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Wintrust Financial Corporation Reports First Quarter 2019 Net Income of $89.1 million, An Increase of 9% Over Prior Year Quarter

April 15, 2019 5:18 PM

ROSEMONT, Ill., April 15, 2019 (GLOBE NEWSWIRE) -- Wintrust Financial Corporation (“Wintrust” or “the Company”) (Nasdaq: WTFC) announced net income of $89.1 million or $1.52 per diluted common share for the first quarter of 2019, an increase in diluted earnings per share of 13% compared to the prior quarter and 9% compared to the first quarter of 2018.

Highlights of the First Quarter of 2019:

Edward J. Wehmer, President and Chief Executive Officer, commented, "Wintrust reported net income of $89.1 million for the first quarter of 2019, up from $79.7 million in the fourth quarter of 2018. The Company experienced strong balance sheet growth as total assets were $1.1 billion higher than the prior quarter end and $3.9 billion higher than the first quarter of 2018. The first quarter was characterized by net interest margin expansion, loan and deposit growth, stable credit quality, market volatility impacting the mortgage division and cost control."

Mr. Wehmer continued, "Net interest margin for the Company increased considerably as earning assets benefited from the increase in short term interest rates in late 2018. Additionally, the Company managed deposits costs which continued to moderate as the rate paid on interest bearing deposits increased by nine basis points from the prior quarter or a calculated beta of 36% on the December 2018 rate hike. While this quarter demonstrates the benefit of Wintrust having maintained a rate sensitive position, the Company has taken action in recent quarters to reduce the asset sensitivity of its balance sheet given the recent increase in rates. Given the shape of the interest rate curve and projected interest rate environment, we expect some pressure on net interest margin in the upcoming quarter. Growing low cost deposits in our market area remains a significant focus of the Company which we believe will be the key in mitigating net interest margin compression."

Mr. Wehmer added, "We experienced strong loan growth in our commercial and commercial premium finance receivables portfolios during the first quarter, increasing our total loans outstanding by $394 million. Our loan pipelines remain consistently strong, and reflect opportunities to continue to grow loans across most of our portfolio segments. Deposits grew by $710 million in the first quarter, lowering our loans to deposits ratio to 90.3%. We expect that we will be able to grow our retail and commercial deposit base while further supplementing deposit growth with deposits generated from the 1031 exchanges facilitated by our Chicago Deferred Exchange Company subsidiary."

Commenting on credit quality, Mr. Wehmer noted, "During the first quarter of 2019, the Company continued its practice of addressing and resolving non-performing credits in a timely fashion. Total non-performing assets increased slightly by $1.0 million during the first quarter, but declined to 0.43% of total assets. Non-performing loans increased by $4.4 million while other real-estate owned declined by $3.3 million during the quarter. Additionally, near-term 60 to 89 day delinquent loans declined to $19.2 million or only 0.1% of total loans in the first quarter of 2019. The allowance for loan losses as a percentage of non-performing loans remained flat to the prior quarter at 135%. As a percentage of average total loans, annualized net charge-offs for the first quarter were nine basis points down from 12 basis points in the prior quarter. We believe that the Company’s reserves remain appropriate and we remain diligent in our review of credit."

Mr. Wehmer further commented, “Our mortgage banking business was impacted by seasonal demand in the first quarter as loan volumes originated for sale decreased to $678.5 million, down from $927.8 million in the fourth quarter of 2018. The decline in origination volume resulted in lower production revenue and a decrease in mortgage servicing rights capitalization revenue. Declining long-term interest rates led to an increase in refinance activity, however home purchase activity continues to make up the majority of our originations accounting for 67% of loan volumes originated for sale in the first quarter. The decrease in long-term mortgage rates resulted in a negative fair value adjustment on our mortgage servicing rights portfolio of $8.7 million related to changes in valuation assumptions as compared to a $7.6 million negative fair value adjustment in the fourth quarter of 2018. These valuation adjustments negatively impacted the net overhead ratio by 11 basis points in the first quarter of 2019 and 10 basis points in the fourth quarter of 2018. We continue to focus on efficiencies in our delivery channels and our operating costs in our mortgage banking area. We believe that the lower mortgage rate outlook bodes well for mortgage origination demand in future quarters."

Turning to the future, Mr. Wehmer stated, “We believe 2019 got off to a strong start as we grew assets significantly while expanding net interest margin, maintaining strong credit quality and managing operating costs. We expect continued organic growth in all areas of our businesses. We will remain diligent in monitoring changes to the interest rate environment and managing the balance sheet to maximize net interest margin and net income. We will continue to take a steady and measured approach to achieving our main objectives of growing franchise value, increasing profitability, leveraging our expense infrastructure and continuing to increase shareholder value. Evaluating strategic acquisitions, like the announced acquisition of Oak Bank, and organic branch growth will also be a part of our overall growth strategy with the continued goal of becoming Chicago’s bank and Wisconsin’s bank. We believe our opportunities for both internal growth and external growth remain consistently strong."

The graphs below illustrate certain highlights of the first quarter of 2019.

http://ml.globenewswire.com/Resource/Download/00fe74d7-f93f-4e19-ab97-d67e97fd6911

Wintrust’s key operating measures and growth rates for the first quarter of 2019, as compared to the fourth quarter of 2018 (sequential quarter) and first quarter of 2018 (linked quarter), are shown in the table below:

% or(4)basis point (bp)change from4th Quarter2018 % orbasis point (bp)change from1st Quarter2018
Three Months Ended
(Dollars in thousands)March 31,2019 December 31,2018 March 31,2018
Net income$89,146 $79,657 $81,981 12 % 9 %
Net income per common share – diluted$1.52 $1.35 $1.40 13 % 9 %
Net revenue (1)$343,643 $329,396 $310,761 4 % 11 %
Net interest income261,986 254,088 225,082 3 % 16 %
Net interest margin3.70% 3.61% 3.54% 9 bp 16 bp
Net interest margin - fully taxable equivalent (non-GAAP) (2)3.72% 3.63% 3.56% 9 bp 16 bp
Net overhead ratio (3)1.72% 1.79% 1.58% (7) bp 14 bp
Return on average assets1.16% 1.05% 1.20% 11 bp (4) bp
Return on average common equity11.09% 10.01% 11.29% 108 bp (20) bp
Return on average tangible common equity (non-GAAP) (2)14.14% 12.48% 14.02% 166 bp 12 bp
At end of period
Total assets$32,358,621 $31,244,849 $28,456,772 14 % 14 %
Total loans (5)24,214,629 23,820,691 22,062,134 7 % 10 %
Total deposits26,804,742 26,094,678 23,279,327 11 % 15 %
Total shareholders’ equity3,371,972 3,267,570 3,031,250 13 % 11 %
(1) Net revenue is net interest income plus non-interest income.
(2) See "Supplemental Financial Measures/Ratios" for additional information on this performance measure/ratio.
(3) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period's average total assets. A lower ratio indicates a higher degree of efficiency.
(4) Period-end balance sheet percentage changes are annualized.
(5) Excludes mortgage loans held-for-sale.

Certain returns, yields, performance ratios, or quarterly growth rates are “annualized” in this presentation to represent an annual time period. This is done for analytical purposes to better discern for decision-making purposes underlying performance trends when compared to full-year or year-over-year amounts. For example, a 5% growth rate for a quarter would represent an annualized 20% growth rate. Additional supplemental financial information showing quarterly trends can be found on the Company’s website at www.wintrust.com by choosing “Financial Reports” under the “Investor Relations” heading, and then choosing “Financial Highlights.”

WINTRUST FINANCIAL CORPORATION
Selected Financial Highlights
Three Months Ended
(Dollars in thousands, except per share data)March 31,2019 December 31,2018 March 31,2018
Selected Financial Condition Data (at end of period):
Total assets$32,358,621 $31,244,849 $28,456,772
Total loans (1)24,214,629 23,820,691 22,062,134
Total deposits26,804,742 26,094,678 23,279,327
Junior subordinated debentures253,566 253,566 253,566
Total shareholders’ equity3,371,972 3,267,570 3,031,250
Selected Statements of Income Data:
Net interest income$261,986 $254,088 $225,082
Net revenue (2)343,643 329,396 310,761
Net income89,146 79,657 81,981
Net income per common share – Basic$1.54 $1.38 $1.42
Net income per common share – Diluted$1.52 $1.35 $1.40
Selected Financial Ratios and Other Data:
Performance Ratios:
Net interest margin3.70% 3.61% 3.54%
Net interest margin - fully taxable equivalent (non-GAAP) (3)3.72% 3.63% 3.56%
Non-interest income to average assets1.06% 0.99% 1.25%
Non-interest expense to average assets2.79% 2.78% 2.83%
Net overhead ratio (4)1.72% 1.79% 1.58%
Return on average assets1.16% 1.05% 1.20%
Return on average common equity11.09% 10.01% 11.29%
Return on average tangible common equity (non-GAAP) (3)14.14% 12.48% 14.02%
Average total assets$31,216,171 $30,179,887 $27,809,597
Average total shareholders’ equity3,309,078 3,200,654 2,995,592
Average loans to average deposits ratio92.7% 92.4% 95.2%
Period-end loans to deposits ratio90.3% 91.3% 94.8%
Common Share Data at end of period:
Market price per common share$67.33 $66.49 $86.05
Book value per common share$57.33 $55.71 $51.66
Tangible book value per common share (non-GAAP) (3)$46.38 $44.67 $42.17
Common shares outstanding56,638,968 56,407,558 56,256,498
Other Data at end of period:
Leverage Ratio (5)9.1% 9.1% 9.3%
Tier 1 capital to risk-weighted assets (5)9.7% 9.7% 10.0%
Common equity Tier 1 capital to risk-weighted assets (5)9.3% 9.3% 9.5%
Total capital to risk-weighted assets (5)11.6% 11.6% 12.0%
Allowance for credit losses (6)$159,622 $154,164 $140,746
Non-performing loans117,586 113,234 89,690
Allowance for credit losses to total loans (6)0.66% 0.65% 0.64%
Non-performing loans to total loans0.49% 0.48% 0.41%
Number of:
Bank subsidiaries15 15 15
Banking offices170 167 157
(1) Excludes mortgage loans held-for-sale.
(2) Net revenue includes net interest income and non-interest income.
(3) See “Supplemental Financial Measures/Ratios” for additional information on this performance measure/ratio.
(4) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period’s total average assets. A lower ratio indicates a higher degree of efficiency.
(5) Capital ratios for current quarter-end are estimated.
(6) The allowance for credit losses includes both the allowance for loan losses and the allowance for unfunded lending-related commitments.

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(Unaudited) (Unaudited)
(In thousands)March 31,2019 December 31,2018 March 31,2018
Assets
Cash and due from banks$270,765 $392,142 $231,407
Federal funds sold and securities purchased under resale agreements58 58 57
Interest bearing deposits with banks1,609,852 1,099,594 980,380
Available-for-sale securities, at fair value2,185,782 2,126,081 1,895,688
Held-to-maturity securities, at amortized cost1,051,542 1,067,439 892,937
Trading account securities559 1,692 1,682
Equity securities with readily determinable fair value47,653 34,717 37,832
Federal Home Loan Bank and Federal Reserve Bank stock89,013 91,354 104,956
Brokerage customer receivables14,219 12,609 24,531
Mortgage loans held-for-sale248,557 264,070 411,505
Loans, net of unearned income24,214,629 23,820,691 22,062,134
Allowance for loan losses(158,212) (152,770) (139,503)
Net loans24,056,417 23,667,921 21,922,631
Premises and equipment, net676,037 671,169 626,687
Lease investments, net224,240 233,208 190,775
Accrued interest receivable and other assets888,492 696,707 601,794
Trade date securities receivable375,211 263,523 —
Goodwill573,658 573,141 511,497
Other intangible assets46,566 49,424 22,413
Total assets$32,358,621 $31,244,849 $28,456,772
Liabilities and Shareholders’ Equity
Deposits:
Non-interest bearing$6,353,456 $6,569,880 $6,612,319
Interest bearing20,451,286 19,524,798 16,667,008
Total deposits26,804,742 26,094,678 23,279,327
Federal Home Loan Bank advances576,353 426,326 915,000
Other borrowings372,194 393,855 247,092
Subordinated notes139,235 139,210 139,111
Junior subordinated debentures253,566 253,566 253,566
Accrued interest payable and other liabilities840,559 669,644 591,426
Total liabilities28,986,649 27,977,279 25,425,522
Shareholders’ Equity:
Preferred stock125,000 125,000 125,000
Common stock56,765 56,518 56,364
Surplus1,565,185 1,557,984 1,540,673
Treasury stock(6,650) (5,634) (5,355)
Retained earnings1,682,016 1,610,574 1,387,663
Accumulated other comprehensive loss(50,344) (76,872) (73,095)
Total shareholders’ equity3,371,972 3,267,570 3,031,250
Total liabilities and shareholders’ equity$32,358,621 $31,244,849 $28,456,772

