Summary of WINTRUST FINANCIAL CORP

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of financial condition as of September 30, 2008, compared with December 31, 2007, and September 30, 2007, and the results of operations for the nine month periods ended September 30, 2008 and 2007 should be read in conjunction with the Company's unaudited consolidated financial statements and notes contained in this report. This discussion contains forward-looking statements that involve risks and uncertainties and, as such, future results could differ significantly from management's current expectations. See the last section of this discussion for further information on forward-looking statements.
Overview and Strategy
Wintrust is a financial holding company providing traditional community banking services as well as a full array of wealth management services to customers in the Chicago metropolitan area and southern Wisconsin. Additionally, the Company operates other financing businesses on a national basis through several non-bank subsidiaries.
Community Banking
As of September 30, 2008, the Company's community banking franchise consisted of 15 community banks (the "Banks") with 79 locations. The Company developed its banking franchise through the de novoorganization of nine banks (55 locations) and the purchase of seven banks, one of which was merged into another of our banks, with 24 locations. Wintrust's first bank was organized in December 1991, as a highly personal service-oriented community bank. Each of the banks organized or acquired since then share that same commitment to community banking. The historical financial performance of the Company has been affected by costs associated with growing market share in deposits and loans, establishing and acquiring banks, opening new branch facilities and building an experienced management team. The Company's financial performance generally reflects the improved profitability of its banking subsidiaries as they mature, offset by the costs of establishing and acquiring banks and opening new branch facilities. From the Company's experience, it generally takes 13 to 24 months for new banks to achieve operational profitability depending on the number and timing of branch facilities added.
The following table presents the Banks in chronological order based on the date in which they joined Wintrust. Each of the Banks has established additional full-service banking facilities subsequent to their initial openings.

                                                             De novo / Acquired             Date
Lake Forest Bank                                                  De novo                December, 1991
Hinsdale Bank                                                     De novo                 October, 1993
North Shore Bank                                                  De novo               September, 1994
Libertyville Bank                                                 De novo                 October, 1995
Barrington Bank                                                   De novo                December, 1996
Crystal Lake Bank                                                 De novo                December, 1997
Northbrook Bank                                                   De novo                November, 2000
Advantage Bank (organized 2001)                                   Acquired                October, 2003
Village Bank (organized 1995)                                     Acquired               December, 2003
Beverly Bank                                                      De novo                   April, 2004
Wheaton Bank (formerly Northview Bank; organized 1993)            Acquired              September, 2004
Town Bank (organized 1998)                                        Acquired                October, 2004
State Bank of The Lakes (organized 1894)                          Acquired                January, 2005
First Northwest Bank (organized 1995; merged into                 Acquired                  March, 2005
Village Bank in May 2005)
Old Plank Trail Bank                                              De novo                   March, 2006
St. Charles Bank (formerly Hinsbrook Bank; organized              Acquired                    May, 2006
1987)

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Following is a summary of the activity related to the expansion of the Company's banking franchise since September 30, 2007:
2008 Banking Expansion Activity
• New branch locations:

