Other Real Estate Owned

The table below presents a summary of other real estate owned, excluding covered other real estate owned, as of December 31, 2010 and shows the activity for the respective period and the balance for each property type:

 
       
  Three Months Ended
  December 31, September 30, December 31,
(Dollars in thousands) 2010 2010 2009
Balance at beginning of period  $ 76,654  $ 86,420  $ 40,639
Disposals/resolved  (21,904)  (15,463)  (28,286)
Transfers in at fair value, less costs to sell  18,812  8,303  68,647
Fair value adjustments  (2,348)  (2,606)  (837)
Balance at end of period  $ 71,214  $ 76,654  $ 80,163
       
   Period End 
  December 31, September 30, December 31,
Balance by Property Type 2010 2010 2009
Residential real estate  $ 5,694  $ 8,778  $ 5,889
Residential real estate development  17,781  22,600  41,992
Commercial real estate  47,739  45,276  32,282
Total  $ 71,214  $ 76,654  $ 80,163
 

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, North Shore Community Bank & Trust Company in Wilmette, Libertyville Bank & Trust Company, Barrington Bank & Trust Company, Crystal Lake Bank & Trust Company, Northbrook Bank & Trust Company, Advantage National Bank in Elk Grove Village, Village Bank & Trust in Arlington Heights, Beverly Bank & Trust Company in Chicago, Wheaton Bank & Trust Company, State Bank of The Lakes in Antioch, Old Plank Trail Community Bank, N.A. in New Lenox, St. Charles Bank & Trust Company and Town Bank in Hartland, Wisconsin. The banks also operate facilities in Illinois in Algonquin, Bloomingdale, Buffalo Grove, Cary, Chicago, Clarendon Hills, Deerfield, Downers Grove, Frankfort, Geneva, Glencoe, Glen Ellyn, Gurnee, Grayslake, Highland Park, Highwood, Hoffman Estates, Island Lake, Lake Bluff, Lake Villa, Lincoln Park, Lindenhurst, McHenry, Mokena, Mount Prospect, Mundelein, Naperville, North Chicago, Northfield, Palatine, Prospect Heights, Ravenswood, Ravinia, Riverside, Roselle, Sauganash, Skokie, Spring Grove, Vernon Hills, Wauconda, Western Springs, Willowbrook and Winnetka, and in Delafield, Elm Grove, Madison, Wales, Wisconsin.

Additionally, the Company operates various non-bank subsidiaries. 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. 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 Corporation 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. Wintrust Capital Management provides money management services and advisory services to individual accounts. Advanced Investment Partners, LLC is an investment management firm specializing in the active management of domestic equity investment strategies. The Chicago Trust Company, a trust subsidiary, allows Wintrust to service customers' trust and investment needs at each banking location. Wintrust Information Technology Services Company provides information technology support, item capture and statement preparation services to the Wintrust subsidiaries.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements within the meaning of federal securities laws. Forward-looking information 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 2009 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:

  • negative economic conditions that adversely affect the economy, housing prices, the job market and other factors that may affect the Company's liquidity and the performance of its loan portfolios, particularly in the markets in which it operates;                                
  • the extent of defaults and losses on the Company's loan portfolio, which may require further increases in its allowance for credit losses;                             
  • estimates of fair value of certain of the Company's assets and liabilities, which could change in value significantly from period to period;                             
  • changes in the level and volatility of interest rates, the capital markets and other market indices that may affect, among other things, the Company's liquidity and the value of its assets and liabilities;                             
  • a decrease in the Company's regulatory capital ratios, including as a result of further declines in the value of its loan portfolios, or otherwise;               
  • effects resulting from the Company's prior participation in the Capital Purchase Program;
  • increased costs of compliance, heightened regulatory capital requirements and other risks associated with changes in regulation and the current regulatory environment, including the requirements of the Basel II and III capital regimes and the Dodd-Frank Wall Street Reform and Consumer Protection Act;
  • legislative or regulatory changes, particularly changes in regulation of financial services companies and/or the products and services offered by financial services companies;                                 
  • increases in the Company's FDIC insurance premiums, or the collection of special assessments by the FDIC;            
  • competitive pressures in the financial services business which may affect the pricing of the Company's loan and deposit products as well as its services (including wealth management services);                               
  • delinquencies or fraud with respect to the Company's premium finance business;                             
  • the Company's ability to comply with covenants under its securitization facility and credit facility;                       
  • credit downgrades among commercial and life insurance providers that could negatively affect the value of collateral securing the Company's premium finance loans;                             
  • any negative perception of the Company's reputation or financial strength;                           
  • the loss of customers as a result of technological changes allowing consumers to complete their financial transactions without the use of a bank;                                   
  • the ability of the Company to attract and retain senior management experienced in the banking and financial services industries;                                 
  • failure to identify and complete favorable acquisitions in the future, or unexpected difficulties or developments related to the integration of recent or future acquisitions, including with respect to any FDIC-assisted acquisitions;     
  • unexpected difficulties or unanticipated developments related to the Company's strategy of de novo bank formations and openings, which typically require over 13 months of operations before becoming profitable due to the impact of organizational and overhead expenses, the startup phase of generating deposits and the time lag typically involved in redeploying deposits into attractively priced loans and other higher yielding earning assets;        
  • changes in accounting standards, rules and interpretations and the impact on the Corporation's financial statements;                              
  • significant litigation involving the Company; and                               
  • the ability of the Company to receive dividends from its subsidiaries.

