Wintrust Financial Corporation 7.875% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series F

Company Overview

Business Model: Wintrust Financial Corporation is a financial holding company with approximately $64.9 billion in total assets as of December 31, 2024. It provides community-oriented personal and commercial banking services through sixteen wholly-owned banking subsidiaries in the Chicago metropolitan area, southern Wisconsin, northwest Indiana, and west Michigan. The Company also originates residential mortgages for sale into the secondary market via Wintrust Mortgage. Specialty finance services, including property and casualty insurance premium financing (FIRST Insurance Funding, First Insurance Funding of Canada Inc.) and life insurance premium financing (Wintrust Life Finance), are offered nationally and in Canada. Lease financing is provided by Wintrust Asset Finance, Inc., and short-term accounts receivable financing and outsourced administrative services are offered by Tricom, Inc. of Milwaukee. Wealth management services are delivered through The Wintrust Private Trust Company, N.A., Wintrust Investments, LLC, Great Lakes Advisors, LLC, and Chicago Deferred Exchange Company, LLC.

Market Position: As a $64.9 billion asset financial services company, Wintrust Financial Corporation benefits from greater access to financial and managerial resources compared to smaller local competitors. Its multi-chartered approach, coupled with local and accountable management, aims to provide superior customer service. Wintrust Mortgage leverages its size, bank affiliation, regulatory competency, branding, technology, and reputation for competitive positioning. Specialty finance operations, including FIRST Insurance Funding and Wintrust Life Finance, compete by emphasizing industry knowledge, financing flexibility, and timely funding. Wealth management entities differentiate themselves through personalized attention and customer service for small to midsize businesses and affluent individuals.

Recent Strategic Developments: In 2024, Wintrust Financial Corporation expanded its physical footprint by opening nine new branch locations in the Chicago metropolitan area and acquiring twenty-six branch locations in the west Michigan market through the acquisition of Macatawa Bank Corporation. Four branch locations in the Chicago metropolitan area were closed in 2024. On August 1, 2024, the Company acquired Macatawa Bank Corporation, issuing approximately 4.7 million shares of common stock. In Q1 2024, the Company sold its Retirement Benefits Advisors division, recording a $20.0 million gain. On April 3, 2023, Wintrust Financial Corporation acquired Rothschild & Co Asset Management US Inc. and Rothschild & Co Risk Based Investments LLC. In late January 2025, Wintrust Investments transitioned its wealth management and certain private client business support to a platform operated by LPL Financial Holdings, Inc., with Wintrust Investments expecting to deregister as a broker-dealer and investment advisor by the end of 2025.

Geographic Footprint: Wintrust Financial Corporation's primary banking operations are concentrated in the Chicago metropolitan area, southern Wisconsin, northwest Indiana, and west Michigan. Its specialty finance services, particularly premium finance, operate nationally across all 50 U.S. states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, with Canadian operations through First Insurance Funding of Canada Inc. Retail mortgage offices are located in multiple states, with significant concentrations in the Chicago, Minneapolis, Salt Lake City, and Los Angeles metropolitan areas. As of December 31, 2024, the Company operated 205 banking locations. Wealth management subsidiaries maintain offices in downtown Chicago, Appleton, Wisconsin, Tampa, Florida, and Stamford, Connecticut, in addition to various banking offices.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Operating Margin: 38.6% (2024) vs. 37.2% (2023)
• Net Margin: 28.4% (2024) vs. 27.4% (2023)

Investment in Growth:

• Capital Expenditures: Approximately $91.5 million (calculated from change in premises, software and equipment, net, plus depreciation and amortization expense).
• Strategic Investments:
  • Acquisition of Macatawa Bank Corporation: Approximately $499.3 million in common stock issued.
  • Acquisition of Rothschild & Co Asset Management US Inc. and Rothschild & Co Risk Based Investments LLC: Approximately $12.6 million in net assets acquired.

Business Segment Analysis

Community Banking

Financial Performance:

• Revenue: $1.8 billion (+5.9% YoY)
• Operating Margin: 25.5% (2024)
• Key Growth Drivers: Increased interest and fees on loans, driven by loan growth and higher interest rates; increased mortgage banking revenue from favorable mortgage servicing rights (MSR) fair value adjustments and higher originations for sale.

