Wintrust Financial Corporation · NASDAQ:WTFC
Wintrust Financial — Sterne Agee's 6th Annual Financial Services Symposium 2011
54 slides from Wintrust Financial's conference presentation, Feb 17, 2011
Slide 1: Sterne Agee's 6th Annual Financial Services Symposium
1 Sterne Agee's 6th Annual Financial Services Symposium February 17, 2011 February 17, 2011 February 17, 2011 February 17, 2011
Slide 2: Forward-Looking Information
2 FORWARD-LOOKING INFORMATION During the course of our remarks today, we will make certain predictive statements regarding our plans and strategies and anticipated financial effects to assist you better in understanding our company. These forward looking statements about future results are subject t
Slide 3: Today's Presentation
Today's Presentation Who we are Where we have been-how we got here Where we are going Summary financial results Questions 3
Slide 4: Slide 4
Slide 5: Who We Are
5 Who We Are Nineteen year-old community focused banking organization with approximately $14 billion in assets Fifteen community banks with strong ties to local residents and business leaders in the Chicago and Milwaukee metropolitan markets 9 de novo charters established since 1991 11 bank acquisit
Slide 6: Who We Are - Company Overview
6 Who We Are - Company Overview Community Banking Specialty Finance Wealth Management Fifteen community banks Chicago and Milwaukee metropolitan markets 87 locations Full product suite - home equity, home mortgage, consumer, real estate and commercial loans, safe deposit facilities, ATMs, & internet
Slide 7: Asset Growth - Internal / Acquired
7 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 7 40 Internal Growth 52 83 189 354 471 706 1053 1348 1650 2074 2676 3619 4450 5399 6456 7363 7098 8387 9945 10954 Acquired Growth 29 29 29 103 297 1020 1721 2209 2271 2271 2271 3014 Asset Growth - I
Slide 8: Banking Locations
Banking Locations _ Acquisition __ Internal ae ms | | | esau FIFI EEE ILLS SS SLES LSS
Slide 9: Wintrust Locations
Wintrust Locations Banking Wealth Management Mortgage
Slide 10: Who We Are - Core Strategy
10 Chicago and Milwaukee metropolitan markets Initially focused on high net worth areas. Have since moved into broader market Flexibility to continue to profitably penetrate broader market Downtown Chicago focusing on corporate and commercial customers Positioned as local alternatives to the "Big Ba
Slide 11: Who We Are - Operating Strategy
11 Funding Assets Who We Are - Operating Strategy Loan-to-deposit ratio 85% - 90% Generate ~ two-thirds of loan volume from banks Remaining loan volume from niche businesses First Insurance Funding Tricom Other (including housing associations, franchise lending, mortgage warehouse lending, indirect
Slide 12: Deposit Market Share-Chicago MSA
12 Deposit Market Share-Chicago MSA As of June 30, 2010 and 2009 At June 30, 2009 At June 30, 2010 In-market Deposit In-market Deposit 2010 Deposit Market Deposit Market Rank Bank Holding Company Dollars Share % Dollars Share % JP Morgan Chase & Co. ** $ 45.0 BB 15.8% $49.2 BB 17.4% Bank of America
Slide 13: How We Got Here
How We Got Here 13
Slide 14: Consistent Strategy - Changing Tactics
14 Consistent Strategy - Changing Tactics (1991-2005) (2010-11) (2008) (2009) (2006-07) Organic & Acquisition Growth 7 traditional bank acquisitions since 2003 9 de novo charters since 1991 "Rope - A - Dope" Slowed growth Maintained extremely conservative underwriting Reduced relative cost of funds
Slide 15: Compound Annual Growth Rates Through 2005
15 Compound Annual Growth Rates Through 2005 (Years ended December 31, 2005) 1 year 2 year 3 year 4 year 5 year Revenues 27.6% 26.8 25.0% 31.8% 31.4% Net Income 30.5 32.6 34.0 38.1 43.1 EPS (diluted) 17.5 17.9 19.8 21.3 27.1 Assets 27.4 31.2 30.0 31.9 31.2 Loans 19.9 25.7 26.8 26.8 27.5 Deposits 31.
