WINTRUST FINANCIAL CORPORATION
727 North Bank Lane, Lake Forest, Illinois 60045
NEWS RELEASE
FOR IMMEDIATE RELEASE April 17, 2003
- ---------------------
FOR MORE INFORMATION CONTACT:
Edward J. Wehmer, President & Chief Executive Officer
David A. Dykstra, Senior Executive Vice President & Chief Operating Officer
(847) 615-4096
Website address: www.wintrust.com
WINTRUST FINANCIAL CORPORATION REPORTS
--------------------------------------
RECORD EARNINGS FOR THE FIRST QUARTER;
--------------------------------------
FIRST QUARTER NET EARNINGS UP 30%
---------------------------------
LAKE FOREST, ILLINOIS -- Wintrust Financial Corporation ("Wintrust")
(Nasdaq: WTFC) announced record net income of $8.3 million for the quarter ended
March 31, 2003, an increase of $1.9 million, or 30%, over the $6.4 million
recorded in the first quarter of 2002. On a per share basis, net income for the
first quarter of 2003 totaled $0.45 per diluted common share, a $0.05 per share,
or 13%, increase as compared to the 2002 first quarter total of $0.40 per
diluted common share. The results for the first quarter of 2002 included pretax
income of $1.25 million, or $754,000 after-tax ($0.05 per common diluted share),
for a partial settlement related to a non-recurring charge recorded in 2000. The
lower growth rate in the earnings per share as compared to net income was
primarily due to the issuance of 1,362,750 additional shares of common stock in
June and July of 2002. The return on average equity for the first quarter of
2003 stood at 14.51%.
"We are pleased with the results and growth of the Company as we
continue to address and meet the challenges of the current economic cycle,"
commented Edward J. Wehmer, President and Chief Executive Officer. "In the first
quarter we continued to devote significant efforts to our wealth management
businesses."
1
Mr. Wehmer added, "We successfully completed the acquisition of Lake
Forest Capital Management Company in February, named James F. Duca, II as
Director of Wealth Management, announced the addition of Thomas M. McDonald as
President and CEO of Wayne Hummer Investments, LLC and added to our stable of
experienced customer-oriented brokerage representatives, all aimed at growing
this important business segment. We remain comfortable with the existing range
of the analysts' earnings estimate for 2003 of $1.75 to $1.90 per share."
Key operating measures for Wintrust in 2003, as compared to the prior
year, are shown in the table below:
QUARTER Quarter
ENDED Ended % or
MARCH 31, March 31, basis point (bp)
(Dollars in thousands, except per share data) 2003 2002 Change
- ---------------------------------------------------- ------------------- ------------------ -------------------
Net income $ 8,263 $ 6,362 30 %
Net income per common share - Diluted $ 0.45 $ 0.40 13 %
Net revenue (1) $ 44,347 $ 34,920 27 %
Net interest income $ 26,604 $ 22,168 20 %
Net interest margin (4) 3.15 % 3.48 % (33)bp
Core net interest margin (2) (4) 3.26 % 3.68 % (42)bp
Net overhead ratio (3) 1.21 % 1.43 % (22)bp
Return on average assets 0.89 % 0.92 % (3)bp
Return on average equity 14.51 % 17.12 % (261)bp
At end of period
- ----------------
Total assets $ 3,914,995 $ 2,955,153 32 %
Total loans $ 2,628,480 $ 2,167,550 21 %
Total deposits $ 3,270,295 $ 2,417,315 35 %
Book value per common share $ 13.75 $ 10.41 32 %
Market price per common share $ 28.60 $ 22.97 25 %
Common shares outstanding 17,371,140 15,711,641 11 %
- ------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Net revenue includes net interest income and non-interest income.
(2) Core net interest margin excludes interest expense associated with
Wintrust's Long-term Debt - Trust Preferred Securities.
(3) The net overhead ratio is calculated by netting total non-interest
expense and total non-interest income, annualizing this amount, and
dividing by that period's total average assets. A lower ratio indicates
a higher degree of efficiency.
(4) See "Supplemental Financial Measures/Ratios" for additional information
on this performance measure/ratio.
</FN>
2
On February 20, 2002, Wintrust completed its acquisition of Wayne
Hummer Investments, LLC (including its wholly owned subsidiary, Focused
Investments LLC) and Wayne Hummer Asset Management Company (collectively, the
"Wayne Hummer Companies"). Accounted for as a purchase, the Wayne Hummer
Companies results of operations are included only since the effective date of
acquisition (February 1, 2002) in Wintrust's results. As of March 31, 2003, we
have migrated approximately $252 million of customers' funds from the money
market mutual fund managed by Wayne Hummer Asset Management Company into insured
bank deposits of the Wintrust banks. The introduction of bank and trust products
to customers of the Wayne Hummer Companies continues, as well as the referral of
banking customers to Wayne Hummer's brokerage operation. We now are actively
pursuing the placement of brokerage representatives into the markets served by
Wintrust banks.
On February 4, 2003, Wintrust completed the acquisition of Lake Forest
Capital Management Company based in Lake Forest, Illinois. Lake Forest Capital
Management will retain its name and has been merged into and will operate as a
separate division of Wayne Hummer Asset Management Company, Wintrust's existing
asset management subsidiary. Accounted for as a purchase, Lake Forest Capital
Management Company's results of operations are included only since the effective
date of acquisition (February 1, 2003) in Wintrust's 2003 results. The
acquisition of Lake Forest Capital Management Company will further expand our
wealth management business in the Chicago metropolitan area.
The Company's first quarter 2003 results of operations include three
months revenue and expenses attributable to the Wayne Hummer Companies and two
months revenue and expenses attributable to Lake Forest Capital Management
Company while the first quarter of 2002 includes only two months revenue and
expenses from the Wayne Hummer Companies and no revenue and expenses from Lake
Forest Capital Management Company.
