Regulatory Matters

Banking laws place restrictions upon the amount of dividends which can be paid to Wintrust by the banks. Based on these laws, the banks could, subject to minimum capital requirements, declare dividends to Wintrust without obtaining regulatory approval in an amount not exceeding (a) undivided profits, and (b) the amount of net income reduced by dividends paid for the current and prior two years. During 2014, 2013 and 2012, cash dividends totaling $77.0 million, $112.8 million and $45.0 million, respectively, were paid to Wintrust by the banks. As of January 1, 2015, the banks had approximately $47.5 million available to be paid as dividends to Wintrust without prior regulatory approval and without reducing their capital below the well-capitalized level.

The banks are also required by the Federal Reserve Act to maintain reserves against deposits. Reserves are held either in the form of vault cash or balances maintained with the Federal Reserve Bank and are based on the average daily deposit balances and statutory reserve ratios prescribed by the type of deposit account. At December 31, 2014 and 2013, reserve balances of approximately $291.0 million and $213.2 million, respectively, were required to be maintained at the Federal Reserve Bank.

The Company and the banks are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory — and possibly additional discretionary—actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the banks must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s and the banks’ capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the banks to maintain minimum amounts and ratios of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and Tier 1 leverage capital (as defined) to average quarterly assets (as defined).

The Federal Reserve’s capital guidelines require bank holding companies to maintain a minimum ratio of qualifying total capital to risk-weighted assets of 8.0%, of which at least 4.0% must be in the form of Tier 1 Capital. The Federal Reserve also requires a minimum tangible Tier 1 leverage ratio (Tier 1 Capital to total assets) of 3.0% for strong bank holding companies (those rated a composite “1” under the Federal Reserve’s rating system). For all other banking holding companies, the minimum tangible Tier 1 leverage ratio is 4.0%. In addition, the Federal Reserve continues to consider the tangible Tier 1 leverage ratio in evaluating proposals for expansion or new activities. As reflected in the following table, the Company met all minimum capital requirements at December 31, 2014 and 2013:



	2014		2013
Total Capital to Risk Weighted Assets	13.0	%	12.9	%
Tier 1 Capital to Risk Weighted Assets	11.6	%	12.2	%
Tier 1 Leverage Ratio	10.2	%	10.5	%

Wintrust is designated as a financial holding company. Bank holding companies approved as financial holding companies may engage in an expanded range of activities, including the businesses conducted by its wealth management subsidiaries. As a financial holding company, Wintrust’s banks are required to maintain their capital positions at the “well-capitalized” level. As of December 31, 2014, the banks were categorized as well capitalized under the regulatory framework for prompt corrective action. The ratios required for the banks to be “well capitalized” by regulatory definition are 10.0%, 6.0%, and 5.0% for Total Capital to Risk-Weighted Assets, Tier 1 Capital to Risk-Weighted Assets and Tier 1 Leverage Ratio, respectively.

Effective January 1, 2015, the Company will be subject to new capital requirements due to the Basel III regulation, including:


•	A new minimum ratio of Common Equity Tier 1 Capital to risk-weighted assets of 4.5%;


•	An increase in the minimum required amount of Additional Tier 1 Capital to 6% of risk-weighted assets;


•	A continuation of the current minimum required amount of Total Capital (Tier 1 plus Tier 2) at 8% of risk-weighted assets; and


•	A minimum leverage ratio of Tier 1 Capital to total assets equal to 4% in all circumstances.

In order to be “well-capitalized” under the new regime, a depository institution must maintain a Common Equity Tier 1 Capital ratio of 6.5% or more; an Additional Tier 1 Capital ratio of 8% or more; a Total Capital ratio of 10% or more; and a leverage ratio of 5% or more.

The banks’ actual capital amounts and ratios as of December 31, 2014 and 2013 are presented in the following table:



