UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 19992000
WINTRUST FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
0-21923
Commission File Number
ILLINOIS 36-3873352
(State of incorporation or organization) (I.R.S. Employer Identification No.)
727 NORTH BANK LANE
LAKE FOREST, ILLINOIS 60045
(Address of principal executive offices)
(847) 615-4096
(Registrant's telephone number, including area code)
COMMON STOCK, NO PAR VALUEVALUE*
9.00% CUMULATIVE TRUST PREFERRED SECURITIES (AND RELATED GUARANTEE)
10.50% CUMULATIVE TRUST PREFERRED SECURITIES (AND RELATED GUARANTEE)
Securities registered pursuant to Section 12(g) of the Act
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No --- ---___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant was approximately $110,190,000$137,316,370 as of March 23, 2000.20, 2001. As of March 23,
2000,20,
2001, the registrant had outstanding 8,752,6438,616,976 shares of Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the year ended December 31,
1999,2000, which is included as Exhibit 13.1 to this Form 10-K, are incorporated by
reference into Parts I and II hereof and portions of the Proxy Statement for the
Company's Annual Meeting of Shareholders to be held on May 25, 200024, 2001 are
incorporated by reference into Part III.
- --------------------------------------------------------------------------------
* including Preferred Share Purchase Rights related thereto
TABLE OF CONTENTS
PART I
Page
----
ITEM 1. Business.......................................................Business........................................................ 3
ITEM 2. Properties..................................................... 16Properties...................................................... 17
ITEM 3. Legal Proceedings.............................................. 18Proceedings............................................... 19
ITEM 4. Submission of Matters to a Vote of Security Holders............ 18Holders............. 19
PART II
ITEM 5. Market for Registrant's Common Equity and Related
Stockholder Matters....................................... 18Matters......................................... 19
ITEM 6. Selected Financial Data........................................ 19Data.......................................... 20
ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 20Operations................................... 21
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risks.... 20Risks...... 21
ITEM 8. Financial Statements and Supplementary Data.................... 20Data...................... 21
ITEM 9. Changes in and Disagreements with Accountants on Accounting 9.
and Financial Disclosure.................................. 27Disclosure.................................... 29
PART III
ITEM 10. Directors and Executive Officers of the Registrant............. 27Registrant............... 29
ITEM 11. Executive Compensation......................................... 27Compensation........................................... 29
ITEM 12. Security Ownership of Certain Beneficial Owners and Management. 27Management... 29
ITEM 13. Certain Relationships and Related Transactions................. 27Transactions................... 29
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. 28
Signatures...................................................... 338-K.. 30
Signatures....................................................... 34
- 2 -
PART I
ITEM 1. BUSINESS
Wintrust Financial Corporation, an Illinois corporation (the "Company"), is a
bank holding company based in Lake Forest, Illinois, with total assets of
approximately $1.7$2.1 billion at December 31, 1999.2000. The Company is currently
engagedengages in the
business of providing traditional community banking services, trust and
investment services, commercial insurance premium financing, short-term accounts
receivable financing, and certain administrative services, such as data
processing of payrolls, billing and cash management services.
The Company provides community-oriented, personal and commercial banking
services to customers located predominantly in affluent suburbs of Chicago,
Illinois through its sixseven wholly-owned banking subsidiaries (collectively,
"Banks"), all of which started as de novo (i.e., started new) institutions,
including Lake Forest Bank and Trust Company ("Lake Forest Bank"), Hinsdale Bank
and Trust Company ("Hinsdale Bank"), North Shore Community Bank and Trust
Company ("North Shore Bank"), Libertyville Bank and Trust Company ("Libertyville
Bank"), Barrington Bank and Trust Company, N.A. ("Barrington Bank") and, Crystal
Lake Bank & Trust Company, N.A. ("Crystal Lake Bank"), and Northbrook Bank &
Trust Company ("Northbrook Bank"). Through Hinsdale Bank, the Company operates
its indirect auto segment, which is in the business of providing new and used
automobile loans through a large network of auto dealerships within the Chicago
metropolitan area.
All indirect auto loans
originated are currently being retained within each of the Banks' loan
portfolios.
On September 30, 1998, theThe Company began providingprovides trust and investment services at each of its Banks through
its wholly-owned subsidiary, Wintrust Asset Management Company, N.A. ("WAMC"). Previously, the Company provided trust
services through the trust department of Lake Forest Bank.
The Company provides financing for the payment of commercial insurance premiums
("premium finance receivables"), on a national basis, through First Insurance
Funding Corporation ("FIFC"), a wholly-owned subsidiary of Crabtree Capital
Corporation ("Crabtree") which is a wholly-owned subsidiary of Lake Forest Bank.
On October 26, 1999,
Hinsdale Bank acquired Tricom, Inc. of Milwaukee ("Tricom"), a providerwholly-owned subsidiary of Hinsdale
Bank, provides short-term accounts receivable financing ("Tricom finance
receivables") 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.
As a mid-size financial services company, management expects to benefit from
greater access to financial and managerial resources while maintaining its
commitment to localizedlocal decision-making and to its community banking philosophy.
Management also believes the Company is positioned to compete more effectively
with other larger and more diversified banks, bank holding companies and other
financial services companies as it continues its growth strategy through
additional branch openings and de novo bank formations, expansion of trust and
investment activities, pursuit of specialized earning asset niches and potential
acquisitions of banks or specialty finance companies.
- 3 -
Additional information regarding the Company's business and strategies is
included in the 19992000 Annual Report to Shareholders, which is filed as Exhibit
13.1 to this Form 10-K.10-K and Item 8 under "Supplemental Statistical Data". Such
information is incorporated herein by reference and constitutes a part of this
report.
BANKING
- -------
The Company provides banking and financial services to individuals, small
businesses, local governmental units and institutional clients residing
primarily in the Banks' local service areas. These services include traditional
demand, NOW, money market, savings and time deposit accounts, as well as a
number of unique deposit products targeted to specific market segments. The
Banks offer home equity, home mortgage, consumer, real estate and commercial
loans, safe deposit facilities, ATMs, and other innovative and traditional
services specially tailored to meet the needs of customers in their market
areas. The Hinsdale Bank also operates the indirect auto segment which provides
high quality new and used auto loans through a large network of auto dealerships
within the Chicago metropolitan area. All indirect auto loans are currently
being purchased by the Banks and retained within their loan portfolios.
Each of the Banks was founded as a de novo banking organization within the last
nineten years. The organizational efforts began in 1991, when a group of experienced
bankers and local business people identified an unfilled niche in the Chicago
metropolitan area retail banking market. As large banks acquired smaller ones
and personal service was subjected to consolidation strategies, the opportunity
increased in affluent suburbs for locally owned and operated, highly personal
service-oriented banks. As a result, Lake Forest Bank was founded in December
1991 to service the Lake Forest and Lake Bluff communities. AIn 1994, Lake BluffForest
Bank opened a branch of this bank wasoffice in Lake Bluff. In early 2000 Lake Forest Bank opened
a branch in 1994.Highwood to serve the Highwood-Fort Sheridan communities. In 1993,
Hinsdale Bank was opened to service the communities of Hinsdale and Burr Ridge.
Hinsdale Bank established branch facilities in Clarendon Hills and Western
Springs in 1996 and 1997, respectively. In 1994, North Shore Bank was started in
order to service Wilmette and Kenilworth. North Shore Bank opened branch
facilities in Glencoe during 1995 and 1998, in Winnetka during 1996 to service
Winnetka and Northfield, and in Skokie during 1999. In 1995, Libertyville Bank
was opened to service Libertyville, Vernon Hills and Mundelein. Libertyville
Bank opened a branch facility in south Libertyville during 1998 to service south
Libertyville and Vernon Hills.Hills and in Wauconda during 2000. In December 1996,
Barrington Bank was opened to service the greater Barrington/Inverness areas. In
December 1997, Crystal Lake Bank was opened to serve the Crystal Lake/Cary
communities. In 1999, Crystal Lake Bank opened two new branch facilities in
Crystal Lake. In November 2000, Northbrook Bank opened for business in a
temporary facility to serve the Northbrook, Glenview and Deerfield communities.
All Banks are insured by the Federal Deposit Insurance Company ("FDIC") and are
subject to regulation, supervision and regular examination by the Illinois
Office of Banks and Real Estate, the Federal Reserve Bank and/or the Office of
the Comptroller of Currency ("OCC").
PREMIUM FINANCE
- ---------------
FIFC commenced operations nine years ago and is headquartered in Deerfield,Northbrook,
Illinois. Based on limited industry data available in certain state regulatory
filings and FIFC management's experience
- 4 -
in and knowledge of the premium finance industry, management estimates that,
ranked by origination volumes, FIFC is one of the top five premium finance
companies operating in the United States. Premium finance receivables are
originated by FIFC's own sales force, working with medium and large insurance
agents and brokers throughout the United States. These receivables are retained
- 4 -
mainly within the Banks' loan portfolios and are also sold to an unaffiliated
financial institution. Insurance premiums are financed primarily for commercial
customers' purchase of property, casualty and liability insurance. Substantially
all premium finance receivables are made to commercial accounts. FIFC is
licensed or otherwise qualified to do business as an insurance premium finance
company in all 50 states and the District of Columbia.
TRUST ACTIVITIES
- ----------------
With the formation of WAMC in September 1998, the Company intends to expand the
trust and investment management services previously provided through a trust
department of the Lake Forest Bank. Asbegan operating as a separately chartered non-depository bank subsidiary the Company is better able to offerin
September 1998. WAMC offers trust and investment management services to all of
the Banks' communities, which management believes are some of the best trust
markets in Illinois. In addition to offering these services to existing bank
customers at each of the Banks, WAMC intends to targettargets small to mid-size businesses and
newly affluent individuals whose needs command the personalized attention that
will beare offered by WAMC and its experienced trust professionals. Services offered
typically include traditional trust products and services, as well as investment
management, financial planning and 401(k) management services. WAMC is subject
to regulation, supervision and regular examination by the OCC.
TRICOM
- ------
On October 26, 1999 (effective as of October 1, 1999),Tricom was acquired by Hinsdale Bank acquired
100%in October 1999 as part of the common stock of Tricom. This acquisition is another significant step
in the Company's
strategy to pursue specialized earning asset niches. TricomIt is a Milwaukee-based company thatlocated in Milwaukee,
Wisconsin and has been in business for approximatelyover ten years
andyears. It specializes in providing on a national basis,
short-term accounts receivable financing and value-added out-sourced
administrative services, such as data processing of payrolls, billing and cash
management services, to clients
in the temporary staffing industry. On an annual basis,service clients located throughout
the United States. Tricom currently finances and processes payrolls with
associated billings in excess of $200$250 million. In 2000, it generated
approximately $8.1 million of net revenues for the Company. As a wholly-owned
subsidiary of Hinsdale Bank, Tricom has the capital and generates approximately $7 million in revenues. By virtue of the
Company's funding resources, this acquisition will provide Tricom with
additional capital necessary to
expand its financing services in a national market. In addition to expanding the
Company's earning asset niches, this
acquisition will add to the level ofTricom provides fee-based income andto augment itsthe
Company's community-based banking revenues.
COMPETITION
- -----------
The Company competes in the commercial banking industry through the Banks in the
communities each serves. The commercial banking industry is highly competitive,
and the Banks face strong direct competition for deposits, loans, and other
financial-related services. The Banks compete directly in Cook, DuPage, Lake and
McHenry counties with other commercial banks, thrifts, credit unions,
stockbrokers, and the finance divisions of automobile companies. Some of these
competitors are local, while others are statewide or nationwide. The Banks have
developed a community banking and marketing strategy. In keeping with this
strategy, the Banks provide highly personalized and responsive service, a
characteristic of locally-owned and managed institutions. As such, the Banks
compete for deposits principally by offering depositors a variety of deposit
programs, convenient
- 5 -
office locations, hours and other services, and for loan originations primarily
through the interest
- 5 -
rates and loan fees they charge, the efficiency and quality
of services they provide to borrowers and the variety of their loan products.
Some of the financial institutions and financial services organizations with
which the Banks compete are not subject to the same degree of regulation as
imposed on bank holding companies, Illinois banking corporations and national
banking associations. In addition, the larger banking organizations have
significantly greater resources than are available to the Banks. As a result,
such competitors have advantages over the Banks in providing certain non-deposit
services.