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended
(In thousands, except per share data)March 31,2019 December 31,2018 March 31,2018
Interest income
Interest and fees on loans$296,987 $283,311 $234,994
Mortgage loans held-for-sale2,209 3,409 2,818
Interest bearing deposits with banks5,300 5,628 2,796
Federal funds sold and securities purchased under resale agreements— — —
Investment securities27,956 26,656 19,128
Trading account securities8 14 14
Federal Home Loan Bank and Federal Reserve Bank stock1,355 1,343 1,298
Brokerage customer receivables155 235 157
Total interest income333,970 320,596 261,205
Interest expense
Interest on deposits60,976 55,975 26,549
Interest on Federal Home Loan Bank advances2,450 2,563 3,639
Interest on other borrowings3,633 3,199 1,699
Interest on subordinated notes1,775 1,788 1,773
Interest on junior subordinated debentures3,150 2,983 2,463
Total interest expense71,984 66,508 36,123
Net interest income261,986 254,088 225,082
Provision for credit losses10,624 10,401 8,346
Net interest income after provision for credit losses251,362 243,687 216,736
Non-interest income
Wealth management23,977 22,726 22,986
Mortgage banking18,158 24,182 30,960
Service charges on deposit accounts8,848 9,065 8,857
Gains (losses) on investment securities, net1,364 (2,649) (351)
Fees from covered call options1,784 626 1,597
Trading (losses) gains, net(171) (155) 103
Operating lease income, net10,796 10,882 9,691
Other16,901 10,631 11,836
Total non-interest income81,657 75,308 85,679
Non-interest expense
Salaries and employee benefits125,723 122,111 112,436
Equipment11,770 11,523 10,072
Operating lease equipment depreciation8,319 8,462 6,533
Occupancy, net16,245 15,980 13,767
Data processing7,525 8,447 8,493
Advertising and marketing9,858 9,414 8,824
Professional fees5,556 9,259 6,649
Amortization of other intangible assets2,942 1,407 1,004
FDIC insurance3,576 4,044 4,362
OREO expense, net632 1,618 2,926
Other22,228 19,068 19,283
Total non-interest expense214,374 211,333 194,349
Income before taxes118,645 107,662 108,066
Income tax expense29,499 28,005 26,085
Net income$89,146 $79,657 $81,981
Preferred stock dividends2,050 2,050 2,050
Net income applicable to common shares$87,096 $77,607 $79,931
Net income per common share - Basic$1.54 $1.38 $1.42
Net income per common share - Diluted$1.52 $1.35 $1.40
Cash dividends declared per common share$0.25 $0.19 $0.19
Weighted average common shares outstanding56,529 56,395 56,137
Dilutive potential common shares699 892 888
Average common shares and dilutive common shares57,228 57,287 57,025

EARNINGS PER SHARE

The following table shows the computation of basic and diluted earnings per share for the periods indicated:

Three Months Ended
(In thousands, except per share data) March 31,2019 December 31,2018 March 31,2018
Net income $89,146 $79,657 $81,981
Less: Preferred stock dividends 2,050 2,050 2,050
Net income applicable to common shares(A)87,096 77,607 79,931
Weighted average common shares outstanding(B)56,529 56,395 56,137
Effect of dilutive potential common shares:
Common stock equivalents 699 892 888
Weighted average common shares and effect of dilutive potential common shares(C)57,228 57,287 57,025
Net income per common share:
Basic(A/B)$1.54 $1.38 $1.42
Diluted(A/C)$1.52 $1.35 $1.40

Potentially dilutive common shares can result from stock options, restricted stock unit awards, stock warrants, and shares to be issued under the Employee Stock Purchase Plan and the Directors Deferred Fee and Stock Plan, being treated as if they had been either exercised or issued, computed by application of the treasury stock method. While potentially dilutive common shares are typically included in the computation of diluted earnings per share, potentially dilutive common shares are excluded from this computation in periods in which the effect would reduce the loss per share or increase the income per share.

SUPPLEMENTAL FINANCIAL MEASURES/RATIOS

The accounting and reporting policies of Wintrust conform to generally accepted accounting principles (“GAAP”) in the United States and prevailing practices in the banking industry. However, certain non-GAAP performance measures and ratios are used by management to evaluate and measure the Company’s performance. These include taxable-equivalent net interest income (including its individual components), taxable-equivalent net interest margin (including its individual components), the taxable-equivalent efficiency ratio, tangible common equity ratio, tangible book value per common share and return on average tangible common equity. Management believes that these measures and ratios provide users of the Company’s financial information a more meaningful view of the performance of the Company's interest-earning assets and interest-bearing liabilities and of the Company’s operating efficiency. Other financial holding companies may define or calculate these measures and ratios differently.

Management reviews yields on certain asset categories and the net interest margin of the Company and its banking subsidiaries on a fully taxable-equivalent basis. In this non-GAAP presentation, net interest income is adjusted to reflect tax-exempt interest income on an equivalent before-tax basis using tax rates effective as of the end of the period. This measure ensures comparability of net interest income arising from both taxable and tax-exempt sources. Net interest income on a fully taxable-equivalent basis is also used in the calculation of the Company’s efficiency ratio. The efficiency ratio, which is calculated by dividing non-interest expense by total taxable-equivalent net revenue (less securities gains or losses), measures how much it costs to produce one dollar of revenue. Securities gains or losses are excluded from this calculation to better match revenue from daily operations to operational expenses. Management considers the tangible common equity ratio and tangible book value per common share as useful measurements of the Company’s equity. The Company references the return on average tangible common equity as a measurement of profitability.

The following table presents a reconciliation of certain non-GAAP performance measures and ratios used by the Company to evaluate and measure the Company’s performance to the most directly comparable GAAP financial measures for the last five quarters.

Three Months Ended
March 31, December 31, September 30, June 30, March 31,
(Dollars and shares in thousands)2019 2018 2018 2018 2018
Calculation of Net Interest Margin and Efficiency Ratio
(A) Interest Income (GAAP)$333,970 $320,596 $304,962 $284,047 $261,205
Taxable-equivalent adjustment:
- Loans1,034 980 941 812 670
- Liquidity Management Assets565 586 575 566 531
- Other Earning Assets2 4 3 1 3
(B) Interest Income (non-GAAP)$335,571 $322,166 $306,481 $285,426 $262,409
(C) Interest Expense (GAAP)$71,984 $66,508 $57,399 $45,877 $36,123
(D) Net Interest Income (GAAP) (A minus C)$261,986 $254,088 $247,563 $238,170 $225,082
(E) Net Interest Income (non-GAAP) (B minus C)$263,587 $255,658 $249,082 $239,549 $226,286
Net interest margin (GAAP)3.70% 3.61% 3.59% 3.61% 3.54%
Net interest margin (non-GAAP)3.72% 3.63% 3.61% 3.63% 3.56%
(F) Non-interest income$81,657 $75,308 $99,930 $95,233 $85,679
(G) Gains (losses) on investment securities, net1,364 (2,649) 90 12 (351)
(H) Non-interest expense214,374 211,333 213,637 206,769 194,349
Efficiency ratio (H/(D+F-G))62.63% 63.65% 61.50% 62.02% 62.47%
Efficiency ratio (non-GAAP) (H/(E+F-G))62.34% 63.35% 61.23% 61.76% 62.23%
Calculation of Tangible Common Equity Ratio (at period end)
Total shareholders’ equity$3,371,972 $3,267,570 $3,179,822 $3,106,871 $3,031,250
Less: Non-convertible preferred stock(125,000) (125,000) (125,000) (125,000) (125,000)
Less: Intangible assets(620,224) (622,565) (564,938) (531,371) (533,910)
(I) Total tangible common shareholders’ equity$2,626,748 $2,520,005 $2,489,884 $2,450,500 $2,372,340
(J) Total assets$32,358,621 $31,244,849 $30,142,731 $29,464,588 $28,456,772
Less: Intangible assets(620,224) (622,565) (564,938) (531,371) (533,910)
(K) Total tangible assets$31,738,397 $30,622,284 $29,577,793 $28,933,217 $27,922,862
Common equity to assets ratio (GAAP) (L/J)10.0% 10.1% 10.1% 10.1% 10.2%
Tangible common equity ratio (non-GAAP) (I/K)8.3% 8.2% 8.4% 8.5% 8.5%
Calculation of Tangible Book Value per Common Share
Total shareholders’ equity$3,371,972 $3,267,570 $3,179,822 $3,106,871 $3,031,250
Less: Preferred stock(125,000) (125,000) (125,000) (125,000) (125,000)
(L) Total common equity$3,246,972 $3,142,570 $3,054,822 $2,981,871 $2,906,250
(M) Actual common shares outstanding56,639 56,408 56,377 56,329 56,256
Book value per common share (L/M)$57.33 $55.71 $54.19 $52.94 $51.66
Tangible book value per common share (non-GAAP) (I/M)$46.38 $44.67 $44.16 $43.50 $42.17

Calculation of Return on Average Tangible Common Equity
(N) Net income applicable to common shares$87,096 $77,607 $89,898 $87,530 $79,931
Add: Intangible asset amortization2,942 1,407 1,163 997 1,004
Less: Tax effect of intangible asset amortization(731) (366) (292) (263) (243)
After-tax intangible asset amortization2,211 1,041 871 734 761
(O) Tangible net income applicable to common shares (non-GAAP)$89,307 $78,648 $90,769 $88,264 $80,692
Total average shareholders' equity$3,309,078 $3,200,654 $3,131,943 $3,064,154 $2,995,592
Less: Average preferred stock(125,000) (125,000) (125,000) (125,000) (125,000)
(P) Total average common shareholders' equity$3,184,078 $3,075,654 $3,006,943 $2,939,154 $2,870,592
Less: Average intangible assets(622,240) (574,757) (547,552) (533,496) (536,676)
(Q) Total average tangible common shareholders’ equity (non-GAAP)$2,561,838 $2,500,897 $2,459,391 $2,405,658 $2,333,916
Return on average common equity, annualized (N/P)11.09% 10.01% 11.86% 11.94% 11.29%
Return on average tangible common equity, annualized (non-GAAP) (O/Q)14.14% 12.48% 14.64% 14.72% 14.02%

BUSINESS UNIT SUMMARY

Community Banking

Through its community banking unit, the Company provides banking and financial services primarily to individuals, small to mid-sized businesses, local governmental units and institutional clients residing primarily in the local areas the Company services. In the first quarter of 2019, revenue within this unit was primarily driven by increased net interest income due to increased earning assets and a higher net interest margin, partially offset by the impact of having two fewer days in the period. The net interest margin increased in the first quarter of 2019 compared to the fourth quarter of 2018 primarily as a result of higher yields within the loan portfolio. Mortgage banking revenue decreased by $6.0 million from $24.2 million for the fourth quarter of 2018 to $18.2 million for the first quarter of 2019. The lower revenue was primarily due to to lower origination volumes, negative fair value adjustments recognized on mortgage servicing rights related to changes in valuation assumptions and pay-offs, partially offset by higher production margins. Mortgage loans originated for sale during the current period decreased to $678.5 million from $927.8 million in the fourth quarter of 2018. Home purchases represented 67% of loan volume originated for sale for the first quarter of 2019. The Company's gross commercial and commercial real estate loan pipelines remain strong. Before the impact of scheduled payments and prepayments, at March 31, 2019, gross commercial and commercial real estate loan pipelines totaled $1.3 billion, or $812.9 million when adjusted for the probability of closing, compared to $1.1 billion, or $671.1 million when adjusted for the probability of closing, at December 31, 2018.

Specialty Finance

Through its specialty finance unit, the Company offers financing of insurance premiums for businesses and individuals, equipment financing through structured loans and lease products to customers in a variety of industries and accounts receivable financing, value-added, out-sourced administrative services, and other services. In the first quarter of 2019, the specialty finance unit experienced higher revenue as a result of increased volumes and higher yields within its insurance premium financing receivables portfolio. Originations within the insurance premium financing receivables portfolio were $2.1 billion during the first quarter of 2019 and average balances increased by $186.1 million. The increase in average balances along with higher yields on these loans resulted in a $5.9 million increase in interest income attributed to this portfolio. The Company's leasing business showed steady growth during the first quarter of 2019, with its portfolio of assets, including capital leases, loans and equipment on operating leases, increasing $65.4 million to $1.3 billion at the end of the first quarter of 2019. Revenues from the Company's out-sourced administrative services business remained relatively steady, totaling approximately $1.0 million in the first quarter of 2019 and $1.3 million in the fourth quarter of 2018.

Wealth Management

Through four separate subsidiaries within its wealth management unit, the Company offers a full range of wealth management services, including trust and investment services, tax-deferred like-kind exchange services, asset management, securities brokerage services and 401(k) and retirement plan services. Wealth management revenue increased by $1.3 million in the first quarter of 2019 compared to the fourth quarter of 2018, totaling $24.0 million in the current period. At March 31, 2019, the Company’s wealth management subsidiaries had approximately $25.1 billion of assets under administration, which includes $3.7 billion of assets owned by the Company and its subsidiary banks, representing a $883.1 million increase from the $24.2 billion of assets under administration at December 31, 2018. The increase in the first quarter of 2019 was primarily due to the impact of market conditions on the value of assets under administration. Tax-deferred like-kind exchange services provided by CDEC, our Qualified Intermediary for taxpayers seeking to structure tax-deferred like-kind exchanges under Internal Revenue Code Section 1031, resulted in average deposit balances from these transactions totaling $821.1 million during the first quarter of 2019.

LOANS

Loan Portfolio Mix and Growth Rates

% Growth
(Dollars in thousands)March 31,2019 December 31,2018 March 31,2018 From (1) December 31, 2018 FromMarch 31,2018
Balance:
Commercial$7,994,191 $7,828,538 $7,060,871 9% 13%
Commercial real estate6,973,505 6,933,252 6,633,520 2 5
Home equity528,448 552,343 626,547 (18) (16)
Residential real estate1,053,524 1,002,464 869,104 21 21
Premium finance receivables - commercial2,988,788 2,841,659 2,576,150 21 16
Premium finance receivables - life insurance4,555,369 4,541,794 4,189,961 1 9
Consumer and other120,804 120,641 105,981 1 14
Total loans, net of unearned income$24,214,629 $23,820,691 $22,062,134 7% 10%
Mix:
Commercial33% 33% 32%
Commercial real estate29 29 30
Home equity2 2 3
Residential real estate4 4 4
Premium finance receivables - commercial12 12 12
Premium finance receivables - life insurance19 19 19
Consumer and other1 1 —
Total loans, net of unearned income100% 100% 100%
(1) Annualized.

