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What changed in Merchants Bancorp's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Merchants Bancorp's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+452 added−425 removedSource: 10-K (2026-02-27) vs 10-K (2025-02-28)

Top changes in Merchants Bancorp's 2025 10-K

452 paragraphs added · 425 removed · 344 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

71 edited+12 added−14 removed90 unchanged
Biggest changeThere are multiple investor outlets, including direct sale capability to Fannie Mae, Freddie Mac, FHLBI, and other third-party investors to allow Merchants Mortgage a best execution at sale. Merchants Mortgage also originates loans held for investment and earns interest income over the life of the loan.
Biggest changeLoans held for sale generate revenues from fees charged to borrowers, interest income during the warehouse period, gain on sale of loans to investors, and servicing fee income. There are multiple investor outlets, including direct sale capability to Fannie Mae, Freddie Mac, FHLB, and other third-party investors to allow Merchants Mortgage a best execution at sale.
Consistently one of the top ranked agency lenders in the nation, our licenses with FHA and affordable Fannie Mae and Freddie Mac, coupled with our bank financing products, and tax credit syndication platform, provide sponsors custom beginning-to-end financing solutions that adapt to an ever-changing market. We are also an approved USDA Rural Housing 538 lender.
Consistently one of the top ranked agency affordable lenders in the nation, our licenses with FHA, Fannie Mae, and Freddie Mac, coupled with our bank financing products, and tax credit syndication platform, provide sponsors custom beginning-to-end financing solutions that adapt to an ever-changing market. We are also an approved USDA Rural Housing 538 lender.
Merchants Bank offers operating lines of credit for crop and livestock production, intermediate term financing to purchase agricultural equipment and breeding livestock and long-term financing to purchase agricultural real estate. Merchants Bank is approved to sell agricultural loans in the secondary market through the Farmer Mac and uses this relationship to manage interest rate risk within the agricultural loan portfolio.
Merchants Bank offers operating lines of credit for crop and livestock production, intermediate term financing to purchase agricultural equipment and breeding livestock and long-term financing to purchase agricultural real estate. Merchants Bank is approved to sell agricultural loans in the secondary market through Farmer Mac and uses this relationship to manage interest rate risk within the agricultural loan portfolio.
Competition We compete in several areas, including commercial and retail banking, SBA, residential mortgages, warehouse lending, and multi-family FHA, Fannie Mae, and Freddie Mac affordable loan originations in the multi-family and healthcare sectors. These industries are highly competitive, and the Company faces strong direct competition for deposits, loans, and loan originations and other financial-related services.
Competition We compete in several areas, including commercial and retail banking, SBA, residential mortgages, warehouse lending, and multi-family FHA, Fannie Mae, and Freddie Mac affordable loan originations in the multi-family and healthcare sectors. These industries are highly competitive, and the Company faces strong direct competition for deposits, loans, loan originations, and other financial-related services.
We make a discretionary contribution equal to 3% of an employee’s eligible compensation under our 401(k) plan each 9 Table of Contents pay period regardless of whether such employee also contributed.
We make a discretionary contribution equal to 3% of an employee’s 9 Table of Contents eligible compensation under our 401(k) plan each pay period regardless of whether such employee also contributed.
Furthermore, tax laws administered by the Internal Revenue Service and state taxing authorities, accounting rules developed by the FASB, anti-money laundering laws enforced by the Treasury and mortgage related rules, including with respect to loan 10 Table of Contents securitization and servicing by HUD and agencies such as Ginnie Mae, Fannie Mae, and Freddie Mac, have an impact on our business.
Furthermore, tax laws administered by the Internal Revenue Service and state taxing authorities, accounting rules developed by the FASB, 10 Table of Contents anti-money laundering laws enforced by the Treasury and mortgage related rules, including with respect to loan securitization and servicing by HUD and agencies such as Ginnie Mae, Fannie Mae, and Freddie Mac, have an impact on our business.
A number of important factors could cause our actual results to differ materially from those indicated in these forward-looking statements, including the following: • business and economic conditions, particularly those affecting the financial services industry and our primary market areas; • our ability to successfully manage our credit risk and the sufficiency of our allowance for credit losses on loans; • factors that can impact the performance of our loan portfolio, including real estate values and liquidity in our primary market areas, the financial health of our commercial borrowers and the success of construction projects that we finance, including any loans acquired in acquisition transactions; • liquidity issues, including fluctuations in the fair value and liquidity of the securities we hold for sale and our ability to raise additional capital, if necessary; • compliance with governmental and regulatory requirements, relating to banking, consumer protection, securities and tax matters; • our ability to maintain licenses required in connection with residential and multi-family mortgage origination, sale and servicing operations; • our ability to identify and address cybersecurity risks, fraud and systems errors; • our ability to effectively execute our strategic plan and manage our growth; 19 Table of Contents • changes in our senior management team and our ability to attract, motivate and retain qualified personnel; • governmental monetary and fiscal policies, and changes in market interest rates; • effects of competition from a wide variety of local, regional, national and other providers of financial, investment and insurance services; • the impact of any claims or legal actions to which we may be subject, including any effect on our reputation; and • changes in federal tax law or policy.
A number of important factors could cause our actual results to differ materially from those indicated in these forward-looking statements, including the following: • business and economic conditions, particularly those affecting the financial services industry and our primary market areas; • our ability to successfully manage our credit risk and the sufficiency of our allowance for credit losses on loans; • factors that can impact the performance of our loan portfolio, including real estate values and liquidity in our primary market areas, the financial health of our commercial borrowers and the success of construction projects that we finance, including any loans acquired in acquisition transactions; • liquidity issues, including fluctuations in the fair value and liquidity of the securities we hold for sale and our ability to raise additional capital, if necessary; • compliance with governmental and regulatory requirements, relating to banking, consumer protection, securities and tax matters; • our ability to maintain licenses required in connection with residential and multi-family mortgage origination, sale and servicing operations; • our ability to identify and address cybersecurity risks, fraud and systems errors; • our ability to effectively execute our strategic plan and manage our growth; • changes in our senior management team and our ability to attract, motivate and retain qualified personnel; • governmental monetary and fiscal policies, and changes in market interest rates; • effects of competition from a wide variety of local, regional, national and other providers of financial, investment and insurance services; • the impact of any claims or legal actions to which we may be subject, including any effect on our reputation; and • changes in federal tax law or policy.
In particular, and among other things, the Dodd-Frank Act: (i) created a Financial Stability Oversight Council as part of a regulatory structure for identifying emerging systemic risks and improving interagency cooperation; (ii) created the CFPB, which is authorized to regulate providers of consumer credit, savings, payment and other consumer financial products and services; (iii) narrowed the scope of federal preemption of state consumer laws enjoyed by national banks and federal savings associations and expanded the authority of state attorneys general to bring actions to enforce federal consumer protection legislation; (iv) imposed more stringent capital requirements on bank holding companies and subjected certain activities, including interstate mergers and acquisitions, to heightened capital conditions; (v) with respect to mortgage lending, (a) significantly expanded requirements applicable to loans secured by 1-4 family residential real property, (b) imposed strict rules on mortgage servicing, and (c) required the originator of a securitized loan, or the sponsor of a securitization, to retain at least 5% of the credit risk of securitized exposures unless the underlying exposures are qualified residential mortgages or meet certain underwriting standards; (vi) repealed the prohibition on the payment of interest on business checking accounts; (vii) restricted the interchange fees payable on debit card transactions for issuers with $10 billion in assets or greater; (viii) in the so-called “Volcker Rule,” subject to numerous exceptions, prohibited depository institutions and affiliates from certain investments in, and sponsorship of, hedge funds and private equity funds and from engaging in proprietary trading; (ix) provided for enhanced regulation of advisers to private funds and of the derivatives markets; (x) enhanced oversight of credit rating agencies; and (xi) prohibited banking agency requirements tied to credit ratings.
In particular, and among other things, the Dodd-Frank Act: (i) created a Financial Stability Oversight Council as part of a regulatory structure for identifying emerging systemic risks and improving interagency cooperation; (ii) created the CFPB, which is authorized to regulate providers of consumer credit, savings, payment and other consumer financial products and services; (iii) narrowed the scope of federal preemption of state consumer laws enjoyed by national banks and federal savings associations and expanded the authority of state attorneys general to bring actions to enforce federal consumer protection legislation; (iv) imposed more stringent capital requirements on bank holding companies and subjected certain activities, including interstate mergers and acquisitions, to heightened capital conditions; (v) with respect to mortgage lending, (a) significantly expanded requirements applicable to loans secured by one-to-four family residential real property, (b) imposed strict rules on mortgage servicing, and (c) required the originator of a securitized loan, or the sponsor of a securitization, to retain at least 5% of the credit risk of securitized exposures unless the underlying exposures are qualified residential mortgages or meet certain underwriting standards; (vi) repealed the prohibition on the payment of interest on business checking accounts; (vii) restricted the interchange fees payable on debit card transactions for issuers with $10 billion in assets or greater; (viii) in the so-called “Volcker Rule,” subject to numerous exceptions, prohibited depository institutions and affiliates from certain investments in, and sponsorship of, hedge funds and private equity funds and from engaging in proprietary trading; (ix) provided for enhanced regulation of advisers to private funds and of the derivatives markets; (x) enhanced oversight of credit rating agencies; and (xi) prohibited banking agency requirements tied to credit ratings.
Our principal source of funds consists of dividends from Merchants Bank. State and federal law restrict the amount of dividends that banks may pay to its shareholders or BHC. The specific limits depend on a number of factors, including the bank’s type of charter, recent earnings, recent dividends, level of capital and liquidity, and regulatory status.
Our principal source of funds consists of dividends from Merchants Bank. State and federal law restrict the amount of dividends that a bank may pay to its shareholders or BHC. The specific limits depend on a number of factors, including the bank’s type of charter, recent earnings, recent dividends, level of capital and liquidity, and regulatory status.
This cost-effective, reliable funding source is a powerful tool in expanding the availability of affordable housing in rural markets that often have the greatest need. We also offer customized loan products for need-based skilled nursing facilities, including independent living, assisted living, and memory care.
This cost-effective, reliable funding source for borrowers is a powerful tool in expanding the availability of affordable housing in rural markets that often have the greatest need. We also offer customized loan products for need-based skilled nursing facilities, including independent living, assisted living, and memory care.
Our commitment to IO also led to the creation of an employee level committee focused on IO and our hiring of an individual who leads our IO efforts, including such committee. Some activities that have been launched include regular educational events for all employees and an open forum for IO topics of discussion.
Our commitment to IO also led to the creation of an employee level committee focused on IO and our hiring of an individual who leads our IO efforts, including chairing such committee. Some activities that have been launched include regular educational events for all employees and an open forum for IO topics of discussion.
The primary source of liquidity is provided by custodial and corporate deposits of its customers. Banking The Banking segment includes retail banking, commercial lending, agricultural lending, retail and correspondent residential mortgage banking, and SBA lending. Retail banking operates primarily in central Indiana and Richmond but has grown its national footprint through online banking.
The primary source of liquidity is provided by custodial and corporate deposits of its customers. Banking The Banking segment includes retail banking, commercial lending, agricultural lending, retail and correspondent residential mortgage banking, and SBA lending. Retail banking operates primarily in central Indiana and Richmond but has grown its national footprint through online and mobile banking.
Through our website at www.merchantsbancorp.com under “Investors,” we make available, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well as proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
Through our website at www.bankmerchants.com under “Investors,” we make available, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well as proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.
MCC has a commitment to environmental and social risk mitigation, disclosures around project selection and evaluation, management of proceeds, and reporting on allocation and impact metrics. The Company received a second-party opinion from Sustainalytics stating that our ESG focused Tax Credit Equity Fund framework is credible, impactful and will deliver overall positive social impacts.
MCC has a commitment to environmental and social risk mitigation, disclosures around project selection and evaluation, management of proceeds, and reporting on allocation and impact metrics. In 2022, the Company received a second-party opinion from Sustainalytics stating that our ESG focused Tax Credit Equity Fund framework is credible, impactful and will deliver overall positive social impacts.
The investors in MCC’s syndicated funds are institutional investors comprised of banks, insurance companies, and large publicly traded corporations. All funds are underwritten and serviced in-house. Additionally, through MAM, we serve as a registered investment advisor that deploys third party investor capital into high quality assets originated by MCC.
The investors in MCC’s syndicated funds are institutional investors comprised of banks, insurance companies, and large publicly traded corporations. All funds are underwritten and serviced in-house. Additionally, through MIP, we serve as a registered investment advisor that deploys third party investor capital into high quality assets originated by MCC.
Merchants Bank also maintains records of cash purchases of negotiable instruments, file reports of certain cash transactions exceeding $10,000 (daily aggregate amount), and report suspicious activity that might signify money laundering, tax evasion, or other criminal activities pursuant to the BSA. Merchants Bank otherwise has implemented policies and procedures to comply with the foregoing requirements.
Merchants Bank also maintains records of cash purchases of negotiable instruments, files reports of certain cash transactions exceeding $10,000 (daily aggregate amount), and reports suspicious activity that might signify money laundering, tax evasion, or other criminal activities pursuant to the BSA. Merchants Bank otherwise has implemented policies and procedures to comply with the foregoing requirements.
Standards over information security are Board-approved and various types of control testing is conducted throughout the year, by internal and external parties. Recommendations are implemented and reported to various committees. These security and privacy policies and 16 Table of Contents procedures, for the protection of personal and confidential information, are in effect across all businesses and geographic locations.
Standards over information security are Board-approved and various types of control testing is conducted throughout the year, by internal and external parties. Recommendations are implemented and reported to various committees. These security and privacy policies and procedures, for the protection of personal and confidential information, are in effect across all businesses and geographic locations.
Community Reinvestment Act The CRA requires that the federal banking regulators evaluate the record of a financial institution in meeting the credit needs of its local community, including low and moderate income neighborhoods. Regulators also consider these factors in evaluating mergers, acquisitions, and applications to open a branch or facility.
Community Reinvestment Act The CRA requires that the federal banking regulators evaluate the record of a financial institution in meeting the credit needs of its local community, including low and moderate income neighborhoods. Regulators also consider 15 Table of Contents these factors in evaluating mergers, acquisitions, and applications to open a branch or facility.
As of December 31, 2024, the most recent notifications from the Federal Reserve categorized the Company as well capitalized and most recent notifications from the FDIC categorized Merchants Bank as well capitalized under the regulatory framework for prompt corrective action.
As of December 31, 2025, the most recent notifications from the Federal Reserve categorized the Company as well capitalized and most recent notifications from the FDIC categorized Merchants Bank as well capitalized under the regulatory framework for prompt corrective action.
At December 31, 2024, Merchants Bank was well capitalized, and also well capitalized with the Basel III capital conservation buffer, as defined by applicable regulations.
At December 31, 2025, Merchants Bank was well capitalized, and also well capitalized with the Basel III capital conservation buffer, as defined by applicable regulations.
Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.
Any forward-looking statement speaks only as of the date on which it is 19 Table of Contents made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.
These statutory changes shifted the regulatory framework for financial institutions, impacted the way in which they do business and have the potential to constrain revenues. Although the reforms primarily targeted systemically important financial service providers, their influence is expected to filter down in varying degrees to smaller institutions over time.
These statutory changes shifted the regulatory framework for financial institutions, impacted the way in which they do business and have the potential to constrain revenues. Although the reforms primarily targeted systemically important financial service providers, their influence filtered down in varying degrees to smaller institutions over time.
We believe that the combination of net interest income based on short duration assets and liabilities and noninterest income from the sale of low risk profile assets results in lower than industry charge-offs and a lower expense base, which serves to maximize net income and higher than industry shareholder return.
We believe that the combination of net interest income based on short duration assets and liabilities and noninterest income from the sale of low risk profile assets has traditionally resulted in lower than industry charge-offs and a lower expense base, which serves to maximize net income and higher than industry shareholder return.
As one of the largest government-sponsored entity multi-family lenders in the country, a significant portion of our business has been centered on supporting the financing needs of affordable housing projects as well as need-based skilled nursing for seniors and related healthcare facilities.
As one of the largest GSE multi-family lenders in the country, a significant portion of our business has been centered on supporting the financing needs of affordable housing projects as well as need-based skilled nursing for seniors and related healthcare facilities.
We believe that the range and quality of products that we offer, the knowledge of our personnel and our emphasis on building long-lasting relationships, along with our diversified business model, sets us apart from our competitors. Human Capital As of December 31, 2024, we had approximately 663 employees located in multiple states, including 388 employees in Central Indiana.
We believe that the range and quality of products that we offer, the knowledge of our personnel, and our emphasis on building long-lasting relationships, along with our diversified business model, sets us apart from our competitors. Human Capital As of December 31, 2025, we had approximately 735 employees located in multiple states, including 424 employees in central Indiana.
See Item 7: “ Management’s Discussion and Analysis of Financial Condition and Results of Operations - Operating Segment Analysis for the years ended December 31, 2024 and 2023” and Note 23: Segment Information for further information about our segments.
See Item 7: “ Management’s Discussion and Analysis of Financial Condition and Results of Operations - Operating Segment Analysis for the years ended December 31, 2025 and 2024” and Note 23: Segment Information for further information about our segments.
The CFPB has broad rulemaking authority for a wide range of consumer protection laws that apply to all providers of consumer products and services, including Merchants Bank, as well as the authority to prohibit “unfair, deceptive or abusive” acts and practices.
Consumer Financial Services The CFPB is authorized to oversee and enforce consumer protection laws. The CFPB has broad rulemaking authority for a wide range of consumer protection laws that apply to all providers of consumer products and services, including Merchants Bank, as well as the authority to prohibit “unfair, deceptive or abusive” acts and practices.
The Company has been subject to continuous monitoring since it exceeded $10 billion in total assets. This supervisory and regulatory framework subjects banks and bank holding companies to regular examination by their respective regulatory agencies, which results in examination reports and ratings that, while not publicly available, can impact the conduct and growth of their businesses.
The Company has been subject to continuous monitoring since 2021. This supervisory and regulatory framework subjects banks and bank holding companies to regular examination by their respective regulatory agencies, which results in examination reports and ratings that, while not publicly available, can impact the conduct and growth of their businesses.
