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

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ROSEMONT, Ill., Oct. 16, 2019 (GLOBE NEWSWIRE) -- Wintrust Financial Corporation (“Wintrust” or “the Company”) (WTFC) announced net income of $99.1 million or $1.69 per diluted common share for the third quarter of 2019, an increase in diluted earnings per common share of 22.5% compared to the prior quarter and 7.6% compared to the third quarter of 2018. The Company recorded net income of $269.7 million or $4.60 per diluted common share for the first nine months of 2019 compared to net income of $263.5 million or $4.50 per diluted common share for the same period of 2018.

Highlights of the Third Quarter of 2019:
Comparative information to the second quarter of 2019

  • Total assets increased by $1.3 billion or 15% on an annualized basis.

  • Total loans increased by $406 million or 6% on an annualized basis.

  • Total deposits increased by $1.2 billion or 17% on an annualized basis, the increase was net of a $552 million reduction in brokered deposits.

  • Mortgage banking production revenue increased by $12.8 million as mortgage loans originated for sale totaled $1.4 billion in the third quarter of 2019 as compared to $1.2 billion in the second quarter of 2019.

  • Net interest income decreased by $1.3 million as a 25 basis point decline in net interest margin was partially offset by a $1.7 billion increase in average earning assets.

  • The net overhead ratio declined by 24 basis points to 1.40%, effectively offsetting the impact of the net interest margin decline.

  • Recorded net charge-offs of $9.4 million in the third quarter of 2019 as compared to $22.3 million in the second quarter of 2019. The $9.4 million includes $4.0 million of additional net charge-offs related to the three non-performing credits disclosed in the second quarter of 2019.

  • The ratio of non-performing assets to total assets declined by two basis points to 0.38%.

Other highlights of the third quarter of 2019

  • Total period end loans were $364 million higher than average total loans in the current quarter.

  • Loans to deposits ratio ended the period at 89.6%.

  • Recorded a $3.9 million reduction to FDIC insurance expense related to assessment credits received from the FDIC.

  • Recorded a reduction in value of mortgage servicing rights related to changes in fair value model assumptions, net of derivative contract activity held as an economic hedge, of $4.0 million.

  • Recorded acquisition related costs of $1.3 million in the third quarter of 2019 as compared to $238,000 in the second quarter of 2019.

Expansion activity

  • Opened two new branches in the city of Chicago.

  • Completed the previously announced acquisition of STC Bancshares Corp., the parent company of STC Capital Bank, early in the fourth quarter of 2019. STC Capital Bank had approximately $190 million in loans and approximately $244 million in deposits as of June 30, 2019.

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

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

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

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

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

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

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

The graphs below illustrate certain highlights of the third quarter of 2019.
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SUMMARY OF RESULTS:

BALANCE SHEET

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

Total liabilities grew by $1.2 billion in the third quarter of 2019 primarily comprised of a $1.2 billion increase in total deposits. The Company successfully leveraged its retail deposit base in the third quarter of 2019 to generate new deposits. In addition, the total deposit growth was net of a $552 million reduction in brokered deposits. Management believes in substantially funding the Company's balance sheet with core deposits and utilizes brokered or wholesale funding sources as appropriate to manage its liquidity position as well as for interest rate risk management purposes. Non-brokered deposits now comprise approximately 96% of total deposits.

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

NET INTEREST INCOME

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

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

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

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

ASSET QUALITY

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

Net charge-offs as a percentage of average total loans, in the third quarter of 2019 totaled 15 basis points on an annualized basis compared to 36 basis points on an annualized basis in the second quarter of 2019 and eight basis points on an annualized basis in the third quarter of 2018. Net charge-offs totaled $9.4 million in the third quarter of 2019, a $12.8 million decrease from $22.3 million in the second quarter of 2019 and a $4.8 million increase from $4.7 million in the third quarter of 2018. The $9.4 million of net charge-offs in the current quarter includes $4.0 million of additional net charge-offs (which were substantially reserved for in prior quarters) related to the three non-performing credits disclosed in the second quarter of 2019 and represents a return to lower levels of net charge-offs. These three credits are substantially resolved and are not expected to materially impact future quarters. The provision for credit losses totaled $10.8 million for the third quarter of 2019 compared to $24.6 million for the second quarter of 2019 and $11.0 million for the third quarter of 2018. For more information regarding net charge-offs, see Table 11 in this report.

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

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

As of September 30, 2019, $51.1 million of all loans, or 0.2%, were 60 to 89 days past due and $134.2 million, or 0.5%, were 30 to 59 days (or one payment) past due. As of June 30, 2019, $54.9 million of all loans, or 0.2%, were 60 to 89 days past due and $129.1 million, or 0.5%, were 30 to 59 days (or one payment) past due. Many of the commercial and commercial real estate loans shown as 60 to 89 days and 30 to 59 days past due are included on the Company’s internal problem loan reporting system. Loans on this system are closely monitored by management on a monthly basis.

The Company’s home equity and residential loan portfolios continue to exhibit low delinquency ratios. Home equity loans at September 30, 2019 that are current with regard to the contractual terms of the loan agreement represent 97.8% of the total home equity portfolio. Residential real estate loans at September 30, 2019 that are current with regards to the contractual terms of the loan agreements comprise 98.4% of total residential real estate loans outstanding. For more information regarding past due loans, see Table 13 in this report.

