UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2000
Commission File Number 0-21923
WINTRUST FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Illinois 36-3873352
- --------------------------------------- ------------------------------------
(State of incorporation of 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)
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 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 the number of shares outstanding of each of issuer's class of common
stock, as of the last practicable date.
Common Stock - no par value, 8,756,177 shares, as of May 8, 2000.
TABLE OF CONTENTS
PART I. -- FINANCIAL INFORMATION
Page
ITEM 1. Financial Statements.__________________________________________ 1-7
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. ______________________________________ 8-25
ITEM 3. Quantitative and Qualitative Disclosures About Market Risks. __ 26-28
PART II. -- OTHER INFORMATION
ITEM 1. Legal Proceedings. ____________________________________________ 29
ITEM 2. Changes in Securities. ________________________________________ 29
ITEM 3. Defaults Upon Senior Securities. ______________________________ 29
ITEM 4. Submission of Matters to a Vote of Security Holders.___________ 29
ITEM 5. Other Information. ____________________________________________ 29
ITEM 6. Exhibits and Reports on Form 8-K. _____________________________ 29
Signatures ____________________________________________________ 30
Exhibit Index _________________________________________________ 31
PART I
ITEM 1 FINANCIAL STATEMENTS
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED)
(In thousands)
March 31, December 31, March 31,
2000 1999 1999
- ---------------------------------------------------------------------------------------------------------------------------
ASSETS
Cash and due from banks $ 42,664 $ 53,066 $ 32,989
Federal funds sold 97,099 28,231 28,945
Interest-bearing deposits with banks 288 2,547 3,545
Available-for-Sale securities, at fair value 210,825 205,795 195,142
Loans, net of unearned income 1,307,796 1,278,249 1,071,016
Less: Allowance for possible loan losses 9,359 8,783 7,518
- ---------------------------------------------------------------------------------------------------------------------------
Net loans 1,298,437 1,269,466 1,063,498
Premises and equipment, net 74,891 72,851 61,966
Accrued interest receivable and other assets 36,382 35,943 31,972
Goodwill and other intangible assets, net 11,305 11,483 1,379
- ---------------------------------------------------------------------------------------------------------------------------
Total assets $ 1,771,891 $1,679,382 $1,419,436
===========================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing $ 155,507 $ 154,034 $ 117,463
Interest bearing 1,378,154 1,309,588 1,135,336
- ---------------------------------------------------------------------------------------------------------------------------
Total deposits 1,533,661 1,463,622 1,252,799
Short-term borrowings 68,721 59,843 40,033
Notes payable 14,050 8,350 2,000
Long-term debt - trust preferred securities 31,050 31,050 31,050
Accrued interest payable and other liabilities 29,574 23,570 16,330
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities 1,677,056 1,586,435 1,342,212
- ---------------------------------------------------------------------------------------------------------------------------
Shareholders' equity:
Preferred stock - - -
Common stock 8,838 8,771 8,161
Surplus 83,487 82,792 73,001
Common stock warrants 100 100 100
Treasury stock, at cost (1,306) - -
Retained earnings (deficit) 6,235 3,555 (4,038)
Accumulated other comprehensive loss (2,519) (2,271) -
- ---------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 94,835 92,947 77,224
- ---------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 1,771,891 $ 1,679,382 $ 1,419,436
===========================================================================================================================
See accompanying notes to unaudited consolidated financial statements.
- 1 -
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share data)
Three Months Ended
March 31,
2000 1999
===========================================================================================
INTEREST INCOME
Interest and fees on loans $ 28,738 $ 21,663
Interest bearing deposits with banks 16 71
Federal funds sold 247 193
Securities 3,308 2,351
- -------------------------------------------------------------------------------------------
Total interest income 32,309 24,278
- -------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits 16,599 12,550
Interest on short-term borrowings and notes payable 1,107 177
Interest on long-term debt - trust preferred securities 735 735
- -------------------------------------------------------------------------------------------
Total interest expense 18,441 13,462
- -------------------------------------------------------------------------------------------
NET INTEREST INCOME 13,868 10,816
Provision for possible loan losses 1,141 784
- -------------------------------------------------------------------------------------------
Net interest income after provision for possible loan losses 12,727 10,032
- -------------------------------------------------------------------------------------------
NON-INTEREST INCOME
Fees on mortgage loans sold 483 1,298
Service charges on deposit accounts 469 334
Trust fees 472 225
Gain on sale of premium finance receivables 1,241 -
Administrative services revenue 1,013 -
Net securities gains 3 -
Other 597 451
- -------------------------------------------------------------------------------------------
Total non-interest income 4,278 2,308
- -------------------------------------------------------------------------------------------
NON-INTEREST EXPENSE
Salaries and employee benefits 6,335 5,079
Occupancy, net 1,010 676
Equipment expense 1,149 628
Data processing 680 482
Advertising and marketing 249 369
Professional fees 295 310
Amortization of intangibles 178 35
Other 2,213 1,957
- -------------------------------------------------------------------------------------------
Total non-interest expense 12,109 9,536
- -------------------------------------------------------------------------------------------
Income before income taxes 4,896 2,804
Income tax expense 1,774 970
- -------------------------------------------------------------------------------------------
NET INCOME $ 3,122 $ 1,834
===========================================================================================
NET INCOME PER COMMON SHARE - BASIC $ 0.35 $ 0.22
===========================================================================================
NET INCOME PER COMMON SHARE - DILUTED $ 0.35 $ 0.22
===========================================================================================
Weighted average common shares outstanding 8,798 8,155
Dilutive potential common shares 213 323
- -------------------------------------------------------------------------------------------
Average common shares and dilutive common shares 9,011 8,478
===========================================================================================
See accompanying notes to unaudited consolidated financial statements.
- 2 -
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
(In thousands, except share data)
Accumulated
other
Compre- Common Retained compre- Total
hensive Common stock earnings Treasury hensive shareholders'
income stock Surplus warrants (deficit) Stock income(loss) equity
------ ----- ------- -------- --------- ----- ------------ ------
Balance at December 31, 1998 $ 8,150 $ 72,878 $ 100 $ (5,872) $ - $ (51) $ 75,205
Comprehensive Income:
Net income $ 1,834 - - - 1,834 - - 1,834
Other Comprehensive Income, net of tax:
Unrealized gains on securities,
net of reclassification adjustment 51 - - - - - 51 51
--------
Comprehensive Income $ 1,885
========
Common stock issued upon exercise
of stock options 11 123 - - - - 134
- ------------------------------------- --------------------------------------------------------------------------------
BALANCE AT MARCH 31, 1999 $ 8,161 $ 73,001 $ 100 $ (4,038) $ - $ - $ 77,224
===================================== ================================================================================
Balance at December 31, 1999 $ 8,771 $ 82,792 $ 100 $ 3,555 $ - $ (2,271) $ 92,947
Comprehensive Income:
Net income $ 3,122 - - - 3,122 - - 3,122
Other Comprehensive Income (Loss),
net of tax:
Unrealized losses on securities,
net of reclassification adjustment (248) - - - - - (248) (248)
--------
Comprehensive Income $ 2,874
========
Cash dividends declared on common stock - - - (442) - - (442)
Purchase of treasury stock, 85,200
shares at cost - - - - (1,306) - (1,306)
Common stock issued upon exercise
of stock options 67 695 - - - - 762
- ------------------------------------- --------------------------------------------------------------------------------
BALANCE AT MARCH 31, 2000 $ 8,838 $ 83,487 $ 100 $ 6,235 $ (1,306) $ (2,519) $ 94,835
===================================== ================================================================================
Three Months Ended March 31,
2000 1999
------ ------
Disclosure of reclassification amount:
Unrealized holding gains (losses) arising during the period $ (439) $ 57
Less: Reclassification adjustment for gains included in net income 3 -
Less: Income tax expense (benefit) (194) 6
-------- -------
Net unrealized gains (losses) on securities $ (248) $ 51
======== =======
See accompanying notes to unaudited consolidated financial statements.
