Wintrust Financial Corporation, an Illinois corporation, which was incorporated
in 1992, is a financial holding company based in Rosemont, Illinois. We conduct
our businesses through three segments: community banking, specialty finance
and wealth management. All segment measurements discussed below are based on
the reportable segments and do not reflect intersegment eliminations.
We provide community-oriented, personal and commercial banking services to customers
located in the Chicago metropolitan area and in southern Wisconsin (“our
market area”) through our fifteen wholly owned banking subsidiaries (collectively,
the “banks”), as well as the origination and purchase of residential
mortgages for sale into the secondary market through Wintrust Mortgage, a division
of Barrington Bank and Trust Company, N.A. (“Barrington Bank”).
We provide specialty finance services, including financing for the payment
of commercial insurance premiums and life insurance premiums (“premium
finance receivables”) on a national basis through our wholly owned subsidiary,
First Insurance Funding Corporation (“FIFC”) and in Canada through
our premium finance company, First Insurance Funding of Canada (“FIFC
Canada”), and short-term accounts receivable financing and outsourced
administrative services through our wholly owned subsidiary, Tricom, Inc. of
Milwaukee (“Tricom”).
Community Banking
Through our banks, we provide community-oriented, personal and commercial banking
services to customers located in our market area. Our customers include individuals,
small to mid-sized businesses, local governmental units and institutional clients
residing primarily in the banks local service areas. The banks have a strategy
to provide comprehensive community-focused banking services. In keeping with
this strategy, the banks provide highly personalized and responsive service,
a characteristic of locally-owned and managed institutions. As such, the banks
compete for deposits principally by offering depositors a variety of deposit
programs, convenient office locations, hours and other services, and for loan
originations primarily through the interest rates and loan fees they charge,
the efficiency and quality of services they provide to borrowers and the variety
of their loan and cash management products. Using our decentralized corporate
structure to our advantage, we offer our MaxSafe® deposit accounts, which
provide customers with expanded Federal Deposit Insurance Corporation (“FDIC”)
insurance coverage by spreading a customers deposit across our fifteen banks.
This product differentiates our banks from many of our competitors that have
consolidated their bank charters into branches. We also have a downtown Chicago
office that works with each of our banks to capture commercial and industrial
business. Our commercial and industrial lenders in our downtown office operate
in close partnership with lenders at our community banks. By combining our expertise
in the commercial and industrial sector with our high level of personal service
and full suite of banking products, we believe we create another point of differentiation
from both our larger and smaller competitors. Our banks also offer home equity,
consumer, and real estate loans, safe deposit facilities, ATMs, internet banking
and other innovative and traditional services specially tailored to meet the
needs of customers in their market areas.
We developed our banking franchise through a combination of de novo organization
and the purchase of existing bank franchises. The organizational efforts began
in 1991, when a group of experienced bankers and local business people identified
an unfilled niche in the Chicago metropolitan area retail banking market. As
large banks acquired smaller ones and personal service was subjected to consolidation
strategies, the opportunity increased for locally owned and operated, highly
personal service-oriented banks.
We now own fifteen banks, including nine Illinois-chartered banks: Lake Forest
Bank, Hinsdale Bank and Trust Company (“Hinsdale Bank”), Wintrust
Bank, Libertyville Bank and Trust Company (“Libertyville Bank”),
Northbrook Bank & Trust Company (“Northbrook Bank”), Village
Bank & Trust (“Village Bank”), Wheaton Bank & Trust Company
(“Wheaton Bank”), State Bank of the Lakes and St. Charles Bank &
Trust Company (“St. Charles Bank”). In addition, we have one Wisconsin-chartered
bank, Town Bank, and five nationally chartered banks: Barrington Bank, Crystal
Lake Bank & Trust Company, N.A. (“Crystal Lake Bank”), Schaumburg
Bank & Trust Company, N.A. (“Schaumburg Bank”), Beverly Bank
& Trust Company, N.A. (“Beverly Bank”) and Old Plank Trail Community
Bank, N.A. (“Old Plank Trail Bank”).
