WTFC-2014.09.30-10Q
Table of Contents

 
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, 2014
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to
Commission File Number 001-35077
_____________________________________ 
WINTRUST FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter) 
Illinois
36-3873352
(State of incorporation or organization)
(I.R.S. Employer Identification No.)
9700 W. Higgins Road, Suite 800
Rosemont, Illinois 60018
(Address of principal executive offices)

(847) 939-9000
(Registrant’s telephone number, including area code)
______________________________________ 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer
 
þ
 
 
Accelerated filer
 
¨
Non-accelerated filer
 
¨
(Do not check if a smaller reporting company)
 
Smaller reporting company
 
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common Stock — no par value, 46,715,099 shares, as of October 31, 2014
 

Table of Contents

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

Table of Contents

PART I
ITEM 1. FINANCIAL STATEMENTS
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
 
(Unaudited)
 
 
 
(Unaudited)
(In thousands, except share data)
September 30,
2014
 
December 31,
2013
 
September 30,
2013
Assets
 
 
 
 
 
Cash and due from banks
$
260,694

 
$
253,408

 
$
322,866

Federal funds sold and securities purchased under resale agreements
26,722

 
10,456

 
7,771

Interest bearing deposits with banks
620,370

 
495,574

 
681,834

Available-for-sale securities, at fair value
1,782,648

 
2,176,290

 
1,781,883

Trading account securities
6,015

 
497

 
259

Federal Home Loan Bank and Federal Reserve Bank stock
80,951

 
79,261

 
76,755

Brokerage customer receivables
26,624

 
30,953

 
29,253

Mortgage loans held-for-sale
363,303

 
334,327

 
334,345

Loans, net of unearned income, excluding covered loans
14,052,059

 
12,896,602

 
12,581,039

Covered loans
254,605

 
346,431

 
415,988

Total loans
14,306,664

 
13,243,033

 
12,997,027

Less: Allowance for loan losses
91,019

 
96,922

 
107,188

Less: Allowance for covered loan losses
2,655

 
10,092

 
12,924

Net loans
14,212,990

 
13,136,019

 
12,876,915

Premises and equipment, net
555,241

 
531,947

 
517,942

FDIC indemnification asset
27,359

 
85,672

 
100,313

Accrued interest receivable and other assets
494,213

 
569,619

 
576,121

Trade date securities receivable
285,627

 
—

 
—

Goodwill
406,604

 
374,547

 
357,309

Other intangible assets
19,984

 
19,213

 
18,982

Total assets
$
19,169,345

 
$
18,097,783

 
$
17,682,548

Liabilities and Shareholders’ Equity
 
 
 
 
 
Deposits:
 
 
 
 
 
Non-interest bearing
$
3,253,477

 
$
2,721,771

 
$
2,622,518

Interest bearing
12,811,769

 
11,947,018

 
12,024,928

Total deposits
16,065,246

 
14,668,789

 
14,647,446

Federal Home Loan Bank advances
347,500

 
417,762

 
387,852

Other borrowings
51,483

 
255,104

 
248,416

Subordinated notes
140,000

 
—

 
10,000

Junior subordinated debentures
249,493

 
249,493

 
249,493

Trade date securities payable
—

 
303,088

 
—

Accrued interest payable and other liabilities
287,115

 
302,958

 
265,775

Total liabilities
17,140,837

 
16,197,194

 
15,808,982

Shareholders’ Equity:
 
 
 
 
 
Preferred stock, no par value; 20,000,000 shares authorized:
 
 
 
 
 
Series C - $1,000 liquidation value; 126,467 shares issued and outstanding at September 30, 2014, 126,477 shares issued and outstanding at December 31, 2013, and 126,500 shares issued and outstanding at September, 30, 2013
126,467

 
126,477

 
126,500

Common stock, no par value; $1.00 stated value; 100,000,000 shares authorized at September 30, 2014, December 31, 2013, and September 30, 2013; 46,766,420 shares issued at September 30, 2014, 46,181,588 shares issued at December 31, 2013, and 39,992,300 shares issued at September 30, 2013
46,766

 
46,181

 
39,992

Surplus
1,129,975

 
1,117,032

 
1,118,550

Treasury stock, at cost, 75,373 shares at September 30, 2014, 65,005 shares at December 31, 2013, and 261,257 shares at September 30, 2013
(3,519
)
 
(3,000
)
 
(8,290
)
Retained earnings
771,519

 
676,935

 
643,228

Accumulated other comprehensive loss
(42,700
)
 
(63,036
)
 
(46,414
)
Total shareholders’ equity
2,028,508

 
1,900,589

 
1,873,566

Total liabilities and shareholders’ equity
$
19,169,345

 
$
18,097,783

 
$
17,682,548

See accompanying notes to unaudited consolidated financial statements.