- 3 -
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in thousands)
For the Period Ended
March 31,
- ----------------------------------------------------------------------------------------------------
2000 1999
- ----------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES:
Net income $ 3,122 $ 1,834
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for possible loan losses 1,141 784
Depreciation and amortization 1,466 993
Deferred income tax benefit (75) (370)
Net accretion/amortization of securities 241 (135)
Originations of mortgage loans held for sale (35,839) (89,574)
Proceeds from sales of mortgage loans held for sale 43,962 88,575
Purchase of trading securities (2,940) -
Proceeds from sale of trading securities 2,945 -
Gain on sale of trading securities (5) -
Gain on sale of premium finance receivables (1,241) -
Gain on sale of Available-for-Sale securities (3) -
Decrease in other assets, net (176) (1,614)
Increase in other liabilities, net 6,004 3,691
- ----------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 18,602 4,184
- ----------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Proceeds from maturities of Available-for-Sale securities 16,233 144,025
Proceeds from maturities of Held-to-Maturity securities - 5,000
Proceeds from sale of Available-for-Sale securities 1,998 -
Purchases of Available-for-Sale securities (23,935) (129,854)
Proceeds from sale of premium finance receivables 71,414 -
Net decrease in interest-bearing deposits with banks 2,259 4,318
Net increase in loans (108,408) (78,255)
Purchases of premises and equipment, net (3,328) (5,759)
- ----------------------------------------------------------------------------------------------------
NET CASH USED FOR INVESTING ACTIVITIES (43,767) (60,525)
- ----------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Increase in deposit accounts 70,039 23,645
Increase in short-term borrowings, net 8,878 40,033
Proceeds from notes payable 5,700 2,000
Common stock issued upon exercise of stock options 762 134
Repurchase of common stock (1,306) -
Dividends paid (442) -
- ----------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 83,631 65,812
- ----------------------------------------------------------------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 58,466 9,471
- ----------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 81,297 52,463
- ----------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $139,763 $ 61,934
====================================================================================================
See accompanying notes to unaudited consolidated financial statements.
- 4 -
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
---------------------
The consolidated financial statements of Wintrust Financial Corporation and
Subsidiaries ("Wintrust" or "Company") presented herein are unaudited, but in
the opinion of management reflect all necessary adjustments of a normal or
recurring nature for a fair presentation of results as of the dates and for the
periods covered by the consolidated financial statements.
Wintrust is a bank holding company currently engaged in the business of
providing community banking services through its banking subsidiaries to
customers in the Chicago metropolitan area, trust and investment services,
financing of commercial insurance premiums, and financing and administrative
services to the temporary services industry.
As of March 31, 2000, Wintrust had six wholly-owned bank subsidiaries
(collectively, "Banks"), all of which started as de novo institutions, including
Lake Forest Bank & Trust Company ("Lake Forest Bank"), Hinsdale Bank & Trust
Company ("Hinsdale Bank"), North Shore Community Bank & Trust Company ("North
Shore Bank"), Libertyville Bank & Trust Company ("Libertyville Bank"),
Barrington Bank & Trust Company, N.A. ("Barrington Bank") and Crystal Lake Bank
& Trust Company, N.A. ("Crystal Lake Bank").
The Company provides financing of commercial insurance premiums ("premium
finance receivables") on a national basis, through its subsidiary, First
Insurance Funding Corporation ("FIFC"). FIFC is a wholly-owned subsidiary of
Crabtree Capital Corporation ("Crabtree") which is a wholly-owned subsidiary of
Lake Forest Bank. On September 30, 1998, Wintrust began operating a wholly-owned
trust and investment subsidiary, Wintrust Asset Management Company, N.A.
("WAMC"), which currently provides trust and investment services at four of the
Wintrust banks. Previously, the Company provided trust services through the
trust department of Lake Forest Bank. In October 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 clients located throughout the United
States.
The accompanying consolidated financial statements are unaudited and do not
include information or footnotes necessary for a complete presentation of
financial condition, results of operations or cash flows in accordance with
generally accepted accounting principles. The consolidated financial statements
should be read in conjunction with the consolidated financial statements and
notes included in the Company's Annual Report and Form 10-K for the year ended
December 31, 1999. Operating results for the three-month periods presented are
not necessarily indicative of the results which may be expected for the entire
year. Reclassifications of certain prior period amounts have been made to
conform with the current period presentation.
(2) Cash and Cash Equivalents
-------------------------
For the purposes of the Consolidated Statements of Cash Flows, the Company
considers cash and cash equivalents to include cash and due from banks and
federal funds sold which have an original maturity of 90 days or less.
- 5 -
(3) Earnings Per Share
------------------
The following table shows the computation of basic and diluted earnings per
share (in thousands, except per share data):
For the Three Months
Ended March 31,
----------------------------------
2000 1999
---------------- ---------------
Net income (A) $ 3,122 $ 1,834
================ ===============
Average common shares outstanding (B) 8,798 8,155
Effect of dilutive common shares 213 323
---------------- ---------------
Weighted average common shares and
effect of dilutive common shares (C) 9,011 8,478
================ ===============
Net income per average
common share - Basic (A/B) $ 0.35 $ 0.22
================ ===============
Net income per average
common share - Diluted (A/C) $ 0.35 $ 0.22
================ ===============
The effect of dilutive common shares outstanding results from stock options,
stock warrants and shares to be issued under the Employee Stock Purchase Plan,
all being treated as if they had been either exercised or issued, and are
computed by application of the treasury stock method.
(4) Long-term Debt - Trust Preferred Securities
-------------------------------------------
In October 1998, the Company completed its offering of $31.05 million of 9.00%
Cumulative Trust Preferred Securities. For purposes of generally accepted
accounting principles, these securities are considered to be debt securities and
not a component of shareholders' equity. The Trust Preferred Securities offering
has increased Wintrust's regulatory capital under Federal Reserve guidelines.
Interest expense on the Trust Preferred Securities is also deductible for income
tax purposes. For further information on the Trust Preferred Securities, please
refer to Note 10 of the Company's Consolidated Financial Statements included in
the Annual Report and Form 10-K for the year ended December 31, 1999.
(5) Segment Information
-------------------
The segment financial information provided in the following tables has been
derived from the internal profitability reporting system used by management and
the chief decision makers to monitor and manage the financial performance of the
Company. The Company evaluates segment performance based on after-tax profit or
loss and other appropriate profitability measures common to each segment.
Certain indirect expenses have been allocated based on actual volume
measurements and other criteria, as appropriate. Inter-segment revenue and
transfers are generally accounted for at current market prices. The other
category, as shown in the following table, reflects parent company information.
- 6 -
The net interest income and segment profit of the banking segment includes
income and related interest costs from portfolio loans that were purchased from
the premium finance and indirect auto segments. For purposes of internal segment
profitability analysis, management reviews the results of its premium finance
and indirect auto segments as if all loans originated and sold to the banking
segment were retained within that segment's operations; thereby causing the
inter-segment elimination amounts shown in the following table. The following
table is a summary of certain operating information for reportable segments for
the three-month periods ended March 31, 2000 and 1999 (in thousands):
For the Three Months
Ended March 31,
2000 1999
---------------- ----------------
NET INTEREST INCOME:
Banking $ 12,594 $ 10,056
Premium Finance 3,532 3,132
Indirect Auto 1,875 1,864
Tricom 797 N/A
Trust 122 108
Inter-segment eliminations (4,156) (3,609)
Other (896) (735)
---------------- ----------------
Total $ 13,868 $ 10,816
================ ================
NON-INTEREST INCOME:
Banking $ 1,714 $ 2,140
Premium Finance 1,241 -
Indirect Auto - -
Tricom 1,017 N/A
Trust 472 225
Inter-segment eliminations (166) (57)
---------------- ----------------
Total $ 4,278 $ 2,308
================ ================
SEGMENT PROFIT (LOSS):
Banking $ 2,848 $ 2,361
Premium Finance 1,331 944
Indirect Auto 550 671
Tricom 283 N/A
Trust (121) (232)
Inter-segment eliminations (1,077) (1,206)
Other (692) (704)
---------------- ----------------
Total $ 3,122 $ 1,834
================ ================
SEGMENT ASSETS:
Banking $1,793,904 $1,450,907
Premium Finance 303,524 274,444
Indirect Auto 260,691 236,718
Tricom 30,667 N/A
Trust 2,375 2,672
Inter-segment eliminations (624,112) (549,907)
Other 4,842 4,602
---------------- ----------------
Total $1,771,891 $1,419,436
================ ================
- 7 -
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of financial condition as of March 31,
2000, compared with December 31, 1999, and March 31, 1999, and the results of
operations for the three-month periods ended March 31, 2000 and 1999 should be
read in conjunction with the Company's unaudited consolidated financial
statements and notes contained in this report. This discussion contains
forward-looking statements that involve risks and uncertainties and, as such,
future results could differ significantly from management's current
expectations. See the last section of this discussion for further information on
forward-looking statements.
OVERVIEW AND STRATEGY
The Company's operating subsidiaries were organized within the last nine years,
with an average life of its six subsidiary banks of approximately five years.
Wintrust has grown rapidly during the past few years and its Banks have been
among the fastest growing community-oriented de novo banking operations in
Illinois and the country. Because of the rapid growth, the historical
performance of the Banks, FIFC and WAMC has been affected by costs associated
with growing market share, establishing new de novo banks, opening new branch
facilities, and building an experienced management team. The Company's financial
performance over the past several years generally reflects improving
profitability of the operating subsidiaries, as they mature, offset by the
significant costs of opening new banks and branch facilities. The Company's
experience has been that it generally takes 13-24 months for new banking offices
to first achieve operational profitability. Similarly, management currently
expects a start-up phase for WAMC to continue for up to two more years before
its operations become profitable.
