The information in this prospectus supplement is not complete and may be
changed. This prospectus supplement and the accompanying prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
PROSPECTUS SUPPLEMENT Filed pursuant to Rule 424(b)(5)
(To Prospectus dated October 6, 2004) File No. 33-119345
Subject to completion dated December 2, 2004
1,200,000 SHARES
WINTRUST FINANCIAL CORPORATION
COMMON STOCK
_______________________
An affiliate of RBC Capital Markets Corporation is, at our request, borrowing
and selling 1,200,000 shares of our common stock in connection with a forward
sale agreement between that affiliate and us. We will not initially receive any
proceeds from the sale of the shares. We will receive aggregate proceeds from
the sale of our common stock only upon future stock settlements of the forward
sale agreement, subject to certain adjustments pursuant to the forward sale
agreement. The underwriters are offering the shares of our common stock for sale
in the United States. Subject to applicable law, the underwriters may also offer
the shares of our common stock for sale outside the United States.
Our common stock is traded on the Nasdaq National Market under the symbol
"WTFC". The last reported sale price of our common stock as reported on Nasdaq
on December 10, 2004 was $60.40 per share.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS THAT ARE DESCRIBED IN THE "RISK
FACTORS" SECTIONS BEGINNING ON PAGE S-14 OF THIS PROSPECTUS SUPPLEMENT AND ON
PAGE 4 OF THE ACCOMPANYING PROSPECTUS.
________________________________
PRICE $ PER SHARE
________________________________
PER SHARE TOTAL(1)
------------- -----------
Public offering price.......................... $ $
Underwriting discount.......................... $ $
Proceeds, before expenses, to Wintrust(2)...... $ $
------------------
(1) Assumes no exercise of the underwriters' over-allotment option.
(2) We will receive such proceeds, before expenses, from the sale of common
stock only upon full physical settlement of the forward sale agreement,
subject to the provisions of the forward sale agreement. See "Use of
Proceeds". For purposes of calculating the aggregate net proceeds,
before expenses, to us we have assumed that the forward sale agreement
is fully settled based upon the aggregate initial forward sale price of
$ and by the delivery of 1,200,000 shares of our common stock. See
"Underwriting--Forward Sale Agreement".
The underwriters may also purchase up to an additional 180,000 shares of common
stock at the public offering price, less the underwriting discount, within 30
days from the date of this prospectus supplement to cover over-allotments, if
any.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS SUPPLEMENT OR ACCOMPANYING PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE NOT DEPOSITS, SAVINGS ACCOUNTS OR OTHER OBLIGATIONS OF ANY
BANK AND ARE NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
The shares of common stock will be ready for delivery on or about , 2004.
_______________________
RBC CAPITAL MARKETS
PIPER JAFFRAY
RAYMOND JAMES
SANDLER O'NEILL & PARTNERS, L.P.
STIFEL, NICOLAUS & COMPANY
INCORPORATED
_______________________
, 2004
[MAP SHOWING LOCATIONS OF CURRENT AND PENDING
BANKING AND SUBSIDIARY OFFICES]
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
----
Presentation of Information..................................................ii
Special Note About Forward-Looking Statements................................ii
Prospectus Supplement Summary...............................................S-1
Summary Consolidated Financial Data........................................S-10
Risk Factors...............................................................S-14
Use of Proceeds............................................................S-21
Capitalization.............................................................S-22
Price Range of Common Stock and Dividend Policy............................S-23
Underwriting...............................................................S-24
Legal Matters..............................................................S-29
Experts ..................................................................S-29
Documents Incorporated by Reference........................................S-29
PROSPECTUS
Important Notice to Readers..................................................ii
Special Note Regarding Forward-Looking Statements............................ii
Prospectus Summary............................................................1
Risk Factors..................................................................4
Use of Proceeds...............................................................9
Ratio of Earnings to Fixed Charges............................................9
Description of Debt Securities................................................9
Description of Purchase Contracts............................................17
Description of Units.........................................................18
Description of Warrants......................................................18
Description of Capital Stock.................................................20
Global Securities............................................................29
Description of the Trust.....................................................30
Description of the Trust Preferred Securities................................32
Description of the Junior Subordinated Debentures............................44
Description of the Guarantee.................................................50
Relationship Among the Trust Preferred Securities,
the Debentures and the Guarantee...........................................53
Book-Entry Issuance..........................................................54
Plan of Distribution.........................................................56
Legal Matters................................................................59
Experts ....................................................................59
Where You Can Find More Information..........................................59
Documents Incorporated by Reference..........................................59
------------------------
You should rely only on the information contained in or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We have
not authorized anyone to provide you with different information. This document
may be used only in jurisdictions where offers and sales of these securities is
permitted. You should not assume that information contained in this prospectus
supplement, in the accompanying prospectus, or in any document incorporated by
reference is accurate as of any date other than the date on the front page of
the document that contains the information, regardless of when this prospectus
is delivered or when any sale of our securities occurs.
i
PRESENTATION OF INFORMATION
These offering materials consist of two documents: (1) this prospectus
supplement, which describes the terms of the current offering of our common
stock, and (2) the accompanying prospectus, which provides general information
about our securities, some of which may not apply to the common stock that we
are offering. THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT REPLACES ANY
INCONSISTENT INFORMATION INCLUDED IN THE ACCOMPANYING PROSPECTUS.
At varying places in this prospectus supplement and the accompanying
prospectus, we refer you to other sections of the documents for additional
information by indicating the caption heading of the other sections. The page on
which each principal caption included in this prospectus supplement and the
accompanying prospectus can be found is listed in the Table of Contents above.
SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS
We make certain forward-looking statements in this prospectus
supplement, the accompanying prospectus and the documents incorporated by
reference into this prospectus supplement and the accompanying prospectus that
are based upon our current expectations and projections about current events. We
intend these forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995, and we are including this statement for purposes
of these safe harbor provisions. You can identify these statements from our use
of the words "may," "will," "should," "could," "would," "plan," "potential,"
"estimate," "project," "believe," "intend," "anticipate," "expect," "target" and
similar expressions. These forward-looking statements may include, among other
things, statements relating to our projected growth, anticipated improvements in
financial performance, and management's long-term performance goals, as well as
statements relating to the anticipated effects on results of operations and
financial condition from expected developments or events, our business and
growth strategies, including anticipated internal growth, plans to form
additional de novo banks and to open new branch offices, and to pursue
additional potential development or acquisition of banks, wealth management
entities, specialty finance businesses or fee-related business.
These forward-looking statements are subject to significant risks,
assumptions and uncertainties, including among other things, changes in general
economic and business conditions and the risks and other factors set forth in
the "Risk Factors" section beginning on page S-14 of this prospectus supplement
and on page 4 in the accompanying prospectus.
Because of these and other uncertainties, our actual future results,
performance or achievements, or industry results, may be materially different
from the results indicated by these forward-looking statements. In addition, our
past results of operations do not necessarily indicate our future results. You
should not place undue reliance on any forward-looking statements, which speak
only as of the date they were made. We do not intend to update these
forward-looking statements, even though our situation may change in the future,
unless we are obligated to do so under the federal securities laws. We qualify
all of our forward-looking statements by these cautionary statements.
ii
PROSPECTUS SUPPLEMENT SUMMARY
The items in the following summary are described in more detail later
in this prospectus supplement and the accompanying prospectus or in the other
information incorporated by reference into this prospectus supplement and the
accompanying prospectus. This summary provides an overview of selected
information and does not contain all of the information you should consider.
Therefore, you should also read the more detailed information included in this
prospectus supplement and the accompanying prospectus, our consolidated
financial statements and the other information that is incorporated by reference
in this prospectus supplement and the accompanying prospectus before making a
decision to invest in our common stock. Unless otherwise indicated, the
information in this prospectus supplement and the accompanying prospectus
assumes that the underwriters will not exercise their option to purchase
additional shares to cover over-allotments.
ABOUT WINTRUST FINANCIAL CORPORATION
We are a financial holding company headquartered in Lake Forest,
Illinois, with total assets of approximately $6 billion at September 30, 2004.
As of November 30, 2004, we currently operate 12 community banks located in the
greater Chicago and Milwaukee metropolitan areas that provide
community-oriented, personal and commercial banking services primarily to
individuals and small to mid-size businesses through 49 banking facilities. Each
of our banks provides a full complement of commercial and consumer loan and
deposit products and services. We provide wealth management services, including
trust, asset management and brokerage services, to customers primarily located
in the Midwest, as well as to customers of our banks. We also originate and
purchase residential mortgage loans, many of which are sold into the secondary
market. In addition, we are involved in specialty lending through operating
subsidiaries or divisions of certain of our banks. Our specialty lending niches
include commercial insurance premium finance; accounts receivable financing and
administrative services to the temporary staffing industry; and indirect auto
lending in which we purchase loans through Chicago-area automobile dealerships.
FINANCIAL SUMMARY
We have grown from $1.7 billion in assets at December 31, 1999 to
approximately $6 billion in assets at September 30, 2004, and our diluted
earnings per share have increased at a compound annual growth rate of 32.2% over
the five-year period ended December 31, 2003. Our financial performance has been
affected by costs associated with growing market share in deposits and loans,
establishing and acquiring new banks, opening new banking facilities, and
building an experienced management team. Our recent financial performance
generally reflects the improved profitability of our operating subsidiaries as
they mature, offset by the costs of establishing and acquiring new banks and
opening new banking facilities. Our experience has been that it generally takes
13 to 24 months for de novo banks to first achieve operational profitability
depending on the number and timing of banking facilities added. The following
table highlights the financial performance of our organization for the five-year
period ended December 31, 2003 and nine-month periods ended September 30, 2004
and 2003.
S-1
AS OF OR FOR THE
NINE MONTHS ENDED
SEPTEMBER 30, AS OF OR FOR THE YEAR ENDED DECEMBER 31,
---------------------- ------------------------------------------------------------
2004 2003 2003 2002 2001 2000 1999
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Net revenue.............. $ 173,947 $ 142,114 $ 193,084 $ 158,800 $ 102,812 $ 79,306 $ 57,542
Net income............... 37,163 27,189 38,118 27,875 18,439 11,155 9,427
Earnings per share
(diluted)............. 1.71 1.46 1.98 1.60 1.27 0.83 0.73
Total assets............. 5,817,286 4,304,877 4,747,398 3,721,555 2,705,422 2,102,806 1,679,382
Total loans.............. 4,000,175 2,949,143 3,297,794 2,556,086 2,018,479 1,547,596 1,270,126
Mortgage loans
held-for-sale......... 80,074 65,240 24,041 90,446 42,904 10,424 8,123
Total deposits........... 4,751,593 3,529,196 3,876,621 3,089,124 2,314,636 1,826,576 1,463,622
Common shareholders'
equity................ 430,153 299,874 349,837 227,002 141,278 102,276 92,947
Return on average assets. 0.95% 0.91% 0.93% 0.87% 0.79% 0.60% 0.63%
Return on average equity. 13.46% 14.92% 14.36% 14.76% 15.24% 11.51% 11.58%
The following table shows the compound annual growth rates we achieved
over the one-, two-, three-, four- and five-year periods ended December 31,
2003.
COMPOUND ANNUAL GROWTH RATES
-----------------------------------------------------------
1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR
------ ------ ------ ------ ------
Total assets...................... 27.6% 32.5% 31.2% 29.7% 28.6%
Total loans....................... 29.0 27.8 28.7 26.9 27.6
Total deposits.................... 25.5 29.4 28.5 27.6 25.8
Total revenue..................... 21.6 37.0 34.5 35.3 33.9
Net income........................ 36.7 43.8 50.6 41.8 43.6
Diluted earnings per share........ 23.8 24.9 33.6 28.3 32.2
COMMUNITY BANKING
We have developed our community banking franchise through the formation
of de novo banks, the opening of branch offices of the banks and acquisitions.
Of our 12 banking subsidiaries, eight are de novo banks organized by us or our
management team and four are banks we acquired since October 2003 that were
started as de novo banks by others. Our first bank was organized in December
1991, and in October 2004, we completed the acquisition of our twelfth bank
subsidiary, Town Bank, with banking locations in Delafield and Madison,
Wisconsin. In addition, we recently announced plans to acquire two existing
community-oriented banks, with banking locations in the greater Chicago
metropolitan area. See "--Recent Developments--Recently Announced Acquisitions."
S-2
The following table provides information regarding each of our existing
banks as of September 30, 2004.(1)
NUMBER OF
DATE OPENED TOTAL ASSETS BANKING
BANK OR ACQUIRED (IN THOUSANDS) FACILITIES
----------------------------------------- -------------- -------------- ----------
Lake Forest Bank & Trust................. December 1991 $1,155,290 8
Hinsdale Bank & Trust.................... October 1993 836,636 6
North Shore Community Bank & Trust....... September 1994 889,755 8
Libertyville Bank & Trust................ October 1995 666,866 7
Barrington Bank & Trust.................. December 1996 662,669 2
Crystal Lake Bank & Trust................ December 1997 461,928 5
Northbrook Bank & Trust.................. November 2000 325,626 2
Advantage National Bank.................. October 2003 237,325 2
Village Bank & Trust-Arlington Heights... December 2003 163,949 2
Beverly Bank & Trust..................... April 2004 49,921 1
Northview Bank & Trust................... September 2004 372,844 4
------------------
(1) Excludes Town Bankshares, Ltd., which was acquired in October 2004. As
of September 30, 2004, Town had total assets of $261 million and
operated two banking facilities.
WEALTH MANAGEMENT SERVICES
We currently offer a full range of wealth management services through
four separate subsidiaries, including trust and investment services, asset
management and securities brokerage services marketed primarily under the Wayne
Hummer name. We acquired the Wayne Hummer operations, based in the Chicago area,
in February 2002. Wayne Hummer Investments, our broker-dealer subsidiary, has
been in operation since 1931.
Through Wayne Hummer Trust Company we offer trust and investment
services to existing bank customers and are also targeting small to mid-size
businesses and affluent individuals whose needs command the personalized
attention offered by our experienced trust professionals. Assets under
administration at the trust company were approximately $644 million at September
30, 2004.
Through Wayne Hummer Investments, a registered broker-dealer, we
provide a full range of private client and securities brokerage services to
clients located primarily in the Midwest. Client assets at the brokerage firm
were approximately $5 billion at September 30, 2004. Focused Investments, LLC, a
broker-dealer and wholly-owned subsidiary of Wayne Hummer Investments, provides
a full range of investment services to individuals through a network of
relationships with community-based financial institutions located primarily in
Illinois.
Through Wayne Hummer Asset Management Company, a registered investment
adviser, we provide money management services and advisory services to
individuals and institutional, municipal and tax-exempt organizations as well as
two proprietary mutual funds. In addition, we provide portfolio management and
financial supervision for a wide range of pension and profit-sharing plans. At
September 30, 2004, individual accounts managed by Wayne Hummer Asset Management
Company totaled approximately $814 million, while the two managed mutual funds
had approximately $176 million in total assets.
SPECIALTY LENDING
We conduct our specialty lending businesses through indirect non-bank
subsidiaries and divisions of our banks.
S-3
Through First Insurance Funding, our most significant specialized
lending niche, we make loans to businesses to finance the insurance premiums
they pay on their commercial insurance policies. The loans are originated by
First Insurance Funding working through independent medium and large insurance
agents and brokers located throughout the United States. The insurance premiums
we finance are primarily for commercial customers' purchases of liability,
property and casualty and other commercial insurance. This lending involves
relatively rapid turnover of the loan portfolio and high volume of loan
originations. Due to the indirect nature of this lending and because the
borrowers are located nationwide, this segment may be more susceptible to third
party fraud. The majority of these loans are purchased by our banks to more
fully utilize their lending capacity. These loans generally provide the banks
higher yields than alternative investments. Since the second quarter of 1999, we
also have been selling some of these loan originations to an unrelated third
party with servicing retained. We sold approximately $346 million, or 18%, of
the receivables generated during the first nine months of 2004. The purchaser of
the loans has recourse rights against us if it suffers losses associated with
the loans we sold.
Through Tricom, Inc. we provide high-yielding, short-term accounts
receivable financing and value-added, outsourced administrative services, such
as data processing of payrolls, billing and cash management services to clients
in the temporary staffing industry. Tricom's clients, located throughout the
United States, provide staffing services to businesses in diversified
industries. During the first nine months of 2004, Tricom processed payrolls with
associated client billings of approximately $246 million and contributed
approximately $6 million of revenues, net of interest expense, to us.
We engage in other specialty lending through divisions of our banks,
including indirect auto lending, medical and municipal equipment leasing, small
aircraft lending, mortgage broker warehouse lending and loans to condominium,
homeowner and community associations. These other specialty loans and leases
together comprised approximately 8.0% of our loan and lease portfolio at
September 30, 2004.
We continue to pursue the development and/or acquisition of other
specialty lending businesses that generate assets suitable for bank investment
and/or secondary market sales. In May 2004, we acquired WestAmerica Mortgage
Company and its affiliate, Guardian Real Estate Services, Inc. WestAmerica
engages primarily in the origination and purchase of residential mortgages for
sale into the secondary market, and Guardian provides document preparation and
other loan closing services to WestAmerica and its mortgage broker affiliates.
We expect that our acquisition of these firms will allow us to enhance the loan
origination and document system and improve the mortgage product offerings of
our banks, further augment and diversify our revenue stream and provide
additional earning assets, as well as further diversification of our earning
asset base.
OPERATIONAL STRATEGY
Since our first bank was opened in 1991, we have been committed to the
same fundamental operational strategy, the key elements of which include the
following:
o MAINTAINING DECISION-MAKING AUTHORITY LOCALLY WITHIN EACH OF
OUR OPERATING SUBSIDIARIES AND PROVIDING A HIGH LEVEL OF
PERSONAL AND PROFESSIONAL SERVICE. Our community banking
philosophy is driven by our emphasis on local independence and
decision-making authority within each of our banks. While
senior management of Wintrust provides expertise to each of
our subsidiaries in the areas of capital planning, long-term
strategic planning, marketing and advertising, financial
management, investment and asset/liability management, audit
and regulatory compliance and technology, the separate
management teams of each of the banks, as well as First
Insurance, Wayne Hummer Trust Company, Tricom, the Wayne
Hummer Companies, WestAmerica and Guardian have managerial
responsibilities for customer service and the ongoing
day-to-day operations of their respective organizations,
subject to the
S-4
oversight of our Board of Directors and the boards of our
subsidiaries. Our operating subsidiaries enjoy the competitive
advantages of being able to tailor products and services to
meet the differing needs of the customers that they serve, to
quickly make decisions affecting customers and to participate
actively in their communities.
o EMPLOYING FEWER, BUT HIGHLY QUALIFIED AND PRODUCTIVE
INDIVIDUALS AT RELATIVELY HIGH COMPENSATION RATES AND FOCUSING
ON LOW NET OVERHEAD RATIOS. Key to our growth and
profitability is our management's extensive experience in
providing community banking and financial services; and
retaining highly qualified managers is critical to our
strategy. The presidents and chief executive officers of our
banks were selected not only for their years of banking
experience, but also for their business development skills and
strong ties to the communities they serve. Although our
management compensation levels may be relatively high, we
believe our organizational structure allows us to continue to
improve and maintain favorable net overhead ratios as the
banks, First Insurance, Wayne Hummer Trust Company and Tricom,
mature.
o MARKETING COMPETITIVE DEPOSIT AND LOAN PRODUCTS. Each of our
banks has developed a strong customer base within its
communities through the utilization of innovative
community-oriented marketing programs. Our banks market their
products aggressively through creative newspaper and other
advertising, special promotions and frequently sponsored
community events. While competitive pricing may create
pressure on our net interest margin at times, to be more
responsive to the needs of consumers in their specific
markets, the banks have also introduced a variety of deposit
and loan products to appeal to the unique needs of different
types of bank customers, such as different age groups and
other special segments of the target markets. Each of our
banks has a large board of directors comprised of experienced
business persons and other individuals prominent within their
respective communities who assist the banking officers with
business development.
o PURSUING A NUMBER OF SPECIALTY LENDING NICHES. We currently
finance loans in several different specialty lending niches to
more fully utilize our lending capacity, to diversify our loan
portfolio and to enhance the profitability of our banks. In
addition to premium finance loans originated by First
Insurance, short-term accounts receivables financed by Tricom
and indirect auto loans, we also engage in mortgage warehouse
lending, medical and municipal equipment leasing, homeowners
and condominium association lending and small aircraft
lending. Loans in our specialty lending niches tend to be
higher yielding than other commercial and consumer loans in
our banks' portfolios, but may involve greater credit risks
than generally associated with loan portfolios of more
traditional community banks due to marketability of the
collateral or because we do not have direct customer
relationships with the underlying borrowers.
o FOCUS ON GENERATING FEE INCOME TO AUGMENT NET INTEREST INCOME.
During 2003 and through the third quarter of 2004, we
generated fee income from a variety of sources including the
origination and sale of mortgage loans, account service
charges, trust, asset management and brokerage fees, premium
income from selling covered call option contracts on fixed
income securities we own, as well as gains on sales of premium
finance receivables and securities. In addition, we earn
administrative fees at Tricom related to its payroll
processing business. Non-interest income as a percentage of
net revenues was 38% for the years ended December 31, 2003 and
2002 and 35% for the first nine months of 2004.
S-5
GROWTH STRATEGY
Key elements of our growth strategy include the following:
o INTERNAL GROWTH OF OUR EXISTING BANKS. Due to our de novo
strategy, we believe we have not yet realized the full deposit
and asset generation potential in the communities now served
by our existing banking facilities. We believe we can leverage
our existing infrastructure to support additional business
while maintaining a high level of personalized customer
service and responsiveness. As consolidation and the trend
toward nationwide franchises continue in the financial
services industry, management expects that more individuals
and small businesses will become disenchanted with the
perceived lower level of service offered by the larger
institutions, providing continuing market share opportunity
for us. We may from time to time compete for deposits,
particularly in our newer markets, with aggressive pricing,
which may reduce our net interest margin. With management's
focus on balancing further asset growth with earnings growth,
our current strategy is to continue less aggressive deposit
pricing at those banks with significant market share and more
established customer bases.
o EXPANDING INTO ATTRACTIVE MARKETS WITH LIMITED LOCAL BANKING
COMPETITION. We plan to continue our geographic expansion by
leveraging our existing banks and opening new branch
facilities in nearby communities where management believes
targeted customers would be attracted to a community banking
alternative. During 2004, we opened seven additional bank and
branch locations on a de novo basis and began development on
three more. We intend to continue the formation of additional
de novo banks in attractive markets in and around the greater
Chicago and Milwaukee metropolitan areas. We will continue to
be impacted by start-up costs to the extent we undertake
additional de novo bank and branch formations.
In addition, part of our strategy is to continue to pursue
potential acquisitions of other community-oriented banks that
are already operating in desirable markets in the greater
Chicago and Milwaukee metropolitan areas. As highlighted below
under "--Recent Developments," we have recently expanded into
several new markets. Acquisitions may have a short-term
dilutive effect on earnings per share, although the pending
acquisitions of Antioch Holding Company and First Northwest
Bancorp, Inc. discussed below are not expected to have any
material impact on 2005 earnings per share.
o AUGMENTING THE LOAN PORTFOLIO WITH OUR SPECIALTY LENDING
NICHES TO ALLOW THE BANKS TO MORE FULLY UTILIZE THEIR LENDING
CAPACITY AND ADD RELATED FINANCIAL SERVICES BUSINESSES TO
INCREASE FEE INCOME. Our specialty lending niches have
enhanced the profitability of our community banks by
optimizing their earning asset base and allowing them to
diversify their loan portfolios. We plan to continue to build
our sales staff at First Insurance to further increase loan
volume in our premium finance business, seeking to increase
our market penetration in selected geographic markets. We may
pursue acquisitions or development of additional specialty
lending businesses engaged in asset generation suitable for
bank investment and/or secondary market sales. We may also
pursue acquisitions or development of related financial
services businesses to augment fee income, such as our recent
acquisition of WestAmerica and Guardian. Management intends to
continue to explore various commercial and consumer finance
activities and to seek attractive potential acquisition
candidates. Acquisitions could have a short-term dilutive
effect on earnings per share.
o GROWTH OF WEALTH MANAGEMENT SERVICES PROVIDED TO SMALL AND
MID-SIZED BUSINESSES AND AFFLUENT INDIVIDUALS. As part of our
strategy to build and grow our wealth management business, we
will continue to recruit talented brokers, cross-market our
expanded base of
S-6
brokerage and investment management products and services to
our banking clients and offer trust services and estate
planning products, as well as traditional banking services, to
wealth management customers.
RECENT DEVELOPMENTS
UPDATE ON GROWTH STRATEGY
A key element of our growth strategy is to acquire community-oriented
banks that operate in desirable markets in the greater Chicago and Milwaukee
metropolitan areas. As highlighted below, we have recently expanded into several
new markets with the acquisition of the following banks:
In October 2003, we completed the acquisition of Advantage National
Bancorp, Inc., the parent company of Advantage National Bank, with banking
locations in Elk Grove Village and Roselle in the northwest suburbs of Chicago.
Advantage began operations in 2000 as a de novo bank and had assets as of the
date of acquisition of approximately $114 million compared to approximately $237
million as of September 30, 2004.
In December 2003, we completed the acquisition of Village Bancorp,
Inc., the parent company of Village Bank & Trust, with banking locations in
Arlington Heights and Prospect Heights in the northwest suburbs of Chicago.
Village began operations in 1995 as a de novo bank and had assets as of the date
of acquisition of approximately $80 million compared to approximately $164
million as of September 30, 2004.
In September 2004, we completed the acquisition of Northview Financial
Corporation, the parent company of Northview Bank & Trust, with banking
locations in Northfield, Mundelein and Wheaton in the north and west suburbs of
Chicago. Northview began operations in 1994 as a de novo bank and had assets as
of September 30, 2004 of approximately $373 million.
On October 15, 2004, we completed our acquisition of Town Bankshares,
Ltd., parent company of Town Bank with banking locations in Delafield and
Madison, Wisconsin. Town began operations as a de novo bank in 1998 and had
total assets of approximately $261 million as of September 30, 2004. The
aggregate purchase price, including the value of in-the-money options, was
approximately $41 million. This transaction is consistent with our plan to seek
to expand into attractive communities within the greater Milwaukee metropolitan
area and represents our first banking location in the southeastern Wisconsin
marketplace. The transaction is not expected to have a material effect on our
2005 earnings per share.
RECENTLY ANNOUNCED ACQUISITIONS
ANTIOCH HOLDING COMPANY
On October 15, 2004, we announced the signing of a definitive agreement
to acquire Antioch Holding Company, the parent company of State Bank of The
Lakes, with banking locations in Antioch, Lindenhurst, Grayslake, Spring Grove
and a location under construction in McHenry, Illinois. Antioch had total assets
of approximately $445 million as of September 30, 2004. The aggregate purchase
price for the acquisition is approximately $95 million, payable in cash at the
closing and will be funded in part with a portion of the net proceeds we will
receive upon settlement of a portion of the forward sale agreement as well as
with the proceeds from a $50 million offering of trust preferred securities that
is expected to close in December 2004. We have submitted our applications to the
applicable regulatory authorities seeking approval of the acquisition, and we
currently expect to receive final regulatory approval in early 2005. Subject to
approval by banking regulators and certain closing conditions, we
S-7
expect this transaction to close early in the first quarter of 2005. The
transaction is not expected to have a material effect on our 2005 earnings per
share.
FIRST NORTHWEST BANCORP, INC.
On November 17, 2004, we announced the signing of a definitive
agreement to acquire First Northwest Bancorp, Inc., the parent company of First
Northwest Bank, which has two banking locations in Arlington Heights, Illinois.
First Northwest began operations as a de novo bank in 1995 and had total assets
of approximately $268 million as of September 30, 2004. The aggregate purchase
price for the acquisition, including the value of in-the-money options, is
approximately $46 million, subject to adjustment pursuant to the terms of the
merger agreement, and will be paid in cash and shares of our common stock at the
closing, with the cash portion to be funded in part with a portion of the net
proceeds we will receive upon settlement of a portion of the forward sale
agreement. Subject to approval by banking regulators and certain closing
conditions, we expect this transaction to close late in the first quarter or
early in the second quarter of 2005. The transaction is not expected to have a
material effect on our 2005 earnings per share.
The following table is a summary of assets, deposits and banking
facilities as of September 30, 2004, including information related to the
recently completed acquisition of Town and the pending acquisitions of Antioch
and First Northwest:
NUMBER
OF
TOTAL TOTAL BANKING
ASSETS DEPOSITS FACILITIES
------ -------- ----------
(Dollars in millions)
Wintrust Financial Corporation.............. $5,817 $4,751 47
Town Bankshares, Ltd. ...................... 261 232 2
Antioch Holding Company..................... 445 366 4
First Northwest Bancorp, Inc. .............. 268 226 2
------ ------ --
Total....................................... $6,791 $5,575 55
------ ------ --
ANTICIPATED TRUST PREFERRED OFFERING
In December 2004, we expect to issue $50 million of floating rate trust
preferred securities in a private placement offering. The trust preferred
securities will be issued by our newly established subsidiary, Wintrust Capital
Trust VII. The trust preferred securities will have a maturity of 30 years and
will be redeemable by us in whole or in part after five years. Distributions on
the trust preferred securities will be paid quarterly at a rate to be determined
at pricing. We expect to use the proceeds of the trust preferred offering to
fund a portion of the aggregate purchase price of our acquisition of Antioch.
S-8
THE OFFERING
An affiliate of RBC Capital Markets Corporation is, at our request,
selling 1,200,000 shares of our common stock in connection with the execution of
a forward sale agreement between us and such affiliate. See
"Underwriting--Forward Sale Agreement."
Common stock offered by the forward purchaser....... 1,200,000 shares
Common stock outstanding prior to full physical
settlement of the forward sale agreement(1)...... 21,659,967 shares
Common stock outstanding after full physical
settlement of the forward sale agreement(1)(2)... 22,859,967 shares
Offering price per share............................ $
Use of proceeds..................................... We will not initially receive any proceeds
from the sale of the shares of our common
stock pursuant to this prospectus
supplement. If we elect to settle the
forward sale agreement at the initial
forward sale price of $ per share (which
reflects a reduction for the underwriting
discount) entirely with shares of our common
stock, we expect to receive net proceeds of
approximately $ million. We intend to use
the net proceeds to finance a portion of the
purchase price for our acquisitions of
Antioch and First Northwest and for other
general corporate purposes. See "--Recent
Developments--Recently Announced
Acquisitions" and "Use of Proceeds."
Risk Factors........................................ See "Risk Factors" beginning on page
S-14 and on page 4 in the
accompanying prospectus and other
information included or incorporated by
reference in this prospectus supplement and
the accompanying prospectus for a discussion
of factors you should consider carefully
before deciding whether to invest
in our common stock.
