Wintrust Financial Profile
Wintrust Financial Corporation provides community-oriented, personal and commercial banking services to customers generally located in the Chicago metropolitan area, southern Wisconsin and northwest Indiana (market area) through its 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. (Barrington Bank).
In addition, the company provides specialty finance services, including financing for the payment of property and casualty insurance premiums and life insurance premiums (‘premium finance receivables’) on a national basis through FIRST Insurance Funding, a division of the company’s wholly-owned subsidiary, Lake Forest Bank & Trust Company, N.A. (‘Lake Forest Bank’), and Wintrust Life Finance, a division of Lake Forest Bank; and in Canada through the company’s premium finance company, First Insurance Funding of Canada (‘FIFC Canada’), lease financing and other direct leasing opportunities through the company’s wholly-owned subsidiary, Wintrust Asset Finance, Inc. (‘Wintrust Asset Finance’), and short-term accounts receivable financing and outsourced administrative services through the company’s wholly-owned subsidiary, Tricom, Inc. of Milwaukee (‘Tricom’).
Further, the company provides a full range of wealth management services primarily to customers in its market area through four separate subsidiaries, The Chicago Trust Company, N.A. (‘CTC’), Wintrust Investments, LLC (‘Wintrust Investments’), Great Lakes Advisors, LLC (‘Great Lakes Advisors’) and Chicago Deferred Exchange Company, LLC (‘CDEC’).
Segments
The company operates through three primary segments: Community Banking, Specialty Finance, and Wealth Management.
Community Banking
Through the company’s Community Banking segment, its banks provide community-oriented, personal and commercial banking services to customers located in the company’s market area. The company’s customers include individuals, small to mid-sized businesses, local governmental units and institutional clients residing primarily in the banks’ local service areas. The banks have a strategy to provide comprehensive community-focused banking services. In keeping with this strategy, the banks provide highly personalized and responsive service, a characteristic of locally-owned and managed institutions.
The company offers its MaxSafe deposit accounts, which provide customers with expanded Federal Deposit Insurance Corporation (‘FDIC’) insurance coverage by spreading a customer’s deposit across the company’s fifteen banks. The company also has e downtown Chicago and Milwaukee offices that work with each of its banks to capture commercial and industrial business. The company’s commercial and industrial lenders in the company’s downtown offices operate in close partnership with lenders at the company’s community banks. By combining the company’s expertise in the commercial and industrial sector with its high level of personal service and a full suite of banking products, the company creates another point of differentiation from both the company’s larger and smaller competitors. Its banks also offer home equity, consumer, and real estate loans, safe deposit facilities, ATMs, online and mobile banking and other innovative and traditional services specially tailored to meet the needs of customers in their market areas.
The company developed its banking franchise through a combination of de novo organizations and the purchase of existing bank franchises.
As of December 31, 2022, the company 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. (‘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. (‘Old Plank Trail Bank’), Hinsdale Bank & Trust Company, N.A. (‘Hinsdale Bank’), St. Charles Bank & Trust Company, N.A. (‘St. Charles Bank’) and Town Bank, N.A. (‘Town Bank’). The company has banking locations. Each nationally-chartered bank is subject to regulation, supervision and regular examination by the Office of the Comptroller of the Currency (‘OCC’).
The company also engages in the retail origination and purchase of residential mortgages through Wintrust Mortgage, as well as consumer direct lending primarily to veterans through the company’s Veterans First brand. Certain originated loans are sold to unaffiliated companies or the company’s banks with servicing remaining within Wintrust Mortgage operations. Wintrust Mortgage maintains retail mortgage offices in a number of states, with the largest concentration located in the Chicago, Minneapolis, Salt Lake City and Los Angeles metropolitan areas.
The company also offers several niche lending products through several of the banks. 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. Other niches offered throughout the company’s 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. In addition, the company offers a niche deposit service through its Northbrook Bank’s Funds Group.
Specialty Finance
Through the company’s Specialty Finance segment, the company offers financing of insurance premiums for businesses and individuals; accounts receivable financing, value-added, out-sourced administrative services; and other specialty finance businesses. FIRST Insurance Funding and Wintrust Life Finance engage in the premium finance receivables business, the company’s most significant specialized lending niche, including property and casualty insurance premium finance and life insurance premium finance. The company also engages in property and casualty insurance premium finance in Canada through the company’s wholly-owned subsidiary, FIFC Canada.