Lake Forest Bank, Hinsdale Bank, North Shore Bank, Libertyville Bank, Barrington
Bank and Crystal Lake Bank began operations in December 1991, October 1993,
September 1994, October 1995, December 1996 and December 1997, respectively.
Subsequent to those initial dates of operations, each of the Banks, except
Barrington Bank, have established additional full-service banking facilities.
FIFC began operations in 1990 and is primarily engaged in the business of
financing insurance premiums written through independent insurance agents or
brokers on a national basis for commercial customers. On September 30, 1998,
WAMC began operations and offers a full range of trust and investment services
at many of the Wintrust banks.
Crystal Lake Bank, since moving into its permanent location in downtown Crystal
Lake in September 1998, opened a new drive-thru facility in March 1999 and a new
full-service branch facility in south Crystal Lake in September 1999. In October
1999, North Shore Bank opened a new full-service branch facility in Skokie,
Illinois. In February 2000, the Lake Forest Bank opened a new temporary branch
facility in Highwood, Illinois. A permanent facility in Highwood is currently
under construction and should be open later this year. Expenses related to these
new banking operations predominantly impact only the 2000 operating results
presented in this discussion and analysis.
While committed to a continuing growth strategy, management's current focus is
to balance further asset growth with earnings growth by seeking to more fully
leverage the existing capacity within each of the Banks, FIFC, WAMC and Tricom.
One aspect of this strategy is to continue to pursue specialized earning asset
niches, and to maintain the mix of earning assets such that loans, which are
higher yielding, are kept at a level of between 85% and
- 8 -
90% of our deposit funds. Another aspect of this strategy is a continued focus
on less aggressive deposit pricing at those Banks with significant market share
and more established customer bases.
FIFC has been the Company's most significant specialized earning asset niche and
is expected to reach in excess of $900 million in premium finance receivable
volume during 2000. The majority of these receivables have been retained within
the Banks' loan portfolios as part of the strategy noted above. However, since
the second quarter of 1999, as a result of the continued solid growth in loan
originations, FIFC has, from time to time, sold a portion of new receivables to
an unrelated third party. In addition to recognizing gains on the sale of these
receivables, the proceeds have provided the Company with additional liquidity.
It is possible that similar future sales may occur depending on the level of new
volume growth in relation to the desired capacity within the Banks' loan
portfolios.
The October 1999 acquisition of Tricom 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. 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. Tricom's
revenue principally consists of interest income from financing activities and
fee-based revenues from administrative services. 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.
Other newer specialized earning asset niches include Lake Forest Bank's MMF
Leasing Services equipment leasing division, a previously established small
business that was acquired in July 1998, and Barrington Bank's recently
established program that provides lending and deposit services to condominium,
homeowner and community associations. In addition, Hinsdale Bank's mortgage
warehouse lending program provides loan and deposit services to approximately
thirty mortgage brokerage companies located predominantly in the Chicago
metropolitan area. The Company plans to continue pursuing the development or
acquisition of other specialty finance businesses that generate assets suitable
for bank investment and/or secondary market sales.
With the formation of WAMC, the Company is expanding the trust and investment
management services that had already been provided prior to October 1998 through
the trust department of the Lake Forest Bank. With a separately chartered trust
subsidiary, the Company is now better able to offer trust and investment
management services to all communities served by Wintrust banks, 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, the
Company believes WAMC can successfully compete for trust business by targeting
small to mid-size businesses and newly affluent individuals whose needs command
the personalized attention that is offered by WAMC's experienced trust
professionals. Since the fourth quarter of 1998, WAMC has provided the services
of experienced trust professionals at North Shore Bank, Hinsdale Bank and
Barrington Bank. As in the past, a full complement of trust professionals
continues to operate from offices at the Lake Forest Bank. Prospective trust and
investment customers at Libertyville Bank and Crystal Lake Bank are currently
being served on an appointment basis, as the need arises. Services offered by
WAMC typically will include traditional trust products and services, as well as
investment management, financial planning and 401(k) management services.
- 9 -
Similar to starting a de novo bank, the introduction of expanded trust services
has caused relatively high overhead levels when compared to initial fee income
generated to date. The overhead consists primarily of the salaries and benefits
of experienced trust professionals. Management currently anticipates that WAMC's
efforts to attract trust business will begin to generate sufficient trust fees
to absorb the overhead of WAMC and make that entity a contributor to the
Company's profits within the next two years.
RESULTS OF OPERATIONS
EARNINGS SUMMARY
Net income for the quarter ended March 31, 2000 totaled $3.1 million, an
increase of $1.3 million, or 70%, over the first quarter of 1999. On a per share
basis, net income for the first quarter of 2000 totaled $0.35 per diluted common
share, a $0.13 per share, or 59%, increase over the first quarter of 1999. The
return on average equity for the first quarter of 2000 increased to 13.32% from
9.75% for the prior year quarter.
NET INTEREST INCOME
The following tables present a summary of the Company's net interest income and
related net interest margins, calculated on a fully taxable equivalent basis,
for the three-month periods ended March 31, 2000 and 1999:
For the Quarter Ended For the Quarter Ended
March 31, 2000 March 31, 1999
----------------------------------------- ---------------------------------------
(dollars in thousands) Average Interest Rate Average Interest Rate
- ---------------------- ---------------- ------------- ---------- --------------- ------------- ---------
Liquidity management assets (1) (2) $ 228,838 $ 3,548 6.24% $201,465 $ 2,615 5.22%
Loans, net of unearned income (2) 1,309,355 28,844 8.86 1,029,591 21,700 8.55
---------------- ------------- ---------- --------------- ------------- ---------
Total earning assets 1,538,193 32,392 8.47% 1,231,056 24,315 8.01%
---------------- ------------- ---------- --------------- ------------- ---------
Interest-bearing deposits 1,333,012 16,598 5.01% 1,093,156 12,550 4.66%
Short-term borrowings and notes payable 74,048 1,108 6.02 15,946 177 4.50
Long-term debt - trust preferred securities 31,050 735 9.47 31,050 735 9.47
---------------- ------------- ---------- --------------- ------------- ---------
Total interest-bearing liabilities 1,438,110 18,441 5.16% 1,140,152 13,462 4.79%
---------------- ------------- ---------- --------------- ------------- ---------
Tax-equivalent net interest income $ 13,951 $ 10,853
============= =============
Net interest margin 3.65% 3.58%
========== =========
Core net interest margin (3) 3.76% 3.66%
========== =========
- -------------------------------
<FN>
(1) Liquidity management assets include securities, interest earning deposits
with banks and federal funds sold.
(2) Interest income on tax-advantaged loans and securities reflects a
tax-equivalent adjustment based on a marginal federal corporate tax rate
of 35% and 34% in 2000 and 1999, respectively. The total adjustment for
the quarters ended March 31, 2000 and 1999 were $83,000 and $37,000,
respectively.
(3) The core net interest margin excludes the net impact of the Company's
9.00% Cumulative Trust Preferred Securities offering and certain
discretionary investment leveraging transactions.
</FN>
Net interest income is defined as the difference between interest income and
fees on earning assets and interest expense on deposits, borrowings and
long-term debt. The related net interest margin represents the net interest
income on a tax-equivalent basis as a percentage of average earning assets
during the period.
- 10 -
Tax-equivalent net interest income for the quarter ended March 31, 2000 totaled
$14.0 million, an increase of $3.1 million, or 29%, as compared to the $10.9
million recorded in the same quarter of 1999. This increase mainly resulted from
loan growth, the October 1999 acquisition of Tricom and management's ability to
control funding costs in the current interest rate environment. Tax-equivalent
interest and fees on loans for the quarter ended March 31, 2000 totaled $28.8
million, an increase of $7.1 million, or 33%, over the prior year quarterly
total of $21.7 million. This growth was predominantly due to a $280 million, or
27%, increase in average total loans.
For the first quarter of 2000, the net interest margin was 3.65%, an increase of
seven basis points when compared to the margin of 3.58% in the prior year
quarter. This increase resulted primarily from higher yields on both loans and
securities coupled with solid loan growth and the addition of Tricom. The core
net interest margin, which excludes the impact of the 9.00% Cumulative Trust
Preferred Securities offering and certain discretionary investment leveraging
transactions, was 3.76% for the first quarter of 2000, and increased ten basis
points when compared to the prior year quarterly margin of 3.66%.
The rate paid on interest-bearing deposits averaged 5.01% for the first quarter
of 2000 versus 4.66% for the same quarter in 1999, an increase of 35 basis
points. This increase was caused by continued increases in market rates, which
was somewhat offset by management's decision to be less aggressive on its
deposit pricing. The rate paid on short-term borrowings and notes payable
increased to 6.02% in the first quarter of 2000 as compared to 4.50% in the same
quarter of 1999, due primarily to a higher outstanding balance under the
Company's Libor-based revolving credit agreement with an unaffiliated bank and a
higher rate environment for the Company's short-term funding sources.
