Regulatory Matters

Banking laws place restrictions upon the amount of dividends that 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 2017, 2016 and 2015, cash dividends totaling $122.0 million, $59.0 million and $22.2 million, respectively, were paid to Wintrust by the banks and other subsidiaries. As of January 1, 2018, the banks had approximately $317.7 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 FRB and are based on the average daily deposit balances and statutory reserve ratios prescribed by the type of deposit account. At December 31, 2017 and 2016, reserve balances of approximately $557.7 million and $507.0 million, respectively, were required to be maintained at the FRB.

The Company and the banks are subject to various regulatory capital requirements established by the federal banking agencies that take into account risk attributable to balance sheet and off-balance sheet activities. Failure to meet minimum capital requirements can initiate certain mandatory — and possibly 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.

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 4.50% must be in the form of Common Equity Tier 1 capital and 6.0% must be in the form of Tier 1 capital. The Federal Reserve also requires a minimum leverage ratio of Tier 1 capital to total assets of 4.0%. In addition the Federal Reserve continues to consider the 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, 2017 and 2016:



	2017		2016
Total capital to risk weighted assets	12.0	%	11.9	%
Tier 1 capital to risk weighted assets	9.9		9.7
Common Equity Tier 1 capital to risk weighted assets	9.4		8.6
Tier 1 leverage Ratio	9.3		8.9

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, 2017, 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%, 8.0%, 6.5% and 5.0% for total capital to risk-weighted assets, Tier 1 capital to risk-weighted assets, Common Equity Tier 1 capital to risk weighted assets and Tier 1 leverage ratio, respectively.

The banks’ actual capital amounts and ratios as of December 31, 2017 and 2016 are presented in the following table:



(Dollars in thousands)	December 31, 2017								December 31, 2016
	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	$	366,407	11.6	%	$	317,180	10.0	%	$	348,058	11.7	%	$	296,573	10.0	%
Hinsdale Bank	224,577		11.5		195,125		10.0		211,605		11.7		180,470		10.0
Wintrust Bank	512,581		11.2		456,230		10.0		441,330		11.2		393,081		10.0
Libertyville Bank	141,723		11.4		124,637		10.0		133,571		11.4		117,620		10.0
Barrington Bank	234,930		12.0		195,409		10.0		205,766		11.5		178,846		10.0
Crystal Lake Bank	95,532		11.3		84,664		10.0		93,905		11.8		79,829		10.0
Northbrook Bank	222,441		11.4		194,764		10.0		190,853		11.1		171,647		10.0
Schaumburg Bank	111,772		11.9		93,752		10.0		106,108		11.5		92,496		10.0
Village Bank	145,517		11.9		121,867		10.0		136,958		11.2		122,125		10.0
Beverly Bank	132,516		11.7		112,810		10.0		115,638		11.4		101,235		10.0
Town Bank	188,987		11.4		166,253		10.0		181,907		11.3		161,492		10.0
Wheaton Bank	151,141		11.4		132,211		10.0		130,255		11.3		114,887		10.0
State Bank of the Lakes	105,770		11.4		92,518		10.0		97,196		11.5		84,880		10.0
Old Plank Trail Bank	145,272		11.6		125,642		10.0		127,868		11.2		114,021		10.0
St. Charles Bank	105,778		11.4		92,582		10.0		109,345		12.0		91,188		10.0
Tier 1 Capital (to Risk Weighted Assets):
Lake Forest Bank	$	347,924	11.0	%	$	253,744	8.0	%	$	331,883	11.2	%	$	237,259	8.0	%
Hinsdale Bank	214,061		11.0		156,100		8.0		201,353		11.2		144,376		8.0
Wintrust Bank	439,061		9.6		364,984		8.0		375,907		9.6		314,464		8.0
Libertyville Bank	134,310		10.8		99,709		8.0		126,387		10.7		94,096		8.0
Barrington Bank	229,311		11.7		156,327		8.0		198,545		11.1		143,077		8.0
Crystal Lake Bank	91,273		10.8		67,731		8.0		89,700		11.2		63,863		8.0
Northbrook Bank	198,628		10.2		155,811		8.0		167,721		9.8		105,760		8.0
Schaumburg Bank	105,733		11.3		75,001		8.0		100,854		10.9		73,997		8.0
Village Bank	136,807		11.2		97,494		8.0		127,028		10.4		97,700		8.0
Beverly Bank	127,561		11.3		90,248		8.0		111,281		11.0		80,988		8.0
Town Bank	180,943		10.9		133,003		8.0		174,234		10.8		129,194		8.0
Wheaton Bank	135,009		10.2		105,769		8.0		112,664		9.8		91,910		8.0
State Bank of the Lakes	95,520		10.3		74,014		8.0		86,092		10.1		67,904		8.0
Old Plank Trail Bank	139,366		11.1		100,514		8.0		122,067		10.7		91,216		8.0
St. Charles Bank	102,251		11.0		74,066		8.0		104,843		11.5		72,950		8.0
Common Equity Tier 1 Capital (to Risk Weighted Assets):
Lake Forest Bank	$	347,924	11.0	%	$	206,167	6.5	%	$	331,883	11.2	%	$	192,773	6.5	%
Hinsdale Bank	214,061		11.0		126,831		6.5		201,353		11.2		117,305		6.5
Wintrust Bank	439,061		9.6		296,549		6.5		375,907		9.6		255,502		6.5
Libertyville Bank	134,310		10.8		81,014		6.5		126,387		10.7		76,453		6.5
Barrington Bank	229,311		11.7		127,016		6.5		198,545		11.1		116,250		6.5
Crystal Lake Bank	91,273		10.8		55,031		6.5		89,700		11.2		51,889		6.5
Northbrook Bank	198,628		10.2		126,597		6.5		167,721		9.8		85,930		6.5
Schaumburg Bank	105,733		11.3		60,939		6.5		100,854		10.9		60,123		6.5
Village Bank	136,807		11.2		79,214		6.5		127,028		10.4		79,381		6.5
Beverly Bank	127,561		11.3		73,327		6.5		111,281		11.0		65,802		6.5
Town Bank	180,943		10.9		108,065		6.5		174,234		10.8		104,970		6.5
Wheaton Bank	135,009		10.2		85,937		6.5		112,664		9.8		74,677		6.5
State Bank of the Lakes	95,520		10.3		60,137		6.5		86,092		10.1		55,172		6.5
Old Plank Trail Bank	139,366		11.1		81,667		6.5		122,067		10.7		74,113		6.5
St. Charles Bank	102,251		11.0		60,178		6.5		104,843		11.5		59,272		6.5




