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, 1999
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
Securities registered pursuant to Section 12(g) of the Act
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant was approximately $110,190,000 as of March 23, 2000. As of March 23,
2000, the registrant had outstanding 8,752,643 shares of Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the year ended December 31,
1999, which is included as Exhibit 13.1 to this Form 10-K, are incorporated by
reference into Parts I and II hereof and portions of the Proxy Statement for the
Company's Annual Meeting of Shareholders to be held on May 25, 2000 are
incorporated by reference into Part III.
TABLE OF CONTENTS
PART I
Page
----
ITEM 1. Business....................................................... 3
ITEM 2. Properties..................................................... 16
ITEM 3. Legal Proceedings.............................................. 18
ITEM 4. Submission of Matters to a Vote of Security Holders............ 18
PART II
ITEM 5. Market for Registrant's Common Equity and Related
Stockholder Matters....................................... 18
ITEM 6. Selected Financial Data........................................ 19
ITEM 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 20
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risks.... 20
ITEM 8. Financial Statements and Supplementary Data.................... 20
ITEM 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 27
PART III
ITEM 10. Directors and Executive Officers of the Registrant............. 27
ITEM 11. Executive Compensation......................................... 27
ITEM 12. Security Ownership of Certain Beneficial Owners and Management. 27
ITEM 13. Certain Relationships and Related Transactions................. 27
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. 28
Signatures...................................................... 33
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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 $1.7 billion at December 31, 1999. The Company is currently
engaged in the business of providing community banking services, trust and
investment services, commercial insurance premium financing, short-term accounts
receivable financing, and certain administrative services, such as data
processing of payrolls, billing and cash management services.
The Company provides community-oriented, personal and commercial banking
services to customers located predominantly in affluent suburbs of Chicago,
Illinois through its six wholly-owned banking subsidiaries (collectively,
"Banks"), all of which started as de novo (i.e., started new) institutions,
including Lake Forest Bank and Trust Company ("Lake Forest Bank"), Hinsdale Bank
and Trust Company ("Hinsdale Bank"), North Shore Community Bank and Trust
Company ("North Shore Bank"), Libertyville Bank and Trust Company ("Libertyville
Bank"), Barrington Bank and Trust Company, N.A. ("Barrington Bank") and Crystal
Lake Bank & Trust Company, N.A. ("Crystal Lake Bank"). Through Hinsdale Bank,
the Company operates its indirect auto segment, which is in the business of
providing new and used automobile loans through a large network of auto
dealerships within the Chicago metropolitan area. All indirect auto loans
originated are currently being retained within each of the Banks' loan
portfolios.
On September 30, 1998, the Company began providing trust and investment services
at each of its Banks through its wholly-owned subsidiary, Wintrust Asset
Management Company, N.A. ("WAMC"). Previously, the Company provided trust
services through the trust department of Lake Forest Bank. The Company provides
financing for the payment of commercial insurance premiums ("premium finance
receivables"), on a national basis, through First Insurance Funding Corporation
("FIFC"), a wholly-owned subsidiary of Crabtree Capital Corporation ("Crabtree")
which is a wholly-owned subsidiary of Lake Forest Bank. On October 26, 1999,
Hinsdale Bank acquired Tricom, Inc. of Milwaukee ("Tricom"), a provider of
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 localized 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.
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Additional information regarding the Company's business and strategies is
included in the 1999 Annual Report to Shareholders, which is filed as Exhibit
13.1 to this Form 10-K. Such information is incorporated herein by reference and
constitutes a part of this report.
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
nine 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. A Lake
Bluff branch of this bank was opened in 1994. 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. In December 1996, Barrington Bank was opened to service the
greater Barrington/Inverness areas. In December 1997, Crystal Lake Bank was
opened to serve the Crystal Lake/Cary communities. In 1999, Crystal Lake Bank
opened two new branch facilities in Crystal Lake. 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 Deerfield,
Illinois. Based on limited industry data available in certain state regulatory
filings and FIFC management's experience in and knowledge of the premium finance
industry, management estimates that, ranked by origination volumes, FIFC is one
of the top five premium finance companies operating in the United States.
Premium finance receivables are originated by FIFC's own sales force, working
with medium and large insurance agents and brokers throughout the United States.
These receivables are retained
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mainly within the Banks' loan portfolios and are also sold to an unaffiliated
financial institution. Insurance premiums are financed primarily for commercial
customers' purchase of property, casualty and liability insurance. Substantially
all premium finance receivables are made to commercial accounts. FIFC is
licensed or otherwise qualified to do business as an insurance premium finance
company in all 50 states and the District of Columbia.
TRUST ACTIVITIES
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With the formation of WAMC in September 1998, the Company intends to expand the
trust and investment management services previously provided through a trust
department of the Lake Forest Bank. As a separately chartered non-depository
bank subsidiary, the Company is better able to offer trust and investment
management services to all of the Banks' communities, which management believes
are some of the best trust markets in Illinois. In addition to offering these
services to existing bank customers at each of the Banks, WAMC intends to target
small to mid-size businesses and newly affluent individuals whose needs command
the personalized attention that will be offered by WAMC and its experienced
trust professionals. Services offered typically include traditional trust
products and services, as well as investment management, financial planning and
401(k) management services. WAMC is subject to regulation, supervision and
regular examination by the OCC.
TRICOM
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On October 26, 1999 (effective as of October 1, 1999), Hinsdale Bank acquired
100% of the common stock of Tricom. This acquisition is another significant step
in the Company's strategy to pursue specialized earning asset niches. Tricom is
a Milwaukee-based company that has been in business for approximately ten years
and specializes in providing, on a national basis, short-term accounts
receivable financing and value-added out-sourced administrative services, such
as data processing of payrolls, billing and cash management services, to clients
in the temporary staffing industry. On an annual basis, Tricom currently
finances and processes payrolls with associated billings in excess of $200
million and generates approximately $7 million in revenues. By virtue of the
Company's funding resources, this acquisition will provide Tricom with
additional capital necessary to expand its financing services in a national
market. In addition to expanding the Company's earning asset niches, this
acquisition will add to the level of fee-based income and augment its
community-based banking revenues.
COMPETITION
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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 office locations, hours and other services, and for loan
originations primarily through the interest
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rates and loan fees they charge, the efficiency and quality of services they
provide to borrowers and the variety of their loan products. Some of the
financial institutions and financial services organizations with which the Banks
compete are not subject to the same degree of regulation as imposed on bank
holding companies, Illinois banking corporations and national banking
associations. In addition, the larger banking organizations have significantly
greater resources than are available to the Banks. As a result, such competitors
have advantages over the Banks in providing certain non-deposit services.
FIFC encounters intense competition from numerous other firms, including a
number of national commercial premium finance companies, companies affiliated
with insurance carriers, independent insurance brokers who offer premium finance
services, banks and other lending institutions. Some of FIFC's competitors are
larger and have greater financial and other resources and are better known than
FIFC. FIFC competes with these entities by emphasizing a high level of knowledge
of the insurance industry, flexibility in structuring financing transactions,
and the timely purchase of qualifying contracts. FIFC believes that its
commitment to account service also distinguishes it from its competitors. It is
FIFC's policy to notify the insurance agent when an insured is in default and to
assist in collection, if requested by the agent. To the extent that affiliates
of insurance carriers, banks, and other lending institutions add greater service
and flexibility to their financing practices in the future, the Company's
operations could be adversely affected. There can be no assurance that FIFC will
be able to continue to compete successfully in its markets.
WAMC's primary competition is with more established trust companies of other
larger bank holding companies. WAMC is also in competition with other trust
companies, brokerage and other financial service companies, stockbrokers and
financial advisors. As a new company, it may be more difficult to successfully
attract new customers than the more established Chicago area trust companies.
However, the Company believes it can successfully compete for trust business by
offering personalized attention and customer service to small to mid-size
businesses and newly affluent individuals. The hiring of several experienced
trust professionals from the more established Chicago area trust companies is
also expected to help in attracting new customer relationships. There can be no
assurances, however, that WAMC will be successful in establishing this new
business as a preferred alternative to the larger trust companies, and as a
profitable venture.
Tricom competes with numerous other firms, including a small number of similar
niche finance companies and payroll processing firms, as well as various finance
companies, banks and other lending institutions. Tricom management believes that
its commitment to service distinguishes itself from competitors. To the extent
that other finance companies, financial institutions and payroll processing
firms add greater programs and services to their existing businesses, Tricom's
operations could be adversely affected. There can be no assurance that Tricom
will be able to continue to compete successfully in its markets.
