Wintrust Financial Corporation (NASDAQ:WTFC)
Q1 2016 Results Earnings Conference Call
April 19, 2016 14:00 ET
Edward Wehmer - President & CEO
Dave Dykstra - SVP & COO
Dave Stoehr - Chief Financial Officer
Kate Boege - General Counsel
John Arfstrom - RBC Capital Markets
David Long - Raymond James
Emlen Harmon - Jefferies
Brad Milsaps - Sandler O'Neill
Chris McGratty - KBW
Terry McEvoy - Stephens
Welcome to Wintrust Financial Corporation's 2016 First Quarter Earnings Conference Call. At this time all participants are in listen-only mode. [Operator Instructions] Following a review of the results by Edward Wehmer, Chief Executive Officer and President; and David Dykstra, Senior Executive Vice President and Chief Operating Officer, there will be a formal question-and-answer session.
During the course of today's call, Wintrust management may make statements that constitute projections, expectations, beliefs or similar forward-looking statements. Actual results could differ materially from the results anticipated or projected in any such forward-looking statements. The company's forward-looking assumptions that could cause the actual results to differ materially from the information discussed during this call are detailed in the second quarter and year-to-date earnings press release and in the company's most recent Form 10-K and any subsequent filings on file with the SEC. As a reminder, this conference call is being recorded.
I will now turn the conference call over to Mr. Edward Wehmer. Please go ahead.
Thanks very much, welcome everybody to our first quarter earnings call. With me as always is Dave Dykstra, our Chief Operating Officer; Dave Stoehr, our Chief Financial Officer; and Kate Boege, our General Counsel.
The call will pick on the same format as we have had in the past with me giving you a high level summary of the quarterly results; Dave Dykstra will go into other income and other expenses and detail; and Dave will turn it back over to me with some summary thoughts and some thoughts about the future. Then we will have the time for questions. I don't know if you can hear that or not but that's the sound of a quiet successful quarter, something we haven't had in a couple of quarters but based on our results I think you can see the investments we made in the business last year are paying off.
The pain of the noisy third and fourth quarters of last year as we reintegrated these investments were well worth the effort, surely nice to be reporting at probably clean and uncluttered quarter. Debt income of $49.1 million or $0.90 per share was up 26% and 18% respectively from prior year first quarter and 38% over the fourth quarter last year. Given that math is hired and all of you differently I believe you do is individually determine the earnings period over period statistics.
I will tell you however, that good progress was made in all aspects of the financial, of our financial performance and results. Our margin increased three basis points over the fourth quarter to 3.32% to the higher rates and according assets to consistent funding costs. Notwithstanding to moving to yield but we still expect our margin to stay within 10 basis points either side of the 330 mark given our pipelines, expected portfolio with pricing expanding spreads in the market and our ability to control funding costs. If I was a betting man I would probably bet the over on that particular item.
Debt overhead ratio for the quarter was 1.49 which was down significantly from previous quarter as you would imagine ahead of our 1.75% goal even if you would have backed out the securities gains and gains on the early extinguishment of trust preferred securities, debt overhead ration showed marked improvement over prior years and our goal still maintains in the year to 150 or better net overhead ratio.
Our strategy of - and that's based upon our strategy of additional core goal, the leverage of our infrastructure, additional cost out acquisitions and a continued expense reduction that we expect to achieve. We will spend more time on this but the mortgage area exceeded our expectations in the first quarter, the rate drop occurred spurred an unexpected increase in the yield of the first quarter. You would imagine pipelines for the second quarter will be exceptionally strong given the low rates of the onset of the spring buyers' market.
On the wealth management front first quarter volatility in the markets caused freeze the drop i.e. beyond $300,000. That being said assets under administration grew approximately $200 million to $21.42 billion. We still believe that this is an area of great opportunity for us. On the balance sheet front we experienced another consistent strong quarter. Total assets grew by $579 million or $10 million over - $579 million at 10% annualized over the December 31, 2015 levels. Average assets are starting the quarter approximately $450 million higher than that experience through the entire fourth quarter.
This goes very well for Q2 and beyond. What also bold well for Q2 is the fact that our pipelines which although has been consistently strong but the highest level they have been for some time. Gross pipelines commercial real estate loans about $1.5 billion and that makes to close to $960 million probability of close. Our Q2 rates have remained very strong and consistent so we feel comfortable with those numbers. Note that these numbers do not include our leasing business or both divisions of our premium financial business which too are showing good growth opportunities.
