UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2012
OR
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number 001-35077
WINTRUST FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Illinois | 36-3873352 | |
(State of incorporation or organization) |
(I.R.S. Employer Identification No.) |
727 North Bank Lane
Lake Forest, Illinois 60045
(Address of principal executive offices)
(847) 615-4096
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer | x | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.
Common Stock no par value, 36,318,332 shares, as of April 30, 2012
PART I. FINANCIAL INFORMATION
Page | ||||||
ITEM 1. |
Financial Statements. | 1 | ||||
ITEM 2. |
Managements Discussion and Analysis of Financial Condition and Results of Operations. | 48 | ||||
ITEM 3. |
Quantitative and Qualitative Disclosures About Market Risk. | 92 | ||||
ITEM 4. |
Controls and Procedures. | 94 | ||||
PART II. OTHER INFORMATION | ||||||
ITEM 1. |
Legal Proceedings. | NA | ||||
ITEM 1A. |
Risk Factors. | 94 | ||||
ITEM 2. |
Unregistered Sales of Equity Securities and Use of Proceeds. | 94 | ||||
ITEM 3. |
Defaults Upon Senior Securities. | NA | ||||
ITEM 4. |
Mine Safety Disclosures. | NA | ||||
ITEM 5. |
Other Information. | NA | ||||
ITEM 6. |
Exhibits. | 95 | ||||
. |
Signatures. | 96 |
PART I
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
(In thousands, except share data) |
(Unaudited) March 31, 2012 |
December 31, 2011 |
(Unaudited) March 31, 2011 |
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Assets |
||||||||||||
Cash and due from banks |
$ | 146,014 | $ | 148,012 | $ | 140,919 | ||||||
Federal funds sold and securities purchased under resale agreements |
14,588 | 21,692 | 33,575 | |||||||||
Interest-bearing deposits with other banks (balance restricted for securitization investors of $529,418 at March 31, 2012, $272,592 at December 31, 2011, and $35,630 at March 31, 2011) |
900,755 | 749,287 | 946,193 | |||||||||
Available-for-sale securities, at fair value |
1,869,344 | 1,291,797 | 1,710,321 | |||||||||
Trading account securities |
1,140 | 2,490 | 2,229 | |||||||||
Federal Home Loan Bank and Federal Reserve Bank stock |
88,216 | 100,434 | 85,144 | |||||||||
Brokerage customer receivables |
31,085 | 27,925 | 25,361 | |||||||||
Mortgage loans held-for-sale, at fair value |
339,600 | 306,838 | 92,151 | |||||||||
Mortgage loans held-for-sale, at lower of cost or market |
10,728 | 13,686 | 2,335 | |||||||||
Loans, net of unearned income, excluding covered loans |
10,717,384 | 10,521,377 | 9,561,802 | |||||||||
Covered loans |
691,220 | 651,368 | 431,299 | |||||||||
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Total loans |
11,408,604 | 11,172,745 | 9,993,101 | |||||||||
Less: Allowance for loan losses |
111,023 | 110,381 | 115,049 | |||||||||
Less: Allowance for covered loan losses |
17,735 | 12,977 | 4,844 | |||||||||
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Net loans (balance restricted for securitization investors of $156,132 at March 31, 2012, $411,532 at December 31, 2011, and $647,793 at March 31, 2011) |
11,279,846 | 11,049,387 | 9,873,208 | |||||||||
Premises and equipment, net |
434,700 | 431,512 | 369,785 | |||||||||
FDIC indemnification asset |
263,212 | 344,251 | 124,785 | |||||||||
Accrued interest receivable and other assets |
463,394 | 444,912 | 394,292 | |||||||||
Trade date securities receivable |
| 634,047 | | |||||||||
Goodwill |
307,295 | 305,468 | 281,940 | |||||||||
Other intangible assets |
22,101 | 22,070 | 12,056 | |||||||||
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Total assets |
$ | 16,172,018 | $ | 15,893,808 | $ | 14,094,294 | ||||||
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Liabilities and Shareholders Equity |
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Deposits: |
||||||||||||
Non-interest bearing |
$ | 1,901,753 | $ | 1,785,433 | $ | 1,279,256 | ||||||
Interest bearing |
10,764,100 | 10,521,834 | 9,635,913 | |||||||||
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Total deposits |
12,665,853 | 12,307,267 | 10,915,169 | |||||||||
Notes payable |
52,639 | 52,822 | 1,000 | |||||||||
Federal Home Loan Bank advances |
466,391 | 474,481 | 423,500 | |||||||||
Other borrowings |
411,037 | 443,753 | 250,032 | |||||||||
Secured borrowings - owed to securitization investors |
428,000 | 600,000 | 600,000 | |||||||||
Subordinated notes |
35,000 | 35,000 | 50,000 | |||||||||
Junior subordinated debentures |
249,493 | 249,493 | 249,493 | |||||||||
Trade date securities payable |
| 47 | 10,000 | |||||||||
Accrued interest payable and other liabilities |
175,684 | 187,412 | 141,847 | |||||||||
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Total liabilities |
14,484,097 | 14,350,275 | 12,641,041 | |||||||||
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Shareholders Equity: |
||||||||||||
Preferred stock, no par value; 20,000,000 shares authorized: |
||||||||||||
Series A - $1,000 liquidation value; 50,000 shares issued and outstanding at March 31, 2012, December 31, 2011 and March 31, 2011 |
49,802 | 49,768 | 49,672 | |||||||||
Series C - $1,000 liquidation value; 126,500 shares issued and outstanding at March 31, 2012, and no shares issued and outstanding at December 31, 2011 and March 31, 2011 |
126,500 | | | |||||||||
Common stock, no par value; $1.00 stated value; 60,000,000 shares authorized; 36,521,562 shares issued at March 31, 2012, 35,981,950 shares issued at December 31, 2011, and 34,947,251 shares issued at March 31, 2011 |
36,522 | 35,982 | 34,947 | |||||||||
Surplus |
1,008,326 | 1,001,316 | 967,587 | |||||||||
Treasury stock, at cost, 232,182 shares at March 31, 2012, 3,601 shares at December 31, 2011, and 1,069 shares at March 31, 2011 |
(6,559 | ) | (112 | ) | (74 | ) | ||||||
Retained earnings |
478,160 | 459,457 | 404,580 | |||||||||
Accumulated other comprehensive loss |
(4,830 | ) | (2,878 | ) | (3,459 | ) | ||||||
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Total shareholders equity |
1,687,921 | 1,543,533 | 1,453,253 | |||||||||
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Total liabilities and shareholders equity |
$ | 16,172,018 | $ | 15,893,808 | $ | 14,094,294 | ||||||
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See accompanying notes to unaudited consolidated financial statements.
1
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended March 31, |
||||||||
(In thousands, except per share data) |
2012 | 2011 | ||||||
Interest income |
||||||||
Interest and fees on loans |
$ | 143,555 | $ | 136,543 | ||||
Interest bearing deposits with banks |
248 | 936 | ||||||
Federal funds sold and securities purchased under resale agreements |
12 | 32 | ||||||
Securities |
11,847 | 9,540 | ||||||
Trading account securities |
9 | 13 | ||||||
Federal Home Loan Bank and Federal Reserve Bank stock |
604 | 550 | ||||||
Brokerage customer receivables |
211 | 166 | ||||||
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Total interest income |
156,486 | 147,780 | ||||||
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Interest expense |
||||||||
Interest on deposits |
18,030 | 23,956 | ||||||
Interest on Federal Home Loan Bank advances |
3,584 | 3,958 | ||||||
Interest on notes payable and other borrowings |
3,102 | 2,630 | ||||||
Interest on secured borrowings - owed to securitization investors |
2,549 | 3,040 | ||||||
Interest on subordinated notes |
169 | 212 | ||||||
Interest on junior subordinated debentures |
3,157 | 4,370 | ||||||
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Total interest expense |
30,591 | 38,166 | ||||||
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Net interest income |
125,895 | 109,614 | ||||||
Provision for credit losses |
17,400 | 25,344 | ||||||
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Net interest income after provision for credit losses |
108,495 | 84,270 | ||||||
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Non-interest income |
||||||||
Wealth management |
12,401 | 10,236 | ||||||
Mortgage banking |
18,534 | 11,631 | ||||||
Service charges on deposit accounts |
4,208 | 3,311 | ||||||
Gains on available-for-sale securities, net |
816 | 106 | ||||||
Gain on bargain purchases |
840 | 9,838 | ||||||
Trading gains (losses) |
146 | (440 | ) | |||||
Other |
10,078 | 6,205 | ||||||
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Total non-interest income |
47,023 | 40,887 | ||||||
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Non-interest expense |
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Salaries and employee benefits |
69,030 | 56,099 | ||||||
Equipment |
5,400 | 4,264 | ||||||
Occupancy, net |
8,062 | 6,505 | ||||||
Data processing |
3,618 | 3,523 | ||||||
Advertising and marketing |
2,006 | 1,614 | ||||||
Professional fees |
3,604 | 3,546 | ||||||
Amortization of other intangible assets |
1,049 | 689 | ||||||
FDIC insurance |
3,357 | 4,518 | ||||||
OREO expenses, net |
7,178 | 5,808 | ||||||
Other |
14,455 | 11,543 | ||||||
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Total non-interest expense |
117,759 | 98,109 | ||||||
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Income before taxes |
37,759 | 27,048 | ||||||
Income tax expense |
14,549 | 10,646 | ||||||
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Net income |
$ | 23,210 | $ | 16,402 | ||||
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Preferred stock dividends and discount accretion |
$ | 1,246 | $ | 1,031 | ||||
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Net income applicable to common shares |
$ | 21,964 | $ | 15,371 | ||||
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Net income per common share - Basic |
$ | 0.61 | $ | 0.44 | ||||
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Net income per common share - Diluted |
$ | 0.50 | $ | 0.36 | ||||
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Cash dividends declared per common share |
$ | 0.09 | $ | 0.09 | ||||
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Weighted average common shares outstanding |
36,207 | 34,928 | ||||||
Dilutive potential common shares |
7,530 | 7,794 | ||||||
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Average common shares and dilutive common shares |
43,737 | 42,722 | ||||||
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See accompanying notes to unaudited consolidated financial statements.
