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What changed in WINTRUST FINANCIAL CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of WINTRUST FINANCIAL CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+553 added−528 removedSource: 10-K (2025-02-28) vs 10-K (2024-02-28)

Top changes in WINTRUST FINANCIAL CORP's 2024 10-K

553 paragraphs added · 528 removed · 449 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

123 edited+37 added−16 removed162 unchanged
Biggest changeIn 2023, the corporate campus green house gas carbon emissions (CO 2 e) totaled 4,473 tons in 2023 compared to 4,194 tons in 2022. • The Company continued to pursue certain renewable energy solutions as well as efficient building standards and technologies. • Great Lakes Advisors executes investing through its Climate Opportunities Net Zero Portfolio, a portfolio started in 2013.
Biggest changeThe 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.
(“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 (“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.
(“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.
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 service was subjected to consolidation strategies, the opportunity increased for locally owned and operated, highly personal 3 service-oriented banks.
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.
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 9.3 % Risk-based capital ratios: Tier 1 capital ratio 6.00 8.50 6.00 10.3 Common equity tier 1 capital ratio 4.50 7.00 N/A 9.4 Total capital ratio 8.00 10.50 10.00 12.1 (1) Reflects the Capital Conservation Buffer of 2.50%.
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%.
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; 20 • 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.
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.
Further, in the spring of 2022, the Federal Reserve, OCC, and FDIC adopted a new regulation that, among other things, 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.
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.
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 • 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.
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 19 • 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.
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.
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 16 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.
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 22 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.
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.
We also developed the “Leadership Journey”, an eight-phase leadership development 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.
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.
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 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.
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.
Basel III Rule, we and our subsidiary banks are required to maintain the following minimum capital ratios: 10 • 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%.
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%.
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 and businesses; and Lake Forest Bank’s franchise lending program, which provides lending to restaurant franchisees.
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.
Pursuant to rules adopted by the U.S. federal banking agencies, the Company has 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.
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.
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.
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 15 subject to divergent interpretation or application in a manner that may create inconsistent or conflicting requirements for businesses.
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 providing payment to the agent or broker, who then forwards it to the insurance company.
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.
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 contrary to shareholders’ interests.
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.
In some cases, the agent or broker may hold our collateral, in the form of the proceeds of the unearned insurance premium from the 4 insurance company, and forward it to FIRST Insurance Funding or FIFC Canada in the event of a default by the borrower.
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.
The Anti-Money Laundering Act of 2020, 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.
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.
In general, these affiliate transaction rules limit the amount 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 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.
While the Company’s management monitors each of the fifteen 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.
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.
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 fifteen banks. This product differentiates our banks from many of our competitors that have consolidated their bank charters into branches.
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.
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.
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.
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, 2023, calculated using the regulatory capital methodology applicable to us during 2023.
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.
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 NASDAQ that apply to companies with securities listed on the NASDAQ Global Select Market.
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.
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, 2023 would exceed such revised well-capitalized standard.
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.
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, 2023, the Company remained in compliance with such requirements.
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.
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, 2023 would exceed such revised well-capitalized standard.
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 2023, 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.
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.
Approved medium and large 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.
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.
In 2023, 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, 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.
(“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 Chicago Trust Company, N.A.
(“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.
Our premium finance receivables balances finance insurance policies that are spread among a large number of insurers; however, one of the insurers represents approximately 11% of such balances and two additional insurers represent approximately 6% each of such balances. FIRST Insurance Funding, Wintrust Life Finance and FIFC Canada consistently monitor carrier ratings and financial performance of our carriers.
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.
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.
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.
(“Northbrook Bank”), Village Bank & Trust, N.A. (“Village Bank”), Wheaton Bank & Trust Company, N.A. (“Wheaton Bank”), State Bank of the Lakes, N.A., 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.
(“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.
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 some cases, Wintrust Life Finance may make a loan that has a partially unsecured position.
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.
However, on October 26, 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.
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 GLB Act requires a financial institution to, among other things, disclose its privacy policy to certain customers and, in some circumstances, enables certain 15 customers to opt-out of certain sharing of the customers’ nonpublic personal information with nonaffiliated third persons.
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.
In October 2023, the CFPB proposed 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 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.
We provide community-oriented, personal and commercial banking services to customers generally located in the Chicago metropolitan area, southern Wisconsin and northwest Indiana (“our market area”) through our fifteen wholly-owned-banking subsidiaries (collectively, the “banks”), as well as the origination and purchase of residential mortgages for sale into the secondary market through Wintrust Mortgage, a division of Barrington Bank & Trust Company, N.A.
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.
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, 2023, we owned fifteen 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.
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.
These policies must establish loan portfolio diversification standards, prudent underwriting standards (including loan-to-value limits) that are clear and measurable, loan administration procedures, and documentation, approval and reporting requirements.
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.
Talent Recruiting and Retention At Wintrust we recognize that attracting, motivating and retaining talent at all levels is vital to continuing our success. In 2023, Wintrust filled over 1,500 positions, including external hires, internal transfers/promotions, and temporary hires.
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.
To further advance diversity and 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.
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.
Strategy and Competition The Company has employed certain strategies since 2013 to achieve strong net income amid increased competition and an environment, that up until recent months, was characterized by low interest rates. In general, the Company has taken a steady and measured approach to grow strategically and manage expenses.
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.
