WTFC-2015.06.30-10Q
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 June 30, 2015
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, 48,230,299 shares, as of July 31, 2015
 


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)
June 30,
2015
 
December 31,
2014
 
June 30,
2014
Assets
 
 
 
 
 
Cash and due from banks
$
248,094

 
$
225,136

 
$
349,013

Federal funds sold and securities purchased under resale agreements
4,115

 
5,571

 
7,965

Interest bearing deposits with banks
591,721

 
998,437

 
506,871

Available-for-sale securities, at fair value
2,162,061

 
1,792,078

 
1,824,240

Trading account securities
1,597

 
1,206

 
2,234

Federal Home Loan Bank and Federal Reserve Bank stock
89,818

 
91,582

 
84,531

Brokerage customer receivables
29,753

 
24,221

 
28,199

Mortgage loans held-for-sale, at fair value
497,283

 
351,290

 
363,627

Loans, net of unearned income, excluding covered loans
15,513,650

 
14,409,398

 
13,749,996

Covered loans
193,410

 
226,709

 
275,154

Total loans
15,707,060

 
14,636,107

 
14,025,150

Less: Allowance for loan losses
100,204

 
91,705

 
92,253

Less: Allowance for covered loan losses
2,215

 
2,131

 
1,667

Net loans
15,604,641

 
14,542,271

 
13,931,230

Premises and equipment, net
571,498

 
555,228

 
535,281

FDIC indemnification asset
3,429

 
11,846

 
46,115

Accrued interest receivable and other assets
556,344

 
501,882

 
525,394

Trade date securities receivable

 
485,534

 
292,366

Goodwill
421,646

 
405,634

 
381,721

Other intangible assets
17,924

 
18,811

 
16,894

Total assets
$
20,799,924

 
$
20,010,727

 
$
18,895,681

Liabilities and Shareholders’ Equity
 
 
 
 
 
Deposits:
 
 
 
 
 
Non-interest bearing
$
3,910,310

 
$
3,518,685

 
$
3,072,430

Interest bearing
13,172,108

 
12,763,159

 
12,483,946

Total deposits
17,082,418

 
16,281,844

 
15,556,376

Federal Home Loan Bank advances
444,017

 
733,050

 
580,582

Other borrowings
261,908

 
196,465

 
43,716

Subordinated notes
140,000

 
140,000

 
140,000

Junior subordinated debentures
249,493

 
249,493

 
249,493

Trade date securities payable

 
3,828

 

Accrued interest payable and other liabilities
357,106

 
336,225

 
327,279

Total liabilities
18,534,942

 
17,940,905

 
16,897,446

Shareholders’ Equity:
 
 
 
 
 
Preferred stock, no par value; 20,000,000 shares authorized:
 
 
 
 
 
Series C - $1,000 liquidation value; 126,312 shares issued and outstanding at June 30, 2015 and 126,467 shares issued and outstanding at December 31, 2014, and June 30, 2014
126,312

 
126,467

 
126,467

Series D - $25 liquidation value; 5,000,000 shares issued and outstanding at June 30, 2015 and no shares issued and outstanding at December 31, 2014 and June 30, 2014.
125,000

 

 

Common stock, no par value; $1.00 stated value; 100,000,000 shares authorized at June 30, 2015, December 31, 2014, and June 30, 2014; 47,762,681 shares issued at June 30, 2015, 46,881,108 shares issued at December 31, 2014, and 46,626,772 shares issued at June 30, 2014
47,763

 
46,881

 
46,627

Surplus
1,159,052

 
1,133,955

 
1,125,551

Treasury stock, at cost, 85,424 shares at June 30, 2015, 76,053 shares at December 31, 2014, and 73,867 shares at June 30, 2014
(3,964
)
 
(3,549
)
 
(3,449
)
Retained earnings
872,690

 
803,400

 
737,542

Accumulated other comprehensive loss
(61,871
)
 
(37,332
)
 
(34,503
)
Total shareholders’ equity
2,264,982

 
2,069,822

 
1,998,235

Total liabilities and shareholders’ equity
$
20,799,924

 
$
20,010,727

 
$
18,895,681

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
 
Six Months Ended
(In thousands, except per share data)
June 30,
2015
 
June 30,
2014
 
June 30,
2015
 
June 30,
2014
Interest income
 
 
 
