Wintrust Financial Corporation Reports Fourth Quarter 2020 Net Income of $101.2 million and Full-Year 2020 Net Income of $293.0 million

ROSEMONT, Ill., Jan. 20, 2021 (GLOBE NEWSWIRE) — Wintrust Financial Corporation (“Wintrust”, “the Company”, “we” or “our”) (Nasdaq: WTFC) announced net income of $101.2 million or $1.63 per diluted common share for the fourth quarter of 2020, a decrease in diluted earnings per common share of 2% compared to the third quarter of 2020 and an increase of 13% compared to the fourth quarter of 2019. The Company recorded net income of $293.0 million or $4.68 per diluted common share for the year ended December 31, 2020 compared to net income of $355.7 million or $6.03 per diluted common share for the same period of 2019.

Highlights of the Fourth Quarter of 2020:
Comparative information to the third quarter of 2020

  • Total assets increased by $1.3 billion.
  • Total loans, excluding Paycheck Protection Program (“PPP”) loans, increased by $607 million primarily due to growth in commercial loans and life insurance premium finance receivables. This growth also included a $71 million net increase in residential real estate loans for investment as the Company decided to allocate a portion of its current and future mortgage production for investment.
    • In addition, during the fourth quarter of 2020, the Company exercised its early buy-out option on $248 million of eligible loans previously sold to the Government National Mortgage Association (“GNMA”) recorded in mortgage loans held-for-sale. See Table 1 for more information.
    • PPP loans originated in 2020 declined by $663 million in the fourth quarter of 2020 primarily as a result of processing forgiveness payments. As of January 15, 2021, approximately 23% of PPP loan balances originated in 2020 have been forgiven, approximately 45% of balances are in the forgiveness review or submission process, and approximately 32% of balances have yet to apply.
  • Total deposits increased by $1.2 billion, notwithstanding the return of approximately $666 million in wholesale deposits during the fourth quarter of 2020.
  • Net interest income increased by $3.5 million primarily due to a reduction in the rate on interest-bearing deposits and loan growth.
    • The rate on interest-bearing deposits declined by 10 basis points in the fourth quarter of 2020 as compared to the third quarter of 2020. This improvement more than offset a two basis point decline in the yield on total loans in the fourth quarter of 2020 as compared to the third quarter of 2020.
    • The Company recognized $16.8 million of PPP loan fee accretion in the fourth quarter of 2020 as compared to $17.4 million in the third quarter of 2020 on PPP loans originated in 2020. As of December 31, 2020, the Company had approximately $32.5 million of PPP loan fees that have yet to be recognized in income.
  • The loans to deposits ratio ended the fourth quarter of 2020 at 86.5% as compared to 89.7% as of September 30, 2020. Excluding PPP loans, the loans to deposits ratio ended the fourth quarter of 2020 at 79.2%.
  • Mortgage banking revenue decreased by $21.7 million to $86.8 million for the fourth quarter of 2020 as compared to $108.5 million in the prior quarter.
  • Outstanding COVID-19 related loan modifications for customers totaled approximately $345 million or 1.2% of total loans, excluding PPP loans, as of December 31, 2020 as compared to $413 million or 1.4% as of September 30, 2020.
  • Provision for credit losses totaled $1.2 million in the fourth quarter of 2020 as compared to $25.0 million in the third quarter of 2020.
  • Recorded net charge-offs of $10.3 million in the fourth quarter of 2020, of which $5.9 million were reserves on individually assessed loans as of the prior quarter end, as compared to net charge-offs of $9.3 million in the third quarter of 2020. Net charge-offs as a percentage of average total loans, totaled 13 basis points in the fourth quarter of 2020 on an annualized basis compared to 12 basis points on an annualized basis in the third quarter of 2020.
  • The allowance for credit losses on our core loan portfolio is approximately 1.82% of the outstanding balance as of December 31, 2020, down from 1.88% as of September 30, 2020. See Table 12 for more information.
  • Non-performing loans declined by $45.6 million, or 26%, and totaled $127.5 million, or 0.40% of total loans, as of December 31, 2020 as compared to $173.1 million, or 0.54% of total loans, as of September 30, 2020.

Other items of note from the fourth quarter of 2020

  • The following items had a $13.2 million unfavorable pre-tax income impact on the fourth quarter of 2020:
    • Recorded a decrease in the value of mortgage servicing rights related to changes in fair value model assumptions of $5.2 million in the fourth quarter of 2020 as compared to a decrease of $3.0 million in the third quarter of 2020.
    • Accrued $6.6 million of contingent consideration expense in the fourth quarter of 2020 related to the previous acquisition of mortgage operations as compared to $6.3 million in the third quarter of 2020, which was recorded in other non-interest expense.
    • Recorded an impairment charge of $1.4 million in occupancy expense related to the planned closure of 10 bank branches.
  • Repurchased 974,150 shares of our common stock at a cost of $54.9 million, or an average price of $56.40 per share.

Edward J. Wehmer, Founder and Chief Executive Officer, commented, “Wintrust reported net income of $101.2 million for the fourth quarter of 2020, down from $107.3 million in the third quarter of 2020. The fourth quarter of 2020 was characterized by significant loan growth, increased net interest income, strong mortgage banking revenue, a significant reduction in non-performing loans and a continued focus to increase franchise value in our market area.”

Reflecting on the year, Mr. Wehmer stated, “I am very appreciative of our staff’s tireless efforts to make the best of a difficult year. The year offered many challenges and I could not be more proud of our results. Pre-tax income, excluding provision for credit losses (non-GAAP), increased by 13% to $604 million in 2020 as compared to $534 million in 2019. We finished 2020 with a lot of momentum and look forward to serving our communities and being responsive to our customers in the new year.”

Mr. Wehmer continued, “The Company experienced significant loan growth, excluding PPP loans, in the fourth quarter of 2020, including growth in its commercial, commercial real estate, residential real estate loans for investment and life insurance premium finance receivable portfolios. In addition, the Company supplemented loan growth by exercising its early buy-out option on eligible GNMA loans. The majority of the loan growth was in the latter part of the quarter as total period end loans, excluding PPP loans, were $678 million higher than average total loans, excluding PPP loans, in the fourth quarter of 2020. Our loan pipelines remain strong and we expect to continue to grow loans in 2021 without compromising our credit standards. Total deposits increased by $1.2 billion as compared to the third quarter of 2020 even with the return of approximately $666 million in wholesale deposits. Additionally, the mix of deposit growth during the quarter was favorable evidenced by $1.3 billion of growth in non-interest bearing deposits. We continue to emphasize growing our franchise, including gathering low cost deposits, which we believe will drive value in the long term. Our loans to deposits ratio ended the quarter at 86.5% and we believe that we have sufficient liquidity to meet customer loan demand.”

Mr. Wehmer commented, “Net interest income increased in the fourth quarter of 2020 primarily due to lower interest expense on interest-bearing deposits and loan growth. The rate on interest-bearing deposits declined 10 basis points in the fourth quarter of 2020 as compared to the third quarter of 2020. This improvement more than offset a two basis point decline in the yield on total loans in the fourth quarter of 2020 as compared to the third quarter of 2020. PPP loan fee accretion was relatively flat as the Company recognized $16.8 million of PPP loan fee accretion in the fourth quarter of 2020 as compared to $17.4 million in the third quarter of 2020. The three basis point decline in the net interest margin in the fourth quarter of 2020 as compared to the third quarter of 2020 was primarily due to increased levels of liquidity as average interest-bearing cash increased by $1.0 billion. We have accumulated excess liquidity in recent quarters and believe that, if conditions allow for suitable deployment of such excess liquidity, we could potentially increase our net interest margin by 15 to 30 basis points, depending on the mix of earning assets of such reinvestment.”

Mr. Wehmer noted, “Our mortgage banking business delivered another strong quarter of mortgage banking revenue in light of the demand associated with historically low long-term interest rates. Loan volumes originated for sale in the fourth quarter of 2020 were $2.4 billion, up from $2.2 billion in the third quarter of 2020. Production revenue decreased during the quarter as the origination pipeline declined as compared to the end of the third quarter of 2020. This decline was partially due to the Company increasing its allocation of pipeline to originations for investment in order to increase earning assets on the balance sheet. Additionally, the Company recorded a $5.2 million decline in the value of mortgage servicing rights related to changes in fair value model assumptions. We are leveraging efficiencies in our delivery channels and staffing strategies to keep pace with unprecedented demand. The strong quarter of mortgage performance contributed to reporting a 1.12% net overhead ratio for the fourth quarter of 2020. We believe the first quarter of 2021 will provide another strong quarter for mortgage banking production.”

Commenting on credit quality, Mr. Wehmer stated, “The Company recorded provision for credit losses of $1.2 million reflecting improvement in credit quality in the fourth quarter of 2020. We expended significant effort in the quarter diligently reviewing and addressing our credit portfolio. The Company’s population of loans with a rating below “pass” as of December 31, 2020 declined by $273 million, or 14%, as compared to the prior quarter end primarily due to a note sale, pay-offs and risk rating upgrades. The level of non-performing loans decreased by $45.6 million primarily due to non-performing loan pay-offs. Additionally, net charge-offs remained relatively low totaling $10.3 million in the fourth quarter of 2020 as compared to $9.3 million in the third quarter of 2020. The allowance for credit losses on our core loan portfolio as of December 31, 2020 is approximately 1.82% of the outstanding balance. We believe that the Company’s reserves remain appropriate and we remain diligent in our review of credit.”