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

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

NON-INTEREST INCOME

Wealth management revenue decreased by $140,000 during the third quarter of 2019 as compared to the second quarter of 2019 primarily due to decreased brokerage commissions. Wealth management revenue is comprised of the trust and asset management revenue of The Chicago Trust Company and Great Lakes Advisors, the brokerage commissions, managed money fees and insurance product commissions at Wintrust Investments and fees from tax-deferred like-kind exchange services provided by the Chicago Deferred Exchange Company.

Mortgage banking revenue increased by $13.5 million in the third quarter of 2019 as compared to the second quarter of 2019 primarily as a result of higher production revenues and an increase in the fair value of the mortgage servicing rights portfolio in the third quarter of 2019. Production revenue increased by $12.8 million in the third quarter of 2019 as compared to the second quarter of 2019 primarily due to an increase in origination volumes as a result of increased refinancing activity. The percentage of origination volume from refinancing activities was 52% in the third quarter of 2019 as compared to 37% in the second quarter of 2019. Additionally, production margin improved from 2.59% in the second quarter of 2019 to 3.01% in the third quarter of 2019 primarily due to a favorable shift in origination channel mix. Mortgage banking revenue includes revenue from activities related to originating, selling and servicing residential real estate loans for the secondary market.

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

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

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

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

NON-INTEREST EXPENSE

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

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

Advertising and marketing expenses in the third quarter of 2019 increased by $530,000 as compared to the second quarter of 2019 primarily related to higher corporate sponsorship costs as well as increased spending related to deposit generation and brand awareness to grow our loan and deposit portfolios. The level of marketing expenditures depends on the timing of sponsorship programs utilized which are determined based on the market area, targeted audience, competition and various other factors.

FDIC insurance expense totaled $148,000 in the third quarter of 2019, a decrease of $4.0 million as compared to the second quarter of 2019. The decrease in the current quarter relates primarily to FDIC assessment credits received by the 15 Wintrust affiliate banks.

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

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

INCOME TAXES

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

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

BUSINESS UNIT SUMMARY

Community Banking

Through its community banking unit, the Company provides banking and financial services primarily to individuals, small to mid-sized businesses, local governmental units and institutional clients residing primarily in the local areas the Company services. In the third quarter of 2019, this unit generated significant retail deposit growth. However, the banking segment also experienced net interest margin compression in part due to current market conditions.

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

Specialty Finance

Through its specialty finance unit, the Company offers financing of insurance premiums for businesses and individuals, equipment financing through structured loans and lease products to customers in a variety of industries and accounts receivable financing, value-added, out-sourced administrative services, and other services. In the third quarter of 2019, the specialty finance unit experienced higher revenue primarily as a result of increased volumes within its insurance premium financing receivables portfolio. Originations within the insurance premium financing receivables portfolio were $2.4 billion during the third quarter of 2019 and average balances increased by $446.4 million as compared to the second quarter of 2019. The increase in average balances primarily resulted in a $6.5 million increase in interest income attributed to the insurance premium finance receivables portfolio. The Company's leasing business grew during the third quarter of 2019, with its portfolio of assets, including capital leases, loans and equipment on operating leases, increasing $98.0 million to $1.5 billion at the end of the third quarter of 2019. Revenues from the Company's out-sourced administrative services business increased to $1.1 million in the third quarter of 2019 as compared to $1.0 million in the second quarter of 2019.

Wealth Management

Through four separate subsidiaries within its wealth management unit, the Company offers a full range of wealth management services, including trust and investment services, tax-deferred like-kind exchange services, asset management, securities brokerage services and 401(k) and retirement plan services. Wealth management revenue decreased by $140,000 in the third quarter of 2019 compared to the second quarter of 2019, totaling $24.0 million in the current period. At September 30, 2019, the Company’s wealth management subsidiaries had approximately $26.1 billion of assets under administration, which included $3.3 billion of assets owned by the Company and its subsidiary banks, representing a $188.4 million increase from the $25.9 billion of assets under administration at June 30, 2019. The increase in the third quarter of 2019 was primarily due to increased business.

ITEMS IMPACTING COMPARATIVE FINANCIAL RESULTS

Acquisitions

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

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

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

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

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

WINTRUST FINANCIAL CORPORATION
Key Operating Measures

Wintrust’s key operating measures and growth rates for the third quarter of 2019, as compared to the second quarter of 2019 (sequential quarter) and third quarter of 2018 (linked quarter), are shown in the table below:

% or(4)
basis point (bp) change from
2nd Quarter
2019

% or
basis point (bp)
change from
3rd Quarter
2018

Three Months Ended

(Dollars in thousands, except per share data)

Sep 30, 2019

Jun 30, 2019

Sep 30, 2018

Net income

$

99,121

$

81,466

$

91,948

22

%

8

%

Net income per common share – diluted

1.69

1.38

1.57

22

8

Net revenue (1)

379,989

364,360

347,493

4

9

Net interest income

264,852

266,202

247,563

(1

)

