KBRA assigns a senior unsecured debt rating of A-, a subordinated debt rating of BBB+, a preferred stock rating of BBB, and a short-term debt rating of K2 to Rosemont, Illinois-based Wintrust Financial Corporation (NASDAQ:WTFC) ("the company"). KBRA also assigns deposit and senior unsecured debt ratings of A and short-term deposit and debt ratings of K1 to 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 firm's relative scale and asset diversification built through a combination of organic growth. 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.
As noted, the consistency of WTFC's operating performance can mostly be attributed to its good 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 just 0.26%, outperforming most peers, especially ones that operated primarily in the Chicagoland/Midwestern area. In more recent periods, while NPLs both in dollar terms and as a proportion of the loan book have ticked up, they remain quite low at under 0.40% 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 firm has managed its CET1 ratio up to over 10% at 1Q25 which is towards the lower end of peers. However, we note that the firm's RWA density tends to be higher, driven by the aforementioned premium finance portfolio which is risk-weighted at 100% but has very low loss content. Thus, on a risk adjusted basis, we see the 10%+ CET1 ratio as supportive of the ratings.
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 1Q25, 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 assigned 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. An increase in risk tolerance, unexpected asset quality deterioration, or more aggressive financial management could have negative rating ramifications.
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Methodologies
- Financial Institutions: Bank & Bank Holding Company Global Rating Methodology
- ESG Global Rating Methodology
Disclosures
A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.
Information on the meaning of each rating category can be located here.
Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.
About KBRA
Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan's Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.
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Analytical Contacts
Bain Rumohr, Managing Director (Lead Analyst)
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Marshall Birkey, Senior Director
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Ashley Phillips, Managing Director (Rating Committee Chair)
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Business Development Contact
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