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, 20002001
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 VALUE*
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 $137,316,370 as$296,155,137 of March 20, 2001.22, 2002. As of March 20,
2001,22,
2002, the registrant had outstanding 8,616,97615,711,641 shares of Common Stock.Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the year ended December 31,
2000,2001, 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 24, 200123, 2002 are
incorporated by reference into Part III.
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* including Preferred Share Purchase Rights related theretoINCLUDING PREFERRED SHARE PURCHASE RIGHTS RELATED THERETO
TABLE OF CONTENTS
PART I
Page
----
ITEM 1. Business........................................................Business...................................................... 3
ITEM 2. Properties......................................................Properties.................................................... 17
ITEM 3. Legal Proceedings...............................................Proceedings............................................. 19
ITEM 4. Submission of Matters to a Vote of Security Holders.............Holders........... 19
PART II
ITEM 5. Market for Registrant's Common Equity and Related
Stockholder Matters.........................................Matters...................................... 19
ITEM 6. Selected Financial Data.......................................... 20Data....................................... 21
ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................Operations................................ 21
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risks......Risks... 21
ITEM 8. Financial Statements and Supplementary Data...................... 21Data................... 22
ITEM 9. Changes in and Disagreements with Accountants on Accounting
9.
and Financial Disclosure....................................Disclosure................................. 29
PART III
ITEM 10. Directors and Executive Officers of the Registrant...............Registrant............ 29
ITEM 11. Executive Compensation...........................................Compensation........................................ 29
ITEM 12. Security Ownership of Certain Beneficial Owners and Management...Management 29
ITEM 13. Certain Relationships and Related Transactions...................Transactions................ 29
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K..8-K 30
Signatures....................................................... 34Signatures..................................................... 35
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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 $2.1$2.7 billion at December 31, 2000.2001. The Company engages in the
business of providing traditional community banking services, trust and investmentasset
management 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 seven 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"), 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.
The Company provides trust and investmentasset management services at each of its Banks
through its wholly-owned subsidiary, Wintrust Asset Management Company, N.A.
("WAMC"). 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. Tricom, Inc. of Milwaukee ("Tricom"), a wholly-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 local 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 2000"Management's Discussion and Analysis" section of the 2001
Annual Report to Shareholders, which is filed as Exhibit 13.1 to this Form 10-K
and Item 8 under "Supplemental Statistical Data". Such information is
incorporated herein by reference and constitutes a part of this report.
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BANKING
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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
teneleven 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. In 1994,
Lake Forest Bank opened a branch office in Lake Bluff. In early 2000 Lake Forest
Bank opened a branch in 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 and in Wauconda
during 2000. In December 1996, Barrington Bank was opened to service the greater
Barrington/Inverness areas.areas, and in September 2001, Barrington Bank established a
branch facility in Hoffman Estates. In December 1997, Crystal Lake Bank was
opened to serve the Crystal Lake/Cary communities. Incommunities, and in 1999 Crystal Lake Bank
opened two new branch facilities in Crystal Lake. In February 2001, Crystal Lake
Bank opened a branch facility in McHenry. In November 2000, Northbrook Bank
opened for business in a temporary facility to serve the Northbrook, Glenview
and Deerfield communities.communities, and in December 2001, Northbrook Bank moved into its
newly constructed permanent facility. 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
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FIFC commenced operations nine years ago and is headquartered in 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
- 4 -
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 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 AND ASSET MANAGEMENT ACTIVITIES
- -----------------------------------------------------
WAMC began operating as a separately chartered non-depository bank subsidiary in
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 targets small to mid-size businesses and
newly affluent individuals whose needs command the personalized attention that
are 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.
To expand the Company's asset management business and to enter into the
brokerage business, on February 20, 2002, the Company acquired Wayne Hummer
Investments, LLC, a registered broker-dealer, Wayne Hummer Management Company, a
registered investment adviser, and Focused Investments LLC, a broker-dealer and
wholly-owned subsidiary of Wayne Hummer Investments (collectively referred to as
"the Wayne Hummer Companies"), each based in Chicago. Wayne Hummer Investments
is a broker-dealer providing a full range of private client and brokerage
services to clients located primarily in the Midwest. Focused Investments is a
broker-dealer that provides a full range of investment solutions to clients
through a network of community-based financial institutions throughout the
Midwest. Wayne Hummer Management Company provides money management services and
advisory services to individual accounts as well as the Wayne Hummer Companies'
four proprietary mutual funds.
TRICOM
- ------
Tricom was acquired by Hinsdale Bank in October 1999 as part of the Company's
strategy to pursue specialized earning asset niches. It is located in Milwaukee,
Wisconsin and has been in business over ten years. It specializes in providing
short-term accounts receivable financing and value-added out-sourced
administrative services, such as data processing of payrolls, billing and cash
management services, to temporary staffing service clients located throughout
the United States. Tricom currently finances and processes payrolls with
associated client billings in excess of $250approximately $248 million. In 2000,2001, it generated
approximately $8.1$8.0 million of net revenues for the Company. As a wholly-owned
subsidiary of Hinsdale Bank, Tricom has the capital and funding necessary to
expand its financing services in a national market. In addition to expanding the
Company's earning asset niches, Tricom provides fee-based income to augment the
Company's community-based banking revenues.
- 5 -
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 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 newstart-up company, it may be difficult to successfully
attract new customers away 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. The Company will
expand its trust and asset management services in 2002, including the
introduction of brokerage services, as a result of its acquisition of the Wayne
Hummer Companies in February 2002. There can be no assurances, however, that
WAMC will be successful in establishing this new businessitself as a preferred alternative to the
larger trust companies, and as a profitable venture.that the Company will be successful in the
integration of the Wayne Hummer Companies into the Wintrust organization.
- 6 -
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, 2000,2001, the Company and its subsidiaries employed a total of 520566
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 developments
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.asset management services. 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 investmentasset
management 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 developinherent 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.
