Wintrust Financial Corporation Reports Record First Quarter 2018 Net Income, an Increase of 40% Over Prior Year

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ROSEMONT, Ill., April 16, 2018 (GLOBE NEWSWIRE) -- Wintrust Financial Corporation (“Wintrust” or “the Company”) (Nasdaq:WTFC) announced net income of $82.0 million or $1.40 per diluted common share for the first quarter of 2018 compared to net income of $68.8 million or $1.17 per diluted common share for the fourth quarter of 2017 and $58.4 million or $1.00 per diluted common share for the first quarter of 2017.

Edward J. Wehmer, President and Chief Executive Officer, commented, "Wintrust reported record net income for the ninth consecutive quarter. These results reflected the steady strength of our internal growth engine at Wintrust as we grew assets by $541 million.  The first quarter of 2018 was also characterized by the increased net interest margin as we continued to benefit from rising interest rates, reduced operating costs, steady credit quality metrics and the completion of the acquisition of Veterans First."                Mr. Wehmer continued, "We grew our loan portfolio by $421 million during the first quarter of 2018, which was driven by strong growth in the commercial loan portfolio. The improvement in net interest margin during the period was primarily attributable to rising interest rates in the market. We remain well positioned for expected rising rates in the future. The increased loan volume and continued improvement in net interest margin along with the continued momentum from loan growth at the very end of 2017 resulted in an increase in net interest income of $6.0 million in the first quarter of 2018, despite two less days in the quarter. Our loan pipelines remain consistently strong."

Commenting on credit quality, Mr. Wehmer noted, "Credit quality metrics remained strong during the first quarter of 2018 and the Company continued its practice of addressing and resolving non-performing credits in a timely fashion. Total non-performing assets decreased $4.6 million during the first quarter of 2018 resulting in non-performing assets as a percentage of total assets dropping from 0.47% to 0.44% during the period.  Total non-performing loans decreased slightly in the first quarter of 2018 and now total $89.7 million, or 0.41% of total loans. As a percentage of non-performing loans, the allowance for loan losses remained strong at 156%. Other real estate owned decreased $4.0 million to $36.6 million during the first quarter of 2018 as a result of our continued monitoring and workout efforts. Net charge-offs totaled $6.7 million in the current quarter, increasing $3.0 million from the fourth quarter of 2017. This increase was driven primarily by $4.3 million of net charge-offs within the commercial insurance premium finance receivables portfolio. Despite this increase during the current period, annualized net charge-offs as a percentage of total loans ended the first quarter of 2018 at 0.12%, which remains at historically low levels. We believe that the Company's reserves remain appropriate."

Mr. Wehmer further commented, "Mortgage banking revenue in the first quarter of 2018 totaled $31.0 million, an increase of $3.5 million compared to the fourth quarter of 2017 and an increase of $9.0 million compared to the first quarter of 2017. The increase in mortgage banking revenue for the first quarter of 2018 compared to the fourth quarter of 2017 was impacted by the acquisition of Veterans First, which contributed approximately $5.9 million during its first partial quarter of being a part of Wintrust. Veterans First will continue to assist us in growing our mortgage banking business with opportunities to expand in both size and delivery channels. Mortgage loan origination volumes in the first quarter of 2018 declined to $779 million from $879 million in the fourth quarter of 2017 as a result of the recent rise in interest rates and typical seasonality in January and February within our primary markets. Home purchases activity represented 73% of the volume for the first quarter of 2018 compared to 67% in the fourth 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."

Turning to the future, Mr. Wehmer stated, "We expect our growth engine to continue its momentum from the first quarter into the remainder of 2018. Wintrust continues to take a steady and measured approach to achieving our main objectives of growing franchise value, increasing profitability, leveraging our expense infrastructure to achieve our goal of a net overhead ratio below 1.50% by the end of 2018 and continuing to increase shareholder value. Loan growth at the end of the first quarter of 2018 should add to this momentum as period-end loan balances exceeded the first quarter average balance by $351 million. We remain well-positioned for a rising interest rate environment in the future, which, coupled with this loan growth, should continue to grow net interest income. Additionally, Tax Reform is expected to help fuel our growth and increase profitability as we continue through 2018. As previously noted, 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. 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. To that end, the Company opened one new branch location in the heart of Wrigleyville in Chicago during April and anticipates opening four or five additional branches in Illinois and Wisconsin during the second and third quarters of 2018. Our opportunities for both internal growth and external growth remain consistently strong."

