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~~March 31, 2013



¨	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~~37,039,332 shares, as of ~~November 1, 2012~~April 30, 2013

Table of Contents

TABLE OF CONTENTS



		Page
	PART I. — FINANCIAL INFORMATION
ITEM 1.	Financial Statements	1
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5954
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	~~111~~100
ITEM 4.	Controls and Procedures	~~113~~102
	PART II. — OTHER INFORMATION
ITEM 1.	Legal Proceedings	NA
ITEM 1A.	Risk Factors	~~114~~103
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	~~114~~103
ITEM 3.	Defaults Upon Senior Securities	NA
ITEM 4.	Mine Safety Disclosures	NA
ITEM 5.	Other Information	NA
ITEM 6.	Exhibits	~~115~~104
	Signatures	~~116~~105

Table of Contents

PART I

ITEM 1. FINANCIAL STATEMENTS

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CONDITION	WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CONDITION									WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CONDITION

	(Unaudited)						(Unaudited)			(Unaudited)						(Unaudited)
(In thousands, except share data)	September 30, 2012			December 31, 2011			September 30, 2011			March 31, 2013			December 31, 2012			March 31, 2012
Assets
Cash and due from banks	$	186,752		$	148,012		$	147,270		$	199,575		$	284,731		$	146,014
Federal funds sold and securities purchased under resale agreements	26,062			21,692			13,452			13,626			30,297			14,588
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
Interest-bearing deposits with other banks (no balance restricted for securitization investors at March 31, 2013 and December 31, 2012, and a balance restricted for securitization investors of $529,418 at March 31, 2012)										685,302			1,035,743			900,755
Available-for-sale securities, at fair value	1,256,768			1,291,797			1,267,682			1,870,831			1,796,076			1,869,344
Trading account securities	635			2,490			297			1,036			583			1,140
Federal Home Loan Bank and Federal Reserve Bank stock	80,687			100,434			99,749			76,601			79,564			88,216
Brokerage customer receivables	30,633			27,925			27,935			25,614			24,864			31,085
Mortgage loans held-for-sale, at fair value	548,300			306,838			204,081			370,570			385,033			339,600
Mortgage loans held-for-sale, at lower of cost or market	21,685			13,686			8,955			10,352			27,167			10,728
Loans, net of unearned income, excluding covered loans	11,489,900			10,521,377			10,272,711			11,900,312			11,828,943			10,717,384
Covered loans	657,525			651,368			680,075			518,661			560,087			691,220
Total loans	12,147,425			11,172,745			10,952,786			12,418,973			12,389,030			11,408,604
Less: Allowance for loan losses	112,287			110,381			118,649			110,348			107,351			111,023
Less: Allowance for covered loan losses	21,926			12,977			12,496			12,272			13,454			17,735
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
Net loans (no balance restricted for securitization investors at March 31, 2013 and December 31, 2012, and a balance restricted for securitization investors of $156,132 at March 31, 2012)										12,296,353			12,268,225			11,279,846
Premises and equipment, net	461,905			431,512			412,478			504,803			501,205			434,700
FDIC indemnification asset	238,305			344,251			379,306			170,696			208,160			263,212
Accrued interest receivable and other assets	557,884			444,912			468,711			485,746			511,617			463,394
Trade date securities receivable	307,295			634,047			637,112
Goodwill	331,634			305,468			302,369			343,632			345,401			307,295
Other intangible assets	22,405			22,070			22,413			19,510			20,947			22,101
Total assets	$	17,018,592		$	15,893,808		$	15,914,804		$	17,074,247		$	17,519,613		$	16,172,018
Liabilities and Shareholders’ Equity
Deposits:
Non-interest bearing	$	2,162,215		$	1,785,433		$	1,631,709		$	2,243,440		$	2,396,264		$	1,901,753
Interest bearing	11,685,750			10,521,834			10,674,299			11,719,317			12,032,280			10,764,100
Total deposits	13,847,965			12,307,267			12,306,008			13,962,757			14,428,544			12,665,853
Notes payable	2,275			52,822			3,004			31,911			2,093			52,639
Federal Home Loan Bank advances	414,211			474,481			474,570			414,032			414,122			466,391
Other borrowings	377,229			443,753			448,082			256,244			274,411			411,037
Secured borrowings—owed to securitization investors	—			600,000			600,000			—			—			428,000
Subordinated notes	15,000			35,000			40,000			15,000			15,000			35,000
Junior subordinated debentures	249,493			249,493			249,493			249,493			249,493			249,493
Trade date securities payable	412			47			73,874			1,250			—			—
Accrued interest payable and other liabilities	350,707			187,412			191,586			317,872			331,245			175,684
Total liabilities	15,257,292			14,350,275			14,386,617			15,248,559			15,714,908			14,484,097
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
Series A - $1,000 liquidation value; 50,000 shares issued and outstanding at March 31, 2013, December 31, 2012 and March 31, 2012										49,941			49,906			49,802
Series C - $1,000 liquidation value; 126,500 shares issued and outstanding at March 31, 2013, December 31, 2012 and March 31, 2012										126,500			126,500			126,500
Common stock, no par value; $1.00 stated value; 100,000,000 shares authorized at March 31, 2013 and December 31, 2012 and 60,000,000 shares authorized at March 31, 2012; 37,272,279 shares issued at March 31, 2013, 37,107,684 shares issued at December 31, 2012, and 36,521,562 shares issued at March 31, 2012										37,272			37,108			36,522
Surplus	1,018,417			1,001,316			997,854			1,040,098			1,036,295			1,008,326
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		)
Treasury stock, at cost, 258,572 shares at March 31, 2013, 249,329 shares at December 31, 2012, and 232,182 shares at March 31, 2012										(8,187		)	(7,838		)	(6,559		)
Retained earnings	527,550			459,457			441,268			581,131			555,023			478,160
Accumulated other comprehensive income (loss)	9,805			(2,878		)	3,471
Accumulated other comprehensive (loss) income										(1,067		)	7,711			(4,830		)
Total shareholders’ equity	1,761,300			1,543,533			1,528,187			1,825,688			1,804,705			1,687,921
Total liabilities and shareholders’ equity	$	17,018,592		$	15,893,808		$	15,914,804		$	17,074,247		$	17,519,613		$	16,172,018

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)	WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)										WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	Three Months Ended					Nine Months Ended					Three Months Ended
	September 30,					September 30,					March 31,
(In thousands, except per share data)	2012			2011		2012			2011		2013			2012
Interest income
Interest and fees on loans	$	149,271		$	140,543	$	436,926		$	409,424	$	142,114		$	143,555
Interest bearing deposits with banks	362			917		813			2,723		569			248
Federal funds sold and securities purchased under resale agreements	7			28		25			83		15			12
Securities	7,691			12,667		30,048			33,645		8,752			11,847
Trading account securities	3			15		22			38		5			9
Federal Home Loan Bank and Federal Reserve Bank stock	649			584		1,894			1,706		684			604
Brokerage customer receivables	218			197		650			557		174			211
Total interest income	158,201			154,951		470,378			448,176		152,313			156,486
Interest expense
Interest on deposits	16,794			21,893		52,097			68,253		14,504			18,030
Interest on Federal Home Loan Bank advances	2,817			4,166		9,268			12,134		2,764			3,584
Interest on notes payable and other borrowings	2,024			2,874		7,400			8,219		1,154			3,102
Interest on secured borrowings—owed to securitization investors	795			3,003		5,087			9,037		—			2,549
Interest on subordinated notes	67			168		362			574		59			169
Interest on junior subordinated debentures	3,129			4,437		9,424			13,229		3,119			3,157
Total interest expense	25,626			36,541		83,638			111,446		21,600			30,591
Net interest income	132,575			118,410		386,740			336,730		130,713			125,895
Provision for credit losses	18,799			29,290		56,890			83,821		15,687			17,400
Net interest income after provision for credit losses	113,776			89,120		329,850			252,909		115,026			108,495
Non-interest income
Wealth management	13,252			11,994		39,046			32,831		14,828			12,401
Mortgage banking	31,127			14,469		75,268			38,917		30,145			18,534
Service charges on deposit accounts	4,235			4,085		12,437			10,990		4,793			4,208
Gains on available-for-sale securities, net	409			225		2,334			1,483		251			816
Fees from covered call options											1,639			3,123
Gain on bargain purchases, net	6,633			27,390		7,418			37,974		—			840
Trading (losses) gains, net	(998		)	591		(1,780		)	121		(435		)	146
Other	8,287			8,493		26,180			22,470		6,158			6,955
Total non-interest income	62,945			67,247		160,903			144,786		57,379			47,023
Non-interest expense
Salaries and employee benefits	75,280			61,863		212,449			171,041		77,513			69,030
Equipment	5,888			4,501		16,754			13,174		6,184			5,400
Occupancy, net	8,024			7,512		23,814			20,789		8,853			8,062
Data processing	4,103			3,836		11,561			10,506		4,599			3,618
Advertising and marketing	2,528			2,119		6,713			5,173		2,040			2,006
Professional fees	4,653			5,085		12,104			13,164		3,221			3,604
Amortization of other intangible assets	1,078			970		3,216			2,363		1,120			1,049
FDIC insurance	3,549			3,100		10,383			10,899		3,444			3,357
OREO expenses, net	3,808			5,134		16,834			17,519
OREO (income) expense, net											(1,620		)	7,178
Other	15,637			12,201		45,664			37,008		14,765			14,455
Total non-interest expense	124,548			106,321		359,492			301,636		120,119			117,759
Income before taxes	52,173			50,046		131,261			96,059		52,286			37,759
Income tax expense	19,871			19,844		50,154			37,705		20,234			14,549
Net income	$	32,302		$	30,202	$	81,107		$	58,354	$	32,052		$	23,210
Preferred stock dividends and discount accretion	$	2,616		$	1,032	$	6,477		$	3,096	$	2,616		$	1,246
Net income applicable to common shares	$	29,686		$	29,170	$	74,630		$	55,258	$	29,436		$	21,964
Net income per common share—Basic	$	0.82		$	0.82	$	2.06		$	1.57	$	0.80		$	0.61
Net income per common share—Diluted	$	0.66		$	0.65	$	1.70		$	1.26	$	0.65		$	0.50
Cash dividends declared per common share	$	0.09		$	0.09	$	0.18		$	0.18	$	0.09		$	0.09
Weighted average common shares outstanding	36,381			35,550		36,305			35,152		36,976			36,207
Dilutive potential common shares	12,295			10,551		11,292			8,683		12,463			7,530
Average common shares and dilutive common shares	48,676			46,101		47,597			43,835		49,439			43,737

See accompanying notes to unaudited consolidated financial statements.

Table of Contents

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(In thousands)	2012			2011			2012			2011			2013			2012
Net income	$	32,302		$	30,202		$	81,107		$	58,354		$	32,052		$	23,210
Unrealized gains on securities
Unrealized losses on securities
Before tax	3,921			1,212			8,661			15,225			(7,455		)	(3,219		)
Tax effect	(1,563		)	(565		)	(3,447		)	(6,125		)	2,806			1,276
Net of tax	2,358			647			5,214			9,100			(4,649		)	(1,943		)
Less: Reclassification of net gains included in net income
Before tax	409			225			2,334			1,483			251			816
Tax effect	(162		)	(88		)	(934		)	(583		)	(100		)	(327		)
Net of tax	247			137			1,400			900			151			489
Net unrealized gains on securities	2,111			510			3,814			8,200
Unrealized (losses) gains on derivative instruments
Net unrealized losses on securities													(4,800		)	(2,432		)
Unrealized gains on derivative instruments
Before tax	(293		)	(2,088		)	1,439			1,115			1,474			796
Tax effect	119			917			(568		)	(332		)	(586		)	(316		)
Net unrealized (losses) gains on derivative instruments	(174		)	(1,171		)	871			783
Net unrealized gains on derivative instruments													888			480
Foreign currency translation adjustment
Before tax	8,438			—			11,139			—			(6,304		)	—
Tax effect	(2,541		)	—			(3,141		)	—			1,438			—
Net foreign currency translation adjustment	5,897			—			7,998			—			(4,866		)	—
Total other comprehensive income (loss)	7,834			(661		)	12,683			8,983
Total other comprehensive loss													(8,778		)	(1,952		)
Comprehensive income	$	40,136		$	29,541		93,790			67,337			$	23,274		$	21,258

See accompanying notes to unaudited consolidated financial statements.

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WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)	WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)																			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			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		$	49,768	$	35,982	$	1,001,316		$	(112	)	$	459,457		$	(2,878	)	$	1,543,533
Net income	—		—		—			—			81,107			—			81,107			—		—		—			—			23,210			—			23,210
Other comprehensive income, net of tax	—		—		—			—			—			12,683			12,683
Other comprehensive loss, net of tax																				—		—		—			—			—			(1,952		)	(1,952		)
Cash dividends declared on common stock	—		—		—			—			(6,537		)	—			(6,537		)	—		—		—			—			(3,261		)	—			(3,261		)
Dividends on preferred stock	—		—		—			—			(6,374		)	—			(6,374		)	—		—		—			—			(1,212		)	—			(1,212		)
Accretion on preferred stock	103		—		—			—			(103		)	—			—			34		—		—			—			(34		)	—			—
Stock-based compensation	—		—		7,260			—			—			—			7,260			—		—		2,289			—			—			—			2,289
Issuance of Series C preferred stock	126,500		—		(3,810		)	—			—			—			122,690			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			—		407		7,822			(5,592		)	—			—			2,637
Restricted stock awards	—		123		(152		)	(987		)	—			—			(1,016		)	—		94		(94		)	(855		)	—			—			(855		)
Employee stock purchase plan	—		55		1,777			—			—			—			1,832			—		17		465			—			—			—			482
Director compensation plan	—		22		1,108			—			—			—			1,130			—		22		338			—			—			—			360
Balance at September 30, 2012	$	176,371	$	36,647	$	1,018,417		$	(7,490	)	$	527,550		$	9,805		$	1,761,300
Balance at March 31, 2012																				$	176,302	$	36,522	$	1,008,326		$	(6,559	)	$	478,160		$	(4,830	)	$	1,687,921
Balance at December 31, 2012																				$	176,406	$	37,108	$	1,036,295		$	(7,838	)	$	555,023		$	7,711		$	1,804,705
Net income																				—		—		—			—			32,052			—			32,052
Other comprehensive loss, net of tax																				—		—		—			—			—			(8,778		)	(8,778		)
Cash dividends declared on common stock																				—		—		—			—			(3,328		)	—			(3,328		)
Dividends on preferred stock																				—		—		—			—			(2,581		)	—			(2,581		)
Accretion on preferred stock																				35		—		—			—			(35		)	—			—
Stock-based compensation																				—		—		2,413			—			—			—			2,413
Common stock issued for:
Exercise of stock options and warrants																				—		9		320			(214		)	—			—			115
Restricted stock awards																				—		111		90			(135		)	—			—			66
Employee stock purchase plan																				—		13		628			—			—			—			641
Director compensation plan																				—		31		352			—			—			—			383
Balance at March 31, 2013																				$	176,441	$	37,272	$	1,040,098		$	(8,187	)	$	581,131		$	(1,067	)	$	1,825,688

See accompanying notes to unaudited consolidated financial statements.

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WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Nine Months Ended						Three Months Ended
	September 30,						March 31,
(In thousands)	2012			2011			2013			2012
Operating Activities:
Net income	$	81,107		$	58,354		$	32,052		$	23,210
Adjustments to reconcile net income to net cash (used for) provided by operating activities
Adjustments to reconcile net income to net cash provided by operating activities
Provision for credit losses	56,890			83,821			15,687			17,400
Depreciation and amortization	17,624			14,128			6,782			5,627
Stock-based compensation expense	7,260			3,433			2,413			2,289
Tax benefit from stock-based compensation arrangements	1,279			183			200			12
Excess tax benefits from stock-based compensation arrangements	(868		)	(760		)	(222		)	(643		)
Net amortization of premium on securities	4,745			6,308
Net amortization (accretion) of premium on securities							3,424			(2,092		)
Mortgage servicing rights fair value change and amortization, net	(3,469		)	3,626			(273		)	(514		)
Originations and purchases of mortgage loans held-for-sale	(2,688,002		)	(1,662,368		)	(974,432		)	(714,655		)
Proceeds from sales of mortgage loans held-for-sale	2,498,525			1,846,396			1,033,129			699,315
Bank owned life insurance income, net of claims	(2,234		)	(1,888		)	(846		)	(919		)
Decrease in trading securities, net	1,855			4,582
(Increase) decrease in trading securities, net							(453		)	1,350
Net increase in brokerage customer receivables	(2,708		)	(3,386		)	(750		)	(3,160		)
Gains on mortgage loans sold	(59,984		)	(25,617		)	(27,419		)	(14,464		)
Gains on available-for-sale securities, net	(2,334		)	(1,483		)	(251		)	(816		)
Gain on bargain purchases, net	(7,418		)	(37,974		)	—			(840		)
Loss on sales of premises and equipment, net	702			10			1			12
Net (gain) loss on sales and fair value adjustments of other real estate owned							(2,658		)	5,496
Decrease in accrued interest receivable and other assets, net	30,377			7,178			32,914			10,040
Increase (decrease) in accrued interest payable and other liabilities, net	140,857			(2,481		)
Decrease in accrued interest payable and other liabilities, net							(19,617		)	(11,689		)
Net Cash Provided by Operating Activities	74,204			292,062			99,681			14,959
Investing Activities:
Proceeds from maturities of available-for-sale securities	473,331			1,189,834			67,941			280,110
Proceeds from sales of available-for-sale securities	2,059,154			605,026			41,056			737,369
Purchases of available-for-sale securities	(2,079,665		)	(2,015,888		)	(192,379		)	(952,853		)
Net cash received for acquisitions	30,220			91,073			—			8,191
Divestiture of operations							(149,100		)	—
Proceeds from sales of other real estate owned							30,641			25,768
Proceeds received from the FDIC related to reimbursements on covered assets	152,594			65,038			13,932			82,278
Net increase in interest-bearing deposits with banks	(113,963		)	(211,382		)
Net decrease (increase) in interest-bearing deposits with banks							350,441			(151,033		)
Net increase in loans	(739,941		)	(520,770		)	(52,143		)	(221,051		)
Purchases of premises and equipment, net	(45,533		)	(54,769		)	(6,508		)	(8,501		)
Net Cash Used for Investing Activities	(263,803		)	(851,838		)
Net Cash Provided by (Used for) Investing Activities							103,881			(199,722		)
Financing Activities:
Increase in deposit accounts	914,513			383,001
(Decrease) increase in other borrowings, net	(118,552		)	180,723
(Decrease) increase in deposit accounts							(314,618		)	269,326
Increase (decrease) in other borrowings, net							11,576			(34,141		)
Decrease in Federal Home Loan Bank advances, net	(60,000		)	—			—			(8,000		)
Repayment of subordinated notes	(20,000		)	(10,000		)
Payoff of secured borrowing	(600,000		)	—
Excess tax benefits from stock-based compensation arrangements	868			760			222			643
Net proceeds from issuance of preferred stock	122,690			—
Debt defeasance							—			(172,848		)
Net proceeds from issuance of Series C 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			1,354			8,699
Common stock repurchases	(7,378		)	(68		)	(349		)	(6,447		)
Dividends paid	(11,575		)	(9,344		)	(3,574		)	(4,261		)
Net Cash Provided by Financing Activities	232,709			547,918
Net Increase (Decrease) in Cash and Cash Equivalents	43,110			(11,858		)
Net Cash (Used for) Provided by Financing Activities							(305,389		)	175,661
Net Decrease in Cash and Cash Equivalents							(101,827		)	(9,102		)
Cash and Cash Equivalents at Beginning of Period	169,704			172,580			315,028			169,704
Cash and Cash Equivalents at End of Period	$	212,814		$	160,722		$	213,201		$	160,602

See accompanying notes to unaudited consolidated financial statements.

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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~~2012 (“~~2011~~2012 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~~2012 Form 10-K.

(2) Recent Accounting Developments

Accumulated Other Comprehensive Income Reporting by Component

In February 2013, the FASB issued ASU No. 2013-02, "Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” which adds disclosures to make reporting of accumulated other comprehensive income more informative. Specifically, the new guidance requires a Company to identify amounts reclassified out of other comprehensive income by component. The guidance is effective for fiscal years beginning after December 15, 2012. The Company has included the required disclosures in this Form 10-Q by disclosing the reclassification amounts related to its securities, derivatives and foreign currency translation components. Other than requiring additional disclosures, adoption of this guidance did not have a material impact on our consolidated financial statements. See Note 17 - Shareholders' Equity and Earnings Per Share, for further information.

Balance Sheet Offsetting

In January 2013, the FASB issued ASU No. 2013-01, "Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities” to address the disclosure requirements within ASU No. 2011-11 "Disclosures about Offsetting Assets and Liabilities". ASU 2011-11 requires disclosure showing the Company's gross and net positions for derivatives and financial transactions that are either offset in accordance with GAAP or are subject to a master netting or similar agreement. The guidance is effective for fiscal years beginning on or after January 1, 2013. The Company has included required disclosures for the current and comparative periods as required by the new guidance. Other than requiring additional disclosures, adoption of this guidance did not have a material impact on our consolidated financial statements. See Note 14 - Derivative Financial Instruments, for further information.

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~~As of January 1, 2013, the Company ~~does not expect adoption~~is accounting for its FDIC

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indemnification assets in accordance with ASU No. 2012-06. Adoption of this guidance todid not have a material impact on the ~~Company’s~~Company's consolidated financial statements.

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(3) Business Combinations

FDIC-Assisted Transactions

In 2010 and 2011, the Company acquired the banking operations, including the acquisition of certain assets and the assumption of liabilities, of six financial institutions in FDIC-assisted transactions.

Since ~~April 2010,~~February 2012, the Company has acquired the banking operations, including the acquisition of certain assets and the assumption of liabilities, of ~~nine~~three financial institutions in FDIC-assisted transactions.

The following table presents details related to ~~these~~the three recent 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		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		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	$	92,355	$	171,625	$	328,408
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		45,555		—		77,964
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		91,570		171,582		321,734
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		13,164		—		67,190
Gain on bargain purchase recognized	4,179		22,315		6,842		1,957		8,627		27,390		785		43		6,590		785		43		6,675

(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.~~losses.

Loans comprise the majority of the assets acquired in nearly all of these FDIC-assisted transactions since 2010, 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

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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.

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The following table summarizes the activity in the Company’s FDIC indemnification asset during the periods indicated:


	Three Months Ended						Nine Months Ended						Three Months Ended
(Dollars in thousands)	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011			March 31, 2013			March 31, 2012
Balance at beginning of period	$	222,568		$	110,049		$	344,251		$	118,182		$	208,160		$	344,251
Additions from acquisitions	65,100			273,311			78,264			328,837			—			13,164
Additions from reimbursable expenses	5,669			3,707			18,646			8,778			5,033			6,864
Accretion	(1,139		)	393			(3,919		)	1,057
Amortization													(2,468		)	(1,576		)
Changes in expected reimbursements from the FDIC for changes in expected credit losses	(16,579		)	(344		)	(46,343		)	(12,510		)	(26,097		)	(17,213		)
Payments received from the FDIC	(37,314		)	(7,810		)	(152,594		)	(65,038		)	(13,932		)	(82,278		)
Balance at end of period	$	238,305		$	379,306		$	238,305		$	379,306		$	170,696		$	263,212

Divestiture of Previous FDIC-Assisted Acquisition

On February 1, 2013, the Company completed the divestiture of the deposits and current banking operations of Second Federal to Self-Help Federal Credit Union. Through this transaction, the Company divested approximately $149 million of related deposits.

Other Recent Bank Acquisitions

On December 12, 2012, the Company acquired HPK. HPK is the parent company of Hyde Park Bank, which operated two banking locations in the Hyde Park neighborhood of Chicago, Illinois. As part of this transaction, Hyde Park Bank was merged into Beverly Bank. The Company acquired assets with a fair value of approximately $371.6 million, including approximately $118.5 million of loans, and assumed liabilities with a fair value of approximately $344.1 million, including approximately $243.8 million of deposits. Additionally, the Company recorded goodwill of $12.6 million on the acquisition.

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~~21.9 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.~~

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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.

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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.

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(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									March 31, 2013
(Dollars in thousands)	Amortized Cost		Gross unrealized gains		Gross unrealized losses			Fair Value		Amortized Cost		Gross unrealized gains		Gross unrealized losses			Fair Value
U.S. Treasury	$	25,045	$	211	$	—		$	25,256	$	220,215	$	190	$	(2,760	)	$	217,645
U.S. Government agencies	626,725		3,833		(2,374		)	628,184		975,386		2,960		(4,631		)	973,715
Municipal	96,696		2,711		(23		)	99,384		107,947		2,628		(316		)	110,259
Corporate notes and other:
Financial issuers	142,158		2,550		(5,170		)	139,538		136,761		2,569		(2,280		)	137,050
Other	17,200		251		—			17,451		11,628		195		—			11,823
Mortgage-backed: ⁽¹⁾
Agency	225,393		13,733		—			239,126
Non-agency CMOs	66,422		690		—			67,112
Mortgage-backed securities										294,728		7,360		(3,194		)	298,894
Collateralized mortgage obligations										68,496		897		(5		)	69,388
Other equity securities	43,737		216		(3,236		)	40,717		52,413		745		(1,101		)	52,057
Total available-for-sale securities	$	1,243,376	$	24,195	$	(10,803	)	$	1,256,768	$	1,867,574	$	17,544	$	(14,287	)	$	1,870,831


	December 31, 2011											December 31, 2012
	Amortized Cost		Gross unrealized gains				Gross unrealized losses			Fair Value		Amortized Cost			Gross unrealized gains		Gross unrealized losses			Fair Value
(Dollars in thousands)
U.S. Treasury	$	16,028			$	145				$	—		$	16,173	$	220,226	$	198		$	(937	)	$	219,487
U.S. Government agencies	760,533		5,596				(213		)	765,916		986,186			4,839		(986		)	990,039
Municipal	57,962		2,159				(23		)	60,098		107,868			2,899		(296		)	110,471
Corporate notes and other:
Financial issuers	149,229		1,914				(8,499		)	142,644		142,205			2,452		(3,982		)	140,675
Other	27,070		287				(65		)	27,292		13,911			220		—			14,131
Mortgage-backed: ⁽¹⁾
Agency	206,549		12,078				(15		)	218,612
Non-agency CMOs	29,767		175				(3		)	29,939
Mortgage-backed securities												188,485			8,805		(30		)	197,260
Collateralized mortgage obligations												73,386			928		—			74,314
Other equity securities	37,595		48				(6,520		)	31,123		52,846			215		(3,362		)	49,699
Total available-for-sale securities	$	1,284,733	$	22,402			$	(15,338	)	$	1,291,797	$	1,785,113		$	20,556	$	(9,593	)	$	1,796,076



	March 31, 2012
	Amortized Cost		Gross unrealized gains		Gross unrealized losses			Fair Value
(Dollars in thousands)	Amortized Cost		Gross unrealized gains		Gross unrealized losses			Fair Value
U.S. Treasury	$	23,063	$	128	$	(2	)	$	23,189
U.S. Government agencies	682,847		4,082		(4,149		)	682,780
Municipal	67,970		1,963		(18		)	69,915
Corporate notes and other:
Financial issuers	148,492		2,569		(9,044		)	142,017
Other	26,475		329		(5		)	26,799
Mortgage-backed: ⁽¹⁾
Mortgage-backed securities	846,380		11,866		(806		)	857,440
Collateralized mortgage obligations	28,423		286		(1		)	28,708
Other equity securities	42,664		111		(4,279		)	38,496
Total available-for-sale securities	$	1,866,314	$	21,334	$	(18,304	)	$	1,869,344


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

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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~~March 31, 2013:


	Continuous unrealized losses existing for less than 12 months					Continuous unrealized losses existing for greater than 12 months					Total					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			Fair Value		Unrealized losses			Fair Value		Unrealized losses			Fair Value		Unrealized losses
U.S. Treasury	$	—	$	—		$	—	$	—		$	—	$	—		$	197,422	$	(2,760	)	$	—	$	—		$	197,422	$	(2,760	)
U.S. Government agencies	216,383		(2,374		)	—		—			216,383		(2,374		)	510,371		(4,629		)	6,032		(2		)	516,403		(4,631		)
Municipal	14,177		(22		)	711		(1		)	14,888		(23		)	19,977		(314		)	463		(2		)	20,440		(316		)
Corporate notes and other:
Financial issuers	21,248		(1,095		)	81,838		(4,075		)	103,086		(5,170		)	4,606		(37		)	73,696		(2,243		)	78,302		(2,280		)
Other	—		—			—		—			—		—			—		—			—		—			—		—
Mortgage-backed:
Agency	—		—			—		—			—		—
Non-agency CMOs	—		—			—		—			—		—
Mortgage-backed securities																158,142		(3,194		)	—		—			158,142		(3,194		)
Collateralized mortgage obligations																13,616		(5		)	—		—			13,616		(5		)
Other equity securities	22,164		(3,236		)	—		—			22,164		(3,236		)	5,920		(80		)	24,379		(1,021		)	30,299		(1,101		)
Total	$	273,972	$	(6,727	)	$	82,549	$	(4,076	)	$	356,521	$	(10,803	)	$	910,054	$	(11,019	)	$	104,570	$	(3,268	)	$	1,014,624	$	(14,287	)

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~~March 31, 2013 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~~primarily corporate securities of financial ~~issuers.~~issuers and auction rate securities included in other equity securities. The corporate securities of financial issuers in this category ~~included~~ were comprised of 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~~all 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,						Three months ended March 31,
(Dollars in thousands)	2012			2011			2012			2011			2013			2012
Realized gains	$	413		$	292		$	2,350		$	1,550		$	313		$	828
Realized losses	(4		)	(67		)	(16		)	(67		)	(62		)	(12		)
Net realized gains	$	409		$	225		$	2,334		$	1,483		$	251		$	816
Other than temporary impairment charges	—			—			—			—			—			—
Gains on available-for-sale securities, net	$	409		$	225		$	2,334		$	1,483		$	251		$	816
Proceeds from sales of available-for-sale securities	$	694,608		$	551,515		$	2,059,154		$	605,026		$	41,056		$	737,369

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The amortized cost and fair value of securities as of ~~September 30, 2012 and~~ March 31, 2013, December 31, ~~2011,~~2012 and March 31, 2012, 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				March 31, 2013				December 31, 2012				March 31, 2012
(Dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	83,658	$	83,863	$	121,400	$	121,662	$	247,388	$	247,836	$	188,594	$	189,015	$	79,980	$	80,351
Due in one to five years	471,863		471,747		532,828		530,632		337,431		338,633		419,588		419,654		496,724		494,391
Due in five to ten years	135,580		137,116		95,279		95,508		357,677		356,871		361,037		362,135		106,545		105,856
Due after ten years	216,723		217,087		261,315		264,321		509,441		507,152		501,177		503,999		265,598		264,102
Mortgage-backed	291,815		306,238		236,316		248,551		363,224		368,282		261,871		271,574		874,803		886,148
Other equity securities	43,737		40,717		37,595		31,123		52,413		52,057		52,846		49,699		42,664		38,496
Total available-for-sale securities	$	1,243,376	$	1,256,768	$	1,284,733	$	1,291,797	$	1,867,574	$	1,870,831	$	1,785,113	$	1,796,076	$	1,866,314	$	1,869,344

At ~~both September 30, 2012 and~~ March 31, 2013, December 31, ~~2011,~~2012 and March 31, 2012, 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,~~March 31, 2013, 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,			March 31,			December 31,			March 31,
(Dollars in thousands)	2012			2011			2011			2013			2012			2012
Balance:
Commercial	$	2,771,053		$	2,498,313		$	2,337,098		$	2,872,695		$	2,914,798		$	2,544,456
Commercial real estate	3,699,712			3,514,261			3,465,321
Commercial real-estate										3,990,465			3,864,118			3,585,760
Home equity	807,592			862,345			879,180			759,218			788,474			840,364
Residential real estate	376,678			350,289			326,207
Residential real-estate										360,652			367,213			361,327
Premium finance receivables—commercial	1,982,945			1,412,454			1,417,572			1,997,160			1,987,856			1,512,630
Premium finance receivables—life insurance	1,665,620			1,695,225			1,671,443			1,753,512			1,725,166			1,693,763
Indirect consumer	77,378			64,545			62,452			69,245			77,333			67,445
Consumer and other	108,922			123,945			113,438			97,365			103,985			111,639
Total loans, net of unearned income, excluding covered loans	$	11,489,900		$	10,521,377		$	10,272,711		$	11,900,312		$	11,828,943		$	10,717,384
Covered loans	657,525			651,368			680,075			518,661			560,087			691,220
Total loans	$	12,147,425		$	11,172,745		$	10,952,786		$	12,418,973		$	12,389,030		$	11,408,604
Mix:
Commercial	23		%	22		%	21		%	23		%	24		%	22		%
Commercial real estate	30			31			32
Commercial real-estate										32			31			32
Home equity	7			8			8			6			6			7
Residential real estate	3			3			3
Residential real-estate										3			3			3
Premium finance receivables—commercial	16			13			13			16			16			13
Premium finance receivables—life insurance	14			15			15			14			14			15
Indirect consumer	1			1			1			1			1			1
Consumer and other	1			1			1			1			1			1
Total loans, net of unearned income, excluding covered loans	95		%	94		%	94		%	96		%	96		%	94		%
Covered loans	5			6			6			4			4			6
Total loans	100		%	100		%	100		%	100		%	100		%	100		%

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Certain premium finance receivables are recorded net of unearned income. The unearned income portions of such premium finance receivables were $~~39.5~~40.0 million at ~~September 30, 2012~~March 31, 2013, $~~34.6~~41.1 million at December 31, ~~2011~~2012 and $~~36.4~~36.8 million at ~~September 30, 2011~~March 31, 2012, 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~~10.5 million at ~~September 30, 2012~~March 31, 2013, $~~12.8~~13.2 million at December 31, ~~2011~~2012 and $~~13.5~~12.6 million at ~~September 30, 2011~~March 31, 2012.

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.~~banks serve. 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~~previous 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~~these acquired ~~with evidence of credit quality deterioration since origination:~~loans:


	September 30, 2012				December 31, 2011				March 31, 2013				December 31, 2012
	Unpaid Principal		Carrying		Unpaid Principal		Carrying		Unpaid Principal		Carrying		Unpaid Principal		Carrying
(Dollars in thousands)	Balance		Value		Balance		Value		Balance		Value		Balance		Value
Bank acquisitions	$	812,285	$	607,300	$	866,874	$	596,946	$	612,702	$	462,129	$	674,868	$	503,837
Life insurance premium finance loans acquisition	561,616		537,032		632,878		598,463		519,757		499,731		536,503		514,459

~~For loans acquired with evidence of credit quality deterioration since origination as a result of acquisitions during the~~ ~~nine months endedSeptember 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~~March 31, 2013.

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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						Three Months Ended March 31, 2013						Three Months Ended March 31, 2012
(Dollars in thousands)	Bank Acquisitions			Life Insurance Premium Finance Loans			Bank Acquisitions			Life Insurance Premium Finance Loans			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		$	143,224		$	13,055		$	173,120		$	18,861
Acquisitions	6,052			—			24,695			—			(78		)	—			2,288			—
Accretable yield amortized to interest income	(12,266		)	(2,309		)	(9,820		)	(5,127		)	(9,577		)	(2,019		)	(14,892		)	(3,737		)
Accretable yield amortized to indemnification asset ⁽¹⁾	(16,472		)	—			(4,367		)	—			(8,706		)	—			(21,377		)	—
Reclassification from non-accretable difference ⁽²⁾	4,636			2,951			2,145			—			5,412			—			41,601			—
(Decreases) increases in interest cash flows due to payments and changes in interest rates	(1,951		)	158			(6,904		)	432			(8,550		)	182			1,482			724
Accretable yield, ending balance ⁽³⁾	$	151,800		$	15,426		$	86,497		$	20,196		$	121,725		$	11,218		$	182,222		$	15,848


(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,~~March 31, 2013, 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 bankacquisitions is~~ ~~$74.8~~42.9 million. The remainder of the accretable yield related to bank acquisitions is expected to be amortized to interest income.

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(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, 2012~~March 31, 2013, December 31, ~~2011~~2012 and ~~September 30, 2011~~March 31, 2012:


As of September 30, 2012			90+ days and still accruing			60-89 days past due		30-59 days past due
As of March 31, 2013														90+ days and still accruing				60-89 days past due				30-59 days past due
(Dollars in thousands)	Nonaccrual				90+ days and still accruing					60-89 days past due			30-59 days past due								Current				Total Loans			Nonaccrual						Current			Total Loans
Loan Balances:
Commercial
Commercial and industrial	$	15,163	$	—		$	5,985	$	16,631		$	1,518,596				$	1,556,375		$	17,717			$	—		$	1,150			$	16,710		$	1,533,999		$	1,569,576
Franchise	1,792		—			—		—			177,914				179,706			125				—			—				76			194,310			194,511
Mortgage warehouse lines of credit	—		—			—		—			225,295				225,295			—				—			—				—			131,970			131,970
Community Advantage—homeowners association	—		—			—		—			73,881				73,881			—				—			—				—			82,763			82,763
Aircraft	428		—			—		150			20,866				21,444			—				—			—				—			14,112			14,112
Asset-based lending	328		—			1,211		5,556			525,966				533,061			531				—			483				5,518			680,723			687,255
Municipal	—		—			—		—			90,404				90,404			—				—			—				—			89,508			89,508
Leases	—		—			—		—			83,351				83,351			—				—			—				844			97,186			98,030
Other	—		—			—		—			1,576				1,576			—				—			—				—			127			127
Purchased non-covered commercial ⁽¹⁾	—		499			—		—			5,461				5,960			—				449			—				—			4,394			4,843
Total commercial	17,711		499			7,196		22,337			2,723,310				2,771,053			18,373				449			1,633				23,148			2,829,092			2,872,695
Commercial real-estate:
Commercial real-estate
Residential construction	2,141		—			3,008		—			39,106				44,255			3,094				—			945				—			33,044			37,083
Commercial construction	3,315		—			163		13,072			152,993				169,543			1,086				—			9,521				—			151,751			162,358
Land	10,629		—			3,033		3,017			116,807				133,486			17,976				—			—				11,563			104,039			133,578
Office	6,185		—			5,717		7,237			565,182				584,321			3,564				—			8,990				4,797			567,333			584,684
Industrial	1,885		—			645		1,681			570,114				574,325			7,137				—			—				986			587,402			595,525
Retail	10,133		—			1,853		5,617			543,066				560,669			7,915				—			6,970				5,953			565,963			586,801
Multi-family	3,314		—			3,062		—			357,047				363,423			2,088				—			1,036				4,315			505,346			512,785
Mixed use and other	20,859		—			9,779		14,990			1,175,222				1,220,850			18,947				—			1,573				13,560			1,288,754			1,322,834
Purchased non-covered commercial real-estate ⁽¹⁾	—		1,066			150		389			47,235				48,840			—				1,866			251				3,333			49,367			54,817
Total commercial real-estate	58,461		1,066			27,410		46,003			3,566,772				3,699,712			61,807				1,866			29,286				44,507			3,852,999			3,990,465
Home equity	11,504		—			5,905		5,642			784,541				807,592			14,891				—			1,370				4,324			738,633			759,218
Residential real estate	15,393		—			3,281		2,637			354,711				376,022
Purchased non-covered residential real estate ⁽¹⁾	—		—			—		—			656				656
Residential real-estate																		9,606				—			782				8,680			340,751			359,819
Purchased non-covered residential real-estate ⁽¹⁾																		—				—			198				—			635			833
Premium finance receivables
Commercial insurance loans	7,488		5,533			5,881		14,369			1,949,674				1,982,945			12,068				7,677			4,647				19,323			1,953,445			1,997,160
Life insurance loans	29		—			—		—			1,128,559				1,128,588			20				2,256			—				1,340			1,250,165			1,253,781
Purchased life insurance loans ⁽¹⁾	—		—			—		—			537,032				537,032			—				—			—				—			499,731			499,731
Indirect consumer	72		215			74		344			76,673				77,378			95				145			127				221			68,657			69,245
Consumer and other	1,485		—			429		849			106,092				108,855			1,695				—			160				493			92,379			94,727
Purchased non-covered consumer and other ⁽¹⁾	—		—			—		—			67				67			—				—			—				20			2,618			2,638
Total loans, net of unearned income, excluding covered loans	$	112,143	$	7,313		$	50,176	$	92,181		$	11,228,087			$	11,489,900		$	118,555			$	12,393		$	38,203			$	102,056		$	11,629,105		$	11,900,312
Covered loans	910		129,257			6,521		14,571			506,266				657,525			1,820				115,482			1,454				12,268			387,637			518,661
Total loans, net of unearned income	$	113,053	$	136,570		$	56,697	$	106,752		$	11,734,353			$	12,147,425		$	120,375			$	127,875		$	39,657			$	114,324		$	12,016,742		$	12,418,973


(1)	Purchased loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. Loan agings are based upon contractually required payments.

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As of December 31, 2011			90+ days and still accruing			60-89 days past due		30-59 days past due
As of December 31, 2012														90+ days and still accruing				60-89 days past due				30-59 days past due
(Dollars in thousands)	Nonaccrual				90+ days and still accruing					60-89 days past due			30-59 days past due								Current				Total Loans			Nonaccrual						Current			Total Loans
Loan Balances:
Commercial
Commercial and industrial	$	16,154	$	—		$	7,496	$	15,797		$	1,411,004				$	1,450,451		$	19,409			$	—		$	5,520			$	15,410		$	1,587,864		$	1,628,203
Franchise	1,792		—			—		—			140,983				142,775			1,792				—			—				—			194,603			196,395
Mortgage warehouse lines of credit	—		—			—		—			180,450				180,450			—				—			—				—			215,076			215,076
Community Advantage—homeowners association	—		—			—		—			77,504				77,504			—				—			—				—			81,496			81,496
Aircraft	—		—			709		170			19,518				20,397			—				—			148				—			17,216			17,364
Asset-based lending	1,072		—			749		11,026			452,890				465,737			536				—			1,126				6,622			564,154			572,438
Municipal	—		—			—		—			78,319				78,319			—				—			—				—			91,824			91,824
Leases	—		—			—		431			71,703				72,134			—				—			—				896			89,547			90,443
Other	—		—			—		—			2,125				2,125			—				—			—				—			16,549			16,549
Purchased non-covered commercial ⁽¹⁾	—		589			74		—			7,758				8,421			—				496			432				7			4,075			5,010
Total commercial	19,018		589			9,028		27,424			2,442,254				2,498,313			21,737				496			7,226				22,935			2,862,404			2,914,798
Commercial real-estate
Residential construction	1,993		—			4,982		1,721			57,115				65,811			3,110				—			4				41			37,246			40,401
Commercial construction	2,158		—			—		150			167,568				169,876			2,159				—			885				386			167,525			170,955
Land	31,547		—			4,100		6,772			136,112				178,531			11,299				—			632				9,014			113,252			134,197
Office	10,614		—			2,622		930			540,280				554,446			4,196				—			1,889				3,280			560,346			569,711
Industrial	2,002		—			508		4,863			548,429				555,802			2,089				—			6,042				4,512			565,294			577,937
Retail	5,366		—			5,268		8,651			517,444				536,729			7,792				—			1,372				998			558,734			568,896
Multi-family	4,736		—			3,880		347			305,594				314,557			2,586				—			3,949				1,040			389,116			396,691
Mixed use and other	8,092		—			7,163		20,814			1,050,585				1,086,654			16,742				—			6,660				13,349			1,312,503			1,349,254
Purchased non-covered commercial real-estate ⁽¹⁾	—		2,198			—		252			49,405				51,855			—				749			2,663				2,508			50,156			56,076
Total commercial real-estate	66,508		2,198			28,523		44,500			3,372,532				3,514,261			49,973				749			24,096				35,128			3,754,172			3,864,118
Home equity	14,164		—			1,351		3,262			843,568				862,345			13,423				100			1,592				5,043			768,316			788,474
Residential real estate	6,619		—			2,343		3,112			337,522				349,596
Purchased non-covered residential real estate ⁽¹⁾	—		—			—		—			693				693
Residential real-estate																		11,728				—			2,763				8,250			343,616			366,357
Purchased non-covered residential real-estate ⁽¹⁾																		—				—			200				—			656			856
Premium finance receivables
Commercial insurance loans	7,755		5,281			3,850		13,787			1,381,781				1,412,454			9,302				10,008			6,729				19,597			1,942,220			1,987,856
Life insurance loans	54		—			—		423			1,096,285				1,096,762			25				—			—				5,531			1,205,151			1,210,707
Purchased life insurance loans ⁽¹⁾	—		—			—		—			598,463				598,463			—				—			—				—			514,459			514,459
Indirect consumer	138		314			113		551			63,429				64,545			55				189			51				442			76,596			77,333
Consumer and other	233		—			170		1,070			122,393				123,866			1,511				32			167				433			99,010			101,153
Purchased non-covered consumer and other ⁽¹⁾	—		—			—		2			77				79			—				66			32				101			2,633			2,832
Total loans, net of unearned income, excluding covered loans	$	114,489	$	8,382		$	45,378	$	94,131		$	10,258,997			$	10,521,377		$	107,754			$	11,640		$	42,856			$	97,460		$	11,569,233		$	11,828,943
Covered loans	—		174,727			25,507		24,799			426,335				651,368			1,988				122,350			16,108				7,999			411,642			560,087
Total loans, net of unearned income	$	114,489	$	183,109		$	70,885	$	118,930		$	10,685,332			$	11,172,745		$	109,742			$	133,990		$	58,964			$	105,459		$	11,980,875		$	12,389,030


(1)	Purchased loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. Loan agings are based upon contractually required payments.

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As of September 30, 2011			90+ days and still accruing			60-89 days past due		30-59 days past due
As of March 31, 2012														90+ days and still accruing				60-89 days past due				30-59 days past due
(Dollars in thousands)	Nonaccrual				90+ days and still accruing					60-89 days past due			30-59 days past due								Current				Total Loans			Nonaccrual						Current			Total Loans
Loan Balances:
Commercial
Commercial and industrial	$	21,055	$	—		$	13,691	$	9,748		$	1,370,221				$	1,414,715		$	17,392			$	—		$	9,210			$	24,634		$	1,454,783		$	1,506,019
Franchise	1,792		—			—		—			125,062				126,854			1,792				—			—				100			167,385			169,277
Mortgage warehouse lines of credit	—		—			—		—			132,425				132,425			—				—			—				—			136,438			136,438
Community Advantage—homeowners association	—		—			—		—			74,281				74,281			—				—			—				—			75,786			75,786
Aircraft	—		—			—		53			18,027				18,080			260				—			428				1,189			18,014			19,891
Asset-based lending	1,989		—			210		—			417,538				419,737			391				—			926				970			472,524			474,811
Municipal	—		—			—		—			74,723				74,723			—				—			—				—			76,885			76,885
Leases	—		—			—		—			66,671				66,671			—				—			—				11			77,660			77,671
Other	—		—			—		—			2,044				2,044			—				—			—				—			1,733			1,733
Purchased non-covered commercial ⁽¹⁾	—		616			—		—			6,952				7,568			—				424			1,063				—			4,458			5,945
Total commercial	24,836		616			13,901		9,801			2,287,944				2,337,098			19,835				424			11,627				26,904			2,485,666			2,544,456
Commercial real-estate
Residential construction	1,358		1,105			1,532		4,896			63,050				71,941			1,807				—			—				4,469			49,835			56,111
Commercial construction	2,860		—			—		823			156,738				160,421			2,389				—			3,100				—			159,230			164,719
Land	31,072		—			2,661		8,935			156,462				199,130			25,306				—			6,606				6,833			145,297			184,042
Office	15,432		—			2,079		63			516,356				533,930			8,534				—			4,310				5,471			542,393			560,708
Industrial	2,160		—			294		2,427			533,367				538,248			1,864				—			6,683				10,101			572,255			590,903
Retail	3,664		—			4,318		19,085			492,168				519,235			7,323				73			—				8,797			511,884			528,077
Multi-family	3,423		—			4,230		5,666			311,458				324,777			3,708				—			1,496				4,691			315,043			324,938
Mixed use and other	9,700		—			8,955		22,759			1,021,868				1,063,282			11,773				—			17,745				30,689			1,063,733			1,123,940
Purchased non-covered commercial real-estate ⁽¹⁾	—		344			—		285			53,728				54,357			—				2,959			301				1,601			47,461			52,322
Total commercial real-estate	69,669		1,449			24,069		64,939			3,305,195				3,465,321			62,704				3,032			40,241				72,652			3,407,131			3,585,760
Home equity	15,426		—			2,002		5,072			856,680				879,180			12,881				—			2,049				6,576			818,858			840,364
Residential real estate	7,546		—			1,852		908			315,901				326,207
Purchased non-covered residential real estate ⁽¹⁾	—		—			—		—			—				—
Residential real-estate																		5,329				—			453				13,530			341,358			360,670
Purchased non-covered residential real-estate ⁽¹⁾																		—				—			—				—			657			657
Premium finance receivables
Commercial insurance loans	6,942		4,599			3,206		7,726			1,395,099				1,417,572			7,650				4,619			3,360				17,612			1,479,389			1,512,630
Life insurance loans	349		2,413			5,877		7,076			1,019,952				1,035,667			—				—			—				389			1,132,970			1,133,359
Purchased life insurance loans ⁽¹⁾	—		675			—		—			635,101				635,776			—				—			—				—			560,404			560,404
Indirect consumer	146		292			81		370			61,563				62,452			152				257			53				317			66,666			67,445
Consumer and other	653		—			26		386			111,736				112,801			121				—			20				1,601			109,723			111,465
Purchased non-covered consumer and other ⁽¹⁾	—		—			—		63			574				637			—				—			—				—			174			174
Total loans, net of unearned income, excluding covered loans	$	125,567	$	10,044		$	51,014	$	96,341		$	9,989,745			$	10,272,711		$	108,672			$	8,332		$	57,803			$	139,581		$	10,402,996		$	10,717,384
Covered loans	—		179,277			13,721		14,750			472,327				680,075			—				182,011			20,254				28,249			460,706			691,220
Total loans, net of unearned income	$	125,567	$	189,321		$	64,735	$	111,091		$	10,462,072			$	10,952,786		$	108,672			$	190,343		$	78,057			$	167,830		$	10,863,702		$	11,408,604


(1)	Purchased loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. Loan agings are based upon contractually required payments.

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~~Table of Contents~~

Each loan officer is responsible for monitoring his or her loan portfolio, recommending a credit risk rating for each loan in his or her portfolio and ensuring the credit risk ratings are appropriate. These credit risk ratings are then ratified by the bank’s chief credit officer and/or concurrence credit officer. Credit risk ratings are determined by evaluating a number of factors including: a borrower’s financial strength, cash flow coverage, collateral protection and guarantees.

The Company’s Problem Loan Reporting system automatically includes all loans with credit risk ratings of 6 through 9. This system is designed to provide an on-going detailed tracking mechanism for each problem loan. Once management determines that a loan has deteriorated to a point where it has a credit risk rating of 6 or worse, the Company’s Managed Asset Division performs an overall credit and collateral review. As part of this review, all underlying collateral is identified and the valuation methodology is analyzed and tracked. As a result of this initial review by the Company’s Managed Asset Division, the credit risk rating is reviewed and a portion of the outstanding loan balance may be deemed uncollectible or an impairment reserve may be established. The Company’s impairment analysis utilizes an independent re-appraisal of the collateral (unless such a third-party evaluation is not possible due to the unique nature of the collateral, such as a closely-held business or thinly traded securities). In the case of commercial ~~real estate~~real-estate collateral, an independent third party appraisal is ordered by the Company’s Real Estate Services Group to determine if there has been any change in the underlying collateral value. These independent appraisals are reviewed by the Real Estate Services Group and sometimes by independent third party valuation experts and may be adjusted depending upon market conditions.

Through the credit risk rating process, loans are reviewed to determine if they are performing in accordance with the original contractual terms. If the borrower has failed to comply with the original contractual terms, further action may be required by the Company, including a downgrade in the credit risk rating, movement to non-accrual status, a charge-off or the establishment of a specific impairment reserve. If we determine that a loan amount, or portion thereof, is uncollectible, the loan’s credit risk rating is immediately downgraded to an 8 or 9 and the uncollectible amount is charged-off. Any loan that has a partial charge-off continues to be assigned a credit risk rating of an 8 or 9 for the duration of time that a balance remains outstanding. The Company undertakes a thorough and ongoing analysis to determine if additional impairment and/or charge-offs are appropriate and to begin a workout plan for the credit to minimize actual losses.

If, based on current information and events, it is probable that the Company will be unable to collect all amounts due to it according to the contractual terms of the loan agreement, a specific impairment reserve is established. In determining the appropriate charge-off for collateral-dependent loans, the Company considers the results of appraisals for the associated collateral.