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

CONFERENCE CALL, WEB CAST AND REPLAY

The Company will hold a conference call at 1:00 p.m. (CT) Monday, January 24, 2011 regarding fourth quarter 2010 results. Individuals interested in listening should call (800) 514-8478 and enter Conference ID #38097571. 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 News and Events, Presentations & Conference Calls. The text of the fourth quarter 2010 earnings press release will be available on the home page of the Company's website at ( http://www.wintrust.com ) and at the 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
  December 31, September 30, June 30, March 31, December 31,
  2010 2010 2010 2010 2009
Selected Financial Condition Data (at end of period):        
Total assets  $ 13,968,074  $ 14,100,368  $ 13,708,560  $ 12,839,978  $ 12,215,620
Total loans, excluding covered loans  9,599,886  9,461,155  9,324,163  9,070,562  8,411,771
Total deposits  10,803,673  10,962,239  10,624,742  9,724,870  9,917,074
Junior subordinated debentures  249,493  249,493  249,493  249,493  249,493
Total shareholders' equity  1,436,549  1,398,912  1,384,736  1,364,832  1,138,639
Selected Statements of Income Data:          
Net interest income  112,677  102,980  104,314  95,865  86,934
Net revenue (1)  157,138  157,636  154,750  138,472  172,022
Core pre-tax earnings (2)  58,666  48,074  47,728  42,076  39,931
Net income  14,205  20,098  13,009  16,017  28,167
Net income (loss) per common share – Basic  $ (0.06)  $ 0.49  $ 0.26  $ 0.43  $ 0.96
Net income (loss) per common share – Diluted   $ (0.06)  $ 0.47  $ 0.25  $ 0.41  $ 0.90
Selected Financial Ratios and Other Data:          
Performance Ratios:          
Net interest margin (2)  3.46%  3.22%  3.43%  3.38%  3.10%
Non-interest income to average assets  1.24%  1.56%  1.51%  1.37%  2.77%
Non-interest expense to average assets   2.97%  2.85%  2.78%  2.70%  2.94%
Net overhead ratio (3)  1.73%  1.28%  1.26%  1.33%  0.17%
Efficiency ratio (2) (4)  67.48%  67.01%  59.72%  60.59%  52.54%
Return on average assets  0.40%  0.57%  0.39%  0.52%  0.92%
Return on average common equity  (0.66)%  5.44%  2.98%  4.93%  10.97%
Average total assets  $ 14,199,351  $ 14,015,757  $ 13,390,537  $ 12,590,817  $ 12,189,096
Average total shareholders' equity  1,442,754  1,391,507  1,371,689  1,196,191  1,126,594
Average loans to average deposits ratio  89.0%  88.7%  91.0%  94.6%  86.9%
Average loans to average deposits ratio (including covered loans)  92.1  91.7  93.0  94.6  86.9
Common Share Data at end of period:          
Market price per common share  $ 33.03  $ 32.41  $ 33.34  $ 37.21  $ 30.79
Book value per common share (2)  $ 32.73  $ 35.70  $ 35.33  $ 34.76  $ 35.27
Tangible common book value per share (2)  $ 25.80  $ 26.34  $ 25.96  $ 25.39  $ 23.22
Common shares outstanding 34,864,068 31,143,740 31,084,298 31,044,449 24,206,819
Other Data at end of period:(9)          
Leverage Ratio (5)  10.6%  10.0%  10.2%  10.8%  9.3%
Tier 1 Capital to risk-weighted assets (5)  12.6%  12.7%  13.0%  13.4%  11.0%
Total capital to risk-weighted assets (5)  13.9%  14.1%  14.3%  14.9%  12.4%
Tangible Common Equity ratio (TCE) (2) (8)  8.0%  5.9%  6.0%  6.3%  4.7%
Allowance for credit losses (6)  $ 118,037  $ 112,807  $ 108,716  $ 106,050  $ 101,831
Credit discounts on purchased premium          
 finance receivables - life insurance (7)  23,227  26,399  28,216  33,990  37,323
Non-performing loans  142,132  134,323  135,401  140,960  131,804
Allowance for credit losses to total loans (6)  1.23%  1.19%  1.17%  1.17%  1.21%
Non-performing loans to total loans  1.48%  1.42%  1.45%  1.55%  1.57%
Number of:          
 Bank subsidiaries 15 15 15 15 15
 Non-bank subsidiaries 8 8 8 8 8
 Banking offices 86 85 85 78 78
(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) The efficiency ratio is calculated by dividing total non-interest expense by tax-equivalent net revenue (less securities gains or losses). A lower ratio indicates more efficient revenue generation.
(5) Capital ratios for current quarter-end are estimated.
(6) The allowance for credit losses includes both the allowance for loan losses and the allowance for unfunded lending-related commitments.
(7) Represents the credit discounts on purchased life insurance premium finance loans.
(8) Total shareholders' equity minus preferred stock and total intangible assets divided by total assets minus total intangible assets
(9) Asset quality ratios exclude covered loans.
 