2
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
Three Months Ended March 31, |
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(In thousands) |
2012 | 2011 | ||||||
Net income |
$ | 23,210 | $ | 16,402 | ||||
Unrealized gains (losses) on securities |
||||||||
Before tax |
(3,219 | ) | 1,370 | |||||
Tax effect |
1,276 | (558 | ) | |||||
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Net of tax |
(1,943 | ) | 812 | |||||
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Reclassification of net gains included in net income |
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Before tax |
816 | 106 | ||||||
Tax effect |
(327 | ) | (43 | ) | ||||
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Net of tax |
489 | 63 | ||||||
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Net unrealized gains (losses) on securities |
(2,432 | ) | 749 | |||||
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Unrealized gains on derivative instruments |
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Before tax |
796 | 2,121 | ||||||
Tax effect |
(316 | ) | (817 | ) | ||||
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Net of tax |
480 | 1,304 | ||||||
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Total other comprehensive income (loss) |
(1,952 | ) | 2,053 | |||||
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Comprehensive income |
$ | 21,258 | $ | 18,455 | ||||
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See accompanying notes to unaudited consolidated financial statements.
3
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY (UNAUDITED)
(In thousands) |
Preferred stock |
Common stock |
Surplus | Treasury stock |
Retained earnings |
Accumulated other comprehensive income (loss) |
Total shareholders equity |
|||||||||||||||||||||
Balance at December 31, 2010 |
$ | 49,640 | $ | 34,864 | $ | 965,203 | $ | | $ | 392,354 | $ | (5,512 | ) | $ | 1,436,549 | |||||||||||||
Net income |
| | | | 16,402 | | 16,402 | |||||||||||||||||||||
Other comprehensive income, net of tax |
| | | | | 2,053 | 2,053 | |||||||||||||||||||||
Cash dividends declared on common stock |
| | | | (3,145 | ) | | (3,145 | ) | |||||||||||||||||||
Dividends on preferred stock |
| | | | (999 | ) | | (999 | ) | |||||||||||||||||||
Accretion on preferred stock |
32 | | | | (32 | ) | | | ||||||||||||||||||||
Common stock repurchases |
| | | (74 | ) | | | (74 | ) | |||||||||||||||||||
Stock-based compensation |
| | 1,094 | | | | 1,094 | |||||||||||||||||||||
Common stock issued for: |
||||||||||||||||||||||||||||
Exercise of stock options and warrants |
| 33 | 546 | | | | 579 | |||||||||||||||||||||
Restricted stock awards |
| 12 | (16 | ) | | | | (4 | ) | |||||||||||||||||||
Employee stock purchase plan |
| 13 | 423 | | | | 436 | |||||||||||||||||||||
Director compensation plan |
| 25 | 337 | | | | 362 | |||||||||||||||||||||
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Balance at March 31, 2011 |
$ | 49,672 | $ | 34,947 | $ | 967,587 | $ | (74 | ) | $ | 404,580 | $ | (3,459 | ) | $ | 1,453,253 | ||||||||||||
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Balance at December 31, 2011 |
$ | 49,768 | $ | 35,982 | $ | 1,001,316 | $ | (112 | ) | $ | 459,457 | $ | (2,878 | ) | $ | 1,543,533 | ||||||||||||
Net income |
| | | | 23,210 | | 23,210 | |||||||||||||||||||||
Other comprehensive income, net of tax |
| | | | | (1,952 | ) | (1,952 | ) | |||||||||||||||||||
Cash dividends declared on common stock |
| | | | (3,261 | ) | | (3,261 | ) | |||||||||||||||||||
Dividends on preferred stock |
| | | | (1,212 | ) | | (1,212 | ) | |||||||||||||||||||
Accretion on preferred stock |
34 | | | | (34 | ) | | | ||||||||||||||||||||
Stock-based compensation |
| | 2,289 | | | | 2,289 | |||||||||||||||||||||
Issuance of Series C preferred stock |
126,500 | | (3,810 | ) | | | | 122,690 | ||||||||||||||||||||
Common stock issued for: |
||||||||||||||||||||||||||||
Exercise of stock options and warrants |
| 407 | 7,822 | (5,592 | ) | | | 2,637 | ||||||||||||||||||||
Restricted stock awards |
| 94 | (94 | ) | (855 | ) | | | (855 | ) | ||||||||||||||||||
Employee stock purchase plan |
| 17 | 465 | | | | 482 | |||||||||||||||||||||
Director compensation plan |
| 22 | 338 | | | | 360 | |||||||||||||||||||||
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Balance at March 31, 2012 |
$ | 176,302 | $ | 36,522 | $ | 1,008,326 | $ | (6,559 | ) | $ | 478,160 | $ | (4,830 | ) | $ | 1,687,921 | ||||||||||||
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See accompanying notes to unaudited consolidated financial statements.
4
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended March 31, |
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(In thousands) |
2012 | 2011 | ||||||
Operating Activities: |
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Net income |
$ | 23,210 | $ | 16,402 | ||||
Adjustments to reconcile net income to net cash provided by operating activities |
||||||||
Provision for credit losses |
17,400 | 25,344 | ||||||
Depreciation and amortization |
5,627 | 5,551 | ||||||
Stock-based compensation expense |
2,289 | 1,094 | ||||||
Tax benefit from stock-based compensation arrangements |
12 | 235 | ||||||
Excess tax benefits from stock-based compensation arrangements |
(643 | ) | (194 | ) | ||||
Net (accretion) amortization of (discount) premium on securities |
(2,092 | ) | 4,176 | |||||
Mortgage servicing rights fair value change and amortization, net |
(514 | ) | (140 | ) | ||||
Originations and purchases of mortgage loans held-for-sale |
(714,655 | ) | (562,088 | ) | ||||
Proceeds from sales of mortgage loans held-for-sale |
699,315 | 843,209 | ||||||
Bank owned life insurance income, net of claims |
(919 | ) | (876 | ) | ||||
Decrease in trading securities, net |
1,350 | 2,650 | ||||||
Net increase in brokerage customer receivables |
(3,160 | ) | (812 | ) | ||||
Gains on mortgage loans sold |
(14,464 | ) | (4,160 | ) | ||||
Gains on available-for-sale securities, net |
(816 | ) | (106 | ) | ||||
Gain on bargain purchases |
(840 | ) | (9,838 | ) | ||||
Debt defeasance costs |
848 | | ||||||
Loss on sales of premises and equipment, net |
12 | | ||||||
Decrease in accrued interest receivable and other assets, net |
107,929 | 47,043 | ||||||
Decrease in accrued interest payable and other liabilities, net |
(11,689 | ) | (16,406 | ) | ||||
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Net Cash Provided by Operating Activities |
108,200 | 351,084 | ||||||
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Investing Activities: |
||||||||
Proceeds from maturities of available-for-sale securities |
280,110 | 284,469 | ||||||
Proceeds from sales of available-for-sale securities |
737,369 | 50,142 | ||||||
Purchases of available-for-sale securities |
(952,853 | ) | (541,199 | ) | ||||
Net cash received for acquisitions |
8,191 | 21,371 | ||||||
Net increase in interest-bearing deposits with banks |
(151,033 | ) | (56,222 | ) | ||||
Net (increase) decrease in loans |
(206,246 | ) | 17,691 | |||||
Purchases of premises and equipment, net |
(8,501 | ) | (10,557 | ) | ||||
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Net Cash Used for Investing Activities |
(292,963 | ) | (234,305 | ) | ||||
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Financing Activities: |
||||||||
Increase (decrease) in deposit accounts |
269,326 | (100,938 | ) | |||||
Decrease in other borrowings, net |
(34,141 | ) | (10,808 | ) | ||||
Decrease in Federal Home Loan Bank advances, net |
(8,000 | ) | | |||||
Excess tax benefits from stock-based compensation arrangements |
643 | 194 | ||||||
Net proceeds from issuance of preferred stock |
122,690 | | ||||||
Debt defeasance |
(172,848 | ) | | |||||
Issuance of common shares resulting from exercise of stock options, employee stock purchase plan and conversion of common stock warrants |
8,699 | 905 | ||||||
Common stock repurchases |
(6,447 | ) | (74 | ) | ||||
Dividends paid |
(4,261 | ) | (4,144 | ) | ||||
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Net Cash Provided by (Used for) Financing Activities |
175,661 | (114,865 | ) | |||||
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Net (Decrease) Increase in Cash and Cash Equivalents |
(9,102 | ) | 1,914 | |||||
Cash and Cash Equivalents at Beginning of Period |
169,704 | 172,580 | ||||||
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Cash and Cash Equivalents at End of Period |
$ | 160,602 | $ | 174,494 | ||||
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See accompanying notes to unaudited consolidated financial statements.