7

Net interest margin

3.37

%

3.62

%

3.59

%

(25

)

bp

(22

)

bp

Net interest margin - fully taxable equivalent (non-GAAP) (2)

3.39

3.64

3.61

(25

)

(22

)

Net overhead ratio (3)

1.40

1.64

1.53

(24

)

(13

)

Return on average assets

1.16

1.02

1.24

14

(8

)

Return on average common equity

11.42

9.68

11.86

174

(44

)

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

14.36

12.28

14.64

208

(28

)

At end of period

Total assets

$

34,911,902

$

33,641,769

$

30,142,731

15

%

16

%

Total loans (5)

25,710,171

25,304,659

23,123,951

6

11

Total deposits

28,710,379

27,518,815

24,916,715

17

15

Total shareholders’ equity

3,540,325

3,446,950

3,179,822

11

11

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

  2. See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 18 for additional information on this performance measure/ratio.

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

  4. Period-end balance sheet percentage changes are annualized.

  5. Excludes mortgage loans held-for-sale.

Certain returns, yields, performance ratios, or quarterly growth rates are “annualized” in this presentation to represent an annual time period. This is done for analytical purposes to better discern for decision-making purposes underlying performance trends when compared to full-year or year-over-year amounts. For example, a 5% growth rate for a quarter would represent an annualized 20% growth rate. Additional supplemental financial information showing quarterly trends can be found on the Company’s website at www.wintrust.com by choosing “Financial Reports” under the “Investor Relations” heading, and then choosing “Financial Highlights.”

WINTRUST FINANCIAL CORPORATION
Selected Financial Highlights

Three Months Ended

Nine Months Ended

(Dollars in thousands, except per share data)

Sep 30,
2019

Jun 30,
2019

Mar 31,
2019

Dec 31,
2018

Sep 30,
2018

Sep 30,
2019

Sep 30,
2018

Selected Financial Condition Data (at end of period):

Total assets

$

34,911,902

$

33,641,769

$

32,358,621

$

31,244,849

$

30,142,731

Total loans (1)

25,710,171

25,304,659

24,214,629

23,820,691

23,123,951

Total deposits

28,710,379

27,518,815

26,804,742

26,094,678

24,916,715

Junior subordinated debentures

253,566

253,566

253,566

253,566

253,566

Total shareholders’ equity

3,540,325

3,446,950

3,371,972

3,267,570

3,179,822

Selected Statements of Income Data:

Net interest income

$

264,852

$

266,202

$

261,986

$

254,088

$

247,563

$

793,040

$

710,815

Net revenue (2)

379,989

364,360

343,643

329,396

347,493

1,087,992

991,657

Net income

99,121

81,466

89,146

79,657

91,948

269,733

263,509

Net income per common share – Basic

1.71

1.40

1.54

1.38

1.59

4.65

4.57

Net income per common share – Diluted

1.69

1.38

1.52

1.35

1.57

4.60

4.50

Selected Financial Ratios and Other Data:

Performance Ratios:

Net interest margin

3.37

%

3.62

%

3.70

%

3.61

%

3.59

%

3.56

%

3.58

%

Net interest margin - fully taxable equivalent (non-GAAP) (3)

3.39

3.64

3.72

3.63

3.61

3.58

3.60

Non-interest income to average assets

1.35

1.23

1.06

0.99

1.34

1.22

1.31

Non-interest expense to average assets

2.74

2.87

2.79

2.78

2.87

2.80

2.87

Net overhead ratio (4)

1.40

1.64

1.72

1.79

1.53

1.58

1.56

Return on average assets

1.16

1.02

1.16

1.05

1.24

1.11

1.23

Return on average common equity

11.42

9.68

11.09

10.01

11.86

10.74

11.71

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

14.36

12.28

14.14

12.48

14.64

13.60

14.47

Average total assets

$

33,954,592

$

32,055,769

$

31,216,171

$

30,179,887

$

29,525,109

$

32,418,875

$

28,640,380

Average total shareholders’ equity

3,496,714

3,414,340

3,309,078

3,200,654

3,131,943

3,407,398

3,064,396

Average loans to average deposits ratio

90.6

%

93.9

%

92.7

%

92.4

%

92.2

%

92.4

%

94.2

%

Period-end loans to deposits ratio

89.6

92.0

90.3

91.3

92.8

Common Share Data at end of period:

Market price per common share

$

64.63

$

73.16

$

67.33

$

66.49

$

84.94

Book value per common share

60.24

58.62

57.33

55.71

54.19

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

49.16

47.48

46.38

44.67

44.16

Common shares outstanding

56,698,429

56,667,846

56,638,968

56,407,558

56,377,169

Other Data at end of period:

Tier 1 leverage ratio (5)

8.8

%

9.1

%

9.1

%

9.1

%

9.3

%

Risk-based capital ratios:

Tier 1 capital ratio (5)

9.7

9.6

9.8

9.7

10.0

Common equity tier 1 capital ratio(5)

9.3

9.2

9.3

9.3

9.5

Total capital ratio (5)

12.4

12.4

11.7

11.6

12.0

Allowance for credit losses (6)

$

163,273

$

161,901

$

159,622

$

154,164

$

151,001

Non-performing loans

114,284

113,447

117,586

113,234

127,227

Allowance for credit losses to total loans (6)

0.64

%

0.64

%

0.66

%

0.65

%

0.65

%

Non-performing loans to total loans

0.44

0.45

0.49

0.48

0.55

Number of:

Bank subsidiaries

15

15

15

15

15

Banking offices

174

172

170

167

166

  1. Excludes mortgage loans held-for-sale.

  2. Net revenue includes net interest income and non-interest income.

  3. See “Supplemental Non-GAAP Financial Measures/Ratios” at Table 18 for additional information on this performance measure/ratio.

