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

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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.)

727 North Bank Lane
Lake Forest, Illinois 60045
(Address of principal executive offices)

(847) 615-4096
(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 o

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 o

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):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o 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, 35,536,596 shares, as of July 29, 2011

 

 

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			42
ITEM 3.		Quantitative and Qualitative Disclosures About Market Risk			85
ITEM 4.		Controls and Procedures			86
		PART II. — OTHER INFORMATION
ITEM 1.		Legal Proceedings		NA
ITEM 1A.		Risk Factors			86
ITEM 2.		Unregistered Sales of Equity Securities and Use of Proceeds			86
ITEM 3.		Defaults Upon Senior Securities		NA
ITEM 4.		Removed and Reserved		NA
ITEM 5.		Other Information		NA
ITEM 6.		Exhibits			87
		Signatures			88
EX-31.1
EX-31.2
EX-32.1
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

PART I

ITEM 1. FINANCIAL STATEMENTS

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION

		(Unaudited)								(Unaudited)
		June 30,				December 31,				June 30,
(In thousands, except share data)		2011				2010				2010
Assets
Cash and due from banks		$	140,434			$	153,690			$	123,712
Federal funds sold and securities purchased under resale agreements			43,634				18,890				28,664
Interest-bearing deposits with other banks (balance restricted for securitization investors of $23,276 at June 30, 2011, $36,620 at December 31, 2010, and $83,501 at June 30, 2010)			990,308				865,575				1,110,123
Available-for-sale securities, at fair value			1,456,426				1,496,302				1,418,035
Trading account securities			509				4,879				38,261
Federal Home Loan Bank and Federal Reserve Bank stock			86,761				82,407				79,300
Brokerage customer receivables			29,736				24,549				24,291
Mortgage loans held-for-sale, at fair value			133,083				356,662				222,703
Mortgage loans held-for-sale, at lower of cost or market			5,881				14,785				15,278
Loans, net of unearned income, excluding covered loans			9,925,077				9,599,886				9,324,163
Covered loans			408,669				334,353				275,563
Total loans			10,333,746				9,934,239				9,599,726
Less: Allowance for loan losses			117,362				113,903				106,547
Less: Allowance for covered loan losses			7,443				—				—
Net Loans (balance restricted for securitization investors of $660,294 at June 30, 2011, $646,268 at December 31, 2010, and $598,857 at June 30, 2010)			10,208,941				9,820,336				9,493,179
Premises and equipment, net			403,577				363,696				346,806
FDIC indemnification asset			110,049				118,182				114,102
Accrued interest receivable and other assets			389,634				366,438				374,172
Trade date securities receivable			322,091				—				28,634
Goodwill			283,301				281,190				278,025
Other intangible assets			11,532				12,575				13,275
Total assets		$	14,615,897			$	13,980,156			$	13,708,560
Liabilities and Shareholders’ Equity
Deposits:
Non-interest bearing		$	1,397,433			$	1,201,194			$	953,814
Interest bearing			9,861,827				9,602,479				9,670,928
Total deposits			11,259,260				10,803,673				10,624,742
Notes payable			1,000				1,000				1,000
Federal Home Loan Bank advances			423,500				423,500				415,571
Other borrowings			432,706				260,620				218,424
Secured borrowings — owed to securitization investors			600,000				600,000				600,000
Subordinated notes			40,000				50,000				55,000
Junior subordinated debentures			249,493				249,493				249,493
Trade date securities payable			2,243				—				200
Accrued interest payable and other liabilities			134,309				155,321				159,394
Total liabilities			13,142,511				12,543,607				12,323,824
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 June 30, 2011, December 31, 2010 and June 30, 2010			49,704				49,640				49,379
Series B — $1,000 liquidation value; no shares issued and outstanding at June 30, 2011 and December 31, 2010, and 250,000 shares issued and outstanding at June 30, 2010			—				—				237,081
Common stock, no par value; $1.00 stated value; 60,000,000 shares authorized; 34,988,497 shares issued at June 30, 2011, 34,864,068 shares issued at December 31, 2010, and 31,084,417 shares issued at June 30, 2010			34,988				34,864				31,084
Surplus			969,315				965,203				680,261
Treasury stock, at cost, 1,441 shares at June 30, 2011, no shares at December 31, 2010, and 119 shares at June 30, 2010, respectively.			(50	)			—				(4	)
Retained earnings			415,297				392,354				381,969
Accumulated other comprehensive income (loss)			4,132				(5,512	)			4,966
Total shareholders’ equity			1,473,386				1,436,549				1,384,736
Total liabilities and shareholders’ equity		$	14,615,897			$	13,980,156			$	13,708,560

See accompanying notes to unaudited consolidated financial statements.