 
 
 
 
Interest and fees on loans
$
159,823

 
$
151,984

 
$
314,499

 
$
299,014

Interest bearing deposits with banks
305

 
319

 
621

 
568

Federal funds sold and securities purchased under resale agreements
1

 
6

 
3

 
10

Available-for-sale securities
14,071

 
13,309

 
28,471

 
26,423

Trading account securities
51

 
5

 
64

 
14

Federal Home Loan Bank and Federal Reserve Bank stock
785

 
727

 
1,554

 
1,438

Brokerage customer receivables
205

 
200

 
386

 
409

Total interest income
175,241

 
166,550

 
345,598

 
327,876

Interest expense
 
 
 
 
 
 
 
Interest on deposits
11,996

 
11,759

 
23,810

 
23,682

Interest on Federal Home Loan Bank advances
1,812

 
2,705

 
3,968

 
5,348

Interest on other borrowings
787

 
510

 
1,575

 
1,260

Interest on subordinated notes
1,777

 
354

 
3,552

 
354

Interest on junior subordinated debentures
1,977

 
2,042

 
3,910

 
4,046

Total interest expense
18,349

 
17,370

 
36,815

 
34,690

Net interest income
156,892

 
149,180

 
308,783

 
293,186

Provision for credit losses
9,482

 
6,660

 
15,561

 
8,540

Net interest income after provision for credit losses
147,410

 
142,520

 
293,222

 
284,646

Non-interest income
 
 
 
 
 
 
 
Wealth management
18,476

 
18,222

 
36,576

 
35,035

Mortgage banking
36,007

 
23,804

 
63,807

 
40,232

Service charges on deposit accounts
6,474

 
5,688

 
12,771

 
11,034

(Losses) gains on available-for-sale securities, net
(24
)
 
(336
)
 
500

 
(369
)
Fees from covered call options
4,565

 
1,244

 
8,925

 
2,786

Trading gains (losses), net
160

 
(743
)
 
(317
)
 
(1,395
)
Other
11,355

 
6,223

 
19,292

 
12,308

Total non-interest income
77,013

 
54,102

 
141,554

 
99,631

Non-interest expense
 
 
 
 
 
 
 
Salaries and employee benefits
94,421

 
81,963

 
184,551

 
161,897

Equipment
7,914

 
7,223

 
15,750

 
14,626

Occupancy, net
11,401

 
9,850

 
23,752

 
20,843

Data processing
6,081

 
4,543

 
11,529

 
9,258

Advertising and marketing
6,406

 
3,558

 
10,313

 
6,374

Professional fees
5,074

 
4,046

 
9,738

 
7,500

Amortization of other intangible assets
934

 
1,156

 
1,947

 
2,319

FDIC insurance
3,047

 
3,196

 
6,034

 
6,147

OREO expense, net
841

 
2,490

 
2,252

 
6,466

Other
18,178

 
15,566

 
35,749

 
29,476

Total non-interest expense
154,297

 
133,591

 
301,615

 
264,906

Income before taxes
70,126

 
63,031

 
133,161

 
119,371

Income tax expense
26,295

 
24,490

 
50,278

 
46,330

Net income
$
43,831

 
$
38,541

 
$
82,883

 
$
73,041

Preferred stock dividends and discount accretion
1,580

 
1,581

 
3,161

 
3,162

Net income applicable to common shares
$
42,251

 
$
36,960

 
$
79,722

 
$
69,879

Net income per common share—Basic
$
0.89

 
$
0.79

 
$
1.68

 
$
1.51

Net income per common share—Diluted
$
0.85

 
$
0.76

 
$
1.61

 
$
1.44

Cash dividends declared per common share
$
0.11

 
$
0.10

 
$
0.22

 
$
0.20

Weighted average common shares outstanding
47,567

 
46,520

 
47,404

 
46,358

Dilutive potential common shares
4,156

 
4,402

 
4,220

 
4,456

Average common shares and dilutive common shares
51,723

 
50,922

 
51,624

 
50,814

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
 
Six Months Ended
(In thousands)
June 30,
2015
 
June 30,
2014
 
June 30,
2015
 
June 30,
2014
Net income
$
43,831

 
$
38,541

 
$
82,883

 
$
73,041

Unrealized (losses) gains on securities
 
 
 