 
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Consolidated Statements of Condition - 5 Quarter Trends
           
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)  
  December 31, September 30, June 30, March 31, December 31,
(In thousands) 2010 2010 2010 2010 2009
Assets          
Cash and due from banks  $ 153,690  $ 155,067  $ 123,712  $ 106,501  $ 135,133
Federal funds sold and securities purchased under resale agreements 18,890 88,913 28,664 15,393 23,483
Interest-bearing deposits with other banks 865,575 1,224,584 1,110,123 1,222,323 1,025,663
Available-for-sale securities, at fair value 1,496,302 1,324,179 1,418,035 1,205,919 1,255,066
Trading account securities 4,879 4,935 38,261 39,938 33,774
Brokerage customer receivables 24,549 25,442 24,291 20,978 20,871
Federal Home Loan Bank and Federal Reserve Bank stock, at cost 82,407 80,445 79,300 74,001 73,749
Loans held-for-sale 371,447 320,440 237,981 156,049 275,715
Loans, net of unearned income, excluding covered loans 9,599,886 9,461,155 9,324,163 9,070,562 8,411,771
Covered loans 334,353 353,840 275,563  --   -- 
Total loans 9,934,239 9,814,995 9,599,726 9,070,562 8,411,771
Less: Allowance for loan losses 113,903 110,432 106,547 102,397 98,277
Net loans 9,820,336 9,704,563 9,493,179 8,968,165 8,313,494
Premises and equipment, net 363,696 353,445 346,806 348,182 350,345
FDIC indemnification asset 118,182 161,640 114,102  --   -- 
Accrued interest receivable and other assets 354,356 365,496 374,172 363,676 416,678
Trade date securities receivable  --   --   28,634  27,850  -- 
Goodwill 281,190 278,025 278,025 278,025 278,025
Other intangible assets 12,575 13,194 13,275 12,978 13,624
Total assets  $ 13,968,074  $ 14,100,368  $ 13,708,560  $ 12,839,978  $ 12,215,620
           
Liabilities and Shareholders' Equity          
Deposits:          
Non-interest bearing  $ 1,201,194  $ 1,042,730  $ 953,814  $ 871,830  $ 864,306
Interest bearing 9,602,479 9,919,509 9,670,928 8,853,040 9,052,768
Total deposits 10,803,673 10,962,239 10,624,742 9,724,870 9,917,074
Notes payable 1,000 1,000 1,000 1,000 1,000
Federal Home Loan Bank advances 415,643 414,832 415,571 421,775 430,987
Other borrowings 260,619 241,522 218,424 218,079 247,437
Secured borrowings - owed to securitization investors 600,000 600,000 600,000 600,000  -- 
Subordinated notes 50,000 55,000 55,000 60,000 60,000
Junior subordinated debentures  249,493  249,493  249,493  249,493  249,493
Trade date securities payable  --   2,045  200  62,017  -- 
Accrued interest payable and other liabilities  151,097  175,325  159,394  137,912  170,990
Total liabilities  12,531,525  12,701,456  12,323,824  11,475,146  11,076,981
           
Shareholders' Equity:          
Preferred stock  49,640  287,234  286,460  285,642  284,824
Common stock  34,864  31,145  31,084  31,044  27,079
Surplus 965,203 682,318 680,261 677,090 589,939
Treasury stock  --   (51)  (4)  --   (122,733)
Retained earnings 392,354 394,323 381,969 373,903 366,152
Accumulated other comprehensive income (loss)  (5,512) 3,943 4,966  (2,847)  (6,622)
Total shareholders' equity 1,436,549 1,398,912 1,384,736 1,364,832 1,138,639
Total liabilities and shareholders' equity  $ 13,968,074  $ 14,100,368  $ 13,708,560  $ 12,839,978  $ 12,215,620
 