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

		Three Months Ended								Six Months Ended
		June 30,								June 30,
(In thousands, except per share data)		2011				2010				2011				2010
Interest income
Interest and fees on loans		$	132,338			$	135,800			$	268,881			$	265,342
Interest bearing deposits with banks			870				1,215				1,806				2,489
Federal funds sold and securities purchased under resale agreements			23				34				55				83
Securities			11,438				11,218				20,978				22,230
Trading account securities			10				343				23				364
Federal Home Loan Bank and Federal Reserve Bank stock			572				472				1,122				931
Brokerage customer receivables			194				166				360				304
Total interest income			145,445				149,248				293,225				291,743
Interest expense
Interest on deposits			22,404				31,626				46,360				64,838
Interest on Federal Home Loan Bank advances			4,010				4,094				7,968				8,440
Interest on notes payable and other borrowings			2,715				1,439				5,345				2,901
Interest on secured borrowings — owed to securitization investors			2,994				3,115				6,034				6,109
Interest on subordinated notes			194				256				406				497
Interest on junior subordinated debentures			4,422				4,404				8,792				8,779
Total interest expense			36,739				44,934				74,905				91,564
Net interest income			108,706				104,314				218,320				200,179
Provision for credit losses			29,187				41,297				54,531				70,342
Net interest income after provision for credit losses			79,519				63,017				163,789				129,837
Non-interest income
Wealth management			10,601				9,193				20,837				17,860
Mortgage banking			12,817				7,985				24,448				17,713
Service charges on deposit accounts			3,594				3,371				6,905				6,703
Gains on available-for-sale securities, net			1,152				46				1,258				438
Gain on bargain purchases			746				26,494				10,584				37,388
Trading (losses) gains			(30	)			(1,617	)			(470	)			4,344
Other			7,772				4,964				13,977				8,598
Total non-interest income			36,652				50,436				77,539				93,044
Non-interest expense
Salaries and employee benefits			53,079				50,649				109,178				99,721
Equipment			4,409				4,046				8,673				7,941
Occupancy, net			6,772				6,033				13,277				12,263
Data processing			3,147				3,669				6,670				7,076
Advertising and marketing			1,440				1,470				3,054				2,784
Professional fees			4,533				3,957				8,079				7,064
Amortization of other intangible assets			704				674				1,393				1,319
FDIC insurance			3,281				5,005				7,799				8,814
OREO expenses, net			6,577				5,843				12,385				7,181
Other			13,264				11,317				24,807				22,438
Total non-interest expense			97,206				92,663				195,315				176,601
Income before taxes			18,965				20,790				46,013				46,280
Income tax expense			7,215				7,781				17,861				17,253
Net income		$	11,750			$	13,009			$	28,152			$	29,027
Preferred stock dividends and discount accretion		$	1,033			$	4,943			$	2,064			$	9,887
Net income applicable to common shares		$	10,717			$	8,066			$	26,088			$	19,140
Net income per common share — Basic		$	0.31			$	0.26			$	0.75			$	0.67
Net income per common share — Diluted		$	0.25			$	0.25			$	0.60			$	0.64
Cash dividends declared per common share		$	—			$	—			$	0.09			$	0.09
Weighted average common shares outstanding			34,971				31,074				34,950				28,522
Dilutive potential common shares			8,438				1,267				8,437				1,203
Average common shares and dilutive common shares			43,409				32,341				43,387				29,725

See accompanying notes to unaudited consolidated financial statements.