Commercial and Commercial Real Estate Loan Portfolios

As of March 31, 2019
% ofTotalBalance Nonaccrual > 90 DaysPast Dueand StillAccruing AllowanceFor LoanLossesAllocation
(Dollars in thousands)Balance
Commercial:
Commercial, industrial and other$5,250,953 35.0% $38,858 $— $50,178
Franchise879,906 5.9 15,799 — 12,055
Mortgage warehouse lines of credit174,284 1.2 — — 1,399
Asset-based lending1,040,834 7.0 1,135 — 8,868
Leases622,884 4.2 — — 1,675
PCI - commercial loans (1)25,330 0.1 — 2,499 463
Total commercial$7,994,191 53.4% $55,792 $2,499 $74,638
Commercial Real Estate:
Construction$803,669 5.4% $1,030 $— $9,142
Land147,701 1.0 54 — 4,194
Office926,375 6.2 4,482 — 6,267
Industrial964,960 6.4 267 — 6,534
Retail895,267 6.0 7,645 — 6,065
Multi-family1,117,385 7.5 303 — 10,875
Mixed use and other2,007,487 13.4 2,152 — 14,653
PCI - commercial real estate (1)110,661 0.7 — 4,265 120
Total commercial real estate$6,973,505 46.6% $15,933 $4,265 $57,850
Total commercial and commercial real estate$14,967,696 100.0% $71,725 $6,764 $132,488
Commercial real estate - collateral location by state:
Illinois$5,331,784 76.5%
Wisconsin758,097 10.9
Total primary markets$6,089,881 87.4%
Indiana175,350 2.5
Florida55,528 0.8
Arizona61,375 0.9
Michigan35,650 0.5
California67,545 1.0
Other488,176 6.9
Total$6,973,505 100.0%
(1) Purchased credit impaired ("PCI") loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. Loan agings are based upon contractually required payments.

DEPOSITS

Deposit Portfolio Mix and Growth Rates

% Growth
(Dollars in thousands)March 31,2019 December 31,2018 March 31,2018 From (1)December 31,2018 FromMarch 31,2018
Balance:
Non-interest bearing$6,353,456 $6,569,880 $6,612,319 (13)% (4)%
NOW and interest bearing demand deposits2,948,576 2,897,133 2,315,122 7 27
Wealth management deposits (2)3,328,781 2,996,764 2,495,134 45 33
Money market6,093,596 5,704,866 4,617,122 28 32
Savings2,729,626 2,665,194 2,901,504 10 (6)
Time certificates of deposit5,350,707 5,260,841 4,338,126 7 23
Total deposits$26,804,742 $26,094,678 $23,279,327 11% 15%
Mix:
Non-interest bearing24% 25% 28%
NOW and interest bearing demand deposits11 11 10
Wealth management deposits (2)12 12 11
Money market23 22 20
Savings10 10 12
Time certificates of deposit20 20 19
Total deposits100% 100% 100%
(1) Annualized.
(2) Represents deposit balances of the Company’s subsidiary banks from brokerage customers of Wintrust Investments, CDEC, trust and asset management customers of the Company and brokerage customers from unaffiliated companies which have been placed into deposit accounts.

Time Certificates of Deposit
Maturity/Re-pricing Analysis
As of March 31, 2019
(Dollars in thousands)CDARs &BrokeredCertificates of Deposit (1) MaxSafeCertificates of Deposit (1) Variable RateCertificates of Deposit (2) Other FixedRate Certificates of Deposit (1) Total TimeCertificates ofDeposit Weighted-AverageRate of MaturingTime Certificates of Deposit (3)
1-3 months$249 $32,771 $99,466 $874,080 $1,006,566 1.52%
4-6 months75,064 30,871 — 701,663 807,598 1.74%
7-9 months— 13,019 — 583,211 596,230 1.80%
10-12 months— 22,078 — 686,059 708,137 1.98%
13-18 months— 7,181 — 909,809 916,990 2.24%
19-24 months— 15,942 — 459,659 475,601 2.70%
24+ months1,000 9,496 — 829,089 839,585 2.65%
Total$76,313 $131,358 $99,466 $5,043,570 $5,350,707 2.05%
(1) This category of certificates of deposit is shown by contractual maturity date.
(2) This category includes variable rate certificates of deposit and savings certificates with the majority repricing on at least a monthly basis.
(3) Weighted-average rate excludes the impact of purchase accounting fair value adjustments.

NET INTEREST INCOME

The following table presents a summary of Wintrust’s average balances, net interest income and related net interest margins, calculated on a fully tax-equivalent basis, for the first quarter of 2019 compared to the fourth quarter of 2018 (sequential quarter) and first quarter of 2018 (linked quarter), respectively:

Average Balancefor three months ended, Interestfor three months ended, Yield/Ratefor three months ended,
(Dollars in thousands)March 31,2019 December 31,2018 March 31,2018 March 31,2019 December 31,2018 March 31,2018 March 31,2019 December 31,2018 March 31,2018
Interest-bearing deposits with banks and cash equivalents (1)$897,629 $1,042,860 $749,973 $5,300 $5,628 $2,796 2.39% 2.14% 1.51%
Investment securities (2)3,630,577 3,347,496 2,892,617 28,521 27,242 19,659 3.19 3.23 2.76
FHLB and FRB stock94,882 98,084 105,414 1,355 1,343 1,298 5.79 5.43 4.99
Liquidity management assets (3)(8)$4,623,088 $4,488,440 $3,748,004 $35,176 $34,213 $23,753 3.09% 3.02% 2.57%
Other earning assets (3)(4)(8)13,591 16,204 27,571 165 253 174 4.91 6.19 2.56
Mortgage loans held-for-sale188,190 265,717 281,181 2,209 3,409 2,818 4.76 5.09 4.06
Loans, net of unearned income (3)(5)(8)23,880,916 23,164,154 21,711,342 298,021 284,291 235,664 5.06 4.87 4.40
Total earning assets (8)$28,705,785 $27,934,515 $25,768,098 $335,571 $322,166 $262,409 4.74% 4.58% 4.13%
Allowance for loan losses(157,782) (154,438) (143,108)
Cash and due from banks283,019 271,403 254,489
Other assets2,385,149 2,128,407 1,930,118
Total assets$31,216,171 $30,179,887 $27,809,597
NOW and interest bearing demand deposits$2,803,338 $2,671,283 $2,255,692 $4,613 $4,007 $1,386 0.67% 0.60% 0.25%
Wealth management deposits2,614,035 2,289,904 2,250,139 7,000 7,119 5,441 1.09 1.23 0.98
Money market accounts5,915,525 5,632,268 4,520,620 19,460 16,936 4,667 1.33 1.19 0.42
Savings accounts2,715,422 2,553,133 2,813,772 4,249 3,096 2,732 0.63 0.48 0.39
Time deposits5,267,796 5,381,029 4,322,111 25,654 24,817 12,323 1.98 1.83 1.16
Interest-bearing deposits$19,316,116 $18,527,617 $16,162,334 $60,976 $55,975 $26,549 1.29% 1.20% 0.67%
Federal Home Loan Bank advances594,335 551,846 872,811 2,450 2,563 3,639 1.67 1.84 1.69
Other borrowings465,571 385,878 263,125 3,633 3,199 1,699 3.16 3.29 2.62
Subordinated notes139,217 139,186 139,094 1,775 1,788 1,773 5.10 5.14 5.10
Junior subordinated debentures253,566 253,566 253,566 3,150 2,983 2,463 4.97 4.60 3.89
Total interest-bearing liabilities$20,768,805 $19,858,093 $17,690,930 $71,984 $66,508 $36,123 1.40% 1.33% 0.83%
Non-interest bearing deposits6,444,378 6,542,228 6,639,845
Other liabilities693,910 578,912 483,230
Equity3,309,078 3,200,654 2,995,592
Total liabilities and shareholders’ equity$31,216,171 $30,179,887 $27,809,597
Interest rate spread (6)(8) 3.34% 3.25% 3.30%
Less: Fully tax-equivalent adjustment (1,601) (1,570) (1,204) (0.02) (0.02) (0.02)
Net free funds/contribution (7)$7,936,980 $8,076,422 $8,077,168 0.38 0.38 0.26
Net interest income/ margin (GAAP) (8) $261,986 $254,088 $225,082 3.70% 3.61% 3.54%
Fully tax-equivalent adjustment 1,601 1,570 1,204 0.02 0.02 0.02
Net interest income/ margin (non-GAAP) (8) $263,587 $255,658 $226,286 3.72% 3.63% 3.56%
(1) Includes interest-bearing deposits from banks, federal funds sold and securities purchased under resale agreements.
(2) Investment securities includes investment securities classified as available-for-sale and held-to-maturity, and equity securities with readily determinable fair values. Equity securities without readily determinable fair values are included within other assets.
(3) Interest income on tax-advantaged loans, trading securities and investment securities reflects a tax-equivalent adjustment based on the marginal federal corporate tax rate in effect as of the applicable period. The total adjustments for the three months ended March 31, 2019, December 31, 2018 and March 31, 2018 were $1.6 million, $1.6 million and $1.2 million, respectively.
(4) Other earning assets include brokerage customer receivables and trading account securities.
(5) Loans, net of unearned income, include non-accrual loans.
(6) Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.
(7) Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.
(8) See “Supplemental Financial Measures/Ratios” for additional information on this performance ratio.

For the first quarter of 2019, net interest income totaled $262.0 million, an increase of $7.9 million as compared to the fourth quarter of 2018 and an increase of $36.9 million as compared to the first quarter of 2018. Net interest margin was 3.70% (3.72% on a fully taxable-equivalent basis, non-GAAP) during the first quarter of 2019 compared to 3.61% (3.63% on a fully taxable-equivalent basis, non-GAAP) during the fourth quarter of 2018 and 3.54% (3.56% on a fully taxable-equivalent basis, non-GAAP) during the first quarter of 2018. The $7.9 million increase in net interest income in the first quarter of 2019 compared to the fourth quarter of 2018 was attributable to a $5.5 million increase from higher levels of earning assets and a $8.0 million increase due to a higher net interest margin, partially offset by a $5.6 million decrease due to two less days in the quarter.

Interest Rate Sensitivity

As an ongoing part of its financial strategy, the Company attempts to manage the impact of fluctuations in market interest rates on net interest income. Management measures its exposure to changes in interest rates by modeling many different interest rate scenarios.

The following interest rate scenarios display the percentage change in net interest income over a one-year time horizon assuming increases of 100 and 200 basis points and a decrease of 100 basis points. The Static Shock Scenario results incorporate actual cash flows and repricing characteristics for balance sheet instruments following an instantaneous, parallel change in market rates based upon a static (i.e. no growth or constant) balance sheet. Conversely, the Ramp Scenario results incorporate management’s projections of future volume and pricing of each of the product lines following a gradual, parallel change in market rates over twelve months. Actual results may differ from these simulated results due to timing, magnitude, and frequency of interest rate changes as well as changes in market conditions and management strategies. The interest rate sensitivity for both the Static Shock and Ramp Scenario at March 31, 2019, December 31, 2018 and March 31, 2018 is as follows:

Static Shock Scenario +200 Basis Points +100 Basis Points -100 Basis Points
March 31, 2019 14.9% 7.8% (8.5)%
December 31, 2018 15.6% 7.9% (8.6)%
March 31, 2018 18.8% 9.7% (11.6)%

Ramp Scenario+200 Basis Points +100 Basis Points -100 Basis Points
March 31, 20196.7% 3.5% (3.3)%
December 31, 20187.4% 3.8% (3.6)%
March 31, 20189.0% 4.6% (4.8)%

These results indicate that the Company has positioned its balance sheet to benefit from a rise in interest rates. This analysis also indicates that the Company would benefit to a greater magnitude should a rise in interest rates be significant (i.e., 200 basis points) and immediate (Static Shock Scenario).