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Non-performing loans include all non-accrual loans (8 and 9 risk ratings) as well as loans 90 days past due and still accruing interest, excluding loans acquired with evidence of credit quality deterioration since origination. The remainder of the portfolio not classified as non-performing are considered performing under the contractual terms of the loan agreement. The following table presents the recorded investment based on performance of loans by class, excluding covered loans, per the most recent analysis at ~~September 30, 2012~~March 31, 2013, December 31, ~~2011~~2012 and ~~September 30, 2011~~March 31, 2012:


	Performing						Non-performing						Total						Performing						Non-performing						Total
(Dollars in thousands)	September 30, 2012		December 31, 2011		September 30, 2011		September 30, 2012		December 31, 2011		September 30, 2011		September 30, 2012		December 31, 2011		September 30, 2011		March 31, 2013		December 31, 2012		March 31, 2012		March 31, 2013		December 31, 2012		March 31, 2012		March 31, 2013		December 31, 2012		March 31, 2012
Loan Balances:
Commercial
Commercial and industrial	$	1,541,212	$	1,434,297	$	1,393,660	$	15,163	$	16,154	$	21,055	$	1,556,375	$	1,450,451	$	1,414,715	$	1,551,859	$	1,608,794	$	1,488,627	$	17,717	$	19,409	$	17,392	$	1,569,576	$	1,628,203	$	1,506,019
Franchise	177,914		140,983		125,062		1,792		1,792		1,792		179,706		142,775		126,854		194,386		194,603		167,485		125		1,792		1,792		194,511		196,395		169,277
Mortgage warehouse lines of credit	225,295		180,450		132,425		—		—		—		225,295		180,450		132,425		131,970		215,076		136,438		—		—		—		131,970		215,076		136,438
Community Advantage—homeowners association	73,881		77,504		74,281		—		—		—		73,881		77,504		74,281		82,763		81,496		75,786		—		—		—		82,763		81,496		75,786
Aircraft	21,016		20,397		18,080		428		—		—		21,444		20,397		18,080		14,112		17,364		19,631		—		—		260		14,112		17,364		19,891
Asset-based lending	532,733		464,665		417,748		328		1,072		1,989		533,061		465,737		419,737		686,724		571,902		474,420		531		536		391		687,255		572,438		474,811
Municipal	90,404		78,319		74,723		—		—		—		90,404		78,319		74,723		89,508		91,824		76,885		—		—		—		89,508		91,824		76,885
Leases	83,351		72,134		66,671		—		—		—		83,351		72,134		66,671		98,030		90,443		77,671		—		—		—		98,030		90,443		77,671
Other	1,576		2,125		2,044		—		—		—		1,576		2,125		2,044		127		16,549		1,733		—		—		—		127		16,549		1,733
Purchased non-covered commercial ⁽¹⁾	5,960		8,421		7,568		—		—		—		5,960		8,421		7,568		4,843		5,010		5,945		—		—		—		4,843		5,010		5,945
Total commercial	2,753,342		2,479,295		2,312,262		17,711		19,018		24,836		2,771,053		2,498,313		2,337,098		2,854,322		2,893,061		2,524,621		18,373		21,737		19,835		2,872,695		2,914,798		2,544,456
Commercial real-estate
Residential construction	42,114		63,818		69,478		2,141		1,993		2,463		44,255		65,811		71,941		33,989		37,291		54,304		3,094		3,110		1,807		37,083		40,401		56,111
Commercial construction	166,228		167,718		157,561		3,315		2,158		2,860		169,543		169,876		160,421		161,272		168,796		162,330		1,086		2,159		2,389		162,358		170,955		164,719
Land	122,857		146,984		168,058		10,629		31,547		31,072		133,486		178,531		199,130		115,602		122,898		158,736		17,976		11,299		25,306		133,578		134,197		184,042
Office	578,136		543,832		518,498		6,185		10,614		15,432		584,321		554,446		533,930		581,120		565,515		552,174		3,564		4,196		8,534		584,684		569,711		560,708
Industrial	572,440		553,800		536,088		1,885		2,002		2,160		574,325		555,802		538,248		588,388		575,848		589,039		7,137		2,089		1,864		595,525		577,937		590,903
Retail	550,536		531,363		515,571		10,133		5,366		3,664		560,669		536,729		519,235		578,886		561,104		520,681		7,915		7,792		7,396		586,801		568,896		528,077
Multi-family	360,109		309,821		321,354		3,314		4,736		3,423		363,423		314,557		324,777		510,697		394,105		321,230		2,088		2,586		3,708		512,785		396,691		324,938
Mixed use and other	1,199,991		1,078,562		1,053,582		20,859		8,092		9,700		1,220,850		1,086,654		1,063,282		1,303,887		1,332,512		1,112,167		18,947		16,742		11,773		1,322,834		1,349,254		1,123,940
Purchased non-covered commercial real-estate⁽¹⁾	48,840		51,855		54,357		—		—		—		48,840		51,855		54,357		54,817		56,076		52,322		—		—		—		54,817		56,076		52,322
Total commercial real-estate	3,641,251		3,447,753		3,394,547		58,461		66,508		70,774		3,699,712		3,514,261		3,465,321		3,928,658		3,814,145		3,522,983		61,807		49,973		62,777		3,990,465		3,864,118		3,585,760
Home equity	796,088		848,181		863,754		11,504		14,164		15,426		807,592		862,345		879,180		744,327		774,951		827,483		14,891		13,523		12,881		759,218		788,474		840,364
Residential real estate	360,629		342,977		318,661		15,393		6,619		7,546		376,022		349,596		326,207
Purchased non-covered residential real estate ⁽¹⁾	656		693		—		—		—		—		656		693		—
Residential real-estate																			350,213		354,629		355,341		9,606		11,728		5,329		359,819		366,357		360,670
Purchased non-covered residential real-estate ⁽¹⁾																			833		856		657		—		—		—		833		856		657
Premium finance receivables
Commercial insurance loans	1,969,924		1,399,418		1,406,031		13,021		13,036		11,541		1,982,945		1,412,454		1,417,572		1,977,415		1,968,546		1,500,361		19,745		19,310		12,269		1,997,160		1,987,856		1,512,630
Life insurance loans	1,128,559		1,096,708		1,032,905		29		54		2,762		1,128,588		1,096,762		1,035,667		1,251,505		1,210,682		1,133,359		2,276		25		—		1,253,781		1,210,707		1,133,359
Purchased life insurance loans ⁽¹⁾	537,032		598,463		635,776		—		—		—		537,032		598,463		635,776		499,731		514,459		560,404		—		—		—		499,731		514,459		560,404
Indirect consumer	77,091		64,093		62,014		287		452		438		77,378		64,545		62,452		69,005		77,089		67,036		240		244		409		69,245		77,333		67,445
Consumer and other	107,370		123,633		112,148		1,485		233		653		108,855		123,866		112,801		93,032		99,610		111,344		1,695		1,543		121		94,727		101,153		111,465
Purchased non-covered consumer and other⁽¹⁾	67		79		637		—		—		—		67		79		637		2,638		2,832		174		—		—		—		2,638		2,832		174
Total loans, net of unearned income, excluding covered loans	$	11,372,009	$	10,401,293	$	10,138,735	$	117,891	$	120,084	$	133,976	$	11,489,900	$	10,521,377	$	10,272,711	$	11,771,679	$	11,710,860	$	10,603,763	$	128,633	$	118,083	$	113,621	$	11,900,312	$	11,828,943	$	10,717,384


(1)	Purchased loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30. See Note 6 - Loans for further discussion of these purchased loans.

Table of Contents

A summary of activity in the allowance for credit losses by loan portfolio (excluding covered loans) for the three ~~and nine~~ months ended ~~September 30, 2012~~March 31, 2013 and ~~2011~~2012 is as follows:


Three months ended September 30, 2012				Commercial Real-estate								Residential Real-estate				Premium Finance Receivable				Indirect Consumer				Consumer and Other			Total, Excluding Covered Loans
Three months ended March 31, 2013															Three months ended March 31, 2013					Indirect Consumer			Commercial Real-estate				Total, Excluding Covered Loans							Residential Real-estate				Premium Finance Receivable			Indirect Consumer				Consumer and Other				Total, Excluding Covered Loans
(Dollars in thousands)	Commercial			Commercial Real-estate			Commercial Real-estate				Home Equity				Residential Real-estate				Premium Finance Receivable				Commercial Real-estate			Indirect Consumer			Consumer and Other				Total, Excluding Covered Loans				Commercial							Home Equity
Allowance for credit losses															Residential Real-estate											Indirect Consumer			Consumer and Other
Allowance for loan losses at beginning of period	$	26,983		$	53,801		Commercial Real-estate		$	13,878		Residential Real-estate		$	6,724			$	Premium Finance Receivable		8,522			$	640		$	1,372			$	111,920	Total, Excluding Covered Loans			$	28,794	Premium Finance Receivable			Indirect Consumer	$	52,135		Consumer and Other			$	Total, Excluding Covered Loans		12,734		$	5,560		$	6,096	$	267	$	1,765	$	107,351
Other adjustments	(138		)	(304		)		(2		)		(90		)		—				—				—			(534		)	(3		)		(217		)		—			(9		)		—				—			—			(229		)
Reclassification to/from allowance for unfunded lending-related commitments	—			626				—				—				—				—				—			626			—				(213		)		—			—				—				—			—			(213		)
Charge-offs	(3,315		)	(17,000		)		(1,543		)		(1,027		)		(886		)		(73		)		(93		)	(23,937		)	(4,540		)		(3,299		)		(2,397		)	(1,728		)		(1,068		)		(32		)	(97		)	(13,161		)
Recoveries	349			5,352				52				8				206				25				28			6,020			295				368				162			5				294				15			94			1,233
Provision for credit losses	3,862			12,610				1,215				1,938				(955		)		(323		)		(155		)	18,192			4,406				7,634				1,623			1,312				749				27			(384		)	15,367
Allowance for loan losses at period end	$	27,741		$	55,085			$	13,600			$	7,553			$	6,887			$	269			$	1,152		$	112,287		$	28,952			$	56,408			$	12,122		$	5,140			$	6,071			$	277		$	1,378		$	110,348
Allowance for unfunded lending-related commitments at period end	$	—		$	12,627			$	—			$	—			$	—			$	—			$	—		$	12,627		$	—			$	15,287			$	—		$	—			$	—			$	—		$	—		$	15,287
Allowance for credit losses at period end	$	27,741		$	67,712			$	13,600			$	7,553			$	6,887			$	269			$	1,152		$	124,914		$	28,952			$	71,695			$	12,122		$	5,140			$	6,071			$	277		$	1,378		$	125,635
Individually evaluated for impairment	3,168			21,998				3,011				3,244				—				1				480			31,902			3,682				23,089				1,748			598				—				3			153			29,273
Collectively evaluated for impairment	24,573			45,714				10,589				4,306				6,887				268				672			93,009			25,270				48,409				10,374			4,532				6,071				274			1,225			96,155
Loans acquired with deteriorated credit quality	—			—				—				3				—				—				—			3			—				197				—			10				—				—			—			207
Loans at period end
Individually evaluated for impairment	$	38,838		$	160,711			$	13,118			$	18,696			$	—			$	69			$	1,582		$	233,014		$	27,447			$	145,203			$	16,057		$	12,984			$	—			$	58		$	1,805		$	203,554
Collectively evaluated for impairment	2,726,255			3,490,161				794,474				357,326				3,111,533				77,309				107,273			10,664,331			2,840,405				3,790,445				743,161			346,835				3,250,941				69,187			92,922			11,133,896
Loans acquired with deteriorated credit quality	5,960			48,840				—				656				537,032				—				67			592,555			4,843				54,817				—			833				499,731				—			2,638			562,862



Three months ended March 31, 2012				Commercial Real-estate						Residential Real-estate			Premium Finance Receivable			Indirect Consumer			Consumer and Other			Total, Excluding Covered Loans
(Dollars in thousands)	Commercial			Commercial Real-estate			Home Equity			Residential Real-estate			Premium Finance Receivable			Indirect Consumer			Consumer and Other			Total, Excluding Covered Loans
Allowance for credit losses
Allowance for loan losses at beginning of period	$	31,237		$	56,405		$	7,712		$	5,028		$	7,214		$	645		$	2,140		$	110,381
Other adjustments	(3		)	(222		)	1			(14		)	—			—			—			(238		)
Reclassification to/from allowance for unfunded lending-related commitments	45			107			—			—			—			—			—			152
Charge-offs	(3,262		)	(8,229		)	(2,590		)	(175		)	(850		)	(51		)	(310		)	(15,467		)
Recoveries	257			131			162			2			298			30			161			1,041
Provision for credit losses	4,945			5,760			2,635			710			1,446			19			(361		)	15,154
Allowance for loan losses at period end	$	33,219		$	53,952		$	7,920		$	5,551		$	8,108		$	643		$	1,630		$	111,023
Allowance for unfunded lending-related commitments at period end	$	—		$	13,078		$	—		$	—		$	—		$	—		$	—		$	13,078
Allowance for credit losses at period end	$	33,219		$	67,030		$	7,920		$	5,551		$	8,108		$	643		$	1,630		$	124,101
Individually evaluated for impairment	$	3,705		$	25,336		$	3,056		$	1,362		$	—		$	7		$	1		$	33,467
Collectively evaluated for impairment	$	29,514		$	41,694		$	4,864		$	4,189		$	8,108		$	636		$	1,629		$	90,634
Loans acquired with deteriorated credit quality	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Loans at period end
Individually evaluated for impairment	$	29,158		$	197,221		$	14,495		$	10,791		$	—		$	77		$	221		$	251,963
Collectively evaluated for impairment	2,509,353			3,336,217			825,869			349,879			2,645,989			67,368			111,244			9,845,919
Loans acquired with deteriorated credit quality	5,945			52,322			—			657			560,404			—			174			619,502

Table of Contents

Three months ended September 30, 2011 Commercial Real-estate
Residential Real-estate Premium Finance Receivable Indirect Consumer Consumer and Other Total, Excluding Covered Loans
(Dollars in thousands) Commercial Home Equity
Allowance for credit losses
Allowance for loan losses at beginning of period $ 32,847
$ 61,703
$ 7,077
$ 5,878
$ 7,436
$ 613
$ 1,808
$ 117,362
Other adjustments —
—
—
—
—
—
—
—
Reclassification to/from allowance for unfunded lending-related commitments 75
(141 ) —
—
—
—
—
(66 )
Charge-offs (8,851 ) (14,734 ) (1,071 ) (926 ) (1,769 ) (24 ) (282 ) (27,657 )
Recoveries 150
299
32
3
159
75
29
747
Provision for credit losses 9,559
17,245
1,079
258
1,048
(52 ) (874 ) 28,263
Allowance for loan losses at period end $ 33,780
$ 64,372
$ 7,117
$ 5,213
$ 6,874
$ 612
$ 681
$ 118,649
Allowance for unfunded lending-related commitments at period end $ 45
$ 13,357
$ —
$ —
$ —
$ —
$ —
$ 13,402
Allowance for credit losses at period end $ 33,825
$ 77,729
$ 7,117
$ 5,213
$ 6,874
$ 612
$ 681
$ 132,051
Individually evaluated for impairment $ 7,143
$ 30,000
$ 2,272
$ 1,509
$ —
$ 7
$ 429
$ 41,360
Collectively evaluated for impairment $ 26,682
$ 47,729
$ 4,845
$ 3,704
$ 6,874
$ 605
$ 252
$ 90,691
Loans acquired with deteriorated credit quality $ —
$ —
$ —
$ —
$ —
$ —
$ —
$ —
Loans at period end
Individually evaluated for impairment $ 32,561
$ 143,975
$ 16,367
$ 9,829
$ —
$ 81
$ 757
$ 203,570
Collectively evaluated for impairment 2,296,969
3,266,989
862,813
316,378
2,453,239
62,371
112,044
9,370,803
Loans acquired with deteriorated credit quality 7,568
54,357
—
—
635,776
—
637
698,338

Nine months ended September 30, 2012
Commercial
Real-estate
Home Equity
Residential
Real-estate

Premium
Finance
Receivable

Indirect
Consumer

Consumer
and Other

Total,
Excluding
Covered Loans
(Dollars in thousands) Commercial
Allowance for credit losses
Allowance for loan losses at beginning of period $ 31,237
$ 56,405
$ 7,712
$ 5,028
$ 7,214
$ 645
$ 2,140
$ 110,381
Other adjustments (142 ) (787 ) (4 ) (111 ) —
—
—
(1,044 )
Reclassification to/from allowance for unfunded lending-related commitments 45
908
—
—
—
—
—
953
Charge-offs (12,623 ) (34,455 ) (5,865 ) (1,590 ) (2,483 ) (157 ) (454 ) (57,627 )
Recoveries 852
5,657
385
13
675
76
226
7,884
Provision for credit losses 8,372
27,357
11,372
4,213
1,481
(295 ) (760 ) 51,740
Allowance for loan losses at period end $ 27,741
$ 55,085
$ 13,600
$ 7,553
$ 6,887
$ 269
$ 1,152
$ 112,287
Allowance for unfunded lending-related commitments at period end $ —
$ 12,627
$ —
$ —
$ —
$ —
$ —
$ 12,627
Allowance for credit losses at period end $ 27,741
$ 67,712
$ 13,600
$ 7,553
$ 6,887
$ 269
$ 1,152
$ 124,914

~~Table of Contents~~

Nine months ended September 30, 2011
Commercial
Real-estate

Residential
Real-estate

Premium
Finance
Receivable

Indirect
Consumer

Consumer
and Other

Total,
Excluding
Covered Loans
(Dollars in thousands) Commercial Home Equity
Allowance for credit losses
Allowance for loan losses at beginning of period $ 31,777
$ 62,618
$ 6,213
$ 5,107
$ 6,319
$ 526
$ 1,343
$ 113,903
Other adjustments —
—
—
—
—
—
—
—
Reclassification to/from allowance for unfunded lending-related commitments 1,606
127
—
—
—
—
—
1,733
Charge-offs (25,574 ) (48,767 ) (3,144 ) (2,483 ) (5,413 ) (188 ) (708 ) (86,277 )
Recoveries 717
1,100
59
8
5,814
183
104
7,985
Provision for credit losses 25,254
49,294
3,989
2,581
154
91
(58 ) 81,305
Allowance for loan losses at period end $ 33,780
$ 64,372
$ 7,117
$ 5,213
$ 6,874
$ 612
$ 681
$ 118,649
Allowance for unfunded lending-related commitments at period end $ 45
$ 13,357
$ —
$ —
$ —
$ —
$ —
$ 13,402
Allowance for credit losses at period end $ 33,825
$ 77,729
$ 7,117
$ 5,213
$ 6,874
$ 612
$ 681
$ 132,051

A summary of activity in the allowance for covered loan losses for the three ~~and nine~~ months ended ~~September 30, 2012~~March 31, 2013 and ~~2011~~2012 is as follows:


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,			September 30,			September 30,			September 30,			March 31,			March 31,
(Dollars in thousands)	2012			2011			2012			2011			2013			2012
Balance at beginning of period	$	20,560		$	7,443		$	12,977		$	—		$	13,454		$	12,977
Provision for covered loan losses before benefit attributable to FDIC loss share agreements	3,096			5,139			25,916			12,582			1,600			11,229
Benefit attributable to FDIC loss share agreements	(2,489		)	(4,112		)	(20,766		)	(10,066		)	(1,280		)	(8,983		)
Net provision for covered loan losses	607			1,027			5,150			2,516			320			2,246
Increase in FDIC indemnification asset	2,489			4,112			20,766			10,064			1,280			8,983
Loans charged-off	(1,736		)	(86		)	(17,052		)	(86		)	(2,791		)	(6,523		)
Recoveries of loans charged-off	6			—			85			2			9			52
Net charge-offs	(1,730		)	(86		)	(16,967		)	(84		)	(2,782		)	(6,471		)
Balance at end of period	$	21,926		$	12,496		$	21,926		$	12,496		$	12,272		$	17,735

In conjunction with FDIC-assisted transactions, the Company entered into loss share agreements with the FDIC. Additional expected losses, to the extent such expected losses result in the recognition of an allowance for ~~covered~~ loan losses, will increase the FDIC indemnification asset. The allowance for loan losses for loans acquired in FDIC-assisted transactions is determined without giving consideration to the amounts recoverable through loss share agreements (since the loss share agreements are separately accounted for and thus presented “gross” on the balance sheet). On the Consolidated Statements of Income, the provision for credit losses related to covered loans is reported net of changes in the amount recoverable under the loss share agreements. 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 reduce the ~~loss share assets.~~FDIC indemnification asset. Additions to expected losses will require an increase to the allowance for ~~covered~~ loan losses, and a corresponding increase to the FDIC indemnification asset. See “FDIC-Assisted Transactions” within Note 3 –�� Business Combinations for more detail.

~~Table of Contents~~

Impaired Loans

A summary of impaired loans, including restructured loans, is as follows:


	September 30,		December 31,		September 30,		March 31,		December 31,		March 31,
(Dollars in thousands)	2012		2011		2011		2013		2012		2012
Impaired loans (included in non-performing and restructured loans):
Impaired loans with an allowance for loan loss required ⁽¹⁾	$	120,060	$	115,779	$	83,191	$	101,565	$	89,983	$	137,805
Impaired loans with no allowance for loan loss required	112,954		110,759		120,379		101,989		114,562		114,158
Total impaired loans ⁽²⁾	$	233,014	$	226,538	$	203,570	$	203,554	$	204,545	$	251,963
Allowance for loan losses related to impaired loans	$	19,818	$	21,488	$	28,447	$	14,607	$	13,575	$	20,989
Restructured loans	$	147,196	$	130,518	$	104,392	$	116,345	$	126,473	$	165,046


(1)	These impaired loans require an allowance for loan losses because the estimated fair value of the loans or related collateral is less than the recordedinvestment in the loans.


(2)	Impaired loans are considered by the Company to be non-accrual loans, restructured loans or loans with principal and/or interest at risk, even if the loan is current with all payments of principal and interest.

2321

Table of Contents

The following tables present impaired loans evaluated for impairment by loan class for the periods ended as follows:


							For the Nine Months Ended										For the Three Months Ended
	As of September 30, 2012						September 30, 2012				As of March 31, 2013						March 31, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
(Dollars in thousands)
Impaired loans with a related ASC 310 allowance recorded
Commercial
Commercial and industrial	$	11,271	$	13,484	$	2,615	$	13,623	$	670	$	12,827	$	14,544	$	3,627	$	13,034	$	230
Franchise	1,792		1,792		386		1,792		91		—		—		—		—		—
Mortgage warehouse lines of credit	—		—		—		—		—		—		—		—		—		—
Community Advantage—homeowners association	—		—		—		—		—		—		—		—		—		—
Aircraft	428		428		95		428		22		—		—		—		—		—
Asset-based lending	306		1,624		72		558		67		511		511		55		511		7
Municipal	—		—		—		—		—		—		—		—		—		—
Leases	—		—		—		—		—		—		—		—		—		—
Other	—		—		—		—		—		—		—		—		—		—
Commercial real-estate
Residential construction	2,637		2,712		540		2,637		102		1,881		2,007		405		1,976		23
Commercial construction	4,184		4,184		743		4,160		153		8,682		8,682		49		8,983		86
Land	13,689		15,459		1,576		13,986		460		17,851		19,070		2,380		17,861		104
Office	7,366		9,851		802		7,998		355		5,792		5,996		659		5,853		61
Industrial	752		804		295		778		34		4,229		4,286		1,241		4,244		65
Retail	17,933		18,060		1,257		18,024		626		16,734		17,316		674		16,773		194
Multi-family	5,588		5,588		859		5,598		213		3,966		4,063		152		4,044		42
Mixed use and other	30,921		32,005		3,842		31,582		1,145		18,910		20,337		2,863		19,317		232
Home equity	8,254		8,923		3,011		8,572		352		5,160		5,751		1,748		5,488		57
Residential real estate	13,578		14,220		3,244		13,507		448
Residential real-estate											4,357		4,974		598		4,365		49
Premium finance receivables
Commercial insurance	—		—		—		—		—		—		—		—		—		—
Life insurance	—		—		—		—		—		—		—		—		—		—
Purchased life insurance	—		—		—		—		—		—		—		—		—		—
Indirect consumer	12		13		1		13		1		14		14		3		13		—
Consumer and other	1,349		1,349		480		1,351		64		651		651		153		652		8
Impaired loans with no related ASC 310 allowance recorded
Commercial
Commercial and industrial	$	25,019	$	28,581	$	—	$	27,829	$	1,076	$	13,963	$	17,153	$	—	$	14,344	$	226
Franchise	—		—		—		—		—		125		1,544		—		1,189		26
Mortgage warehouse lines of credit	—		—		—		—		—		—		—		—		—		—
Community Advantage—homeowners association	—		—		—		—		—		—		—		—		—		—
Aircraft	—		—		—		—		—		—		—		—		—		—
Asset-based lending	22		57		—		81		5		21		1,358		—		23		18
Municipal	—		—		—		—		—		—		—		—		—		—
Leases	—		—		—		—		—		—		—		—		—		—
Other	—		—		—		—		—		—		—		—		—		—
Commercial real-estate
Residential construction	3,603		3,719		—		4,389		134		3,208		3,579		—		3,708		42
Commercial construction	9,868		10,466		—		10,937		332		3,970		4,450		—		4,016		49
Land	13,330		17,331		—		15,866		648		11,305		16,304		—		12,048		203
Office	9,463		10,368		—		9,627		339		8,283		8,357		—		8,306		95
Industrial	3,080		3,164		—		3,115		107		5,541		5,653		—		5,563		74
Retail	16,610		16,876		—		17,070		613		14,483		15,095		—		14,628		172
Multi-family	1,926		2,672		—		2,371		87		2,200		4,541		—		2,618		54
Mixed use and other	19,761		21,819		—		20,970		861		18,168		19,483		—		18,345		269
Home equity	4,864		5,494		—		4,931		162		10,897		13,179		—		11,395		131
Residential real estate	5,118		5,374		—		5,392		118
Residential real-estate											8,627		9,053		—		8,703		94
Premium finance receivables
Commercial insurance	—		—		—		—		—		—		—		—		—		—
Life insurance	—		—		—		—		—		—		—		—		—		—
Purchased life insurance	—		—		—		—		—		—		—		—		—		—
Indirect consumer	57		71		—		67		5		44		54		—		48		1
Consumer and other	233		237		—		248		11		1,154		1,610		—		1,160		24
Total loans, net of unearned income, excluding covered loans	$	233,014	$	256,725	$	19,818	$	247,500	$	9,301	$	203,554	$	229,615	$	14,607	$	209,208	$	2,636

2422

Table of Contents


							For the Twelve Months Ended										For the Twelve Months Ended
	As of December 31, 2011						December 31, 2011				As of December 31, 2012						December 31, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
(Dollars in thousands)
Impaired loans with a related ASC 310 allowance recorded
Commercial
Commercial and industrial	$	7,743	$	9,083	$	2,506	$	9,113	$	510	$	11,010	$	12,562	$	1,982	$	13,312	$	881
Franchise	1,792		1,792		394		1,792		122		1,792		1,792		1,259		1,792		122
Mortgage warehouse lines of credit	—		—		—		—		—		—		—		—		—		—
Community Advantage—homeowners association	—		—		—		—		—		—		—		—		—		—
Aircraft	—		—		—		—		—		—		—		—		—		—
Asset-based lending	785		1,452		178		1,360		81		511		511		55		484		26
Municipal	—		—		—		—		—		—		—		—		—		—
Leases	—		—		—		—		—		—		—		—		—		—
Other	—		—		—		—		—		—		—		—		—		—
Commercial real-estate
Residential construction	1,993		2,068		374		1,993		122		2,007		2,007		389		2,007		98
Commercial construction	3,779		3,779		952		3,802		187		1,865		1,865		70		1,865		78
Land	27,657		29,602		6,253		29,085		1,528		12,184		12,860		1,414		12,673		483
Office	11,673		13,110		2,873		13,209		709		5,829		5,887		622		5,936		246
Industrial	663		676		159		676		46		1,150		1,200		224		1,208		75
Retail	13,728		13,732		480		13,300		504		13,240		13,314		343		13,230		584
Multi-family	7,149		7,155		1,892		7,216		330		3,954		3,954		348		3,972		157
Mixed use and other	20,386		21,337		1,447		21,675		1,027		22,249		23,166		2,989		23,185		1,165
Home equity	11,828		12,600		2,963		12,318		652		7,270		7,313		2,569		7,282		271
Residential real estate	6,478		6,681		992		6,535		220
Residential real-estate											6,420		6,931		1,169		6,424		226
Premium finance receivables
Commercial insurance	—		—		—		—		—		—		—		—		—		—
Life insurance	—		—		—		—		—		—		—		—		—		—
Purchased life insurance	—		—		—		—		—		—		—		—		—		—
Indirect consumer	31		32		5		33		3		—		—		—		—		—
Consumer and other	94		95		20		99		7		502		502		142		502		26
Impaired loans with no related ASC 310 allowance recorded
Commercial
Commercial and industrial	$	17,680	$	20,365	$	—	$	21,841	$	1,068	$	20,270	$	27,574	$	—	$	23,877	$	1,259
Franchise	—		—		—		—		—		—		—		—		—		—
Mortgage warehouse lines of credit	—		—		—		—		—		—		—		—		—		—
Community Advantage—homeowners association	—		—		—		—		—		—		—		—		—		—
Aircraft	—		—		—		—		—		—		—		—		—		—
Asset-based lending	287		287		—		483		25		25		1,362		—		252		76
Municipal	—		—		—		—		—		—		—		—		—		—
Leases	—		—		—		—		—		—		—		—		—		—
Other	—		—		—		—		—		—		—		—		—		—
Commercial real-estate
Residential construction	4,284		4,338		—		4,189		175		4,085		4,440		—		4,507		143
Commercial construction	9,792		9,792		—		10,249		426		12,263		13,395		—		13,635		540
Land	15,991		23,097		—		19,139		1,348		12,163		17,141		—		14,646		906
Office	9,162		11,421		—		11,235		550		8,939		9,521		—		9,432		437
Industrial	4,569		4,780		—		4,750		198		3,598		3,776		—		3,741		181
Retail	15,841		15,845		—		15,846		815		18,073		18,997		—		19,067		892
Multi-family	2,347		3,040		—		3,026		127		2,817		4,494		—		4,120		222
Mixed use and other	22,359		25,015		—		24,370		1,297		15,462		17,210		—		16,122		912
Home equity	3,950		4,707		—		4,784		184		7,320		8,758		—		8,164		376
Residential real estate	4,314		5,153		—		4,734		191
Residential real-estate											8,390		9,189		—		9,069		337
Premium finance receivables
Commercial insurance	—		—		—		—		—		—		—		—		—		—
Life insurance	—		—		—		—		—		—		—		—		—		—
Purchased life insurance	—		—		—		—		—		—		—		—		—		—
Indirect consumer	44		55		—		56		6		53		61		—		65		6
Consumer and other	139		141		—		146		12		1,104		1,558		—		1,507		94
Total loans, net of unearned income, excluding covered loans	$	226,538	$	251,230	$	21,488	$	247,054	$	12,470	$	204,545	$	231,340	$	13,575	$	222,076	$	10,819

2523

Table of Contents


							For the Nine Months Ended										For the Three Months Ended
	As of September 30, 2011						September 30, 2011				As of March 31, 2012						March 31, 2012
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
(Dollars in thousands)
Impaired loans with a related ASC 310 allowance recorded
Commercial
Commercial and industrial	$	9,542	$	10,725	$	6,597	$	9,670	$	398	$	8,610	$	10,151	$	3,270	$	9,121	$	145
Franchise	—		—		—		—		—		1,792		1,792		394		1,792		31
Mortgage warehouse lines of credit	—		—		—		—		—		—		—		—		—		—
Community Advantage—homeowners association	—		—		—		—		—		—		—		—		—		—
Aircraft	—		—		—		—		—		—		—		—		—		—
Asset-based lending	945		1,451		501		1,485		62		258		258		41		266		3
Municipal	—		—		—		—		—		—		—		—		—		—
Leases	—		—		—		—		—		—		—		—		—		—
Other	—		—		—		—		—		—		—		—		—		—
Commercial real-estate
Residential construction	716		716		160		716		33		1,807		1,882		390		1,807		24
Commercial construction	2,483		2,613		381		2,606		117		4,632		4,632		989		4,572		55
Land	25,990		27,782		7,396		26,591		1,121		49,766		53,325		4,785		50,889		584
Office	12,627		12,822		4,985		12,656		564		7,974		8,819		2,357		7,857		123
Industrial	1,057		1,059		257		1,063		52		460		487		62		467		6
Retail	2,157		2,661		566		2,147		110		23,312		23,337		701		22,861		244
Multi-family	3,423		3,766		1,150		3,661		134		6,532		6,532		1,504		6,511		81
Mixed use and other	6,790		7,087		2,237		7,687		307		18,473		19,324		2,070		18,452		224
Home equity	12,254		12,718		2,272		12,469		494		8,409		8,976		3,056		8,480		116
Residential real estate	4,630		4,785		1,509		4,622		109
Residential real-estate											5,737		6,156		1,362		5,722		48
Premium finance receivables
Commercial insurance	—		—		—		—		—		—		—		—		—		—
Life insurance	—		—		—		—		—		—		—		—		—		—
Purchased life insurance	—		—		—		—		—		—		—		—		—		—
Indirect consumer	49		51		7		52		3		29		29		7		30		1
Consumer and other	528		529		429		608		26		14		15		1		15		1
Impaired loans with no related ASC 310 allowance recorded
Commercial
Commercial and industrial	$	19,238	$	24,131	$	—	$	25,522	$	1,032	$	18,105	$	21,708	$	—	$	16,614	$	226
Franchise	1,792		1,792		—		1,792		92		—		—		—		—		—
Mortgage warehouse lines of credit	—		—		—		—		—		—		—		—		—		—
Community Advantage—homeowners association	—		—		—		—		—		—		—		—		—		—
Aircraft	—		—		—		—		—		260		260		—		260		5
Asset-based lending	1,044		1,044		—		1,089		44		133		1,452		—		622		19
Municipal	—		—		—		—		—		—		—		—		—		—
Leases	—		—		—		—		—		—		—		—		—		—
Other	—		—		—		—		—		—		—		—		—		—
Commercial real-estate
Residential construction	3,298		4,017		—		4,180		141		3,031		3,102		—		2,847		27
Commercial construction	11,019		11,019		—		11,330		377		9,788		9,788		—		9,790		96
Land	11,442		20,681		—		13,267		899		14,649		16,952		—		14,720		196
Office	8,411		9,702		—		9,653		378		10,187		11,875		—		10,499		128
Industrial	7,037		7,527		—		7,338		274		3,827		4,051		—		3,848		49
Retail	13,197		13,200		—		13,209		485		14,421		14,562		—		14,535		191
Multi-family	548		548		—		549		14		1,916		1,916		—		1,919		25
Mixed use and other	33,780		35,512		—		34,601		1,289		26,446		28,934		—		27,202		374
Home equity	4,113		4,497		—		4,775		135		6,086		7,441		—		6,539		72
Residential real estate	5,199		5,870		—		4,756		189
Residential real-estate											5,054		5,818		—		5,056		52
Premium finance receivables
Commercial insurance	—		—		—		—		—		—		—		—		—		—
Life insurance	—		—		—		—		—		—		—		—		—		—
Purchased life insurance	—		—		—		—		—		—		—		—		—		—
Indirect consumer	32		40		—		39		3		48		60		—		51		1
Consumer and other	229		231		—		234		10		207		208		—		208		2
Total impaired loans, net of unearned income, excluding covered loans	$	203,570	$	228,576	$	28,447	$	218,367	$	8,892
Total loans, net of unearned income, excluding covered loans											$	251,963	$	273,842	$	20,989	$	253,552	$	3,149

2624

Table of Contents

Restructured Loans

At ~~September 30, 2012~~March 31, 2013, the Company had $~~147.2~~116.3 million in loans with modified terms. The $~~147.2~~116.3 million in modified loans represents ~~181~~167 credits in which economic concessions were granted to certain borrowers to better align the terms of their loans with their current ability to pay.

The Company’s approach to restructuring loans, excluding those acquired with evidence of credit quality deterioration since origination, is built on its credit risk rating system which requires credit management personnel to assign a credit risk rating to each loan. In each case, the loan officer is responsible for recommending a credit risk rating for each loan and ensuring the credit risk ratings are appropriate. These credit risk ratings are then reviewed and approved by the bank’s chief credit officer and/or concurrence credit officer. Credit risk ratings are determined by evaluating a number of factors including a borrower’s financial strength, cash flow coverage, collateral protection and guarantees. The Company’s credit risk rating scale is one through ten with higher scores indicating higher risk. In the case of loans rated six or worse following modification, the Company’s Managed Assets Division evaluates the loan and the credit risk rating and determines that the loan has been restructured to be reasonably assured of repayment and of performance according to the modified terms and is supported by a current, well-documented credit assessment of the borrower’s financial condition and prospects for repayment under the revised terms.

A modification of a loan, excluding those acquired with evidence of credit quality deterioration since origination, with an existing credit risk rating of six or worse or a modification of any other credit which will result in a restructured credit risk rating of six or worse, must be reviewed for possible TDR classification. In that event, our Managed Assets Division conducts an overall credit and collateral review. A modification of these loans is considered to be a TDR if both (1) the borrower is experiencing financial difficulty and (2) for economic or legal reasons, the bank grants a concession to a borrower that it would not otherwise consider. The modification of a loan, excluding those acquired with evidence of credit quality deterioration since origination, where the credit risk rating is five or better both before and after such modification is not considered to be a TDR. Based on the Company’s credit risk rating system, it considers that borrowers whose credit risk rating is five or better are not experiencing financial difficulties and therefore, are not considered TDRs.

TDRs are reviewed at the time of modification and on a quarterly basis to determine if a specific reserve is needed. The carrying amount of the loan is compared to the expected payments to be received, discounted at the loan’s original rate, or for collateral dependent loans, to the fair value of the collateral. Any shortfall is recorded as a specific reserve.

All credits determined to be a TDR will continue to be classified as a TDR in all subsequent periods, unless the borrower has been in compliance with the loan’s modified terms for a period of six months (including over a calendar year-end) and the modified interest rate represented a market rate at the time of a restructuring. The Managed Assets Division, in consultation with the respective loan officer, determines whether the modified interest rate represented a current market rate at the time of restructuring. Using knowledge of current market conditions and rates, competitive pricing on recent loan originations, and an assessment of various characteristics of the modified loan (including collateral position and payment history), an appropriate market rate for a new borrower with similar risk is determined. If the modified interest rate meets or exceeds this market rate for a new borrower with similar risk, the modified interest rate represents a market rate at the time of restructuring. Additionally, before removing a loan from TDR classification, a review of the current or previously measured impairment on the loan and any concerns related to future performance by the borrower is conducted. If concerns exist about the future ability of the borrower to meet its obligations under the loans based on a credit review by the Managed Assets Division, the TDR classification is not removed from the loan.

Each restructured loan was reviewed for impairment at ~~September 30, 2012~~March 31, 2013 and approximately $~~3.1~~2.6 million of impairment was present and appropriately reserved for through the Company’s normal reserving methodology in the Company’s allowance for loan losses. For restructured loans in which impairment is calculated by the present value of future cash flows, the Company records interest income representing the decrease in impairment resulting from the passage of time during the respective period, which differs from interest income from contractually required interest on these specific loans. During the three months ended March 31, 2013and ~~nine months ended~~ ~~September 30,~~ 2012,, the Company recorded $~~534,000~~229,000 and $~~1.0~~238,000 ~~million,~~, respectively, in interest income representing this decrease in impairment.

2725

Table of Contents

The tables below present a summary of the post-modification balance of loans restructured during the three ~~and nine~~ months ended ~~September 30, 2012~~March 31, 2013 and ~~2011,~~2012, respectively, which represent troubled debt restructurings:


Three months ended September 30, 2012 (Dollars in thousands)		Total ⁽¹⁾⁽²⁾			Extension at Below Market Terms ⁽²⁾			Reduction of Interest Rate ⁽²⁾			Modification to Interest- only Payments ⁽²⁾			Forgiveness of Debt ⁽²⁾
		Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Three months ended March 31, 2013 (Dollars in thousands)																	Total ⁽¹⁾⁽²⁾			Extension at Below Market Terms ⁽²⁾			Reduction of Interest Rate ⁽²⁾			Modification to Interest- only Payments ⁽²⁾			Forgiveness of Debt ⁽²⁾
Three months ended March 31, 2013 (Dollars in thousands)																	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial and industrial		3	$	442	2	$	275	1	$	225	1	$	167	—	$	—	6	$	708	5	$	573	4	$	553	2	$	185	—	$	—
Commercial real-estate
Residential construction		1	496		1	496		1	496		1	496		—	—
Commercial construction		—	—		—	—		—	—		—	—		—	—		—	—		—	—		—	—		—	—		—	—
Land		—	—		—	—		—	—		—	—		—	—		2	287		2	287		2	287		—	—		1	73
Office	��	—	—		—	—		—	—		—	—		—	—
Industrial		—	—		—	—		—	—		—	—		—	—
Retail		2	4,653		2	4,653		—	—		2	4,654		—	—		1	200		1	200		1	200		—	—		—	—
Multi-family		1	380		—	—		1	380		1	380		—	—		1	705		1	705		1	705		—	—		—	—
Mixed use and other		7	3,108		2	858		5	2,250		5	2,699		—	—		—	—		—	—		—	—		—	—		—	—
Residential real estate and other		4	437		3	308		3	357		1	79		—	—
Residential real-estate and other																	4	377		2	70		3	361		1	123		—	—
Total loans		18	$	9,516	10	$	6,590	11	$	3,708	11	$	8,475	—	$	—	14	$	2,277	11	$	1,835	11	$	2,106	3	$	308	1	$	73


(1)	Restructured loans may have more than one modification representing a concession. As such, restructured loans during the period may be represented in more than oneof the categories noted above.


(2)	Balances represent the recorded investment in the loan at the time of the restructuring.


Three months ended September 30, 2011 (Dollars in thousands)	Total ⁽¹⁾⁽²⁾			Extension at Below Market Terms ⁽²⁾			Reduction of Interest Rate ⁽²⁾			Modification to Interest- only Payments ⁽²⁾			Forgiveness of Debt ⁽²⁾
	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Three months ended March 31, 2012 (Dollars in thousands)																Total ⁽¹⁾⁽²⁾			Extension at Below Market Terms ⁽²⁾			Reduction of Interest Rate ⁽²⁾			Modification to Interest- only Payments ⁽²⁾			Forgiveness of Debt ⁽²⁾
Three months ended March 31, 2012 (Dollars in thousands)																Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial and industrial	8	$	3,157	—	$	—	2	$	412	6	$	2,745	—	$	—	3	$	118	1	$	14	—	$	—	2	$	104	—	$	—
Commercial real-estate
Residential construction	—	—		—	—		—	—		—	—		—	—
Commercial construction	1	467		—	—		1	467		1	467		—	—		2	622		2	622		2	622		2	622		—	—
Land	2	436		2	436		1	280		—	—		—	—		14	27,992		14	27,992		12	27,004		11	22,954		—	—
Office	—	—		—	—		—	—		—	—		—	—
Industrial	1	797		1	797		1	797		1	797		—	—
Retail	2	3,016		2	3,016		1	2,235		2	3,016		—	—		5	8,633		5	8,633		5	8,633		4	8,244		—	—
Multi-family	1	548		1	548		—	—		—	—		—	—		—	—		—	—		—	—		—	—		—	—
Mixed use and other	5	2,195		1	155		3	541		2	1,654		—	—		3	1,272		3	1,272		2	1,212		2	1,129		—	—
Residential real estate and other	6	2,857		5	1,917		4	2,334		2	928		—	—
Residential real-estate and other																4	1,046		3	927		1	118		2	844		—	—
Total loans	26	$	13,473	12	$	6,869	13	$	7,066	14	$	9,607	—	$	—	31	$	39,683	28	$	39,460	22	$	37,589	23	$	33,897	—	$	—


(1)	Restructured loans may have more than one modification representing a concession. As such, restructured loans during the period may be represented in more than oneof the categories noted above.


(2)	Balances represent the recorded investment in the loan at the time of the restructuring.

During the three months ended ~~September 30, 2012~~March 31, 2013, 1814 loans totaling $~~9.5~~2.3 million were determined to be troubled debt restructurings, compared to 2631 loans totaling $~~13.5~~39.7 million in the same period of ~~2011.~~2012. Of these loans extended at below market terms, the weighted average extension had a term of approximately ~~eight~~21 months during the three months ended ~~September 30, 2012~~March 31, 2013 compared to 14seven months for the same period of ~~2011.~~2012. Further, the weighted average decrease in the stated interest rate for loans with a reduction of interest rate during the period was approximately ~~293~~153 basis points and ~~201~~162 basis points during the three months ending ~~September 30, 2012~~March 31, 2013 and ~~2011,~~2012, respectively. Interest-only payment terms were approximately ~~nine~~eight months and 11four months during the three months ending ~~September 30, 2012~~March 31, 2013 and ~~2011,~~2012, respectively. Additionally, no$50,000 in balances were forgiven in the ~~third~~first quarter of ~~2012 and 2011.~~

~~Table of Contents~~

Nine months ended September 30, 2012

(Dollars in thousands)

Total ⁽¹⁾⁽²⁾

Extension at Below
Market Terms ⁽²⁾

Reduction of Interest
Rate ⁽²⁾

Modification to Interest-
only Payments ⁽²⁾

Forgiveness of Debt ⁽²⁾
Count Balance Count Balance Count Balance Count Balance Count Balance
Commercial
Commercial and industrial 16
$ 13,325
9
$ 2,617
9
$ 12,705
7
$ 10,579
2
$ 1,486
Commercial real-estate
Residential construction 3
2,147
3
2,147
1
496
1
496
—
—
Commercial construction 2
622
2
622
2
622
2
622
—
—
Land 17
31,836
17
31,836
14
30,561
13
26,511
—
—
Office —
—
—
—
—
—
—
—
—
—
Industrial —
—
—
—
—
—
—
—
—
—
Retail 7
13,286
7
13,286
5
8,633
6
12,897
—
—
Multi-family 1
380
—
—
1
380
1
380
—
—
Mixed use and other 13
6,745
8
4,495
9
5,680
8
3,974
—
—
Residential real estate and other 9
1,512
7
1,264
5
504
3
924
1
29
Total loans 68
$ 69,853
53
$ 56,267
46
$ 59,581
41
$ 56,383
3
$ 1,515


~~(1)~~	~~Restructured loans may have more than one modification representing a concession. As such, restructured loans during the period may be represented in more than oneof the categories noted above.~~


~~(2)~~	~~Balances represent the recorded investment in the loan at the time of the restructuring.~~

Nine months ended September 30, 2011

(Dollars in thousands)

Total ⁽¹⁾⁽²⁾

Extension at Below
Market Terms ⁽²⁾

Reduction of Interest
Rate ⁽²⁾

Modification to Interest-
only Payments ⁽²⁾

Forgiveness of Debt ⁽²⁾
Count Balance Count Balance Count Balance Count Balance Count Balance
Commercial
Commercial and industrial 19
$ 5,119
9
$ 1,828
10
$ 1,271
10
$ 3,327
2
$ 135
Commercial real-estate
Residential construction —
—
—
—
—
—
—
—
—
—
Commercial construction 3
9,401
2
8,934
3
9,401
1
467
—
—
Land 3
1,947
3
1,947
1
280
—
—
—
—
Office 7
4,075
5
2,740
5
1,996
2
1,536
—
—
Industrial 3
4,020
3
4,020
2
2,181
2
2,181
—
—
Retail 6
4,302
4
3,775
4
3,251
4
3,586
—
—
Multi-family 1
548
1
548
—
—
—
—
—
—
Mixed use and other 19
23,112
12
11,852
14
20,324
4
6,804
—
—
Residential real estate and other 9
3,453
7
2,326
6
2,797
4
1,391
—
—
Total loans 70
$ 55,977
46
$ 37,970
45
$ 41,501
27
$ 19,292
2
$ 135


~~(1)~~	~~Restructured loans may have more than one modification representing a concession. As such, restructured loans during the period may be represented in more than oneof the categories noted above.~~


~~(2)~~	~~Balances represent the recorded investment in the loan at the time of the restructuring.~~

~~During the nine months ended~~ ~~September 30, 2012~~, 68 ~~loans totaling~~ ~~$69.9 million, were determined to be troubled debt restructurings,~~2013 compared to 70zero ~~loans totaling~~ ~~$56.0 million, in~~balances forgiven during the same period of ~~2011. Of these loans extended at below market terms, the weighted average extension had a term of approximately~~ 2012.~~eight~~ ~~months during the nine months ended~~ ~~September 30, 2012~~ ~~compared to~~ 10 ~~months for the same period of 2011. Further, the weighted average decrease in the stated interest rate for loans with a reduction of interest rate during the period was approximately~~ ~~151~~ ~~basis points and~~ ~~201~~ ~~basis points during the nine months ending~~ ~~September 30, 2012~~ ~~and 2011, respectively. Interest-only payment terms were approximately~~ ~~five~~ ~~months and~~ 10 ~~months during the nine months ending~~ ~~September 30, 2012~~ ~~and 2011, respectively. Additionally,~~ ~~$420,000~~ ~~in principal balances were forgiven during the first nine months of 2012, compared to~~ ~~$67,000~~ ~~in the same period of 2011.~~

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The following table presents a summary of all loans restructured during the twelve months ended ~~September 30, 2012~~March 31, 2013 and ~~2011,~~2012, and such loans which were in payment default under the restructured terms during the respective periods below:

(Dollars in thousands) As of September 30, 2012
Three months ended
September 30, 2012

Nine months ended
September 30, 2012
Total ⁽¹⁾⁽³⁾

Payments in Default⁽²⁾⁽³⁾

Payments in Default⁽²⁾⁽³⁾
Count Balance Count Balance Count Balance
Commercial
Commercial and industrial 21
$ 15,161
3
$ 351
3
$ 351
Commercial real-estate
Residential construction 4
3,252
—
—
—
—
Commercial construction 7
3,360
5
2,740
5
2,740
Land 21
37,860
1
651
2
1,925
Office 2
4,795
—
—
—
—
Industrial 2
1,313
1
990
1
990
Retail 15
28,097
—
—
1
1,605
Multi-family 6
4,247
1
264
1
264
Mixed use and other 27
12,342
2
914
5
3,197
Residential real estate and other 16
3,977
5
1,931
6
2,379
Total loans 121
$ 114,404
18
$ 7,841
24
$ 13,451


~~(1)~~	~~Total restructured loans represent all loans restructured during the previous twelve months from the date indicated.~~


~~(2)~~	~~Restructured loans considered to be in payment default are over 30 days past-due subsequent to the restructuring.~~


~~(3)~~	~~Balances represent the recorded investment in the loan at the time of the restructuring.~~


(Dollars in thousands)	As of September 30, 2011			Three months ended September 30, 2011			Nine months ended September 30, 2011			Three Months Ended March 31, 2013						Three Months Ended March 31, 2012
	Total ⁽¹⁾⁽³⁾			Payments in Default⁽²⁾⁽³⁾			Payments in Default⁽²⁾⁽³⁾			Total ⁽¹⁾⁽³⁾			Payments in Default⁽²⁾⁽³⁾			Total ⁽¹⁾⁽³⁾			Payments in Default⁽²⁾⁽³⁾
	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count		Balance
Commercial
Commercial and industrial	32	$	11,941	3	$	1,120	5	$	1,946	21	$	14,901	6	$	10,377	20	$	5,388	$	6	$	664
Commercial real-estate
Residential construction	—	—		—	—		—	—		3	2,147		—	—		1	1,105		—		—
Commercial construction	4	9,779		1	377		1	377		—	—		—	—		10	12,762		1		467
Land	4	4,507		3	4,227		3	4,227		5	4,131		1	651		20	34,452		2		1,430
Office	9	8,906		3	3,899		3	3,899		—	—		—	—		6	6,401		2		421
Industrial	3	4,020		1	1,840		1	1,840		1	727		—	—		3	2,110		—		—
Retail	6	4,302		1	459		1	459		4	5,085		—	—		19	27,746		3		4,299
Multi-family	1	548		—	—		—	—		2	1,085		1	705		6	4,414		—		—
Mixed use and other	22	25,941		4	1,852		4	1,852		12	6,061		4	2,603		35	29,696		7		6,522
Residential real estate and other	10	3,894		3	769		3	769
Residential real-estate and other										10	969		2	221		19	6,777		3		721
Total loans	91	$	73,838	19	$	14,543	21	$	15,369	58	$	35,106	14	$	14,557	139	$	130,851	$	24	$	14,524


(1)	Total restructured loans represent all loans restructured during the previous twelve months from the date indicated.


(2)	Restructured loans considered to be in payment default are over 30 days past-due subsequent to the restructuring.


(3)	Balances represent the recorded investment in the loan at the time of the restructuring.

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(8) Loan Securitization

During the third quarter of 2009, the Company entered into a revolving period securitization transaction sponsored by First Insurance Funding Corporation ("FIFC"). In connection with the securitization, premium finance receivables – commercial were transferred to FIFC Premium Funding, LLC (the “securitization entity”). Principal collections on loans in the securitization entity were used to acquire and transfer additional loans into the securitization entity during the stated revolving period. At December 31, 2011, the stated revolving period ended and the majority of collections began accumulating to pay off the issued instruments as scheduled.

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Instruments issued by the securitization entity included $600 million Class A notes bearing an annual interest rate of one-month LIBOR plus 1.45% (the “Notes”). At the time of issuance, the Notes were eligible collateral under the Federal Reserve Bank of New York’s Term Asset-Backed Securities Loan Facility (“TALF”). Class B and Class C notes (“Subordinated securities”), which ~~are~~were recorded in the form of zero coupon bonds, were also issued and were retained by the Company.

This securitization transaction was accounted for as a secured borrowing and the securitization entity is treated as a consolidated subsidiary of the Company under ASC 810, “Consolidation”. The securitization entity’s receivables underlying third-party investors’ interests were recorded in loans, net of unearned income, excluding covered loans, an allowance for loan losses was established and the related debt issued was reported in secured borrowings—owed to securitization investors. Additionally, the Company’s retained interests in the transaction, principally consisting of subordinated securities, cash collateral, and overcollateralization of loans, constituted intercompany positions, which were eliminated in the preparation of the Company’s Consolidated Statements of Condition.

Upon transfer of premium finance receivables – commercial to the securitization entity, the receivables and certain cash flows derived from them became restricted for use in meeting obligations to the securitization entity’s creditors. The securitization entity had ownership of interest-bearing deposit balances that also had restrictions, the amounts of which were reported in interest-bearing deposits with other banks. With the exception of the seller’s interest in the transferred receivables, the Company’s interests in the securitization entity’s assets were generally subordinate to the interests of third-party investors.

During the first and second quarters of 2012, the Company purchased portions of the Notes in the open market in the amounts of $172.0 million and $67.2 million, respectively, effectively reducing the outstanding Notes, on a consolidated basis, to $360.8 million. On August 15, 2012, the securitization entity paid off the $360.8 million of Notes held by third party investors as well as the $239.2 million owed to the Company. Additionally, the Company received payment of $49.6 million related to the Subordinated securities held by the Company. As of ~~September 30, 2012,~~March 31, 2013, the securitization entity held no loans or borrowings but retained approximately $~~1.8 million~~36,000 in ~~cash.~~cash, which is not restricted.

The ~~table below details~~carrying values and classification of the ~~securitization entity’s~~ assets and liabilities ~~on a stand-alone basis as~~relating to the securitization activities are shown in the table below. As of March 31, 2012, the ~~dates shown:~~balances of interest-bearing deposits with banks and loans were restricted for securitization investors.


(Dollars in thousands)	September 30, 2012		December 31, 2011			September 30, 2011			March 31, 2013		December 31, 2012		March 31, 2012
Cash collateral accounts	$	1,795	$	4,427		$	1,759		$	36	$	36	$	2,017
Collections and interest funding accounts	—		268,165			35,406			—		—		527,401
Interest-bearing deposits with banks—restricted for securitization investors	$	1,795	$	272,592		$	37,165
Loans, net of unearned income—restricted for securitization investors	$	—	$	412,988		$	645,621
Interest-bearing deposits with banks									$	36	$	36	$	529,418
Loans, net of unearned income									$	—	$	—	$	156,793
Allowance for loan losses	—		(1,456		)	(2,155		)	—		—		(661		)
Net loans—restricted for securitization investors	$	—	$	411,532		$	643,466
Net loans									$	—	$	—	$	156,132
Other assets	—		2,319			2,568			—		—		2,045
Total assets	$	1,795	$	686,443		$	683,199		$	36	$	36	$	687,595
Secured borrowings—owed to securitization investors	$	—	$	600,000		$	600,000		$	—	$	—	$	600,000
Other liabilities	—		2,821			4,490			—		—		1,187
Total liabilities	$	—	$	602,821		$	604,490		$	—	$	—	$	601,187

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(9) Goodwill and Other Intangible Assets

A summary of the Company’s goodwill assets by business segment is presented in the following table:


(Dollars in thousands)	January 1, 2012		Goodwill Acquired		Impairment Loss		September 30, 2012		January 1, 2013		Goodwill Acquired		Impairment Loss		Goodwill Adjustments			March 31, 2013
Community banking	$	259,336	$	1,516	$	—	$	260,852	$	274,963	$	—	$	—	$	(1,504	)	$	273,459
Specialty finance	16,095		22,823		—		38,918		38,574		—		—		(265		)	38,309
Wealth management	30,037		1,827		—		31,864		31,864		—		—		—			31,864
Total	$	305,468	$	26,166	$	—	$	331,634	$	345,401	$	—	$	—	$	(1,769	)	$	343,632

The community banking ~~and wealth management segments’~~segment's goodwill ~~increased~~decreased $1.5 million ~~and~~ ~~$1.8 million, respectively,~~ in ~~2012~~2013 as a result of the subsequent purchase adjustments related to the acquisition of ~~a bank branch and the trust operations of Suburban.~~Hyde Park Bank in 2012. Additionally, the specialty finance

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segment’s goodwill ~~increased~~decreased $~~22.8 million~~265,000 during this same period as a result of subsequent purchase adjustments and foreign currency translation adjustments related to the acquisition of Macquarie Premium Funding Inc. in 2012.

A summary of finite-lived intangible assets as of the dates shown and the expected amortization as of ~~September 30, 2012~~March 31, 2013 is as follows:



(Dollars in thousands)	March 31, 2013			December 31, 2012			March 31, 2012
Community banking segment:
Core deposit intangibles:
Gross carrying amount	$	37,860		$	38,176		$	36,053
Accumulated amortization	(26,127		)	(25,159		)	(22,347		)
Net carrying amount	$	11,733		$	13,017		$	13,706
Specialty finance segment:
Customer list intangibles:
Gross carrying amount	$	1,800		$	1,800		$	1,800
Accumulated amortization	(688		)	(645		)	(510		)
Net carrying amount	$	1,112		$	1,155		$	1,290
Wealth management segment:
Customer list and other intangibles:
Gross carrying amount	$	7,390		$	7,390		$	7,390
Accumulated amortization	(725		)	(615		)	(285		)
Net carrying amount	$	6,665		$	6,775		$	7,105
Total other intangible assets, net	$	19,510		$	20,947		$	22,101

(Dollars in thousands) September 30, 2012 December 31, 2011 September 30, 2011
Specialty finance segment:
Customer list intangibles:
Gross carrying amount $ 1,800
$ 1,800
$ 1,800
Accumulated amortization (603 ) (460 ) (411 )
Net carrying amount $ 1,197
$ 1,340
$ 1,389
Community banking segment:
Core deposit intangibles:
Gross carrying amount $ 38,501
$ 35,587
$ 35,567
Accumulated amortization (24,178 ) (21,457 ) (20,547 )
Net carrying amount $ 14,323
$ 14,130
$ 15,020
Wealth management segment:
Customer list and other intangibles:
Gross carrying amount $ 7,390
$ 6,790
$ 6,090
Accumulated amortization (505 ) (190 ) (86 )
Net carrying amount $ 6,885
$ 6,600
$ 6,004
Total other intangible assets, net $ 22,405
$ 22,070
$ 22,413



Estimated amortization
Actual in three months ended March 31, 2013	$	1,120
Estimated remaining in 2013	3,239
Estimated—2014	3,834
Estimated—2015	2,309
Estimated—2016	1,753
Estimated—2017	1,388

Estimated amortization
Actual in nine months ended September 30, 2012 $ 3,216
Estimated remaining in 2012 1,158
Estimated—2013 4,471
Estimated—2014 3,942
Estimated—2015 2,402
Estimated—2016 1,836
The decrease in core deposit intangibles from 2012 was primarily from the divestiture of the deposits and current banking locations of Second Federal in the first quarter of 2013. The core deposit intangibles previously recognized in connection with this and other prior acquisitions are being amortized over a ten-year period on an accelerated basis.