1
Table of Contents

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
Three Months Ended
 
Nine Months Ended
(In thousands, except per share data)
September 30,
2014
 
September 30,
2013
 
September 30,
2014
 
September 30,
2013
Interest income
 
 
 
 
 
 
 
Interest and fees on loans
$
156,534

 
$
150,810

 
$
455,548

 
$
438,907

Interest bearing deposits with banks
409

 
229

 
977

 
1,209

Federal funds sold and securities purchased under resale agreements
12

 
4

 
22

 
23

Available-for-sale securities
12,767

 
9,224

 
39,190

 
27,335

Trading account securities
20

 
14

 
34

 
27

Federal Home Loan Bank and Federal Reserve Bank stock
733

 
687

 
2,171

 
2,064

Brokerage customer receivables
201

 
200

 
610

 
562

Total interest income
170,676

 
161,168

 
498,552

 
470,127

Interest expense
 
 
 
 
 
 
 
Interest on deposits
12,298

 
12,524

 
35,980

 
40,703

Interest on Federal Home Loan Bank advances
2,641

 
2,729

 
7,989

 
8,314

Interest on other borrowings
200

 
910

 
1,460

 
3,196

Interest on subordinated notes
1,776

 
40

 
2,130

 
151

Interest on junior subordinated debentures
2,091

 
3,183

 
6,137

 
9,444

Total interest expense
19,006

 
19,386

 
53,696

 
61,808

Net interest income
151,670

 
141,782

 
444,856

 
408,319

Provision for credit losses
5,864

 
11,114

 
14,404

 
42,183

Net interest income after provision for credit losses
145,806

 
130,668

 
430,452

 
366,136

Non-interest income
 
 
 
 
 
 
 
Wealth management
17,659

 
16,057

 
52,694

 
46,777

Mortgage banking
26,691

 
25,682

 
66,923

 
87,561

Service charges on deposit accounts
6,084

 
5,308

 
17,118

 
15,136

(Losses) gains on available-for-sale securities, net
(153
)
 
75

 
(522
)
 
328

Fees from covered call options
2,107

 
285

 
4,893

 
2,917

Trading gains (losses), net
293

 
(1,655
)
 
(1,102
)
 
1,170

Other
5,271

 
8,910

 
17,579

 
22,147

Total non-interest income
57,952

 
54,662

 
157,583

 
176,036

Non-interest expense
 
 
 
 
 
 
 
Salaries and employee benefits
85,976

 
78,007

 
247,873

 
234,745

Equipment
7,570

 
6,593

 
22,196

 
19,190

Occupancy, net
10,446

 
9,079

 
31,289

 
26,639

Data processing
4,765

 
4,884

 
14,023

 
13,841

Advertising and marketing
3,528

 
2,772

 
9,902

 
7,534

Professional fees
4,035

 
3,378

 
11,535

 
10,790

Amortization of other intangible assets
1,202

 
1,154

 
3,521

 
3,438

FDIC insurance
3,211

 
3,245

 
9,358

 
9,692

OREO expense, net
581

 
2,499

 
7,047

 
3,163

Other
17,186

 
15,637

 
46,662

 
46,522

Total non-interest expense
138,500

 
127,248

 
403,406

 
375,554

Income before taxes
65,258

 
58,082

 
184,629

 
166,618

Income tax expense
25,034

 
22,519

 
71,364

 
64,696

Net income
$
40,224

 
$
35,563

 
$
113,265

 
$
101,922

Preferred stock dividends and discount accretion
1,581

 
1,581

 
4,743

 
6,814

Net income applicable to common shares
$
38,643

 
$
33,982

 
$
108,522

 
$
95,108

Net income per common share—Basic
$
0.83

 
$
0.86

 
$
2.34

 
$
2.51

Net income per common share—Diluted
$
0.79

 
$
0.71

 
$
2.23

 
$
2.05

Cash dividends declared per common share
$
0.10

 
$
0.09

 
$
0.30

 
$
0.18

Weighted average common shares outstanding
46,639

 
39,331

 
46,453

 
37,939

Dilutive potential common shares
4,241

 
10,823

 
4,349

 
11,763

Average common shares and dilutive common shares
50,880

 
50,154

 
50,802

 
49,702

See accompanying notes to unaudited consolidated financial statements.

2
Table of Contents

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 
 
Three Months Ended
 
Nine Months Ended
(In thousands)
September 30,
2014
 
September 30,
2013
 
September 30,
2014
 
September 30,
2013
Net income
$
40,224

 
$
35,563

 
$
113,265

 
$
101,922

Unrealized gains (losses) on securities
 
 
 
 
 
 
 
Before tax
1,345

 
(2,419
)
 
49,920

 
(81,337
)
Tax effect
(533
)
 
959

 
(19,669
)
 
32,106

Net of tax
812

 
(1,460
)
 
30,251

 
(49,231
)
Less: Reclassification of net (losses) gains included in net income
 
 
 
 
 
 
 
Before tax
(153
)
 
75

 
(522
)
 
328

Tax effect
62

 
(30
)
 
208

 
(131
)
Net of tax
(91
)
 
45

 
(314
)
 
197

Net unrealized gains (losses) on securities
903

 
(1,505
)
 
30,565

 
(49,428
)
Unrealized gains on derivative instruments
 
 
 