Total loans excluding loans after sale and covered loans with $328 million in the quarter or about 8%, total deposits grew $577 million or 12% for the quarter. The majority of the growth was a non-interest growing deposits which grew $369 million or 31% at an annualized basis. Demand deposits now make up 27% of our deposit base that's a credit to our commercial initiative. The acquisition of generations which took place March 31 added $124 million of that asset growth, $96 million to deposit growth and $76 million of loan growth to quarter end totals.
When totally converted and absorbed this field will provide approximately 90% cost out opportunity for Wintrust. Conversions here are scheduled for the beginning of the third quarter this year. On the credit front all of our vital statistics and credit remained very strong. NPAs remained cast-in from the first quarter at 0.56%. Total assets that we charged off approximately $3 million from the fourth quarter 2015 to $3.5 million while the provision was relatively constant $700,000 sound quarter over quarter.
The ounce for credit losses is two basis points and coverage NPAs could well cancel the 123%. We continue as always to call the portfolio for loans or assets to even the most minute reaction in order to move them out which is relatively easy in this continued voracious credit market. On the capital front, our capital ratios remained very strong. Now, over to Dave who is going to give you detailed overview of other income and expenses.
Thank you, Ed. I will start with the non-interest income portion of the income statement. Our wealth management revenue totaled $18.3 million for the first quarter of 2016 which was down slightly from $18.6 million recorded in prior quarter and was up from the $18.1 million recorded in the year ago quarter. The trust and asset management component of this revenue category increased to $12.3 million in the current quarter compared to $11.8 million in the prior quarter. Brokerage revenue declined on lower customer trading activity to approximately $6.1 million in the first quarter compared to $6.8 million in the fourth quarter of last year.
Mortgage banking revenue decreased by $1.6 million to $21.7 million in the first quarter from $273.3 million recorded in the prior quarter and was just lower than the $27.8 million recorded in the fourth quarter of last year. The company originated and sold approximately $737 million of mortgage loans in the first quarter, compared to $809 million originated in the prior quarter and $942 million originated in the year ago quarter. And, so the mix of the production, we had approximately 56% related to purchase home activity and that compared to roughly the low 60% range in the prior quarter.
Fees from covered call options were $1.7 million in the first quarter, compared to $3.6 million in the previous quarter and $4.4 million recorded in the first quarter of last year. As we have discussed previously we consistently utilize this program to supplement the total returns on our treasury and agency securities held in our portfolio in an effort to hedge to the margin pressures caused over a low interest rate environment.
The revenue in the first quarter of 2016 for operating leases totaled $2.8 million compared to $2.0 million in the prior quarter increasing 42% during the quarter. the revenue growth was consistent with the trend of the balance sheet growth whereas the outstanding balances of operating leases grew 41% during the quarter from $63.2 million at December 31 to $89.3 million at the end of the first quarter and to be clear these are the months related to the operating leases as only the capital leases are carried in the loan section of the balance sheet.
Our other non-interest income includes fees generated from transaction related to customer based interest rates swaps. Market conditions for such products were more attractive for customers in the first quarter resulting in $2.1 million of additional revenue compared to the prior quarter. In total the company recognized $4.4 million in interest rate swap revenue in the first quarter of 2016 compared to $2.3 million and $2.2 million compared to the prior and year-ago quarters respectively.
Additionally on January 21, 2016 the company acquired $15.0 million of trust preferred securities issued by Wintrust capital trust aide from a third party investor at a 71.3% of our recorded value. The purchase effectively extinguished the $15 million of junior subordinated ventures related to Wintrust capital trust aide and resulted in a $4.3 million gain.
Now turning to the non-interest expense categories, our non-interest expenses totaled $153.7 million in the first quarter 2016 decreasing approximately $13.1 million compared to the prior quarter. The biggest drivers of this decline related to net reduction in salaries and employee benefits expenses, reduce OREO costs, decline in marketing expenses and current quarter having approximately $5.6 million of acquisition related costs and acquisition relation severance cost and pension obligation charges that were incurred in the prior quarter.