Maturities and Sensitivities of Loans to Changes in Interest Rates

The following table classifies the loan portfolio at March 31, 2019 by date at which the loans reprice or mature, and the type of rate exposure:

As of March 31, 2019One year or less From one to five years Over five years
(Dollars in thousands) Total
Commercial
Fixed rate$164,370 $1,149,701 $755,402 $2,069,473
Variable rate5,917,650 6,923 145 5,924,718
Total commercial$6,082,020 $1,156,624 $755,547 $7,994,191
Commercial real estate
Fixed rate419,045 1,956,704 332,469 2,708,218
Variable rate4,237,177 28,102 8 4,265,287
Total commercial real estate$4,656,222 $1,984,806 $332,477 $6,973,505
Home equity
Fixed rate16,272 12,934 4,981 34,187
Variable rate494,261 — — 494,261
Total home equity$510,533 $12,934 $4,981 $528,448
Residential real estate
Fixed rate30,648 20,501 235,107 286,256
Variable rate49,860 314,090 403,318 767,268
Total residential real estate$80,508 $334,591 $638,425 $1,053,524
Premium finance receivables - commercial
Fixed rate2,928,872 59,916 — 2,988,788
Variable rate— — — —
Total premium finance receivables - commercial$2,928,872 $59,916 $— $2,988,788
Premium finance receivables - life insurance
Fixed rate19,925 66,737 6,087 92,749
Variable rate4,462,620 — — 4,462,620
Total premium finance receivables - life insurance$4,482,545 $66,737 $6,087 $4,555,369
Consumer and other
Fixed rate80,068 11,236 2,072 93,376
Variable rate27,387 41 — 27,428
Total consumer and other$107,455 $11,277 $2,072 $120,804
Total per category
Fixed rate3,659,200 3,277,729 1,336,118 8,273,047
Variable rate15,188,955 349,156 403,471 15,941,582
Total loans, net of unearned income$18,848,155 $3,626,885 $1,739,589 $24,214,629
Variable Rate Loan Pricing by Index:
Prime$2,307,308
One- month LIBOR8,188,860
Three- month LIBOR381,204
Twelve- month LIBOR4,836,490
Other227,720
Total variable rate$15,941,582

http://ml.globenewswire.com/Resource/Download/56f85e52-e126-403a-9736-e900730297bc

Source: Bloomberg

As noted in the table on the previous page, the majority of the Company’s portfolio is tied to LIBOR indices which, as shown in the table above, do not mirror the same increases as the Prime rate when the Federal Reserve raises interest rates. Specifically, the Company has $8.2 billion of variable rate loans tied to one-month LIBOR and $4.8 billion of variable rate loans tied to twelve-month LIBOR. The above chart shows:

Changes in
Prime 1-monthLIBOR 12-monthLIBOR
Second Quarter 2018+25 bps +21 bps +10 bps
Third Quarter 2018+25 bps +17 bps +16 bps
Fourth Quarter 2018+25 bps +24 bps +9 bps
First Quarter 2019+0 bps -1 bps -30 bps

NON-INTEREST INCOME

The following table presents non-interest income by category for the periods presented:

Three Months Ended
March 31, December 31, March 31, Q1 2019 compared to Q4 2018 Q1 2019 compared to Q1 2018
(Dollars in thousands) 2019 2018 2018 $ Change % Change $ Change % Change
Brokerage $4,516 $4,997 $6,031 $(481) (10)% $(1,515) (25)%
Trust and asset management 19,461 17,729 16,955 1,732 10 2,506 15
Total wealth management $23,977 $22,726 $22,986 $1,251 6% $991 4%
Mortgage banking 18,158 24,182 30,960 (6,024) (25) (12,802) (41)
Service charges on deposit accounts 8,848 9,065 8,857 (217) (2) (9) —
Gains (losses) on investment securities, net 1,364 (2,649) (351) 4,013 NM 1,715 NM
Fees from covered call options 1,784 626 1,597 1,158 NM 187 12
Trading (losses) gains, net (171) (155) 103 (16) 10 (274) NM
Operating lease income, net 10,796 10,882 9,691 (86) (1) 1,105 11
Other:
Interest rate swap fees 2,831 2,602 2,237 229 9 594 27
BOLI 1,591 (466) 714 2,057 NM 877 NM
Administrative services 1,030 1,260 1,061 (230) (18) (31) (3)
Foreign currency remeasurement gains (losses) 464 (1,149) (328) 1,613 NM 792 NM
Early pay-offs of capital leases 5 3 33 2 67 (28) (85)
Miscellaneous 10,980 8,381 8,119 2,599 31 2,861 35
Total Other $16,901 $10,631 $11,836 $6,270 59% $5,065 43%
Total Non-Interest Income $81,657 $75,308 $85,679 $6,349 8% $(4,022) (5)%
NM - Not meaningful.

Notable contributions to the change in non-interest income are as follows:

The increase in wealth management revenue during the current period as compared to the fourth quarter of 2018 is primarily attributable to higher fees on tax-deferred like-kind exchange services and market appreciation related to managed money accounts with fees based on assets under management. Wealth management revenue is comprised of the trust and asset management revenue of The Chicago Trust Company and Great Lakes Advisors, the brokerage commissions, managed money fees and insurance product commissions at Wintrust Investments and fees from tax-deferred like-kind exchange services provided by CDEC.

The decrease in mortgage banking revenue in the first quarter of 2019 as compared to the fourth quarter of 2018 resulted primarily from lower origination volumes and negative fair value adjustments recognized on mortgage servicing rights related to changes in valuation assumptions and pay-offs, partially offset by higher production margins. Mortgage loans originated for sale totaled $678.5 million in the first quarter of 2019 as compared to $927.8 million in the fourth quarter of 2018 and $778.9 million in the first quarter of 2018. Mortgage banking revenue includes revenue from activities related to originating, selling and servicing residential real estate loans for the secondary market. Mortgage revenue is also impacted by changes in the fair value of mortgage servicing rights ("MSRs") as the Company does not hedge this change in fair value. The Company records MSRs at fair value on a recurring basis. The table below presents additional selected information regarding mortgage banking revenue for the respective periods.

Three Months Ended
(Dollars in thousands)March 31,2019 December 31,2018 March 31,2018
Originations:
Retail originations$365,602 $463,196 $539,911
Correspondent originations148,100 289,101 126,464
Veterans First originations164,762 175,483 112,477
Total originations for sale (A)$678,464 $927,780 $778,852
Originations for investment93,689 93,275 43,249
Total originations$772,153 $1,021,055 $822,101
Purchases as a percentage of originations for sale67% 71% 73%
Refinances as a percentage of originations for sale33 29 27
Total100% 100% 100%
Production Margin:
Production revenue (B) (1)$16,606 $18,657 $20,526
Production margin (B / A)2.45% 2.01% 2.64%
Mortgage Servicing:
Loans serviced for others (C)$7,014,269 $6,545,870 $4,795,335
MSRs, at fair value (D)71,022 75,183 54,572
Percentage of MSRs to loans serviced for others (D / C)1.01% 1.15% 1.14%
Components of Mortgage Banking Revenue:
Production revenue$16,606 $18,657 $20,526
MSR - current period capitalization6,580 9,683 4,159
MSR - collection of expected cash flows - paydowns(505) (496) (443)
MSR - collection of expected cash flows - payoffs(1,492) (896) (759)
MSR - changes in fair value model assumptions(8,744) (7,638) 4,133
Servicing income5,460 4,917 2,905
Other253 (45) 439
Total mortgage banking revenue$18,158 $24,182 $30,960
(1) Production revenue represents revenue earned from the origination and subsequent sale of mortgages, including gains on loans sold and fees from originations, processing and other related activities, and excludes servicing fees, changes in the fair value of servicing rights and changes to the mortgage recourse obligation.

The net gains and net losses recognized on investment securities in the first quarter of 2019 and fourth quarter of 2018, respectively, were primarily due to unrealized gains and losses recognized on equity securities held by the Company, including a large cap value mutual fund.

The Company has typically written call options with terms of less than three months against certain U.S. Treasury and agency securities held in its portfolio for liquidity and other purposes. Management has entered into these transactions with the goal of economically hedging security positions and enhancing its overall return on its investment portfolio by using fees generated from these options to compensate for net interest margin compression. These option transactions are designed to mitigate overall interest rate risk and do not qualify as hedges pursuant to accounting guidance. There were no outstanding call option contracts at March 31, 2019, December 31, 2018 or March 31, 2018.

The increase in BOLI income was primarily the result of higher market returns during the first quarter of 2019 on certain investments supporting deferred compensation plan benefits.

The increase in miscellaneous non-interest income in the first quarter of 2019 as compared to the fourth quarter of 2018 is primarily due to income from investments in partnerships and positive adjustments from foreign currency remeasurement of the Company's Canadian subsidiary.

NON-INTEREST EXPENSE

The following table presents non-interest expense by category for the periods presented:

Three Months Ended
March 31, December 31, March 31, Q1 2019 compared to Q4 2018 Q1 2019 compared to Q1 2018
(Dollars in thousands)2019 2018 2018 $ Change % Change $ Change % Change
Salaries and employee benefits:
Salaries$74,037 $67,708 $61,986 $6,329 9% $12,051 19%
Commissions and incentive compensation31,599 33,656 31,949 (2,057) (6) (350) (1)
Benefits20,087 20,747 18,501 (660) (3) 1,586 9
Total salaries and employee benefits125,723 122,111 112,436 3,612 3 13,287 12
Equipment11,770 11,523 10,072 247 2 1,698 17
Operating lease equipment depreciation8,319 8,462 6,533 (143) (2) 1,786 27
Occupancy, net16,245 15,980 13,767 265 2 2,478 18
Data processing7,525 8,447 8,493 (922) (11) (968) (11)
Advertising and marketing9,858 9,414 8,824 444 5 1,034 12
Professional fees5,556 9,259 6,649 (3,703) (40) (1,093) (16)
Amortization of other intangible assets2,942 1,407 1,004 1,535 NM 1,938 NM
FDIC insurance3,576 4,044 4,362 (468) (12) (786) (18)
OREO expense, net632 1,618 2,926 (986) (61) (2,294) (78)
Other:
Commissions - 3rd party brokers718 779 1,252 (61) (8) (534) (43)
Postage2,450 2,047 1,866 403 20 584 31
Miscellaneous19,060 16,242 16,165 2,818 17 2,895 18
Total other22,228 19,068 19,283 3,160 17 2,945 15
Total Non-Interest Expense$214,374 $211,333 $194,349 $3,041 1% $20,025 10%
NM - Not meaningful.

Notable contributions to the change in non-interest expense are as follows:

Salaries and employee benefits expense increased in the first quarter of 2019 compared to the fourth quarter of 2018 primarily as a result of lower salary deferrals related to loan origination costs and an increase in costs related to deferred compensation plans impacted by market returns of related BOLI investments.

Professional fees decreased in the first quarter of 2019 compared to the fourth quarter of 2018 primarily due to lower legal and consulting fees during the current period.

The increase in amortization of intangible assets in the first quarter of 2019 compared to the fourth quarter of 2018 was primarily due to the amortization of certain acquired intangible assets related to the acquisition of CDEC in mid-December of 2018.

Other miscellaneous expense increased during the first quarter of 2019 compared to the fourth quarter of 2018 as a result of various other expenses, including a $1.0 million non-tax-deductible settlement in the first quarter of 2019.

INCOME TAXES

The Company recorded income tax expense of $29.5 million in the first quarter of 2019 compared to $28.0 million in the fourth quarter of 2018 and $26.1 million in the first quarter of 2018. The effective tax rates were 24.86% in the first quarter of 2019, 26.01% in the fourth quarter of 2018 and 24.14% in the first quarter of 2018. The effective tax rates were impacted by excess tax benefits related to share-based compensation. These excess tax benefits were $1.6 million in the first quarter of 2019 compared to $160,000 in the fourth quarter of 2018 and $2.6 million in the first quarter of 2018. Excess tax benefits are expected to be higher in the first quarter when the majority of the Company's shared-based awards vest, and will fluctuate throughout the year based on the Company's stock price and timing of employee stock option exercises and vesting of other share-based awards.

ASSET QUALITY
Allowance for Credit Losses
Three Months Ended
March 31, December 31, March 31,
(Dollars in thousands)2019 2018 2018
Allowance for loan losses at beginning of period$152,770 $149,756 $137,905
Provision for credit losses10,624 10,401 8,346
Other adjustments(27) (79) (40)
Reclassification (to) from allowance for unfunded lending-related commitments(16) (150) 26
Charge-offs:
Commercial503 6,416 2,687
Commercial real estate3,734 219 813
Home equity88 715 357
Residential real estate3 267 571
Premium finance receivables - commercial2,210 1,741 4,721
Premium finance receivables - life insurance— — —
Consumer and other102 148 129
Total charge-offs6,640 9,506 9,278
Recoveries:
Commercial318 225 262
Commercial real estate480 1,364 1,687
Home equity62 105 123
Residential real estate29 47 40
Premium finance receivables - commercial556 567 385
Premium finance receivables - life insurance— — —
Consumer and other56 40 47
Total recoveries1,501 2,348 2,544
Net charge-offs(5,139) (7,158) (6,734)
Allowance for loan losses at period end$158,212 $152,770 $139,503
Allowance for unfunded lending-related commitments at period end1,410 1,394 1,243
Allowance for credit losses at period end$159,622 $154,164 $140,746
Annualized net charge-offs (recoveries) by category as a percentage of its own respective category’s average:
Commercial0.01% 0.33% 0.14%
Commercial real estate0.19 (0.07) (0.05)
Home equity0.02 0.43 0.15
Residential real estate(0.01) 0.10 0.26
Premium finance receivables - commercial0.23 0.16 0.68
Premium finance receivables - life insurance0.00 0.00 0.00
Consumer and other0.16 0.30 0.26
Total loans, net of unearned income0.09% 0.12% 0.13%
Net charge-offs as a percentage of the provision for credit losses48.37% 68.82% 80.69%
Loans at period-end$24,214,629 $23,820,691 $22,062,134
Allowance for loan losses as a percentage of loans at period end0.65% 0.64% 0.63%
Allowance for credit losses as a percentage of loans at period end0.66% 0.65% 0.64%

The allowance for credit losses is comprised of the allowance for loan losses and the allowance for unfunded lending-related commitments. The allowance for loan losses is a reserve against loan amounts that are actually funded and outstanding while the allowance for unfunded lending-related commitments (separate liability account) relates to certain amounts that Wintrust is committed to lend but for which funds have not yet been disbursed. The provision for credit losses may contain both a component related to funded loans (provision for loan losses) and a component related to lending-related commitments (provision for unfunded loan commitments and letters of credit).