Each bank is subject to regulation, supervision and regular examination by:
(1) the Secretary of the Illinois Department of Financial and Professional Regulation
(“Illinois Secretary”) and the Board of Governors of the Federal
Reserve System (“Federal Reserve”) for Illinois-chartered banks;
(2) the Office of the Comptroller of the Currency (“OCC”) for nationally-chartered
banks; or (3) the Wisconsin Department of Financial Institutions (“Wisconsin
Department”) and the Federal Reserve for Town Bank.
We also engage in the retail origination and correspondent purchase of residential
mortgages through Wintrust Mortgage. Most originated and purchased loans sold
into the secondary market are sold with servicing released. Certain originated
loans are sold to the Companys banks with servicing remaining within Wintrust
Mortgage operations. Wintrust Mortgage maintains retail mortgage offices in
a number of states, with the largest concentration located in the Chicago, Minneapolis
and Los Angeles metropolitan areas.
We also offer several niche lending products through several of the banks.
These include Barrington Banks Community Advantage program, which provides
lending, deposit and cash management services to condominium, homeowner and
community associations; Hinsdale Banks mortgage warehouse lending program,
which provides loan and deposit services to mortgage brokerage companies located
predominantly in the Chicago metropolitan area; and Lake Forest Banks franchise
lending program, which provides lending to restaurant franchisees. Other niches
offered throughout our banking franchise include Wintrust Commercial Finance,
which offers direct leasing opportunities; Wintrust Business Credit, which specializes
in asset-based lending for middle-market companies; Wintrust SBA Lending, which
is dedicated to offering expertise in Small Business Administration loans; Wintrust
Commercial Real Estate, which concentrates on real estate lending solutions
including commercial mortgages and construction loans; and Wintrust Government,
Non-Profit & Hospital, which focuses on financial solutions for mission-based
organizations such as hospitals, non-profits, educational institutions and local
government operations.
Specialty Finance
We conduct our specialty finance businesses through non-bank subsidiaries. Our
wholly owned subsidiary, FIFC, engages in the premium finance receivables business,
our most significant specialized lending niche, including commercial insurance
premium finance and life insurance premium finance. We also engage in commercial
insurance premium finance in Canada through our wholly owned subsidiary FIFC
Canada.
In their commercial insurance premium finance operations, FIFC and FIFC Canada
make loans to businesses to finance the insurance premiums they pay on their
commercial insurance policies. Approved medium and large insurance agents and
brokers located throughout the United States and Canada assist FIFC and FIFC
Canada, respectively, in arranging each commercial premium finance loan between
the borrower and FIFC or FIFC Canada, as the case may be. FIFC or FIFC Canada
evaluates each loan request according to its own underwriting criteria including
the amount of the down payment on the insurance policy, the term of the loan,
the credit quality of the insurance company providing the financed insurance
policy, the interest rate, the borrowers previous payment history, if any,
and other factors deemed appropriate. Upon approval of the loan by FIFC or FIFC
Canada, as the case may be, the borrower makes a down payment on the financed
insurance policy, which is generally done by providing payment to the agent
or broker, who then forwards it to the insurance company. FIFC or FIFC Canada
may either forward the financed amount of the remaining policy premiums directly
to the insurance carrier or to the agent or broker for remittance to the insurance
carrier on FIFCs or FIFC Canadas behalf. In some cases the agent or broker
may hold our collateral, in the form of the proceeds of the unearned insurance
premium from the insurance company, and forward it to FIFC or FIFC Canada in
the event of a default by the borrower. This lending involves relatively rapid
turnover of the loan portfolio and high volume of loan originations. Because
the agent or broker is the primary contact to the ultimate borrowers who are
located nationwide and because proceeds and our collateral may be handled by
the agent or brokers during the term of the loan, FIFC and FIFC Canada may be
more susceptible to third party (i.e., agent or broker) fraud. The Company performs
various controls and procedures including ongoing credit and other reviews of
the agents and brokers as well as performs various internal audit steps to mitigate
against the risk of any fraud.