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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 Unforeseen future events that may cause slower than anticipated development
and growth of the Tricom business and/or changes in the temporary staffing
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 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.
o Unforeseen future events surrounding the brokerage and asset management
business, including competition and related pricing of brokerage and asset
management products and difficulties integrating the acquisition of the
Wayne Hummer Companies.
SUPERVISION AND REGULATION
- --------------------------
Bank holding companies, banks and banksinvestment firms 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
- -------------------------------
TheIn connection with its acquisition of the Wayne Hummer Companies, in early 2002
the Company is registered asbecame a "bank"financial holding company" withas provided in the
Gramm-Leach-Bliley Act (the "GLB Act"). The GLB Act, enacted in November 1999,
established a comprehensive framework to
- 8 -
permit affiliations among commercial banks, insurance companies and securities
firms. Under the GLB Act, bank holding companies approved as financial holding
companies may engage in an expanded range of activities, including the
businesses conducted by the Wayne Hummer Companies. Banking subsidiaries of
financial holding companies are required to be "well-capitalized" and
"well-managed" as defined in the applicable regulatory standards. If these
conditions are not maintained, and the financial holding company fails to
correct any deficiency within 180 days, the Federal Reserve and, accordingly, ismay require the
company to either divest control of its banking subsidiaries or, at the election
of the company, cease to engage in any activities not permissible for a bank
holding company.
The Company continues to be subject to supervision and regulation by the Federal
Reserve under the Bank Holding Company Act (the Bank Holding Company Act, as
amended by the GLB 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.and the Company's other subsidiaries.
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 5% of the voting shares or substantially all the assets of any
bank, or for a merger or consolidation of a bank holding company with another
bank holding company. With certain exceptions, the BHC Act prohibits a bankfinancial
holding company from acquiring direct or indirect ownership or control of voting
shares of any company which is not a bankbusiness that is financial in nature or
bank holding companyincidental thereto, and from engaging directly or indirectly in any activity
other than bankingthat is not financial in nature 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 premium finance business conducted by FIFC.incidental thereto. 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. That means that,
except with respect to traditional banking products, the CompanyBanks may not condition
a customer's purchase of one of its services on the purchase of another service. The passageother services from any of
the Gramm-Leach-Bliley Act, however, allows bank
holding companies to become financial holding companies. Financial holding
companies do not faceBanks or other subsidiaries of the same prohibitions on entering into certain business
transactions that bank holding companies currently faceCompany.
Under the Illinois Banking Act, any person who acquires more than 10% of the
Company's stock may be required to obtain the prior approval of the Commissioner
of the Illinois Office 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 Federal Reserve or the Office of the
Comptroller of the Currency (the "OCC") before acquiring control of 10% or more
of any class of the Company's outstanding stock.
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 ratios in relation to assets, both on an aggregate
basis and as adjusted for credit 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 stockholders' equity, qualifying noncumulative perpetual
preferred stock (including related
- 9 -
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 and
specified intangible assets ("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; perpetual preferred stock and related surplus; hybrid capital
instruments; unrealized holding gains on marketable equity securities; perpetual
debt and mandatory convertible debt securities; 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% for strong bank holding companies (those rated a
composite "1" under the Federal Reserve's rating system). For all other bank
holding companies, the minimum ratio of Tier 1 Capital to total assets 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 growth, whether
internally or by making acquisitions, are expected to maintain strong capital
positions substantially above the minimum levels. As a Financial Holding
Company, the Company's depository institutions are required to maintain their
capital positions at the "well-capitalized" level.
As of December 31, 2000,2001, the Company's total capital to risk-weighted assets
ratio was 8.4%8.5%, its Tier I Capital to risk-weighted asset ratio was 6.9%7.7% and its
leverage ratio was 6.3%7.1%.
Dividend Limitations. Because the Company's consolidated net income consists
largely of net income of the Banks and its non-bank subsidiaries, the Company's
ability to pay dividends depends upon its receipt of dividends from these
entities. 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 revenue 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.
- 10 -
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 Commissioner. Barrington Bank, Crystal Lake Bank and
WAMC are federally-chartered banks and 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,
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
- 11 -
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 were2001, each of the Company's Banks was categorized as
"well-capitalized." Because the Company is designated as a financial holding
company, each of the Banks is required to maintain capital ratios at or above
the "well-capitalized" levels.
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 their 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 income
for the year plus the retained net income for the preceding two 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 income for the year plus the
retained net income for the preceding two 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 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.
- 12 -
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 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 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
adopted guidelines for asset quality and earnings standards.
A range of other provisions in FDICIA include requirements applicable to:
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 addition, the Federal Reserve, OCC, FDIC and other federal banking agencies
adopted a final rule, which modified the risk-based capital standards, to
provide for consideration of interest rate risk when assessing the capital
adequacy of a bank. Under this 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'
- 13 -
examiners will be incorporated into the banks' overall risk management rating
and used to determine the effectiveness of management.
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 Bank Insurance Fund ("BIF"). The FDIC has authority to
raise or lower assessment rates on insured deposits in order to achieve
statutorily 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
"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: "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 are 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 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 were
assessed at a rate of 20.0% of the assessment rate applicable to SAIF deposits
until December 31, 1999. After December 31, 1999, full pro rata sharing of FICO
assessments began.
During 2001, the Banks were assessed deposit insurance, including the FICO
assessment, in the aggregate amount of $432,000.
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.
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 $44.3 million of transaction accounts plus 10.0% on the remainder. The
first $5.0 million of otherwise reservable balances (subject to adjustments by
the
- 14 -
Federal Reserve) are exempted from the reserve requirements. The Banks are in
compliance with the foregoing requirements.
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,
other than Northbrook Bank, received a "satisfactory" ratingsrating from either the
Federal Reserve or OCC on their most recent CRA performance evaluations.
