0001015328-12-000037.txt : 20121108 0001015328-12-000037.hdr.sgml : 20121108 20121108155901 ACCESSION NUMBER: 0001015328-12-000037 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20120930 FILED AS OF DATE: 20121108 DATE AS OF CHANGE: 20121108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WINTRUST FINANCIAL CORP CENTRAL INDEX KEY: 0001015328 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 363873352 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-35077 FILM NUMBER: 121190017 BUSINESS ADDRESS: STREET 1: 9700 WEST HIGGINS ROAD, 8TH FLOOR CITY: ROSEMONT STATE: IL ZIP: 60018 BUSINESS PHONE: 8479399000 MAIL ADDRESS: STREET 1: 9700 WEST HIGGINS ROAD, 8TH FLOOR CITY: ROSEMONT STATE: IL ZIP: 60018 10-Q 1 wtfc-20120930x10q.htm 10-Q WTFC-2012.09.30-10Q
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _________________________________________
FORM 10-Q
_________________________________________
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2012
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to
Commission File Number 001-35077
_____________________________________ 
WINTRUST FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter) 
Illinois
36-3873352
(State of incorporation or organization)
(I.R.S. Employer Identification No.)
9700 W. Higgins Road, Suite 800
Rosemont, Illinois 60018
(Address of principal executive offices)

(847) 939-9000
(Registrant’s telephone number, including area code)
______________________________________ 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer

þ
 

Accelerated filer

¨
Non-accelerated filer

¨
(Do not check if a smaller reporting company)

Smaller reporting company

¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common Stock — no par value, 36,440,520 shares, as of November 1, 2012
 



TABLE OF CONTENTS
 


Page
 
PART I. — FINANCIAL INFORMATION
 
ITEM 1.
ITEM 2.
ITEM 3.
ITEM 4.
 
PART II. — OTHER INFORMATION
 
ITEM 1.
Legal Proceedings
NA
ITEM 1A.
ITEM 2.
ITEM 3.
Defaults Upon Senior Securities
NA
ITEM 4.
Mine Safety Disclosures
NA
ITEM 5.
Other Information
NA
ITEM 6.
 



PART I
ITEM 1. FINANCIAL STATEMENTS
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
 
(Unaudited)
 
 
 
(Unaudited)
(In thousands, except share data)
September 30,
2012
 
December 31,
2011
 
September 30,
2011
Assets
 
 
 
 
 
Cash and due from banks
$
186,752

 
$
148,012

 
$
147,270

Federal funds sold and securities purchased under resale agreements
26,062

 
21,692

 
13,452

Interest-bearing deposits with other banks (no balance restricted for securitization investors at September 30, 2012, and a balance restricted for securitization investors of $272,592 at December 31, 2011 and $37,165 at September 30, 2011)
934,430

 
749,287

 
1,101,353

Available-for-sale securities, at fair value
1,256,768

 
1,291,797

 
1,267,682

Trading account securities
635

 
2,490

 
297

Federal Home Loan Bank and Federal Reserve Bank stock
80,687

 
100,434

 
99,749

Brokerage customer receivables
30,633

 
27,925

 
27,935

Mortgage loans held-for-sale, at fair value
548,300

 
306,838

 
204,081

Mortgage loans held-for-sale, at lower of cost or market
21,685

 
13,686

 
8,955

Loans, net of unearned income, excluding covered loans
11,489,900

 
10,521,377

 
10,272,711

Covered loans
657,525

 
651,368

 
680,075

Total loans
12,147,425

 
11,172,745

 
10,952,786

Less: Allowance for loan losses
112,287

 
110,381

 
118,649

Less: Allowance for covered loan losses
21,926

 
12,977

 
12,496

Net loans (no balance restricted for securitization investors at September 30, 2012, and a balance restricted for securitization investors of $411,532 at December 31, 2011 and $643,466 at September 30, 2011)
12,013,212

 
11,049,387

 
10,821,641

Premises and equipment, net
461,905

 
431,512

 
412,478

FDIC indemnification asset
238,305

 
344,251

 
379,306

Accrued interest receivable and other assets
557,884

 
444,912

 
468,711

Trade date securities receivable
307,295

 
634,047

 
637,112

Goodwill
331,634

 
305,468

 
302,369

Other intangible assets
22,405

 
22,070

 
22,413

Total assets
$
17,018,592

 
$
15,893,808

 
$
15,914,804

Liabilities and Shareholders’ Equity
 
 
 
 
 
Deposits:
 
 
 
 
 
Non-interest bearing
$
2,162,215

 
$
1,785,433

 
$
1,631,709

Interest bearing
11,685,750

 
10,521,834

 
10,674,299

Total deposits
13,847,965

 
12,307,267

 
12,306,008

Notes payable
2,275

 
52,822

 
3,004

Federal Home Loan Bank advances
414,211

 
474,481

 
474,570

Other borrowings
377,229

 
443,753

 
448,082

Secured borrowings—owed to securitization investors

 
600,000

 
600,000

Subordinated notes
15,000

 
35,000

 
40,000

Junior subordinated debentures
249,493

 
249,493

 
249,493

Trade date securities payable
412

 
47

 
73,874

Accrued interest payable and other liabilities
350,707

 
187,412

 
191,586

Total liabilities
15,257,292

 
14,350,275

 
14,386,617

Shareholders’ Equity:
 
 
 
 
 
Preferred stock, no par value; 20,000,000 shares authorized:
 
 
 
 
 
Series A - $1,000 liquidation value; 50,000 shares issued and outstanding at September 30, 2012, December 31, 2011 and September 30, 2011
49,871

 
49,768

 
49,736

Series C - $1,000 liquidation value; 126,500 shares issued and outstanding at September 30, 2012, and no shares issued and outstanding at December 31, 2011 and September 30, 2011
126,500

 

 

Common stock, no par value; $1.00 stated value; 100,000,000 shares authorized; 36,647,154 shares issued at September 30, 2012, 35,981,950 shares issued at December 31, 2011, and 35,926,137 shares issued at September 30, 2011
36,647

 
35,982

 
35,926

Surplus
1,018,417

 
1,001,316

 
997,854

Treasury stock, at cost, 239,373 shares at September 30, 2012, 3,601 shares at December 31, 2011, and 2,071 shares at September 30, 2011
(7,490
)
 
(112
)
 
(68
)
Retained earnings
527,550

 
459,457

 
441,268

Accumulated other comprehensive income (loss)
9,805

 
(2,878
)
 
3,471

Total shareholders’ equity
1,761,300

 
1,543,533

 
1,528,187

Total liabilities and shareholders’ equity
$
17,018,592

 
$
15,893,808

 
$
15,914,804

See accompanying notes to unaudited consolidated financial statements.