EMPLOYEES
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At December 31, 1999, the Company and its subsidiaries employed a total of 412
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.
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FORWARD-LOOKING STATEMENTS
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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 development
or events, the Company's business and growth strategies, including anticipated
internal growth, plans to form additional de novo banks and to open new branch
offices, and to pursue additional potential development or acquisition of banks
or specialty finance businesses. Actual results could differ materially from
those addressed in the forward-looking statements as a result of numerous
factors, including the following:
o The level of reported net income, return on average assets and return on
average equity for the Company will in the near term continue to be
impacted by start-up costs associated with de novo bank formations, branch
openings, and expanded trust and investment operations. De novo banks may
typically require 13 to 24 months of operations before becoming profitable,
due to the impact of organizational and overhead expenses, the start-up
phase of generating deposits and the time lag typically involved in
redeploying deposits into attractively priced loans and other higher
yielding earning assets. Similarly, the expansion of trust and investment
services through the Company's newer trust subsidiary, WAMC, is expected to
be in a start-up phase for the next few years, before becoming profitable.
o The Company's success to date has been and will continue to be strongly
influenced by its ability to attract and retain senior management
experienced in banking and financial services.
o Although management believes the allowance for possible loan losses is
adequate to absorb losses that may develop in the existing portfolio of
loans and leases, there can be no assurance that the allowance will prove
sufficient to cover actual future loan or lease losses.
o If market interest rates should move contrary to the Company's gap position
on interest earning assets and interest bearing liabilities, the "gap" will
work against the Company and its net interest income may be negatively
affected.
o The financial services business is highly competitive which may affect the
pricing of the Company's loan and deposit products as well as its services.
o The Company's ability to adapt successfully to technological changes to
compete effectively in the marketplace.
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o The extent of the Company's preparedness efforts, and that of its outside
data processing providers, software vendors, and customers, in implementing
and testing Year 2000 compliant hardware, software and systems, and the
effectiveness of appropriate contingency plans that have been developed.
o Unforeseen future events that may cause slower than anticipated development
and growth of the Tricom business, changes in the temporary staffing
industry or difficulties integrating the Tricom acquisition.
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.
SUPERVISION AND REGULATION
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Bank holding companies and banks are extensively regulated under federal and
state law. References under this heading to applicable statutes or regulations
are brief summaries or portions thereof which do not purport to be complete and
which are qualified in their entirety by reference to those statutes and
regulations. Any change in applicable laws or regulations may have a material
adverse effect on the business of commercial banks and bank holding companies,
including the Company, the Banks, FIFC, WAMC and Tricom. However, management is
not aware of any current recommendations by any regulatory authority which, if
implemented, would have or would be reasonably likely to have a material effect
on liquidity, capital resources, or operations of the Company, the Banks, FIFC,
WAMC or Tricom.
BANK HOLDING COMPANY REGULATION
The Company is registered as a "bank holding company" with the Federal Reserve
and, accordingly, is subject to supervision by the Federal Reserve under the
Bank Holding Company Act (the Bank Holding Company Act and the regulations
issued thereunder, are collectively the "BHC Act"). The Company is required to
file with the Federal Reserve periodic reports and such additional information
as the Federal Reserve may require pursuant to the BHC Act. The Federal Reserve
examines the Company and may examine the Banks, FIFC, WAMC or Tricom.
The BHC Act requires prior Federal Reserve approval for, among other things, the
acquisition by a bank holding company of direct or indirect ownership or control
of more than five percent of the voting shares or substantially all the assets
of any bank or bank holding company, or for a merger or consolidation of a bank
holding company with another bank holding company. With certain exceptions, the
BHC Act prohibits a bank holding company from acquiring direct or indirect
ownership or control of voting shares of any company which is not a bank or bank
holding company and from engaging directly or indirectly in any activity other
than banking or managing or controlling banks or performing services for its
authorized subsidiaries. A bank holding company may, however, engage in or
acquire an interest in a company that engages in activities which the Federal
Reserve has 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
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premium finance business conducted by FIFC. Under the BHC Act and Federal
Reserve regulations, the Company and the Banks are prohibited from engaging in
certain tie-in arrangements in connection with an extension of credit, lease,
sale of property, or furnishing of services.
Any person, including associates and affiliates of and groups acting in concert
with such person, who purchases or subscribes for five percent or more of the
Company's Common Stock may be required to obtain prior approval of the Illinois
Commissioner and the Federal Reserve. Under the Illinois Banking Act, any person
who thereafter acquires stock of the Company such that its interest exceeds ten
percent of the Company, may be required to obtain the prior approval of the
Illinois Commissioner and under the Change in Bank Control Act, a person may be
required to obtain the prior regulatory approval of the FDIC or OCC, in the case
of Barrington Bank, Crystal Lake Bank, and WAMC, and the Federal Reserve before
acquiring the power to directly or indirectly direct the management, operations
or policies of the Company or the Banks or before acquiring control of 25
percent or more of any class of the Company's or Banks' outstanding voting
stock. In addition, any Company, partnership, trust or organized group that
acquires a controlling interest in the Company or the Banks may have to obtain
approval of the Federal Reserve to become a bank holding company and thereafter
be subject to regulation as such.
It is the policy of the Federal Reserve that the Company is expected to act as a
source of financial strength to the Banks and WAMC, and to commit resources to
support the Banks and WAMC. The Federal Reserve takes the position that in
implementing this policy, it may require the Company to provide such support
when the Company otherwise would not consider itself able to do so.
The Federal Reserve has risk-based capital requirements for assessing bank
holding company capital adequacy. These standards define regulatory capital and
establish minimum capital standards in relation to assets and off-balance sheet
exposures, as adjusted for credit risks. Under the Federal Reserve's risk-based
guidelines, capital is classified into two categories. For bank holding
companies, Tier 1 or "core" capital consists of common shareholders' equity,
perpetual preferred and trust preferred stock (subject to certain limitations)
and minority interests in the common equity accounts of consolidated
subsidiaries, and is reduced by goodwill, certain other intangible assets and
certain investments in other companies ("Tier 1 Capital"). Tier 2 capital
consists of the allowance for loan and lease losses (subject to certain
conditions and limitations), perpetual preferred and trust preferred stock,
"hybrid capital instruments," perpetual debt and mandatory convertible debt
securities, and 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 capital to risk-weighted
assets of 8.0%, of which at least 4.0% must be in the form of Tier 1 Capital.
The Federal Reserve also requires a minimum leverage ratio of Tier 1 Capital to
total assets of 3.0%, except that bank holding companies not rated in the
highest category under the regulatory rating system are required to maintain a
leverage ratio of 1.0% to 2.0% above such minimum. The 3.0% Tier 1 Capital to
total assets ratio constitutes the minimum leverage standard for bank holding
companies, and will be used in conjunction with the risk-based ratio in
determining the overall capital adequacy of banking organizations. In addition,
the Federal Reserve continues to consider the Tier 1 leverage ratio in
evaluating proposals for expansion or new activities.
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In its capital adequacy guidelines, the Federal Reserve emphasizes that the
foregoing standards are supervisory minimums and that banking organizations
generally are expected to operate well above the minimum ratios. These
guidelines also provide that banking organizations experiencing internal growth
or making acquisitions will be expected to maintain strong capital positions
substantially above the minimum levels.
BANK REGULATION
Under Illinois law, each of Lake Forest Bank, Hinsdale Bank, North Shore Bank,
Libertyville Bank 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 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. The FDIC
requires that the appropriate federal regulatory authority (the Federal Reserve
Bank and/or the FDIC in the case of Lake Forest Bank, North Shore Bank, Hinsdale
Bank and Libertyville Bank, or the OCC, in the case of Barrington Bank and
Crystal Lake Bank) approve any merger and/or consolidation by or with an insured
bank, as well as the establishment or relocation of any bank or branch office.
The FDIC also supervises compliance with the provisions of federal law and
regulations which place restrictions on loans by FDIC-insured banks to their
directors, executive officers and other controlling persons.
Furthermore, banks are affected by the credit policies of other monetary
authorities, including the Federal Reserve, which regulate the national supply
of bank credit. Such regulation influences overall growth of bank loans,
investments, and deposits and may also affect interest rates charged on loans
and paid on deposits. The monetary policies of the Federal Reserve have had a
significant effect on the operating results of commercial banks in the past and
are expected to continue to do so in the future.