Other niches offered throughout our banking franchise include 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 & Hospital, which focuses on financial solutions for mission-based organizations such as hospitals, non-profits, educational institutions and local government operations.
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.
CTC, our trust subsidiary, offers trust and investment management services to clients through offices located in downtown Chicago and at various banking offices of our fifteen banks. CTC is subject to regulation, supervision and regular examination by the OCC.
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.
As a $56.3 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.
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.
Wintrust Investments and Great Lakes Advisors 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.
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.
Workforce Overview As of December 31, 2023, Wintrust employed 5,521 full-time equivalent employees in the U.S. and Canada. 97% 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.
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.
Great Lakes Advisors 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 CTC. Great Lakes Advisors 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.
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.
As an outcome of the program, 46% of the proteges from the inaugural cohort have been promoted. • Continued to offer and support Business Resource Groups (“BRG”) to help foster a sense of belonging and recognizing the value of creating an inclusive and diverse workplace for our employees.
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.
In 2023, we maintained an online training catalog containing over 22,000 course offerings for our employees’ personal and professional development and, in 2023, invested more than 217,000 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.
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.
The wealth management segment had total assets of $1.2 billion, $1.8 billion and $1.5 billion as of December 31, 2023, 2022 and 2021, respectively. The wealth management segment accounted for 7% of our consolidated net revenues, excluding intersegment eliminations, for the year ended December 31, 2023.
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.
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 $56.3 billion as of December 31, 2023.
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.
Great Lakes Advisors, our registered investment adviser with locations in downtown Chicago, Tampa, Florida, and Stamford, Connecticut, as well as in various banking offices of our fifteen banks, provides money management services and advisory services to individuals, institutions, and municipal and tax-exempt organizations.
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.
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.
See Item 1A. Risk Factors. 20 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.
The specialty finance segment had total assets of $10.7 billion, $9.8 billion and $8.4 billion as of December 31, 2023, 2022 and 2021, respectively. The specialty finance segment accounted for 19% of our consolidated net revenues, excluding intersegment eliminations, for the year ended December 31, 2023.
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.
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.
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%.
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.
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.
Broker-Dealer and Investment Adviser Regulation Wintrust Investments and Great Lakes Advisors 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.
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.
Turnover for the entire Wintrust enterprise for the year was approximately 14% and of that voluntary departures accounted for approximately 63% of the total turnover. Wintrust offers a robust total rewards package that is designed to attract, motivate and retain a talented and diverse group of employees.
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.
The rule is expected to result in a significant increase in the thresholds for large banks to receive “Outstanding” ratings in the future. The rule is expected to take effect on April 1, 2024, with most of the provisions becoming applicable on January 1, 2026. Reporting of the collected data will not be required until 2027.
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.
(“CTC”), Wintrust Investments, LLC (“Wintrust Investments”), Great Lakes Advisors, LLC (“Great Lakes Advisors”) 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.
(“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.
As of December 31, 2023, the Company’s leasing portfolio, including direct financing leases, loans and equipment on operating leases, totaled $3.4 billion compared to $3.0 billion as of December 31, 2022. During 2023, Wintrust Asset Finance contributed approximately $77.5 million to our revenue, which does not reflect intersegment eliminations.
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.
Approximately 17% 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 enhanced products and services. 18 • Required each of our business units to update their Diversity & Inclusion Business Unit Action Plan, documenting key goals and effective efforts towards advancing diversity, equity and inclusion internally and externally in a relevant and intentional way.
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.
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. As finalized, the Small Business Lending Rule requires compliance by covered lenders as early as October 2024.
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.
The community banking segment had total assets of $44.4 billion, $41.4 billion and $40.3 billion as of December 31, 2023, 2022 and 2021, respectively. The community banking segment accounted for approximately 74% of our consolidated net revenues, excluding intersegment eliminations, for the year ended December 31, 2023.
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.
Our employees have access to approximately 460 Banking topics, 160 Professional Skills topics and 640 customized training courses and resources through Wintrust University – our learning portal.
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.
As of December 31, 2023, the Company’s wealth management subsidiaries had approximately $47.1 billion of assets under administration, which included $8.7 billion of assets owned by the Company and its subsidiary banks.
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.
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 11 As of December 31, 2023, our Company’s and our subsidiary banks’ regulatory capital ratios were above the well-capitalized standards and met the Capital Conservation Buffer.
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. 11 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.
Wealth Management Through our wealth management segment, we offer a full range of wealth management services through four separate subsidiaries (CTC, Wintrust Investments, Great Lakes Advisors and CDEC): trust and investment services, tax-deferred like-kind exchange services, asset management solutions, securities brokerage services and 401(k) and retirement plan services.
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.
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.
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.
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. The special assessment for Wintrust was estimated at approximately $34.4 million.
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.
Under the five-year transition, 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. The Company continues to transition over the next two years in compliance with the rule.
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.
All of our subsidiary banks are commonly controlled within the meaning of the cross-guarantee provision. 13 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.
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.
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.
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.
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.
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.
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.
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.
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.
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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisks Related to Financial Strength and Liquidity • 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. 23 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, 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.
Biggest changeRisks 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.
Our business activities and earnings are affected by general 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.
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.
Significant prolonged reduced investor demand could manifest itself in lower fair values for these securities 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.
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.
In addition, we anticipate that our pro forma capital ratios will be an 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.
In addition, we anticipate that our pro forma capital ratios will be an 31 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 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 or provide services.
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 39 or provide services.
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 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.
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.