 
 
 
 
Before tax
(53,400
)
 
26,049

 
(27,124
)
 
48,575

Tax effect
20,959

 
(10,332
)
 
10,628

 
(19,136
)
Net of tax
(32,441
)
 
15,717

 
(16,496
)
 
29,439

Less: Reclassification of net (losses) gains included in net income
 
 
 
 
 
 
 
Before tax
(24
)
 
(336
)
 
500

 
(369
)
Tax effect
10

 
133

 
(196
)
 
146

Net of tax
(14
)
 
(203
)
 
304

 
(223
)
Net unrealized (losses) gains on securities
(32,427
)
 
15,920

 
(16,800
)
 
29,662

Unrealized gains (losses) on derivative instruments
 
 
 
 
 
 
 
Before tax
215

 
(626
)
 
(346
)
 
(724
)
Tax effect
(84
)
 
249

 
136

 
288

Net unrealized gains (losses) on derivative instruments
131

 
(377
)
 
(210
)
 
(436
)
Foreign currency translation adjustment
 
 
 
 
 
 
 
Before tax
2,072

 
9,045

 
(10,218
)
 
(914
)
Tax effect
(556
)
 
(2,338
)
 
2,689

 
221

Net foreign currency translation adjustment
1,516

 
6,707

 
(7,529
)
 
(693
)
Total other comprehensive (loss) income
(30,780
)
 
22,250

 
(24,539
)
 
28,533

Comprehensive income
$
13,051

 
$
60,791

 
$
58,344

 
$
101,574

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
loss
 
Total
shareholders’
equity
Balance at December 31, 2013
$
126,477

 
$
46,181

 
$
1,117,032

 
$
(3,000
)
 
$
676,935

 
$
(63,036
)
 
$
1,900,589

Net income

 

 

 

 
73,041

 

 
73,041

Other comprehensive income, net of tax

 

 

 

 

 
28,533

 
28,533

Cash dividends declared on common stock

 

 

 

 
(9,272
)
 

 
(9,272
)
Dividends on preferred stock

 

 

 

 
(3,162
)
 

 
(3,162
)
Stock-based compensation

 

 
3,754

 

 

 

 
3,754

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

 
9

 

 

 

 

Common stock issued for:
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercise of stock options and warrants

 
347

 
2,472

 
(313
)
 

 

 
2,506

Restricted stock awards

 
48

 
127

 
(136
)
 

 

 
39

Employee stock purchase plan

 
30

 
1,394

 

 

 

 
1,424

Director compensation plan

 
20

 
763

 

 

 

 
783

Balance at June 30, 2014
$
126,467

 
$
46,627

 
$
1,125,551

 
$
(3,449
)
 
$
737,542

 
$
(34,503
)
 
$
1,998,235

Balance at December 31, 2014
$
126,467

 
$
46,881

 
$
1,133,955

 
$
(3,549
)
 
$
803,400

 
$
(37,332
)
 
$
2,069,822

Net income

 

 

 

 
82,883

 

 
82,883

Other comprehensive loss, net of tax

 

 

 

 

 
(24,539
)
 
(24,539
)
Cash dividends declared on common stock

 

 

 

 
(10,432
)
 

 
(10,432
)
Dividends on preferred stock

 

 

 

 
(3,161
)
 

 
(3,161
)
Stock-based compensation

 

 
5,286

 

 

 

 
5,286

Issuance of Series D preferred stock
125,000

 

 
(3,849
)
 

 

 

 
121,151

Conversion of Series C preferred stock to common stock
(155
)
 
4

 
151

 

 

 

 

Common stock issued for:
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquisitions

 
422

 
18,749

 

 

 

 
19,171

Exercise of stock options and warrants

 
312

 
2,266

 
(130
)
 

 

 
2,448

Restricted stock awards

 
93

 
352

 
(285
)
 

 

 
160

Employee stock purchase plan

 
31

 
1,360

 

 

 

 
1,391

Director compensation plan

 
20

 
782

 

 

 

 
802

Balance at June 30, 2015
$
251,312

 
$
47,763

 
$
1,159,052

 
$
(3,964
)
 
$
872,690

 
$
(61,871
)
 
$
2,264,982

See accompanying notes to unaudited consolidated financial statements.

