WINTRUST FINL(WTFCP) - 2022 Q4 - Annual Report

Capital Adequacy - The Company has adopted the capital transition relief over a five-year period for the day-one impact of CECL on retained earnings[64] - As of December 31, 2022, the Company's Common Equity Tier 1 Capital Ratio was 9.1%, exceeding the minimum requirement of 4.5%[71] - The Tier 1 Capital Ratio was 10.0%, above the minimum requirement of 6.0%[71] - The Total Capital Ratio stood at 11.9%, surpassing the minimum requirement of 8.0%[71] - The Company and its subsidiary banks met the Capital Conservation Buffer of 2.5% as of December 31, 2022[70] - The Company is categorized as "well-capitalized" and exceeds the revised well-capitalized standards set by the Federal Reserve[79] - The Federal Reserve requires a Tier 1 Capital Ratio of 6.0% or greater for bank holding companies to be considered well-capitalized[67] - The Company must maintain a Capital Conservation Buffer to avoid restrictions on capital distributions, including dividends[69] Regulatory Compliance - The FDIC has adopted a final rule to increase deposit insurance assessment rates by 2 basis points starting in 2023[86] - The Company remains in compliance with specific net worth requirements for participation in mortgage programs as of December 31, 2022[74] - The company is subject to a statutory requirement that interchange fees for electronic debit transactions are limited to 21 cents plus 0.05% of the transaction, plus an additional one cent per transaction for fraud adjustment[105] - The company’s subsidiary banks received a "satisfactory" or better rating from the Federal Reserve or the OCC on their most recent Community Reinvestment Act performance evaluation[93] - The company has implemented policies and internal controls to comply with anti-money laundering requirements, including maintaining an AML program and conducting periodic audits[107] - The company consolidated its consumer mortgage loan origination and servicing operations primarily within Wintrust Mortgage to ensure compliance with mortgage-related rules and regulations[102] - The Federal Reserve finalized a rule that requires debit card issuers to enable all debit card transactions to be processed on at least two unaffiliated payment card networks, effective July 1, 2023[105] - The company is required to disclose its privacy policy to certain customers under the Gramm-Leach-Bliley Act[111] - The Anti-Money Laundering Act of 2020 may significantly alter due diligence and reporting requirements for banks in the coming years[108] - The company is subject to various federal and state statutes designed to protect consumers, with increased focus from state authorities on enforcement[95] - The company’s lending operations must adhere to federal laws governing credit transactions, including the Truth-In-Lending Act and the Equal Credit Opportunity Act[99] - The company is required to monitor and report suspicious transactions as part of its compliance with the Bank Secrecy Act[107] Workforce and Diversity - As of December 31, 2022, Wintrust employed 5,275 full-time equivalent employees, with 97% classified as full-time[126] - In 2022, Wintrust filled 1,881 positions, with 53% of new hires identifying as female and 42% as racial or ethnic minorities[127] - The turnover rate for Wintrust in 2022 was approximately 25%, with voluntary departures accounting for about 83% of total turnover[127] - Women represent 57% of Wintrust's workforce, while racially and ethnically diverse representation stands at 32%[129] - Wintrust has launched a fifth Business Resource Group called Women of Wintrust, aimed at promoting inclusivity and empowerment[129] - Wintrust's Future of Work model allows for remote work up to 2 days a week for eligible roles, reflecting a flexible approach to scheduling[135] - Wintrust invested more than 189,000 total hours in training for employees in 2022, maintaining an online training catalog with over 16,000 course offerings[130] - Wintrust's clawback policy must be adopted no later than 60 days following the effective date of the applicable listing standard, which is set for November 28, 2023[123] Environmental Impact - Wintrust's corporate campus energy usage in 2022 was 9,331 MWh, a decrease from 9,713 MWh in 2021, while greenhouse gas emissions totaled 4,194 tons, down from 4,733 tons in 2021[136] - The Climate Opportunities Net Zero Portfolio managed by Great Lakes Advisors reached $157 million in climate-focused investments as of December 31, 2022[137] Interest Rate Risk Management - The Company’s interest rate sensitivity under the Static Shock Scenario showed a 7.2% increase in net interest income with a 200 basis point rise in rates as of December 31, 2022, compared to 25.3% in 2021[516] - Under the Ramp Scenario, the Company projected a 5.6% increase in net interest income with a 200 basis point rise in rates as of December 31, 2022, down from 13.9% in 2021[516] - The Company utilizes derivative financial instruments, including interest rate swaps and options, to manage interest rate risk and enhance profitability[516] - The Company’s asset-liability management policies are monitored by the Risk Management Committee to balance interest rate risk, credit risk, and liquidity risk[512] - Interest rate risk is continuously reviewed, with management taking action to mitigate potential adverse changes in net interest income[515] - The Company entered into covered call option transactions to hedge positions and increase total returns from related securities, contributing to overall profitability[517] - The Company’s primary source of interest-bearing liabilities is customer deposits, which limits its ability to manage deposit types and terms[514] - Changes in inflation are not expected to materially impact the Company’s financial condition compared to changes in interest rates[511] - The Company’s interest rate risk exposure is regularly assessed to minimize inherent risks while maximizing net interest income[515]