Consumer Laws Merchants Bank must comply with a number of federal consumer protection laws, including, among others: • the Gramm-Leach-Bliley Act, which requires a bank to maintain privacy with respect to certain consumer data in its possession and to periodically communicate with consumers on privacy matters; • the Right to Financial Privacy Act, which imposed a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • the Fair Debt Collection Practices Act, which regulates the timing and content of debt collection communications; • the Truth in Lending Act and Regulation Z thereunder, which requires certain disclosures to consumer borrowers regarding the terms of their loans; • the Fair Credit Reporting Act, which regulates the use and reporting of information related to the credit history of consumers; • the Equal Credit Opportunity Act and Regulation B thereunder, which prohibits discrimination on the basis of age, race and certain other characteristics, in the extension of credit; • the Homeowners Equity Protection Act, which requires, among other things, the cancellation of mortgage insurance once certain equity levels are reached; • the Home Mortgage Disclosure Act and Regulation C thereunder, which require mortgage lenders to report certain public loan data; • the Fair Housing Act, which prohibits discrimination in housing on the basis of race, sex, national origin, and certain other characteristics; • the Real Estate Settlement Procedures Act and Regulation X thereunder, which imposes conditions on the consummation and servicing of mortgage loans; • the Truth in Savings Act and Regulation DD thereunder, which requires certain disclosures to depositors concerning the terms of their deposit accounts; and 18 Table of Contents • the Electronic Funds Transfer Act and Regulation E thereunder, which governs various forms of electronic banking.
Although we are not a party to any of these settlements or consent orders, we, like many mortgage servicers, have voluntarily adopted many of these servicing and foreclosure standards due to competitive pressures. ​ 17 Table of Contents Consumer Laws Merchants Bank must comply with a number of federal consumer protection laws, including, among others: • the Gramm-Leach-Bliley Act, which requires a bank to maintain privacy with respect to certain consumer data in its possession and to periodically communicate with consumers on privacy matters; • the Right to Financial Privacy Act, which imposed a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • the Fair Debt Collection Practices Act, which regulates the timing and content of debt collection communications; • the Truth in Lending Act and Regulation Z thereunder, which requires certain disclosures to consumer borrowers regarding the terms of their loans; • the Fair Credit Reporting Act, which regulates the use and reporting of information related to the credit history of consumers; • the Equal Credit Opportunity Act and Regulation B thereunder, which prohibits discrimination on the basis of age, race and certain other characteristics, in the extension of credit; • the Homeowners Equity Protection Act, which requires, among other things, the cancellation of mortgage insurance once certain equity levels are reached; • the Home Mortgage Disclosure Act and Regulation C thereunder, which require mortgage lenders to report certain public loan data; • the Fair Housing Act, which prohibits discrimination in housing on the basis of race, sex, national origin, and certain other characteristics; • the Real Estate Settlement Procedures Act and Regulation X thereunder, which imposes conditions on the consummation and servicing of mortgage loans; • the Truth in Savings Act and Regulation DD thereunder, which requires certain disclosures to depositors concerning the terms of their deposit accounts; and • the Electronic Funds Transfer Act and Regulation E thereunder, which governs various forms of electronic banking.
The Dodd-Frank Act represented a sweeping reform of the U.S. supervisory and regulatory framework applicable to financial institutions and capital markets in the wake of the global financial crisis, certain aspects of which are described below in more detail.
The Dodd-Frank Wall Street Reform and Consumer Protection Act Upon enactment, the Dodd-Frank Act represented a sweeping reform of the U.S. supervisory and regulatory framework applicable to financial institutions and capital markets in the wake of the global financial crisis, certain aspects of which are described below in more detail.
The warehouse financing facilities are secured by residential and multi-family mortgage loans underwritten to standards approved by Merchants Bank that are generally comparable to those established by Fannie Mae, Freddie Mac, FHA and VA. Mortgage Warehousing funded $33.2 billion of loan principal in 2022, $33.0 billion in 2023 and $45.6 billion in 2024.
The warehouse financing facilities are secured by residential and multi-family mortgage loans underwritten to standards approved by Merchants Bank and those established by Fannie Mae, Freddie Mac, FHA and VA. Mortgage Warehousing funded $66.3 billion of loan principal in 2025, $45.6 billion in 2024, and $33.0 billion in 2023.
The FDIC has adopted regulations to implement the prompt corrective action provisions of FDICIA. “Undercapitalized” banks are subject to growth limitations and are required to submit a capital restoration plan. The bank’s BHC is required to guarantee that the bank will comply with the plan and provide appropriate assurances of performance.
The FDIC has adopted regulations to implement the prompt corrective action provisions of FDICIA. 13 Table of Contents “Undercapitalized” banks are subject to growth limitations and are required to submit a capital restoration plan. Merchants Bank’s BHC would be required to guarantee that Merchants Bank would comply with such a plan and provide appropriate assurances of performance.
Merchants Mortgage is an approved originator of FHA, VA, and USDA loans and an approved seller servicer by Ginnie Mae, Fannie Mae and Freddie Mac, as well as a Fitch rated servicer. Merchants Mortgage offers agency eligible, jumbo fixed and hybrid adjustable-rate mortgages for purchase or refinancing of single-family residences.
Merchants Mortgage is an approved originator of FHA, VA, and USDA loans and an approved Seller/Servicer by Ginnie Mae, Fannie Mae and Freddie Mac, as well as a Fitch rated servicer. Merchants Mortgage offers agency eligible, jumbo fixed and hybrid adjustable-rate mortgages for purchase or refinancing of single-family residences. Other products include construction, bridge and lot financing, and first-lien HELOC.
For example, we were named to the list of “Best Places to Work in Indiana” by the Indiana Chamber of Commerce every year from 2016 to 2023 and were named as a “Top Workplace” by The Indianapolis Star in 2023 and 2024 and in 2024 our turnover rate was only 9%.
For example, we were named to the list of “Best Places to Work in Indiana” by the Indiana Chamber of Commerce every year from 2016 to 2022, Top Workplaces USA in 2024-2026, and were named as a “Top Workplace” by The Indianapolis Star in 2023 to 2026. Our employee turnover rate in 2025 was only 8%.
If an “undercapitalized” bank fails to submit an acceptable plan, it is treated as if it is significantly 13 Table of Contents undercapitalized.
If an “undercapitalized” bank fails to submit an acceptable plan, it is treated as if it is significantly undercapitalized.
The increase in assessment rate schedules is intended to increase the likelihood that the reserve ratio of the DIF reaches the statutory minimum of 1.35% by the statutory deadline of September 30, 2028.
The FDIC maintained the DRR for the DIF at 2% for 2025. The increase in assessment rate schedules is intended to increase the likelihood that the reserve ratio of the DIF reaches the statutory minimum of 1.35% by the statutory deadline of September 30, 2028.
The scorecard combines the following measures to produce a score that is converted to an assessment rate: ​ • CAMELS component ratings that evaluate five critical elements of a credit union's operations: (C)apital adequacy, (A)sset quality, (M)anagement, (E)arnings, and (L)iquidity and asset-liability management, • financial measures used to measure a bank's ability to withstand asset-related and funding-related stress, and • a measure of loss severity that estimates the relative magnitude of potential losses to the FDIC in the event of the bank's failure.
The scorecard combines the following measures to produce a score that is converted to an assessment rate: ​ • CAMELS component ratings that evaluate six critical elements of Merchants Bank’s operations: (C)apital adequacy, (A)sset quality, (M)anagement capabilities, (E)arnings sufficiency, (L)iquidity position, and (S)ensitivity to market risk, • financial measures used to measure Merchants Bank's ability to withstand asset-related and funding-related stress, and • a measure of loss severity that estimates the relative magnitude of potential losses to the DIF in the event of the Merchants Bank's failure.
Beginning in 2023, large banks (generally, those with $10 billion or more in assets) are assigned an individual rate based on a scorecard.
Large banks (generally, those with $10 billion or more in assets, and including Merchants Bank) are assigned an individual rate based on a scorecard.
The CFPB has examination and enforcement authority over insured depository institutions and their holding companies that have more than $10 billion in assets for at least four consecutive quarters. Merchants Bank had four consecutive quarters with assets of more than $10 billion during each of 2023 and 2024.
The CFPB has examination and enforcement authority over insured depository institutions and their holding companies that have more than $10 billion in assets for at least four consecutive quarters.
Another primary source of funding is our Banking segment. Investors in the secondary market are primarily large financial institutions, brokerage companies, insurance companies and real estate investment trusts. These programs facilitate secondary market activities in order to provide funding for the multi-family mortgage market. Mortgage Warehousing We started the warehouse lending business in 2009 because of dislocation in the market.
Another primary source of funding is our Banking segment. Investors in the secondary market are primarily large financial institutions, brokerage companies, insurance companies, real estate investment trusts, private equity, and debt funds. These programs facilitate secondary market activities in order to provide funding for the multi-family mortgage market.
Merchants Bank is also a Certified Lender with the Farm Service Agency to offset credit risk inherent in the agriculture loan portfolio. Single-Family Mortgage Lending, Correspondent Lending and Servicing Merchants Mortgage is the branded division of Merchants Bank that is a single-family mortgage origination and servicing platform. Merchants Mortgage is both a retail and correspondent mortgage lender.
Merchants Bank is also a Certified Preferred Lender with the Farm Service Agency, allowing us to offer lower risk loans for the agriculture loan portfolio. Single-Family Mortgage Lending, Correspondent Lending and Servicing Merchants Mortgage is the branded division of Merchants Bank that is a single-family mortgage origination and servicing platform. Merchants Mortgage is both a retail and correspondent mortgage lender.
Those filings can also be obtained on the SEC’s website at www.sec.gov. Additionally, from time to time we may post other press releases, news, investor presentations and stories regarding our business on the News and Presentation sections of our website’s Investor page. The information contained on our website is not a part of, or incorporated by reference into, this report.
Those filings can also be obtained on the SEC’s website at www.sec.gov. Additionally, from time to time we may post other press releases, news, investor presentations and stories regarding our business on the News and Presentation sections of our website’s Investor page.
As of December 31, 2024, we had $18.8 billion in assets, $11.9 billion of deposits and $2.2 billion of shareholders’ equity. We were founded in 1990 as a mortgage banking company, providing financing for multi-family housing and senior living properties.
As of December 31, 2025, we had $19.4 billion in assets, $13.0 billion of deposits and $2.3 billion of shareholders’ equity. We were founded in 1990 as a mortgage banking company, providing financing for multi-family housing and senior living properties.
By virtue of a provision in the Dodd-Frank Act known as the Collins Amendment, the requirements must be the same at both the institution level and the holding company level. The minimum capital rules have undergone several revisions over the years. The current requirements, which began to take effect in 2015, are based on the international Basel III capital framework.
By virtue of a provision in the Dodd-Frank Act known as the Collins Amendment, the requirements must be the same at both the institution level and the holding company level. The minimum capital rules have undergone several revisions over the years.
Our Business Segments We have several lines of business and provide various banking and financial services through our subsidiaries.
Our Business Segments We have several lines of business and provide various banking and financial services through our subsidiaries. Our business segments are defined as Multi-family Mortgage Banking, Mortgage Warehousing, and Banking.
Merchants Bank currently has warehouse repurchase agreements, loan participations, operating lines of credit collateralized by mortgage servicing rights, and custodial deposits with some of the largest non-depository financial institutions and mortgage bankers in the industry. 7 Table of Contents Our Mortgage Warehousing segment provides asset-based financing in the form of warehouse facilities to eligible non-depository financial institutions and mortgage bankers, which enables them to fund and inventory residential and multi-family mortgage loans until they are sold and purchased in the secondary market by an approved investor.
Merchants is one of the largest warehouse lenders in the country. 7 Table of Contents Our Mortgage Warehousing segment provides asset-based financing in the form of warehouse facilities to eligible non-depository financial institutions and mortgage bankers, which enables them to fund and inventory residential and multi-family mortgage loans until they are sold and purchased in the secondary market by an approved investor.
In December 2019, the Company added a new team of SBA originators, located in Illinois and Indiana, which later expanded into Ohio and Texas, to help broaden our reach to small business owners in and around these states. Strategy for Complementary Segments Our segments diversify the net income of Merchants Bank and provide synergies across the segments.
The Company has originators located in Illinois, Indiana, Ohio, and Texas to help serve small business owners in and around these states. Strategy for Complementary Segments Our segments diversify the net income of Merchants Bank and provide synergies across the segments.
However, the Company may not be subject to such excise tax to the extent it issues an equal to or greater than amount of stock (based on fair market value) in the same calendar year. Merchants Bank Merchants Bank is an Indiana chartered, non-Federal Reserve member bank subject to supervision and regulation by the FDIC and IDFI.
However, the Company may not be subject to such excise tax to the extent it issues an equal to or greater than amount of stock (based on fair market value) in the same calendar year.
Other originations are referred to the Banking segment, including bridge financing products to refinance, acquire, or reposition multi-family housing projects, as well as construction lending for market rate and affordable housing developments, and financing of need-based healthcare facilities. The originations referred to the Banking segment can represent a significant portion of the Multi-family Mortgage Banking total origination volume.
Our origination platform and servicing portfolio are 6 Table of Contents significant sources of our noninterest income and deposits. Other originations are referred to the Banking segment, including bridge financing products to refinance, acquire, or reposition multi-family housing projects, as well as construction lending for market rate and affordable housing developments, and financing of need-based healthcare facilities.
Merchants Bank of Indiana (“Merchants Bank”), one of our wholly owned banking subsidiaries, operates under an Indiana charter and provides national and traditional community banking services, as well as portfolio lending for multi-family and healthcare facility loans, retail and correspondent residential mortgage banking, warehouse lending, SBA lending, and agricultural lending.
Merchants Bank, our wholly owned banking subsidiary, operates under an Indiana charter and provides national and traditional community banking services, as well as portfolio lending for multi-family and healthcare facility loans, retail and correspondent residential mortgage banking, warehouse lending, SBA lending, and agricultural lending. Merchants Bank has seven depository branches located in Carmel, Indianapolis, Lynn, Spartanburg, and Richmond, Indiana.
Failure to adequately meet these criteria could result in the imposition of additional requirements and limitations on Merchants Bank. The Company is currently operating under an approved CRA strategic plan through 2025. The Dodd-Frank Wall Street Reform and Consumer Protection Act On July 21, 2010, the Dodd-Frank Act was signed into law.
Failure to adequately meet these criteria could result in the imposition of additional requirements and limitations on Merchants Bank. The Company is currently operating under an approved CRA strategic plan through 2028.
This designation provides 8 Table of Contents us delegated loan approval, closing and servicing authority that enables loan decisions to be made more rapidly.
Merchants Bank has Preferred Lender Program status, the SBA’s highest level of approval that a lender can hold. This designation provides us delegated loan approval, 8 Table of Contents closing and servicing authority that enables loan decisions to be made more rapidly.
The current administration is considering reforms to certain GSEs, including ending the federal government’s conservatorship of Fannie Mae and Freddie Mac and is considering significant changes in the size and operation of the federal government, including reductions in certain agencies’ staffing levels and budgets.
The current administration is considering, among other things, reforms to certain GSEs, including ending the federal government’s conservatorship of Fannie Mae and Freddie Mac, making significant changes in the size and operation of the federal government, including reductions in certain agencies’ staffing levels and budgets, and modifying the applicability of certain banking regulations, including modifying the total asset thresholds for certain regulations and changing the way certain examinations of financing institutions are conducted.
In addition, under Indiana law, Merchants Bank must obtain the approval of the IDFI prior to the payment of any dividend if the total of all dividends declared by Merchants Bank during the calendar year, including any proposed dividend, would exceed the sum of its net income for the year to date combined with its retained net income for the previous two years. 15 Table of Contents Capital regulations also limit a depository institution’s ability to make capital distributions if it does not hold capital conservation buffer of 2.5% above the required minimum risk-based capital ratios.
In addition, under Indiana law, Merchants Bank must obtain the approval of the IDFI prior to the payment of any dividend if the total of all dividends declared by Merchants Bank during the calendar year, including any proposed dividend, would exceed the sum of its net income for the year to date combined with its retained net income for the previous two years.
In addition to numerous disclosure requirements, the Dodd-Frank Act imposed new standards for mortgage loan originations on all lenders, including banks and savings associations, in an effort to strongly encourage lenders to verify a borrower’s ability to repay, while also establishing a presumption of compliance for certain “qualified mortgages.” In addition, the Dodd-Frank Act generally required lenders or securitizers to retain an economic interest in the credit risk relating to loans that the lender sells, and other asset-backed securities that the securitizer issues, if the loans do not comply with the ability-to-repay standards described below.
The Dodd-Frank Act imposes significant underwriting and disclosure requirements for loans secured by one-to-four family residential real property and supplements and enhances other laws combating predatory lending practices and its standards strongly encourage lenders to verify a borrower’s ability to repay, establishing a presumption of compliance for certain “qualified mortgages.” In addition, the Dodd-Frank Act generally requires lenders or securitizers to retain an economic interest in the credit risk relating to loans that the lender sells, and other asset-backed securities that the securitizer issues, if the loans do not comply with the “ability to pay” rule described below.
Our business segments are defined as Multi-family Mortgage Banking, Mortgage Warehousing, and Banking. ​ ​ ​ 6 Table of Contents Multi-family Mortgage Banking ​ MCC and MCS, subsidiaries of Merchants Bank, are primarily engaged in mortgage banking, specializing in originating and servicing loans for affordable multi-family rental housing and healthcare facility financing.
Multi-family Mortgage Banking ​ MCC and MCS, subsidiaries of Merchants Bank, are primarily engaged in mortgage banking, specializing in originating and servicing loans for affordable multi-family rental housing and healthcare facility financing. Our mortgage servicing portfolio consists primarily of Merchants Bank’s balance sheet loans, referred to as bridge financing, FHA loans, and affordable Fannie Mae and Freddie Mac loans.
Because the Company is classified as a large bank under the new assessment structure, deposit insurance premiums are expected to be higher than in previous years. ​ In December 2023, the FDIC also imposed a special assessment on banks with assets over $5 billion to replenish the DIF, which was depleted with the collapses of several banks in March 2023.
