Company: WTFCN
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0001015328-25-000093
Chunk: 143

Company: WINTRUST FINANCIAL CORP
Filing Date: 2025-02-28
Form: 10-K
Item: Item 8
Chunk 143
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.1 million and $144.3 million, respectively. 

153

Other Derivatives—Periodically, the Company will sell options to a bank or dealer for the right to purchase certain securities held within the banks’ investment portfolios (covered call options). These option transactions are designed to increase the total return associated with the investment securities portfolio. These options do not qualify as accounting hedges pursuant to ASC 815 and, accordingly, changes in fair value of these contracts are recognized as other non-interest income. There were no covered call options outstanding as of December 31, 2024 or December 31, 2023.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.  At December 31, 2024 the Company held ten interest rate derivatives with an aggregate notional value of $295.0 million and four interest rate derivatives with an aggregate notional value of $195.0 million at December 31, 2023 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) Years EndedDecember 31,DerivativeLocation in income statement20242023Interest rate swaps and capsTrading gains (losses), net$59 $765 Mortgage banking derivativesMortgage banking revenue952 12,285 Commodity contractsTrading gains (losses), net184 279 Foreign exchange contractsTrading gains (losses), net(84)— Covered call optionsFees from covered call options10,196 21,863 Derivative contract held as economic hedge on MSRsMortgage banking revenue(7,909)1,280 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