FIFC encounters intense competition from numerous other firms, including a
number of national commercial premium finance companies, companies affiliated
with insurance carriers, independent insurance brokers who offer premium finance
services, banks and other lending institutions. Some of FIFC's competitors are
larger and have greater financial and other resources and are better known than
FIFC. FIFC competes with these entities by emphasizing a high level of knowledge
of the insurance industry, flexibility in structuring financing transactions,
and the timely purchase of qualifying contracts. FIFC believes that its
commitment to account service also distinguishes it from its competitors. It is
FIFC's policy to notify the insurance agent when an insured is in default and to
assist in collection, if requested by the agent. To the extent that affiliates
of insurance carriers, banks, and other lending institutions add greater service
and flexibility to their financing practices in the future, the Company's
operations could be adversely affected. There can be no assurance that FIFC will
be able to continue to compete successfully in its markets.
WAMC's primary competition is with more established trust companies of other
larger bank holding companies. WAMC is also in competition with other trust
companies, brokerage and other financial service companies, stockbrokers and
financial advisors. As a new company, it may be more difficult to successfully
attract new customers thanaway from the more established Chicago area trust
companies. However, the Company believes it can successfully compete for trust
business by offering personalized attention and customer service to small to
mid-size businesses and newly affluent individuals. The hiring of several
experienced trust professionals from the more established Chicago area trust
companies is also expected to help in attracting new customer relationships.
There can be no assurances, however, that WAMC will be successful in
establishing this new business as a preferred alternative to the larger trust
companies, and as a profitable venture.
Tricom competes with numerous other firms, including a small number of similar
niche finance companies and payroll processing firms, as well as various finance
companies, banks and other lending institutions. Tricom management believes that
its commitment to service distinguishes itself from competitors. To the extent
that other finance companies, financial institutions and payroll processing
firms add greater programs and services to their existing businesses, Tricom's
operations could be adversely affected. There can be no assurance that Tricom
will be able to continue to compete successfully in its markets.
EMPLOYEES
- ---------
At December 31, 1999,2000, the Company and its subsidiaries employed a total of 412520
full-time-equivalent employees. The Company provides its employees with
comprehensive medical and dental benefit plans, life insurance plans, 401(k)
plans and an employee stock purchase plan. The Company considers its
relationship with its employees to be good.
- 6 -
FORWARD-LOOKING STATEMENTS
- --------------------------
This document contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. 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 projected growth, anticipated improvements
in earnings, earnings per share and other financial performance measures, and
management's long-term performance goals, as well as statements relating to the
anticipated effects on financial results of condition from expected developmentdevelopments
or events, the Company's business and growth strategies, including anticipated
internal growth, plans to form additional de novo banks and to open new branch
offices, and to pursue additional potential development or acquisition of banks
or specialty finance businesses. Actual results could differ materially from
those addressed in the forward-looking statements as a result of numerous
factors, including the following:
o The level of reported net income, return on average assets and return on
average equity for the Company will in the near term continue to be
impacted by start-up costs associated with de novo bank formations, branch
openings, and expanded trust and investment operations. De novo banks may
typically require 13 to 24 months of operations before becoming profitable,
due to the impact of organizational and overhead expenses, the start-up
phase of generating deposits and the time lag typically involved in
redeploying deposits into attractively priced loans and other higher
yielding earning assets. Similarly, the expansion of trust and investment
services through the Company's newer trust subsidiary, WAMC, is expected to
be in a start-up phase for the next few years, before becoming profitable.
o The Company's success to date has been and will continue to be strongly
influenced by its ability to attract and retain senior management
experienced in banking and financial services.
o Although management believes the allowance for possible loan losses is
adequate to absorb losses that may develop in the existing portfolio of
loans and leases, there can be no assurance that the allowance will prove
sufficient to cover actual future loan or lease losses.
o If market interest rates should move contrary to the Company's gap position
on interest earning assets and interest bearing liabilities, the "gap" will
work against the Company and its net interest income may be negatively
affected.
o The financial services business is highly competitive which may affect the
pricing of the Company's loan and deposit products as well as its services.
o The Company's ability to adapt successfully to technological changes to
compete effectively in the marketplace.
- 7 -
o The extent of the Company's preparedness efforts, and that of its outside
data processing providers, software vendors, and customers, in implementing
and testing Year 2000 compliant hardware, software and systems, and the
effectiveness of appropriate contingency plans that have been developed.
o Unforeseen future events that may cause slower than anticipated development
and growth of the Tricom business and/or changes in the temporary staffing
industry or difficulties integrating the Tricom acquisition.industry.
o Changes in the economic environment, competition, or other factors, may
influence the anticipated growth rate of loans and deposits, the quality of
the loan portfolio and loan and deposit pricing.pricing and may affect the
Company's ability to successfully pursue acquisition and expansion
strategies.
o The Company's ability to recover on the loss resulting from the fraudulent
loan scheme perpetrated against the Company's premium finance subsidiary in
the third quarter of 2000.
SUPERVISION AND REGULATION
- --------------------------
Bank holding companies and banks are extensively regulated under federal and
state law. References under this heading to applicable statutes or regulations
are brief summaries or portions thereof which do not purport to be complete and
which are qualified in their entirety by reference to those statutes and
regulations. Any change in applicable laws or regulations may have a material
adverse effect on the business of commercial banks and bank holding companies,
including the Company, the Banks, FIFC, WAMC and Tricom. However, management is
not aware of any current recommendations by any regulatory authority which, if
implemented, would have or would be reasonably likely to have a material effect
on liquidity, capital resources, or operations of the Company, the Banks, FIFC,
WAMC or Tricom. The supervision, regulation and examination of banks and bank
holding companies by bank regulatory agencies are intended primarily for the
protection of depositors rather than stockholders of banks and bank holding
companies.
BANK HOLDING COMPANY REGULATION
- -------------------------------
The Company is registered as a "bank holding company" with the Federal Reserve
and, accordingly, is subject to supervision and regulation by the Federal
Reserve under the Bank Holding Company Act (the Bank Holding Company Act and the
regulations issued thereunder, are collectively the "BHC Act"). The Company is
required to file with the Federal Reserve periodic reports and such additional
information as the Federal Reserve may require pursuant to the BHC Act. The
Federal Reserve examines the Company and may examine the Banks, FIFC, WAMC or
Tricom.
The BHC Act requires prior Federal Reserve approval for, among other things, the
acquisition by a bank holding company of direct or indirect ownership or control
of more than five percent5% of the voting shares or substantially all the assets of any
bank, or bank holding company, or for a merger or consolidation of a bank holding company with another
bank holding company. With certain exceptions, the BHC Act prohibits a bank
holding company from acquiring direct or indirect ownership or control of voting
shares of any company which is not a bank or bank holding company and from
engaging directly or indirectly in any activity other than banking or managing
or controlling banks or performing services for its authorized subsidiaries. A
bank holding company may, however, engage in or acquire an interest in a company
that engages in activities which the Federal Reserve has
- 8 -
determined, by regulation or order, to be so closely related to banking or
managing or controlling banks as to be a proper incident thereto, such as owning
and operating the
- 8 -
premium finance business conducted by FIFC. Under the BHC Act
and Federal Reserve regulations, the Company and the Banks are prohibited from
engaging in certain tie-in arrangements in connection with an extension of
credit, lease, sale of property, or furnishing of services. Any person, including associates and affiliatesThat means that,
except with respect to traditional banking products, the Company may not
condition a customer's purchase of and groups acting in concert
with such person, who purchases or subscribes for five percent or moreone of its services on the purchase of
another service. The passage of the Company's Common Stock may be requiredGramm-Leach-Bliley Act, however, allows bank
holding companies to obtain prior approval ofbecome financial holding companies. Financial holding
companies do not face the Illinois
Commissioner and the Federal Reserve.same prohibitions on entering into certain business
transactions that bank holding companies currently face
Under the Illinois Banking Act, any person who thereafter acquires stockmore than 10% of the
Company such that its interest exceeds ten
percent of the Company,Company's stock may be required to obtain the prior approval of the Commissioner
of the Illinois CommissionerOffice of Banks and Real Estate (the "Illinois Commissioner").
Similarly, under the Change in Bank Control Act, a person may be required to
obtain the prior regulatory approval of the FDIC or OCC, in the case
of Barrington Bank, Crystal Lake Bank, and WAMC, and the Federal Reserve before
acquiringor the power to directly or indirectly direct the management, operations
or policiesOffice of the
Company orComptroller of the Banks orCurrency (the "OCC") before acquiring control of 25
percent10% or more
of any class of the Company's or Banks' outstanding voting
stock. In addition, any Company, partnership, trust or organized group that
acquires a controlling interest in the Company or the Banks may have to obtain
approval of the Federal Reserve to become a bank holding company and thereafter
be subject to regulation as such.
It is the policy of the Federal Reserve that the Company is expected to act as a
source of financial strength to the Banks and WAMC, and to commit resources to
support the Banks and WAMC. The Federal Reserve takes the position that in
implementing this policy, it may require the Company to provide such support
when the Company otherwise would not consider itself able to do so.
The Federal Reserve has risk-based capital requirements for assessing bank
holding company capital adequacy. These standards define regulatory capital and
establish minimum capital standardsratios in relation to assets, both on an aggregate
basis and off-balance sheet
exposures, as adjusted for credit risks.risks and off-balance sheet exposures. Under
the Federal Reserve's risk-based guidelines, capital is classified into two
categories. For bank holding companies, Tier 1 capital, or "core" capital,
consists of common shareholders'stockholders' equity, qualifying noncumulative perpetual
preferred and truststock (including related surplus), qualifying cumulative perpetual
preferred stock (including related surplus) (subject to certain limitations) and
minority interests in the common equity accounts of consolidated subsidiaries,
and is reduced by goodwill certain otherand specified intangible assets and
certain investments in other companies ("Tier 1 Capital").
Tier 2 capital, or "supplementary" capital, consists of the following items, all
of which are subject to certain conditions and limitations: the allowance for
loan and lease losses (subject to certain
conditions and limitations),losses; perpetual preferred stock and trust preferred stock,
"hybridrelated surplus; hybrid
capital instruments,"instruments; unrealized holding gains on equity securities; perpetual
debt and mandatory convertible debt securities, andsecurities; term subordinated debt and
intermediate-term preferred stock.
Under the Federal Reserve's capital guidelines, bank holding companies are
required to maintain a minimum ratio of qualifying total capital to
risk-weighted assets of 8.0%, of which at least 4.0% must be in the form of Tier
1 Capital. The Federal Reserve also requires a minimum leverage ratio of Tier 1
Capital to total assets of 3.0%, except that for strong bank holding companies not(those rated in the
highest categorya
composite "1" under the regulatoryFederal Reserve's rating system are required to maintain a
leveragesystem). For all other bank
holding companies, the minimum ratio of 1.0% to 2.0% above such minimum. The 3.0% Tier 1 Capital to total assets ratio constitutes the minimum leverage standard for bank holding
companies, and will be used in conjunction with the risk-based ratio in
determining the overall capital adequacy of banking organizations.is 4%. In
addition, the Federal Reserve continues to consider the Tier 1 leverage ratio
(Tier 1 capital to average quarterly assets) in evaluating proposals for
expansion or new activities.
- 9 -
In its capital adequacy guidelines, the Federal Reserve emphasizes that the
foregoing standards are supervisory minimums and that banking organizations
generally are expected to operate well above the minimum ratios. These
guidelines also provide that banking organizations experiencing internal growth, whether
internally or by making acquisitions, will beare expected to maintain strong capital
positions substantially above the minimum levels.
BANK REGULATION
Under Illinois law, eachAs of Lake Forest Bank, Hinsdale Bank, North Shore Bank,
Libertyville BankDecember 31, 2000, the Company's total capital to risk-weighted assets
ratio was 8.4%, its Tier I Capital to risk-weighted asset ratio was 6.9% and their subsidiaries, are subject to supervision and
examination byits
leverage ratio was 6.3%.
Dividend Limitations. Because the Illinois Commissioner. As an affiliateCompany's consolidated net income consists
largely of these Banks, the
Company is also subject to examination by the Illinois Commissioner. Barrington
Bank, Crystal Lake Bank and WAMC are subject to supervision and examination by
the OCC pursuant to the National Bank Act and regulations promulgated
thereunder. Eachnet income of the Banks and WAMC are membersits non-bank subsidiaries, the Company's
ability to pay dividends depends upon its receipt of the Federal Reserve Bank
and, as such, is also subject to examination by the Federal Reserve.
The deposits of the Banks are insured by the Bank Insurance Fund under the
provisions of the Federal Deposit Insurance Act (the "FDIA"), and the Banks are,
therefore, also subject to supervision and examination by the FDIC. The FDIC
requires that the appropriate federal regulatory authority (the Federal Reserve
Bank and/or the FDIC in the case of Lake Forest Bank, North Shore Bank, Hinsdale
Bank and Libertyville Bank, or the OCC, in the case of Barrington Bank and
Crystal Lake Bank) approve any merger and/or consolidation by or with an insured
bank, as well as the establishment or relocation of any bank or branch office.