In December 2023, the FDIC also imposed a special assessment on banks with assets over $5 billion to replenish the DIF, which was depleted with the collapses of several banks in March 2023.
The gain on sale of loans and servicing fees generated from the multi-family rental real estate, residential, and SBA loans, as well as fees and fair market value adjustments to servicing related assets, contribute to noninterest income. Loans are funded primarily from mortgage custodial, municipal, retail, commercial, short-term borrowings, as well as brokered deposits.
The gain on sale of loans and servicing fees generated from the multi-family rental real estate, residential, and SBA loans, as well as fees and fair market value adjustments to servicing related assets, contribute to noninterest income. Tax syndication and asset management fees have also become a growing source of noninterest income.
The FDIC maintains the DIF by assessing depository institutions an insurance premium. The FDIC’s risk-based assessment system requires insured institutions to pay deposit insurance premiums based on the risk that each institution poses to the DIF. The rate is applied to the institution’s total average consolidated assets during the assessment period less average tangible equity (i.e., Tier 1 capital).
The FDIC funds its DIF by assessing depository institutions an insurance premium. The FDIC’s risk-based assessment system requires insured institutions to pay deposit insurance premiums based on the risk that each institution poses to the DIF.
In 2022, the FDIC adopted a final rule, applicable to all insured depository institutions, to increase initial base deposit insurance assessment rate schedules uniformly by two basis points, beginning in the first quarterly assessment period of 2023. The FDIC also concurrently maintained the DRR for the DIF at 2% for 2023.
The rate is applied to the institution’s total average consolidated assets during the assessment period less average tangible equity (i.e., Tier 1 capital). 14 Table of Contents In 2022, the FDIC adopted a final rule, applicable to all insured depository institutions, to increase initial base deposit insurance assessment rate schedules uniformly by two basis points, beginning in the first quarterly assessment period of 2023.
Additionally, a qualified mortgage may not: (i) contain excess upfront points and fees; (ii) have a term greater than 30 years; or (iii) include interest−only or negative amortization payments.
Additionally, a qualified mortgage may not: (i) contain excess upfront points and fees; (ii) have a term greater than 30 years; or (iii) include interest−only or negative amortization payments. The rule has not had a significant impact on our mortgage production operations since most of the loans Merchants Bank currently originates would constitute “qualified mortgages” under the rule.
Through the Multi-family Mortgage Banking segment, many of our fixed rate originated loans are sold to government agencies as mortgage-backed securities within approximately 30 days. As these loans are sold, servicing rights are traditionally retained. We believe that MCC is one of the largest government agency servicers in the country based on aggregate loan principal balance.
As these loans are sold, servicing rights are traditionally retained. MCC is one of the largest government agency servicers in the country based on aggregate loan principal balance.
Merchants Bank has seven depository branches located in Carmel, Indianapolis, Lynn, Spartanburg, and Richmond, Indiana. Our business consists primarily of funding fixed rate, low risk loans meeting underwriting standards of government programs, under an originate to sell model, while retaining adjustable-rate loans as held for investment to reduce interest rate risk.
Our business consists primarily of funding fixed rate, low risk loans meeting underwriting standards of government programs, under an originate-to-sell model, while retaining adjustable-rate loans as held for investment to reduce interest rate risk. Loans are funded primarily from mortgage custodial, municipal, retail, commercial, and brokered deposits, as well as short-term borrowings.
The orders and legislation may change banking statutes and our operating environment in substantial and unpredictable ways by increasing or decreasing the cost of doing business, limiting or expanding permissible activities, or affecting the competitive balance among banks, savings associations, credit unions, and other financial institutions.
The orders and legislation may change banking statutes and our operating environment in substantial and unpredictable ways by increasing or decreasing the cost of doing business, limiting or expanding permissible activities, or affecting the competitive balance among banks, savings associations, credit unions, and other financial institutions. 18 Table of Contents SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains certain “forward-looking statements” within the meaning of and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
SBA Lending Merchants Bank participates in the SBA’s 7(a), 504 and Express programs to meet the needs of our small business communities and help diversify our retail revenue stream. In January 2018, Merchants Bank was awarded Preferred Lender Program status, the SBA’s highest level of approval that a lender can hold.
Merchants Mortgage also originates loans held for investment and earns interest income over the life of the loan. SBA Lending Merchants Bank participates in the SBA’s 7(a), 504 and Express programs to meet the needs of our small business communities and help diversify our retail revenue stream.
SUPERVISION AND REGULATION General Insured banks, their holding companies and their affiliates are extensively regulated under federal and state law.
The information contained on our website is not a part of, or incorporated by reference into, this report. ​ SUPERVISION AND REGULATION General Insured banks, their holding companies and their affiliates are extensively regulated under federal and state law.
The rule also establishes certain protections from liability for mortgage lenders with regard to the “qualified mortgages” they originate.
The rule also establishes certain protections from liability for mortgage lenders with regard to the “qualified mortgages” they originate. This rule includes within the definition of a “qualified mortgage” a loan having a rate under a CFPB established limit, but still generally requires consideration of the debt to income ratio.
The rule has not had a significant impact on our mortgage production operations since most of the loans Merchants Bank currently originates would constitute “qualified mortgages” under the rule, including under the revised definition that became effective on June 30, 2021. 17 Table of Contents Mortgage Servicing Additionally, the CFPB has issued a series of final rules as part of an ongoing effort to address mortgage servicing reforms and create uniform standards for the mortgage servicing industry.
Mortgage Servicing Additionally, since its creation, the CFPB has issued a series of final rules as part of an ongoing effort to address mortgage servicing reforms and create uniform standards for the mortgage servicing industry.
Because abuses in connection with residential mortgages were a significant factor contributing to the financial crisis, many new rules issued by the CFPB and required by the Dodd-Frank Act address mortgage and mortgage-related products, their underwriting, origination, servicing and sales.
Merchants Bank became subject to the CFPB’s oversight in 2023. 16 Table of Contents Since its creation, and as required by the Dodd-Frank Act, the CFPB has issued rules to address mortgage and mortgage-related products, their underwriting, origination, servicing and sales.
There are no conditions or events since that notification that management believes have changed the Company’s or Merchants Bank’s category. 14 Table of Contents Deposit Insurance Fund and Financing Corporation Assessments The DIF of the FDIC insures the deposits of Merchants Bank up to $250,000 per depositor, qualifying joint accounts, and certain other accounts.
See Part 7 – “Management’s Discussion and Analysis – “Recent Developments and Material Trends – Memorandum of Understanding” and “Liquidity and Capital Resources - Capital Adequacy.” Deposit Insurance Fund and Financing Corporation Assessments The FDIC insures the deposits of Merchants Bank up to $250,000 per depositor, qualifying joint accounts, and certain other accounts.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains certain “forward-looking statements” within the meaning of and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance.
These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance.
Removed
Our mortgage servicing portfolio consists primarily of Merchants Bank balance sheet loans, referred to as bridge financing, FHA loans, and affordable Fannie Mae and Freddie Mac loans. Our origination platform and servicing portfolio are significant sources of our noninterest income and deposits.
Added
The originations referred to the Banking segment can represent a significant portion of the Multi-family Mortgage Banking total origination volume.
Removed
These debt investment vehicles ultimately support the mission of MCC by creating additional lending capacity and competitive loan terms for clients. We also optimize our capital position and manage our balance sheet through credit risk transfer vehicles and securitizations.
Added
These debt investment vehicles exist to serve a global institutional investor base – including university endowments, private charitable foundations, pensions, insurance companies and sovereign wealth funds. MIP, operating as a subsidiary but with its own distinct investment criteria, ultimately supports the mission of MCC by creating additional lending capacity and competitive loan terms for clients.
Removed
Other products include construction, bridge and lot financing, and first-lien HELOC. Loans held for sale generate revenues from fees charged to borrowers, interest income during the warehouse period, gain on sale of loans to investors, and servicing fee income.
Added
MIP also serves as a facilitator of various capital markets transactions to optimize our capital position and manage our balance sheet through credit risk transfer vehicles and securitizations. Through the Multi-family Mortgage Banking segment, many of our fixed rate originated loans are sold to government agencies as mortgage-backed securities within approximately 30 days.
Removed
These requirements apply to all covered banking organizations (including us) with some requirements phasing in over time.
Added
Mortgage Warehousing We started the warehouse lending business in 2009 because of dislocation in the market. Merchants Bank currently has warehouse repurchase agreements, loan participations, operating lines of credit collateralized by servicing rights, and custodial deposits with some of the largest Fannie Mae and Freddie Mac Seller/Servicers as well as Ginnie Mae Issuer/Servicers in the country.
Removed
However, on November 21, 2017, the Federal Reserve, OCC, and FDIC finalized a joint proposal and adopted a final rule (the “Transitions Rule”) pursuant to which the current regulatory capital treatment then in place for servicing rights, certain temporary difference deferred tax assets, and significant investments in the capital of unconsolidated financial institutions was indefinitely extended in anticipation of a subsequent notice of proposed rulemaking by such regulators to simplify the regulatory capital treatment of such items (the “Simplification Rule”).

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

59 edited+13 added−5 removed164 unchanged
Biggest changeWe review goodwill for impairment at least annually, or more frequently if a triggering event occurs which indicates that the carrying value of the asset might be impaired. If the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess.
Biggest changeGoodwill represents the amount by which the cost of an acquisition exceeded the fair value of net assets we acquired in connection with the purchase of another financial institution. We review goodwill for impairment at least annually, or more frequently if a triggering event occurs which indicates that the carrying value of the asset might be impaired.
Liquidity stress testing, interest rate sensitivity analysis, allowance for credit losses computations, mortgage servicing rights valuations, and the identification of possible violations of anti-money laundering regulations are all examples of areas in which we are dependent on models and the data that underlies them. The use of statistical and quantitative models is also becoming more prevalent in regulatory compliance.
Liquidity stress testing, interest rate sensitivity analysis, allowance for credit losses computations, servicing rights valuations, and the identification of possible violations of anti-money laundering regulations are all examples of areas in which we are dependent on models and the data that underlies them. The use of statistical and quantitative models is also becoming more prevalent in regulatory compliance.
Downgrades of the Company’s credit rating, and its perceived creditworthiness, could affect our ability to borrow funds and/or access capital markets on favorable terms. Such downgrades could adversely affect the future borrowings or capital raised, including substantially raising the costs and could cause creditors and business counterparties to raise collateral requirements.
Downgrades of the Company’s, or its subsidiaries’ credit rating, and its perceived creditworthiness, could affect our ability to borrow funds and/or access capital markets on favorable terms. Such downgrades could adversely affect the future borrowings or capital raised, including substantially raising the costs and could cause creditors and business counterparties to raise collateral requirements.
We are required to comply with the SEC's rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting.
We are required to comply with the SEC's rules implementing Sections 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of internal controls over financial reporting.
In addition, we could become subject to investigations by the stock exchange on which our securities are listed, the SEC, Federal Reserve, FDIC, IDFI, IDFPR, CFPB or other regulatory authorities, which could require additional financial and management resources.
In addition, we could become subject to investigations by the stock exchange on which our securities are listed, the SEC, Federal Reserve, FDIC, IDFI, CFPB or other regulatory authorities, which could require additional financial and management resources.
If we identify any material weaknesses in our internal control over financial reporting or are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness 24 Table of Contents of our internal control over financial reporting, investors, counterparties and customers may lose confidence in the accuracy and completeness of our financial statements and reports; our liquidity, access to capital markets and perceptions of our creditworthiness could be adversely affected; and the market price of our common stock could decline.
If we identify any material weaknesses in our internal control over financial reporting or are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors, counterparties and customers may lose confidence in the accuracy and completeness of our financial statements and reports; our liquidity, access to capital markets and perceptions of our creditworthiness could be adversely affected; and the market price of our common stock could decline.
Certain of our directors and executive officers and their immediate families beneficially own approximately 57% of our outstanding shares of common stock which allows them the ability to substantially influence the outcome of matters requiring shareholder approval. Messrs. Petrie and Rogers and their immediate families, collectively owned approximately 57% of our outstanding common stock as of December 31, 2024.
Certain of our directors and executive officers and their immediate families beneficially own approximately 57% of our outstanding shares of common stock which allows them the ability to substantially influence the outcome of matters requiring shareholder approval. Messrs. Petrie and Rogers and their immediate families, collectively owned approximately 57% of our outstanding common stock as of December 31, 2025.
As a result, if future events or regulatory views concerning such analysis differ significantly from the judgments, assumptions and estimates in our critical accounting policies, those events or assumptions could have a material impact on our consolidated financial statements and related disclosures, in each case resulting in our needing to revise or restate prior period financial statements, cause damage to our reputation and the price of our common stock, and adversely affect our business, financial condition and results of operations.
As a result, if future events or regulatory views concerning such analysis differ significantly from the judgments, assumptions and estimates in our critical accounting policies, those events or assumptions could have a material impact on our consolidated financial statements and related disclosures, in each case 24 Table of Contents resulting in our needing to revise or restate prior period financial statements, cause damage to our reputation and the price of our common stock, and adversely affect our business, financial condition and results of operations.
Any decline in available funding, including a decrease in brokered deposits, could adversely impact our ability to continue to implement our strategic plan, including our ability to originate loans, fund warehouse financing 30 Table of Contents commitments, meet our expenses, declare and pay dividends to our shareholders or to fulfill obligations such as repaying our borrowings or meeting deposit withdrawal demands, any of which could have a material adverse impact on our liquidity, business, financial condition and results of operations.
Any decline in available funding, including a decrease in brokered deposits, could adversely impact our ability to continue to implement our strategic plan, including our ability to originate loans, fund warehouse financing commitments, meet our expenses, declare and pay dividends to our shareholders or to fulfill obligations such as repaying our borrowings or meeting deposit withdrawal demands, any of which could have a material adverse impact on our liquidity, business, financial condition and results of operations.
These businesses generally have fewer financial resources in terms of capital or borrowing capacity than larger entities, frequently have smaller market shares than their competition, may be more vulnerable to economic downturns, often need substantial additional 23 Table of Contents capital to expand or compete and may experience substantial volatility in operating results, any of which may impair a borrower’s ability to repay a loan.
These businesses generally have fewer financial resources in terms of capital or borrowing capacity than larger entities, frequently have smaller market shares than their competition, may be more vulnerable to economic downturns, often need substantial additional capital to expand or compete and may experience substantial volatility in operating results, any of which may impair a borrower’s ability to repay a loan.
The Dodd-Frank Act established the CFPB as an independent entity within the Federal Reserve, which has broad rulemaking, supervisory and enforcement authority over consumer financial products and services, including deposit products, residential mortgages, home-equity loans and 31 Table of Contents credit cards and contains provisions on mortgage-related matters, such as steering incentives, determinations as to a borrower’s ability to repay and prepayment penalties.
The Dodd-Frank Act established the CFPB as an independent entity within the Federal Reserve, which has broad rulemaking, supervisory and enforcement authority over consumer financial products and services, including deposit products, residential mortgages, home-equity loans and credit cards and contains provisions on mortgage-related matters, such as steering incentives, determinations as to a borrower’s ability to repay and prepayment penalties.
Such computer break-ins and other disruptions would jeopardize the security of information stored in and transmitted through 26 Table of Contents our computer systems and network infrastructure, which may result in significant liability, damage our reputation and inhibit the use of our mobile and internet banking services by current and potential customers.
Such computer break-ins and other disruptions would jeopardize the security of information stored in and transmitted through our computer systems and network infrastructure, which may result in significant liability, damage our reputation and inhibit the use of our mobile and internet banking services by current and potential customers.
If our internal controls fail to prevent or detect an occurrence, or if any resulting loss is not insured or exceeds applicable insurance limits, it could have a material adverse effect on our business, financial condition and results of operations.
If our internal controls fail to 27 Table of Contents prevent or detect an occurrence, or if any resulting loss is not insured or exceeds applicable insurance limits, it could have a material adverse effect on our business, financial condition and results of operations.
This would have a material adverse effect on our net interest income and our results of operations. 29 Table of Contents Negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing our real estate loans and result in loan and other losses.
This would have a material adverse effect on our net interest income and our results of operations. Negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing our real estate loans and result in loan and other losses.
The effects of such policies upon our business, financial condition and results of operations cannot be predicted. The Federal Reserve, FDIC, IDFI, IDFPR, Fannie Mae, Freddie Mac, FHA, RHS, and Ginnie Mae periodically examine our business, including our compliance with laws and regulations.
The effects of such policies upon our business, financial condition and results of operations cannot be predicted. The Federal Reserve, FDIC, IDFI, Fannie Mae, Freddie Mac, FHA, USDA, and Ginnie Mae periodically examine our business, including our compliance with laws and regulations.
When loans are delinquent more than ninety days, classified as substandard, or when we take collateral in foreclosure and similar proceedings, we order an appraisal and mark the collateral to its then fair market value on an as-is basis, which may result in a loss.
When loans are delinquent more than ninety days, classified as substandard, or when we take collateral in foreclosure and similar proceedings, we order 22 Table of Contents an appraisal and mark the collateral to its then fair market value on an as-is basis, which may result in a loss.
The profitability of participating in specific programs 20 Table of Contents may vary depending on a number of factors, including our administrative costs of originating and purchasing qualifying loans and our costs of meeting such criteria.
The profitability of participating in specific programs may vary depending on a number of factors, including our administrative costs of originating and purchasing qualifying loans and our costs of meeting such criteria.
Additionally, the current administration is considering significant changes in the size and operation of the federal government, including material reductions in certain agencies’ staffing levels and budgets.
Additionally, the current administration is considering significant changes in the size and operation of 21 Table of Contents the federal government, including material reductions in certain agencies’ staffing levels and budgets.
In September 2008, Fannie Mae and Freddie Mac were placed into conservatorship by the U.S. government. The federal government has for many years considered proposals to reform Fannie Mae and Freddie Mac, but the results of any such reform, and their impact on us, are difficult to predict. To date, no reform proposal has been enacted.