The yield on total earning assets for the first quarter of 2000 was 8.47% as
compared to 8.01% in 1999, an increase of 46 basis points resulting primarily
from increases in the prime lending rate, general market rate increases on
liquidity management assets, and the acquisition of Tricom. The first quarter
2000 loan yield of 8.86% increased 31 basis points when compared to the prior
year quarterly yield of 8.55% and was due primarily to a higher average prime
lending rate of 8.69% during the first quarter of 2000 versus an average prime
lending rate of 7.75% for the first quarter of 1999. The Company's loan
portfolio does not re-price in a parallel fashion to increases in the prime rate
due to a portion of the portfolio being longer-term fixed rate loans.
The following table presents a reconciliation of the Company's tax-equivalent
net interest income, calculated on a tax equivalent basis, between the
three-month periods ended March 31, 1999 and March 31, 2000. The reconciliation
sets forth the change in the tax-equivalent net interest income as a result of
changes in volumes, changes in rates and the change due to the combination of
volume and rate changes (in thousands):
Amount
------
Tax-equivalent net interest income for the period ended March 31, 1999 $ 10,853
Change due to average earning assets fluctuations (volume) ........................ 2,731
Change due to interest rate fluctuations (rate) ................................... 365
Change due to rate/volume fluctuations (mix) ...................................... 2
-------------------
Tax-equivalent net interest income for the period ended March 31, 2000 $ 13,951
===================
- 11 -
NON-INTEREST INCOME
For the first quarter of 2000, non-interest income totaled $4.3 million and
increased $2.0 million, or 85%, when compared to the same period in 1999. This
increase was mainly the result of gains from the sale of premium finance
receivables, the administrative services revenue contributed by recently
acquired Tricom and additional increases in trust fees, deposit service charges
and leased equipment rental income. Partially offsetting these increases was a
decline in fees from the sale of mortgage loans, as further explained below. The
following table presents non-interest income by category (in thousands):
Three Months Ended
March 31,
-----------------------------------
2000 1999
----------------- ----------------
Fees on mortgage loans sold $ 483 $ 1,298
Service charges on deposit accounts 469 334
Trust fees 472 225
Gain on sale of premium finance receivables 1,241 -
Administrative services revenue 1,013 -
Net securities gains 3 -
Other income 597 451
----------------- ----------------
Total non-interest income $ 4,278 $ 2,308
================= ================
Fees on mortgage loans sold includes income from originating and selling
residential real estate loans into the secondary market, the majority of which
are sold without retaining servicing rights. For the quarter ended March 31,
2000, these fees totaled $483,000 and declined $815,000 from the 1999 quarterly
total of $1.3 million. These declines were due to lower mortgage volumes and
related refinancing activity due mainly to the rise in mortgage interest rates.
Accordingly, future fee income on mortgage loans sold is not expected to be at
the levels that were experienced in the first half of 1999.
As a result of strong loan originations during the first quarter of 2000,
approximately $71 million of premium finance receivables were sold to an
unrelated third party and resulted in the recognition of a $1.2 million gain.
The Company currently is targeting its average loan-to-deposit ratio in the
range of 85-90%. During the first quarter of 2000, the ratio was approximately
88.4%. Accordingly, the Company sold excess premium finance receivables to an
unrelated third party financial institution. Consistent with Wintrust's strategy
to be asset-driven and the desire to maintain our loan-to-deposit ratio in the
aforementioned range, it is probable that similar sales of premium finance
receivables will occur in the future.
The administrative services revenue contributed by Tricom, which was acquired in
October 1999, added $1.0 million to total non-interest income in the first
quarter of 2000. This revenue comprises income from administrative services,
such as data processing of payrolls, billing and cash management services to
temporary staffing service clients located throughout the United States. Tricom
also earns interest and fee income from providing short-term accounts receivable
financing to this same client base, which is included in the net interest income
category.
Service charges on deposit accounts totaled $469,000 for the first quarter of
2000, an increase of $135,000, or 40%, when compared to the same quarter of
1999. This increase was due to a higher deposit base and a larger number of
accounts at the banking subsidiaries. The majority of deposit service charges
relates to customary
- 12 -
fees on overdrawn accounts and returned items. The level of service charges
received is substantially below peer group levels as management believes in the
philosophy of providing high quality service without encumbering that service
with numerous activity charges.
Trust fees totaled $472,000 for the first quarter of 2000, a $247,000, or 110%,
increase over the same quarter of 1999. This increase was mainly the result of
new business development efforts from the staff of experienced trust officers
added since late 1998 with the formation of Wintrust Asset Management Company.
The Company is committed to growing the trust and investment business in order
to better service its customers and create a more diversified revenue stream.
However, as the introduction of expanded trust and investment services continues
to unfold, it is expected that overhead levels will be high when compared to the
initial fee income that is generated. It is anticipated that trust fees will
eventually increase to a level sufficient to absorb this overhead within the
next two years.
Other non-interest income for the first quarter totaled $597,000 and increased
$146,000 over the prior year quarterly total of $451,000. This increase was due
primarily to a $210,000 increase in rental income from equipment leased through
the MMF Leasing Services division of the Lake Forest Bank, a business that was
acquired in mid-1998.
NON-INTEREST EXPENSE
Non-interest expense for the first quarter of 2000 totaled $12.1 million and
increased $2.6 million, or 27%, from the first quarter 1999 total of $9.5
million. The continued growth and expansion of the banks, the development of the
trust and investment business, and the October 1999 acquisition of Tricom were
the primary causes for this increase. Since March 31, 1999, total deposits and
loan balances have each grown over 22%, requiring higher levels of staffing and
other costs to both attract and service the larger customer base. The following
table presents non-interest expense by category (in thousands):
Three Months
Ended March 31,
-----------------------------------
2000 1999
------------------ ----------------
Salaries and employee benefits $ 6,335 $ 5,079
Occupancy, net 1,010 676
Equipment expense 1,149 628
Data processing 680 482
Advertising and marketing 249 369
Professional fees 295 310
Amortization of intangibles 178 35
Other 2,213 1,957
------------------ ----------------
Total non-interest expense $ 12,109 $ 9,536
================== ================
Salaries and employee benefits expense for the first quarter of 2000 totaled
$6.3 million, an increase of $1.3 million, or 25%, as compared to the prior year
total of $5.1 million. This increase was primarily due to the acquisition of
Tricom, the expansion of the trust and investment business and the addition of
three additional banking facilities. As a percent of average total assets, on an
annualized basis, salaries and employee benefits were 1.49% for the first three
months of 2000, an improvement from 1.52% in the same period of 1999.
- 13 -
For the first quarter of 2000, occupancy costs, equipment expense and data
processing increased $334,000 (49%), $521,000 (83%) and $198,000 (41%),
respectively, over the prior year first quarter due to the general growth of the
Company including the opening of several new banking facilities as discussed in
the Overview and Strategy section, the acquisition of Tricom and the development
of the trust and investment business. Goodwill and other intangibles
amortization expense totaled $178,000 for the first quarter of 2000 and
increased $143,000 over the prior year quarter as a result of the acquisition of
Tricom in October 1999.
Other non-interest expense, for the three months ended March 31, 2000, totaled
$2.2 million and increased $256,000, or 13%, due mainly to the factors mentioned
earlier. This category of expense includes loan expenses, correspondent bank
service charges, postage, insurance, stationary and supplies and other sundry
expenses.
Despite the Company's growth and the related increases in many of the
non-interest expense categories, the ratio of non-interest expense to total
average assets declined slightly from 2.86% for the three-month period ended
March 31, 1999, to 2.85% for the 2000 period, and is favorable to the Company's
most recent peer group ratio. In addition, the net overhead ratio for the first
three months of 2000 declined to 1.84% as compared to the first quarter 1999
ratio of 2.17%. The overhead ratio is within management's previously stated
performance goal range of 1.50% - 2.00%.
INCOME TAXES
The Company recorded income tax expense of $1.8 million for the three months
ended March 31, 2000 versus $970,000 for the same period of 1999. The increase
was due primarily to the increase in operating income from $2.8 million in the
first quarter of 1999 to $4.9 million in the first quarter of 2000.
OPERATING SEGMENT RESULTS
As shown in Note 5 to the Unaudited Consolidated Financial Statements, the
Company's operations consist of five primary segments: banking, premium finance,
indirect auto, trust and Tricom. The Company's profitability is primarily
dependent on the net interest income, provision for possible loan losses,
non-interest income and operating expenses of its banking segment.