The customer list intangibles recognized in connection with the purchase of life insurance premium finance assets in 2009 are being amortized over an 18-year period on an accelerated basis.

The increase in core deposit intangibles from 2011 was related to the FDIC-assisted acquisitions of Charter National in the first quarter of 2012, Second Federal and First United Bank in the third quarter of 2012 as well as the acquisition of a bank branch of Suburban in the second quarter of 2012. The core depositcustomer list intangibles recognized in connection with ~~these~~prior acquisitions within the wealth management segment are being amortized over a 10~~-year period on an accelerated basis.~~

The increase in intangibles within the wealth management segment was related to the Company’s acquisition of the trust business of Suburban during the first quarter of 2012. The customer list intangible recognized in connection with the acquisition is being amortized over a 10ten-year period on a straight-line basis.

Total amortization expense associated with finite-lived intangibles totaled approximately $~~3.2~~1.1 million and $~~2.4~~1.0 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2013 and 2012, ~~and 2011,~~ respectively.

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Table of Contents

(10) Deposits

The following table is a summary of deposits as of the dates shown:


(Dollars in thousands)	September 30, 2012			December 31, 2011			September 30, 2011			March 31, 2013			December 31, 2012			March 31, 2012
Balance:
Non-interest bearing	$	2,162,215		$	1,785,433		$	1,631,709		$	2,243,440		$	2,396,264		$	1,901,753
NOW	1,841,743			1,698,778			1,633,752			2,043,227			2,022,957			1,756,313
Wealth management deposits	979,306			788,311			730,315			868,119			991,902			933,609
Money market	2,596,702			2,263,253			2,190,117			2,879,636			2,761,498			2,306,726
Savings	1,156,466			888,592			867,483			1,258,682			1,275,012			943,066
Time certificates of deposit	5,111,533			4,882,900			5,252,632			4,669,653			4,980,911			4,824,386
Total deposits	$	13,847,965		$	12,307,267		$	12,306,008		$	13,962,757		$	14,428,544		$	12,665,853
Mix:
Non-interest bearing	16		%	15		%	13		%	16		%	17		%	15		%
NOW	13			14			13			15			14			14
Wealth management deposits	7			6			6			6			7			7
Money market	19			18			18			21			19			18
Savings	8			7			7			9			9			8
Time certificates of deposit	37			40			43			33			34			38
Total deposits	100		%	100		%	100		%	100		%	100		%	100		%

Wealth management deposits represent deposit balances (primarily money market accounts) at the Company’s subsidiary banks from brokerage customers of Wayne Hummer Investments, trust and asset management customers of CTC and brokerage customers from unaffiliated companies.

(11) Notes Payable, Federal Home Loan Bank Advances, Other Borrowings, Secured Borrowings and Subordinated Notes

The following table is a summary of notes payable, Federal Home Loan Bank advances, other borrowings, secured borrowings and subordinated notes as of the dates shown:


(Dollars in thousands)	September 30, 2012		December 31, 2011		September 30, 2011		March 31, 2013		December 31, 2012		March 31, 2012
Notes payable	$	2,275	$	52,822	$	3,004	$	31,911	$	2,093	$	52,639
Federal Home Loan Bank advances	414,211		474,481		474,570		414,032		414,122		466,391
Other borrowings:
Securities sold under repurchase agreements	337,405		413,333		414,333		224,297		238,401		384,046
Other	39,824		30,420		33,749		31,947		36,010		26,991
Total other borrowings	377,229		443,753		448,082		256,244		274,411		411,037
Secured borrowings—owed to securitization investors	—		600,000		600,000		—		—		428,000
Subordinated notes	15,000		35,000		40,000		15,000		15,000		35,000
Total notes payable, Federal Home Loan Bank advances, other borrowings, secured borrowings, and subordinated notes	$	808,715	$	1,606,056	$	1,565,656	$	717,187	$	705,626	$	1,393,067

At ~~September 30, 2012~~March 31, 2013, the Company had notes payable of $~~2.3~~31.9 million. The Company had a $~~1.0~~31.0 million outstanding balance of notes payable, with an interest rate of ~~4.50%~~4.00%, under a $~~76.0~~101.0 million loan agreement (“Agreement”) with unaffiliated banks. The Agreement consists of a $~~75.0~~100.0 million revolving credit facility, ~~which matured~~maturing on October ~~26, 2012~~25, 2013, and a $1.0 million term loan maturing on June 1, 2015. At ~~September 30, 2012~~March 31, 2013, there was no$30.0 million ~~balance~~ outstanding on the $~~75.0~~100.0 million revolving credit facility. Borrowings under the Agreement that are considered “Base Rate Loans” will bear interest at a rate equal to the higher of (1) ~~450~~400 basis points and (2) for the applicable period, the highest of (a) the federal funds rate plus 100 basis points,

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(b) the lender’s prime rate plus 50 basis points, and (c) the Eurodollar Rate (as defined below) that would be applicable for an interest period of one month plus 150 basis points. Borrowings under the Agreement that are considered “Eurodollar Rate Loans” will bear interest at a rate equal to the higher of (1) the British Bankers Association’s LIBOR rate for the applicable period plus ~~350~~300 basis points (the ~~“Eurodollar~~

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“Eurodollar Rate”) and (2) ~~450~~400 basis points. A commitment fee is payable quarterly equal to 0.50% of the actual daily amount by which the lenders’ commitment under the revolving note exceeded the amount outstanding under such facility. ~~As more fully described in Note 18 - Subsequent Events, on~~ ~~October 26, 2012, the Company entered into an Amended and Restated Credit Agreement, which altered the terms of the Agreement, and which provides for a~~ ~~$1.0 million~~ ~~term loan and a~~ ~~$100.0 million~~ ~~revolving credit facility, which mature on~~ ~~June 1, 2015~~ ~~and~~ ~~October 25, 2013, respectively.~~

Borrowings under the Agreement are secured by the stock of some of the banks and contains several restrictive covenants, including the maintenance of various capital adequacy levels, asset quality and profitability ratios, and certain restrictions on dividends and other indebtedness. At ~~September 30, 2012~~March 31, 2013, the Company was in compliance with all debt covenants. The Agreement is available to be utilized, as needed, to provide capital to fund continued growth at the Company’s banks and to serve as an interim source of funds for acquisitions, common stock repurchases or other general corporate purposes.

As a result of the acquisition of Great Lakes Advisors, the Company assumed an unsecured promissory note to a Great Lakes Advisor shareholder (“Unsecured Promissory Note”) with an outstanding balance of $~~1.3 million~~911,000 as of ~~September 30, 2012~~March 31, 2013. Under the Unsecured Promissory Note, the Company will make quarterly principal payments and pay interest at a rate of the federal funds rate plus 100 basis points. As of ~~September 30, 2012~~March 31, 2013, the current interest rate was 1.25%.

Federal Home Loan Bank advances consist of obligations of the banks and are collateralized by qualifying residential ~~real estate~~real-estate and home equity loans and certain securities. FHLB advances are stated at par value of the debt adjusted for unamortized fair value adjustments recorded in connection with advances acquired through acquisitions. In order to achieve lower interest rates and to extend maturities, the Company may periodically restructure FHLB advances. The Company restructured $292.5 million of FHLB advances in the first quarter of 2012, paying $22.4 million in prepayment ~~fees, in the first quarter of 2012.~~fees. The Company did not restructure any FHLB advances in ~~2011.~~the first quarter of 2013. These prepayment fees are classified in other assets on the Consolidated Statements of Condition and are amortized as an adjustment to interest expense using the effective interest method.

At ~~September 30,~~March 31, 2013 and 2012, securities sold under repurchase agreements represent $~~70.8~~44.3 million and $81.6 million, respectively, of customer balances in sweep accounts in connection with master repurchase agreements at the banks and $~~266.6~~180.0 million and $302.5 million, respectively, of short-term borrowings from brokers. Securities pledged for customer balances in sweep accounts are maintained under the Company’s control and consist of U.S. Government agency, mortgage-backed and corporate securities. These securities are included in the available-for-sale securities portfolio as reflected on the Company’s Consolidated Statements of Condition.

Other borrowings at ~~September 30, 2012~~March 31, 2013 and ~~2011~~2012 represent the junior subordinated amortizing notes issued by the Company in connection with the issuance of Tangible Equity Units (TEUs) in December 2010 and a fixed-rate promissory note issued by the Company in August 2012 ("Fixed-rate Promissory Note") related to and secured by an office building owned by the Company. The junior subordinated notes were recorded at their initial principal balance of $44.7 million, net of issuance costs. These notes have a stated interest rate of 9.5% and require quarterly principal and interest payments of $4.3 million, with an initial payment of $4.6 million that was paid on March 15, 2011. The issuance costs are being amortized to interest expense using the effective-interest method. The scheduled final installment payment on the notes is December 15, 2013, subject to extension. At ~~September 30, 2012~~March 31, 2013, these notes had an outstanding balance of $~~19.8~~12.2 million. See Note 17 – Shareholders’ Equity and Earnings Per Share for further discussion of the TEUs. At ~~September 30, 2012~~March 31, 2013 the Fixed-rate Promissory Note had an outstanding balance of $~~20.0~~19.7 million. Under the Fixed-rate Promissory Note, the Company will make monthly principal payments and pay interest at a fixed rate of 3.75% until maturity on September 1, 2017.

During the third quarter of 2009, the Company entered into an off-balance sheet securitization transaction sponsored by FIFC. In connection with the securitization, premium finance receivables—commercial were transferred to FIFC Premium Funding, LLC, a qualifying special purpose entity (the “QSPE”). The QSPE issued $600 million Class A notes, which were reflected on the Company's Consolidated Statements of Condition as secured borrowings owed to securitization investors, that had an annual interest rate of one-month LIBOR plus 1.45% (the “Notes”). At the time of issuance, the Notes were eligible collateral under TALF. During the first and second quarters of 2012, the Company purchased $172.0 million and $67.2 million, respectively, of the Notes in the open market effectively defeasing a portion of the Notes. During the third quarter of 2012, the Company completely paid-off the remaining portion of these Notes as reflected on the Company’s Consolidated Statements of Condition as secured borrowings owed to securitization investors. See Note 8 — Loan Securitization, for more information on the QSPE.

At ~~September 30, 2012~~March 31, 2013, the Company had an obligation for one subordinated note with a remaining balance of $15.0 million. This subordinated note was issued in October 2005 (funded in May 2006). During the second quarter of 2012, two subordinated notes issued in October 2002 and April 2003 with remaining balances of $5.0 million and $10.0 million, respectively, were paid off prior to maturity. The remaining subordinated note as of ~~September 30, 2012~~March 31, 2013 requires annual principal payments of $5.0 million on May 29, 2013, 2014 and 2015. The Company may redeem the subordinated note without payment of premium or

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penalty at any time prior to maturity. Interest on each note is calculated at a rate equal to three-month LIBOR plus 130 basis points.

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(12) Junior Subordinated Debentures

As of ~~September 30, 2012~~March 31, 2013, the Company owned 100% of the common securities of nine trusts, Wintrust Capital Trust III, Wintrust Statutory Trust IV, Wintrust Statutory Trust V, Wintrust Capital Trust VII, Wintrust Capital Trust VIII, Wintrust Capital Trust IX, Northview Capital Trust I, Town Bankshares Capital Trust I, and First Northwest Capital Trust I (the “Trusts”) set up to provide long-term financing. The Northview, Town and First Northwest capital trusts were acquired as part of the acquisitions of Northview Financial Corporation, Town Bankshares, Ltd., and First Northwest Bancorp, Inc., respectively. The Trusts were formed for purposes of issuing trust preferred securities to third-party investors and investing the proceeds from the issuance of the trust preferred securities and common securities solely in junior subordinated debentures issued by the Company (or assumed by the Company in connection with an acquisition), with the same maturities and interest rates as the trust preferred securities. The junior subordinated debentures are the sole assets of the Trusts. In each Trust, the common securities represent approximately 3% of the junior subordinated debentures and the trust preferred securities represent approximately 97% of the junior subordinated debentures.

The Trusts are reported in the Company’s consolidated financial statements as unconsolidated subsidiaries. Accordingly, in the Consolidated Statements of Condition, the junior subordinated debentures issued by the Company to the Trusts are reported as liabilities and the common securities of the Trusts, all of which are owned by the Company, are included in available-for-sale securities.

The following table provides a summary of the Company’s junior subordinated debentures as of ~~September 30, 2012~~March 31, 2013. The junior subordinated debentures represent the par value of the obligations owed to the Trusts.


(Dollars in thousands)	Common Securities		Trust Preferred Securities		Junior Subordinated Debentures		Rate Structure	Contractual rate at 9/30/2012		Issue Date	Maturity Date	Earliest Redemption Date	Common Securities		Trust Preferred Securities		Junior Subordinated Debentures		Rate Structure	Contractual rate at 3/31/2013		Issue Date	Maturity Date	Earliest Redemption Date
Wintrust Capital Trust III	$	774	$	25,000	$	25,774	L+3.25	3.71	%	04/2003	04/2033	04/2008	$	774	$	25,000	$	25,774	L+3.25	3.54	%	04/2003	04/2033	04/2008
Wintrust Statutory Trust IV	619		20,000		20,619		L+2.80	3.16	%	12/2003	12/2033	12/2008	619		20,000		20,619		L+2.80	3.08	%	12/2003	12/2033	12/2008
Wintrust Statutory Trust V	1,238		40,000		41,238		L+2.60	2.96	%	05/2004	05/2034	06/2009	1,238		40,000		41,238		L+2.60	2.88	%	05/2004	05/2034	06/2009
Wintrust Capital Trust VII	1,550		50,000		51,550		L+1.95	2.34	%	12/2004	03/2035	03/2010	1,550		50,000		51,550		L+1.95	2.23	%	12/2004	03/2035	03/2010
Wintrust Capital Trust VIII	1,238		40,000		41,238		L+1.45	1.81	%	08/2005	09/2035	09/2010	1,238		40,000		41,238		L+1.45	1.73	%	08/2005	09/2035	09/2010
Wintrust Captial Trust IX	1,547		50,000		51,547		L+1.63	2.02	%	09/2006	09/2036	09/2011	1,547		50,000		51,547		L+1.63	1.91	%	09/2006	09/2036	09/2011
Northview Capital Trust I	186		6,000		6,186		L+3.00	3.44	%	08/2003	11/2033	08/2008	186		6,000		6,186		L+3.00	3.30	%	08/2003	11/2033	08/2008
Town Bankshares Capital Trust I	186		6,000		6,186		L+3.00	3.44	%	08/2003	11/2033	08/2008	186		6,000		6,186		L+3.00	3.30	%	08/2003	11/2033	08/2008
First Northwest Capital Trust I	155		5,000		5,155		L+3.00	3.36	%	05/2004	05/2034	05/2009	155		5,000		5,155		L+3.00	3.28	%	05/2004	05/2034	05/2009
Total					$	249,493		2.57	%								$	249,493		2.47	%

The junior subordinated debentures totaled $249.5 million at ~~September 30, 2012~~March 31, 2013, December 31, ~~2011~~2012 and ~~September 30, 2011~~March 31, 2012.

The interest rates on the variable rate junior subordinated debentures are based on the three-month LIBOR rate and reset on a quarterly basis. At ~~September 30, 2012~~March 31, 2013, the weighted average contractual interest rate on the junior subordinated debentures was ~~2.57%~~2.47%. The Company entered into interest rate swaps and caps with an aggregate notional value of $225 million to hedge the variable cash flows on certain junior subordinated debentures. The hedge-adjusted rate on the junior subordinated debentures as of ~~September 30, 2012~~March 31, 2013, was ~~4.91%~~4.88%. Distributions on the common and preferred securities issued by the Trusts are payable quarterly at a rate per annum equal to the interest rates being earned by the Trusts on the junior subordinated debentures. Interest expense on the junior subordinated debentures is deductible for income tax purposes.

The Company has guaranteed the payment of distributions and payments upon liquidation or redemption of the trust preferred securities, in each case to the extent of funds held by the Trusts. The Company and the Trusts believe that, taken together, the obligations of the Company under the guarantees, the junior subordinated debentures, and other related agreements provide, in the aggregate, a full, irrevocable and unconditional guarantee, on a subordinated basis, of all of the obligations of the Trusts under the trust preferred securities. Subject to certain limitations, the Company has the right to defer the payment of interest on the junior subordinated debentures at any time, or from time to time, for a period not to exceed 20 consecutive quarters. The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the junior subordinated

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debentures at maturity or their earlier redemption. The junior subordinated debentures are redeemable in whole or in part prior to maturity at any time after the earliest redemption dates shown in the table, and earlier at the discretion of the Company if certain conditions

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are met, and, in any event, only after the Company has obtained Federal Reserve approval, if then required under applicable guidelines or regulations.

The junior subordinated debentures, subject to certain limitations, qualify as Tier 1 capital of the Company for regulatory purposes. The amount of junior subordinated debentures and certain other capital elements in excess of those certain limitations could be included in Tier 2 capital, subject to restrictions. At ~~September 30, 2012~~March 31, 2013, all of the junior subordinated debentures, net of the Common Securities, were included in the Company’s Tier 1 regulatory capital.

(13) Segment Information

The Company’s operations consist of three primary segments: community banking, specialty finance and wealth management.

The three reportable segments are strategic business units that are separately managed as they offer different products and services and have different marketing strategies. In addition, each segment’s customer base has varying characteristics. The community banking segment has a different regulatory environment than the specialty finance and wealth management segments. While the Company’s management monitors each of the fifteen bank subsidiaries’ operations and profitability separately, these subsidiaries have been aggregated into one reportable operating segment due to the similarities in products and services, customer base, operations, profitability measures, and economic characteristics.

The net interest income, net revenue and segment profit of the community banking segment includes income and related interest costs from portfolio loans that were purchased from the specialty finance segment. For purposes of internal segment profitability analysis, management reviews the results of its specialty finance segment as if all loans originated and sold to the community banking segment were retained within that segment’s operations, thereby causing inter-segment eliminations. Similarly, for purposes of analyzing the contribution from the wealth management segment, management allocates a portion of the net interest income earned by the community banking segment on deposit balances of customers of the wealth management segment to the wealth management segment. See Note 10 — Deposits, for more information on these deposits.

The segment financial information provided in the following tables has been derived from the internal profitability reporting system used by management to monitor and manage the financial performance of the Company. The accounting policies of the segments are substantially similar to as those described in “Summary of Significant Accounting Policies” in Note 1 of the Company’s ~~2011~~2012 Form 10-K. The Company evaluates segment performance based on after-tax profit or loss and other appropriate profitability measures common to each segment. Certain indirect expenses have been allocated based on actual volume measurements and other criteria, as appropriate. Intersegment revenue and transfers are generally accounted for at current market prices. The parent and intersegment eliminations reflected parent company information and intersegment eliminations.

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The following is a summary of certain operating information for reportable segments:

Three months ended September 30,
$ Change in
Contribution

% Change in
Contribution
(Dollars in thousands) 2012 2011
Net interest income:
Community banking $ 124,684
$ 109,242
$ 15,442
14 %
Specialty finance 33,125
28,802
4,323
15
Wealth management 524
2,883
(2,359 ) (82 )
Parent and inter-segment eliminations (25,758 ) (22,517 ) (3,241 ) (14 )
Total net interest income $ 132,575
$ 118,410
$ 14,165
12 %
Non-interest income:
Community banking $ 48,912
$ 55,714
$ (6,802 ) (12 )%
Specialty finance 131
784
(653 ) (83 )
Wealth management 16,115
14,304
1,811
13
Parent and inter-segment eliminations (2,213 ) (3,555 ) 1,342
38
Total non-interest income $ 62,945
$ 67,247
$ (4,302 ) (6 )%
Net revenue:
Community banking $ 173,596
$ 164,956
$ 8,640
5 %
Specialty finance 33,256
29,586
3,670
12
Wealth management 16,639
17,187
(548 ) (3 )
Parent and inter-segment eliminations (27,971 ) (26,072 ) (1,899 ) (7 )
Total net revenue $ 195,520
$ 185,657
$ 9,863
5 %
Segment profit:
Community banking $ 39,663
$ 32,887
$ 6,776
21 %
Specialty finance 12,967
12,765
202
2
Wealth management 1,317
2,357
(1,040 ) (44 )
Parent and inter-segment eliminations (21,645 ) (17,807 ) (3,838 ) (22 )
Total segment profit $ 32,302
$ 30,202
$ 2,100
7 %
Segment assets:
Community banking $ 16,877,673
$ 15,110,396
$ 1,767,277
12 %
Specialty finance 3,796,745
3,255,916
540,829
17
Wealth management 95,128
88,551
6,577
7
Parent and inter-segment eliminations (3,750,954 ) (2,540,059 ) (1,210,895 ) (48 )
Total segment assets $ 17,018,592
$ 15,914,804
$ 1,103,788
7 %

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	Nine months ended September 30,						$ Change in Contribution				% Change in Contribution		Three months ended March 31,						$ Change in Contribution			% Change in Contribution
(Dollars in thousands)	2012			2011						2013				2012					$ Change in Contribution			% Change in Contribution
Net interest income:							$ Change in Contribution				% Change in Contribution
Community banking	$	368,834		$	312,053		$	56,781			18	%	$	123,434		$	121,134		$	2,300		2	%
Specialty finance	90,750			84,808			5,942				7	%	31,090			27,586			3,504			13
Wealth management	4,940			6,322			(1,382		)		(22	)%	1,264			1,724			(460		)	(27	)
Parent and inter-segment eliminations	(77,784		)	(66,453		)	(11,331		)		(17	)%	(25,075		)	(24,549		)	(526		)	(2	)
Total net interest income	$	386,740		$	336,730		$	50,010			15	%	$	130,713		$	125,895		$	4,818		4	%
Non-interest income:
Community banking	$	117,717		$	109,172		$	8,545			8	%	$	39,882		$	31,786		$	8,096		25	%
Specialty finance	1,724			2,282			(558		)		(24	)%	1,693			1,371			322			23
Wealth management	47,316			40,734			6,582				16	%	17,856			15,237			2,619			17
Parent and inter-segment eliminations	(5,854		)	(7,402		)	1,548				21	%	(2,052		)	(1,371		)	(681		)	(50	)
Total non-interest income	$	160,903		$	144,786		$	16,117			11	%	$	57,379		$	47,023		$	10,356		22	%
Net revenue:
Community banking	$	486,551		$	421,225		$	65,326			16	%	$	163,316		$	152,920		$	10,396		7	%
Specialty finance	92,474			87,090			5,384				6	%	32,783			28,957			3,826			13
Wealth management	52,256			47,056			5,200				11	%	19,120			16,961			2,159			13
Parent and inter-segment eliminations	(83,638		)	(73,855		)	(9,783		)		(13	)%	(27,127		)	(25,920		)	(1,207		)	(5	)
Total net revenue	$	547,643		$	481,516		$	66,127			14	%	$	188,092		$	172,918		$	15,174		9	%
Segment profit:
Community banking	$	96,052		$	61,158		$	34,894			57	%	$	33,647		$	26,975		$	6,672		25	%
Specialty finance	36,401			40,730			(4,329		)		(11	)%	13,774			12,465			1,309			11
Wealth management	5,297			5,060			237				5	%	2,237			1,496			741			50
Parent and inter-segment eliminations	(56,643		)	(48,594		)	(8,049		)		(17	)%	(17,606		)	(17,726		)	120			1
Total segment profit	$	81,107		$	58,354		$	22,753			39	%	$	32,052		$	23,210		$	8,842		38	%
Segment assets:
Community banking													$	16,743,196		$	15,640,198		$	1,102,998		7	%
Specialty finance													3,932,552			3,387,001			545,551			16
Wealth management													94,918			95,275			(357		)	—
Parent and inter-segment eliminations													(3,696,419		)	(2,950,456		)	(745,963		)	(25	)
Total segment assets													$	17,074,247		$	16,172,018		$	902,229		6	%

(14) Derivative Financial Instruments

The Company primarily enters into derivative financial instruments as part of its strategy to manage its exposure to changes in interest rates. Derivative instruments represent contracts between parties that result in one party delivering cash to the other party based on a notional amount and an underlying (such as a rate, security price or price index) as specified in the contract. The amount of cash delivered from one party to the other is determined based on the interaction of the notional amount of the contract with the underlying. Derivatives are also implicit in certain contracts and commitments.

The derivative financial instruments currently used by the Company to manage its exposure to interest rate risk include: (1) interest rate swaps and caps to manage the interest rate risk of certain fixed and variable rate assets and variable rate liabilities; (2) interest rate lock commitments provided to customers to fund certain mortgage loans to be sold into the secondary market; (3) forward commitments for the future delivery of such mortgage loans to protect the Company from adverse changes in interest rates and corresponding changes in the value of mortgage loans available-for-sale; and (4) covered call options related to specific investment securities to enhance the overall yield on such securities. The Company also enters into derivatives (typically interest rate swaps) with certain qualified borrowers to facilitate the borrowers’ risk management strategies and concurrently enters into mirror-image derivatives with a third party counterparty, effectively making a market in the derivatives for such borrowers. Additionally, the Company enters into foreign currency contracts to manage foreign exchange risk associated with certain foreign currency denominated assets.

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As required by ASC 815, the Company recognizes derivative financial instruments in the consolidated financial statements at fair value regardless of the purpose or intent for holding the instrument. Derivative financial instruments are included in other assets or other liabilities, as appropriate, on the Consolidated Statements of Condition. Changes in the fair value of derivative financial instruments are either recognized in income or in shareholders’ equity as a component of other comprehensive income depending on whether the derivative financial instrument qualifies for hedge accounting and, if so, whether it qualifies as a fair value hedge or cash flow hedge. Generally, changes in fair values of derivatives accounted for as fair value hedges are recorded in income in the same period and in the same income statement line as changes in the fair values of the hedged items that relate to the hedged risk(s). Changes in fair values of derivative financial instruments accounted for as cash flow hedges, to the extent they are effective hedges, are recorded as a component of other comprehensive income, net of deferred taxes, and reclassified

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to earnings when the hedged transaction affects earnings. Changes in fair values of derivative financial instruments not designated in a hedging relationship pursuant to ASC 815, including changes in fair value related to the ineffective portion of cash flow hedges, are reported in non-interest income during the period of the change. Derivative financial instruments are valued by a third party and are validated by comparison with valuations provided by the respective counterparties. Fair values of certain mortgage banking derivatives (interest rate lock commitments and forward commitments to sell mortgage loans on a best efforts basis) are estimated based on changes in mortgage interest rates from the date of the loan commitment. The fair value of foreign currency derivatives is computed based on changes in foreign currency rates stated in the contract compared to those prevailing at the measurement date.

The Company records derivative assets and derivative liabilities on the Consolidated Statements of Condition within accrued interest receivable and other assets and accrued interest payable and other liabilities, respectively. The table below presents the fair value of the Company’s derivative financial instruments as ~~well as their classification on the Consolidated Statements of Condition as~~ of ~~September 30,~~March 31, 2013, December 31, 2012 and ~~2011:~~March 31, 2012:


	Derivative Assets					Derivative Liabilties					Derivative Assets						Derivative Liabilities
	Fair Value					Fair Value					Fair Value						Fair Value
(Dollars in thousands)	Balance Sheet Location	September 30, 2012		September 30, 2011		Balance Sheet Location	September 30, 2012		September 30, 2011		March 31, 2013		December 31, 2012		March 31, 2012		March 31, 2013		December 31, 2012		March 31, 2012
Derivatives designated as hedging instruments under ASC 815:
Interest rate derivatives designated as Cash Flow Hedges	Other assets	$	6	$	132	Other liabilities	$	9,491	$	12,339	$	1	$	2	$	61	$	6,556	$	7,988	$	10,178
Interest rate derivatives designated as Fair Value Hedges	Other assets	$	153	$	—	Other liabilities	$	—	$	—	$	93	$	104	$	—	$	—	$	—	$	—
Total derivatives designated as hedging instruments under ASC 815		$	159	$	132		$	9,491	$	12,339	$	94	$	106	$	61	$	6,556	$	7,988	$	10,178
Derivatives not designated as hedging instruments under ASC 815:
Interest rate derivatives	Other assets	50,190		32,882		Other liabilities	48,517		32,908		46,559		47,440		34,966		43,706		45,767		34,706
Interest rate lock commitments	Other assets	15,614		6,506		Other liabilities	10,392		249		5,551		6,069		3,789		1,315		937		368
Forward commitments to sell mortgage loans	Other assets	16		283		Other liabilities	11,568		5,116		213		277		404		3,015		3,057		1,112
Foreign exchange contracts	Other assets	11		—		Other liabilities	9		—		19		14		—		153		2		—
Total derivatives not designated as hedging instruments under ASC 815		$	65,831	$	39,671		$	70,486	$	38,273	$	52,342	$	53,800	$	39,159	$	48,189	$	49,763	$	36,186
Total derivatives		$	65,990	$	39,803		$	79,977	$	50,612	$	52,436	$	53,906	$	39,220	$	54,745	$	57,751	$	46,364

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to net interest income and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps and interest rate caps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without the exchange of the underlying notional amount. Interest rate caps designated as cash flow hedges involve the receipt of payments at the end of each period in which the interest rate specified in the contract ~~exceed~~exceeds the agreed upon strike price. As of ~~September 30, 2012~~March 31, 2013, the Company had four interest rate swaps and two interest rate caps with an aggregate notional amount of $225 million that were designated as cash flow hedges of interest rate risk.

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The table below provides details on each of these cash flow hedges as of ~~September 30, 2012~~March 31, 2013:


	September 30, 2012					March 31, 2013
(Dollars in thousands)	Notional		Fair Value			Notional		Fair Value
Maturity Date	Amount		Gain (Loss)			Amount		Asset (Liability)
Interest Rate Swaps:
September 2013	50,000		(2,398		)	50,000		(1,158		)
September 2013	40,000		(2,001		)	40,000		(1,008		)
September 2016	50,000		(3,352		)	50,000		(2,887		)
October 2016	25,000		(1,740		)	25,000		(1,503		)
Total Interest Rate Swaps	165,000		(9,491		)	165,000		(6,556		)
Interest Rate Caps:
September 2014	20,000		2			20,000		—
September 2014	40,000		4			40,000		1
Total Interest Rate Caps	60,000		6			60,000		1
Total Cash Flow Hedges	$	225,000	$	(9,485	)	$	225,000	$	(6,555	)

Since entering into these interest rate derivatives, the Company has used them to hedge the variable cash outflows associated with interest expense on the Company’s junior subordinated debentures. The effective portion of changes in the fair value of these cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified to interest expense as interest payments are made on the Company’s variable rate junior subordinated debentures. The changes in fair value (net of tax) are separately disclosed in the Consolidated Statements of Comprehensive Income. The ineffective portion of the change in fair value of these derivatives is recognized directly in earnings; however, no hedge ineffectiveness was recognized during the ~~nine~~three months ended ~~September 30, 2012~~March 31, 2013 or ~~September 30, 2011~~March 31, 2012. The Company uses the hypothetical derivative method to assess and measure effectiveness.

A rollforward of the amounts in accumulated other comprehensive income related to interest rate derivatives designated as cash flow hedges follows:


	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
(Dollars in thousands)	2012			2011			2012			2011			2013			2012
Unrealized loss at beginning of period	$	(9,901	)	$	(10,120	)	$	(11,633	)	$	(13,323	)	$	(8,673	)	$	(11,633	)
Amount reclassified from accumulated other comprehensive income to interest expense on junior subordinated debentures	1,471			2,246			4,324			6,615			1,539			1,410
Amount of loss recognized in other comprehensive income	(1,764		)	(4,333		)	(2,885		)	(5,499		)	(65		)	(614		)
Unrealized loss at end of period	$	(10,194	)	$	(12,207	)	$	(10,194	)	$	(12,207	)	$	(7,199	)	$	(10,837	)

As of ~~September 30, 2012,~~March 31, 2013, the Company estimates that during the next twelve months, $~~6.1~~4.0 million will be reclassified from accumulated other comprehensive income as an increase to interest expense.

Fair Value Hedges of Interest Rate Risk

The Company is exposed to changes in the fair value related to certain of its floating rate assets that contain embedded optionality due to changes in benchmark interest rates, such as LIBOR. The Company uses purchased interest rate caps to manage its exposure to changes in fair value on these instruments attributable to changes in the benchmark interest rate. Interest rate caps designated as fair value hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike price on the contract in exchange for an up-front premium. As of ~~September 30, 2012~~March 31, 2013, the Company had one interest rate cap with a notional amount of $96.5 million that was designated as a fair value hedge of interest rate risk associated with an embedded cap in one of the Company’s floating rate assets.

Additionally, the Company has designated two interest rate swaps with a total notional amount of $4.3 million as fair value hedges of interest rate risk associated with fixed rate commercial franchise loans. In these interest rate swaps, the Company pays a fixed rate cash flow to receive a variable rate cash flow to minimize interest rate risk associated with the lack of repricing of fixed rate loans in a rising rate environment.

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For derivatives designated as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in earnings. The Company includes the gain or loss on the hedged item in the same line item as the offsetting loss or gain on the related derivatives. During the three months ended ~~September 30,~~

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~~2012~~March 31, 2013, the Company recognized a net ~~gain~~loss of $~~37,000~~1,000 in other ~~income/expense~~income related to hedge ineffectiveness. The Company also recognized a net reduction to interest income of $~~50,000~~57,000 for the three months ended ~~September 30, 2012~~March 31, 2013 related to the Company’s fair value hedges, which includes net settlements on the derivatives and amortization adjustment of the basis in the hedged item. The Company did not have any fair value hedges outstanding prior to the second quarter of 2012.

The following table presents the gain/(loss) and hedge ineffectiveness recognized on derivative instruments and the related hedged items that are designated as a fair value hedge accounting relationship as of ~~September 30, 2012~~March 31, 2013:

(Dollars in thousands)

Derivatives in Fair Value
Hedging Relationships
Location of Gain or (Loss)
Recognized in Income on
Derivative

Amount of Gain or (Loss) Recognized
in Income on Derivative
Three Months Ended September 30,

Amount of Gain or (Loss) Recognized
in Income on Hedged Item
Three Months Ended September 30,

Income Statement Gain/
(Loss) due to Hedge
Ineffectiveness
Three Months Ended
September 30,
2012 2011 2012 2011 2012 2011
Interest rate products Other income $ (229 ) $ —
$ 266
$ —
$ 37
$ —


(Dollars in thousands) Derivatives in Fair Value Hedging Relationships	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative Nine Months Ended September 30,					Amount of Gain or (Loss) Recognized in Income on Hedged Item Nine Months Ended September 30,				Income Statement Gain/ (Loss) due to Hedge Ineffectiveness Nine Months Ended September 30,				Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative Three Months Ended March 31,					Amount of Gain or (Loss) Recognized in Income on Hedged Item Three Months Ended March 31,				Income Statement Gain/ (Loss) due to Hedge Ineffectiveness Three Months Ended March 31,
		2012			2011		2012		2011		2012		2011			2013			2012		2013		2012		2013			2012
Interest rate products	Other income	$	(432	)	$	—	$	482	$	—	$	50	$	—	Other income	$	(11	)	$	—	$	10	$	—	$	(1	)	$	—

Non-Designated Hedges

The Company does not use derivatives for speculative purposes. Derivatives not designated as hedges are used to manage the Company’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements of ASC 815. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings.

Interest Rate Derivatives—The Company has interest rate derivatives, including swaps and option products, resulting from a service the Company provides to certain qualified borrowers. The Company’s banking subsidiaries execute certain derivative products (typically interest rate swaps) directly with qualified commercial borrowers to facilitate their respective risk management strategies. For example, these arrangements allow the Company’s commercial borrowers to effectively convert a variable rate loan to a fixed rate. In order to minimize the Company’s exposure on these transactions, the Company simultaneously executes offsetting derivatives with third parties. In most cases, the offsetting derivatives have mirror-image terms, which result in the positions’ changes in fair value substantially offsetting through earnings each period. However, to the extent that the derivatives are not a mirror-image and because of differences in counterparty credit risk, changes in fair value will not completely offset resulting in some earnings impact each period. Changes in the fair value of these derivatives are included in other non-interest income. At ~~September 30, 2012~~March 31, 2013, the Company had interest rate derivative transactions with an aggregate notional amount of approximately $~~2.0~~2.4 billion (all interest rate swaps and caps with customers and third parties) related to this program. These interest rate derivatives had maturity dates ranging from ~~December 2012~~April 2013 to January ~~2033.~~2033.

Mortgage Banking Derivatives—These derivatives include interest rate lock commitments provided to customers to fund certain mortgage loans to be sold into the secondary market and forward commitments for the future delivery of such loans. It is the Company’s practice to enter into forward commitments for the future delivery of a portion of our residential mortgage loan production when interest rate lock commitments are entered into in order to economically hedge the effect of future changes in interest rates on its commitments to fund the loans as well as on its portfolio of mortgage loans held-for-sale. The Company’s mortgage banking derivatives have not been designated as being in hedge relationships. At ~~September 30, 2012~~March 31, 2013, the Company had forward commitments to sell mortgage loans with an aggregate notional amount of approximately $~~1.2 billion~~758.2 million and interest rate lock commitments with an aggregate notional amount of approximately $~~588.8~~433.8 million. Additionally, the Company’s total mortgage loans held-for-sale at ~~September 30, 2012~~March 31, 2013 was $~~570.0~~380.9 million. The fair values of these derivatives were estimated based on changes in mortgage rates from the dates of the commitments. Changes in the fair value of these mortgage banking derivatives are included in mortgage banking revenue.

Foreign Currency Derivatives—These derivatives include foreign currency contracts used to manage the foreign exchange risk associated with foreign currency denominated assets and transactions. Foreign currency contracts, which include spot and forward contracts, represent agreements to exchange the currency of one country for the currency of another country at an agreed-upon price on an agreed-upon settlement date. As a result of fluctuations in foreign currencies, the U.S. ~~dollar-~~

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~~equivalent~~dollar-equivalent value of the foreign currency denominated assets or forecasted transactions increase or decrease. Gains or losses on the derivative instruments related to these foreign currency denominated assets or forecasted transactions are expected to substantially offset this variability. As of ~~September 30, 2012~~March 31, 2013 the Company held foreign currency derivatives with an aggregate notional amount of approximately $~~5.0~~4.8 million.

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Other Derivatives—Periodically, the Company will sell options to a bank or dealer for the right to purchase certain securities held within the Banks’ investment portfolios (covered call options). These option transactions are designed primarily to increase the total return associated with the investment securities portfolio. These options do not qualify as hedges pursuant to ASC 815, and, accordingly, changes in fair value of these contracts are recognized as other non-interest income. There were no covered call options outstanding as of ~~September 30,~~March 31, 2013, December 31, 2012 or ~~September 30, 2011~~March 31, 2012.

~~In the second quarter of 2012, the~~The Company has entered into ~~two~~ interest rate cap derivatives to protect the Company in a rising rate environment against increased margin compression due to the repricing of variable rate liabilities and lack of repricing of fixed rate loans and/or securities. These interest rate caps manage rising interest rates by transforming fixed rate loans and/or securities to variable if rates continue to rise, while retaining the ability to benefit from a decline in interest rates. The Company entered into ~~another~~two interest rate cap derivative contracts in the second quarter of 2012, one interest rate cap derivative contract in the third quarter of ~~2012.~~2012 and two interest rate cap derivative contracts in the first quarter of 2013. As of ~~September 30, 2012~~March 31, 2013, the ~~three~~five interest rate cap ~~derivatives,~~derivative contracts, which have not been designated as being in hedge relationships, have an aggregate notional value of $~~508.5~~708.5 million.

Amounts included in the Consolidated Statements of Income related to derivative instruments not designated in hedge relationships were as follows:


		Three Months Ended					Nine Months Ended							Three Months Ended
(Dollars in thousands)		September 30,					September 30,							March 31,
Derivative	Location in income statement	2012			2011		2012			2011			Location in income statement	2013			2012
Interest rate swaps and caps	Other income	$	(1,025	)	$	535	$	(1,822	)	$	(93	)	Other income	$	(297	)	$	151
Mortgage banking derivatives	Mortgage banking revenue	(295		)	448		2,068			(1,060		)	Mortgage banking revenue	(670		)	1,347
Covered call options	Other income	2,083			3,436		8,320			8,193			Fees from covered call options	1,639			3,123
Foreign exchange contracts													Other income	(146		)	—

Credit Risk

Derivative instruments have inherent risks, primarily market risk and credit risk. Market risk is associated with changes in interest rates and credit risk relates to the risk that the counterparty will fail to perform according to the terms of the agreement. The amounts potentially subject to market and credit risks are the streams of interest payments under the contracts and the market value of the derivative instrument and not the notional principal amounts used to express the volume of the transactions. Market and credit risks are managed and monitored as part of the ~~Company’s~~Company's overall asset-liability management process, except that the credit risk related to derivatives entered into with certain qualified borrowers is managed through the ~~Company’s~~Company's standard loan underwriting process since these derivatives are secured through collateral provided by the loan agreements. Actual exposures are monitored against various types of credit limits established to contain risk within parameters. When deemed necessary, appropriate types and amounts of collateral are obtained to minimize credit exposure.

The Company has agreements with certain of its interest rate derivative counterparties that contain cross-default provisions, which provide that if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. The Company also has agreements with certain of its derivative counterparties that contain a provision allowing the ~~counter party~~counterparty to terminate the derivative positions if the Company fails to maintain its status as a well or ~~adequate~~adequately capitalized institution, which would require the Company to settle its obligations under the agreements. ~~The~~As of March 31, 2013 the fair value of interest rate derivatives ~~that contain credit-risk related contingent features that were~~ in a net liability position, ~~as of~~ ~~September 30, 2012~~which includes accrued interest related to these agreements, was $~~58.9~~50.6 million. ~~As of~~ ~~September 30, 2012~~ ~~the Company has minimum collateral posting thresholds with certain of its derivative counterparties and has posted collateral consisting of~~ ~~$7.1 million~~ ~~of cash and~~ ~~$48.7 million~~ ~~of securities. If the Company had breached any of these provisions at~~ ~~September 30, 2012~~ it would have been required to settle its obligations under the agreements at the termination value and would have been required to pay any additional amounts due in excess of amounts previously posted as collateral with the respective counterparty.

The ~~Company~~Company's is also exposed to the credit risk of its commercial borrowers who are counterparties to interest rate derivatives with the Banks. This counterparty risk related to the commercial borrowers is managed and monitored through the ~~Banks’~~Banks' standard underwriting process applicable to loans since these derivatives are secured through collateral provided by the loan

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agreement. The counterparty risk associated with the mirror-image swaps executed with third parties is monitored and managed in connection with the ~~Company’s~~Company's overall asset liability management process.

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The Company records interest rate derivatives subject to master netting agreements at their gross value and does not offset derivative assets and liabilities on the Consolidated Statements of Condition. The tables below summarize the Company's interest rate derivatives and offsetting positions as of the dates shown.



	Derivative Assets									Derivative Liabilities
	Fair Value									Fair Value
(Dollars in thousands)	March 31, 2013			December 31, 2012			March 31, 2012			March 31, 2013			December 31, 2012			March 31, 2012
Gross Amounts Recognized	$	46,653		$	47,546		$	35,027		$	50,262		$	53,755		$	44,884
Less: Amounts offset in the Statements of Financial Condition	$	—		$	—		$	—		$	—		$	—		$	—
Net amount presented in the Statements of Financial Condition	$	46,653		$	47,546		$	35,027		$	50,262		$	53,755		$	44,884
Gross amounts not offset in the Statements of Financial Condition
Offsetting Derivative Positions	(1,523		)	(339		)	(61		)	(1,523		)	(339		)	(61		)
Securities Collateral Posted ⁽¹⁾	—			—			—			(43,361		)	(46,811		)	(29,353		)
Cash Collateral Posted	—			—			—			(2,445		)	(6,605		)	(7,055		)
Net Credit Exposure	$	45,130		$	47,207		$	34,966		$	2,933		$	—		$	8,415


(1)	As of December 31, 2012, the Company posted securities collateral of $49.9 million which resulted in excess collateral with its counterparties. For purposes of this disclosure, the amount of posted collateral is limited to the amount offsetting the derivative liability.

(15) Fair Values of Assets and Liabilities

The Company measures, monitors and discloses certain of its assets and liabilities on a fair value basis. These financial assets and financial liabilities are measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the observability of the assumptions used to determine fair value. These levels are:

Level 1—unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2—inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3—significant unobservable inputs that reflect the Company’s own assumptions that market participants would use in pricing the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

A financial instrument’s categorization within the above valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the assets or liabilities. Following is a description of the valuation methodologies used for the Company’s assets and liabilities measured at fair value on a recurring basis.

Available-for-sale and trading account securities—Fair values for available-for-sale and trading securities are typically based on prices obtained from independent pricing vendors. Securities measured with these valuation techniques are generally classified as Level 2 of the fair value hierarchy. Typically, standard inputs such as benchmark yields, reported trades for similar securities, issuer spreads, benchmark securities, bids, offers and reference data including market research publications are used to fair value a security. When these inputs are not available, broker/dealer quotes may be obtained by the vendor to determine the fair value of the security. We review the vendor’s pricing methodologies to determine if observable market information is being used, versus unobservable inputs. Fair value measurements using significant inputs that are unobservable in the market due to limited activity or a less liquid market are classified as Level 3 in the fair value hierarchy.

The Company’s Investment Operations Department is responsible for the valuation of Level 3 available-for-sale securities. The methodology and variables used as inputs in pricing Level 3 securities are derived from a combination of observable and

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unobservable inputs. The unobservable inputs are determined through internal assumptions that may vary from period to period due to external factors, such as market movement and credit rating adjustments.

At ~~September 30, 2012~~March 31, 2013, the Company classified $~~35.8~~32.3 million of municipal securities as Level 3. These municipal securities are bond issues for various municipal government entities, including park districts, located in the Chicago metropolitan area and southeastern Wisconsin and are privately placed, non-rated bonds without CUSIP numbers. The Company’s methodology for pricing the non-rated bonds focuses on three distinct inputs: equivalent rating, yield and other pricing terms. To determine the rating for a given non-rated municipal bond, the Investment Operations Department references a publicly issued bond by the same issuer if available. A reduction is then applied to the rating obtained from the comparable bond, as the Company believes if liquidated, a non-rated bond would be valued less than a similar bond with a verifiable rating. The reduction applied by the Company is one complete rating grade (i.e. a “AA” rating for a comparable bond would be reduced to “A” for the Company’s valuation). In the ~~third~~first quarter of ~~2012~~,2013, all of the ratings derived in the above process by Investment Operations were BBB or better, for both bonds with and without comparable bond proxies. The fair value measurement of municipal bonds is sensitive to the rating input, as a higher rating typically results in an increased valuation. The remaining pricing inputs used in the bond valuation are observable. Based on the rating determined in the above process, Investment Operations obtains a corresponding current market yield curve available to market participants. Other terms including coupon, maturity date, redemption price, number of coupon payments per year, and accrual method are obtained from the individual bond term sheets. Certain municipal bonds held by the Company at ~~September 30, 2012~~March 31, 2013 have a call date that has passed, and are now continuously callable. When valuing these bonds, the fair value is capped at par value as the Company assumes a market participant would not pay more than par for a continuously callable bond.

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At ~~September 30, 2012~~March 31, 2013, the Company held $~~22.3~~24.5 million of other equity securities classified as Level 3. The securities in Level 3 are primarily comprised of auction rate preferred securities. The Company utilizes an independent pricing vendor to provide a fair market valuation of these securities. The vendor’s valuation methodology includes modeling the contractual cash flows of the underlying preferred securities and applying a discount to these cash flows by a credit spread derived from the market price of the securities underlying debt. At ~~September 30, 2012~~March 31, 2013, the vendor considered five different securities whose implied credit spreads were believed to provide a proxy for the Company’s auction rate preferred securities. The credit spreads ranged from ~~2.03%~~1.20%-~~2.41%~~1.52% with an average of ~~2.25%~~1.39% which was added to three-month LIBOR to be used as the discount rate input to the vendor’s model. Fair value of the securities is sensitive to the discount rate utilized as a higher discount rate results in a decreased fair value measurement.

Mortgage loans held-for-sale—Mortgage loans originated by Wintrust Mortgage, a division of Barrington ("Wintrust Mortgage") are carried at fair value. The fair value of mortgage loans held-for-sale is determined by reference to investor price sheets for loan products with similar characteristics.

Mortgage servicing rights—Fair value for mortgage servicing rights is determined utilizing a third party valuation model which stratifies the servicing rights into pools based on product type and interest rate. The fair value of each servicing rights pool is calculated based on the present value of estimated future cash flows using a discount rate commensurate with the risk associated with that pool, given current market conditions. At ~~September 30, 2012~~March 31, 2013, the Company classified $~~6.3~~7.3 million of mortgage servicing rights as Level 3. The weighted average discount rate used as an input to value the pool of mortgage servicing rights at ~~September 30, 2012~~March 31, 2013 was ~~10.22%~~10.19% with discount rates applied ranging from 10%-13.5%. The higher the rate utilized to discount estimated future cash flows, the lower the fair value measurement. Additionally, fair value estimates include assumptions about prepayment speeds which ranged from ~~21%~~16%-~~26%~~22% or a weighted average prepayment speed of ~~22.31%~~18.32% used as an input to value the pool of mortgage servicing rights at ~~September 30, 2012~~March 31, 2013. Prepayment speeds are inversely related to the fair value of mortgage servicing rights as an increase in prepayment speeds results in a decreased valuation.

Derivative instruments—The Company’s derivative instruments include interest rate swaps and caps, commitments to fund mortgages for sale into the secondary market (interest rate locks), forward commitments to end investors for the sale of mortgage loans and foreign currency contracts. Interest rate swaps and caps are valued by a third party, using models that primarily use market observable inputs, such as yield curves, and are validated by comparison with valuations provided by the respective counterparties. The fair value for mortgage derivatives is based on changes in mortgage rates from the date of the commitments. The fair value of foreign currency derivatives is computed based on change in foreign currency rates stated in the contract compared to those prevailing at the measurement date. In conjunction with the FASB’s fair value measurement guidance, the Company made an accounting policy election in the first quarter of 2012 to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Nonqualified deferred compensation assets—The underlying assets relating to the nonqualified deferred compensation plan are included in a trust and primarily consist of non-exchange traded institutional funds which are priced based by an independent third party service.

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The following tables present the balances of assets and liabilities measured at fair value on a recurring basis for the periods presented:


	September 30, 2012								March 31, 2013
(Dollars in thousands)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Available-for-sale securities
U.S. Treasury	$	25,256	$	—	$	25,256	$	—	$	217,645	$	—	$	217,645	$	—
U.S. Government agencies	628,184		—		628,184		—		973,715		—		973,715		—
Municipal	99,384		—		63,629		35,755		110,259		—		77,935		32,324
Corporate notes and other	156,989		—		156,989		—		148,873		—		148,873		—
Mortgage-backed	306,238		—		306,238		—		368,282		—		368,282		—
Equity securities	40,717		—		18,462		22,255		52,057		—		27,587		24,470
Trading account securities	635		—		635		—		1,036		—		1,036		—
Mortgage loans held-for-sale	548,300		—		548,300		—		370,570		—		370,570		—
Mortgage servicing rights	6,276		—		—		6,276		7,344		—		—		7,344
Nonqualified deferred compensations assets	5,438		—		5,438		—		6,545		—		6,545		—
Derivative assets	65,990		—		65,990		—		52,436		—		52,436		—
Total	$	1,883,407	$	—	$	1,819,121	$	64,286	$	2,308,762	$	—	$	2,244,624	$	64,138
Derivative liabilities	$	79,977	$	—	$	79,977	$	—	$	54,745	$	—	$	54,745	$	—


	September 30, 2011								December 31, 2012
(Dollars in thousands)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Available-for-sale securities
U.S. Treasury	$	16,203	$	—	$	16,203	$	—	$	219,487	$	—	$	219,487	$	—
U.S. Government agencies	686,956		—		678,997		7,959		990,039		—		990,039		—
Municipal	62,307		—		36,902		25,405		110,471		—		79,701		30,770
Corporate notes and other	186,637		—		180,728		5,909		154,806		—		154,806		—
Mortgage-backed	272,547		—		269,595		2,952		271,574		—		271,574		—
Equity securities	43,032		—		12,141		30,891		49,699		—		27,530		22,169
Trading account securities	297		—		272		25		583		—		583		—
Mortgage loans held-for-sale	204,081		—		204,081		—		385,033		—		385,033		—
Mortgage servicing rights	6,740		—		—		6,740		6,750		—		—		6,750
Nonqualified deferred compensations assets	4,289		—		4,289		—		5,532		—		5,532		—
Derivative assets	39,803		—		39,803		—		53,906		—		53,906		—
Total	$	1,522,892	$	—	$	1,443,011	$	79,881	$	2,247,880	$	—	$	2,188,191	$	59,689
Derivative liabilities	$	50,612	$	—	$	50,612	$	—	$	57,751	$	—	$	57,751	$	—

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	March 31, 2012
(Dollars in thousands)	Total		Level 1		Level 2		Level 3
Available-for-sale securities
U.S. Treasury	$	23,189	$	—	$	23,189	$	—
U.S. Government agencies	682,780		—		682,780		—
Municipal	69,915		—		44,380		25,535
Corporate notes and other	168,816		—		168,816		—
Mortgage-backed	886,148		—		886,148		—
Equity securities	38,496		—		17,272		21,224
Trading account securities	1,140		—		1,140		—
Mortgage loans held-for-sale	339,600		—		339,600		—
Mortgage servicing rights	7,201		—		—		7,201
Nonqualified deferred compensations assets	5,315		—		5,315		—
Derivative assets	39,220		—		39,220		—
Total	$	2,261,820	$	—	$	2,207,860	$	53,960
Derivative liabilities	$	46,364	$	—	$	46,364	$	—

The aggregate remaining contractual principal balance outstanding as of ~~September 30,~~March 31, 2013, December 31, 2012 and ~~2011~~March 31, 2012 for mortgage loans held-for-sale measured at fair value under ASC 825 was $~~537.2~~366.8 million, $379.5 million and $~~200.4~~329.9 million, respectively, while the aggregate fair value of mortgage loans held-for-sale was $~~548.3~~370.6 million, $385.0 million and $~~204.1~~339.6 million, ~~respectively,~~for the same respective periods, as shown in the above tables. There were no nonaccrual loans or loans past due greater than 90 days and still accruing in the mortgage loans held-for-sale portfolio measured at fair value as of ~~September 30,~~March 31, 2013, December 31, 2012 and ~~2011~~March 31, 2012.

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The changes in Level 3 assets measured at fair value on a recurring basis during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2013 and March 31, 2012 are summarized as follows:


			Equity securities				Mortgage servicing rights						Equity securities		Mortgage servicing rights
(Dollars in thousands)	Municipal					Municipal
Balance at June 30, 2012	$	25,537		$	20,218					$	6,647
Balance at January 1, 2013										$	30,770		$	22,169	$	6,750
Total net gains (losses) included in:
Net income ⁽¹⁾	—		—				(371		)	—			—		594
Other comprehensive income	14		2,037				—			(12		)	2,301		—
Purchases	10,204		—				—			1,687			—		—
Issuances	—		—				—			—			—		—
Sales	—		—				—			—			—		—
Settlements	—		—				—			(121		)	—		—
Net transfers into/(out of) Level 3	—		—				—			—			—		—
Balance at September 30, 2012	$	35,755	$	22,255			$	6,276
Balance at March 31, 2013										$	32,324		$	24,470	$	7,344


(1)	Changes in the balance of mortgage servicing rights are recorded as a component of mortgage banking revenue in non-interest income.