I will talk about these changes in more detail now. Salaries and employee benefits decreased approximately $4 million in the first quarter compared to the fourth quarter 2015. Net of the acquisition related severance and pension costs incurred in the fourth quarter of 2015, this category expense declined $1.2 million. The base salary component was down approximately $700,000 in the first quarter 2016 from the prior quarter. The first quarter included the impact of our annual base salary increases for employees which were generally in the 3% range however, those increases were offset by savings from reduction in the transitional staffing connect with the acquisitions that we did in second half of 2015 and not having acquisition related severance charges in the current quarter.
Employee benefits expenses up approximately $1.6 million in the current quarter compared to the prior quarter. Significantly impacting this category was the payroll expense which was up approximately $3.7 million compared to the fourth quarter of 2015. Payroll taxes are always higher in the first quarter of the year as the social security tax limitations are reset at the beginning of the year. I should also note that in the fourth quarter 2015 the employee benefit category also had approximately $1.6 million of acquisition related and pension costs but did not significantly impact the current quarter.
Moving on to the commissions and the compensations category, this category of expense decreased approximately $4.8 million to $26.4 million from $31.2 million in the prior quarter. The company experienced a decline in commission expense related to reduced mortgage revenue and reduced revenue in the wealth management brokerage area along with the decline in the crude incentive compensation from the higher 2015 levels. The occupancy expense categories decreased by approximately $1.1 million in the first quarter compared to the prior quarter. The decrease in the current quarter compared to the fourth quarter of 2015 is primarily the result of approximately $605,000 of acquisition related charges incurred in the fourth quarter of 2015 to certain banking locations.
As I discussed in regarding to the operating leases in the non-interest income section, company has a similar increase in expenses related to the operating leases of that portfolio was strong. Again we expect this category expense to grow at a similar rate as revenue side of the portfolio continues to expand. Our data processing expense decreased to approximately $765,000 from the prior quarter to $6.5 million. The primary reason for the expense in the current quarter was that the prior quarter had approximately $1.5 million of acquisition related conversion costs whereas old similar costs were incurred in the current quarter.
Our marketing expenses declined approximately $1.6 million from the fourth quarter 2015 but was relatively consistent with the first quarter of the last year. The first quarter of the year tends to be our lowest quarter of marketing spending. We would expect the category of these expenses to increase in the next couple of quarters to level similar to the mid-2015 amounts as the corporate sponsorships tend to be higher in the second and the third quarter in the fiscal year.
Other real estate owned expenses decreased by $2 million in the first quarter compared to the previous quarter. Total OREO expenses totaled $560,000 in the current quarter compared to $2.6 million in the fourth quarter 2015. The decreased was primarily due to the less valuation allowances of approximately $700,000, decreased operating costs of approximately $700,000 and recognizing higher gains of approximately OREO sales during the current quarter. As we have discussed in the last quarter and as I had mentioned earlier we have a goal of reducing our net overhead ratio of 1.5% or better in 2016. Given the steps we took in the last half of 2015 particularly related to recent acquisitions to consolidate our operations including facilities and staffing and our ability to leverage our existing infrastructure to support the growth of the company.
We saw progress in that goal in the first quarter. Our net overhead ratio sat at 1.49% and excluding the gain on the extinguishment of trust preferred security that stood at 1.75%. We will continue to work hard to achieve that goal we have mentioned and keep you posted on our progress as we perceive throughout the year.
So with that I will conclude my comment and throw it back over to Ed.
Thank you, Dave. Now some summary and thoughts about the future and under the second quarter with a great deal of momentum in all aspects of our business. Long pipelines were strong, used to deliver strong second quarter where management has the momentum and we continue to seek out and execute additional cost cutting moves. Organic growth opportunities remain good. Acquisition pipelines are active. We continue to concentrate on banks less than billion dollars in assets, a perfect candidate for us would be one where we achieve greater geography but still have enough over lapse to achieve significant cost out opportunity.
We will also continue to explore acquisition opportunities in all areas of our business. On the overall acquisition front you can be ensured of our consistent and conservative approach which has served us so well. We hate the delusion. Buying these smaller banks with cash and securities allows us to buy lesser multiples and larger banks. Delusion is forever, it's a four letter word. In our organization I personally consider being delusion that be a crime against humanity if you will. So you can be assured that we will continue to work out of the grand dot and finance book as we look at fields and we look at growing tangible book value per share as a real measure of how well we are achieving growth and value for our shareholders.
