UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☑
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2024
☐
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Transition Period from to
Commission File Number 001-35077
Wintrust Financial Corporation
(Exact name of registrant as specified in its charter)
Illinois
36-3873352
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
9700 W. Higgins Road, Suite 800
Rosemont, Illinois 60018
(Address of principal executive offices)
Registrant’s telephone number, including area code: (847) 939-9000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading
Symbol(s)
Name of Each Exchange on Which Registered
Common Stock, no par value
WTFC
The Nasdaq Global Select Market
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D, no par value
WTFCM
The Nasdaq Global Select Market
Depositary Shares, Each Representing a 1/1,000th Interest in a Share of
WTFCP
The Nasdaq Global Select Market
6.875% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series E, no par value
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. þ Yes ¨ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ¨ Yes þ No
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes ¨ No
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit such files). þ Yes ¨ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definition of
“large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☑
Accelerated filer
☐
Non-Accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal controls over financial reporting under Section 404(b) of
the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. þ Yes ¨ No
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously
issued financial statements. ¨ Yes ¨ No
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers
during the relevant recovery period pursuant to §240.10D-1(b). ¨ Yes ¨ No
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ☐ Yes ☑ No
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant on June 28, 2024 (the last business day of the registrant’s most recently completed second
quarter), determined using the closing price of the common stock on that day of $98.56, as reported by the Nasdaq Global Select Market, was $6,034,106,686.
As of February 26, 2025, the registrant had 66,707,801 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the Company’s Annual Meeting of Shareholders to be held on May 22, 2025 are incorporated by reference into Part III.
TABLE OF CONTENTS
Page
PART I
ITEM 1
Business ............................................................................................................................................
3
ITEM 1A.
Risk Factors .......................................................................................................................................
23
ITEM 1B.
Unresolved Staff Comments .............................................................................................................
44
ITEM 1C.
Cybersecurity ....................................................................................................................................
44
ITEM 2.
Properties .........................................................................................................................................
46
ITEM 3.
Legal Proceedings ............................................................................................................................
46
ITEM 4.
Mine Safety Disclosures ..................................................................................................................
46
PART II
ITEM 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities ..............................................................................................................................
47
ITEM 6.
[Reserved] .........................................................................................................................................
48
ITEM 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations ..........
49
ITEM 7A.
Quantitative and Qualitative Disclosures About Market Risk ..........................................................
93
ITEM 8.
Financial Statements and Supplementary Data .................................................................................
96
ITEM 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ..........
169
ITEM 9A.
Controls and Procedures ..................................................................................................................
169
ITEM 9B.
Other Information .............................................................................................................................
172
ITEM 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections ..............................................
172
PART III
ITEM 10.
Directors, Executive Officers and Corporate Governance ................................................................
172
ITEM 11.
Executive Compensation ...................................................................................................................
172
ITEM 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters ..............................................................................................................................................
173
ITEM 13.
Certain Relationships and Related Transactions, and Director Independence .................................
173
ITEM 14.
Principal Accountant Fees and Services ...........................................................................................
173
PART IV
ITEM 15.
Exhibits, Financial Statement Schedules ..........................................................................................
174
ITEM 16.
Form 10-K Summary ........................................................................................................................
180
Signatures ..........................................................................................................................................
181
PART I
ITEM 1. BUSINESS
Overview
Wintrust Financial Corporation, an Illinois corporation (“we,” “Wintrust” or “the Company”), which was incorporated in 1992,
is a financial holding company based in Rosemont, Illinois, with total assets of approximately $64.9 billion as of December 31,
2024. We provide community-oriented, personal and commercial banking services to customers generally located in the
Chicago metropolitan area, southern Wisconsin, northwest Indiana and west Michigan (“our market area”) through our sixteen
wholly-owned-banking subsidiaries (collectively, the “banks”), as well as the origination of residential mortgages for sale into
the secondary market through Wintrust Mortgage, a division of Barrington Bank & Trust Company, N.A. (“Barrington Bank”).
In addition, we provide specialty finance services, including financing for the payment of property and casualty insurance
premiums and life insurance premiums (“premium finance receivables”) on a national basis through FIRST Insurance Funding,
a division of our wholly-owned subsidiary Lake Forest Bank & Trust Company, N.A. (“Lake Forest Bank”), and Wintrust Life
Finance, a division of Lake Forest Bank, and in Canada through our premium finance company, First Insurance Funding of
Canada Inc. (“FIFC Canada”), an indirect subsidiary of Lake Forest Bank, lease financing and other direct leasing opportunities
through our wholly-owned subsidiary, Wintrust Asset Finance, Inc. (“Wintrust Asset Finance”), and short-term accounts
receivable financing and outsourced administrative services through our wholly-owned subsidiary, Tricom, Inc. of Milwaukee
(“Tricom”). Further, we provide a full range of wealth management services primarily to customers in our market area through
four separate subsidiaries, The Wintrust Private Trust Company, N.A. (“WPT”) (formerly known as The Chicago Trust
Company), Wintrust Investments, LLC (“Wintrust Investments”), Great Lakes Advisors, LLC (“Great Lakes Advisors” or
“GLA”) and Chicago Deferred Exchange Company, LLC (“CDEC”).
Our Business and Reporting Segments
As set forth in Note (24) “Segment Information”, our operations consist of three primary segments: community banking,
specialty finance and wealth management. The three reportable segments are strategic business units that are separately
managed as they offer different products and services and have different marketing strategies. In addition, each segment’s
customer base has varying characteristics and each segment has a different regulatory environment. While the Company’s
management monitors each of the sixteen bank subsidiaries’ operations and profitability separately, these subsidiaries have
been aggregated into one reportable operating segment due to the similarities in products and services, customer base,
operations, profitability measures and economic characteristics. All segment measurements discussed below are based on the
reportable segments and do not reflect intersegment eliminations.
Community Banking
Through our community banking segment, our banks provide community-oriented, personal and commercial banking services
to customers located in our market area. Our customers include individuals, small to mid-sized businesses, local governmental
units and institutional clients residing primarily in the banks’ local service areas. The banks have a strategy to provide
comprehensive community-focused banking services. In keeping with this strategy, the banks provide highly personalized and
responsive services, a characteristic of locally-owned and managed institutions. As such, the banks compete for deposits
principally by offering depositors a variety of deposit programs, convenient office locations, hours and other services, and for
loan originations primarily through the interest rates and loan fees they charge, the efficiency and quality of services they
provide to borrowers and the variety of their loan and treasury management products. Using our multiple bank charter corporate
structure to our advantage, we offer our MaxSafe® deposit accounts, which provide customers with expanded Federal Deposit
Insurance Corporation (“FDIC”) insurance coverage by spreading a customer’s deposit across our sixteen banks. This product
differentiates our banks from many of our competitors that have consolidated their bank charters into branches. We also have
downtown Chicago and Milwaukee offices that work with each of our banks to capture commercial and industrial business. Our
commercial and industrial lenders in our downtown offices operate in close partnership with lenders at our community banks.
By combining our expertise in the commercial and industrial sector with our high level of personal service and a full suite of
banking products, we believe we create another point of differentiation from both our larger and smaller competitors. Our banks
also offer home equity, consumer, and real estate loans, safe deposit facilities, ATMs, online and mobile banking and other
innovative and traditional services specially tailored to meet the needs of customers in their market areas.
We developed our banking franchise through a combination of de novo organizations and the purchase of existing bank
franchises. The organizational efforts began in 1991, when a group of experienced bankers and local business people identified
an unfilled niche in the Chicago metropolitan area retail banking market. As large banks acquired smaller ones and personal
3
service was subjected to consolidation strategies, the opportunity increased for locally owned and operated, highly personal
service-oriented banks. As a result, Lake Forest Bank was founded in December 1991 to service the Lake Forest and Lake Bluff
communities within the Chicago metropolitan area.
As of December 31, 2024, we owned sixteen nationally chartered banks: Lake Forest Bank, Barrington Bank, Wintrust Bank,
N.A. (“Wintrust Bank”), Libertyville Bank & Trust Company, N.A. (“Libertyville Bank”), Northbrook Bank & Trust
Company, N.A. (“Northbrook Bank”), Village Bank & Trust, N.A. (“Village Bank”), Wheaton Bank & Trust Company, N.A.
(“Wheaton Bank”), State Bank of the Lakes, N.A. (“State Bank of the Lakes”), Crystal Lake Bank & Trust Company, N.A.
(“Crystal Lake Bank”), Schaumburg Bank & Trust Company, N.A. (“Schaumburg Bank”), Beverly Bank & Trust Company,
N.A. (“Beverly Bank”), Old Plank Trail Community Bank, N.A. (“Old Plank Trail Bank”), Hinsdale Bank & Trust Company,
N.A. (“Hinsdale Bank”), St. Charles Bank & Trust Company, N.A. (“St. Charles Bank”), Town Bank, N.A. (“Town Bank”) and
Macatawa Bank, N.A. (“Macatawa Bank”). As of December 31, 2024, we had 205 banking locations. Each nationally-chartered
bank is subject to regulation, supervision and regular examination by the Office of the Comptroller of the Currency (“OCC”).
We also engage in the retail origination of residential mortgages through Wintrust Mortgage as well as consumer direct lending
primarily to veterans through our Veterans First brand. Certain originated residential mortgage loans are sold to unaffiliated
companies or the Company’s banks; and, Wintrust Mortgage balances selling loans with servicing retained versus servicing
released to maximize current gain on sale revenue combined with potentially deepening customer relationships. Wintrust
Mortgage maintains retail mortgage offices in a number of states, with the largest concentration located in the Chicago,
Minneapolis, Salt Lake City and Los Angeles metropolitan areas.
We also offer several niche lending products through several of the banks. These include Barrington Bank’s Community
Advantage program, which provides lending, deposit and treasury management services to condominium, homeowner and
community associations; Hinsdale Bank’s mortgage warehouse lending program, which provides loan and deposit services to
mortgage brokerage companies located predominantly in the Chicago metropolitan area; Lake Forest Bank’s insurance agency
finance lending program, which provides financing to insurance agents, brokers and insurance businesses; and Lake Forest
Bank’s franchise lending program, which provides lending to restaurant franchisees. Other niches offered throughout our
banking franchise include, but are not limited to, Wintrust Commercial Finance, which offers direct leasing opportunities;
Wintrust Business Credit, which specializes in asset-based lending for middle-market companies; Wintrust SBA Lending,
which is dedicated to offering expertise in Small Business Administration (“SBA”) loans; Wintrust Commercial Real Estate,
which concentrates on real estate lending solutions including commercial mortgages and construction loans; and Wintrust
Government, Non-Profit & Healthcare, which focuses on financial solutions for mission-based organizations such as healthcare
facilities, non-profits, educational institutions and local government operations. In addition, we offer a niche deposit service
through Northbrook Bank’s Funds Group and Financial Markets Group, as well as Wintrust Bank's Wintrust Workplace
Solutions, which offers Health Savings Accounts and other notional banking products for employers.
For the years ended December 31, 2024, 2023 and 2022, the community banking segment had net revenues of $1.8 billion, $1.7
billion and $1.5 billion, respectively, and net income of $458.7 million, $414.1 million and $349.3 million, respectively. The
community banking segment had total assets of $52.5 billion, $44.4 billion and $41.4 billion as of December 31, 2024, 2023
and 2022, respectively. The community banking segment accounted for approximately 72.9% of our consolidated net revenues,
excluding intersegment eliminations, for the year ended December 31, 2024.
Specialty Finance
Through our specialty finance segment, we offer financing of insurance premiums for businesses and individuals; accounts
receivable financing, value-added, out-sourced administrative services; and other specialty finance businesses. FIRST Insurance
Funding and Wintrust Life Finance engage in the premium finance receivables business, our most significant specialized
lending niche, including property and casualty insurance premium finance and life insurance premium finance. We also engage
in property and casualty insurance premium finance in Canada through our wholly-owned subsidiary FIFC Canada.
In their property and casualty insurance premium finance operations, FIRST Insurance Funding and FIFC Canada make loans
primarily to businesses to finance the insurance premiums they pay on their property and casualty insurance policies. Approved
insurance agents and brokers located throughout the United States and Canada assist FIRST Insurance Funding and FIFC
Canada, respectively, in arranging each commercial premium finance loan between the borrower and FIRST Insurance Funding
or FIFC Canada, as the case may be. FIRST Insurance Funding or FIFC Canada evaluates each loan request according to its
own underwriting criteria including the amount of the down payment on the insurance policy, the term of the loan, the credit
quality of the insurance company providing the financed insurance policy, the interest rate, the borrower's previous payment
history, if any, and other factors deemed appropriate. Upon approval of the loan by FIRST Insurance Funding or FIFC Canada,
as the case may be, the borrower makes a down payment on the financed insurance policy, which is generally done by
4
providing payment to the agent or broker, who then forwards it to the insurance company. FIRST Insurance Funding or FIFC
Canada may either forward the financed amount of the remaining policy premiums directly to the insurance carrier or to the
agent or broker for remittance to the insurance carrier on FIRST Insurance Funding’s or FIFC Canada’s behalf. In some cases,
the agent or broker may hold our collateral, in the form of the proceeds of the unearned insurance premium from the insurance
company, and forward it to FIRST Insurance Funding or FIFC Canada in the event of a default by the borrower. This lending
involves relatively rapid turnover of the loan portfolio and high volume of loan originations. Because the agent or broker is the
primary contact to the ultimate borrowers who are located nationwide and because proceeds and our collateral may be handled
by the agent or brokers during the term of the loan, FIRST Insurance Funding and FIFC Canada may be more susceptible to
third party (i.e., agent or broker) fraud. The Company performs various controls and procedures including ongoing credit and
other reviews of the agents and brokers as well as performs various internal audit steps to mitigate against the risk of material
fraud.
The commercial and property premium finance business is subject to regulation in the majority of states. Regulation typically
governs notices to borrowers prior to cancellation of a policy and required communication to insurance agents and insurance
companies. FIRST Insurance Funding offers financing of property and casualty insurance policies in all 50 states, the District of
Columbia, Puerto Rico, and the U.S. Virgin Islands. FIRST Insurance Funding’s legal department regularly monitors changes
to regulations and updates policies and programs accordingly.
Wintrust Life Finance finances life insurance policy premiums generally used for estate planning purposes of high net-worth
borrowers. These loans are originated directly with the borrowers with assistance from life insurance carriers, independent
insurance agents, financial advisors and legal counsel. The cash surrender value of the life insurance policy is the primary form
of collateral. In addition, these loans often are secured with a letter of credit, marketable securities or certificates of deposit. In
very rare cases, Wintrust Life Finance may make a loan that has a partially unsecured position.
The life insurance premium finance business is subject to banking regulations but is not subject to additional regulatory regimes
(e.g. additional state regulation). Wintrust Life Finance’s compliance department regularly monitors the regulatory environment
and compliance with existing regulations. Wintrust Life Finance maintains a policy prohibiting the known financing of
stranger-originated life insurance and has established procedures to identify and prevent financing such policies. While a carrier
could potentially put at risk the cash surrender value of a policy, which serves as Wintrust Life Finance’s primary collateral, by
challenging the validity of the insurance contract for lack of an insurable interest, Wintrust Life Finance believes it has strong
counterclaims against any such claims by carriers, in addition to recourse to borrowers and guarantors as well as to additional
collateral in certain cases.
Premium finance loans made by FIRST Insurance Funding, Wintrust Life Finance and FIFC Canada are primarily secured by
the insurance policies financed by the loans. These insurance policies are written by a large number of insurance companies
geographically dispersed throughout the United States and Canada. Our premium finance receivables balances finance
insurance policies that are spread among a large number of insurers; however, one of the insurers represents approximately 10%
of such balances and two additional insurers represent approximately 8% and 6% each of such balances. FIRST Insurance
Funding, Wintrust Life Finance and FIFC Canada consistently monitor carrier ratings and financial performance of our carriers.
In the event carrier ratings fall below certain levels, most of Wintrust Life Finance’s life insurance premium finance policies
provide for an event of default and allow Wintrust Life Finance to have recourse to borrowers and guarantors as well as to
additional collateral in certain cases. For the commercial premium finance business, the term of the loans is sufficiently short
such that in the event of a decline in carrier ratings, FIRST Insurance Funding or FIFC Canada, as the case may be, can restrict
or eliminate additional loans to finance premiums to such carriers. The majority of premium finance receivables 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.
Through our wholly-owned subsidiary Wintrust Asset Finance, we provide equipment financing through structured loan and
lease products to customers in a variety of industries throughout the United States. Wintrust Asset Finance provides financing
of fixed assets consisting of property, plant and equipment, transportation (trucks, trailers, rail, marine, buses), construction,
manufacturing equipment, technology, oil and gas, restaurant equipment, medical and healthcare. As of December 31, 2024, the
Company’s leasing portfolio, including direct financing leases, loans and equipment on operating leases, totaled $3.9 billion
compared to $3.4 billion as of December 31, 2023. During 2024, Wintrust Asset Finance contributed approximately $89.6
million to our revenue, which does not reflect intersegment eliminations.
Through our wholly-owned subsidiary Tricom, 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 the
temporary staffing industry. Tricom’s clients, located throughout the United States, provide staffing services to businesses in
diversified industries. During 2024, Tricom processed payrolls with associated client billings of approximately $695.5 million
5
and contributed approximately $10.5 million to our revenue, net of interest expense, which does not reflect intersegment
eliminations.
In 2024, our commercial premium finance operations, life insurance premium finance operations, leasing operations and
accounts receivable finance operations accounted for 49%, 30%, 19% and 2%, respectively, of the total revenues of our
specialty finance business. For the years ended December 31, 2024, 2023 and 2022 the specialty finance segment had net
revenues of $475.6 million, $435.0 million and $344.4 million, respectively, and net income of $186.3 million, $175.5 million
and $120.9 million, respectively. The specialty finance segment had total assets of $11.2 billion, $10.7 billion and $9.8 billion
as of December 31, 2024, 2023 and 2022, respectively. The specialty finance segment accounted for 19.1% of our consolidated
net revenues, excluding intersegment eliminations, for the year ended December 31, 2024.
Wealth Management
Through our wealth management segment, we offer a full range of wealth management services through four separate
subsidiaries (WPT, Wintrust Investments, GLA and CDEC): trust and investment services, tax-deferred like-kind exchange
services, asset management solutions, and securities brokerage services.
Wintrust Investments, our registered broker/dealer subsidiary which has been operating since 1931, provides a full range of
private client and securities brokerage services to clients located primarily in the Midwest. Wintrust Investments is
headquartered in downtown Chicago, operates an office in Appleton, Wisconsin, and has established branch locations in offices
at a majority of our banks. Wintrust Investments also provides a full range of investment services to clients through a network
of relationships with community-based financial institutions primarily located in Illinois. Wintrust Investments currently is
regulated by the Securities and Exchange Commission (“SEC”) and the Financial Industry Regulatory Authority (“FINRA”) as
a registered broker-dealer, as well as by the SEC as a registered investment adviser. In late January of 2025, following receipt
of regulatory approvals and satisfaction of certain other conditions, Wintrust Investments transitioned support of the wealth
management business of Wintrust Investments and certain private client business at GLA to a platform operated by LPL
Financial Holdings, Inc. (“LPL”). As previously announced by Wintrust Investments, this transition is expected to allow
Wintrust and GLA to focus on the growth of their wealth management business, while outsourcing most of their operational and
compliance support to LPL. As a result of this outsourcing, Wintrust Investments also expects to deregister as a broker-dealer
and investment advisor by the end of 2025.
WPT, our trust subsidiary, offers trust and investment management services to clients through offices located in downtown
Chicago and at various banking offices of our sixteen banks. WPT is subject to regulation, supervision and regular examination
by the OCC.
GLA, our registered investment adviser with locations in downtown Chicago, Tampa, Florida, and Stamford, Connecticut, as
well as in various banking offices of our sixteen banks, provides money management services and advisory services to
individuals, institutions, and municipal and tax-exempt organizations. GLA also provides portfolio management and financial
advisory services for a wide range of pension and profit-sharing plans as well as money management and advisory services to
WPT. GLA is regulated by the SEC as a registered investment adviser.
CDEC, our provider of tax-deferred like-kind exchange services, provides Qualified Intermediary services (as defined by U.S.
Treasury regulations) for taxpayers seeking to structure tax-deferred like-kind exchanges under Internal Revenue Code (“IRC”)
Section 1031. Under IRC Section 1031, a taxpayer may defer the gain on the sale of certain investment property if the taxpayer
utilizes the services of a Qualified Intermediary. These transactions typically generate customer deposits during the period
following the sale of the property until such proceeds are used to purchase a replacement property. These deposits may flow
into our banks as a source of low-cost deposits. CDEC is the subsidiary of Elektra Holding Company, LLC (“Elektra”), which
was acquired by the Company in December of 2018.
As of December 31, 2024, the Company’s wealth management subsidiaries had approximately $51.2 billion of assets under
administration, which included $8.5 billion of assets owned by the Company and its subsidiary banks. For the years ended
December 31, 2024, 2023 and 2022, the wealth management segment had net revenues of $198.1 million, $169.3 million and
$162.9 million, respectively, and net income of $50.0 million, $33.0 million and $39.4 million, respectively. The wealth
management segment had total assets of $1.1 billion, $1.2 billion and $1.8 billion as of December 31, 2024, 2023 and 2022,
respectively. The wealth management segment accounted for 8.0% of our consolidated net revenues, excluding intersegment
eliminations, for the year ended December 31, 2024.
Strategy and Competition
6
The Company has employed certain strategies to achieve strong net income amid increased competition and an environment,
that up until recent years, was characterized by low interest rates. In general, the Company has taken a steady and measured
approach to grow strategically and manage expenses. Specifically, the Company has:
•
Leveraged its internal loan pipeline and external growth opportunities to grow earnings assets to increase net interest
income;
•
Continued to diversify our loan portfolio by adding product and geographic diversification;
•
Continued efforts to grow our deposit franchise in a diversified manner to be the Company’s primary funding source;
•
Completed strategic acquisitions to expand our presence in existing and complimentary markets;
•
Invested in our technology infrastructure to allow for growth and to enhance digital and other product offerings to better
serve our existing customers and to attract new customers;
•
Focused on cost control and leveraging our infrastructure to grow without a commensurate increase in operating
expenses; and
•
Expanded the Wintrust Asset Finance direct leasing niche.
Our strategy and competitive position for each of our business segments is summarized in further detail, below.
Community Banking
We compete in the commercial banking industry through our banks in the communities they serve. The commercial banking
industry is highly competitive and the banks face strong direct competition for deposits, loans and other financial related
services. The banks compete with other commercial banks, thrifts, credit unions, stockbrokers, government-sponsored entities,
mutual fund companies, insurance companies, factoring companies and other commercial entities offering financial services
products, including non-bank financial companies and entities commonly known as financial technology companies. Some of
these competitors are local, while others are statewide or nationwide.
As a $64.9 billion asset financial services company, we expect to benefit from greater access to financial and managerial
resources than our smaller local competitors while maintaining our commitment to local decision-making and to our community
banking philosophy. In particular, we are able to provide a wider product selection and larger credit facilities than many of our
smaller competitors, and we believe our service offerings help us in recruiting talented staff. We continue to add lenders
throughout the community banking organization, many of whom have joined us because of our ability to offer a range of
products and level of services which compete effectively with both larger and smaller market participants. We have continued
to expand our product delivery systems, including a wide variety of electronic banking options for our retail and commercial
customers which allow us to provide a level of service typically associated with much larger banking institutions. Additionally,
we have access to public capital markets whereas many of our local competitors are privately held and may have limited
capital-raising capabilities.
Management views service as a great equalizer to offset some of the inherent advantages of its significantly larger competitors.
We also believe we are positioned to compete effectively with other larger and more diversified banks, bank holding companies
and other financial services companies due to the multi-chartered approach that pushes accountability for building a franchise
and a high level of customer service down to each of our banking franchises. Additionally, we believe that we provide a
relatively complete portfolio of products that is responsive to the majority of our customers’ needs through the retail and
commercial operations supplied by our banks, and through our mortgage and wealth management operations. The breadth of
our product mix allows us to compete effectively with our larger competitors, while our multi-chartered approach with local and
accountable management provides for what we believe is superior customer service relative to our larger and more centralized
competitors. We continue to grow and enhance our digital service offerings while maintaining our expectations of high quality,
more traditional banking services.
Wintrust Mortgage competes with large mortgage brokers as well as other banking organizations. Consolidation, margin
compression, enhanced regulatory guidance and the promise of equal oversight for both banks and independent mortgage
lenders have created challenges for small and medium-sized independent mortgage lenders. Wintrust Mortgage’s size, bank
affiliation, regulatory competency, branding, technology, business development tools and reputation make us well positioned to
compete in this environment. Wintrust Mortgage balances selling loans with servicing retained versus servicing released to
maximize current gain on sale revenue combined with potentially deepening customer relationships. While earnings will
fluctuate with the rise and fall of long-term interest rates, we expect that mortgage banking revenue will be a continuous source
of revenue for us and our mortgage lending relationships will continue to provide franchise value to our other financial service
businesses.
7
We continue to review our branch footprint and in 2024, the Company opened nine new branch locations in the Chicago
metropolitan area and acquired twenty-six branch locations in the west Michigan market (Kent, Ottawa, and northern Allegan
counties) resulting from the Macatawa Bank acquisition completed in August of 2024. The Company also closed four branch
locations in the Chicago metropolitan area. There was no material attrition or customer disruption in connection with these
footprint changes. It is important to note that while we see increased use of electronic services and are investing heavily in
digital capabilities to allow clients to choose how they want to be served, Wintrust expects that our strategy will continue to
include selectively opening branches in areas where we are not represented.
Specialty Finance
FIRST Insurance Funding and Wintrust Life Finance encounter intense competition from numerous other firms, including a
number of national commercial premium finance companies, companies affiliated with insurance carriers, independent
insurance brokers who offer premium finance services and other lending institutions. Some of our competitors are larger and
have greater financial and other resources. FIRST Insurance Funding and Wintrust Life Finance compete with these entities by
emphasizing a high level of knowledge of the insurance industry, flexibility in structuring financing transactions, and the timely
funding of qualifying contracts. We believe that our commitment to service also distinguishes us from our competitors. FIFC
Canada competes with one national commercial premium finance company, a few regional providers and insurance broker
owned premium finance companies where brokers finance their own customers policies.
Wintrust Asset Finance competes with other bank-affiliated, independent, captive and vendor equipment leasing and finance
companies. Wintrust Asset Finance believes a customer-focused origination philosophy, an experienced team, strong
underwriting discipline and expert asset management enables them to compete effectively in a growing and dynamic market.
Tricom competes with numerous other firms, including a small number of similar niche finance companies and payroll
processing firms, as well as various finance companies, banks and other lending institutions. Tricom’s management believes
that its commitment to service distinguishes it from competitors.
Wealth Management
Our wealth management companies (WPT, Wintrust Investments, GLA and CDEC) compete with larger wealth management
subsidiaries of other larger bank holding companies as well as with other trust companies, brokerage and other financial service
companies, stockbrokers and financial advisors. We believe we can successfully compete for trust, tax services, asset
management and brokerage business by offering personalized attention and customer service to small to midsize businesses and
affluent individuals. We continue to recruit and hire experienced wealth management professionals from within the larger
Chicago metropolitan area as well as Wisconsin, west Michigan and southwest Florida, which is expected to help in attracting
new customer relationships.
Supervision and Regulation
Regulatory Environment
Our business is heavily regulated and supervised by federal agencies, state agencies and the federal & provincial governments
of Canada. Both the scope of the laws and regulations and the intensity of the supervision to which our business is subject have
increased in recent years, initially in response to the financial crisis, and more recently in light of other factors such as the
regional banking uncertainty in early 2023, technological updates, and market changes. Regulatory enforcement and fines have
also increased across the banking and financial services sector. Many of these changes have occurred as a result of the Dodd-
Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) and its implementing regulations, most of which
are now in place. We expect that our business will remain subject to extensive regulation and supervision.
The Company is a bank holding company under the Bank Holding Company Act of 1956, as amended (the “BHC Act”), subject
to regulation, supervision, and examination by the Federal Reserve. The Company is also subject to the disclosure and
regulatory requirements of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, both
as administered by the SEC, as well as the rules of the Nasdaq Stock Market (“Nasdaq”) that apply to companies with securities
listed on the Nasdaq Global Select Market. Each nationally-chartered bank is subject to regulation, supervision and regular
examination by the OCC. The deposits of all of our subsidiary banks are insured by the Deposit Insurance Fund (“DIF”) and, as
such, the FDIC has additional oversight authority over the banks. The supervision, regulation and examination of banks and
bank holding companies by bank regulatory agencies are intended primarily for the protection of depositors, the DIF, and the
banking system as a whole, rather than shareholders of banks and bank holding companies, and in some instances may be
8
contrary to shareholders’ interests. First Insurance Funding of Canada Inc. as a foreign owned subsidiary through an Edge corp.
is subject to examination by the Federal Reserve.
The Consumer Financial Protection Bureau (“CFPB”) has broad rulemaking authority over a wide range of federal consumer
protection laws applicable to the business of our subsidiary banks and some other operating subsidiaries. Because each of our
subsidiary banks has less than $10 billion in total consolidated assets, our subsidiary banks’ federal banking agency, not the
CFPB, is responsible for examining and supervising the subsidiary banks’ compliance with federal consumer protection laws
and regulations. Our non-bank subsidiaries are subject to regulation by their functional regulators, including applicable state
finance and insurance agencies, the applicable exchanges, the SEC, FINRA, and the OCC, as well as by the Federal Reserve.
Federal and state laws, and the regulations of the bank regulatory agencies issued under them, affect the scope of business, the
kinds and amounts of investments banks may make, reserve requirements, capital levels, the nature and amount of collateral for
loans, the establishment of branches, the ability to merge, consolidate and acquire, dealings with insiders and affiliates and the
payment of dividends. The regulatory agencies have broad discretion to impose restrictions and limitations on the operations of
a regulated entity where the agencies determine, among other things, that such operations are unsafe or unsound, fail to comply
with applicable law or are otherwise inconsistent with laws and regulations or with the supervisory policies of these agencies.
The following is a description of some of the laws and regulations that affect our business. By necessity, the descriptions below
are summaries that do not purport to be complete, and that are qualified in their entirety by reference to those statutes and
regulations discussed, and all regulatory interpretations thereof. Any changes in applicable laws, regulations, or the
interpretations thereof could have a material adverse effect on our business or the business of our subsidiaries.
Bank Holding Company Regulation
The Company is a bank holding company that has elected to be treated as a financial holding company. The activities of bank
holding companies generally are limited to the business of banking, managing or controlling banks, and certain other activities
determined by the Federal Reserve to be closely related to banking. As a financial holding company, we may engage in an
expanded range of activities, including activities that are considered to be financial in nature. Financial holding companies may
also engage in activities incidental or complementary to financial activities, if the Federal Reserve determines that such
activities pose no substantial risk to the safety or soundness of depository institutions or the financial system in general.
Impermissible activities for financial holding companies and their subsidiaries include activities that are related to commerce,
such as sales of nonfinancial products or manufacturing. As a result, subject to certain exceptions, the BHC Act generally
prohibits us from acquiring direct or indirect ownership or control of voting shares of any company engaged in activities that
are not permissible for us to engage in.
Maintaining our financial holding company status requires that the Company and each of our subsidiary banks remain “well-
capitalized” and “well-managed” as defined by regulation and that each of our subsidiary banks maintain at least a
“satisfactory” rating under the Community Reinvestment Act (“CRA”). If we or our subsidiary banks fail to continue to meet
these requirements, we could be subject to restrictions on new activities and acquisitions, and/or be required to cease and
possibly divest operations that conduct existing activities that are not permissible for a bank holding company that is not a
financial holding company.
The BHC Act generally requires us to obtain prior approval from the Federal Reserve before acquiring direct or indirect
ownership or control of more than 5% of the voting shares of an additional bank or bank holding company, or to merge or
consolidate with another bank holding company. The Bank Merger Act generally requires our subsidiary banks to obtain prior
regulatory approval to merge or consolidate with, or acquire substantially all of the assets of or assume deposits of, another
bank. We must also be well-capitalized and well-managed, in order to acquire a bank located outside of our home state.
The standards by which bank and financial institution acquisitions are evaluated have been undergoing review and change by
the federal banking agencies. In September 2024, the OCC adopted a final rule and policy statement regarding its review of
Bank Merger Act applications for OCC-supervised institutions. The final rule removes the ability for Bank Merger Act
applicants to file a streamlined application form for certain types of acquisitions and removes the expedited review process for
Bank Merger Act applications. The policy statement provides indicators of whether a Bank Merger Act application is more or
less likely to be approved by the OCC. One indicator for approval is that the resulting institution has total assets of less than $50
billion, which the Company exceeds. The policy statement also provides heightened expectations around the existing statutory
factors the OCC is required to consider in evaluating Bank Merger Act applications.
In September 2024, the Department of Justice (the “DOJ”) withdrew its 1995 Bank Merger Guidelines and issued the 2024
Banking Addendum to 2023 Merger Guidelines (the “2024 Banking Addendum”). The DOJ clarified that it will assess
9
competition considerations in connection with bank and bank holding company mergers using its 2023 Merger Guidelines,
which is the general merger review framework the DOJ now uses to evaluate transactions in all segments of the economy, and
2024 Banking Addendum. The 2024 Banking Addendum provides guidance on how the DOJ will assess competition in the
context of bank and bank holding company mergers. An analysis under the 2023 Merger Guidelines and 2024 Banking
Addendum may include consideration of theories of harm and relevant markets not considered under the 1995 Bank Merger
Guidelines, which focused primarily on concentrations of deposits and branches.
The Federal Deposit Insurance Act (“FDIA”) and Federal Reserve regulations and policy require us to serve as a source of
financial and managerial strength for our subsidiary banks, and to commit resources to support the banks. This support may be
required even if doing so may adversely affect our ability to meet other obligations.
Acquisitions of Ownership of the Company
Acquisitions of the Company’s voting stock above certain thresholds may be subject to prior regulatory notice or approval
under applicable federal banking laws. Investors are responsible for ensuring that they do not, directly or indirectly, acquire
shares of our stock in excess of the amount that can be acquired without regulatory approval or notice under the BHC Act and
the Change in Bank Control Act.
Volcker Rule
We are prohibited under the Volcker Rule from (1) engaging in short-term proprietary trading for our own account, and
(2) having certain ownership interests in and relationships with hedge funds or private equity funds. The fundamental
prohibitions of the Volcker Rule apply to banking entities of any size, including the Company and its bank subsidiaries. The
Volcker Rule regulations contain exemptions for market-making, hedging, underwriting, trading in U.S. government and
agency obligations and also permit certain ownership interests in certain types of funds to be retained. They also permit the
offering and sponsoring of funds under certain conditions. The Volcker Rule regulations impose significant compliance and
reporting obligations on banking entities. The Company has put in place the compliance programs required by the Volcker Rule
and has divested any holdings in illiquid funds. The Company will continue to monitor Volcker Rule-related developments and
assess their impact on its operations as necessary.
Capital Requirements of the Company and Subsidiary Banks
We and our subsidiary banks are required to maintain minimum risk-based and leverage capital ratios, as well as a capital
conservation buffer (“Capital Conservation Buffer”), pursuant to regulations adopted by the Federal Reserve and the OCC to
implement the Basel III capital framework (“U.S. Basel III Rule”).
Regulatory Capital and Risk-weighted Assets
Regulatory capital requirements apply to Common Equity Tier 1 capital, Tier 1 capital and total capital.
•
Common Equity Tier 1 capital consists primarily of common stock and related surplus (net of treasury stock), retained
earnings, and certain minority interests, subject to certain regulatory adjustments. For us and our subsidiary banks,
Common Equity Tier 1 capital does not include most elements of accumulated other comprehensive income (“AOCI”)
because we exercised an opt-out election that was available to us with respect to certain changes in the capital treatment
of AOCI. We made this election to avoid variations in the level of our capital depending on fluctuations in the fair value
of our securities and derivatives portfolio.
•
Tier 1 capital is composed of Common Equity Tier 1 capital and Additional Tier 1 capital. Additional Tier 1 capital
consists primarily of non-cumulative perpetual preferred stock and related surplus, certain minority interests and, subject
to certain regulatory limits, certain grandfathered cumulative perpetual preferred stock and certain grandfathered trust
preferred securities.
•
Total capital is composed of Tier 1 capital and Tier 2 capital. Tier 2 capital consists primarily of capital instruments and
related surplus meeting specified requirements, and may include cumulative preferred stock and long-term perpetual
preferred stock, mandatory convertible securities, intermediate preferred stock, certain trust preferred securities and
subordinated debt. Also included in Tier 2 capital is the allowance for credit losses limited to a maximum of 1.25% of
risk-weighted assets (“RWAs”) and, for institutions that have exercised the opt-out election regarding the treatment of
AOCI up to 45% of net unrealized gains on available-for-sale equity securities with readily determinable fair market
values.
10
Certain adjustments to and deductions from capital are required for purposes of calculating these regulatory capital measures,
including with respect to goodwill, intangible assets, certain deferred tax assets, AOCI and investments in the capital
instruments of unconsolidated financial institutions. In July 2019, the U.S. bank regulators finalized changes to certain aspects
of the U.S. Basel III capital rules that simplified, for certain bank holding companies and banks, including us and our subsidiary
banks, the framework for capital deductions for mortgage servicing assets, certain deferred tax assets and investments in the
capital instruments of unconsolidated financial institutions, and the recognition of minority interests in regulatory capital. These
amendments were effective as of April 1, 2020.
Pursuant to rules adopted by the U.S. federal banking agencies, the Company elected to delay, for regulatory capital purposes,
the day-one impact of Accounting Standards Update (“ASU”) 2016-13 Financial Instruments - Credit Losses (Topic 326)
(“CECL”) on retained earnings over a period of five years. Under the five-year transition going through the end of 2024, the
Company deferred for two years 100% of the day-one effect of adopting CECL and 25% of the cumulative increase or decrease
in the allowance for credit losses since the adoption of CECL. For further discussion of the CECL accounting standard,
including the Company’s implementation of such guidance, see “Summary of Critical Accounting Estimates” under
Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Annual Report on
Form 10-K.
Capital Ratio Requirements
Under the U.S. Basel III Rule, we and our subsidiary banks are required to maintain the following minimum capital ratios:
•
Tier 1 capital to quarterly average assets (net of goodwill, certain other intangible assets and certain other deductions)
ratio (“Tier 1 Leverage Ratio”) of 4.0%;
•
Tier 1 capital to RWAs ratio (“Tier 1 Capital Ratio”) of 6.0%;
•
Common Equity Tier 1 capital to RWAs ratio (“Common Equity Tier 1 Capital Ratio”) of 4.5%; and
•
Total capital to RWAs ratio (“Total Capital Ratio”) of 8.0%.
To be well-capitalized, our subsidiary banks must maintain the following capital ratios:
•
Tier 1 Leverage Ratio of 5.0% or greater.
•
Tier 1 Capital Ratio of 8.0% or greater;
•
Common Equity Tier 1 Capital Ratio of 6.5% or greater; and
•
Total Capital Ratio of 10.0% or greater.
The Federal Reserve has not yet revised the well-capitalized standard for bank holding companies to reflect the higher capital
requirements imposed under the U.S. Basel III Rule. For purposes of the Federal Reserve’s Regulation Y, including
determining whether a bank holding company meets the requirements to be a financial holding company, bank holding
companies, such as the Company, must maintain a Tier 1 Capital Ratio of 6.0% or greater and a Total Capital Ratio of 10.0% or
greater to be well-capitalized. If the Federal Reserve were to apply the same or a very similar well-capitalized standard to bank
holding companies as that applicable to our subsidiary banks, the Company’s capital ratios as of December 31, 2024 would
exceed such revised well-capitalized standard. The Federal Reserve may require bank holding companies, including us, to
maintain capital ratios substantially in excess of mandated minimum levels, depending upon general economic conditions and a
bank holding company’s particular condition, risk profile and growth plans.
Failure to be well-capitalized or to meet minimum capital requirements could result in certain mandatory and possible
additional discretionary actions by regulators, including restrictions on our or our subsidiary banks’ ability to pay dividends or
otherwise distribute capital or to receive regulatory approval of applications, or other restrictions on growth. Such actions, if
undertaken, could have an adverse material effect on our operations or financial condition.
In addition to meeting the minimum capital requirements, under the U.S. Basel III Rule, we and our banking subsidiaries must
also maintain the required Capital Conservation Buffer to avoid becoming subject to restrictions on capital distributions and
certain discretionary bonus payments to management. The Capital Conservation Buffer is 2.5% and is calculated as a ratio of
Common Equity Tier 1 capital to RWAs and it effectively increases the required minimum risk-based capital ratios. The Tier 1
Leverage Ratio is not impacted by the Capital Conservation Buffer, and a banking institution may be considered well-
capitalized while remaining out of compliance with the Capital Conservation Buffer.
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The table below summarizes the capital requirements that we and our subsidiary banks must satisfy to avoid limitations on
capital distributions and certain discretionary bonus payments (i.e., the required minimum capital ratios plus the Capital
Conservation Buffer):
Minimum Regulatory Capital Ratio Plus
Capital Conservation Buffer
Tier 1 capital ratio
8.50 %
Common Equity Tier 1 Capital Ratio
7.00
Total Capital Ratio
10.50
As of December 31, 2024, our Company’s and our subsidiary banks’ regulatory capital ratios were above the well-capitalized
standards and met the Capital Conservation Buffer. Based on current estimates, we believe that we and our subsidiary banks
will continue to exceed all applicable well-capitalized regulatory capital requirements and the Capital Conservation Buffer.
Please refer to the table below for a summary of our regulatory capital ratios as of December 31, 2024, calculated using the
regulatory capital methodology applicable to us during 2024.
Company Regulatory Capital Ratios
Minimum
Regulatory
Capital Ratio
for the
Company
Minimum
Ratio + Capital
Conservation
Buffer(1)
Well-
Capitalized
Minimum
for the
Company(2)
The Company
Tier 1 leverage ratio
4.00 %
N/A
N/A
9.4 %
Risk-based capital ratios:
Tier 1 capital ratio
6.00
8.50
6.00
10.7
Common equity tier 1 capital ratio
4.50
7.00
N/A
9.9
Total capital ratio
8.00
10.50
10.00
12.3
(1) Reflects the Capital Conservation Buffer of 2.50%.
(2) Reflects the well-capitalized standard applicable to the Company for purposes of the Federal Reserve’s Regulation Y. The
Federal Reserve has not yet revised the well-capitalized standard for BHCs to reflect the higher capital requirements
imposed under the U.S. Basel III Rule or to add Common Equity Tier 1 capital ratio and Tier 1 leverage ratio
requirements to this standard. As a result, the Common Equity Tier 1 capital ratio and Tier 1 leverage ratio are denoted
as “N/A” in this column. If the Federal Reserve were to apply the same or a very similar well-capitalized standard to
BHCs as the standard applicable to our subsidiary banks, the Company’s capital ratios as of December 31, 2024 would
exceed such revised well-capitalized standard.
In addition to the above, as a result of participation in mortgage programs with certain government-sponsored entities as well as
other investors, the Company has specific net worth requirements for continued participation. As of December 31, 2024, the
Company remained in compliance with such requirements.
Payment of Dividends and Share Repurchases
We are a legal entity separate and distinct from our banking and non-banking subsidiaries. Since our consolidated net income
consists largely of net income of our bank and non-bank subsidiaries, our ability to pay dividends and repurchase shares
depends upon our receipt of dividends from our subsidiaries. There are various federal and state law limitations on the extent to
which our banking subsidiaries can declare and pay dividends to us, including regulatory capital requirements, general
regulatory oversight to prevent unsafe or unsound practices and federal and state banking law requirements concerning the
payment of dividends out of net profits or surplus. Applicable banking laws also prohibit, without prior regulatory approval,
insured depository institutions, such as our bank subsidiaries, from making dividend distributions if such distributions are not
paid out of available earnings. In addition, our right, and the right of our shareholders and creditors, to participate in any
distribution of the assets or earnings of our bank and non-bank subsidiaries is further subject to the prior claims of creditors of
our subsidiaries. No assurances can be given that the banks will, in any circumstances, pay dividends to the Company.
We and our bank subsidiaries must maintain the applicable Common Equity Tier 1 Capital Conservation Buffer to avoid
becoming subject to restrictions on capital distributions, including dividends. The Capital Conservation Buffer is currently at its
fully phased-in level of 2.5%. For more information on the Capital Conservation Buffer, see Capital Ratio Requirements above.
12
Our ability to declare and pay dividends to our shareholders is similarly limited by federal banking law and Federal Reserve
regulations and policy. Federal Reserve policy provides that a bank holding company should not pay dividends unless (1) the
bank holding company’s net income over the last four quarters (net of dividends paid) is sufficient to fully fund the dividends,
(2) the prospective rate of earnings retention appears consistent with the capital needs, asset quality and overall financial
condition of the bank holding company and its subsidiaries and (3) the bank holding company will continue to meet minimum
required capital adequacy ratios. The policy also provides that a bank holding company should inform the Federal Reserve
reasonably in advance of declaring or paying a dividend that exceeds earnings for the period for which the dividend is being
paid or that could result in a material adverse change to the bank holding company’s capital structure. Bank holding companies
also are required to consult with the Federal Reserve before materially increasing dividends. The Federal Reserve could prohibit
or limit the payment of dividends by a bank holding company if it determines that payment of the dividend would constitute an
unsafe or unsound practice.
FDICIA and Prompt Corrective Action
The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”) requires the federal bank regulatory
agencies to take “prompt corrective action” regarding FDIC-insured depository institutions that do not meet certain capital
adequacy standards. A depository institution’s treatment for purposes of the prompt corrective action provisions depends upon
its level of capitalization and certain other factors. An institution that fails to remain well-capitalized becomes subject to a series
of restrictions that increase in severity as its capital condition weakens. Such restrictions may include a prohibition on capital
distributions, restrictions on asset growth or restrictions on the ability to receive regulatory approval of applications. The
FDICIA also provides for enhanced supervisory authority over under capitalized institutions, including authority for the
appointment of a conservator or receiver for the institution. In certain instances, a bank holding company may be required to
guarantee the performance of an under capitalized subsidiary bank’s capital restoration plan.
As of December 31, 2024, each of the Company’s banks was categorized as “well-capitalized” and, in addition, met additional
requirements under the Capital Conservation Buffer.
Enforcement Authority
The federal bank regulatory agencies have broad authority to issue orders to depository institutions and their holding companies
prohibiting activities that constitute violations of law, rule, regulation, or administrative order, or that represent unsafe or
unsound banking practices, as determined by the federal banking agencies. The federal banking agencies also are empowered to
require affirmative actions to correct any violation or practice; issue administrative orders that can be judicially enforced; direct
increases in capital; limit dividends and distributions; restrict growth; assess civil money penalties against institutions or
individuals who violate any laws, regulations, orders, or written agreements with the agencies; order termination of certain
activities of holding companies or their non-bank subsidiaries; remove officers and directors; order divestiture of ownership or
control of a non-banking subsidiary by a holding company; or terminate deposit insurance and appoint a conservator or
receiver.
Safety and Soundness
The federal bank regulatory agencies have adopted a set of guidelines prescribing safety and soundness standards relating to
internal controls and information systems, informational security, internal audit systems, loan documentation, credit
underwriting, interest rate exposure, asset growth, and compensation, fees and benefits. The guidelines prohibit excessive
compensation as an unsafe and unsound practice and describe compensation as excessive when the amounts paid are
unreasonable or disproportionate to the services performed by an executive officer, employee, director or principal shareholder.
Properly managing risks has been identified by regulators as critical to the conduct of safe and sound banking activities and has
become even more important as new technologies, product innovation, and the size and speed of financial transactions have
changed the nature of banking markets. The agencies have identified a spectrum of risks facing banking institutions including,
but not limited to, credit, market, liquidity, operational, legal, and reputational risk. Some of the regulatory pronouncements
have focused on operational risk, which arises from the potential that inadequate information systems, operational problems,
breaches in internal controls, fraud, or unforeseen catastrophes will result in unexpected losses. New products and services,
third-party risk management and cybersecurity are critical sources of operational risk that financial institutions are expected to
address in the current environment. Our subsidiary banks are expected to have active board and senior management oversight;
adequate policies, procedures, and limits; adequate risk measurement, monitoring, and management information systems; and
comprehensive and effective internal controls.
13
Cross-Guarantee
Under the cross-guarantee provision of the FDIA, insured depository institutions such as our subsidiary banks may be liable to
the FDIC for any losses incurred, or reasonably expected to be incurred, by the FDIC resulting from the default of, or FDIC
assistance to, any other commonly controlled insured depository institution. An FDIC cross-guarantee claim against a
depository institution is superior in right of payment to claims of the holding company and its affiliates against such depository
institution. All of our subsidiary banks are commonly controlled within the meaning of the cross-guarantee provision.
Insurance of Deposit Accounts
The deposits of each of our subsidiary banks are insured by the DIF up to the standard maximum deposit insurance amount of
$250,000 per depositor. Each of our subsidiary banks is subject to deposit insurance assessments based on the risk it poses to
the DIF, as determined by the capital category and supervisory category to which it is assigned. The FDIC has authority to raise
or lower assessment rates on insured deposits in order to achieve statutorily required reserve ratios in the DIF and to impose
special additional assessments. There is a risk that our subsidiary banks’ deposit insurance premiums will increase if failures of
insured depository institutions deplete the DIF or if the FDIC were to change its view of the risk that they pose to the DIF.
Extraordinary growth in insured deposits during the first and second quarters of 2020 caused the DIF reserve ratio to decline
below the statutory minimum of 1.35%. On June 21, 2022, the FDIC Board of Directors adopted an Amended Restoration Plan.
The FDIC later adopted a final rule, applicable to all insured depository institutions, to increase initial base deposit insurance
assessment rate schedules uniformly by 2 basis points, beginning in the first quarterly assessment period of 2023. The FDIC
also concurrently maintained the Designated Reserve Ratio (“DRR”) for the DIF at 2% for 2023 and 2024. The increase in
assessment rate schedules is intended to increase the likelihood that the reserve ratio of the DIF reaches the statutory minimum
of 1.35% by the statutory deadline of September 30, 2028. The new assessment rate schedules will remain in effect unless and
until the reserve ratio meets or exceed 2% in order to support growth in the DIF in progressing toward the FDIC’s long-term
goal of 2% DRR. Progressively lower assessment rate schedules will take effect when the reserve ratio reaches 2%, and again
when it reaches 2.5%.
In November 2023, the FDIC issued a final rule to implement a special assessment to recoup losses to the DIF associated with
bank failures in the first half of 2023. Under the rule, the assessment base for the special assessment is equal to an insured
depository institution’s estimated uninsured deposits reported as of December 31, 2022, adjusted to exclude the first $5 billion
of uninsured deposits. Wintrust recorded $34.4 million and $5.2 million, respectively, in the fourth quarter of 2023 and first
quarter of 2024. Special assessment payments began in June of 2024 and will continue for a total of eight quarterly installments
in the initial collection period. The FDIC currently projects that the special assessment will be collected for an additional two
quarters beyond the initial eight quarter period at a lower rate, subject to change depending on any adjustments to the loss
estimate, mergers or failures, or amendments to reported estimates of uninsured deposits. The FDIC may impose additional
special assessments from time to time based on the actual losses incurred by the FDIC as a result of the March 2023 bank
failures or future failures.
Limits on Loans to One Borrower and Loans to Insiders
Federal banking laws impose limits on the amount of credit a bank can extend to any one person (or group of related persons).
For national banks, this limit includes credit exposures arising from derivative transactions, repurchase agreements, and
securities lending and borrowing transactions.
Applicable banking laws and regulations also place restrictions on loans by FDIC-insured banks and their affiliates to their
directors, executive officers and principal shareholders.
Lending Standards and Guidance
The federal banking agencies have adopted uniform regulations prescribing standards for extensions of credit that are secured
by liens or interests in real estate or made for the purpose of financing permanent improvements to real estate. Under these
regulations, all insured depository institutions, such as our subsidiary banks, must adopt and maintain written policies
establishing appropriate limits and standards for extensions of credit that are secured by liens or interests in real estate or are
made for the purpose of financing permanent improvements to real estate. These policies must establish loan portfolio
diversification standards, prudent underwriting standards (including debt service coverage and loan-to-value limits) that are
clear and measurable, loan administration procedures, and documentation, approval and reporting requirements. The real estate
lending policies must reflect consideration of the federal bank regulators’ Interagency Guidelines for Real Estate Lending
Policies.
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Anti-Money Laundering Programs
The Bank Secrecy Act (the “BSA”) and USA PATRIOT Act of 2001 (the “USA PATRIOT Act”) contain anti-money
laundering (“AML”) and financial transparency provisions intended to detect, and prevent the use of the U.S. financial system
for, money laundering and terrorist financing activities. The BSA, as amended by the USA PATRIOT Act, requires financial
institutions, including banks, to undertake activities including maintaining an AML program, verifying the identity of
customers, monitoring for and reporting suspicious transactions, reporting on cash transactions exceeding specified thresholds,
and responding to requests for information by regulatory authorities and law enforcement agencies. Each of our subsidiary
banks is subject to the BSA and, therefore, is required to provide its employees with AML training, designate an AML
compliance officer and undergo periodic, independent audits to assess the effectiveness of its AML program. We have
implemented policies, procedures and internal controls that are designed to comply with these AML requirements. Bank
regulators are focusing their examinations on AML compliance, and we will continue to monitor and augment, where
necessary, our AML compliance programs. The federal banking agencies are required, when reviewing bank and bank holding
company acquisition or merger applications, to take into account the effectiveness of the AML activities of the applicant.
The Anti-Money Laundering Act of 2020 (the “AMLA”), enacted on January 1, 2021 as part of the National Defense
Authorization Act, does not directly impose new requirements on banks, but requires the U.S. Treasury Department to issue
National Anti-Money Laundering and Countering the Financing of Terrorism Priorities, and conduct studies and issue
regulations that may, over the next few years, significantly alter some of the due diligence, recordkeeping and reporting
requirements that the BSA and USA PATRIOT Act impose on banks. The AMLA also contains provisions that promote
increased information-sharing and use of technology, and increases penalties for violations of the BSA and includes
whistleblower incentives, both of which could increase the prospect of regulatory enforcement.
In an effort to increase transparency in the U.S. financial system and prevent shell entities from being used to launder money or
hide assets, AMLA includes the Corporate Transparency Act (the “CTA”), which requires the U.S. Treasury Department’s
Financial Crimes Enforcement Network (“FinCEN”) to, among other things, establish a national beneficial ownership
information registry. In September 2022, FinCEN issued the final Beneficial Ownership Information Reporting Requirements
rule (the BOI Reporting Rule) which, effective January 1, 2024, requires certain “reporting companies” to file beneficial
ownership information reports with FinCEN that will be stored in the national beneficial ownership registry and will detail the
reporting company’s beneficial owners. In December 2023, FinCEN issued the final Beneficial Ownership Information Access
and Safeguards rule—the second of three rulemakings that would implement the CTA—which governs access to the national
beneficial ownership registry. FinCEN has not yet issued the third CTA-implementing regulation, which will amend the
beneficial ownership requirements applicable to banks and other covered financial institutions under FinCEN’s existing
Customer Due Diligence (“CDD”) rule. The constitutionality of the CTA is subject to ongoing litigation, and it is not clear what
impact the new rules will have on our bank subsidiaries; however, the Company’s compliance costs will likely increase as the
Company develops enhanced CDD procedures and recalibrates customer information collection and reporting systems to
effectively respond to the CTA’s new requirements.
Office of Foreign Assets Control Regulation
The U.S. Department of the Treasury’s Office of Foreign Assets Control, or “OFAC,” is responsible for administering
economic sanctions that affect transactions with designated foreign countries and territories, nationals and others, as defined by
various Executive Orders and Acts of Congress. OFAC-administered sanctions take many different forms. For example,
sanctions may include: (1) restrictions on trade with or investment in a sanctioned country or territory, including prohibitions
against direct or indirect imports from and exports to a sanctioned country or territory and prohibitions on U.S. persons
engaging in financial transactions relating to, making investments in, or providing investment-related advice or assistance to, a
sanctioned country or territory; and (2) a blocking of assets in which the government or “specially designated nationals” of the
sanctioned country or territory have an interest, by prohibiting transfers of property subject to U.S. jurisdiction (including
property in the possession or control of U.S. persons). OFAC also publishes lists of persons and organizations that are subject to
asset blocking sanctions, known as the Specially Designated Nationals and Blocked Persons List. Blocked assets (e.g., property
and bank deposits) cannot be paid out, withdrawn, set off or transferred in any manner without a license from OFAC. Failure to
comply with these sanctions could have serious legal and reputational consequences.
Protection of Client Information
Data privacy and cybersecurity laws and regulations concerning the collection, storage, handling, use, disclosure, transfer,
protection and other processing of client information (including personal information) affect many aspects of the Company’s
business, and are continuing to evolve. Data privacy and cybersecurity are currently areas of considerable legislative and
regulatory attention, with new or modified laws, regulations, rules and standards frequently being adopted and potentially
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subject to divergent interpretation or application in a manner that may create inconsistent or conflicting requirements for
businesses.
We are, or may in the future become, subject to a variety of complex federal, state and local laws, regulations, rules and
standards regarding data privacy and cybersecurity, including the privacy and information safeguarding provisions of the
Gramm-Leach-Bliley Act (“GLB Act”), the Fair Credit Reporting Act (“FCRA”) and the amendments adopted by the Fair and
Accurate Credit Transactions Act of 2003, as well as various state laws and regulations. The GLB Act requires a financial
institution to, among other things, disclose its privacy policy to certain customers and, in some circumstances, enables certain
customers to opt-out of certain sharing of the customers’ nonpublic personal information with nonaffiliated third parties. The
GLB Act also requires financial institutions to implement a comprehensive information security program that includes
administrative, technical and physical safeguards to ensure the security and confidentiality of customer information. In
accordance with these requirements, we and each of our banks and operating subsidiaries provide a written privacy notice to
each affected customer when the customer relationship begins and, to the extent required, on an annual basis. As described in
the privacy notice, we endeavor to protect the security of information (including personal information) about our customers,
educate our employees about the importance of protecting customer privacy, and allow affected customers to opt-out of certain
types of information sharing. We and our subsidiaries also require business partners with which we share information
(including personal information) to have adequate security safeguards and to follow the requirements of the GLB Act. The GLB
Act, as interpreted by the federal banking regulators, and state laws and regulations require us to take certain actions, including
providing notice under certain circumstances to affected customers, in the event that sensitive or personal customer information
is compromised. We and/or each of the banks and operating subsidiaries may need to amend our privacy policies and adapt our
internal procedures in the event that these legal requirements, or the regulators’ interpretation of them, change, or if new
requirements are added. Additionally, the federal banking regulators, as well as the SEC and related self-regulatory
organizations, regularly issue guidance regarding cybersecurity that is intended to enhance cyber risk management among
financial institutions.
Data privacy and cybersecurity also are areas of increasing state legislative focus. For example, the California Consumer
Privacy Act, as amended by the California Privacy Rights Act (collectively, the “CCPA”) applies to covered businesses that
conduct business in California and meet certain revenue or personal information collection thresholds. The CCPA contains
several exemptions, including that many, but not all, requirements of the CCPA are inapplicable to personal information that is
collected, processed, sold or disclosed pursuant to the GLB Act. The CCPA imposes obligations on covered companies, broadly
defines personal information, expands California residents’ rights with respect to personal information, and provides for civil
penalties for violations. The CCPA may be interpreted or applied in a manner inconsistent with our understanding, resulting in
further uncertainty and potentially requiring us to incur additional costs and expenses in an effort to comply with these
requirements. Similar laws have been adopted by other states where we do business, or may in the future do business. At least
four such laws (in Virginia, Colorado, Connecticut and Utah) took effect in 2023. In addition, laws in all 50 U.S. states
generally require businesses to provide notice under certain circumstances to consumers whose personal information has been
disclosed as a result of a data breach. Moreover, the federal government has recently considered, and is currently considering,
various proposals for more comprehensive data privacy and cybersecurity legislation, to which we may be subject if passed.
Like other lenders, the banks and several of our operating subsidiaries use credit bureau data in their underwriting activities.
Use of such data is regulated under the FCRA, and the FCRA also regulates, among other things, reporting information to credit
bureaus, prescreening individuals for credit offers, sharing of information (including personal information) between affiliates,
and using affiliate data for marketing purposes. Similar state laws and regulations may impose additional requirements on us,
the banks and our operating subsidiaries.
Further, in the spring of 2022, the Federal Reserve, OCC, and FDIC adopted a regulation that requires a banking organization to
notify its primary federal regulators as soon as possible and within 36 hours after identifying a “computer-security incident”
that the banking organization believes in good faith is reasonably likely to materially disrupt or degrade its business or
operations in a manner that would, among other things, jeopardize the viability of its operations, result in customers being
unable to access their deposit and other accounts, result in a material loss of revenue, profit or franchise value, or pose a threat
to the financial stability of the United States. The rule also imposes requirements on bank service providers to notify their
affected banking organization customers of certain computer-security incidents.
Violation of these laws, rules, regulations and standards may expose us to regulatory action and private litigation, including
claims for damages and penalties. For more information regarding the risks associated with data privacy and cybersecurity laws
and regulations, see “We are subject to complex and evolving laws, regulations, rules, standards and contractual obligations
regarding data privacy and cybersecurity, which could increase the cost of doing business, compliance risks and potential
liability” and “We face risks from cyber-attacks, information security breaches and other similar incidents that could result in
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the disclosure of confidential and other information (including personal information), all of which could adversely affect our
business or reputation, and create significant legal and financial exposure” under Risk Factors in Item 1A.
Broker-Dealer and Investment Adviser Regulation
Wintrust Investments and GLA currently are subject to extensive regulation under federal and state securities laws. Wintrust
Investments is registered as a broker-dealer with the SEC and in all 50 states, the District of Columbia and the U.S. Virgin
Islands. Both Wintrust Investments and GLA are registered as investment advisers with the SEC. In addition, Wintrust
Investments is a member of several self-regulatory organizations (“SROs”), including FINRA. In addition to SEC rules and
regulations, the SROs adopt rules, subject to approval of the SEC, that govern all aspects of business in the securities industry
and conduct periodic examinations of member firms. Wintrust Investments is also subject to regulation by state securities
commissions in states in which it conducts business. Wintrust Investments and GLA are registered only with the SEC as
investment advisers, but certain of their advisory personnel are subject to regulation by state securities regulatory agencies.
As a result of federal and state registrations and SRO memberships, Wintrust Investments is subject to overlapping schemes of
regulation that cover all aspects of its securities businesses. Such regulations cover uses and safekeeping of clients’ funds;
record-keeping and reporting requirements; supervisory and organizational procedures intended to assure compliance with
securities laws and to prevent improper trading on material nonpublic information; personnel-related matters, including
qualification and licensing of supervisory and sales personnel; limitations on extensions of credit in securities transactions;
clearance and settlement procedures; “suitability” and best interest determinations as to certain customer transactions;
limitations on the amounts and types of fees and commissions that may be charged to customers; and regulation of proprietary
trading activities and affiliate transactions. Violations of the laws and regulations governing a broker-dealer’s actions can result
in censures, fines, the issuance of cease-and-desist orders, revocation of licenses or registrations, the suspension or expulsion
from the securities industry of a broker-dealer or its officers or employees, or other similar actions by both federal and state
securities administrators, as well as the SROs.
As a registered broker-dealer, Wintrust Investments is subject to the SEC’s net capital rule as well as the net capital
requirements of the SROs of which it is a member. Net capital rules, which specify minimum capital requirements, are designed
to measure general financial integrity and liquidity and require that at least a minimum amount of net assets be kept in relatively
liquid form. Rules of FINRA and other SROs also impose limitations and requirements on the transfer of member
organizations’ assets. Compliance with net capital requirements may limit the Company’s operations requiring the intensive use
of capital. These requirements restrict the Company’s ability to withdraw capital from Wintrust Investments, which in turn may
limit the Company’s ability to pay dividends, repay debt or redeem or purchase shares of the Company’s own outstanding
stock. Wintrust Investments is a member of the Securities Investor Protection Corporation (“SIPC”), which subject to certain
limitations, serves to oversee the liquidation of a member brokerage firm, and to return missing cash, stock and other securities
owed to the firm’s brokerage customers, in the event a member broker-dealer fails. The general SIPC protection for customers’
securities accounts held by a member broker-dealer is up to $500,000 for each eligible customer, including a maximum of
$250,000 for cash claims. SIPC does not protect brokerage customers against investment losses. In addition to SIPC coverage,
the clearing firm utilized by Wintrust Investments offers certain insurance coverage. In the event of the clearing firm’s
insolvency, clients whose cash and securities were not fully protected by SIPC may benefit from this additional insurance. The
policy provides coverage to each client up to $1.9 million, subject to an aggregate cap of $1 billion for all policy beneficiaries.
Wintrust Investments and GLA in their capacities as investment advisers are subject to regulations covering matters such as
transactions between clients, transactions between the adviser and clients, custody of client assets and management of mutual
funds and other client accounts. The principal purpose of regulation and discipline of investment firms is the protection of
customers, clients and the securities markets rather than the protection of creditors and shareholders of investment firms.
Sanctions that may be imposed for failure to comply with laws or regulations governing investment advisers include the
suspension of individual employees, limitations on an adviser’s engaging in various asset management activities for specified
periods of time, the revocation of registrations, other censures and fines.
In late January of 2025, following receipt of regulatory approvals and satisfaction of certain other conditions, Wintrust
Investments transitioned support of the wealth management business of Wintrust Investments and certain private client business
at GLA to a platform operated by LPL. As previously announced by Wintrust Investments, this transition is expected to allow
Wintrust and GLA to focus on the growth of their wealth management business, while outsourcing most of their operational and
compliance support to LPL. As a result of this outsourcing, Wintrust Investments also expects to deregister as a broker-dealer
and investment advisor by the end of 2025.
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Incentive Compensation
The federal banking agencies have issued joint guidance on incentive compensation designed to ensure that the incentive
compensation policies of banking organizations, such as us and our subsidiary banks, do not encourage imprudent risk taking
and are consistent with the safety and soundness of the organization. In addition, the Dodd-Frank Act requires the federal
banking agencies and the SEC to issue regulations or guidelines requiring covered financial institutions, including us and our
subsidiary banks, to prohibit incentive-based payment arrangements that encourage inappropriate risks by providing
compensation that is excessive or that could lead to material financial loss to the institution. A proposed rule was issued in 2016
and re-proposed in May 2024 requesting public comments and questions. It is unclear when, if ever, the proposed rule will be
finalized.
Also pursuant to the Dodd-Frank Act, in October 2022, the SEC adopted final rules that direct stock exchanges to require listed
companies to implement clawback policies to recover incentive-based compensation from current or former executive officers
in the event of certain financial restatements and require companies to disclose their clawback policies and certain actions under
those policies. The Nasdaq listing standards required compliance by November 28, 2023.
De Novo Branching and De Novo Banks
With the approval of applicable regulators, national banks and state banks may establish de novo branches in states other than
their home state as if such state was the bank’s home state.
For a three-year period, newly chartered banks are subject to enhanced supervisory procedures, including higher capital
requirements, more frequent examinations and other requirements.
Anti-Tying Provisions
Each of our subsidiary banks is prohibited from conditioning the availability of any product or service, or varying the price for
any product or service, on the requirement that the customer obtain some additional product or service from the bank or any of
its affiliates, other than loans, deposits and trust services.
Transactions with Affiliates
Certain transactions between a bank and its holding company or other non-bank affiliates are subject to various restrictions
imposed by state and federal law and regulation. Such “covered transactions” include loans and other extensions of credit by the
bank to the affiliate, investments in securities issued by the affiliate, purchases of assets from the affiliate, certain derivative
transactions that create a credit exposure to an affiliate, the acceptance of securities issued by the affiliate as collateral for a
loan, and the issuance of a guarantee, acceptance or letter of credit on behalf of the affiliate. In general, these affiliate
transaction rules limit the number of covered transactions between an institution and a single affiliate, as well as the aggregate
amount of covered transactions between an institution and all of its affiliates. In addition, covered transactions that are credit
transactions must be secured by acceptable collateral, and all affiliate transactions, including those that do not qualify as
covered transactions, must be on terms that are at least as favorable to the bank as then-prevailing in the market for comparable
transactions with unaffiliated entities. Transactions between affiliated banks may be subject to certain exemptions under
applicable federal law.
Community Reinvestment Act
Under the CRA, insured depository institutions, including our subsidiary banks, have a continuing and affirmative obligation to
help meet the credit needs of its entire community, including low and moderate-income neighborhoods. The CRA does not
establish specific lending requirements or programs for insured depository institutions, nor does it limit an insured depository
institution’s discretion to develop the types of products and services that it believes are best suited to its particular community,
consistent with the CRA. However, insured depository institutions are rated on their performance in meeting the needs of their
communities. The CRA requires each federal banking agency to take an insured depository institution’s CRA record into
account when evaluating certain applications by the insured depository institution or its holding company, including
applications for charters, branches and other deposit facilities, relocations, mergers, consolidations, acquisitions of assets or
assumptions of liabilities, and bank and savings association acquisitions. An unsatisfactory record of performance may be the
basis for denying or conditioning approval of an application by an insured depository institution or its holding company. The
CRA also requires that all institutions publicly disclose their CRA ratings. Each of our subsidiary banks received a
“satisfactory” or better rating from the OCC on its most recent CRA performance evaluation.
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On October 24, 2023, the Federal Reserve, FDIC, and OCC issued a final rule to amend their regulations implementing the
CRA. The rule materially revises the current CRA framework, including the assessment areas in which a bank is evaluated to
include activities associated with online and mobile banking, the tests used to evaluate the bank in its assessment areas, new
methods of calculating credit for lending, investment and service activities, and additional data collection and reporting
requirements. The rule is expected to result in a significant increase in the thresholds for large banks to receive “Outstanding”
ratings in the future. The final rule was expected to take effect April 1, 2024, with most of its provisions becoming applicable
on January 1, 2026. Compliance with data and disclosure reporting requirements will not be required until 2027. Several
banking industry groups filed a lawsuit seeking to invalidate the CRA final rule, in which they argued that the federal banking
agencies exceeded their statutory authority in adopting the CRA final rule. In March 2024, a federal judge granted an injunction
to extend the CRA final rule’s effective date, originally set for April 1, 2024. The effective date will be extended each day the
injunction remains in place, pending the resolution of the lawsuit.
Compliance with Consumer Protection Laws
Our subsidiary banks and some other operating subsidiaries are subject to a variety of federal and state statutes and regulations
designed to protect consumers. The CFPB has broad rulemaking authority over a wide range of federal consumer protection
laws that apply to banks and other providers of financial products and services, including the authority to prohibit “unfair,
deceptive or abusive” acts and practices, but examination and supervision is carried out by each subsidiary bank’s primary
federal banking agency and, where applicable, state banking agency, not the CFPB. In addition, the Dodd-Frank Act authorizes
state attorneys general and other state officials to enforce consumer protection rules issued by the CFPB. State authorities have
recently increased their focus on and enforcement of consumer protection rules.
Interest and other charges collected or contracted for by banks are subject to state usury laws and federal laws concerning
interest rates.
Loan operations are also subject to federal laws and regulations applicable to credit transactions, such as:
Issued by the CFPB:
•
The federal Truth-In-Lending Act and Regulation Z governing disclosures of credit terms to consumer borrowers;
•
The Real Estate Settlement Procedures Act and Regulation X requiring that borrowers for mortgage loans for one- to
four-family residential real estate receive various disclosures, including good faith estimates of settlement costs, lender
servicing and escrow account practices, and prohibiting certain practices that increase the cost of settlement services;
•
The Home Mortgage Disclosure Act and Regulation C requiring financial institutions to provide information to enable
the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the
housing needs of the community it serves;
•
The Equal Credit Opportunity Act and Regulation B prohibiting discrimination on the basis of various prohibited factors
in extending credit;
•
The Fair Credit Reporting Act and Regulation V governing the use and provision of information to consumer reporting
agencies; and
•
The Fair Debt Collection Practices Act and Regulation F governing the manner in which consumer debts may be
collected by collection agencies;
Issued by others:
•
The Service Members Civil Relief Act, applying to all debts incurred prior to commencement of active military service
(including credit card and other open-end debt) and limiting the amount of interest, including service and renewal charges
and any other fees or charges (other than bona fide insurance) that is related to the obligation or liability; and
•
The guidance of the various federal agencies charged with the responsibility of implementing such federal laws.
Deposit operations are subject to, among others:
Issued by the CFPB:
•
The Truth in Savings Act and Regulation DD which require disclosure of deposit terms to consumers; and
•
The Electronic Fund Transfer Act and Regulation E which governs automatic deposits to and withdrawals from deposit
accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic
banking services;
Issued by others:
•
Regulation CC issued by the Federal Reserve Board, which relates to the availability of deposit funds to consumers; and
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•
The Right to Financial Privacy Act, which imposes a duty to maintain the confidentiality of consumer financial records
and prescribes procedures for complying with administrative subpoenas of financial records.
There are consumer protection standards that apply to functional areas of operation rather than applying only to loan or deposit
products. Our subsidiary banks and some other operating subsidiaries are also subject to certain state laws and regulations
designed to protect consumers.
The CFPB has promulgated, and continues to promulgate, many mortgage-related final rules since it was established under the
Dodd-Frank Act, including rules related to the ability to repay and qualified mortgage standards, mortgage servicing standards,
loan originator compensation standards, high-cost mortgage requirements, Home Mortgage Disclosure Act requirements and
appraisal and escrow standards for higher priced mortgages. Most of the provisions of these mortgage-related final rules are
currently effective. In addition, several proposed revisions to mortgage-related rules are pending finalization. The mortgage-
related final rules issued by the CFPB have materially restructured the origination, servicing and securitization of residential
mortgages in the United States. These rules have impacted, and will continue to impact, the business practices of mortgage
lenders, including the Company.
In order to ensure compliance with all mortgage-related rules and regulations, the Company consolidated its consumer
mortgage loan origination and loan servicing operations primarily within Wintrust Mortgage. All consumer mortgage
applications are taken through Wintrust Mortgage, which has extensively trained loan originators located at many of our
branches. While in certain limited cases our banks may offer specialized consumer mortgages to our customers, substantially all
consumer mortgages for all of our banks are originated and closed by Wintrust Mortgage. Wintrust Mortgage then sells loans to
third parties or to our banks. To the extent that we retain consumer mortgage loans in our bank portfolios, our banks have
engaged Wintrust Mortgage to provide loan servicing.
In March 2023, the CFPB issued the “Small Business Lending Rule” to implement Section 1071 of the Dodd-Frank Act for the
stated purpose of increasing transparency in small business lending, promoting economic development and combating unlawful
discrimination. Under this rule, covered lenders, including the Company’s bank subsidiaries, are required to collect and report
information about the small business credit applications they receive, including geographic and demographic data, lending
decisions and the price of credit. In October 2023, a federal district court issued a nationwide injunction prohibiting the CFPB
from implementing or enforcing the Small Business Lending Rule pending the U.S. Supreme Court’s decision in an appeal of a
Fifth Circuit decision finding that the CFPB’s funding structure is unconstitutional. The Supreme Court overruled the Fifth
Circuit’s finding and extended the CFPB compliance deadlines for the Small Business Lending Rule to compensate for the
period in which its implementation and enforcement of the rule was stayed by the district court. The extended compliance dates
for the Small Business Lending Rule begin as early as July 2025. It is anticipated that the Company will require a material
effort to update its systems and train its lenders to comply with the Small Business Lending Rule.