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

																						Accumulated
																						other				Total
		Preferred				Common								Treasury				Retained				comprehensive				shareholder’s
(In thousands)		stock				stock				Surplus				stock				earnings				income (loss)				equity
Balance at December 31, 2009		$	284,824			$	27,079			$	589,939			$	(122,733	)		$	366,152			$	(6,622	)		$	1,138,639
Comprehensive income:
Net income			—				—				—				—				29,027				—				29,027
Other comprehensive income, net of tax:
Unrealized gains on securities, net of reclassification adjustment			—				—				—				—				—				12,040				12,040
Unrealized losses on derivative instruments			—				—				—				—				—				(296	)			(296	)
Comprehensive income																											40,771
Cash dividends declared on common stock			—				—				—				—				(2,191	)			—				(2,191	)
Dividends on preferred stock			—				—				—				—				(8,251	)			—				(8,251	)
Accretion on preferred stock			1,636				—				—				—				(1,636	)			—				—
Common stock repurchases			—				—				—				(102	)			—				—				(102	)
Stock-based compensation			—				—				2,505				—				—				—				2,505
Cumulative effect of change in accounting for loan securitizations			—				—				—				—				(1,132	)			(156	)			(1,288	)
Common stock issued for:
New issuance, net of costs			—				3,795				83,791				122,831				—				—				210,417
Exercise of stock options and warrants			—				108				2,198				—				—				—				2,306
Restricted stock awards			—				41				(91	)			—				—				—				(50	)
Employee stock purchase plan			—				13				482				—				—				—				495
Director compensation plan			—				48				1,437				—				—				—				1,485
Balance at June 30, 2010		$	286,460			$	31,084			$	680,261			$	(4	)		$	381,969			$	4,966			$	1,384,736
Balance at December 31, 2010		$	49,640			$	34,864			$	965,203			$	—			$	392,354			$	(5,512	)		$	1,436,549
Comprehensive income:
Net income			—				—				—				—				28,152				—				28,152
Other comprehensive income, net of tax:
Unrealized gains on securities, net of reclassification adjustment			—				—				—				—				—				7,690				7,690
Unrealized gains on derivative instruments			—				—				—				—				—				1,954				1,954
Comprehensive income																											37,796
Cash dividends declared on common stock			—				—				—				—				(3,145	)			—				(3,145	)
Dividends on preferred stock			—				—				—				—				(2,000	)			—				(2,000	)
Accretion on preferred stock			64				—				—				—				(64	)			—				—
Common stock repurchases			—				—				—				(50	)			—				—				(50	)
Stock-based compensation			—				—				2,034				—				—				—				2,034
Common stock issued for:
Exercise of stock options and warrants			—				45				567				—				—				—				612
Restricted stock awards			—				25				(28	)			—				—				—				(3	)
Employee stock purchase plan			—				29				868				—				—				—				897
Director compensation plan			—				25				671				—				—				—				696
Balance at June 30, 2011		$	49,704			$	34,988			$	969,315			$	(50	)		$	415,297			$	4,132			$	1,473,386

		Six Months Ended June 30,
		2011				2010
Other comprehensive income (loss)
Unrealized gains on available-for-sale securities arising during the period, net		$	14,013			$	20,023
Unrealized gains (losses) on derivative instruments arising during the period, net			3,203				(482	)
Less: Reclassification adjustment for gains included in net income, net			1,258				438
Less: Income tax expense			6,314				7,359
Other comprehensive income		$	9,644			$	11,744

See accompanying notes to unaudited consolidated financial statements.