				Equity securities				Mortgage servicing rights							Equity securities			Mortgage servicing rights
(Dollars in thousands)	Municipal						Municipal
Balance at January 1, 2012	$	24,211			$	18,971					$	6,700		$	24,211		$	18,971		$	6,700
Total net gains (losses) included in:
Net income ⁽¹⁾	—			—				(424		)	—				—			501
Other comprehensive income	50			3,284				—			2				2,253			—
Purchases	14,044			—				—			3,840				—			—
Issuances	—			—				—			—				—			—
Sales	—			—				—			—				—			—
Settlements	(148		)	—				—			(116		)		—			—
Net transfers out of Level 3 ⁽²⁾	(2,402		)	—				—			(2,402		)		—			—
Balance at September 30, 2012	$	35,755		$	22,255			$	6,276
Balance at March 31, 2012											$	25,535			$	21,224		$	7,201


(1)	Changes in the balance of mortgage servicing rights are recorded as a component of mortgage banking revenue in non-interest income.


(2)	During the first quarter of 2012, one municipal security was transferred out of Level 3 into Level 2 as observable market information was available that market participants would use in pricing these securities. Transfers out of Level 3 are recognized at the end of the reporting period.

~~Table of Contents~~

~~The changes in Level 3 assets and liabilities measured at fair value on a recurring basis during the~~ ~~three and nine~~ ~~months ended~~ ~~September 30, 2011~~ ~~are summarized as follows:~~

(Dollars in thousands) U.S. Agencies Municipal
Corporate
notes and
other debt

Mortgage-
backed

Equity
securities

Trading
Account
Securities

Mortgage
servicing
rights
Balance at June 30, 2011 $ —
$ 24,525
$ 16,313
$ 2,684
$ 30,891
$ 172
$ 8,762
Total net gains (losses) included in:
Net income ⁽¹⁾
—
—
—
—
—
—
(2,022 )
Other comprehensive income —
—
—
—
—
—
—
Purchases —
6,492
500
333
—
—
—
Issuances —
—
—
—
—
—
—
Sales —
(1,871 ) —
—
—
(147 ) —
Settlements —
(1,230 ) (192 ) (65 ) —
—
—
Net transfers into/(out of) Level 3 ⁽²⁾
7,959
(2,511 ) (10,712 ) —
—
—
—
Balance at September 30, 2011 $ 7,959
$ 25,405
$ 5,909
$ 2,952
$ 30,891
$ 25
$ 6,740


~~(1)~~	~~Changes in the balance of mortgage servicing rights are recorded as a component of mortgage banking revenue in non-interest income.~~


~~(2)~~	The transfer of U.S. Agency, Municipal securities and Corporate notes and other debt into/(out of) Level 3 is the result of the use of unobservable inputs that reflect the Company's own assumptions that market participants would use in pricing these securities. Transfers into/(out of) Level 3 are recognized at the end of the reporting period.

(Dollars in thousands) U.S. Agencies Municipal
Corporate
notes and
other debt

Mortgage-
backed

Equity
securities

Trading
Account
Securities

Mortgage
servicing
rights
Balance at January 1, 2011 $ —
$ 16,416
$ 9,841
$ 2,460
$ 28,672
$ 4,372
$ 8,762
Total net gains (losses) included in:
Net income ⁽¹⁾
—
—
(274 ) (53 ) —
—
(2,022 )
Other comprehensive income —
(748 ) —
—
419
—
—
Purchases —
15,630
7,246
610
1,800
—
—
Issuances —
—
—
—
—
—
—
Sales —
(6,655 ) —
—
—
(4,347 ) —
Settlements —
(1,230 ) (192 ) (65 ) —
—
—
Net transfers into/(out of) Level 3 ⁽²⁾
7,959
1,992
(10,712 ) —
—
—
—
Balance at September 30, 2011 $ 7,959
$ 25,405
$ 5,909
$ 2,952
$ 30,891
$ 25
$ 6,740


~~(1)~~	Income for Corporate notes and other debt and mortgage-backed is recognized as a component of interest income on securities. Changes in the balance of mortgage servicing rights are recorded as a component of mortgage banking revenue in non-interest income.


~~(2)~~	The transfer of U.S. Agency, Municipal securities and Corporate notes and other debt into/(out of) Level 3 is the result of the use of unobservable inputs that reflect the Company's own assumptions that market participants would use in pricing these securities. Transfers into/(out of) Level 3 are recognized at the end of the reporting period.

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Also, the Company may be required, from time to time, to measure certain other financial assets at fair value on a nonrecurring basis in accordance with GAAP. These adjustments to fair value usually result from application of lower of cost or market accounting or impairment charges of individual assets. For assets measured at fair value on a nonrecurring basis that were still held in the balance sheet at the end of the period, the following table provides the carrying value of the related individual assets or portfolios at ~~September 30, 2012~~March 31, 2013.


	September 30, 2012								Three Months Ended September 30, 2012 Fair Value Losses Recognized		Nine Months Ended September 30, 2012 Fair Value Losses Recognized		March 31, 2013								Three Months Ended March 31, 2013 Fair Value Losses Recognized
(Dollars in thousands)	Total		Level 1		Level 2		Level 3						Total		Level 1		Level 2		Level 3
Impaired loans—collateral based	$	147,979	$	—	$	—	$	147,979	$	6,187	$	19,049	$	121,197	$	—	$	—	$	121,197	$	5,372
Other real estate owned ⁽¹⁾	67,377		—		—		67,377		4,484		18,936		56,177		—		—		56,177		2,959
Mortgage loans held-for-sale, at lower of cost or market	21,685		—		21,685		—		—		—		10,352		—		10,352		—		—
Total	$	237,041	$	—	$	21,685	$	215,356	$	10,671	$	37,985	$	187,726	$	—	$	10,352	$	177,374	$	8,331


(1)	Fair value losses recognized on other real estate owned include valuation adjustments and charge-offs during the respective period.

Impaired loans—A loan is considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts due pursuant to the contractual terms of the loan agreement. A loan restructured in a troubled debt restructuring is an impaired loan according to applicable accounting guidance. Impairment is measured by estimating the fair value of the loan based on the present value of expected cash flows, the market price of the loan, or the fair value of the underlying collateral. Impaired loans are considered a fair value measurement where an allowance is established based on the fair value of collateral. Appraised values, which may require adjustments to market-based valuation inputs, are generally used on real estate collateral-dependent impaired loans.

The Company’s Managed Assets Division is primarily responsible for the valuation of Level 3 measurements of impaired loans. For more information on the Managed Assets Division review of impaired loans refer to Note 7 – Allowance for Loan Losses, Allowance for Losses on Lending-Related Commitments and Impaired Loans. At ~~September 30, 2012~~March 31, 2013, the Company had $~~233.0~~203.6 million of impaired loans classified as Level 3. Of the $~~233.0~~203.6 million of impaired loans, $~~148.0~~121.2 million were measured at fair value based on the underlying collateral of the loan as shown in the table above. The remaining $~~85.0~~82.4 million were valued based on discounted cash flows in accordance with ASC 310.

Other real estate owned—Other real estate owned is comprised of real estate acquired in partial or full satisfaction of loans and is included in other assets. Other real estate owned is recorded at its estimated fair value less estimated selling costs at the date of transfer, with any excess of the related loan balance over the fair value less expected selling costs charged to the allowance for loan losses. Subsequent changes in value are reported as adjustments to the carrying amount and are recorded in other non-interest expense. Gains and losses upon sale, if any, are also charged to other non-interest expense. Fair value is generally based on third party appraisals and internal estimates and is therefore considered a Level 3 valuation.

Similar to impaired loans, the Company’s Managed Assets Division is primarily responsible for the valuation of Level 3 measurements for other real estate owned. At ~~September 30, 2012~~March 31, 2013, the Company had $~~67.4~~56.2 million of other real estate owned classified as Level 3. The unobservable input applied to other real estate owned relates to the valuation adjustment determined by the Company’s appraisals. The impairment adjustments applied to other real estate owned range from 0%-~~61%~~100% of the carrying value prior to impairment adjustments at ~~September 30, 2012~~March 31, 2013, with a weighted average input of ~~5.4%~~4.44%. An increased impairment adjustment applied to the carrying value results in a decreased valuation.

Mortgage loans held-for-sale, at lower of cost or market—Fair value is based on either quoted prices for the same or similar loans, or values obtained from third parties, or is estimated for portfolios of loans with similar financial characteristics and is therefore considered a Level 2 valuation.

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The valuation techniques and significant unobservable inputs used to measure both recurring and non-recurring Level 3 fair value measurements at ~~September 30, 2012~~March 31, 2013 were as follows:

(Dollars in thousands)

Fair Value

Valuation Methodology

Significant Unobservable Input

Range

of Inputs

Weighted

Average

of Inputs

Impact to valuation

from an increased or

higher input value

Fair Value

Valuation Methodology

Significant Unobservable Input

Range

of Inputs

Weighted

Average

of Inputs

Impact to valuation

from an increased or

higher input value

Measured at fair value on a recurring basis:

Municipal Securities

35,755

Bond pricing

Equivalent rating

BBB-AAA

N/A

Increase

32,324

Bond pricing

Equivalent rating

BBB-AAA

N/A

Increase

Other Equity Securities

22,255

Discounted cash flows

Discount rate

2.03%-2.41%

2.25%

Decrease

24,470

Discounted cash flows

Discount rate

1.20%-1.52%

1.39%

Decrease

Mortgage Servicing Rights

6,276

Discounted cash flows

Discount rate

10%-13.5%

10.22%

Decrease

7,344

Discounted cash flows

Discount rate

10%-13.5%

10.19%

Decrease

Constant prepayment rate (CPR)

21%-26%

22.31%

Decrease

Constant prepayment rate (CPR)

16%-22%

18.32%

Decrease

Measured at fair value on a non-recurring basis:

Impaired loans—collateral based

147,979

Appraisal value

N/A

121,197

Appraisal value

N/A

Other real estate owned

67,377

Appraisal value

Property specific impairment adjustment

0%-61%

5.43%

Decrease

56,177

Appraisal value

Property specific impairment adjustment

0%-100%

4.44%

Decrease

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The Company is required under applicable accounting guidance to report the fair value of all financial instruments on the consolidated statements of condition, including those financial instruments carried at cost. The carrying amounts and estimated fair values of the Company’s financial instruments as of the dates shown:


	At September 30, 2012				At December 31, 2011				At March 31, 2013				At December 31, 2012				At March 31, 2012
	Carrying		Fair		Carrying		Fair		Carrying		Fair		Carrying		Fair		Carrying		Fair
(Dollars in thousands)	Value		Value		Value		Value		Value		Value		Value		Value		Value		Value
Financial Assets:
Cash and cash equivalents	$	212,814	$	212,814	$	169,704	$	169,704	$	213,201	$	213,201	$	315,028	$	315,028	$	160,602	$	160,602
Interest bearing deposits with banks	934,430		934,430		749,287		749,287		685,302		685,302		1,035,743		1,035,743		900,755		900,755
Available-for-sale securities	1,256,768		1,256,768		1,291,797		1,291,797		1,870,831		1,870,831		1,796,076		1,796,076		1,869,344		1,869,344
Trading account securities	635		635		2,490		2,490		1,036		1,036		583		583		1,140		1,140
Brokerage customer receivables	30,633		30,633		27,925		27,925		25,614		25,614		24,864		24,864		31,085		31,085
Federal Home Loan Bank and Federal Reserve Bank stock, at cost	80,687		80,687		100,434		100,434		76,601		76,601		79,564		79,564		88,216		88,216
Mortgage loans held-for-sale, at fair value	548,300		548,300		306,838		306,838		370,570		370,570		385,033		385,033		339,600		339,600
Mortgage loans held-for-sale, at lower of cost or market	21,685		22,042		13,686		13,897		10,352		10,458		27,167		27,568		10,728		10,905
Total loans	12,147,425		12,835,354		11,172,745		11,590,729		12,418,973		13,125,643		12,389,030		13,053,101		11,408,604		11,798,811
Mortgage servicing rights	6,276		6,276		6,700		6,700		7,344		7,344		6,750		6,750		7,201		7,201
Nonqualified deferred compensation assets	5,438		5,438		4,299		4,299		6,545		6,545		5,532		5,532		5,315		5,315
Derivative assets	65,990		65,990		38,607		38,607		52,436		52,436		53,906		53,906		39,220		39,220
FDIC indemnification asset	238,305		238,305		344,251		344,251		170,696		170,696		208,160		208,160		263,212		263,212
Accrued interest receivable and other	157,923		157,923		147,207		147,207		156,825		156,825		157,157		157,157		153,755		153,755
Total financial assets	$	15,707,309	$	16,395,595	$	14,375,970	$	14,794,165	$	16,066,326	$	16,773,102	$	16,484,593	$	17,149,065	$	15,278,777	$	15,669,161
Financial Liabilities
Non-maturity deposits	$	8,736,432	8,736,432		$	7,424,367	$	7,424,367	$	9,293,104	9,293,104		$	9,447,633	$	9,447,633	$	7,841,467	$	7,841,467
Deposits with stated maturities	5,111,533		5,149,824		4,882,900		4,917,740		4,669,653		4,701,049		4,980,911		5,013,757		4,824,386		4,859,697
Notes payable	2,275		2,275		52,822		52,822		31,911		31,911		2,093		2,093		52,639		52,639
Federal Home Loan Bank advances	414,211		427,006		474,481		507,368		414,032		425,103		414,122		425,431		466,391		498,504
Subordinated notes	15,000		15,000		35,000		35,000		15,000		15,000		15,000		15,000		35,000		35,000
Other borrowings	377,229		377,229		443,753		443,753		256,244		256,244		274,411		274,411		411,037		411,037
Secured borrowings—owed to securitization investors	—		—		600,000		603,294
Secured borrowings - owed to securitization investors									—		—		—		—		428,000		430,044
Junior subordinated debentures	249,493		250,385		249,493		185,199		249,493		250,470		249,493		250,428		249,493		177,355
Derivative liabilities	79,977		79,977		50,081		50,081		54,745		54,745		57,751		57,751		46,364		46,364
Accrued interest payable and other	11,133		11,133		12,952		12,952		11,520		11,520		11,589		11,589		11,531		11,531
Total financial liabilities	$	14,997,283	$	15,049,261	$	14,225,849	$	14,232,576	$	14,995,702	$	15,039,146	$	15,453,003	$	15,498,093	$	14,366,308	$	14,363,638

Not all the financial instruments listed in the table above are subject to the disclosure provisions of ASC Topic 820, as certain assets and liabilities result in their carrying value approximating fair value. These include cash and cash equivalents, interest bearing deposits with banks, brokerage customer receivables, FHLB and FRB stock, FDIC indemnification asset, accrued interest receivable and accrued interest payable, non-maturity deposits, notes payable, subordinated notes and other borrowings.

The following methods and assumptions were used by the Company in estimating fair values of financial instruments that were not previously disclosed.

Loans. Fair values are estimated for portfolios of loans with similar financial characteristics. Loans are analyzed by type such as commercial, residential ~~real estate,~~real-estate, etc. Each category is further segmented by interest rate type (fixed and variable) and term. For variable-rate loans that reprice frequently, estimated fair values are based on carrying values. The fair value of residential loans is based on secondary market sources for securities backed by similar loans, adjusted for differences in loan characteristics. The fair value for other fixed rate loans is estimated by discounting scheduled cash flows through the estimated maturity using estimated market discount rates that reflect credit and interest rate risks inherent in the loan. The primary impact of credit risk on the present

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~~of credit risk on the present~~ value of the loan portfolio, however, was accommodated through the use of the allowance for loan losses, which is believed to represent the current fair value of probable incurred losses for purposes of the fair value calculation. In accordance with ASC 820, the Company has categorized loans as a Level 3 fair value measurement.

Deposits with stated maturities. The fair value of certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is estimated using the rates currently in effect for deposits of similar remaining maturities. In accordance with ASC 820, the Company has categorized deposits with stated maturities as a Level 3 fair value measurement.

Federal Home Loan Bank advances. The fair value of Federal Home Loan Bank advances is obtained from the Federal Home Loan Bank which uses a discounted cash flow analysis based on current market rates of similar maturity debt securities to discount cash flows. In accordance with ASC 820, the Company has categorized Federal Home Loan Bank advances as a Level 3 fair value measurement.

Secured borrowings – owed to securitization investors. The fair value of secured borrowings – owed to securitization investors is based on the discounted value of expected cash flows. In accordance with ASC 820, the Company has categorized secured borrowings – owed to securitization investors as a Level 3 fair value measurement. There were no secured borrowings - owed to securitization investors outstanding at ~~September 30, 2012~~March 31, 2013.

Junior subordinated debentures. The fair value of the junior subordinated debentures is based on the discounted value of contractual cash flows. In accordance with ASC 820, the Company has categorized junior subordinated debentures as a Level 3 fair value measurement.

(16) Stock-Based Compensation Plans

The 2007 Stock Incentive Plan (“the 2007 Plan”), which was approved by the Company’s shareholders in January 2007, permits the grant of incentive stock options, nonqualified stock options, rights and restricted stock, as well as the conversion of outstanding options of acquired companies to Wintrust options. The 2007 Plan initially provided for the issuance of up to 500,000 shares of common stock. In May 2009 and May 2011, the Company’s shareholders approved an additional 325,000 shares and 2,860,000 shares, respectively, of common stock that may be offered under the 2007 Plan. All grants made after 2006 have been made pursuant to the 2007 Plan, and as of ~~September 30, 2012~~March 31, 2013, assuming all performance-based shares will be issued at the maximum levels, ~~1,304,844~~686,256 shares were available for future grants. The 2007 Plan replaced the Wintrust Financial Corporation 1997 Stock Incentive Plan (“the 1997 Plan”) which had substantially similar terms. The 2007 Plan and the 1997 Plan are collectively referred to as “the Plans.” The Plans cover substantially all employees of Wintrust. The Compensation Committee of the Board of Directors administers all stock-based compensation programs and authorizes all awards granted pursuant to the Plans.

The Company historically awarded stock-based compensation in the form of nonqualified stock options and time-vested restricted share awards (“restricted shares”.) In general, the grants of options provide for the purchase shares of Wintrust’s common stock at the fair market value of the stock on the date the options are granted. Options under the 2007 Plan generally vest ratably ~~periods~~ over periods of three to five years and have a maximum term of seven years from the date of grant. Stock options granted under the 1997 Plan provided for a maximum term of ~~ten~~10 years. Restricted shares entitle the holders to receive, at no cost, shares of the Company’s common stock. Restricted shares generally vest over periods of one to five years from the date of grant.

The Long-Term Incentive Program (“LTIP”), which is designed in part to align the interests of management with the interests of shareholders, foster retention, create a long-term focus based on sustainable results and provide participants a target long-term incentive opportunity, is administered under the ~~2007. The target awards include three components –~~2007 Plan. LTIP grants to date have consisted of time vested nonqualified stock options ~~performance-vested~~and performance-based stock ~~awards~~ and ~~performance-vested~~ cash awards. The first grant of these awards was made in August 2011 and ~~a second grant was~~subsequent grants were made in January ~~2012.~~2012 and January 2013. It is anticipated that LTIP awards will be granted annually. Stock options granted under the LTIP have a term of seven years and will generally vest equally over three years based on continued service. ~~Performance-vested~~Performance-based stock ~~awards~~ and ~~performance-vested~~ cash awards are ~~based on~~contingent upon the achievement of pre-established ~~targets~~long-term performance goals set in advance by the Compensation Committee over a three-year period with overlapping performance periods starting at the ~~end~~beginning of ~~the performance period, which will generally be three years from the date of grant.~~each calendar year. The actual payouts of performance-based ~~award payouts~~awards will vary based on the achievement of the pre-established targets and can range from 0% to 200% of the target award. The first grant of these awards, made in August 2011, has a final performance measurement date of December 31, 2013, resulting in an initial performance period of less than three years. The performance-based awards granted in 2012 have a final performance measurement date of December 31, 2014.

Holders of restricted share awards and ~~performance-vested~~performance-based stock awards received under the Plans are not entitled to vote or receive cash dividends (or cash payments equal to the cash dividends) on the underlying common shares until the awards are vested. Except in limited circumstances, these awards are canceled upon termination of employment without any payment of consideration by the Company.

~~Table of Contents~~

~~The Compensation Committee of the Board of Directors administers all stock-based compensation programs and authorizes all awards granted pursuant to the Plans.~~

Stock-based compensation is measured as the fair value of an award on the date of grant, and the measured cost is recognized over the period which the recipient is required to provide service in exchange for the award. The fair values of restricted shares and ~~performance-vested~~performance-based stock awards are determined based on the average of the high and low trading prices on the grant date, and the fair value of stock options is estimated using a Black-Scholes option-pricing model that utilizes the assumptions outlined in

Table of Contents

the following table. Option-pricing models require the input of highly subjective assumptions and are sensitive to changes in the option’s expected life and the price volatility of the underlying stock, which can materially affect the fair value estimate. Expected life has been based on historical exercise and termination behavior as well as the term of the option, but the expected life of the options granted pursuant to the LTIP awards was based on the safe harbor rule of the SEC Staff Accounting Bulletin No. 107 “Share-Based Payment” as the Company believes historical exercise data may not provide a reasonable basis to estimate the expected term of these options. Expected stock price volatility is based on historical volatility of the Company’s common stock, which correlates with the expected life of the options, and the risk-free interest rate is based on comparable U.S. Treasury rates. Management reviews and adjusts the assumptions used to calculate the fair value of an option on a periodic basis to better reflect expected trends.

The following table presents the weighted average assumptions used to determine the fair value of options granted in the ~~nine~~three month ~~period~~periods ending ~~September 30, 2012~~March 31, 2013 and ~~2011~~2012.


	Nine Months Ended				Three Months Ended		Three Months Ended
	September 30,				March 31,		March 31,
	2012		2011		2013		2012
Expected dividend yield	0.6	%	0.6	%	0.5	%	0.6	%
Expected volatility	62.6	%	50.3	%	59.7	%	62.7	%
Risk-free rate	0.7	%	1.2	%	0.7	%	0.7	%
Expected option life (in years)	4.5		6.1		4.5		4.5

Stock based compensation is recognized based upon the number of awards that are ultimately expected to vest. Forfeitures are estimated based on historical forfeiture experience. For ~~performance-vested~~performance-based awards, an estimate is made of the number of shares expected to vest as a result of ~~actual~~projected performance against the performance criteria in the award to determine the amount of compensation expense to ~~be recognized.~~recognize. The estimate is reevaluated periodically and total compensation expense is adjusted for any change in estimate in the current period.

Stock-based compensation expense recognized in the Consolidated Statements of Income was $~~2.6~~2.3 million ~~and~~ ~~$1.4 million~~, in the ~~third quarters~~first quarter of ~~2012~~2013 and ~~2011, respectively, and~~in the first quarter of ~~$7.2 million~~2012 ~~and~~ ~~$3.4 million~~ ~~for the 2012 and 2011 year-to-date periods, respectively.~~.

~~Table of Contents~~

A summary of the Plans' stock option activity ~~under the Plans~~ for the ~~nine~~three months ended ~~September 30, 2012~~March 31, 2013 and ~~September 30, 2011~~March 31, 2012 is presented below:



Stock Options	Common Shares		Weighted Average Strike Price		Remaining Contractual Term⁽¹⁾	Intrinsic Value ⁽²⁾ ($000)
Outstanding at January 1, 2013	1,745,427		$	42.31
Granted	219,695		37.85
Exercised	(8,336	)	24.98
Forfeited or canceled	(6,330	)	41.49
Outstanding at March 31, 2013	1,950,456		$	41.89	3.3	$	3,975
Exercisable at March 31, 2013	1,437,240		$	44.64	2.3	$	2,318

Stock Options
Common
Shares

Weighted
Average
Strike Price

Remaining
Contractual
Term⁽¹⁾

Intrinsic
Value ⁽²⁾
($000)
Outstanding at January 1, 2012 2,064,534
$ 38.83

Granted 250,997
31.16

Exercised (421,426 ) 20.27

Forfeited or canceled (50,235 ) 36.42

Outstanding at September 30, 2012 1,843,870
$ 42.09
3.2 $ 5,029
Exercisable at September 30, 2012 1,840,731
$ 42.11
3.2 $ 5,010


Stock Options	Common Shares		Weighted Average Strike Price		Remaining Contractual Term ⁽¹⁾	Intrinsic Value ⁽²⁾ ($000)		Common Shares		Weighted Average Strike Price		Remaining Contractual Term ⁽¹⁾	Intrinsic Value ⁽²⁾ ($000)
Outstanding at January 1, 2011	2,040,701		$	38.92
Outstanding at January 1, 2012								2,064,534		$	38.83
Granted	10,000		31.00					243,116		30.98
Exercised	(48,883	)	15.90					(388,390	)	19.74
Forfeited or canceled	(103,149	)	46.30					(14,250	)	33.64
Outstanding at September 30, 2011	1,898,669		$	39.07	2.6	$	3,028
Exercisable at September 30, 2011	1,717,762		$	39.85	2.3	$	2,818
Outstanding at March 31, 2012								1,905,010		$	41.75	3.5	$	4,059
Exercisable at March 31, 2012								1,407,357		$	45.38	2.6	$	1,889


(1)	Represents the remaining weighted average contractual life ~~remaining~~ in years.

(2)

Aggregate intrinsic value represents the total pre-tax intrinsic value (i.e., the difference between the Company’s average of the high and low stock price on the last trading day of the quarter and the option exercise price, multiplied by the number of shares) that would have been received by the option holders if they had exercised their options on the last day of the quarter. ~~This amount~~Options with exercise prices above the average of the high and low stock price on the last trading day of the quarter are excluded from the calculation of intrinsic value. The intrinsic value will change based on the fair market value of the Company’s stock.

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The weighted average grant date fair value per share of options granted during the ~~nine~~three months endedMarch 31, 2013~~September 30,~~ and March 31, 2012 was $~~14.55~~17.59. and $14.91, respectively. The aggregate intrinsic value of options exercised during the ~~nine~~three months ended~~September 30, 2012~~March 31, 2013 and ~~2011~~2012, was $~~4.9 million~~102,000 and $~~823,000~~4.5 million, respectively.

A summary of the Plans' restricted share and ~~performance-vested~~performance-based stock award activity ~~under the Plans~~ for the ~~nine~~three months ended~~September 30, 2012~~March 31, 2013 and ~~September 30, 2011~~March 31, 2012 is presented below:


	Nine months ended September 30, 2012				Nine months ended September 30, 2011				Three months ended March 31, 2013				Three months ended March 31, 2012
Restricted Shares	Common Shares		Weighted Average Grant-Date Fair Value		Common Shares		Weighted Average Grant-Date Fair Value		Common Shares		Weighted Average Grant-Date Fair Value		Common Shares		Weighted Average Grant-Date Fair Value
Outstanding at January 1	336,709		$	38.29	299,040		$	39.44	314,226		$	37.99	336,709		$	38.29
Granted	109,557		32.31		90,285		33.16		—		—		84,851		30.98
Vested and issued	(123,629	)	34.46		(37,651	)	32.71		(109,725	)	31.67		(93,825	)	34.94
Forfeited	(1,353	)	30.99		(2,000	)	33.53		(674	)	32.10		(959	)	30.98
Outstanding at September 30	321,284		$	37.76	349,674		$	38.58
Vested, but not issuable at September 30	85,320		$	51.80	85,000		$	51.88
Outstanding at March 31									203,827		$	41.40	326,776		$	37.38
Vested, but not issuable at March 31									85,000		$	51.88	85,000		$	51.88

Performance-based Shares
Outstanding at January 1									153,915		$	31.78	72,158		$	33.25
Granted									102,160		37.84		116,939		30.98
Vested and issued									—		—		—		—
Net change due to estimated performance									—		—		—		—
Forfeited									(1,785	)	$	33.07	(3,481	)	$	31.91
Outstanding at March 31									254,290		$	34.21	185,616		$	31.85

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Nine months ended September 30, 2012 Nine months ended September 30, 2011
Performance Shares
Common
Shares

Weighted
Average
Grant-Date
Fair Value

Common
Shares

Weighted
Average
Grant-Date
Fair Value
Outstanding at January 1 72,158
$ 33.25
—
$ —
Granted 119,476
31.10
100,993
33.28
Vested and issued —
—
—
—
Net change due to estimated performance 19,651
30.55
—
—
Forfeited (3,897 ) 32.07
—
—
Outstanding at September 30 207,388
$ 31.78
100,993
$ 33.28

The number of ~~performance-vested~~performance-based shares ~~outstanding~~granted is reflected in the above table ~~reflects~~at the ~~estimated~~target performance level. The actual performance-based award payouts will vary based on the achievement of the pre-established goals and can range from 0% to 200% of the target award. The outstanding number of performance-based shares reflected in the table represents the number of shares expected to be ~~issued~~awarded based on ~~management’s~~management's current assessment of ~~attaining~~ the ~~pre-established performance measures. At~~ ~~September 30, 2012~~,achievement of the goals. However, the maximum number of ~~performance-vested~~performance-based shares that could be issued based on the grants made to date ~~was~~is approximately ~~430,440~~629,000 shares.

The Company issues new shares to satisfy ~~option exercises and vesting of restricted shares.~~its obligation to issue shares granted pursuant to the Plans.

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(17) Shareholders’ Equity and Earnings Per Share

Tangible Equity Units

In December 2010, the Company sold 4.6 million 7.50% TEUs at a public offering price of $50.00 per unit. The Company received net proceeds of $222.7 million after deducting underwriting discounts and commissions and estimated offering expenses. Each tangible equity unit is composed of a prepaid common stock purchase contract and a junior subordinated amortizing note due December 15, 2013. The prepaid stock purchase contracts have been recorded as surplus (a component of shareholders’ equity), net of issuance costs, and the junior subordinated amortizing notes have been recorded as debt within other borrowings. Issuance costs associated with the debt component are recorded as a discount within other borrowings and will be amortized over the term of the instrument to December 15, 2013. The Company allocated the proceeds from the issuance of the TEU to equity and debt based on the relative fair values of the respective components of each unit.

The aggregate fair values assigned to each component of the TEU offering at the issuance date were as follows:



(Dollars in thousands, except per unit amounts)	Equity Component		Debt Component		TEU Total
Units issued ⁽¹⁾	4,600		4,600		4,600
Unit price	$	40.271818	$	9.728182	$	50.00
Gross proceeds	185,250		44,750		230,000
Issuance costs, including discount	5,934		1,419		7,353
Net proceeds	$	179,316	$	43,331	$	222,647
Balance sheet impact
Other borrowings	—		43,331		43,331
Surplus	179,316		—		179,316


(1)	TEUs consist of two components: one unit of the equity component and one unit of the debt component.

The fair value of the debt component was determined using a discounted cash flow model using the following assumptions: (1) quarterly cash payments of 7.5%; (2) a maturity date of December 15, 2013; and (3) an assumed discount rate of 9.5%. The discount rate used for estimating the fair value was determined by obtaining yields for comparably-rated issuers trading in the market. The debt component was recorded at fair value, and the discount is being amortized using the level yield method over the term of the instrument to the settlement date of December 15, 2013.

The fair value of the equity component was determined using Black-Scholes valuation models applied to the range of stock prices contemplated by the terms of the TEU and using the following assumptions: (1) risk-free interest rate of 0.95%; (2) expected stock price volatility in the range of 35%-45%; (c) dividend yield plus stock borrow cost of 0.85%; and (4)term of 3.02 years.

Each junior subordinated amortizing note, which had an initial principal amount of $9.728182, is bearing interest at 9.50% per annum, and has a scheduled final installment payment date of December 15, 2013. On each March 15, June 15, September 15 and December 15, the Company will pay equal quarterly installments of $0.9375 on each amortizing note. Each payment will constitute a payment of interest and a partial repayment of principal. The Company may defer installment payments at any time and from time to time, under certain circumstances and subject to certain conditions, by extending the installment period so long as such period of time does not extend beyond December 15, 2015.

Each prepaid common stock purchase contract will automatically settle on December 15, 2013 and the Company will deliver not more than 1.6666 shares and not less than 1.3333 shares of its common stock based on the applicable market value (the average of the volume weighted average price of Company common stock for the twenty ~~(20)~~ (20) consecutive trading days ending on the third trading day immediately preceding December 15, 2013) as follows:



Applicable market value of Company common stock	Settlement Rate
Less than or equal to $30.00	1.6666
Greater than $30.00 but less than $37.50	$50.00, divided by the applicable market value
Greater than or equal to $37.50	1.3333

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At any time prior to the third business day immediately preceding December 15, 2013, the holder may settle the purchase contract early and receive 1.3333 shares of Company common stock, subject to anti-dilution adjustments. Upon settlement, an amount equal to $1.00 per common share issued will be reclassified from additional paid-in capital to common stock.

Series A Preferred Stock

In August 2008, the Company issued and sold 50,000 shares of non-cumulative perpetual convertible preferred stock, Series A, liquidation preference $1,000 per share (the “Series A Preferred Stock”) for $50 million in a private transaction. If declared, dividends on the Series A Preferred Stock are payable quarterly in arrears at a rate of 8.00% per annum. The Series A Preferred Stock is convertible into common stock at the option of the holder at a conversion rate of 38.88 shares of common stock per share of Series A Preferred Stock. On and after August 26, 2010, the Series A Preferred Stock are subject to mandatory conversion into common stock in connection with a fundamental transaction, or on and after August 26, 2013 if the closing price of the Company’s common stock exceeds a certain amount.

Series C Preferred Stock

In March 2012, the Company issued and sold 126,500 shares of non-cumulative perpetual convertible preferred stock, Series C, liquidation preference $1,000 per share (the “Series C Preferred Stock”) for $126.5 million in an equity offering. If declared, dividends on the Series C Preferred Stock are payable quarterly in arrears at a rate of 5.00% per annum. The Series C Preferred Stock is convertible into common stock at the option of the holder at a conversion rate of 24.3132 shares of common stock per share of Series C Preferred Stock. On and after April 15, 2017, the Company will have the right under certain circumstances to cause the Series C Preferred Stock to be converted into common stock if the closing price of the Company’s common stock exceeds a certain amount.

Common Stock Warrants

Pursuant to the U.S. Department of the Treasury’s (the “U.S. Treasury”) Capital Purchase Program, on December 19, 2008, the Company issued to the U.S. Treasury, a warrant to purchase 1,643,295 shares of Wintrust common stock at a per share exercise price of $22.82 and with a term of 10 years. In February 2011, the U.S. Treasury sold all of its interest in the warrant issued to it in a secondary underwritten public offering. At ~~September 30, 2012~~March 31, 2013, the warrant to purchase 1,643,295 shares remains outstanding.

The Company previously issued other warrants to acquire common stock. These warrants ~~entitle~~entitled the holders to purchase one share of the Company’s common stock at a purchase price of $30.50 per share. In March 2012, 18,000 warrants were ~~exercised. As a result,~~exercised resulting in warrants outstanding ~~totaled~~totaling 1,000 at ~~September 30,~~March 31, 2012 ~~and~~. In February 2013, the remaining warrants were exercised resulting in ~~19,000~~no warrants outstanding at ~~September 30, 2011. The expiration date on these remaining outstanding warrants is~~ ~~February~~March 31, 2013.

Other

In December 2012, the Company issued 372,530 shares of its common stock in the acquisition of HPK. In August 2012, the Company issued 25,493 shares of its common stock in settlement of contingent consideration related to the previously completed acquisition of Great Lakes Advisors, which is in addition to the 529,087 shares issued in July 2011 at the time of the acquisition. ~~In September 2011, the Company issued~~ ~~353,650~~ ~~shares of its common stock in the acquisition of ESBI.~~

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Accumulated Other Comprehensive Income (Loss)

The following ~~table summarizes~~tables summarize the components of other comprehensive income (loss), including the related income tax effects, and the related amount reclassified to net income for the periods presented (in thousands).

Accumulated
Unrealized
Gains on
Securities

Accumulated
Unrealized
Losses on
Derivative
Instruments

Accumulated
Foreign
Currency
Translation
Adjustments

Total
Accumulated
Other
Comprehensive
Income (Loss)
Balance at July 1, 2012 $ 5,907
$ (6,037 ) $ 2,101
$ 1,971
Other comprehensive income during the period 2,111
(174 ) 5,897
7,834
Balance at September 30, 2012 $ 8,018
$ (6,211 ) $ 7,998
$ 9,805

Balance at January 1, 2012 $ 4,204
$ (7,082 ) $ —
$ (2,878 )
Other comprehensive income during the period 3,814
871
7,998
12,683
Balance at September 30, 2012 $ 8,018
$ (6,211 ) $ 7,998
$ 9,805

Balance at July 1, 2011 $ 10,369
$ (6,237 ) $ —
$ 4,132
Other comprehensive income during the period 510
(1,171 ) —
(661 )
Balance at September 30, 2011 $ 10,879
$ (7,408 ) $ —
$ 3,471

Balance at January 1, 2011 $ 2,679
$ (8,191 ) $ —
$ (5,512 )
Other comprehensive income during the period 8,200
783
—
8,983
Balance at September 30, 2011 $ 10,879
$ (7,408 ) $ —
$ 3,471



	Accumulated Unrealized Gains (Losses) on Securities			Accumulated Unrealized Gains (Losses) on Derivative Instruments			Accumulated Foreign Currency Translation Adjustments			Total Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2013	$	6,710		$	(5,292	)	$	6,293		$	7,711
Other comprehensive income during the period, net of tax, before reclassifications	(4,649		)	(39		)	(4,866		)	(9,554		)
Amount reclassified from accumulated other comprehensive income, net of tax	(151		)	927			—			776
Net other comprehensive (loss) income during the period, net of tax	$	(4,800	)	$	888		$	(4,866	)	$	(8,778	)
Balance at March 31, 2013	$	1,910		$	(4,404	)	$	1,427		$	(1,067	)

Balance at January 1, 2012	$	4,204		$	(7,082	)	$	—		$	(2,878	)
Other comprehensive income during the period, net of tax, before reclassifications	$	(1,943	)	$	(364	)	$	—		$	(2,307	)
Amount reclassified from accumulated other comprehensive income, net of tax	(489		)	844			—			355
Net other comprehensive (loss) income during the period, net of tax	$	(2,432	)	$	480		$	—		$	(1,952	)
Balance at March 31, 2012	$	1,772		$	(6,602	)	$	—		$	(4,830	)



	Amount Reclassified from Accumulated Other Comprehensive Income for the
Details Regarding the Component of	Three Months Ended March 31,						Impacted Line on the
Accumulated Other Comprehensive Income	2013			2012			Consolidated Statements of Income
Accumulated unrealized gains on securities
Gains included in net income	$	251		$	816		Gains on available-for-sale securities, net
	251			816			Income before taxes
Tax effect	$	(100	)	$	(327	)	Income tax expense
Net of tax	$	151		$	489		Net income

Accumulated unrealized losses on derivative instruments
Amount reclassified to interest expense on junior subordinated debentures	$	1,539		$	1,410		Interest on junior subordinated debentures
	(1,539		)	(1,410		)	Loss before taxes
Tax effect	$	612		$	566		Income tax benefit
Net of tax	$	(927	)	$	(844	)	Net loss

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Earnings per Share

The following table shows the computation of basic and diluted earnings per share for the periods indicated:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(In thousands, except per share data)		2012		2011		2012		2011			2013		2012
Net income		$	32,302	$	30,202	$	81,107	$	58,354		$	32,052	$	23,210
Less: Preferred stock dividends and discount accretion		2,616		1,032		6,477		3,096			2,616		1,246
Net income applicable to common shares—Basic	(A)	29,686		29,170		74,630		55,258		(A)	29,436		21,964
Add: Dividends on convertible preferred stock, if dilutive		2,581		1,000		6,374		—			2,581		—
Net income applicable to common shares—Diluted	(B)	32,267		30,170		81,004		55,258		(B)	32,017		21,964
Weighted average common shares outstanding	(C)	36,381		35,550		36,305		35,152		(C)	36,976		36,207
Effect of dilutive potential common shares		12,295		10,551		11,292		8,683
Common stock equivalents											7,443		7,530
Convertible preferred stock, if dilutive											5,020		—
Total dilutive potential common shares											12,463		7,530
Weighted average common shares and effect of dilutive potential common shares	(D)	48,676		46,101		47,597		43,835		(D)	49,439		43,737
Net income per common share:
Basic	(A/C)	$	0.82	$	0.82	$	2.06	$	1.57	(A/C)	$	0.80	$	0.61
Diluted	(B/D)	$	0.66	$	0.65	$	1.70	$	1.26	(B/D)	$	0.65	$	0.50

Potentially dilutive common shares can result from stock options, restricted stock unit awards, stock warrants, the Company’s convertible preferred stock, tangible equity unit shares and shares to be issued under the Employee Stock Purchase Plan and the Directors Deferred Fee and Stock Plan, being treated as if they had been either exercised or issued, computed by application of the treasury stock method. While potentially dilutive common shares are typically included in the computation of diluted earnings per share, potentially dilutive common shares are excluded from this computation in periods in which the effect would

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reduce the loss per share or increase the income per share. For diluted earnings per share, net income applicable to common shares can be affected by the conversion of the Company’s convertible preferred stock. Where the effect of this conversion would reduce the loss per share or increase the income per share, net income applicable to common shares is not adjusted by the associated preferred dividends.

(18) Subsequent Events

On ~~October 26, 2012~~,May 1, 2013, the Company ~~entered into a Fifth Amendment Agreement, (the “Amendment”~~completed its previously announced acquisition of First Lansing Bancorp, Inc. ("FLB"). FLB is the parent company of First National Bank of Illinois ("FNBI"), which operates seven banking locations in the south and southwest suburbs of Chicago, Illinois as well as one location in northwest Indiana. Through this transaction, subject to ~~the Amended and Restated Credit Agreement dated as of October 30, 2009 (as amended, the “Credit Agreement”) among~~final adjustments, the Company ~~the lenders named therein, and an unaffiliated bank as administrative agent.~~

~~The revolving commitment under the Credit Agreement was increased by~~acquired approximately $~~25.0~~365 million ~~resulting~~ in ~~a total revolving commitment of all lenders under the Credit Agreement of~~assets and assumed approximately $~~100.0~~323 million in deposits. The aggregate purchase price was approximately $38.5 million. ~~Pursuant~~In the merger, outstanding shares of FLB common stock outstanding were converted into the right to ~~the Amendment, borrowings under the Agreement that are considered “Base Rate Loans” will bear interest at~~receive merger consideration paid in a ~~rate equal to the greater~~combination of ~~(1)~~approximately ~~400 basis points~~40% cash and ~~(2) for the applicable period, the highest of (a) the federal funds rate plus~~approximately ~~100 basis points, (b) the lender’s prime rate plus~~ ~~50 basis points, and (c) the Eurodollar Rate (as defined below) that would be applicable for an interest period of one month plus~~ ~~150 basis points~~. Borrowings under the Agreement that are considered “Eurodollar Rate Loans” will bear interest at a rate equal to the higher of (1) the British Bankers Association’s LIBOR rate for the applicable period plus ~~300 basis points~~60% ~~(the “Eurodollar Rate”) and (2)~~ ~~400 basis points. A commitment fee is payable quarterly equal to~~ ~~0.50%~~shares of Wintrust common stock. Immediately after the ~~actual daily amount by which~~acquisition, FNBI was merged into the ~~lenders’ commitment under the revolving note exceeded the amount outstanding under such facility.~~

~~As of the date hereof, the Company has~~ no ~~outstanding balance under the revolving credit facility and has~~ ~~$1.0 million~~ ~~outstanding under its term facility.~~Company's wholly-owned subsidiary, Old Plank Trail Community Bank, N.A.

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ITEM 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of financial condition as of ~~September 30, 2012~~March 31, 2013 compared with December 31, ~~2011~~2012 and ~~September 30, 2011~~March 31, 2012, and the results of operations for the three ~~and nine~~ month periods ended ~~September 30, 2012~~March 31, 2013 and ~~2011~~2012, should be read in conjunction with the unaudited consolidated financial statements and notes contained in this report and the ~~Risk Factors~~risk factors discussed herein and under Item 1A of the Company’s ~~2011~~2012 Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties and, as such, future results could differ significantly from management’s current expectations. See the last section of this discussion for further information on forward-looking statements.

Introduction

Wintrust is a financial holding company that provides traditional community banking services, primarily in the Chicago metropolitan area and southeastern Wisconsin, and operates other financing businesses on a national basis and Canada through several non-bank subsidiaries. Additionally, Wintrust offers a full array of wealth management services primarily to customers in the Chicago metropolitan area and southeastern Wisconsin.

Overview

~~Third~~First Quarter Highlights

The Company recorded net income of $~~32.3~~32.1 million for the ~~third~~first quarter of ~~2012~~2013 compared to $~~30.2~~23.2 million in the ~~third~~first quarter of ~~2011~~2012. The results for the ~~third~~first quarter of ~~2012~~2013 demonstrate continued operating strengths as loans outstanding increased, ~~credit quality measures improved,~~ net interest margin remained stable and our deposit funding base mix continued its beneficial shift toward an aggregate lower cost of funds. The Company also continues to take advantage of the opportunities that have resulted from distressed credit markets – specifically, a dislocation of assets, banks and people in the overall market. For more information, see “Overview—Recent Acquisition Transactions.”

The Company increased its loan portfolio, excluding covered loans and loans held for sale, from $~~10.3~~10.7 billion at ~~September 30, 2011~~March 31, 2012 and $~~10.5~~11.8 billion at December 31, ~~2011~~2012, to $~~11.5~~11.9 billion at ~~September 30, 2012~~March 31, 2013. ~~This~~The increase in the current quarter compared to the prior year quarter was primarily a result of the Company’s commercial banking initiative, growth in the premium finance receivables – commercial portfolio ~~and the~~as well as acquisition ~~of a Canadian insurance premium funding company in the second quarter of 2012.~~transactions. The Company continues to make new loans, including in the commercial and commercial ~~real estate~~real-estate sector, where opportunities that meet our underwriting standards exist. For more information regarding changes in the Company’s loan portfolio, see “Financial Condition – Interest Earning Assets” and Note 6 “Loans” of the Financial Statements presented under Item 1 of this report.

Management considers the maintenance of adequate liquidity to be important to the management of risk. Accordingly, during the ~~third~~first quarter of ~~2012~~2013, the Company continued its practice of maintaining appropriate funding capacity to provide the Company with adequate liquidity for its ongoing operations. In this regard, the Company ~~benefited~~continues to benefit from its strong deposit base, a liquid short-term investment portfolio and its access to funding from a variety of external funding ~~sources, including~~sources. Additionally, in the ~~Company’s~~ first quarter ~~2012 issuance~~ of ~~preferred stock, see “Stock Offerings” below.~~2013, the Company was able to reduce its excess liquidity through the planned reductions in certain wholesale wealth management deposits and brokered CDs of approximately $250 million. At ~~September 30, 2012~~March 31, 2013, the Company had ~~over $1.1 billion~~$898.5 million in overnight liquid funds and interest-bearing deposits with banks.

The Company recorded net interest income of $~~132.6~~130.7 million in the ~~third~~first quarter of ~~2012~~2013 compared to $~~118.4~~125.9 million in the ~~third~~first quarter of ~~2011~~2012. The higher level of net interest income recorded in the ~~third~~first quarter of ~~2012~~2013 compared to the ~~third~~first quarter of ~~2011~~2012 resulted from an increase in average earning assets and the positive re-pricing of retail interest-bearing deposits along with a more favorable deposit mix. Average earning assets for the ~~third~~first quarter of ~~2012~~2013 increased by ~~$1.1~~$1.3 billion compared to the ~~third~~first quarter of ~~2011~~2012. Average earning asset growth over the past 12 months was primarily a result of the ~~$1.7~~$1.4 billion increase in average loans, excluding covered loans, and an increase of $34 million in the average balance of liquidity management and other assets partially offset by a decrease of ~~$518.4 million in average liquidity management assets and a decrease of $82.5~~$131 million in the average balance of covered loans. The growth in average total loans, excluding covered loans, was comprised of an increase of ~~$533.6~~$398 million in commercial loans, ~~$407.8 million in mortgages held for sale, $260.0~~$378 million in commercial real-estate loans, ~~$253.3~~$282 million in U.S.-originated commercial premium finance receivables, ~~$246.8~~$249 million in Canadian-originated commercial premium finance receivables, ~~and $19.7~~$48 million in life premium finance ~~receivables.~~receivables and $114 million in mortgages held for sale partially offset by a decrease of $64 million in home equity and other loans. The average earning asset growth of ~~$1.1~~$1.3 billion in the ~~third~~first quarter of ~~2012~~2013 did not fully offset a 2344 basis point decline in the yield on earning assets, creating ~~an increase~~a decrease in total interest income of ~~$3.3~~$4.2 million in the ~~third~~first quarter of ~~2012~~2013 compared to the ~~third~~first quarter of ~~2011.~~2012. Funding for the average earning asset growth of ~~$1.1~~$1.3 billion was provided by an increase in total average interest bearing liabilities of ~~$290.8~~$576 million (an increase in interest-bearing deposits of ~~$818.3 million~~$1.4 billion partially offset by a decrease of ~~$527.5~~$800 million of wholesale funding) and an increase of ~~$832.3~~$732 million in the average balance of net free funds. A 3732 basis point decline in the rate paid on total interest-bearing liabilities ~~partially attributable to~~more than offset the ~~pay off of instruments~~

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~~issued by the Company's securitization entity (see Note 8 “Loan Securitization” of the Financial Statements presented under Item 1 of this report for more information) more than offset the~~ increase in average balance, ~~of net free funds,~~ creating a ~~$10.9~~$9 million reduction in interest expense in the ~~third~~first quarter of ~~2012~~2013 compared to the ~~third~~first quarter of ~~2011.~~2012.

Non-interest income totaled $~~62.9~~57.4 million in the ~~third~~first quarter of ~~2012~~2013 ~~a decrease~~an increase of $~~4.3~~10.4 million, or 622%, compared to the ~~third~~first quarter of ~~2011~~2012. The ~~decrease~~increase in the ~~third~~first quarter of ~~2012~~2013 compared to the ~~third~~first quarter of ~~2011~~2012 was primarily attributable to ~~lower bargain purchase gains and trading losses, partially offset by~~ higher mortgage banking and wealth management ~~revenues.~~revenues, partially offset by a decrease in fees from covered call options. Mortgage banking revenue increased $~~16.7~~11.6 million when compared to the ~~third~~first quarter of ~~2011~~2012. The increase in mortgage banking revenue in the current quarter as compared to the ~~third~~first quarter of ~~2011~~2012 resulted primarily from ~~an increase in gains on sales of loans, which was driven by~~ higher origination volumes as well as general improvement in the ~~current quarter due to a favorable mortgage interest rate environment.~~overall economy (increased housing starts, home sales and median prices of homes). Loans sold to the secondary market were $~~1.1 billion~~974.4 million in the ~~third~~first quarter of ~~2012~~2013 compared to $~~641.7~~714.7 million in the ~~third~~first quarter of ~~2011~~2012 (see “Non-Interest Income” section later in this document for further detail).

Non-interest expense totaled $~~124.5~~120.1 million in the ~~third~~first quarter of ~~2012~~2013, increasing $~~18.2~~2.4 million, or 172%, compared to the ~~third~~first quarter of ~~2011~~2012. The increase compared to the ~~third~~first quarter of ~~2011~~2012 was primarily attributable to a $~~13.4~~8.5 million increase in salaries and employee ~~benefits.~~benefits and a $2.6 million increase in equipment, occupancy and data processing expenses due to growth in the Company, partially offset by a $8.8 million decrease in OREO expense. Salaries and employee benefits expense increased primarily as a result of a $~~9.1~~4.5 million increase in bonus and commissions primarily attributable to the increase in variable pay based revenue and the Company’s long-term incentive program, a $~~3.5~~3.9 million increase in salaries caused by the addition of employees from the various acquisitions and larger staffing as the Company grows and ana $~~820,000~~111,000 increase from employee ~~benefits (primarily health plan~~benefits. OREO expense decreased primarily as a result of fewer negative valuation adjustments on properties held in OREO and ~~payroll taxes related).~~higher gains on sale of properties

The Current Economic Environment

The Company’s results during the quarter reflect an improvement in ~~credit quality metrics~~net charge-offs but a slight increase in non-performing assets as compared to recent quarters. The Company has continued to be disciplined in its approach to growth and has not sacrificed asset quality. However, the Company’s results continue to be impacted by the existing stressed economic environment and ~~depressed~~ real estate valuations that affected both the U.S. economy, generally, and the Company’s local markets, specifically. In response to these conditions, Management continues to carefully monitor the impact on the Company of the financial markets, the depressed values of real property and other assets, loan performance, default rates and other financial and macro-economic indicators in order to navigate the challenging economic environment.

In particular:

The Company’s provision for credit losses, excluding covered loans, in the ~~third~~first quarter of ~~2012~~2013 totaled $~~18.8~~15.4 million, ~~a decrease~~an increase of ~~$10.5 million~~$213,000 when compared to the ~~third~~first quarter of ~~2011~~2012. Net charge-offs decreased to ~~$17.9~~$11.9 million in the ~~third~~first quarter of ~~2012~~2013 (of which $7.2 million related to commercial and commercial real-estate loans) compared to ~~$26.9~~$14.4 million for the same period in ~~2011~~2012 (of which $11.1 million related to commercial and commercial real-estate loans).

The Company’s allowance for loan losses, excluding covered loans, totaled $~~112.3~~110.3 million at ~~September 30, 2012~~March 31, 2013, reflecting a decrease of ~~$6.4 million,~~$675,000, or 5%1%, when compared to the same period in ~~2011~~2012 and an increase of ~~$1.9~~$3.0 million, or 2%3%, when compared to December 31, ~~2011~~2012. At ~~September 30, 2012~~March 31, 2013, approximately ~~$55.1~~$56.4 million,, or ~~49%~~51%, of the allowance for loan losses was associated with commercial ~~real estate~~real-estate loans and another ~~$27.7~~$29.0 million,, or ~~25%~~26%, was associated with commercial loans. ~~The decrease in the allowance for loan losses, excluding covered loans, in the current period compared to the prior year period reflects the improvements in credit quality metrics in 2012.~~

The Company has significant exposure to commercial ~~real estate.~~real-estate. At ~~September 30, 2012~~March 31, 2013, $~~3.7~~4.0 billion, or ~~30%~~34%, of our loan portfolio, excluding covered loans, was commercial ~~real estate,~~real-estate, with more than ~~91%~~92% located in the greater Chicago metropolitan and southeastern Wisconsin market areas. As of ~~September 30, 2012~~March 31, 2013, the commercial ~~real estate~~real-estate loan portfolio was comprised of ~~$347.3~~$333.0 million related to land, residential and commercial construction, ~~$584.3~~$584.7 million related to office buildings, ~~$560.7~~$586.8 million related to retail, ~~$574.3~~$595.5 million related to industrial use, ~~$363.4~~$512.8 million related to multi-family and ~~$1.2~~$1.3 billion related to mixed use and other use types. In analyzing the commercial ~~real estate~~real-estate market, the Company does not rely upon the assessment of broad market statistical data, in large part because the Company’s market area is diverse and covers many communities, each of which is impacted differently by economic forces affecting the Company’s general market area. As such, the extent of the decline in real estate valuations can vary meaningfully among the different types of commercial and other real estate loans made by the Company. The Company uses its multi-chartered structure and local management knowledge to analyze and manage the local market conditions at each of its banks. As of ~~September 30, 2012~~March 31, 2013, the Company had approximately $~~58.5~~61.8 million of non-performing commercial ~~real estate~~real-estate loans representing approximately 1.6% of the total ~~commercial real estate loan portfolio. $16.1 million, or 28%, of the total non-performing commercial real estate loan portfolio related~~

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commercial real-estate loan portfolio. $22.2 million, or 36%, of the total non-performing commercial real-estate loan portfolio related to the land, residential and commercial construction ~~sector which remains under stress due to the significant oversupply of new homes in certain portions of our market area.~~sector.