Net charge-offs as a percentage of loans, for the first quarter of 2019 totaled nine basis points on an annualized basis compared to 12 basis points on an annualized basis in the fourth quarter of 2018 and 13 basis points on an annualized basis in the first quarter of 2018. Net charge-offs totaled $5.1 million in the first quarter of 2019, a $2.0 million decrease from $7.2 million in the fourth quarter of 2018 and a $1.6 million decrease from $6.7 million in the first quarter of 2018. The decrease in net charge-offs in the first quarter of 2019 compared to fourth quarter of 2018 is primarily the result of lower charge-offs within the commercial portfolio, partially offset by an increase in charge-offs within the commercial real estate portfolio, during the current period. The provision for credit losses, totaled $10.6 million for the first quarter of 2019 compared to $10.4 million for the fourth quarter of 2018 and $8.3 million for the first quarter of 2018.

Management believes the allowance for credit losses is appropriate to provide for inherent losses in the portfolio. There can be no assurances, however, that future losses will not exceed the amounts provided for, thereby affecting future results of operations. The amount of future additions to the allowance for credit losses will be dependent upon management’s assessment of the appropriateness of the allowance based on its evaluation of economic conditions, changes in real estate values, interest rates, the regulatory environment, the level of past-due and non-performing loans and other factors.

The following table presents the provision for credit losses by component for the periods presented:

Three Months Ended
March 31, December 31, March 31,
(Dollars in thousands)2019 2018 2018
Provision for loan losses$10,608 $10,251 $8,372
Provision for unfunded lending-related commitments16 150 (26)
Provision for credit losses$10,624 $10,401 $8,346

The tables below summarize the calculation of allowance for loan losses for the Company’s core loan portfolio and consumer, niche and purchased loan portfolio, as of March 31, 2019 and December 31, 2018.

As of March 31, 2019
Recorded Calculated As a percentageof its own respective
(Dollars in thousands)Investment Allowance category’s balance
Commercial:(1)
Commercial and industrial$4,460,202 $46,436 1.04%
Asset-based lending1,037,632 8,868 0.85
Tax exempt514,789 3,255 0.63
Leases615,015 1,675 0.27
Commercial real estate:(1)
Residential construction38,986 879 2.25
Commercial construction759,826 8,240 1.08
Land146,654 4,194 2.86
Office891,365 6,266 0.70
Industrial931,343 6,532 0.70
Retail863,435 6,065 0.70
Multi-family1,073,431 10,874 1.01
Mixed use and other1,931,079 14,641 0.76
Home equity(1)500,636 8,584 1.71
Residential real estate(1)1,027,586 7,524 0.73
Total core loan portfolio$14,791,979 $134,033 0.91%
Commercial:
Franchise$834,911 $11,975 1.43%
Mortgage warehouse lines of credit174,284 1,399 0.80
Community Advantage - homeowner associations185,488 465 0.25
Aircraft11,491 15 0.13
Purchased commercial loans (2)160,379 550 0.34
Commercial real estate:
Purchased commercial real estate (2)337,386 159 0.05
Purchased home equity (2)27,812 43 0.15
Purchased residential real estate (2)25,938 106 0.41
Premium finance receivables
U.S. commercial insurance loans2,620,703 6,251 0.24
Canada commercial insurance loans (2)368,085 592 0.16
Life insurance loans (1)4,389,599 1,376 0.03
Purchased life insurance loans (2)165,770 — —
Consumer and other (1)117,561 1,246 1.06
Purchased consumer and other (2)3,243 2 0.06
Total consumer, niche and purchased loan portfolio$9,422,650 $24,179 0.26%
Total loans, net of unearned income$24,214,629 $158,212 0.65%
(1) Excludes purchased loans reported in accordance with ASC 310-20 and ASC 310-30.
(2) Purchased loans represent loans reported in accordance with ASC 310-20 and ASC 310-30.

As of December 31, 2018
Recorded Calculated As a percentage of its own respective
(Dollars in thousands)Investment Allowance category’s balance
Commercial:(1)
Commercial and industrial$4,339,618 $42,948 0.99%
Asset-based lending1,025,805 9,138 0.89
Tax exempt495,896 3,150 0.64
Leases556,808 1,502 0.27
Commercial real estate:(1)
Residential construction39,569 773 1.95
Commercial construction715,260 8,203 1.15
Land140,409 3,953 2.82
Office903,559 6,235 0.69
Industrial867,676 6,083 0.70
Retail856,114 9,312 1.09
Multi-family933,362 9,386 1.01
Mixed use and other2,120,361 16,183 0.76
Home equity(1)518,814 8,428 1.62
Residential real estate(1)975,750 7,001 0.72
Total core loan portfolio$14,489,001 $132,295 0.91%
Commercial:
Franchise$885,882 $8,772 0.99%
Mortgage warehouse lines of credit144,199 1,162 0.81
Community Advantage - homeowner associations180,757 453 0.25
Aircraft12,218 17 0.14
Purchased commercial loans (2)187,355 684 0.37
Commercial real estate:
Purchased commercial real estate (2)356,942 139 0.04
Purchased home equity (2)33,529 79 0.24
Purchased residential real estate (2)26,714 193 0.72
Premium finance receivables
U.S. commercial insurance loans2,504,515 5,629 0.22
Canada commercial insurance loans (2)337,144 515 0.15
Life insurance loans (1)4,373,891 1,571 0.04
Purchased life insurance loans (2)167,903 — —
Consumer and other (1)117,251 1,258 1.07
Purchased consumer and other (2)3,390 3 0.09
Total consumer, niche and purchased loan portfolio$9,331,690 $20,475 0.22%
Total loans, net of unearned income$23,820,691 $152,770 0.64%
(1) Excludes purchased loans reported in accordance with ASC 310-20 and ASC 310-30.
(2) Purchased loans represent loans reported in accordance with ASC 310-20 and ASC 310-30.

As part of the regular quarterly review performed by management to determine if the Company’s allowance for loan losses is appropriate, an analysis is prepared on the loan portfolio based upon a breakout of core loans and consumer, niche and purchased loans. A summary of the allowance for loan losses calculated for the loan components in both the core loan portfolio and the consumer, niche and purchased loan portfolio was shown on the preceding tables as of March 31, 2019 and December 31, 2018.

Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date. In accordance with accounting guidance, credit deterioration on purchased loans is recorded as a credit discount at the time of purchase.

In addition to the $158.2 million of allowance for loan losses, there is $6.1 million of non-accretable credit discount on purchased loans reported in accordance with ASC 310-30 that is available to absorb credit losses.

The tables below show the aging of the Company’s loan portfolio at March 31, 2019 and December 31, 2018:

90+ days 60-89 30-59
As of March 31, 2019 and still days past days past
(Dollars in thousands)Nonaccrual accruing due due Current Total Loans
Loan Balances:
Commercial (1)$55,792 $2,499 $1,787 $49,700 $7,884,413 $7,994,191
Commercial real estate (1)15,933 4,265 5,612 54,872 6,892,823 6,973,505
Home equity7,885 — 810 4,315 515,438 528,448
Residential real estate (1)15,879 1,481 509 11,112 1,024,543 1,053,524
Premium finance receivables - commercial14,797 6,558 5,628 20,767 2,941,038 2,988,788
Premium finance receivables - life insurance (1)— 168 4,788 35,046 4,515,367 4,555,369
Consumer and other (1)326 280 47 350 119,801 120,804
Total loans, net of unearned income$110,612 $15,251 $19,181 $176,162 $23,893,423 $24,214,629

As of March 31, 2019Aging as a % of Loan BalanceNonaccrual 90+ daysand stillaccruing 60-89days pastdue 30-59days pastdue Current Total Loans
Commercial (1)0.7% 0.0% 0.0% 0.6% 98.7% 100.0%
Commercial real estate (1)0.2 0.1 0.1 0.8 98.8 100.0
Home equity1.5 — 0.2 0.8 97.5 100.0
Residential real estate (1)1.5 0.1 0.0 1.1 97.3 100.0
Premium finance receivables - commercial0.5 0.2 0.2 0.7 98.4 100.0
Premium finance receivables - life insurance (1)— 0.0 0.1 0.8 99.1 100.0
Consumer and other (1)0.3 0.2 0.0 0.3 99.2 100.0
Total loans, net of unearned income0.5% 0.1% 0.1% 0.7% 98.6% 100.0%
(1) Including PCI loans. PCI loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. Loan agings are based upon contractually required payments.

90+ days 60-89 30-59
As of December 31, 2018 and still days past days past
(Dollars in thousands)Nonaccrual accruing due due Current Total Loans
Loan Balances:
Commercial (1)$50,984 $3,313 $1,651 $34,861 $7,737,729 $7,828,538
Commercial real estate (1)19,129 6,241 10,826 51,566 6,845,490 6,933,252
Home equity7,147 — 131 3,105 541,960 552,343
Residential real estate (1)16,383 1,292 1,692 6,171 976,926 1,002,464
Premium finance receivables - commercial11,335 7,799 11,382 15,085 2,796,058 2,841,659
Premium finance receivables - life insurance (1)— — 8,407 24,628 4,508,759 4,541,794
Consumer and other (1)348 227 87 733 119,246 120,641
Total loans, net of unearned income$105,326 $18,872 $34,176 $136,149 $23,526,168 $23,820,691

As of December 31, 2018Aging as a % of Loan Balance:Nonaccrual 90+ daysand stillaccruing 60-89days pastdue 30-59days pastdue Current Total Loans
Commercial (1)0.7% 0.0% 0.0% 0.4% 98.9% 100.0%
Commercial real estate (1)0.3 0.1 0.2 0.7 98.7 100.0
Home equity1.3 — 0.0 0.6 98.1 100.0
Residential real estate (1)1.6 0.1 0.2 0.6 97.5 100.0
Premium finance receivables - commercial0.4 0.3 0.4 0.5 98.4 100.0
Premium finance receivables - life insurance (1)— — 0.2 0.5 99.3 100.0
Consumer and other (1)0.3 0.2 0.1 0.6 98.8 100.0
Total loans, net of unearned income0.4% 0.1% 0.1% 0.6% 98.8% 100.0%
(1) Including PCI loans. PCI loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. Loan agings are based upon contractually required payments.

As of March 31, 2019, $19.2 million of all loans, or 0.1%, were 60 to 89 days past due and $176.2 million, or 0.7%, were 30 to 59 days (or one payment) past due. As of December 31, 2018, $34.2 million of all loans, or 0.1%, were 60 to 89 days past due and $136.1 million, or 0.6%, were 30 to 59 days (or one payment) past due. Many of the commercial and commercial real estate loans shown as 60 to 89 days and 30 to 59 days past due are included on the Company’s internal problem loan reporting system. Loans on this system are closely monitored by management on a monthly basis. All loans within the life insurance premium financing portfolio shown as 60 to 89 days and 30 to 59 days past due (four and nine credits, respectively) remain fully secured.

The Company’s home equity and residential loan portfolios continue to exhibit low delinquency ratios. Home equity loans at March 31, 2019 that are current with regard to the contractual terms of the loan agreement represent 97.5% of the total home equity portfolio. Residential real estate loans at March 31, 2019 that are current with regards to the contractual terms of the loan agreements comprise 97.3% of total residential real estate loans outstanding.

Non-performing Assets

The following table sets forth Wintrust’s non-performing assets and troubled debt restructurings ("TDRs") performing under the contractual terms of the loan agreement, excluding PCI loans, at the dates indicated.

March 31, December 31, March 31,
(Dollars in thousands) 2019 2018 2018
Loans past due greater than 90 days and still accruing(1):
Commercial$— $— $—
Commercial real estate— — —
Home equity— — —
Residential real estate30 — —
Premium finance receivables - commercial6,558 7,799 8,547
Premium finance receivables - life insurance168 — —
Consumer and other218 109 207
Total loans past due greater than 90 days and still accruing6,974 7,908 8,754
Non-accrual loans(2):
Commercial55,792 50,984 14,007
Commercial real estate15,933 19,129 21,825
Home equity7,885 7,147 9,828
Residential real estate15,879 16,383 17,214
Premium finance receivables - commercial14,797 11,335 17,342
Premium finance receivables - life insurance— — —
Consumer and other326 348 720
Total non-accrual loans110,612 105,326 80,936
Total non-performing loans:
Commercial55,792 50,984 14,007
Commercial real estate15,933 19,129 21,825
Home equity7,885 7,147 9,828
Residential real estate15,909 16,383 17,214
Premium finance receivables - commercial21,355 19,134 25,889
Premium finance receivables - life insurance168 — —
Consumer and other544 457 927
Total non-performing loans$117,586 $113,234 $89,690
Other real estate owned9,154 11,968 18,481
Other real estate owned - from acquisitions12,366 12,852 18,117
Other repossessed assets270 280 113
Total non-performing assets$139,376 $138,334 $126,401
TDRs performing under the contractual terms of the loan agreement$48,305 $33,281 $39,562
Total non-performing loans by category as a percent of its own respective category’s period-end balance:
Commercial0.70% 0.65% 0.20%
Commercial real estate0.23 0.28 0.33
Home equity1.49 1.29 1.57
Residential real estate1.51 1.63 1.98
Premium finance receivables - commercial0.71 0.67 1.00
Premium finance receivables - life insurance0.00 — —
Consumer and other0.45 0.38 0.87
Total loans, net of unearned income0.49% 0.48% 0.41%
Total non-performing assets as a percentage of total assets0.43% 0.44% 0.44%
Allowance for loan losses as a percentage of total non-performing loans134.55% 134.92% 155.54%
(1) As of the dates shown, no TDRs were past due greater than 90 days and still accruing interest.
(2) Non-accrual loans included TDRs totaling $40.1 million, $32.8 million and $8.1 million as of March 31, 2019, December 31, 2018 and March 31, 2018, respectively.

