ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion highlights the significant factors affecting the operations and financial condition of Wintrust for the three years ended December 31, 2025. The detailed financial discussion focuses on 2025 results compared to 2024. This discussion and analysis should be read in conjunction with the Company’s Consolidated Financial Statements and Notes thereto within this Annual Report on Form 10-K.
For a discussion of 2024 results compared to 2023, refer to Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” of the Wintrust Annual Report on Form 10-K for the year ended December 31, 2024 filed on February 28, 2025.
OPERATING SUMMARY
Wintrust’s key measures of profitability and balance sheet changes are shown in the following table:
Years Ended
December 31,
Percentage (%) or
Basis Point (bp)
Change
Percentage (%) or
Basis Point (bp)
Change
(Dollars in thousands, except per share data)
Net income
Pre-tax income, excluding provision for credit losses (non-GAAP) (1)
Net income per common share — Diluted
Net revenue (2)
Net interest income
Net interest margin
bps
Net interest margin - fully taxable-equivalent (non-GAAP) (1)
Net overhead ratio (3)
Non-interest income to average assets
Non-interest expense to average assets
Return on average assets
Return on average common equity
Return on average tangible common equity (non-GAAP) (1)
At end of period
Total assets
Total loans, excluding loans held-for-sale
Total deposits
Total shareholders’ equity
Average loans to average deposits ratio
bps
bps
Book value per common share (1)
Tangible book value per common share (non-GAAP) (1)
Common equity to assets ratio (1)
bps
bps
Tangible common equity ratio (non-GAAP) (1)
Market price per common share
Allowance for loan and unfunded lending-related commitment losses to total loans
bps
bps
Non-performing loans to total loans
(1) See “Non-GAAP Financial Measures/Ratios” for additional information on this performance measure/ratio.
(2) Net revenue is net interest income plus non-interest income.
(3) The net overhead ratio is calculated by netting total non-interest expense and total non-interest income and dividing by that period’s total average assets. A lower ratio indicates a higher degree of efficiency.
Please refer to the Consolidated Results of Operations section later in this discussion for an analysis of the Company’s operations for the past three years.
NON-GAAP FINANCIAL MEASURES/RATIOS
The accounting and reporting policies of Wintrust conform to generally accepted accounting principles (“GAAP”) in the United States and prevailing practices in the banking industry. However, certain non-GAAP performance measures and ratios are used by management to evaluate and measure the Company’s performance. These include taxable-equivalent net interest income (including its individual components), taxable-equivalent net interest margin (including its individual components), the taxable-equivalent efficiency ratio, tangible common equity ratio, tangible book value per common share, return on average tangible common equity and pre-tax income, excluding provision for credit losses. Management believes that these measures and ratios provide users of the Company’s financial information a more meaningful view of the performance of the Company’s interest-earning assets and interest-bearing liabilities and of the Company’s operating efficiency. Other financial holding companies may define or calculate these measures and ratios differently.
Management reviews yields on certain asset categories and the net interest margin of the Company and its banking subsidiaries on a fully taxable-equivalent (“FTE”) basis. In this non-GAAP presentation, net interest income is adjusted to reflect tax-exempt interest income on an equivalent before-tax basis using tax rates effective as of the end of the period. This measure ensures comparability of net interest income arising from both taxable and tax-exempt sources. Net interest income on a FTE basis is also used in the calculation of the Company’s efficiency ratio. The efficiency ratio, which is calculated by dividing non-interest expense by total taxable-equivalent net revenue (less securities gains or losses), measures how much it costs to produce one dollar of revenue. Securities gains or losses are excluded from this calculation to better match revenue from daily operations to operational expenses. Management considers the tangible common equity ratio and tangible book value per common share as useful measurements of the Company’s equity. The Company references the return on average tangible common equity as a measurement of . Management considers pre-tax income, excluding provision for credit as a useful measurement of the Company’s core net income.
The following table presents a reconciliation of certain non-GAAP performance measures and ratios used by the Company to evaluate and measure the Company’s performance to the most directly comparable GAAP financial measures for the last three years.
Years Ended December 31,
(Dollars and shares in thousands, except per share data)
Reconciliation of Non-GAAP Net Interest Margin and Efficiency Ratio:
(A) Interest Income (GAAP)
Taxable-equivalent adjustment:
-Loans
-Liquidity management assets
-Other earning assets
(B) Interest Income (non-GAAP)
(C) Interest Expense (GAAP)
(D) Net Interest Income (GAAP) (A minus C)
(E) Net interest Income, fully taxable-equivalent (non-GAAP) (B minus C)
Net interest margin (GAAP)
Net interest margin, fully taxable-equivalent (non-GAAP)
(F) Non-interest income
(G) Gains (losses) on investment securities, net
(H) Non-interest expense
Efficiency ratio (H/(D+F-G))
Efficiency ratio (non-GAAP) (H/(E+F-G))
Reconciliation of Non-GAAP Tangible Common Equity Ratio:
Total shareholders’ equity (GAAP)
Less: Non-convertible preferred stock (GAAP)
Less: Acquisition-related intangible assets (GAAP)
(I) Total tangible common shareholders’ equity (non-GAAP)
(J) Total assets (GAAP)
Less: Acquisition-related intangible assets (GAAP)
(K) Total tangible assets (non-GAAP)
Common equity to assets ratio (GAAP) (L/J)
Tangible common equity ratio (non-GAAP) (I/K)
Reconciliation of Non-GAAP Tangible Book Value per Common Share:
Total shareholders’ equity (GAAP)
Less: Non-convertible preferred stock (GAAP)
(L) Total common equity
(M) Actual common shares outstanding
Book value per common share (L/M)
Tangible book value per common share (Non-GAAP) (I/M)
Reconciliation of Non-GAAP Return on Average Tangible Common Equity:
(N) Net income applicable to common shares
Add: Acquisition-related intangible asset amortization
Less: Tax effect of acquisition-related intangible asset amortization
After-tax acquisition-related intangible asset amortization
(O) Tangible net income applicable to common shares (non-GAAP)
Total average shareholders’ equity
Less: Average preferred stock
(P) Total average common shareholders’ equity
Less: Average acquisition-related intangible assets
(Q) Total average tangible common shareholders’ equity (non-GAAP)
Return on average common equity (N/P)
Return on average tangible common equity (non-GAAP) (O/Q)
Reconciliation of Non-GAAP Pre-Tax, Pre-Provision Income:
Income before taxes
Add: Provision for credit losses
Pre-tax income, excluding provision for credit losses (non-GAAP)
Years Ended December 31,
(Dollars and shares in thousands, except per share data)
Reconciliation of Non-GAAP Net Income per Common Share:
Net income
Preferred stock dividends
Preferred stock redemption
(R) Net income applicable to common shares
(S) Weighted average common shares outstanding
Dilutive potential common shares
(T) Average common shares and dilutive common shares
Net income per common share - Basic (R/S)
Net income per common share - Diluted (R/T)
Preferred stock series F excess one-time extended first dividend
Preferred stock redemption
(U) Total non-recurring preferred stock offering impact (non-GAAP)
Net income per common share - Basic (non-GAAP) (R+U)/S
Net income per common share - Diluted (non-GAAP) (R+U)/T
OVERVIEW AND STRATEGY
2025 Highlights
The Company recorded net income of $823.8 million for the year of 2025 compared to $695.0 million and $622.6 million for the years of 2024 and 2023, respectively. The results for 2025 were driven by increased net interest income primarily due to increased growth in earning assets.
The Company increased its loan portfolio from $48.1 billion at December 31, 2024 to $53.1 billion at December 31, 2025. This increase was across all major loan portfolios. For more information regarding changes in the Company’s loan portfolio, see “Analysis of Financial Condition – Interest Earning Assets” and Note (4) “Loans” to the Consolidated Financial Statements presented under Item 8 of this Annual Report on Form 10-K.
The Company recorded net interest income of $2.2 billion in 2025 compared to $2.0 billion and $1.8 billion in 2024 and 2023, respectively. The higher level of net interest income recorded in 2025 compared to 2024 resulted primarily from a $7.4 billion increase in average earning assets (see “Net Interest Margin” section later in this Item 7 for further detail).
Non-interest income totaled $501.9 million in 2025, increasing $13.6 million, or 3%, compared to 2024. The increase in non-interest income in 2025 compared to 2024 was primarily attributable to service charges on deposits, gains on investment securities and fees from covered call options. This was offset by a decrease in other non-interest income which included a $20.0 million gain recognized in the first quarter of 2024 related to the sale of the Company’s RBA division within its wealth management business and a slight decrease in mortgage banking revenues (see “Non-Interest Income” section later in this Item 7 for further detail).
Non-interest expense totaled $1.5 billion in 2025, increasing $109.3 million, or 8%, compared to 2024. The increase compared to 2024 was primarily attributable to a $56.2 million increase in salary and employee benefits expense and a $19.6 million increase in software and equipment expense (see “Non-Interest Expense” section later in this Item 7 for further detail).
Management considers the maintenance of adequate liquidity to be important to the management of risk. Accordingly, during 2025, the Company continued its practice of maintaining appropriate funding capacity to provide the Company with adequate liquidity for its ongoing operations. In this regard, the Company benefited from its strong deposit base, a liquid investment portfolio and its access to funding from a variety of external funding sources. The Company had overnight liquid funds and interest-bearing deposits with banks of $3.6 billion and $4.9 billion at December 31, 2025 and 2024, respectively.
Economic Environment
In 2025, the Federal Reserve Open Market Committee continued its current cycle of reducing short term interest rates in part due to declining inflation. However, longer term interest rates did not experience a commensurate reduction resulting in an upward sloping yield curve. Although uncertainty prevails, overall economic forecasts improved resulting in generally favorable credit trends for banks. The Company has employed certain strategies to manage net income in the current environment, including those discussed below.
Net Interest Income
The Company has leveraged its operating strengths to grow its earning assets base while maintaining a stable net interest margin in 2025. In 2025, the Company’s net interest margin increased to 3.52% (3.53% on a fully tax-equivalent basis, non-GAAP) as compared to 3.51% (3.53% on a fully tax-equivalent basis, non-GAAP) in 2024, as the Company was able to reprice deposits to offset the impact of earning asset repricing. Significant growth in earning assets resulted in the Company’s net interest income increasing by $261.5 million in 2025 compared to 2024. The magnitude of potential changes in net interest income in various interest rate scenarios has continued to remain relatively neutral. Management has taken action to reposition its sensitivity to interest rates to stabilize net interest margin following the rise in short term interest rates in 2022 and 2023. To this end, management has executed various derivative instruments including collars, floors and receive-fixed swaps to hedge variable-rate loan exposures. The Company will continue to monitor current and projected interest rates and may execute additional derivatives to mitigate potential fluctuations in the net interest margin in future periods.
Non-Interest Income
The interest rate environment impacts the profitability and mix of the Company’s mortgage banking business which generated revenues of $90.8 million in 2025 and $93.2 million in 2024, representing 3% and 4% of total net revenue in 2025 and 2024, respectively. Mortgage banking revenue is primarily comprised of gains on sales of mortgage loans originated for new home purchases as well as mortgage refinancing. Mortgage revenue is also impacted by changes in the fair value of MS Rs and EBOs guaranteed by U.S. government agencies. Mortgage originations for sale totaled $2.6 billion in 2025 and 2024. In 2025, approximately 68% of originations were mortgages associated with new home purchases, while 32% of originations were related to refinancing of mortgages. In 2024, approximately 75% of originations were mortgages associated with new home purchases, while 25% of originations were related to refinancing of mortgages.
Non-Interest Expense
Management believes expense management is important to enhance profitability amid increased competition. Cost control and an efficient infrastructure should position the Company appropriately as it continues its growth strategy. Management continues to be disciplined in its approach to growth and plans to leverage the Company’s existing expense infrastructure to expand its presence in existing and complimentary markets. Potentially impacting the cost control strategies discussed above, the Company anticipates increased costs resulting from the regulatory environment in which we operate as well as wage inflation and continued investment in technology.
Credit Quality
The Company continues to actively address non-performing assets and remains disciplined in its approach to grow without sacrificing asset quality.
In particular:
• The Company’s 2025 provision for credit losses totaled $95.6 million compared to a provision of $101.0 million in 2024 and a provision of $114.4 million in 2023. The lower provision in 2025 was primarily the result of improvements in the macroeconomic forecast, specifically the Company’s macroeconomic forecasts of key model inputs (most notably Baa corporate credit spreads) despite growth in the Company's loan portfolios. Net charge-offs decreased to $72.3 million in 2025 (of which $56.9 million related to commercial and commercial real estate loans), compared to $94.4 million in 2024 (of which $67.8 million related to commercial and commercial real estate loans) and $45.5 million in 2023 (of which $27.8 million related to commercial and commercial real estate loans).
• The Company’s allowance for loan and unfunded lending-related commitment losses increased to $460.2 million at December 31, 2025, reflecting an increase of $23.6 million, or 5%, when compared to 2024. At December 31, 2025, approximately $246.9 million, or 54%, of the allowance for loan and unfunded lending-related commitment losses was associated with commercial real estate loans and an additional $178.5 million, or 39%, was associated with commercial loans.
• The Company has significant exposure to commercial real estate. At December 31, 2025, $13.9 billion, or 26%, of our loan portfolio was commercial real estate, with approximately 63.9% located in our market area. The commercial real estate loan portfolio was comprised of $2.4 billion in construction and development loans, and $11.5 billion in non-construction loans. In analyzing the commercial real estate market, the Company does not rely upon the assessment of broad market statistical data, in large part because the Company’s market area is diverse and covers many communities, each of which is impacted differently by economic forces affecting the Company’s general market area. As such, the extent of the decline in real estate valuations can vary meaningfully among the different types of commercial and other real estate loans made by the Company. The Company uses its multi-chartered structure and local management knowledge to analyze and manage the local market conditions at each of its banks.
• Excluding early buy-out loans (“EBO”) guaranteed by U.S. government agencies, total non-performing loans (loans on non-accrual status and loans more than 90 days past due and still accruing interest) were $185.8 million (of which $25.1 million, or 14% , was related to commercial real estate) at December 31, 2025, an increase of $15.0 million compared to December 31, 2024. Non-performing loans as a percentage of total loans were 0.35% at December 31, 2025 compared to 0.36% at December 31, 2024.
• The Company’s other real estate owned decreased by $2.3 million to $20.8 million during 2025, from $23.1 million at December 31, 2024. The $20.8 million of other real estate owned as of December 31, 2025 was comprised entirely of commercial real estate property.
During 2025, management continued its efforts to aggressively resolve problem loans through liquidation, rather than retention of loans or real estate acquired as collateral through the foreclosure process. Management believes these actions will serve the Company well in the future by providing some protection for the Company from further valuation deterioration and permitting management to spend less time on resolution of problem loans and more time on growing the Company’s core business and the evaluation of other opportunities.