The FDIC also supervises compliance with the provisions of federal law and
regulations which place restrictions on loans by FDIC-insured banks to their
directors, executive officers and other controlling persons.
Furthermore, banks are affected by the credit policies of other monetary
authorities, including the Federal Reserve, which regulate the national supply
of bank credit. Such regulation influences overall growth of bank loans,
investments, and deposits and may also affect interest rates charged on loans
and paid on deposits. The monetary policies of the Federal Reserve have had a
significant effect on the operating results of commercial banks in the past and
are expected to continue to do so in the future.
FINANCIAL INSTITUTION REGULATION GENERALLY
Transactions with Affiliates. Transactions between a bank and its holding
company or other affiliates are subject to various restrictions imposed by state
and federal regulatory agencies. Such transactions include loans and other
extensions of credit, purchases of securities and other assets, and payments of
fees or other distributions. In general,dividends from these
restrictions limit the amount of
transactions between an institution and an affiliate of such institution, as
well as the aggregate amount of transactions between an institution and all of
its affiliates, and require transactions with affiliates to be on terms
comparable to those for transactions with unaffiliated entities.
- 10 -
Dividend Limitations. As a holding company, the Company is primarily dependent
upon dividend distributions from its operating subsidiaries for its income. Federal and state statutes and regulations impose restrictions on the
payment of dividends by the Company, the Banks and WAMC. See Part II, Item 5 for
further discussion of dividend limitations.
Federal Reserve policy provides that a bank holding company should not pay
dividends unless (i) the bank holding company's net income over the prior year
is sufficient to fully fund the dividends and (ii) the prospective rate of
earnings retention appears consistent with the capital needs, asset quality and
overall financial condition of the bank holding company and its subsidiaries.
Illinois law also places certain limitations on the ability of the Company to
pay dividends. For example, the Company may not pay dividends to its
shareholders if, after giving effect to the dividend, the Company would not be
able to pay its debts as they become due. Since a major potential source of the
Company's fundingrevenue is dividends the Company expects to receive from the Banks,
the Company's ability to pay dividends is likely to be dependent on the amount
of dividends paid by the Banks. No assurance can be given that the Banks will,
in any circumstances, pay dividends to the Company.
BANK REGULATION
- ---------------
Lake Forest Bank, Hinsdale Bank, North Shore Bank, Libertyville Bank and
Northbrook Bank are Illinois-chartered banks and as such they and their
subsidiaries are subject to supervision and examination by the Illinois
Commissioner. As an affiliate of these Banks, the Company is also subject to
examination by the Illinois state-charteredCommissioner. Barrington Bank, Crystal Lake Bank and
WAMC are federally-chartered banks noneand are subject to supervision and
examination by the OCC pursuant to the National Bank Act and regulations
promulgated thereunder. Each of the Banks and WAMC are members of the Federal
Reserve Bank and, as such, is also subject to examination by the Federal
Reserve.
The deposits of the Banks are insured by the Bank Insurance Fund under the
provisions of the Federal Deposit Insurance Act (the "FDIA"), and the Banks are,
therefore, also subject to supervision and examination by the FDIC. FDIA
requires that the appropriate federal regulatory authority (the Federal Reserve
Bank in the case of Lake Forest Bank, North Shore Bank, Hinsdale Bank,
nor Libertyville Bank and Northbrook Bank, or the OCC, in the case of Barrington
Bank and Crystal Lake Bank) approve any merger and/or consolidation by or with
an insured bank, as well as the establishment or relocation of any bank or
branch office. The FDIA also gives the Federal Reserve, the OCC and the other
federal bank regulatory agencies power to issue cease and desist
- 10 -
orders against either banks, holding companies or persons regarded as
"institution affiliated parties." A cease and desist order can either prohibit
such entities from engaging in certain unsafe and unsound bank activity or can
require them to take certain affirmative action. The FDIC also supervises
compliance with the provisions of federal law and regulations which place
restrictions on loans by FDIC-insured banks to their directors, executive
officers and other controlling persons.
Furthermore, banks are affected by the credit policies of other monetary
authorities, including the Federal Reserve, which regulate the national supply
of bank credit. Such regulation influences overall growth of bank loans,
investments, and deposits and may also affect interest rates charged on loans
and paid on deposits. The monetary policies of the Federal Reserve have had a
significant effect on the operating results of commercial banks in the past and
are expected to continue to do so in the future.
FINANCIAL INSTITUTION REGULATION GENERALLY
- ------------------------------------------
Transactions with Affiliates. Transactions between a bank and its holding
company or other affiliates are subject to various restrictions imposed by state
and federal regulatory agencies. Such transactions include loans and other
extensions of credit, purchases of securities and other assets, and payments of
fees or other distributions. In general, these restrictions limit the amount of
transactions between an institution and an affiliate of such institution, as
well as the aggregate amount of transactions between an institution and all of
its affiliates, and require transactions with affiliates to be on terms
comparable to those for transactions with unaffiliated entities.
Capital Requirements. Capital requirements for the Banks generally parallel the
capital requirements previously noted for bank holding companies. Each of the
Banks is subject to applicable capital requirements on a separate company basis.
The federal banking regulators must take prompt corrective action with respect
to FDIC-insured depository institutions that do not meet minimum capital
requirements. There are five capital tiers: "well-capitalized",
"adequately-capitalized", "undercapitalized", "significantly undercapitalized"
and "critically undercapitalized". As of December 31, 2000, Lake Forest Bank,
Hinsdale Bank, and North Shore Bank were categorized as "adequately
capitalized", while Libertyville Bank, Barrington Bank, Crystal Lake Bank, and
Northbrook Bank were categorized as "well-capitalized."
Prompt Corrective Action. The Federal Deposit Insurance Company Improvement Act
of 1991 ("FDICIA") requires the federal banking regulators, including the
Federal Reserve, the OCC and the FDIC, to take prompt corrective action with
respect to depository institutions that fall below minimum capital standards and
prohibits any depository institution from making any capital distribution that
would cause it to be undercapitalized. Institutions that are not adequately
capitalized may be subject to a variety of supervisory actions including, but
not limited to, restrictions on growth, investment activities, capital
distributions and affiliate transactions and will be required to submit a
capital restoration plan which, to be accepted by the regulators, must be
guaranteed in part by any company having control of the institution (such as the
Company). In other respects, FDICIA provides for enhanced supervisory authority,
including greater authority for the appointment of a conservator or receiver for
under-capitalized institutions. The capital-based prompt corrective action
provisions of FDICIA and their implementing regulations apply to FDIC-insured
depository institutions. However, federal banking agencies have indicated
- 11 -
that, in regulating bank holding companies, the agencies may take appropriate
action at the holding company level based on their assessment of the
effectiveness of supervisory actions imposed upon subsidiary insured depository
institutions pursuant to the prompt corrective action provisions of FDICIA.
Dividends. As Illinois state-chartered banks, Lake Forest Bank, North Shore
Bank, Hinsdale Bank, Libertyville Bank and Northbrook Bank may not pay dividends
in an amount greater than itstheir current net profits after deducting losses and
bad debts out of undivided profits provided that its surplus equals or exceeds
its capital. For the purpose of determining the amount of dividends that an
Illinois bank may pay, bad debts are defined as debts upon which interest is
past due and unpaid for a period of six months or more unless such debts are
well-secured and in the process of collection. Furthermore, federal regulations
also prohibit any Federal Reserve member bank, including each of the Banks and
WAMC, from declaring dividends in any calendar year in excess of its net profitincome
for the year plus the retained net profitsincome for the preceding two years.years, less any
required transfers to the surplus account. Similarly, as national associations
supervised by the OCC, Barrington Bank, Crystal Lake Bank and WAMC may not
declare dividends in any year in excess of its net profitincome for the year plus the
retained net profitsincome for the preceding two years.years, less any required transfers to
the surplus account. Furthermore, the OCC may, after notice and opportunity for
hearing, prohibit the payment of a dividend by a national bank if it determines
that such payment would constitute an unsafe or unsound practice.
In addition to the foregoing, the ability of the Company, the Banks and WAMC to
pay dividends may be affected by the various minimum capital requirements and
the capital and non-capital standards established under the Federal Deposit
Insurance Company Improvements Act of 1991 ("FDICIA"),FDICIA, as described
below. The right of the Company, its shareholders and its creditors to
participate in any distribution of the assets or earnings of its subsidiaries is
further subject to the prior claims of creditors of the respective subsidiaries.
Standards for Safety and Soundness. The FDIA, as amended by FDICIA and the
Riegle Community Development and Regulatory Improvement Act of 1994 requires the
Federal Reserve, together with the other federal bank regulatory agencies, to
prescribe standards of safety and soundness, by regulations or guidelines,
relating generally to operations and management, asset growth, asset quality,
earnings, stock valuation, and compensation. The Federal Reserve, the OCC and
the other federal bank regulatory agencies have adopted effective August 9, 1995, a set of guidelines
prescribing safety and soundness standards pursuant to FDICIA, as amended. The
guidelines establish general standards relating to internal controls and
information systems, internal audit systems, loan
- 11 -
documentation, credit
underwriting, interest rate exposure, asset growth, and compensation, fees and
benefits. In general, the guidelines require, among other things, appropriate
systems and practices to identify and manage the risks and exposures specified
in the guidelines. The guidelines prohibit excessive compensation as an unsafe
and unsound practice and describe compensation as excessive when the amounts
paid are unreasonable or disproportionate to the services performed by an
executive officer, employee, director or principal shareholder. In addition,
each of the Federal Reserve and the OCC adopted regulations that authorize, but
do not require, the Federal Reserve or the OCC, as the case may be, to order an
institution that has been given notice by the Federal Reserve or the OCC, as the
case may be, that it is not satisfying any of such safety and soundness
standards to submit a compliance plan. If, after being so notified, an
institution fails to submit an acceptable compliance plan or fails in any
material respect to implement an accepted compliance plan, the Federal Reserve
or the OCC, as the case may be,
- 12 -
must issue an order directing action to correct the deficiency and may issue an
order directing other actions of the types to which an undercapitalized
association is subject under the "prompt corrective action" provisions of
FDICIA. If an institution fails to comply with such an order, the Federal
Reserve or the OCC, as the case may be, may seek to enforce such order in
judicial proceedings and to impose civil money penalties. The Federal Reserve,
the OCC and the other federal bank regulatory agencies also proposedadopted guidelines
for asset quality and earnings standards.
A range of other provisions in FDICIA include requirements applicable toto:
closure of branches; additional disclosures to depositors with respect to terms
and interest rates applicable to deposit accounts; uniform regulations for
extensions of credit secured by real estate; restrictions on activities of and
investments by state-chartered banks; modification of accounting standards to
conform to generally accepted accounting principles including the reporting of
off-balance sheet items and supplemental disclosure of estimated fair market
value of assets and liabilities in financial statements filed with the banking
regulators; increased penalties in making or failing to file assessment reports
with the FDIC; greater restrictions on extensions of credit to directors,
officers and principal shareholders; and increased reporting requirements on
agricultural loans and loans to small businesses.
In August 1995,addition, the Federal Reserve, OCC, FDIC and other federal banking agencies
publishedadopted a final rule modifying their existingwhich modified the risk-based capital standards to provide
for consideration of interest rate risk when assessing the capital adequacy of a
bank. Under the finalthis rule, the Federal Reserve, the OCC and the FDIC must explicitly
include a bank's exposure to declines in the economic value of its capital due
to changes in interest rates as a factor in evaluating a bank's capital
adequacy. The Federal Reserve, the FDIC, the OCC and other federal banking
agencies also have adopted a joint agency policy statement providing guidance to
banks for managing interest rate risk. The policy statement emphasizes the
importance of adequate oversight by management and a sound risk management
process. The assessment of interest rate risk management made by the banks'
examiners will be incorporated into the banks' overall risk management rating
and used to determine the effectiveness of management.
Prompt Corrective Action. FDICIA requires the federal banking regulators,
including the Federal Reserve, the OCC and the FDIC, to take prompt corrective
action with respect to depository institutions that fall below certain capital
standards and prohibits any depository institution from making any capital
distribution that would cause it to be undercapitalized. Institutions that are
not adequately capitalized may be subject to a variety of supervisory actions
including, but not limited
- 12 -
to, restrictions on growth, investment activities, capital distributions and
affiliate transactions and will be required to submit a capital restoration plan
which, to be accepted by the regulators, must be guaranteed in part by any
company having control of the institution (such as the Company). In other
respects, FDICIA provides for enhanced supervisory authority, including greater
authority for the appointment of a conservator or receiver for under-capitalized
institutions. The capital-based prompt corrective action provisions of FDICIA
and their implementing regulations apply to FDIC-insured depository
institutions. However, federal banking agencies have indicated that, in
regulating bank holding companies, the agencies may take appropriate action at
the holding company level based on their assessment of the effectiveness of
supervisory actions imposed upon subsidiary insured depository institutions
pursuant to the prompt corrective action provisions of FDICIA.