1


WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
Three Months Ended
 
Nine Months Ended

September 30,
 
September 30,
(In thousands, except per share data)
2012
 
2011
 
2012
 
2011
Interest income
 
 
 
 
 
 
 
Interest and fees on loans
$
149,271

 
$
140,543

 
$
436,926

 
$
409,424

Interest bearing deposits with banks
362

 
917

 
813

 
2,723

Federal funds sold and securities purchased under resale agreements
7

 
28

 
25

 
83

Securities
7,691

 
12,667

 
30,048

 
33,645

Trading account securities
3

 
15

 
22

 
38

Federal Home Loan Bank and Federal Reserve Bank stock
649

 
584

 
1,894

 
1,706

Brokerage customer receivables
218

 
197

 
650

 
557

Total interest income
158,201

 
154,951

 
470,378

 
448,176

Interest expense
 
 
 
 
 
 
 
Interest on deposits
16,794

 
21,893

 
52,097

 
68,253

Interest on Federal Home Loan Bank advances
2,817

 
4,166

 
9,268

 
12,134

Interest on notes payable and other borrowings
2,024

 
2,874

 
7,400

 
8,219

Interest on secured borrowings—owed to securitization investors
795

 
3,003

 
5,087

 
9,037

Interest on subordinated notes
67

 
168

 
362

 
574

Interest on junior subordinated debentures
3,129

 
4,437

 
9,424

 
13,229

Total interest expense
25,626

 
36,541

 
83,638

 
111,446

Net interest income
132,575

 
118,410

 
386,740

 
336,730

Provision for credit losses
18,799

 
29,290

 
56,890

 
83,821

Net interest income after provision for credit losses
113,776

 
89,120

 
329,850

 
252,909

Non-interest income
 
 
 
 
 
 
 
Wealth management
13,252

 
11,994

 
39,046

 
32,831

Mortgage banking
31,127

 
14,469

 
75,268

 
38,917

Service charges on deposit accounts
4,235

 
4,085

 
12,437

 
10,990

Gains on available-for-sale securities, net
409

 
225

 
2,334

 
1,483

Gain on bargain purchases, net
6,633

 
27,390

 
7,418

 
37,974

Trading (losses) gains, net
(998
)
 
591

 
(1,780
)
 
121

Other
8,287

 
8,493

 
26,180

 
22,470

Total non-interest income
62,945

 
67,247

 
160,903

 
144,786

Non-interest expense
 
 
 
 
 
 
 
Salaries and employee benefits
75,280

 
61,863

 
212,449

 
171,041

Equipment
5,888

 
4,501

 
16,754

 
13,174

Occupancy, net
8,024

 
7,512

 
23,814

 
20,789

Data processing
4,103

 
3,836

 
11,561

 
10,506

Advertising and marketing
2,528

 
2,119

 
6,713

 
5,173

Professional fees
4,653

 
5,085

 
12,104

 
13,164

Amortization of other intangible assets
1,078

 
970

 
3,216

 
2,363

FDIC insurance
3,549

 
3,100

 
10,383

 
10,899

OREO expenses, net
3,808

 
5,134

 
16,834

 
17,519

Other
15,637

 
12,201

 
45,664

 
37,008

Total non-interest expense
124,548

 
106,321

 
359,492

 
301,636

Income before taxes
52,173

 
50,046

 
131,261

 
96,059

Income tax expense
19,871

 
19,844

 
50,154

 
37,705

Net income
$
32,302

 
$
30,202

 
$
81,107

 
$
58,354

Preferred stock dividends and discount accretion
$
2,616

 
$
1,032

 
$
6,477

 
$
3,096

Net income applicable to common shares
$
29,686

 
$
29,170

 
$
74,630

 
$
55,258

Net income per common share—Basic
$
0.82

 
$
0.82

 
$
2.06

 
$
1.57

Net income per common share—Diluted
$
0.66

 
$
0.65

 
$
1.70

 
$
1.26

Cash dividends declared per common share
$
0.09

 
$
0.09

 
$
0.18

 
$
0.18

Weighted average common shares outstanding
36,381

 
35,550

 
36,305

 
35,152

Dilutive potential common shares
12,295

 
10,551

 
11,292

 
8,683

Average common shares and dilutive common shares
48,676

 
46,101

 
47,597

 
43,835

See accompanying notes to unaudited consolidated financial statements.

2


WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 
 
Three Months Ended
 
Nine Months Ended

September 30,
 
September 30,
(In thousands)
2012
 
2011
 
2012
 
2011
Net income
$
32,302

 
$
30,202

 
$
81,107

 
$
58,354

Unrealized gains on securities
 
 
 
 
 
 
 
Before tax
3,921

 
1,212

 
8,661

 
15,225

Tax effect
(1,563
)
 
(565
)
 
(3,447
)
 
(6,125
)
Net of tax
2,358

 
647

 
5,214

 
9,100

Less: Reclassification of net gains included in net income
 
 
 
 
 
 
 
Before tax
409

 
225

 
2,334

 
1,483

Tax effect
(162
)
 
(88
)
 
(934
)
 
(583
)
Net of tax
247

 
137

 
1,400

 
900

Net unrealized gains on securities
2,111

 
510

 
3,814

 
8,200

Unrealized (losses) gains on derivative instruments
 
 
 
 
 
 
 
Before tax
(293
)
 
(2,088
)
 
1,439

 
1,115

Tax effect
119

 
917

 
(568
)
 
(332
)
Net unrealized (losses) gains on derivative instruments
(174
)
 
(1,171
)
 
871

 
783

Foreign currency translation adjustment
 
 
 
 
 
 
 
Before tax
8,438

 

 
11,139

 

Tax effect
(2,541
)
 

 
(3,141
)
 

Net foreign currency translation adjustment
5,897

 

 
7,998

 

Total other comprehensive income (loss)
7,834

 
(661
)
 
12,683

 
8,983

Comprehensive income
$
40,136

 
$
29,541

 
93,790

 
67,337

See accompanying notes to unaudited consolidated financial statements.