Product Portfolio:

• Community-oriented personal and commercial banking services, including MaxSafe® deposit accounts.
• Niche lending products: Community Advantage program (condominium, homeowner, community associations), mortgage warehouse lending, insurance agency finance, franchise lending, Wintrust Commercial Finance (direct leasing), Wintrust Business Credit (asset-based lending), Wintrust SBA Lending (Small Business Administration loans), Wintrust Commercial Real Estate, and Wintrust Government, Non-Profit & Healthcare solutions.
• Niche deposit services: Funds Group, Financial Markets Group, and Wintrust Workplace Solutions (Health Savings Accounts).
• Residential mortgages and consumer direct lending (Veterans First brand) through Wintrust Mortgage.

Market Dynamics:

• Serves individuals, small to mid-sized businesses, local governmental units, and institutional clients primarily in the Chicago metropolitan area, southern Wisconsin, northwest Indiana, and west Michigan. Downtown Chicago and Milwaukee offices focus on commercial and industrial business.

Specialty Finance

Financial Performance:

• Revenue: $475.6 million (+9.3% YoY)
• Operating Margin: 39.2% (2024)
• Key Growth Drivers: Loan growth and increased interest rates on premium finance receivables.

Product Portfolio:

• Financing of property and casualty insurance policies (FIRST Insurance Funding, First Insurance Funding of Canada Inc.).
• Financing of life insurance policy premiums for high net-worth borrowers (Wintrust Life Finance).
• Equipment financing through structured loan and lease products (Wintrust Asset Finance, Inc.).
• Short-term accounts receivable financing and outsourced administrative services for the temporary staffing industry (Tricom, Inc. of Milwaukee).

Market Dynamics:

• Operates nationally in the U.S. and in Canada. Premium finance receivables are secured by financed insurance policies from geographically dispersed insurance companies, with one insurer representing approximately 10% of balances, and two others representing approximately 8% and 6% each. The leasing portfolio totaled $3.9 billion as of December 31, 2024.

Sub-segment Breakdown:

• Commercial Premium Finance Operations: 49% of total specialty finance revenues in 2024.
• Life Insurance Premium Finance Operations: 30% of total specialty finance revenues in 2024.
• Leasing Operations: 19% of total specialty finance revenues in 2024.
• Accounts Receivable Finance Operations: 2% of total specialty finance revenues in 2024.

Wealth Management

Financial Performance:

• Revenue: $198.1 million (+17.0% YoY)
• Operating Margin: 25.2% (2024)
• Key Growth Drivers: A $20.0 million gain from the sale of the Retirement Benefits Advisors division.

Product Portfolio:

• Trust and investment management services (The Wintrust Private Trust Company, N.A.).
• Tax-deferred like-kind exchange services under Internal Revenue Code Section 1031 (Chicago Deferred Exchange Company, LLC).
• Money management and advisory services (Great Lakes Advisors, LLC).
• Private client and securities brokerage services (Wintrust Investments, LLC).

Market Dynamics:

• Primarily serves its market area, with approximately $51.2 billion of assets under administration as of December 31, 2024. The Company actively recruits experienced wealth management professionals from the Chicago metropolitan area, Wisconsin, west Michigan, and southwest Florida. Wintrust Investments is transitioning its support platform to LPL Financial Holdings, Inc. and expects to deregister as a broker-dealer and investment advisor by the end of 2025.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: No common shares were repurchased in the twelve months ended December 31, 2024. A $200 million share repurchase authorization remains in place with no expiration date.
• Dividend Payments: $115.3 million in common stock dividends and $28.0 million in preferred stock dividends were paid in 2024. The quarterly cash dividend per common share was $0.45 in 2024, increasing to $0.50 per share declared in January 2025.
• Dividend Yield: 1.44% (based on 2024 common dividends and year-end market price).
• Future Capital Return Commitments: The Company has an authorized $200 million share repurchase program and has declared a quarterly cash dividend of $0.50 per common share for Q1 2025.

