Company: WTFCN
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0001015328-25-000207
Chunk: 75

Company: WINTRUST FINANCIAL CORP
Filing Date: 2025-11-06
Form: 10-Q
Item: Item 1
Chunk 75
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Other real estate owned is comprised of real estate acquired in partial or full satisfaction of loans and is included in other assets. Other real estate owned is recorded at its estimated fair value less estimated selling costs at the date of transfer, with any excess of the related loan balance over the fair value less expected selling costs charged to the allowance for loan losses. Subsequent changes in value are reported as adjustments to the carrying amount and are recorded in other non-interest expense. Gains and losses upon sale, if any, are also charged to other non-interest expense. Fair value is generally based on third party appraisals and internal estimates that are adjusted by a discount representing the estimated cost of sale and is therefore considered a Level 3 valuation.The Company’s Managed Assets Division is primarily responsible for the valuation of Level 3 inputs for other real estate owned. At September 30, 2025, the Company had $24.8 million of other real estate owned classified as Level 3. The unobservable input applied to other real estate owned relates to the 10% reduction to the appraisal value representing the estimated cost of sale of the foreclosed property. A higher discount for the estimated cost of sale results in a decreased carrying value.The valuation techniques and significant unobservable inputs used to measure both recurring and non-recurring Level 3 fair value measurements at September 30, 2025 were as follows:(Dollars in thousands)Fair ValueValuation MethodologySignificant Unobservable InputInput / Range of InputsWeightedAverageof InputsImpact to valuationfrom an increased orhigher input valueMeasured at fair value on a recurring basis:Municipal securities$129,794 Bond pricingEquivalent ratingBBB-AA+N/AIncreaseMortgage loans held-for-sale54,726 Discounted cash flowsDiscount rate5.14%5.14%DecreaseCredit discount0% - 26%1.29%DecreaseLoans held-for-investment49,220 Discounted cash flowsDiscount rate5.14% - 6.00%5.14%DecreaseCredit discount0% - 26%1.88%DecreaseConstant prepayment rate (CPR) - current loans9.44%9.44%DecreaseAverage life - delinquent loans (in years)1.6 years - 11.7 years5.8 yearsDecreaseMSRs190,938 Discounted cash flowsDiscount rate5% - 20%10.43%Decre