3


WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)
(In thousands)
Preferred
stock
 
Common
stock
 
Surplus
 
Treasury
stock
 
Retained
earnings
 
Accumulated
other
comprehensive
income (loss)
 
Total
shareholders’
equity
Balance at December 31, 2010
$
49,640

 
$
34,864

 
$
965,203

 
$

 
$
392,354

 
$
(5,512
)
 
$
1,436,549

Net income

 

 

 

 
58,354

 

 
58,354

Other comprehensive income, net of tax

 

 

 

 

 
8,983

 
8,983

Cash dividends declared on common stock

 

 

 

 
(6,344
)
 

 
(6,344
)
Dividends on preferred stock

 

 

 

 
(3,000
)
 

 
(3,000
)
Accretion on preferred stock
96

 

 

 

 
(96
)
 

 

Common stock repurchases

 

 

 
(68
)
 

 

 
(68
)
Stock-based compensation

 

 
3,433

 

 

 

 
3,433

Common stock issued for:
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisitions

 
883

 
25,603

 

 

 

 
26,486

Exercise of stock options and warrants

 
49

 
632

 

 

 

 
681

Restricted stock awards

 
38

 
(41
)
 

 

 

 
(3
)
Employee stock purchase plan

 
67

 
1,988

 

 

 

 
2,055

Director compensation plan

 
25

 
1,036

 

 

 

 
1,061

Balance at September 30, 2011
$
49,736

 
$
35,926

 
$
997,854

 
$
(68
)
 
$
441,268

 
$
3,471

 
$
1,528,187

Balance at December 31, 2011
$
49,768

 
$
35,982

 
$
1,001,316

 
$
(112
)
 
$
459,457

 
$
(2,878
)
 
$
1,543,533

Net income

 

 

 

 
81,107

 

 
81,107

Other comprehensive income, net of tax

 

 

 

 

 
12,683

 
12,683

Cash dividends declared on common stock

 

 

 

 
(6,537
)
 

 
(6,537
)
Dividends on preferred stock

 

 

 

 
(6,374
)
 

 
(6,374
)
Accretion on preferred stock
103

 

 

 

 
(103
)
 

 

Stock-based compensation

 

 
7,260

 

 

 

 
7,260

Issuance of Series C preferred stock
126,500

 

 
(3,810
)
 

 

 

 
122,690

Common stock issued for:
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisitions

 
26

 
868

 

 

 

 
894

Exercise of stock options and warrants

 
439

 
10,050

 
(6,391
)
 

 

 
4,098

Restricted stock awards

 
123

 
(152
)
 
(987
)
 

 

 
(1,016
)
Employee stock purchase plan

 
55

 
1,777

 

 

 

 
1,832

Director compensation plan

 
22

 
1,108

 

 

 

 
1,130

Balance at September 30, 2012
$
176,371

 
$
36,647

 
$
1,018,417

 
$
(7,490
)
 
$
527,550

 
$
9,805

 
$
1,761,300

See accompanying notes to unaudited consolidated financial statements.

4



WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
Nine Months Ended

September 30,
(In thousands)
2012
 
2011
Operating Activities:
 
 
 
Net income
$
81,107

 
$
58,354

Adjustments to reconcile net income to net cash (used for) provided by operating activities
 
 
 
Provision for credit losses
56,890

 
83,821

Depreciation and amortization
17,624

 
14,128

Stock-based compensation expense
7,260

 
3,433

Tax benefit from stock-based compensation arrangements
1,279

 
183

Excess tax benefits from stock-based compensation arrangements
(868
)
 
(760
)
Net amortization of premium on securities
4,745

 
6,308

Mortgage servicing rights fair value change and amortization, net
(3,469
)
 
3,626

Originations and purchases of mortgage loans held-for-sale
(2,688,002
)
 
(1,662,368
)
Proceeds from sales of mortgage loans held-for-sale
2,498,525

 
1,846,396

Bank owned life insurance income, net of claims
(2,234
)
 
(1,888
)
Decrease in trading securities, net
1,855

 
4,582

Net increase in brokerage customer receivables
(2,708
)
 
(3,386
)
Gains on mortgage loans sold
(59,984
)
 
(25,617
)
Gains on available-for-sale securities, net
(2,334
)
 
(1,483
)
Gain on bargain purchases, net
(7,418
)
 
(37,974
)
Loss on sales of premises and equipment, net
702

 
10

Decrease in accrued interest receivable and other assets, net
30,377

 
7,178

Increase (decrease) in accrued interest payable and other liabilities, net
140,857

 
(2,481
)
Net Cash Provided by Operating Activities
74,204

 
292,062

Investing Activities:
 
 
 
Proceeds from maturities of available-for-sale securities
473,331

 
1,189,834

Proceeds from sales of available-for-sale securities
2,059,154

 
605,026

Purchases of available-for-sale securities
(2,079,665
)
 
(2,015,888
)
Net cash received for acquisitions
30,220

 
91,073

Proceeds received from the FDIC related to reimbursements on covered assets
152,594

 
65,038

Net increase in interest-bearing deposits with banks
(113,963
)
 
(211,382
)
Net increase in loans
(739,941
)
 
(520,770
)
Purchases of premises and equipment, net
(45,533
)
 
(54,769
)
Net Cash Used for Investing Activities
(263,803
)
 
(851,838
)
Financing Activities:
 
 
 
Increase in deposit accounts
914,513

 
383,001

(Decrease) increase in other borrowings, net
(118,552
)
 
180,723

Decrease in Federal Home Loan Bank advances, net
(60,000
)
 

Repayment of subordinated notes
(20,000
)
 
(10,000
)
Payoff of secured borrowing
(600,000
)
 

Excess tax benefits from stock-based compensation arrangements
868

 
760

Net proceeds from issuance of preferred stock
122,690

 

Issuance of common shares resulting from exercise of stock options, employee stock purchase plan and conversion of common stock warrants
12,143

 
2,846

Common stock repurchases
(7,378
)
 
(68
)
Dividends paid
(11,575
)
 
(9,344
)
Net Cash Provided by Financing Activities
232,709

 
547,918

Net Increase (Decrease) in Cash and Cash Equivalents
43,110

 
(11,858
)
Cash and Cash Equivalents at Beginning of Period
169,704

 
172,580

Cash and Cash Equivalents at End of Period
$
212,814

 
$
160,722

See accompanying notes to unaudited consolidated financial statements.

