Wintrust Financial Corporation · NASDAQ:WTFC
Wintrust Financial — Sandler O'Neill 2010 East Coast Financial Services Conference
47 slides from Wintrust Financial's conference presentation, Nov 12, 2010
Slide 1: Sandler O'Neill 2010 East Coast Financial Services Conference
1 Sandler O'Neill 2010 East Coast Financial Services Conference November 11, 2010 November 11, 2010 November 11, 2010 November 11, 2010
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: Who We Are
3 Who We Are Eighteen year-old community focused banking organization with approximately $14.1 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 10 bank acqu
Slide 4: Who We Are - Company Overview
4 Who We Are - Company Overview Community Banking Specialty Finance Wealth Management Fifteen community banks Chicago and Milwaukee metropolitan markets 85 locations Full product suite - home equity, home mortgage, consumer, real estate and commercial loans, safe deposit facilities, ATMs, & internet
Slide 5: Who We Are - Core Strategy
5 Chicago and Milwaukee metropolitan markets Historically focused on high net worth areas Flexibility to profitably penetrate broader market Downtown Chicago focusing on corporate and commercial customers Positioned as local alternatives to the "Big Banks" We know our communities extremely well Pers
Slide 6: Wintrust Locations
Wintrust Locations Banking Wealth Management Mortgage
Slide 7: Operating Strategy
7 Funding Assets 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 auto -- to nam
Slide 8: Deposit Market Share-Chicago MSA
8 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 9: Relative Deposit Market Share
Relative Deposit Market Share Deposit Rankings Total: $283 bn ____________________ Source: FDIC. Deposit data as of June 30, 2010. (1) Large local includes local banks with top 20 deposit ranking in Chicago. Wintrust is the Largest Local Bank Focused on the Chicago Market 9
Slide 10: Growth Strategy - Expansion
10 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 11: Consistent Strategy - Changing Tactics
11 Consistent Strategy - Changing Tactics (1991-2005) (2010) (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 Con
Slide 12: The Perfect Storm
12 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 re
Slide 13: Our Response - The Rope-a-Dope Strategy
13 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 e
Slide 14: Rope-a-Dope Timing and TARP
14 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 15: So How Did Wintrust Fare?? - 2009 Report Card
15 So How Did Wintrust Fare?? - 2009 Report Card Goals Results Concentrate on core earnings Net income of $73 million ($2.18 per share) Aided by pre-tax bargain purchase gain of $156mm from life insurance premium finance transaction Majority offset by credit expenses Continued improvement in pre-cre
Slide 16: So How Did Wintrust Fare?? - 2010 YTD Report Card
16 So How Did Wintrust Fare?? - 2010 YTD Report Card Goals Results Concentrate on core earnings Net income of $49 million ($1.12 /diluted share) Aided by pre-tax bargain purchase gains totaling $44mm from FDIC-assisted acquisitions and life insurance premium finance portfolio purchase Majority offse
Slide 17: So How Did Wintrust Fare?? (continued)
17 So How Did Wintrust Fare?? (continued) We have taken advantage of the many opportunities which are always present in adverse credit cycles Dislocated people Dislocated assets Dislocated banks
Slide 18: Taking Advantage of Dislocations
18 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 19: Annual Core Pre-tax Earnings
19 Annual "Core Pre-tax Earnings" 2003 2004 2005 2006 2007 2008 2009 2010* 3Q08* 4Q08* 1Q09* 2Q09* 3Q09* 4Q09* 1Q10* 2Q10* 3Q10* Core Earnings 69707 85322 111466 102566 98854 93985 121900 183050 75568 86184 79592 99844 148544 159620 168256 190596 190300 (in 000s) (* - Annualized) "Core Pre-tax Earni
Slide 20: Expected Core Pre-tax Earnings Improvements
20 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: Continued Margin Improvement Deposit Re-pricing CD's Other core savings
Slide 21: March 2010 Capital Raise
21 March 2010 Capital Raise Enhance and maintain strong capital ratios 12/31/09 3/31/10 6/30/10 9/30/10 Tier 1 Risk-based capital 11.0% 13.4% 13.0% 12.7% Total capital ratio 12.4% 14.9% 14.3% 14.1% Leverage ratio 9.3% 10.8% 10.2% 10.0% Tangible common equity ratio 4.7% 6.3% 6.0% 5.9% Provide flexibi
Slide 22: Strategy for 2010 and Beyond
22 Strategy for 2010 and Beyond This cycle isn't over yet so we need to proceed cautiously in all of our endeavors. Continue to expeditiously remove problem assets from the balance sheet Plan is to return to the growth mode experienced in the first 15 years of our existence with an overriding emphas
Slide 23: Why Invest in Wintrust?