The ratio of non-performing assets to total assets was 0.43% as of March 31, 2019, compared to 0.44% at December 31, 2018, and 0.44% at March 31, 2018. Non-performing assets, excluding PCI loans, totaled $139.4 million at March 31, 2019, compared to $138.3 million at December 31, 2018 and $126.4 million at March 31, 2018. Non-performing loans, excluding PCI loans, totaled $117.6 million, or 0.49% of total loans, at March 31, 2019 compared to $113.2 million, or 0.48% of total loans, at December 31, 2018 and $89.7 million, or 0.41% of total loans, at March 31, 2018. OREO of $21.5 million at March 31, 2019 decreased $3.3 million compared to $24.8 million at December 31, 2018 and decreased $15.1 million compared to $36.6 million at March 31, 2018.

Management is pursuing the resolution of all credits in this category. At this time, management believes reserves are appropriate to absorb inherent losses and OREO is appropriately valued at the lower of carrying value or fair value less estimated costs to sell.

Nonperforming Loans Rollforward

The table below presents a summary of the changes in the balance of non-performing loans, excluding PCI loans, for the periods presented:

Three Months Ended
March 31, December 31, March 31,
(Dollars in thousands)2019 2018 2018
Balance at beginning of period$113,234 $127,227 $90,162
Additions, net 24,030 18,553 6,608
Return to performing status (14,077) (6,155) (3,753)
Payments received (4,024) (16,437) (2,569)
Transfer to OREO and other repossessed assets (82) (970) (1,981)
Charge-offs (3,992) (7,161) (3,555)
Net change for niche loans (1) 2,497 (1,823) 4,778
Balance at end of period$117,586 $113,234 $89,690
(1) This includes activity for premium finance receivables and indirect consumer loans.

TDRs

The table below presents a summary of TDRs as of the respective date, presented by loan category and accrual status:

March 31, December 31, March 31,
(Dollars in thousands)2019 2018 2018
Accruing TDRs:
Commercial$19,650 $8,545 $19,803
Commercial real estate14,123 13,895 16,087
Residential real estate and other14,532 10,841 3,672
Total accrual$48,305 $33,281 $39,562
Non-accrual TDRs: (1)
Commercial$34,390 $27,774 $1,741
Commercial real estate1,517 1,552 1,304
Residential real estate and other4,150 3,495 5,069
Total non-accrual$40,057 $32,821 $8,114
Total TDRs:
Commercial$54,040 $36,319 $21,544
Commercial real estate15,640 15,447 17,391
Residential real estate and other18,682 14,336 8,741
Total TDRs$88,362 $66,102 $47,676
(1) Included in total non-performing loans.

Other Real Estate Owned

The table below presents a summary of other real estate owned, as of March 31, 2019, December 31, 2018 and March 31, 2018, and shows the activity for the respective period and the balance for each property type:

Three Months Ended
March 31, December 31, March 31,
(Dollars in thousands)2019 2018 2018
Balance at beginning of period$24,820 $28,303 $40,646
Disposals/resolved (2,758) (3,848) (3,679)
Transfers in at fair value, less costs to sell 32 997 1,789
Additions from acquisition — 160 —
Fair value adjustments (574) (792) (2,158)
Balance at end of period$21,520 $24,820 $36,598
Period End
March 31, December 31, March 31,
Balance by Property Type2019 2018 2018
Residential real estate$3,037 $3,446 $6,407
Residential real estate development 1,139 1,426 2,229
Commercial real estate 17,344 19,948 27,962
Total$21,520 $24,820 $36,598

Items Impacting Comparative Financial Results:

Acquisitions

On December 14, 2018, the Company acquired Elektra Holding Company, LLC ("Elektra"), the parent company of Chicago Deferred Exchange Company, LLC ("CDEC"). CDEC is a provider of Qualified Intermediary services (as defined by U.S. Treasury regulations) for taxpayers seeking to structure tax-deferred like-kind exchanges under Internal Revenue Code Section 1031. CDEC has successfully facilitated more than 8,000 like-kind exchanges in the past decade for taxpayers nationwide. These transactions typically generate customer deposits during the period following the sale of the property until such proceeds are used to purchase a replacement property. The Company recorded goodwill of $37.6 million on the acquisition.

On December 7, 2018, the Company completed its acquisition of certain assets and the assumption of certain liabilities of American Enterprise Bank ("AEB"). Through this asset acquisition, the Company acquired approximately $164.0 million in assets, including approximately $119.3 million in loans, and approximately $150.8 million in deposits.

On August 1, 2018, the Company completed its acquisition of Chicago Shore Corporation ("CSC"). CSC was the parent company of Delaware Place Bank. Through this business combination, the Company acquired Delaware Place Bank's one banking location in Chicago, Illinois, approximately $282.8 million in assets, including approximately $152.7 million in loans, and approximately $213.1 million in deposits. The Company recorded goodwill of $26.5 million on the acquisition.

On January 4, 2018, the Company acquired certain assets and assumed certain liabilities of the mortgage banking business of Veterans First, in a business combination. The Company also acquired mortgage servicing rights assets from Veterans First on approximately 10,000 loans, totaling an estimated $1.6 billion in unpaid principal balance. Veterans First is a consumer direct lender with two offices, operating one in Salt Lake City and one in San Diego. The Company recorded goodwill of $9.1 million on the acquisition.

WINTRUST SUBSIDIARIES AND LOCATIONS

Wintrust is a financial holding company whose common stock is traded on the Nasdaq Global Select Market (Nasdaq: WTFC). Its 15 community bank subsidiaries are: Lake Forest Bank & Trust Company, N.A., Hinsdale Bank & Trust Company, Wintrust Bank in Chicago, Libertyville Bank & Trust Company, Barrington Bank & Trust Company, N.A., Crystal Lake Bank & Trust Company, N.A., Northbrook Bank & Trust Company, Schaumburg Bank & Trust Company, N.A., Village Bank & Trust in Arlington Heights, Beverly Bank & Trust Company, N.A. in Chicago, Wheaton Bank & Trust Company, State Bank of The Lakes in Antioch, Old Plank Trail Community Bank, N.A. in New Lenox, St. Charles Bank & Trust Company and Town Bank in Hartland, Wisconsin.

The banks also operate facilities in Illinois in Addison, Algonquin, Aurora, Bloomingdale, Buffalo Grove, Cary, Clarendon Hills, Crete, Deerfield, Des Plaines, Downers Grove, Elgin, Elk Grove Village, Elmhurst, Evanston, Evergreen Park, Frankfort, Geneva, Glen Ellyn, Glencoe, Glenview, Gurnee, Grayslake, Hanover Park, Highland Park, Highwood, Hoffman Estates, Island Lake, Itasca, Joliet, Lake Bluff, Lake Villa, Lansing, Lemont, Lindenhurst, Lynwood, Markham, McHenry, Mokena, Mount Prospect, Mundelein, Naperville, North Chicago, Northfield, Norridge, Oak Lawn, Orland Park, Palatine, Park Ridge, Prospect Heights, Ravinia, Riverside, Rogers Park, Rolling Meadows, Roselle, Round Lake Beach, Shorewood, Skokie, South Holland, Spring Grove, Steger, Stone Park, Vernon Hills, Wauconda, Western Springs, Willowbrook, Wilmette, Winnetka and Wood Dale, in Albany, Burlington, Clinton, Darlington, Delafield, Delavan, Elm Grove, Genoa City, Kenosha, Lake Geneva, Madison, Menomonee Falls, Milwaukee, Monroe, Pewaukee, Racine, Sharon, Wales, Walworth and Wind Lake, Wisconsin, in Dyer, Indiana and in Naples, Florida.

Additionally, the Company operates various non-bank business units:

FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements within the meaning of federal securities laws. Forward-looking information can be identified through the use of words such as “intend,” “plan,” “project,” “expect,” “anticipate,” “believe,” “estimate,” “contemplate,” “possible,” “will,” “may,” “should,” “would” and “could.” Forward-looking statements and information are not historical facts, are premised on many factors and assumptions, and represent only management’s expectations, estimates and projections regarding future events. Similarly, these statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict, which may include, but are not limited to, those listed below and the Risk Factors discussed under Item 1A of the Company’s 2018 Annual Report on Form 10-K and in any of the Company’s subsequent SEC filings. 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 future financial performance, the performance of its loan portfolio, the expected amount of future credit reserves and charge-offs, delinquency trends, growth plans, regulatory developments, securities that the Company may offer from time to time, and management’s long-term performance goals, as well as statements relating to the anticipated effects on financial condition and results of operations from expected developments or events, the Company’s business and growth strategies, including future acquisitions of banks, specialty finance or wealth management businesses, internal growth and plans to form additional de novo banks or branch offices. Actual results could differ materially from those addressed in the forward-looking statements as a result of numerous factors, including the following:

Therefore, there can be no assurances that future actual results will correspond to these forward-looking statements. The reader is cautioned not to place undue reliance on any forward-looking statement made by the Company. Any such statement speaks only as of the date the statement was made or as of such date that may be referenced within the statement. The Company undertakes no obligation to update any forward-looking statement to reflect the impact of circumstances or events after the date of the press release. Persons are advised, however, to consult further disclosures management makes on related subjects in its reports filed with the Securities and Exchange Commission and in its press releases.

CONFERENCE CALL, WEBCAST AND REPLAY

The Company will hold a conference call at 2:00 p.m. (Central Time) on Tuesday, April 16, 2019 regarding first quarter 2019 results. Individuals interested in listening should call (877) 363-5049 and enter Conference ID #5868367. A simultaneous audio-only webcast and replay of the conference call may be accessed via the Company’s website at https://www.wintrust.com, Investor Relations, Investor News and Events, Presentations & Conference Calls. The text of the first quarter 2019 earnings press release will be available on the home page of the Company’s website at https://www.wintrust.com and at the Investor Relations, Investor News and Events, Press Releases link on its website.

WINTRUST FINANCIAL CORPORATION

Supplemental Financial Information

5 Quarter Trends

WINTRUST FINANCIAL CORPORATION - Supplemental Financial Information
Selected Financial Highlights - 5 Quarter Trends
(Dollars in thousands, except per share data)
Three Months Ended
March 31, December 31, September 30, June 30, March 31,
2019 2018 2018 2018 2018
Selected Financial Condition Data (at end of period):
Total assets$32,358,621 $31,244,849 $30,142,731 $29,464,588 $28,456,772
Total loans (1)24,214,629 23,820,691 23,123,951 22,610,560 22,062,134
Total deposits26,804,742 26,094,678 24,916,715 24,365,479 23,279,327
Junior subordinated debentures253,566 253,566 253,566 253,566 253,566
Total shareholders’ equity3,371,972 3,267,570 3,179,822 3,106,871 3,031,250
Selected Statements of Income Data:
Net interest income261,986 254,088 247,563 238,170 225,082
Net revenue (2)343,643 329,396 347,493 333,403 310,761
Net income89,146 79,657 91,948 89,580 81,981
Net income per common share – Basic$1.54 $1.38 $1.59 $1.55 $1.42
Net income per common share – Diluted$1.52 $1.35 $1.57 $1.53 $1.40
Selected Financial Ratios and Other Data:
Performance Ratios:
Net interest margin3.70% 3.61% 3.59% 3.61% 3.54%
Net interest margin - fully taxable equivalent (non-GAAP) (3)3.72% 3.63% 3.61% 3.63% 3.56%
Non-interest income to average assets1.06% 0.99% 1.34% 1.34% 1.25%
Non-interest expense to average assets2.79% 2.78% 2.87% 2.90% 2.83%
Net overhead ratio (4)1.72% 1.79% 1.53% 1.57% 1.58%
Return on average assets1.16% 1.05% 1.24% 1.26% 1.20%
Return on average common equity11.09% 10.01% 11.86% 11.94% 11.29%
Return on average tangible common equity (non-GAAP) (3)14.14% 12.48% 14.64% 14.72% 14.02%
Average total assets$31,216,171 $30,179,887 $29,525,109 $28,567,579 $27,809,597
Average total shareholders’ equity3,309,078 3,200,654 3,131,943 3,064,154 2,995,592
Average loans to average deposits ratio92.7% 92.4% 92.2% 95.5% 95.2%
Period-end loans to deposits ratio90.3 91.3 92.8 92.8 94.8
Common Share Data at end of period:
Market price per common share$67.33 $66.49 $84.94 $87.05 $86.05
Book value per common share$57.33 $55.71 $54.19 $52.94 $51.66
Tangible common book value per share (3)$46.38 $44.67 $44.16 $43.50 $42.17
Common shares outstanding56,638,968 56,407,558 56,377,169 56,329,276 56,256,498
Other Data at end of period:
Leverage Ratio(5)9.1% 9.1% 9.3% 9.4% 9.3%
Tier 1 Capital to risk-weighted assets (5)9.7% 9.7% 10.0% 10.0% 10.0%
Common equity Tier 1 capital to risk-weighted assets (5)9.3% 9.3% 9.5% 9.6% 9.5%
Total capital to risk-weighted assets (5)11.6% 11.6% 12.0% 12.1% 12.0%
Allowance for credit losses (6)$159,622 $154,164 $151,001 $144,645 $140,746
Non-performing loans117,586 113,234 127,227 83,282 89,690
Allowance for credit losses to total loans (6)0.66% 0.65% 0.65% 0.64% 0.64%
Non-performing loans to total loans0.49% 0.48% 0.55% 0.37% 0.41%
Number of:
Bank subsidiaries15 15 15 15 15
Banking offices170 167 166 162 157
(1) Excludes mortgage loans held-for-sale.
(2) Net revenue includes net interest income and non-interest income.
(3) See “Supplemental Financial Measures/Ratios” for additional information on this performance measure/ratio.
(4) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period’s total average assets. A lower ratio indicates a higher degree of efficiency.
(5) Capital ratios for current quarter-end are estimated.
(6) The allowance for credit losses includes both the allowance for loan losses and the allowance for unfunded lending-related commitments.