We are working hard on the asset front to get paid for the risk we are taking; recent widening of the overall market spreads helps us there. That being said we will never vacillate from our proven credit methods which have served us so well in the past and have proven profitability which has served us well in the past. That is we are going to get business on our terms and our pricing and get paid for our risk.
Our interest rate sensitivity position remains very possibly capped and we are well compared to the eventuality of higher rates in fact our interest rate sensitivity position actually bigger in the first quarter. So all in all I really like how we are position to achieve and succeed our state of goals in 2016 and beyond. I like where we stand and with that we will open it up for questions.
Thank you. [Operator Instructions] Our first question comes from the line of John Arfstrom with RBC Capital Markets, your line is open. Please go ahead.
Thanks, afternoon. One of the comments you just made that you also made earlier when you were talking about your pipeline and pricing you talked about expanding spreads in the market and that is the first time I have heard you talk about that in quite a while. Can you maybe expand on that a little bit more?
Sure, in the middle market commercial side we have seen a little bit of movement there, not as much as you would imagine but again on that side we have the opportunity to bring in core deposits to cross sell wealth management, treasury management and other opportunities so, that's just up a little. Where we see that is on the real estate side, and that's moved remarkably up almost a whole full point. You know where you are doing deals with four spreads as opposed to three spreads and two and a half spreads before. So, the market has moved on real estate, yet be careful on the real estate. We have seen a number of opportunities come our way, larger deals that we would syndicate out and you have to ask yourselves, why are these guys coming to us and of course the big guys aren't doing up.
So when we are doing these real estate deals they have to be well sponsored, they have to have a lot of equity in the deal, they have to be well under-written and they have to be priced right. So we are getting a fair share of those but you have to careful of this market now because you don't want to be the low cost provider out there but we are seeing those spreads get a little wider. I think in the first insurance funding side you have seen those spreads move up a bit and all in all as our portfolio of crisis from that first corner hot by the increase that the fed put in, it takes time to be absorbed and you see that happen little by little too.
Spreads seem to be getting better and our portfolio continues to be re-priced higher and we are able to at least in this quarter through the mix and through other mix of more demand deposits coming on and maintaining our cost of funds and our margin is looks pretty good to be able to execute to continue to show increases going forward.
Okay. That helps and then another one of your quotes, describe mortgages being exceptionally strong and I look back and you typically have a better Q2 in general. But exceptionally strong is a big statement. I am just curious if you can help us understand what you are seeing so far?
I will let Dave go through the numbers. I think we have said in previous calls when we hit 100 applications a day we start raising our pricing. You have seen this happen as volume picks up people get better spreads and better pricing. We have been averaging 118 to 120 applications a day for the past almost 6 weeks to 2 months so pricing is getting better, volumes are looking strong. Dave I don't know if you want to go over the numbers here but we feel very good about the margins we should achieve and the volumes that we should pick up in the second quarter.
Yes, John if you include the current quarter, okay refer to my remarks, we originated $737 million. My guess is that given where the pipelines are at right now, obviously they have to close and it's clear to us as obviously April is paying but I expect that number to be over a billion dollars in the second quarter.
Okay. That helps. Okay I will pop back in the queue thank you.
Thank you and our next question comes from the line of David Long with Raymond James. Your line is open, please go ahead.
Good afternoon guys.
Coming off of a strong quarter, your capital levels did decline a bit here. Growth prospects still seem pretty good. M&A pipeline seems pretty good. How are you thinking of managing that capital against how you would like to grow for the rest of the year?
Well, it will be a function of how we grow and whether growth exceeds our expectations. We think that our earnings should be able to support it notwithstanding acquisitions in the pipeline which could change how we are thinking about things. But right now, we are projecting earnings and you would imagine we should be able to maintain these ratios and support growth going forward, you never know.
But it just depends on these growth prospects are pretty strong and hopefully the earnings will result from these growth prospects and hopefully be able to withstand it going forward. If that's the case then we always want to maintain good capital and be ahead of the game. In the past we have always used, try to use shareholder friendly vehicles like [ph] where we can safely pile the money while we achieve a higher stock price again. We look at both value for share and delusions being a very bad thing so, we can be assured that if growth exceeds our expectations that we would have to avail ourselves of something. But right now, we evaluate it every month and we will see where we go.
Okay. Great thanks for that color and then secondly on the growth front looking at the market place what is your appetite for hiring veteran bankers at this point? This is usually that time of the year you start hearing about some moves. Have you been active talking to others out there?