In October 2024, the CFPB finalized a rule to implement Section 1033 of the Dodd-Frank Act, sometimes referred to as the
Dodd-Frank Act’s “open banking” provision, which would require certain entities, including the Company and our bank
subsidiaries, to comply with an established framework to govern consumer access to electronic financial data. In general, the
rule requires, among other things, data providers holding a consumer account, such as our bank subsidiaries, to establish a
developer interface satisfying certain data security specifications and other standards, through which the data provider can
receive requests for, and provide, specific types of data covered by the rule in electronic, usable form to authorized third parties,
including data aggregators. Under the rule, data providers are prohibited from, among other things, charging consumers or third
parties fees for processing these consumer data requests. The rule also places certain data security, authorization and other
obligations on third parties accessing covered data from data providers, which could include the Company and our bank
subsidiaries when acting in certain capacities. The rule requires third parties to limit their collection, use, and retention of the
data received to only what is reasonably necessary to provide the consumers’ requested product or service. The final rule is
subject to ongoing litigation that could impact whether and when the Company and our bank subsidiaries are required to
comply with the rule. The Company continues to monitor this rule and evaluate the potential impacts on the Company and our
bank subsidiaries.
Changes to consumer protection regulations, including those promulgated by the CFPB, could affect our business but the
likelihood, timing and scope of any such changes and the impact any such change may have on us cannot be determined with
any certainty. See Item 1A. Risk Factors.
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Debit Interchange
We are subject to a statutory requirement that interchange fees for electronic debit transactions that are paid to or charged by
payment card issuers, including our bank subsidiaries, be reasonable and proportional to the cost incurred by the issuer.
Interchange fees for electronic debit transactions are limited to 21 cents plus 0.05% of the transaction, plus an additional one
cent per transaction fraud adjustment, impose requirements regarding routing and exclusivity of electronic debit transactions.
On October 3, 2022, the Federal Reserve finalized a rule that amended Regulation II to, among other things, specify that debit
card issuers should enable all debit card transactions, including card-not-present transactions such as online payments, to be
processed on at least two unaffiliated payment card networks. The final rule became effective July 1, 2023. As an issuer with
over $10 billion in assets, we are subject to Regulation II and have incorporated all new requirements as of July 1, 2023.
In October 2023, the Federal Reserve released a notice of proposed rulemaking that would lower the maximum interchange fee
that a large debit card issuer can receive on a debit card transaction. Under the proposal, initially the base component would
decrease from 21.0 cents to 14.4 cents, the ad valorem component would decrease from 5.0 basis points to 4.0 basis points
multiplied by the value of the transaction, and the fraud-prevention adjustment would increase from 1.0 cents to 1.3 cents for
the debit card transactions performed from the effective date of the final rule to June 30, 2025. In addition, the proposal would
adopt an approach for future adjustments to the interchange fee cap, which would occur every other year based on issuer cost
data gathered from large debit card issuers. We will continue to monitor the status of the proposed rule and are in the process of
evaluating this proposed rulemaking and assessing the scale of its adverse impact on the Company and our bank subsidiaries, if
adopted as proposed.
Human Capital Resources
Since its formation, Wintrust has held the objective of aiming to differentiate itself by offering customers a highly-personalized
banking experience, through staff that is warm, friendly, and responsive. Wintrust expects each of its employees to embody that
original mission by serving as brand ambassadors each day, within each community served by our banks and other business
units.
Workforce Overview
As of December 31, 2024, Wintrust employed 5,903 full-time equivalent employees in the U.S. and Canada. 98% of Wintrust’s
employees are classified as full-time, working greater than 30 hours per week. None of our employees are represented by a
collective bargaining agreement and we consider our employee relations to be good.
Talent Recruiting and Retention
At Wintrust we recognize that attracting, motivating and retaining talent at all levels is vital to continuing our success. In 2024,
Wintrust filled over 1,390 positions, including external hires, internal transfers/promotions, and temporary hires. In 2024, 53%
of our new hires self-identified as female and 41% of our new hires self-identified as a racial or ethnic minority. Wintrust
promotes an employee referral program, which we believe favorably influences colleague retention and engagement. Turnover
for the entire Wintrust enterprise for the year was approximately 12% and of that voluntary departures accounted for
approximately 75% of the total turnover.
Wintrust offers a robust total rewards package that is designed to attract, motivate and retain a talented and inclusive group of
employees. In addition to competitive, performance-based compensation plans, we provide employees with comprehensive
benefits packages. Wintrust consistently monitors and adapts its total rewards program design to reflect both market changes
and employee feedback.
Inclusion
Wintrust strives to promote an inclusive culture where each employee can be successful, and one that is reflective of the
communities we serve. Women currently represent 56% of Wintrust’s workforce. In addition, the racial and ethnic
representation in Wintrust’s workforce is 33%. To further support inclusion across Wintrust, we have taken the following steps:
•
Continued the “shared responsibility in action” theme with Paired To Win: Mentoring, a program launched in 2023
designed to enable access to mentoring for all employees across the enterprise. Over 1,300 Wintrust employees
participated in the mentoring program and 33% of participants were minorities.
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•
Continued our Paired To Win: Advocacy program, which is open to all employees, pairs select high-potential protégés
with senior executive advocates. The third cohort launched in 2024, and includes over 73% women and 13% minority
mid-level leaders. The program objective is to accelerate development of leadership opportunities for protégés within
one to three years after launching the partnership. As an outcome of the program, 48% of the proteges from the
inaugural cohort have been promoted.
•
Continued to offer and support Business Resource Groups (“BRG”) to all employees to help foster a sense of
belonging and recognizing the value of creating an inclusive and supportive workplace for all of our employees. Our
BRGs consist of Leadership Coalition, Multicultural Professionals Network, Career Navigation, Prism, and Women of
Wintrust. Approximately 23% of Wintrust employees have registered as members of one or more BRG.
•
Continued the 360° Inclusivity Model, a multicultural marketing framework for addressing the unique needs of an
increasingly diverse marketplace by taking inclusive approaches to eradicating financial disparities in the communities
we serve, through access to products and services.
•
Supported each of our business units as they update their Business Unit Action Plans, documenting key goals and
effective efforts towards fostering inclusion internally and externally in a relevant and intentional way. The Business
Unit Action Plan is updated annually and reviewed by senior leaders and the Board of Directors.
Learning & Development
We are committed to providing all team members with development opportunities through individual and career development
planning. Our employees have access to approximately 500 Banking topics, 200 Professional Skills topics and 770 customized
training courses and resources through Wintrust University – our learning portal. In 2024, we maintained an online training
catalog containing over 21,000 course offerings for our employees’ personal and professional development and, in 2024,
invested more than 177,000 total hours in training by team members.
We routinely identify and recognize talented employees by performing comprehensive reviews of leadership capability,
readiness, aspiration and succession planning. To support the development of our internal talent pipeline, we have invested in a
number of programs to support the development of future leaders and additional training for senior leaders with strategic
accountability. To support the development of future leaders, over 425 leaders participated in at least one of our leadership
development programs in 2024. We also developed the “Leadership Journey”, an eight-phase program that supports our leaders
at every phase of their advancement.
Annually, Wintrust team members at all levels certify their completion of regulatory training based upon their roles and
responsibilities. They also are encouraged to complete a minimum of two professional development activities each year.
Climate Impact
The Company’s approach in considering its climate impact is currently focused on mitigating the environmental impact of
operations, specifically at its various banking locations; assessing other climate-related risks within the Company’s various
businesses; and providing support to projects and investments that contribute to climate solutions. In 2024, some of the
highlights of this approach included the following:
•
The Company continued to monitor the climate impact of its various banking locations, including its corporate campus
that consists of three office buildings located in Rosemont, Illinois. In 2024, the corporate campus green house gas
carbon emissions (CO2e) totaled 3,692 tons in 2024 compared to 3,938 tons in 2023. The Company also measures
green house gas carbon emissions (CO2e) at a majority of its retail banking locations and the aggregate measurement
of such emissions from the Company’s corporate campus and the retail banking locations totaled 17,699 tons in 2024
related to 187 locations compared to 18,607 tons in 2023 related to 181 locations.
•
The Company continued to pursue certain renewable energy solutions as well as efficient building standards and
technologies.
•
GLA executes investing through its Climate Opportunities strategy (which began in 2013) as well as additional client
portfolios which emphasize climate considerations. These portfolios include investments in solutions for green
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buildings, renewable energy, sustainable agriculture, sustainable water, energy efficiency and pollution prevention. At
December 31, 2024, these portfolios totaled approximately $135 million in climate-focused assets.
Available Information
The Company’s Internet address is www.wintrust.com. The Company makes available at this address, under the “Investor
Relations” tab, free of charge, its Annual Report on Form 10-K, its annual reports to shareholders, Quarterly Reports on Form
10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (the “Exchange Act”) as soon as reasonably practicable after such material is electronically
filed with, or furnished to, the SEC. These filings are also available on the SEC’s website at www.sec.gov.
ITEM 1A. RISK FACTORS
Risk Factors Summary
The summary of risks below provides an overview of the principal risks we are exposed to in the normal course of our business
activities. This summary does not contain all of the information provided in the detailed discussion of risks that follows this
summary and should be read together with such detailed discussion.
Risks Related to Economic Conditions and Operating Environment
•
Includes risks related to deterioration in economic conditions and economic declines in the Chicago metropolitan,
southern Wisconsin and west Michigan market areas, since our business is concentrated in these regions, and climate
change and related environmental and sustainability matters.
Risks Related to Competition and Reputation
•
Includes risks related to our ability to compete effectively, damage to our reputation, consumers deciding not to use
banks to complete their financial transactions and the impact on us from the soundness of other financial institutions.
Risks Related to Growth and Acquisitions
•
Includes risks related to our ability to identify favorable acquisitions or successfully integrate our acquisitions, our
participation in FDIC-assisted acquisitions, new lines of business and new products and services and de novo
operations that often involve significant expenses and delayed returns.
Legal and Regulatory Risks
•
Includes risks related to our ability to meet regulatory capital ratios, changes in the United States’ monetary policy,
legislative and regulatory actions taken now or in the future regarding the financial services industry, changes in data
privacy and cybersecurity laws and regulations, financial reform legislation and increased regulatory rigor around
consumer protection mortgage-related issues, federal, state and local consumer lending laws that may restrict our
ability to originate certain mortgage loans or increase our risk of liability with respect to such loans, regulatory
initiatives regarding bank capital requirements that may require heightened capital, any increase in our FDIC insurance
premiums, any non-compliance with the USA PATRIOT Act, BSA or other laws and regulations, claims and legal
actions, examinations and challenges by tax authorities, changes in federal and state tax laws and changes in the
interpretation of existing laws, changes in accounting policies or accounting standards and changes in U.S. trade
policies, including the imposition of tariffs and retaliatory tariffs.
Risks Related to Lending Operations
•
Includes risks related to our allowance for credit losses and sufficiency to absorb losses that may occur in our loan
portfolio, the repayment of commercial loans which are largely dependent upon the financial success and economic
viability of the borrower, our loan portfolio being secured by real estate, in particular commercial real estate, events
impacting collateral consisting of real property, any inaccurate assumptions in our analytical and forecasting models
and environmental liability risk associated with lending activities.
Risks Related to Our Niche Businesses
•
Includes risks related to our premium finance business, which may involve a higher risk of delinquency or collection
than our other lending operations, widespread financial difficulties or credit downgrades among commercial and life
insurance providers and exposure to certain risks associated with the securities industry.
Risks Related to Financial Strength and Liquidity
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•
Includes risks related to changes in prevailing interest rates, our liquidity position, an actual or perceived reduction in
our financial strength, loss of deposits or a change in deposit mix, our credit rating, capital not being available when it
is needed or the cost of that capital being very high, disruption in the financial markets, and being a bank holding
company and therefore being limited in sources of funds, including to pay dividends.
Risks Related to General Operations
•
Includes risks related to our controls and procedures, our operational or security systems or infrastructure, or those of
third parties, fraud and security risks (including cyber-attacks, information security breaches and other similar
incidents and those associated with debit cards and debit card transactions), the failure of vendors, the accuracy and
completeness of information we receive about our customers and counterparties to make credit decisions, our ability to
attract and retain experienced and qualified personnel, losses incurred in connection with actual or projected
repurchases and indemnification payments related to mortgages that we have sold into the secondary market and the
occurrence of extraordinary events, such as acts of war, terrorist attacks, natural disasters and public health threats.
Risks Related to Ownership of Our Common Stock
•
Anti-takeover provisions could negatively impact our shareholders.
Risk Factors
An investment in our securities is subject to risks inherent to our business. Certain material risks and uncertainties that
management believes affect Wintrust are described below. Before making an investment decision, you should carefully
consider the risks and uncertainties described below together with all of the other information included or incorporated by
reference in this Annual Report on Form 10-K and in our other filings with the SEC. Additional risks and uncertainties that
management is not aware of or that management currently deems immaterial may also impair Wintrust’s business operations.
This Annual Report on Form 10-K is qualified in its entirety by these risk factors. If any of the following risks actually occur,
our business, financial condition and results of operations could be materially and adversely affected. If this were to happen, the
value of our securities could decline significantly, and you could lose all or part of your investment.
Risks Related to Economic Conditions and Operating Environment
Deterioration in economic conditions may materially adversely affect the financial services industry and our business,
financial condition, results of operations and cash flows.
Our business activities and earnings are affected by general economic and business conditions in the United States and abroad,
including factors such as the level and volatility of short-term and long-term interest rates, inflation, home prices,
unemployment and underemployment levels, bankruptcies, household income, consumer spending, fluctuations in both debt
and equity capital markets, liquidity of the global financial markets, the availability and cost of capital and credit, investor
sentiment and confidence in the financial markets, and the strength of the domestic economies in which we operate. The
deterioration of any of these conditions can adversely affect our consumer and commercial businesses and securities portfolios,
our level of charge-offs and provision for credit losses, our capital levels and liquidity, and our results of operations.
As a lending institution, our business is directly affected by the ability of our borrowers to repay their loans, as well as by the
value of collateral, such as real estate, that secures many of our loans. Any economic deterioration from current levels or
slowing of current economic activity could lead to an increase in loan charge-offs and negatively affect consumer confidence as
well as the level of business activity. Net charge-offs totaled $94.4 million in 2024 compared to $45.5 million in 2023. Our
balance of non-performing loans and other real estate owned (“OREO”) was $170.8 million and $23.1 million, respectively, at
December 31, 2024 compared to $139.0 million and $13.3 million, respectively, at December 31, 2023. Deterioration in the
economy and real estate markets, higher inflation, rising interest rates or increased unemployment rates, particularly in the
markets in which we operate, will likely diminish the ability of our borrowers to repay loans that we have made to them,
decrease the value of any collateral securing such loans and may cause increases in delinquencies, problem assets, charge-offs
and provision for credit losses, all of which could materially adversely affect our financial condition and results of operations.
Further, the underwriting and credit monitoring policies and procedures that we have adopted may not prevent losses that could
have a material adverse effect on our business, financial condition, results of operations and cash flows.
A U.S. government debt default or rating downgrade could have a material adverse impact on our business and financial
performance, including a decrease in the value of Treasury bonds and other government securities we hold, which could
negatively impact the banks’ capital position and ability to meet regulatory requirements. Other negative impacts could include
volatile capital markets, an adverse impact on the U.S. economy and the U.S. dollar, as well as increased default rates among
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borrowers in light of increased economic uncertainty. Some of these impacts might occur even in the absence of an actual
default by or rating downgrade of the U.S. government but as a consequence of the uncertainty caused by extended political
negotiations around the threat of such a default or rating downgrade and a U.S. government shutdown.
Since our business is concentrated in the Chicago metropolitan, southern Wisconsin and west Michigan market areas,
economic declines in the economy of this region could adversely affect our business.
Except for our premium finance business and certain other niche businesses, our success depends primarily on the general
economic conditions of the specific local markets in which we operate. Unlike larger national or other regional banks that are
more geographically diversified, we provide banking and financial services to customers primarily in the Chicago metropolitan,
southern Wisconsin and west Michigan market areas. The local economic conditions in these areas significantly impact the
demand for our products and services as well as the ability of our customers to repay loans, the value of the collateral securing
loans and the stability of our deposit funding sources.
In addition, the State of Illinois has experienced significant financial difficulty in recent years. To the extent that these issues
impact the economic vitality of the state and the businesses operating in Illinois, businesses may be encouraged to leave the
state or new employers may be discouraged to start or move businesses to Illinois, which could have a material adverse effect
on our financial condition and results of operations.
Climate change manifesting as transition, physical or other risks could adversely affect our operations, businesses,
customers, reputation and financial condition.
The physical risks of climate change include discrete events, such as flooding, hurricanes, tornadoes and wildfires, and longer-
term shifts in climate patterns, such as extreme heat, sea level rise, and more frequent and prolonged drought. Such events could
disrupt our operations or those of our customers or third parties on which we rely, including through direct damage to assets and
indirect impacts from supply chain disruption and market volatility. Additionally, transitioning to a low-carbon economy would
entail extensive policy, legal, technology, human capital and market initiatives, each of which may be costly. Transition risks,
including changes in consumer preferences, additional regulatory requirements or taxes and additional counterparty or customer
requirements, could increase our expenses, undermine our strategies and impact our financial condition.
In addition, our reputation and client relationships may be damaged as a result of our practices related to climate change,
including our involvement, or our clients’ involvement, in certain industries or projects associated with causing or exacerbating
climate change, as well as any decisions we make to continue to conduct or change our activities in response to considerations
relating to climate change. As climate risk is interconnected with all key risk types, we have begun to develop and continue to
enhance processes, to embed climate risk considerations into our risk management strategies established for risks such as
market, credit and operational risks; however, because the timing and severity of climate change may not be predictable, our
risk management strategies may not be effective in mitigating climate risk exposure.
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Risks Related to Competition and Reputation
The financial services industry is very competitive, and if we are not able to compete effectively, we may lose market share
and our business could suffer.
We face competition in attracting and retaining deposits, making loans, and providing other financial services (including wealth
management services) throughout our market area. Our competitors include national, regional and other community banks, and
a wide range of other financial institutions such as credit unions, government-sponsored enterprises, mutual fund companies,
insurance companies, factoring companies and other non-bank financial companies such as marketplace lenders and other
financial technology companies. Many of these competitors have substantially greater resources and market presence or more
advanced technology than Wintrust and, as a result of their size, may be able to offer a broader range of products and services,
better pricing for those products and services, or newer technologies to deliver those products and services than we can. The
financial services industry could become even more competitive as a result of legislative, regulatory and technological changes
and continued consolidation. For example, the Economic Growth Act and its implementing regulations significantly reduce the
regulatory burden of certain large BHCs and raise the asset thresholds at which more onerous requirements apply, which could
cause certain large BHCs to become more competitive or to more aggressively pursue expansion. Also, technology has lowered
barriers to entry and made it possible for non-banks to offer products and services traditionally provided by banks, such as
mobile payment and other automatic transfer and payment systems, and for banks that do not have a physical presence in our
markets to compete for deposits. The absence of regulatory requirements may give non-bank financial companies a competitive
advantage over Wintrust.
Our ability to compete successfully depends on a number of factors, including, among other things:
•
the ability to develop, maintain and build upon long-term customer relationships based on top quality service and high
ethical standards;
•
the scope, relevance and pricing of products and services offered to meet customer needs and demands;
•
the ability to expand our market position;
•
the ability to uphold our reputation in the marketplace;
•
the rate at which we introduce new products and services relative to our competitors;
•
customer satisfaction with our level of service; and
•
industry and general economic trends.
If we are unable to compete effectively, our market share and income from deposits, loans and other products may be reduced.
This could adversely affect our profitability and have a material adverse effect on our business, financial condition and results
of operations.
Damage to our reputation may harm our business.
Maintaining trust in the Company is critical to our ability to attract and maintain customers, investors and employees. If our
reputation is damaged, our business could be significantly harmed. Harm to our reputation could arise from numerous sources,
including, among others, employee misconduct, security and cybersecurity breaches, compliance failures, litigation or
regulatory outcomes or governmental investigations. Our reputation could also be harmed by the failure or perceived failure of
an affiliate or a vendor or other third party with which we do business, to comply with applicable laws or regulations. In
addition, our reputation or prospects could be significantly damaged by adverse publicity or negative information regarding the
Company, whether or not true, that may be posted on social media, non-mainstream news services or other parts of the internet,
and this risk can be magnified by the speed and pervasiveness with which information is disseminated through those channels.
Actions by the financial services industry generally or by certain members of or individuals in the industry can also affect our
reputation. For example, the role played by financial services firms during and after the financial crisis, including concerns that
consumers have been treated unfairly by financial institutions or that a financial institution had acted inappropriately with
respect to the methods employed in offering products to customers, have damaged the reputation of the industry as a whole.
Should any of these or other events or factors that can undermine our reputation occur, there is no assurance that the additional
costs and expenses that we may need to incur to address the issues giving rise to the damage to our reputation would not
adversely affect our earnings and results of operations, or that damage to our reputation will not impair our ability to retain our
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existing customers and employees or attract new customers and employees. Harm to our reputation or the reputation of our
industry may also result in greater regulatory or legislative scrutiny, which may lead to changes in laws or regulations that
could constrain our business or operations. Events that result in damage to our reputation may also increase our litigation risk.
Investors’ and other stakeholders’ expectations of our performance relating to environmental, social and governance factors
may impose additional costs and expose us to new risks.
Increased focus on environmental, social and governance (“ESG”) issues could damage our reputation or prospects if
customers, prospective customers, investors or third parties assigning ESG ratings to the Company are of the opinion that the
Company’s practices, including without limitation our lending practices, are not sufficiently robust from an ESG perspective, or
otherwise disagree with the Company’s practices. Simultaneous, disparate and divergent sentiments on ESG-related matters
from multiple stakeholder groups increase the risk that any action or lack thereof by us on such matters will be perceived
negatively by some stakeholders. Failing to comply with expectations and standards from investors, customers, regulators,
policymakers and other stakeholders regarding ESG-related issues, or taking action in conflict with one or another of those
stakeholders’ expectations, could also lead to a loss of business, adverse publicity, an adverse impact on our reputation,
customer complaints or other adverse consequences.
At the same time, “anti-ESG” sentiment has gained momentum among certain groups across the United States, and the federal
and certain state governments have proposed or enacted anti-ESG legislation, rules, regulations and policies. Such anti-ESG
measures may lead to increased scrutiny and expose us to the risk of litigation, regulatory exposure and reputational harm.
Additionally, certain states now require that certain investment managers make investments based solely on financial
considerations, without regard to consideration of ESG factors. If investors subject to such legislation viewed us, our policies
or our practices as being in contradiction of such anti-ESG requirements, such investors may not invest in us, which could
negatively affect our financial performance.
Consumers may decide not to use banks to complete their financial transactions, which could adversely affect our business
and results of operations.
Technology and other changes are allowing parties to complete financial transactions that historically have involved banks
through alternative methods. For example, consumers can now maintain funds that would have historically been held as bank
deposits in brokerage accounts or mutual funds. Consumers can also complete transactions such as paying bills and transferring
funds directly without the assistance of banks. The process of eliminating banks as intermediaries could result in the loss of fee
income, as well as the loss of customer deposits and the related income generated from those deposits. The loss of these
revenue streams and the lower cost deposits as a source of funds could have a material adverse effect on our business, financial
condition and results of operations.
We may be adversely impacted by the soundness of other financial institutions.
Adverse developments affecting the overall strength and soundness of other financial institutions, the financial services industry
as a whole and the general economic climate and the U.S. Treasury market could have a negative impact on perceptions about
the strength and soundness of our business even if we are not subject to the same adverse developments. In addition, adverse
developments with respect to third parties with whom we have important relationships could also negatively impact perceptions
about us. These perceptions about us could cause our business to be negatively affected and exacerbate the other risks that we
face.
Wintrust may be impacted by actual or perceived soundness of other financial institutions, including as a result of the financial
or operational failure of a major financial institution, or concerns about the creditworthiness of such a financial institution or its
ability to fulfill its obligations, which can cause substantial and cascading disruption within the financial markets and increased
expenses, including FDIC insurance premiums, and could affect our ability to attract and retain depositors and to borrow or
raise capital. The failure of other banks and financial institutions and the measures taken by governments, businesses and other
organizations in response to these events could adversely impact Wintrust’s business, financial condition and results of
operations.
Wintrust’s ability to engage in routine funding transactions could be adversely affected by the actions and commercial
soundness of other financial institutions. Financial services institutions are interrelated as a result of trading, clearing,
counterparty or other relationships. We have exposure to many different industries and counterparties and routinely execute
transactions with counterparties in the financial services industry, including the Federal Home Loan Bank (“FHLB”),
commercial banks, brokers and dealers, investment banks and other institutional clients. Many of these transactions expose us
to credit risk as well as market and liquidity risk in the event of a default by a counterparty or client. In addition, our credit risk
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may be exacerbated when collateral held by us cannot be realized or is liquidated at prices not sufficient to recover the full
amount due to us. Any such losses could have material adverse effect on our business, financial condition and results of
operations.
In addition a decrease in the supply of deposits or significant increase in competition for deposits could result in substantial
increases in costs to retain and service deposits. Increased adoption of consumer banking technology could result in reduced
deposit retention due to the relevant ease with which depositors may transfer deposits to a different depository institution in the
event that confidence is lost in us or any of our bank subsidiaries.
Risks Related to Growth and Acquisitions
If we are unable to continue to identify favorable acquisitions or successfully integrate our acquisitions, our growth may be
limited and our results of operations could suffer.
In the past, we have completed numerous acquisitions of banks, other financial services related companies and financial
services related assets, including acquisitions of troubled financial institutions, as more fully described below. We expect to
continue to make such acquisitions in the future. Wintrust seeks merger or acquisition partners that are culturally similar, have
experienced management, possess either significant market presence or have potential for improved profitability through
financial management, economies of scale or expanded services. Failure to successfully identify and complete acquisitions may
result in Wintrust achieving slower growth.
The standards by which bank and financial institution acquisitions will be evaluated are currently in flux and some banking
organizations are experiencing delays in the processing of applications. For example, the OCC adopted a final rule in
September 2024 amending its procedures for reviewing applications under the Bank Merger Act (the “BMA”) and adding a
policy statement on the OCC’s substantive approach to evaluating bank mergers under the BMA. The policy statement outlines
the general principles the OCC will apply when reviewing bank merger applications and clarifies how the OCC would consider
the statutory factors under the BMA. The policy statement also identifies certain indicators that are more likely to withstand
scrutiny and be approved expeditiously and those that would raise supervisory or regulatory concerns. Indicators generally
consistent with timely approval include, among others, appropriate capital and supervisory ratings, lack of enforcement or fair
lending actions, lack of significant CRA or consumer compliance concerns or significant adverse effect on competition and that
the resulting institution would have total assets less than $50 billion.
Acquiring other banks, businesses or branches involves various risks commonly associated with acquisitions, including, among
other things:
(1) potential exposure to unknown or contingent liabilities or asset quality issues of the target company;
(2) failure to adequately estimate the level of loan losses at the target company;
(3) difficulty and expense of integrating the operations and personnel of the target company;
(4) potential disruption to our business, including diversion of our management's time and attention;
(5) the possible loss of key employees and customers of the target company;
(6) difficulty in estimating the value of the target company; and
(7) potential changes in banking or tax laws or regulations that may affect the target company.
Acquisitions typically involve the payment of a premium over book and market values, and, therefore, some dilution of
Wintrust’s tangible book value and net income per common share may occur as a result of any future acquisitions. In addition,
certain acquisitions may expose us to additional regulatory risks, including from foreign governments. Our ability to comply
with any such regulations will impact the success of any such acquisitions. Furthermore, failure to realize the expected revenue
increases, cost savings, increases in geographic or product presence, and/or other projected benefits from an acquisition could
have a material adverse effect on our financial condition and results of operations.
New lines of business and new products and services are essential to our ability to compete but may subject us to additional
risks.
We continually implement new lines of business and offer new products and services within existing lines of business to offer
our customers a competitive array of products and services. The financial services industry is continually undergoing rapid
technological change with frequent introductions of new technology-driven products and services, such as the rapid adoption of
mobile payment platforms. The effective use of technology can increase efficiency and enable financial institutions to better
serve customers and to reduce costs. However, some new technologies needed to compete effectively result in incremental
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operating costs. Our future success depends, in part, upon our ability to address the needs of our customers by using technology
to provide products and services that will satisfy customer demands, as well as to create additional efficiencies in operations.
Many of our competitors, because of their larger size and available capital, have substantially greater resources to invest in
technological improvements. We may not be able to effectively implement new technology-driven products and services or be
successful in marketing these products and services to our customers. Failure to successfully keep pace with technological
change affecting the financial services industry, including the emerging use of artificial intelligence and machine learning,
could cause a loss of customers and have a material adverse effect on our business.
At the same time, there can be substantial risks and uncertainties associated with these efforts, particularly in instances where
the markets for such services are still developing. In developing and marketing new lines of business and/or new products or
services, we may invest significant time and resources. Initial timetables for the introduction and development of new lines of
business and/or new products or services may not be achieved, and price and profitability targets may not prove feasible.
External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also
impact the successful implementation of a new line of business or a new product or service. Furthermore, any new line of
business and/or new product or service could have a significant impact on the effectiveness of our system of internal controls.
Failure to successfully manage these risks in the development and implementation of new lines of business or new products or
services could have a material adverse effect on our business, financial condition, and results of operations.
De novo operations often involve significant expenses and delayed returns and may negatively impact Wintrust's
profitability.
Our financial results have been and will continue to be impacted by our strategy of branch openings and de novo bank
formations. We expect to increase the opening of additional branches and may, under certain circumstances, resume de novo
bank formations. It may take longer than expected or more than the amount of time Wintrust has historically experienced for
new banks and/or banking facilities to reach profitability, and there can be no guarantee that these branches or banks will ever
be profitable. Moreover, the FDIC's enhanced supervisory period for de novo banks of three years, including higher capital
requirements during this period, could also delay a new bank's ability to contribute to the Company's earnings and impact the
Company's willingness to expand through de novo bank formation. 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 startup costs associated with such operations, and it is 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, which could have a material adverse effect on our business, financial condition and results of operations.
Legal and Regulatory Risks
If we fail to meet our regulatory capital ratios, we may be forced to raise capital or sell assets.
As a banking institution, we are subject to regulations that require us to maintain certain capital ratios, such as the ratio of our
Tier 1 capital to our risk-based assets, and in recent years these regulatory and market expectations have increased substantially.
If our regulatory capital ratios decline, as a result of decreases in the value of our loan portfolio or otherwise, we may be
required to improve such ratios by either raising additional capital or by disposing of assets. If we choose to dispose of assets,
we cannot be certain that we will be able to do so at prices that we believe to be appropriate, and our future operating results
could be negatively affected. If we choose to raise additional capital, we may accomplish this by selling additional shares of
common stock, or securities convertible into or exchangeable for common stock, which could significantly dilute the ownership
percentage of holders of our common stock and cause the market price of our common stock to decline. Additionally, events or
circumstances in the capital markets generally may increase our capital costs and impair our ability to raise capital at any given
time.
Changes in the United States’ monetary policy may restrict our ability to conduct our business in a profitable manner.
Our ability to profitably operate is dependent, in part, upon federal fiscal policies that cannot be predicted. We are particularly
affected by the monetary policies of the Federal Reserve, which influence money supply in the United States. Any change in the
United States’ monetary policy, or worsening federal budgetary pressures, could affect our access to capital. Additionally, any
trend toward inflation, economic decline, destabilizing of financial markets, or other factors beyond our control may
significantly affect consumer demand for our products and consumers’ ability to repay loans, reducing our results of operations.
The Federal Reserve lowered interest rates towards the end of 2024, while maintaining its balance sheet reduction throughout
the entire year. Inflation remains above the Federal Reserve's two percent target rate and while the Federal Reserve may seek to
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further lower interest rates in 2025, the range of potential rate paths will ultimately be driven by inflation data, labor market
performance, and economic growth. It is anticipated the Federal Funds Rate will remain restrictive in the near term. Sustained
higher interest rates and continued Federal Reserve asset reductions may adversely affect market stability, market liquidity, and
our financial performance and condition. We cannot predict the nature or timing of future changes in monetary policies, or the
precise effects that future changes in monetary policies may have on our activities and financial results.
Legislative and regulatory actions taken now or in the future regarding the financial services industry may significantly
increase our costs or limit our ability to conduct our business in a profitable manner.
We are subject to extensive federal and state regulation and supervision. The cost of compliance with such laws and regulations
can be substantial and adversely affect our ability to operate profitably. While we are unable to predict the scope or impact of
any potential legislation or regulatory action until it becomes final, it is possible that changes in applicable laws, regulations or
interpretations thereof could significantly increase our regulatory compliance costs, impede the efficiency of our internal
business processes, negatively impact the recoverability of certain of our recorded assets, require us to increase our regulatory
capital, interfere with our executive compensation plans, or limit our ability to pursue business opportunities in an efficient
manner including our plan for de novo growth and growth through acquisitions.
We are subject to complex and evolving laws, regulations, rules, standards and contractual obligations regarding data
privacy and cybersecurity, which could increase the cost of doing business, compliance risks and potential liability.
We are subject to complex and evolving laws, regulations, rules, standards and contractual obligations regarding data privacy
and cybersecurity, including in relation to the personal information of customers, employees or others, and any failure to
comply with these laws, regulations, rules, standards and contractual obligations could expose us to liability and/or reputational
damage. As data privacy and cybersecurity risks for banking organizations and the broader financial system have significantly
increased in recent years, data privacy and cybersecurity issues have become the subject of increasing legislative and regulatory
focus. As new data privacy and cybersecurity-related laws, regulations, rules and standards are implemented, the time and
resources needed for us to comply with such laws, regulations, rules and standards as well as our potential liability for non-
compliance and reporting obligations in the case of cyber-attacks, information security breaches or other similar incidents, may
significantly increase. Compliance with these laws, regulations, rules and standards may require us to change our policies,
procedures and technology, which could, among other things, make us more vulnerable to operational failures and to monetary
penalties for breach of such laws, regulations, rules and standards.
In addition to various data privacy and cybersecurity laws and regulations already in place, U.S. states are increasingly adopting
laws and regulations imposing comprehensive data privacy and cybersecurity obligations, which may be more stringent,
broader in scope, or offer greater individual rights, with respect to personal information than federal or other state laws and
regulations, and such laws and regulations may differ from each other, which may complicate compliance efforts and increase
compliance costs. Certain aspects of federal and state laws and regulations relating to data privacy and cybersecurity, as well as
their enforcement, remain unclear, and we may be required to modify our practices in an effort to comply with them.
Further, while we strive to publish and prominently display privacy policies that are accurate, comprehensive, and compliant
with applicable laws, regulations, rules and industry standards, we cannot ensure that our privacy policies and other statements
regarding our practices will be sufficient to protect us from claims, proceedings, liability or adverse publicity relating to data
privacy or cybersecurity. Although we endeavor to comply with our privacy policies, we may at times fail to do so or be alleged
to have failed to do so. The publication of our privacy policies and other documentation that provide promises and assurances
about data privacy and cybersecurity can subject us to potential federal or state action if they are found to be deceptive, unfair,
or misrepresentative of our actual practices. Additional risks could arise in connection with any failure or perceived failure by
us, our service providers or other third parties with which we do business to provide adequate disclosure or transparency to our
customers about the personal information collected from them and its use, to receive, document or honor the privacy
preferences expressed by our customers, to protect personal information from unauthorized disclosure, or to maintain proper
training on privacy practices for all employees or third parties who have access to personal information in our possession or
control.
Any failure or perceived failure by us to comply with our privacy policies, or applicable data privacy and cybersecurity laws,
regulations, rules, standards or contractual obligations, or any compromise of security that results in unauthorized access to, or
unauthorized loss, destruction, use, modification, acquisition, disclosure, release or transfer of personal information, may result
in requirements to modify or cease certain operations or practices, the expenditure of substantial costs, time and other resources,
proceedings or actions against us, legal liability, governmental investigations, enforcement actions, claims, fines, judgments,
awards, penalties, sanctions and costly litigation (including class actions). Any of the foregoing could harm our reputation,
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distract our management and technical personnel, increase our costs of doing business, adversely affect the demand for our
products and services, and ultimately result in the imposition of liability, any of which could have a material adverse effect on
our business, financial condition and results of operations. For more information regarding data privacy and cybersecurity laws
and regulations, see “Protection of Client Information” under Supervision and Regulation in Item 1.
Financial reform legislation and increased regulatory rigor around consumer protection and mortgage-related issues may
reduce our ability to market our products to consumers and may limit our ability to profitably operate our mortgage
business.
The CFPB has broad rulemaking authority over a wide range of federal consumer protection laws applicable to the business of
our subsidiary banks and some other operating subsidiaries, including the authority to prohibit “unfair, deceptive or abusive”
acts and practices, but examination and supervision of our subsidiary banks is carried out by the primary federal banking
agency and, where applicable, state banking agencies. Consumer protection is an area of significantly heightened regulatory
focus, and the CFPB has promulgated a number of specific regulatory requirements and regulatory guidance in this area. These
actions have increased and may further increase the costs of doing business for all market participants, including our
subsidiaries.
In particular, the mortgage-related rules issued by the CFPB have materially restructured the origination, servicing and
securitization of residential mortgages in the United States. These rules have impacted, and will continue to impact, the business
practices of mortgage lenders, including the Company. For example, in order to ensure compliance with mortgage-related rules
issued by the CFPB, the Company consolidated its consumer mortgage loan origination and loan servicing operations within
Wintrust Mortgage.
The CFPB and federal and state banking agencies also closely examine the mortgage and mortgage servicing activities of
depository financial institutions. Should these or other agencies have serious concerns with respect to our operations in this
regard, the effect of such concerns could have a material adverse effect on our profits.
Federal, state and local consumer lending laws may restrict our ability to originate certain mortgage loans or increase our
risk of liability with respect to such loans and could increase our cost of doing business.
Federal, state and local laws have been adopted that are intended to eliminate certain lending practices considered “predatory.”
These laws prohibit practices such as steering borrowers away from more affordable products, selling unnecessary insurance to
borrowers, repeatedly refinancing loans and making loans without a reasonable expectation that the borrowers will be able to
repay the loans irrespective of the value of the underlying property. The CFPB has promulgated many mortgage-related rules
since it was established under the Dodd-Frank Act, including rules relating to the ability to repay loans and relating to qualified
mortgage standards. Most of these mortgage-related rules have been adopted, although portions of certain of these rules have
not yet become effective. We may find it necessary to tighten our mortgage loan underwriting standards in response to the
CFPB rules, which may constrain our ability to make loans consistent with our business strategies. It is our policy not to make
predatory loans and to determine borrowers' ability to repay, but the law and related rules create the potential for increased
liability with respect to our lending and loan investment activities. They increase our cost of doing business and, ultimately,
may prevent us from making certain loans and cause us to reduce the average percentage rate or the points and fees on loans
that we do make. In addition, regulation related to redlining, fair lending, CRA compliance and BSA compliance create
significant burdens which necessitate increased costs. Any failure to comply with any of these regulations could have a
significant impact on our ability to operate, our ability to acquire or open new banks and/or result in meaningful fines.
Regulatory initiatives regarding bank capital requirements may require heightened capital.
The U.S. Basel III Rule, as well as other aspects of current or proposed regulatory or legislative changes to laws applicable to
banking organizations, have increased our compliance costs, impacted the profitability of our business activities and may
change certain of our business practices, including the ability to offer new products, obtain financing, attract deposits, make
loans, and achieve satisfactory interest spreads, and could expose us to additional costs, including increased compliance costs.
These changes also may require us to invest significant management attention and resources to make any necessary changes to
operations in order to comply, and could therefore also materially and adversely affect our business, financial condition and
results of operations.
Our ability to engage in capital distributions, including paying dividends or repurchasing stock, may be restricted if we do not
maintain the required Capital Conservation Buffer. In addition, we anticipate that our pro forma capital ratios will be an
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important factor considered by the Federal Reserve in evaluating whether proposed payments of dividends or stock repurchases
are consistent with its prudential expectations. For more information regarding capital requirements, see “Capital Requirements
of the Company and Subsidiary Banks” under Supervision and Regulation in Item 1.
Our FDIC insurance premiums may increase, or the FDIC could adopt additional special assessments, either of which
could negatively impact our results of operations.
The Dodd-Frank Act and FDIC regulations use an assessment base for federal deposit insurance premiums based on average
total consolidated assets less average tangible capital. There is a risk that the banks’ deposit insurance premiums will increase in
the future if failures of insured depository institutions once again deplete the DIF. Additionally, to recoup losses to the DIF
resulting from the bank failures of 2023, the FDIC also adopted a special assessment that became effective in 2024 and will be
collected over an initial eight quarterly assessment periods, which the FDIC currently projects will be extended for an additional
two quarters at a lower rate, subject to certain adjustments. There is a risk that the FDIC could adopt additional special
assessments in the future to recoup future DIF losses. Either of these events could negatively impact our financial condition and
results of operations. For more information regarding the most recent increase to the banks’ deposit insurance premiums, see
“Insurance of Deposit Accounts” under Supervision and Regulation in Item 1.
Non-compliance with the USA PATRIOT Act, BSA or other laws and regulations could result in fines or sanctions.
The USA PATRIOT Act and the BSA require financial institutions to develop risk-based compliance programs designed to
prevent financial institutions from being used for money laundering, the funding of terrorist activities or other illicit finance
activities. If such activities are detected, financial institutions are obligated to file suspicious activity reports with FinCEN. The
BSA and its implementing regulations require covered financial institutions to establish procedures for identifying and
verifying the identity of customers seeking to open new accounts. Failure to comply with the BSA and its implementing
regulations could result in fines or sanctions. An increasing number of banking institutions have received large fines for non-
compliance with the BSA and its implementing regulations. Although we have developed policies and procedures designed to
assist in compliance with these laws and regulations, no assurance can be given that these policies and procedures will be
effective in preventing violations of these laws and regulations.
We are subject to claims and legal actions that could negatively affect our results of operations or financial condition.
Periodically, as a result of our normal course of business, we are involved in claims and related litigation from our customers,
employees or other parties. These claims and legal actions, whether meritorious or not, as well as reviews, investigations and
proceedings by governmental and self-regulatory agencies could involve large monetary claims and significant legal expense.
In addition, such actions may negatively impact our reputation in the marketplace and lessen customer demand. If such claims
and legal actions are not decided in Wintrust's favor, our results of operations and financial condition could be adversely
impacted.
We are subject to examinations and challenges by tax authorities that may impact our financial results.
In the normal course of business, we, as well as our subsidiaries, are routinely subject to examinations from federal and state tax
authorities regarding the amount of taxes due in connection with investments we have made and the businesses in which we
have engaged. Recently, federal and state tax authorities have become increasingly aggressive in challenging tax positions taken
by financial institutions. These tax positions may relate to among other things tax compliance, sales and use, franchise, gross
receipts, payroll, property and income tax issues, including tax base, apportionment and tax credit planning. The challenges
made by tax authorities may result in adjustments to the timing or amount of taxable income or deductions or the allocation of
income among tax jurisdictions. If any such challenges are made and are not resolved in our favor, they could have a material
adverse effect on our financial condition and results of operations.
Changes in federal and state tax laws and changes in interpretation of existing laws can impact our financial results.
Given the changing economic and political environment and ongoing budgetary pressures, the enactment of further new federal
or state tax legislation may occur. The enactment of such legislation, or changes in the interpretation of existing law, including
provisions impacting tax rates, apportionment, consolidation or combination, income, expenses, credits and exemptions may
have a material adverse effect on our business, financial condition and results of operations.
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Changes in accounting policies or accounting standards could materially adversely affect how we report our financial
results and financial condition.
Our accounting policies are fundamental to understanding our financial results and financial condition. Some of these policies
require use of estimates and assumptions that affect the value of our assets or liabilities and financial results. Some of our
accounting policies are critical because they require management to make difficult, subjective and complex judgments about
matters that are inherently uncertain and because it is likely that materially different amounts would be reported under different
conditions or using different assumptions. If such estimates or assumptions underlying our financial statements are incorrect,
we may experience material losses. From time to time, the FASB and the SEC change the financial accounting and reporting
standards that govern the preparation of our financial statements. These changes can be hard to predict and could materially
impact how we record and report our financial condition and results of operations. In some cases, we could be required to apply
a new or revised standard retroactively, resulting in the restatement of prior period financial statements.
Changes in U.S. trade policies, including the imposition of tariffs and retaliatory tariffs, may adversely impact our business,
financial condition and results of operations.
There continue to be proposals and discussion and dialogue in the U.S. government regarding potential changes to U.S. trade
policies, legislation, treaties and tariffs, including trade policies and tariffs affecting other countries, including China, the
European Union, Canada and Mexico and retaliatory tariffs by such countries. Tariffs and retaliatory tariffs have been imposed,
and additional tariffs and retaliatory tariffs have been proposed. Additionally, the U.S. government has imposed certain
economic sanctions and trade restrictions against certain other countries, and could impose additional sanctions and trade
restrictions. Such tariffs, retaliatory tariffs, sanctions or other trade restrictions on products and materials that our customers
import or export could cause the prices of our customers’ products to increase, which could reduce demand for such products,
or reduce our customers’ margins, and adversely impact their revenues, financial results and ability to service debt. This in turn,
could adversely affect our financial condition and results of operations. In addition, to the extent changes in the political
environment have a negative impact on us or on the markets in which we operate our business, results of operations and
financial condition could be materially and adversely impacted. It remains unclear what the U.S. government or foreign
governments will or will not do with respect to tariffs already imposed, additional tariffs that may be imposed, or international
trade agreements and policies.
Risks Related to Lending Operations
If our allowance for credit losses is not sufficient to absorb losses that may occur in our loan portfolio, our financial
condition and liquidity could suffer.
We maintain an allowance for credit losses that is intended to absorb expected lifetime credit losses related to our loan
portfolio, off-balance sheet credit exposures and held-to-maturity debt securities portfolio. At each balance sheet date, our
management determines the amount of the allowance for credit losses based on our estimate of expected credit losses over the
life of the related asset with consideration of historical credit losses, current economic conditions and reasonable and
supportable forecasts.
Because our allowance for credit losses represents an estimate of lifetime losses, there is no certainty that it will be adequate
over time to cover credit losses in the portfolios, particularly if there are changes in expectations of general economic or market
conditions, or events that adversely affect specific customers. In 2024, we charged off $94.4 million in loans (net of recoveries)
and increased our allowance for credit losses from $427.6 million at December 31, 2023 to $437.1 million at December 31,
2024. Our allowance for loan and unfunded lending-related commitment losses represented 0.91% and 1.01% of total loans
outstanding at December 31, 2024 and 2023, respectively.
Although we believe our allowance for credits losses is adequate to absorb estimated credit losses in our loan portfolio, if our
estimates are inaccurate and our actual credit losses exceed the amount that is anticipated, or if the forecasts and assumptions
used in calculating our reserves are significantly different from those we actually experience, our financial condition and
liquidity could be materially adversely affected.
For more information regarding our allowance for loan losses, see “Loan Portfolio and Asset Quality” under Management's
Discussion and Analysis of Financial Condition and Results of Operations in Item 7.
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A significant portion of our loan portfolio is comprised of commercial loans, the repayment of which is largely dependent
upon the financial success and economic viability of the borrower.
The repayment of our commercial loans is dependent upon the financial success and viability of the borrower. If the economy
weakens for a prolonged period or experiences deterioration or if the industry or market in which the borrower operates
weakens, our borrowers may experience depressed or dramatic and sudden decreases in revenues that could hinder their ability
to repay their loans. Our commercial loan portfolio totaled $15.6 billion or 32% of our total loan portfolio, at December 31,
2024, compared to $12.8 billion, or 30% of our total loan portfolio, at December 31, 2023.
Commercial loans are secured by different types of collateral related to the underlying business, such as accounts receivable,
inventory and equipment. Should a commercial loan require us to foreclose on the underlying collateral, the unique nature of
the collateral may make it more difficult and costly to liquidate, thereby increasing the risk to us of not recovering the principal
amount of the loan. Accordingly, our business, results of operations and financial condition may be materially adversely
affected by defaults in this portfolio.
A substantial portion of our loan portfolio is secured by real estate, in particular commercial real estate. Deterioration in the
real estate markets could lead to additional losses, which could have a material adverse effect on our financial condition and
results of operations.
As of both December 31, 2024 and 2023, approximately 36% and 35%, respectively, of our total loan portfolio was secured by
real estate, the majority of which is commercial real estate. The commercial and residential real estate markets continue to
experience a variety of difficulties, including the Chicago metropolitan area, southern Wisconsin and west Michigan, in which a
majority of our real estate loans are concentrated. Continued uncertainty in economic conditions may impair a borrower’s
business operations, slow the execution of new leases and lead to existing lease turnover. As a result of these factors, vacancy
rates for retail, office and industrial space may increase, and hotel occupancy rates may decline. High vacancy and lower
occupancy rates could also result in rents falling. The combination of these factors could result in the deterioration in the
fundamentals underlying the commercial real estate market and the deterioration in value of some of our loans. Any such
deterioration could adversely affect the ability of our borrowers to repay the amounts due under their loans. Specifically, the
office property segment, which represents 3.45% of our total loan portfolio, is undergoing a structural shift given the rise of a
remote work environment, resulting in heightened vacancies and potentially reduced leasing needs. It is anticipated that this
heightened risk environment for the office segment may take several years to resolve. Increases in commercial and consumer
delinquency levels or declines in real estate market values would require increased net charge-offs and increases in the
allowance for loan and lease losses, which could have a material adverse effect on our business, financial condition and results
of operations.
Additionally, any formal or informal action by our regulatory supervisors may require us to take increased reserves on these
loans and could affect our share price. As a result of the risks associated with commercial real estate, banking regulators give
greater scrutiny to lenders with a high concentration of commercial real estate in their portfolios, and such lenders are expected
to implement stricter underwriting, internal controls, risk management policies and portfolio stress testing, as well as maintain
higher capital levels and loss allowances. Concentrations in commercial real estate are monitored by regulatory agencies and
subject to especially heightened scrutiny both on a public and confidential basis. Regulators may require banks to maintain
elevated levels of capital or liquidity due to commercial real estate concentrations, especially if there is a downturn in our local
real estate markets.
Events impacting collateral consisting of real property could lead to additional losses which could have a material adverse
effect on our financial condition and results of operations.
Many of the loans in our portfolio are secured by real estate located in the Chicago metropolitan area. Any declines in economic
conditions, including inflation, recession, unemployment, changes in securities markets or other factors impacting these local
markets could, in turn, have a material adverse effect on our financial condition and results of operations. Deterioration in the
real estate markets where collateral for our mortgage loans is located could adversely affect the borrower's ability to repay the
loan and the value of the collateral securing the loan, and in turn the value of our assets. In addition, any natural disasters or
severe weather events have the potential to damage our real estate collateral. Climate change could have an impact on longer-
term natural weather trends and increase the occurrence and severity of such adverse weather events.
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Any inaccurate assumptions in our analytical and forecasting models could cause us to miscalculate our projected revenue,
capital, liquidity or losses, which could adversely affect our financial condition.
We use analytical and forecasting models to estimate the effects of economic conditions on our loan portfolio and probable loan
performance. Those models reflect certain assumptions about market forces, including interest rates and consumer behavior that
may be incorrect. If our analytical and forecasting models’ underlying assumptions are incorrect, improperly applied, or
otherwise inadequate, we may suffer deleterious effects such as higher than expected loan losses, lower than expected net
interest income, lower than expected liquidity, lower than expected capital or unanticipated charge-offs, any of which could
have a material adverse effect on our business, financial condition and results of operations.
We are subject to environmental liability risk associated with lending activities.
A significant portion of the Company's loan portfolio is secured by real property. In the ordinary course of business, the
Company may foreclose on and take title to properties securing certain loans. In doing so, there is a risk that hazardous or toxic
substances could be found on these properties. If hazardous or toxic substances are found, the Company may be liable for
remediation costs, as well as for personal injury and property damage and may suffer reputational harm as a result. In addition,
we own and operate a number of properties that may be subject to similar environmental liability risks.
Environmental laws may require the Company to incur substantial expenses and could materially reduce the affected property's
value or limit the Company's ability to use or sell the affected property. The costs associated with investigation and remediation
activities could be substantial and increase over time. In addition, if we are the owner or former owner of a contaminated site,
we may be subject to common law claims by third parties based on damages and costs resulting from environmental
contamination emanating from the property. Although the Company has policies and procedures to perform an environmental
review before initiating any foreclosure action on real property, these reviews may not be sufficient to detect all potential
environmental hazards. The remediation costs and any other financial liabilities associated with an environmental hazard could
have a material adverse effect on the Company's business, financial condition, reputation and results of operations.
Risks Related to Our Niche Businesses
Our premium finance business may involve a higher risk of delinquency or collection than our other lending operations,
and could expose us to losses.
We provide financing for the payment of property and casualty insurance premiums and life insurance premiums on a national
basis through FIRST Insurance Funding and Wintrust Life Finance, respectively, and financing for the payment of property and
casualty insurance premiums in Canada through our wholly-owned subsidiary, FIFC Canada. Property and casualty insurance
premium finance loans involve a different, and possibly higher, risk of delinquency or collection than life insurance premium
finance loans and the loan portfolios of our bank subsidiaries because these loans are issued primarily through relationships
with a large number of unaffiliated insurance agents and because the borrowers are located nationwide. As a result, risk
management and general supervisory oversight may be difficult. As of December 31, 2024, we had $7.3 billion of property and
casualty insurance premium finance loans outstanding, of which $6.4 billion related to the Company's U.S. operations at FIRST
Insurance Funding and $824.4 million related to the Company's Canadian operations at FIFC Canada. Together, these loans
represented 15% of our total loan portfolio as of such date.
FIRST Insurance Funding and FIFC Canada have in the past been susceptible to, and may in the future be more susceptible to
third party fraud with respect to property and casualty insurance premium finance loans because these loans are originated and
many times funded through relationships with unaffiliated insurance agents and brokers. 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.
Wintrust Life Finance may be exposed to the risk of loss in our life insurance premium finance business because of fraud.
While Wintrust Life Finance maintains a policy prohibiting the known financing of stranger-originated life insurance and has
established procedures to identify and prevent the company from financing such policies, Wintrust Life Finance cannot be
certain that it will never provide loans with respect to such a policy. In the event such policies were financed, a carrier could
potentially put at risk the cash surrender value of a policy, which serves as Wintrust Life Finance's primary collateral, by
challenging the validity of the insurance contract for lack of an insurable interest.
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See the below risk factor “Widespread financial difficulties or credit downgrades among commercial and life insurance
providers could lessen the value of the collateral securing our premium finance loans and impair the financial condition and
liquidity of FIRST Insurance Funding, Wintrust Life Finance and FIFC Canada” for a discussion of further risks associated
with our insurance premium finance activities.
While FIRST Insurance Funding and Wintrust Life Finance are licensed as required and carefully monitor compliance with
regulation of each of their businesses, there can be no assurance that either will not be negatively impacted by material changes
in the regulatory environment. FIFC Canada is not required to be licensed in most provinces of Canada, but there can be no
assurance that future regulations which impact the business of FIFC Canada will not be enacted.
Additionally, to the extent that affiliates of insurance carriers, banks, and other lending institutions add greater service and
flexibility to their financing practices in the future, our competitive position and results of operations could be adversely
affected. Wintrust Life Finance's life insurance premium finance business could be materially negatively impacted by changes
in the federal or state estate tax provisions. There can be no assurance that FIRST Insurance Funding and Wintrust Life Finance
will be able to continue to compete successfully in its markets.
Widespread financial difficulties or credit downgrades among commercial and life insurance providers could lessen the
value of the collateral securing our premium finance loans and impair the financial condition and liquidity of FIRST
Insurance Funding, Wintrust Life Finance and FIFC Canada.
FIRST Insurance Funding, Wintrust Life Finance and FIFC Canada's premium finance loans are primarily secured by the
insurance policies financed by the loans. These insurance policies are written by a large number of geographically dispersed
insurance companies. Our premium finance receivables balances finance insurance policies that are spread among a large
number of insurers; however, one of the insurers represents approximately 10% of such balances and two additional insurers
represent approximately 8% and 6% each of such balances. FIRST Insurance Funding, Wintrust Life Finance and FIFC Canada
consistently monitor carrier ratings and financial performance of our carriers. While FIRST Insurance Funding, Wintrust Life
Finance and FIFC Canada can mitigate risks as a result of this monitoring to the extent that commercial or life insurance
providers experience widespread difficulties or credit downgrades, the value of our collateral will be reduced. FIRST Insurance
Funding, Wintrust Life Finance and FIFC Canada are also subject to the possibility of insolvency of insurance carriers in the
commercial and life insurance businesses that are in possession of our collateral. If one or more large nationwide insurers were
to fail, the value of our portfolio could be significantly negatively impacted. A significant downgrade in the value of the
collateral supporting our premium finance business could impair our ability to create liquidity for this business, which, in turn
could negatively impact our ability to expand.
Our wealth management business in general, and Wintrust Investments’ brokerage operation, in particular, exposes us to
certain risks associated with the securities industry.
Our wealth management business in general, and Wintrust Investments' brokerage operations in particular, present special risks
not borne by community banks that focus exclusively on community banking. For example, the brokerage industry is subject to
fluctuations in the stock market that may have a significant adverse impact on transaction fees, customer activity and
investment portfolio gains and losses. Likewise, additional or modified regulations may adversely affect our wealth
management operations. Each of our wealth management operations is dependent on a small number of professionals whose
departure could result in the loss of a significant number of customer accounts. A significant decline in fees and commissions or
trading losses suffered in the investment portfolio could adversely affect our results of operations. In addition, we are subject to
claim arbitration risk arising from customers who claim their investments were not suitable or that their portfolios were
inappropriately traded. These risks increase when the market, as a whole, declines. The risks associated with retail brokerage
may not be supported by the income generated by our wealth management operations.
Risks Related to Financial Strength and Liquidity
Changes in prevailing interest rates could adversely affect our net interest income, which is our largest source of income.
We are exposed to interest rate risk in our core banking activities of lending and deposit taking, since changes in prevailing
interest rates affect the value of our assets and liabilities. Such changes may adversely affect our net interest income, which is
the difference between interest income and interest expense. Our net interest income is affected by the fact that assets and
liabilities reprice at different times and by different amounts as interest rates change. Net interest income represents our largest
component of net income, and was $2.0 billion and $1.8 billion for the years ended December 31, 2024 and 2023, respectively.
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Each of our businesses may be affected differently by a given change in interest rates. For example, we expect that the results of
our mortgage banking business in selling loans into the secondary market could be negatively impacted during periods of rising
interest rates, whereas falling interest rates could have a negative impact on the net interest spread earned on deposits as we
would be unable to lower the rates on many interest bearing deposit accounts of our customers to the same extent as many of
our higher yielding asset classes.
Additionally, increases in interest rates may adversely influence the growth rate of loans and deposits, the quality of our 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.
In response to inflationary forces, the Federal Reserve has maintained a restrictive monetary policy stance, despite lowering
rates at the end of 2024. The federal funds rate ended 2024 at a range of 4.25-4.50%. Though we expect the Federal Reserve to
slow the rate of decreases, we cannot predict the nature or timing of future changes in monetary policies or the precise effects
that they may have on our activities and financial results. For more discussion of this issue, see the above risk factor “Changes
in the United States’ monetary policy may restrict our ability to conduct our business in a profitable manner.”
We seek to mitigate our interest rate risk through several strategies, which may not be successful. With the relatively low
interest rates that prevailed in past years, we were able to augment the total return of our investment securities portfolio by
selling call options on fixed-income securities that we own. We recorded fee income of approximately $10.2 million, $21.9
million and $14.1 million for the years ended December 31, 2024, 2023 and 2022, respectively. We also mitigate our interest
rate risk by entering into interest rate swaps and other interest rate derivative contracts from time to time with counterparties.
The Company held $6.7 billion of derivatives effective as of December 31, 2024 that were designated as cash flow hedges
against the potential downward repricing of variable rate loans. To the extent that the market value of any derivative contract
moves to a negative market value, we are subject to loss if the counterparty defaults. In the future, there can be no assurance
that such mitigation strategies will be available or successful or that we will be successful in implementing any new mitigation
strategies necessary to address the current rising interest rate environment. In addition, transactions entered into as part of
mitigation strategies employed to mitigate risks associated with a prolonged low interest rate environment could be less
beneficial or result in losses if interest rates continue to rise.
Our liquidity position may be negatively impacted if economic conditions do not improve or if they decline.
Liquidity is a measure of whether our cash flows and liquid assets are sufficient to satisfy current and future financial
obligations, such as demand for loans, deposit withdrawals and operating costs. Our liquidity position is affected by a number
of factors, including the amount of cash and other liquid assets on hand, payment of interest and dividends on debt and equity
instruments that we have issued, capital we inject into our bank subsidiaries, proceeds we raise through the issuance of
securities, our ability to draw upon our revolving credit facility and dividends received from our banking subsidiaries. Our
future liquidity position may be adversely affected by multiple factors, including:
•
if our banking subsidiaries report net losses or their earnings are weak relative to our cash flow needs;
•
if it is necessary for us to make capital injections to our banking subsidiaries;
•
if changes in regulations require us to maintain a greater level of capital, as more fully described below;
•
if we are unable to access our revolving credit facility due to a failure to satisfy financial and other covenants; or
•
if we are unable to raise additional capital on terms that are satisfactory to us.
Weakness or worsening of the economy, real estate markets or unemployment levels may increase the likelihood that one or
more of these events will occur. If our liquidity is adversely affected, it may have a material adverse effect on our business,
results of operations and financial condition.
An actual or perceived reduction in our financial strength may cause others to reduce or cease doing business with us,
which could result in a decrease in our net interest income and fee revenues.
Our customers rely upon our financial strength and stability and evaluate the risks of doing business with us. If we experience
diminished financial strength or stability, actual or perceived, including due to market or regulatory developments, announced
or rumored business developments or results of operations, or a decline in stock price, customers may withdraw their deposits
or otherwise seek services from other banking institutions and prospective customers may select other service providers. The
risk that we may be perceived as less creditworthy relative to other market participants is increased in the current market
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environment, where the consolidation of financial institutions, including major global financial institutions, is resulting in a
smaller number of much larger counterparties and competitors. As our community banks become more closely identified with
the Wintrust name, the impact of any perceived weakness or creditworthiness at either the holding company or our community
banks may be greater than in prior periods. If customers reduce their deposits with us or select other service providers for all or
a portion of the services that we provide them, net interest income and fee revenues will decrease accordingly, and could have a
material adverse effect on our results of operations.
Loss of deposits or a change in the deposit mix could increase our funding costs.
Deposits are a low cost and stable source of funding. Wintrust competes with banks and other financial institutions for deposits
and as a result, Wintrust could lose deposits in the future, clients may shift their deposits into higher cost products or Wintrust
may need to raise interest rates to avoid deposit attrition. Funding costs may also increase if lost deposits are replaced with
wholesale funding. Higher funding costs reduce Wintrust’s net interest margin, net interest income and net income. Any of a
variety of single or combined factors could contribute to adverse movement in deposits or deposit costs, including but not
limited to economic uncertainty, rapid movements in market interest rates or the Federal Reserve’s monetary policy, entrance of
competitors, disruptive technology or decreased confidence in Wintrust or the banking industry.
If our credit rating is lowered, our financing costs could increase.
As of December 31, 2024, we have been rated by Fitch Ratings as "BBB+" and Morningstar DBRS as "A (low)". A credit
rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the
assigning rating organization.
Our creditworthiness is not fixed and should be expected to change over time as a result of company performance and industry
conditions. We cannot give any assurances that our credit ratings will remain at current levels, and it is possible that our ratings
could be lowered or withdrawn by Fitch Ratings or Morningstar DBRS. Any actual or threatened downgrade or withdrawal of
our credit rating could affect our perception in the marketplace and our ability to raise capital, and could increase our debt
financing costs.
If our growth requires us to raise additional capital, that capital may not be available when it is needed or the cost of that
capital may be very high.
We are required by regulatory authorities to maintain adequate levels of capital to support our operations (see the above risk
factor “Legal and Regulatory Risks - If we fail to meet our regulatory capital ratios, we may be forced to raise capital or sell
assets”) and as we grow, internally and through acquisitions, the amount of capital required to support our operations grows as
well. We may need to raise additional capital to support continued growth both internally and through acquisitions. Any capital
we obtain may result in the dilution of the interests of existing holders of our common stock.
Our ability to raise additional capital, if needed, will depend on conditions in the capital markets at that time which are outside
our control and on our financial condition and performance. The interest rate environment, disruptions in financial markets,
negative perception of our business or our financial strength or other factors may impact our ability to raise additional capital
when needed, or on terms acceptable to us. For example, in the event of future uncertainty in the banking industry or other
idiosyncratic events, there is no guarantee that the U.S. government would invoke the systemic risk exception, create additional
liquidity programs or take any other action to stabilize the banking industry or provide liquidity. Any diminished ability to
access short-term funding or capital markets to raise additional capital, if needed, could subject us to liability, and our ability to
further expand our operations through internal growth and acquisitions could be materially impaired and our financial condition
and liquidity could be materially and negatively affected.
Disruption in the financial markets could result in lower fair values for our investment securities portfolio.
The Company's available-for-sale debt and trading securities as well as certain equity securities are carried at fair value.
Accounting standards require the Company to categorize these securities according to a fair value hierarchy. As of
December 31, 2024, approximately 97% of the Company's available-for-sale debt securities and equity securities with a readily
determinable fair value were categorized in level 1 or 2 of the fair value hierarchy (meaning that their fair values were
determined by unadjusted quoted prices in active markets for identical assets, quoted prices for similar assets or other
observable inputs). Significant prolonged reduced investor demand could manifest itself in lower fair values for these securities
38
and may result in recognition of an other-than-temporary or permanent impairment of available-for-sale debt securities and
unrealized losses of equity securities with a readily determinable fair value recognized in earnings, which could lead to
accounting charges and have a material adverse effect on the Company's financial condition and results of operations.
The remaining securities in our available-for-sale debt securities and equity securities with a readily determinable fair value
portfolios were categorized as level 3 (meaning that their fair values were determined by inputs that are unobservable in the
market and therefore require a greater degree of management judgment). The determination of fair value for securities
categorized in level 3 involves significant judgment due to the complexity of factors contributing to the valuation, many of
which are not readily observable in the market. In addition, the nature of the business of the third party source that is valuing
the securities at any given time could impact the valuation of the securities. Consequently, the ultimate sales price for any of
these securities could vary significantly from the recorded fair value at December 31, 2024, especially if the security is sold
during a period of illiquidity or market disruption or as part of a large block of securities under a forced transaction.
There can be no assurance that decline in market value of available-for-sale debt securities and equity securities with a readily
determinable fair value associated with these disruptions will not result in credit or permanent impairments, and unrealized
losses, respectively, of these assets, which would lead to accounting charges which could have a material negative effect on our
business, financial condition and results of operations.
We are a bank holding company, and our sources of funds, including to pay dividends, are limited.
We are a bank holding company and our operations are primarily conducted by and through our 16 operating banks, which are
subject to significant federal and state regulation. Cash available to pay dividends to our shareholders, repurchase our shares or
repay our indebtedness is derived primarily from dividends received from our banks and our ability to receive dividends from
our subsidiaries is restricted. Various statutory provisions restrict the amount of dividends our banks can pay to us without
regulatory approval. The banks may not pay cash dividends if that payment could reduce the amount of their capital below that
necessary to meet the “adequately capitalized” level in accordance with regulatory capital requirements. It is also possible that,
depending upon the financial condition of the banks and other factors, regulatory authorities could conclude that payment of
dividends or other payments, including payments to us, is an unsafe or unsound practice and impose restrictions or prohibit
such payments. Our inability to receive dividends from our banks could adversely affect our business, financial condition and
results of operations.
Risks Related to General Operations
Our controls and procedures may fail or be circumvented.
Management regularly reviews and updates our internal controls over financial reporting, disclosure controls and procedures
and corporate governance policies and procedures. Any system of controls, however well-designed and operated, is based in
part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met.
Any circumvention of our controls and procedures or failure to comply with regulations related to controls and procedures
could have a material adverse effect on our business, results of operations and financial condition.
Our operational or security systems, networks or infrastructure, or those of third parties, could fail or be breached, which
could disrupt our business and adversely impact our results of operations, liquidity and financial condition, as well as cause
legal or reputational harm.
The potential for operational risk exposure exists throughout our business and, as a result of our interactions with, and reliance
on, third parties, is not limited to our own internal operational functions. Our operational and security systems, networks and
infrastructure, including our computer systems and networks, data management, and internal processes, as well as those of third
parties, are integral to our performance. We rely on our employees and third parties in our day-to-day and ongoing operations,
who may, as a result of human error, misconduct, malfeasance or failure, or breach of our or of third-party systems or
infrastructure, expose us to risk. For example, our ability to conduct business may be adversely affected by any significant
disruptions to us or to third parties with whom we interact or upon whom we rely. In addition, our ability to implement backup
systems and other safeguards with respect to third-party systems is more limited than with respect to our own systems.
Moreover, technological or financial difficulties of one of our third-party vendors or their subcontractors could adversely affect
our business to the extent those difficulties results in the interruption or discontinuation of services provided by an affected
vendor. Our financial, accounting, data processing, backup or other operating or security systems, networks and infrastructure,
or those of third parties, may fail to operate properly or become disabled or damaged as a result of a number of factors,
including events that are wholly or partially beyond our control, which could adversely affect our ability to process transactions
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or provide services. Such events may include sudden increases in customer transaction volume; electrical, telecommunications
or other major physical infrastructure outages; natural disasters such as earthquakes, tornadoes, wildfires, hurricanes and floods;
disease pandemics; and events arising from local or larger scale political or social matters, including wars and terrorist acts. In
addition, we may need to take our systems or networks offline if they become infected with malware or a computer virus or as a
result of another form of cyber-attack, information security breach or other similar incident. In the event that backup systems
are utilized, they may not process data as quickly as our primary systems and some data might not have been saved to backup
systems, potentially resulting in a temporary or permanent loss of such data. Our business recovery plan may not be adequate
and may not prevent significant interruptions of our operations or substantial losses. We frequently update our systems to
support our operations and growth and to remain compliant with all applicable laws, rules and regulations. This updating entails
significant costs and creates risks associated with implementing new systems and networks and integrating them with existing
ones, including business interruptions. Implementation and testing of controls related to our computer systems and networks,
security monitoring and retaining and training personnel required to operate our systems also entail significant costs.
We may not be insured against all types of losses as a result of disruptions to or failures of our operational and security systems,
networks and infrastructure or those of third parties, and our insurance coverage may not be available on reasonable terms, or at
all, or may be inadequate to cover all losses resulting from such disruptions or failures. Disruptions or failures in our business
structure or in the structure of one or more of our third-party vendors could interrupt the operations or increase the cost of doing
business. The occurrence of any disruptions or failures impacting our or our third-party vendors’ operational or security
systems, networks or infrastructure could result in a loss of customer business and expose us to additional regulatory scrutiny,
civil litigation, and possible financial liability, any of which could adversely impact our results of operations, liquidity and
financial condition, as well as cause reputational harm.
We face risks from cyber-attacks, information security breaches and other similar incidents that could result in the
disclosure of confidential and other information (including personal information), all of which could adversely affect our
business or reputation, and create significant legal and financial exposure.
Our computer systems and network infrastructure and those of third parties, on which we are highly dependent, are subject to
security risks and could be susceptible to cyber-attacks, information security breaches and other similar incidents. Our business
relies on the secure processing, transmission, storage and retrieval of confidential, personal, proprietary and other information
in our computer and data management systems and networks, and in the computer and data management systems and networks
of third parties. In addition, to access our network, products and services, our customers and other third parties may use
personal mobile devices or computing devices that are outside of our network environment and are subject to their own
cybersecurity risks.
We, our customers, regulators and other third parties, including other financial services institutions and companies engaged in
data processing, have been subject to, and are likely to continue to be the target of, cyber-attacks, information or security
breaches, and other similar incidents. These may include, among other things, computer viruses, malicious or destructive code,
phishing attacks, denial of service or information, ransomware, malfeasance or improper access by employees or vendors,
attacks on personal email of employees, hacking, terrorist activities, identity theft, social engineering, credential stuffing,
account takeovers, insider threats, human error, fraud, or other similar incidents that could result in the unauthorized release,
gathering, monitoring, misuse, misappropriation, loss, disclosure or destruction of confidential, personal, proprietary and other
information of ours, our employees, our customers or of third parties, damage to our systems and networks or other material
disruption of our or our customers’ or other third parties’ network access or business operations. As cyber threats continue to
evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures
or to investigate and remediate any information security vulnerabilities or incidents. Despite efforts to ensure the integrity of
our systems and implement controls, processes, policies and other protective measures, we may not be able to anticipate all
security breaches, nor may we be able to implement guaranteed preventive measures against such security breaches. Cyber
threats are rapidly evolving and we may not be able to anticipate or prevent all such attacks and could be held liable for any
security breach or loss.
Cybersecurity risks for banking organizations have significantly increased in recent years in part because of the proliferation of
new technologies, and the use of the internet and telecommunications technologies to conduct financial transactions. For
example, cybersecurity risks may increase in the future as we continue to increase our mobile-payment and other internet-based
product offerings and expand our internal usage of web-based products and applications. In addition, cybersecurity risks have
significantly increased in recent years in part due to the increased sophistication and activities of organized crime affiliates,
terrorist organizations, hostile foreign governments, nation states, nation state-supported actors, disgruntled employees or
vendors, activists and other external parties, including those involved in corporate espionage. Even the most advanced internal
control environment may be vulnerable to compromise. Targeted social engineering attacks and "spear phishing" attacks are
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becoming more sophisticated and are extremely difficult to prevent. In such an attack, an attacker will attempt to fraudulently
induce colleagues, customers or other users of our systems and networks to disclose sensitive information (including
confidential, personal, proprietary and other information) in order to gain access to its data or that of its clients. Persistent
attackers may succeed in penetrating defenses given enough resources, time, and motive. The techniques used by cyber
criminals change frequently and may not be recognized until launched or until well after a breach has occurred. The risk of a
security breach caused by a cyber-attack, information security breach or other similar incident at a vendor or by unauthorized
vendor access has also increased in recent years. Additionally, the existence of cyber-attacks, information security breaches or
other similar incidents at third-party vendors with access to our data may not be disclosed to us in a timely manner. While we
generally perform cybersecurity diligence on our key vendors, because we do not control our vendors and our ability to monitor
their cybersecurity is limited, we cannot ensure the cybersecurity measures they take will be sufficient to protect any
information we share them. Due to applicable laws and regulations or contractual obligations, we may be held responsible for
cyber-attacks, information security breaches or other similar incidents attributed to our service providers as they relate to the
information we share with them.
