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Wintrust Financial Corp.$79.36($.37)(.46%)

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 Wintrust Financial Corporation Reports Record Fourth Quarter 2017 Net Income, an Increase of 26% Over Prior Year, and Record Full-Year 2017 Net Income of $257.7 million, an Increase of 25% Over Prior Year
   Monday, January 22, 2018 5:15:12 PM ET

Wintrust Financial Corporation ("Wintrust" or "the Company") (WTFC ) announced net income of $68.8 million or $1.17 per diluted common share for the fourth quarter of 2017 compared to net income of $65.6 million or $1.12 per diluted common share for the third quarter of 2017 and $54.6 million or $0.94 per diluted common share for the fourth quarter of 2016. The Company recorded net income of $257.7 million or $4.40 per diluted common share for the year ended 2017 compared to net income of $206.9 million or $3.66 per diluted common share for the same period of 2016.

Highlights of the Fourth Quarter of 2017 *:

-- Total assets increased by $558 million from the prior quarter and now total $27.9 billion.



-- Total deposits increased $288 million to $23.2 billion with non-interest bearing deposit accounts now comprising 29% of total deposits.

-- Total loans, excluding the reclassification of covered loans and mortgage loans held-for-sale, increased by $681 million from the prior quarter.

-- Net interest margin increased primarily as a result of higher earning asset yields. This increase as well as $175 million of growth in average earning assets since the third quarter of 2017 drove a $3.1 million increase in net interest income over the prior quarter.

-- Net charge-offs, excluding covered loans, decreased to $3.7 million. Net charge-offs as a percentage of average total loans, excluding covered loans, decreased to seven basis points for the fourth quarter of 2017 and for the full-year 2017.

-- Allowance for loan losses as a percentage of total non-performing loans remained strong at 153%.

-- Recorded a $7.6 million net tax benefit related to the enactment of the Tax Cuts and Jobs Act on December 22, 2017 ("Tax Reform").

-- Recorded an increase of $8.4 million in bonus and long-term performance-based incentive compensation as a result of higher current and projected earnings as impacted by the higher rate environment, lower taxes and balance sheet growth.

-- Increase in professional fees primarily as a result of $1.6 million of additional consulting costs related to continued investments in various areas of the Company including technology and an enhanced customer experience.

-- Increase in benefits expense primarily due to a $1.2 million negative adjustment of pension obligations assumed in previous acquisitions.

-- Entered into agreements with the Federal Deposit Insurance Corporation ("FDIC") that terminated all existing loss share agreements with the FDIC.

-- Opened one new branch in Rolling Meadows, Illinois to continue to expand our market area.

* See "Supplemental Financial Measures/Ratios" on pages 11-12 for more information on non-GAAP measures.

Edward J. Wehmer, President and Chief Executive Officer, commented, "Wintrust reported record net income for the fourth quarter of 2017 and for the full year of 2017. These results were driven by our continued strong asset growth throughout 2017 and an increased net interest margin as we continue to benefit from rising interest rates. The fourth quarter of 2017 was also characterized by strong deposit growth and a $7.6 million net tax benefit from Tax Reform."

Mr. Wehmer continued, "We experienced strong loan growth among our various loan categories, including the commercial, commercial real estate and life premium finance receivables portfolios. Excluding the reclassification of covered loans and mortgage loans held-for-sale, we grew our loan portfolio by $681 million during the fourth quarter. Our loan pipelines remain consistently strong. The increased loan volume and continued improvement in net interest margin from rising interest rates helped net interest income increase by $3.1 million. We remain well positioned for expected rising rates in the future. Deposit growth was strong in the fourth quarter of 2017 as deposits increased $288 million and exceeded $23 billion as of the end of the fourth quarter. Total deposit growth included $290 million of growth from demand deposits, which now total $6.8 billion and comprise 29% of our overall deposit base."

Commenting on credit quality, Mr. Wehmer noted, "During the fourth quarter of 2017, the Company continued its practice of addressing and resolving non-performing credits in a timely fashion. Excluding covered loans, net charge-offs totaled $3.7 million in the current quarter, decreasing $778,000 from the third quarter of 2017. Additionally, net charge-offs as a percentage of average total loans, excluding covered loans, decreased to 0.07% from 0.08% in the third quarter. For the full year of 2017, net charge-offs as a percentage of average total loans, excluding covered loans, decreased to 0.07% from 0.09% in the full year of 2016. Total non-performing loans, excluding covered loans, increased $12.2 million in the fourth quarter of 2017, or 0.42% of total loans, excluding covered loans. This increase was primarily the result of one relationship within the commercial real estate portfolio totaling $11.1 million becoming non-performing during the period. Additionally, the allowance for loan losses as a percentage of non-performing loans, excluding covered loans, remained strong at 153%. We believe that the Company’s reserves remain appropriate."

Mr. Wehmer further commented, "The wealth management business unit’s strong contribution to revenue continued in the fourth quarter of 2017 with wealth management revenue increasing $2.1 million during the period as a result of continued growth in assets under management. Mortgage banking revenue in the fourth quarter of 2017 totaled $27.4 million, a slight decrease of $773,000 compared to the third quarter of 2017. Mortgage banking revenue for the fourth quarter of 2017 compared to the third quarter of 2017 was impacted by a $46,000 positive fair value adjustment related to mortgage servicing rights assets compared to a $2.2 million negative fair value adjustment in the third quarter of 2017. Mortgage loan origination volumes in the fourth quarter of 2017 totaled $879 million compared to $956 million in the third quarter of 2017 as a result of typical seasonality in our market area. Purchases represented 67% of the volume for the fourth quarter of 2017 compared to 80% in the third quarter of 2017. Our mortgage pipeline remains strong. We continue to look for opportunities to further enhance the mortgage banking business both organically and through acquisitions. The recently completed acquisition of Veterans First Mortgage in early January 2018 will assist us to grow our mortgage banking business with opportunities to expand in both size and delivery channels."

Turning to the future, Mr. Wehmer stated, "Wintrust continues to take a steady and measured approach to achieving our main objectives of growing franchise value, increasing profitability, leveraging our expense infrastructure and increasing shareholder value. As 2017 comes to a close, we expect our growth engine to continue its momentum into 2018 in all areas of our business while focusing on expense control to achieve our goal of a net overhead ratio below 1.50% in 2018. Loan growth at the end of the fourth quarter of 2017 should add to this momentum as period-end loan balances, excluding covered loans and mortgage loans held-for-sale, exceeded the fourth quarter average balance by $560 million. We remain well-positioned for a rising rate environment in the future, which, coupled with this loan growth, should continue to grow net interest income. Additionally, Tax Reform at the end of the year is expected to help fuel our growth engine and increase profitability as we enter 2018. At this time, we expect our effective income tax rate for the full year of 2018 to be approximately 26%-27%, excluding any impact of excess tax benefits associated with share-based compensation, compared to an effective tax rate, excluding any impact of such excess tax benefits and Tax Reform, of approximately 37.5% for the full year of 2017. Evaluating strategic acquisitions and organic branch growth will also be a part of our overall growth strategy with the goal of becoming Chicago’s bank and Wisconsin’s bank. Our opportunities for both internal growth and external growth remain consistently strong."

The graphs below illustrate certain highlights of the fourth quarter of 2017 and the year ended 2017.

http://resource.globenewswire.com/Resource/Download/b1b9f647-370d-4dbb-a0ce-49ea9b0cc956

Wintrust’s key operating measures and growth rates for the fourth quarter of 2017, as compared to the sequential and linked quarters, are shown in the table below:

                                                                                                                                          % or               % or
                                                                                                                                          basis point  (bp)  basis point  (bp)
                                                                                                                                          change from        change from
                                                                                                                                          3nd Quarter        4rd Quarter
                                                                                                                                          2017               2016
                                                                     Three Months Ended
(Dollars in thousands)                                               December 31,           September 30,          December 31,
                                                                     2017                   2017                   2016
Net income                                                           $     68,781           $     65,626           $     54,608           5      %           26     %
Net income per common share - diluted                                $     1.17             $     1.12             $     0.94             4      %           24     %
Net revenue                                                          $     300,137          $     295,719          $     276,053          1      %           9      %
Net interest income                                                  $     219,099          $     215,988          $     190,778          1      %           15     %
Net interest margin                                                  3.45             %     3.43             %     3.21             %     2      bp          24     bp
Net interest margin - fully taxable equivalent (non-GAAP)            3.49             %     3.46             %     3.23             %     3      bp          26     bp
Net overhead ratio                                                   1.69             %     1.53             %     1.48             %     16     bp          21     bp
Return on average assets                                             1.00             %     0.96             %     0.85             %     4      bp          15     bp
Return on average common equity                                      9.39             %     9.15             %     8.32             %     24     bp          107    bp
Return on average tangible common equity (non-GAAP)                  11.65            %     11.39            %     10.68            %     26     bp          97     bp
At end of period
Total assets                                                         $     27,915,970       $     27,358,162       $     25,668,553       8      %           9      %
Total loans, excluding loans held-for-sale, excluding covered loans  21,640,797             20,912,781             19,703,172             14     %           10     %
Total loans, including loans held-for-sale, excluding covered loans  21,954,389             21,283,063             20,121,546             13     %           9      %
Total deposits                                                       23,183,347             22,895,063             21,658,632             5      %           7      %
Total shareholders’ equity                                           2,976,939              2,908,925              2,695,617              9      %           10     %

(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 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                                                   Years Ended
(Dollars in thousands, except per share data)                                                     December 31,           September 30,          December 31,           December 31,          December 31,
                                                                                                  2017                   2017                   2016                   2017                  2016
Selected Financial Condition Data (at end of period):
Total assets                                                                                      $     27,915,970       $     27,358,162       $     25,668,553
Total loans, excluding loans held-for-sale and covered loans                                      21,640,797             20,912,781             19,703,172
Total deposits                                                                                    23,183,347             22,895,063             21,658,632
Junior subordinated debentures                                                                    253,566                253,566                253,566
Total shareholders’ equity                                                                        2,976,939              2,908,925              2,695,617
Selected Statements of Income Data:
Net interest income                                                                               $     219,099          $     215,988          $     190,778          $    832,076          $    722,193
Net revenue                                                                                       300,137                295,719                276,053                1,151,582             1,047,623
Net income                                                                                        68,781                 65,626                 54,608                 257,682               206,875
Net income per common share - Basic                                                               $     1.19             $     1.14             $     0.98             $    4.53             $    3.83
Net income per common share - Diluted                                                             $     1.17             $     1.12             $     0.94             $    4.40             $    3.66
Selected Financial Ratios and Other Data:
Performance Ratios:
Net interest margin                                                                               3.45             %     3.43             %     3.21             %     3.41            %     3.24            %
Net interest margin - fully taxable equivalent (non-GAAP)                                         3.49             %     3.46             %     3.23             %     3.44            %     3.26            %
Non-interest income to average assets                                                             1.18             %     1.17             %     1.32             %     1.21            %     1.34            %
Non-interest expense to average assets                                                            2.87             %     2.70             %     2.80             %     2.78            %     2.81            %
Net overhead ratio                                                                                1.69             %     1.53             %     1.48             %     1.56            %     1.47            %
Return on average assets                                                                          1.00             %     0.96             %     0.85             %     0.98            %     0.85            %
Return on average common equity                                                                   9.39             %     9.15             %     8.32             %     9.26            %     8.37            %
Return on average tangible common equity (non-GAAP)                                               11.65            %     11.39            %     10.68            %     11.63           %     10.90           %
Average total assets                                                                              $     27,179,484       $     27,012,295       $     25,611,060       $    26,369,702       $    24,292,231
Average total shareholders’ equity                                                                2,942,999              2,882,682              2,689,876              2,842,081             2,549,929
Average loans to average deposits ratio (excluding loans held-for-sale, excluding covered loans)  92.3             %     91.8             %     89.6             %     92.7            %     90.9            %
Average loans to average deposits ratio (excluding loans held-for-sale, including covered loans)  92.4             %     92.1             %     89.9             %     92.9            %     91.4            %
Common Share Data at end of period:
Market price per common share                                                                     $     82.37            $     78.31            $     72.57
Book value per common share                                                                       $     50.96            $     49.86            $     47.12
Tangible common book value per share                                                              $     41.68            $     40.53            $     37.08
Common shares outstanding                                                                         55,965,207             55,838,063             51,880,540
Other Data at end of period:
Leverage Ratio                                                                                    9.3              %     9.2              %     8.9              %
Tier 1 capital to risk-weighted assets                                                            9.9              %     10.0             %     9.7              %
Common equity Tier 1 capital to risk-weighted assets                                              9.4              %     9.5              %     8.6              %
Total capital to risk-weighted assets                                                             12.0             %     12.2             %     11.9             %
Allowance for credit losses                                                                       $     139,174          $     134,395          $     123,964
Non-performing loans                                                                              90,162                 77,983                 87,454
Allowance for credit losses to total loans                                                        0.64             %     0.64             %     0.63             %
Non-performing loans to total loans                                                               0.42             %     0.37             %     0.44             %
Number of:
Bank subsidiaries                                                                                 15                     15                     15
Banking offices                                                                                   157                    156                    155

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

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

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

(4) Capital ratios for current quarter-end are estimated.

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

(6) Asset quality ratios exclude covered loans.

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CONDITION

                                                                     (Unaudited)            (Unaudited)
(In thousands)                                                       December 31,           September 30,          December 31,
                                                                     2017                   2017                   2016
Assets
Cash and due from banks                                              $     277,534          $     251,896          $     267,194
Federal funds sold and securities purchased under resale agreements  57                     56                     2,851
Interest bearing deposits with banks                                 1,063,242              1,218,728              980,457
Available-for-sale securities, at fair value                         1,803,666              1,665,903              1,724,667
Held-to-maturity securities, at amortized cost                       826,449                819,340                635,705
Trading account securities                                           995                    643                    1,989
Federal Home Loan Bank and Federal Reserve Bank stock                89,989                 87,192                 133,494
Brokerage customer receivables                                       26,431                 23,631                 25,181
Mortgage loans held-for-sale                                         313,592                370,282                418,374
Loans, net of unearned income, excluding covered loans               21,640,797             20,912,781             19,703,172
Covered loans                                                        --                     46,601                 58,145
Total loans                                                          21,640,797             20,959,382             19,761,317
Allowance for loan losses                                            (137,905         )     (133,119         )     (122,291         )
Allowance for covered loan losses                                    --                     (758             )     (1,322           )
Net loans                                                            21,502,892             20,825,505             19,637,704
Premises and equipment, net                                          621,895                609,978                597,301
Lease investments, net                                               212,335                193,828                129,402
Accrued interest receivable and other assets                         567,374                580,612                593,796
Trade date securities receivable                                     90,014                 189,896                --
Goodwill                                                             501,884                502,021                498,587
Other intangible assets                                              17,621                 18,651                 21,851
Total assets                                                         $     27,915,970       $     27,358,162       $     25,668,553
Liabilities and Shareholders’ Equity
Deposits:
Non-interest bearing                                                 $     6,792,497        $     6,502,409        $     5,927,377
Interest bearing                                                     16,390,850             16,392,654             15,731,255
Total deposits                                                       23,183,347             22,895,063             21,658,632
Federal Home Loan Bank advances                                      559,663                468,962                153,831
Other borrowings                                                     266,123                251,680                262,486
Subordinated notes                                                   139,088                139,052                138,971
Junior subordinated debentures                                       253,566                253,566                253,566
Trade date securities payable                                        --                     880                    --
Accrued interest payable and other liabilities                       537,244                440,034                505,450
Total liabilities                                                    24,939,031             24,449,237             22,972,936
Shareholders’ Equity:
Preferred stock                                                      125,000                125,000                251,257
Common stock                                                         56,068                 55,940                 51,978
Surplus                                                              1,529,035              1,519,596              1,365,781
Treasury stock                                                       (4,986           )     (4,884           )     (4,589           )
Retained earnings                                                    1,313,657              1,254,759              1,096,518
Accumulated other comprehensive loss                                 (41,835          )     (41,486          )     (65,328          )
Total shareholders’ equity                                           2,976,939              2,908,925              2,695,617
Total liabilities and shareholders’ equity                           $     27,915,970       $     27,358,162       $     25,668,553