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

		Six Months Ended June 30,
(In thousands)		2011				2010
Operating Activities:
Net income		$	28,152			$	29,027
Adjustments to reconcile net income to net cash provided by operating activities
Provision for credit losses			54,531				70,342
Depreciation and amortization			9,772				9,060
Stock-based compensation expense			2,034				2,505
Tax benefit from stock-based compensation arrangements			169				562
Excess tax benefits from stock-based compensation arrangements			(238	)			(760	)
Net amortization of premium on securities			5,496				1,159
Mortgage servicing rights fair value change and amortization, net			1,136				2,242
Originations and purchases of mortgage loans held-for-sale			(1,020,626	)			(1,419,144	)
Proceeds from sales of mortgage loans held-for-sale			1,257,619				1,480,862
Bank owned life insurance income, net of claims			(1,537	)			(1,042	)
Decrease (increase) in trading securities, net			4,370				(4,487	)
Net increase in brokerage customer receivables			(5,187	)			(3,420	)
Gain on mortgage loans sold			(4,510	)			(23,984	)
Gain on available-for-sale securities, net			(1,258	)			(438	)
Gain on bargain purchases			(10,584	)			(37,388	)
Loss on sales of premises and equipment, net			—				8
Decrease in accrued interest receivable and other assets, net			85,641				97,626
Decrease in accrued interest payable and other liabilities, net			(29,341	)			(14,350	)
Net Cash Provided by Operating Activities			375,639				188,380
Investing Activities:
Proceeds from maturities of available-for-sale securities			746,324				675,419
Proceeds from sales of available-for-sale securities			53,511				270,654
Purchases of available-for-sale securities			(1,072,299	)			(1,148,417	)
Net cash received for acquisitions			19,925				133,952
Net (increase) decrease in interest-bearing deposits with banks			(100,337	)			36,909
Net increase in loans			(364,474	)			(421,140	)
Purchases of premises and equipment, net			(48,741	)			(5,067	)
Net Cash Used for Investing Activities			(766,091	)			(457,690	)
Financing Activities:
Increase in deposit accounts			243,605				137,276
Increase (decrease) in other borrowings, net			171,673				(29,013	)
Decrease in Federal Home Loan Bank advances, net			—				(43,069	)
Repayment of subordinated note			(10,000	)			(5,000	)
Excess tax benefits from stock-based compensation arrangements			238				760
Issuance of common stock, net of issuance costs			—				210,417
Issuance of common shares resulting from exercise of stock options, employee stock purchase plan and conversion of common stock warrants			1,619				2,242
Common stock repurchases			(50	)			(102	)
Dividends paid			(5,145	)			(10,441	)
Net Cash Provided by Financing Activities			401,940				263,070
Net Increase (Decrease) in Cash and Cash Equivalents			11,488				(6,240	)
Cash and Cash Equivalents at Beginning of Period			172,580				158,616
Cash and Cash Equivalents at End of Period		$	184,068			$	152,376

See accompanying notes to unaudited consolidated financial statements.

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. 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, 2010 (“2010 Form 10-K”). Operating results reported for the three-month and year-to-date 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, covered loan losses, and losses on lending-related commitments, 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 2010 Form 10-K.

(2) Recent Accounting Developments

Presentation of Comprehensive Income

In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income,” which amends the presentation formats permitted for reporting other comprehensive income. This ASU no longer allows other comprehensive income to be presented as part of the statement of changes in stockholder’s equity. Entities must present other comprehensive income and its components in a single statement along with net income or in a separate, consecutive statement of other comprehensive income. This guidance is effective for fiscal and interim periods beginning after December 15, 2011. Other than changing the format of the comprehensive income disclosure, the Company does not expect adoption of this new guidance to have a material impact on our consolidated financial statements.

Amended Guidance for Fair Value Measurement and Disclosure

In May 2011, the FASB issued ASU No. 2011-04, “Fair Value Measurements (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS,” which amends the language used to describe U.S. GAAP requirements for measuring fair value and for disclosing information about fair value measurements. The amended language seeks to clarify the application of existing guidance as well as change the measurement and disclosure of a few specific items. The principles changed include measurement of financial instruments that are managed within a portfolio and application of premiums and discounts in fair value measurement. The new guidance will also require additional disclosures including expanded disclosures for measurements categorized within level three, disclosures for nonfinancial assets at fair value and disclosure displaying the fair value hierarchy by level for items in the statement of financial position that are not measured at fair value but for which a fair value is required to be disclosed. The guidance is effective during interim and annual periods beginning after December 15, 2011. The Company is currently evaluating the impact of adopting this new guidance on the consolidated financial statements.

Changes to the Effective Control Assessment in Accounting for Transfers

In April 2011, the FASB issued ASU No. 2011-03, “Transfers and Servicing (Topic 860); Reconsideration of Effective Control for Repurchase Agreements,” which amends the criteria used to determine when an entity may or may not recognize a sale upon the transfer of financial assets subject to repurchase agreements. The changes presented in this ASU are intended to improve the accounting for these transactions by removing the criterion requiring the transferor to have the ability to repurchase or redeem the

transferred financial assets from the assessment of effective control. The guidance in this update is effective for the first interim or annual period beginning on or after December 15, 2011 and should be applied prospectively. The Company is currently evaluating the impact of adopting this new guidance on the consolidated financial statements.