In September 2008, Fannie Mae and Freddie Mac were placed into conservatorship by the U.S. government. The federal government has for many years considered proposals to reform Fannie Mae and Freddie Mac, but the results of any such reform, and their impact on us, are difficult to predict.
We may not be successful in overcoming these risks or any other problems encountered in connection with pending or potential acquisitions, and any acquisition we 28 Table of Contents may consider will be subject to prior regulatory approval.
We may not be successful in overcoming these risks or any other problems encountered in connection with pending or potential acquisitions, and any acquisition we may consider will be subject to prior regulatory approval.
Petrie) are subject to non-competition and non-solicitation provisions as part of change in control agreements entered into with them and our mortgage originators and loan officers are generally subject to non-solicitation provisions as part of their employment, our ability to enforce such agreements may not fully mitigate the injury to our business from the breach of such agreements, as such employees could leave us and immediately begin soliciting our customers.
Petrie) are subject to non-competition and non-solicitation provisions as 25 Table of Contents part of change in control agreements entered into with them and many of our multi-family mortgage originators and loan officers are subject to non-solicitation provisions as part of their employment, our ability to enforce such agreements may not fully mitigate the injury to our business from the breach of such agreements, as such employees could leave us and immediately begin soliciting our customers.
Any reduction or limitation on our subsidiaries abilities to pay us dividends could have a material adverse effect on our liquidity and in particular, affect our ability to repay our borrowings.
Any reduction 30 Table of Contents or limitation on our subsidiaries abilities to pay us dividends could have a material adverse effect on our liquidity and in particular, affect our ability to repay our borrowings.
Our risk management framework may not be effective under all circumstances and may not adequately mitigate any risk or loss to us. If our framework is not effective, we could suffer unexpected losses and our business, financial condition, results of operations or growth prospects could be materially and adversely affected.
Our risk management framework may not be effective under all circumstances and may not adequately mitigate any risk or loss to us. If our framework is not effective, we could suffer unexpected losses and our business, financial condition, results of operations or growth prospects could be materially and adversely affected. We may also be subject to potentially adverse regulatory consequences.
The CFPB may propose new rules on consumer financial products or services, which could have an adverse effect on our business, financial condition and results of operations if any such rules limit our ability to provide such financial products or services. The Company currently has an approved CRA strategic plan.
The CFPB may propose new rules on consumer financial products or services, which could have an adverse effect on our business, financial condition and results of operations if any such rules limit our ability to provide such financial products or services.
Even if we are able to replace them, it may be at a higher cost to us, which could adversely affect our business, financial condition and results of operations. ​ We have a continuing need for technological change, and we may not have the resources to effectively implement new technology or we may experience operational challenges when implementing new technology.
Even if we are able to replace them, it may be at a higher cost to us, which could adversely affect our business, financial condition and results of operations. ​ We have a continuing need for technological change, and we may not have the resources to effectively implement new technology or we may experience operational challenges when implementing new technology. ​ The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services.
In order to be a “well-capitalized” depository institution under Basel III, an institution must maintain a common equity Tier 1 capital ratio of 6.5% or more; a Tier 1 capital ratio of 8% or more; a total capital ratio of 10% or more; and a leverage ratio of 5% or more.
In order to be categorized as “well-capitalized” under such regulations, an institution must maintain a common equity Tier 1 capital ratio of 6.5% or more; a Tier 1 capital ratio of 8% or more; a total capital ratio of 10% or more; and a leverage ratio of 5% or more.
We may experience operational challenges as we implement these new technology enhancements, or seek to implement them across all of our offices and business units, which could result in us not fully realizing the anticipated benefits from such new technology or require us to incur significant costs to remedy any such challenges in a timely manner. 27 Table of Contents Many of our larger competitors have substantially greater resources to invest in technological improvements.
We may experience operational challenges as we implement these new technology enhancements, or seek to implement them across all of our offices and business units, which could result in us not fully realizing the anticipated benefits from such new technology or require us to incur significant costs to remedy any such challenges in a timely manner.
We may also be subject to potentially adverse regulatory consequences. 25 Table of Contents We are highly dependent on our management team, and the loss of our senior executive officers or other key employees could harm our ability to implement our strategic plan, impair our relationships with customers and adversely affect our business, results of operations and growth prospects.
We are highly dependent on our management team, and the loss of our senior executive officers or other key employees could harm our ability to implement our strategic plan, impair our relationships with customers and adversely affect our business, results of operations and growth prospects.
Therefore Messrs. Petrie and Rogers, together with their immediate families, have the ability to substantially influence the outcome of matters submitted to our shareholders for approval, and this position may conflict with the interests of some or all of our other shareholders.
Therefore Messrs. Petrie and Rogers, together with their immediate families, have the ability to substantially influence the outcome of matters submitted to our shareholders for approval, and this position may conflict with the interests of some or all of our other shareholders. Our operations could be adversely affected by extraordinary events beyond our control.
All of these factors are generally detrimental to our business. Our business is significantly affected by monetary and other regulatory policies of the U.S. federal government, its agencies and government-sponsored entities.
Our business is significantly affected by monetary and other regulatory policies of the U.S. federal government, its agencies and government-sponsored entities.
Employee errors could also subject us to financial claims for negligence. We maintain a system of internal controls and insurance coverage to mitigate against operational risks, including data processing system failures and errors and customer or employee fraud.
We maintain a system of internal controls and insurance coverage to mitigate against operational risks, including data processing system failures and errors and customer or employee fraud.
In addition to being affected by general economic conditions, our earnings and growth are affected by the policies of the Federal Reserve. An important function of the Federal Reserve is to regulate the money supply and credit conditions.
Monetary policies and regulations of the Federal Reserve could adversely affect our business, financial condition, and results of operations. In addition to being affected by general economic conditions, our earnings and growth are affected by the policies of the Federal Reserve. An important function of the Federal Reserve is to regulate the money supply and credit conditions.
If we violate HUD requirements, our multi-family FHA origination and servicing business could be adversely affected. We originate, sell and service loans under HUD programs, and make certifications regarding compliance with applicable requirements and guidelines.
To date, no reform proposal has been enacted. 20 Table of Contents If we violate HUD requirements, our multi-family FHA origination and servicing business could be adversely affected. We originate, sell and service loans under HUD programs, and make certifications regarding compliance with applicable requirements and guidelines.
We are required to comply with these and other anti-money laundering requirements. 33 Table of Contents The federal banking agencies and FinCEN are authorized to impose significant civil money penalties for violations of those requirements and have recently engaged in coordinated enforcement efforts against banks and other financial services providers with the U.S.
The federal banking agencies and FinCEN are authorized to impose significant civil money penalties for violations of those requirements and have recently engaged in coordinated enforcement efforts against banks and other financial services providers with the U.S. Department of Justice, Drug Enforcement Administration and Internal Revenue Service.
We face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations. The BSA, the Patriot Act and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and to file reports such as suspicious activity reports and currency transaction reports.
The BSA, the Patriot Act and other laws and regulations require financial institutions, among other duties, to institute and maintain an effective anti-money laundering program and to file reports such as suspicious activity reports and currency transaction reports. We are required to comply with these and other anti-money laundering requirements.
The failure to meet applicable regulatory capital requirements could result in one or more of our regulators placing limitations or conditions on our activities, including our growth initiatives, or restricting the commencement of new activities, and could affect customer and investor confidence, our costs of funds and FDIC insurance costs, our ability to pay dividends on our common stock, our ability to make acquisitions, and our business, results of operations and financial conditions, generally. 32 Table of Contents Monetary policies and regulations of the Federal Reserve could adversely affect our business, financial condition, and results of operations.
Institutions must also maintain a capital conservation buffer consisting of common equity Tier 1 capital. 32 Table of Contents The failure to meet applicable regulatory capital requirements could result in one or more of our regulators placing limitations or conditions on our activities, including our growth initiatives, or restricting the commencement of new activities, and could affect customer and investor confidence, our costs of funds and FDIC insurance costs, our ability to pay dividends on our common stock, our ability to make acquisitions, our ability to hold certain types of deposits, such as brokered deposits, and our business, results of operations and financial conditions, generally.
Department of Justice, Drug Enforcement Administration and Internal Revenue Service. We are also subject to increased scrutiny of compliance with the rules enforced by the Office of Foreign Assets Control.
We are also subject to increased scrutiny of compliance with the rules enforced by the Office of Foreign Assets Control.
Interest rates had been historically low in recent years, but the market has seen interest rate increases throughout 2023 and then a drop in mid-2024 before increasing again at the end of 2024. Moreover, if interest rates increase further, there can be no assurance that our mortgage production will continue at current levels.
Interest rates had been historically low in recent years, but the market experienced interest rate increases throughout 2023 and most of 2024 but began to decrease or stabilize during 2025. If interest rates increase, there can be no assurance that our mortgage production will continue at current levels.
We also may rely on customer representations and certifications, or other audit or accountants’ reports, with respect to the business and financial condition of our clients. Our financial condition, results of operations, financial reporting and reputation could be negatively affected if we rely on materially misleading, false, inaccurate or fraudulent information.
We also may rely on customer representations and certifications, or other audit or accountants’ reports, with respect to the business and financial condition of our clients.
A breach of our security that results in unauthorized access to our data could expose us to a disruption or challenges relating to our daily operations, as well as to data loss, litigation, damages, fines and penalties, significant increases in compliance costs and reputational damage, any of which could have an adverse effect on our business, financial condition, and results of operations.
A breach of our security that results in unauthorized access to our data could expose us to a disruption or challenges relating to our daily operations, as well as to data loss, litigation, damages, fines and penalties, significant increases in compliance costs and reputational damage, any of which could have an adverse effect on our business, financial condition, and results of operations. ​ 26 Table of Contents Adoption of AI may present significant challenges relating to compliance risk, credit risk, reputation risk, and operational risk. ​ Advances in computing capacity, combined with greater availability of data and improvements in analytical techniques, continue to expand opportunities for banks to leverage AI for various risk management and operational purposes.
The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services. In addition to better serving customers, the effective use of technology increases efficiency and enables financial institutions to reduce costs.
In addition to better serving customers, the effective use of technology increases efficiency and enables financial institutions to reduce costs.
Legislative and regulatory actions taken now or in the future may increase our costs and impact our business, governance structure, financial condition or results of operations.
If we fail to maintain capital to meet regulatory requirements, our financial condition, liquidity and results of operations would be materially and adversely affected. 31 Table of Contents Legislative and regulatory actions taken now or in the future may increase our costs and impact our business, governance structure, financial condition or results of operations.
Changes in any of these policies are influenced by macroeconomic conditions and other factors that are beyond our control, are difficult to predict and could have a material adverse effect on our business, financial position, results of operations and growth prospects. 22 Table of Contents If we do not effectively manage our credit risk, we may experience increased levels of delinquencies, nonperforming loans and charge-offs, which could require increases in our provision for credit losses.
Changes in any of these policies are influenced by macroeconomic conditions and other factors that are beyond our control, are difficult to predict and could have a material adverse effect on our business, financial position, results of operations and growth prospects.
Any such adjustments are reflected in our results of operations in the periods in which they become known. As of December 31, 2024, our goodwill totaled $8.0 million.
If the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. Any such adjustments are reflected in our results of operations in the periods in which they become known. As of December 31, 2025, our goodwill totaled $8.0 million.
Accordingly, we cannot provide assurances that we will be able to raise additional capital if needed or on terms acceptable to us. If we fail to maintain capital to meet regulatory requirements, our financial condition, liquidity and results of operations would be materially and adversely affected.
Accordingly, we cannot provide assurances that we will be able to raise additional capital if needed or on terms acceptable to us.
Market, Interest Rate, and Liquidity Risks Fluctuations in interest rates may reduce net interest income and otherwise negatively impact our financial condition and results of operations. Net interest income is the difference between the amounts received by us on our interest-earning assets and the interest paid by us on our interest-bearing liabilities.
Net interest income is the difference between the amounts received by us on our interest-earning assets and the interest paid by us on our interest-bearing liabilities.
Additionally, 2022 through 2024 had elevated levels of inflation and interest rates, with a modest decline in interest rates during mid-2024, before increasing again near the end of 2024. If these conditions persist, it could also cause increased volatility and uncertainty in the business environment, which could adversely affect loan demand and our clients’ ability to repay indebtedness.
If inflation and interest rates increase, it could also cause increased volatility and uncertainty in the business environment, which could adversely affect loan demand and our clients’ ability to repay indebtedness. All of these factors are generally detrimental to our business.
If we are unable to attract and retain banking and 21 Table of Contents mortgage customers, we may be unable to continue to grow our business, and our financial condition and results of operations may be adversely affected.
If we are unable to attract and retain banking and mortgage customers, we may be unable to continue to grow our business, and our financial condition and results of operations may be adversely affected. Many of our non-bank competitors are not subject to the same extensive regulations that govern our activities and may have greater flexibility in competing for business.
In addition, some of our current commercial banking customers may seek alternative banking sources as they develop needs for credit facilities larger than we may be able to accommodate. Our inability to compete successfully in the markets in which we operate could have an adverse effect on our business, financial condition or results of operations.
Our inability to compete successfully in the markets in which we operate could have an adverse effect on our business, financial condition or results of operations.
The slope of the yield curve affects our net interest income and we could experience net interest margin compression if our interest earning assets reprice downward while our interest-bearing liability rates fail to decline in tandem.
Alternatively, certain securities, for which a fair value option has been elected, will require the company to recognize gains or losses into income currently as there are changes in value. 29 Table of Contents The slope of the yield curve affects our net interest income and we could experience net interest margin compression if our interest earning assets reprice downward while our interest-bearing liability rates fail to decline in tandem.
Misconduct by our employees could include, but is not limited to, hiding unauthorized activities from us, improper or unauthorized activities on behalf of our customers or improper use of confidential information. It is not always possible to prevent employee errors and misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases.
It is not always possible to prevent employee errors and misconduct, and the precautions we take to prevent and detect this activity may not be effective in all cases. Employee errors could also subject us to financial claims for negligence.
As a result, they may be able to offer additional or superior products to those that we will be able to offer, which would put us at a competitive disadvantage. Accordingly, a risk exists that we will not be able to effectively implement new technology-driven products and services or be successful in marketing such products and services to our customers.
Many of our larger competitors have substantially greater resources to invest in technological improvements. As a result, they may be able to offer additional or superior products to those that we will be able to offer, which would put us at a competitive disadvantage.
We are subject to heightened regulatory requirements because we exceed $10 billion in assets . ​ At December 31, 2024 we had total assets of $18.8 billion. We expect to continue to exceed $10 billion in total assets in the future. Upon crossing that threshold, we became subject to increased regulatory scrutiny and expectations imposed by the Dodd-Frank Act.
We are subject to heightened regulatory requirements because we exceed $10 billion in assets . ​ As a financial institution over $10 billion in total assets, we are subject to increased regulatory scrutiny and expectations imposed by the Dodd-Frank Act, including the direct oversight and examination authority of the CFPB.
If debt securities in an unrealized loss position are sold, such losses become realized and will reduce our regulatory capital ratios. Alternatively, certain securities, for which a fair value option has been elected, will require the company to recognize gains or losses into income currently as there are changes in value.
If debt securities in an unrealized loss position are sold, such losses become realized and will reduce our regulatory capital ratios.
However, in 2023, after exceeding $10 billion in total assets for four consecutive quarters, Merchants Bank became subject to direct examination of the CFPB. We cannot be certain how such direct examination will continue to impact us. Additionally, institutions over $10 billion are also subject to limits on interchange fees paid by merchants when debit cards are used as payment.
Additionally, institutions over $10 billion are also subject to limits on interchange fees paid by merchants when debit cards are used as payment.
If the goodwill that we have recorded or may record in connection with a business acquisition becomes impaired, it could require charges to earnings. Goodwill represents the amount by which the cost of an acquisition exceeded the fair value of net assets we acquired in connection with the purchase of another financial institution.
Our financial condition, results of operations, financial reporting and reputation could be negatively affected if we rely on materially misleading, false, inaccurate or fraudulent information. 23 Table of Contents If the goodwill that we have recorded or may record in connection with a business acquisition becomes impaired, it could require charges to earnings.
Our regulators may also consider our compliance with their standards when examining our operations generally or considering any request for regulatory approval we may make. ​ Previously, while Merchants Bank was subject to regulations adopted by the CFPB, the FDIC was primarily responsible for examining Merchants Bank’s compliance with consumer protection laws and the CFPB’s regulations.
Compliance with the standards imposed by our regulators because of such scrutiny and expectations could increase our operational costs. Our regulators may also consider our compliance with their standards when examining our operations generally or considering any request for regulatory approval we may make. ​ We cannot be certain how such direct examination will continue to impact us.
Many of our non-bank competitors are not subject to the same extensive regulations that govern our activities and may have greater flexibility in competing for business. The financial services industry could become even more competitive as a result of legislative, regulatory and technological changes and continued consolidation.
The financial services industry could become even more competitive as a result of legislative, regulatory and technological changes and continued consolidation. In addition, some of our current commercial banking customers may seek alternative banking sources as they develop needs for credit facilities larger than we may be able to accommodate.
We are subject to certain operational risks, including customer or employee fraud and data processing system failures and errors. Employee errors and employee and/or customer misconduct could subject us to financial losses or regulatory sanctions and seriously harm our reputation or financial performance.
Employee errors and employee and/or customer misconduct could subject us to financial losses or regulatory sanctions and seriously harm our reputation or financial performance. Misconduct by our employees could include, but is not limited to, hiding unauthorized activities from us, improper or unauthorized activities on behalf of our customers or improper use of confidential information.
Removed
Adoption of AI may present significant challenges relating to compliance risk, credit risk, reputation risk, and operational risk. ​ Advances in computing capacity, combined with greater availability of data and improvements in analytical techniques, continue to expand opportunities for banks to leverage AI for various risk management and operational purposes.
Added
Interest rates had been historically low in recent years, but the market experienced interest rate increases throughout 2023 and most of 2024 but began to decrease or stabilize during 2025.
Removed
Compliance with the standards imposed by our regulators because of such scrutiny and expectations could increase our operational costs.