 
 
 
 
Before tax
971

 
647

 
247

 
4,290

Tax effect
(386
)
 
(257
)
 
(98
)
 
(1,708
)
Net unrealized gains on derivative instruments
585

 
390

 
149

 
2,582

Foreign currency translation adjustment
 
 
 
 
 
 
 
Before tax
(13,062
)
 
4,970

 
(13,976
)
 
(9,575
)
Tax effect
3,377

 
(1,065
)
 
3,598

 
2,296

Net foreign currency translation adjustment
(9,685
)
 
3,905

 
(10,378
)
 
(7,279
)
Total other comprehensive (loss) income
(8,197
)
 
2,790

 
20,336

 
(54,125
)
Comprehensive income
$
32,027

 
$
38,353

 
$
133,601

 
$
47,797

See accompanying notes to unaudited consolidated financial statements.

3
Table of Contents

WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)
(In thousands)
Preferred
stock
 
Common
stock
 
Surplus
 
Treasury
stock
 
Retained
earnings
 
Accumulated
other
comprehensive
income (loss)
 
Total
shareholders’
equity
Balance at December 31, 2012
$
176,406

 
$
37,108

 
$
1,036,295

 
$
(7,838
)
 
$
555,023

 
$
7,711

 
$
1,804,705

Net income
—

 
—

 
—

 
—

 
101,922

 
—

 
101,922

Other comprehensive loss, net of tax
—

 
—

 
—

 
—

 
—

 
(54,125
)
 
(54,125
)
Cash dividends declared on common stock
—

 
—

 
—

 
—

 
(6,903
)
 
—

 
(6,903
)
Dividends on preferred stock
—

 
—

 
—

 
—

 
(6,744
)
 
—

 
(6,744
)
Accretion on preferred stock
70

 
—

 
—

 
—

 
(70
)
 
—

 
—

Conversion of Series A preferred stock to common stock
(49,976
)
 
1,944

 
48,032

 
—

 
—

 
—

 
—

Stock-based compensation
—

 
—

 
6,598

 
—

 
—

 
—

 
6,598

Common stock issued for:
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisitions
—

 
648

 
22,422

 
—

 
—

 
—

 
23,070

Exercise of stock options and warrants
—

 
79

 
2,161

 
(214
)
 
—

 
—

 
2,026

Restricted stock awards
—

 
135

 
140

 
(238
)
 
—

 
—

 
37

Employee stock purchase plan
—

 
47

 
1,801

 
—

 
—

 
—

 
1,848

Director compensation plan
—

 
31

 
1,101

 
—

 
—

 
—

 
1,132

Balance at September 30, 2013
$
126,500

 
$
39,992

 
$
1,118,550

 
$
(8,290
)
 
$
643,228

 
$
(46,414
)
 
$
1,873,566

Balance at December 31, 2013
$
126,477

 
$
46,181

 
$
1,117,032

 
$
(3,000
)
 
$
676,935

 
$
(63,036
)
 
$
1,900,589

Net income
—

 
—

 
—

 
—

 
113,265

 
—

 
113,265

Other comprehensive income, net of tax
—

 
—

 
—

 
—

 
—

 
20,336

 
20,336

Cash dividends declared on common stock
—

 
—

 
—

 
—

 
(13,938
)
 
—

 
(13,938
)
Dividends on preferred stock
—

 
—

 
—

 
—

 
(4,743
)
 
—

 
(4,743
)
Stock-based compensation
—

 
—

 
5,754

 
—

 
—

 
—

 
5,754

Conversion of Series C preferred stock to common stock
(10
)
 
1

 
9

 
—

 
—

 
—

 
—

Common stock issued for:
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercise of stock options and warrants
—

 
450

 
3,797

 
(313
)
 
—

 
—

 
3,934

Restricted stock awards
—

 
67

 
151

 
(206
)
 
—

 
—

 
12

Employee stock purchase plan
—

 
47

 
2,086

 
—

 
—

 
—

 
2,133

Director compensation plan
—

 
20

 
1,146

 
—

 
—

 
—

 
1,166

Balance at September 30, 2014
$
126,467

 
$
46,766

 
$
1,129,975

 
$
(3,519
)
 
$
771,519

 
$
(42,700
)
 
$
2,028,508

See accompanying notes to unaudited consolidated financial statements.