Balance Sheet Position:

• Cash and Equivalents: $4.87 billion (as of December 31, 2024)
• Total Debt: $4.24 billion (as of December 31, 2024)
• Net Cash Position: $630.3 million (as of December 31, 2024)
• Credit Rating: Fitch Ratings: "BBB+", Morningstar DBRS: "A (low)".
• Debt Maturity Profile:
  • Federal Home Loan Bank (FHLB) advances: $3.15 billion outstanding at December 31, 2024, with approximately $2.7 billion having varying put or call dates over the next 12 months. Weighted average contractual interest rate of 3.23%.
  • Subordinated notes: $298.3 million outstanding at December 31, 2024, including $300.0 million (4.85% interest) maturing in June 2029. $140.0 million of 5.00% subordinated notes were repaid in Q2 2024.
  • Other borrowings: $534.8 million outstanding at December 31, 2024, including a $142.8 million term loan facility (matures December 12, 2027), a $100.0 million revolving credit facility (matures December 5, 2025, no outstanding balance), $323.2 million in Canadian Secured Borrowing (matures December 15, 2025), and a $57.1 million fixed-rate promissory note (1.70% interest, matures March 31, 2025).
  • Junior subordinated debentures: $253.6 million outstanding at December 31, 2024, with a weighted average contractual interest rate of 6.85%.

Operational Excellence

Production & Service Model: Wintrust Financial Corporation operates a diversified financial services model, providing community-oriented banking, national specialty finance, and regional wealth management services. Its community banking segment emphasizes personalized service through a multi-chartered approach. Mortgage origination is a key service, balancing sales into the secondary market with servicing retention. Specialty finance operations focus on efficient, timely funding for insurance premiums and equipment, alongside administrative services for niche industries. Wealth management delivers trust, investment, and brokerage services with a focus on personalized client attention. The Company offers MaxSafe® deposit accounts to provide expanded FDIC insurance coverage by spreading deposits across its banking subsidiaries.

Supply Chain Architecture: Key Suppliers & Partners:

• Wealth Management Platform: LPL Financial Holdings, Inc. - provides platform support for Wintrust Investments' wealth management and private client business.
• Clearing Broker: Wintrust Investments utilizes a clearing broker for its securities brokerage services.

Facility Network:

• Manufacturing: Not applicable for a financial services company.
• Research & Development: Not explicitly detailed as separate facilities. Technology investments are focused on digital customer experience, infrastructure upgrades, and information security.
• Distribution:
  • Banking: 205 banking facilities, primarily owned, and 184 automatic teller machines in the Chicago metropolitan area, southern Wisconsin, northwest Indiana, Kent, Ottawa, and northern Allegan counties in Michigan, and three locations in southwest Florida.
  • Mortgage: Wintrust Mortgage is headquartered in Rosemont, Illinois, with 28 leased locations in 11 states and additional offices at several banks.
  • Wealth Management: Leased locations in downtown Chicago, Appleton, Wisconsin, Tampa, Florida, and Stamford, Connecticut, plus offices at several banks.
  • Specialty Finance (U.S.): One owned location in Northbrook, Illinois, and leased locations in downtown Newark, New Jersey, Long Island, New York, and Newport Beach, California for FIRST Insurance Funding and Wintrust Life Finance. Wintrust Asset Finance is in Rosemont, Illinois, with leased locations in Frisco, Texas, and Irvine, California. Tricom, Inc. of Milwaukee has one owned location in Menomonee Falls, Wisconsin.
  • Specialty Finance (Canada): Three leased locations in Toronto, Ontario; Wainwright, Alberta; and Vancouver, British Columbia for First Insurance Funding of Canada Inc.

Operational Metrics:

• Efficiency Ratio (non-GAAP): 56.90% (2024) compared to 57.55% (2023), indicating improved efficiency.
• Net Overhead Ratio: 1.54 (2024) compared to 1.64 (2023).

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Wintrust Financial Corporation employs a direct sales approach for its community banking services, targeting individuals, small to mid-sized businesses, local governmental units, and institutional clients. Its downtown Chicago and Milwaukee offices are strategically positioned to capture commercial and industrial business. Wintrust Mortgage engages in direct customer lending through its Veterans First brand.
• Channel Partners: Wintrust Investments has transitioned its wealth management and private client business support to a platform operated by LPL Financial Holdings, Inc.
• Digital Platforms: The Company is investing in software licensing expenses for digital customer experience, indicating a focus on enhancing online sales and service channels.

