WINTRUST FINL(WTFCP) - 2025 Q4 - Annual Report

Capital Ratios and Compliance - As of December 31, 2025, the Company's Tier 1 Capital Ratio was 11.0%, exceeding the well-capitalized standard of 6.0%[73] - The Common Equity Tier 1 Capital Ratio was 10.3%, surpassing the required minimum of 4.5%[73] - The Total Capital Ratio stood at 12.4%, well above the minimum requirement of 8.0%[73] - The Capital Conservation Buffer is fully phased in at 2.5%, which is included in the regulatory capital ratios[77] - The Company and its subsidiary banks are expected to continue exceeding all applicable well-capitalized regulatory capital requirements[72] - The Federal Reserve has not yet revised the well-capitalized standard for bank holding companies, which may affect future capital requirements[74] - The Company must maintain a Tier 1 Leverage Ratio of at least 4.0%[71] Regulatory and Compliance Requirements - The Company recorded a special assessment of $5.2 million in Q1 2024 due to losses associated with bank failures in the first half of 2023[87] - The deposits of each subsidiary bank are insured by the DIF up to $250,000 per depositor[85] - The Company remains in compliance with specific net worth requirements for participation in mortgage programs with government-sponsored entities[75] - The Anti-Money Laundering Act of 2020 requires the U.S. Treasury Department to issue National Anti-Money Laundering and Countering the Financing of Terrorism Priorities, which may alter due diligence and reporting requirements for banks[92] - The Cyber Incident Reporting for Critical Infrastructure Act will require covered entities to report significant cyber incidents to the Cybersecurity and Infrastructure Security Agency within 72 hours[99] - The California Consumer Privacy Act imposes obligations on covered companies and provides civil penalties for violations, potentially increasing compliance costs[100] - The Dodd-Frank Act requires financial institutions to prohibit incentive-based payment arrangements that encourage inappropriate risks, with final rules expected to be issued[105] - The federal banking agencies have issued guidance on incentive compensation to ensure policies do not encourage imprudent risk-taking[105] - The Office of Foreign Assets Control administers U.S. economic sanctions that restrict transactions with designated foreign countries and nationals[93] - Data privacy and cybersecurity laws are evolving, with new regulations potentially creating inconsistent requirements for businesses[94] Employee and Organizational Development - The Company employs 5,902 full-time equivalent employees, with 98% classified as full-time[125] - In 2025, the Company filled over 1,374 positions, with a turnover rate of approximately 12%[126] - The Company offers a total rewards package that includes competitive compensation and comprehensive benefits[127] - Wintrust University provides access to 1,547 courses, supporting both core banking topics and professional skills[129] - The Leadership Journey program had 2,670 leaders participate, enhancing leadership capability across the organization[131] - Approximately 27% of employees are members of business resource groups, promoting inclusiveness and engagement[133] Financial Performance and Risk Management - The Company is monitoring proposed changes to interchange fees, which could impact debit card transaction revenues[123] - The Company is subject to a statutory requirement that limits interchange fees for electronic debit transactions to 21 cents plus 0.05% of the transaction[122] - The Company is evaluating the potential impacts of the Small Business Lending Rule, which requires reporting on small business credit applications[117] - The Company continues to assess the effects of inflation on its financial condition, noting that interest rates have a more significant impact[496] - The Company’s net interest income sensitivity under the Static Shock Scenario for December 31, 2025, shows a decrease of (1.6)% for a +200 basis point change[501] - Under the Ramp Scenario for December 31, 2025, the net interest income sensitivity indicates a neutral change of (0.0)% for a +200 basis point change[501] - Management has executed various derivative instruments, including collars and receive-fixed swaps, to hedge variable-rate loan exposures and stabilize net interest margin[502] - The Company entered into covered call option transactions to economically hedge positions and increase total return associated with certain securities[503] - There were no covered call options outstanding as of December 31, 2025, or 2024, indicating a strategic shift in managing interest rate risk[503] - The Company’s exposure to interest rate risk is regularly reviewed to adjust balance sheet and derivative financial instruments to minimize risk and maximize net interest income[500] - The interest rate sensitivity for December 31, 2024, under the Static Shock Scenario shows a decrease of (1.6)% for a +200 basis point change[501] - The Company may execute additional derivatives to mitigate potential fluctuations in net interest margin in future periods[502] - The revenue from covered call options is recorded as non-interest income, contributing to overall profitability despite being separate from interest income[503] - Management's actions to reposition sensitivity to interest rates were in response to the rise in short-term interest rates in 2022 and 2023[502]