Slide 16: Storm Clouds and What We Expected
16 Storm Clouds and What We Expected Storm Clouds Gather in 2006 Disadvantageous yield curve Loosened credit standards Credit spreads moved to unacceptable levels Opportunities for those with dry powder Lending opportunities Acquisition opportunities for bruised banks and asset generators Need to be
Slide 17: The Rope-a-Dope Strategy
17 The "Rope-a-Dope" Strategy 2006 Through 3rd Quarter 2008 No change in loan underwriting - do not chase the herd!! Slow growth Shrink larger banks (run-off of CD-only customers) Grow newer banks Reduce relative cost of funds Discipline Mix Get paid for making loans - hand out credit with an eye dr
Slide 18: Rope-a-Dope Timing and TARP
18 Rope-a-Dope Timing and TARP Capital was always key in the timing as to when to move off of our defensive strategy. In the third quarter of 2008 and in anticipation of moving off of our defensive strategy, we raised $50 million of convertible preferred stock through a private placement. This capit
Slide 19: So How Did Wintrust Fare??
19 So How Did Wintrust Fare?? Remained profitable throughout the cycle. We have taken advantage of the many opportunities which are always present in adverse credit cycles Dislocated people Dislocated assets Dislocated banks Core Financial Goals Increase core earnings Move bad assets out
Slide 20: Consolidated Net Income
20 Consolidated Net Income (before Preferred Dividends, in 000s) 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 3Q09-YTD 3Q10-YTD -2236 1497 -973 4846 6245 9427 11155 18439 27875 38118 51334 67016 66493 55653 20488 73069 63329 44902 49125 West 31.6 2606 North 43
Slide 21: Taking Advantage of Dislocations
21 Taking Advantage of Dislocations Dislocated People Dislocated Assets Dislocated Banks FIFC purchased a portfolio of domestic life insurance premium finance loans and certain related assets from indirect wholly-owned subsidiaries of AIG Aggregate balance of approximately $1.03 billion Purchase pri
Slide 22: 2009 Report Card
22 So How Did Wintrust Fare?? - 2009 Report Card So How Did Wintrust Fare?? - 2009 Report Card Positioned to start 2010 with strong earnings and clean balance sheet
Slide 23: 2010 Report Card
23 So How Did Wintrust Fare?? - 2010 Report Card So How Did Wintrust Fare?? - 2010 Report Card WTFC Has Remained Profitable Throughout The Cycle, with 2009 Being A Record Year For Earnings
Slide 24: Annual Core Pre-tax Earnings
24 Annual "Core Pre-tax Earnings" (in 000s) (* - Annualized) "Core Pre-tax Earnings" are calculated by removing from reported Pre-tax earnings the following categories: Provision for Credit Losses; OREO Related Costs; Mortgage Recourse Obligations on Loans Previously Sold; Bargain Purchase Gains; Tr
Slide 25: Loan Growth
LOAN GROWTH (excluding Loans Held for Sale) 25 (in millions) 5 year CAGR = 13.8%
Slide 26: Non-Performing Asset Ratio Wintrust vs. Peer Group
26 Non-Performing Asset Ratio Wintrust vs. Peer Group 2003 2004 2005 2006 2007 2008 2009 Wintrust 0.0051 0.0029 0.0034 0.0039 0.0081 0.0158 0.0174 Peer 0.0058 0.0045 0.0042 0.0043 0.008 0.0194 0.03 Peer Group Data is per the Federal Reserve's Bank Holding Company Performance Report