Customer Portfolio: Enterprise Customers:

• Tier 1 Clients: The Company serves a broad base of small to mid-sized businesses, local governmental units, and institutional clients. Wintrust Life Finance targets high net-worth borrowers. Tricom, Inc. of Milwaukee specializes in serving clients within the temporary staffing industry.
• Customer Concentration: In its premium finance receivables portfolio, one insurer accounts for approximately 10% of balances, and two additional insurers represent approximately 8% and 6% each, indicating some concentration risk within this segment.

Geographic Revenue Distribution:

• Primary Markets (Illinois, Wisconsin, Michigan): These states collectively account for 68.5% of the Company's commercial real estate collateral as of December 31, 2024.
• International Exposure: Foreign income attributable to the Canadian subsidiary was $27.3 million in 2024.
• Other U.S. Markets: Commercial real estate collateral is also present in Indiana (3.5%), Florida (3.4%), Colorado (1.9%), California (2.0%), Tennessee (2.3%), Ohio (1.8%), and Texas (2.5%), with other states comprising 14.1%.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: Wintrust Financial Corporation operates within the highly regulated financial services industry, characterized by ongoing changes in deposit insurance assessment rates, bank merger regulations (e.g., Bank Merger Act, DOJ Banking Addendum), and capital requirements (e.g., U.S. Basel III Rule). The industry is also subject to evolving consumer protection laws (e.g., CFPB rules on small business lending and open banking), anti-money laundering regulations (BSA, USA PATRIOT Act, AMLA, CTA), data privacy laws (GLB Act, FCRA, CCPA), and debit card interchange fee regulations (Regulation II).

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Community Banking: Smaller local competitors within its regional markets.
• Specialty Finance (Canada): One national commercial premium finance company, regional providers, and broker-owned companies.
• Equipment Leasing: Other bank-affiliated, independent, captive, and vendor equipment leasing and finance companies.
• Accounts Receivable Financing: Similar niche finance companies, payroll processing firms, and other lending institutions.
• Wealth Management: Firms offering personalized attention and customer service to small to midsize businesses and affluent individuals.

Emerging Competitive Threats: The Company acknowledges general industry risks from new entrants, disruptive technologies, and alternative solutions.

Competitive Response Strategy: Wintrust Financial Corporation's strategy includes leveraging its internal loan pipeline and external growth opportunities, diversifying its loan portfolio, growing its deposit franchise, completing strategic acquisitions, investing in technology infrastructure, focusing on cost control, and expanding its Wintrust Asset Finance direct leasing niche.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Interest Rate Sensitivity: The net interest margin decreased in 2024, primarily due to increased deposit competition. Approximately 74% of current loan balances are projected to reprice or mature in 2025, indicating significant interest rate exposure. The federal funds rate ended 2024 in a range of 4.25-4.50%.
• Technology Disruption: The Company manages cybersecurity risks through a program overseen by its Board of Directors' Information Technology & Information Security Committee, with no material cybersecurity threats realized to date.
• Customer Concentration: In its premium finance receivables, one insurer represents approximately 10% of balances, and two additional insurers represent approximately 8% and 6% each, posing a concentration risk.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Geographic Concentration: The commercial real estate loan portfolio exhibits geographic concentration, with 68.5% of collateral located in its primary markets of Illinois, Wisconsin, and Michigan as of December 31, 2024.

Financial & Regulatory Risks

Market & Financial Risks:

• Credit & Liquidity: Net charge-offs increased to $94.4 million in 2024 from $45.5 million in 2023. Non-performing loans and other real estate owned (OREO) increased to $170.8 million and $23.1 million, respectively, at December 31, 2024, from $139.0 million and $13.3 million at December 31, 2023. The allowance for credit losses was $437.1 million at December 31, 2024. Total liquidity sources of $17.4 billion as of December 31, 2024, covered approximately 110% of uninsured and uncollateralized deposits ($15.8 billion).
• Foreign Exchange: The Company recorded a net foreign currency translation adjustment loss of $24.9 million and foreign currency remeasurement losses of $1.3 million in 2024, primarily related to its Canadian subsidiary.
• Regulatory & Compliance: The Company is subject to extensive regulation, including new Bank Merger Act procedures, DOJ merger guidelines, FDIC cross-guarantee provisions, Volcker Rule, U.S. Basel III capital requirements, BSA/AML/CTA, OFAC sanctions, data privacy laws (GLB Act, FCRA, CCPA), SEC clawback rules, CRA rules (currently under injunction), CFPB small business lending and open banking rules, and debit card interchange fee regulations. A special FDIC assessment related to 2023 bank failures resulted in $5.2 million recognized in Q1 2024, following $34.4 million in Q4 2023.

