Wintrust Financial Corporation · NASDAQ:WTFC
Wintrust Financial — Sandler O'Neill & Partners 2009 East Coast Financial Services Conference
56 slides from Wintrust Financial's conference presentation, Nov 12, 2009
Slide 1: Sandler O'Neill 2009 East Coast Financial Services Conference
Sandler O'Neill & Partners, L.P. 2009 East Coast Financial Services Conference November 12, 2009 November 12, 2009 November 12, 2009 November 12, 2009 November 12, 2009
Slide 2: Forward-Looking Information
FORWARD-LOOKING INFORMATION During the course of our remarks today, you will hear us 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 su
Slide 3: Wintrust Financial Corporation Agenda
WINTRUST FINANCIAL C O R P O R A T I O N Questions Who We Are Strategy &Tactics Commercial Initiative Market Share Position Financial Review De Novo Growth and Acquisitions Brands and Locations
Slide 4: Who We Are
Who We Are Seventeen year-old community focused banking organization with approximately $12.1 billion in assets. Fifteen community banks with strong ties to local residents and business leaders in the Chicago and Milwaukee metropolitan markets. 9 charters started since 1991 and 7 bank acquisitions s
Slide 5: Who We Are - Wealth Management and Specialty Finance
Who We Are Significant wealth management operation (Approximately $7 billion in assets under administration) through the 78 year old Wayne Hummer Companies acquired in 2002. Provide brokerage, asset management and trust capabilities to our retail and commercial customer bases. Two commercial finance
Slide 6: Who We Are - Core Strategy
Consistent strategy for eighteen years - though the last three years have required a temporary change in tactics Serve markets in Chicago and Milwaukee areas. Currently operating in the higher net worth areas of those markets. Have taken advantage of consolidation to grow quickly Position ourselves
Slide 7: Wintrust Banking & Wealth Management Locations
Wintrust Banking & Wealth Management Locations
Slide 8: Core Strategy - Operating Tenets
Core Strategy - Operating Tenets Operate at 85% to 90% loan-to-deposit ratio thereby providing for adequate liquidity Generate about two-thirds of loan volume from banks with remaining coming from asset generation niches First Insurance Funding P & C Life Insurance Tricom - Temporary help industry p
Slide 9: Core Strategy - Deposits
Core Strategy - Deposits Philosophy has always been to create and maintain a strong, diversified right hand side of the balance sheet Recent markets have proven the value of that approach Franchise is built on core deposits with approximately 92% of our deposit base being directly generated through
Slide 10: Deposit Market Share-Chicago MSA
Deposit Market Share-Chicago MSA As of June 30, 2009 and 2008 At June 30, 2009 At June 30, 2008 In-market Deposit In-market Deposit Deposit Market Deposit Market Bank Holding Company Dollars Share % Dollars Share % JP Morgan Chase & Co. ** $ 45.0 BB 15.8% $40.6 BB 14.9% Bank of America ** $ 33.2 BB
Slide 11: Strategy - Expansion Philosophy
Focus on community banks in areas not currently served Within 11/2 hours of Wintrust headquarters Includes Chicago suburbs and SE Wisconsin Focus on entities with existing management that wishes to continue to grow the business Consider non-bank acquisitions in the earning asset and wealth managemen
Slide 12: Temporary Change in Tactics
Temporary Change in Tactics The aforementioned philosophy resulted in compound growth rates north of 20% for most of our vital statistics for the first fourteen years of our existence. Then the environment changed and we were forced to temporarily change our tactics.