Mr. Wehmer added, “In addition to the previously announced sale of three branches in southwestern Wisconsin, we continue to review our branch footprint and have initiated plans to close an additional 10 branches. These are predominantly smaller locations in close proximity to other Wintrust locations. As such, we do not expect any material attrition or customer disruption. We expect the noted branches to close prior to the end of the second quarter and the branch sale in Wisconsin to close in the second quarter. In the fourth quarter of 2020, we recorded an impairment charge of $1.4 million associated with the closing of the 10 locations. Collectively, the reduction of 13 locations represents approximately 7% of the Wintrust retail banking locations and will result in a reduction in expenses of approximately $5 million annually on an ongoing basis. It is important to note that while we see increased use of electronic services and are investing heavily in digital capabilities to allow clients to choose how they want to be served, Wintrust will continue to selectively open branches in areas where we are not represented.”

Mr. Wehmer concluded, “We remain committed to supporting our community, including the well-being and safety of our customers and employees. We are participating in the latest round of PPP having opened our application portal on January 11, 2021. As of January 19, 2021, we have received approximately 5,400 applications aggregating in excess of $1.1 billion of loans with associated fees of approximately $44 million. We are focused on taking advantage of market opportunities to prudently deploy excess liquidity into earning assets. In particular, we expect to grow PPP loans, organic loans, residential real estate loans for investment and investment securities while maintaining an interest rate sensitive asset portfolio. We continue to evaluate our operating expense base to enhance future profitability. We also continue to carefully monitor the COVID-19 pandemic and evaluate the impact that it could have on the economy, our customers and our business. We remain focused on navigating the current environment by actively monitoring and managing our credit portfolio.”

Graphs available at the following link: https://ml.globenewswire.com/Resource/Download/0bdf7499-4e66-4b90-bd05-707da79ea7cd

SUMMARY OF RESULTS:

BALANCE SHEET

Total asset growth of $1.3 billion in the fourth quarter of 2020 was primarily comprised of a $977 million increase in interest-bearing deposits with banks, a $312 million increase in mortgage loans held-for-sale, and a $128 million increase in investment securities, partially offset by a $56 million decrease in loans. The Company believes that the $4.8 billion of interest-bearing deposits with banks held as of December 31, 2020 provides more than sufficient liquidity to operate its business plan.

The $56 million decrease in loans was primarily a result of processing forgiveness payments, as PPP loans declined by $663 million in the fourth quarter of 2020. Total loans, excluding PPP loans, increased by $607 million primarily due to growth in commercial loans and life insurance premium finance receivables. This growth also included a $71 million net increase in residential real estate loans for investment as the Company decided to allocate a portion of its current and future mortgage production for investment.

Total liabilities increased $1.3 billion in the fourth quarter of 2020 resulting primarily from a $1.2 billion increase in total deposits, which included the return of approximately $666 million in wholesale deposits. The increase in deposits was primarily due to a $1.3 billion increase in non-interest-bearing deposits. Our loans to deposits ratio ended the quarter at 86.5%. Management believes in substantially funding the Company’s balance sheet with core deposits and utilizes brokered or wholesale funding sources as appropriate to manage its liquidity position as well as for interest rate risk management purposes.

For more information regarding changes in the Company’s balance sheet, see Consolidated Statements of Condition and Tables 1 through 3 in this report.

NET INTEREST INCOME

For the fourth quarter of 2020, net interest income totaled $259.4 million, an increase of $3.5 million as compared to the third quarter of 2020 and a decrease of $2.5 million as compared to the fourth quarter of 2019. The $3.5 million increase in net interest income in the fourth quarter of 2020 compared to the third quarter of 2020 was primarily due to a 10 basis point decline in the rate on interest-bearing deposits in the fourth quarter of 2020 and loan growth.

Net interest margin was 2.53% (2.54% on a fully taxable-equivalent basis, non-GAAP) during the fourth quarter of 2020 compared to 2.56% (2.57% on a fully taxable-equivalent basis, non-GAAP) during the third quarter of 2020 and 3.17% (3.19% on a fully taxable-equivalent basis, non-GAAP) during the fourth quarter of 2019. The three basis point decrease in net interest margin in the fourth quarter of 2020 as compared to the third quarter of 2020 was attributable to a 10 basis point decline in the yield on earning assets and a two basis point decrease in the net free funds contribution partially offset by a nine basis point decrease in the rate paid on interest-bearing liabilities. The 10 basis point decline in the yield on earning assets in the fourth quarter of 2020 as compared to the third quarter of 2020 was primarily due to a $1.0 billion increase in average interest-bearing deposits with banks and cash equivalents. The decrease in the rate paid on interest-bearing liabilities in the fourth quarter of 2020 as compared to the prior quarter is primarily due to a 10 basis point decrease in the rate paid on interest-bearing deposits as management initiated various deposit rate reductions given the low interest rate environment.

For more information regarding net interest income, see Tables 4 through 8 in this report.

ASSET QUALITY

The allowance for credit losses totaled $380.0 million as of December 31, 2020, a decrease of $9.0 million as compared to $389.0 million as of September 30, 2020. The allowance for credit losses decreased primarily due to portfolio changes and was partially offset by changes in the macroeconomic forecasted conditions. The Commercial, Industrial and Other portfolio realized a decrease in the allowance for credit losses as compared to the prior quarter-end, which was primarily driven by improving portfolio credit characteristics.  There was an increase in the allowance for credit losses in the Commercial Real Estate portfolios driven by deterioration in the Commercial Real Estate Price Index forecast, partially offset by improvement in Baa Corporate Credit Spreads. Other key drivers of allowance for credit losses changes in these portfolios include, but are not limited to, decreases in COVID-19 related loan modifications and loan risk rating migration.

The provision for credit losses totaled $1.2 million for the fourth quarter of 2020 compared to $25.0 million for the third quarter of 2020 and $7.8 million for the fourth quarter of 2019. For more information regarding the provision for credit losses, see Table 11 in this report.

Management believes the allowance for credit losses is appropriate to account for expected credit losses. The Current Expected Credit Losses (“CECL”) standard requires the Company to estimate expected credit losses over the life of the Company’s financial assets at a certain point in time. There can be no assurances, however, that future losses will not significantly exceed the amounts provided for, thereby affecting future results of operations. A summary of the allowance for credit losses calculated for the loan components in the core loan portfolio, the niche and consumer loan portfolio and the purchased loan portfolio as of December 31, 2020 and September 30, 2020 is shown on Table 12 of this report.

Net charge-offs totaled $10.3 million in the fourth quarter of 2020, a $1.0 million increase from $9.3 million in the third quarter of 2020 and a $2.4 million decrease from $12.7 million in the fourth quarter of 2019. Net charge-offs as a percentage of average total loans, totaled 13 basis points in the fourth quarter of 2020 on an annualized basis compared to 12 basis points on an annualized basis in the third quarter of 2020 and 19 basis points on an annualized basis in the fourth quarter of 2019. For more information regarding net charge-offs, see Table 10 in this report.

As of December 31, 2020, $41.6 million of all loans, or 0.1%, were 60 to 89 days past due and $139.1 million, or 0.4%, were 30 to 59 days (or one payment) past due. As of September 30, 2020, $49.9 million of all loans, or 0.2%, were 60 to 89 days past due and $186.5 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.

The Company’s home equity and residential real estate loan portfolios continue to exhibit low delinquency rates as of December 31, 2020. Home equity loans at December 31, 2020 that are current with regard to the contractual terms of the loan agreement represent 98.3% of the total home equity portfolio. Residential real estate loans at December 31, 2020 that are current with regards to the contractual terms of the loan agreements comprised 96.8% of total residential real estate loans outstanding. For more information regarding past due loans, see Table 13 in this report.

Outstanding COVID-19 related loan modifications for customers totaled approximately $345 million or 1.2% of total loans, excluding PPP loans as of December 31, 2020 as compared to $413 million or 1.4% as of September 30, 2020 and $1.7 billion or 6.2% as of June 30, 2020. The outstanding modifications primarily changed terms to interest-only payments.

The ratio of non-performing assets to total assets was 0.32% as of December 31, 2020, compared to 0.42% at September 30, 2020, and 0.36% at December 31, 2019. Non-performing assets totaled $144.1 million at December 31, 2020, compared to $182.3 million at September 30, 2020 and $132.8 million at December 31, 2019. Non-performing loans totaled $127.5 million, or 0.40% of total loans, at December 31, 2020 compared to $173.1 million, or 0.54% of total loans, at September 30, 2020 and $117.6 million, or 0.44% of total loans, at December 31, 2019. The decrease in non-performing loans as of December 31, 2020 as compared to September 30, 2020 is primarily due to $30.1 million in payments received throughout the quarter. The payment activity was primarily driven by sales of underlying real property collateral, sales of operating businesses, and refinance activity. Other real estate owned (“OREO”) of $16.6 million at December 31, 2020 increased by $7.4 million compared to $9.2 million at September 30, 2020 and increased $1.4 million compared to $15.2 million at December 31, 2019. Management is pursuing the resolution of all non-performing assets. At this time, management believes OREO is appropriately valued at the lower of carrying value or fair value less estimated costs to sell. For more information regarding non-performing assets, see Table 14 in this report.

NON-INTEREST INCOME

Wealth management revenue increased by $1.8 million during the fourth quarter of 2020 as compared to the third quarter of 2020 primarily due to increased trust and asset management fees and brokerage commissions. 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 the Chicago Deferred Exchange Company.

Mortgage banking revenue decreased by $21.7 million in the fourth quarter of 2020 as compared to the third quarter of 2020, primarily due to a $23.3 million decrease in production revenue. Production revenue decreased as origination pipelines designated for sale declined as compared to the prior quarter, due in part to the Company’s intention to retain more loans for investment. Loans originated for sale were $2.4 billion in the fourth quarter of 2020, an increase of $124.7 million as compared to the third quarter of 2020. The percentage of origination volume from refinancing activities was 65% in the fourth quarter of 2020 as compared to 59% in the third quarter of 2020. Mortgage banking revenue includes revenue from activities related to originating, selling and servicing residential real estate loans for the secondary market.