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

                                                                    Three Months Ended                               Years Ended
(In thousands, except per share data)                               December 31,   September 30,      December 31,   December 31,       December 31,
                                                                    2017           2017               2016           2017               2016
Interest income
Interest and fees on loans                                          $    229,738   $    227,120       $    199,155   $    868,881       $    741,001
Interest bearing deposits with banks                                2,723          3,272              1,541          9,252              4,236
Federal funds sold and securities purchased under resale agreements --             --                 1              2                  4
Investment securities                                               18,160         16,058             12,954         63,315             62,038
Trading account securities                                          2              8                  32             25                 75
Federal Home Loan Bank and Federal Reserve Bank stock               1,067          1,080              1,144          4,370              4,287
Brokerage customer receivables                                      150            150                186            623                816
Total interest income                                               251,840        247,688            215,013        946,468            812,457
Interest expense
Interest on deposits                                                24,930         23,655             16,413         83,326             58,409
Interest on Federal Home Loan Bank advances                         2,124          2,151              2,439          8,798              10,886
Interest on other borrowings                                        1,600          1,482              1,074          5,370              4,355
Interest on subordinated notes                                      1,786          1,772              1,779          7,116              7,111
Interest on junior subordinated debentures                          2,301          2,640              2,530          9,782              9,503
Total interest expense                                              32,741         31,700             24,235         114,392            90,264
Net interest income                                                 219,099        215,988            190,778        832,076            722,193
Provision for credit losses                                         7,772          7,896              7,350          29,768             34,084
Net interest income after provision for credit losses               211,327        208,092            183,428        802,308            688,109
Non-interest income
Wealth management                                                   21,910         19,803             19,512         81,766             76,018
Mortgage banking                                                    27,411         28,184             35,489         113,472            128,743
Service charges on deposit accounts                                 8,907          8,645              8,054          34,513             31,210
Gains on investment securities, net                                 14             39                 1,575          45                 7,645
Fees from covered call options                                      1,610          1,143              1,476          4,402              11,470
Trading gains (losses), net                                         24             (129         )     1,007          (845         )     91
Operating lease income, net                                         8,598          8,461              5,171          29,646             16,441
Other                                                               12,564         13,585             12,991         56,507             53,812
Total non-interest income                                           81,038         79,731             85,275         319,506            325,430
Non-interest expense
Salaries and employee benefits                                      118,009        106,251            104,735        430,078            405,158
Equipment                                                           9,500          9,947              9,532          38,358             37,055
Operating lease equipment depreciation                              7,015          6,794              4,219          24,107             13,259
Occupancy, net                                                      14,154         13,079             14,254         52,920             50,912
Data processing                                                     7,915          7,851              7,687          31,495             28,776
Advertising and marketing                                           7,382          9,572              6,691          30,830             24,776
Professional fees                                                   8,879          6,786              5,425          27,835             20,411
Amortization of other intangible assets                             1,028          1,068              1,158          4,401              4,789
FDIC insurance                                                      4,324          3,877              4,726          16,231             16,065
OREO expense, net                                                   599            590                1,843          3,593              5,187
Other                                                               17,775         17,760             20,101         71,969             75,297
Total non-interest expense                                          196,580        183,575            180,371        731,817            681,685
Income before taxes                                                 95,785         104,248            88,332         389,997            331,854
Income tax expense                                                  27,004         38,622             33,724         132,315            124,979
Net income                                                          $    68,781    $    65,626        $    54,608    $    257,682       $    206,875
Preferred stock dividends                                           2,050          2,050              3,629          9,778              14,513
Net income applicable to common shares                              $    66,731    $    63,576        $    50,979    $    247,904       $    192,362
Net income per common share - Basic                                 $    1.19      $    1.14          $    0.98      $    4.53          $    3.83
Net income per common share - Diluted                               $    1.17      $    1.12          $    0.94      $    4.40          $    3.66
Cash dividends declared per common share                            $    0.14      $    0.14          $    0.12      $    0.56          $    0.48
Weighted average common shares outstanding                          55,924         55,796             51,812         54,703             50,278
Dilutive potential common shares                                    1,010          966                4,152          1,983              3,994
Average common shares and dilutive common shares                    56,934         56,762             55,964         56,686             54,272

EARNINGS PER SHARE

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

                                                                                     Three Months Ended                        Years Ended
(In thousands, except per share data)                                                December 31,  September 30, December 31,  December 31,   December 31,
                                                                                     2017          2017          2016          2017           2016
Net income                                                                           $    68,781   $    65,626   $    54,608   $    257,682   $    206,875
Less: Preferred stock dividends                                                      2,050         2,050         3,629         9,778          14,513
Net income applicable to common shares--Basic                                 (A)    66,731        63,576        50,979        247,904        192,362
Add: Dividends on convertible preferred stock, if dilutive                           --            --            1,578         1,578          6,313
Net income applicable to common shares--Diluted                               (B)    66,731        63,576        52,557        249,482        198,675
Weighted average common shares outstanding                                    (C)    55,924        55,796        51,812        54,703         50,278
Effect of dilutive potential common shares:
Common stock equivalents                                                             1,010         966           1,052         998            894
Convertible preferred stock, if dilutive                                             --            --            3,100         985            3,100
Weighted average common shares and effect of dilutive potential common shares (D)    56,934        56,762        55,964        56,686         54,272
Net income per common share:
Basic                                                                         (A/C)  $    1.19     $    1.14     $    0.98     $    4.53      $    3.83
Diluted                                                                       (B/D)  $    1.17     $    1.12     $    0.94     $    4.40      $    3.66

Potentially dilutive common shares can result from stock options, restricted stock unit awards, stock warrants, the Company’s convertible preferred stock and shares to be issued under the Employee Stock Purchase Plan and the Directors Deferred Fee and Stock Plan, being treated as if they had been either exercised or issued, computed by application of the treasury stock method. While potentially dilutive common shares are typically included in the computation of diluted earnings per share, potentially dilutive common shares are excluded from this computation in periods in which the effect would reduce the loss per share or increase the income per share. For diluted earnings per share, net income applicable to common shares can be affected by the conversion of the Company’s convertible preferred stock. Where the effect of this conversion would reduce the loss per share or increase the income per share for a period, net income applicable to common shares is not adjusted by the associated preferred dividends. On April 25, 2017, 2,073 shares of the Series C Preferred Stock were converted at the option of the respective holder into 51,244 shares of the Company’s common stock, pursuant to the terms of the Series C Preferred Stock. On April 27, 2017, the Company caused a mandatory conversion of its outstanding 124,184 shares of Series C Preferred Stock into 3,069,828 shares of the Company’s common stock at a conversion rate of 24.72 shares of common stock per share of Series C Preferred Stock. Cash was paid in lieu of fractional shares for an amount considered insignificant.

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), taxable-equivalent net interest margin (including its individual components), the taxable-equivalent efficiency ratio, tangible common equity ratio, tangible common book value per share and return on average tangible common equity. Management believes that these measures and ratios provide users of the Company’s financial information a more meaningful view of the performance of the Company’s 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 using tax rates effective as of the end of the period. This measure ensures comparability of net interest income arising from both taxable and tax-exempt sources. Net interest income on a FTE basis is also used in the calculation of the Company’s efficiency ratio. The efficiency ratio, which is calculated by dividing non-interest expense by total taxable-equivalent net revenue (less securities gains or losses), measures how much it costs to produce one dollar of revenue. Securities gains or losses are excluded from this calculation to better match revenue from daily operations to operational expenses. Management considers the tangible common equity ratio and tangible book value per common share as useful measurements of the Company’s equity. The Company references the return on average tangible common equity as a measurement of profitability.

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

                                                                                                Three Months Ended                                                                                         Years Ended
                                                                                                December 31,          September 30,         June 30,            March 31,            December 31,          December 31,         December 31,
(Dollars and shares in thousands)                                                               2017                  2017                  2017                2017                 2016                  2017                 2016
Calculation of Net Interest Margin and Efficiency Ratio
(A) Interest Income (GAAP)                                                                      $    251,840          $    247,688          $    231,181        $    215,759         $    215,013          $    946,468         $    812,457
Taxable-equivalent adjustment:
- Loans                                                                                         1,106                 1,033                 831                 790                  666                   3,760                2,282
- Liquidity Management Assets                                                                   1,019                 921                   866                 907                  815                   3,713                3,630
- Other Earning Assets                                                                          2                     5                     2                   5                    17                    14                   40
(B) Interest Income - FTE                                                                       $    253,967          $    249,647          $    232,880        $    217,461         $    216,511          $    953,955         $    818,409
(C) Interest Expense (GAAP)                                                                     32,741                31,700                26,772              23,179               24,235                114,392              90,264
(D) Net Interest Income - FTE (B minus C)                                                       $    221,226          $    217,947          $    206,108        $    194,282         $    192,276          $    839,563         $    728,145
(E) Net Interest Income (GAAP) (A minus C)                                                      $    219,099          $    215,988          $    204,409        $    192,580         $    190,778          $    832,076         $    722,193
Net interest margin (GAAP-derived)                                                              3.45            %     3.43            %     3.41            %   3.36            %    3.21            %     3.41           %     3.24           %
Net interest margin - FTE                                                                       3.49            %     3.46            %     3.43            %   3.39            %    3.23            %     3.44           %     3.26           %
(F) Non-interest income                                                                         $    81,038           $    79,731           $    89,972         $    68,765          $    85,275           $    319,506         $    325,430
(G) Gains (losses) on investment securities, net                                                14                    39                    47                  (55             )    1,575                 45                   7,645
(H) Non-interest expense                                                                        196,580               183,575               183,544             168,118              180,371               731,817              681,685
Efficiency ratio (H/(E+F-G))                                                                    65.50           %     62.09           %     62.36           %   64.31           %    65.71           %     63.55          %     65.55          %
Efficiency ratio - FTE (H/(D+F-G))                                                              65.04           %     61.68           %     62.00           %   63.90           %    65.36           %     63.14          %     65.18          %
Calculation of Tangible Common Equity ratio (at period end)
Total shareholders’ equity                                                                      $    2,976,939        $    2,908,925        $    2,839,458      $    2,764,983       $    2,695,617
(I) Less: Convertible preferred stock                                                           --                    --                    --                  (126,257        )    (126,257        )
Less:  Non-convertible preferred stock                                                          (125,000        )     (125,000        )     (125,000        )   (125,000        )    (125,000        )
Less: Intangible assets                                                                         (519,505        )     (520,672        )     (519,806        )   (520,028        )    (520,438        )
(J) Total tangible common shareholders’ equity                                                  $    2,332,434        $    2,263,253        $    2,194,652      $    1,993,698       $    1,923,922
Total assets                                                                                    $    27,915,970       $    27,358,162       $    26,929,265     $    25,778,893      $    25,668,553
Less: Intangible assets                                                                         (519,505        )     (520,672        )     (519,806        )   (520,028        )    (520,438        )
(K) Total tangible assets                                                                       $    27,396,465       $    26,837,490       $    26,409,459     $    25,258,865      $    25,148,115
Tangible common equity ratio (J/K)                                                              8.5             %     8.4             %     8.3             %   7.9             %    7.7             %
Tangible common equity ratio, assuming full conversion of convertible preferred stock ((J-I)/K) 8.5             %     8.4             %     8.3             %   8.4             %    8.2             %
Calculation of book value per share
Total shareholders’ equity                                                                      $    2,976,939        $    2,908,925        $    2,839,458      $    2,764,983       $    2,695,617
Less: Preferred stock                                                                           (125,000        )     (125,000        )     (125,000        )   (251,257        )    (251,257        )
(L) Total common equity                                                                         $    2,851,939        $    2,783,925        $    2,714,458      $    2,513,726       $    2,444,360
(M) Actual common shares outstanding                                                            55,965                55,838                55,700              52,504               51,881
Book value per common share (L/M)                                                               $    50.96            $    49.86            $    48.73          $    47.88           $    47.12
Tangible common book value per share (J/M)                                                      $    41.68            $    40.53            $    39.40          $    37.97           $    37.08
Calculation of return on average common equity
(N) Net income applicable to common shares                                                      $    66,731           $    63,576           $    62,847         $    54,750          $    50,979           $    247,904         $    192,362
Add: After-tax intangible asset amortization                                                         738                   672                   726                 771                  716                   2,907                2,986
(O) Tangible net income applicable to common shares                                             $    67,469           $    64,248           $    63,573         $    55,521          $    51,695           $    250,811         $    195,348
Total average shareholders’ equity                                                              $    2,942,999        $    2,882,682        $    2,800,905      $    2,739,050       $    2,689,876        $    2,842,081       $    2,549,929
Less: Average preferred stock                                                                        (125,000   )          (125,000   )          (161,028   )        (251,257   )         (251,257   )          (165,114  )          (251,258  )
(P) Total average common shareholders’ equity                                                   $    2,817,999        $    2,757,682        $    2,639,877      $    2,487,793       $    2,438,619        $    2,676,967       $    2,298,671
Less: Average intangible assets                                                                      (519,626   )          (520,333   )          (519,340   )        (520,346   )         (513,017   )          (519,910  )          (506,241  )
(Q) Total average tangible common shareholders’ equity                                          $    2,298,373        $    2,237,349        $    2,120,537      $    1,967,447       $    1,925,602        $    2,157,057       $    1,792,430
Return on average common equity, annualized  (N/P)                                                   9.39       %          9.15       %          9.55       %        8.93       %         8.32       %          9.26      %          8.37      %
Return on average tangible common equity, annualized (O/Q)                                           11.65      %          11.39      %          12.02      %        11.44      %         10.68      %          11.63     %          10.90     %

BUSINESS UNIT SUMMARY

Community Banking

Through its community banking segment, 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 fourth quarter of 2017, revenue within this franchise was primarily driven by increased net interest income due to a higher net interest margin, partially offset by lower revenue from the mortgage banking business. The net interest margin increased in the fourth quarter of 2017 compared to the third quarter of 2017 primarily as a result of higher yields on the commercial loan portfolio (excluding lease loans) and the securities portfolio, partially offset by higher rates on interest-bearing deposits. Mortgage banking revenue decreased by $773,000 from $28.2 million for the third quarter of 2017 to $27.4 million for the fourth quarter of 2017. The lower revenue was primarily due to originations during the current period decreasing to $879.4 million from $956.0 million in the third quarter of 2017 as a result of typical seasonality in our primary market area. The reduction in mortgage banking revenue due to lower origination volumes was partially offset by a $46,000 positive fair value adjustment related to mortgage servicing rights assets compared to a $2.2 million negative fair value adjustment in the third quarter of 2017. Purchases represented 67% of loan origination volume for the fourth quarter of 2017. The Company’s gross commercial and commercial real estate loan pipelines remain strong. Before the impact of scheduled payments and prepayments, at December 31, 2017, gross commercial and commercial real estate loan pipelines totaled $974.4 million, or $630.2 million when adjusted for the probability of closing, compared to $1.1 billion, or $714.7 million when adjusted for the probability of closing, at September 30, 2017.

Specialty Finance

Through its specialty finance segment, 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 fourth quarter of 2017, the specialty finance unit experienced higher revenue as a result of increased volumes and higher yields within its insurance premium financing receivables portfolio. Originations of $1.8 billion during the fourth quarter of 2017 resulted in a $21.6 million increase in average balances. The increase in average balances along with higher yields on these loans resulted in a $723,000 increase in interest income attributed to this portfolio. The Company’s leasing business continued to grow during the fourth quarter of 2017, increasing its portfolio of assets, including capital leases, loans and equipment on operating leases, 38% on an annualized basis to $1.0 billion at the end of the fourth quarter of 2017. Revenues from the Company’s out-sourced administrative services business remained steady, totaling approximately $1.1 million in the fourth quarter of 2017 and third quarter of 2017.

Wealth Management

Through its wealth management segment, the Company offers a full range of wealth management services through three separate subsidiaries: trust and investment services, asset management, securities brokerage services and 401(k) and retirement plan services. At December 31, 2017, the Company’s wealth management subsidiaries had approximately $24.6 billion of assets under administration, which includes $2.7 billion of assets owned by the Company and its subsidiary banks, representing a $515.6 million increase from the $24.1 billion of assets under administration at September 30, 2017. This growth in assets under administration was primarily driven by growth in the Company’s asset management business.