Insurance of Deposit Accounts. Under FDICIA, as an FDIC-insured institution,
each of the Banks is required to pay deposit insurance premiums based on the
risk it poses to the insurance fund.Bank Insurance Fund ("BIF"). The FDIC has authority to
raise or lower assessment rates on insured deposits in order to achieve
certain designatedstatutorily required reserve ratios in the insurance funds and to impose special
additional assessments. Each depository institution is assigned to one of three
capital groups: "well capitalized," "adequately capitalized" or
"less than adequately"undercapitalized." An institution is considered well capitalized if it has a
total risk-based capital ratio of 10% or greater, has a Tier 1 risk-based
capital ratio of 6% or greater, has a leverage ratio of 5% or greater and is not
subject to any order or written directive to meet and maintain a specific
capital level. An "adequately capitalized" institution is defined as one that
has a total risk-based capital ratio of 8% or greater, has a Tier 1 risk-based
capital ratio of 4% or greater, has a leverage ratio of 4% or greater and does
not meet the definition of a well capitalized bank. An institution is considered
"undercapitalized" if it does not meet the definition of "well capitalized" or
"adequately capitalized." Within each capital group, institutions are assigned
to one of three supervisory subgroups: "healthy," "supervisory concern" or "substantial
supervisory concern.""A" (institutions with few minor
weaknesses), "B" (institutions which demonstrate weaknesses which, if not
corrected, could result in significant deterioration of the institution and
increased risk of loss to the BIF), and "C"
- 13 -
(institutions that pose a substantial probability of loss to BIF unless
effective corrective action is taken). Accordingly, there are nine combinations
of capital groups and supervisory subgroups to which varying assessment rates
would beare applicable. An institution's assessment rate depends on the capital category
and supervisory category to which it is assigned. During 2000, the Banks were
assessed deposit insurance in the aggregate amount of $697,000.
Deposit insurance may be terminated by the FDIC upon a finding that an
institution has engaged in unsafe or unsound practices, is in an unsafe or
unsound condition to continue operations or has violated any applicable law,
regulation, rule, order or condition imposed by the FDIC. Such termination can
only occur, if contested, following judicial review through the federal courts.
The management of each of the Banks does not know of any practice, condition or
violation that might lead to termination of deposit insurance.
The Economic Growth and Regulatory Paperwork Reduction Act of 1996 enacted on
September 30, 1996 provides that
beginning with semi-annual periods after December 31, 1996, deposits insured by
the Bank Insurance Fund ("BIF") will also be assessed to pay interest on the
bonds (the "FICO Bonds") issued in the late 1980s by the Financing Company to
recapitalize the now defunct Federal Savings & Loan Insurance Company. For
purposes of the assessments to pay interest on the FICO Bonds, BIF deposits will bewere
assessed at a rate of 20.0% of the assessment rate applicable to SAIF deposits
until December 31, 1999. After the earlier of
December 31, 1999, or the date on which the last savings association ceases to
exist, full pro rata sharing of FICO
assessments will begin. The payment of the
assessment to pay interest on the FICO Bonds should not materially affect the
Banks.began.
Federal Reserve System. The Banks are subject to Federal Reserve regulations
requiring depository institutions to maintain non-interest-earning reserves
against their transaction accounts (primarily NOW and regular checking
accounts). The Federal Reserve regulations generally require 3.0% reserves on
the first $46.5$44.3 million of transaction accounts plus 10.0% on the remainder. The
first $4.9$5.0 million of otherwise reservable balances (subject to adjustments by
the Federal Reserve) are exempted from the reserve requirements. The Banks are
in compliance with the foregoing requirements.
- 13 -
Community Reinvestment. Under the Community Reinvestment Act ("CRA"), a
financial institution has a continuing and affirmative obligation, consistent
with the safe and sound operation of such institution, to help meet the credit
needs of its entire community, including low- and moderate-income neighborhoods.
The CRA does not establish specific lending requirements or programs for
financial institutions nor does it limit an institution's discretion to develop
the types of products and services that it believes are best suited to its
particular community, consistent with the CRA. However, institutions are rated
on their performance in meeting the needs of their communities. Performance is
judged in three areas: (a) a lending test, to evaluate the institution's record
of making loans in its assessment areas; (b) an investment test, to evaluate the
institution's record of investing in community development projects, affordable
housing and programs benefiting low or moderate income individuals and business;
and (c) a service test, to evaluate the institution's delivery of services
through its branches, ATMs and other offices. The CRA requires each federal
banking agency, in connection with its examination of a financial institution,
to assess and assign one of four ratings to the institution's record of meeting
the credit needs of its community and to take such record into account in its
evaluation of certain applications by the institution, including applications
for charters, branches and other deposit facilities, relocations, mergers,
consolidations, acquisitions of assets or assumptions of liabilities,
- 14 -
and savings and loan holding company acquisitions. The CRA also requires that
all institutions make public disclosure of their CRA ratings. Each of the Banks
received "satisfactory" ratings from either the Federal Reserve or OCC on their
most recent CRA performance evaluations.
In April 1995, the Federal Reserve, the OCC and other federal banking agencies
adopted amendments revising their CRA regulations. Among other things, the
amended CRA regulations substitute for the prior process-based assessment
factors a new evaluation system that rates an institution based on its actual
performance in meeting community needs. In particular, the focus is on three
tests: (i) a lending test, to evaluate the institution's record of making loans
in its assessment areas; (ii) an investment test, to evaluate the institution's
record of investing in community development projects, affordable housing, and
programs benefiting low or moderate income individuals and businesses; and (iii)
a service test, to evaluate the institution's delivery of services through its
branches, ATMs and other offices. The amended CRA regulations also clarify how
an institution's CRA performance would be considered in the application process.
Brokered Deposits. Well-capitalized institutions are not subject to limitations
on brokered deposits, while an adequately capitalized institution is able to
accept, renew or rollover brokered deposits only with a waiver from the FDIC and
subject to certain restrictions on the yield paid on such deposits.
Undercapitalized institutions are not permitted to accept brokered deposits.
Each of the Banks is eligible to accept brokered deposits (as a result of its
capital levels or having received a waiver) and may use this funding source from
time to time when management deems it appropriate from an asset/liability
management perspective.
Enforcement Actions. Federal and state statutes and regulations provide
financial institution regulatory agencies with great flexibility to undertake
enforcement action against an institution that fails to comply with regulatory
requirements, particularly capital requirements. Possible enforcement actions
range from the imposition of a capital plan and capital directive to civil money
penalties, cease and desist orders, receivership, conservatorship or the
termination of deposit insurance.
- 14 -
Interstate Banking and Branching Legislation. On September 29, 1994,Under the Riegle-Neal Interstate
Banking and Efficiency Act of 1994 (the "Interstate Banking Act") was enacted. Under the Interstate Banking Act,, adequately
capitalized and adequately managed bank holding companies will beare allowed to acquire
banks across state lines subject to certain limitations. In addition, under the
Interstate Banking Act, effective June 1, 1997, banks are permitted to merge with one another across
state lines and thereby create a main bank with branches in separate states.
After establishing branches in a state through an interstate merger transaction,
a bank canmay establish and acquire additional branches at any location in the
state where any bank involved in the interstate merger could have established or
acquired branches under applicable federal and state law.
Recent Legislation. On November 12, 1999, the Gramm-Leach-Bliley Act ("GLB(the "GLB
Act") was enacted. The GLB Act amended or repealed certain provisions of the
Glass-Steagall Act and other legislation that restricted the ability of bank
holding companies, securities firms and among other things,insurance companies to affiliate with
one another. The GLB Act establishes a comprehensive framework to permit
affiliations among commercial banks, insurance companies and securities firmsfirms.
Further, the GLB Act expanded the range of activities in which bank holding
companies may engage by allowing certain well managed and insurancewell capitalized bank
holding companies to be designated as "financial holding companies." In
addition, the GLB Act contains provisions intended to safeguard consumer
financial information in the hands of financial service providers primarily by, among
other things, requiring such entities to disclose their privacy policies to
their customers and allowing customers to "opt out" of having their financial
servicesservice providers disclose their confidential financial information to
non-affiliated third parties, subject to certain exceptions. The federal
regulatory agencies have not asFinal regulations
implementing the new financial privacy regulations become effective during 2001.
Similar to most other consumer-oriented laws, the regulations contain some
specific prohibitions and require timely disclosures of this date issued final regulations under the
GLB Act.certain information. The
Company doeshas devoted what it believes are sufficient resources to comply with
these new requirements. It is not believeanticipated that the GLB Act will have a
material adverse affect uponeffect on the operations or prospects of the Company and its
operations in the near term.subsidiaries. However, to the extent the GLB Act permits banks, securities firms
and insurance companies to affiliate, the financial services industry may
experience further
- 15 -
consolidation. This consolidation could result in a growing number of larger
financial institutions that offer a wider variety of financial services than the
Company currently offers and that can aggressively compete in the markets the
Company currently serves.
MONETARY POLICY AND ECONOMIC CONDITIONS
The earnings of banks and bank holding companies are affected by general
economic conditions and also by the fiscal and monetary policies of federal
regulatory agencies, including the Federal Reserve. Through open market
transactions, variations in the discount rate and the establishment of reserve
requirements, the Federal Reserve exerts considerable influence over the cost
and availability of funds obtainable for lending or investing.
The above monetary and fiscal policies and resulting changes in interest rates
have affected the operating results of all commercial banks in the past and are
expected to do so in the future. The Banks and their respective holding companiescompany
cannot fully predict the nature or the extent of any effects which fiscal or
monetary policies may have on their business and earnings.
SUPPLEMENTAL STATISTICAL DATA
Pages 3, 45 and 46 of the 19992000 Annual Report to Shareholders and Item 8 of this
Form 10-K contain supplemental statistical data as required by The Exchange Act
Industry Guide 3 which is incorporated intopart of Regulation S-K ofas promulgated by the Securities and
Exchange Acts.SEC. This
data should be read in conjunction with the Company's Consolidated Financial
Statements and notes thereto, and Management's Discussion and Analysis which are
contained in its 19992000 Annual Report to Shareholders filed herewith as Exhibit
13.1 and incorporated herein by reference.
- 1516 -
ITEM 2. PROPERTIES
The Company's executive offices are located in the main bank facility of Lake
Forest Bank. Lake Forest Bank has sixseven physical banking locations. Lake Forest
Bank's main bank facility is located at 727 N. Bank Lane, Lake Forest, Illinois,
and is a three story, 37,000 square foot brick building that includes a 15,200
square foot addition that was completed in May 1999. The Company's executive
offices and staff of the holding company, Lake Forest Bank and WAMC are located
on the second and third floors of the addition with first floor retail space
leased to unrelated third parties. Lake Forest Bank constructed a drive-in,
walk-up banking facility on land leased from the City of Lake Forest on the
corner of Bank Lane and Wisconsin Avenue in Lake Forest, approximately one block
north of the main banking facility. Lake Forest Bank also leases a 1,200 square
foot, a full service banking facility at 103 East Scranton Avenue in Lake Bluff,
Illinois; a 2,100 square foot, a full service banking facility on the west side
of Lake Forest, Illinois at 810 South Waukegan Road, and a drive-in and walk-up
banking facility at 911 S. Telegraph Road in the West Lake Forest Train Station.
Lake Forest Bank also maintains a small office facility at a retirement
community known as Lake Forest Place at 1100 Pembridge Drive in Lake Forest. In
early 2000, a temporary branch facility was opened in the Highwood-Fort Sheridan
area with final construction of a permanent building expected to be completed
later in 2000. Lake Forest Bank maintainsconstructed a new branch facility in Highwood, Illinois.
The Highwood branch includes a drive-thru facility. ATMs are located at each of
itsLake Forest Bank's locations except the 810 South Waukegan Road facility. Lake
Forest Bank has no offsite ATMs.
Hinsdale Bank currently has four physical banking locations, all of which are
owned. The main bank facility is a two story brick building located at 25 East
First Street in downtown Hinsdale, Illinois. The 1,000 square foot drive-in,
walk-up banking facility at 130 West Chestnut is approximately two blocks west
of the main banking facility. Hinsdale Bank also has full service branches in
Clarendon Hills and Western Springs. The buildings in Clarendon Hills and
Western Springs are partially used for bank purposes, with the remainder being
leased to unrelated parties. Hinsdale Bank maintains one ATM machine at each
location, with the exception of Clarendon Hills, which has two. In addition,
Hinsdale has a separate, stand-alone, ATM drive-thru facility in Clarendon
Hills. Other than this stand-alone ATM drive-thru facility in Clarendon Hills,
Hinsdale Bank has no offsite ATMs.