The Company enters into residential mortgage loan sale agreements with investors in the normal course of business. The Company’s practice is generally not to retain long-term fixed-rate mortgages on its balance sheet in order to mitigate interest rate risk, and consequently sells most of such mortgages into the secondary market. These agreements provide recourse to investors through certain representations concerning credit information, loan documentation, collateral and insurability. Investors request the Company to indemnify them against losses on certain loans or to repurchase loans which the investors believe do not comply with applicable representations. An increase in requests for loss indemnification can negatively impact mortgage banking revenue as additional recourse expense. The liability for estimated losses on repurchase and indemnification claims for residential mortgage loans previously sold to investors was approximately $578,000 at December 31, 2025 and $188,000 at December 31, 2024.
Community Banking
Through our community banking franchise, we provide banking and financial services primarily to individuals, small to mid-sized businesses, local governmental units and institutional clients residing primarily in the local areas we service. Profitability of this franchise is primarily driven by our net interest income and margin, our funding mix and related costs, the measurement of the allowance for credit losses and the impact of current and forecasted macroeconomic conditions on such measurement, the level of non-performing loans and other real estate owned, the amount of mortgage banking revenue and our history of acquiring banking operations and establishing de novo banking locations.
Net interest income and margin . The primary source of our revenue is net interest income. Net interest income is the difference between interest income and fees on earning assets, such as loans and securities, and interest expense on liabilities to fund those assets, including deposits and other borrowings. Net interest income can change significantly from period to period based on general levels of interest rates, customer prepayment patterns, the mix of interest-earning assets and the mix of interest-bearing and non-interest-bearing deposits and borrowings.
Funding mix and related costs. The most significant source of funding in community banking is core deposits, which are comprised of non-interest-bearing deposits, non-brokered interest-bearing transaction accounts, savings deposits and domestic time deposits. Our branch network is the principal source of core deposits, which generally carry lower interest rates than wholesale funds of comparable maturities. Community banking profitability has been favorably impacted in recent years as the Company funded strong loan growth with a more desirable blend of funds.
Measurement of the allowance for credit losses. The Company adopted CECL as of January 1, 2020, which requires the estimate of expected credit losses over the entire life of financial assets measured at amortized cost. To measure lifetime expected credit losses, the Company adjusts credit loss estimates for reasonable and supportable forecasts of macroeconomic conditions. Such forecasts can significantly impact the profitability of our community banks as changing estimates of lifetime losses from period to period can result in significant fluctuations in provision for credit losses during those periods. In 2025, such fluctuations in provision for credit losses favorably impacted the profitability of our community banks, primarily as a result of improvement in a key variable (Baa credit spread) within forecasted macroeconomic conditions.
Level of non-performing loans and other real estate owned . The level of non-performing loans and other real estate owned can significantly impact our profitability as these loans and other real estate owned do not accrue any income, can be subject to charge-offs and write-downs due to deteriorating market conditions and generally result in additional legal and collections expenses. The Company’s credit quality measures have remained at historically low levels in recent years.
Mortgage banking revenue . Our community banking franchise is also influenced by the level of fees generated by the origination of residential mortgages and the sale of such mortgages into the secondary market by Wintrust Mortgage. The Company recognized a decrease of $2.4 million in mortgage banking revenue in 2025 compared to 2024 primarily as a result of unfavorable fair value adjustments of MSRs in 2025 compared to 2024. This was partially offset by gains recognized on
derivative contracts held as an economic hedge and by changes in the fair value of early buy-out loans guaranteed by the U.S. government held-for-sale. Mortgage originations for sale totaled $2.6 billion in both 2025 and 2024, respectively.
Expansion of banking operations. Our historical financial performance has been affected by costs associated with growing market share in deposits and loans, establishing and acquiring banks, opening new branch facilities and building an experienced management team. Our financial performance generally reflects the improved profitability of our banking subsidiaries as they mature, offset by the costs of establishing and acquiring banks and opening new branch facilities.
In determining the timing of the opening of additional branches of existing banks, and the acquisition of additional banks, we consider many factors, particularly our perceived ability to obtain an adequate return on our invested capital driven largely by the then existing cost of funds and lending margins, the general economic climate and the level of competition in a given market.
In addition to the factors considered above, before we engage in expansion through de novo branches, we must first make a determination that the expansion fulfills our objective of enhancing shareholder value through potential future earnings growth and enhancement of the overall franchise value of the Company. Generally, we believe that, in normal market conditions, expansion through de novo growth is a better long-term investment than acquiring banks because the cost to bring a de novo location to profitability is generally substantially less than the premium paid for the acquisition of a healthy bank. Each opportunity to expand is unique from a cost and benefit perspective. Both FDIC-assisted and non-FDIC-assisted acquisitions offer a unique opportunity for the Company to expand into new and existing markets in a non-traditional manner. Potential acquisitions are reviewed in a similar manner as a de novo branch opportunities, however, FDIC-assisted and non-FDIC-assisted acquisitions have the ability to immediately enhance shareholder value. Factors including the valuation of our stock, other economic market conditions, the size and scope of the particular expansion and competitive landscape all influence the decision to expand via de novo growth or through acquisition. See discussion of acquisition activity in the “Recent Transactions” section below.
Specialty Finance
Through our specialty finance segment, we offer financing of insurance premiums for businesses and individuals; lease financing and other direct leasing opportunities; accounts receivable financing, value-added, out-sourced administrative services; and other specialty finance businesses.
Financing of Commercial Insurance Premiums
The primary driver of profitability related to the financing of property and casualty insurance premiums is the net interest spread that FIRST Insurance Funding and FIFC Canada can produce between the yields on the loans generated and the cost of funds incurred by the business unit. The property and casualty insurance premium finance business is a competitive industry and yields on loans are influenced by the market rates offered by our competitors. The majority of loans originated by FIRST Insurance Funding 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. We fund these loans primarily through our deposits, the cost of which is influenced by competitors in the retail banking markets in our market area.
Financing of Life Insurance Premiums
The primary driver of profitability related to the financing of life insurance premiums is the net interest spread that Wintrust Life Finance can produce between the yields on the loans generated and the cost of funds allocated to the business unit.
Profitability of financing both commercial and life insurance premiums is also meaningfully impacted by leveraging information technology systems, maintaining operational efficiency and increasing average loan size, each of which allows us to expand our loan volume without significant capital investment.
Wealth Management
Through our wealth management segment, we offer a full range of wealth management services through four separate subsidiaries (WPT, Wintrust Investments, GLA and CDEC): trust and investment services, tax-deferred like-kind exchange services, asset management solutions, and securities brokerage services.
The primary drivers of profitability of the wealth management business can be associated with the level of commission received related to the trading performed by the brokerage customers for their accounts and the amount of assets under management in
which the unit receives a management fee for advisory, administrative and custodial services. As such, revenues are influenced by a rise or fall in the debt and equity markets and the resulting increase or decrease in the value of our client accounts on which our fees are based. The commissions received by the brokerage unit are not as directly influenced by the directionality of the debt and equity markets but rather the desire of our customers to engage in trading based on their particular situations and outlooks of the market or particular stocks and bonds.
Financial Regulatory Reform
Our business is heavily regulated and supervised by federal agencies, state agencies and the federal & provincial governments of Canada. The scope of the laws, regulations and supervision to which our business is subject have increased in response to factors such as the regional banking uncertainty in early 2023, technological updates, and market changes. We expect that our business will remain subject to extensive regulation and supervision.
The exact impact of the changing regulatory environment on our business and operations depends upon legislative or regulatory changes to reform the financial regulatory framework and the actions of our competitors, customers, and other market participants. Legislative and regulatory changes could have a significant impact on us by, for example, requiring us to change our business practices; requiring us to meet more stringent capital, liquidity and leverage ratio requirements; limiting our ability to pursue business opportunities; imposing additional costs and compliance obligations on us; limiting fees we can charge for services; impacting the value of our assets; or otherwise adversely affecting our businesses and our earnings’ capabilities. We have already experienced significant increases in compliance related costs in recent years, and we are now subject to more stringent risk-based capital and leverage ratio requirements than we were prior to the adoption of the U.S. Basel III Rules. We are also now subject to many mortgage-related rules promulgated by the CFPB that materially restructured the origination, services and securitization of residential mortgages in the United States. As discussed under Supervision and Regulation in Item 1, the FDIC adopted a final rule, applicable to all insured depository institutions, to increase initial base deposit insurance assessment rate schedules uniformly by 2 basis points, which began in the first quarterly assessment period of 2023. There was no change to the initial base deposit insurance assessment rate in 2025. Additionally, there was a special assessment by the FDIC that was levied on banks with an asset size above $5 billion to recoup from certain bank that occurred early in 2023. Special assessment payments began in June of 2024. The final scheduled payment will be made in March 2026. We will continue to monitor the impact that the implementation of applicable rules, regulations and policies arising out of any legislative or regulatory changes may have on our organization. For further discussion of the laws and regulations applicable to us and our subsidiary banks, please refer to “Business-Supervision and Regulation.”
Recent Transactions
Business Combination
On August 1, 2024, the Company completed its previously announced acquisition of Macatawa, the parent company of Macatawa Bank. In conjunction with the completed acquisition, the Company issued approximately 4.7 million shares of common stock. Macatawa operates full-service branches located throughout communities in Kent, Ottawa and northern Allegan counties in the state of Michigan. Macatawa offers a full range of banking, retail and commercial lending, wealth management and ecommerce services to individuals, businesses and governmental entities. As of August 1, 2024, Macatawa had fair values of approximately $2.9 billion in assets, $2.3 billion in deposits and $1.3 billion in loans. As of the first quarter of 2025, the purchase accounting was finalized and is no longer subject to change. See Note (7) “Business Combinations” to the Consolidated Financial Statements in Item 8 for a further discussion of recent and other transactions.
Division Sale
In the first quarter of 2024, the Company sold its Retirement Benefits Advisors (“RBA”) division and recorded a gain of approximately $20.0 million in other non-interest income from the sale.
SUMMARY OF CRITICAL ACCOUNTING ESTIMATES
The Company’s Consolidated Financial Statements are prepared in accordance with GAAP in the United States, prevailing practices of the banking industry, and the application of accounting policies of which are described in Note (1) “Summary of Significant Accounting Policies” to the Consolidated Financial Statements in Item 8. These policies require numerous estimates and strategic or economic assumptions, which may prove inaccurate or subject to variations. Changes in underlying factors, assumptions or estimates could have material impact on the Company’s future financial condition and results of operations. At December 31, 2025, management views critical accounting estimates to include the determination of the allowance for credit losses, estimations of fair value, and the valuation and accounting for derivative instruments, as the accounting areas that
require the most subjective and complex judgments, and as such could be most subject to revision as new information becomes available. These estimates were reviewed by the Audit Committee of the Company’s Board of Directors and are discussed in further detail below.
Allowance for Credit Losses, including the Allowance for Loan Losses, Allowance for Losses on Lending-Related Commitments and Allowance for Held-to-Maturity Debt Securities
The allowance for credit losses represents management’s estimate of expected credit losses over the life of a financial asset carried at amortized cost. Determining the amount of the allowance for credit losses is considered a critical accounting estimate because it requires significant judgment and includes the use of estimates related to the fair value of the underlying collateral and amount and timing of expected future cash flows on individually assessed financial assets, estimated credit losses on pools of loans with similar risk characteristics, and consideration of reasonable and supportable forecasts of macroeconomic conditions, all of which are susceptible to significant change. At December 31, 2025, the loan and held-to-maturity debt securities portfolios represent 79% of total assets on the Company’s consolidated balance sheet. The Company also maintains an allowance for lending-related commitments, specifically unfunded loan commitments and letters of credit, which relates to certain amounts the Company is committed to lend (not unconditionally cancelable) but for which funds have not yet been disbursed.
Key macroeconomic variable data points that are significant inputs into our credit loss models for the commercial and commercial real estate portfolios are the Baa corporate credit spread, the Dow Jones Total Stock Market Index for the commercial portfolio, and the Commercial Real Estate Pricing Index ("CREPI") related to the commercial real estate portfolio. While the Dow Jones Total Stock Market Index is not a new macroeconomic variable, we have included the impact analysis due to the significant volatility experienced in this variable in 2025. Holding all other inputs constant, the table below shows the impact of changes in these key macroeconomic variable data points on the estimate of allowance for credit losses.
Impact to estimated allowance for credit losses from an increased or higher input value
Baa Credit Spread
Increases
Dow Jones Total Stock Market Index
Decreases
CRE Price Index
Decreases
Holding all other inputs constant, the following table provides a sensitivity analysis for the commercial and commercial real estate portfolios based on a 35 basis point change in Baa credit spreads from the assumption utilized in the estimate of that portfolio’s allowance for credit losses at December 31, 2025:
Baa Credit Spread
Narrows
Widens
Commercial
Decreases estimate by 15%-20%
Increases estimate by 20%-25%
Commercial Real Estate:
Construction
Decreases estimate by 20%-25%
Increases estimate by 30%-35%
Non-Construction
Decreases estimate by 8%-9%
Increases estimate by 9%-10%
Holding all other inputs constant, the following table provides a sensitivity analysis for the commercial portfolio based on a 10% change in the Dow Jones Total Stock Market Index from the assumption utilized in the estimate of that portfolio’s allowance for credit losses at December 31, 2025:
Dow Jones Total Stock Market Index
Increases
Decreases
Commercial
Decreases estimate by 5%-10%
Increases estimate by 5%-10%
Holding all other inputs constant, the following table provides a sensitivity analysis for the commercial real estate construction and non-construction portfolios based on a 10% change in CREPI from the assumption utilized in the estimate of that portfolio’s allowance for credit losses at December 31, 2025:
CRE Price Index
Increases
Decreases
Commercial Real Estate:
Construction
Decreases estimate by 35%-40%
Increases estimate by 120%-125%
Non-Construction
Decreases estimate by 25%-30%
Increases estimate by 50%-55%
See Note (5) “Allowance for Credit Losses” to the Consolidated Financial Statements in Item 8 and the section titled “Loan Portfolio and Asset Quality” in Item 7 for a description of the methodology used to determine the allowance for credit losses.
Estimations of Fair Value
A portion of the Company’s assets and liabilities are carried at fair value on the Consolidated Statements of Condition, with changes in fair value recorded either through earnings or other comprehensive income in accordance with GAAP. Certain asset and liability fair value estimates require significant management judgment and are disclosed as Level 3 in the fair value hierarchy. Level 3 includes a portion of the following portfolios: municipal securities, mortgage loans held-for-sale, loans held-for-investment, MSRs, and derivative assets. Since market prices are not available, Level 3 fair values are estimated using models employing techniques such as matrix pricing or discounting expected cash flows. The significant assumptions used in the models include assumptions for interest rates, discount rates, prepayments and credit losses. In this circumstance, fair value is estimated based on management’s judgment regarding the value that market participants would assign to the asset or liability because there are no observable markets to compare the assumptions to. This valuation process takes into consideration factors such as market illiquidity. Imprecision in estimating these factors can impact the amount recorded on the balance sheet for a particular asset or liability with related impacts to earnings or other comprehensive income. See Note (22) “Fair Value of Assets and Liabilities” to the Consolidated Financial Statements in Item 8 for a further discussion of fair value measurements.