During the fourth quarter of 2020, the fair value of the mortgage servicing rights portfolio increased primarily due to the capitalization of $20.3 million of servicing rights during the fourth quarter of 2020. This increase was partially offset by a negative fair value adjustment of $5.2 million as well as a reduction in value of $9.0 million due to payoffs and paydowns of the existing portfolio. No economic hedges were outstanding relative to the mortgage servicing rights portfolio during the third or fourth quarter of 2020.

Other non-interest income increased by $6.4 million in the fourth quarter of 2020 as compared to the third quarter of 2020 primarily due to increased bank owned life insurance (“BOLI”) revenue and income on partnership investments.

For more information regarding non-interest income, see Tables 15 and 16 in this report.

NON-INTEREST EXPENSE

Salaries and employee benefits expense increased by $7.1 million in the fourth quarter of 2020 as compared to the third quarter of 2020. The $7.1 million increase is comprised of an increase of $3.9 million in commissions and incentive compensation, an increase of $3.7 million in salaries expense, partially offset by a decrease of $520,000 in employee benefits expense.

The increase in commissions and incentive compensation is primarily due to increased commissions expense from higher levels of mortgage loan originations in the current quarter. The increase in salaries expense is primarily related to increased staffing costs to support mortgage origination and investment in technology related services to satisfy customer demands and create efficiencies in operations.

Occupancy expense totaled $19.7 million in the fourth quarter of 2020, an increase of $3.9 million as compared to the third quarter of 2020. This increase is primarily associated with an impairment charge of $1.4 million related to the planned closure of 10 bank branches, increased real estate tax assessment estimates and a higher level of utility charges.

Equipment expense totaled $20.6 million in the fourth quarter of 2020, an increase of $3.3 million as compared to the third quarter of 2020. This increase is primarily due to increased software licensing expenses.

Advertising and Marketing expense totaled $9.9 million in the fourth quarter of 2020, an increase of $2.0 million as compared to the third quarter of 2020. The increase in the fourth quarter relates primarily to increased digital advertising campaigns and corporate sponsorship costs. Marketing costs are incurred to promote the Company’s brand, commercial banking capabilities and various products, to attract loans and deposits and to announce new branch openings as well as the expansion of the Company’s non-bank businesses. The level of marketing expenditures depends on the timing of sponsorship programs utilized which are determined based on the market area, targeted audience, competition and various other factors.

Miscellaneous expense in the fourth quarter of 2020 increased by $302,000 as compared to the third quarter of 2020. The fourth quarter of 2020 included $6.6 million of contingent consideration expense related to the previous acquisition of mortgage operations as compared to $6.3 million in the prior quarter. The liability for contingent consideration expense related to the previous acquisition of mortgage operations is based upon forward looking mortgage origination volumes and the estimated profitability of that operation. Should those assumptions change going forward, the liability may need to be increased or decreased. The contractual period covering contingent consideration ends in January 2023 and the final two years of the contract contemplate a lower ratio of contingent consideration relative to financial performance. As a result, the Company does not expect to have material adjustments to the contingent consideration liability in future periods. Miscellaneous expense also includes ATM expenses, correspondent bank charges, directors fees, telephone, travel and entertainment, corporate insurance, dues and subscriptions, problem loan expenses and lending origination costs that are not deferred.

For more information regarding non-interest expense, see Table 17 in this report.

INCOME TAXES

The Company recorded income tax expense of $33.5 million in the fourth quarter of 2020 compared to $30.0 million in the third quarter of 2020 and $30.7 million in the fourth quarter of 2019. The effective tax rates were 24.87% in the fourth quarter of 2020 compared to 21.83% in the third quarter of 2020 and 26.33% in the fourth quarter of 2019. The effective tax rate in the third quarter of 2020 reflects the impact of a $9.0 million state income tax benefit related to the settlement of an uncertain tax position.

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 fourth quarter of 2020, this unit expanded its loan portfolio, excluding PPP loans, and its deposit portfolio. However, the banking segment also experienced net interest margin compression primarily due to increased levels of liquidity as average interest bearing cash increased by $1.0 billion in the fourth quarter of 2020 as compared to the third quarter of 2020.

Mortgage banking revenue was $86.8 million for the fourth quarter of 2020, a decrease of $21.7 million as compared to the third quarter of 2020 primarily due to a $23.3 million decrease in production revenue as origination pipelines declined as compared to the prior quarter. Service charges on deposit accounts totaled $11.8 million in the fourth quarter of 2020, an increase of $344,000 as compared to the third quarter of 2020 primarily due to higher account analysis and overdraft fees. The Company’s gross commercial and commercial real estate loan pipelines remained strong as of December 31, 2020. Before the impact of scheduled payments and prepayments, gross commercial and commercial real estate loan pipelines were estimated to be approximately $1.1 billion to $1.3 billion at December 31, 2020. When adjusted for the probability of closing, the pipelines were estimated to be approximately $650 million to $750 million at December 31, 2020.

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, accounts receivable financing and value-added, out-sourced administrative services and other services. Originations within the insurance premium financing receivables portfolio were $2.9 billion during the fourth quarter of 2020 and average balances increased by $49.9 million as compared to the third quarter of 2020. The increase in average balances was more than offset by margin compression in this portfolio resulting in a $3.6 million decrease in interest income attributed to the lower market rates of interest associated with the insurance premium finance receivables portfolio. The Company’s leasing business grew during the fourth quarter of 2020, with its portfolio of assets, including capital leases, loans and equipment on operating leases, increasing by $95.2 million to $2.1 billion at the end of the fourth quarter of 2020. Revenues from the Company’s out-sourced administrative services business were $1.3 million in the fourth quarter of 2020, an increase of $186,000 from the third quarter of 2020.

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 totaled $26.8 million in the fourth quarter of 2020, an increase of $1.8 million compared to the third quarter of 2020. Increases in asset management fees were primarily due to favorable equity market performance during the fourth quarter of 2020. At December 31, 2020, the Company’s wealth management subsidiaries had approximately $30.1 billion of assets under administration, which included $3.5 billion of assets owned by the Company and its subsidiary banks, representing a $1.9 billion increase from the $28.2 billion of assets under administration at September 30, 2020.

ITEMS IMPACTING COMPARATIVE FINANCIAL RESULTS

Paycheck Protection Program

On March 27, 2020, the President of the United States signed the CARES Act, which authorized the Small Business Administration (“SBA”) to guarantee loans under the PPP for small businesses who met the necessary eligibility requirements in order to keep their workers on the payroll. The Company began accepting applications on April 3, 2020. From such date through the end of 2020, the Company secured authorization from the SBA for and funded over 12,000 PPP loans with a carrying balance of approximately $3.4 billion. As of December 31, 2020, the carrying balance of such loans was reduced to approximately $2.7 billion primarily resulting from forgiveness by the SBA.

Acquisitions

On November 1, 2019, the Company completed its acquisition of SBC, Incorporated (“SBC”).  SBC was the parent company of Countryside Bank. Through this business combination, the Company acquired Countryside Bank’s six banking offices located in Countryside, Burbank, Darien, Homer Glen, Oak Brook and Chicago, Illinois. As of the acquisition date, the Company acquired approximately $620 million in assets, including approximately $423 million in loans, and approximately $508 million in deposits. The Company recorded goodwill of approximately $40 million on the acquisition.

On October 7, 2019, the Company completed its acquisition of STC Bancshares Corp. (“STC”).  STC was the parent company of STC Capital Bank. Through this business combination, the Company acquired STC Capital Bank’s five banking offices located in the communities of St. Charles, Geneva and South Elgin, Illinois. As of the acquisition date, the Company acquired approximately $250 million in assets, including approximately $174 million in loans, and approximately $201 million in deposits. The Company recorded goodwill of approximately $19 million on the acquisition.

On May 24, 2019, the Company completed its acquisition of Rush-Oak Corporation (“ROC”). ROC was the parent company of Oak Bank. Through this business combination, the Company acquired Oak Bank’s one banking location in Chicago, Illinois. As of the acquisition date, the Company acquired approximately $223 million in assets, including approximately $125 million in loans, and approximately $161 million in deposits. The Company recorded goodwill of approximately $12 million on the acquisition.

Adoption of New Credit Losses Accounting Standard

Beginning in 2020, the Company adopted the CECL standard, which impacted the measurement of the Company’s allowance for credit losses (including the allowance for unfunded lending-related commitments). CECL replaced the previous incurred loss methodology, which delayed recognition until such loss was probable, with a methodology that reflects an estimate of lifetime expected credit losses considering current economic condition and forecasts. Though other assets, including investment securities and other receivables, were considered in-scope of the standard and required a measurement of the allowance for credit loss, the most significant impact of CECL remains within the Company’s loan portfolios and related lending commitments. For more information regarding the adoption of CECL, see the “Asset Quality” section and the asset quality Tables 10-14 in this report.