Added
If we do not effectively manage our credit risk, we may experience increased levels of delinquencies, nonperforming loans and charge-offs, which could require increases in our provision for credit losses.
Removed
The Basel III regulatory capital reforms, or Basel III, not only increased most of the required minimum regulatory capital ratios, but also introduced a new common equity Tier 1 capital ratio and the concept of a capital conservation buffer.
Added
Accordingly, a risk exists that we will not be able to effectively implement new technology-driven products and services or be successful in marketing such products and services to our customers. We are subject to certain operational risks, including customer or employee fraud and data processing system failures and errors.
Removed
Basel III also expanded the definition of capital by establishing additional criteria that capital instruments must meet to be considered additional Tier 1 and Tier 2 capital.
Added
We cannot predict the occurrence and potential impact of power or utility failures or loss of access to technology and operational systems; natural disasters, effects of climate change, or severe weather; pandemics or health 28 Table of Contents crises; shutdowns of mass transit; physical security incidents; damage to or loss of property or collateral; key personnel unavailability; civil or political unrest; international hostilities; terrorist acts; or other extraordinary events beyond our control.
Removed
Institutions must also maintain a capital conservation buffer consisting of common equity Tier 1 capital.
Added
These events may impair our ability to serve customers, transact with counterparties, or access market infrastructure, may require significant resources to remediate, may result in losses or liabilities, expose us to litigation, regulatory actions, or penalties, and may harm our reputation.
Added
We maintain a business continuity plan designed to mitigate the impact of these unexpected incidents and to ensure limited reputational and financial losses.
Added
However, not every disruption can be anticipated or mitigated, and there can be no assurance our measures will be effective, particularly during simultaneous, prolonged, or widespread events, or where response is hindered by the dispersion or concentration of our workforce, assets, or vendors, or by the preparedness of public and private parties.
Added
Indirect effects could increase delinquencies, bankruptcies, defaults, charge-offs, and required credit loss provisions, reduce demand for our products and services, and otherwise adversely affect our business, financial condition, and results of operations. Market, Interest Rate, and Liquidity Risks Fluctuations in interest rates may reduce net interest income and otherwise negatively impact our financial condition and results of operations.
Added
The federal banking regulations impose certain minimum capital requirements on financial institutions, including definitions of what capital constitutes Tier 1 and Tier 2 capital and establish a capital conservation buffer, and categorize financial institutions based on the institution’s capital levels in comparison to such minimum and buffer.
Added
The Company currently has an approved CRA strategic plan. 33 Table of Contents We are subject to a complex set of laws relating to our processing and safeguarding of personal information. As a financial institution, we necessarily collect, use, store, and share substantial amounts of personal data belonging to our customers, prospective customers, employees, job applicants, and other individuals.
Added
Many U.S. federal and state governmental authorities have adopted and are considering adopting legislative and regulatory initiatives relating to data privacy. These evolving requirements increase the complexity and cost of compliance, may limit our ability to develop or offer certain products or services, require changes to our business practices or system architecture, and may demand ongoing management attention.
Added
In addition, we depend on third-party vendors and other external parties to maintain appropriate safeguards when exchanging information, and deficiencies in their controls could expose us to additional risk.
Added
Failure to comply with these requirements, or litigation and enforcement actions relating to them, could result in financial losses, remediation costs, heightened regulatory scrutiny, loss of customers or employees, and reputational harm. We face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe believe that our facilities are in good condition and are adequate to meet our operating needs for the foreseeable future.
Biggest changeWe believe that our facilities are in good condition and are adequate to meet our operating needs for the foreseeable future. The Company also owns the Merchants Capital headquarters, opened in 2025, at 420 3 rd Ave. SW in Carmel, Indiana.
Board-approved policies are in place to effectively mitigate risks linked to third-party service providers, encompassing factors such as availability, confidentiality, and governance and compliance. As part of this risk mitigation, the Company actively monitors vendors’ cybersecurity practices through periodic assessments and contractual security requirements. This ensures that vendors adhere to our security standards and promptly address emerging threats or vulnerabilities.
Board-approved policies are in place to effectively mitigate risks linked to third-party service providers, encompassing factors such as availability, confidentiality, governance and compliance. As part of this risk mitigation, the Company actively monitors vendors’ cybersecurity practices through periodic assessments and contractual security requirements. This ensures that vendors adhere to our security standards and promptly address emerging threats or vulnerabilities.
Standards over information security are Board-approved and various types of control testing is conducted throughout the year, by internal and external parties. Recommendations are implemented and reported to various committees. These security and privacy policies and procedures, aimed at protecting personal and confidential 34 Table of Contents information, are in effect across all businesses and geographic locations.
Standards over information security are Board-approved and various types of control testing is conducted throughout the year, by internal and external parties. Recommendations are implemented and reported to various committees. These security and privacy policies and procedures, aimed at protecting personal and confidential information, are in effect across all businesses and geographic locations.
The Company employes a defense in depth posture, designed to safeguard information, prevent unauthorized access, detect, and respond to threats, and maintain the confidentiality, integrity, and availability of data.
The Company employs a defense in depth posture, designed to safeguard information, prevent unauthorized access, detect, and respond to threats, and maintain the confidentiality, integrity, and availability of data.
The IT committee membership includes senior management from business units, as well as information security risk experts such as the Information Security Officer, experts from Enterprise Risk Management, Internal Audit, and Information Technology Leaders.
The IT committee membership includes the President & COO and senior management from business units, as well as information security risk experts such as the Information Security Officer, experts from Enterprise Risk Management, Internal Audit, and Information Technology Leaders.
These laws require banks to periodically disclose their privacy policies and practices relating to sharing such information and permitting customers to opt out of their ability to share information with unaffiliated third parties under certain circumstances.
These laws require banks to periodically disclose their privacy policies and practices relating to sharing such information and 34 Table of Contents permitting customers to opt out of their ability to share information with unaffiliated third parties under certain circumstances.
Recognizing people as a key component of an effective information security program, the Merchants Information Security Program strives to enhance education and awareness at all levels of the Company. One critical component of education and awareness is an internal cybersecurity committee, comprised of employees from all levels and departments, who act as embedded security representatives for their business units.
Recognizing people as a key component of an effective information security program, the Merchants Information Security Program strives to enhance education and awareness at all levels of the Company. One critical component of education and awareness is an internal Cyber Champions program, comprised of employees from all levels and departments, who act as embedded security representatives for their business units.
They have multiple industry leading certifications, including nine GIAC and CISSP from the ISC2 and a Master of Engineering in Cybersecurity Policy and Compliance. ​ The Information Security Officer presents an Annual Information Security Review to the board which summarizes the previous year’s threat landscape, risk assessment, service provider, and audit testing activities, results of security incidents, information security program changes, and future strategies and recommendations. ​ 35 Table of Contents Item 2.
They have multiple industry leading certifications, including eleven GIAC certifications and the CISSP from the ISC2 and a Master of Engineering in Cybersecurity Policy and Compliance. ​ The Information Security Officer presents an Annual Information Security Review to Merchants Bank’s board which summarizes the previous year’s threat landscape, risk assessment, service provider, and audit testing activities, results of security incidents, information security program changes, and future strategies and recommendations. ​ Item 2.
The Company has established conditions to quickly respond to a cyber incident, ensuring a resilient, information environment. Governance The Board established an IT Committee to assist executive management and the Board of Directors of the Bank in fulfilling their oversight responsibilities related to information security.
The Company has established conditions to quickly respond to a cyber incident, ensuring a resilient, information environment. Governance The Board established an IT Committee to assist executive management and the board of Merchants Bank in fulfilling their oversight responsibilities related to information security for all Merchants Bancorp entities.
At the IT Committee meetings, security-related policies and standards are reviewed and approved, annual risk assessment results and action plans are noted, annual penetration test reports shared, current security incidents discussed, emerging threats reported on, and relevant cyber risks and trends are presented. The IT Committee is responsible for governing the assessment and treatment of cyber risks.
At the quarterly IT Committee meetings, security-related policies and standards are reviewed and approved, annual risk assessment results and action plans are noted, annual penetration 35 Table of Contents test reports shared, current security incidents discussed, emerging threats reported on, and relevant cyber risks and trends are presented.
Properties. The Company owns its headquarters building, which includes a Merchants Bank branch at 410 Monon Blvd. in Carmel, Indiana. Its headquarters is currently in the process of being expanded. Employees of all three of our segments have operations in this location. There are also several other branches and small offices in Indiana and other states.
Properties. The Company owns its headquarters building, which includes a Bank branch at 410 Monon Blvd. in Carmel, Indiana. Employees of all three of our segments have operations in these locations. There are also several other branches and small offices in Indiana and other states.
The Committee reports its activities, key conclusions, and recommendations to the Board on a quarterly basis. ​ The Chief Administrative Officer is responsible for the appointment of the Information Security Officer.
The IT Committee is responsible for governing the assessment and treatment of cyber risks. The Committee reports its activities, key conclusions, and recommendations to Merchants Bank‘s board on a quarterly basis. ​ The Chief Administrative Officer is responsible for the appointment of the Information Security Officer.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. ​ Mine Safety Disclosures ​ 36 ​ ​ ​ PART II ​ ​ ​ ​ ​ ​ Item 5. ​ Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ 36 ​ ​ ​ Item 6. ​ Selected Financial Data ​ 38 ​ ​ ​ Item 7. ​ Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 40 ​ ​ ​ Item 7A. ​ Quantitative and Qualitative Disclosures About Market Risk ​ 68 ​ ​ ​ Item 8. ​ Financial Statements and Supplementary Data ​ 71 ​ ​ ​
Biggest changeItem 4. ​ Mine Safety Disclosures ​ 36 ​ ​ ​ PART II ​ ​ ​ ​ ​ ​ Item 5. ​ Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ​ 37 ​ ​ ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+0 added−0 removed4 unchanged
Biggest changeSee Part I, Item 1 - “Supervision and Regulation—Merchants Bank – Dividends.” ​ 36 Table of Contents Stock Performance Graph The following graph compares the cumulative total shareholder return on our common stock from December 31, 2019 through December 31, 2024. The graph compares our common stock with the Nasdaq Composite Index and the Nasdaq Bank Index.
Biggest changeSee Part I, Item 1 - “Supervision and Regulation—Merchants Bank – Dividends and Part 7 – “Management’s Discussion and Analysis – “Recent Developments and Material Trends – Memorandum of Understanding” and “Liquidity and Capital Resources - Capital Adequacy.” ​ 37 Table of Contents Stock Performance Graph The following graph compares the cumulative total shareholder return on our common stock from December 31, 2020 through December 31, 2025.
Any future determination to pay dividends to holders of our common stock will depend on our results of operations, financial condition, capital requirements, banking regulations, payment of dividends on our preferred stock, contractual restrictions and any other factors that our board of directors may deem relevant.
Any future determination to pay dividends to holders of our common stock will depend on our results of operations, financial condition, capital requirements, banking regulations, payment of dividends on our preferred stock, contractual restrictions and any other factors that our Board may deem relevant.
The graph assumes an investment of $100.00 in our common stock and each index on December 31, 2019 and reinvestment of all quarterly dividends. Measurement points are December 31, 2019 and the last trading day of each subsequent quarter through December 31, 2024.
The graph compares our common stock with the Nasdaq Composite Index and the Nasdaq Bank Index. The graph assumes an investment of $100.00 in our common stock and each index on December 31, 2020 and reinvestment of all quarterly dividends. Measurement points are December 31, 2020 and the last trading day of each subsequent quarter through December 31, 2025.
Unregistered Sales and Repurchases of Equity Securities None. ​ 37 Table of Contents
Unregistered Sales and Repurchases of Equity Securities None. ​ Item 6. [Reserved] ​ ​ ​ ​ 38 Table of Contents
Dividend Policy It has been our policy to pay quarterly dividends to holders of our common stock, and we intend to continue paying dividends. Our dividend policy and practice may change in the future, however, and our board of directors may change or eliminate the payment of future dividends at its discretion, without notice to our shareholders.
Our dividend policy and practice may change in the future, however, and our Board may change or eliminate the payment of future dividends at its discretion, without notice to our shareholders.
Merchants Bank is also subject to various legal, regulatory and other restrictions on its ability to pay dividends and make other distributions and payments to us.
Merchants Bank is also subject to various legal, regulatory and other restrictions on its ability to pay dividends and make other distributions and payments to us. Additionally, under its MOU, if Merchants Bank’s capital ratios fall below certain minimum levels, Merchants Bank may not pay dividends without the FDIC and IDFI’s prior consent.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock began trading on the Nasdaq under the symbol “MBIN” on October 27, 2017. Prior to that date, there was no public market for our common stock. On February 24, 2025, the closing price of our common stock was $41.21.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Our common stock is traded on the Nasdaq under the symbol “MBIN”. On February 18, 2026, the closing price of our common stock was $46.45. As of February 18, 2026, there were 45,962,065 shares of our common stock outstanding and 33 shareholders of record.
As of February 24, 2025, there were 45,850,904 shares of our common stock outstanding and 32 shareholders of record. A substantially greater number of holders of our common stock are “street name” or beneficial holders, whose shares are held by banks, brokers and other financial institutions.
A substantially greater number of holders of our common stock are “street name” or beneficial holders, whose shares are held by banks, brokers and other financial institutions. Dividend Policy It has been our policy to pay quarterly dividends to holders of our common stock, and we intend to continue paying dividends.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Selected Financial Data. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or for the Year Ended December 31, ​ 2024 2023 2022 2021 2020 ​ ​ (Dollars in thousands, except per share data) ​ Balance Sheet Data: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Assets ​ $ 18,805,732 ​ $ 16,952,516 ​ $ 12,615,227 ​ $ 11,278,638 ​ $ 9,645,375 ​ Loans held for investment ​ 10,438,388 ​ 10,199,553 ​ 7,470,872 ​ 5,782,663 ​ 5,535,426 ​ Allowance for credit losses (1) ​ (84,386) ​ (71,752) ​ (44,014) ​ (31,344) ​ (27,500) ​ Loans held for sale ​ 3,771,510 ​ 3,144,756 ​ 2,910,576 ​ 3,303,199 ​ 3,070,154 ​ Deposits ​ 11,919,976 ​ 14,061,460 ​ 10,071,345 ​ 8,982,613 ​ 7,408,066 ​ Total liabilities ​ 16,562,422 ​ 15,251,432 ​ 11,155,488 ​ 10,123,229 ​ 8,834,754 ​ Total shareholders' equity ​ 2,243,310 ​ 1,701,084 ​ 1,459,739 ​ 1,155,409 ​ 810,621 ​ Tangible common shareholders' equity (non-GAAP) ​ 1,563,102 ​ 1,184,889 ​ 943,100 ​ 775,708 ​ 579,847 ​ Statement of Income Data: ​ ​ ​ ​ ​ ​ Interest Income ​ $ 1,302,720 ​ $ 1,077,798 ​ $ 480,833 ​ $ 311,886 ​ $ 282,790 ​ Interest Expense ​ 780,100 ​ 629,727 ​ 162,282 ​ 33,892 ​ 58,644 ​ Net interest income ​ 522,620 ​ 448,071 ​ 318,551 ​ 277,994 ​ 224,146 ​ Provision for credit losses ​ 24,278 ​ 40,231 ​ 17,295 ​ 5,012 ​ 11,838 ​ Noninterest income ​ 148,112 ​ 114,668 ​ 125,936 ​ 157,333 ​ 127,473 ​ Noninterest expense ​ 223,812 ​ 174,601 ​ 136,050 ​ 125,385 ​ 96,424 ​ Income before taxes ​ 422,642 ​ 347,907 ​ 291,142 ​ 304,930 ​ 243,357 ​ Provision for income taxes ​ 102,256 ​ 68,673 ​ 71,421 ​ 77,826 ​ 62,824 ​ Net income ​ 320,386 ​ 279,234 ​ 219,721 ​ 227,104 ​ 180,533 ​ Preferred stock dividends ​ 34,909 ​ 34,670 ​ 25,983 ​ 20,873 ​ 14,473 ​ Impact of preferred stock redemption ​ ​ 1,823 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ Net income available to common shareholders ​ $ 283,654 ​ $ 244,564 ​ $ 193,738 ​ $ 206,231 ​ $ 166,060 ​ Credit Quality Data: ​ ​ ​ ​ ​ ​ Nonperforming loans ​ $ 279,722 ​ $ 82,015 ​ $ 26,683 ​ $ 761 ​ $ 6,321 ​ Nonperforming loans to total loans receivable ​ 2.68 % 0.80 % 0.36 % 0.01 % 0.11 % Nonperforming assets ​ $ 287,931 ​ $ 82,015 ​ $ 26,683 ​ $ 761 ​ $ 6,321 ​ Nonperforming assets to total assets ​ 1.53 % 0.48 % 0.21 % 0.01 % 0.07 % Allowance for credit losses to total loans ​ 0.81 % 0.70 % 0.59 % 0.54 % 0.50 % Allowance for credit losses to nonperforming loans ​ 30.17 % 87.49 % 164.95 % 4,118.79 % 435.06 % Net charge-offs to average loans and loans held for sale ​ 0.07 % 0.08 % 0.01 % 0.01 % 0.00 % Per Share Data (Common Stock): ​ ​ ​ ​ ​ ​ Diluted earnings per share ​ $ 6.30 ​ $ 5.64 ​ $ 4.47 ​ $ 4.76 ​ $ 3.85 ​ Dividends declared ​ $ 0.36 ​ $ 0.32 ​ $ 0.28 ​ $ 0.24 ​ $ 0.21 ​ Tangible book value (non-GAAP) ​ $ 34.15 ​ $ 27.40 ​ $ 21.88 ​ $ 17.96 ​ $ 13.45 ​ Weighted average shares outstanding ​ ​ ​ ​ ​ ​ Basic ​ 44,855,100 ​ 43,224,042 ​ 43,164,477 ​ 43,172,078 ​ 43,113,741 ​ Diluted ​ 45,004,786 ​ 43,345,799 ​ 43,316,904 ​ 43,325,303 ​ 43,167,113 ​ Shares outstanding at period end ​ 45,767,166 ​ 43,242,928 ​ 43,113,127 ​ 43,180,079 ​ 43,120,625 ​ Performance Metrics: ​ ​ ​ ​ ​ ​ Return on average assets ​ 1.79 % 1.85 % 1.99 % 2.23 % 2.12 % Return on average equity ​ 16.86 % 17.63 % 17.21 % 22.07 % 25.09 % Return on average tangible common equity (non-GAAP) ​ 20.16 % 22.92 % 22.50 % 30.10 % 34.02 % Net interest margin ​ 3.03 % 3.06 % 2.97 % 2.79 % 2.69 % Efficiency ratio (non-GAAP) ​ 33.37 % 31.03 % 30.61 % 28.80 % 27.42 % Loans and loans held for sale to deposits ​ 119.21 % 94.90 % 103.08 % 101.15 % 116.17 % Capital Ratios—Merchants Bancorp: ​ ​ ​ ​ ​ ​ Tangible common equity to tangible assets (non-GAAP) ​ 8.3 % 7.0 % 7.5 % 6.9 % 6.0 % Tier 1 common equity to risk-weighted assets ​ 9.3 % 7.8 % 7.7 % n/a % n/a % Tier 1 leverage ratio/CBLR ​ 12.1 % 10.1 % 11.7 % 10.4 % 8.6 % Tier 1 capital to risk-weighted assets ​ 13.3 % 11.1 % 11.7 % n/a % n/a % Total capital to risk-weighted assets ​ 13.9 % 11.6 % 12.2 % n/a % n/a % Capital Ratios—Merchants Bank Only: ​ ​ ​ ​ ​ ​ Tier 1 common equity to risk-weighted assets ​ 12.3 % 10.9 % 11.3 % n/a % n/a % Tier 1 capital to average assets ​ 11.2 % 10.1 % 11.3 % 10.3 % 8.7 % Tier 1 capital to risk-weighted assets ​ 12.3 % 10.9 % 11.3 % n/a % n/a % Total capital to risk-weighted assets ​ 12.9 % 11.5 % 11.7 % n/a % n/a % ​ (1) The Company adopted FASB ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“CECL”) on January 1, 2022.