North Shore Bank currently has seven physical banking locations. North Shore
Bank owns the main bank facility, a one storyone-story brick building that is located at
1145 Wilmette Avenue in downtown Wilmette, Illinois. North Shore Bank also owns
a 9,600 square foot drive-in, walk-up banking facility at 720 12th Street,
approximately one block west of the main banking facility. North Shore Bank also
leases a full service banking facility at 362 Park Avenue in Glencoe, Illinois
and a branch banking facility in Winnetka, Illinois where it leases
approximately 4,000 square feet. In 1998, North Shore Bank opened a drive-up and
ATM for the Glencoe branch and a small facility at 4th Street and Linden in
Wilmette. In 1999, a full service leased facility was opened in Skokie,
Illinois. North Shore Bank maintains ATMs at each of its locations, except
Winnetka, and has notwo offsite ATMs.ATMs located in Glencoe and Skokie.
- 1617 -
Libertyville Bank currently has threefive physical banking locations. Libertyville
Bank owns the main bank facility, which is a 13,000 square foot two story brick
building located at 507 North Milwaukee Avenue in downtown Libertyville,
Illinois. Libertyville Bank also owns a 2,500 square foot drive-in, walk-up
banking facility at 201 Hurlburt Court, approximately five blocks southeast of
the main banking facility. A leased branch facility located at 1167 South
Milwaukee Avenue in south Libertyville was opened in October 1998. In 2000,
Libertyville Bank opened two facilities in Wauconda -- a full service branch
located at 495 Liberty Street and a drive-thru facility at 1180 Dato Lane. The
branch at 495 Liberty Street is a temporary facility; a permanent facility on
the same location is under construction and expected to be completed in 2001.
Libertyville Bank maintains ATMs at each of its banking locations and at one
offsite location.
Barrington Bank currently has one physical banking location at 201 South Hough
Street in Barrington, Illinois which is a 12,700 square foot, two story frame
construction building that has an attached drive-through facility. Barrington
Bank has two ATMs, but no offsite ATMs.
In September 1998, Crystal Lake Bank moved into its permanent two story,has three physical banking locations as of December 31, 2000.
Crystal Lake Bank's main banking office is a two-story, 12,000 square foot main bank
facility located at 70 Williams Street in downtown Crystal Lake, Illinois.
In March 1999, Crystal Lake Bank openedalso has a drive-up facility that is located in the downtown
area, near the main bank facility. In September 1999,
Crystal Lake Bank openedfacility and a full service owned facility located at
1000 McHenry Avenue in south Crystal Lake. Crystal Lake Bank maintains an ATM at
each location. In early 2001, Crystal Lake Bank opened a branch office in
McHenry, Illinois.
In November 2000, Northbrook Bank opened for business in a temporary leased
facility located at 1340 Shermer Road in Northbrook, Illinois. Construction of
its permanent facility, located at the corner of Shermer and Wuakegan Roads, is
expected to be completed by year-end 2001. Northbrook Bank has one ATM at its
temporary facility.
FIFC's offices are located at 520 Lake Cook Road,450 Skokie Boulevard, Suite 300, Deerfield,1000, Northbrook,
Illinois. FIFC leasespurchased the property in late 1999 and moved into it in 2000.
The building provides approximately 12,00016,000 square feet of office space, under a
contract that expires in the year 2000. In mid-2000, FIFC will relocate to a
facility in Northbrook that was purchased in late 1999.which is
used solely by FIFC.
WAMC's executive and operations staff are based in office space leased from Lake
Forest Bank. WAMC also leases office space for its trust professionals at Lake
Forest Bank, Hinsdale Bank, North Shore Bank and Barrington Bank.
Tricom leases approximately 10,700 square feet of office space in Milwaukee,
Wisconsin at 11270 West Park Place, Suite 100.
See Note 6 to the Consolidated Financial Statements contained in the 19992000 Annual
Report to Shareholders filed herewith as Exhibit 13.1 and incorporated herein by
reference.
- 1718 -
ITEM 3. LEGAL PROCEEDINGS
The Company and its subsidiaries, from time to time, are subject to pending and
threatened legal action and proceedings arising in the ordinary course of
business. Any such litigation currently pending against the Company or its
subsidiaries is incidental to the Company's business and, based on information
currently available to management, management believes the outcome of such
actions or proceedings will not have a material adverse effect on the operations
or financial position of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of 1999.2000.
PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded on The Nasdaq Stock Market(R) under the
symbol WTFC. The following table sets forth the high and low sales prices
reported on Nasdaq for the Common Stock during 19992000 and 1998.1999.
2000 1999 1998
---- ----
HIGH LOW HIGH LOW
---- --- ---- ---
Fourth quarter $ 17.00 15.38 18.19 14.69
20.13 16.50
Third quarter 17.81 15.25 19.12 16.19
23.00 17.13
Second quarter 16.25 13.75 26.75 17.50
20.38 17.38
First quarter 16.00 13.38 20.25 15.50 18.50 16.50
APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS
- ---------------------------------------------
As of February 29, 200028, 2001 there were 1,4731,336 shareholders of record of the Company's
common stock.
- 1819 -
DIVIDENDS ON COMMON STOCK
- -------------------------
In January 2000, the Company's Board of Directors approved the first semi-annual
cash dividend on its common stock. The dividend in the amount of $0.05 per share
was paid on February 24, 2000 to shareholders of record as of February 10, 2000.
In July 2000, the second semi-annual dividend for the same amount was declared.
The $0.05 per share amount was paid on August 24, 2000 to shareholders of record
as of August 10, 2000. In January 2001, the Company's Board of Directors
approved a 40% increase in its semi-annual dividend to $0.07 per share. The
dividend was paid on February 22, 2001 to shareholders of record as of February
8, 2001.
The declaration of dividends is at the discretion of the Company's Board of
Directors and depends upon earnings, capital requirements, regulatory
limitations, tax considerations, the operating and financial condition of the
Company and other factors. Additionally, the payment of dividends may be
restricted under certain terms of the Company's Trust Preferred Securities
offering.offerings and under certain financial covenants in the Company's revolving line
of credit.
Because the Company's consolidated net income consists largely of net income of
the Banks, FIFC and Tricom, the Company's ability to pay dividends depends upon
its receipt of dividends from these entities. The Banks' ability to pay
dividends is regulated by banking statutes. See "Financial Institution
Regulation Generally - Dividend Limitations"Dividends" on page 1012 of this Form 10-K. During 2000, the
Banks paid $16 million in dividends to the Company. During 1999 no dividends
were paid by the Banks and during 1998, Lake Forest Bank paid $8.25 million of
dividends to the Company. There were noDe novo banks are prohibited from paying dividends
paid by the Banks to the Company during either 1999 or
1997. In addition, Crystal Lake Bank is subject to additional restrictions
prohibiting the payment of dividends by a de novo bank in itstheir first three years of operations. TheAs of January 1, 2001, Northbrook
Bank, which began operations in November 2000, is the only bank currently
subject to this additional dividend restriction. Its de novo period will end in
December 2000 for Crystal Lake
Bank. In addition, the payment of dividends may be restricted under certain
financial covenants in the Company's revolving line of credit.November 2003.
Reference is made to Note 14 to the Consolidated Financial Statements contained
in the 19992000 Annual Report to Shareholders, attached hereto as Exhibit 13.1,
which is incorporated herein by reference, for a description of the restrictions
on the ability of certain subsidiaries to transfer funds to the Company in the
form of dividends.
RECENT SALES OF UNREGISTERED SECURITIES
- ---------------------------------------
In Hinsdale Bank's acquisitionThe Company had no sales of 100% of the stock of Tricom, completed
effective as of October 1, 1999, the Company issued 227,635 shares of Common
Stock as part of the purchase price to the two individual selling shareholders.
Such shares were issued and sold without registration in reliance on the
exemption provided by Section 4(2) of the Securities Act of 1933.
On November 17, 1999, the Company sold 352,942 shares of Common Stock for $6
million in cash directly to two institutional investors in a private placement
transaction exempt from registration pursuant to Section 4(2).unregistered securities during 2000.
ITEM 6. SELECTED FINANCIAL DATA
Certain information required in response to this item is contained in the 19992000
Annual Report to Shareholders under the caption "Selected Financial Highlights"
and is incorporated herein by reference.
The Company had no cash dividends
declared during any period during the last five years. The Company had no
Preferred Stock outstanding at December 31, 1999, 1998, 1997 or 1996.
Predecessors of the Company did have $503,000 of Preferred Stock outstanding at
December 31, 1995.
- 1920 -
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information required in response to this item is contained in the 19992000
Annual Report to Shareholders under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations". This discussion and
analysis of financial condition and results of operations should be read in
conjunction with the Consolidated Financial Statements and notes thereto
contained in the 19992000 Annual Report to Shareholders.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Certain information required in response to this item is contained in the 19992000
Annual Report to Shareholders under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Asset-Liability
Management" and in Notes 15 and 16 to the Consolidated Financial Statements,
which are incorporated herein by reference. This information should be read in
conjunction with the complete Consolidated Financial Statements and notes
thereto contained in the 19992000 Annual Report to Shareholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required in response to this item is contained in the 19992000
Annual Report to Shareholders under the caption "Consolidated Financial
Statements," and is incorporated herein by reference. Also, refer to Item 14 of
this Report for the Index to Financial Statements.
SUPPLEMENTAL STATISTICAL DATA
- -----------------------------
SECURITIES PORTFOLIO
The following table presents the carrying value of the Company's investment
portfolio, by investment category, as of December 31, 2000, 1999 and 1998:
2000 1999 1998
---------------------------------------------------------------------------------
Held-to-maturity:
U.S. Treasury obligations $ -- -- 5,000
---------------------------------------------------------------------------------
Available-for-sale:
U.S. Treasury obligations $ 29,987 39,171 5,664
Federal agency obligations 61,871 70,184 54,690
Municipal securities 5,142 4,038 504
Corporate notes and other 29,197 39,025 142,102
Mortgage-backed securities 54,274 46,124 -
Federal Agency Bank stock 12,634 7,253 6,159
---------------------------------------------------------------------------------
Total available-for-sale securities 193,105 205,795 209,119
---------------------------------------------------------------------------------
Total securities $ 193,105 205,795 214,119
=================================================================================
- 21 -
Tables presenting the carrying amounts and gross unrealized gains and losses for
securities held-to-maturity and available-for-sale at December 31, 19992000 and 19981999 are included by
reference to Note 2 to the Consolidated Financial Statements included in the
19992000 Annual Report to Shareholders, which is incorporated herein by reference.
At December 31, 2000 and 1999, there were no held-to-maturity securities.
Maturities of securities as of December 31, 19992000 by maturity distribution are as
follows (in thousands):
Mortgage-Mortgage Federal
Within From 1 From 5 to After backed Agency
1 Year to 5 years 10 years 10 years securities Bank stock Total
-------- ---------- -------- -------- ---------- ---------- ---------------------------------------------------------------------------------------------
U.S. Treasury obligations $ 1,242 37,929 - - - - 39,171-- 29,987 -- -- -- -- 29,987
Federal agency obligations 40,711 24,597 4,876 - - - 70,18451,465 9,910 496 -- -- -- 61,871
Municipal securities 498 1,545 - 1,995 - - 4,038830 1,137 3,175 -- -- -- 5,142
Corporate notes and other 23,390 4,015 1,028 10,592 - - 39,025(1) 6,097 10,082 1,036 11,982 -- -- 29,197
Mortgage-backed securities (1) - - - - 46,124 - 46,124(2) -- -- -- -- 54,274 -- 54,274
Federal Agency Bank stock (2) - - - - - 7,253 7,253
-------- ---------- -------- -------- ---------- ---------- --------(3) -- -- -- -- -- 12,634 12,634
-------------------------------------------------------------------------------------
Total $ 65,841 68,086 5,904 12,587 46,124 7,253 205,795
======== ========== ======== ======== ========== ========== ========58,392 51,116 4,707 11,982 54,274 12,634 193,105
=====================================================================================
- 20 -
The weighted average yield for each range of maturities of securities, on a tax
equivalent basis, is shown below as of December 31, 1999:2000:
Mortgage-Mortgage Federal
Within From 1 From 5 to After backed Agency
1 Year to 5 years 10 years 10 years securities Bank stock Total
-------- ---------- -------- -------- ---------- ---------- ---------------------------------------------------------------------------------------------
U.S. Treasury obligations 5.13% 5.28% - - - - 5.28%-- 5.20% -- -- -- -- 5.20%
Federal agency obligations 5.45% 6.06% 5.59% - - - 5.67%6.70% 5.90% 6.29% -- -- -- 6.57%
Municipal securities 5.80% 6.54% - 8.25% - - 7.29%6.77% 6.56% 7.74% -- -- -- 7.31%
Corporate notes and other 5.16% 7.03%(1) 2.95% 6.81% 6.61% 7.21% - - 5.98%7.66% -- -- 6.38%
Mortgage-backed securities (1) - - - - 7.38% - 7.38%(2) -- -- -- -- 7.16% -- 7.16%
Federal Agency Bank stock (2) - - - - - 6.85% 6.85%
-------- ---------- -------- -------- ---------- ---------- --------(3) -- -- -- -- -- 6.54% 6.54%
-------------------------------------------------------------------------------------
Total 5.34%6.31% 5.69% 5.77% 7.37% 7.38% 6.85% 6.11%
======== ========== ======== ======== ========== ========== ========7.33% 7.66% 7.16% 6.54% 6.51%
=====================================================================================
(1) Equity securities are reflected in the above tables as having maturities
within one year and no yield.