4

Table of Contents


WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
Six Months Ended
(In thousands)
June 30,
2015
 
June 30,
2014
Operating Activities:
 
 
 
Net income
$
82,883

 
$
73,041

Adjustments to reconcile net income to net cash (used for) provided by operating activities
 
 
 
Provision for credit losses
15,561

 
8,540

Depreciation and amortization
15,813

 
15,510

Stock-based compensation expense
5,286

 
3,754

Tax expense from stock-based compensation arrangements
(596
)
 
(61
)
Excess tax benefits from stock-based compensation arrangements
(476
)
 
(226
)
Net amortization of premium on securities
205

 
3,419

Mortgage servicing rights fair value change, net
258

 
712

Originations and purchases of mortgage loans held-for-sale
(2,121,237
)
 
(1,368,131
)
Proceeds from sales of mortgage loans held-for-sale
2,034,173

 
1,371,124

Bank owned life insurance, net of claims
(1,470
)
 
(1,387
)
Increase in trading securities, net
(391
)
 
(1,737
)
Net (increase) decrease in brokerage customer receivables
(5,532
)
 
2,754

Gains on mortgage loans sold
(58,929
)
 
(32,293
)
(Gains) losses on available-for-sale securities, net
(500
)
 
369

Losses on sales of premises and equipment, net
403

 
561

Net (gains) losses on sales and fair value adjustments of other real estate owned
430

 
3,360

(Increase) decrease in accrued interest receivable and other assets, net
(38,117
)
 
43,274

Increase in accrued interest payable and other liabilities, net
17,757

 
4,253

Net Cash (Used for) Provided by Operating Activities
(54,479
)
 
126,836

Investing Activities:
 
 
 
Proceeds from maturities of available-for-sale securities
335,286

 
213,384

Proceeds from sales of available-for-sale securities
1,134,033

 
196,042

Purchases of available-for-sale securities
(1,353,356
)
 
(608,800
)
Net cash received (paid) for acquisitions
12,004

 
(7,267
)
Proceeds from sales of other real estate owned
24,444

 
47,160

Proceeds received from the FDIC related to reimbursements on covered assets
150

 
10,818

Net decrease (increase) in interest bearing deposits with banks
406,784

 
(11,297
)
Net increase in loans
(965,794
)
 
(822,314
)
Redemption of bank owned life insurance
2,701

 

Purchases of premises and equipment, net
(25,478
)
 
(17,386
)
Net Cash Used for Investing Activities
(429,226
)
 
(999,660
)
Financing Activities:
 
 
 
Increase in deposit accounts
630,785

 
882,631

Increase (decrease) in other borrowings, net
54,575

 
(211,388
)
(Decrease) increase in Federal Home Loan Bank advances, net
(293,584
)
 
163,000

Proceeds from the issuance of preferred stock, net
121,151

 

Proceeds from the issuance of subordinated notes, net

 
139,090

Excess tax benefits from stock-based compensation arrangements
476

 
226

Issuance of common shares resulting from the exercise of stock options and the employee stock purchase plan
5,812

 
5,262

Common stock repurchases
(415
)
 
(449
)
Dividends paid
(13,593
)
 
(12,434
)
Net Cash Provided by Financing Activities
505,207

 
965,938

Net Increase in Cash and Cash Equivalents
21,502

 
93,114

Cash and Cash Equivalents at Beginning of Period
230,707

 
263,864

Cash and Cash Equivalents at End of Period
$
252,209

 
$
356,978

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, 2014 (“2014 Form 10-K”). Operating results reported for the three-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 2014 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 a 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. The Company adopted this new guidance beginning January 1, 2015. The guidance did not 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. The Company adopted this new guidance beginning January 1, 2015. The guidance did not have a material impact on the Company's consolidated financial statements.

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

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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. At the time ASU No. 2014-09 was issued, the guidance was effective for fiscal years beginning after December 15, 2016. In July 2015, the FASB approved a deferral of the effective date by one year, which would result in the guidance becoming effective for fiscal years beginning after December 15, 2017. The Company is currently evaluating the impact of adopting this new guidance on the consolidated financial statements.