Slide 13: Banking Environment Caused Temporary Change in Tactics
Banking Environment Caused Temporary Change in Tactics In the first quarter of 2006, we saw a dramatic change in the overall banking environment Disadvantageous yield curve Loosened credit standards Credit spreads moved to unacceptable levels Profitable growth at acceptable risk levels was taken awa
Slide 14: The Perfect Storm - What We Expected
The Perfect Storm What We Expected Increased credit costs Possible liquidity crisis Bank stock multiples to decrease drastically as earnings plummet and the industry moves out of favor Capital raising difficulties Market disarray and dislocation
Slide 15: The Perfect Storm - What We Expected (Opportunities)
The Perfect Storm What We Expected Opportunities for those with dry powder Lending opportunities Acquisition opportunities for bruised banks and asset generators Need to be first out ^ cannot be burdened by a troubled loan portfolio, lack of funding or capital "It's times like this where money retur
Slide 16: Our Response - The Rope-a-Dope Strategy
Our Response - The "Rope-a-Dope" Strategy 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 dropper Control expe
Slide 17: Rope-a-Dope Interim Report Card
Rope-a-Dope Interim Report Card 2008 and 2009 YTD Results Earnings For 2008 the 13 publicly traded bank holding companies in our market area, 5 were profitable and 8 lost money. We were in the 5! YTD 2009, 3 showed profits, one was out of business and 9 lost money. We are in the 3! Net Charge-offs F
Slide 18: Rope-a-Dope Interim Report Card (NPAs)
Rope-a-Dope Interim Report Card 2008 and 2009 YTD Results NPA's At year end 2008, NPA's as a percent of assets for the group stood at 4.74% (3.24% sans Industrial Charter) - Wintrust was 1.58% At 9/30/09, NPA's for the group were 4.57% while Wintrust was at 2.24% Relatively speaking, and knock on wo
Slide 19: Timing and TARP
Timing and TARP Capital was always key in the timing as to when to move off of our defensive strategy. Unwilling to dilute shareholders In the third quarter of last year and in anticipation of this move, we raised $50 million of convertible preferred stock through a private placement. This capital p
Slide 20: Time to Come off the Ropes - But Cautiously
Time to Come off the Ropes- But Cautiously Aided by $300 million of new capital, we began "coming off the ropes" in the 4th quarter 2008. Loans grew $1.3 billion since 12/31/08 (includes loans securitized in the 3rd Quarter) Deposits grew $1.5 billion since 12/31/08 The above growth was accomplished
Slide 21: Time to Come off the Ropes - Pipeline
Time to Come off the Ropes- But Cautiously As anticipated, tremendous market dislocation, competitive disarray, and non-bank de- leveraging are affording numerous opportunities to those with dry powder. Our loan pipeline is strong but we are obviously being more discerning than usual: Commercial rel
Slide 22: Purchase of Life Insurance Premium Finance Loan Portfolio
Purchase of Life Insurance Premium Finance Loan Portfolio On July 28, 2009, First Insurance Funding Corp. entered into an Asset Purchase Agreement with American International Group, Inc. ("AIG"), pursuant to which FIFC purchased a portfolio of domestic life insurance premium finance loans and certai
Slide 23: Characteristics of Purchased Life Insurance Premium Finance Loan Portfolio
Characteristics of Purchased Life Insurance Premium Finance Loan Portfolio Generally used for estate planning purposes of high net worth borrowers Generally collateralized by the cash surrender value of life insurance policies, letters of credit, annuities, cash and marketable securities. Purchased
Slide 24: Purchase of Premium Finance Portfolio - Discount Recognition
Purchase of Life Insurance Premium Finance Loan Portfolio -Discount Recognition Summary of July and October 2009 Purchases (1) $14.5 million of the bargain purchase gain is recognizable in the 4th quarter of 2009 and the remaining unrecognized bargain purchase gain is recognizable subject to the rec
Slide 25: Securitization
Securitization On September 11, 2009 Wintrust's indirect, wholly-owned subsidiary, FIFC Premium Funding I, LLC (the "Issuer"), closed on the sale of $600,000,000 aggregate principal amount of its Series 2009-A Premium Finance Asset Backed Notes, Class A (the "Notes"). The Notes were issued in a secu