5
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The consolidated financial statements of Wintrust Financial Corporation and Subsidiaries (Wintrust or the Company) presented herein are unaudited, but in the opinion of management reflect all necessary adjustments of a normal or recurring nature for a fair presentation of results as of the dates and for the periods covered by the consolidated financial statements.
The accompanying consolidated financial statements are unaudited and do not include information or footnotes necessary for a complete presentation of financial condition, results of operations or cash flows in accordance with U.S. generally accepted accounting principles. The consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Companys Annual Report on Form 10-K for the year ended December 31, 2011 (2011 Form 10-K). Operating results reported for the three-month period are not necessarily indicative of the results which may be expected for the entire year. Reclassifications of certain prior period amounts have been made to conform to the current period presentation.
The preparation of the financial statements requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities. Management believes that the estimates made are reasonable, however, changes in estimates may be required if economic or other conditions develop differently from managements expectations. Certain policies and accounting principles inherently have a greater reliance on the use of estimates, assumptions and judgments and as such have a greater possibility of producing results that could be materially different than originally reported. Management views critical accounting policies to be those which are highly dependent on subjective or complex judgments, estimates and assumptions, and where changes in those estimates and assumptions could have a significant impact on the financial statements. Management currently views the determination of the allowance for loan losses, allowance for covered loan losses and the allowance for losses on lending-related commitments, loans acquired with evidence of credit quality deterioration since origination, estimations of fair value, the valuations required for impairment testing of goodwill, the valuation and accounting for derivative instruments and income taxes as the accounting areas that require the most subjective and complex judgments, and as such could be the most subject to revision as new information becomes available. Descriptions of our significant accounting policies are included in Note 1 Summary of Significant Accounting Policies of the Companys 2011 Form 10-K.
(2) Recent Accounting Developments
Goodwill Impairment Testing
In September 2011, the FASB issued ASU No. 2011-08, Intangibles Goodwill and Other (Topic 350): Testing Goodwill for Impairment, which presents a qualitative approach to test goodwill for impairment. This ASU provides entities the option to assess qualitative factors to determine if impairment of goodwill exists. If examination of the qualitative factors yields a determination that it is not more likely than not that impairment exists, then it is not necessary for the Company to perform the two-step impairment test. This guidance is effective for fiscal periods beginning after December 15, 2011. As such, the Company will consider this guidance in conjunction with its goodwill impairment testing in 2012. Adoption of this guidance did not have a material impact on the Companys consolidated financial statements.
Presentation of Comprehensive Income
In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income, which amends the presentation formats permitted for reporting other comprehensive income. This ASU no longer allows other comprehensive income to be presented as part of the statement of changes in shareholders equity. Entities must present other comprehensive income and its components in a single statement along with net income or in a separate, consecutive statement of other comprehensive income. This guidance is effective for fiscal and interim periods beginning after December 15, 2011. However, in December 2011, the FASB issued ASU No. 2011-12 Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05 which deferred the ASU No. 2011-05 provision requiring companies to present reclassification adjustments for each component of other comprehensive income in both net income and other comprehensive income on the face of the financial statements. This deferral does not change the requirement to present items of net income, other comprehensive income and total comprehensive income in either a continuous statement or consecutive statements as of the effective date noted above. The Company adopted ASU No. 2011-05 in the first quarter of 2012 and is including separate consolidated statements of comprehensive income in accordance with the above guidance.
Amended Guidance for Fair Value Measurement and Disclosure
In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurements (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS, which amends the language used to describe U.S. GAAP requirements for measuring fair value and for disclosing information about fair value measurements. The amended language
6
seeks to clarify the application of existing guidance as well as change the measurement and disclosure of a few specific items. The principles changed include measurement of financial instruments that are managed within a portfolio and application of premiums and discounts in fair value measurement. The new guidance will also require additional disclosures including expanded disclosures for measurements categorized within level three of the fair value hierarchy, disclosures for nonfinancial assets at fair value and disclosure displaying the fair value hierarchy by level for items in the statement of financial position that are not measured at fair value but for which a fair value is required to be disclosed. The guidance is effective during interim and annual periods beginning after December 15, 2011. The Company adopted this guidance in the first quarter of 2012 and is including additional disclosures to address the topics presented within this ASU. See Footnote 15 - Fair Value of Assets and Liabilities for the additional disclosures.
Changes to the Effective Control Assessment in Accounting for Transfers
In April 2011, the FASB issued ASU No. 2011-03, Transfers and Servicing (Topic 860): Reconsideration of Effective Control for Repurchase Agreements, which amends the criteria used to determine when an entity may or may not recognize a sale upon the transfer of financial assets subject to repurchase agreements. The changes presented in this ASU are intended to improve the accounting for these transactions by removing the criterion requiring the transferor to have the ability to repurchase or redeem the transferred financial assets from the assessment of effective control. The guidance in this update is effective for the first interim or annual period beginning on or after December 15, 2011 and should be applied prospectively. The adoption of this guidance in the first quarter of 2012 did not have a material impact on the Companys consolidated financial statements.
(3) Business Combinations
FDIC-Assisted Transactions
Since April 2010, the Company has acquired the banking operations, including the acquisition of certain assets and the assumption of liabilities, of seven financial institutions in FDIC-assisted transactions.
The following table presents details related to these transactions:
(Dollars in thousands) |
Lincoln Park |
Wheatland | Ravenswood | Community First Bank - Chicago |
The Bank of Commerce |
First Chicago |
Charter National |
|||||||||||||||||||||
Date of acquisition |
|
April 23, 2010 |
|
|
April 23, 2010 |
|
|
August 6, 2010 |
|
|
February 4, 2011 |
|
|
March 25, 2011 |
|
|
July 8, 2011 |
|
|
February 10, 2012 |
| |||||||
Fair value of assets acquired, at the acquisition date |
$ | 157,078 | $ | 343,870 | $ | 173,919 | $ | 50,891 | $ | 173,986 | $ | 768,873 | $ | 92,409 | ||||||||||||||
Fair value of loans acquired, at the acquisition date |
103,420 | 175,277 | 97,956 | 27,332 | 77,887 | 330,203 | 45,555 | |||||||||||||||||||||
Fair value of liabilities assumed, at the acquisition date |
192,018 | 415,560 | 122,943 | 49,779 | 168,472 | 741,508 | 91,570 |
Loans comprise the majority of the assets acquired in these transactions, most of which are subject to loss sharing agreements with the FDIC whereby the FDIC has agreed to reimburse the Company for 80% of losses incurred on the purchased loans, other real estate owned (OREO), and certain other assets. Additionally, the loss share agreements with the FDIC require the Company to reimburse the FDIC in the event that actual losses on covered assets are lower than the original loss estimates agreed upon with the FDIC with respect of such assets in the loss share agreements. The Company refers to the loans subject to these loss-sharing agreements as covered loans and uses the term covered assets to refer to covered loans, covered OREO and certain other covered assets. On February 10, 2012, the Company announced that its wholly-owned subsidiary bank, Barrington Bank, acquired certain assets and liabilities and the banking operations of Charter National Bank and Trust (Charter National) in an FDIC-assisted transaction. At the acquisition date, the Company estimated the fair value of the reimbursable losses to be approximately $13.2 million. In 2011, the Company estimated the fair value of the reimbursable losses to be approximately $273.3 million for the First Chicago Bank & Trust (First Chicago) acquisition, $48.9 million for The Bank of Commerce (TBOC) acquisition and $6.7 million for the Community First Bank-Chicago (CFBC) acquisition, at their respective acquisition dates. For the three acquisitions subject to loss share agreements in 2010, the Company estimated the fair value of the reimbursable losses to be approximately $44.0 million for the Ravenswood Bank (Ravenswood) acquisition, and $113.8 million for the Lincoln Park Savings Bank (Lincoln Park) and Wheatland Bank (Wheatland) acquisitions. The agreements with the FDIC require that the Company follow certain servicing procedures or risk losing the FDIC reimbursement of covered asset losses.
The loans covered by the loss sharing agreements are classified and presented as covered loans and the estimated reimbursable losses are recorded as an FDIC indemnification asset in the Consolidated Statements of Condition. The Company recorded the acquired assets and liabilities at their estimated fair values at the acquisition date. The fair value for loans reflected expected credit losses at the acquisition date. Therefore, the Company will only recognize a provision for credit losses and charge-offs on the acquired loans for any further credit deterioration. See Note 7 Allowance for Loan Losses, Allowance for Losses on Lending-Related Commitments and Impaired Loans for further discussion of the allowance on covered loans. The Charter National acquisition resulted in bargain purchase gain of approximately $840,000. The 2011 transactions resulted in bargain purchase gains of a total of $38.0 million, including $27.4 million for First Chicago, $8.6 million for TBOC and $2.0 million for CFBC, and are shown as a component of non-
7
interest income on the Companys Consolidated Statements of Income. In 2010, FDIC-assisted transactions resulted in bargain purchase gains of a total of $33.3 million, including $6.8 million for Ravenswood, $22.3 million for Wheatland, and $4.2 million for Lincoln Park.
