Wintrust Financial Corporation · NASDAQ:WTFC
Wintrust Financial — RBC Financial Institutions Conference 2010
51 slides from Wintrust Financial's conference presentation, May 3, 2010
Slide 1: RBC Financial Institutions Conference May 3, 2010
1 RBC Financial Institutions Conference May 3, 2010 May 3, 2010 May 3, 2010
Slide 2: Forward-Looking Information
2 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
Slide 3: Who We Are
3 Who We Are Eighteen year-old community focused banking organization with approximately $12.8 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
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 83 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 Positioned as local alternatives to the "Big Banks" We know our communities extremely well Personalized service, creative marketing and employee involvement Ha
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 airplanes, housing associations, franchise lending, mortgage warehouse lending -- to name a
Slide 8: Deposit Market Share-Chicago MSA
8 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 B
Slide 9: Growth Strategy - Expansion
9 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 ad
Slide 10: Consistent Strategy - Changing Tactics
10 Consistent Strategy - Changing Tactics (1991-2005) (2010) (2008) (2009) (2006-07) Organic & Acquisition Growth 7 bank acquisitions since 2003 9 de novo charters since 1991 "Rope - A - Dope" Slowed growth Maintained extremely conservative underwriting Reduced relative cost of funds Controlled expe
Slide 11: Growth During Previous Healthy Credit Environment
11 Growth During Previous Healthy Credit Environment Compound Annual Growth Rates in 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.
Slide 12: Timing and TARP
12 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 2008 and in anticipation of this move, we raised $50 million of convertible preferred stock through a private placement. This capital pro
Slide 13: Time to Come off the Ropes- But Cautiously
13 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 $1.4 billion (from 12/31/08 to 3/31/10) Deposits grew $1.3 billion (from 12/31/08 to 3/31/10) The above growth was accomplished at pricing commensur
Slide 14: Time to Come off the Ropes- But Cautiously
14 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 r
Slide 15: Purchase of Life Insurance Premium Finance
15 Purchase of Life Insurance Premium Finance FIFC purchased a portfolio of domestic life insurance premium finance loans and certain related assets from indirect wholly-owned subsidiaries of AIG Aggregate unpaid principal balance of approximately $1.03 billion Purchase price of $746 million Resulti
Slide 16: Characteristics of Purchased Life Insurance Premium Finance Loan Portfolio
16 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. Purchas
Slide 17: Securitization
17 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 s
Slide 18: March 2010 Capital Raise
18 March 2010 Capital Raise Enhance and maintain strong capital ratios 12/31/09 3/31/10 Tier 1 Risk-based capital 11.2% 13.3% Total capital ratio 12.7% 14.9% Leverage ratio 9.3% 10.8% Tangible common equity ratio 4.7% 6.3% Provide flexibility for growth Organic growth & lending opportunities Portfol
Slide 19: Wintrust is Managing Well Through Challenging Times
19 Wintrust is Managing Well Through Challenging Times (1) Excludes balance of loans in securitization completed on September 11, 2009.
Slide 20: 2009 Report Card
20 2009 Report Card 2009 Report Card Positioned to start 2010 with strong earnings and clean balance sheet
Slide 21: A Word on Reserves
21 A Word on Reserves The allowance for credit losses stands at $106 million or 1.17% of loans as of 3/31/10 Adding credit discounts on purchased assets, reserve coverage equals 1.55% of loans as of 3/31/10 Company uses a thorough, loan by loan process in building its reserve
Slide 22: Annual Pre-tax Pre-Credit Costs Earnings
22 Annual "Pre-tax Pre-Credit Costs" Earnings 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 Pre-tax Pre-Provision Earnings 21503 37029 52816 70343 87185 111626 111298 98703 90105 148386 71296 106412 139104 171844 176188 179908 (in 000s) (Qtrs are Annualized) Amounts
Slide 23: Expected Earnings Improvements
23 Expected Earnings Improvements Pre-Tax 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 Liquidity Re-deployment Bala
Slide 24: Goals
24 Goals Continue to concentrate on core earnings Continue to clear the "junk" off the balance sheet Continue to scour the market for dislocated assets Continue to add to management Maintain disciplined core growth Grow core earnings and maintain a relatively clean balance sheet We will selectively
Slide 25: Summary
25 Summary Our 2010 goals continue to focus on taking advantage of current market opportunities to increase earnings, maintain better than peer and solid asset quality, and continue to build the core franchise. Hopefully this will result in a higher stock price. Retire TARP when it makes sense to do
Slide 26: Why Invest in Wintrust?