For the first quarter of 2000, the banking segment's net interest income totaled
$12.6 million, an increase of $2.5 million, or 25%, as compared to the $10.1
million recorded in the same quarter of 1999. These increases were the direct
result of earning asset growth, particularly in the loan portfolio, as earlier
discussed in the Net Interest Income section. The banking segment's non-interest
income totaled $1.7 million for the first quarter of 2000 and declined $426,000,
or 20%, when compared to the prior year quarter. This decline was due to a drop
in fees on mortgage loans sold that was caused by the recent rise in mortgage
interest rates and the related lower levels of refinancing activity. Partially
offsetting the decline in mortgage fees were increases in deposit service
charges and rental income on equipment leases. The banking segment's after-tax
profit for the quarter ended March 31, 2000, totaled $2.8 million, an increase
of $487,000, or 21%, as compared to the prior year quarterly total of $2.4
million. This improved profitability resulted mainly from higher levels of net
interest income created from the continued growth and maturation of the
Company's de novo banks and branches.
- 14 -
Net interest income from the premium finance segment totaled $3.5 million for
the quarter ended March 31, 2000, an increase of $400,000, or 13%, over the $3.1
million recorded in the same quarter of 1999. Non-interest income for the three
months ended March 31, 2000 totaled $1.2 million as a result of gains from the
sale of premium finance receivables, as mentioned earlier. No such sales of
premium finance loans occurred in the first quarter of 1999. After-tax profit
for the premium finance segment totaled $1.3 million for the three-month period
ended March 31, 2000, and increased $387,000, or 41%, over the same period of
1999. These increases were due mostly to higher levels of premium finance
receivables created from new product offerings and targeted marketing programs
and the gain from the sale of receivables.
The indirect auto segment recorded $1.9 million of net interest income for the
first quarter of 2000, an increase of $11,000, or 1%, as compared to the 1999
quarterly total. Despite a higher level of outstanding loans, higher funding
costs associated with this operation resulted in reduced margins related to this
segment's net interest income. After-tax segment profit totaled $550,000 for the
three-month period ended March 31, 2000, a decline of $121,000 when compared to
the same period of 1999. The decline in this segment's profitability was caused
mainly by a higher level of credit losses and compressed margins in 2000 versus
1999. See further discussion of credit quality information in the "ASSET
QUALITY" section of this report.
The trust segment recorded non-interest income of $472,000 for the first quarter
of 2000 as compared to $225,000 for the same quarter of 1999, an increase of
$247,000, or 110%. The increase was the result of continued new business
development efforts by a larger staff of experienced trust professionals that
were hired in connection with the October 1998 start-up of WAMC. The trust
segment after-tax loss totaled $121,000 for the three-month period ended March
31, 2000, as compared to after-tax loss of $232,000 for the same period of 1999.
The decline in after-tax segment losses was a direct result of the increased
asset base managed by WAMC and the associated fees. As more fully discussed in
the Overview and Strategy section of this analysis, management expects the
start-up phase for the trust segment to continue for up to two years before its
operations become profitable.
The Tricom segment data reflects the net interest income, non-interest income
and segment profit associated with short-term accounts receivable financing and
value-added out-sourced administrative services, such as data processing of
payrolls, billing and cash management services, that Tricom provides to its
clients in the temporary staffing industry. For the quarter ended March 31,
2000, the Tricom segment added $797,000 to the Company's net interest income,
$1.0 million to the Company's non-interest income, and $283,000 to the Company's
net income. No results are included for the first quarter of 1999 because Tricom
was acquired in October 1999 using the purchase method of accounting.
FINANCIAL CONDITION
Total assets were $1.77 billion at March 31, 2000, an increase of $352 million,
or 25%, over the $1.42 billion a year earlier, and $93 million, or 6%, over the
$1.68 billion at December 31, 1999. Growth at the newer banks and branches
coupled with continued market share growth at the more mature banks were the
primary factors for these increases. Total funding liabilities, which include
deposits, short-term borrowings, notes payable and long-term debt, were $1.65
billion at March 31, 2000, and increased $322 million, or 24%, over the prior
year, and $85 million, or 5%, since December 31, 1999. These increases were
primarily utilized to fund growth in the loan portfolio and certain
discretionary investment leveraging transactions.
- 15 -
INTEREST-EARNING ASSETS
The following table sets forth, by category, the composition of earning asset
balances and the relative percentage of total earning assets as of the date
specified (dollars in thousands):
March 31, 2000 December 31, 1999 March 31, 1999
------------------------------- ------------------------------ -----------------------------
Loans: Balance Percent Balance Percent Balance Percent
------------------ ------------ ------------------ ----------- ----------------- ----------
Commercial and commercial
real estate $ 503,824 31% $ 485,776 32% $ 383,841 30%
Premium finance, net 225,424 14 219,341 15 210,169 16
Indirect auto, net 249,927 16 255,410 17 229,203 18
Home equity 146,517 9 139,194 9 111,070 8
Residential real estate 120,443 7 111,026 7 101,612 8
Tricom finance receivables 18,319 1 17,577 1 - -
Installment and other 43,342 3 49,925 3 35,121 3
------------------ ------------ ------------------ ----------- ----------------- ----------
Total loans, net of
unearned income 1,307,796 81 1,278,249 84 1,071,016 83
------------------ ------------ ------------------ ----------- ----------------- ----------
Securities and money
market investments 308,212 19 236,573 16 227,632 17
------------------ ------------ ------------------ ----------- ----------------- ----------
Total earning assets $ 1,616,008 100% $ 1,514,822 100% $ 1,298,648 100%
================== ============ ================== =========== ================= ==========
Earning assets as of March 31, 2000, increased $317 million, or 24%, over the
balance a year earlier, and $101 million, or 7%, over the balance at the end of
1999. The ratio of earning assets as a percent of total assets remained
consistent at approximately 90% - 91% as of each reporting period date shown in
the above table.
Total net loans were $1.31 billion at March 31, 2000, an increase of $30
million, or 2%, since December 31, 1999, and an increase of $237 million, or
22%, since March 31, 1999. Solid loan growth in the core commercial loan, home
equity and residential real estate portfolios were the main factor for these
increases. Also, showing increases were the specialty premium finance and Tricom
finance receivable segments, the latter category which was added as a result of
the October 1999 acquisition of Tricom. Total net loans comprised 81% of total
earning assets at March 31, 2000 as compared to 83% a year earlier and 84% at
the end of 1999.
Commercial and commercial real estate loans, the largest loan category,
comprised 31% of total earning assets as of March 31, 2000 and has increased
$120.0 million, or 31%, since March 31, 1999 and $18.0 million, or 4%, since the
end of 1999. The strong growth experienced over the past year has resulted
mainly from a healthy economy and the hiring of additional experienced lending
officers.
Net indirect auto loans comprised 16% of total earning assets as of March 31,
2000 and increased $20.7 million, or 9%, over a year ago, but decreased $5.5
million, or 2%, since the end of 1999. The decrease from the December 31, 1999
balance was the result of a higher interest rate environment experienced during
the first three months of 2000 coupled with a traditionally slow period for new
automobile purchases. Additionally, the Company currently has a desire to reduce
its reliance upon indirect automobile lending as a percent of the overall
earning asset portfolio due to competitive pricing and margin concerns. As such,
management intends to maintain the outstanding level of the portfolio near the
existing level. The Company utilizes credit
- 16 -
underwriting routines that management believes result in a high quality new and
used auto loan portfolio. 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. Management continually monitors the dealer
relationships and the Banks are not dependent on any one dealer as a source of
such loans.
Net premium finance receivables totaled $225.4 million at March 31, 2000 and
comprised 14% of the total loan portfolio. This total balance increased $15.3
million, or 7%, since March 31, 1999 and $6.1 million, or 3%, since the end of
1999. This growth was primarily the result of increased market penetration from
new product offerings and targeted marketing programs. Over the past few years,
the majority of premium finance receivables originated by FIFC were being sold
to the Banks and consequently remained an asset of the Company. However, since
the second quarter of 1999, as a result of the continued solid growth in loan
originations, FIFC has been selling a portion of new receivables to an unrelated
third party. During the first quarter of 2000 the Company sold approximately $71
million of premium finance receivables to an unrelated third party at a gain of
$1.2 million. In addition to recognizing gains on the sale of these receivables,
the proceeds provided the Company with additional liquidity. It is possible that
similar future sales may occur depending on the level of new volume growth in
relation to the desired capacity within the Banks' loan portfolios.
The October 1999 acquisition of Tricom added a new category of specialty finance
receivables to the Company's earning asset portfolio. These receivables consist
of high-yielding short-term accounts receivable financing to clients in the
temporary staffing industry located throughout the United States. At March 31,
2000, outstanding finance receivables totaled $18.3 million, an increase of
$742,000 or 4% from the December 31, 1999 balance.