WINTRUST FINANCIAL CORPORATION
Selected Financial Highlights

    Three Months Ended Years Ended
(Dollars in thousands, except per share data)   Dec 31, 2020   Sep 30, 2020   Jun 30, 2020   Mar 31, 2020   Dec 31, 2019 Dec 31, 2020   Dec 31, 2019
Selected Financial Condition Data (at end of period):      
Total assets   $ 45,080,768     $ 43,731,718     $ 43,540,017     $ 38,799,847     $ 36,620,583        
Total loans (1)   32,079,073     32,135,555     31,402,903     27,807,321     26,800,290        
Total deposits   37,092,651     35,844,422     35,651,874     31,461,660     30,107,138        
Junior subordinated debentures   253,566     253,566     253,566     253,566     253,566        
Total shareholders’ equity   4,115,995     4,074,089     3,990,218     3,700,393     3,691,250        
Selected Statements of Income Data:      
Net interest income   $ 259,397     $ 255,936     $ 263,131     $ 261,443     $ 261,879   $ 1,039,907     $ 1,054,919  
Net revenue (2)   417,758     426,529     425,124     374,685     374,099   1,644,096     1,462,091  
Net income   101,204     107,315     21,659     62,812     85,964   292,990     355,697  
Pre-tax income, excluding provision for credit losses (non-GAAP) (3)   135,891     162,310     165,756     140,044     124,508   604,001     533,965  
Net income per common share – Basic   1.64     1.68     0.34     1.05     1.46   4.72     6.11  
Net income per common share – Diluted   1.63     1.67     0.34     1.04     1.44   4.68     6.03  
Selected Financial Ratios and Other Data:      
Performance Ratios:      
Net interest margin   2.53 %   2.56 %   2.73 %   3.12 %   3.17 % 2.72 %   3.45 %
Net interest margin – fully taxable equivalent (non-GAAP) (3)   2.54     2.57     2.74     3.14     3.19   2.73     3.47  
Non-interest income to average assets   1.44     1.58     1.55     1.24     1.25   1.46     1.23  
Non-interest expense to average assets   2.56     2.45     2.48     2.58     2.78   2.51     2.79  
Net overhead ratio (4)   1.12     0.87     0.93     1.33     1.53   1.05     1.57  
Return on average assets   0.92     0.99     0.21     0.69     0.96   0.71     1.07  
Return on average common equity   10.30     10.66     2.17     6.82     9.52   7.50     10.41  
Return on average tangible common equity (non-GAAP) (3)   12.95     13.43     2.95     8.73     12.17   9.54     13.22  
Average total assets   $ 43,810,005     $ 42,962,844     $ 42,042,729     $ 36,625,490     $ 35,645,190   $ 41,371,339     $ 33,232,083  
Average total shareholders’ equity   4,050,286     4,034,902     3,908,846     3,710,169     3,622,184   3,926,688     3,461,535  
Average loans to average deposits ratio   87.8 %   89.6 %   87.8 %   90.1 %   88.8 % 88.8 %   91.4 %
Period-end loans to deposits ratio   86.5     89.7     88.1     88.4     89.0        
Common Share Data at end of period:      
Market price per common share   $ 61.09     $ 40.05     $ 43.62     $ 32.86     $ 70.90        
Book value per common share   65.24     63.57     62.14     62.13     61.68        
Tangible book value per common share (non-GAAP) (3)   53.23     51.70     50.23     50.18     49.70        
Common shares outstanding   56,769,625     57,601,991     57,573,672     57,545,352     57,821,891        
Other Data at end of period:      
Tier 1 leverage ratio (5)   8.1 %   8.2 %   8.1 %   8.5 %   8.7 %      
Risk-based capital ratios:                          
Tier 1 capital ratio (5)   10.0     10.2     10.1     9.3     9.6        
Common equity tier 1 capital ratio(5)   8.8     9.0     8.8     8.9     9.2        
Total capital ratio (5)   12.6     12.9     12.8     11.9     12.2        
Allowance for credit losses (6)   $ 379,969     $ 388,971     $ 373,174     $ 253,482     $ 158,461        
Allowance for loan and unfunded lending-related commitment losses to total loans   1.18 %   1.21 %   1.19 %   0.91 %   0.59 %      
Number of:                          
Bank subsidiaries   15     15     15     15     15        
Banking offices   181     182     186     187     187        

(1)  Excludes mortgage loans held-for-sale.
(2)  Net revenue includes net interest income and non-interest income.
(3)  See “Supplemental Non-GAAP Financial Measures/Ratios” at Table 18 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. Effective January 1, 2020, the allowance for credit losses also includes the allowance for investment securities as a result of the adoption of Accounting Standard Update (“ASU”) 2016-13, Financial Instruments – Credit Losses.

WINTRUST FINANCIAL CORPORATION

Key Operating Measures

Wintrust’s key operating measures and growth rates for the fourth quarter of 2020, as compared to the third quarter of 2020 (sequential quarter) and fourth quarter of 2019 (linked quarter), are shown in the table below:

    Three Months Ended % or(1)
basis point (bp)
change from
3rd Quarter
2020

  % or
basis point (bp)
change from
4th Quarter
2019
(Dollars in thousands, except per share data)   Dec 31, 2020   Sep 30, 2020   Dec 31, 2019  
Net income   $ 101,204      $ 107,315     $ 85,964   (6 ) %   18   %
Pre-tax income, excluding provision for credit losses (non-GAAP) (2)   135,891      162,310     124,508   (16 )     9    
Net income per common share – diluted   1.63      1.67     1.44   (2 )     13    
Net revenue (3)   417,758      426,529     374,099   (2 )     12    
Net interest income   259,397      255,936     261,879   1       (1 )  
Net interest margin   2.53  %   2.56 %   3.17 % (3 ) bps   (64 ) bps
Net interest margin – fully taxable equivalent (non-GAAP) (2)   2.54      2.57     3.19   (3 )     (65 )  
Net overhead ratio (4)   1.12      0.87     1.53   25       (41 )  
Return on average assets   0.92      0.99     0.96   (7 )     (4 )  
Return on average common equity   10.30      10.66     9.52   (36 )     78    
Return on average tangible common equity (non-GAAP) (2)   12.95      13.43     12.17   (48 )     78    
At end of period                      
Total assets   $ 45,080,768      $ 43,731,718     $ 36,620,583   12   %   23   %
Total loans (5)   32,079,073      32,135,555     26,800,290   (1 )     20    
Total deposits   37,092,651      35,844,422     30,107,138   16       23    
Total shareholders’ equity   4,115,995      4,074,089     3,691,250   13       12    

(1)  Period-end balance sheet percentage changes are annualized.
(2)  See “Supplemental Non-GAAP Financial Measures/Ratios” at Table 18 for additional information on this performance measure/ratio.
(3)  Net revenue is net interest income plus non-interest income.
(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 average total assets. A lower ratio indicates a higher degree of efficiency.
(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 AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION

    (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)    
    Dec 31,   Sep 30,   Jun 30,   Mar 31,   Dec 31,
(In thousands)   2020   2020   2020   2020   2019
Assets                    
Cash and due from banks   $ 322,415     $ 308,639     $ 344,999     $ 349,118     $ 286,167  
Federal funds sold and securities purchased under resale agreements   59     56     58     309     309  
Interest-bearing deposits with banks   4,802,527     3,825,823     4,015,072     1,943,743     2,164,560  
Available-for-sale securities, at fair value   3,055,839     2,946,459     3,194,961     3,570,959     3,106,214  
Held-to-maturity securities, at amortized cost   579,138     560,267     728,465     865,376     1,134,400  
Trading account securities   671     1,720     890     2,257     1,068  
Equity securities with readily determinable fair value   90,862     54,398     52,460     47,310     50,840  
Federal Home Loan Bank and Federal Reserve Bank stock   135,588     135,568     135,571     134,546     100,739  
Brokerage customer receivables   17,436     16,818     14,623     16,293     16,573  
Mortgage loans held-for-sale   1,272,090     959,671     833,163     656,934     377,313  
Loans, net of unearned income   32,079,073     32,135,555     31,402,903     27,807,321     26,800,290  
Allowance for loan losses   (319,374 )   (325,959 )   (313,510 )   (216,050 )   (156,828 )
Net loans   31,759,699     31,809,596     31,089,393     27,591,271     26,643,462  
Premises and equipment, net   768,808     774,288     769,909     764,583     754,328  
Lease investments, net   242,434     230,373     237,040     207,147     231,192  
Accrued interest receivable and other assets   1,351,455     1,424,728     1,437,832     1,460,168     1,061,141  
Trade date securities receivable               502,207      
Goodwill   645,707     644,644     644,213     643,441     645,220  
Other intangible assets   36,040     38,670     41,368     44,185     47,057  
Total assets   $ 45,080,768     $ 43,731,718     $ 43,540,017     $ 38,799,847     $ 36,620,583  
Liabilities and Shareholders’ Equity                    
Deposits:                    
Non-interest bearing   $ 11,748,455     $ 10,409,747     $ 10,204,791     $ 7,556,755     $ 7,216,758  
Interest bearing   25,344,196     25,434,675     25,447,083     23,904,905     22,890,380  
Total deposits   37,092,651     35,844,422     35,651,874     31,461,660     30,107,138  
Federal Home Loan Bank advances   1,228,429     1,228,422     1,228,416     1,174,894     674,870  
Other borrowings   518,928     507,395     508,535     487,503     418,174  
Subordinated notes   436,506     436,385     436,298     436,179     436,095  
Junior subordinated debentures   253,566     253,566     253,566     253,566     253,566  
Trade date securities payable   200,907                  
Accrued interest payable and other liabilities   1,233,786     1,387,439     1,471,110     1,285,652     1,039,490  
Total liabilities   40,964,773     39,657,629     39,549,799     35,099,454     32,929,333  
Shareholders’ Equity:                    
Preferred stock   412,500     412,500     412,500     125,000     125,000  
Common stock   58,473     58,323     58,294     58,266     57,951  
Surplus   1,649,990     1,647,049     1,643,864     1,652,063     1,650,278  
Treasury stock   (100,363 )   (44,891 )   (44,891 )   (44,891 )   (6,931 )
Retained earnings   2,080,013     2,001,949     1,921,048     1,917,558     1,899,630  
Accumulated other comprehensive income (loss)   15,382     (841 )   (597 )   (7,603 )   (34,678 )
Total shareholders’ equity   4,115,995     4,074,089     3,990,218     3,700,393     3,691,250  
Total liabilities and shareholders’ equity   $ 45,080,768     $ 43,731,718     $ 43,540,017     $ 38,799,847     $ 36,620,583  