(Dollars in thousands)	December 31, 2017								December 31, 2016
	Actual				To Be Well Capitalized by Regulatory Definition				Actual				To Be Well Capitalized by Regulatory Definition
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Tier 1 Leverage Ratio:
Lake Forest Bank	$	347,924	10.3	%	$	168,865	5.0	%	$	331,883	9.6	%	$	172,160	5.0	%
Hinsdale Bank	214,061		10.2		105,086		5.0		201,353		10.1		100,006		5.0
Wintrust Bank	439,061		9.2		237,782		5.0		375,907		9.2		204,994		5.0
Libertyville Bank	134,310		9.8		68,404		5.0		126,387		9.7		65,318		5.0
Barrington Bank	229,311		11.8		97,007		5.0		198,545		10.0		99,722		5.0
Crystal Lake Bank	91,273		9.5		48,069		5.0		89,700		9.4		47,575		5.0
Northbrook Bank	198,628		9.5		104,377		5.0		167,721		8.9		94,466		5.0
Schaumburg Bank	105,733		10.1		52,171		5.0		100,854		10.0		50,643		5.0
Village Bank	136,807		9.7		70,182		5.0		127,028		9.1		69,511		5.0
Beverly Bank	127,561		10.8		59,140		5.0		111,281		10.1		55,002		5.0
Town Bank	180,943		10.1		89,617		5.0		174,234		9.5		91,558		5.0
Wheaton Bank	135,009		9.4		72,152		5.0		112,664		8.8		64,361		5.0
State Bank of the Lakes	95,520		9.2		51,681		5.0		86,092		8.7		49,446		5.0
Old Plank Trail Bank	139,366		9.9		70,735		5.0		122,067		9.3		65,293		5.0
St. Charles Bank	102,251		9.8		51,907		5.0		104,843		11.2		46,641		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, 2017, these business units met their minimum net worth capital requirements.