3
Total assets rose to $3.9 billion at March 31, 2003, an increase of
$960 million, or 32%, compared to $3.0 billion a year ago. Total deposits as of
March 31, 2003 were $3.3 billion, an increase of $853 million, or 35%, as
compared to $2.4 billion at March 31, 2002. Total loans grew to $2.6 billion as
of March 31, 2003, a $461 million, or 21%, increase over the $2.2 billion of a
year ago.
For the first quarter of 2003, net interest income totaled $26.6
million, increasing $4.4 million, or 20%, compared to the first quarter of 2002.
Average earning assets grew $846 million over the first quarter of 2002, a 32%
increase. Despite the first quarter's economic uncertainties and the current low
interest rate environment, net interest income in the quarter increased by
$476,000, or 2%, over the fourth quarter of 2002. Loan growth continued in the
first quarter of 2003, despite higher levels of refinancing, with total loans
outstanding at March 31, 2003 increasing from December 31, 2002 by $72 million,
or 11% on an annualized basis. The net interest margin for the first quarter of
2003 increased to 3.15% compared with 3.13% in the fourth quarter of 2002, but
down 33 basis points from the 3.48% recorded in the first quarter of 2002. Net
interest margin pressure over the last 12 months was mitigated by increases in
fees on mortgage loans sold and fees from covered call option transactions.
Non-interest income totaled $17.7 million for the first quarter of
2003, increasing $5.0 million, or 39%, over the same period in 2002. Fees on
mortgage loans increased $2.6 million or 128%, wealth management fees increased
$1.4 million or 30%, gain on sale of premium finance receivables increased
$396,000 or 52%, administrative services revenue associated with Tricom
increased $269,000 or 33%, fees from covered call option transactions increased
$576,000 or 37% and net securities gains increased $601,000. Partially
offsetting the increased fees on mortgage loans sold were the commissions,
included in salaries and employee benefits expense, paid to the mortgage
originators, increasing $697,000 over the first quarter of 2002.
4
Non-interest expense totaled $28.9 million for the first quarter of
2003, increasing $6.2 million, or 27%, over the first quarter of 2002. The
growth in non-interest expense is attributable to increases in salaries and
benefits and operating costs as a result of continued growth and expansion of
the banking franchise (including the commissions paid to mortgage originators
described above and other costs related to increased mortgage loan activities),
normal annual increases in salaries, increased costs of employee benefits and
the growth of the wealth management business. The net overhead ratio for the
first quarter of 2003 improved to 1.21% from 1.43% in the same period last year.
Non-performing assets totaled $13.4 million, minimally increasing over
both the $11.6 million at March 31, 2002 and the $12.6 million at December 31,
2002. The increase in non-performing assets from year-end is attributable to a
$908,000 increase in other real estate owned. Non-performing assets were 0.34%
of total assets, at March 31, 2003. This ratio improved when compared to 0.39%
at March 31, 2002 and remained level with the 0.34% at December 31, 2002. The
level of non-performing assets remains low and manageable.
5
Wintrust is a financial holding company whose common stock is traded on
the Nasdaq Stock Market(R). Its seven suburban Chicago community bank
subsidiaries, each of which was founded as a de novo bank since December 1991,
are located in high income retail markets -- Lake Forest Bank & Trust Company,
Hinsdale Bank & Trust Company, North Shore Community Bank & Trust Company in
Wilmette, Libertyville Bank & Trust Company, Barrington Bank & Trust Company,
Crystal Lake Bank & Trust Company and Northbrook Bank & Trust Company. The banks
also operate facilities in Lake Bluff, Highland Park, Hoffman Estates, Highwood,
Glencoe, Winnetka, Clarendon Hills, Western Springs, Skokie, Wauconda, Cary,
McHenry and Riverside, Illinois. Additionally, the Company operates various
non-bank subsidiaries. First Insurance Funding Corporation, one of the largest
commercial insurance premium finance companies operating in the United States,
serves commercial loan customers throughout the country. Wayne Hummer Trust
Company, a trust subsidiary, allows Wintrust to service customers' trust and
investment needs at each banking location. Tricom, Inc. of Milwaukee provides
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. Wayne Hummer Investments, LLC is a broker-dealer providing a
full range of private client and brokerage services to clients located primarily
in the Midwest. Focused Investments LLC 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 Asset Management
Company provides money management services and advisory services to individual
accounts as well as the Wayne Hummer Companies' four proprietary mutual funds.
Wintrust Information Technology Services Company provides information technology
support, item capture, and statement preparation and lockbox services to the
Wintrust subsidiaries.
Currently, Wintrust operates a total of 32 banking offices and is in
the process of constructing several additional branch facilities. All of the
Company's banking subsidiaries are locally managed with large local boards of
directors. Wintrust Financial Corporation has been one of the fastest growing de
novo bank groups in Illinois.
# # #
6
WINTRUST FINANCIAL CORPORATION
SELECTED FINANCIAL HIGHLIGHTS
THREE MONTHS ENDED
MARCH 31,
-------------------------------------------------------------
(Dollars in thousands, except per share data) 2003 2002
- ------------------------------------------------------------------------------------------- --------------------------
SELECTED FINANCIAL CONDITION DATA (AT END OF PERIOD):
Total assets $ 3,914,995 $ 2,955,153
Total loans 2,628,480 2,167,550
Total deposits 3,270,295 2,417,315
Long-term debt - trust preferred securities 51,004 51,050
Total shareholders' equity 238,905 163,521
- ----------------------------------------------------------------------------------------------------------------------
SELECTED STATEMENTS OF INCOME DATA:
Net interest income $ 26,604 $ 22,168
Net revenue (1) 44,347 34,920
Income before taxes 12,795 9,893
Net income 8,263 6,362
Net income per common share - Basic 0.48 0.42
Net income per common share - Diluted 0.45 0.40
- --------------------------------------------------------------------------------------------------------------------------
SELECTED FINANCIAL RATIOS AND OTHER DATA:
Performance Ratios:
Net interest margin (5) 3.15 % 3.48 %
Core net interest margin (2) (5) 3.26 3.68
Non-interest income to average assets 1.92 1.84
Non-interest expense to average assets 3.12 3.28
Net overhead ratio (3) 1.21 1.43
Efficiency ratio (4) (5) 65.46 64.17
Return on average assets 0.89 0.92
Return on average equity 14.51 17.12
Average total assets $ 3,757,564 $ 2,805,594
Average total shareholders' equity 230,928 150,743
Average loans to average deposits ratio 85.5 % 89.8 %
- --------------------------------------------------------------------------------------------------------------------------
Common Share Data at end of period:
Market price per common share $ 28.60 $ 22.97
Book value per common share $ 13.75 $ 10.41
Common shares outstanding 17,371,140 15,711,641
Other Data at end of period:
Allowance for loan losses $ 19,773 $ 14,697
Non-performing assets $ 13,405 $ 11,576
Allowance for loan losses to total loans 0.75 % 0.68 %
Non-performing assets to total assets 0.34 % 0.39 %
Number of:
Bank subsidiaries 7 7
Non-bank subsidiaries 7 7
Banking offices 32 30
- --------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Net revenue includes net interest income and non-interest income.