In their property and casualty insurance premium finance operations, FIRST Insurance Funding and FIFC Canada make loans primarily to businesses to finance the insurance premiums they pay on their property and casualty insurance policies. 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. FIRST Insurance Funding or FIFC Canada may either forward the financed amount of the remaining policy premiums directly to the insurance carrier or to the agent or broker for remittance to the insurance carrier on FIRST Insurance Funding’s or FIFC Canada’s behalf.
Because the agent or broker is the primary contact to the ultimate borrowers who are located nationwide and because proceeds and the company’s collateral may be handled by the agent or brokers during the term of the loan, FIRST Insurance Funding and FIFC Canada may be more susceptible to third party (i.e., agent or broker) fraud. The company performs various controls and procedures, including ongoing credit and other reviews of the agents and brokers, as well as performs various internal audit steps to mitigate against the risk of material fraud.
FIRST Insurance Funding offers financing of property and casualty insurance policies in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. FIRST Insurance Funding’s legal department regularly monitors changes to regulations and updates policies and programs accordingly.
Wintrust Life Finance finances life insurance policy premiums generally used for estate planning purposes of high net-worth borrowers. These loans are originated directly with the borrowers with assistance from life insurance carriers, independent insurance agents, financial advisors and legal counsel. 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.
Premium finance loans made by FIRST Insurance Funding, Wintrust Life Finance and FIFC Canada are primarily secured by the insurance policies financed by the loans. These insurance policies are written by a large number of insurance companies geographically dispersed throughout the United States and Canada. FIRST Insurance Funding, Wintrust Life Finance and FIFC Canada consistently monitor carrier ratings and financial performance of the company’s carriers. In the event carrier ratings fall below certain levels, most of Wintrust Life Finance’s life insurance premium finance policies provide for an event of default and allow Wintrust Life Finance to have recourse to borrowers and guarantors, as well as to additional collateral in certain cases. For the commercial premium finance business, the term of the loans is sufficiently short such that in the event of a decline in carrier ratings, FIRST Insurance Funding or FIFC Canada, as the case may be, can restrict or eliminate additional loans to finance premiums to such carriers. The majority of premium finance receivables are purchased by the banks in order to more fully utilize their lending capacity as these loans generally provide the banks with higher yields than alternative investments.
Through the company’s wholly-owned subsidiary Wintrust Asset Finance, the company provides equipment financing through structured loan and lease products to customers in a variety of industries throughout the United States. Wintrust Asset Finance provides financing of fixed assets consisting of property, plant and equipment, transportation (trucks, trailers, rail, marine, and buses), construction, manufacturing equipment, technology, oil and gas, restaurant equipment, medical and healthcare.
Through the company’s wholly-owned subsidiary Tricom, the company provides high-yielding, short-term accounts receivable financing and value-added, outsourced administrative services, such as data processing of payrolls, billing and cash management services to the temporary staffing industry. Tricom’s clients, located throughout the United States, provide staffing services to businesses in diversified industries.
Wealth Management
Through the company’s Wealth Management segment, the company offers 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.
Wintrust Investments, the company’s registered broker/dealer subsidiary, provides a full range of private client and securities brokerage services to clients located primarily in the Midwest. Wintrust Investments is headquartered in downtown Chicago, operates an office in Appleton, Wisconsin, and has established branch locations in offices at a majority of the company’s banks. 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.
CTC, the company’s trust subsidiary, offers trust and investment management services to clients through offices located in downtown Chicago and at various banking offices of the company’s fifteen banks. CTC is subject to regulation, supervision and regular examination by the OCC.
Great Lakes Advisors, the company’s registered investment adviser with locations in downtown Chicago and Tampa, Florida, as well as in various banking offices of the company’s fifteen banks, provides money management services and advisory services to individuals, institutions, and municipal and tax-exempt organizations. 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, the company’s provider of tax-deferred like-kind exchange services, provides Qualified Intermediary services (as defined by the U.S. Treasury regulations) for taxpayers seeking to structure tax-deferred like-kind exchanges under Internal Revenue Code (‘IRC’) Section 1031. Under IRC Section 1031, a taxpayer may defer the gain on the sale of certain investment property if the taxpayer utilizes the services of a Qualified Intermediary. These transactions typically generate customer deposits during the period following the sale of the property until such proceeds are used to purchase a replacement property. These deposits may flow into the company’s banks as a source of low-cost deposits. CDEC is the subsidiary of Elektra Holding Company, LLC (‘Elektra’), which was acquired by the company in December of 2018.