 
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Consolidated Statements of Income (Unaudited) - 5 Quarter Trends
           
  Three Months Ended
  December 31, September 30, June 30, March 31, December 31,
(In thousands, except per share data) 2010 2010 2010 2010 2009
Interest income          
Interest and fees on loans  $ 144,652  $ 137,902  $ 135,800  $ 129,542  $ 122,140
Interest bearing deposits with banks  1,342  1,339  1,215  1,274  1,369
Federal funds sold and securities purchased under resale agreements  39  35  34  49  38
Securities  7,236  7,438  11,218  11,012  12,672
Trading account securities  11  19  343  21  20
Brokerage customer receivables  170  180  166  139  143
Federal Home Loan Bank and Federal Reserve Bank stock  512  488  472  459  447
Total interest income  153,962  147,401  149,248  142,496  136,829
Interest expense          
Interest on deposits  27,853  31,088  31,626  33,212  38,998
Interest on Federal Home Loan Bank advances  4,038  4,042  4,094  4,346  4,510
Interest on notes payable and other borrowings  1,631  1,411  1,439  1,462  1,663
Interest on secured borrowings - owed to securitization investors  3,089  3,167  3,115  2,995  -- 
Interest on subordinated notes  233  265  256  241  286
Interest on junior subordinated debentures  4,441  4,448  4,404  4,375  4,438
Total interest expense  41,285  44,421  44,934  46,631  49,895
Net interest income  112,677  102,980  104,314  95,865  86,934
Provision for credit losses  28,795  25,528  41,297  29,044  38,603
Net interest income after provision for credit losses  83,882  77,452  63,017  66,821  48,331
Non-interest income          
Wealth management  10,108  8,973  9,193  8,667  8,047
Mortgage banking  22,686  20,980  7,985  9,727  16,495
Service charges on deposit accounts  3,346  3,384  3,371  3,332  3,437
Gain on sales of commercial premium finance receivables  --  --   --   --   4,429
Gains (losses) on available-for-sale securities, net  159  9,235  46  392  642
Gain on bargain purchases  250  6,593  26,494  10,894  42,951
Trading gains (losses)  611  210  (1,617)  5,961  4,411
Other  7,301  5,281  4,964  3,634  4,676
Total non-interest income  44,461  54,656  50,436  42,607  85,088
Non-interest expense          
Salaries and employee benefits  59,031  57,014  50,649  49,072  47,955
Equipment  4,384  4,203  4,046  3,896  4,097
Occupancy, net  5,927  6,254  6,033  6,230  6,124
Data processing  4,388  3,891  3,669  3,407  3,404
Advertising and marketing  1,881  1,650  1,470  1,314  1,366
Professional fees  4,775  4,555  3,957  3,107  3,556
Amortization of other intangible assets  719  701  674  645  744
FDIC insurance  4,572  4,642  5,005  3,809  4,731
OREO expenses, net  7,384  4,767  5,843  1,337  5,293
Other  13,140  12,046  11,317  11,121  13,047
Total non-interest expense  106,201  99,723  92,663  83,938  90,317
Income before taxes  22,142  32,385  20,790  25,490  43,102
Income tax expense  7,937  12,287  7,781  9,473  14,935
Net income  $ 14,205  $ 20,098  $ 13,009  $ 16,017  $ 28,167
Preferred stock dividends and discount accretion  $ 16,175  $ 4,943  $ 4,943  $ 4,943  $ 4,888
Net income (loss) applicable to common shares  $ (1,970)  $ 15,155  $ 8,066  $ 11,074  $ 23,279
Net income (loss) per common share - Basic  $ (0.06)  $ 0.49  $ 0.26  $ 0.43  $ 0.96
Net income (loss) per common share - Diluted  $ (0.06)  $ 0.47  $ 0.25  $ 0.41  $ 0.90
Cash dividends declared per common share  $ --   $ 0.09  $ --   $ 0.09  $ -- 
Weighted average common shares outstanding  32,015  31,117  31,074  25,942  24,166
Dilutive potential common shares  --   988  1,267  1,139  2,845
Average common shares and dilutive common shares  32,015  32,105  32,341  27,081  27,011
 
 
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Period End Loan Balances - 5 Quarter Trends
           