Climate change could have an impact on longer-term natural weather trends and increase the occurrence and severity of such adverse weather events. 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.
Climate change could have an impact on longer-term natural weather trends and increase the occurrence and severity of such adverse weather events. 34 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.
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 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.
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 27 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.
However, some new technologies needed to compete effectively result in incremental 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.
However, some new technologies needed to compete effectively result in incremental 28 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.
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 DBRS.
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.
We also rely on representations of those customers, counterparties, or other third parties, such as independent auditors, as to the 42 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.
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.
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 and purchase of residential mortgages for sale into the secondary market.
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.
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 32 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.
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.
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, 25 better pricing for those products and services, or newer technologies to deliver those products and services than we can.
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.
Sustained higher interest rates and continued Federal Reserve asset reductions may adversely affect market stability, market liquidity, and 29 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.
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.
Such events may include sudden increases in customer transaction volume; electrical, telecommunications or other major physical infrastructure outages; natural disasters such as earthquakes, tornadoes, hurricanes and floods; disease pandemics; and events arising from local or larger scale political or social matters, including wars and terrorist acts.
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.
Any of the foregoing could harm our reputation, 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.
Any of the foregoing could harm our reputation, 30 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.
Many of our competitors, because of their larger size and available capital, have substantially greater resources to invest in 28 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.
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.
The risk that we may be perceived as less creditworthy relative to other market participants is increased in the current market environment, where the consolidation of financial institutions, including major global financial institutions, is resulting in a smaller number of much larger counterparties and competitors.
The risk that we may be perceived as less creditworthy relative to other market participants is increased in the current market 37 environment, where the consolidation of financial institutions, including major global financial institutions, is resulting in a smaller number of much larger counterparties and competitors.
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, 30 or misrepresentative of our actual practices.
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.
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 34 to repay their loans.
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.
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 borrowers in light of increased economic uncertainty.
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 24 borrowers in light of increased economic uncertainty.
It remains unclear what the U.S. government or foreign governments will or will 33 not do with respect to tariffs already imposed, additional tariffs that may be imposed, or international trade agreements and policies.
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.
The commercial and residential real estate markets continue to experience a variety of difficulties, including the Chicago metropolitan area and southern Wisconsin, 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.
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.
Funding costs may also increase if lost deposits are replaced with 38 wholesale funding. Higher funding costs reduce Wintrust’s net interest margin, net interest income and net income.
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.
Though we expect the Federal Reserve to slow the rate of increases, 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.
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.
Risks Related to Economic Conditions and Operating Environment • Includes risks related to deterioration in economic conditions and economic declines in the Chicago metropolitan and southern Wisconsin market areas, since our business is concentrated in these regions, and climate change and related environmental sustainability matters.
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.
If our credit rating is lowered, our financing costs could increase. As of December 31, 2023, we have been rated by Fitch Ratings as "BBB+" and 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.
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.
Targeted social engineering attacks and "spear phishing" attacks are becoming more sophisticated and are extremely difficult to prevent.
Targeted social engineering attacks and "spear phishing" attacks are 40 becoming more sophisticated and are extremely difficult to prevent.
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 15 operating banks, which are subject to significant federal and state regulation.
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.
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.
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. 41 Our business could be adversely affected by fraud.
Our premium finance receivables balances finance insurance policies that are spread among a large number of insurers; however, one of the insurers represents approximately 11% of such balances and two additional insurers represent approximately 6% each of such balances. FIRST Insurance Funding, Wintrust Life Finance and FIFC Canada consistently monitor carrier ratings and financial performance of our carriers.
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.
As of December 31, 2023, approximately 96% 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).
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).
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, 2023 and 2022, approximately 35% and 34%, respectively, of our total loan portfolio was secured by real estate, the majority of which is 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.
Our commercial loan portfolio totaled $12.8 billion or 30% of our total loan portfolio, at December 31, 2023, compared to $12.5 billion, or 32% of our total loan portfolio, at December 31, 2022. Commercial loans are secured by different types of collateral related to the underlying business, such as accounts receivable, inventory and equipment.
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.
In addition, increased focus on environmental, social and governance (“ESG”) issues, including without limitation the impact of climate change or our diversity initiatives, 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.
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.
Together, these loans represented 16% of our total loan portfolio as of such date.
Together, these loans represented 15% of our total loan portfolio as of such date.
With the relatively low interest rates that prevailed in recent 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 $21.9 million, $14.1 million and $3.7 million for the years ended December 31, 2023, 2022 and 2021, respectively.
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.
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 will entail extensive policy, legal, technology and market initiatives.
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.
As a result, risk management and general supervisory oversight may be difficult. As of December 31, 2023, we had $6.9 billion of property and casualty insurance premium finance loans outstanding, of which $6.0 billion related to the Company's U.S. operations at FIRST Insurance Funding and $920.4 million related to the Company's Canadian operations at FIFC Canada.
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.
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. 35 We are subject to environmental liability risk associated with lending activities.
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.
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 $45.5 million in 2023 from $20.3 million in 2022.
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 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.
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 policy statement would also identify certain indicators as generally consistent with OCC approval, which 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.
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.
In 2023, we charged off $45.5 million in loans (net of recoveries) and increased our allowance for credit losses from $357.9 million at December 31, 2022 to $427.6 million at December 31, 2023. Our allowance for loan and unfunded lending-related commitment losses represented 1.01% and 0.91% of total loans outstanding at December 31, 2023 and 2022, respectively.