(2) The core net interest margin excludes interest expense associated with
Wintrust's Long-term Debt - Trust Preferred Securities.
(3) The net overhead ratio is calculated by netting total non-interest
expense and total non-interest income, annualizing this amount, and
dividing by that period's total average assets. A lower ratio indicates
a higher degree of efficiency
(4) The efficiency ratio is calculated by dividing total non-interest
expense by tax-equivalent net revenues (less securities gains or
losses). A lower ratio indicates more efficient revenue generation.
(5) See "Supplemental Financial Measure/Ratios" for additional information
on this performance measure/ratio.
</FN>
7
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(UNAUDITED) (Unaudited)
MARCH 31, December 31, March 31,
(In thousands) 2003 2002 2002
- --------------------------------------------------------------------------------------------------------------------------
ASSETS
Cash and due from banks $ 78,858 $ 105,671 $ 55,793
Federal funds sold and securities purchased under
resale agreements 331,640 151,251 97,287
Interest bearing deposits with banks 4,870 4,418 1,028
Available-for-sale securities, at fair value 504,190 547,679 365,540
Trading account securities 5,777 5,558 5,298
Brokerage customer receivables 35,405 37,592 64,765
Mortgage loans held-for-sale 96,350 90,446 31,723
Loans, net of unearned income 2,628,480 2,556,086 2,167,550
Less: Allowance for loan losses 19,773 18,390 14,697
- --------------------------------------------------------------------------------------------------------------------------
Net loans 2,608,707 2,537,696 2,152,853
Premises and equipment, net 121,068 118,961 104,780
Accrued interest receivable and other assets 95,939 95,852 50,059
Goodwill 29,515 25,266 25,935
Other intangible assets 2,676 1,165 92
- --------------------------------------------------------------------------------------------------------------------------
Total assets $ 3,914,995 $ 3,721,555 $ 2,955,153
- --------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing $ 313,207 $ 305,540 $ 242,966
Interest bearing 2,957,088 2,783,584 2,174,349
- --------------------------------------------------------------------------------------------------------------------------
Total deposits 3,270,295 3,089,124 2,417,315
Notes payable 46,975 44,025 66,125
Federal Home Loan Bank advances 140,000 140,000 90,000
Subordinated note 25,000 25,000 --
Other borrowings 41,668 46,708 113,624
Long-term debt - trust preferred securities 51,004 50,894 51,050
Accrued interest payable and other liabilities 101,148 98,802 53,518
- --------------------------------------------------------------------------------------------------------------------------
Total liabilities 3,676,090 3,494,553 2,791,632
- --------------------------------------------------------------------------------------------------------------------------
Shareholders' equity:
Preferred stock -- -- --
Common stock 17,371 17,216 15,712
Surplus 157,499 153,614 116,201
Common stock warrants 1,031 81 98
Retained earnings 63,842 56,967 36,482
Accumulated other comprehensive loss (838) (876) (4,972)
- --------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 238,905 227,002 163,521
- --------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 3,914,995 $ 3,721,555 $ 2,955,153
- --------------------------------------------------------------------------------------------------------------------------
8
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED
MARCH 31,
----------------------------------------------
(UNAUDITED) (Unaudited)
(In thousands, except per share data) 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------
INTEREST INCOME
Interest and fees on loans $ 40,591 $ 36,661
Interest bearing deposits with banks 29 3
Federal funds sold and securities purchased under resale agreements 389 293
Securities 5,835 4,500
Trading account securities 38 24
Brokerage customer receivables 357 490
- -----------------------------------------------------------------------------------------------------------------------------
Total interest income 47,239 41,971
- -----------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 17,102 16,675
Interest on Federal Home Loan Bank advances 1,457 897
Interest on subordinated note 444 --
Interest on notes payable and other borrowings 704 943
Interest on long-term debt - trust preferred securities 928 1,288
- -----------------------------------------------------------------------------------------------------------------------------
Total interest expense 20,635 19,803
- -----------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 26,604 22,168
Provision for loan losses 2,641 2,348
- -----------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 23,963 19,820
- -----------------------------------------------------------------------------------------------------------------------------
NON-INTEREST INCOME
Wealth management fees 5,951 4,570
Fees on mortgage loans sold 4,598 2,017
Service charges on deposit accounts 855 738
Gain on sale of premium finance receivables 1,162 766
Administrative services revenue 1,091 822
Net available-for-sale securities gains (losses) 386 (215)
Other 3,700 4,054
- -----------------------------------------------------------------------------------------------------------------------------
Total non-interest income 17,743 12,752
- -----------------------------------------------------------------------------------------------------------------------------
NON-INTEREST EXPENSE
Salaries and employee benefits 17,450 13,362
Equipment expense 1,842 1,730
Occupancy, net 1,898 1,544
Data processing 1,053 1,014
Advertising and marketing 539 524
Professional fees 782 611
Amortization of other intangible assets 139 17
Other 5,208 3,877
- -----------------------------------------------------------------------------------------------------------------------------
Total non-interest expense 28,911 22,679
- -----------------------------------------------------------------------------------------------------------------------------
Income before taxes 12,795 9,893
Income tax expense 4,532 3,531
- -----------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 8,263 $ 6,362
- -----------------------------------------------------------------------------------------------------------------------------
NET INCOME PER COMMON SHARE - BASIC $ 0.48 $ 0.42
- -----------------------------------------------------------------------------------------------------------------------------
NET INCOME PER COMMON SHARE - DILUTED $ 0.45 $ 0.40
- -----------------------------------------------------------------------------------------------------------------------------
CASH DIVIDENDS DECLARED PER COMMON SHARE $ 0.08 $ 0.06
- -----------------------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding 17,308 15,078
Dilutive potential common shares 1,124 913
- -----------------------------------------------------------------------------------------------------------------------------
Average common shares and dilutive common shares 18,432 15,991
- -----------------------------------------------------------------------------------------------------------------------------
9
SUPPLEMENTAL FINANCIAL MEASURES/RATIOS
In accordance with new SEC rules required by the Sarbanes-Oxley Act of 2002
regarding the use of financial measures and ratios not calculated in accordance
with generally accepted accounting principles ("GAAP"), a reconciliation must be
provided that shows these measures and ratios calculated according to GAAP and a
statement why management believes these measures and ratios provide a more
accurate view of performance.