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

  Three Months Ended Years Ended
(In thousands, except per share data) Dec 31, 2020   Sep 30, 2020   Jun 30, 2020   Mar 31, 2020   Dec 31, 2019 Dec 31, 2020   Dec 31, 2019
Interest income                        
Interest and fees on loans $ 280,185     $ 280,479     $ 294,746     $ 301,839     $ 308,055   $ 1,157,249      $ 1,228,480  
Mortgage loans held-for-sale 6,357     5,791     4,764     3,165     3,201   20,077      11,992  
Interest-bearing deposits with banks 1,294     1,181     1,310     4,768     8,971   8,553      29,803  
Federal funds sold and securities purchased under resale agreements         16     86     390   102      700  
Investment securities 18,243     21,819     27,105     32,467     27,611   99,634      108,046  
Trading account securities 11     6     13     7     6   37      39  
Federal Home Loan Bank and Federal Reserve Bank stock 1,775     1,774     1,765     1,577     1,328   6,891      5,416  
Brokerage customer receivables 116     106     97     158     169   477      666  
Total interest income 307,981     311,156     329,816     344,067     349,731   1,293,020      1,385,142  
Interest expense                        
Interest on deposits 32,602     39,084     50,057     67,435     74,724   189,178      278,892  
Interest on Federal Home Loan Bank advances 4,952     4,947     4,934     3,360     1,461   18,193      9,878  
Interest on other borrowings 2,779     3,012     3,436     3,546     3,273   12,773      13,897  
Interest on subordinated notes 5,509     5,474     5,506     5,472     5,504   21,961      15,555  
Interest on junior subordinated debentures 2,742     2,703     2,752     2,811     2,890   11,008      12,001  
Total interest expense 48,584     55,220     66,685     82,624     87,852   253,113      330,223  
Net interest income 259,397     255,936     263,131     261,443     261,879   1,039,907      1,054,919  
Provision for credit losses 1,180     25,026     135,053     52,961     7,826   214,220      53,864  
Net interest income after provision for credit losses 258,217     230,910     128,078     208,482     254,053   825,687      1,001,055  
Non-interest income                        
Wealth management 26,802     24,957     22,636     25,941     24,999   100,336      97,114  
Mortgage banking 86,819     108,544     102,324     48,326     47,860   346,013      154,293  
Service charges on deposit accounts 11,841     11,497     10,420     11,265     10,973   45,023      39,070  
Gains (losses) on investment securities, net 1,214     411     808     (4,359 )   587   (1,926 )   3,525  
Fees from covered call options —              2,292     1,243   2,292      3,670  
Trading (losses) gains, net (102 )   183     (634 )   (451 )   46   (1,004 )   (158 )
Operating lease income, net 12,118     11,717     11,785     11,984     12,487   47,604      47,041  
Other 19,669     13,284     14,654     18,244     14,025   65,851      62,617  
Total non-interest income 158,361     170,593     161,993     113,242     112,220   604,189      407,172  
Non-interest expense                        
Salaries and employee benefits 171,116     164,042     154,156     136,762     145,941   626,076     546,420  
Equipment 20,565     17,251     15,846     14,834     14,485   68,496     52,328  
Operating lease equipment depreciation 9,938     9,425     9,292     9,260     9,766   37,915     35,760  
Occupancy, net 19,687     15,830     16,893     17,547     17,132   69,957     64,289  
Data processing 5,728     5,689     10,406     8,373     7,569   30,196     27,820  
Advertising and marketing 9,850     7,880     7,704     10,862     12,517   36,296     48,595  
Professional fees 6,530     6,488     7,687     6,721     7,650   27,426     27,471  
Amortization of other intangible assets 2,634     2,701     2,820     2,863     3,017   11,018     11,844  
FDIC insurance 7,016     6,772     7,081     4,135     1,348   25,004     9,199  
OREO expense, net (114 )   (168 )   237     (876 )   536   (921 )   3,628  
Other 28,917     28,309     27,246     24,160     29,630   108,632     100,772  
Total non-interest expense 281,867     264,219     259,368     234,641     249,591   1,040,095     928,126  
Income before taxes 134,711     137,284     30,703     87,083     116,682   389,781     480,101  
Income tax expense 33,507     29,969     9,044     24,271     30,718   96,791     124,404  
Net income $ 101,204     $ 107,315     $ 21,659     $ 62,812     $ 85,964   $ 292,990     $ 355,697  
Preferred stock dividends 6,991     10,286     2,050     2,050     2,050   21,377     8,200  
Net income applicable to common shares $ 94,213     $ 97,029     $ 19,609     $ 60,762     $ 83,914   $ 271,613     $ 347,497  
Net income per common share – Basic $ 1.64     $ 1.68     $ 0.34     $ 1.05     $ 1.46   $ 4.72     $ 6.11  
Net income per common share – Diluted $ 1.63     $ 1.67     $ 0.34     $ 1.04     $ 1.44   $ 4.68     $ 6.03  
Cash dividends declared per common share $ 0.28     $ 0.28     $ 0.28     $ 0.28     $ 0.25   $ 1.12     $ 1.00  
Weighted average common shares outstanding   57,309       57,597       57,567       57,620       57,538     57,523       56,857  
Dilutive potential common shares 588     449     414     575     874   496     762  
Average common shares and dilutive common shares 57,897     58,046     57,981     58,195     58,412   58,019     57,619  

TABLE 1: LOAN PORTFOLIO MIX AND GROWTH RATES AND COMMERCIAL REAL ESTATE BY STATE

                    % Growth From
(Dollars in thousands) Dec 31, 2020   Sep 30, 2020   Jun 30, 2020   Mar 31, 2020   Dec 31, 2019 Sep 30, 2020 (1)   Dec 31, 2019
Balance:                        
Mortgage loans held-for-sale, excluding early buy-out exercised loans guaranteed by U.S. Government Agencies $ 927,307     $ 862,924     $ 814,667     $ 642,386     $ 361,309   30 %   157 %
Mortgage loans held-for-sale, early buy-out exercised loans guaranteed by U.S. Government Agencies 344,783     96,747     18,496     14,548     16,004   1020     2054  
Total mortgage loans held-for-sale $ 1,272,090     $ 959,671     $ 833,163     $ 656,934     $ 377,313   130 %   237 %
                         
Commercial                        
Commercial, industrial, and other $ 9,240,046     $ 8,897,986     $ 8,523,864     $ 9,025,886     $ 8,285,920   15 %   12 %
Commercial PPP loans 2,715,921     3,379,013     3,335,368           (78 )   100  
Commercial real estate                        
Construction and development 1,371,802     1,333,149     1,285,282     1,237,274     1,200,783   12     14  
Non-construction 7,122,330     7,089,993     6,915,463     6,948,257     6,819,493   2     4  
Home equity 425,263     446,274     466,596     494,655     513,066   (19 )   (17 )
Residential real estate                        
Residential real estate loans for investment 1,214,744     1,143,908     1,186,768     1,244,690     1,231,123   25     (1 )
Residential mortgage loans, early buy-out eligible loans guaranteed by U.S. Government Agencies 44,854     240,902     240,661     132,699     123,098   (324 )   (64 )
Premium Finance receivables                        
Commercial insurance 4,054,489     4,060,144     3,999,774     3,465,055     3,442,027   (1 )   18  
Life insurance 5,857,436     5,488,832     5,400,802     5,221,639     5,074,602   27     15  
Consumer and other 32,188     55,354     48,325     37,166     110,178   (166 )   (71 )
Total loans, net of unearned income $ 32,079,073     $ 32,135,555     $ 31,402,903     $ 27,807,321     $ 26,800,290   (1 )%   20 %
Mix:                        
Mortgage loans held-for-sale, excluding early buy-out exercised loans guaranteed by U.S. Government Agencies 73 %   90 %   98 %   98 %   96 %      
Mortgage loans held-for-sale, early buy-out exercised loans guaranteed by U.S. Government Agencies 27     10     2     2     4        
Total mortgage loans held-for-sale 100 %   100 %   100 %   100 %   100 %      
                         
Commercial                        
Commercial, industrial, and other 29  %   28 %   28 %   32 %   31 %      
Commercial PPP loans     11     11                
Commercial real estate                        
Construction and development     4     4     4     4        
Non-construction 22      22     22     25     26        
Home equity     1     1     2     2        
Residential real estate                        
Residential real estate loans for investment     3     3     4     5        
Residential mortgage loans, early buy-out eligible loans guaranteed by U.S. Government Agencies     1     1     1     0        
Premium Finance receivables                        
Commercial insurance 13      13     13     13     13        
Life insurance 18      17     17     19     19        
Consumer and other     0     0     0     0        
Total loans, net of unearned income 100  %   100 %   100 %   100 %   100 %      

(1)  Annualized.