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.
There continues to be 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.
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.
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.
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.
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.
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.
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.
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. 32 Changes in accounting policies or accounting standards could materially adversely affect how we report our financial results and financial condition.
In addition, several proposed revisions to mortgage-related rules are pending finalization. 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.
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.
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, litigation from the banks’ customers or other parties regarding the banks’ processing of loans for the SBA Paycheck Protection Program (“PPP”) and that the SBA may invalidate some or all PPP loan guaranties, 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 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.
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.
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.
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.
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.
Our balance of non-performing loans and other real estate owned (“OREO”) was $139.0 million and $13.3 million, respectively, at December 31, 2023 compared to $100.7 million and $9.9 million, respectively, at December 31, 2022.
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.
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.
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.
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. 40 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.
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.
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.
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. 25 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.
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.
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.
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.
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.
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. 41 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.
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.
Moreover, uncertainty as to the outcome of national elections in late 2024 increases the risk of uncertainty as to whether regulatory reform will continue. 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, which could increase the cost of doing business, compliance risks and potential liability.
Increased adoption of consumer banking technology can 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. 27 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.
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.
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.
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.
Consequently, the ultimate sales price for any of these securities could vary significantly from the recorded fair value at December 31, 2023, 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. 39 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.
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.
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.
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. 43 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.
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. 24 Since our business is concentrated in the Chicago metropolitan and southern Wisconsin market areas, economic declines in the economy of this region could adversely affect our business.
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.
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 .
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.
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.
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. 35 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.
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.
The repayment of our commercial loans is dependent upon the financial success and viability of the borrower.
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. 31 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 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.
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.
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. 33 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.
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.
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.
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.
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.
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.
There can be no assurance that FIRST Insurance Funding and Wintrust Life Finance will be able to continue to compete successfully in its markets.
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.
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. 42 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.
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. 37 In response to inflationary forces in 2023, the Federal Reserve raised its target for the federal funds rate several times, beginning from a range of 4.25-4.50% and ending at a range of 5.25-5.5% at year end.
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.
Additionally, to recoup losses to the DIF resulting from the bank failures of 2023, the FDIC also adopted a special assessment that will become effective in 2024 and will be collected over eight quarterly assessment periods. There is a risk that the FDIC could adopt additional special assessments in the future to recoup future DIF losses.
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.
While the Federal Reserve has indicated that it may seek to lower interest rates in the near term during 2024, the range of potential rate paths over the coming year is wide and likely will ultimately be driven by the path of inflation, labor market performance and economic growth.
Inflation remains above the Federal Reserve's two percent target rate and while the Federal Reserve may seek to 29 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.
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 and southern Wisconsin market areas.
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.
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.
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.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIf 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.
Biggest changeA 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.
In addition, the full 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.
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.
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 review of recent enhancements to the cybersecurity program and management’s progress on its cybersecurity strategic roadmap.
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 44 and management’s progress on its cybersecurity strategic roadmap.
Additionally, Wintrust leverages global cybersecurity standards as general guides, including the National Institute of Standards and Technology Cybersecurity Framework and the International Organization Standardization 27001 Information Security Management System Requirements. 44 Cybersecurity oversight begins with the Information Technology & Information Security Committee (“IT/IS Committee”) of the Wintrust Board of Directors.
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 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.
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.
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.
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.
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.
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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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Similar state laws and regulations may impose additional requirements on us, the banks and our operating subsidiaries. 45 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.
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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.
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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

Properties — owned and leased real estate

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Biggest changeWintrust Mortgage, also of our banking segment, is headquartered in our corporate headquarters in Rosemont, Illinois and has 31 locations in 9 states, all of which are leased, as well as office locations at several of our banks. 45 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.
Biggest changeThe 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.
Jackson Street in downtown Milwaukee. The Company’s community banking segment operates through 174 banking facilities, the majority of which are owned. The Company owns 224 automatic teller machines, the majority of which are housed at banking locations.
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 and northwest Indiana as well as two banking locations in southwest Florida. Excess space in certain properties is leased to third parties.
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.
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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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following is a summary of the cash dividends paid in 2023 and 2022: Record Date Payable Date Dividend per Share 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 November 10, 2022 November 25, 2022 $0.34 August 11, 2022 August 25, 2022 $0.34 May 12, 2022 May 26, 2022 $0.34 February 10, 2022 February 24, 2022 $0.34 On January 25, 2024, Wintrust Financial Corporation announced that the Company’s Board of Directors approved a quarterly cash dividend of $0.45 per share of outstanding common stock.
Biggest changeThe 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.
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, 2023.
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.
See “Supervision and Regulation - Payment of Dividends and Share Repurchases” in Item 1 of this Annual Report on Form 10-K. During 2023, 2022 and 2021, the banks and certain wealth management subsidiaries paid $360.0 million, $52.0 million and $145.0 million, respectively, in dividends to the Company.
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.
The dividend was paid on February 22, 2024 to shareholders of record as of February 8, 2024. 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.
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.
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. 2018 2019 2020 2021 2022 2023 Wintrust Financial Corporation 100.00 108.17 95.44 144.21 136.22 152.59 NASDAQ — Total US 100.00 131.17 159.07 200.26 160.75 203.23 NASDAQ — Bank Index 100.00 137.18 119.62 164.26 135.89 149.56 47 Approximate Number of Equity Security Holders As of February 8, 2024, there were approximately 1,770 shareholders of record of the Company’s common stock.