FINANCIAL INSTITUTION REGULATION GENERALLY
Transactions with Affiliates. Transactions between a bank and its holding
company or other affiliates are subject to various restrictions imposed by state
and federal regulatory agencies. Such transactions include loans and other
extensions of credit, purchases of securities and other assets, and payments of
fees or other distributions. In general, 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.
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Dividend Limitations. As a holding company, the Company is primarily dependent
upon dividend distributions from its operating subsidiaries for its income.
Federal and state statutes and regulations impose restrictions on the payment of
dividends by the Company, the Banks and WAMC. See Part II, Item 5 for further
discussion of dividend limitations.
Federal Reserve policy provides that a bank holding company should not pay
dividends unless (i) the bank holding company's net income over the prior year
is sufficient to fully fund the dividends and (ii) the prospective rate of
earnings retention appears consistent with the capital needs, asset quality and
overall financial condition of the bank holding company and its subsidiaries.
Illinois law also places certain limitations on the ability of the Company to
pay dividends. For example, the Company may not pay dividends to its
shareholders if, after giving effect to the dividend, the Company would not be
able to pay its debts as they become due. Since a major potential source of the
Company's funding 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.
As Illinois state-chartered banks, none of Lake Forest Bank, North Shore Bank,
Hinsdale Bank nor Libertyville Bank may pay dividends in an amount greater than
its 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 profit for the year plus the retained net
profits for the preceding two years. Similarly, as national associations,
Barrington Bank, Crystal Lake Bank and WAMC may not declare dividends in any
year in excess of its net profit for the year plus the retained net profits for
the preceding two years. Furthermore, the OCC may, after notice and opportunity
for hearing, prohibit the payment of a dividend by a national bank if it
determines that such payment would constitute an unsafe or unsound practice.
In addition to the foregoing, the ability of the Company, the Banks and WAMC to
pay dividends may be affected by the various minimum capital requirements and
the capital and non-capital standards established under the Federal Deposit
Insurance Company Improvements Act of 1991 ("FDICIA"), as described below. The
right of the Company, its shareholders and its creditors to participate in any
distribution of the assets or earnings of its subsidiaries is further subject to
the prior claims of creditors of the respective subsidiaries.
Standards for Safety and Soundness. The FDIA, as amended by FDICIA and the
Riegle Community Development and Regulatory Improvement Act of 1994 requires the
Federal Reserve, together with the other federal bank regulatory agencies, to
prescribe standards of safety and soundness, by regulations or guidelines,
relating generally to operations and management, asset growth, asset quality,
earnings, stock valuation, and compensation. The Federal Reserve, the OCC and
the federal bank regulatory agencies have adopted, effective August 9, 1995, a
set of guidelines prescribing safety and soundness standards pursuant to FDICIA,
as amended. The guidelines establish general standards relating to internal
controls and information systems, internal audit systems, loan
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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, 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 proposed 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 August 1995, the Federal Reserve, OCC, FDIC and other federal banking
agencies published a final rule modifying their existing risk-based capital
standards to provide for consideration of interest rate risk when assessing the
capital adequacy of a bank. Under the final rule, the Federal Reserve, the OCC
and the FDIC must explicitly include a bank's exposure to declines in the
economic value of its capital due to changes in interest rates as a factor in
evaluating a bank's capital adequacy. The Federal Reserve, the FDIC, the OCC and
other federal banking agencies also have adopted a joint agency policy statement
providing guidance to banks for managing interest rate risk. The policy
statement emphasizes the importance of adequate oversight by management and a
sound risk management process. The assessment of interest rate risk management
made by the banks' examiners will be incorporated into the banks' overall risk
management rating and used to determine the effectiveness of management.
Prompt Corrective Action. FDICIA requires the federal banking regulators,
including the Federal Reserve, the OCC and the FDIC, to take prompt corrective
action with respect to depository institutions that fall below certain capital
standards and prohibits any depository institution from making any capital
distribution that would cause it to be undercapitalized. Institutions that are
not adequately capitalized may be subject to a variety of supervisory actions
including, but not limited
- 12 -
to, restrictions on growth, investment activities, capital distributions and
affiliate transactions and will be required to submit a capital restoration plan
which, to be accepted by the regulators, must be guaranteed in part by any
company having control of the institution (such as the Company). In other
respects, FDICIA provides for enhanced supervisory authority, including greater
authority for the appointment of a conservator or receiver for under-capitalized
institutions. The capital-based prompt corrective action provisions of FDICIA
and their implementing regulations apply to FDIC-insured depository
institutions. However, federal banking agencies have indicated that, in
regulating bank holding companies, the agencies may take appropriate action at
the holding company level based on their assessment of the effectiveness of
supervisory actions imposed upon subsidiary insured depository institutions
pursuant to the prompt corrective action provisions of FDICIA.
Insurance of Deposit Accounts. Under FDICIA, as an FDIC-insured institution,
each of the Banks is required to pay deposit insurance premiums based on the
risk it poses to the insurance fund. The FDIC has authority to raise or lower
assessment rates on insured deposits in order to achieve certain designated
reserve ratios in the insurance funds and to impose special additional
assessments. Each depository institution is assigned to one of three capital
groups: "well capitalized," "adequately capitalized" or "less than adequately
capitalized." Within each capital group, institutions are assigned to one of
three supervisory subgroups: "healthy," "supervisory concern" or "substantial
supervisory concern." Accordingly, there are nine combinations of capital groups
and supervisory subgroups to which varying assessment rates would be applicable.
An institution's assessment rate depends on the capital category and supervisory
category to which it is assigned.
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. The management of each
of the Banks does not know any practice, condition or violation that might lead
to termination of deposit insurance.
The Economic Growth and Regulatory Paperwork Reduction Act of 1996 enacted on
September 30, 1996 provides that beginning with semi-annual periods after
December 31, 1996, deposits insured by the Bank Insurance Fund ("BIF") will also
be assessed to pay interest on the bonds (the "FICO Bonds") issued in the late
1980s by the Financing Company to recapitalize the now defunct Federal Savings &
Loan Insurance Company. For purposes of the assessments to pay interest on the
FICO Bonds, BIF deposits will be assessed at a rate of 20.0% of the assessment
rate applicable to SAIF deposits until December 31, 1999. After the earlier of
December 31, 1999 or the date on which the last savings association ceases to
exist, full pro rata sharing of FICO assessments will begin. The payment of the
assessment to pay interest on the FICO Bonds should not materially affect the
Banks.
Federal Reserve System. The Banks are subject to Federal Reserve regulations
requiring depository institutions to maintain non-interest-earning reserves
against their transaction accounts (primarily NOW and regular checking
accounts). The Federal Reserve regulations generally require 3.0% reserves on
the first $46.5 million of transaction accounts plus 10.0% on the remainder. The
first $4.9 million of otherwise reservable balances (subject to adjustments by
the Federal Reserve) are exempted from the reserve requirements. The Banks are
in compliance with the foregoing requirements.
- 13 -
Community Reinvestment. Under the Community Reinvestment Act ("CRA"), a
financial institution has a continuing and affirmative obligation, consistent
with the safe and sound operation of such institution, to help meet the credit
needs of its entire community, including low- and moderate-income neighborhoods.
The CRA does not establish specific lending requirements or programs for
financial institutions nor does it limit an institution's discretion to develop
the types of products and services that it believes are best suited to its
particular community, consistent with the CRA. 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, and
savings and loan holding company acquisitions. The CRA also requires that all
institutions make public disclosure of their CRA ratings. Each of the Banks
received "satisfactory" ratings from either the Federal Reserve or OCC on their
most recent CRA performance evaluations.
In April 1995, the Federal Reserve, the OCC and other federal banking agencies
adopted amendments revising their CRA regulations. Among other things, the
amended CRA regulations substitute for the prior process-based assessment
factors a new evaluation system that rates an institution based on its actual
performance in meeting community needs. In particular, the focus is on three
tests: (i) a lending test, to evaluate the institution's record of making loans
in its assessment areas; (ii) an investment test, to evaluate the institution's
record of investing in community development projects, affordable housing, and
programs benefiting low or moderate income individuals and businesses; and (iii)
a service test, to evaluate the institution's delivery of services through its
branches, ATMs and other offices. The amended CRA regulations also clarify how
an institution's CRA performance would be considered in the application process.