Home equity loans totaled $146.5 million at March 31, 2000 and increased $35.4
million, or 32%, since a year earlier and $7.3 million, or 5%, as compared to
the end of 1999. This category of loans has increased due mainly to targeted
marketing programs over the past year. These marketing programs generally use a
short-term low initial interest rate as an incentive to the borrower. Unused
commitments on home equity lines of credit have increased $24.9 million, or 14%,
over the balance at March 31, 1999 and totaled $198.4 million at March 31, 2000.
Residential real estate loans totaled $120.4 million as of March 31, 2000 and
increased $18.8 million, or 19%, over a year ago and $9.4 million, or 8%, since
December 31, 1999. Mortgage loans held for sale are included in this category
and totaled $8.7 million as of March 31, 2000, $8.1 million as of December 31,
1999 and $19.0 million as of March 31, 1998. The Company collects a fee on the
sale of these loans into the secondary market, as discussed earlier in the
Non-interest Income section of this analysis. As these loans are predominantly
long-term fixed rate loans, the Company eliminates the interest rate risk
associated with these loans by selling them into the secondary market. The
remaining residential real estate loans in this category are maintained within
the Banks' portfolios and include mostly adjustable rate mortgage loans and
shorter-term fixed rate mortgage loans. The growth in this loan category has
been due mainly to the relatively low mortgage interest rate environment
experienced until recently and a continued strong local housing market.
- 17 -
Securities and money market investments (i.e. federal funds sold and
interest-bearing deposits with banks) totaled $308.2 million at March 31, 2000,
an increase of $71.6 million, or 30%, since December 31, 1999 and $80.6 million,
or 35%, since a year earlier. This category as a percent of total earning assets
has increased to 19% at March 31, 2000 versus 16% and 17% at December 31, 1999
and March 31, 1999; respectively. The increase was caused mainly from the sale
of premium finance receivables totaling $71 million in the first quarter of
2000. The Company maintained no trading account securities at March 31, 2000 or
as of any of the other previous reporting dates. The balances of securities and
money market investments fluctuate frequently based upon deposit inflows, loan
demand and proceeds from loan sales. As a result of anticipated growth in the
development of the de novo banks, it has been Wintrust's policy to generally
maintain its securities and money market portfolio in short-term, liquid, and
diversified high credit quality securities in order to facilitate the funding of
quality loan demand as it emerges and to keep the Banks in a liquid condition in
the event that deposit levels fluctuate.
DEPOSITS
Total deposits at March 31, 2000 were $1.53 billion, an increase of $281
million, or 22%, over the March 31, 1999 total and an increase of $70 million,
or 5%, since December 31, 1999. The following table sets forth, by category, the
composition of deposit balances and the relative percentage of total deposits as
of the date specified (dollars in thousands):
March 31, 2000 December 31, 1999 March 31, 1999
--------------------------------- --------------------------------- --------------------------------
Percent Percent Percent
Balance of Total Balance of Total Balance of Total
----------------- -------------- ------------------ -------------- ------------------ -------------
Demand $ 155,507 10% $ 154,034 11% $ 117,463 9%
NOW 138,228 9 130,625 9 112,542 9
Money market 273,076 18 252,483 17 232,184 19
Savings 75,404 5 72,718 5 74,258 6
Certificates of deposit 891,446 58 853,762 58 716,352 57
----------------- -------------- ------------------ -------------- ------------------ -------------
Total $ 1,533,661 100% $ 1,463,622 100% $ 1,252,799 100%
================= ============== ================== ============== ================== =============
The percentage mix of deposits as of March 31, 2000 was relatively consistent
with the deposit mix as of the prior year dates. Growth in both the number of
accounts and balances has been primarily the result of newer bank and branch
growth, and continued marketing efforts at the more established banks to create
additional deposit market share.
SHORT-TERM BORROWINGS AND NOTES PAYABLE
As of March 31, 2000, the Company's short-term borrowings totaled $68.7 million
and consisted primarily of short-term repurchase agreements utilized to leverage
certain investment transactions within several banks' security portfolios. At
March 31, 2000, the Company also had $14.1 million outstanding on its $40
million revolving credit line with an unaffiliated bank. The outstanding balance
on this credit line as of March 31, 1999 was $2.0 million and $8.4 million at
December 31, 1999. The Company continues to maintain the revolving credit line
for corporate purposes such as to provide capital to fund continued growth at
the Banks, expansion of WAMC, possible future acquisitions and for other general
corporate matters.
- 18 -
LONG-TERM DEBT - TRUST PREFERRED SECURITIES
For each of the reporting periods, the long-term debt category consists of the
Company's $31.05 million of 9.00% Cumulative Trust Preferred Securities, which
were publicly sold in an offering that was completed in October 1998. The Trust
Preferred Securities offering increased the Company's regulatory capital and has
provided for the continued growth of its banking and trust franchise. The
ability to treat these Trust Preferred Securities as regulatory capital under
Federal Reserve guidelines, coupled with the Federal income tax deductibility of
the related interest expense, provides the Company with a cost-effective form of
capital. See Note 4 to the Unaudited Consolidated Financial Statements for
further information on these Trust Preferred Securities.
SHAREHOLDERS' EQUITY
Total shareholders' equity was $94.8 million at March 31, 2000 and increased
$17.6 million since March 31, 1999 and $1.9 million since the end of 1999. These
increases were the result of the Company's corporate earnings offset by net
unrealized losses of the available-for-sale security portfolio, dividend
payments and stock repurchases. The annualized return on average equity for the
quarter ended March 31, 2000 increased to 13.32% as compared to 9.75% for the
prior year period.
The following table reflects various consolidated measures of capital at March
31, 2000, December 31, 1999 and March 31, 1999:
March 31, December 31, March 31,
2000 1999 1999
---------------------- ------------------- --------------------
Leverage ratio 6.9% 7.1% 7.5%
Ending tier 1 capital to risk-based asset ratio 7.5% 7.8% 8.2%
Ending total capital to risk-based asset ratio 8.1% 8.4% 9.2%
Dividend payout ratio 7.1% 0.0% 0.0%
On January 27, 2000, Wintrust declared its first semi-annual cash dividend of
$0.05 per common share. The dividend was payable February 24, 2000.
Additionally, the Company initiated a stock buyback program authorizing the
repurchase of up to 300,000 shares of its common stock. Through March 31, 2000,
the Company repurchased a total of 85,200 shares at an average price of $15.33
per share.
To be "adequately capitalized", an entity must maintain a leverage ratio of at
least 4.0%, a Tier 1 risk-based capital ratio of at least 4.0%, and a total
risk-based capital ratio of at least 8.0%. To be considered "well capitalized,"
an entity must maintain a leverage ratio of at least 5.0%, a Tier 1 risk-based
capital ratio of at least 6.0%, and a total risk-based capital ratio of at least
10.0%. At March 31, 2000, the Company was considered "well capitalized" under
both the leverage ratio and the Tier 1 risk-based capital ratio, and was
considered "adequately capitalized" under the total risk-based capital ratio.
The Company's capital ratios at March 31, 2000 were lower in comparison to the
ratios a year earlier due primarily to continued asset growth. The Company
attempts to maintain an efficient capital structure in order to provide higher
returns on equity. Additional capital is required from time-to-time, however, to
support the growth of the organization. The issuance of additional common stock
or additional trust preferred securities are the primary forms of capital that
the Company considers as it evaluates its capital position.
- 19 -
ASSET QUALITY
ALLOWANCE FOR POSSIBLE LOAN LOSSES
A reconciliation of the activity in the allowance for possible loan losses for
the three months ended March 31, 2000 and 1999 is shown as follows (dollars in
thousands):
Three Months Ended
March 31,
2000 1999
------------------ -----------------
Balance at beginning of period $ 8,783 $ 7,034
Provision for possible loan losses 1,141 784
Charge-offs
-----------
Core banking loans 130 101
Indirect automobile loans 311 160
Premium finance receivables 201 95
------------------ -----------------
Total charge-offs 642 356
------------------ -----------------
Recoveries
----------
Core banking loans 8 6
Indirect automobile loans 43 14
Premium finance receivables 26 36
------------------ -----------------
Total recoveries 77 56
------------------ -----------------
Net charge-offs (565) (300)
------------------ -----------------
Balance at March 31 $ 9,359 $ 7,518
================== =================
Loans, net of unearned discount
at March 31 $1,307,796 $1,071,016
================== =================
Allowance as a percentage of loans 0.72% 0.70%
================== =================
Annualized net charge-offs as a percentage of average:
Core banking loans 0.06% 0.06%
Indirect automobile loans 0.43% 0.27%
Premium finance receivables 0.29% 0.12%
------------------ -----------------
Total loans 0.17% 0.12%
================== =================
Annualized provision for
possible loan losses 49.52% 38.27%
================== =================
Management believes that the loan portfolio is well diversified and well
secured, without undue concentration in any specific risk area. Control of loan
quality is continually monitored by management and is reviewed by the Banks'
Board of Directors and their Credit Committees on a monthly basis. Independent
external review of
- 20 -
the loan portfolio is provided by the examinations conducted by regulatory
authorities and an independent loan review performed by an entity engaged by the
Board of Directors. The amount of additions to the allowance for possible loan
losses, which are charged to earnings through the provision for possible loan
losses, are determined based on a variety of factors, including actual
charge-offs during the year, historical loss experience, delinquent and other
potential problem loans, and an evaluation of economic conditions in the market
area.