5


WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The consolidated financial statements of Wintrust Financial Corporation and Subsidiaries (“Wintrust” or “the Company”) presented herein are unaudited, but in the opinion of management reflect all necessary adjustments of a normal or recurring nature for a fair presentation of results as of the dates and for the periods covered by the consolidated financial statements.
The accompanying consolidated financial statements are unaudited and do not include information or footnotes necessary for a complete presentation of financial condition, results of operations or cash flows in accordance with U.S. generally accepted accounting principles ("GAAP"). The consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 (“2011 Form 10-K”). Operating results reported for the three-month and nine-month periods are not necessarily indicative of the results which may be expected for the entire year. Reclassifications of certain prior period amounts have been made to conform to the current period presentation.
The preparation of the financial statements requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities. Management believes that the estimates made are reasonable, however, changes in estimates may be required if economic or other conditions develop differently from management’s expectations. Certain policies and accounting principles inherently have a greater reliance on the use of estimates, assumptions and judgments and as such have a greater possibility of producing results that could be materially different than originally reported. Management views critical accounting policies to be those which are highly dependent on subjective or complex judgments, estimates and assumptions, and where changes in those estimates and assumptions could have a significant impact on the financial statements. Management currently views the determination of the allowance for loan losses, allowance for covered loan losses and the allowance for losses on lending-related commitments, loans acquired with evidence of credit quality deterioration since origination, estimations of fair value, the valuations required for impairment testing of goodwill, the valuation and accounting for derivative instruments and income taxes as the accounting areas that require the most subjective and complex judgments, and as such could be the most subject to revision as new information becomes available. Descriptions of our significant accounting policies are included in Note 1 “Summary of Significant Accounting Policies” of the Company’s 2011 Form 10-K.
(2) Recent Accounting Developments
Subsequent Accounting for Indemnification Assets
In October 2012, the FASB issued ASU No. 2012-06, “Business Combinations (Topic 805): Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution,” to address the diversity in practice and interpret guidance related to the subsequent measurement of an indemnification asset recognized in a government-assisted acquisition. These indemnification assets are recorded by the Company as FDIC indemnification assets on the Consolidated Statements of Condition. This ASU clarifies existing guidance by asserting that subsequent changes in expected cash flows related to an indemnification asset should be amortized over the shorter of the life of the indemnification agreement or the life of the underlying loan. This guidance is to be applied with respect to changes in cash flows on existing indemnification agreements as well as prospectively to new indemnification agreements. The guidance is effective for fiscal years beginning after December 15, 2012. The Company does not expect adoption of this guidance to have a material impact on the Company’s consolidated financial statements.


6


(3) Business Combinations
FDIC-Assisted Transactions
Since April 2010, the Company has acquired the banking operations, including the acquisition of certain assets and the assumption of liabilities, of nine financial institutions in FDIC-assisted transactions.
The following table presents details related to these transactions:
 
(Dollars in thousands)
Lincoln 
Park
 
Wheatland
 
Ravenswood
 
Community First
Bank - Chicago
 
The Bank  of
Commerce
 
First
Chicago
 
Charter
National
 
Second Federal
 
First United Bank
Date of acquisition
April 23,
2010
 
April 23,
2010
 
August 6,
2010
 
February 4,
2011
 
March 25,
2011
 
July 8,
2011
 
February 10,
2012
 
July 20,
2012
 
September 28,
2012
Fair value of assets acquired, at the acquisition date
$
157,078

 
$
343,870

 
$
173,919

 
$
50,891

 
$
173,986

 
$
768,873

 
$
92,409

 
$
171,625

 
$
328,142

Fair value of loans acquired, at the acquisition date
103,420

 
175,277

 
97,956

 
27,332

 
77,887

 
330,203

 
45,555

 

 
78,832

Fair value of liabilities assumed, at the acquisition date
192,018

 
415,560

 
122,943

 
49,779

 
168,472

 
741,508

 
91,570

 
171,582

 
321,552

Fair value of reimbursable losses, at the acquisition date(1)
23,289

 
90,478

 
43,996

 
6,672

 
48,853

 
273,311

 
13,164

 