Northbrook Bank, which opened in November 2000, has not had a CRA examination as
of yet. Because the Company is a financial holding company, failure of any of
the Banks to maintain "satisfactory" CRA ratings could restrict further
expansion of the Company's or the Banks' activities.
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.
Interstate Banking and Branching Legislation. Under the Riegle-Neal Interstate
Banking and Efficiency Act of 1994 (the "Interstate Banking Act"), adequately
capitalized and adequately managed bank holding companies are allowed to acquire
banks across state lines subject to certain limitations. In addition, under the
Interstate Banking Act, 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 may establish and
- 15 -
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,BROKER-DEALER AND INVESTMENT ADVISER REGULATION
The broker-dealers and investment advisers are subject to extensive regulation
under federal and state securities laws. These firms are required to be
registered with the Gramm-Leach-Bliley Act (the "GLB
Act"Securities and Exchange Commission, although much of their
regulation and examination has been delegated to self-regulatory organizations
("SROs") was enacted. The GLB Act amended or repealed certain provisionsthat the SEC oversees, including the National Association of Securities
Dealers and the national securities exchanges. In addition to SEC rules and
regulations, the SROs adopt rules, subject to approval of the Glass-Steagall Act and other legislationSEC, that restricted the abilitygovern
all aspects of bank
holding companies, securities firms and insurance companies to affiliate with
one another. The GLB Act establishes a comprehensive framework to permit
affiliations among commercial banks, insurance companies and securities firms.
Further, the GLB Act expanded the range of activities in which bank holding
companies may engage by allowing certain well managed and well capitalized bank
holding companies to be designated as "financial holding companies." In
addition, the GLB Act contains provisions intended to safeguard consumer
financial informationbusiness in the handssecurities industry and conduct periodic
examinations of financial service providersmember firms. These businesses are also subject to regulation by
state securities commissions in states where they conduct business.
As a result of federal and state registrations and SRO memberships, the Wayne
Hummer Companies are subject to over-lapping schemes of regulation which cover
all aspects of their securities businesses. Such regulations cover, among other
things, requiring such entitiesmatters including minimum net capital requirements; uses and safekeeping
of clients' funds; recordkeeping and reporting requirements; supervisory and
organizational procedures intended to disclose their privacy policiesassure compliance with securities laws and
to theirprevent improper trading on material nonpublic information; employee-related
matters, including qualification and licensing of supervisory and sales
personnel; limitations on extensions of credit in securities transactions;
clearance and settlement procedures; "suitability" determinations as to certain
customer transactions, limitations on the amounts and types of fees and
commissions that may be charged to customers, and allowingthe timing of proprietary
trading in relation to customers' trades; affiliate transactions; and mutual
fund management. The principal purpose of regulation and discipline of
investment firms is the protection of customers to "opt out" of having their financial
service providers disclose their confidential financial information to
non-affiliated third parties, subject to certain exceptions. Final regulations
implementingand 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 certain information. The
Company has devoted what it believes are sufficient resources to comply with
these new requirements. It is not anticipated that the GLB Act will have a
material adverse effect on the operations or prospects of the Company and its
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 servicesmarkets
rather than the Company currently offersprotection of creditors and that can aggressively compete in the markets the
Company currently serves.stockholders of investment firms.
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 company
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, 4552 and 4653 of the 20002001 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 part of Regulation S-K as promulgated by the 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 20002001 Annual Report to Shareholders filed herewith as Exhibit
13.1 and incorporated herein by reference.
- 16 -
ITEM 2. PROPERTIES
The Company's executive offices are located in the main bank facility of Lake
Forest Bank. During 2001, the Company leased additional office space for its
corporate staff directly across the street from Lake Forest Bank's main facility
and purchased a two-story office building located at 851 N. Villa Avenue, in
Villa Park, Illinois, to house the data processing facilities and internet
banking operations of the Banks as well as the Company's technology staff.
Lake Forest Bank has sevenoperates from six 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 2,1004,500 square foot a full service banking facility on the west side of
Lake Forest, Illinois at 810 South Waukegan Road,Road; and a drive-in and walk-up
banking facility at 911 S. Telegraph Road in the West Lake Forest Train Station.
In 2000, Lake Forest Bank also maintainsconstructed a new branch facility in Highwood,
Illinois that includes a drive-through facility. During 2001, Lake Forest Bank
closed a small office facility at a retirement community known as Lake Forest
Place at 1100 Pembridge Drive in Lake Forest. In
2000, Lake Forest Bank constructed a new branch facility in Highwood, Illinois.
The Highwood branch includes a drive-thru facility.Place. ATMs are located at each of Lake Forest Bank's locations except the 810
South Waukegan Road facility. Lake Forest Bank has no offsiteoff-site ATMs.
At December 31, 2001, Hinsdale Bank currently hasoperated 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-thrudrive-through facility in
Clarendon Hills. Other than this stand-alone ATM drive-thrudrive-through facility in
Clarendon Hills, Hinsdale Bank has no offsiteoff-site ATMs. During 2001, Hinsdale Bank
purchased property at 17 E. Burlington, in Riverside, Illinois, and in January
2002, opened its fifth banking office at this location.
North Shore Bank currently hasoperates seven physical banking locations. North
Shore Bank owns the main bank facility, a one-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.Illinois. 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 at 5049 Oakton Street in Skokie,
Illinois.Illinois, and in 2001, North Shore Bank purchased the
- 17 -
Skokie building. In 2001, North Shore Bank relocated its Winnetka branch to a
one-story fully- renovated owned-facility located at 576 Lincoln Avenue in
Winnetka. North Shore Bank maintains ATMs at each of its locations, except
Winnetka, and has two offsiteone
off-site ATMs located in Glencoe and Skokie.
- 17 -
Glencoe.