(2) Mortgage-backed security maturities may differ from contractual maturities
because the underlying mortgages may be called or prepaid without any
penalties. Therefore, these securities are not included within the maturity
categories above.
(2)(3) Includes stock of the Federal Reserve Bank and of the Federal Home Loan
Bank.
- 22 -
LOAN PORTFOLIO
The following table shows the Company's loan portfolio by category for the five
previous fiscal years (in thousands):
At December 31 2000 1999 1998 1997 1996
1995
- ----------- ---- ---- ---- ---- ------------------------------------------------- ----------------------------------------------------------------------------
Commercial/Commercial and commercial real estate $ 647,947 485,776 366,229 235,483 182,403
101,271
Home equity 179,168 139,194 111,537 116,147 87,303
54,592
Residential real estate 141,919 111,026 91,525 61,611 51,673
37,074
Premium finance receivables 321,711 225,239 183,165 131,952 59,240
15,703
Indirect auto 203,572 255,434 210,137 139,296 91,211
37,323
Tricom finance receivables 20,354 17,577 - - - --- -- --
Installment and other 51,995 49,925 34,650 32,153 23,717
14,032
---------------- ------------ ----------- ------------ ---------------------------------------------------------------------------------------------
Total loans 1,566,666 1,284,171 997,243 716,642 495,547
259,995
Less: Unearned income 8,646 5,922 5,181 4,011 2,999
1,764
---------------- ------------ ----------- ------------ ---------------------------------------------------------------------------------------------
Total loans, net of
unearned income $1,278,249$1,558,020 1,278,249 992,062 712,631 492,548
258,231
================ ============ =========== ============ =============================================================================================
Commercial and commercial real estate loans. The commercial loan component is
comprised primarily of commercial real estate loans, lines of credit for working
capital purposes, and term loans for the acquisition of equipment. This category
also includes certain commercial equipment leases. Commercial real estate is
predominantly owner occupied and secured by a first mortgage lien and assignment
of rents on the property. Equipment loans and leases are generally fully
amortized over 24 to 60 months and secured by titles and/or U.C.C. filings.
Working capital lines are generally renewable annually and supported by business
assets, personal guarantees and,
- 21 -
oftentimes, additional collateral. Commercial
business lending is generally considered to involve a higher degree of risk than
traditional consumer bank lending. The vast majority of commercial loans are
made within the Banks' immediate market areas. The increase in this loan
category can be attributed to additional banking facilities, an emphasis on
business development calling programs and superior servicing of existing
commercial loan customers which has increased referrals.
In addition to the home mortgages originated by the Banks, the Company
participates in mortgage warehouse lending by providing interim funding to
unaffiliated mortgage brokers to finance residential mortgages originated by
such brokers for sale into the secondary market. The Company's loans to the
mortgage brokers are secured by the business assets of the mortgage companies as
well as the underlying mortgages, the majority of which are funded by the
Company on a loan-by-loan basis after they have been pre-approved for purchase
by third party end lenders who forward payment directly to the Company upon
their acceptance of final loan documentation. In addition, the Company may also
provide interim financing for packages of mortgage loans on a bulk basis in
circumstances where the mortgage brokers desire to competitively bid a number of
mortgages for sale as a package in the secondary market. Typically, the Company
will serve as sole funding source for its mortgage warehouse lending customers
under short-term revolving credit agreements. Amounts advanced with respect to
any particular mortgages are usually
- 23 -
required to be repaid within 15 days. The Company has developed strong
relationships with a number of mortgage brokers and is seeking to expand its
customer base for this specialty business.
The following table classifies the commercial loan portfolio category at
December 31, 19992000 by date at which the loans mature:
FROM ONE
ONE YEAR TO FIVE AFTER
OR LESS YEARS FIVE YEARS TOTAL
------------ ------------ ------------ ------------
(IN THOUSANDS)From one
One year to five After
or less years five years Total
------- ----- ---------- -----
(in thousands)
Commercial loans and commercial real
estate loans........................... $ 208,062 225,074 52,640 485,776307,170 281,149 59,628 647,947
Premium finance receivables, net of
unearned income........................ 219,341 - - 219,341313,065 -- -- 313,065
Tricom finance receivables............... 17,577 - - 17,57720,354 -- -- 20,354
Of those loans maturing after one year, approximately $228.5$269.3 million have fixed
rates.
Home equity loans. The Company's home equity loan products are generally
structured as lines of credit secured by first or second position mortgage liens
on the underlying property with loan-to-value ratios not exceeding 80%,
including prior liens, if any. The Banks' home equity loans feature competitive
rate structures and fee arrangements. In addition, the Banks periodically offer
promotional home equity loan products as part of their marketing strategy often
featuring lower introductory rates.
- 22 -
Indirect auto loans. As part of its strategy to pursue specialized earning asset
niches to augment loan generation within the Banks' target markets, the Company
finances fixed rate automobile loans funded indirectly through unaffiliated
automobile dealers. As of December 31, 1999,2000, indirect auto loans comprised
approximately 84%80% of the Company's consumer loan portfolio. Indirect automobile
loans are secured by new and used automobiles and are generated by a large
network of automobile dealers located in the Chicago area with which the Company
has established relationships. These credits generally have an average initial
balance of approximately $15,000 and have an original maturity of 36 to 60
months with the average actual maturity, as a result of prepayments, estimated
to be approximately 35-40 months. The Company does not currently originate any
significant level of sub-prime loans, which are made to individuals with
impaired credit histories at generally higher interest rates, and accordingly,
with higher levels of credit risk. The risk associated with this portfolio is
diversified among many individual borrowers. Management continually monitors the
dealer relationships and the Banks are not dependent on any one dealer as a
source of such loans. Like other consumer loans, the indirect auto loans are
subject to the Banks' stringent credit standards.
Residential real estate mortgages. The residential real estate category
predominantly includes one-to-four family adjustable rate mortgages that have
repricing terms generally from one to three years, construction loans to
individuals, bridge financing loans for qualifying customers and mortgage loans
held for sale into the secondary market. The adjustable rate mortgages are often
non-agency conforming, may have terms based on differing indexes, and relate to
properties located principally in the Chicago metropolitan area or vacation
homes owned by local residents. Adjustable-rate mortgage loans decrease, but do
not eliminate, the risks associated with changes in interest rates.
- 24 -
Because periodic and lifetime caps limit the interest rate adjustments, the
value of adjustable-rate mortgage loans fluctuates inversely with changes in
interest rates. In addition, as interest rates increase, the required payments
by the borrower increases, thus increasing the potential for default. The
Company does not generally originate loans for its own portfolio with long-term
fixed rates due to interest rate risk considerations, however, the Banks do
accommodate customer requests for fixed rate loans by originating and selling
these loans into the secondary market, in connection with which the Company
receives fee income, or by selectively including certain of these loans within
the Banks' own portfolios. A portion of the loans sold by the Banks into the
secondary market is to the Federal National Mortgage Association ("FNMA")
whereby the servicing of those loans is retained. The amount of loans serviced
for FNMA as of December 31, 2000 and 1999 and 1998 was $87.1$97.2 million and $82.1$87.1 million,
respectively. All other mortgage loans held for sale are sold into the secondary
market without the retention of servicing rights.
Premium finance receivables. The Company originates premium finance receivables
through FIFC. Most of the receivables originated by FIFC which, in turn, are mostly sold to the Banks
and retained within their loan portfolios. In 1999,However, due to FIFC's loan
origination volume exceeding the Companycapacity within the Banks' loan portfolios,
FIFC began selling a portionloans to an unrelated third party in 1999. During 2000, FIFC
originated approximately $1.1 billion of premium
finance receivable originationsloans and sold approximately $225
million of those loans originated in 2000 to an unrelated financial institution, which
resulted ininstitution.
FIFC recognized gains of $3.8 million on the recognitionsale of gains from the sales of these receivables. FIFC
sold approximately $69 million of receivables to this third party in 1999 and
recognized approximately $1.0 million in gains.those loans. As of December
31, 2000 and 1999, the balance of these receivables that are being serviced by FIFC services for
others totaled approximately $93.4 million and $46.2 million.million, respectively. All
premium finance receivables are subject to the Company's stringent credit
standards, and substantially all such loans are made to commercial customers.
The Company rarely finances consumer insurance premiums.
- 23 -
FIFC generally offers financing of approximately 80% of an insurance premium
primarily to commercial purchasers of property and casualty and liability
insurance who desire to pay insurance premiums on an installment basis. FIFC
markets its financial services primarily by establishing and maintaining
relationships with medium and large insurance agents and brokers and by offering
a high degree of service and innovative products. Senior management is
significantly involved in FIFC's marketing efforts, currently focused almost
exclusively on commercial accounts. Loans are originated by FIFC's own sales
force by working with insurance agents and brokers throughout the United States.
As of December 31, 1999,2000, FIFC had the necessary licensing and other regulatory
approvals to do business in all 50 states and the District of Columbia.
In financing insurance premiums, the Company does not assume the risk of loss
normally borne by insurance carriers. Typically, the insured buys an insurance
policy from an independent insurance agent or broker who offers financing
through FIFC. The insured typically makes a down payment of approximately 15% to
25% of the total premium and signs a premium finance agreement for the balance
due, which amount FIFC disburses directly to the insurance carrier or its agents
to satisfy the unpaid premium amount. The average initial balance of premium
finance loans is approximately $13,000 and the average term of the agreements is
approximately 10 months. As the insurer earns the premium ratably over the life
of the policy, the unearned portion of the premium secures payment of the
balance due to FIFC by the insured. Under the terms of the Company's standard
form of financing contract, the Company has the power to cancel the insurance
policy if there is a default in the payment on the finance contract and to
collect the unearned portion of the premium from the insurance carrier. In the
event of cancellation of a policy, the cash returned in payment of the
- 25 -
unearned premium by the insurer should be sufficient to cover the loan balance
and generally the interest and other charges due as well. The major risks
inherent in this type of lending are (1) the risk of fraud on the part of an
insurance agent whereby the agent fraudulently fails to forward funds to the
insurance carrier or to FIFC, as the case may be; (2) the risk that the
insurance carrier becomes insolvent and is unable to return unearned premiums
related to loans in default; (3) for policies that are subject to an audit by
the insurance carrier (i.e. workers compensation policies where the insurance
carrier can audit the insured actual payroll records), the risk that the initial
underwriting of the policy was such that the premium paid by the insured are not
sufficient to cover the a entire return premium in the event of default; and (4)
that the borrower is unable to ultimately satisfy the debt in the event the
returned unearned premium is insufficient to retire the loan. FIFC has
established underwriting procedures to reduce the potential of loss associated
with the aforementioned risks and has systems in place to continually monitor
conditions that would indicate an increase in risk factors and to act on
situations where the Company's collateral position is in jeopardy.
Tricom finance receivables. The October 1999 acquisition of Tricom added this
category, which consists offinance receivables represent high-yielding
short-term accounts receivable financing to clients in the temporary staffing
industry located throughout the United States. The clients' working capital
needs arise primarily from the timing differences between weekly payroll funding
and monthly collections from customers. The primary security for Tricom's
finance receivables are the accounts receivable of its clients and personal
guarantees. Tricom generally advances 80-95% based on various factors including
the client's financial condition, the length of client relationship and the
nature of the client's customer business lines. Typically, Tricom will also
provide value-added out-sourced administrative services to many of these
clients, such as data processing of payrolls, billing and cash management
services, which generates additional fee income.
- 24 -
Installment and Other. Included in the installment and other loan category is a
wide variety of personal and consumer loans to individuals. The Banks have been
originating consumer loans in recent years in order to provide a wider range of
financial services to their customers. Consumer loans generally have shorter
terms and higher interest rates than mortgage loans but generally involve more
credit risk than mortgage loans due to the type and nature of the collateral.
The Company had no loans to businesses or governments of foreign countries at
any time during the reporting periods.