Total non-performing loans (loans on non-accrual status and loans more than 90 days past due and still accruing interest), excluding covered loans, was $~~117.9~~128.6 million (of which $~~58.5~~61.8 million, or ~~50%~~48%, was related to commercial ~~real estate)~~real-estate) at ~~September 30, 2012~~March 31, 2013, ~~a decrease~~an increase of approximately ~~$16.1~~$15.0 million compared to ~~September 30, 2011~~March 31, 2012. ~~This decrease was a result of non-performing loan settlements and a lower level of non-performing loan inflows during the current period.~~

The Company’s other real estate owned, excluding covered other real estate owned, decreased by ~~$29.5~~$20.0 million, to ~~$67.4~~$56.2 million during the ~~third~~first quarter of ~~2012~~2013, from ~~$96.9~~$76.2 million at ~~September 30, 2011~~March 31, 2012. The decrease in other real estate owned in the ~~third~~first quarter of ~~2012~~2013 compared to the same period in the prior year is primarily a result of disposals ~~during 2012.~~in the past 12 months. The ~~$67.4~~$56.2 million of other real estate owned as of ~~September 30, 2012~~March 31, 2013 was comprised of ~~$13.9~~$10.1 million of residential ~~real estate~~real-estate development property, ~~$45.3~~$38.8 million of commercial ~~real estate~~real-estate property and ~~$8.2~~$7.3 million of residential ~~real estate~~real-estate property.

A continuation of real estate valuation and macroeconomic deterioration could result in higher default levels, a significant increase in foreclosure activity, and a material decline in the value of the Company’s assets.

During the quarter, Management continued its strategic efforts to ~~aggressively~~ resolve problem loans through liquidation, rather than retention, of loans or real estate acquired as collateral through the foreclosure process. For more information regarding these efforts, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation—Overview and Strategy” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2011~~2012. The level of loans past due 30 days or more and still accruing interest, excluding covered loans, totaled ~~$149.7~~$152.7 million as of ~~September 30, 2012~~March 31, 2013, increasing ~~$1.8 million~~$696,000 compared to the balance of ~~$147.9~~$152.0 million as of December 31, ~~2011~~2012. Fluctuations from period to period in loans that are past due 30 days or more and still accruing interest are primarily the result of timing of payments for loans with near term delinquencies (i.e. 30-89 days past-due).

The Company enters into residential mortgage loan sale agreements with investors in the normal course of business. These agreements provide recourse to investors through certain representations concerning credit information, loan documentation, collateral and insurability. At ~~September 30, 2012~~March 31, 2013, the Company had a ~~$3.2~~$3.5 million estimated liability on loans expected to be repurchased from loans sold to investors compared to a ~~$7.8~~$4.3 million liability and a $2.7 million liability for similar items as of ~~September 30, 2011~~December 31, 2012. and March 31, 2012, respectively. The ~~decrease~~Company recognized a reduction in its estimated obligation of $755,000 in the ~~liability is a result~~first quarter of ~~negotiated settlements~~2013 based on analysis of historical claims and lower loss estimates on future indemnification requests. Investors request the Company to indemnify them against losses on certain loans or to repurchase loans which the investors believe do not comply with applicable representations.payments. For more information regarding requests for indemnification on loans sold, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation—Overview and Strategy” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2011~~2012.

In addition, during the ~~third~~first quarter of ~~2012~~2013, the Company restructured certain loans in the amount of ~~$9.5~~$2.3 million by providing economic concessions to borrowers to better align the terms of their loans with their current ability to pay. At ~~September 30, 2012~~March 31, 2013, approximately ~~$147.2~~$116.3 million in loans had terms modified, with ~~$128.4~~$97.1 million of these modified loans in accruing status.

Trends in Our Three Operating Segments During the ~~Third~~First Quarter

Community Banking

Net interest income. Net interest income for the community banking segment totaled $~~124.7~~123.4 million for the ~~third~~first quarter of 2013 compared to $125.9 million for the fourth quarter of 2012 ~~compared to $123.0 million for the second quarter of 2012~~ and $~~109.2~~121.1 million for the ~~third~~first quarter of ~~2011~~2012. The decrease in net interest income in the first quarter of 2013 compared to the fourth quarter of 2012 is primarily attributable to two fewer days of interest income in the current quarter. The increase in net interest income in the current quarter compared to the ~~third~~first quarter of 2012 ~~compared to both the second quarter of 2012 and~~ ~~third quarter of 2011~~ can be attributed to growth in earning assets, including those obtained in FDIC-assisted acquisitions as well as the ability to price interest-bearing deposits at more reasonable rates.

Funding mix and related costs. Community banking profitability has been bolstered in recent quarters as fixed term certificates of deposit have been renewing at lower rates given the historically low interest rate levels and growth in non-interest bearing deposits as a result of the Company’s commercial banking initiative.

Level of non-performing loans and other real estate owned. Given the current economic conditions, problem loan expenses have been at elevated levels in recent years. ~~However, both other real-estate owned and non-performing~~Non-performing loans ~~decreased~~increased in the ~~third~~first quarter of ~~2012~~2013 as compared to the ~~second~~fourth quarter of 2012 and ~~third~~first quarter of ~~2011~~2012~~. The decrease in~~, however the company does not believe this increase is establishing a trend since the Company is committed to the timely resolution of non-performing ~~loans~~loans. Other real estate owned decreased in the current quarter as compared to the ~~second~~fourth quarter of 2012 and ~~third~~first quarter of ~~2011~~2012.

Mortgage banking revenue. isMortgage banking revenue decreased $4.6 million when compared to the fourth quarter of 2012 and increased $11.6 million when compared to the first quarter of 2012. The decrease in the current quarter as compared to the fourth quarter of 2012 resulted primarily from a ~~result~~drop in loan volume, associated with a slight increase in mortgage rates in the current quarter and the related tightening of ~~improvement~~pricing and secondary market gains, partially offset by a reduction in ~~credit quality.~~recourse reserves based

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~~Mortgage banking revenue.~~ ~~Mortgage banking revenue increased $5.5 million when compared to the~~ ~~second quarter~~on analysis of ~~2012~~historical claims and ~~increased~~ ~~$16.7 million~~ ~~when compared to the~~ ~~third quarter of 2011~~.payments. The increase in the current quarter as compared to the ~~second~~first quarter of 2012 ~~and~~ ~~third quarter of 2011~~ resulted primarily from ~~an increase in gains on sales of loans, which was driven by~~ higher origination volumes as well as general improvement in the ~~current quarter due to a favorable mortgage interest rate environment.~~overall economy (increased housing starts, home sales and median prices of homes).

For more information regarding our community banking business, please see “Overview and Strategy—Community Banking” under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2011~~2012.

Specialty Finance

Financing of Commercial Insurance Premiums. FIFC originated approximately ~~$936.2 million in~~$1.1 billion of commercial insurance premium finance loans in the U.S. in the ~~third~~first quarter of ~~2012~~2013, relatively unchanged as compared to ~~$1.1~~$1.0 billion of U.S. commercial insurance premium finance loan originated in both the ~~second~~fourth quarter of 2012 and ~~$867.7 million in~~ the ~~third quarter of 2011. The decline in originations in the~~ ~~third~~first quarter of 2012 ~~as compared to the~~ ~~second quarter of 2012~~ ~~is due to seasonality. When compared to the~~ ~~third quarter of 2011~~, ~~loan originations in the current quarter increased by 8% which reflects improved market conditions as well as a continued focus on establishing new customer relationships.~~

respectively. The Company acquired a Canadian insurance premium funding company in the second quarter of 2012. In the ~~third~~first quarter of ~~2012,~~2013, the Canadian insurance premium funding company originated approximately ~~$173.3~~$126.3 million in commercial insurance premium finance ~~loans.~~loans as compared to $152.8 million in fourth quarter of 2012. For more information on this acquisition, see “Overview—Recent Acquisition Transactions.”

Financing of Life Insurance Premiums. FIFC originated approximately ~~$79.9~~$85.7 million in life insurance premium finance loans in the ~~third~~first quarter of ~~2012~~2013 compared to ~~$96.4~~$123.0 million in the ~~second~~fourth quarter of 2012, and compared to ~~$91.3~~$112.8 million in the ~~third~~first quarter of ~~2011~~2012. The decline in originations in the ~~third~~first quarter of 2013 from the fourth quarter of 2012 ~~from~~is a result of seasonality as the fourth quarter historically produces the largest volume of originations. The decline in originations in the first quarter of 2013 compared to the ~~second~~first quarter of 2012 ~~and~~ ~~third quarter of 2011~~ was a result of ~~a decrease~~fewer loan originations and lower average loan sizes on originations in the ~~demand for life insurance financing during the~~ current ~~period due in part to the uncertainty regarding prospective tax law changes.~~quarter.

For more information regarding our specialty finance business, please see “Overview and Strategy—Specialty Finance” under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2011~~2012.

Wealth Management Activities

The wealth management segment recorded higher non-interest income in the ~~third~~first quarter of ~~2012~~2013 compared to the ~~third~~first quarter of ~~2011~~2012 primarily as a result of the acquisition of a community bank trust operation as well as continued growth within the existing business. For more information on the trust operation acquisition, see “Overview—Recent Acquisition Transactions.”

For more information regarding our wealth management business, please see “Overview and Strategy—Wealth Management Activities” under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2011~~2012.

Recent Acquisition Transactions

FDIC-Assisted Transactions

On September 28, 2012, the Company’s wholly-owned subsidiary Old Plank Trail Bank, acquired certain assets and liabilities and the banking operations of First United Bank in an FDIC-assisted transaction. First United Bank operated four locations in Illinois; one in Crete, two in Frankfort and one in Steger, as well as one location in St. John, Indiana and had approximately ~~$328.1~~$328.4 million in total assets and ~~$316.7~~$316.9 million in total deposits as of the acquisition date. Old Plank Trail Bank acquired substantially all of First United Bank's assets at a discount of approximately 9.3% and assumed all of the non-brokered deposits at a premium of 0.60%. In connection with the acquisition, Old Plank Trail Bank entered into a loss sharing agreement with the FDIC whereby Old Plank Trail Bank will share in losses with the FDIC on certain loans and foreclosed real estate at First United Bank.

On July 20, 2012, the Company’s wholly-owned subsidiary Hinsdale Bank, assumed the deposits and banking operations of Second Federal in an FDIC-assisted transaction. Second Federal operated three locations in Illinois; two in Chicago (Brighton Park and Little Village neighborhoods) and one in Cicero, and had ~~$168.8~~$169.1 million in total deposits as of the acquisition date. Hinsdale Bank assumed substantially all of Second Federal's non-brokered deposits at a premium of $100,000. The Company subsequently divested the deposits and banking operations of Second Federal. See "Divestiture of Previous FDIC-Assisted Acquisition" below for more information.

On February 10, 2012, the Company announced that its wholly-owned subsidiary bank, Barrington Bank, acquired certain assets and liabilities and the banking operations of Charter National in an FDIC-assisted transaction. Charter National operated

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two locations: one in Hoffman Estates and one in Hanover Park and had approximately $92.4 million in total assets and $90.1 million in total deposits as of the acquisition date. Barrington Bank acquired substantially all of Charter National’s assets at a discount of

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approximately 4.1% and assumed all of the non-brokered deposits at no premium. In connection with the acquisition, Barrington Bank entered into a loss sharing agreement with the FDIC whereby Barrington Bank will share in losses with the FDIC on certain loans and foreclosed real estate at Charter National.

On July 8, 2011, the Company announced that its wholly-owned subsidiary bank, Northbrook Bank, acquired certain assets and liabilities and the banking operations of First Chicago in an FDIC-assisted transaction. First Chicago operated seven locations in Illinois: three in Chicago, one each in Bloomingdale, Itasca, Norridge and Park Ridge, and had approximately $768.9 million in total assets and $667.8 million in total deposits as of the acquisition date. Northbrook Bank acquired substantially all of First Chicago’s assets at a discount of approximately 12% and assumed all of the non-brokered deposits at a premium of approximately 0.5%. In connection with the acquisition, Northbrook Bank entered into a loss sharing agreement with the FDIC whereby Northbrook Bank will share in losses with the FDIC on certain loans and foreclosed real estate at First Chicago.

On March 25, 2011, the Company announced that its wholly-owned subsidiary bank, Advantage National Bank Group (“Advantage”), acquired certain assets and liabilities and the banking operations of The Bank of Commerce (“TBOC”) in an FDIC-assisted transaction. TBOC operated one location in Wood Dale, Illlinois and had approximately $174.0 million in total assets and $164.7 million in total deposits as of the acquisition date. Advantage acquired substantially all of TBOC’s assets at a discount of approximately 14% and assumed all of the non-brokered deposits at a premium of approximately 0.1%. Advantage subsequently changed its name to Schaumburg Bank and Trust Company, N.A. (“Schaumburg”). In connection with the acquisition, Advantage entered into a loss sharing agreement with the FDIC whereby Advantage will share in losses with the FDIC on certain loans and foreclosed real estate at TBOC.

On February 4, 2011, the Company announced that its wholly-owned subsidiary bank, Northbrook Bank, acquired certain assets and liabilities and the banking operations of Community First Bank-Chicago (“CFBC”) in an FDIC-assisted transaction. CFBC operated one location in Chicago and had approximately $50.9 million in total assets and $48.7 million in total deposits as of the acquisition date. Northbrook Bank acquired substantially all of CFBC’s assets at a discount of approximately 8% and assumed all of the non-brokered deposits at a premium of approximately 0.5%. In connection with the acquisition, Northbrook Bank entered into a loss sharing agreement with the FDIC whereby Northbrook Bank will share in losses with the FDIC on certain loans and foreclosed real estate at CFBC.

Loans comprise the majority of the assets acquired in FDIC-assisted transactions and 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, 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 loss-sharing agreements as “covered loans” and use the term “covered assets” to refer to covered loans, covered OREO and certain other covered assets. At their respective acquisition dates in 2012, the Company estimated the fair value of the reimbursable losses, which were approximately ~~$65.1 million, $13.2 million, $273.3 million, $48.9~~$67.2 million and ~~$6.7~~$13.2 million, related to the First United Bank and Charter National ~~First Chicago, TBOC and CFBC~~ acquisitions, respectively. As no loans were acquired by the Company in the acquisition of Second Federal, there is no fair value of reimbursable losses. The agreements with the FDIC require that the Company follow certain servicing procedures or risk losing the FDIC reimbursement of covered asset losses.

The loans covered by the loss sharing agreements are classified and presented as covered loans and the estimated reimbursable losses are recorded as FDIC indemnification assets, both 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. The FDIC-assisted transactions resulted in bargain purchase gains of ~~$6.6~~$6.7 million for First United Bank, $43,000 for Second Federal and $785,000 for Charter National, ~~$27.4 million for First Chicago, $8.6 million for TBOC and $2.0 million for CFBC,~~ which are shown as a component of non-interest income on the Company’s Consolidated Statements of Income.

Other Completed Transactions

Acquisition of HPK Financial Corporation

On December 12, 2012, the Company completed its acquisition of HPK Financial Corporation (“HPK”). HPK was the parent company of Hyde Park Bank & Trust Company, an Illinois state bank, (“Hyde Park Bank”), which operated two banking locations in the Hyde Park neighborhood of Chicago, Illinois. As part of the transaction, Hyde Park Bank merged into the Company's wholly-owned subsidiary bank, Beverly Bank & Trust Company, N.A. (“Beverly Bank”), and the two acquired banking locations are operating as branches of Beverly Bank under the brand name Hyde Park Bank. HPK had approximately $358 million in assets and $243 million in deposits as of the acquisition date, prior to purchase accounting adjustments. The Company recorded goodwill of $12.6 million on the acquisition.

Acquisition of Macquarie Premium Funding Inc.

On June 8, 2012, the Company, through its wholly-owned subsidiary Lake Forest Bank and Trust Company (“Lake Forest Bank”), completed its acquisition of Macquarie Premium Funding Inc., the Canadian insurance premium funding unit of Macquarie Group. Through this transaction, Lake Forest Bank acquired approximately $213 million of gross premium finance receivables outstanding. The Company recorded goodwill of approximately $22 million on the acquisition.

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Acquisition of a Branch of Suburban Bank & Trust

On April 13, 2012, the Company’s wholly-owned subsidiary bank, Old Plank Trail Bank, completed its acquisition of a branch of Suburban located in Orland Park, Illinois. Through this transaction, Old Plank Trail Bank acquired approximately $52 million of deposits and $3 million of loans. The Company recorded goodwill of $1.5 million on the branch acquisition.

Acquisition of the Trust Operations of Suburban Bank & Trust

On March 30, 2012, the Company’s wholly-owned subsidiary, CTC, completed its acquisition of 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 and various other assets. The Company recorded goodwill of $1.8 million on this acquisition.

~~Acquisition~~

Divestiture of ~~Elgin State Bank~~Previous FDIC-Assisted Acquisition

On ~~September 30, 2011,~~February 1, 2013, Hinsdale Bank completed its divestiture of the deposits and current banking operations of Second Federal, which were acquired in an FDIC-assisted transaction on July 20, 2012, to Self-Help Federal Credit Union. Through this transaction, the Company divested approximately $149 million of related deposits.

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Acquisitions Completed After March 31, 2013

On May 1, 2013, the Company completed its previously announced acquisition of ESBI. ESBI was the parent company of Elgin State Bank, which operated three banking locations in Elgin, Illinois. As part of the transaction, Elgin State Bank merged into the Company’s wholly-owned subsidiary bank, St. Charles, and the three acquired banking locations are operating as branches of St. Charles under the brand name Elgin State Bank. Elgin State Bank had approximately $263.2 million in assets and $241.1 million in deposits at September 30, 2011. The Company recorded goodwill of approximately $5.0 million on the acquisition.

~~Acquisition of Great Lakes Advisors~~

On July 1, 2011, the Company acquired Great Lakes Advisors, a Chicago-based investment manager with approximately $2.4 billion in assets under management. Great Lakes Advisors merged with Wintrust’s existing asset management business, Wintrust Capital Management, LLC and operates as “Great Lakes Advisors, LLC, a Wintrust Wealth Management Company”.

~~Acquisition of River City Mortgage~~

On April 13, 2011, the Company announced the acquisition of certain assets and the assumption of certain liabilities of the mortgage banking business of River City of Bloomington, Minnesota. With offices in Minnesota, Nebraska and North Dakota, River City originated nearly $500 million in mortgage loans in 2010.

~~Acquisition of Woodfield Planning Corporation~~

On February 3, 2011, the Company acquired certain assets and assumed certain liabilities of the mortgage banking business of 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.

~~Announced Acquisitions~~

~~On September 18, 2012, the Company announced the signing of a definitive agreement to acquire HPK Financial Corporation (“HPK”~~First Lansing Bancorp, Inc. ("FLB"). ~~HPK~~FLB is the parent company of ~~Hyde Park~~First National Bank ~~and Trust Company, an~~of Illinois ~~state bank, (“Hyde Park Bank”~~("FNBI"), which operates ~~two~~seven banking locations in the ~~Hyde Park neighborhood~~south and southwest suburbs of Chicago, ~~Illinois. As of June 30, 2012, Hyde Park Bank had~~Illinois as well as one location in northwest Indiana. Through this transaction, subject to final adjustments, the Company acquired approximately ~~$390~~$365 million in assets and assumed approximately ~~$238~~$323 million in deposits. The ~~Company expects that this~~aggregate purchase price was approximately $38.5 million. In the merger, outstanding shares of FLB common stock outstanding were converted into the right to receive merger consideration paid in a combination of approximately 40% cash and approximately 60% shares of Wintrust common stock. Immediately after the acquisition, ~~will be completed late in~~FNBI was merged into the ~~fourth quarter of 2012.~~Company's wholly-owned subsidiary, Old Plank Trail Community Bank, N.A.

Stock Offerings

On March 14, 2012, the Company announced the ~~pricing~~sale of 126,500 shares, or $126,500,000 aggregate liquidation preference, of Series C Preferred Stock. Dividends will be payable on the Series C Preferred Stock when, as, and if, declared by Wintrust’s Board of Directors on a non-cumulative basis quarterly in arrears on January 15, April 15, July 15 and October 15 of each year at a rate of 5.00% per year on the liquidation preference of $1,000 per share.

The holders of the Series C Preferred Stock will have the right at any time to convert each share of Series C Preferred Stock into 24.3132 shares of Wintrust common stock, which represents an initial conversion price of $41.13 per share of Wintrust common stock, plus cash in lieu of fractional shares. The initial conversion price represents a 17.5% conversion premium to the volume-weighted average price of Wintrust common stock on March 13, 2012 of approximately $35.00 per share. The conversion rate, and thus the conversion price, will be subject to adjustment under certain circumstances. On or after April 15, 2017, Wintrust will have the right under certain circumstances to cause the Series C Preferred Stock to be converted into shares of Wintrust common stock, plus cash in lieu of fractional shares.

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RESULTS OF OPERATIONS

Earnings Summary

The Company’s key operating measures for the three ~~and nine~~ months ended ~~September 30, 2012~~March 31, 2013, as compared to the same period last year, are shown below:


(Dollars in thousands, except per share data)	Three months ended September 30, 2012			Three months ended September 30, 2011			Percentage (%) or Basis Point (bp)Change		Three months ended March 31, 2013			Three months ended March 31, 2012			Percentage (%) or Basis Point (bp)Change
Net income	$	32,302		$	30,202		7	%	$	32,052		$	23,210		38	%
Net income per common share—Diluted	0.66			0.65			2		0.65			0.50			30
Pre-tax adjusted earnings ^{(2) (6)}									68,263			64,067			7
Net revenue ⁽¹⁾	195,520			185,657			5		188,092			172,918			9
Net interest income	132,575			118,410			12		130,713			125,895			4
Pre-tax adjusted earnings ^{(2) (6)}	68,923			57,524			20
Net interest margin ⁽²⁾	3.50		%	3.37		%	13 bp		3.41		%	3.55		%	(14) bp
Net overhead ratio ⁽²⁾ ⁽³⁾	1.47			1.00			47		1.47			1.80			(33	)
Net overhead ratio, based on pre-tax adjusted earnings ^{(2) (3)}	1.52			1.56			(4	)	1.47			1.57			(10	)
Efficiency ratio ^{(2) (4)}	63.67			57.21			646		63.78			68.24			(446	)
Efficiency ratio, based on pre-tax adjusted earnings ^{(2) (4)}	63.48			63.69			(21	)	63.46			62.17			129
Return on average assets	0.77			0.77			—		0.75			0.59			16
Return on average common equity	7.57			7.94			(37	)	7.27			5.90			137
Return on average tangible common equity									9.35			7.55			180

(Dollars in thousands, except per share data) Nine months ended September 30, 2012 Nine months ended September 30, 2011
Percentage (%) or
Basis Point (bp)
Change
Net income $ 81,107
$ 58,354
39 %
Net income per common share—Diluted 1.70
1.26
35
Net revenue ⁽¹⁾
547,643
481,516
14
Net interest income 386,740
336,730
15
Pre-tax adjusted earnings ^{(2) (6)}
201,452
161,416
25
Net interest margin ⁽²⁾
3.52 % 3.41 % 11 bp
Net overhead ratio ⁽²⁾ ⁽³⁾
1.63
1.44
19
Net overhead ratio, based on pre-tax adjusted earnings ^{(2) (3)}
1.52
1.61
(9 )
Efficiency ratio ^{(2) (4)}
65.75
62.67
308
Efficiency ratio, based on pre-tax adjusted earnings ^{(2) (4)}
62.41
63.36
(95 )
Return on average assets 0.67
0.54
13
Return on average common equity 6.53
5.21
132
At end of period
Total assets $ 17,018,592
$ 15,914,804
7 %
Total loans, excluding loans held-for-sale, excluding covered loans 11,489,900
10,272,711
12
Total loans, including loans held-for-sale, excluding covered loans 12,059,885
10,485,747
15
Total deposits 13,847,965
12,306,008
13
Junior subordinated debentures 249,493
249,493
—
Total shareholders’ equity 1,761,300
1,528,187
15
Tangible common equity ratio (TCE) ⁽²⁾
7.4 % 7.4 % 0 bp
Tangible common equity ratio, assuming full conversion of preferred stock ⁽²⁾
8.4
7.7
70
Book value per common share ⁽²⁾
$ 37.25
$ 33.92
10 %
Tangible common book value per share ⁽²⁾
28.93
26.47
9
Market price per common share 37.57
25.81
46
Excluding covered loans:
Allowance for loan losses to total loans ⁽⁵⁾
0.98 % 1.15 % (17) bp
Allowance for credit losses to total loans ⁽⁵⁾
1.09
1.29
(20 )
Non-performing loans to total loans 1.03
1.30
(27 )



At end of period
Total assets	$	17,074,247		$	16,172,018		6	%
Total loans, excluding loans held-for-sale, excluding covered loans	11,900,312			10,717,384			11
Total loans, including loans held-for-sale, excluding covered loans	12,281,234			11,067,712			11
Total deposits	13,962,757			12,665,853			10
Total shareholders’ equity	1,825,688			1,687,921			8
Tangible common equity ratio (TCE) ⁽²⁾	7.7		%	7.5		%	20 bp
Tangible common equity ratio, assuming full conversion of preferred stock ⁽²⁾	8.8			8.6			20
Book value per common share ⁽²⁾	$	38.13		$	35.25		8	%
Tangible common book value per share ⁽²⁾	29.74			27.57			8
Market price per common share	37.04			35.79			3
Excluding covered loans:
Allowance for credit losses to total loans ⁽⁵⁾	1.06			1.16			(10) bp
Non-performing loans to total loans	1.08			1.06			2


(1)	Net revenue is net interest income plus non-interest income.


(2)	See following section titled, “Supplementary Financial Measures/Ratios” for additional information on this performance measure/ratio.


(3)	The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period’s total average assets. A lower ratio indicates a higher degree of efficiency.


(4)	The efficiency ratio is calculated by dividing total non-interest expense by tax-equivalent net revenues (less securities gains or losses). A lower ratio indicates more efficient revenue generation.


(5)	The allowance for credit losses includes both the allowance for loan losses and the allowance for lending-related commitments.


(6)	Pre-tax adjusted earnings excludes the provision for credit losses and certain significant items.

~~Table of Contents~~

Certain returns, yields, performance ratios, and quarterly growth rates are “annualized” in this presentation and throughout this report to represent an annual time period. This is done for analytical purposes to better discern for decision-making purposes underlying performance trends when compared to full-year or year-over-year amounts. For example, balance sheet growth rates are most often expressed in terms of an annual rate. As such, 5% growth during a quarter would represent an annualized growth rate of 20%.

Table of Contents

Supplemental Financial Measures/Ratios

The accounting and reporting policies of Wintrust conform to GAAP in the United States and prevailing practices in the banking industry. However, certain non-GAAP performance measures and ratios are used by management to evaluate and measure the Company’s performance. These include taxable-equivalent net interest income (including its individual components), net interest margin (including its individual components), the efficiency ratio, tangible common equity ratio, tangible common book value per share, return on average tangible common equity and pre-tax adjusted earnings. Management believes that these measures and ratios provide users of the Company’s financial information a more meaningful view of the performance of the interest-earning assets and interest-bearing liabilities and of the Company’s operating efficiency. Other financial holding companies may define or calculate these measures and ratios differently.

Management reviews yields on certain asset categories and the net interest margin of the Company and its banking subsidiaries on a fully taxable-equivalent (“FTE”) basis. In this non-GAAP presentation, net interest income is adjusted to reflect tax-exempt interest income on an equivalent before-tax basis. This measure ensures comparability of net interest income arising from both taxable and tax-exempt sources. Net interest income on a FTE basis is also used in the calculation of the Company’s efficiency ratio. The efficiency ratio, which is calculated by dividing non-interest expense by total taxable-equivalent net revenue (less securities gains or losses), measures how much it costs to produce one dollar of revenue. Securities gains or losses are excluded from this calculation to better match revenue from daily operations to operational expenses. Management considers the tangible common equity ratio and tangible book value per common share as useful measurements of the Company’s equity. The Company references the return on average tangible common equity as a measurement of profitability. Pre-tax adjusted earnings is a significant metric in assessing the Company’s operating performance. Pre-tax adjusted earnings is calculated by adjusting income before taxes to exclude the provision for credit losses and certain significant items.

The net overhead ratio and the efficiency ratio are primarily reviewed by the Company based on pre-tax adjusted earnings. The Company believes that these measures provide a more meaningful view of the Company’s operating efficiency and expense management. The net overhead ratio, based on pre-tax adjusted earnings, is calculated by netting total adjusted non-interest expense and total adjusted non-interest income, annualizing this amount, and dividing it by total average assets. Adjusted non-interest expense is calculated by subtracting OREO expenses, covered loan collection expense, defeasance cost, ~~and~~ seasonal payroll tax ~~fluctuation.~~fluctuation and fees to terminate repurchase agreements. Adjusted non-interest income is calculated by adding back the recourse obligation on loans previously sold and subtracting gains or adding back losses on FDIC indemnification asset amortization, foreign currency remeasurement, investment partnerships, bargain purchase, trading and available-for-sale securities activity.

The efficiency ratio, based on pre-tax adjusted earnings, is calculated by dividing adjusted non-interest expense by adjusted taxable-equivalent net revenue. Adjusted taxable-equivalent net revenue is comprised of fully taxable equivalent net interest income and adjusted non-interest income.

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A reconciliation of certain non-GAAP performance measures and ratios used by the Company to evaluate and measure the Company’s performance to the most directly comparable GAAP financial measures is shown below:


	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
(Dollars in thousands)	2012			2011			2012			2011			2013			2012
Calculation of Net Interest Margin and Efficiency Ratio
(A) Interest Income (GAAP)	$	158,201		$	154,951		$	470,378		$	448,176		$	152,313		$	156,486
Taxable-equivalent adjustment:
—Loans	148			100			417			326			150			134
—Liquidity management assets	352			313			1,014			904			343			329
—Other earning assets	1			6			7			11			1			3
Interest Income—FTE	$	158,702		$	155,370		$	471,816		$	449,417		$	152,807		$	156,952
(B) Interest Expense (GAAP)	25,626			36,541			83,638			111,446			21,600			30,591
Net interest income—FTE	133,076			118,829			388,178			337,971			131,207			126,361
(C) Net Interest Income (GAAP) (A minus B)	$	132,575		$	118,410		$	386,740		$	336,730		$	130,713		$	125,895
(D) Net interest margin (GAAP)	3.49		%	3.36		%	3.51		%	3.40		%	3.40		%	3.54		%
Net interest margin—FTE	3.50		%	3.37		%	3.52		%	3.41		%	3.41		%	3.55		%
(E) Efficiency ratio (GAAP)	63.83		%	57.34		%	65.92		%	62.84		%	63.95		%	68.42		%
Efficiency ratio—FTE	63.67		%	57.21		%	65.75		%	62.67		%	63.78		%	68.24		%
Efficiency ratio—Based on pre-tax adjusted earnings	63.48		%	63.69		%	62.41		%	63.36		%	63.46		%	62.17		%
(F) Net Overhead ratio (GAAP)	1.47		%	1.00		%	1.63		%	1.44		%	1.47		%	1.80		%
Net Overhead ratio—Based on pre-tax adjusted earnings	1.52		%	1.56		%	1.52		%	1.61		%	1.47		%	1.57		%
Calculation of Tangible Common Equity ratio (at period end)
Total shareholders’ equity	$	1,761,300		$	1,528,187								$	1,825,688		$	1,687,921
(G) Less: Preferred stock	(176,371		)	(49,736		)							(176,441		)	(176,302		)
Less: Intangible assets	(354,039		)	(324,782		)							(363,142		)	(329,396		)
(H) Total tangible common shareholders’ equity	$	1,230,890		$	1,153,669								$	1,286,105		$	1,182,223
Total assets	$	17,018,592		$	15,914,804								$	17,074,247		$	16,172,018
Less: Intangible assets	(354,039		)	(324,782		)							(363,142		)	(329,396		)
(I) Total tangible assets	$	16,664,553		$	15,590,022								$	16,711,105		$	15,842,622
Tangible common equity ratio (H/I)	7.4		%	7.4		%							7.7		%	7.5		%
Tangible common equity ratio, assuming full conversion of preferred stock ((H-G)/I)	8.4		%	7.7		%							8.8		%	8.6		%
Calculation of Pre-Tax Adjusted Earnings
Income before taxes	$	52,173		$	50,046		$	131,261		$	96,059		$	52,286		$	37,759
Add: Provision for credit losses	18,799			29,290			56,890			83,821			15,687			17,400
Add: OREO expenses, net	3,808			5,134			16,834			17,519
Add: OREO (income) expense, net													(1,620		)	7,178
Add: Recourse obligation on loans previously sold	—			266			—			(547		)	(755		)	36
Add: Covered loan collection expense	1,201			336			3,923			1,887			699			1,399
Add: Defeasance cost	—			—			996			—			—			848
Add: Seasonal payroll tax fluctuation	(1,121		)	(781		)	873			932			1,610			2,265
Add: FDIC indemnification asset amortization													1,208			379
Add: Loss on foreign currency remeasurement	825			—			825			—			22			—
Less: (Gain) loss from investment partnerships	(718		)	1,439			(2,178		)	1,323
Add: Fees for termination of repurchase agreements													—			—
Less: Gain from investment partnerships													(1,058		)	(1,395		)
Less: Gain on bargain purchases, net	(6,633		)	(27,390		)	(7,418		)	(37,974		)	—			(840		)
Less: Trading losses (gains), net	998			(591		)	1,780			(121		)	435			(146		)
Less: Gains on available-for-sale securities, net	(409		)	(225		)	(2,334		)	(1,483		)	(251		)	(816		)
Pre-tax adjusted earnings	$	68,923		$	57,524		$	201,452		$	161,416		$	68,263		$	64,067
Calculation of book value per share
Total shareholders’ equity	$	1,761,300		$	1,528,187								$	1,825,688		$	1,687,921
Less: Preferred stock	(176,371		)	(49,736		)							(176,441		)	(176,302		)
(J) Total common equity	$	1,584,929		$	1,478,451								$	1,649,247		$	1,511,619
Actual common shares outstanding	36,411			35,924									37,014			36,289
Add: TEU conversion shares	6,133			7,666									6,238			6,593
(K) Common shares used for book value calculation	42,544			43,590									43,252			42,882
Book value per share (J/K)	$	37.25		$	33.92								$	38.13		$	35.25
Tangible common book value per share (H/K)	$	28.93		$	26.47								$	29.74		$	27.57
Calculation of return on average common equity
(L) Net income applicable to common shares													$	29,436		$	21,964
Total average shareholders' equity													1,818,127			1,564,662
Less: Average preferred stock													(176,422		)	(67,852		)
(M) Total average common shareholders' equity													1,641,705			1,496,810
Less: Average intangible assets													(365,505		)	(327,195		)
(N) Total average tangible common shareholders’ equity													1,276,200			1,169,615
Return on average common equity, annualized (L/M)													7.27		%	5.90		%
Return on average tangible common equity, annualized (L/N)													9.35		%	7.55		%

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Critical Accounting Policies

The Company’s Consolidated Financial Statements are prepared in accordance with GAAP in the United States and prevailing practices of the banking industry. Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. 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 that changes in those estimates and assumptions could produce financial results that are materially different than originally reported. Estimates, assumptions and judgments are necessary when assets and liabilities are required to be recorded at fair value, when a decline in the value of an asset not carried on the financial statements at fair value warrants an impairment write-down or valuation reserve to be established, or when an asset or liability needs to be recorded contingent upon a future event, are based on information available as of the date of the financial statements; accordingly, as information changes, the financial statements could reflect different estimates and assumptions. 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 critical accounting policies to include 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 most subject to revision as new information becomes available. For a more detailed discussion on these critical accounting policies, see “Summary of Critical Accounting Policies” beginning on page 4547 of the Company’s ~~2011~~2012 Form 10-K.

Net Income

Net income for the quarter ended ~~September 30, 2012~~March 31, 2013 totaled $~~32.3~~32.1 million, an increase of $~~2.1~~8.8 million, or 7%38%, compared to the ~~third~~first quarter of ~~2011~~2012. On a per share basis, net income for the ~~third~~first quarter of ~~2012~~2013 totaled $~~0.66~~0.65 per diluted common share compared to $~~0.65~~0.50 in the ~~third~~first quarter of ~~2011~~2012.

The most significant factors impacting net income for the ~~third~~first quarter of ~~2012~~2013 as compared to the same period in the prior year include increased mortgage banking revenues primarily due to higher origination volumes as well as the general improvement in the overall economy (increased housing starts, home sales, and ~~better pricing in 2012, lower provision for credit losses as credit quality improved, increased interest income and fees on loans due to portfolio growth, along with~~median price of homes), reduced costs on interest-bearing deposits from a more favorable mix of the deposit funding ~~base.~~base, improvement in OREO expenses related to lower valuation adjustments on properties held and higher gains on properties sold, higher wealth management revenues partially benefited by an acquisition in March 2012 and growth within the existing business and lower provision for credit losses. These improvements were partially offset by an increase in salary expense caused by the addition of employees from acquisitions, lower interest income due to a decline in the yield on earning assets and ~~lower bargain purchase gains.~~a decrease in fees from covered call options.

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Net Interest Income

The primary source of the Company’s revenue is net interest income. Net interest income is the difference between interest income and fees on earnings assets, such as loans and securities, and interest expense on the liabilities to fund those assets, including interest bearing deposits and other borrowings. The amount of net interest income is affected by both changes in the level of interest rates and the amount and composition of earning assets and interest bearing liabilities. Net interest margin represents tax-equivalent net interest income as a percentage of the average earning assets during the period.

Quarter Ended ~~September 30, 2012~~March 31, 2013 compared to the Quarter Ended ~~September 30, 2011~~March 31, 2012

The following table presents a summary of the Company’s net interest income and related net interest margin, calculated on a fully taxable equivalent basis, for the ~~third~~first quarter of ~~2012~~2013 as compared to the ~~third~~first quarter of ~~2011~~2012 (linked quarters):


	For the three months ended September 30, 2012							For the three months ended September 30, 2011							For the three months ended March 31, 2013							For the three months ended March 31, 2012
(Dollars in thousands)	Average			Interest		Rate		Average			Interest		Rate		Average			Interest		Rate		Average			Interest		Rate
Liquidity management assets ^{(1) (2) (7)}	$	2,565,151		$	9,061	1.41	%	$	3,083,508		$	14,508	1.87	%	$	2,797,310		$	10,363	1.50	%	$	2,756,833		$	13,040	1.90	%
Other earning assets ^{(2) (3) (7)}	31,142			222		2.83		28,834			217		2.98		24,205			180		3.02		30,499			224		2.96
Loans, net of unearned income ^{(2) (4) (7)}	11,922,450			137,022		4.57		10,200,733			127,718		4.97		12,252,558			131,740		4.36		10,848,016			128,784		4.77
Covered loans	597,518			12,397		8.25		680,003			12,926		7.54		536,284			10,524		7.96		667,242			14,904		8.98
Total earning assets ⁽⁷⁾	$	15,116,261		$	158,702	4.18	%	$	13,993,078		$	155,369	4.41	%	$	15,610,357		$	152,807	3.97	%	$	14,302,590		$	156,952	4.41	%
Allowance for loan and covered loan losses	(138,740		)					(128,848		)					(125,221		)					(131,769		)
Cash and due from banks	185,435							140,010							217,345							143,869
Other assets	1,542,473							1,522,187							1,554,362							1,520,660
Total assets	$	16,705,429						$	15,526,427						$	17,256,843						$	15,835,350

Interest-bearing deposits	$	11,261,184		$	16,794	0.59	%	$	10,442,886		$	21,893	0.83	%	$	11,857,400		$	14,504	0.50	%	$	10,481,822		$	18,030	0.69	%
Federal Home Loan Bank advances	441,445			2,817		2.54		486,379			4,166		3.40		414,092			2,764		2.71		470,345			3,584		3.06
Notes payable and other borrowings	426,675			2,024		1.89		461,141			2,874		2.47		297,151			1,154		1.57		505,814			3,102		2.47
Secured borrowings—owed to securitization investors	176,904			795		1.79		600,000			3,003		1.99		—			—		—		514,923			2,549		1.99
Subordinated notes	15,000			67		1.75		40,000			168		1.65		15,000			59		1.56		35,000			169		1.91
Junior subordinated notes	249,493			3,129		4.91		249,493			4,437		6.96		249,493			3,119		5.00		249,493			3,157		5.01
Total interest-bearing liabilities	$	12,570,701		$	25,626	0.81	%	$	12,279,899		$	36,541	1.18	%	$	12,833,136		$	21,600	0.68	%	$	12,257,397		$	30,591	1.00	%
Non-interest bearing deposits	2,092,028							1,553,769							2,290,725							1,832,627
Other liabilities	305,960							185,042							314,855							180,664
Equity	1,736,740							1,507,717							1,818,127							1,564,662
Total liabilities and shareholders’ equity	$	16,705,429						$	15,526,427						$	17,256,843						$	15,835,350
Interest rate spread ^{(5) (7)}						3.37	%						3.23	%						3.29	%						3.41	%
Net free funds/contribution ⁽⁶⁾	$	2,545,560				0.13	%	$	1,713,179				0.14	%	$	2,777,221				0.12	%	$	2,045,193				0.14	%
Net interest income/Net interest margin⁽⁷⁾				$	133,076	3.50	%				$	118,828	3.37	%				$	131,207	3.41	%				$	126,361	3.55	%


(1)	Liquidity management assets include available-for-sale securities, interest earning deposits with banks, federal funds sold and securities purchased under resale agreements.


(2)	Interest income on tax-advantaged loans, trading securities and securities reflects a tax-equivalent adjustment based on a marginal federal corporate tax rate of 35%. The total adjustments for the three months ended ~~September 30, 2012~~March 31, 2013 and ~~2011~~2012 were ~~$501,000~~$494,000 and ~~$419,000,~~$466,000, respectively.


(3)	Other earning assets include brokerage customer receivables and trading account securities.


(4)	Loans, net of unearned income, include loans held-for-sale and non-accrual loans.


(5)	Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.


(6)	Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.


(7)	See “Supplemental Financial Measures/Ratios” for additional information on this performance ratio.

The net interest margin ~~for~~in the ~~third~~first quarter of ~~2012 was 3.50% compared to 3.37% in the third quarter of 2011. Average earning assets for the third quarter of 2012 increased~~2013 declined by ~~$1.1 billion~~14 basis points when compared to the ~~third~~first quarter of ~~2011.~~2012. This ~~was comprised of~~decrease resulted as the yield on total average ~~loan growth, excluding covered loans, of $1.7 billion~~earning assets declined 44 basis points and the contribution from net free funds declined by two basis points, partially offset by a 32 basis point decrease ~~of $518.4 million~~on the rate on total average interest-bearing liabilities. The decline in the yield on average ~~balance of liquidity management~~earning assets includes lower yields on our non-covered loan portfolio which was negatively impacted by competitive and ~~a decrease of $82.5 million in~~economic pricing pressures. Additionally, the ~~average balance of~~Company experienced lower yields on the covered ~~loans. The growth in average~~

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total loans, excluding covered loans, was comprised of an increase of $533.6 million in commercial loans, $407.8 million in mortgages held for sale, $260.0 million in commercial real-estate loans, $253.3 million in U.S.-originated commercial premium finance receivables, $246.8 million in Canadian-originated commercial premium finance receivables and $19.7 million in life premium finance receivables. The average earning asset growth of $1.1 billion in the third quarter of 2012 offset a 23 basis point decline in the yield on earning assets, creating an increase in total interest income of $3.3 million in the third quarter of 2012 compared to the third quarter of 2011. Funding for the average earning asset growth of $1.1 billion was provided by an increase in total average interest bearing liabilities of $290.8 million (an increase in interest-bearing deposits of $818.3 million offset by a decrease of $527.5 million of wholesale funding) and an increase of $832.3 million in the average balance of net free funds. A 37 basis point declineloan portfolio. However, decreases in the rate ~~paid~~ on ~~total~~average interest-bearing liabilities ~~more than~~primarily attributed to the positive repricing of retail interest-bearing deposits partially offset the ~~increase in average balance of net free funds, creating a $10.9 million reduction in interest expense in the third quarter of 2012 compared to the third quarter of 2011.~~lower loan portfolio yields.

Quarter Ended ~~September 30, 2012~~March 31, 2013 compared to the Quarter Ended ~~June 30,~~December 31, 2012

The following table presents a summary of the Company’s net interest income and related net interest margin, calculated on a fully taxable equivalent basis, for the ~~third~~first quarter of ~~2012~~2013 as compared to the ~~second~~fourth quarter of 2012 (sequential quarters):


	For the three months ended September 30, 2012							For the three months ended June 30, 2012							For the three months ended March 31, 2013							For the three months ended December 31, 2012
(Dollars in thousands)	Average			Interest		Rate		Average			Interest		Rate		Average			Interest		Rate		Average			Interest		Rate
Liquidity management assets ^{(1) (2) (7)}	$	2,565,151		$	9,061	1.41	%	$	2,781,730		$	11,693	1.69	%	$	2,797,310		$	10,363	1.50	%	$	2,949,034		$	9,844	1.33	%
Other earning assets ^{(2) (3) (7)}	31,142			222		2.83		30,761			233		3.04		24,205			180		3.02		27,482			203		2.95
Loans, net of unearned income ^{(2) (4) (7)}	11,922,450			137,022		4.57		11,300,395			130,293		4.64		12,252,558			131,740		4.36		12,001,433			134,347		4.45
Covered loans	597,518			12,397		8.25		659,783			13,943		8.50		536,284			10,524		7.96		626,449			12,758		8.10
Total earning assets ⁽⁷⁾	$	15,116,261		$	158,702	4.18	%	$	14,772,669		$	156,162	4.25	%	$	15,610,357		$	152,807	3.97	%	$	15,604,398		$	157,152	4.01	%
Allowance for loan and covered loan losses	(138,740		)					(134,077		)					(125,221		)					(135,156		)
Cash and due from banks	185,435							152,118							217,345							206,914
Other assets	1,542,473							1,528,497							1,554,362							1,572,494
Total assets	$	16,705,429						$	16,319,207						$	17,256,843						$	17,248,650

Interest-bearing deposits	$	11,261,184		$	16,794	0.59	%	$	10,815,018		$	17,273	0.64	%	$	11,857,400		$	14,504	0.50	%	$	11,709,058		$	16,209	0.55	%
Federal Home Loan Bank advances	441,445			2,817		2.54		514,513			2,867		2.24		414,092			2,764		2.71		414,289			2,835		2.72
Notes payable and other borrowings	426,675			2,024		1.89		422,146			2,274		2.17		297,151			1,154		1.57		397,807			1,565		1.57
Secured borrowings—owed to securitization investors	176,904			795		1.79		407,259			1,743		1.72
Subordinated notes	15,000			67		1.75		23,791			126		2.10		15,000			59		1.56		15,000			66		1.72
Junior subordinated notes	249,493			3,129		4.91		249,493			3,138		4.97		249,493			3,119		5.00		249,493			3,192		5.01
Total interest-bearing liabilities	$	12,570,701		$	25,626	0.81	%	$	12,432,220		$	27,421	0.89	%	$	12,833,136		$	21,600	0.68	%	$	12,785,647		$	23,867	0.74	%
Non-interest bearing deposits	2,092,028							1,993,880							2,290,725							2,314,935
Other liabilities	305,960							197,667							314,855							361,244
Equity	1,736,740							1,695,440							1,818,127							1,786,824
Total liabilities and shareholders’ equity	$	16,705,429						$	16,319,207						$	17,256,843						$	17,248,650
Interest rate spread ^{(5) (7)}						3.37	%						3.36	%						3.29	%						3.27	%
Net free funds/contribution ⁽⁶⁾	$	2,545,560				0.13	%	$	2,340,449				0.15	%	$	2,777,221				0.12	%	$	2,818,751				0.13	%
Net interest income/Net interest margin ⁽⁷⁾				$	133,076	3.50	%				$	128,741	3.51	%				$	131,207	3.41	%				$	133,285	3.40	%


(1)	Liquidity management assets include available-for-sale securities, interest earning deposits with banks, federal funds sold and securities purchased under resale agreements.


(2)	Interest income on tax-advantaged loans, trading securities and securities reflects a tax-equivalent adjustment based on a marginal federal corporate tax rate of 35%. The total adjustments for the three months ended ~~September 30, 2012~~March 31, 2013 and ~~June 30,~~December 31, 2012 were ~~$501,000~~$494,000 and ~~$471,000,~~$509,000, respectively.


(3)	Other earning assets include brokerage customer receivables and trading account securities.


(4)	Loans, net of unearned income, include loans held-for-sale and non-accrual loans.


(5)	Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.


(6)	Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.


(7)	See “Supplemental Financial Measures/Ratios” for additional information on this performance ratio.

The net interest margin in the first quarter of 2013 increased by one basis point when compared to the fourth quarter of 2012. This increase resulted from a six basis point decrease in the rate on total average interest-bearing liabilities which was partially offset by a four basis point decline in the yield on total average earning assets and a one basis point decline from the contribution of net free funds.

The contribution from re-pricing retail deposits and maturing wholesale funding has diminished when compared to previous quarters. Pressure on the net interest margin will be applied more from the pricing/re-pricing of loan volumes as the low rate environment prohibits further declines in interest-bearing deposits of the same magnitude.

7065

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The net interest margin decreased one basis point in the third quarter of 2012 compared to the second quarter of 2012. Average earning assets for the third quarter of 2012 increased by $343.6 million compared to the second quarter of 2012. This was comprised of average loan growth, excluding covered loans, of $622.1 million partially offset by a decrease of $216.6 million in the average balance of liquidity management assets and a decrease of $62.3 million in the average balance of covered loans. The growth in average total loans, excluding covered loans, included an increase of $203.2 million in Canadian-originated commercial premium finance receivables, $134.9 million in U.S.-originated commercial premium finance receivables, $123.8 million in mortgages held for sale, $111.7 million in commercial loans and $48.5 million in commercial real-estate loans. The earning asset growth of $343.6 million in the third quarter of 2012 offset a seven basis point decline in the yield on earning assets, creating an increase in total interest income of $2.5 million in the third quarter of 2012 compared to the second quarter of 2012. Funding for the average earning asset growth of $343.6 million was provided by an increase in total average interest bearing liabilities of $138.5 million (an increase in interest-bearing deposits of $446.2 million partially offset by a decrease of $307.6 million of wholesale funding) and an increase of $205.1 million in the average balance of net free funds. An eight basis point decline in the rate paid on total interest-bearing liabilities more than offset the increase in average balance, creating a $1.8 million reduction in interest expense in the third quarter of 2012 compared to the second quarter of 2012.

~~Nine months ended September 30, 2012~~ ~~compared to the~~ ~~nine months ended September 30, 2011~~

The following table presents a summary of the Company’s net interest income and related net interest margin, calculated on a fully taxable equivalent basis, for the first nine months of 2012 as compared to the first nine months of 2011:

For the nine months ended September 30, 2012 For the nine months ended September 30, 2011
(Dollars in thousands) Average Interest Rate Average Interest Rate
Liquidity management assets ^{(1) (2) (7)}
$ 2,700,742
$ 33,794
1.67 % $ 2,768,817
$ 39,060
1.89 %
Other earning assets ^{(2) (3) (7)}
30,802
679
2.94
28,483
606
2.84
Loans, net of unearned income ^{(2) (4) (7)}
11,359,017
396,099
4.66
9,971,231
381,352
5.11
Covered loans 641,354
41,244
8.59
476,199
28,398
7.97
Total earning assets ⁽⁷⁾
$ 14,731,915
$ 471,816
4.28 % $ 13,244,730
$ 449,416
4.54 %
Allowance for loan and covered loan losses (134,876 ) (124,369 )
Cash and due from banks 160,565
141,611

Other assets 1,530,587
1,287,724

Total assets $ 16,288,191
$ 14,549,696

Interest-bearing deposits $ 10,854,166
$ 52,096
0.64 % $ 9,826,982
$ 68,253
0.93 %
Federal Home Loan Bank advances 475,310
9,269
2.60
441,558
12,134
3.67
Notes payable and other borrowings 451,455
7,400
2.19
355,989
8,219
1.29
Secured borrowings—owed to securitization investors 365,670
5,087
1.86
600,000
9,037
2.01
Subordinated notes 24,562
362
1.94
45,110
574
1.68
Junior subordinated notes 249,493
9,424
4.96
249,493
13,229
6.99
Total interest-bearing liabilities $ 12,420,656
$ 83,638
0.90 % $ 11,519,132
$ 111,446
1.29 %
Non-interest bearing liabilities 1,973,280
1,389,307

Other liabilities 228,381
172,449

Equity 1,665,874
1,468,808

Total liabilities and shareholders’ equity $ 16,288,191
$ 14,549,696

Interest rate spread ^{(5) (7)}
3.38 % 3.25 %
Net free funds/contribution ⁽⁶⁾
$ 2,311,259
0.14 % $ 1,725,598
0.16 %
Net interest income/Net interest margin ⁽⁷⁾
$ 388,178
3.52 % $ 337,970
3.41 %


~~(1)~~	~~Liquidity management assets include available-for-sale securities, interest earning deposits with banks, federal funds sold and securities purchased under resale agreements.~~


~~(2)~~	~~Interest income on tax-advantaged loans, trading securities and securities reflects a tax-equivalent adjustment based on a marginal federal corporate tax rate of 35%. The total adjustments for the~~ ~~nine months ended September 30, 2012~~ ~~and~~ ~~2011~~ ~~were $1.4 million and $1.2 million, respectively.~~


~~(3)~~	~~Other earning assets include brokerage customer receivables and trading account securities.~~


~~(4)~~	~~Loans, net of unearned income, include loans held-for-sale and non-accrual loans.~~


~~(5)~~	~~Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.~~


~~(6)~~	Net free funds are the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.


~~(7)~~	~~See “Supplemental Financial Measures/Ratios” for additional information on this performance ratio.~~

~~Table of Contents~~

The net interest margin for the first nine months of 2012 was 3.52% compared to 3.41% in the first nine months of 2011. Average earnings assets for the first nine months of 2012 totaled $14.7 billion, an increase of $1.5 billion compared to the prior year period. This average earning asset growth is primarily a result of the $1.4 billion increase in average loans, excluding covered loans and a $165.2 million of average covered loan growth from the FDIC-assisted bank acquisitions partially offset by a $65.8 million decrease in average balance of liquidity management and other earning assets. The majority of the increase in average loans was comprised of increases of $529.8 million in commercial loans, $287.5 million in residential real estate loans, $223.3 million in commercial real estate loans, $200.1 million in U.S.-originated commercial premium finance receivables, $97.3 million in Canadian-originated commercial premium finance receivables and $82.8 million in life insurance premium finance receivables, partially offset by a $33.1 million decrease in home equity and all other loans. The average earning asset growth of $1.5 billion in the first nine months of 2012 offset a 26 basis point decline in the yield on earning assets, creating an increase in total interest income of $22.4 million in the first nine months of 2012 compared to the first nine months of 2011. This average earning asset growth was primarily funded by a $1.0 billion increase in the average balances of interest-bearing deposits and an increase in the average balance of net free funds of $585.6 million. A 39 basis point decline in the rate paid on total interest-bearing liabilities more than offset the increase in average balance, creating a $27.8 million reduction in interest expense in the first nine months of 2012 compared to the first nine months of 2011.