Extraordinary and Unusual Items

In January 2015, the FASB issued ASU No. 2015-01, “Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items,” to eliminate the concept of extraordinary items related to separately classifying, presenting and disclosing certain events and transactions that meet the criteria for that concept. This guidance is effective for fiscal years beginning after December 15, 2015 and is to be applied either prospectively or retrospectively. The Company does not expect this guidance to have a material impact on the Company’s consolidated financial statements.

Consolidation

In February 2015, the FASB issued ASU No. 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis,” which changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. This guidance is effective for fiscal years beginning after December 15, 2015 and is to be applied retrospectively. The Company is currently evaluating the impact of adopting this new guidance on the consolidated financial statements.

Debt Issuance Costs

In April 2015, the FASB issued ASU No. 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs," to clarify the presentation of debt issuance costs within the balance sheet. This ASU requires that an entity present debt issuance costs related to a recognized debt liability on the balance sheet as a direct deduction from the carrying amount of that debt liability, not as a separate asset. The ASU does not affect the current guidance for the recognition and measurement for these debt issuance costs. This guidance is effective for fiscal years beginning after December 15, 2015 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.

(3) Business Combinations

Non-FDIC Assisted Bank Acquisitions

On January 16, 2015, the Company acquired Delavan Bancshares, Inc. ("Delavan"). Delavan was the parent company of Community Bank CBD, which had four banking locations. Community Bank CBD was merged into the Company's wholly-owned subsidiary Town Bank. The Company acquired assets with a fair value of approximately $224.1 million, including approximately $128.0 million of loans, and assumed liabilities with a fair value of approximately $186.4 million, including approximately $170.2 million of deposits. Additionally the Company recorded goodwill of $17.4 million on the acquisition.

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

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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.

See Note 17 - Subsequent Events for discussion regarding the Company's acquisitions of Community Financial Shares, Inc ("CFIS"), Suburban Illinois Bancorp, Inc. ("Suburban") and North Bank.

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, 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, clawback provisions within these loss share agreements with the FDIC require the Company to reimburse the FDIC in the event that actual losses on covered assets are lower than the original loss estimates agreed upon with the FDIC with respect of such assets in the loss share agreements. The Company refers to the loans subject to these loss-sharing agreements as “covered loans” and uses the term “covered assets” to refer to covered loans, covered OREO and certain other covered assets. The agreements with the FDIC require that the Company follow certain servicing procedures or risk losing the FDIC reimbursement of covered asset losses.
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 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. In accordance with the clawback provision noted above, the Company may be required to reimburse the FDIC when actual losses are less than certain thresholds established for each lose share agreement. The balance of these estimated reimbursements in accordance with clawback provisions and any related amortization are adjusted periodically for changes in the expected losses on covered assets. Estimated reimbursements from clawback provisions are recorded as a reduction to the FDIC indemnification asset on the Consolidated Statements of Condition. Although these assets are contractual receivables from the FDIC, there are no contractual interest rates. Additional expected losses, to the extent such expected losses result in recognition of an allowance for covered loan losses, will increase the FDIC indemnification asset. The corresponding amortization 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
 
Six Months Ended
(Dollars in thousands)
June 30,
2015
 
June 30,
2014
 
June 30,
2015
 
June 30,
2014
Balance at beginning of period
$
10,224

 
$
60,298

 
$
11,846

 
$
85,672

Additions from acquisitions

 

 

 

Additions from reimbursable expenses
934

 
2,067

 
2,509

 
3,349

Amortization
(1,206
)
 
(1,456
)
 
(2,466
)
 
(3,059
)
Changes in expected reimbursements from the FDIC for changes in expected credit losses
(4,317
)
 
(13,645
)
 
(8,310
)
 
(29,029
)
Payments received from the FDIC
(2,206
)
 
(1,149
)
 
(150
)
 
(10,818
)
Balance at end of period
$
3,429

 
$
46,115

 
$
3,429

 
$
46,115



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Specialty Finance Acquisition
On April 28, 2014, the Company, through its wholly-owned subsidiary, First Insurance Funding of Canada, Inc., acquired 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.
Purchased Credit Impaired ("PCI") Loans
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 PCI 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 PCI loans.
(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, 2015
(Dollars in thousands)
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
U.S. Treasury
$
288,196

 
$
138

 
$
(7,173
)
 
$
281,161

U.S. Government agencies
651,737

 
2,074

 
(25,151
)
 
628,660

Municipal
269,562

 
4,222

 
(3,994
)
 