† Vernon Hills, Illinois - a branch of Libertyville Bank

† Deerfield, Illinois - a branch of Northbrook Bank

Management's ongoing focus is to balance further asset growth with earnings growth by seeking to more fully leverage the existing capacity within each of the operating subsidiaries. One aspect of this strategy is to continue to pursue specialized earning asset niches in order to maintain the mix of earning assets in higher-yielding loans as well as diversify the loan portfolio. Another aspect of this strategy is a continued focus on less aggressive deposit pricing at the Banks with significant market share and more established customer bases. Specialty Lending
First Insurance Funding Corporation ("FIFC") is the Company's most significant specialized earning asset niche. FIFC makes loans to businesses to finance the insurance premiums they pay on their commercial insurance policies. The insurance premiums financed 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. Because of the indirect nature of this lending and because the borrowers are located nationwide, this segment may be more susceptible to third party fraud than relationship lending; however, management established various control procedures to mitigate the risks associated with this lending. The majority of these loans are purchased by the Banks in order to more fully utilize their lending capacity as these loans generally provide the Banks with higher yields than alternative investments. However, excess FIFC originations over the capacity to retain such loans within the Banks' loan portfolios may be sold to unrelated third parties with servicing retained.
Additionally, in 2007, FIFC began to make loans to irrevocable life insurance trusts to purchase life insurance policies for high net-worth individuals. The loans are originated through independent insurance agents or financial advisors and legal counsel. The life insurance policy is the primary collateral on the loan and, in most cases, the loans are also secured by a letter of credit. On November 1, 2007, the Company acquired Broadway Premium Funding Corporation ("Broadway"). Broadway is a commercial finance company that specializes in financing insurance premiums for corporate entities. Its products are marketed through insurance agents and brokers to their small to mid-size corporate clients primarily in the northeastern United States and California. Broadway was a subsidiary of FIFC, however, it was merged into FIFC in November 2008. FIFC and Broadway originated approximately $748 million in loan (premium finance receivables) volume in the third quarter of 2008, and $2.3 billion in the first nine months of 2008. FIFC and, since the date of acquisition, Broadway, originated approximately $3.1 billion in loan volume in the calendar year 2007. The loans are originated by FIFC working through independent medium and large insurance agents and brokers located throughout the United States. SGB Corporation d/b/a WestAmerica Mortgage Company ("WestAmerica") engages primarily in the origination and purchase of residential mortgages for sale into the secondary market. WestAmerica's affiliate, Guardian Real Estate Services, Inc. ("Guardian") provides the document preparation and other loan closing services to WestAmerica and a network of mortgage brokers. WestAmerica sells its loans with servicing released and does not currently engage in servicing loans for others. WestAmerica maintains principal origination offices in nine states, including Illinois, and originates loans in other states through wholesale and correspondent offices. WestAmerica provides the Banks with the ability to use an enhanced loan origination and documentation system which allows WestAmerica and the Banks to better utilize existing operational capacity and expand the mortgage products offered to the Banks' customers. WestAmerica's production of adjustable rate mortgage loan products and other variable rate mortgage loan products may be purchased by the Banks for their loan portfolios resulting in additional earning assets to the combined organization, thus adding further desired diversification to the Company's earning asset base.

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Tricom Inc. ("Tricom") is a company that has been in business since 1989 and specializes in providing high-yielding, short-term accounts receivable financing and value-added, out-sourced 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. These receivables may involve greater credit risks than generally associated with the loan portfolios of more traditional community banks depending on the marketability of the collateral. The principal sources of repayments on the receivables are payments to borrowers from their customers who are located throughout the United States. Tricom mitigates this risk by employing lockboxes and other cash management techniques to protect its interests. Tricom's revenue principally consists of interest income from financing activities and fee-based revenues from administrative services.
In addition to the earning asset niches provided by the Company's non-bank subsidiaries, several earning asset niches operate within the Banks. Barrington Bank's Community Advantage program provides lending, deposit and cash management services to condominium, homeowner and community associations. In addition, Hinsdale Bank operates a mortgage warehouse lending program that provides loan and deposit services to mortgage brokerage companies located predominantly in the Chicago metropolitan area, and Crystal Lake Bank has a specialty in small aircraft lending. The Company continues to pursue the development or acquisition of other specialty lending businesses that generate assets suitable for bank investment and/or secondary market sales.
At the beginning of the third quarter of 2008, the Company ceased the origination of indirect automobile loans through Hinsdale Bank. This niche business has served the Company well over the past twelve years in helping de novo banks quickly and profitably, grow into their physical structures. Competitive pricing pressures have significantly reduced the long-term potential profitably of this niche business. Given the current economic environment, the retirement of the founder of this niche business and the Company's belief that interest rates may rise over the longer-term, exiting the origination of this business was deemed to be in the best interest of the Company. The Company continues to service its existing portfolio during the duration of the credits and does not anticipate any change in historical credit trends for this niche business given this decision.
Wealth Management
Wayne Hummer Investments LLC ("WHI"), a registered broker-dealer, provides a full-range of investment products and services tailored to meet the specific needs of individual and institutional investors throughout the country, primarily in the Midwest. In addition, WHI provides a full range of investment services to clients through a network of relationships with unaffiliated community-based financial institutions located primarily in Illinois. Although headquartered in Chicago, WHI also operates an office in Appleton, Wisconsin and has branch locations in a majority of the Company's Banks.
Wayne Hummer Asset Management Company ("WHAMC"), a registered investment advisor, is the investment advisory affiliate of WHI. WHAMC provides money management, financial planning and investment advisory services to individuals and institutional, municipal and tax-exempt organizations. WHAMC also provides portfolio management and financial supervision for a wide-range of pension and profit sharing plans.
Wayne Hummer Trust Company ("WHTC") was formed to offer trust and investment management services to all communities served by the Banks. In addition to offering trust services to existing bank customers at each of the Banks, WHTC targets small to mid-size businesses and affluent individuals whose needs command the personalized attention offered by WHTC's experienced trust professionals. Services offered by WHTC typically include traditional trust products and services, as well as investment management services.