Nasdaq National Market symbol....................... WTFC
Throughout this prospectus supplement, we have assumed that the
underwriters do not exercise their over-allotment option and the forward sale
agreement is fully settled based upon the initial forward sale price of $
and by the delivery of 1,200,000 shares of our common stock. See
"Underwriting--Forward Sale Agreement" for a description of the forward sale
agreement. We will issue 1,380,000 shares of our common stock in total in
connection with the settlement of the forward sale agreement if the
over-allotment option is exercised in full and all of the shares subject to the
forward sale agreement are issued.
------------------
(1) Calculated as of December 8, 2004; excludes 4,727,672 shares reserved
for issuance under our stock incentive plan and other compensation
plans or upon the exercise of outstanding warrants and up to a maximum
of approximately 625,000 shares that we expect to issue in connection
with our pending acquisitions. As of December 8, 2004, we had
outstanding options and restricted stock unit awards relating to
3,129,380 shares, with a weighted average exercise price of $23.25, and
warrants to purchase 150,695 shares of our common stock, with a
weighted average exercise price of $18.15.
(2) Calculated as of December 8, 2004, assuming all 1,200,000 shares subject
to the forward sale agreement are issued. We may not issue all 1,200,000
shares upon settlement if we elect cash or net stock settlement for all
or a portion of our obligations under the forward sale agreement. See
"Underwriting--Forward Sale Agreement."
S-9
SUMMARY CONSOLIDATED FINANCIAL DATA
The summary consolidated financial data presented below as of or for
each of the years in the five-year period ended December 31, 2003, are derived
from our audited historical financial statements. The summary data presented
below as of or for the nine-month periods ended September 30, 2004 and 2003, are
derived from unaudited consolidated financial statements. In our opinion, all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair statement of results as of or for the nine-month periods have been
included. Per share amounts have been adjusted to reflect the 3-for-2 stock
split effected as a stock dividend effective as of March 14, 2002. This
information should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements and the notes thereto incorporated by reference into this
prospectus from our Annual Report on Form 10-K for the fiscal year ended
December 31, 2003, and our Quarterly Report on Form 10-Q for the period ended
September 30, 2004. Results for past periods are not necessarily indicative of
results that may be expected for any future period; and results for the
nine-month period ended September 30, 2004 are not necessarily indicative of
results that may be expected for the entire year ending December 31, 2004.
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------ ----------------------------------------------------------------------
2004(1) 2003(2) 2003(2) 2002(3) 2001 2000 1999
---------- ---------- ---------- ---------- ---------- ----------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
STATEMENT OF INCOME DATA:
Total interest income...... $ 184,683 $ 148,977 $ 203,991 $ 182,233 $ 166,455 $ 148,184 $ 109,331
Total interest expense..... 72,364 62,154 83,499 84,105 92,441 87,184 61,597
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income..... 112,319 86,823 120,492 98,128 74,014 61,000 47,734
Provision for loan
losses.................. 5,020 8,402 10,999 10,321 7,900 5,055 3,713
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net interest income
after provision
for loan losses...... 107,299 78,421 109,493 87,807 66,114 55,945 44,021
Non-interest Income:
Gain on sale of
premium finance
receivables.......... 5,365 3,470 4,911 3,374 4,564 3,831 1,033
Mortgage banking
revenue.............. 12,549 14,877 16,718 13,271 8,106 3,139 3,423
Wealth management
fees................. 23,659 20,669 28,871 25,229 1,996 1,971 1,171
Service charges on
deposit accounts..... 2,944 2,611 3,525 3,121 2,504 1,936 1,562
Administrative
services revenues.... 2,927 3,178 4,151 3,501 4,084 4,402 996
Premium finance
defalcation-partial
settlement(4)........ -- -- 500 1,250 -- -- --
Securities (losses)
gains, net........... 1,731 637 642 107 337 (40) 5
Other................... 12,453 9,849 13,274 10,819 7,207 3,067 1,618
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total
non-interest
income............. 61,628 55,291 72,592 60,672 28,798 18,306 9,808
---------- ---------- ---------- ---------- ---------- ---------- ----------
(See footnotes on page S-12)
S-10
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------ ----------------------------------------------------------------------
2004(1) 2003(2) 2003(2) 2002(3) 2001 2000 1999
---------- ---------- ---------- ---------- ---------- ----------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Non-interest Expense:
Salaries and
employee benefits.... $ 66,841 $ 55,673 $ 74,775 $ 63,442 $ 35,628 $ 28,119 $ 20,808
Equipment expense....... 6,626 5,727 7,957 7,191 6,297 5,101 3,199
Occupancy expense,
net.................. 7,026 5,626 7,436 6,691 4,821 4,252 2,991
Data processing......... 3,909 3,193 4,304 4,161 3,393 2,837 2,169
Advertising and
marketing............ 2,376 1,645 2,215 2,302 1,604 1,309 1,402
Professional fees....... 3,432 2,565 3,342 2,801 2,055 1,681 1,203
Amortization of
intangibles.......... 587 448 640 324 685 713 251
Premium finance
defalcation(4)....... -- -- -- -- -- 4,320 --
Other non-interest
expenses............. 19,312 16,382 22,072 19,072 11,300 9,471 7,655
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total
non-interest
expense............ 110,109 91,259 122,741 105,984 65,783 57,803 39,678
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before taxes
and cumulative
effect of
accounting change....... 58,818 42,453 59,344 42,495 29,129 16,448 14,151
Income tax expense......... 21,655 15,264 21,226 14,620 10,436 5,293 4,724
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before
cumulative effect
of accounting change.... 37,163 27,189 38,118 27,875 18,693 11,155 9,427
Cumulative effect of
change in
accounting for
derivatives, net of
tax..................... -- -- -- -- (254) -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income.............. $ 37,163 $ 27,189 $ 38,118 $ 27,875 $ 18,439 $ 11,155 $ 9,427
========== ========== ========== ========== ========== ========== ==========
COMMON SHARE DATA:
Earnings per share:
Basic................... $ 1.83 $ 1.56 $ 2.11 $ 1.71 $ 1.34 $ 0.85 $ 0.76
Diluted................. 1.71 1.46 1.98 1.60 1.27 0.83 0.73
Cash dividends per
common share(5)......... 0.20 0.16 0.16 0.12 0.093 0.067 --
Book value per share....... 20.42 15.87 17.43 13.19 9.72 7.92 7.06
Weighted average
common shares
outstanding:
Basic................... 20,347 17,445 18,032 16,334 13,734 13,066 12,373
Diluted................. 21,674 18,582 19,219 17,445 14,545 13,411 12,837
SELECTED FINANCIAL
CONDITION DATA (AT
END OF PERIOD):
Total assets............... $5,817,286 $4,304,877 $4,747,398 $3,721,555 $2,705,422 $2,102,806 $1,679,382
Total loans................ 4,000,175 2,949,143 3,297,794 2,556,086 2,018,479 1,547,596 1,270,126
Mortgage loans
held-for-sale........... 80,074 65,240 24,041 90,446 42,904 10,424 8,123
Total deposits............. 4,751,593 3,529,196 3,876,621 3,089,124 2,314,636 1,826,576 1,463,622
Notes payable.............. 1,000 26,000 26,000 44,025 46,575 27,575 8,350
Subordinated notes......... 50,000 50,000 50,000 25,000 -- -- --
Long term debt - trust
preferred securities.... 146,465 76,512 96,811 50,894 51,050 51,050 31,050
Total shareholders'
equity.................. 430,153 299,874 349,837 227,002 141,278 102,276 92,947
(See footnotes on following page)
S-11
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------ ----------------------------------------------------------------------
2004(1) 2003(2) 2003(2) 2002(3) 2001 2000 1999
---------- ---------- ---------- ---------- ---------- ----------- ----------
SELECTED FINANCIAL
RATIOS AND OTHER
DATA:
Performance Ratios:
Net interest
margin(6)(7)(8)...... 3.16% 3.20% 3.20% 3.34% 3.49% 3.66% 3.54%
Net interest
spread(6)(9)(10)..... 2.95 2.99 2.99 3.06 3.08 3.29 3.23
Non-interest income
to average
assets(6)............ 1.58 1.86 1.76 1.89 1.24 0.99 0.66
Non-interest
expense to
average
assets(4)(6)......... 2.83 3.07 2.98 3.30 2.83 3.12 2.65
Net overhead
ratio(4)(6)(11)...... 1.25 1.21 1.22 1.41 1.59 2.13 2.00
Efficiency
ratio(4)(8)(12)...... 63.74 64.23 63.52 66.41 63.66 72.33 68.63
Return on average
assets(4)(6)......... 0.95 0.91 0.93 0.87 0.79 0.60 0.63
Return on average
equity(4)(6)......... 13.46 14.92 14.36 14.76 15.24 11.51 11.58
Average
loan-to-average
deposit ratio........ 88.1 87.1 86.4 88.5 87.4 87.7 86.6
Dividend payout
ratio(5)(6).......... 8.8 8.2 8.1 7.5 7.4 8.0 --
Asset Quality Ratios:
Non-performing
loans to total
loans................ 0.45% 0.48% 0.72% 0.49% 0.64% 0.63% 0.55%
Allowance for loan
losses to:
Total loans.......... 0.79 0.77 0.77 0.72 0.68 0.67 0.69
Non-performing
loans.............. 175.97 160.33 107.59 146.63 105.63 107.75 126.10
Net charge-offs to
average
loans(4)(6).......... 0.06 0.19 0.18 0.24 0.26 0.24 0.19
Non-performing
assets to total
assets............... 0.33 0.34 0.51 0.34 0.48 0.46 0.41
Other data at end of period:
Number of banking
facilities........... 47 32 36 31 29 28 24
------------------
(1) We completed our acquisitions of WestAmerica and Guardian on May 19,
2004, and Northview Financial Corporation on September 30, 2004. The
results for the nine months ended September 30, 2004 include the
results of WestAmerica and Guardian since the effective date of the
acquisition.
(2) We completed our acquisitions of Lake Forest Capital Management Company
on February 1, 2003, Advantage on October 1, 2003 and Village on
December 5, 2003. The results for the nine months ended September 30,
2003 and year ended December 31, 2003 include the results of the
companies acquired as of and since the effective date of the
acquisitions only.
(3) We completed our acquisition of the Wayne Hummer Companies effective as
of February 1, 2002. The results for the year ended December 31, 2002
include the results of the Wayne Hummer Companies since February 1,
2002.
(4) In 2000, we recorded a $4.3 million pre-tax charge ($2.6 million
after-tax) related to a fraudulent loan scheme perpetrated against our
premium finance subsidiary. The amount of this charge was not included
in loans charged-off because a lending relationship had never been
established. In the first quarter of 2002, we recovered $1.25 million
(pre-tax) of this amount ($754,000 after-tax), and in the fourth
quarter of 2003, we recovered $500,000 (pre-tax) of this amount
($302,000 after-tax).
(5) We declared our first semi-annual dividend payment in January 2000.
Dividend data reflected for the interim periods reflect semi-annual,
not quarterly, dividends. See "Price Range of Common Stock and Dividend
Policy."
(6) These financial ratios for interim periods have been annualized.
(7) Net interest income on a tax-equivalent basis divided by average
interest-earning assets.
(8) See "Supplemental Financial Measures/Ratios" on page S-13 for a
reconciliation of net interest income to net interest income on a tax
equivalent basis.
(9) Calculated on a tax-equivalent basis.
(10) Yield earned on average interest-earning assets less rate paid on
average interest-bearing liabilities.
(11) Non-interest expense less non-interest income divided by average total
assets.
(12) Non-interest expense (excluding non-recurring items) divided by the sum
of net interest income on a tax equivalent basis plus non-interest
income (excluding securities gains and losses).
S-12
SUPPLEMENTAL FINANCIAL MEASURES/RATIOS
Certain non-GAAP (generally accepted accounting principles in the
United States) performance measures and ratios are used by management to
evaluate and measure our performance. These include tax-equivalent net interest
income (including its individual components), net interest margin (including its
individual components) and the efficiency ratio. Management believes that these
measures and ratios provide users of our financial information a more accurate
view of the performance of the interest-earning assets and interest-bearing
liabilities and of our operating efficiency for comparative purposes than the
most directly comparable GAAP measures. Other financial holding companies may
define or calculate these measures and ratios differently. See the table below
for supplemental data and the corresponding reconciliation to GAAP financial
measures for the nine months ended September 30, 2004 and 2003, and for the
years ended December 31, 1999 through 2003.
Management reviews yields on certain asset categories and the net
interest margin of the company and our banking subsidiaries on a fully
tax-equivalent basis or "FTE." In this non-GAAP presentation, net interest
income is adjusted to reflect tax-exempt interest income on an equivalent
before-tax basis. This measure ensures comparability of net interest income
arising from both taxable and tax-exempt sources. Net interest income on a
tax-equivalent basis is also used in the calculation of our efficiency ratio.
The efficiency ratio, which is calculated by dividing non-interest expense by
total tax-equivalent net revenue (less securities gains or losses), measures how
much it costs to produce one dollar of revenue. Securities gains or losses are
excluded from this calculation to better match revenue from daily operations to
operational expenses.
The following table reconciles the GAAP calculations to the financial
measures and ratios used by management as discussed above.
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------------- ---------------------------------------------------------
2004 2003 2003 2002 2001 2000 1999
---------- ---------- --------- ---------- ---------- --------- ---------
(DOLLARS IN THOUSANDS)
(A) INTEREST INCOME (GAAP)....... $ 184,683 $ 148,977 $ 203,991 $ 182,233 $ 166,455 $ 148,184 $ 109,331
FTEA - Loans(1).............. 330 375 474 685 793 518 259
FTEA - Liquidity
management assets(1)...... 173 180 236 209 65 48 15
FTEA - Other earning
assets(1)................. 39 50 67 -- -- -- --
---------- -- ------- --------- ---------- ---------- --------- ---------
Interest income - FTE........ 185,225 149,582 204,768 183,127 167,313 148,750 109,605
(B) INTEREST EXPENSE (GAAP)...... 72,364 62,154 83,499 84,105 92,441 87,184 61,597
---------- -- ------- --------- ---------- ---------- --------- ---------
Net interest income - FTE.... $ 112,861 $ 87,428 $ 121,269 $ 99,022 $ 74,872 $ 61,566 $ 48,008
---------- -- ------- --------- ---------- ---------- --------- ---------
(C) NET INTEREST INCOME
(GAAP)(A MINUS B)............ $ 112,319 $ 86,823 $ 120,492 $ 98,128 $ 74,014 $ 61,000 $ 47,734
(D) NET INTEREST MARGIN
(GAAP)....................... 3.14% 3.18% 3.18% 3.31% 3.45% 3.63% 3.52%
Net interest margin - FTE.... 3.16 3.20 3.20 3.34 3.49 3.66 3.54
(E) EFFICIENCY RATIO (GAAP)...... 63.94 64.50 63.78 66.79 64.19 72.85 68.96
Efficiency ratio - FTE....... 63.74 64.23 63.52 66.41 63.66 72.33 68.63
------------------
(1) FTEA = Fully tax-equivalent adjustment based on an assumed marginal federal tax rate of 35%.
S-13
RISK FACTORS
You should carefully consider the following risk factors as well as the
risk factors beginning on page 4 of the accompanying prospectus before you
decide to buy our common stock. You should also consider the other information
in this prospectus supplement, the accompanying prospectus and the documents
incorporated by reference in this prospectus supplement and the accompanying
prospectus.
RISKS RELATED TO THE OFFERING
SETTLEMENT PROVISIONS CONTAINED IN THE FORWARD SALE AGREEMENT SUBJECT US TO
CERTAIN RISKS.
The purchaser under the forward sale agreement will have the right to
require us to physically settle the forward sale agreement with shares of our
common stock on a date specified by the purchaser if, among other things, (1) in
its judgment, it is unable to continue to borrow a number of shares of our
common stock equal to the number of shares to be delivered by us under the
forward sale agreement or it is commercially impracticable or economically
unfeasible to do so or the cost of borrowing the stock has increased above a
specified amount, (2) the closing price of our common stock is equal to or less
than $30.00 per share on any trading day or (3) we declare certain dividends or
distributions on shares of our common stock. The purchaser's decision to
exercise its right to require us to physically settle the forward sale agreement
will be made irrespective of our need for capital. Delivery of such shares would
result in dilution to our earnings per share and return on equity. See
"Underwriting--Forward Sale Agreement."
Except under limited circumstances described above, we have the right
to elect cash or net stock settlement under the forward sale agreement. In that
event, we would expect the purchaser or one of its affiliates under the forward
sale agreement to purchase up to 1,200,000 shares of our common stock in
secondary market transactions to close out its short position. If the price of
our common stock is above the forward sale price, we would pay the purchaser
under the forward sale agreement an amount in cash (if we cash settle) equal to
the difference or deliver a number of shares of our common stock (if we net
stock settle) having a market value equal to the difference. We may also have to
make the forward purchaser whole in the event of a tender offer or acquisition
of our shares. Any such difference could be significant.
THERE IS FLUCTUATION IN THE TRADING MARKET FOR OUR COMMON STOCK; YOU MAY NOT BE
ABLE TO RESELL YOUR SHARES AT OR ABOVE THE PRICE YOU PAY FOR THEM.
The price of our shares of common stock subject to this offering may be
greater than the market price for our common stock following the offering. The
price of our common stock has been, and will likely continue to be, subject to
fluctuations based on, among other things, changes in earnings estimates by
securities analysts, material announcements by us or our competitors,
governmental regulatory action, the inability to close pending transactions, the
liquidity of the market for our common stock, economic and market conditions for
banks and other financial services companies and the stock market in general, as
well as changes in investor perceptions of our company. Over the past several
years, the stock market has experienced significant price and volume
fluctuations that have affected market prices of smaller capitalization
companies and that sometimes have been unrelated to the operating performance of
such companies. In addition, our operating results may be below the expectations
of securities analysts and investors. In such event, the price of our common
stock would likely decline, perhaps substantially.
Our common stock is traded on the Nasdaq National Market under the
symbol "WTFC". The maintenance of an active public trading market depends,
however, upon the existence of willing buyers and sellers, the presence of which
is beyond our control or the control of any market maker, and there can be no
assurance that our shareholders will be able to sell their shares at or above
the offering price. A number of shares of our common stock are covered by resale
registration statements. We estimate that
S-14
there are currently approximately up to 1,075,000 of those shares outstanding
that have not yet been resold. These remaining shares may be freely sold from
time to time in the market. The market price of our common stock could drop
significantly if shareholders sell or are perceived by the market as intending
to sell large blocks of our shares.
OUR ABILITY TO UNDERTAKE FUTURE SALES OR DISTRIBUTIONS OF COMMON STOCK MAY CAUSE
THE MARKET PRICE OF OUR COMMON STOCK TO DECLINE, IRRESPECTIVE OF OUR FINANCIAL
PERFORMANCE.
The sale of a substantial number of shares of our common stock into the
public market, or the availability of these shares for future sale, could
adversely affect the market price of our common stock and could impair our
ability to obtain additional capital in the future through an offering of equity
securities at a time or at a price we deem appropriate. We have a currently
effective shelf registration statement permitting the public sale of up to $200
million of our securities, including the common stock offered hereby. We may
issue shares of our common stock from time to time as consideration for future
acquisitions and investments. In the event any such acquisition or investment is
significant, the number of shares that we may issue may in turn be significant.
Any such offering would dilute your ownership interest in us and our per share
earnings.
FUTURE POTENTIAL DEBT OR PREFERRED STOCK ISSUANCE MAY NEGATIVELY IMPACT HOLDERS
OF COMMON STOCK.
If at some point in the future we choose to issue additional debt
and/or preferred securities, these securities will have a senior claim on our
assets relative to common shareholders. Therefore, in the event of our
bankruptcy, liquidation or dissolution, our assets must be used to pay off our
debt and preferred obligations in full before making any distributions to common
shareholders. In this event, it might be possible that a common shareholder will
not recover his original investment.
OUR SHAREHOLDER RIGHTS PLAN AND PROVISIONS IN OUR ARTICLES OF INCORPORATION AND
OUR BY-LAWS MAY DELAY OR PREVENT AN ACQUISITION OF US BY A THIRD PARTY.
Our board of directors has implemented a shareholder rights plan. The
rights, which are attached to our shares of common stock and trade together with
our common stock, have certain anti-takeover effects. The plan may discourage or
make it more difficult for another party to complete a merger or tender offer
for our shares without negotiating with our board of directors or to launch a
proxy contest or to acquire control of a larger block of our shares. If
triggered, the rights will cause substantial dilution to a person or group that
attempts to acquire us without approval of our board of directors, and under
certain circumstances, the rights beneficially owned by the person or group may
become void. The plan also may have the effect of limiting shareholder
participation in certain transactions such as mergers or tender offers whether
or not such transactions are favored by incumbent directors and key management.
In addition, our executive officers may be more likely to retain their positions
with us as a result of the plan, even if their removal would be beneficial to
shareholders generally.
Our articles of incorporation and by-laws contain provisions, including
a staggered board provision, that make it more difficult for a third party to
gain control or acquire us without the consent of our board of directors. These
provisions also could discourage proxy contests and may make it more difficult
for dissident shareholders to elect representatives as directors and take other
corporate actions.
These provisions of our governing documents may have the effect of
delaying, deferring or preventing a transaction or a change in control that
might be in the best interest of our shareholders.
S-15
RISKS RELATED TO OUR BUSINESS
WE COULD ENCOUNTER DIFFICULTIES OR UNEXPECTED DEVELOPMENTS RELATED TO OUR RECENT
AND ANY FUTURE ACQUISITIONS.
We recently completed our acquisitions of WestAmerica, its affiliate
Guardian, Northview Financial and Town, and are currently in the process of
integrating those businesses into our organization. While we expect this process
will go smoothly, to the extent we experience any significant difficulties or
challenges with this integration, our business may be adversely impacted.
Our pending acquisition of Antioch is currently expected to close early
in the first quarter of 2005, and our pending acquisition of First Northwest is
currently expected to close late in the first quarter or early in the second
quarter 2005. The Antioch acquisition is subject to both Federal and state bank
regulatory approvals. The First Northwest acquisition remains subject to
approval by both Federal and state regulatory agencies and First Northwest's
shareholders. There can be no assurances that we will receive the necessary
approvals for these acquisitions, or as to the timing of such approvals. We may
not be successful in completing the acquisitions as planned if, for example, the
closing conditions for either acquisition are not met. If we do complete the
acquisitions, we may be adversely impacted if we have difficulty integrating
either bank into our organization or if the composition or quality of either
bank's assets or liabilities that we acquire differ significantly from our
expectations. In addition, our net income and earnings per share could be
adversely impacted if we incur greater than anticipated costs associated with
operating either bank, if we have difficulty retaining key personnel at either
bank, or if we are unable to grow the businesses of either bank as contemplated.
We plan to continue to pursue potential acquisitions of other
community-oriented banks as well as additional specialty lending and related
financial services businesses which could also present challenges relating to
the integration of the operations of acquired businesses into our organization.
To the extent acquisitions divert a significant amount of management time and
attention, our business could be disrupted and, despite our efforts, our
corporate infrastructure may be unable to keep pace with the growth in charters
and locations.
DE NOVO OPERATIONS AND BRANCH OPENINGS IMPACT OUR PROFITABILITY.
Our financial results have been and will continue to be impacted by our
strategy of de novo bank formations and branch openings. We have employed this
strategy to build an infrastructure that management believes can support
additional internal growth in our banks' respective markets. We opened our
eighth de novo bank in April 2004, and expect to undertake additional de novo
bank formations or branch openings as we expand into additional communities in
and around Chicago and Southeast Wisconsin. Based on our experience, management
believes that it generally takes from 13 to 24 months for de novo banks to first
achieve operational profitability, depending on the number of banking facilities
opened, the impact of organizational and overhead expenses, the start-up phase
of generating deposits and the time lag typically involved in redeploying
deposits into attractively priced loans and other higher yielding earning
assets. However, it may take longer than expected or than the amount of time we
have historically experienced for new banks and/or banking facilities to reach
profitability, and there can be no guarantee that these new banks or branches
will ever be profitable. To the extent we undertake additional de novo bank,
branch and business formations, our level of reported net income, return on
average equity and return on average assets will be impacted by start-up costs
associated with such operations, and we are likely to continue to experience the
effects of higher expenses relative to operating income from the new operations.
These expenses may be higher than we expected or than our experience has shown.
S-16
WE DEPEND ON OUR ABILITY TO ATTRACT AND RETAIN KEY PERSONNEL; WE RELY HEAVILY ON
OUR MANAGEMENT TEAM, AND THE UNEXPECTED LOSS OF KEY MANAGERS MAY ADVERSELY
AFFECT OUR OPERATIONS.
Our success to date has been influenced strongly by our ability to
attract and to retain senior management experienced in banking and financial
services. Retention of senior managers and appropriate succession planning will
continue to be critical to the successful implementation of our strategies. We
have entered into more than 70 employment contracts with our executive officers
and certain senior officers who we consider to be key employees. It is also
important as we grow to be able to attract and retain additional qualified
senior and middle management. We maintain a limited number of key-man life
insurance policies and maintain bank-owned life insurance policies on most of
our executive and senior officers to offset liabilities under employment
contracts. The unexpected loss of services of any key management personnel, or
the inability to recruit and retain qualified personnel in the future, could
have an adverse effect on our business and financial results.
OUR BUSINESS MAY BE ADVERSELY AFFECTED BY THE HIGHLY REGULATED ENVIRONMENT IN
WHICH WE OPERATE.
We are subject to extensive federal and state legislation, regulation
and supervision. The burden of regulatory compliance has increased under current
legislation and banking regulations and is likely to continue to have or may
have a significant impact on the financial services industry. These regulatory
authorities have extensive discretion in connection with their supervisory and
enforcement activities, including the imposition of restrictions on our
operations, the classification of our assets and the adequacy of our allowance
for loan losses. Recent legislative and regulatory changes, as well as changes
in regulatory enforcement policies and capital adequacy guidelines, are
increasing our costs of doing business and, as a result, may create an advantage
for our competitors who may not be subject to similar legislative and regulatory
requirements. In addition, future regulatory changes, including changes to
regulatory capital requirements, could have an adverse impact on our future
results. Self regulatory organizations, such as the New York Stock Exchange and
the National Association of Securities Dealers, require our securities brokerage
subsidiaries to comply with extensive rules and regulations, and we could be
adversely affected by applicable changes in these regulations. Our failure to
comply with these regulations and the results of any potential enforcement
actions may materially adversely affect our reputation and the value of our
securities.
SINCE OUR BUSINESS IS CONCENTRATED IN THE CHICAGO METROPOLITAN AREA, A DOWNTURN
IN THE CHICAGO ECONOMY MAY ADVERSELY AFFECT OUR BUSINESS.
Currently, our lending and deposit gathering activities are
concentrated primarily in the greater Chicago metropolitan area. Our success
depends on the general economic condition of Chicago and its surrounding areas.
Declining economic conditions could reduce our growth rate, impair our ability
to collect loans, and generally affect our financial condition and results of
operations.
OUR ALLOWANCE FOR LOAN LOSSES MAY PROVE TO BE INSUFFICIENT TO ABSORB LOSSES THAT
MAY OCCUR IN OUR LOAN PORTFOLIO.
Our allowance for loan losses is established in consultation with
management of our operating subsidiaries and is maintained at a level considered
adequate by management to absorb loan and lease losses that are inherent in the
portfolios. At September 30, 2004, our allowance for loan losses was 175.97% of
total non-performing loans and 0.79% of total loans. The amount of future losses
is susceptible to changes in economic, operating and other conditions, including
changes in interest rates, that may be beyond our control, and such losses may
exceed current estimates. Rapidly growing and de novo bank loan portfolios are,
by their nature, unseasoned. As a result, estimating loan loss allowances for
our newer banks is more difficult, and therefore the banks may be more
susceptible to changes in loss estimates, and to losses exceeding estimates,
than banks with more seasoned loan portfolios. Although
S-17
management believes that the allowance for loan losses is adequate to absorb
losses that may develop in our existing portfolios of loans and leases, there
can be no assurance that the allowance will prove sufficient to cover actual
loan or lease losses in the future.
OUR PREMIUM FINANCE BUSINESS INVOLVES UNIQUE OPERATIONAL RISKS AND COULD EXPOSE
US TO SIGNIFICANT LOSSES.
Of our total loans at September 30, 2004, 19%, or approximately $765
million, were comprised of commercial insurance premium finance receivables that
we generated through First Insurance. These loans, intended to enhance the
average yield of earning assets of our banks, involve a different, and possibly
higher, level of risk of delinquency or collection than generally associated
with loan portfolios of more traditional community banks. First Insurance also
faces unique operational and internal control challenges due to the relatively
rapid turnover of the premium finance loan portfolio and high volume of new loan
originations. The average term to maturity of these loans is less than 12
months, and the average loan size when originated is approximately $30,000.
Because we conduct lending in this segment primarily through
relationships with a large number of unaffiliated insurance agents and because
the borrowers are located nationwide, risk management and general supervisory
oversight may be more difficult than in our banks. We may also be more
susceptible to third party fraud. Acts of fraud are difficult to detect and
deter, and we cannot assure investors that our risk management procedures and
controls will prevent losses from fraudulent activity. For example, in the third
quarter of 2000, we recorded a non-recurring after-tax charge of $2.6 million in
connection with a series of fraudulent loan transactions perpetrated against
First Insurance by one independent insurance agency located in Florida. Although
we have since enhanced our internal control system at First Insurance, we may
continue to be exposed to the risk of significant loss in our premium finance
business.
Due to continued growth in origination volume of premium finance
receivables, since the second quarter of 1999, we have been selling some of the
loans First Insurance originates to an unrelated third party. We have recognized
gains on the sales of the receivables, and the proceeds of sales have provided
us with additional liquidity. Consistent with our strategy to be asset driven,
we expect to pursue similar sales of premium finance receivables in the future;
however, we cannot assure you that there will continue to be a market for sale
of these loans and the extent of our future sales of these loans will depend on
the level of new volume growth in relation to our capacity to retain the loans
within our subsidiary banks' loan portfolios. Because we have a recourse
obligation to the purchaser of premium finance loans that we sell, we could
incur losses in connection with the loans sold if collections on the underlying
loans prove to be insufficient to repay to the purchaser the principal amount of
the loans sold plus interest at the negotiated buy-rate and if the collection
shortfall on the loans sold exceeds our estimate of losses at the time of sale.
OUR STRATEGY OF PURSUING SPECIALTY LENDING NICHES MAY EXPOSE US TO CREDIT RISKS
THAT ARE UNIQUE FOR A COMMUNITY BANKING ORGANIZATION OF OUR SIZE.
At September 30, 2004, 28% of our total loan portfolio consisted of
loans we make in what we consider to be specialty lending niches. In addition to
our premium finance loans, we engage in indirect auto lending, accounts
receivable financing, mortgage broker warehouse lending, loans to condominium,
homeowner and community associations, and to a much lesser extent, medical and
municipal equipment leasing and small aircraft lending.