4
Table of Contents


WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
Nine Months Ended
(In thousands)
September 30,
2014
 
September 30,
2013
Operating Activities:
 
 
 
Net income
$
113,265

 
$
101,922

Adjustments to reconcile net income to net cash provided by operating activities
 
 
 
Provision for credit losses
14,404

 
42,183

Depreciation and amortization
23,952

 
21,061

Stock-based compensation expense
5,754

 
6,598

Tax (expense) benefit from stock-based compensation arrangements
(279
)
 
188

Excess tax benefits from stock-based compensation arrangements
(339
)
 
(349
)
Net amortization of premium on securities
4,733

 
1,534

Mortgage servicing rights fair value change, net
706

 
(1,373
)
Originations and purchases of mortgage loans held-for-sale
(2,272,919
)
 
(2,966,058
)
Proceeds from sales of mortgage loans held-for-sale
2,299,103

 
3,108,405

(Increase) decrease in trading securities, net
(5,518
)
 
324

Net decrease (increase) in brokerage customer receivables
4,329

 
(4,389
)
Gains on mortgage loans sold
(55,160
)
 
(64,492
)
Losses (gains) on available-for-sale securities, net
522

 
(328
)
Losses (gains) on sales of premises and equipment, net
664

 
(375
)
Net losses (gains) on sales and fair value adjustments of other real estate owned
2,628

 
(1,323
)
Decrease in accrued interest receivable and other assets, net
78,709

 
27,170

Decrease in accrued interest payable and other liabilities, net
(55,874
)
 
(50,290
)
Net Cash Provided by Operating Activities
158,680

 
220,408

Investing Activities:
 
 
 
Proceeds from maturities of available-for-sale securities
222,434

 
169,139

Proceeds from sales of available-for-sale securities
578,594

 
129,537

Purchases of available-for-sale securities
(944,281
)
 
(240,640
)
Net cash received (paid) for acquisitions
228,946

 
(9,350
)
Divestiture of operations
—

 
(149,100
)
Proceeds from sales of other real estate owned
73,940

 
76,506

Proceeds received from the FDIC related to reimbursements on covered assets
17,652

 
47,408

Net (increase) decrease in interest bearing deposits with banks
(124,796
)
 
412,638

Net increase in loans
(1,011,889
)
 
(589,402
)
Purchases of premises and equipment, net
(30,982
)
 
(24,239
)
Net Cash Used for Investing Activities
(990,382
)
 
(177,503
)
Financing Activities:
 
 
 
Increase in deposit accounts
1,000,603

 
39,575

Decrease in other borrowings, net
(203,621
)
 
(29,009
)
Decrease in Federal Home Loan Bank advances, net
(70,000
)
 
(26,000
)
Proceeds from issuance of subordinated notes, net
139,090

 
—

Repayment of subordinated notes
—

 
(5,000
)
Excess tax benefits from stock-based compensation arrangements
339

 
349

Issuance of common shares resulting from exercise of stock options, employee stock purchase plan and conversion of common stock warrants
8,043

 
5,307

Common stock repurchases
(519
)
 
(452
)
Dividends paid
(18,681
)
 
(12,066
)
Net Cash Provided by (Used for) Financing Activities
855,254

 
(27,296
)
Net Increase in Cash and Cash Equivalents
23,552

 
15,609

Cash and Cash Equivalents at Beginning of Period
263,864

 
315,028

Cash and Cash Equivalents at End of Period
$
287,416

 
$
330,637

See accompanying notes to unaudited consolidated financial statements.

5
Table of Contents

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, 2013 (“2013 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 2013 Form 10-K.
(2) Recent Accounting Developments

Accounting for Investments in Qualified Affordable Housing Projects

In January 2014, the FASB issued ASU No. 2014-01, “Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects,” to provide guidance on accounting for investments by a reporting entity in flow-through limited liability entities that invest in affordable housing projects that qualify for the low-income housing tax credit. This ASU permits new accounting treatment, if certain conditions are met, which allows the Company to amortize the initial cost of an investment in proportion to the amount of tax credits and other tax benefits received with recognition of the investment performance in income tax expense. This guidance is effective for fiscal years beginning after December 15, 2014 and is to be applied retrospectively. The Company does not expect this guidance to have a material impact on the Company’s consolidated financial statements.

Repossession of Residential Real Estate Collateral

In January 2014, the FASB issued ASU No. 2014-04, “Receivables - Troubled Debt Restructurings by Creditors (Topic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure,” to address diversity in practice and clarify guidance regarding the accounting for an in-substance repossession or foreclosure of residential real estate collateral. This ASU clarifies that an in-substance repossession or foreclosure occurs upon either the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or the borrower conveying all interest in the residential real estate property to the creditor. Additionally, this ASU requires disclosure of both the amount of foreclosed residential real estate property held by the Company and the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure. This guidance is effective for fiscal years beginning after December 15, 2014. Other than requiring additional disclosures, the Company does not expect adoption of this guidance to have a material impact on the Company’s consolidated financial statements.


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Revenue Recognition

In May 2014, the FASB issued ASU No. 2014-09, which created "Revenue from Contracts with Customers (Topic 606), to clarify the principles for recognizing revenue and develop a common revenue standard for customer contracts. This ASU provides guidance regarding how an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also added a new subtopic to the codification, ASC 340-40, "Other Assets and Deferred Costs: Contracts with Customers" to provide guidance on costs related to obtaining and fulfilling a customer contract. Furthermore, the new standard requires disclosure of sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. This guidance is effective for fiscal years beginning after December 15, 2016. The Company is current evaluating the impact of adopting this new guidance on the consolidated financial statements.