Certain non-GAAP performance measures and ratios are used by management to
evaluate and measure the Company's performance. These include taxable-equivalent
net interest income (including its individual components), net interest margin
(including its individual components), core net interest margin and the
efficiency ratio. Management believes that these measures and ratios provide
users of the Company's financial information a more accurate view of the
performance of the interest-earning assets and interest-bearing liabilities and
of the Company's operating efficiency for comparative purposes. Other financial
holding companies may define or calculate these measures and ratios differently.
See the table below for supplemental data and the corresponding reconciliation
to GAAP financial measures for the three months ended March 31, 2003 and 2002.
Management reviews yields on certain asset categories and the net interest
margin of the Company, and its banking subsidiaries, on a fully
taxable-equivalent basis ("FTE"). In this non-GAAP presentation, net interest
income is adjusted to reflect tax-exempt interest income on an equivalent
before-tax basis. This measure ensures comparability of net interest income
arising from both taxable and tax-exempt sources. Net interest income on a
taxable-equivalent basis is also used in the calculation of the Company's
efficiency ratio. The efficiency ratio, which is calculated by dividing
non-interest expense by total taxable-equivalent net revenue (less securities
gains or losses), measures how much it costs to produce one dollar of revenue.
Management also evaluates the net interest margin excluding the interest expense
associated with the Company's Long-term Debt - Trust Preferred Securities ("Core
Net Interest Margin".) Because these instruments are utilized by the Company
primarily as capital instruments, management finds it useful to view the net
interest margin excluding this expense and deems it to be a more accurate view
of the operational net interest margin of the Company.
QUARTER ENDED MARCH 31,
-------------------------------------------------
(Dollars in thousands) 2003 2002
- --------------------------------------------------------------------------------------------------------------------------------
(A) INTEREST INCOME (GAAP) $ 47,239 $ 41,971
Taxable-equivalent adjustment - Loans 141 188
Taxable-equivalent adjustment - Liquidity management assets 61 20
--------------------- ---------------------
Interest income - FTE $ 47,441 $ 42,179
(B) INTEREST EXPENSE (GAAP) 20,635 19,803
--------------------- ---------------------
Net interest income - FTE $ 26,806 $ 22,376
--------------------- ---------------------
(C) NET INTEREST INCOME (GAAP) (A MINUS B) $ 26,604 $ 22,168
Net interest income - FTE $ 26,806 $ 22,376
Add: Interest expense on long-term debt - trust preferred securities 928 1,288
--------------------- ---------------------
Core net interest income - FTE (1) $ 27,734 $ 23,664
--------------------- ---------------------
(D) NET INTEREST MARGIN (GAAP) 3.13 % 3.45 %
Net interest margin - FTE 3.15 % 3.48 %
Core net interest margin - FTE (1) 3.26 % 3.68 %
(E) EFFICIENCY RATIO (GAAP) 65.76 % 64.55 %
Efficiency ratio - FTE 65.46 % 64.17 %
- --------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Core net interest income and core net interest margin are by definition
a non-GAAP measure/ratio. The GAAP equivalents are the net interest
income and net interest margin determined in accordance with GAAP
(lines C and D in the table).
</FN>
10
LOANS, NET OF UNEARNED INCOME % Growth % Growth
From From
MARCH 31, December 31, March 31, December 31, March 31,
(Dollars in thousands) 2003 2002 2002 2002 (1) 2002
- ---------------------------------------- ------------------ ---------------- ----------------- ---------------- ---------------
BALANCE:
Commercial and commercial real estate $ 1,314,493 $ 1,320,598 $ 1,066,326 (1.9)% 23.3 %
Home equity 395,056 365,521 287,186 32.8 37.6
Residential real estate 135,940 156,213 142,554 (52.6) (4.6)
Premium finance receivables 532,162 461,614 414,330 62.0 28.4
Indirect auto loans 169,311 178,234 184,385 (20.3) (8.2)
Tricom finance receivables 24,416 21,048 17,558 64.9 39.1
Consumer and other loans 57,102 52,858 55,211 32.6 3.4
------------------- ---------------- ----------------- ------------------- ----------------
Total loans, net of unearned income $ 2,628,480 $ 2,556,086 $ 2,167,550 11.5 % 21.3 %
------------------- ---------------- ----------------- ------------------- ----------------
MIX:
Commercial and commercial real estate 50 % 52 % 49 %
Home equity 15 14 13
Residential real estate 5 6 7
Premium finance receivables 20 18 19
Indirect auto loans 7 7 9
Tricom finance receivables 1 1 1
Consumer and other loans 2 2 2
------------------ ---------------- ---------------
Total loans, net of unearned income 100 % 100 % 100 %
------------------ ---------------- ---------------
<FN>
(1) Annualized based on the number of days in the period.
