Junior Subordinated Debentures

12 Months Ended

Dec. 31, 2022

Junior Subordinated Debenture Owed to Unconsolidated Subsidiary Trust [Abstract]

Junior Subordinated DebenturesAs of December 31, 2022, the Company owned 100% of the common securities of eleven trusts, Wintrust Capital Trust III, Wintrust Statutory Trust IV, Wintrust Statutory Trust V, Wintrust Capital Trust VII, Wintrust Capital Trust VIII, Wintrust Capital Trust IX, Northview Capital Trust I, Town Bankshares Capital Trust I, First Northwest Capital Trust I, Suburban Illinois Capital Trust II, and Community Financial Shares Statutory Trust II (the “Trusts”) set up to provide long-term financing. The Northview, Town, First Northwest, Suburban and Community Financial Shares capital trusts were acquired as

part of the acquisitions of Northview Financial Corporation, Town Bankshares, Ltd., First Northwest Bancorp, Inc., Suburban Illinois Bancorp, Inc. and Community Financial Shares, Inc., respectively. The Trusts were formed for purposes of issuing trust preferred securities to third-party investors and investing the proceeds from the issuance of the trust preferred securities and common securities solely in junior subordinated debentures issued by the Company (or assumed by the Company in connection with an acquisition), with the same maturities and interest rates as the trust preferred securities. The junior subordinated debentures are the sole assets of the Trusts. In each Trust, the common securities represent approximately 3% of the junior subordinated debentures and the trust preferred securities represent approximately 97% of the junior subordinated debentures.

The Trusts are reported in the Company’s consolidated financial statements as unconsolidated subsidiaries. Accordingly, in the Consolidated Statements of Condition, the junior subordinated debentures issued by the Company to the Trusts are reported as liabilities and the common securities of the Trusts, all of which are owned by the Company, are included in investment securities.

The following table provides a summary of the Company’s junior subordinated debentures as of December 31, 2022 and 2021. The junior subordinated debentures represent the par value of the obligations owed to the Trusts.


	Common Securities		Trust Preferred Securities		Junior Subordinated Debentures				Rate Structure	Contractual rate at 12/31/2022			Maturity Date	Earliest Redemption Date
(Dollars in thousands)					2022		2021					Issue Date
Wintrust Capital Trust III	$	774	$	25,000	$	25,774	$	25,774	L+3.25	7.33	%	04/2003	04/2033	04/2008
Wintrust Statutory Trust IV	619		20,000		20,619		20,619		L+2.80	7.55		12/2003	12/2033	12/2008
Wintrust Statutory Trust V	1,238		40,000		41,238		41,238		L+2.60	7.35		05/2004	05/2034	06/2009
Wintrust Capital Trust VII	1,550		50,000		51,550		51,550		L+1.95	6.72		12/2004	03/2035	03/2010
Wintrust Capital Trust VIII	1,238		25,000		26,238		26,238		L+1.45	6.20		08/2005	09/2035	09/2010
Wintrust Capital Trust IX	1,547		50,000		51,547		51,547		L+1.63	6.40		09/2006	09/2036	09/2011
Northview Capital Trust I	186		6,000		6,186		6,186		L+3.00	7.44		08/2003	11/2033	08/2008
Town Bankshares Capital Trust I	186		6,000		6,186		6,186		L+3.00	7.44		08/2003	11/2033	08/2008
First Northwest Capital Trust I	155		5,000		5,155		5,155		L+3.00	7.75		05/2004	05/2034	05/2009
Suburban Illinois Capital Trust II	464		15,000		15,464		15,464		L+1.75	6.52		12/2006	12/2036	12/2011
Community Financial Shares Statutory Trust II	109		3,500		3,609		3,609		L+1.62	6.39		06/2007	09/2037	06/2012
Total					$	253,566	$	253,566		6.87	%

The interest rates on the variable rate junior subordinated debentures are based on the three-month LIBOR rate and reset on a quarterly basis. At December 31, 2022, the weighted average contractual interest rate on the junior subordinated debentures was 6.87%. Prior to 2021, the Company entered into interest rate swaps with an aggregate notional value of $210.0 million to hedge the variable cash flows on certain junior subordinated debentures. Such interest rate swaps matured in 2021 and no separate hedging derivatives were outstanding at December 31, 2022 related to the variable cash flows on any balance of the junior subordinated debentures. Distributions on the common and preferred securities issued by the Trusts are payable quarterly at a rate per annum equal to the interest rates being earned by the Trusts on the junior subordinated debentures. Interest expense on the junior subordinated debentures is deductible for income tax purposes.

Under the Adjustable Interest Rate (LIBOR) Act (“AIRLA”) and Part 253 of Regulation ZZ (Rule 253), after June 30, 2023, the interest rate on the junior subordinated debentures will, by operation of law, change their base rate from USD LIBOR to CME Term SOFR of the same tenor, plus an applicable tenor spread adjustment. CME Term SOFR is an indicative, forward-looking measurement of daily overnight SOFR. CME Term SOFR is published by CME Group Inc., as administrator of that rate. The calculation agent for any series of the junior subordinated debentures may also make additional administrative conforming changes to the terms of that series of the junior subordinated debentures under AIRLA and Rule 253.

The Company has guaranteed the payment of distributions and payments upon liquidation or redemption of the trust preferred securities, in each case to the extent of funds held by the Trusts. The Company and the Trusts believe that, taken together, the obligations of the Company under the guarantees, the junior subordinated debentures, and other related agreements provide, in the aggregate, a full, irrevocable and unconditional guarantee, on a subordinated basis, of all of the obligations of the Trusts under the trust preferred securities. Subject to certain limitations, the Company has the right to defer the payment of interest on the junior subordinated debentures at any time, or from time to time, for a period not to exceed 20 consecutive quarters. The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the junior subordinated debentures at maturity or their earlier redemption. The junior subordinated debentures are redeemable in whole or in part prior to maturity at any time after the earliest redemption dates shown in the table, and earlier at the discretion of the Company if

certain conditions are met, and, in any event, only after the Company has obtained Federal Reserve Bank (“FRB”) approval, if then required under applicable guidelines or regulations.

At December 31, 2022, the Company included $245.5 million of the junior subordinated debentures, net of common securities, in Tier 2 regulatory capital.