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

  5. Capital ratios for current quarter-end are estimated.

  6. The allowance for credit losses includes both the allowance for loan losses and the allowance for unfunded lending-related commitments.


WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

(In thousands)

2019

2019

2019

2018

2018

Assets

Cash and due from banks

$

448,755

$

300,934

$

270,765

$

392,142

$

279,936

Federal funds sold and securities purchased under resale agreements

59

58

58

58

57

Interest bearing deposits with banks

2,260,806

1,437,105

1,609,852

1,099,594

1,137,044

Available-for-sale securities, at fair value

2,270,059

2,186,154

2,185,782

2,126,081

2,164,985

Held-to-maturity securities, at amortized cost

1,095,802

1,191,634

1,051,542

1,067,439

966,438

Trading account securities

3,204

2,430

559

1,692

688

Equity securities with readily determinable fair value

46,086

44,319

47,653

34,717

36,414

Federal Home Loan Bank and Federal Reserve Bank stock

92,714

92,026

89,013

91,354

99,998

Brokerage customer receivables

14,943

13,569

14,219

12,609

15,649

Mortgage loans held-for-sale

464,727

394,975

248,557

264,070

338,111

Loans, net of unearned income

25,710,171

25,304,659

24,214,629

23,820,691

23,123,951

Allowance for loan losses

(161,763

)

(160,421

)

(158,212

)

(152,770

)

(149,756

)

Net loans

25,548,408

25,144,238

24,056,417

23,667,921

22,974,195

Premises and equipment, net

721,856

711,214

676,037

671,169

664,469

Lease investments, net

228,647

230,111

224,240

233,208

199,241

Accrued interest receivable and other assets

1,087,864

1,023,896

888,492

696,707

700,568

Trade date securities receivable

237,607

375,211

263,523

Goodwill

584,315

584,911

573,658

573,141

537,560

Other intangible assets

43,657

46,588

46,566

49,424

27,378

Total assets

$

34,911,902

$

33,641,769

$

32,358,621

$

31,244,849

$

30,142,731

Liabilities and Shareholders’ Equity

Deposits:

Non-interest bearing

$

7,067,960

$

6,719,958

$

6,353,456

$

6,569,880

$

6,399,213

Interest bearing

21,642,419

20,798,857

20,451,286

19,524,798

18,517,502

Total deposits

28,710,379

27,518,815

26,804,742

26,094,678

24,916,715

Federal Home Loan Bank advances

574,847

574,823

576,353

426,326

615,000

Other borrowings

410,488

418,057

372,194

393,855

373,571

Subordinated notes

435,979

436,021

139,235

139,210

139,172

Junior subordinated debentures

253,566

253,566

253,566

253,566

253,566

Trade date securities payable

226

Accrued interest payable and other liabilities

986,092

993,537

840,559

669,644

664,885

Total liabilities

31,371,577

30,194,819

28,986,649

27,977,279

26,962,909

Shareholders’ Equity:

Preferred stock

125,000

125,000

125,000

125,000

125,000

Common stock

56,825

56,794

56,765

56,518

56,486

Surplus

1,574,011

1,569,969

1,565,185

1,557,984

1,553,353

Treasury stock

(6,799

)

(6,650

)

(6,650

)

(5,634

)

(5,547

)

Retained earnings

1,830,165

1,747,266

1,682,016

1,610,574

1,543,680

Accumulated other comprehensive loss

(38,877

)

(45,429

)

(50,344

)

(76,872

)

(93,150

)

Total shareholders’ equity

3,540,325

3,446,950

3,371,972

3,267,570

3,179,822

Total liabilities and shareholders’ equity

$

34,911,902

$

33,641,769

$

32,358,621

$

31,244,849

$

30,142,731


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

Three Months Ended

Nine Months Ended

(In thousands, except per share data)