</FN>
DEPOSITS % Growth % Growth
From From
MARCH 31, December 31, March 31, December 31, March 31,
(Dollars in thousands) 2003 2002 2002 2002 (1) 2002
- ---------------------------------------- --------------- ----------------- ----------------- ---------------- -----------------
BALANCE:
Non-interest bearing $ 313,207 $ 305,540 $ 242,966 10.2 % 28.9 %
NOW 347,938 354,499 290,120 (7.5) 19.9
NOW-Brokerage customer deposits 252,223 231,700 -- 35.9 N/M
Money market 416,698 399,441 368,240 17.5 13.2
Savings 155,228 147,669 133,963 20.8 15.9
Time certificate of deposits 1,785,001 1,650,275 1,382,026 33.1 29.2
--------------- ----------------- ----------------- ---------------- -----------------
Total deposits $ 3,270,295 $ 3,089,124 $ 2,417,315 23.8 % 35.3 %
--------------- ----------------- ----------------- -----------------------------------
MIX:
Non-interest bearing 9 % 10 % 10 %
NOW 11 11 12
NOW-Brokerage customer deposits 8 8 --
Money market 13 13 15
Savings 5 5 6
Time certificate of deposits 54 53 57
--------------- ----------------- -----------------
Total deposits 100 % 100 % 100 %
--------------- ----------------- -----------------
<FN>
(1) Annualized based on the number of days in the period. N/M = Not
Meaningful
</FN>
Previously, Wintrust indicated its strategy to attract funds from the money
market mutual fund balances managed by Wayne Hummer Asset Management Company
into deposit accounts of the Wintrust affiliate banks. Consistent with
reasonable interest rate risk parameters, the funds will generally be invested
in loan production of the affiliate banks as well as other investments suitable
for banks. As of March 31, 2003, approximately $252 million had migrated into
insured bank deposits at the affiliate banks. The migration of additional funds
to the affiliate banks is subject to the desire of the customers to make the
transition of their funds into FDIC insured bank accounts, capital capacity of
the Company and the availability of suitable investments in which to deploy the
funds.
11
NET INTEREST INCOME
The following table presents a summary of Wintrust's net interest income and
related net interest margins, calculated on a fully tax-equivalent basis, for
the three-month periods ended March 31, 2003 and 2002:
FOR THE QUARTER ENDED For the Quarter Ended
MARCH 31, 2003 March 31, 2002
----------------------------------------------------------------------------------
(Dollars in thousands) AVERAGE INTEREST RATE Average Interest Rate
- --------------------- ----------------------------------------------------------------------------------
Liquidity management assets (1) (2) (8) $ 715,338 $ 6,314 3.58 % $ 458,922 $ 4,816 4.26 %
Other earning assets (3) 41,221 395 3.89 44,920 514 4.64
Loans, net of unearned income (2) (4) (8) 2,695,146 40,732 6.13 2,101,802 36,849 7.11
----------------------------------------------------------------------------------
Total earning assets (8) $ 3,451,705 $ 47,441 5.57 % $ 2,605,644 $ 42,179 6.56 %
----------------------------------------------------------------------------------
Interest-bearing deposits $ 2,851,643 $ 17,102 2.43 % $ 2,097,388 $ 16,675 3.22 %
Federal Home Loan Bank advances 140,000 1,457 4.22 90,000 897 4.04
Notes payable and other borrowings 92,018 704 3.10 119,698 943 3.20
Subordinated note 25,000 444 7.10 -- -- --
Long-term debt - trust preferred securities 50,894 928 7.29 51,050 1,288 10.09
----------------------------------------------------------------------------------
Total interest-bearing liabilities $ 3,159,555 $ 20,635 2.65 % $ 2,358,136 $ 19,803 3.41 %
----------------------------------------------------------------------------------
Interest rate spread (5) (8) 2.92 % 3.15 %
Net free funds/contribution (6) $ 292,150 0.23 $ 247,508 0.33
---------------- -------- --------------- -------
Net interest income/Net interest margin (8) $ 26,806 3.15 % $ 22,376 3.48 %
-------------- ------- ------------ -------
Core net interest margin (7) (8) 3.26 % 3.68 %
------- -------
- -----------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Liquidity management assets include available-for-sale securities,
interest earning deposits with banks and federal funds sold.
(2) Interest income on tax-advantaged loans and securities reflects a
tax-equivalent adjustment based on a marginal federal corporate tax
rate of 35%. The total adjustments for the quarters ended March 31,
2003 and 2002 were $202,000 and $208,000, respectively.
(3) Other earning assets include brokerage customer receivables and trading
account securities.
(4) Loans, net of unearned income includes mortgages held for sale and
non-accrual loans.
(5) Interest rate spread is the difference between the yield earned on
earning assets and the rate paid on interest-bearing liabilities.
(6) Net free funds are the difference between total average earning assets
and total average interest-bearing liabilities. The contribution is
based on the rate paid for total interest-bearing liabilities.
(7) The core net interest margin excludes interest expense associated with
Wintrust's Long-term Debt - Trust Preferred Securities.
(8) See "Supplemental Financial Measures/Ratios" for additional information
on this performance measure/ratio.
</FN>
Net interest income, which is the difference between interest income and fees on
earning assets and interest expense on deposits and borrowings, is the major
source of earnings for Wintrust. Tax-equivalent net interest income for the
quarter ended March 31, 2003 totaled $26.8 million, an increase of $4.4 million,
or 20%, as compared to the $22.4 million recorded in the same quarter of 2002.
Average loans in the first quarter of 2003 increased $593 million, or 28%, over
the first quarter of 2002.
Net interest margin represents tax-equivalent net interest income as a
percentage of the average earning assets during the period. For the first
quarter of 2003 the net interest margin was 3.15%, a decrease of 33 basis points
when compared to the net interest margin of 3.48% in the prior year first
quarter. The core net interest margin, which excludes the interest expense
related to Wintrust's Long-term Debt - Trust Preferred Securities, was 3.26% for
the first quarter of 2003, and decreased 42 basis points when compared to the
prior year first quarter's core margin of 3.68%. Wintrust's net interest margin
increased slightly when compared to the fourth quarter of 2002.