26 Why Invest in Wintrust? Managing well through the cycle Relatively clean balance sheet Cautiously on offense in 2010 Positioned for growth Differentiated and sustainable business model Strong management team and Board of Directors Additional earnings leverage in operating model
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Slide 28: Financial Results
Financial Results
Slide 29: Historical Growth
29 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 83 Historical Growth
Slide 30: Banking Locations
30 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 25
Slide 31: Total Assets (in millions)
31 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 3/31/2010 Crystal Lake 7 40 Total 52 83 189 354 471 706 1053 1348 1679 2103 2705 3722 4747 6419 8177 9572 9369 10658 12216 12840 Barrington 11 72 105 Libertyville 35 76 124 174 North Shore 44 105 169 26
Slide 32: Asset Growth - Internal / Acquired
32 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1Q10 7 40 Internal Growth 52 83 189 354 471 706 1053 1348 1650 2074 2676 3619 4450 5399 6456 7363 7098 8387 9945 10569 Acquired Growth 29 29 29 103 297 1020 1721 2209 2271 2271 2271 2271 Asset Growth -
Slide 33: Asset Growth of Banks by Year
33 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 1Q10 Lake Forest 8 49 96 143 195 270 380 441 499 581 667 897 1087 1256 1334 1458 1504 1654 1816 2391 Hinsdale 0 23 67 115 167 223 281 350 401 508 642 746 887 980 1401 1270
Slide 34: Consolidated Net Income
34 Consolidated Net Income (before Preferred Dividends, in 000s) 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1Q09 1Q10 -2236 1497 -973 4846 6245 9427 11155 18439 27875 38118 51334 67016 66493 55653 20488 73069 6358 16017 West 31.6 2606 North 43.9
Slide 35: EPS Growth
35 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 36: Revenue Growth by Quarter
36 Revenue Growth by Quarter (excluding Bargain Purchase Gain in 3Q09, 4Q09 & 1Q10) 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 4
Slide 37: Net Interest Margin
37 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1Q10 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 0.0338 Net Interest Margin (fully taxable equivalent)
Slide 38: Net Overhead Ratio & Efficiency Ratio
38 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1Q10 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 0.0133 Efficiency Ratio 0.8603 0.7975 0.6863 0.7233 0.6366 0.6641 0.6352 0.6445 0.6397
Slide 39: Loan Portfolio Composition
39 Loan Portfolio Composition As of March 31, 2010 - $9.1 Billion (excludes loans sold or held for sale) Comm'l CRE Premium Finance-Comml Premium Finance-Life Ins. Other Niches Res. Real Estate Home Equity Other Loan comp 0.16 0.37 0.14 0.14 0.04 0.04 0.1 0.01 Commercial Premium Finance - Life Insur
Slide 40: Ending Loan-to-Deposit/Secured Borrowing Ratio
40 Ending Loan-to-Deposit/Secured Borrowing Ratio* (excludes loans held for sale) 1996 2001 2002 2003 2004 2005 2006 2007 2008 2009 1Q09 BV per share 0.872 0.827 0.851 0.852 0.775 0.826 0.91 0.91 0.848 0.879 *Includes $600 million of secured borrowing related to the commercial premium finance loan s
Slide 41: Non-Performing Assets to Total Assets
41 Non-Performing Assets to Total Assets (NPAs include NPLs and OREO) 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1Q10 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.
Slide 42: Non-Performing Asset Ratio Wintrust vs. Peer Group
42 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 43: Net Charge-offs to Total Loans
43 Net Charge-offs to Total Loans 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1Q10 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 0.0119 Total Loans 194 258 493 713 992 12
Slide 44: Net Charge-offs Ratio Wintrust vs. Peer Group
44 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 45: Credit Loss Reserve Analysis
45 Credit Loss Reserve Analysis Non- Non- Performing Performing Loans, net Loans (%) Community and Commercial Banking $6,436,031 $112,572 1.75% Indirect Consumer 83,136 1,280 1.54% Premium Finance Rec. 2,551,395 27,065 1.06% Total $9,070,562 $140,917 1.55% $5,229 2003 Calendar Year Net Charge-offs $
Slide 46: Financial Overview - Capital Components
46 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1Q10 Capital Growth 14583 11291 17227 25366 40487 42620 68790 75205 92947 102276 141278 227002 349837 473912 627911 773346 739555 784699 853815 1079190 Preferred 0 0 0 0 0 0 0 0 0 0 281873 284824 285642
Slide 47: Financial Overview - Common Book Value Per Share
47 Financial Overview - Common Book Value Per Share 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1Q10 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 34.76
Slide 48: Forward-Looking Statements
48 FORWARD-LOOKING STATEMENTS This document contains 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," "project," "expect," "anticipate," "believe," "estimate," "contemplate," "po
Slide 49: Forward-Looking Statements (cont.)
49 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 of d
Slide 50: Forward-Looking Statements (cont.)
50 FORWARD-LOOKING STATEMENTS (cont.) the ability of the Company to attract and retain senior management experienced in the banking and financial services industries; failure to identify and complete favorable acquisitions in the future, or unexpected difficulties or developments related to the inte
Slide 51: Questions
51 Questions
Wintrust Financial — RBC Financial Institutions Conference 2010 on 6ix