Slide 26: Third Quarter Results
Third Quarter Results The Company recorded net income of $32 million ($1.07 per share). YTD net income was $45 million ($1.25 per share) Third quarter results were aided by the bargain purchase gain associated with the life insurance premium finance transaction, the majority of which was offset by c
Slide 27: A Word on Reserve Levels
A Word on Reserve Levels The reserve for credit losses stands at $98 million or 1.19% of loans. Adding credit discounts on purchased assets, reserve coverage equals 1.62% of loans. Company uses a thorough, loan by loan process in building its reserve
Slide 28: Annual Pre-tax Pre-Credit Costs Earnings
Annual "Pre-tax Pre-Credit Costs" Earnings 2000 2001 2002 2003 2004 2005 2006 2007 2008 4TH QTR '08 1ST QTR '09 2ND QTR '09 3RD QTR '09 Pre-tax Pre-Provision Earnings 21503 37029 52816 70343 87185 111626 111298 98703 88082 71296 106412 139104 171844 (in 000s) (Qtrs are Annualized) Amounts exclude "B
Slide 29: Expected Earnings Improvements
Expected Earnings Improvements Pre-Tax Subject to market and other conditions, including interest rate environments, credit loss costs, special FDIC assessments and other factors influencing growth, pre-tax, pre-provision earnings could benefit from the following: Continued Margin Improvement Deposi
Slide 30: Annual Pre-tax Pre-Credit Costs Earnings (Pro Forma)
Annual "Pre-tax Pre-Credit Costs" Earnings 2000 2001 2002 2003 2004 2005 2006 2007 2008 4TH QTR '08 1ST QTR '09 2ND QTR '09 3RD QTR '09 PRO FORMA Pre-tax Pre-Provision Earnings 21503 37029 52816 70343 87185 111626 111298 98703 88082 71296 106412 139104 171844 252000 (in 000s) (Quarters are Annualize
Slide 31: Goals for the Remainder of 2009
Goals for the Remainder of 2009 Continue to concentrate on core earnings Clear the "junk" off the balance sheet Continue to scour the market for dislocated assets Continue to add to management Maintain disciplined core growth Start 2010 with strong core earnings and a relatively clean balance sheet
Slide 32: Summary
Summary Our goal is to take advantage of current market opportunities to increase earnings and continue to build the core franchise. Hopefully this will result in a higher stock price. Retire TARP when it makes sense to do so. Opportunities are abundant.......
Slide 33: Slide 33
Slide 34: Financial Results
Financial Results
Slide 35: Historical Growth
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 3Q09 Bank and Trust Subsidiaries 2 2 3 4 5 6 7 8 9 10 10 14 16 22 23 23 23 22 23 Banking Offices 1 1 3 5 11 14 17 21 24 28 29 31 36 50 62 73 77 79 78 Historical Growth
Slide 36: Banking Locations
Banking Locations 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2Q09 Internal 1 1 3 5 11 14 17 21 24 28 29 31 32 40 45 51 56 58 58 Acquisition 4 10 17 22 21 21 20
Slide 37: Total Assets (in millions)
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 3Q09 Crystal Lake 7 40 Total 52 83 189 354 471 706 1053 1348 1679 2103 2705 3722 4747 6419 8177 9572 9369 10658 12136 Barrington 11 72 105 Libertyville 35 76 124 174 North Shore 44 105 169 266 287 Hinsdale 23 6
Slide 38: Asset Growth - Internal / Acquired
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 3Q09 7 40 Internal Growth 52 83 189 354 471 706 1053 1348 1650 2074 2676 3619 4450 5399 6456 7363 7098 8387 9865 Acquired Growth 29 29 29 103 297 1020 1721 2209 2271 2271 2271 Asset Growth - Internal / Acquired
Slide 39: Asset Growth of Banks by Year
Asset Growth of Banks by Year 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 3Q09 Lake Forest 8 49 96 143 195 270 380 441 499 581 667 897 1087 1256 1334 1458 1504 1654 1846 Hinsdale 0 23 67 115 167 223 281 350 401 508 642 746 887 980 1401 1270 1314 1467 Nor
Slide 40: Consolidated Net Income
Consolidated Net Income (before Preferred Dividends, in 000s) 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 3Q08 3Q09 -2236 1497 -973 4846 6245 9427 11155 18439 27875 38118 51334 67016 66493 55653 20488 18533 44902 West 31.6 2606 North 43.9 YTD
Slide 41: EPS Growth