We also face indirect technology, cybersecurity and operational risks relating to the customers, clients and other third parties
with whom we do business or upon whom we rely to facilitate or enable our business activities, including, for example,
financial counterparties, regulators and providers of critical infrastructure such as internet access and electrical power. As a
result of increasing consolidation, interdependence and complexity of financial entities and technology systems, a technology
failure, cyber-attack, information security breach or other similar incident that significantly degrades, deletes or compromises
the systems, networks or data of one or more financial entities could have a material impact on counterparties or other market
participants, including us. This consolidation, interconnectivity and complexity increases the risk of operational failure, on both
individual and industry-wide bases, as disparate systems need to be integrated, often on an accelerated basis. Any third-party
technology failure, cyber-attack, information security breach, termination, constraint or other similar incident could, among
other things, adversely affect our ability to effect transactions, service our clients, manage our exposure to risk or expand our
business.
Moreover, debit card numbers are susceptible to theft at the point of sale via the physical terminal through which transactions
are processed and by other means of hacking. The security and integrity of these transactions are dependent upon retailers’
vigilance and willingness to invest in technology and upgrades. Despite third-party security risks that are beyond our control,
we offer our customers protection against fraud and attendant losses for unauthorized use of debit cards in order to stay
competitive in the marketplace. Offering such protection to our customers exposes us to potential losses which, in the event of a
data breach at one or more retailers of considerable magnitude, may adversely affect our business, financial condition, and
results of operations.
Although we believe that we have appropriate information security procedures and controls designed to prevent or limit the
effects of a cyber-attack, information security breach or other similar incident, our or our customers’ and/or third parties’
computers, systems or networks may be the target of cyber-attacks, information security breaches or other similar incidents that
could result in the unauthorized release, accessing, gathering, monitoring, loss, destruction, modification, acquisition, transfer,
use or other processing of our or our customers’ confidential, personal, proprietary and other information. Additionally, we may
not be insured against all types of losses as a result of cyber-attacks, information security breaches and other similar incidents,
and our insurer may deny coverage as to any future claim or insurance coverage may not be available on reasonable terms, or at
all, or may be inadequate to cover all losses resulting from such incidents.
Cyber-attacks, information security breaches or similar incidents, whether directed at us or third parties, may result in a material
loss or have material consequences. Furthermore, the public perception that a cyber-attack on our systems has been successful,
whether or not this perception is correct, may damage our reputation with customers and third parties with whom we do
business. Hacking or other unauthorized disclosure of personal information and identity theft risks, in particular, could cause
serious reputational harm. A successful penetration or circumvention of system security could cause us serious negative
consequences, including our loss of customers and business opportunities, significant disruption to our operations and business,
misappropriation or destruction of our confidential, personal, proprietary or other information and/or that of our customers or
other third parties, or damage to our or our customers’ and/or third parties’ computers, systems or networks, and could result in
a violation of applicable data privacy and cybersecurity laws and regulations and other laws and regulations, litigation exposure,
regulatory fines, penalties or intervention, remediation costs, loss of confidence in our security measures, reputational damage,
reimbursement or other compensatory costs, remediation costs, additional compliance costs, and could adversely impact our
results of operations, liquidity and financial condition.
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Our business could be adversely affected by fraud.
As a financial institution, we are inherently and consistently exposed to a wide variety of fraudulent activity, including but not
limited to check fraud, card fraud, electronic and digital fraud, wire fraud, ATM machine compromise, person-to-person
payment fraud, social engineering and phishing attacks. Fraudulent activity is becoming increasingly sophisticated and may
evade the systems and controls that we have in place to monitor our operations. We have experienced, and could experience in
the future, losses incurred due to third-party, customer or employee fraud and theft. Additionally, certain of our banking clients
have experienced, and could experience in the future, financial fraud and related losses, often requiring our involvement and
assistance. Losses in the future could be material, negatively affect our results of operations, financial condition, prospects or
reputation.
Our vendors may be responsible for failures that adversely affect our operations.
We use and rely upon many external vendors to provide us with day-to-day products and services essential to our operations.
We are thus exposed to risk that such vendors will not perform as contracted or at agreed-upon service levels. The failure of our
vendors to perform as contracted or at necessary service levels for any reason could disrupt our operations, which could
adversely affect our business. In addition, if any of our vendors experience insolvency or other business failure, such failure
could affect our ability to obtain necessary products or services from a substitute vendor in a timely and cost-effective manner
or prevent us from effectively pursuing certain business objectives entirely. Our failure to implement business objectives due to
vendor nonperformance could adversely affect our financial condition and results of operations.
We depend on the accuracy and completeness of information we receive about our customers and counterparties to make
credit decisions.
We rely on information furnished by or on behalf of customers and counterparties in deciding whether to extend credit or enter
into other transactions. This information could include financial statements, credit reports, and other financial information. We
also rely on representations of those customers, counterparties, or other third parties, such as independent auditors, as to the
accuracy and completeness of that information. Reliance on inaccurate or misleading financial statements, credit reports, or
other financial information could have a material adverse impact on our business, financial condition and results of operations.
If we are unable to attract and retain experienced and qualified personnel, our ability to provide high quality service will be
diminished, we may lose key customer relationships, and our results of operations may suffer.
We believe that our future success depends, in part, on our ability to attract and retain experienced personnel, including our
senior management and other key personnel. Our business model is dependent upon our ability to provide high quality and
personal service. In addition, as a holding company that conducts its operations through our subsidiaries, we are focused on
providing entrepreneurial-based compensation to the chief executives of each our business units. As a Company with start-up
and growth oriented operations, we are cognizant that to attract and retain the managerial talent necessary to operate and grow
our businesses we often have to compensate our executives with a view to the business we expect them to manage, rather than
the size of the business they currently manage. Accordingly, any executive compensation restrictions may negatively impact
our ability to retain and attract senior management. The departure of a senior manager or other key personnel may damage
relationships with certain customers, or certain customers may choose to follow such personnel to a competitor. The loss of any
of our senior managers or other key personnel, or our inability to identify, recruit and retain such personnel, particularly during
a period in which the labor market is characterized as tight and employee turnover has escalated in many industries, could
materially and adversely affect our business, results of operations and financial condition. If we fail to effectively manage the
transition in the position of chief executive officer, our business, financial condition, results of operations, cash flows and
reputation, as well as our ability to successfully attract, motivate and retain key employees, could be harmed.
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Losses incurred in connection with actual or projected repurchases and indemnification payments related to mortgages that
we have sold into the secondary market may exceed our financial statement reserves and we may be required to increase
such reserves in the future. Increases to our reserves and losses incurred in connection with actual loan repurchases and
indemnification payments could have a material adverse effect on our business, financial condition, results of operations or
cash flows.
We engage in the origination of residential mortgages for sale into the secondary market. In connection with such sales, we
make certain representations and warranties, which, if breached, may require us to repurchase such loans, substitute other loans
or indemnify the purchasers of such loans for actual losses incurred in respect of such loans. We receive requests for loan
repurchases and indemnification payments relating to the representations and warranties with respect to such loans. We have
been able to reach settlements with a number of purchasers, and believe that we have established appropriate reserves with
respect to indemnification requests. It is possible that the number of such requests will increase or that we will not be able to
reach settlements with respect to such requests in the future. Accordingly, it is possible that losses incurred in connection with
loan repurchases and indemnification payments may be in excess of our financial statement reserves, and we may be required to
increase such reserves and may sustain additional losses associated with such loan repurchases and indemnification payments in
the future. Increases to our reserves and losses incurred by us in connection with actual loan repurchases and indemnification
payments in excess of our reserves could have a material adverse effect on our business, financial condition, results of
operations or cash flows.
Our business could be adversely affected by the occurrence of extraordinary events, such as acts of war, terrorist attacks,
natural disasters and public health threats.
An act of war, terrorist activity, including acts of domestic terrorism or violence, a major epidemic or pandemic, natural
disaster, or the threat of such an event or other public health threat, could adversely affect our customers and our business. Such
events could significantly impact the demand for our products and services as well as the ability of our customers to repay
loans, affect the stability of our deposit base, impair the value of the collateral securing loans, adversely impact our employee
base, cause significant property damage, result in loss of revenue, and cause us to incur additional expenses. Additionally,
financial markets may be adversely affected by the current or anticipated impact of military conflict, including the war in
Ukraine, the conflict between Israel and Hamas, terrorism or other geopolitical events. The occurrence or threat of any such
extraordinary event could result in a material negative effect on our business and results of operations.
Risks Related to Ownership of Our Common Stock
Anti-takeover provisions could negatively impact our shareholders.
Certain provisions of our articles of incorporation, by-laws and Illinois law 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 our board of directors. For example, our board of directors may issue additional authorized shares of our 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 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. In
addition, our articles of incorporation expressly elect to be governed by the provisions of Section 7.85 of the Illinois Business
Corporation Act, which would make it more difficult for another party to acquire us without the approval of our board of
directors.
The ability of a third party to acquire us is also limited under applicable banking regulations. The BHC Act requires any “bank
holding company” (as defined in the BHC Act) to obtain the approval of the Federal Reserve prior to acquiring more than 5%
of our outstanding common stock. Any person other than a bank holding company is required to obtain prior approval of the
Federal Reserve to acquire 10% or more of our outstanding common stock under the Change in Bank Control Act of 1978. Any
holder of 25% or more of our outstanding common stock, other than an individual, is subject to regulation as a “bank holding
company” under the BHC Act. For purposes of calculating ownership thresholds under these banking regulations, bank
regulators would generally take the position that the maximum number of shares of Wintrust common stock that a holder is
entitled to receive pursuant to securities convertible into or settled in Wintrust common stock, including pursuant to any
warrants to purchase Wintrust common stock held by such holder, must be taken into account in calculating a shareholder's
aggregate holdings of Wintrust common stock.
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These provisions may have the effect of discouraging a future takeover attempt that is not approved by our board of directors
but which our individual shareholders may deem to be in their best interests or in which our 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 our current board of
directors or management more difficult.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Risk Management and Strategy
Like every major financial services institution, Wintrust faces significant and persistent cybersecurity risks. Whether in the
form of data theft, ransomware, phishing, denial of service, or third-party vendor incidents, threat actors continue to become
more sophisticated and escalate their efforts against financial institutions. At Wintrust, the Board of Directors and executive
management are committed to devoting the necessary resources into monitoring, detecting, preventing and mitigating cyber
risk. As a regulated financial institution, we are required to comply with various regulations applicable to cybersecurity, as well
as guidance issued by our regulators, and our cybersecurity program closely tracks to those requirements. Additionally,
Wintrust leverages global cybersecurity standards as general guides, including the National Institute of Standards and
Technology Cybersecurity Framework.
Cybersecurity oversight begins with the Information Technology & Information Security Committee (“IT/IS Committee”) of
the Wintrust Board of Directors. The Wintrust Chief Security Officer (“CSO”) and Deputy Chief Information Security Officer
(“Deputy CISO”) oversee the cybersecurity program. The CSO has a dual reporting structure, reporting to both the IT/IS
Committee and the Vice Chairman/Chief Operating Officer of Wintrust. The CSO and Deputy CISO, each with extensive
industry experience, manage a team of skilled professionals with cybersecurity expertise. This team governs our cybersecurity
program that follows seven pillars: strategy; prevention, detection, response, measurement, compliance, and training. Our
cybersecurity program employs a wide range of technological, administrative, and physical security measures designed to
address the confidentiality, integrity, and availability of the information and data of both Wintrust and our customers. We have
established policies, processes and procedures to monitor, report and respond to suspected or actual security events. A critical
function of the cybersecurity program is the Security Operations Center, which is constantly monitoring Wintrust systems to
detect threats. If any credible threats are detected, the Security Operations Center notifies both the CSO and Deputy CISO, and
the appropriate response plan is initiated. The CSO will advise executive management and other relevant stakeholders as
necessary. We coordinate with our third parties and vendor partners through assessments and due diligence before sharing or
allowing the hosting of data. We also work with our outside partners to investigate security events that may have impacted our
confidential and other information, and to leverage lessons learned during those investigations. In addition, we contractually
require our third-party service providers that possess or process any Wintrust or customer information to adhere to certain
security requirements, controls and responsibilities based on the risk profile of the relationship.
Wintrust also recognizes that individual employees are frequent targets of threat actors. We regularly engage with employees on
the importance of protecting the information and data of Wintrust, our customers and employees through monthly newsletters,
posters and ad-hoc communications. If specific threats are identified, management may communicate those threats directly to
employees for heightened awareness. Our cybersecurity program requires employees to review information security and
privacy policies annually, complete multiple cybersecurity training courses throughout the year, and participate in monthly
mock phishing campaigns. We also communicate with our customers about their role in enhancing cybersecurity.
Governance
In addition to our dedicated cybersecurity team, Wintrust’s approach to cybersecurity is supported by dedicated risk
management and internal audit teams. Our governance program maintains policies and standards, which are validated through
risk-based assessments, reviews and testing. The CSO reports at regular intervals to the Wintrust Enterprise Risk Management
Committee, the IT/IS Committee, and the Audit Committee of the Wintrust Board of Directors, as well as the full Wintrust
Board of Directors, as necessary. The Audit Committee performs an annual review of our cybersecurity program, which
includes a discussion of management’s actions to identify and detect threats and incident plans in the event of a response or
recovery situation. The Audit Committee receives an annual review that includes enhancements to the cybersecurity program
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and management’s progress on its cybersecurity strategic roadmap. In addition, the Board of Directors receives quarterly
cybersecurity reports, which include a review of key performance indicators, test results and related remediation, and an
overview of recent threats and how the Company is managing those threats. For more information on the material risks that
cybersecurity threats pose to us, please see our risk factor disclosures under Item 1A of this Annual Report on Form 10-K.
Notwithstanding the extensive approach we take to cybersecurity, Wintrust continues to face risks and accompanying threats
that could have a material adverse effect on the enterprise. We work to manage these risks and threats on a daily basis. To date,
we have not realized any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that
have, or are reasonably likely to, materially affect us, our business strategy, results of operation or financial condition. We
continue to invest in our cybersecurity program, the resiliency of our networks and work to enhance our internal controls.
Protection of Client Information
Data privacy and cybersecurity laws and regulations concerning the collection, storage, handling, use, disclosure, transfer,
protection and other processing of client information (including personal information) affect many aspects of the Company’s
business, and are continuing to evolve. Data privacy and cybersecurity are currently areas of considerable legislative and
regulatory attention, with new or modified laws, regulations, rules and standards frequently being adopted and potentially
subject to divergent interpretation or application in a manner that may create inconsistent or conflicting requirements for
businesses.
We are, or may in the future become, subject to a variety of complex federal, state and local laws, regulations, rules and
standards regarding data privacy and cybersecurity, including the privacy and information safeguarding provisions of the
Gramm-Leach-Bliley Act (“GLB Act”), the Fair Credit Reporting Act (“FCRA”) and the amendments adopted by the Fair and
Accurate Credit Transactions Act of 2003, as well as various state laws and regulations. The GLB Act requires a financial
institution to, among other things, disclose its privacy policy to certain customers and, in some circumstances, enables certain
customers to opt-out of certain sharing of the customers’ nonpublic personal information with nonaffiliated third parties. The
GLB Act also requires financial institutions to implement a comprehensive information security program that includes
administrative, technical and physical safeguards to ensure the security and confidentiality of customer information. In
accordance with these requirements, we and each of our banks and operating subsidiaries provide a written privacy notice to
each affected customer when the customer relationship begins and, to the extent required, on an annual basis. As described in
the privacy notice, we endeavor to protect the security of information (including personal information) about our customers,
educate our employees about the importance of protecting customer privacy, and allow affected customers to opt-out of certain
types of information sharing. We and our subsidiaries also require business partners with which we share information
(including personal information) to have adequate security safeguards and to follow the requirements of the GLB Act. The GLB
Act, as interpreted by the federal banking regulators, and state laws and regulations require us to take certain actions, including
providing notice under certain circumstances to affected customers, in the event that sensitive or personal customer information
is compromised. We and/or each of the banks and operating subsidiaries may need to amend our privacy policies and adapt our
internal procedures in the event that these legal requirements, or the regulators’ interpretation of them, change, or if new
requirements are added. Additionally, the federal banking regulators, as well as the SEC and related self-regulatory
organizations, regularly issue guidance regarding cybersecurity that is intended to enhance cyber risk management among
financial institutions.
Data privacy and cybersecurity also are areas of increasing state legislative focus. For example, the California Consumer
Privacy Act, as amended by the California Privacy Rights Act (collectively, the “CCPA”) applies to covered businesses that
conduct business in California and meet certain revenue or personal information collection thresholds. The CCPA contains
several exemptions, including that many, but not all, requirements of the CCPA are inapplicable to personal information that is
collected, processed, sold or disclosed pursuant to the GLB Act. The CCPA imposes obligations on covered companies, broadly
defines personal information, expands California residents’ rights with respect to personal information, and provides for civil
penalties for violations. The CCPA may be interpreted or applied in a manner inconsistent with our understanding, resulting in
further uncertainty and potentially requiring us to incur additional costs and expenses in an effort to comply with these
requirements. Similar laws have been adopted by other states where we do business, or may in the future do business. At least
four such laws (in Virginia, Colorado, Connecticut and Utah) took effect in 2023. In addition, laws in all 50 U.S. states
generally require businesses to provide notice under certain circumstances to consumers whose personal information has been
disclosed as a result of a data breach. Moreover, the federal government has recently considered, and is currently considering,
various proposals for more comprehensive data privacy and cybersecurity legislation, to which we may be subject if passed.
Like other lenders, the banks and several of our operating subsidiaries use credit bureau data in their underwriting activities.
Use of such data is regulated under the FCRA, and the FCRA also regulates, among other things, reporting information to credit
bureaus, prescreening individuals for credit offers, sharing of information (including personal information) between affiliates,
and using affiliate data for marketing purposes. Similar state laws and regulations may impose additional requirements on us,
the banks and our operating subsidiaries.
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Further, in the spring of 2022, the Federal Reserve, OCC, and FDIC adopted a new regulation that requires a banking
organization to notify its primary federal regulators as soon as possible and within 36 hours after identifying a “computer-
security incident” that the banking organization believes in good faith is reasonably likely to materially disrupt or degrade its
business or operations in a manner that would, among other things, jeopardize the viability of its operations, result in customers
being unable to access their deposit and other accounts, result in a material loss of revenue, profit or franchise value, or pose a
threat to the financial stability of the United States. The rule also imposes requirements on bank service providers to notify their
affected banking organization customers of certain computer-security incidents.
Violation of these laws, rules, regulations and standards may expose us to regulatory action and private litigation, including
claims for damages and penalties. For more information regarding the risks associated with data privacy and cybersecurity laws
and regulations, see “We are subject to complex and evolving laws, regulations, rules, standards and contractual obligations
regarding data privacy and cybersecurity, which could increase the cost of doing business, compliance risks and potential
liability” and “We face cybersecurity risks from cyber-attacks, information security breaches and other similar incidents that
could result in the disclosure of confidential and other information (including personal information), all of which could
adversely affect our business or reputation, and create significant legal and financial exposure” under Risk Factors in Item 1A.
ITEM 2. PROPERTIES
The Company’s executive offices are located at 9700 W. Higgins Road, Rosemont, Illinois as well as additional nearby
corporate office locations at 9701 W. Higgins Road, Rosemont, Illinois and 9801 W. Higgins Road, Rosemont, Illinois. The
Company also leases office locations and retail space at 231 S. LaSalle Street in downtown Chicago and at 731 N. Jackson
Street in downtown Milwaukee. The Company’s community banking segment operates through 205 banking facilities, the
majority of which are owned. The Company owns 184 automatic teller machines, the majority of which are housed at banking
locations. The banking facilities are located in communities throughout the Chicago metropolitan area, southern Wisconsin,
northwest Indiana, and Kent, Ottawa and northern Allegan counties in the state of Michigan, as well as three banking locations
in southwest Florida. Excess space in certain properties is leased to third parties. Wintrust Mortgage, also of our banking
segment, is headquartered in our corporate headquarters in Rosemont, Illinois and has 28 locations in 11 states, all of which are
leased, as well as office locations at several of our banks.
The Company’s wealth management subsidiaries has locations in downtown Chicago, Appleton, Wisconsin, Tampa, Florida,
and Stamford, Connecticut, all of which are leased, as well as office locations at several of our banks. FIRST Insurance Funding
and Wintrust Life Finance have one location in Northbrook, Illinois which is owned and locations in downtown Newark, New
Jersey, Long Island, New York and Newport Beach, California, all of which are leased. FIFC Canada has three locations in
Canada that are leased, located in Toronto, Ontario; Wainwright, Alberta; and Vancouver, British Columbia. Wintrust Asset
Finance is located in our corporate headquarters in Rosemont, Illinois and has locations in Frisco, Texas, and Irvine, California,
all of which are leased. Tricom has one location in Menomonee Falls, Wisconsin which is owned.
ITEM 3. LEGAL PROCEEDINGS
The information required by this item is set forth in Part II, Item 8, Financial Statements and Supplementary Data, under Note
(20) “Commitments and Contingencies”.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
46
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
The Company’s common stock is traded on The Nasdaq Global Select Stock Market under the symbol WTFC.
Performance Graph
The following performance graph compares the five-year percentage change in the Company’s cumulative shareholder return
on common stock compared with the cumulative total return on composites of (1) all Nasdaq Global Select Market stocks for
United States companies (broad market index) and (2) all Nasdaq Global Select Market bank stocks (peer group index).
Cumulative total return is computed by dividing the sum of the cumulative amount of dividends for the measurement period
and the difference between the Company’s share price at the end and the beginning of the measurement period by the share
price at the beginning of the measurement period. The Nasdaq Global Select Market for United States companies’ index
comprises all domestic common shares traded on the Nasdaq Global Select Market and the Nasdaq Small-Cap Market. The
Nasdaq Global Select Market bank stocks index comprises all banks traded on the Nasdaq Global Select Market and the Nasdaq
Small-Cap Market.
This graph and other information furnished in the section titled “Performance Graph” under this Part II, Item 5 of this Annual
Report on Form 10-K shall not be deemed to be “soliciting” materials or to be “filed” with the SEC or subject to Regulation
14A or 14C, or to the liabilities of Section 18 of the Exchange Act, as amended.
Period Ending
Index Value
Total Return Performance
Wintrust Financial Corporation
NASDAQ - Total US
NASDAQ - Bank Index
12/31/19
12/31/20
12/31/21
12/31/22
12/31/23
12/31/24
80
100
120
140
160
180
200
2019
2020
2021
2022
2023
2024
Wintrust Financial Corporation
100.00
88.23
133.32 125.94 141.06
193.02
Nasdaq — Total US
100.00 121.27
152.67 122.55 154.93
192.86
Nasdaq — Bank Index
100.00
87.20
119.74
99.06 109.02
146.80
47
Approximate Number of Equity Security Holders
As of February 6, 2025, there were approximately 2,069 shareholders of record of the Company’s common stock.
Dividends on Common Stock
The Company’s Board of Directors approved the first semi-annual dividend on the Company’s common stock in January 2000
and continued to approve a semi-annual dividend until quarterly dividends were approved starting in 2014. The payment of
dividends is subject to statutory restrictions and restrictions arising under the terms of the Company's Fixed-to-Floating Non-
Cumulative Perpetual Preferred Stock, Series D (the “Series D Preferred Stock”), the terms of the Company’s Fixed-Rate Reset
Non-Cumulative Perpetual Preferred Stock, Series E (the “Series E Preferred Stock”), the terms of the Company’s Trust
Preferred Securities offerings and under certain financial covenants in the Company’s revolving and term credit facilities.
Under the terms of these separate revolving and term credit facilities, the Company is prohibited from paying dividends on any
equity interests, including its common stock and preferred stock, if such payments would cause the Company to be in default
under its credit facilities or exceed a certain threshold.
The following is a summary of the cash dividends paid in 2024 and 2023:
Record Date
Payable Date
Dividend per Share
November 7, 2024
November 22, 2024
$0.45
August 8, 2024
August 22, 2024
$0.45
May 9, 2024
May 23, 2024
$0.45
February 8, 2024
February 22, 2024
$0.45
November 9, 2023
November 24, 2023
$0.40
August 10, 2023
August 24, 2023
$0.40
May 11, 2023
May 25, 2023
$0.40
February 9, 2023
February 23, 2023
$0.40
On January 23, 2025, Wintrust Financial Corporation announced that the Company’s Board of Directors approved a quarterly
cash dividend of $0.50 per share of outstanding common stock. The dividend was paid on February 20, 2025 to shareholders of
record as of February 6, 2025.
The final determination of timing, amount and payment of dividends is at the discretion of the Company’s Board of Directors
and will depend on the Company’s earnings, financial condition, capital requirements and other relevant factors. Because the
Company’s consolidated net income consists largely of net income of the banks and certain wealth management subsidiaries,
the Company’s ability to pay dividends generally depends upon its receipt of dividends from these entities. The Company’s and
the banks’ ability to pay dividends is subject to banking laws, regulations and policies. See “Supervision and Regulation -
Payment of Dividends and Share Repurchases” in Item 1 of this Annual Report on Form 10-K. During 2024, 2023 and 2022,
the banks and certain wealth management subsidiaries paid $475.0 million, $360.0 million and $52.0 million, respectively, in
dividends to the Company.
Reference is also made to Note (19) “Regulatory Matters” to the Consolidated Financial Statements, and “Liquidity and Capital
Resources” contained in Item 8 of this Annual Report on Form 10-K for a description of the restrictions on the ability of certain
subsidiaries to transfer funds to the Company in the form of dividends.
Issuer Purchases of Equity Securities
Our previously authorized share repurchase program permitted the repurchase of up to $125 million of our common stock. On
October 28, 2021, the Board of Directors of the Company authorized the repurchase of up to $200 million of the Company’s
outstanding shares of common stock. This authorization is incremental to the remaining authorization of approximately $23
million under the previous program, which the Board approved in 2019. The repurchase authorization does not have an
expiration date. No purchases of the Company’s common shares were made by or on behalf of the Company or any “affiliated
purchaser” as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended, during the twelve months
ended December 31, 2024.
ITEM 6. [Reserved]
48
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion highlights the significant factors affecting the operations and financial condition of Wintrust for the
three years ended December 31, 2024. The detailed financial discussion focuses on 2024 results compared to 2023. This
discussion and analysis should be read in conjunction with the Company’s Consolidated Financial Statements and Notes thereto
within this Annual Report on Form 10-K.
For a discussion of 2023 results compared to 2022, refer to Part II, Item 7, “Management's Discussion and Analysis of Financial
Condition and Results of Operations” of the Wintrust Annual Report on Form 10-K for the year ended December 31, 2023 filed
on February 28, 2024.
OPERATING SUMMARY
Wintrust’s key measures of profitability and balance sheet changes are shown in the following table:
Years Ended
December 31,
Percentage
(%) or
Basis Point (bp)
Change
Percentage
(%) or
Basis Point (bp)
Change
(Dollars in thousands, except per share data)
2024
2023
2022
2023 to 2024
2022 to 2023
Net income
$
695,045
$
622,626
$
509,682
12 %
22 %
Pre-tax income, excluding provision for credit losses (non-
GAAP) (1)
1,048,136
959,471
779,144
9
23
Net income per common share — Diluted
10.31
9.58
8.02
8
19
Net revenue (2)
2,450,860
2,271,970
1,956,415
8
16
Net interest income
1,962,535
1,837,864
1,495,362
7
23
Net interest margin
3.51 %
3.66 %
3.15 %
(15) bp
51 bp
Net interest margin - fully taxable-equivalent (non-GAAP) (1)
3.53
3.68
3.17
(15)
51
Net overhead ratio (3)
1.54
1.64
1.42
(10)
22
Non-interest income to average assets
0.82
0.81
0.91
1
(10)
Non-interest expense to average assets
2.36
2.45
2.33
(9)
12
Return on average assets
1.17
1.16
1.01
1
15
Return on average common equity
12.32
12.90
11.41
(58)
149
Return on average tangible common equity (non-GAAP) (1)
14.58
15.23
13.73
(65)
150
At end of period
Total assets
$ 64,879,668
$ 56,259,934
$ 52,949,649
15 %
6 %
Total loans, excluding loans held-for-sale
48,055,037
42,131,831
39,196,485
14
7
Total deposits
52,512,349
45,397,170
42,902,544
16
6
Total shareholders’ equity
6,344,297
5,399,526
4,796,838
17
13
Average loans to average deposits ratio
93.8 %
93.1 %
87.5 %
70 bp
560 bp
Book value per common share (1)
$
89.21
$
81.43
$
72.12
10 %
13 %
Tangible book value per common share (non-GAAP) (1)
75.39
70.33
61.00
7
15
Common equity to assets ratio (1)
9.1 %
8.9 %
8.3 %
20 bp
60 bp
Tangible common equity ratio (non-GAAP) (1)
7.8
7.7
7.1
10
60
Market price per common share
$
124.71
$
92.75
$
84.52
34 %
10 %
Allowance for loan and unfunded lending-related
commitment losses to total loans
0.91 %
1.01 %
0.91 %
(10) bp
10 bp
Non-performing loans to total loans
0.36
0.33
0.26
3
7
(1) See “Non-GAAP Financial Measures/Ratios” for additional information on this performance measure/ratio.
(2) Net revenue is net interest income plus non-interest income.
(3) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income and dividing by
that period’s total average assets. A lower ratio indicates a higher degree of efficiency.
Please refer to the Consolidated Results of Operations section later in this discussion for an analysis of the Company’s
operations for the past three years.
49
NON-GAAP FINANCIAL MEASURES/RATIOS
The accounting and reporting policies 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), taxable-equivalent net interest margin (including its individual components), the taxable-
equivalent efficiency ratio, tangible common equity ratio, tangible book value per common share, return on average tangible
common equity and pre-tax income, excluding provision for credit losses. Management believes that these measures and ratios
provide users of the Company’s financial information a more meaningful view of the performance of the Company’s 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 using tax rates effective as of the end of the period. 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 considers the tangible common equity ratio and tangible book value per
common share as useful measurements of the Company’s equity. The Company references the return on average tangible
common equity as a measurement of profitability. Management considers pre-tax income, excluding provision for credit losses
as a useful measurement of the Company’s core net income.
50
The following table presents 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 for the last three
years.
Years Ended December 31,
(Dollars and shares in thousands, except per share data)
2024
2023
2022
Reconciliation of Non-GAAP Net Interest Margin and Efficiency Ratio:
(A) Interest Income (GAAP)
$
3,477,597
$
2,893,114
$
1,747,443
Taxable-equivalent adjustment:
-Loans
9,377
7,827
3,619
-Liquidity management assets
2,501
2,249
1,977
-Other earning assets
12
10
5
(B) Interest Income (non-GAAP)
$
3,489,487
$
2,903,200
$
1,753,044
(C) Interest Expense (GAAP)
1,515,062
1,055,250
252,081
(D) Net Interest Income (GAAP) (A minus C)
1,962,535
1,837,864
1,495,362
(E) Net interest Income, fully taxable-equivalent (non-GAAP) (B minus C)
1,974,425
1,847,950
1,500,963
Net interest margin (GAAP)
3.51 %
3.66 %
3.15 %
Net interest margin, fully taxable-equivalent (non-GAAP)
3.53
3.68
3.17
(F) Non-interest income
$
488,325
$
434,106
$
461,053
(G) Losses on investment securities, net
(2,602)
1,525
(20,427)
(H) Non-interest expense
1,402,724
1,312,499
1,177,271
Efficiency ratio (H/(D+F-G))
57.17 %
57.81 %
59.55 %
Efficiency ratio (non-GAAP) (H/(E+F-G))
56.90
57.55
59.38
Reconciliation of Non-GAAP Tangible Common Equity Ratio:
Total shareholders’ equity (GAAP)
$
6,344,297
$
5,399,526
$
4,796,838
Less: Non-convertible preferred stock (GAAP)
(412,500)
(412,500)
(412,500)
Less: Acquisition-related intangible assets (GAAP)
(918,632)
(679,561)
(675,710)
(I) Total tangible common shareholders’ equity (non-GAAP)
$
5,013,165
$
4,307,465
$
3,708,628
(J) Total assets (GAAP)
$
64,879,668
$
56,259,934
$
52,949,649
Less: Acquisition-related intangible assets (GAAP)
(918,632)
(679,561)
(675,710)
(K) Total tangible assets (non-GAAP)
$
63,961,036
$
55,580,373
$
52,273,939
Common equity to assets ratio (GAAP) (L/J)
9.1 %
8.9 %
8.3 %
Tangible common equity ratio (non-GAAP) (I/K)
7.8
7.7
7.1
Reconciliation of Non-GAAP Tangible Book Value per Common Share:
Total shareholders’ equity (GAAP)
$
6,344,297
$
5,399,526
$
4,796,838
Less: Non-convertible preferred stock (GAAP)
(412,500)
(412,500)
(412,500)
(L) Total common equity
$
5,931,797
$
4,987,026
$
4,384,338
(M) Actual common shares outstanding
66,495
61,244
60,794
Book value per common share (L/M)
$
89.21
$
81.43
$
72.12
Tangible book value per common share (Non-GAAP) (I/M)
75.39
70.33
61.00
Reconciliation of Non-GAAP Return on Average Tangible Common Equity:
(N) Net income applicable to common shares
$
667,081
$
594,662
$
481,718
Add: Acquisition-related intangible asset amortization
12,095
5,498
6,116
Less: Tax effect of acquisition-related intangible asset amortization
(3,217)
(1,446)
(1,664)
After-tax acquisition-related intangible asset amortization
8,878
4,052
4,452
(O) Tangible net income applicable to common shares (non-GAAP)
$
675,959
$
598,714
$
486,170
Total average shareholders’ equity
$
5,826,940
$
5,023,153
$
4,634,224
Less: Average preferred stock
(412,500)
(412,500)
(412,500)
(P) Total average common shareholders’ equity
$
5,414,440
$
4,610,653
$
4,221,724
Less: Average acquisition-related intangible assets
(778,283)
(679,802)
(679,735)
(Q) Total average tangible common shareholders’ equity (non-GAAP)
$
4,636,157
$
3,930,851
$
3,541,989
Return on average common equity (N/P)
12.32 %
12.90 %
11.41 %
Return on average tangible common equity (non-GAAP) (O/Q)
14.58
15.23
13.73
Reconciliation of Non-GAAP Pre-Tax, Pre-Provision Income:
Income before taxes
$
947,089
$
845,081
$
700,555
Add: Provision for credit losses
101,047
114,390
78,589
Pre-tax income, excluding provision for credit losses (non-GAAP)
$
1,048,136
$
959,471
$
779,144
51
OVERVIEW AND STRATEGY
2024 Highlights
The Company recorded net income of $695.0 million for the year of 2024 compared to $622.6 million and $509.7 million for
the years of 2023 and 2022, respectively. The results for 2024 demonstrate increased net interest income primarily due to
increased growth in earning assets, as well as increased wealth management revenue and mortgage banking revenues as a result
of a favorable fair value adjustments of MSRs, net of servicing hedge, and an increase in loans originated for sale, partially
offset by payoffs, paydowns and repurchases of the existing portfolio.
The Company increased its loan portfolio from $42.1 billion at December 31, 2023 to $48.1 billion at December 31, 2024. This
increase was primarily due to growth in several portfolios, including the commercial, industrial and other, commercial real
estate, property and casualty premium finance receivables, and residential real estate portfolios. For more information regarding
changes in the Company’s loan portfolio, see “Analysis of Financial Condition – Interest Earning Assets” and Note (4) “Loans”
to the Consolidated Financial Statements presented under Item 8 of this Annual Report on Form 10-K.
The Company recorded net interest income of $2.0 billion in 2024 compared to $1.8 billion and $1.5 billion in 2023 and 2022,
respectively. The higher level of net interest income recorded in 2024 compared to 2023 resulted primarily from a $5.7 billion
increase in average earning assets partially offset by a 15 basis point decline in the net interest margin in 2024 (see “Net Interest
Margin” section later in this Item 7 for further detail).
Non-interest income totaled $488.3 million in 2024, increasing $54.2 million, or 12%, compared to 2023. The increase in non-
interest income in 2024 compared to 2023 was primarily attributable to a $20.0 million gain recognized in the first quarter of
2024 related to the sale of the Company’s Retirement Benefits Advisors (“RBA”) division within its wealth management
business and an increase in mortgage banking revenues as a result of favorable fair value adjustments of MSRs, net of servicing
hedge, and an increase in loans originated for sale, partially offset by payoffs, paydowns and repurchases of the existing
portfolio (see “Non-Interest Income” section later in this Item 7 for further detail).
Non-interest expense totaled $1.4 billion in 2024, increasing $90.2 million, or 7%, compared to 2023. The increase compared to
2023 was primarily attributable to an $69.1 million increase in salary and employee benefits expense and a $18.2 million
increase in software and equipment expense (see “Non-Interest Expense” section later in this Item 7 for further detail).
Management considers the maintenance of adequate liquidity to be important to the management of risk. Accordingly, during
2024, the Company continued its practice of maintaining appropriate funding capacity to provide the Company with adequate
liquidity for its ongoing operations. In this regard, the Company benefited from its strong deposit base, a liquid investment
portfolio and its access to funding from a variety of external funding sources. The Company had overnight liquid funds and
interest-bearing deposits with banks of $4.9 billion and $2.5 billion at December 31, 2024 and 2023, respectively.
Economic Environment
The economic environment in 2024 included the return of a more normal shaped yield curve that is no longer inverted as the
Federal Reserve Open Market Committee pivoted to reduce short term interest rates in the second half of 2024. Additionally,
overall economic forecasts improved resulting in favorable credit trends for banks. The Company has employed certain
strategies to manage net income in the current environment, including those discussed below.
Net Interest Income
The Company has leveraged its operating strengths to grow its earning assets base while maintaining a stable net interest
margin in 2024. In 2024, the Company's net interest margin decreased to 3.51% (3.53% on a fully tax-equivalent basis, non-
GAAP) as compared to 3.66% (3.68% on a fully tax-equivalent basis, non-GAAP) in 2023, primarily due to increased deposit
competition following bank failures in 2023. Significant growth in earning assets resulted in the Company’s net interest income
increasing by $124.7 million in 2024 compared to 2023. Based on contractual terms, approximately 74% of our current loan
balances are projected to reprice or mature in 2025. The magnitude of potential changes in net interest income in various
interest rate scenarios has continued to remain relatively neutral. As the current interest rate cycle progressed, management took
action to reposition its sensitivity to interest rates. To this end, management has executed various derivative instruments
including collars and receive-fixed swaps to hedge variable-rate loan exposures. The Company will continue to monitor current
and projected interest rates and may execute additional derivatives to mitigate potential fluctuations in the net interest margin in
future periods.
52
The Company has continued its practice of writing call options against certain investment securities to economically hedge the
securities positions and receive fee income to compensate for net interest margin compression. In 2024, the Company
recognized $10.2 million in fees on covered call options compared to $21.9 million in 2023.
The Company utilizes “back to back” interest rate derivative transactions, primarily interest rate swaps, to receive floating rate
interest payments related to customer loans. In these arrangements, the Company makes a floating rate loan to a borrower who
prefers to pay a fixed rate. To accommodate the risk management strategy of certain qualified borrowers, the Company enters a
swap with its borrower to effectively convert the borrower's variable rate loan to a fixed rate. However, in order to minimize
the Company's exposure on these transactions and continue to receive a floating rate, the Company simultaneously executes an
offsetting mirror-image swap with various third parties.
Non-Interest Income
The interest rate environment impacts the profitability and mix of the Company’s mortgage banking business which generated
revenues of $93.2 million in 2024 and $83.1 million in 2023, representing 4% of total net revenue in both 2024 and 2023.
Mortgage banking revenue is primarily comprised of gains on sales of mortgage loans originated for new home purchases as
well as mortgage refinancing. Mortgage revenue is also impacted by changes in the fair value of MSRs and EBOs guaranteed
by U.S. government agencies. Mortgage originations for sale totaled $2.6 billion and $2.0 billion in 2024 and 2023,
respectively. In 2024, approximately 75% of originations were mortgages associated with new home purchases, while 25% of
originations were related to refinancing of mortgages. In 2023, approximately 83% of originations were mortgages associated
with new home purchases, while 17% of originations were related to refinancing of mortgages.
Non-Interest Expense
Management believes expense management is important to enhance profitability amid increased competition. Cost control and
an efficient infrastructure should position the Company appropriately as it continues its growth strategy. Management continues
to be disciplined in its approach to growth and plans to leverage the Company's existing expense infrastructure to expand its
presence in existing and complimentary markets. Potentially impacting the cost control strategies discussed above, the
Company anticipates increased costs resulting from the regulatory environment in which we operate as well as wage inflation,
higher FDIC insurance assessments and continued investment in technology.
Credit Quality
The Company continues to actively address non-performing assets and remains disciplined in its approach to grow without
sacrificing asset quality.
In particular:
•
The Company’s 2024 provision for credit losses totaled $101.0 million compared to a provision of $114.4 million in 2023
and a provision of $78.6 million in 2022. The lower provision in 2024 was primarily the result of improvements in the
macroeconomic forecast, specifically the Company’s macroeconomic forecasts of key model inputs (most notably,
Commercial Real Estate Price Index and Baa corporate credit spreads) despite growth in the Company's loan portfolios.
Net charge-offs increased to $94.4 million in 2024 (of which $67.8 million related to commercial and commercial real
estate loans), compared to $45.5 million in 2023 (of which $27.8 million related to commercial and commercial real
estate loans) and $20.3 million in 2022 (of which $10.1 million related to commercial and commercial real estate loans).
•
The Company's allowance for loan and unfunded lending-related commitment losses increased to $436.6 million at
December 31, 2024, reflecting an increase of $9.3 million, or 2%, when compared to 2023. At December 31, 2024,
approximately $222.9 million, or 51%, of the allowance for loan and unfunded lending-related commitment losses was
associated with commercial real estate loans and an additional $175.8 million, or 40%, was associated with commercial
loans.
•
The Company has significant exposure to commercial real estate. At December 31, 2024, $12.9 billion, or 27%, of our
loan portfolio was commercial real estate, with approximately 68.5% located in our market area. The commercial real
estate loan portfolio was comprised of $2.4 billion in construction and development loans, and $10.5 billion in non-
construction loans. In analyzing the commercial real estate market, the Company does not rely upon the assessment of
broad market statistical data, in large part because the Company’s market area is diverse and covers many communities,
each of which is impacted differently by economic forces affecting the Company’s general market area. As such, the
extent of the decline in real estate valuations can vary meaningfully among the different types of commercial and other
53
real estate loans made by the Company. The Company uses its multi-chartered structure and local management
knowledge to analyze and manage the local market conditions at each of its banks.
•
Excluding early buy-out loans guaranteed by U.S. government agencies, total non-performing loans (loans on non-accrual
status and loans more than 90 days past due and still accruing interest) were $170.8 million (of which $21.0 million, or
12%, was related to commercial real estate) at December 31, 2024, an increase of $31.8 million compared to
December 31, 2023. Non-performing loans as a percentage of total loans were 0.36% at December 31, 2024 compared to
0.33% at December 31, 2023.
•
The Company’s other real estate owned increased by $9.8 million to $23.1 million during 2024, from $13.3 million at
December 31, 2023. The $23.1 million of other real estate owned as of December 31, 2024 was comprised entirely of
commercial real estate property.
During 2024, management continued its efforts to aggressively resolve problem loans through liquidation, rather than retention
of loans or real estate acquired as collateral through the foreclosure process. Management believes these actions will serve the
Company well in the future by providing some protection for the Company from further valuation deterioration and permitting
management to spend less time on resolution of problem loans and more time on growing the Company’s core business and the
evaluation of other opportunities.
The Company enters into residential mortgage loan sale agreements with investors in the normal course of business. The
Company’s practice is generally not to retain long-term fixed-rate mortgages on its balance sheet in order to mitigate interest
rate risk, and consequently sells most of such mortgages into the secondary market. These agreements provide recourse to
investors through certain representations concerning credit information, loan documentation, collateral and insurability.
Investors request the Company to indemnify them against losses on certain loans or to repurchase loans which the investors
believe do not comply with applicable representations. An increase in requests for loss indemnification can negatively impact
mortgage banking revenue as additional recourse expense. The liability for estimated losses on repurchase and indemnification
claims for residential mortgage loans previously sold to investors was approximately $188,000 at December 31, 2024 and
$152,000 at December 31, 2023.
Community Banking
Through our community banking franchise, we provide banking and financial services primarily to individuals, small to mid-
sized businesses, local governmental units and institutional clients residing primarily in the local areas we service. Profitability
of this franchise is primarily driven by our net interest income and margin, our funding mix and related costs, the measurement
of the allowance for credit losses and the impact of current and forecasted macroeconomic conditions on such measurement, the
level of non-performing loans and other real estate owned, the amount of mortgage banking revenue and our history of
acquiring banking operations and establishing de novo banking locations.
Net interest income and margin. The primary source of our revenue is net interest income. Net interest income is the difference
between interest income and fees on earning assets, such as loans and securities, and interest expense on liabilities to fund those
assets, including deposits and other borrowings. Net interest income can change significantly from period to period based on
general levels of interest rates, customer prepayment patterns, the mix of interest-earning assets and the mix of interest-bearing
and non-interest-bearing deposits and borrowings.
Funding mix and related costs. The most significant source of funding in community banking is core deposits, which are
comprised of non-interest-bearing deposits, non-brokered interest-bearing transaction accounts, savings deposits and domestic
time deposits. Our branch network is the principal source of core deposits, which generally carry lower interest rates than
wholesale funds of comparable maturities. Community banking profitability has been favorably impacted in recent years as the
Company funded strong loan growth with a more desirable blend of funds.
Measurement of the allowance for credit losses. The Company adopted CECL as of January 1, 2020, which requires the
estimate of expected credit losses over the entire life of financial assets measured at amortized cost. To measure lifetime
expected credit losses, the Company adjusts credit loss estimates for reasonable and supportable forecasts of macroeconomic
conditions. Such forecasts can significantly impact the profitability of our community banks as changing estimates of lifetime
losses from period to period can result in significant fluctuations in provision for credit losses during those periods. In 2024,
such fluctuations in provision for credit losses favorably impacted the profitability of our community banks, primarily as a
result of improvement in key variables (Baa credit spread and Commercial Real Estate Price Index) within forecasted
macroeconomic conditions.
54
Level of non-performing loans and other real estate owned. The level of non-performing loans and other real estate owned can
significantly impact our profitability as these loans and other real estate owned do not accrue any income, can be subject to
charge-offs and write-downs due to deteriorating market conditions and generally result in additional legal and collections
expenses. The Company’s credit quality measures have remained at historically low levels in recent years.
Mortgage banking revenue. Our community banking franchise is also influenced by the level of fees generated by the
origination of residential mortgages and the sale of such mortgages into the secondary market by Wintrust Mortgage. The
Company recognized an increase of $10.1 million in mortgage banking revenue in 2024 compared to 2023 as a result of higher
origination volumes and favorable fair value adjustments of MSRs in 2024 compared to 2023. Mortgage originations for sale
totaled $2.6 billion and $2.0 billion in 2024 and 2023, respectively, and was driven by growth in both purchase and refinance
originations as housing inventories have improved and interest rates pulled back from peak levels reached in 2023. Partially
offsetting the impact of higher originations and production margins was the change in fair value on EBOs guaranteed by U.S.
government agencies.
Expansion of banking operations. Our historical financial performance 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. Our financial performance generally reflects the improved profitability of our banking subsidiaries as they
mature, offset by the costs of establishing and acquiring banks and opening new branch facilities.
In determining the timing of the opening of additional branches of existing banks, and the acquisition of additional banks, we
consider many factors, particularly our perceived ability to obtain an adequate return on our invested capital driven largely by
the then existing cost of funds and lending margins, the general economic climate and the level of competition in a given
market.
In addition to the factors considered above, before we engage in expansion through de novo branches, we must first make a
determination that the expansion fulfills our objective of enhancing shareholder value through potential future earnings growth
and enhancement of the overall franchise value of the Company. Generally, we believe that, in normal market conditions,
expansion through de novo growth is a better long-term investment than acquiring banks because the cost to bring a de novo
location to profitability is generally substantially less than the premium paid for the acquisition of a healthy bank. Each
opportunity to expand is unique from a cost and benefit perspective. Both FDIC-assisted and non-FDIC-assisted acquisitions
offer a unique opportunity for the Company to expand into new and existing markets in a non-traditional manner. Potential
acquisitions are reviewed in a similar manner as a de novo branch opportunities, however, FDIC-assisted and non-FDIC-
assisted acquisitions have the ability to immediately enhance shareholder value. Factors including the valuation of our stock,
other economic market conditions, the size and scope of the particular expansion opportunity and competitive landscape all
influence the decision to expand via de novo growth or through acquisition. See discussion of acquisition activity in the “Recent
Transactions” section below.
Specialty Finance
Through our specialty finance segment, we offer financing of insurance premiums for businesses and individuals; lease
financing and other direct leasing opportunities; accounts receivable financing, value-added, out-sourced administrative
services; and other specialty finance businesses.
Financing of Commercial Insurance Premiums
The primary driver of profitability related to the financing of property and casualty insurance premiums is the net interest
spread that FIRST Insurance Funding and FIFC Canada can produce between the yields on the loans generated and the cost of
funds incurred by the business unit. The property and casualty insurance premium finance business is a competitive industry
and yields on loans are influenced by the market rates offered by our competitors. The majority of loans originated by FIRST
Insurance Funding 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. We fund these loans primarily through our deposits, the cost
of which is influenced by competitors in the retail banking markets in our market area.
Financing of Life Insurance Premiums
The primary driver of profitability related to the financing of life insurance premiums is the net interest spread that Wintrust
Life Finance can produce between the yields on the loans generated and the cost of funds allocated to the business unit.
Profitability of financing both commercial and life insurance premiums is also meaningfully impacted by leveraging
55
information technology systems, maintaining operational efficiency and increasing average loan size, each of which allows us
to expand our loan volume without significant capital investment.
Wealth Management
Through our wealth management segment, we offer a full range of wealth management services through four separate
subsidiaries (WPT, Wintrust Investments, GLA and CDEC): trust and investment services, tax-deferred like-kind exchange
services, asset management solutions, and securities brokerage services.
The primary drivers of profitability of the wealth management business can be associated with the level of commission received
related to the trading performed by the brokerage customers for their accounts and the amount of assets under management in
which the unit receives a management fee for advisory, administrative and custodial services. As such, revenues are influenced
by a rise or fall in the debt and equity markets and the resulting increase or decrease in the value of our client accounts on which
our fees are based. The commissions received by the brokerage unit are not as directly influenced by the directionality of the
debt and equity markets but rather the desire of our customers to engage in trading based on their particular situations and
outlooks of the market or particular stocks and bonds.
Financial Regulatory Reform
Our business is heavily regulated and supervised by federal agencies, state agencies and the federal & provincial governments
of Canada. Both the scope of the laws and regulations and the intensity of the supervision to which our business is subject have
increased in recent years, initially in response to the financial crisis, and more recently in light of other factors such as the
regional banking uncertainty in early 2023, technological updates, and market changes. Many of these changes have occurred as
a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) and its implementing
regulations, most of which are now in place. We expect that our business will remain subject to extensive regulation and
supervision.
The exact impact of the changing regulatory environment on our business and operations depends upon legislative or regulatory
changes to reform the financial regulatory framework and the actions of our competitors, customers, and other market
participants. Legislative and regulatory changes could have a significant impact on us by, for example, requiring us to change
our business practices; requiring us to meet more stringent capital, liquidity and leverage ratio requirements; limiting our ability
to pursue business opportunities; imposing additional costs and compliance obligations on us; limiting fees we can charge for
services; impacting the value of our assets; or otherwise adversely affecting our businesses and our earnings’ capabilities. We
have already experienced significant increases in compliance related costs in recent years, and we are now subject to more
stringent risk-based capital and leverage ratio requirements than we were prior to the adoption of the U.S. Basel III Rules. We
are also now subject to many mortgage-related rules promulgated by the CFPB that materially restructured the origination,
services and securitization of residential mortgages in the United States. As discussed under Supervision and Regulation in Item
1, the FDIC adopted a final rule, applicable to all insured depository institutions, to increase initial base deposit insurance
assessment rate schedules uniformly by 2 basis points, which began in the first quarterly assessment period of 2023. There was
no change to the initial base deposit insurance assessment rate in 2024. Additionally, there was a special assessment by the
FDIC that was levied on banks with an asset size above $5 billion to recoup losses from certain bank failures that occurred early
in 2023. Special assessment payments began in June of 2024. We will continue to monitor the impact that the implementation
of applicable rules, regulations and policies arising out of any legislative or regulatory changes may have on our organization.
For further discussion of the laws and regulations applicable to us and our subsidiary banks, please refer to “Business-
Supervision and Regulation.”
56
Recent Transactions
Business Combination
On August 1, 2024, the Company completed its previously announced acquisition of Macatawa, the parent company of
Macatawa Bank. In conjunction with the completed acquisition, the Company issued approximately 4.7 million shares of
common stock. Macatawa operates 26 full-service branches located throughout communities in Kent, Ottawa and northern
Allegan counties in the state of Michigan. Macatawa offers a full range of banking, retail and commercial lending, wealth
management and ecommerce services to individuals, businesses and governmental entities. As of August 1, 2024, Macatawa
had carrying values of approximately $2.7 billion in assets, $2.3 billion in deposits and $1.4 billion in loans. As of
December 31, 2024, the Company recorded preliminary goodwill of approximately $142.1 million on the purchase. The initial
purchase accounting for the acquisition, in accordance with GAAP, for this business combination is not finalized and is
therefore subject to change. See Note (7) “Business Combinations” to the Consolidated Financial Statements in Item 8 for a
further discussion of recent and other transactions.
Division Sale
In the first quarter of 2024, the Company sold its Retirement Benefits Advisors (“RBA”) division and recorded a gain of
approximately $20.0 million in other non-interest income from the sale.
Business Combination
On April 3, 2023, the Company completed its acquisition of Rothschild & Co Asset Management US Inc. and Rothschild & Co
Risk Based Investments LLC from Rothschild & Co North America Inc. As of the acquisition date, the Company acquired
approximately $12.6 million in net assets. As the transaction was determined to be a business combination, the Company
recorded goodwill of approximately $2.6 million on the purchase.
SUMMARY OF CRITICAL ACCOUNTING ESTIMATES
The Company’s Consolidated Financial Statements are prepared in accordance with GAAP in the United States, prevailing
practices of the banking industry, and the application of accounting policies of which are described in Note (1) “Summary of
Significant Accounting Policies” to the Consolidated Financial Statements in Item 8. These policies require numerous estimates
and strategic or economic assumptions, which may prove inaccurate or subject to variations. Changes in underlying factors,
assumptions or estimates could have material impact on the Company’s future financial condition and results of operations. At
December 31, 2024, management views critical accounting estimates to include the determination of the allowance for credit
losses, estimations of fair value, the valuations required for impairment testing of goodwill, the valuation and accounting for
derivative instruments and income taxes as the accounting areas that require the most subjective and complex judgments, and as
such could be most subject to revision as new information becomes available. These estimates were reviewed with the Audit
Committee of the Company’s Board of Directors and are discussed more fully below.
Allowance for Credit Losses, including the Allowance for Loan Losses, Allowance for Losses on Lending-Related Commitments
and Allowance for Held-to-Maturity Debt Securities
The allowance for credit losses represents management’s estimate of expected credit losses over the life of a financial asset
carried at amortized cost. Determining the amount of the allowance for credit losses is considered a critical accounting estimate
because it requires significant judgment and the use of estimates related to the fair value of the underlying collateral and amount
and timing of expected future cash flows on individually assessed financial assets, estimated credit losses on pools of loans with
similar risk characteristics, and consideration of reasonable and supportable forecasts of macroeconomic conditions, all of
which are susceptible to significant change. At December 31, 2024, the loan and held-to-maturity debt securities portfolios
represent 80% of total assets on the Company’s consolidated balance sheet. The Company also maintains an allowance for
lending-related commitments, specifically unfunded loan commitments and letters of credit, which relates to certain amounts
the Company is committed to lend (not unconditionally cancelable) but for which funds have not yet been disbursed.
Key macroeconomic variable data points that are significant inputs into our credit loss models for the commercial and
commercial real estate portfolios are the Baa corporate credit spread, as well as the Commercial Real Estate Pricing Index
(“CREPI”) specifically related to the commercial real estate portfolio. Holding all other inputs constant, the table below shows
the impact of changes in these key macroeconomic variable data points on the estimate of allowance for credit losses.
57
Impact to estimated allowance for credit losses from an increased or higher input value
Baa Credit Spread
Increases
CRE Price Index
Decreases
Holding all other inputs constant, the following table provides a sensitivity analysis for the commercial and commercial real
estate portfolios based on a 20 basis point change in Baa credit spreads from the assumption utilized in the estimate of that
portfolio’s allowance for credit losses at December 31, 2024:
Baa Credit Spread
Narrows
Widens
Commercial
Decreases estimate by 10%-15%
Increases estimate by 10%-15%
Commercial Real Estate:
Construction
Decreases estimate by 15%-20%
Increases estimate by 15%-20%
Non-Construction
Decreases estimate by 5%-6%
Increases estimate by 5%-6%
Holding all other inputs constant, the following table provides a sensitivity analysis for the commercial real estate construction
and non-construction portfolios based on a 10% change in CREPI from the assumption utilized in the estimate of that
portfolio’s allowance for credit losses at December 31, 2024:
CRE Price Index
Increases
Decreases
Commercial Real Estate:
Construction
Decreases estimate by 35%-40%
Increases estimate by 130%-135%
Non-Construction
Decreases estimate by 25%-30%
Increases estimate by 45%-50%
See Note (5) “Allowance for Credit Losses” to the Consolidated Financial Statements in Item 8 and the section titled “Loan
Portfolio and Asset Quality” in Item 7 for a description of the methodology used to determine the allowance for credit losses.
Estimations of Fair Value
A portion of the Company’s assets and liabilities are carried at fair value on the Consolidated Statements of Condition, with
changes in fair value recorded either through earnings or other comprehensive income in accordance with applicable accounting
principles generally accepted in the United States. These include the Company’s trading account securities, available-for-sale
debt securities, equity securities with a readily determinable fair value, derivatives, mortgage loans held-for-sale, certain loans
held-for-investment and mortgage servicing rights (“MSRs”). The determination of fair value is important for certain other
assets, including goodwill and other intangible assets, loans individually assessed when measuring a related allowance for credit
loss, and other real estate owned that are periodically evaluated for impairment using fair value estimates.
Fair value is generally defined as the amount at which an asset or liability could be exchanged in a current transaction between
willing, unrelated parties, other than in a forced or liquidation sale. Fair value is based on quoted market prices in an active
market, or if market prices are not available, is estimated using models employing techniques such as matrix pricing or
discounting expected cash flows. The significant assumptions used in the models, which include assumptions for interest rates,
discount rates, prepayments and credit losses, are independently verified against observable market data where possible. Where
observable market data is not available, the estimate of fair value becomes more subjective and involves a high degree of
judgment. In this circumstance, fair value is estimated based on management’s judgment regarding the value that market
participants would assign to the asset or liability. This valuation process takes into consideration factors such as market
illiquidity. Imprecision in estimating these factors can impact the amount recorded on the balance sheet for a particular asset or
liability with related impacts to earnings or other comprehensive income. See Note (22) “Fair Value of Assets and Liabilities”
to the Consolidated Financial Statements in Item 8 for a further discussion of fair value measurements.
Impairment Testing of Goodwill
The Company performs impairment testing of goodwill for each of its reporting units on an annual basis or more frequently
when events warrant, using a qualitative or quantitative approach. Using a qualitative approach, the Company reviews any
58
recent events or circumstances that would indicate it is more likely than not that the fair value of a reporting unit is less than its
carrying amount. These events and circumstances include the performance of the Company, the condition of the related industry
in which the reporting unit operates and general economic environment and other factors. If the Company determines it is not
more likely than not that there is impairment based on an evaluation of these events and circumstances, the Company may forgo
the quantitative approach.
Using a quantitative approach, the Company compares each reporting unit’s fair value to its carrying value. If the carrying value
of a reporting unit was determined to have been higher than its fair value, the Company would measure and recognize an
impairment loss for the amount by which the carrying value exceeds the fair value of the reporting unit. Any impairment loss
would not exceed the total amount of goodwill allocated to the reporting unit. Valuations are estimated in good faith by
management through the use of publicly available valuations of comparable entities and discounted cash flow models using
internal financial projections in the reporting unit’s business plan.
Under both a qualitative and quantitative approach, the goodwill impairment analysis requires management to make subjective
judgments in determining if an indicator of impairment has occurred. Events and factors that may significantly affect the
analysis include: a significant decline in the Company’s expected future cash flows, a substantial increase in the discount rate, a
sustained, significant decline in the Company’s stock price and market capitalization, a significant adverse change in legal
factors or in the business climate. Other factors might include changing competitive forces, customer behaviors and attrition,
revenue trends, cost structures, along with specific industry and market conditions. Adverse change in these factors could have
a significant impact on the recoverability of intangible assets and could have a material impact on the Company’s consolidated
financial statements.
As of December 31, 2024, the Company had three reporting units: Community Banking, Specialty Finance and Wealth
Management. Based on the Company’s 2024 annual goodwill impairment testing, which was performed quantitatively, the
Company concluded that the fair value of each reporting unit more likely than not exceeded the carrying amounts of the
respective reporting units.
Derivative Instruments
The Company utilizes derivative instruments to manage risks such as interest rate risk or market risk. The Company’s policy
prohibits using derivatives for speculative purposes.
Accounting for derivatives differs significantly depending on whether a derivative is designated as an accounting hedge, which
is a transaction intended to reduce a risk associated with specific assets or liabilities or future expected cash flows at the time it
is purchased. In order to qualify as an accounting hedge, a derivative must be designated as such at inception by management
and meet certain criteria. Management must also continue to evaluate whether the instrument effectively reduces the risk
associated with the hedged item. To determine if a derivative instrument continues to be an effective hedge, the Company must
make assumptions and judgments about the continued effectiveness of the hedging strategies and the nature and timing of
forecasted transactions. If the Company’s hedging strategy were to become ineffective, hedge accounting would no longer
apply and the reported results of operations or financial condition could be materially affected. See Note (21) “Derivative
Financial Instruments” to the Consolidated Financial Statements in Item 8 for a further discussion of derivative accounting.
Income Taxes
The Company is subject to the income tax laws of the United States, its states, Canada and other jurisdictions where it conducts
business. These laws are complex and subject to potentially different interpretations by the taxpayer and the various taxing
authorities. In determining the provision for income taxes, management must make judgments and estimates about the
application of these inherently complex laws, related regulations and case law. In the process of preparing the Company’s tax
returns, management attempts to make reasonable interpretations of the tax laws. These interpretations are subject to challenge
by the tax authorities upon audit or to reinterpretation based on management’s ongoing assessment of facts and evolving case
law. Management reviews its uncertain tax positions and recognition of the benefits of such positions on a regular basis.
On a quarterly basis, management assesses the reasonableness of its effective tax rate based upon its current best estimate of net
income and the applicable taxes expected for the full year. Deferred tax assets and liabilities are reassessed on a quarterly basis,
if business events or circumstances warrant. Additionally, any enactment of new tax rates requires the Company to re-measure
its existing deferred tax assets and liabilities to reflect the new tax rate, with such adjustments recognized in current year
earnings. See Note (17) “Income Taxes” to the Consolidated Financial Statements in Item 8 for a further discussion of income
taxes.
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CONSOLIDATED RESULTS OF OPERATIONS
The following discussion of Wintrust’s results of operations requires an understanding that a majority of the Company’s bank
subsidiaries have been started as de novo banks since December 1991. Wintrust has a strategy of continuing to build its
customer base and securing broad product penetration in each marketplace that it serves. The Company has expanded its
banking franchise from three banks with five offices in 1994 to 16 banks with 205 offices at the end of 2024. FIRST Insurance
Funding and Wintrust Life Finance have matured into separate divisions that generated, on a national basis, $18.1 billion in
total premium finance receivables in 2024 within the United States. FIFC Canada, acquired in 2012, originated $1.9 billion in
Canadian property and casualty premium finance receivables in 2024. The Company’s leasing business increased its portfolio
of assets, including direct financing leases, loans and equipment on operating leases, to $3.9 billion as of December 31, 2024. In
addition, the wealth management companies have been building a team of experienced professionals who are located within a
majority of the banks.
Earnings Summary
Net income for the year ended December 31, 2024, totaled $695.0 million, or $10.31 per diluted common share, compared to
$622.6 million, or $9.58 per diluted common share, in 2023, and $509.7 million, or $8.02 per diluted common share, in 2022.
During 2024, net income increased by $72.4 million and earnings per diluted common share increased by $0.73. Net interest
income increased in 2024 compared to 2023 primarily as a result of growth in average earning assets in 2024. Non-interest
income increased primarily due to a $20.0 million gain recognized in the first quarter of 2024 related to the sale of the
Company’s RBA division within its wealth management business and an increase in mortgage banking revenue in 2024 as
compared 2023 primarily as a result of favorable fair value adjustments of MSRs, net of servicing hedge, and an increase in
loans originated for sale, partially offset by unfavorable adjustments to the Company’s held-for-sale portfolio of EBOs
guaranteed by U.S. government agencies, which are held at fair value.
Other items impacting net income in 2024 compared to 2023 include increased salary and employee benefits expenses.
Net Interest Income
The primary source of the Company’s revenue is net interest income. Net interest income is the difference between interest
income and fees on earning assets, such as loans and securities, and interest expense on the liabilities to fund those assets,
including interest-bearing deposits and other borrowings. The amount of net interest income is affected by both changes in the
level of interest rates, and the amount and composition of earning assets and interest-bearing liabilities.
Net interest income in 2024 totaled $1.96 billion, up from $1.84 billion in 2023 and up from $1.50 billion in 2022, representing
an increase of $124.7 million, or 7%, in 2024 and an increase of $342.5 million, or 23%, in 2023. The table presented later in
this section, titled “Changes in Interest Income and Expense,” presents the dollar amount of changes in interest income and
expense, by major category, attributable to changes in the volume of the balance sheet category and changes in the rate earned
or paid with respect to that category of assets or liabilities for 2024 and 2023.
Average earning assets increased $5.7 billion, or 11%, in 2024 and $2.8 billion, or 6%, in 2023. Loans are the most significant
component of the earning asset base as they earn interest at a higher rate than the majority of other earning assets. Average
loans increased $4.4 billion, or 11%, in 2024 and $3.6 billion, or 10%, in 2023. Total average loans as a percentage of total
average earning assets were 80%, 80% and 77% in 2024, 2023 and 2022, respectively. The average yield on loans was 6.82% in
2024, 6.32% in 2023 and 4.12% in 2022, reflecting an increase of 50 basis points in 2024 and an increase of 220 basis points in
2023. The higher loan yields in 2024 compared to 2023 is primarily a result of new loan originations at higher market rates
along with existing loans repricing at higher levels in 2024 compared to 2023. The average yield on liquidity management
assets was 3.85% in 2024, 3.53% in 2023 and 2.15% in 2022, reflecting an increase of 32 basis points in 2024 and an increase
of 138 basis points in 2023. The higher yield in 2024 compared to 2023 is a result of investment security purchases at higher
market rates. The average rate paid on interest-bearing deposits, the largest component of the Company’s interest-bearing
liabilities, was 3.58% in 2024, 2.81% in 2023 and 0.62% in 2022, representing an increase of 77 basis points in 2024 and an
increase of 219 basis points in 2023. The higher level of interest-bearing deposits rates in 2024 compared to 2023 is primarily a
result of increased deposit competition driving interest rates higher in 2024 compared to 2023. As a result of the above, net
interest margin decreased to 3.51% (3.53% on a fully taxable-equivalent basis, non-GAAP) in 2024 compared to 3.66% (3.68%
on a fully taxable-equivalent basis, non-GAAP) in 2023.
Net interest income and net interest margin were also affected by amortization of valuation adjustments to earning assets and
interest-bearing liabilities of acquired businesses. Assets and liabilities of acquired businesses are required to be recognized at
their estimated fair value at the date of acquisition. These valuation adjustments represent the difference between the estimated
60
fair value and the carrying value of assets and liabilities acquired. These adjustments are amortized into interest income and
interest expense based upon the estimated remaining lives of the assets and liabilities acquired.
Average Balance Sheets, Interest Income and Expense, and Interest Rate Yields and Costs
The following table sets forth the average balances, the interest earned or paid thereon, and the effective interest rate, yield or
cost for each major category of interest-earning assets and interest-bearing liabilities for the years ended December 31, 2024,
2023 and 2022. The yields and costs include loan origination fees and certain direct origination costs that are considered
adjustments to yields. Interest income on non-accruing loans is reflected in the year that it is collected, to the extent it is not
applied to principal. Such amounts are not material to net interest income or the net change in net interest income in any year.
Non-accrual loans are included in the average balances. Net interest income and the related net interest margin have been
adjusted to reflect tax-exempt income, such as interest on municipal securities and loans, on a fully taxable-equivalent basis
(non-GAAP). This table should be referred to in conjunction with discussion of the financial condition and results of operations
of the Company.
61
Average Balance
for the years ended December 31,
Interest
for the years ended December 31,
Yield/Rate
for the years ended December 31,
(Dollars in thousands)
2024
2023
2022
2024
2023
2022
2024
2023
2022
Assets
Interest-bearing deposits with banks,
securities purchased under resale
agreements and cash equivalents (1)
$ 2,276,818
$ 1,608,835
$ 3,323,196
$ 115,618
$
80,783
$
48,350
5.08 %
5.02 %
1.45 %
Investment securities(2)
8,229,846
7,721,661
6,735,732
278,617
240,837
162,577
3.39
3.12
2.41
FHLB and FRB stock
255,018
215,699
150,223
20,060
14,912
8,622
7.87
6.91
5.74
Total liquidity management assets (3) (8)
$ 10,761,682
$ 9,546,195
$ 10,209,151
$ 414,295
$ 336,532
$ 219,549
3.85 %
3.53 %
2.15 %
Other earning assets (3) (4) (8)
17,113
17,129
22,391
1,025
1,098
955
5.99
6.41
4.27
Mortgage loans held-for-sale
348,278
294,421
496,088
21,436
16,791
21,195
6.15
5.70
4.27
Loans, net of unearned income (3) (5) (8)
44,765,445
40,324,472
36,684,528
3,052,731
2,548,779
1,511,345
6.82
6.32
4.12
Total earning assets (8)
$ 55,892,518
$ 50,182,217
$ 47,412,158
$ 3,489,487
$ 2,903,200
$ 1,753,044
6.24 %
5.79 %
3.70 %
Allowance for loan and investment
security losses
(368,342)
(308,724)
(256,690)
Cash and due from banks
455,708
468,298
473,025
Other assets
3,437,025
3,187,715
2,795,826
Total assets
$ 59,416,909
$ 53,529,506
$ 50,424,319
Liabilities and Shareholders’ Equity
Deposits — interest-bearing:
NOW and interest-bearing demand
deposits
$ 5,360,630
$ 5,626,277
$ 5,355,077
$ 130,281
$ 122,074
$
27,566
2.43 %
2.17 %
0.51 %
Wealth management deposits
1,458,404
1,730,523
2,827,497
40,324
42,782
29,750
2.76
2.47
1.05
Money market accounts
15,946,363
13,665,248
12,254,159
620,411
429,900
80,591
3.89
3.15
0.66
Savings accounts
6,015,085
5,299,205
4,014,166
161,429
109,666
11,234
2.68
2.07
0.28
Time deposits
8,753,848
5,952,537
3,812,148
391,197
202,048
26,061
4.47
3.39
0.68
Total interest-bearing deposits
$ 37,534,330
$ 32,273,790
$ 28,263,047
$ 1,343,642
$ 906,470
$ 175,202
3.58 %
2.81 %
0.62 %
FHLB advances
3,042,052
2,316,722
1,484,663
99,149
72,287
30,329
3.26
3.12
2.04
Other borrowings
603,868
630,115
485,820
34,480
35,280
14,294
5.71
5.60
2.94
Subordinated notes
360,802
437,604
437,139
18,117
22,023
22,004
5.02
5.03
5.03
Junior subordinated notes
253,566
253,566
253,566
19,674
19,190
10,252
7.76
7.57
4.10
Total interest-bearing liabilities
$ 41,794,618
$ 35,911,797
$ 30,924,235
$ 1,515,062
$ 1,055,250
$ 252,081
3.63 %
2.94 %
0.81 %
Non-interest-bearing deposits
10,212,088
11,018,596
13,667,879
Other liabilities
1,583,263
1,575,960
1,197,981
Equity
5,826,940
5,023,153
4,634,224
Total liabilities and shareholders’
equity
$ 59,416,909
$ 53,529,506
$ 50,424,319
Interest rate spread (6) (8)
2.61 %
2.85 %
2.89 %
Less: fully taxable-equivalent adjustment
$
(11,890) $
(10,086) $
(5,601)
(0.02)
(0.02)
(0.02)
Net free funds/contribution (7)
$ 14,097,900
$ 14,270,420
$ 16,487,923
0.92
0.83
0.28
Net interest income/margin (GAAP) (8)
$ 1,962,535
$ 1,837,864
$ 1,495,362
3.51 %
3.66 %
3.15 %
Fully taxable-equivalent adjustment
11,890
10,086
5,601
0.02
0.02
0.02
Net interest income/margin fully taxable-
equivalent (non-GAAP) (8)
$ 1,974,425
$ 1,847,950
$ 1,500,963
3.53 %
3.68 %
3.17 %
(1)
Includes interest-bearing deposits from banks and securities purchased under resale agreements with original maturities of greater than three
months. Cash equivalents include federal funds sold and securities purchased under resale agreements with original maturities of three months or
less.
(2)
Investment securities includes investment securities classified as available-for-sale and held-to-maturity, and equity securities with readily determinable fair
values. Equity securities without readily determinable fair values are included within other assets.
(3)
Interest income on tax-advantaged loans, trading securities and investment securities reflects a tax-equivalent adjustment based on a marginal
federal corporate tax rate in effect as of the applicable period. The total adjustments for the years ended December 31, 2024, 2023 and 2022 were
$11.9 million, $10.1 million and $5.6 million, respectively.
(4)
Other earning assets include brokerage customer receivables and trading account securities.
(5)
Loans, net of unearned income, include non-accrual loans.
(6)
Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.
(7)
Net free funds is the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net
interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.
(8)
See “Non-GAAP Financial Measures/Ratios” for additional information on this performance measure/ratio.