12
The yield on total earning assets for the first quarter of 2003 was 5.57% as
compared to 6.56% in 2002, a decrease of 99 basis points resulting primarily
from the effect of decreases in general market rates on liquidity management
assets and loans. The yield on earning assets is heavily dependent on the yield
on loans since average loans comprised approximately 78% of total average
earning assets. The first quarter 2003 yield on loans was 6.13%, a 98 basis
point decrease when compared to the prior year first quarter yield of 7.11%.
The rate paid on interest-bearing liabilities for the first quarter of 2003 was
2.65%, compared to 3.41% in the first quarter of 2002, a decline of 76 basis
points. Interest-bearing deposits accounted for 90% of total interest-bearing
funding in the first quarter of 2003, compared to 89% in the same period of
2002. The rate paid on interest-bearing deposits averaged 2.43% for the first
quarter of 2003 versus 3.22% for the same quarter of 2002, a decrease of 79
basis points.
The rate paid on wholesale funding, consisting of Federal Home Loan Bank of
Chicago advances, notes payable, subordinated note and other borrowings, rose to
4.11% in the first quarter of 2003 compared to 3.56% in the first quarter of
2002. The increase in the rate paid on total wholesale funding is primarily
attributable to a $25 million subordinated debt agreement with an unaffiliated
bank that qualifies as Tier II regulatory capital that was completed in the
fourth quarter of 2002. The Company utilizes these borrowing sources to fund the
additional capital requirements of the subsidiary banks, manage its capital,
manage its interest rate risk position, funding at the Wayne Hummer Companies
and for general corporate purposes.
NON-INTEREST INCOME
For the first quarter of 2003, non-interest income totaled $17.7 million and
increased $5.0 million over the prior year first quarter. All categories of
non-interest income increased over the first quarter of 2002. Most notable were
increases in fees on mortgage loans sold and wealth management fees. The first
quarter of 2002 includes a $1.25 million partial settlement related to a
non-recurring charge recorded in 2000. Non-interest income as a percentage of
net revenue increased to 40% in the first quarter of 2003, up from 37% in the
first quarter of 2002.
Wealth management fees is comprised of the trust and asset management revenue of
Wayne Hummer Trust Company (name changed from Wintrust Asset Management Company
in May 2002) and the asset management fees, brokerage commissions, trading
commissions and insurance product commissions at the Wayne Hummer Companies
(including the recently acquired Lake Forest Capital Management Company). The
increase in this category, up $1.4 million over the first quarter of 2002, is
primarily attributable to the additional month of revenues from the Wayne Hummer
Companies included in the 2003 results and the two months of revenue from Lake
Forest Capital Management Company. The acquisition of Lake Forest Capital
Management Company demonstrates Wintrust's commitment to growing the trust and
investment business in order to better service its customers and create a more
diversified revenue stream.
Fees on mortgage loans sold include income from originating and selling
residential real estate loans into the secondary market. For the quarter ended
March 31, 2003, these fees totaled $4.6 million, an increase of $2.6 million, or
128%, from the prior year first quarter and up from the $4.5 million recorded in
the fourth quarter of 2002. Although these fees are a continuous source of
revenue, these fees continue to benefit from high levels of mortgage origination
volumes, particularly refinancing activity caused by the low level of mortgage
interest rates. Management anticipates that the levels of refinancing activity
may taper off in 2003, barring any further reductions in mortgage interest
rates.
13
Service charges on deposit accounts totaled $855,000 for the first quarter of
2003, an increase of $117,000, or 16%, when compared to the same quarter of
2002. This increase was mainly due to a higher deposit base and a larger number
of accounts at the banking subsidiaries. The majority of deposit service charges
relates to customary fees on overdrawn accounts and returned items. The level of
service charges received is substantially below peer group levels, as management
believes in the philosophy of providing high quality service without encumbering
that service with numerous activity charges.
As a result of continued strong loan originations of premium finance
receivables, Wintrust sold excess premium finance receivables volume to an
unrelated third party financial institution in the first quarter of 2003 and
recognized gains of $1.2 million related to this activity, compared with
$766,000 of recognized gains in the first quarter of 2002. Wintrust has a
philosophy of maintaining its average loan-to-deposit ratio in the range of
85-90%. During the first quarter of 2003, the ratio was approximately 86%.
Consistent with Wintrust's strategy to be asset-driven and the desire to
maintain our loan-to-deposit ratio in the aforementioned range, it is probable
that similar sales of premium finance receivables will occur in the future.
The administrative services revenue contributed by Tricom added $1.1 million to
total non-interest income in the first quarter of 2003, an increase of $269,000
from the first quarter of 2002 and an increase of $284,000 from the fourth
quarter of 2002. This revenue comprises income from administrative services,
such as data processing of payrolls, billing and cash management services, to
temporary staffing service clients located throughout the United States. The
revenue increase in the first quarter of 2003 is attributable to the acquisition
of a competitor's customer base in early January 2003. Tricom also earns
interest and fee income from providing short-term accounts receivable financing
to this same client base, which is included in the net interest income category.
Other non-interest income for the first quarter of 2003 totaled $3.7 million and
decreased $354,000, or 9%, from the prior year quarterly total of $4.1 million.
The first quarter of 2002 included pretax income of $1.25 million for a partial
settlement related to a non-recurring charge recorded in 2000. This was
partially offset by a $576,000 increase in premium income from certain covered
call option transactions and $410,000 from Bank Owned Life Insurance ("BOLI").