Brokered Deposits. Well-capitalized institutions are not subject to limitations
on brokered deposits, while an adequately capitalized institution is able to
accept, renew or rollover brokered deposits only with a waiver from the FDIC and
subject to certain restrictions on the yield paid on such deposits.
Undercapitalized institutions are not permitted to accept brokered deposits.
Each of the Banks is eligible to accept brokered deposits (as a result of its
capital levels or having received a waiver) and may use this funding source from
time to time when management deems it appropriate from an asset/liability
management perspective.
Enforcement Actions. Federal and state statutes and regulations provide
financial institution regulatory agencies with great flexibility to undertake
enforcement action against an institution that fails to comply with regulatory
requirements, particularly capital requirements. Possible enforcement actions
range from the imposition of a capital plan and capital directive to
receivership, conservatorship or the termination of deposit insurance.
- 14 -
Interstate Banking and Branching Legislation. On September 29, 1994, the
Riegle-Neal Interstate Banking and Efficiency Act of 1994 (the "Interstate
Banking Act") was enacted. Under the Interstate Banking Act, adequately
capitalized and adequately managed bank holding companies will be allowed to
acquire banks across state lines subject to certain limitations. In addition,
under the Interstate Banking Act, effective June 1, 1997, banks are permitted to
merge with one another across state lines and thereby create a main bank with
branches in separate states. After establishing branches in a state through an
interstate merger transaction, a bank can establish and acquire additional
branches at any location in the state where any bank involved in the interstate
merger could have established or acquired branches under applicable federal and
state law.
Recent Legislation. On November 12, 1999, the Gramm-Leach-Bliley Act ("GLB Act")
was enacted. The GLB Act amended or repealed certain provisions of the
Glass-Steagall Act and other legislation and, among other things, establishes a
comprehensive framework to permit affiliations among commercial banks,
securities firms and insurance companies. In addition, the GLB Act contains
provisions intended to safeguard consumer financial information in the hands of
financial service providers primarily by requiring such entities to disclose
their privacy policies to their customers and allowing customers to "opt out" of
having their financial services providers disclose their confidential financial
information to third parties, subject to certain exceptions. The federal
regulatory agencies have not as of this date issued final regulations under the
GLB Act. The Company does not believe the GLB Act will have a material adverse
affect upon its operations in the near term. However, to the extent the GLB Act
permits banks, securities firms and insurance companies to affiliate, the
financial services industry may experience further consolidation. This could
result in a growing number of larger financial institutions that offer a wider
variety of financial services than the Company currently offers and that can
aggressively compete in the markets the Company currently serves.
MONETARY POLICY AND ECONOMIC CONDITIONS
The earnings of banks and bank holding companies are affected by general
economic conditions and also by the fiscal and monetary policies of federal
regulatory agencies, including the Federal Reserve. Through open market
transactions, variations in the discount rate and the establishment of reserve
requirements, the Federal Reserve exerts considerable influence over the cost
and availability of funds obtainable for lending or investing.
The above monetary and fiscal policies and resulting changes in interest rates
have affected the operating results of all commercial banks in the past and are
expected to do so in the future. The Banks and their respective holding
companies cannot fully predict the nature or the extent of any effects which
fiscal or monetary policies may have on their business and earnings.
SUPPLEMENTAL STATISTICAL DATA
Pages 3, 45 and 46 of the 1999 Annual Report to Shareholders and Item 8 of this
Form 10-K contain supplemental statistical data as required by The Exchange Act
Industry Guide 3 which is incorporated into Regulation S-K of the Securities and
Exchange Acts. 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 1999 Annual Report to Shareholders filed
herewith as Exhibit 13.1 and incorporated herein by reference.
- 15 -
ITEM 2. PROPERTIES
The Company's executive offices are located in the main bank facility of Lake
Forest Bank. Lake Forest Bank has 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 2,100 square foot, a full service banking facility on the west side
of Lake Forest, Illinois at 810 South Waukegan Road, and a drive-in and walk-up
banking facility at 911 S. Telegraph Road in the West Lake Forest Train Station.
Lake Forest Bank also maintains a small office facility at a retirement
community known as Lake Forest Place at 1100 Pembridge Drive in Lake Forest. In
early 2000, a temporary branch facility was opened in the Highwood-Fort Sheridan
area with final construction of a permanent building expected to be completed
later in 2000. Lake Forest Bank maintains ATMs at each of its locations except
the 810 South Waukegan Road facility. Lake Forest Bank has no offsite ATMs.
Hinsdale Bank currently has four physical banking locations, all of which are
owned. The main bank facility is a two story brick building located at 25 East
First Street in downtown Hinsdale, Illinois. The 1,000 square foot drive-in,
walk-up banking facility at 130 West Chestnut is approximately two blocks west
of the main banking facility. Hinsdale Bank also has full service branches in
Clarendon Hills and Western Springs. The buildings in Clarendon Hills and
Western Springs are partially used for bank purposes, with the remainder being
leased to unrelated parties. Hinsdale Bank maintains one ATM machine at each
location, with the exception of Clarendon Hills, which has two. Hinsdale Bank
has no offsite ATMs.
North Shore Bank currently has seven physical banking locations. North Shore
Bank owns the main bank facility, a one story brick building that is located at
1145 Wilmette Avenue in downtown Wilmette, Illinois. North Shore Bank also owns
a 9,600 square foot drive-in, walk-up banking facility at 720 12th Street,
approximately one block west of the main banking facility. North Shore Bank also
leases a full service banking facility at 362 Park Avenue in Glencoe, Illinois
and a branch banking facility in Winnetka, Illinois where it leases
approximately 4,000 square feet. In 1998, North Shore Bank opened a drive-up and
ATM for the Glencoe branch and a small facility at 4th Street and Linden in
Wilmette. In 1999, a full service leased facility was opened in Skokie,
Illinois. North Shore Bank maintains ATMs at each of its locations, except
Winnetka, and has no offsite ATMs.
- 16 -
Libertyville Bank currently has three physical banking locations. Libertyville
Bank owns the main bank facility, which is a 13,000 square foot two story brick
building located at 507 North Milwaukee Avenue in downtown Libertyville,
Illinois. Libertyville Bank also owns a 2,500 square foot drive-in, walk-up
banking facility at 201 Hurlburt Court, approximately five blocks southeast of
the main banking facility. A leased branch facility located at 1167 South
Milwaukee Avenue in south Libertyville was opened in October 1998. Libertyville
Bank maintains ATMs at each of its banking locations and at one offsite
location.
Barrington Bank currently has one physical banking location at 201 South Hough
Street in Barrington, Illinois which is a 12,700 square foot, two story frame
construction building that has an attached drive-through facility. Barrington
Bank has two ATMs, but no offsite ATMs.
In September 1998, Crystal Lake Bank moved into its permanent two story, 12,000
square foot main bank facility located at 70 Williams Street in downtown Crystal
Lake, Illinois. In March 1999, Crystal Lake Bank opened a drive-up facility that
is located in the downtown area, near the main bank facility. In September 1999,
Crystal Lake Bank opened a full service owned facility located at 1000 McHenry
Avenue in south Crystal Lake. Crystal Lake Bank maintains an ATM at each
location.
FIFC's offices are located at 520 Lake Cook Road, Suite 300, Deerfield,
Illinois. FIFC leases approximately 12,000 square feet of office space under a
contract that expires in the year 2000. In mid-2000, FIFC will relocate to a
facility in Northbrook that was purchased in late 1999.
WAMC's executive and operations staff are based in office space leased from Lake
Forest Bank. WAMC also leases office space for its trust professionals at Lake
Forest Bank, Hinsdale Bank, North Shore Bank and Barrington Bank.
Tricom leases approximately 10,700 square feet of office space in Milwaukee,
Wisconsin at 11270 West Park Place, Suite 100.
See Note 6 to the Consolidated Financial Statements contained in the 1999 Annual
Report to Shareholders filed herewith as Exhibit 13.1 and incorporated herein by
reference.
- 17 -
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 is incidental to the Company's
business and, based on information currently available to management, management
believes the outcome of such actions or proceedings will not have a material
adverse effect on the operations or financial position of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of 1999.
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 1999 and 1998.