Our portfolio of automobile loans are originated indirectly through
unaffiliated automobile dealers located throughout the Chicago metropolitan
area. At September 30, 2004, our indirect auto loans were approximately $178
million and comprised approximately 4% of our loan portfolio. Because we are
lending through third-party originators, our indirect auto portfolio may be
relatively riskier than direct
S-18
consumer lending. Because the indirect auto loan industry is highly competitive,
the cost of collection and repossession of the underlying collateral may
significantly reduce the profitability of this portfolio, particularly in a
recessionary environment.
Through Tricom, we finance payrolls of companies engaged in the
temporary staffing business. At September 30, 2004, these finance receivables
totaled approximately $31 million and represented approximately 1% of our loan
portfolio. The principal source of repayments on the loans we make in this niche
are payments to our borrowers from their customers who are located throughout
the United States. While we employ lockboxes and other cash management
techniques to protect our interests, to the extent third parties fail to pay or
fraudulently engage in the conversion of funds through misuse or nonuse of the
lockbox or the creation of ghost payrolls, we may suffer losses.
Our lease financing niche may involve a higher degree of credit risk
than mortgage or consumer lending due primarily to the potential for relatively
rapid depreciation of medical equipment and other assets securing leases.
Similarly, in the event of a default of loans originated in our aircraft lending
program, the marketability of the collateral may make it more difficult to
convert this collateral to cash, especially in an adverse economic environment.
In our condominium and homeowner association lending niche, we may face
difficulties in securing repayment from our association borrowers to the extent
they are unable to collect assessments from their members, and we may suffer
losses if we are unable to enforce liens against homeowner properties.
OUR WEALTH MANAGEMENT BUSINESSES ARE VULNERABLE TO FLUCTUATIONS IN THE TRADING
VOLUME AND PRICE LEVELS OF SECURITIES; WE FACE STRONG COMPETITION FOR NEW
BROKERS WE SEEK TO HIRE.
The results of our wealth management subsidiaries depend heavily on
conditions in the financial markets and on economic conditions generally, both
domestically and abroad. Because currently a significant portion of our revenue
in these businesses is derived from commissions, margin interest revenue and
principal transactions, declines in stock prices, trading volumes or liquidity
could result in the failure of buyers and sellers of securities to fulfill their
settlement obligations, and in the failure of our brokerage clients to fulfill
their credit obligations, which could adversely affect our results.
The success of the strategy we are pursuing to grow our wealth
management business is largely dependent on our ability to identify, hire and
retain talented securities brokers with investment services experience. We face
strong competition for qualified brokers, and many potential candidates are
subject to restrictive covenants with existing employers. If we are unable to
significantly increase the size of our investment services sales force as
planned, we may have difficulty attracting new accounts and increasing assets
under management and may be unable to improve the profitability of this segment
of our business.
WE MAY BE ADVERSELY AFFECTED BY INTEREST RATE CHANGES.
Our interest income and interest expense are affected by general
economic conditions and by the policies of regulatory authorities, including the
monetary policies of the Federal Reserve. Changes in interest rates may
influence the growth rate of loans and deposits, the quality of the loan
portfolio, loan and deposit pricing, the volume of loan originations in our
mortgage banking business and the value that we can recognize on the sale of
mortgage loans in the secondary market. We expect the results of WestAmerica,
our newly acquired mortgage banking business, in selling loans into the
secondary market will be impacted during periods of rising interest rates. While
we have taken measures intended to manage the risks of operating in a changing
interest rate environment, there can be no assurance that such measures will be
effective in avoiding undue interest rate risk. If market interest rates should
move contrary to our "gap" position on interest earning assets and interest
bearing liabilities, the "gap" will work against us and our net interest income
may be negatively affected.
S-19
The success of our covered call and put option program, which we have
used in effect to hedge our interest rate risk, may also be affected by changes
in interest rates. With the relatively low interest rates that prevailed over
the last three years, we have been able to augment the total return of our
investment securities portfolio by selling put options and call options on
fixed-income securities we own. We recorded fee income of approximately $8
million during 2003, compared to approximately $6 million in 2002 from premiums
earned on these option transactions. During the first nine months of 2004, we
recorded fee income of approximately $7 million on these transactions. In a
rising interest rate environment, particularly if interest rates continue to
increase, the amount of premium income we earn on these transactions will likely
decline. Our opportunities to sell covered call options may be limited in the
future if rates continue to rise.
OUR FUTURE SUCCESS IS DEPENDENT ON OUR ABILITY TO COMPETE EFFECTIVELY IN THE
HIGHLY COMPETITIVE BANKING INDUSTRY.
The financial services business is highly competitive, and we encounter
strong direct competition for deposits, loans and other financial services in
all of our market areas. In recent years, several major bank holding companies
have entered or expanded into the Chicago metropolitan market, and are pursuing
aggressive branching initiatives in the area. Generally, these financial
institutions are significantly larger than we are and have greater access to
capital and other resources. Our ability to compete effectively in the
marketplace is also dependent on our ability to adapt successfully to
technological changes within the banking and financial services industries.
S-20
USE OF PROCEEDS
We will not initially receive any proceeds from the sale of shares of
common stock in this offering. If we elect to settle the forward sale agreement
at the initial forward sale price of $ per share (which reflects a
reduction for the underwriting discount) entirely with shares of our common
stock, we expect to receive net proceeds of approximately $ million
($ million if the over-allotment option is exercised in full). We intend
to use the net proceeds that we receive upon settlement of the agreement to fund
a portion of the purchase price for our acquisitions of Antioch and First
Northwest and for general corporate purposes. See "Underwriting--Forward Sale
Agreement."
S-21
CAPITALIZATION
The following table sets forth our total indebtedness and
capitalization at September 30, 2004, on an historical basis and as adjusted to
give effect to our receipt of the estimated net proceeds from the settlement of
the forward sale agreement with shares of our common stock at the initial
forward price as described in this prospectus supplement (assuming no exercise
of the underwriters' over-allotment option) as if such settlement had been
consummated on September 30, 2004. This data should be read in conjunction with
the consolidated financial statements and notes thereto incorporated by
reference into this prospectus from our Annual Report on Form 10-K for the
fiscal year ended December 31, 2003, and from our Quarterly Report on Form 10-Q
for the quarter ended September 30, 2004. The following table does not give
effect to our acquisition of Town Bankshares Ltd., which was consummated on
October 15, 2004, or to either of our two pending acquisitions. See "Prospectus
Supplement Summary--Recent Developments."
SEPTEMBER 30, 2004
------------------------
ACTUAL AS ADJUSTED
---------- -----------
(DOLLARS IN THOUSANDS)
INDEBTEDNESS:
Other borrowings (including securities sold under agreements to repurchase,
federal funds purchased and Federal Home Loan Bank advances)................. $308,147 $308,147
Notes payable under revolving credit line with an unaffiliated commercial bank.. 1,000 1,000
Subordinated notes.............................................................. 50,000 50,000
Long-term debt--trust preferred securities(1)................................... 142,050 142,050
-------- --------
Total indebtedness........................................................... 501,197 501,197
-------- --------
SHAREHOLDERS' EQUITY:
Preferred stock, no par value; 20,000,000 shares authorized, of which 100,000
shares are designated Junior Serial Preferred Stock A; no shares
issued and outstanding....................................................... -- --
Common stock, no par value; 30,000,000 shares authorized; 21,064,496 shares
issued and outstanding; 22,264,496 shares issued and outstanding as
adjusted(2).................................................................. 21,064 22,264
Surplus......................................................................... 287,547
Common stock warrants(3)........................................................ 993 993
Retained earnings............................................................... 125,395 125,395
Accumulated other comprehensive loss............................................ (4,846) (4,846)
-------- --------
Total shareholders' equity................................................... 430,153
-------- --------
Total capitalization......................................................... $931,350 $
======== ========
CAPITAL RATIOS:
Leverage ratio(4)............................................................... 9.0% %
Tier 1 capital ratio............................................................ 9.9
Total risk-based capital ratio.................................................. 11.6
------------------
(1) Excludes $4.4 million of our long-term indebtedness related to the
common securities of our capital trust subsidiaries; also excludes $51.5
million of additional long-term debt--trust preferred securities
(including $1.5 million relating to the common securities of the trust)
we expect to issue in December 2004.
(2) Does not include 3,136,835 shares subject to options and restricted
stock unit awards outstanding at September 30, 2004, with a weighted
average exercise price of $21.09.
(3) Represents warrants to purchase 150,695 shares of our common stock with
a weighted average exercise price of $18.15; the warrants expire between
December 31, 2004 and February 4, 2013.
(4) The leverage ratio is Tier 1 capital divided by average quarterly
assets, after deducting intangible assets and net deferred tax assets in
excess of regulatory maximum limits.
S-22
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
Our common stock is traded on the Nasdaq National Market under the
symbol "WTFC". The following table sets forth the high and low sales prices
reported on the Nasdaq National Market for our common stock for the periods
indicated and the semi-annual dividends paid by us during such periods. The
following information gives effect to a 3-for-2 stock split effective as of
March 14, 2002.
HIGH LOW DIVIDEND
------ ------ --------
2004
----
First Quarter............................ $50.44 $41.85 $0.100
Second Quarter........................... 50.80 45.18 --
Third Quarter............................ 58.42 49.82 0.100
Fourth Quarter (through December 10,
2004)................................. 63.39 54.33 --
2003
----
First Quarter............................ $33.65 $27.19 $0.080
Second Quarter........................... 32.40 27.74 --
Third Quarter............................ 38.89 29.30 0.080
Fourth Quarter........................... 46.85 37.64 --
2002
----
First Quarter............................ $22.99 $18.33 $0.060
Second Quarter........................... 34.58 22.22 --
Third Quarter............................ 36.00 26.54 0.060
Fourth Quarter........................... 32.66 25.45 --
As of December 9, 2004, there were approximately 2,048 shareholders of
record of our common stock.
COMMON STOCK DIVIDEND POLICY
In January 2000, our board of directors approved the payment of our
first semi-annual cash dividend on our common stock. We have continued to pay a
semi-annual cash dividend since that time. The final determination of timing,
amount and payment of dividends on our common stock is at the discretion of our
board of directors and will depend upon our profitability, financial condition,
capital requirements and other relevant factors, including the restrictions
described below. We target an earnings retention ratio of approximately 90% to
support our continued growth.
Because the principal source of our income at the holding company level
is dividends from our banks, our ability to pay dividends on common stock in the
future may be largely dependent on the banks' ability to pay dividends to us.
Any payment of dividends by the banks is subject to certain restrictions imposed
by federal and state banking laws and regulations.
Our ability to pay cash dividends on our common stock is also subject
to statutory restrictions and restrictions arising under the terms of our
outstanding and any future debt securities and trust preferred securities. The
terms of such securities generally restrict payment of dividends on common stock
until required payments and distributions are made on those securities and may
impose additional restrictions in the future. Under applicable corporate law, we
are permitted to pay dividends only to the extent of our shareholders' equity.
Federal regulation of bank holding companies may also impose restrictions on the
ability of a bank holding company to pay dividends.
S-23
UNDERWRITING
RBC Capital Markets Corporation is acting as representative of the
underwriters named below. In this offering, an affiliate of RBC Capital Markets
Corporation is, at our request, borrowing and selling 1,200,000 shares of our
common stock in connection with the execution of a forward sale agreement
between us and that affiliate. Subject to the terms and conditions stated in the
underwriting agreement, dated the date of this prospectus supplement, among us,
the forward purchaser and underwriters, each underwriter named below has
severally agreed to purchase from the forward purchaser, on a firm commitment
basis, the number of shares set forth opposite the underwriter's name, subject
only to the conditions contained in the underwriting agreement.
NUMBER
UNDERWRITERS OF SHARES
-------------------------------------------------------- ---------
RBC Capital Markets Corporation.........................
Piper Jaffray & Co. ....................................
Raymond James & Associates, Inc.........................
Sandler O'Neill & Partners, L.P.........................
Stifel, Nicolaus & Company, Incorporated................ ---------
Total................................................ 1,200,000
=========
The underwriting agreement provides that the underwriters' obligation
to purchase our common stock from the forward purchaser under the forward sale
agreement depends on the satisfaction of the conditions contained in the
underwriting agreement, which include:
o if any shares of common stock are purchased by the
underwriters, then all of the shares of common stock the
underwriters agreed to purchase must be purchased;
o the representations and warranties made by us to the
underwriters are true;
o there is no material change in the financial markets; and
o we deliver customary closing documents to the underwriters.
The underwriters have advised us that they propose to offer the shares
of common stock to the public at the public offering price set forth on the
cover page of this prospectus supplement and to selected dealers at such price
less a concession not in excess of $ per share. The underwriters may
allow and such dealers may reallow a discount not in excess of $ per
share to certain other brokers and dealers. After the offering, the public
offering price, concession, discount and other selling terms may be changed by
the underwriters.
The underwriters are offering the shares, subject to prior sale, when,
as and if issued to and accepted by them, subject to approval of legal matters
by their counsel, including the validity of the shares, and other conditions
contained in the underwriting agreement. The underwriters have reserved the
right to withdraw, cancel or modify offers to the public and to reject orders in
whole or in part.
OVER-ALLOTMENT OPTION
The forward purchaser has granted to the underwriters an option to
purchase up to an aggregate of 180,000 additional shares of common stock,
exercisable solely to cover over-allotments at the public offering price less
the underwriting discount shown on the cover page of this prospectus supplement.
The underwriters may exercise this option at any time, and from time to time,
until 30 days after the date of this prospectus supplement. If the underwriters
exercise this option, each will be obligated, subject to
S-24
conditions contained in the underwriting agreement, to purchase a number of
additional shares proportionate to that underwriter's initial amount reflected
in the above table.
FORWARD SALE AGREEMENT
We have entered into a forward sale agreement on the date of this
prospectus supplement with an affiliate of RBC Capital Markets Corporation, as
forward purchaser, relating to 1,200,000 shares of our common stock. In
connection with the execution of the forward sale agreement and at our request,
such affiliate of RBC Capital Markets Corporation is borrowing and selling in
this offering 1,200,000 shares of our common stock. The number of shares subject
to the forward sale agreement is subject to increase by up to 180,000 shares if
the over-allotment option described above is executed in whole or in part. If,
in its sole judgment, the forward purchaser under the forward sale agreement is
unable to borrow, at a cost not greater than a specified amount per share, and
deliver for sale on the anticipated closing date of the offering all of the
shares of our common stock to which the forward sale agreement relates, then the
number of shares of our common stock to which that forward sale agreement
relates will be reduced to the number that the forward purchaser can so borrow
and deliver at such a cost. If, in its judgment, the forward purchaser under the
forward sale agreement is unable to borrow, at a cost not greater than a
specified amount per share, and deliver for sale on the anticipated closing date
of the offering any shares of our common stock, then the forward sale agreement
will be terminated in its entirety. In the event that the number of shares
relating to the forward sale agreement is so reduced, or the forward sale
agreement is so terminated, we will issue directly to the underwriters under the
underwriting agreement a number of shares of our common stock equal to the
number of shares not borrowed and delivered by the forward purchaser, so that
the total number of shares offered in this offering is not reduced. In such
event, the representative of the underwriters will have the right to postpone
the closing date for one day to effect any necessary changes to any documents or
arrangements in connection with such closing.
Prior to settlement under the forward sale agreement, the forward
purchaser or another affiliate of RBC Capital Markets Corporation will hold the
aggregate net proceeds from the sale of the borrowed shares of our common stock
sold in this offering. We will receive the net proceeds from the sale of the
borrowed shares of our common stock sold in this offering from the forward
purchaser upon settlement of the forward sale agreement if we elect to settle
the forward sale agreement with shares of our common stock.
The forward sale agreement matures on December , 2005. The forward
sale agreement may be settled in whole or in part at earlier settlement dates to
be specified at our discretion. On a settlement date under the forward sale
agreement, we will issue shares of our common stock to the forward purchaser at
the then-applicable forward sale price. The forward sale price under the forward
sale agreement will initially be $ per share, which is the public
offering price of our shares of common stock less the underwriting discount. The
forward sale agreement provides that the initial forward sale price per share
will be subject to daily adjustment based on a floating interest factor equal to
the federal funds rate, less a spread. In addition, on each of February 1, 2005
and August 1, 2005, to the extent not settled in full prior to these dates, the
forward sale price will be decreased by $0.12 per share. The forward sale price
will also be subject to decrease if the cost to the forward purchaser of
borrowing our common stock exceeds a specified amount. If the federal funds rate
is less than the spread on any day, the interest factor will result in a daily
reduction of the forward sale price.
The forward purchaser under the forward sale agreement will have the
right to accelerate the forward sale agreement, and in the cases of (1), (2) and
(3) below, require us to physically settle, on a date specified by such forward
purchaser if (1) in its judgment, it is unable to continue to borrow a number of
shares of our common stock equal to the number of shares to be delivered by us
under the forward sale agreement or the cost of borrowing the common stock has
increased above a specified amount, (2) the
S-25
closing price of our common stock is equal to or less than $30.00 per share on
any trading day, (3) we declare any dividend or distribution on shares of our
common stock payable in (i) cash in excess of a specified amount, (ii)
securities of another company or (iii) any other type of securities (other than
our common stock), rights, warrants or other assets for payment at less than the
prevailing market price in such forward purchaser's judgment, (4) our board of
directors votes to approve a merger or takeover of us or other similar
transaction that would require our shareholders to exchange their shares of
common stock for cash, securities or other property, or (5) certain other events
of default or termination events occur, including, among other things, any
material misrepresentation made in connection with entering into the forward
sale agreement or delisting of our common stock from the Nasdaq National Market.
The forward purchaser's decision to exercise its right to require us to settle
the forward sale agreement will be made irrespective of our need for capital. In
the event that we elect or are required to settle the forward sale agreement
with shares of our common stock, delivery of such shares would result in
dilution to our earnings per share and return on equity. In the event that we
receive proceeds from the settlement of the forward sale agreement under these
circumstances and our pending acquisitions of either Antioch or First Northwest
do not close, we would consider our options with respect to the application of
such proceeds at such time, taking into account the amounts received and our
prevailing capital requirements and investment alternatives.
We have the right to elect cash or net share settlement under the
forward sale agreement. Although we expect to settle the forward sale agreement
entirely by the delivery of shares of our common stock, we may elect cash or net
share settlement for all or a portion of our obligations if we conclude that it
is in our interest to cash or net share settle. For example, we may conclude
that it is in our interest to cash or net share settle if we have no current use
for all or a portion of the net proceeds. In the event that we elect to cash or
net share settle, the settlement amount will be equal to the then applicable
forward sale price minus the average price of the shares purchased by the
forward purchaser in order to close out its trading activities related to the
forward sale agreement times the number of shares being settled. If this
settlement amount is a negative number, we would, if we cash settle, pay the
purchaser that amount in cash, or if we net share settle, deliver a number of
shares of our common stock having a market value equal to that amount. If the
settlement amount is a positive number, the forward purchaser would pay us, if
we cash settle, that amount in cash, or if we net share settle, in shares of our
common stock. We would expect the forward purchaser or one of its affiliates to
purchase shares of our common stock in secondary market transactions for
delivery to stock lenders in order to close out its short position.
UNDERWRITING DISCOUNT
The following table shows the underwriting discount to be paid to the
underwriters in connection with this offering. The initial forward sale price to
be paid to us under the forward sale agreement reflects a reduction for this
underwriting discount. This information assumes (a) either no exercise or full
exercise by the underwriters of their over-allotment option and (b) that the
forward sale agreement is settled based upon the aggregate initial forward sale
price of $ , without reference to the adjustments described above. Based
on these assumptions, we would receive proceeds of $ million (or $
million if the over-allotment option is executed in full), net of the
underwriting discount and offering expenses, subject to certain adjustments as
described above, upon settlement of the forward sale agreement. We estimate that
our portion of the total expenses of this offering, net of the underwriting
discount, will be $ .
TOTAL
---------------------------------------------------
FULL
PER SHARE NO EXERCISE EXERCISE
--------------- ---------------- ------------
Public Offering Price...................... $ $ $
Underwriting Discount...................... $ $ $
S-26
LOCK-UP AGREEMENTS
We and our executive officers and directors have agreed under lock-up
agreements, subject to certain exceptions, not to, directly or indirectly,
offer, sell or otherwise dispose of any shares of common stock or any securities
that may be converted into or exchanged for any shares of common stock without
the prior written consent of RBC Capital Markets Corporation on behalf of the
underwriters for a period of 90 days from the date of this prospectus
supplement. RBC Capital Markets Corporation may consent to release some of our
executive officers and directors from these restrictions at any time, without
notice.
In addition, we have agreed that, except under (1) a publicly announced
stock repurchase program, (2) our stock option plan, (3) our employee stock
purchase plan or (4) our directors deferred fee and stock plan, we will not for
a period of 180 days after the date of this prospectus supplement, without the
prior written consent of RBC Capital Markets Corporation on behalf of the
underwriters, purchase, redeem or call for redemption, or prepay or give notice
of prepayment (or announce any redemption or call for redemption, or any
prepayment or notice of prepayment) of, any of our securities.
INDEMNITY
We have agreed to indemnify the forward purchaser and underwriters
against liabilities relating to the offering, including liabilities under the
Securities Act of 1933 and liabilities arising from breaches of the
representations and warranties contained in the underwriting agreement, and to
contribute to payments that the forward purchaser or underwriters may be
required to make for these liabilities.
STABILIZATION
In connection with the offering, RBC Capital Markets Corporation, on
behalf of the underwriters, may purchase and sell shares of our common stock in
the open market. These transactions may include short sales, covering
transactions and stabilizing transactions. Short sales involve sales of our
common stock in excess of the number of shares to be purchased by the
underwriters in the offering, which creates a short position. "Covered" short
sales are sales of shares made in an amount up to the number of shares
represented by the underwriters' over-allotment option. In determining the
source of shares to close out the covered syndicate short position, the
underwriters will consider, among other things, the price of shares available
for purchase in the open market compared to the price at which they may purchase
shares through the over-allotment option. Transactions to close out the covered
short position involve either purchases of the common stock in the open market
after the distribution has been completed or the exercise of the over-allotment
option. The underwriters may also make "naked" short sales of shares in excess
of the over-allotment option. The underwriters must close out any naked short
position by purchasing shares of common stock in the open market. A naked short
position is more likely to be created if the underwriters are concerned that
there may be downward pressure on the price of the shares in the open market
after pricing that could adversely affect investors who purchase in the
offering. Stabilizing transactions consist of bids for or purchases of shares in
the open market, while the offering is in progress.
The underwriters also may impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from other broker-dealers
participating in the offering when the representatives repurchase shares
originally sold by the broker-dealer in order to cover short positions or make
stabilizing purchases.
Any of these activities may have the effect of preventing or retarding
a decline in the market price of the common stock. They may also cause the price
of the common stock to be higher than the price that would otherwise exist in
the open market in the absence of these transactions. The underwriters may
S-27
conduct these transactions on the Nasdaq National Market or in the
over-the-counter market, or otherwise. If the underwriters commence any of these
transactions, the underwriters may discontinue them at any time.
In addition, in connection with this offering, some underwriters may
engage in passive market making transactions in the common stock on the Nasdaq
National Market, prior to the pricing and completion of the offering. Passive
market making consists of displaying bids on the Nasdaq National Market no
higher than the bid prices of independent market makers and making purchases at
prices no higher than those independent bids and effected in response to order
flow. Net purchases by a passive market maker on each day are limited to a
specified percentage of the passive market maker's average daily trading volume
in the common stock during a specified period and must be discontinued when that
limit is reached. Passive market making may cause the price of the common stock
to be higher than the price that otherwise would exist in the open market in the
absence of those transactions. If the underwriters commence passive market
making transactions, the underwriters may discontinue them at any time.
NASDAQ NATIONAL MARKET LISTING
Our common stock is quoted on the Nasdaq National Market under the
symbol "WTFC".
OFFERS IN THE UNITED KINGDOM
Each underwriter has agreed that:
o it has not offered or sold and, prior to the expiry of the six
months from the completion of the offering, will not offer or
sell our common stock to persons in the United Kingdom except
to persons whose ordinary activities involve them acquiring,
holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses, or otherwise in
circumstances which have not resulted and will not result in
an offer to the public in the United Kingdom within the
meaning of the Public Offers of Securities Regulations 1995;
o it has complied or will comply with all applicable provisions
of the Financial Services and Markets Act 2000, or the FSMA,
with respect to anything done by it in relation to our common
stock in, from or otherwise involving the United Kingdom; and
o it has communicated or caused to be communicated and will only
communicate or cause to be communicated any invitation or
inducement to engage in investment activity (within the
meaning of section 21 of the FSMA) received by it in
connection with the issue or sale of our common stock in
circumstances in which section 21(l) of the FSMA does not
apply to us or in accordance with one of the applicable
exemptions to Section 21 of the FSMA.
NO PUBLIC OFFERING OUTSIDE THE UNITED STATES
No action has been or will be taken in any jurisdiction (except in the
United States) that would permit a public offering of our common stock, or the
possession, circulation or distribution of this prospectus supplement or the
accompanying prospectus or any other material relating to us or our common stock
in any jurisdiction where action for that purpose is required. Accordingly, our
common stock may not be offered or sold, directly or indirectly, and this
prospectus supplement, the accompanying prospectus and any other offering
material or advertisements in connection with our common stock may not be
distributed or published, in or from any country or jurisdiction except in
compliance with any applicable rules and regulations of any such country or
jurisdiction.
S-28
Purchasers of our common stock offered by this prospectus supplement
and the accompanying prospectus may be required to pay stamp taxes and other
charges in accordance with the laws and practices of the country of purchase in
addition to the offering price on the cover page of this prospectus supplement.
ELECTRONIC PROSPECTUS DELIVERY
A prospectus in electronic format may be made available on the websites
maintained by one or more of the underwriters. In connection with this offering,
certain of the underwriters or securities dealers may distribute prospectuses
electronically. The representative may agree to allocate a number of shares of
our common stock to underwriters for sale to their online brokerage account
holders. The representative will allocate shares of our common stock to
underwriters that may make Internet distributions on the same basis as other
allocations. Other than the prospectus in electronic format, the information on
any of these websites and any other information contained on a website
maintained by an underwriter or syndicate member is not part of this prospectus.
OTHER RELATIONSHIPS
Certain representatives of the underwriters or their affiliates have
performed and may in the future perform investment banking and other financial
services for us and our affiliates for which they may receive advisory or
transaction fees, as applicable, plus out-of-pocket expenses, of the nature and
in amounts customary in the industry for these financial services. As discussed
above, an affiliate of RBC Capital Markets Corporation has entered into the
forward sale agreement described above under "--Forward Sale Agreement."
DISCRETIONARY SHARES
The underwriters have informed us that they do not intend to confirm
sales to any discretionary account without the prior written approval of the
customer in compliance with NASD Rule 2720(l).
LEGAL MATTERS
Certain legal matters relating to the common stock offered by this
prospectus supplement and accompanying prospectus have been passed upon for us
by Vedder, Price, Kaufman & Kammholz, P.C., Chicago, Illinois. Certain legal
matters have been passed upon for the underwriters by Jones Day, Chicago,
Illinois.
EXPERTS
The consolidated financial statements and schedule of Wintrust
Financial Corporation at December 31, 2003 and 2002, and for each of the three
years in the period ended December 31, 2003, appearing in Wintrust Financial
Corporation's Annual Report on Form 10-K for the year ended December 31, 2003,
have been audited by Ernst & Young LLP, an independent registered public
accounting firm, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements and
schedule are incorporated herein by reference in reliance upon such reports
given on the authority of such firm as experts in accounting and auditing.
DOCUMENTS INCORPORATED BY REFERENCE
We incorporate by reference into this prospectus supplement and
accompanying prospectus the information we file with the SEC, which means we can
disclose important information to you by referring
S-29
you to those documents. The information incorporated by reference is an
important part of this prospectus supplement and accompanying prospectus.
Some of the information contained in this prospectus supplement and the
accompanying prospectus updates and supercedes the information incorporated by
reference, and some information that we file subsequently with the SEC will
automatically update this prospectus supplement and the accompanying prospectus.
In addition to the documents identified in the accompanying prospectus under
"Documents Incorporated By Reference," we incorporate by reference the documents
listed below:
o our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2004, filed with the SEC on November 9, 2004
(File No. 0-21923);
o our Current Reports on Form 8-K filed with the SEC on October
15, 2004 (File No. 0-21923); and
o our Current Report on Form 8-K filed with the SEC on November
17, 2004 (File No. 0-21923).
We also incorporate by reference any filings we make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after
the date of this prospectus supplement and before the time that all of the
shares offered by this prospectus supplement are sold. You can also find more
information about us from the sources described under "Where You Can Find More
Information" and "Documents Incorporated By Reference" in the accompanying
prospectus.
S-30
1,200,000 SHARES
WINTRUST FINANCIAL CORPORATION
COMMON STOCK
_______________________
PRICE $ PER SHARE
_______________________
RBC CAPITAL MARKETS
PIPER JAFFRAY
RAYMOND JAMES
SANDLER O'NEILL & PARTNERS, L.P.
STIFEL, NICOLAUS & COMPANY
INCORPORATED
__________________
, 2004
__________________
S-31
PROSPECTUS
WINTRUST FINANCIAL CORPORATION [LOGO]
DEBT SECURITIES
UNITS
WARRANTS
PURCHASE CONTRACTS
PREFERRED STOCK
COMMON STOCK
WINTRUST CAPITAL TRUST VI
TRUST PREFERRED SECURITIES
(FULLY AND UNCONDITIONALLY GUARANTEED ON A SUBORDINATED BASIS,
AS DESCRIBED HEREIN, BY
WINTRUST FINANCIAL CORPORATION)
__________________
Wintrust Financial Corporation may offer from time to time debt
securities, units, warrants, preferred stock and common stock, and Wintrust
Capital Trust VI may offer from time to time trust preferred securities, or any
combination of such securities. This prospectus describes the general terms of
these securities and the general manner in which we will offer the securities.
The specific terms of any securities we offer will be included in a supplement
to this prospectus. The prospectus supplement will also describe the specific
manner in which we will offer the securities.
You should read this prospectus and any prospectus supplement carefully
before you purchase any of our securities.
Our common stock is traded on the Nasdaq National Market under the
symbol "WTFC".
__________________
INVESTING IN OUR SECURITIES INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 4.