Libertyville Bank currently hasoperates from five 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 East Hurlburt Court, which is
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-thruleased
drive-through facility at 1180 Dato Lane. The branch at 495 Liberty Street is a
temporary facility; construction is underway for a permanent facility onat the
same location is under construction and expected to be completed in 2001.location. Libertyville Bank maintains ATMs at each of its banking locations
and at one offsiteoff-site location.
Barrington Bank currently has onetwo physical banking locationlocations, both of which are
owned. Its main office is located at 201 South Hough Street in Barrington,
Illinois whichand is a 12,700 square foot, two storytwo-story frame construction building that
has an attached drive-through facility. In 2001, Barrington Bank constructed a
one-story building with a basement and attached drive-through lanes, at 1375
Palatine Road, in Hoffman Estates, Illinois, for its new Hoffman Estates branch.
Barrington Bank has twothree ATMs, but no offsite ATMs.
Crystal Lake Bank has threefour physical banking locations as of December 31, 2000.locations. Crystal Lake Bank's main
banking office is a two-story, 12,000 square foot facility located at 70
Williams Street in downtown Crystal Lake, Illinois. Crystal Lake Bank also has a
drive-up facility that is located in the downtown area, near the main bank
facility 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 a
leased facility located at 3322 West Elm Street in McHenry, Illinois. Crystal
Lake Bank maintains an ATM at each location.
In November 2000, Northbrook Bank opened for business in a temporary leased
facility located at 1340 Shermer Road in Northbrook, Illinois. Construction ofIn December 2001,
Northbrook Bank moved into its newly constructed permanent facility, located at
the corner of Shermer and WuakeganWaukegan Roads, is
expected to be completed by year-end 2001.in Northbrook, Illinois. Northbrook
Bank has one ATMtwo ATMs located at its temporary facility.banking office, including one drive-through
ATM, and no off-site ATMs.
FIFC's offices are located at 450 Skokie Boulevard, Suite 1000, Northbrook,
Illinois. FIFC purchased the property in late 1999 and moved into it in 2000. The building provides approximately 16,000 square feet of office
space, which is used solely by FIFC.
WAMC's executive and operations staff areis 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, Barrington Bank and BarringtonNorthbrook
Bank.
Tricom leases approximately 10,700 square feet of office space in Milwaukee,
Wisconsin at 11270 West Park Place, Suite 100.
The Wayne Hummer Companies lease office space in downtown Chicago, Illinois at
300 South Wacker Drive and in Appleton, Wisconsin at 200 E. Washington Street.
See Note 67 to the Consolidated Financial Statements contained in the 20002001 Annual
Report to Shareholders filed herewith as Exhibit 13.1 and incorporated herein by
reference.
- 18 -
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 2000.2001.
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 20002001 and 1999.2000.
- ----------------------------------------------------------------------------------------------------------
2001 2000
1999
---- ----
HIGH LOW HIGH LOW
---- --- ---- ------------------------------------- ----------------------------------
High Low High Low
----------------- ---------------- ----------------- ----------------
Fourth quarter $ 17.00 15.38 18.19 14.6922.13 17.93 11.33 10.25
Third quarter 17.81 15.25 19.12 16.1921.41 16.27 11.88 10.17
Second quarter 16.25 13.75 26.75 17.5017.62 11.67 10.83 9.17
First quarter 16.00 13.38 20.25 15.5012.75 10.54 10.67 8.92
- ----------------------------------------------------------------------------------------------------------
The prices reflected above have been adjusted to reflect the 3-for-2 stock split
(effected in the form of a 50% common stock dividend) announced in January 2002
and paid on March 14, 2002 to shareholders of record on March 4, 2002.
APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS
- ---------------------------------------------
As of February 28, 2001March 19, 2002 there were 1,3361,258 shareholders of record of the Company's
common stock.
- 19 -
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, 2000stock and has continued to shareholders of record as of February 10, 2000.
In July 2000, the secondapprove a semi-annual
dividend for the same amount was declared.
The $0.05 per share amount was paid on August 24, 2000 to shareholders of recordsince that time. Additionally, as of August 10, 2000. Inpreviously noted, in January 2001,2002,
the Company's Board of Directors approved a 40%3-for-2 stock split, to be effected
in the form of a 50% common stock dividend, payable on March 14, 2002 to
shareholders of record on March 4, 2002.
Following is a summary of the cash dividends approved in 2000 and 2001, adjusted
to give effect to the stock split:
- ---------------------------------------------------------------------------------------------------------------------
Record Date Payable Date Dividend per Share
----------- ------------ ------------------
February 10, 2000 February 24, 2000 $0.0333
August 10, 2000 August 24, 2000 $0.0333
February 8, 2001 February 22, 2001 $0.0467
August 9, 2001 August 23, 2001 $0.0467
- ----------------------------------------- ---------------------------------------- ----------------------------------
In January 2002, the Company's Board of Directors approved a 29% increase in its
semi-annual dividend to $0.07$0.06 per share. The dividend was paid on February 22, 200119,
2002 to shareholders of record as of February 8, 2001.5, 2002.
The declarationfinal determination of timing, amount and payment of dividends is at the
discretion of the Company's Board of Directors and dependswill depend upon the
Company's earnings, financial condition, capital requirements regulatory
limitations, tax considerations, the operating and financial condition of the
Company and other relevant
factors. Additionally, the payment of dividends may be
restrictedis also subject to statutory
restrictions and restrictions arising under certainthe terms of the Company's Trust
Preferred Securities 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 - Dividends" on page 12 of this Form 10-K. During 2001 and
2000, the Banks paid $16$13.5 million and $16.0 million, respectively, 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.no dividends. De novo banks are
prohibited from paying dividends during their first three years of operations.
As of January 1, 2001,2002, 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 November 2003.
Reference is made to Note 1416 to the Consolidated Financial Statements contained
in the 20002001 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
- ---------------------------------------
The Company had no sales of unregistered securities during 2000.2001.