 
65,100

Gain on bargain purchase recognized
4,179

 
22,315

 
6,842

 
1,957

 
8,627

 
27,390

 
785

 
43

 
6,590

(1) As no assets subject to loss sharing agreements were acquired in the acquisition of Second Federal, there was no fair value of reimbursable losses recorded.
Loans comprise the majority of the assets acquired in nearly all of these transactions, most of which are subject to loss sharing agreements with the FDIC whereby the FDIC has agreed to reimburse the Company for 80% of losses incurred on the purchased loans, other real estate owned (“OREO”), and certain other assets. Additionally, the loss share agreements with the FDIC require the Company to reimburse the FDIC in the event that actual losses on covered assets are lower than the original loss estimates agreed upon with the FDIC with respect of such assets in the loss share agreements. The Company refers to the loans subject to these loss-sharing agreements as “covered loans” and uses the term “covered assets” to refer to covered loans, covered OREO and certain other covered assets. The agreements with the FDIC require that the Company follow certain servicing procedures or risk losing the FDIC reimbursement of covered asset losses.
On their respective acquisition dates in 2012, the Company announced that its wholly-owned subsidiary banks, Old Plank Trail Community Bank, N.A. ("Old Plank Trail Bank"), Hinsdale Bank and Trust Company ("Hinsdale Bank") and Barrington Bank and Trust Company, N.A. ("Barrington"), acquired certain assets and liabilities and the banking operations of First United Bank of Crete, Illinois ("First United Bank"), Second Federal Savings and Loan Association of Chicago ("Second Federal") and Charter National Bank and Trust (“Charter National”), respectively, in FDIC-assisted transactions.
The loans covered by the loss sharing agreements are classified and presented as covered loans and the estimated reimbursable losses are recorded as an FDIC indemnification asset in the Consolidated Statements of Condition. The Company recorded the acquired assets and liabilities at their estimated fair values at the acquisition date. The fair value for loans reflected expected credit losses at the acquisition date. Therefore, the Company will only recognize a provision for credit losses and charge-offs on the acquired loans for any further credit deterioration subsequent to the acquisition date. See Note 7 — Allowance for Loan Losses, Allowance for Losses on Lending-Related Commitments and Impaired Loans for further discussion of the allowance on covered loans.
The loss share agreements with the FDIC cover realized losses on loans, foreclosed real estate and certain other assets. These loss share assets are measured separately from the loan portfolios because they are not contractually embedded in the loans and are not transferable with the loans should the Company choose to dispose of them. Fair values at the acquisition dates were estimated based on projected cash flows available for loss-share based on the credit adjustments estimated for each loan pool and the loss share percentages. The loss share assets are also separately measured from the related loans and foreclosed real estate and recorded as FDIC indemnification assets on the Consolidated Statements of Condition. Subsequent to the acquisition

7


date, reimbursements received from the FDIC for actual incurred losses will reduce the FDIC indemnification assets. Reductions to expected losses, to the extent such reductions to expected losses are the result of an improvement to the actual or expected cash flows from the covered assets, will also reduce the FDIC indemnification assets. Although these assets are contractual receivables from the FDIC, there are no contractual interest rates. Additions to expected losses will require an increase to the allowance for loan losses and a corresponding increase to the FDIC indemnification assets. The corresponding accretion is recorded as a component of non-interest income on the Consolidated Statements of Income.
The following table summarizes the activity in the Company’s FDIC indemnification asset during the periods indicated:
 

Three Months Ended
 
Nine Months Ended
(Dollars in thousands)
September 30, 2012
 
September 30, 2011
 
September 30, 2012
 
September 30, 2011
Balance at beginning of period
$
222,568

 
$
110,049

 
$
344,251

 
$
118,182

Additions from acquisitions
65,100

 
273,311

 
78,264

 
328,837

Additions from reimbursable expenses
5,669

 
3,707

 
18,646

 
8,778

Accretion
(1,139
)
 
393

 
(3,919
)
 
1,057

Changes in expected reimbursements from the FDIC for changes in expected credit losses
(16,579
)
 
(344
)
 
(46,343
)
 
(12,510
)
Payments received from the FDIC
(37,314
)
 
(7,810
)
 
(152,594
)
 
(65,038
)
Balance at end of period
$
238,305

 
$
379,306

 
$
238,305

 
$
379,306

Other Bank Acquisitions
On April 13, 2012, the Company acquired a branch of Suburban Bank & Trust Company (“Suburban”) located in Orland Park, Illinois. Through this transaction, the Company acquired approximately $52 million of deposits and $3 million of loans. The Company recorded goodwill of $1.5 million on the branch acquisition.
On September 30, 2011, the Company acquired Elgin State Bancorp, Inc. (“ESBI”). ESBI was the parent company of Elgin State Bank, which operated three banking locations in Elgin, Illinois. As part of this transaction, Elgin State Bank was merged into the Company’s wholly-owned subsidiary bank, St. Charles Bank & Trust Company (“St. Charles”). St. Charles acquired assets with a fair value of approximately $263.2 million, including $146.7 million of loans, and assumed liabilities with a fair value of approximately $248.4 million, including $241.1 million of deposits. Additionally, the Company recorded goodwill of $5.0 million on the acquisition.
Specialty Finance Acquisition
On June 8, 2012, the Company completed its acquisition of Macquarie Premium Funding Inc., the Canadian insurance premium funding business of Macquarie Group. Through this transaction, the Company acquired approximately $213 million of gross premium finance receivables. The Company recorded goodwill of approximately $22.8 million on the acquisition.
Wealth Management Acquisitions
On March 30, 2012, the Company’s wholly-owned subsidiary, The Chicago Trust Company, N.A. (“CTC”), acquired the trust operations of Suburban. Through this transaction, CTC acquired trust accounts having assets under administration of approximately $160 million, in addition to land trust accounts. The Company recorded goodwill of $1.8 million on the trust operations acquisition.
On July 1, 2011, the Company acquired Great Lakes Advisors, Inc. (“Great Lakes Advisors”), a Chicago-based investment manager with approximately $2.4 billion in assets under management. The Company acquired assets with a fair value of approximately $26.0 million and assumed liabilities with a fair value of approximately $8.8 million. The Company recorded goodwill of $15.7 million on the acquisition.

Mortgage Banking Acquisitions
On April 13, 2011, the Company acquired certain assets and assumed certain liabilities of the mortgage banking business of River City Mortgage, LLC (“River City”) of Bloomington, Minnesota. Licensed to originate loans in five states, and with offices in Minnesota, Nebraska and North Dakota, River City originated nearly $500 million in mortgage loans in 2010.