The graphs below illustrate certain highlights of the first quarter of 2018.

Wintrust’s key operating measures and growth rates for the first quarter of 2018, as compared to the sequential and linked quarters, are shown in the table below:

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  by choosing “Financial Reports” under the “Investor Relations” heading, and then choosing “Financial Highlights.”

 

 

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.

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.

Through its community banking unit, the Company provides banking and financial services primarily to individuals, small to mid-sized businesses, local governmental units and institutional clients residing primarily in the local areas the Company services. In the first quarter of 2018, revenue within this unit was primarily driven by increased net interest income due to a higher net interest margin and increased earning assets. The net interest margin increased in the first quarter of 2018 compared to the fourth quarter of 2017 primarily as a result of higher yields on the commercial and commercial real estate loan portfolios (excluding lease loans) and the liquidity management assets portfolio, partially offset by higher rates on interest-bearing liabilities. Mortgage banking revenue increased by $3.5 million from $27.4 million for the fourth quarter of 2017 to $31.0 million for the first quarter of 2018. The higher  revenue was primarily due to increased revenue from the Veterans First acquisition of $5.9 million and a $4.1 million positive fair value adjustment related to mortgage servicing rights assets compared to a $46,000 positive fair value adjustment in the fourth quarter of 2017. The increase in revenue was partially offset as origination volume was lower during the current period, decreasing to $778.9 million from $879.4 million in the fourth quarter of 2017, as a result of typical seasonality in our primary markets. Home purchases represented 73% of loan origination volume for the first quarter of 2018. The Company's gross commercial and commercial real estate loan pipelines remain strong. Before the impact of scheduled payments and prepayments, at March 31, 2018, gross commercial and commercial real estate loan pipelines totaled $1.1 billion, or $688.4 million when adjusted for the probability of closing, compared to $974.4 million, or $630.2 million when adjusted for the probability of closing, at December 31, 2017.

Through its specialty finance unit, the Company offers financing of insurance premiums for businesses and individuals, equipment financing through structured loans and lease products to customers in a variety of industries and accounts receivable financing, value-added, out-sourced administrative services, and other services. In the first quarter of 2018, 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 first quarter of 2018 resulted in a $188.3 million increase in average balances. The increase in average balances along with higher yields on these loans resulted in a $2.7 million increase in interest income attributed to this portfolio. The Company's leasing business remained steady during the first quarter of 2018, with its portfolio of assets, including capital leases, loans and equipment on operating leases, totaling $986.7 million at the end of the first quarter of 2018. Revenues from the Company's out-sourced administrative services business remained steady, totaling approximately $1.1 million in the first quarter of 2018 and fourth quarter of 2017.

Through its wealth management unit, 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 March 31, 2018, the Company’s wealth management subsidiaries had approximately $24.3 billion of assets under administration, which includes $2.9 billion of assets owned by the Company and its subsidiary banks, representing a $347.1 million decrease from the $24.6 billion of assets under administration at December 31, 2017. This decrease in assets under administration was primarily driven by market depreciation.

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 first quarter of 2018 compared to the fourth quarter of 2017 (sequential quarters) and first quarter of 2017 (linked quarters), respectively:

For the first quarter of 2018, net interest income totaled $225.1 million, an increase of $6.0 million as compared to the fourth quarter of 2017 and an increase of $32.5 million as compared to the first quarter of 2017. Net interest margin was 3.54% (3.56% on a fully tax-equivalent basis) during the first quarter of 2018 compared to 3.45% (3.49% on a fully tax-equivalent basis) during the fourth quarter of 2017 and 3.36% (3.39% on a fully tax-equivalent basis) during the first quarter of 2017. The $6.0 million increase in net interest income in the first quarter of 2018 compared to the fourth quarter of 2017 was attributable to a $5.2 million increase from higher levels of earning assets and a $5.7 million increase from rising rates, partially offset by a $4.9 million decrease due to two less days in the quarter.