- 20 -
ITEM 6. SELECTED FINANCIAL DATA
Certain information required in response to this item is contained in the 20002001
Annual Report to Shareholders under the caption "Selected Financial Highlights"
and is incorporated herein by reference.
- 20 -
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 20002001
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 20002001 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 20002001
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,Management," which areis incorporated herein by reference. ThisThat information should
be read in conjunction with the complete Consolidated Financial Statements and
notes thereto containedalso included in the 20002001 Annual Report to Shareholders.
- 21 -
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required in response to this item is contained in the 20002001
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 investmentsecurities
portfolio, by investment category, as of December 31, 2001, 2000 and 1999 and 1998:(in
thousands):
- ------------------------------------------------------------------------------------------------------------------------
2001 2000 1999
1998
------------------------------------------------------------------------------------------------------------ ------------------------- ------------------------
Held-to-maturity:
U.S. Treasury obligations $ -- -- 5,000
---------------------------------------------------------------------------------
Available-for-sale:
U.S. Treasury obligations $ 3,048 29,987 39,171 5,664
Federal agency obligations 152,185 61,871 70,184
54,690
Municipal securities 6,686 5,142 4,038 504
Corporate notes and other 25,895 29,197 39,025
142,102
Mortgage-backed securities 181,425 54,274 46,124
-
Federal Agency Bank stockEquity securities 16,111 12,634 7,253
6,159
------------------------------------------------------------------------------------------------------------ ------------------------- ------------------------
Total available-for-sale securities $ 385,350 193,105 205,795
209,119
---------------------------------------------------------------------------------
Total securities $ 193,105 205,795 214,119
=================================================================================- ------------------------------------------------------------------------------------------------------------------------
- 21 -
Tables presenting the carrying amounts and gross unrealized gains and losses for
securities available-for-sale at December 31, 20002001 and 19992000 are included by
reference to Note 23 to the Consolidated Financial Statements included in the
20002001 Annual Report to Shareholders, which is incorporated herein by reference.
At December 31, 20002001 and 1999,2000, there were no held-to-maturity securities.
Maturities of securities as of December 31, 20002001, by maturity distribution, are
as follows (in thousands):
Mortgage Federal- ------------------------------------------------------------------------------------------------------------------------
Mortgage-
Within From 1 From 5 to After backed AgencyEquity
1 Year to 5 years 10 years 10 years securities Bank stocksecurities Total
-------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------
U.S. Treasury obligations $ -- 29,9873,048 -- -- -- -- 29,987-- 3,048
Federal agency obligations 51,465 9,910 496127,332 24,853 -- -- -- 61,871-- 152,185
Municipal securities 830 1,137 3,1752,333 1,172 3,181 -- -- -- 5,1426,686
Corporate notes and other (1) 6,097 10,082 1,036 11,9826,878 6,954 -- 12,063 -- -- 29,19725,895
Mortgage-backed securities(1) -- -- -- -- 181,425 -- 181,425
Equity securities (2) -- -- -- -- 54,274 -- 54,274
Federal Agency Bank stock (3) -- -- -- -- -- 12,634 12,634
-------------------------------------------------------------------------------------16,111 16,111
-----------------------------------------------------------------------------------------
Total $ 58,392 51,116 4,707 11,982 54,274 12,634 193,105
=====================================================================================
The weighted average yield for each range of maturities of securities, on a tax
equivalent basis, is shown below as of December 31, 2000:
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 -- 5.20% -- -- -- -- 5.20%
Federal agency obligations 6.70% 5.90% 6.29% -- -- -- 6.57%
Municipal securities 6.77% 6.56% 7.74% -- -- -- 7.31%
Corporate notes and other (1) 2.95% 6.81% 6.61% 7.66% -- -- 6.38%
Mortgage-backed securities (2) -- -- -- -- 7.16% -- 7.16%
Federal Agency Bank stock (3) -- -- -- -- -- 6.54% 6.54%
-------------------------------------------------------------------------------------
Total 6.31% 5.69% 7.33% 7.66% 7.16% 6.54% 6.51%
=====================================================================================139,591 32,979 3,181 12,063 181,425 16,111 385,350
- ------------------------------------------------------------------------------------------------------------------------
(1) EquityThe maturities of mortgage-backed 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 becausesince the underlying mortgages may be called or prepaid without
any penalties. Therefore, these securities are not included within the
maturity categories above.
(3)(2) Includes stock of the Federal Reserve Bank, and of the Federal Home Loan Bank.Bank and
other equity securities.
- 22 -
The weighted average yield for each range of maturities of securities, on a
tax-equivalent basis, is shown below as of December 31, 2001:
- ------------------------------------------------------------------------------------------------------------------------
Mortgage-
Within From 1 From 5 to After backed Equity
1 Year to 5 years 10 years 10 years securities securities Total
- ------------------------------------------------------------------------------------------------------------------------
U.S. Treasury obligations 2.81% -- -- -- -- -- 2.81%
Federal agency obligations 3.03% 2.55% -- -- -- -- 3.03%
Municipal securities 4.61% 6.68% 7.75% -- -- -- 6.43%
Corporate notes and other 5.83% 3.56% -- 5.45% -- -- 5.05%
Mortgage-backed securities (1) -- -- -- -- 5.50% -- 5.50%
Equity securities (2) -- -- -- -- -- 5.56% 5.56%
----------------------------------------------------------------------------------------
Total 3.28% 2.89% 7.75% 5.45% 5.50% 5.56% 4.50%
- ------------------------------------------------------------------------------------------------------------------------
(1) The maturities of mortgage-backed securities may differ from contractual
maturities since the underlying mortgages may be called or prepaid without
any penalties. Therefore, these securities are not included within the
maturity categories above.
(2) Includes stock of the Federal Reserve Bank, the Federal Home Loan Bank and
other equity securities.