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. 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.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

214 edited+26 added−35 removed215 unchanged
Biggest changeThe table below presents additional selected information regarding mortgage banking for the respective periods. 64 Years Ended December 31, (Dollars in thousands) 2023 2022 2021 Originations: Retail originations $ 1,387,423 $ 1,978,609 $ 5,104,277 Veterans First originations 574,782 820,391 1,699,500 Total originations for sale (A) $ 1,962,205 $ 2,799,000 $ 6,803,777 Originations for investment 578,571 944,389 931,169 Total originations $ 2,540,776 $ 3,743,389 $ 7,734,946 As a percentage of originations for sale: Retail originations 71 % 71 % 75 % Veterans First originations 29 29 25 Purchases 83 % 71 % 45 % Refinances 17 29 55 Production Margin: Production revenue (B) (1) $ 41,031 $ 44,153 $ 176,242 Total originations for sale (A) 1,962,205 2,799,000 6,803,777 Add: Current period end mandatory interest rate lock commitments to fund originations for sale (2) 119,624 113,303 353,509 Less: Prior period end mandatory interest rate lock commitments to fund originations for sale (2) 113,303 353,509 1,072,717 Total mortgage production volume (C) $ 1,968,526 $ 2,558,794 $ 6,084,569 Production margin (B / C) 2.08 % 1.73 % 2.90 % Mortgage servicing: Loans serviced for others (D) $ 12,007,165 $ 14,052,596 $ 13,126,254 Mortgage servicing rights, at fair value (E) 192,456 230,225 147,571 Percentage of mortgage servicing rights to loans serviced for others (E/D) 1.60 % 1.64 % 1.12 % Servicing income 43,563 44,080 40,686 Components of Mortgage Servicing Rights (MSR): MSR - current period capitalization $ 28,610 $ 46,221 $ 72,754 MSR - collection of expected cash flows - paydowns (6,284) (6,213) (3,856) MSR - collection of expected cash flows - payoffs (10,776) (17,242) (30,932) Valuation: MSR - changes in fair value model assumptions (19,149) 60,064 18,273 Changes in fair value of derivative contract held as an economic hedge, net 1,280 (2,165) — MSR valuation adjustment, net of changes in fair value of derivative contract held as an economic hedge $ (17,869) $ 57,899 $ 18,273 Summary of Mortgage Banking Revenue: Production revenue (1) $ 41,031 $ 44,153 $ 176,242 Servicing income 43,563 44,080 40,686 MSR activity (6,319) 80,665 56,239 Changes in fair value on early buy-out loans guaranteed by U.S. government agencies and other revenue 4,798 (13,725) (157) Total mortgage banking revenue $ 83,073 $ 155,173 $ 273,010 (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.
Biggest changeYears 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.
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 all 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.
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.
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. 93
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.
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. 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.
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.
Based on these laws, the banks could, subject to minimum capital requirements, declare dividends to the Company 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.
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.
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 54 time deposits. Our branch network is the principal source of core deposits, which generally carry lower interest rates than wholesale funds of comparable maturities.
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.
Profitability of financing both commercial and life insurance premiums is also meaningfully impacted by leveraging 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.
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.
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 4.5% 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’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.
Using a qualitative approach, the Company reviews any 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.
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.
The following table summarizes the capital guidelines for bank holding companies as of December 31, 2023, as well as certain ratios relating to the Company’s equity and assets as of December 31, 2023, 2022 and 2021: Minimum Ratios Minimum Ratio + Capital Conservation Buffer (1) Minimum Well Capitalized Ratios (2) 2023 2022 2021 Tier 1 Leverage Ratio 4.0 % N/A N/A 9.3 % 8.8 % 8.0 % Risk-based capital ratios: Tier 1 Capital Ratio 6.0 8.50 6.0 10.3 10.0 9.6 Common equity tier 1 capital ratio 4.5 7.00 N/A 9.4 9.1 8.6 Total capital ratio 8.0 10.50 10.0 12.1 11.9 11.6 Other ratios: Total average equity to total average assets N/A N/A N/A 9.4 9.2 9.2 Dividend payout ratio N/A N/A N/A 16.7 17.0 16.4 (1) Reflects the Capital Conservation Buffer of 2.50%.
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%.
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 rates.
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.
Partially offsetting the impact of lower 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.
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.
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 fair value and the carrying value of assets and liabilities acquired.
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.
Upon completion of its own investigation, the Company generally repurchases or provides indemnification on certain loans. Indemnification requests are generally received within two years subsequent to sale.
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.
At December 31, 2023, 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.
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.
As such, the extent of the decline in real estate valuations can vary meaningfully among the different types of commercial and other real estate loans made by the Company.
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 property and casualty insurance premium finance business is a competitive industry 55 and yields on loans are influenced by the market rates offered by our competitors.
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.
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 downgraded.
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.
In 2023, 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.
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.
As of December 31, 2021, approximately $320,000 of TDRs were past due greater than 90 days and still accruing interest. No TDRs as of December 31, 2020, and 2019 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.
Other borrowings at December 31, 2023 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.
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 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 2023 and 2022.
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 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, 2023, 2022 and 2021.
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.
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, 2023, none of our mortgage loans consist of interest-only loans. Premium finance receivables — property & casualty.
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.
For a discussion of 2022 results compared to 2021, 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, 2022 filed on February 28, 2023.
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.