LOANS

Loan Portfolio Mix and Growth Rates

                                                                                                                                % Growth
(Dollars in thousands)                                        December 31,          September 30,         December 31,          From September 30,  From
                                                              2017                  2017                  2016                  2017                December 31,
                                                                                                                                                    2016
Balance:
Commercial                                                    $    6,787,677        $    6,456,034        $    6,005,422        20        %         13     %
Commercial real estate                                        6,580,618             6,400,781             6,196,087             11                  6
Home equity                                                   663,045               672,969               725,793               (6        )         (9     )
Residential real estate                                       832,120               789,499               705,221               21                  18
Premium finance receivables - commercial                      2,634,565             2,664,912             2,478,581             (5        )         6
Premium finance receivables - life insurance                  4,035,059             3,795,474             3,470,027             25                  16
Consumer and other                                            107,713               133,112               122,041               (76       )         (12    )
Total loans, net of unearned income, excluding covered loans  $    21,640,797       $    20,912,781       $    19,703,172       14        %         10     %
Covered loans                                                 --                    46,601                58,145                (100      )         (100   )
Total loans, net of unearned income                           $    21,640,797       $    20,959,382       $    19,761,317       13        %         10     %
Mix:
Commercial                                                    31              %     31              %     30              %
Commercial real estate                                        30                    31                    31
Home equity                                                   3                     3                     4
Residential real estate                                       4                     3                     4
Premium finance receivables - commercial                      12                    13                    12
Premium finance receivables - life insurance                  19                    18                    18
Consumer and other                                            1                     1                     1
Total loans, net of unearned income, excluding covered loans  100             %     100             %     100             %
Covered loans                                                 --                    --                    --
Total loans, net of unearned income                           100             %     100             %     100             %

(1) Annualized

Commercial and Commercial Real Estate Loan Portfolios

                                                        As of December 31, 2017
                                                                          % of       Nonaccrual   > 90 Days   Allowance
                                                                          Total                   Past Due    For Loan
                                                                          Balance                 and Still   Losses
                                                                                                  Accruing    Allocation
(Dollars in thousands)                                  Balance
Commercial:
Commercial, industrial and other                        $    4,342,505    32.5  %    $   11,260   $   --      $   39,901
Franchise                                               847,597           6.3        2,447        --          6,451
Mortgage warehouse lines of credit                      194,523           1.5        --           --          1,454
Asset-based lending                                     980,466           7.3        1,550        --          8,236
Leases                                                  413,172           3.1        439          --          1,242
PCI - commercial loans                                  9,414             0.1        --           877         527
Total commercial                                        $    6,787,677    50.8  %    $   15,696   $   877     $   57,811
Commercial Real Estate:
Construction                                            $    745,514      5.6   %    $   3,143    $   --      $   8,728
Land                                                    126,484           0.9        188          --          3,838
Office                                                  894,833           6.7        2,438        --          5,736
Industrial                                              883,019           6.6        811          --          5,767
Retail                                                  951,527           7.1        12,328       --          7,389
Multi-family                                            915,644           6.8        --           --          9,509
Mixed use and other                                     1,935,705         14.5       3,140        --          13,879
PCI - commercial real estate                            127,892           1.0        --           7,135       381
Total commercial real estate                            $    6,580,618    49.2  %    $   22,048   $   7,135   $   55,227
Total commercial and commercial real estate             $    13,368,295   100.0 %    $   37,744   $   8,012   $   113,038
Commercial real estate - collateral location by state:
Illinois                                                $    5,128,434    78.0  %
Wisconsin                                               712,835           10.8
Total primary markets                                   $    5,841,269    88.8  %
Indiana                                                 138,316           2.1
Florida                                                 69,427            1.1
Arizona                                                 58,594            0.9
Michigan                                                47,167            0.7
California                                              68,478            1.0
Other (no individual state greater than 0.6%)           357,367           5.4
Total                                                   $    6,580,618    100.0 %

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

DEPOSITS

Deposit Portfolio Mix and Growth Rates

                                                                                                            % Growth
(Dollars in thousands)                    December 31,          September 30,         December 31,          From September 30,  From
                                          2017                  2017                  2016                  2017                December 31,
                                                                                                                                2016
Balance:
Non-interest bearing                      $    6,792,497        $    6,502,409        $    5,927,377        18        %         15     %
NOW and interest bearing demand deposits  2,315,055             2,273,025             2,624,442             7                   (12    )
Wealth management deposits                2,323,699             2,171,758             2,209,617             28                  5
Money market                              4,515,353             4,607,995             4,441,811             (8        )         2
Savings                                   2,829,373             2,673,201             2,180,482             23                  30
Time certificates of deposit              4,407,370             4,666,675             4,274,903             (22       )         3
Total deposits                            $    23,183,347       $    22,895,063       $    21,658,632       5         %         7      %
Mix:
Non-interest bearing                      29              %     28              %     27              %
NOW and interest bearing demand deposits  10                    10                    12
Wealth management deposits                10                    10                    10
Money market                              20                    20                    21
Savings                                   12                    12                    10
Time certificates of deposit              19                    20                    20
Total deposits                            100             %     100             %     100             %

(1) Annualized

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

Time Certificates of Deposit

Maturity/Re-pricing Analysis

As of December 31, 2017

(Dollars in thousands)  CDARs &       MaxSafe        Variable Rate  Other Fixed        Total Time        Weighted-
                        Brokered      Certificates   Certificates   Rate  Certificates Certificates of   Average
                        Certificates  of Deposit     of Deposit     of Deposit         Deposit           Rate of
                        of Deposit                                                                       Maturing
                                                                                                         Time
                                                                                                         Certificates
                                                                                                         of Deposit
1-3 months              $    1,494    $    35,931    $    126,182   $      908,264     $     1,071,871   0.90%
4-6 months              59,747        26,866         --             787,365            873,978           1.01%
7-9 months              --            22,437         --             594,359            616,796           1.03%
10-12 months            --            13,436         --             595,315            608,751           1.11%
13-18 months            249           14,587         --             767,006            781,842           1.32%
19-24 months            --            16,719         --             166,485            183,204           1.35%
24+ months              1,000         7,838          --             262,090            270,928           1.54%
Total                   $    62,490   $    137,814   $    126,182   $      4,080,884   $     4,407,370   1.10%

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

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

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

NET INTEREST INCOME

The following table presents a summary of Wintrust’s average balances, net interest income and related net interest margins, calculated on a fully tax-equivalent basis, for the fourth quarter of 2017 compared to the third quarter of 2017 (sequential quarters) and fourth quarter of 2016 (linked quarters), respectively:

                                                          Average Balance                                                      Interest                                                 Yield/Rate
                                                          for three months ended,                                              for three months ended,                                  for three months ended,
(Dollars in thousands)                                    December 31,           September 30,          December 31,           December 31,       September 30,      December 31,       December 31,  September 30,  December 31,
                                                          2017                   2017                   2016                   2017               2017               2016               2017          2017           2016
Interest-bearing deposits with banks and cash equivalents $     914,319          $     1,003,572        $     1,251,677        $    2,723         $    3,272         $    1,542         1.18   %      1.29   %       0.49   %
Investment securities                                     2,736,253              2,652,119              2,477,708              19,179             16,979             13,769             2.78          2.54           2.21
FHLB and FRB stock                                        82,092                 81,928                 131,231                1,067              1,080              1,144              5.15          5.23           3.47
Liquidity management assets                               $     3,732,664        $     3,737,619        $     3,860,616        $    22,969        $    21,331        $    16,455        2.44   %      2.26   %       1.70   %
Other earning assets                                      26,955                 25,844                 27,608                 154                163                235                2.27          2.49           3.37
Loans, net of unearned                                    21,416,369             21,195,222             19,711,504             230,758            227,553            198,861            4.27          4.26           4.01
income
Covered loans                                             6,025                  48,415                 59,827                 86                 600                960                5.66          4.91           6.38
Total earning assets                                      $     25,182,013       $     25,007,100       $     23,659,555       $    253,967       $    249,647       $    216,511       4.00   %      3.96   %       3.64   %
Allowance for loan and covered loan losses                (138,584         )     (135,519         )     (122,665         )
Cash and due from banks                                   244,097                242,186                221,892
Other assets                                              1,891,958              1,898,528              1,852,278
Total assets                                              $     27,179,484       $     27,012,295       $     25,611,060
NOW and interest bearing demand deposits                  $     2,284,576        $     2,344,848        $     2,533,638        $    1,407         $    1,313         $    1,097         0.24   %      0.22   %       0.17   %
Wealth management deposits                                2,005,197              2,320,674              2,232,451              4,059              4,715              2,522              0.80          0.81           0.45
Money market accounts                                     4,611,515              4,471,342              4,480,699              4,154              3,505              2,324              0.36          0.31           0.21
Savings accounts                                          2,741,621              2,581,946              2,087,494              2,716              2,162              1,164              0.39          0.33           0.22
Time deposits                                             4,581,464              4,573,081              4,232,981              12,594             11,960             9,306              1.09          1.04           0.87
Interest-bearing deposits                                 $     16,224,373       $     16,291,891       $     15,567,263       $    24,930        $    23,655        $    16,413        0.61   %      0.58   %       0.42   %
Federal Home Loan Bank advances                           324,748                324,996                388,780                2,124              2,151              2,439              2.59          2.63           2.50
Other borrowings                                          255,972                268,850                240,174                1,600              1,482              1,074              2.48          2.19           1.78
Subordinated notes                                        139,065                139,035                138,953                1,786              1,772              1,779              5.14          5.10           5.12
Junior subordinated debentures                            253,566                253,566                253,566                2,301              2,640              2,530              3.55          4.07           3.90
Total interest-bearing liabilities                        $     17,197,724       $     17,278,338       $     16,588,736       $    32,741        $    31,700        $    24,235        0.75   %      0.73   %       0.58   %
Non-interest bearing deposits                             6,605,553              6,419,326              5,902,439
Other liabilities                                         433,208                431,949                430,009
Equity                                                    2,942,999              2,882,682              2,689,876
Total liabilities and shareholders’ equity                $     27,179,484       $     27,012,295       $     25,611,060
Interest rate spread                                                                                                                                                                    3.25   %      3.23   %       3.06   %
Less:  Fully tax-equivalent adjustment                                                                                         (2,127       )     (1,959       )     (1,498       )     (0.04  )      (0.03  )       (0.02  )
Net free funds/contribution                               $     7,984,289        $     7,728,762        $     7,070,819                                                                 0.24          0.23           0.17
Net interest income/ margin(GAAP)                                                                                              $    219,099       $    215,988       $    190,778       3.45   %      3.43   %       3.21   %
Fully tax-equivalent adjustment                                                                                                2,127              1,959              1,498              0.04          0.03           0.02
Net interest income/ margin - FTE                                                                                              $    221,226       $    217,947       $    192,276       3.49   %      3.46   %       3.23   %

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

(2) Interest income on tax-advantaged loans, trading securities and investment 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, 2017, September 30, 2017 and December 31, 2016 were $2.1 million, $2.0 million and $1.5 million, respectively.

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

(4) Loans, net of unearned income, include loans held-for-sale and non-accrual loans.

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

(6) Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.

(7) See "Supplemental Financial Measures/Ratios" for additional information on this performance ratio.

For the fourth quarter of 2017, net interest income totaled $219.1 million, an increase of $3.1 million as compared to the third quarter of 2017 and an increase of $28.3 million as compared to the fourth quarter of 2016. Net interest margin was 3.45% (3.49% on a fully tax-equivalent basis) during the fourth quarter of 2017 compared to 3.43% (3.46% on a fully tax-equivalent basis) during the third quarter of 2017 and 3.21% (3.23% on a fully tax-equivalent basis) during the fourth quarter of 2016.

The following table presents a summary of Wintrust’s average balances, net interest income and related interest margins, calculated on a fully tax-equivalent basis, for the year ended December 31, 2017 compared to the year ended December 31, 2016:

                                                          Average Balance                               Interest                              Yield/Rate
                                                          for year ended,                               for year ended,                       for year ended,
(Dollars in thousands)                                    December 31,           December 31,           December 31,       December 31,       December 31,  December 31,
                                                          2017                   2016                   2017               2016               2017          2016
Interest-bearing deposits with banks and cash equivalents $     856,020          $     829,845          $    9,254         $    4,240         1.08   %      0.51   %
Investment securities                                     2,590,260              2,611,909              67,028             65,668             2.59          2.51
FHLB and FRB stock                                        89,333                 120,726                4,370              4,287              4.89          3.55
Liquidity management assets                               $     3,535,613        $     3,562,480        $    80,652        $    74,195        2.28   %      2.08   %
Other earning assets                                      25,951                 28,992                 662                931                2.55          3.21
Loans, net of unearned income                             20,788,946             18,628,261             870,390            737,694            4.19          3.96
Covered loans                                             40,665                 102,948                2,251              5,589              5.54          5.43
Total earning assets                                      $     24,391,175       $     22,322,681       $    953,955       $    818,409       3.91   %      3.67   %
Allowance for loan and covered loan losses                (133,432         )     (118,229         )
Cash and due from banks                                   239,638                248,507
Other assets                                              1,872,321              1,839,272
Total assets                                              $     26,369,702       $     24,292,231
NOW and interest bearing demand deposits                  $     2,402,254        $     2,438,052        $    5,027         $    4,014         0.21   %      0.16   %
Wealth management deposits                                2,125,177              1,877,020              13,952             8,206              0.66          0.44
Money market accounts                                     4,482,137              4,343,332              12,588             9,254              0.28          0.21
Savings accounts                                          2,471,663              1,887,748              7,715              3,313              0.31          0.18
Time deposits                                             4,423,067              4,074,734              44,044             33,622             1.00          0.83
Interest-bearing deposits                                 $     15,904,298       $     14,620,886       $    83,326        $    58,409        0.52   %      0.40   %
Federal Home Loan Bank advances                           380,412                653,529                8,798              10,886             2.31          1.67
Other borrowings                                          255,136                248,753                5,370              4,355              2.10          1.75
Subordinated notes                                        139,022                138,912                7,116              7,111              5.12          5.12
Junior subordinated debentures                            253,566                254,591                9,782              9,503              3.81          3.67
Total interest-bearing liabilities                        $     16,932,434       $     15,916,671       $    114,392       $    90,264        0.67   %      0.57   %
Non-interest bearing deposits                             6,182,048              5,409,923
Other liabilities                                         413,139                415,708
Equity                                                    2,842,081              2,549,929
Total liabilities and shareholders’ equity                $     26,369,702       $     24,292,231
Interest rate spread                                                                                                                          3.24   %      3.10   %
Less:  Fully tax-equivalent adjustment                                                                  (7,487       )     (5,952       )     (0.03  )      (0.02  )
Net free funds/contribution                               $     7,458,741        $     6,406,010                                              0.20          0.16
Net interest income/ margin(GAAP)                                                                       $    832,076       $    722,193       3.41   %      3.24   %
Fully tax-equivalent adjustment                                                                         7,487              5,952              0.03          0.02
Net interest income/ margin - FTE                                                                       $    839,563       $    728,145       3.44   %      3.26   %

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

(2) Interest income on tax-advantaged loans, trading securities and investment securities reflects a tax-equivalent adjustment based on a marginal federal corporate tax rate of 35%. The total adjustments for the years ended December 31, 2017 and 2016 were $7.5 million and $6.0 million respectively.

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

(4) Loans, net of unearned income, include loans held-for-sale and non-accrual loans.

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

(6) Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.

(7) See "Supplemental Financial Measures/Ratios" for additional information on this performance ratio.

For the year ended 2017 net interest income totaled $832.1 million, an increase of $109.9 million as compared to the year ended 2016. Net interest margin was 3.41% (3.44% on a fully tax-equivalent basis) for the year ended 2017 compared to 3.24% (3.26% on a fully tax-equivalent basis) for the year ended 2017.