Analysis of Changes in Tax-equivalent Net Interest Income

The following table presents an analysis of the changes in the Company’s tax-equivalent net interest income comparing the three month periods ended ~~September 30,~~March 31, 2013 and December 31, 2012 and ~~June 30, 2012~~, the ~~nine~~three months ended ~~September 30, 2012~~March 31, 2013 and ~~September 30, 2011~~ ~~and the three month periods ended~~ ~~September 30,~~March 31, 2012 ~~and~~ ~~September 30, 2011~~. The reconciliations set forth the changes in the tax-equivalent net interest income as a result of changes in volumes, changes in rates and differing number of days in each period:


	Third Quarter of 2012 Compared to Second Quarter of 2012			First Nine Months of 2012 Compared to First Nine Months of 2011			Third Quarter of 2012 Compared to Third Quarter of 2011			First Quarter of 2013 Compared to Fourth Quarter of 2012			First Quarter of 2013 Compared to First Quarter of 2012
(Dollars in thousands)	Third Quarter of 2012 Compared to Second Quarter of 2012						Third Quarter of 2012 Compared to Third Quarter of 2011			First Quarter of 2013 Compared to Fourth Quarter of 2012			First Quarter of 2013 Compared to First Quarter of 2012
Tax-equivalent net interest income for comparative period	$	128,741			$	337,970		$	118,828		$	133,285		$	126,361
Change due to mix and growth of earning assets and interest-bearing liabilities (volume)	6,448			55,418			18,553			1,152			16,919
Change due to interest rate fluctuations (rate)	(3,513		)	(6,443		)	(4,305		)	(268		)	(10,669		)
Change due to number of days in each period	1,400			1,233			—			(2,962		)	(1,404		)
Tax-equivalent net interest income for the period ended September 30, 2012	$	133,076		$	388,178		$	133,076
Tax-equivalent net interest income for the period ended March 31, 2013										$	131,207		$	131,207

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Non-interest Income

For the ~~third~~first quarter of ~~2012~~2013, non-interest income totaled $~~62.9~~57.4 million, ~~a decrease~~an increase of $~~4.3~~10.4 million, or 6%22%, compared to the ~~third~~first quarter of ~~2011~~2012. ~~On a year-to-date basis, non-interest income for the first nine months of 2012 totaled~~ ~~$160.9 million~~ ~~and increased~~ ~~$16.1 million, or~~ ~~11%, compared to the same period in 2011.~~

The following table presents non-interest income by category for the periods presented:

Three months ended September 30, $ %
(Dollars in thousands) 2012 2011 Change Change
Brokerage $ 6,355
$ 6,108
$ 247
4
Trust and asset management 6,897
5,886
1,011
17
Total wealth management 13,252
11,994
1,258
10
Mortgage banking 31,127
14,469
16,658
115
Service charges on deposit accounts 4,235
4,085
150
4
Gains on available-for-sale securities, net 409
225
184
82
Gain on bargain purchases, net 6,633
27,390
(20,757 ) (76 )
Trading (losses) gains, net (998 ) 591
(1,589 ) NM
Other:
Fees from covered call options 2,083
3,436
(1,353 ) (39 )
Bank Owned Life Insurance 810
351
459
131
Administrative services 825
784
41
5
Miscellaneous 4,569
3,922
647
16
Total Other 8,287
8,493
(206 ) (2 )
Total Non-Interest Income $ 62,945
$ 67,247
$ (4,302 ) (6 )

~~NM—Not Meaningful~~


	Nine months ended September 30,					$			%		Three months ended March 31,					$			%
(Dollars in thousands)	2012			2011		Change			Change		2013			2012		Change			Change
Brokerage	$	19,073		$	18,641	$	432		2		$	7,267		$	6,322	$	945		15
Trust and asset management	19,973			14,190		5,783			41		7,561			6,079		1,482			24
Total wealth management	39,046			32,831		6,215			19		14,828			12,401		2,427			20
Mortgage banking	75,268			38,917		36,351			93		30,145			18,534		11,611			63
Service charges on deposit accounts	12,437			10,990		1,447			13		4,793			4,208		585			14
Gains on available-for-sale securities, net	2,334			1,483		851			57		251			816		(565		)	(69	)
Fees from covered call options											1,639			3,123		(1,484		)	(48	)
Gain on bargain purchases, net	7,418			37,974		(30,556		)	(80	)	—			840		(840		)	(100	)
Trading (losses) gains, net	(1,780		)	121		(1,901		)	NM		(435		)	146		(581		)	NM
Other:
Fees from covered call options	8,320			8,193		127			2
Interest rate swap fees											2,270			2,511		(241		)	(10	)
Bank Owned Life Insurance	2,234			1,888		346			18		846			919		(73		)	(8	)
Administrative services	2,414			2,282		132			6		738			766		(28		)	(4	)
Miscellaneous	13,212			10,107		3,105			31		2,304			2,759		(455		)	(16	)
Total Other	26,180			22,470		3,710			17		6,158			6,955		(797		)	(11	)
Total Non-Interest Income	$	160,903		$	144,786	$	16,117		11		$	57,379		$	47,023	$	10,356		22

NM—Not Meaningful

The significant changes in non-interest income for the ~~three and nine~~ ~~months~~quarter ended ~~September 30, 2012~~March 31, 2013 compared to ~~same periods in~~ the ~~prior year~~quarter ended March 31, 2012 are discussed below.

Wealth management revenue totaled $~~13.3~~14.8 million in the ~~third~~first quarter of ~~2012~~2013 ~~and~~compared to $~~12.0~~12.4 million in the ~~third~~first quarter of ~~2011~~2012, an increase of ~~10%~~20%. The increase in ~~third quarter of 2012~~ ~~as compared to the~~ ~~third quarter of 2011~~ is mostly attributable to additional revenues resulting from the acquisition of a community bank trust operation on March 30, 2012 as well as continued

~~Table of Contents~~

growth within the existing business. ~~On a year-to-date basis, wealth management revenues totaled~~ ~~$39.0 million~~ ~~for the~~ ~~nine months ended September 30, 2012, compared to~~ ~~$32.8 million~~ ~~in the~~ ~~nine months ended September 30, 2011. The increase in the current year-to-date period is a result of both the community bank trust operation acquisition and the acquisition of Great Lakes Advisors in the third quarter of 2011.~~ Wealth management revenue is comprised of the trust and asset management revenue of ~~CTC~~The Chicago Trust Company and Great Lakes Advisors and the brokerage commissions, money managed fees and insurance product commissions at Wayne Hummer Investments.

For the quarter ended ~~September 30, 2012~~March 31, 2013, mortgage banking revenue totaled $~~31.1~~30.1 million, an increase of $~~16.7~~11.6 million when compared to the ~~third~~first quarter of ~~2011. For the~~ ~~nine months ended September 30,~~ 2012~~, mortgage banking revenue totaled~~ ~~$75.3 million~~ ~~as compared to~~ ~~$38.9 million~~ ~~for the~~ ~~nine months ended September 30, 2011~~. The increase in mortgage banking revenue in the ~~three and nine~~ ~~month periods ended~~ ~~September 30, 2012~~first quarter of 2013 as compared to the ~~prior year periods~~first quarter of 2012 resulted primarily from ~~an increase in gain on sales of loans, which were driven by~~ higher origination volumes due to ~~a favorable mortgage interest rate environment in~~the continuation of the late 2012 ~~and better pricing~~robust refinance market into 2013 as well as the general improvement in the overall economy (increased housing starts, home sales and median price of homes). Mortgage loan originations were $974.4 million in the first quarter of 2013 as compared to $714.7 million in the prior year quarter. In addition to higher origination volume, improved pricing, secondary market gains and a positive adjustment to the recourse reserve contributed to the current ~~year.~~period increase in mortgage banking revenue. Mortgage banking revenue includes revenue from activities related to originating, selling and servicing residential ~~real estate~~real-estate loans for the secondary market.

~~A summary of the mortgage banking revenue components is shown below:~~

~~Mortgage banking revenue~~

Three months ended September 30, Nine months ended September 30,
(Dollars in thousands) 2012 2011 2012 2011
Mortgage loans originated and sold $ 1,119,762
$ 641,742
$ 2,688,002
$ 1,662,368
Mortgage loans serviced for others 997,235
952,257

Fair value of mortgage servicing rights (MSRs) 6,276
6,740

MSRs as a percentage of loans serviced 0.63 % 0.71 %

~~Gain on bargain purchases totaled~~ ~~$7.4 million~~ ~~for the first nine months of 2012, a decrease of~~ ~~$30.6 million~~ ~~as compared to~~ ~~$38.0 million~~ recorded in the first nine months of 2011. The gain on bargain purchases in 2012 relates primarily to the FDIC-assisted acquisitions of First United Bank in the third quarter of 2012 and Charter National in the first quarter of 2012. The gain on bargain purchases in 2011 relates primarily to the FDIC-assisted acquisition of First Chicago in the third quarter of 2011 as well as the FDIC-assisted acquisitions of TBOC and CFBC in the first quarter of 2011. See Note 3 to the financial statements under Item 1 of this report for details of FDIC-assisted acquisitions.

~~The Company recognized~~ ~~$998,000~~ ~~in trading losses in the~~ ~~third quarter of 2012~~ ~~compared to trading gains of~~ ~~$591,000~~ ~~in the~~ ~~third quarter of 2011. On a year-to-date basis, trading losses totaled~~ ~~$1.8 million~~ ~~in the first nine months of 2012 as compared to trading gains of~~ ~~$121,000~~ in the first nine months of 2011. The increase in trading losses in the three month and year-to-date periods has resulted primarily from fair value adjustments related to interest rate derivatives not designated as hedges, primarily interest rate cap instruments that the Company uses to manage interest rate risk associated with rising rates on various fixed rate, longer term earning assets.

~~Other non-interest income for the~~ ~~third quarter of 2012~~ ~~totaled~~ ~~$8.3 million, a decrease of~~ ~~$206,000~~ ~~from the~~ ~~third quarter of 2011. On a year-to-date basis, other non-interest income totaled~~ ~~$26.2 million~~ ~~in 2012, an increase of~~ ~~$3.7 million~~ ~~as compared to~~ ~~$22.5 million~~ ~~recorded in the first nine months of 2011. Fees from certain covered call option transactions decreased in the three months ended~~ ~~September 30, 2012~~ by ~~$1.4 million~~ ~~and increased in the nine months ended~~ ~~September 30, 2012~~ by ~~$127,000~~, respectively as compared to the same periods in the prior year. Historically, compression in the net interest margin was effectively offset by the Company’s covered call strategy. Miscellaneous income increased in the third quarter of 2012 compared to the prior year quarter as a result of an increase in gains from partnership investments of $2.2 million partially offset by an $825,000 foreign currency remeasurement loss recorded in the current quarter at the Company’s Canadian subsidiary, as well as a $439,000 decrease in ATM and debit card fees and a $365,000 decrease in swap fee revenue. On a year-to-date basis, miscellaneous income increased in the first nine months of 2012 as compared to the first nine months of 2011. The increase is primarily attributable to higher gains on investment partnerships and increased swap fee revenues. The swap fee revenue recognized on this customer-based activity is a function of the pace of organic loan growth, the shape of the LIBOR curve and the customers’ expectations of interest rates.

7467

Table of Contents

A summary of the mortgage banking components is shown below:



	Three months ended March 31,
(Dollars in thousands)	2013			2012
Mortgage loans originated and sold	$	974,432		$	714,655
Mortgage loans serviced for others	1,016,191			963,514
Fair value of mortgage servicing rights (MSRs)	7,344			7,201
MSRs as a percentage of loans serviced	0.72		%	0.75		%

Fees from covered call option transactions decreased by $1.5 million in the first quarter of 2013 as compared to the same period in the prior year. Fees from covered call options decreased primarily as a result of fewer option transactions entered in the first quarter of 2013 compared to the first quarter of 2012 resulting in lower premiums received by the Company. The Company has typically written call options with terms of less than three months against certain U.S. Treasury and agency securities held in its portfolio for liquidity and other purposes. Historically, the Company has effectively entered into these transactions with the goal of enhancing its overall return on its investment portfolio by using fees generated from these options to compensate for net interest margin compression. These option transactions are designed to increase the total return associated with holding certain investment securities that do not qualify as hedges pursuant to accounting guidance.

Other non-interest income for the first quarter of 2013 totaled $6.2 million, a decrease of $797,000 compared to the first quarter of 2012. Miscellaneous income decreased in the first quarter of 2013 compared to the prior year quarter primarily as a result of increased FDIC indemnification asset amortization, primarily related to additional clawback expense related to a covered OREO sale during the quarter.

Table of Contents

Non-interest Expense

Non-interest expense for the ~~third~~first quarter of ~~2012~~2013 totaled $~~124.5~~120.1 million and increased approximately $~~18.2~~2.4 million, or 172%, compared to the ~~third~~first quarter of ~~2011~~2012. ~~On a year-to-date basis, non-interest expense for the first nine months of 2012 totaled~~ ~~$359.5 million~~ ~~and increased~~ ~~$57.9 million, or~~ 19~~%, compared to the same period in 2011.~~

The following table presents non-interest expense by category for the periods presented:


	Three months ended September 30,				$			%		Three months ended March 31,					$			%
(Dollars in thousands)	2012		2011		Change			Change		2013			2012		Change			Change
Salaries and employee benefits:
Salaries	$	40,173	$	36,633	$	3,540		10		$	41,831		$	37,933	$	3,898		10
Commissions and bonus	24,041		14,984		9,057			60		21,276			16,802		4,474			27
Benefits	11,066		10,246		820			8		14,406			14,295		111			1
Total salaries and employee benefits	75,280		61,863		13,417			22		77,513			69,030		8,483			12
Equipment	5,888		4,501		1,387			31		6,184			5,400		784			15
Occupancy, net	8,024		7,512		512			7		8,853			8,062		791			10
Data processing	4,103		3,836		267			7		4,599			3,618		981			27
Advertising and marketing	2,528		2,119		409			19		2,040			2,006		34			2
Professional fees	4,653		5,085		(432		)	(8	)	3,221			3,604		(383		)	(11	)
Amortization of other intangible assets	1,078		970		108			11		1,120			1,049		71			7
FDIC insurance	3,549		3,100		449			14		3,444			3,357		87			3
OREO expenses, net	3,808		5,134		(1,326		)	(26	)
OREO (income) expense, net										(1,620		)	7,178		(8,798		)	NM
Other:
Commissions—3rd party brokers	1,106		936		170			18		1,233			1,021		212			21
Postage	1,120		1,102		18			2		1,249			1,423		(174		)	(12	)
Stationery and supplies	954		904		50			6		934			919		15			2
Miscellaneous	12,457		9,259		3,198			35		11,349			11,092		257			2
Total other	15,637		12,201		3,436			28		14,765			14,455		310			2
Total Non-Interest Expense	$	124,548	$	106,321	$	18,227		17		$	120,119		$	117,759	$	2,360		2

NM - Not Meaningful

Nine months ended September 30, $ %
(Dollars in thousands) 2012 2011 Change Change
Salaries and employee benefits:
Salaries $ 115,343
$ 101,776
$ 13,567
13
Commissions and bonus 60,231
36,458
23,773
65
Benefits 36,875
32,807
4,068
12
Total salaries and employee benefits 212,449
171,041
41,408
24
Equipment 16,754
13,174
3,580
27
Occupancy, net 23,814
20,789
3,025
15
Data processing 11,561
10,506
1,055
10
Advertising and marketing 6,713
5,173
1,540
30
Professional fees 12,104
13,164
(1,060 ) (8 )
Amortization of other intangible assets 3,216
2,363
853
36
FDIC insurance 10,383
10,899
(516 ) (5 )
OREO expenses, net 16,834
17,519
(685 ) (4 )
Other:
Commissions—3rd party brokers 3,196
2,957
239
8
Postage 3,873
3,350
523
16
Stationery and supplies 2,908
2,632
276
10
Miscellaneous 35,687
28,069
7,618
27
Total other 45,664
37,008
8,656
23
Total Non-Interest Expense $ 359,492
$ 301,636
$ 57,856
19

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The significant changes in non-interest expense for the ~~three and nine~~ ~~months~~quarter ended ~~September 30, 2012~~March 31, 2013 compared to ~~same periods in~~ the ~~prior year~~quarter ended March 31, 2012 are discussed below.

~~Salaries and employee benefits comprised 60% of total non-interest expense in the~~ ~~third quarter of 2012~~ ~~as compared to 58% in the~~ ~~third quarter of 2011~~. Salaries and employee benefits expense increased $~~13.4~~8.5 million, or 2212%%, in the ~~third~~first quarter of ~~2012~~2013 compared to the ~~third~~first quarter of ~~2011~~2012 primarily as a result of a $~~3.5~~4.5 million increase in bonus and commissions primarily attributable to the increase in variable pay based revenue and the Company's long-term incentive program, a $3.9 million increase in salaries caused by the addition of employees from the various acquisitions and larger staffing as the Company grows and a $~~9.1 million~~111,000 increase in ~~bonus and commissions primarily attributable to the increase in variable pay based revenue and the Company’s long-term incentive program and a~~ ~~$820,000~~ ~~increase from~~ employee ~~benefits (primarily health plan and payroll taxes related). On a year-to-date basis, salaries and employee benefits expense increased~~ benefits.~~$41.4 million, or~~ 24~~%, in the first nine months of 2012 compared to the first nine months of 2011 primarily as a result of a~~ ~~$13.6 million~~ ~~increase in salaries caused by the addition of employees from the various acquisitions and larger staffing as the Company grows, a~~ ~~$23.8 million~~ increase in bonus and commissions primarily attributable to the increase in variable pay based revenue and the Company’s long-term incentive program and a $4.0 million increase from employee benefits (primarily health plan and payroll taxes related).

Equipment expense totaled $~~5.9~~6.2 million for the ~~third~~first quarter of ~~2012~~2013, an increase of $~~1.4 million~~784,000 compared to the ~~third~~first quarter of ~~2011~~2012. ~~On a year-to-date basis, equipment expense totaled~~ ~~$16.8 million~~ ~~for the first nine months of 2012 as compared to~~ ~~$13.2 million~~ ~~for the first nine months of 2011.~~ The increase ~~in the current year periods~~ is primarily ~~the result of~~related to additional equipment depreciation as a result of acquisitions as well as increased software license fees. Equipment expense includes depreciation on equipment, maintenance and ~~repair costs associated with the increasing number of facilities due to acquisition activity. In addition, equipment expense also includes~~repairs, equipment rental and software license fees.

Occupancy expense for the ~~third~~first quarter of ~~2012~~2013 was $~~8.0~~8.9 million, an increase of $~~512,000~~791,000, or 710%%, compared to the same period in ~~2011. On a year-to-date basis, occupancy expense totaled~~ ~~$23.8 million~~2012 ~~for the first nine months of 2012 as compared to~~ ~~$20.8 million~~ ~~for the first nine months of 2011.~~. The increase ~~in the current year periods~~ is primarily the result of ~~rent expense on additional leased premises and~~ depreciation and ~~property taxes~~maintenance and repairs on owned locations which were obtained in the ~~FDIC-assisted~~Company's acquisitions. Occupancy expense includes depreciation on premises, real estate taxes, utilities and maintenance of premises, as well as net rent expense for leased premises.

Data processing expenses increased $981,000 in the first quarter of 2013 totaling $4.6 million compared to $3.6 million recorded in the first quarter of 2012. The amount of data processing expenses incurred fluctuates based on the overall growth of loan and deposit accounts as well as additional expenses recorded related to bank acquisition transactions. Data processing expenses increased in the current quarter compared to the previous year quarter primarily due to growth in the Company.

OREO ~~expense~~income totaled $~~3.8~~1.6 million in the ~~third~~first quarter of ~~2012, a decrease of~~ ~~$1.3 million~~2013 compared to ~~$5.1 million~~ ~~in the~~ ~~third quarter of 2011. On a year-to-date basis,~~ OREO expense ~~totaled~~ ~~$16.8 million~~ ~~for the first nine months of 2012, a decrease~~ of $~~685,000~~ ~~as compared to~~ ~~$17.5~~7.2 million recorded in the ~~first nine months of 2011. The decrease in total OREO expenses in the~~ ~~third~~first quarter of 2012. The OREO income recorded in the current quarter is primarily related to ~~lower valuations~~a $3.4 million gain recognized on a

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covered OREO property sale as well as fewer negative valuation adjustments ofon properties held in ~~OREO in the~~ ~~third quarter of 2012~~ ~~as compared to the~~ ~~third quarter of 2011~~. On a year-to-date basis, OREO expense decreased in the first nine months of 2012 as compared to the first nine months of 2011 as a result of lower losses recognized on the sale of OREO properties in the current year.OREO. OREO costs include all costs related to obtaining, maintaining and selling other real estate owned properties.

Miscellaneous expenses in the ~~third~~first quarter of ~~2012~~2013 increased $~~3.2 million~~257,000, or 352%%, compared to the same period in the prior year. ~~On a year-to-date basis, miscellaneous expenses increased by~~ ~~$7.6 million~~ to ~~$35.7 million~~ ~~for the first nine months of 2012 as compared to~~ ~~$28.1 million~~ in the prior year period. The increase in the current year periods is primarily attributable to increased expenses related to covered loans and general growth in the Company’s business. Additionally, the current year-to-date period included $1.0 million of defeasance costs incurred by the Company to repurchase a portion of secured borrowings owed to securitization investors held by third parties in the first two quarters of 2012. Miscellaneous expense includes ATM expenses, correspondent bank charges, ~~directors’~~directors' fees, telephone, travel and entertainment, corporate insurance, dues and subscriptions, problem loan expenses and lending origination costs that are not deferred.

As previously discussed in this report, the accounting and reporting policies of Wintrust conform to GAAP in the United States and prevailing practices in the banking industry. However, certain non-GAAP performance measures and ratios are used by management to evaluate and measure the Company’s performance. One significant metric that is used by the Company in assessing operating performance is pre-tax adjusted earnings. Pre-tax adjusted earnings is calculated by adjusting income before taxes to exclude the provision for credit losses and certain significant items.

Two ratios the Company uses to measure expense management are the efficiency ratio and the net overhead ratio. The efficiency ratio, which is calculated by dividing non-interest expense by total taxable-equivalent net revenue (less securities gains and losses), measures how much it costs to produce one dollar of revenue. The net overhead ratio is calculated by netting total non-interest expense and total non-interest income and dividing by total average assets.

~~The efficiency ratio and net overhead ratio are primarily reviewed by the Company based on pre-tax adjusted earnings. The~~ Company believes that these measures provide a more meaningful view of the ~~Company’s~~Company's operating efficiency and expense management. The efficiency ratio, based on pre-tax adjusted earnings, was ~~63.48~~63.46%% for the ~~third~~first quarter of ~~2012~~2013, compared to ~~63.69~~62.17%% in the ~~third~~first quarter of ~~2011~~2012. The net overhead ratio, based on pre-tax adjusted earnings, was ~~1.52~~1.47%~~% in~~ for the ~~third~~first quarter

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~~of 2012~~2013, compared to ~~1.56~~1.57%% in the ~~third~~first quarter of ~~2011~~2012. ~~On a year-to-date basis, the efficiency ratio, based~~See "Supplemental Financial Measures/Ratios" section earlier in this document for further detail on ~~pre-tax adjusted earnings, was~~ ~~62.41% for the first nine months of 2012, compared to~~ ~~63.36% in the first nine months of 2011. The net overhead ratio, based on pre-tax adjusted earnings, was~~ ~~1.52% for the first nine months of 2012, compared to~~ ~~1.61% for the first nine months of 2011. These lower ratios indicate a higher degree of efficiency in the three and nine month periods ended~~ ~~September 30, 2012~~ ~~as compared to the prior year periods as the Company has leveraged its existing infrastructure.~~these non-GAAP measures/ratios.

Income Taxes

The Company recorded income tax expense of ~~$19.9~~$20.2 million for the three months ended ~~September 30, 2012~~March 31, 2013, compared to ~~$19.8~~$14.5 million for same period of ~~2011. Income tax expense was $50.2 million and $37.7 million for the nine months ended~~ ~~September 30,~~ 2012 ~~and~~ ~~2011, respectively.~~. The effective tax rates were ~~38.1%~~38.7% and ~~39.7%~~38.5% for the ~~third~~first quarters of ~~2012~~2013 and ~~2011, respectively, and 38.2% and 39.3% for the~~ 2012 ~~and 2011 year-to-date periods,~~, respectively. The lower effective tax rates in the 2012 periods compared to the 2011 periods reflect higher levels of tax credits in 2012 and higher levels of state income taxes in 2011, due in part to changes in various state tax laws.

Operating Segment Results

The Company’s operations consist of three primary segments: community banking, specialty finance and wealth management. The Company’s profitability is primarily dependent on the net interest income, provision for credit losses, non-interest income and operating expenses of its community banking segment. The net interest income of the community banking segment includes interest income and related interest costs from portfolio loans that were purchased from the specialty finance segment. For purposes of internal segment profitability analysis, management reviews the results of its specialty finance segment as if all loans originated and sold to the community banking segment were retained within that segment’s operations.

Similarly, for purposes of analyzing the contribution from the wealth management segment, management allocates a portion of the net interest income earned by the community banking segment on deposit balances of customers of the wealth management segment to the wealth management segment. (See “wealth management deposits” discussion in the Deposits section of this report for more information on these deposits).

The community banking segment’s net interest income for the quarter ended ~~September 30, 2012~~March 31, 2013 totaled $~~124.7~~123.4 million as compared to $~~109.2~~121.1 million for the same period in ~~2011~~2012, an increase of $~~15.4~~2.3 million, or ~~14%~~2%. ~~On a year-to-date basis, net interest income totaled~~ ~~$368.8 million~~ ~~for the first nine months of 2012, an~~The increase of ~~$56.8 million, or~~ ~~18%, as compared to the~~ ~~$312.1 million~~ ~~recorded~~ in the ~~first nine months of 2011. The increases in both periods are~~current quarter is primarily attributable to growth in earning assets, including those obtained in ~~FDIC-assisted~~ acquisitions as well as the ability to ~~price~~gather interest-bearing deposits at more reasonable rates. The community banking segment’s non-interest income totaled $~~48.9~~39.9 million in the ~~third~~first quarter of ~~2012~~2013, ~~a decrease~~an increase of $~~6.8~~8.1 million, or ~~12%~~25%, when compared to the ~~third~~first quarter of ~~2011~~2012 total of $~~55.7~~31.8 million. The ~~decrease~~increase in the current quarter as compared to the ~~third~~first quarter of ~~2011 is a result of lower bargain purchase gains in the current quarter, partially offset by higher mortgage banking revenue. On a year-to-date basis, the segment’s non-interest income totaled~~ ~~$117.7 million~~2012 ~~for the first nine months of 2012, an increase of~~ ~~$8.5 million, or~~ 8%~~, when compared to the first nine months of 2011 total of~~ ~~$109.2 million. The increased non-interest income in the first nine months of 2012 compared to the prior period can be~~is primarily attributed to higher mortgage banking ~~revenues due to a favorable mortgage interest rate environment~~revenue resulting from higher origination volumes as well as the general improvement in ~~2012.~~the overall economy (increased housing starts, home sales and median price of homes). The community banking segment’s after-tax profit for the quarter ended ~~September 30, 2012~~March 31, 2013 totaled $~~39.7~~33.6 million, an increase of $~~6.8~~6.7 million as compared to after-tax profit in the ~~third~~first quarter of ~~2011~~2012 of $~~32.9 million. The after-tax profit for the nine months ended~~ ~~September 30, 2012, totaled~~ ~~$96.1 million, an increase of~~ ~~$34.9 million, or~~ ~~57%~~ ~~as compared to the prior year total of~~ ~~$61.2~~27.0 million.

Net interest income for the specialty finance segment totaled $~~33.1~~31.1 million for the quarter ended ~~September 30, 2012~~March 31, 2013, compared to $~~28.8~~27.6 million for the same period in ~~2011~~2012, an increase of $~~4.3~~3.5 million or ~~15%~~13%. ~~On a year-to-date basis,~~The specialty finance segment’s non-interest income for the three month period ending March 31, 2013 totaled $1.7 million compared to the three month period ending March 31, 2012 total of $1.4 million. The increases in both net interest income ~~totaled~~ ~~$90.8 million~~ ~~for~~and non-interest income in the ~~first nine months~~current quarter are primarily attributable to revenues from the Company’s Canadian insurance premium finance subsidiary acquired in the second quarter of ~~2012, an increase of~~ ~~$5.9 million, or~~ 7%~~, as compared to the~~ ~~$84.8 million~~ ~~recorded last year.~~2012. Our commercial premium finance operations, life insurance finance operations and accounts receivable finance operations accounted for ~~60%~~63%, ~~33%~~31% and 7%6%, respectively, of the total revenues of our specialty finance business for the ~~nine~~three month period ending ~~September 30, 2012~~March 31, 2013. The increases in net interest income in both the three and nine month comparable periods are primarily attributable to revenues recorded at the Company’s Canadian insurance premium finance subsidiary acquired in the second quarter of 2012. The specialty finance segment’s non-interest income for the three and nine months periods ended ~~September 30, 2012~~ ~~totaled~~ ~~$131,000~~ ~~and~~ ~~$1.7 million, respectively, compared to the three and nine month periods ended~~ ~~September 30, 2011~~ ~~totals of~~ ~~$784,000~~ ~~and~~ ~~$2.3 million~~. The decreases in the current year periods compared to the same periods in 2011 is a result of a foreign currency remeasurement loss at the Company's Canadian insurance premium finance subsidiary during the current year. The after-tax profit of the specialty finance segment for the quarter ended ~~September 30, 2012~~March 31, 2013 totaled $~~13.0~~13.8 million as compared to $~~12.8~~12.5 million for the quarter ended ~~September 30,~~

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~~2011. The specialty finance segment’s after-tax profit for the nine months ended~~ ~~September 30,~~March 31, 2012 ~~totaled~~ ~~$36.4 million, a decrease of~~ ~~$4.3 million, or~~ ~~11%, as compared to the prior year total of~~ ~~$40.7 million~~.

The wealth management segment reported net interest income of $~~524,000~~1.3 million for the ~~third~~first quarter of ~~2012~~2013 compared to $~~2.9~~1.7 million in the same quarter of ~~2011~~2012. ~~On a year-to-date basis, net interest income totaled~~ ~~$4.9 million~~ ~~for the first nine months of 2012, a decrease of~~ ~~$1.4 million, or~~ ~~22%, as compared to the~~ ~~$6.3 million~~ ~~recorded last year.~~ Net interest income for this segment is comprised of the net interest earned on brokerage customer receivables at WHI and an allocation of the net interest income earned by the community banking segment on non-interest bearing and interest-bearing wealth management customer account balances on deposit at the banks (“wealth management deposits”). The allocated net interest income included in this segment’s profitability was ~~$360,000 ($237,000 million after tax) and $4.4~~$1.1 million ($~~2.7 million~~687,000 after tax) for the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2012~~March 31, 2013, ~~respectively~~ compared to ~~$2.7~~$1.6 million ($~~1.7 million after tax) and $5.9 million ($3.6 million~~932,000 after tax) in the ~~comparable periods of~~ ~~2011~~.prior year quarter. This segment recorded non-interest income of $~~16.1~~17.9 million for the ~~third~~first quarter of ~~2012~~2013 compared to $~~14.3~~15.2 million for the ~~third~~first quarter of ~~2011. On a year-to-date basis, non-interest income totaled~~ ~~$47.3 million, an increase of~~ ~~$6.6 million~~ ~~compared to the prior year period total of~~ ~~$40.7 million~~2012. The increase in the ~~third~~first quarter of ~~2012~~2013 as compared to the ~~third~~first quarter of ~~2011~~2012 is mostly attributable to additional revenues resulting from the

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acquisition of a community bank trust operation on March 30, 2012 as well as continued growth within the existing business. The increase in the current year-to-date period is primarily attributable to both the acquisition of the community bank trust operation and the acquisition of Great Lakes Advisors in the third quarter of 2011. The wealth management segment’s after-tax profit totaled $~~1.3~~2.2 million for the ~~third~~first quarter of ~~2012~~2013 compared to after-tax profit of $~~2.4~~1.5 million for the ~~third~~first quarter of ~~2011. This segment’s after-tax profit for the nine months ended~~ ~~September 30,~~ 2012 ~~totaled~~ ~~$5.3 million~~ ~~compared to~~ ~~$5.1 million~~ ~~for the nine months ended~~ ~~September 30, 2011~~.

Financial Condition

Total assets were $~~17.0~~17.1 billion at ~~September 30, 2012~~March 31, 2013, representing an increase of $~~1.1 billion~~902.2 million, or 7%6%, when compared to ~~September 30, 2011~~March 31, 2012 and a decrease of approximately $~~442.3~~445.4 million, or ~~11%~~10% on an annualized basis, when compared to ~~June 30,~~December 31, 2012. Total funding, which includes deposits, all notes and advances, including the junior subordinated debentures, was $14.9 billion at ~~September 30, 2012~~March 31, 2013, $~~14.1~~14.3 billion at ~~September 30, 2011~~March 31, 2012 and $~~14.6~~15.4 billion at ~~June 30,~~December 31, 2012. See Notes 5, 6, 10, 11 and 12 of the Financial Statements presented under Item 1 of this report for additional period-end detail on the Company’s interest-earning assets and funding liabilities.

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Interest-Earning Assets

The following table sets forth, by category, the composition of average earning asset balances and the relative percentage of total average earning assets for the periods presented:


	Three Months Ended												Three Months Ended
	September 30, 2012				June 30, 2012				September 30, 2011				March 31, 2013				December 31, 2012				March 31, 2012
(Dollars in thousands)	Balance		Percent		Balance		Percent		Balance		Percent		Balance		Percent		Balance		Percent		Balance		Percent
Loans:
Commercial	$	2,684,782	18	%	$	2,573,103	17	%	$	2,151,163	15	%	$	2,841,360	18	%	$	2,768,603	18	%	$	2,443,595	17	%
Commercial real estate	3,656,756		24	%	3,608,218		24	%	3,396,805		24	%
Commercial real-estate													3,916,871		25		3,731,790		24		3,538,735		25
Home equity	813,754		5	%	830,936		6	%	875,211		6	%	774,772		5		800,616		5		851,495		6
Residential real estate ⁽¹⁾	917,326		6	%	785,304		5	%	457,487		3	%
Residential real-estate ⁽¹⁾													751,473		5		825,698		5		626,623		4
Premium finance receivables	3,659,178		24	%	3,315,378		22	%	3,139,473		22	%	3,777,563		24		3,677,591		24		3,199,028		22
Indirect consumer loans	75,139		1	%	70,420		1	%	60,512		1	%	73,238		1		78,155		1		65,587		1
Other loans	115,515		1	%	117,036		1	%	120,082		2	%	117,281		1		118,980		1		122,953		1
Total loans, net of unearned income excluding covered loans ⁽²⁾	$	11,922,450	79	%	$	11,300,395	76	%	$	10,200,733	73	%	$	12,252,558	79	%	$	12,001,433	78	%	$	10,848,016	76	%
Covered loans	597,518		4	%	659,783		4	%	680,003		5	%	536,284		3		626,449		4		667,242		5
Total average loans ⁽²⁾	$	12,519,968	83	%	$	11,960,178	80	%	$	10,880,736	78	%	$	12,788,842	82	%	$	12,627,882	82	%	$	11,515,258	81	%
Liquidity management assets ⁽³⁾	$	2,565,151	17	%	$	2,781,730	19	%	3,083,508		22	%	$	2,797,310	18	%	$	2,949,034	18	%	2,756,833		19	%
Other earning assets ⁽⁴⁾	31,142		—	%	30,761		1	%	28,834		—	%	24,205		—		27,482		—		30,499		—
Total average earning assets	$	15,116,261	100	%	$	14,772,669	100	%	$	13,993,078	100	%	$	15,610,357	100	%	$	15,604,398	100	%	$	14,302,590	100	%
Total average assets	$	16,705,429			$	16,319,207			$	15,526,427			$	17,256,843			$	17,248,650			$	15,835,350
Total average earning assets to total average assets			90	%			91	%			90	%			90	%			90	%			90	%


(1)	Includes mortgage loans held-for-sale


(2)	Includes loans held-for-sale and non-accrual loans


(3)	Liquidity management assets include available-for-sale securities, other securities, interest earning deposits with banks, federal funds sold and securities purchased under resale agreements


(4)	Other earning assets include brokerage customer receivables and trading account securities

Total average earning assets for the ~~third~~first quarter of ~~2012~~2013 increased $~~1.1~~1.3 billion, or 8%9%, to $~~15.1~~15.6 billion, compared to the ~~third quarter~~ of ~~2011, and increased~~ ~~$343.6 million, or~~ 9% ~~on an annualized basis, compared to the second quarter of 2012. The ratio of total average earning assets as a percent of total average assets was~~ ~~90%~~ at ~~September 30, 2012~~ ~~compared to~~ ~~90%~~ at ~~September 30, 2011~~ ~~and~~ ~~91%~~ at ~~June 30, 2012~~.

~~Commercial loans averaged~~ ~~$2.7 billion~~ ~~in the~~ ~~third~~first quarter of 2012, and increased $~~533.6~~6.0 million, or less than 1% on an annualized basis, compared to the fourth quarter of 2012. Average earning assets comprised 90% of average total assets at March 31, 2013, December 31, 2012 and March 31, 2012.

Average total loans, net of unearned income, totaled $12.8 billion in the first quarter of 2013, increasing $1.3 billion, or 11%, from the first quarter of 2012 and $161.0 million, or ~~25%~~5% on an annualized basis, from the fourth quarter of 2012. Average commercial loans totaled $2.8 billion in the first quarter of 2013, and increased $397.8 million, or 16%, over the average balance in the same period of ~~2011,~~2012, while average commercial ~~real estate~~real-estate loans totaled $~~3.7~~3.9 billion in the ~~third~~first quarter of ~~2012~~2013, increasing $~~260.0~~378.1 million, or 8%11%, compared to the ~~third~~first quarter of ~~2011~~2012. Combined, these categories comprised ~~51%~~53% and 52% of the average loan portfolio in ~~both~~ the ~~third~~first quarters of 2013 and 2012, ~~and 2011.~~respectively. The growth realized in these categories for the ~~third~~first quarter of ~~2012~~2013 as compared to the prior year period is primarily attributable to increased business development efforts and the acquisition of ~~Elgin State~~Hyde Park Bank at the end of the ~~third~~fourth quarter of ~~2011.~~2012. Average balances increased compared to the quarter ended ~~June 30,~~December 31, 2012, with average commercial loans increasing by $~~111.7~~72.8 million, or ~~17%~~11% annualized, and average commercial ~~real estate~~real-estate loans increasing by $~~48.5~~185.1 million, or 5%20% annualized.

Home equity loans averaged $~~813.8~~774.8 million in the ~~third~~first quarter of ~~2012~~2013, and decreased $~~61.5~~76.7 million, or 7%9%, when compared to the average balance in the same period of ~~2011~~2012 and $~~17.2~~25.8 million, or 8%13% annualized, when compared to quarter ended ~~June 30,~~December 31, 2012. As a result of economic conditions, the Company has been actively managing its home equity portfolio to ensure that diligent pricing, appraisal and other underwriting activities continue to exist. The Company has not sacrificed asset quality or pricing standards when originating new home equity loans. Our home equity loan portfolio has performed well in light of the deterioration in the overall residential real-estate market. The number of home equity line of credit commitments originated by us has decreased due to declines in housing valuations that have decreased the amount of equity against which homeowners may borrow, and a decline in homeowners' desire to use their remaining equity as collateral.

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Residential ~~real estate~~real-estate loans averaged $~~917.3~~751.5 million in the ~~third~~first quarter of ~~2012~~2013, and increased $~~459.8~~124.9 million, or ~~101%~~20% from the average balance of $~~457.5~~626.6 million in same period of ~~2011.~~2012. Additionally, compared to the quarter ended ~~June 30,~~December 31, 2012, the average balance ~~increased~~decreased $~~132.0~~74.2 million, or ~~67%~~36% on an annualized ~~basis, from~~ ~~$785.3 million~~.basis. This category includes mortgage loans held-for-sale. By selling residential mortgage loans into the secondary market, the Company eliminates the interest-rate risk associated with these loans, as they are predominantly long-term fixed rate loans, and provides a source of non-interest revenue. Mortgage loans held-for-sale increased ~~during~~since the same period of 2012 as a result of higher origination volumes due to ~~a favorable mortgage interest rate environment in~~the continuation of the late 2012 ~~and better pricing in the current quarter.~~refinance market into 2013.

Average premium finance receivables totaled $~~3.7~~3.8 billion in the ~~third~~first quarter of ~~2012~~2013, and accounted for ~~29%~~30% of the Company’s average total loans. Premium finance receivables consist of a commercial portfolio and a life portfolio, comprising approximately 54% and 46%, respectively, of the average total balance of premium finance receivables for the ~~third~~first quarter of ~~2012~~2013, compared to 47% and 53%, respectively, for the same period in ~~2011. Average premium finance receivables in~~2012. In the ~~third~~first quarter of ~~2012~~2013, average premium finance receivables increased $~~519.7~~578.5 million, or ~~17%~~18%, from the average balance of $~~3.1~~3.2 billion at the same period of ~~2011.~~2012. Additionally, the average balance increased $~~343.8~~100.0 million, or ~~41%~~11% on an annualized basis, from the average balance of $~~3.3~~3.7 billion in the quarter ended ~~June 30,~~December 31, 2012. The increase during ~~2012~~2013 compared to both periods was the result of continued originations within the portfolio due to the effective marketing and customer ~~servicing, and~~servicing. Additionally, the increase during 2013 compared to 2012 was the result of the acquisition of Macquarie Premium Funding Inc. Approximately ~~$1.2~~$1.3 billion of premium finance receivables were originated in the ~~third~~first quarter of ~~2012~~2013 compared to ~~$958.9 million~~$1.1 billion during the same period of ~~2011.~~2012.

Indirect consumer loans are comprised primarily of automobile loans originated at Hinsdale Bank. These loans ~~are~~were financed from networks of unaffiliated automobile dealers located throughout the Chicago metropolitan area with which the Company has established relationships. The risks associated with the Company’s portfolios are diversified among many individual borrowers. Like other consumer loans, the indirect consumer loans are subject to the Banks’ established credit standards. Management regards substantially all of these loans as prime quality loans. In the fourth quarter of 2012, the Company ceased the origination of indirect automobile loans through Hinsdale Bank as a result of competitive pricing pressures. During the first quarter of 2013 and 2012, average indirect consumer loans totaled $73.2 million and $65.6 million, respectively.

Other loans represent a wide variety of personal and consumer loans to individuals as well as high-yielding short-term accounts receivable financing to clients in the temporary staffing industry located throughout the United States. Consumer loans generally have shorter terms and higher interest rates than mortgage loans but generally involve more credit risk due to the type and nature of the collateral. Additionally, short-term accounts receivable financing may also involve greater credit risks than generally associated with the loan portfolios of more traditional community banks depending on the marketability of the collateral.

Covered loans averaged $~~597.5~~536.3 million in the ~~third~~first quarter of ~~2012~~2013, and decreased $~~82.5~~131.0 million, or ~~12%~~20%, when compared to the average balance in the same period of ~~2011~~2012 and decreased $~~62.3~~90.2 million, or ~~38%~~58% annualized, when compared to quarter ended ~~June 30,~~December 31, 2012. Covered loans represent loans acquired in FDIC-assisted transactions. These loans are subject to loss sharing agreements with the FDIC. The FDIC has agreed to reimburse the Company for 80% of losses incurred on the purchased loans, foreclosed real estate, and certain other assets. See Note 3 of the Financial Statements presented under Item 1 of this report for a discussion of these acquisitions, including the aggregation of these loans by risk characteristics when determining the initial and subsequent fair value.

Liquidity management assets include available-for-sale securities, other securities, interest earning deposits with banks, federal funds sold and securities purchased under resale agreements. The balances of these assets can fluctuate based on management’s ongoing effort to manage liquidity and for asset liability management purposes. Average liquidity management assets accounted for 18% of total average earning assets in the first quarter of 2013 and fourth quarter of 2012, and 19% in the first quarter of 2012. Average liquidity management assets increased $40.5 million in the first quarter of 2013 compared to the same period 2012, and increased $151.7 million compared to the fourth quarter of 2012. The balances of liquidity management assets can fluctuate based on management’s ongoing effort to manage liquidity and for asset liability management purposes.

Other earning assets include brokerage customer receivables and trading account securities. In the normal course of business, Wayne Hummer Investments, LLC (“WHI”) activities involve the execution, settlement, and financing of various securities transactions. WHI’s customer securities activities are transacted on either a cash or margin basis. In margin transactions, WHI, under an agreement with an out-sourced securities firm, extends credit to its customers, subject to various regulatory and internal margin requirements, collateralized by cash and securities in customer’s accounts. In connection with these activities, WHI executes and the out-sourced firm clears customer transactions relating to the sale of securities not yet purchased, substantially all of which are transacted on a margin basis subject to individual exchange regulations. Such transactions may expose WHI to off-balance-sheet risk, particularly in volatile trading markets, in the event margin requirements are not sufficient to fully cover losses that customers may incur. In the event a customer fails to satisfy its obligations, WHI under the agreement with the outsourced securities firm, may be required to purchase or sell financial instruments at prevailing market prices to fulfill the customer’s obligations. WHI seeks to control the risks associated with its customers’ activities by requiring customers to maintain margin collateral in

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compliance with various regulatory and internal guidelines. WHI monitors required margin levels daily and, pursuant to such guidelines, requires customers to deposit additional collateral or to reduce positions when necessary.

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Average Balances for the
Nine Months Ended

September 30, 2012 September 30, 2011
(Dollars in thousands) Balance Percent Balance Percent
Loans:
Commercial $ 2,567,589
17 % $ 2,037,786
15 %
Commercial real estate 3,601,439
24 % 3,378,142
26 %
Home equity 831,995
6 % 889,883
7 %
Residential real estate ⁽¹⁾
776,932
5 % 489,384
4 %
Premium finance receivables 3,392,173
23 % 3,011,914
23 %
Indirect consumer loans 70,399
1 % 55,977
1 %
Other loans 118,490
1 % 108,145
1 %
Total loans, net of unearned income excluding covered loans ⁽²⁾
$ 11,359,017
77 % $ 9,971,231
77 %
Covered loans 641,354
4 % 476,199
3 %
Total average loans ⁽²⁾
$ 12,000,371
81 % $ 10,447,430
80 %
Liquidity management assets ⁽³⁾
$ 2,700,742
18 % 2,768,817
20 %
Other earning assets ⁽⁴⁾
30,802
1 % 28,483
— %
Total average earning assets $ 14,731,915
100 % $ 13,244,730
100 %
Total average assets $ 16,288,191
$ 14,549,696

Total average earning assets to total average assets 90 % 91 %


~~(1)~~	~~Includes mortgage loans held-for-sale~~


~~(2)~~	~~Includes loans held-for-sale and non-accrual loans~~


~~(3)~~	~~Liquidity management assets include available-for-sale securities, other securities, interest earning deposits with banks, federal funds sold and securities purchased under resale agreements~~


~~(4)~~	~~Other earning assets include brokerage customer receivables and trading account securities~~

~~Total average loans for the first nine months of 2012 increased~~ ~~$1.6 billion, or~~ ~~15%, over the previous year period. Similar to the quarterly discussion above, approximately~~ ~~$529.8 million~~ ~~of this increase relates to the commercial portfolio,~~ ~~$380.3 million~~ ~~of this increase relates to the premium finance receivables portfolio,~~ ~~$287.5 million~~ ~~of this increase relates to the residential real estate portfolio and~~ ~~$223.3 million~~ ~~of this increase relates to the commercial real estate portfolio.~~

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Deposits

Total deposits at ~~third quarter of 2012~~March 31, 2013, were $~~13.8~~14.0 billion ~~and increased~~an increase of $~~1.5~~1.3 billion, or ~~13%~~10%, compared to total deposits at ~~third quarter of 2011~~March 31, 2012. See Note 10 to the financial statements presented under Item 1 of this report for a summary of period end deposit balances.

The following table sets forth, by category, the maturity of time certificates of deposit as of ~~September 30, 2012~~March 31, 2013:


Time Certificates of Deposit Maturity/Re-pricing Analysis As of September 30, 2012 (Dollars in thousands)	CDARs & Brokered Certificates of Deposit ⁽¹⁾		MaxSafe Certificates of Deposit ⁽¹⁾		Variable Rate Certificates of Deposit ⁽²⁾		Other Fixed Rate Certificates of Deposit ⁽¹⁾		Total Time Certificates of Deposits		Weighted-Average Rate of Maturing Time Certificates of Deposit ⁽³⁾
Time Certificates of Deposit Maturity/Re-pricing Analysis As of March 31, 2013 (Dollars in thousands)													CDARs & Brokered Certificates of Deposit ⁽¹⁾		MaxSafe Certificates of Deposit ⁽¹⁾		Variable Rate Certificates of Deposit ⁽²⁾		Other Fixed Rate Certificates of Deposit ⁽¹⁾		Total Time Certificates of Deposits		Weighted-Average Rate of Maturing Time Certificates of Deposit ⁽³⁾
1-3 months	$	6,277	$	51,813	$	164,058	$	790,279	$	1,012,427	0.77	%	$	146,322	$	61,916	$	161,566	$	817,366	$	1,187,170	0.58	%
4-6 months	117,599		46,419		—		648,852		812,870		0.85	%	125,277		45,658		—		667,345		838,280		0.79	%
7-9 months	144,041		35,980		—		718,938		898,959		0.72	%	4,465		51,234		—		533,132		588,831		0.72	%
10-12 months	121,591		39,117		—		577,716		738,424		0.88	%	40,012		46,938		—		584,053		671,003		0.82	%
13-18 months	41,213		54,206		—		594,567		689,986		1.07	%	18,370		35,645		—		491,918		545,933		1.02	%
19-24 months	18,358		27,478		—		264,442		310,278		1.29	%	95,661		13,554		—		211,650		320,865		1.77	%
24+ months	95,574		24,303		—		528,712		648,589		1.99	%	—		23,790		—		493,781		517,571		1.66	%
Total	$	544,653	$	279,316	$	164,058	$	4,123,506	$	5,111,533	1.02	%	$	430,107	$	278,735	$	161,566	$	3,799,245	$	4,669,653	0.92	%


(1)	This category of certificates of deposit is shown by contractual maturity date.


(2)	This category includes variable rate certificates of deposit and savings certificates with the majority repricing on at least a monthly basis.


(3)	Weighted-average rate excludes the impact of purchase accounting fair value adjustments.

The following table sets forth, by category, the composition of average deposit balances and the relative percentage of total average deposits for the periods presented:


	Three Months Ended												Three Months Ended
	September 30, 2012				June 30, 2012				September 30, 2011				March 31, 2013				December 31, 2012				March 31, 2012
(Dollars in thousands)	Balance		Percent		Balance		Percent		Balance		Percent		Balance		Percent		Balance		Percent		Balance		Percent
Non-interest bearing	$	2,092,028	16	%	$	1,993,880	16	%	$	1,553,768	13	%	$	2,290,725	16	%	$	2,314,935	17	%	$	1,832,627	15	%
NOW	1,794,413		13		1,762,463		14		1,587,710		13		2,005,668		14		1,879,620		13		1,710,407		14
Wealth management deposits	981,550		7		941,509		7		735,231		6		966,219		7		990,621		7		780,851		6
Money market	2,390,359		18		2,288,148		18		2,050,383		17		2,804,256		20		2,571,065		18		2,275,178		19
Savings	1,074,308		8		944,924		7		813,304		7		1,251,759		9		1,209,452		9		914,399		7
Time certificates of deposit	5,020,554		38		4,877,974		38		5,256,259		44		4,829,498		34		5,058,300		36		4,800,987		39
Total average deposits	$	13,353,212	100	%	$	12,808,898	100	%	$	11,996,655	100	%	$	14,148,125	100	%	$	14,023,993	100	%	$	12,314,449	100	%

Total average deposits for the ~~third~~first quarter of ~~2012~~2013 were $~~13.4~~14.1 billion, an increase of ~~1.4~~$1.8 billion, or ~~11%~~15%, from the ~~third~~first quarter of ~~2011~~2012. The increase in average deposits is primarily attributable to the Company’s acquisition activity in ~~2011 and~~ 2012, as well as deposits added which are associated with the increased commercial lending. The Company continues to see a beneficial shift in its deposit mix as average non-interest bearing deposits increased $~~538.3~~458.1 million, or ~~35%~~25%, in the ~~third~~first quarter of ~~2012~~2013 compared to the ~~third~~first quarter of ~~2011~~2012.

Wealth management deposits are funds from the brokerage customers of WHI, the trust and asset management customers of CTC and brokerage customers from unaffiliated companies which have been placed into deposit accounts of the banks (“wealth management deposits” in the table above). Wealth Management deposits consist primarily of money market accounts. Consistent with reasonable interest rate risk parameters, these funds have generally been invested in loan production of the banks as well as other investments suitable for banks.

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Brokered Deposits

While the Company obtains a portion of its total deposits through brokered deposits, the Company does so primarily as an asset-liability management tool to assist in the management of interest rate risk. The Company does not consider brokered deposits to be a vital component of its current liquidity resources. Historically, brokered deposits have represented a small component of the Company’s total deposits outstanding, as set forth in the table below:


	September 30,						December 31,									March 31,						December 31,
(Dollars in thousands)	2012			2011			2011			2010			2009			2013			2012			2012			2011			2010
Total deposits	$	13,847,965		$	12,306,008		$	12,307,267		$	10,803,673		$	9,917,074		$	13,962,757		$	12,665,853		$	14,428,544		$	12,307,267		$	10,803,673
Brokered deposits	837,456			726,411			674,013			639,687			927,722			538,128			884,523			787,812			674,013			639,687
Brokered deposits as a percentage of total deposits	6.0		%	5.9		%	5.5		%	5.9		%	9.4		%	3.9		%	7.0		%	5.5		%	5.5		%	5.9		%

Brokered deposits include certificates of deposit obtained through deposit brokers, deposits received through the Certificate of Deposit Account Registry Program (“CDARS”), and wealth management deposits of brokerage customers from unaffiliated companies which have been placed into deposit accounts of the banks.

Other Funding Sources

Although deposits are the Company’s primary source of funding its interest-earning assets, the Company’s ability to manage the types and terms of deposits is somewhat limited by customer preferences and market competition. As a result, in addition to deposits and the issuance of equity securities and the retention of earnings, the Company uses several other funding sources to support its growth. These sources include short-term borrowings, notes payable, Federal Home Loan Bank advances, subordinated debt, secured borrowings and junior subordinated debentures. The Company evaluates the terms and unique characteristics of each source, as well as its asset-liability management position, in determining the use of such funding sources.

The following table sets forth, by category, the composition of the average balances of other funding sources for the quarterly periods presented:


	Three Months Ended						Three Months Ended
	September 30,		June 30,		September 30,		March 31,		December 31,		March 31,
(Dollars in thousands)	2012		2012		2011		2013		2012		2012
Notes payable	$	2,455	$	22,418	$	3,259	$	3,424	$	2,273	$	52,820
Federal Home Loan Bank advances	441,445		514,513		486,379		414,092		414,289		470,345
Other borrowings:
Federal funds purchased	143		8,621		160		108		161		8,413
Securities sold under repurchase agreements	388,446		364,715		421,262		258,360		356,207		414,771
Other	35,631		26,392		36,460		35,259		39,166		29,810
Total other borrowings	$	424,220	$	399,728	$	457,882	$	293,727	$	395,534	$	452,994
Secured borrowings—owed to securitization investors	176,904		407,259		600,000		—		—		514,923
Subordinated notes	15,000		23,791		40,000		15,000		15,000		35,000
Junior subordinated debentures	249,493		249,493		249,493		249,493		249,493		249,493
Total other borrowings	$	1,309,517	$	1,617,202	$	1,837,013	$	975,736	$	1,076,589	$	1,775,575

Notes payable balances represent the balances on a ~~credit~~loan agreement with unaffiliated banks and an unsecured promissory note as a result of the Great Lakes Advisors acquisition. The loan agreement is a $100.0 million revolving credit facility and a $1.0 million term loan available for corporate purposes such as to provide capital to fund continued growth at existing bank subsidiaries, possible future acquisitions and for other general corporate matters. At ~~September 30, 2012~~March 31, 2013, the Company had $~~2.3~~31.9 million of notes payable outstanding compared to $~~2.5~~2.1 million at ~~June 30,~~December 31, 2012 and $~~3.0~~52.6 million at ~~September 30, 2011~~March 31, 2012.

FHLB advances provide the banks with access to fixed rate funds which are useful in mitigating interest rate risk and achieving an acceptable interest rate spread on fixed rate loans or securities. FHLB advances to the banks totaled $~~414.2~~414.0 million at ~~September 30, 2012~~March 31, 2013, compared to $~~564.3~~414.1 million at ~~June 30,~~December 31, 2012 and $~~474.6~~466.4 million at ~~September 30, 2011~~March 31, 2012.

Other borrowings include securities sold under repurchase agreements, federal funds purchased, debt issued by the Company in conjunction with its tangible equity unit offering in December 2010 and a fixed-rate promissory note entered into in August 2012

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related to an office building complex owned by the Company. These borrowings totaled $~~377.2~~256.2 million, $~~375.5~~274.4 million

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and $~~448.1~~411.0 million at ~~September 30, 2012~~March 31, 2013, ~~June 30,~~December 31, 2012 and ~~September 30, 2011~~March 31, 2012, respectively. Securities sold under repurchase agreements represent sweep accounts for certain customers in connection with master repurchase agreements at the banks as well as short-term borrowings from banks and brokers. This funding category fluctuates based on customer preferences and daily liquidity needs of the banks, their customers and the banks’ operating subsidiaries.