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Item 6. ​ [Reserved] ​ 38 ​ ​ ​ Item 7. ​ Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 39 ​ ​ ​ Item 7A. ​ Quantitative and Qualitative Disclosures About Market Risk ​ 69 ​ ​ ​ Item 8. ​ Financial Statements and Supplementary Data ​ 72 ​ ​ ​
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ASU 2016-13 replaces the allowance for loan losses that used incurred loss impairment methodology in 2021-2020 with an allowance based on expected losses. ​ ​ 38 Table of Contents NON-GAAP FINANCIAL MEASURES Some of the financial measures included in this report are not measures of financial performance recognized by GAAP.
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Our management uses these non-GAAP financial measures in its analysis of our performance. These non-GAAP financial measures include presentation of tangible common shareholders’ equity, tangible book value per share, tangible common shareholders’ equity to tangible assets, return on average tangible common equity, and efficiency ratio.
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The reconciliation from shareholders’ equity per GAAP to tangible common shareholders’ equity is comprised of goodwill and intangibles. The reconciliation from consolidated assets per GAAP to tangible assets is comprised solely of consolidated assets less goodwill and intangibles. The efficiency ratio represents noninterest expense divided by the sum of interest income, less provision for credit losses, and noninterest income.
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Tangible book value per common share represents tangible common shareholders’ equity divided by ending common shares. Return on average tangible common equity represents net income available to common shareholders divided by average shareholders’ equity, less average goodwill, average intangibles, and average preferred stock.
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We believe that these non-GAAP financial measures provide useful information to management and investors that is supplementary to our financial condition, results of operations and cash flows computed in accordance with GAAP; however, we acknowledge that the non-GAAP financial measures have a number of limitations.
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As such, you should not view these disclosures as a substitute for results determined in accordance with GAAP, and these disclosures are not necessarily comparable to non-GAAP financial measures that other companies use.
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A reconciliation of GAAP to non-GAAP financial measures is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ 2024 2023 2022 2021 2020 ​ ​ (Dollars in thousands) Tangible common shareholders’ equity: ​ ​ ​ ​ ​ ​ Shareholders’ equity per GAAP ​ $ 2,243,310 ​ $ 1,701,084 ​ $ 1,459,739 ​ $ 1,155,409 ​ $ 810,621 ​ Less: goodwill & intangibles ​ (8,073) ​ (16,587) ​ (17,031) ​ (17,552) ​ (18,128) ​ Tangible shareholders’ equity ​ 2,235,237 ​ 1,684,497 ​ 1,442,708 ​ 1,137,857 ​ 792,493 ​ Less: preferred stock ​ (672,135) ​ (499,608) ​ (499,608) ​ (362,149) ​ (212,646) ​ Tangible common shareholders’ equity ​ $ 1,563,102 ​ $ 1,184,889 ​ $ 943,100 ​ $ 775,708 ​ $ 579,847 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average tangible common shareholders’ equity: ​ ​ ​ ​ ​ ​ Average shareholders’ equity per GAAP ​ $ 1,900,130 ​ $ 1,583,485 ​ $ 1,276,443 ​ $ 1,028,834 ​ $ 719,630 ​ Less: average goodwill & intangibles ​ (8,697) ​ (16,801) ​ (17,293) ​ (17,841) ​ (18,899) ​ Less: average preferred stock ​ (484,391) ​ (499,608) ​ (398,182) ​ (325,904) ​ (212,646) ​ Average tangible common shareholders’ equity ​ $ 1,407,042 ​ $ 1,067,076 ​ $ 860,968 ​ $ 685,089 ​ $ 488,085 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tangible assets: ​ ​ ​ ​ ​ ​ Assets per GAAP ​ $ 18,805,732 ​ $ 16,952,516 ​ $ 12,615,227 ​ $ 11,278,638 ​ $ 9,645,375 ​ Less: goodwill & intangibles ​ (8,073) ​ (16,587) ​ ​ (17,031) ​ ​ (17,552) ​ (18,128) ​ Tangible assets ​ $ 18,797,659 ​ $ 16,935,929 ​ $ 12,598,196 ​ $ 11,261,086 ​ $ 9,627,247 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Ending Common Shares ​ ​ 45,767,166 ​ ​ 43,242,928 ​ ​ 43,113,127 ​ ​ 43,180,079 ​ ​ 43,120,625 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tangible book value per common share ​ $ 34.15 ​ $ 27.40 ​ $ 21.88 ​ $ 17.96 ​ $ 13.45 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on average tangible common equity ​ ​ 20.16 % ​ 22.92 % ​ 22.50 % ​ 30.10 % ​ 34.02 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tangible common equity to tangible assets ​ 8.3 % 7.0 % 7.5 % 6.9 % 6.0 % ​ 39 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended ​ ​ ​ December 31, ​ ​ 2024 2023 2022 2021 2020 ​ Net income as reported per GAAP ​ $ 320,386 ​ $ 279,234 ​ $ 219,721 ​ $ 227,104 ​ $ 180,533 ​ Less: preferred stock dividends ​ ​ (34,909) ​ ​ (34,670) ​ ​ (25,983) ​ ​ (20,873) ​ ​ (14,473) ​ Less: impact of preferred stock redemption ​ ​ (1,823) ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ Net income available to common shareholders ​ $ 283,654 ​ $ 244,564 ​ $ 193,738 ​ $ 206,231 ​ $ 166,060 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Efficiency ratio (based on all GAAP metrics): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Noninterest expense ​ $ 223,812 ​ $ 174,601 ​ $ 136,050 ​ $ 125,385 ​ $ 96,424 ​ Net interest income (before provision for credit losses) ​ ​ 522,620 ​ ​ 448,071 ​ ​ 318,551 ​ ​ 277,994 ​ ​ 224,146 ​ Noninterest income ​ ​ 148,112 ​ ​ 114,668 ​ ​ 125,936 ​ ​ 157,333 ​ ​ 127,473 ​ Total revenues for efficiency ratio ​ $ 670,732 ​ $ 562,739 ​ $ 444,487 ​ $ 435,327 ​ $ 351,619 ​ Efficiency ratio ​ 33.37 % 31.03 % 30.61 % 28.80 % 27.42 % ​ ​ ​

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table presents an analysis of the ACL-Loans for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or For the Year ​ ​ Ended December 31, (Dollars in thousands) 2024 2023 2022 ​ ​ ​ Balance at beginning of period ​ $ 71,752 ​ $ 44,014 ​ $ 31,344 ​ Less charge-offs: ​ ​ ​ ​ Residential real estate ​ — ​ (34) ​ (4) ​ Multi-family financing ​ (5,282) ​ (8,400) ​ — ​ Healthcare financing ​ ​ (3,095) ​ ​ — ​ ​ — ​ Commercial and commercial real estate ​ (2,210) ​ (1,356) ​ (1,238) ​ Consumer and margin ​ — ​ (1) ​ (15) ​ Total charge-offs ​ (10,587) ​ (9,791) ​ (1,257) ​ Plus recoveries: ​ ​ ​ ​ Residential real estate ​ 14 ​ — ​ — ​ Multi-family financing ​ 46 ​ — ​ — ​ Commercial and commercial real estate ​ 76 ​ 41 ​ 746 ​ Consumer and margin ​ — ​ — ​ 7 ​ Total recoveries ​ 136 ​ 41 ​ 753 ​ Net (charge-offs) recoveries ​ (10,451) ​ (9,750) ​ (504) ​ Transfers out: ​ ​ ​ ​ ​ FMBI's ACL for loans sold ​ (593) ​ — ​ — ​ Impact of adopting CECL ​ ​ — ​ ​ — ​ ​ (299) ​ Provision for credit losses ​ 23,678 ​ 37,488 ​ 13,473 ​ Balance at end of period ​ $ 84,386 ​ $ 71,752 ​ $ 44,014 ​ Ratios: ​ ​ ​ ​ Total net charge-offs to total average loans and loans held for sale ​ (0.07) % (0.08) % (0.01) % Net charge-offs to average loans outstanding: Multi-family financing ​ ​ (0.12) % ​ (0.24) % ​ — % Net charge-offs to average loans outstanding: Healthcare financing ​ ​ (0.16) % ​ — % ​ — % Net charge-offs to average loans outstanding: Commercial and commercial real estate ​ ​ (0.14) % ​ (0.10) % ​ (0.07) % Net charge-offs to average loans outstanding: Consumer and margin ​ ​ — % ​ (0.01) % ​ (0.06) % Allowance for credit losses to nonperforming loans at end of period ​ 30.17 % 87.49 % 164.95 % Allowance for credit losses to total loans receivable at end of period ​ 0.81 % 0.70 % 0.59 % ​ The following table presents an analysis of the ACL-Loans for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At December 31, ​ ​ 2024 ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ Percent of ​ ​ ​ ​ ​ Percent of ​ ​ ​ ​ ​ Percent of ​ ​ ​ ​ Percent of ​ Loans in ​ ​ ​ Percent of ​ Loans in ​ ​ ​ Percent of ​ Loans in ​ ​ ​ ​ Allowance ​ Category ​ ​ ​ Allowance ​ Category ​ ​ ​ Allowance ​ Category ​ ​ ​ ​ to Loans ​ to Loans ​ ​ ​ to Loans ​ to Loans ​ ​ ​ to Loans ​ to Loans (Dollars in thousands) Amount Receivable Receivable Amount Receivable Receivable Amount Receivable Receivable ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage warehouse repurchase agreements ​ $ 3,816 5 % 14 % $ 2,070 3 % 7 % $ 1,249 3 % 6 % Residential real estate ​ 5,942 7 % 13 % 7,323 10 % 13 % 7,029 16 % 16 % Multi-family financing ​ 55,126 65 % 44 % 26,874 38 % 40 % 16,781 39 % 43 % Healthcare financing ​ ​ 8,562 ​ 10 % 14 % ​ 22,454 ​ 31 % 23 % ​ 9,882 ​ 22 % 21 % Commercial and commercial real estate ​ 10,293 12 % 14 % 12,243 17 % 16 % 8,326 19 % 13 % Agricultural production and real estate ​ 539 1 % 1 % 619 1 % 1 % 565 1 % 1 % Consumer and margin ​ 108 - % - % 169 - % - % 182 - % - % Total allowance for credit losses ​ $ 84,386 100 % 100 % $ 71,752 100 % 100 % $ 44,014 100 % 100 % 59 Table of Contents The following table sets forth the amounts of nonperforming loans and nonperforming assets at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At ​ ​ December 31, (Dollars in thousands) 2024 2023 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ Nonaccrual loans: ​ ​ ​ ​ Mortgage warehouse repurchase agreements ​ $ — ​ $ — ​ $ — ​ Residential real estate ​ ​ 6,154 ​ ​ 1,486 ​ ​ 245 ​ Multi-family financing ​ 201,508 ​ 39,608 ​ — ​ Healthcare financing ​ ​ 69,001 ​ ​ 28,783 ​ ​ 21,783 ​ Commercial and commercial real estate ​ 3,047 ​ 3,820 ​ 4,390 ​ Agricultural production and real estate ​ 6 ​ 147 ​ 147 ​ Consumer and margin ​ — ​ 3 ​ 6 ​ Total ​ 279,716 ​ 73,847 ​ 26,571 ​ Accruing loans 90 days or more past due: ​ ​ ​ ​ Residential real estate ​ — ​ 894 ​ 96 ​ Healthcare financing ​ ​ — ​ ​ 7,216 ​ ​ — ​ Commercial and commercial real estate ​ — ​ 43 ​ — ​ Agricultural production and real estate ​ 6 ​ — ​ — ​ Consumer and margin ​ — ​ 15 ​ 16 ​ Total ​ 6 ​ 8,168 ​ 112 ​ Total nonperforming loans ​ $ 279,722 ​ $ 82,015 ​ $ 26,683 ​ Real estate owned ​ 8,209 ​ — ​ — ​ Total nonperforming assets ​ $ 287,931 ​ $ 82,015 ​ $ 26,683 ​ Modifications/TDR 1 : ​ ​ ​ ​ Multi-family financing ​ $ 92,184 ​ $ — ​ $ — ​ Healthcare financing ​ ​ 13,961 ​ ​ — ​ — ​ Commercial and commercial real estate ​ ​ — ​ ​ 3,533 ​ ​ 3,533 ​ Total ​ $ 106,145 ​ $ 3,533 ​ $ 3,778 ​ Ratios: ​ ​ ​ ​ Total nonperforming loans to total loans ​ 2.68 % 0.80 % 0.36 % Total nonperforming loans to total assets ​ 1.49 % 0.48 % 0.21 % Total nonperforming assets to total assets ​ 1.53 % 0.48 % 0.21 % (1) On January 1, 2023, the Company adopted FASB ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326) Troubled Debt Restructurings and Vintage Disclosures, which eliminates the recognition and measurement of a TDR.
Biggest changeThe following table presents an analysis of the ACL-Loans for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of or For the Year ​ ​ Ended December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 ​ ​ (Dollars in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at beginning of period ​ $ 84,386 ​ $ 71,752 ​ $ 44,014 ​ Less charge-offs: ​ ​ ​ ​ ​ ​ ​ Residential real estate ​ — ​ — ​ (34) ​ Multi-family financing ​ (114,281) ​ (5,282) ​ (8,400) ​ Healthcare financing ​ ​ (7,497) ​ ​ (3,095) ​ ​ — ​ Commercial and commercial real estate ​ (2,338) ​ (2,210) ​ (1,356) ​ Consumer and margin ​ — ​ — ​ (1) ​ Total charge-offs ​ (124,116) ​ (10,587) ​ (9,791) ​ Plus recoveries: ​ ​ ​ ​ ​ ​ ​ Residential real estate ​ — ​ 14 ​ — ​ Multi-family financing ​ 49 ​ 46 ​ — ​ Commercial and commercial real estate ​ 78 ​ 76 ​ 41 ​ Total recoveries ​ 127 ​ 136 ​ 41 ​ Net (charge-offs) recoveries ​ (123,989) ​ (10,451) ​ (9,750) ​ Transfers out: ​ ​ ​ ​ ​ ​ ​ FMBI's ACL for loans sold ​ — ​ (593) ​ — ​ Provision for credit losses ​ 122,904 ​ 23,678 ​ 37,488 ​ Balance at end of period ​ $ 83,301 ​ $ 84,386 ​ $ 71,752 ​ Ratios: ​ ​ ​ ​ ​ ​ ​ Total net charge-offs to total average loans and loans held for sale ​ (0.85) % (0.07) % (0.08) % Net charge-offs to average loans outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Multi-family financing ​ ​ (2.29) % ​ (0.12) % ​ (0.24) % Healthcare financing ​ ​ (0.52) % ​ (0.16) % ​ — % Commercial and commercial real estate ​ ​ (0.15) % ​ (0.14) % ​ (0.10) % Consumer and margin ​ ​ — % ​ — % ​ (0.01) % Allowance for credit losses to nonperforming loans at end of period ​ 42.11 % 30.17 % 87.49 % Allowance for credit losses to total loans receivable at end of period ​ 0.75 % 0.81 % 0.70 % ​ The following table presents an analysis of the ACL-Loans for the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2025 ​ 2024 ​ 2023 ​ ​ ​ ​ ​ ​ Percent of ​ ​ ​ ​ ​ Percent of ​ ​ ​ ​ ​ Percent of ​ ​ ​ ​ Percent ​ Loans in ​ ​ ​ Percent ​ Loans in ​ ​ ​ Percent ​ Loans in ​ ​ ​ ​ of Allowance ​ Category ​ ​ ​ of Allowance ​ Category ​ ​ ​ of Allowance ​ Category ​ ​ ​ ​ by Loan ​ to Loans ​ ​ ​ by Loan ​ to Loans ​ ​ ​ by Loan ​ to Loans ​ ​ ​ ​ Amount ​ ​ ​ Type ​ ​ ​ Receivable ​ ​ ​ Amount ​ ​ ​ Type ​ ​ ​ Receivable ​ ​ ​ Amount ​ ​ ​ Type ​ ​ ​ Receivable ​ ​ (Dollars in thousands) Mortgage warehouse repurchase agreements ​ $ 4,269 5 % 14 % $ 3,816 5 % 14 % $ 2,070 3 % 7 % Residential real estate ​ 4,672 6 % 9 % 5,942 7 % 13 % 7,323 10 % 13 % Multi-family financing ​ 43,041 52 % 48 % 55,126 65 % 44 % 26,874 38 % 40 % Healthcare financing ​ ​ 18,595 ​ 22 % 13 % ​ 8,562 ​ 10 % 14 % ​ 22,454 ​ 31 % 23 % Commercial and commercial real estate ​ 11,998 14 % 15 % 10,293 12 % 14 % 12,243 17 % 16 % Agricultural production and real estate ​ 697 1 % 1 % 539 1 % 1 % 619 1 % 1 % Consumer and margin ​ 29 - % - % 108 - % - % 169 - % - % Total allowance for credit losses ​ $ 83,301 100 % 100 % $ 84,386 100 % 100 % $ 71,752 100 % 100 % 58 Table of Contents The following table sets forth the amounts of nonperforming loans and nonperforming assets at the dates indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 ​ ​ (Dollars in thousands) Nonaccrual loans: ​ ​ ​ ​ ​ ​ ​ Residential real estate ​ $ 7,680 ​ $ 6,154 ​ $ 1,486 ​ Multi-family financing ​ 128,241 ​ 201,508 ​ 39,608 ​ Healthcare financing ​ ​ 59,574 ​ ​ 69,001 ​ ​ 28,783 ​ Commercial and commercial real estate ​ 2,313 ​ 3,047 ​ 3,820 ​ Agricultural production and real estate ​ 4 ​ 6 ​ 147 ​ Consumer and margin ​ — ​ — ​ 3 ​ Total ​ 197,812 ​ 279,716 ​ 73,847 ​ Accruing loans 90 days or more past due: ​ ​ ​ ​ ​ ​ ​ Residential real estate ​ — ​ — ​ 894 ​ Healthcare financing ​ ​ — ​ ​ — ​ ​ 7,216 ​ Commercial and commercial real estate ​ — ​ — ​ 43 ​ Agricultural production and real estate ​ — ​ 6 ​ — ​ Consumer and margin ​ — ​ — ​ 15 ​ Total ​ — ​ 6 ​ 8,168 ​ Total nonperforming loans ​ $ 197,812 ​ $ 279,722 ​ $ 82,015 ​ Real estate owned ​ 60,145 ​ 8,209 ​ — ​ Total nonperforming assets ​ $ 257,957 ​ $ 287,931 ​ $ 82,015 ​ Modifications: ​ ​ ​ ​ ​ ​ ​ Multi-family financing ​ $ 113,469 ​ $ 92,184 ​ $ — ​ Healthcare financing ​ ​ 74,299 ​ ​ 13,961 ​ — ​ Commercial and commercial real estate ​ ​ 945 ​ ​ — ​ ​ 3,533 ​ Total ​ $ 188,713 ​ $ 106,145 ​ $ 3,533 ​ Ratios: ​ ​ ​ ​ ​ ​ ​ Total nonperforming loans to total loans receivable ​ 1.79 % 2.68 % 0.80 % Total nonperforming loans to total assets ​ 1.02 % 1.49 % 0.48 % Total nonperforming assets to total assets ​ 1.33 % 1.53 % 0.48 % ​ The ACL-Loans of $83.3 million at December 31, 2025 decreased $1.1 million, or 1%, compared to $84.4 million at December 31, 2024.