As stated above, in conjunction with FDIC-assisted transactions, the Company entered into loss share agreements with the FDIC. These agreements cover realized losses on loans, foreclosed real estate and certain other assets. These loss share assets are measured separately from the loan portfolios because they are not contractually embedded in the loans and are not transferable with the loans should the Company choose to dispose of them. Fair values at the acquisition dates were estimated based on projected cash flows available for loss-share based on the credit adjustments estimated for each loan pool and the loss share percentages. The loss share assets are also separately measured from the related loans and foreclosed real estate and recorded as FDIC indemnification assets on the Consolidated Statements of Condition. Subsequent to the acquisition date, reimbursements received from the FDIC for actual incurred losses will reduce the FDIC indemnification assets. Reductions to expected losses, to the extent such reductions to expected losses are the result of an improvement to the actual or expected cash flows from the covered assets, will also reduce the FDIC indemnification assets. Although these assets are contractual receivables from the FDIC, there are no contractual interest rates. Additions to expected losses will require an increase to the allowance for loan losses and a corresponding increase to the FDIC indemnification assets. The corresponding accretion is recorded as a component of non-interest income on the Consolidated Statements of Income.
The following table summarizes the activity in the Companys FDIC indemnification asset during the periods indicated:
Three Months Ended | ||||||||
(Dollars in thousands) |
March 31, 2012 |
March 31, 2011 |
||||||
Balance at beginning of period |
$ | 344,251 | $ | 118,182 | ||||
Additions |
20,028 | 51,159 | ||||||
Accretion |
(1,576 | ) | 359 | |||||
Changes in expected reimbursements from the FDIC for changes in expected credit losses |
(17,213 | ) | (9,406 | ) | ||||
Payments received from the FDIC |
(82,278 | ) | (35,509 | ) | ||||
|
|
|
|
|||||
Balance at end of period |
$ | 263,212 | $ | 124,785 | ||||
|
|
|
|
Other Bank Acquisitions 2011
On September 30, 2011, the Company acquired Elgin State Bancorp, Inc. (ESBI). ESBI was the parent company of Elgin State Bank, which operated three banking locations in Elgin, Illinois. As part of this transaction, Elgin State Bank was merged into the Companys wholly-owned subsidiary bank, St. Charles Bank & Trust Company (St. Charles). St. Charles acquired assets with a fair value of approximately $263.2 million, including $146.7 million of loans, and assumed liabilities with a fair value of approximately $248.4 million, including $241.1 million of deposits. Additionally, the Company recorded goodwill of $5.0 million on the acquisition.
Wealth Management Acquisitions
On March 30, 2012, the Companys wholly-owned subsidiary, The Chicago Trust Company, N.A. (CTC), completed its previously announced acquisition of the trust operations of Suburban Bank & Trust Company (Suburban). Through this transaction, CTC acquired trust accounts having assets under administration of approximately $160 million, in addition to land trust accounts. The Company recorded goodwill of $1.8 million on the acquisition. Certain purchase price allocations for the trust operations of Suburban are preliminary. The final allocation is not expected to result in material changes.
On July 1, 2011, the Company acquired Great Lakes Advisors, Inc. (Great Lakes Advisors), a Chicago-based investment manager with approximately $2.4 billion in assets under management. The Company acquired assets with a fair value of approximately $26.0 million and assumed liabilities with a fair value of approximately $8.8 million. The Company recorded goodwill of $15.7 million on the acquisition.
Mortgage Banking Acquisitions
On April 13, 2011, the Company acquired certain assets and assumed certain liabilities of the mortgage banking business of River City Mortgage, LLC (River City) of Bloomington, Minnesota. Licensed to originate loans in five states, and with offices in Minnesota, Nebraska and North Dakota, River City originated nearly $500 million in mortgage loans in 2010.
On February 3, 2011, the Company acquired certain assets and assumed certain liabilities of the mortgage banking business of Woodfield Planning Corporation (Woodfield) of Rolling Meadows, Illinois. With offices in Rolling Meadows, Illinois and Crystal Lake, Illinois, Woodfield originated approximately $180 million in mortgage loans in 2010.
8
Purchased loans with evidence of credit quality deterioration since origination
Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date. Expected future cash flows at the purchase date in excess of the fair value of loans are recorded as interest income over the life of the loans if the timing and amount of the future cash flows is reasonably estimable (accretable yield). The difference between contractually required payments and the cash flows expected to be collected at acquisition is referred to as the non-accretable difference and represents probable losses in the portfolio.
In determining the acquisition date fair value of purchased impaired loans, and in subsequent accounting, the Company aggregates these purchased loans into pools of loans by common risk characteristics, such as credit risk rating and loan type. Subsequent to the purchase date, increases in cash flows over those expected at the purchase date are recognized as interest income prospectively. Subsequent decreases to the expected cash flows will generally result in a provision for loan losses.
The Company purchased a portfolio of life insurance premium finance receivables in 2009. These purchased life insurance premium finance receivables are valued on an individual basis with the accretable component being recognized into interest income using the effective yield method over the estimated remaining life of the loans. The non-accretable portion is evaluated each quarter and if the loans credit related conditions improve, a portion is transferred to the accretable component and accreted over future periods. In the event a specific loan prepays in whole, any remaining accretable and non-accretable discount is recognized in income immediately. If credit related conditions deteriorate, an allowance related to these loans will be established as part of the provision for credit losses.
See Note 6 Loans, for more information on loans acquired with evidence of credit quality deterioration since origination.
(4) Cash and Cash Equivalents
For purposes of the Consolidated Statements of Cash Flows, the Company considers cash and cash equivalents to include cash on hand, cash items in the process of collection, non-interest bearing amounts due from correspondent banks, federal funds sold and securities purchased under resale agreements with original maturities of three months or less.
9
(5) Available-for-sale Securities
The following tables are a summary of the available-for-sale securities portfolio as of the dates shown:
March 31, 2012 | ||||||||||||||||
(Dollars in thousands) |
Amortized Cost |
Gross unrealized gains |
Gross unrealized losses |
Fair Value |
||||||||||||
U.S. Treasury |
$ | 23,063 | $ | 128 | $ | (2 | ) | $ | 23,189 | |||||||
U.S. Government agencies |
682,847 | 4,082 | (4,149 | ) | 682,780 | |||||||||||
Municipal |
67,970 | 1,963 | (18 | ) | 69,915 | |||||||||||
Corporate notes and other: |
||||||||||||||||
Financial issuers |
148,492 | 2,569 | (9,044 | ) | 142,017 | |||||||||||
Other |
26,475 | 329 | (5 | ) | 26,799 | |||||||||||
Mortgage-backed: (1) |
||||||||||||||||
Agency |
846,380 | 11,866 | (806 | ) | 857,440 | |||||||||||
Non-agency CMOs |
28,423 | 286 | (1 | ) | 28,708 | |||||||||||
Other equity securities |
42,664 | 111 | (4,279 | ) | 38,496 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total available-for-sale securities |
$ | 1,866,314 | $ | 21,334 | $ | (18,304 | ) | $ | 1,869,344 | |||||||
|
|
|
|
|
|
|
|
December 31, 2011 | ||||||||||||||||
(Dollars in thousands) |
Amortized Cost |
Gross unrealized gains |
Gross unrealized losses |
Fair Value |
||||||||||||
U.S. Treasury |
$ | 16,028 | $ | 145 | $ | | $ | 16,173 | ||||||||
U.S. Government agencies |
760,533 | 5,596 | (213 | ) | 765,916 | |||||||||||
Municipal |
57,962 | 2,159 | (23 | ) | 60,098 | |||||||||||
Corporate notes and other: |
||||||||||||||||
Financial issuers |
149,229 | 1,914 | (8,499 | ) | 142,644 | |||||||||||
Other |
27,070 | 287 | (65 | ) | 27,292 | |||||||||||
Mortgage-backed: (1) |
||||||||||||||||
Agency |
206,549 | 12,078 | (15 | ) | 218,612 | |||||||||||
Non-agency CMOs |
29,767 | 175 | (3 | ) | 29,939 | |||||||||||
Other equity securities |
37,595 | 48 | (6,520 | ) | 31,123 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total available-for-sale securities |
$ | 1,284,733 | $ | 22,402 | $ | (15,338 | ) | $ | 1,291,797 | |||||||
|
|
|
|
|
|
|
|
(1) | Consisting entirely of residential mortgage-backed securities, none of which are subprime. |
The following table presents the portion of the Companys available-for-sale securities portfolio which has gross unrealized losses, reflecting the length of time that individual securities have been in a continuous unrealized loss position at March 31, 2012:
Continuous unrealized losses existing for less than 12 months |
Continuous unrealized losses existing for greater than 12 months |
Total | ||||||||||||||||||||||
(Dollars in thousands) |
Fair value |
Unrealized losses |
Fair value |
Unrealized losses |
Fair value |
Unrealized losses |
||||||||||||||||||
U.S. Treasury |
$ | 1,998 | $ | (2 | ) | $ | | $ | | $ | 1,998 | $ | (2 | ) | ||||||||||
U.S. Government agencies |
349,222 | (4,149 | ) | | | 349,222 | (4,149 | ) | ||||||||||||||||
Municipal |
6,249 | (18 | ) | | | 6,249 | (18 | ) | ||||||||||||||||
Corporate notes and other: |
||||||||||||||||||||||||
Financial issuers |
48,590 | (4,654 | ) | 51,556 | (4,390 | ) | 100,146 | (9,044 | ) | |||||||||||||||
Other |
1,085 | (5 | ) | | | 1,085 | (5 | ) | ||||||||||||||||
Mortgage-backed: |
||||||||||||||||||||||||
Agency |
657,358 | (806 | ) | | | 657,358 | (806 | ) | ||||||||||||||||
Non-agency CMOs |
907 | (1 | ) | | | 907 | (1 | ) | ||||||||||||||||
Other equity securities |
26,121 | (4,279 | ) | | | 26,121 | (4,279 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total |
$ | 1,091,530 | $ | (13,914 | ) | $ | 51,556 | $ | (4,390 | ) | $ | 1,143,086 | $ | (18,304 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
10
The Company conducts a regular assessment of its investment securities to determine whether securities are other-than-temporarily impaired considering, among other factors, the nature of the securities, credit ratings or financial condition of the issuer, the extent and duration of the unrealized loss, expected cash flows, market conditions and the Companys ability to hold the securities through the anticipated recovery period.