The premium income from the covered call option transactions totaled $2.1
million in the first quarter of 2003 and $1.6 million in the same period of
2002. Management is able to effectively use the proceeds from selling covered
call options to offset net interest margin compression and administers such
sales in a coordinated process with the Company's overall asset/liability
management. During the third quarter of 2002, the Company purchased $41.1
million of BOLI. The BOLI policies were purchased to consolidate existing term
life insurance contracts of executive officers and to mitigate the mortality
risk associated with death benefits provided for in the executives' employment
contracts. Adjustments to the cash surrender value of the BOLI policies are
recorded as non-interest income.
14
NON-INTEREST EXPENSE
Non-interest expense for the first quarter of 2003 totaled $28.9 million and
increased $6.2 million, or 27%, from the first quarter 2002 total of $22.7
million. All categories of non-interest expense increased over the first quarter
of 2002, reflecting the continued growth and expansion of the banks with
additional branches, the growth in the premium finance business, the addition of
Lake Forest Capital Management in the first quarter of 2003 and a full quarter's
operating expenses attributable to the Wayne Hummer Companies.
Salaries and employee benefits totaled $17.4 million for the first quarter of
2003, an increase of $4.0 million, or 31%, as compared to the prior year's first
quarter total of $13.4 million. This increase was primarily due to an additional
month in the first quarter of 2003 of employee costs associated with the Wayne
Hummer Companies, the salary and benefit costs of Lake Forest Capital Management
Company, increases in salaries and employee benefit costs as a result of
continued growth and expansion of the banking franchise, commissions associated
with increased mortgage loan origination activity and normal annual increases in
salaries and the employee benefit costs.
The remaining categories of non-interest expense, such as occupancy costs,
equipment expense, data processing, advertising and marketing, professional fees
and other increased by $2.1 million over the prior year first quarter due to the
acquisition of the Wayne Hummer Companies, the acquisition of Lake Forest
Capital Management Company and the general growth and expansion of the banks.
15
ASSET QUALITY
Allowance for Loan Losses
A reconciliation of the activity in the balance of the allowance for loan losses
for the three months ended March 31, 2003 and 2002 is shown as follows:
THREE MONTHS ENDED
MARCH 31,
-------------------------------------------------------------
(Dollars in thousands) 2003 2002
- --------------------------------------------------------------- --------------------------- ----------------------------
BALANCE AT BEGINNING OF PERIOD $ 18,390 $ 13,686
PROVISION FOR LOAN LOSSES 2,641 2,348
CHARGE-OFFS:
Commercial and commercial real estate loans 445 225
Home equity loans -- --
Residential real estate loans -- --
Consumer and other loans 103 76
Premium finance receivables 673 867
Indirect automobile loans 216 287
Tricom finance receivables -- --
---------------------- ------------------------
Total charge-offs 1,437 1,455
---------------------- ------------------------
RECOVERIES:
Commercial and commercial real estate loans 43 20
Home equity loans -- --
Residential real estate loans -- --
Consumer and other loans 23 --
Premium finance receivables 67 63
Indirect automobile loans 42 30
Tricom finance receivables 4 5
---------------------- ------------------------
Total recoveries 179 118
---------------------- ------------------------
NET CHARGE-OFFS (1,258) (1,337)
---------------------- ------------------------
BALANCE AT MARCH 31 $ 19,773 $ 14,697
---------------------- ------------------------
ANNUALIZED NET CHARGE-OFFS (RECOVERIES) AS A PERCENTAGE OF AVERAGE:
Commercial and commercial real estate loans 0.13 % 0.08 %
Home equity loans -- --
Residential real estate loans -- --
Consumer and other loans 0.57 0.48
Premium finance receivables 0.45 0.80
Indirect automobile loans 0.40 0.56
Tricom finance receivables (0.07) (0.11)
---------------------- ------------------------
Total loans, net of unearned income 0.19 % 0.26 %
---------------------- ------------------------
Net charge-offs as a percentage of the provision
for loan losses 47.67 % 56.94 %
---------------------- ------------------------
Loans at March 31 $ 2,628,480 $ 2,167,550
---------------------- ------------------------
Allowance as a percentage of loans at period-end 0.75 % 0.68 %
---------------------- ------------------------
16
Past Due Loans and Non-performing Assets
- ----------------------------------------
The following table sets forth Wintrust's non-performing assets at the dates
indicated. The information in the table should be read in conjunction with the
detailed discussion following the table.
MARCH 31, December 31, March 31,
(Dollars in thousands) 2003 2002 2002
- ---------------------------------------------------------------------- ----------------- ------------------ ----------------
PAST DUE GREATER THAN 90 DAYS AND STILL ACCRUING:
Residential real estate and home equity $ 13 $ 32 $ 136
Commercial, consumer and other 2,053 3,047 208
Premium finance receivables 1,574 2,198 1,582
Indirect automobile loans 399 423 249
Tricom finance receivables -- -- --
----------------- ------------------ ----------------
Total past due greater than 90 days and still accruing 4,039 5,700 2,175
----------------- ------------------ ----------------
NON-ACCRUAL LOANS:
Residential real estate and home equity 375 711 1,912
Commercial, consumer and other 2,053 1,132 742
Premium finance receivables 5,694 4,725 6,277
Indirect automobile loans 246 254 266
Tricom finance receivables 14 20 104
----------------- ------------------ ----------------
Total non-accrual 8,382 6,842 9,301
----------------- ------------------ ----------------
TOTAL NON-PERFORMING LOANS:
Residential real estate and home equity 388 743 2,048
Commercial, consumer and other 4,106 4,179 950
Premium finance receivables 7,268 6,923 7,859
Indirect automobile loans 645 677 515
Tricom finance receivables 14 20 104
----------------- ------------------ ----------------
Total non-performing loans 12,421 12,542 11,476
----------------- ------------------ ----------------
OTHER REAL ESTATE OWNED 984 76 100
----------------- ------------------ ----------------
TOTAL NON-PERFORMING ASSETS $ 13,405 $ 12,618 $ 11,576
----------------- ------------------ ----------------
TOTAL NON-PERFORMING LOANS BY CATEGORY AS A PERCENT OF ITS OWN
RESPECTIVE CATEGORY:
Residential real estate and home equity 0.07% 0.14% 0.48%
Commercial, consumer and other 0.30 0.30 0.08
Premium finance receivables 1.37 1.50 1.90
Indirect automobile loans 0.38 0.38 0.28
Tricom finance receivables 0.06 0.10 0.59
----------------- ------------------ ----------------
Total non-performing loans 0.47% 0.49% 0.53%
----------------- ------------------ ----------------
Total non-performing assets as a
percentage of total assets 0.34% 0.34% 0.39%
----------------- ------------------ ----------------
Allowance for loan losses as a
percentage of non-performing loans 159.19% 146.63% 128.07%
----------------- ------------------ ----------------
17
The provision for loan losses totaled $2.6 million for the first quarter of
2003, an increase of $293,000 from a year earlier. For the quarter ended March
31, 2003 net charge-offs totaled $1.3 million, down $78,000 from the $1.3
million of net charge-offs recorded in the same period of 2002. On a ratio basis
annualized net charge-offs as a percentage of average loans decreased to 0.19%
in the first quarter of 2003 from 0.26% in the same period in 2002.