The Company redeemed all outstanding shares of the Series B Preferred Stock on January 2, 2025, at a price equal to the liquidation preference of $1,000 per share (equivalent to $25 per depositary share), or $125.0 million, using cash on hand.
On January 2, 2025, the Company redeemed all outstanding shares of the Series B Preferred Stock at a price equal to the liquidation preference of $1,000 per share (equivalent to $25 per depositary share), or $125.0 million, using cash on hand.
On November 25, 2024, the Company issued 9,200,000 depositary shares, each representing a 1/40 th interest in a share of its 7.625% Fixed Rate Reset Series E Non-Cumulative Perpetual Preferred Stock, without par value, and with a liquidation preference of $1,000 per share (equivalent to $25 per depositary share).
On November 25, 2024, the Company issued 9,200,000 depositary shares, each representing a 1/40 th interest in a share of its 7.625% Fixed Rate Series E Non-Cumulative Perpetual Preferred Stock, without par value, and with a liquidation preference of $1,000 per share (equivalent to $25 per depositary share).
On November 25, 2024, the Company issued 9,200,000 depositary shares, each representing a 1/40 th interest in a share of its 7.625% Fixed Rate Reset Series E Non-Cumulative Perpetual Preferred Stock, without par value, and with a liquidation preference of $1,000 per share (equivalent to $25 per depositary share).
On November 25, 2024, the Company issued 9,200,000 depositary shares, each representing a 1/40 th interest in a share of its 7.625% Fixed Rate Series E Non-Cumulative Perpetual Preferred Stock, without par value, and with a liquidation preference of $1,000 per share (equivalent to $25 per depositary share).
We review the reasonableness of the assumptions and the methodology to ensure the estimated fair value complies with GAAP. These variables change from quarter to quarter as market conditions and projected interest rates change and may have an adverse impact on the value of the mortgage-servicing right and may result in a reduction to noninterest income. Fair Value Measurements.
We review the reasonableness of the assumptions and the methodology to ensure the estimated fair value complies with GAAP. These variables change from quarter to quarter as market conditions and projected interest rates change and may have an adverse impact on the value of the mortgage-servicing right and may result in a reduction to noninterest income.
Fair value adjustments to the value of servicing rights are also included in noninterest income. Mortgage warehouse fees are accrued at the time of funding. Syndication fee income is recognized at the point in time when investor equity capital is obtained primarily to acquire qualifying investments in LIHTC projects for its funds.
Fair value adjustments to the value of servicing rights are also included in noninterest income. Mortgage warehouse fees are accrued at the time of funding. Syndication fee income is generally recognized at the point in time when investor equity capital is obtained primarily to acquire qualifying investments in LIHTC projects for its funds.
We manage our liquidity based upon factors that include: (a) our amount of custodial and brokered deposits as a percentage of total deposits (b) the level of diversification of our funding sources (c) the allocation and amount of our deposits among deposit types (d) the short-term funding sources used to fund assets (e) the amount of non-deposit funding used to fund assets (f) the availability of unused funding sources; (g) off-balance sheet obligations; (h) the availability of assets to be readily converted into cash without a material loss on the investment; (i) the amount of cash and cash equivalent; (j) the repricing characteristics of our assets; (k) maturity and duration of our assets when compared to the repricing characteristics of our liabilities; (l) costs of available funding options; and (m) other factors.
We manage our liquidity based upon factors that include: (a) the amount of custodial and brokered deposits as a percentage of total deposits (b) the level of diversification of our funding sources (c) the allocation and amount of our deposits among deposit types (d) the short-term funding sources used to fund assets (e) the amount of non-deposit funding used to fund assets (f) the availability of unused funding sources; (g) off-balance sheet obligations; (h) the availability of assets to be readily converted into cash without a material loss on the investment; (i) the amount of cash and cash equivalents; (j) the repricing characteristics of our assets; (k) maturity and duration of our assets when compared to the repricing characteristics of our liabilities; (l) costs of available funding options; and (m) other factors.
For the year ended December 31, 2024 there was a $17.9 million negative fair value adjustment on the securities that were offset by a $17.9 million positive fair value adjustment on the put options, hence having no net gain or loss recognized.
Similarly, for the year ended December 31, 2024 there was $17.9 million negative fair value adjustment on the securities that were offset by a $17.9 million positive fair value adjustment on the put options, hence having no net gain or loss recognized.
The Series E Preferred Stock have no voting rights with respect to matters that generally require the approval of our common shareholders. Dividends on the Series E Preferred Stock, to the extent declared by the Company’s board, are payable quarterly.
The Series E Preferred Stock have no voting rights with respect to matters that generally require the approval of our common shareholders. Dividends on the Series E Preferred Stock, to the extent declared by the Board, are payable quarterly.
The Company may redeem the Series E Preferred Stock, in whole or in part, at its option, on any dividend payment date on or after January 1, 2030, subject to the approval of the appropriate federal banking agency, at 64 Table of Contents the liquidation preference, plus any declared and unpaid dividends (without regard to any undeclared dividends) to, but excluding, the date of redemption.
The Company may redeem the Series E Preferred Stock, in whole or in part, at its option, on any dividend payment date on or after January 1, 2030, subject to the approval of the appropriate federal banking agency, at the 65 Table of Contents liquidation preference, plus any declared and unpaid dividends (without regard to any undeclared dividends) to, but excluding, the date of redemption.
Additional details are provided in the ACL-Loans portion of the Comparison of Financial Condition at December 31, 2024 and December 31, 2023. Because there could be unforeseen future losses, the Company continues to monitor the situation and may need to adjust future expectations as developments occur. Issuance and Redemption of Preferred Stock.
Additional details are provided in the ACL-Loans portion of the Comparison of Financial Condition at December 31, 2025 and 2024. Because there could be unforeseen future losses, the Company continues to monitor the situation and may need to adjust future expectations as developments occur. Issuance and Redemption of Preferred Stock.
Management believes, as of December 31, 2024 and December 31, 2023, that the Company and Merchants Bank met all capital adequacy requirements to which they were subject. ​ As of December 31, 2024 and December 31, 2023, the most recent notifications from the Federal Reserve categorized the Company as well capitalized and most recent notifications from the FDIC categorized Merchants Bank as well capitalized under the regulatory framework for prompt corrective action.
Management believes, as of December 31, 2025 and 2024, that the Company and Merchants Bank met all capital adequacy requirements to which they were subject. ​ As of December 31, 2025 and 2024, the most recent notifications from the Federal Reserve categorized the Company as well capitalized and most recent notifications from the FDIC categorized Merchants Bank as well capitalized under the regulatory framework for prompt corrective action.
The fair value of a financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. We estimate the fair value of a financial instrument and any related asset impairment using a variety of valuation methods.
Fair Value of Financial Instruments. The fair value measurement of a financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. We estimate the fair value of a financial instrument and any related asset impairment using a variety of valuation methods.
We currently operate in multiple business segments, including Multi-family Mortgage Banking that offers multi-family housing and healthcare facility financing and servicing, as well as syndicated low-income housing tax credit and debt funds; Mortgage Warehousing that offers mortgage warehouse financing, commercial loans, and deposit services; and Banking that offers portfolio lending for multi-family and healthcare facility loans, retail and correspondent residential mortgage banking, agricultural lending, SBA lending, and traditional community banking. ​ 41 Table of Contents Our business consists of funding low risk, multi-family, residential, and SBA loans meeting underwriting standards of government programs under an originate to sell model, and retaining adjustable-rate loans as held for investment to reduce interest rate risk.
We currently operate in multiple business segments, including Multi-family Mortgage Banking that offers multi-family housing and healthcare facility financing and servicing, as well as syndicated low-income housing tax credit and debt funds; Mortgage Warehousing that offers mortgage warehouse financing, commercial loans, and deposit services; and Banking that offers portfolio lending for multi-family and healthcare facility loans, retail and correspondent residential mortgage banking, jumbo lending, agricultural lending, SBA lending, and traditional community banking. ​ Our business consists of funding low risk, multi-family, residential, and SBA loans meeting underwriting standards of government programs under an originate-to-sell model, and retaining adjustable-rate loans as held for investment to reduce interest rate risk.
Noninterest Income. Noninterest income consists of, among other things: (a) gain on sale of loans; (b) loan servicing fees; (c) fair value adjustments to the value of servicing rights; (d) mortgage warehouse fees; and (e) syndication and asset management fees; and (f) other noninterest income.
Noninterest Income. Noninterest income consists of, among other things: (a) gain on sale of loans; (b) loan servicing fees; (c) fair value adjustments to the value of servicing rights, derivatives, and certain loans; (d) mortgage warehouse fees; and (e) syndication and asset management fees; and (f) other noninterest income.
Financial Condition The primary factors we use to evaluate and manage our financial condition are asset levels, liquidity, capital and asset quality. Asset Levels. We manage our asset levels based upon forecasted closings or fundings within our business segments to ensure we have the necessary liquidity and capital to meet the required regulatory capital ratios.
Financial Condition The primary factors we use to evaluate and manage our financial condition are asset levels, liquidity, capital and asset quality. Asset Levels. We manage our asset levels based upon forecasted closings within our business segments to ensure we have the necessary liquidity and capital to meet the required regulatory capital ratios.
On May 13, 2024, the Company issued 2.4 million shares of the Company’s common stock, without par value, at a public offering price of $43.00 per share in an underwritten public offering.
On May 16, 2024, the Company issued 2.4 million shares of the Company’s common stock, without par value, at a public offering price of $43.00 per share in an underwritten public offering.
The valuation model is from an independent third party and it incorporates assumptions that market participants would use in estimating future net servicing cash flows, such as the cost to service, the discount rate, the custodial assets earnings rate, an inflation rate, ancillary income, prepayment speeds, prepayment penalties, and default rates and losses.
The valuation model is from an independent third party and it incorporates assumptions that market participants would use in estimating future net servicing cash flows, such as the cost to service, the discount rate, the escrow earnings rate, an inflation rate, ancillary income, prepayment speeds, prepayment penalties, and default rates and losses.
Recently Issued Accounting Pronouncements For a discussion of the expected impact of accounting pronouncements recently issued but not adopted by us as of December 31, 2024, see Note 1: Nature of Operations and Summary of Significant Accounting Policies .
Recently Issued Accounting Pronouncements For a discussion of the expected impact of accounting pronouncements recently issued but not adopted by us as of December 31, 2025, see Note 1: Nature of Operations and Summary of Significant Accounting Policies .
Retail and commercial customers provide cross selling opportunities within the Banking segment. Merchants Mortgage is a risk mitigant to Mortgage Warehousing because it provides us with a ready platform to sell the underlying collateral to secure repayment. These and other synergies form a part of our strategic plan.
Retail and commercial customers provide cross selling opportunities within the Banking segment. Merchants Mortgage is a risk mitigant to 51 Table of Contents Mortgage Warehousing because it provides us with a ready platform to sell the underlying collateral to secure repayment. These and other synergies form a part of our strategic plan.
Loans receivable is presented net of the allowance to reflect the principal balance expected to be collected over the contractual term of the loans. This life of loan allowance is established through a provision for credit losses charged to net interest income as loans are recorded in the financial statements.
Loans receivable is presented net of the allowance to reflect the principal balance expected to be collected over the contractual term of the loans. This life of loan allowance is established through a provision for credit losses included in net interest income after provision for credit losses as loans are recorded in the financial statements.
Gain on sale of loans includes placement and origination fees, capitalized servicing rights, trading gains and losses, gains and losses on certain derivatives and other related income. Loan servicing fees are collected as payments are received for loans in the servicing portfolio and reduced by amortization on servicing rights.
Gain on sale of loans includes origination fees, capitalized servicing rights, trading gains and losses, exit and extension fees, gains and losses on certain derivatives and other related income. Loan servicing fees are collected as payments are received for loans in the servicing portfolio and reduced by amortization on servicing rights.
The aggregate gross offering proceeds for the shares issued by the Company was $230.0 million, and after deducting underwriting discounts and commissions and offering expenses of approximately $7.3 million paid to third parties, the Company received total net proceeds of $222.7 million.
The aggregate gross offering proceeds for the shares issued by the Company was $230.0 million, and after deducting underwriting discounts and commissions and offering expenses of approximately $7.3 million paid to third parties, the Company received total net proceeds of $222.7 million. Issuance of Common Stock.
Operating Segment Analysis for the Years Ended December 31, 2024 and 2023 We operate in three primary segments: Multi-family Mortgage Banking, Mortgage Warehousing, and Banking, as discussed in “Our Business Segments” of Item 1 and Note 23: Segment Information . The reportable segments are consistent with the internal reporting and evaluation of the principal lines of business of the Company.
Operating Segment Analysis Comparing the Years Ended December 31, 2025 and 2024 We operate in three primary segments: Multi-family Mortgage Banking, Mortgage Warehousing, and Banking, as discussed in “Our Business Segments” of Item 1 and Note 23: Segment Information . The reportable segments are consistent with the internal reporting and evaluation of the principal lines of business of the Company.
The gain on sale of these loans and servicing fees contribute to noninterest income. The funding source is primarily from mortgage custodial, municipal, retail, commercial, brokered deposits, and short-term borrowing.
The gain on sale of these loans and servicing fees contribute to noninterest income. The funding source is primarily from mortgage custodial, retail, commercial and brokered deposits, as well as short-term borrowing.
The provision for a reporting period also reflects increases or decreases in the allowance related to changes in credit loss expectations. Actual credit losses are charged against the allowance when management believes the uncollectability of a loan balance, or a portion thereof, is confirmed. Subsequent recoveries, if any, are credited to the allowance.
The provision for a reporting period also reflects increases or decreases in the allowance related to changes in credit loss expectations. Actual credit losses are charged against the allowance when management believes the loan balance, or a portion thereof, is uncollectible. Subsequent recoveries, if any, are credited to the allowance.
Other noninterest income included a $2.5 million negative adjustment to the fair value of floor derivatives for the year ended December 31, 2024 compared to a $6.6 million positive fair value adjustment for the year ended December 31, 2023.
Other noninterest income included a $5.5 million positive adjustment to the fair value of floor derivatives for the year ended December 31, 2025 compared to a $2.5 million negative fair value adjustment for the year ended December 31, 2024.
Salaries and employee benefits includes commissions, other compensation, employee benefits, and employer tax expenses for our personnel. Loan origination and servicing expenses include third party processing for financing activities and loan-related origination expenses. Occupancy expense includes depreciation expense on our owned properties, lease expense on our leased properties and other occupancy-related expenses.
Salaries and employee benefits includes commissions, other compensation, employee benefits, and employer tax expenses for our personnel. 41 Table of Contents Loan origination and servicing expenses include third party processing for financing activities and loan-related origination expenses. Occupancy expense includes depreciation expense on our owned properties, lease expense on our leased properties and other occupancy-related expenses.