  Dec 31, 2020     Sep 30, 2020       Jun 30, 2020     Mar 31, 2020   Dec 31, 2019
(Dollars in thousands)   Balance   % of
Total
Balance
      Balance   % of
Total
Balance
      Balance   % of
Total
Balance
      Balance   % of
Total
Balance
      Balance   % of
Total
Balance
 
Commercial real estate – collateral location by state:                                            
Illinois $ 6,243,651   73.5 %   $ 6,270,584   74.4 %   $ 6,198,486   75.6 %   $ 6,171,606   75.4 %   $ 6,176,353   77.0 %
Wisconsin 779,390   9.2     783,241   9.3     760,839   9.3     793,145   9.7     744,975   9.3  
Total primary markets $ 7,023,041   82.7 %   $ 7,053,825   83.7 %   $ 6,959,325   84.9 %   $ 6,964,751   85.1 %   $ 6,921,328   86.3 %
Indiana 301,177   3.5     265,905   3.2     249,423   3.0     249,680   3.1     218,963   2.7  
Florida 131,259   1.5     133,602   1.6     133,810   1.6     126,786   1.5     114,629   1.4  
Arizona 63,494   0.8     79,086   0.9     78,135   1.0     72,214   0.9     64,022   0.8  
California 85,624   1.0     82,852   1.0     81,634   1.0     63,883   0.8     64,345   0.8  
Texas 79,406   0.9     55,229   0.7     48,082   0.6     59,647   0.8     29,586   0.5  
Other 810,131   9.6     752,643   8.9     650,336   7.9     648,570   7.8     607,403   7.5  
Total commercial real estate $ 8,494,132   100 %   $ 8,423,142   100 %   $ 8,200,745   100 %   $ 8,185,531   100 %   $ 8,020,276   100 %

TABLE 2: DEPOSIT PORTFOLIO MIX AND GROWTH RATES

                    % Growth From
(Dollars in thousands) Dec 31, 2020   Sep 30, 2020   Jun 30, 2020   Mar 31, 2020   Dec 31, 2019 Sep 30, 2020 (1)   Dec 31, 2019
Balance:                        
Non-interest bearing $ 11,748,455     $ 10,409,747     $ 10,204,791     $ 7,556,755     $ 7,216,758   51 %   63 %
NOW and interest-bearing demand deposits 3,349,021     3,294,071     3,440,348     3,181,159     3,093,159   7     8  
Wealth management deposits (2) 4,138,712     4,235,583     4,433,020     3,936,968     3,123,063   (9 )   33  
Money market 9,348,806     9,423,653     9,288,976     8,114,659     7,854,189   (3 )   19  
Savings 3,531,029     3,415,073     3,447,352     3,282,340     3,196,698   14     10  
Time certificates of deposit 4,976,628     5,066,295     4,837,387     5,389,779     5,623,271   (7 )   (11 )
Total deposits $ 37,092,651     $ 35,844,422     $ 35,651,874     $ 31,461,660     $ 30,107,138   14 %   23 %
Mix:                        
Non-interest bearing 32 %   29 %   29 %   24 %   24 %      
NOW and interest-bearing demand deposits 9     9     10     10     10        
Wealth management deposits (2) 11     12     12     13     10        
Money market 25     26     25     26     26        
Savings 10     10     10     10     11        
Time certificates of deposit 13     14     14     17     19        
Total deposits 100 %   100 %   100 %   100 %   100 %      

(1)  Annualized.
(2)  Represents deposit balances of the Company’s subsidiary banks from brokerage customers of Wintrust Investments, Chicago Deferred Exchange Company, LLC (“CDEC”), trust and asset management customers of the Company and brokerage customers from unaffiliated companies which have been placed into deposit accounts.

TABLE 3: TIME CERTIFICATES OF DEPOSIT MATURITY/RE-PRICING ANALYSIS
As of December 31, 2020

(Dollars in thousands)   Total Time
Certificates of
Deposit
  Weighted-Average
Rate of Maturing
Time Certificates
of Deposit (1)
1-3 months   $ 872,282     1.74 %
4-6 months   1,327,476     1.82  
7-9 months   948,251     1.57  
10-12 months   760,907     1.19  
13-18 months   628,017     0.85  
19-24 months   224,885     0.98  
24+ months   214,810     1.02  
Total   $ 4,976,628     1.47 %

(1)  Weighted-average rate excludes the impact of purchase accounting fair value adjustments.

TABLE 4: QUARTERLY AVERAGE BALANCES

    Average Balance for three months ended,
    Dec 31,   Sep 30,   Jun 30,   Mar 31,   Dec 31,
(In thousands)   2020   2020   2020   2020   2019
Interest-bearing deposits with banks and cash equivalents (1)   $ 4,381,040     $ 3,411,164     $ 3,240,167     $ 1,418,809     $ 2,206,251  
Investment securities (2)   3,534,594     3,789,422     4,309,471     4,780,709     3,909,699  
FHLB and FRB stock   135,569     135,567     135,360     114,829     94,843  
Liquidity management assets (3)   8,051,203     7,336,153     7,684,998     6,314,347     6,210,793  
Other earning assets (3)(4)   18,716     16,656     16,917     19,166     18,353  
Mortgage loans held-for-sale   893,395     822,908     705,702     403,262     381,878  
Loans, net of unearned income (3)(5)   31,783,279     31,634,608     30,336,626     26,936,728     26,137,722  
Total earning assets (3)   40,746,593     39,810,325     38,744,243     33,673,503     32,748,746  
Allowance for loan and investment security losses (6)   (336,139 )   (321,732 )   (222,485 )   (176,291 )   (167,759 )
Cash and due from banks   344,536     345,438     352,423     321,982     316,631  
Other assets   3,055,015     3,128,813     3,168,548     2,806,296     2,747,572  
Total assets   $ 43,810,005     $ 42,962,844     $ 42,042,729     $ 36,625,490     $ 35,645,190  
                     
NOW and interest-bearing demand deposits   $ 3,320,527     $ 3,435,089     $ 3,323,124     $ 3,113,733     $ 3,016,991  
Wealth management deposits   4,066,948     4,239,300     4,380,996     2,838,719     2,934,292  
Money market accounts   9,435,344     9,332,668     8,727,966     7,990,775     7,647,635  
Savings accounts   3,413,388     3,419,586     3,394,480     3,189,835     3,028,763  
Time deposits   5,043,558     4,900,839     5,104,701     5,526,407     5,682,449  
Interest-bearing deposits   25,279,765     25,327,482     24,931,267     22,659,469     22,310,130  
Federal Home Loan Bank advances   1,228,425     1,228,421     1,214,375     951,613     596,594  
Other borrowings   510,725     512,787     493,350     469,577     415,092  
Subordinated notes   436,433     436,323     436,226     436,119     436,025  
Junior subordinated debentures   253,566     253,566     253,566     253,566     253,566  
Total interest-bearing liabilities   27,708,914     27,758,579     27,328,784     24,770,344     24,011,407  
Non-interest-bearing deposits   10,874,912     9,988,769     9,607,528     7,235,177     7,128,166  
Other liabilities   1,175,893     1,180,594     1,197,571     909,800     883,433  
Equity   4,050,286     4,034,902     3,908,846     3,710,169     3,622,184  
Total liabilities and shareholders’ equity   $ 43,810,005     $ 42,962,844     $ 42,042,729     $ 36,625,490     $ 35,645,190  
                     
Net free funds/contribution (7)   $ 13,037,679     $ 12,051,746     $ 11,415,459     $ 8,903,159     $ 8,737,339  

(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)  See “Supplemental Non-GAAP Financial Measures/Ratios” at Table 18 for additional information on this performance measure/ratio.
(4)  Other earning assets include brokerage customer receivables and trading account securities.
(5)  Loans, net of unearned income, include non-accrual loans.
(6)  Effective January 1, 2020 this includes the allowance for investment security losses as a result of the adoption of ASU 2016-13, Financial Instruments – Credit Losses.
(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.

TABLE 5: QUARTERLY NET INTEREST INCOME

    Net Interest Income for three months ended,
    Dec 31,   Sep 30,   Jun 30,   Mar 31,   Dec 31,
(In thousands)   2020   2020   2020   2020   2019
Interest income:                    
Interest-bearing deposits with banks and cash equivalents   $ 1,294     $ 1,181     $ 1,326     $ 4,854     $ 9,361  
Investment securities   18,773     22,365     27,643     33,018     28,184  
FHLB and FRB stock   1,775     1,774     1,765     1,577     1,328  
Liquidity management assets (1)   21,842     25,320     30,734     39,449     38,873  
Other earning assets (1)   130     113     113     167     176  
Mortgage loans held-for-sale   6,357     5,791     4,764     3,165     3,201  
Loans, net of unearned income (1)   280,509     280,960     295,322     302,699     308,947  
Total interest income   $ 308,838     $ 312,184     $ 330,933     $ 345,480     $ 351,197  
                     
Interest expense:                    
NOW and interest-bearing demand deposits   $ 1,074     $ 1,342     $ 1,561     $ 3,665     $ 4,622  
Wealth management deposits   7,436     7,662     7,244     6,935     7,867  
Money market accounts   3,740     7,245     13,140     22,363     25,603  
Savings accounts   773     2,104     3,840     5,790     6,145  
Time deposits   19,579     20,731     24,272     28,682     30,487  
Interest-bearing deposits   32,602     39,084     50,057     67,435     74,724  
Federal Home Loan Bank advances   4,952     4,947     4,934     3,360     1,461  
Other borrowings   2,779     3,012     3,436     3,546     3,273  
Subordinated notes   5,509     5,474     5,506     5,472     5,504  
Junior subordinated debentures   2,742     2,703     2,752     2,811     2,890  
Total interest expense   $ 48,584     $ 55,220     $ 66,685     $ 82,624     $ 87,852  
                     
Less: Fully taxable-equivalent adjustment   (857 )   (1,028 )   (1,117 )   (1,413 )   (1,466 )
Net interest income (GAAP) (2)   259,397     255,936     263,131     261,443     261,879  
Fully taxable-equivalent adjustment   857     1,028     1,117     1,413     1,466  
Net interest income, fully taxable-equivalent (non-GAAP) (2)   $ 260,254     $ 256,964     $ 264,248     $ 262,856     $ 263,345  

(1)  Interest income on tax-advantaged loans, trading securities and investment securities reflects a taxable-equivalent adjustment based on the marginal federal corporate tax rate in effect as of the applicable period.
(2)  See “Supplemental Non-GAAP Financial Measures/Ratios” at Table 18 for additional information on this performance measure/ratio.

