WINTRUST FINL(WTFCP) - 2023 Q4 - Annual Report

Capital Ratios and Compliance - As of December 31, 2023, the Company's Tier 1 leverage ratio was 9.3%, exceeding the minimum requirement of 4.0%[70] - The Company's Tier 1 capital ratio was 10.3%, surpassing the well-capitalized standard of 6.0%[70] - The Common Equity Tier 1 capital ratio stood at 9.4%, well above the minimum requirement of 4.5%[70] - The total capital ratio was reported at 12.1%, exceeding the minimum requirement of 8.0%[70] - The Capital Conservation Buffer is currently at its fully phased-in level of 2.5%[74] - The Company is in compliance with specific net worth requirements for participation in mortgage programs as of December 31, 2023[72] - The Federal Reserve has not revised the well-capitalized standard for bank holding companies, but the Company's capital ratios exceed the expected revised standards[64] - The Company and its subsidiary banks are categorized as "well-capitalized" as of December 31, 2023[77] Regulatory Compliance and Legal Obligations - The company is subject to various federal, state, and local laws regarding data privacy and cybersecurity, which are evolving and may increase compliance costs[91] - The Anti-Money Laundering Act of 2020 may significantly alter due diligence and reporting requirements for banks over the next few years[89] - Wintrust Investments is registered as a broker-dealer with the SEC and in all 50 states, which subjects it to extensive regulation under federal and state securities laws[98] - The company must comply with the SEC's net capital rule, which requires maintaining a minimum amount of net assets in liquid form, potentially limiting its operations[101] - The company has implemented policies to comply with the Bank Secrecy Act, including maintaining an anti-money laundering program and conducting employee training[88] - The California Consumer Privacy Act imposes obligations on the company regarding personal information and may require additional costs for compliance[94] - The company is required to adopt a clawback policy for incentive-based compensation in line with SEC rules effective by November 28, 2023[104] - The company’s incentive compensation policies must not encourage imprudent risk-taking, as mandated by federal banking agencies[103] Workforce and Diversity - As of December 31, 2023, Wintrust employed 5,521 full-time equivalent employees, with 97% classified as full-time[107] - In 2023, Wintrust filled over 1,500 positions, with 53% of new hires identifying as female and 41% as racial or ethnic minorities[108] - The turnover rate for Wintrust in 2023 was approximately 14%, with voluntary departures accounting for about 63% of total turnover[108] - Wintrust's workforce is composed of 56% women and 33% racially and ethnically diverse individuals[110] - In 2023, Wintrust invested over 217,000 total hours in training for employees, maintaining an online training catalog with over 22,000 course offerings[112] - The company has implemented a "Leadership Journey" program to support the development of future leaders, with over 100 newly minted leaders participating in 2023[113] - Wintrust has taken steps to enhance diversity and inclusion, including mentoring programs with 31% minority participation and advocacy programs with over 72% women[110] Financial Projections and Interest Rate Management - The Company anticipates three 25 basis point rate cuts starting June 2024, expecting net interest margin to remain stable in a narrow range[515] - Under the Static Shock Scenario, the net interest income is projected to change by +2.6% and -0.7% for +200 and -200 basis points respectively as of December 31, 2023[517] - In the Ramp Scenario, the net interest income is projected to change by +1.6% and -1.5% for +200 and -200 basis points respectively as of December 31, 2023[517] - The Company uses derivative financial instruments to manage interest rate risk, including interest rate swaps and options[518] - The Company’s asset-liability management policies are monitored by the Risk Management Committee to balance interest rate, credit, and liquidity risks[512] - The Company does not expect inflation to materially impact its financial condition compared to interest rate changes[511] - The Company’s ability to manage interest-bearing liabilities is limited by customer preferences and local competition[514] - The Company continuously monitors its net interest margin and performs simulation analysis to identify potential adverse changes due to interest rate fluctuations[513] Environmental Impact - The corporate campus greenhouse gas carbon emissions totaled 4,473 tons in 2023, an increase from 4,194 tons in 2022[135] - The Climate Opportunities Net Zero Portfolio managed $102 million in climate-focused investments as of December 31, 2023[135] Community Engagement and Performance - Wintrust's subsidiary banks received a "satisfactory" or better rating from the OCC on their most recent Community Reinvestment Act performance evaluation[119] - The Federal Reserve finalized a rule on October 3, 2022, limiting debit interchange fees to 21 cents plus 0.05% of the transaction, effective July 1, 2023[132] - The Small Business Lending Rule requires covered lenders to collect and report information about small business credit applications, with compliance required by October 2024[127]