The average balance of secured borrowings represents the consolidation of a QSPE. In connection with the securitization, premium finance receivables—commercial were transferred to FIFC Premium Funding, LLC, a QSPE. Instruments issued by the QSPE included $600 million Class A notes that had an annual interest rate of LIBOR plus 1.45% ~~(the “Notes”)~~. At the time of issuance, the Notes were eligible collateral under the Federal Reserve Bank of New York’s Term Asset-Backed Securities Loan Facility (“TALF”). During the first and second ~~quarter~~quarters of 2012, the Company repurchased ~~$172.0~~$172.0 million and ~~$67.2~~$67.2 million, respectively, of the Notes in the open market effectively defeasing a portion of the Notes. During the third quarter of 2012, the QSPE completely paid-off the remaining portion of the these Notes resulting in no balance remaining at ~~September 30,~~March 31, 2013 and December 31, 2012, compared to ~~balances of~~ $~~360.8~~428.0 million at ~~June 30,~~March 31, 2012~~, and~~ ~~$600.0 million~~ at ~~September 30, 2011~~.

The Company borrowed ~~$75.0~~$75.0 million under three separate ~~$25.0~~$25.0 million subordinated note agreements. Each subordinated note requires annual principal payments of ~~$5.0~~$5.0 million beginning in the sixth year of the note and has a term of ten years with final maturity dates in 2012, 2013, and 2015. During the second quarter of 2012, two subordinated notes issued in October 2002 and April 2003 with remaining balances of ~~$5.0~~$5.0 million and ~~$10.0~~$10.0 million, respectively, were paid off prior to maturity. Subject to certain limitations, ~~these notes qualify~~the remaining note qualifies as Tier 2 regulatory capital. Subordinated notes totaled $15.0 million at ~~September 30, 2012~~March 31, 2013 and ~~June 30,~~December 31, 2012, and $~~40.0~~35.0 million at ~~September 30, 2011~~March 31, 2012.

The Company had $249.5 million of junior subordinated debentures outstanding as of ~~September 30, 2012~~March 31, 2013, ~~June 30,~~December 31, 2012 and ~~September 30, 2011~~March 31, 2012. The amounts reflected on the balance sheet represent the junior subordinated debentures issued to nine trusts by the Company and equal the amount of the preferred and common securities issued by the trusts. Junior subordinated debentures, subject to certain limitations, currently qualify as Tier 1 regulatory capital. Interest expense on these debentures is deductible for tax purposes, resulting in a cost-efficient form of regulatory capital.

See Notes 8, 11 and 12 of the Financial Statements presented under Item 1 of this report for details of period end balances and other information for these various funding sources. There were no material changes outside the ordinary course of business in the Company’s contractual obligations during the ~~third~~first quarter of ~~2012~~2013 as compared to December 31, ~~2011.~~2012.

Shareholders’ Equity

Total shareholders’ equity was ~~$1.8~~$1.8 billion at ~~September 30, 2012~~March 31, 2013, reflecting an increase of ~~$233.1~~$137.8 million since ~~September 30, 2011~~March 31, 2012 and ~~$217.8~~$21.0 million since December 31, ~~2011~~2012. The increase from December 31, ~~2011~~2012 was the result of net income of ~~$81.1~~$32.1 million less common stock dividends of ~~$6.5~~$3.3 million and preferred stock dividends of ~~$6.4~~$2.6 million ~~$7.3~~, $2.4 million credited to surplus for stock-based compensation costs, ~~$122.7~~$1.6 million ~~from the issuance of Series C preferred stock, net of costs, $14.3 million~~ from the issuance of shares of the Company’s common stock (and related tax benefit) pursuant to various stock compensation plans ~~$3.8 million in net unrealized gains from available-for-sale securities, net of tax, $871,000~~and $888,000 net unrealized gains from cash flow hedges, net of tax, ~~and $8.0~~offset by $4.9 million of foreign currency translation adjustments, net of tax, ~~offset by $7.4~~$4.8 million in net unrealized losses from available-for-sale securities, net of tax, and $349,000 of common stock repurchases by the Company.

The following tables reflect various consolidated measures of capital as of the dates presented and the capital guidelines established by the Federal Reserve Bank for a bank holding company:


	September 30, 2012		June 30, 2012		September 30, 2011		March 31, 2013		December 31, 2012		March 31, 2012
Leverage ratio	10.2	%	10.2	%	9.6	%	10.2	%	10.0	%	10.5	%
Tier 1 capital to risk-weighted assets	12.2		12.2		11.9		12.4		12.1		12.7
Total capital to risk-weighted assets	13.3		13.4		13.2		13.5		13.1		13.9
Total average equity-to-total average assets⁽¹⁾	10.4		10.4		9.7		10.5		10.4		9.9


(1)	Based on quarterly average balances.



	Minimum Capital Requirements		Well Capitalized
Leverage ratio	4.0	%	5.0	%
Tier 1 capital to risk-weighted assets	4.0		6.0
Total capital to risk-weighted assets	8.0		10.0

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The Company’s principal sources of funds at the holding company level are dividends from its subsidiaries, borrowings under its loan agreement with unaffiliated banks and proceeds from the issuances of subordinated debt and additional common or preferred equity. Refer to Notes 11, 12 and 17 of the Financial Statements presented under Item 1 of this report for further information on these various funding sources. The issuances of subordinated debt, preferred stock and additional common stock are the primary forms of regulatory capital that are considered as the Company evaluates increasing its capital position. Management is committed to maintaining the Company’s capital levels above the “Well Capitalized” levels established by the Federal Reserve for bank holding companies.

The Company’s Board of Directors approves dividends from time to time, however, the ability to declare a dividend is limited by the Company's financial condition, the terms of the Company's 8.00% non-cumulative perpetual convertible preferred stock, Series A, the terms of the Company's 5.00% non-cumulative perpetual convertible preferred stock, Series C, the terms of the Company’s Trust Preferred Securities offerings, the Company’s 7.5% tangible equity units and under certain financial covenants in the Company’s credit agreement. In January ~~and July~~ of ~~2012,~~2013, Wintrust declared a semi-annual cash dividend of $0.09 per common share. In each of January and July of ~~2011,~~2012, Wintrust declared a semi-annual cash dividend of $0.09 per common share.

See Note 17 of the Financial Statements presented under Item 1 of this report for details on the Company’s issuance of Series C preferred stock in March 2012, tangible equity units in December 2010, and Series A preferred stock in August 2008.

LOAN PORTFOLIO AND ASSET QUALITY

Loan Portfolio

The following table shows the Company’s loan portfolio by category as of the dates shown:


	September 30, 2012				December 31, 2011				September 30, 2011				March 31, 2013				December 31, 2012				March 31, 2012
			% of				% of				% of				% of				% of				% of
(Dollars in thousands)	Amount		Total		Amount		Total		Amount		Total		Amount		Total		Amount		Total		Amount		Total
Commercial	$	2,771,053	23	%	$	2,498,313	22	%	$	2,337,098	21	%	$	2,872,695	23	%	$	2,914,798	24	%	$	2,544,456	22	%
Commercial real-estate	3,699,712		30		3,514,261		31		3,465,321		32		3,990,465		32		3,864,118		31		3,585,760		32
Home equity	807,592		7		862,345		8		879,180		8		759,218		6		788,474		6		840,364		7
Residential real-estate	376,678		3		350,289		3		326,207		3		360,652		3		367,213		3		361,327		3
Premium finance receivables—commercial	1,982,945		16		1,412,454		13		1,417,572		13		1,997,160		16		1,987,856		16		1,512,630		13
Premium finance receivables—life insurance	1,665,620		14		1,695,225		15		1,671,443		15		1,753,512		14		1,725,166		14		1,693,763		15
Indirect consumer	77,378		1		64,545		1		62,452		1		69,245		1		77,333		1		67,445		1
Other loans	108,922		1		123,945		1		113,438		1		97,365		1		103,985		1		111,639		1
Total loans, net of unearned income, excluding covered loans	$	11,489,900	95	%	$	10,521,377	94	%	$	10,272,711	94	%	$	11,900,312	96	%	$	11,828,943	96	%	$	10,717,384	94	%
Covered loans	657,525		5		651,368		6		680,075		6		518,661		4		560,087		4		691,220		6
Total loans	$	12,147,425	100	%	$	11,172,745	100	%	$	10,952,786	100	%	$	12,418,973	100	%	$	12,389,030	100	%	$	11,408,604	100	%

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Commercial and commercial ~~real estate~~real-estate loans. Our commercial and commercial ~~real estate~~real-estate loan portfolios are comprised primarily of commercial ~~real estate~~real-estate loans and lines of credit for working capital purposes. The table below sets forth information regarding the types, amounts and performance of our loans within these portfolios (excluding covered loans) as of ~~September 30, 2012~~March 31, 2013 and ~~2011:~~2012:


As of September 30, 2012			% of				> 90 Days Past Due		Allowance For Loan
As of September 30, 2012			Total				and Still		Losses
As of March 31, 2013													% of				> 90 Days Past Due		Allowance For Loan
As of March 31, 2013													Total				and Still		Losses
(Dollars in thousands)	Balance		Balance		Nonaccrual		Accruing		Allocation		Balance		Balance		Nonaccrual		Accruing		Allocation
Commercial:
Commercial and industrial	$	1,556,375	24.1	%	$	15,163	$	—	$	17,137	$	1,569,576	22.9	%	$	17,717	$	—	$	18,279
Franchise	179,706		2.8		1,792		—		1,909		194,511		2.8		125		—		1,655
Mortgage warehouse lines of credit	225,295		3.5		—		—		1,968		131,970		1.9		—		—		1,288
Community Advantage—homeowner associations	73,881		1.1		—		—		185		82,763		1.2		—		—		207
Aircraft	21,444		0.3		428		—		199		14,112		0.2		—		—		74
Asset-based lending	533,061		8.2		328		—		5,064		687,255		10.0		531		—		6,307
Municipal	90,404		1.4		—		—		1,020		89,508		1.3		—		—		880
Leases	83,351		1.3		—		—		247		98,030		1.4		—		—		261
Other	1,576		—		—		—		12		127		—		—		—		1
Purchased non-covered commercial loans ⁽¹⁾	5,960		0.1		—		499		—		4,843		—		—		449		—
Total commercial	$	2,771,053	42.8	%	$	17,711	$	499	$	27,741	$	2,872,695	41.7	%	$	18,373	$	449	$	28,952
Commercial Real-Estate:
Residential construction	$	44,255	0.7	%	$	2,141	$	—	$	1,453	$	37,083	0.5	%	$	3,094	$	—	$	1,200
Commercial construction	169,543		2.6		3,315		—		3,965		162,358		2.4		1,086		—		2,749
Land	133,486		2.1		10,629		—		5,376		133,578		2.0		17,976		—		5,198
Office	584,321		9.0		6,185		—		5,856		584,684		8.5		3,564		—		5,634
Industrial	574,325		8.9		1,885		—		5,555		595,525		8.7		7,137		—		6,602
Retail	560,669		8.7		10,133		—		5,993		586,801		8.6		7,915		—		5,592
Multi-family	363,423		5.6		3,314		—		10,511		512,785		7.5		2,088		—		12,778
Mixed use and other	1,220,850		18.8		20,859		—		16,376		1,322,834		19.3		18,947		—		16,458
Purchased non-covered commercial real-estate ⁽¹⁾	48,840		0.8		—		1,066		—		54,817		0.8		—		1,866		197
Total commercial real-estate	$	3,699,712	57.2	%	$	58,461	$	1,066	$	55,085	$	3,990,465	58.3	%	$	61,807	$	1,866	$	56,408
Total commercial and commercial real-estate	$	6,470,765	100.0	%	$	76,172	$	1,565	$	82,826	$	6,863,160	100.0	%	$	80,180	$	2,315	$	85,360

Commercial real-estate—collateral location by state:
Illinois	$	3,080,715	83.3	%							$	3,359,815	84.2	%
Wisconsin	316,251		8.5								334,333		8.4
Total primary markets	$	3,396,966	91.8	%							$	3,694,148	92.6	%
Florida	51,975		1.4								64,999		1.6
Arizona	38,755		1.0								39,442		1.0
Indiana	48,123		1.3								53,401		1.3
Other (no individual state greater than 0.5%)	163,893		4.5								138,475		3.5
Total	$	3,699,712	100.0	%							$	3,990,465	100.0	%


(1)	Purchased loans represent loans acquired with evidence of credit quality deterioration since origination, in accordancewith ASC 310-30. Loan agings are based upon contractually required payments.

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			% of				> 90 Days Past Due		Allowance For Loan				% of				> 90 Days Past Due		Allowance For Loan
As of September 30, 2011			Total				and Still		Losses
As of March 31, 2012													Total				and Still		Losses
(Dollars in thousands)	Balance		Balance		Nonaccrual		Accruing		Allocation		Balance		Balance		Nonaccrual		Accruing		Allocation
Commercial:
Commercial and industrial	$	1,414,715	24.4	%	$	21,055	$	—	$	22,269	$	1,506,019	24.6	%	$	17,392	$	—	$	20,849
Franchise	126,854		2.2		1,792		—		1,050		169,277		2.8		1,792		—		1,876
Mortgage warehouse lines of credit	132,425		2.3		—		—		1,041		136,438		2.2		—		—		1,146
Community Advantage—homeowner associations	74,281		1.3		—		—		186		75,786		1.2		—		—		190
Aircraft	18,080		0.3		—		—		108		19,891		0.3		260		—		103
Asset-based lending	419,737		7.2		1,989		—		7,652		474,811		7.7		391		—		7,704
Municipal	74,723		1.3		—		—		1,122		76,885		1.3		—		—		1,031
Leases	66,671		1.1		—		—		335		77,671		1.3		—		—		306
Other	2,044		0.1		—		—		17		1,733		—		—		—		14
Purchased non-covered commercial loans ⁽¹⁾	7,568		0.1		—		616		—		5,945		0.1		—		424		—
Total commercial	$	2,337,098	40.3	%	$	24,836	$	616	$	33,780	$	2,544,456	41.5	%	$	19,835	$	424	$	33,219
Commercial Real-Estate:
Residential construction	$	71,941	1.2	%	$	1,358	$	1,105	$	1,815	$	56,111	0.9	%	$	1,807	$	—	$	1,744
Commercial construction	160,421		2.8		2,860		—		4,588		164,719		2.7		2,389		—		4,167
Land	199,130		3.4		31,072		—		15,368		184,042		3.0		25,306		—		10,606
Office	533,930		9.2		15,432		—		9,112		560,708		9.1		8,534		—		6,418
Industrial	538,248		9.3		2,160		—		5,479		590,903		9.6		1,864		—		5,475
Retail	519,235		8.9		3,664		—		5,503		528,077		8.6		7,323		73		4,561
Multi-family	324,777		5.6		3,423		—		9,668		324,938		5.3		3,708		—		8,400
Mixed use and other	1,063,282		18.4		9,700		—		12,839		1,123,940		18.4		11,773		—		12,581
Purchased non-covered commercial real-estate ⁽¹⁾	54,357		0.9		—		344		—		52,322		0.9		—		2,959		—
Total commercial real-estate	$	3,465,321	59.7	%	$	69,669	$	1,449	$	64,372	$	3,585,760	58.5	%	$	62,704	$	3,032	$	53,952
Total commercial and commercial real-estate	$	5,802,419	100.0	%	$	94,505	$	2,065	$	98,152	$	6,130,216	100.0	%	$	82,539	$	3,456	$	87,171

Commercial real-estate—collateral location by state:
Illinois	$	2,833,384	81.8								$	2,990,714	83.4	%
Wisconsin	342,305		9.9								331,901		9.3
Total primary markets	$	3,175,689	91.7	%							$	3,322,615	92.7	%
Florida	57,758		1.7								56,969		1.6
Arizona	40,434		1.2								39,329		1.1
Indiana	47,963		1.4								41,222		1.1
Other (no individual state greater than 0.5%)	143,477		4.0								125,625		3.5
Total	$	3,465,321	100.0	%							$	3,585,760	100.0	%


(1)	Purchased loans represent loans acquired with evidence of credit quality deterioration since origination, in accordancewith ASC 310-30. Loan agings are based upon contractually required payments.

We make commercial loans for many purposes, including: working capital lines, which are generally renewable annually and supported by business assets, personal guarantees and additional collateral; loans to condominium and homeowner associations originated through Barrington Bank’s Community Advantage program; small aircraft financing, an earning asset niche developed at Crystal Lake Bank; and franchise lending at Lake Forest Bank. Commercial business lending is generally considered to involve a higher degree of risk than traditional consumer bank lending. However, as a result of improvement in credit quality within the overall commercial portfolio, our allowance for loan losses in our commercial loan portfolio is $~~27.7~~29.0 million as of ~~September 30, 2012~~March 31, 2013 compared to $~~33.8~~33.2 million as of ~~September 30, 2011~~March 31, 2012.

Our commercial ~~real estate~~real-estate loans are generally secured by a first mortgage lien and assignment of rents on the property. Since most of our bank branches are located in the Chicago metropolitan area and southeastern Wisconsin, ~~91.8%~~92.6% of our commercial ~~real estate~~

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real-estate loan portfolio is located in this region. Commercial ~~real estate~~real-estate market conditions continued to be under stress in the

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~~third~~first quarter of ~~2012~~2013, however we have been able to effectively manage and reduce our total non-performing commercial ~~real estate~~real-estate loans from ~~September 30, 2011~~March 31, 2012 to ~~September 30, 2012~~March 31, 2013. As of ~~September 30, 2012~~March 31, 2013, our allowance for loan losses related to this portfolio is $~~55.1~~56.4 million compared to $~~64.4~~54.0 million as of ~~September 30, 2011~~March 31, 2012.

The Company also participates in mortgage warehouse lending by providing interim funding to unaffiliated mortgage bankers to finance residential mortgages originated by such bankers for sale into the secondary market. The Company’s loans to the mortgage bankers are secured by the business assets of the mortgage companies as well as the specific mortgage loans funded by the Company, after they have been pre-approved for purchase by third party end lenders. The Company may also provide interim financing for packages of mortgage loans on a bulk basis in circumstances where the mortgage bankers desire to competitively bid on a number of mortgages for sale as a package in the secondary market. ~~Typically, the Company will serve as sole funding source for its mortgage warehouse lending customers under short-term revolving credit agreements.~~ Amounts advanced with respect to any particular mortgage loan are usually required to be repaid within 21 days. Despite difficult conditions in the U.S. residential ~~real estate~~real-estate market experienced since 2008, our mortgage warehouse lending business expanded due to the high demand for mortgage re-financings given the historically low interest rate environment at that time and the fact that many of our competitors exited the market in late 2008 and early 2009. ~~The expansion~~However, increased competition in the first quarter of ~~the business has caused our~~2013 resulted in mortgage warehouse lines ~~to increase~~decreasing to $~~225.3~~132.0 million as of ~~September 30, 2012~~March 31, 2013 from $~~132.4~~136.4 million as of ~~September 30, 2011~~March 31, 2012. Our allowance for loan losses with respect to these loans is $~~2.0~~1.3 million as of ~~September 30, 2012~~March 31, 2013.

Home equity loans. Our home equity loans and lines of credit are originated by each of our banks in their local markets where we have a strong understanding of the underlying real estate value. Our banks monitor and manage these loans, and we conduct an automated review of all home equity loans and lines of credit at least twice per year. This review collects current credit performance for each home equity borrower and identifies situations where the credit strength of the borrower is declining, or where there are events that may influence repayment, such as tax liens or judgments. Our banks use this information to manage loans that may be higher risk and to determine whether to obtain additional credit information or updated property valuations. As a result of this work and general market conditions, we have modified our home equity offerings and changed our policies regarding home equity renewals and requests for subordination. In a limited number of situations, the unused availability on home equity lines of credit was frozen.

The rates we offer on new home equity lending are based on several factors, including appraisals and valuation due diligence, in order to reflect inherent risk, and we place additional scrutiny on larger home equity requests. In a limited number of cases, we issue home equity credit together with first mortgage financing, and requests for such financing are evaluated on a combined basis. It is not our practice to advance more than 85% of the appraised value of the underlying asset, which ratio we refer to as the loan-to-value ratio, or LTV ratio, and a majority of the credit we previously extended, when issued, had an LTV ratio of less than 80%.

Our home equity loan portfolio has performed well in light of the deterioration in the overall residential ~~real estate~~real-estate market. The number of new home equity line of credit commitments originated by us has decreased due to declines in housing valuations that have decreased the amount of equity against which homeowners may borrow, and a decline in homeowners’ desire to use their remaining equity as collateral.

Residential ~~real estate~~real-estate mortgages. Our residential ~~real estate~~real-estate portfolio predominantly includes one to four-family adjustable rate mortgages that have repricing terms generally from one to three years, construction loans to individuals and bridge financing loans for qualifying customers. As of ~~September 30, 2012~~March 31, 2013, our residential loan portfolio totaled $~~376.7~~360.7 million, or 3% of our total outstanding loans.

Our adjustable rate mortgages relate to properties located principally in the Chicago metropolitan area and southeastern Wisconsin or vacation homes owned by local residents, and may have terms based on differing indexes. These adjustable rate mortgages are often non-agency conforming because the outstanding balance of these loans exceeds the maximum balance that can be sold into the secondary market. Adjustable rate mortgage loans decrease the interest rate risk we face on our mortgage portfolio. However, this risk is not eliminated because, among other things, such loans generally provide for periodic and lifetime limits on the interest rate adjustments. Additionally, adjustable rate mortgages may pose a higher risk of delinquency and default because they require borrowers to make larger payments when interest rates rise. To date, we have not seen a significant elevation in delinquencies and foreclosures in our residential loan portfolio. As of ~~September 30, 2012~~March 31, 2013, $~~15.4~~9.6 million of our residential ~~real estate~~real-estate mortgages, or ~~4.1%~~2.7% of our residential ~~real estate~~real-estate loan portfolio, excluding loans acquired with evidence of credit quality deterioration since origination, were classified as nonaccrual, ~~$5.9~~$9.5 million were 30 to 89 days past due ~~(1.6%~~(2.6%) and $~~354.7~~340.8 million were current (~~94.3%~~94.7%). We believe that since our loan portfolio consists primarily of locally originated loans, and since the majority of our borrowers are longer-term customers with lower LTV ratios, we face a relatively low risk of borrower default and delinquency.

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While we generally do not originate loans for our own portfolio with long-term fixed rates due to interest rate risk considerations, we can accommodate customer requests for fixed rate loans by originating such loans and then selling them into the secondary market, for which we receive fee income, or by selectively retaining certain of these loans within the banks’ own portfolios where

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they are non-agency conforming, or where the terms of the loans make them favorable to retain. A portion of the loans we sold into the secondary market were sold with the servicing of those loans retained. The amount of loans serviced for others as of ~~September 30, 2012~~March 31, 2013 and ~~2011~~2012 was ~~$997.2 million~~$1.0 billion and ~~$952.3~~$963.5 million, respectively. All other mortgage loans sold into the secondary market were sold without the retention of servicing rights.

It is not our current practice to underwrite, and we have no plans to underwrite, subprime, Alt A, no or little documentation loans, or option ARM loans. As of ~~September 30, 2012~~March 31, 2013, approximately ~~$17.4~~$15.8 million of our mortgage loans consist of interest-only loans.

Premium finance receivables – commercial. FIFC and FIFC Canada originated approximately ~~$1.1~~$1.2 billion in commercial insurance premium finance receivables during the ~~third~~first quarter of ~~2012~~2013 compared to ~~$867.7 million~~$1.0 billion in the same period of ~~2011. During the nine months ending~~ ~~September 30, 2012~~2012. FIFC and ~~2011,~~ FIFC ~~originated approximately $3.2 billion and $2.7 billion, respectively, in commercial insurance premium finance receivables. FIFC~~Canada makes loans to businesses to finance the insurance premiums they pay on their commercial insurance policies. The loans are originated by ~~FIFC~~ working through independent medium and large insurance agents and brokers located throughout the United States and Canada. The insurance premiums financed are primarily for commercial customers’ purchases of liability, property and casualty and other commercial insurance.

During the second quarter of 2012, the Company completed its acquisition of Macquarie Premium Funding Inc. Through this transaction, the Company acquired approximately $213 million of gross premium finance receivables outstanding. See Note 3 of the Consolidated Financial Statements presented under Item 8 of this report for a discussion of this acquisition.

This lending involves relatively rapid turnover of the loan portfolio and high volume of loan originations. Because of the indirect nature of this lending through third party agents and brokers and because the borrowers are located nationwide and in Canada, this segment is more susceptible to third party fraud than relationship lending. ~~In the second quarter of 2010, fraud perpetrated against a number of premium finance companies in the industry, including the property~~The Company performs ongoing credit and casualty division of our premium financing subsidiary, increased both the Company’s net charge-offs and provision for credit losses by $15.7 million. In the second quarter of 2011, the Company recovered $5.0 million from insurance coverageother reviews of the $15.7 million fraud loss recorded in the second quarter of 2010. Actions have been taken by the Company to decrease the likelihood of this type of loss from recurring in this line of business for the Company by the enhancement ofagents and brokers, and performs various ~~control procedures~~internal audit steps to mitigate against the ~~risks associated with this lending. The Company has conducted a thorough review~~risk of ~~the premium finance – commercial portfolio and found no signs of similar situations.~~any fraud.

The majority of these loans are purchased by the banks in order to more fully utilize their lending capacity as these loans generally provide the banks with higher yields than alternative investments. ~~Historically, FIFC originations that were not purchased by the banks were sold to unrelated third parties with servicing retained.~~ However, during the third quarter of 2009, FIFC initially sold $695 million in commercial premium finance receivables to our indirect subsidiary, FIFC Premium Funding I, LLC, which in turn sold $600 million in aggregate principal amount of notes backed by such premium finance receivables in a securitization transaction sponsored by FIFC. During the first and second quarter of 2012, the Company ~~repurchased $172.0 million and $67.2 million, respectively, of these notes in the open market effectively defeasing a portion of the notes. During the third quarter of 2012, the Company~~ completely paid-off ~~the remaining portion of the~~ these notes. See Note 8 of the Consolidated Financial Statements presented under Item 8 of this report for a discussion of this securitization transaction.

Premium finance receivables—life insurance. In 2007, FIFC began financing life insurance policy premiums generally for high net-worth individuals. In 2009, FIFC expanded this niche lending business segment when it purchased a portfolio of domestic life insurance premium finance loans for a total aggregate purchase price of $745.9 million.

FIFC originated approximately ~~$79.9~~$85.7 million in life insurance premium finance receivables in the ~~third~~first quarter of ~~2012~~2013 as compared to ~~$91.3~~$112.8 million of originations in the ~~third~~first quarter of ~~2011. For~~2012. The decrease in originations from period to period was the ~~nine months ending~~ ~~September 30, 2012~~result of increased competition and ~~2011, FIFC originated $289.1 million and $318.6 million, respectively, in life insurance premium finance receivables.~~pricing pressure within the current market. These loans are originated directly with the borrowers with assistance from life insurance carriers, independent insurance agents, financial advisors and legal counsel. The life insurance policy is the primary form of collateral. In addition, these loans often are secured with a letter of credit, marketable securities or certificates of deposit. In some cases, FIFC may make a loan that has a partially unsecured position.

Indirect consumer loans. As part of its strategy to pursue specialized earning asset niches to augment loan generation within the Banks’ target markets, the Company established fixed-rate automobile loan financing at Hinsdale Bank funded indirectly through unaffiliated automobile dealers. The risks associated with the Company’s portfolios are diversified among many individual borrowers. Like other consumer loans, the indirect consumer loans are subject to the Banks’ established credit standards. Management regards substantially all of these loans as prime quality loans. In the fourth quarter of 2012, the Company ceased the origination of indirect automobile loans through Hinsdale Bank as a result of competitive pricing pressures.

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Other Loans. Included in the other loan category is a wide variety of personal and consumer loans to individuals as well as high yielding short-term accounts receivable financing to clients in the temporary staffing industry located throughout the United States. The Banks originate consumer loans in order to provide a wider range of financial services to their customers.

Consumer loans generally have shorter terms and higher interest rates than mortgage loans but generally involve more credit risk than mortgage loans due to the type and nature of the collateral. Additionally, short-term accounts receivable financing may also involve greater credit risks than generally associated with the loan portfolios of more traditional community banks depending on the marketability of the collateral.

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Variable Rate Loan Repricing and Rate Floors

The following table classifies the commercial and commercial real-estate loan portfolio at ~~September 30, 2012~~March 31, 2013 by date at which the loans reprice and the type of rate:


As of September 30, 2012	One year or less		From one to five years			Over five years
As of March 31, 2013								One year or less			From one to five years			Over five years
(Dollars in thousands)	One year or less				From one to five years					Over five years						Total					Total
Commercial
Fixed rate	$	89,022	$	299,633			$	108,523		$	497,178	$	75,818		$	329,020		$	120,103			$	524,941
Variable rate
With floor feature	864,212		5,940			—			870,152		703,600			5,880			—			709,480
Without floor feature	1,399,770		3,953			—			1,403,723		1,633,973			4,301			—			1,638,274
Total commercial	2,353,004		309,526			108,523			2,771,053		2,413,391			339,201			120,103			2,872,695
Commercial real-estate
Fixed rate	444,928		989,853			90,957			1,525,738		431,971			1,114,255			98,417			1,644,643
Variable rate
With floor feature	863,413		5,755			—			869,168		751,938			7,889			473			760,300
Without floor feature	1,289,707		14,743			356			1,304,806		1,556,047			28,375			1,100			1,585,522
Total commercial real-estate	2,598,048		1,010,351			91,313			3,699,712		2,739,956			1,150,519			99,990			3,990,465

Past Due Loans and Non-Performing Assets

Our ability to manage credit risk depends in large part on our ability to properly identify and manage problem loans. To do so, we operate a credit risk rating system under which our credit management personnel assign a credit risk rating to each loan at the time of origination and review loans on a regular basis to determine each loan’s credit risk rating on a scale of 1 through 10 with higher scores indicating higher risk. The credit risk rating structure used is shown below:

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1 Rating —		Minimal Risk (Loss Potential – none or extremely low) (Superior asset quality, excellent liquidity, minimal leverage)

2 Rating —		Modest Risk (Loss Potential demonstrably low) (Very good asset quality and liquidity, strong leverage capacity)

3 Rating —		Average Risk (Loss Potential low but no longer refutable) (Mostly satisfactory asset quality and liquidity, good leverage capacity)

4 Rating —		Above Average Risk (Loss Potential variable, but some potential for deterioration) (Acceptable asset quality, little excess liquidity, modest leverage capacity)

5 Rating —		Management Attention Risk (Loss Potential moderate if corrective action not taken) (Generally acceptable asset quality, somewhat strained liquidity, minimal leverage capacity)

6 Rating —		Special Mention (Loss Potential moderate if corrective action not taken) (Assets in this category are currently protected, potentially weak, but not to the point of substandard classification)

7 Rating —		Substandard Accrual (Loss Potential distinct possibility that the bank may sustain some loss, but no discernable impairment) (Must have well defined weaknesses that jeopardize the liquidation of the debt)

8 Rating —		Substandard Non-accrual (Loss Potential well documented probability of loss, including potential impairment) (Must have well defined weaknesses that jeopardize the liquidation of the debt)

9 Rating —		Doubtful (Loss Potential extremely high) (These assets have all the weaknesses in those classified “substandard” with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of current existing facts, conditions, and values, highly improbable)

10 Rating —		Loss (fully charged-off) (Loans in this category are considered fully uncollectible.)

Each loan officer is responsible for monitoring his or her loan portfolio, recommending a credit risk rating for each loan in his or her portfolio and ensuring the credit risk ratings are appropriate. These credit risk ratings are then ratified by the bank’s chief credit officer and/or concurrence credit officer. Credit risk ratings are determined by evaluating a number of factors, ~~including,~~including: a borrower’s financial strength, cash flow coverage, collateral protection and guarantees. A third party loan review firm independently

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reviews a significant portion of the loan portfolio at each of the Company’s subsidiary banks to evaluate the appropriateness of the management-assigned credit risk ratings. These ratings are subject to further review at each of our bank subsidiaries by the applicable regulatory authority, including the Federal Reserve Bank of Chicago, the Office of the Comptroller of the Currency, the State of Illinois and the State of Wisconsin and are also reviewed by our internal audit staff.

The Company’s problem loan reporting system automatically includes all loans with credit risk ratings of 6 through 9. This system is designed to provide an on-going detailed tracking mechanism for each problem loan. Once management determines that a loan has deteriorated to a point where it has a credit risk rating of 6 or worse, the Company’s Managed Asset Division performs an overall credit and collateral review. As part of this review, all underlying collateral is identified and the valuation methodology is analyzed and tracked. As a result of this initial review by the Company’s Managed Asset Division, the credit risk rating is reviewed and a portion of the outstanding loan balance may be deemed uncollectible or an impairment reserve may be established. The Company’s impairment analysis utilizes an independent re-appraisal of the collateral (unless such a third-party evaluation is not possible due to the unique nature of the collateral, such as a closely-held business or thinly traded securities). In the case of commercial ~~real estate~~real-estate collateral, an independent third party appraisal is ordered by the Company’s Real Estate Services Group to determine if there has been any change in the underlying collateral value. These independent appraisals are reviewed by the Real Estate Services Group and sometimes by independent third party valuation experts and may be adjusted depending upon market conditions. An appraisal is ordered at least once a year for these loans, or more often if market conditions dictate. In the event that the underlying value of the collateral cannot be easily determined, a detailed valuation methodology is prepared by the Managed Asset Division. A summary of this analysis is provided to the directors’ loan committee of the bank which originated the credit for approval of a charge-off, if necessary.

Through the credit risk rating process, loans are reviewed to determine if they are performing in accordance with the original contractual terms. If the borrower has failed to comply with the original contractual terms, further action may be required by the Company, including a downgrade in the credit risk rating, movement to non-accrual status, a charge-off or the establishment of a specific impairment reserve. In the event a collateral shortfall is identified during the credit review process, the Company will work with the borrower for a principal reduction and/or a pledge of additional collateral and/or additional guarantees. In the event that these options are not available, the loan may be subject to a downgrade of the credit risk rating. If we determine that a loan amount or portion thereof, is uncollectible the loan’s credit risk rating is immediately downgraded to an 8 or 9 and the uncollectible amount is charged-off. Any loan that has a partial charge-off continues to be assigned a credit risk rating of an 8 or 9 for the duration of time that a balance remains outstanding. The Managed Asset Division undertakes a thorough and

~~Table of Contents~~

ongoing analysis to determine if additional impairment and/or charge-offs are appropriate and to begin a workout plan for the credit to minimize actual losses.

The Company’s approach to workout plans and restructuring loans is built on the credit-risk rating process. A modification of a loan with an existing credit risk rating of six or worse or a modification of any other credit, which will result in a restructured credit risk rating of six or worse must be reviewed for troubled debt restructuring (“TDR”) classification. In that event, our Managed Assets Division conducts an overall credit and collateral review. A modification of a loan is considered to be a TDR if both (1) the borrower is experiencing financial difficulty and (2) for economic or legal reasons, the bank grants a concession to a borrower that it would not otherwise consider. The modification of a loan where the credit risk rating is five or better both before and after such modification is not considered to be a TDR. Based on the Company’s credit risk rating system, it considers that borrowers whose credit risk rating is five or better are not experiencing financial difficulties and therefore, are not considered TDRs.

TDRs, which are by definition considered impaired loans, are reviewed at the time of modification and on a quarterly basis to determine if a specific reserve is needed. The carrying amount of the loan is compared to the expected payments to be received, discounted at the loan’s original rate, or for collateral dependent loans, to the fair value of the collateral. Any shortfall is recorded as a specific reserve.

For non-TDR loans, if based on current information and events, it is probable that the Company will be unable to collect all amounts due to it according to the contractual terms of the loan agreement, a loan is considered impaired, and a specific impairment reserve analysis is performed and if necessary, a specific reserve is established. In determining the appropriate reserve for collateral-dependent loans, the Company considers the results of appraisals for the associated collateral.

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Non-performing Assets, excluding covered assets

The following table sets forth Wintrust’s non-performing assets, excluding covered assets, and loans acquired with credit quality deterioration since origination, as of the dates shown:


(Dollars in thousands)	September 30, 2012			June 30, 2012			December 31, 2011			September 30, 2011			March 31, 2013			December 31, 2012			March 31, 2012
Loans past due greater than 90 days and still accruing:
Commercial	$	—		$	—		$	—		$	—		$	—		$	—		$	—
Commercial real-estate	—			—			—			1,105			—			—			73
Home equity	—			—			—			—			—			100			—
Residential real-estate	—			—			—			—			—			—			—
Premium finance receivables—commercial	5,533			5,184			5,281			4,599			7,677			10,008			4,619
Premium finance receivables—life insurance	—			—			—			2,413			2,256			—			—
Indirect consumer	215			234			314			292			145			189			257
Consumer and other	—			—			—			—			—			32			—
Total loans past due greater than 90 days and still accruing	5,748			5,418			5,595			8,409			10,078			10,329			4,949
Non-accrual loans:
Commercial	17,711			30,473			19,018			24,836			18,373			21,737			19,835
Commercial real-estate	58,461			56,077			66,508			69,669			61,807			49,973			62,704
Home equity	11,504			10,583			14,164			15,426			14,891			13,423			12,881
Residential real-estate	15,393			9,387			6,619			7,546			9,606			11,728			5,329
Premium finance receivables—commercial	7,488			7,404			7,755			6,942			12,068			9,302			7,650
Premium finance receivables—life insurance	29			—			54			349			20			25			—
Indirect consumer	72			132			138			146			95			55			152
Consumer and other	1,485			1,446			233			653			1,695			1,511			121
Total non-accrual loans	112,143			115,502			114,489			125,567			118,555			107,754			108,672
Total non-performing loans:
Commercial	17,711			30,473			19,018			24,836			18,373			21,737			19,835
Commercial real-estate	58,461			56,077			66,508			70,774			61,807			49,973			62,777
Home equity	11,504			10,583			14,164			15,426			14,891			13,523			12,881
Residential real-estate	15,393			9,387			6,619			7,546			9,606			11,728			5,329
Premium finance receivables—commercial	13,021			12,588			13,036			11,541			19,745			19,310			12,269
Premium finance receivables—life insurance	29			—			54			2,762			2,276			25			—
Indirect consumer	287			366			452			438			240			244			409
Consumer and other	1,485			1,446			233			653			1,695			1,543			121
Total non-performing loans	$	117,891		$	120,920		$	120,084		$	133,976		$	128,633		$	118,083		$	113,621
Other real estate owned	61,897			66,532			79,093			86,622			50,593			56,174			69,575
Other real estate owned—obtained in acquisition	5,480			6,021			7,430			10,302			5,584			6,717			6,661
Other repossessed assets													4,315			—			—
Total non-performing assets	$	185,268		$	193,473		$	206,607		$	230,900		$	189,125		$	180,974		$	189,857
Total non-performing loans by category as a percent of its own respective category’s period-end balance:
Commercial	0.64		%	1.14		%	0.76		%	1.06		%	0.64		%	0.75		%	0.78		%
Commercial real-estate	1.58			1.53			1.89			2.04			1.55			1.29			1.75
Home equity	1.42			1.29			1.64			1.75			1.96			1.72			1.53
Residential real-estate	4.09			2.50			1.89			2.31			2.66			3.19			1.47
Premium finance receivables—commercial	0.66			0.69			0.92			0.81			0.99			0.97			0.81
Premium finance receivables—life insurance	—			—			—			0.17			0.13			—			—
Indirect consumer	0.37			0.51			0.70			0.70			0.35			0.32			0.61
Consumer and other	1.36			1.34			0.19			0.58			1.74			1.48			0.11
Total non-performing loans	1.03		%	1.08		%	1.14		%	1.30		%	1.08		%	1.00		%	1.06		%
Total non-performing assets, as a percentage of total assets	1.09		%	1.17		%	1.30		%	1.45		%	1.11		%	1.03		%	1.17		%
Allowance for loan losses as a percentage of total non-performing loans	95.25		%	92.56		%	91.92		%	88.56		%	85.79		%	90.91		%	97.71		%

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Non-performing Commercial and Commercial Real-Estate

Commercial non-performing loans totaled $~~17.7~~18.4 million as of ~~September 30, 2012~~March 31, 2013 compared to $~~19.0~~21.7 million as of December 31, ~~2011~~2012 and $~~24.8~~19.8 million as of ~~September 30, 2011~~March 31, 2012. Commercial ~~real estate~~real-estate non-performing loans totaled $~~58.5~~61.8 million as of ~~September 30, 2012~~March 31, 2013 compared to $~~66.5~~50.0 million as of December 31, ~~2011~~2012 and $~~70.8~~62.8 million as of ~~September 30, 2011~~March 31, 2012.

Management is pursuing the resolution of all credits in this category. At this time, management believes reserves are adequate to absorb inherent losses that may occur upon the ultimate resolution of these credits.

Non-performing Residential ~~Real Estate~~Real-Estate and Home Equity

Non-performing residential ~~real estate~~real-estate and home equity loans totaled ~~$26.9~~$24.5 million as of ~~September 30,~~March 31, 2013. The balance decreased $754,000 from December 31, 2012 and increased $6.3 million from March 31, 2012. The ~~balance increased $6.1 million from~~ ~~December~~March 31, ~~2011~~ ~~and $3.9 million from~~ ~~September 30, 2011. The~~ ~~September 30, 2012~~2013 non-performing balance is comprised of ~~$15.4~~$9.6 million of residential ~~real estate (58~~real-estate (50 individual credits) and ~~$11.5~~$14.9 million of home equity loans ~~(45~~(53 individual credits). On average, this is approximately seven non-performing residential ~~real estate~~real-estate loans and home equity loans per chartered bank within the Company. The Company believes control and collection of these loans is very manageable. At this time, management believes reserves are adequate to absorb inherent losses that may occur upon the ultimate resolution of these credits.

Non-performing Commercial Premium Finance Receivables

The table below presents the level of non-performing property and casualty premium finance receivables as of ~~September 30, 2012~~March 31, 2013 and ~~2011,~~2012, and the amount of net charge-offs for the quarters then ended.


(Dollars in thousands)	September 30, 2012			September 30, 2011			March 31, 2013			March 31, 2012
Non-performing premium finance receivables—commercial	$	13,021		$	11,541		$	19,745		$	12,269
- as a percent of premium finance receivables—commercial outstanding	0.66		%	0.81		%	0.99		%	0.81		%
Net charge-offs (recoveries) of premium finance receivables—commercial	$	695		$	1,579
Net charge-offs of premium finance receivables—commercial							$	783		$	560
- annualized as a percent of average premium finance receivables—commercial	0.14		%	0.42		%	0.16		%	0.15		%

Fluctuations in this category may occur due to timing and nature of account collections from insurance carriers. The Company’s underwriting standards, regardless of the condition of the economy, have remained consistent. We anticipate that net charge-offs and non-performing asset levels in the near term will continue to be at levels that are within acceptable operating ranges for this category of loans. Management is comfortable with administering the collections at this level of non-performing property and casualty premium finance receivables and believes reserves are adequate to absorb inherent losses that may occur upon the ultimate resolution of these credits.

Due to the nature of collateral for commercial premium finance receivables, it customarily takes 60-150 days to convert the collateral into cash. Accordingly, the level of non-performing commercial premium finance receivables is not necessarily indicative of the loss inherent in the portfolio. In the event of default, Wintrust has the power to cancel the insurance policy and collect the unearned portion of the premium from the insurance carrier. In the event of cancellation, the cash returned in payment of the unearned premium by the insurer should generally be sufficient to cover the receivable balance, the interest and other charges due. Due to notification requirements and processing time by most insurance carriers, many receivables will become delinquent beyond 90 days while the insurer is processing the return of the unearned premium. Management continues to accrue interest until maturity as the unearned premium is ordinarily sufficient to pay-off the outstanding balance and contractual interest due.

Table of Contents

Loan Portfolio Aging

The following table shows, as of ~~September 30, 2012~~March 31, 2013, only 1.1% of the entire portfolio, excluding covered loans, is non-accrual or greater than 90 days past due and still accruing interest with only 1.2%, either one or two payments past due. In total, 97.7% of the Company’s total loan portfolio, excluding covered loans, as of ~~September 30, 2012~~March 31, 2013 is current according to the original contractual terms of the loan agreements.

~~Table of Contents~~

The tables below show the aging of the Company’s loan portfolio at ~~September 30, 2012~~March 31, 2013 and ~~June 30,~~December 31, 2012:


			90+ days		60-89		30-59								90+ days		60-89		30-59
As of September 30, 2012			and still		days past		days past
As of March 31, 2013															and still		days past		days past
(Dollars in thousands)	Nonaccrual		accruing		due		due		Current		Total Loans		Nonaccrual		accruing		due		due		Current		Total Loans
Loan Balances:
Commercial
Commercial and industrial	$	15,163	$	—	$	5,985	$	16,631	$	1,518,596	$	1,556,375	$	17,717	$	—	$	1,150	$	16,710	$	1,533,999	$	1,569,576
Franchise	1,792		—		—		—		177,914		179,706		125		—		—		76		194,310		194,511
Mortgage warehouse lines of credit	—		—		—		—		225,295		225,295		—		—		—		—		131,970		131,970
Community Advantage—homeowners association	—		—		—		—		73,881		73,881		—		—		—		—		82,763		82,763
Aircraft	428		—		—		150		20,866		21,444		—		—		—		—		14,112		14,112
Asset-based lending	328		—		1,211		5,556		525,966		533,061		531		—		483		5,518		680,723		687,255
Municipal	—		—		—		—		90,404		90,404		—		—		—		—		89,508		89,508
Leases	—		—		—		—		83,351		83,351		—		—		—		844		97,186		98,030
Other	—		—		—		—		1,576		1,576		—		—		—		—		127		127
Purchased non-covered commercial ⁽¹⁾	—		499		—		—		5,461		5,960		—		449		—		—		4,394		4,843
Total commercial	17,711		499		7,196		22,337		2,723,310		2,771,053		18,373		449		1,633		23,148		2,829,092		2,872,695
Commercial real-estate:
Commercial real-estate
Residential construction	2,141		—		3,008		—		39,106		44,255		3,094		—		945		—		33,044		37,083
Commercial construction	3,315		—		163		13,072		152,993		169,543		1,086		—		9,521		—		151,751		162,358
Land	10,629		—		3,033		3,017		116,807		133,486		17,976		—		—		11,563		104,039		133,578
Office	6,185		—		5,717		7,237		565,182		584,321		3,564		—		8,990		4,797		567,333		584,684
Industrial	1,885		—		645		1,681		570,114		574,325		7,137		—		—		986		587,402		595,525
Retail	10,133		—		1,853		5,617		543,066		560,669		7,915		—		6,970		5,953		565,963		586,801
Multi-family	3,314		—		3,062		—		357,047		363,423		2,088		—		1,036		4,315		505,346		512,785
Mixed use and other	20,859		—		9,779		14,990		1,175,222		1,220,850		18,947		—		1,573		13,560		1,288,754		1,322,834
Purchased non-covered commercial real-estate ⁽¹⁾	—		1,066		150		389		47,235		48,840		—		1,866		251		3,333		49,367		54,817
Total commercial real-estate	58,461		1,066		27,410		46,003		3,566,772		3,699,712		61,807		1,866		29,286		44,507		3,852,999		3,990,465
Home equity	11,504		—		5,905		5,642		784,541		807,592		14,891		—		1,370		4,324		738,633		759,218
Residential real estate	15,393		—		3,281		2,637		354,711		376,022
Purchased non-covered residential real estate ⁽¹⁾	—		—		—		—		656		656
Residential real-estate													9,606		—		782		8,680		340,751		359,819
Purchased non-covered residential real-estate ⁽¹⁾													—		—		198		—		635		833
Premium finance receivables
Commercial insurance loans	7,488		5,533		5,881		14,369		1,949,674		1,982,945		12,068		7,677		4,647		19,323		1,953,445		1,997,160
Life insurance loans	29		—		—		—		1,128,559		1,128,588		20		2,256		—		1,340		1,250,165		1,253,781
Purchased life insurance loans ⁽¹⁾	—		—		—		—		537,032		537,032		—		—		—		—		499,731		499,731
Indirect consumer	72		215		74		344		76,673		77,378		95		145		127		221		68,657		69,245
Consumer and other	1,485		—		429		849		106,092		108,855		1,695		—		160		493		92,379		94,727
Purchased non-covered consumer and other ⁽¹⁾	—		—		—		—		67		67		—		—		—		20		2,618		2,638
Total loans, net of unearned income, excluding covered loans	$	112,143	$	7,313	$	50,176	$	92,181	$	11,228,087	$	11,489,900	$	118,555	$	12,393	$	38,203	$	102,056	$	11,629,105	$	11,900,312
Covered loans	910		129,257		6,521		14,571		506,266		657,525		1,820		115,482		1,454		12,268		387,637		518,661
Total loans, net of unearned income	$	113,053	$	136,570	$	56,697	$	106,752	$	11,734,353	$	12,147,425	$	120,375	$	127,875	$	39,657	$	114,324	$	12,016,742	$	12,418,973


(1)	Purchased loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30.Loan agings are based upon contractually required payments.

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Aging as a % of Loan Balance: As of September 30, 2012	Nonaccrual		90+ days and still accruing		60-89 days past due		30-59 days past due		Current		Total Loans
Aging as a % of Loan Balance: As of March 31, 2013													Nonaccrual		90+ days and still accruing		60-89 days past due		30-59 days past due		Current		Total Loans
Commercial
Commercial and industrial	1.0	%	—		0.4	%	1.1	%	97.5	%	100.0	%	1.1	%	—		0.1	%	1.1	%	97.7	%	100.0	%
Franchise	1.0		—		—		—		99.0		100.0		0.1		—		—		—		99.9		100.0
Mortgage warehouse lines of credit	—		—		—		—		100.0		100.0		—		—		—		—		100.0		100.0
Community Advantage—homeowners association	—		—		—		—		100.0		100.0		—		—		—		—		100.0		100.0
Aircraft	2.0		—		—		0.7		97.3		100.0		—		—		—		—		100.0		100.0
Asset-based lending	0.1		—		0.2		1.0		98.7		100.0		0.1		—		0.1		0.8		99.0		100.0
Municipal	—		—		—		—		100.0		100.0		—		—		—		—		100.0		100.0
Leases	—		—		—		—		100.0		100.0		—		—		—		0.9		99.1		100.0
Other	—		—		—		—		100.0		100.0		—		—		—		—		100.0		100.0
Purchased non-covered commercial ⁽¹⁾	—		8.4		—		—		91.6		100.0		—		9.3		—		—		90.7		100.0
Total commercial	0.6		—		0.3		0.8		98.3		100.0		0.6		—		0.1		0.8		98.5		100.0
Commercial real-estate
Residential construction	4.8		—		6.8		—		88.4		100.0		8.3		—		2.6		—		89.1		100.0
Commercial construction	2.0		—		0.1		7.7		90.2		100.0		0.7		—		5.9		—		93.4		100.0
Land	8.0		—		2.3		2.3		87.4		100.0		13.5		—		—		8.7		77.8		100.0
Office	1.1		—		1.0		1.2		96.7		100.0		0.6		—		1.5		0.8		97.1		100.0
Industrial	0.3		—		0.1		0.3		99.3		100.0		1.2		—		—		0.2		98.6		100.0
Retail	1.8		—		0.3		1.0		96.9		100.0		1.4		—		1.2		1.0		96.4		100.0
Multi-family	0.9		—		0.8		—		98.3		100.0		0.4		—		0.2		0.8		98.6		100.0
Mixed use and other	1.7		—		0.8		1.2		96.3		100.0		1.4		—		0.1		1.0		97.5		100.0
Purchased non-covered commercial real-estate ⁽¹⁾	—		2.2		0.3		0.8		96.7		100.0		—		3.4		0.5		6.1		90.0		100.0
Total commercial real-estate	1.6		—		0.7		1.2		96.5		100.0		1.6		0.1		0.7		1.1		96.5		100.0
Home equity	1.4		—		0.7		0.7		97.2		100.0		2.0		—		0.2		0.6		97.2		100.0
Residential real estate	4.1		—		0.9		0.7		94.3		100.0
Purchased non-covered residential real estate ⁽¹⁾	—		—		—		—		100.0		100.0
Residential real-estate													2.7		—		0.2		2.4		94.7		100.0
Purchased non-covered residential real-estate ⁽¹⁾													—		—		23.8		—		76.2		100.0
Premium finance receivables
Commercial insurance loans	0.4		0.3		0.3		0.7		98.3		100.0		0.6		0.4		0.2		1.0		97.8		100.0
Life insurance loans	—		—		—		—		100.0		100.0		—		0.2		—		0.1		99.7		100.0
Purchased life insurance loans ⁽¹⁾	—		—		—		—		100.0		100.0		—		—		—		—		100.0		100.0
Indirect consumer	0.1		0.3		0.1		0.4		99.1		100.0		0.1		0.2		0.2		0.3		99.2		100.0
Consumer and other	1.4		—		0.4		0.8		97.4		100.0		1.8		—		0.2		0.5		97.5		100.0
Purchased non-covered consumer and other ⁽¹⁾	—		—		—		—		100.0		100.0		—		—		—		0.8		99.2		100.0
Total loans, net of unearned income, excluding covered loans	1.0	%	0.1	%	0.4	%	0.8	%	97.7	%	100.0	%	1.0	%	0.1	%	0.3	%	0.9	%	97.7	%	100.0	%
Covered loans	0.1	%	19.7	%	1.0	%	2.2	%	77.0	%	100.0	%	0.4		22.3		0.3		2.4		74.6		100.0
Total loans, net of unearned income	0.9	%	1.1	%	0.5	%	0.9	%	96.6	%	100.0	%	1.0	%	1.0	%	0.3	%	0.9	%	96.8	%	100.0	%


(1)	Purchased loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30.Loan agings are based upon contractually required payments.

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Table of Contents


As of June 30, 2012 (Dollars in thousands)	Nonaccrual		90+ days and still accruing		60-89 days past due		30-59 days past due		Current		Total Loans
As of December 31, 2012 (Dollars in thousands)													Nonaccrual		90+ days and still accruing		60-89 days past due		30-59 days past due		Current		Total Loans
Loan Balances:
Commercial
Commercial and industrial	$	27,911	$	—	$	5,557	$	17,227	$	1,570,366	$	1,621,061	$	19,409	$	—	$	5,520	$	15,410	$	1,587,864	$	1,628,203
Franchise	1,792		—		—		—		176,827		178,619		1,792		—		—		—		194,603		196,395
Mortgage warehouse lines of credit	—		—		—		—		123,804		123,804		—		—		—		—		215,076		215,076
Community Advantage—homeowners association	—		—		—		—		73,289		73,289		—		—		—		—		81,496		81,496
Aircraft	428		—		—		170		22,205		22,803		—		—		148		—		17,216		17,364
Asset-based lending	342		—		172		1,074		487,619		489,207		536		—		1,126		6,622		564,154		572,438
Municipal	—		—		—		—		79,708		79,708		—		—		—		—		91,824		91,824
Leases	—		—		—		1		77,805		77,806		—		—		—		896		89,547		90,443
Other	—		—		—		—		1,842		1,842		—		—		—		—		16,549		16,549
Purchased non-covered commercial ⁽¹⁾	—		486		—		57		4,499		5,042		—		496		432		7		4,075		5,010
Total commercial	30,473		486		5,729		18,529		2,617,964		2,673,181		21,737		496		7,226		22,935		2,862,404		2,914,798
Commercial real-estate:
Commercial real-estate
Residential construction	892		—		6,041		5,773		32,020		44,726		3,110		—		4		41		37,246		40,401
Commercial construction	3,011		—		13,131		330		140,223		156,695		2,159		—		885		386		167,525		170,955
Land	13,459		—		3,276		6,044		142,490		165,269		11,299		—		632		9,014		113,252		134,197
Office	4,796		—		891		1,868		562,879		570,434		4,196		—		1,889		3,280		560,346		569,711
Industrial	1,820		—		3,158		1,320		591,919		598,217		2,089		—		6,042		4,512		565,294		577,937
Retail	8,158		—		1,351		6,657		546,617		562,783		7,792		—		1,372		998		558,734		568,896
Multi-family	3,312		—		151		1,447		332,871		337,781		2,586		—		3,949		1,040		389,116		396,691
Mixed use and other	20,629		—		15,530		16,063		1,126,930		1,179,152		16,742		—		6,660		13,349		1,312,503		1,349,254
Purchased non-covered commercial real-estate ⁽¹⁾	—		2,232		2,352		1,057		45,821		51,462		—		749		2,663		2,508		50,156		56,076
Total commercial real-estate	56,077		2,232		45,881		40,559		3,521,770		3,666,519		49,973		749		24,096		35,128		3,754,172		3,864,118
Home equity	10,583		—		2,182		3,195		805,031		820,991		13,423		100		1,592		5,043		768,316		788,474
Residential real estate	9,387		—		3,765		1,558		360,128		374,838
Purchased non-covered residential real estate ⁽¹⁾	—		—		—		—		656		656
Residential real-estate													11,728		—		2,763		8,250		343,616		366,357
Purchased non-covered residential real-estate ⁽¹⁾													—		—		200		—		656		856
Premium finance receivables
Commercial insurance loans	7,404		5,184		4,796		7,965		1,804,695		1,830,044		9,302		10,008		6,729		19,597		1,942,220		1,987,856
Life insurance loans	—		—		—		30		1,111,207		1,111,237		25		—		—		5,531		1,205,151		1,210,707
Purchased life insurance loans ⁽¹⁾	—		—		—		—		544,963		544,963		—		—		—		—		514,459		514,459
Indirect consumer	132		234		51		312		71,753		72,482		55		189		51		442		76,596		77,333
Consumer and other	1,446		—		483		265		105,669		107,863		1,511		32		167		433		99,010		101,153
Purchased non-covered consumer and other ⁽¹⁾	—		—		—		—		68		68		—		66		32		101		2,633		2,832
Total loans, net of unearned income, excluding covered loans	$	115,502	$	8,136	$	62,887	$	72,413	$	10,943,904	$	11,202,842	$	107,754	$	11,640	$	42,856	$	97,460	$	11,569,233	$	11,828,943
Covered loans	—		145,115		14,658		7,503		446,786		614,062		1,988		122,350		16,108		7,999		411,642		560,087
Total loans, net of unearned income	$	115,502	$	153,251	$	77,545	$	79,916	$	11,390,690	$	11,816,904	$	109,742	$	133,990	$	58,964	$	105,459	$	11,980,875	$	12,389,030


(1)	Purchased loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30.Loan agings are based upon contractually required payments.