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Consolidated Statements of Condition - 5 Quarter Trends
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
March 31, December 31, September 30, June 30, March 31,
(In thousands)2019 2018 2018 2018 2018
Assets
Cash and due from banks$270,765 $392,142 $279,936 $304,580 $231,407
Federal funds sold and securities purchased under resale agreements58 58 57 62 57
Interest bearing deposits with banks1,609,852 1,099,594 1,137,044 1,221,407 980,380
Available-for-sale securities, at fair value2,185,782 2,126,081 2,164,985 1,940,787 1,895,688
Held-to-maturity securities, at amortized cost1,051,542 1,067,439 966,438 890,834 892,937
Trading account securities559 1,692 688 862 1,682
Equity securities with readily determinable fair value47,653 34,717 36,414 37,839 37,832
Federal Home Loan Bank and Federal Reserve Bank stock89,013 91,354 99,998 96,699 104,956
Brokerage customer receivables14,219 12,609 15,649 16,649 24,531
Mortgage loans held-for-sale248,557 264,070 338,111 455,712 411,505
Loans, net of unearned income24,214,629 23,820,691 23,123,951 22,610,560 22,062,134
Allowance for loan losses(158,212) (152,770) (149,756) (143,402) (139,503)
Net loans24,056,417 23,667,921 22,974,195 22,467,158 21,922,631
Premises and equipment, net676,037 671,169 664,469 639,345 626,687
Lease investments, net224,240 233,208 199,241 194,160 190,775
Accrued interest receivable and other assets888,492 696,707 700,568 666,673 601,794
Trade date securities receivable375,211 263,523 — 450 —
Goodwill573,658 573,141 537,560 509,957 511,497
Other intangible assets46,566 49,424 27,378 21,414 22,413
Total assets$32,358,621 $31,244,849 $30,142,731 $29,464,588 $28,456,772
Liabilities and Shareholders’ Equity
Deposits:
Non-interest bearing$6,353,456 $6,569,880 $6,399,213 $6,520,724 $6,612,319
Interest bearing20,451,286 19,524,798 18,517,502 17,844,755 16,667,008
Total deposits26,804,742 26,094,678 24,916,715 24,365,479 23,279,327
Federal Home Loan Bank advances576,353 426,326 615,000 667,000 915,000
Other borrowings372,194 393,855 373,571 255,701 247,092
Subordinated notes139,235 139,210 139,172 139,148 139,111
Junior subordinated debentures253,566 253,566 253,566 253,566 253,566
Accrued interest payable and other liabilities840,559 669,644 664,885 676,823 591,426
Total liabilities28,986,649 27,977,279 26,962,909 26,357,717 25,425,522
Shareholders’ Equity:
Preferred stock125,000 125,000 125,000 125,000 125,000
Common stock56,765 56,518 56,486 56,437 56,364
Surplus1,565,185 1,557,984 1,553,353 1,547,511 1,540,673
Treasury stock(6,650) (5,634) (5,547) (5,355) (5,355)
Retained earnings1,682,016 1,610,574 1,543,680 1,464,494 1,387,663
Accumulated other comprehensive loss(50,344) (76,872) (93,150) (81,216) (73,095)
Total shareholders’ equity3,371,972 3,267,570 3,179,822 3,106,871 3,031,250
Total liabilities and shareholders’ equity$32,358,621 $31,244,849 $30,142,731 $29,464,588 $28,456,772

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Consolidated Statements of Income (Unaudited) - 5 Quarter Trends
Three Months Ended
March 31, December 31, September 30, June 30, March 31,
(In thousands, except per share data)2019 2018 2018 2018 2018
Interest income
Interest and fees on loans$296,987 $283,311 $271,134 $255,063 $234,994
Mortgage loans held-for-sale2,209 3,409 5,285 4,226 2,818
Interest bearing deposits with banks5,300 5,628 5,423 3,243 2,796
Federal funds sold and securities purchased under resale agreements— — — 1 —
Investment securities27,956 26,656 21,710 19,888 19,128
Trading account securities8 14 11 4 14
Federal Home Loan Bank and Federal Reserve Bank stock1,355 1,343 1,235 1,455 1,298
Brokerage customer receivables155 235 164 167 157
Total interest income333,970 320,596 304,962 284,047 261,205
Interest expense
Interest on deposits60,976 55,975 48,736 35,293 26,549
Interest on Federal Home Loan Bank advances2,450 2,563 1,947 4,263 3,639
Interest on other borrowings3,633 3,199 2,003 1,698 1,699
Interest on subordinated notes1,775 1,788 1,773 1,787 1,773
Interest on junior subordinated debentures3,150 2,983 2,940 2,836 2,463
Total interest expense71,984 66,508 57,399 45,877 36,123
Net interest income261,986 254,088 247,563 238,170 225,082
Provision for credit losses10,624 10,401 11,042 5,043 8,346
Net interest income after provision for credit losses251,362 243,687 236,521 233,127 216,736
Non-interest income
Wealth management23,977 22,726 22,634 22,617 22,986
Mortgage banking18,158 24,182 42,014 39,834 30,960
Service charges on deposit accounts8,848 9,065 9,331 9,151 8,857
Gains (losses) on investment securities, net1,364 (2,649) 90 12 (351)
Fees from covered call options1,784 626 627 669 1,597
Trading (losses) gains, net(171) (155) (61) 124 103
Operating lease income, net10,796 10,882 9,132 8,746 9,691
Other16,901 10,631 16,163 14,080 11,836
Total non-interest income81,657 75,308 99,930 95,233 85,679
Non-interest expense
Salaries and employee benefits125,723 122,111 123,855 121,675 112,436
Equipment11,770 11,523 10,827 10,527 10,072
Operating lease equipment depreciation8,319 8,462 7,370 6,940 6,533
Occupancy, net16,245 15,980 14,404 13,663 13,767
Data processing7,525 8,447 9,335 8,752 8,493
Advertising and marketing9,858 9,414 11,120 11,782 8,824
Professional fees5,556 9,259 9,914 6,484 6,649
Amortization of other intangible assets2,942 1,407 1,163 997 1,004
FDIC insurance3,576 4,044 4,205 4,598 4,362
OREO expense, net632 1,618 596 980 2,926
Other22,228 19,068 20,848 20,371 19,283
Total non-interest expense214,374 211,333 213,637 206,769 194,349
Income before taxes118,645 107,662 122,814 121,591 108,066
Income tax expense29,499 28,005 30,866 32,011 26,085
Net income$89,146 $79,657 $91,948 $89,580 $81,981
Preferred stock dividends2,050 2,050 2,050 2,050 2,050
Net income applicable to common shares$87,096 $77,607 $89,898 $87,530 $79,931
Net income per common share - Basic$1.54 $1.38 $1.59 $1.55 $1.42
Net income per common share - Diluted$1.52 $1.35 $1.57 $1.53 $1.40
Cash dividends declared per common share$0.25 $0.19 $0.19 $0.19 $0.19
Weighted average common shares outstanding56,529 56,395 56,366 56,299 56,137
Dilutive potential common shares699 892 918 928 888
Average common shares and dilutive common shares57,228 57,287 57,284 57,227 57,025

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Period End Loan Balances - 5 Quarter Trends
March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands)2019 2018 2018 2018 2018
Balance:
Commercial$7,994,191 $7,828,538 $7,473,958 $7,289,060 $7,060,871
Commercial real estate6,973,505 6,933,252 6,746,774 6,575,084 6,633,520
Home equity528,448 552,343 578,844 593,500 626,547
Residential real estate1,053,524 1,002,464 924,250 895,470 869,104
Premium finance receivables - commercial2,988,788 2,841,659 2,885,327 2,833,452 2,576,150
Premium finance receivables - life insurance4,555,369 4,541,794 4,398,971 4,302,288 4,189,961
Consumer and other120,804 120,641 115,827 121,706 105,981
Total loans, net of unearned income$24,214,629 $23,820,691 $23,123,951 $22,610,560 $22,062,134
Mix:
Commercial33% 33% 32% 32% 32%
Commercial real estate29 29 29 29 30
Home equity2 2 3 3 3
Residential real estate4 4 4 4 4
Premium finance receivables - commercial12 12 12 12 12
Premium finance receivables - life insurance19 19 19 19 19
Consumer and other1 1 1 1 —
Total loans, net of unearned income100% 100% 100% 100% 100%

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Period End Deposits Balances - 5 Quarter Trends
March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands)2019 2018 2018 2018 2018
Balance:
Non-interest bearing$6,353,456 $6,569,880 $6,399,213 $6,520,724 $6,612,319
NOW and interest bearing demand deposits2,948,576 2,897,133 2,512,259 2,452,474 2,315,122
Wealth management deposits (1)3,328,781 2,996,764 2,520,120 2,523,572 2,495,134
Money market6,093,596 5,704,866 5,429,921 5,205,678 4,617,122
Savings2,729,626 2,665,194 2,595,164 2,763,062 2,901,504
Time certificates of deposit5,350,707 5,260,841 5,460,038 4,899,969 4,338,126
Total deposits$26,804,742 $26,094,678 $24,916,715 $24,365,479 $23,279,327
Mix:
Non-interest bearing24% 25% 26% 27% 28%
NOW and interest bearing demand deposits11 11 10 10 10
Wealth management deposits (1)12 12 10 11 11
Money market23 22 22 21 20
Savings10 10 10 11 12
Time certificates of deposit20 20 22 20 19
Total deposits100% 100% 100% 100% 100%
(1) Represents deposit balances of the Company’s subsidiary banks from brokerage customers of Wintrust Investments, CDEC, trust and asset management customers of the Company and brokerage customers from unaffiliated companies which have been placed into deposit accounts of the Banks.

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Net Interest Margin (Including Call Option Income) - 5 Quarter Trends
Three Months Ended
March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands)2019 2018 2018 2018 2018
Net interest income (non-GAAP)$263,587 $255,658 $249,082 $239,549 $226,286
Call option income1,784 626 627 669 1,597
Net interest income (non-GAAP), including call option income$265,371 $256,284 $249,709 $240,218 $227,883
Yield on earning assets4.74% 4.58% 4.45% 4.32% 4.13%
Rate on interest-bearing liabilities1.40 1.33 1.17 1.00 0.83
Rate spread3.34% 3.25% 3.28% 3.32% 3.30%
Less: Fully tax-equivalent adjustment(0.02) (0.02) (0.02) (0.02) (0.02)
Net free funds contribution0.38 0.38 0.33 0.31 0.26
Net interest margin (GAAP)3.70% 3.61% 3.59% 3.61% 3.54%
Fully tax-equivalent adjustment0.02 0.02 0.02 0.02 0.02
Net interest margin (non-GAAP)3.72% 3.63% 3.61% 3.63% 3.56%
Call option income0.03 0.01 0.01 0.01 0.03
Net interest margin (non-GAAP), including call option income3.75% 3.64% 3.62% 3.64% 3.59%

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Net Interest Margin (Including Call Option Income) - YTD Trends
Three Months Ended
March 31, Years Ended December 31,
(Dollars in thousands) 2019 2018 2017 2016 2015
Net interest income (non-GAAP) $263,587 $970,575 $839,563 $728,145 $646,238
Call option income 1,784 3,519 4,402 11,470 15,364
Net interest income (non-GAAP), including call option income $265,371 $974,094 $843,965 $739,615 $661,602
Yield on earning assets 4.74% 4.38% 3.91% 3.67% 3.76%
Rate on interest-bearing liabilities 1.40 1.09 0.67 0.57 0.54
Rate spread 3.34% 3.29% 3.24% 3.10% 3.22%
Less: Fully tax-equivalent adjustment (0.02) (0.02) (0.03) (0.02) (0.02)
Net free funds contribution 0.38 0.32 0.20 0.16 0.14
Net interest margin (GAAP) 3.70% 3.59% 3.41% 3.24% 3.34%
Fully tax-equivalent adjustment 0.02 0.02 0.03 0.02 0.02
Net interest margin (non-GAAP) 3.72% 3.61% 3.44% 3.26% 3.36%
Call option income 0.03 0.01 0.02 0.05 0.08
Net interest margin (non-GAAP), including call option income 3.75% 3.62% 3.46% 3.31% 3.44%