Well we are always out there talking to people. People call us, we are not a bad place to work despite me being there but we are always looking to make an investments in the future, we continue, we always call the herd here or people who are not informing; we will help them find maybe a better opportunity to advance their careers it may not be here. But we consistently look at opportunities to bring seasoned bankers in to build the business. We also will continue to look at, we certainly believe and always have that the diversification of our portfolio is important and one of the strengths and one of the attributes that keeps our credit costs half of the peer group historically.
We continue to enter into new lines of lending business that we will have vetted fully and we will not be afraid to invest in those going forward and we will have some success there. I can't comment on that now but there are some opportunities in the market to enhance some of the areas that we are in on the leasing side, on the franchise side and the likes. We will continue to look at those.
Excellent, thanks Ed. Go Black Hawks.
Thank you. Our next question comes from the line of Emlen Harmon from Jefferies. Your line is open, please go ahead.
Hey, good afternoon.
Emlen, how are you?
I am doing good thanks. In your prepared remarks you noted the drop in wealth comp was mortgaged wealth management and the incentive accrual. On the incentive accrual could you give us the delta on that specifically from the fourth quarter and what are the key performance factors that can drive those differences as we go through the rest of the year?
Well, this is Dave. On our short term plan is heavily waded towards achieving our budgeted net income and then we have personal objectives. On the long term incentive plan we have got it's a circa rolling 3 year plan so there may be rewards and so there is a 3 year performance review where we measure it. For the rewards we began at 2016 and beginning at 2015 they were based upon achievement of earnings per share. The awards that were done in 2014 for the performance period and this year is a combination of asset growth and value per share growth and return on assets and probably two-thirds is now achieving our earnings per share.
And the other half is growth and ROA and interim value related. Last year at the end of the year we had significant growth which the awards are good to be paid out of January affected that accrual and drove it up in the fourth quarter. We only have one more year of that type of award out there and the rest will be just based upon cumulative earnings per share so you won't have the same volatility, I don't believe, as you did on the asset growth and ROA.
Got it, so maybe one more year of that volatility in the fourth quarter and then in the future year's it will smooth out?
One year was a third of it, last year it was two-thirds of it. This is now one-third of the accrual so it should be more predictable and steady prospectively.
Got you. Thank you that's very helpful and then going to the NIM and look at that, those were flat quarter-over-quarter. I know a component of that is the accretion was down probably $0.5 million quarter-over-quarter. Could you talk a little bit about the effect of short term interest rates on the loan yields in the quarter and if there is any follow through, if we don't get another increase, is there a follow through on the loan yields as we get through the rest of the year here?
I think first of all, our premium finance portfolio is being priced over a period of the year so we are still achieving the positive effects of the 25% that they did at the end of last year, so life insurance is one-twelfth a year or one-twelfth a month as we price. Another premium finance, the price is over nine month period. So we're still achieving that which should be helpful. The rising spreads on the real estate side should be helpful for both, new business and for renewals. And on the commercial side as I said we're seeing a little bit of a bump so not much but a little bit which is heartening. And our leasing portfolio continues to grow nicely, the pipelines are strong and again, those are higher yielding asset. So we would expect - we would hope to see that increase in earning and the loan side of the earning assets continue to move up. We highlighted for you in the report the accretion that's running off and it is what it is. We'll pick up additional accretion and if we do have a deal but certainly not - unless we did a big deal not to the levels that's running off right now, those were generated at different times in the cycle and there were lot more about there but I guess said in the past, accretion is like bolt, if it buy a big bang and take another hit of it or you got to lean yourself off and we're in the process that with our acquisition strategy of winning ourselves off of that. So I'm trying to just stay ahead of the game by getting paid for our risks and by staying diversified and continuing to get the repricing affects from the first one quarter jump at the Fed meet.
Got it, thanks. I appreciate it.
Thank you. Our next question comes from the line of Brad Milsaps with Sandler O'Neill. Your line is open, please go ahead.
Hey Dave, how are you?
Good Brad, how are you?
Good, good, nice quarter. Just wanted to follow-up on the name discussion, it's going to - see if you give us little more color on the increase in the yield on the liquidity management assets. I know that mix can move around a lot but it was up about 13 basis points, I'm just kind of curious, if you did reinvest more cash or what drove that?