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 March 31, 2018, December 31, 2017 and March 31, 2017 is as follows:

 

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).

The following table classifies the loan portfolio at March 31, 2018 by date at which the loans reprice or mature, and the type of rate exposure:

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 when the Federal Reserve raises interest rates.  Specifically, the Company has $7.4 billion of variable rate loans tied to one-month LIBOR and $4.2 billion of variable rate loans tied to twelve-month LIBOR. The above chart shows:

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

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 fourth quarter of 2017 and first quarter of 2017 is primarily attributable to market appreciation at the beginning of the quarter related to managed money accounts with fees based on assets under management at the beginning of the quarterly term.  Wealth management revenue is comprised of the trust and asset management revenue of The Chicago Trust Company and Great Lakes Advisors and the brokerage commissions, managed money fees and insurance product commissions at Wayne Hummer Investments.

The increase in mortgage banking revenue in the current quarter as compared to the fourth quarter of 2017 resulted primarily from increased revenue of $5.9 million from the Veterans First acquisition and a $4.1 million positive fair value adjustment related to mortgage servicing rights assets compared to a $46,000 positive fair value adjustment in the fourth quarter of 2017, partially offset by lower origination volumes in the current quarter. Mortgage loans originated or purchased for sale totaled $778.9 million in the first quarter of 2018 as compared to $879.4 million in the fourth quarter of 2017 and $722.5 million in the first 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 ("MSRs") retained or released. Additionally, through the acquisition of Veterans First, the Company acquired approximately $13.8 million of MSRs in the first quarter of 2018. The Company records MSRs at fair value on a recurring basis. The table below presents additional selected information regarding mortgage banking revenue for the respective periods.

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 remained relatively stable in the first quarter of 2018. There were no outstanding call option contracts at March 31, 2018, December 31, 2017 or March 31, 2017.

The increase in operating lease income in the current quarter compared to the fourth quarter of 2017 is primarily related to a $1.1 million gain realized from the sale of certain equipment held on operating leases.

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

NM - Not meaningful

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

Salaries and employee benefits expense decreased in the current quarter compared to the fourth quarter of 2017 primarily as a result of lower commissions and incentive compensation, partially offset by higher salaries in the current quarter. The decrease in commissions and incentive compensation was the result of an increase in bonus and long-term performance-based incentive compensation recognized in the fourth quarter of 2017 due to higher current and projected earnings as impacted by the higher rate environment, lower taxes and balance sheet growth at that time as well as an increase in salaries and employee benefits (primarily health plan related). Additionally, salaries and employee benefits expense in the fourth quarter of 2017 included $1.2 million of additional expense related to pension obligations assumed in previous acquisitions. These decreases were partially offset by a $3.7 million increase in salaries primarily due to $2.4 million of additional salaries from the Veterans First acquisition as well as increases from merit-based salary increases for current employees effective in February and an increase of the minimum wage for eligible hourly employees effective in March.

The increase in advertising and marketing expenses during the current quarter compared to the fourth quarter of 2017 and the first quarter of 2017 is primarily related to higher expenses for community advertisements and sponsorships as well as mass media. 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 decrease in professional fees during the current quarter compared to the fourth quarter of 2017 is primarily related to lower consulting fees related to continued investments in various areas of the Company including technology and an enhanced digital customer experience. Professional fees include legal, audit and tax fees, external loan review costs, consulting arrangements and normal regulatory exam assessments.

The increase in OREO expense in the current quarter compared to the fourth quarter of 2017 was primarily the result of negative valuation adjustments and realized losses on the sale of certain OREO properties as a result of our continuing efforts to address and resolve non-performing assets in a timely fashion. OREO expenses include all costs associated with obtaining, maintaining and selling other real estate owned properties as well as valuation adjustments.

The Company recorded income tax expense of $26.1 million in the first quarter of 2018 compared to $27.0 million in the fourth quarter of 2017 and $29.6 million in the first quarter of 2017. The effective tax rates were 24.14% in the first quarter of 2018, 28.19% in the fourth quarter of 2017 and 33.67% in the first quarter of 2017. The lower effective tax rate for the first quarter of 2018 was primarily due to reduction of the federal corporate tax rate as a result of Tax Reform and recording $2.6 million of excess tax benefits related to income taxes attributed to share-based compensation. 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.