62
Changes In Interest Income and Expense
The following table shows the dollar amount of changes in interest income and expense, on a fully taxable-equivalent basis
(non-GAAP), by major categories of interest-earning assets and interest-bearing liabilities attributable to changes in volume or
rate for the periods indicated:
Years Ended December 31,
2024 Compared to 2023
2023 Compared to 2022
(In thousands)
Change
Due to
Rate
Change
Due to
Volume
Total
Change
Change
Due to
Rate
Change
Due to
Volume
Total
Change
Interest income, FTE basis (non-GAAP) (1)
Interest-bearing deposits with banks,
securities purchased under resale agreements
and cash equivalents (2)
$
968 $
33,867 $
34,835 $ 67,201 $ (34,768) $ 32,433
Investment securities
21,089
16,691
37,780
52,257
26,003
78,260
FHLB and FRB stock
2,208
2,940
5,148
2,005
4,285
6,290
Total liquidity management assets
$
24,265 $
53,498 $
77,763 $ 121,463 $ (4,480) $ 116,983
Other earning assets
(75)
2
(73)
403
(260)
143
Mortgage loans held-for-sale
1,387
3,258
4,645
5,792 (10,196)
(4,404)
Loans, net of unearned income
207,753
296,199
503,952 872,679 164,755 1,037,434
Total interest income
$ 233,330 $ 352,957 $
586,287 $ 1,000,337 $ 149,819 $ 1,150,156
Interest Expense
Deposits — interest-bearing:
NOW and interest-bearing demand deposits
$
13,940 $
(5,733) $
8,207 $ 93,047 $
1,461 $ 94,508
Wealth management deposits
4,664
(7,122)
(2,458)
28,052 (15,020)
13,032
Money market accounts
110,745
79,766
190,511 338,999
10,310 349,309
Savings accounts
35,290
16,473
51,763
93,740
4,692
98,432
Time deposits
76,076
113,073
189,149 154,153
21,834 175,987
Total interest expense — deposits
$ 240,715 $ 196,457 $
437,172 $ 707,991 $ 23,277 $ 731,268
FHLB advances
3,343
23,519
26,862
20,367
21,591
41,958
Other borrowings
657
(1,457)
(800)
14,983
6,003
20,986
Subordinated notes
(45)
(3,861)
(3,906)
—
19
19
Junior subordinated notes
432
52
484
8,938
—
8,938
Total interest expense
$ 245,102 $ 214,710 $
459,812 $ 752,279 $ 50,890 $ 803,169
Less: fully taxable-equivalent adjustment
(1,804)
—
(1,804)
(4,485)
—
(4,485)
Net interest income (GAAP) (1)
$ (13,576) $ 138,247 $
124,671 $ 243,573 $ 98,929 $ 342,502
Fully taxable-equivalent adjustment
1,804
—
1,804
4,485
—
4,485
Net interest income, FTE basis (non-
GAAP) (1)
$ (11,772) $ 138,247 $
126,475 $ 248,058 $ 98,929 $ 346,987
(1)
See “Non-GAAP Financial Measures/Ratios” for additional information on this performance measure/ratio.
(2)
Includes interest-bearing deposits from banks and securities purchased under resale agreements with original maturities of greater than three
months. Cash equivalents include federal funds sold and securities purchased under resale agreements with original maturities of three months or
less.
The changes in net interest income are created by changes in both interest rates and volumes. In the table above, volume
variances are computed using the change in volume multiplied by the previous year’s rate. Rate variances are computed using
the change in rate multiplied by the previous year’s volume. The change in interest due to both rate and volume has been
allocated between factors in proportion to the relationship of the absolute dollar amounts of the change in each. The change in
interest due to an additional day resulting from the 2024 leap year has been allocated entirely to the change due to volume.
63
Non-Interest Income
The following table presents non-interest income by category for 2024, 2023 and 2022:
Years ended December 31,
2024 compared to 2023
2023 compared to 2022
(Dollars in thousands)
2024
2023
2022
$ Change
% Change
$ Change
% Change
Brokerage
$
22,611 $
18,645 $
17,668 $
3,966
21 % $
977
6 %
Trust and asset management
123,616
111,962
108,946
11,654
10
3,016
3
Total wealth management(1)
$ 146,227 $ 130,607 $ 126,614 $ 15,620
12 % $
3,993
3 %
Mortgage banking
93,213
83,073
155,173
10,140
12
(72,100)
(46)
Service charges on deposit
accounts
65,651
55,250
58,574
10,401
19
(3,324)
(6)
(Losses) gains on investment
securities, net
(2,602)
1,525
(20,427)
(4,127)
NM
21,952
NM
Fees from covered call options
10,196
21,863
14,133 (11,667)
(53)
7,730
55
Trading gains, net
504
1,142
3,752
(638)
(56)
(2,610)
(70)
Operating lease income, net
58,710
53,298
55,510
5,412
10
(2,212)
(4)
Other:
Interest rate swap fees
12,494
12,251
12,185
243
2
66
1
BOLI
5,755
5,149
806
606
12
4,343
NM
Administrative services
5,336
5,599
6,713
(263)
(5)
(1,114)
(17)
Foreign currency
remeasurement (losses) gains
(1,302)
1,059
292
(2,361)
NM
767
NM
Changes in fair value on EBOs
and loans held-for-investment
812
1,521
4,240
(709)
(47)
(2,719)
(64)
Early pay-offs of capital leases
1,869
1,184
694
685
58
490
71
Miscellaneous
91,462
60,585
42,794
30,877
51
17,791
42
Total Other
$ 116,426 $
87,348 $
67,724 $ 29,078
33 % $ 19,624
29 %
Total Non-Interest Income
$ 488,325 $ 434,106 $ 461,053 $ 54,219
12 % $ (26,947)
(6) %
(1)
Wealth management revenue is comprised of the trust and asset management revenue of the WPT and GLA, the brokerage commissions, managed
money fees and insurance product commissions at Wintrust Investments and fees from tax-deferred like-kind exchange services provided by CDEC.
NM—Not Meaningful
Notable contributions to the change in non-interest income are as follows:
Mortgage banking revenue increased in 2024 as compared 2023 primarily as a result of a favorable fair value adjustments of
MSRs, net of servicing hedge, and a increase in loans originated for sale, partially offset by payoffs, paydowns and repurchases
of the existing portfolio. Mortgage banking revenue includes revenue from activities related to originating, selling and servicing
residential real estate loans for the secondary market. A main factor in the mortgage banking revenue recognized by the
Company is the volume of mortgage loans originated or purchased for sale. Mortgage loans originated for sale totaled $2.6
billion for the year ended 2024 compared to $2.0 billion for the same period of 2023. The increase in originations was primarily
driven by growth in both purchase and refinance originations as housing inventories have improved and interest rates pulled
back from peak levels reached in 2023. The percentage of origination volume from refinancing activities was 25% in 2024 as
compared to 17% in 2023.
The Company records MSRs at fair value on a recurring basis. During 2024, the fair value of the MSRs portfolio increased due
to a favorable fair value adjustment of $4.4 million and retained servicing rights which led to capitalization of $30.0 million,
partially offset by reduction in value of $23.0 million due to payoffs and paydowns of the existing portfolio. See Note (6)
“Mortgage Servicing Rights (“MSRs”)” to the Consolidated Financial Statements in Item 8 for a summary of the changes in the
carrying value of MSRs.
Mortgage banking revenue is also impacted by changes in the fair value of derivative contracts held to economically hedge a
portion of the fair value adjustments related to the Company’s MSRs portfolio. The change in fair value of the derivative
contracts held as an economic hedge during 2024 was a $7.9 million unfavorable valuation adjustment compared to a $1.3
64
million favorable valuation adjustment in 2023. The table below presents additional selected information regarding mortgage
banking for the respective periods.
Years Ended December 31,
(Dollars in thousands)
2024
2023
2022
Originations:
Retail originations
$
1,886,730
$
1,387,423
$
1,978,609
Veterans First originations
738,184
574,782
820,391
Total originations for sale (A)
$
2,624,914
$
1,962,205
$
2,799,000
Originations for investment
1,018,680
578,571
944,389
Total originations
$
3,643,594
$
2,540,776
$
3,743,389
As a percentage of originations for sale:
Retail originations
72 %
71 %
71 %
Veterans First originations
28
29
29
Purchases
75 %
83 %
71 %
Refinances
25
17
29
Production Margin:
Production revenue (B) (1)
$
48,531
$
41,031
$
44,153
Total originations for sale (A)
2,624,914
1,962,205
2,799,000
Add: Current period end mandatory interest rate lock commitments to fund
originations for sale (2)
103,946
119,624
113,303
Less: Prior period end mandatory interest rate lock commitments to fund
originations for sale (2)
119,624
113,303
353,509
Total mortgage production volume (C)
$
2,609,236
$
1,968,526
$
2,558,794
Production margin (B / C)
1.86 %
2.08 %
1.73 %
Mortgage servicing:
Loans serviced for others (D)
$
12,400,913
$
12,007,165
$
14,052,596
Mortgage servicing rights, at fair value (E)
203,788
192,456
230,225
Percentage of mortgage servicing rights to loans serviced for others (E/D)
1.64 %
1.60 %
1.64 %
Servicing income
42,624
43,563
44,080
MSR Fair Value Asset Activity
MSR - FV at Beginning of Period
$
192,456
$
230,225
$
147,571
MSR - current period rights sold
—
(30,170)
—
MSR - current period capitalization
29,969
28,610
46,221
MSR - collection of expected cash flows - paydowns
(6,009)
(6,284)
(6,213)
MSR - collection of expected cash flows - payoffs and repurchases
(17,017)
(10,776)
(17,418)
MSR - changes in fair value model assumptions
4,389
(19,149)
60,064
MSR Fair Value at end of period
$
203,788
$
192,456
$
230,225
Summary of Mortgage Banking Revenue
Operational:
Production revenue (1)
$
48,531
$
41,031
$
44,153
MSR - Current period capitalization
29,969
28,610
46,221
MSR - Collection of expected cash flows - paydowns
(6,009)
(6,284)
(6,213)
MSR - Collection of expected cash flows - pay offs
(17,017)
(10,776)
(17,418)
Servicing income
42,624
43,563
44,080
Other revenue
(97)
384
176
Total operational mortgage banking revenue
$
98,001
$
96,528
$
110,999
Fair Value:
MSR - changes in fair value model assumptions
$
4,389
$
(19,149)
$
60,064
(Loss) gain on derivative contract held as an economic hedge, net
(7,909)
1,280
(2,165)
Changes in FV on early buy-out loans guaranteed by US Govt (HFS)
(1,268)
4,414
(13,725)
Total fair value mortgage banking revenue
$
(4,788)
$
(13,455)
$
44,174
Total mortgage banking revenue
$
93,213
$
83,073
$
155,173
(1)
Production revenue represents revenue earned from the origination and subsequent sale of mortgages, including gains on loans sold and fees from
originations, changes in other related financial instruments carried at fair value, processing and other related activities, and excludes servicing fees,
changes in the fair value of servicing rights and changes to the mortgage recourse obligation and other non-production revenue.
(2)
Certain volume adjusted for the estimated pull-through rate of the loan, which represents the Company’s best estimate of the likelihood that a
committed loan will ultimately fund.
65
Wealth management revenue increased by $15.6 million in 2024 compared to the same period in 2023 primarily due to
increased asset management fees as a result of higher assets under management when compared to the same period in the prior
year. Trust and asset management fees are based primarily on the market value of the assets under management or
administration as well as volume of tax-deferred like-kind exchange services provided during a period.
Service charges on deposit accounts increased in 2024 compared to 2023 primarily as a result of higher fees associated with
commercial account analysis fees.
Net losses on investment securities in 2024 were primarily the result of unrealized losses on equity investments. The Company
did not recognize any credit-related write-downs or other-than-temporary impairment charges within its available-for-sale or
held-to-maturity investment securities portfolio in 2024 or 2023, respectively.
Fees from covered call option transactions totaled $10.2 million in 2024, compared to $21.9 million in 2023. The Company has
typically written call options with terms of less than three months against certain U.S. Treasury and agency securities held in its
portfolio for liquidity and other purposes. Management has effectively entered into these transactions with the goal of
economically hedging security positions and enhancing its overall return on its investment portfolio. These option transactions
are designed to increase the total return associated with holding certain investment securities and do not qualify as hedges
pursuant to accounting guidance. There were no outstanding call option contracts at December 31, 2024 and 2023.
Miscellaneous non-interest income includes loan servicing fees, income from other investments, service charges and other fees.
The increased miscellaneous other income for 2024 compared to 2023 was primarily due to a $20.0 million gain recognized in
the first quarter of 2024 related to the sale of the Company’s RBA division within its wealth management business as well as a
$4.6 million gain recognized in the second quarter of 2024 on the sale of premium finance receivables.
66
Non-Interest Expense
The following table presents non-interest expense by category for 2024, 2023 and 2022:
Years ended December 31,
2024 compared to 2023
2023 compared to 2022
(Dollars in thousands)
2024
2023
2022
$ Change
% Change
$ Change
% Change
Salaries and employee benefits:
Salaries
$ 465,972
$ 438,812
$ 382,181
$
27,160
6 % $ 56,631
15 %
Commissions and incentive compensation
215,519
182,101
197,873
33,418
18
(15,772)
(8)
Benefits
135,617
127,100
116,053
8,517
7
11,047
10
Total salaries and employee benefits
$ 817,108
$ 748,013
$ 696,107
$
69,095
9 % $ 51,906
7 %
Software and equipment
122,794
104,632
95,885
18,162
17
8,747
9
Operating lease equipment
42,298
42,363
38,008
(65)
(0)
4,355
11
Occupancy, net
79,213
77,068
70,965
2,145
3
6,103
9
Data processing
39,736
38,800
31,209
936
2
7,591
24
Advertising and marketing
61,812
65,075
59,418
(3,263)
(5)
5,657
10
Professional fees
40,637
34,758
33,088
5,879
17
1,670
5
Amortization of other acquisition-related
intangible assets
12,095
5,498
6,116
6,597
NM
(618)
(10)
FDIC insurance
40,962
36,728
28,639
4,234
12
8,089
28
FDIC insurance - special assessment
5,156
34,374
—
(29,218)
(85)
34,374
NM
OREO expenses, net
(408)
(1,528)
(140)
1,120
(73)
(1,388)
NM
Other:
Lending expenses, net of deferred
origination costs
21,856
21,096
20,576
760
4
520
3
Travel and entertainment
23,441
21,194
16,506
2,247
11
4,688
28
Miscellaneous
96,024
84,428
80,894
11,596
14
3,534
4
Total other
$ 141,321
$ 126,718
$ 117,976
$
14,603
12 % $
8,742
7 %
Total Non-Interest Expense
$ 1,402,724
$ 1,312,499
$ 1,177,271
$
90,225
7 % $ 135,228
11 %
NM—Not Meaningful
Notable contributions to the change in non-interest expense are as follows:
Salaries and employee benefits is the largest component of non-interest expense, accounting for 58% of the total in 2024
compared to 57% in 2023. Salaries and employee benefits increased in 2024 compared to 2023 primarily as a result of elevated
commissions from increased mortgage production as well as due to the increase in employees related to the growth of the
Company, including Macatawa.
Software and equipment expense increased in 2024 compared to 2023 primarily as a result of increased software licensing
expenses as the Company invests in enhancements to the digital customer experience, upgrades to infrastructure and
enhancements to information security capabilities. Software and equipment expense includes furniture, equipment and
computer software, depreciation and repairs and maintenance costs.
Amortization of other-acquisition related intangible assets increased in 2024 compared to 2023. The increase was primarily due
to the amortization of the core deposit intangible associated with the Macatawa acquisition.
Professional fees expense increased in 2024 compared to 2023 primarily as a result of increased fees on consulting services and
legal costs associated with the Macatawa acquisition. Professional fees include legal, audit, and tax fees, external loan
review costs, consulting arrangements and normal regulatory exam assessments.
FDIC insurance expense decreased in 2024 compared to 2023 primarily due to the Company’s recognition of approximately
$34.4 million in 2023 as compared to $5.2 million recognized in 2024 accrued for the estimated amount owed as a result of the
FDIC special assessment on uninsured deposits in response to certain bank failures occurring in 2023.
67
Miscellaneous non-interest expense includes ATM expenses, correspondent banking charges, directors’ fees, telephone,
postage, corporate insurance, dues and subscriptions, problem loan expenses and other miscellaneous operational losses and
costs. Miscellaneous non-interest expense increased in 2024 as compared to 2023 primarily as a result of various other
operational costs including an increase in interest payments made on collateral received for outstanding interest rate derivative
contracts and includes approximately $4.3 million in acquisition related expenses related to the acquisition of Macatawa.
Income Taxes
The Company recorded income tax expense of $252.0 million in 2024 compared to $222.5 million in 2023 and $190.9 million
2022. The effective tax rates were 26.6% in 2024, 26.3% in 2023 and 27.2% in 2022. The effective tax rate in 2024 is slightly
higher due to the Company’s income tax expense being impacted by an increase in non-deductible items in the most recent
comparable period. Income tax expense was also impacted by the tax effects related to the issuance of shares in share-based
compensation plans. These tax effects fluctuate based on the Company’s stock price and timing of employee stock option
exercises and vesting of other share based awards. The Company recorded a net excess tax benefit related to share-based
compensation of $4.5 million in 2024, a net excess tax benefit of $2.9 million 2023, and a net excess tax benefit of $2.9 million
in 2022, the majority of which were recognized in the first quarter in each year. Please refer to Note (17) “Income Taxes” to the
Consolidated Financial Statements in Item 8 for further discussion and analysis of the Company’s tax position, including a
reconciliation of the tax expense computed at the statutory tax rate to the Company’s actual tax expense.
Operating Segment Results
As described in Note (24) “Segment Information” to the Consolidated Financial Statements in Item 8, the Company’s
operations consist of three primary segments: community banking, specialty finance and wealth management. The Company’s
profitability is primarily dependent on the net interest income, provision for credit losses, non-interest income and operating
expenses of its community banking segment. For purposes of internal segment profitability, management allocates certain
intersegment and parent company balances. Management allocates a portion of revenues to the specialty finance segment
related to loans and leases originated by the specialty finance segment and sold or assigned to the community banking segment.
Similarly, for purposes of analyzing the contribution from the wealth management segment, management allocates a portion of
the net interest income earned by the community banking segment on deposit balances of customers of the wealth management
segment to the wealth management segment. Finally, expenses incurred at the Wintrust parent company are allocated to each
segment based on each segment’s risk-weighted assets.
The community banking segment’s net interest income for the year ended December 31, 2024 totaled $1.5 billion as compared
to $1.4 billion for the same period in 2023, an increase of $95.3 million, or 7%. The increase in 2024 compared to 2023 was
primarily attributable to increased interest and fees on loans due to loan growth and increased interest rates, partially offset by
increased interest expense on deposits. The community banking segment recorded a provision for credit losses of $88.3 million
in 2024 compared to $104.9 million in 2023. The provision for credit losses decreased in 2024 compared to 2023 primarily due
to improvements in the macroeconomic forecast partially offset by increased loan growth across portfolios including $15.5
million in Day 1 loan loss provision related to the acquisition of Macatawa. Non-interest income for the community banking
segment increased $16.8 million, or 6% in 2024 when compared to 2023. The increase in non-interest income in 2024
compared to 2023 was primarily the result of increased mortgage banking revenue due to favorable fair value adjustments of
MSRs, net of servicing hedge, and higher originations for sale. Non-interest expenses increased by $65.5 million in 2024
compared to 2023, primarily because of higher salary, commissions, and incentive compensation. The community banking
segment’s net income for the year ended December 31, 2024 totaled $458.7 million, an increase of $44.7 million, compared to
net income of $414.1 million in 2023. The increase was primarily attributable to higher net interest income and a decrease in the
provision for credit losses in 2024, as discussed above.
The specialty finance segment’s net interest income totaled $356.3 million for the year ended December 31, 2024, compared to
$329.0 million in the same period of 2023, an increase of $27.2 million, or 8%. The increase in 2024 compared to 2023 was
primarily attributable to loan growth and increased interest rates on the premium finance receivables portfolios. The specialty
finance segment’s provision for credit losses totaled $12.7 million in 2024 compared to $9.5 million in 2023. The increase was
due to higher net charge-offs experienced in 2024 and loan growth. The specialty finance segment’s non-interest income
increased to $119.3 million for the year ended December 31, 2024 compared to $106.0 million in 2023. Non-interest expenses
increased by $20.9 million in 2024 compared to 2023, primarily because of higher salary, commissions, and incentive
compensation as well as other segment expenses. For 2024, our commercial premium finance operations, life insurance
premium finance operations, leasing operations and accounts receivable finance operations accounted for 49%, 30%, 19% and
2%, respectively, of the total revenues of our specialty finance business. Net income of the specialty finance segment totaled
$186.3 million and $175.5 million for the years ended December 31, 2024 and 2023, respectively.
The wealth management segment reported net interest income of $30.0 million for 2024 and $32.7 million for 2023. Net
interest income for this segment is primarily comprised of an allocation of net interest income earned by the community
banking segment on non-interest bearing and interest-bearing wealth management customer account balances on deposit at the
68
banks. Wealth management customer account balances on deposit at the banks averaged $1.5 billion and $1.7 billion in 2024
and 2023, respectively. This segment recorded non-interest income of $168.1 million for 2024 as compared to $136.6 million
for 2023. The increase was primarily due to a $20.0 million gain recognized in the first quarter of 2024 related to the sale of the
Company’s RBA division within its wealth management business. Non-interest expenses increased by $6.4 million in 2024
compared to 2023, primarily because of higher commissions and incentive compensation. Distribution of wealth management
services through each bank continues to be a focus of the Company as the number of brokers in its banks continues to increase.
The Company is committed to growing the wealth management segment in order to better service its customers and create a
more diversified revenue stream. The wealth management segment reported net income of $50.0 million for 2024 compared to
$33.0 million for 2023.
Analysis of Financial Condition
Total assets were $64.9 billion at December 31, 2024, representing an increase of $8.6 billion, or 15%, when compared to
December 31, 2023. Total funding, which includes deposits, all notes and advances, including secured borrowings and junior
subordinated debentures, was $56.8 billion at December 31, 2024 and $49.1 billion at December 31, 2023. See Notes (3), (4),
and (10) through (14) to the Consolidated Financial Statements in Item 8 for additional period-end detail on the Company’s
interest-earning assets and funding liabilities.
Interest-Earning Assets
The following table sets forth, by category, the composition of average earning assets and the relative percentage of each
category to total average earning assets for the periods presented:
Years Ended December 31,
2024
2023
2022
(Dollars in thousands)
Balance
Percent
Balance
Percent
Balance
Percent
Mortgage loans held-for-sale
$
348,278
1 % $
294,421
1 % $
496,088
1 %
Loans:
Commercial
14,075,830
25
12,478,768
25
11,897,776
25
Commercial real estate
12,180,253
22
10,631,288
21
9,432,526
20
Home equity
384,095
1
337,836
1
327,506
1
Residential real estate
3,044,847
5
2,497,553
5
1,968,333
4
Premium finance receivables
14,992,245
27
14,295,504
28
12,993,677
27
Other loans
88,175
0
83,523
0
64,710
0
Total loans, net of unearned income (1)
$ 44,765,445
80 % $ 40,324,472
80 % $ 36,684,528
77 %
Liquidity management assets (2)
10,761,682
19
9,546,195
19
10,209,151
22
Other earning assets (3)
17,113
0
17,129
0
22,391
0
Total average earning assets
$ 55,892,518
100 % $ 50,182,217
100 % $ 47,412,158
100 %
Total average assets
$ 59,416,909
$ 53,529,506
$ 50,424,319
Total average earning assets to total average
assets
94 %
94 %
94 %
(1) Includes non-accrual loans.
(2) Liquidity management assets include investment securities, other securities, interest-earning deposits with banks,
federal funds sold and securities purchased under resale agreements.
(3) Other earning assets include brokerage customer receivables and trading account securities.
Total average earning assets increased $5.7 billion, or 11%, in 2024. Average earning assets comprised 94% of average total
assets in 2024 and 2023.
Mortgage loans held-for-sale. Average mortgage loans held-for-sale totaled $348.3 million in 2024, compared to $294.4
million in 2023. These balances represent mortgage loans awaiting subsequent sale in the secondary market with such sales
eliminating the interest-rate risk associated with these loans, as they are predominantly long-term fixed rate loans, and provides
a source of non-interest revenue. The increase in average balance from 2023 to 2024 was primarily due to higher mortgage
origination production balances.
69
Loans, net of unearned income. Average total loans, net of unearned income, totaled $44.8 billion and increased $4.4 billion, or
11%, in 2024. Average commercial loans totaled $14.1 billion in 2024, and increased $1.6 billion, or 13%, over the average
balance in 2023. Average commercial real estate loans totaled $12.2 billion in 2024, increasing $1.5 billion, or 15%, since
2023. Combined, these categories comprised 59% and 57% of the average loan portfolio in 2024 and 2023, respectively. The
growth realized in these categories for 2024 is primarily attributable to increased business development efforts during the
period.
Home equity loans averaged $384.1 million in 2024, and increased $46.3 million, or 14%, when compared to the average
balance in 2023. Unused commitments on home equity lines of credit totaled $999.1 million at December 31, 2024 and $845.6
million at December 31, 2023. The Company has been actively managing its home equity portfolio to ensure that diligent
pricing, appraisal and other underwriting activities continue to exist.
Residential real estate loans averaged $3.0 billion in 2024, and increased $547.3 million, or 22%, from the average balance in
2023. The increase in average balance was partially due to the Company originating, through Wintrust Mortgage, more loans
which were retained in the banks’ portfolios rather than being sold into the secondary market.
Average premium finance receivables totaled $15.0 billion in 2024, and accounted for 33% of the Company’s average total
loans. In 2024, average premium finance receivables increased $0.7 billion, or 5%, compared to 2023. The increase during 2024
was the result of effective marketing and customer servicing as well as continued originations within the portfolio due to
hardening insurance market conditions driving a higher average size of new property and casualty insurance premium finance
receivables. Approximately $20.0 billion of premium finance receivables were originated in 2024 compared to approximately
$17.9 billion in 2023.
Other loans represent a wide variety of personal and consumer loans to individuals. Consumer loans generally have shorter
terms and higher interest rates than mortgage loans but generally involve more credit risk due to the type and nature of the
collateral.
Liquidity Management Assets. Funds that are not utilized for loan originations are used to purchase investment securities and
short-term money market investments, to sell as federal funds and to maintain in interest-bearing deposits with banks. Average
liquidity management assets accounted for 19% and 19% of total average earning assets in 2024 and 2023, respectively.
Average liquidity management assets increased $1.2 billion in 2024 compared to 2023. The balances of these assets can
fluctuate based on management’s ongoing effort to manage liquidity and for asset liability management purposes. The
Company will continue to prudently evaluate and utilize liquidity sources as needed, including the management of availability
with the FHLB and FRB and utilization of the revolving credit facility with unaffiliated banks.
Other earning assets. Other earning assets include brokerage customer receivables and trading account securities. In the normal
course of business, Wintrust Investments activities involve the execution, settlement, and financing of various securities
transactions. Wintrust Investments customer securities activities are transacted on either a cash or margin basis. In margin
transactions, Wintrust Investments, under an agreement with the out-sourced securities firm, extends credit to its customer,
subject to various regulatory and internal margin requirements, collateralized by cash and securities in customer’s accounts. In
connection with these activities, Wintrust Investments executes and the out-sourced firm clears customer transactions relating to
the sale of securities not yet purchased, substantially all of which are transacted on a margin basis subject to individual
exchange regulations. Such transactions may expose Wintrust Investments to off-balance-sheet risk, particularly in volatile
trading markets, in the event margin requirements are not sufficient to fully cover losses that customers may incur. In the event
a customer fails to satisfy its obligations, Wintrust Investments under an agreement with the out-sourced securities firm, may be
required to purchase or sell financial instruments at prevailing market prices to fulfill the customer's obligations. Wintrust
Investments seeks to control the risks associated with its customers’ activities by requiring customers to maintain margin
collateral in compliance with various regulatory and internal guidelines. Wintrust Investments monitors required margin levels
daily and, pursuant to such guidelines, requires customers to deposit additional collateral or to reduce positions when necessary.
Investment Securities Portfolio
Supplemental Statistical Data
The following statistical information is provided in accordance with the requirements of Regulation S-K as promulgated by the
SEC. This data should be read in conjunction with the Company’s Consolidated Financial Statements and notes thereto, and
Management’s Discussion and Analysis which are contained in Item 8 and Item 7, respectively, of this Annual Report on Form
10-K.
70
The following table presents the amortized cost and fair value of the Company’s investment securities portfolios, by investment
category, as of December 31, 2024, and 2023:
(In thousands)
2024
2023
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Available-for-sale securities
U.S. Treasury
$
37,858
$
37,907
$
6,960
$
6,968
U.S. government agencies
50,000
44,945
50,000
45,124
Municipal
188,405
184,593
144,299
140,958
Corporate notes:
Financial issuers
83,997
80,169
83,996
75,540
Other
1,000
993
1,000
991
Mortgage-backed: (1)
Residential mortgage-backed securities
4,106,641
3,553,638
3,505,012
3,059,620
Commercial (multi-family) mortgage-backed securities
19,064
18,332
13,201
12,980
Collateralized mortgage obligations
238,574
220,905
175,346
160,734
Total available-for-sale securities
$
4,725,539
$
4,141,482
$
3,979,814
$
3,502,915
Held-to-maturity securities
U.S. government agencies
$
313,539
$
244,412
$
336,468
$
269,410
Municipal
161,016
155,969
172,933
169,720
Mortgage-backed: (1)
Residential mortgage-backed securities
2,864,927
2,259,913
3,042,828
2,495,485
Commercial (multi-family) mortgage-backed securities
6,364
6,112
6,415
6,231
Collateralized mortgage obligations
211,023
189,155
241,075
220,551
Corporate notes
56,851
54,989
57,544
54,071
Total held-to-maturity securities
$
3,613,720
$
2,910,550
$
3,857,263
$
3,215,468
Less: Allowance for credit losses
(457)
(347)
Held-to-maturity securities, net of allowance for credit losses
$
3,613,263
$
3,856,916
Equity securities with readily determinable fair value
$
220,758
$
215,412
$
143,312
$
139,268
(1)
None of our mortgage-backed securities are subprime.
71
Tables presenting the carrying amounts and gross unrealized gains and losses for securities at December 31, 2024 and 2023 are
included by reference to Note (3) “Investment Securities” to the Consolidated Financial Statements presented under Item 8 of
this Annual Report on Form 10-K.
The following table presents the carrying value of the investment securities portfolios as of December 31, 2024, by maturity
distribution. Carrying value represents the fair value of investment securities classified as available-for-sale, the amortized cost
of those classified as held-to-maturity and the fair value of equity securities with readily determinable fair values.
(In thousands)
Within 1
year
From 1 to
5 years
From 5 to
10 years
After 10
years
Mortgage-
backed
Equity
Securities
Total
Available-for-sale securities
U.S. Treasury
$
35,902
$
2,005
$
—
$
—
$
—
$
—
$
37,907
U.S. government agencies
—
—
37,225
7,720
—
—
44,945
Municipal
53,490
81,461
35,712
13,930
—
—
184,593
Corporate notes:
Financial issuers
—
68,866
11,303
—
—
—
80,169
Other
—
993
—
—
—
—
993
Mortgage-backed: (1)
Residential mortgage-backed
securities
—
—
—
—
3,553,638
—
3,553,638
Commercial (multi-family)
mortgage-backed securities
—
—
—
—
18,332
—
18,332
Collateralized mortgage obligations
—
—
—
—
220,905
—
220,905
Total available-for-sale securities
$
89,392
$ 153,325
$
84,240
$
21,650
$ 3,792,875
$
—
$ 4,141,482
Held-to-maturity securities
U.S. government agencies
$
—
$
1,719
$
—
$ 311,820
$
—
$
—
$ 313,539
Municipal
7,626
78,599
56,877
17,914
—
—
161,016
Corporate notes:
Financial issuers
11,303
30,579
14,969
—
—
—
56,851
Mortgage-backed: (1)
Residential mortgage-backed
securities
—
—
—
—
2,864,927
—
2,864,927
Commercial (multi-family)
mortgage-backed securities
—
—
—
—
6,364
—
6,364
Collateralized mortgage obligations
—
—
—
—
211,023
—
211,023
Total held-to-maturity securities
$
18,929
$ 110,897
$
71,846
$ 329,734
$ 3,082,314
$
—
$ 3,613,720
Less: Allowance for credit losses
(457)
Held-to-maturity securities, net of
allowance for credit losses
$ 3,613,263
Equity securities with readily
determinable fair value
$
—
$
—
$
—
$
—
$
—
$ 215,412
$ 215,412
(1) None of our mortgage-backed securities are subprime.
72
The weighted average yield calculated based on amortized cost for each range of maturities of securities, on a tax-equivalent
basis, is shown below as of December 31, 2024:
Within
1 year
From 1
to 5 years
From 5 to
10 years
After
10 years
Mortgage-
backed
Equity
Securities
Total
Available-for-sale securities
U.S. Treasury
5.16 %
4.96 %
— %
— %
— %
— %
5.15 %
U.S. government agencies
—
—
4.00
2.87
—
—
3.81
Municipal
4.29
4.44
4.67
4.80
—
—
4.47
Corporate notes:
Financial issuers
—
4.26
3.49
—
—
—
4.15
Other
—
4.40
—
—
—
—
4.40
Mortgage-backed: (1)
Residential mortgage-backed
securities
—
—
—
—
3.52
—
3.52
Commercial (multi-family)
mortgage-backed securities
—
—
—
—
5.57
—
5.57
Collateralized mortgage obligations
—
—
—
—
4.83
—
4.83
Total available-for-sale securities
4.64 %
4.37 %
4.22 %
4.11 %
3.61 %
0.32 %
3.68 %
Held-to-maturity securities
U.S. government agencies
— %
3.22 %
— %
2.84 %
— %
— %
2.84 %
Municipal
4.16
4.20
4.36
4.35
—
—
4.27
Corporate notes:
Financial issuers
1.89
1.05
6.37
—
—
—
2.62
Mortgage-backed: (1)
Residential mortgage-backed
securities
—
—
—
—
2.49
—
2.49
Commercial (multi-family)
mortgage-backed securities
—
—
—
—
3.94
—
3.94
Collateralized mortgage obligations
—
—
—
—
3.82
—
3.82
Total held-to-maturity securities
2.80 %
3.32 %
4.78 %
2.92 %
2.58 %
— %
2.68 %
Equity securities with readily
determinable fair value
— %
— %
— %
— %
— %
0.32 %
0.32 %
(1) None of our mortgage-backed securities are subprime.
73
Credit Quality
Commercial and Commercial Real Estate Loan Portfolios
Commercial and commercial real estate loans. Our commercial and commercial real estate loan portfolios are comprised
primarily of commercial real estate loans and lines of credit for working capital purposes. The table below sets forth
information regarding the types, amounts and performance of our loans within these portfolios as of December 31, 2024 and
2023:
As of December 31, 2024
As of December 31, 2023
Balance
% of
Total
Balance
Allowance
For Credit
Losses Allocation
Balance
% of
Total
Balance
Allowance
For Credit
Losses Allocation
Commercial:
Commercial, industrial and other
$ 15,574,551
54.7 %
$
175,837
$ 12,832,053
53.1 %
$
169,604
Commercial Real Estate:
Construction and development
$ 2,434,081
8.5 %
$
87,236
$ 2,084,041
8.6 %
$
94,081
Non-construction
10,469,863
36.8
135,620
9,260,123
38.3
129,772
Total commercial real estate
$ 12,903,944
45.3 %
$
222,856
$ 11,344,164
46.9 %
$
223,853
Total commercial and commercial real estate
$ 28,478,495
100.0 %
$
398,693
$ 24,176,217
100.0 %
$
393,457
Commercial real estate—collateral location by state:
Illinois
$ 7,043,810
54.6 %
$ 6,935,002
61.1 %
Wisconsin
918,976
7.1
878,888
7.7
Michigan
877,058
6.8
195,212
1.7
Total primary markets
$ 8,839,844
68.5 %
$ 8,009,102
70.5 %
Indiana
447,768
3.5
367,215
3.2
Florida
434,078
3.4
337,771
3.0
Colorado
249,070
1.9
267,369
2.4
California
260,037
2.0
251,509
2.2
Tennessee
290,391
2.3
199,751
1.8
Ohio
235,257
1.8
224,588
2.0
Texas
327,660
2.5
219,163
1.9
Other
1,819,839
14.1
1,467,696
13.0
Total
$ 12,903,944
100.0 %
$ 11,344,164
100.0 %
We make commercial loans for many purposes, including working capital lines, which are generally renewable annually and
supported by business assets, personal guarantees and additional collateral. Such loans may vary in size based on customer
need. Commercial business lending is generally considered to involve a slightly higher degree of risk than traditional consumer
bank lending. Primarily as a result of growth in the portfolio, our allowance for credit losses in our commercial loan portfolio
increased to $175.8 million as of December 31, 2024 compared to $169.6 million as of December 31, 2023.
Our commercial real estate loans are generally secured by a first mortgage lien and assignment of rents on the property. Since
most of our bank branches are located in the Chicago metropolitan area, southern Wisconsin, and west Michigan, 68.5% of our
commercial real estate loan portfolio is located in this region as of December 31, 2024. We have been able to effectively
manage our total non-performing commercial real estate loans. As of December 31, 2024, our allowance for credit losses
related to this portfolio was $222.9 million compared to $223.9 million as of December 31, 2023. The decrease in the allowance
for credit losses is primarily due to the impact on the Company’s loan loss modeling from improving macroeconomic
conditions and expectations between the two reporting dates primarily related to the Baa credit spread and the Commercial Real
Estate Price Index. The table below sets forth the commercial real estate loans by property type and owner vs. non-owner
occupied.
74
(In thousands)
December 31, 2024
December 31, 2023
Commercial
Real Estate:
Owner
Occupied
Non-Owner
Occupied
Total
% of
Total
Average
Size of
Loan
Owner
Occupied
Non-
Owner
Occupied
Total
% of
Total
Average
Size of
Loan
Residential
construction
$
2,252 $
46,365 $
48,617
0 % $
423 $
3,790 $ 54,852 $
58,642
0 % $
814
Commercial
construction
197,184
1,868,591 2,065,775
16
4,661
85,353 1,644,584 1,729,937 15
5,351
Land
5,554
314,135
319,689
2
1,827
9,663 285,799
295,462
3
1,813
Office
286,041
1,370,068 1,656,109
13
1,489 272,171 1,183,246 1,455,417 13
1,386
Industrial
956,972
1,671,604 2,628,576
21
1,786 840,056 1,295,820 2,135,876 19
1,602
Retail
349,183
1,025,472 1,374,655
11
1,156 316,527 1,020,990 1,337,517 12
1,176
Multi-family
95,855
3,029,650 3,125,505
24
1,315 111,005 2,704,906 2,815,911 25
1,199
Mixed use and
other
586,970
1,098,048 1,685,018
13
1,210 481,345 1,034,057 1,515,402 13
1,170
Total
commercial
real estate
$ 2,480,011 $ 10,423,933 $ 12,903,944 100 % $ 1,559 $ 2,119,910 $ 9,224,254 $ 11,344,164 100 %$ 1,470
The Company also participates in mortgage warehouse lending which is included above within commercial, industrial and
other, by providing interim funding to unaffiliated mortgage bankers to finance residential mortgages originated by such
bankers for sale into the secondary market. The Company’s loans to the mortgage bankers are secured by the business assets of
the mortgage companies as well as the specific mortgage loans funded by the Company, after they have been pre-approved for
purchase by third party end lenders. The Company may also provide interim financing for packages of mortgage loans on a
bulk basis in circumstances where the mortgage bankers desire to competitively bid on a number of mortgages for sale as a
package in the secondary market.
Home equity loans. The Company’s home equity loans and lines of credit are primarily originated by each of the bank
subsidiaries in their local markets where there is a strong understanding of the underlying real estate value. The Company’s
banks monitor and manage these loans, and conduct an automated review of all home equity lines of credit at least twice per
year. This review collects FICO and Bankruptcy scores for each home equity borrower and identifies situations where the credit
strength of the borrower is declining. When other specific events occur that may influence repayment, information such as tax
liens or judgments is collected. The bank subsidiaries use this information to manage loans that may be higher risk and to
determine whether to obtain additional credit information or updated property valuations. In a limited number of cases, the
Company may issue home equity credit together with first mortgage financing, and requests for such financing are evaluated on
a combined basis.
The rates we offer on new home equity lending are based on several factors, including appraisals and valuation due diligence, in
order to reflect inherent risk, and we place additional scrutiny on larger home equity requests. It is not our practice to advance
more than 85% of the appraised value of the underlying asset, which ratio we refer to as the loan-to-value ratio, or LTV ratio,
and a majority of the credit we previously extended, when issued, had an LTV ratio of less than 80%. Our home equity loan
portfolio has performed well in light of the ongoing volatility in the overall residential real estate market.
Residential real estate. The Company’s residential real estate portfolio includes one- to four-family adjustable rate mortgages,
construction loans to individuals and bridge financing loans for qualifying customers as well as certain long-term fixed rate
loans. As of December 31, 2024, our residential loan portfolio totaled $3.6 billion, or 8% of our total outstanding loans.
Our adjustable rate mortgages are often non-agency conforming. These loans generally provide for periodic and lifetime limits
on the interest rate adjustments among other features. Additionally, adjustable rate mortgages may pose a higher risk of
delinquency and default because they require borrowers to make larger payments when interest rates rise. As of December 31,
2024, excluding early buyout loans guaranteed by U.S. government agencies, $23.8 million of our residential real estate
mortgages, or 0.7% of our residential real estate loan portfolio were classified as nonaccrual, no balances were 90 or more days
past due and still accruing, $24.6 million were 30 to 89 days past due or 0.7% and $3.4 billion were current or 98.6%. We
believe that since our loan portfolio consists primarily of locally originated loans, and since the majority of our borrowers are
longer-term customers with lower LTV ratios, we face a relatively low risk of borrower default and delinquency.
75
Due to interest rate risk considerations, the Company generally sells in the secondary market loans originated with long-term
fixed rates, for which we receive fee income. The Company also selectively retains certain of these loans within the banks’ own
loan portfolios where they are non-agency conforming, or where the terms of the loans make them favorable to retain. A portion
of the loans we sold into the secondary market were sold with the servicing of those loans retained. The amount of loans
serviced for others as of December 31, 2024 and 2023 was $12.4 billion and $12.0 billion, respectively. All other mortgage
loans sold into the secondary market were sold without the retention of servicing rights.
The GNMA optional repurchase programs allow financial institutions acting as servicers to buyout individual delinquent
mortgage loans that meet certain criteria from the securitized loan pool for which the institution was the original transferor of
such loans. At the option of the servicer and without prior authorization from GNMA, the servicer may repurchase such
delinquent loans for an amount equal to the remaining principal balance of the loan. Under FASB ASC 860, “Transfers and
Servicing,” this early buyout option is considered a conditional option until the delinquency criteria are met, at which time the
option becomes unconditional. When the Company is deemed to have regained effective control over these loans under the
unconditional repurchase option and the expected benefit of the potential repurchase is more than trivial, the loans can no
longer be reported as sold and must be brought back onto the balance sheet as loans at fair value, regardless of whether the
Company intends to exercise the early buyout option. These rebooked loans are reported as loans held-for-investment, part of
the residential real estate portfolio, with the offsetting liability being reported in accrued interest payable and other liabilities.
When the early buyout option on these rebooked GNMA loans is exercised, the repurchased loans continue to be carried at fair
value. Additionally, such loans typically transfer to mortgage loans held-for-sale at the time of early buyout as the Company’s
intent is to cure and resell such loans subsequent to repurchase from GNMA. If such intent to cure and resell changes
subsequent to early buyout, the Company reclassifies such loans as held-for-investment. Early buyout loan classified as held-
for-investment totaled $156.8 million at December 31, 2024 compared to $150.6 million at December 31, 2023. Such loans
consist of both the rebooked GNMA loans and the early buyout exercised loans classified as held-for-investment discussed
above. Rebooked GNMA loans held-for-investment amounted to $115.0 million at December 31, 2024, compared to $92.8
million at December 31, 2023. The increase in balance from December 31, 2023 to December 31, 2024 was the result of a
slightly higher delinquency rate between periods and less frequent exercising of the early buyout option by the Company. As of
December 31, 2024, early buyout exercised loans held-for-investment totaled $41.8 million compared to $57.8 million as of
December 31, 2023. At December 31, 2024 and 2023, early buyout exercised mortgage loans held-for-sale remained relatively
stable and totaled $141.5 million and $137.2 million, respectively.
It is not the Company’s current practice to underwrite, and there are no plans to underwrite subprime, Alt A, no or little
documentation loans, or option ARM loans. As of December 31, 2024, none of our mortgage loans consist of interest-only
loans.
Premium finance receivables — property & casualty. FIRST Insurance Funding and FIFC Canada originated approximately
$18.4 billion in property and casualty insurance premium finance receivables during 2024 as compared to approximately $16.4
billion in 2023. FIRST Insurance Funding and FIFC Canada makes loans to finance insurance premiums related to property
and casualty insurance policies. The loans are indirectly originated by working through independent medium and large
insurance agents and brokers located throughout the United States and Canada. 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. The Company performs ongoing credit and
other reviews of the agents and brokers, and performs various internal audit steps to mitigate against the risk of fraud. 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.
Premium finance receivables — life insurance. Wintrust Life Finance originated approximately $1.7 billion in life insurance
premium finance receivables in 2024 as compared to $1.5 billion in 2023. The Company continues to experience a high level of
competition and pricing pressure within the current market. These loans are originated directly with the borrowers with
assistance from life insurance carriers, independent insurance agents, financial advisors and legal counsel. The life insurance
policy is the primary form of collateral. In addition, these loans often are secured with a letter of credit, marketable securities or
certificates of deposit. In some cases, Wintrust Life Finance may make a loan that has a partially unsecured position.
Consumer and other. Included in the consumer and other loan category is a wide variety of personal and consumer loans to
individuals. The Company originates consumer loans in order to provide a wider range of financial services to its customers.
Consumer loans generally have shorter terms and higher interest rates than mortgage loans but generally involve more credit
risk than mortgage loans due to the type and nature of the collateral.
76
Foreign. The Company had approximately $824.4 million of loans to businesses with operations in foreign countries as of
December 31, 2024 compared to $920.4 million at December 31, 2023. This balance as of December 31, 2024 consists of loans
originated by FIFC Canada.
Loan Concentrations
Loan concentrations are considered to exist when there are amounts loaned to multiple borrowers engaged in similar activities
which would cause them to be similarly impacted by economic or other conditions. The Company had limited concentrations of
loans exceeding 10% of total loans at December 31, 2024, including the specialty finance operating segment, which are
diversified throughout the United States and Canada.
77
Maturities and Sensitivities of Loans to Changes in Interest Rates
The following table classifies the loan portfolio at December 31, 2024 by date at which the loans reprice or mature, and the type
of rate exposure:
(In thousands)
One year or
less
From one to
five years
From five to
fifteen years
After fifteen
years
Total
Commercial
Fixed rate
$
419,733
$
3,452,609
$
2,001,276
$
26,914
$
5,900,532
Variable rate
9,673,183
836
—
—
9,674,019
Total commercial
$
10,092,916
$
3,453,445
$
2,001,276
$
26,914
$
15,574,551
Commercial real estate
Fixed rate
$
611,473
$
2,842,450
$
389,550
$
60,813
$
3,904,286
Variable rate
8,987,087
12,504
67
—
8,999,658
Total commercial real estate
$
9,598,560
$
2,854,954
$
389,617
$
60,813
$
12,903,944
Home equity
Fixed rate
$
9,106
$
1,138
$
—
$
20
$
10,264
Variable rate
434,764
—
—
—
434,764
Total home equity
$
443,870
$
1,138
$
—
$
20
$
445,028
Residential real estate
Fixed rate
$
12,157
$
4,594
$
76,321
$
1,093,139
$
1,186,211
Variable rate
90,855
584,092
1,751,607
—
2,426,554
Total residential real estate
$
103,012
$
588,686
$
1,827,928
$
1,093,139
$
3,612,765
Premium finance receivables - property & casualty
Fixed rate
$
7,179,672
$
92,370
$
—
$
—
$
7,272,042
Variable rate
—
—
—
—
—
Total premium finance receivables - property &
casualty
$
7,179,672
$
92,370
$
—
$
—
$
7,272,042
Premium finance receivables - life insurance
Fixed rate
$
271,528
$
318,470
$
4,000
$
4,451
$
598,449
Variable rate
7,548,696
—
—
—
7,548,696
Total premium finance receivables - life insurance
$
7,820,224
$
318,470
$
4,000
$
4,451
$
8,147,145
Consumer and other
Fixed rate
$
32,507
$
7,587
$
927
$
920
$
41,941
Variable rate
57,621
—
—
—
57,621
Total consumer and other
$
90,128
$
7,587
$
927
$
920
$
99,562
Total per category
Fixed rate
$
8,536,176
$
6,719,218
$
2,472,074
$
1,186,257
$
18,913,725
Variable rate
26,792,206
597,432
1,751,674
—
29,141,312
Total loans, net of unearned income
$
35,328,382
$
7,316,650
$
4,223,748
$
1,186,257
$
48,055,037
Less: Existing cash flow hedging derivatives (1)
(6,700,000)
Total loans repricing or maturing in one year
or less, adjusted for cash flow hedging activity $
28,628,382
Variable Rate Loan Pricing by Index:
SOFR tenors (2)
$
18,029,528
12- month CMT (3)
6,355,203
Prime
3,388,920
Fed Funds
886,812
Other U.S. Treasury tenors
190,576
Other
290,273
Total variable rate
$
29,141,312
(1)
Excludes cash flow hedges with future effective starting dates.
(2)
SOFR - Secured Overnight Financing Rate.
(3)
CMT - Constant Maturity Treasury Rate.SOFR - Secured Overnight Financing Rate
78
Past Due Loans and Non-Performing Assets
The Company’s ability to manage credit risk depends in large part on its ability to properly identify and manage problem loans.
To do so, the Company operates a credit risk rating system under which credit management personnel assign a credit risk rating
(1 to 10 rating, with higher scores indicating higher risk) to each loan at the time of origination and review loans on a regular
basis. For loans measured at amortized cost, these credit risk ratings are also an important aspect of the Company’s allowance
for credit losses measurement methodology. The credit risk rating structure and classifications are shown below:
1 Rating
—
Minimal Risk (Loss Potential — none or extremely low) (Superior asset quality, excellent
liquidity, minimal leverage)
2 Rating
—
Modest Risk (Loss Potential demonstrably low) (Very good asset quality and liquidity, strong
leverage capacity)
3 Rating
—
Average Risk (Loss Potential low but no longer refutable) (Mostly satisfactory asset quality and
liquidity, good leverage capacity)
4 Rating
—
Above Average Risk (Loss Potential variable, but some potential for deterioration) (Acceptable
asset quality, little excess liquidity, modest leverage capacity)
5 Rating
—
Management Attention Risk (Loss Potential moderate if corrective action not taken) (Generally
acceptable asset quality, somewhat strained liquidity, minimal leverage capacity, minimum for
most commercial real estate construction loans)
6 Rating
—
Special Mention (Loss Potential moderate if corrective action not taken) (Assets in this category
are currently protected, potentially weak, but not to the point of substandard classification)
7 Rating
—
Substandard Accrual (Loss Potential distinct possibility that the bank may sustain some loss, but
no discernible impairment) (Must have well defined weaknesses that jeopardize the liquidation of
the debt)
8 Rating
—
Substandard Non-accrual (Loss Potential well documented probability of loss, including potential
impairment) (Must have well defined weaknesses that jeopardize the liquidation of the debt)
9 Rating
—
Doubtful (Loss Potential extremely high) (These assets have all the weaknesses in those classified
“substandard” with the added characteristic that the weaknesses make collection or liquidation in
full, on the basis of current existing facts, conditions, and values, highly improbable)
10 Rating
—
Loss (fully charged-off) (Loans in this category are considered fully uncollectible.)
Generally, each loan officer is responsible for monitoring his or her loan portfolio, recommending a credit risk rating for each
loan in his or her portfolio and ensuring the credit risk ratings are appropriate. These credit risk ratings are then ratified by the
bank’s chief credit officer and/or concurrence credit officer. Credit risk ratings are determined by evaluating a number of
factors including: a borrower’s financial strength, cash flow coverage, collateral protection and guarantees. The Company
maintains an internal loan review function to independently review a portion of the loan portfolio to evaluate the
appropriateness of the management-assigned credit risk ratings. These ratings are subject to further review at each of our bank
subsidiaries by the applicable regulatory authority, including the FRB of Chicago and the OCC, and are also reviewed by our
internal loan review staff and our internal audit staff.
The Company’s Problem Loan Reporting system includes all such loans described above with credit risk ratings of 6 through 9.
This system is designed to provide an on-going detailed tracking mechanism for each problem loan. Once management
determines that a loan has deteriorated to a point where it has a credit risk rating of 6 or worse, the Company’s Managed Asset
Division performs an overall credit and collateral review. As part of this review, all underlying collateral is identified and the
valuation methodology is analyzed and tracked. As a result of this initial review by the Company’s Managed Asset Division,
the credit risk rating is reviewed and a portion of the outstanding loan balance may be deemed uncollectible and, as a result, no
longer share similar risk characteristics as its related pool. If that is the case, the individual loan is considered collateral
dependent and individually assessed for an allowance for credit loss. The Company’s individual assessment utilizes an
79
independent re-appraisal of the collateral (unless such a third-party evaluation is not possible due to the unique nature of the
collateral, such as a closely-held business or thinly traded securities). In the case of commercial real estate collateral, an
independent third party appraisal is ordered by the Company’s Real Estate Services Group to determine if there has been any
change in the underlying collateral value. These independent appraisals are reviewed by the Real Estate Services Group and
sometimes by independent third party valuation experts and may be adjusted depending upon market conditions.
Through the credit risk rating process, such loans are reviewed to determine if they are performing in accordance with the
original contractual terms. If the borrower has failed to comply with the original contractual terms, further action may be
required by the Company, including a downgrade in the credit risk rating, movement to non-accrual status or a charge-off. If the
Company determines that a loan amount or portion thereof is uncollectible, the loan’s credit risk rating is immediately
downgraded to an 8 or 9 and the uncollectible amount is charged-off. Any loan that has a partial charge-off continues to be
assigned a credit risk rating of an 8 or 9 for the duration of time that a balance remains outstanding. The Company undertakes a
thorough and ongoing analysis to determine if additional impairment and/or charge-offs are appropriate and to begin a workout
plan for the credit to minimize actual losses. In determining the appropriate charge-off for collateral-dependent loans, the
Company considers the results of appraisals for the associated collateral.
The Company’s approach to workout plans and restructuring loans is built on the credit-risk rating process. A modification of a
loan with an existing credit risk rating of 6 or worse or a modification of any other credit, which will result in a restructured
credit risk rating of 6 or worse must be reviewed for enhanced loan modifications that now must be disclosed in accordance
with ASU 2022-02. In that event, our Managed Assets Division conducts an overall credit and collateral review. A modification
of a loan is considered to be enhanced if both (1) the borrower is experiencing financial difficulty and (2) for economic or legal
reasons, the bank grants a concession to a borrower that it would not otherwise consider. The modification of a loan where the
credit risk rating is 5 or better both before and after such modification is not considered to be an enhanced modification. Based
on the Company’s credit risk rating system, it considers that borrowers whose credit risk rating is 5 or better are not
experiencing financial difficulties and therefore, are not considered enhanced modifications.
Loan modifications are assessed at the time of the modification and on a quarterly basis to measure an allowance for credit loss.
The carrying amount of the loan is compared to the expected payments to be received, discounted at the loan’s original rate, or
for collateral dependent loans, to the fair value of the collateral. Any shortfall is recorded as a reserve.
For loans that do not meet the criteria listed above for enhanced modifications, if based on current information and events, it is
probable that the Company will be unable to collect all amounts due to it according to the contractual terms of the loan
agreement, a loan is individually assessed for measuring the allowance for credit losses and if necessary, a reserve is
established. In determining the appropriate reserve for collateral-dependent loans, the Company considers the results of
appraisals for the associated collateral.
Non-Performing Assets (1)
The following table sets forth the Company’s non-performing assets, and for the years prior to 2023, the troubled debt
restructurings (“TDRs”) performing under the contractual terms of the loan agreement as of the dates shown. Reporting periods
prior to the adoption of ASU 2022-02 as of January 1, 2023 present information on loan modifications representing TDRs under
the prior accounting standards and related disclosure requirements. Prior to January 1, 2020, Purchased Credit-Impaired (“PCI”)
loans were aggregated into pools by common risk characteristics for accounting purposes, including recognition of interest
income on a pool basis. As a result of the implementation of CECL, beginning in the first quarter of 2020, PCI loans
transitioned to a classification of Purchased Credit Deteriorated (“PCD”) loans, which no longer maintains the prior pools and
related accounting concepts. Recognition of interest income on PCD loans is considered at the individual asset level following
the Company’s accrual policies, instead of based upon the entire pool of loans. Due to the adoption of CECL, the Company
included $22.6 million of PCD loans in total non-performing loans as of December 31, 2020.
80
(Dollars in thousands)
2024
2023
2022
2021
2020
Loans past due greater than 90 days and still accruing(2):
Commercial
$
104
$
98
$
462
$
15
$
307
Commercial real estate
—
—
—
—
—
Home equity
—
—
—
—
—
Residential real estate
—
—
—
—
—
Premium finance receivables – property & casualty
16,031
20,135
15,841
7,210
12,792
Premium finance receivables – life insurance
—
—
17,245
7
—
Consumer and other
47
54
49
137
264
Total loans past due greater than 90 days and still accruing
$
16,182
$
20,287
$
33,597
$
7,369
$
13,363
Non-accrual loans(3):
Commercial
$
73,490
$
38,940
$
35,579
$
20,399
$
21,743
Commercial real estate
21,042
35,459
6,387
21,746
46,107
Home equity
1,117
1,341
1,487
2,574
6,529
Residential real estate
23,762
15,391
10,171
16,440
26,071
Premium finance receivables – property & casualty
28,797
27,590
13,470
5,433
13,264
Premium finance receivables – life insurance
6,431
—
—
—
—
Consumer and other
2
22
6
477
436
Total non-accrual loans
$
154,641
$ 118,743
$
67,100
$
67,069
$
114,150
Total non-performing loans:
Commercial
$
73,594
$
39,038
$
36,041
$
20,414
$
22,050
Commercial real estate
21,042
35,459
6,387
21,746
46,107
Home equity
1,117
1,341
1,487
2,574
6,529
Residential real estate
23,762
15,391
10,171
16,440
26,071
Premium finance receivables – property & casualty
44,828
47,725
29,311
12,643
26,056
Premium finance receivables – life insurance
6,431
—
17,245
7
—
Consumer and other
49
76
55
614
700
Total non-performing loans
$
170,823
$ 139,030
$
100,697
$
74,438
$
127,513
Other real estate owned
23,116
13,309
8,589
1,959
9,711
Other real estate owned – from acquisitions
—
—
1,311
2,312
6,847
Total non-performing assets
$
193,939
$ 152,339
$
110,597
$
78,709
$
144,071
Accruing TDRs not included within non-performing assets
N/A
N/A
$
36,620
$
37,486
$
47,023
Total non-performing loans by category as a percent of its
own respective category’s period-end balance:
Commercial
0.47 %
0.30 %
0.29 %
0.17 %
0.18 %
Commercial real estate
0.16
0.31
0.06
0.24
0.54
Home equity
0.25
0.39
0.45
0.77
1.54
Residential real estate
0.66
0.56
0.43
1.00
2.07
Premium finance receivables – property & casualty
0.62
0.69
0.50
0.26
0.64
Premium finance receivables – life insurance
0.08
—
0.21
0.00
—
Consumer and other
0.05
0.13
0.11
2.54
2.17
Total non-performing loans
0.36 %
0.33 %
0.26 %
0.21 %
0.40 %
Total non-performing assets as a percentage of total assets
0.30 %
0.27 %
0.21 %
0.16 %
0.32 %
Total non-accrual loans as a percentage of total loans
0.32 %
0.28 %
0.17 %
0.19 %
0.36 %
Allowance for loan and unfunded lending-related
commitment losses as a percentage of
nonaccrual loans
282.33 %
359.82 %
532.71 %
446.78 %
332.82 %
(1)
Excludes early buy-out loans guaranteed by U.S. government agencies. Early buy-out loans are insured or guaranteed by the FHA or the U.S. Department of Veterans Affairs, subject to
indemnifications and insurance limits for certain loans.
(2)
As of December 31, 2022, no TDRs were past due greater than 90 days and still accruing interest. As of December 31, 2021, approximately $320,000 of TDRs were past due and greater than 90
days and still accruing interest. As of December 31, 2020, no TDRs were past due greater than 90 days and still accruing interest.
(3)
Non-accrual loans included TDRs totaling $4.5 million, $11.8 million, and $21.2 million as of December 31, 2022, 2021, and 2020, respectively.
At this time, management believes reserves are appropriate to absorb losses that are expected upon the ultimate resolution of
these credits. Management will continue to actively review and monitor its loan portfolios, in an effort to identify problem
credits in a timely manner.
Loan Portfolio Aging
As of December 31, 2024, $164.4 million, or 0.3% of all loans, excluding early buy-out loans guaranteed by U.S. government
agencies, were 60 to 89 days (or two payments) past due and $249.9 million, or 0.5%, were 30 to 59 days (or one payment) past
81
due. As of December 31, 2023, $69.9 million, or 0.2%, of all loans, excluding early buy-out loans guaranteed by U.S.
government agencies were 60 to 89 days (or two payments) past due and $227.6 million, or 0.5%, were 30 to 59 days (or one
payment) past due. Many of the commercial and commercial real estate loans shown as 60 to 89 days and 30 to 59 days past
due are included on the Company’s internal problem loan reporting system. Loans on this system are closely monitored by
management on a monthly basis.
The Company’s home equity and residential loan portfolios continue to exhibit low delinquency ratios. Home equity loans at
December 31, 2024 that are current with regard to the contractual terms of the loan agreement represent 99.0% of the total
home equity portfolio. Residential real estate loans, excluding early buy-out loans guaranteed by U.S. government agencies, at
December 31, 2024 that are current with regards to the contractual terms of the loan agreements comprise 98.6% of these
residential real estate loans outstanding.
For more information regarding delinquent loans as of December 31, 2024, see Note (5) “Allowance for Credit Losses” in Item
8.
Non-performing Loans Rollforward, excluding early buy-out loans guaranteed by U.S. government agencies
The table below presents a summary of non-performing loans for the periods presented:
(In thousands)
2024
2023
Balance at beginning of period
$
139,030
$
100,697
Additions from becoming non-performing in the respective period
150,784
123,377
Additions from assets acquired in the respective period
189
—
Return to performing status
(2,872)
(27,011)
Payments received
(41,060)
(34,063)
Transfers to OREO and other repossessed assets
(29,903)
(8,252)
Charge-offs, net
(49,306)
(16,346)
Net change for niche loans (1)
3,961
628
Balance at period end
$
170,823
$
139,030
(1) This includes activity for premium finance receivables and indirect consumer loans.
Allowance for Credit Losses
The allowance for credit losses, specifically the allowance for loan losses and the allowance for unfunded commitment losses,
represents management’s estimate of lifetime expected credit losses in the loan portfolio. The allowance for credit losses is
determined quarterly using a methodology that incorporates important risk characteristics of each loan, as described below
under “How We Determine the Allowance for Credit Losses” in this Item 7.
82
The following table sets forth the allocation of the allowance for credit losses by major loan type and the percentage of loans in
each category to total loans for the past five fiscal years:
December 31, 2024
December 31, 2023
December 31, 2022
December 31, 2021
December 31, 2020
(Dollars in
thousands)
Amount
% of
Loan Type to
Total
Loans
Amount
% of
Loan Type
to
Total
Loans
Amount
% of
Loan Type
to
Total
Loans
Amount
% of
Loan Type
to
Total
Loans
Amount
% of
Loan Type
to
Total
Loans
Allowance for credit losses allocation:
Commercial
$ 175,837
32 %
$ 169,604
30 %
$ 142,769
32 %
$ 119,307
34 %
$
94,212
37 %
Commercial
real-estate
222,856
27
223,853
27
184,352
25
144,583
26
243,603
26
Home equity
8,943
1
7,116
1
7,573
1
10,699
1
11,437
1
Residential
real-estate
10,335
8
13,133
7
11,585
6
8,782
5
12,459
5
Premium
finance
receivables –
property &
casualty
17,111
15
12,384
16
9,967
15
15,246
14
17,267
13
Premium
finance
receivables –
life insurance
709
17
685
19
704
21
613
20
510
18
Consumer and
other
812
0
490
0
498
0
423
0
422
0
Total
allowance for
credit losses
$ 436,603
100 %
$ 427,265
100 %
$ 357,448
100 %
$ 299,653
100 %
$ 379,910
100 %
Allowance category as a percent of total
allowance for credit losses:
Commercial
41 %
40 %
40 %
40 %
25 %
Commercial
real-estate
51
52
52
48
64
Home equity
2
2
2
4
3
Residential
real-estate
2
3
3
3
3
Premium
finance
receivables—
property &
casualty
4
3
3
5
5
Premium
finance
receivables—
life insurance
0
0
0
0
0
Consumer and
other
0
0
0
0
0
Total
allowance for
credit losses
100 %
100 %
100 %
100 %
100 %
Management determined that the allowance for credit losses was appropriate at December 31, 2024, and that the loan portfolio
is well diversified and well secured, without undue concentration in any specific risk area. While this process involves a high
degree of management judgment, the allowance for credit losses is based on a comprehensive, well documented, and
consistently applied analysis of the Company’s loan portfolio. This analysis takes into consideration all available information
existing as of the financial statement date, including environmental factors such as economic, industry, geographical and
political factors, when considered applicable. The relative level of allowance for credit losses is reviewed and compared to
industry peers. This review encompasses levels of total non-performing loans, portfolio mix, portfolio concentrations and
overall levels of net charge-off. Historical trending of both the Company’s results and the industry peers is also reviewed to
analyze comparative significance.
83
Allowance for Credit Losses
The following table summarizes the activity in our allowance for credit losses, specifically related to loans and unfunded
lending-related commitments, during the last five fiscal years.
(Dollars in thousands)
2024
2023
2022
2021
2020
Allowance for credit losses at beginning of year
$
427,265
$
357,448
$
299,653
$
379,910
$
158,461
Cumulative effect adjustment from the adoption of ASU 2016-13
—
741
—
—
47,344
Provision for credit losses - Other
85,390
114,531
78,179
(59,280)
214,235
Provision for credit losses - Day 1 on non-PCD assets acquired
during the period
15,547
—
—
—
—
Initial allowance for credit losses recognized on PCD assets
acquired during the period
3,004
—
—
470
—
Other adjustments
(207)
47
(108)
3
179
Charge-offs:
Commercial
48,864
15,713
14,141
20,801
18,293
Commercial real estate
22,127
15,228
1,379
3,293
15,960
Home equity
74
227
432
336
2,061
Residential real estate
175
192
471
1,082
891
Premium finance receivables – property & casualty
37,515
21,684
14,240
9,020
15,472
Premium finance receivables – life insurance
4
173
35
—
—
Consumer and other
587
595
1,081
487
528
Total charge-offs
$
109,346
$
53,812
$
31,779
$
35,019
$
53,205
Recoveries:
Commercial
2,853
2,651
4,748
2,559
5,092
Commercial real estate
323
460
701
1,304
1,835
Home equity
359
139
319
1,203
528
Residential real estate
15
21
77
330
184
Premium finance receivables – property & casualty
11,259
4,930
5,522
7,989
5,108
Premium finance receivables – life insurance
54
16
—
—
—
Consumer and other
87
93
136
184
149
Total recoveries
$
14,950
$
8,310
$
11,503
$
13,569
$
12,896
Net charge-offs
$
(94,396)
$
(45,502)
$
(20,276)
$
(21,450)
$
(40,309)
Allowance for credit losses at year end
$
436,603
$
427,265
$
357,448
$
299,653
$
379,910
Net charge-offs (recoveries) by category as a percentage of its
own respective category’s average:
Commercial
0.33 %
0.10 %
0.08 %
0.16 %
0.12 %
Commercial real estate
0.18
0.14
0.01
0.02
0.17
Home equity
(0.07)
0.03
0.03
(0.23)
0.33
Residential real estate
0.01
0.01
0.02
0.05
0.06
Premium finance receivables – property & casualty
0.37
0.27
0.16
0.02
0.27
Premium finance receivables – life insurance
(0.00)
0.00
0.00
—
—
Consumer and other
0.57
0.60
1.22
0.66
0.52
Total loans, net of unearned income
0.21 %
0.11 %
0.06 %
0.06 %
0.13 %
Year-end total loans
$ 48,055,037
$ 42,131,831
$ 39,196,485
$ 34,789,104
$ 32,079,273
Allowance for loan losses as a percentage of loans at end of year
0.76 %
0.82 %
0.69 %
0.71 %
1.00 %
Allowance for loan and unfunded loan-related commitment
losses as a percentage of loans at end of year
0.91
1.01
0.91
0.86
1.18
NM—Not Meaningful
The allowance for credit losses, as related to loans and lending-related commitments, is comprised of an allowance for loan
losses, which is determined with respect to loans that we have originated, and an allowance for unfunded commitment losses. A
separate allowance for held-to-maturity securities losses is measured related to such debt securities portfolio. Our allowance for
unfunded commitment losses is determined with respect to funds that we have committed to lend but for which funds have not
yet been disbursed and is computed using a methodology similar to that used to determine the allowance for loan losses. The
allowance for unfunded lending-related commitments totaled $72.6 million as of December 31, 2024 compared to $83.0 million
as of December 31, 2023.
84
Additions to the allowance for credit losses are charged to earnings through the provision for credit losses. Charge-offs
represent the amount of loans that have been determined to be uncollectible during a given period, and are deducted from the
allowance for credit losses, and recoveries represent the amount of collections received from loans that had previously been
charged off, and are credited to the allowance for credit losses. See Note (5) “Allowance for Credit Losses” of the Consolidated
Financial Statements presented under Item 8 of this report for further discussion of activity within the allowance for credit
losses during the period and the relationship with respective loan balances for each loan category and the total loan portfolio.
How We Determine the Allowance for Credit Losses
The allowance for credit losses is measured on a collective or pooled basis by loans that share similar risk characteristics. If the
loan no longer exhibits risk characteristics similar to that of a pool, typically due to credit deterioration of the related borrower,
the Company analyzes the loan for purposes of individually assessing a specific allowance for credit loss as part of the Problem
Loan Reporting system review. A separate reserve is collectively measured for loans continuing to share risk characteristics
and, as a result, remaining in the pools. See Note (5) “Allowance for Credit Losses” of the Consolidated Financial Statements
presented under Item 8 of this report for further discussion of the allowance for credit losses measurement process.
Collective Measurement
The allowance for credit losses is measured on a collective or pooled basis when similar risk characteristics exist, based upon
the segmentation discussed above. The Company utilizes modeling methodologies that estimate lifetime credit loss rates on
each pool. These methodologies include estimating the probability of default and loss given default on the commercial and
commercial real estate segments, using the weighted-average remaining maturity methodology for the residential real estate,
home equity, and consumer segments, and utilizing an assumption-based approach focusing on historical loss rates for the
premium finance receivables segments. Historical credit loss history is adjusted for reasonable and supportable forecasts
developed by the Company on a quantitative or qualitative basis and incorporates third party economic forecasts. Reasonable
and supportable forecasts consider the macroeconomic factors that are most relevant to evaluating and predicting expected
credit losses in the Company's financial assets. Currently, the Company utilizes an eight quarter forecast period using a single
macroeconomic scenario provided by a third party and reviewed within the Company's governance structure. For periods
beyond the ability to develop reasonable and supportable forecasts, the Company reverts to historical loss rates at an input level,
straight-line over a four quarter reversion period. Expected credit losses are measured over the contractual term of the financial
asset with consideration of expected prepayments. Expected extensions, renewals or modifications of the financial asset are
considered when the expected extension, renewal or modification is contained within the existing agreement and is not
unconditionally cancelable. The methodologies discussed above are applied to both current asset balances on the Company's
Consolidated Statements of Condition and off-balance sheet commitments (i.e. unfunded lending-related commitments).
Individual Assessment
Loans with a credit risk rating of a 6 through 9 are reviewed on a monthly basis to determine if (a) an amount is deemed
uncollectible (a charge-off) or (b) it is probable that the Company will be unable to collect amounts due in accordance with the
original contractual terms of the loan. In cases in which collectability is not probable, the loan is considered to no longer exhibit
shared risk characteristics of a pool and as a result, is individually assessed for allowance for credit losses measurement
purposes. If a loan is individually assessed credit risk rating 8 or 9, the carrying amount of the loan is compared to the expected
payments to be received, discounted at the loan’s original rate, or for foreclosure-probable and collateral dependent loans, to the
fair value of the collateral less the estimated cost to sell, when appropriate under accounting rules. Any shortfall is recorded as a
specific reserve within the allowance for credit losses.
Home Equity, Residential Real Estate and Consumer Loans
The determination of the appropriate allowance for credit losses for home equity, residential real estate and consumer loans
differs from the process used for commercial and commercial real estate loans. These portfolios utilize the weighted-average
remaining maturity (“WARM”) methodology. The WARM methodology is an assumption-based approach that utilizes
historical loss and prepayment information as the basis to estimate prepayment and credit adjusted contractual cash flows. The
Company considers a qualitative factor to adjust historical information for current conditions and reasonable and supportable
forecasts. The same credit risk rating system and Problem Loan Reporting systems are used. The only significant difference is
in how the credit risk ratings are assigned to these loans.
The home equity loan portfolio is reviewed on a loan by loan basis by analyzing current FICO and Bankruptcy scores of the
borrowers, line availability, recent line usage, approaching maturity, and the aging status of the loan. Certain of these factors, or
combination of these factors, may cause a portion of the credit risk ratings of home equity loans across all banks to be
85
downgraded. Similar to commercial and commercial real estate loans, once a home equity loan’s credit risk rating is
downgraded to a 6 through 9, the Company’s Managed Asset Division reviews and advises the subsidiary banks as to collateral
valuations and as to the ultimate resolution of the credits that deteriorate to a non-accrual status to minimize losses.
Residential real estate loans that are downgraded to a credit risk rating of 6 through 9 also enter the problem loan reporting
system and have the underlying collateral evaluated by the Managed Assets Division.
Premium Finance Receivables
The determination of the appropriate allowance for credit losses for premium finance receivables is an assumption-based
approach focusing on historical loss rates in the portfolio, adjusted qualitatively for current macroeconomic conditions and
reasonable and supportable forecasts.
Methodology in Assessing Impairment and Charge-off Amounts
In determining the amount of reserves or charge-offs associated with collateral dependent loans, the Company values the loan
generally by starting with a valuation obtained from an appraisal of the underlying collateral and then deducting estimated
selling costs, if appropriate, to arrive at a net appraised value. We obtain the appraisals of the underlying collateral typically on
an annual basis from one of a pre-approved list of independent, third party appraisal firms. Types of appraisal valuations
include “as-is,” “as-complete,” “as-stabilized,” bulk, fair market, liquidation and “retail sellout” values.