1999 1998
---- ----
HIGH LOW HIGH LOW
---- --- ---- ---
Fourth quarter $ 18.19 14.69 20.13 16.50
Third quarter 19.12 16.19 23.00 17.13
Second quarter 26.75 17.50 20.38 17.38
First quarter 20.25 15.50 18.50 16.50
APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS
- ---------------------------------------------
As of February 29, 2000 there were 1,473 shareholders of record of the Company's
common stock.
- 18 -
DIVIDENDS ON COMMON STOCK
- -------------------------
In January 2000, the Company's Board of Directors approved the first semi-annual
cash dividend on its common stock. The dividend in the amount of $0.05 per share
was paid on February 24, 2000 to shareholders of record as of February 10, 2000.
The declaration of dividends is at the discretion of the Company's Board of
Directors and depends upon earnings, capital requirements, regulatory
limitations, tax considerations, the operating and financial condition of the
Company and other factors. Additionally, the payment of dividends may be
restricted under certain terms of the Company's Trust Preferred Securities
offering.
Because the Company's consolidated net income consists largely of net income of
the Banks, FIFC and Tricom, the Company's ability to pay dividends depends upon
its receipt of dividends from these entities. The Banks' ability to pay
dividends is regulated by banking statutes. See "Financial Institution
Regulation Generally - Dividend Limitations" on page 10 of this Form 10-K.
During 1998, Lake Forest Bank paid $8.25 million of dividends to the Company.
There were no dividends paid by the Banks to the Company during either 1999 or
1997. In addition, Crystal Lake Bank is subject to additional restrictions
prohibiting the payment of dividends by a de novo bank in its first three years
of operations. The de novo period will end in December 2000 for Crystal Lake
Bank. In addition, the payment of dividends may be restricted under certain
financial covenants in the Company's revolving line of credit.
Reference is made to Note 14 to the Consolidated Financial Statements contained
in the 1999 Annual Report to Shareholders, attached hereto as Exhibit 13.1,
which is incorporated herein by reference, for a description of the restrictions
on the ability of certain subsidiaries to transfer funds to the Company in the
form of dividends.
RECENT SALES OF UNREGISTERED SECURITIES
- ---------------------------------------
In Hinsdale Bank's acquisition of 100% of the stock of Tricom, completed
effective as of October 1, 1999, the Company issued 227,635 shares of Common
Stock as part of the purchase price to the two individual selling shareholders.
Such shares were issued and sold without registration in reliance on the
exemption provided by Section 4(2) of the Securities Act of 1933.
On November 17, 1999, the Company sold 352,942 shares of Common Stock for $6
million in cash directly to two institutional investors in a private placement
transaction exempt from registration pursuant to Section 4(2).
ITEM 6. SELECTED FINANCIAL DATA
Certain information required in response to this item is contained in the 1999
Annual Report to Shareholders under the caption "Selected Financial Highlights"
and is incorporated herein by reference. The Company had no cash dividends
declared during any period during the last five years. The Company had no
Preferred Stock outstanding at December 31, 1999, 1998, 1997 or 1996.
Predecessors of the Company did have $503,000 of Preferred Stock outstanding at
December 31, 1995.
- 19 -
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 1999
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 1999 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 1999
Annual Report to Shareholders under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Asset-Liability
Management" and in Notes 15 and 16 to the Consolidated Financial Statements,
which are incorporated herein by reference. This information should be read in
conjunction with the complete Consolidated Financial Statements and notes
thereto contained in the 1999 Annual Report to Shareholders.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required in response to this item is contained in the 1999
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
Tables presenting the carrying amounts and gross unrealized gains and losses for
securities held-to-maturity and available-for-sale at December 31, 1999 and 1998
are included by reference to Note 2 to the Consolidated Financial Statements
included in the 1999 Annual Report to Shareholders, which is incorporated herein
by reference. Maturities of securities as of December 31, 1999 by maturity
distribution are as follows (in thousands):
Mortgage- Federal
Within From 1 From 5 to After backed Agency
1 Year to 5 years 10 years 10 years securities Bank stock Total
-------- ---------- -------- -------- ---------- ---------- --------
U.S. Treasury obligations $ 1,242 37,929 - - - - 39,171
Federal agency obligations 40,711 24,597 4,876 - - - 70,184
Municipal securities 498 1,545 - 1,995 - - 4,038
Corporate notes and other 23,390 4,015 1,028 10,592 - - 39,025
Mortgage-backed securities (1) - - - - 46,124 - 46,124
Federal Agency Bank stock (2) - - - - - 7,253 7,253
-------- ---------- -------- -------- ---------- ---------- --------
Total $ 65,841 68,086 5,904 12,587 46,124 7,253 205,795
======== ========== ======== ======== ========== ========== ========
- 20 -
The weighted average yield for each range of maturities of securities, on a tax
equivalent basis, is shown below as of December 31, 1999:
Mortgage- Federal
Within From 1 From 5 to After backed Agency
1 Year to 5 years 10 years 10 years securities Bank stock Total
-------- ---------- -------- -------- ---------- ---------- --------
U.S. Treasury obligations 5.13% 5.28% - - - - 5.28%
Federal agency obligations 5.45% 6.06% 5.59% - - - 5.67%
Municipal securities 5.80% 6.54% - 8.25% - - 7.29%
Corporate notes and other 5.16% 7.03% 6.61% 7.21% - - 5.98%
Mortgage-backed securities (1) - - - - 7.38% - 7.38%
Federal Agency Bank stock (2) - - - - - 6.85% 6.85%
-------- ---------- -------- -------- ---------- ---------- --------
Total 5.34% 5.69% 5.77% 7.37% 7.38% 6.85% 6.11%
======== ========== ======== ======== ========== ========== ========
<FN>
(1) Mortgage-backed security maturities may differ from contractual maturities
because the underlying mortgages may be called or prepaid without any
penalties. Therefore, these securities are not included within the maturity
categories above.
(2) Includes stock of the Federal Reserve Bank and of the Federal Home Loan
Bank.
</FN>
LOAN PORTFOLIO
The following table shows the Company's loan portfolio by category for the five
previous fiscal years (in thousands):
At December 31 1999 1998 1997 1996 1995
- ----------- ---- ---- ---- ---- ----
Commercial/commercial real estate $ 485,776 366,229 235,483 182,403 101,271
Home equity 139,194 111,537 116,147 87,303 54,592
Residential real estate 111,026 91,525 61,611 51,673 37,074
Premium finance receivables 225,239 183,165 131,952 59,240 15,703
Indirect auto 255,434 210,137 139,296 91,211 37,323
Tricom finance receivables 17,577 - - - -
Installment and other 49,925 34,650 32,153 23,717 14,032
---------------- ------------ ----------- ------------ ------------
Total loans 1,284,171 997,243 716,642 495,547 259,995
Less: Unearned income 5,922 5,181 4,011 2,999 1,764
---------------- ------------ ----------- ------------ ------------
Total loans, net of
unearned income $1,278,249 992,062 712,631 492,548 258,231
================ ============ =========== ============ ============
Commercial and commercial real estate loans. The commercial loan component is
comprised primarily of commercial real estate loans, lines of credit for working
capital purposes, and term loans for the acquisition of equipment. This category
also includes certain commercial equipment leases. Commercial real estate is
predominantly owner occupied and secured by a first mortgage lien and assignment
of rents on the property. Equipment loans and leases are generally fully
amortized over 24 to 60 months and secured by titles and/or U.C.C. filings.
Working capital lines are generally renewable annually and supported by business
assets, personal guarantees and,
- 21 -
oftentimes, additional collateral. Commercial business lending is generally
considered to involve a higher degree of risk than traditional consumer bank
lending. The vast majority of commercial loans are made within the Banks'
immediate market areas. The increase in this loan category can be attributed to
additional banking facilities, an emphasis on business development calling
programs and superior servicing of existing commercial loan customers which has
increased referrals.