(3) Business Combinations

Non-FDIC Assisted Bank Acquisitions

On August 8, 2014, the Company, through its wholly-owned subsidiary Town Bank, acquired eleven branch offices and deposits of Talmer Bank & Trust. Subsequent to this date, the Company acquired loans from these branches as well. In total, the Company acquired assets with a fair value of approximately $361.3 million, including approximately $41.5 million of loans, and assumed liabilities with a fair value of approximately $361.3 million, including approximately $354.9 million of deposits. Additionally, the Company recorded goodwill of $9.7 million on the acquisition.

On July 11, 2014 the Company, through its wholly-owned subsidiary Town Bank, acquired the Pewaukee, Wisconsin branch of THE National Bank. The Company acquired assets with a fair value of approximately $94.1 million, including approximately $75.0 million of loans, and assumed deposits with a fair value of approximately $36.2 million. Additionally, the Company recorded goodwill of $16.3 million on the acquisition.

On May 16, 2014, the Company, through its wholly-owned subsidiary Hinsdale Bank and Trust Company ("Hinsdale Bank") acquired the Stone Park branch office and certain related deposits of Urban Partnership Bank ("UPB"). The Company assumed liabilities with a fair value of approximately $5.5 million, including approximately $5.4 million of deposits. Additionally, the Company recorded goodwill of $678,000 on the acquisition.

On October 18, 2013, the Company acquired Diamond Bancorp, Inc. ("Diamond"). Diamond was the parent company of Diamond Bank, FSB ("Diamond Bank"), which operated four banking locations in Chicago, Schaumburg, Elmhurst, and Northbrook, Illinois. As part of the transaction, Diamond Bank was merged into Wintrust Bank (formerly known as North Shore Community Bank & Trust Company). The Company acquired assets with a fair value of approximately $172.5 million, including approximately $91.7 million of loans, and assumed liabilities with a fair value of approximately $169.1 million, including approximately $140.2 million of deposits. Additionally, the Company recorded goodwill of $8.4 million on the acquisition.

On May 1, 2013, the Company acquired First Lansing Bancorp, Inc. ("FLB"). FLB was the parent company of First National Bank of Illinois ("FNBI"), which operated seven banking locations in the south and southwest suburbs of Chicago, as well as one location in northwest Indiana. As part of this transaction, FNBI was merged into Old Plank Trail Community Bank, N.A. ("Old Plank Trail Bank"). The Company acquired assets with a fair value of approximately $373.4 million, including approximately $123.0 million of loans, and assumed liabilities with a fair value of approximately $334.7 million, including approximately $331.4 million of deposits. Additionally, the Company recorded goodwill of $14.0 million on the acquisition.
See Note 17—Subsequent Events for discussion regarding the Company's announced acquisition of Delavan Bancshares, Inc. ("Delavan").

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

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“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.
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 date, reimbursements received from the FDIC for actual incurred losses will reduce the FDIC indemnification assets. Reductions to expected losses, to the extent such reductions to expected losses are the result of an improvement to the actual or expected cash flows from the covered assets, will also reduce the FDIC indemnification assets. Although these assets are contractual receivables from the FDIC, there are no contractual interest rates. Additions to expected losses will require an increase to the allowance for loan losses and a corresponding increase to the FDIC indemnification assets. The corresponding accretion is recorded as a component of non-interest income on the Consolidated Statements of Income.
The following table summarizes the activity in the Company’s FDIC indemnification asset during the periods indicated:
 
Three Months Ended
 
Nine Months Ended
(Dollars in thousands)
September 30,
2014
 
September 30,
2013
 
September 30,
2014
 
September 30,
2013
Balance at beginning of period
$
46,115

 
$
137,681

 
$
85,672

 
$
208,160

Additions from acquisitions
—

 
—

 
—

 
—

Additions from reimbursable expenses
1,584

 
3,062

 
4,933

 
10,922

Amortization
(1,382
)
 
(1,763
)
 
(4,441
)
 
(5,884
)
Changes in expected reimbursements from the FDIC for changes in expected credit losses
(12,124
)
 
(12,742
)
 
(41,153
)
 
(65,477
)
Payments received from the FDIC
(6,834
)
 
(25,925
)
 
(17,652
)
 
(47,408
)
Balance at end of period
$
27,359

 
$
100,313

 
$
27,359

 
$
100,313

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 Savings and Loan Association of Chicago ("Second Federal") to an unaffiliated financial institution. Through this transaction, the Company divested approximately $149 million of related deposits.
Specialty Finance Acquisition
On April 28, 2014, the Company, through its wholly-owned subsidiary, First Insurance Funding of Canada, Inc., completed its acquisition of Policy Billing Services Inc. and Equity Premium Finance Inc., two affiliated Canadian insurance premium funding and payment services companies. Through this transaction, the Company acquired approximately $7.4 million of premium finance receivables. The Company recorded goodwill of approximately $6.5 million on the acquisition.

Mortgage Banking Acquisitions

On October 1, 2013, the Company, through its wholly-owned subsidiary, Barrington Bank and Trust Company, N.A. ("Barrington Bank"), acquired certain assets and assumed certain liabilities of the mortgage banking business of Surety Financial Services ("Surety") of Sherman Oaks, California. Surety had five offices located in southern California which originated approximately $1.0 billion in the twelve months prior to the acquisition date. The Company recorded goodwill of $9.5 million on the acquisition.