The provision for possible loan losses totaled $1.1 million for the first
quarter of 2000, an increase of $357,000 from a year earlier. The higher
provision was necessary to cover a 22% increase in loan balances compared to
March 31, 1999. For the quarter ended March 31, 2000, net charge-offs totaled
$565,000 and increased from the $300,000 of net charge-offs recorded in the same
period of 1999. On a ratio basis, net charge-offs as a percentage of average
loans increased slightly to 0.17% in 2000 from 0.12% in 1999. This increase is
the result of a slightly higher level of delinquencies and a more aggressive
charge-off philosophy in managing the indirect auto portfolio. Management is
actively monitoring and pursuing methods to reduce the level of delinquencies in
both the indirect and premium finance portfolios.
Management believes the allowance for possible loan losses is adequate to cover
inherent losses in the portfolio. There can be no assurance, however, that
future losses will not exceed the amounts provided for, thereby affecting future
results of operations. The amount of future additions to the allowance for
possible loan losses will be dependent upon the economy, changes in real estate
values, interest rates, the view of regulatory agencies toward adequate reserve
levels, the level of past-due and non-performing loans, and other factors.
- 21 -
PAST DUE LOANS AND NON-PERFORMING ASSETS
The following table sets forth the Company's non-performing assets at the dates
indicated. The information in the table should be read in conjunction with the
detailed discussion following the table (dollars in thousands).
March 31, December 31, March 31,
2000 1999 1999
---- ---- ----
Past Due greater than 90 days
and still accruing:
Core banking loans $ 362 $ 713 $ 335
Indirect automobile loans 466 391 317
Premium finance receivables 2,273 1,523 1,021
--------------------- ---------------------- ---------------------
Total 3,101 2,627 1,673
--------------------- ---------------------- ---------------------
Non-accrual loans:
Core banking loans 1,582 1,895 1,423
Indirect automobile loans 266 298 195
Premium finance receivables 2,334 2,145 1,439
--------------------- ---------------------- ---------------------
Total non-accrual loans 4,182 4,338 3,057
--------------------- ---------------------- ---------------------
Total non-performing loans:
Core banking loans 1,944 2,608 1,758
Indirect automobile loans 732 689 512
Premium finance receivables 4,607 3,668 2,460
--------------------- ---------------------- ---------------------
Total non-performing loans 7,283 6,965 4,730
--------------------- ---------------------- ---------------------
Other real estate owned - - 590
--------------------- ---------------------- ---------------------
Total non-performing assets $ 7,283 $ 6,965 $ 5,320
===================== ====================== =====================
Total non-performing loans by category as a percent of its own respective
category:
Core banking loans 0.23% 0.32% 0.28%
Indirect automobile loans 0.29% 0.27% 0.23%
Premium finance receivables 2.04% 1.67% 1.17%
--------------------- ---------------------- ---------------------
Total non-performing loans 0.56% 0.54% 0.44%
--------------------- ---------------------- ---------------------
Total non-performing assets as a
percentage of total assets 0.41% 0.41% 0.37%
Allowance for possible loan losses as
a percentage of non-performing loans 128.50% 126.10% 158.94%
- 22 -
Non-performing Core Banking Loans
Total non-performing loans for the Company's core banking business were $1.9
million, or 0.23%, of the Company's core banking loans as of March 31, 2000, and
were down from the ratios of 0.32% and 0.28% as of December 31, 1999, and March
31, 1999, respectively. Although the outstanding core loan portfolio has
increased 29% from a year ago, the amount of non-performing core loans has
increased only 11% from the prior year totals. Non-performing core banking loans
consist primarily of a small number of commercial and real estate loans, which
management believes are well secured and in the process of collection. The small
number of such non-performing loans allows management the opportunity to monitor
closely the status of these credits and work with the borrowers to resolve these
problems effectively.
Non-performing Premium Finance Receivables
The table below presents the level of non-performing premium finance receivables
as of March 31, 2000 and 1999, and the amount of net charge-offs for the
quarters then ended.
As of % of Premium As of % of Premium
3/31/00 Finance Rec. 3/31/99 Finance Rec.
------- ------------ ------- ------------
Non-performing premium finance
receivables $4,607,000 2.04% $2,460,000 1.17%
Net charge-offs of premium
finance receivables $ 175,000 0.29% $ 59,000 0.12%
It is important to note that the ratio of net charge-offs is substantially less
than the ratio of non-performing assets. The ratio of non-performing premium
finance receivables fluctuates throughout the year due to the nature and timing
of canceled account collections from insurance carriers. Due to the nature of
collateral for premium finance receivables, it customarily takes 60-150 days to
convert the collateral into cash collections. Accordingly, the level of
non-performing premium finance receivables is not necessarily indicative of the
loss inherent in the portfolio. In the event of default, the Company has the
power to cancel the insurance policy and collect the unearned portion of the
premium from the insurance carrier. In the event of cancellation, the cash
returned by the insurer should generally be sufficient to cover the receivable
balance, the interest and other charges due. Due to notification requirements
and processing time by most insurance carriers, many receivables will become
delinquent beyond 90 days while the insurer is processing the return of the
unearned premium. Management continues to accrue interest until maturity as the
unearned premium is ordinarily sufficient to pay-off the outstanding balance and
contractual interest due.
Non-performing Indirect Automobile Loans
Total non-performing indirect automobile loans were $732,000 at March 31, 2000.
The ratio of these non-performing loans has increased slightly to 0.29% of total
indirect automobile loans at March 31, 2000 from 0.27% at December 31, 1999 and
0.23% at March 31, 1999. Despite the increase in the level of non-performing
loans, the ratios continue to be below standard industry ratios for this type of
loan category.
- 23 -
Potential Problem Loans
In addition to those loans disclosed under "Past Due Loans and Non-performing
Assets," there are certain loans in the portfolio which management has
identified, through its problem loan identification system, which exhibit a
higher than normal credit risk. However, these loans are still considered
performing and, accordingly, are not included in non-performing loans. Examples
of these potential problem loans include certain loans that are in a past-due
status, loans with borrowers that have recent adverse operating cash flow or
balance sheet trends, or loans with general risk characteristics that the loan
officer feels might jeopardize the future timely collection of principal and
interest payments. Management's review of the total loan portfolio to identify
loans where there is concern that the borrower will not be able to continue to
satisfy present loan repayment terms includes factors such as review of
individual loans, recent loss experience and current economic conditions. The
principal amount of potential problem loans as of March 31, 2000 and December
31, 1999 was approximately $12.2 million and $14.4 million, respectively.
LIQUIDITY
Wintrust manages the liquidity position of its banking operations to ensure that
sufficient funds are available to meet customers' needs for loans and deposit
withdrawals. The liquidity to meet the demand is provided by maturing assets,
sales of premium finance receivables, liquid assets that can be converted to
cash, and the ability to attract funds from external sources. Liquid assets
refer to federal funds sold and to marketable, unpledged securities, which can
be quickly sold without material loss of principal.
INFLATION
A banking organization's assets and liabilities are primarily monetary. Changes
in the rate of inflation do not have as great an impact on the financial
condition of a bank as do changes in interest rates. Moreover, interest rates do
not necessarily change at the same percentage, as does inflation. Accordingly,
changes in inflation are not expected to have a material impact on the Company.
An analysis of the Company's asset and liability structure provides the best
indication of how the organization is positioned to respond to changing interest
rates.
FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements within the meaning of Section
27A of the Securities Act 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
anticipated improvements in financial performance and management's long-term
performance goals, as well as statements relating to the anticipated effects on
results of operations and financial 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,
specialty finance or fee related businesses. Actual results could differ
- 24 -
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 new trust subsidiary, WAMC, is expected to
continue in a start-up phase during the next two 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.
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 The Company may not identify attractive opportunities to expand in the
future through acquisitions of other community banks, specialty finance
companies or fee-based businesses or may have difficulty negotiating
potential acquisitions on terms considered acceptable to the Company.
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.
- 25 -
ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
As a continuing part of its financial strategy, the Company attempts to manage
the impact of fluctuations in market interest rates on net interest income. This
effort entails providing a reasonable balance between interest rate risk, credit
risk, liquidity risk and maintenance of yield. Asset-liability management
policies are established and monitored by management in conjunction with the
boards of directors of the Banks, subject to general oversight by the Company's
Board of Directors. The policy establishes guidelines for acceptable limits on
the sensitivity of the market value of assets and liabilities to changes in
interest rates.