Geopolitical & External Risks

Geographic Dependencies: The Company has approximately $824.4 million of loans to businesses with foreign operations as of December 31, 2024, primarily through First Insurance Funding of Canada Inc., exposing it to international operational and regulatory environments.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas: Wintrust Financial Corporation is strategically investing in technology infrastructure, with a focus on enhancing digital customer experience, upgrading core infrastructure, and strengthening information security. This is reflected in increased software licensing expenses. Innovation Pipeline: While a formal innovation pipeline is not explicitly detailed, the Company's strategic initiatives include investing in technology infrastructure to support its growth and competitive positioning.

Intellectual Property Portfolio:

• Patent Strategy: Not explicitly detailed in the filing.
• Licensing Programs: Not explicitly detailed in the filing.
• IP Litigation: Not explicitly detailed in the filing.

Technology Partnerships:

• Strategic Alliances: Wintrust Investments transitioned its wealth management and private client business support to a platform operated by LPL Financial Holdings, Inc., indicating a strategic collaboration for technology and service delivery.

Leadership & Governance

Executive Leadership Team

• Chief Executive Officer: Timothy S. Crane (President and Chief Executive Officer)
• Chief Financial Officer: David L. Stoehr (Executive Vice President & Chief Financial Officer)
• Chief Accounting Officer: Jeffrey D. Hahnfeld (Executive Vice President, Controller, and Chief Accounting Officer)

Leadership Continuity: The Company's cybersecurity program is overseen by the Board of Directors' Information Technology & Information Security Committee. The Chief Security Officer reports to this committee, the Vice Chairman/Chief Operating Officer, the Wintrust Enterprise Risk Management Committee, and the Audit Committee, indicating a structured oversight and reporting framework.

Board Composition: The Board of Directors receives quarterly cybersecurity reports, and the Audit Committee performs an annual review of the cybersecurity program. The Company has adopted a Corporate Code of Ethics.

Human Capital Strategy

Workforce Composition:

• Total Employees: 5,903 full-time equivalent employees in the U.S. and Canada as of December 31, 2024, with 98% being full-time.
• Geographic Distribution: Employees are located across the U.S. and Canada.
• Skill Mix: Women represent 56% of the workforce, and racial and ethnic minorities represent 33%.

Talent Management: Acquisition & Retention:

• Hiring Strategy: In 2024, Wintrust Financial Corporation filled over 1,390 positions. New hires in 2024 included 53% self-identifying as female and 41% as a racial or ethnic minority.
• Retention Metrics: Total employee turnover for 2024 was approximately 12%, with voluntary departures accounting for approximately 75%.
• Employee Value Proposition: The Company incurred $38.9 million in stock-based compensation expense and contributed $19.7 million to 401(k) Plans in 2024.

Diversity & Development:

• Diversity Metrics: Women represent 56% of the workforce, and racial and ethnic minorities represent 33%.
• Development Programs: Over 1,300 employees participated in the Paired To Win: Mentoring program (33% minority participants). The third cohort of the Paired To Win: Advocacy program launched in 2024, with over 73% women and 13% minority mid-level leaders; 48% of protégés from the inaugural cohort have been promoted.
• Culture & Engagement: Approximately 23% of employees are members of Business Resource Groups (Leadership Coalition, Multicultural Professionals Network, Career Navigation, Prism, and Women of Wintrust). In 2024, the Company invested over 177,000 total hours in training, with over 425 leaders participating in leadership development programs.

Environmental & Social Impact

Environmental Commitments: Climate Strategy:

• Emissions Targets: Corporate campus greenhouse gas carbon emissions (CO2e) totaled 3,692 tons in 2024, a decrease from 3,938 tons in 2023. Aggregate greenhouse gas carbon emissions from the corporate campus and 187 retail banking locations totaled 17,699 tons in 2024, down from 18,607 tons from 181 locations in 2023.
• Renewable Energy: Great Lakes Advisors, LLC's Climate Opportunities strategy, initiated in 2013, had approximately $135 million in climate-focused assets under management at December 31, 2024.