In many cases, the Company simultaneously values the underlying collateral by marketing the property to market participants
interested in purchasing properties of the same type. If the Company receives offers or indications of interest, we will analyze
the price and review market conditions to assess whether in light of such information the appraised value overstates the likely
price and that a lower price would be a better assessment of the market value of the property and would enable us to liquidate
the collateral. Additionally, the Company takes into account the strength of any guarantees or other credit enhancements, and
the ability of the borrower to provide value related to those guarantees in determining the ultimate charge-off or reserve
associated with any individually assessed loans. Accordingly, the Company may charge-off a loan to a value below the net
appraised value if it believes that an expeditious liquidation is desirable in the circumstance and it has legitimate offers or other
indications of interest to support a value that is less than the net appraised value. Alternatively, the Company may carry a loan
at a value that is in excess of the appraised value if the Company has a guarantee from a borrower or other credit enhancements
that the Company believes has realizable value. In evaluating the strength of any guarantee, the Company evaluates the
financial wherewithal of the guarantor, the guarantor’s reputation, and the guarantor’s willingness and desire to work with the
Company. The Company then conducts a review of the strength of a guarantee on a frequency established as the circumstances
and conditions of the borrower warrant.
In circumstances where the Company has received an appraisal but has no third party offers or indications of interest, the
Company may enlist the input of realtors in the local market as to the highest valuation that the realtor believes would result in a
liquidation of the property given a reasonable marketing period of approximately 90 days. To the extent that the realtors’
indication of market clearing price under such scenario is less than the net appraised valuation, the Company may take a charge-
off on the loan to a valuation that is less than the net appraised valuation.
The Company may also charge-off a loan below the net appraised valuation if the Company holds a junior mortgage position in
a piece of collateral whereby the risk to acquiring control of the property through the purchase of the senior mortgage position
is deemed to potentially increase the risk of loss upon liquidation due to the amount of time to ultimately market the property
and the volatile market conditions. In such cases, the Company may abandon its junior mortgage and charge-off the loan
balance in full.
In other cases, the Company may allow the borrower to conduct a “short sale,” which is a sale where the Company allows the
borrower to sell the property at a value less than the amount of the loan. Many times, it is possible for the current owner to
receive a better price than if the property is marketed by a financial institution which the market place perceives to have a
greater desire to liquidate the property at a lower price. To the extent that we allow a short sale at a price below the value
indicated by an appraisal, we may take a charge-off beyond the value that an appraisal would have indicated.
Other market conditions may require a reserve to bring the carrying value of the loan below the net appraised valuation such as
litigation surrounding the borrower and/or property securing our loan or other market conditions impacting the value of the
collateral.
86
Having determined the net value based on the factors such as those noted above and compared that value to the book value of
the loan, the Company arrives at a charge-off amount or a specific reserve included in the allowance for credit losses. In
summary, for collateral dependent loans, appraisals are used as the fair value starting point in the estimate of net value.
Estimated costs to sell are deducted from the appraised value, when appropriate under current accounting rules, to arrive at the
net appraised value. Although an external appraisal is the primary source of valuation utilized for charge-offs on collateral
dependent loans, alternative sources of valuation may become available between appraisal dates. As a result, we may utilize
values obtained through these alternative sources, which include purchase and sale agreements, legitimate indications of
interest, negotiated short sales, realtor price opinions, sale of the note or support from guarantors, as the basis for charge-offs.
These alternative sources of value are used only if deemed to be more representative of value based on updated information
regarding collateral resolution. In addition, if an appraisal is not deemed current, a discount to appraised value may be utilized.
Any adjustments from appraised value to net value are detailed and justified in an impairment analysis, which is reviewed and
approved by the Company’s Managed Assets Division.
Potential Problem Loans
Management believes that any loan where there are serious doubts as to the ability of such borrowers to comply with the
present loan repayment terms should be identified as a non-performing loan and should be included in the disclosure of “Past
Due Loans and Non-Performing Assets.” At end of the periods presented in this Annual Report on Form 10-K, the Company
had no potential problem loans not already identified as non-performing.
Other Real Estate Owned
In certain circumstances, the Company is required to take action against the real estate collateral of specific loans. The
Company uses foreclosure only as a last resort for dealing with borrowers experiencing financial hardships. The Company
employs extensive contact and restructuring procedures to attempt to find other solutions for our borrowers. The tables below
present a summary of other real estate owned and show the activity for the respective periods and the balance for each property
type:
Years Ended
(In thousands)
December 31,
December 31,
2024
2023
Balance at beginning of period
$
13,309 $
9,900
Disposal/resolved
(20,026)
(5,051)
Transfers in at fair value, less costs to sell
30,040
8,564
Fair value adjustments
(207)
(104)
Balance at period end
$
23,116 $
13,309
Period End
(In thousands)
December 31,
December 31,
2024
2023
Residential real estate
$
— $
720
Commercial real estate
23,116
12,589
Total
$
23,116 $
13,309
Deposits and Other Funding Sources
Total deposits at December 31, 2024, were $52.5 billion, increasing $7.1 billion, or 16%, compared to the $45.4 billion at
December 31, 2023. Average deposit balances in 2024 were $47.7 billion, reflecting an increase of $4.5 billion, or 10%,
compared to the average balances in 2023.
The increase in year end and average deposits in 2024 over 2023 is primarily attributable to the Company's increased marketing
efforts during 2024 to retain and attract deposits to support continued loan growth, the Macatawa acquisition, and due to the
diversity of our deposit base. The Company has experienced a change in the mix of deposits as non-interest bearing deposits
have migrated to interest-bearing products as rates paid on deposits increased substantially in 2023 due to the rise in market
87
rates. Average non-interest bearing deposits decreased $806.5 million, or 7% in 2024 compared to 2023, with period end
balances ending at 22% of total deposits at December 31, 2024, compared to 23% at December 31, 2023.
The following table presents the composition of average deposits by product category for each of the last three years:
Years Ended December 31,
2024
2023
2022
(Dollars in thousands)
Balance
Percent
Balance
Percent
Balance
Percent
Non-interest bearing deposits
$ 10,212,088
22 % $ 11,018,596
25 % $ 13,667,879
32 %
NOW and interest-bearing demand deposits
5,360,630
11
5,626,277
13
5,355,077
13
Wealth management deposits
1,458,404
3
1,730,523
4
2,827,497
7
Money market accounts
15,946,363
33
13,665,248
32
12,254,159
29
Savings accounts
6,015,085
13
5,299,205
12
4,014,166
10
Time certificates of deposit
8,753,848
18
5,952,537
14
3,812,148
9
Total average deposits
$ 47,746,418
100 % $ 43,292,386
100 % $ 41,930,926
100 %
Wealth management deposits are funds from the brokerage customers of Wintrust Investments, CDEC and trust and asset
management customers of the Company which have been placed into deposit accounts of the banks (“wealth management
deposits” in the table above). Wealth management deposits consist primarily of money market accounts. Consistent with
reasonable interest rate risk parameters, these funds have generally been invested in loan production of the banks as well as
other investments suitable for banks.
Other Funding Sources. Although deposits are the Company’s primary source of funding its interest-earning assets, the
Company’s ability to manage the types and terms of deposits is somewhat limited by customer preferences and market
competition. As a result, in addition to deposits and the issuance of equity securities and the retention of earnings, the Company
uses several other funding sources to support its growth. These sources include FHLB advances, notes payable, short-term
borrowings, secured borrowings, subordinated debt, and junior subordinated debentures. The Company evaluates the terms and
unique characteristics of each source, as well as its asset-liability management position, in determining the use of such funding
sources.
The Company had approximately $18.9 billion of uninsured deposits as of December 31, 2024, of which $3.1 billion were fully
collateralized deposits. The net position of $15.8 billion of uninsured and uncollateralized deposits represents approximately
30% of total deposits as of December 31, 2024. The Company had total liquidity sources, including cash and collateralized
funding sources of $17.4 billion or approximately 110% of uninsured and uncollateralized deposits as of December 31, 2024.
The following table sets forth, by category, the composition of the average balances of other funding sources for the periods
presented:
Years Ended December 31,
2024
2023
Average
Percent
Average
Percent
(Dollars in thousands)
Balance
of Total
Balance
of Total
Federal Home Loan Bank advances
$
3,042,052
72 % $
2,316,722
64 %
Subordinated notes
360,802
8
437,604
12
Notes payable
160,396
4
188,900
5
Short-term borrowings
6,207
0
17,893
0
Secured borrowings
379,194
9
363,173
10
Other
58,071
1
60,149
2
Total other borrowings
603,868
14
630,115
17
Junior subordinated debentures
253,566
6
253,566
7
Total other funding sources
$
4,260,288
100 % $
3,638,007
100 %
FHLB advances provide the banks with access to fixed-rate funds which are useful in mitigating interest rate risk and achieving
an acceptable interest rate spread on fixed-rate loans or securities. FHLB advances to the banks outstanding balance totaled $3.2
billion at December 31, 2024 and $2.3 billion at December 31, 2023. See Note (11) “Federal Home Loan Bank Advances” to
the Consolidated Financial Statements in Item 8 for further discussion of the terms of these advances.
88
Notes payable balances represent the balances on a credit agreement (as amended, the “Credit Agreement”) with certain
unaffiliated banks. The Credit Agreement consists of a $200.0 million term loan facility and a $100.0 million revolving credit
facility. As of December 31, 2024, the outstanding principal balance under the term loan facility was $142.8 million and there
was no outstanding principal balance under the revolving credit facility. See Note (13) “Other Borrowings” to the Consolidated
Financial Statements in Item 8 for further discussion of notes payable.
Short-term borrowings include securities sold under repurchase agreements of customer sweep accounts in connection with
master repurchase agreements at the banks. At December 31, 2024, the Company had none of these types of borrowings
compared to $13.4 million at December 31, 2023. This funding category typically fluctuates based on customer preferences and
daily liquidity needs of the banks, their customers and the banks’ operating subsidiaries. See Note (13) “Other Borrowings” to
the Consolidated Financial Statements in Item 8 for further discussion of these borrowings.
The balance of secured borrowings primarily represents a third party Canadian transaction (“Canadian Secured Borrowing”).
Under the Canadian Secured Borrowing, the Company, through its subsidiary, FIFC Canada, sells an undivided co-ownership
interest in all receivables owed to FIFC Canada to an unrelated third party in exchange for cash payments pursuant to a
receivables purchase agreement (“Receivables Purchase Agreement”). See Note (13) “Other Borrowings” to the Consolidated
Financial Statements in Item 8 for further discussion of these secured borrowings under this agreement. At December 31, 2024
and 2023, the translated balance of the secured borrowings totaled $323.2 million and $392.5 million, respectively.
Other borrowings at December 31, 2024 represent a fixed-rate promissory note (“Fixed-Rate Promissory Note”) issued by the
Company in June 2017. Amendments to the Fixed-Rate Promissory Note since issuance increased the principal amount to
$66.4 million, reduced the interest rate to 1.70%, and extended the maturity date to March 31, 2025. The Fixed-Rate
Promissory Note relates to and is secured by three office buildings owned by the Company. At December 31, 2024 and 2023,
the Fixed-Rate Promissory Note had a balance of $57.1 million and $59.2 million, respectively. See Note (13) “Other
Borrowings” to the Consolidated Financial Statements in Item 8 for further discussion of these borrowings.
At December 31, 2024 and 2023, subordinated notes totaled $298.3 million and $437.9 million, respectively. During 2019, the
Company issued $300.0 million of subordinated notes receiving $296.7 million in proceeds, net of underwriting discount. The
notes have a stated interest rate of 4.85% and mature in June 2029. In the second quarter of 2024, the Company repaid the
$140.0 million of subordinated notes issued in 2014. The notes had a stated interest rate of 5.00% and matured in June 2024.
See Note (12) “Subordinated Notes” to the Consolidated Financial Statements in Item 8 for further discussion.
The Company had $253.6 million of junior subordinated debentures outstanding as of December 31, 2024 and 2023. The
amounts reflected on the balance sheet represent the junior subordinated debentures issued to eleven trusts by the Company and
equal the amount of the preferred and common securities issued by the trusts. See Note (14) “Junior Subordinated Debentures”
to the Consolidated Financial Statements in Item 8 for further discussion of the Company’s junior subordinated debentures.
Starting in 2016, none of the junior subordinated debentures qualified as Tier 1 regulatory capital of the Company resulting in
$245.5 million of the junior subordinated debentures, net of common securities, being included in the Company’s Tier 2
regulatory capital as of December 31, 2024.
Shareholders’ Equity. Total shareholders’ equity was $6.3 billion at December 31, 2024, an increase of $944.8 million from the
December 31, 2023 total of $5.4 billion. The increase in 2024 was primarily a result of net income of $695.0 million, common
stock issued for acquisition of Macatawa Bank Corporation of $499.2 million, and $38.1 million of stock-based compensation
costs credited to surplus. These increases to total shareholders’ equity were partially offset by $78.9 million in net unrealized
losses from investment securities, net of tax, $43.3 million of net unrealized losses on cash flow hedges, net of tax, $24.9
million of foreign currency translation adjustments, net of tax, common stock dividends of $115.3 million and preferred stock
dividends of $28.0 million. See Note (23) “Shareholders’ Equity” to the Consolidated Financial Statements in Item 8 for further
discussion of shareholders’ equity.
Liquidity and Capital Resources
The Company and the banks are subject to various regulatory capital requirements established by the federal banking agencies
that take into account risk attributable to balance sheet and off-balance sheet activities. Failure to meet minimum capital
requirements can initiate certain mandatory — and possibly discretionary — actions by regulators, that if undertaken could
have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Company and the banks must meet specific capital guidelines that involve
quantitative measures of the Company’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory
accounting practices. The Federal Reserve’s capital guidelines require bank holding companies to maintain a minimum ratio of
89
qualifying total capital to risk-weighted assets of 8.0%, of which at least 4.5% must be in the form of Common Equity Tier 1
capital and 6.0% must be in the form of Tier 1 capital. The Federal Reserve also requires a minimum leverage ratio of Tier 1
capital to total assets of greater than 4.0%. In addition, the Federal Reserve continues to consider the Tier 1 leverage ratio in
evaluating proposals for expansion or new activities.
The following table summarizes the capital guidelines for bank holding companies as of December 31, 2024, as well as certain
ratios relating to the Company’s equity and assets as of December 31, 2024, 2023 and 2022:
Minimum
Ratios
Minimum
Ratio +
Capital
Conservation
Buffer (1)
Minimum
Well
Capitalized
Ratios (2)
2024
2023
2022
Tier 1 Leverage Ratio
4.0 %
N/A
N/A
9.4 %
9.3 %
8.8 %
Risk-based capital ratios:
Tier 1 Capital Ratio
6.0
8.50
6.0
10.7
10.3
10.0
Common equity tier 1 capital ratio
4.5
7.00
N/A
9.9
9.4
9.1
Total capital ratio
8.0
10.50
10.0
12.3
12.1
11.9
Other ratios:
Total average equity to total average assets
N/A
N/A
N/A
9.8
9.4
9.2
Dividend payout ratio
N/A
N/A
N/A
17.5
16.7
17.0
(1) Reflects the Capital Conservation Buffer of 2.50%.
(2) Reflects the well-capitalized standard applicable to the Company for purposes of the Federal Reserve’s Regulation Y.
The Federal Reserve has not yet revised the well-capitalized standard for BHCs to reflect the higher capital
requirements imposed under the U.S. Basel III Rule or to add Common Equity Tier 1 capital ratio and Tier 1 leverage
ratio requirements to this standard. As a result, the Common Equity Tier 1 capital ratio and Tier 1 leverage ratio are
denoted as “N/A” in this column. If the Federal Reserve were to apply the same or a very similar well-capitalized
standard to BHCs as the standard applicable to our subsidiary banks, the Company’s capital ratios as of
December 31, 2024 would exceed such revised well-capitalized standard.
As reflected in the table, each of the Company’s capital ratios at December 31, 2024, exceeded the well-capitalized ratios
established by the Federal Reserve. Management is committed to maintaining the Company’s capital levels above the “Well
Capitalized” levels established by the Federal Reserve for bank holding companies. Refer to Note (19) “Regulatory Matters” to
the Consolidated Financial Statements in Item 8 for further information on the capital positions of the banks.
The Company’s principal sources of funds at the holding company level are dividends from its subsidiaries, borrowings under
its loan agreement with unaffiliated banks and proceeds from the issuances of subordinated debt and additional equity. Refer to
Notes (12), (13), (14) and (23) to the Consolidated Financial Statements in Item 8 for further information on the Company’s
subordinated notes, other borrowings, junior subordinated debentures and shareholders’ equity, respectively.
In January, April, July and October of 2024 and 2023, Wintrust declared a quarterly cash dividend of $0.41 per share and
$429.69 per share of Series D and Series E Preferred Stock, respectively.
The payment of common stock dividends is also subject to statutory restrictions and restrictions arising under the terms of the
Company’s Series D and Series E Preferred Stock, the Company’s trust preferred securities offerings units and under certain
financial covenants in the Company’s revolving and term credit facilities. Under the terms of these separate revolving and term
credit facilities, the Company is prohibited from paying dividends on any equity interests, including its common stock and
preferred stock, if such payments would cause the Company to be in default under its facilities or exceed a certain threshold. In
January, April, July and October of 2024, Wintrust declared a quarterly cash dividend of $0.45 per common share. In January,
April, July and October of 2023, Wintrust declared a quarterly cash dividend of $0.40 per common share. In January of 2025,
Wintrust declared a quarterly cash dividend of $0.50 per common share. Taking into account the limitations on the payment of
dividends, the final determination of timing, amount and payment of dividends is at the discretion of the Company’s Board of
Directors and will depend on the Company’s earnings, financial condition, capital requirements and other relevant factors.
In June 2022, the Company sold a total of 3,450,000 shares of its common stock through a public offering. Net proceeds to the
Company totaled approximately $285.7 million, net of estimated issuance costs.
Banking laws impose restrictions upon the amount of dividends that can be paid to the holding company by the banks. Based on
these laws, the banks could, subject to minimum capital requirements, declare dividends to the Company without obtaining
90
regulatory approval in an amount not exceeding (a) undivided profits, and (b) the amount of net income reduced by dividends
paid for the current and prior two years.
Since the banks are required to maintain their capital at the well-capitalized level (due to the Company being a financial holding
company), funds otherwise available as dividends from the banks are limited to the amount that would not reduce any of the
banks’ capital ratios below the well-capitalized level. During 2024, 2023 and 2022, the subsidiaries paid $475.0 million, $360.0
million and $52.0 million, respectively, in dividends to the Company. As of December 31, 2024, subject to minimum capital
requirements at the banks, approximately $932.5 million was available as dividends from the banks without prior regulatory
approval and without compromising the banks’ well-capitalized positions.
Liquidity management at the banks involves planning to meet anticipated funding needs at a reasonable cost. Liquidity
management is guided by policies, formulated and monitored by the Company’s senior management and each Bank’s asset/
liability committee, which take into account the marketability of assets, the sources and stability of funding and the level of
unfunded commitments. The banks’ principal sources of funds are deposits, short-term borrowings and capital contributions
from the holding company. In addition, the banks are eligible to borrow under FHLB advances and at the FRB Discount
Window, another source of liquidity.
In accordance with the liquidity management noted above, deposit growth and increases in borrowings from various sources
have resulted in accumulating liquidity assets in recent periods. In 2024, we managed our liquid assets to ensure that we have
the balance sheet strength to serve our clients. As a result, the Company believes that it has sufficient funds and access to funds
to meet its working capital and other needs. The Company will continue to prudently evaluate liquidity sources, including the
management of availability with the FHLB and FRB and utilization of the revolving credit facility with unaffiliated banks.
Core deposits are the most stable source of liquidity for community banks due to the nature of long-term relationships generally
established with depositors and the security of deposit insurance provided by the FDIC. Core deposits are generally defined in
the industry as total deposits less time deposits with balances greater than $100,000. Due to the affluent nature of many of the
communities that the Company serves, management believes that many of its time deposits with balances in excess of $100,000
are also a stable source of funds. Currently, standard deposit insurance coverage is $250,000 per depositor per insured bank, for
each account ownership category.
While the Company obtains a portion of its total deposits through brokered deposits, the Company does so primarily as an
asset-liability management tool to assist in the management of interest rate risk, and the Company does not consider brokered
deposits to be a vital component of its current liquidity resources. Historically, brokered deposits have represented a small
component of the Company’s total deposits outstanding, as set forth in the table below:
December 31,
(Dollars in thousands)
2024
2023
2022
2021
2020
Total deposits
$ 52,512,349
$ 45,397,170
$ 42,902,544
$ 42,095,585
$ 37,092,651
Brokered Deposits (1)
3,598,102
4,216,718
3,174,093
1,591,083
1,843,227
Brokered deposits as a percentage of
total deposits (1)
6.9 %
9.3 %
7.4 %
3.8 %
5.0 %
(1) Brokered Deposits include certificates of deposit obtained through deposit brokers, deposits received through the
Certificate of Deposit Account Registry Program, as well as wealth management deposits of brokerage customers from
unaffiliated companies which have been placed into deposit accounts of the banks.
The Company’s banks routinely accept deposits from a variety of municipal entities. Typically, these municipal entities require
that banks pledge marketable securities to collateralize these public deposits. At December 31, 2024 and 2023, the banks had
approximately $6.9 billion of securities collateralizing public deposits and other liquidity sources. Public deposits requiring
pledged assets are not considered to be core deposits, however they provide the Company with a reliable, lower cost, short-term
funding source than what is available through many other wholesale alternatives.
Other than as discussed in this section, the Company is not aware of any known trends, commitments, events, regulatory
recommendations or uncertainties that would have any material adverse effect on the Company’s capital resources, operations
or liquidity.
91
CONTRACTUAL OBLIGATIONS, OFF-BALANCE SHEET COMMITMENTS AND CONTINGENT LIABILITIES
The Company has various financial obligations, including contractual obligations and commitments, that may require future
cash payments.
Contractual Obligations. Our significant contractual obligations with third parties primarily consist of deposit liabilities and
other sources of funding for our businesses, including FHLB advances, subordinated debt, other debt borrowings and junior
subordinated debentures. These debt obligations have fixed and determinable contractual repayment dates specific to each type
of instrument. Deposit liabilities are primarily due on-demand, with certain time deposits due based on contractual maturities
that may exceed one year. Repayment of debt obligations, including junior subordinated debentures, vary based on terms of the
underlying debt instrument, with certain debt instruments requiring full repayment of the debt at the respective maturity date
and other debt instruments requiring periodic partial repayment over the entire term of the debt instrument. Further information
on these debt obligations is included in Notes (10) “Deposits” through (14) “Junior Subordinated Debentures” of the
Consolidated Financial Statements in Item 8 of this report.
The Company enters into various leasing arrangements with contractual obligations to pay for use of specified assets over a
specific period of time. These leased assets primarily related to certain banking facilities as well as specific signage related to
sponsorships and other agreements, and certain automatic teller machines and other equipment. Payments under these
obligations are primarily made on a monthly basis. Further information on these lease obligations is included in Note (16)
“Lease Commitments” of the Consolidated Financial Statements in Item 8 of this report.
The Company’s other purchase obligations relate to certain contractual cash obligations for acquisition-related contingent costs,
marketing obligations and services related to the construction of facilities, data processing and the outsourcing of certain
operational activities. In 2024, the Company continued to significantly invest in technology, including enhancements to our
customer’s digital experience, and it is subject to additional contractual purchase obligations in furtherance of these efforts.
The Company also enters into derivative contracts under which the Company is required to either receive cash from or pay cash
to counterparties depending on changes in interest rates. Derivative contracts are carried at fair value representing the net
present value of expected future cash receipts or payments based on market rates as of the balance sheet date. Further
information on derivative contracts is included in Note (21) “Derivative Financial Instruments” of the Consolidated Financial
Statements in Item 8 of this report.
Commitments. The following table presents a summary of the amounts and expected maturities of significant commitments as
of December 31, 2024. Further information on these commitments is included in Note (20) “Commitments and Contingencies”
of the Consolidated Financial Statements in Item 8 of this report.
(In thousands)
One year or
less
From one to
three years
From three
to five years
Over
five years
Total
Commitment type:
Commercial, commercial real estate and
construction
$ 6,159,670 $ 3,797,836 $ 1,192,951 $
379,005 $ 11,529,462
Residential real estate
361,342
—
—
—
361,342
Revolving home equity lines of credit
999,063
—
—
—
999,063
Letters of credit
382,809
53,650
66,708
260
503,427
Commitments to sell mortgage loans
377,544
—
—
—
377,544
Our remaining commitment to fund community investments totaled $94.1 million, which includes future cash outlays for the
construction and development of properties for low-income housing, support for small businesses, and historic tax credit
projects that qualify for CRA purposes. These commitments are not included in the commitments table above, as the timing and
amounts are based upon the financing arrangements provided in each project’s partnership or operating agreement and could
change due to variances in the construction schedule, project revisions, or the cancellation of the project.
Contingencies. The Company enters into residential mortgage loan sale agreements with investors in the normal course of
business. These agreements usually require certain representations concerning credit information, loan documentation,
collateral and insurability. On occasion, investors have requested the Company to indemnify them against losses on certain
loans or to repurchase loans which the investors believe do not comply with applicable representations. Upon completion of its
own investigation, the Company generally repurchases or provides indemnification on certain loans. Indemnification requests
92
are generally received within two years subsequent to sale. Management maintains a liability for estimated losses on loans
expected to be repurchased or on which indemnification is expected to be provided and regularly evaluates the adequacy of this
recourse liability based on trends in repurchase and indemnification requests, actual loss experience, known and inherent risks
in the loans, and current economic conditions. At December 31, 2024, the liability for estimated losses on repurchase and
indemnification was approximately $188,000 and was included in other liabilities on the balance sheet.
Forward Looking Statements
This document contains forward-looking statements within the meaning of federal securities laws. Forward-looking information
can be identified through the use of words such as “intend,” “plan,” “project,” “expect,” “anticipate,” “believe,” “estimate,”
“contemplate,” “possible,” “will,” “may,” “should,” “would” and “could.” Forward-looking statements and information are not
historical facts, are premised on many factors and assumptions, and represent only management’s expectations, estimates and
projections regarding future events. Similarly, these statements are not guarantees of future performance and involve certain
risks and uncertainties that are difficult to predict. The Company intends such 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 is
including this statement for purposes of invoking these safe harbor provisions. Such forward-looking statements may be
deemed to include, among other things, statements relating to the Company’s future financial performance, the performance of
its loan portfolio, the expected amount of future credit reserves and charge-offs, delinquency trends, growth plans, regulatory
developments, securities that the Company may offer from time to time, plans to form additional de novo banks or branch
offices, and management’s long-term performance goals, as well as statements relating to the anticipated effects on the
Company’s financial condition and results of operations from expected developments or events, the Company’s business and
growth strategies, including future acquisitions of banks, specialty finance or wealth management businesses, internal growth
and plans to form additional de novo banks or branch offices. Actual results could differ materially from those addressed in the
forward-looking statements as a result of numerous factors and uncertainties, including those discussed in the Risk Factors and
summary thereof disclosed under Item 1A of this Annual Report on 10-K and in any of the Company’s subsequent SEC filings.
Therefore, there can be no assurances that future actual results will correspond to any forward-looking statements. The reader is
cautioned not to place undue reliance on any forward-looking statement made by the Company. Any such statement speaks
only as of the date the statement was made or as of such date that may be referenced within the statement. The Company
undertakes no obligation to update any forward-looking statement to reflect the impact of circumstances or events after the date
of this Annual Report on Form 10-K. Persons are advised, however, to consult further disclosures management makes on
related subjects in its reports filed with the SEC and in its press releases.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Effects of Inflation
A banking organization’s assets and liabilities are primarily monetary. Changes in the rate of inflation do not have as great an
impact on the financial condition of a bank as do changes in interest rates. Moreover, interest rates do not necessarily change at
the same percentage as inflation. Accordingly, changes in inflation are not expected to have a material impact on the Company.
Asset-Liability Management
As an ongoing part of its financial strategy, the Company attempts to manage the impact of fluctuations in market interest rates
on net interest income. This effort entails providing a reasonable balance between interest rate risk, credit risk, liquidity risk and
maintenance of yield. Asset-liability management policies are established and monitored by management in conjunction with
the boards of directors of the banks, subject to general oversight by the Risk Management Committee of the Company’s Board.
The policies establish guidelines for acceptable limits on the sensitivity of the market value of assets and liabilities to changes
in interest rates.
Interest rate risk arises when the maturity or re-pricing periods and interest rate indices of the interest-earning assets, interest-
bearing liabilities, and derivative financial instruments are different. It is the risk that changes in the level of market interest
rates will result in disproportionate changes in the value of, and the net earnings generated from, the Company’s interest-
earning assets, interest-bearing liabilities and derivative financial instruments. The Company continuously monitors not only
the organization’s current net interest margin, but also the historical trends of these margins. In addition, management attempts
to identify potential adverse changes in net interest income in future years as a result interest rate fluctuations by performing
simulation analysis of various interest rate environments. If a potential adverse change in net interest margin and/or net income
is identified, management takes appropriate action with its asset-liability structure to mitigate these potentially adverse
93
situations. Please refer to Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
for further discussion of the net interest margin.
Since the Company’s primary source of interest-bearing liabilities is from customer deposits, the Company’s ability to manage
the types and terms of such deposits is somewhat limited by customer preferences and local competition in the market areas in
which the banks operate. The rates, terms and interest rate indices of the Company’s interest-earning assets result primarily
from the Company’s strategy of investing in loans and securities that permit the Company to limit its exposure to interest rate
risk, together with credit risk, while at the same time achieving an acceptable interest rate spread.
The Company’s exposure to interest rate risk is reviewed on a regular basis by management and the Risk Management
Committees of the boards of directors of the banks and the Company. The objective of the review is to measure the effect on net
income and to adjust balance sheet and derivative financial instruments to minimize the inherent risk while at the same time
maximize net interest income.
The following interest rate scenarios display the percentage change in net interest income over a one-year time horizon
assuming increases and decreases of 100 and 200 basis points as compared to projected net interest income in a scenario with
no assumed rate changes. The Static Shock Scenario results incorporate actual cash flows and repricing characteristics for
balance sheet instruments following an instantaneous, parallel change in market rates based upon a static (i.e. no growth or
constant) balance sheet. Conversely, the Ramp Scenario results incorporate management’s projections of future volume and
pricing of each of the product lines following a gradual, parallel change in market rates over twelve months. Actual results may
differ from these simulated results due to timing, magnitude, and frequency of interest rate changes as well as changes in
market conditions and management strategies. The interest rate sensitivity for both the Static Shock and Ramp Scenario at
December 31, 2024 and December 31, 2023 is as follows:
Static Shock Scenarios
+200
Basis
Points
+100
Basis
Points
-100
Basis
Points
-200
Basis
Points
December 31, 2024
(1.6) %
(0.6) %
(0.3) %
(1.5) %
December 31, 2023
2.6
1.8
0.4
(0.7)
Ramp Scenarios
+200
Basis
Points
+100
Basis
Points
-100
Basis
Points
-200
Basis
Points
December 31, 2024
(0.2) %
(0.0) %
0.0 %
(0.3) %
December 31, 2023
1.6
1.2
(0.3)
(1.5)
One method utilized by financial institutions, including the Company, to manage interest rate risk is to enter into derivative
financial instruments. Derivative financial instruments include interest rate swaps, interest rate caps, floors and collars, futures,
forwards, option contracts and other financial instruments with similar characteristics. Additionally, the Company enters into
commitments to fund certain mortgage loans (interest rate locks) to be sold into the secondary market and forward
commitments for the future delivery of mortgage loans to third party investors. See Note (21) “Derivative Financial
Instruments” to the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-K for further information on
the Company’s derivative financial instruments.
As shown above, at December 31, 2024, the magnitude of potential changes in net interest income in various interest rate
scenarios has continued to remain relatively neutral. As the current interest rate cycle progressed, management took action to
reposition its sensitivity to interest rates. To this end, management has executed various derivative instruments including collars
and receive-fixed swaps to hedge variable-rate loan exposures. The Company will continue to monitor current and projected
interest rates and may execute additional derivatives to mitigate potential fluctuations in the net interest margin in future
periods.
During 2024 and 2023, the Company entered into certain covered call option transactions related to certain securities held by
the Company. The Company uses these option transactions (rather than entering into other derivative interest rate contracts,
such as interest rate floors) to economically hedge positions and compensate for net interest margin compression by increasing
the total return associated with the related securities through fees generated from these options. Although the revenue received
from these options is recorded as non-interest income rather than interest income, the increased return attributable to the related
securities from these options contributes to the Company’s overall profitability. The Company’s exposure to interest rate risk
may be impacted by these transactions. To further mitigate this risk, the Company may acquire fixed-rate term debt or use
94
financial derivative instruments. There were no covered call options outstanding as of December 31, 2024 or 2023. See Note
(21) “Derivative Financial Instruments” of the Consolidated Financial Statements in Item 8 of this Annual Report on Form 10-
K for further information on the Company’s fees from covered call options for the twelve months ended December 31, 2024
and December 31, 2023.
95
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Wintrust Financial Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of condition of Wintrust Financial Corporation and subsidiaries
(the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income,
changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2024, and the
related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and
the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity
with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework), and our report dated February 28, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on
the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken
as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit
matter or on the account or disclosures to which it relates.
96
Allowance for credit losses
Description of the
Matter
At December 31, 2024, the Company’s allowance for credit losses (ACL) was $437.1 million.
As more fully described in Notes (1) and (5) to the consolidated financial statements, the ACL
represents management’s estimate of expected credit losses over the contractual term of the loan.
The ACL is measured on a collective or pooled basis when assets share the same risk
characteristics or on an individual basis when assets do not share similar risk characteristics. For
assets measured on a collective basis, the Company applies modeling methodologies that utilize
the Company’s historical loss experience to estimate lifetime credit loss rates on each pool,
including methodologies estimating the probability of default and loss given default on specific
segments. The historical credit loss experience utilized in the ACL models is adjusted for the
Company’s reasonable and supportable economic forecasts. The modeled results are then
adjusted for certain qualitative factors. For assets measured on an individual basis, the Company
measures the expected losses primarily based on the estimated collateral value.
Auditing management’s estimate of the ACL was especially challenging due to the complexity
of the Company’s ACL models, the significant judgment required in establishing management’s
reasonable and supportable economic forecasts, and the significant judgment required in
developing and applying management’s qualitative factors.
How We Addressed
the Matter in Our
Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of
internal controls over the ACL process, including, among other things, controls over
management’s process for the development, operation and monitoring of the ACL models,
assessing and challenging the reasonable and supportable economic forecasts, the development
and application of qualitative factors, and verifying the completeness and accuracy of key inputs
and assumptions used in the ACL models.
To test the Company’s ACL models, we involved our specialists to test a sample of the ACL
models by evaluating model methodology, model performance and testing key modeling
assumptions. Additionally, we tested the accuracy of data utilized in the models by agreeing key
data fields to source documentation and performed targeted re-calculations for a sample of
models.
To test the reasonable and supportable economic forecasts, our audit procedures included among
others, evaluating the basis of the economic forecast factors utilized by management and testing
the completeness and accuracy of data used by management to develop the economic forecasts.
To test the qualitative factors, among other procedures, we assessed management’s methodology
and considered whether relevant risks were reflected in the models and whether qualitative
adjustments to the model outputs were appropriate. We tested the completeness, accuracy and
relevance of the underlying data used to estimate the qualitative factors. We evaluated whether
qualitative factors were reasonable based on changes in economic conditions and the
composition of the loan portfolio.
In addition, we evaluated the overall ACL and whether the ACL appropriately reflects expected
lifetime losses in the loan portfolio as of the consolidated balance sheet date. For example, we
compared the overall ACL amount to those established by similar banking institutions with
similar loan portfolios.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 1999.
Chicago, Illinois
February 28, 2025
97
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
December 31,
(In thousands, except shares and per share amounts)
2024
2023
Assets
Cash and due from banks
$
452,017
$
423,404
Federal funds sold and securities purchased under resale agreements
6,519
60
Interest-bearing deposits with banks
4,409,753
2,084,323
Available-for-sale securities, at fair value
4,141,482
3,502,915
Held-to-maturity securities, at amortized cost, net of allowance for credit losses of $457 and $347 at
December 31, 2024 and December 31, 2023, respectively ($2.9 billion and $3.2 billion fair value at
December 31, 2024 and December 31, 2023, respectively)
3,613,263
3,856,916
Trading account securities
4,072
4,707
Equity securities with readily determinable fair value
215,412
139,268
Federal Home Loan Bank and Federal Reserve Bank stock
281,407
205,003
Brokerage customer receivables
18,102
10,592
Mortgage loans held-for-sale, at fair value
331,261
292,722
Loans, net of unearned income
48,055,037
42,131,831
Allowance for loan losses
(364,017)
(344,235)
Net loans
47,691,020
41,787,596
Premises, software and equipment, net
779,130
748,966
Lease investments, net
278,264
281,280
Accrued interest receivable and other assets
1,739,334
1,551,899
Receivable on unsettled securities sales
—
690,722
Goodwill
796,942
656,672
Other acquisition-related intangible assets
121,690
22,889
Total assets
$
64,879,668
$
56,259,934
Liabilities and Shareholders’ Equity
Deposits:
Non-interest-bearing
$
11,410,018
$
10,420,401
Interest-bearing
41,102,331
34,976,769
Total deposits
52,512,349
45,397,170
Federal Home Loan Bank advances
3,151,309
2,326,071
Other borrowings
534,803
645,813
Subordinated notes
298,283
437,866
Junior subordinated debentures
253,566
253,566
Accrued interest payable and other liabilities
1,785,061
1,799,922
Total liabilities
58,535,371
50,860,408
Shareholders’ Equity:
Preferred stock, no par value; 20,000,000 shares authorized:
Series D - $25 liquidation value; 5,000,000 shares issued and outstanding at December 31, 2024 and
December 31, 2023
125,000
125,000
Series E - $25,000 liquidation value; 11,500 shares issued and outstanding at December 31, 2024 and
December 31, 2023
287,500
287,500
Common stock, no par value; $1.00 stated value; 100,000,000 shares authorized at December 31, 2024 and
December 31, 2023; 66,560,182 shares issued at December 31, 2024 and 61,268,566 shares issued at
December 31, 2023
66,560
61,269
Surplus
2,482,561
1,943,806
Treasury stock, at cost, 64,955 shares at December 31, 2024 and 24,940 shares at December 31, 2023
(6,153)
(2,217)
Retained earnings
3,897,164
3,345,399
Accumulated other comprehensive loss
(508,335)
(361,231)
Total shareholders’ equity
6,344,297
5,399,526
Total liabilities and shareholders’ equity
$
64,879,668
$
56,259,934
See accompanying Notes to Consolidated Financial Statements.
98
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31,
(In thousands, except per share data)
2024
2023
2022
Interest income
Interest and fees on loans
$
3,043,354
$
2,540,952
$
1,507,726
Mortgage loans held-for-sale
21,436
16,791
21,195
Interest-bearing deposits with banks
115,253
78,978
43,447
Federal funds sold and securities purchased under resale agreements
366
1,806
4,903
Investment securities
276,115
238,587
160,600
Trading account securities
48
41
22
Federal Home Loan Bank and Federal Reserve Bank stock
20,060
14,912
8,622
Brokerage customer receivables
965
1,047
928
Total interest income
3,477,597
2,893,114
1,747,443
Interest expense
Interest on deposits
1,343,642
906,470
175,202
Interest on Federal Home Loan Bank advances
99,149
72,286
30,329
Interest on other borrowings
34,480
35,280
14,294
Interest on subordinated notes
18,117
22,024
22,004
Interest on junior subordinated debentures
19,674
19,190
10,252
Total interest expense
1,515,062
1,055,250
252,081
Net interest income
1,962,535
1,837,864
1,495,362
Provision for credit losses
101,047
114,390
78,589
Net interest income after provision for credit losses
1,861,488
1,723,474
1,416,773
Non-interest income
Wealth management
146,227
130,607
126,614
Mortgage banking
93,213
83,073
155,173
Service charges on deposit accounts
65,651
55,250
58,574
Gains (losses) on investment securities, net
(2,602)
1,525
(20,427)
Fees from covered call options
10,196
21,863
14,133
Trading gains, net
504
1,142
3,752
Operating lease income, net
58,710
53,298
55,510
Other
116,426
87,348
67,724
Total non-interest income
488,325
434,106
461,053
Non-interest expense
Salaries and employee benefits
817,108
748,013
696,107
Software and equipment
122,794
104,632
95,885
Operating lease equipment
42,298
42,363
38,008
Occupancy, net
79,213
77,068
70,965
Data processing
39,736
38,800
31,209
Advertising and marketing
61,812
65,075
59,418
Professional fees
40,637
34,758
33,088
Amortization of other acquisition-related intangible assets
12,095
5,498
6,116
FDIC insurance
46,118
71,102
28,639
OREO expense, net
(408)
(1,528)
(140)
Other
141,321
126,718
117,976
Total non-interest expense
1,402,724
1,312,499
1,177,271
Income before taxes
947,089
845,081
700,555
Income tax expense
252,044
222,455
190,873
Net income
$
695,045
$
622,626
$
509,682
Preferred stock dividends
27,964
27,964
27,964
Net income applicable to common shares
$
667,081
$
594,662
$
481,718
Net income per common share—Basic
$
10.47
$
9.72
$
8.14
Net income per common share—Diluted
$
10.31
$
9.58
$
8.02
Cash dividends declared per common share
$
1.80
$
1.60
$
1.36
Weighted average common shares outstanding
63,685
61,149
59,205
Dilutive potential common shares
1,016
938
886
Average common shares and dilutive common shares
64,701
62,087
60,091
See accompanying Notes to Consolidated Financial Statements.
99
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Years Ended December 31,
(In thousands)
2024
2023
2022
Net income
$
695,045 $
622,626 $
509,682
Unrealized (losses) gains on available-for-sale securities
Before tax
(105,922)
50,669
(537,602)
Tax effect
28,019
(14,455)
143,270
Net of tax
(77,903)
36,214
(394,332)
Reclassification of net gains on available-for-sale securities included
in net income
Before tax
1,236
951
439
Tax effect
(321)
(252)
(118)
Net of tax
915
699
321
Reclassification of amortization of unrealized gains on investment
securities transferred to held-to-maturity from available-for-sale
Before tax
89
212
175
Tax effect
(24)
(57)
(47)
Net of tax
65
155
128
Net unrealized (losses) gains on available-for-sale securities
(78,883)
35,360
(394,781)
Unrealized (losses) gains on derivative instruments
Before tax
(59,046)
33,512
(26,882)
Tax effect
15,770
(8,844)
7,152
Net unrealized (losses) gains on derivative instruments
(43,276)
24,668
(19,730)
Foreign currency translation adjustment
Before tax
(30,518)
7,788
(21,781)
Tax effect
5,573
(1,411)
4,564
Net foreign currency translation adjustment
(24,945)
6,377
(17,217)
Total other comprehensive (loss) income
(147,104)
66,405
(431,728)
Comprehensive income
$
547,941 $
689,031 $
77,954
See accompanying Notes to Consolidated Financial Statements.
100
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(In thousands, except per share data)
Preferred
stock
Common
stock
Surplus
Treasury
stock
Retained
earnings
Accumulated
other
comprehensive
income (loss)
Total
shareholders’
equity
Balance at December 31, 2021
$
412,500
$
58,892
$ 1,685,572
$
(109,903) $ 2,447,535
$
4,092
$
4,498,688
Net income
—
—
—
—
509,682
—
509,682
Other comprehensive loss, net of tax
—
—
—
—
—
(431,728)
(431,728)
Cash dividends declared on common
stock, $1.36 per share
—
—
—
—
(80,246)
—
(80,246)
Dividends on Series D preferred stock,
$1.64 per share and Series E preferred
stock, $1,718.76 per share
—
—
—
—
(27,964)
—
(27,964)
Stock-based compensation
—
—
31,748
—
—
—
31,748
Common stock issued for:
New issuances, net of cost
—
1,612
174,214
109,903
—
—
285,729
Exercise of stock options and
warrants
—
123
5,067
(304)
—
—
4,886
Restricted stock awards
—
69
(69)
—
—
—
—
Employee stock purchase plan
—
42
3,344
—
—
—
3,386
Director compensation plan
—
59
2,598
—
—
—
2,657
Balance at December 31, 2022
$
412,500
$
60,797
$ 1,902,474
$
(304) $ 2,849,007
$
(427,636) $
4,796,838
Cumulative effect adjustment from the
adoption of ASU 2022-02 (TDR), net
of tax
—
—
—
—
(544)
—
(544)
Net income
—
—
—
—
622,626
—
622,626
Other comprehensive income, net of tax
—
—
—
—
—
66,405
66,405
Cash dividends declared on common
stock, $1.60 per share
—
—
—
—
(97,726)
—
(97,726)
Dividends on Series D preferred stock,
$1.64 per share and Series E preferred
stock, $1,718.76 per share
—
—
—
—
(27,964)
—
(27,964)
Stock-based compensation
—
—
33,495
—
—
—
33,495
Common stock issued for:
Exercise of stock options and
warrants
—
56
2,186
—
—
—
2,242
Restricted stock awards
—
307
(307)
(1,913)
—
—
(1,913)
Employee stock purchase plan
—
46
3,283
—
—
—
3,329
Director compensation plan
—
63
2,675
—
—
—
2,738
Balance at December 31, 2023
$
412,500
$
61,269
$ 1,943,806
$
(2,217) $ 3,345,399
$
(361,231) $
5,399,526
Net income
—
—
—
—
695,045
—
695,045
Other comprehensive loss, net of tax
—
—
—
—
—
(147,104)
(147,104)
Cash dividends declared on common
stock, $1.80 per share
—
—
—
—
(115,316)
—
(115,316)
Dividends on Series D preferred stock,
$1.64 per share and Series E preferred
stock, $1,718.76 per share
—
—
—
—
(27,964)
—
(27,964)
Stock-based compensation
—
—
38,108
—
—
—
38,108
Common stock issued for:
Acquisition of Macatawa Bank
Corporation
—
4,702
494,537
—
—
—
499,239
Exercise of stock options and
warrants
—
2
84
—
—
—
86
Restricted stock awards
—
537
(532)
(3,936)
—
—
(3,931)
Employee stock purchase plan
—
35
3,312
—
—
—
3,347
Director compensation plan
—
15
3,246
—
—
—
3,261
Balance at December 31, 2024
$
412,500
$
66,560
$ 2,482,561
$
(6,153) $ 3,897,164
$
(508,335) $
6,344,297
See accompanying Notes to Consolidated Financial Statements.
101
WINTRUST FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,
(In thousands)
2024
2023
2022
Operating Activities:
Net income
$
695,045
$
622,626
$
509,682
Adjustments to reconcile net income to net cash provided by operating activities
Provision for credit losses
101,047
114,390
78,589
Depreciation, amortization and accretion, net
100,079
84,764
82,070
Deferred income tax expense (benefit)
11,011
(19,707)
22,057
Stock-based compensation expense
38,108
33,495
31,748
(Accretion) amortization of premium on securities, net
(2,133)
1,236
2,416
Accretion of discount and deferred fees on loans, net
(18,984)
(16,943)
(19,565)
Mortgage servicing rights fair value changes
18,637
36,209
(36,609)
Non-designated derivatives fair value changes, net
61,035
(3,048)
1,691
Originations and purchases of mortgage loans held-for-sale
(2,624,914)
(1,962,205)
(2,799,000)
Early buy-out exercises of mortgage loans held-for-sale guaranteed by U.S. government agencies, net of subsequent paydowns or payoffs
(23,197)
(25,954)
80,158
Proceeds from sales of mortgage loans held-for-sale
2,609,248
1,963,214
3,146,442
Bank owned life insurance (“BOLI”) (gains) losses
(5,755)
(4,575)
806
Decrease (increase) in trading securities, net
635
(3,580)
(66)
(Increase) decrease in brokerage customer receivables, net
(7,510)
5,795
9,681
Gains on mortgage loans sold
(46,430)
(37,738)
(43,391)
Gains on premium financing receivables sold
(4,575)
(890)
—
Losses (gains) on investment securities, net, and dividend reinvestment on equity securities
2,602
(1,525)
20,427
Losses on sales of premises and equipment, net
336
1,290
2,845
Gains on sales and fair value adjustments of other real estate owned, net
(1,951)
(1,656)
(792)
Increase in accrued interest receivable and other assets, net
(131,429)
(205,428)
(91,585)
(Decrease) increase in accrued interest payable and other liabilities, net
(49,348)
164,606
377,396
Net Cash Provided by Operating Activities
721,557
744,376
1,375,000
Investing Activities:
Proceeds from calls and sales of available-for-sale securities
1,769,854
1,881,410
17,413
Proceeds from payments and maturities of available-for-sale securities
588,664
384,769
368,846
Proceeds from payments, maturities and calls of held-to-maturity securities
242,427
191,421
210,958
Proceeds from sales of equity securities with readily determinable fair value
51,792
23,592
31,753
Proceeds from sales and capital distributions of equity securities without readily determinable fair value
2,226
67
1,330
Purchases of available-for-sale securities
(1,748,535)
(2,244,564)
(2,762,171)
Purchases of held-to-maturity securities
—
(408,917)
(910,964)
Purchases of equity securities with readily determinable fair value
(125,573)
(47,454)
(59,495)
Purchases of equity securities without readily determinable fair value
(6,933)
(10,450)
(17,429)
(Purchases) redemptions of FHLB and FRB stock, net
(76,404)
19,756
(89,381)
Distributions from investments in partnerships, net
2,763
7,476
4,765
Net cash received (paid) in business combinations
531,308
(5,147)
—
Proceeds from sales of premium financing receivables, net
627,450
405,560
—
Proceeds from sale of other real estate owned
20,026
5,051
3,954
Decrease in securities purchased under resale agreements with terms exceeding three months, net
—
—
700,000
(Increase) decrease in interest-bearing deposits with banks, net
(2,334,423)
(91,251)
3,382,366
Increase in loans, net
(5,405,340)
(3,303,303)
(4,320,225)
Redemption of BOLI
367
574
960
Purchases of premises and equipment, net
(86,032)
(46,406)
(53,449)
Net Cash Used for Investing Activities
(5,946,363)
(3,237,816)
(3,490,769)
Financing Activities:
Increase in deposit accounts, net
4,805,004
2,494,619
806,947
(Decrease) increase in other borrowings, net
(83,674)
40,670
125,135
Increase in Federal Home Loan Bank advances, net
825,238
10,000
1,075,000
Cash payments to settle contingent consideration liabilities recognized in business combinations
(6,168)
(57)
—
Proceeds from common stock offering, net
—
—
285,729
Repayment of subordinated notes
(140,000)
—
—
Issuance of common shares resulting from exercise of stock options, employee stock purchase plan and director compensation plan
6,694
8,309
11,233
Common stock repurchases for tax withholdings related to stock-based compensation
(3,936)
(1,913)
(304)
Dividends paid
(143,280)
(125,690)
(108,210)
Net Cash Provided by Financing Activities
5,259,878
2,425,938
2,195,530
Net Increase (Decrease) in Cash and Cash Equivalents
35,072
(67,502)
79,761
Cash and Cash Equivalents at Beginning of Period
423,464
490,966
411,205
Cash and Cash Equivalents at End of Period
$
458,536
$
423,464
$
490,966
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest
$
1,517,813
$
1,026,311
$
239,209
Income taxes, net
252,851
231,653
153,499
Business combinations:
Fair value of assets acquired, including cash and cash equivalents
2,611,601
23,669
—
Value ascribed to goodwill and other intangible assets
252,983
8,822
—
Fair value of liabilities assumed
2,365,345
12,468
—
Non-cash activities
Transfer to other real estate owned from loans
30,040
8,564
10,018
Common stock issued for acquisitions
499,239
—
—
See accompanying Notes to Consolidated Financial Statements.
102
(1) Summary of Significant Accounting Policies
The accounting and reporting policies of Wintrust Financial Corporation (“Wintrust” or the “Company”) and its subsidiaries
conform to generally accepted accounting principles in the United States and prevailing practices of the banking industry. In the
preparation of the consolidated financial statements, management is required to make certain estimates and assumptions that
affect the reported amounts contained in the consolidated financial statements. Management believes that the estimates made
are reasonable; however, changes in estimates may be required if economic or other conditions change beyond management’s
expectations. Reclassifications of certain prior year amounts have been made to conform to the current year presentation. The
following is a summary of the Company’s significant accounting policies.
Principles of Consolidation
The consolidated financial statements of Wintrust include the accounts of the Company and its subsidiaries. All significant
intercompany accounts and transactions have been eliminated in the consolidated financial statements.
Earnings per Share
Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of
common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that would occur if
securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance
of common stock that then share in the earnings of the Company. The weighted-average number of common shares outstanding
is increased by the assumed conversion of any outstanding convertible preferred stock shares from the beginning of the year or
date of issuance, if later, and the number of common shares that would be issued assuming the exercise of stock options and the
issuance of restricted shares using the treasury stock method. The adjustments to the weighted-average common shares
outstanding are only made when such adjustments will dilute earnings per common share. If relevant convertible preferred
shares are outstanding during a period, net income applicable to common shares used in the diluted earnings per share
calculation may be adjusted to consider potential conversion of such preferred shares. Where the effect of this conversion
would reduce the loss per share or increase the income per share, net income applicable to common shares is not adjusted by the
associated preferred dividends.
Business Combinations
The Company accounts for business combinations under the acquisition method of accounting in accordance with ASC 805,
“Business Combinations” (“ASC 805”) when it obtains control of a business. When determining whether a business has been
acquired, the Company first evaluates whether substantially all of the fair value of the gross assets acquired are concentrated in
a single identifiable asset or a group of similar identifiable assets. If concentrated in such a manner, the set of assets and
activities is not a business. If not concentrated in such a manner, the Company assesses whether the set meets the definition of a
business by containing inputs, outputs and at least one substantive process. If the set represents a business, the Company
recognizes the fair value of the assets acquired and liabilities assumed, immediately expenses transaction costs and accounts for
restructuring plans separately from the business combination. The excess of the cost of the acquisition over the fair value of the
net tangible and intangible assets acquired is recorded as goodwill. Alternatively, a gain is recorded equal to the amount by
which the fair value of assets purchased exceeds the fair value of liabilities assumed and consideration paid.
If the set of assets and activities do not constitute a business, the transaction is accounted for as an asset acquisition. The cost of
a group of assets acquired is allocated to the individual assets acquired or liabilities assumed based on the relative fair value and
does not result in the recognition of goodwill. Generally, any excess of the cost of the transaction over the fair value of the
individual assets acquired or liabilities assumed, or, in contrast, any excess of the fair value of the individual assets acquired or
liabilities assumed over the cost of the transaction, should be allocated on a relative fair value basis. Certain "non-qualifying"
assets are excluded from this allocation, and are recognized at the individual asset's fair value.
Results of operations of the acquired business are included in the income statement from the effective date of acquisition.
Subsequent adjustments to provisional amounts that are identified in reporting periods within one year after the acquisition date
in a business combination are recognized in the reporting period in which the adjustment amounts are determined.
103
Cash Equivalents
For purposes of the consolidated statements of cash flows, Wintrust considers cash on hand, cash items in the process of
collection, non-interest bearing amounts due from correspondent banks, federal funds sold and securities purchased under resale
agreements with original maturities of three months or less, to be cash equivalents. There were no securities sold under
agreements to repurchase with original maturities of three months or less at December 31, 2024.
Investment Securities
The Company classifies debt and equity securities upon purchase in one of five categories: trading, held-to-maturity debt
securities, available-for-sale debt securities, equity securities with a readily determinable fair value or equity securities without
a readily determinable fair value. Debt and equity securities held for resale are classified as trading securities. Debt securities
for which the Company has the ability and positive intent to hold until maturity are classified as held-to-maturity. All other debt
securities are classified as available-for-sale as they may be sold prior to maturity in response to changes in the Company’s
interest rate risk profile, funding needs, demand for collateralized deposits by public entities or other reasons. Equity securities
are classified based upon whether a readily determinable fair value exists on such security. The fair value of an equity security
is readily determinable if it meets certain conditions, including whether sales prices or bid-ask quotes are currently available on
certain securities exchanges; traded only in a foreign market that is of a breadth and scope comparable to one of the U.S.
markets; or the security is an investment in a mutual fund or similar structure with a fair value per share or unit that is
determined and published, and is the basis for current transactions.
Held-to-maturity debt securities are stated at amortized cost, which represents actual cost adjusted for premium amortization
and discount accretion using methods that approximate the effective interest method. Available-for-sale debt securities are
stated at fair value, with unrealized gains and losses, net of related taxes, included in shareholders’ equity as a separate
component of other comprehensive income. Trading account securities and equity securities with a readily determinable fair
value are stated at fair value. Realized and unrealized gains and losses from sales and fair value adjustments are included in
other non-interest income. Equity securities without a readily determinable fair value are stated at either a calculated net asset
value per share, if available, or the cost of the security minus impairment, if any, plus or minus changes resulting from
observable price changes in orderly transactions for the identical or similar instrument of the same issuer.
Subsequent to classification at the time of purchase, the Company may transfer debt securities between trading, held-to-
maturity, or available-for-sale. For debt securities transferred to trading, the current unrealized gain or loss at the date of
transfer, net of related taxes, is immediately recognized in earnings. Debt securities transferred from trading to either held-to-
maturity or available-for-sale have already recognized any unrealized gain or loss into earnings and this amount is not reversed.
Unrealized gains or losses, net related taxes, for available-for-sale debt securities transferred to held-to-maturity remain as a
separate component of other comprehensive income and an offsetting discount or premium is included in the amortized cost of
the held-to-maturity debt security. These amounts are amortized over the remaining life of the debt security in equal and
offsetting amounts. Unrealized gains or losses for held-to-maturity debt securities transferred to available-for-sale are
recognized at the transfer date as a separate component of other comprehensive income, net of related taxes.
Declines in the fair value of held-to-maturity and available-for-sale debt investment securities (with certain exceptions for debt
securities noted below) that are deemed to be credit losses are charged to the allowance for credit losses. In evaluating credit
impairment, management considers the extent to which the fair value has been less than cost, the financial condition and near-
term prospects of the issuer, and the intent and ability of the Company to retain its investment in the issuer for a period of time
sufficient to allow for any anticipated recovery in fair value in the near term. Declines in the fair value of debt securities below
amortized cost are deemed to be credit losses in circumstances where: (1) the Company has the intent to sell a security; (2) it is
more likely than not that the Company will be required to sell the debt security before recovery of its amortized cost basis; or
(3) the Company does not expect to recover the entire amortized cost basis of the debt security. If the Company intends to sell a
debt security or if it is more likely than not that the Company will be required to sell the debt security before recovery, a credit
impairment write-down is recognized in the allowance for credit losses equal to the difference between the debt security’s
amortized cost basis and its fair value. If an entity does not intend to sell the debt security or it is not more likely than not that it
will be required to sell the debt security before recovery, the credit impairment write-down is separated into an amount
representing credit loss, which is recognized in the allowance for credit losses, and an amount related to all other factors, which
is recognized in other comprehensive income.
Equity securities with readily determinable fair values are measured at fair value with changes recognized in net income. Equity
securities without readily determinable fair values are measured at cost minus impairment, if any, plus or minus changes
resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. Such
104
investments are included within accrued interest receivable and other assets within the Company's Consolidated Statements of
Condition.
Interest and dividends, including amortization of premiums and accretion of discounts, are recognized as interest income when
earned. Realized gains and losses on sales (using the specific identification method), unrealized gains and losses on equity
securities and declines in value judged to be other-than-temporary are included in non-interest income.
FHLB and FRB Stock
Investments in FHLB and FRB stock are restricted as to redemption and are carried at cost.
Securities Purchased Under Resale Agreements and Securities Sold Under Repurchase Agreements
Securities purchased under resale agreements and securities sold under repurchase agreements are generally treated as
collateralized financing transactions and are recorded at the amount at which the securities were acquired or sold plus accrued
interest. Securities, consisting of U.S. Treasury, U.S. Government agency and mortgage-backed securities, pledged as collateral
under these financing arrangements cannot be sold by the secured party. The fair value of collateral either received from or
provided to a third party is monitored and additional collateral is obtained or requested to be returned as deemed appropriate.
Brokerage Customer Receivables
The Company, under an agreement with an out-sourced securities clearing firm, extends credit to its brokerage customers to
finance their purchases of securities on margin. The Company receives income from interest charged on such extensions of
credit. Brokerage customer receivables represent amounts due on margin balances. Securities owned by customers are held as
collateral for these receivables.
Mortgage Loans Held-for-Sale
Mortgage loans are classified as held-for-sale when originated or acquired with the intent to sell the loan into the secondary
market. ASC 825, “Financial Instruments” provides entities with an option to report selected financial assets and liabilities at
fair value. Mortgage loans classified as held-for-sale are measured at fair value which is typically determined by reference to
investor prices for loan products with similar characteristics. Changes in fair value are recognized in mortgage banking revenue.
Market conditions or other developments may change management’s intent with respect to the disposition of these loans and
loans previously classified as mortgage loans held-for-sale may be reclassified to the loans held-for-investment portfolio, with
the balance transferred continuing to be carried at fair value.
Loans and Leases
Loans are generally reported at the principal amount outstanding, net of unearned income. Interest income is recognized when
earned. Loan origination fees and certain direct origination costs are deferred and amortized over the expected life of the loan as
an adjustment to the yield using methods that approximate the effective interest method. Finance charges on premium finance
receivables are earned over the term of the loan, using a method which approximates the effective yield method.
Leases classified as direct financing leases are included within lease loans, net of unearned income, for financial statement
purposes. Direct financing leases are stated as the sum of remaining minimum lease payments from lessees plus estimated
residual values less unearned lease income. Unearned lease income on direct financing leases is recognized over the term of the
leases using the effective interest method.
Interest income is not accrued on loans where management has determined that the borrowers may be unable to meet
contractual principal or interest obligations, or where interest or principal is 90 days or more past due, unless the loans are
adequately secured and in the process of collection. Cash receipts on non-accrual loans are generally applied to the principal
balance until the remaining balance is considered collectible, at which time interest income may be recognized when received.
Allowance for Credit Losses
In accordance with ASC 326, “Financial Instruments – Credit Losses” (“ASC 326”), the Company measures the allowance for
credit losses at the time of origination or purchase of a financial asset, representing an estimate of lifetime expected credit losses
on the related asset. Financial assets include assets measured under the amortized cost basis, including loans, net investments in
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leases recognized by a lessor, held-to-maturity debt securities and purchased credit deteriorated (“PCD”) assets at the time of
and subsequent to acquisition, and off-balance-sheet credit exposures considered not unconditionally cancellable. In addition to
financial assets measured at amortized cost, credit losses related to available-for-sale debt securities are recorded through the
allowance for credit losses and not as a direct adjustment to the amortized cost of the securities. The Company elects the
collateral maintenance practical expedient under ASC 326 and applies this approach to securities purchased under resale
agreements and brokerage customer receivables. In accordance with contractual terms, these assets require underlying collateral
to be monitored continuously and replenished when collateral is less than required levels. The Company measures an allowance
for credit losses if the carrying balance of such assets exceeds the amount of underlying collateral.
The allowance for credit losses on financial assets held at amortized cost is measured on a collective or pooled basis when
similar risk characteristics exist. The Company utilizes modeling methodologies that estimate lifetime credit loss rates on each
pool, including methodologies estimating the probability of default and loss given default on specific segments. Credit quality
indicators, specifically the Company's internal risk rating systems, reflect how the Company monitors credit losses and
represent factors used by the Company when measuring the allowance for credit losses. Historical credit loss history is adjusted
for reasonable and supportable forecasts developed by the Company and incorporates third party economic forecasts on a
quantitative or qualitative basis. Reasonable and supportable forecasts consider the macroeconomic factors that are most
relevant to evaluating and predicting expected credit losses in the Company's financial assets. For periods beyond the ability to
develop reasonable and supportable forecasts, the Company reverts to historical loss rates. Qualitative factors assessed by
Management include the following:
•
Changes in the nature and volume of the institution’s financial assets;
•
Changes in the existence, growth, and effect of any concentrations of credit;
•
Changes in the volume and severity of past due financial assets, the volume of non-accrual assets, and the volume and
severity of adversely classified or graded assets;
•
Changes in the value of the underlying collateral for loans that are not collateral-dependent;
•
Changes in the institution’s lending policies and procedures, including changes in underwriting standards and practices
for collections, write-offs, and recoveries;
•
Changes in the quality of the institution’s credit review function;
•
Changes in the experience, ability, and depth of the institution’s lending, investment, collection, and other relevant
management and staff;
•
The effect of changes in other external factors such as the regulatory, legal and technological environments;
competition; and events such as natural disasters; and
•
Actual and expected changes in international, national, regional, and local economic and business conditions and
developments in which the institution operates that affect the collectability of financial assets.
Expected credit losses are measured over the contractual term of the financial asset with consideration of expected
prepayments. Expected extensions, renewals or modifications of the financial asset are considered when the expected extension,
renewal or modification is contained within the existing agreement and is not unconditionally cancellable.
Financial assets that do not share similar risk characteristics with any pool are assessed for the allowance for credit losses on an
individual basis. These typically include assets experiencing financial difficulties, including substandard non-accrual assets. If
an individual asset is removed from a pool, the allowance for credit losses for such pool will be measured without considering
the removed asset. If foreclosure is probable or the asset is considered collateral-dependent, expected credit losses are measured
based upon the fair value of the underlying collateral adjusted for selling costs, if appropriate.
For purchased financial assets that have experienced more-than-insignificant deterioration in credit quality since origination
(“PCD assets”), the Company recognizes the sum of the purchase price and estimate of the allowance for credit losses as of the
date of acquisition as the initial amortized cost basis. If the estimated allowance for credit losses is recognized under a
methodology that is not a discounted cash flow methodology, such allowance for credit losses will be estimated based upon the
unpaid principal balance of the financial asset.
The Company does not measure an allowance for credit losses on accrued interest receivable balances if these balances are
written off in a timely manner. Write-offs of accrued interest receivable balances are recorded as a reduction to interest income.
Recoveries of financial assets previously written off are recognized when received and recorded as a component of the
allowance for credit losses. When measuring the allowance for credit losses, the Company incorporates an estimate of expected
recoveries provided the estimate is reasonable and supportable. Write-offs of financial assets are charged-off or deducted from
the allowance for credit losses and recorded in the period when the Company concludes that all or a portion of a financial asset
is no longer collectible. A provision for credit losses is charged to income based on Management’s periodic evaluation of the
factors previously described. Evaluations are conducted at least quarterly and more frequently if deemed necessary.
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Mortgage Servicing Rights ("MSRs")
MSRs are recorded in the Consolidated Statements of Condition at fair value in accordance with ASC 860, “Transfers and
Servicing.” The Company originates mortgage loans for sale to the secondary market. Certain loans are originated and sold with
servicing rights retained. MSRs associated with loans originated and sold, where servicing is retained, are capitalized at the time
of sale at fair value based on the future net cash flows expected to be realized for performing the servicing activities, and
included in other assets in the Consolidated Statements of Condition. The change in the fair value of MSRs is recorded as a
component of mortgage banking revenue in non-interest income in the Consolidated Statements of Income. The Company
measures the fair value of MSRs by stratifying the servicing rights into pools based on homogeneous characteristics, such as
product type and interest rate. The fair value of each servicing rights pool is calculated based on the present value of estimated
future cash flows using a discount rate commensurate with the risk associated with that pool, given current market conditions.
Estimates of fair value include assumptions about prepayment speeds, interest rates and other factors which are subject to
change over time. Changes in these underlying assumptions could cause the fair value of MSRs to change significantly in the
future.
Lease Investments
The Company’s investments in equipment and other assets held on operating leases are reported as lease investments, net.
Rental income on operating leases is recognized as income over the lease term on a straight-line basis. Equipment and other
assets held on operating leases is stated at cost less accumulated depreciation. Depreciation of the cost of the assets held on
operating leases, less any residual value, is computed using the straight-line method over the term of the leases, which is
generally seven years or less.
Premises and Equipment
Premises and equipment, including leasehold improvements, are stated at cost less accumulated depreciation and amortization.
Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the related assets.
Useful lives generally range from two to 15 years for furniture, fixtures and equipment, two to seven years for software and
computer-related equipment and seven to 39 years for buildings and improvements. Land improvements are amortized over a
period of 15 years and leasehold improvements are amortized over the shorter of the useful life of the improvement or the term
of the respective lease including any lease renewals deemed to be reasonably assured. Land, antique furnishings and artwork are
not subject to depreciation. Expenditures for major additions and improvements are capitalized, and maintenance and repairs
are charged to expense as incurred. Eligible costs related to the configuration, coding, testing and installation of internal use
software and qualifying cloud computing arrangements are capitalized.
Long-lived depreciable assets are evaluated periodically for impairment when events or changes in circumstances indicate the
carrying amount may not be recoverable. Impairment exists when the expected undiscounted future cash flows of a long-lived
asset are less than its carrying value. In that event, a loss is recognized for the difference between the carrying value and the
estimated fair value of the asset based on a quoted market price, if applicable, or a discounted cash flow analysis. Impairment
losses are recognized in other non-interest expense.
Other Real Estate Owned
Other real estate owned is comprised of real estate acquired in partial or full satisfaction of loans and is included in other assets
in the Consolidated Statements of Condition. Other real estate owned is recorded at its estimated fair value less estimated
selling costs at the date of transfer. Any excess of the related loan balance over the fair value less expected selling costs is
charged to the allowance for credit losses. In contrast, any excess of the fair value less expected selling costs over the related
loan balance is recorded as a recovery of prior charge-offs on the loan and, if any portion of the excess exceeds prior charge-
offs, as an increase to earnings. Subsequent changes in value are reported as adjustments to the carrying amount, limited to the
initial fair value recorded at the date of transfer, and are recorded in other non-interest expense. Gains and losses upon sale, if
any, are also charged to other non-interest expense. At December 31, 2024 and 2023, other real estate owned totaled $23.1
million and $13.3 million, respectively.
107
Goodwill and Other Intangible Assets
Goodwill represents the excess of the cost of a business acquisition over the fair value of net assets acquired. Other intangible
assets represent purchased assets that also lack physical substance but can be distinguished from goodwill because of
contractual or other legal rights or because the asset is capable of being sold or exchanged either on its own or in combination
with a related contract, asset or liability. In accordance with accounting standards, goodwill is not amortized, but rather is tested
for impairment on an annual basis or more frequently when events warrant, using a qualitative or quantitative approach.
Intangible assets which have finite lives are amortized over their estimated useful lives and also are subject to impairment
testing. Intangible assets which have indefinite lives are evaluated each reporting date to determine whether events and
circumstances continue to support an indefinite useful life. If an indefinite useful life can no longer be supported for such asset,
the intangible asset will be amortized prospectively over the remaining estimated useful life. If an indefinite useful life can be
supported, the asset is not amortized, but rather is tested for impairment on an annual basis or more frequently when events
warrant, using a qualitative or quantitative approach. The Company’s intangible assets having finite lives are amortized over
varying periods not exceeding twenty years.
Bank-Owned Life Insurance ("BOLI")
The Company maintains BOLI on certain individuals. BOLI balances are recorded at their cash surrender values and are
included in other assets in the Consolidated Statements of Condition. Changes in the cash surrender values are included in non-
interest income. At December 31, 2024 and 2023, BOLI totaled $219.5 million and $160.2 million, respectively.
Derivative Instruments
The Company enters into derivative transactions principally to protect against the risk of adverse price or interest rate
movements on the future cash flows or the value of certain assets and liabilities. The Company is also required to recognize
certain contracts and commitments, including certain commitments to fund mortgage loans held-for-sale, as derivatives when
the characteristics of those contracts and commitments meet the definition of a derivative. The Company accounts for
derivatives in accordance with ASC 815, “Derivatives and Hedging,” which requires that all derivative instruments be recorded
in the Consolidated Statements of Condition at fair value. The accounting for changes in the fair value of a derivative
instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of
hedging relationship.
Derivative instruments designated in a hedge relationship to mitigate exposure to changes in the fair value of an asset or
liability attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivative instruments
designated in a hedge relationship to mitigate exposure to variability in expected future cash flows, or other types of forecasted
transactions, are considered cash flow hedges. Formal documentation of the relationship between a derivative instrument and a
hedged asset or liability, as well as the risk-management objective and strategy for undertaking each hedge transaction and an
assessment of effectiveness, is required at inception to apply hedge accounting. In addition, formal documentation of ongoing
effectiveness testing is required to maintain hedge accounting.
Fair value hedges are accounted for by recording the changes in the fair value of the derivative instrument and the changes in
the fair value related to the risk being hedged of the hedged asset or liability on the statement of condition with corresponding
offsets recorded in the income statement. The adjustment to the hedged asset or liability is included in the basis of the hedged
item, while the fair value of the derivative is recorded as a freestanding asset or liability. Actual cash receipts or payments and
related amounts accrued during the period on derivatives included in a fair value hedge relationship are recorded as adjustments
to the interest income or expense recorded on the hedged asset or liability.
Cash flow hedges are accounted for by recording the changes in the fair value of the derivative instrument on the statement of
condition as either a freestanding asset or liability, with a corresponding offset recorded in other comprehensive income within
shareholders’ equity, net of deferred taxes. Amounts are reclassified from accumulated other comprehensive income to interest
expense in the period or periods the hedged forecasted transaction affects earnings.
Under both the fair value and cash flow hedge scenarios, changes in the fair value of derivatives not considered to be highly
effective in hedging the change in fair value or the expected cash flows of the hedged item are recognized in earnings as non-
interest income during the period of the change.
Derivative instruments that are not designated as hedges according to accounting guidance are reported on the statement of
condition at fair value and the changes in fair value are recognized in earnings as non-interest income during the period of the
change.
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Commitments to fund mortgage loans (i.e. interest rate locks) to be sold into the secondary market and forward commitments
for the future delivery of these mortgage loans are accounted for as derivatives and are not designated in hedging relationships.
Fair values of these mortgage derivatives are estimated primarily based on changes in mortgage rates from the date of the
commitments. Changes in the fair values of these derivatives are included in mortgage banking revenue.
Forward currency and commodity contracts used to manage foreign exchange risk and commodity price risk, respectively,
associated with certain assets are accounted for as derivatives and are not designated in hedging relationships. Such derivatives
are recorded at fair value based on prevailing currency and commodity exchange rates at the measurement date. Changes in the
fair values of these derivatives are recognized in earnings as non-interest income during the period of change.
Periodically, the Company sells options to an unrelated bank or dealer for the right to purchase certain securities held within its
investment portfolios (“covered call options”). These option transactions are designed primarily as an economic hedge to
compensate for net interest margin compression by increasing the total return associated with holding the related securities as
earning assets by using fee income generated from these options. These transactions are not designated in hedging relationships
pursuant to accounting guidance and, accordingly, changes in fair values of these contracts, are reported in other non-interest
income.
The Company periodically purchases options for the right to purchase securities not currently held within its investment
portfolios or enters into interest rate swaps in which the Company elects to not designate such derivatives as hedging
instruments. These option and swap transactions are designed primarily to economically hedge a portion of the fair value
adjustments related to the Company’s mortgage servicing rights portfolio. The gain or loss associated with these derivative
contracts are included in mortgage banking revenue.
Trust Assets, Assets Under Management and Brokerage Assets
Assets held in fiduciary or agency capacity for customers are not included in the consolidated financial statements as they are
not assets of Wintrust or its subsidiaries. Fee income is recognized on an accrual basis and is included as a component of non-
interest income.
Income Taxes
Wintrust and its subsidiaries file a consolidated Federal income tax return. Income tax expense is based upon income in the
consolidated financial statements rather than amounts reported on the income tax return. Deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using
currently enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as an income tax
benefit or income tax expense in the period that includes the enactment date.