Credit Quality Disclosures of Financing Receivables and Allowance for Credit Losses

In July 2010, the FASB issued ASU No. 2010-20, “Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses,” which required more information in disclosures related to the credit quality of financing receivables and the credit reserves held against them. This guidance required the Company to provide a greater level of disaggregated information about the credit quality of the Company’s loans and the allowance for loan losses as well as to disclose additional information related to credit quality indicators, past due information, and impaired loans. This ASU also included disclosure requirements for information related to loans modified in a troubled debt restructuring, however these disclosures were deferred in January 2011 upon FASB’s issuance of ASU No. 2011-01 “Receivables (Topic 310): Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in update No. 2010-20” to become effective for reporting periods beginning on or after June 15, 2011. All other provisions of ASU 2010-20, except for the summary of activity in the allowance for credit losses by loan portfolio, were effective for the Company’s reporting period ending on or after December 15, 2010. Although not required, the Company disclosed the summary of activity in the allowance for credit losses for the year ending December 31, 2010. Additional credit quality disclosures are included in our consolidated financial statements to provide disaggregated information with respect to the Company’s loan portfolio and the allowance for loan losses. Other than requiring additional disclosures, the adoption of this new guidance did not have a material impact on our consolidated financial statements. See Item 2 — Loan Portfolio and Asset Quality for further detail.

Determination of a Troubled Debt Restructuring

In April 2011, the FASB issued ASU No. 2011-02, “Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring,” which sought to clarify guidance used to evaluate troubled debt restructurings resulting in consistent application of U.S. GAAP. The update provided guidance to evaluate what is considered to be an economic concession as well as circumstances which indicate that a debtor is experiencing financial difficulties. The effective periods for application of the amendments in this update were interim and annual periods beginning on or after June 15, 2011, and should be applied retrospectively to the beginning of the annual period of adoption. The Company does not expect adoption of this new guidance to significantly change the Company’s troubled debt restructuring determination process or have a material impact on its consolidated financial statements.

(3) Business Combinations

FDIC-Assisted Transactions

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

The following table presents details related to these transactions:

														Community First				The Bank of
(Dollars in thousands)		Lincoln Park				Wheatland				Ravenswood				Bank — Chicago				Commerce
Date of acquisition		April 23, 2010				April 23, 2010				August 6, 2010				February 4, 2011				March 25, 2011
Fair value of assets acquired, at the acquisition date		$	157,078			$	343,870			$	173,919			$	50,891			$	173,986
Fair value of loans acquired, at the acquisition date			103,420				175,277				97,956				27,332				77,887
Fair value of liabilities assumed, at the acquisition date			192,018				415,560				122,943				49,779				168,472

Loans comprise the majority of the assets acquired in these 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, other real estate owned (“OREO”), and certain other assets. The Company refers to the loans subject to these loss-sharing agreements as “covered loans.” Covered assets include covered loans, covered OREO and certain other covered assets. At the acquisition date in 2011, the Company estimated the fair value of the reimbursable losses to be approximately $48.9 million for The Bank of Commerce (“TBOC”) acquisition and $6.7 million for the Community First Bank-Chicago (“CFBC”) acquisition. In 2010, the Company estimated the fair value of the reimbursable losses to be approximately $44.0 million for the Ravenswood acquisition, and $113.8 million for the Lincoln Park and Wheatland acquisitions. 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 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. 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. These transactions resulted in bargain purchase gains of $10.6 million in 2011, $8.6 million for TBOC and $2.0 million for CFBC, and are shown as a component of non-interest income on the Company’s Consolidated Statements of Income. In 2010, FDIC-assisted transactions resulted in bargain purchase gains of $33.1 million, $6.6 million for Ravenswood, $22.3 million for Wheatland, and $4.2 million for Lincoln Park.