LOAN PORTFOLIO
The following table shows the Company's loan portfolio by category as of
December 31 for each of the five previous fiscal years (in thousands):
At December 31- -------------------------------------------------------------------------------------------------------------------------
2001 2000 1999 1998 1997
1996
- --------------------------------------------- ------------------------------------------------------------------------------------------- -------------- ------------- ------------ -----------
Core loans:
Commercial and
commercial real estate $ 1,007,580 647,947 485,776 366,229 235,483
182,403
Home equity 261,049 179,168 139,194 111,537 116,147
87,303
Residential real estate 182,945 141,919 111,026 91,525 61,611
51,673Installment and other 59,157 51,995 49,925 34,650 32,153
--------------- -------------- ------------- ------------ -----------
Total core loans 1,510,731 1,021,029 785,921 603,941 445,394
--------------- -------------- ------------- ------------ -----------
Niche loans:
Premium finance receivables 321,711 225,239 183,165 131,952 59,240348,163 313,066 219,341 178,138 128,453
Indirect auto 203,572 255,434 210,137 139,296 91,211184,209 203,571 255,410 209,983 138,784
Tricom finance receivables 18,280 20,354 17,577 -- --
--
Installment and other 51,995 49,925 34,650 32,153 23,717
------------------------------------------------------------------------------------------------ -------------- ------------- ------------ -----------
Total niche loans 1,566,666 1,284,171 997,243 716,642 495,547
Less: Unearned income 8,646 5,922 5,181 4,011 2,999
---------------------------------------------------------------------------------550,652 536,991 492,328 388,121 267,237
--------------- -------------- ------------- ------------ -----------
Total loans, net of
unearned income $1,558,020$ 2,061,383 1,558,020 1,278,249 992,062 712,631
492,548
=================================================================================- -------------------------------------------------------------------------------------------------------------------------
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
- 23 -
are generally renewable annually and supported by business assets, personal
guarantees and, oftentimes, additional collateral. Also included in this
category are loans to condominium and homeowner associations originated through
Barrington Bank's Community Advantage program and small aircraft financing, a
new earning asset niche developed at Crystal Lake Bank. 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, 20002001 by date at which the loans mature:mature (in thousands):
From one-------------------------------------------------------------------------------------------------------------------
One year to fiveFrom one After
or less to five years five years Total
------- ----- ---------- -----
(in thousands)--------------- ---------------- ------------- -------------
Commercial loans and
commercial real estate loans...........................loans........ $ 307,170 281,149 59,628 647,947510,243 420,234 77,103 1,007,580
Premium finance receivables,
net of unearned income........................ 313,065income................ 348,163 -- -- 313,065348,163
Tricom finance receivables............... 20,354receivables........... 18,280 -- -- 20,35418,280
-------------------------------------------------------------------------------------------------------------------
Of those loans maturing after one year, approximately $269.3$377.4 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.
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
- 24 -
funded indirectly through unaffiliated automobile dealers. As of December 31,
2000,2001, indirect auto loans comprised approximately 80%76% of the Company's consumer
loan portfolio.loans. In response to economic conditions and the competitive environment for
this product, the Company has been reducing the level of new indirect auto loans
originated. However, the Company continues to maintain its relationships with
the dealers and may increase its volume of originations when market conditions
indicate it is prudent to do so. 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,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
isare sold to the Federal National Mortgage Association ("FNMA") wherebywith the
servicing of those loans is retained. The amount of loans serviced for FNMA as of
December 31, 2001 and 2000 and 1999 was $97.2$131.5 million and $87.1$97.2 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 are sold to the Banks
and retained within their loan portfolios. However, due to FIFC's loan
origination volume exceeding the capacity within the Banks' loan portfolios,
FIFC began selling loans to an unrelated third party in 1999. During 2000,2001, FIFC
originated approximately $1.1$1.3 billion of loans and sold approximately $225$245
million of those loans originated in 20002001 to an unrelated financial institution.
FIFC recognized gains of $3.8$4.6 million on the sale of those loans. As of December
31, 20002001 and 1999,2000, the balance of these receivables that FIFC services for
others totaled approximately $93.4$107.8 million and $46.2$94.6 million, respectively. All
premium finance receivables are subject to the Company's stringent credit
standards, and
- 25 -
substantially all such loans are made to commercial customers. The Company
rarely finances consumer insurance premiums.
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, 2000,2001, 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$25,000 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. Tricom finance 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
- 26 -
data processing of payrolls, billing and cash management services, which
generates additional fee income.
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
The following table sets forth the allocation of the allowance for possible loan
losses by major loan type and the percentage of loans in each category to total
loans (dollars in thousands):
- -----------------------------------------------------------------------------------------------------------------------
2001 2000 1999 1998 1997
--------------------------------------------------------------------------------------------
Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
--------------------------------------------------------------------------------------------
Commercial and
Commercial Real Estate $6,251 49% $4,019 42% $3,435 38% $2,480 37% $1,490 33%
Home equity 1,353 12 992 12 1,146 11 1,046 11 580 16
Residential real estate 137 9 141 9 126 9 81 9 43 9
Installment and other 835 3 473 3 469 4 494 4 218 5
--------------------------------------------------------------------------------------------
Total core loans 8,576 73 5,625 66 5,176 62 4,101 61 2,331 63
--------------------------------------------------------------------------------------------
Premium finance 1,391 17 1,209 20 721 17 919 18 702 18
Indirect auto 1,442 9 1,552 13 1,947 20 1,205 21 679 19
Tricom finance 112 1 120 1 120 1 - - - -
receivables
Unallocated 2,165 - 1,927 - 819 - 809 - 1,404 -
--------------------------------------------------------------------------------------------
Totals $13,686 100% $10,433 100% $8,783 100% $7,034 100% $5,116 100%
- -----------------------------------------------------------------------------------------------------------------------
The above allocation is made for internal analysis of the allowance and is not
an indication of expected loss or anticipated losses.