__________________
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORS HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THESE SECURITIES ARE NOT DEPOSITS OR SAVINGS ACCOUNTS BUT ARE UNSECURED
OBLIGATIONS OF WINTRUST FINANCIAL CORPORATION. THESE SECURITIES ARE NOT ISSUED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
__________________
October 6, 2004
TABLE OF CONTENTS
PAGE
Important Notice to Readers.....................................................................................ii
Special Note Regarding Forward-Looking Statements...............................................................ii
Prospectus Summary...............................................................................................1
Risk Factors.....................................................................................................4
Use of Proceeds..................................................................................................9
Ratio of Earnings to Fixed Charges...............................................................................9
Description of Debt Securities...................................................................................9
Description of Purchase Contracts...............................................................................17
Description of Units............................................................................................18
Description of Warrants.........................................................................................18
Description of Capital Stock....................................................................................20
Global Securities...............................................................................................29
Description of the Trust........................................................................................30
Description of the Trust Preferred Securities...................................................................32
Description of the Junior Subordinated Debentures...............................................................44
Description of the Guarantee....................................................................................50
Relationship Among the Trust Preferred Securities, the Debentures and the Guarantee.............................53
Book-Entry Issuance.............................................................................................54
Plan of Distribution............................................................................................56
Legal Matters...................................................................................................59
Experts .......................................................................................................59
Where You Can Find More Information.............................................................................59
Documents Incorporated by Reference.............................................................................59
i
IMPORTANT NOTICE TO READERS
This prospectus is part of a registration statement we filed with the
Securities and Exchange Commission, or SEC, using a "shelf" registration
process. Under the shelf registration process, using this prospectus, together
with a prospectus supplement, we may sell, from time to time, in one or more
offerings, any combination of the securities described in this prospectus in a
dollar amount that does not exceed $200,000,000, in the aggregate. This
prospectus provides you with a general description of the securities we may
offer. Each time we offer securities, we will provide a prospectus supplement
that will contain specific information about the terms of that offering. The
prospectus supplement may also add, update or change information contained in
this prospectus. You should read this prospectus, the applicable prospectus
supplement and the information incorporated by reference in this prospectus
before making an investment in our securities. See "Where You Can Find More
Information" for more information.
You should rely only on the information contained in or incorporated by
reference in this prospectus or supplement to this prospectus. We have not
authorized anyone to provide you with different information. This document may
be used only in jurisdictions where offers and sales of these securities is
permitted. You should not assume that information contained in this prospectus,
in any supplement to this prospectus, or in any document incorporated by
reference is accurate as of any date other than the date on the front page of
the document that contains the information, regardless of when this prospectus
is delivered or when any sale of our securities occurs.
________________
In this prospectus, we use the terms "we," "us" and "our" to refer to
Wintrust Financial Corporation and the trust. We use the term "Wintrust" to
refer to Wintrust Financial Corporation and, unless the context indicates
otherwise, we use the term "trust" to refer to Wintrust Capital Trust VI.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
We make certain forward-looking statements in this prospectus and in
the documents incorporated by reference into this prospectus that are based upon
our current expectations and projections about current events. We intend these
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995, and we are including this statement for purposes of these safe
harbor provisions. You can identify these statements from our use of the words
"may," "will," "should," "could," "would," "plan," "potential," "estimate,"
"project," "believe," "intend," "anticipate," "expect," "target" and similar
expressions. These forward-looking statements may include, among
other things, statements relating to our projected growth, anticipated
improvements in financial performance, and management's long-term performance
goals, as well as statements relating to the anticipated effects on results of
operations and financial condition from expected developments or events, our
business and growth strategies, including anticipated internal growth, plans to
form additional de novo banks and to open new branch offices, and to pursue
additional potential development or acquisition of banks, wealth management
entities, specialty finance businesses or fee-related business.
These forward-looking statements are subject to significant risks,
assumptions and uncertainties, including among other things, changes in general
economic and business conditions and the risks and other factors set forth in
the "Risk Factors" section beginning on page 4 and in a supplemental prospectus.
Because of these and other uncertainties, our actual future results,
performance or achievements, or industry results, may be materially different
from the results indicated by these forward-looking
ii
statements. In addition, our past results of operations do not necessarily
indicate our future results. You should not place undue reliance on any
forward-looking statement, which speak only as of the date they were made. We do
not intend to update these forward-looking statements, even though our situation
may change in the future, unless we are obligated to do so under the federal
securities laws. We qualify all of our forward-looking statements by these
cautionary statements.
iii
PROSPECTUS SUMMARY
This summary highlights selected information about our company and a
general description of the securities we may offer. This summary is not complete
and does not contain all of the information that may be important to you. For a
more complete understanding of us and the terms of the securities we will offer,
you should read carefully this entire prospectus, including the "Risk Factors"
section, the applicable prospectus supplement for the securities and the other
documents we refer to and incorporate by reference. In particular, we
incorporate important business and financial information into this prospectus by
reference.
ABOUT WINTRUST FINANCIAL CORPORATION
We are a financial holding company headquartered in Lake Forest,
Illinois, with total assets of approximately $5.33 billion at June 30, 2004. We
currently operate ten community banks, all located in the Chicago metropolitan
area. These banks provide community-oriented, personal and commercial banking
services primarily to individuals and small to mid-size businesses through 42
banking facilities as of June 30, 2004. Each of our banks provides a full
complement of commercial and consumer loan and deposit products and services. We
provide wealth management services through our trust company, investment adviser
and broker-dealer subsidiaries to customers primarily located in the Midwest, as
well as to customers of our banks. In addition, we are involved in specialty
lending through operating subsidiaries or divisions of certain of our banks. Our
specialty lending niches include commercial insurance premium finance; accounts
receivable financing and administrative services to the temporary staffing
industry; and indirect auto lending in which we purchase loans through
Chicago-area automobile dealerships. Our common stock trades on the Nasdaq
National Market under the symbol "WTFC".
Our principal executive offices are located at 727 North Bank Lane,
Lake Forest, Illinois 60045-1951, and our telephone number is (847) 615-4096.
Our website address is www.wintrust.com. Information in our website is not a
prospectus and does not constitute a part of this prospectus.
THE SECURITIES WE MAY OFFER
We may use this prospectus to offer up to $200,000,000 aggregate amount
of securities in one or more offerings. A prospectus supplement, which we will
provide each time we offer securities, will describe the amounts, prices and
detailed terms of the securities and may describe risks associated with an
investment in the securities in addition to those described in "Risk Factors".
We will also include in the prospectus supplement, where applicable, information
about material United States federal income tax considerations relating to the
securities. Terms used in this prospectus will have the meanings described in
this prospectus unless otherwise specified.
We may sell the securities to or through underwriters, dealers or
agents or directly to purchasers. We, as well as any agents acting on our
behalf, reserve the sole right to accept and to reject in whole or in part any
proposed purchase of our securities. Each prospectus supplement will set forth
the names of any underwriters, dealers or agents involved in the sale of our
securities described in that prospectus supplement and any applicable fee,
commission or discount arrangements with them.
DEBT SECURITIES
Our debt securities may be senior or subordinated in priority of
payment. We will provide a prospectus supplement that describes the ranking,
whether senior or subordinated, the specific designation, the aggregate
principal amount, the purchase price, the maturity, the redemption terms, the
interest rate or manner of calculating the interest rate, the time of payment of
interest, if any, the terms for
any conversion or exchange, including the terms relating to the adjustment of
any conversion or exchange mechanism, the listing, if any, on a securities
exchange and any other specific terms of the debt securities.
The debt securities will be issued under an indenture between us and
BNY Midwest Trust Company, as trustee. We have summarized the general features
of the indenture under the heading "Description of Debt Securities." We
encourage you to read the indenture, a form which is an exhibit to our
registration statement.
PURCHASE CONTRACTS
We may issue purchase contracts, including purchase contracts issued as
part of a unit with one or more other securities, for the purchase or sale of
our debt securities, preferred stock, depositary shares or common stock. The
price of our debt securities or price per share of common stock, preferred stock
or depositary shares, as applicable, may be fixed at the time the purchase
contracts are issued or may be determined by reference to a specific formula
contained in the purchase contracts. We may issue purchase contracts in such
amounts and in as many distinct series as we wish.
UNITS
We may sell any combination of one or more of the other securities
described in this prospectus, together as units. In a prospectus supplement, we
will describe the particular combination of securities constituting any units
and any other specific terms of the units.
WARRANTS
We may sell warrants to purchase our debt securities, shares of
preferred stock or shares of our common stock. In a prospectus supplement, we
will inform you of the exercise price and other specific terms of the warrants,
including whether our or your obligations, if any, under any warrants may be
satisfied by delivering or purchasing the underlying securities or their cash
value.
PREFERRED STOCK
We may sell our preferred stock, no par value per share, in one or more
series. In a prospectus supplement, we will describe the specific designation,
the aggregate number of shares offered, the dividend rate or manner of
calculating the dividend rate, the dividend periods or manner of calculating the
dividend periods, the stated value of the shares of the series, the voting
rights of the shares of the series, whether or not and on what terms the shares
of the series will be convertible or exchangeable, whether and on what terms we
can redeem the shares of the series, whether we will offer depositary shares
representing shares of the series and if so, the fraction or multiple of a share
of preferred stock represented by each depositary share, whether we will list
the preferred stock or depositary shares on a securities exchange and any other
specific terms of the series of preferred stock.
COMMON STOCK
We may sell our common stock, no par value per share, and the
associated preferred stock purchase rights. In a prospectus supplement, we will
describe the aggregate number of shares offered and the offering price or prices
of the shares.
ABOUT WINTRUST CAPITAL TRUST VI
The trust is a newly formed financing subsidiary of Wintrust. Upon
issuance of trust preferred securities, the purchasers will own all of the
issued and outstanding trust preferred securities of the trust.
2
In exchange for our capital contribution to the trust, we will own all of the
common securities of the trust. The trust exists exclusively for the following
purposes:
o issuing the trust preferred securities to the public for cash;
o issuing the common securities to us;
o investing the proceeds from the sale of its preferred and
common securities in an equivalent amount of junior
subordinated debentures to be issued by us; and
o engaging in activities that are incidental to those listed
above, such as receiving payments on the debentures and making
distributions to security holders, furnishing notices and
other administrative tasks.
A detailed description of the general terms of the trust preferred
securities is set forth in "Description of the Trust Preferred Securities" and
the applicable prospectus supplement will set forth the specific terms of any
trust preferred securities.
3
RISK FACTORS
You should carefully consider the risks described below, as well as the
other information included or incorporated by reference in this prospectus,
before you decide to buy our securities. Additional risks, including those that
relate to any particular offering, will be included in the applicable prospectus
supplement. Our business, financial condition or results of operations could be
materially adversely affected by any of these risks. In addition, please read
"Special Note About Forward-Looking Statements" in this prospectus, where we
describe additional uncertainties associated with our business and the
forward-looking statements included or incorporated by reference in this
prospectus.
DE NOVO OPERATIONS AND BRANCH OPENINGS IMPACT OUR PROFITABILITY.
Our financial results have been and will continue to be impacted by our
strategy of de novo bank formations and branch openings. We have employed this
strategy to build an infrastructure that management believes can support
additional internal growth in our banks' respective markets. We opened our
eighth de novo bank in April 2004, and expect to undertake additional de novo
bank formations or branch openings as we expand into additional communities in
and around Chicago and Southeast Wisconsin. Based on our experience, management
believes that it generally takes from 13 to 24 months for new banks to first
achieve operational profitability, depending on the number of branch facilities
opened, the impact of organizational and overhead expenses, the start-up phase
of generating deposits and the time lag typically involved in redeploying
deposits into attractively priced loans and other higher yielding earning
assets. However, it may take longer than expected or than the amount of time we
have historically experienced for new banks and/or branch facilities to reach
profitability, and there can be no guarantee that these new banks or branches
will ever be profitable. To the extent we undertake additional de novo bank,
branch and business formations, our level of reported net income, return on
average equity and return on average assets will be impacted by start-up costs
associated with such operations, and we are likely to continue to experience the
effects of higher expenses relative to operating income from the new operations.
These expenses may be higher than we expected or than our experience has shown.
WE COULD ENCOUNTER DIFFICULTIES OR UNEXPECTED DEVELOPMENTS RELATED TO
OUR RECENT AND ANY FUTURE ACQUISITIONS.
We recently completed our acquisitions of WestAmerica and Guardian and
Northview Financial, and are currently in the process of integrating those
businesses into our organization. While we expect this process will go smoothly,
to the extent we experience any significant difficulties or challenges with this
integration, our business may be adversely impacted.
Our pending acquisition of Town Bankshares is currently expected to
close by the end of 2004. The acquisition has received both Federal and state
regulatory approvals and we expect to receive approval by the Town Bankshares
shareholders at a special meeting to be held on October 12, 2004. There can be
no assurances that Wintrust will receive such approval. We may not be successful
in completing the acquisition as planned if, for example, all of the closing
conditions are not met. If we do complete the acquisition, we may be adversely
impacted if we have difficulty integrating the bank into our organization or if
the composition or quality of the bank's assets or liabilities that we acquire
differ significantly from our expectations. In addition, our net income and
earnings per share could be adversely impacted if we incur greater than
anticipated costs associated with operating this bank, if we have difficulty
retaining key personnel at the banks, or if we are unable to grow the businesses
of the bank as contemplated.
We plan to continue to pursue potential acquisitions of other
community-oriented banks as well as additional specialty lending and related
financial services businesses which could also present
4
challenges relating to the integration of the operations of acquired businesses
into our organization. To the extent acquisitions divert a significant amount of
management time and attention, our business could be disrupted.
WE DEPEND ON OUR ABILITY TO ATTRACT AND RETAIN KEY PERSONNEL; WE RELY
HEAVILY ON OUR MANAGEMENT TEAM, AND THE UNEXPECTED LOSS OF KEY MANAGERS MAY
ADVERSELY AFFECT OUR OPERATIONS.
Our success to date has been influenced strongly by our ability to
attract and to retain senior management experienced in banking and financial
services. Retention of senior managers and appropriate succession planning will
continue to be critical to the successful implementation of our strategies. We
have entered into more than 70 employment contracts with our executive officers
and certain senior officers who we consider to be key employees. It is also
important as we grow to be able to attract and retain additional qualified
senior and middle management. We maintain a limited number of key-man life
insurance policies and maintain bank-owned life insurance policies on most of
our executive and senior officers to offset liabilities under employment
contracts. The unexpected loss of services of any key management personnel, or
the inability to recruit and retain qualified personnel in the future, could
have an adverse effect on our business and financial results.
OUR ALLOWANCE FOR LOAN LOSSES MAY PROVE TO BE INSUFFICIENT TO ABSORB
LOSSES THAT MAY OCCUR IN OUR LOAN PORTFOLIO.
Our allowance for loan losses is established in consultation with
management of our operating subsidiaries and is maintained at a level considered
adequate by management to absorb loan and lease losses that are inherent in the
portfolios. At June 30, 2004, our allowance for loan losses was 191.34% of total
non-performing loans and 0.76% of total loans. The amount of future losses is
susceptible to changes in economic, operating and other conditions, including
changes in interest rates, that may be beyond our control, and such losses may
exceed current estimates. Rapidly growing and de novo bank loan portfolios are,
by their nature, unseasoned. As a result, estimating loan loss allowances for
our newer banks is more difficult, and therefore the banks may be more
susceptible to changes in loss estimates, and to losses exceeding estimates,
than banks with more seasoned loan portfolios. Although management believes that
the allowance for loan losses is adequate to absorb losses that may develop in
our existing portfolios of loans and leases, there can be no assurance that the
allowance will prove sufficient to cover actual loan or lease losses in the
future.
OUR PREMIUM FINANCE BUSINESS INVOLVES UNIQUE OPERATIONAL RISKS AND
COULD EXPOSE US TO SIGNIFICANT LOSSES.
Of our total loans at June 30, 2004, 21%, or $790.9 million, were
comprised of commercial insurance premium finance receivables that we generated
through First Insurance. These loans, intended to enhance the average yield of
earning assets of our banks, involve a different, and possibly higher, level of
risk of delinquency or collection than generally associated with loan portfolios
of more traditional community banks. First Insurance also faces unique
operational and internal control challenges due to the relatively rapid turnover
of the premium finance loan portfolio and high volume of new loan originations.
The average term to maturity of these loans is less than 12 months, and the
average loan size when originated is approximately $30,000.
Because we conduct lending in this segment primarily through
relationships with a large number of unaffiliated insurance agents and because
the borrowers are located nationwide, risk management and general supervisory
oversight may be more difficult than in our banks. We may also be more
susceptible to third party fraud. Acts of fraud are difficult to detect and
deter, and we cannot assure investors that our risk management procedures and
controls will prevent losses from fraudulent activity. For example, in the third
quarter of 2000, we recorded a non-recurring after-tax charge of $2.6 million in
connection with
5
a series of fraudulent loan transactions perpetrated against First Insurance by
one independent insurance agency located in Florida. Although we have since
enhanced our internal control system at First Insurance, we may continue to be
exposed to the risk of significant loss in our premium finance business.
Due to continued growth in origination volume of premium finance
receivables, since the second quarter of 1999, we have been selling some of the
loans First Insurance originates to an unrelated third party. We have recognized
gains on the sales of the receivables, and the proceeds of sales have provided
us with additional liquidity. Consistent with our strategy to be asset driven,
we expect to pursue similar sales of premium finance receivables in the future;
however, we cannot assure you that there will continue to be a market for sale
of these loans and the extent of our future sales of these loans will depend on
the level of new volume growth in relation to our capacity to retain the loans
within our subsidiary banks' loan portfolios. Because we have a recourse
obligation to the purchaser of premium finance loans that we sell, we could
incur losses in connection with the loans sold if collections on the underlying
loans prove to be insufficient to repay to the purchaser the principal amount of
the loans sold plus interest at the negotiated buy-rate and if the collection
shortfall on the loans sold exceeds our estimate of losses at the time of sale.
OUR STRATEGY OF PURSUING SPECIALTY LENDING NICHES MAY EXPOSE US TO
CREDIT RISKS THAT ARE UNIQUE FOR A COMMUNITY BANKING ORGANIZATION OF OUR SIZE.
At June 30, 2004, 32% of our total loan portfolio consisted of loans we
make in what we consider to be specialty lending niches. In addition to our
premium finance loans, we engage in indirect auto lending, accounts receivable
financing, mortgage broker warehouse lending, loans to condominium, homeowner
and community associations, and to a much lesser extent, medical and municipal
equipment leasing and small aircraft lending.
Our portfolio of automobile loans are originated indirectly through
unaffiliated automobile dealers located throughout the Chicago metropolitan
area. At June 30, 2004, our indirect auto loans were $179.8 million and
comprised approximately 5% of our loan portfolio. Because we are lending through
third-party originators, our indirect auto portfolio may be relatively riskier
than direct consumer lending. Because the indirect auto loan industry is highly
competitive, the cost of collection and repossession of the underlying
collateral may significantly reduce the profitability of this portfolio,
particularly in a recessionary environment.
Through Tricom, we finance payrolls of companies engaged in the
temporary staffing business. At June 30, 2004, these finance receivables totaled
$28.4 million and represented approximately 1% of our loan portfolio. The
principal source of repayments on the loans we make in this niche are payments
to our borrowers from their customers who are located throughout the United
States. While we employ lockboxes and other cash management techniques to
protect our interests, to the extent third parties fail to pay or fraudulently
engage in the conversion of funds through misuse or nonuse of the lockbox or the
creation of ghost payrolls, we may suffer losses.
Our lease financing niche may involve a higher degree of credit risk
than mortgage or consumer lending due primarily to the potential for relatively
rapid depreciation of medical equipment and other assets securing leases.
Similarly, in the event of a default of loans originated in our aircraft lending
program, the marketability of the collateral may make it more difficult to
convert this collateral to cash, especially in an adverse economic environment.
In our condominium and homeowner association lending niche, we may face
difficulties in securing repayment from our association borrowers to the extent
they are unable to collect assessments from their members, and we may suffer
losses if we are unable to enforce liens against homeowner properties.
6
OUR WEALTH MANAGEMENT BUSINESSES ARE VULNERABLE TO FLUCTUATIONS IN THE
TRADING VOLUME AND PRICE LEVELS OF SECURITIES; WE FACE STRONG COMPETITION FOR
NEW BROKERS WE SEEK TO HIRE.
The results of our wealth management subsidiaries depend heavily on
conditions in the financial markets and on economic conditions generally, both
domestically and abroad. Because currently a significant portion of our revenue
in these businesses is derived from commissions, margin interest revenue and
principal transactions, declines in stock prices, trading volumes or liquidity
could result in the failure of buyers and sellers of securities to fulfill their
settlement obligations, and in the failure of our brokerage clients to fulfill
their credit obligations, which could adversely affect our results.
The success of the strategy we are pursuing to grow our wealth
management business is largely dependent on our ability to identify, hire and
retain talented securities brokers with investment services experience. We face
strong competition for qualified brokers, and many potential candidates are
subject to restrictive covenants with existing employers. If we are unable to
significantly increase the size of our investment services sales force as
planned, we may have difficulty attracting new accounts and increasing assets
under management and may be unable to improve the profitability of this segment
of our business.
WE MAY BE ADVERSELY AFFECTED BY INTEREST RATE CHANGES.
Our interest income and interest expense are affected by general
economic conditions and by the policies of regulatory authorities, including the
monetary policies of the Federal Reserve. Changes in interest rates may
influence the growth rate of loans and deposits, the quality of the loan
portfolio, loan and deposit pricing, the volume of loan originations in our
mortgage banking business and the value that we can recognize on the sale of
mortgage loans in the secondary market. We expect the results of WestAmerica,
our newly acquired mortgage banking business, in selling loans into the
secondary market will be impacted during periods of rising interest rates. While
we have taken measures intended to manage the risks of operating in a changing
interest rate environment, there can be no assurance that such measures will be
effective in avoiding undue interest rate risk. If market interest rates should
move contrary to our "gap" position on interest earning assets and interest
bearing liabilities, the "gap" will work against us and our net interest income
may be negatively affected.
The success of our covered call option program, which we have used in
effect to hedge our interest rate risk, may also be affected by changes in
interest rates. With the relatively low interest rates that prevailed over the
last three years, we have been able to augment the total return of our
investment securities portfolio by selling call options on fixed-income
securities we own. We recorded fee income of $7.9 million during 2003, compared
to $6.0 million in 2002 from premiums earned on these covered call option
transactions. During the first six months of 2004, we recorded fee income of
$4.6 million on these transactions. In a rising interest rate environment,
particularly if interest rates continue to increase, the amount of premium
income we earn on these transactions will likely decline. Our opportunities to
sell covered call options may be limited in the future if rates continue to
rise.
OUR FUTURE SUCCESS IS DEPENDENT ON OUR ABILITY TO COMPETE EFFECTIVELY
IN THE HIGHLY COMPETITIVE BANKING INDUSTRY.
The financial services business is highly competitive, and we encounter
strong direct competition for deposits, loans and other financial services in
all of our market areas. In recent years, several major bank holding companies
have entered or expanded into the Chicago metropolitan market, and are pursuing
aggressive branching initiatives in the area. Generally, these financial
institutions are significantly larger than we are and have greater access to
capital and other resources. Our ability to compete effectively in the
marketplace is also dependent on our ability to adapt successfully to
technological changes within the banking and financial services industries.
7
OUR BUSINESS MAY BE ADVERSELY AFFECTED BY THE HIGHLY REGULATED
ENVIRONMENT IN WHICH WE OPERATE.
We are subject to extensive federal and state legislation, regulation
and supervision. The burden of regulatory compliance has increased under current
legislation and banking regulations and is likely to continue to have or may
have a significant impact on the financial services industry. Recent legislative
and regulatory changes, as well as changes in regulatory enforcement policies
and capital adequacy guidelines, are increasing our costs of doing business and,
as a result, may create an advantage for our competitors who may not be subject
to similar legislative and regulatory requirements. In addition, future
regulatory changes, including changes to regulatory capital requirements, could
have an adverse impact on our future results. Self regulatory organizations,
such as the New York Stock Exchange and the National Association of Securities
Dealers, require our securities brokerage subsidiaries to comply with extensive
rules and regulations, and we could be adversely affected by applicable changes
in these regulations.
SINCE OUR BUSINESS IS CONCENTRATED IN THE CHICAGO METROPOLITAN AREA, A
DOWNTURN IN THE CHICAGO ECONOMY MAY ADVERSELY AFFECT OUR BUSINESS.
Currently, our lending and deposit gathering activities are
concentrated primarily in the greater Chicago metropolitan area. Our success
depends on the general economic condition of Chicago and its surrounding areas.
Declining economic conditions could reduce our growth rate, impair our ability
to collect loans, and generally affect our financial condition and results of
operations.
OUR SHAREHOLDER RIGHTS PLAN AND PROVISIONS IN OUR ARTICLES OF
INCORPORATION AND OUR BY-LAWS MAY DELAY OR PREVENT AN ACQUISITION OF US BY A
THIRD PARTY.
Our board of directors has implemented a shareholder rights plan. The
rights, which are attached to our shares of common stock and trade together with
our common stock, have certain anti-takeover effects. The plan may discourage or
make it more difficult for another party to complete a merger or tender offer
for our shares without negotiating with our board of directors or to launch a
proxy contest or to acquire control of a larger block of our shares. If
triggered, the rights will cause substantial dilution to a person or group that
attempts to acquire us without approval of our board of directors, and under
certain circumstances, the rights beneficially owned by the person or group may
become void. The plan also may have the effect of limiting shareholder
participation in certain transactions such as mergers or tender offers whether
or not such transactions are favored by incumbent directors and key management.
In addition, our executive officers may be more likely to retain their positions
with us as a result of the plan, even if their removal would be beneficial to
shareholders generally.
Our articles of incorporation and by-laws contain provisions, including
a staggered board provision, that make it more difficult for a third party to
gain control or acquire us without the consent of our board of directors. These
provisions also could discourage proxy contests and may make it more difficult
for dissident shareholders to elect representatives as directors and take other
corporate actions.
These provisions of our governing documents may have the effect of
delaying, deferring or preventing a transaction or a change in control that
might be in the best interest of our shareholders.
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USE OF PROCEEDS
Except as otherwise described in the applicable prospectus supplement,
we intend to use the net proceeds from any sale of the securities offered
hereunder to increase the capital at our banks, to pursue further growth
opportunities, including though acquisitions, and for general corporate
purposes.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our consolidated ratio of earnings to
fixed charges for the periods indicated:
(UNAUDITED)
SIX MONTHS ENDED FISCAL YEAR
---------------- --------------------------------------------------
JUNE 30, JUNE 30,
2004 2003 2003 2002 2001 2000 1999
---- ---- ---- ---- ---- ---- ----
Ratio of earnings to fixed charges:(1)
Including deposit interest...... 1.82 1.65 1.71 1.51 1.32 1.19 1.23
Excluding deposit interest...... 5.12 4.60 4.82 4.03 4.26 2.93 3.54
________________
(1) Currently, we have no shares of preferred stock outstanding and have
not paid any dividends on preferred stock in the periods presented.
Therefore, the ratio of earnings to combined fixed charges and
preferred stock dividends is not different from the ratio of earnings
to fixed charges.
For purposes of calculating the ratio of earnings to fixed charges,
earnings are the sum of:
o income before income taxes and losses from unconsolidated
investees; and
o fixed charges.
For purposes of calculating the ratio, fixed charges are the sum of:
o interest cost, including interest on deposits; and
o that portion of rent expense estimated to be representative of
the interest factor.
DESCRIPTION OF DEBT SECURITIES
DEBT MAY BE SENIOR OR SUBORDINATED
We may issue senior or subordinated debt securities. The senior debt
securities and, in the case of debt securities in bearer form, any coupons to
these securities, will constitute part of our senior debt and, except as
otherwise included in the applicable prospectus supplement, will rank on a
parity with all of our other unsecured and unsubordinated debt. The subordinated
debt securities and any coupons will constitute part of our subordinated debt
and will be subordinate and junior in right of payment to all of our "senior
indebtedness," which will be defined in the applicable prospectus supplement. If
this prospectus is being delivered in connection with a series of subordinated
debt securities, the accompanying prospectus supplement or the information we
incorporate in this prospectus by reference will indicate the approximate amount
of senior indebtedness outstanding as of the end of the most recent fiscal
quarter. Our debt securities will be issued under an indenture, the form of
which is included as an exhibit to the registration statement of which this
prospectus is a part.
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We have summarized below the material provisions of the indenture and
the debt securities, or indicated which material provisions will be described in
the related prospectus supplement. These descriptions are only summaries, and
each investor should refer to the indenture, including the applicable supplement
thereto, which describes completely the terms and definitions summarized below
and contains additional information regarding the debt securities.
PAYMENTS
We may issue debt securities from time to time in one or more series.
The provisions of the indenture allow us to "reopen" a previous issue of a
series of debt securities and issue additional debt securities of that issue.
The debt securities may be denominated and payable in U.S. dollars.
Debt securities may bear interest at a fixed rate or a floating rate,
which, in either case, may be zero, or at a rate that varies during the lifetime
of the debt security. Debt securities may be sold at a discount below their
stated principal amount.
TERMS SPECIFIED IN PROSPECTUS SUPPLEMENT
The prospectus supplement will contain, where applicable, the following
terms of and other information relating to any offered debt securities:
o classification as senior or subordinated debt securities and
the specific designation;
o aggregate principal amount, purchase price and denomination;
o the currency in which the debt securities are denominated
and/or in which principal and/or interest, if any, is payable;
o date of maturity;
o the interest rate or rates or the method by which the
calculation agent will determine the interest rate or rates,
if any;
o the interest payment dates, if any;
o the place or places for payment of the principal of and any
premium and/or interest on the debt securities;
o any repayment, redemption, prepayment or sinking fund
provisions, including any redemption notice provisions;
o whether we will issue the debt securities in registered form
or bearer form or both and, if we are offering debt securities
in bearer form, any restrictions applicable to the exchange of
one form for another and to the offer, sale and delivery of
those debt securities in bearer form;
o whether we will issue the debt securities in definitive form
and under what terms and conditions;
o the terms on which holders of the debt securities may convert
or exchange these securities into or for common or preferred
stock or other securities of ours offered hereby, into or for
common or preferred stock or other securities of an entity
affiliated with us or debt or equity or other securities of an
entity not affiliated with us, or for the cash value of our
stock or any of the above securities, the terms on which
conversion or exchange may occur, including
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whether conversion or exchange is mandatory, at the option of
the holder or at our option, the period during which
conversion or exchange may occur, the initial conversion or
exchange price or rate and the circumstances or manner in
which the amount of common or preferred stock or other
securities issuable upon conversion or exchange may be
adjusted;
o information as to the methods for determining the amount of
principal or interest payable on any date and/or the
currencies, securities or baskets of securities, commodities
or indices to which the amount payable on that date is linked;
o any agents for the debt securities, including trustees,
depositories, authenticating or paying agents, transfer agents
or registrars;
o any applicable United States federal income tax consequences,
including:
o whether and under what circumstances we will pay
additional amounts on debt securities held by a
person who is not a U.S. person for any tax,
assessment or governmental charge withheld or
deducted and, if so, whether we will have the option
to redeem those debt securities rather than pay the
additional amounts;
o tax considerations applicable to any discounted debt
securities or to debt securities issued at par that
are treated as having been issued at a discount for
United States federal income tax purposes; and
o tax considerations applicable to any debt securities
denominated and payable in foreign currencies; and
o any other specific terms of the debt securities, including any
additional events of default or covenants, and any terms
required by or advisable under applicable laws or regulations.
