Company: WTFCN
Filing Date: 2025-02-28
Form Type: 10-K
Source: 0001015328-25-000093
Chunk: 254

Company: WINTRUST FINANCIAL CORP
Filing Date: 2025-02-28
Form: 10-K
Item: Item 7
Chunk 254
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 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 2024, such fluctuations in provision for credit losses favorably impacted the profitability of our community banks, primarily as a result of improvement in key variables (Baa credit spread and Commercial Real Estate Price Index) within forecasted macroeconomic conditions.

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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 an increase of $10.1 million in mortgage banking revenue in 2024 compared to 2023 as a result of higher origination volumes and favorable fair value adjustments of MSRs in 2024 compared to 2023. Mortgage originations for sale totaled $2.6 billion and $2.0 billion in 2024 and 2023, respectively, and was driven by growth in both purchase and refinance originations as housing inventories have improved and interest rates pulled back from peak levels reached in 2023.  Partially offsetting the impact of higher originations and production margins was the change in fair value on EBOs guaranteed by U.S. government agencies.

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