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The following table presents a summary of the approximate amount of assets under administration and/or management in the Company's wealth management operating subsidiaries as of the dates shown:

                                     September 30,      December 31,       September 30,
(Dollars in thousands)                   2008               2007               2007
WHTC                                $     1,007,842     $   1,009,587     $     1,045,869
WHAMC (1)                                   410,820           522,893             532,150
WHAMC's proprietary mutual fund               9,053            18,015              23,616
WHI - brokerage assets in custody         4,400,000         5,600,000           5,700,000

(1) Excludes the proprietary mutual fund managed by WHAMC

The decrease in assets under administration and/or management in the third quarter of 2008 was primarily due to lower market valuations.

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RESULTS OF OPERATIONS
Earnings Summary
The Company's key operating measures for 2008, as compared to the same period
last year, are shown below:

                                                    Three Months             Three Months          Percentage (%) or
                                                       Ended                    Ended              Basis Point (bp)
(Dollars in thousands, except per share data)    September 30, 2008       September 30, 2007            Change
Net (loss) income                               $             (2,448 )   $              9,919                    (125 )%
Net (loss) income per common share - Diluted                   (0.13 )                   0.40                    (133 )

Net revenue (1)                                               82,595                   77,724                       6
Net interest income                                           60,680                   66,187                      (8 )

Net interest margin (6)                                         2.74 %                   3.14 %                   (40 ) bp
Core net interest margin (2) (6)                                2.97                     3.43                     (46 )
Net overhead ratio (3)                                          1.65                     2.03                     (38 )
Efficiency ratio (4) (6)                                       76.57                    75.73                      84
Return on average assets                                       (0.10 )                   0.42                     (52 )
Return on average common equity                                (1.59 )                   5.53                    (712 )



                                          Nine Months                 Nine Months              Percentage (%) or
                                             Ended                       Ended                 Basis Point (bp)
                                       September 30, 2008          September 30, 2007               Change
Net income                            $             18,533        $             40,010                        (54 )%
Net income per common share -
Diluted                                               0.75                        1.59                        (53 )

Net revenue (1)                                    261,301                     248,232                          5
Net interest income                                181,822                     196,112                         (7 )

Net interest margin (6)                               2.83 %                      3.13 %                      (30 ) bp
Core net interest margin (2) (6)                      3.08                        3.39                        (31 )
Net overhead ratio (3)                                1.54                        1.81                        (27 )
Efficiency ratio (4) (6)                             72.19                       71.65                         54
Return on average assets                              0.26                        0.57                        (31 )
Return on average common equity                       3.20                        7.34                       (414 )

At end of period
Total assets                          $          9,864,920        $          9,465,114                          4 %
Total loans, net of unearned
income                                           7,322,545                   6,808,359                          8
Total deposits                                   7,829,527                   7,578,064                          3
Junior subordinated debentures                     249,537                     249,704                          -
Total shareholders' equity                         809,331                     721,973                         12

Book value per common share                          32.07                       30.55                          5
Market price per common share                        29.35                       42.69                        (31 )

Allowance for credit losses to
total loans (5)                                       0.91 %                      0.72 %                       19  bp
Non-performing loans to total
loans                                                 1.54                        0.69                         85

(1) Net revenue is net interest income plus non-interest income.

(2) The core net interest margin excludes the effect of the net interest expense associated with Wintrust's junior subordinated debentures and the interest expense incurred to fund common stock repurchases.

(3) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income, annualizing this amount, and dividing by that period's total average assets. A lower ratio indicates a higher degree of efficiency.

(4) The efficiency ratio is calculated by dividing total non-interest expense by tax-equivalent net revenue (less securities gains or losses). A lower ratio indicates more efficient revenue generation.

(5) The allowance for credit losses includes both the allowance for loan losses and the allowance for lending-related commitments.

(6) See following section titled, "Supplemental Financial Measures/Ratios" for additional information on this performance measure/ratio.

Certain returns, yields, performance ratios, and quarterly growth rates are "annualized" in this presentation and throughout this report to represent an annual time period. This is done for analytical purposes to better discern for decision-making purposes underlying performance trends when compared to full-year or year-over-year amounts. For example, balance sheet growth rates are most often expressed in terms of an annual rate. As such, 5% growth during a quarter would represent an annualized growth rate of 20%.