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Table of Contents


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


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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, 2014
(Dollars in thousands)
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
U.S. Treasury
$
388,873

 
$
372

 
$
(10,984
)
 
$
378,261

U.S. Government agencies
771,255

 
3,866

 
(35,369
)
 
739,752

Municipal
184,015

 
4,969

 
(1,881
)
 
187,103

Corporate notes:
 
 
 
 
 
 
 
Financial issuers
129,259

 
2,252

 
(1,208
)
 
130,303

Other
3,773

 
79

 
—

 
3,852

Mortgage-backed: (1)
 
 
 
 
 
 
 
Mortgage-backed securities
246,354

 
4,303

 
(8,938
)
 
241,719

Collateralized mortgage obligations
49,909

 
357

 
(763
)
 
49,503

Equity securities
47,595

 
4,958

 
(398
)
 
52,155

Total available-for-sale securities
$
1,821,033

 
$
21,156

 
$
(59,541
)
 
$
1,782,648

 
 
December 31, 2013
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
(Dollars in thousands)
 
 
 
U.S. Treasury
$
354,262

 
$
141

 
$
(18,308
)
 
$
336,095

U.S. Government agencies
950,086

 
1,680

 
(56,078
)
 
895,688

Municipal
154,463

 
2,551

 
(4,298
)
 
152,716

Corporate notes:
 
 
 
 
 
 
 
Financial issuers
129,362

 
1,993

 
(2,411
)
 
128,944

Other
5,994

 
105

 
(5
)
 
6,094

Mortgage-backed: (1)
 
 
 
 
 
 
 
Mortgage-backed securities
562,708

 
3,537

 
(18,047
)
 
548,198

Collateralized mortgage obligations
57,711

 
258

 
(942
)
 
57,027

Equity securities
50,532

 
1,493

 
(497
)
 
51,528

Total available-for-sale securities
$
2,265,118

 
$
11,758

 
$
(100,586
)
 
$
2,176,290

 
 
September 30, 2013
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
(Dollars in thousands)
 
 
 
U.S. Treasury
$
225,190

 
$
150

 
$
(14,438
)
 
$
210,902

U.S. Government agencies
954,050

 
2,213

 
(43,574
)
 
912,689

Municipal
152,010

 
1,983

 
(3,346
)
 
150,647

Corporate notes:

 

 

 
 
Financial issuers
132,320

 
2,252

 
(2,513
)
 
132,059

Other
7,011

 
126

 
(15
)
 
7,122

Mortgage-backed: (1)

 

 

 
 
Mortgage-backed securities
268,166

 
4,157

 
(12,861
)
 
259,462

Collateralized mortgage obligations
60,001

 
458

 
(728
)
 
59,731

Equity securities
53,837

 
1,097

 
(5,663
)
 
49,271

Total available-for-sale securities
$
1,852,585

 
$
12,436

 
$
(83,138
)
 
$
1,781,883


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

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Table of Contents

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, 2014:
 
 
Continuous unrealized
losses existing for
less than 12 months
 
Continuous unrealized
losses existing for
greater than 12 months
 
Total
(Dollars in thousands)
Fair Value
 
Unrealized Losses
 
Fair Value
 
Unrealized Losses
 
Fair Value
 
Unrealized Losses
U.S. Treasury
$
10,006

 
$
(3
)
 
$
189,172

 
$
(10,981
)
 
$
199,178

 
$
(10,984
)
U.S. Government agencies
13,557

 
(78
)
 
447,369

 
(35,291
)
 
460,926

 
(35,369
)
Municipal
9,029

 
(113
)
 
47,937

 
(1,768
)
 
56,966

 
(1,881
)
Corporate notes:
 
 
 
 
 
 
 
 
 
 
 
Financial issuers
1,318

 
(3
)
 
57,982

 
(1,205
)
 
59,300

 
(1,208
)
Other
—

 
—

 
—

 
—

 
—

 
—

Mortgage-backed:
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities
14,619

 
(3
)
 
141,358

 
(8,935
)
 
155,977

 
(8,938
)
Collateralized mortgage obligations
16,475

 
(150
)
 
13,728

 
(613
)
 
30,203

 
(763
)
Equity securities
—

 
—

 
10,399

 
(398
)
 
10,399

 
(398
)
Total
$
65,004

 
$
(350
)
 
$
907,945

 
$
(59,191
)
 
$
972,949

 
$
(59,541
)

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, 2014 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 agency bonds, treasury notes and mortgage-backed securities. Unrealized losses recognized on agency bonds, treasury notes and mortgage-backed securities are the result of increases in yields for similar types of securities which also have a longer duration and maturity.
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
 
Nine months ended
(Dollars in thousands)
September 30,
2014
 
September 30,
2013
 
September 30,
2014
 
September 30,
2013
Realized gains
$
179

 
$
118

 
$
333

 
$
434

Realized losses
(332
)
 