Strategy
Specifically, the company has leveraged its internal loan pipeline and external growth opportunities to grow earnings assets to increase net interest income; continued to diversify the company’s loan portfolio by adding product and geographic diversification; continued efforts to better manage the company’s interest costs by improving the company’s funding mix; written call option contracts on certain securities as an economic hedge to mitigate overall interest rate risk and enhance the securities’ overall return by using fees generated from these options; entered into mirror-image swap transactions to both satisfy customer preferences and maintain variable interest rate exposure; completed strategic acquisitions to expand the company’s presence in existing and complimentary markets; focused on cost control and leveraging the company’s infrastructure to grow without a commensurate increase in operating expenses; and expanded the wintrust asset finance direct leasing niche.
Supervision and Regulation
The company is a bank holding company under the Bank Holding Company Act of 1956, as amended (the ‘BHC Act’), subject to regulation, supervision, and examination by the Federal Reserve. 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. Each nationally-chartered bank is subject to regulation, supervision and regular examination by the OCC. The deposits of all of the company’s subsidiary banks are insured by the Deposit Insurance Fund (‘DIF’) and, as such, the FDIC has additional oversight authority over the banks.
The Consumer Financial Protection Bureau (‘CFPB’) has broad rulemaking authority over a wide range of federal consumer protection laws applicable to the business of the company’s subsidiary banks and some other operating subsidiaries.
The company’s non-bank subsidiaries are subject to regulation by their functional regulators, including applicable state finance and insurance agencies, the applicable exchanges, the SEC, FINRA, and the OCC, as well as by the Federal Reserve.
Maintaining the company’s financial holding company status requires that the company and each of the company’s subsidiary banks remain ‘well-capitalized’ and ‘well-managed’ as defined by regulation and that each of the company’s subsidiary banks maintain at least a ‘satisfactory’ rating under the Community Reinvestment Act (‘CRA’).
The Federal Deposit Insurance Act (‘FDIA’) and Federal Reserve regulations and policy require the company to serve as a source of financial and managerial strength for the company’s subsidiary banks, and to commit resources to support the banks.
The deposits of each of the company’s subsidiary banks are insured by the Depositors Insurance Fund (‘DIF’) up to the standard maximum deposit insurance amount of $250,000 per depositor.
Each of the company’s subsidiary banks received a ‘satisfactory’ or better rating from the Federal Reserve or the OCC on its most recent CRA performance evaluation.
Each of the company’s subsidiary banks is subject to the Bank Secrecy Act and, therefore, is required to provide its employees with AML (anti-money laundering) training, designate an AML compliance officer and undergo periodic, independent audits to assess the effectiveness of its AML program. The company has implemented policies, procedures and internal controls that are designed to comply with these AML requirements.
The company is 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.
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. Both Wintrust Investments and Great Lakes Advisors are registered as investment advisers with the SEC. In addition, Wintrust Investments is a member of several self-regulatory organizations (‘SROs’), including FINRA. Wintrust Investments is also subject to regulation by state securities commissions in states in which it conducts business. Wintrust Investments and Great Lakes Advisors are registered only with the SEC as investment advisers, but certain of their advisory personnel are subject to regulation by state securities regulatory agencies.
In addition, the Dodd-Frank Act requires the federal banking agencies and the SEC to issue regulations or guidelines requiring covered financial institutions, including the company and its subsidiary banks, to prohibit incentive-based payment arrangements that encourage inappropriate risks by providing compensation that is excessive or that could lead to material financial loss to the institution.
Investment Securities
As of December 31, 2022, the company’s investment securities portfolios included U.S. treasury, U.S. government agencies, municipal securities, corporate notes (financial issuers and other securities), mortgage-backed securities, and collateralized mortgage obligations.
History
Wintrust Financial Corporation, an Illinois corporation, was founded in 1991.