8


On February 3, 2011, the Company acquired certain assets and assumed certain liabilities of the mortgage banking business of Woodfield Planning Corporation (“Woodfield”) of Rolling Meadows, Illinois. With offices in Rolling Meadows, Illinois and Crystal Lake, Illinois, Woodfield originated approximately $180 million in mortgage loans in 2010.
Purchased loans with evidence of credit quality deterioration since origination
Purchased loans acquired in a business combination are recorded at estimated fair value on their purchase date. Expected future cash flows at the purchase date in excess of the fair value of loans are recorded as interest income over the life of the loans if the timing and amount of the future cash flows is reasonably estimable (“accretable yield”). The difference between contractually required payments and the cash flows expected to be collected at acquisition is referred to as the non-accretable difference and represents probable losses in the portfolio.
In determining the acquisition date fair value of purchased impaired loans, and in subsequent accounting, the Company aggregates these purchased loans into pools of loans by common risk characteristics, such as credit risk rating and loan type. Subsequent to the purchase date, increases in cash flows over those expected at the purchase date are recognized as interest income prospectively. Subsequent decreases to the expected cash flows will generally result in a provision for loan losses.
The Company purchased a portfolio of life insurance premium finance receivables in 2009. These purchased life insurance premium finance receivables are valued on an individual basis with the accretable component being recognized into interest income using the effective yield method over the estimated remaining life of the loans. The non-accretable portion is evaluated each quarter and if the loans’ credit related conditions improve, a portion is transferred to the accretable component and accreted over future periods. In the event a specific loan prepays in whole, any remaining accretable and non-accretable discount is recognized in income immediately. If credit related conditions deteriorate, an allowance related to these loans will be established as part of the provision for credit losses.
See Note 6—Loans, for more information on loans acquired with evidence of credit quality deterioration since origination.
(4) Cash and Cash Equivalents
For purposes of the Consolidated Statements of Cash Flows, the Company considers cash and cash equivalents to include cash on hand, cash items in the process of collection, non-interest bearing amounts due from correspondent banks, federal funds sold and securities purchased under resale agreements with original maturities of three months or less.


9



(5) Available-For-Sale Securities
The following tables are a summary of the available-for-sale securities portfolio as of the dates shown:
 

September 30, 2012
(Dollars in thousands)
Amortized
Cost
 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Fair
Value
U.S. Treasury
$
25,045

 
$
211

 
$

 
$
25,256

U.S. Government agencies
626,725

 
3,833

 
(2,374
)
 
628,184

Municipal
96,696

 
2,711

 
(23
)
 
99,384

Corporate notes and other:
 
 
 
 
 
 
 
Financial issuers
142,158

 
2,550

 
(5,170
)
 
139,538

Other
17,200

 
251

 

 
17,451

Mortgage-backed: (1)
 
 
 
 
 
 
 
Agency
225,393

 
13,733

 

 
239,126

Non-agency CMOs
66,422

 
690

 

 
67,112

Other equity securities
43,737

 
216

 
(3,236
)
 
40,717

Total available-for-sale securities
$
1,243,376

 
$
24,195

 
$
(10,803
)
 
$
1,256,768

 

December 31, 2011
 
Amortized
Cost
 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Fair
Value
(Dollars in thousands)
 
 
 
U.S. Treasury
$
16,028

 
$
145

 
$

 
$
16,173

U.S. Government agencies
760,533

 
5,596

 
(213
)
 
765,916

Municipal
57,962

 
2,159

 
(23
)
 
60,098

Corporate notes and other:
 
 
 
 
 
 
 
Financial issuers
149,229

 
1,914

 
(8,499
)
 
142,644

Other
27,070

 
287

 
(65
)
 
27,292

Mortgage-backed: (1)
 
 
 
 
 
 
 
Agency
206,549

 
12,078

 
(15
)
 
218,612

Non-agency CMOs
29,767

 
175

 
(3
)
 
29,939

Other equity securities
37,595

 
48

 
(6,520
)
 
31,123

Total available-for-sale securities
$
1,284,733

 
$
22,402

 
$
(15,338
)
 
$
1,291,797

 
(1)
Consisting entirely of residential mortgage-backed securities, none of which are subprime.

10


The following table presents the portion of the Company’s available-for-sale securities portfolio which has gross unrealized losses, reflecting the length of time that individual securities have been in a continuous unrealized loss position at September 30, 2012:
 
 
Continuous unrealized
losses existing for
less than 12 months
 
Continuous unrealized
losses existing for
greater than 12 months
 
Total
(Dollars in thousands)
Fair Value
 
Unrealized losses
 
Fair Value
 
Unrealized losses
 
Fair Value
 
Unrealized losses
U.S. Treasury
$

 
$

 
$

 
$

 
$

 
$

U.S. Government agencies
216,383

 
(2,374
)
 

 

 
216,383

 
(2,374
)
Municipal
14,177

 
(22
)
 
711

 
(1
)
 
14,888

 
(23
)
Corporate notes and other:
 
 
 
 
 
 
 
 
 
 
 
Financial issuers
21,248

 
(1,095
)
 
81,838

 
(4,075
)
 
103,086

 
(5,170
)
Other

 

 

 

 

 

Mortgage-backed:
 
 
 
 
 
 
 
 
 
 
 
Agency

 

 

 

 

 

Non-agency CMOs

 

 

 

 

 

Other equity securities
22,164

 
(3,236
)
 

 

 
22,164

 
(3,236
)
Total
$
273,972

 
$
(6,727
)
 
$
82,549

 
$
(4,076
)
 
$
356,521

 
$
(10,803
)

The Company conducts a regular assessment of its investment securities to determine whether securities are other-than-temporarily impaired considering, among other factors, the nature of the securities, credit ratings or financial condition of the issuer, the extent and duration of the unrealized loss, expected cash flows, market conditions and the Company’s ability to hold the securities through the anticipated recovery period.
The Company does not consider securities with unrealized losses at September 30, 2012 to be other-than-temporarily impaired. The Company does not intend to sell these investments and it is more likely than not that the Company will not be required to sell these investments before recovery of the amortized cost bases, which may be the maturity dates of the securities. The unrealized losses within each category have occurred as a result of changes in interest rates, market spreads and market conditions subsequent to purchase. Securities with continuous unrealized losses existing for more than twelve months were comprised almost entirely of corporate securities of financial issuers. The corporate securities of financial issuers in this category included seven fixed-to-floating rate bonds, one fixed rate bond and three trust-preferred securities, all of which continue to be considered investment grade. Additionally, a review of the issuers indicated that they each have strong capital ratios.
The following table provides information as to the amount of gross gains and gross losses realized and proceeds received through the sales of available-for-sale investment securities:
 

Three months ended September 30,
 
Nine months ended September 30,
(Dollars in thousands)
2012
 
2011
 
2012
 
2011
Realized gains
$
413

 
$
292

 
$
2,350

 
$
1,550

Realized losses
(4
)
 