Software and equipment expense increased in 2023 compared to 2022 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.
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.
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 that item.
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.
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 2023, we managed our liquid assets to ensure that we have the balance sheet strength to serve our clients.
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.
The following table presents the carrying value of the investment securities portfolios as of December 31, 2023, 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.
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.
As reflected in the table, each of the Company’s capital ratios at December 31, 2023, 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.
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.
The Company had $253.6 million of junior subordinated debentures outstanding as of December 31, 2023 and 2022. 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.
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.
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, 2023 would exceed such revised well-capitalized standard.
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.
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, 2023. The detailed financial discussion focuses on 2023 results compared to 2022.
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.
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 years. 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.
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.
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 22% of total average earning assets in 2023 and 2022, respectively.
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.
Management considers the maintenance of adequate liquidity to be important to the management of risk. Accordingly, during 2023, the Company continued its practice of maintaining appropriate funding capacity to provide the Company with adequate liquidity for its ongoing operations.
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.
Residential real estate loans, excluding early buy-out loans guaranteed by U.S. government agencies, at December 31, 2023 that are current with regards to the contractual terms of the loan agreements comprise 98.4% of these residential real estate loans outstanding. For more information regarding delinquent loans as of December 31, 2023, see Note (5) “Allowance for Credit Losses” in Item 8.
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.
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 allocated to the business unit.
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.
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 MS Rs and EBOs guaranteed by U.S. government agencies. Mortgage originations for sale totaled $2.0 billion and $2.8 billion in 2023 and 2022, respectively.
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 MS Rs 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.
(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, 2023, 2022 and 2021 were $10.1 million, $5.6 million and $3.6 million, respectively.
(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.
The Company’s leasing business increased its portfolio of assets, including direct financing leases, loans and equipment on operating leases, to $3.4 billion as of December 31, 2023. In addition, the wealth management companies have been building a team of experienced professionals who are located within a majority of the banks.
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.
Starting in 2016, none of the junior subordinated debentures qualified as Tier 1 regulatory capital of the Company resulting in 89 $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, 2023. Shareholders’ Equity .
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 .
As of December 31, 2023, the Company had three reporting units: Community Banking, Specialty Finance and Wealth Management. Based on the Company’s 2023 annual goodwill impairment testing, which was performed qualitatively, the Company concluded that the fair value of each reporting unit more likely than not exceeded the carrying amounts of the respective reporting units.
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.
The Company recorded a net excess tax benefit related to share-based compensation of $2.9 million in 2023, a net excess tax benefit of $2.9 million 2022, and a net excess tax benefit of $2.4 million in 2021, the majority of which were recognized in the first quarter in each year.
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.
At December 31, 2023 and 2022, subordinated notes totaled $437.9 million and $437.4 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.
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.
At December 31, 2023, the liability for estimated losses on repurchase and indemnification was approximately $152,000 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.
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.
Early buyout loan classified as held-for-investment totaled $150.6 million at December 31, 2023 compared to $164.8 million at December 31, 2022. Such loans consist of both the rebooked GNMA loans and the early buyout exercised loans classified as held-for-investment discussed above.
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.
Premium finance receivables — life insurance. Wintrust Life Finance originated approximately $1.5 billion in life insurance premium finance receivables in 2023 as compared to $1.8 billion in 2022. The Company continues to experience a high level of competition and pricing pressure within the current market.
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.
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 $2.5 billion at December 31, 2023 and 2022.
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.
The Company increased its loan portfolio from $39.2 billion at December 31, 2022 to $42.1 billion at December 31, 2023. 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.
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.
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 TDRs performing under the contractual terms of the loan agreement as of the dates shown.
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.
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, 2023 and 2022, the banks had approximately $6.9 billion and $2.8 billion, respectively, of securities collateralizing public deposits and other liquidity sources.
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.
The increase during 2023 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 $17.9 billion of premium finance receivables were originated in 2023 compared to approximately $15.4 billion in 2022.
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.
The Fixed-Rate Promissory Note relates to and is secured by three office buildings owned by the Company. At December 31, 2023 and 2022, the Fixed-Rate Promissory Note had a balance of $59.2 million and $61.3 million, respectively. See Note (13) “Other Borrowings” to the Consolidated Financial Statements in Item 8 for further discussion of these borrowings.
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.
Average earning assets increased $2.8 billion, or 6%, in 2023 and $3.6 billion, or 8%, in 2022. 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 $3.6 billion, or 10%, in 2023 and $3.6 billion, or 11%, in 2022.
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.
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, 2023 December 31, 2022 December 31, 2021 December 31, 2020 December 31, 2019 (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 $ 169,604 30 % $ 142,769 32 % $ 119,307 34 % $ 94,212 37 % $ 64,920 31 % Commercial real-estate 223,853 27 184,352 25 144,583 26 243,603 26 68,511 30 Home equity 7,116 1 7,573 1 10,699 1 11,437 1 3,878 2 Residential real-estate 13,133 7 11,585 6 8,782 5 12,459 5 9,800 5 Premium finance receivables – property & casualty 12,384 16 9,967 15 15,246 14 17,267 13 8,132 13 Premium finance receivables – life insurance 685 19 704 21 613 20 510 18 1,515 19 Consumer and other 490 0 498 0 423 0 422 0 1,705 0 Total allowance for credit losses $ 427,265 100 % $ 357,448 100 % $ 299,653 100 % $ 379,910 100 % $ 158,461 100 % Allowance category as a percent of total allowance for credit losses: Commercial 40 % 40 % 40 % 25 % 41 % Commercial real-estate 52 52 48 64 43 Home equity 2 2 4 3 3 Residential real-estate 3 3 3 3 6 Premium finance receivables—property & casualty 3 3 5 5 5 Premium finance receivables—life insurance 0 0 0 0 1 Consumer and other 0 0 0 0 1 Total allowance for credit losses 100 % 100 % 100 % 100 % 100 % Management determined that the allowance for credit losses was appropriate at December 31, 2023, and that the loan portfolio is well diversified and well secured, without undue concentration in any specific risk area.