Sep 30,
2019

Jun 30,
2019

Mar 31,
2019

Dec 31,
2018

Sep 30,
2018

Sep 30,
2019

Sep 30,
2018

Interest income

Interest and fees on loans

$

314,277

$

309,161

$

296,987

$

283,311

$

271,134

$

920,425

$

761,191

Mortgage loans held-for-sale

3,478

3,104

2,209

3,409

5,285

8,791

12,329

Interest bearing deposits with banks

10,326

5,206

5,300

5,628

5,423

20,832

11,462

Federal funds sold and securities purchased under resale agreements

310

310

1

Investment securities

24,758

27,721

27,956

26,656

21,710

80,435

60,726

Trading account securities

20

5

8

14

11

33

29

Federal Home Loan Bank and Federal Reserve Bank stock

1,294

1,439

1,355

1,343

1,235

4,088

3,988

Brokerage customer receivables

164

178

155

235

164

497

488

Total interest income

354,627

346,814

333,970

320,596

304,962

1,035,411

850,214

Interest expense

Interest on deposits

76,168

67,024

60,976

55,975

48,736

204,168

110,578

Interest on Federal Home Loan Bank advances

1,774

4,193

2,450

2,563

1,947

8,417

9,849

Interest on other borrowings

3,466

3,525

3,633

3,199

2,003

10,624

5,400

Interest on subordinated notes

5,470

2,806

1,775

1,788

1,773

10,051

5,333

Interest on junior subordinated debentures

2,897

3,064

3,150

2,983

2,940

9,111

8,239

Total interest expense

89,775

80,612

71,984

66,508

57,399

242,371

139,399

Net interest income

264,852

266,202

261,986

254,088

247,563

793,040

710,815

Provision for credit losses

10,834

24,580

10,624

10,401

11,042

46,038

24,431

Net interest income after provision for credit losses

254,018

241,622

251,362

243,687

236,521

747,002

686,384

Non-interest income

Wealth management

23,999

24,139

23,977

22,726

22,634

72,115

68,237

Mortgage banking

50,864

37,411

18,158

24,182

42,014

106,433

112,808

Service charges on deposit accounts

9,972

9,277

8,848

9,065

9,331

28,097

27,339

Gains (losses) on investment securities, net

710

864

1,364

(2,649

)

90

2,938

(249

)

Fees from covered call options

643

1,784

626

627

2,427

2,893

Trading gains (losses), net

11

(44

)

(171

)

(155

)

(61

)

(204

)

166

Operating lease income, net

12,025

11,733

10,796

10,882

9,132

34,554

27,569

Other

17,556

14,135

16,901

10,631

16,163

48,592

42,079

Total non-interest income

115,137

98,158

81,657

75,308

99,930

294,952

280,842

Non-interest expense

Salaries and employee benefits

141,024

133,732

125,723

122,111

123,855

400,479

357,966

Equipment

13,314

12,759

11,770

11,523

10,827

37,843

31,426

Operating lease equipment depreciation

8,907

8,768

8,319

8,462

7,370

25,994

20,843

Occupancy, net

14,991

15,921

16,245

15,980

14,404

47,157

41,834

Data processing

6,522

6,204

7,525

8,447

9,335

20,251

26,580

Advertising and marketing

13,375

12,845

9,858

9,414

11,120

36,078

31,726

Professional fees

8,037

6,228

5,556

9,259

9,914

19,821

23,047

Amortization of other intangible assets

2,928

2,957

2,942

1,407

1,163

8,827

3,164

FDIC insurance

148

4,127

3,576

4,044

4,205

7,851

13,165

OREO expense, net

1,170

1,290

632

1,618

596

3,092

4,502

Other

24,138

24,776

22,228

19,068

20,848

71,142

60,502

Total non-interest expense

234,554

229,607

214,374

211,333

213,637

678,535

614,755

Income before taxes

134,601

110,173

118,645

107,662

122,814

363,419

352,471

Income tax expense

35,480

28,707

29,499

28,005

30,866

93,686

88,962

Net income

$

99,121

$

81,466

$

89,146

$

79,657

$

91,948

$

269,733

$

263,509

Preferred stock dividends

2,050

2,050

2,050

2,050

2,050

6,150

6,150

Net income applicable to common shares

$

97,071

$

79,416

$

87,096

$

77,607

$

89,898

$

263,583

$

257,359

Net income per common share - Basic

$

1.71

$

1.40

$

1.54

$

1.38

$

1.59

$

4.65

$

4.57

Net income per common share - Diluted

$

1.69

$

1.38

$

1.52

$

1.35

$

1.57

$

4.60

$

4.50

Cash dividends declared per common share

$

0.25

$

0.25

$

0.25

$

0.19

$

0.19

$

0.75

$

0.57

Weighted average common shares outstanding

56,690

56,662

56,529

56,395

56,366

56,627

56,268

Dilutive potential common shares

773

699

699

892

918

724

912

Average common shares and dilutive common shares

57,463

57,361

57,228

57,287

57,284

57,351

57,180


TABLE 1: LOAN PORTFOLIO MIX AND GROWTH RATES

% Growth From

(Dollars in thousands)

Sep 30,
2019

Jun 30,
2019

Mar 31,
2019

Dec 31,
2018

Sep 30,
2018

Dec 31,
2018 (1)

Sep 30,
2018

Balance:

Commercial

$

8,195,602

$

8,270,774

$

7,994,191

$

7,828,538

$

7,473,958

6

%

10

%

Commercial real estate

7,448,667

7,276,244

6,973,505

6,933,252

6,746,774

10

10

Home equity

512,303

527,370

528,448

552,343

578,844

(10

)

(11

)

Residential real estate

1,218,666

1,118,178

1,053,524

1,002,464

924,250

29

32

Premium finance receivables - commercial

3,449,950

3,368,423

2,988,788

2,841,659

2,885,327

29

20

Premium finance receivables - life insurance

4,795,496

4,634,478

4,555,369

4,541,794

4,398,971

7

9

Consumer and other

89,487

109,192

120,804

120,641

115,827

(35

)