269,790

Corporate notes:
 
 
 
 
 
 
 
Financial issuers
124,924

 
1,773

 
(1,289
)
 
125,408

Other
2,726

 
9

 
(2
)
 
2,733

Mortgage-backed: (1)
 
 
 
 
 
 
 
Mortgage-backed securities
777,087

 
4,053

 
(23,499
)
 
757,641

Collateralized mortgage obligations
42,550

 
342

 
(432
)
 
42,460

Equity securities
48,740

 
5,876

 
(408
)
 
54,208

Total available-for-sale securities
$
2,205,522

 
$
18,487

 
$
(61,948
)
 
$
2,162,061

 

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December 31, 2014
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
(Dollars in thousands)
 
 
 
U.S. Treasury
$
388,713

 
$
84

 
$
(6,992
)
 
$
381,805

U.S. Government agencies
686,106

 
4,113

 
(21,903
)
 
668,316

Municipal
234,951

 
5,318

 
(1,740
)
 
238,529

Corporate notes:
 
 
 
 
 
 
 
Financial issuers
129,309

 
2,006

 
(1,557
)
 
129,758

Other
3,766

 
55

 

 
3,821

Mortgage-backed: (1)
 
 
 
 
 
 
 
Mortgage-backed securities
271,129

 
5,448

 
(4,928
)
 
271,649

Collateralized mortgage obligations
47,347

 
249

 
(535
)
 
47,061

Equity securities
46,592

 
4,872

 
(325
)
 
51,139

Total available-for-sale securities
$
1,807,913

 
$
22,145

 
$
(37,980
)
 
$
1,792,078

 
 
June 30, 2014
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
(Dollars in thousands)
 
 
 
U.S. Treasury
$
399,031

 
$
354

 
$
(10,970
)
 
$
388,415

U.S. Government agencies
798,889

 
4,458

 
(37,347
)
 
766,000

Municipal
173,664

 
4,385

 
(1,942
)
 
176,107

Corporate notes:
 
 
 
 
 
 
 
Financial issuers
129,211

 
2,402

 
(1,387
)
 
130,226

Other
4,980

 
97

 

 
5,077

Mortgage-backed: (1)
 
 
 
 
 
 
 
Mortgage-backed securities
255,082

 
5,190

 
(9,097
)
 
251,175

Collateralized mortgage obligations
52,672

 
389

 
(673
)
 
52,388

Equity securities
50,594

 
4,634

 
(376
)
 
54,852

Total available-for-sale securities
$
1,864,123

 
$
21,909

 
$
(61,792
)
 
$
1,824,240


(1)
Consisting entirely of residential mortgage-backed securities, none of which are subprime.
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, 2015:
 
 
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
$
207,997

 
$
(7,173
)
 
$

 
$

 
$
207,997

 
$
(7,173
)
U.S. Government agencies
231,514

 
(8,817
)
 
248,487

 
(16,334
)
 
480,001

 
(25,151
)
Municipal
96,407

 
(2,545
)
 
37,578

 
(1,449
)
 
133,985

 
(3,994
)
Corporate notes:
 
 
 
 
 
 
 
 
 
 
 
Financial issuers
13,117

 
(94
)
 
44,762

 
(1,195
)
 
57,879

 
(1,289
)
Other
998

 
(2
)
 

 

 
998

 
(2
)
Mortgage-backed:
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities
551,405

 
(16,869
)
 
120,626

 
(6,630
)
 
672,031

 
(23,499
)
Collateralized mortgage obligations
5,158

 
(31
)
 
9,877

 
(401
)
 
15,035

 
(432
)
Equity securities
2,909

 
(37
)
 
8,505

 
(371
)
 
11,414

 
(408
)
Total
$
1,109,505

 
$
(35,568
)
 
$
469,835

 
$
(26,380
)
 
$
1,579,340

 
$
(61,948
)

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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, 2015 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 and mortgage-backed securities. Unrealized losses recognized on agency bonds 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 June 30,
 
Six months ended June 30,
(Dollars in thousands)
2015
 
2014
 
2015
 
2014
Realized gains
$
14

 
$
99

 
$
567

 
$
154

Realized losses
(38
)
 
(435
)
 
(67
)
 
(523
)
Net realized (losses) gains
$
(24
)
 