Interest Rate Sensitivity

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

The following interest rate scenarios display the percentage change in net interest income over a one-year time horizon assuming increases of 100 and 200 basis points and a decrease of 100 basis points. The Static Shock Scenario results incorporate actual cash flows and repricing characteristics for balance sheet instruments following an instantaneous, parallel change in market rates based upon a static (i.e. no growth or constant) balance sheet. Conversely, the Ramp Scenario results incorporate management’s projections of future volume and pricing of each of the product lines following a gradual, parallel change in market rates over twelve months. Actual results may differ from these simulated results due to timing, magnitude, and frequency of interest rate changes as well as changes in market conditions and management strategies. The interest rate sensitivity for both the Static Shock and Ramp Scenario at December 31, 2017, September 30, 2017 and December 31, 2016 is as follows:

Static Shock Scenario +200    +100    -100
                      Basis   Basis   Basis
                      Points  Points  Points
December 31, 2017     17.7%   9.0%    (11.8)%
September 30, 2017    19.5%   9.8%    (12.9)%
December 31, 2016     18.5%   9.6%    (13.2)%
Ramp Scenario      +200    +100    -100
                   Basis   Basis   Basis
                   Points  Points  Points
December 31, 2017  8.9%    4.6%    (5.1)%
September 30, 2017 9.0%    4.6%    (5.3)%
December 31, 2016  7.6%    4.0%    (5.0)%

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

Maturities and Sensitivities of Loans to Changes in Interest Rates

The following table classifies the loan portfolio, excluding covered loans, at December 31, 2017 by date at which the loans reprice or mature, and the type of rate exposure:

As of December 31, 2017                                      One year or less   From one to five       Over five years
                                                                                years
(Dollars in thousands)                                                                                                   Total
Commercial
Fixed rate                                                   $     162,137      $     916,046          $     548,248     $     1,626,431
Variable rate                                                5,153,353          6,113                  1,780             5,161,246
Total commercial                                             $     5,315,490    $     922,159          $     550,028     $     6,787,677
Commercial real estate
Fixed rate                                                   430,938            1,744,750              257,890           2,433,578
Variable rate                                                4,120,039          26,564                 437               4,147,040
Total commercial real estate                                 $     4,550,977    $     1,771,314        $     258,327     $     6,580,618
Home equity
Fixed rate                                                   10,100             4,849                  58,402            73,351
Variable rate                                                589,694            --                     --                589,694
Total home equity                                            $     599,794      $     4,849            $     58,402      $     663,045
Residential real estate
Fixed rate                                                   58,459             30,114                 149,453           238,026
Variable rate                                                59,307             221,629                313,158           594,094
Total residential real estate                                $     117,766      $     251,743          $     462,611     $     832,120
Premium finance receivables - commercial
Fixed rate                                                   2,561,032          73,533                 --                2,634,565
Variable rate                                                --                 --                     --                --
Total premium finance receivables - commercial               $     2,561,032    $     73,533           $     --          $     2,634,565
Premium finance receivables - life insurance
Fixed rate                                                   13,114             33,355                 2,130             48,599
Variable rate                                                3,986,460          --                     --                3,986,460
Total premium finance receivables - life insurance           $     3,999,574    $     33,355           $     2,130       $     4,035,059
Consumer and other
Fixed rate                                                   53,936             12,491                 4,001             70,428
Variable rate                                                37,266             19                     --                37,285
Total consumer and other                                     $     91,202       $     12,510           $     4,001       $     107,713
Total per category
Fixed rate                                                   3,289,716          2,815,138              1,020,124         7,124,978
Variable rate                                                13,946,119         254,325                315,375           14,515,819
Total loans, net of unearned income, excluding covered loans $     17,235,835   $     3,069,463        $     1,335,499   $     21,640,797
Variable Rate Loan Pricing by Index:
Prime                                                        $     2,798,945
One- month LIBOR                                             7,052,440
Three- month LIBOR                                           412,169
Twelve- month LIBOR                                          4,012,009
Other                                                        240,256
Total variable rate                                          $     14,515,819

A table accompanying this announcement can be found at:

http://resource.globenewswire.com/Resource/Download/fb235704-e92d-4e11-b24a-cc152dbd1098

Source: Bloomberg

As noted in the table on the previous page, the majority of the Company’s portfolio is tied to LIBOR indices which, as shown in the table above, do not mirror the same increases as the prime rate or the federal funds rate when the Federal Reserve raises interest rates. Specifically, the Company has $7.1 billion of variable rate loans tied to one-month LIBOR and $4.0 billion of variable rate loans tied to twelve-month LIBOR. The above chart shows that the Federal Reserve raised interest rates by 25 bps in the first and second quarters of 2017, and during those periods one-month LIBOR increased by 21 bps and 24 bps respectively, while twelve-month LIBOR increased by 11 bps in the first quarter of 2017 and then decreased by 6 bps in the second quarter of 2017. The Federal Reserve did not raise interest rates during the third quarter of 2017. During that period, one-month LIBOR increased by 1 bp and twelve-month LIBOR increased by 4 bps. The Federal Reserve raised interest rates by 25 bps in the fourth quarter of 2017. During that period, one-month LIBOR and twelve-month LIBOR increased by 33 bps.

NON-INTEREST INCOME

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

                                     Three Months Ended
                                     December 31,  September 30,     December 31,      Q4 2017 compared to       Q4 2017 compared to
                                                                                       Q3 2017                   Q4 2016
(Dollars in thousands)               2017          2017              2016              $ Change       % Change   $ Change        % Change
Brokerage                            $    6,067    $    5,127        $    6,408        $   940        18   %     $   (341   )    (5   )%
Trust and asset management           15,843        14,676            13,104            1,167          8          2,739           21
Total wealth management              21,910        19,803            19,512            2,107          11         2,398           12
Mortgage banking                     27,411        28,184            35,489            (773      )    (3   )     (8,078     )    (23  )
Service charges on deposit accounts  8,907         8,645             8,054             262            3          853             11
Gains on investment securities, net  14            39                1,575             (25       )    (64  )     (1,561     )    (99  )
Fees from covered call options       1,610         1,143             1,476             467            41         134             9
Trading gains (losses), net          24            (129        )     1,007             153            (119 )     (983       )    (98  )
Operating lease income, net          8,598         8,461             5,171             137            2          3,427           66
Other:
Interest rate swap fees              1,963         1,762             2,870             201            11         (907       )    (32  )
BOLI                                 754           897               981               (143      )    (16  )     (227       )    (23  )
Administrative services              1,103         1,052             1,115             51             5          (12        )    (1   )
Loss on extinguishment of debt       --            --                (717        )     --             NM         717             (100 )
Early pay-offs of leases             7             --                728               7              NM         (721       )    (99  )
Miscellaneous                        8,737         9,874             8,014             (1,137    )    (12  )     723             9
Total Other                          12,564        13,585            12,991            (1,021    )    (8   )     (427       )    (3   )
Total Non-Interest Income            $    81,038   $    79,731       $    85,275       $   1,307      2    %     $   (4,237 )    (5   )%
                                     Years Ended
                                     December 31,       December 31,   $              %
(Dollars in thousands)               2017               2016           Change         Change
Brokerage                            $    22,863        $    25,519    $   (2,656 )   (10  )%
Trust and asset management           58,903             50,499         8,404          17
Total wealth management              81,766             76,018         5,748          8
Mortgage banking                     113,472            128,743        (15,271    )   (12  )
Service charges on deposit accounts  34,513             31,210         3,303          11
Gains on investment securities, net  45                 7,645          (7,600     )   (99  )
Fees from covered call options       4,402              11,470         (7,068     )   (62  )
Trading (losses) gains, net          (845         )     91             (936       )   NM
Operating lease income, net          29,646             16,441         13,205         80
Other:
Interest rate swap fees              7,379              12,024         (4,645     )   (39  )
BOLI                                 3,524              3,594          (70        )   (2   )
Administrative services              4,165              4,409          (244       )   (6   )
Gain on extinguishment of debt       --                 3,588          (3,588     )   (100 )
Early pay-offs of leases             1,228              728            500            69
Miscellaneous                        40,211             29,469         10,742         36
Total Other                          56,507             53,812         2,695          5
Total Non-Interest Income            $    319,506       $    325,430   $   (5,924 )   (2   )%

NM - Not Meaningful

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

The increase in wealth management revenue during the current period as compared to the third quarter of 2017 and fourth quarter of 2016 is primarily attributable to growth in assets under management due to new customers and market appreciation as well as higher customer trading activity. Wealth management revenue is comprised of the trust and asset management revenue of The Chicago Trust Company and Great Lakes Advisors and the brokerage commissions, managed money fees and insurance product commissions at Wayne Hummer Investments.

The decrease in mortgage banking revenue in the current quarter as compared to the third quarter of 2017 resulted primarily from lower origination volumes. Mortgage loans originated or purchased for sale decreased during the current quarter, totaling $879.4 million in the fourth quarter of 2017 as compared to $956.0 million in the third quarter of 2017 and $1.2 billion in the fourth quarter of 2016. The reduction in mortgage banking revenue from lower origination volumes was partially offset by a $46,000 positive fair value adjustment related to mortgage servicing rights assets compared to a $2.2 million negative fair value adjustment in the third quarter of 2017. Mortgage banking revenue includes revenue from activities related to originating, selling and servicing residential real estate loans for the secondary market. Mortgage revenue is also impacted by changes in the fair value of mortgage servicing rights as the Company does not hedge this change in fair value. The Company typically originates mortgage loans held-for-sale with associated mortgage servicing rights retained or released. The Company records mortgage servicing rights at fair value on a recurring basis. The table below presents additional selected information regarding mortgage banking revenue for the respective periods.

                                                                              Three Months Ended                                             Years Ended
(Dollars in thousands)                                                        December 31,         September 30,        December 31,         December 31,         December 31,
                                                                              2017                 2017                 2016                 2017                 2016
Retail originations                                                           $    744,496         809,961              $    1,042,145       $    3,142,824       $    4,020,788
Correspondent originations                                                    134,904              145,999              135,726              549,261              365,551
Total originations (A)                                                        $    879,400         955,960              $    1,177,871       $    3,692,085       $    4,386,339
Purchases as a percentage of originations                                     67             %     80             %     52             %     75             %     58             %
Refinances as a percentage of originations                                    33                   20                   48                   25                   42
Total                                                                         100            %     100            %     100            %     100            %     100            %
Production revenue (B)                                                        $    20,603          $    24,038          $    28,320          $    90,458          $    113,360
Production margin (B / A)                                                     2.34           %     2.51           %     2.40           %     2.45           %     2.58           %
Loans serviced for others (C)                                                 $    2,929,133       $    2,622,411       $    1,784,760
Mortgage servicing rights, at fair value (D)                                  33,676               29,414               19,103
Percentage of mortgage servicing rights to loans serviced for others (D / C)  1.15           %     1.12           %     1.07           %

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

The Company has typically written call options with terms of less than three months against certain U.S. Treasury and agency securities held in its portfolio for liquidity and other purposes. Management has entered into these transactions with the goal of economically hedging security positions and enhancing its overall return on its investment portfolio by using fees generated from these options to compensate for net interest margin compression. These option transactions are designed to mitigate overall interest rate risk and do not qualify as hedges pursuant to accounting guidance. Fees from covered call options increased in the current quarter compared to the third quarter of 2017 and fourth quarter of 2016, primarily as a result of selling call options against a larger value of underlying securities resulting in higher premiums received by the Company. There were no outstanding call option contracts at December 31, 2017, September 30, 2017 or December 31, 2016.

The increase in operating lease income in the current quarter compared to the prior periods is primarily related to growth in business from the Company’s leasing divisions during the fourth quarter of 2017.

The decrease in other non-interest income in the current quarter as compared to the third quarter of 2017 is primarily due to foreign currency remeasurement loss of $163,000 recorded in the current period (compared to a $901,000 foreign currency remeasurement gain recorded in the third quarter of 2017), partially offset by higher interest rate swap fees.

NON-INTEREST EXPENSE

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

                                         Three Months Ended
                                         December 31,   September 30,  December 31,   Q4 2017 compared to        Q4 2017 compared to
                                                                                      Q3 2017                    Q4 2016
(Dollars in thousands)                   2017           2017           2016           $ Change        % Change   $ Change        % Change
Salaries and employee benefits:
Salaries                                 $    58,239    $    57,689    $    53,108    $   550         1    %     $   5,131       10   %
Commissions and incentive compensation   40,723         32,095         35,744         8,628           27         4,979           14
Benefits                                 19,047         16,467         15,883         2,580           16         3,164           20
Total salaries and employee benefits     118,009        106,251        104,735        11,758          11         13,274          13
Equipment                                9,500          9,947          9,532          (447       )    (4   )     (32        )    --
Operating lease equipment depreciation   7,015          6,794          4,219          221             3          2,796           66
Occupancy, net                           14,154         13,079         14,254         1,075           8          (100       )    (1   )
Data processing                          7,915          7,851          7,687          64              1          228             3
Advertising and marketing                7,382          9,572          6,691          (2,190     )    (23  )     691             10
Professional fees                        8,879          6,786          5,425          2,093           31         3,454           64
Amortization of other intangible assets  1,028          1,068          1,158          (40        )    (4   )     (130       )    (11  )
FDIC insurance                           4,324          3,877          4,726          447             12         (402       )    (9   )
OREO expense, net                        599            590            1,843          9               2          (1,244     )    (67  )
Other:
Commissions - 3rd party brokers          1,057          990            1,165          67              7          (108       )    (9   )
Postage                                  1,427          1,814          1,955          (387       )    (21  )     (528       )    (27  )
Miscellaneous                            15,291         14,956         16,981         335             2          (1,690     )    (10  )
Total other                              17,775         17,760         20,101         15              --         (2,326     )    (12  )
Total Non-Interest Expense               $    196,580   $    183,575   $    180,371   $   13,005      7    %     $   16,209      9    %
                                         Years Ended
                                         December 31,   December 31,   $              %
(Dollars in thousands)                   2017           2016           Change         Change
Salaries and employee benefits:
Salaries                                 $    226,151   $    210,623   $   15,528     7   %
Commissions and incentive compensation   133,511        128,390        5,121          4
Benefits                                 70,416         66,145         4,271          6
Total salaries and employee benefits     430,078        405,158        24,920         6
Equipment                                38,358         37,055         1,303          4
Operating lease equipment depreciation   24,107         13,259         10,848         82
Occupancy, net                           52,920         50,912         2,008          4
Data processing                          31,495         28,776         2,719          9
Advertising and marketing                30,830         24,776         6,054          24
Professional fees                        27,835         20,411         7,424          36
Amortization of other intangible assets  4,401          4,789          (388       )   (8  )
FDIC insurance                           16,231         16,065         166            1
OREO expense, net                        3,593          5,187          (1,594     )   (31 )
Other:
Commissions - 3rd party brokers          4,178          5,161          (983       )   (19 )
Postage                                  6,763          7,184          (421       )   (6  )
Miscellaneous                            61,028         62,952         (1,924     )   (3  )
Total other                              71,969         75,297         (3,328     )   (4  )
Total Non-Interest Expense               $    731,817   $    681,685   $   50,132     7   %

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

Salaries and employee benefits expense increased in the current quarter compared to the third quarter of 2017 primarily as a result of higher commissions and incentive compensation due to an increase in bonus and long-term performance-based incentive compensation from higher current and projected earnings as impacted by the higher rate environment, lower taxes and balance sheet growth as well as an increase in salaries and employee benefits (primarily health plan related). Additionally, salaries and employee benefits expense included a $1.2 million negative adjustment of pension obligations assumed in previous acquisitions and higher payroll taxes.

Occupancy expense increased in the current quarter compared to the third quarter of 2017 due to higher maintenance and repair costs, and increased utilities and other occupancy expenses. Occupancy expense includes depreciation on premises, real estate taxes, utilities and maintenance of premises, as well as net rent expense for lease premises.

The increase in operating lease equipment depreciation in the current quarter compared to the prior periods is primarily related to growth in business from the Company’s leasing divisions during the period.

The decrease in advertising and marketing expenses during the current quarter compared to the third quarter of 2017 is primarily related to lower expenses for community advertisements and sponsorships. Marketing costs are incurred to promote the Company’s brand, commercial banking capabilities, the Company’s various products, to attract loans and deposits and to announce new branch openings as well as the expansion of the company’s non-bank businesses. The level of marketing expenditures depends on the timing of sponsorship programs and type of marketing programs utilized which are determined based on the market area, targeted audience, competition and various other factors.

The increase in professional fees during the current quarter compared to the third quarter of 2017 is primarily related to higher consulting fees related to continued investments in various areas of the Company including technology and an enhanced customer experience as well as higher legal fees. Professional fees include legal, audit and tax fees, external loan review costs, consulting arrangements and normal regulatory exam assessments.

INCOME TAXES

The Company recorded income tax expense of $27.0 million in the fourth quarter of 2017 compared to $38.6 million in the third quarter of 2017 and $33.7 million in the fourth quarter of 2016. The effective tax rates were 28.19% in the fourth quarter of 2017, 37.05% in the third quarter of 2017 and 38.18% in the fourth quarter of 2016. For the year ended December 31, 2017, the Company recorded income tax expense of $132.3 million (33.93% effective tax rate) compared to $125.0 million (37.66% effective tax rate) for the same period of 2016. The lower effective tax rate for the fourth quarter of 2017 was primarily due to a $7.6 million income tax benefit related to the enactment of Tax Reform. The enactment of such legislation in December, which reduces the federal income tax rate for corporations from 35% to 21% effective January 1, 2018, required the Company to remeasure its existing net deferred tax liabilities at year end to reflect the new tax rate, which resulted in a $10.5 million net tax benefit. This net tax benefit was partially offset by a $2.9 million tax from Tax Reform on a deemed repatriation of unremitted earnings on our Canadian subsidiary. The lower effective tax rate for the year ended 2017 as compared to 2016 was due to Tax Reform as well as recording $6.2 million of excess tax benefits related to the adoption of new accounting rules over income taxes attributed to share-based compensation that became effective on January 1, 2017. Approximately $3.4 million of the excess tax benefits were recorded in the first quarter of 2017. Excess tax benefits are expected to be higher in the first quarter when the majority of the Company’s share-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.