Derivative Financial Instruments
One method utilized by financial institutions to limit market risk is to enter
into derivative financial instruments. A derivative financial instrument
includes interest rate swaps, interest rate caps and floors, futures, forwards,
option contracts and other financial instruments with similar characteristics.
As of March 31, 2000, the Company had $375 million notional principal amount of
interest rate cap contracts that mature in April 2000 ($60 million), September
2000 ($60 million), October 2000 ($60 million), January 2001 ($60 million),
February 2001 ($55 million), April 2001 ($60 million) and July 2001 ($20
million). These contracts, which have various strike rates measured against the
91-day treasury bill rate, were purchased to mitigate the effect of rising rates
on certain of its floating rate deposit products and fixed rate loan products.
During 2000, the Company also entered into certain covered call option
transactions related to certain securities held by the Company. These
transactions were designed to utilize excess capital at certain banks and
increase the total return associated with holding these securities as earning
assets. The Company may enter into other derivative financial instruments in the
future to more effectively manage its market risk.
Commitments To Extend Credit And Standby Letters Of Credit
In addition, the Company is a party to financial instruments with off-balance
sheet risk in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend credit and
standby letters of credit. These instruments involve, to varying degrees,
elements of credit and interest rate risk in excess of the amount recognized in
the consolidated statements of condition. Commitments to extend credit are
agreements to lend to a customer as long as there is no violation on any
condition established in the contract. Commitments may require collateral from
the borrower if deemed necessary by the Company and generally have a fixed
expiration date. Standby letters of credit are conditional commitments issued by
the Banks to guarantee the performance of a customer to a third party up to a
specified amount and with specific terms and conditions. Commitments to extend
credit and standby letters of credit are not recorded as an asset or liability
by the Company until the instrument is exercised.
Interest Rate Sensitivity Analysis
Interest rate sensitivity is the fluctuation in earnings resulting from changes
in market interest rates. Wintrust continuously monitors not only the
organization's current net interest margin, but also the historical trends of
these margins. In addition, Wintrust also attempts to identify potential adverse
swings in net interest income in future years, as a result of interest rate
movements, by performing computerized simulation analysis of potential interest
rate environments. If a potential adverse swing in net interest margin and/or
net income were identified, management then would take appropriate actions
within its asset/liability structure to counter these potential adverse
situations. Please refer to the "Net Interest Income" section for further
discussion of the net interest margin.
- 26 -
The Company's exposure to market risk is reviewed on a regular basis by
management and the boards of directors of the Banks and the Company. The
objective is to measure the effect on net income and to adjust balance sheet and
off-balance sheet instruments to minimize the inherent risk while at the same
time maximize income. Tools used by management include a standard gap report and
a rate simulation model whereby changes in net interest income are measured in
the event of various changes in interest rate indices. An institution with more
assets than liabilities repricing over a given time frame is considered asset
sensitive and will generally benefit from rising rates and conversely, a higher
level of repricing liabilities versus assets would be beneficial in a declining
rate environment. The following table illustrates the Company's gap position as
of March 31, 2000.
Time to Maturity or Repricing
-----------------------------
0-90 91-365 1-5 5+ Years
Days Days Years & Other Total
---- ---- ----- ------- -----
(Dollars in thousands)
ASSETS:
Loans, net of unearned income ....... $554,013 $ 313,551 $412,088 $ 28,144 $ 1,307,796
Securities........................... 71,835 11,455 92,200 35,335 210,825
Interest-bearing bank deposits....... 288 - - - 288
Federal funds sold................... 97,099 - - - 97,099
Other................................ - - - 155,883 155,883
--------------- ---------------- ---------------- -------------- -----------------
Total rate sensitive assets (RSA) 723,235 325,006 504,288 219,362 1,771,891
=============== ================ ================ ============== =================
LIABILITIES AND SHAREHOLDERS' EQUITY:
NOW.................................. 138,228 - - - 138,228
Savings and money market............. 320,735 - - 27,745 348,480
Time deposits........................ 387,300 338,565 164,967 614 891,446
Short term borrowings................ 68,721 - - - 68,721
Notes payable........................ 14,050 - - - 14,050
Demand deposits & other
liabilities....................... - - - 185,081 185,081
Trust preferred securities........... - - - 31,050 31,050
Shareholders' equity................. - - - 94,835 94,835
--------------- ---------------- ---------------- -------------- -----------------
Total rate sensitive liabilities
and equity (RSL)............... 929,034 338,565 164,967 339,325 1,771,891
=============== ================ ================ ============== =================
Cumulative gap, excluding interest
rate caps (GAP = RSA - RSL) (1) $(205,799) $ (219,358) $119,963 $ -
=============== ================ ================ ==============
Cumulative RSA/RSL (1).................. 0.78 0.96 3.06
RSA/Total assets........................ 0.41 0.18 0.28
RSL/Total assets (1).................... 0.52 0.19 0.09
GAP/Total assets (1).................... (12)% (12)% 7%
GAP/Cumulative RSA (1).................. (28)% (21)% 8%
- ----------------------------------------
<FN>
(1) The gap amount and related ratios do not reflect $375 million notional
amount of interest rate caps, as discussed on the following page.
</FN>
- 27 -
While the gap position illustrated on the previous page is a useful tool that
management can assess for general positioning of the Company's and its
subsidiaries' balance sheets, it is only as of a point in time and does not
reflect the impact of off-balance sheet interest rate cap contracts. As of March
31, 2000, the Company had $375 million notional principal amount of interest
rate caps that reprice on a monthly basis. These interest rate caps, which
mature in intervals throughout the next 15 months, were purchased to mitigate
the effect of rising rates on certain floating rate deposit products and fixed
rate loan products. When the gap position in the above table is adjusted for the
impact of these interest rate caps, the Company's short-term gap position
becomes relatively neutral in that the level of rate sensitive assets that
reprice within one year approximately match the level of rate sensitive
liabilities that reprice within one year.
Management uses an additional measurement tool to evaluate its asset/liability
sensitivity which determines exposure to changes in interest rates by measuring
the percentage change in net interest income due to changes in interest rates
over a two-year time horizon. Management measures its exposure to changes in
interest rates using many different interest rate scenarios. One interest rate
scenario utilized is to measure the percentage change in net interest income
assuming an instantaneous permanent parallel shift in the yield curve of 200
basis points, both upward and downward. This analysis also includes the impact
of both interest rate cap agreements mentioned above. Utilizing this measurement
concept, the interest rate risk of the Company, expressed as a percentage change
in net interest income over a two-year time horizon due to changes in interest
rates, at March 31, 2000 and 1999, is as follows:
AS OF MARCH 31, 2000
--------------------
+200 BASIS -200 BASIS
POINTS POINTS
------ ------
Percentage change in net interest income due to an immediate 200 basis point
change in interest rates over a two-year time horizon.... 2.4% 0.2%
=============== ===============
AS OF MARCH 31, 1999
--------------------
+200 BASIS -200 BASIS
POINTS POINTS
------ ------
Percentage change in net interest income due to an immediate 200 basis point
change in interest rates over a two-year time horizon.... 2.1% 1.0%
=============== ===============
- 28 -
PART II
ITEM 1: LEGAL PROCEEDINGS.
This item has been omitted from this Form 10-Q since it is inapplicable or would
contain a negative response.
ITEM 2: CHANGES IN SECURITIES.
This item has been omitted from this Form 10-Q since it is inapplicable or would
contain a negative response.
ITEM 3: DEFAULTS UPON SENIOR SECURITIES.
This item has been omitted from this Form 10-Q since it is inapplicable or would
contain a negative response.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5: OTHER INFORMATION.
None.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
--------
27 Financial Data Schedule.
(b) Reports on Form 8-K.
--------------------
A Form 8-K report as of January 24, 2000 was filed during the quarter and
provided the Company's fourth quarter earnings release dated January 24, 2000
and included a copy of the Company's letter to shareholders mailed in February
2000.
A Form 8-K report as of January 27, 2000 was filed during the quarter and
announced the Company's declaration of a $0.05 per share dividend and the
announcement of a common stock buyback program authorizing the purchase of up to
300,000 shares of common stock.
- 29 -
SIGNATURES
Pursuant to the requirements 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
(Registrant)
Date: May 15, 2000 /s/ Edward J. Wehmer
--------------------
President & Chief Executive Officer
Date: May 15, 2000 /s/ David A. Dykstra
--------------------
Executive Vice President & Chief Financial Officer
(Principal Financial and Accounting Officer)
- 30 -
EXHIBIT INDEX
Exhibit 27 Financial Data Schedule
- 31 -