REGISTRATION AND TRANSFER OF DEBT SECURITIES
Holders may present debt securities for exchange, and holders of
registered debt securities may present these securities for transfer, in the
manner, at the places and subject to the restrictions stated in the debt
securities and described in the applicable prospectus supplement. We will
provide these services without charge except for any tax or other governmental
charge payable in connection with these services and subject to any limitations
provided in the applicable indenture.
If any of the securities are held in global form, the procedures for
transfer of interests in those securities will depend upon the procedures of the
depositary for those global securities. See "Global Securities."
SUBORDINATION PROVISIONS
Subordinated debt securities will be subordinate and junior in right of
payment, to the extent and in the manner stated in the applicable prospectus
supplement, to all of our senior indebtedness.
Unless all principal of and any premium or interest on the senior
indebtedness has been paid in full, or provision has been made to make these
payments in full, no payment of principal of, or any premium or interest on, any
subordinated debt securities may be made in the event:
o of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization or other similar
proceedings involving us or a substantial part of our
property;
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o that (a) a default has occurred in the payment of principal,
any premium, interest or other monetary amounts due and
payable on any senior indebtedness or (b) there has occurred
any other event of default concerning senior indebtedness that
permits the holder or holders of the senior indebtedness to
accelerate the maturity of the senior indebtedness, with
notice or passage of time, or both, and that event of default
has continued beyond the applicable grace period, if any, and
that default or event of default has not been cured or waived
or has not ceased to exist; or
o that the principal of and accrued interest on any subordinated
debt securities have been declared due and payable upon an
event of default and that declaration has not been rescinded
and annulled as provided under the applicable supplemental
indenture.
COVENANTS RESTRICTING PLEDGES, MERGERS AND OTHER SIGNIFICANT CORPORATE ACTIONS
Negative Pledge. The supplemental indenture relating to any senior debt
securities will provide that we will not, and will not permit any subsidiary to,
create, assume, incur or guarantee any indebtedness for borrowed money that is
secured by a pledge, lien or other encumbrance except for liens specifically
permitted by the indenture on:
o the voting securities of Wintrust or any subsidiary succeeding
to any substantial part of the business now conducted by
Wintrust or any such subsidiary, which we refer to
collectively as the "principal subsidiaries," or
o the voting securities of a subsidiary that owns, directly or
indirectly, the voting securities of any of the principal
subsidiaries,
without making effective provisions so that the senior debt securities issued
under the indenture will be secured equally and ratably with indebtedness so
secured.
Merger, Consolidation, Sale, Lease or Conveyance. The indenture
provides that we will not merge or consolidate with any other person and will
not sell, lease or convey all or substantially all of our assets to any other
person, unless:
o we will be the continuing corporation; or
o the successor corporation or person that acquires all or
substantially all of our assets:
o will be a corporation organized under the laws of the
United States, a state of the United States or the
District of Columbia; and
o will expressly assume all of our obligations under
the indenture and the debt securities issued under
the indenture; and
o immediately after the merger, consolidation, sale,
lease or conveyance, we or that successor corporation
will not be in default in the performance of the
covenants and conditions of the indenture.
Absence of Protections Against All Potential Actions of Wintrust. There
are no covenants or other provisions in the indenture that would afford holders
of debt securities additional protection in the event of a recapitalization
transaction, a change of control of Wintrust or a highly leveraged transaction.
The merger covenant described above would only apply if the recapitalization
transaction, change of control or highly leveraged transaction were structured
to include a merger or consolidation of Wintrust or a sale,
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lease or conveyance of all or substantially all of our assets. However, we may
provide specific protections, such as a put right or increased interest, for
particular debt securities, which we would describe in the applicable prospectus
supplement.
EVENTS OF DEFAULT
The indenture provides holders of debt securities with remedies if we
fail to perform specific obligations, such as making payments on the debt
securities or other indebtedness, or if we become bankrupt. Holders should
review these provisions and understand which of our actions trigger an event of
default and which actions do not. The indenture permits the issuance of debt
securities in one or more series, and, in many cases, whether an event of
default has occurred is determined on a series by series basis.
An "event of default" is defined under the indenture, with respect to
any series of debt securities issued under that indenture, as being:
o default in payment of any principal of the debt securities of
that series, either at maturity or upon any redemption, by
declaration or otherwise;
o default for 30 days in payment of any interest on any debt
securities of that series;
o default for 60 days after written notice in the observance or
performance of any covenant or agreement in the debt
securities of that series or the related indenture (other than
a covenant or warranty with respect to the debt securities of
that series the breach or nonperformance of which is otherwise
included in the definition of "event of default");
o specified events of bankruptcy, insolvency or reorganization;
o failure to make any payment at maturity, including any
applicable grace period, on other indebtedness in an amount in
excess of $10,000,000 and continuance of that failure for a
period of 30 days after written notice of the failure to us by
the applicable trustee, or to us and the applicable trustee by
the holders of not less than 25% in principal amount of the
outstanding debt securities, treated as one class, issued
under the indenture;
o default with respect to any other indebtedness, which default
results in the acceleration of indebtedness in an amount in
excess of $10,000,000 without the indebtedness having been
discharged or the acceleration having been cured, waived,
rescinded or annulled for a period of 30 days after written
notice of the acceleration to us by the applicable trustee, or
to us and the applicable trustee by the holders of not less
than 25% in principal amount of the outstanding debt
securities, treated as one class, issued under the indenture;
or
o any other event of default provided in the supplemental
indenture under which that series of debt securities is
issued.
For purposes of the fifth and sixth clauses above, indebtedness means
obligations of, or guaranteed or assumed by, Wintrust, other than the debt
securities of that series, for borrowed money or evidenced by bonds, debentures,
notes or other similar instruments, but does not include non recourse
obligations. In addition, if a failure, default or acceleration referred to in
the fifth and sixth clauses above ceases or is cured, waived, rescinded or
annulled, then the event of default under the applicable indenture caused by
that failure, default or acceleration will also be considered cured.
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Acceleration of Debt Securities upon an Event of Default. The indenture
provides that:
o if an event of default (other than events of default relating
to certain specified events of bankruptcy, insolvency or
reorganization) occurs and is continuing, either the trustee
or the holders of not less than 50% in aggregate principal
amount of the outstanding debt securities of each affected
series, voting as one class, by notice in writing to Wintrust
and to the trustee, if given by security holders, may declare
the principal of all debt securities of each affected series
and interest accrued thereon to be due and payable
immediately; and
o if an event of default due to specified events of bankruptcy,
insolvency or reorganization of Wintrust occurs and is
continuing, then the principal of all those debt securities,
interest accrued thereon will become immediately due and
payable.
Annulment of Acceleration and Waiver of Defaults. In some
circumstances, if any and all events of default under the indenture,
other than the non-payment of the principal of or interest on the
securities that has become due as a result of an acceleration, have
been cured, waived or otherwise remedied, then the holders of a
majority in aggregate principal amount of all series of outstanding
debt securities affected, voting as one class, may annul past
declarations of acceleration of or waive past defaults of the debt
securities.
Indemnification of Trustee for Actions Taken on Your Behalf. The
indenture contains a provision entitling the trustee, subject to the duty of the
trustee during a default to act with the required standard of care, to be
indemnified by the holders of debt securities issued under the indenture before
proceeding to exercise any trust or power at the request of holders. Subject to
these provisions and some other limitations, the holders of a majority in
aggregate principal amount of each series of outstanding debt securities, voting
as one class, may, with respect to debt securities of that class, direct the
time, method and place of conducting any proceeding for any remedy available to
the applicable trustee, or exercising any trust or power conferred on the
trustee.
Limitation on Actions by You as an Individual Holder. The indenture
provides that no individual holder of debt securities may institute any action
against us under the indenture, except actions for payment of overdue principal
and interest, unless the following actions have occurred:
o the holder must have previously given written notice to the
trustee of the continuing default;
o the holders of not less than 25% in aggregate principal amount
of the outstanding debt securities of each affected series,
treated as one class, must have (1) requested the trustee to
institute that action and (2) offered the trustee reasonable
indemnity;
o the trustee must have failed to institute that action within
60 days after receipt of the request referred to above; and
o during such 60-day period, the holders of a majority in
aggregate principal amount of the outstanding debt securities
of each affected series, voting as one class, must not have
given directions to the trustee inconsistent with those of the
holders referred to above.
Annual Certification. The indenture contains a covenant that we will
file annually with the trustee a certificate of no default or a certificate
specifying any default that exists.
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DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
We have the ability to eliminate most or all of our obligations on any
series of debt securities prior to maturity if we comply with the following
provisions.
Discharge. Under the indenture, we may discharge specific obligations
to holders of any series of debt securities (1) that have not already been
delivered to the trustee for cancellation and (2) that either have become due
and payable or will, within one year, become due and payable or scheduled for
redemption, by depositing with the trustee, in trust, funds in an amount
sufficient to pay when due, whether at maturity or upon redemption, the
principal of and interest on the debt securities to the stated maturity or
redemption date, as the case may be.
Defeasance and Covenant Defeasance. If the provisions in the indenture
relating to defeasance and covenant defeasance are applicable to the debt
securities of any series, we may elect either:
o defeasance, which means we elect to defease and be discharged
from any and all obligations with respect to the debt
securities, except for the obligations to register the
transfer or exchange of the debt securities, to replace
destroyed, lost or stolen debt securities, to maintain an
office or agency in respect of the debt securities and to hold
moneys for payment in trust; or
o covenant defeasance, which means we may elect to be released
from our obligations with respect to the debt securities under
specified provisions of the indenture relating to (1) delivery
to the trustee of certain reports and certificates, (2) the
Company's ability to consolidate or merge with or into or
sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its assets, and (3) any additional
covenants contained in a supplemental indenture for a
particular series of debt securities or a board resolution or
officers' certificate delivered pursuant to the indenture, and
any failure to comply with such obligations will not
constitute an event of default with respect to the debt
securities;
in either case upon the irrevocable deposit by us with the trustee, in
trust, of an amount, in cash and/or U.S. government obligations,
sufficient to make scheduled payments of the principal of and interest
on the debt securities, when due, whether at maturity, upon redemption
or otherwise, and any mandatory sinking fund payments.
Defeasance will only be permitted if, among other things:
o we have delivered to the trustee an opinion of counsel to the
effect that the holders of the debt securities will not
recognize income, gain or loss for federal income tax purposes
as a result of the defeasance or covenant defeasance and will
be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case
if the defeasance or covenant defeasance had not occurred, and
the opinion of counsel, in the case of defeasance, will be
required to refer to and be based upon a ruling of the
Internal Revenue Service or a change in applicable U.S.
federal income tax law occurring after the date of the
indenture;
o no event of default has occurred or is continuing;
o the deposit of funds will not result in a breach or violation
of, or constitute a default under, the indenture or any other
material agreement or instrument to which we are a party or by
which we are bound;
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o certain other provisions set forth in the indenture are met;
o we have delivered to the trustee an officers' certificate and
an opinion of counsel, each stating that all conditions
precedent to the defeasance or covenant defeasance have been
complied with; and
o in the case of any subordinated debt securities, no event or
condition will exist that, pursuant to certain provisions
described under "-- Subordination Provisions", would prevent
us from making payments of principal of and interest on the
subordinated debt securities at the date of the deposit
referred to above.
The applicable prospectus supplement may further describe the
provisions, if any, permitting defeasance or covenant defeasance, including any
modifications to the provisions described above, with respect to the debt
securities of a particular series.
MODIFICATION OF THE INDENTURE
Modification Without Consent of Holders. We and the applicable trustee
may enter into supplemental indentures without the consent of the holders of
debt securities issued under a particular indenture to:
o secure any debt securities;
o evidence the assumption by a successor corporation of our
obligations;
o add covenants for the protection of the holders of debt
securities;
o add additional events of default;
o cure any ambiguity or correct any inconsistency;
o establish the forms or terms of debt securities of any series;
or
o evidence the acceptance of appointment by a successor trustee.
Modification with Consent of Holders. We and the applicable trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of each affected series of outstanding debt securities, voting
as one class, may add any provisions to, or change in any manner or eliminate
any of the provisions of, the applicable indenture or modify in any manner the
rights of the holders of those debt securities. However, we and the trustee may
not make any of the following changes to any outstanding debt security without
the consent of each holder that would be affected by such change:
o extend the final maturity of the principal;
o reduce the principal amount;
o reduce the rate or extend the time of payment of interest;
o reduce any amount payable on redemption;
o change the currency in which the principal, any amount of
original issue discount, or interest thereon is
payable;
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o modify or amend the provisions for conversion of any currency
into another currency;
o reduce the amount of any original issue discount security
payable upon acceleration or provable in bankruptcy;
o alter the terms on which holders of the debt securities may
convert or exchange debt securities for stock or other
securities of Wintrust or of other entities or for other
property or the cash value of the property, other than in
accordance with the antidilution provisions or other similar
adjustment provisions included in the terms of the debt
securities;
o alter certain provisions of the indenture relating to
debt securities not denominated in U.S. dollars;
o impair the right of any holder to institute suit for the
enforcement of any payment on any debt security when due; or
o reduce the percentage of debt securities the consent of whose
holders is required for modification of the indenture.
Modification of Subordination Provisions. We may not amend a
supplemental indenture relating to subordinated debt securities to alter the
subordination of any outstanding subordinated debt securities without the
written consent of each potentially adversely affected holder of senior
indebtedness then outstanding.
GOVERNING LAW
Unless otherwise specified in a prospectus supplement, the debt
securities and the indenture will be governed by, and construed in accordance
with, the laws of the State of Illinois.
DESCRIPTION OF PURCHASE CONTRACTS
We may issue purchase contracts, including purchase contracts issued as
part of a unit with one or more other securities, for the purchase or sale of
our debt securities, preferred stock, depositary shares or common stock. The
price of our debt securities or price per share of common stock, preferred stock
or depositary shares, as applicable, may be fixed at the time the purchase
contracts are issued or may be determined by reference to a specific formula
contained in the purchase contracts. We may issue purchase contracts in such
amounts and in as many distinct series as we wish.
The applicable prospectus supplement may contain, where applicable, the
following information about the purchase contracts issued under it:
o whether the purchase contracts obligate the holder to purchase
or sell, or both, our debt securities, common stock, preferred
stock or depositary shares, as applicable, and the nature and
amount of each of those securities, or method of determining
those amounts;
o whether the purchase contracts are to be prepaid or not;
o whether the purchase contracts are to be settled by delivery,
or by reference or linkage to the value, performance or level
of our common stock or preferred stock;
o any acceleration, cancellation, termination or other
provisions relating to the settlement of the purchase
contracts;
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o United States federal income tax considerations relevant to
the purchase contracts; and
o whether the purchase contracts will be issued in fully
registered global form.
The applicable prospectus supplement will describe the terms of any
purchase contracts. The preceding description and any description of purchase
contracts in the applicable prospectus supplement does not purport to be
complete and is subject to and is qualified in its entirety by reference to the
purchase contract agreement and, if applicable, collateral arrangements and
depositary arrangements relating to such purchase contracts.
DESCRIPTION OF UNITS
Units will consist of any combination of one or more of the other
securities described in this prospectus. The applicable prospectus supplement
will also describe:
o the designation and the terms of the units and of any
combination of the securities constituting the units,
including whether and under what circumstances those
securities may be held or traded separately;
o any additional terms of the agreement governing the units;
o any additional provisions for the issuance, payment,
settlement, transfer or exchange of the units or of the
securities constituting the units;
o any applicable United States federal income tax consequences;
and
o whether the units will be issued in fully registered form.
The terms and conditions described under "Description of Debt
Securities," "Description of Warrants," "Description of Capital Stock--Preferred
Stock" and "Description of Capital Stock--Common Stock" will apply to each unit
and to the securities included in each unit, unless otherwise specified in the
applicable prospectus supplement.
We will issue the units under one or more unit agreements to be entered
into between us and a bank or trust company, as unit agent. We may issue units
in one or more series, which will be described in the applicable prospectus
supplement.
DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of debt securities, shares of
preferred stock or common stock. Warrants may be issued independently or
together with any debt securities, shares of preferred stock or common stock
offered by any prospectus supplement and may be attached to or separate from the
debt securities, shares of preferred stock or common stock. The warrants are to
be issued under warrant agreements to be entered into between Wintrust and a
bank or trust company, as warrant agent, as is named in the prospectus
supplement relating to the particular issue of warrants. The warrant agent will
act solely as an agent of Wintrust in connection with the warrants and will not
assume any obligation or relationship of agency or trust for or with any holders
of warrants or beneficial owners of warrants. This section is a summary of the
material terms of the warrant agreement; it does not describe every aspect of
the warrants. We urge you to read the form of warrant agreement we will file
with the SEC promptly after an offering of warrants, which will be available as
described under the heading "Where You Can Find More Information," because it,
and not this description, will define your rights as a warrant holder.
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GENERAL
If warrants are offered, the prospectus supplement will describe the
terms of the warrants, including the following:
o the offering price;
o the designation, aggregate principal amount and terms of the
debt securities purchasable upon exercise of the debt warrants
and the price at which such debt securities may be purchased
upon such exercise;
o the designation, number of shares and terms of the preferred
stock purchasable upon exercise of the preferred stock
warrants and the price at which such shares of preferred stock
may be purchased upon such exercise;
o the designation, number of shares and terms of the common
stock purchasable upon exercise of the common stock warrants
and the price at which such shares of common stock may be
purchased upon such exercise;
o if applicable, the designation and terms of the debt
securities, preferred stock or common stock with which the
warrants are issued and the number of warrants issued with
each such debt security or share of preferred stock or common
stock;
o if applicable, the date on and after which the warrants and
the related debt securities, preferred stock or common stock
will be separately transferable;
o the date on which the right to exercise the warrants shall
commence and the date on which such right shall expire;
o whether the warrants will be issued in registered or bearer
form;
o a discussion of certain federal income tax, accounting and
other special considerations, procedures and limitations
relating to the warrants; and
o any other terms of the warrants.
Warrants may be exchanged for new warrants of different denominations.
If in registered form, warrants may be presented for registration of transfer,
and may be exercised at the corporate trust office of the Warrant Agent or any
other office indicated in the prospectus supplement. Before the exercise of
their warrants, holders of warrants will not have any of the rights of holders
of the securities purchasable upon such exercise, including the right to receive
payments of principal of, any premium on, or any interest on, the debt
securities purchasable upon such exercise or to enforce the covenants in the
indenture or to receive payments of dividends, if any, on the preferred stock or
common stock purchasable upon such exercise or to exercise any applicable right
to vote.
EXERCISE OF WARRANTS
Each warrant will entitle the holder to purchase such principal amount
of debt securities or such number of shares of preferred stock or common stock
at such exercise price as shall in each case be set forth in, or can be
calculated according to information contained in, the prospectus supplement
relating to the warrant. Warrants may be exercised at such times as are set
forth in the prospectus supplement relating to such warrants. After the close of
business on the expiration date of the warrants, or such later date to which
such expiration date may be extended by Wintrust, unexercised warrants will
become void.
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Subject to any restrictions and additional requirements that may be set
forth in the prospectus supplement, warrants may be exercised by delivery to the
warrant agent of the certificate evidencing such warrants properly completed and
duly executed and of payment as provided in the prospectus supplement of the
amount required to purchase the debt securities or shares of preferred stock or
common stock purchasable upon such exercise. The exercise price will be the
price applicable on the date of payment in full, as set forth in the prospectus
supplement relating to the warrants. Upon receipt of such payment and the
certificate representing the warrants to be exercised, properly completed and
duly executed at the corporate trust office of the warrant agent or any other
office indicated in the prospectus supplement, we will, as soon as practicable,
issue and deliver the debt securities or shares of preferred stock or common
stock purchasable upon such exercise. If fewer than all of the warrants
represented by such certificate are exercised, a new certificate will be issued
for the remaining amount of warrants.
ADDITIONAL PROVISIONS
The exercise price payable and the number of shares of common stock or
preferred stock purchasable upon the exercise of each stock warrant will be
subject to adjustment in certain events, including:
o the issuance of the stock dividend to holders of common stock
or preferred stock, respectively;
o a combination, subdivision or reclassification of common stock
or preferred stock, respectively; or
o any other event described in the applicable prospectus
supplement.
In lieu of adjusting the number of shares of common stock or preferred
stock purchasable upon exercise of each stock warrant, we may elect to adjust
the number of stock warrants. No adjustment in the number of shares purchasable
upon exercise of the stock warrants will be required until cumulative
adjustments require an adjustment of at least 1% thereof. We may, at our option,
reduce the exercise price at any time. No fractional shares will be issued upon
exercise of stock warrants, but we will pay the cash value of any fractional
shares otherwise issuable. Notwithstanding the foregoing, in case of any
consolidation, merger, or sale or conveyance of the property of Wintrust as an
entirety or substantially as an entirety, the holder of each outstanding stock
warrant shall have the right upon the exercise thereof to the kind and amount of
shares of stock and other securities and property, including cash, receivable by
a holder of the number of shares of common stock or preferred stock into which
such stock warrants were exercisable immediately prior thereto.
NO RIGHTS AS STOCKHOLDERS
Holders of stock warrants will not be entitled, by virtue of being such
holders, to vote, to consent, to receive dividends, to receive notice as
stockholders with respect to any meeting of stockholders for the election of
directors of Wintrust or any other matter, or to exercise any rights whatsoever
as stockholders of Wintrust.
DESCRIPTION OF CAPITAL STOCK
AUTHORIZED CAPITALIZATION
As of the date of this prospectus, our capital structure consists of 30
million authorized shares of common stock, no par value per share, and 20
million shares of undesignated preferred stock, no par
20
value per share. As of October 4, 2004, 21,064,496 shares of our common stock
were issued and outstanding, and no shares of preferred stock were issued and
outstanding.
COMMON STOCK
The holders of common stock will be entitled to receive and share
equally in such dividends, if any, declared by the board of directors out of
funds legally available therefor. Wintrust may pay dividends if, as and when
declared by its board of directors. The payment of dividends by Wintrust is
subject to limitations imposed by the Illinois Business Corporation Act (the
"IBCA"). If Wintrust issues preferred stock, the holders thereof may have a
priority over the holders of the common stock with respect to dividends.
The holders of common stock possess voting rights in Wintrust. They
elect Wintrust's board of directors and act on such other matters as are
required to be presented to them under Illinois law or Wintrust's articles of
incorporation or as are otherwise presented to them by the board of directors.
Each holder of common stock is entitled to one vote per share and does not have
any right to cumulate votes in the election of directors. Although there are no
present plans to do so, if the Company issues preferred stock, holders of the
preferred stock may also possess voting rights. Certain matters require an 85%
shareholder vote. See "Certain Anti-takeover Effects of Wintrust's Articles and
By-Laws and Illinois Law" below.
In the event of any liquidation, dissolution or winding up of Wintrust,
the holders of its common stock would be entitled to receive, after payment or
provision for payment of all debts and liabilities of Wintrust, all assets of
Wintrust available for distribution. If preferred stock is issued, the holders
thereof may have a priority over the holders of the common stock in the event of
any liquidation or dissolution.
Holders of Wintrust's common stock are not entitled to preemptive
rights with respect to any shares that may be issued in the future. The common
stock is not subject to mandatory redemption by Wintrust.
Certain Anti-takeover Effects of Wintrust's Articles and By-laws and
Illinois Law. Certain provisions of Wintrust's articles of incorporation,
by-laws and the Illinois Business Corporation Act, or IBCA, may have the effect
of impeding the acquisition of control of Wintrust by means of a tender offer, a
proxy fight, open-market purchases or otherwise in a transaction not approved by
Wintrust's board of directors.
These provisions may have the effect of discouraging a future takeover
attempt which is not approved by Wintrust's board of directors but which
individual Wintrust shareholders may deem to be in their best interests or in
which Wintrust shareholders may receive a substantial premium for their shares
over then-current market prices. As a result, shareholders who might desire to
participate in such a transaction may not have an opportunity to do so. Such
provisions will also render the removal of Wintrust's current board of directors
or management more difficult.
These provisions of Wintrust's articles of incorporation and by-laws
include the following:
(1) Wintrust's board of directors may issue additional
authorized shares of Wintrust's capital stock to deter future attempts
to gain control of Wintrust, including the authority to determine the
terms of any one or more series of preferred stock, such as voting
rights, conversion rates, and liquidation preferences. As a result of
the ability to fix voting rights for a series of preferred stock, the
board has the power, to the extent consistent with its fiduciary duty,
to issue a series of preferred stock to persons friendly to management
in order to attempt to
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block a merger or other transaction by which a third party seeks
control, and thereby assist the incumbent board of directors and
management to retain their respective positions;
(2) Wintrust's staggered board is intended to provide for
continuity of its board of directors and to make it more difficult and
time consuming for a shareholder group to fully use its voting power to
gain control of the board of directors without the consent of
Wintrust's incumbent board of directors;
(3) Wintrust's articles of incorporation do not provide for
cumulative voting for any purpose, and its articles of incorporation
and by-laws also provide that any action required or permitted to be
taken by its shareholders may be taken only at an annual or special
meeting and prohibit shareholder action by written consent in lieu of a
meeting;
(4) Wintrust's articles of incorporation expressly elect to be
governed by the provisions of Section 7.85 of the IBCA, as discussed
above. Under the IBCA fair price provision and Wintrust's articles of
incorporation, the approval of at least 80% of its shares is required
in connection with any transaction involving an Interested Shareholder,
subject to certain exceptions. Fair price provisions are designed to
impede a two-step takeover transaction that might otherwise result in
disparate treatment of Wintrust's shareholders; and
(5) Amendment of Wintrust's articles of incorporation must be
approved by a majority vote of the board of directors and also by a
two-thirds vote of the outstanding shares of Wintrust common stock,
provided, however, that an affirmative vote of at least 85% of the
outstanding voting stock entitled to vote is required to amend or
repeal certain provisions of the articles of incorporation, including
provisions (a) prohibiting cumulative voting rights, (b) relating to
certain business combinations, (c) limiting the shareholders' ability
to act by written consent, (d) regarding the number, classification of
directors, filling of board vacancies and newly created directorships,
(e) indemnification of directors and officers by Wintrust and
limitation of liability for directors, and (f) regarding amendment of
the foregoing supermajority provisions of Wintrust's articles of
incorporation. Wintrust's by-laws may be amended only by the board of
directors.
The provisions described above are intended to reduce Wintrust's
vulnerability to takeover attempts and certain other transactions which have not
been negotiated with and approved by members of its board of directors.
Rights Plan. Wintrust has a shareholders rights plan which could
discourage unsolicited or hostile takeover attempts which are not negotiated
with its board of directors. The plan discourages such attempts by causing
substantial dilution to any person who acquires an amount in excess of a
specified percentage of Wintrust's common stock and by making an acquisition of
Wintrust, without the consent of its board of directors, prohibitively
expensive. The description of the rights plan set forth below does not purport
to be complete and is qualified in its entirety by reference to the description
of the rights plan set forth in Wintrust's Registration Statement on Form 8-A
dated August 28, 1998. See "Documents Incorporated by Reference" on page 59.
Each share of Wintrust common stock has attached to it a stock purchase
right having the terms set forth in a rights agreement between Wintrust and
Illinois Stock Transfer Company, as rights agent. Each right will entitle its
registered holder to purchase from Wintrust one one-hundredth of a share of
Junior Serial Preferred Stock A, without par value, at a price of $85.00 per one
one-hundredth share, subject to certain adjustments. Generally, the rights
become exercisable when any person or group (i) acquires or obtains the right to
acquire 15% or more of Wintrust's common stock, or (ii) commences
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(or announces its intention to commence) a tender or exchange offer to acquire
15% or more of Wintrust's common stock.
In the event that any person or group becomes the beneficial owner of
15% or more of Wintrust's common stock, rights owned by that person or group
will immediately become null and void. Thereafter, other registered rights
holders will have the right to receive, upon exercise at the then-current
exercise price of the right, Wintrust common stock having a value equal to two
times the exercise price of the right. Additionally, if, after any person or
group has acquired 15% or more Wintrust's common stock, Wintrust is acquired in
a merger or other business combination or 50% or more of Wintrust's assets or
earning power are sold, then each registered right holder will receive the right
to purchase, for the exercise price, common stock of the entity which acquires
or survives Wintrust having a value equal to twice the exercise price of the
right.
Prior to any person or group acquiring 15% or more of Wintrust's common
stock, Wintrust may redeem the rights in whole, but not in part, at a price of
$0.01 per right, to be paid in cash, shares of Wintrust common stock or other
consideration. In addition, at any time after a person or group acquires 15% of
Wintrust's common stock, but prior to such person or group acquiring 50% or more
of Wintrust's common stock, Wintrust may exchange the rights, in whole or in
part, at an exchange ratio of one share of common stock per right. The rights
will expire on July 31, 2008 unless exercised, redeemed, exchanged or otherwise
cancelled before that date.
Transfer Agent and Registrar. The transfer agent and registrar for our
common stock is Illinois Stock Transfer Company, 209 W. Jackson Boulevard, Suite
903, Chicago, IL 60606.
PREFERRED STOCK
Our board of directors has authorized the issuance of one or more
series of preferred stock and has authorized a committee of the board of
directors to establish and designate series and to fix the number of shares and
the relative rights, preferences and limitations of the respective series of the
preferred stock offered by this prospectus and the applicable prospectus
supplement. The shares of preferred stock, when issued and sold, will be fully
paid and nonassessable.
Terms Specified in Prospectus Supplement. The following description
sets forth some general terms and provisions of the preferred stock. The number
of shares and all of the relative rights, preferences and limitations of the
respective series of preferred stock that the board of directors or the
committee establishes will be described in the applicable prospectus supplement.
The terms of particular series of preferred stock may differ, among other
things, in:
o designation;
o number of shares that constitute the series;
o dividend rate, or the method of calculating the dividend rate;
o dividend periods, or the method of calculating the dividend
periods;
o redemption provisions, including whether or not, on what terms
and at what prices the shares will be subject to redemption at
our option;
o voting rights;
o preferences and rights upon liquidation or winding up;
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o whether or not and on what terms the shares will be
convertible into or exchangeable for shares of any other
class, series or security of ours or any other corporation or
any other property;
o for preferred stock convertible into common stock, the number
of shares of common stock to be reserved in connection with,
and issued upon conversion of, the preferred stock;
o whether depositary shares representing the preferred stock
will be offered and, if so, the fraction or multiple of a
share that each depositary share will represent; and
o the other rights and privileges and any qualifications,
limitations or restrictions of those rights or privileges.
Rank. Each series of preferred stock will rank, with respect to the
payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up:
o junior to any series of our capital stock expressly stated to
be senior to that series of preferred stock;
o senior to our common stock and any class of our capital stock
expressly stated to be junior to that series of preferred
stock; and
o on a parity with each other series of preferred stock and all
other classes of our capital stock.