The Company does not consider securities with unrealized losses at March 31, 2012 to be other-than-temporarily impaired. The Company does not intend to sell these investments and it is more likely than not that the Company will not be required to sell these investments before recovery of the amortized cost bases, which may be the maturity dates of the securities. The unrealized losses within each category have occurred as a result of changes in interest rates, market spreads and market conditions subsequent to purchase. Securities with continuous unrealized losses existing for more than twelve months were primarily corporate securities of financial issuers. The corporate securities of financial issuers in this category were comprised of four fixed-to-floating rate bonds and three trust-preferred securities, all of which continue to be considered investment grade. Additionally, a review of the issuers indicated that they each have strong capital ratios.
The following table provides information as to the amount of gross gains and gross losses realized and proceeds received through the sales of available-for-sale investment securities:
Three Months Ended March 31, | ||||||||
(Dollars in thousands) |
2012 | 2011 | ||||||
Realized gains |
$ | 828 | $ | 106 | ||||
Realized losses |
(12 | ) | | |||||
|
|
|
|
|||||
Net realized gains |
$ | 816 | $ | 106 | ||||
Other than temporary impairment charges |
| | ||||||
|
|
|
|
|||||
Gains on available- for-sale securities, net |
$ | 816 | $ | 106 | ||||
|
|
|
|
|||||
Proceeds from sales of available-for-sale securities |
$ | 737,369 | $ | 50,142 | ||||
|
|
|
|
The amortized cost and fair value of securities as of March 31, 2012 and December 31, 2011, by contractual maturity, are shown in the following table. Contractual maturities may differ from actual maturities as borrowers may have the right to call or repay obligations with or without call or prepayment penalties. Mortgage-backed securities are not included in the maturity categories in the following maturity summary as actual maturities may differ from contractual maturities because the underlying mortgages may be called or prepaid without penalties:
March 31, 2012 | December 31, 2011 | |||||||||||||||
(Dollars in thousands) |
Amortized Cost |
Fair Value |
Amortized Cost |
Fair Value |
||||||||||||
Due in one year or less |
$ | 79,980 | $ | 80,351 | $ | 121,400 | $ | 121,662 | ||||||||
Due in one to five years |
496,724 | 494,391 | 532,828 | 530,632 | ||||||||||||
Due in five to ten years |
106,545 | 105,856 | 95,279 | 95,508 | ||||||||||||
Due after ten years |
265,598 | 264,102 | 261,315 | 264,321 | ||||||||||||
Mortgage-backed |
874,803 | 886,148 | 236,316 | 248,551 | ||||||||||||
Other equity securities |
42,664 | 38,496 | 37,595 | 31,123 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total available-for-sale securities |
$ | 1,866,314 | $ | 1,869,344 | $ | 1,284,733 | $ | 1,291,797 | ||||||||
|
|
|
|
|
|
|
|
At March 31, 2012 and December 31, 2011, securities having a carrying value of $1.1 billion, which include securities traded but not yet settled, were pledged as collateral for public deposits, trust deposits, FHLB advances, securities sold under repurchase agreements and derivatives. At March 31, 2012, there were no securities of a single issuer, other than U.S. Government-sponsored agency securities, which exceeded 10% of shareholders equity.
11
(6) Loans
The following table shows the Companys loan portfolio by category as of the dates shown:
March 31, | December 31, | March 31, | ||||||||||
(Dollars in thousands) |
2012 | 2011 | 2011 | |||||||||
Balance: |
||||||||||||
Commercial |
$ | 2,544,456 | $ | 2,498,313 | $ | 1,937,561 | ||||||
Commercial real-estate |
3,585,760 | 3,514,261 | 3,356,562 | |||||||||
Home equity |
840,364 | 862,345 | 891,332 | |||||||||
Residential real-estate |
361,327 | 350,289 | 344,909 | |||||||||
Premium finance receivables - commercial |
1,512,630 | 1,412,454 | 1,337,851 | |||||||||
Premium finance receivables - life insurance |
1,693,763 | 1,695,225 | 1,539,521 | |||||||||
Indirect consumer |
67,445 | 64,545 | 52,379 | |||||||||
Consumer and other |
111,639 | 123,945 | 101,687 | |||||||||
|
|
|
|
|
|
|||||||
Total loans, net of unearned income, excluding covered loans |
$ | 10,717,384 | $ | 10,521,377 | $ | 9,561,802 | ||||||
Covered loans |
691,220 | 651,368 | 431,299 | |||||||||
|
|
|
|
|
|
|||||||
Total loans |
$ | 11,408,604 | $ | 11,172,745 | $ | 9,993,101 | ||||||
|
|
|
|
|
|
|||||||
Mix: |
||||||||||||
Commercial |
22 | % | 22 | % | 19 | % | ||||||
Commercial real-estate |
32 | 31 | 34 | |||||||||
Home equity |
7 | 8 | 9 | |||||||||
Residential real-estate |
3 | 3 | 4 | |||||||||
Premium finance receivables - commercial |
13 | 13 | 13 | |||||||||
Premium finance receivables - life insurance |
15 | 15 | 15 | |||||||||
Indirect consumer |
1 | 1 | 1 | |||||||||
Consumer and other |
1 | 1 | 1 | |||||||||
|
|
|
|
|
|
|||||||
Total loans, net of unearned income, excluding covered loans |
94 | % | 94 | % | 96 | % | ||||||
Covered loans |
6 | 6 | 4 | |||||||||
|
|
|
|
|
|
|||||||
Total loans |
100 | % | 100 | % | 100 | % | ||||||
|
|
|
|
|
|
Certain premium finance receivables are recorded net of unearned income. The unearned income portions of such premium finance receivables were $36.8 million at March 31, 2012, and $34.6 million at December 31, 2011 and at March 31, 2011, respectively. Certain life insurance premium finance receivables attributable to the life insurance premium finance loan acquisition in 2009 as well as the covered loans acquired in the FDIC-assisted acquisitions starting in 2010 are recorded net of credit discounts. See Acquired Loan Information at Acquisition below.
Indirect consumer loans include auto, boat and other indirect consumer loans. Total loans, excluding loans acquired with evidence of credit quality deterioration since origination, include net deferred loan fees and costs and fair value purchase accounting adjustments totaling $12.6 million at March 31, 2012, $12.8 million at December 31, 2011 and $11.5 million at March 31, 2011.
The Companys loan portfolio is generally comprised of loans to consumers and small to medium-sized businesses located within the geographic market areas that the Company serves. The premium finance receivables portfolios are made to customers on a national basis and the majority of the indirect consumer loans were generated through a network of local automobile dealers. As a result, the Company strives to maintain a loan portfolio that is diverse in terms of loan type, industry, borrower and geographic concentrations. Such diversification reduces the exposure to economic downturns that may occur in different segments of the economy or in different industries.
It is the policy of the Company to review each prospective credit in order to determine the appropriateness and, when required, the adequacy of security or collateral necessary to obtain when making a loan. The type of collateral, when required, will vary from liquid assets to real estate. The Company seeks to ensure access to collateral, in the event of default, through adherence to state lending laws and the Companys credit monitoring procedures.
Acquired Loan Information at Acquisition Loans with evidence of credit quality deterioration since origination
As part of our acquisition of a portfolio of life insurance premium finance loans in 2009 as well as the bank acquisitions starting in 2010, we acquired loans for which there was evidence of credit quality deterioration since origination and we determined that it was probable that the Company would be unable to collect all contractually required principal and interest payments.
12
The following table presents the unpaid principal balance and carrying value for loans acquired with evidence of credit quality deterioration since origination:
March 31, 2012 | December 31, 2011 | |||||||||||||||
(Dollars in thousands) |
Unpaid Principal Balance |
Carrying Value |
Unpaid Principal Balance |
Carrying Value |
||||||||||||
Bank acquisitions |
849,194 | 622,859 | 866,874 | 596,946 | ||||||||||||
Life insurance premium finance loans acquisition |
590,152 | 560,404 | 632,878 | 598,463 |
For loans acquired with evidence of credit quality deterioration since origination as a result of acquisitions during the three months ended March 31, 2012, the following table provides estimated details on these loans at the date of acquisition:
(Dollars in thousands) |
Charter National |
|||
Contractually required payments including interest |
$ | 40,475 | ||
Less: Nonaccretable difference |
11,855 | |||
|
|
|||
Cash flows expected to be collected (1) |
28,620 | |||
Less: Accretable yield |
2,288 | |||
|
|
|||
Fair value of loans acquired with evidence of credit quality deterioration since origination |
$ | 26,332 | ||
|
|
(1) | Represents undiscounted expected principal and interest cash flows at acquisition. |
See Note 7 Allowance for Loan Losses, Allowance for Losses on Lending-Related Commitments and Impaired Loans for further discussion regarding the allowance for loan losses associated with loans acquired with evidence of credit quality deterioration since origination at March 31, 2012.