Derivative Instruments
The Company utilizes derivative instruments to manage risks such as interest rate risk or market risk. The Company’s policy prohibits using derivatives for speculative purposes. Accounting for derivatives differs significantly depending on whether a derivative is designated as an accounting hedge. To determine if a derivative instrument continues to be an effective hedge, the Company must make assumptions and judgments about the continued effectiveness of the hedging strategies and the nature and timing of forecasted transactions. If the Company’s hedging strategy were to become ineffective, hedge accounting would no longer apply and the reported results of operations or financial condition could be materially affected. See Note (21) “Derivative Financial Instruments” to the Consolidated Financial Statements in Item 8 for a further discussion of derivative accounting.
CONSOLIDATED RESULTS OF OPERATIONS
The following discussion of Wintrust’s results of operations requires an understanding that a majority of the Company’s bank subsidiaries have been started as de novo banks since December 1991. Wintrust has a strategy of continuing to build its customer base and securing broad product penetration in each marketplace that it serves. The Company has expanded its banking franchise from three banks with five offices in 1994 to 16 banks with 209 offices at the end of 2025. FIRST Insurance Funding and Wintrust Life Finance have matured into separate divisions that generated, on a national basis, $19.9 billion in total premium finance receivables in 2025 within the United States. FIFC Canada, acquired in 2012, originated $1.9 billion in Canadian property and casualty premium finance receivables in 2025. The Company’s leasing business increased its portfolio of assets, including direct financing leases, loans and equipment on operating leases, to $4.5 billion as of December 31, 2025. In addition, the wealth management companies have been building a team of experienced professionals who are located within a majority of the banks.
Earnings Summary
Net income for the year ended December 31, 2025, totaled $823.8 million, or $11.40 per diluted common share, compared to $695.0 million, or $10.31 per diluted common share, in 2024, and $622.6 million, or $9.58 per diluted common share, in 2023. During 2025, net income increased by $128.8 million and earnings per diluted common share increased by $1.09. Net interest income increased in 2025 compared to 2024 primarily as a result of growth in average earning assets in 2025. Non-interest income increased primarily due to an increase in service charges on deposit accounts, gains on investment securities, and fees from covered call options in 2025 as compared to 2024.
Other items impacting net income in 2025 compared to 2024 include increased salary and employee benefits expenses, as well as software and equipment expense.
Net Interest Income
The primary source of the Company’s revenue is net interest income. Net interest income is the difference between interest income and fees on earning assets, such as loans and securities, and interest expense on the liabilities to fund those assets, including interest-bearing deposits and other borrowings. The amount of net interest income is affected by both changes in the level of interest rates, and the amount and composition of earning assets and interest-bearing liabilities.
Net interest income in 2025 totaled $2.22 billion, up from $1.96 billion in 2024 and up from $1.84 billion in 2023, representing an increase of $261.5 million, or 13%, in 2025 and an increase of $124.7 million, or 7%, in 2024. The table presented later in this section, titled “Changes in Interest Income and Expense,” presents the dollar amount of changes in interest income and expense, by major category, attributable to changes in the volume of the balance sheet category and changes in the rate earned or paid with respect to that category of assets or liabilities for 2025 and 2024.
Average earning assets increased $7.4 billion, or 13%, in 2025 and $5.7 billion, or 11%, in 2024. Loans are the most significant component of the earning asset base as they earn interest at a higher rate than the majority of other earning assets. Average loans increased $5.5 billion, or 12%, in 2025 and $4.4 billion, or 11%, in 2024. Total average loans as a percentage of total average earning assets was 80% in 2025, 2024 and 2023. The average yield on loans was 6.43% in 2025, 6.82% in 2024 and 6.32% in 2023, reflecting a decrease of 39 basis points in 2025 and an increase of 50 basis points in 2024. The lower loan yields in 2025 compared to 2024 is primarily due to existing loans repricing to lower rates as a result of the decrease in short term interest rates that began in late 2024. The average yield on liquidity management assets was 3.86% in 2025, 3.85% in 2024 and 3.53% in 2023, reflecting an increase of one basis point in 2025 and an increase of 32 basis points in 2024. The higher yield in 2025 compared to 2024 is due to investment security purchases at higher market rates partially offset by lower yields on interest bearing cash related to reductions in the federal funds rate. The average rate paid on interest-bearing deposits, the largest component of the Company’s interest-bearing liabilities, was 3.09% in 2025, 3.58% in 2024 and 2.81% in 2023, representing a decrease of 49 basis points in 2025 and an increase of 77 basis points in 2024. The lower level of interest-bearing deposits rates in 2025 compared to 2024 is primarily a result of repricing existing deposits in conjunction with declining short term interest rates. As a result of the above, net interest margin increased to 3.52% (3.53% on a fully taxable-equivalent basis, non-GAAP) in 2025 compared to 3.51% (3.53% on a fully taxable-equivalent basis, non-GAAP) in 2024.
Net interest income and net interest margin were also affected by amortization of valuation adjustments to earning assets and interest-bearing liabilities of acquired businesses. Assets and liabilities of acquired businesses are required to be recognized at their estimated fair value at the date of acquisition. These valuation adjustments represent the difference between the estimated fair value and the carrying value of assets and liabilities acquired. These adjustments are amortized into interest income and interest expense based upon the estimated remaining lives of the assets and liabilities acquired.
Average Balance Sheets, Interest Income and Expense, and Interest Rate Yields and Costs
The following table sets forth the average balances, the interest earned or paid thereon, and the effective interest rate, yield or cost for each major category of interest-earning assets and interest-bearing liabilities for the years ended December 31, 2025, 2024 and 2023. The yields and costs include loan origination fees and certain direct origination costs that are considered adjustments to yields. Interest income on non-accruing loans is reflected in the year that it is collected, to the extent it is not applied to principal. Such amounts are not material to net interest income or the net change in net interest income in any year. Non-accrual loans are included in the average balances. Net interest income and the related net interest margin have been adjusted to reflect tax-exempt income, such as interest on municipal securities and loans, on a fully taxable-equivalent basis (non-GAAP). This table should be referred to in conjunction with discussion of the financial condition and results of operations of the Company.
Average Balance
for the years ended December 31,
Interest
for the years ended December 31,
Yield/Rate
for the years ended December 31,
(Dollars in thousands)
Assets
Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents (1)
Investment securities (2)
FHLB and FRB stock
Total liquidity management assets (3) (8)
Other earning assets (3) (4) (8)
Mortgage loans held-for-sale
Loans, net of unearned income (3) (5) (8)
Total earning assets (8)
Allowance for loan and investment security losses
Cash and due from banks
Other assets
Total assets
Liabilities and Shareholders’ Equity
Deposits — interest-bearing:
NOW and interest-bearing demand deposits
Wealth management deposits
Money market accounts
Savings accounts
Time deposits
Total interest-bearing deposits
FHLB advances
Other borrowings
Subordinated notes
Junior subordinated notes
Total interest-bearing liabilities
Non-interest-bearing deposits
Other liabilities
Equity
Total liabilities and shareholders’ equity
Interest rate spread (6) (8)
Less: fully taxable-equivalent adjustment
Net free funds/contribution (7)
Net interest income/margin (GAAP) (8)
Fully taxable-equivalent adjustment
Net interest income/margin fully taxable-equivalent (non-GAAP) (8)
(1) Includes interest-bearing deposits from banks and securities purchased under resale agreements with original maturities of greater than three months. Cash equivalents include federal funds sold and securities purchased under resale agreements with original maturities of three months or less.
(2) Investment securities includes investment securities classified as available-for-sale and held-to-maturity, and equity securities with readily determinable fair values. Equity securities without readily determinable fair values are included within other assets.
(3) Interest income on tax-advantaged loans, trading securities and investment securities reflects a tax-equivalent adjustment based on a marginal federal corporate tax rate in effect as of the applicable period. The total adjustments for the years ended December 31, 2025, 2024 and 2023 were $11.4 million, $11.9 million and $10.1 million, respectively.
(4) Other earning assets include brokerage customer receivables and trading account securities.
(5) Loans, net of unearned income, include non-accrual loans.
(6) Interest rate spread is the difference between the yield earned on earning assets and the rate paid on interest-bearing liabilities.
(7) Net free funds is the difference between total average earning assets and total average interest-bearing liabilities. The estimated contribution to net interest margin from net free funds is calculated using the rate paid for total interest-bearing liabilities.
(8) See “Non-GAAP Financial Measures/Ratios” for additional information on this performance measure/ratio.
Changes In Interest Income and Expense
The following table shows the dollar amount of changes in interest income and expense, on a fully taxable-equivalent basis (non-GAAP), by major categories of interest-earning assets and interest-bearing liabilities attributable to changes in volume or rate for the periods indicated:
Years Ended December 31,
2025 Compared to 2024
2024 Compared to 2023
(In thousands)
Change
Due to
Rate
Change
Due to
Volume
Total
Change
Change
Due to
Rate
Change
Due to
Volume
Total
Change
Interest income, FTE basis (non-GAAP) (1)
Interest-bearing deposits with banks, securities purchased under resale agreements and cash equivalents (2)
Investment securities
FHLB and FRB stock
Total liquidity management assets
Other earning assets
Mortgage loans held-for-sale
Loans, net of unearned income
Total interest income
Interest Expense
Deposits — interest-bearing:
NOW and interest-bearing demand deposits
Wealth management deposits
Money market accounts
Savings accounts
Time deposits
Total interest expense — deposits
FHLB advances
Other borrowings
Subordinated notes
Junior subordinated notes
Total interest expense
Less: fully taxable-equivalent adjustment
Net interest income (GAAP) (1)
Fully taxable-equivalent adjustment
Net interest income, FTE basis (non-GAAP) (1)
(1) See “Non-GAAP Financial Measures/Ratios” for additional information on this performance measure/ratio.
(2) Includes interest-bearing deposits from banks and securities purchased under resale agreements with original maturities of greater than three months. Cash equivalents include federal funds sold and securities purchased under resale agreements with original maturities of three months or less.
The changes in net interest income are created by changes in both interest rates and volumes. In the table above, volume variances are computed using the change in volume multiplied by the previous year’s rate. Rate variances are computed using the change in rate multiplied by the previous year’s volume. The change in interest due to both rate and volume has been allocated between factors in proportion to the relationship of the absolute dollar amounts of the change in each. The change in interest due to an additional day resulting from the 2024 leap year has been allocated entirely to the change due to volume.
Non-Interest Income
The following table presents non-interest income by category for 2025, 2024 and 2023:
Years ended December 31,
2025 compared to 2024
2024 compared to 2023
(Dollars in thousands)
$ Change
% Change
$ Change
% Change
Brokerage
Trust and asset management
Total wealth management (1)
Mortgage banking
Service charges on deposit accounts
Gains (losses) on investment securities, net
Fees from covered call options
Trading gains, net
Operating lease income, net
Other:
Interest rate swap fees
Bank owned life insurance (“BOLI”)
Administrative services
Foreign currency remeasurement (losses) gains
Changes in fair value on EBOs and loans held-for-investment
Early pay-offs of capital leases
Miscellaneous
Total Other
Total Non-Interest Income
(1) Wealth management revenue is comprised of the trust and asset management revenue of the WPT and GLA, the brokerage commissions, managed money fees and insurance product commissions at Wintrust Investments and fees from tax-deferred like-kind exchange services provided by CDEC.
NM—Not Meaningful
Notable contributions to the change in non-interest income are as follows:
Mortgage banking revenue decreased in 2025 as compared 2024 primarily as a result of an unfavorable fair value adjustment of MSRs partially offset by favorable hedge performance. Mortgage banking revenue includes revenue from activities related to originating, selling and servicing residential real estate loans for the secondary market. A main factor in the mortgage banking revenue recognized by the Company is the volume of mortgage loans originated or purchased for sale. Mortgage loans originated for sale totaled $2.6 billion for the years ended 2025 and 2024. The percentage of origination volume from refinancing activities was 32% in 2025 as compared to 25% in 2024.
The Company records MSRs at fair value on a recurring basis. During 2025, retained servicing rights led to capitalization of $26.0 million, partially offset by a reduction in value of $23.7 million due to payoffs and paydowns of the existing portfolio, as well as an unfavorable fair value adjustment of $11.1 million. Changes in the fair value of MSRs were partially offset by gains of $5.3 million on servicing hedges, resulting in a net decrease in the fair value of the MSR portfolio during the year. See Note (6) “Mortgage Servicing Rights (“MSRs”)” to the Consolidated Financial Statements in Item 8 for a summary of the changes in the carrying value of MSRs.
Mortgage banking revenue is also impacted by changes in the fair value of derivative contracts held to economically hedge a portion of the fair value adjustments related to the Company’s MSRs portfolio. The change in fair value of the derivative contracts held as an economic hedge during 2025 was a $5.3 million favorable valuation adjustment compared to a $7.9 million unfavorable valuation adjustment in 2024. The table below presents additional selected information regarding mortgage banking for the respective periods.
Years Ended December 31,
(Dollars in thousands)
Originations:
Retail originations
Veterans First originations
Total originations for sale (A)
Originations for investment
Total originations
As a percentage of originations for sale:
Retail originations
Veterans First originations
Purchases
Refinances
Production Margin:
Production revenue (B) (1)
Total originations for sale (A)
Add: Current period end mandatory interest rate lock commitments to fund originations for sale (2)
Less: Prior period end mandatory interest rate lock commitments to fund originations for sale (2)
Total mortgage production volume (C)
Production margin (B / C)
Mortgage servicing:
Loans serviced for others (D)
Mortgage servicing rights, at fair value (E)
Percentage of mortgage servicing rights to loans serviced for others (E/D)
Servicing income
MSR Fair Value Asset Activity
MSR - FV at Beginning of Period
MSR - current period rights sold
MSR - current period capitalization
MSR - collection of expected cash flows - paydowns
MSR - collection of expected cash flows - payoffs and repurchases
MSR - changes in fair value model assumptions
MSR Fair Value at end of period
Summary of Mortgage Banking Revenue
Operational:
Production revenue (1)
MSR - Current period capitalization
MSR - Collection of expected cash flows - paydowns
MSR - Collection of expected cash flows - pay offs
Servicing income
Other revenue
Total operational mortgage banking revenue
Fair Value:
MSR - changes in fair value model assumptions
Gain (loss) on derivative contract held as an economic hedge, net
Changes in FV on early buy-out loans guaranteed by US Govt (HFS)
Total fair value mortgage banking revenue
Total mortgage banking revenue
(1) Production revenue represents revenue earned from the origination and subsequent sale of mortgages, including gains on loans sold and fees from originations, changes in other related financial instruments carried at fair value, processing and other related activities, and excludes servicing fees, changes in the fair value of servicing rights and changes to the mortgage recourse obligation and other non-production revenue.
(2) Certain volume adjusted for the estimated pull-through rate of the loan, which represents the Company’s best estimate of the likelihood that a committed loan will ultimately fu nd.