Dividends. If described in the applicable prospectus supplement, we
will pay cumulative cash dividends to the holders of preferred stock, when and
as declared by the board of directors or the committee, out of funds legally
available for payment. The prospectus supplement will detail the annual rate of
dividends or the method or formula for determining or calculating them, and the
payment dates and payment periods for dividends. The board of directors or the
committee will fix a record date for the payment of dividends. We will pay
dividends on the preferred stock to the holders of record on that record date.
Dividends will be cumulative from the date of original issue of the series. A
series of preferred stock will be junior as to payment of dividends to any
series of preferred stock that may be issued in the future that is expressly
stated to be senior as to payment of dividends to that series of preferred
stock. If at any time we have failed to pay accrued dividends on any of those
senior shares when payable, we may not pay any dividend on that series of
preferred stock or redeem or otherwise repurchase any shares of that series
until we have paid or set aside for payment the full amount of the accumulated
but unpaid dividends on the senior shares.
We will not declare, pay or set aside for payment any dividends on any
preferred stock ranking on a parity as to payment of dividends with the
preferred stock unless we declare, pay or set aside for payment dividends on all
the outstanding shares of preferred stock for all dividend payment periods
ending on or before the dividend payment date for that parity stock. We must
declare, pay or set aside for payment any amounts on the preferred stock ratably
in proportion to the respective amounts of dividends (1) accumulated and unpaid
or payable on that parity stock, on the one hand, and (2) accumulated and unpaid
or payable through the dividend payment period or periods of the preferred stock
preceding the dividend payment date for that parity stock, on the other hand.
Except as described above, unless we have paid the full cumulative
dividends on the outstanding shares of preferred stock, we may not take any of
the following actions with respect to our common stock or any other preferred
stock of Wintrust ranking junior or on parity with the preferred stock as to
dividend payments:
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o declare, pay or set aside for payment any dividends, other
than dividends payable in our common stock;
o make other distributions;
o redeem, purchase or otherwise acquire our common stock or
junior preferred stock for any consideration; or
o make any payment to or available for a sinking fund for the
redemption of our common stock or junior preferred stock.
Redemption. The prospectus supplement will indicate whether, and on
what terms, shares of any series of preferred stock will be subject to mandatory
redemption or sinking fund provision. The prospectus supplement will also
indicate whether, and on what terms, including the date on or after which
redemption may occur, we may redeem shares of a series of the preferred stock.
We will effect any optional redemption upon not less than 30 days' notice at a
redemption price of not less than the stated value per share of the applicable
series of preferred stock plus accrued and accumulated but unpaid dividends to
but excluding the date fixed for redemption. If we have not paid full cumulative
dividends on all outstanding shares of preferred stock, we may not redeem the
preferred stock in part and we may not purchase or acquire any shares of
preferred stock, otherwise than by a purchase or exchange offer made on the same
terms to all holders of the preferred stock. If fewer than all the outstanding
shares of a series of preferred stock are to be redeemed, we will select those
to be redeemed by lot or a substantially equivalent method.
Liquidation Rights. In the event of any liquidation, dissolution or
winding up of Wintrust, the holders of shares of preferred stock will be
entitled to receive, out of the assets of Wintrust available for distribution to
stockholders, liquidating distributions in an amount equal to the stated value
per share of preferred stock, as described in the applicable prospectus
supplement, plus accrued and accumulated but unpaid dividends to the date of
final distribution, before any distribution is made to holders of:
o any class or series of capital stock ranking junior to the
preferred stock as to rights upon liquidation, dissolution or
winding up; or
o our common stock.
However, holders of the shares of preferred stock will not be entitled to
receive the liquidation price of their shares until we have paid or set aside an
amount sufficient to pay in full the liquidation preference of any class or
series of our capital stock ranking senior as to rights upon liquidation,
dissolution or winding up. Neither a consolidation or merger of Wintrust with or
into another corporation nor a merger of another corporation with or into
Wintrust nor a sale or transfer of all or part of Wintrust's assets for cash or
securities will be considered a liquidation, dissolution or winding up of
Wintrust.
If, upon any liquidation, dissolution or winding up of Wintrust, assets
of Wintrust then distributable are insufficient to pay in full the amounts
payable with respect to the preferred stock and any other preferred stock
ranking on parity with the preferred stock as to rights upon liquidation,
dissolution or winding up, the holders of the preferred stock and of that other
preferred stock will share ratably in any distribution in proportion to the full
respective preferential amounts to which they are entitled. After we have paid
the full amount of the liquidating distribution to which they are entitled, the
holders of the preferred stock will not be entitled to any further participation
in any distribution of assets by Wintrust.
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Voting Rights. Unless otherwise determined by our board of directors
and indicated in the prospectus supplement, holders of the preferred stock will
not have any voting rights except as from time to time required by law.
So long as any shares of the preferred stock remain outstanding, we
will not, without the consent of the holders of at least two thirds of the
shares of preferred stock outstanding at the time, voting together as one class
with all other series of preferred stock having similar voting rights that have
been conferred and are exercisable:
o issue or increase the authorized amount of any class or series
of stock ranking prior to the outstanding preferred stock as
to dividends or upon liquidation; or
o amend, alter or repeal the provisions of our certificate of
incorporation or of the resolutions contained in the
certificate of designation, whether by merger, consolidation
or otherwise, so as to materially and adversely affect any
power, preference or special right of the outstanding
preferred stock or its holders.
Agents and Registrar for Preferred Stock. The transfer agent, dividend
disbursing agent and registrar for each series of preferred stock will be the
Illinois Stock Transfer Company.
DEPOSITARY SHARES
We may, at our option, elect to offer fractional shares or some
multiple of shares of preferred stock, rather than individual shares of
preferred stock. If we choose to do so, we will issue depositary receipts for
depositary shares, each of which will represent a fraction or a multiple of a
share of a particular series of preferred stock as described below.
The following statements concerning depositary shares, depositary
receipts, and the deposit agreement are not intended to be comprehensive and are
qualified in their entirety by reference to the forms of these documents, which
we will file with the SEC promptly after an offering of depositary shares and
will be available as described under the heading "Where You Can Find More
Information." Each investor should refer to the detailed provisions of those
documents.
The shares of any series of preferred stock represented by depositary
shares will be deposited under a deposit agreement among Wintrust, a bank or
trust company we select, with its principal executive office in the United
States and a combined capital and surplus of at least $50,000,000, as
depositary, which we refer to as the Preferred Stock Depositary, and the holders
from time to time of depositary receipts issued under the agreement. Subject to
the terms of the deposit agreement, each holder of a depositary share will be
entitled, in proportion to the fraction or multiple of a share of preferred
stock represented by that depositary share, to all the rights and preferences of
the preferred stock represented by that depositary share, including dividend,
voting and liquidation rights.
The depositary shares will be evidenced by depositary receipts issued
under the deposit agreement. Depositary receipts will be distributed to those
persons purchasing the fractional or multiple shares of the related series of
preferred stock. Immediately following the issuance of shares of a series of
preferred stock, we will deposit those shares with the Preferred Stock
Depositary, which will then issue and deliver the depositary receipts to the
purchasers. Depositary receipts will only be issued evidencing whole depositary
shares. A depositary receipt may evidence any number of whole depositary shares.
Dividends and Other Distributions. The Preferred Stock Depositary will
distribute all cash dividends or other cash distributions received on the
related series of preferred stock to the record holders of depositary receipts
relating to those series in proportion to the number of the depositary shares
evidenced by depositary receipts those holders own.
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If we make a distribution other than in cash, the Preferred Stock
Depositary will distribute the property it receives to the record holders of
depositary receipts in proportion to the number of depositary shares evidenced
by depositary receipts those holders own, unless the Preferred Stock Depositary
determines that the distribution cannot be made proportionately among those
holders or that it is not feasible to make the distribution. In that event, the
Preferred Stock Depositary may, with our approval, sell the property and
distribute the net proceeds to the holders in proportion to the number of
depositary shares evidenced by depositary receipts they own.
The amount distributed to holders of depositary shares will be reduced
by any amounts required to be withheld by Wintrust or the Preferred Stock
Depositary on account of taxes or other governmental charges.
Conversion and Exchange. If any series of preferred stock underlying
the depositary shares is subject to conversion or exchange, the applicable
prospectus supplement will describe the rights or obligations of each record
holder of depositary receipts to convert or exchange the depositary shares.
Withdrawal of Stock. Upon surrender of the depositary receipts at the
corporate trust office of the Preferred Stock Depositary and upon payment of the
taxes, charges and fees provided for in the deposit agreement and compliance
with any other requirement of the deposit agreement, the holder of the
depositary shares evidenced by those depositary receipts is entitled to delivery
of the number of whole shares of the related series of preferred stock and all
money or other property, if any, represented by those shares. Holders of
depositary receipts representing any number of whole shares of preferred stock
will be entitled to receive whole shares of the related series of preferred
stock, but those holders of whole shares of preferred stock will not thereafter
be entitled to deposit those shares of preferred stock with the Preferred Stock
Depositary or to receive depositary shares therefor. If the depositary receipts
delivered by the holder evidence a number of depositary shares in excess of the
number representing whole shares of the related series of preferred stock to be
withdrawn, the Preferred Stock Depositary will deliver to the holder at the same
time a new depositary receipt evidencing the excess number of depositary shares.
Voting the Preferred Stock. Upon receiving notice of any meeting at
which the holders of any series of the preferred stock are entitled to vote, the
Preferred Stock Depositary will mail the information contained in the notice of
the meeting to the record holders of the depositary receipts relating to that
series of preferred stock. Each record holder of the depositary receipts on the
record date, which will be the same date as the record date for the related
series of preferred stock, may instruct the Preferred Stock Depositary how to
exercise his or her voting rights. The Preferred Stock Depositary will endeavor,
insofar as practicable, to vote or cause to be voted the maximum number of whole
shares of the preferred stock represented by those depositary shares in
accordance with those instructions received sufficiently in advance of the
meeting, and we will agree to take all reasonable action that may be deemed
necessary by the Preferred Stock Depositary in order to enable the Preferred
Stock Depositary to do so. The Preferred Stock Depositary will abstain from
voting shares of the preferred stock for which it does not receive specific
instructions from the holder of the depositary shares representing them.
Redemption of Depositary Shares. Depositary shares will be redeemed
from any proceeds received by the Preferred Stock Depositary resulting from the
redemption, in whole or in part, of the series of the preferred stock
represented by those depositary shares. The redemption price per depositary
share will equal the applicable fraction or multiple of the redemption price per
share payable with respect to the series of the preferred stock. If we redeem
shares of a series of preferred stock held by the Preferred Stock Depositary,
the Preferred Stock Depositary will redeem as of the same redemption date the
number of depositary shares representing the shares of preferred stock that we
redeem. If less than all the depositary shares will be redeemed, the depositary
shares to be redeemed will be selected by lot or substantially equivalent method
determined by the Preferred Stock Depositary.
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After the date fixed for redemption, the depositary shares called for
redemption will no longer be deemed to be outstanding, and all rights of the
holders of the depositary shares will cease, except the right to receive the
monies payable and any other property to which the holders were entitled upon
the redemption upon surrender to the Preferred Stock Depositary of the
depositary receipts evidencing the depositary shares. Any funds deposited by us
with the Preferred Stock Depositary for any depositary shares that the holders
fail to redeem will be returned to us after a period of two years from the date
the funds are deposited.
Amendment and Termination of the Deposit Agreement. We may amend the
form of depositary receipt evidencing the depositary shares and any provision of
the deposit agreement at any time and from time to time by agreement with the
Preferred Stock Depositary. However, any amendment that materially and adversely
alters the rights of the holders of depositary receipts will not be effective
unless it has been approved by the holders of at least a majority of the
depositary shares then outstanding, and no amendment may impair the right of any
holder of any depositary receipts, described above under "--Withdrawal of
Stock," to receive shares of the related series of preferred stock and any money
or other property represented by those depositary shares, except in order to
comply with mandatory provisions of applicable law. We may terminate the deposit
agreement at any time with at least 60 days' prior written notice to the
Preferred Stock Depositary. Within 30 days of the date of the notice, the
Preferred Stock Depositary will deliver or make available for delivery to
holders of depositary receipts, upon surrender of the depositary receipts
evidencing the depositary shares and upon payment of any applicable taxes or
governmental charges to be paid by the holders as described below, the number of
whole shares of the related series of preferred stock as are represented by the
depositary receipts. The deposit agreement will automatically terminate after
there has been a final distribution on the related series of preferred stock in
connection with any liquidation, dissolution or winding up of Wintrust and that
distribution has been made to the holders of depositary shares.
Charges of Preferred Stock Depositary. We will pay all transfer and
other taxes and governmental charges arising solely from the existence of the
depositary arrangements. We will pay all charges of the Preferred Stock
Depositary in connection with the initial deposit of the related series of
preferred stock, the initial issuance of the depositary shares, all withdrawals
of shares of the related series of preferred stock by holders of depositary
shares and the registration of transfers of title to any depositary shares.
However, holders of depositary shares will pay other transfer and other taxes
and governmental charges and the other charges expressly provided in the deposit
agreement to be for their accounts.
Corporate Trust Office of Preferred Stock Depositary. The Preferred
Stock Depositary's corporate trust office will be set forth in the applicable
prospectus supplement relating to a series of depositary shares. The Preferred
Stock Depositary will act as transfer agent and registrar for depositary
receipts, and, if shares of a series of preferred stock are redeemable, the
Preferred Stock Depositary will act as redemption agent for the corresponding
depositary receipts.
Resignation and Removal of Preferred Stock Depositary. The Preferred
Stock Depositary may resign at any time by delivering to us written notice of
its election to do so, and we may at any time remove the Preferred Stock
Depositary. Any resignation or removal will take effect upon the appointment of
a successor Preferred Stock Depositary. A successor must be appointed by us
within 60 days after delivery of the notice of resignation or removal and must
be a bank or trust company having its principal office in the United States and
a combined capital and surplus of at least $50,000,000.
Reports to Holders. We will deliver all required reports and
communications to holders of the preferred stock to the Preferred Stock
Depositary, and it will forward those reports and communications to the holders
of depositary shares.
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Inspection by Holders. Upon request, the Preferred Stock Depositary
will provide for inspection to the holders of depositary shares the transfer
books of the depositary and the list of holders of receipts; provided that any
requesting holder certifies to the Preferred Stock Depositary that such
inspection is for a proper purpose reasonably related to such person's interest
as an owner of depositary shares evidenced by the receipts.
GLOBAL SECURITIES
Registered Global Securities. Unless otherwise indicated in the
applicable prospectus supplement, we may issue the securities other than common
stock in the form of one or more fully registered global securities that will be
deposited with a depositary or its nominee identified in the applicable
prospectus supplement and registered in the name of that depositary or its
nominee. In those cases, one or more registered global securities will be issued
in a denomination or aggregate denominations equal to the portion of the
aggregate principal or face amount of the securities to be represented by
registered global securities. Unless and until it is exchanged in whole for
securities in definitive registered form, a registered global security may not
be transferred except as a whole by and among the depositary for the registered
global security, the nominees of the depositary or any successors of the
depositary or those nominees.
If not described below, any specific terms of the depositary
arrangement with respect to any securities to be represented by a registered
global security will be described in the prospectus supplement relating to those
securities. We anticipate that the following provisions will apply to all
depositary arrangements.
Ownership of beneficial interests in a registered global security will
be limited to persons, called participants, that have accounts with the
depositary or persons that may hold interests through participants. Upon the
issuance of a registered global security, the depositary will credit, on its
book-entry registration and transfer system, the participants' accounts with the
respective principal or face amounts of the securities beneficially owned by the
participants. Any dealers, underwriters or agents participating in the
distribution of the securities will designate the accounts to be credited.
Ownership of beneficial interests in a registered global security will be shown
on, and the transfer of ownership interests will be effected only through,
records maintained by the depositary, with respect to interests of participants,
and on the records of participants, with respect to interests of persons holding
through participants. The laws of some states may require that some purchasers
of securities take physical delivery of these securities in definitive form.
These laws may impair your ability to own, transfer or pledge beneficial
interests in registered global securities.
So long as the depositary, or its nominee, is the registered owner of a
registered global security, that depositary or its nominee, as the case may be,
will be considered the sole owner or holder of the securities represented by the
registered global security for all purposes under the applicable indenture,
warrant agreement or unit agreement. Except as described below, owners of
beneficial interests in a registered global security will not be entitled to
have the securities represented by the registered global security registered in
their names, will not receive or be entitled to receive physical delivery of the
securities in definitive form and will not be considered the owners or holders
of the securities under the applicable indenture, warrant agreement or unit
agreement. Accordingly, each person owning a beneficial interest in a registered
global security must rely on the procedures of the depositary for that
registered global security and, if that person is not a participant, on the
procedures of the participant through which the person owns its interest, to
exercise any rights of a holder under the applicable indenture, warrant
agreement or unit agreement. We understand that under existing industry
practices, if we request any action of holders or if an owner of a beneficial
interest in a registered global security desires to give or take any action that
a holder is entitled to give or take under the applicable indenture, warrant
agreement
29
or unit agreement, the depositary for the registered global security would
authorize the participants holding the relevant beneficial interests to give or
take that action, and the participants would authorize beneficial owners owning
through them to give or take that action or would otherwise act upon the
instructions of beneficial owners holding through them.
Payments of principal of, and premium, if any, and interest on, debt
securities, and any payments to holders with respect to warrants or units,
represented by a registered global security registered in the name of a
depositary or its nominee will be made to the depositary or its nominee, as the
case may be, as the registered owner of the registered global security. None of
Wintrust, the trustees, the warrant agents, the unit agents or any other agent
of Wintrust, agent of the trustees or agent of the warrant agents or unit agents
will have any responsibility or liability for any aspect of the records relating
to payments made on account of beneficial ownership interests in the registered
global security or for maintaining, supervising or reviewing any records
relating to those beneficial ownership interests.
We expect that the depositary for any of the securities represented by
a registered global security, upon receipt of any payment of principal, premium,
interest or other distribution of underlying securities or other property to
holders on that registered global security, will immediately credit
participants' accounts in amounts proportionate to their respective beneficial
interests in that registered global security as shown on the records of the
depositary. We also expect that payments by participants to owners of beneficial
interests in a registered global security held through participants will be
governed by standing customer instructions and customary practices, as is now
the case with the securities held for the accounts of customers in bearer form
or registered in "street name," and will be the responsibility of those
participants.
If the depositary for any of these securities represented by a
registered global security is at any time unwilling or unable to continue as
depositary or ceases to be a clearing agency registered under the Exchange Act,
and a successor depositary registered as a clearing agency under the Exchange
Act is not appointed by us within 90 days, we will issue securities in
definitive form in exchange for the registered global security that had been
held by the depositary. In addition, under the terms of the indenture, we may at
any time and in our sole discretion decide not to have any of the securities
represented by one or more registered global securities. We understand, however,
that, under current industry practices, the depositary would notify its
participants of our request, but will only withdraw beneficial interests from a
global security at the request of each participant. We would issue definitive
certificates in exchange for any such interests withdrawn. Any securities issued
in definitive form in exchange for a registered global security will be
registered in the name or names that the depositary gives to the applicable
trustee, warrant agent, unit agent or other relevant agent of ours or theirs. It
is expected that the depositary's instructions will be based upon directions
received by the depositary from participants with respect to ownership of
beneficial interests in the registered global security that had been held by the
depositary.
FORM OF SECURITIES INCLUDED IN UNITS
The form of the warrant included in a unit will correspond to the form
of the unit and of any other security included in that unit.
DESCRIPTION OF THE TRUST
Wintrust Capital Trust VI is a Delaware statutory trust formed pursuant
to the Delaware Statutory Trust Act under a trust agreement executed by us, as
sponsor for the trust, and the trustees, and a certificate of trust has been
filed with the Delaware Secretary of State. The trust agreement will be amended
and restated in its entirety in the form filed as an exhibit to the registration
statement of which
30
this prospectus is a part, as of the date the trust preferred securities are
initially issued. The trust agreement will be qualified under the Trust
Indenture Act of 1939.
The following discussion contains a description of the material terms
of the trust agreement for the trust and is subject to, and is qualified in its
entirety by reference to, the amended and restated trust agreement.
The holders of the trust preferred securities issued pursuant to an
offering described in this prospectus and subsequent prospectus supplements will
own all of the issued and outstanding trust preferred securities of the trust
which have certain prior rights over the other securities of the trust in
certain circumstances as specified in this prospectus. We will not initially own
any of the trust preferred securities. We will initially own, directly or
indirectly, all of the issued and outstanding common securities. The common
securities, together with the trust preferred securities, are called the trust
securities.
The trust exists exclusively for the purposes of:
o issuing the trust preferred securities to the public for cash;
o issuing its common securities to us in exchange for our
capitalization of the trust;
o investing the proceeds from the sale of the trust securities
in an equivalent amount of debentures; and
o engaging in other activities that are incidental to those
listed above, such as receiving payments on the debentures and
making distributions to security holders, furnishing notices
and other administrative tasks.
The trust will not have any independent business operations or any
assets, revenues or cash flows other than those related to the issuance and
administration of the trust securities.
The rights of the holders of the trust securities are as set forth in
the trust agreement, the Delaware Statutory Trust Act and the Trust Indenture
Act. The trust agreement does not permit the trust to borrow money or make any
investment other than in the debentures. Other than with respect to payment of
distributions on and the liquidation amount of the trust securities, Wintrust
has agreed to pay for all debts and obligations and all costs and expenses of
the trust, including the fees and expenses of the trustees and any income taxes,
duties and other governmental charges, and all costs and expenses related to
these charges, to which the trust may become subject, except for United States
withholding taxes that are properly withheld.
The number of trustees of the trust will initially be five. Three of
the trustees will be persons who are employees or officers of or who are
affiliated with Wintrust. They are the administrative trustees. The fourth
trustee will be an entity that maintains its principal place of business in the
State of Delaware. It is the Delaware trustee. Initially, Wilmington Trust
Company, a Delaware banking corporation, will act as Delaware trustee. The fifth
trustee, called the property trustee, will also initially be Wilmington Trust
Company. The property trustee is the institutional trustee under the trust
agreement and acts as the indenture trustee called for under the applicable
provisions of the Trust Indenture Act. Also for purposes of compliance with the
Trust Indenture Act, Wilmington Trust Company will act as guarantee trustee and
indenture trustee under the guarantee agreement and the indenture. We, as holder
of all of the common securities, will have the right to appoint or remove any
trustee unless an event of default under the indenture has occurred and is
continuing, in which case only the holders of the trust preferred securities
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may remove the Delaware trustee or the property trustee. The trust has a term of
approximately 31 years but may terminate earlier as provided in the trust
agreement.
The property trustee will hold the debentures for the benefit of the
holders of the trust securities and will have the power to exercise all rights,
powers and privileges under the indenture as the holder of the debentures. In
addition, the property trustee will maintain exclusive control of a segregated
noninterest-bearing "payment account" established with Wilmington Trust Company
to hold all payments made on the debentures for the benefit of the holders of
the trust securities. The property trustee will make payments of distributions
and payments on liquidation, redemption and otherwise to the holders of the
trust securities out of funds from the payment account. The guarantee trustee
will hold the guarantee for the benefit of the holders of the trust preferred
securities. We will pay all fees and expenses related to the trust and the
offering of the trust preferred securities, including the fees and expenses of
the trustees.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
The trust will issue only one series of trust preferred securities and
one series of common securities. The trust agreement for the trust will be
qualified as an indenture under the Trust Indenture Act of 1939. The trust
preferred securities will have terms and will be subject to conditions as set
forth in the trust agreement or made a part of the trust agreement by the Trust
Indenture Act. This summary of certain provisions of the trust preferred
securities and each trust agreement does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all the provisions of
each trust agreement, including the definitions of certain terms, and those
provisions made part of each trust agreement by the Trust Indenture Act. A form
of the trust agreement to be used in connection with the issuance of the trust
preferred securities and a form of the trust preferred securities are filed as
exhibits to the registration statement that includes this prospectus. Wherever
particular defined terms of a trust agreement are referred to in this
prospectus, those defined terms are incorporated in this prospectus by
reference. A copy of the form of the trust agreement is available upon request
from the property trustee.
GENERAL
The trust agreement authorizes the administrative trustees, on behalf
of the trust, to issue the trust securities, which are comprised of the trust
preferred securities to be sold to the public and the common securities. We will
own all of the common securities issued by the trust. The trust is not permitted
to issue any securities other than the trust securities or incur any other
indebtedness.
The trust preferred securities will represent preferred undivided
beneficial interests in the assets of the trust, and the holders of the trust
preferred securities will be entitled to a preference over the common securities
upon an event of default with respect to distributions and amounts payable on
redemption or liquidation. The trust preferred securities will rank equally, and
payments on the trust preferred securities will be made proportionally, with the
common securities, except as described under "--Subordination of Common
Securities."
The property trustee will hold legal title to the debentures in trust
for the benefit of the holders of the trust securities. We will guarantee the
payment of distributions out of money held by the trust, and payments upon
redemption of the trust preferred securities or liquidation of the trust, to the
extent described under "Description of the Guarantee." The guarantee agreement
does not cover the payment of any distribution or the liquidation amount when
the trust does not have sufficient funds available to make these payments.
The specific terms of the trust preferred securities offered by the
trust will be described in a prospectus supplement, including:
32
o the specific designation, liquidation amount, number to be
issued by the trust and purchase price;
o the currency or units based on or relating to currencies in
which distributions and other payments will or may be payable;
o the distribution rates (or the method by which the rates will
be determined), if any;
o the dates on which any distributions will be payable;
o any provisions relating to deferral of distribution payments;
o the places where distributions and other amounts payable on
the trust preferred securities will be payable;
o any repayment, redemption, prepayment or sinking fund
provisions;
o any conversion or exchange provisions;
o the voting rights, if any, of holders of the capital
securities;
o the terms and conditions, if any, upon which the assets of the
trust may be distributed to holders of the trust preferred
securities;
o any applicable United States federal income tax consequences;
and
o any other specific terms of the trust preferred securities.
If indicated in the applicable prospectus supplement, the terms of the
trust agreement for, and capital securities offered by, the trust may differ
from the terms summarized in this prospectus.
DISTRIBUTIONS
Source of Distributions. The funds of the trust available for
distribution to holders of the trust preferred securities will be limited to
payments made under the debentures, which the trust will purchase with the
proceeds from the sale of the trust securities. Distributions will be paid
through the property trustee, which will hold the amounts received from our
interest payments on the debentures in the payment account for the benefit of
the holders of the trust securities. If we do not make interest payments on the
debentures, the property trustee will not have funds available to pay
distributions on the trust preferred securities.
Distributions will accumulate from the date of issuance, will be
cumulative and will be computed on the basis of a 360-day year of twelve 30-day
months. If the distribution date is not a business day, then payment of the
distributions will be made on the next day that is a business day, without any
additional interest or other payment for the delay. However, if the next
business day is in the next calendar year, payment of the distribution will be
made on the business day immediately preceding the scheduled distribution date.
Extension Period. As long as no event of default under the indenture
has occurred and is continuing, we have the right to defer the payment of
interest on the debentures at any time for a period not exceeding 20 consecutive
quarters. We refer to this period of deferral as an "extension period." No
extension period may extend beyond the maturity date or end on a date other than
an interest payment date, which dates are the same as the distribution dates. If
we defer the payment of interest, quarterly
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distributions on the trust preferred securities will also be deferred during any
such extension period. Any deferred distributions under the trust preferred
securities will accumulate additional amounts at an annual rate compounded
quarterly from the relevant distribution date. The term "distributions" as used
in this prospectus includes those accumulated amounts.
During an extension period, we may not:
o declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect
to, any of our capital stock (other than stock dividends,
non-cash dividends in connection with the implementation of a
shareholder rights plan, purchases of common stock in
connection with employee benefit plans or in connection with
the reclassification of any class of our capital stock into
another class of capital stock);
o make any payment of principal, interest or premium on or
repay, repurchase or redeem any debt securities that rank
equally with (including the debentures issued to our other
affiliated Delaware trusts), or junior in interest to, the
debentures;
o make any guarantee payments with respect to any other
guarantee by us of any other debt securities of any of our
subsidiaries if the guarantee ranks equally with or junior to
the debentures (other than payments under the guarantee for
the trust preferred securities); or
o redeem, purchase or acquire less than all of the debentures or
any of the trust preferred securities.
After the termination of any extension period and the payment of all
amounts due, we may elect to begin a new extension period, subject to the above
requirements.
We do not currently intend to exercise our right to defer distributions
on the trust preferred securities by deferring the payment of interest on the
debentures.
REDEMPTION OR EXCHANGE
General. Subject to the prior approval of the Federal Reserve, if
required, we will have the right to redeem the debentures:
o in whole at any time, or in part from time to time, on or
after the date set forth in the applicable prospectus
supplement;
o at any time, in whole, within 180 days following the
occurrence of a Tax Event, an Investment Company Event or a
Capital Treatment Event, which terms we define below; or
o at any time, and from time to time, to the extent of any trust
preferred securities we purchase, plus a proportionate amount
of the common securities we hold.
Mandatory Redemption. Upon our repayment or redemption, in whole or in
part, of any debentures, whether on the date set forth in the applicable
prospectus supplement or earlier, the property trustee will apply the proceeds
to redeem the same amount of the trust securities, upon not less than 30 days'
nor more than 60 days' notice, at the redemption price. The redemption price
will equal 100% of the aggregate liquidation amount of the trust securities plus
accumulated but unpaid distributions to the date of redemption. If less than all
of the debentures are to be repaid or redeemed on a date of redemption, then the
proceeds from such repayment or redemption will be allocated to redemption of
trust preferred securities and common securities proportionately.
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Distribution of Debentures in Exchange for Trust Preferred Securities.
Upon prior approval of the Federal Reserve, if required by law or regulation, we
will have the right at any time to dissolve, wind-up or terminate the trust and,
after satisfaction of the liabilities of creditors of the trust as provided by
applicable law, including, without limitation, amounts due and owing the
trustees of the trust, cause the debentures to be distributed directly to the
holders of trust securities in liquidation of the trust. See "--Liquidation
Distribution Upon Termination."
After the liquidation date fixed for any distribution of debentures in
exchange for trust preferred securities:
o those trust securities will no longer be deemed to be
outstanding;
o certificates representing debentures in a principal amount
equal to the liquidation amount of those trust preferred
securities will be issued in exchange for the trust preferred
securities;
o we will use our best efforts to list the debentures on the
Nasdaq National Market or similar national exchange or
automated quotation system;
o any certificates representing trust securities that are not
surrendered for exchange will be deemed to represent
debentures with a principal amount equal to the liquidation
amount of those trust preferred securities, accruing interest
at the rate provided for in the debentures from the last
distribution date on the trust preferred securities; and
o all rights of the trust securityholders other than the right
to receive debentures upon surrender of a certificate
representing trust securities will terminate.
We cannot assure you that the market prices for the trust preferred
securities or the debentures that may be distributed if a dissolution and
liquidation of the trust were to occur would be favorable. The trust preferred
securities that an investor may purchase, or the debentures that an investor may
receive on dissolution and liquidation of the trust, may trade at a discount to
the price that the investor paid to purchase the trust preferred securities.