Slide 27: Net Charge-offs Ratio Wintrust vs. Peer Group
27 Net Charge-offs Ratio Wintrust vs. Peer Group 2003 2004 2005 2006 2007 2008 2009 Wintrust 0.0018 0.0007 0.001 0.0009 0.0016 0.0051 0.0165 Peer Group 0.0033 0.0021 0.0018 0.0015 0.0027 0.011 0.0228 Peer Group Data is per the Federal Reserve's Bank Holding Company Performance Report
Slide 28: 2010 Capital Activity
28 2010 Capital Activity Enhance and maintain strong capital ratios 12/31/09 3/31/10 6/30/10 9/30/10 12/31/10 Tier 1 Risk-based capital 11.0% 13.4% 13.0% 12.7% 12.6% Total capital ratio 12.4% 14.9% 14.3% 14.1% 13.9% Leverage ratio 9.3% 10.8% 10.2% 10.0% 10.6% Tangible common equity ratio 4.7% 6.3% 6
Slide 29: Book Value Per Share Growth
29 Financial Overview - Wintrust Has Consistently Grown Book Value Per Share Through Cycles Common Book Value Per Share 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 BV per share 5.65 6.15 7.06 7.92 9.72 13.19 17.43 21.81 26.23 30.38 31.56 33.03 35.27 32.73 TEU at Minumu
Slide 30: Tangible Book Value Per Share Growth
Financial Overview - Wintrust Has Consistently Grown Tangible Book Value Per Share Through Cycles Tangible Common Book Value Per Share $26.66* * Proforma assuming tangible equity units convert at a maximum price of $37.50
Slide 31: Financial Overview - Capital Components
31 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Capital Growth 14583 11291 17227 25366 40487 42620 68790 75205 92947 102276 141278 227002 349837 473912 627911 773346 739555 784699 853815 1387089 Preferred 0 0 0 0 0 0 0 0 0 0 281873 284824 49460
Slide 32: Wintrust Strategy for 2011 and Beyond
Wintrust Strategy for 2011 and Beyond Back to the Future 32
Slide 33: Back to the Future Strategy for 2011 and Beyond
33 Back to the Future Strategy for 2011 and Beyond This cycle isn't over yet so we need to proceed cautiously in all of our endeavors Continue to increase core earnings Continue to expeditiously remove problem assets from the balance sheet Plan is to return to the growth mode experienced in the firs
Slide 34: Expected Core Pre-tax Earnings Improvements
Expected Core Pre-tax Earnings Improvements Subject to market and other conditions, including interest rate environments, and other factors influencing growth, pre-tax, pre-provision earnings could benefit from the following: 4th Quarter 2010 "core pre-tax earnings" run rate of $235 million Tactics:
Slide 35: Organic Growth and Branding
Organic Growth and Branding Organic Growth-going back to pre Rope-A-Dope model Expect each bank to grow $75 million per year Expect each bank to open a branch every two years Seven new branches budgeted for 2011 The Wintrust Brand By design becoming more prevalent and recognized over the last two ye
Slide 36: Growth Strategy - Expansion
36 Penetrate new markets with community banking model Within 11/2 hours of Wintrust headquarters Acquired entities with existing management that wish to continue to grow Acquisitions in specialty finance and wealth management Must complement existing franchise, be a strategic new business line, or a
Slide 37: Why Invest in Wintrust?