(Dollars in thousands)	December 31, 2014								December 31, 2013
	Actual				To Be Well Capitalized by Regulatory Definition				Actual				To Be Well Capitalized by Regulatory Definition
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Total Capital (to Risk Weighted Assets):
Lake Forest Bank	$	245,248	10.9	%	$	224,354	10.0	%	$	236,055	11.7	%	$	202,443	10.0	%
Hinsdale Bank	155,797		11.4		136,415		10.0		152,266		11.4		134,106		10.0
Wintrust Bank	312,223		11.2		279,295		10.0		232,454		11.6		200,806		10.0
Libertyville Bank	113,513		11.4		99,999		10.0		111,396		11.4		97,777		10.0
Barrington Bank	163,162		11.9		137,527		10.0		128,924		11.0		117,103		10.0
Crystal Lake Bank	87,138		12.9		67,482		10.0		85,922		13.0		66,066		10.0
Northbrook Bank	126,325		11.1		114,042		10.0		142,512		11.0		130,208		10.0
Schaumburg Bank	73,999		11.3		65,485		10.0		70,728		11.4		62,130		10.0
Village Bank	103,148		11.2		92,110		10.0		95,359		11.0		86,435		10.0
Beverly Bank	73,808		11.3		65,229		10.0		70,754		11.2		63,251		10.0
Town Bank	130,699		12.1		108,434		10.0		85,647		11.2		76,234		10.0
Wheaton Bank	77,366		11.6		66,920		10.0		77,177		13.0		59,354		10.0
State Bank of the Lakes	78,048		11.6		67,272		10.0		73,248		11.9		61,698		10.0
Old Plank Trail Bank	100,082		12.4		80,420		10.0		96,495		12.7		75,834		10.0
St. Charles Bank	71,123		11.1		63,912		10.0		71,170		11.4		62,669		10.0
Tier 1 Capital (to Risk Weighted Assets):
Lake Forest Bank	$	231,448	10.3	%	$	134,612	6.0	%	$	222,577	11.0	%	$	121,466	6.0	%
Hinsdale Bank	146,290		10.7		81,849		6.0		144,196		10.8		80,463		6.0
Wintrust Bank	222,845		8.0		167,577		6.0		162,903		8.1		120,484		6.0
Libertyville Bank	107,649		10.8		59,999		6.0		103,895		10.6		58,666		6.0
Barrington Bank	150,705		11.0		82,516		6.0		122,664		10.5		70,262		6.0
Crystal Lake Bank	83,788		12.4		40,489		6.0		79,878		12.1		39,640		6.0
Northbrook Bank	116,808		10.2		68,425		6.0		131,591		10.1		78,125		6.0
Schaumburg Bank	67,427		10.3		39,291		6.0		64,263		10.3		37,278		6.0
Village Bank	97,684		10.6		55,266		6.0		88,961		10.3		51,861		6.0
Beverly Bank	71,197		10.9		39,137		6.0		65,385		10.3		37,951		6.0
Town Bank	125,716		11.6		65,061		6.0		79,843		10.5		45,741		6.0
Wheaton Bank	70,632		10.6		40,152		6.0		69,730		11.8		35,613		6.0
State Bank of the Lakes	69,176		10.3		40,363		6.0		68,399		11.1		37,019		6.0
Old Plank Trail Bank	96,689		12.0		48,252		6.0		92,694		12.2		45,500		6.0
St. Charles Bank	67,588		10.6		38,347		6.0		64,922		10.4		37,601		6.0
Tier 1 Leverage Ratio:
Lake Forest Bank	$	231,448	9.0	%	$	128,590	5.0	%	$	222,577	9.6	%	$	116,340	5.0	%
Hinsdale Bank	146,290		9.7		75,509		5.0		144,196		9.5		75,822		5.0
Wintrust Bank	222,845		7.4		149,925		5.0		162,903		7.2		113,580		5.0
Libertyville Bank	107,649		9.3		58,032		5.0		103,895		9.2		56,703		5.0
Barrington Bank	150,705		9.4		80,086		5.0		122,664		8.9		69,270		5.0
Crystal Lake Bank	83,788		10.3		40,502		5.0		79,878		10.2		39,108		5.0
Northbrook Bank	116,808		8.9		65,626		5.0		131,591		8.1		80,876		5.0
Schaumburg Bank	67,427		8.9		37,930		5.0		64,263		9.0		35,571		5.0
Village Bank	97,684		9.4		51,753		5.0		88,961		9.4		47,549		5.0
Beverly Bank	71,197		9.3		38,304		5.0		65,385		8.8		37,281		5.0
Town Bank	125,716		10.1		62,283		5.0		79,843		9.5		42,164		5.0
Wheaton Bank	70,632		8.8		40,152		5.0		69,730		9.3		37,498		5.0
State Bank of the Lakes	69,176		8.4		41,382		5.0		68,399		9.8		34,784		5.0
Old Plank Trail Bank	96,689		8.4		57,717		5.0		92,694		8.7		53,603		5.0
St. Charles Bank	67,588		9.8		34,504		5.0		64,922		9.6		33,975		5.0

Wintrust’s mortgage banking division and broker/dealer subsidiary are also required to maintain minimum net worth capital requirements with various governmental agencies. The mortgage banking division’s net worth requirements are governed by the Department of Housing and Urban Development and the broker/dealer’s net worth requirements are governed by the SEC. As of December 31, 2014, these business units met their minimum net worth capital requirements.