The commercial and property premium finance business is subject to regulation
in the majority of states. Regulation typically governs notices to borrowers
prior to cancellation of a policy, notices to insurance companies, maximum interest
rates and late fees and approval of loan documentation. FIFC is licensed or
otherwise qualified to provide financing of commercial insurance policies in
all 50 states, the District of Columbia and Puerto Rico, and FIFC’s compliance
department regularly monitors changes to regulations and updates policies and
programs accordingly.
FIFC also finances life insurance policy premiums generally used for estate
planning purposes of high net-worth borrowers. These loans are originated directly
with the borrowers with assistance from life insurance carriers, independent
insurance agents, financial advisors and legal counsel. The cash surrender value
of 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, FIFC may make a loan that has a partially
unsecured position.
The life insurance premium finance business is governed under banking regulations
but is not subject to additional systemic regulation. FIFCs compliance department
regularly monitors the regulatory environment and the companys compliance with
existing regulations. FIFC maintains a policy prohibiting the knowing financing
of stranger-originated life insurance and has established procedures to identify
and prevent the company from financing such policies. While a carrier could
potentially put at risk the cash surrender value of a policy, which serves as
FIFCs primary collateral, by challenging the validity of the insurance contract
for lack of an insurable interest, FIFC believes it has strong counterclaims
against any such claims by carriers, in addition to recourse to borrowers and
guarantors as well as to additional collateral in certain cases.
Premium finance loans made by FIFC and FIFC Canada are primarily secured by
the insurance policies financed by the loans. These insurance policies are written
by a large number of insurance companies geographically dispersed throughout
the United States and Canada. Our premium finance receivables balances finance
insurance policies that are spread among a large number of insurers, however
one of the insurers represents approximately 14% of such balances and two additional
insurers each represent approximately 5% of such balances. FIFC and FIFC Canada
consistently monitor carrier ratings and financial performance of our carriers.
In the event ratings fall below certain levels, most of FIFCs life insurance
premium finance policies provide for an event of default and allow FIFC to have
recourse to borrowers and guarantors as well as to additional collateral in
certain cases. For the commercial premium finance business, the term of the
loans is sufficiently short such that in the event of a decline in carrier ratings,
FIFC or FIFC Canada, as the case may be, can restrict or eliminate additional
loans to finance premiums to such carriers. The majority of premium finance
receivables 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.
Through our wholly owned subsidiary Tricom, we provide high-yielding, short-term
accounts receivable financing and value-added, outsourced administrative services,
such as data processing of payrolls, billing and cash management services to
the temporary staffing industry. Tricom’s clients, located throughout
the United States, provide staffing services to businesses in diversified industries.
During 2015, Tricom processed payrolls with associated client billings of approximately
$660 million and contributed approximately $10.6 million to our revenue, net
of interest expense. Net revenue is based on our reportable segments and does
not reflect intersegment eliminations.
Wealth Management Activities
We offer a full range of wealth management services through three separate subsidiaries,
trust and investment services, asset management and securities brokerage services.
These subsidiaries are subject to regulation by the Securities and Exchange
Commission (the "SEC") and the Financial Industry Regulatory Authority
("FINRA").
Great Lakes Advisors, our registered investment adviser with locations in downtown
Chicago and Safety Harbor, Florida as well as in various banking offices of
our fifteen banks, provides money management services and advisory services
to individuals, institutions, and municipal and tax-exempt organizations.
CTC, our trust subsidiary, offers trust and investment management services to
clients through offices located in downtown Chicago and at various banking offices
of our fifteen banks. CTC is subject to regulation, supervision and regular
examination by the OCC.
WHI, our registered broker/dealer subsidiary which has been operating since
1931, provides a full range of private client and securities brokerage services
to clients located primarily in the Midwest. WHI is headquartered in downtown
Chicago, operates an office in Appleton, Wisconsin, and has established branch
locations in offices at a majority of our banks. WHI also provides a full range
of investment services to clients through a network of relationships with community-based
financial institutions primarily located in Illinois.