  December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands) 2010 2010 2010 2010 2009
Balance:          
Commercial  $ 2,049,326  $ 1,952,791  $ 1,827,618  $ 1,749,895  $ 1,743,208
Commercial real estate  3,338,007  3,331,498  3,347,823  3,333,157  3,296,698
Home equity  914,412  919,824  922,305  924,993  930,482
Residential real-estate  353,336  342,009  332,673  322,984  306,296
Premium finance receivables - commercial  1,265,500  1,323,934  1,346,985  1,317,822  730,144
Premium finance receivables - life insurance  1,521,886  1,434,994  1,378,657  1,233,573  1,197,893
Indirect consumer (1)  51,147  56,575  69,011  83,136  98,134
Consumer and other  106,272  99,530  99,091  105,002  108,916
Total loans, net of unearned income, excluding covered loans  $ 9,599,886  $ 9,461,155  $ 9,324,163  $ 9,070,562  $ 8,411,771
Covered loans  334,353  353,840  275,563  --   -- 
Total loans, net of unearned income  $ 9,934,239  $ 9,814,995  $ 9,599,726  $ 9,070,562  $ 8,411,771
           
Mix:          
Commercial   21%  20%  19%  19%  21%
Commercial real estate  34  34  35  37  39
Home equity  9  9  10  10  11
Residential real-estate  3  3  3  4  4
Premium finance receivables - commercial  13  13  14  14  9
Premium finance receivables - life insurance  15  15  14  14  14
Indirect consumer (1)  1  1  1  1  1
Consumer and other  1  1  1  1  1
Total loans, net of unearned income, excluding covered loans  97%  96%  97%  100%  100%
Covered loans  3  4  3  --   -- 
Total loans, net of unearned income  100%  100%  100%  100%  100%
           
(1) Includes autos, boats, snowmobiles and other indirect consumer loans.
 
 
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Period End Deposits Balances - 5 Quarter Trends
           
  December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands) 2010 2010 2010 2010 2009
Balance:          
Non-interest bearing  $ 1,201,194  $ 1,042,730  $ 953,814  $ 871,830  $ 864,306
NOW  1,561,507  1,551,749  1,560,733  1,448,857  1,415,856
Wealth Management deposits (1)  658,660  710,435  694,830  690,919  971,113
Money Market  1,759,866  1,746,168  1,722,729  1,586,830  1,534,632
Savings  744,534  713,823  594,753  558,770  561,916
Time certificates of deposit  4,877,912  5,197,334  5,097,883  4,567,664  4,569,251
Total deposits  $ 10,803,673  $ 10,962,239  $ 10,624,742  $ 9,724,870  $ 9,917,074
           
Mix:          
Non-interest bearing  11%  10%  9%  9%  9%
NOW  15  14  15  15  14
Wealth Management deposits (1)  6  6  6  7  10
Money Market  16  16  16  16  15
Savings  7  7  6  6  6
Time certificates of deposit  45  47  48  47  46
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 customes of The Chicago Trust 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
  December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands) 2010 2010 2010 2010 2009
           
Net interest income  $ 113,083  $ 103,396  $ 104,775  $ 96,311  $ 87,448
Call option income  1,075  703  169  289  -- 
Net interest income including call option income  $ 114,158  $ 104,099  $ 104,944  $ 96,600  $ 87,448
           
Yield on earning assets  4.72%  4.59%  4.91%  5.01%  4.87%
Rate on interest-bearing liabilities  1.43  1.55  1.65  1.82  1.98
Rate spread  3.29%  3.04%  3.26%  3.19%  2.89%
Net free funds contribution  0.17  0.18  0.17  0.19  0.21
Net interest margin  3.46  3.22  3.43  3.38  3.10
Call option income  0.03  0.02  0.01  0.01  -- 
Net interest margin including call option income  3.49%  3.24%  3.44%  3.39%  3.10%
 
 
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Net Interest Margin (Including Call Option Income) - YTD Trends
 
  Years Ended

December 31,
(Dollars in thousands) 2010 2009 2008 2007 2006
           
Net interest income  $ 417,565  $ 314,096  $ 247,054  $ 264,777  $ 250,507
Call option income  2,236  1,998  29,024  2,628  3,157
Net interest income including call option income  $ 419,801  $ 316,094  $ 276,078  $ 267,405  $ 253,664
           
Yield on earning assets  4.80%  5.07%  5.88%  7.21%  6.91%
Rate on interest-bearing liabilities  1.61  2.29  3.31  4.39  4.11
Rate spread  3.19%  2.78%  2.57%  2.82%  2.80%
Net free funds contribution  0.18  0.23  0.24  0.29  0.30
Net interest margin  3.37  3.01  2.81  3.11  3.10
Call option income  0.02  0.02  0.33  0.03  0.04
Net interest margin including call option income  3.39%  3.03%  3.14%  3.14%  3.14%
 