Wealth management revenue increased by $1.2 million in 2025 compared to the same period in 2024 primarily due to increased asset management fees as a result of higher assets under management when compared to the same period in the prior year. Trust and asset management fees are based primarily on the market value of the assets under management or administration as well as volume of tax-deferred like-kind exchange services provided during a period.
Service charges on deposit accounts increased in 2025 compared to 2024 primarily as a result of higher fees associated with commercial account analysis fees. Service charges on deposit accounts include fees charged to deposit customers for various services, including account analysis services, and are based on factors such as the size and type of customer, type of product and number of transactions. The fees are based on a standard schedule of fees and, depending on the nature of the service performed, the service is performed at a point in time or over a period of a month.
Net gains on investment securities in 2025 were primarily the result of unrealized gains on equity investment securities with a readily determinable fair value. The Company did not recognize any credit-related write-downs or other-than-temporary impairment charges within its available-for-sale or held-to-maturity investment securities portfolio in 2025 or 2024, respectively. See Note (3) “Investment Securities” to the Consolidated Financial Statements in Item 8 of this report for more information on net gains and losses on investment securities.
Fees from covered call option transactions totaled $20.7 million in 2025, compared to $10.2 million in 2024. The Company has always written call options with terms of less than three months against certain U.S. Treasury and agency securities held in its portfolio for liquidity and other purposes. Management has effectively entered into these transactions with the goal of economically hedging security positions and enhancing its overall return on its investment portfolio. These option transactions are designed to increase the total return associated with holding certain investment securities and do not qualify as hedges pursuant to accounting guidance. There were no outstanding call option contracts at December 31, 2025 and 2024.
Operating lease income totaled $62.3 million in 2025 compared to $58.7 million in 2024. The increase in 2025 was primarily related to growth in business from the Company’s leasing divisions.
Miscellaneous non-interest income includes loan servicing fees, income from other investments, service charges and other fees. The decreased miscellaneous other income for 2025 compared to 2024 was primarily due to a $20.0 million gain recognized in the first quarter of 2024 related to the sale of the Company’s RBA division within its wealth management business as well as a $4.6 million gain recognized in the second quarter of 2024 on the sale of premium finance receivables.
Non-Interest Expense
The following table presents non-interest expense by category for 2025, 2024 and 2023:
Years ended December 31,
2025 compared to 2024
2024 compared to 2023
(Dollars in thousands)
$ Change
% Change
$ Change
% Change
Salaries and employee benefits:
Salaries
Commissions and incentive compensation
Benefits
Total salaries and employee benefits
Software and equipment
Operating lease equipment
Occupancy, net
Data processing
Advertising and marketing
Professional fees
Amortization of other acquisition-related intangible assets
FDIC insurance
FDIC insurance - special assessment
OREO expenses, net
Other:
Lending expenses, net of deferred origination costs
Travel and entertainment
Miscellaneous
Total other
Total Non-Interest Expense
NM—Not Meaningful
Notable contributions to the change in non-interest expense are as follows:
Salaries and employee benefits is the largest component of non-interest expense, accounting for 58% of the total in 2025 compared to 58% in 2024. Salaries and employee benefits increased in 2025 compared to 2024 primarily due to annual merit increases along with increased levels of health insurance claims and a full year of impact of the Macatawa acquisition.
Software and equipment expense increased in 2025 compared to 2024 primarily as a result of increased software licensing expenses as the Company invests in enhancements to the digital customer experience, upgrades to infrastructure and enhancements to information security capabilities. Software and equipment expense includes furniture, equipment and computer software, depreciation and repairs and maintenance costs.
Amortization of other-acquisition related intangible assets increased in 2025 compared to 2024. The increase was primarily due to a full-year of amortization in 2025 compared to a partial-year amortization in 2024 of the core deposit intangible associated with the Macatawa acquisition completed during the third quarter of 2024.
Total FDIC insurance expense decreased in 2025 compared to 2024 primarily due to the Company’s recognition of approximately $5.2 million in 2024 related to the FDIC special assessment on uninsured deposits in response to certain bank failures that occurred in 2023. In the fourth quarter of 2025, the FDIC announced a special assessment rate change from 3.36% to 2.97%. At that time, the Company recorded a partial reversal, of approximately $499,000, of the previously recorded special assessment.
Miscellaneous non-interest expense includes ATM expenses, correspondent banking charges, directors’ fees, telephone, postage, corporate insurance, dues and subscriptions, problem loan expenses and other miscellaneous operational losses and costs. Miscellaneous non-interest expense increased in 2025 as compared to 2024 primarily as a result of various other operational costs including an increase in interest payments made on collateral received for outstanding interest rate derivative contracts and includes approximately $7.0 million in acquisition related expenses recorded in 2025 compared to $4.3 million in 2024 related to the acquisition of Macatawa.
Income Taxes
The Company recorded income tax expense of $294.6 million in 2025 compared to $252.0 million in 2024 and $222.5 million 2023. The effective tax rates were 26.3% in 2025, 26.6% in 2024 and 26.3% in 2023. The effective tax rate in 2025 is slightly lower due to the Company’s income tax expense being impacted by an overall lower level of provision for state income taxes and higher level of pre-tax income in the most recent comparable period. Income tax expense was also impacted by the tax effects related to the issuance of shares in share-based compensation plans. These tax effects fluctuate based on the Company’s stock price and timing of employee stock option exercises and vesting of other share-based awards. The Company recorded a net excess tax benefit related to share-based compensation of $3.9 million in 2025, a net excess tax benefit of $4.5 million 2024, and a net excess tax benefit of $2.9 million in 2023, the majority of which were recognized in the first quarter in each year. Please refer to Note (17) “Income Taxes” to the Consolidated Financial Statements in Item 8 for further discussion and analysis of the Company’s tax position, including a reconciliation of the tax expense computed at the statutory tax rate to the Company’s actual tax expense.
Operating Segment Results
As described in Note (24) “Segment Information” to the Consolidated Financial Statements in Item 8, the Company’s operations consist of three primary segments: community banking, specialty finance and wealth management. The Company’s profitability is primarily dependent on the net interest income, provision for credit losses, non-interest income and operating expenses of its community banking segment. For purposes of internal segment profitability, management allocates certain intersegment and parent company balances. Management allocates a portion of revenues to the specialty finance segment related to loans and leases originated by the specialty finance segment and sold or assigned to the community banking segment. Similarly, for purposes of analyzing the contribution from the wealth management segment, management allocates a portion of the net interest income earned by the community banking segment on deposit balances of customers of the wealth management segment to the wealth management segment. Finally, expenses incurred at the Wintrust parent company are allocated to each segment based on each segment’s risk-weighted assets.
The community banking segment’s net interest income for the year ended December 31, 2025 totaled $1.8 billion as compared to $1.5 billion for the same period in 2024, an increase of $224.8 million, or 15%. The increase in 2025 compared to 2024 was primarily attributable to increased interest and fees on loans due to loan growth and increased gain on investment securities. The community banking segment recorded a provision for credit losses of $89.1 million in 2025 compared to $88.3 million in 2024. The provision for credit losses increased in 2025 compared to 2024 primarily due to loan growth across portfolios slightly offset by improved macroeconomic forecasts . Non-interest income for the community banking segment increased $31.1 million, or 11% in 2025 when compared to 2024. The increase in non-interest income in 2025 compared to 2024 was primarily the result of increased service charges on deposit accounts and increased gain on investments . Non-interest expenses increased by $98.2 million in 2025 compared to 2024, primarily because of higher salary and benefits expense. The community banking segment’s net income for the year ended December 31, 2025 totaled $576.7 million, an increase of $118.0 million, compared to net income of $458.7 million in 2024. The increase was primarily attributable to higher net interest income offset by an increase in salary expenses in 2025, as discussed above.
The specialty finance segment’s net interest income totaled $379.4 million for the year ended December 31, 2025, compared to $356.3 million in the same period of 2024, an increase of $23.1 million, or 6%. The increase in 2025 compared to 2024 was primarily attributable to loan growth across several specialty finance portfolios. The specialty finance segment’s provision for credit losses totaled $6.5 million in 2025 compared to $12.7 million in 2024. The decrease was due to lower net charge-offs experienced in 2025 . The specialty finance segment’s non-interest income increased to $129.7 million for the year ended December 31, 2025 compared to $119.3 million in 2024. Non-interest expenses increased by $15.4 million in 2025 compared to 2024, primarily because of higher salary and benefits expense as well as other segment expenses. For 2025, our commercial premium finance operations, life insurance premium finance operations, leasing operations and accounts receivable finance operations accounted for 48%, 28%, 22%, and 2% respectively, of the total revenues of our specialty finance business. Net income of the specialty finance segment totaled $205.3 million and $186.3 million for the years ended December 31, 2025 and 2024, respectively.
The wealth management segment reported net interest income of $37.5 million for 2025 and $30.0 million for 2024. Net interest income for this segment is primarily comprised of an allocation of net interest income earned by the community banking segment on non-interest bearing and interest-bearing wealth management customer account balances on deposit at the
banks. Wealth management customer account balances on deposit at the banks averaged $1.7 billion and $1.5 billion in 2025 and 2024, respectively. This segment recorded non-interest income of $154.4 million for 2025 as compared to $168.1 million for 2024. The decrease was primarily due to a $20.0 million gain recognized in the first quarter of 2024 related to the sale of the Company’s RBA division within its wealth management business. Non-interest expenses remained relatively consistent in 2025 compared to 2024. Distribution of wealth management services through each bank continues to be a focus of the Company as the number of brokers in its banks continues to increase. The Company is committed to growing the wealth management segment in order to better service its customers and create a more diversified revenue stream. The wealth management segment reported net income of $41.9 million for 2025 compared to $50.0 million for 2024.
Analysis of Financial Condition
Total assets were $71.1 billion at December 31, 2025, representing an increase of $6.3 billion, or 10%, when compared to December 31, 2024. Total funding, which includes deposits, all notes and advances, including secured borrowings and junior subordinated debentures, was $62.2 billion at December 31, 2025 and $56.8 billion at December 31, 2024. See Notes (3), (4), and (10) through (14) to the Consolidated Financial Statements in Item 8 for additional period-end detail on the Company’s interest-earning assets and funding liabilities.
Interest-Earning Assets
The following table sets forth, by category, the composition of average earning assets and the relative percentage of each category to total average earning assets for the periods presented:
Years Ended December 31,
(Dollars in thousands)
Balance
Percent
Balance
Percent
Balance
Percent
Mortgage loans held-for-sale
Loans:
Commercial
Commercial real estate
Home equity
Residential real estate
Premium finance receivables—property & casualty
Premium finance receivables—life insurance
Other loans
Total loans, net of unearned income (1)
Liquidity management assets (2)
Other earning assets (3)
Total average earning assets
Total average assets
Total average earning assets to total average assets
(1) Includes non-accrual loans.
(2) Liquidity management assets include investment securities, other securities, interest-earning deposits with banks, federal funds sold and securities purchased under resale agreements.
(3) Other earning assets include brokerage customer receivables and trading account securities.
Total average earning assets increased $7.4 billion, or 13%, in 2025. Average earning assets comprised 94% of average total assets in 2025 compared to 94% in 2024.
Mortgage loans held-for-sale. Average mortgage loans held-for-sale totaled $312.7 million in 2025, compared to $348.3 million in 2024. These balances represent mortgage loans awaiting subsequent sale in the secondary market with such sales eliminating the interest-rate risk associated with these loans, as they are predominantly long-term fixed rate loans, and provides a source of non-interest revenue.
Loans, net of unearned income. Average total loans, net of unearned income, totaled $50.3 billion and increased $5.5 billion, or 12%, in 2025. Average commercial loans totaled $16.0 billion in 2025, and increased $1.9 billion, or 14%, over the average balance in 2024. Average commercial real estate loans totaled $13.3 billion in 2025, increasing $1.1 billion, or 9%, since 2024. Combined, these categories comprised 58% and 59% of the average loan portfolio in 2025 and 2024, respectively. The growth realized in these categories for 2025 is primarily attributable to increased business development efforts during the period.
Home equity loans averaged $467.1 million in 2025, and increased $83.0 million, or 22%, when compared to the average balance in 2024. Unused commitments on home equity lines of credit totaled $1.0 billion at December 31, 2025 and $999.1 million at December 31, 2024. The Company has been actively managing its home equity portfolio to ensure that diligent pricing, appraisal and other underwriting activities continue to exist.
Residential real estate loans averaged $3.8 billion in 2025, and increased $796.7 million, or 26%, from the average balance in 2024. The increase in average balance was partially due to the Company originating, through Wintrust Mortgage, more loans which were retained in the banks’ portfolios rather than being sold into the secondary market.
Average premium finance receivables totaled $16.5 billion in 2025, and accounted for 33% of the Company’s average total loans. In 2025, average premium finance receivables increased $1.5 billion, or 10%, compared to 2024. The increase during 2025 was the result of effective marketing and customer servicing as well as continued originations within the portfolio due to hardening insurance market conditions driving a higher average size of new property and casualty insurance premium finance receivables. Premium finance receivables consist of a property and casualty portfolio and a life portfolio comprising approximately 48% and 52%, respectively, of the average total balance of premium finance receivables for the year-ended 2025, and 47% and 53%, respectively, for the year-ended 2024. Approximately $21.8 billion of premium finance receivables were originated in 2025 compared to approximately $20.0 billion in 2024.
Other loans represent a wide variety of personal and consumer loans to individuals. Consumer loans generally have shorter terms and higher interest rates than mortgage loans but generally involve more credit risk due to the type and nature of the collateral.
Liquidity Management Assets. Funds that are not utilized for loan originations are used to purchase investment securities and short-term money market investments, to sell as federal funds and to maintain in interest-bearing deposits with banks. Average liquidity management assets accounted for 20% and 19% of total average earning assets in 2025 and 2024, respectively. Average liquidity management assets increased $1.9 billion in 2025 compared to 2024. The balances of these assets can fluctuate based on management’s ongoing effort to manage liquidity and for asset liability management purposes. The Company will continue to prudently evaluate and utilize liquidity sources as needed, including the management of availability with the FHLB and FRB and utilization of the revolving credit facility with unaffiliated banks.
Other earning assets. For the periods presented prior to the brokerage service outsourcing to LPL, other earning assets included brokerage customer receivables and trading account securities. In the normal course of business, Wintrust Investments activities involved the execution, settlement, and financing of various securities transactions. Wintrust Investments customer securities activities were transacted on either a cash or margin basis. In margin transactions, Wintrust Investments, under an agreement with the out-sourced securities firm, extended credit to its customer, subject to various regulatory and internal margin requirements, collateralized by cash and securities in customer’s accounts. In connection with these activities, Wintrust Investments executed and the out-sourced firm cleared customer transactions relating to the sale of securities not yet purchased, substantially all of which were transacted on a margin basis subject to individual exchange regulations.