Other Bank Acquisitions

On October 22, 2010, Wheaton Bank acquired a branch from an unaffiliated bank that is located in Naperville, Illinois. The acquired operations are operating as Naperville Bank & Trust. Wheaton Bank acquired assets with a fair value of approximately $22.9 million, including $10.7 million of loans, and assumed liabilities with a fair value of approximately $22.9 million, including $22.8 million of deposits. Additionally, the Company recorded goodwill of $1.7 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. Currently 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.

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 for the five FDIC-assisted transactions, and in subsequent accounting, the Company aggregates these purchased loans into pools of loans with common risk characteristics. Subsequent to the purchase date, increases in cash flows over those expected at the purchase date are recognized as interest income prospectively. Subsequent decreases to the expected cash flows will generally result in a provision for loan losses.

The Company purchased a portfolio of life insurance premium finance receivables in 2009. These purchased life insurance premium finance receivables are valued on an individual basis with the accretable component being recognized into interest income using the effective yield method over the estimated remaining life of the loans. The non-accretable portion is evaluated each quarter and if the loans’ credit related conditions improve, a portion is transferred to the accretable component and accreted over future periods. In the event a specific loan prepays in whole, any remaining accretable and non-accretable discount is recognized in income immediately. If credit related conditions deteriorate, an allowance related to these loans will be established as part of the provision for credit losses.

See Note 6 — Loans, for more information on loans acquired with evidence of credit quality deterioration since origination.

(4) Cash and Cash Equivalents

For purposes of the Consolidated Statements of Cash Flows, the Company considers cash and cash equivalents to include cash on hand, cash items in the process of collection, non-interest bearing amounts due from correspondent banks, federal funds sold and securities purchased under resale agreements with original maturities of three months or less.

(5)Available-for-sale Securities

The following tables are a summary of the available-for-sale securities portfolio as of the dates shown:

		June 30, 2011
						Gross				Gross
		Amortized				unrealized				unrealized				Fair
(Dollars in thousands)		Cost				gains				losses				Value
U.S. Treasury		$	104,300			$	3			$	(3,566	)		$	100,737
U.S. Government agencies			679,261				4,445				(16	)			683,690
Municipal			48,710				775				(28	)			49,457
Corporate notes and other:
Financial issuers			165,908				3,348				(1,988	)			167,268
Other			46,549				456				(21	)			46,984
Mortgage-backed: (1)
Agency			351,246				13,706				—				364,952
Non-agency CMOs			362				9				—				371
Other equity securities			42,945				50				(28	)			42,967
Total available-for-sale securities		$	1,439,281			$	22,792			$	(5,647	)		$	1,456,426

		December 31, 2010
						Gross				Gross
		Amortized				unrealized				unrealized				Fair
(Dollars in thousands)		Cost				gains				losses				Value
U.S. Treasury		$	104,418			$	—			$	(8,321	)		$	96,097
U.S. Government agencies			882,095				2,682				(722	)			884,055
Municipal			51,493				896				(86	)			52,303
Corporate notes and other:
Financial issuers			186,931				3,048				(2,972	)			187,007
Other			74,629				330				(51	)			74,908
Mortgage-backed: (1)
Agency			148,693				9,963				(3	)			158,653
Non-agency CMOs			3,018				10				—				3,028
Other equity securities			40,636				96				(481	)			40,251
Total available-for-sale securities		$	1,491,913			$	17,025			$	(12,636	)		$	1,496,302

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 June 30, 2011:

		Continuous unrealized								Continuous unrealized
		losses existing for								losses existing for
		less than 12 months								greater than 12 months								Total
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
(Dollars in thousands)		value				losses				value				losses				value				losses
U.S. Treasury		$	98,727			$	(3,566	)		$	—			$	—			$	98,727			$	(3,566	)
U.S. Government agencies			59,539				(16	)			—				—				59,539				(16	)
Municipal			2,463				(28	)			—				—				2,463				(28	)
Corporate notes and other:
Financial issuers			61,994				(1,052	)			5,007				(936	)			67,001				(1,988	)
Other			1,012				(21	)			—				—				1,012				(21	)
Other equity securities			2,228				(28	)			—				—				2,228				(28	)
Total		$	225,963			$	(4,711	)		$	5,007			$	(936	)		$	230,970			$	(5,647	)

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 June 30, 2011 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 primarily corporate securities of financial issuers. The corporate securities of financial issuers in this category were comprised of three trust-preferred securities with high investment grades. These obligations have interest rates significantly below the rates at which these types of obligations are currently issued, and have maturity dates in 2027. Although they are currently callable by the issuers, it is unlikely that they will be called in the near future as the interest rates are very attractive to the issuers. A review of the issuers indicated that they have recently raised equity capital and/or have strong capital ratios. The Company does not own any pooled trust-preferred securities.