 
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Quarterly Average Balances - 5 Quarter Trends
  Three Months Ended
  December 31, September 30, June 30, March 31, December 31,
(In thousands) 2010 2010 2010 2010 2009
Liquidity management assets  $ 2,844,351  $ 2,802,964  $ 2,613,179  $ 2,384,122  $ 2,569,584
Other earning assets  29,676  34,263  62,874  26,269  26,167
Loans, net of unearned income  9,777,435  9,603,561  9,356,033  9,150,078  8,604,006
Covered loans  337,690  325,751  210,030  --   -- 
Total earning assets  $ 12,989,152  $ 12,766,539  $ 12,242,116  $ 11,560,469  $ 11,199,757
Allowance for loan losses  (116,447)  (113,631)  (108,764)  (107,257)  (97,269)
Cash and due from banks  151,562  154,078  137,531  113,514  124,219
Other assets  1,175,084  1,208,771  1,119,654  1,024,091  962,389
Total assets  $ 14,199,351  $ 14,015,757  $ 13,390,537  $ 12,590,817  $ 12,189,096
           
Interest-bearing deposits  $ 9,839,223  $ 9,823,525  $ 9,348,541  $ 8,818,012  $ 9,016,863
Federal Home Loan Bank advances  415,260  414,789  417,835  429,195  432,028
Notes payable and other borrowings  244,044  232,991  217,751  225,919  234,754
Secured borrowings - owed to securitization investors  600,000  600,000  600,000  600,000  -- 
Subordinated notes  53,369  55,000  57,198  60,000  63,261
Junior subordinated notes  249,493  249,493  249,493  249,493  249,493
Total interest-bearing liabilities  $ 11,401,389  $ 11,375,798  $ 10,890,818  $ 10,382,619  $ 9,996,399
Non-interest bearing liabilities  1,148,208  1,005,170  932,046  858,875  886,988
Other liabilities  207,000  243,282  195,984  153,132  179,115
Equity  1,442,754  1,391,507  1,371,689  1,196,191  1,126,594
Total liabilities and shareholders' equity  $ 14,199,351  $ 14,015,757  $ 13,390,537  $ 12,590,817  $ 12,189,096
 
           
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Net Interest Margin - 5 Quarter Trends
  Three Months Ended
  December 31, September 30, June 30, March 31, December 31,
  2010 2010 2010 2010 2009
Yield earned on:          
Liquidity management assets  1.32%  1.36%  2.04%  2.24%  2.31%
Other earning assets  2.45  2.37  3.28  2.53  2.59
Loans, net of unearned income  5.71  5.54  5.71  5.75  5.64
Covered loans  4.75  4.84  5.12  --   -- 
   4.72%  4.59%  4.91%  5.01%  4.87%
Rate paid on:          
Interest-bearing deposits  1.12%  1.26%  1.36%  1.53%  1.72%
Federal Home Loan Bank advances  3.86  3.87  3.93  4.11  4.14
Notes payable and other borrowings  2.65  2.40  2.65  2.63  2.81
Secured borrowings - owed to securitization investors  2.04  2.09  2.08  2.02  -- 
Subordinated notes  1.71  1.89  1.77  1.60  1.77
Junior subordinated notes  6.97  6.98  6.98  7.01  6.96
   1.43%  1.55%  1.65%  1.82%  1.98%
           
Interest rate spread  3.29%  3.04%  3.26%  3.19%  2.89%
Net free funds/contribution  0.17  0.18  0.17  0.19  0.21
Net interest income/Net interest margin  3.46%  3.22%  3.43%  3.38%  3.10%
 
 
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Non-Interest Income - 5 Quarter Trends
           
  Three Months Ended
  December 31, September 30, June 30, March 31, December 31,
(In thousands) 2010 2010 2010 2010 2009
Brokerage  $ 6,641  $ 5,806  $ 5,712  $ 5,554  $ 5,034
Trust and asset management  3,467  3,167  3,481  3,113  3,013
Total wealth management  10,108  8,973  9,193  8,667  8,047
Mortgage banking  22,686  20,980  7,985  9,727  16,495
Service charges on deposit accounts  3,346  3,384  3,371  3,332  3,437
Gains on sales of premium finance receivables  --   --   --   --   4,429
Gains (losses) on available-for-sale securities  159  9,235  46  392  642
Gain on bargain purchases  250  6,593  26,494  10,894  42,951
Trading gains (losses)  611  210  (1,617)  5,961  4,411
Other:          
Fees from covered call options  1,074  703  169  289  -- 
Bank Owned Life Insurance  811  552  418  623  642
Administrative services  715  744  708  582  511
Miscellaneous  4,701  3,282  3,669  2,140  3,523
Total other income  7,301  5,281  4,964  3,634  4,676
           