(43
)
 
(855
)
 
(106
)
Net realized (losses) gains
$
(153
)
 
$
75

 
$
(522
)
 
$
328

Other than temporary impairment charges
—

 
—

 
—

 
—

(Losses) gains on available-for-sale securities, net
$
(153
)
 
$
75

 
$
(522
)
 
$
328

Proceeds from sales of available-for-sale securities
$
382,552

 
$
45,078

 
$
578,594

 
$
129,537




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Table of Contents

The amortized cost and fair value of securities as of September 30, 2014, December 31, 2013 and September 30, 2013, 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, 2014
 
December 31, 2013
 
September 30, 2013
(Dollars in thousands)
Amortized Cost
 
Fair Value
 
Amortized Cost
 
Fair Value
 
Amortized Cost
 
Fair Value
Due in one year or less
$
216,244

 
$
216,582

 
$
268,847

 
$
269,168

 
$
285,746

 
$
286,066

Due in one to five years
309,914

 
310,917

 
358,108

 
358,357

 
316,076

 
316,474

Due in five to ten years
327,505

 
317,654

 
350,372

 
330,020

 
344,742

 
328,895

Due after ten years
623,512

 
594,118

 
616,840

 
561,992

 
524,017

 
481,984

Mortgage-backed
296,263

 
291,222

 
620,419

 
605,225

 
328,167

 
319,193

Equity securities
47,595

 
52,155

 
50,532

 
51,528

 
53,837

 
49,271

Total available-for-sale securities
$
1,821,033

 
$
1,782,648

 
$
2,265,118

 
$
2,176,290

 
$
1,852,585

 
$
1,781,883

Securities having a carrying value of $1.1 billion at September 30, 2014, $1.2 billion at December 31, 2013 and $1.2 billion at September 30, 2013, were pledged as collateral for public deposits, trust deposits, FHLB advances, securities sold under repurchase agreements and derivatives. At September 30, 2014, there were no securities of a single issuer, other than U.S. Government-sponsored agency securities, which exceeded 10% of shareholders’ equity.

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(6) Loans
The following table shows the Company’s loan portfolio by category as of the dates shown:
 
September 30,
 
December 31,
 
September 30,
(Dollars in thousands)
2014
 
2013
 
2013
Balance:
 
 
 
 
 
Commercial
$
3,689,671

 
$
3,253,687

 
$
3,109,121

Commercial real-estate
4,510,375

 
4,230,035

 
4,146,110

Home equity
720,058

 
719,137

 
736,620

Residential real-estate
470,319

 
434,992

 
397,707

Premium finance receivables—commercial
2,377,892

 
2,167,565

 
2,150,481

Premium finance receivables—life insurance
2,134,405

 
1,923,698

 
1,869,739

Consumer and other
149,339

 
167,488

 
171,261

Total loans, net of unearned income, excluding covered loans
$
14,052,059

 
$
12,896,602

 
$
12,581,039

Covered loans
254,605

 
346,431

 
415,988

Total loans
$
14,306,664

 
$
13,243,033

 
$
12,997,027

Mix:
 
 
 
 
 
Commercial
26
%
 
25
%
 
24
%
Commercial real-estate
31

 
32

 
32

Home equity
5

 
5

 
6

Residential real-estate
3

 
3

 
3

Premium finance receivables—commercial
17

 
16

 
16

Premium finance receivables—life insurance
15

 
15

 
14

Consumer and other
1

 
1

 
2

Total loans, net of unearned income, excluding covered loans
98
%
 
97
%
 
97
%
Covered loans
2

 
3

 
3

Total loans
100
%
 
100
%
 
100
%
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 banks serve. The premium finance receivables portfolios are made to customers throughout the United States and Canada. 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.
Certain premium finance receivables are recorded net of unearned income. The unearned income portions of such premium finance receivables were $44.8 million at September 30, 2014, $41.9 million at December 31, 2013 and $40.6 million at September 30, 2013, respectively. Certain life insurance premium finance receivables attributable to the life insurance premium finance loan acquisition in 2009 as well as purchased credit impaired ("PCI") loans acquired with evidence of credit quality deterioration since origination are recorded net of credit discounts. See “Acquired Loan Information at Acquisition” below.
Total loans, excluding PCI loans, include net deferred loan fees and costs and fair value purchase accounting adjustments totaling $(6.3) million at September 30, 2014, $(9.2) million at December 31, 2013 and $(1.5) million at September 30, 2013. The net credit balances at September 30, 2014, December 31, 2013 and September 30, 2013 are primarily the result of purchase accounting adjustments related to the various acquisitions in 2014 and 2013.
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—PCI Loans
As part of our previous acquisitions, 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.