(23

)

Total loans, net of unearned income

$

25,710,171

$

25,304,659

$

24,214,629

$

23,820,691

$

23,123,951

11

%

11

%

Mix:

Commercial

32

%

33

%

33

%

33

%

32

%

Commercial real estate

29

29

29

29

29

Home equity

2

2

2

2

3

Residential real estate

5

4

4

4

4

Premium finance receivables - commercial

13

13

12

12

12

Premium finance receivables - life insurance

19

18

19

19

19

Consumer and other

0

1

1

1

1

Total loans, net of unearned income

100

%

100

%

100

%

100

%

100

%

  1. Annualized.


TABLE 2: COMMERCIAL AND COMMERCIAL REAL ESTATE LOAN PORTFOLIOS

As of September 30, 2019

(Dollars in thousands)

Balance

% of
Total
Balance

Nonaccrual

> 90 Days
Past Due
and Still
Accruing

Allowance
For Loan
Losses
Allocation

Commercial:

Commercial, industrial and other

$

5,150,567

32.9

%

$

34,397

$

$

51,463

Franchise

914,774

5.9

3,752

8,308

Mortgage warehouse lines of credit

314,697

2.0

2,481

Asset-based lending

1,045,869

6.7

5,782

8,445

Leases

754,163

4.8

2,069

PCI - commercial loans (1)

15,532

0.1

382

361

Total commercial

$

8,195,602

52.4

%

$

43,931

$

382

$

73,127

Commercial Real Estate:

Construction

$

850,575

5.4

%

$

1,030

$

$

9,405

Land

175,386

1.1

994

4,801

Office

996,931

6.4

8,158

10,066

Industrial

1,009,680

6.5

100

7,021

Retail

1,004,720

6.4

7,174

6,718

Multi-family

1,291,825

8.3

690

12,504

Mixed use and other

2,002,267

12.8

3,411

14,370

PCI - commercial real estate (1)

117,283

0.7

4,992

53

Total commercial real estate

$

7,448,667

47.6

%

$

21,557

$

4,992

$

64,938

Total commercial and commercial real estate

$

15,644,269

100.0

%

$

65,488

$

5,374

$

138,065

Commercial real estate - collateral location by state:

Illinois

$

5,654,827

75.9

%

Wisconsin

744,577

10.0

Total primary markets

$

6,399,404

85.9

%

Indiana

193,350

2.6

Florida

80,120

1.1

Arizona

62,657

0.8

California

67,999

0.9

Other

645,137

8.7

Total commercial real estate

$

7,448,667

100.0

%

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


TABLE 3: DEPOSIT PORTFOLIO MIX AND GROWTH RATES

% Growth From

(Dollars in thousands)

Sep 30,
2019

Jun 30,
2019

Mar 31,
2019

Dec 31,
2018

Sep 30,
2018

Dec 31,
2018 (1)

Sep 30,
2018

Balance:

Non-interest bearing

$

7,067,960

$

6,719,958

$

6,353,456

$

6,569,880

$

6,399,213

10

%

10

%

NOW and interest bearing demand deposits

2,966,098

2,788,976

2,948,576

2,897,133

2,512,259

3

18

Wealth management deposits (2)

2,795,838

3,220,256

3,328,781

2,996,764

2,520,120

(9

)

11

Money market

7,326,899

6,460,098

6,093,596

5,704,866

5,429,921

38

35

Savings

2,934,348

2,823,904

2,729,626

2,665,194

2,595,164

14

13

Time certificates of deposit

5,619,236

5,505,623

5,350,707

5,260,841

5,460,038

9

3

Total deposits

$

28,710,379

$

27,518,815

$

26,804,742

$

26,094,678

$

24,916,715

13

%

15

%

Mix:

Non-interest bearing

25

%

24

%

24

%

25

%

26

%

NOW and interest bearing demand deposits

10

10

11

11

10

Wealth management deposits (2)

10

12

12

12

10

Money market

25

24

23

22

22

Savings

10

10

10

10

10

Time certificates of deposit

20

20

20

20

22

Total deposits

100

%

100

%

100

%

100

%

100

%

  1. Annualized.

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


TABLE 4: TIME CERTIFICATES OF DEPOSIT MATURITY/RE-PRICING ANALYSIS
As of September 30, 2019

(Dollars in thousands)

CDARs &
Brokered
Certificates
of Deposit (1)

MaxSafe
Certificates
of Deposit (1)

Variable Rate
Certificates
of Deposit (2)

Other Fixed
Rate Certificates
of Deposit (1)

Total Time
Certificates of
Deposit

Weighted-Average
Rate of Maturing
Time Certificates
of Deposit (3)

1-3 months

$

$

32,568

$

91,118

$

701,268

$

824,954

1.66

%

4-6 months

27,147

845,167

872,314

2.01

7-9 months

11,048

1,155,153

1,166,201

2.18

10-12 months

18,177

529,793

547,970

1.92

13-18 months

15,977

733,072

749,049

2.36

19-24 months

1,000

9,714

1,128,392

1,139,106

2.62

24+ months

5,042

314,600

319,642

2.30

Total

$

1,000

$

119,673

$

91,118

$

5,407,445

$

5,619,236

2.17

%

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

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

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


TABLE 5: QUARTERLY AVERAGE BALANCES

Average Balance for three months ended,

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

2019

2019

2019

2018

2018

(In thousands)