Why Invest in Wintrust? Managing well through the cycle Asset quality position is manageable and better than peer group Cautiously on offense in 2009 and through 2010 Positioned for sustainable growth Differentiated and sustainable business model Strong management team and Board of Directors Additio
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Slide 25: Financial Results
Financiall Results
Slide 26: Historical Growth
26 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Current Bank and Trust Subsidiaries 2 2 3 4 5 6 7 8 9 10 10 14 16 22 23 23 23 22 23 23 Banking Offices 1 1 3 5 11 14 17 21 24 28 29 31 36 50 62 73 77 79 78 85 Historical Growth
Slide 27: Banking Locations
27 Banking Locations 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Current Internal 1 1 3 5 11 14 17 21 24 28 29 31 32 40 45 51 56 58 58 58 Acquisition 4 10 17 22 21 21 20 27
Slide 28: Total Assets by Bank (in millions)
28 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 3Q10 Crystal Lake 7 40 Total 52 83 189 354 471 706 1053 1348 1679 2103 2705 3722 4747 6419 8177 9572 9369 10658 12216 14100 Barrington 11 72 105 Libertyville 35 76 124 174 North Shore 44 105 169 266 287
Slide 29: Asset Growth - Internal / Acquired
29 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 3Q10 7 40 Internal Growth 52 83 189 354 471 706 1053 1348 1650 2074 2676 3619 4450 5399 6456 7363 7098 8387 9945 11110 Acquired Growth 29 29 29 103 297 1020 1721 2209 2271 2271 2271 2990 Asset Growth -
Slide 30: Asset Growth of Banks by Year
30 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 3Q10 Lake Forest 8 49 96 143 195 270 380 441 499 581 667 897 1087 1256 1334 1458 1504 1654 1816 2483 Hinsdale 0 23 67 115 167 223 281 350 401 508 642 746 887 980 1401 1270
Slide 31: Consolidated Net Income
31 Consolidated Net Income (before Preferred Dividends, in 000s) 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 3Q09-YTD 3Q10-YTD -2236 1497 -973 4846 6245 9427 11155 18439 27875 38118 51334 67016 66493 55653 20488 73069 44902 49125 West 31.6 2606 North 43.9
Slide 32: EPS Growth
32 EPS Growth 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 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 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
Slide 33: Revenue Growth by Quarter
33 Revenue Growth by Quarter (excluding Bargain Purchase Gain in 3Q09, 4Q09, 1Q10, 2Q10 & 3Q10) 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
Slide 34: Net Interest Margin
34 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 3Q10-YTD 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 0.0334 Net Interest Margin (fully taxable equivalent)
Slide 35: Net Overhead Ratio & Efficiency Ratio
35 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 3Q10-YTD 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 0.0129 Efficiency Ratio 0.8603 0.7975 0.6863 0.7233 0.6366 0.6641 0.6352 0.6445 0.
Slide 36: Loan Portfolio Composition
36 Loan Portfolio Composition As of September 30, 2010 - $9.8 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 0.16 0.04 0.13 0.15 0.02 0.03 0.09 0.04 Comm'l Commerci
Slide 37: Ending Loan-to-Deposit/Secured Borrowing Ratio
37 Ending Loan-to-Deposit/Secured Borrowing Ratio* (excludes loans held for sale) 1996 2001 2002 2003 2004 2005 2006 2007 2008 2009 3Q10 BV per share 0.872 0.827 0.851 0.852 0.775 0.826 0.91 0.91 0.848 0.849 *Includes $600 million of secured borrowing related to the commercial premium finance loan s
Slide 38: Non-Performing Assets to Total Assets
38 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 3Q10 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 39: Non-Performing Asset Ratio Wintrust vs. Peer Group
39 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 40: Net Charge-offs to Total Average Loans
40 Net Charge-offs to Total Average Loans 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 3Q10-YTD 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 0.012 Total Loans 194 258 493
Slide 41: Net Charge-offs Ratio Wintrust vs. Peer Group
41 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 42: Financial Overview - Capital Components
42 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 3Q10 Capital Growth 14583 11291 17227 25366 40487 42620 68790 75205 92947 102276 141278 227002 349837 473912 627911 773346 739555 784699 853815 1111678 Preferred 0 0 0 0 0 0 0 0 0 0 281873 284824 287234
Slide 43: Consistently Grown Book Value Per Share Through Cycles
43 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 3Q10 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 35.7
Slide 44: 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 45: Forward-Looking Statements (cont.)
45 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 extent
Slide 46: Forward-Looking Statements (cont.)
46 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 of custom
Slide 47: Questions
47 Questions
Wintrust Financial — Sandler O'Neill 2010 East Coast Financial Services Conference on 6ix