Positions taken in the Company’s tax returns may be subject to challenge by the taxing authorities upon examination. In
accordance with applicable accounting guidance, uncertain tax positions are initially recognized in the financial statements
when it is more likely than not the positions will be sustained upon examination by the tax authorities. Such tax positions are
both initially and subsequently measured as the largest amount of tax benefit that is greater than 50% likely of being realized
upon settlement with the tax authority, assuming full knowledge of the position and all relevant facts. Interest and penalties on
income tax uncertainties are classified within income tax expense in the income statement.
The Company has elected to apply the deferral method for acquired investments that generate investment tax credits (ITCs).
This includes solar tax credit investments. Under this approach, the ITCs are recorded as an offset to the related investment on
the balance sheet, with credit amounts being recognized in earnings over the life of the investment within the same income or
expense accounts as used for the investment.
Stock-Based Compensation Plans
In accordance with ASC 718, “Compensation — Stock Compensation,” compensation cost is measured as the fair value of the
awards on their date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options and a Monte-Carlo
simulation model is used to estimate the fair value of performance awards with a market condition metric. The market price of
the Company’s stock at the date of grant is used to estimate the fair value of time-vested restricted stock awards and
performance awards with a performance metric. Compensation cost is recognized over the required service period, generally
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defined as the vesting period. For awards with graded vesting, compensation cost is recognized on a straight-line basis over the
requisite service period for the entire award.
Accounting guidance permits for the recognition of stock based compensation for the number of awards that are ultimately
expected to vest. As a result, recognized compensation expense for stock options and restricted share awards is reduced for
estimated forfeitures prior to vesting. Forfeitures rates are estimated for each type of award based on historical forfeiture
experience. Estimated forfeitures will be reassessed in subsequent periods and may change based on new facts and
circumstances. The Company issues new shares to satisfy option exercises and vesting of restricted shares.
Comprehensive Income
Comprehensive income consists of net income and other comprehensive income. Other comprehensive income includes
unrealized gains and losses on available-for-sale debt securities, net of deferred taxes, changes in deferred unrealized gains and
losses on investment securities transferred from available-for-sale debt securities to held-to-maturity debt securities, net of
deferred taxes, adjustments related to cash flow hedges, net of deferred taxes, and foreign currency translation adjustments, net
of deferred taxes. The Company has a policy for releasing the income tax effects from accumulated other comprehensive
income using an individual security approach.
Stock Repurchases
The Company periodically repurchases shares of its outstanding common stock through open market purchases or other
methods. Repurchased shares are recorded as treasury shares on the trade date using the treasury stock method, and the cash
paid is recorded as treasury stock.
Foreign Currency Translation
The Company revalues assets and liabilities denominated in non-U.S. currencies into U.S. dollars at the end of each month
using applicable exchange rates and revenue and expenses are revalued using a daily spot rate.
Gains and losses relating to translating functional currency financial statements for U.S. reporting are included in other
comprehensive income. Gains and losses relating to the re-measurement of transactions to the functional currency are reported
in the Consolidated Statements of Income.
Going Concern
In connection with preparing financial statements for each reporting period, the Company evaluates whether conditions or
events, considered in the aggregate, exist that would raise substantial doubt about the Company's ability to continue as a going
concern within one year after the date the financial statements are issued. If substantial doubt exists, specific disclosures are
required to be included in the Company's financial statements issued. Through its evaluation, the Company did not identify any
conditions or events that would raise substantial doubt about the Company's ability to continue as a going concern within one
year of the issuance of these consolidated financial statements.
Accounting Pronouncements and Other Regulatory Rules Newly Adopted
Equity Method and Joint Ventures - Investments in Tax Credit Structures
In March 2023, the FASB issued ASU No. 2023-02, “Investments-Equity Method and Joint Ventures (Topic 323): Accounting
for Investments in Tax Credit Structures Using the Proportional Amortization Method,” which allows reporting entities the
option to apply the proportional amortization method to other tax credit programs besides the Low-Income Housing Tax Credit
structures. The guidance requires application of the proportional amortization method on a tax-credit-program-by-tax-credit-
program basis rather than electing the method at the reporting level entity level. The Company adopted ASU No. 2023-02 as of
January 1, 2024. Adoption of this standard did not have a material impact on the Company’s consolidated financial statements.
Segment Reporting
In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable
Segment Disclosures,” to enhance public entity disclosures regarding significant segment expenses which are regularly reported
to an entity’s chief operating decision-maker (“CODM”) and included in a segment’s reported profit or loss. This ASU requires
disclosure of the amount and composition of “other segment items”, the title and position of the CODM, and how the CODM
110
uses reported measures of profit or loss to assess segment performance. Further, the guidance requires certain segment
disclosures previously provided only annually, on an interim basis. The Company adopted ASU No. 2023-07 as of January 1,
2024. Refer to Note (24) “Segment Information” for further information regarding the adoption of this standard.
(2) Recent Accounting Pronouncements
Income Tax Disclosures
In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax
Disclosures,” to enhance the transparency and decision usefulness of income tax disclosures. This ASU requires annually that
all entities disclose increasingly disaggregated information on amount of income taxes paid. Further, this ASU requires
annually that all public entities must disclose specific categories in the rate reconciliation and provide additional information for
reconciling items that meet a specific quantitative threshold. This guidance is effective for fiscal years beginning after
December 15, 2024 and is to be applied either on prospective basis or retrospective basis. Early adoption is permitted. The
Company expects that adopting this new guidance will have an impact to disclosures only.
Compensation – Scope Application of Profits Interest and Similar Awards
In March 2024, the FASB issued ASU No. 2024-01, “Compensation – Stock Compensation (Topic 718): Scope Application of
Profits Interest and Similar Awards” which clarifies the guidance by providing an illustrative example to demonstrate how an
entity should apply the scope guidance in Topic 718 when determining whether profits interest and similar awards should be
accounted for in accordance with Topic 718. For public business entities, this guidance is effective for fiscal years beginning
after December 15, 2024, including interim periods therein, and is to be applied either on a prospective basis or retrospective
basis. Early adoption is permitted. The Company does not expect this guidance to have a material impact on the Company’s
consolidated financial statements.
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU No. 2024-03, “Income Statement – Reporting Comprehensive Income – Expense
Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses”, which requires public business
entities to disclose additional information about specific expense categories including employee compensation, depreciation,
intangible asset amortization, etc., as well as qualitative descriptions of certain expenses, in the notes to the financial statements.
This guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning
after December 15, 2027. The guidance is to be applied either prospectively or retrospectively. Early adoption is permitted. The
Company is currently evaluating the impact of adopting this new guidance on the consolidated financial statements.
Induced Conversions of Convertible Debt Instruments
In November 2024, the FASB issued ASU No. 2024-04, “Debt – Debt with Conversion and Other Options (Subtopic 470-20):
Induced Conversions of Convertible Debt Instruments” to clarify the requirements for determining whether certain settlements
of convertible debt instruments should be accounted for as an induced conversion. This guidance is effective for fiscal years
beginning after December 15, 2025, including interim periods therein, and is to be applied either on a prospective basis or
retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact of adopting this new guidance
on the consolidated financial statements.
111
(3) Investment Securities
A summary of the available-for-sale and held-to-maturity investment securities portfolios presenting carrying amounts and
gross unrealized gains and losses as of December 31, 2024 and 2023 is as follows:
December 31, 2024
December 31, 2023
(In thousands)
Amortized
Cost
Gross
unrealized
gains
Gross
unrealized
losses
Fair Value
Amortized
Cost
Gross
unrealized
gains
Gross
unrealized
losses
Fair Value
Available-for-sale securities
U.S. Treasury
$
37,858
$
49
$
—
$
37,907
$
6,960
$
8
$
—
$
6,968
U.S. government agencies
50,000
—
(5,055)
44,945
50,000
—
(4,876)
45,124
Municipal
188,405
528
(4,340)
184,593
144,299
657
(3,998)
140,958
Corporate notes:
Financial issuers
83,997
—
(3,828)
80,169
83,996
—
(8,456)
75,540
Other
1,000
—
(7)
993
1,000
—
(9)
991
Mortgage-backed: (1)
Residential mortgage-backed
securities
4,106,641
284
(553,287) 3,553,638
3,505,012
1,392
(446,784) 3,059,620
Commercial (multi-family)
mortgage-baked securities
19,064
23
(755)
18,332
13,201
68
(289)
12,980
Collateralized mortgage
obligations
238,574
1,187
(18,856)
220,905
175,346
1,400
(16,012)
160,734
Total available-for-sale securities
$ 4,725,539
$
2,071
$ (586,128) $ 4,141,482
$ 3,979,814
$ 3,525
$ (480,424) $ 3,502,915
Held-to-maturity securities
U.S. government agencies
$ 313,539
$
—
$ (69,127) $ 244,412
$ 336,468
$
—
$ (67,058) $ 269,410
Municipal
161,016
243
(5,290)
155,969
172,933
565
(3,778)
169,720
Mortgage-backed: (1)
Residential mortgage-backed
securities
2,864,927
—
(605,014) 2,259,913
3,042,828
1,922
(549,265) 2,495,485
Commercial (multi-family)
mortgage-backed securities
6,364
—
(252)
6,112
6,415
—
(184)
6,231
Collateralized mortgage
obligations
211,023
815
(22,683)
189,155
241,075
978
(21,502)
220,551
Corporate notes
56,851
8
(1,870)
54,989
57,544
7
(3,480)
54,071
Total held-to-maturity securities
$ 3,613,720
$
1,066
$ (704,236) $ 2,910,550
$ 3,857,263
$ 3,472
$ (645,267) $ 3,215,468
Less: Allowance for credit losses
(457)
(347)
Held-to-maturity securities, net
of allowance for credit losses
$ 3,613,263
$ 3,856,916
Equity securities with readily
determinable fair value
$ 220,758
$
2,905
$ (8,251) $ 215,412
$ 143,312
$ 3,500
$ (7,544) $ 139,268
(1) None of our mortgage-backed securities are subprime.
Equity securities without readily determinable fair values totaled $65.1 million as of December 31, 2024 and $60.0 million as of
December 31, 2023. Equity securities without readily determinable fair values are included as part of accrued interest receivable
and other assets in the Company’s Consolidated Statements of Condition. The Company monitors its equity investments
without readily determinable fair values to identify potential transactions that may indicate an observable price change in
orderly transactions for the identical or a similar investment of the same issuer, requiring adjustment to its carrying amount. The
Company recorded no upward and no downward adjustments related to such observable price changes in 2024 or 2023. The
Company conducts a quarterly assessment of its equity securities without readily determinable fair values to determine whether
impairment exists in such equity securities, considering, among other factors, the nature of the securities, financial condition of
the issuer and expected future cash flows. During the years ended December 31, 2024 and December 31, 2023, the Company
recorded $3.7 million and $688,000, respectively, of impairment of equity securities without readily determinable fair values.
112
The following tables present the portion of the Company’s available-for-sale investment securities portfolios which had gross
unrealized losses, reflecting the length of time that individual securities have been in a continuous unrealized loss position at
December 31, 2024 and 2023, respectively:
As of December 31, 2024
Continuous unrealized
losses existing for less
than 12 months
Continuous unrealized
losses existing for
greater than 12 months
Total
(In thousands)
Fair value
Unrealized
losses
Fair value
Unrealized
losses
Fair value
Unrealized
losses
Available-for-sale securities
U.S. government agencies
$
44,945 $
(5,055) $
— $
— $
44,945 $
(5,055)
Municipal
52,344
(3,536)
83,517
(804)
135,861
(4,340)
Corporate notes:
Financial issuers
80,169
(3,828)
—
—
80,169
(3,828)
Other
993
(7)
—
—
993
(7)
Mortgage-backed: (1)
Residential mortgage-backed
securities
2,212,780
(519,164) 1,327,534
(34,123) 3,540,314
(553,287)
Commercial (multi-family)
mortgage backed securities
3,134
(390)
12,204
(365)
15,338
(755)
Collateralized mortgage obligations
65,874
(18,841)
7,428
(15)
73,302
(18,856)
Total available-for-sale securities
$ 2,460,239 $ (550,821) $ 1,430,683 $
(35,307) $ 3,890,922 $ (586,128)
(1) None of our mortgage-backed securities are subprime.
As of December 31, 2023
Continuous unrealized
losses existing for less
than 12 months
Continuous unrealized
losses existing for
greater than 12 months
Total
(In thousands)
Fair value
Unrealized
losses
Fair value
Unrealized
losses
Fair value
Unrealized
losses
Available-for-sale securities
U.S. government agencies
$
— $
— $
45,124 $
(4,876) $
45,124 $
(4,876)
Municipal
36,519
(513)
58,216
(3,485)
94,735
(3,998)
Corporate notes:
Financial issuers
—
—
75,540
(8,456)
75,540
(8,456)
Other
991
(9)
—
—
991
(9)
Mortgage-backed: (1)
Mortgage-backed securities
333,879
(1,170) 2,374,724
(445,614) 2,708,603
(446,784)
Commercial (multi-family)
mortgage backed securities
9,953
(289)
—
—
9,953
(289)
Collateralized mortgage obligations
—
—
75,101
(16,012)
75,101
(16,012)
Total available-for-sale securities
$
381,342 $
(1,981) $ 2,628,705 $ (478,443) $ 3,010,047 $ (480,424)
(1) None of our mortgage-backed securities are subprime.
The Company conducts a regular assessment of its investment securities to determine whether securities are experiencing credit
losses. Factors for consideration include the nature of the securities, credit ratings or financial condition of the issuer, the extent
of the unrealized loss, expected cash flows, market conditions and the Company’s ability to hold the securities through the
anticipated recovery period.
The Company does not consider available-for-sale securities with unrealized losses at December 31, 2024 to be experiencing
credit losses and recognized no resulting allowance for credit losses for such individually assessed credit losses. The Company
does not intend to sell these investments and it is more likely than not that the Company will not be required to sell these
investments before recovery of the amortized cost bases, which may be the maturity dates of the securities. The unrealized
losses within each category have occurred as a result of changes in interest rates, market spreads and market conditions
subsequent to purchase. Available-for-sale securities with continuous unrealized losses existing for more than twelve months at
December 31, 2024 were primarily mortgage-backed securities with unrealized losses due to increased market rates during such
period.
113
See Note (5) “Allowance for Credit Losses” for further discussion regarding any credit losses associated with held-to-maturity
securities at December 31, 2024.
The following table provides information as to the amount of gross gains and losses, adjustments and impairment on investment
securities recognized in earnings and proceeds received through the sale or call of investment securities:
Years Ended December 31,
(In thousands)
2024
2023
2022
Realized gains on investment securities
$
2,704 $
1,136 $
461
Realized losses on investment securities
(276)
(71)
(22)
Net realized gains on investment securities
2,428
1,065
439
Unrealized gains on equity securities with readily determinable fair value
4,451
5,428
1,154
Unrealized losses on equity securities with readily determinable fair value
(5,751)
(4,280)
(9,862)
Net unrealized (losses) gains on equity securities with readily
determinable fair value
(1,300)
1,148
(8,708)
Impairment of equity securities without readily determinable fair values
(3,730)
(688)
(12,158)
Adjustment and impairment, net, of equity securities without readily
determinable fair values
(3,730)
(688)
(12,158)
(Losses) gains on investment securities, net
$
(2,602) $
1,525 $
(20,427)
Proceeds from sales of equity securities with readily determinable fair
value
$
51,792 $
23,592 $
31,753
Proceeds from sales and capital distributions of equity securities without
readily determinable fair value
2,226
67
1,330
Net gains/losses on investment securities resulted in income tax (benefit) expense of $(676,520), $403,000 and $(5.4) million in
2024, 2023 and 2022, respectively.
114
The amortized cost and fair value of investment securities as of December 31, 2024 and December 31, 2023, by contractual
maturity, are shown in the following table. Contractual maturities may differ from actual maturities as borrowers may have the
right to call or repay obligations with or without call or prepayment penalties. Mortgage-backed securities are not included in
the maturity categories in the following maturity summary as actual maturities may differ from contractual maturities because
the underlying mortgages may be called or prepaid without penalties:
December 31, 2024
December 31, 2023
(In thousands)
Amortized
Cost
Fair Value
Amortized
Cost
Fair Value
Available-for-sale securities
Due in one year or less
$
89,578 $
89,392 $
53,162 $
52,945
Due in one to five years
157,883
153,325
132,348
123,985
Due in five to ten years
89,125
84,240
82,040
76,869
Due after ten years
24,674
21,650
18,705
15,782
Mortgage-backed
4,364,279
3,792,875
3,693,559
3,233,334
Total available-for-sale securities
$
4,725,539 $
4,141,482 $
3,979,814 $
3,502,915
Held-to-maturity securities
Due in one year or less
$
18,929 $
18,658 $
5,169 $
5,142
Due in one to five years
110,897
108,056
109,602
105,835
Due in five to ten years
71,846
70,277
99,700
98,718
Due after ten years
329,734
258,379
352,474
283,506
Mortgage-backed
3,082,314
2,455,180
3,290,318
2,722,267
Total held-to-maturity securities
$
3,613,720 $
2,910,550 $
3,857,263 $
3,215,468
Less: Allowance for credit losses
(457)
(347)
Held-to-maturity securities, net of allowance for
credit losses
$
3,613,263
$
3,856,916
At December 31, 2024 and December 31, 2023, securities having a carrying value of $6.9 billion were pledged as collateral for
public deposits, trust deposits, FHLB advances, FRB discount window, securities sold under repurchase agreements, and
derivatives. At December 31, 2024, there were no securities of a single issuer, other than U.S. government-sponsored agency
securities, which exceeded 10% of shareholders’ equity.
115
(4) Loans
The following table shows the Company’s loan portfolio by category as of the dates shown:
(Dollars in thousands)
December 31, 2024
December 31, 2023
Balance:
Commercial
$
15,574,551
$
12,832,053
Commercial real estate
12,903,944
11,344,164
Home equity
445,028
343,976
Residential real estate
3,612,765
2,769,666
Premium finance receivables—property & casualty
7,272,042
6,903,529
Premium finance receivables—life insurance
8,147,145
7,877,943
Consumer and other
99,562
60,500
Total loans, net of unearned income
$
48,055,037
$
42,131,831
Mix:
Commercial
32 %
30 %
Commercial real estate
27
27
Home equity
1
1
Residential real estate
8
7
Premium finance receivables—property & casualty
15
16
Premium finance receivables—life insurance
17
19
Consumer and other
0
0
Total loans, net of unearned income
100 %
100 %
The Company’s loan portfolio is generally comprised of loans to consumers and small to medium-sized businesses, which, for
the commercial and commercial real estate portfolios, are located primarily within the geographic market areas that the banks
serve. Various niche lending businesses, including lease finance and franchise lending, operate on a national level. The
premium finance receivables portfolios are made to customers throughout the United States and Canada. The Company strives
to maintain a loan portfolio that is diverse in terms of loan type, industry, borrower and geographic concentrations. Such
diversification reduces the exposure to economic downturns that may occur in different segments of the economy or in different
industries.
Certain premium finance receivables are recorded net of unearned income. The unearned income portions of such premium
finance receivables were $267.7 million and $285.4 million at December 31, 2024 and 2023, respectively.
Total loans, excluding PCD loans, include net deferred loan fees and costs and fair value purchase accounting adjustments
totaling $78.2 million at December 31, 2024 and $84.2 million at December 31, 2023.
Certain real estate loans, including mortgage loans held-for-sale, commercial, consumer, and home equity loans with balances
totaling approximately $23.7 billion and $21.1 billion at December 31, 2024 and 2023, respectively, were pledged as collateral
to secure the availability of borrowings from certain federal agency banks. At December 31, 2024, approximately $15.1 billion
of these pledged loans are included in a pledge of qualifying loans to the FHLB. The remaining $8.6 billion of pledged loans
was used to secure potential borrowings at the FRB discount window. At December 31, 2024 and 2023, the banks had
outstanding borrowings of $3.2 billion and $2.3 billion from the FHLB in connection with these collateral arrangements. See
Note (11) “Federal Home Loan Bank Advances” for a summary of these borrowings.
It is the policy of the Company to review each prospective credit in order to determine the appropriateness and, when required,
the adequacy of security or collateral necessary to obtain when making a loan. The type of collateral, when required, will vary
from liquid assets to real estate. The Company seeks to assure access to collateral, in the event of default, through adherence to
state lending laws and the Company’s credit monitoring procedures.
116
Acquired Loan Information — PCD Loans
As part of the Company’s prior acquisitions, the Company acquired loans that were classified as PCD based upon various
factors as of the acquisition date, including internal risk rating methodologies and prior performance under the acquiree. The
following table provides estimated details as of the date of acquisition on PCD loans acquired in 2024:
(In thousands)
Macatawa
Contractually required payments (unpaid principal balance)
$
169,472
Allowance for credit losses
(3,004)
Discount, net of any premium
(4,529)
Purchase price of PCD loans acquired
$
161,939
(5) Allowance for Credit Losses
In accordance with ASC 326, the Company is required to measure the allowance for credit losses of financial assets with similar
risk characteristics on a collective or pooled basis. In considering the segmentation of financial assets measured at amortized
cost into pools, the Company considered various risk characteristics in its analysis. Generally, the segmentation utilized
represents the level at which the Company develops and documents its systematic methodology to determine the allowance for
credit losses for the financial asset held at amortized cost, specifically the Company’s loan portfolio and debt securities
classified as held-to-maturity. Below is a summary of the Company’s loan portfolio segments and major debt security types:
Commercial loans: The Company makes commercial loans for many purposes, including working capital lines and leasing
arrangements, that are generally renewable annually and supported by business assets, personal guarantees and additional
collateral. Underlying collateral includes receivables, inventory, enterprise value and the assets of the business. Commercial
business lending is generally considered to involve a slightly higher degree of risk than traditional consumer bank lending. This
portfolio includes a range of industries, including manufacturing, restaurants, franchise, professional services, equipment
finance and leasing, mortgage warehouse lending and industrial. Individually assessed collateral dependent commercial loans
are primarily collateralized by equipment and the enterprise value or assets of the specific business.
Commercial real estate loans, including construction and development, and non-construction: The Company’s commercial real
estate loans are generally secured by a first mortgage lien and assignment of rents on the underlying property (utilized in related
assessment of individually assessed collateral dependent loans). Since most of the Company’s bank branches are located in the
Chicago metropolitan area, southern Wisconsin, and west Michigan, a significant portion of the Company’s commercial real
estate loan portfolio is located in this region. As the risks and circumstances of such loans in construction phase vary from that
of non-construction commercial real estate loans, the Company assesses the allowance for credit losses separately for these two
segments.
Home equity loans: The Company’s home equity loans and lines of credit are primarily originated by each of the bank
subsidiaries in their local markets where there is a strong understanding of the underlying real estate value. The Company’s
banks monitor and manage these loans, and conduct an automated review of all home equity lines of credit at least twice per
year. This review collects FICO and Bankruptcy scores for each home equity borrower and identifies situations where the credit
strength of the borrower is declining. When other specific events occur that may influence repayment, information such as tax
liens or judgments is collected. The bank subsidiaries use this information to manage loans that may be higher risk and to
determine whether to obtain additional credit information or updated property valuations. In a limited number of cases, the
Company may issue home equity credit together with first mortgage financing, and requests for such financing are evaluated on
a combined basis.
Residential real estate loans, including early buy-out loans guaranteed by U.S. government agencies: The Company’s
residential real estate portfolio includes one- to four-family adjustable rate mortgages, construction loans to individuals and
bridge financing loans for qualifying customers as well as certain long-term fixed rate loans. The Company’s residential
mortgages relate to properties located principally in the Chicago metropolitan area, California, southern Wisconsin and west
Michigan. Due to interest rate risk considerations, the Company generally sells in the secondary market loans originated with
long-term fixed rates, for which we receive fee income. The Company also selectively retains certain of these loans within the
banks’ own loan portfolios where they are non-agency conforming, or where the terms of the loans make them favorable to
retain. Since this loan portfolio consists primarily of locally originated loans, and since the majority of the borrowers are
longer-term customers with lower LTV ratios, the Company may face a relatively low risk of borrower default and delinquency.
Collateral dependent residential real estate loans that are individually assessed when measuring the allowance for credit losses
117
are primarily collateralized by such one-to-four family properties noted above. It is not the Company’s current practice to
underwrite, and there are no plans to underwrite subprime, Alt A, no or little documentation loans, or option ARM loans.
Additionally, early buy-out loans guaranteed by U.S. government agencies include loans in which the Company is eligible or
has exercised its option under the Government National Mortgage Association (“GNMA”) securitization program to repurchase
certain delinquent mortgage loans. Such loans were previously transferred by the Company with servicing of such loans
retained. Early buy-out loans are insured or guaranteed by the Federal Housing Administration (“FHA”) or the U.S. Department
of Veterans Affairs, subject to indemnifications and insurance limits for certain loans.
Premium finance receivables: The Company makes loans to finance insurance premiums related to property and casualty
insurance policies. The loans are indirectly originated by working through independent medium and large insurance agents and
brokers located throughout the United States and Canada. 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. The Company performs ongoing credit and other reviews of
the agents and brokers, and performs various internal audit steps to mitigate against the risk of fraud.
The Company also originates life insurance premium finance receivables. These loans are originated directly with the borrowers
with assistance from life insurance carriers, independent insurance agents, financial advisors and legal counsel. The life
insurance policy is the primary form of collateral. In addition, these loans often are secured with a letter of credit, marketable
securities or certificates of deposit. In some cases, the Company may make a loan that has a partially unsecured position.
Consumer and other loans: Included in the consumer and other loan category is a wide variety of personal and consumer loans
to individuals. The Company originates consumer loans in order to provide a wider range of financial services to its customers.
Consumer loans generally have shorter terms and higher interest rates than mortgage loans but generally involve more credit
risk than mortgage loans due to the type and nature of the collateral.
U.S. government agency securities: This security type includes debt obligations of certain government-sponsored entities of the
U.S. government such as the Federal Home Loan Bank, Federal Agricultural Mortgage Corporation, Federal Farm Credit Banks
Funding Corporation and Fannie Mae. Such securities often contain an explicit or implicit guarantee of the U.S. government.
Municipal securities: The Company’s municipal securities portfolio includes bond issues for various municipal government
entities located throughout the United States, including the Chicago metropolitan area, southern Wisconsin and west Michigan,
some of which are privately placed and non-rated. Though the risk of loss is typically low, default history exists on municipal
securities within the United States.
Mortgage-backed securities: This security type includes debt obligations supported by pools of individual mortgage loans and
issued by certain government-sponsored entities of the U.S. government such as Freddie Mac and Fannie Mae. Such securities
are considered to contain an implicit guarantee of the U.S. government.
Corporate notes: The Company’s corporate notes portfolio includes bond issues for various public companies representing a
diversified population of industries. The risk of loss in this portfolio is considered low based on the characteristics of the
investments.
In accordance with ASC 326, the Company elected to not measure an allowance for credit losses on accrued interest. As such,
accrued interest is written off in a timely manner when deemed uncollectible. Any such write-off of accrued interest will
reverse previously recognized interest income. In addition, the Company elected to not include accrued interest within
presentation and disclosures of the carrying amount of financial assets held at amortized cost. This election is applicable to the
various disclosures included within the Company’s financial statements. Accrued interest related to financial assets held at
amortized cost is included within accrued interest receivable and other assets within the Company’s Consolidated Statements of
Condition and totaled $332.8 million at December 31, 2024 and $304.5 million at December 31, 2023.
118
The tables below show the aging of the Company’s loan portfolio by the segmentation noted above at December 31, 2024 and
2023.
As of December 31, 2024
(In thousands)
Nonaccrual
90+ days
and still
accruing
60-89
days past
due
30-59
days past
due
Current
Total Loans
Loan Balances (includes PCD):
Commercial
$
73,490
$
104
$
54,844
$
92,551
$ 15,353,562
$ 15,574,551
Commercial real estate:
Construction and development
2,282
—
1,339
4,634
2,425,826
2,434,081
Non-construction
18,760
—
9,182
26,132
10,415,789
10,469,863
Home equity
1,117
—
1,233
2,148
440,530
445,028
Residential real estate loans,
excluding early buy-out loans
23,762
—
5,708
18,917
3,407,622
3,456,009
Premium finance receivables
Property & casualty insurance loans
28,797
16,031
19,042
68,219
7,139,953
7,272,042
Life insurance loans
6,431
—
72,963
36,405
8,031,346
8,147,145
Consumer and other
2
47
59
882
98,572
99,562
Total loans, net of unearned
income, excluding early buy-out
loans
$
154,641
$
16,182
$
164,370
$
249,888
$ 47,313,200
$ 47,898,281
Early buy-out loans guaranteed by
U.S. government agencies (1)
—
33,952
618
2,335
119,851
156,756
Total loans, net of unearned
income
$
154,641
$
50,134
$
164,988
$
252,223
$ 47,433,051
$ 48,055,037
As of December 31, 2023
(In thousands)
Nonaccrual
90+ days
and still
accruing
60-89
days past
due
30-59
days past
due
Current
Total Loans
Loan Balances (includes PCD):
Commercial
$
38,940
$
98
$
19,488
$
85,743
$ 12,687,784
$ 12,832,053
Commercial real estate
Construction and development
2,205
—
251
1,343
2,080,242
2,084,041
Non-construction
33,254
—
8,264
19,291
9,199,314
9,260,123
Home equity
1,341
—
62
2,263
340,310
343,976
Residential real estate loans,
excluding early buy-out loans
15,391
—
2,325
22,942
2,578,425
2,619,083
Premium finance receivables
Property & casualty insurance loans
27,590
20,135
23,236
50,437
6,782,131
6,903,529
Life insurance loans
—
—
16,206
45,464
7,816,273
7,877,943
Consumer and other
22
54
25
165
60,234
60,500
Total loans, net of unearned
income, excluding early buy-out
loans
$
118,743
$
20,287
$
69,857
$
227,648
$ 41,544,713
$ 41,981,248
Early buy-out loans guaranteed by
U.S. government agencies (1)
—
57,688
250
328
92,317
150,583
Total loans, net of unearned
income
$
118,743
$
77,975
$
70,107
$
227,976
$ 41,637,030
$ 42,131,831
(1)
Early buy-out loans are insured or guaranteed by the FHA or the U.S. Department of Veterans Affairs, subject to indemnifications and insurance
limits for certain loans.
Credit Quality Indicators
Credit quality indicators, specifically the Company’s internal risk rating systems, reflect how the Company monitors credit
losses and represents factors used by the Company when measuring the allowance for credit losses. The following discusses the
Company’s credit quality indicators by financial asset.
119
Loan portfolios
The Company’s ability to manage credit risk depends in large part on its ability to properly identify and manage problem loans.
To do so, the Company operates a credit risk rating system under which credit management personnel assign a credit risk rating
(1 to 10 rating, with higher scores indicating higher risk) to each loan at the time of origination and review loans on a regular
basis. For loans measured at amortized cost, these credit risk ratings are also an important aspect of the Company’s allowance
for credit losses measurement methodology. The credit risk rating structure and classifications are shown below:
Pass (risk rating 1 to 5): Based on various factors (liquidity, leverage, etc.), the Company believes asset quality is acceptable
and is deemed to not require additional monitoring by the Company.
Special mention (risk rating 6): Assets in this category are currently protected, potentially weak, but not to the point of
substandard classification. Loss potential is moderate if corrective action is not taken.
Substandard accrual (risk rating 7): Assets in this category have well defined weaknesses that jeopardize the liquidation of the
debt. Loss potential is distinct but with no discernible impairment.
Substandard nonaccrual/doubtful (risk rating 8 and 9): Assets have all the weaknesses in those classified “substandard accrual”
with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of current existing facts,
conditions, and values, improbable.
Loss/fully charged-off (risk rating 10): Assets in this category are considered fully uncollectible. As such, these assets have no
carrying balance on the Company's Consolidated Statements of Condition.
Early buy-out loans guaranteed by U.S. government agencies: These loans are measured at fair value and thus excluded from
the measurement of the allowance for credit losses. Credit risk rating assigned to such loans are considered in the measurement
of fair value as well as related guarantees provided by the FHA or the U.S. Department of Veterans Affairs, subject to
indemnifications and insurance limits for certain loans.
Generally, each loan officer is responsible for monitoring his or her loan portfolio, recommending a credit risk rating for each
loan in his or her portfolio and ensuring the credit risk ratings are appropriate. These credit risk ratings are then ratified by the
bank’s chief credit officer and/or concurrence credit officer. Credit risk ratings are determined by evaluating a number of
factors including: a borrower’s financial strength, cash flow coverage, collateral protection and guarantees.
The Company’s Problem Loan Reporting system includes all such loans described above with credit risk ratings of 6 through 9.
This system is designed to provide an on-going detailed tracking mechanism for each problem loan. Once management
determines that a loan has deteriorated to a point where it has a credit risk rating of 6 or worse, the Company’s Managed Asset
Division performs an overall credit and collateral review. As part of this review, all underlying collateral is identified and the
valuation methodology is analyzed and tracked. As a result of this initial review by the Company’s Managed Asset Division,
the credit risk rating is reviewed and a portion of the outstanding loan balance may be deemed uncollectible and, as a result, no
longer share similar risk characteristics as its related pool. If that is the case, the individual loan is considered collateral
dependent and individually assessed for an allowance for credit loss. The Company’s individual assessment utilizes an
independent re-appraisal of the collateral (unless such a third-party evaluation is not possible due to the unique nature of the
collateral, such as a closely-held business or thinly traded securities). In the case of commercial real estate collateral, an
independent third party appraisal is ordered by the Company’s Real Estate Services Group to determine if there has been any
change in the underlying collateral value. These independent appraisals are reviewed by the Real Estate Services Group and
sometimes by independent third party valuation experts and may be adjusted depending upon market conditions.
Through the credit risk rating process, such loans are reviewed to determine if they are performing in accordance with the
original contractual terms. If the borrower has failed to comply with the original contractual terms, further action may be
required by the Company, including a downgrade in the credit risk rating, movement to non-accrual status or a charge-off. If the
Company determines that a loan amount or portion thereof is uncollectible, the loan’s credit risk rating is immediately
downgraded to an 8 or 9 and the uncollectible amount is charged-off. Any loan that has a partial charge-off continues to be
assigned a credit risk rating of an 8 or 9 for the duration of time that a balance remains outstanding. The Company undertakes a
thorough and ongoing analysis to determine if additional impairment and/or charge-offs are appropriate and to begin a workout
plan for the credit to minimize actual losses. In determining the appropriate charge-off for collateral-dependent loans, the
Company considers the results of appraisals for the associated collateral.
120
The table below shows the Company’s loan portfolio by credit quality indicator and year of origination at December 31, 2024:
As of December 31, 2024
Year of Origination
Revolving
Total
(In thousands)
2024
2023
2022
2021
2020
Prior
Revolving
to Term
Loans
Loan Balances:
Commercial, industrial and other
Pass
$ 3,361,218 $ 2,217,568 $ 1,628,315 $ 1,139,059 $ 424,974 $ 1,035,390
$ 5,111,527 $
15,821
$ 14,933,872
Special mention
11,611
86,527
34,790
78,699
12,529
5,372
143,428
1,691
374,647
Substandard accrual
7,561
23,119
40,548
19,924
6,000
9,346
84,969
1,075
192,542
Substandard nonaccrual/doubtful
503
5,824
18,764
15,813
1,747
7,696
22,823
320
73,490
Total commercial, industrial and other
$ 3,380,893 $ 2,333,038 $ 1,722,417 $ 1,253,495 $ 445,250 $ 1,057,804
$ 5,362,747 $
18,907
$ 15,574,551
Construction and development
Pass
$
342,474 $
616,252 $
983,538 $ 216,737 $
32,972 $ 139,706
$
15,388 $
—
$ 2,347,067
Special mention
—
845
—
—
—
—
3,690
—
4,535
Substandard accrual
—
755
18,999
1,166
1,777
57,500
—
—
80,197
Substandard nonaccrual/doubtful
—
251
—
—
2,031
—
—
—
2,282
Total construction and development
$
342,474 $
618,103 $ 1,002,537 $ 217,903 $
36,780 $ 197,206
$
19,078 $
—
$ 2,434,081
Non-construction
Pass
$ 1,466,041 $ 1,481,826 $ 1,809,592 $ 1,417,473 $ 978,442 $ 2,812,243
$
216,231 $
1,534
$ 10,183,382
Special mention
3,509
15,212
16,310
59,130
3,293
37,032
2,334
—
136,820
Substandard accrual
156
2,691
30,333
26,041
30,453
41,227
—
—
130,901
Substandard nonaccrual/doubtful
—
487
453
557
—
17,263
—
—
18,760
Total non-construction
$ 1,469,706 $ 1,500,216 $ 1,856,688 $ 1,503,201 $ 1,012,188 $ 2,907,765
$
218,565 $
1,534
$ 10,469,863
Home equity
Pass
$
70 $
43 $
110 $
22 $
189 $
6,988
$
415,011 $
6,021
$
428,454
Special mention
—
97
276
60
42
3,472
5,492
545
9,984
Substandard accrual
—
15
197
—
57
4,578
542
84
5,473
Substandard nonaccrual/doubtful
—
—
385
129
—
517
—
86
1,117
Total home equity
$
70 $
155 $
968 $
211 $
288 $
15,555
$
421,045 $
6,736
$
445,028
Residential real estate
Early buy-out loans guaranteed by U.S.
government agencies
$
— $
4,421 $
3,417 $
3,707 $
4,076 $ 141,135
$
— $
—
$
156,756
Pass
870,033
498,330
811,336
762,997
204,328
250,196
—
—
3,397,220
Special mention
1,046
2,558
5,821
3,420
637
8,898
—
—
22,380
Substandard accrual
162
572
6,634
532
1,155
3,592
—
—
12,647
Substandard nonaccrual/doubtful
155
5,044
5,486
4,906
628
7,543
—
—
23,762
Total residential real estate
$
871,396 $
510,925 $
832,694 $ 775,562 $ 210,824 $ 411,364
$
— $
—
$ 3,612,765
Premium finance receivables - property &
casualty
Pass
$ 7,095,026 $
25,834 $
— $
4,542 $
1 $
—
$
— $
—
$ 7,125,403
Special mention
114,401
902
26
—
—
—
—
—
115,329
Substandard accrual
1,938
571
1
3
—
—
—
—
2,513
Substandard nonaccrual/doubtful
23,213
5,542
33
9
—
—
—
—
28,797
Total premium finance receivables - property &
casualty
$ 7,234,578 $
32,849 $
60 $
4,554 $
1 $
—
$
— $
—
$ 7,272,042
Premium finance receivables - life
Pass
$ 1,352,365 $ 6,783,031 $
4,135 $
— $
— $
—
$
— $
—
$ 8,139,531
Special mention
—
1,183
—
—
—
—
—
—
1,183
Substandard accrual
—
—
—
—
—
—
—
—
—
Substandard nonaccrual/doubtful
6,431
—
—
—
—
—
—
—
6,431
Total premium finance receivables - life
$ 1,358,796 $ 6,784,214 $
4,135 $
— $
— $
—
$
— $
—
$ 8,147,145
Consumer and other
Pass
$
4,408 $
3,131 $
700 $
805 $
70 $
31,065
$
59,127 $
—
$
99,306
Special mention
28
13
5
3
—
70
5
—
124
Substandard accrual
8
3
85
—
—
25
9
—
130
Substandard nonaccrual/doubtful
—
1
—
1
—
—
—
—
2
Total consumer and other
$
4,444 $
3,148 $
790 $
809 $
70 $
31,160
$
59,141 $
—
$
99,562
Total loans
Early buy-out loans guaranteed by U.S.
government agencies
$
— $
4,421 $
3,417 $
3,707 $
4,076 $ 141,135
$
— $
—
$
156,756
121
Pass
14,491,635 11,626,015
5,237,726 3,541,635 1,640,976 4,275,588
5,817,284
23,376
46,654,235
Special mention
130,595
107,337
57,228
141,312
16,501
54,844
154,949
2,236
665,002
Substandard accrual
9,825
27,726
96,797
47,666
39,442
116,268
85,520
1,159
424,403
Substandard nonaccrual/doubtful
30,302
17,149
25,121
21,415
4,406
33,019
22,823
406
154,641
Total loans
$ 14,662,357 $ 11,782,648 $ 5,420,289 $ 3,755,735 $ 1,705,401 $ 4,620,854
$ 6,080,576 $
27,177
$ 48,055,037
Gross write offs
Three months ended December 31, 2024
$
13,839 $
1,722 $
1,810 $
702 $
403 $
1,255
$
— $
—
$
19,731
Twelve months ended December 31, 2024
22,062
32,707
7,607
20,796
2,609
23,565
—
—
109,346
Held-to-maturity debt securities
The Company conducts an assessment of its investment securities, including those classified as held-to-maturity, at the time of
purchase and on at least an annual basis to ensure such investment securities remain within appropriate levels of risk and
continue to perform satisfactorily in fulfilling its obligations. The Company considers, among other factors, the nature of the
securities and credit ratings or financial condition of the issuer. If available, the Company obtains a credit rating for issuers
from a Nationally Recognized Statistical Rating Organization (“NRSRO”) for consideration. If no such rating is available for an
issuer, the Company performs an internal rating based on the scale utilized within the loan portfolio as discussed above. For
purposes of the table below, the Company has converted any issuer rating from an NRSRO into the Company’s internal ratings
based on Investment Policy and review by the Company’s management.
As of December 31, 2024
Year of Origination
Total
(In thousands)
2024
2023
2022
2021
2020
Prior
Balance
Amortized Cost Balances:
U.S. government agencies
1-4 internal grade
$
— $
— $
135,000 $
147,820 $
25,000 $
5,719
$
313,539
5-7 internal grade
—
—
—
—
—
—
—
8-10 internal grade
—
—
—
—
—
—
—
Total U.S. government agencies
$
— $
— $
135,000 $
147,820 $
25,000 $
5,719
$
313,539
Municipal
1-4 internal grade
$
— $
4,176 $
1,033 $
6,815 $
258 $
146,610
$
158,892
5-7 internal grade
—
—
—
—
—
2,124
2,124
8-10 internal grade
—
—
—
—
—
—
—
Total municipal
$
— $
4,176 $
1,033 $
6,815 $
258 $
148,734
$
161,016
Mortgage-backed securities
1-4 internal grade
$
— $
333,577 $
532,079 $ 2,216,658 $
— $
—
$ 3,082,314
5-7 internal grade
—
—
—
—
—
—
—
8-10 internal grade
—
—
—
—
—
—
—
Total mortgage-backed securities
$
— $
333,577 $
532,079 $ 2,216,658 $
— $
—
$ 3,082,314
Corporate notes
1-4 internal grade
$
— $
— $
14,969 $
— $
6,004 $
35,878
$
56,851
5-7 internal grade
—
—
—
—
—
—
—
8-10 internal grade
—
—
—
—
—
—
—
Total corporate notes
$
— $
— $
14,969 $
— $
6,004 $
35,878
$
56,851
Total held-to-maturity securities
$ 3,613,720
Less: Allowance for credit losses
(457)
Held-to-maturity securities, net of allowance for credit losses
$ 3,613,263
122
Measurement of Allowance for Credit Losses
The Company’s allowance for credit losses consists of the allowance for loan losses, the allowance for unfunded commitment
losses and the allowance for held-to-maturity debt security losses. In accordance with ASC 326, the Company measures the
allowance for credit losses at the time of origination or purchase of a financial asset, representing an estimate of lifetime
expected credit losses on the related asset. When developing its estimate, the Company considers available information relevant
to assessing the collectability of cash flows, from both internal and external sources. Historical credit loss experience is one
input in the estimation process as well as inputs relevant to current conditions and reasonable and supportable forecasts. In
considering past events, the Company considers the relevance, or lack thereof, of historical information due to changes in such
things as financial asset underwriting or collection practices, and changes in portfolio mix due to changing business plans and
strategies. In considering current conditions and forecasts, the Company considers both the current economic environment and
the forecasted direction of the economic environment with emphasis on those factors deemed relevant to or driving changes in
expected credit losses. As significant judgment is required, the review of the appropriateness of the allowance for credit losses
is performed quarterly by various committees with participation by the Company’s executive management.
December 31,
December 31,
(In thousands)
2024
2023
Allowance for loan losses
$
364,017
$
344,235
Allowance for unfunded lending-related commitments losses
72,586
83,030
Allowance for loan losses and unfunded lending-related commitments losses
436,603
427,265
Allowance for held-to-maturity securities losses
457
347
Allowance for credit losses
$
437,060
$
427,612
The allowance for credit losses is measured on a collective or pooled basis when similar risk characteristics exist, based upon
the segmentation discussed above. The Company utilizes modeling methodologies that estimate lifetime credit loss rates on
each pool. These methodologies include estimating the probability of default and loss given default on the commercial and
commercial real estate segments, using the weighted-average remaining maturity methodology for the residential real estate,
home equity, and consumer segments, and utilizing an assumption-based approach focusing on historical loss rates for the
premium finance receivables segments. Historical credit loss history is adjusted for reasonable and supportable forecasts
developed by the Company on a quantitative or qualitative basis and incorporates third party economic forecasts. Reasonable
and supportable forecasts consider the macroeconomic factors that are most relevant to evaluating and predicting expected
credit losses in the Company's financial assets. Currently, the Company utilizes an eight quarter forecast period using a single
macroeconomic scenario provided by a third party and reviewed within the Company's governance structure. For periods
beyond the ability to develop reasonable and supportable forecasts, the Company reverts to historical loss rates at an input level,
straight-line over a four quarter reversion period. Expected credit losses are measured over the contractual term of the financial
asset with consideration of expected prepayments. Expected extensions, renewals or modifications of the financial asset are
considered when the expected extension, renewal or modification is contained within the existing agreement and is not
unconditionally cancelable. The methodologies discussed above are applied to both current asset balances on the Company's
Consolidated Statements of Condition and off-balance sheet commitments (i.e. unfunded lending-related commitments).
Assets that do not share similar risk characteristics with a pool are assessed for the allowance for credit losses on an individual
basis. These typically include assets experiencing financial difficulties, including assets rated as substandard nonaccrual and
doubtful. If foreclosure is probable or the asset is considered collateral-dependent, expected credit losses are measured based
upon the fair value of the underlying collateral, adjusted for selling costs, if appropriate. Underlying collateral across the
Company’s segments consist primarily of real estate, land and construction assets, as well as general business assets of the
borrower. As of December 31, 2024, excluding loans carried at fair value, substandard nonaccrual loans totaling $33.8 million
in carrying balance had no related allowance for credit losses.
The Company does not measure an allowance for credit losses on accrued interest receivable balances because these balances
are written off in a timely manner as a reduction to interest income when assets are placed on nonaccrual status.
123
Loan portfolios
A summary of the activity in the allowance for credit losses by loan portfolio (i.e. allowance for loan losses and allowance for
unfunded commitment losses) for the years ended December 31, 2024 and 2023 is as follows:
Year Ended
December 31, 2024
(In thousands)
Commercial
Commercial
Real Estate
Home
Equity
Residential
Real Estate
Premium
Finance
Receivable
Consumer
and Other
Total
Loans
Allowance for credit losses at beginning of
period
$
169,604
$
223,853
$
7,116
$
13,133
$
13,069
$
490
427,265
Other adjustments
—
—
—
—
(207)
—
(207)
Charge-offs
(48,864)
(22,127)
(74)
(175)
(37,519)
(587)
(109,346)
Recoveries
2,853
323
359
15
11,313
87
14,950
Provision for credit losses - other
47,439
9,164
196
(3,337)
31,164
764
85,390
Provision for credit losses - Day 1 on non-
PCD assets acquired during the period
2,967
10,540
1,344
638
—
58
15,547
Initial allowance for credit losses recognized
on PCD assets acquired during the period
1,838
1,103
2
61
—
—
3,004
Allowance for credit losses at period end
$
175,837
$
222,856
$
8,943
$
10,335
$
17,820
$
812
$
436,603
By measurement method:
Individually evaluated for impairment
$
27,894
$
6,768
$
50
$
44
$
—
$
1
$
34,757
Collectively evaluated for impairment
147,943
216,088
8,893
10,291
17,820
811
401,846
Loans at period end:
Individually evaluated for impairment
$
73,490
$
21,042
$
1,117
$
23,674
$
—
$
2
$
119,325
Collectively evaluated for impairment
15,501,061
12,882,902
443,911
3,430,296
15,419,187
99,560
47,776,917
Loans held at fair value
—
—
—
158,795
—
—
158,795
Year Ended
December 31, 2023
(In thousands)
Commercial
Commercial
Real Estate
Home
Equity
Residential
Real Estate
Premium
Finance
Receivable
Consumer
and Other
Total
Loans
Allowance for credit losses at beginning of
period
$
142,769
$
184,352
$
7,573
$
11,585
$
10,671
$
498
$
357,448
Cumulative effect adjustment from the adoption
of ASU 2022-02
111
1,356
(33)
(692)
—
(1)
741
Other adjustments
—
—
—
—
47
—
47
Charge-offs
(15,713)
(15,228)
(227)
(192)
(21,857)
(595)
(53,812)
Recoveries
2,651
460
139
21
4,946
93
8,310
Provision for credit losses
39,786
52,913
(336)
2,411
19,262
495
114,531
Allowance for loan losses at period end
$
169,604
$
223,853
$
7,116
$
13,133
$
13,069
$
490
427,265
By measurement method:
Individually evaluated for impairment
$
17,589
$
3,150
$
—
$
135
$
—
$
11
$
20,885
Collectively evaluated for impairment
152,015
220,703
7,116
12,998
13,069
479
406,380
Loans at period end:
Individually evaluated for impairment
$
38,940
$
35,459
$
1,341
$
15,391
$
—
$
22
$
91,153
Collectively evaluated for impairment
12,793,113
11,308,705
342,635
2,599,014
14,781,472
60,478
41,885,417
Loan held at fair value
—
—
—
155,261
—
—
155,261
For the year ended December 31, 2024, the Company recognized an approximately $100.9 million provision for credit losses
related to loans and lending agreements, including an approximately $15.5 million provision for credit losses related to non-
PCD assets acquired with the Macatawa acquisition. The decreased provision compared to December 31, 2023 was primarily
the result of improvements in the macroeconomic forecast, specifically the Company’s macroeconomic forecasts of key model
inputs (most notably, Commercial Real Estate Price Index primarily impacting the commercial real estate portfolio and Baa
corporate credit spreads) partially offset by growth experienced by the Company in 2024 in various loan portfolios and from the
Macatawa acquisition. While uncertainties remain regarding expected economic performance, macroeconomic forecasts as of
December 31, 2024 assume that the impact of those uncertainties is less severe compared to that assumed at December 31,
2023. Other key drivers of provision for credit losses in these portfolios include, but are not limited to, loan risk rating
migration and net charge-offs in 2024 totaled $94.4 million.
124
Held-to-maturity debt securities
The allowance for credit losses on the Company’s held-to-maturity debt securities is presented as a reduction to the amortized
cost basis of held-to-maturity securities on the Company’s Consolidated Statements of Condition. For the years ended
December 31, 2024 and December 31, 2023, the Company recognized approximately $110,000 and $(141,000), respectively, of
provision for credit losses related to held-to-maturity securities. At December 31, 2024 and December 31, 2023, the Company
did not identify any held-to-maturity debt securities within its portfolio that would require a charge-off.
Loan Modifications to Borrowers Experiencing Financial Difficulties
The Company’s approach to restructuring or modifying loans is built on its credit risk rating system, which requires credit
management personnel to assign a credit risk rating to each loan. In each case, the loan officer is responsible for recommending
a credit risk rating for each loan and ensuring the credit risk ratings are appropriate. These credit risk ratings are then reviewed
and approved by the bank’s chief credit officer and/or concurrence credit officer. Credit risk ratings are determined by
evaluating a number of factors, including a borrower’s financial strength, cash flow coverage, collateral protection and
guarantees. The Company’s credit risk rating scale is one through ten with higher scores indicating higher risk. In the case of
loans rated six or worse following modification, the Company’s Managed Assets Division evaluates the loan and the credit risk
rating and determines that the loan has been restructured to be reasonably assured of repayment and of performance according
to the modified terms and is supported by a current, well-documented credit assessment of the borrower’s financial condition
and prospects for repayment under the revised terms. Based on the Company’s credit risk rating system, it considers that
borrowers whose credit risk rating is 5 or better are not experiencing financial difficulties.
Restructurings may arise when, due to financial difficulties experienced by the borrower, the Company obtains through physical
possession one or more collateral assets in satisfaction of all or part of an existing credit. Once possession is obtained, the
Company reclassifies the appropriate portion of the remaining balance of the credit from loans to other real estate owned
(“OREO”), which is included within other assets in the Consolidated Statements of Condition. For any residential real estate
property collateralizing a consumer mortgage loan, the Company is considered to possess the related collateral only if legal title
is obtained upon completion of foreclosure, or the borrower conveys all interest in the residential real estate property to the
Company through completion of a deed in lieu of foreclosure or similar legal agreement. At December 31, 2024, the Company
had no foreclosed residential real estate properties included within OREO. Further, the recorded investment in residential
mortgage loans secured by residential real estate properties for which foreclosure proceedings are in process totaled
$38.2 million and $53.3 million at December 31, 2024 and 2023, respectively.
The tables below presents a summary of the balance immediately following the modification of loans to borrowers experiencing
financial difficulties during the years ended December 31, 2024 and 2023:
Year Ended
December 31, 2024
(Dollars in thousands)
Total
Percentage of
Total Class of
Loan
Extension of
Term
Reduction of
Interest
Rate
Interest Only
Payments
Delay in
Contractual
Payments
Extension of
Term and
Reduction of
Interest Rate
Commercial
Commercial, industrial
and other
$
11,531
0.1 % $
9,516
$
9
$
17
$
81
$
1,908
Commercial real estate
Construction and
development
701
0.0 %
701
—
—
—
—
Non-Construction
813
0.0
493
—
320
—
—
Home equity
86
0.0
86
—
—
—
—
Residential real estate
166
0.0
—
166
—
—
—
Premium finance
receivables
Property and casualty
insurance loans
1,226
0.0
96
1,103
—
—
27
Total loans
$
14,523
0.0
$
10,892
$
1,278
$
337
$
81
$
1,935
125
Weighted Average Magnitude of Modifications:
Year Ended December 31, 2024
(Dollars in thousands)
Total
Duration of Extension
of Term (months)
Reduction of
Interest
Rate (bps)
Duration of Delay in
Contractual Payments
(months)
Commercial
Commercial, industrial and other
$
11,531
10
80
34
Commercial real estate
Construction and development
701
13
—
—
Non-construction
813
8
—
—
Home equity
86
12
—
—
Residential real estate
166
—
201
—
Premium finance receivables
Property and casualty insurance loans
1,226
—
37
—
Total loans
$
14,523
9
74
34
Year Ended
December 31, 2023
(Dollars in thousands)
Total (1)
Percentage of
Total Class of
Loan
Extension of (1)
Term
Reduction of
Interest
Rate (1)
Delay in
Contractual
Payments (1)
Extension of
Term and
Reduction of
Interest Rate (1)
Commercial
Commercial, industrial and
other
$
41,223
0.3 % $
3,367
$
314
$
37,069
$
473
Commercial real estate
Construction and
development
2,504
0.1
—
—
—
2,504
Non-construction
6,980
0.1
467
827
1,310
4,376
Home equity
702
0.2
203
—
—
499
Residential real estate
2,113
0.1
1,537
271
—
305
Premium finance receivables
Property and casualty
insurance loans
129
0.0
62
59
—
8
Total loans
$
53,651
0.1 % $
5,636
$
1,471
$
38,379
$
8,165
(1) Balances represent the recorded investment in the loan at the time of the restructuring.
Weighted Average Magnitude of Modifications:
Year Ended December 31, 2023
(Dollars in thousands)
Total
Duration of Extension
of Term (months)
Reduction of
Interest
Rate (bps)
Duration of Delay in
Contractual Payments
(months)
Commercial
Commercial, industrial and other
$
41,223
15
114
16
Commercial real estate
Construction and development
2,504
12
150
—
Non-construction
6,980
40
232
101
Home equity
702
21
137
—
Residential real estate
2,113
54
284
—
Premium finance receivables
Property and casualty insurance loans
129
1
50
—
Total loans
$
53,651
28
198
16
The Company had commitments of $20.9 million and $53.7 million as of December 31, 2024 and December 31, 2023,
respectively, to lend additional funds to borrowers experiencing financial difficulty and for whom the Company has modified
the terms of loans in the form of principal forgiveness, an interest rate reduction, an other-than insignificant payment delay or a
term extension during the periods presented.
126
The following table presents a summary of all modified loans for borrowers experiencing financial difficulties and such loans
that were in payment default under the restructured terms during the respective periods below:
(Dollars in thousands)
Year Ended
December 31, 2024
Year Ended
December 31, 2024
Year Ended
December 31, 2023
Year Ended
December 31, 2023
Total
Payments in Default
Total
Payments in Default
Commercial
Commercial, industrial and other
$
11,531
$
995
$
41,223
$
19,361
Commercial real estate
Construction and development
701
—
2,504
2,504
Non-construction
813
319
6,980
4,851
Home equity
86
86
702
203
Residential real estate
166
166
2,113
767
Premium finance receivables
Property and casualty insurance loans
1,226
122
129
129
Total loans
$
14,523
$
1,688
$
53,651
$
27,815
(6) Mortgage Servicing Rights (“MSRs”)
Following is a summary of the changes in the carrying value of MSRs, accounted for at fair value, for the years ended
December 31, 2024, 2023 and 2022:
December 31,
December 31,
December 31,
(In thousands)
2024
2023
2022
Fair value at beginning of year
$
192,456 $
230,225 $
147,571
Additions from loans sold with servicing retained
29,969
28,610
46,221
Servicing rights sold
—
(30,170)
—
Estimate of changes in fair value due to:
Payoffs and paydowns
(23,026)
(17,060)
(23,631)
Changes in valuation inputs or assumptions
4,389
(19,149)
60,064
Fair value at end of year
$
203,788 $
192,456 $
230,225
Unpaid principal balance of mortgage loans serviced for others
$
12,400,913 $
12,007,165 $
14,052,596
The Company recognizes MSR assets upon the sale of residential real estate loans to external third parties when it retains the
obligation to service the loans and the servicing fee is more than adequate compensation. The initial recognition of MSR assets
from loans sold with servicing retained and subsequent changes in fair value of all MSRs are recognized in mortgage banking
revenue. MSRs are subject to changes in value from actual and expected prepayment of the underlying loans.
The estimation of fair value related to MSRs is partly impacted by the Company exercising its EBO on eligible loans previously
sold to the GNMA. Under such optional repurchase program, financial institutions acting as servicers are allowed to buy back
from the securitized loan pool individual delinquent mortgage loans meeting certain criteria for which the institution was the
original transferor of such loans. At the option of the servicer and without prior authorization from GNMA, the servicer may
repurchase such delinquent loans for an amount equal to the remaining principal balance of the loan. At the time of such
repurchase, any MSR value related to such loans is derecognized.
The MSR asset fair value is determined by using a discounted cash flow model that incorporates the objective characteristics of
the portfolio as well as subjective valuation parameters that purchasers of servicing would apply to such portfolios sold into the
secondary market. The subjective factors include loan prepayment speeds, discount rates, servicing costs and other economic
factors. The Company uses a third party to assist in the valuation of MSRs.
Periodically the Company will purchase options for the right to purchase securities not currently held within the banks’
investment portfolios or enter into interest rate swaps in which the Company elects to not designate such derivatives as hedging
instruments. These option and swap transactions are designed primarily to economically hedge a portion of the fair value
adjustments related to the Company’s MSRs. The gain or loss associated with these derivative contracts is included in mortgage
127
banking revenue. For more information regarding these hedges outstanding as of December 31, 2024 and December 31, 2023,
see Note (21) “Derivative Financial Instruments” in Item 8 of this report.
(7) Business Combinations
On August 1, 2024, the Company completed its previously announced acquisition of Macatawa Bank Corporation
(“Macatawa”), the parent company of Macatawa Bank. Pursuant to the terms of the merger, each common share of Macatawa
outstanding at the time of merger was converted into the right to receive 0.137 shares of Wintrust common stock, with cash
paid in lieu of fractional shares. As a result, the Company issued approximately 4.7 million shares of common stock, the fair
value of consideration paid was $499.3 million. Macatawa operates 26 full-service branches located throughout communities in
Kent, Ottawa and northern Allegan counties in the state of Michigan. Macatawa offers a full range of banking, retail and
commercial lending, wealth management and ecommerce services to individuals, businesses and governmental entities. As of
August 1, 2024, Macatawa had approximately $2.7 billion in assets, $2.3 billion in deposits and $1.4 billion in loans. In
conjunction with the acquisition, the Company recorded $53.7 million discount on acquired loans, $33.5 million discount on
securities and recorded total intangibles of $253.0 million. During 2024, the Company incurred $4.3 million in acquisition
expenses related to the acquisition of Macatawa. The fair value estimates of the loans acquired are subject to adjustment up to
one year after the closing date of the acquisition as additional information becomes available.
On April 3, 2023, the Company completed its acquisition of Rothschild & Co Asset Management US Inc. and Rothschild & Co
Risk Based Investments LLC from Rothschild & Co North America Inc. (collectively, “Rothschild & Co Asset Management
U.S.”). As of the acquisition date, the Company acquired approximately $12.6 million in net assets. As the transaction was
determined to be a business combination, the Company recorded goodwill of approximately $2.6 million on the purchase.
(8) Goodwill and Other Acquisition-Related Intangible Assets
A summary of the Company’s goodwill assets by business segment is presented in the following table:
(In thousands)
January 1,
2024
Goodwill
Acquired
Impairment
Loss
Goodwill
Adjustments
December 31,
2024
Community banking
$
545,671 $
142,083 $
— $
— $
687,754
Specialty finance
39,006
—
—
(1,813)
37,193
Wealth management
71,995
—
—
—
71,995
Total
$
656,672 $
142,083 $
— $
(1,813) $
796,942
The community banking unit’s goodwill increased $142.1 million in 2024 as a result of the Macatawa acquisition. The specialty
finance segment’s goodwill decreased $1.8 million in 2024 as a result of foreign currency translation adjustments related to
prior Canadian acquisitions.
The Company assesses each reporting unit’s goodwill for impairment on at least an annual basis and considers potential
indicators of impairment at each reporting date between annual goodwill impairment tests. At October 1, 2024, the Company
utilized a quantitative approach for its annual goodwill impairment tests of the community banking, specialty finance and
wealth management reporting units and determined that no impairment existed at that time.
At each reporting date between annual goodwill impairment tests, the Company considers potential indicators of impairment.
The Company assessed whether events and circumstances as of each reporting date in 2024 resulted in it being more likely than
not that the fair value of any reporting unit was less than its carrying value. Potential impairment indicators considered include
the condition of the economy and banking industry; government intervention and regulatory updates; the impact of recent
events to financial performance and cost factors of the reporting units; performance of the Company’s stock and other relevant
events. As of December 31, 2024, the Company identified no indicators of goodwill impairment subsequent to its analysis as of
October 1, 2024 within the community banking, specialty finance or wealth management reporting units and the Company
determined it was more likely than not that the fair value of all reporting units exceeded the respective carrying value of such
reporting unit.
128
A summary of acquisition-related intangible assets as of the dates shown and the expected amortization of finite-lived
acquisition-related intangible assets as of December 31, 2024 is as follows:
December 31,
(In thousands)
2024
2023
Community banking segment:
Core deposit intangibles with finite lives:
Gross carrying amount
$
158,106 $
55,206
Accumulated amortization
(56,784)
(46,125)
Net carrying amount
$
101,322 $
9,081
Trademark with indefinite lives:
Carrying amount
13,800
5,800
Total net carrying amount
$
115,122 $
14,881
Specialty finance segment:
Customer list intangibles with finite lives:
Gross carrying amount
$
1,959 $
1,963
Accumulated amortization
(1,881)
(1,837)
Net carrying amount
$
78 $
126
Wealth management segment:
Customer list and other intangibles with finite lives:
Gross carrying amount
$
26,630 $
26,630
Accumulated amortization
(20,140)
(18,748)
Net carrying amount
$
6,490 $
7,882
Total acquisition-related intangible assets:
Gross carrying amount
$
200,495 $
89,599
Accumulated amortization
(78,805)
(66,710)
Total acquisition-related intangible assets, net
$
121,690 $
22,889
Estimated amortization for the year-ended:
2025
$
21,391
2026
18,830
2027
16,342
2028
13,908
2029
11,536
The community banking unit's core deposit intangibles and trademarks with indefinite lives increased $102.9 million and $8.0
million, respectively, in the third quarter of 2024 as a result of the Macatawa acquisition.
The core deposit intangibles recognized in connection with the Company’s bank acquisitions are amortized over a ten-year
period on an accelerated basis. The customer list intangibles recognized in connection with the purchase of life insurance
premium finance assets in 2009 are being amortized over an 18-year period on an accelerated basis. The customer list and other
intangibles recognized in connection with prior acquisitions within the wealth management segment are being amortized over a
period of up to ten-years on a straight-line or accelerated basis. Indefinite-lived intangible assets consist of certain trade and
domain names recognized in connection with prior acquisitions. As indefinite-lived intangible assets are not amortized, the
Company assesses impairment on at least an annual basis.
Total amortization expense associated with finite-lived intangibles in 2024, 2023 and 2022 was $12.1 million, $5.5 million and
$6.1 million, respectively.
129
(9) Premises, Software and Equipment, Net
A summary of premises, software and equipment at December 31, 2024 and 2023 is as follows:
December 31,
(In thousands)
2024
2023
Land
$
184,318 $
166,036
Buildings and leasehold improvements
703,798
687,326
Furniture, equipment and computer software
383,056
333,176
Construction in progress
15,702
26,443
$
1,286,874 $
1,212,981
Less: Accumulated depreciation and amortization
507,744
464,015
Total premises, software, and equipment, net
$
779,130 $
748,966
Depreciation and amortization expense related to premises, software and equipment totaled $61.4 million in 2024, $56.9 million
in 2023 and $53.1 million in 2022.
(10) Deposits
The following is a summary of deposits at December 31, 2024 and 2023:
(Dollars in thousands)
2024
2023
Balance:
Non-interest bearing
$
11,410,018
$
10,420,401
NOW and interest-bearing demand deposits
5,865,546
5,797,649
Wealth management deposits
1,469,064
1,614,499
Money market
17,975,191
15,149,215
Savings
6,372,499
5,790,334
Time certificates of deposit
9,420,031
6,625,072
Total deposits
$
52,512,349
$
45,397,170
Mix:
Non-interest bearing
22 %
23 %
NOW and interest-bearing demand deposits
11
13
Wealth management deposits
3
4
Money market
34
33
Savings
12
13
Time certificates of deposit
18
14
Total deposits
100 %
100 %
Wealth management deposits represent deposit balances (primarily money market accounts) at the Company’s subsidiary banks
from brokerage customers of Wintrust Investments, CDEC and trust and asset management customers of the Company.
The scheduled maturities of time certificates of deposit at December 31, 2024 and 2023 are as follows:
(In thousands)
2024
2023
Due within one year
$
9,061,295 $
5,994,905
Due in one to two years
281,239
558,387
Due in two to three years
53,009
42,559
Due in three to four years
14,316
16,251
Due in four to five years
10,104
12,966
Due after five years
68
4
Total time certificate of deposits
$
9,420,031 $
6,625,072
130
The following table sets forth the scheduled maturities of uninsured time deposits, specifically the portion of time deposit
balances in excess of the FDIC insurance limit of $250,000, at December 31, 2024 and 2023:
(In thousands)
2024
2023
Maturing within three months
$
774,312 $
315,495
After three but within six months
926,997
327,183
After six but within 12 months
490,231
466,699
After 12 months
54,691
73,534
Total
$
2,246,231 $
1,182,911
Time deposits in denominations of $250,000 or more were $3.9 billion and $2.5 billion at December 31, 2024 and 2023,
respectively.
(11) Federal Home Loan Bank Advances
A summary of the outstanding FHLB advances at December 31, 2024 and 2023, is as follows:
(In thousands)
2024
2023
0.00% advance due April 2024
$
— $
442
2.98% advance due August 2024
—
25,000
0.00% advance due April 2026
629
629
0.00% advance due January 2029
680
—
3.70% advance due July 2030
150,000
150,000
2.81% advance due September 2032
500,000
500,000
3.08% advance due September 2032
500,000
500,000
2.96% advance due December 2032
—
250,000
2.98% advance due December 2032
—
250,000
3.13% advance due February 2033
—
250,000
2.95% advance due May 2033
250,000
250,000
3.72% advance due July 2033
150,000
150,000
3.43% advance due January 2034
175,000
—
3.19% advance due January 2034
175,000
—
3.45% advance due April 2034
250,000
—
3.44% advance due April 2034
250,000
—
3.33% advance due May 2034
250,000
—
3.29% advance due June 2034
250,000
—
3.38% advance due June 2034
250,000
—
Total FHLB advances
$
3,151,309 $
2,326,071
FHLB advances consist of obligations of the banks and are collateralized by qualifying commercial and residential real estate
and home equity loans and certain securities. The banks have arrangements with the FHLB whereby, based on available
collateral, they could have borrowed an additional $3.9 billion at December 31, 2024.
FHLB advances are stated at par value of the debt adjusted for unamortized prepayment fees paid at the time of prior
restructurings of FHLB advances and unamortized fair value adjustments recorded in connection with advances acquired
through acquisitions and debt issuance costs. Unamortized prepayment fees are amortized as an adjustment to interest expense
using the effective interest method.
In 2024, the Company was required to repay approximately $750.0 million of FHLB advances prior to the respective maturity
date as a result of call date terms within the related agreements. Approximately $2.7 billion of the FHLB advances outstanding
at December 31, 2024 currently have varying put or call dates over the next 12 months. At December 31, 2024, the weighted
average contractual interest rate on FHLB advances was 3.23%.
(12) Subordinated Notes
At December 31, 2024, the Company had outstanding subordinated notes totaling $298.3 million compared to $437.9 million at
December 31, 2023. In 2019, the Company issued $300.0 million of subordinated notes receiving $296.7 million in proceeds,
131
net of underwriting discount. The notes have a stated interest rate of 4.85% and mature in June 2029. In the second quarter of
2024, the Company repaid the $140.0 million of subordinated notes issued in 2014. The notes had a stated interest rate of
5.00% and matured in June 2024. Subordinated notes are stated at par adjusted for unamortized issuance costs paid related to
such debt.
In connection with the issuance of subordinated notes in 2019 and 2014, the Company incurred costs totaling $3.3 million and
$1.3 million, respectively. These costs are a direct deduction from the carrying amount of the subordinated notes and are
amortized to interest expense using the effective interest method. At December 31, 2024, the unamortized balances of costs for
both issuances were approximately $1.7 million. These subordinated notes qualify as Tier II capital under the regulatory capital
requirements, subject to restrictions.
(13) Other Borrowings
The following is a summary of other borrowings at December 31, 2024 and 2023:
(In thousands)
2024
2023
Notes payable
$
142,763 $
171,282
Short-term borrowings
—
13,430
Secured Borrowings
334,934
401,897
Other
57,106
59,204
Total other borrowings
$
534,803 $
645,813
Notes Payable
On December 12, 2022, the Company entered into a credit agreement (as amended, the “Amended and Restated Credit
Agreement”) with certain unaffiliated banks. The Credit Agreement consists of a $200.0 million term loan facility and a
$100.0 million revolving credit facility.
The Amended and Restated Credit Agreement provides for, among other things, a maturity date for the revolving credit facility
of December 5, 2025, and a maturity date for the term loan facility of December 12, 2027. The Amended and Restated Credit
Agreement also provides for certain financial covenants that must be met by the Company for so long as any amounts or
commitments under the Amended and Restated Credit Agreement are still outstanding.
Borrowings under the Amended and Restated Credit Agreement that are considered “Base Rate Loans” bear interest at a rate
equal to the sum of (1) 75 basis points plus (2) the highest of (a) the prime rate, (b) the federal funds rate plus 50 basis points,
and (c) Term SOFR for a one-month tenor in effect on such day plus 110 basis points. Borrowings under the Amended and
Restated Credit Agreement that are considered “Term SOFR Loans” bear interest at a rate equal to the sum of (1) 160 basis
points plus (2) Term SOFR for the applicable interested period. A commitment fee is payable quarterly in arrears in an amount
equal to 0.30% of the actual daily amount by which the lenders’ commitments under the revolving credit facility exceeded the
amount outstanding under such facility. The Company is required to make monthly or quarterly (as applicable) payments of
interest in respect of all loans under the Amended and Restated Credit Agreement, and quarterly payments of principal in
respect of the loans under the term loan facility.
Borrowings under the Amended and Restated Credit Agreement are secured by pledges of and first priority perfected security
interests in the Company’s equity interest in its bank subsidiaries and contain several restrictive covenants, including the
maintenance of various capital adequacy levels, asset quality and profitability ratios, and certain restrictions on dividends and
other indebtedness. As of December 31, 2024, the Company was in compliance with all such covenants. The term loan facility
and revolving credit facility under the Amended and Restated Credit Agreement are available to be utilized, as needed, to
provide capital to fund continued growth at the Company’s banks and to serve as an interim source of funds for acquisitions,
common stock repurchases or other general corporate purposes.
The term debt facility is stated at par of the current outstanding balance of the debt adjusted for unamortized costs paid by the
Company in relation to the debt issuance. Unamortized costs paid by the Company in relation to the issuance of the revolving
credit facility are classified in other assets on the Consolidated Statements of Condition.
As of December 31, 2024, the outstanding principal balance under the term loan facility was $142.8 million and there was no
outstanding principal balance under the revolving credit facility.
132
Short-term Borrowings
Short-term borrowings include securities sold under repurchase agreements of customer sweep accounts in connection with
master repurchase agreements at the banks. At December 31, 2024, the Company had none of these types of borrowings
compared to $13.4 million at December 31, 2023. The Company records securities sold under repurchase agreements at their
gross value and does not offset positions on the Consolidated Statements of Condition.
Secured Borrowings
Secured borrowings primarily represent transactions to sell an undivided co-ownership interest in all receivables owed to the
Company’s subsidiary, First Insurance Funding of Canada (“FIFC Canada”). In December 2014, FIFC Canada sold such
interest to an unrelated third party in exchange for a cash payment of approximately C$150 million pursuant to a receivables
purchase agreement (“Receivables Purchase Agreement”). Amendments to the Receivables Purchase Agreement since issuance
increased the total payments to C$650 million, extended the maturity date to December 15, 2025. Additionally, since Canadian
Dollar Offered Rate (“CDOR”) ceased being used in Canada in June 2024, references to CDOR changed to the Benchmark rate.
These transactions were not considered sales of receivables and, as such, related proceeds received are reflected on the
Company’s Consolidated Statements of Condition as a secured borrowing owed to the unrelated third party, net of unamortized
debt issuance costs, and translated to the Company’s reporting currency as of the respective date. At December 31, 2024, the
translated balance of the secured borrowing totaled $323.2 million compared to $392.5 million at December 31, 2023. The
interest rate under the Receivables Purchase Agreement is the Canadian Commercial Paper Rate plus 0.825%.
Other Borrowings
Other borrowings represent a fixed-rate promissory note (“Fixed-Rate Promissory Note”) issued by the Company in June 2017.