Why Invest in Wintrust? Managing well through the cycle-consistently profitable with strong core earnings growth Asset quality position is manageable and better than peer group and should allow us to be first out of this cycle Strong capital position-NO TARP overhang Enviable core deposit franchise
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Slide 39: Supplemental Financial Data
Supplemental Financial Data
Slide 40: Total Assets
40 Total Assets (in millions)
Slide 41: Historical Growth
Historical Growth Banking Sou 874 Facilities ay Operating Subsidiaries
Slide 42: Asset Growth of Banks by Year
42 Asset Growth of Banks by Year 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Lake Forest 8 49 96 143 195 270 380 441 499 581 667 897 1087 1256 1334 1458 1504 1654 1816 2408 Hinsdale 0 23 67 115 167 223 281 350 401 508 642 746 887 980 1401 1270
Slide 43: Net Interest Margin
43 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Net Interst Margin 0.0335 0.0296 0.0291 0.0341 0.0343 0.0354 0.0366 0.0349 0.0334 0.032 0.0317 0.0316 0.031 0.0311 0.0281 0.0301 0.0337 Net Interest Margin (fully taxable equivalent)
Slide 44: Revenue Growth by Quarter
44 Revenue Growth by Quarter (excluding Bargain Purchase Gains recorded in 3Q09 through 4Q10) 1Q97 2Q97 3Q97 4Q97 1Q98 2Q98 3Q98 4Q98 1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2
Slide 45: EPS Growth
45 EPS Growth 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Annual 0.4 0.49 0.73 0.83 1.27 1.6 1.98 2.34 2.75 2.56 2.24 0.76 2.18 1.38 Quarterly 0.07 0.09 0.1 0.13 0.08 0.08 0.17 0.16 0.15 0.18 0.2 0.21 0.23 0.24 0.07 0.29 0.29 0.32 0.33 0.33 0.4 0.37 0.4 0.43 0.45 0.49 0.53
Slide 46: Net Overhead Ratio & Efficiency Ratio
46 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Net Overhead Ratio 0.0357 0.0201 0.0271 0.026 0.0236 0.02 0.0213 0.0159 0.0141 0.0122 0.013 0.0139 0.0154 0.0172 0.016 0.0023 0.014 Efficiency Ratio 0.8603 0.7975 0.6863 0.7233 0.6366 0.6641 0.6352 0.6445 0.6397
Slide 47: Loan Portfolio Composition
47 Loan Portfolio Composition As of December 31, 2010 - $9.9 Billion (excludes loans held for sale) CRE Comm'l Other Comm'l. Niches Premium Finance-Comml Premium Finance-Life Ins. Other Res. Real Estate Home Equity Covered Loans Loan comp 0.34 0.17 0.04 0.13 0.15 0.02 0.03 0.09 0.03 Commercial and I
Slide 48: Ending Loan-to-Deposit/Secured Borrowing Ratio
48 Ending Loan-to-Deposit/Secured Borrowing Ratio* (excludes loans held for sale) 1996 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 BV per share 0.872 0.827 0.851 0.852 0.775 0.826 0.91 0.91 0.848 0.8711 *Includes $600 million of secured borrowing related to the commercial premium finance loan
Slide 49: Non-Performing Assets to Total Assets
49 Non-Performing Assets to Total Assets (NPAs include NPLs and OREO and exclude covered loans) 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Core NPA/TA 0 0.0017 0.0007 0.0016 0.0021 0.0016 0.000676 0.001402 0.0013 0.003 0.0011 0.0019 0.0025 0.0059 0.0138 0.02
Slide 50: Net Charge-offs to Total Average Loans
50 Net Charge-offs to Total Average Loans 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Net Charge-offs/Average Loans 0.0018 0.002 0.0031 0.0031 0.0028 0.0019 0.0024 0.0026 0.0024 0.0018 0.0007 0.001 0.0009 0.0016 0.0051 0.0165 0.0113 Total Loans 194 258 493 71
Slide 51: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This document contains, and the documents into which it may be incorporated by reference may contain, forward-looking statements within the meaning of federal securities laws. Forward-looking information can be identified through the use of words such as "intend," "plan,"
Slide 52: Forward-Looking Statements (cont.)
52 FORWARD-LOOKING STATEMENTS (cont.) - --negative economic conditions that adversely affect the economy, housing prices, the job market and other factors that may affect the Company's liquidity and the performance of its loan portfolios, particularly in the markets in which it operates; - -- the ex
Slide 53: Forward-Looking Statements (cont.)
53 FORWARD-LOOKING STATEMENTS (cont.) - -- credit downgrades among commercial and life insurance providers that could negatively affect the value of collateral securing the Company's premium finance loans; - -- any negative perception of the Company's reputation or financial strength; - -- the loss
Slide 54: Questions
54 Questions
Wintrust Financial — Sterne Agee's 6th Annual Financial Services Symposium 2011 on 6ix