Accretable Yield Activity
Changes in expected cash flows may vary from period to period as the Company periodically updates its cash flow model assumptions for loans acquired with evidence of credit quality deterioration since origination. The factors that most significantly affect the estimates of gross cash flows expected to be collected, and accordingly the accretable yield, include changes in the benchmark interest rate indices for variable-rate products and changes in prepayment assumptions. The following table provides activity for the accretable yield of loans acquired with evidence of credit quality deterioration since origination:
Three Months Ended March 31, 2012 |
Three Months Ended March 31, 2011 |
|||||||||||||||
(Dollars in thousands) |
Bank Acquisitions |
Life Insurance Premium Finance Loans |
Bank Acquisitions |
Life Insurance Premium Finance Loans |
||||||||||||
Accretable yield, beginning balance |
$ | 173,120 | $ | 18,861 | $ | 39,809 | $ | 33,315 | ||||||||
Acquisitions |
2,288 | | 7,107 | | ||||||||||||
Accretable yield amortized to interest income |
(14,892 | ) | (3,737 | ) | (7,072 | ) | (9,052 | ) | ||||||||
Accretable yield amortized to indemnification asset (1) |
(21,377 | ) | (7,087 | ) | | |||||||||||
Reclassification from non-accretable difference (2) |
41,601 | | 48,844 | 184 | ||||||||||||
Increases in interest cash flows due to payments and changes in interest rates |
1,482 | 724 | 9,731 | 1,096 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Accretable yield, ending balance |
$ | 182,222 | $ | 15,848 | $ | 91,332 | $ | 25,543 | ||||||||
|
|
|
|
|
|
|
|
(1) | Represents the portion of the current period accreted yield, resulting from lower expected losses, applied to reduce the loss share indemnification asset. |
(2) | Reclassification is the result of subsequent increases in expected principal cash flows. |
13
(7) Allowance for Loan Losses, Allowance for Losses on Lending-Related Commitments and Impaired Loans
The tables below show the aging of the Companys loan portfolio at March 31, 2012, December 31, 2011 and March 31, 2011:
As of March 31, 2012 (Dollars in thousands) |
Nonaccrual | 90+ days and still accruing |
60-89 days past due |
30-59 days past due |
Current | Total Loans | ||||||||||||||||||
Loan Balances: |
||||||||||||||||||||||||
Commercial |
||||||||||||||||||||||||
Commercial and industrial |
$ | 17,392 | $ | | $ | 9,210 | $ | 24,634 | $ | 1,454,783 | $ | 1,506,019 | ||||||||||||
Franchise |
1,792 | | | 100 | 167,385 | 169,277 | ||||||||||||||||||
Mortgage warehouse lines of credit |
| | | | 136,438 | 136,438 | ||||||||||||||||||
Community Advantage - homeowners association |
| | | | 75,786 | 75,786 | ||||||||||||||||||
Aircraft |
260 | | 428 | 1,189 | 18,014 | 19,891 | ||||||||||||||||||
Asset-based lending |
391 | | 926 | 970 | 472,524 | 474,811 | ||||||||||||||||||
Municipal |
| | | | 76,885 | 76,885 | ||||||||||||||||||
Leases |
| | | 11 | 77,660 | 77,671 | ||||||||||||||||||
Other |
| | | | 1,733 | 1,733 | ||||||||||||||||||
Purchased non-covered commercial (1) |
| 424 | 1,063 | | 4,458 | 5,945 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total commercial |
19,835 | 424 | 11,627 | 26,904 | 2,485,666 | 2,544,456 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Commercial real-estate: |
||||||||||||||||||||||||
Residential construction |
1,807 | | | 4,469 | 49,835 | 56,111 | ||||||||||||||||||
Commercial construction |
2,389 | | 3,100 | | 159,230 | 164,719 | ||||||||||||||||||
Land |
25,306 | | 6,606 | 6,833 | 145,297 | 184,042 | ||||||||||||||||||
Office |
8,534 | | 4,310 | 5,471 | 542,393 | 560,708 | ||||||||||||||||||
Industrial |
1,864 | | 6,683 | 10,101 | 572,255 | 590,903 | ||||||||||||||||||
Retail |
7,323 | 73 | | 8,797 | 511,884 | 528,077 | ||||||||||||||||||
Multi-family |
3,708 | | 1,496 | 4,691 | 315,043 | 324,938 | ||||||||||||||||||
Mixed use and other |
11,773 | | 17,745 | 30,689 | 1,063,733 | 1,123,940 | ||||||||||||||||||
Purchased non-covered commercial real-estate (1) |
| 2,959 | 301 | 1,601 | 47,461 | 52,322 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total commercial real-estate |
62,704 | 3,032 | 40,241 | 72,652 | 3,407,131 | 3,585,760 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Home equity |
12,881 | | 2,049 | 6,576 | 818,858 | 840,364 | ||||||||||||||||||
Residential real estate |
5,329 | | 453 | 13,530 | 341,358 | 360,670 | ||||||||||||||||||
Purchased non-covered residential real estate (1) |
| | | | 657 | 657 | ||||||||||||||||||
Premium finance receivables |
||||||||||||||||||||||||
Commercial insurance loans |
7,650 | 4,619 | 3,360 | 17,612 | 1,479,389 | 1,512,630 | ||||||||||||||||||
Life insurance loans |
| | | 389 | 1,132,970 | 1,133,359 | ||||||||||||||||||
Purchased life insurance loans (1) |
| | | | 560,404 | 560,404 | ||||||||||||||||||
Indirect consumer |
152 | 257 | 53 | 317 | 66,666 | 67,445 | ||||||||||||||||||
Consumer and other |
121 | | 20 | 1,601 | 109,723 | 111,465 | ||||||||||||||||||
Purchased non-covered consumer and other (1) |
| | | | 174 | 174 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total loans, net of unearned income, excluding covered loans |
$ | 108,672 | $ | 8,332 | $ | 57,803 | $ | 139,581 | $ | 10,402,996 | $ | 10,717,384 | ||||||||||||
Covered loans |
| 182,011 | 20,254 | 28,249 | 460,706 | 691,220 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total loans, net of unearned income |
$ | 108,672 | $ | 190,343 | $ | 78,057 | $ | 167,830 | $ | 10,863,702 | $ | 11,408,604 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Purchased 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. |
14
As of December 31, 2011 (Dollars in thousands) |
Nonaccrual | 90+ days and still accruing |
60-89 days past due |
30-59 days past due |
Current | Total Loans | ||||||||||||||||||
Loan Balances: |
||||||||||||||||||||||||
Commercial |
||||||||||||||||||||||||
Commercial and industrial |
$ | 16,154 | $ | | $ | 7,496 | $ | 15,797 | $ | 1,411,004 | $ | 1,450,451 | ||||||||||||
Franchise |
1,792 | | | | 140,983 | 142,775 | ||||||||||||||||||
Mortgage warehouse lines of credit |
| | | | 180,450 | 180,450 | ||||||||||||||||||
Community Advantage - homeowners association |
| | | | 77,504 | 77,504 | ||||||||||||||||||
Aircraft |
| | 709 | 170 | 19,518 | 20,397 | ||||||||||||||||||
Asset-based lending |
1,072 | | 749 | 11,026 | 452,890 | 465,737 | ||||||||||||||||||
Municipal |
| | | | 78,319 | 78,319 | ||||||||||||||||||
Leases |
| | | 431 | 71,703 | 72,134 | ||||||||||||||||||
Other |
| | | | 2,125 | 2,125 | ||||||||||||||||||
Purchased non-covered commercial (1) |
| 589 | 74 | | 7,758 | 8,421 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total commercial |
19,018 | 589 | 9,028 | 27,424 | 2,442,254 | 2,498,313 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Commercial real-estate |
||||||||||||||||||||||||
Residential construction |
1,993 | | 4,982 | 1,721 | 57,115 | 65,811 | ||||||||||||||||||
Commercial construction |
2,158 | | | 150 | 167,568 | 169,876 | ||||||||||||||||||
Land |
31,547 | | 4,100 | 6,772 | 136,112 | 178,531 | ||||||||||||||||||
Office |
10,614 | | 2,622 | 930 | 540,280 | 554,446 | ||||||||||||||||||
Industrial |
2,002 | | 508 | 4,863 | 548,429 | 555,802 | ||||||||||||||||||
Retail |
5,366 | | 5,268 | 8,651 | 517,444 | 536,729 | ||||||||||||||||||
Multi-family |
4,736 | | 3,880 | 347 | 305,594 | 314,557 | ||||||||||||||||||
Mixed use and other |
8,092 | | 7,163 | 20,814 | 1,050,585 | 1,086,654 | ||||||||||||||||||
Purchased non-covered commercial real-estate (1) |
| 2,198 | | 252 | 49,405 | 51,855 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total commercial real-estate |
66,508 | 2,198 | 28,523 | 44,500 | 3,372,532 | 3,514,261 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Home equity |
14,164 | | 1,351 | 3,262 | 843,568 | 862,345 | ||||||||||||||||||
Residential real estate |
6,619 | | 2,343 | 3,112 | 337,522 | 349,596 | ||||||||||||||||||
Purchased non-covered residential real estate (1) |
| | | | 693 | 693 | ||||||||||||||||||
Premium finance receivables |
||||||||||||||||||||||||