Investment Securities Portfolio
Supplemental Statistical Data
The following statistical information is provided in accordance with the requirements of Regulation S-K as promulgated by the SEC. This data should be read in conjunction with the Company’s Consolidated Financial Statements and notes thereto, and Management’s Discussion and Analysis which are contained in Item 8 and Item 7, respectively, of this Annual Report on Form 10-K.
The following table presents the amortized cost and fair value of the Company’s investment securities portfolios, by investment category, as of December 31, 2025, and 2024:
(In thousands)
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Available-for-sale securities
U.S. Treasury
U.S. government agencies
Municipal
Corporate notes:
Financial issuers
Other
Mortgage-backed: (1)
Residential mortgage-backed securities
Commercial (multi-family) mortgage-backed securities
Collateralized mortgage obligations
Total available-for-sale securities
Held-to-maturity securities
U.S. government agencies
Municipal
Mortgage-backed: (1)
Residential mortgage-backed securities
Commercial (multi-family) mortgage-backed securities
Collateralized mortgage obligations
Corporate notes
Total held-to-maturity securities
Less: Allowance for credit losses
Held-to-maturity securities, net of allowance for credit losses
Equity securities with readily determinable fair value
(1) None of our mortgage-backed securities are subprime.
Tables presenting the carrying amounts and gross unrealized gains and losses for securities at December 31, 2025 and 2024 are included by reference to Note (3) “Investment Securities” to the Consolidated Financial Statements presented under Item 8 of this Annual Report on Form 10-K.
The following table presents the carrying value of the investment securities portfolios as of December 31, 2025, by maturity distribution. Carrying value represents the fair value of investment securities classified as available-for-sale, the amortized cost of those classified as held-to-maturity and the fair value of equity securities with readily determinable fair values.
(In thousands)
Within 1
year
From 1 to
5 years
From 5 to
10 years
After 10
years
Mortgage-
backed
Equity Securities
Total
Available-for-sale securities
U.S. Treasury
U.S. government agencies
Municipal
Corporate notes:
Financial issuers
Other
Mortgage-backed: (1)
Residential mortgage-backed securities
Commercial (multi-family) mortgage-backed securities
Collateralized mortgage obligations
Total available-for-sale securities
Held-to-maturity securities
U.S. government agencies
Municipal
Corporate notes:
Financial issuers
Mortgage-backed: (1)
Residential mortgage-backed securities
Commercial (multi-family) mortgage-backed securities
Collateralized mortgage obligations
Total held-to-maturity securities
Less: Allowance for credit losses
Held-to-maturity securities, net of allowance for credit losses
Equity securities with readily determinable fair value
(1) None of our mortgage-backed securities are subprime.
The weighted average yield calculated based on amortized cost for each range of maturities of securities, on a tax-equivalent basis, is shown below as of December 31, 2025:
Within
1 year
From 1
to 5 years
From 5 to
10 years
After
10 years
Mortgage-
backed
Equity Securities
Total
Available-for-sale securities
U.S. Treasury
U.S. government agencies
Municipal
Corporate notes:
Financial issuers
Other
Mortgage-backed: (1)
Residential mortgage-backed securities
Commercial (multi-family) mortgage-backed securities
Collateralized mortgage obligations
Total available-for-sale securities
Held-to-maturity securities
U.S. government agencies
Municipal
Corporate notes:
Financial issuers
Mortgage-backed: (1)
Residential mortgage-backed securities
Commercial (multi-family) mortgage-backed securities
Collateralized mortgage obligations
Total held-to-maturity securities
Equity securities with readily determinable fair value
(1) None of our mortgage-backed securities are subprime.
Credit Quality
Commercial and Commercial Real Estate Loan Portfolios
Commercial and commercial real estate loans. Our commercial and commercial real estate loan portfolios are comprised primarily of commercial real estate loans and lines of credit for working capital purposes. The table below sets forth information regarding the types, amounts and performance of our loans within these portfolios as of December 31, 2025 and 2024:
As of December 31, 2025
As of December 31, 2024
Balance
Total
Balance
Allowance
For Credit
Losses Allocation
Balance
Total
Balance
Allowance
For Credit
Losses Allocation
Commercial:
Commercial, industrial and other
Commercial Real Estate:
Construction and development
Non-construction
Total commercial real estate
Total commercial and commercial real estate
Commercial real estate—collateral location by state:
Illinois
Michigan
Wisconsin
Total primary markets
Florida
Indiana
Texas
Georgia
California
Colorado
Arizona
Tennessee
Ohio
Other
Total
We make commercial loans for many purposes, including working capital lines, which are generally renewable annually and supported by business assets, personal guarantees and additional collateral. Such loans may vary in size based on customer need. Commercial business lending is generally considered to involve a slightly higher degree of risk than traditional consumer bank lending. Primarily as a result of growth in the portfolio, our allowance for credit losses in our commercial loan portfolio increased to $178.5 million as of December 31, 2025 compared to $175.8 million as of December 31, 2024.
Our commercial real estate loans are generally secured by a first mortgage lien and assignment of rents on the property. Since most of our bank branches are located in the Chicago metropolitan area, southern Wisconsin, and west Michigan, 63.9% of our commercial real estate loan portfolio is located in this region as of December 31, 2025. We have been able to effectively manage our total non-performing commercial real estate loans. As of December 31, 2025, our allowance for credit losses related to this portfolio was $246.9 million compared to $222.9 million as of December 31, 2024. The increase in the allowance for credit losses is primarily due to growth in the portfolio coupled with the impact on the Company’s loan loss modeling from macroeconomic conditions and expectations between the two reporting dates related to the Commercial Real Estate Price Index. The table below sets forth the commercial real estate loans by property type and owner vs. non-owner occupied.
(In thousands)
December 31, 2025
December 31, 2024
Commercial Real Estate:
Owner Occupied
Non-Owner Occupied
Total
% of Total
Average Size of Loan
Owner Occupied
Non-Owner Occupied
Total
% of Total
Average Size of Loan
Residential construction
Commercial construction
Land
Office
Industrial
Retail
Multi-family
Mixed use and other
Total commercial real estate
The Company also participates in mortgage warehouse lending which is included above within commercial, industrial and other, by providing interim funding to unaffiliated mortgage bankers to finance residential mortgages originated by such bankers for sale into the secondary market. The Company’s loans to the mortgage bankers are secured by the business assets of the mortgage companies as well as the specific mortgage loans funded by the Company, after they have been pre-approved for purchase by third party end lenders. The Company may also provide interim financing for packages of mortgage loans on a bulk basis in circumstances where the mortgage bankers desire to competitively bid on a number of mortgages for sale as a package in the secondary market.
Home equity loans. The Company’s home equity loans and lines of credit are primarily originated by each of the bank subsidiaries in their local markets where there is a strong understanding of the underlying real estate value. The Company’s banks monitor and manage these loans, and conduct an automated review of all home equity lines of credit at least twice per year. This review collects FICO and Bankruptcy scores for each home equity borrower and identifies situations where the credit strength of the borrower is declining. When other specific events occur that may influence repayment, information such as tax liens or judgments is collected. The bank subsidiaries use this information to manage loans that may be higher risk and to determine whether to obtain additional credit information or updated property valuations. In a limited number of cases, the Company may issue home equity credit together with first mortgage financing, and requests for such financing are evaluated on a combined basis.
The rates we offer on new home equity lending are based on several factors, including appraisals and valuation due diligence, in order to reflect inherent risk, and we place additional scrutiny on larger home equity requests. It is not our practice to advance more than 85% of the appraised value of the underlying asset, which ratio we refer to as the loan-to-value ratio, or LTV ratio, and a majority of the credit we previously extended, when issued, had an LTV ratio of less than 80%. Our home equity loan portfolio has performed well in light of the ongoing volatility in the overall residential real estate market.
Residential real estate. The Company’s residential real estate portfolio includes one- to four-family adjustable rate mortgages, construction loans to individuals and bridge financing loans for qualifying customers as well as certain long-term fixed rate loans. As of December 31, 2025, our residential loan portfolio totaled $4.3 billion, or 8% of our total outstanding loans.
Our adjustable rate mortgages are often non-agency conforming. These loans generally provide for periodic and lifetime limits on the interest rate adjustments among other features. Additionally, adjustable rate mortgages may pose a higher risk of delinquency and default because they require borrowers to make larger payments when interest rates rise. As of December 31, 2025, excluding early buyout loans guaranteed by U.S. government agencies, $32.9 million of our residential real estate mortgages, or 0.8% of our residential real estate loan portfolio were classified as nonaccrual, no balances were 90 or more days past due and still accruing, $32.5 million were 30 to 89 days past due or 0.8% and $4.1 billion were current or 98.4%. We believe that since our loan portfolio consists primarily of locally originated loans, and since the majority of our borrowers are longer-term customers with lower LTV ratios, we face a relatively low risk of borrower default and delinquency.
Due to interest rate risk considerations, the Company generally sells in the secondary market loans originated with long-term fixed rates, for which we receive fee income. The Company also selectively retains certain of these loans within the banks’ own
loan portfolios where they are non-agency conforming, or where the terms of the loans make them favorable to retain. A portion of the loans we sold into the secondary market were sold with the servicing of those loans retained. The amount of loans serviced for others as of December 31, 2025 and 2024 was $12.6 billion and $12.4 billion, respectively. All other mortgage loans sold into the secondary market were sold without the retention of servicing rights.
The GNMA optional repurchase programs allow financial institutions acting as servicers to buyout individual delinquent mortgage loans that meet certain criteria from the securitized loan pool for which the institution was the original transferor of such loans. At the option of the servicer and without prior authorization from GNMA, the servicer may repurchase such delinquent loans for an amount equal to the remaining principal balance of the loan. Under FASB ASC 860, “Transfers and Servicing,” this early buyout option is considered a conditional option until the delinquency criteria are met, at which time the option becomes unconditional. When the Company is deemed to have regained effective control over these loans under the unconditional repurchase option and the expected benefit of the potential repurchase is more than trivial, the loans can no longer be reported as sold and must be brought back onto the balance sheet as loans at fair value, regardless of whether the Company intends to exercise the early buyout option. These rebooked loans are reported as loans held-for-investment, part of the residential real estate portfolio, with the offsetting liability being reported in accrued interest payable and other liabilities. When the early buyout option on these rebooked GNMA loans is exercised, the repurchased loans continue to be carried at fair value. Additionally, such loans typically transfer to mortgage loans held-for-sale at the time of early buyout as the Company’s intent is to cure and resell such loans subsequent to repurchase from GNMA. If such intent to cure and resell changes subsequent to early buyout, the Company reclassifies such loans as held-for-investment. Early buyout loan classified as held-for-investment totaled $145.8 million at December 31, 2025 compared to $156.8 million at December 31, 2024. Such loans consist of both the rebooked GNMA loans and the early buyout exercised loans classified as held-for-investment discussed above. Rebooked GNMA loans held-for-investment amounted to $84.7 million at December 31, 2025, compared to $115.0 million at December 31, 2024. The decrease in balance from December 31, 2024 to December 31, 2025 was the result of more frequent exercising of the early buyout option by the Company, at which time, the loans are transferred from held-for-investment to mortgages held-for-sale. As of December 31, 2025, early buyout exercised loans held-for-investment totaled $61.1 million compared to $41.8 million as of December 31, 2024. At December 31, 2025 and 2024, early buyout exercised mortgage loans held-for-sale decreased slightly and totaled $123.6 million and $141.5 million, respectively.
It is not the Company’s current practice to underwrite, and there are no plans to underwrite subprime, Alt A, no or little documentation loans, or option ARM loans. As of December 31, 2025, none of our mortgage loans consist of interest-only loans.
Premium finance receivables — property & casualty. FIRST Insurance Funding and FIFC Canada originated approximately $19.9 billion in property and casualty insurance premium finance receivables during 2025 as compared to approximately $18.4 billion in 2024. FIRST Insurance Funding and FIFC Canada makes loans to finance insurance premiums related to property and casualty insurance policies. The loans are indirectly originated by working through independent insurance agents and brokers located throughout the United States and Canada. The insurance premiums financed are primarily for commercial customers’ purchases of liability, property and casualty and other commercial insurance. This lending involves relatively rapid turnover of the loan portfolio and high volume of loan originations. The Company performs ongoing credit and other reviews of the agents and brokers, and performs various internal audit steps to mitigate against the risk of fraud. The majority of these loans 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.
Premium finance receivables — life insurance. Wintrust Life Finance originated approximately $1.9 billion in life insurance premium finance receivables in 2025 as compared to $1.7 billion in 2024. The Company continues to experience a high level of competition and pricing pressure within the current market. These loans are originated via referrals from life insurance carriers, independent insurance agents, financial advisors and legal counsel. 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.
Consumer and other. Included in the consumer and other loan category is a wide variety of personal and consumer loans to individuals. The Company originates consumer loans in order to provide a wider range of financial services to its customers. Consumer loans generally have shorter terms and higher interest rates than mortgage loans but generally involve more credit risk than mortgage loans due to the type and nature of the collateral.
Foreign. The Company had approximately $875.4 million of loans to businesses with operations in foreign countries as of December 31, 2025 compared to $824.4 million at December 31, 2024. This balance as of December 31, 2025 consists of loans originated by FIFC Canada.
Loan Concentrations
Loan concentrations are considered to exist when there are amounts loaned to multiple borrowers engaged in similar activities which would cause them to be similarly impacted by economic or other conditions. The Company had limited concentrations of loans exceeding 10% of total loans at December 31, 2025, including the specialty finance operating segment, which are diversified throughout the United States and Canada.
Maturities and Sensitivities of Loans to Changes in Interest Rates
The following table classifies the loan portfolio at December 31, 2025 by date at which the loans reprice or mature, and the type of rate exposure:
(In thousands)
One year or
less
From one to
five years
From five to fifteen years
After fifteen years
Total
Commercial
Fixed rate
Variable rate
Total commercial
Commercial real estate
Fixed rate
Variable rate
Total commercial real estate
Home equity
Fixed rate
Variable rate
Total home equity
Residential real estate
Fixed rate
Variable rate
Total residential real estate
Premium finance receivables - property & casualty
Fixed rate
Variable rate
Total premium finance receivables - property & casualty
Premium finance receivables - life insurance
Fixed rate
Variable rate
Total premium finance receivables - life insurance
Consumer and other
Fixed rate
Variable rate
Total consumer and other
Total per category
Fixed rate
Variable rate
Total loans, net of unearned income
Less: Existing cash flow hedging derivatives (1)
Total loans repricing or maturing in one year or less, adjusted for cash flow hedging activity
Variable Rate Loan Pricing by Index:
SOFR tenors (2)
12- month CMT (3)
Prime
Fed Funds
Other U.S. Treasury tenors
Other
Total variable rate
(1) Excludes cash flow hedges with future effective starting dates and those that have matured as of December 31, 2025. The $6.15 billion of cash flow hedging derivatives includes receive fixed swaps, collars and floors of which $5.2 billion were impacting the cash flows of loans indexed to one-month SOFR as of December 31, 2025.
(2) SOFR - Secured Overnight Financing Rate.
(3) CMT - Constant Maturity Treasury Rate.