EPS Growth 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 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 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 0.52 0.54 0.58 0.6 0.62
Slide 42: Revenue Growth by Quarter
Revenue Growth by Quarter (excluding Bargain Purchase Gain in 3Q09) 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 2Q07 3Q07 4Q07 1Q08 2Q08 3Q
Slide 43: Net Interest Margin (fully taxable equivalent)
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 YTD09 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 0.0298 Net Interest Margin (fully taxable equivalent)
Slide 44: Net Overhead Ratio & Efficiency Ratio
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 YTD09 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 0.0025 Efficiency Ratio 0.8603 0.7975 0.6863 0.7233 0.6366 0.6641 0.6352 0.6445 0.6397 0.6696 0.7106
Slide 45: Individual Bank Efficiency Ratios - 2008
LFBT HBT LBT NSCBT BBT NBT SBOTL VBT TOWN CLBT ANB WBT OPTCB BVBT SCB Average Assets 1543379 1241484 973234 956822 804156 688380 608415 592609 589865 571492 363002 336655 187319 186812 124521 Efficiency Ratio 0.4132 0.5978 0.4659 0.7426 0.5828 0.5644 0.6034 0.5515 0.6608 0.5155 0.9799 0.6851 1.6022
Slide 46: Loan Portfolio Composition
Loan Portfolio Composition As of September 30, 2009 - $8.3 Billion (excludes loans held for sale) Comm'l CRE Premium Finance Other Niches Res. Real Estate Home Equity Other Loan comp 0.17 0.41 0.22 0.04 0.04 0.11 0.01 Commercial Premium Finance Res. R/E Home Equity Other Other Niches Commercial Real
Slide 47: Ending Loan-to-Deposit Ratio
Ending Loan-to-Deposit Ratio (excludes loans held for sale) 1996 2001 2002 2003 2004 2005 2006 2007 2008 3Q09 BV per share 0.872 0.827 0.851 0.852 0.775 0.826 0.91 0.91 0.8404
Slide 48: Non-Performing Assets to Total Assets
Non-Performing Assets to Total Assets 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 3Q09 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 0.0218 NPA/TA 0.0001 0.0041 0.0025 0.004 0.0045 0.0041 0.0046 0.004
Slide 49: Net Charge-offs to Total Loans
Net Charge-offs to Total Loans 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 YTD09 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 0.0166 Total Loans 194 258 493 713 992 1278 1558 2061 2
Slide 50: Credit Loss Reserve Analysis
Credit Loss Reserve Analysis Non- Non- Performing Performing Loans, net Loans (%) Community Banking $6,362,044 $202,567 3.18% Indirect Consumer 115,528 1,285 1.11% Premium Finance Rec. 1,797,685 27,807 1.55% Total $8,275,257 $231,659 2.80% $5,229 2003 Calendar Year Net Charge-offs $5,450 9/30/09 Cre
Slide 51: Financial Overview - Capital Components
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 3Q09 Capital Growth 14583 11291 17227 25366 40487 42620 68790 75205 92947 102276 141278 227002 349837 473912 627911 773346 739555 784699 822021 Preferred 0 0 0 0 0 0 0 0 0 0 281873 284061 Trust Pfd 31050 31050
Slide 52: Financial Overview - Common Book Value Per Share
Financial Overview - Common Book Value Per Share 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 3Q09 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 34.1
Slide 53: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements within the meaning of federal securities laws. Forward-looking information in this document can be identified through the use of words such as "may," "will," "intend," "plan," "project," "expect," "anticipate," "should,
Slide 54: Forward-Looking Statements (cont.)
FORWARD-LOOKING STATEMENTS (cont.) Competitive pressures in the financial services business which may affect the pricing of the Company's loan and deposit products as well as its services (including wealth management services). Changes in the interest rate environment, which may influence, among oth
Slide 55: Forward-Looking Statements (cont.)
FORWARD-LOOKING STATEMENTS (cont.) Unexpected difficulties or unanticipated developments related to the Company's strategy of de novo bank formations and openings. De novo banks typically require over 13 months of operations before becoming profitable, due to the impact of organizational and overhea
Slide 56: Questions
Questions
Wintrust Financial — Sandler O'Neill & Partners 2009 East Coast Financial Services Conference on 6ix