Brad, this is David. There is a few reasons. We barely had $100 million more in securities this quarter than we did last quarter on average. And so that helped the margin by a few basis points. Also a lot of our liquidity is sitting at the Fed and overnight money in the quarter basis point rise and rates in the fourth quarter certainly helped in that regard, and so that was another sort of five basis points. And then the way we calculated on actual days and last quarter there was 92 days in the quarter, this quarter there is 91 days. So those securities that are 3360 actually get a little bit of a benefit there. So the 25 basis point rise on overnight money, $100 million more invested in securities versus overnight funds and then the basis change.
That's helpful. And then on the other side, it looked like average federal home loan bank advances were higher than maybe they had been running. Anything, any specific strategy there or is it just kind of locking in some lower funding, just kind of take advantage of that or any other color there?
We use that a little bit with our mortgage business, our mortgage warehouse business, and so a lot of that is real short-term, overnight type of money. And we also - sometimes we just take a little bit extra in the systematic liquidity. We didn't extend in that portfolio, it was all really short-term overnight advances.
Okay. And then I was writing previously during all the expense discussion but just on miscellaneous expenses, I think there may be $2 million or $3 million, you sort of alluded to a number of things and the release. Just kind of curious if you think that miscellaneous number is sort of run rate or will that build through the year? And then just kind of bigger picture that the 150 net overhead ratio, is that where you expect run rate to be by the end of the year? Is that more of an annual average for 2016?
The 150 was the full year, so I mean if you think about it, that would mean we should be better than that at the end of the year. So that was a full year calculation.
That was standing in the acquisition when we made one-time charges.
The miscellaneous, I mean obviously there is a lot of stuff in there, entertainment, and if you get into the summer month, a little bit more of that but there - in bigger company [ph], there are things that move up and move down here. So there could be a little bit upward pressure there but it's not going to be - nothing dramatic, I don't think.
Okay, great. Thank you guys.
Thank you. Our next question comes from the line of Chris McGratty with KBW. Your line is open, please go ahead.
Good afternoon, thanks for taking my question. Ed or Dave, on credit your numbers look great and you're providing a 20 basis point rate. Given what you're putting on the balance sheet, what should we be thinking about as an appropriate rate, provisioning rate for the near-term?
Well, our mix of business I don't think has changed too much, leases are growing but other than that the mixes are changing dramatically but still the allowances are sort of in the 60s and get some of the credit stuff out there that increases it but it's probably in the 75 basis point range.
Chris, I think the easy way to do this would be just to go to the schedule that we put in the press release that talks about how we have reserved against all of the various components of the loan portfolio. So that on life insurance loans, it's what four basis points or something and the premium finance, the commercial loan is 20 basis points or something like that. And if you just project out where you see our growth, I think that you can just do the math and determine where we'll be. The life insurance loans continue to grow, the property and casualty is kind of falling off a little bit, we expect that to pick up a bit going forward. And the leases will have obviously a higher number associated with it and we expect growth there, growth in commercial real estate, growth in the like. So in commercial, commercial real estate leases in those aspects of our business, they may because of our size and the momentum we have, the provision might be going up prospectively just because of the mix that's coming, the mix of the growth that's coming in. So you can project the growth out and put those factors against it and come up with a pretty good estimate of where our provision should be. Hopefully those are coming in at higher rates and certainly the income we'll earn from them will offset any increase in the provision.
The schedule that Ed's referring to is on Page 25 of our press release, but we break it down fairly granular by loan type.
Okay, thanks for the clarity. Just a follow-up, I'm interested in the quarter included any material changes and prepayments and maybe if it or if it didn't added, what might a reasonable rate of, I think in the past you've kind of quoted quarterly production or quarterly loan growth in a few hundred million dollars. Any kind of specifics with that would be great. Thanks.
Well, we shoot for $250 million, $300 million of quarter growth. We're about there; we had a little bit $70 million coming from the acquisition. We had some large pay downs in the life insurance portfolio that affected us which is okay by the way. It was like a hundred year-old lady and she paid it off, she figured she doesn't need it anymore insurance on that. So but that was a big deal that got paid off, so we had a number of those paid down. And but some growth was still between $250 million and $300 million. Given our pipelines right now, we'll probably ratchet, I would ratchet that up just a bit, just because our pipelines are stronger than they've been and our pull through rates are remaining relatively constant. E-payments have been relatively constant. We have not seen a lot of prepayments. We still are showing the door, as I said during the prepared remarks, if there's any a slight for any crack where ushering those folks out to the world where they are usually are able to achieve probably a better deal than we were giving them. So prepayments are relatively constant and loan growth looks pretty strong at least for the foreseeable future.