Redemption upon a Tax Event, Investment Company Event or Capital
Treatment Event. If a Tax Event, an Investment Company Event or a Capital
Treatment Event occurs, we will have the right to redeem the debentures in
whole, but not in part, and thereby cause a mandatory redemption of all of the
trust securities at the redemption price described above. If one of these events
occurs and we do not elect to redeem the debentures, or to dissolve the trust
and cause the debentures to be distributed to holders of the trust securities,
then the trust preferred securities will remain outstanding and additional
interest may be payable on the debentures.
"Tax Event" means the receipt by the trust and us of an opinion of
counsel experienced in such matters stating that, as a result of any change or
prospective change in the laws or regulations of the United States or any
political subdivision or taxing authority of the United States, or as a result
of any official administrative pronouncement or judicial decision interpreting
or applying the tax laws or regulations, there is more than an insubstantial
risk that:
o interest payable by us on the debentures is not, or within 90
days of the date of the opinion will not be, deductible by us,
in whole or in part, for federal income tax purposes;
o the trust is, or will be within 90 days after the date of the
opinion, subject to federal income tax with respect to income
received or accrued on the debentures; or
35
o the trust is, or will be within 90 days after the date of
opinion, subject to more than an immaterial amount of other
taxes, duties, assessments or other governmental charges.
"Investment Company Event" means the receipt by the trust and us of an
opinion of counsel experienced in such matters to the effect that there is more
than an insubstantial risk that the trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act, as a result of a change in law or regulation or a change in
interpretation or application of law or regulation.
"Capital Treatment Event" means the receipt by the trust and us of an
opinion of counsel experienced in such matters to the effect that there is more
than an insubstantial risk of impairment of our ability to treat the trust
preferred securities as Tier 1 capital for purposes of the current capital
adequacy guidelines of the Federal Reserve, as a result of any amendment to any
laws or any regulations.
For all of the events described above, we or the trust must request and
receive an opinion with regard to the event within a reasonable period of time
after we become aware of the possible occurrence of an event of this kind.
Redemption of Debentures in Exchange for Trust Preferred Securities We
Purchase. Upon prior approval of the Federal Reserve, if required by law or
regulation, we will also have the right at any time, and from time to time, to
redeem debentures in exchange for any trust preferred securities we may have
purchased in the market. If we elect to surrender any trust preferred securities
beneficially owned by us in exchange for redemption of a like amount of
debentures, we will also surrender a proportionate amount of common securities
in exchange for debentures. Trust preferred securities owned by other holders
will not be called for redemption at any time when we elect to exchange trust
securities we own for debentures.
The common securities we surrender will be in the same proportion to
the trust preferred securities we surrender as is the ratio of common securities
purchased by us to the trust preferred securities issued by the trust. In
exchange for the trust securities surrendered by us, the property trustee will
cause to be released to us for cancellation debentures with a principal amount
equal to the liquidation amount of the trust securities, plus any accumulated
but unpaid distributions, if any, then held by the property trustee allocable to
those trust securities. After the date of redemption involving an exchange by
us, the trust securities we surrender will no longer be deemed outstanding and
the debentures redeemed in exchange will be cancelled.
REDEMPTION PROCEDURES
Trust preferred securities will be redeemed at the redemption price
with the applicable proceeds from our contemporaneous redemption of the
debentures. Redemptions of the trust preferred securities will be made, and the
redemption price will be payable, on each redemption date only to the extent
that the trust has funds available for the payment of the redemption price.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the date of redemption to each holder of trust securities to
be redeemed at its registered address. Unless we default in payment of the
redemption price on the debentures, interest will cease to accumulate on the
debentures called for redemption on and after the date of redemption.
If the trust gives notice of redemption of its trust securities, then
the property trustee, to the extent funds are available, will irrevocably
deposit with the depositary for the trust securities funds sufficient to pay the
aggregate redemption price and will give the depositary for the trust securities
irrevocable instructions and authority to pay the redemption price to the
holders of the trust securities. If the trust
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preferred securities are no longer in book-entry only form, the property
trustee, to the extent funds are available, will deposit with the designated
paying agent for such trust preferred securities funds sufficient to pay the
aggregate redemption price and will give the paying agent irrevocable
instructions and authority to pay the redemption price to the holders upon
surrender of their certificates evidencing the trust preferred securities.
Notwithstanding the foregoing, distributions payable on or prior to the date of
redemption for any trust securities called for redemption will be payable to the
holders of the trust securities on the relevant record dates for the related
distribution dates.
If notice of redemption has been given and we have deposited funds as
required, then on the date of the deposit all rights of the holders of the trust
securities called for redemption will cease, except the right to receive the
redemption price, but without interest on such redemption price after the date
of redemption. The trust securities will also cease to be outstanding on the
date of the deposit. If any date fixed for redemption of trust securities is not
a business day, then payment of the redemption price payable on that date will
be made on the next day that is a business day without any additional interest
or other payment in respect of the delay. However, if the next business day is
in the next succeeding calendar year, payment of the interest will be made on
the immediately preceding business day.
If payment of the redemption price in respect of trust securities
called for redemption is improperly withheld or refused and not paid by the
trust, or by us pursuant to the guarantee, distributions on the trust securities
will continue to accumulate at the applicable rate from the date of redemption
originally established by the trust for the trust securities to the date the
redemption price is actually paid. In this case, the actual payment date will be
considered the date fixed for redemption for purposes of calculating the
redemption price.
Payment of the redemption price on the trust preferred securities and
any distribution of debentures to holders of trust preferred securities will be
made to the applicable recordholders as they appear on the register for the
trust preferred securities on the relevant record date. As long as the trust
preferred securities are represented by a global security, the record date will
be the business day immediately preceding the date of redemption or liquidation
date, as applicable.
If less than all of the trust securities are to be redeemed, then the
aggregate liquidation amount of the trust securities to be redeemed will be
allocated proportionately to those trust securities based upon the relative
liquidation amounts. The particular trust preferred securities to be redeemed
will be selected by the property trustee from the outstanding trust preferred
securities not previously called for redemption by a method the property trustee
deems fair and appropriate. The property trustee will promptly notify the
registrar for the trust preferred securities in writing of the trust preferred
securities selected for redemption and, in the case of any trust preferred
securities selected for partial redemption, the liquidation amount to be
redeemed. If the redemption relates to trust preferred securities purchased by
us and being exchanged for a like amount of debentures, then the trust preferred
securities we own will be the ones selected for redemption.
Subject to applicable law, if we are exercising our right to defer
interest payments on the debentures or an event of default under the indenture
for the debentures shall have occurred and be continuing, we may not, at any
time, purchase outstanding trust preferred securities.
SUBORDINATION OF COMMON SECURITIES
Payment of distributions on, and the redemption price of, the trust
preferred securities and common securities will be made based on the liquidation
amount of these securities. However, if an event of default under the indenture
has occurred and is continuing, no distributions on or redemption of the common
securities may be made unless payment in full in cash of all accumulated and
unpaid distributions on all of the outstanding trust preferred securities for
all distribution periods terminating on
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or before that time, or in the case of payment of the redemption price, payment
of the full amount of the redemption price on all of the outstanding trust
preferred securities then called for redemption, has been made or provided for.
All funds available to the property trustee will first be applied to the payment
in full in cash of all distributions on, or the redemption price of, the trust
preferred securities then due and payable.
In the case of the occurrence and continuance of any event of default
under the trust agreement resulting from an event of default under the
indenture, we, as holder of the common securities, will be deemed to have waived
any right to act with respect to that event of default under the trust agreement
until the effect of the event of default has been cured, waived or otherwise
eliminated. Until the event of default under the trust agreement has been so
cured, waived or otherwise eliminated, the property trustee will act solely on
behalf of the holders of the trust preferred securities and not on our behalf,
and only the holders of the trust preferred securities will have the right to
direct the property trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON TERMINATION
We will have the right at any time to dissolve, wind-up or terminate
the trust and cause debentures to be distributed to the holders of the trust
preferred securities. This right is subject, however, to us receiving approval
of the Federal Reserve, if required by law or regulation.
In addition, the trust will automatically terminate upon expiration of
its term and will terminate earlier on the first to occur of:
o our bankruptcy, dissolution or liquidation;
o the distribution of a like amount of the debentures to the
holders of trust securities, if we have given written
direction to the property trustee to terminate the trust;
o redemption of all of the trust preferred securities as
described under "--Redemption or Exchange--Mandatory
Redemption"; or
o the entry of a court order for the dissolution of the trust.
With the exception of a redemption as described under "--Redemption or
Exchange--Mandatory Redemption," if an early termination of the trust occurs,
the trust will be liquidated by the administrative trustees as expeditiously as
they determine to be possible. After satisfaction of liabilities to creditors of
the trust as provided by applicable law, the trustees will distribute to the
holders of trust securities, debentures:
o in an aggregate stated principal amount equal to the aggregate
stated liquidation amount of the trust securities;
o with an interest rate identical to the distribution rate on
the trust securities; and
o with accrued and unpaid interest equal to accumulated and
unpaid distributions on the trust securities.
However, if the property trustee determines that the distribution is
not practical, then the holders of trust securities will be entitled to receive,
instead of debentures, a proportionate amount of the liquidation distribution.
The liquidation distribution will be the amount equal to the aggregate of the
liquidation amount plus accumulated and unpaid distributions to the date of
payment. If the liquidation
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distribution can be paid only in part because the trust has insufficient assets
available to pay in full the aggregate liquidation distribution, then the
amounts payable directly by the trust on the trust securities will be paid on a
proportional basis, based on liquidation amounts, to us, as the holder of the
common securities, and to the holders of the trust preferred securities.
However, if an event of default under the indenture has occurred and is
continuing, the trust preferred securities will have a priority over the common
securities. See "--Subordination of Common Securities."
Under current United States federal income tax law and interpretations
and assuming that the trust is treated as a grantor trust, as is expected, a
distribution of the debentures should not be a taxable event to holders of the
trust preferred securities. Should there be a change in law, a change in legal
interpretation, a Tax Event or another circumstance, however, the distribution
could be a taxable event to holders of the trust preferred securities. The
applicable prospectus supplement will contain a detailed description of these
tax consequences.
If we do not elect to redeem the debentures prior to maturity or to
liquidate the trust and distribute the debentures to holders of the trust
preferred securities, the trust preferred securities will remain outstanding
until the repayment of the debentures. If we elect to dissolve the trust and
thus cause the debentures to be distributed to holders of the trust securities
in liquidation of the trust, we will continue to have the right to shorten the
maturity of the debentures.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an event of default under
the trust agreement with respect to the trust preferred securities:
o the occurrence of an event of default under the indenture;
o a default by the trust in the payment of any distribution when
it becomes due and payable, and continuation of the default
for a period of 30 days;
o a default by the trust in the payment of any redemption price
of any of the trust securities when it becomes due and
payable;
o a default in the performance, or breach, in any material
respect, of any covenant or warranty of the trustees in the
trust agreement, other than those defaults covered in the
previous two points, and continuation of the default or breach
for a period of 60 days after there has been given, by
registered or certified mail, to the trustee(s) by the holders
of at least 25% in aggregate liquidation amount of the
outstanding trust preferred securities, a written notice
specifying the default or breach and requiring it to be
remedied and stating that the notice is a "Notice of Default"
under the trust agreement; or
o the occurrence of events of bankruptcy or insolvency with
respect to the property trustee and our failure to appoint a
successor property trustee within 60 days.
Within five business days after the occurrence of any event of default
actually known to the property trustee, the property trustee will transmit
notice of the event of default to the holders of the trust preferred securities,
the administrative trustees and to us, unless the event of default has been
cured or waived. Wintrust and the administrative trustees are required to file
annually with the property trustee a certificate as to whether or not they are
in compliance with all the conditions and covenants applicable to them under the
trust agreement.
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If an event of default under the indenture has occurred and is
continuing, the trust preferred securities will have preference over the common
securities upon termination of the trust. The existence of an event of default
under the trust agreement does not entitle the holders of trust preferred
securities to accelerate the maturity thereof, unless the event of default is
caused by the occurrence of an event of default under the indenture and both the
indenture trustee and holders of at least 25% in principal amount of the
debentures fail to accelerate the maturity thereof.
REMOVAL OF THE TRUSTEES
Unless an event of default under the indenture has occurred and is
continuing, we may remove any trustee at any time. If an event of default under
the indenture has occurred and is continuing, only the holders of a majority in
liquidation amount of the outstanding trust preferred securities may remove the
property trustee or the Delaware trustee. The holders of the trust preferred
securities have no right to vote to appoint, remove or replace the
administrative trustees. These rights are vested exclusively with us as the
holder of the common securities. No resignation or removal of a trustee and no
appointment of a successor trustee will be effective until the successor trustee
accepts the appointment in accordance with the trust agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an event of default under the indenture has occurred and is
continuing, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the trust property may
at the time be located, we will have the power to appoint at any time or times,
and upon written request of the property trustee will appoint, one or more
persons or entities either (1) to act as a co-trustee, jointly with the property
trustee, of all or any part of the trust property, or (2) to act as separate
trustee of any trust property. In either case these trustees will have the
powers that may be provided in the instrument of appointment, and will have
vested in them any property, title, right or power deemed necessary or
desirable, subject to the provisions of the trust agreement. In case an event of
default under the indenture has occurred and is continuing, the property trustee
alone will have power to make the appointment.
MERGER OR CONSOLIDATION OF TRUSTEES
Generally, any person or successor to any of the trustees may be a
successor trustee to any of the trustees, including a successor resulting from a
merger or consolidation. However, any successor trustee must meet all of the
qualifications and eligibility standards to act as a trustee.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The trust may not merge with or into, convert into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to any corporation or other person, except
as described below. For these purposes, if we consolidate or merge with another
entity, or transfer or sell substantially all of our assets to another entity,
in some cases that transaction may be considered to involve a replacement of the
trust, and the conditions set forth below would apply to such transaction. The
trust may, at our request, with the consent of the administrative trustees and
without the consent of the holders of the trust preferred securities, the
property trustee or the Delaware trustee, undertake a transaction listed above
if the following conditions are met:
o the successor entity either (a) expressly assumes all of the
obligations of the trust with respect to the trust preferred
securities, or (b) substitutes for the trust preferred
securities other securities having substantially the same
terms as the trust preferred securities (referred to as
"successor securities") so long as the successor securities
rank the same in priority as the trust
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preferred securities with respect to distributions and
payments upon liquidation, redemption and otherwise;
o we appoint a trustee of the successor entity possessing
substantially the same powers and duties as the property
trustee in its capacity as the holder of the debentures;
o the successor securities are listed or traded or will be
listed or traded on any national securities exchange or other
organization on which the trust preferred securities are then
listed, if any;
o the merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the holders of the trust
preferred securities (including any successor securities) in
any material respect;
o the successor entity has a purpose substantially identical to
that of the trust;
o prior to the merger, conversion, consolidation, amalgamation,
replacement, conveyance, transfer or lease, we have received
an opinion from independent counsel that (a) any transaction
of this kind does not adversely affect the rights, preferences
and privileges of the holders of the trust preferred
securities (including any successor securities) in any
material respect, and (b) following the transaction, neither
the trust nor the successor entity will be required to
register as an "investment company" under the Investment
Company Act; and
o we own all of the common securities of the successor entity
and guarantee the obligations of the successor entity under
the successor securities at least to the extent provided by
the guarantee, the debentures, the trust agreement and the
expense agreement.
Notwithstanding the foregoing, the trust may not, except with the consent of
every holder of the trust preferred securities, enter into any transaction of
this kind if the transaction would cause the trust or the successor entity not
to be classified as a grantor trust for federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT
Except as described below and under "Description of the
Guarantee--Amendments" and as otherwise required by the Trust Indenture Act and
the trust agreement, the holders of the trust preferred securities will have no
voting rights.
The trust agreement may be amended from time to time by us and the
trustees, without the consent of the holders of the trust preferred securities,
in the following circumstances:
o with respect to acceptance of appointment by a successor
trustee;
o to cure any ambiguity, correct or supplement any provisions in
the trust agreement that may be inconsistent with any other
provision, or to make any other provisions with respect to
matters or questions arising under the trust agreement, as
long as the amendment is not inconsistent with the other
provisions of the trust agreement and does not have a material
adverse effect on the interests of any holder of trust
securities; or
o to modify, eliminate or add to any provisions of the trust
agreement if necessary to ensure that the trust will be
classified for federal income tax purposes as a grantor trust
at all times that any trust securities are outstanding or to
ensure that the trust will not be required to register as an
"investment company" under the Investment Company Act.
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With the consent of the holders of a majority of the aggregate
liquidation amount of the outstanding trust securities, we and the trustees may
amend the trust agreement if the trustees receive an opinion of counsel to the
effect that the amendment or the exercise of any power granted to the trustees
in accordance with the amendment will not affect the trust's status as a grantor
trust for federal income tax purposes or the trust's exemption from status as an
"investment company" under the Investment Company Act. However, without the
consent of each holder of trust securities, the trust agreement may not be
amended to (a) change the amount or timing of any distribution on the trust
securities or otherwise adversely affect the amount of any distribution required
to be made in respect of the trust securities as of a specified date, or (b)
restrict the right of a holder of trust securities to institute suit for the
enforcement of the payment on or after that date.
As long as the property trustee holds any debentures, the trustees will
not, without obtaining the prior approval of the holders of a majority in
aggregate liquidation amount of all outstanding trust preferred securities:
o direct the time, method and place of conducting any proceeding
for any remedy available to the indenture trustee, or
executing any trust or power conferred on the property trustee
with respect to the debentures;
o waive any past default that is waivable under the indenture;
o exercise any right to rescind or annul a declaration that the
principal of all the debentures will be due and payable; or
o consent to any amendment or termination of the indenture or
the debentures, where the property trustee's consent is
required. However, where a consent under the indenture
requires the consent of each holder of the affected
debentures, no consent will be given by the property trustee
without the prior consent of each holder of the trust
preferred securities.
The trustees may not revoke any action previously authorized or approved by a
vote of the holders of the trust preferred securities except by subsequent vote
of the holders of the trust preferred securities. The property trustee will
notify each holder of trust preferred securities of any notice of default with
respect to the debentures. In addition to obtaining the foregoing approvals of
the holders of the trust preferred securities, prior to taking any of the
foregoing actions, the trustees must obtain an opinion of counsel experienced in
these matters to the effect that the trust will not be classified as an
association taxable as a corporation for federal income tax purposes on account
of the action.
Any required approval of holders of trust securities may be given at a
meeting or by written consent. The property trustee will cause a notice of any
meeting at which holders of the trust securities are entitled to vote, or of any
matter upon which action by written consent of the holders is to be taken, to be
given to each holder of record of trust securities.
No vote or consent of the holders of trust preferred securities will be
required for the trust to redeem and cancel its trust preferred securities in
accordance with the trust agreement.
Notwithstanding the fact that holders of trust preferred securities are
entitled to vote or consent under any of the circumstances described above, any
of the trust preferred securities that are owned by Wintrust, the trustees or
any affiliate of Wintrust or any trustee, will, for purposes of the vote or
consent, be treated as if they were not outstanding.
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PAYMENT AND PAYING AGENCY
Payments in respect of the trust preferred securities will be made to
The Depository Trust Company, or DTC, which will credit the relevant accounts of
participants on the applicable distribution dates, or, if any of the trust
preferred securities are not held by DTC, the payments will be made by check
mailed to the address of the holder as listed on the register of holders of the
trust preferred securities. The paying agent for the trust preferred securities
will initially be the property trustee and any co-paying agent chosen by the
property trustee and acceptable to us and the administrative trustees. The
paying agent for the trust preferred securities may resign as paying agent upon
30 days' written notice to the administrative trustees, the property trustee and
us. If the property trustee no longer is the paying agent for the trust
preferred securities, the administrative trustees will appoint a successor to
act as paying agent. The successor must be a bank or trust company acceptable to
us and the property trustee.
REGISTRAR AND TRANSFER AGENT
The property trustee will act as the registrar and the transfer agent
for the trust preferred securities. Registration of transfers of trust preferred
securities will be effected without charge by or on behalf of the trust, but
upon payment of any tax or other governmental charges that may be imposed in
connection with any transfer or exchange. The trust and its registrar and
transfer agent will not be required to register or cause to be registered the
transfer of trust preferred securities after they have been called for
redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The property trustee undertakes to perform only the duties set forth in
the trust agreement. After the occurrence of an event of default that is
continuing, the property trustee must exercise the same degree of care and skill
as a prudent person exercises or uses in the conduct of its own affairs. The
property trustee is under no obligation to exercise any of the powers vested in
it by the trust agreement at the request of any holder of trust preferred
securities unless it is offered reasonable indemnity against the costs, expenses
and liabilities that might be incurred. If no event of default under the trust
agreement has occurred and is continuing and the property trustee is required to
decide between alternative causes of action, construe ambiguous or inconsistent
provisions in the trust agreement or is unsure of the application of any
provision of the trust agreement, and the matter is not one on which holders of
trust preferred securities are entitled to vote upon, then the property trustee
will take the action directed in writing by us. If the property trustee is not
so directed, then it will take the action it deems advisable and in the best
interests of the holders of the trust securities and will have no liability
except for its own bad faith, negligence or willful misconduct.
MISCELLANEOUS
The administrative trustees are authorized and directed to conduct the
affairs of and to operate the trust in such a way that:
o the trust will not be deemed to be an "investment company"
required to be registered under the Investment Company Act;
o the trust will not be classified as an association taxable as
a corporation for federal income tax purposes; and
o the debentures will be treated as indebtedness of Wintrust for
federal income tax purposes.
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In this regard, we and the administrative trustees are authorized to take any
action not inconsistent with applicable law, the certificate of trust or the
trust agreement, that we and the administrative trustees determine to be
necessary or desirable for these purposes.
We are required to use our best efforts to maintain the listing of the
trust preferred securities on the Nasdaq National Market or a similar national
securities exchange or automated quotation system, but this requirement will not
prevent us from redeeming all or a portion of the trust preferred securities in
accordance with the trust agreement.
Holders of the trust preferred securities have no preemptive or similar
rights. The trust agreement and the trust securities will be governed by
Delaware law.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Concurrently with the issuance of the trust preferred securities, the
trust will invest the proceeds from the sale of the trust preferred securities
in the debentures issued by us. The debentures will be issued as unsecured debt
under the indenture between us and an indenture trustee. The indenture will be
qualified under the Trust Indenture Act. When used in this section, indenture
refers only to the indenture for the junior subordinated debentures of Wintrust,
and not the indenture for the debt securities of Wintrust.
The following discussion contains a description of the material
provisions of the indenture and is subject to, and is qualified in its entirety
by reference to, the indenture and to the Trust Indenture Act. We urge
prospective investors to read the form of the indenture, which is filed as an
exhibit to the registration statement of which this prospectus forms a part. If
indicated in the prospectus supplement, the terms of any series may differ from
the terms summarized below.
GENERAL
The debentures will be unsecured and will rank junior to all of our
senior and subordinated debt, including indebtedness we may incur in the future.
Because we are a holding company, our right to participate in any distribution
of assets of any of our subsidiaries, upon any subsidiary's liquidation or
reorganization or otherwise, and thus the ability of holders of the debentures
to benefit indirectly from any distribution by a subsidiary, is subject to the
prior claim of creditors of the subsidiary, except to the extent that we may be
recognized as a creditor of the subsidiary. The debentures will, therefore, be
effectively subordinated to all existing and future liabilities of our
subsidiaries, and holders of debentures should look only to our assets for
payment. Except as otherwise provided in the applicable prospectus supplement,
the indenture does not limit our ability to incur or issue secured or unsecured
senior and junior debt. See "--Subordination" and "--Miscellaneous."
The indenture does not contain provisions that afford holders of the
debentures protection in the event of a highly leveraged transaction or other
similar transaction involving us, nor does it require us to maintain or achieve
any financial performance levels or to obtain or maintain any credit rating on
the debentures.
The applicable prospectus supplement will contain, where applicable,
the following terms of and other information relating to any offered junior
subordinated debentures:
o the title of the junior subordinated debentures;
o any limit upon the aggregate principal amount of the junior
subordinated debentures;
44
o the date or dates on which the principal of the junior
subordinated debentures is payable or the method of
determination thereof, including the right, if any, of
Wintrust to shorten or extend the stated maturity date in
certain circumstances;
o the rate or rates, if any, at which the junior subordinated
debentures will bear interest, the dates on which that
interest will be payable, our right, if any, to defer or
extend an interest payment date and the record dates for any
interest payable on any interest payment date or the method by
which any of the foregoing will be determined;
o the place or places where the principal of and premium, if
any, and interest on the junior subordinated debentures will
be payable and where, subject to the terms of the indenture as
described below under "--Registration and Transfer of Junior
Subordinated Debentures," the junior subordinated debentures
may be presented for registration of transfer or exchange and
the place or places where notices and demands to or upon us in
respect of the junior subordinated debentures and the
indenture may be made;
o any period or periods within which, or date or dates on which,
the price or prices at which and the terms and conditions upon
which junior subordinated debentures may be redeemed, in whole
or in part, at our option or at the option of a holder of
junior subordinated debentures;
o our obligation, if any, to redeem, purchase or repay the
junior subordinated debentures and the period or periods
within which, the price or prices at which, and the other
terms and conditions upon which the junior subordinated
debentures will be redeemed, repaid or purchased, in whole or
in part, pursuant to that obligation;
o the denominations in which any junior subordinated debentures
will be issuable;
o if other than in U.S. dollars, in which the principal of (and
premium, if any) and interest, if any, on the junior
subordinated debentures will be payable, or in which the
junior subordinated debentures will be denominated;
o any additions, modifications or deletions in the events of
default under the indenture or covenants of Wintrust specified
in the indenture with respect to the junior subordinated
debentures;
o if other than the principal amount, the portion of the
principal amount of junior subordinated debentures that will
be payable upon declaration of acceleration of maturity;
o any index or indices used to determine the amount of payments
of principal of and premium, if any, and interest on the
junior subordinated debentures and the manner in which those
amounts will be determined;
o whether the junior subordinated debentures will be issuable in
registered form or bearer form or both and, if bearer
securities are issuable, any restrictions applicable to the
exchange of one form for another and to the offer, sale and
delivery of the bearer securities;
o any additions or changes to the indenture with respect to a
series of junior subordinated debentures as will be necessary
to permit or facilitate the issuance of that series in bearer
form, registrable or not registrable as to principal, and with
or without interest coupons;
45
o the appointment of any trustees, depositaries, authenticating
or paying agents, transfer agents or registrars or other
agents;
o whether the junior subordinated debentures will be convertible
or exchangeable for other securities or property and, if so,
the terms of any conversion or exchange and the terms of the
other securities; and
o any other terms of the junior subordinated debentures not
inconsistent with the provisions of the indenture.
REGISTRATION AND TRANSFER OF JUNIOR SUBORDINATED DEBENTURES
Holders may present junior subordinated debentures for exchange, and
holders of registered junior subordinated debentures may present these
securities for transfer, in the manner, at the places and subject to the
restrictions stated in the junior subordinated debentures and described in the
applicable prospectus supplement. We will provide these services without charge
except for any tax or other governmental charge payable in connection with these
services and subject to any limitations provided in the indenture.
Holders may transfer junior subordinated debentures in bearer form and
the related coupons, if any, by delivery to the transferee. If any of the
securities are held in global form, the procedures for transfer of interests in
those securities will depend upon the procedures of the depositary for those
global securities.
SUBORDINATION
The debentures are subordinated and junior in right of payment to all
of our senior and subordinated debt, as defined in the applicable prospectus
supplement. Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up or reorganization of Wintrust, whether
voluntary or involuntary in bankruptcy, insolvency, receivership or other
proceedings in connection with any insolvency or bankruptcy proceedings, the
holders of our senior and subordinated debt will first be entitled to receive
payment in full of principal and interest before the holders of debentures will
be entitled to receive or retain any payment in respect of the debentures.
If the maturity of any debentures is accelerated, the holders of all of
our senior and subordinated debt outstanding at the time of the acceleration
will also be entitled to first receive payment in full of all amounts due to
them, including any amounts due upon acceleration, before the holders of the
debentures will be entitled to receive or retain any principal or interest
payments on the debentures.
No payments of principal or interest on the debentures may be made if
there has occurred and is continuing a default in any payment with respect to
any of our senior or subordinated debt or an event of default with respect to
any of our senior or subordinated debt resulting in the acceleration of the
maturity of the senior or subordinated debt, or if any judicial proceeding is
pending with respect to any default.
PAYMENT AND PAYING AGENT
Generally, payment of principal of and interest on the debentures will
be made at the office of the indenture trustee. However, we have the option to
make payment of any interest by (a) check mailed to the address of the person
entitled to payment at the address listed in the register of holders of the
debentures, or (b) wire transfer to an account maintained by the person entitled
thereto as specified in the register of holders of the debentures, provided that
proper transfer instructions have been received by the applicable record date.
Payment of any interest on debentures will be made to the person in whose name
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the debenture is registered at the close of business on the regular record date
for the interest payment, except in the case of defaulted interest.
Any moneys deposited with the indenture trustee or any paying agent for
the debentures, or then held by us in trust, for the payment of the principal of
or interest on the debentures and remaining unclaimed for two years after the
principal or interest has become due and payable, will be repaid to us on
September 30 of each year. If we hold any of this money in trust, then it will
be discharged from the trust to us and the holder of the debenture will
thereafter look, as a general unsecured creditor, only to us for payment.
REGISTRAR AND TRANSFER AGENT
The indenture trustee will act as the registrar and the transfer agent
for the debentures. Debentures may be presented for registration of transfer,
with the form of transfer endorsed thereon, or a satisfactory written instrument
of transfer, duly executed, at the office of the registrar. Provided that we
maintain a transfer agent in Wilmington, Delaware, we may rescind the
designation of any transfer agent or approve a change in the location through
which any transfer agent acts. We may at any time designate additional transfer
agents with respect to the debentures.
If we redeem any of the debentures, neither we nor the indenture
trustee will be required to (a) issue, register the transfer of or exchange any
debentures during a period beginning at the opening of business 15 days before
the day of the mailing of and ending at the close of business on the day of the
mailing of the relevant notice of redemption, or (b) transfer or exchange any
debentures so selected for redemption, except, in the case of any debentures
being redeemed in part, any portion not to be redeemed.
MODIFICATION OF INDENTURE
We and the indenture trustee may, from time to time without the consent
of the holders of the debentures, amend, waive our rights under or supplement
the indenture for purposes which do not materially adversely affect the rights
of the holders of the debentures. Other changes may be made by us and the
indenture trustee with the consent of the holders of a majority in principal
amount of the outstanding debentures. However, without the consent of the holder
of each outstanding debenture affected by the proposed modification, no
modification may:
o extend the maturity date of the debentures;
o reduce the principal amount or the rate or extend the time of
payment of interest; or
o reduce the percentage of principal amount of debentures
required to amend the indenture.