ASSET QUALITY

Allowance for Credit Losses, excluding covered loans

                                                                                                               Three Months Ended                                                Years Ended
                                                                                                               December 31,          September 30,         December 31,          December 31,       December 31,
(Dollars in thousands)                                                                                         2017                  2017                  2016                  2017               2016
Allowance for loan losses at beginning of period                                                               $    133,119          $    129,591          $    117,693          $    122,291       $    105,400
Provision for credit losses                                                                                    7,772                 7,942                 7,357                 29,982             34,790
Other adjustments                                                                                              698                   (39             )     33                    573                (291         )
Reclassification (to) from allowance for unfunded lending-related commitments                                  7                     94                    (25             )     69                 (725         )
Charge-offs:
Commercial                                                                                                     1,340                 2,265                 3,054                 5,159              7,915
Commercial real estate                                                                                         1,001                 989                   375                   4,236              1,930
Home equity                                                                                                    728                   968                   326                   3,952              3,998
Residential real estate                                                                                        542                   267                   410                   1,284              1,730
Premium finance receivables - commercial                                                                       2,314                 1,716                 1,843                 7,335              8,193
Premium finance receivables - life insurance                                                                   --                    --                    --                    --                 --
Consumer and other                                                                                             207                   213                   205                   729                925
Total charge-offs                                                                                              6,132                 6,418                 6,213                 22,695             24,691
Recoveries:
Commercial                                                                                                     235                   801                   668                   1,870              1,594
Commercial real estate                                                                                         1,037                 323                   1,916                 2,190              2,945
Home equity                                                                                                    359                   178                   300                   746                484
Residential real estate                                                                                        165                   55                    21                    452                225
Premium finance receivables - commercial                                                                       613                   499                   498                   2,128              2,374
Premium finance receivables - life insurance                                                                   --                    --                    --                    --                 --
Consumer and other                                                                                             32                    93                    43                    299                186
Total recoveries                                                                                               2,441                 1,949                 3,446                 7,685              7,808
Net charge-offs                                                                                                (3,691          )     (4,469          )     (2,767          )     (15,010      )     (16,883      )
Allowance for loan losses at period end                                                                        $    137,905          $    133,119          $    122,291          $    137,905       $    122,291
Allowance for unfunded lending-related commitments at period end                                               1,269                 1,276                 1,673                 1,269              1,673
Allowance for credit losses at period end                                                                      $    139,174          $    134,395          $    123,964          $    139,174       $    123,964
Annualized net charge-offs (recoveries) by category as a percentage of its own respective category’s average:
Commercial                                                                                                     0.07            %     0.09            %     0.16            %     0.05         %     0.12         %
Commercial real estate                                                                                         0.00                  0.04                  (0.10           )     0.03               (0.02        )
Home equity                                                                                                    0.22                  0.46                  0.01                  0.46               0.46
Residential real estate                                                                                        0.13                  0.08                  0.13                  0.08               0.14
Premium finance receivables - commercial                                                                       0.26                  0.18                  0.22                  0.20               0.24
Premium finance receivables - life insurance                                                                   0.00                  0.00                  0.00                  0.00               0.00
Consumer and other                                                                                             0.52                  0.37                  0.47                  0.34               0.54
Total loans, net of unearned income, excluding covered loans                                                   0.07            %     0.08            %     0.06            %     0.07         %     0.09         %
Net charge-offs as a percentage of the provision for credit losses                                             47.49           %     56.27           %     37.61           %     50.06        %     48.53        %
Loans at period-end, excluding covered loans                                                                   $    21,640,797       $    20,912,781       $    19,703,172
Allowance for loan losses as a percentage of loans at period end                                               0.64            %     0.64            %     0.62            %
Allowance for credit losses as a percentage of loans at period end                                             0.64            %     0.64            %     0.63            %

(1) Includes $742,000 of allowance for covered loan losses reclassified as a result of the termination of all existing loss share agreements with the FDIC during the fourth quarter of 2017.

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

Net charge-offs as a percentage of loans, excluding covered loans, for the fourth quarter of 2017 totaled seven basis points on an annualized basis compared to eight basis points on an annualized basis in the third quarter of 2017 and six basis points on an annualized basis in the fourth quarter of 2016. Net charge-offs totaled $3.7 million in the fourth quarter of 2017, a $778,000 decrease from $4.5 million in the third quarter of 2017 and a $924,000 increase from $2.8 million in the fourth quarter of 2016. The provision for credit losses, excluding the provision for covered loan losses, totaled $7.8 million for the fourth quarter of 2017 compared to $7.9 million for the third quarter of 2017 and $7.4 million for the fourth quarter of 2016.

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

The Company also provided a provision for covered loan losses on covered loans when applicable.

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

                                                    Three Months Ended                                   Years Ended
                                                    December 31,     September 30,    December 31,       December 31,       December 31,
(Dollars in thousands)                              2017             2017             2016               2017               2016
Provision for loan losses                           $    7,779       $    8,036       $    7,332         $    30,051        $    34,065
Provision for unfunded lending-related commitments  (7         )     (94        )     25                 (69          )     725
Provision for covered loan losses                   --               (46        )     (7           )     (214         )     (706         )
Provision for credit losses                         $    7,772       $    7,896       $    7,350         $    29,768        $    34,084
                                                                                      Period End
                                                                                      December 31,       September 30,      December 31,
                                                                                      2017               2017               2016
Allowance for loan losses                                                             $    137,905       $    133,119       $    122,291
Allowance for unfunded lending-related commitments                                    1,269              1,276              1,673
Allowance for covered loan losses                                                     --                 758                1,322
Allowance for credit losses                                                           $    139,174       $    135,153       $    125,286

The tables below summarize the calculation of allowance for loan losses for the Company’s core loan portfolio and consumer, niche and purchased loan portfolio, excluding covered loans, as of December 31, 2017 and September 30, 2017.

                                                              As of December 31, 2017
                                                              Recorded          Calculated    As a percentage
                                                                                              of its own respective
(Dollars in thousands)                                        Investment        Allowance     category’s balance
Commercial:
Commercial and industrial                                     $    3,771,593    $   36,812    0.98       %
Asset-based lending                                           979,526           8,236         0.84
Tax exempt                                                    380,523           2,600         0.68
Leases                                                        411,721           1,242         0.30
Commercial real estate:
Residential construction                                      47,241            889           1.88
Commercial construction                                       697,404           7,839         1.12
Land                                                          124,740           3,835         3.07
Office                                                        854,882           5,731         0.67
Industrial                                                    846,191           5,762         0.68
Retail                                                        915,769           7,353         0.80
Multi-family                                                  885,905           9,495         1.07
Mixed use and other                                           1,835,612         13,814        0.75
Home equity                                                   602,175           10,319        1.71
Residential real estate                                       783,842           6,447         0.82
Total core loan portfolio                                     $    13,137,124   $   120,374   0.92       %
Commercial:
Franchise                                                     $    741,965      $   6,367     0.86       %
Mortgage warehouse lines of credit                            194,524           1,454         0.75
Community Advantage - homeowner associations                  164,837           412           0.25
Aircraft                                                      2,984             42            1.41
Purchased non-covered commercial loans                        140,004           646           0.46
Commercial real estate:
Purchased non-covered commercial real estate                  372,874           509           0.14
Purchased non-covered home equity                             60,870            174           0.29
Purchased non-covered residential real estate                 48,278            241           0.50
Premium finance receivables
U.S. commercial insurance loans                               2,315,644         4,872         0.21
Canada commercial insurance loans                             318,921           484           0.15
Life insurance loans                                          3,835,790         1,490         0.04
Purchased life insurance loans                                199,269           --            --
Consumer and other                                            104,204           836           0.80
Purchased non-covered consumer and other                      3,509             4             0.11
Total consumer, niche and purchased loan portfolio            $    8,503,673    $   17,531    0.21       %
Total loans, net of unearned income, excluding covered loans  $    21,640,797   $   137,905   0.64       %

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

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

                                                              As of September 30, 2017
                                                              Recorded          Calculated    As a percentage
                                                                                              of its own respective
(Dollars in thousands)                                        Investment        Allowance     category’s balance
Commercial:
Commercial and industrial                                     $    3,587,207    $   35,803    1.00       %
Asset-based lending                                           895,283           7,682         0.86
Tax exempt                                                    350,470           2,454         0.70
Leases                                                        380,056           1,208         0.32
Commercial real estate:
Residential construction                                      37,501            722           1.93
Commercial construction                                       635,763           6,843         1.08
Land                                                          99,360            3,352         3.37
Office                                                        836,978           6,245         0.75
Industrial                                                    798,459           5,532         0.69
Retail                                                        900,005           6,094         0.68
Multi-family                                                  833,330           8,856         1.06
Mixed use and other                                           1,870,439         14,199        0.76
Home equity                                                   615,690           10,556        1.71
Residential real estate                                       753,407           6,565         0.87
Total core loan portfolio                                     $    12,593,948   $   116,111   0.92       %
Commercial:
Franchise                                                     $    690,867      $   5,950     0.86       %
Mortgage warehouse lines of credit                            194,370           1,438         0.74
Community Advantage - homeowner associations                  156,457           392           0.25
Aircraft                                                      3,084             43            1.39
Purchased non-covered commercial loans                        198,240           765           0.39
Commercial real estate:
Purchased non-covered commercial real estate                  388,946           197           0.05
Purchased non-covered home equity                             57,279            --            --
Purchased non-covered residential real estate                 36,092            92            0.25
Premium finance receivables
U.S. commercial insurance loans                               2,353,705         4,760         0.20
Canada commercial insurance loans                             311,207           469           0.15
Life insurance loans                                          3,586,011         1,324         0.04
Purchased life insurance loans                                209,463           --            --
Consumer and other                                            130,852           1,577         1.21
Purchased non-covered consumer and other                      2,260             1             0.04
Total consumer, niche and purchased loan portfolio            $    8,318,833    $   17,008    0.20       %
Total loans, net of unearned income, excluding covered loans  $    20,912,781   $   133,119   0.64       %

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

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

As part of the regular quarterly review performed by management to determine if the Company’s allowance for loan losses is appropriate, an analysis is prepared on the loan portfolio based upon a breakout of core loans and consumer, niche and purchased loans. A summary of the allowance for loan losses calculated for the loan components in both the core loan portfolio and the consumer, niche and purchased loan portfolio was shown on the preceding tables as of December 31, 2017 and September 30, 2017.

Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date. In accordance with accounting guidance, credit deterioration on purchased loans is recorded as a credit discount at the time of purchase instead of as an increase to the allowance for loan losses.

In addition to the $137.9 million of allowance for loan losses, there is $4.9 million of non-accretable credit discount on purchased loans reported in accordance with ASC 310-30, excluding covered loans, that is available to absorb credit losses.

The tables below show the aging of the Company’s loan portfolio at December 31, 2017 and September 30, 2017:

                                                           90+ days     60-89        30-59
As of December 31, 2017                                    and still    days past    days past
(Dollars in thousands)                        Nonaccrual   accruing     due          due          Current           Total Loans
Loan Balances:
Commercial                                    $   15,696   $   877      $   4,218    $   29,407   $    6,737,479    $    6,787,677
Commercial real estate                        22,048       7,135        4,346        29,326       6,517,763         6,580,618
Home equity                                   8,978        --           518          4,634        648,915           663,045
Residential real estate                       17,977       5,304        1,303        8,378        799,158           832,120
Premium finance receivables - commercial      12,163       9,242        17,796       15,849       2,579,515         2,634,565
Premium finance receivables - life insurance  --           --           4,837        10,017       4,020,205         4,035,059
Consumer and other                            740          101          242          727          105,903           107,713
Total loans, net of unearned income           $   77,602   $   22,659   $   33,260   $   98,338   $    21,408,938   $    21,640,797
As of December 31, 2017                       Nonaccrual  90+ days   60-89      30-59      Current   Total Loans
Aging as a % of Loan Balance                              and still  days past  days past
                                                          accruing   due        due
Commercial                                    0.2   %     --   %     0.1  %     0.4  %     99.3 %    100.0 %
Commercial real estate                        0.3         0.1        0.1        0.4        99.1      100.0
Home equity                                   1.4         --         0.1        0.7        97.8      100.0
Residential real estate                       2.2         0.6        0.2        1.0        96.0      100.0
Premium finance receivables - commercial      0.5         0.4        0.7        0.6        97.8      100.0
Premium finance receivables - life insurance  --          --         0.1        0.2        99.7      100.0
Consumer and other                            0.7         0.1        0.2        0.7        98.3      100.0
Total loans, net of unearned income           0.4   %     0.1  %     0.2  %     0.5  %     98.8 %    100.0 %

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

                                                                           90+ days     60-89        30-59
As of September 30, 2017                                                   and still    days past    days past
(Dollars in thousands)                                        Nonaccrual   accruing     due          due          Current           Total Loans
Loan Balances:
Commercial                                                    $   13,931   $   1,489    $   5,036    $   36,450   $    6,399,128    $    6,456,034
Commercial real estate                                        14,878       8,443        5,838        16,955       6,354,667         6,400,781
Home equity                                                   7,581        --           446          2,590        662,352           672,969
Residential real estate                                       14,743       1,120        2,055        165          771,416           789,499
Premium finance receivables - commercial                      9,827        9,584        7,421        9,966        2,628,114         2,664,912
Premium finance receivables - life insurance                  --           6,740        946          6,937        3,780,851         3,795,474
Consumer and other                                            540          221          242          685          131,424           133,112
Total loans, net of unearned income, excluding covered loans  $   61,500   $   27,597   $   21,984   $   73,748   $    20,727,952   $    20,912,781
Covered loans                                                 1,936        2,233        1,074        45           41,313            46,601
Total loans, net of unearned income                           $   63,436   $   29,830   $   23,058   $   73,793   $    20,769,265   $    20,959,382
As of September 30, 2017                                      Nonaccrual  90+ days   60-89      30-59      Current   Total Loans
Aging as a % of Loan Balance:                                             and still  days past  days past
                                                                          accruing   due        due
Commercial                                                    0.2   %     --   %     0.1  %     0.6  %     99.1 %    100.0 %
Commercial real estate                                        0.2         0.1        0.1        0.3        99.3      100.0
Home equity                                                   1.1         --         0.1        0.4        98.4      100.0
Residential real estate                                       1.9         0.1        0.3        --         97.7      100.0
Premium finance receivables - commercial                      0.4         0.4        0.3        0.4        98.5      100.0
Premium finance receivables - life insurance                  --          0.2        --         0.2        99.6      100.0
Consumer and other                                            0.4         0.2        0.2        0.5        98.7      100.0
Total loans, net of unearned income, excluding covered loans  0.3   %     0.1  %     0.1  %     0.4  %     99.1 %    100.0 %
Covered loans                                                 4.2         4.8        2.3        0.1        88.6      100.0
Total loans, net of unearned income                           0.3   %     0.1  %     0.1  %     0.4  %     99.1 %    100.0 %

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

As of December 31, 2017, $33.3 million of all loans, or 0.2%, were 60 to 89 days past due and $98.3 million, or 0.5%, were 30 to 59 days (or one payment) past due. As of September 30, 2017, $22.0 million of all loans, excluding covered loans, or 0.1%, were 60 to 89 days past due and $73.7 million, or 0.4%, 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, 2017 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 December 31, 2017 that are current with regards to the contractual terms of the loan agreements comprise 96.0% of total residential real estate loans outstanding.

Non-performing Assets, excluding covered assets

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

                                                                                                          December 31,       September 30,      December 31,
(Dollars in thousands)                                                                                    2017               2017               2016
Loans past due greater than 90 days and still accruing:
Commercial                                                                                                $    --            $    --            $    174
Commercial real estate                                                                                    --                 --                 --
Home equity                                                                                               --                 --                 --
Residential real estate                                                                                   3,278              --                 --
Premium finance receivables - commercial                                                                  9,242              9,584              7,962
Premium finance receivables - life insurance                                                              --                 6,740              3,717
Consumer and other                                                                                        40                 159                144
Total loans past due greater than 90 days and still accruing                                              12,560             16,483             11,997
Non-accrual loans:
Commercial                                                                                                15,696             13,931             15,875
Commercial real estate                                                                                    22,048             14,878             21,924
Home equity                                                                                               8,978              7,581              9,761
Residential real estate                                                                                   17,977             14,743             12,749
Premium finance receivables - commercial                                                                  12,163             9,827              14,709
Premium finance receivables - life insurance                                                              --                 --                 --
Consumer and other                                                                                        740                540                439
Total non-accrual loans                                                                                   77,602             61,500             75,457
Total non-performing loans:
Commercial                                                                                                15,696             13,931             16,049
Commercial real estate                                                                                    22,048             14,878             21,924
Home equity                                                                                               8,978              7,581              9,761
Residential real estate                                                                                   21,255             14,743             12,749
Premium finance receivables - commercial                                                                  21,405             19,411             22,671
Premium finance receivables - life insurance                                                              --                 6,740              3,717
Consumer and other                                                                                        780                699                583
Total non-performing loans                                                                                $    90,162        $    77,983        $    87,454
Other real estate owned                                                                                   20,244             17,312             17,699
Other real estate owned - from acquisitions                                                               20,402             20,066             22,583
Other repossessed assets                                                                                  153                301                581
Total non-performing assets                                                                               $    130,961       $    115,662       $    128,317
TDRs performing under the contractual terms of the loan agreement                                         $    23,427        $    26,972        $    29,911
Total non-performing loans by category as a percent of its own respective category’s period-end balance:
Commercial                                                                                                0.23         %     0.22         %     0.27         %
Commercial real estate                                                                                    0.34               0.23               0.35
Home equity                                                                                               1.35               1.13               1.34
Residential real estate                                                                                   2.55               1.87               1.81
Premium finance receivables - commercial                                                                  0.81               0.73               0.91
Premium finance receivables - life insurance                                                              --                 0.18               0.11
Consumer and other                                                                                        0.72               0.53               0.48
Total loans, net of unearned income                                                                       0.42         %     0.37         %     0.44         %
Total non-performing assets as a percentage of total assets                                               0.47         %     0.42         %     0.50         %
Allowance for loan losses as a percentage of total non-performing loans                                   152.95       %     170.70       %     139.83       %

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

(2) Non-accrual loans included TDRs totaling $10.1 million, $6.2 million and $11.8 million as of December 31, 2017, September 30, 2017 and December 31, 2016, respectively.