(67
)
 
(16
)
 
(67
)
Net realized gains
$
409

 
$
225

 
$
2,334

 
$
1,483

Other than temporary impairment charges

 

 

 

Gains on available-for-sale securities, net
$
409

 
$
225

 
$
2,334

 
$
1,483

Proceeds from sales of available-for-sale securities
$
694,608

 
$
551,515

 
$
2,059,154

 
$
605,026


11


The amortized cost and fair value of securities as of September 30, 2012 and December 31, 2011, by contractual maturity, are shown in the following table. Contractual maturities may differ from actual maturities as borrowers may have the right to call or repay obligations with or without call or prepayment penalties. Mortgage-backed securities are not included in the maturity categories in the following maturity summary as actual maturities may differ from contractual maturities because the underlying mortgages may be called or prepaid without penalties:
 

September 30, 2012
 
December 31, 2011
(Dollars in thousands)
Amortized Cost
 
Fair Value
 
Amortized Cost
 
Fair Value
Due in one year or less
$
83,658

 
$
83,863

 
$
121,400

 
$
121,662

Due in one to five years
471,863

 
471,747

 
532,828

 
530,632

Due in five to ten years
135,580

 
137,116

 
95,279

 
95,508

Due after ten years
216,723

 
217,087

 
261,315

 
264,321

Mortgage-backed
291,815

 
306,238

 
236,316

 
248,551

Other equity securities
43,737

 
40,717

 
37,595

 
31,123

Total available-for-sale securities
$
1,243,376

 
$
1,256,768

 
$
1,284,733

 
$
1,291,797

At both September 30, 2012 and December 31, 2011, securities having a carrying value of $1.1 billion, which include securities traded but not yet settled, were pledged as collateral for public deposits, trust deposits, FHLB advances, securities sold under repurchase agreements and derivatives. At September 30, 2012, there were no securities of a single issuer, other than U.S. Government-sponsored agency securities, which exceeded 10% of shareholders’ equity.
(6) Loans
The following table shows the Company’s loan portfolio by category as of the dates shown:
 
 
September 30,
 
December 31,
 
September 30,
(Dollars in thousands)
2012
 
2011
 
2011
Balance:
 
 
 
 
 
Commercial
$
2,771,053

 
$
2,498,313

 
$
2,337,098

Commercial real estate
3,699,712

 
3,514,261

 
3,465,321

Home equity
807,592

 
862,345

 
879,180

Residential real estate
376,678

 
350,289

 
326,207

Premium finance receivables—commercial
1,982,945

 
1,412,454

 
1,417,572

Premium finance receivables—life insurance
1,665,620

 
1,695,225

 
1,671,443

Indirect consumer
77,378

 
64,545

 
62,452

Consumer and other
108,922

 
123,945

 
113,438

Total loans, net of unearned income, excluding covered loans
$
11,489,900

 
$
10,521,377

 
$
10,272,711

Covered loans
657,525

 
651,368

 
680,075

Total loans
$
12,147,425

 
$
11,172,745

 
$
10,952,786

Mix:
 
 
 
 
 
Commercial
23
%
 
22
%
 
21
%
Commercial real estate
30

 
31

 
32

Home equity
7

 
8

 
8

Residential real estate
3

 
3

 
3

Premium finance receivables—commercial
16

 
13

 
13

Premium finance receivables—life insurance
14

 
15

 
15

Indirect consumer
1

 
1

 
1

Consumer and other
1

 
1

 
1

Total loans, net of unearned income, excluding covered loans
95
%
 
94
%
 
94
%
Covered loans
5

 
6

 
6

Total loans
100
%
 
100
%
 
100
%

12


Certain premium finance receivables are recorded net of unearned income. The unearned income portions of such premium finance receivables were $39.5 million at September 30, 2012, $34.6 million at December 31, 2011 and $36.4 million at September 30, 2011, respectively. Certain life insurance premium finance receivables attributable to the life insurance premium finance loan acquisition in 2009 as well as the covered loans acquired in the FDIC-assisted acquisitions starting in 2010 are recorded net of credit discounts. See “Acquired Loan Information at Acquisition” below.
Indirect consumer loans include auto, boat and other indirect consumer loans. Total loans, excluding loans acquired with evidence of credit quality deterioration since origination, include net deferred loan fees and costs and fair value purchase accounting adjustments totaling $14.3 million at September 30, 2012, $12.8 million at December 31, 2011 and $13.5 million at September 30, 2011.
The Company’s loan portfolio is generally comprised of loans to consumers and small to medium-sized businesses located within the geographic market areas that the Company serves. The premium finance receivables portfolios are made to customers in the United States and Canada on a national basis and the majority of the indirect consumer loans were generated through a network of local automobile dealers. As a result, the Company strives to maintain a loan portfolio that is diverse in terms of loan type, industry, borrower and geographic concentrations. Such diversification reduces the exposure to economic downturns that may occur in different segments of the economy or in different industries.
It is the policy of the Company to review each prospective credit in order to determine the appropriateness and, when required, the adequacy of security or collateral necessary to obtain when making a loan. The type of collateral, when required, will vary from liquid assets to real estate. The Company seeks to ensure access to collateral, in the event of default, through adherence to state lending laws and the Company’s credit monitoring procedures.
Acquired Loan Information at Acquisition—Loans with evidence of credit quality deterioration since origination
As part of our acquisition of a portfolio of life insurance premium finance loans in 2009 as well as the bank acquisitions starting in 2010, we acquired loans for which there was evidence of credit quality deterioration since origination and we determined that it was probable that the Company would be unable to collect all contractually required principal and interest payments.