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 June 30,								Six Months Ended June 30,
(Dollars in thousands)		2011				2010				2011				2010
Realized gains		$	1,152			$	46			$	1,258			$	549
Realized losses			—				—				—				(111	)
Net realized gains		$	1,152			$	46			$	1,258			$	438
Other than temporary impairment charges			—				—				—				—
Gains on available- for-sale securities, net		$	1,152			$	46			$	1,258			$	438
Proceeds from sales of available-for-sale securities		$	3,369			$	86,139			$	53,511			$	270,654

The amortized cost and fair value of securities as of June 30, 2011 and December 31, 2010, 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:

		June 30, 2011								December 31, 2010
		Amortized				Fair				Amortized				Fair
(Dollars in thousands)		Cost				Value				Cost				Value
Due in one year or less		$	246,118			$	246,435			$	647,494			$	647,987
Due in one to five years			495,758				497,409				309,795				310,663
Due in five to ten years			210,106				209,120				194,442				185,938
Due after ten years			92,746				95,172				147,835				149,782
Mortgage-backed			351,608				365,323				151,711				161,681
Other equity securities			42,945				42,967				40,636				40,251
Total available-for-sale securities		$	1,439,281			$	1,456,426			$	1,491,913			$	1,496,302

At June 30, 2011 and December 31, 2010, securities having a carrying value of $1.1 billion and $876 million, respectively, 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 June 30, 2011, 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:

		June 30,				December 31,				June 30,
(Dollars in thousands)		2011				2010				2010
Balance:
Commercial		$	2,132,436			$	2,049,326			$	1,827,618
Commercial real-estate			3,374,668				3,338,007				3,347,823
Home equity			880,702				914,412				922,305
Residential real-estate			329,381				353,336				332,673
Premium finance receivables — commercial			1,429,436				1,265,500				1,346,985
Premium finance receivables — life insurance			1,619,668				1,521,886				1,378,657
Indirect consumer			57,718				51,147				69,011
Consumer and other			101,068				106,272				99,091
Total loans, net of unearned income, excluding covered loans		$	9,925,077			$	9,599,886			$	9,324,163
Covered loans			408,669				334,353				275,563
Total loans		$	10,333,746			$	9,934,239			$	9,599,726
Mix:
Commercial			20	%			21	%			19	%
Commercial real-estate			33				34				35
Home equity			8				9				10
Residential real-estate			3				3				3
Premium finance receivables — commercial			14				13				14
Premium finance receivables — life insurance			16				15				14
Indirect consumer			1				1				1
Consumer and other			1				1				1
Total loans, net of unearned income, excluding covered loans			96	%			97	%			97	%
Covered loans			4				3				3
Total loans			100	%			100	%			100	%

Certain premium finance receivables are recorded net of unearned income. The unearned income portions of such premium finance receivables were $37.3 million at June 30, 2011, $32.3 million at December 31, 2010 and $36.9 million at June 30, 2010. 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 during 2010 and 2011 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 $12.9 million at June 30, 2011, $12.5 million at December 31, 2010 and $11.7 million at June 30, 2010.

