Wintrust Financial Corporation · NASDAQ:WTFC
Wintrust Financial — Howe Barnes Hoefer & Arnett 15th Annual Bank Conference (August 2010)
46 slides from Wintrust Financial's conference presentation, Aug 17, 2010
Slide 1: Howe Barnes Hoefer & Arnett 15th Annual Bank Conference
WINTRUST FINANCIAL CORPORATION (TM) 1 Howe Barnes Hoefer & Arnett 15th Annual Bank Conference August 17, 2010 August 17, 2010 August 17, 2010 August 17, 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 $13.7 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 86 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: Funding and Assets
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 -- to name a few) Consis
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 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 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: 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. 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
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?? (continued)
16 So How Did Wintrust Fare?? (continued) Wintrust has remained profitable throughout the cycle In fact, 2009 was a record year for earnings!! First half 2010 earnings up 124% from prior year Assets have grown to $13.7 billion at 6/30/10 from $9.57 billion at the end of 2006 Credit charge-offs and n
Slide 17: Purchase of Life Insurance Premium Finance
17 Purchase of Life Insurance Premium Finance ("Dislocated Assets") 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 o
Slide 18: Acquisitions of Three Failed Banks from the FDIC
18 Acquisitions of Lincoln Park Savings, Wheatland Bank and Ravenswood Bank from the FDIC ("Dislocated Banks") Since April 2010, acquired these three failed banks from the FDIC - they cover the majority of losses Will be immediately accretive to earnings Strategic in the sense that they moved us int
Slide 19: Annual Core Pre-tax Earnings
19 Annual "Core Pre-tax Earnings" 2003 2004 2005 2006 2007 2008 2009 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 Core Earnings 40334 85210 111469 102374 101400 93985 121901 75568 86185 79593 99848 148548 159620 168256 190596 (in 000s) (Qtrs are Annualized) "Core Pre-tax Earnings" are calculated as by re
Slide 20: Expected Earnings Improvements
20 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 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 Tier 1 Risk-based capital 11.2% 13.4% 13.0% Total capital ratio 12.7% 14.9% 14.3% Leverage ratio 9.3% 10.8% 10.2% Tangible common equity ratio 4.7% 6.3% 6.0% Provide flexibility for growth Organic growth
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
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Slide 24: Financial Results
Financiall Results
Slide 25: Historical Growth
25 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 86 Historical Growth
Slide 26: Banking Locations
26 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 28
Slide 27: Total Assets by Bank
27 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2Q10 Crystal Lake 7 40 Total 52 83 189 354 471 706 1053 1348 1679 2103 2705 3722 4747 6419 8177 9572 9369 10658 12216 13709 Barrington 11 72 105 Libertyville 35 76 124 174 North Shore 44 105 169 266 287
Slide 28: Asset Growth - Internal / Acquired
28 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2Q10 7 40 Internal Growth 52 83 189 354 471 706 1053 1348 1650 2074 2676 3619 4450 5399 6456 7363 7098 8387 9945 10906 Acquired Growth 29 29 29 103 297 1020 1721 2209 2271 2271 2271 2803 Asset Growth -
Slide 29: Asset Growth of Banks by Year
29 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 Lake Forest 8 49 96 143 195 270 380 441 499 581 667 897 1087 1256 1334 1458 1504 1654 1816 2416 Hinsdale 0 23 67 115 167 223 281 350 401 508 642 746 887 980 1401 1270 1314
Slide 30: Consolidated Net Income
30 Consolidated Net Income (before Preferred Dividends, in 000s) 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1H09 1H10 -2236 1497 -973 4846 6245 9427 11155 18439 27875 38118 51334 67016 66493 55653 20488 73069 12907 29027 West 31.6 2606 North 43.9
Slide 31: EPS Growth
31 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 32: Revenue Growth by Quarter
32 Revenue Growth by Quarter (excluding Bargain Purchase Gain in 3Q09, 4Q09, 1Q10 & 2Q10) 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
Slide 33: Net Interest Margin
33 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1H10 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 0.0341 Net Interest Margin (fully taxable equivalent)
Slide 34: Net Overhead Ratio & Efficiency Ratio
34 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 1H10 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 0.013 Efficiency Ratio 0.8603 0.7975 0.6863 0.7233 0.6366 0.6641 0.6352 0.6445 0.6397
Slide 35: Loan Portfolio Composition
35 Loan Portfolio Composition As of June 30, 2010 - $9.6 Billion (excludes loans held for sale and $276MM of covered loans) Comm'l CRE Premium Finance-Comml Premium Finance-Life Ins. Other Niches Res. Real Estate Home Equity Other Loan comp 0.16 0.36 0.14 0.15 0.04 0.03 0.1 0.02 Commercial Premium F
Slide 36: Ending Loan-to-Deposit/Secured Borrowing Ratio
36 Ending Loan-to-Deposit/Secured Borrowing Ratio* (excludes loans held for sale) 1996 2001 2002 2003 2004 2005 2006 2007 2008 2009 2Q10 BV per share 0.872 0.827 0.851 0.852 0.775 0.826 0.91 0.91 0.848 0.855 *Includes $600 million of secured borrowing related to the commercial premium finance loan s
Slide 37: Non-Performing Assets to Total Assets
37 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 2Q10 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 38: Non-Performing Asset Ratio Wintrust vs. Peer Group
38 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 39: Net Charge-offs to Total Loans
39 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 0.0141 Total Loans 194 258 493 713 992 12
Slide 40: Net Charge-offs Ratio Wintrust vs. Peer Group
40 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 41: Financial Overview - Capital Components
41 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2Q10 Capital Growth 14583 11291 17227 25366 40487 42620 68790 75205 92947 102276 141278 227002 349837 473912 627911 773346 739555 784699 853815 1098276 Preferred 0 0 0 0 0 0 0 0 0 0 281873 284824 286460
Slide 42: Financial Overview - Common Book Value Per Share
42 Financial Overview - Common Book Value Per Share 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2Q10 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 35.33
Slide 43: Forward-Looking Statements
43 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 44: Forward-Looking Statements (cont.)
44 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 45: Forward-Looking Statements (cont.)
45 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 46: Questions
46 Questions
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