In addition to the home mortgages originated by the Banks, the Company
participates in mortgage warehouse lending by providing interim funding to
unaffiliated mortgage brokers to finance residential mortgages originated by
such brokers for sale into the secondary market. The Company's loans to the
mortgage brokers are secured by the business assets of the mortgage companies as
well as the underlying mortgages, the majority of which are funded by the
Company on a loan-by-loan basis after they have been pre-approved for purchase
by third party end lenders who forward payment directly to the Company upon
their acceptance of final loan documentation. In addition, the Company may also
provide interim financing for packages of mortgage loans on a bulk basis in
circumstances where the mortgage brokers desire to competitively bid a number of
mortgages for sale as a package in the secondary market. Typically, the Company
will serve as sole funding source for its mortgage warehouse lending customers
under short-term revolving credit agreements. Amounts advanced with respect to
any particular mortgages are usually 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, 1999 by date at which the loans mature:
FROM ONE
ONE YEAR TO FIVE AFTER
OR LESS YEARS FIVE YEARS TOTAL
------------ ------------ ------------ ------------
(IN THOUSANDS)
Commercial loans and commercial real
estate loans........................... $ 208,062 225,074 52,640 485,776
Premium finance receivables, net of
unearned income........................ 219,341 - - 219,341
Tricom finance receivables............... 17,577 - - 17,577
Of those loans maturing after one year, approximately $228.5 million have fixed
rates.
Home equity loans. The Company's home equity loan products are generally
structured as lines of credit secured by first or second position mortgage liens
on the underlying property with loan-to-value ratios not exceeding 80%,
including prior liens, if any. The Banks' home equity loans feature competitive
rate structures and fee arrangements. In addition, the Banks periodically offer
promotional home equity loan products as part of their marketing strategy often
featuring lower introductory rates.
- 22 -
Indirect auto loans. As part of its strategy to pursue specialized earning asset
niches to augment loan generation within the Banks' target markets, the Company
finances fixed rate automobile loans funded indirectly through unaffiliated
automobile dealers. As of December 31, 1999, indirect auto loans comprised
approximately 84% of the Company's consumer loan portfolio. Indirect automobile
loans are secured by new and used automobiles and are generated by a large
network of automobile dealers located in the Chicago area with which the Company
has established relationships. These credits generally have an average initial
balance of approximately $15,000 and have an original maturity of 36 to 60
months with the average actual maturity, as a result of prepayments, estimated
to be approximately 35-40 months. The Company does not currently originate any
significant level of sub-prime loans, which are made to individuals with
impaired credit histories at generally higher interest rates, and accordingly,
with higher levels of credit risk. The risk associated with this portfolio is
diversified among many individual borrowers. Management continually monitors the
dealer relationships and the Banks are not dependent on any one dealer as a
source of such loans. Like other consumer loans, the indirect auto loans are
subject to the Banks' stringent credit standards.
Residential real estate mortgages. The residential real estate category
predominantly includes one-to-four family adjustable rate mortgages that have
repricing terms generally from one to three years, construction loans to
individuals, bridge financing loans for qualifying customers and mortgage loans
held for sale into the secondary market. The adjustable rate mortgages are often
non-agency conforming, may have terms based on differing indexes, and relate to
properties located principally in the Chicago metropolitan area or vacation
homes owned by local residents. Adjustable-rate mortgage loans decrease, but do
not eliminate, the risks associated with changes in interest rates. Because
periodic and lifetime caps limit the interest rate adjustments, the value of
adjustable-rate mortgage loans fluctuates inversely with changes in interest
rates. In addition, as interest rates increase, the required payments by the
borrower increases, thus increasing the potential for default. The Company does
not generally originate loans for its own portfolio with long-term fixed rates
due to interest rate risk considerations, however, the Banks do accommodate
customer requests for fixed rate loans by originating and selling these loans
into the secondary market, in connection with which the Company receives fee
income, or by selectively including certain of these loans within the Banks' own
portfolios. A portion of the loans sold by the Banks into the secondary market
is to the Federal National Mortgage Association ("FNMA") whereby the servicing
of those loans is retained. The amount of loans serviced for FNMA as of December
31, 1999 and 1998 was $87.1 million and $82.1 million, respectively. All other
mortgage loans held for sale are sold into the secondary market without the
retention of servicing rights.
Premium finance receivables. The Company originates premium finance receivables
through FIFC, which, in turn, are mostly sold to the Banks and retained within
their loan portfolios. In 1999, the Company began selling a portion of premium
finance receivable originations to an unrelated financial institution, which
resulted in the recognition of gains from the sales of these receivables. FIFC
sold approximately $69 million of receivables to this third party in 1999 and
recognized approximately $1.0 million in gains. As of December 31, 1999, the
balance of these receivables that are being serviced by FIFC totaled
approximately $46.2 million. All premium finance receivables are subject to the
Company's stringent credit standards, and substantially all such loans are made
to commercial customers. The Company rarely finances consumer insurance
premiums.
- 23 -
FIFC generally offers financing of approximately 80% of an insurance premium
primarily to commercial purchasers of property and casualty and liability
insurance who desire to pay insurance premiums on an installment basis. FIFC
markets its financial services primarily by establishing and maintaining
relationships with medium and large insurance agents and brokers and by offering
a high degree of service and innovative products. Senior management is
significantly involved in FIFC's marketing efforts, currently focused almost
exclusively on commercial accounts. Loans are originated by FIFC's own sales
force by working with insurance agents and brokers throughout the United States.
As of December 31, 1999, FIFC had the necessary licensing and other regulatory
approvals to do business in all 50 states and the District of Columbia.
In financing insurance premiums, the Company does not assume the risk of loss
normally borne by insurance carriers. Typically, the insured buys an insurance
policy from an independent insurance agent or broker who offers financing
through FIFC. The insured typically makes a down payment of approximately 15% to
25% of the total premium and signs a premium finance agreement for the balance
due, which amount FIFC disburses directly to the insurance carrier or its agents
to satisfy the unpaid premium amount. The average initial balance of premium
finance loans is approximately $13,000 and the average term of the agreements is
approximately 10 months. As the insurer earns the premium ratably over the life
of the policy, the unearned portion of the premium secures payment of the
balance due to FIFC by the insured. Under the terms of the Company's standard
form of financing contract, the Company has the power to cancel the insurance
policy if there is a default in the payment on the finance contract and to
collect the unearned portion of the premium from the insurance carrier. In the
event of cancellation of a policy, the cash returned in payment of the unearned
premium by the insurer should be sufficient to cover the loan balance and
generally the interest and other charges due as well. The major risks inherent
in this type of lending are (1) the risk of fraud on the part of an insurance
agent whereby the agent fraudulently fails to forward funds to the insurance
carrier or to FIFC, as the case may be; (2) the risk that the insurance carrier
becomes insolvent and is unable to return unearned premiums related to loans in
default; (3) for policies that are subject to an audit by the insurance carrier
(i.e. workers compensation policies where the insurance carrier can audit the
insured actual payroll records), the risk that the initial underwriting of the
policy was such that the premium paid by the insured are not sufficient to cover
the a entire return premium in the event of default; and (4) that the borrower
is unable to ultimately satisfy the debt in the event the returned unearned
premium is insufficient to retire the loan. FIFC has established underwriting
procedures to reduce the potential of loss associated with the aforementioned
risks and has systems in place to continually monitor conditions that would
indicate an increase in risk factors and to act on situations where the
Company's collateral position is in jeopardy.
Tricom finance receivables. The October 1999 acquisition of Tricom added this
category, which consists of high-yielding short-term accounts receivable
financing to clients in the temporary staffing industry located throughout the
United States. The clients' working capital needs arise primarily from the
timing differences between weekly payroll funding and monthly collections from
customers. The primary security for Tricom's finance receivables are the
accounts receivable of its clients and personal guarantees. Tricom generally
advances 80-95% based on various factors including the client's financial
condition, the length of client relationship and the nature of the client's
customer business lines. Typically, Tricom will also provide value-added
out-sourced administrative services to many of these clients, such as data
processing of payrolls, billing and cash management services, which generates
additional fee income.
- 24 -
Installment and Other. Included in the installment and other loan category is a
wide variety of personal and consumer loans to individuals. The Banks have been
originating consumer loans in recent years in order to provide a wider range of
financial services to their customers. Consumer loans generally have shorter
terms and higher interest rates than mortgage loans but generally involve more
credit risk than mortgage loans due to the type and nature of the collateral.
The Company had no loans to businesses or governments of foreign countries at
any time during the reporting periods.
RISK ELEMENTS IN THE LOAN PORTFOLIO
For analysis and review of the allowance for possible loan losses; non-accrual,
past due and restructured loans; other real estate owned; potential problem
loans; and loan concentrations, reference is made to the "Credit Risk and Asset
Quality" section of the Management's Discussion and Analysis of Financial
Condition and Results of Operations of the 1999 Annual Report to Shareholders
filed herewith as Exhibit 13.1, and incorporated herein by reference.