The Company’s loan portfolio is generally comprised of loans to consumers and small to medium-sized businesses located within the geographic market areas that the Company serves. The premium finance receivables portfolios are made to customers 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 FDIC-assisted bank acquisitions in 2010 and 2011, 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 these acquired loans:

		June 30, 2011								December 31, 2010
		Unpaid								Unpaid
		Principal				Carrying				Principal				Carrying
(Dollars in thousands)		Balance				Value				Balance				Value
Acquisitions during 2011:
The Bank of Commerce		$	119,273			$	64,097			$	—			$	—
Community First Bank — Chicago			17,701				13,425				—				—
Acquisitions during prior periods:
Covered loans from FDIC-assisted acquistions			358,726				310,452				432,566				331,295
Life insurance premium finance loans			695,088				652,739				752,129				695,587

For the loans acquired as a result of acquisitions during the six months ended June 30, 2011, the following table provides estimated details on these loans at the date of each acquisition:

		The Bank of				Community First
(Dollars in thousands)		Commerce				Bank — Chicago
Contractually required payments including interest		$	127,122			$	22,178
Less: Nonaccretable difference			56,257				6,313
Cash flows expected to be collected (1)			70,865				15,865
Less: Accretable yield			4,414				688
Fair value of loans acquired with evidence of credit quality deterioration since origination		$	66,451			$	15,177

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 the covered loan portfolio at June 30, 2011.

Accretable Yield Activity

The following table provides activity for the accretable yield of loans acquired with evidence of credit quality deterioration since origination:

		Three Months Ended								Six Months Ended
		June 30, 2011								June 30, 2011
						Life Insurance								Life Insurance
		FDIC—Assisted				Premium				FDIC—Assisted				Premium
(Dollars in thousands)		Acquisitions				Finance Loans				Acquisitions				Finance Loans
Accretable yield, beginning balance		$	91,332			$	25,543			$	39,809			$	33,315
Acquisitions			—				—				7,107				—
Accretable yield amortized to interest income			(13,568	)			(5,122	)			(27,727	)			(14,174	)
Increase in expected cash flows (1)			2,984				4,470				61,559				5,750
Accretable yield, ending balance		$	80,748			$	24,891			$	80,748			$	24,891

(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 June 30, 2011, December 31, 2010 and June 30, 2010:

						90+ days				60-89				30-59
As of June 30, 2011						and still				days past				days past
(Dollars in thousands)		Nonaccrual				accruing				due				due				Current				Total Loans
Loan Balances:
Commercial
Commercial and industrial		$	22,289			$	—			$	7,164			$	23,754			$	1,309,455			$	1,362,662
Franchise			1,792				—				—				—				112,342				114,134
Mortgage warehouse lines of credit			—				—				—				—				68,477				68,477
Community Advanatage — homeowners association			—				—				—				—				73,929				73,929
Aircraft			—				—				—				—				21,231				21,231
Asset-based lending			2,087				—				—				2,415				361,594				366,096
Municipal			—				—				—				—				63,296				63,296
Leases			—				—				—				763				61,772				62,535
Other			—				—				—				—				76				76
Total commercial			26,168				—				7,164				26,932				2,072,172				2,132,436
Commercial real-estate
Residential construction			3,011				—				938				5,245				81,561				90,755
Commercial construction			2,453				—				7,579				7,075				120,540				137,647
Land			33,980				—				10,281				8,076				160,597				212,934
Office			17,503				—				1,648				3,846				509,385				532,382
Industrial			2,470				—				2,689				2,480				506,895				514,534
Retail			8,164				—				3,778				14,806				498,040				524,788
Multi-family			4,947				—				4,628				3,836				302,740				316,151
Mixed use and other			17,265				—				9,350				4,201				1,014,661				1,045,477
Total commercial real-estate			89,793				—				40,891				49,565				3,194,419				3,374,668
Home equity			15,853				—				1,502				4,081				859,266				880,702
Residential real estate			7,379				—				1,272				949				319,781				329,381
Premium finance receivables
Commercial insurance loans			10,309				4,446				5,089				7,897				1,401,695				1,429,436
Life insurance loans			670				324				4,873				3,254				957,808				966,929
Purchased life insurance loans			—				—				—				—				652,739				652,739
Indirect consumer			89				284				98				531				56,716				57,718
Consumer and other			757				—				123				418				99,770				101,068
Total loans, net of unearned income, excluding covered loans		$	151,018			$	5,054			$	61,012			$	93,627			$	9,614,366			$	9,925,077
Covered loans			—				121,271				5,643				11,899				269,856				408,669
Total loans, net of unearned income		$	151,018			$	126,325			$	66,655			$	105,526			$	9,884,222			$	10,333,746