Amendments to the Fixed-Rate Promissory Note since issuance increased the principal amount to $66.4 million, reduced the
interest rate to 1.70% and extended the maturity date to March 31, 2025. The Fixed-Rate Promissory Note relates to and is
secured by three office buildings owned by the Company. At December 31, 2024, the Fixed-Rate Promissory Note had a
balance of $57.1 million compared to $59.2 million at December 31, 2023. Under the Fixed-Rate Promissory Note, during the
twelve months ended December 31, 2024, the Company made monthly principal and interest payments. The Fixed-Rate
Promissory Note contains several restrictive covenants, including the maintenance of various capital adequacy levels, asset
quality and profitability ratios, and certain restrictions on dividends and indebtedness. At December 31, 2024, the Company
was in compliance with all such covenants.
The remaining $11.7 million within secured borrowings at December 31, 2024 represents other sold interests in certain loans by
the Company that were not considered sales and, as such, related proceeds received are reflected on the Company’s
Consolidated Statements of Condition as a secured borrowing owed to the various unrelated third parties.
(14) Junior Subordinated Debentures
As of December 31, 2024, the Company owned 100% of the common securities of eleven trusts, Wintrust Capital Trust III,
Wintrust Statutory Trust IV, Wintrust Statutory Trust V, Wintrust Capital Trust VII, Wintrust Capital Trust VIII, Wintrust
Capital Trust IX, Northview Capital Trust I, Town Bankshares Capital Trust I, First Northwest Capital Trust I, Suburban
Illinois Capital Trust II, and Community Financial Shares Statutory Trust II (the “Trusts”) set up to provide long-term
financing. The Northview, Town, First Northwest, Suburban and Community Financial Shares capital trusts were acquired as
part of the acquisitions of Northview Financial Corporation, Town Bankshares, Ltd., First Northwest Bancorp, Inc., Suburban
Illinois Bancorp, Inc. and Community Financial Shares, Inc., respectively. The Trusts were formed for purposes of issuing trust
preferred securities to third-party investors and investing the proceeds from the issuance of the trust preferred securities and
common securities solely in junior subordinated debentures issued by the Company (or assumed by the Company in connection
with an acquisition), with the same maturities and interest rates as the trust preferred securities. The junior subordinated
debentures are the sole assets of the Trusts. In each Trust, the common securities represent approximately 3% of the junior
subordinated debentures and the trust preferred securities represent approximately 97% of the junior subordinated debentures.
The Trusts are reported in the Company’s consolidated financial statements as unconsolidated subsidiaries. Accordingly, in the
Consolidated Statements of Condition, the junior subordinated debentures issued by the Company to the Trusts are reported as
liabilities and the common securities of the Trusts, all of which are owned by the Company, are included in investment
securities.
133
The following table provides a summary of the Company’s junior subordinated debentures as of December 31, 2024 and 2023.
The junior subordinated debentures represent the par value of the obligations owed to the Trusts.
Common
Securities
Trust
Preferred
Securities
Junior
Subordinated
Debentures
Rate Structure (1)
Contractual
rate at
12/31/2024
Maturity
Date
Earliest
Redemption
Date
(Dollars in thousands)
2024
2023
Issue Date
Wintrust Capital Trust III
$
774
$ 25,000
$ 25,774
$ 25,774
S+0.26161+3.25
8.17 %
04/2003
04/2033
04/2008
Wintrust Statutory Trust IV
619
20,000
20,619
20,619
S+0.26161+2.80
7.39
12/2003
12/2033
12/2008
Wintrust Statutory Trust V
1,238
40,000
41,238
41,238
S+0.26161+2.60
7.19
05/2004
05/2034
06/2009
Wintrust Capital Trust VII
1,550
50,000
51,550
51,550
S+0.26161+1.95
6.57
12/2004
03/2035
03/2010
Wintrust Capital Trust VIII
1,238
25,000
26,238
26,238
S+0.26161+1.45
6.04
08/2005
09/2035
09/2010
Wintrust Capital Trust IX
1,547
50,000
51,547
51,547
S+0.26161+1.63
6.25
09/2006
09/2036
09/2011
Northview Capital Trust I
186
6,000
6,186
6,186
S+0.26161+3.00
7.83
08/2003
11/2033
08/2008
Town Bankshares Capital Trust I
186
6,000
6,186
6,186
S+0.26161+3.00
7.83
08/2003
11/2033
08/2008
First Northwest Capital Trust I
155
5,000
5,155
5,155
S+0.26161+3.00
7.59
05/2004
05/2034
05/2009
Suburban Illinois Capital Trust II
464
15,000
15,464
15,464
S+0.26161+1.75
6.37
12/2006
12/2036
12/2011
Community Financial Shares
Statutory Trust II
109
3,500
3,609
3,609
S+0.26161+1.62
6.24
06/2007
09/2037
06/2012
Total
$ 253,566
$ 253,566
6.85 %
(1) The interest rates on the variable rate junior subordinated debentures are based on the three-month Chicago
Mercantile Exchange (“CME”) Term Secured Overnight Financing Rate (“SOFR”) and reset on a quarterly basis.
At December 31, 2024, the weighted average contractual interest rate on the junior subordinated debentures was 6.85%.
Distributions on the common and preferred securities issued by the Trusts are payable quarterly at a rate per annum equal to the
interest rates being earned by the Trusts on the junior subordinated debentures. Interest expense on the junior subordinated
debentures is deductible for income tax purposes.
Under AIRLA and Part 253 of Regulation ZZ (Rule 253), after June 30, 2023, the interest rate on the junior subordinated
debentures, by operation of law, changed their base rate from USD LIBOR to CME Term SOFR of the same tenor, plus an
applicable tenor spread adjustment. CME Term SOFR is an indicative, forward-looking measurement of daily overnight
SOFR. CME Term SOFR is published by CME Group Inc., as administrator of that rate. The calculation agent for any series of
the junior subordinated debentures may also make additional administrative conforming changes to the terms of that series of
the junior subordinated debentures under AIRLA and Rule 253.
The Company has guaranteed the payment of distributions and payments upon liquidation or redemption of the trust preferred
securities, in each case to the extent of funds held by the Trusts. The Company and the Trusts believe that, taken together, the
obligations of the Company under the guarantees, the junior subordinated debentures, and other related agreements provide, in
the aggregate, a full, irrevocable and unconditional guarantee, on a subordinated basis, of all of the obligations of the Trusts
under the trust preferred securities. Subject to certain limitations, the Company has the right to defer the payment of interest on
the junior subordinated debentures at any time, or from time to time, for a period not to exceed 20 consecutive quarters. The
trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the junior subordinated
debentures at maturity or their earlier redemption. The junior subordinated debentures are redeemable in whole or in part prior
to maturity at any time after the earliest redemption dates shown in the table, and earlier at the discretion of the Company if
certain conditions are met, and, in any event, only after the Company has obtained Federal Reserve Bank (“FRB”) approval, if
then required under applicable guidelines or regulations.
At December 31, 2024, the Company included $245.5 million of the junior subordinated debentures, net of common securities,
in Tier 2 regulatory capital.
134
(15) Revenue from Contracts with Customers
Disaggregation of Revenue
The following table presents revenue from contracts with customers, disaggregated by the revenue source:
(Dollars in thousands)
Years Ended
Revenue from contracts with customers
Location in income statement
December 31,
2024
December 31,
2023
December 31,
2022
Brokerage and insurance product
commissions
Wealth management
$
22,611 $
18,645 $
17,668
Trust
Wealth management
25,941
24,190
33,460
Asset management
Wealth management
97,675
87,772
75,486
Total wealth management
146,227
130,607
126,614
Mortgage broker fees
Mortgage banking
1,925
844
854
Service charges on deposit accounts
Service charges on deposit accounts
65,651
55,250
58,574
Administrative services
Other non-interest income
5,336
5,599
6,713
Card related fees
Other non-interest income
17,829
13,789
11,474
Other deposit related fees
Other non-interest income
13,774
14,354
13,490
Total revenue from contracts
with customers
$
250,742 $
220,443 $
217,719
Wealth Management Revenue
Wealth management revenue is comprised of brokerage and insurance product commissions, managed money fees and trust and
asset management revenue of the Company's four wealth management subsidiaries: Wintrust Investments, GLA, WPT and
CDEC. All wealth management revenue is recognized in the wealth management segment.
Brokerage and insurance product commissions consists primarily of commissions earned from trade execution services on
behalf of customers and from selling mutual funds, insurance and other investment products to customers. For trade execution
services, the Company recognizes commissions and receives payment from the brokerage customers at the point of transaction
execution. Commissions received from the investment or insurance product providers are recognized at the point of sale of the
product. The Company also receives trail and other commissions from providers for certain plans. These are generally based on
qualifying account values and are recognized once the performance obligation, specific to each provider, is satisfied on a
monthly, quarterly or annual basis.
Trust revenue is earned primarily from trust and custody services that are generally performed over time as well as fees earned
on funds held during the facilitation of tax-deferred like-kind exchange transactions. Revenue is determined periodically based
on a schedule of fees applied to the value of each customer account using a time-elapsed method to measure progress toward
complete satisfaction of the performance obligation. Fees are typically billed on a calendar month or quarter basis in advance or
in arrears depending upon the contract. Upfront fees received related to the facilitation of tax-deferred like-kind exchange
transactions are deferred until the transaction is completed. Additional fees earned for certain extraordinary services performed
on behalf of the customers are recognized when the service has been performed.
Asset management revenue is earned from money management and advisory services that are performed over time. Revenue is
based primarily on the market value of assets under management or administration using a time-elapsed method to measure
progress toward complete satisfaction of the performance obligation. Fees are typically billed on a calendar month or quarter
basis in advance or in arrears depending upon the contract. Certain programs provide the customer with an option of paying
fees as a percentage of the account value or incurring commission charges for each trade similar to brokerage and insurance
product commissions. Trade commissions and any other fees received for additional services are recognized at a point in time
once the performance obligation is satisfied.
135
Mortgage Broker Fees
For customers desiring a mortgage product not currently offered by the Company, the Company may refer such customers and,
with permission, direct such customers' applications to certain third party mortgage brokers. Mortgage broker fees are received
from these brokers for such customer referrals upon settlement of the underlying mortgage. The Company's entitlement to the
consideration is contingent on the settlement of the mortgage which is highly susceptible to factors outside of the Company's
influence, such as the third party broker's underwriting requirements. Also, the uncertainty surrounding the consideration could
be resolved in varying lengths of time, dependent upon the third party brokers. Therefore, mortgage broker fees are recognized
at the settlement of the underlying mortgage when the consideration is received. Broker fees are recognized in the community
banking segment.
Service Charges on Deposit Accounts
Service charges on deposit accounts include fees charged to deposit customers for various services, including account analysis
services, and are based on factors such as the size and type of customer, type of product and number of transactions. The fees
are based on a standard schedule of fees and, depending on the nature of the service performed, the service is performed at a
point in time or over a period of a month. When the service is performed at a point in time, the Company recognizes and
receives revenue when the service has been performed. When the service is performed over a period of a month, the Company
recognizes and receives revenue in the month the service has been performed. Service charges on deposit accounts are
recognized in the community banking segment.
Administrative Services
Administrative services revenue is earned from providing outsourced administrative services, such as data processing of
payrolls, billing and cash management services, to temporary staffing service clients located throughout the United States. Fees
are charged periodically (typically a payroll cycle) and computed in accordance with the contractually determined rate applied
to the total gross billings administered for the period. The revenue is recognized over the period using a time-elapsed method to
measure progress toward complete satisfaction of the performance obligation. Other fees are charged on a per occurrence basis
as the service is provided in the billing cycle. The Company has certain contracts with customers to perform outsourced
administrative services and short-term accounts receivable financing. For these contracts, the total fee is allocated between the
administrative services revenue and interest income during the client onboarding process based on the specific client and
services provided. Administrative services revenue is recognized in the specialty finance segment.
Card and Deposit Related Fees
Card related fees include interchange and merchant revenue, and fees related to debit and credit cards. Interchange revenue is
related to the Company issued debit cards. Other deposit related fees primarily include pay by phone processing fees, ATM and
safe deposit box fees, check order charges and foreign currency related fees. Card and deposit related fees are generally based
on volume of transactions and are recognized at the point in time when the service has been performed. For any consideration
that is constrained, the revenue is recognized once the uncertainty is known. Upfront fees received from certain contracts are
recognized on a straight line basis over the term of the contract. Card and deposit related fees are recognized in the community
banking segment.
136
Contract Balances
The following table provides information about contract assets, contract liabilities and receivables from contracts with
customers:
(Dollars in thousands)
December 31,
2024
December 31,
2023
Contract assets
$
— $
—
Contract liabilities
$
1,329 $
665
Mortgage broker fees receivable
$
101 $
64
Administrative services receivable
213
118
Wealth management receivable
12,130
13,796
Card related fees receivable
1,026
1,190
Total receivables from contracts with customer
$
13,470 $
15,168
Contract liabilities represent upfront fees that the Company received at inception of certain contracts. The revenue recognized
that was included in the contract liability balance at beginning of the period totaled $565,000 and $932,000 for the years ended
December 31, 2024 and 2023, respectively. Receivables are recognized in the period the Company provides services when the
Company's right to consideration is unconditional. Card related fee receivable is the result of volume based fee that the
Company receives from a customer on an annual basis in the second quarter of each year. Payment terms on other invoiced
amounts are typically 30 days or less. Contract liabilities and receivables from contracts with customers are included within the
accrued interest payable and other liabilities and accrued interest receivable and other assets line items, respectively, in the
Consolidated Statements of Condition.
Transaction price allocated to the remaining performance obligations
For contracts with an original expected length of more than one year, the following table presents the estimated future timing of
recognition of upfront fees related to card and deposit related fees. These upfront fees represent performance obligations that
are unsatisfied or partially unsatisfied at the end of the reporting period.
(Dollars in thousands)
Estimated—2025
$
552
Estimated—2026
111
Estimated—2027
111
Estimated—2028
111
Estimated—2029+
444
Total
$
1,329
Practical Expedients and Exemptions
The Company does not adjust the promised amount of consideration for the effects of a significant financing component if the
Company expects, at contract inception, that the period between when the Company transfers a promised service to a customer
and when the customer pays for that services is one year or less.
The Company recognizes the incremental costs of obtaining a contract as an expense when incurred if the amortization period
of the asset that the entity otherwise would have recognized is one year or less.
137
(16) Lease Commitments
The following tables provide a summary of lease costs, weighted average remaining lease term and discount rate and future
required fixed payments related to the Company’s leasing arrangements in which it is the lessee:
Year Ended
(In thousands)
December 31,
2024
December 31,
2023
December 31,
2022
Operating lease cost
$
23,446 $
22,337 $
22,767
Finance lease cost:
Amortization of right-of-use asset
249
219
219
Interest on lease liability
366
290
291
Short-term lease cost
111
41
302
Variable lease cost
2,865
2,391
2,966
Sublease income
(80)
(70)
(73)
Total lease cost
$
26,957 $
25,208 $
26,472
Year Ended
(In thousands)
December 31,
2024
December 31,
2023
Cash paid for amounts included in the measurement of operating lease
liabilities
$
24,940
$
23,599
Cash paid for amounts included in the measurement of finance lease
liabilities
349
337
Right-of-use asset obtained in exchange for new operating lease
liabilities
9,538
14,595
Right-of-use asset obtained in exchange for new finance lease liabilities
1,222
1,408
Weighted average remaining lease term - operating leases
9.87 years
10.6 years
Weighted average remaining lease term - finance leases
36.49 years
37.4 years
Weighted average discount rate - operating leases
4.30 %
4.12 %
Weighted average discount rate - finance leases
3.93 %
3.81 %
(In thousands)
Payments
2025
$
25,408
2026
23,020
2027
21,544
2028
19,601
2029
17,407
2030 and thereafter
93,401
Total minimum future amounts
$
200,381
Impact of measuring the lease liability on a discounted basis
(46,771)
Total lease liability
$
153,610
138
In addition to the lessee arrangements discussed above, the Company also leases certain owned premises and receives rental
income from such lessor agreements. Gross rental income related to the Company’s buildings totaled $5.8 million, $6.3 million
and $7.8 million, in 2024, 2023 and 2022, respectively. The approximate annual gross rental receipts under noncancelable
agreements with remaining terms in excess of one year as of December 31, 2024, are as follows (in thousands):
Receipts
2025
$
3,717
2026
2,997
2027
2,245
2028
1,131
2029
746
2030 and thereafter
3,612
Total minimum future amounts
$
14,448
(17) Income Taxes
Income tax expense (benefit) for the years ended December 31, 2024, 2023 and 2022 is summarized as follows:
Years Ended December 31,
(In thousands)
2024
2023
2022
Current income taxes:
Federal
$
178,075 $
165,518 $
116,976
State
52,882
62,948
48,633
Foreign
10,076
13,696
3,207
Total current income taxes
$
241,033 $
242,162 $
168,816
Deferred income taxes:
Federal
$
2,914 $
(8,245) $
18,560
State
7,927
(9,750)
(1,183)
Foreign
170
(1,712)
4,680
Total deferred income taxes
$
11,011 $
(19,707) $
22,057
Total income tax expense
$
252,044 $
222,455 $
190,873
The Company’s income before income taxes in 2024, 2023 and 2022 includes $27.3 million, $42.5 million and $27.7 million,
respectively, of foreign income attributable to its Canadian subsidiary.
The tax effects of certain transactions are recorded directly to shareholders’ equity rather than income tax expense. The tax
effect of fair value adjustments on securities available-for-sale and derivative instruments in cash flow hedges are recorded
directly to shareholders’ equity as part of other comprehensive income (loss) and are reflected on the Consolidated Statements
of Comprehensive Income. The tax effect of unrealized gains and losses on certain foreign currency transactions is also
recorded in shareholders’ equity as part of other comprehensive income (loss).
139
A reconciliation of the differences between taxes computed using the statutory Federal income tax rate and actual income tax
expense is as follows:
Years Ended December 31,
(Dollars in thousands)
2024
2023
2022
Income tax expense using the statutory Federal income tax rate of
21% on income before taxes
$
198,889 $
177,467 $
147,117
(Decrease) increase in tax resulting from:
Tax-exempt interest, net of interest expense disallowance
(5,338)
(5,348)
(3,936)
State taxes, net of federal tax benefit
48,039
42,027
37,328
Income earned on bank owned life insurance
(1,139)
(1,013)
(102)
Excess tax benefits on share based compensation
(3,621)
(2,314)
(2,278)
Meals, entertainment and related expenses
2,823
2,439
1,506
FDIC insurance expense
8,602
7,713
6,014
Non-deductible compensation expense
2,587
2,147
2,361
Foreign subsidiary, net
4,600
3,060
2,376
Tax benefits related to tax credits, net
(3,049)
(3,632)
(338)
Other, net
(349)
(91)
825
Income tax expense
$
252,044 $
222,455 $
190,873
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at
December 31, 2024 and 2023 are as follows:
(In thousands)
2024
2023
Deferred tax assets:
Net unrealized losses on securities included in other comprehensive income
$
151,886 $
126,155
Allowance for credit losses
113,648
113,105
Right-of-use liability
39,691
43,693
Deferred compensation
34,850
25,369
Stock-based compensation
14,741
13,762
Loans
12,104
435
FDIC special assessment
6,926
9,092
Net unrealized losses on derivatives included in other comprehensive income
4,032
—
Federal net operating loss carryforward
549
697
Other
1,091
4,495
Total gross deferred tax assets
379,518
336,803
Deferred tax liabilities:
Equipment leasing
165,363
165,806
Capitalized servicing rights
52,298
49,857
Goodwill and intangible assets
42,733
16,019
Premises and equipment
38,554
35,288
Right-of-use asset
32,651
36,249
Net unrealized gains on derivatives included in other comprehensive income
—
11,516
Deferred loan fees and costs
7,889
7,434
Other
2,660
2,652
Total gross deferred tax liabilities
342,148
324,821
Net deferred tax assets
$
37,370 $
11,982
Management has determined that a valuation allowance is not required for the deferred tax assets at December 31, 2024 because
it is more likely than not that these assets could be realized through future reversals of existing taxable temporary differences,
tax planning strategies and future taxable income. This conclusion is based on the Company’s historical earnings, its current
level of earnings and prospects for continued growth and profitability.
140
The Company has Federal net operating loss (“NOL”) carryforwards of $2.6 million that begin to expire in 2029 through 2035
and are subject to IRC Section 382 annual limitation. The NOL carryforwards were a result of acquisitions.
The Company accounts for uncertainties in income taxes in accordance with ASC 740, “Income Taxes.” At December 31,
2024, 2023, and 2022, the Company had no unrecognized tax benefits related to uncertain tax positions that, if recognized,
would impact the effective tax rate. If the Company were to record interest or penalties associated with uncertain tax positions,
the interest or penalties would be included in income tax expense. As of December 31, 2024, the Company does not expect the
total amount of unrecognized tax benefits to significantly increase in the next 12 months.
The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax in numerous state jurisdictions
and in Canada. In the ordinary course of business, we are routinely subject to audit by the taxing authorities of these
jurisdictions. Currently, the Company’s U.S. federal income tax returns are open and subject to audit for the 2021 tax return
year forward, and in general, the Company’s state income tax returns are open and subject to audit from the 2021 tax return
year forward, subject to individual state statutes of limitation. The Company has extended the statute of limitations on certain
state income tax returns for tax years 2017 through 2020 due to an ongoing audit. The Company’s Canadian subsidiary’s
Canadian income tax returns are also subject to audit for the 2021 tax return year forward.
(18) Stock Compensation Plans and Other Employee Benefit Plans
Stock Incentive Plan
In May 2022, the Company’s shareholders approved the 2022 Stock Incentive Plan (“the 2022 Plan”) which provides for the
issuance of up to 1,200,000 shares of common stock plus any shares of common stock that were available for awards under the
2015 Stock Incentive Plan (“the 2015 Plan”) as of the effective date of the 2022 Plan. The 2022 Plan replaced the 2015 Plan,
and similarly, the 2015 Plan replaced the 2007 Stock Incentive Plan (“the 2007 Plan”) and the 2007 Plan replaced the 1997
Stock Incentive Plan (“the 1997 Plan”). The 2022 Plan, 2015 Plan, 2007 Plan and the 1997 Plan are collectively referred to as
“the Plans.” The 2022 Plan has substantially similar terms to the predecessor plans. Awards granted under the Plans for which
common shares are not issued by reason of cancellation, forfeiture, lapse of such award or settlement of such award in cash, are
again available under the 2022 Plan. All grants made after the approval of the 2022 Plan are made pursuant to the 2022 Plan. As
of December 31, 2024, approximately 680,538 shares were available for future grants assuming the maximum number of shares
are issued for the performance awards outstanding. The Plans cover substantially all employees of Wintrust. The Compensation
Committee of the Board of Directors administers all stock-based compensation programs and authorizes all awards granted
pursuant to the Plans.
The Plans permit the grant of incentive stock options, non-qualified stock options, stock appreciation rights, stock awards,
restricted share or unit awards, performance awards and other incentive awards valued in whole or in part by reference to the
Company’s common stock, all on a stand-alone, combination or tandem basis. The Company historically awarded stock-based
compensation in the form of time-vested non-qualified stock options and time-vested restricted share unit awards (“restricted
shares”). The grants of options provide for the purchase of shares of the Company’s common stock at the fair market value of
the stock on the date the options are granted. Stock options generally vest ratably over periods of three to five years and have a
maximum term of ten years from the date of grant. Restricted shares entitle the holders to receive, at no cost, shares of the
Company’s common stock. Restricted shares generally vest over periods of one to five years from the date of grant.
Beginning in 2011, the Company has awarded annual grants under the Long-Term Incentive Program (“LTIP”), which is
administered under the Plans. The LTIP is designed in part to align the interests of management with interests of shareholders,
foster retention, create a long-term focus based on sustainable results and provide participants a target long-term incentive
opportunity. LTIP grants in 2024, 2023, and 2022 consisted of a combination of performance-based stock awards with a
performance condition metric, performance-based stock awards with a market condition metric and time-vested restricted
shares. Performance-based stock awards granted under the LTIP are contingent upon the achievement of pre-established long-
term performance goals set in advance by the Compensation Committee over a three-year period starting at the beginning of
each calendar year. Performance-based stock awards with a market condition metric are contingent on the total shareholder
return performance over a three-year period relative to the KBW Regional Bank Index. These performance awards are granted
at a target level, and based on the Company’s achievement of the pre-established long-term goals, the actual payouts can range
from 0% to a maximum of 150% of the target award. The awards typically vest in the quarter after the end of the performance
period upon certification of the payout by the Compensation Committee of the Board of Directors. Holders of performance-
based stock awards are entitled to receive, at no cost, the shares earned based on the achievement of the pre-established long-
term goals.
141
Holders of restricted share awards and performance-based stock awards received under the Plans are not entitled to vote or
receive cash dividends (or cash payments equal to the cash dividends) on the underlying common shares until the awards are
vested and shares are issued. Shares that are vested but are not issuable pursuant to deferred compensation arrangements accrue
additional shares based on the value of dividends otherwise paid. Except in limited circumstances, awards granted pursuant to
the Plans are canceled upon termination of employment without any payment of consideration by the Company.
Stock-based compensation is measured as the fair value of an award on the date of grant, and the measured cost is recognized
over the period which the recipient is required to provide service in exchange for the award. The fair value of restricted share
and performance-based stock awards with a performance metric is determined based on the average of the high and low trading
prices on the grant date. The fair value of performance stock awards with a market condition metric is determined using a
Monte Carlo simulation model and the fair value of stock options is estimated using a Black-Scholes option-pricing model. The
Monte Carlo simulation model and the Black-Scholes option-pricing model require the input of highly subjective assumptions
and are sensitive to changes in the award’s expected life and the price volatility of the underlying stock, which can materially
affect the fair value estimates. Management periodically reviews and adjusts the assumptions used to calculate the fair value of
such awards when granted. No options have been granted since 2016.
Stock-based compensation is recognized based on the number of awards that are ultimately expected to vest, taking into account
expected forfeitures. In addition, for performance-based awards with a performance metric, an estimate is made of the number
of shares expected to vest as a result of actual performance against the performance criteria in the award to determine the
amount of compensation expense to recognize. The estimate is re-evaluated quarterly and total compensation expense is
adjusted for any change in estimate in the current period.
Stock-based compensation expense recognized in the Consolidated Statements of Income was $38.9 million, $33.5 million and
$31.7 million and the related tax benefits were $8.3 million, $7.4 million and $7.0 million in 2024, 2023 and 2022, respectively.
A summary of the Plans’ stock option activity for the years ended December 31, 2024, 2023 and 2022 is as follows:
Stock Options
Common
Shares
Weighted Average
Strike Price
Remaining
Contractual Term(1)
Intrinsic Value(2)
($000)
Outstanding at January 1, 2022
193,447
$
41.62
Exercised
(123,924)
41.89
Forfeited or canceled
(1,430)
40.87
Outstanding at December 31, 2022
68,093
$
41.14
1.1
$
2,954
Exercisable at December 31, 2022
68,093
$
41.14
1.1
$
2,954
Outstanding at January 1, 2023
68,093
$
41.14
Exercised
(54,993)
40.75
Outstanding at December 31, 2023
13,100
$
42.76
4.2
$
655
Exercisable at December 31, 2023
13,100
$
42.76
4.2
$
655
Outstanding at January 1, 2024
13,100
$
42.76
Exercised
(2,275)
38.00
Outstanding at December 31, 2024
10,825
$
43.76
3.5
$
876
Exercisable at December 31, 2024
10,825
$
43.76
3.5
$
876
Vested or expected to vest at December 31, 2024
10,825
$
43.76
3.5
$
876
(1)
Represents the weighted average contractual remaining life in years.
(2)
Aggregate intrinsic value represents the total pretax intrinsic value (i.e., the difference between the Company’s stock price at year end and the option
exercise price, multiplied by the number of shares) that would have been received by the option holders if they had exercised their options on the last
day of the year. Options with exercise prices above the year end stock price are excluded from the calculation of intrinsic value. The intrinsic value
will change based on the fair market value of the Company’s stock.
The aggregate intrinsic value of options exercised during the years ended December 31, 2024, 2023 and 2022, was $179,664,
$2.5 million and $6.7 million, respectively. The actual tax benefit realized for the tax deductions from option exercises totaled
$30,000, $540,000 and $1.8 million for 2024, 2023 and 2022, respectively. Cash received from option exercises under the Plans
for the years ended December 31, 2024, 2023 and 2022 was $86,457, $2.2 million and $5.2 million, respectively.
142
A summary of the Plans’ restricted share activity for the years ended December 31, 2024, 2023 and 2022 is as follows:
2024
2023
2022
Restricted Shares
Common
Shares
Weighted
Average
Grant-Date
Fair Value
Common
Shares
Weighted
Average
Grant-Date
Fair Value
Common
Shares
Weighted
Average
Grant-Date
Fair Value
Outstanding at January 1
746,123
$
79.60
610,155
$
73.21
476,813
$
61.33
Granted
407,046
99.89
270,855
88.06
225,680
95.93
Vested and issued
(241,415)
70.41
(121,534)
65.90
(68,541)
64.49
Forfeited or canceled
(30,888)
95.26
(13,353)
83.68
(23,797)
75.84
Outstanding at end of year
880,866
$
90.95
746,123
$
79.60
610,155
$
73.21
Vested, but deferred, at year end
100,610
$
54.46
98,919
$
53.58
96,920
$
53.08
A summary of the Plans’ performance-based stock award activity, based on the target level of the awards, for the years ended
December 31, 2024, 2023 and 2022 is as follows:
2024
2023
2022
Performance Shares
Common
Shares
Weighted
Average
Grant-Date
Fair Value
Common
Shares
Weighted
Average
Grant-Date
Fair Value
Common
Shares
Weighted
Average
Grant-Date
Fair Value
Outstanding at January 1
553,026
$
79.69
545,379
$
70.30
557,255
$
62.94
Granted
111,469
100.47
189,355
92.36
160,598
97.14
Added by performance factor at vesting
96,952
58.78
23,925
62.82
—
—
Vested and issued
(295,644)
58.69
(186,344)
62.67
—
—
Forfeited or canceled
(11,786)
95.97
(19,289)
81.84
(172,474)
71.52
Outstanding at end of year
454,017
$
93.57
553,026
$
79.69
545,379
$
70.30
Vested, but deferred, at year end
21,759
$
44.51
29,020
$
45.88
35,696
$
44.38
At December 31, 2024, the maximum number of performance-based shares that could be issued on outstanding awards if
performance is attained at the maximum amount was approximately 670,000 shares.
The actual tax benefit realized upon the vesting and issuance of restricted shares and performance-based stock is based on the
fair value of the shares on the issue date, and the estimated tax benefit of the awards is based on fair value of the awards on the
grant date. The actual tax benefit realized upon the vesting and issuance of restricted shares and performance-based stock in
2024 was $4.4 million more than the expected tax benefit for those shares; in 2023 the actual tax benefit was $1.8 million more
than the expected tax benefit for those shares and in 2022 the actual tax benefit was $580,000 more than the expected tax
benefit for those shares. These differences in actual and expected tax benefits were recorded to income tax expense.
As of December 31, 2024, there was $47.2 million of total unrecognized compensation cost related to non-vested share based
arrangements under the Plans. That cost is expected to be recognized over a weighted average period of approximately two
years. The total fair value of shares vested during the years ended December 31, 2024, 2023 and 2022 was $34.7 million, $22.1
million and $4.5 million, respectively.
The Company issues new shares to satisfy its obligation to issue shares granted pursuant to the Plans.
Cash Incentive and Retention Plan
The Cash Incentive and Retention Plan (“CIRP”) allows the Company to provide cash compensation to the Company’s and its
subsidiaries’ officers and employees. The CIRP is administered by the Compensation Committee of the Board of Directors. The
CIRP generally provides for the grants of cash awards, which may be earned pursuant to the achievement of performance
criteria established by the Compensation Committee and/or continued employment. The performance criteria, if any,
established by the Compensation Committee must relate to one or more of the criteria specified in the CIRP, which includes:
earnings, earnings growth, revenues, stock price, return on assets, return on equity, improvement of financial ratings,
achievement of balance sheet or income statement objectives and expenses. These criteria may relate to the Company, a
particular line of business or a specific subsidiary of the Company. The Company had no expense related to the CIRP in 2024,
2023 and 2022, and no awards were paid in those years. There were no outstanding awards under this plan at December 31,
2024.
143
Other Employee Benefits
Wintrust and its subsidiaries also provide 401(k) Retirement Savings Plans (“401(k) Plans”). The 401(k) Plans cover all
employees meeting certain eligibility requirements. Contributions by employees are made through salary deferrals at their
direction, subject to certain Plan and statutory limitations. Employer contributions to the 401(k) Plans are made at the
employer’s discretion. Eligible participants that have contributed to the 401(k) Plans are eligible to share in an allocation of
employer contributions. The Company’s expense for the employer contributions to the 401(k) Plans was approximately $19.7
million in 2024, $19.2 million in 2023, and $16.2 million in 2022.
The Wintrust Financial Corporation Employee Stock Purchase Plan (“ESPP”) is designed to encourage greater stock ownership
among employees, thereby enhancing employee commitment to the Company. The ESPP gives eligible employees the right to
accumulate funds over an offering period to purchase shares of common stock. All shares offered under the ESPP will be either
newly issued shares of the Company or shares issued from treasury, if any. In accordance with the ESPP, beginning January 1,
2015, the purchase price of the shares of common stock is equal to 95% of the closing price of the Company’s common stock
on the last day of the offering period. During 2024, 2023 and 2022, 32,942, 46,034 and 40,421, shares of common stock,
respectively, were purchased by participants and no compensation expense was recorded. The Company plans to continue to
offer common stock through this ESPP on an ongoing basis and, in 2021, increased the shares authorized under the ESPP by
200,000 shares. At December 31, 2024, the Company had an obligation to issue 6,540 shares of common stock to participants
and had 133,496 shares available for future grants under the ESPP.
The Company does not currently offer other postretirement benefits such as health care or other pension plans.
Directors Deferred Fee and Stock Plan
The Wintrust Financial Corporation Directors Deferred Fee and Stock Plan (“DDFS Plan”) allows directors of the Company
and its subsidiaries to choose to receive payment of directors’ fees in either cash or common stock of the Company and to defer
the receipt of the fees. The DDFS Plan is designed to encourage stock ownership by directors. All shares offered under the
DDFS Plan will be either newly issued shares of the Company or shares issued from treasury. The number of shares issued is
determined on a quarterly basis based on the fees earned during the quarter and the fair market value per share of the common
stock on the last trading day of the preceding quarter. The shares are issued annually and the directors are entitled to dividends
and voting rights upon the issuance of the shares. During 2020, an additional 200,000 shares were authorized under the DDFS
Plan. During 2024, 2023 and 2022, a total of 14,927 shares, 63,001 shares and 59,174 shares, respectively, were issued to
directors. For those directors that elect to defer the receipt of the common stock, the Company maintains records of stock units
representing an obligation to issue shares of common stock. The number of stock units equals the number of shares that would
have been issued had the director not elected to defer receipt of the shares. Additional stock units are credited at the time
dividends are paid, however no voting rights are associated with the stock units. The shares of common stock represented by the
stock units are issued in the year specified by the directors in their participation agreements. At December 31, 2024, the
Company has an obligation to issue 304,092 shares of common stock to directors and has 52,508 shares available for future
grants under the DDFS Plan.
(19) Regulatory Matters
Banking laws place restrictions upon the amount of dividends that can be paid to Wintrust by the banks. Based on these laws,
the banks could, subject to minimum capital requirements, declare dividends to Wintrust without obtaining regulatory approval
in an amount not exceeding (a) undivided profits, and (b) the amount of net income reduced by dividends paid for the current
and prior two years. During 2024, 2023 and 2022, cash dividends totaling $475.0 million, $360.0 million and $52.0 million,
respectively, were paid to Wintrust by the banks and other subsidiaries. As of December 31, 2024, the banks had approximately
$932.5 million available to be paid as dividends to Wintrust without prior regulatory approval and without reducing their capital
below the well-capitalized level.
The Company and the banks are subject to various regulatory capital requirements established by the federal banking agencies
that take into account risk attributable to balance sheet and off-balance sheet activities. Failure to meet minimum capital
requirements can initiate certain mandatory — and possibly discretionary — actions by regulators, that if undertaken could
have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Company and the banks must meet specific capital guidelines that involve
quantitative measures of the Company’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory
accounting practices.
144
Quantitative measures established by regulation to ensure capital adequacy require the Company and the banks to maintain
minimum amounts and ratios of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and
Tier 1 leverage capital (as defined) to average quarterly assets (as defined). The Federal Reserve’s capital guidelines require
bank holding companies to maintain a minimum ratio of qualifying total capital to risk-weighted assets of 8.0%, of which at
least 4.50% must be in the form of Common Equity Tier 1 capital and 6.0% must be in the form of Tier 1 capital. The Federal
Reserve also requires a minimum leverage ratio of Tier 1 capital to average total assets of 4.0%. In addition, the Federal
Reserve continues to consider the Tier 1 leverage ratio in evaluating proposals for expansion or new activities.
As reflected in the following table, the Company met all minimum capital requirements at December 31, 2024 and 2023:
2024
2023
Total capital to risk weighted assets
12.3 %
12.1 %
Tier 1 capital to risk weighted assets
10.7
10.3
Common Equity Tier 1 capital to risk weighted assets
9.9
9.4
Tier 1 Leverage Ratio
9.4
9.3
Wintrust is designated as a financial holding company. Bank holding companies approved as financial holding companies may
engage in an expanded range of activities, including the businesses conducted by its wealth management subsidiaries. As a
financial holding company, Wintrust’s banks are required to maintain their capital positions at the “well-capitalized” level. As
of December 31, 2024, the banks were categorized as well-capitalized under the regulatory framework for prompt corrective
action. The ratios required for the banks to be “well capitalized” by regulatory definition are 10.0%, 8.0%, 6.5% and 5.0% for
total capital to risk-weighted assets, Tier 1 capital to risk-weighted assets, Common Equity Tier 1 capital to risk weighted assets
and Tier 1 leverage ratio, respectively.
145
The banks’ actual capital amounts and ratios as of December 31, 2024 and 2023 are presented in the following table:
December 31, 2024
December 31, 2023
Actual
To Be Well
Capitalized by
Regulatory Definition
Actual
To Be Well
Capitalized by
Regulatory Definition
(Dollars in thousands)
Amount
Ratio
Amount
Ratio
Amount
Ratio
Amount
Ratio
Total Capital (to Risk Weighted Assets):
Lake Forest Bank
$ 857,438
11.8 % $ 728,358
10.0 % $ 852,471
12.5 % $ 683,460
10.0 %
Hinsdale Bank
543,925
11.9
458,046
10.0
478,606
11.8
407,428
10.0
Wintrust Bank
1,164,532
12.7
915,950
10.0
1,115,527
11.9
938,320
10.0
Libertyville Bank
276,568
11.8
234,181
10.0
272,241
12.3
221,509
10.0
Barrington Bank
472,428
11.4
413,497
10.0
431,663
11.6
372,989
10.0
Crystal Lake Bank
187,820
11.8
159,314
10.0
181,916
12.7
143,786
10.0
Northbrook Bank
502,434
11.3
446,536
10.0
474,973
12.3
385,619
10.0
Macatawa
307,829
16.3
189,233
10.0
NA
NA
NA
10.0
Schaumburg Bank
229,770
12.2
187,982
10.0
203,127
11.3
179,670
10.0
Village Bank
310,037
11.5
270,656
10.0
278,437
11.9
233,112
10.0
Beverly Bank
265,590
12.5
213,222
10.0
239,374
11.5
207,604
10.0
Town Bank
387,911
11.4
340,161
10.0
352,266
11.7
301,424
10.0
Wheaton Bank
347,365
11.4
304,003
10.0
317,491
11.5
275,018
10.0
State Bank of the Lakes
213,869
11.6
184,932
10.0
197,243
11.9
165,218
10.0
Old Plank Trail Bank
271,641
11.3
241,562
10.0
240,694
11.3
212,258
10.0
St. Charles Bank
291,380
11.2
259,615
10.0
250,964
11.5
218,403
10.0
Tier 1 Capital (to Risk Weighted Assets):
Lake Forest Bank
$ 807,848
11.1 % $ 582,687
8.0 % $ 804,011
11.8 % $ 546,768
8.0 %
Hinsdale Bank
512,323
11.2
366,437
8.0
447,075
11.0
325,943
8.0
Wintrust Bank
1,069,171
11.7
732,760
8.0
1,009,631
10.8
750,656
8.0
Libertyville Bank
258,709
11.1
187,345
8.0
253,576
11.5
177,207
8.0
Barrington Bank
453,022
11.0
330,798
8.0
416,070
11.2
298,392
8.0
Crystal Lake Bank
176,144
11.1
127,451
8.0
170,670
11.9
115,029
8.0
Northbrook Bank
473,065
10.6
357,229
8.0
441,563
11.5
308,496
8.0
Macatawa
293,541
15.5
151,387
8.0
NA
NA
NA
8.0
Schaumburg Bank
216,675
11.5
150,386
8.0
190,280
10.6
143,736
8.0
Village Bank
286,808
10.6
216,524
8.0
255,649
11.0
186,489
8.0
Beverly Bank
246,565
11.6
170,578
8.0
221,548
10.7
166,083
8.0
Town Bank
366,265
10.8
272,129
8.0
334,086
11.1
241,139
8.0
Wheaton Bank
323,221
10.6
243,202
8.0
296,134
10.8
220,014
8.0
State Bank of the Lakes
203,972
11.0
147,946
8.0
189,197
11.5
132,174
8.0
Old Plank Trail Bank
255,788
10.6
193,249
8.0
227,759
10.7
169,806
8.0
St. Charles Bank
270,446
10.4
207,692
8.0
233,651
10.7
174,722
8.0
Common Equity Tier 1 Capital (to Risk Weighted Assets):
Lake Forest Bank
$ 807,848
11.1 % $ 473,433
6.5 % $ 804,011
11.8 % $ 444,249
6.5 %
Hinsdale Bank
512,323
11.2
297,730
6.5
447,075
11.0
264,828
6.5
Wintrust Bank
1,069,171
11.7
595,367
6.5
1,009,631
10.8
609,908
6.5
Libertyville Bank
258,709
11.1
152,218
6.5
253,576
11.5
143,981
6.5
Barrington Bank
453,022
11.0
268,773
6.5
416,070
11.2
242,443
6.5
Crystal Lake Bank
176,144
11.1
103,554
6.5
170,670
11.9
93,461
6.5
Northbrook Bank
473,065
10.6
290,248
6.5
441,563
11.5
250,653
6.5
Macatawa
293,541
15.5
123,002
6.5
NA
NA
NA
6.5
Schaumburg Bank
216,675
11.5
122,188
6.5
190,280
10.6
116,786
6.5
Village Bank
286,808
10.6
175,926
6.5
255,649
11.0
151,523
6.5
Beverly Bank
246,565
11.6
138,594
6.5
221,548
10.7
134,942
6.5
Town Bank
366,265
10.8
221,105
6.5
334,086
11.1
195,926
6.5
Wheaton Bank
323,221
10.6
197,602
6.5
296,134
10.8
178,762
6.5
State Bank of the Lakes
203,972
11.0
120,206
6.5
189,197
11.5
107,392
6.5
Old Plank Trail Bank
255,788
10.6
157,015
6.5
227,759
10.7
137,968
6.5
St. Charles Bank
270,446
10.4
168,750
6.5
233,651
10.7
141,962
6.5
146
December 31, 2024
December 31, 2023
Actual
To Be Well
Capitalized by
Regulatory Definition
Actual
To Be Well
Capitalized by
Regulatory Definition
(Dollars in thousands)
Amount
Ratio
Amount
Ratio
Amount
Ratio
Amount
Ratio
Tier 1 Leverage Ratio:
Lake Forest Bank
$ 807,848
9.7 % $ 416,233
5.0 % $ 804,011
9.9 % $ 404,942
5.0 %
Hinsdale Bank
512,323
9.6
266,427
5.0
447,075
9.4
238,724
5.0
Wintrust Bank
1,069,171
11.1
479,667
5.0
1,009,631
10.8
467,712
5.0
Libertyville Bank
258,709
9.5
136,451
5.0
253,576
9.7
130,396
5.0
Barrington Bank
453,022
10.7
212,429
5.0
416,070
10.8
192,589
5.0
Crystal Lake Bank
176,144
9.8
89,519
5.0
170,670
10.0
85,280
5.0
Northbrook Bank
473,065
9.2
256,737
5.0
441,563
9.9
222,668
5.0
Macatawa
293,541
10.1
144,975
5.0
NA
NA
NA
5.0
Schaumburg Bank
216,675
10.0
108,031
5.0
190,280
9.4
101,620
5.0
Village Bank
286,808
9.6
149,062
5.0
255,649
9.8
129,995
5.0
Beverly Bank
246,565
10.1
122,295
5.0
221,548
10.0
110,741
5.0
Town Bank
366,265
8.9
205,847
5.0
334,086
9.1
183,077
5.0
Wheaton Bank
323,221
9.1
178,254
5.0
296,134
9.4
157,056
5.0
State Bank of the Lakes
203,972
9.8
104,067
5.0
189,197
9.9
95,551
5.0
Old Plank Trail Bank
255,788
8.9
143,480
5.0
227,759
9.0
127,250
5.0
St. Charles Bank
270,446
9.3
144,886
5.0
233,651
9.5
122,638
5.0
NA - Macatawa Bank acquired August 1, 2024
Wintrust’s mortgage banking division and broker/dealer subsidiary are also required to maintain minimum net worth capital
requirements with various governmental agencies. The mortgage banking division’s net worth requirements are governed by the
Department of Housing and Urban Development and the broker/dealer’s net worth requirements are governed by the SEC. As
of December 31, 2024, these business units met their minimum net worth capital requirements.
(20) Commitments and Contingencies
The Company has outstanding, at any time, a number of commitments to extend credit. These commitments include revolving
home equity line and other credit agreements, term loan commitments and standby and commercial letters of credit. Standby
and commercial letters of credit are conditional commitments issued to guarantee the performance of a customer to a third
party. Standby letters of credit are contingent upon the failure of the customer to perform according to the terms of the
underlying contract with the third party, while commercial letters of credit are issued specifically to facilitate commerce and
typically result in the commitment being drawn on when the underlying transaction is consummated between the customer and
the third party.
These commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized in
the Consolidated Statements of Condition. Since many of the commitments are expected to expire without being drawn upon,
the total commitment amounts do not necessarily represent future cash requirements. The Company uses the same credit
policies in making commitments as it does for on-balance sheet instruments. Commitments to extend commercial, commercial
real estate and construction loans totaled $11.5 billion and $10.5 billion as of December 31, 2024 and 2023, respectively, and
unused home equity lines totaled $999.1 million and $845.6 million as of December 31, 2024 and 2023, respectively. Standby
and commercial letters of credit totaled $503.4 million at December 31, 2024 and $389.5 million at December 31, 2023.
In addition, at December 31, 2024 and 2023, the Company had approximately $361.3 million and $222.8 million, respectively,
in commitments to fund residential mortgage loans to be sold into the secondary market. These lending commitments are also
considered derivative instruments. The Company also enters into forward contracts for the future delivery of residential
mortgage loans at specified interest rates to reduce the interest rate risk associated with commitments to fund loans as well as
mortgage loans held-for-sale. These forward contracts are also considered derivative instruments and had contractual amounts
of approximately $377.5 million at December 31, 2024 and $626.9 million at December 31, 2023. See Note (21) “Derivative
Financial Instruments” in Item 8 of this report for further discussion on derivative instruments.
The Company enters into residential mortgage loan sale agreements with investors in the normal course of business. These
agreements usually require certain representations concerning credit information, loan documentation, collateral and
insurability. On occasion, investors have requested the Company to indemnify them against losses on certain loans or to
147
repurchase loans which the investors believe do not comply with applicable representations. Management maintains a liability
for estimated losses on loans expected to be repurchased or on which indemnification is expected to be provided and regularly
evaluates the adequacy of this recourse liability based on trends in repurchase and indemnification requests, actual loss
experience, known and inherent risks in the loans, and current economic conditions. The Company sold approximately $2.6
billion of mortgage loans in 2024 and $2.0 billion in 2023. The liability for estimated losses on repurchase and indemnification
claims for residential mortgage loans previously sold to investors was approximately $188,000 and $152,000 at December 31,
2024 and 2023, respectively, and was included in other liabilities on the Consolidated Statements of Condition. Losses charged
against the liability were $60,100 in 2024 as compared to $96,000 in 2023. These losses relate to mortgages which experienced
early payment and other defaults meeting certain representation and warranty recourse requirements.
The Company had unfunded commitments to investment partnerships that qualify for CRA purposes totaling $94.1 million and
$54.0 million as of December 31, 2024 and 2023, respectively. Of these commitments, $67.0 million and $36.2 million related
to legally-binding unfunded commitments for tax-credit investments and were included within other liabilities on the
Consolidated Statements of Condition as of December 31, 2024 and 2023, respectively.
The Company utilizes an out-sourced securities clearing platform and has agreed to indemnify the clearing broker of Wintrust
Investments for losses that it may sustain from the customer accounts introduced by Wintrust Investments. As of December 31,
2024 and 2023, the total amount of customer balances maintained by the clearing broker and subject to indemnification was
approximately $15.4 million and $9.0 million, respectively. Wintrust Investments seeks to control the risks associated with its
customers’ activities by requiring customers to maintain margin collateral in compliance with various regulatory and internal
guidelines.
Litigation Matters
In accordance with applicable accounting principles, the Company establishes an accrued liability for litigation and threatened
litigation actions and proceedings when those actions present loss contingencies, which are both probable and estimable. In
actions for which a loss is reasonably possible in future periods, the Company determines whether it can estimate a loss or
range of possible loss. To determine whether a possible loss is estimable, the Company reviews and evaluates its material
litigation on an ongoing basis, in conjunction with any outside counsel handling the matter, in light of potentially relevant
factual and legal developments. This review may include information learned through the discovery process, rulings on
substantive or dispositive motions, and settlement discussions.
Wintrust Mortgage California PAGA Matter
On May 24, 2022, a former Wintrust Mortgage employee filed a California Private Attorney General Act (“PAGA”) suit, not
individually, but as representative of all Wintrust Mortgage’s California hourly employees, against Wintrust Mortgage in the
Superior Court of San Diego County, California. Plaintiff alleges Wintrust Mortgage failed to provide: (i) accurate sick leave
accrual and pay; (ii) overtime wages; (iii) accurately itemized wage statements; (iv) meal breaks and meal premiums; (v) timely
payment of earned wages; (vi) payment of all earned wages; and (vii) payment of all vested vacation hours. Wintrust Mortgage
disputes the validity of Plaintiff’s claims and believes, to the extent there were defects in complying with California law
governing the payment of compensation to Plaintiff, such errors would have been de minimis. Plaintiff also has an arbitration
agreement with a collective and class action waiver and on January 19, 2023, Wintrust Mortgage moved to compel arbitration.
The court stayed litigation pending mediation, which was held on May 13, 2024. The parties agreed to settle the dispute for an
immaterial amount. On October 16, 2024, the court entered an order approving the settlement and on December 31, 2024, the
funds were disbursed to the settlement administrator.
Wintrust Mortgage Fair Lending Matter
On May 25, 2022, a Wintrust Mortgage customer filed a putative class action and asserted individual claims against Wintrust
Mortgage and Wintrust Financial Corporation in the District Court for the Northern District of Illinois. Plaintiff alleges that
Wintrust Mortgage discriminated against black/African American borrowers and brings class claims under the Equal Credit
Opportunity Act, Sections 1981 and 1982 under Chapter 42 of the United States Code; and the Fair Housing Act of 1968.
Plaintiff also asserts individual claims under theories of promissory estoppel, fraudulent inducement, and breach of contract. On
September 23, 2022, Wintrust filed a motion to dismiss the entire suit and the court granted that motion to dismiss on
September 27, 2023 and gave Plaintiff until October 20, 2023 to file an amended complaint. Plaintiff timely filed an amended
complaint. Wintrust moved to dismiss the amended complaint on November 21, 2023. This motion was fully briefed in January
2024 and remains pending with the Court. Wintrust vigorously disputes these allegations, believing them to be legally and
factually meritless, and Wintrust otherwise lacks sufficient information to estimate the amount of any potential liability.
148
Wintrust Financial ERISA Matter
On July 29, 2022, a former Wintrust employee filed a class action in the District Court for the Northern District of Illinois
asserting claims under the federal Employee Retirement Income Security Act (“ERISA”) against Wintrust Financial
Corporation. Plaintiff alleges Wintrust breached its fiduciary duty in the selection of BlackRock Target Date funds for inclusion
in its 401(k) plan, that Wintrust failed to monitor the performance of those funds, and in the alternative, Wintrust should be
liable for breach of trust. Plaintiff’s sole basis for the allegations is that BlackRock Target Date funds allegedly performed more
poorly than two comparable funds over a three-year period. Wintrust is one of several public companies that were sued on
identical grounds within the same week by the same plaintiff’s law firm. On November 8, 2022, Wintrust filed a motion to
dismiss the entire complaint. On July 14, 2023, the District Court granted Wintrust’s motion to dismiss and gave Plaintiff until
August 2, 2023 to file an amended complaint. Plaintiff timely filed an amended complaint which Wintrust moved to dismiss on
September 14, 2023. On August 14, 2024, the district court granted Wintrust’s motion with prejudice. On September 9, 2024,
Plaintiff timely appealed to the Seventh Circuit. In December 2024, Plaintiff proposed the parties agree to dismiss the appeal
and on December 18, 2024, the court entered and approved the joint stipulation of dismissal with prejudice which ended the
litigation.
Other Matters
In addition, the Company and its subsidiaries, from time to time, are subject to pending and threatened legal action and
proceedings arising in the ordinary course of business.
Based on information currently available and upon consultation with counsel, management believes that the eventual outcome
of any pending or threatened legal actions and proceedings described above, including our ordinary course litigation, will not
have a material adverse effect on the operations or financial condition of the Company. However, it is possible that the ultimate
resolution of these matters, if unfavorable, may be material to the results of operations or financial condition for a particular
period.
(21) Derivative Financial Instruments
The Company primarily enters into derivative financial instruments as part of its strategy to manage its exposure to changes in
interest rates. Derivative instruments represent contracts between parties that result in one party delivering cash to the other
party based on a notional amount and an underlying term (such as a rate, security price or price index or commodity price) as
specified in the contract. The amount of cash delivered from one party to the other is determined based on the interaction of the
notional amount of the contract with the underlying term. Derivatives are also implicit in certain contracts and commitments.
The derivative financial instruments currently used by the Company to manage its exposure to interest rate risk include:
(1) interest rate swaps and collars to manage the interest rate risk of certain fixed and variable rate assets and variable rate
liabilities; (2) interest rate lock commitments provided to customers to fund certain mortgage loans to be sold into the secondary
market; (3) forward commitments for the future delivery of such mortgage loans to protect the Company from adverse changes
in interest rates and corresponding changes in the value of mortgage loans held-for-sale; (4) covered call options to
economically hedge specific investment securities and receive fee income, effectively enhancing the overall yield on such
securities to compensate for net interest margin compression; and (5) options and swaps to economically hedge a portion of the
fair value adjustments related to the Company’s mortgage servicing rights portfolio. The Company also enters into derivatives
(typically interest rate swaps and commodity forward contracts) with certain qualified borrowers to facilitate the borrowers’ risk
management strategies and concurrently enters into mirror-image derivatives with a third party counterparty, effectively making
a market in the derivatives for such borrowers. Additionally, the Company enters into foreign currency contracts to manage
foreign exchange risk associated with certain foreign currency denominated assets.
The Company recognizes derivative financial instruments in the consolidated financial statements at fair value regardless of the
purpose or intent for holding the instrument. The Company records derivative assets and derivative liabilities on the
Consolidated Statements of Condition within accrued interest receivable and other assets and accrued interest payable and other
liabilities, respectively. Changes in the fair value of derivative financial instruments are either recognized in income or in
shareholders’ equity as a component of accumulated other comprehensive income or loss depending on whether the derivative
financial instrument qualifies for hedge accounting and, if so, whether it qualifies as a fair value hedge or cash flow hedge.
Changes in fair values of derivatives accounted for as fair value hedges are recorded in income in the same period and in the
same income statement line as changes in the fair values of the hedged items that relate to the hedged risk(s). Changes in fair
values of derivative financial instruments accounted for as cash flow hedges are recorded as a component of accumulated other
comprehensive income or loss, net of deferred taxes, and reclassified to earnings when the hedged transaction affects earnings.
Changes in fair values of derivative financial instruments not designated in a hedging relationship pursuant to ASC 815 are
149
reported in non-interest income during the period of the change. Derivative financial instruments are valued by a third party and
are corroborated by comparison with valuations provided by the respective counterparties. Fair values of certain mortgage
banking derivatives (interest rate lock commitments and forward commitments to sell mortgage loans) are estimated based on
changes in mortgage interest rates from the date of the loan commitment. The fair value of foreign currency derivatives is
computed based on changes in foreign currency rates stated in the contract compared to those prevailing at the measurement
date. Commodity derivative fair values are computed based on changes in the price per unit stated in the contract compared to
those prevailing at the measurement date.
The table below presents the fair value of the Company’s derivative financial instruments as of December 31, 2024 and
December 31, 2023:
Derivative Assets
Derivative Liabilities
(In thousands)
December 31,
2024
December 31,
2023
December 31,
2024
December 31,
2023
Derivatives designated as hedging instruments under ASC 815:
Interest rate derivatives designated as Cash Flow Hedges
$
7,329
$
40,116
$
56,084
$
44,456
Interest rate derivatives designated as Fair Value Hedges
10,001
12,349
87
273
Total derivatives designated as hedging instruments under ASC 815
$
17,330
$
52,465
$
56,171
$
44,729
Derivatives not designated as hedging instruments under ASC 815:
Interest rate derivatives
$
177,553
$
211,490
$
183,799
$
210,397
Interest rate lock commitments
1,950
4,511
18
—
Forward commitments to sell mortgage loans
1,297
—
88
5,212
Commodity forward contracts
766
888
583
609
Foreign exchange contracts
1,131
6,372
1,091
6,308
Total derivatives not designated as hedging instruments under ASC 815
$
182,697
$
223,261
$
185,579
$
222,526
Total Derivatives
$
200,027
$
275,726
$
241,750
$
267,255
Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are to add stability to net interest income and to manage its
exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps and
interest rate collars as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges
involve the receipt of variable-rate amounts to or from a counterparty in exchange for the Company receiving or paying fixed-
rate payments over the life of the agreements without the exchange of the underlying notional amount. Interest rate collars
designated as cash flow hedges involve the settlement of amounts in which the interest rate specified in the contract exceeds the
agreed upon cap strike rate or in which the interest rate specified in the contract is below the agreed upon floor strike rate at the
end of each period.
As of December 31, 2024, the Company had various interest rate collar and swap derivatives designated as cash flow hedges of
variable rate loans. When the relationship between the hedged item and hedging instrument is highly effective at achieving
offsetting changes in cash flows attributable to the hedged risk, changes in the fair value of these cash flow hedges are recorded
in accumulated other comprehensive income or loss and are subsequently reclassified to interest income as interest payments
are made on such variable rate loans. The changes in fair value (net of tax) are separately disclosed in the Consolidated
Statements of Comprehensive Income.
150
The table below provides details on these cash flow hedges, summarized by derivative type and maturity, as of December 31,
2024:
December 31, 2024
(In thousands)
Notional
Amount
Fair Value
Asset (Liability)
Interest Rate Collars at 1-month CME term SOFR:
Buy 2.250% floor, sell 3.743% cap; matures September 2025
$
1,250,000 $
(3,943)
Buy 2.750% floor, sell 4.320% cap; matures October 2026
500,000
(893)
Buy 2.000% floor, sell 3.450% cap; matures September 2027
1,250,000
(23,600)
Interest Rate Swaps at 1-month CME term SOFR:
Fixed 3.748%; matures December 2025
250,000
(881)
Fixed 3.759%; matures December 2025
250,000
(854)
Fixed 3.680%; matures February 2026
250,000
(1,100)
Fixed 4.176%; matures March 2026
250,000
277
Fixed 3.915%; matures March 2026
250,000
(470)
Fixed 4.450%; matures July 2026
250,000
1,497
Fixed 3.515%, matures December 2026
250,000
(2,412)
Fixed 3.512%; matures December 2026
250,000
(2,427)
Fixed 3.453%; matures February 2027
250,000
(2,807)
Fixed 4.150%; matures July 2027
250,000
916
Fixed 3.748%; matures March 2028
250,000
(1,784)
Fixed 3.526%; matures March 2028
250,000
(3,452)
Fixed 3.993%; matures October 2029
350,000
329
Fixed 4.245%; matures November 2029
350,000
4,270
Fixed 3.300%; matures November 2029(1)
250,000
(5,732)
Fixed 3.816%; matures November 2030(1)
250,000
(1,399)
Fixed 3.551%; matures November 2030(1)
250,000
(4,330)
Fixed 3.950%; matures February 2031(2)
250,000
40
Total Cash Flow Hedges
$
7,700,000 $
(48,755)
(1)
Represents interest rate swaps that have effective starting dates of November 1, 2025.
(2)
Represents interest rate swaps that have effective starting dates of February 1, 2026.
In the first quarter of 2022, the Company terminated interest rate swap derivative contracts designated as cash flow hedges of
variable rate deposits with a total notional value of $1.0 billion and a five-year term effective July 2022. At the time of
termination, the fair value of the derivative contracts totaled an asset of $66.5 million, with such adjustments to fair value
recorded in accumulated other comprehensive income or loss. In the second quarter of 2022, the Company terminated two
interest rate swap derivative contracts designated as cash flow hedges of variable rate deposits with a total notional value of
$500.0 million each effective since April 2020. The remaining terms of such derivative contracts were through March 2023 and
April 2024 and, at the time of termination, the fair value of the derivative contracts totaled assets of $3.7 million and
$10.7 million, respectively, with such adjustments to fair value recorded in accumulated other comprehensive income or loss. In
the fourth quarter of 2022, the Company terminated one additional interest rate collar derivative contract designated as a cash
flow hedge of the Term Facility with a total notional value of $64.3 million effective since September 2018. The remaining
term of such derivative contract was through September 2023 and, at the time of termination, the fair value of the derivative
contract totaled an asset of $875,000, with such adjustments to fair value recorded in accumulated other comprehensive income
or loss.
For all such terminations, as the hedged forecasted transactions (interest payments on variable rate deposits and the Term
Facility) are still expected to occur over the remaining term of such terminated derivatives, such adjustments will remain in
accumulated other comprehensive income or loss and be reclassified as a reduction to interest expense on a straight-line basis
over the original term of the terminated derivative contracts.
151
A rollforward of the amounts in accumulated other comprehensive income or loss related to interest rate derivatives designated
as cash flow hedges, including such derivative contracts terminated during the period, follows:
Years Ended December 31,
(In thousands)
2024
2023
Unrealized gain at beginning of period
$
43,538 $
10,026
Amount reclassified from accumulated other comprehensive income or loss to
interest income or expense on deposits, loans and other borrowings
72,674
55,846
Amount of loss recognized in other comprehensive income or loss
(131,720)
(22,334)
Unrealized (loss) gain at end of period
$
(15,508) $
43,538
As of December 31, 2024, the Company estimated that during the next 12 months, $5.9 million will be reclassified from
accumulated other comprehensive income or loss as a decrease to net interest income. Such estimate consists of $13.3 million
reclassified as a reduction to interest expense on the terminated cash flow hedges discussed above and $19.2 million reclassified
as a reduction to interest income related to the interest rate collars and swaps noted above that remain outstanding.
Fair Value Hedges of Interest Rate Risk
Interest rate swaps designated as fair value hedges involve the payment of fixed amounts to a counterparty in exchange for the
Company receiving variable payments over the life of the agreements without the exchange of the underlying notional amount.
As of December 31, 2024, the Company had 13 interest rate swaps with an aggregate notional amount of $176.2 million that
were designated as fair value hedges primarily associated with fixed rate commercial and industrial and commercial real estate
loans as well as life insurance premium finance receivables.
For derivatives designated and that qualify as fair value hedges, the net gain or loss from the entire change in the fair value of
the derivative instrument is recognized in the same income statement line item as the earnings effect, including the net gain or
loss, of the hedged item (interest income earned on fixed rate loans) when the hedged item affects earnings.
The following table presents the carrying amount of the hedged assets/(liabilities) and the cumulative amount of fair value
hedging adjustment included in the carrying amount of the hedged assets/(liabilities) that are designated as a fair value hedge
accounting relationship as of December 31, 2024:
December 31, 2024
(In thousands)
Derivatives in
Fair Value
Hedging
Relationships
Location in the Statement of Condition
Carrying Amount of the
Hedged Assets/(Liabilities)
Cumulative Amount of Fair
Value Hedging Adjustment
Included in the Carrying
Amount of the Hedged
Assets/(Liabilities)
Cumulative Amount of Fair
Value Hedging Adjustment
Remaining for any Hedged
Assets/(Liabilities) for which
Hedge Accounting has been
Discontinued
Interest rate
swaps
Loans, net of unearned income
$
156,907 $
(9,961) $
(56)
Available-for-sale debt securities
605
(11)
—
The following table presents the gain or loss recognized related to derivative instruments that are designated as fair value
hedges for the respective period:
(In thousands)
Location of Gain or (Loss) Recognized in Income on Derivative
Year Ended
December 31,
Derivatives in Fair Value
Hedging Relationships
2024
Interest rate swaps
Interest and fees on loans
$
(27)
Interest income - investment securities
—
Non-Designated Hedges
The Company does not use derivatives for speculative purposes. Derivatives not designated as accounting hedges are used to
manage the Company’s economic exposure to interest rate movements and other identified risks but do not meet the strict
152
hedge accounting requirements of ASC 815. Changes in the fair value of derivatives not designated in hedging relationships are
recorded directly in earnings.
Interest Rate Derivatives—Periodically, the Company may purchase interest rate cap derivatives designed to act as an economic
hedge of the risk of the negative impact on its fixed-rate loan portfolios from rising interest rates. As of December 31, 2024,
there were no interest rate caps outstanding that were designed to act as an economic hedge.
Additionally, the Company has interest rate derivatives, including swaps and option products, resulting from a service the
Company provides to certain qualified borrowers. The Company’s banking subsidiaries execute certain derivative products
(typically interest rate swaps) directly with qualified commercial borrowers to facilitate their respective risk management
strategies. For example, these arrangements allow the Company’s commercial borrowers to effectively convert a variable rate
loan to a fixed rate. In order to minimize the Company’s exposure on these transactions, the Company simultaneously executes
offsetting derivatives with third parties. In most cases, the offsetting derivatives have mirror-image terms, which result in the
positions’ changes in fair value substantially offsetting through earnings each period. However, to the extent that the derivatives
are not a mirror-image and because of differences in counterparty credit risk, changes in fair value will not completely offset
resulting in some earnings impact each period. Changes in the fair value of these derivatives are included in other non-interest
income. At December 31, 2024 and 2023, the Company had interest rate derivative transactions with an aggregate notional
amount of approximately $13.3 billion and $11.4 billion, respectively, (all interest rate swaps and caps with customers and third
parties) related to this program. At December 31, 2024, these interest rate derivatives had maturity dates ranging from January
2025 to January 2037.
Mortgage Banking Derivatives—These derivatives include interest rate lock commitments provided to customers to fund certain
mortgage loans to be sold into the secondary market and forward commitments for the future delivery of such loans. It is the
Company’s practice to enter into forward commitments for the future delivery of a portion of our residential mortgage loan
production when interest rate lock commitments are entered into in order to economically hedge the effect of future changes in
interest rates on its commitments to fund the loans as well as on its portfolio of mortgage loans held-for-sale. The Company’s
mortgage banking derivatives have not been designated as being in hedge relationships. At December 31, 2024 and 2023, the
Company had interest rate lock commitments with an aggregate notional amount of approximately $120.7 million and $129.9
million and forward commitments to sell mortgage loans with an aggregate notional amount of approximately $377.5 million
and $626.9 million. The fair values of these derivatives were estimated based on changes in mortgage rates from the dates of the
commitments. Changes in the fair value of these mortgage banking derivatives are included in mortgage banking revenue.
Commodity Derivatives—The Company has commodity forward contracts resulting from a service the Company provides to
certain qualified borrowers. The Company’s banking subsidiaries execute certain derivative products directly with qualified
commercial borrowers to facilitate their respective risk management strategies. For example, these arrangements allow the
Company’s commercial borrowers to effectively purchase or sell a given commodity at an agreed-upon price on an agreed-upon
settlement date. In order to minimize the Company’s exposure on these transactions, the Company simultaneously executes
offsetting derivatives with third parties. In most cases, the offsetting derivatives have mirror-image terms, which result in the
positions’ changes in fair value substantially offsetting through earnings each period. However, to the extent that the derivatives
are not a mirror-image and because of differences in counterparty credit risk, changes in fair value will not completely offset
resulting in some earnings impact each period. Changes in the fair value of these derivatives are included in other non-interest
income. At December 31, 2024 and 2023, the Company had commodity derivative transactions with an aggregate notional
amount of approximately $5.2 million and $8.4 million, respectively, (all forward contracts with customers and third parties)
related to this program. At December 31, 2024, these commodity derivatives had maturity dates ranging from January 2025 to
October 2025.
Foreign Currency Derivatives—The Company has foreign currency derivative contracts resulting from a service the Company
provides to certain qualified customers. The Company’s banking subsidiaries execute certain derivative products directly with
qualified customers to facilitate their respective risk management strategies related to foreign currency fluctuations. For
example, these arrangements allow the Company’s customers to effectively exchange the currency of one country for the
currency of another country at an agreed-upon price on an agreed-upon settlement date. In order to minimize the Company’s
exposure on these transactions, the Company simultaneously executes offsetting derivatives with third parties. In most cases,
the offsetting derivatives have mirror-image terms, which result in the positions’ changes in fair value substantially offsetting
through earnings each period. However, to the extent that the derivatives are not a mirror-image and because of differences in
counterparty credit risk, changes in fair value will not completely offset resulting in some earnings impact each period. Changes
in the fair value of these derivatives are included in other non-interest income. As of December 31, 2024 and 2023, the
Company held foreign currency derivatives with an aggregate notional amount of approximately $97.1 million and $144.3
million, respectively.
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Other Derivatives—Periodically, the Company will sell options to a bank or dealer for the right to purchase certain securities
held within the banks’ investment portfolios (covered call options). These option transactions are designed to increase the total
return associated with the investment securities portfolio. These options do not qualify as accounting hedges pursuant to ASC
815 and, accordingly, changes in fair value of these contracts are recognized as other non-interest income. There were no
covered call options outstanding as of December 31, 2024 or December 31, 2023.
Periodically, the Company will purchase options for the right to purchase securities not currently held within the banks’
investment portfolios or enter into interest rate swaps in which the Company elects to not designate such derivatives as hedging
instruments. These option and swap transactions are designed primarily to economically hedge a portion of the fair value
adjustments related to the Company’s mortgage servicing rights portfolio. The gain or loss associated with these derivative
contracts are included in mortgage banking revenue. At December 31, 2024 the Company held ten interest rate derivatives with
an aggregate notional value of $295.0 million and four interest rate derivatives with an aggregate notional value of $195.0
million at December 31, 2023 for such purpose of economically hedging a portion of the fair value adjustment related to its
mortgage servicing rights portfolio.
Amounts included in the Consolidated Statements of Income related to derivative instruments not designated in hedge
relationships were as follows:
(In thousands)
Years Ended
December 31,
Derivative
Location in income statement
2024
2023
Interest rate swaps and caps
Trading gains (losses), net
$
59 $
765
Mortgage banking derivatives
Mortgage banking revenue
952
12,285
Commodity contracts
Trading gains (losses), net
184
279
Foreign exchange contracts
Trading gains (losses), net
(84)
—
Covered call options
Fees from covered call options
10,196
21,863
Derivative contract held as economic hedge on MSRs
Mortgage banking revenue
(7,909)
1,280
Credit Risk
Derivative instruments have inherent risks, primarily market risk and credit risk. Market risk is associated with changes in the
value of an underlying asset. Credit risk relates to the risk that the counterparty will fail to perform according to the terms of the
agreement. The Company is exposed to the credit risk of its commercial borrowers and third party financial institutions who are
counterparties to interest rate derivatives with the Company.
The counterparty credit risk associated with the mirror-image swaps executed with third party financial institutions, is
monitored and managed as part of the Company’s overall asset-liability management process, except that the counterparty
credit risk related to derivatives entered into with certain qualified borrowers is managed through the Company’s standard loan
underwriting process for commercial borrowers since these derivatives typically share in the collateral provided by the loan
agreements.
When deemed necessary, appropriate types and amounts of collateral are obtained to minimize credit exposure. The Company
hedges the market risk of derivatives transactions with commercial borrowers by entering into offsetting transactions with large,
highly rated financial institutions. These exposures are generally secured by cash under bilateral Credit Support Annexes
(“CSAs”), which are a component of the ISDA Master Agreements executed with counterparties.
Aggregate counterparty exposures are monitored against various types of credit limits established to contain risk within
parameters. Counterparty credit risk is managed by the Counterparty Credit Risk Management team in accordance with SR
11-10, Interagency Counterparty Credit Risk Guidance, which was issued in 2011 in response to the financial crisis of 2008.
The guidance addresses counterparty credit risk governance, measurement, management, and systems. Specifically,
counterparty risk is managed through the establishment and regular review of exposure limits, formalization of limits in policy
and procedure, ongoing review of models, and having a single platform to allow for the timely aggregation of exposures. The
Counterparty Credit Risk Management team uses a variety of approaches to monitor counterparty financial performance,
including monitoring of credit exposure versus limits, use of early warning reports, and daily and intraday monitoring of
financial developments.
The Company has agreements with certain of its interest rate derivative counterparties that contain cross-default provisions,
which provide that if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness
has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. The
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Company also has agreements with certain of its derivative counterparties that contain a provision allowing the counterparty to
terminate the derivative positions if the Company fails to maintain its status as a well or adequately capitalized institution,
which would require the Company to settle its obligations under the agreements. If the Company were to breach any of these
provisions, at a time when the derivatives subject to such agreements are in a liability position, and the derivatives were to be
terminated as a result, the Company would be required to settle its obligations under the agreements at the termination value
and would be required to pay any additional amounts due in excess of amounts previously posted as collateral with the
respective counterparty. As of December 31, 2024, there were no derivatives that were subject to such agreements in a net
liability position.
The Company records interest rate derivatives subject to master netting agreements at their gross value and does not offset
derivative assets and liabilities on the Consolidated Statements of Condition. The table below summarizes the Company’s
interest rate derivatives and offsetting positions as of the dates shown.