As long as any of the trust preferred securities remain outstanding, no
modification of the indenture may be made that requires the consent of the
holders of the debentures, no termination of the indenture may occur, and no
waiver of any event of default under the indenture may be effective, without the
prior consent of the holders of a majority of the aggregate liquidation amount
of the trust preferred securities.
DEBENTURE EVENTS OF DEFAULT
The indenture provides that any one or more of the following events
with respect to the debentures that has occurred and is continuing constitutes
an event of default under the indenture:
o our failure to pay any interest on the debentures for 30 days
after the due date, except where we have properly deferred the
interest payment;
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o our failure to pay any principal on the debentures when due
whether at maturity, upon redemption or otherwise;
o our failure to observe or perform in any material respect any
other covenants or agreements contained in the indenture for
90 days after written notice to us from the indenture trustee
or the holders of at least 25% in aggregate outstanding
principal amount of the debentures; or
o our bankruptcy, insolvency or reorganization or dissolution of
the trust other than in connection with a distribution of the
debentures in connection with such dissolution, redemption of
the trust securities or certain transactions permitted under
the trust agreement.
The holders of a majority of the aggregate outstanding principal amount
of the debentures have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the indenture trustee. The
indenture trustee, or the holders of at least 25% in aggregate outstanding
principal amount of the debentures, may declare the principal due and payable
immediately upon an event of default under the indenture. The holders of a
majority of the outstanding principal amount of the debentures may rescind and
annul the declaration if the default has been cured and a sum sufficient to pay
all matured installments of interest and principal due otherwise than by
acceleration has been deposited with the indenture trustee and any and all
events of default have been remedied or waived by the holders of a majority of
the outstanding principal amount of the debentures. The holders may not annul
the declaration and waive a default if the default is the non-payment of the
principal of the debentures which has become due solely by the acceleration.
So long as the property trustee is the holder of the debentures, an
event of default under the indenture has occurred and is continuing, the
property trustee will have the right to declare the principal of and the
interest on the debentures, and any other amounts payable under the indenture,
to be immediately due and payable and to enforce its other rights as a creditor
with respect to the debentures.
We are required to file annually with the indenture trustee a
certificate as to whether or not we are in compliance with all of the conditions
and covenants applicable to us under the indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF THE TRUST PREFERRED SECURITIES
If an event of default under the indenture has occurred and is
continuing and the event is attributable to the failure by us to pay interest on
or principal of the debentures on the date on which the payment is due and
payable, then a holder of trust preferred securities may institute a direct
action against us to compel us to make the payment. We may not amend the
indenture to remove the foregoing right to bring a direct action without the
prior written consent of all of the holders of the trust preferred securities.
If the right to bring a direct action is removed, the trust may become subject
to the reporting obligations under the Securities Exchange Act of 1934.
The holders of the trust preferred securities will not be able to
exercise directly any remedies, other than those set forth in the preceding
paragraph, available to the holders of the debentures unless there has been an
event of default under the trust agreement.
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
We may not consolidate with or merge into any other entity or convey or
transfer our properties and assets substantially as an entirety to any entity,
and no entity may be consolidated with or merged into us or sell, convey,
transfer or otherwise dispose of its properties and assets substantially as an
entirety to us, unless:
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o if we consolidate with or merge into another person or convey
or transfer our properties and assets substantially as an
entirety to any person, the successor person is organized
under the laws of the United States or any state or the
District of Columbia, and the successor person expressly
assumes by supplemental indenture our obligations on the
debentures, and the ultimate parent entity of the successor
entity expressly assumes our obligations under the guarantee,
to the extent the trust preferred securities are then
outstanding;
o immediately after the transaction, no event of default under
the indenture, and no event which, after notice or lapse of
time, or both, would become an event of default under the
indenture, has occurred and is continuing; and
o other conditions as prescribed in the indenture are met.
Under certain circumstances, if we consolidate or merge with another
entity, or transfer or sell substantially all of our assets to another entity,
such transaction may be considered to involve a replacement of the trust, and
the provisions of the trust agreement relating to a replacement of the trust
would apply to such transaction. See "Description of the Trust Preferred
Securities-- Mergers, Consolidations, Amalgamations or Replacements of the
Trust" on page 40.
SATISFACTION AND DISCHARGE
The indenture will cease to be of further effect and we will be deemed
to have satisfied and discharged our obligations under the indenture when all
debentures not previously delivered to the indenture trustee for cancellation:
o have become due and payable; and
o will become due and payable at their stated maturity within
one year or are to be called for redemption within one year,
and we deposit or cause to be deposited with the indenture
trustee funds, in trust, for the purpose and in an amount
sufficient to pay and discharge the entire indebtedness on the
debentures not previously delivered to the indenture trustee
for cancellation, for the principal and interest due to the
date of the deposit or to the stated maturity or redemption
date, as the case may be.
We may still be required to provide officers' certificates, opinions of
counsel and pay fees and expenses due after these events occur.
GOVERNING LAW
Unless otherwise specified in a prospectus supplement, the indenture
and the debentures will be governed by and construed in accordance with Illinois
law.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
The indenture trustee is subject to all the duties and responsibilities
specified with respect to an indenture trustee under the Trust Indenture Act.
Subject to these provisions, the indenture trustee is under no obligation to
exercise any of the powers vested in it by the indenture at the request of any
holder of debentures, unless offered reasonable security or indemnity by the
holder against the costs, expenses and liabilities which might be incurred. The
indenture trustee is not required to expend or risk its own funds or otherwise
incur personal financial liability in the performance of its duties if the
indenture trustee reasonably believes that repayment or adequate indemnity is
not reasonably assured to it.
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MISCELLANEOUS
We have agreed, pursuant to the indenture, for so long as trust
preferred securities remain outstanding:
o to maintain directly or indirectly 100% ownership of the
common securities of the trust, except that certain successors
that are permitted pursuant to the indenture may succeed to
our ownership of the common securities;
o not to voluntarily terminate, wind up or liquidate the trust
without prior approval of the Federal Reserve, if required by
law or regulation;
o to use our reasonable efforts to cause the trust (a) to remain
a Delaware statutory trust (and to avoid involuntary
termination, winding up or liquidation), except in connection
with a distribution of debentures, the redemption of all of
the trust securities of the trust or mergers, consolidations
or amalgamations, each as permitted by the trust agreement;
and (b) to otherwise continue not to be treated as an
association taxable as a corporation or partnership for
federal income tax purposes; and
o to use our reasonable efforts to cause each holder of trust
securities to be treated as owning an individual beneficial
interest in the debentures.
DESCRIPTION OF THE GUARANTEE
The trust preferred securities guarantee agreement will be executed and
delivered by us concurrently with the issuance of the trust preferred securities
for the benefit of the holders of the trust preferred securities. The guarantee
agreement will be qualified as an indenture under the Trust Indenture Act. The
guarantee trustee will act as trustee for purposes of complying with the
provisions of the Trust Indenture Act, and will also hold each guarantee for the
benefit of the holders of the trust preferred securities. The following
discussion contains a description of the material provisions of the guarantee
and is qualified in its entirety by reference to the guarantee agreement and the
Trust Indenture Act. Prospective investors are urged to read the form of the
guarantee agreement, which has been filed as an exhibit to the registration
statement of which this prospectus forms a part. Specific terms of a guarantee
will be described in the prospectus supplement relating to the applicable trust
preferred securities. If indicated in the applicable prospectus supplement, the
terms of a particular guarantee may differ from the terms discussed below.
GENERAL
We agree to pay in full on a subordinated basis, to the extent
described in the guarantee agreement, the guarantee payments (as defined below)
to the holders of the trust preferred securities as and when due, regardless of
any defense, right of set-off or counterclaim that the trust may have or assert
other than the defense of payment.
The following payments with respect to the trust preferred securities
are called the "guarantee payments" and, to the extent not paid or made by the
trust and to the extent that the trust has funds available for those
distributions, will be subject to the guarantee:
o any accumulated and unpaid distributions required to be paid
on the trust preferred securities;
o with respect to any trust preferred securities called for
redemption, the redemption price; and
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o upon a voluntary or involuntary dissolution, winding up or
termination of the trust (other than in connection with the
distribution of debentures to the holders of trust preferred
securities in exchange for trust preferred securities), the
lesser of:
(a) the amount of the liquidation distribution; and
(b) the amount of assets of the trust remaining available
for distribution to holders of trust preferred
securities in liquidation of the trust.
We may satisfy our obligations to make a guarantee payment by making a
direct payment of the required amounts to the holders of the trust preferred
securities or by causing the trust to pay the amounts to the holders.
The guarantee agreement is a guarantee, on a subordinated basis, of the
guarantee payments, but the guarantee only applies to the extent the trust has
funds available for those distributions. If we do not make interest payments on
the debentures purchased by the trust, the trust will not have funds available
to make the distributions and will not pay distributions on the trust preferred
securities.
STATUS OF THE GUARANTEE
The guarantee constitutes our unsecured obligation that ranks
subordinate and junior in right of payment to all of our senior and subordinated
debt in the same manner as the debentures. We expect to incur additional
indebtedness in the future, although we have no specific plans in this regard
presently, and neither of the indenture nor the trust agreement limits the
amounts of the obligations that we may incur.
The guarantee constitutes a guarantee of payment and not of collection.
If we fail to make guarantee payments when required, holders of trust preferred
securities may institute a legal proceeding directly against us to enforce their
rights under the guarantee without first instituting a legal proceeding against
any other person or entity.
The guarantee will not be discharged except by payment of the guarantee
payments in full to the extent not paid by the trust or upon distribution of the
debentures to the holders of the trust preferred securities. Because we are a
bank holding company, our right to participate in any distribution of assets of
any subsidiary upon the subsidiary's liquidation or reorganization or otherwise
is subject to the prior claims of creditors of that subsidiary, except to the
extent we may be recognized as a creditor of that subsidiary. Our obligations
under the guarantee, therefore, will be effectively subordinated to all existing
and future liabilities of our subsidiaries, and claimants should look only to
our assets for payments under the guarantee.
AMENDMENTS
Except with respect to any changes that do not materially adversely
affect the rights of holders of the trust preferred securities, in which case no
vote will be required, the guarantee may not be amended without the prior
approval of the holders of a majority of the aggregate liquidation amount of the
outstanding trust preferred securities.
EVENTS OF DEFAULT; REMEDIES
An event of default under the guarantee agreement will occur upon our
failure to make any required guarantee payments or to perform any other
obligations under the guarantee. If the guarantee trustee has actual knowledge
that an event of default has occurred and is continuing, the guarantee trustee
51
must enforce the guarantee for the benefit of the holders of the trust preferred
securities. The holders of a majority in aggregate liquidation amount of the
trust preferred securities will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the guarantee
trustee in respect of the guarantee and may direct the exercise of any power
conferred upon the guarantee trustee under the guarantee agreement.
Any holder of trust preferred securities may institute and prosecute a
legal proceeding directly against us to enforce its rights under the guarantee
without first instituting a legal proceeding against the trust, the guarantee
trustee or any other person or entity.
We are required to provide to the guarantee trustee annually a
certificate as to whether or not we are in compliance with all of the conditions
and covenants applicable to us under the guarantee agreement.
TERMINATION OF THE GUARANTEE
The guarantee will terminate and be of no further force and effect
upon:
o full payment of the redemption price of the trust preferred
securities;
o full payment of the amounts payable upon liquidation of the
trust; or
o distribution of the debentures to the holders of the trust
preferred securities.
If at any time any holder of the trust preferred securities must
restore payment of any sums paid under the trust preferred securities or the
guarantee, the guarantee will continue to be effective or will be reinstated
with respect to such amounts.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee, other than during the occurrence and continuance
of our default in performance of the guarantee, undertakes to perform only those
duties as are specifically set forth in the guarantee. When an event of default
has occurred and is continuing, the guarantee trustee must exercise the same
degree of care and skill as a prudent person would exercise or use in the
conduct of his or her own affairs. Subject to those provisions, the guarantee
trustee is under no obligation to exercise any of the powers vested in it by the
guarantee at the request of any holder of any trust preferred securities, unless
it is offered reasonable security and indemnity against the costs, expenses and
liabilities that might be incurred thereby; but this does not relieve the
guarantee trustee of its obligation to exercise the rights and powers under the
guarantee in the event of a default.
EXPENSE AGREEMENT
We will, pursuant to the separate Agreement as to Expenses and
Liabilities entered into by us and the trust under the trust agreement,
irrevocably and unconditionally guarantee to each person or entity to whom the
trust becomes indebted or liable, the full payment of any costs, expenses or
liabilities of the trust, other than obligations of the trust to pay to the
holders of the trust preferred securities or other similar interests in the
trust of the amounts due to the holders pursuant to the terms of the trust
preferred securities or other similar interests, as the case may be. Third party
creditors of the trust may proceed directly against us under the expense
agreement, regardless of whether they had notice of the expense agreement.
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GOVERNING LAW
Unless otherwise specified in a prospectus supplement, the guarantee
will be governed by Illinois law.
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES, THE
DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
We will irrevocably guarantee, as and to the extent described in this
prospectus, payments of distributions and other amounts due on the trust
preferred securities, to the extent the trust has funds available for the
payment of these amounts. We and the trust believe that, taken together, our
obligations under the debentures, the indenture, the trust agreement, the
expense agreement and the guarantee agreement will provide, in the aggregate, a
full, irrevocable and unconditional guarantee, on a subordinated basis, of
payment of distributions and other amounts due on the trust preferred
securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes a guarantee. It is only the
combined operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the obligations of the trust under
the trust preferred securities.
If and to the extent that we do not make payments on the debentures,
the trust will not pay distributions or other amounts due on the trust preferred
securities. The guarantee does not cover payment of distributions when the trust
does not have sufficient funds to pay the distributions. In this event, the
remedy of a holder of trust preferred securities is to institute a legal
proceeding directly against us for enforcement of payment of the distributions
to the holder. Our obligations under the guarantee are subordinated and junior
in right of payment to all of our other indebtedness.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on
the debentures, these payments will be sufficient to cover distributions and
other payments due on the trust preferred securities, primarily because:
o the aggregate principal amount of the debentures will be equal
to the sum of the aggregate stated liquidation amount of the
trust securities;
o the interest rate and interest and other payment dates on the
debentures will match the distribution rate and distribution
and other payment dates for the trust preferred securities;
o we will pay for any and all costs, expenses and liabilities of
the trust, except the obligations of the trust to pay to
holders of the trust preferred securities the amounts due to
the holders pursuant to the terms of the trust preferred
securities; and
o the trust will not engage in any activity that is not
consistent with the limited purposes of the trust.
ENFORCEMENT RIGHTS OF HOLDERS OF TRUST PREFERRED SECURITIES
A holder of any preferred security may institute a legal proceeding
directly against us to enforce its rights under the guarantee without first
instituting a legal proceeding against the guarantee trustee, the trust or any
other person. A default or event of default under any of our senior or
subordinated debt
53
would not constitute a default or event of default under the trust agreement. In
the event, however, of payment defaults under, or acceleration of, our senior or
subordinated debt, the subordination provisions of the indenture provides that
no payments may be made in respect of the debentures, until the obligations have
been paid in full or any payment default has been cured or waived. Failure to
make required payments on the debentures would constitute an event of default
under the trust agreement.
LIMITED PURPOSE OF THE TRUST
The trust preferred securities evidence preferred undivided beneficial
interests in the assets of the trust. The trust exists for the exclusive
purposes of issuing the trust securities, investing the proceeds thereof in
debentures, and engaging in only those other activities necessary, advisable or
incidental thereto. A principal difference between the rights of a holder of a
preferred security and the rights of a holder of a debenture is that a holder of
a debenture is entitled to receive from us the principal amount of, and interest
accrued on, debentures held, while a holder of trust preferred securities is
entitled to receive distributions from the trust (or from us under the
guarantee) if and to the extent the trust has funds available for the payment of
the distributions.
RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or
liquidation of the trust involving the liquidation of the debentures, the
holders of the trust preferred securities will be entitled to receive, out of
assets held by the trust, the liquidation distribution in cash. See "Description
of the Trust Preferred Securities-- Liquidation Distribution Upon Termination"
on page 38.
Upon our voluntary or involuntary liquidation or bankruptcy, the
property trustee, as holder of the debentures, would be a subordinated creditor
of ours. Therefore, the property trustee would be subordinated in right of
payment to all of our senior and subordinated debt, but is entitled to receive
payment in full of principal and interest before any of our shareholders receive
payments or distributions. Since we are the guarantor under the guarantee and
have agreed to pay for all costs, expenses and liabilities of the trust other
than the obligations of the trust to pay to holders of the trust preferred
securities the amounts due to the holders pursuant to the terms of the trust
preferred securities, the positions of a holder of the trust preferred
securities and a holder of the debentures relative to our other creditors and to
our shareholders in the event of liquidation or bankruptcy are expected to be
substantially the same.
BOOK-ENTRY ISSUANCE
GENERAL
The Depository Trust Company ("DTC") will act as securities depositary
for each of the trust preferred securities and may act as securities depositary
for all of the debentures in the event of the distribution of the debentures to
the holders of trust preferred securities. Except as described below, the trust
preferred securities will be issued only as registered securities in the name of
Cede & Co. (DTC's partnership nominee) or such other name as may be requested by
DTC. One or more global trust preferred securities will be issued for the trust
preferred securities and will be deposited with DTC.
DTC, the world's largest depository, is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to Section 17A of the
Securities Exchange Act of 1934. DTC holds securities that its participants
deposit with DTC. DTC also facilitates
54
the settlement among participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. DTC is a wholly-owned subsidiary of the Depository Trust &
Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of its direct
participants and members of the National Securities Clearing Corporation,
Government Securities Clearing Corporation, MBS Clearing Corporation and
Emerging Markets Clearing Corporation, as well as by the New York Stock
Exchange, the American Stock Exchange and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to indirect
participants, such as securities brokers and dealers, banks and trust companies
that clear through or maintain custodial relationships with direct participants,
either directly or indirectly. The rules applicable to DTC and its participants
are on file with the SEC.
Purchases of trust preferred securities under the DTC system must be
made by or through direct participants, which will receive a credit for the
trust preferred securities on DTC's records. The ownership interest of each
actual purchaser of each preferred security ("beneficial owner") is in turn to
be recorded on the direct and indirect participants' records. Beneficial owners
will not receive written confirmation from DTC of their purchases, but
beneficial owners are expected to receive written confirmations providing
details of the transactions, as well as periodic statements of their holdings,
from the direct or indirect participants through which the beneficial owners
purchased trust preferred securities. Transfers of ownership interests in the
trust preferred securities are to be accomplished by entries made on the books
of participants acting on behalf of beneficial owners. Beneficial owners will
not receive certificates representing their ownership interest in trust
preferred securities except if use of the book-entry-only system for the trust
preferred securities is discontinued.
The deposit of trust preferred securities with DTC and their
registration in the name of Cede & Co. or such other nominee will not effect any
change in beneficial ownership. DTC will have no knowledge of the actual
beneficial owners of the trust preferred securities; DTC's records reflect only
the identity of the direct participants to whose accounts the trust preferred
securities are credited, which may or may not be the beneficial owners. The
participants will remain responsible for keeping account of their holdings on
behalf of their customers.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that we believe to be reliable, but we and
the trust assume no responsibility for the accuracy thereof. Neither we nor the
trust have any responsibility for the performance by DTC or its participants of
their respective obligations as described in this prospectus or under the rules
and procedures governing their respective operations.
NOTICES AND VOTING
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants, and by direct and
indirect participants to beneficial owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
Redemption notices will be sent to Cede & Co. as the registered holder
of the trust preferred securities. If less than all of the trust preferred
securities are being redeemed, the amount to be redeemed will be determined in
accordance with the trust agreement.
Although voting with respect to the trust preferred securities is
limited to the holders of record of the trust preferred securities, in those
instances in which a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to trust preferred securities. Under its usual
procedures, DTC
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would mail an omnibus proxy to the property trustee as soon as possible after
the record date. The omnibus proxy assigns Cede & Co.'s consenting or voting
rights to those direct participants to whose accounts the trust preferred
securities are credited on the record date.
DISTRIBUTION OF FUNDS
The property trustee will make distribution payments on the trust
preferred securities to DTC. DTC's practice is to credit direct participants'
accounts on the relevant payment date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payments on the payment date. Payments by participants to beneficial
owners will be governed by standing instructions and customary practices and
will be the responsibility of the participant and not of DTC, the property
trustee, the trust or us, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of distributions to DTC is the
responsibility of the property trustee, disbursement of the payments to direct
participants is the responsibility of DTC, and disbursements of the payments to
the beneficial owners is the responsibility of direct and indirect participants.
SUCCESSOR DEPOSITARIES AND TERMINATION OF BOOK-ENTRY SYSTEM
DTC may discontinue providing its services with respect to any of the
trust preferred securities at any time by giving reasonable notice to the
property trustee or us. If no successor securities depositary is obtained,
definitive certificates representing the trust preferred securities are required
to be printed and delivered. We also have the option to discontinue use of the
system of book-entry transfers through DTC (or a successor depositary). After an
event of default under the indenture, the holders of a majority in liquidation
amount of trust preferred securities may determine to discontinue the system of
book-entry transfers through DTC. In these events, definitive certificates for
the trust preferred securities will be printed and delivered.
PLAN OF DISTRIBUTION
We may sell the securities being offered hereby in one or more of the
following ways from time to time:
o through agents to the public or to investors;
o to underwriters for resale to the public or to investors;
o directly to investors; or
o through a combination of any of these methods of sale.
We will set forth in a prospectus supplement the terms of that
particular offering of securities, including:
o the name or names of any agents or underwriters;
o the purchase price of the securities being offered and the
proceeds we will receive from the sale;
o any over-allotment options under which underwriters may
purchase additional securities from us;
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o any agency fees or underwriting discounts and other items
constituting agents' or underwriters' compensation;
o any initial public offering price;
o any discounts or concessions allowed or reallowed or paid to
dealers; and
o any securities exchanges or markets on which such securities
may be listed.
AGENTS
If the applicable prospectus supplement indicates, we will authorize
dealers or our agents to solicit offers by various institutions to purchase
offered securities from us pursuant to contracts that provide for payment and
delivery on a future date. We must approve all institutions, but they may
include, among others:
o commercial and savings banks;
o insurance companies;
o pension funds;
o investment companies; and
o educational and charitable institutions.
The institutional purchaser's obligations under a contract will be
subject only to the condition that the purchase of the offered securities at the
time of delivery is allowed by any laws applicable to the purchaser. The dealers
and our agents will not be responsible for the validity or performance of the
contracts.
UNDERWRITERS
If we use underwriters for a sale of securities, the underwriters will
acquire the securities for their own account. The underwriters may resell the
securities in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The underwriters may sell the securities directly or through underwriting
syndicates by managing underwriters. We may designate agents who agree to use
their reasonable efforts to solicit purchases of our securities for the period
of their appointment or to sell our securities on a continuing basis. The
obligations of the underwriters to purchase the securities will be subject to
the conditions set forth in the applicable underwriting agreement. The
underwriters will be obligated to purchase all the securities of the series
offered if they purchase any of the securities of that series. We may change
from time to time any initial public offering price and any discounts or
concessions the underwriters allow or reallow or pay to dealers. We may use
underwriters with whom we have a material relationship. We will describe the
nature of any such relationship in any prospectus supplement naming any such
underwriter.
DIRECT SALES
We may also sell securities directly to one or more purchasers without
using underwriters or agents. Underwriters, dealers and agents that participate
in the distribution of the securities may be underwriters as defined in the
Securities Act, and any discounts or commissions they receive from us and any
profit on their resale of the securities may be treated as underwriting
discounts and commissions under the Securities Act. We will identify in the
applicable prospectus supplement any underwriters,
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dealers or agents and will describe their compensation. We may have agreements
with the underwriters, dealers and agents to indemnify them against various
civil liabilities, including liabilities under the Securities Act, or to
contribute payments that the agents, underwriters, dealers and remarketing firms
may be required to make as a result of those civil liabilities. Underwriters,
dealers and agents and their affiliates may be customers of, engage in
transactions with, or perform services for us or our subsidiary companies in the
ordinary course of their businesses. In connection with the distribution of the
securities, we may enter into swap or other hedging transactions with, or
arranged by, underwriters or agents or their affiliates. These underwriters or
agents or their affiliates may receive compensation, trading gain or other
benefits from these transactions.
TRADING MARKETS AND LISTING OF SECURITIES
Unless otherwise specified in the applicable prospectus supplement,
each class or series of securities will be a new issue with no established
trading market, other than our common stock, which is listed on The Nasdaq
National Market. We may elect to list any other class or series of securities on
any additional exchange or market, but we are not obligated to do so unless
stated otherwise in a prospectus supplement. It is possible that one or more
underwriters may make a market in a class or series of securities, but the
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. We cannot give any assurance as to the
liquidity of the trading market for any of the securities.
STABILIZATION ACTIVITIES
Any underwriter may engage in overallotment, stabilizing transactions,
short covering transactions and penalty bids in accordance with Regulation M
under the Exchange Act. Overallotment involves sales in excess of the offering
size, which create a short position. Stabilizing transactions permit bids to
purchase the underlying security so long as the stabilizing bids do not exceed a
specified maximum. Short covering transactions involve purchases of the
securities in the open market after the distribution is completed to cover short
positions. Penalty bids permit the underwriters to reclaim a selling concession
from a dealer when the securities originally sold by the dealer are purchased in
a covering transaction to cover short positions. Those activities may cause the
price of the securities to be higher than it would otherwise be. If commenced,
the underwriters may discontinue any of these activities at any time.
PASSIVE MARKET MARKING
Any underwriters who are qualified market markers on The Nasdaq
National Market may engage in passive market making transactions in the
securities on The Nasdaq National Market in accordance with Rule 103 of
Regulation M, during the business day prior to the pricing of the offering,
before the commencement of offers or sales of the securities. Passive market
makers must comply with applicable volume and price limitations and must be
identified as passive market makers. In general, a passive market maker must
display its bid at a price not in excess of the highest independent bid for such
security. If all independent bids are lowered below the passive market maker's
bid, however, the passive market maker's bid must then be lowered when certain
purchase limits are exceeded.
GENERAL INFORMATION
The securities may also be offered and sold, if so indicated in the
applicable prospectus supplement, in connection with a remarketing upon their
purchase, in accordance with a redemption or repayment pursuant to their terms,
or otherwise, by one or more remarketing firms, acting as principals for their
own accounts or as agents for us. Any remarking firm will be identified and
terms of its agreement, if any, with us, and its compensation will be described
in the applicable prospectus
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supplement. Remarketing firms may be deemed to be underwriters, as that term is
defined in the Securities Act, in connection with the securities remarketed
thereby.
LEGAL MATTERS
Unless otherwise indicated in a prospectus supplement, the validity of
the securities to be offered by this prospectus will be passed upon for us by
Vedder, Price, Kaufman & Kammholz, P.C., Chicago, Illinois. Unless otherwise
indicated in a prospectus supplement, the validity of the trust preferred
securities to be offered by this prospectus will be passed upon for us by
Richards, Layton & Finger, P.A., Wilmington, Delaware. Unless otherwise
indicated in a prospectus supplement, in the event the securities are offered
through one or more underwriters, certain legal matters will be passed upon for
the underwriters by Jones Day, Chicago, Illinois.
EXPERTS
The consolidated financial statements and schedule of Wintrust
Financial Corporation at December 31, 2003 and 2002, and for each of the three
years in the period ended December 31, 2003, appearing in Wintrust Financial
Corporation's Annual Report on Form 10-K for the year ended December 31, 2003,
have been audited by Ernst & Young LLP, an independent registered public
accounting firm, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements and
schedule are incorporated herein by reference in reliance upon such reports
given on the authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is a part of a Registration Statement on Form S-3 that
we filed with the SEC under the Securities Act. This prospectus does not contain
all the information set forth in the registration statement, certain parts of
which are omitted in accordance with the rules and regulations of the SEC. For
further information with respect to us and the securities offered by this
prospectus, reference is made to the registration statement, including the
exhibits to the registration statement and the documents incorporated by
reference.
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. Our filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file with the SEC at its public reference facilities at 450
Fifth Street, N.W., Washington, D.C. 20549. You can also obtain copies of the
documents at prescribed rates by writing to the Public Reference Section of the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the public reference
facilities. Our SEC filings are also available on our web site at
http://www.wintrust.com, and at the office of the Nasdaq National Market. For
further information on obtaining copies of our public filings at the Nasdaq
National Market, you should call (212) 656-5060.
DOCUMENTS INCORPORATED BY REFERENCE
We "incorporate by reference" into this prospectus the information we
file with the SEC, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is an important part of this prospectus.
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Some information contained in this prospectus updates and supersedes
the information incorporated by reference and some information that we file
subsequently with the SEC will automatically update this prospectus. We
incorporate by reference the documents listed below:
o our Annual Report on Form 10-K for the fiscal year ended
December 31, 2003, filed with the SEC on March 15, 2004 (File
No. 0-21923);
o our Quarterly Report on Form 10-Q for the quarter ended March
31, 2004, filed with the SEC on May 10, 2004 (File No.
0-21923);
o our Quarterly Report on Form 10-Q for the quarter ended June
30, 2004, filed with the SEC on August 9, 2004 (File No.
0-21923);
o our Current Report on Form 8-K filed with the SEC on January
21, 2004 (File No. 0-21923);
o our Current Report on Form 8-K filed with the SEC on April 20,
2004 (File No. 0-21923);
o our Current Report on Form 8-K filed with the SEC on May 11,
2004 (File No. 0-21923);
o our Current Report on Form 8-K filed with the SEC on July 20,
2004 (File No. 0-21923); and
o our Current Report on Form 8-K filed with the SEC on September
30, 2004 (File No. 0-21923); and
o the descriptions of (a) our Common Stock contained in our
Registration Statement on Form 8-A dated January 3, 1997 (File
No. 0-21923), and (b) the associated preferred stock purchase
rights contained in our Registration Statement on Form 8-A
dated August 28, 1998 (File No. 0-21923).
We also incorporate by reference any filings we make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after
the initial filing of the registration statement that contains this prospectus
and before the time that all of the shares offered by this prospectus are sold.
Any statement contained in a document incorporated by reference in this
prospectus shall be deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained in this prospectus, or in
any other document filed later which is also incorporated in this prospectus by
reference, modifies or supersedes the statement. Any statement so modified or
superseded shall not be deemed to constitute a part of this prospectus except as
so modified or superseded. The information contained in this prospectus should
be read together with the information in the documents incorporated in this
prospectus by reference.
You may obtain any of these incorporated documents from us without
charge, excluding any exhibits to these documents unless the exhibit is
specifically incorporated by reference in such document, by requesting them from
us in writing or by telephone at the following address:
Wintrust Financial Corporation
727 North Bank Lane
Lake Forest, Illinois 60045
Attention: Legal Department
(847) 615-4096
Documents may also be available on our website at www.wintrust.com.
Information contained on our website is not a prospectus and does not constitute
part of this prospectus.
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