KBRA Affirms Ratings for Wintrust Financial Corporation

KBRA affirms the senior unsecured debt rating of A-, the subordinated debt rating of BBB+, the preferred stock rating of BBB, and the short-term debt rating of K2 of Illinois-based Wintrust Financial Corporation (NASDAQ: WTFC) (“the company”). KBRA also affirms the deposit and senior unsecured debt ratings of A and short-term deposit and debt ratings of K1 of all 16 of WTFC's bank subsidiaries: Lake Forest Bank & Trust Company, N.A., Barrington Bank & Trust Company, N.A., Wintrust Bank, N.A., Libertyville Bank & Trust Company, N.A., Northbrook Bank & Trust Company, N.A., Village Bank & Trust, N.A., Wheaton Bank & Trust Company, N.A., State Bank of the Lakes, N.A., Crystal Lake Bank & Trust Company, N.A., Schaumburg Bank & Trust Company, N.A., Beverly Bank & Trust Company, N.A., Old Plank Trail Community Bank, N.A., Hinsdale Bank & Trust Company, N.A., St. Charles Bank & Trust Company, N.A., Town Bank, N.A., and Macatawa Bank, N.A. The Outlook for all long-term ratings is Stable.

Key Credit Considerations

WTFC’s ratings reflect its consistent earnings performance driven by a conservative risk appetite and strategic execution. Ratings are also supported by the company’s relative scale and asset diversification built through a combination of organic growth and select acquisitions. WTFC has produced consistently favorable operating results over a long period (remaining profitable during the GFC) driven by a high-quality, long-tenured management team that has exhibited a conservative risk stance which has allowed it to be opportunistic during times of market dislocation. While earnings are not necessarily peer-leading, we note that performance has been generally less volatile than peers. Over more recent periods, the company has generated ROAs >1.0% and has positioned its balance sheet to consistently generate a NIM in the 3.50% range which should result in continued similar performance.

As noted, the consistency of WTFC’s operating performance can mostly be attributed to its sound credit performance, supported by conservative underwriting in its community banking book and its purposeful exposure to low loss generating insurance premium finance loans. By design, management has historically operated with a diversified, granular loan portfolio with one-third of loans made up of insurance premium finance loans which have generated very low historical losses over time. This is a key differentiator for WTFC relative to regional banking peers rated by KBRA. Over the last 25+ years, the company’s NCO ratio has averaged under 30 bps, outperforming most peers, especially ones that operated primarily in the Chicagoland/Midwestern area. In more recent periods, while NPLs in dollar terms have ticked up year-over-year, they remain quite low at under 0.35% of loans, relatively stable from recent periods and below similarly rated peers.

WTFC’s capital levels are reasonable in the context of its earnings power and risk profile. The company has managed its CET1 ratio up to ~10.4% at the end of 1Q26 which is towards the lower end of peers. We believe capital will likely remain lower than the range where similarly rated peers manage capital (10.5%-11.5% CET1) over time. That said, WTFC’s ratings reflect our view that the relatively lower CET1 levels are reasonable given: 1) WTFC’s lower loss content within its overall loan book, historically and 2) a good degree of balance sheet diversification driven by the aforementioned premium finance segments. These loans are risk-weighted 100%, which, in our view, somewhat inflates RWAs relative to their potential loss content. We also note that WTFC has less exposure to investor CRE than similarly rated peers which further supports our view that regulatory capital levels are reasonably managed.

The company is primarily core deposit funded, benefitting from community banking-like relationships in its core markets and its ability to offer 16x the FDIC limit through its MaxSafe product which allows customers to spread their deposit accounts across its 16 charters. At 1Q26, WTFC’s loan-to-deposit ratio was slightly above its target range of 85% to 90%, but we take comfort in management’s historically conservative stance in where to manage the metric.

Rating Sensitivities

At the current rating level, KBRA believes ratings are well-positioned. Continued growth in low-cost deposits / related fee income would be viewed favorably over the longer-term. Although not expected, an increase in risk tolerance, asset quality deterioration, or more aggressive financial management could have negative rating ramifications.

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