(3) Includes $2.6 million of non-performing loans and $2.9 million of other real estate owned reclassified from covered assets as a result of the termination of all existing loss share agreements with the FDIC during the fourth quarter of 2017.

The ratio of non-performing assets to total assets was 0.47% as of December 31, 2017, compared to 0.42% at September 30, 2017, and 0.50% at December 31, 2016. Non-performing assets, excluding covered assets and non-covered PCI loans, totaled $131.0 million at December 31, 2017, compared to $115.7 million at September 30, 2017 and $128.3 million at December 31, 2016. Non-performing loans, excluding covered loans and non-covered PCI loans, totaled $90.2 million, or 0.42% of total loans, at December 31, 2017 compared to $78.0 million, or 0.37% of total loans, at September 30, 2017 and $87.5 million, or 0.44% of total loans, at December 31, 2016. The increase in non-performing loans, excluding covered loans and non-covered PCI loans, compared to September 30, 2017 was primarily the result of one relationship within the commercial real estate portfolio totaling $11.1 million becoming non-performing during the period. OREO, excluding covered OREO, of $40.6 million at December 31, 2017 increased $3.3 million compared to $37.4 million at September 30, 2017 and increased $364,000 compared to $40.3 million at December 31, 2016.

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

Nonperforming Loans Rollforward

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

                                                                                       Three Months Ended                                    Years Ended
                                                                                       December 31,      September 30,     December 31,      December 31,      December 31,
(Dollars in thousands)                                                                 2017              2017              2016              2017              2016
Balance at beginning of period                                                         $    77,983       $    69,050       $    83,128       $    87,454       $    84,057
Additions, net, from non-covered portfolio                                             25,619            10,622            10,969            55,738            42,927
Additions, net, from covered non-performing loans subsequent to loss share expiration  2,572             --                --                2,572             81
Return to performing status                                                            (426        )     (603        )     (150        )     (3,596      )     (3,260      )
Payments received                                                                      (4,271      )     (6,633      )     (6,623      )     (27,202     )     (19,976     )
Transfer to OREO and other repossessed assets                                          (3,960      )     (1,072      )     (878        )     (9,236      )     (7,046      )
Charge-offs                                                                            (2,443      )     (2,295      )     (3,494      )     (10,362     )     (10,323     )
Net change for niche loans                                                             (4,912      )     8,914             4,502             (5,206      )     994
Balance at end of period                                                               $    90,162       $    77,983       $    87,454       $    90,162       $    87,454

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

TDRs

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

                                                    December 31,      September 30,     December 31,
(Dollars in thousands)                              2017              2017              2016
Accruing TDRs:
Commercial                                          $    3,661        $    3,774        $    4,643
Commercial real estate                              16,160            16,475            19,993
Residential real estate and other                   3,606             6,723             5,275
Total accrual                                       $    23,427       $    26,972       $    29,911
Non-accrual TDRs:
Commercial                                          $    4,000        $    2,493        $    1,487
Commercial real estate                              1,340             1,492             8,153
Residential real estate and other                   4,763             2,226             2,157
Total non-accrual                                   $    10,103       $    6,211        $    11,797
Total TDRs:
Commercial                                          $    7,661        $    6,267        $    6,130
Commercial real estate                              17,500            17,967            28,146
Residential real estate and other                   8,369             8,949             7,432
Total TDRs                                          $    33,530       $    33,183       $    41,708
Weighted-average contractual interest rate of TDRs  4.21        %     4.39        %     4.33        %

(1) Included in total non-performing loans.

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, 2017, September 30, 2017 and December 31, 2016, 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)                                              2017              2017              2016
Balance at beginning of period                                      $    37,378       $    39,361       $    35,050
Disposals/resolved                                                  (6,107      )     (2,391      )     (5,850      )
Transfers in at fair value, less costs to sell                      6,733             898               667
Transfers in from covered OREO subsequent to loss share expiration  2,851             --                4,213
Additions from acquisition                                          --                --                7,230
Fair value adjustments                                              (209        )     (490        )     (1,028      )
Balance at end of period                                            $    40,646       $    37,378       $    40,282
                                                                    Period End
                                                                    December 31,      September 30,     December 31,
Balance by Property Type                                            2017              2017              2016
Residential real estate                                             $    7,515        $    7,236        $    8,063
Residential real estate development                                 2,221             676               1,349
Commercial real estate                                              30,910            29,466            30,870
Total                                                               $    40,646       $    37,378       $    40,282

Items Impacting Comparative Financial Results:

Acquisitions

On February 14, 2017, the Company acquired certain assets and assumed certain liabilities of the mortgage banking business of American Homestead Mortgage, LLC ("AHM"), in a business combination. AHM is located in Montana’s Flathead Valley and originated approximately $55 million of residential mortgage loans in 2016.

On November 18, 2016, the Company completed its acquisition of First Community Financial Corporation ("FCFC"). FCFC was the parent company of First Community Bank. Through this transaction, the Company acquired First Community Bank’s two banking locations in Elgin, Illinois, approximately $187 million in assets and approximately $150 million in deposits.

On August 19, 2016, the Company, through its wholly-owned subsidiary Lake Forest Bank & Trust Company, completed its acquisition of approximately $561 million in select performing loans and related relationships from an affiliate of GE Capital Franchise Finance. The loans are to franchise operators (primarily quick service restaurant concepts) in the Midwest and in the Western portion of the United States.

On March 31, 2016, the Company completed its acquisition of Generations Bancorp. Inc. ("Generations"). Generations was the parent company of Foundations Bank ("Foundations"). Through this transaction, the Company acquired Foundations’ banking location in Pewaukee, Wisconsin, approximately $134 million in assets and approximately $100 million in deposits.

Termination of Loss Share Agreements

On October 16, 2017, the Company entered in agreements with the FDIC that terminated all existing loss share agreements with the FDIC. The loss share agreements were related to the Company’s acquisition of assets and assumption of liabilities of eight failed banks through FDIC assisted transactions in 2010, 2011 and 2012.

Under terms of the agreements, the Company made a net payment of $15.2 million to the FDIC as consideration for the early termination of the loss share agreements. The Company recorded a pre-tax gain of approximately $0.4 million in the fourth quarter of 2017 to write off the remaining loss share asset, relieve the claw-back liability and recognize the payment to the FDIC.

Approximately $0.2 million of the remaining net indemnification liabilities that were scheduled to be amortized against future earnings did not occur for the remainder of the fourth quarter of 2017. Additionally, $0.8 million, $0.8 million and $0.7 million each year in 2018, 2019 and 2020, respectively, of previously scheduled amortization will not occur.

The termination of the FDIC loss share agreements has no effect on yields of the loans that were previously covered under these agreements. Subsequent to this transaction, the Company is solely responsible for all future charge-offs, recoveries, gains, losses and expenses related to the previously covered assets as the FDIC will no longer share in those amounts.

Items Occurring Subsequent to December 31, 2017:

Acquisitions

On January 4, 2018, the Company acquired certain assets and assumed certain liabilities of the mortgage banking business of iFreedom Direct Corporation DBA Veterans First Mortgage ("Veterans First Mortgage"), in a business combination. The company also acquired servicing rights from Veterans First Mortgage on approximately 8,300 loans, totaling an estimated $1.4 billion in principal balance. Veterans First Mortgage is a consumer direct lender with three offices, operating two in Salt Lake City and one in San Diego, and originated in excess of $800 million in loans in 2017.

Increase in Minimum Wage

On January 19, 2018, the Company announced that as a result of the Tax Reform, Wintrust will increase the minimum wage paid to its eligible non-commissioned hourly employees to $15 per hour. The Company expects that over 600 employees will benefit from this action.

WINTRUST SUBSIDIARIES AND LOCATIONS

Wintrust is a financial holding company whose common stock is traded on the Nasdaq Global Select Market (WTFC ). Its 15 community bank subsidiaries are: Lake Forest Bank & Trust Company, N.A., Hinsdale Bank & Trust Company, Wintrust Bank in Chicago, Libertyville Bank & Trust Company, Barrington Bank & Trust Company, N.A., Crystal Lake Bank & Trust Company, N.A., Northbrook Bank & Trust Company, Schaumburg Bank & Trust Company, N.A., Village Bank & Trust in Arlington Heights, Beverly Bank & Trust Company, N.A. in Chicago, Wheaton Bank & Trust Company, State Bank of The Lakes in Antioch, Old Plank Trail Community Bank, N.A. in New Lenox, St. Charles Bank & Trust Company and Town Bank in Hartland, Wisconsin.

The banks also operate facilities in Illinois in Algonquin, Aurora, Bloomingdale, Buffalo Grove, Cary, Clarendon Hills, Crete, Deerfield, Des Plaines, Downers Grove, Elgin, Elk Grove Village, Elmhurst, Evergreen Park, Frankfort, Geneva, Glen Ellyn, Glencoe, Glenview, Gurnee, Grayslake, Hanover Park, Highland Park, Highwood, Hoffman Estates, Island Lake, Itasca, Joliet, Lake Bluff, Lake Villa, Lansing, Lemont, Lindenhurst, Lynwood, Markham, McHenry, Mokena, Mount Prospect, Mundelein, Naperville, North Chicago, Northfield, Norridge, Oak Lawn, Orland Park, Palatine, Park Ridge, Prospect Heights, Ravinia, Riverside, Rogers Park, Rolling Meadows, Roselle, Round Lake Beach, Shorewood, Skokie, South Holland, Spring Grove, Steger, Stone Park, Vernon Hills, Wauconda, Western Springs, Willowbrook, Wilmette, Winnetka and Wood Dale and in Albany, Burlington, Clinton, Darlington, Delafield, Delavan, Elm Grove, Genoa City, Kenosha, Lake Geneva, Madison, Menomonee Falls, Milwaukee, Monroe, Pewaukee, Sharon, Wales, Walworth and Wind Lake, Wisconsin and Dyer, Indiana.

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

-- FIRST Insurance Funding, a division of Lake Forest Bank & Trust Company, N.A., and Wintrust Life Finance, a division of Lake Forest Bank & Trust Company, N.A., serve commercial and life insurance loan customers, respectively, throughout the United States.

-- First Insurance Funding of Canada serves commercial insurance loan customers throughout Canada.

-- Tricom, Inc. of Milwaukee provides high-yielding, short-term accounts receivable financing and value-added out-sourced administrative services, such as data processing of payrolls, billing and cash management services, to temporary staffing service clients located throughout the United States.

-- Wintrust Mortgage, a division of Barrington Bank & Trust Company, N.A., engages primarily in the origination and purchase of residential mortgages for sale into the secondary market through origination offices located throughout the United States. Loans are also originated nationwide through relationships with wholesale and correspondent offices.

-- Wayne Hummer Investments, LLC is a broker-dealer providing a full range of private client and brokerage services to clients and correspondent banks located primarily in the Midwest.

-- Great Lakes Advisors LLC provides money management services and advisory services to individual accounts.

-- The Chicago Trust Company, a trust subsidiary, allows Wintrust to service customers’ trust and investment needs at each banking location.

-- Wintrust Asset Finance which offers direct leasing opportunities.

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements within the meaning of federal securities laws. Forward-looking information can be identified through the use of words such as "intend," "plan," "project," "expect," "anticipate," "believe," "estimate," "contemplate," "possible," "point," "will," "may," "should," "would" and "could." Forward-looking statements and information are not historical facts, are premised on many factors and assumptions, and represent only management’s expectations, estimates and projections regarding future events. Similarly, these statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict, which may include, but are not limited to, those listed below and the Risk Factors discussed under Item 1A of the Company’s 2016 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;

-- the financial success and economic viability of the borrowers of our commercial loans;

-- commercial real estate market conditions in the Chicago metropolitan area and southern Wisconsin;

-- the extent of commercial and consumer delinquencies and declines in real estate values, which may require further increases in the Company’s allowance for loan and lease losses;

-- inaccurate assumptions in our analytical and forecasting models used to manage our loan portfolio;

-- 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;

-- 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), which may result in loss of market share and reduced income from deposits, loans, advisory fees and income from other products;

-- failure to identify and complete favorable acquisitions in the future or unexpected difficulties or developments related to the integration of the Company’s recent or future acquisitions;

-- unexpected difficulties and losses related to FDIC-assisted acquisitions, including those resulting from our loss-sharing arrangements with the FDIC;

-- any negative perception of the Company’s reputation or financial strength;

-- ability of the Company to raise additional capital on acceptable terms when needed;

-- disruption in capital markets, which may lower fair values for the Company’s investment portfolio;

-- ability of the Company to use technology to provide products and services that will satisfy customer demands and create efficiencies in operations and to manage risks associated therewith;

-- adverse effects on our information technology systems resulting from failures, human error or cyberattack, any of which could result in an information or security breach, the disclosure or misuse of confidential or proprietary information, significant legal and financial losses and reputational harm;

-- adverse effects of failures by our vendors to provide agreed upon services in the manner and at the cost agreed, particularly our information technology vendors;

-- increased costs as a result of protecting our customers from the impact of stolen debit card information;

-- accuracy and completeness of information the Company receives about customers and counterparties to make credit decisions;

-- ability of the Company to attract and retain senior management experienced in the banking and financial services industries;

-- environmental liability risk associated with lending activities;

-- the impact of any claims or legal actions to which the Company is subject, including any effect on our reputation;

-- losses incurred in connection with repurchases and indemnification payments related to mortgages and increases in reserves associated therewith;

-- the loss of customers as a result of technological changes allowing consumers to complete their financial transactions without the use of a bank;

-- the soundness of other financial institutions;

-- the expenses and delayed returns inherent in opening new branches and de novo banks;

-- examinations and challenges by tax authorities, and any unanticipated impact of Tax Reform;

-- changes in accounting standards, rules and interpretations, including any changes as a result of Tax Reform, and the impact on the Company’s financial statements;

-- the ability of the Company to receive dividends from its subsidiaries;

-- 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;

-- legislative or regulatory changes, particularly changes in regulation of financial services companies and/or the products and services offered by financial services companies, including those resulting from the Dodd-Frank Act;

-- a lowering of our credit rating;

-- changes in U.S. monetary policy;

-- restrictions upon our ability to market our products to consumers and limitations on our ability to profitably operate our mortgage business resulting from the Dodd-Frank Act;

-- increased costs of compliance, heightened regulatory capital requirements and other risks associated with changes in regulation and the current regulatory environment, including the Dodd-Frank Act;

-- the impact of heightened capital requirements;

-- increases in the Company’s FDIC insurance premiums, or the collection of special assessments by the FDIC;

-- delinquencies or fraud with respect to the Company’s premium finance business;

-- credit downgrades among commercial and life insurance providers that could negatively affect the value of collateral securing the Company’s premium finance loans;

-- the Company’s ability to comply with covenants under its credit facility; and

-- fluctuations in the stock market, which may have an adverse impact on the Company’s wealth management business and brokerage operation.

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

CONFERENCE CALL, WEB CAST AND REPLAY

The Company will hold a conference call at 1:00 p.m. (Central Time) Tuesday, January 23, 2018 regarding fourth quarter and year-end 2017 results. Individuals interested in listening should call (877) 363-5049 and enter Conference ID #6892328. A simultaneous audio-only web cast and replay of the conference call may be accessed via the Company’s website at http://www.wintrust.com ,">http://www.wintrust.com , Investor Relations, Investor News and Events, Presentations & Conference Calls. The text of the fourth quarter and year-end 2017 earnings press release will be available on the home page of the Company’s website at http://www.wintrust.com and at the Investor Relations, Investor News and Events, Press Releases link on its website.