Management has actively monitored and pursued methods to reduce the level of
delinquencies in the indirect auto and premium finance portfolios. Management
believes the allowance for loan losses is adequate to provide for inherent
losses in the portfolio. There can be no assurances, however, that future losses
will not exceed the amounts provided for, thereby affecting future results of
operations. The amount of future additions to the allowance for loan losses will
be dependent upon the economy, changes in real estate values, interest rates,
the regulatory environment, the level of past-due and non-performing loans, and
other factors.
The $908,000 increase in other real estate owned is attributable to possession
taken from two customers on several properties that are in the process of being
sold. Management does not anticipate any material losses in future periods from
the disposition of these properties.
Non-performing Residential Real Estate, Commercial, Consumer and Other Loans
Total non-performing loans for Wintrust's residential real estate, commercial,
consumer and other loans were $4.5 million, up from the $3.0 million reported at
March 31, 2002, and down from the $4.9 million reported at December 31, 2002.
These loans consist primarily of a small number of commercial, residential real
estate and home equity loans, which management believes are well secured and in
the process of collection. The small number of such non-performing loans allows
management to monitor the status of these credits and work with the borrowers to
resolve these problems effectively.
Non-performing Premium Finance Receivables
The table below presents the level of non-performing premium finance receivables
as of March 31, 2003 and 2002, and the amount of net charge-offs for the
quarters then ended.
MARCH 31, March 31,
(Dollars in thousands) 2003 2002
- ------------------------------------------------------------------------- ------------------------- -----------------------
Non-performing premium finance receivables $ 7,268 $ 7,859
- as a percent of premium finance receivables 1.37% 1.90%
Net charge-offs of premium finance receivables $ 606 $ 804
- as a percent of premium finance receivables 0.45% 0.80%
- ------------------------------------------------------------------------- ------------------------- -----------------------
Management continues to see progress in this portfolio and continues to expect
the level of non-performing loans related to this portfolio to remain at
relatively low levels.
The ratio of non-performing premium finance receivables fluctuates throughout
the year due to the nature and timing of canceled account collections from
insurance carriers. Due to the nature of collateral for premium finance
receivables it customarily takes 60-150 days to convert the collateral into cash
collections. Accordingly, the level of non-performing premium finance
receivables is not necessarily indicative of the loss inherent in the portfolio.
In the event of default, Wintrust has the power to cancel the insurance policy
and collect the unearned portion of the premium from the insurance carrier. In
the event of cancellation, the cash returned in payment of the unearned premium
by the insurer should generally be sufficient to cover the receivable balance,
the interest and other charges due. Due to notification requirements and
processing time by most insurance carriers, many receivables will become
delinquent beyond 90 days while the insurer is processing the return of the
unearned premium. Management continues to accrue interest until maturity as the
unearned premium is ordinarily sufficient to pay-off the outstanding balance and
contractual interest due.
18
Non-performing Indirect Automobile Loans
Total non-performing indirect automobile loans were $645,000 at March 31, 2003,
increasing from $515,000 at March 31, 2002 and decreasing from $677,000 at
December 31, 2002. The ratio of these non-performing loans to total indirect
automobile loans stood at 0.38% of total indirect automobile loans at March 31,
2003, 0.28% at March 31, 2002 and 0.38% at December 31, 2002. As noted in the
Allowance for Loan Losses table, net charge-offs as a percent of total indirect
automobile loans has decreased from 0.56% in the first quarter of 2002 to 0.40%
in the first quarter of 2003. The level of non-performing and net charge-offs of
indirect automobile loans continues to be below standard industry ratios for
this type of lending. Due to the impact of the current economic and competitive
environment surrounding this type of lending, management continues to
de-emphasize, in relation to other loan categories, growth in the indirect
automobile loan portfolio. Indirect automobile loans at March 31, 2003 were
$169.3 million, down from $178.2 million at December 31, 2002 and $184.4 million
at March 31, 2002.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements related to Wintrust's
financial performance that are based on estimates. Wintrust intends such
forward-looking statements to be covered by the safe harbor provision 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. Actual results could differ materially from those addressed
in the forward-looking statements due to factors such as changes in economic
conditions, competition, or other factors that may influence the anticipated
growth rate of loans and deposits, the quality of the loan portfolio and loan
and deposit pricing, unanticipated changes in interest rates that negatively
impact net interest income, future events that may cause unforeseen loan or
lease losses, slower than anticipated development and growth of the trust and
investment business, unanticipated changes in the temporary staffing industry,
the ability to adapt successfully to technological changes to compete
effectively in the marketplace, competition and the related pricing of brokerage
and asset management products, unforeseen difficulties in integrating the
acquisition of the Wayne Hummer Companies, unforeseen difficulties in
integrating the acquisition of Lake Forest Capital Management with Wintrust, the
ability to pursue acquisition and expansion strategies and the ability to
attract and retain experienced senior management. Therefore, there can be no
assurances that future actual results will correspond to these forward-looking
statements.
19