TABLE 6: QUARTERLY NET INTEREST MARGIN

    Net Interest Margin for three months ended,
    Dec 31, 2020   Sep 30, 2020   Jun 30, 2020   Mar 31, 2020   Dec 31, 2019
Yield earned on:                    
Interest-bearing deposits with banks and cash equivalents   0.12 %   0.14   0.16   1.38 %   1.68 %
Investment securities   2.11     2.35     2.58     2.78     2.86  
FHLB and FRB stock   5.21     5.21     5.24     5.52     5.55  
Liquidity management assets   1.08     1.37     1.61     2.51     2.48  
Other earning assets   2.79     2.71     2.71     3.50     3.83  
Mortgage loans held-for-sale   2.83     2.80     2.72     3.16     3.33  
Loans, net of unearned income   3.51     3.53     3.92     4.52     4.69  
Total earning assets   3.02 %   3.12 %   3.44 %   4.13 %   4.25 %
                     
Rate paid on:                    
NOW and interest-bearing demand deposits   0.13 %   0.16 %   0.19 %   0.47 %   0.61 %
Wealth management deposits   0.73     0.72     0.67     0.98     1.06  
Money market accounts   0.16     0.31     0.61     1.13     1.33  
Savings accounts   0.09     0.24     0.45     0.73     0.80  
Time deposits   1.54     1.68     1.91     2.09     2.13  
Interest-bearing deposits   0.51     0.61     0.81     1.20     1.33  
Federal Home Loan Bank advances   1.60     1.60     1.63     1.42     0.97  
Other borrowings   2.16     2.34     2.80     3.04     3.13  
Subordinated notes   5.05     5.02     5.05     5.02     5.05  
Junior subordinated debentures   4.23     4.17     4.29     4.39     4.46  
Total interest-bearing liabilities   0.70 %   0.79 %   0.98 %   1.34 %   1.45 %
                     
Interest rate spread (1)(2)   2.32 %   2.33   2.46 %   2.79 %   2.80 %
Less: Fully taxable-equivalent adjustment   (0.01 )   (0.01 )   (0.01 )   (0.02 )   (0.02 )
Net free funds/contribution (3)   0.22     0.24     0.28     0.35     0.39  
Net interest margin (GAAP) (2)   2.53 %   2.56   2.73 %   3.12 %   3.17 %
Fully taxable-equivalent adjustment   0.01     0.01     0.01     0.02     0.02  
Net interest margin, fully taxable-equivalent (non-GAAP) (2)   2.54 %   2.57 %   2.74 %   3.14 %   3.19 %

(1)  Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.
(2)  See “Supplemental Non-GAAP Financial Measures/Ratios” at Table 18 for additional information on this performance measure/ratio.
(3)  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.

TABLE 7: YEAR-TO-DATE AVERAGE BALANCES, AND NET INTEREST INCOME AND MARGIN

  Average Balance
for years ended,
Interest
for years ended,
Yield/Rate
for years ended,
(Dollars in thousands) Dec 31, 2020   Dec 31,
2019
Dec 31, 2020   Dec 31, 2019 Dec 31, 2020   Dec 31, 2019
Interest-bearing deposits with banks and cash equivalents (1) $ 3,117,075     $ 1,494,418     $ 8,655     $ 30,503     0.28 %   2.04 %
Investment securities (2) 4,101,136     3,651,091     101,799     110,326     2.48     3.02  
FHLB and FRB stock 130,360     96,924     6,891     5,416     5.29     5.59  
Liquidity management assets (3)(4) $ 7,348,571     $ 5,242,433     $ 117,345     $ 146,245     1.60   2.79 %
Other earning assets (3)(4)(5) 17,863     16,385     523     714     2.94     4.36  
Mortgage loans held-for-sale 707,147     308,645     20,077     11,992     2.84     3.89  
Loans, net of unearned income (3)(4)(6) 30,181,204     24,986,736     1,159,490     1,232,415     3.84     4.93  
Total earning assets (4) $ 38,254,785     $ 30,554,199     $ 1,297,435     $ 1,391,366     3.39 %   4.55 %
Allowance for loan and investment security losses (7) (264,516 )   (164,587 )              
Cash and due from banks 341,116     292,807                
Other assets 3,039,954     2,549,664                
Total assets $ 41,371,339     $ 33,232,083                
                   
NOW and interest-bearing demand deposits $ 3,298,554     $ 2,903,441     $ 7,642     $ 20,079     0.23 %   0.69 %
Wealth management deposits 3,882,975     2,761,936     29,277     31,121     0.75     1.13  
Money market accounts 8,874,488     6,659,376     46,488     91,940     0.52     1.38  
Savings accounts 3,354,662     2,834,381     12,507     20,975     0.37     0.74  
Time deposits 5,142,938     5,467,192     93,264     114,777     1.81     2.10  
Interest-bearing deposits $ 24,553,617     $ 20,626,326     $ 189,178     $ 278,892     0.77 %   1.35 %
Federal Home Loan Bank advances 1,156,106     658,669     18,193     9,878     1.57     1.50  
Other borrowings 496,693     428,834     12,773     13,897     2.57     3.24  
Subordinated notes 436,275     309,178     21,961     15,555     5.03     5.03  
Junior subordinated debentures 253,566     253,566     11,008     12,001     4.27     4.67  
Total interest-bearing liabilities $ 26,896,257     $ 22,276,573     $ 253,113     $ 330,223     0.94 %   1.48 %
Non-interest-bearing deposits 9,432,090     6,711,298                
Other liabilities 1,116,304     782,677                
Equity 3,926,688     3,461,535                
Total liabilities and shareholders’ equity $ 41,371,339     $ 33,232,083                
Interest rate spread (4)(8)             2.45 %   3.07 %
Less: Fully taxable-equivalent adjustment       (4,415 )   (6,224 )   (0.01 )   (0.02 )
Net free funds/contribution (9) $ 11,358,528     $ 8,277,626           0.28     0.40  
Net interest income/ margin (GAAP) (4)       $ 1,039,907     1,054,919     2.72 %   3.45 %
Fully taxable-equivalent adjustment       4,415     6,224     0.01     0.02  
Net interest income/ margin, fully taxable-equivalent (non-GAAP) (4)       $ 1,044,322     $ 1,061,143     2.73 %   3.47 %

(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 taxable-equivalent adjustment based on a marginal federal corporate tax rate in effect as of the applicable period.
(4)  See “Supplemental Non-GAAP Financial Measures/Ratios” at Table 18 for additional information on this performance ratio.
(5)  Other earning assets include brokerage customer receivables and trading account securities.
(6)  Loans, net of unearned income, include non-accrual loans.
(7)  Effective January 1, 2020 this includes the allowance for investment security losses as a result of the adoption of ASU 2016-13, Financial Instruments – Credit Losses.
(8)  Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.
(9)  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.

TABLE 8: 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 is as follows:

Static Shock Scenario   +200
Basis
Points
  +100
Basis
Points
  -100
Basis
Points
Dec 31, 2020   25.0 %   11.6 %   (7.9 )%  
Sep 30, 2020   23.4     10.9     (8.1 )  
Jun 30, 2020   25.9     12.6     (8.3 )  
Mar 31, 2020   22.5     10.6     (9.4 )  
Dec 31, 2019   18.6     9.7     (10.9 )  

 

Ramp Scenario +200
Basis
Points
  +100
Basis
Points
  -100
Basis
Points
Dec 31, 2020 11.4 %   5.7 %   (3.3 )%  
Sep 30, 2020 10.7     5.2     (3.5 )  
Jun 30, 2020 13.0     6.7     (3.2 )  
Mar 31, 2020 7.7     3.7     (3.8 )  
Dec 31, 2019 9.3     4.8     (5.0 )  

TABLE 9: MATURITIES AND SENSITIVITIES TO CHANGES IN INTEREST RATES

  Loans repricing or maturity period    
As of December 31, 2020 One year or less   From one to five years   Over five years    
(In thousands)       Total
Commercial              
Fixed rate $ 372,909      $ 1,878,763      $ 804,397      $ 3,056,069   
Fixed Rate – PPP —      2,715,921      —      2,715,921   
Variable rate 6,180,119      3,735      123      6,183,977   
Total commercial $ 6,553,028      $ 4,598,419      $ 804,520      $ 11,955,967   
Commercial real estate              
Fixed rate 557,819      2,087,351      377,779      3,022,949   
Variable rate 5,435,402      35,781      —      5,471,183   
Total commercial real estate $ 5,993,221      $ 2,123,132      $ 377,779      $ 8,494,132   
Home equity              
Fixed rate 14,710      8,882      25      23,617   
Variable rate 401,646      —      —      401,646   
Total home equity $ 416,356      $ 8,882      $ 25      $ 425,263   
Residential real estate              
Fixed rate 31,179      11,061      384,420      426,660   
Variable rate 60,121      319,347      453,470      832,938   
Total residential real estate $ 91,300      $ 330,408      $ 837,890      $ 1,259,598   
Premium finance receivables – commercial              
Fixed rate 3,967,351      87,138      —      4,054,489   
Variable rate —      —      —      —   
Total premium finance receivables – commercial $ 3,967,351      $ 87,138      $ —      $ 4,054,489   
Premium finance receivables – life insurance              
Fixed rate 12,424      299,640      18,931      330,995   
Variable rate 5,526,441      —      —      5,526,441   
Total premium finance receivables – life insurance $ 5,538,865      $ 299,640      $ 18,931      $ 5,857,436   
Consumer and other              
Fixed rate 8,696      5,031      1,392      15,119   
Variable rate 17,069      —      —      17,069   
Total consumer and other $ 25,765      $ 5,031      $ 1,392      $ 32,188   
               
Total per category              
Fixed rate 4,965,088      4,377,866      1,586,944      10,929,898   
Fixed rate – PPP —      2,715,921      —      2,715,921   
Variable rate 17,620,798      358,863      453,593      18,433,254   
Total loans, net of unearned income $ 22,585,886      $ 7,452,650      $ 2,040,537      $ 32,079,073   
               
Variable Rate Loan Pricing by Index:              
Prime             $ 2,324,385   
One- month LIBOR             9,338,592   
Three- month LIBOR             394,592   
Twelve- month LIBOR             6,112,979   
Other             262,706   
Total variable rate             $ 18,433,254   

Graph available at the following link: https://ml.globenewswire.com/Resource/Download/f719da90-6a62-4f5d-a7fb-d34801cb841a