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Supplemental Financial Measures/Ratios
The accounting and reporting polices of Wintrust conform to generally accepted accounting principles ("GAAP") in the United States and prevailing practices in the banking industry. However, certain non-GAAP performance measures and ratios are used by management to evaluate and measure the Company's performance. These include taxable-equivalent net interest income (including its individual components), net interest margin (including its individual components), core net interest margin and the efficiency ratio. Management believes that these measures and ratios provide users of the Company's financial information with a more meaningful view of the performance of interest-earning assets and interest-bearing liabilities and of the Company's operating efficiency. Other financial holding companies may define or calculate these measures and ratios differently.
Management reviews yields on certain asset categories and the net interest margin of the Company and its banking subsidiaries on a fully taxable-equivalent ("FTE") basis. 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 FTE basis is also used in the calculation of the Company's efficiency ratio. The efficiency ratio, which is calculated by dividing non-interest expense by total taxable-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.
Management also evaluates the net interest margin excluding the net interest expense associated with the Company's junior subordinated debentures and the interest expense incurred to fund common stock repurchases ("Core Net Interest Margin"). Because junior subordinated debentures are utilized by the Company primarily as capital instruments and the cost incurred to fund common stock repurchases is capital utilization related, management finds it useful to view the net interest margin excluding these expenses and deems it to be a more meaningful view of the operational net interest margin of the Company. A reconciliation of certain non-GAAP performance measures and ratios used by the Company to evaluate and measure the Company's performance to the most directly comparable GAAP financial measures is shown below:

                                                  Three Months Ended                Nine Months Ended
                                                    September 30,                     September 30,
(Dollars in thousands)                          2008             2007             2008             2007

(A) Interest income (GAAP)                    $ 126,569        $ 154,645        $ 388,905        $ 459,840
Taxable-equivalent adjustment:
- Loans                                             142              214              499              618
- Liquidity management assets                       423              534            1,362            1,634
- Other earning assets                               12                6               31               11

Interest income - FTE                         $ 127,146        $ 155,399        $ 390,797        $ 462,103
(B) Interest expense (GAAP)                      65,889           88,458          207,083          263,728

Net interest income - FTE                     $  61,257        $  66,941        $ 183,714        $ 198,375


(C) Net interest income (GAAP) (A minus
B)                                            $  60,680        $  66,187        $ 181,822        $ 196,112
Net interest income - FTE                     $  61,257        $  66,941        $ 183,714        $ 198,375
Add: Interest expense on junior
subordinated debentures and interest
cost incurred for common stock
repurchases(1)                                    5,157            6,047           16,519           16,954

Core net interest income - FTE (2)            $  66,414        $  72,988        $ 200,233        $ 215,329


(D) Net interest margin (GAAP)                     2.71 %           3.11 %           2.80 %           3.09 %
Net interest margin - FTE                          2.74 %           3.14 %           2.83 %           3.13 %
Core net interest margin - FTE (2)                 2.97 %           3.43 %           3.08 %           3.39 %

(E) Efficiency ratio (GAAP)                       77.12 %          76.46 %          72.71 %          72.31 %
Efficiency ratio - FTE                            76.57 %          75.73 %          72.19 %          71.65 %

(1) Interest expense from the junior subordinated debentures is net of the interest income on the Common Securities of the Trusts owned by the Company and included in interest income. Interest cost incurred for common stock repurchases is estimated using current period average rates on certain debt obligations.

(2) Core net interest income and core net interest margin are by definition non-GAAP measures/ratios.
The GAAP
equivalents are
the net interest
income and net
interest margin
determined in
accordance with
GAAP (lines C
and D in the
table).

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Critical Accounting Policies
The Company's Consolidated Financial Statements are prepared in accordance with generally accepted accounting principles in the United States and prevailing practices of the banking industry. Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. Critical accounting policies inherently have greater complexity and greater reliance on the use of estimates, assumptions and judgments than other accounting policies, and as such have a greater possibility that changes in those estimates and assumptions could produce financial results that are materially different than originally reported. Estimates, assumptions and judgments are based on information available as of the date of the financial statements; accordingly, as information changes, the financial statements could reflect different estimates and assumptions. Management currently views critical accounting policies to include the determination of the allowance for loan losses and the allowance for losses on lending-related commitments, the valuation of the retained interest in the premium finance receivables sold, the valuations required for impairment testing of goodwill, the valuation and accounting for derivative instruments and the accounting for income taxes as the areas that are most complex and require the most subjective and complex judgments, and as such could be most subject to revision as new information becomes available. For a more detailed discussion on these critical accounting policies, see "Summary of Critical Accounting Policies" beginning on page 28 of the Company's 2007 Annual Report. During the second quarter of 2008, the Company refined its methodology for determining certain elements of the allowance for loan losses. These refinements resulted in allocation of the allowance to loan portfolio groups based on loan collateral and credit risk rating. Previously, this element of the allowance was not segmented at the loan collateral and credit risk rating level. Impaired . . .