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Aging as a % of Loan Balance: As of June 30, 2012	Nonaccrual		90+ days and still accruing		60-89 days past due		30-59 days past due		Current		Total Loans
Aging as a % of Loan Balance: As of December 31, 2012													Nonaccrual		90+ days and still accruing		60-89 days past due		30-59 days past due		Current		Total Loans
Commercial
Commercial and industrial	1.7	%	—	%	0.3	%	1.1	%	96.9	%	100.0	%	1.2	%	—	%	0.3	%	1.0	%	97.5	%	100.0	%
Franchise	1.0		—		—		—		99.0		100.0		0.9		—		—		—		99.1		100.0
Mortgage warehouse lines of credit	—		—		—		—		100.0		100.0		—		—		—		—		100.0		100.0
Community Advantage—homeowners association	—		—		—		—		100.0		100.0		—		—		—		—		100.0		100.0
Aircraft	1.9		—		—		0.7		97.4		100.0		—		—		0.9		—		99.1		100.0
Asset-based lending	0.1		—		—		0.2		99.7		100.0		0.1		—		0.2		1.2		98.5		100.0
Municipal	—		—		—		—		100.0		100.0		—		—		—		—		100.0		100.0
Leases	—		—		—		—		100.0		100.0		—		—		—		1.0		99.0		100.0
Other	—		—		—		—		100.0		100.0		—		—		—		—		100.0		100.0
Purchased non-covered commercial ⁽¹⁾	—		9.6		—		1.1		89.3		100.0		—		9.9		8.6		0.1		81.4		100.0
Total commercial	1.1		—		0.2		0.7		98.0		100.0		0.8		—		0.3		0.8		98.1		100.0
Commercial real-estate
Residential construction	2.0		—		13.5		12.9		71.6		100.0		7.7		—		—		0.1		92.2		100.0
Commercial construction	1.9		—		8.4		0.2		89.5		100.0		1.3		—		0.5		0.2		98.0		100.0
Land	8.1		—		2.0		3.7		86.2		100.0		8.4		—		0.5		6.7		84.4		100.0
Office	0.8		—		0.2		0.3		98.7		100.0		0.7		—		0.3		0.6		98.4		100.0
Industrial	0.3		—		0.5		0.2		99.0		100.0		0.4		—		1.1		0.8		97.7		100.0
Retail	1.4		—		0.2		1.2		97.2		100.0		1.4		—		0.2		0.2		98.2		100.0
Multi-family	1.0		—		—		0.4		98.6		100.0		0.7		—		1.0		0.3		98.0		100.0
Mixed use and other	1.7		—		1.3		1.4		95.6		100.0		1.2		—		0.5		1.0		97.3		100.0
Purchased non-covered commercial real-estate ⁽¹⁾	—		4.3		4.6		2.1		89.0		100.0		—		1.3		4.8		4.5		89.4		100.0
Total commercial real-estate	1.5		0.1		1.3		1.1		96.0		100.0		1.3		—		0.6		0.9		97.2		100.0
Home equity	1.3		—		0.3		0.4		98.0		100.0		1.7		—		0.2		0.6		97.5		100.0
Residential real estate	2.5		—		1.0		0.4		96.1		100.0
Purchased non-covered residential real estate ⁽¹⁾	—		—		—		—		100.0		100.0
Residential real-estate													3.2		—		0.8		2.3		93.7		100.0
Purchased non-covered residential real-estate ⁽¹⁾													—		—		23.4		—		76.6		100.0
Premium finance receivables
Commercial insurance loans	0.4		0.3		0.3		0.4		98.6		100.0		0.5		0.5		0.3		1.0		97.7		100.0
Life insurance loans	—		—		—		—		100.0		100.0		—		—		—		0.5		99.5		100.0
Purchased life insurance loans ⁽¹⁾	—		—		—		—		100.0		100.0		—		—		—		—		100.0		100.0
Indirect consumer	0.2		0.3		0.1		0.4		99.0		100.0		0.1		0.2		0.1		0.6		99.0		100.0
Consumer and other	1.3		—		0.4		0.2		98.1		100.0		1.5		—		0.2		0.4		97.9		100.0
Purchased non-covered consumer and other ⁽¹⁾	—		—		—		—		100.0		100.0		—		2.3		1.1		3.6		93.0		100.0
Total loans, net of unearned income, excluding covered loans	1.0	%	0.1	%	0.6	%	0.6	%	97.7	%	100.0	%	0.9	%	0.1	%	0.4	%	0.8	%	97.8	%	100.0	%
Covered loans	—	%	23.6	%	2.4	%	1.2	%	72.8	%	100.0	%	0.4		21.8		2.9		1.4		73.5		100.0
Total loans, net of unearned income	1.0	%	1.3	%	0.7	%	0.7	%	96.3	%	100.0	%	0.9	%	1.1	%	0.5	%	0.9	%	96.6	%	100.0	%


(1)	Purchased loans represent loans acquired with evidence of credit quality deterioration since origination, in accordance with ASC 310-30.Loan agings are based upon contractually required payments.

As of ~~September 30, 2012~~March 31, 2013, only $~~50.2~~38.2 million of all loans, excluding covered loans, or 0.3%, were 60 to 89 days past due and $102.1 million or 0.9%, were 30 to 59 days (or one payment) past due. As of December 31, 2012, $42.9 million of all loans, excluding covered loans, or 0.4%, were 60 to 89 days past due and $~~92.2~~97.5 million, or 0.8%, were 30 to 59 days (or one payment) past due. ~~As of~~ ~~June 30, 2012~~, ~~$62.9 million~~ ~~of all loans, excluding covered loans, or~~ ~~0.6%, were 60 to 89 days past due and~~ ~~$72.4 million, or~~ ~~0.6%, were 30 to 59 days (or one payment) past due.~~

The majority of the commercial and commercial ~~real estate~~real-estate loans shown as 60 to 89 days and 30 to 59 days past due are included on the Company’s internal problem loan reporting system. Loans on this system are closely monitored by management on a ~~monthly basis. Near-term delinquencies (30 to 59 days past due) increased $19.8 million since~~ ~~June 30, 2012~~.

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monthly basis. Commercial and commercial real estate loans with delinquencies from 30 to 89 days past-due increased $9.2 million since December 31, 2012.

The Company's home equity and residential loan portfolios continue to exhibit low delinquency ratios. Home equity loans at ~~September 30, 2012~~March 31, 2013 that are current with regard to the contractual terms of the loan agreement represent 97.2% of the total home equity portfolio. Residential ~~real estate~~real-estate loans, excluding loans acquired with evidence of credit quality deterioration since origination, at ~~September 30, 2012~~March 31, 2013 that are current with regards to the contractual terms of the loan agreements comprise ~~94.3%~~94.7% of total residential ~~real estate~~real-estate loans outstanding.

The ratio of non-performing commercial premium finance receivables fluctuates throughout the year due to the nature and timing of canceled account collections from insurance carriers. Due to the nature of collateral for commercial premium finance receivables, it customarily takes 60-150 days to convert the collateral into cash. Accordingly, the level of non-performing commercial premium finance receivables is not necessarily indicative of the loss inherent in the portfolio. In the event of default, Wintrust has the power to cancel the insurance policy and collect the unearned portion of the premium from the insurance carrier. In the event of cancellation, the cash returned in payment of the unearned premium by the insurer should generally be sufficient to cover the receivable balance, the interest and other charges due. Due to notification requirements and processing time by most insurance carriers, many receivables will become delinquent beyond 90 days while the insurer is processing the return of the unearned premium. Management continues to accrue interest until maturity as the unearned premium is ordinarily sufficient to pay-off the outstanding balance and contractual interest due.

Nonperforming Loans Rollforward

The table below presents a summary of non-performing loans, excluding covered loans, and loans acquired with credit quality deterioration since origination, for the periods presented:


	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,			September 30,			September 30,			September 30,			March 31,			March 31,
(Dollars in thousands)	2012			2011			2012			2011			2013			2012
Balance at beginning of period	$	120,920		$	156,072		$	120,084		$	142,132		$	118,083		$	120,084
Additions, net	27,452			39,500			81,179			141,410			28,030			17,867
Return to performing status	(1,005		)	(2,147		)	(3,043		)	(5,515		)	—			(922		)
Payments received	(14,773		)	(20,236		)	(29,236		)	(34,378		)	(4,121		)	(4,640		)
Transfer to OREO	(4,760		)	(17,670		)	(17,916		)	(53,021		)	(6,890		)	(6,601		)
Charge-offs	(10,616		)	(18,283		)	(33,560		)	(49,994		)	(9,148		)	(11,307		)
Net change for niche loans ⁽¹⁾	673			(3,260		)	383			(6,658		)	2,679			(860		)
Balance at end of period	$	117,891		$	133,976		$	117,891		$	133,976		$	128,633		$	113,621


(1)	This includes activity for premium finance receivables and indirect consumer loans.

See Note 7 of the Financial Statements presented under Item 1 of this report for further discussion of non-performing loans and the loan aging during the respective periods.

Allowance for Loan Losses

The allowance for loan losses represents management’s estimate of the probable and reasonably estimable loan losses that our loan portfolio is expected to incur. The allowance for loan losses is determined quarterly using a methodology that incorporates important risk characteristics of each loan, as described below under “How We Determine the Allowance for Credit Losses.” This process is subject to review at each of our bank subsidiaries by the applicable regulatory authority, including the Federal Reserve Bank of Chicago, the Office of the Comptroller of the Currency, the State of Illinois and the State of Wisconsin.

Management ~~has~~ determined that the allowance for loan losses was appropriate at ~~September 30, 2012~~March 31, 2013, and that the loan portfolio is well diversified and well secured, without undue concentration in any specific risk area. This process involves a high degree of management judgment, however the allowance for credit losses is based on a comprehensive, well documented, and consistently applied analysis of the Company’s loan portfolio. This analysis takes into consideration all available information existing as of the financial statement date, including environmental factors such as economic, industry, geographical and political factors. The relative level of allowance for credit losses is reviewed and compared to industry peers. This review encompasses levels of total nonperforming loans, portfolio mix, portfolio concentrations, current geographic risks and overall levels of net charge-offs. Historical trending of both the Company’s results and the industry peers is also reviewed to analyze comparative significance.

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Allowance for Credit Losses, excluding covered loans

The following table summarizes the activity in our allowance for credit losses during the periods indicated.


	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
(Dollars in thousands)	2012			2011			2012			2011			2013			2012
Allowance for loan losses at beginning of period	$	111,920		$	117,362		$	110,381		$	113,903		$	107,351		$	110,381
Provision for credit losses	18,192			28,263			51,740			81,305			15,367			15,154
Other adjustments	(534		)	—			(1,044		)	—			(229		)	(238		)
Reclassification from/(to) allowance for unfunded lending-related commitments	626			(66		)	953			1,733
Reclassification (to)/from allowance for unfunded lending-related commitments													(213		)	152
Charge-offs:
Commercial	3,315			8,851			12,623			25,574			4,540			3,262
Commercial real estate	17,000			14,734			34,455			48,767
Commercial real-estate													3,299			8,229
Home equity	1,543			1,071			5,865			3,144			2,397			2,590
Residential real estate	1,027			926			1,590			2,483
Residential real-estate													1,728			175
Premium finance receivables—commercial	886			1,738			2,467			5,138			1,068			837
Premium finance receivables—life insurance	—			31			16			275			—			13
Indirect consumer	73			24			157			188			32			51
Consumer and other	93			282			454			708			97			310
Total charge-offs	23,937			27,657			57,627			86,277			13,161			15,467
Recoveries:
Commercial	349			150			852			717			295			257
Commercial real estate	5,352			299			5,657			1,100
Commercial real-estate													368			131
Home equity	52			32			385			59			162			162
Residential real estate	8			3			13			8
Residential real-estate													5			2
Premium finance receivables—commercial	191			159			621			5,802			285			277
Premium finance receivables—life insurance	15			—			54			12			9			21
Indirect consumer	25			75			76			183			15			30
Consumer and other	28			29			226			104			94			161
Total recoveries	6,020			747			7,884			7,985			1,233			1,041
Net charge-offs	(17,917		)	(26,910		)	(49,743		)	(78,292		)	(11,928		)	(14,426		)
Allowance for loan losses at period end	$	112,287		$	118,649		$	112,287		$	118,649		$	110,348		$	111,023
Allowance for unfunded lending-related commitments at period end	12,627			13,402			12,627			13,402			15,287			13,078
Allowance for credit losses at period end	$	124,914		$	132,051		$	124,914		$	132,051		$	125,635		$	124,101
Annualized net charge-offs by category as a percentage of its own respective category’s average:
Commercial	0.44		%	1.60		%	0.61		%	1.63		%	0.61		%	0.49		%
Commercial real estate	1.27			1.69			1.07			1.89
Commercial real-estate													0.30			0.92
Home equity	0.73			0.47			0.88			0.46			1.17			1.15
Residential real estate	0.44			0.80			0.27			0.68
Residential real-estate													0.93			0.11
Premium finance receivables—commercial	0.14			0.42			0.14			(0.06		)	0.16			0.15
Premium finance receivables—life insurance	—			0.01			—			0.02			—			—
Indirect consumer	0.25			(0.33		)	0.15			0.01			0.09			0.13
Consumer and other	0.22			0.84			0.26			0.75			0.01			0.49
Total loans, net of unearned income, excluding covered loans	0.60		%	1.05		%	0.58		%	1.05		%	0.39		%	0.53		%
Net charge-offs as a percentage of the provision for credit losses	98.49		%	95.21		%	96.14		%	96.29		%	77.62		%	95.20		%
Loans at period-end, excluding covered loans							$	11,489,900		$	10,272,711		$	11,900,312		$	10,717,384
Allowance for loan losses as a percentage of loans at period end							0.98		%	1.15		%	0.93		%	1.04		%
Allowance for credit losses as a percentage of loans at period end							1.09		%	1.29		%	1.06		%	1.16		%

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The allowance for credit losses, excluding the allowance for covered loan losses, is comprised of an allowance for loan losses, which is determined with respect to loans that we have originated, and an allowance for lending-related commitments. Our allowance for lending-related commitments is determined with respect to funds that we have committed to lend but for which funds have not yet been disbursed and is computed using a methodology similar to that used to determine the allowance for loan losses. Additions to the allowance for loan losses are charged to earnings through the provision for credit losses. Charge-offs

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represent the amount of loans that have been determined to be uncollectible during a given period, and are deducted from the allowance for loan losses, and recoveries represent the amount of collections received from loans that had previously been charged off, and are credited to the allowance for loan losses. See Note 7 of the Financial Statements presented under Item 1 of this report for further discussion of activity within the allowance for loan losses during the period and the relationship with respective loan balances for each loan category and the total loan portfolio, excluding covered loans.

How We Determine the Allowance for Credit Losses

The allowance for loan losses includes an element for estimated probable but undetected losses and for imprecision in the credit risk models used to calculate the allowance. As part of the Problem Loan Reporting system review, the Company analyzes the loan for purposes of calculating our specific impairment reserves and a general reserve. See Note 7 of the Financial Statements presented under Item 1 of this report for further discussion of the specific impairment reserve and general reserve as it relates to the allowance for credit losses for each loan category and the total loan portfolio, excluding covered loans.

Specific Impairment Reserves:

Loans with a credit risk rating of a 6 through 9 are reviewed on a monthly basis to determine if (a) an amount is deemed uncollectible (a charge-off) or (b) it is probable that the Company will be unable to collect amounts due in accordance with the original contractual terms of the loan (impaired loan). If a loan is impaired, the carrying amount of the loan is compared to the expected payments to be reserved, discounted at the loan’s original rate, or for collateral dependent loans, to the fair value of the collateral. Any shortfall is recorded as a specific impairment reserve.

At ~~September 30, 2012~~March 31, 2013, the Company had $~~233.0~~203.6 million of impaired loans with $~~120.1~~101.6 million of this balance requiring $~~19.8~~14.6 million of specific impairment reserves. At ~~June 30,~~December 31, 2012, the Company had $~~264.7~~204.5 million of impaired loans with $~~161.3~~90.0 million of this balance requiring $~~19.1~~13.6 million of specific impairment reserves. The most significant fluctuations in impaired loans with specific impairment from ~~June 30,~~December 31, 2012 to ~~September 30, 2012~~March 31, 2013 occurred within the commercial ~~and industrial~~construction and land ~~portfolios requiring specific impairment reserves.~~portfolios. The recorded investment of the commercial ~~and industrial~~construction and land portfolios ~~decreased $20.0~~increased $6.8 million and ~~$27.7~~$5.7 million, respectively, which was primarily the result of the ~~resolution~~addition of two ~~credit relationships~~credits previously ~~considered impaired.~~not requiring a specific impairment. See Note 7 of the Financial Statements presented under Item 1 of this report for further discussion of impaired loans and the related specific impairment reserve.

General Reserves:

For loans with a credit risk rating of 1 through 7, reserves are established based on the type of loan collateral, if any, and the assigned credit risk rating. Determination of the allowance is inherently subjective as it requires significant estimates, including the amounts and timing of expected future cash flows on impaired loans, estimated losses on pools of homogeneous loans based on the average historical loss experience over a five-year period, and consideration of current environmental factors and economic trends, all of which may be susceptible to significant change.

We determine this component of the allowance for loan losses by classifying each loan into (i) categories based on the type of collateral that secures the loan (if any), and (ii) one of ten categories based on the credit risk rating of the loan, as described above under “Past Due Loans and Non-Performing Assets.” Each combination of collateral and credit risk rating is then assigned a specific loss factor that incorporates the following factors:

historical underwriting loss factor;

changes in lending policies and procedures, including changes in underwriting standards and collection, charge-off, and recovery practices not considered elsewhere in estimating credit losses;

changes in national, regional, and local economic and business conditions and developments that affect the collectibility of the portfolio;

changes in the nature and volume of the portfolio and in the terms of the loans;

changes in the experience, ability, and depth of lending management and other relevant staff;

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changes in the volume and severity of past due loans, the volume of non-accrual loans, and the volume and severity of adversely classified or graded loans;

changes in the quality of the bank’s loan review system;

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changes in the underlying collateral for collateral dependent loans;

the existence and effect of any concentrations of credit, and changes in the level of such concentrations; and

the effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in the bank’s existing portfolio.

In the second quarter of 2012, the Company modified its historical loss experience analysis to incorporate three-year average loss rate assumptions. Prior to this, the Company employed a five-year average loss rate assumption analysis. The three-year average loss rate assumption analysis is computed for each of the Company’s collateral codes. The historical loss experience is combined with the specific loss factor for each combination of collateral and credit risk rating which is then applied to each individual loan balance to determine an appropriate general reserve. The historical loss rates are updated on a quarterly basis and are driven by the performance of the portfolio and any changes to the specific loss factors are driven by management judgment and analysis of the factors described above.

The reasons for the migration to a three-year average historical loss rate from the previous five-year average historical loss rate analysis are:

The three-year average is more relevant to the inherent losses in the core bank loan portfolio as the charge-off rates from earlier periods are no longer as relevant in comparison to the more recent periods. Earlier periods had historically low credit losses which then built up to a peak in credit losses as a result of the stressed economic environment and depressed real estate valuations that affected both the U.S. economy, generally, and the Company’s local markets, specifically during that time. Since the end of 2009 there has been no evidence in the Company’s loan portfolio of a return to the level of charge-offs experienced at the height of the credit crisis.

Migrating to a three-year historical average loss rate reduces the need for management judgment factors related to national, regional, and local economic and business conditions and developments that affect the collectability of the portfolio as the three year average is now more closely aligned with the credit risk in our portfolio today.

The Company also analyzes the four- and five-year average historical loss rates on a quarterly basis as a comparison.

Home Equity and Residential ~~Real Estate~~Real-Estate Loans:

The determination of the appropriate allowance for loan losses for residential ~~real estate~~real-estate and home equity loans differs slightly from the process used for commercial and commercial ~~real estate~~real-estate loans. The same credit risk rating system, Problem Loan Reporting system, collateral coding methodology and loss factor assignment are used. The only significant difference is in how the credit risk ratings are assigned to these loans.

The home equity loan portfolio is reviewed on a loan by loan basis by analyzing current FICO scores of the borrowers, line availability, recent line usage and the aging status of the loan. Certain of these factors, or combination of these factors, may cause a portion of the credit risk ratings of home equity loans across all banks to be downgraded. Similar to commercial and commercial ~~real estate~~real-estate loans, once a home equity loan’s credit risk rating is downgraded to a 6 through 9, the Company’s Managed Asset Division reviews and advises the subsidiary banks as to collateral valuations and as to the ultimate resolution of the credits that deteriorate to a non-accrual status to minimize losses.

Residential ~~real estate~~real-estate loans that are downgraded to a credit risk rating of 6 through 9 also enter the Problem Loan Reporting system and have the underlying collateral evaluated by the Managed Assets Division.

Premium Finance Receivables and Indirect Consumer Loans:

The determination of the appropriate allowance for loan losses for premium finance receivables and indirect consumer loans is based solely on the aging (collection status) of the portfolios. Due to the large number of generally smaller sized and homogenous credits in these portfolios, these loans are not individually assigned a credit risk rating. Loss factors are assigned

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to each delinquency category in order to calculate an allowance for credit losses. The allowance for loan losses for these categories is entirely a general reserve.

Effects of Economic Recession and Real Estate Market:

The Company’s primary markets, which are mostly in suburban Chicago, have not experienced the same levels of credit deterioration in residential mortgage and home equity loans as certain other major metropolitan markets, such as Miami, Phoenix or Southern California, however the Company’s markets have clearly been under stress. As of ~~September 30, 2012~~March 31, 2013, home equity loans and residential mortgages comprised 7%6% and 3%, respectively, of the Company’s total loan portfolio. At ~~September 30, 2012~~March 31, 2013 ~~(excluding covered loans)~~, approximately ~~5.7%~~ 2.9%

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of all of the Company’s residential mortgage loans, excluding covered loans and loans acquired with evidence of credit quality deterioration since origination, and approximately ~~2.8%~~2.2% of all of the Company’s home equity loans, are on nonaccrual status or more than one payment past due. Current delinquency statistics of these two portfolios, ~~demonstrating~~demonstrate that although there is stress in the Chicago metropolitan and southeastern Wisconsin markets, our portfolios of residential mortgages and home equity loans are performing reasonably well as reflected in the aging of the Company’s loan portfolio table shown earlier in this section.

Methodology in Assessing Impairment and Charge-off Amounts

In determining the amount of impairment or charge-offs associated with collateral dependent loans, the Company values the loan generally by starting with a valuation obtained from an appraisal of the underlying collateral and then deducting estimated selling costs to arrive at a net appraised value. We obtain the appraisals of the underlying collateral typically on an annual basis from one of a pre-approved list of independent, third party appraisal firms. Types of appraisal valuations include “as-is”, “as-complete”, “as-stabilized”, bulk, fair market, liquidation and “retail sell-out” values.

In many cases, the Company simultaneously values the underlying collateral by marketing the property to market participants interested in purchasing properties of the same type. If the Company receives offers or indications of interest, we will analyze the price and review market conditions to assess whether in light of such information the appraised value overstates the likely price and that a lower price would be a better assessment of the market value of the property and would enable us to liquidate the collateral. Additionally, the Company takes into account the strength of any guarantees and the ability of the borrower to provide value related to those guarantees in determining the ultimate charge-off or reserve associated with any impaired loans. Accordingly, the Company may charge-off a loan to a value below the net appraised value if it believes that an expeditious liquidation is desirable in the circumstance and it has legitimate offers or other indications of interest to support a value that is less than the net appraised value. Alternatively, the Company may carry a loan at a value that is in excess of the appraised value if the Company has a guarantee from a borrower that the Company believes has realizable value. In evaluating the strength of any guarantee, the Company evaluates the financial wherewithal of the guarantor, the guarantor’s reputation, and the guarantor’s willingness and desire to work with the Company. The Company then conducts a review of the strength of a guarantee on a frequency established as the circumstances and conditions of the borrower warrant.

In circumstances where the Company has received an appraisal but has no third party offers or indications of interest, the Company may enlist the input of realtors in the local market as to the highest valuation that the realtor believes would result in a liquidation of the property given a reasonable marketing period of approximately 90 days. To the extent that the realtors’ indication of market clearing price under such scenario is less than the net appraised valuation, the Company may take a charge-off on the loan to a valuation that is less than the net appraised valuation.

The Company may also charge-off a loan below the net appraised valuation if the Company holds a junior mortgage position in a piece of collateral whereby the risk to acquiring control of the property through the purchase of the senior mortgage position is deemed to potentially increase the risk of loss upon liquidation due to the amount of time to ultimately market the property and the volatile market conditions. In such cases, the Company may abandon its junior mortgage and charge-off the loan balance in full.

In other cases, the Company may allow the borrower to conduct a “short sale,” which is a sale where the Company allows the borrower to sell the property at a value less than the amount of the loan. Many times, it is possible for the current owner to receive a better price than if the property is marketed by a financial institution which the market place perceives to have a greater desire to liquidate the property at a lower price. To the extent that we allow a short sale at a price below the value indicated by an appraisal, we may take a charge-off beyond the value that an appraisal would have indicated.

Other market conditions may require a reserve to bring the carrying value of the loan below the net appraised valuation such as litigation surrounding the borrower and/or property securing our loan or other market conditions impacting the value of the collateral.

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Having determined the net value based on the factors such as those noted above and compared that value to the book value of the loan, the Company arrives at a charge-off amount or a specific reserve included in the allowance for loan losses. In summary, for collateral dependent loans, appraisals are used as the fair value starting point in the estimate of net value. Estimated costs to sell are deducted from the appraised value to arrive at the net appraised value. Although an external appraisal is the primary source of valuation utilized for charge-offs on collateral dependent loans, alternative sources of valuation may become available between appraisal dates. As a result, we may utilize values obtained through these alternating sources, which include purchase and sale agreements, legitimate indications of interest, negotiated short sales, realtor price opinions, sale of the note or support from guarantors, as the basis for charge-offs. These alternative sources of value are used only if deemed to be more representative of value based on updated information regarding collateral resolution. In addition, if an appraisal is not deemed current, a discount

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to appraised value may be utilized. Any adjustments from appraised value to net value are detailed and justified in an impairment analysis, which is reviewed and approved by the Company’s Managed Assets Division.

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Restructured Loans

At ~~September 30, 2012~~March 31, 2013, the Company had $~~147.2~~116.3 million in loans with modified ~~terms. The~~terms representing ~~$147.2 million~~ ~~in modified loans represents~~ ~~181~~167 credits in which economic concessions were granted to certain borrowers to better align the terms of their loans with their current ability to pay. The balance decreased from $126.5 million representing 165 credits at December 31, 2012 and $165.0 million representing 182 credits at March 31, 2012.

These actions were taken on a case-by-case basis working with these borrowers to find a concession that would assist them in retaining their businesses or their homes and attempt to keep these loans in an accruing status for the Company. Typical concessions include reduction of the loan interest rate to a rate considered lower than market and other modification of terms including forgiveness of all or a portion of the loan balance, extension of the maturity date, and/or modifications from principal and interest payments to interest-only payments for a certain period. See Note 7 of the Financial Statements presented under Item 1 of this report for further discussion regarding the effectiveness of these modifications in keeping the modified loans current based upon contractual terms.

Subsequent to its restructuring, any restructured loan with a below market rate concession that becomes nonaccrual, will remain classified by the Company as a restructured loan for its duration and will be included in the Company’s nonperforming loans. Each restructured loan was reviewed for impairment at ~~September 30, 2012~~March 31, 2013 and approximately $~~3.1~~2.6 million of impairment was present and appropriately reserved for through the Company’s normal reserving methodology in the Company’s allowance for loan losses.

The table below presents a summary of restructured loans for the respective periods, presented by loan category and accrual status:


	September 30,			June 30,			September 30,			March 31,			December 31,			March 31,
(Dollars in thousands)	2012			2012			2011			2013			2012			2012
Accruing:
Commercial	$	21,126		$	21,478		$	7,726		$	9,073		$	11,871		$	9,324
Commercial real estate	102,251			128,662			74,307
Residential real estate and other	5,014			6,450			3,326
Commercial real-estate										83,396			89,906			134,516
Residential real-estate and other										4,653			4,342			7,176
Total accrual	$	128,391		$	156,590		$	85,359		$	97,122		$	106,119		$	151,016
Non-accrual: ⁽¹⁾
Commercial	$	924		$	1,562		$	3,793		$	2,764		$	6,124		$	1,465
Commercial real estate	15,399			13,215			13,322
Residential real estate and other	2,482			939			1,918
Commercial real-estate										14,907			12,509			11,805
Residential real-estate and other										1,552			1,721			760
Total non-accrual	$	18,805		$	15,716		$	19,033		$	19,223		$	20,354		$	14,030
Total restructured loans:
Commercial	$	22,050		$	23,040		$	11,519		$	11,837		$	17,995		$	10,789
Commercial real estate	117,650			141,877			87,629
Residential real estate and other	7,496			7,389			5,244
Commercial real-estate										98,303			102,415			146,321
Residential real-estate and other										6,205			6,063			7,936
Total restructured loans	$	147,196		$	172,306		$	104,392		$	116,345		$	126,473		$	165,046
Weighted-average contractual interest rate of restructured loans	4.21		%	4.19		%	4.53		%	4.14		%	4.11		%	4.12		%


(1)	Included in total non-performing loans.

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Restructured Loans Rollforward

The table below presents a summary of restructured loans as of ~~September 30, 2012~~March 31, 2013 and ~~2011,~~2012, and shows the changes in the balance during those periods:


Three Months Ended September 30, 2012 (Dollars in thousands)	Commercial			Commercial Real estate			Residential Real estate and Other			Total
Three Months Ended March 31, 2013 (Dollars in thousands)													Commercial			Commercial Real-estate			Residential Real-estate and Other			Total
Balance at beginning of period	$	23,040		$	141,877		$	7,389		$	172,306		$	17,995		$	102,415		$	6,063		$	126,473
Additions during the period	442			8,638			457			9,537			708			1,192			377			2,277
Reductions:
Charge-offs	(638		)	(8,878		)	(338		)	(9,854		)	(2,142		)	(1,372		)	(17		)	(3,531		)
Transferred to OREO	—			(1,012		)	—			(1,012		)
Transferred to OREO and other repossessed assets													(3,800		)	(167		)	(103		)	(4,070		)
Removal of restructured loan status ⁽¹⁾	(163		)	—			—			(163		)	(609		)	—			—			(609		)
Payments received	(631		)	(22,975		)	(12		)	(23,618		)	(315		)	(3,765		)	(115		)	(4,195		)
Balance at period end	$	22,050		$	117,650		$	7,496		$	147,196		$	11,837		$	98,303		$	6,205		$	116,345


Three Months Ended September 30, 2011 (Dollars in thousands)	Commercial			Commercial Real estate			Residential Real estate and Other			Total
Three Months Ended March 31, 2012 (Dollars in thousands)													Commercial			Commercial Real-estate			Residential Real-estate and Other			Total
Balance at beginning of period	$	15,983		$	84,671		$	2,390		$	103,044		$	10,834		$	112,796		$	6,888		$	130,518
Additions during the period	3,157			7,459			2,857			13,473			118			38,519			1,060			39,697
Reductions:
Charge-offs	(1,248		)	(2,062		)	—			(3,310		)	—			(1,342		)	—			(1,342		)
Transferred to OREO	—			—			—			—
Transferred to OREO and other repossessed assets													—			(2,129		)	—			(2,129		)
Removal of restructured loan status ⁽¹⁾	(6,344		)	—			—			(6,344		)	—			(463		)	—			(463		)
Payments received	(29		)	(2,439		)	(3		)	(2,471		)	(163		)	(1,060		)	(12		)	(1,235		)
Balance at period end	$	11,519		$	87,629		$	5,244		$	104,392		$	10,789		$	146,321		$	7,936		$	165,046


(1)	Loan was previously classified as a troubled debt restructuring and subsequently performed in compliance with the loan's modified terms for a period of six months (including over a calendar year-end) at a modified interest rate which represented a market rate at the time of restructuring. Per our TDR policy, the TDR classification is removed.

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Nine Months Ended September 30, 2012
(Dollars in thousands)
Commercial Commercial
Real estate Residential
Real estate
and Other Total
Balance at beginning of period $ 10,834
$ 112,796
$ 6,888
$ 130,518
Additions during the period 13,325
55,017
1,546
69,888
Reductions:
Charge-offs (799 ) (11,536 ) (632 ) (12,967 )
Transferred to OREO —
(3,141 ) —
(3,141 )
Removal of restructured loan status ⁽¹⁾
(363 ) (1,877 ) (273 ) (2,513 )
Payments received (947 ) (33,609 ) (33 ) (34,589 )
Balance at period end $ 22,050
$ 117,650
$ 7,496
$ 147,196

Nine Months Ended September 30, 2011
(Dollars in thousands)
Commercial
Commercial
Real estate

Residential
Real estate
and Other
Total
Balance at beginning of period $ 18,028
$ 81,366
$ 1,796
$ 101,190
Additions during the period 5,119
47,405
3,461
55,985
Reductions:
Charge-offs (3,781 ) (13,026 ) (4 ) (16,811 )
Transferred to OREO —
(6,743 ) —
(6,743 )
Removal of restructured loan status ⁽¹⁾
(6,588 ) (5,596 ) —
(12,184 )
Payments received (1,259 ) (15,777 ) (9 ) (17,045 )
Balance at period end $ 11,519
$ 87,629
$ 5,244
$ 104,392


~~(1)~~	~~Loan was previously classified as a troubled debt restructuring and subsequently performed in compliance with the loan's modifiedterms for a period of six months (including over a calendar year-end) at a modified interest rate which represented a market rate atthe time of restructuring. Per our TDR policy, the TDR classification is removed.~~

Other Real Estate Owned

In certain circumstances, the Company is required to take action against the real estate collateral of specific loans. The Company uses foreclosure ~~however,~~ only as a last resort for dealing with borrowers experiencing financial hardships. The Company employs extensive contact and restructuring procedures to attempt to find other solutions for our borrowers. The table below presents a summary of other real estate owned, excluding covered other real estate owned, ~~as of~~ ~~September 30, 2012~~ ~~and 2011~~ and shows the activity for the respective periods and the balance for each property type:


	Three Months Ended						Nine Months Ended						Three Months Ended
(Dollars in thousands)	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011			March 31, 2013			December 31, 2012			March 31, 2012
Balance at beginning of period	$	72,553		$	82,772		$	86,523		$	71,214		$	62,891		$	67,377		$	86,523
Disposal/resolved	(10,604		)	(7,581		)	(29,808		)	(27,349		)	(7,498		)	(12,516		)	(11,681		)
Transfers in at fair value, less costs to sell	6,895			14,530			22,621			53,585			2,128			8,030			6,876
Additions from acquisition	—			10,302			—			10,302			—			2,923			—
Fair value adjustments	(1,467		)	(3,099		)	(11,959		)	(10,828		)	(1,344		)	(2,923		)	(5,482		)
Balance at end of period	$	67,377		$	96,924		$	67,377		$	96,924		$	56,177		$	62,891		$	76,236

Period End
(Dollars in thousands) September 30,
2012 September 30,
2011
Residential real estate $ 8,241
$ 6,938
Residential real estate development 13,872
18,535
Commercial real estate 45,264
71,451
Total $ 67,377
$ 96,924



	Period End
(Dollars in thousands)	March 31, 2013		December 31, 2012		March 31, 2012
Residential real-estate	$	7,312	$	9,077	$	6,647
Residential real-estate development	10,133		12,144		14,764
Commercial real-estate	38,732		41,670		54,825
Total	$	56,177	$	62,891	$	76,236

Other Repossessed Assets

At March 31, 2013, the Company had $4.3 million of other repossessed assets. This balance consists primarily of an airplane, which was repossessed during the first quarter of 2013 at a fair value of $3.8 million. Repossessed assets also includes miscellaneous other assets.

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LIQUIDITY

Wintrust manages the liquidity position of its banking operations to ensure that sufficient funds are available to meet customers’ needs for loans and deposit withdrawals. The liquidity to meet these demands is provided by maturing assets, liquid assets that can be converted to cash and the ability to attract funds from external sources. Liquid assets refer to money market assets such as Federal funds sold and interest bearing deposits with banks, as well as available-for-sale debt securities which are not pledged to secure public funds.

The Company believes that it has sufficient funds and access to funds to meet its working capital and other needs. Please refer to the Interest-Earning Assets, Deposits, Other Funding Sources and Shareholders’ Equity discussions of this report for additional information regarding the Company’s liquidity position.

INFLATION

A banking organization’s assets and liabilities are primarily monetary. Changes in the rate of inflation do not have as great an impact on the financial condition of a bank as do changes in interest rates. Moreover, interest rates do not necessarily change at the same percentage as inflation. Accordingly, changes in inflation are not expected to have a material impact on the Company. An analysis of the Company’s asset and liability structure provides the best indication of how the organization is positioned to respond to changing interest rates. See “Quantitative and Qualitative Disclosures About Market Risks” section of this report for additional information.

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,” “project,” “expect,” “anticipate,” “believe,” “estimate,” “contemplate,” “possible,” “point,” “will,” “may,” “should,” “would” and “could.” Forward-looking statements and information are not historical facts, are premised on many factors and assumptions, and represent only management’s expectations, estimates and projections regarding future events. Similarly, these statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict, which may include, but are not limited to, those listed below and the Risk Factors discussed under Item 1A of the Company’s ~~2011~~2012 Annual Report on Form 10-K and in any of the Company’s subsequent SEC filings. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of invoking these safe harbor provisions. Such forward-looking statements may be deemed to include, among other things, statements relating to the Company’s future financial performance, the performance of its loan portfolio, the expected amount of future credit reserves and charge-offs, delinquency trends, growth plans, regulatory developments, securities that the Company may offer from time to time, and management’s long-term performance goals, as well as statements relating to the anticipated effects on financial condition and results of operations from expected developments or events, the Company’s business and growth strategies, including future acquisitions of banks, specialty finance or wealth management businesses, internal growth and plans to form additional de novo banks or branch offices. Actual results could differ materially from those addressed in the forward-looking statements as a result of numerous factors, including the following:

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 defaults and losses on the Company’s loan portfolio, which may require further increases in its allowance for credit losses;

estimates of fair value of certain of the Company’s assets and liabilities, which could change in value significantly from period to period;

the financial success and economic viability of the borrowers of our commercial loans;

market conditions in the commercial real-estate market in the Chicago metropolitan area;

the extent of commercial and consumer delinquencies and declines in real estate values, which may require further increases in the Company’s allowance for loan and lease losses;

changes in the level and volatility of interest rates, the capital markets and other market indices that may affect, among other things, the Company’s liquidity and the value of its assets and liabilities;

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competitive pressures in the financial services business which may affect the pricing of the Company’s loan and deposit products as well as its services (including wealth management services);

failure to identify and complete favorable acquisitions in the future or unexpected difficulties or developments related to the integration of the Company’s recent or future acquisitions;

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unexpected difficulties and losses related to FDIC-assisted acquisitions, including those resulting from our loss- sharing arrangements with the FDIC;

any negative perception of the Company’s reputation or financial strength;

ability to raise additional capital on acceptable terms when needed;

disruption in capital markets, which may lower fair values for the Company’s investment portfolio;

ability to use technology to provide products and services that will satisfy customer demands and create efficiencies in operations;

adverse effects on our information technology systems resulting from failures, human error or tampering;

accuracy and completeness of information the Company receives about customers and counterparties to make credit decisions;

~~the~~ ability of the Company to attract and retain senior management experienced in the banking and financial services industries;

environmental liability risk associated with lending activities;

the impact of any claims or legal actions, including any effect on our reputation;

losses incurred in connection with repurchases and indemnification payments related to mortgages;

the loss of customers as a result of technological changes allowing consumers to complete their financial transactions without the use of a bank;

the soundness of other financial institutions;

the possibility that certain European Union member states will default on their debt obligations, which may affect the Company’s liquidity, financial conditions and results of operations;

examinations and challenges by tax authorities;

changes in accounting standards, rules and interpretations and the impact on the Company’s financial statements;

the ability of the Company to receive dividends from its subsidiaries;

a decrease in the Company’s regulatory capital ratios, including as a result of further declines in the value of its loan portfolios, or otherwise;

legislative or regulatory changes, particularly changes in regulation of financial services companies and/or the products and services offered by financial services companies, including those resulting from the Dodd-Frank Act;

restrictions onupon our ability to market our products to consumers and limitations on our ability to profitably operate our mortgage business resulting from the Dodd-Frank Act;

increased costs of compliance, heightened regulatory capital requirements and other risks associated with changes in regulation and the current regulatory environment, including the Dodd-Frank Act;

changes in capital ~~requirements resulting from Basel III initiatives;~~

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requirements;

increases in the Company’s FDIC insurance premiums, or the collection of special assessments by the FDIC;

delinquencies or fraud with respect to the Company’s premium finance business;

credit downgrades among commercial and life insurance providers that could negatively affect the value of collateral securing the Company’s premium finance loans;

the Company’s ability to comply with covenants under its credit facility;

and

fluctuations in the stock market, which may have an adverse impact on the Company’s wealth management business and brokerage ~~operation; and~~

~~significant litigation involving the Company.~~operation.

Therefore, there can be no assurances that future actual results will correspond to these forward-looking statements. The reader is cautioned not to place undue reliance on any forward-looking statement made by the Company. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update any forward-looking statement to reflect the impact of circumstances or events that arise after the date the forward-looking statement was made. Persons are advised, however, to consult further disclosures management makes on related subjects in its reports filed with the Securities and Exchange Commission and in its press releases.

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ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

As an ongoing part of its financial strategy, the Company attempts to manage the impact of fluctuations in market interest rates on net interest income. This effort entails providing a reasonable balance between interest rate risk, credit risk, liquidity risk and maintenance of yield. Asset-liability management policies are established and monitored by management in conjunction with the boards of directors of the banks, subject to general oversight by the Risk Management Committee of the Company’s Board of Directors. The policies establish guidelines for acceptable limits on the sensitivity of the market value of assets and liabilities to changes in interest rates.

Interest rate risk arises when the maturity or repricing periods and interest rate indices of the interest earning assets, interest bearing liabilities, and derivative financial instruments are different. It is the risk that changes in the level of market interest rates will result in disproportionate changes in the value of, and the net earnings generated from, the Company’s interest earning assets, interest bearing liabilities and derivative financial instruments. The Company continuously monitors not only the organization’s current net interest margin, but also the historical trends of these margins. In addition, management attempts to identify potential adverse changes in net interest income in future years as a result of interest rate fluctuations by performing simulation analysis of various interest rate environments. If a potential adverse change in net interest margin and/or net income is identified, management would take appropriate actions with its asset-liability structure to mitigate these potentially adverse situations. Please refer to Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for further discussion of the net interest margin.

Since the Company’s primary source of interest bearing liabilities is from customer deposits, the Company’s ability to manage the types and terms of such deposits may be somewhat limited by customer preferences and local competition in the market areas in which the banks operate. The rates, terms and interest rate indices of the Company’s interest earning assets result primarily from the Company’s strategy of investing in loans and securities that permit the Company to limit its exposure to interest rate risk, together with credit risk, while at the same time achieving an acceptable interest rate spread.

The Company’s exposure to interest rate risk is reviewed on a regular basis by management and the Risk Management Committees of the boards of directors of the banks and the Company. The objective is to measure the effect on net income and to adjust balance sheet and derivative financial instruments to minimize the inherent risk while at the same time maximize net interest income.

Management measures its exposure to changes in interest rates using many different interest rate scenarios. One interest rate scenario utilized is to measure the percentage change in net interest income assuming a ramped increase and decrease of 100 and 200 basis points that occurs in equal steps over a twelve-month time horizon. Utilizing this measurement concept, the interest rate risk of the Company, expressed as a percentage change in net interest income over a one-year time horizon due to changes in interest rates, at ~~September 30, 2012~~March 31, 2013, December 31, ~~2011~~2012 and ~~September 30, 2011~~March 31, 2012 is as follows:

+200
Basis
Points +100
Basis
Points -100
Basis
Points -200
Basis
Points
Percentage change in net interest income due to a ramped 100 and 200 basis point shift in the yield curve:
September 30, 2012 5.0 % 2.4 % (3.3 )% (7.0 )%
December 31, 2011 7.7 % 3.2 % (3.4 )% (8.8 )%
September 30, 2011 7.9 % 3.2 % (3.5 )% (8.5 )%



	+200 Basis Points		+100 Basis Points		-100 Basis Points		-200 Basis Points
Percentage change in net interest income due to a ramped 100 and 200 basis point shift in the yield curve:
March 31, 2013	4.3	%	2.1	%	(3.5	)%	(7.7	)%
December 31, 2012	5.1	%	2.4	%	(3.5	)%	(7.6	)%
March 31, 2012	6.5	%	3.1	%	(3.9	)%	(8.6	)%

This simulation analysis is based upon actual cash flows and repricing characteristics for balance sheet instruments and incorporates management’s projections of the future volume and pricing of each of the product lines offered by the Company as well as other pertinent assumptions. Actual results may differ from these simulated results due to timing, magnitude, and frequency of interest rate changes as well as changes in market conditions and management strategies.

One method utilized by financial institutions to manage interest rate risk is to enter into derivative financial instruments. A derivative financial instrument includes interest rate swaps, interest rate caps and floors, futures, forwards, option contracts and other financial instruments with similar characteristics. Additionally, the Company enters into commitments to fund certain mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of mortgage loans to third party investors. See Note 14 of the Financial Statements presented under Item 1 of this report for further information on the Company’s derivative financial instruments.

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During the ~~third~~first quarter of ~~2012~~2013, the Company entered into covered call option transactions related to certain securities held by the Company. The Company uses these option transactions (rather than entering into other derivative interest rate contracts, such

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as interest rate floors) to increase the total return associated with the related securities. Although the revenue received from these options is recorded as non-interest income rather than interest income, the increased return attributable to the related securities from these options contributes to the Company’s overall profitability. The Company’s exposure to interest rate risk may be impacted by these transactions. To mitigate this risk, the Company may acquire fixed rate term debt or use financial derivative instruments. There were no covered call options outstanding as of ~~September 30, 2012~~March 31, 2013.

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ITEM 4

CONTROLS AND PROCEDURES

As of the end of the period covered by this report, the Company’s Chief Executive Officer and Chief Financial Officer carried out an evaluation under their supervision, with the participation of other members of management as they deemed appropriate, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as contemplated by Exchange Act Rule 13a-15. Based upon, and as of the date of that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective, in all material respects, in timely alerting them to material information relating to the Company (and its consolidated subsidiaries) required to be included in the periodic reports the Company is required to file and submit to the SEC under the Exchange Act.

There were no changes in the Company’s internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the period that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

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PART II —

Item 1A: Risk Factors

There were no material changes from the risk factors set forth under Part I, Item 1A “Risk Factors” in the Company’s Form 10-K for the fiscal year ended December 31, ~~2011~~2012 ~~and Part II, Item 1A "Risk Factors" in the Company's Form 10-Q for the quarter ended June 30, 2012.~~.

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

~~No purchases~~On January 22, 2013 the Company entered into an Agreement and Plan of Merger to acquire First Lansing Bancorp, Inc. ("FLB"). The transaction closed on May 1, 2013. At closing, the Company issued 648,287 shares of common stock, subject to reduction due to the payment of cash in lieu of fractional shares as consideration for the merger. Based on representations and warranties made by the shareholders of FLB, including representations to the Company as to their accredited investor status, their investment intent and financial sophistication, the common stock was issued in a transaction exempt from the registration and prospectus delivery requirements of the ~~Company’s common shares were made by or on behalf~~Securities Act of 1933 (the "Securities Act") in reliance upon exemptions from registration pursuant to Section 4(a)(2) of the ~~Company~~ Securities Act and Regulation D and/or ~~any “affiliated purchaser” as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended, during the three months ended~~ ~~September 30, 2012. There is currently no authorization to repurchase shares of outstanding common stock.~~S thereunder.

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Item 6: Exhibits:


(a)	Exhibits



~~10.1~~		Fifth Amendment Agreement, dated as of October 26, 2012, to Amended and Restated Credit Agreement, among Wintrust Financial Corporation, the lenders named therein, and Bank of America, N.A., as administrative agent (incorporated by reference to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on November 1, 2012)

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of President and Chief Executive Officer and Executive Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS	XBRL Instance Document *

101.SCH	XBRL Taxonomy Extension Schema Document

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB	XBRL Taxonomy Extension Label Linkbase Document

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

Includes the following financial information included in the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2012~~March 31, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Condition, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		WINTRUST FINANCIAL CORPORATION (Registrant)
Date:	~~November 8, 2012~~May 9, 2013	/s/ DAVID L. STOEHR
		David L. Stoehr
		Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

~~116~~105



(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



	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



Nine months ended September 30, 2011				Commercial Real-estate						Residential Real-estate			Premium Finance Receivable			Indirect Consumer			Consumer and Other			Total, Excluding Covered Loans
(Dollars in thousands)	Commercial			Commercial Real-estate			Home Equity			Residential Real-estate			Premium Finance Receivable			Indirect Consumer			Consumer and Other			Total, Excluding Covered Loans
Allowance for credit losses
Allowance for loan losses at beginning of period	$	31,777		$	62,618		$	6,213		$	5,107		$	6,319		$	526		$	1,343		$	113,903
Other adjustments	—			—			—			—			—			—			—			—
Reclassification to/from allowance for unfunded lending-related commitments	1,606			127			—			—			—			—			—			1,733
Charge-offs	(25,574		)	(48,767		)	(3,144		)	(2,483		)	(5,413		)	(188		)	(708		)	(86,277		)
Recoveries	717			1,100			59			8			5,814			183			104			7,985
Provision for credit losses	25,254			49,294			3,989			2,581			154			91			(58		)	81,305
Allowance for loan losses at period end	$	33,780		$	64,372		$	7,117		$	5,213		$	6,874		$	612		$	681		$	118,649
Allowance for unfunded lending-related commitments at period end	$	45		$	13,357		$	—		$	—		$	—		$	—		$	—		$	13,402
Allowance for credit losses at period end	$	33,825		$	77,729		$	7,117		$	5,213		$	6,874		$	612		$	681		$	132,051



Nine months ended September 30, 2012 (Dollars in thousands)	Total ⁽¹⁾⁽²⁾			Extension at Below Market Terms ⁽²⁾			Reduction of Interest Rate ⁽²⁾			Modification to Interest- only Payments ⁽²⁾			Forgiveness of Debt ⁽²⁾
	Count	Balance		Count	Balance		Count	Balance		Count	Balance		Count	Balance
Commercial
Commercial and industrial	16	$	13,325	9	$	2,617	9	$	12,705	7	$	10,579	2	$	1,486
Commercial real-estate
Residential construction	3	2,147		3	2,147		1	496		1	496		—	—
Commercial construction	2	622		2	622		2	622		2	622		—	—
Land	17	31,836		17	31,836		14	30,561		13	26,511		—	—
Office	—	—		—	—		—	—		—	—		—	—
Industrial	—	—		—	—		—	—		—	—		—	—
Retail	7	13,286		7	13,286		5	8,633		6	12,897		—	—
Multi-family	1	380		—	—		1	380		1	380		—	—
Mixed use and other	13	6,745		8	4,495		9	5,680		8	3,974		—	—
Residential real estate and other	9	1,512		7	1,264		5	504		3	924		1	29
Total loans	68	$	69,853	53	$	56,267	46	$	59,581	41	$	56,383	3	$	1,515



Estimated amortization
Actual in nine months ended September 30, 2012	$	3,216
Estimated remaining in 2012	1,158
Estimated—2013	4,471
Estimated—2014	3,942
Estimated—2015	2,402
Estimated—2016	1,836



(Dollars in thousands)	U.S. Agencies		Municipal			Corporate notes and other debt			Mortgage- backed			Equity securities		Trading Account Securities			Mortgage servicing rights
Balance at June 30, 2011	$	—	$	24,525		$	16,313		$	2,684		$	30,891	$	172		$	8,762
Total net gains (losses) included in:
Net income ⁽¹⁾	—		—			—			—			—		—			(2,022		)
Other comprehensive income	—		—			—			—			—		—			—
Purchases	—		6,492			500			333			—		—			—
Issuances	—		—			—			—			—		—			—
Sales	—		(1,871		)	—			—			—		(147		)	—
Settlements	—		(1,230		)	(192		)	(65		)	—		—			—
Net transfers into/(out of) Level 3 ⁽²⁾	7,959		(2,511		)	(10,712		)	—			—		—			—
Balance at September 30, 2011	$	7,959	$	25,405		$	5,909		$	2,952		$	30,891	$	25		$	6,740



	Nine months ended September 30, 2012				Nine months ended September 30, 2011
Performance Shares	Common Shares		Weighted Average Grant-Date Fair Value		Common Shares	Weighted Average Grant-Date Fair Value
Outstanding at January 1	72,158		$	33.25	—	$	—
Granted	119,476		31.10		100,993	33.28
Vested and issued	—		—		—	—
Net change due to estimated performance	19,651		30.55		—	—
Forfeited	(3,897	)	32.07		—	—
Outstanding at September 30	207,388		$	31.78	100,993	$	33.28



	Accumulated Unrealized Gains on Securities		Accumulated Unrealized Losses on Derivative Instruments			Accumulated Foreign Currency Translation Adjustments		Total Accumulated Other Comprehensive Income (Loss)
Balance at July 1, 2012	$	5,907	$	(6,037	)	$	2,101	$	1,971
Other comprehensive income during the period	2,111		(174		)	5,897		7,834
Balance at September 30, 2012	$	8,018	$	(6,211	)	$	7,998	$	9,805

Balance at January 1, 2012	$	4,204	$	(7,082	)	$	—	$	(2,878	)
Other comprehensive income during the period	3,814		871			7,998		12,683
Balance at September 30, 2012	$	8,018	$	(6,211	)	$	7,998	$	9,805

Balance at July 1, 2011	$	10,369	$	(6,237	)	$	—	$	4,132
Other comprehensive income during the period	510		(1,171		)	—		(661		)
Balance at September 30, 2011	$	10,879	$	(7,408	)	$	—	$	3,471

Balance at January 1, 2011	$	2,679	$	(8,191	)	$	—	$	(5,512	)
Other comprehensive income during the period	8,200		783			—		8,983
Balance at September 30, 2011	$	10,879	$	(7,408	)	$	—	$	3,471