Commercial insurance loans |
7,755 | 5,281 | 3,850 | 13,787 | 1,381,781 | 1,412,454 | ||||||||||||||||||
Life insurance loans |
54 | | | 423 | 1,096,285 | 1,096,762 | ||||||||||||||||||
Purchased life insurance loans (1) |
| | | | 598,463 | 598,463 | ||||||||||||||||||
Indirect consumer |
138 | 314 | 113 | 551 | 63,429 | 64,545 | ||||||||||||||||||
Consumer and other |
233 | | 170 | 1,070 | 122,393 | 123,866 | ||||||||||||||||||
Purchased non-covered consumer and other (1) |
| | | 2 | 77 | 79 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total loans, net of unearned income, excluding covered loans |
$ | 114,489 | $ | 8,382 | $ | 45,378 | $ | 94,131 | $ | 10,258,997 | $ | 10,521,377 | ||||||||||||
Covered loans |
| 174,727 | 25,507 | 24,799 | 426,335 | 651,368 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total loans, net of unearned income |
$ | 114,489 | $ | 183,109 | $ | 70,885 | $ | 118,930 | $ | 10,685,332 | $ | 11,172,745 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Purchased 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. |
15
As of March 31, 2011 (Dollars in thousands) |
Nonaccrual | 90+ days and still accruing |
60-89 days past due |
30-59 days past due |
Current | Total Loans | ||||||||||||||||||
Loan Balances: |
||||||||||||||||||||||||
Commercial |
||||||||||||||||||||||||
Commercial and industrial |
$ | 24,277 | $ | 150 | $ | 3,233 | $ | 9,201 | $ | 1,240,796 | $ | 1,277,657 | ||||||||||||
Franchise |
1,792 | | | | 112,584 | 114,376 | ||||||||||||||||||
Mortgage warehouse lines of credit |
| | | | 33,482 | 33,482 | ||||||||||||||||||
Community Advantage - homeowners association |
| | | | 75,948 | 75,948 | ||||||||||||||||||
Aircraft |
74 | | | | 22,243 | 22,317 | ||||||||||||||||||
Asset-based lending |
| | 216 | 2,355 | 299,328 | 301,899 | ||||||||||||||||||
Municipal |
| | | | 60,376 | 60,376 | ||||||||||||||||||
Leases |
14 | | | 88 | 51,404 | 51,506 | ||||||||||||||||||
Other |
| | | | | | ||||||||||||||||||
Purchased non-covered commercial (1) |
| | | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total commercial |
26,157 | 150 | 3,449 | 11,644 | 1,896,161 | 1,937,561 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Commercial real-estate |
||||||||||||||||||||||||
Residential construction |
7,891 | | 1,057 | 3,587 | 78,832 | 91,367 | ||||||||||||||||||
Commercial construction |
1,396 | 692 | 2,469 | 680 | 116,311 | 121,548 | ||||||||||||||||||
Land |
26,974 | | 7,366 | 12,455 | 183,419 | 230,214 | ||||||||||||||||||
Office |
17,945 | | 1,705 | 3,059 | 534,558 | 557,267 | ||||||||||||||||||
Industrial |
1,251 | 524 | 1,672 | 8,499 | 483,690 | 495,636 | ||||||||||||||||||
Retail |
12,824 | | 4,994 | 5,810 | 499,486 | 523,114 | ||||||||||||||||||
Multi-family |
5,968 | | 1,107 | 5,059 | 281,729 | 293,863 | ||||||||||||||||||
Mixed use and other |
19,752 | 781 | 7,187 | 19,835 | 995,998 | 1,043,553 | ||||||||||||||||||
Purchased non-covered commercial real-estate (1) |
| | | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total commercial real-estate |
94,001 | 1,997 | 27,557 | 58,984 | 3,174,023 | 3,356,562 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Home equity |
11,184 | | 3,366 | 6,603 | 870,179 | 891,332 | ||||||||||||||||||
Residential real estate |
4,909 | | 918 | 5,174 | 333,908 | 344,909 | ||||||||||||||||||
Purchased non-covered residential real estate (1) |
| | | | | | ||||||||||||||||||
Premium finance receivables |
||||||||||||||||||||||||
Commercial insurance loans |
9,550 | 6,319 | 4,433 | 14,428 | 1,303,121 | 1,337,851 | ||||||||||||||||||
Life insurance loans |
342 | | 1,130 | 5,580 | 857,393 | 864,445 | ||||||||||||||||||
Purchased life insurance loans (1) |
| | | | 675,076 | 675,076 | ||||||||||||||||||
Indirect consumer |
320 | 310 | 182 | 657 | 50,910 | 52,379 | ||||||||||||||||||
Consumer and other |
147 | 1 | 185 | 394 | 100,960 | 101,687 | ||||||||||||||||||
Purchased non-covered consumer and other (1) |
| | | | | | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total loans, net of unearned income, excluding covered loans |
$ | 146,610 | $ | 8,777 | $ | 41,220 | $ | 103,464 | $ | 9,261,731 | $ | 9,561,802 | ||||||||||||
Covered loans |
| 116,298 | 5,288 | 24,855 | 284,858 | 431,299 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total loans, net of unearned income |
$ | 146,610 | $ | 125,075 | $ | 46,508 | $ | 128,319 | $ | 9,546,589 | $ | 9,993,101 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Purchased 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. |
Our ability to manage credit risk depends in large part on our ability to properly identify and manage problem loans. To do so, we operate a credit risk rating system under which our credit management personnel assign a credit risk rating (1 to 10 rating) to each loan at the time of origination and review loans on a regular basis.
Each loan officer is responsible for monitoring his or her loan portfolio, recommending a credit risk rating for each loan in his or her portfolio and ensuring the credit risk ratings are appropriate. These credit risk ratings are then ratified by the banks chief credit officer and/or concurrence credit officer. Credit risk ratings are determined by evaluating a number of factors including: a borrowers financial strength, cash flow coverage, collateral protection and guarantees.
The Companys Problem Loan Reporting system automatically includes all loans with credit risk ratings of 6 through 9. This system is designed to provide an on-going detailed tracking mechanism for each problem loan. Once management determines that a loan has deteriorated to a point where it has a credit risk rating of 6 or worse, the Companys Managed Asset Division performs an overall credit and collateral review. As part of this review, all underlying collateral is identified and the valuation methodology is analyzed and tracked. As a result of this initial review by the Companys Managed Asset Division, the credit risk rating is reviewed and a
16
portion of the outstanding loan balance may be deemed uncollectible or an impairment reserve may be established. The Companys impairment analysis utilizes an independent re-appraisal of the collateral (unless such a third-party evaluation is not possible due to the unique nature of the collateral, such as a closely-held business or thinly traded securities). In the case of commercial real estate collateral, an independent third party appraisal is ordered by the Companys Real Estate Services Group to determine if there has been any change in the underlying collateral value. These independent appraisals are reviewed by the Real Estate Services Group and sometimes by independent third party valuation experts and may be adjusted depending upon market conditions.
Through the credit risk rating process, loans are reviewed to determine if they are performing in accordance with the original contractual terms. If the borrower has failed to comply with the original contractual terms, further action may be required by the Company, including a downgrade in the credit risk rating, movement to non-accrual status, a charge-off or the establishment of a specific impairment reserve. If we determine that a loan amount, or portion thereof, is uncollectible, the loans credit risk rating is immediately downgraded to an 8 or 9 and the uncollectible amount is charged-off. Any loan that has a partial charge-off continues to be assigned a credit risk rating of an 8 or 9 for the duration of time that a balance remains outstanding. The Company undertakes a thorough and ongoing analysis to determine if additional impairment and/or charge-offs are appropriate and to begin a workout plan for the credit to minimize actual losses.
If, based on current information and events, it is probable that the Company will be unable to collect all amounts due to it according to the contractual terms of the loan agreement, a specific impairment reserve is established. In determining the appropriate charge-off for collateral-dependent loans, the Company considers the results of appraisals for the associated collateral.