Past Due Loans and Non-Performing Assets
The Company’s ability to manage credit risk depends in large part on its ability to properly identify and manage problem loans. To do so, the Company operates a credit risk rating system under which credit management personnel assign a credit risk rating (1 to 10 rating, with higher scores indicating higher risk) to each loan at the time of origination and review loans on a regular basis. For loans measured at amortized cost, these credit risk ratings are also an important aspect of the Company’s allowance for credit losses measurement methodology. The credit risk rating structure and classifications are shown below:
1 Rating
Minimal Risk (Loss Potential — none or extremely low) (Superior asset quality, excellent liquidity, minimal leverage)
2 Rating
Modest Risk (Loss Potential demonstrably low) (Very good asset quality and liquidity, strong leverage capacity)
3 Rating
Average Risk (Loss Potential low but no longer refutable) (Mostly satisfactory asset quality and liquidity, good leverage capacity)
4 Rating
Above Average Risk (Loss Potential variable, but some potential for deterioration) (Acceptable asset quality, little excess liquidity, modest leverage capacity)
5 Rating
Management Attention Risk (Loss Potential moderate if corrective action not taken) (Generally acceptable asset quality, somewhat strained liquidity, minimal leverage capacity, minimum for most commercial real estate construction loans)
6 Rating
Special Mention (Loss Potential moderate if corrective action not taken) (Assets in this category are currently protected, potentially weak, but not to the point of substandard classification)
7 Rating
Substandard Accrual (Loss Potential distinct possibility that the bank may sustain some loss, but no discernible impairment) (Must have well defined weaknesses that jeopardize the liquidation of the debt)
8 Rating
Substandard Non-accrual (Loss Potential well documented probability of loss, including potential impairment) (Must have well defined weaknesses that jeopardize the liquidation of the debt)
9 Rating
Doubtful (Loss Potential extremely high) (These assets have all the weaknesses in those classified “substandard” with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of current existing facts, conditions, and values, highly improbable)
10 Rating
Loss (fully charged off) (Loans in this category are considered fully uncollectible.)
Generally, each loan officer is responsible for monitoring his or her loan portfolio, recommending a credit risk rating for each loan in his or her portfolio and ensuring the credit risk ratings are appropriate. These credit risk ratings are then ratified by the bank’s chief credit officer and/or concurrence credit officer. Credit risk ratings are determined by evaluating a number of factors including: a borrower’s financial strength, cash flow coverage, collateral protection and guarantees. The specialty lending areas of the organization rating processes may differ in the way a risk rating is assigned, which may include automated triggers based on delinquency and other factors, however the same rating scale is applied. The Company maintains an internal loan review function to independently review a portion of the loan portfolio to evaluate the appropriateness of the management-assigned credit risk ratings. These ratings are subject to further review at each of our bank subsidiaries by the applicable regulatory authority, including the FRB of Chicago and the OCC, and are also reviewed by our internal loan review staff and our internal audit staff.
The Company’s Problem Loan Reporting system includes all such loans described above with credit risk ratings of 6 through 9. This system is designed to provide an on-going detailed tracking mechanism for each problem loan. Once management determines that a loan has deteriorated to a point where it has a credit risk rating of 6 or worse, the Company’s Managed Asset Division performs an overall credit and collateral review. As part of this review, all underlying collateral is identified and the valuation methodology is analyzed and tracked. As a result of this initial review by the Company’s Managed Asset Division,
the credit risk rating is reviewed and a portion of the outstanding loan balance may be deemed uncollectible and, as a result, no longer share similar risk characteristics as its related pool. If that is the case, the individual loan is considered collateral dependent and individually assessed for an allowance for credit loss. The Company’s individual assessment utilizes an independent re-appraisal of the collateral (unless such a third-party evaluation is not possible due to the unique nature of the collateral, such as a closely-held business or thinly traded securities). In the case of commercial real estate collateral, an independent third party appraisal is ordered by the Company’s Real Estate Services Group to determine if there has been any change in the underlying collateral value. These independent appraisals are reviewed by the Real Estate Services Group and sometimes by independent third party valuation experts and may be adjusted depending upon market conditions.
Through the credit risk rating process, such loans are reviewed to determine if they are performing in accordance with the original contractual terms. If the borrower has failed to comply with the original contractual terms, further action may be required by the Company, including a downgrade in the credit risk rating, movement to non-accrual status or a charge-off. If the Company determines that a loan amount or portion thereof is uncollectible, the loan’s credit risk rating is immediately downgraded to an 8 or 9 and the uncollectible amount is charged off. Any loan that has a partial charge-off continues to be assigned a credit risk rating of an 8 or 9 for the duration of time that a balance remains outstanding. The Company undertakes a thorough and ongoing analysis to determine if additional impairment and/or charge-offs are appropriate and to begin a workout plan for the credit to minimize actual losses. In determining the appropriate charge-off for collateral-dependent loans, the Company considers the results of appraisals for the associated collateral.
The Company’s approach to workout plans and restructuring loans is built on the credit-risk rating process. A modification of a loan with an existing credit risk rating of 6 or worse or a modification of any other credit, which will result in a restructured credit risk rating of 6 or worse must be reviewed for enhanced loan modifications that now must be disclosed in accordance with ASU 2022-02. In that event, our Managed Assets Division conducts an overall credit and collateral review. A modification of a loan is considered to be enhanced if both (1) the borrower is experiencing financial difficulty and (2) for economic or legal reasons, the bank grants a concession to a borrower that it would not otherwise consider. The modification of a loan where the credit risk rating is 5 or better both before and after such modification is not considered to be an enhanced modification. Based on the Company’s credit risk rating system, it considers that borrowers whose credit risk rating is 5 or are not experiencing financial and therefore, are not considered modifications.
For loans that do not meet the criteria listed above for enhanced modifications, if based on current information and events, it is probable that the Company will be unable to collect all amounts due to it according to the contractual terms of the loan agreement, a loan is individually assessed for measuring the allowance for credit losses and if necessary, a reserve is established. In determining the appropriate reserve for collateral-dependent loans, the Company considers the results of appraisals for the associated collateral.
Non-Performing Assets (1)
The following table sets forth the Company’s non-performing assets, and for the years prior to 2023, the troubled debt restructurings (“TDRs”) performing under the contractual terms of the loan agreement as of the dates shown. Reporting periods prior to the adoption of ASU 2022-02 as of January 1, 2023 present information on loan modifications representing TDRs under the prior accounting standards and related disclosure requirements.
(Dollars in thousands)
Loans past due greater than 90 days and still accruing (2) :
Commercial
Commercial real estate
Home equity
Residential real estate
Premium finance receivables – property & casualty
Premium finance receivables – life insurance
Consumer and other
Total loans past due greater than 90 days and still accruing
Non-accrual loans (3) :
Commercial
Commercial real estate
Home equity
Residential real estate
Premium finance receivables – property & casualty
Premium finance receivables – life insurance
Consumer and other
Total non-accrual loans
Total non-performing loans:
Commercial
Commercial real estate
Home equity
Residential real estate
Premium finance receivables – property & casualty
Premium finance receivables – life insurance
Consumer and other
Total non-performing loans
Other real estate owned
Other real estate owned – from acquisitions
Total non-performing assets
Accruing TDRs not included within non-performing assets
Total non-performing loans by category as a percent of its own respective category’s period-end balance:
Commercial
Commercial real estate
Home equity
Residential real estate
Premium finance receivables – property & casualty
Premium finance receivables – life insurance
Consumer and other
Total non-performing loans
Total non-performing assets as a percentage of total assets
Total non-accrual loans as a percentage of total loans
Allowance for loan and unfunded lending-related commitment losses as a percentage of
nonaccrual loans
(1) Excludes early buy-out loans guaranteed by U.S. government agencies. Early buy-out loans are insured or guaranteed by the FHA or the U.S. Department of Veterans Affairs, subject to indemnifications and insurance limits for certain loans.
(2) As of December 31,2022, no TDRs were past due greater than 90 days and still accruing interest. As of December 31, 2021, approximately $320,000 of TDRs were past due and greater than 90 days and still accruing interest.
(3) Non-accrual loans included TDRs totaling $4.5 million and $11.8 million as of December 31, 2022, and 2021, respectively.
At this time, management believes reserves are appropriate to absorb losses that are expected upon the ultimate resolution of these credits. Management will continue to actively review and monitor its loan portfolios, in an effort to identify problem credits in a timely manner.
Loan Portfolio Aging
As of December 31, 2025, $94.8 million, or 0.2% of all loans, excluding early buy-out loans guaranteed by U.S. government agencies, were 60 to 89 days (or two payments) past due and $264.7 million, or 0.5%, were 30 to 59 days (or one payment) past due. As of December 31, 2024, $164.4 million, or 0.3%, of all loans, excluding early buy-out loans guaranteed by U.S. government agencies were 60 to 89 days (or two payments) past due and $249.9 million, or 0.5%, were 30 to 59 days (or one payment) past due. Many of the commercial and commercial real estate loans shown as 60 to 89 days and 30 to 59 days past due are included on the Company’s internal problem loan reporting system. Loans on this system are closely monitored by management on a monthly basis.
The Company’s home equity and residential loan portfolios continue to exhibit low delinquency ratios. Home equity loans at December 31, 2025 that are current with regard to the contractual terms of the loan agreement represent 98.9% of the total home equity portfolio. Residential real estate loans, excluding early buy-out loans guaranteed by U.S. government agencies, at December 31, 2025 that are current with regards to the contractual terms of the loan agreements comprise 98.4% of these residential real estate loans outstanding.
For more information regarding delinquent loans as of December 31, 2025, see Note (5) “Allowance for Credit Losses” in Item 8.
Non-performing Loans Rollforward, excluding early buy-out loans guaranteed by U.S. government agencies
The table below presents a summary of non-performing loans for the periods presented:
(In thousands)
Balance at beginning of period
Additions from becoming non-performing in the respective period
Additions from assets acquired in the respective period
Return to performing status
Payments received
Transfers to OREO or other assets
Charge-offs, net
Net change for premium finance receivables
Balance at period end
Allowance for Credit Losses
The allowance for credit losses, specifically the allowance for loan losses and the allowance for unfunded commitment losses, represents management’s estimate of lifetime expected credit losses in the loan portfolio. The allowance for credit losses is determined quarterly using a methodology that incorporates important risk characteristics of each loan, as described below under “How We Determine the Allowance for Credit Losses” in this Item 7.
The following table sets forth the allocation of the allowance for credit losses by major loan type and the percentage of loans in each category to total loans for the past five fiscal years:
December 31, 2025
December 31, 2024
December 31, 2023
December 31, 2022
December 31, 2021
(Dollars in thousands)
Amount
Loan Type to
Total
Loans
Amount
Loan Type to
Total
Loans
Amount
Loan Type to
Total
Loans
Amount
Loan Type to
Total
Loans
Amount
Loan Type to
Total
Loans
Allowance for credit losses allocation:
Commercial
Commercial real-estate
Home equity
Residential real-estate
Premium finance receivables – property & casualty
Premium finance receivables – life insurance
Consumer and other
Total allowance for credit losses
Allowance category as a percent of total allowance for credit losses:
Commercial
Commercial real-estate
Home equity
Residential real-estate
Premium finance receivables—property & casualty
Premium finance receivables—life insurance
Consumer and other
Total allowance for credit losses
Management determined that the allowance for credit losses was appropriate at December 31, 2025, and that the loan portfolio is well diversified and well secured, without undue concentration in any specific risk area. While this process involves a high degree of management judgment, the allowance for credit losses is based on a comprehensive, well documented, and consistently applied analysis of the Company’s loan portfolio. This analysis takes into consideration all available information existing as of the financial statement date, including environmental factors such as economic, industry, geographical and political factors, when considered applicable. The relative level of allowance for credit losses is reviewed and compared to industry peers. This review encompasses levels of total non-performing loans, portfolio mix, portfolio concentrations and overall levels of net charge-off. Historical trending of both the Company’s results and the industry peers is also reviewed to analyze comparative significance.
Allowance for Credit Losses
The following table summarizes the activity in our allowance for credit losses, specifically related to loans and unfunded lending-related commitments, during the last five fiscal years.
(Dollars in thousands)
Allowance for credit losses at beginning of year
Cumulative effect adjustment from the adoption of ASU 2016-13
Provision for credit losses - Other
Provision for credit losses - Day 1 on non-PCD assets acquired during the period
Initial allowance for credit losses recognized on PCD assets acquired during the period
Other adjustments
Charge-offs:
Commercial
Commercial real estate
Home equity
Residential real estate
Premium finance receivables – property & casualty
Premium finance receivables – life insurance
Consumer and other
Total charge-offs
Recoveries:
Commercial
Commercial real estate
Home equity
Residential real estate
Premium finance receivables – property & casualty
Premium finance receivables – life insurance
Consumer and other
Total recoveries
Net charge-offs
Allowance for credit losses at year end
Net charge-offs (recoveries) by category as a percentage of its own respective category’s average:
Commercial
Commercial real estate
Home equity
Residential real estate
Premium finance receivables – property & casualty
Premium finance receivables – life insurance
Consumer and other
Total loans, net of unearned income
Year-end total loans
Allowance for loan losses as a percentage of loans at end of year
Allowance for loan and unfunded loan-related commitment losses as a percentage of loans at end of year
PCD-Purchased credit deteriorated.
The allowance for credit losses, as related to loans and lending-related commitments, is comprised of an allowance for loan losses, which is determined with respect to loans that we have originated, and an allowance for unfunded commitment losses. A separate allowance for held-to-maturity securities losses is measured related to such debt securities portfolio. Our allowance for unfunded commitment losses is determined with respect to funds that we have committed to lend but for which funds have not yet been disbursed and is computed using a methodology similar to that used to determine the allowance for loan losses. The allowance for unfunded lending-related commitments totaled $80.9 million as of December 31, 2025 compared to $72.6 million as of December 31, 2024.
Additions to the allowance for credit losses are charged to earnings through the provision for credit losses. Charge-offs represent the amount of loans that have been determined to be uncollectible during a given period, and are deducted from the allowance for credit losses, and recoveries represent the amount of collections received from loans that had previously been charged off, and are credited to the allowance for credit losses. See Note (5) “Allowance for Credit Losses” of the Consolidated Financial Statements presented under Item 8 of this report for further discussion of activity within the allowance for credit losses during the period and the relationship with respective loan balances for each loan category and the total loan portfolio.
How We Determine the Allowance for Credit Losses
The allowance for credit losses is measured on a collective or pooled basis by loans that share similar risk characteristics. If the loan no longer exhibits risk characteristics similar to that of a pool, typically due to credit deterioration of the related borrower, the Company analyzes the loan for purposes of individually assessing a specific allowance for credit loss as part of the Problem Loan Reporting system review. A separate reserve is collectively measured for loans continuing to share risk characteristics and, as a result, remaining in the pools. See Note (5) “Allowance for Credit Losses” of the Consolidated Financial Statements presented under Item 8 of this report for further discussion of the allowance for credit losses measurement process.