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Table of Contents

The following table presents the unpaid principal balance and carrying value for these acquired loans:
 
September 30, 2014
 
December 31, 2013
 
Unpaid
Principal
 
Carrying
 
Unpaid
Principal
 
Carrying
(Dollars in thousands)
Balance
 
Value
 
Balance
 
Value
Bank acquisitions
$
316,682

 
$
247,678

 
$
453,944

 
$
338,517

Life insurance premium finance loans acquisition
415,458

 
407,602

 
437,155

 
423,906

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 PCI loans at September 30, 2014.
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, 2014
 
Three Months Ended
September 30, 2013
(Dollars in thousands)
Bank Acquisitions

Life Insurance
Premium Finance Loans

Bank
Acquisitions

Life Insurance
Premium
Finance Loans
Accretable yield, beginning balance
$
92,102


$
5,179


$
130,856


$
10,287

Acquisitions
—


—


—


—

Accretable yield amortized to interest income
(6,722
)

(1,125
)

(9,056
)

(1,943
)
Accretable yield amortized to indemnification asset (1)
(8,784
)

—


(8,279
)

—

Reclassification from non-accretable difference (2)
2,584


—


8,703


234

Increases (decreases) in interest cash flows due to payments and changes in interest rates
4,564


111


(5,194
)

235

Accretable yield, ending balance (3)
$
83,744


$
4,165


$
117,030


$
8,813

 
Nine Months Ended
September 30, 2014
 
Nine Months Ended
September 30, 2013
(Dollars in thousands)
Bank Acquisitions
 
Life Insurance
Premium Finance Loans
 
Bank
Acquisitions
 
Life Insurance
Premium
Finance Loans
Accretable yield, beginning balance
$
107,655

 
$
8,254

 
$
143,224

 
$
13,055

Acquisitions
—

 
—

 
1,977

 
—

Accretable yield amortized to interest income
(24,109
)
 
(4,329
)
 
(27,980
)
 
(6,216
)
Accretable yield amortized to indemnification asset (1)
(25,593
)
 
—

 
(28,891
)
 
—

Reclassification from non-accretable difference (2)
29,092

 
—

 
44,907

 
1,241

(Decreases) increases in interest cash flows due to payments and changes in interest rates
(3,301
)
 
240

 
(16,207
)
 
733

Accretable yield, ending balance (3)
$
83,744

 
$
4,165

 
$
117,030

 
$
8,813

(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, 2014, the Company estimates that the remaining accretable yield balance to be amortized to the indemnification asset for the bank acquisitions is $21.0 million. The remainder of the accretable yield related to bank acquisitions is expected to be amortized to interest income.

Accretion to interest income from loans acquired in bank acquisitions totaled $6.7 million and $9.1 million in the third quarter of 2014 and 2013, respectively. On a year-to-date basis, accretion to interest income from loans acquired in bank acquisitions totaled $24.1 million for the first nine months of 2014 compared to $28.0 million in the same period of the prior year. These amounts include accretion from both covered and non-covered loans, and are included together within interest and fees on loans in the Consolidated Statements of Income.

14
Table of Contents

(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, 2014, December 31, 2013 and September 30, 2013:
As of September 30, 2014
 
 
90+ days and still accruing
 
60-89 days past due
 
30-59 days past due
 
 
 
 
(Dollars in thousands)
Nonaccrual
 
 
 
 
Current
 
Total Loans
Loan Balances:
 
 
 
 
 
 
 
 
 
 
 
Commercial
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
10,430

 
$
—

 
$
7,333

 
$
8,559

 
$
2,044,505

 
$
2,070,827

Franchise
—

 
—

 
—

 
1,221

 
237,079

 
238,300

Mortgage warehouse lines of credit
—

 
—

 
—

 
—

 
121,585

 
121,585

Community Advantage—homeowners association
—

 
—

 
—

 
—

 
99,595

 
99,595

Aircraft
—

 
—

 
—

 
—

 
6,146

 
6,146

Asset-based lending
25

 
—

 
2,959

 
1,220

 
777,723

 
781,927

Tax exempt
—

 
—

 
—

 
—

 
205,150

 
205,150

Leases
—

 
—

 
—

 
—

 
145,439

 
145,439

Other
—

 
—

 
—

 
—

 
11,403

 
11,403

PCI - commercial (1)
—

 
863

 
64

 
137

 
8,235

 
9,299

Total commercial
10,455

 
863

 
10,356

 
11,137

 
3,656,860

 
3,689,671

Commercial real-estate:
 
 
 
 
 
 
 
 
 
 
 
Residential construction
—

 
—

 
—

 
—

 
30,237

 
30,237

Commercial construction
425

 
—

 
—

 
—

 
159,383

 
159,808

Land
2,556

 
—

 
1,316

 
2,918

 
94,449

 
101,239

Office
7,366

 
—

 
1,696

 
1,888

 
688,390

 
699,340

Industrial
2,626

 
—

 
224

 
367

 
624,669

 
627,886

Retail
6,205

 
—

 
—

 
4,117

 
715,568

 
725,890

Multi-family
249

 
—

 
793

 
2,319

 
674,610

 
677,971

Mixed use and other
7,936

 
—

 
1,468

 
10,323

 
1,407,659

 
1,427,386

PCI - commercial real-estate (1)
—

 
14,294

 
—