Company: WTFCN
Filing Date: 2025-08-06
Form Type: 10-Q
Source: 0001015328-25-000188
Chunk: 60

Company: WINTRUST FINANCIAL CORP
Filing Date: 2025-08-06
Form: 10-Q
Item: Item 1
Chunk 60
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 no covered call options outstanding as of June 30, 2025, December 31, 2024 or June 30, 2024. Periodically, the Company will purchase options for the right to purchase securities not currently held within the banks’ investment portfolios or enter into interest rate swaps in which the Company elects to not designate such derivatives as hedging instruments. These option and swap transactions are designed primarily to economically hedge a portion of the fair value adjustments related to the Company’s mortgage servicing rights portfolio. The gain or loss associated with these derivative contracts are included in mortgage banking revenue. The Company held eight interest rate derivatives with an aggregate notional value of $330.0 million at June 30, 2025 and ten interest rate derivatives with an aggregate notional value of and $295.0 million at December 31, 2024, for such purpose of economically hedging a portion of the fair value adjustment related to its mortgage servicing rights portfolio. Amounts included in the Consolidated Statements of Income related to derivative instruments not designated in hedge relationships were as follows:(In thousands)Three Months EndedSix Months EndedDerivativeLocation in income statementJune 30,2025June 30,2024June 30,2025June 30,2024Interest rate swaps and capsTrading gains, net$85 $(102)$(32)$493 Mortgage banking derivativesMortgage banking revenue(324)3,721 3,317 3,706 Commodity contractsTrading gains, net(37)130 77 398 Foreign exchange contractsTrading gains, net65 11 73 19 Covered call optionsFees from covered call options5,624 2,056 9,070 6,903 Derivative contract held as economic hedge on MSRsMortgage banking revenue2,535 (772)7,432 (3,349)Credit RiskDerivative instruments have inherent risks, primarily market risk and credit risk. Market risk is associated with changes in the value of an underlying asset. Credit risk relates to the risk that the counterparty will fail to perform according to the terms of the agreement. The Company is exposed to the credit risk of its commercial borrowers and third party financial institutions who are counterparties to interest rate derivatives with the Company.The counterparty credit risk associated with the mirror-image swaps executed with third party financial institutions is monitored and managed as part of the Company’s overall asset-liability management process, except that the counterparty credit risk