Non-performing loans include all non-accrual loans (8 and 9 risk ratings) as well as loans 90 days past due and still accruing interest, excluding loans acquired with evidence of credit quality deterioration since origination. The remainder of the portfolio not classified as non-performing are considered performing under the contractual terms of the loan agreement. The following table presents the recorded investment based on performance of loans by class, excluding covered loans, per the most recent analysis at March 31, 2012, December 31, 2011, and March 31, 2011:
Performing | Non-performing | Total | ||||||||||||||||||||||||||||||||||
(Dollars in thousands) |
March 31, 2012 |
December 31, 2011 |
March 31, 2011 |
March 31, 2012 |
December 31, 2011 |
March 31, 2011 |
March 31, 2012 |
December 31, 2011 |
March 31, 2011 |
|||||||||||||||||||||||||||
Loan Balances: |
||||||||||||||||||||||||||||||||||||
Commercial |
||||||||||||||||||||||||||||||||||||
Commercial and industrial |
$ | 1,488,627 | $ | 1,434,297 | $ | 1,253,230 | $ | 17,392 | $ | 16,154 | $ | 24,427 | $ | 1,506,019 | $ | 1,450,451 | $ | 1,277,657 | ||||||||||||||||||
Franchise |
167,485 | 140,983 | 112,584 | 1,792 | 1,792 | 1,792 | 169,277 | 142,775 | 114,376 | |||||||||||||||||||||||||||
Mortgage warehouse lines of credit |
136,438 | 180,450 | 33,482 | | | | 136,438 | 180,450 | 33,482 | |||||||||||||||||||||||||||
Community Advantage - homeowners association |
75,786 | 77,504 | 75,948 | | | | 75,786 | 77,504 | 75,948 | |||||||||||||||||||||||||||
Aircraft |
19,631 | 20,397 | 22,243 | 260 | | 74 | 19,891 | 20,397 | 22,317 | |||||||||||||||||||||||||||
Asset-based lending |
474,420 | 464,665 | 301,899 | 391 | 1,072 | | 474,811 | 465,737 | 301,899 | |||||||||||||||||||||||||||
Municipal |
76,885 | 78,319 | 60,376 | | | | 76,885 | 78,319 | 60,376 | |||||||||||||||||||||||||||
Leases |
77,671 | 72,134 | 51,492 | | | 14 | 77,671 | 72,134 | 51,506 | |||||||||||||||||||||||||||
Other |
1,733 | 2,125 | | | | | 1,733 | 2,125 | | |||||||||||||||||||||||||||
Purchased non-covered commercial (1) |
5,945 | 8,421 | | | | | 5,945 | 8,421 | | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Total commercial |
2,524,621 | 2,479,295 | 1,911,254 | 19,835 | 19,018 | 26,307 | 2,544,456 | 2,498,313 | 1,937,561 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Commercial real-estate |
||||||||||||||||||||||||||||||||||||
Residential construction |
54,304 | 63,818 | 83,476 | 1,807 | 1,993 | 7,891 | 56,111 | 65,811 | 91,367 | |||||||||||||||||||||||||||
Commercial construction |
162,330 | 167,718 | 119,460 | 2,389 | 2,158 | 2,088 | 164,719 | 169,876 | 121,548 | |||||||||||||||||||||||||||
Land |
158,736 | 146,984 | 203,240 | 25,306 | 31,547 | 26,974 | 184,042 | 178,531 | 230,214 | |||||||||||||||||||||||||||
Office |
552,174 | 543,832 | 539,322 | 8,534 | 10,614 | 17,945 | 560,708 | 554,446 | 557,267 | |||||||||||||||||||||||||||
Industrial |
589,039 | 553,800 | 493,861 | 1,864 | 2,002 | 1,775 | 590,903 | 555,802 | 495,636 | |||||||||||||||||||||||||||
Retail |
520,681 | 531,363 | 510,290 | 7,396 | 5,366 | 12,824 | 528,077 | 536,729 | 523,114 | |||||||||||||||||||||||||||
Multi-family |
321,230 | 309,821 | 287,895 | 3,708 | 4,736 | 5,968 | 324,938 | 314,557 | 293,863 | |||||||||||||||||||||||||||
Mixed use and other |
1,112,167 | 1,078,562 | 1,023,020 | 11,773 | 8,092 | 20,533 | 1,123,940 | 1,086,654 | 1,043,553 | |||||||||||||||||||||||||||
Purchased non-covered commercial real-estate (1) |
52,322 | 51,855 | | | | | 52,322 | 51,855 | | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total commercial real-estate |
3,522,983 | 3,447,753 | 3,260,564 | 62,777 | 66,508 | 95,998 | 3,585,760 | 3,514,261 | 3,356,562 | |||||||||||||||||||||||||||
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Home equity |
827,483 | 848,181 | 880,148 | 12,881 | 14,164 | 11,184 | 840,364 | 862,345 | 891,332 | |||||||||||||||||||||||||||
Residential real estate |
355,341 | 342,977 | 340,000 | 5,329 | 6,619 | 4,909 | 360,670 | 349,596 | 344,909 | |||||||||||||||||||||||||||
Purchased non-covered residential real estate (1) |
657 | 693 | | | | | 657 | 693 | | |||||||||||||||||||||||||||
Premium finance receivables |
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Commercial insurance loans |
1,500,361 | 1,399,418 | 1,321,982 | 12,269 | 13,036 | 15,869 | 1,512,630 | 1,412,454 | 1,337,851 | |||||||||||||||||||||||||||
Life insurance loans |
1,133,359 | 1,096,708 | 864,103 | | 54 | 342 | 1,133,359 | 1,096,762 | 864,445 | |||||||||||||||||||||||||||
Purchased life insurance loans (1) |
560,404 | 598,463 | 675,076 | | | | 560,404 | 598,463 | 675,076 | |||||||||||||||||||||||||||
Indirect consumer |
67,036 | 64,093 | 51,749 | 409 | 452 | 630 | 67,445 | 64,545 | 52,379 | |||||||||||||||||||||||||||
Consumer and other |
111,344 | 123,633 | 101,539 | 121 | 233 | 148 | 111,465 | 123,866 | 101,687 | |||||||||||||||||||||||||||
Purchased non-covered consumer and other (1) |
174 | 79 | | | | | 174 | 79 | | |||||||||||||||||||||||||||
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Total loans, net of unearned income, excluding covered loans |
$ | 10,603,763 | $ | 10,401,293 | $ | 9,406,415 | $ | 113,621 | $ | 120,084 | $ | 155,387 | $ | 10,717,384 | $ | 10,521,377 | $ | 9,561,802 | ||||||||||||||||||
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(1) | Purchased loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. |
17
A summary of activity in the allowance for credit losses by loan portfolio (excluding covered loans) for the three months ended March 31, 2012 and 2011 is as follows:
Three Months Ended March 31, 2012 | Total, | |||||||||||||||||||||||||||||||
(Dollars in thousands) |
Commercial | Commercial Real-estate |
Home Equity |
Residential Real-estate |
Premium Finance Receivable |
Indirect Consumer |
Consumer and Other |
Excluding Covered Loans |
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Allowance for credit losses |
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Allowance for loan losses at beginning of period |
$ | 31,237 | $ | 56,405 | $ | 7,712 | $ | 5,028 | $ | 7,214 | $ | 645 | $ | 2,140 | $ | 110,381 | ||||||||||||||||
Other adjustments |
$ | (3 | ) | $ | (222 | ) | $ | 1 | $ | (14 | ) | $ | | $ | | $ | | (238 | ) | |||||||||||||
Reclassification to/from allowance for unfunded lending-related commitments |
45 | 107 | | | | | | 152 | ||||||||||||||||||||||||
Charge-offs |
(3,262 | ) | (8,229 | ) | (2,590 | ) | (175 | ) | (850 | ) | (51 | ) | (310 | ) | (15,467 | ) | ||||||||||||||||
Recoveries |
257 | 131 | 162 | 2 | 298 | 30 | 161 | 1,041 | ||||||||||||||||||||||||
Provision for credit losses |
4,945 | 5,760 | 2,635 | 710 | 1,446 | 19 | (361 | ) | 15,154 | |||||||||||||||||||||||
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Allowance for loan losses at period end |
$ | 33,219 | $ | 53,952 | $ | 7,920 | $ | 5,551 | $ | 8,108 | $ | 643 | $ | 1,630 | $ | 111,023 | ||||||||||||||||
Allowance for unfunded lending-related commitments at period end |
$ | | $ | 13,078 | $ | | $ | | $ | | $ | | $ | | $ | 13,078 | ||||||||||||||||
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Allowance for credit losses at period end |
$ | 33,219 | $ | 67,030 | $ | 7,920 | $ | 5,551 | $ | 8,108 | $ | 643 | $ | 1,630 | $ | 124,101 | ||||||||||||||||
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Individually evaluated for impairment |
3,705 | 25,336 | 3,056 | 1,362 | | 7 | 1 | 33,467 | ||||||||||||||||||||||||
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Collectively evaluated for impairment |
29,514 | 41,694 | 4,864 | 4,189 | 8,108 | 636 | 1,629 | 90,634 | ||||||||||||||||||||||||
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Loans acquired with deteriorated credit quality |
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Loans at period end |
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Individually evaluated for impairment |
$ | 29,158 | $ | 197,221 | $ | 14,495 | $ | 10,791 | $ | | $ | 77 | $ | 221 | $ | 251,963 | ||||||||||||||||
Collectively evaluated for impairment |
2,509,353 | 3,336,217 | 825,869 | 349,879 | 2,645,989 | 67,368 | 111,244 | 9,845,919 | ||||||||||||||||||||||||
Loans acquired with deteriorated credit quality |
5,945 | 52,322 | | 657 | 560,404 | | 174 | 619,502 |
Three Months Ended March 31, 2011 | Total, | |||||||||||||||||||||||||||||||
(Dollars in thousands) |
Commercial | Commercial Real-estate |
Home Equity |
Residential Real-estate |
Premium Finance Receivable |
Indirect Consumer |
Consumer and Other |
Excluding Covered Loans |
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Allowance for credit losses |
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Allowance for loan losses at beginning of period |
$ | 31,777 | $ | 62,618 | $ | 6,213 | $ | 5,107 | $ | 6,319 | $ | 526 | $ | 1,343 | $ | 113,903 | ||||||||||||||||
Reclassification to/from allowance for unfunded lending-related commitments |
| 2,116 | | | | | | 2,116 | ||||||||||||||||||||||||
Charge-offs |
(9,140 | ) | (13,342 | ) | (773 | ) | (1,275 | ) | (1,537 | ) | (120 | ) | (160 | ) | (26,347 | ) | ||||||||||||||||
Recoveries |
266 | 338 | 8 | 2 | 268 | 66 | 53 | 1,001 | ||||||||||||||||||||||||
Provision for credit losses |
5,203 | 14,390 | 1,018 | 1,884 | 1,640 | 85 | 156 | 24,376 | ||||||||||||||||||||||||
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Allowance for loan losses at period end |
$ | 28,106 | $ | 66,120 | $ | 6,466 | $ | 5,718 | $ | 6,690 | $ | 557 | $ | 1,392 | $ | 115,049 | ||||||||||||||||
Allowance for unfunded lending-related commitments at period end |
$ | | $ | 2,018 | $ | | $ | | $ | | $ | | $ | | $ | 2,018 | ||||||||||||||||
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Allowance for credit losses at period end |
$ | 28,106 | $ | 68,138 | $ | 6,466 | $ | 5,718 | $ | 6,690 | $ | 557 | $ | 1,392 | $ | 117,067 | ||||||||||||||||
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&nbs |