Total Non-Interest Income  $ 44,461  $ 54,656  $ 50,436  $ 42,607  $ 85,088
 
 
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Non-Interest Expense - 5 Quarter Trends
           
  Three Months Ended
  December 31, September 30, June 30, March 31, December 31,
(In thousands) 2010 2010 2010 2010 2009
Salaries and employee benefits:          
Salaries  $ 31,876  $ 30,537  $ 28,714  $ 29,083  $ 28,426
Commissions and bonus  18,043  17,366  12,967  9,731  11,752
Benefits  9,112  9,111  8,968  10,258  7,777
Total salaries and employee benefits  59,031  57,014  50,649  49,072  47,955
Equipment  4,384  4,203  4,046  3,896  4,097
Occupancy, net  5,927  6,254  6,033  6,230  6,124
Data processing  4,388  3,891  3,669  3,407  3,404
Advertising and marketing  1,881  1,650  1,470  1,314  1,366
Professional fees  4,775  4,555  3,957  3,107  3,556
Amortization of other intangibles  719  701  674  645  744
FDIC insurance  4,572  4,642  5,005  3,809  4,731
OREO expenses, net  7,384  4,767  5,843  1,337  5,293
Other:          
Commissions - 3rd party brokers  965  979  1,097  962  757
Postage  1,220  1,254  1,229  1,110  1,367
Stationery and supplies  1,069  812  761  732  859
Miscellaneous  9,886  9,001  8,230  8,317  10,064
Total other expense  13,140  12,046  11,317  11,121  13,047
           
Total Non-Interest Expense  $ 106,201  $ 99,723  $ 92,663  $ 83,938  $ 90,317
 
 
 
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Allowance for Credit Losses - 5 Quarter Trends
           
  Three Months Ended
  December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands) 2010 2010 2010 2010 2009
           
Allowance for loan losses at beginning of period  $ 110,432  $ 106,547  $ 102,397  $ 98,277  $ 95,096
Provision for credit losses  28,795  25,528  41,297  29,044  38,603
Other adjustments  --   --   --   1,943  -- 
Reclassification (to)/from allowance for unfunded lending-related commitments  (1,781)  (206)  785  (99)  (494)
           
Charge-offs:          
Commercial  6,060  3,076  4,781  4,675  8,894
Commercial real estate  13,591  15,727  12,311  20,244  22,894
Home equity  1,322  1,234  3,089  281  1,572
Residential real estate  311  116  310  406  385
Premium finance receivables - commercial  1,820  1,505  17,747  1,933  2,532
Premium finance receivables - life insurance  154  79  --   --   -- 
Indirect consumer  239  198  256  274  427
Consumer and other  565  288  109  179  148
Total charge-offs  24,062  22,223  38,603  27,992  36,852
           
Recoveries:          
Commercial  268  286  143  443  237
Commercial real estate  57  197  218  442  552
Home equity  2  8  6  8  812
Residential real estate  2  3  2  5  -- 
Premium finance receivables - commercial  144  220  188  229  194
Premium finance receivables - life insurance  --   --   --   --   -- 
Indirect consumer  38  29  81  50  44
Consumer and other  8  43  33  47  85
Total recoveries  519  786  671  1,224  1,924
Net charge-offs, excluding covered loans  (23,543)  (21,437)  (37,932)  (26,768)  (34,928)
Covered loans  --   --   --   --   -- 
Net charge-offs  (23,543)  (21,437)  (37,932)  (26,768)  (34,928)
Allowance for loan losses at period end  $ 113,903  $ 110,432  $ 106,547  $ 102,397  $ 98,277
Allowance for unfunded lending-related commitments at period end  4,134  2,375  2,169  3,653  3,554
Allowance for credit losses at period end  $ 118,037  $ 112,807  $ 108,716  $ 106,050  $ 101,831
Annualized net charge-offs by category as a percentage of its own respective category's average:          
Commercial  1.11%  0.60%  1.04%  1.02%  2.04%
Commercial real estate  1.66  1.84  1.45  2.42  2.62
Home equity  0.57  0.53  1.34  0.12  0.32
Residential real estate  0.17  0.07  0.23  0.32  0.28
Premium finance receivables - commercial  0.54  0.39  5.46  0.54  1.38
Premium finance receivables - life insurance  0.04  0.02  --   --   -- 
Indirect consumer  1.51  1.08  0.92  1.00  1.43
Consumer and other  1.98  1.01  0.27  0.48  0.22
Total loans, net of unearned income, excluding covered loans  0.96%  0.89%  1.63%  1.19%  1.61%
Covered loans  --   --   --   --   -- 
Total loans, net of unearned income  0.92%  0.86%  1.59%  1.19%  1.61%
           