RISK ELEMENTS IN THE LOAN PORTFOLIO
For analysis and review of the allowance for possible loan losses; non-accrual,
past due and restructured loans; other real estate owned; potential problem
loans; and loan concentrations, reference is made to the "Credit Risk and Asset
Quality" section of the Management's Discussion and Analysis of Financial
Condition and Results of Operations of the 19992000 Annual Report to Shareholders
filed herewith as Exhibit 13.1, and incorporated herein by reference.
An- 26 -
The following table sets forth the allocation of the allowance for possible loan
losses by major loan type is
presented belowand the percentage of loans in each category to total
loans (dollars in thousands):
December 31,2000 1999 December 31, 1998 December 31, 1997 ------------------------------- ----------------------------- ---------------------------------
% of loans % of loans % of loans
in each in each in each
category to category to category to1996
---- ---- ---- ---- ----
AMOUNT PERCENT Amount total loansPercent Amount total loansPercent Amount total loans
------------ ------------ ------------ ------------ ------------ ------------Percent Amount Percent
--------------- --------------- ---------------- --------------- ----------------
Commercial and
commercial real estate..........estate $ 4,019 42% $ 3,435 38% $ 2,480 37% $1,490 33% $ 996 37%
Home equity.......................equity 992 12 1,146 11 1,046 11 580 16 402 18
Residential real estate...........estate 141 9 126 9 81 9 43 9 34 10
Premium finance...................finance 1,209 20 721 17 919 18 702 18 288 12
Indirect auto.....................auto 1,552 13 1,947 20 1,205 21 679 19 432 18
Tricom finance receivables.receivables 120 1 - - - -120 1 -- -- -- -- -- --
Installment and other.............other 473 3 469 4 494 4 218 5 Unallocated.......................128 5
Unallocated 1,927 -- 819 --- 809 --- 1,404 -
------------ ------------ ------------ ------------ ------------ ------------
Total..............................-- 1,356 --
--------------- --------------- ---------------- --------------- ----------------
Totals $10,433 100 $ 8,783 100%100 $ 7,034 100% $5,116 100%
============ ============ ============ ============ ============ ============100 $ 5,116 100 $ 3,636 100
=============== =============== ================ =============== ================
The above allocation is made for analytical purposes. Itinternal analysis of the allowance and is not
an indication of expected or anticipated that
charge-offs during the year ending December 31, 2000 will exceed the amount
allocated to any individual category of loan.losses. For further review of the loan
loss provision and the allowance for possible loan losses reference is made to
the "Credit Risk and Asset Quality" section of the Management's Discussion and
Analysis of Financial Condition and Results of Operations of the 19992000 Annual
Report to Shareholders filed herewith as Exhibit 13.1, and incorporated herein
by reference.
- 25 -
DEPOSITSDeposits
The following table sets forth the scheduled maturities of time deposits in
denominations of $100,000 or more at December 31, 19992000 (in thousands):
Maturing within 3 months ...............................months................... $ 113,393138,260
After 3 but within 6 months ............................ 84,991months................ 122,520
After 6 but within 12 months ........................... 161,706months............... 234,156
After 12 months ........................................ 72,892
---------------
Total ................................................months............................ 69,811
-----------
Total................................... $ 432,982
===============
Return on Equity564,747
===========
At December 31, 2000, the scheduled maturities of all time deposits are as
follows (in thousands):
2001....................................... $ 912,542
2002....................................... 120,095
2003....................................... 22,021
2004....................................... 13,195
2005 and Assetsthereafter........................ 9,275
-----------
Total...................................... $1,077,128
===========
- 27 -
RETURN ON EQUITY AND ASSETS
The following table presents certain ratios relating to the Company's equity and
assets:
Year Ended December 31 2000 1999 1998 1997
- ---------------------- ---- ---- ----
Return on average total assets .................................assets.................................. 0.60% 0.63% 0.53% 0.56%
Return on average common shareholders' equity ..................equity... ............... 11.51% 11.58% 8.68%
7.88%
Dividend payout ratio .......................................... 0.00%ratio........................................... 8.00% 0.00% 0.00%
Average equity to average total assets .........................assets.......................... 5.2% 5.4% 6.1% 7.2%
Ending total risk based capital ratio ..........................ratio........................... 8.4% 8.4% 9.7%
9.4%
Leverage ratio .................................................ratio.................................................. 6.3% 7.1% 7.5% 6.6%
SHORT-TERM BORROWINGS
The information required in connection with Short-Term Borrowings is contained
in the "Analysis of Financial Condition - Short-Term Borrowings and Notes
Payable" sections of the Management's Discussion and Analysis of Financial
Condition and Results of Operations in the 19992000 Annual Report to Shareholders
filed herewith as Exhibit 13.1, and is incorporated herein by reference. During
1999,2000, the Company entered into sales ofparticipated in overnight and term security repurchase
agreements. The overnight agreements represent sweep accounts in connection with
a master repurchase agreement. In this case, securities under the Company's
control are pledged for and interest is paid on the available balance of the
customers' accounts. For term repurchase agreements, securities are transferred
to repurchase ("reverse repurchase agreements"). Fixed-coupon reversethe applicable counterparty. Securities underlying the overnight and term
repurchase agreements are treated a financings, and the obligations to repurchase
securities sold are reflected as short-term borrowings in the Company's 1999
Annual Report to Shareholders under the caption "Consolidated Statements of
Condition". The dollar amounts of securities underlying the agreements remainincluded in the available-for-sale securities
section ofportfolio as reflected on the Consolidated Statements of Condition. During 1999,2000,
the maximum month-end balance and weighted average interest rate of reversetotal
repurchase agreements was $82.4 million.$72.3 million and 5.54%, respectively. At December 31,
1999,2000, securities sold under agreements to repurchase consisted of U.S.
government agency mortgage-backed securities.
These securities underlying the agreements were delivered to the
dealer who arranged the transactions. The agreements require the Company to
repurchase the same securities.
- 2628 -
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
At its regular board meeting on April 29, 1999, the Company's Board of Directors
voted to approve the Audit Committee's recommendation to engage the accounting
firm of Ernst & Young LLP as independent accountants for the year ended December
31, 1999. The work of KPMG LLP was terminated on April 29, 1999, subsequent to
the Form 10-K report for December 31, 1998, which was filed with the Securities
and Exchange Commission on March 30, 1999. During the audits of the two fiscal
years ended December 31, 1998 and the subsequent interim period through April
29, 1999, there were no disagreements with KPMG LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures, which disagreements if not resolved to their satisfaction would have
caused them to make reference in connection with their opinion to the subject
matter of the disagreement, nor have there been any reportable events. The
information required in response to this item is contained in the April 29, 1999
Form 8-K that was filed with the Commission on May 6, 1999, and is incorporated
herein by reference.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required in response to this item will be contained in the
Company's definitive Proxy Statement (the "Proxy Statement") for its Annual
Meeting of Shareholders to be held May 25, 200024, 2001 under the caption "Management"captions "Nominees to
Serve as Class II Directors Until the Annual Meeting of Shareholders in Year
2004", "Class I - Continuing Directors Serving Until the Year 2003", "Class III
- - Continuing Directors Serving Until the Year 2002", and "Executive Officers of
the Company" and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required in response to this item will be contained in the
Company's Proxy Statement under the caption "Executive Compensation" and is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information with respect to security ownership of certain beneficial owners and
management is incorporated by reference to the section "Principal Shareholders""Security Ownership of
Certain Beneficial Owners and Management" that will be included in the Proxy
Statement for the Annual Meeting of Shareholders to be held on May 25, 2000.24, 2001.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required in response to this item will be contained in the Proxy
Statement under the caption "Certain Transactions,"sub-caption "Transactions with Management and Others" and is
incorporated herein by reference.
- 2729 -
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) Documents filed as part of this Report:
1., 2. Financial Statements and Schedules
----------------------------------
The following financial statements of Wintrust Financial Corporation,
incorporated herein by reference to the 19992000 Annual Report to
Shareholders filed as Exhibit 13.1, are filed as part of this document
pursuant to Item 8. Financial Statements and Supplementary Data:
- Consolidated Statements of Condition as of December 31, 19992000 and 1998
-1999
Consolidated Statements of Income for the Years Ended December 31,
2000, 1999 1998 and 1997
-1998
Consolidated Statements of Changes in Shareholders' Equity for the
Years Ended December 31, 2000, 1999 1998 and 1997
-1998
Consolidated Statements of Cash Flows for the Years Ended December 31,
2000, 1999 1998 and 1997
-1998
Notes to Consolidated Financial Statements
-
Independent Auditors' Reports
No schedules are required to be filed with this report.
3. Exhibits (Exhibits marked with a "*" denote management contracts or
--------
compensatory plans or arrangements)
2.1 Stock Purchase Agreement Among Wintrust Financial Corporation and John
Leopold and Mark Kahn dated September 16, 1999 in relation to the
acquisition of Tricom, Inc. of Milwaukee (incorporated by reference to
Exhibit 2.1 of the Company's October 26, 1999 Form 8-K filed with the
Securities and Exchange Commission on November 1, 1999).
2.2 Post-Closing Indemnification and Escrow Agreement in relation to the
acquisition of Tricom, Inc. of Milwaukee (incorporated by reference to
Exhibit 2.2 of the Company's October 26, 1999 Form 8-K filed with the
Securities and Exchange Commission on November 1, 1999).
3.1 Amended and Restated Articles of Incorporation of Wintrust
Financial Corporation (incorporated by reference to Exhibit
3.1 of the Company's Form S-1 Registration Statement (No
333-18699) filed with the Securities and Exchange Commission
on December 24, 1996).
3.2 Statement of Resolution Establishing Series of Junior Serial
Preferred Stock A of Wintrust Financial Corporation
(incorporated by reference to Exhibit 3.2 of the Company's
Form 10-K for the year ended December 31, 1998).
- 28 -
3.3 Amended By-laws of Wintrust Financial Corporation
(incorporated by reference to Exhibit 3(i) of the Company's
Form 10-Q for the quarter ended June 30, 1998).
4.1 Rights Agreement between Wintrust Financial Corporation and
Illinois Stock Transfer Company, as Rights Agent, dated July
28, 1998 (incorporated by reference to Exhibit 4.1 of the
Company's Form 8-A Registration Statement (No. 000-21923)
filed with the Securities and Exchange Commission on August
28, 1998).
- 30 -
4.2 Preferred Securities Guarantee Agreement by and between Wintrust
FinancialCertain instruments defining the rights of the holders of
long-term debt of the Corporation and Wilmington Trust Company dated September 29,
1998, relatingcertain of its
subsidiaries, none of which authorize a total amount of
indebtedness in excess of 10% of the total assets of the
Corporation and its subsidiaries on a consolidted basis, have
not been filed as Exhibits. The Corporation hereby agrees to
furnish a copy of any of these agreements to the 9.00% Cumulative Trust Preferred Securities of
Wintrust Capital Trust I (incorporated by reference to Exhibit 4.2 of
the Company's Form 10-K for the year ended December 31, 1998).
4.3 Indenture by and between Wintrust Financial Corporation and Wilmington
Trust Company dated September 29, 1998, relating to the 9.00%
Subordinated Debentures issued to Wintrust Capital Trust I (incorporated
by reference to Exhibit 4.3 of the Company's Form 10-K for the year
ended December 31, 1998).
4.4 Amended and Restated Trust Agreement by and among Wintrust Financial
Corporation, Wilmington Trust Company and the Administrative Trustees
named therein dated September 29, 1998, relating to the 9.00% Cumulative
Trust Preferred Securities of Wintrust Capital Trust I (incorporated by
reference to Exhibit 4.4 of the Company's Form 10-K for the year ended
December 31, 1998).
4.5 Form of Preferred Security Certificate of Wintrust Capital Trust I
(included as an exhibit to Exhibit 4.4).
4.6 Form of Subordinated Debenture (included as an exhibit to Exhibit 4.3).Commission
upon request.
10.1 $25 Million Revolving Loan Agreement between LaSalle National
Bank and Wintrust Financial Corporation, dated September 1,
1996 (incorporated by reference to Exhibit 10.1 of the
Company's Form S-1 Registration Statement (No. 333-18699)
filed with the Securities and Exchange Commission on December
24, 1996).
10.2 First Amendment to Loan Agreement between Wintrust Financial
Corporation and LaSalle National Bank, dated March 1, 1997
(incorporated by reference to Exhibit 10.29 to Registrant's
Form 10-K for the year ended December 31, 1996, filed with the
Securities and Exchange Commission on March 28, 1997).
10.3 Second Amendment to Loan Agreement between Wintrust Financial
Corporation and LaSalle National Bank, dated March 1, 1997
(incorporated by reference to Exhibit 10.3 of the Company's
Form 10-K for the year ended December 31, 1997, filed with the
Securities and Exchange Commission on March 31, 1998).