Great, thanks, I appreciate it.
Thank you. Our next question comes from the line of Terry McEvoy with Stephens. Your line open, please go ahead.
All right, thanks. Good afternoon. Question for Dave. What's left on the cost savings from the 2015 acquisition, if anything? And then what is generations' going to add in terms of core run rates to expenses and do you have a feel yet for any merger charges?
Well, I think we pretty much have realized the expense savings on three deals we did last July. So I think we're through that, we've got them all converted. We've got all the transitional step pretty well going. We had $285,000 worth of charges this quarter for that, I think that's pretty much the end of the road, so this should really be a fairly clean quarter from that perspective. Generations is just a one bank location, we'll convert them in the middle part of July of this year, so we'll have some additional staff through the July period to get that done, and then we'll have the deconversion charges in the like, in the third quarter. But generations, it's a little over $100 million bank, and they were running $500,000 or so expenses, pretax. We'll certainly be able to cut that. We've got another location that's in the vicinity. So once we get it converted, we'll close one of those locations. So the costing's are going to be substantial there, but for quarter here we'll probably have a few hundred thousand dollars of expense related to that.
Okay, great. And then, Ed, in your prepared remarks you talked about, I think you said clatter in the third and fourth quarter because of the deals and some of the expenses, and I fully agree. In January after fourth quarter earnings that was definitely the case. As you think about deals going forward, are you going to be maybe more selective in terms of the timing and the size just to space out some of that clatter so we're not in that same situation again like we were in Q3 and Q4 where it looked like you're about to be highlighted on that hoarder show because there was so much clatter. It's tough to see the growth potential of Wintrust and it's nice to see today the clatter disappears and the stock goes up. So how do we not get in the same situation again?
Well we're still going to be opportunistic and if you look at the payback on what we just did, it was huge and we were able to knockout about 80% to 80 something percent of the cost from a billion dollars plus of asset. Will those opportunities be clustered like they were, the farther you get away from this cycle, I would imagine that they won't be as clustered or we won't do as many. And I think maybe now that maybe we made some believers out of you guys, a lot of you, that we could do a better job of communicating exactly where these cost are. What we did a bad job of communicating to all of you is we took one time charges, but those were several charges or data processing charges, what we didn't show you was here are the run rates, they're going to go away. And that we have, we were using as periodic expense for the people as they worked until they hit their point of departure or the cost of the facilities until we're able to shut them down and put them together, or if we did it again we would do a much better job I think of presenting that to you than we did this time. I think we did a poor job of explaining that to you.
But if you look at what the alternative is, if you look at buying $1 billion or $2 billion or $3 billion bank and paying 230 times book for it and suffering that dilution, we got all that done with really no dilution, when you think about it. We're able to get them at a really good price. We were able to, we suffered through the income statement, but at the same time we didn't go back and say it's going to take you five years of that book value dilution. It was re-added to our book value and then now we're really adding to it by achieving those results. So if we were to be presented with that opportunity again like we were in the past, I'd do it again. We'd do a better job of it. But I don't see that in the future. I think they'll be a little bit more spaced out. I think we'll be able to give you; we have been going now through that on our own front. We'd be much better in terms of how we communicate that to you and hopefully this quarter shows that we regain a little bit of credibility with all of you that we always do what we say we're going to do around here. We tried doing it; we've been very successful in doing it.
So long winded answer to your question, but again if I was faced with that the same opportunity, probably do the same thing again. But I think as we get further away from the cycle, you're not going to see that much, you won't see that volume coming through quickly.
I appreciate that, thank you.
Thank you. And that does conclude today's Q&A portion of the call. I'd like to turn the call back over to Ed Wehmer for any closing remarks.
Thank you all very much for listening in. We hope to present you with another nice, quiet, successful quarter when we talk in July. And thanks again for listening and talk to you soon. If you have any other questions, just tap out at us, please feel free to call Dave Stoehr, Dave Dykstra or myself. Thanks.
Ladies and gentlemen, thank you for your participation in today's conference. This does conclude today's program. You may all disconnect. Everyone have a great day.
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