$
(336
)
 
$
500

 
$
(369
)
Other than temporary impairment charges

 

 

 

(Losses) gains on available-for-sale securities, net
$
(24
)
 
$
(336
)
 
$
500

 
$
(369
)
Proceeds from sales of available-for-sale securities
$
498,501

 
$
169,753

 
$
1,134,033

 
$
196,042

The amortized cost and fair value of securities as of June 30, 2015, December 31, 2014 and June 30, 2014, 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, 2015
 
December 31, 2014
 
June 30, 2014
(Dollars in thousands)
Amortized Cost
 
Fair Value
 
Amortized Cost
 
Fair Value
 
Amortized Cost
 
Fair Value
Due in one year or less
$
141,792

 
$
141,897

 
$
285,596

 
$
285,889

 
$
173,991

 
$
174,220

Due in one to five years
261,285

 
261,146

 
172,647

 
172,885

 
361,300

 
362,423

Due in five to ten years
291,451

 
285,192

 
331,389

 
325,644

 
319,641

 
310,196

Due after ten years
642,617

 
619,517

 
653,213

 
637,811

 
650,843

 
618,986

Mortgage-backed
819,637

 
800,101

 
318,476

 
318,710

 
307,754

 
303,563

Equity securities
48,740

 
54,208

 
46,592

 
51,139

 
50,594

 
54,852

Total available-for-sale securities
$
2,205,522

 
$
2,162,061

 
$
1,807,913

 
$
1,792,078

 
$
1,864,123

 
$
1,824,240

Securities having a carrying value of $1.1 billion at June 30, 2015, December 31, 2014 and June 30, 2014, were pledged as collateral for public deposits, trust deposits, FHLB advances, securities sold under repurchase agreements and derivatives. At June 30, 2015, 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:
 
June 30,
 
December 31,
 
June 30,
(Dollars in thousands)
2015
 
2014
 
2014
Balance:
 
 
 
 
 
Commercial
$
4,330,344

 
$
3,924,394

 
$
3,640,430

Commercial real estate
4,850,590

 
4,505,753

 
4,353,472

Home equity
712,350

 
716,293

 
713,642

Residential real estate
503,015

 
483,542

 
451,905

Premium finance receivables—commercial
2,460,408

 
2,350,833

 
2,378,529

Premium finance receivables—life insurance
2,537,475

 
2,277,571

 
2,051,645

Consumer and other
119,468

 
151,012

 
160,373

Total loans, net of unearned income, excluding covered loans
$
15,513,650

 
$
14,409,398

 
$
13,749,996

Covered loans
193,410

 
226,709

 
275,154

Total loans
$
15,707,060

 
$
14,636,107

 
$
14,025,150

Mix:
 
 
 
 
 
Commercial
27
%
 
26
%
 
26
%
Commercial real estate
31

 
31

 
31

Home equity
5

 
5

 
5

Residential real estate
3

 
3

 
3

Premium finance receivables—commercial
16

 
16

 
17

Premium finance receivables—life insurance
16

 
16

 
15

Consumer and other
1

 
1

 
1

Total loans, net of unearned income, excluding covered loans
99
%
 
98
%
 
98
%
Covered loans
1

 
2

 
2

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 $53.7 million at June 30, 2015, $46.9 million at December 31, 2014 and $44.8 million at June 30, 2014, respectively. Certain life insurance premium finance receivables attributable to the life insurance premium finance loan acquisition in 2009 as well as PCI loans 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 $1.7 million at June 30, 2015, $330,000 at December 31, 2014 and $(1.3) million at June 30, 2014. The net credit balance at June 30, 2014 is primarily the result of purchase accounting adjustments related to acquisitions in 2014.
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.