The following table presents the unpaid principal balance and carrying value for loans acquired with evidence of credit quality deterioration since origination:
 

September 30, 2012
 
December 31, 2011
 
Unpaid
Principal
 
Carrying
 
Unpaid
Principal
 
Carrying
(Dollars in thousands)
Balance
 
Value
 
Balance
 
Value
Bank acquisitions
$
812,285

 
$
607,300

 
$
866,874

 
$
596,946

Life insurance premium finance loans acquisition
561,616

 
537,032

 
632,878

 
598,463

For loans acquired with evidence of credit quality deterioration since origination as a result of acquisitions during the nine months ended September 30, 2012, the following table provides estimated details on these loans at the date of acquisition:
 
(Dollars in thousands)
Charter National
 
First United Bank
Contractually required payments including interest
$
40,475

 
$
152,937

Less: Nonaccretable difference
11,855

 
79,492

Cash flows expected to be collected (1)
28,620

 
73,445

Less: Accretable yield
2,288

 
6,052

Fair value of loans acquired with evidence of credit quality deterioration since origination
$
26,332

 
$
67,393

 
(1)
Represents undiscounted expected principal and interest cash flows at acquisition.
See Note 7—Allowance for Loan Losses, Allowance for Losses on Lending-Related Commitments and Impaired Loans for further discussion regarding the allowance for loan losses associated with loans acquired with evidence of credit quality deterioration since origination at September 30, 2012.

13


Accretable Yield Activity
Changes in expected cash flows may vary from period to period as the Company periodically updates its cash flow model assumptions for loans acquired with evidence of credit quality deterioration since origination. The factors that most significantly affect the estimates of gross cash flows expected to be collected, and accordingly the accretable yield, include changes in the benchmark interest rate indices for variable-rate products and changes in prepayment assumptions and loss estimates. The following table provides activity for the accretable yield of loans acquired with evidence of credit quality deterioration since origination:
 
 
Three Months Ended
September 30, 2012
 
Three Months Ended
September 30, 2011
(Dollars in thousands)
Bank Acquisitions
 
Life Insurance
Premium Finance Loans
 
Bank
Acquisitions
 
Life Insurance
Premium
Finance Loans
Accretable yield, beginning balance
$
171,801

 
$
14,626

 
$
80,748

 
$
24,891

Acquisitions
6,052

 

 
24,695

 

Accretable yield amortized to interest income
(12,266
)
 
(2,309
)
 
(9,820
)
 
(5,127
)
Accretable yield amortized to indemnification asset (1)
(16,472
)
 

 
(4,367
)
 

Reclassification from non-accretable difference (2)
4,636

 
2,951

 
2,145

 

(Decreases) increases in interest cash flows due to payments and changes in interest rates
(1,951
)
 
158

 
(6,904
)
 
432

Accretable yield, ending balance (3)
$
151,800

 
$
15,426

 
$
86,497

 
$
20,196

 
(1)
Represents the portion of the current period accreted yield, resulting from lower expected losses, applied to reduce the loss share indemnification asset.
(2)
Reclassification is the result of subsequent increases in expected principal cash flows.
(3)
As of September 30, 2012, the Company estimates that the remaining accretable yield balance to be amortized to the indemnification asset for the bank acquisitions is $74.8 million. The remainder of the accretable yield related to bank acquisitions is expected to be amortized to interest income.
 
Nine Months Ended
September 30, 2012
 
Nine Months Ended
September 30, 2011
(Dollars in thousands)
Bank Acquisitions
 
Life Insurance
Premium Finance Loans
 
Bank
Acquisitions
 
Life Insurance
Premium
Finance Loans
Accretable yield, beginning balance
$
173,120

 
$
18,861

 
$
39,809

 
$
33,315

Acquisitions
8,340

 

 
29,797

 

Accretable yield amortized to interest income
(40,545
)
 
(8,795
)
 
(24,869
)
 
(19,301
)
Accretable yield amortized to indemnification asset (1)
(55,912
)
 

 
(17,045
)
 

Reclassification from non-accretable difference (2)
53,827

 
4,096

 
52,820

 
3,857

Increases in interest cash flows due to payments and changes in interest rates
12,970

 
1,264

 
5,985

 
2,325

Accretable yield, ending balance (3)
$
151,800

 
$
15,426

 
$
86,497

 
$
20,196

 
(1)
Represents the portion of the current period accreted yield, resulting from lower expected losses, applied to reduce the loss share indemnification asset.
(2)
Reclassification is the result of subsequent increases in expected principal cash flows.
(3)
As of September 30, 2012, the Company estimates that the remaining accretable yield balance to be amortized to the indemnification asset for the bank acquisitions is $74.8 million. The remainder of the accretable yield related to bank acquisitions is expected to be amortized to interest income.

14


(7) Allowance for Loan Losses, Allowance for Losses on Lending-Related Commitments and Impaired Loans
The tables below show the aging of the Company’s loan portfolio at September 30, 2012December 31, 2011 and September 30, 2011: 
As of September 30, 2012

 
90+ days and still accruing
 
60-89 days past due
 
30-59 days past due
 

 

(Dollars in thousands)
Nonaccrual
 
 
 
 
Current
 
Total Loans
Loan Balances:
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
15,163

 
$

 
$
5,985

 
$
16,631

 
$
1,518,596

 
$
1,556,375

Franchise
1,792

 

 

 

 
177,914

 
179,706

Mortgage warehouse lines of credit

 

 

 

 
225,295

 
225,295

Community Advantage—homeowners association

 

 

 

 
73,881

 
73,881

Aircraft
428

 

 

 
150

 
20,866

 
21,444

Asset-based lending
328

 

 
1,211

 
5,556

 
525,966

 
533,061

Municipal

 

 

 

 
90,404

 
90,404

Leases

 

 

 

 
83,351

 
83,351

Other

 

 

 

 
1,576

 
1,576

Purchased non-covered commercial (1)

 
499

 

 

 
5,461

 
5,960

Total commercial
17,711

 
499

 
7,196

 
22,337

 
2,723,310

 
2,771,053

Commercial real-estate:
 
 
 
 
 
 
 
 
 
 
 
Residential construction
2,141

 

 
3,008

 

 
39,106

 
44,255

Commercial construction
3,315

 

 
163

 
13,072

 
152,993

 
169,543

Land
10,629

 

 
3,033

 
3,017

 
116,807

 
133,486

Office
6,185

 

 
5,717

 
7,237

 
565,182

 
584,321

Industrial
1,885

 

 
645

 
1,681