For analysis and review of the loan loss provision and 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 20002001 Annual
Report to Shareholders filed herewith as Exhibit 13.1, and incorporated herein
by reference.
- 26 -
The following table sets forth the allocation of the allowance for possible loan
losses by major loan type and the percentage of loans in each category to total
loans (dollars in thousands):
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
AMOUNT PERCENT Amount Percent Amount Percent Amount Percent Amount Percent
--------------- --------------- ---------------- --------------- ----------------
Commercial and
commercial real estate $ 4,019 42% $ 3,435 38% $ 2,480 37% $1,490 33% $ 996 37%
Home equity 992 12 1,146 11 1,046 11 580 16 402 18
Residential real estate 141 9 126 9 81 9 43 9 34 10
Premium finance 1,209 20 721 17 919 18 702 18 288 12
Indirect auto 1,552 13 1,947 20 1,205 21 679 19 432 18
Tricom finance receivables 120 1 120 1 -- -- -- -- -- --
Installment and other 473 3 469 4 494 4 218 5 128 5
Unallocated 1,927 -- 819 -- 809 -- 1,404 -- 1,356 --
--------------- --------------- ---------------- --------------- ----------------
Totals $10,433 100 $ 8,783 100 $ 7,034 100 $ 5,116 100 $ 3,636 100
=============== =============== ================ =============== ================
The above allocation is made for internal analysis of the allowance and is not
an indication of expected or anticipated 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 2000 Annual
Report to Shareholders filed herewith as Exhibit 13.1, and incorporated herein
by reference.
DepositsDEPOSITS
The following table sets forth the scheduled maturities of time deposits in
denominations of $100,000 or more at December 31, 20002001 (in thousands):
- ------------------------------------------------------------------------
Maturing within 3 months...................months .......... $ 138,260192,476
After 3 but within 6 months................ 122,520months ....... 156,143
After 6 but within 12 months............... 234,156months ...... 168,111
After 12 months............................ 69,811
-----------
Total................................... $ 564,747
===========
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 thereafter........................ 9,275
-----------
Total...................................... $1,077,128
===========months ................... 142,406
----------------
Total .......................... $659,136
- ------------------------------------------------------------------------
- 27 -
RETURN ON EQUITY AND ASSETS
The following table presents certain ratios relating to the Company's equity and
assets:assets as of and for the years ended December 31:
Year Ended December 31- ---------------------------------------------------------------------------------------------------------
2001 2000 1999
1998
- ---------------------- ---- ---- -------------------------------------------------------------------------------------------------------------
Return on average total assets.................................. 0.79% 0.60% 0.63% 0.53%
Return on average common shareholders' equity... ...............equity................... 15.24% 11.51% 11.58% 8.68%
Dividend payout ratio........................................... 7.37% 8.00% 0.00% 0.00%
Average equity to average total assets.......................... 5.2% 5.2% 5.4% 6.1%
Ending total risk based capital ratio........................... 8.5% 8.4% 8.4%
9.7%
Leverage ratio.................................................. 7.1% 6.3% 7.1%
7.5%- ---------------------------------------------------------------------------------------------------------
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 20002001 Annual Report to Shareholders
filed herewith as Exhibit 13.1, and is incorporated herein by reference. During
2000,2001, the Company participated 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 the applicable counterparty. Securities underlying the overnight and term
repurchase agreements are included in the available-for-sale securities
portfolio as reflected on the Consolidated Statements of Condition. During 2000,2001,
the maximum month-end balance and weighted average interest rate of total
repurchase agreements was $72.3$66.0 million and 5.54%3.36%, respectively. At December 31,
2000,2001, securities sold under agreements to repurchase consisted of U.S.
government agency, mortgage-backed and corporate securities.
- 28 -
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
At its regular board meeting on April 29, 1999,No changes were made in the Company's Board of Directors
voted to approve the Audit Committee's recommendation to engage the accounting
firm of Ernst & Young LLP asin 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 ofduring the two
most recent fiscal years ended December 31, 1998 and theor any 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.period.
- 28 -
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 24, 200123, 2002 under the captions "Nominees to
Serve as Class IIIII Directors Until the Annual Meeting of Shareholders in Year
2005", "Class II - Continuing Directors Serving Until the 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 "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 24, 2001.23, 2002.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required in response to this item will be contained in the Proxy
Statement under the sub-caption "Transactions with Management and Others" and is
incorporated herein by reference.
- 29 -
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
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The following financial statements of Wintrust Financial Corporation,
incorporated herein by reference to the 20002001 Annual Report to
Shareholders filed as Exhibit 13.1, are filed as part of this document
pursuant to Item 8.8, Financial Statements and Supplementary Data:
Consolidated Statements of Condition as of December 31, 20002001 and 19992000
Consolidated Statements of Income for the Years Ended December 31, 2001,
2000 1999 and 19981999
Consolidated Statements of Changes in Shareholders' Equity
for the Years Ended December 31, 2001, 2000 1999 and 19981999
Consolidated Statements of Cash Flows for the Years Ended December 31,
2001, 2000 1999 and 19981999
Notes to Consolidated Financial Statements
Report of Independent Auditors' ReportsAuditors
No schedules are required to be filed with this report.
3. Exhibits (Exhibits marked with a "*" denote management contracts or
--------
compensatory plans or arrangements)
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).
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).
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4.2 Certain instruments defining the rights of the holders of
long-term debt of the Corporation and certain 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 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).
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 (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, 2000.2000 (incorporated by reference to Exhibit 10.6 of
the Company's Form 10-K for the year ended December 31, 2000).
10.7 Sixth Amendment to Loan Agreement between Wintrust Financial
Corporation and LaSalle Bank National Association, dated June
1, 2001 (incorporated by reference to Exhibit 99.1 of the
Company's Form S-3 Registration Statement filed with the SEC
on May 16, 2001).