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Quarterly Average Balances - 5 Quarter Trends
Three Months Ended
March 31, December 31, September 30, June 30, March 31,
(In thousands)2019 2018 2018 2018 2018
Interest-bearing deposits with banks and cash equivalents$897,629 $1,042,860 $998,004 $759,425 $749,973
Investment securities3,630,577 3,347,496 3,046,272 2,890,828 2,892,617
FHLB and FRB stock94,882 98,084 88,335 115,119 105,414
Liquidity management assets$4,623,088 $4,488,440 $4,132,611 $3,765,372 $3,748,004
Other earning assets13,591 16,204 17,862 21,244 27,571
Mortgage loans held-for-sale188,190 265,717 380,235 403,967 281,181
Loans, net of unearned income23,880,916 23,164,154 22,823,378 22,283,541 21,711,342
Total earning assets$28,705,785 $27,934,515 $27,354,086 $26,474,124 $25,768,098
Allowance for loan losses(157,782) (154,438) (148,503) (147,192) (143,108)
Cash and due from banks283,019 271,403 268,006 270,240 254,489
Other assets2,385,149 2,128,407 2,051,520 1,970,407 1,930,118
Total assets$31,216,171 $30,179,887 $29,525,109 $28,567,579 $27,809,597
NOW and interest bearing demand deposits$2,803,338 $2,671,283 $2,519,445 $2,295,268 $2,255,692
Wealth management deposits2,614,035 2,289,904 2,517,141 2,365,191 2,250,139
Money market accounts5,915,525 5,632,268 5,369,324 4,883,645 4,520,620
Savings accounts2,715,422 2,553,133 2,672,077 2,702,665 2,813,772
Time deposits5,267,796 5,381,029 5,214,637 4,557,187 4,322,111
Interest-bearing deposits$19,316,116 $18,527,617 $18,292,624 $16,803,956 $16,162,334
Federal Home Loan Bank advances594,335 551,846 429,739 1,006,407 872,811
Other borrowings465,571 385,878 268,278 240,066 263,125
Subordinated notes139,217 139,186 139,155 139,125 139,094
Junior subordinated debentures253,566 253,566 253,566 253,566 253,566
Total interest-bearing liabilities$20,768,805 $19,858,093 $19,383,362 $18,443,120 $17,690,930
Non-interest bearing deposits6,444,378 6,542,228 6,461,195 6,539,731 6,639,845
Other liabilities693,910 578,912 548,609 520,574 483,230
Equity3,309,078 3,200,654 3,131,943 3,064,154 2,995,592
Total liabilities and shareholders’ equity$31,216,171 $30,179,887 $29,525,109 $28,567,579 $27,809,597

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Net Interest Margin - 5 Quarter Trends
Three Months Ended
March 31, 2019 December 31, 2018 September 30, 2018 June 30, 2018 March 31, 2018
Yield earned on:
Interest-bearing deposits with banks and cash equivalents2.39% 2.14% 2.16% 1.71% 1.51%
Investment securities3.19 3.23 2.90 2.84 2.76
FHLB and FRB stock5.79 5.43 5.54 5.07 4.99
Liquidity management assets3.09% 3.02% 2.78% 2.68% 2.57%
Other earning assets4.91 6.19 3.95 3.24 2.56
Mortgage loans held-for-sale4.76 5.09 5.51 4.20 4.06
Loans, net of unearned income5.06 4.87 4.73 4.61 4.40
Total earning assets4.74% 4.58% 4.45% 4.32% 4.13%
Rate paid on:
NOW and interest bearing demand deposits0.67% 0.60% 0.39% 0.33% 0.25%
Wealth management deposits1.09 1.23 1.31 1.19 0.98
Money market accounts1.33 1.19 0.98 0.67 0.42
Savings accounts0.63 0.48 0.43 0.40 0.39
Time deposits1.98 1.83 1.66 1.37 1.16
Interest-bearing deposits1.29% 1.20% 1.06% 0.84% 0.67%
Federal Home Loan Bank advances1.67 1.84 1.80 1.70 1.69
Other borrowings3.16 3.29 2.96 2.84 2.62
Subordinated notes5.10 5.14 5.10 5.14 5.10
Junior subordinated debentures4.97 4.60 4.54 4.42 3.89
Total interest-bearing liabilities1.40% 1.33% 1.17% 1.00% 0.83%
Interest rate spread3.34% 3.25% 3.28% 3.32% 3.30%
Less: Fully tax-equivalent adjustment(0.02) (0.02) (0.02) (0.02) (0.02)
Net free funds/contribution0.38 0.38 0.33 0.31 0.26
Net interest margin (GAAP)3.70% 3.61% 3.59% 3.61% 3.54%
Fully tax-equivalent adjustment0.02 0.02 0.02 0.02 0.02
Net interest margin (non-GAAP)3.72% 3.63% 3.61% 3.63% 3.56%

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Non-Interest Income - 5 Quarter Trends
Three Months Ended
March 31, December 31, September 30, June 30, March 31,
(In thousands)2019 2018 2018 2018 2018
Brokerage$4,516 $4,997 $5,579 $5,784 $6,031
Trust and asset management19,461 17,729 17,055 16,833 16,955
Total wealth management23,977 22,726 22,634 22,617 22,986
Mortgage banking18,158 24,182 42,014 39,834 30,960
Service charges on deposit accounts8,848 9,065 9,331 9,151 8,857
Gains (losses) on investment securities, net1,364 (2,649) 90 12 (351)
Fees from covered call options1,784 626 627 669 1,597
Trading (losses) gains, net(171) (155) (61) 124 103
Operating lease income, net10,796 10,882 9,132 8,746 9,691
Other:
Interest rate swap fees2,831 2,602 2,359 3,829 2,237
BOLI1,591 (466) 3,190 1,544 714
Administrative services1,030 1,260 1,099 1,205 1,061
Foreign currency remeasurement gain (loss)464 (1,149) 348 (544) (328)
Early pay-offs of capital leases5 3 11 554 33
Miscellaneous10,980 8,381 9,156 7,492 8,119
Total other income16,901 10,631 16,163 14,080 11,836
Total Non-Interest Income$81,657 $75,308 $99,930 $95,233 $85,679

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Non-Interest Expense - 5 Quarter Trends
Three Months Ended
March 31, December 31, September 30, June 30, March 31,
(In thousands)2019 2018 2018 2018 2018
Salaries and employee benefits:
Salaries$74,037 $67,708 $69,893 $66,976 $61,986
Commissions and incentive compensation31,599 33,656 34,046 35,907 31,949
Benefits20,087 20,747 19,916 18,792 18,501
Total salaries and employee benefits125,723 122,111 123,855 121,675 112,436
Equipment11,770 11,523 10,827 10,527 10,072
Operating lease equipment depreciation8,319 8,462 7,370 6,940 6,533
Occupancy, net16,245 15,980 14,404 13,663 13,767
Data processing7,525 8,447 9,335 8,752 8,493
Advertising and marketing9,858 9,414 11,120 11,782 8,824
Professional fees5,556 9,259 9,914 6,484 6,649
Amortization of other intangible assets2,942 1,407 1,163 997 1,004
FDIC insurance3,576 4,044 4,205 4,598 4,362
OREO expense, net632 1,618 596 980 2,926
Other:
Commissions - 3rd party brokers718 779 1,059 1,174 1,252
Postage2,450 2,047 2,205 2,567 1,866
Miscellaneous19,060 16,242 17,584 16,630 16,165
Total other expense22,228 19,068 20,848 20,371 19,283
Total Non-Interest Expense$214,374 $211,333 $213,637 $206,769 $194,349

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Allowance for Credit Losses - 5 Quarter Trends
Three Months Ended
March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands) 2019 2018 2018 2018 2018
Allowance for loan losses at beginning of period $152,770 $149,756 $143,402 $139,503 $137,905
Provision for credit losses10,624 10,401 11,042 5,043 8,346
Other adjustments(27) (79) (18) (44) (40)
Reclassification (to) from allowance for unfunded lending-related commitments(16) (150) (2) — 26
Charge-offs:
Commercial503 6,416 3,219 2,210 2,687
Commercial real estate3,734 219 208 155 813
Home equity88 715 561 612 357
Residential real estate3 267 337 180 571
Premium finance receivables - commercial2,210 1,741 2,512 3,254 4,721
Premium finance receivables - life insurance— — — — —
Consumer and other102 148 144 459 129
Total charge-offs6,640 9,506 6,981 6,870 9,278
Recoveries:
Commercial318 225 304 666 262
Commercial real estate480 1,364 193 2,387 1,687
Home equity62 105 142 171 123
Residential real estate29 47 466 1,522 40
Premium finance receivables - commercial556 567 1,142 975 385
Premium finance receivables - life insurance— — — — —
Consumer and other56 40 66 49 47
Total recoveries1,501 2,348 2,313 5,770 2,544
Net charge-offs(5,139) (7,158) (4,668) (1,100) (6,734)
Allowance for loan losses at period end$158,212 $152,770 $149,756 $143,402 $139,503
Allowance for unfunded lending-related commitments at period end1,410 1,394 1,245 1,243 1,243
Allowance for credit losses at period end$159,622 $154,164 $151,001 $144,645 $140,746
Annualized net charge-offs (recoveries) by category as a percentage of its own respective category’s average:
Commercial0.01% 0.33% 0.16% 0.09% 0.14%
Commercial real estate0.19 (0.07) 0.00 (0.14) (0.05)
Home equity0.02 0.43 0.28 0.29 0.15
Residential real estate(0.01) 0.10 (0.06) (0.64) 0.26
Premium finance receivables - commercial0.23 0.16 0.19 0.34 0.68
Premium finance receivables - life insurance0.00 0.00 0.00 0.00 0.00
Consumer and other0.16 0.30 0.23 1.21 0.26
Total loans, net of unearned income0.09% 0.12% 0.08% 0.02% 0.13%
Net charge-offs as a percentage of the provision for credit losses48.37% 68.82% 42.27% 21.81% 80.69%
Loans at period-end$24,214,629 $23,820,691 $23,123,951 $22,610,560 $22,062,134
Allowance for loan losses as a percentage of loans at period end0.65% 0.64% 0.65% 0.63% 0.63%
Allowance for credit losses as a percentage of loans at period end0.66% 0.65% 0.65% 0.64% 0.64%

WINTRUST FINANCIAL CORPORATION - SUPPLEMENTAL FINANCIAL INFORMATION
Non-Performing Assets - 5 Quarter Trends
March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands) 2019 2018 2018 2018 2018
Loans past due greater than 90 days and still accruing(1):
Commercial$— $— $5,122 $— $—
Commercial real estate— — — — —
Home equity— — — — —
Residential real estate30 — — — —
Premium finance receivables - commercial6,558 7,799 7,028 5,159 8,547
Premium finance receivables - life insurance168 — — — —
Consumer and other218 109 233 224 207
Total loans past due greater than 90 days and still accruing6,974 7,908 12,383 5,383 8,754
Non-accrual loans(2):
Commercial55,792 50,984 58,587 18,388 14,007
Commercial real estate15,933 19,129 17,515 19,195 21,825
Home equity7,885 7,147 8,523 9,096 9,828
Residential real estate15,879 16,383 16,062 15,825 17,214
Premium finance receivables - commercial14,797 11,335 13,802 14,832 17,342
Premium finance receivables - life insurance— — — — —
Consumer and other326 348 355 563 720
Total non-accrual loans110,612 105,326 114,844 77,899 80,936
Total non-performing loans:
Commercial55,792 50,984 63,709 18,388 14,007
Commercial real estate15,933 19,129 17,515 19,195 21,825
Home equity7,885 7,147 8,523 9,096 9,828
Residential real estate15,909 16,383 16,062 15,825 17,214
Premium finance receivables - commercial21,355 19,134 20,830 19,991 25,889
Premium finance receivables - life insurance168 — — — —
Consumer and other544 457 588 787 927
Total non-performing loans$117,586 $113,234 $127,227 $83,282 $89,690
Other real estate owned9,154 11,968 14,924 18,925 18,481
Other real estate owned - from acquisitions12,366 12,852 13,379 16,406 18,117
Other repossessed assets270 280 294 305 113
Total non-performing assets$139,376 $138,334 $155,824 $118,918 $126,401
TDRs performing under the contractual terms of the loan agreement$48,305 $33,281 $31,487 $57,249 $39,562
Total non-performing loans by category as a percent of its own respective category’s period-end balance:
Commercial0.70% 0.65% 0.85% 0.25% 0.20%
Commercial real estate0.23 0.28 0.26 0.29 0.33
Home equity1.49 1.29 1.47 1.53 1.57
Residential real estate1.51 1.63 1.74 1.77 1.98
Premium finance receivables - commercial0.71 0.67 0.72 0.71 1.00
Premium finance receivables - life insurance— — — — —
Consumer and other0.45 0.38 0.51 0.65 0.87
Total loans, net of unearned income0.49% 0.48% 0.55% 0.37% 0.41%
Total non-performing assets as a percentage of total assets0.43% 0.44% 0.52% 0.40% 0.44%
Allowance for loan losses as a percentage of total non-performing loans134.55% 134.92% 117.71% 172.19% 155.54%
(1) Loans past due greater than 90 days and still accruing interest included TDRs totaling $5.1 million as of September 30, 2018. As of March 31, 2019, December 31, 2018, June 30, 2018 and March 31, 2018, no TDRs were past due greater than 90 days and still accruing interest.
(2) Non-accrual loans included TDRs totaling $40.1 million, $32.8 million, $34.7 million, $8.1 million and $8.1 million as of March 31, 2019, December 31, 2018, September 30, 2018, June 30, 2018 and March 31, 2018, respectively.
FOR MORE INFORMATION CONTACT:
Edward J. Wehmer, President & Chief Executive Officer
David A. Dykstra, Senior Executive Vice President & Chief Operating Officer
(847) 939-9000
Web site address: www.wintrust.com

Source: Wintrust Financial Corporation

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