Derivative Assets
Derivative Liabilities
Fair Value
Fair Value
(In thousands)
December 31, 2024
December 31, 2023
December 31, 2024
December 31, 2023
Gross Amounts Recognized
$
194,883
$
263,955
$
239,970
$
255,126
Less: Amounts offset in the Statements of Condition
—
—
—
—
Net amount presented in the Statements of Condition
$
194,883
$
263,955
$
239,970
$
255,126
Gross amounts not offset in the Statements of Condition
Offsetting Derivative Positions
$
(74,656) $
(76,514) $
(74,656) $
(76,514)
Collateral Posted
(78,550)
(144,899)
—
—
Net Credit Exposure
$
41,677
$
42,542
$
165,314
$
178,612
(22) Fair Value of Assets and Liabilities
The Company measures, monitors and discloses certain of its assets and liabilities on a fair value basis. These financial assets
and financial liabilities are measured at fair value in three levels, based on the markets in which the assets and liabilities are
traded and the observability of the inputs used to determine fair value. These levels are:
•
Level 1 — unadjusted quoted prices in active markets for identical assets or liabilities.
•
Level 2 — inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly
or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or
similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset
or liability or inputs that are derived principally from or corroborated by observable market data by correlation or other
means.
•
Level 3 — significant unobservable inputs that reflect the Company’s own assumptions that market participants would
use in pricing the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is
determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for
which the determination of fair value requires significant management judgment or estimation.
A financial instrument’s categorization within the above valuation hierarchy is based upon the lowest level of input that is
significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value
measurement in its entirety requires judgment, and considers factors specific to the assets or liabilities. The following is a
description of the valuation methodologies used for the Company’s assets and liabilities measured at fair value on a recurring
basis.
Available-for-sale debt securities, trading account securities and equity securities with readily determinable fair value — Fair
values for available-for-sale debt securities, trading account securities and equity securities with readily determinable fair value
are typically based on prices obtained from independent pricing vendors. Securities measured with these valuation techniques
are generally classified as Level 2 of the fair value hierarchy. Typically, standard inputs such as benchmark yields, reported
trades for similar securities, issuer spreads, benchmark securities, bids, offers and reference data including market research
publications are used to determine the fair value these securities. When these inputs are not available, broker/dealer quotes may
be obtained by the vendor to determine the fair value of the security. We review the vendor’s pricing methodologies to
determine if observable market information is being used, versus unobservable inputs. Fair value measurements using
155
significant inputs that are unobservable in the market due to limited activity or a less liquid market are classified as Level 3 in
the fair value hierarchy. The fair value of U.S. Treasury securities and certain equity securities with readily determinable fair
value are based on unadjusted quoted prices in active markets for identical securities. As such, these securities are classified as
Level 1 in the fair value hierarchy.
The Company’s Investment Operations Department is responsible for the valuation of Level 3 available-for-sale debt securities.
The methodology and variables used as inputs in pricing Level 3 securities are derived from a combination of observable and
unobservable inputs. The unobservable inputs are determined through internal assumptions that may vary from period to period
due to external factors, such as market movement and credit rating adjustments.
At December 31, 2024, the Company classified $121.6 million of municipal securities as Level 3. These municipal securities
are bond issues for various municipal government entities primarily located in the Chicago metropolitan area and southern
Wisconsin and are privately placed, non-rated bonds without CUSIP numbers. The Company’s methodology for pricing these
securities focuses on three distinct inputs: equivalent rating, yield and other pricing terms. To determine the rating for a given
non-rated investment debt security, the Investment Operations Department references a rated, publicly issued bond by the same
issuer if available. A reduction is then applied to the rating obtained from the comparable bond, as the Company believes if
liquidated, a non-rated bond would be valued less than a similar bond with a verifiable rating. The reduction applied by the
Company is one complete rating grade (i.e., a “AA” rating for a comparable bond would be reduced to “A” for the Company’s
valuation). For bond issues without comparable bond proxies, a rating of “BBB” was assigned. For the year ended
December 31, 2024, all of the ratings derived by the Investment Operations Department using the above process were “BBB”
or better. The fair value measurement noted above is sensitive to the rating input, as a higher rating typically results in an
increased valuation. The remaining pricing inputs used in the bond valuation are observable. Based on the rating determined in
the above process, Investment Operations obtains a corresponding current market yield curve available to market participants.
Other terms including coupon, maturity date, redemption price, number of coupon payments per year, and accrual method are
obtained from the individual bond term sheets. Certain municipal bonds held by the Company at December 31, 2024 are
continuously callable. When valuing these bonds, the fair value is capped at par value as the Company assumes a market
participant would not pay more than par for a continuously callable bond.
Mortgage loans held-for-sale — The fair value of mortgage loans held-for-sale is typically determined by reference to investor
price sheets for loan products with similar characteristics. Loans measured with this valuation technique are classified as Level
2 in the fair value hierarchy.
At December 31, 2024, the Company classified $60.4 million of certain delinquent mortgage loans held-for-sale as Level 3. For
such delinquent loans in which investor interest may be limited, the Company estimates fair value by discounting future
scheduled cash flows for the specific loan through its life, adjusted for estimated credit losses. The Company uses a discount
rate based on prevailing market coupon rates on loans with similar characteristics. The assumed weighted average discount rate
used as an input to value these loans at December 31, 2024 was 6.61%. The higher the rate utilized to discount estimated future
cash flows, the lower the fair value measurement. Additionally, the weighted average credit discount used as an input to value
the specific loans was 0.69% with a credit loss discount ranging from 0% to 20% at December 31, 2024.
Loans held-for-investment — The fair value of loans held-for-investment is typically determined by reference to investor price
sheets for loan products with similar characteristics. Loans measured with this valuation technique are classified as Level 2 in
the fair value hierarchy.
The fair value for certain loans in which the Company previously elected the fair value option is estimated by discounting
future scheduled cash flows for the specific loan through maturity, adjusted for estimated credit losses and prepayment or life
assumptions. These loans primarily consist of early buyout loans guaranteed by U.S. government agencies that are delinquent
and, as a result, investor interest may be limited. The Company uses a discount rate based on the actual coupon rate of the
underlying loan. At December 31, 2024, the Company classified $34.9 million of loans held-for-investment carried at fair value
as Level 3. The assumed weighted average discount rate used as an input to value these loans at December 31, 2024 was 6.61%.
The higher the rate utilized to discount estimated future cash flows, the lower the fair value measurement. As noted above, the
fair value estimate also includes assumptions of prepayment speeds and average life as well as credit losses. The weighted
average prepayments speed used as an input to value current loans was 8.29% at December 31, 2024. Prepayment speeds are
inversely related to the fair value of these loans as an increase in prepayment speeds results in a decreased valuation. For
delinquent loans in which performance is not assumed and there is a higher probability of resolution of the loan ending in
foreclosure, the weighted average life of such loans was 6.1 years. Average life is inversely related to the fair value of these
loans as an increase in estimated life results in a decreased valuation. Additionally, the weighted average credit discount used as
an input to value the specific loans was 1.17% with credit loss discounts ranging from 0% to 39% at December 31, 2024.
156
MSRs — Fair value for MSRs is determined utilizing a valuation model which calculates the fair value of each servicing right
based on the present value of estimated future cash flows. The Company uses a discount rate commensurate with the risk
associated with each servicing right, given current market conditions. At December 31, 2024, the Company classified $203.8
million of MSRs as Level 3. The weighted average discount rate used as an input to value the pool of MSRs at December 31,
2024 was 10.95% with discount rates applied ranging from 6% to 18%. The higher the rate utilized to discount estimated future
cash flows, the lower the fair value measurement. The fair value of MSRs was also estimated based on other assumptions
including prepayment speeds and the cost to service. Prepayment speeds ranged from 4% to 90% or a weighted average
prepayment speed of 8.29%. Further, for current and delinquent loans, the Company assumed a weighted average cost of
servicing of $76 and $378, respectively, per loan. Prepayment speeds and the cost to service are both inversely related to the
fair value of MSRs as an increase in prepayment speeds or the cost to service results in a decreased valuation. See Note (6)
“Mortgage Servicing Rights (“MSRs”)” for further discussion of MSRs.
Derivative instruments — The Company’s derivative instruments include interest rate swaps, caps and collars, commitments to
fund mortgages for sale into the secondary market (interest rate locks), forward commitments to end investors for the sale of
mortgage loans, commodity future contracts and foreign currency contracts. Interest rate swaps, caps and collars and
commodity future contracts are valued by a third party, using models that primarily use market observable inputs, such as yield
curves and commodity prices prevailing at the measurement date, and are classified as Level 2 in the fair value hierarchy. The
credit risk associated with derivative financial instruments that are subject to master netting agreements is measured on a net
basis by counterparty portfolio. The fair value for mortgage-related derivatives is based on changes in mortgage rates from the
date of the commitments. The fair value of foreign currency derivatives is computed based on change in foreign currency rates
stated in the contract compared to those prevailing at the measurement date.
At December 31, 2024, the Company classified $2.0 million of derivative assets related to interest rate locks as Level 3. The
fair value of interest rate locks is based on prices obtained for loans with similar characteristics from third parties, adjusted for
the pull-through rate, which represents the Company’s best estimate of the likelihood that a committed loan will ultimately
fund. The weighted-average pull-through rate at December 31, 2024 was 82.52% with pull-through rates applied ranging from
1% to 100%. Pull-through rates are directly related to the fair value of interest rate locks as an increase in the pull-through rate
results in an increased valuation.
Nonqualified deferred compensation assets — The underlying assets relating to the nonqualified deferred compensation plan
are included in a trust and primarily consist of non-exchange traded institutional funds which are priced based by an
independent third party service. These assets are classified as Level 2 in the fair value hierarchy.
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The following tables present the balances of assets and liabilities measured at fair value on a recurring basis for the periods
presented:
December 31, 2024
(In thousands)
Total
Level 1
Level 2
Level 3
Available-for-sale securities
U.S. Treasury
$
37,907 $
37,907 $
— $
—
U.S. government agencies
44,945
—
44,945
—
Municipal
184,593
—
62,986
121,607
Corporate notes
81,162
—
81,162
—
Mortgage-backed
3,792,875
—
3,792,875
—
Trading account securities
4,072
—
4,072
—
Equity securities with readily determinable fair value
215,412
207,346
8,066
—
Mortgage loans held-for-sale
331,261
—
270,862
60,399
Loans held-for-investment
158,795
—
123,899
34,896
MSRs
203,788
—
—
203,788
Nonqualified deferred compensations assets
16,653
—
16,653
—
Derivative assets
200,027
—
198,077
1,950
Total
$
5,271,490 $
245,253 $
4,603,597 $
422,640
Derivative liabilities
$
241,750 $
— $
241,750 $
—
December 31, 2023
(In thousands)
Total
Level 1
Level 2
Level 3
Available-for-sale securities
U.S. Treasury
$
6,968 $
6,968 $
— $
—
U.S. government agencies
45,124
—
45,124
—
Municipal
140,958
—
54,721
86,237
Corporate notes
76,531
—
76,531
—
Mortgage-backed
3,233,334
—
3,233,334
—
Trading account securities
4,707
—
4,707
—
Equity securities with readily determinable fair value
139,268
131,202
8,066
—
Mortgage loans held-for-sale
292,722
—
265,887
26,835
Loans held-for-investment
155,261
—
94,591
60,670
MSRs
192,456
—
—
192,456
Nonqualified deferred compensations assets
15,238
—
15,238
—
Derivative assets
275,726
—
271,216
4,510
Total
$
4,578,293 $
138,170 $
4,069,415 $
370,708
Derivative liabilities
$
267,255 $
— $
267,255 $
—
The aggregate remaining contractual principal balance outstanding as of December 31, 2024 and 2023 for mortgage loans held-
for-sale measured at fair value under ASC 825 was $335.9 million and $291.7 million, respectively, while the aggregate fair
value of mortgage loans held-for-sale was $331.3 million and $292.7 million, respectively, as shown in the above tables. At
December 31, 2024, $4.0 million of mortgage loans held-for-sale were classified as nonaccrual compared to $649,000 as of
December 31, 2023. Additionally, there were $59.3 million of loans past due greater than 90 days and still accruing interest
within the mortgage loans held-for-sale portfolio as of December 31, 2024 compared to $26.6 million as of December 31, 2023.
All of the nonaccrual loans and loans past due greater than 90 days and still accruing within the mortgage loans held-for-sale
portfolio as of December 31, 2024 and December 31, 2023 were individual delinquent mortgage loans bought back from
GNMA at the unconditional option of the Company as servicer for those loans.
The aggregate remaining contractual principal balance outstanding as of December 31, 2024 and 2023 for loans held-for-
investment measured at fair value under ASC 825 was $157.8 million and $156.9 million, respectively, while the aggregate fair
value of loans held-for-investment was $158.8 million and $155.3 million, respectively, as shown in the above tables.
158
The changes in Level 3 assets measured at fair value on a recurring basis during the years ended December 31, 2024 and 2023
are summarized as follows:
(In thousands)
Municipal
Mortgage
loans held-
for-sale
Loans held-for-
investment
MSRs
Derivative
assets
Balance at January 1, 2024
$
86,237 $
26,835
$
60,670 $ 192,456 $
4,510
Total net gains (losses) included in:
Net income (1)
—
370
(43)
11,332
(2,560)
Other comprehensive income or loss
(11,212)
—
—
—
—
Purchases
84,839
—
—
—
—
Issuances
—
—
—
—
—
Sales
—
—
—
—
—
Settlements
(38,257)
(48,555)
(43,525)
—
—
Net transfers into Level 3
—
81,749
17,794
—
—
Balance at December 31, 2024
$ 121,607 $
60,399
$
34,896 $ 203,788 $
1,950
(In thousands)
Municipal
Mortgage
loans held-
for-sale
Loans held-for-
investment
MSRs
Derivative
assets
Balance at January 1, 2023
$ 117,537 $
48,655
$
84,165 $ 230,225 $
1,711
Total net (losses) gains included in:
Net income (1)
—
1,960
(103)
(7,599)
2,799
Other comprehensive income or loss
(7,152)
—
—
—
—
Purchases
36,688
—
—
—
—
Issuances
—
—
—
—
—
Sales
—
—
—
(30,170)
—
Settlements
(60,836)
(75,342)
(69,218)
—
—
Net transfers into Level 3
—
51,562
45,826
—
—
Balance at December 31, 2023
$
86,237 $
26,835
$
60,670 $ 192,456 $
4,510
(1) Changes in the balance of mortgage loans held-for-sale, MSRs and derivative assets related to fair value adjustments
are recorded as components of mortgage banking revenue. Changes in the balance of loans held-for-investment related
to fair value adjustments are recorded as other non-interest income.
Also, the Company may be required, from time to time, to measure certain other assets at fair value on a non-recurring basis in
accordance with GAAP. These adjustments to fair value usually result from impairment charges on individual assets. For assets
measured at fair value on a non-recurring basis that were still held in the balance sheet at the end of the period, the following
table provides the carrying value of the related individual assets or portfolios at December 31, 2024.
December 31, 2024
Year Ended
December 31, 2024
Fair Value Losses
Recognized, net
(In thousands)
Total
Level 1
Level 2
Level 3
Individually assessed loans -
foreclosure probable and collateral-
dependent
$
119,325 $
— $
— $
119,325 $
71,462
Other real estate owned (1)
23,116
—
—
23,116
207
Total
$
142,441 $
— $
— $
142,441 $
71,669
(1) Net fair value losses recognized on other real estate owned include valuation adjustments and charge-offs during the
respective period.
Individually assessed loans — In accordance with ASC 326, the allowance for credit losses for loans and other financial assets
held at amortized cost should be measured on a collective or pooled basis when such assets exhibit similar risk characteristics.
In instances in which a financial asset does not exhibit similar risk characteristics to a pool, the Company is required to measure
such allowance for credit losses on an individual asset basis. For the Company’s loan portfolio, nonaccrual loans are considered
159
to not exhibit similar risk characteristics as pools and thus are individually assessed. Credit losses are measured by estimating
the fair value of the loan based on the present value of expected cash flows, the market price of the loan, or the fair value of the
underlying collateral. Individually assessed loans are considered a fair value measurement where an allowance for credit loss is
established based on the fair value of collateral. Appraised values on relevant real estate properties, which may require
adjustments to market-based valuation inputs, are generally used on foreclosure probable and collateral-dependent loans within
the real estate portfolios.
The Company’s Managed Assets Division is primarily responsible for the valuation of Level 3 inputs of individually assessed
loans. For more information on individually assessed loans refer to Note (5) “Allowance for Credit Losses”. At December 31,
2024, the Company had $119.3 million of individually assessed loans classified as Level 3. All of the $119.3 million of
individually assessed loans were measured at fair value based on the underlying collateral of the loan as shown in the table
above. None were valued based on discounted cash flows in accordance with ASC 310,”Receivables.”
Other real estate owned — Other real estate owned is comprised of real estate acquired in partial or full satisfaction of loans
and is included in other assets. Other real estate owned is recorded at its estimated fair value less estimated selling costs at the
date of transfer, with any excess of the related loan balance over the fair value less expected selling costs charged to the
allowance for loan losses. Subsequent changes in value are reported as adjustments to the carrying amount and are recorded in
other non-interest expense. Gains and losses upon sale, if any, are also charged to other non-interest expense. Fair value is
generally based on third party appraisals and internal estimates that are adjusted by a discount representing the estimated cost of
sale and is therefore considered a Level 3 valuation.
The Company’s Managed Assets Division is primarily responsible for the valuation of Level 3 inputs for other real estate
owned. At December 31, 2024, the Company had $23.1 million of other real estate owned classified as Level 3. The
unobservable input applied to other real estate owned relates to the 10% reduction to the appraisal value representing the
estimated cost of sale of the foreclosed property. A higher discount for the estimated cost of sale results in a decreased carrying
value.
160
The valuation techniques and significant unobservable inputs used to measure both recurring and non-recurring Level 3 fair
value measurements at December 31, 2024 were as follows:
(Dollars in thousands)
Fair Value
Valuation
Methodology
Significant Unobservable
Input
Range
of Inputs
Weighted
Average
of Inputs
Impact to valuation
from an increased
or higher input value
Measured at fair value on a recurring basis:
Municipal securities
$ 121,607
Bond pricing
Equivalent rating
BBB-AA+
N/A
Increase
Mortgage loans held-
for-sale
60,399
Discounted cash
flows
Discount rate
6.61 %
6.61 % Decrease
Credit discount
0% - 20%
0.69 % Decrease
Loans held-for-
investment
34,896
Discounted cash
flows
Discount rate
6.50% - 6.61%
6.61 % Decrease
Credit discount
0% - 39%
1.17 % Decrease
Constant prepayment
rate (CPR) - current
loans
8.29 %
8.29 % Decrease
Average life -
delinquent loans (in
years)
1.7 years -
11.3 years
6.1 years
Decrease
MSRs
203,788
Discounted cash
flows
Discount rate
6% - 18%
10.95 % Decrease
Constant prepayment
rate (CPR)
4% - 90%
8.29 % Decrease
Cost of servicing
$70 - $200
$
76
Decrease
Cost of servicing -
delinquent
$200 - $1,000
$
378
Decrease
Derivatives
1,950
Discounted cash
flows
Pull-through rate
1% - 100%
82.52 % Increase
Measured at fair value on a non-recurring basis:
Individually assessed
loans - foreclosure
probable and
collateral-dependent
119,325
Appraisal value
Appraisal adjustment -
cost of sale
10 %
10.00 % Decrease
Other real estate
owned
23,116
Appraisal value
Appraisal adjustment -
cost of sale
10 %
10.00 % Decrease
161
The Company is required under applicable accounting guidance to report the fair value of all financial instruments on the
Consolidated Statements of Condition, including those financial instruments carried at cost. The table below presents the
carrying amounts and estimated fair values of the Company’s financial instruments as of the dates shown:
December 31, 2024
December 31, 2023
(In thousands)
Carrying
Value
Fair
Value
Carrying
Value
Fair
Value
Financial Assets:
Cash and cash equivalents
$
458,536 $
458,536 $
423,464 $
423,464
Interest-bearing deposits with banks
4,409,753
4,409,753
2,084,323
2,084,323
Available-for-sale securities
4,141,482
4,141,482
3,502,915
3,502,915
Held-to-maturity securities
3,613,263
2,910,550
3,856,916
3,215,468
Trading account securities
4,072
4,072
4,707
4,707
Equity securities with readily determinable fair value
215,412
215,412
139,268
139,268
FHLB and FRB stock, at cost
281,407
281,407
205,003
205,003
Brokerage customer receivables
18,102
18,102
10,592
10,592
Mortgage loans held-for-sale, at fair value
331,261
331,261
292,722
292,722
Loans held-for-investment, at fair value
158,795
158,795
155,261
155,261
Loans held-for-investment, at amortized cost
47,896,242
47,070,249
41,976,570
41,090,010
Nonqualified deferred compensation assets
16,653
16,653
15,238
15,238
Derivative assets
200,027
200,027
275,726
275,726
Accrued interest receivable and other
563,625
563,625
477,832
477,832
Total financial assets
$ 62,308,630 $ 60,779,924 $ 53,420,537 $ 51,892,529
Financial Liabilities:
Non-maturity deposits
$ 43,092,318 $ 43,092,318 $ 38,772,098 $ 38,772,098
Deposits with stated maturities
9,420,031
9,423,976
6,625,072
6,603,746
FHLB advances
3,151,309
3,153,524
2,326,071
2,367,107
Other borrowings
534,803
534,406
645,813
643,755
Subordinated notes
298,283
286,683
437,866
413,501
Junior subordinated debentures
253,566
253,588
253,566
253,579
Derivative liabilities
241,750
241,750
267,255
267,255
Accrued interest payable
48,364
48,364
51,116
51,116
Total financial liabilities
$ 57,040,424 $ 57,034,609 $ 49,378,857 $ 49,372,157
Not all the financial instruments listed in the table above are subject to the disclosure provisions of ASC 820, as certain assets
and liabilities result in their carrying value approximating fair value. These include cash and cash equivalents, interest bearing
deposits with banks, brokerage customer receivables, FHLB and FRB stock, accrued interest receivable and accrued interest
payable and non-maturity deposits.
The following methods and assumptions were used by the Company in estimating fair values of financial instruments that were
not previously disclosed.
Held-to-maturity securities — Held-to-maturity securities include U.S. government-sponsored agency securities, municipal
bonds issued by various municipal government entities primarily located in the Chicago metropolitan area, southern Wisconsin,
and west Michigan and mortgage-backed securities. Fair values for held-to-maturity securities are typically based on prices
obtained from independent pricing vendors. In accordance with ASC 820, the Company has generally categorized these held-to-
maturity securities as a Level 2 fair value measurement. Fair values for certain other held-to-maturity securities are based on the
bond pricing methodology discussed previously related to certain available-for-sale securities. In accordance with ASC 820, the
Company has categorized these held-to-maturity securities as a Level 3 fair value measurement.
Loans held-for-investment, at amortized cost — Fair values are estimated for portfolios of loans with similar financial
characteristics. Loans are analyzed by type (commercial, residential real estate, etc.) and category within each type
(construction, non-construction, franchise lending etc.). Each category is further segmented by interest rate type (fixed and
variable). The fair value of both fixed and variable rate loans is estimated by discounting scheduled cash flows through the
162
estimated maturity using estimated market discount rates that reflect credit and interest rate risks inherent in the loan. In
accordance with ASC 820, the Company has categorized loans as a Level 3 fair value measurement.
Deposits with stated maturities — The fair value of certificates of deposit is based on the discounted value of contractual cash
flows. The discount rate is estimated using the rates currently in effect for deposits of similar remaining maturities. In
accordance with ASC 820, the Company has categorized deposits with stated maturities as a Level 3 fair value measurement.
FHLB advances — The fair value of FHLB advances is calculated using a discounted cash flow analysis based on current
market rates of similar maturity debt securities to discount cash flows. In accordance with ASC 820, the Company has
categorized FHLB advances as a Level 3 fair value measurement.
Subordinated notes — The fair value of the subordinated notes is based on a market price obtained from an independent pricing
vendor. In accordance with ASC 820, the Company has categorized subordinated notes as a Level 2 fair value measurement.
Junior subordinated debentures — The fair value of the junior subordinated debentures is based on the discounted value of
contractual cash flows. In accordance with ASC 820, the Company has categorized junior subordinated debentures as a Level 3
fair value measurement.
(23) Shareholders’ Equity
A summary of the Company’s common and preferred stock at December 31, 2024 and 2023 is as follows:
2024
2023
Common Stock:
Shares authorized
100,000,000
100,000,000
Shares issued
66,560,182
61,268,566
Shares outstanding
66,495,227
61,243,626
Cash dividend per share
$
1.80 $
1.60
Preferred Stock:
Shares authorized
20,000,000
20,000,000
Shares issued
5,011,500
5,011,500
Shares outstanding
5,011,500
5,011,500
The Company reserves shares of its authorized common stock specifically for the 2022 Plan, the ESPP and the DDFS. The
reserved shares and these plans are detailed in Note (18) “Stock Compensation Plans and Other Employee Benefit Plans”.
Common Stock Offering
In June 2022, the Company sold a total of 3,450,000 shares of its common stock through a public offering. Net proceeds to the
Company totaled approximately $285.7 million, net of estimated issuance costs.
Series D Preferred Stock
In June 2015, the Company issued and sold 5,000,000 shares of fixed-to-floating non-cumulative perpetual preferred stock,
Series D, liquidation preference $25 per share (the “Series D Preferred Stock”) for $125.0 million in a public offering. When, as
and if declared, dividends on the Series D Preferred Stock are payable quarterly in arrears at a fixed rate of 6.50% per annum
from the original issuance date to, but excluding, July 15, 2025, and from (and including) that date (as currently specified in the
certificate of designations and subject to the below) at a floating rate equal to three-month LIBOR plus a spread of 4.06% per
annum. Under the AIRLA and Part 253 of Regulation ZZ (Rule 253), the dividend rate on the Series D Preferred Stock, by
operation of law, changed from 3-month USD LIBOR to 3-month CME Term SOFR plus a statutory tenor spread adjustment of
0.26161%. Consequently, for each floating rate period, commencing on July 15, 2025, any dividends will be paid at a rate of
the then-current 3-month CME Term SOFR plus 0.26161%, plus the spread of 4.06% per annum. The calculation agent for the
Series D Preferred Stock may also make additional administrative conforming changes to the terms of the Series D Preferred
Stock under AIRLA and Rule 253.
163
Series E Preferred Stock
In May 2020, the Company issued 11,500 shares of fixed-rate reset non-cumulative perpetual preferred stock, Series E,
liquidation preference $25,000 per share (the “Series E Preferred Stock”) as part of a $287.5 million public offering of
11,500,000 depositary shares, each representing a 1/1,000th interest in a share of Series E Preferred Stock. When, as and if
declared, dividends on the Series E Preferred Stock are payable quarterly in arrears at a fixed rate of 6.875% per annum from
October 15, 2020 to, but excluding, July 15, 2025, and from (and including) July 15, 2025 at a floating rate equal to the Five-
Year Treasury Rate (as defined in the certificate of designations for the Series E Preferred Stock) plus 6.507%.
Other
At the January 2025 Board of Directors meeting, a quarterly cash dividend of $0.50 per share of common stock ($2.00 on an
annualized basis) was declared. It was paid on February 20, 2025 to shareholders of record as of February 6, 2025.
Accumulated Other Comprehensive Income or Loss
The following tables summarize the components of other comprehensive income or loss, including the related income tax
effects, and the related amount reclassified to net income for the years ended December 31, 2024, 2023 and 2022:
(In thousands)
Accumulated
Unrealized
(Losses)
Gains on
Securities
Accumulated
Unrealized
Gains (Losses)
on Derivative
Instruments
Accumulated
Foreign
Currency
Translation
Adjustments
Total
Accumulated
Other
Comprehensive
(Loss) Income
Balance at January 1, 2024
$ (350,697) $
32,049
$
(42,583) $
(361,231)
Other comprehensive (loss) during the period, net of tax, before
reclassifications
(77,903)
(96,872)
(24,945)
(199,720)
Amount reclassified from accumulated other comprehensive income or loss
into net income, net of tax
(915)
53,596
—
52,681
Amount reclassified from accumulated other comprehensive income or loss
related to amortization of unrealized gains on investment securities
transferred to held-to-maturity from available-for-sale, net of tax
(65)
—
—
(65)
Net other comprehensive loss during the period, net of tax
$
(78,883) $
(43,276) $
(24,945) $
(147,104)
Balance at December 31, 2024
$ (429,580) $
(11,227) $
(67,528) $
(508,335)
Balance at January 1, 2023
$ (386,057) $
7,381
$
(48,960) $
(427,636)
Other comprehensive income (loss) during the period, net of tax, before
reclassifications
36,214
(16,334)
6,377
26,257
Amount reclassified from accumulated other comprehensive income or loss
into net income, net of tax
(699)
41,002
—
40,303
Amount reclassified from accumulated other comprehensive income or loss
related to amortization of unrealized gains on investment securities
transferred to held-to-maturity from available-for-sale, net of tax
(155)
—
—
(155)
Net other comprehensive income during the period, net of tax
$
35,360
$
24,668
$
6,377
$
66,405
Balance at December 31, 2023
$ (350,697) $
32,049
$
(42,583) $
(361,231)
Balance at January 1, 2022
$
8,724
$
27,111
$
(31,743) $
4,092
Other comprehensive loss during the period, net of tax, before
reclassifications
(394,332)
(17,295)
(17,217)
(428,844)
Amount reclassified from accumulated other comprehensive income or loss
into net income, net of tax
(321)
(2,435)
—
(2,756)
Amount reclassified from accumulated other comprehensive income or loss
related to amortization of unrealized gains on investment securities
transferred to held-to-maturity from available-for-sale, net of tax
(128)
—
—
(128)
Net other comprehensive loss during the period, net of tax
$ (394,781) $
(19,730) $
(17,217) $
(431,728)
Balance at December 31, 2022
$ (386,057) $
7,381
$
(48,960) $
(427,636)
164
Amount Reclassified from Accumulated
Other Comprehensive Income or Loss
for the Years Ended,
Details Regarding the Component of
Accumulated Other Comprehensive Income or Loss
December 31,
Impacted Line on the
Consolidated Statements of Income
2024
2023
(In thousands)
Accumulated unrealized gains on available-for-sale securities
Gains included in net income
$
1,236
$
951
Gains (losses) on investment securities,
net
1,236
951
Income before taxes
Tax effect
(321)
(252) Income tax expense
Net of tax
$
915
$
699
Net income
Accumulated unrealized gains (losses) on derivative
instruments
Amount reclassified to interest income on loans
$
87,306
$
74,616
Interest on loans
Amount reclassified to interest expense on deposits
(14,632)
(19,559) Interest on deposits
Amount reclassified to interest expense on other borrowings
—
789
Interest on other borrowings
(72,674)
(55,846) Income before taxes
Tax effect
19,078
14,844
Income tax expense
Net of tax
$
(53,596) $
(41,002) Net income
(24) Segment Information
The Company’s operations consist of three primary segments: community banking, specialty finance and wealth management.
The three reportable segments are strategic business units that are separately managed as they offer different products and
services and have different marketing strategies. In addition, each segment’s customer base has varying characteristics and each
segment has a different regulatory environment. While the Company’s management monitors each of the sixteen bank
subsidiaries’ operations and profitability separately, these subsidiaries have been aggregated into one reportable operating
segment due to the similarities in products and services, customer base, operations, profitability measures and economic
characteristics.
For purposes of internal segment profitability, management allocates certain intersegment and parent company balances.
Management allocates a portion of revenues to the specialty finance segment related to loans and leases originated by the
specialty finance segment and sold or assigned to the community banking segment. Similarly, for purposes of analyzing the
contribution from the wealth management segment, management allocates a portion of the net interest income earned by the
community banking segment on deposit balances of customers of the wealth management segment to the wealth management
segment. See Note (10) “Deposits” for more information on these deposits. Finally, expenses incurred at the Wintrust parent
company are allocated to each segment based on each segment’s risk-weighted assets.
The segment financial information provided in the following tables has been derived from the internal profitability reporting
system used by management to monitor and manage the financial performance of the Company. The accounting policies of the
segments are substantially similar to those described in Note (1) “Summary of Significant Accounting Policies”.
Our Chief Executive Officer is our chief operating decision maker (“CODM”). The CODM uses income before taxes to review
segment performance and allocate resources for each reportable segment. Financial information regarding each significant
segment expense outlined below is regularly provided (at least monthly) to the CODM. For community banking and specialty
finance segments, ‘Interest expense’ is a significant segment expense. Additionally, for each of the three reportable segments,
‘Salaries’, ‘Commissions and incentive compensation’ and ‘Benefits’ are significant segment expenses.
165
The following is a summary of certain operating information for reportable segments:
(In thousands)
Community
Banking
Specialty
Finance
Wealth
Management
Total Operating
Segments
Intersegment
Eliminations
Consolidated
2024
Interest income
$ 3,001,500 $
405,317 $
30,765 $
3,437,582 $
40,015 $ 3,477,597
Interest expense
1,465,237
49,030
795
1,515,062
—
1,515,062
Net interest income
1,536,263
356,287
29,970
1,922,520
40,015
1,962,535
Provision for credit losses
88,345
12,702
—
101,047
—
101,047
Non-interest income
279,845
119,339
168,134
567,318
(78,993)
488,325
Non-interest expense:
Salaries
364,144
61,070
38,989
464,203
1,769
465,972
Commissions and incentive
compensation
130,516
36,130
48,873
215,519
—
215,519
Benefits
106,994
18,686
9,937
135,617
—
135,617
Other segment expenses(1)
500,327
91,479
34,557
626,363
(40,747)
585,616
Total non-interest expense
1,101,981
207,365
132,356
1,441,702
(38,978)
1,402,724
Income before taxes
625,782
255,559
65,748
947,089
—
947,089
Income tax expense
167,072
69,214
15,758
252,044
—
252,044
Net income
$
458,710 $
186,345 $
49,990 $
695,045 $
— $
695,045
Total assets at end of year
$ 52,500,643 $ 11,234,012 $ 1,145,013 $
64,879,668 $
— $ 64,879,668
2023
Interest income
$ 2,462,103 $
362,035 $
33,867 $
2,858,005 $
35,109 $ 2,893,114
Interest expense
1,021,128
32,991
1,131
1,055,250
—
1,055,250
Net interest income
1,440,975
329,044
32,736
1,802,755
35,109
1,837,864
Provision for credit losses
104,895
9,495
—
114,390
—
114,390
Non-interest income
263,023
105,992
136,561
505,576
(71,470)
434,106
Non-interest expense:
Salaries
340,993
57,024
39,129
437,146
1,666
438,812
Commissions and incentive
compensation
110,986
30,395
40,720
182,101
—
182,101
Benefits
100,190
17,070
9,840
127,100
—
127,100
Other segment expenses(1)
484,263
82,024
36,226
602,513
(38,027)
564,486
Total non-interest expense
1,036,432
186,513
125,915
1,348,860
(36,361)
1,312,499
Income before taxes
562,671
239,028
43,382
845,081
—
845,081
Income tax expense
148,612
63,484
10,359
222,455
—
222,455
Net income
$
414,059 $
175,544 $
33,023 $
622,626 $
— $
622,626
Total assets at end of year
$ 44,355,786 $ 10,664,887 $ 1,239,261 $
56,259,934 $
— $ 56,259,934
2022
Interest income
$ 1,411,485 $
266,238 $
39,541 $
1,717,264 $
30,179 $ 1,747,443
Interest expense
231,287
19,557
1,237
252,081
—
252,081
Net interest income
1,180,198
246,681
38,304
1,465,183
30,179
1,495,362
Provision for credit losses
74,184
4,405
—
78,589
—
78,589
Non-interest income
298,572
97,701
124,609
520,882
(59,829)
461,053
Non-interest expense:
Salaries
306,062
45,043
29,526
380,631
1,550
382,181
Commissions and incentive
compensation
127,178
31,329
39,366
197,873
—
197,873
Benefits
91,875
15,812
8,366
116,053
—
116,053
Other segment expenses(1)
401,183
80,600
30,581
512,364
(31,200)
481,164
Total non-interest expense
926,298
172,784
107,839
1,206,921
(29,650)
1,177,271
Income before taxes
478,288
167,193
55,074
700,555
—
700,555
Income tax expense
128,939
46,286
15,648
190,873
—
190,873
Net income
$
349,349 $
120,907 $
39,426 $
509,682 $
— $
509,682
Total assets at end of year
$ 41,368,200 $ 9,826,254 $ 1,755,195 $
52,949,649 $
— $ 52,949,649
(1)
Other segment items include non-interest expense categories such as ‘Software & Equipment’, ‘Data processing’, ‘Advertising and Marketing’,
‘FDIC Insurance’, and ‘Occupancy’. See “Non-Interest Expense” under Management’s Discussion and Analysis of Financial Condition and Results
of Operations in Item 7 of this Annual Report on Form 10-K for further discussion on non-interest expense.
166
(25) Condensed Parent Company Financial Statements
Condensed parent company only financial statements of Wintrust follow:
Statements of Financial Condition
December 31,
(In thousands)
2024
2023
Assets
Cash
$
196,969 $
262,680
Available-for-sale debt securities and equity securities with readily determinable fair value
16,240
15,532
Investment in and receivable from subsidiaries
6,674,426
5,842,160
Goodwill
8,371
8,371
Other assets
371,284
364,623
Total assets
$
7,267,290 $
6,493,366
Liabilities and Shareholders’ Equity
Other liabilities
$
171,275 $
171,922
Subordinated notes
298,283
437,866
Other borrowings
199,869
230,486
Junior subordinated debentures
253,566
253,566
Shareholders’ equity
6,344,297
5,399,526
Total liabilities and shareholders’ equity
$
7,267,290 $
6,493,366
Statements of Income
Years Ended December 31,
(In thousands)
2024
2023
2022
Income
Dividends and other revenue from subsidiaries
$
548,232 $
433,784 $
120,151
Other income (losses)
(1,781)
1,729
(12,969)
Total income
$
546,451 $
435,513 $
107,182
Expenses
Interest expense
$
49,306 $
53,612 $
36,522
Salaries and employee benefits
159,725
145,011
138,466
Other expenses
182,255
160,259
155,744
Total expenses
$
391,286 $
358,882 $
330,732
Income (loss) before income taxes and equity in undistributed income
of subsidiaries
$
155,165 $
76,631 $
(223,550)
Income tax benefit
79,684
72,260
70,490
Income (loss) before equity in undistributed net income of
subsidiaries
$
234,849 $
148,891 $
(153,060)
Equity in undistributed net income of subsidiaries
460,196
473,735
662,742
Net income
$
695,045 $
622,626 $
509,682
167
Statements of Cash Flows
Years Ended December 31,
(In thousands)
2024
2023
2022
Operating Activities:
Net income
$
695,045 $
622,626 $
509,682
Adjustments to reconcile net income to net cash provided by operating
activities
Losses (gains) on available-for-sale debt securities and equity securities
with readily determinable fair value, net
913
(442)
7,018
Depreciation and amortization
35,627
25,840
27,642
Deferred income tax benefit
(9,449)
(6,176)
(2,773)
Stock-based compensation expense
16,401
14,154
13,632
Increase in other assets
(3,862)
(3,978)
(7,116)
Increase (decrease) in other liabilities
8,802
(6,059)
(6,107)
Equity in undistributed net income of subsidiaries
(460,196)
(473,735)
(662,742)
Net Cash Provided by (Used for) Operating Activities
$
283,281 $
172,230 $
(120,764)
Investing Activities:
Capital contributions to subsidiaries, net
$
— $
— $
(69,000)
Net cash paid for acquisitions, net
(38)
—
—
Other investing activity, net
(37,764)
(25,965)
(30,872)
Net Cash Used for Investing Activities
$
(37,802) $
(25,965) $
(99,872)
Financing Activities:
(Decrease) increase in other borrowings and junior subordinated debentures,
net
$
(30,668) $
(30,641) $
117,381
Repayment of subordinated note
(140,000)
—
—
Proceeds from the issuance of common stock, net
—
—
285,729
Issuance of common shares resulting from exercise of stock options and
employee stock purchase plan
6,694
8,309
11,233
Dividends paid
(143,280)
(125,690)
(108,210)
Common stock repurchases for tax withholdings related to stock-based
compensation
(3,936)
(1,913)
(304)
Net Cash (Used for) Provided by Financing Activities
$
(311,190) $
(149,935) $
305,829
Net (Decrease) Increase in Cash and Cash Equivalents
$
(65,711) $
(3,670) $
85,193
Cash and Cash Equivalents at Beginning of Year
262,680
266,350
181,157
Cash and Cash Equivalents at End of Year
$
196,969 $
262,680 $
266,350
168
(26) Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per common share for 2024, 2023 and 2022:
(In thousands, except per share data)
2024
2023
2022
Net income
$
695,045
$
622,626
$
509,682
Less: Preferred stock dividends
27,964
27,964
27,964
Net income applicable to common shares
(A)
$
667,081
$
594,662
$
481,718
Weighted average common shares outstanding
(B)
63,685
61,149
59,205
Effect of dilutive potential common shares:
Common stock equivalents
1,016
938
886
Weighted average common shares and effect of dilutive potential common
shares
(C)
64,701
62,087
60,091
Net income per common share:
Basic
(A/B)
$
10.47
$
9.72
$
8.14
Diluted
(A/C)
10.31
9.58
8.02
Potentially dilutive common shares can result from stock options, restricted stock unit awards and shares to be issued under the
ESPP and the DDFS Plan, being treated as if they had been either exercised or issued, computed by application of the treasury
stock method. While potentially dilutive common shares are typically included in the computation of diluted earnings per share,
potentially dilutive common shares are excluded from this computation in periods in which the effect would reduce the loss per
share or increase the income per share.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
The Company made no changes in and had no disagreements with its independent accountants during the two most recent fiscal
years or any subsequent interim period.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As of the end of the period covered by this Annual Report on Form 10-K, management of the Company, under the supervision
and with the participation of the Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the
effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined under Rules
13a-15(e) and 15d-15(e) of the Exchange Act. Based upon, and as of the date of that evaluation, the Chief Executive Officer
and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective, in ensuring the
information relating to the Company (and its consolidated subsidiaries) required to be disclosed by the Company in the reports
it files or submits under the Exchange Act was recorded, processed, summarized and reported in a timely manner. As permitted
by SEC-issued guidance that an assessment of internal controls over financial reporting of a recently acquired business may be
excluded from management’s evaluation of disclosure controls and procedures for up to a year from the date of acquisition, the
Company excluded Macatawa from management’s reporting on internal control over financial reporting as of December 31,
2024 as Macatawa was acquired by the Company during 2024. The Company will continue to evaluate the effectiveness of
internal controls over financial reporting as it completes the integration of Macatawa with the Company and will make changes
to its internal control framework, as necessary. The acquisition of Macatawa contributed $3.3 billion of assets, or 5.1% of the
Company’s total assets, at December 31, 2024 and $63.6 million of net revenue, or 2.6% of the Company’s total net revenue for
the year ended December 31, 2024. The annual report of the Company’s management on internal control over financial
reporting is provided on page 170. The report of Ernst & Young LLP, the Company’s independent registered public accounting
firm, regarding the Company’s internal control over financial reporting is provided on page 171.
169
Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended
December 31, 2024 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control
over financial reporting.
Report on Management’s Assessment of Internal Control Over Financial Reporting
Wintrust Financial Corporation is responsible for the preparation, integrity, and fair presentation of the consolidated financial
statements included in this Annual Report on Form 10-K. The consolidated financial statements and notes included in this
Annual Report on Form 10-K have been prepared in conformity with generally accepted accounting principles in the United
States and necessarily include some amounts that are based on management’s best estimates and judgments.
We, as management of Wintrust Financial Corporation, are responsible for establishing and maintaining adequate internal
control over financial reporting that is designed to produce reliable financial statements in conformity with generally accepted
accounting principles in the United States. The system of internal control over financial reporting as it relates to the financial
statements is evaluated for effectiveness by management and tested for reliability through a program of internal audits. Actions
are taken to correct potential deficiencies as they are identified. Any system of internal control, no matter how well designed,
has inherent limitations, including the possibility that a control can be circumvented or overridden and misstatements due to
error or fraud may occur and not be detected. Also, because of changes in conditions, internal control effectiveness may vary
over time. Accordingly, even an effective system of internal control will provide only reasonable assurance with respect to
financial statement preparation.
Management assessed the Company’s system of internal control over financial reporting as of December 31, 2024, in relation to
criteria for the effective internal control over financial reporting as described in Internal Control-Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (COSO Criteria). Based on
this assessment, management concluded that, as of December 31, 2024, the Company's system of internal control over financial
reporting is effective and meets the criteria of the COSO Criteria.
In conducting the evaluation of the effectiveness of its system of internal control over financial reporting as of December 31,
2024, the Company excluded the operations of Macatawa Bank, N.A. (“Macatawa”) as permitted by the guidance issued by the
Office of the Chief Accountant of the Securities and Exchange Commission (not to extend more than one year beyond the date
of the acquisition or for more than one annual reporting period). The acquisition of Macatawa was completed on August 1,
2024. As of and for the year ended December 31, 2024, Macatawa’s assets represented approximately $3.3 billion of assets, or
5.1% of the Company’s total assets, at December 31, 2024 and $63.6 million of net revenue, or 2.6% of the Company’s total net
revenue for the year ended December 31, 2024. Refer to Note (7) of the Notes to Consolidated Financial Statements for further
discussion of the acquisition and its impact on the Company’s consolidated financial statements.
Ernst & Young LLP (PCAOB ID 42), the independent registered public accounting firm that audited the Company's financial
statements included in this Annual Report on Form 10-K, has issued an attestation report on management’s assessment of the
Corporation’s internal control over financial reporting. Their report expresses an unqualified opinion on the effectiveness of the
Company’s internal control over financial reporting as of December 31, 2024.
/s/ Timothy S. Crane
/s/ David L. Stoehr
Timothy S. Crane
David L. Stoehr
President and
Executive Vice President &
Chief Executive Officer
Chief Financial Officer
Rosemont, Illinois
February 28, 2025
170
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Wintrust Financial Corporation
Opinion on Internal Control Over Financial Reporting
We have audited Wintrust Financial Corporation and subsidiaries’ internal control over financial reporting as of December 31, 2024, based on
criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (2013 framework) (the COSO criteria). In our opinion, Wintrust Financial Corporation and subsidiaries (the Company)
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.
As indicated in the accompanying Report on Management’s Assessment of Internal Control Over Financial Reporting, management’s
assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of
Macatawa Bank, N.A. (“Macatawa”), which is included in the 2024 consolidated financial statements of the Company and constituted 5.1%
of total assets, respectively, as of December 31, 2024 and 2.6% of total net revenue, respectively, for the year then ended. Our audit of
internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of
Macatawa.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the
consolidated statements of condition of the Company as of December 31, 2024 and 2023, the related consolidated statements of income,
comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2024,
and the related notes and our report dated February 28, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the
effectiveness of internal control over financial reporting included in the accompanying Report on Management’s Assessment of Internal
Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting
based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists,
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Chicago, Illinois
February 28, 2025
171
ITEM 9B. OTHER INFORMATION
Securities Trading Plans of Directors and Officers
During the three months ended December 31, 2024, none of our directors or officers adopted or terminated a Rule 10b5-1
trading plan or adopted or terminated a non-Rule 10b5-1 trading arrangement (as each term is defined in Item 408(a) of
Regulation S-K).
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required in response to this item will be contained in the Company’s Proxy Statement for its Annual Meeting
of Shareholders to be held May 22, 2025 (the “Proxy Statement”) under the captions “Proposal No. 1 - Election of Directors,”
“Executive Officers of the Company,” “Board of Directors, Committees and Governance” and “Delinquent Section 16(a)
Reports” and is incorporated herein by reference.
The Company has adopted a Corporate Code of Ethics which complies with the rules of the SEC and the listing standards of the
Nasdaq Global Select Market. The code applies to all of the Company’s directors, officers and employees and is posted on the
Company’s website (www.wintrust.com), under the “Corporate Governance” section of the “Investor Relations” tab. The
Company will post on its website any amendments to, or waivers from, its Corporate Code of Ethics as the code applies to its
directors or executive officers.
The Company has adopted an insider trading policy and procedures applicable to our directors, officers, employees and other
covered persons, and have implemented processes for the Company, that we believe are reasonably designed to promote
compliance with insider trading laws, rules and regulations, and the Nasdaq listing standards. The Company’s insider trading
policy is filed as Exhibit 19.1 to this Annual Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION
The information required in response to this item will be contained in the Company’s Proxy Statement under the captions
“Executive Compensation - Compensation Discussion & Analysis,” “Director Compensation” “Compensation Committee
Interlocks and Insider Participation” “CEO Pay Ratio Disclosure” and “Compensation Committee Report” and is incorporated
herein by reference. The information included under the heading “Compensation Committee Report” in the Proxy Statement
shall not be deemed “soliciting” materials or to be “filed” with the SEC or subject to Regulation 14A or 14C, or to the liabilities
of Section 18 of the Securities Exchange Act of 1934, as amended.
172
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Information with respect to security ownership of certain beneficial owners and management is incorporated by reference to the
materials under the caption “Security Ownership of Certain Beneficial Owners, Directors and Management” that will be
included in the Company’s Proxy Statement.
The following table summarizes information as of December 31, 2024, relating to the Company’s equity compensation plans
pursuant to which common stock is authorized for issuance:
EQUITY COMPENSATION PLAN INFORMATION
Plan Category
Number of
securities to be issued
upon exercise of
outstanding options,
warrants and rights
(a)
Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column (a))
(c)
Equity compensation plans approved by security holders
WTFC 1997 Stock Incentive Plan, as amended
85,000
—
—
WTFC 2007 Stock Incentive Plan
10,576
—
—
WTFC 2015 Stock Incentive Plan
380,678
—
—
WTFC 2022 Stock Incentive Plan
1,074,759
—
680,538
WTFC Employee Stock Purchase Plan
—
—
140,036
WTFC Directors Deferred Fee and Stock Plan
—
—
356,600
1,551,013
—
1,177,174
Equity compensation plans not approved by security holders (1)
N/A
—
—
—
Total
1,551,013
—
1,177,174
(1)
Excludes 10,825 shares of the Company’s common stock issuable pursuant to the exercise of options granted under the plan of STC Bancshares
Corporation. The weighted average exercise price of these options is $43.76. No additional awards will be made under this plan.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required in response to this item will be contained in the Company’s Proxy Statement under the caption
“Related Person Transactions” and is incorporated herein by reference.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required in response to this item will be contained in the Company’s Proxy Statement under the caption “Audit
and Non-Audit Fees Paid” and is incorporated herein by reference.
173
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Documents filed as part of this Annual Report on Form 10-K.
1
Financial Statements
The following financial statements of Wintrust Financial Corporation, incorporated herein by reference to Item 8,
Financial Statements and Supplementary Data:
•
Consolidated Statements of Condition as of December 31, 2024 and 2023
•
Consolidated Statements of Income for the Years Ended December 31, 2024, 2023 and 2022
•
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2024, 2023 and 2022
•
Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2024, 2023
and 2022
•
Consolidated Statements of Cash Flows for the Years Ended December 31, 2024, 2023 and 2022
•
Notes to Consolidated Financial Statements
•
Report of Independent Registered Public Accounting Firm
2
Financial Statement Schedules
Financial statement schedules have been omitted as they are not applicable or the required information is shown in
the Consolidated Financial Statements or notes thereto.
3
Exhibits (Exhibits marked with a “*” denote management contracts or compensatory plans or arrangements)
Exhibit
No.
Exhibit Description
2.1
Agreement and Plan of Merger, by and among Wintrust Financial Corporation, Leo Subsidiary LLC and Macatawa
Bank Corporation, dated April 15, 2024 (incorporated by reference to Exhibit 2.1 of the Company’s Current Report
on Form 8-K filed with the Securities and Exchange Commission on April 15, 2024).
3.1
Amended and Restated Articles of Incorporation of the Company, as amended (incorporated by reference to
Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, Exhibits 3.1
and 3.2 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July
29, 2011 and Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).
3.2
Restated Certificate of Designations of the Company filed on May 5, 2023 with the Secretary of State of the State
of Illinois designating the preferences, limitations, voting powers and relative rights of the Series D Preferred Stock
(incorporated by reference to Exhibit 3.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2023).
3.3
Certificate of Designations of the Company filed on May 7, 2020 with the Secretary of State of the State of Illinois
designating the preferences, limitations, voting powers and relative rights of the Series E Preferred Stock
(incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Securities
and Exchange Commission on May 8, 2020).
3.4
Amended and Restated By-laws of the Company, as amended (incorporated by reference to Exhibit 3.1 of the
Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 1, 2024).
4.1
Description of the Company’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934
(incorporated by reference to Exhibit 4.1 of the Company’s Annual Report on Form 10-K filed with the Securities
and Exchange Commission on February 28, 2024).
4.2
Certain instruments defining the rights of the holders of long-term debt of the Company and certain of its
subsidiaries, none of which authorize a total amount of indebtedness in excess of 10% of the total assets of the
Company and its subsidiaries on a consolidated basis, have not been filed as Exhibits. The Company hereby agrees
to furnish a copy of any of these agreements to the Securities and Exchange Commission upon request.
4.3
Form of Subordinated Indenture between the Company and U.S. Bank National Association, as trustee
(incorporated by reference to Exhibit 4.5 of the Company’s Registration Statement on Form S-3 filed with the
Securities and Exchange Commission on May 6, 2020).
174
4.4
Form of Depositary Receipt (incorporated by reference as Exhibit A to Exhibit 4.2 of the Company’s Current
Report on Form 8-K filed with the Securities and Exchange Commission on May 15, 2020).
4.5
Deposit Agreement, dated as of May 15, 2020, among Wintrust Financial Corporation, U.S. Bank National
Association, as Depositary, and the holders from time to time of the Depositary Receipts issued thereunder
(incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed with the Securities
and Exchange Commission on May 15, 2020).
4.6
Subordinated Indenture, dated June 13, 2014, between the Company and U.S. Bank National Association, as
trustee (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the
Securities and Exchange Commission on June 13, 2014).
4.7
First Supplemental Indenture, dated June 13, 2014 between the Company and U.S. Bank National Association, as
trustee (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed with the
Securities and Exchange Commission on June 13, 2014).
4.8
Form of 5.000% Subordinated Note due 2024 (incorporated by reference to Exhibit A in Exhibit 4.2 of the
Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 13, 2014).
4.9
Second Supplemental Indenture, dated June 6, 2019 between the Company and U.S. Bank National Association, as
trustee (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed with the
Securities and Exchange Commission on June 6, 2019).
4.10
Form of 4.850% Subordinated Notes due 2029 (incorporated by reference to Exhibit A in Exhibit 4.2 of the
Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 6, 2019).
4.11
Form of Subordinated Indenture (incorporated by reference to Exhibit 4.5 of the Company’s Registration Statement
on Form S-3 filed with the Securities and Exchange Commission on May 6, 2020).
10.1
Amended and Restated Credit Agreement, dated as of December 12, 2022, by and among Wintrust Financial
Corporation, as Borrower, the lenders who are party to the Agreement and the lenders who may become a party to
the Agreement pursuant to terms hereof, as Lenders, and Wells Fargo Bank, National Association, a national
banking association, as Administrative Agent for the Lenders (incorporated by reference to Exhibit 10.1 of the
Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on December 15,
2022).
10.2
First Amendment, dated as of July 17, 2023 to the Credit Agreement dated December 12, 2022, as amended and
restated, among the Company, the lenders named therein, and Wells Fargo Bank, National Association, as
administrative agent (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K
Filed with the Securities and Exchange Commission on July 20, 2023).
10.3
Second Amendment, dated as of December 11, 2023 to the Credit Agreement dated December 12, 2022, as
amended and restated, among the Company, the lenders named therein, and Wells Fargo Bank, National
Association, as administrative agent (incorporated by reference to Exhibit 10.1 of the Company’s Current Report
on Form 8-K Filed with the Securities and Exchange Commission on December 12, 2023).
10.4
Third Amendment, dated as of December 6, 2024 to the Credit Agreement dated December 12, 2022, as amended
and restated, among the Company, the lenders named therein, and U.S. Bank, National Association, as
administrative agent (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K
Filed with the Securities and Exchange Commission on December 10, 2024).
10.5
Receivables Purchase Agreement, dated as of December 16, 2014, by and among First Insurance Funding of
Canada Inc. and CIBC Mellon Trust Company, in its capacity as Trustee of PLAZA Trust, by its Financial Service
Agent, Royal Bank of Canada (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on
Form 8-K filed with the Securities and Exchange Commission on December 19, 2014).
10.6
First Amending Agreement to the Receivables Purchase Agreement, dated December 15, 2015, by and among First
Insurance Funding of Canada Inc. and CIBC Mellon Trust Company, in its capacity as Trustee of PLAZA Trust, by
its Financial Service Agent, Royal Bank of Canada (incorporated by reference to Exhibit 10.5 of the Company's
Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 29, 2016).
175
10.7
Second Amending Agreement to the Receivables Purchase Agreement, dated September 9, 2016, by and among
First Insurance Funding of Canada, Inc. and CIBC Mellon Trust Company, in its capacity as Trustee of PLAZA
Trust, by its Financial Service Agent, Royal Bank of Canada (incorporated by reference to Exhibit 10.9 of the
Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 28,
2018).
10.8
Third Amending Agreement to the Receivables Purchase Agreement, dated December 15, 2017, by and among
First Insurance Funding of Canada Inc. and CIBC Mellon Trust Company, in its capacity as Trustee of PLAZA
Trust, by its Financial Service Agent, Royal Bank of Canada (incorporated by reference to Exhibit 10.1 of the
Company's Annual Report on Form 8-K filed with the Securities and Exchange Commission on December 18,
2017).
10.9
Fourth Amending Agreement to the Receivables Purchase Agreement, dated June 29, 2018, by and among First
Insurance Funding of Canada Inc. and CIBC Mellon Trust Company, in its capacity as Trustee of PLAZA Trust, by
its Financial Service Agent, Royal Bank of Canada (incorporated by reference to Exhibit 10.1 of the Company's
Annual Report on Form 8-K filed with the Securities and Exchange Commission on July 3, 2018).
10.10
Fifth Amending Agreement to the Receivables Purchase Agreement, dated as of February 15, 2019 by and between
First Insurance Funding of Canada Inc. and CIBC Mellon Trust, in its capacity as trustee of PLAZA Trust, by its
Financial Service Agent, Royal Bank of Canada (incorporated by reference to Exhibit 10.1 of the Company's
Annual Report on Form 8-K filed with the Securities and Exchange Commission on February 22, 2019).
10.11
Sixth Amending Agreement to the Receivables Purchase Agreement, dated as of May 27, 2019 by and between
First Insurance Funding of Canada Inc. and CIBC Mellon Trust, in its capacity as trustee of PLAZA Trust, by its
Financial Service Agent, Royal Bank of Canada (incorporated by reference to Exhibit 10.1 of the Company's
Annual Report on Form 8-K filed with the Securities and Exchange Commission on May 30, 2019).
10.12
Seventh Amending Agreement to the Receivables Purchase Agreement, date as of January 15, 2020 by and
between First Insurance Funding of Canada Inc. and CIBC Mellon Trust, in its capacity as trustee of PLAZA Trust,
by its Financial Service Agent, Royal Bank of Canada (incorporated by reference to Exhibit 10.1 of the Company's
Annual Report on Form 8-K filed with the Securities and Exchange Commission on January 17, 2020).
10.13
Eighth Amending Agreement to the Receivables Purchase Agreement, dated May 20, 2020, by and between First
Insurance Funding of Canada Inc. and CIBC Mellon Trust, in its capacity as trustee of the PLAZA Trust, by its
Financial Service Agent, Royal Bank of Canada (incorporated by reference to Exhibit 10.1 of the Company’s
Current Report on Form 8-K filed with the Securities and Exchange Commission on May 26, 2020).
10.14
Ninth Amending Agreement to the Receivables Purchase Agreement, dated January 15, 2021, by and between First
Insurance Funding of Canada Inc. and CIBC Mellon Trust, in its capacity as trustee of the PLAZA Trust, by its
Financial Service Agent, Royal Bank of Canada (incorporated by reference to Exhibit 10.1 of the Company’s
Current Report on Form 8-K filed with the Securities and Exchange Commission on January 20, 2021).
10.15
Tenth Amending Agreement to the Receivables Purchase Agreement, dated as of May 2, 2022, by and between
First Insurance Funding of Canada Inc. and CIBC Mellon Trust Company, in its capacity as trustee of PLAZA
Trust, by its Financial Service Agent, Royal Bank of Canada (incorporated by reference to Exhibit 10.1 of the
Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 3, 2022).
10.16
Eleventh Amending Agreement to the Receivables Purchase Agreement, dated as of May 31, 2023, by and between
First Insurance Funding of Canada Inc. and CIBC Mellon Trust Company in its capacity as trustee of PLAZA
Trust, by its Financial Service Agent, Royal Bank of Canada (incorporated by reference to Exhibit 10.1 of the
Company’s Current Report on Form 8-K Filed with the Securities and Exchange Commission on June 6, 2023).
10.17
Twelfth Amending Agreement to the Receivables Purchase Agreement, dated as of August 29, 2024, by and
between First Insurance Funding of Canada Inc. and CIBC Mellon Trust Company in its capacity as trustee of
PLAZA Trust, by its Financial Service Agent, Royal Bank of Canada (incorporated by reference to Exhibit 10.1 of
the Company’s Current Report on Form 8-K Filed with the Securities and Exchange Commission on August 29,
2024).
10.18
Performance Guarantee, made as of December 16, 2014, by the Company in favor of CIBC Mellon Trust
Company, in its capacity as trustee of PLAZA Trust (incorporated by reference to Exhibit 10.3 of the Company’s
Current Report on Form 8-K filed with the Securities and Exchange Commission on December 19, 2014).
10.19
Performance Guarantee Confirmation, made as of December 15, 2017, by the Company in favor of CIBC Mellon
Trust Company, in its capacity as trustee of PLAZA Trust (incorporated by reference to Exhibit 10.2 of the
Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 18,
2017).
176
10.20
Performance Guarantee Confirmation, dated as of June 28, 2018, by the Company in favor of CIBC Mellon Trust
Company, in its capacity as trustee of PLAZA Trust (incorporated by reference to Exhibit 10.2 of the Company’s
Current Report on Form 8-K filed with the Securities and Exchange Commission on July 3, 2018).
10.21
Performance Guarantee Confirmation, dated as of February 15, 2019, by the Company in favor of CIBC Mellon
Trust Company, in its capacity as trustee of PLAZA Trust (incorporated by reference to Exhibit 10.2 of the
Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 22,
2019).
10.22
Performance Guarantee Confirmation, dated as of May 27, 2019, by the Company in favor of CIBC Mellon Trust
Company, in its capacity as trustee of PLAZA Trust (incorporated by reference to Exhibit 10.2 of the Company’s
Current Report on Form 8-K filed with the Securities and Exchange Commission on May 30, 2019).
10.23
Performance Guarantee Confirmation, dated as of January 15, 2020, by the Company in favor of CIBC Mellon
Trust Company, in its capacity as trustee of PLAZA Trust (incorporated by reference to Exhibit 10.2 of the
Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 17, 2020).
10.24
Performance Guarantee Confirmation, dated as of May 20, 2020, by the Company in favor of CIBC Mellon Trust
Company, in its capacity as trustee of PLAZA Trust (incorporated by reference to Exhibit 10.2 of the Company’s
Current Report on Form 8-K filed with the Securities and Exchange Commission on May 26, 2020).
10.25
Performance Guarantee Confirmation, dated as of January 15, 2021, by the Company in favor of CIBC Mellon
Trust Company, in its capacity as trustee of PLAZA Trust (incorporated by reference to Exhibit 10.2 of the
Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 20, 2021).
10.26
Performance Guarantee Confirmation, dated as of May 2, 2022, by the Company in favor of CIBC Mellon Trust
Company, in its capacity as trustee of PLAZA Trust (incorporated by reference to Exhibit 10.2 of the Company’s
Current Report on Form 8-K Filed with the Securities and Exchange Commission on May 3, 2022).
10.27
Performance Guarantee Confirmation, dated as of May 31, 2023, confirming the Performance Guarantee dates as
of December 16, 2014, by and between the Company and PLAZA Trust (incorporated by reference to Exhibit 10.2
of the Company’s Current Report on Form 8-K Filed with the Securities and Exchange Commission on June 6,
2023).
10.28
Performance Guarantee Confirmation, dated as of August 29, 2024, confirming the Performance Guarantee dated
as of December 16, 2014, by and between the Company and Plaza Trust (incorporated by reference to Exhibit 10.2
of the Company’s Current Report on Form 8-K Filed with the Securities and Exchange Commission on August 29,
2024).
10.29
Fee Letter dated as of August 29, 2024 by CIBC Mellon Trust Company, in its capacity as trustee of Plaza Trust,
by its Financial Service Agent, Royal Bank of Canada and acknowledged by First Insurance Funding of Canada
Inc. (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K Filed with the
Securities and Exchange Commission on August 29, 2024).
10.30
Junior Subordinated Indenture, dated as of August 2, 2005, between the Company and Wilmington Trust
Company, as trustee (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K
filed with the Securities and Exchange Commission on August 4, 2005).
10.31
Amended and Restated Trust Agreement, dated as of August 2, 2005, among the Company, as depositor,
Wilmington Trust Company, as property trustee and Delaware trustee, and the Administrative Trustees listed
therein (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the
Securities and Exchange Commission on August 4, 2005).
10.32
Guarantee Agreement, dated as of August 2, 2005, between the Company, as Guarantor, and Wilmington Trust
Company, as trustee (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K
filed with the Securities and Exchange Commission on August 4, 2005).
10.33
Indenture, dated as of September 1, 2006, between the Company and LaSalle Bank National Association, as trustee
(incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Securities
and Exchange Commission on September 6, 2006).
10.34
Amended and Restated Declaration of Trust, dated as of September 1, 2006, among the Company, as depositor,
LaSalle Bank National Association, as institutional trustee, Christiana Bank & Trust Company, as Delaware
trustee, and the Administrators listed therein (incorporated by reference to Exhibit 10.2 of the Company’s Current
Report on Form 8-K filed with the Securities and Exchange Commission on September 6, 2006).
177
10.35
Guarantee Agreement, dated as of September 1, 2006, between the Company, as Guarantor, and LaSalle Bank
National Association, as trustee (incorporated by reference to Exhibit 10.3 of the Company’s Current Report on
Form 8-K filed with the Securities and Exchange Commission on September 6, 2006).
10.36
Amended and Restated Employment Agreement, dated as of January 26, 2023, between the Company and Edward
J. Wehmer (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the
Securities and Exchange Commission on January 30, 2023).*
10.37
Amended and Restated Employment Agreement, dated December 19, 2008, between the Company and David A.
Dykstra, Senior Executive Vice President and Chief Operating Officer (incorporated by reference to Exhibit 10.5
of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December
24, 2008).*
10.38
Amended and Restated Employment Agreement, dated December 19, 2008, between the Company and Richard B.
Murphy, Executive Vice President and Chief Credit Officer (incorporated by reference to Exhibit 10.7 of the
Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 24,
2008).*
10.39
Amended and Restated Employment Agreement, dated December 19, 2008, between the Company and David L.
Stoehr, Executive Vice President and Chief Financial Officer (incorporated by reference to Exhibit 10.6 of the
Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 24,
2008).*
10.40
Amended and Restated Employment Agreement, dated as of January 26, 2023, between the Company and Timothy
S. Crane (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the
Securities and Exchange Commission on January 30, 2023).*
10.41
Wintrust Financial Corporation 1997 Stock Incentive Plan (incorporated by reference to Appendix A of the Proxy
Statement relating to the May 22, 1997 Annual Meeting of Shareholders of the Company).*
10.42
First Amendment to Wintrust Financial Corporation 1997 Stock Incentive Plan (incorporated by reference to
Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2000).*
10.43
Second Amendment to Wintrust Financial Corporation 1997 Stock Incentive Plan adopted by the Board of
Directors on January 24, 2002 (incorporated by reference to Exhibit 99.3 of the Company’s Registration Statement
on Form S-8 filed with the Securities and Exchange Commission on July 1, 2004).*
10.44
Third Amendment to Wintrust Financial Corporation 1997 Stock Incentive Plan adopted by the Board of Directors
on May 27, 2004 (incorporated by reference to Exhibit 99.4 of the Company’s Registration Statement on Form S-8
filed with the Securities and Exchange Commission on July 1, 2004).*
10.45
Wintrust Financial Corporation 2007 Stock Incentive Plan, as amended (incorporated by reference to Exhibit 4.6 to
the Company’s Registration Statement on Form S-8, filed with the Securities and Exchange Commission on
November 8, 2011).*
10.46
Wintrust Financial Corporation 2015 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 of the
Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 1, 2015).*
10.47
Wintrust Financial Corporation 2022 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 of the
Company’s Current Report on Form 8-K Filed with the Securities and Exchange Commission on May 27, 2022).*
10.48
Form of Nonqualified Stock Option Agreement under the Company’s 2007 Stock Incentive Plan (incorporated by
reference to Exhibit 10.31 of the Company’s Annual Report on Form 10-K for the year ended December 31,
2006).*
10.49
Form of Nonqualified Stock Option Agreement under the Company’s 2015 Stock Incentive Plan (incorporated by
reference to Exhibit 10.2 of the Company’s Quarter Report on Form 10-Q for the quarter ended March 31, 2016).*
10.50
Form of Restricted Stock Unit Award, Agreement under Company’s 2015 Stock Incentive Plan (incorporated by
reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021).
10.51
Form of Performance Share Unit Award - Stock Settled under the Company's 2007 Stock Incentive Plan
(incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended
June 30, 2013).*
178
10.52
Form of Performance Award Agreement - Share Settled under the Company's 2015 Stock Incentive Plan
(incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2016).*
10.53
Form of Performance Share Unit Award - Cash Settled under the Company's 2007 Stock Incentive Plan
(incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended
June 30, 2013).*
10.54
Form of Performance Share Unit Award - Cash Settled under the Company's 2015 Stock Incentive Plan
(incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2016).*
10.55
Form of Performance Share Unit Agreement - Shares Settled under the Company’s 2007 Stock Incentive Plan
(incorporated by reference to Exhibit 10.25 of the Company’s Annual Report on Form 10-K filed with the
Securities and Exchange Commission on February 27, 2015).
10.56
Form of Performance Share Unit Award - Shares Settled - Deferral Option under the Company’s 2007 Stock
Incentive Plan (incorporated by reference to Exhibit 10.30 of the Company's Annual Report on Form 10-K filed
with the Securities and Exchange Commission on February 29, 2016).*
10.57
Form of Performance Award Agreement - Shares Settled under Company’s 2015 Stock Incentive Plan
(incorporated by reference to Exhibit 10.5 of the Company’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2021).
10.58
Form of Performance Share Unit Award - Cash Settled - Deferral Option under the Company’s 2007 Stock
Incentive Plan (incorporated by reference to Exhibit 10.31 the Company's Annual Report on Form 10-K filed with
the Securities and Exchange Commission on February 29, 2016).*
10.59
Form of Performance Share Unit Agreement - Cash Settled under the Company’s 2007 Stock Incentive Plan
(incorporated by reference to Exhibit 10.26 of the Company’s Annual Report on Form 10-K filed with the
Securities and Exchange Commission on February 27, 2015).
10.60
Wintrust Financial Corporation Employee Stock Purchase Plan, as amended (incorporated by reference to Annex A
of the Company's definitive Proxy Statement filed with the Securities and Exchange Commission on April 24,
2012).*
10.61
Amended and Restated Wintrust Financial Corporation Employee Stock Purchase Plan, (incorporated by reference
to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission
on May 25, 2018).*
10.62
Second Amended and Restated Wintrust Financial Corporation Employee Stock Purchase Plan, (incorporated by
reference to Annex A to the Company’s Definitive Proxy Statement on Schedule 14A, filed with the Securities and
Exchange Commission on April 8, 2021).*
10.63
Wintrust Financial Corporation Directors Deferred Fee and Stock Plan (incorporated by reference to Appendix B
of the Proxy Statement relating to the May 24, 2001 Annual Meeting of Shareholders of the Company).*
10.64
Wintrust Financial Corporation 2005 Directors Deferred Fee and Stock Plan, as amended and restated
(incorporated by reference to Exhibit 99.1 of the Company’s Current Report on Form 8-K, filed with the Securities
and Exchange Commission on July 29, 2014).*
10.65
Form of Cash Incentive and Retention Award Agreement under the Company’s 2008 Long-Term Cash and
Incentive Retention Plan with no Minimum Payout (incorporated by reference to Exhibit 10.3 of the Company’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2008).*
10.66
Form of Director Indemnification Agreement (incorporated by reference to Exhibit 10.2 of the Company’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2009).
10.67
Form of Officer Indemnification Agreement (incorporated by reference to Exhibit 10.3 of the Company’s Quarterly
Report on Form 10-Q for the quarter ended June 30, 2009).
19.1
Wintrust Financial Corporation Insider Trading and Confidentiality Policy.
21.1
Subsidiaries of the Registrant.
179
23.1
Consent of Independent Registered Public Accounting Firm.
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
97.1
Policy on Recoupment of Incentive Compensation.
101.INS
Inline XBRL Instance Document (1)
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
(1) Includes the following financial information included in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2024, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated
Statements of Condition, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of
Comprehensive Income, (iv) the Consolidated Statements of Changes in Shareholders’ Equity, (v) the Consolidated
Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements.
ITEM 16. FORM 10-K SUMMARY
None.
180
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
WINTRUST FINANCIAL CORPORATION (Registrant)
February 28, 2025
By:
/s/ TIMOTHY S. CRANE
Timothy S. Crane, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ H. PATRICK HACKETT, JR.
H. Patrick Hackett, Jr.
Chairman of the Board of Directors
February 28, 2025
/s/ TIMOTHY S. CRANE
Timothy S. Crane
President, Chief Executive Officer and Director
(Principal Executive Officer)
February 28, 2025
/s/ DAVID L. STOEHR
David L. Stoehr
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
February 28, 2025
/s/ JEFFREY D. HAHNFELD
Jeffrey D. Hahnfeld
Executive Vice President, Controller, and Chief
Accounting Officer (Principal Accounting Officer)
February 28, 2025
/s/ ELIZABETH H. CONNELLY
Elizabeth H. Connelly
Director
February 28, 2025
/s/ PETER D. CRIST
Peter D. Crist
Director
February 28, 2025
/s/ WILLIAM J. DOYLE
William J. Doyle
Director
February 28, 2025
/s/ MARLA F. GLABE
Marla F. Glabe
Director
February 28, 2025
/s/ SCOTT K. HEITMANN
Scott K. Heitmann
Director
February 28, 2025
/s/ BRIAN A. KENNEY
Brian A. Kenney
Director
February 28, 2025
/s/ DEBORAH L. HALL LEFEVRE
Deborah L. Hall Lefevre
Director
February 28, 2025
/s/ SUZET M. MCKINNEY
Suzet M. McKinney
Director
February 28, 2025
/s/ RICHARD L. POSTMA
Richard L. Postma
Director
February 28, 2025
/s/ GREGORY A. SMITH
Gregory A. Smith
Director
February 28, 2025
/s/ KARIN GUSTAFSON TEGLIA
Karin Gustafson Teglia
Director
February 28, 2025
/s/ ALEX E. WASHINGTON, III
Alex E. Washington, III
Director
February 28, 2025
/s/ EDWARD J. WEHMER
Edward J. Wehmer
Founder, Senior Advisor and Director
February 28, 2025
181