10.8 Seventh Amendment to Loan Agreement between Wintrust Financial
Corporation and LaSalle Bank National Association, dated
December 31, 2001, but effective as of November 29, 2001.
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10.9 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).*
10.810.10 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).
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10.910.11 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).
10.1010.12 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).
10.1110.13 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).
10.1210.14 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).
10.1310.15 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).
10.1410.16 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).
10.15- 32 -
10.17 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).
10.1610.18 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).
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10.1710.21 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).*
10.17a10.20 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.exhibit (incorporated by reference to Exhibit
10.17a of the Company's Form 10-K for the year ended December
31, 2000). *
10.1810.21 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), (incorporated by reference to Exhibit 10.17a of
the Company's Form 10-K for the year ended December 31, 2000).*
10.1910.22 Second Amendment to Employment Agreement by and between
Wintrust Financial Corporation and Edward J. Wehmer, dated
January 31, 2000.2000, (incorporated by reference to Exhibit 10.19
of the Company's Form 10-K for the year ended December 31,
2000). *
10.2010.23 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).*
10.21- 33 -
10.24 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.)2000).
*
10.2210.25 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). *
10.26 Wintrust Financial Corporation Directors Deferred Fee and
Stock Plan (incorporated by reference to Appendix B of the
Proxy Statement relating to the May 24, 2001 Annual Meeting of
Shareholders of the Company). *
12.1 Computation of Ratio of Earnings to Fixed Charges.
13.1 20002001 Annual Report to Shareholders.
21.1 Subsidiaries of the Registrant.
23.1 ConsentsConsent of Independent Auditors.
(b) Reports on Form 8-K
There were noTwo reports on Form 8-K were filed with the Securities and Exchange
Commission during the fourth quarter of 2000.2001.
o October 16, 2001 - 33Form 8-K filed on November 15, 2001 to
report the Company's letter to shareholders issued in November
2001, related to the third quarter 2001 earnings.
o December 26, 2001 - Form 8-K filed on December 26, 2001 to
report the signing of an agreement to purchase 100% of the
ownership interest of Wayne Hummer Investments, LLC (including
its wholly-owned subsidiary, Focused Investments, LLC) and
Wayne Hummer Management Company.
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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
EDWARD J. WEHMER EDWARD J. WEHMER March 29, 2001
------------------------------------26, 2002
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President and Chief Executive Officer
DAVID A. DYKSTRA DAVID A. DYKSTRA March 29, 2001
------------------------------------26, 2002
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Senior Executive Vice President, Chief Operating
Officer & Chief Financial Officer (Principal
Financial Officer)
BARBARA A. KILIAN BARBARA A. KILIAN March 29, 2001
------------------------------------26, 2002
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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.
JOHN S. LILLARD JOHN S. LILLARD March 29, 2001
------------------------------------26, 2002
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Chairman of the Board of Directors
EDWARD J. WEHMER EDWARD J. WEHMER March 29, 2001
------------------------------------26, 2002
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President and CEO and Director
JOSEPH ALAIMO JOSEPH ALAIMO March 29, 2001
------------------------------------26, 2002
-------------------------------------
Director
PETER D. CRIST PETER D. CRIST March 29, 2001
------------------------------------26, 2002
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Director
BRUCE K. CROWTHER BRUCE K. CROWTHER March 29, 2001
------------------------------------26, 2002
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Director
MAURICE F. DUNNE,BERT A. GETZ, JR. MAURICE F. DUNNE,BERT A. GETZ, JR March 29, 2001
------------------------------------26, 2002
-------------------------------------
Director
WILLIAM C. GRAFT WILLIAM C. GRAFT March 29, 2001
------------------------------------26, 2002
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Director
KATHLEEN R. HORNE KATHLEEN R. HORNE March 29, 2001
------------------------------------26, 2002
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Director
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JOHN W. LEOPOLD JOHN W. LEOPOLDRAYMOND L. KRATZER RAYMOND A. KRATZER March 29, 2001
------------------------------------
Director26, 2002
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DIRECTOR
JAMES B. MCCARTHY JAMES B. MCCARTHY March 29, 2001
------------------------------------26, 2002
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Director
MARQUERITEMARGUERITE SAVARD MCKENNA MARQUERITEMARGUERITE SAVARD MCKENNA March 29, 2001
------------------------------------26, 2002
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Director
ALBIN F. MOSCHNER ALBIN F. MOSCHNER March 29, 2001
------------------------------------26, 2002
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Director
DOROTHY M. MUELLER DOROTHY M. MUELLER March 29, 2001
------------------------------------26, 2002
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Director
THOMAS J. NEIS THOMAS J. NEIS March 29, 2001
------------------------------------26, 2002
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Director
CHRISTOPHER J. PERRY CHRISTOPHER J. PERRY March 26, 2002
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Director
HOLLIS W. RADEMACHER HOLLIS W. RADEMACHER March 29, 2001
------------------------------------26, 2002
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Director
J. CHRISTOPHER REYES J. CHRISTOPHER REYES March 29, 2001
------------------------------------26, 2002
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Director
PETER P. RUSIN PETER P. RUSIN March 29, 2001
------------------------------------26, 2002
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Director
JOHN N. SCHAPER JOHN N. SCHAPER March 29, 2001
------------------------------------26, 2002
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Director
JOHN J. SCHORNACK JOHN J. SCHORNACK March 29, 2001
------------------------------------26, 2002
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Director
INGRID S. STAFFORD INGRID S. STAFFORD March 29, 2001
------------------------------------
Director
JANE R. STEIN JANE R. STEIN March 29, 2001
------------------------------------26, 2002
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Director
KATHARINE V. SYLVESTER KATHARINE V. SYLVESTER March 29, 2001
------------------------------------26, 2002
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Director
LARRY V. WRIGHT LARRY V. WRIGHT March 29, 2001
------------------------------------26, 2002
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Director
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