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.
The increase in 2023 compared to 2022 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 deposit s . The community banking segment recorded a provision for credit losses of $104.9 million in 2023 compared to $74.2 million in 2022.
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 deposit s . The community banking segment recorded a provision for credit losses of $88.3 million in 2024 compared to $104.9 million in 2023.
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 15 banks with 174 offices at the end of 2023.
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, $16.1 billion in total premium finance receivables in 2023 within the United States. FIFC Canada, acquired in 2012, originated $1.8 billion in Canadian property and casualty premium finance receivables in 2023.
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.
Unused commitments on home equity lines of credit totaled $845.6 million at December 31, 2023 and $796.9 million at December 31, 2022. The Company has been actively managing its home equity portfolio to ensure that diligent pricing, appraisal and other underwriting activities continue to exist.
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.
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, 2023 and 2022, the translated balance of the secured borrowings totaled $392.5 million and $309.7 million, respectively.
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.
The Company had approximately $920.4 million of loans to businesses with operations in foreign countries as of December 31, 2023 compared to $745.6 million at December 31, 2022. This balance as of December 31, 2023 consists of loans originated by FIFC Canada.
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.
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 a specific asset or liability or future expected cash flow at the time it is purchased.
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.
The increase in the allowance for credit losses is primarily due to portfolio growth and the impact on the Company’s loan loss modeling from deteriorating macroeconomic conditions and expectations between the two reporting dates primarily related to the Baa credit spread and the Commercial Real Estate Price Index.
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.
In 2023, such fluctuations in provision for credit losses unfavorably impacted the profitability of our community banks, primarily as a result of deterioration in key variables (Baa credit spread and Commercial Real Estate Price Index) within forecasted macroeconomic conditions. Level of non-performing loans and other real estate owned .
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 .
FIRST Insurance Funding and FIFC Canada originated approximately $16.4 billion in property and casualty insurance premium finance receivables during 2023 as compared to approximately $13.6 billion in 2022. FIRST Insurance Funding and FIFC Canada makes loans to finance insurance premiums related to property and casualty insurance policies.
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.
At December 31, 2023, the loan and held-to-maturity debt securities portfolios represent 82% of total assets on the Company’s consolidated balance sheet.
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.
In January, April, July and October of 2023, Wintrust declared a quarterly cash dividend of $0.40 per common share. In January, April, July and October of 2022, Wintrust declared a quarterly cash dividend of $0.34 per common share. In January of 2024, Wintrust declared a quarterly cash dividend of $0.45 per common share.
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.
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 $139.0 million (of which $35.5 million, or 26% , was related to commercial real estate) at December 31, 2023, an increase of $38.3 million compared to December 31, 2022.
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.
In 2023, the Company recognized $21.9 million in fees on covered call options compared to $14.1 million in 2022. 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 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 2023, approximately 83% of originations were mortgages associated with new home purchases, while 17% of originations were related to refinancing of mortgages. In 2022, approximately 71% of originations were mortgages associated with new home purchases, while 29% of originations were related to refinancing of mortgages. Non-Interest Expense Management believes expense management is important to enhance profitability amid increased competition.
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.
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) 2023 2022 2021 2020 2019 Loans past due greater than 90 days and still accruing (2) : Commercial $ 98 $ 462 $ 15 $ 307 $ — Commercial real estate — — $ — — — Home equity — — $ — — — Residential real estate — — $ — — — Premium finance receivables – property & casualty 20,135 15,841 $ 7,210 12,792 11,517 Premium finance receivables – life insurance — 17,245 $ 7 — — Consumer and other 54 49 $ 137 264 163 Total loans past due greater than 90 days and still accruing $ 20,287 $ 33,597 $ 7,369 $ 13,363 $ 11,680 Non-accrual loans (3) : Commercial 38,940 35,579 $ 20,399 21,743 37,224 Commercial real estate 35,459 6,387 $ 21,746 46,107 26,113 Home equity 1,341 1,487 $ 2,574 6,529 7,363 Residential real estate 15,391 10,171 $ 16,440 26,071 13,797 Premium finance receivables – property & casualty 27,590 13,470 $ 5,433 13,264 20,590 Premium finance receivables – life insurance — — $ — — 590 Consumer and other 22 6 $ 477 436 231 Total non-accrual loans $ 118,743 $ 67,100 $ 67,069 $ 114,150 $ 105,908 Total non-performing loans (4) : Commercial $ 39,038 $ 36,041 $ 20,414 $ 22,050 $ 37,224 Commercial real estate 35,459 6,387 $ 21,746 46,107 26,113 Home equity 1,341 1,487 $ 2,574 6,529 7,363 Residential real estate 15,391 10,171 $ 16,440 26,071 13,797 Premium finance receivables – property & casualty 47,725 29,311 $ 12,643 26,056 32,107 Premium finance receivables – life insurance — 17,245 $ 7 — 590 Consumer and other 76 55 $ 614 700 394 Total non-performing loans $ 139,030 $ 100,697 $ 74,438 $ 127,513 $ 117,588 Other real estate owned 13,309 8,589 $ 1,959 9,711 5,208 Other real estate owned – from acquisitions — 1,311 $ 2,312 6,847 9,963 Other repossessed assets — — $ — — 4 Total non-performing assets $ 152,339 $ 110,597 $ 78,709 $ 144,071 $ 132,763 Accruing TDRs not included within non-performing assets N/A $ 36,620 $ 37,486 $ 47,023 $ 36,725 Total non-performing loans by category as a percent of its own respective category’s period-end balance: Commercial 0.30 % 0.29 % 0.17 % 0.18 % 0.45 % Commercial real estate 0.31 0.06 0.24 0.54 0.33 Home equity 0.39 0.45 0.77 1.54 1.44 Residential real estate 0.56 0.43 1.00 2.07 1.02 Premium finance receivables – property & casualty 0.69 0.50 0.26 0.64 0.93 Premium finance receivables – life insurance — 0.21 0.00 — 0.01 Consumer and other 0.13 0.11 2.54 2.17 0.36 Total non-performing loans 0.33 % 0.26 % 0.21 % 0.40 % 0.44 % Total non-performing assets as a percentage of total assets 0.27 % 0.21 % 0.16 % 0.32 % 0.36 % Total non-accrual loans as a percentage of total loans 0.28 % 0.17 % 0.19 % 0.36 % 0.40 % Allowance for loan and unfunded lending-related commitment losses as a percentage of nonaccrual loans 359.82 % 532.71 % 446.78 % 332.82 % 149.62 % (1) Excludes early buy-out loans guaranteed by U.S. government agencies.
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.
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, beginning in the first quarterly assessment period of 2023.
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.
During 2023, 2022 and 2021, the subsidiaries paid $360.0 million, $52.0 million and $145.0 million, respectively, in dividends to the Company. As of December 31, 2023, subject to minimum capital requirements at the banks, approximately $941.2 million was available as dividends from the banks without prior regulatory approval and without compromising the banks’ well-capitalized positions.
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.
The liability for estimated losses on repurchase and indemnification claims for residential mortgage loans previously sold to investors was $152,000 at December 31, 2023 and $624,000 at December 31, 2022.
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.
As of December 31, 2023, excluding early buyout loans guaranteed by U.S. government agencies, $15.4 million of our residential real estate mortgages, or 0.6% of our residential real estate loan portfolio were classified as nonaccrual, no balances were 90 or more days past due and still accruing, $25.3 million were 30 to 89 days past due or 1.0% and $2.6 billion were current or 98.4%.
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%.
The Company recorded net interest income of $1.8 billion in 2023 compared to $1.5 billion and $1.1 billion in 2022 and 2021, respectively.
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.
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, 2023 totaled $1.4 billion as compared to $1.2 billion for the same period in 2022, an increase of $260.8 million, or 22%.
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%.
Impact to estimated allowance for credit losses from an increased or higher input value Baa Credit Spread Increases CRE Price Index Decreases 57 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, 2023: Baa Credit Spread Narrows Widens Commercial Decreases estimate by 10%-15% Increases estimate by 20%-25% Commercial Real Estate: Construction Decreases estimate by 15%-20% Increases estimate by 15%-20% Non-Construction Decreases estimate by 4%-5% Increases estimate by 4%-5% 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, 2023: CRE Price Index Increases Decreases Commercial Real Estate: Construction Decreases estimate by 45%-50% Increases estimate by 95%-100% Non-Construction Decreases estimate by 25%-30% Increases estimate by 55%-60% 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.
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.
As a result of the above, net interest margin increased to 3.66% (3.68% on a fully taxable-equivalent basis, non-GAAP) in 2023 compared to 3.15% (3.17% on a fully taxable-equivalent basis, non-GAAP) in 2022. 60 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.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+3 added−1 removed15 unchanged
Biggest changeThe interest rate sensitivity for both the Static Shock and Ramp Scenarios at December 31, 2023 and December 31, 2022 is as follows: 94 Static Shock Scenarios +200 Basis Points +100 Basis Points -100 Basis Points -200 Basis Points December 31, 2023 2.6 % 1.8 % 0.4 % (0.7) % December 31, 2022 7.2 3.8 (5.0) (12.1) Ramp Scenarios +200 Basis Points +100 Basis Points -100 Basis Points -200 Basis Points December 31, 2023 1.6 % 1.2 % (0.3) % (1.5) % December 31, 2022 5.6 3.0 (2.9) (6.8) One method utilized by financial institutions, including the Company, to manage interest rate risk is to enter into derivative financial instruments.
Biggest changeThe 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.
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 situations.
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.
To further mitigate this risk, the Company may acquire fixed rate term debt or use financial derivative instruments. There were no covered call options outstanding as of December 31, 2023 or 2022. 95
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.
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.
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.
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. During 2023 and 2022, the Company entered into certain covered call option transactions related to certain securities held by the Company.
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
Removed
While the Company does not believe rapid rate cuts are warranted at this point, we are assuming that there will be three 25 basis point rate cuts starting June 2024. With that assumption our net interest margin should be reasonably stable in a narrow range around the current level for the near term.
Added
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.
Added
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.
Added
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.

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