- 29 -
10.4 Third Amendment to Loan Agreement between Wintrust Financial
Corporation and LaSalle National Bank, dated September 1, 1998
(incorporated by reference to Exhibit 10 of the Company's Form
10-Q for the quarter ended September 30, 1998, filed with the
Securities and Exchange Commission on November 13, 1998).
10.5 Fourth Amendment to Loan Agreement between Wintrust Financial
Corporation and LaSalle Bank National Association, dated
September 1, 1999.1999 (incorporated by reference to Exhibit 10.5
of the Company's Form 10-K for the year ended December 31,
1999).
10.6 Fifth Amendment to Loan Agreement between Wintrust Financial
Corporation and LaSalle Bank National Association, dated
August 30, 2000.
10.7 Form of Wintrust Financial Corporation Warrant Agreement
(incorporated by reference to Exhibit 10.29 to Amendment No. 1
to Registrant's Form S-4 Registration Statement (No.
333-4645), filed with the Securities and Exchange Commission
on July 22, 1996).*
10.710.8 Lake Forest Bank & Trust Company Lease for drive-up facility
located at the corner of Bank Lane & Wisconsin Avenue, Lake
Forest, Illinois, dated December 11, 1992 (incorporated by
reference to Exhibit 10.6 to Amendment No. 1 to Registrant's
Form S-4 Registration Statement (No. 333-4645) filed with the
Securities and Exchange Commission on July 22, 1996).
10.8- 31 -
10.9 Lake Forest Bank & Trust Company Lease for banking facility
located at 810 South Waukegan Road, Lake Forest, Illinois
(incorporated by reference to Exhibit 10.6 to Amendment No. 1
to Registrant's Form S-4 Registration Statement (No. 333-4645)
filed with the Securities and Exchange Commission on July 22,
1996).
10.910.10 Lake Forest Bank & Trust Company Lease for banking facility
located at 666 North Western Avenue, Lake Forest, Illinois,
dated July 19, 1991 and Amendment (incorporated by reference
to Exhibit 10.6 to Amendment No. 1 to Registrant's Form S-4
Registration Statement (No. 333-4645) filed with the
Securities and Exchange Commission on July 22, 1996).
10.1010.11 Lake Forest Bank & Trust Company Lease for banking facility
located at 103 East Scranton Avenue, Lake Bluff, Illinois,
dated November 1, 1994 (incorporated by reference to Exhibit
10.6 to Amendment No. 1 to Registrant's Form S-4 Registration
Statement (No. 333-4645) filed with the Securities and
Exchange Commission on July 22, 1996).
10.1110.12 North Shore Bank & Trust Company Lease for banking facility
located at 362 Park Avenue, Glencoe, Illinois, dated July 27,
1995 (incorporated by reference to Exhibit 10.6 to Amendment
No. 1 to Registrant's Form S-4 Registration Statement (No.
333-4645) filed with the Securities and Exchange Commission on
July 22, 1996).
- 30 -
10.1210.13 North Shore Bank & Trust Company Lease for banking facility
located at 794 Oak Street, Winnetka, Illinois, dated June 16,
1995 (incorporated by reference to Exhibit 10.6 to Amendment
No. 1 to Registrant's Form S-4 Registration Statement (No.
333-4645) filed with the Securities and Exchange Commission on
July 22, 1996).
10.1310.14 Barrington Bank and Trust Company Lease for property located
at 202A South Cook Street, Barrington, Illinois, dated
December 29, 1995 (incorporated by reference to Exhibit 10.24
of the Company's Form S-1 Registration Statement (No
333-18699) filed with the Securities and Exchange Commission
on December 24, 1996).
10.1410.15 Real Estate Contract by and between Wolfhoya Investments, Inc.
and Amoco Oil Company, dated March 25, 1996, and amended as of
__________, 1996, relating to the purchase of property located
at 201 South Hough, Barrington, Illinois (incorporated by
reference to Exhibit 10.25 of the Company's Form S-1
Registration Statement (No 333-18699) filed with the
Securities and Exchange Commission on December 24, 1996).
10.15 Form of Employment Agreement entered into between the Company and Howard
D. Adams, former Chairman and Chief Executive Officer (incorporated by
reference to Exhibit 10.26 of the Company's Form S-1 Registration
Statement (No. 333-18699) filed with the Securities and Exchange
Commission on December 24, 1996). *
10.16 Form of Employment Agreement (entered into between the Company and
Edward J. Wehmer, President and Chief Executive Officer). The Company
entered into Employment Agreements with David A. Dykstra, Executive Vice
President and Chief Financial Officer, Robert F. Key, Executive Vice
President-Marketing, Lloyd M. Bowden, Executive Vice
President-Technology and Randolph M. Hibben, Executive Vice
President-Investments during 1998 in substantially identical form to
this exhibit (incorporated by reference to Exhibit 10.15 of the
Company's Form 10-K for the year ended December 31, 1998). *
10.17 First Premium Services, Inc. Lease, as amended, for corporate offices
located at Lake Cook Road, Deerfield, Illinois (incorporated by
reference to Exhibit 10.27 to Amendment No. 1 of the Company's Form S-1
Registration Statement (No. 333-18699) filed with the Securities and
Exchange Commission on January 24, 1997).
10.18 Lake Forest Bank & Trust Company Lease for drive-up and
walk-up facility located at 911 South Telegraph Road, Lake
Forest, Illinois, dated November 7, 1996 (incorporated by
reference to Exhibit 10.28 to Amendment No. 1 of the Company's
Form S-1 Registration Statement (No. 333-18699) filed with the
Securities and Exchange Commission on January 24, 1997).
- 32 -
10.17 Form of Employment Agreement (entered into between the Company
and Edward J. Wehmer, President and Chief Executive Officer).
The Company entered into Employment Agreements with David A.
Dykstra, Executive Vice President and Chief Financial Officer,
Robert F. Key, Executive Vice President-Marketing and Lloyd M.
Bowden, Executive Vice President-Technology during 1998 in
substantially identical form to this exhibit (incorporated by
reference to Exhibit 10.15 of the Company's Form 10-K for the
year ended December 31, 1998).*
10.17a Form of First Amendment to Employment Agreement (entered into
between the Company and Edward J. Wehmer, President and Chief
Executive Officer). The Company amended the Employment
Agreements with David A. Dykstra, Executive Vice President and
Chief Financial Officer, Robert F. Key, Executive Vice
President-Marketing and Lloyd M. Bowden, Executive Vice
President-Technology during 1999 in substantially identical
form to this exhibit.*
10.18 Term Note ($1.2 million) and related Stock Pledge Agreement
dated January 31, 2000, between Edward J. Wehmer and Dorothy
M. Wehmer (as borrowers) and Wintrust Financial Corporation
(as lender).*
10.19 Second Amendment to Employment Agreement by and between
Wintrust Financial Corporation and Edward J. Wehmer, dated
January 31, 2000.*
10.20 Wintrust Financial Corporation 1997 Stock Incentive Plan
(incorporated by reference to Appendix A of the Proxy
Statement relating to the ---------- May
---------- 22, 1997 Annual
Meeting of Shareholders of the Company).*
- 31 -
10.2010.21 First Amendment to Wintrust Financial Corporation 1997 Stock
Incentive Plan (incorporated by reference to Exhibit 10.1 of
the Company's Form 10-Q for the quarter ended June 30, 2000.)*
10.22 Wintrust Financial Corporation Employee Stock Purchase Plan
(incorporated by reference to Appendix B of the Proxy
Statement relating ----------
to the May 22, 1997 Annual Meeting of
Shareholders of the Company).*
12.1 Computation of Ratio of Earnings to Fixed Charges.
13.1 19992000 Annual Report to Shareholders.
21.1 Subsidiaries of the Registrant.
23.1 ConsentConsents of Independent Auditors.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
There were threeno reports on Form 8-K reports filed with the Securities and
Exchange Commission during the fourth quarter of 1999 as follows:
October 19, 19992000.
- Form 8-K filed on October 28, 1999 to
announce the Company's third quarter 1999 earnings.
October 26, 1999 - Form 8-K filed on November 1, 1999 to
announce the completion of the acquisition of Tricom, Inc. of
Milwaukee.
December 23, 1999 - Form 8-K/A filed on December 23, 1999 to
include the required financial statements and pro forma
financial information in relation to the acquisition of Tricom,
Inc. of Milwaukee.
- 3233 -
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Wintrust Financial Corporation
EdwardWINTRUST FINANCIAL CORPORATION
EDWARD J. WehmerWEHMER EDWARD J. WEHMER March 28, 2000
--------------------------29, 2001
------------------------------------
President and Chief Executive Officer
DavidDAVID A. DykstraDYKSTRA DAVID A. DYKSTRA March 28, 2000
--------------------------29, 2001
------------------------------------
Executive Vice President &
Chief Financial Officer
(Principal Financial Officer)
ToddBARBARA A. Gustafson TODDKILIAN BARBARA A. GUSTAFSONKILIAN March 28, 2000
--------------------------29, 2001
------------------------------------
Senior Vice President - Finance
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
JohnJOHN S. LillardLILLARD JOHN S. LILLARD March 28, 2000
--------------------------29, 2001
------------------------------------
Chairman of the Board of Directors
EdwardEDWARD J. WehmerWEHMER EDWARD J. WEHMER March 28, 2000
--------------------------29, 2001
------------------------------------
President and CEO and Director
Joseph AlaimoJOSEPH ALAIMO JOSEPH ALAIMO March 28, 2000
--------------------------29, 2001
------------------------------------
Director
Peter Crist PETER D. CRIST PETER D. CRIST March 28, 2000
--------------------------29, 2001
------------------------------------
Director
BruceBRUCE K. CrowtherCROWTHER BRUCE K. CROWTHER March 28, 2000
--------------------------29, 2001
------------------------------------
Director
Maurice F. Dunne, Jr.
MAURICE F. DUNNE, JR. MAURICE F. DUNNE, JR March 28, 2000
--------------------------29, 2001
------------------------------------
Director
WilliamWILLIAM C. GraftGRAFT WILLIAM C. GRAFT March 28, 2000
--------------------------29, 2001
------------------------------------
Director
KathleenKATHLEEN R. HorneHORNE KATHLEEN R. HORNE March 28, 2000
--------------------------29, 2001
------------------------------------
Director
- 3334 -
John Leopold JOHN W. LEOPOLD JOHN W. LEOPOLD March 28, 2000
--------------------------29, 2001
------------------------------------
Director
James E. Mahoney JAMES E. MAHONEY March 28, 2000
--------------------------
Director
James B. McCarthyMCCARTHY JAMES B. MCCARTHY March 28, 2000
--------------------------29, 2001
------------------------------------
Director
Marquerite Savard McKennaMARQUERITE SAVARD MCKENNA MARQUERITE SAVARD MCKENNA March 28, 2000
--------------------------29, 2001
------------------------------------
Director
AlbinALBIN F. MoschnerMOSCHNER ALBIN F. MOSCHNER March 28, 2000
--------------------------29, 2001
------------------------------------
Director
ThomasDOROTHY M. MUELLER DOROTHY M. MUELLER March 29, 2001
------------------------------------
Director
THOMAS J. NeisNEIS THOMAS J. NEIS March 28, 2000
--------------------------29, 2001
------------------------------------
Director
HollisHOLLIS W. RademacherRADEMACHER HOLLIS W. RADEMACHER March 28, 2000
--------------------------29, 2001
------------------------------------
Director
J. Christopher ReyesCHRISTOPHER REYES J. CHRISTOPHER REYES March 28, 2000
--------------------------29, 2001
------------------------------------
Director
Peter Rusin PETER P. RUSIN PETER P. RUSIN March 28, 2000
--------------------------29, 2001
------------------------------------
Director
JohnJOHN N. SchaperSCHAPER JOHN N. SCHAPER March 28, 2000
--------------------------29, 2001
------------------------------------
Director
JohnJOHN J. SchornackSCHORNACK JOHN J. SCHORNACK March 28, 2000
--------------------------29, 2001
------------------------------------
Director
IngridINGRID S. StaffordSTAFFORD INGRID S. STAFFORD March 28, 2000
--------------------------29, 2001
------------------------------------
Director
JaneJANE R. SteinSTEIN JANE R. STEIN March 28, 2000
--------------------------29, 2001
------------------------------------
Director
KatharineKATHARINE V. SylvesterSYLVESTER KATHARINE V. SYLVESTER March 28, 2000
--------------------------29, 2001
------------------------------------
Director
Lemuel H. Tate, Jr. LEMUEL H. TATE, JR. March 28, 2000
--------------------------
Director
Larry Wright LARRY V. WRIGHT LARRY V. WRIGHT March 28, 2000
--------------------------29, 2001
------------------------------------
Director
- 3435 -