WINTRUST FINANCIAL CORPORATION

Supplemental Financial Information

5 Quarter Trends

WINTRUST FINANCIAL CORPORATION - Supplemental Financial Information

Selected Financial Highlights - 5 Quarter Trends

(Dollars in thousands, except per share data)

                                                                                                  Three Months Ended
                                                                                                  December 31,           September 30,          June 30,             March 31,             December 31,
                                                                                                  2017                   2017                   2017                 2017                  2016
Selected Financial Condition Data (at end of period):
Total assets                                                                                      $     27,915,970       $     27,358,162       $     26,929,265     $     25,778,893      $     25,668,553
Total loans, excluding loans held-for-sale and covered loans                                      21,640,797             20,912,781             20,743,332           19,931,058            19,703,172
Total deposits                                                                                    23,183,347             22,895,063             22,605,692           21,730,441            21,658,632
Junior subordinated debentures                                                                    253,566                253,566                253,566              253,566               253,566
Total shareholders’ equity                                                                        2,976,939              2,908,925              2,839,458            2,764,983             2,695,617
Selected Statements of Income Data:
Net interest income                                                                               219,099                215,988                204,409              192,580               190,778
Net revenue                                                                                       300,137                295,719                294,381              261,345               276,053
Net income                                                                                        68,781                 65,626                 64,897               58,378                54,608
Net income per common share - Basic                                                               $     1.19             $     1.14             $     1.15           $     1.05            $     0.98
Net income per common share - Diluted                                                             $     1.17             $     1.12             $     1.11           $     1.00            $     0.94
Selected Financial Ratios and Other Data:
Performance Ratios:
Net interest margin                                                                               3.45             %     3.43             %     3.41             %   3.36             %    3.21             %
Net interest margin - fully taxable equivalent (non-GAAP)                                         3.49             %     3.46             %     3.43             %   3.39             %    3.23             %
Non-interest income to average assets                                                             1.18             %     1.17             %     1.39             %   1.11             %    1.32             %
Non-interest expense to average assets                                                            2.87             %     2.70             %     2.83             %   2.70             %    2.80             %
Net overhead ratio                                                                                1.69             %     1.53             %     1.44             %   1.60             %    1.48             %
Return on average assets                                                                          1.00             %     0.96             %     1.00             %   0.94             %    0.85             %
Return on average common equity                                                                   9.39             %     9.15             %     9.55             %   8.93             %    8.32             %
Return on average tangible common equity (non-GAAP)                                               11.65            %     11.39            %     12.02            %   11.44            %    10.68            %
Average total assets                                                                              $     27,179,484       $     27,012,295       $     26,050,949     $     25,207,348      $     25,611,060
Average total shareholders’ equity                                                                2,942,999              2,882,682              2,800,905            2,739,050             2,689,876
Average loans to average deposits ratio (excluding loans held-for-sale, excluding covered loans)  92.3             %     91.8             %     94.1             %   92.5             %    89.6             %
Average loans to average deposits ratio (excluding loans held-for-sale, including covered loans)  92.4                   92.1                   94.4                 92.7                  89.9
Common Share Data at end of period:
Market price per common share                                                                     $     82.37            $     78.31            $     76.44          $     69.12           $     72.57
Book value per common share                                                                       $     50.96            $     49.86            $     48.73          $     47.88           $     47.12
Tangible common book value per share                                                              $     41.68            $     40.53            $     39.40          $     37.97           $     37.08
Common shares outstanding                                                                         55,965,207             55,838,063             55,699,927           52,503,663            51,880,540
Other Data at end of period:
Leverage Ratio                                                                                    9.3              %     9.2              %     9.2              %   9.3              %    8.9              %
Tier 1 Capital to risk-weighted assets                                                            9.9              %     10.0             %     9.8              %   10.0             %    9.7              %
Common equity Tier 1 capital to risk-weighted assets                                              9.4              %     9.5              %     9.3              %   8.9              %    8.6              %
Total capital to risk-weighted assets                                                             12.0             %     12.2             %     12.0             %   12.2             %    11.9             %
Allowance for credit losses                                                                       $     139,174          $     134,395          $     131,296        $     127,630         $     123,964
Non-performing loans                                                                              90,162                 77,983                 69,050               78,979                87,454
Allowance for credit losses to total loans                                                        0.64             %     0.64             %     0.63             %   0.64             %    0.63             %
Non-performing loans to total loans                                                               0.42             %     0.37             %     0.33             %   0.40             %    0.44             %
Number of:
Bank subsidiaries                                                                                 15                     15                     15                   15                    15
Banking offices                                                                                   157                    156                    153                  155                   155

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

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

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

(4) Capital ratios for current quarter-end are estimated.

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

(6) Asset quality ratios exclude covered loans.

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Consolidated Statements of Condition - 5 Quarter Trends

                                                                     (Unaudited)            (Unaudited)            (Unaudited)           (Unaudited)
                                                                     December 31,           September 30,          June 30,              March 31,             December 31,
(In thousands)                                                       2017                   2017                   2017                  2017                  2016
Assets
Cash and due from banks                                              $     277,534          $     251,896          $     296,105         $     214,102         $     267,194
Federal funds sold and securities purchased under resale agreements  57                     56                     56                    3,046                 2,851
Interest bearing deposits with banks                                 1,063,242              1,218,728              1,011,635             1,007,468             980,457
Available-for-sale securities, at fair value                         1,803,666              1,665,903              1,649,636             1,803,733             1,724,667
Held-to-maturity securities, at amortized cost                       826,449                819,340                793,376               667,764               635,705
Trading account securities                                           995                    643                    1,987                 714                   1,989
Federal Home Loan Bank and Federal Reserve Bank stock                89,989                 87,192                 80,812                78,904                133,494
Brokerage customer receivables                                       26,431                 23,631                 23,281                23,171                25,181
Mortgage loans held-for-sale                                         313,592                370,282                382,837               288,964               418,374
Loans, net of unearned income, excluding covered loans               21,640,797             20,912,781             20,743,332            19,931,058            19,703,172
Covered loans                                                        --                     46,601                 50,119                52,359                58,145
Total loans                                                          21,640,797             20,959,382             20,793,451            19,983,417            19,761,317
Allowance for loan losses                                            (137,905         )     (133,119         )     (129,591         )    (125,819         )    (122,291         )
Allowance for covered loan losses                                    --                     (758             )     (1,074           )    (1,319           )    (1,322           )
Net loans                                                            21,502,892             20,825,505             20,662,786            19,856,279            19,637,704
Premises and equipment, net                                          621,895                609,978                605,211               598,746               597,301
Lease investments, net                                               212,335                193,828                191,248               155,233               129,402
Accrued interest receivable and other assets                         567,374                580,612                577,359               560,741               593,796
Trade date securities receivable                                     90,014                 189,896                133,130               --                    --
Goodwill                                                             501,884                502,021                500,260               499,341               498,587
Other intangible assets                                              17,621                 18,651                 19,546                20,687                21,851
Total assets                                                         $     27,915,970       $     27,358,162       $     26,929,265      $     25,778,893      $     25,668,553
Liabilities and Shareholders’ Equity
Deposits:
Non-interest bearing                                                 $     6,792,497        $     6,502,409        $     6,294,052       $     5,790,579       $     5,927,377
Interest bearing                                                     16,390,850             16,392,654             16,311,640            15,939,862            15,731,255
Total deposits                                                       23,183,347             22,895,063             22,605,692            21,730,441            21,658,632
Federal Home Loan Bank advances                                      559,663                468,962                318,270               227,585               153,831
Other borrowings                                                     266,123                251,680                277,710               238,787               262,486
Subordinated notes                                                   139,088                139,052                139,029               138,993               138,971
Junior subordinated debentures                                       253,566                253,566                253,566               253,566               253,566
Trade date securities payable                                        --                     880                    5,151                 --                    --
Accrued interest payable and other liabilities                       537,244                440,034                490,389               424,538               505,450
Total liabilities                                                    24,939,031             24,449,237             24,089,807            23,013,910            22,972,936
Shareholders’ Equity:
Preferred stock                                                      125,000                125,000                125,000               251,257               251,257
Common stock                                                         56,068                 55,940                 55,802                52,605                51,978
Surplus                                                              1,529,035              1,519,596              1,511,080             1,381,886             1,365,781
Treasury stock                                                       (4,986           )     (4,884           )     (4,884           )    (4,884           )    (4,589           )
Retained earnings                                                    1,313,657              1,254,759              1,198,997             1,143,943             1,096,518
Accumulated other comprehensive loss                                 (41,835          )     (41,486          )     (46,537          )    (59,824          )    (65,328          )
Total shareholders’ equity                                           2,976,939              2,908,925              2,839,458             2,764,983             2,695,617
Total liabilities and shareholders’ equity                           $     27,915,970       $     27,358,162       $     26,929,265      $     25,778,893      $     25,668,553

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)                                2017           2017               2017            2017             2016
Interest income
Interest and fees on loans                                           $    229,738   $    227,120       $   212,709     $   199,314      $    199,155
Interest bearing deposits with banks                                 2,723          3,272              1,634           1,623            1,541
Federal funds sold and securities purchased under resale agreements  --             --                 1               1                1
Investment securities                                                18,160         16,058             15,524          13,573           12,954
Trading account securities                                           2              8                  4               11               32
Federal Home Loan Bank and Federal Reserve Bank stock                1,067          1,080              1,153           1,070            1,144
Brokerage customer receivables                                       150            150                156             167              186
Total interest income                                                251,840        247,688            231,181         215,759          215,013
Interest expense
Interest on deposits                                                 24,930         23,655             18,471          16,270           16,413
Interest on Federal Home Loan Bank advances                          2,124          2,151              2,933           1,590            2,439
Interest on other borrowings                                         1,600          1,482              1,149           1,139            1,074
Interest on subordinated notes                                       1,786          1,772              1,786           1,772            1,779
Interest on junior subordinated debentures                           2,301          2,640              2,433           2,408            2,530
Total interest expense                                               32,741         31,700             26,772          23,179           24,235
Net interest income                                                  219,099        215,988            204,409         192,580          190,778
Provision for credit losses                                          7,772          7,896              8,891           5,209            7,350
Net interest income after provision for credit losses                211,327        208,092            195,518         187,371          183,428
Non-interest income
Wealth management                                                    21,910         19,803             19,905          20,148           19,512
Mortgage banking                                                     27,411         28,184             35,939          21,938           35,489
Service charges on deposit accounts                                  8,907          8,645              8,696           8,265            8,054
Gains (losses) on investment securities, net                         14             39                 47              (55         )    1,575
Fees from covered call options                                       1,610          1,143              890             759              1,476
Trading gains (losses), net                                          24             (129         )     (420        )   (320        )    1,007
Operating lease income, net                                          8,598          8,461              6,805           5,782            5,171
Other                                                                12,564         13,585             18,110          12,248           12,991
Total non-interest income                                            81,038         79,731             89,972          68,765           85,275
Non-interest expense
Salaries and employee benefits                                       118,009        106,251            106,502         99,316           104,735
Equipment                                                            9,500          9,947              9,909           9,002            9,532
Operating lease equipment depreciation                               7,015          6,794              5,662           4,636            4,219
Occupancy, net                                                       14,154         13,079             12,586          13,101           14,254
Data processing                                                      7,915          7,851              7,804           7,925            7,687
Advertising and marketing                                            7,382          9,572              8,726           5,150            6,691
Professional fees                                                    8,879          6,786              7,510           4,660            5,425
Amortization of other intangible assets                              1,028          1,068              1,141           1,164            1,158
FDIC insurance                                                       4,324          3,877              3,874           4,156            4,726
OREO expense, net                                                    599            590                739             1,665            1,843
Other                                                                17,775         17,760             19,091          17,343           20,101
Total non-interest expense                                           196,580        183,575            183,544         168,118          180,371
Income before taxes                                                  95,785         104,248            101,946         88,018           88,332
Income tax expense                                                   27,004         38,622             37,049          29,640           33,724
Net income                                                           $    68,781    $    65,626        $   64,897      $   58,378       $    54,608
Preferred stock dividends                                            2,050          2,050              2,050           3,628            3,629
Net income applicable to common shares                               $    66,731    $    63,576        $   62,847      $   54,750       $    50,979
Net income per common share - Basic                                  $    1.19      $    1.14          $   1.15        $   1.05         $    0.98
Net income per common share - Diluted                                $    1.17      $    1.12          $   1.11        $   1.00         $    0.94
Cash dividends declared per common share                             $    0.14      $    0.14          $   0.14        $   0.14         $    0.12
Weighted average common shares outstanding                           55,924         55,796             54,775          52,267           51,812
Dilutive potential common shares                                     1,010          966                1,812           4,160            4,152
Average common shares and dilutive common shares                     56,934         56,762             56,587          56,427           55,964

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)                                        2017                  2017                  2017                2017                 2016
Balance:
Commercial                                                    $    6,787,677        $    6,456,034        $    6,406,289      $    6,081,489       $    6,005,422
Commercial real estate                                        6,580,618             6,400,781             6,402,494           6,261,682            6,196,087
Home equity                                                   663,045               672,969               689,483             708,258              725,793
Residential real estate                                       832,120               789,499               762,810             720,608              705,221
Premium finance receivables - commercial                      2,634,565             2,664,912             2,648,386           2,446,946            2,478,581
Premium finance receivables - life insurance                  4,035,059             3,795,474             3,719,043           3,593,563            3,470,027
Consumer and other                                            107,713               133,112               114,827             118,512              122,041
Total loans, net of unearned income, excluding covered loans  $    21,640,797       $    20,912,781       $    20,743,332     $    19,931,058      $    19,703,172
Covered loans                                                 --                    46,601                50,119              52,359               58,145
Total loans, net of unearned income                           $    21,640,797       $    20,959,382       $    20,793,451     $    19,983,417      $    19,761,317
Mix:
Commercial                                                    31              %     31              %     31              %   30              %    30              %
Commercial real estate                                        30                    31                    31                  31                   31
Home equity                                                   3                     3                     3                   4                    4
Residential real estate                                       4                     3                     3                   4                    4
Premium finance receivables - commercial                      12                    13                    13                  12                   12
Premium finance receivables - life insurance                  19                    18                    18                  18                   18
Consumer and other                                            1                     1                     1                   1                    1
Total loans, net of unearned income, excluding covered loans  100             %     100             %     100             %   100             %    100             %
Covered loans                                                 --                    --                    --                  --                   --
Total loans, net of unearned income                           100             %     100             %     100             %   100             %    100             %

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)                    2017                  2017                  2017                2017                 2016
Balance:
Non-interest bearing                      $    6,792,497        $    6,502,409        $    6,294,052      $    5,790,579       $    5,927,377
NOW and interest bearing demand deposits  2,315,055             2,273,025             2,459,238           2,484,676            2,624,442
Wealth management deposits                2,323,699             2,171,758             2,464,162           2,390,464            2,209,617
Money market                              4,515,353             4,607,995             4,449,385           4,555,752            4,441,811
Savings                                   2,829,373             2,673,201             2,419,463           2,287,958            2,180,482
Time certificates of deposit              4,407,370             4,666,675             4,519,392           4,221,012            4,274,903
Total deposits                            $    23,183,347       $    22,895,063       $    22,605,692     $    21,730,441      $    21,658,632
Mix:
Non-interest bearing                      29              %     28              %     28              %   27              %    27              %
NOW and interest bearing demand deposits  10                    10                    11                  11                   12
Wealth management deposits                10                    10                    11                  11                   10
Money market                              20                    20                    19                  21                   21
Savings                                   12                    12                    11                  11                   10
Time certificates of deposit              19                    20                    20                  19                   20
Total deposits                            100             %     100             %     100             %   100             %    100             %

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

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Net Interest Margin (Including Call Option Income) - 5 Quarter Trends

                                                         Three Months Ended
                                                         December 31,       September 30,      June 30,       March 31,        December 31,
(Dollars in thousands)                                   2017               2017               2017           2017             2016
Net interest income - FTE                                $    221,226       $    217,947       $  206,108     $   194,282      $    192,276
Call option income                                       1,610              1,143              890            759              1,476
Net interest income including call option income         $    222,836       $    219,090       $  206,998     $   195,041      $    193,752
Yield on earning assets                                  4.00         %     3.96         %     3.88       %   3.79        %    3.64         %
Rate on interest-bearing liabilities                     0.75               0.73               0.63           0.58             0.58
Rate spread                                              3.25         %     3.23         %     3.25       %   3.21        %    3.06         %
Less:  Fully tax-equivalent adjustment                   (0.04        )     (0.03        )     (0.02      )   (0.03       )    (0.02        )
Net free funds contribution                              0.24               0.23               0.18           0.18             0.17
Net interest margin (GAAP-derived)                       3.45         %     3.43         %     3.41       %   3.36        %    3.21         %
Fully tax-equivalent adjustment                          0.04               0.03               0.02           0.03             0.02
Net interest margin - FTE                                3.49         %     3.46         %     3.43       %   3.39        %    3.23         %
Call option income                                       0.03               0.02               0.01           0.01             0.02
Net interest margin - FTE, including call option income  3.52         %     3.48         %     3.44       %   3.40        %    3.25         %

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Net Interest Margin (Including Call Option Income - YTD Trends)