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 first quarter of 2018 totaled 12 basis points on an annualized basis compared to seven basis points on an annualized basis in the fourth quarter of 2017 and three basis points on an annualized basis in the first quarter of 2017.  Net charge-offs totaled $6.7 million in the first quarter of 2018, a $3.0 million increase from $3.7 million in the fourth quarter of 2017 and a $5.1 million increase from $1.6 million in the first quarter of 2017. The increase in the first quarter of 2018 compared to both comparative periods is primarily the result of increased net charge-offs within the commercial insurance premium finance receivables portfolio. The provision for credit losses, excluding the provision for covered loan losses, totaled $8.3 million for the first quarter of 2018 compared to $7.8 million for the fourth quarter of 2017 and $5.3 million for the first quarter of 2017.

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:

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 March 31, 2018 and December 31, 2017.

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 March 31, 2018 and December 31, 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 $139.5 million of allowance for loan losses, there is $4.0 million of non-accretable credit discount on purchased loans reported in accordance with ASC 310-30 that is available to absorb credit losses.

The tables below show the aging of the Company’s loan portfolio at March 31, 2018 and December 31, 2017:

 

 

As of March 31, 2018, $18.0 million of all loans, or 0.1%, were 60 to 89 days past due and $155.0 million, or 0.7%, were 30 to 59 days (or one payment) past due. 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. 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 March 31, 2018 that are current with regard to the contractual terms of the loan agreement represent 97.6% of the total home equity portfolio. Residential real estate loans at March 31, 2018 that are current with regards to the contractual terms of the loan agreements comprise 96.8% of total residential real estate loans outstanding.

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.

The ratio of non-performing assets to total assets was 0.44% as of March 31, 2018, compared to 0.47% at December 31, 2017, and 0.46% at March 31, 2017. Non-performing assets, excluding covered assets and non-covered PCI loans, totaled $126.4 million at March 31, 2018, compared to $131.0 million at December 31, 2017 and $119.4 million at March 31, 2017. Non-performing loans, excluding covered loans and non-covered PCI loans, totaled $89.7 million, or 0.41% of total loans, at March 31, 2018 compared to $90.2 million, or 0.42% of total loans, at December 31, 2017 and $79.0 million, or 0.40% of total loans, at March 31, 2017. OREO, excluding covered OREO, of $36.6 million at March 31, 2018 decreased $4.0 million compared to $40.6 million at December 31, 2017 and decreased $3.3 million compared to $39.9 million at March 31, 2017. The decrease in the first quarter of 2018 was partly due to negative fair value adjustments realized on certain properties as a result of our continued monitoring and workout efforts.

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.

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:

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

The table below presents a summary of other real estate owned, excluding covered other real estate owned, as of March 31, 2018, December 31, 2017 and March 31, 2017, and shows the activity for the respective period and the balance for each property type:

On January 4, 2018, the Company acquired certain assets and assumed certain liabilities of the mortgage banking business of Veterans First, in a business combination. The Company also acquired mortgage servicing rights assets from Veterans First on approximately 10,000 loans, totaling an estimated $1.7 billion in unpaid principal balance. Veterans First 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.

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 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.

Wintrust is a financial holding company whose common stock is traded on the Nasdaq Global Select Market (Nasdaq:WTFC). Its 15 community bank subsidiaries are: Lake Forest Bank & Trust Company, 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:

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 2017 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:

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.

The Company will hold a conference call at 1:00 p.m. (Central Time) on Tuesday, April 17, 2018 regarding first quarter 2018 results. Individuals interested in listening should call (877) 363-5049 and enter Conference ID #5398424. 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, Investor Relations, Investor News and Events, Presentations & Conference Calls. The text of the first quarter 2018 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.

5 Quarter Trends

 

 

 

 

 

 

 

 

 

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

More news and information about Wintrust Financial Corporation

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Globe Newswire: 21:41 GMT Monday 16th April 2018

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