$

1,960,898

$

893,332

$

897,629

$

1,042,860

$

998,004

Interest-bearing deposits with banks and cash equivalents (1)

Investment securities (2)

3,410,090

3,653,580

3,630,577

3,347,496

3,046,272

FHLB and FRB stock

92,583

105,491

94,882

98,084

88,335

Liquidity management assets (6)

5,463,571

4,652,403

4,623,088

4,488,440

4,132,611

Other earning assets (3)(6)

17,809

15,719

13,591

16,204

17,862

Mortgage loans held-for-sale

379,870

281,732

188,190

265,717

380,235

Loans, net of unearned income (4)(6)

25,346,290

24,553,263

23,880,916

23,164,154

22,823,378

Total earning assets (6)

31,207,540

29,503,117

28,705,785

27,934,515

27,354,086

Allowance for loan losses

(168,423

)

(164,231

)

(157,782

)

(154,438

)

(148,503

)

Cash and due from banks

297,475

273,679

283,019

271,403

268,006

Other assets

2,618,000

2,443,204

2,385,149

2,128,407

2,051,520

Total assets

$

33,954,592

$

32,055,769

$

31,216,171

$

30,179,887

$

29,525,109

NOW and interest bearing demand deposits

$

2,912,961

$

2,878,021

$

2,803,338

$

2,671,283

$

2,519,445

Wealth management deposits

2,888,817

2,605,690

2,614,035

2,289,904

2,517,141

Money market accounts

6,956,755

6,095,285

5,915,525

5,632,268

5,369,324

Savings accounts

2,837,039

2,752,828

2,715,422

2,553,133

2,672,077

Time deposits

5,590,228

5,322,384

5,267,796

5,381,029

5,214,637

Interest-bearing deposits

21,185,800

19,654,208

19,316,116

18,527,617

18,292,624

Federal Home Loan Bank advances

574,833

869,812

594,335

551,846

429,739

Other borrowings

416,300

419,064

465,571

385,878

268,278

Subordinated notes

436,041

220,771

139,217

139,186

139,155

Junior subordinated debentures

253,566

253,566

253,566

253,566

253,566

Total interest-bearing liabilities

22,866,540

21,417,421

20,768,805

19,858,093

19,383,362

Non-interest bearing deposits

6,776,786

6,487,627

6,444,378

6,542,228

6,461,195

Other liabilities

814,552

736,381

693,910

578,912

548,609

Equity

3,496,714

3,414,340

3,309,078

3,200,654

3,131,943

Total liabilities and shareholders’ equity

$

33,954,592

$

32,055,769

$

31,216,171

$

30,179,887

$

29,525,109

Net free funds/contribution (5)

$

8,341,000

$

8,085,696

$

7,936,980

$

8,076,422

$

7,970,724

  1. Includes interest-bearing deposits from banks, federal funds sold and securities purchased under resale agreements.

  2. Investment securities includes investment securities classified as available-for-sale and held-to-maturity, and equity securities with readily determinable fair values. Equity securities without readily determinable fair values are included within other assets.

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

  4. Loans, net of unearned income, include non-accrual loans.

  5. 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.

  6. See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 18 for additional information on this performance measure/ratio.


TABLE 6: QUARTERLY NET INTEREST INCOME

Net Interest Income for three months ended,

Sep 30,

Jun 30,

Mar 31,

Dec 31,

Sep 30,

(In thousands)

2019

2019

2019

2018

2018

Interest income:

Interest-bearing deposits with banks and cash equivalents

$

10,636

$

5,206

$

5,300

$

5,628

$

5,423

Investment securities

25,332

28,290

28,521

27,242

22,285

FHLB and FRB stock

1,294

1,439

1,355

1,343

1,235

Liquidity management assets (2)

37,262

34,935

35,176

34,213

28,943

Other earning assets (2)

189

184

165

253

178

Mortgage loans held-for-sale

3,478

3,104

2,209

3,409

5,285

Loans, net of unearned income (2)

315,255

310,191

298,021

284,291

272,075

Total interest income

$

356,184

$

348,414

$

335,571

$

322,166

$

306,481

Interest expense:

NOW and interest bearing demand deposits

$

5,291

$

5,553

$

4,613

$

4,007

$

2,479

Wealth management deposits

9,163

7,091

7,000

7,119

8,287

Money market accounts

25,426

21,451

19,460

16,936

13,260

Savings accounts

5,622

4,959

4,249

3,096

2,907

Time deposits

30,666

27,970

25,654

24,817

21,803

Interest-bearing deposits

76,168

67,024

60,976

55,975

48,736

Federal Home Loan Bank advances

1,774

4,193

2,450

2,563

1,947

Other borrowings

3,466

3,525

3,633

3,199

2,003

Subordinated notes

5,470

2,806

1,775

1,788

1,773

Junior subordinated debentures

2,897

3,064

3,150

2,983

2,940

Total interest expense

$

89,775

$

80,612

$

71,984

$

66,508

$

57,399

Less: Fully taxable-equivalent adjustment

(1,557

)

(1,600

)

(1,601

)

(1,570

)

(1,519

)

Net interest income (GAAP) (1)

264,852

266,202

261,986

254,088

247,563

Fully taxable-equivalent adjustment

1,557

1,600

1,601

1,570

1,519

Net interest income, fully taxable-equivalent (non-GAAP) (1)

$

266,409

$

267,802

$

263,587

$

255,658

$

249,082


  1. See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 18 for additional information on this performance measure/ratio.