An allocation of the allowance for possible loan losses by major loan type is
presented below (dollars in thousands):
December 31, 1999 December 31, 1998 December 31, 1997
------------------------------- ----------------------------- ---------------------------------
% of loans % of loans % of loans
in each in each in each
category to category to category to
Amount total loans Amount total loans Amount total loans
------------ ------------ ------------ ------------ ------------ ------------
Commercial and
commercial real estate.......... $ 3,435 38% $ 2,480 37% $1,490 33%
Home equity....................... 1,146 11 1,046 11 580 16
Residential real estate........... 126 9 81 9 43 9
Premium finance................... 721 17 919 18 702 18
Indirect auto..................... 1,947 20 1,205 21 679 19
Tricom finance receivables. 120 1 - - - -
Installment and other............. 469 4 494 4 218 5
Unallocated....................... 819 - 809 - 1,404 -
------------ ------------ ------------ ------------ ------------ ------------
Total.............................. $ 8,783 100% $ 7,034 100% $5,116 100%
============ ============ ============ ============ ============ ============
The above allocation is made for analytical purposes. It is not anticipated that
charge-offs during the year ending December 31, 2000 will exceed the amount
allocated to any individual category of loan. 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 1999 Annual
Report to Shareholders filed herewith as Exhibit 13.1, and incorporated herein
by reference.
- 25 -
DEPOSITS
The following table sets forth the scheduled maturities of time deposits in
denominations of $100,000 or more at December 31, 1999 (in thousands):
Maturing within 3 months ............................... $ 113,393
After 3 but within 6 months ............................ 84,991
After 6 but within 12 months ........................... 161,706
After 12 months ........................................ 72,892
---------------
Total ................................................ $ 432,982
===============
Return on Equity and Assets
The following table presents certain ratios relating to the Company's equity
and assets:
Year Ended December 31 1999 1998 1997
- ---------------------- ---- ---- ----
Return on average total assets ................................. 0.63% 0.53% 0.56%
Return on average common shareholders' equity .................. 11.58% 8.68% 7.88%
Dividend payout ratio .......................................... 0.00% 0.00% 0.00%
Average equity to average total assets ......................... 5.4% 6.1% 7.2%
Ending total risk based capital ratio .......................... 8.4% 9.7% 9.4%
Leverage ratio ................................................. 7.1% 7.5% 6.6%
SHORT-TERM BORROWINGS
The information required in connection with Short-Term Borrowings is contained
in the "Analysis of Financial Condition - Short-Term Borrowings and Notes
Payable" sections of the Management's Discussion and Analysis of Financial
Condition and Results of Operations in the 1999 Annual Report to Shareholders
filed herewith as Exhibit 13.1, and is incorporated herein by reference. During
1999, the Company entered into sales of securities under agreements to
repurchase ("reverse repurchase agreements"). Fixed-coupon reverse repurchase
agreements are treated a financings, and the obligations to repurchase
securities sold are reflected as short-term borrowings in the Company's 1999
Annual Report to Shareholders under the caption "Consolidated Statements of
Condition". The dollar amounts of securities underlying the agreements remain in
the available-for-sale securities section of the Consolidated Statements of
Condition. During 1999, the maximum month-end balance of reverse repurchase
agreements was $82.4 million. At December 31, 1999, securities sold under
agreements to repurchase consisted of U.S. government agency mortgage-backed
securities. These securities underlying the agreements were delivered to the
dealer who arranged the transactions. The agreements require the Company to
repurchase the same securities.
- 26 -
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
At its regular board meeting on April 29, 1999, the Company's Board of Directors
voted to approve the Audit Committee's recommendation to engage the accounting
firm of Ernst & Young LLP as independent accountants for the year ended December
31, 1999. The work of KPMG LLP was terminated on April 29, 1999, subsequent to
the Form 10-K report for December 31, 1998, which was filed with the Securities
and Exchange Commission on March 30, 1999. During the audits of the two fiscal
years ended December 31, 1998 and the subsequent interim period through April
29, 1999, there were no disagreements with KPMG LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedures, which disagreements if not resolved to their satisfaction would have
caused them to make reference in connection with their opinion to the subject
matter of the disagreement, nor have there been any reportable events. The
information required in response to this item is contained in the April 29, 1999
Form 8-K that was filed with the Commission on May 6, 1999, and is incorporated
herein by reference.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required in response to this item will be contained in the
Company's definitive Proxy Statement (the "Proxy Statement") for its Annual
Meeting of Shareholders to be held May 25, 2000 under the caption "Management"
and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information required in response to this item will be contained in the
Company's Proxy Statement under the caption "Executive Compensation" and is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information with respect to security ownership of certain beneficial owners and
management is incorporated by reference to the section "Principal Shareholders"
in the Proxy Statement for the Annual Meeting of Shareholders to be held on May
25, 2000.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required in response to this item will be contained in the Proxy
Statement under the caption "Certain Transactions," and is incorporated herein
by reference.
- 27 -
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) Documents filed as part of this Report:
1., 2. Financial Statements and Schedules
----------------------------------
The following financial statements of Wintrust Financial Corporation,
incorporated herein by reference to the 1999 Annual Report to
Shareholders filed as Exhibit 13.1, are filed as part of this document
pursuant to Item 8. Financial Statements and Supplementary Data:
- Consolidated Statements of Condition as of December 31, 1999 and 1998
- Consolidated Statements of Income for the Years Ended December 31,
1999, 1998 and 1997
- Consolidated Statements of Changes in Shareholders' Equity for the
Years Ended December 31, 1999, 1998 and 1997
- Consolidated Statements of Cash Flows for the Years Ended December 31,
1999, 1998 and 1997
- Notes to Consolidated Financial Statements
- Independent Auditors' Reports
No schedules are required to be filed with this report.
3. Exhibits (Exhibits marked with a "*" denote management contracts or
-------- compensatory plans or arrangements)
2.1 Stock Purchase Agreement Among Wintrust Financial Corporation and John
Leopold and Mark Kahn dated September 16, 1999 in relation to the
acquisition of Tricom, Inc. of Milwaukee (incorporated by reference to
Exhibit 2.1 of the Company's October 26, 1999 Form 8-K filed with the
Securities and Exchange Commission on November 1, 1999).
2.2 Post-Closing Indemnification and Escrow Agreement in relation to the
acquisition of Tricom, Inc. of Milwaukee (incorporated by reference to
Exhibit 2.2 of the Company's October 26, 1999 Form 8-K filed with the
Securities and Exchange Commission on November 1, 1999).
3.1 Amended and Restated Articles of Incorporation of Wintrust Financial
Corporation (incorporated by reference to Exhibit 3.1 of the Company's
Form S-1 Registration Statement (No 333-18699) filed with the Securities
and Exchange Commission on December 24, 1996).
3.2 Statement of Resolution Establishing Series of Junior Serial Preferred
Stock A of Wintrust Financial Corporation (incorporated by reference to
Exhibit 3.2 of the Company's Form 10-K for the year ended December 31,
1998).
- 28 -
3.3 Amended By-laws of Wintrust Financial Corporation (incorporated by
reference to Exhibit 3(i) of the Company's Form 10-Q for the quarter
ended June 30, 1998).
4.1 Rights Agreement between Wintrust Financial Corporation and Illinois
Stock Transfer Company, as Rights Agent, dated July 28, 1998
(incorporated by reference to Exhibit 4.1 of the Company's Form 8-A
Registration Statement (No. 000-21923) filed with the Securities and
Exchange Commission on August 28, 1998).
4.2 Preferred Securities Guarantee Agreement by and between Wintrust
Financial Corporation and Wilmington Trust Company dated September 29,
1998, relating to the 9.00% Cumulative Trust Preferred Securities of
Wintrust Capital Trust I (incorporated by reference to Exhibit 4.2 of
the Company's Form 10-K for the year ended December 31, 1998).
4.3 Indenture by and between Wintrust Financial Corporation and Wilmington
Trust Company dated September 29, 1998, relating to the 9.00%
Subordinated Debentures issued to Wintrust Capital Trust I (incorporated
by reference to Exhibit 4.3 of the Company's Form 10-K for the year
ended December 31, 1998).