Social Impact Initiatives:

• Community Investment: All subsidiary banks received a "satisfactory" or better Community Reinvestment Act (CRA) rating. The Company had unfunded commitments to investment partnerships for CRA purposes totaling $94.1 million in 2024, including $67.0 million for tax-credit investments.

Business Cyclicality & Seasonality

Demand Patterns:

• Economic Sensitivity: Mortgage originations for sale totaled $2.6 billion in 2024, an increase from $2.0 billion in 2023. In 2024, 75% of originations were new home purchases and 25% were refinances, compared to 83% new home purchases and 17% refinances in 2023, indicating a shift towards a higher proportion of refinances.
• Industry Cycles: The Company's net interest margin is sensitive to interest rate changes, with approximately 74% of current loan balances projected to reprice or mature in 2025.

Planning & Forecasting:

• The Company utilizes key macroeconomic variable data points, such as the Baa corporate credit spread and the Commercial Real Estate Pricing Index (CREPI), for its credit loss models, indicating a structured approach to demand forecasting and risk assessment.

Regulatory Environment & Compliance

Regulatory Framework: Wintrust Financial Corporation operates as a bank holding company and financial holding company, primarily regulated by the Federal Reserve. Its nationally-chartered banks are regulated by the Office of the Comptroller of the Currency (OCC), and deposits are insured by the FDIC. The Company is subject to broad rulemaking authority from the Consumer Financial Protection Bureau (CFPB) over federal consumer protection laws. Key regulations include the Bank Merger Act, DOJ Banking Addendum to Merger Guidelines, Federal Deposit Insurance Act (FDIA) cross-guarantee provisions, Volcker Rule, and U.S. Basel III capital requirements. Compliance with anti-money laundering (AML) programs is mandated by the Bank Secrecy Act (BSA), USA PATRIOT Act, Anti-Money Laundering Act of 2020 (AMLA), and Corporate Transparency Act (CTA). The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) administers economic sanctions. Data privacy and cybersecurity laws include the Gramm-Leach-Bliley Act (GLB Act), Fair Credit Reporting Act (FCRA), and state-specific laws like the California Consumer Privacy Act (CCPA). Recent regulatory developments include a rule requiring notification within 36 hours of material computer-security incidents, SEC clawback policies, a new CRA final rule (currently under injunction), CFPB's Small Business Lending Rule, and a finalized CFPB rule for "open banking" (Section 1033 of Dodd-Frank Act). Regulation II requires debit card issuers to enable transactions on at least two unaffiliated payment card networks, and the Federal Reserve has proposed lowering maximum interchange fees for large debit card issuers.

Trade & Export Controls: The Company is subject to OFAC economic sanctions and general export control regulations, which impact its international operations, particularly through First Insurance Funding of Canada Inc.

Legal Proceedings:

• Wintrust Mortgage California PAGA Matter: Settled for an immaterial amount, with court approval on October 16, 2024.
• Wintrust Financial ERISA Matter: Dismissed with prejudice on August 14, 2024, with the appeal dismissed on December 18, 2024.
• Wintrust Mortgage Fair Lending Matter: A putative class action filed May 25, 2022, had a motion to dismiss granted on September 27, 2023. An amended complaint was filed, and a motion to dismiss it was filed on November 21, 2023, which remains pending.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: The Company's effective tax rate was 26.6% in 2024, 26.3% in 2023, and 27.2% in 2022.
• Geographic Tax Planning: Foreign income attributable to the Canadian subsidiary was $27.3 million in 2024. State taxes, net of federal tax benefit, amounted to $48.0 million in 2024, and foreign subsidiary taxes, net, were $4.6 million in 2024.
• Tax Reform Impact: The Company recorded a net excess tax benefit related to share-based compensation of $4.5 million in 2024. Net deferred tax assets were $37.4 million in 2024, with no valuation allowance required. Federal net operating loss carryforwards of $2.6 million begin to expire in 2029. U.S. federal, state, and Canadian income tax returns are open for audit from 2021 forward.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: The Company maintains a liability for estimated losses on repurchase and indemnification payments related to mortgages sold into the secondary market, which was approximately $188,000 at December 31, 2024.
• Risk Transfer Mechanisms: Wintrust Financial Corporation utilizes derivative instruments as part of its risk management strategy. As of December 31, 2024, the Company held $6.7 billion of derivatives designated as cash flow hedges against potential downward repricing of variable rate loans.