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Table of Contents

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 (PCI loans) 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, 2015
 
December 31, 2014
 
Unpaid
Principal
 
Carrying
 
Unpaid
Principal
 
Carrying
(Dollars in thousands)
Balance
 
Value
 
Balance
 
Value
Bank acquisitions
$
251,529

 
$
204,898

 
$
285,809

 
$
227,229

Life insurance premium finance loans acquisition
388,773

 
384,320

 
399,665

 
393,479


The following table provides estimated details as of the date of acquisition on loans acquired in 2015 with evidence of credit quality deterioration since origination:
(Dollars in thousands)
Delavan
Contractually required payments including interest
$
15,791

Less: Nonaccretable difference
1,442

   Cash flows expected to be collected (1)  
14,349

Less: Accretable yield
898

    Fair value of PCI loans acquired
13,451


(1) Represents undiscounted expected principal and interest cash at acquisition.
See Note 7—Allowance for Loan Losses, Allowance for Losses on Lending-Related Commitments and Impaired Loans for further discussion regarding the allowance for loan losses associated with PCI loans at June 30, 2015.
Accretable Yield Activity - PCI Loans
Changes in expected cash flows may vary from period to period as the Company periodically updates its cash flow model assumptions for PCI loans. 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 PCI loans:

Three Months Ended
June 30, 2015
 
Three Months Ended
June 30, 2014
(Dollars in thousands)
Bank Acquisitions

Life Insurance
Premium Finance Loans

Bank
Acquisitions

Life Insurance
Premium
Finance Loans
Accretable yield, beginning balance
$
69,182


$
1,016


$
97,674


$
6,561

Acquisitions







Accretable yield amortized to interest income
(5,184
)

(1,131
)

(9,617
)

(1,433
)
Accretable yield amortized to indemnification asset (1)
(4,089
)



(11,161
)


Reclassification from non-accretable difference (2)
1,638


115


17,928



Increases (decreases) in interest cash flows due to payments and changes in interest rates
2,096




(2,722
)

51

Accretable yield, ending balance (3)
$
63,643


$


$
92,102


$
5,179



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Table of Contents

 
Six Months Ended
June 30, 2015
 
Six Months Ended
June 30, 2014
(Dollars in thousands)
Bank Acquisitions
 
Life Insurance
Premium Finance Loans
 
Bank
Acquisitions
 
Life Insurance
Premium
Finance Loans
Accretable yield, beginning balance
$
77,485

 
$
1,617

 
$
107,655

 
$
8,254

Acquisitions
898

 

 

 

Accretable yield amortized to interest income
(10,688
)
 
(1,732
)
 
(17,387
)
 
(3,204
)
Accretable yield amortized to indemnification asset (1)
(7,665
)
 

 
(16,809
)
 

Reclassification from non-accretable difference (2)
2,741

 
115

 
26,508

 

Increases (decreases) in interest cash flows due to payments and changes in interest rates
872

 

 
(7,865
)
 
129

Accretable yield, ending balance (3)
$
63,643

 
$

 
$
92,102

 
$
5,179



(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 June 30, 2015, the Company estimates that the remaining accretable yield balance to be amortized to the indemnification asset for the bank acquisitions is $12.3 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 $5.2 million and $9.6 million in the second quarter of 2015 and 2014, respectively. For the six months ended June 30, 2015 and 2014, the Company recorded accretion to interest income of $10.7 million and $17.4 million, respectively. 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 June 30, 2015December 31, 2014 and June 30, 2014:
As of June 30, 2015
 
 
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
$
4,424

 
$

 
$
1,846

 
$
6,027

 
$
2,522,162

 
$
2,534,459

Franchise
905

 

 
113

 
396

 
227,185

 
228,599

Mortgage warehouse lines of credit

 

 

 

 
213,797

 
213,797

Community Advantage—homeowners association

 

 

 

 
114,883

 
114,883

Aircraft

 

 

 

 
6,831

 
6,831

Asset-based lending

 

 
1,767

 
7,423

 
823,265

 
832,455

Tax exempt

 

 

 

 
199,185

 
199,185

Leases
65

 

 

 

 
187,565

 
187,630

Other

 

 

 

 
2,772

 
2,772

PCI - commercial (1)

 
474

 

 
233

 
9,026

 
9,733

Total commercial
5,394

 
474

 
3,726

 
14,079

 
4,306,671

 
4,330,344

Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
Residential construction

 

 

 
4

 
57,598

 
57,602

Commercial construction
19

 

 

 

 
249,524

 
249,543

Land
2,035

 

 
1,123

 
2,399

 
82,280

 
87,837

Office
6,360

 
701

 
163

 
2,601

 
744,992

 
754,817

Industrial
2,568

 

 
18

 
484

 
624,337

 
627,407

Retail
2,352

 

 
896

 
2,458

 
744,285

 
749,991

Multi-family
1,730