                                                                       Years Ended
                                                                       December 31,
(Dollars in thousands)                                   2017          2016           2015           2014          2013
Net interest income - FTE                                $  839,563    $   728,145    $   646,238    $  601,744    $  552,887
Call option income                                       4,402         11,470         15,364         7,859         4,773
Net interest income including call option income         $  843,965    $   739,615    $   661,602    $  609,603    $  557,660
Yield on earning assets                                  3.91       %  3.67        %  3.76        %  3.96       %  4.01       %
Rate on interest-bearing liabilities                     0.67          0.57           0.54           0.55          0.63
Rate spread                                              3.24       %  3.10        %  3.22        %  3.41       %  3.38       %
Less:  Fully tax-equivalent adjustment                   (0.03      )  (0.02       )  (0.02       )  (0.02      )  (0.01      )
Net free funds contribution                              0.20          0.16           0.14           0.12          0.12
Net interest margin (GAAP-derived)                       3.41       %  3.24        %  3.34        %  3.51       %  3.49       %
Fully tax-equivalent adjustment                          0.03          0.02           0.02           0.02          0.01
Net interest margin - FTE                                3.44       %  3.26        %  3.36        %  3.53       %  3.50       %
Call option income                                       0.02          0.05           0.08           0.05          0.03
Net interest margin - FTE, including call option income  3.46       %  3.31        %  3.44        %  3.58       %  3.53       %

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)                                             2017                   2017                   2017                 2017                  2016
Interest-bearing deposits with banks and cash equivalents  $     914,319          $     1,003,572        $     722,349        $     780,752         $     1,251,677
Investment securities                                      2,736,253              2,652,119              2,572,619            2,395,625             2,477,708
FHLB and FRB stock                                         82,092                 81,928                 99,438               94,090                131,231
Liquidity management assets                                $     3,732,664        $     3,737,619        $     3,394,406      $     3,270,467       $     3,860,616
Other earning assets                                       26,955                 25,844                 25,749               25,236                27,608
Loans, net of unearned income                              21,416,369             21,195,222             20,599,718           19,923,606            19,711,504
Covered loans                                              6,025                  48,415                 51,823               56,872                59,827
Total earning assets                                       $     25,182,013       $     25,007,100       $     24,071,696     $     23,276,181      $     23,659,555
Allowance for loan and covered loan losses                 (138,584         )     (135,519         )     (132,053         )   (127,425         )    (122,665         )
Cash and due from banks                                    244,097                242,186                242,495              229,588               221,892
Other assets                                               1,891,958              1,898,528              1,868,811            1,829,004             1,852,278
Total assets                                               $     27,179,484       $     27,012,295       $     26,050,949     $     25,207,348      $     25,611,060
NOW and interest bearing demand deposits                   $     2,284,576        $     2,344,848        $     2,470,130      $     2,512,598       $     2,533,638
Wealth management deposits                                 2,005,197              2,320,674              2,091,251            2,082,285             2,232,451
Money market accounts                                      4,611,515              4,471,342              4,435,670            4,407,901             4,480,699
Savings accounts                                           2,741,621              2,581,946              2,329,195            2,227,024             2,087,494
Time deposits                                              4,581,464              4,573,081              4,295,428            4,236,862             4,232,981
Interest-bearing deposits                                  $     16,224,373       $     16,291,891       $     15,621,674     $     15,466,670      $     15,567,263
Federal Home Loan Bank advances                            324,748                324,996                689,600              181,338               388,780
Other borrowings                                           255,972                268,850                240,547              255,012               240,174
Subordinated notes                                         139,065                139,035                139,007              138,980               138,953
Junior subordinated debentures                             253,566                253,566                253,566              253,566               253,566
Total interest-bearing liabilities                         $     17,197,724       $     17,278,338       $     16,944,394     $     16,295,566      $     16,588,736
Non-interest bearing deposits                              6,605,553              6,419,326              5,904,679            5,787,034             5,902,439
Other liabilities                                          433,208                431,949                400,971              385,698               430,009
Equity                                                     2,942,999              2,882,682              2,800,905            2,739,050             2,689,876
Total liabilities and shareholders’ equity                 $     27,179,484       $     27,012,295       $     26,050,949     $     25,207,348      $     25,611,060

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,
                                                           2017          2017           2017        2017        2016
Yield earned on:
Interest-bearing deposits with banks and cash equivalents  1.18   %      1.29   %       0.91  %     0.84  %     0.49   %
Investment securities                                      2.78          2.54           2.55        2.45        2.21
FHLB and FRB stock                                         5.15          5.23           4.66        4.61        3.47
Liquidity management assets                                2.44   %      2.26   %       2.27  %     2.13  %     1.70   %
Other earning assets                                       2.27          2.49           2.53        2.95        3.37
Loans, net of unearned income                              4.27          4.26           4.15        4.05        4.01
Covered loans                                              5.66          4.91           5.01        6.55        6.38
Total earning assets                                       4.00   %      3.96   %       3.88  %     3.79  %     3.64   %
Rate paid on:
NOW and interest bearing demand deposits                   0.24   %      0.22   %       0.20  %     0.18  %     0.17   %
Wealth management deposits                                 0.80          0.81           0.55        0.45        0.45
Money market accounts                                      0.36          0.31           0.24        0.20        0.21
Savings accounts                                           0.39          0.33           0.26        0.24        0.22
Time deposits                                              1.09          1.04           0.95        0.89        0.87
Interest-bearing deposits                                  0.61   %      0.58   %       0.47  %     0.43  %     0.42   %
Federal Home Loan Bank advances                            2.59          2.63           1.71        3.55        2.50
Other borrowings                                           2.48          2.19           1.92        1.81        1.78
Subordinated notes                                         5.14          5.10           5.14        5.10        5.12
Junior subordinated debentures                             3.55          4.07           3.80        3.80        3.90
Total interest-bearing liabilities                         0.75   %      0.73   %       0.63  %     0.58  %     0.58   %
Interest rate spread                                       3.25   %      3.23   %       3.25  %     3.21  %     3.06   %
Less:  Fully tax-equivalent adjustment                     (0.04  )      (0.03  )       (0.02 )     (0.03 )     (0.02  )
Net free funds/contribution                                0.24          0.23           0.18        0.18        0.17
Net interest margin (GAAP)                                 3.45   %      3.43   %       3.41  %     3.36  %     3.21   %
Fully tax-equivalent adjustment                            0.04          0.03           0.02        0.03        0.02
Net interest margin - FTE                                  3.49   %      3.46   %       3.43  %     3.39  %     3.23   %

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)                                2017          2017              2017           2017            2016
Brokerage                                     $    6,067    $    5,127        $   5,449      $   6,220       $    6,408
Trust and asset management                    15,843        14,676            14,456         13,928          13,104
Total wealth management                       21,910        19,803            19,905         20,148          19,512
Mortgage banking                              27,411        28,184            35,939         21,938          35,489
Service charges on deposit accounts           8,907         8,645             8,696          8,265           8,054
Gains (losses) on investment securities, net  14            39                47             (55        )    1,575
Fees from covered call options                1,610         1,143             890            759             1,476
Trading gains (losses), net                   24            (129        )     (420       )   (320       )    1,007
Operating lease income, net                   8,598         8,461             6,805          5,782           5,171
Other:
Interest rate swap fees                       1,963         1,762             2,221          1,433           2,870
BOLI                                          754           897               888            985             981
Administrative services                       1,103         1,052             986            1,024           1,115
Loss on extinguishment of debt                --            --                --             --              (717        )
Early pay-offs of leases                      7             --                10             1,211           728
Miscellaneous                                 8,737         9,874             14,005         7,595           8,014
Total other income                            12,564        13,585            18,110         12,248          12,991
Total Non-Interest Income                     $    81,038   $    79,731       $   89,972     $   68,765      $    85,275

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)                           2017           2017           2017          2017          2016
Salaries and employee benefits:
Salaries                                 $    58,239    $    57,689    $   55,215    $   55,008    $    53,108
Commissions and incentive compensation   40,723         32,095         34,050        26,643        35,744
Benefits                                 19,047         16,467         17,237        17,665        15,883
Total salaries and employee benefits     118,009        106,251        106,502       99,316        104,735
Equipment                                9,500          9,947          9,909         9,002         9,532
Operating lease equipment depreciation   7,015          6,794          5,662         4,636         4,219
Occupancy, net                           14,154         13,079         12,586        13,101        14,254
Data processing                          7,915          7,851          7,804         7,925         7,687
Advertising and marketing                7,382          9,572          8,726         5,150         6,691
Professional fees                        8,879          6,786          7,510         4,660         5,425
Amortization of other intangible assets  1,028          1,068          1,141         1,164         1,158
FDIC insurance                           4,324          3,877          3,874         4,156         4,726
OREO expense, net                        599            590            739           1,665         1,843
Other:
Commissions - 3rd party brokers          1,057          990            1,033         1,098         1,165
Postage                                  1,427          1,814          2,080         1,442         1,955
Miscellaneous                            15,291         14,956         15,978        14,803        16,981
Total other expense                      17,775         17,760         19,091        17,343        20,101
Total Non-Interest Expense               $    196,580   $    183,575   $   183,544   $   168,118   $    180,371

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION

Allowance for Credit Losses, excluding covered loans - 5 Quarter Trends

                                                                                                               Three Months Ended
                                                                                                               December 31,          September 30,         June 30,           March 31,           December 31,
(Dollars in thousands)                                                                                         2017                  2017                  2017               2017                2016
Allowance for loan losses at beginning of period                                                               $    133,119          $    129,591          $   125,819        $   122,291         $    117,693
Provision for credit losses                                                                                    7,772                 7,942                 8,952              5,316               7,357
Other adjustments                                                                                              698                   (39             )     (30            )   (56            )    33
Reclassification (to) from allowance for unfunded lending-related commitments                                  7                     94                    106                (138           )    (25             )
Charge-offs:
Commercial                                                                                                     1,340                 2,265                 913                641                 3,054
Commercial real estate                                                                                         1,001                 989                   1,985              261                 375
Home equity                                                                                                    728                   968                   1,631              625                 326
Residential real estate                                                                                        542                   267                   146                329                 410
Premium finance receivables - commercial                                                                       2,314                 1,716                 1,878              1,427               1,843
Premium finance receivables - life insurance                                                                   --                    --                    --                 --                  --
Consumer and other                                                                                             207                   213                   175                134                 205
Total charge-offs                                                                                              6,132                 6,418                 6,728              3,417               6,213
Recoveries:
Commercial                                                                                                     235                   801                   561                273                 668
Commercial real estate                                                                                         1,037                 323                   276                554                 1,916
Home equity                                                                                                    359                   178                   144                65                  300
Residential real estate                                                                                        165                   55                    54                 178                 21
Premium finance receivables - commercial                                                                       613                   499                   404                612                 498
Premium finance receivables - life insurance                                                                   --                    --                    --                 --                  --
Consumer and other                                                                                             32                    93                    33                 141                 43
Total recoveries                                                                                               2,441                 1,949                 1,472              1,823               3,446
Net charge-offs                                                                                                (3,691          )     (4,469          )     (5,256         )   (1,594         )    (2,767          )
Allowance for loan losses at period end                                                                        $    137,905          $    133,119          $   129,591        $   125,819         $    122,291
Allowance for unfunded lending-related commitments at period end                                               1,269                 1,276                 1,705              1,811               1,673
Allowance for credit losses at period end                                                                      $    139,174          $    134,395          $   131,296        $   127,630         $    123,964
Annualized net charge-offs (recoveries) by category as a percentage of its own respective category’s average:
Commercial                                                                                                     0.07            %     0.09            %     0.02           %   0.03           %    0.16            %
Commercial real estate                                                                                         0.00                  0.04                  0.11               (0.02          )    (0.10           )
Home equity                                                                                                    0.22                  0.46                  0.85               0.32                0.01
Residential real estate                                                                                        0.13                  0.08                  0.03               0.06                0.13
Premium finance receivables - commercial                                                                       0.26                  0.18                  0.23               0.13                0.22
Premium finance receivables - life insurance                                                                   0.00                  0.00                  0.00               0.00                0.00
Consumer and other                                                                                             0.52                  0.37                  0.45               (0.02          )    0.47
Total loans, net of unearned income, excluding covered loans                                                   0.07            %     0.08            %     0.10           %   0.03           %    0.06            %
Net charge-offs as a percentage of the provision for credit losses                                             47.49           %     56.27           %     58.71          %   29.98          %    37.61           %
Loans at period-end                                                                                            $    21,640,797       $    20,912,781       $   20,743,332     $   19,931,058      $    19,703,172
Allowance for loan losses as a percentage of loans at period end                                               0.64            %     0.64            %     0.62           %   0.63           %    0.62            %
Allowance for credit losses as a percentage of loans at period end                                             0.64            %     0.64            %     0.63           %   0.64           %    0.63            %

(1) Includes $742,000 of allowance for covered loan losses reclassified as a result of the termination of all existing loss share agreements with the FDIC during the fourth quarter of 2017.

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)                                                                                   2017               2017               2017            2017             2016
Loans past due greater than 90 days and still accruing:
Commercial                                                                                               $    --            $    --            $   --          $   100          $    174
Commercial real estate                                                                                   --                 --                 --              --               --
Home equity                                                                                              --                 --                 --              --               --
Residential real estate                                                                                  3,278              --                 179             --               --
Premium finance receivables - commercial                                                                 9,242              9,584              5,922           4,991            7,962
Premium finance receivables - life insurance                                                             --                 6,740              1,046           2,024            3,717
Consumer and other                                                                                       40                 159                63              104              144
Total loans past due greater than 90 days and still accruing                                             12,560             16,483             7,210           7,219            11,997
Non-accrual loans:
Commercial                                                                                               15,696             13,931             10,191          14,307           15,875
Commercial real estate                                                                                   22,048             14,878             16,980          20,809           21,924
Home equity                                                                                              8,978              7,581              9,482           11,722           9,761
Residential real estate                                                                                  17,977             14,743             14,292          11,943           12,749
Premium finance receivables - commercial                                                                 12,163             9,827              10,456          12,629           14,709
Premium finance receivables - life insurance                                                             --                 --                 --              --               --
Consumer and other                                                                                       740                540                439             350              439
Total non-accrual loans                                                                                  77,602             61,500             61,840          71,760           75,457
Total non-performing loans:
Commercial                                                                                               15,696             13,931             10,191          14,407           16,049
Commercial real estate                                                                                   22,048             14,878             16,980          20,809           21,924
Home equity                                                                                              8,978              7,581              9,482           11,722           9,761
Residential real estate                                                                                  21,255             14,743             14,471          11,943           12,749
Premium finance receivables - commercial                                                                 21,405             19,411             16,378          17,620           22,671
Premium finance receivables - life insurance                                                             --                 6,740              1,046           2,024            3,717
Consumer and other                                                                                       780                699                502             454              583
Total non-performing loans                                                                               $    90,162        $    77,983        $   69,050      $   78,979       $    87,454
Other real estate owned                                                                                  20,244             17,312             16,853          17,090           17,699
Other real estate owned - from acquisitions                                                              20,402             20,066             22,508          22,774           22,583
Other repossessed assets                                                                                 153                301                532             544              581
Total non-performing assets                                                                              $    130,961       $    115,662       $   108,943     $   119,387      $    128,317
TDRs performing under the contractual terms of the loan agreement                                        $    23,427        $    26,972        $   28,008      $   28,392       $    29,911
Total non-performing loans by category as a percent of its own respective category’s period-end balance:
Commercial                                                                                               0.23         %     0.22         %     0.16        %   0.24        %    0.27         %
Commercial real estate                                                                                   0.34               0.23               0.27            0.33             0.35
Home equity                                                                                              1.35               1.13               1.38            1.66             1.34
Residential real estate                                                                                  2.55               1.87               1.90            1.66             1.81
Premium finance receivables - commercial                                                                 0.81               0.73               0.62            0.72             0.91
Premium finance receivables - life insurance                                                             --                 0.18               0.03            0.06             0.11
Consumer and other                                                                                       0.72               0.53               0.44            0.38             0.48
Total loans, net of unearned income                                                                      0.42         %     0.37         %     0.33        %   0.40        %    0.44         %
Total non-performing assets as a percentage of total assets                                              0.47         %     0.42         %     0.40        %   0.46        %    0.50         %
Allowance for loan losses as a percentage of total non-performing loans                                  152.95       %     170.70       %     187.68      %   159.31      %    139.83       %

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

(2) Non-accrual loans included TDRs totaling $10.1 million, $6.2 million, $5.1 million, $11.3 million and $11.8 million as of December 31, 2017, September 30, 2017, June 30, 2017, March 31, 2017 and December 31, 2016, respectively.

(3) Includes $2.6 million of non-performing loans and $2.9 million of other real estate owned reclassified from covered assets as a result of the termination of all existing loss share agreements with the FDIC during the fourth quarter of 2017.

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

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