Collective Measurement
The allowance for credit losses is measured on a collective or pooled basis when similar risk characteristics exist, based upon the segmentation discussed above. The Company utilizes modeling methodologies that estimate lifetime credit loss rates on each pool. These methodologies include estimating the probability of default and loss given default on the commercial and commercial real estate segments, using the weighted-average remaining maturity methodology for the residential real estate, home equity, and consumer segments, and utilizing an assumption-based approach focusing on historical loss rates for the premium finance receivables segments. Historical credit loss history is adjusted for reasonable and supportable forecasts developed by the Company on a quantitative or qualitative basis and incorporates third party economic forecasts. Reasonable and supportable forecasts consider the macroeconomic factors that are most relevant to evaluating and predicting expected credit losses in the Company's financial assets. Currently, the Company utilizes an eight quarter forecast period using a single macroeconomic scenario provided by a third party and reviewed within the Company's governance structure. For periods beyond the ability to develop reasonable and supportable forecasts, the Company reverts to historical rates at an input level, straight-line over a four quarter reversion period. Expected credit are measured over the contractual term of the financial asset with consideration of expected prepayments. Expected extensions, renewals or modifications of the financial asset are considered when the expected extension, renewal or modification is contained within the existing agreement and is not unconditionally cancelable. The methodologies discussed above are applied to both current asset balances on the Company's Consolidated Statements of Condition and off-balance sheet commitments (i.e. lending-related commitments).
Individual Assessment
Loans with a credit risk rating of a 6 through 9 are reviewed on a monthly basis to determine if (a) an amount is deemed uncollectible (a charge-off) or (b) it is probable that the Company will be unable to collect amounts due in accordance with the original contractual terms of the loan. In cases in which collectability is not probable, the loan is considered to no longer exhibit shared risk characteristics of a pool and as a result, is individually assessed for allowance for credit losses measurement purposes. If a loan is individually assessed credit risk rating 8 or 9, the carrying amount of the loan is compared to the expected payments to be received, discounted at the loan’s original rate, or for foreclosure-probable and collateral dependent loans, to the fair value of the collateral less the estimated cost to sell, when appropriate under accounting rules. Any shortfall is recorded as a specific reserve within the allowance for credit losses.
Home Equity, Residential Real Estate and Consumer Loans
The determination of the appropriate allowance for credit losses for home equity, residential real estate and consumer loans differs from the process used for commercial and commercial real estate loans. These portfolios utilize the weighted-average remaining maturity (“WARM”) methodology. The WARM methodology is an assumption-based approach that utilizes historical loss and prepayment information as the basis to estimate prepayment and credit adjusted contractual cash flows. The Company considers a qualitative factor to adjust historical information for current conditions and reasonable and supportable forecasts. The same credit risk rating system and Problem Loan Reporting systems are used. The only significant difference is in how the credit risk ratings are assigned to these loans.
The home equity loan portfolio is reviewed on a loan by loan basis by analyzing current FICO and Bankruptcy scores of the borrowers, line availability, recent line usage, approaching maturity, and the aging status of the loan. Certain of these factors, or combination of these factors, may cause a portion of the credit risk ratings of home equity loans across all banks to be
downgraded. Similar to commercial and commercial real estate loans, once a home equity loan’s credit risk rating is downgraded to a 6 through 9, the Company’s Managed Asset Division reviews and advises the subsidiary banks as to collateral valuations and as to the ultimate resolution of the credits that deteriorate to a non-accrual status to minimize losses.
Residential real estate loans that are downgraded to a credit risk rating of 6 through 9 also enter the problem loan reporting system and have the underlying collateral evaluated by the Managed Assets Division.
Premium Finance Receivables
The determination of the appropriate allowance for credit losses for premium finance receivables is an assumption-based approach focusing on historical loss rates in the portfolio, adjusted qualitatively for current macroeconomic conditions and reasonable and supportable forecasts.
Methodology in Assessing Impairment and Charge-off Amounts
In determining the amount of reserves or charge-offs associated with collateral dependent loans, the Company values the loan generally by starting with a valuation obtained from an appraisal of the underlying collateral and then deducting estimated selling costs, if appropriate, to arrive at a net appraised value. We obtain the appraisals of the underlying collateral typically on an annual basis from one of a pre-approved list of independent, third party appraisal firms. Types of appraisal valuations include “as-is,” “as-complete,” “as-stabilized,” bulk, fair market, liquidation and “retail sellout” values.
In many cases, the Company simultaneously values the underlying collateral by marketing the property to market participants interested in purchasing properties of the same type. If the Company receives offers or indications of interest, we will analyze the price and review market conditions to assess whether in light of such information the appraised value overstates the likely price and that a lower price would be a better assessment of the market value of the property and would enable us to liquidate the collateral. Additionally, the Company takes into account the strength of any guarantees or other credit enhancements, and the ability of the borrower to provide value related to those guarantees in determining the ultimate charge-off or reserve associated with any individually assessed loans. Accordingly, the Company may charge-off a loan to a value below the net appraised value if it believes that an expeditious liquidation is desirable in the circumstance and it has legitimate offers or other indications of interest to support a value that is less than the net appraised value. Alternatively, the Company may carry a loan at a value that is in excess of the appraised value if the Company has a guarantee from a borrower or other credit that the Company believes has realizable value. In evaluating the of any guarantee, the Company evaluates the financial wherewithal of the guarantor, the guarantor’s reputation, and the guarantor’s willingness and desire to work with the Company. The Company then conducts a review of the of a guarantee on a frequency established as the circumstances and conditions of the borrower warrant.
In circumstances where the Company has received an appraisal but has no third party offers or indications of interest, the Company may enlist the input of realtors in the local market as to the highest valuation that the realtor believes would result in a liquidation of the property given a reasonable marketing period of approximately 90 days. To the extent that the realtors’ indication of market clearing price under such scenario is less than the net appraised valuation, the Company may take a charge-off on the loan to a valuation that is less than the net appraised valuation.
The Company may also charge-off a loan below the net appraised valuation if the Company holds a junior mortgage position in a piece of collateral whereby the risk to acquiring control of the property through the purchase of the senior mortgage position is deemed to potentially increase the risk of loss upon liquidation due to the amount of time to ultimately market the property and the volatile market conditions. In such cases, the Company may abandon its junior mortgage and charge-off the loan balance in full.
In other cases, the Company may allow the borrower to conduct a “short sale,” which is a sale where the Company allows the borrower to sell the property at a value less than the amount of the loan. Many times, it is possible for the current owner to receive a better price than if the property is marketed by a financial institution which the market place perceives to have a greater desire to liquidate the property at a lower price. To the extent that we allow a short sale at a price below the value indicated by an appraisal, we may take a charge-off beyond the value that an appraisal would have indicated.
Other market conditions may require a reserve to bring the carrying value of the loan below the net appraised valuation such as litigation surrounding the borrower and/or property securing our loan or other market conditions impacting the value of the collateral.
Having determined the net value based on the factors such as those noted above and compared that value to the book value of the loan, the Company arrives at a charge-off amount or a specific reserve included in the allowance for credit losses. In summary, for collateral dependent loans, appraisals are used as the fair value starting point in the estimate of net value. Estimated costs to sell are deducted from the appraised value, when appropriate under current accounting rules, to arrive at the net appraised value. Although an external appraisal is the primary source of valuation utilized for charge-offs on collateral dependent loans, alternative sources of valuation may become available between appraisal dates. As a result, we may utilize values obtained through these alternative sources, which include purchase and sale agreements, legitimate indications of interest, negotiated short sales, realtor price opinions, sale of the note or support from guarantors, as the basis for charge-offs. These alternative sources of value are used only if deemed to be more representative of value based on updated information regarding collateral resolution. In addition, if an appraisal is not deemed current, a discount to appraised value may be utilized. Any adjustments from appraised value to net value are detailed and justified in an impairment analysis, which is reviewed and approved by the Company’s Managed Assets Division.
Potential Problem Loans
Management believes that any loan where there are serious doubts as to the ability of such borrowers to comply with the present loan repayment terms should be identified as a non-performing loan and should be included in the disclosure of “Past Due Loans and Non-Performing Assets.” At end of the periods presented in this Annual Report on Form 10-K, the Company had no potential problem loans not already identified as non-performing.
Other Real Estate Owned
In certain circumstances, the Company is required to take action against the real estate collateral of specific loans. The Company uses foreclosure only as a last resort for dealing with borrowers experiencing financial hardships. The Company employs extensive contact and restructuring procedures to attempt to find other solutions for our borrowers. The tables below present a summary of other real estate owned and show the activity for the respective periods and the balance for each property type:
Years Ended
(In thousands)
December 31,
December 31,
Balance at beginning of period
Disposal/resolved
Transfers in at fair value, less costs to sell
Fair value adjustments
Balance at period end
Period End
(In thousands)
December 31,
December 31,
Residential real estate
Commercial real estate
Total
Deposits and Other Funding Sources
Total deposits at December 31, 2025, were $57.7 billion, increasing $5.2 billion, or 10%, compared to the $52.5 billion at December 31, 2024. Average deposit balances in 2025 were $54.3 billion, reflecting an increase of $6.5 billion, or 14%, compared to the average balances in 2024.
The increase in year end and average deposits in 2025 over 2024 is primarily attributable to the Company's increased marketing efforts during 2025 to retain and attract deposits to support continued loan growth and due to the diversity of our deposit base. Average non-interest bearing deposits increased $600.8 million, or 6% in 2025 compared to 2024, with period end balances ending at 20% of total deposits at December 31, 2025, compared to 22% at December 31, 2024.
The following table presents the composition of average deposits by product category for each of the last three years:
Years Ended December 31,
(Dollars in thousands)
Balance
Percent
Balance
Percent
Balance
Percent
Non-interest bearing deposits
NOW and interest-bearing demand deposits
Wealth management deposits
Money market accounts
Savings accounts
Time certificates of deposit
Total average deposits
Wealth management deposits are funds from the brokerage customers of Wintrust Investments, CDEC and trust and asset management customers of the Company which have been placed into deposit accounts of the banks (“wealth management deposits” in the table above). Wealth management deposits consist primarily of money market accounts. Consistent with reasonable interest rate risk parameters, these funds have generally been invested in loan production of the banks as well as other investments suitable for banks.
Other Funding Sources. Although deposits are the Company’s primary source of funding its interest-earning assets, the Company’s ability to manage the types and terms of deposits is somewhat limited by customer preferences and market competition. As a result, in addition to deposits and the issuance of equity securities and the retention of earnings, the Company uses several other funding sources to support its growth. These sources include FHLB advances, notes payable, short-term borrowings, secured borrowings, subordinated debt, and junior subordinated debentures. The Company evaluates the terms and unique characteristics of each source, as well as its asset-liability management position, in determining the use of such funding sources.
The Company had approximately $20.5 billion of uninsured deposits as of December 31, 2025, of which $3.1 billion were fully collateralized deposits. The net position of $17.4 billion of uninsured and uncollateralized deposits represents approximately 30% of total deposits as of December 31, 2025. The Company had total liquidity sources, including cash and collateralized funding sources of $21.4 billion or approximately 123% of uninsured and uncollateralized deposits as of December 31, 2025.
The following table sets forth, by category, the composition of the average balances of other funding sources for the periods presented:
Years Ended December 31,
Average
Percent
Average
Percent
(Dollars in thousands)
Balance
of Total
Balance
of Total
Federal Home Loan Bank advances
Subordinated notes
Notes payable
Short-term borrowings
Secured borrowings
Other
Total other borrowings
Junior subordinated debentures
Total other funding sources
FHLB advances provide the banks with access to fixed-rate funds which are useful in mitigating interest rate risk and achieving an acceptable interest rate spread on fixed-rate loans or securities. FHLB advances to the banks outstanding balance totaled $3.5 billion at December 31, 2025 and $3.2 billion at December 31, 2024. See Note (11) “Federal Home Loan Bank Advances” to the Consolidated Financial Statements in Item 8 for further discussion of the terms of these advances.
Notes payable balances represent the balances on a credit agreement (as amended, the “Credit Agreement”) with certain unaffiliated banks. The Credit Agreement consists of a $200.0 million term loan facility and a $100.0 million revolving credit
facility. As of December 31, 2025, there was no outstanding principal balance under the term loan facility and no outstanding principal balance under the revolving credit facility. See Note (13) “Other Borrowings” to the Consolidated Financial Statements in Item 8 for further discussion of notes payable.
The balance of secured borrowings primarily represents a third party Canadian transaction (“Canadian Secured Borrowing”). Under the Canadian Secured Borrowing, the Company, through its subsidiary, FIFC Canada, sells an undivided co-ownership interest in all receivables owed to FIFC Canada to an unrelated third party in exchange for cash payments pursuant to a receivables purchase agreement (“Receivables Purchase Agreement”). See Note (13) “Other Borrowings” to the Consolidated Financial Statements in Item 8 for further discussion of these secured borrowings under this agreement. At December 31, 2025 and 2024, the translated balance of the secured borrowings totaled $408.0 million and $323.2 million, respectively.
Other borrowings at December 31, 2025 represent a promissory note (“Promissory Note”) issued by the Company in June 2017. Amendments to the Promissory Note since issuance increased the principal amount to $66.4 million, reduced the interest rate to a floating rate equal to 1-month CME Term SOFR plus a spread of 1.40%, and extended the maturity date to March 31, 2028. The Promissory Note relates to and is secured by three office buildings owned by the Company. At December 31, 2025 and 2024, the Promissory Note had a balance of $55.9 million and $57.1 million, respectively. See Note (13) “Other Borrowings” to the Consolidated Financial Statements in Item 8 for further discussion of these borrowings.
At December 31, 2025 and 2024, subordinated notes totaled $298.6 million and $298.3 million, respectively. During 2019, the Company issued $300.0 million of subordinated notes receiving $296.7 million in proceeds, net of underwriting discount. The notes have a stated interest rate of 4.85% and mature in June 2029. In the second quarter of 2024, the Company repaid the $140.0 million of subordinated notes issued in 2014. The notes had a stated interest rate of 5.00% and matured in June 2024. See Note (12) “Subordinated Notes” to the Consolidated Financial Statements in Item 8 for further discussion.
The Company had $253.6 million of junior subordinated debentures outstanding as of December 31, 2025 and 2024. The amounts reflected on the balance sheet represent the junior subordinated debentures issued to eleven trusts by the Company and equal the amount of the preferred and common securities issued by the trusts. See Note (14) “Junior Subordinated Debentures” to the Consolidated Financial Statements in Item 8 for further discussion of the Company’s junior subordinated debentures. Starting in 2016, none of the junior subordinated debentures qualified as Tier 1 regulatory capital of the Company resulting in $245.5 million of the junior subordinated debentures, net of common securities, being included in the Company’s Tier 2 regulatory capital as of December 31, 2025.