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 changes as the Prime rate which has historically moved when the Federal Reserve raises or lowers interest rates.  Specifically, the Company has $9.3 billion of variable rate loans tied to one-month LIBOR and $6.1 billion of variable rate loans tied to twelve-month LIBOR. The above chart shows:

    Basis Point (bp) Change in
    Prime   1-month
LIBOR
  12-month
LIBOR
 
Fourth Quarter 2020   0 bp -1 bp -2 bps
Third Quarter 2020   0   -1   -19  
Second Quarter 2020   0   -83   -45  
First Quarter 2020   -150   -77   -100  
Fourth Quarter 2019   -25   -26   -3  

TABLE 10: ALLOWANCE FOR CREDIT LOSSES

    Three Months Ended Years Ended
    Dec 31,   Sep 30,   Jun 30,   Mar 31,   Dec 31, Dec 31,   Dec 31,
(Dollars in thousands)   2020   2020   2020   2020   2019 2020   2019
Allowance for credit losses at beginning of period   $ 388,971     $ 373,174     $ 253,482     $ 158,461     $ 163,273   $ 158,461     $ 154,164  
Cumulative effect adjustment from the adoption of ASU 2016-13   —              47,418       47,418      
Provision for credit losses   1,180     25,026     135,053     52,961     7,826   214,220     53,864  
Other adjustments   155     55     42     (73 )   30   179     (21 )
Charge-offs:                          
Commercial   5,184     5,270     5,686     2,153     11,222   18,293     35,880  
Commercial real estate   6,637     1,529     7,224     570     533   15,960     5,402  
Home equity   683     138     239     1,001     1,330   2,061     3,702  
Residential real estate   114     83     293     401     483   891     798  
Premium finance receivables   4,214     4,640     3,434     3,184     3,817   15,472     12,902  
Consumer and other   198     103     99     128     167   528     522  
Total charge-offs   17,030     11,763     16,975     7,437     17,552   53,205     59,206  
Recoveries:                          
Commercial   4,168     428     112     384     1,871   5,092     2,845  
Commercial real estate   904     175     493     263     1,404   1,835     2,516  
Home equity   77     111     46     294     166   528     479  
Residential real estate   69     25     30     60     50   184     422  
Premium finance receivables   1,445     1,720     833     1,110     1,350   5,108     3,203  
Consumer and other   30     20     58     41     43   149     195  
Total recoveries   6,693     2,479     1,572     2,152     4,884   12,896     9,660  
Net charge-offs   (10,337 )   (9,284 )   (15,403 )   (5,285 )   (12,668 ) (40,309 )   (49,546 )
Allowance for credit losses at period end   $ 379,969     $ 388,971     $ 373,174     $ 253,482     $ 158,461   $ 379,969     $ 158,461  
                           
Annualized net charge-offs by category as a percentage of its own respective category’s average:      
Commercial   0.03 %   0.16 %   0.20 %   0.08 %   0.46 % 0.12 %   0.41 %
Commercial real estate   0.27     0.06     0.33     0.02     (0.04 ) 0.17     0.04  
Home equity   0.55     0.02     0.16     0.57     0.89   0.33     0.61  
Residential real estate   0.02     0.02     0.09     0.11     0.14   0.06     0.04  
Premium finance receivables   0.11     0.12     0.12     0.10     0.12   0.11     0.12  
Consumer and other   0.78     0.49     0.25     0.56     0.41   0.52     0.29  
Total loans, net of unearned income   0.13 %   0.12 %   0.20 %   0.08 %   0.19 % 0.13 %   0.20 %
                           
Net charge-offs as a percentage of the provision for credit losses   876.02 %   37.10 %   11.41 %   9.98 %   161.87 % 18.82 %   91.99 %
Loans at period-end   $ 32,079,073     $ 32,135,555     $ 31,402,903     $ 27,807,321     $ 26,800,290        
Allowance for loan losses as a percentage of loans at period end   1.00 %   1.01 %   1.00 %   0.78 %   0.59 %      
Allowance for loan and unfunded lending-related commitment losses as a percentage of loans at period end   1.18     1.21     1.19     0.91     0.59        
Allowance for loan and unfunded lending-related commitment losses as a percentage of loans at period end, excluding PPP loans   1.29     1.35     1.33     0.91     0.59        

TABLE 11: ALLOWANCE AND PROVISION FOR CREDIT LOSSES BY COMPONENT

    Three Months Ended Years Ended
    Dec 31,   Sep 30,   Jun 30,   Mar 31,   Dec 31, Dec 31,   Dec 31,
(In thousands)   2020   2020   2020   2020   2019 2020   2019
Provision for loan losses   $ 3,597     $ 21,678     $ 112,822     $ 50,396     $ 7,704   $ 188,493      $ 53,626  
Provision for unfunded lending-related commitments losses   (2,413 )   3,350     22,236     2,569     122   25,742      238  
Provision for held-to-maturity securities losses   (4 )   (2 )   (5 )   (4 )     (15 )    
Provision for credit losses   $ 1,180     $ 25,026     $ 135,053     $ 52,961     $ 7,826   $ 214,220      $ 53,864  
                           
Allowance for loan losses   $ 319,374     $ 325,959     $ 313,510     $ 216,050     $ 156,828        
Allowance for unfunded lending-related commitments losses   60,536     62,949     59,599     37,362     1,633        
Allowance for loan losses and unfunded lending-related commitments losses   379,910     388,908     373,109     253,412     158,461        
Allowance for held-to-maturity securities losses   59     63     65     70            
Allowance for credit losses   $ 379,969     $ 388,971     $ 373,174     $ 253,482     $ 158,461        


TABLE 12: ALLOWANCE BY LOAN PORTFOLIO

The table below summarizes the calculation of allowance for loan losses and allowance for unfunded lending-related commitments losses for the Company’s core, niche and consumer and purchased loan portfolios, as of December 31, 2020 and September 30, 2020.

  As of Dec 31, 2020 As of Sep 30, 2020
(Dollars in thousands) Recorded
Investment
  Calculated
Allowance
  % of its
category’s balance
Recorded
Investment
  Calculated
Allowance
  % of its
category’s balance
Commercial:                    
Commercial, industrial and other, excluding PPP loans $ 9,162,327      $ 92,777      1.01  % $ 8,808,467     $ 110,045     1.25 %
Commercial real estate:                    
Construction and development 1,344,653      77,463      5.76    1,270,235     73,565     5.79  
Non-construction 6,775,195      150,637      2.22    6,708,538     141,249     2.11  
Home equity 395,248      11,027      2.79    412,162     11,216     2.72  
Residential real estate 1,195,271      11,948      1.00    1,309,209     11,165     0.85  
Total core loan portfolio $ 18,872,694      $ 343,852      1.82  % $ 18,508,611     $ 347,240     1.88 %
Commercial PPP loans $ 2,715,921      $     0.00  % $ 3,379,013     $ 3     0.00 %
Premium finance receivables                    
Commercial insurance loans 4,054,489      17,267      0.43    4,060,144     17,378     0.43  
Life insurance loans 5,741,639      510      0.01    5,376,403     478     0.01  
Consumer and other 30,133      290      0.96    53,191     555     1.04  
Total niche and consumer loan portfolio $ 12,542,182      $ 18,069      0.14  % $ 12,868,751     $ 18,414     0.14 %
Purchased commercial $ 77,719      $ 1,433      1.84  % $ 89,519     $ 2,846     3.18 %
Purchased commercial real estate 374,284      15,503      4.14    444,369     19,196     4.32  
Purchased home equity 30,015      410      1.37    34,112     461     1.35  
Purchased residential real estate 64,327      511      0.79    75,601     625     0.83  
Purchased life insurance loans 115,797      —      —    112,429          
Purchased consumer and other 2,055      132      6.42    2,163     126     5.83  
Total purchased loan portfolio $ 664,197      $ 17,989      2.71  % $ 758,193     $ 23,254     3.07 %
Total loans, net of unearned income $ 32,079,073      $ 379,910      1.18  % $ 32,135,555     $ 388,908     1.21 %
Total loans, net of unearned income, excluding PPP loans $ 29,363,152      $ 379,908      1.29  % $ 28,756,542     $ 388,905     1.35 %

TABLE 13: LOAN PORTFOLIO AGING

(Dollars in thousands)   Dec 31, 2020   Sep 30, 2020   Jun 30, 2020   Mar 31, 2020   Dec 31, 2019
Loan Balances:                    
Commercial                    
Nonaccrual   $ 21,743      $ 42,036     $ 42,882     $ 49,916     $ 37,224  
90+ days and still accruing   307          1,374     1,241     1,855  
60-89 days past due   6,900      2,168     8,952     8,873     3,275  
30-59 days past due   44,381      48,271     23,720     86,129     77,324  
Current   11,882,636      12,184,524     11,782,304     8,879,727     8,166,242  
Total commercial   $ 11,955,967      $ 12,276,999     $ 11,859,232     $ 9,025,886     $ 8,285,920  
Commercial real estate                    
Nonaccrual   $ 46,107      $ 68,815     $ 64,557     $ 62,830     $ 26,113  
90+ days and still accruing   —              516     14,946  
60-89 days past due   5,178      8,299     26,480     10,212     31,546  
30-59 days past due   32,116      53,462     75,528     75,068     97,567  
Current   8,410,731      8,292,566     8,034,180     8,036,905     7,850,104  
Total commercial real estate   $ 8,494,132      $ 8,423,142     $ 8,200,745     8,185,531     $ 8,020,276  
Home equity                    
Nonaccrual   $ 6,529      $ 6,329     $ 7,261     $ 7,243     $ 7,363  
90+ days and still accruing   —                   
60-89 days past due   47      70         214     454  
30-59 days past due   637      1,148     1,296     2,096     3,533  
Current   418,050      438,727     458,039     485,102     501,716