4.4 Amended and Restated Trust Agreement by and among Wintrust Financial
Corporation, Wilmington Trust Company and the Administrative Trustees
named therein dated September 29, 1998, relating to the 9.00% Cumulative
Trust Preferred Securities of Wintrust Capital Trust I (incorporated by
reference to Exhibit 4.4 of the Company's Form 10-K for the year ended
December 31, 1998).
4.5 Form of Preferred Security Certificate of Wintrust Capital Trust I
(included as an exhibit to Exhibit 4.4).
4.6 Form of Subordinated Debenture (included as an exhibit to Exhibit 4.3).
10.1 $25 Million Revolving Loan Agreement between LaSalle National Bank and
Wintrust Financial Corporation, dated September 1, 1996 (incorporated by
reference to Exhibit 10.1 of the Company's Form S-1 Registration
Statement (No. 333-18699) filed with the Securities and Exchange
Commission on December 24, 1996).
10.2 First Amendment to Loan Agreement between Wintrust Financial Corporation
and LaSalle National Bank, dated March 1, 1997 (incorporated by
reference to Exhibit 10.29 to Registrant's Form 10-K for the year ended
December 31, 1996, filed with the Securities and Exchange Commission on
March 28, 1997).
10.3 Second Amendment to Loan Agreement between Wintrust Financial
Corporation and LaSalle National Bank, dated March 1, 1997 (incorporated
by reference to Exhibit 10.3 of the Company's Form 10-K for the year
ended December 31, 1997, filed with the Securities and Exchange
Commission on March 31, 1998).
- 29 -
10.4 Third Amendment to Loan Agreement between Wintrust Financial Corporation
and LaSalle National Bank, dated September 1, 1998 (incorporated by
reference to Exhibit 10 of the Company's Form 10-Q for the quarter ended
September 30, 1998, filed with the Securities and Exchange Commission on
November 13, 1998).
10.5 Fourth Amendment to Loan Agreement between Wintrust Financial
Corporation and LaSalle Bank National Association, dated September 1,
1999.
10.6 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).*
10.7 Lake Forest Bank & Trust Company Lease for drive-up facility located at
the corner of Bank Lane & Wisconsin Avenue, Lake Forest, Illinois, dated
December 11, 1992 (incorporated by reference to Exhibit 10.6 to
Amendment No. 1 to Registrant's Form S-4 Registration Statement (No.
333-4645) filed with the Securities and Exchange Commission on July 22,
1996).
10.8 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).
10.9 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).
10.10 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).
10.11 North Shore Bank & Trust Company Lease for banking facility located at
362 Park Avenue, Glencoe, Illinois, dated July 27, 1995 (incorporated by
reference to Exhibit 10.6 to Amendment No. 1 to Registrant's Form S-4
Registration Statement (No. 333-4645) filed with the Securities and
Exchange Commission on July 22, 1996).
- 30 -
10.12 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).
10.13 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).
10.14 Real Estate Contract by and between Wolfhoya Investments, Inc. and Amoco
Oil Company, dated March 25, 1996, and amended as of __________, 1996,
relating to the purchase of property located at 201 South Hough,
Barrington, Illinois (incorporated by reference to Exhibit 10.25 of the
Company's Form S-1 Registration Statement (No 333-18699) filed with the
Securities and Exchange Commission on December 24, 1996).
10.15 Form of Employment Agreement entered into between the Company and Howard
D. Adams, former Chairman and Chief Executive Officer (incorporated by
reference to Exhibit 10.26 of the Company's Form S-1 Registration
Statement (No. 333-18699) filed with the Securities and Exchange
Commission on December 24, 1996). *
10.16 Form of Employment Agreement (entered into between the Company and
Edward J. Wehmer, President and Chief Executive Officer). The Company
entered into Employment Agreements with David A. Dykstra, Executive Vice
President and Chief Financial Officer, Robert F. Key, Executive Vice
President-Marketing, Lloyd M. Bowden, Executive Vice
President-Technology and Randolph M. Hibben, Executive Vice
President-Investments during 1998 in substantially identical form to
this exhibit (incorporated by reference to Exhibit 10.15 of the
Company's Form 10-K for the year ended December 31, 1998). *
10.17 First Premium Services, Inc. Lease, as amended, for corporate offices
located at Lake Cook Road, Deerfield, Illinois (incorporated by
reference to Exhibit 10.27 to Amendment No. 1 of the Company's Form S-1
Registration Statement (No. 333-18699) filed with the Securities and
Exchange Commission on January 24, 1997).
10.18 Lake Forest Bank & Trust Company Lease for drive-up and walk-up facility
located at 911 South Telegraph Road, Lake Forest, Illinois, dated
November 7, 1996 (incorporated by reference to Exhibit 10.28 to
Amendment No. 1 of the Company's Form S-1 Registration Statement (No.
333-18699) filed with the Securities and Exchange Commission on January
24, 1997).
10.19 Wintrust Financial Corporation 1997 Stock Incentive Plan (incorporated
by reference to Appendix A of the Proxy Statement relating to the May
----------
22, 1997 Annual Meeting of Shareholders of the Company). *
- 31 -
10.20 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). *
13.1 1999 Annual Report to Shareholders.
21.1 Subsidiaries of the Registrant.
23.1 Consent of Independent Auditors.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
There were three Form 8-K reports filed with the Securities and Exchange
Commission during the fourth quarter of 1999 as follows:
October 19, 1999 - Form 8-K filed on October 28, 1999 to
announce the Company's third quarter 1999 earnings.
October 26, 1999 - Form 8-K filed on November 1, 1999 to
announce the completion of the acquisition of Tricom, Inc. of
Milwaukee.
December 23, 1999 - Form 8-K/A filed on December 23, 1999 to
include the required financial statements and pro forma
financial information in relation to the acquisition of Tricom,
Inc. of Milwaukee.
- 32 -
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 28, 2000
--------------------------
President and Chief Executive Officer
David A. Dykstra DAVID A. DYKSTRA March 28, 2000
--------------------------
Executive Vice President &
Chief Financial Officer
(Principal Financial Officer)
Todd A. Gustafson TODD A. GUSTAFSON March 28, 2000
--------------------------
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 28, 2000
--------------------------
Chairman of the Board of Directors
Edward J. Wehmer EDWARD J. WEHMER March 28, 2000
--------------------------
President and CEO and Director
Joseph Alaimo JOSEPH ALAIMO March 28, 2000
--------------------------
Director
Peter Crist PETER CRIST March 28, 2000
--------------------------
Director
Bruce K. Crowther BRUCE K. CROWTHER March 28, 2000
--------------------------
Director
Maurice F. Dunne, Jr. MAURICE F. DUNNE, JR. March 28, 2000
--------------------------
Director
William C. Graft WILLIAM C. GRAFT March 28, 2000
--------------------------
Director
Kathleen R. Horne KATHLEEN R. HORNE March 28, 2000
--------------------------
Director
- 33 -
John Leopold JOHN LEOPOLD March 28, 2000
--------------------------
Director
James E. Mahoney JAMES E. MAHONEY March 28, 2000
--------------------------
Director
James B. McCarthy JAMES B. MCCARTHY March 28, 2000
--------------------------
Director
Marquerite Savard McKenna MARQUERITE SAVARD MCKENNA March 28, 2000
--------------------------
Director
Albin F. Moschner ALBIN F. MOSCHNER March 28, 2000
--------------------------
Director
Thomas J. Neis THOMAS J. NEIS March 28, 2000
--------------------------
Director
Hollis W. Rademacher HOLLIS W. RADEMACHER March 28, 2000
--------------------------
Director
J. Christopher Reyes J. CHRISTOPHER REYES March 28, 2000
--------------------------
Director
Peter Rusin PETER RUSIN March 28, 2000
--------------------------
Director
John N. Schaper JOHN N. SCHAPER March 28, 2000
--------------------------
Director
John J. Schornack JOHN J. SCHORNACK March 28, 2000
--------------------------
Director
Ingrid S. Stafford INGRID S. STAFFORD March 28, 2000
--------------------------
Director
Jane R. Stein JANE R. STEIN March 28, 2000
--------------------------
Director
Katharine V. Sylvester KATHARINE V. SYLVESTER March 28, 2000
--------------------------
Director
Lemuel H. Tate, Jr. LEMUEL H. TATE, JR. March 28, 2000
--------------------------
Director
Larry Wright LARRY WRIGHT March 28, 2000
--------------------------
Director
- 34 -