Shareholders’ Equity . Total shareholders’ equity was $7.3 billion at December 31, 2025, an increase of $914.4 million from the December 31, 2024 total of $6.3 billion. The increase in 2025 was primarily a result of net income of $823.8 million and other comprehensive income of $212.6 million. These increases to total shareholders’ equity were partially offset by common stock dividends of $133.8 million and preferred stock dividends of $35.6 million. See Note (23) “Shareholders’ Equity” to the Consolidated Financial Statements in Item 8 for further discussion of shareholders’ equity.
Liquidity and Capital Resources
The Company and the banks are subject to various regulatory capital requirements established by the federal banking agencies that take into account risk attributable to balance sheet and off-balance sheet activities. Failure to meet minimum capital requirements can initiate certain mandatory — and possibly discretionary — actions by regulators, that if undertaken could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the banks must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Federal Reserve’s capital guidelines require bank holding companies to maintain a minimum ratio of qualifying total capital to risk-weighted assets of 8.0%, of which at least 4.5% must be in the form of Common Equity Tier 1 capital and 6.0% must be in the form of Tier 1 capital. The Federal Reserve also requires a minimum leverage ratio of Tier 1 capital to total assets of greater than 4.0%. In addition, the Federal Reserve continues to consider the Tier 1 Leverage Ratio in evaluating proposals for expansion or new activities.
The following table summarizes the capital guidelines for bank holding companies as of December 31, 2025, as well as certain ratios relating to the Company’s equity and assets as of December 31, 2025, 2024 and 2023:
Minimum
Ratios
Minimum Ratio + Capital Conservation Buffer (1)
Minimum Well
Capitalized
Ratios (2)
Tier 1 Leverage Ratio
Risk-based capital ratios:
Tier 1 Capital Ratio
Common Equity Tier 1 Capital Ratio
Total Capital Ratio
Other ratios:
Total average equity to total average assets
Dividend payout ratio
(1) Reflects the Capital Conservation Buffer of 2.50%.
(2) Reflects the well-capitalized standard applicable to the Company for purposes of the Federal Reserve’s Regulation Y. The Federal Reserve has not yet revised the well-capitalized standard for bank holding companies to reflect the higher capital requirements imposed under the U.S. Basel III Rule or to add Common Equity Tier 1 Capital Ratio and Tier 1 Leverage Ratio requirements to this standard. As a result, the Common Equity Tier 1 Capital Ratio and Tier 1 Leverage Ratio are denoted as “N/A” in this column. If the Federal Reserve were to apply the same or a very similar well-capitalized standard to bank holding companies as the standard applicable to our subsidiary banks, the Company’s capital ratios as of December 31, 2025 would exceed such revised well-capitalized standard.
As reflected in the table, each of the Company’s capital ratios at December 31, 2025, exceeded the well-capitalized ratios established by the Federal Reserve. Management is committed to maintaining the Company’s capital levels above the “Well Capitalized” levels established by the Federal Reserve for bank holding companies. Refer to Note (19) “Regulatory Matters” to the Consolidated Financial Statements in Item 8 for further information on the capital positions of the banks.
The Company’s principal sources of funds at the holding company level are dividends from its subsidiaries, borrowings under its loan agreement with unaffiliated banks and proceeds from the issuances of subordinated debt and additional equity. Refer to Notes (12), (13), (14) and (23) to the Consolidated Financial Statements in Item 8 for further information on the Company’s subordinated notes, other borrowings, junior subordinated debentures and shareholders’ equity, respectively.
On July 15, 2025, the Company redeemed all 5,000,000 issued and outstanding shares of the Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D (the “Series D Preferred Stock”), for a redemption price of $25.00 per share or $125.0 million. Also, the Company redeemed all 11,500 issued and outstanding shares of 6.875% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series E (the “Series E Preferred Stock”), and all of the related 11,500,000 issued and outstanding depositary shares (the “Depositary Shares”), each representing a 1/1,000 th interest in a share of Series E Preferred Stock, for a redemption price of $25,000 per share of Series E Preferred Stock (or $25.00 per Depositary Share) or $287.5 million. The regular quarterly dividends on the Series D Preferred Stock and the Series E Preferred Stock represented by the Depositary Shares were paid separately on July 15, 2025 to holders of record on July 1, 2025. Accordingly, the redemption price did not include any accrued and unpaid dividends.
In May 2025, the Company issued 17,000 shares of fixed-rate reset non-cumulative perpetual preferred stock, Series F, liquidation preference $25,000 per share (the “Series F Preferred Stock”) as part of a $425 million public offering of 17,000,000 depository shares, each representing a 1/1000th interest in a share of Series F Preferred Stock. When, as and if declared, dividends on the Series F Preferred Stock are payable quarterly in arrears at a fixed rate of 7.875% per annum starting October 15, 2025. The redemption of the Series D Preferred Stock and Series E Preferred Stock in July 2025 was funded with a portion of the net proceeds from the issuance of the Series F Preferred Stock.
In January, April, July, and October of 2024, Wintrust declared a quarterly cash dividend of $0.41 per share and $429.69 per share of Series D and Series E Preferred Stock, respectively.
In January and April of 2025, Wintrust declared cash dividends aggregating $0.82 per share and $859.38 per share of Series D and Series E Preferred Stock, respectively. In connection with the redemption of the Series D and Series E Preferred Stock, no further dividends were declared on these series following their redemption. In July and October of 2025, Wintrust declared cash dividends aggregating $1,274.22 per share of Series F Preferred Stock.
The payment of common stock dividends is also subject to statutory restrictions and restrictions arising under the terms of the Company’s Series F Preferred Stock, the Company’s trust preferred securities offerings units and under certain financial covenants in the Company’s revolving and term credit facilities. Under the terms of these separate revolving and term credit facilities, the Company is prohibited from paying dividends on any equity interests, including its common stock and preferred stock, if such payments would cause the Company to be in default under its facilities or exceed a certain threshold. In January, April, July and October of 2025, Wintrust declared a quarterly cash dividend of $0.50 per common share. In January, April, July and October of 2024, Wintrust declared a quarterly cash dividend of $0.45 per common share. In January of 2026, Wintrust declared a quarterly cash dividend of $0.55 per common share. Taking into account the limitations on the payment of dividends, the final determination of timing, amount and payment of dividends is at the discretion of the Company’s Board of Directors and will depend on the Company’s earnings, financial condition, capital requirements and other relevant factors.
Banking laws impose restrictions upon the amount of dividends that can be paid to the holding company by the banks. Based on these laws, the banks could, subject to minimum capital requirements, declare dividends to the Company without obtaining regulatory approval in an amount not exceeding (a) undivided profits, and (b) the amount of net income reduced by dividends paid for the current and prior two years.
Since the banks are required to maintain their capital at the well-capitalized level (due to the Company being a financial holding company), funds otherwise available as dividends from the banks are limited to the amount that would not reduce any of the banks’ capital ratios below the well-capitalized level. During 2025, 2024 and 2023, the subsidiaries paid $600.0 million, $475.0 million and $360.0 million, respectively, in dividends to the Company. As of December 31, 2025, subject to minimum capital requirements at the banks, approximately $929.8 million was available as dividends from the banks without prior regulatory approval and without compromising the banks’ well-capitalized positions.
Liquidity management at the banks involves planning to meet anticipated funding needs at a reasonable cost. Liquidity management is guided by policies, formulated and monitored by the Company’s senior management and each Bank’s asset/liability committee, which take into account the marketability of assets, the sources and stability of funding and the level of unfunded commitments. The banks’ principal sources of funds are deposits, short-term borrowings and capital contributions from the holding company. In addition, the banks are eligible to borrow under FHLB advances and at the FRB Discount Window, another source of liquidity.
In accordance with the liquidity management noted above, deposit growth and increases in borrowings from various sources have resulted in accumulating liquidity assets in recent periods. In 2025, we managed our liquid assets to ensure that we have the balance sheet strength to serve our clients. As a result, the Company believes that it has sufficient funds and access to funds to meet its working capital and other needs. The Company will continue to prudently evaluate liquidity sources, including the management of availability with the FHLB and FRB and utilization of the revolving credit facility with unaffiliated banks.
Core deposits are the most stable source of liquidity for community banks due to the nature of long-term relationships generally established with depositors and the security of deposit insurance provided by the FDIC. Core deposits are generally defined in the industry as total deposits less time deposits with balances greater than $100,000. Due to the affluent nature of many of the communities that the Company serves, management believes that many of its time deposits with balances in excess of $100,000 are also a stable source of funds. Currently, standard deposit insurance coverage is $250,000 per depositor per insured bank, for each account ownership category.
While the Company obtains a portion of its total deposits through brokered deposits, the Company does so primarily as an asset-liability management tool to assist in the management of interest rate risk, and the Company does not consider brokered deposits to be a vital component of its current liquidity resources. Historically, brokered deposits have represented a small component of the Company’s total deposits outstanding, as set forth in the table below:
December 31,
(Dollars in thousands)
Total deposits
Brokered Deposits (1)
Brokered deposits as a percentage of total deposits (1)
(1) Brokered Deposits include certificates of deposit obtained through deposit brokers, deposits received through the Certificate of Deposit Account Registry Program, as well as wealth management deposits of brokerage customers from unaffiliated companies which have been placed into deposit accounts of the banks.
The Company’s banks routinely accept deposits from a variety of municipal entities. Typically, these municipal entities require that banks pledge marketable securities to collateralize these public deposits. At December 31, 2025 and 2024, the banks had approximately $8.6 billion, and $6.9 billion of securities collateralizing public deposits and other liquidity sources.
Other than as discussed in this section, the Company is not aware of any known trends, commitments, events, regulatory recommendations or uncertainties that would have any material adverse effect on the Company’s capital resources, operations or liquidity.
CONTRACTUAL OBLIGATIONS, OFF-BALANCE SHEET COMMITMENTS AND CONTINGENT LIABILITIES
The Company has various financial obligations, including contractual obligations and commitments, that may require future cash payments.
Contractual Obligations. Our significant contractual obligations with third parties primarily consist of deposit liabilities and other sources of funding for our businesses, including FHLB advances, subordinated debt, other debt borrowings and junior subordinated debentures. These debt obligations have fixed and determinable contractual repayment dates specific to each type of instrument. Deposit liabilities are primarily due on-demand, with certain time deposits due based on contractual maturities that may exceed one year. Repayment of debt obligations, including junior subordinated debentures, vary based on terms of the underlying debt instrument, with certain debt instruments requiring full repayment of the debt at the respective maturity date and other debt instruments requiring periodic partial repayment over the entire term of the debt instrument. Further information on these debt obligations is included in Notes (10) “Deposits” through (14) “Junior Subordinated Debentures” of the Consolidated Financial Statements in Item 8 of this report.
The Company enters into various leasing arrangements with contractual obligations to pay for use of specified assets over a specific period of time. These leased assets primarily related to certain banking facilities as well as specific signage related to sponsorships and other agreements, and certain automatic teller machines and other equipment. Payments under these obligations are primarily made on a monthly basis. Further information on these lease obligations is included in Note (16) “Lease Commitments” of the Consolidated Financial Statements in Item 8 of this report.
The Company’s other purchase obligations relate to certain contractual cash obligations for acquisition-related contingent costs, marketing obligations and services related to the construction of facilities, data processing and the outsourcing of certain operational activities. In 2025, the Company continued to significantly invest in technology, including enhancements to our customer’s digital experience, and it is subject to additional contractual purchase obligations in furtherance of these efforts.
The Company also enters into derivative contracts under which the Company is required to either receive cash from or pay cash to counterparties depending on changes in interest rates. Derivative contracts are carried at fair value representing the net present value of expected future cash receipts or payments based on market rates as of the balance sheet date. Further information on derivative contracts is included in Note (21) “Derivative Financial Instruments” of the Consolidated Financial Statements in Item 8 of this report.
Commitments. The following table presents a summary of the amounts and expected maturities of significant commitments as of December 31, 2025. Further information on these commitments is included in Note (20) “Commitments and Contingencies” of the Consolidated Financial Statements in Item 8 of this report.
(In thousands)
One year or
less
From one to
three years
From three
to five years
Over
five years
Total
Commitment type:
Commercial, commercial real estate and construction
Residential real estate
Revolving home equity lines of credit
Letters of credit
Commitments to sell mortgage loans
Our remaining commitment to fund community investments totaled $160.7 million, which includes future cash outlays for the construction and development of properties for low-income housing, support for small businesses, and historic tax credit projects that qualify for CRA purposes. These commitments are not included in the commitments table above, as the timing and
amounts are based upon the financing arrangements provided in each project’s partnership or operating agreement and could change due to variances in the construction schedule, project revisions, or the cancellation of the project.
Contingencies. The Company enters into residential mortgage loan sale agreements with investors in the normal course of business. These agreements usually require certain representations concerning credit information, loan documentation, collateral and insurability. On occasion, investors have requested the Company to indemnify them against losses on certain loans or to repurchase loans which the investors believe do not comply with applicable representations. Upon completion of its own investigation, the Company generally repurchases or provides indemnification on certain loans. Indemnification requests are generally received within two years subsequent to sale. Management maintains a liability for estimated losses on loans expected to be repurchased or on which indemnification is expected to be provided and regularly evaluates the adequacy of this recourse liability based on trends in repurchase and indemnification requests, actual loss experience, known and inherent risks in the loans, and current economic conditions. At December 31, 2025, the liability for estimated losses on repurchase and indemnification was approximately $578,000 and was included in other liabilities on the balance sheet.
Forward Looking Statements
This document contains forward-looking statements within the meaning of federal securities laws. Forward-looking information can be identified through the use of words such as “intend,” “plan,” “project,” “expect,” “anticipate,” “believe,” “estimate,” “contemplate,” “possible,” “will,” “may,” “should,” “would” and “could.” Forward-looking statements and information are not historical facts, are premised on many factors and assumptions, and represent only management’s expectations, estimates and projections regarding future events. Similarly, these statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of invoking these safe harbor provisions. Such forward-looking statements may be deemed to include, among other things, statements relating to the Company’s future financial performance, the performance of its loan portfolio, the expected amount of future credit reserves and charge-offs, delinquency trends, growth plans, regulatory developments, securities that the Company may offer from time to time, and management’s long-term performance goals, as well as statements relating to the anticipated effects on the Company’s financial condition and results of operations from expected developments or events, the Company’s business and growth strategies, including future acquisitions of banks, specialty finance or wealth management businesses, internal growth and plans to form additional de novo banks or branch offices. Actual results could differ materially from those addressed in the forward-looking statements as a result of numerous factors and uncertainties, including those discussed in the Risk Factors and summary thereof under Item 1A of this Annual Report on 10-K and in any of the Company’s subsequent SEC filings.
Therefore, there can be no assurances that future actual results will correspond to any forward-looking statements. The reader is cautioned not to place undue reliance on any forward-looking statement made by the Company. Any such statement speaks only as of the date the statement was made or as of such date that may be referenced within the statement. The Company undertakes no obligation to update any forward-looking statement to reflect the impact of circumstances or events after the date of this Annual Report on Form 10-K. Persons are advised, however, to consult further disclosures management makes on related subjects in its reports filed with the SEC and in its press releases.