Net charge-offs as a percentage of the provision for credit losses 81.76% 83.97% 91.85% 92.48% 90.48%
           
Excluding covered loans:          
Loans at period-end  $ 9,599,886  $ 9,461,155  $ 9,324,163  $ 9,070,562  $ 8,411,771
Allowance for loan losses as a percentage of loans at period end 1.19% 1.17% 1.14% 1.13% 1.17%
Allowance for credit losses as a percentage of loans at period end 1.23% 1.19% 1.17% 1.17% 1.21%
           
Including covered loans:          
Loans at period-end  $ 9,934,239  $ 9,814,995  $ 9,599,726  $ 9,070,562  $ 8,411,771
Allowance for loan losses as a percentage of loans at period end  1.15% 1.13% 1.11% 1.13% 1.17%
Allowance for credit losses as a percentage of loans at period end  1.19% 1.15% 1.13% 1.17% 1.21%
 
 
WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Non-Performing Assets, excluding covered assets - 5 Quarter Trends
           
  December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands) 2010 2010 2010 2010 2009
           
Loans past due greater than 90 days and still accruing:          
Commercial  $ 478  $ --   $ 99  $ --   $ 561
Commercial real-estate  --   --   2,248  1,195  -- 
Home equity  --   --   --   21  -- 
Residential real-estate  --   --   --   --   412
Premium finance receivables - commercial  8,096  6,853  6,350  7,479  6,271
Premium finance receivables - life insurance  --   1,222  1,923  5,450  -- 
Indirect consumer  318  355  579  665  461
Consumer and other  1  2  3  20  95
Total loans past due greater than 90 days and still accruing  8,893  8,432  11,202  14,830  7,800
           
Non-accrual loans:          
Commercial  16,382  19,444  17,741  15,331  16,509
Commercial real-estate  93,963  83,340  82,984  82,389  80,639
Home equity  7,425  6,144  7,149  7,730  8,883
Residential real-estate  6,085  6,644  4,436  5,460  3,779
Premium finance receivables - commercial  8,587  9,082  11,389  14,106  11,878
Premium finance receivables - life insurance  354  222  --   73  704
Indirect consumer  191  446  438  615  995
Consumer and other  252  569  62  426  617
Total non-accrual loans  133,239  125,891  124,199  126,130  124,004
           
Total non-performing loans:          
Commercial  16,860  19,444  17,840  15,331  17,070
Commercial real-estate  93,963  83,340  85,232  83,584  80,639
Home equity  7,425  6,144  7,149  7,751  8,883
Residential real-estate  6,085  6,644  4,436  5,460  4,191
Premium finance receivables - commercial  16,683  15,935  17,739  21,585  18,149
Premium finance receivables - life insurance  354  1,444  1,923  5,523  704
Indirect consumer  509  801  1,017  1,280  1,456
Consumer and other  253  571  65  446  712
Total non-performing loans  $ 142,132  $ 134,323  $ 135,401  $ 140,960  $ 131,804
Other real estate owned  71,214  76,654  86,420  89,009  80,163
Total non-performing assets  $ 213,346  $ 210,977  $ 221,821  $ 229,969  $ 211,967
           
Total non-performing loans by category as a percent of its own respective category's period-end balance:          
Commercial  0.82%  1.00%  0.98%  0.88%  0.98%
Commercial real-estate  2.81  2.50  2.55  2.51  2.45
Home equity  0.81  0.67  0.78  0.84  0.95
Residential real-estate  1.72  1.94  1.33  1.69  1.37
Premium finance receivables - commercial  1.32  1.20  1.32  1.64  2.49
Premium finance receivables - life insurance  0.02  0.10  0.14  0.45  0.06
Indirect consumer  0.99  1.42  1.47  1.54  1.48
Consumer and other  0.24  0.57  0.07  0.42  0.65
Total loans  1.48%  1.42%  1.45%  1.55%  1.57%
           
Total non-performing assets as a percentage of total assets 1.58% 1.56% 1.67% 1.79% 1.74%
           
Allowance for loan losses as a percentage total non-performing loans 80.14% 82.21% 78.69% 72.64% 74.56%
 
CONTACT: Edward J. Wehmer, President & Chief Executive Officer
         David A. Dykstra, Senior Executive Vice President &
         Chief Operating Officer
         (847) 615-4096
         Web site address: www.wintrust.com

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