  2. Interest income on tax-advantaged loans, trading securities and investment securities reflects a taxable-equivalent adjustment based on the marginal federal corporate tax rate in effect as of the applicable period.


TABLE 7: QUARTERLY NET INTEREST MARGIN

Net Interest Margin for three months ended,

Sep 30,
2019

Jun 30,
2019

Mar 31,
2019

Dec 31,
2018

Sep 30,
2018

Yield earned on:

Interest-bearing deposits with banks and cash equivalents

2.15

%

2.34

%

2.39

%

2.14

%

2.16

%

Investment securities

2.95

3.11

3.19

3.23

2.90

FHLB and FRB stock

5.55

5.47

5.79

5.43

5.54

Liquidity management assets

2.71

3.01

3.09

3.02

2.78

Other earning assets

4.20

4.68

4.91

6.19

3.95

Mortgage loans held-for-sale

3.63

4.42

4.76

5.09

5.51

Loans, net of unearned income

4.93

5.07

5.06

4.87

4.73

Total earning assets

4.53

%

4.74

%

4.74

%

4.58

%

4.45

%

Rate paid on:

NOW and interest bearing demand deposits

0.72

%

0.77

%

0.67

%

0.60

%

0.39

%

Wealth management deposits

1.26

1.09

1.09

1.23

1.31

Money market accounts

1.45

1.41

1.33

1.19

0.98

Savings accounts

0.79

0.72

0.63

0.48

0.43

Time deposits

2.18

2.11

1.98

1.83

1.66

Interest-bearing deposits

1.43

1.37

1.29

1.20

1.06

Federal Home Loan Bank advances

1.22

1.93

1.67

1.84

1.80

Other borrowings

3.30

3.37

3.16

3.29

2.96

Subordinated notes

5.02

5.08

5.10

5.14

5.10

Junior subordinated debentures

4.47

4.78

4.97

4.60

4.54

Total interest-bearing liabilities

1.56

%

1.51

%

1.40

%

1.33

%

1.17

%

Interest rate spread (1)(3)

2.97

%

3.23

%

3.34

%

3.25

%

3.28

%

Less: Fully taxable-equivalent adjustment

(0.02

)

(0.02

)

(0.02

)

(0.02

)

(0.02

)

Net free funds/contribution (2)

0.42

0.41

0.38

0.38

0.33

Net interest margin (GAAP) (3)

3.37

%

3.62

%

3.70

%

3.61

%

3.59

%

Fully taxable-equivalent adjustment

0.02

0.02

0.02

0.02

0.02

Net interest margin, fully taxable-equivalent (non-GAAP) (3)

3.39

%

3.64

%

3.72

%

3.63

%

3.61

%




  1. Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.

  2. 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.

  3. See "Supplemental Non-GAAP Financial Measures/Ratios" at Table 18 for additional information on this performance measure/ratio.


TABLE 8: YEAR-TO-DATE AVERAGE BALANCES, AND NET INTEREST INCOME AND MARGIN

Average Balance
for nine months ended,

Interest
for nine months ended,

Yield/Rate
for nine months ended,

(Dollars in thousands)

Sep 30,
2019

Sep 30,
2018

Sep 30,
2019

Sep 30,
2018

Sep 30,
2019

Sep 30,
2018

Interest-bearing deposits with banks and cash equivalents (1)

$

1,254,534

$

836,710

$

21,142

$

11,463

2.26

%

1.83

%

Investment securities (2)

3,563,941

2,943,802

82,142

62,398

3.08

2.83

FHLB and FRB stock

97,624

102,893

4,088

3,988

5.60

5.18

Liquidity management assets (3)(8)

$

4,916,099

$

3,883,405

$

107,372

$

77,849

2.92

%

2.68

%

Other earning assets (3)(4)(8)

15,722

22,190

538

524

4.56

3.15

Mortgage loans held-for-sale

283,966

355,491

8,791

12,329

4.14

4.64

Loans, net of unearned income (3)(5)(8)

24,598,857

22,276,827

923,468

763,614

5.02

4.58

Total earning assets (8)

$

29,814,644

$

26,537,913

$

1,040,169

$

854,316

4.66

%

4.30

%

Allowance for loan losses

(163,518

)

(146,287

)

Cash and due from banks

284,779

264,294

Other assets

2,482,970

1,984,460

Total assets

$

32,418,875

$

28,640,380

NOW and interest bearing demand deposits

$

2,865,175

$

2,357,768

$

15,457

$

5,765

0.72

%

0.33

%

Wealth management deposits

2,703,853

2,378,468

23,254

20,721

1.15

1.16

Money market accounts

6,326,336

4,927,639

66,337

26,038

1.40

0.71

Savings accounts

2,768,875

2,728,986

14,830

8,348