Related asset management fees for syndicated LIHTC or debt funds are recognized over time. Other noninterest income includes the recognition and changes in value to protective derivatives associated with certain investment securities, as well as income earned on joint ventures. 42 Table of Contents Noninterest expense.
Related asset management fees for syndicated LIHTC or debt funds are recognized over time. Other noninterest income includes the recognition and changes in value to protective derivatives associated with certain investment securities and certain loans, as well as income earned on joint ventures. Noninterest expense.
Additional details are provided in the ACL-Loans portion of the Comparison of Financial Condition at December 31, 2024 and 2023, and in Note 1: Nature of Operations and Significant Accounting Policies and Note 5: Loans and Allowance for Credit Losses. Noninterest Income.
Additional details are provided in the ACL-Loans portion of the Comparison of Financial Condition at December 31, 2025 and 2024 , and in Note 1: Nature of Operations and Significant Accounting Policies and Note 5: Loans and Allowance for Credit Losses.
Noninterest expenses have increased significantly over the past few years as we have grown organically, and as we have built out and modernized our operational infrastructure and implemented our plan to build an efficient, technology-driven mortgage banking operation with significant operational capacity for growth. Return on Average Equity.
Noninterest expenses have increased significantly over the past few years as we have grown organically and also experienced challenges with nonperforming loans. Additionally, we have built out and modernized our operational infrastructure and implemented our plan to build an efficient, technology-driven mortgage banking operation with significant operational capacity for growth. Return on Average Equity.
Loan servicing fees reflected a positive fair market value adjustment of $20.5 million on servicing rights for the year ended December 31, 2024 compared to a positive fair market value adjustment of $3.9 million for the year ended December 31, 2023.
Loan servicing fees reflected a positive fair market value adjustment of $3.8 million on servicing rights for the year ended December 31, 2025 compared to a positive fair market value adjustment of $20.5 million for the year ended December 31, 2024.
The aggregate gross offering proceeds for the shares issued by the Company was $103.2 million, and after deducting underwriting discounts, commissions, and offering expenses of $5.5 million paid to third parties, the Company received total net proceeds of $97.7 million. As of December 31, 2024, the Company had 45,767,166 common shares issued and outstanding.
The aggregate gross offering proceeds for the shares issued by the Company was $103.2 million, and after deducting underwriting discounts, commissions, and offering expenses of $5.5 million paid to third parties, the Company received total net proceeds of $97.7 million. As of December 31, 2025, the Company had 45,893,172 common shares issued and outstanding.
We believe that the combination of net interest income and noninterest income from the sale of low risk profile assets results in lower than industry charge-offs and a lower expense base, which serves to maximize net income and higher than industry shareholder return. ​ See “Company Overview and Our Business Segments,” in Item 1 “ Business ”, “Operating Segment Analysis for the Years Ended December 31, 2024 and 2023” in Item 7 “Management’s Discussion and Analysis of Financial Condition and the Results of Operations”, and “Segment Information,” in Note 23: Segment Information for further information about our segments.
We believe that the combination of net interest income and noninterest income from the sale of low risk profile assets has traditionally resulted in lower than industry charge-offs and a lower expense base, which serves to maximize net income and higher than industry shareholder return. ​ 40 Table of Contents See “Company Overview and Our Business Segments,” in Item 1 “ Business ”, “Operating Segment Analysis for the Years Ended December 31, 2025 and 2024” in Item 7 “Management’s Discussion and Analysis of Financial Condition and the Results of Operations”, and “Segment Information,” in Note 23: Segment Information for further information about our segments.
Net cash used in investing activities, which consists primarily of net change in loans receivable and purchases, sales and maturities of investment securities and loans, was $(874.3) million and $(3.3) billion for the years ended December 31, 2024 and 2023, respectively.
Net cash used in investing activities, which consists primarily of net change in loans receivable and purchases, sales and maturities of investment securities and loans, was $195.7 million and $874.3 million for the years ended December 31, 2025 and 2024, respectively.
The Board declared a quarterly dividend of $0.09 per share in each quarter of 2024 and expects to raise its dividend in 2025. The Board declared a quarterly dividend of $0.10 per share for the first quarter of 2025. Capital Adequacy .
The Board declared a quarterly dividend of $0.10 per share in each quarter of 2025 and expects to raise its dividend in 2026. The Board declared a quarterly dividend of $0.11 per share for the first quarter of 2026. Capital Adequacy .
In doing so, the Company has been able to effectively reduce its risk-weighted assets and maintain well-capitalized capital ratios. Also see Note 5: Loans and Allowance for Credit Losses on Loans. ​ General and Administrative Expenses.
In doing so, the Company has been able to effectively reduce its risk-weighted assets and maintain well-capitalized capital ratios. In December 2025, the Company fully repaid its credit-linked notes. Also see Note 5: Loans and Allowance for Credit Losses on Loans. ​ General and Administrative Expenses.
The $15.2 million increase in gain on sale of loans reflects the successful execution of the Company’s strategy to grow the business segment and to increase non-interest income.
The $9.1 million increase in gain on sale of loans reflects the successful execution of the Company’s strategy to grow the business segment and to increase non-interest income.
On October 1, 2024, the dividends on the Series B Preferred Stock started to accrue at a floating rate of 3-month SOFR plus 4.831% and were to reset quarterly. The rate was 9.42% for the three months ended December 31 2024.
As of October 1, 2024, the dividends on the 6.00% Fixed-to-Floating Rate Series B Non-Cumulative Perpetual Preferred Stock started to accrue at a floating rate of 3-month SOFR plus 4.831% and were to reset quarterly. The rate was 9.42% for the three months ended December 31, 2024.
Under the fair value method, the servicing rights are 67 Table of Contents carried on the balance sheet at fair value and the changes in fair value are reported in earnings in the period in which the changes occur.
Under the fair value method, the servicing rights are carried on the balance sheet at fair value and the changes in fair value are reported in earnings in the period in which the changes occur.
Discussion and Analysis of the Company’s financial condition and the results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022 is contained in Item 7 of Form 10-K for the year ended December 31, 2023 filed with the SEC on March 12, 2024.
Discussion and Analysis of the Company’s financial condition and the results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 is contained in Item 7 of Form 10-K for the year ended December 31, 2024 filed with the SEC on February 28, 2025.
As of December 31, 2024, approximately 94% of the total net loans reprice within three months, which reduces the risk of market rate fluctuations. ​ ​ ​ ​ ​ ​ 56 Table of Contents The Company is a nationwide lender, especially in our largest portfolios of multi-family and healthcare financing.
As of December 31, 2025, approximately 96% of the total net loans reprice within three months, which reduces the risk of market rate fluctuations. The Company is a nationwide lender, especially in our largest portfolios of multi-family and healthcare financing.
Financial Condition As of December 31, 2024, we had approximately $18.8 billion in total assets, $11.9 billion in deposits, $4.4 billion in borrowings and $2.2 billion in total shareholders’ equity. Total assets as of December 31, 2024 included approximately $10.4 billion of loans receivable, net of ACL-Loans and $3.8 billion of loans held for sale.
Financial Condition As of December 31, 2025, we had approximately $19.4 billion in total assets, $13.0 billion in deposits, $3.8 billion in borrowings and $2.3 billion in total shareholders’ equity. Total assets as of December 31, 2025 included approximately $11.0 billion of loans receivable, net of ACL-Loans and $3.9 billion of loans held for sale.
This compared to the 9% industry increase in single-family residential loan volumes from the year ended December 31, 2024 to the same period in 2023, according to an estimate of industry volume by the Mortgage Bankers Association. ● The total volume of loans originated and acquired through our multi-family business was $6.2 billion and unchanged compared to the year ended December 31, 2023.
This compared to the 22% industry increase in single-family residential loan volumes from the year ended December 31, 2025 compared to the same period in 2024, according to an estimate of industry volume by the Mortgage Bankers Association. ● The total volume of loans originated and acquired through our multi-family business was $6.5 billion, an increase of $272.9 million, or 4%, compared to the year ended December 31, 2024.
Included in securities available for sale were $635.9 million and $722.5 million of investment for which a fair value option was elected at December 31, 2024 and 2023, respectively.
Included in securities available for sale were $571.3 million and $635.9 million of investment at December 31, 2025 and 2024, respectively, for which a fair value option was elected.
We generate interest income from interest (net of deferred origination fees received and costs paid, which are amortized over the expected life of the loans) and fees received on interest-earning assets, including loans, investment securities, cash, and dividends on FHLB stock we own. We incur interest expense from interest paid on interest-bearing liabilities, including interest-bearing deposits and borrowings.
We generate interest income from interest (net of deferred origination fees received and costs paid, which are amortized over the expected life of the loans) and fees received on interest-earning assets, including loans, investment securities, cash, and dividends on FHLB stock and other equity securities we own.
We manage the diversification and quality of our assets based upon factors that include: (a) the level, distribution, severity and trend of problem, classified, delinquent, nonaccrual, nonperforming and restructured assets; (b) the adequacy of our ACL-Loans; (c) the diversification and quality of loan and investment portfolios; (d) the extent of counterparty risks; (e) credit risk concentrations; (f) the liquidity of our assets; and (g) other factors. 43 Table of Contents Recent Developments and Material Trends Economic and Interest Rate Environment.
We manage the diversification and quality of our assets based upon factors that include: (a) the level, distribution, severity and trend of problem, classified, delinquent, nonaccrual, nonperforming and restructured assets; (b) the adequacy of our ACL-Loans; (c) the diversification and quality of loan and investment portfolios; (d) the extent of counterparty risks; (e) credit risk concentrations; (f) the liquidity of our assets; and (g) other factors.
Servicing rights resulting from the sale or securitization of loans originated by us are initially measured at fair value at the date of transfer. We have elected to initially and subsequently measure the servicing rights for mortgage loans using the fair value method.
Servicing assets are recognized separately when rights are acquired through purchase or through sale of financial assets. Servicing rights resulting from the sale or securitization of loans originated by us are initially measured at fair value at the date of transfer. We have elected to initially and subsequently measure the servicing rights for mortgage loans using the fair value method.
(2) Includes $908.9 million, $1.1 billion, and $497.0 million of revolving lines of credit collateralized primarily by mortgage servicing rights as of December 31, 2024, 2023, and 2022, respectively. (3) Includes only $18.7 million, $8.4 million, and $12.8 million of non-owner occupied commercial real estate as of December 31, 2024, 2023, and 2022, respectively.
(2) Includes $944.3 million, $908.9 million, and $1.1 billion of revolving lines of credit collateralized primarily by servicing rights as of December 31, 2025, 2024, and 2023, respectively. (3) Includes only $19.5 million, $18.7 million, and $8.4 million of non-owner occupied commercial real estate as of December 31, 2025, 2024, and 2023, respectively.
The average yield on securities held to maturity increased 35 basis points, to 6.73 % for the year ended December 31, 2024, compared to 6.38% for the year ended December 31, 2023. The increase in average balance of securities held to maturity was primarily related to held to maturity securities acquired as part of loan securitizations that the Company originated.
The average yield on securities held to maturity decreased 87 basis points, to 5.86% for the year ended December 31, 2025, compared to 6.73% for the year ended December 31, 2024. The increase in average balance of securities held to maturity was primarily related to held to maturity securities acquired as part of loan securitizations that the Company originated.
As of December 31, 2024, unused lines of credit totaled $4.3 billion, compared to $6.0 billion at December 31, 2023. The Company’s ratio of total collateralized borrowing capacity to total assets increased from 40% as of December 31, 2023 compared to 46% as of December 31, 2024.
As of December 31, 2025, unused lines of credit totaled $5.3 billion, compared to $4.3 billion at December 31, 2024. The Company’s ratio of total collateralized borrowing capacity to total assets increased from 46% as of December 31, 2024 compared to 47% as of December 31, 2025.
Loans held for sale are comprised primarily of single-family residential real estate loan participations that meet Fannie Mae, Freddie Mac, or Ginnie Mae eligibility. It also includes a growing contribution of multi-family loans that are expected to be sold or securitized within the next year. ​ 55 Table of Contents Loans Receivable, Net.
Loans held for sale are comprised primarily of single-family residential real estate loan participations that meet Fannie Mae, Freddie Mac, or Ginnie Mae eligibility. It also includes multi-family loans that are expected to be sold or securitized in the future. ​ Loans Receivable, Net.
Intersegment interest expense is allocated to the Mortgage Warehousing and Banking segments based on Merchants Bank’s cost of funds. The provision for credit losses is allocated based on information included in our ACL-Loans analysis and specific loan data for each segment. Our segments diversify the net income of Merchants Bank and provide synergies across the segments.
The provision for credit losses is allocated based on information included in our ACL-Loans analysis and specific loan data for each segment. Our segments diversify the net income of Merchants Bank and provide synergies across the segments.
The Company primarily utilizes borrowing facilities from the FHLB, the Federal Reserve’s discount window, and AFX, using the most cost-effective options available. See Note 14: Borrowings for further information. ​ The Company continues to have significant borrowing capacity based on available collateral.
The higher levels of core deposits at lower rates reduced the need for borrowing. The Company primarily utilizes borrowing facilities from the FHLB, the Federal Reserve’s discount window, AFX, and Federal Funds, using the most cost-effective options available. See Note 14: Borrowings for further information. ​ The Company continues to have significant borrowing capacity based on available collateral.
Credit risk transfer premium expense includes premiums paid for our credit default swap arrangements. Other general and administrative expenses include expenses associated with servicing expense, advertising, marketing, travel, meals, training, supplies, and postage, among other miscellaneous expenses. Noninterest expenses generally increase as we grow our business.
Credit risk transfer premium expense includes premiums paid for our credit default swap arrangements. Other general and administrative expenses include those associated with collateral preservation activities associated with nonperforming loans, servicing, advertising, marketing, sponsorships, insurance, certain derivatives, travel, meals, training, supplies, and postage, among other miscellaneous fees and costs. Noninterest expenses generally increase as we grow our business.
On January 2, 2025, the Company redeemed all outstanding shares of the 6.00% Fixed-to-Floating Rate Series B Non-Cumulative Perpetual Preferred Stock at a price equal to the liquidation preference of $1,000 per share (equivalent to $25 per depositary share), or $125.0 million, using cash on hand. Issuance of Common Stock.
The Company redeemed all outstanding shares of the Series B Preferred Stock on January 2, 2025, at a price equal to the liquidation preference of $1,000 per share (equivalent to $25 per depositary share), or $125.0 million.
Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations. The following represent our critical accounting policies: ACL-Loans. The Company adopted CECL on January 1, 2022.
Actual results may differ from these estimates under different assumptions or conditions, resulting in a change that could have a material impact on the carrying value of our assets and liabilities and our results of operations. The following represent our critical accounting policies: ACL-Loans. The ACL-Loans is the Company’s estimate of current expected life of loan credit losses.
The $22.7 million positive fair market value adjustment consisted of a positive fair market value adjustment of $20.5 million for multi-family and healthcare mortgages and a positive fair market value adjustment of $2.2 million for single-family mortgages and SBA loans during the year ended December 31, 2024.
The $1.4 million positive fair market value adjustment consisted of a positive fair market value adjustment of $3.8 million for multi-family and healthcare mortgages and a negative fair market value adjustment of $2.4 million for single-family mortgages and SBA loans during the year ended December 31, 2025 compared to a $22.7 million positive fair market value adjustment which consisted of a positive fair market value adjustment of $20.5 million 59 Table of Contents for multi-family and healthcare mortgages and a positive fair market value adjustment of $2.2 million for single-family mortgages and SBA loans during the year ended December 31, 2024 .
Since 2018, the Company has offered its customers an opportunity to insure balances in excess of $250,000 through our insured cash sweep program that extends FDIC protection up to $100 million. The balance of deposits in this program was $1.6 billion as of December 31, 2024 and 2023.
Uninsured deposits totaled approximately $3.1 billion as of December 31, 2025, representing 23.3% of total deposits. Since 2018, the Company has offered its customers an opportunity to insure balances in excess of $250,000 through our insured cash sweep program that extends FDIC protection up to $100 million.
These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments, lines of credit and standby letters of credit.
Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments, lines of credit and standby letters of credit.
This compared to $6.0 billion at December 31, 2023. While the amounts available fluctuate daily, we also had available capacity lines through our membership in the AFX. This liquidity enhances the ability to effectively manage interest expense and asset levels in the future.
While the amounts available fluctuate daily, we also had available capacity lines through our membership in the AFX and US Bank Federal Funds. This liquidity enhances the ability to effectively manage interest expense and asset levels in the future.
Shareholders’ equity was $2.2 billion as of December 31, 2024, compared to $1.7 billion as of December 31, 2023.
Shareholders’ equity was $2.3 billion as of December 31, 2025, compared to $2.2 billion as of December 31, 2024.
These 54 Table of Contents represent loans that our banking subsidiary, Merchants Bank, has funded and are held pending settlement, primarily as Ginnie Mae, Fannie Mae, and Freddie Mac mortgage-backed securities with a firm investor commitment to purchase the securities. The 287% increase was primarily due to a higher origination volume of loans pending settlement. Securities Available for Sale.
These represent loans that our banking subsidiary, Merchants Bank, has originated or funded and are held in the loan portfolio pending settlement, primarily as Ginnie Mae, Fannie Mae, and Freddie Mac mortgage-backed securities with a firm investor commitment to purchase the securities. Securities Available for Sale.
Taken together with its unused borrowing capacity of $4.3 billion described above, these totaled $10.4 billion, or 55%, of its $18.8 billion total assets at December 31, 2024. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period. Our liquid assets and borrowing capacity significantly exceed our uninsured deposits.
Taken together with its unused borrowing capacity of $5.3 billion described above, these totaled $11.6 billion, or 60%, of its $19.4 billion total assets at December 31, 2025. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period.
The Mortgage Warehousing segment reported net income of $82.8 million for the year ended December 31, 2024, an increase of $9.3 million, or 13%, compared to $73.5 million for the year ended December 31, 2023.
The Mortgage Warehousing segment reported net income of $96.9 million for the year ended December 31, 2025, an increase of $14.1 million, or 17%, compared to $82.8 million for the year ended December 31, 2024.
Securities available for sale of $980.1 million at December 31, 2024 decreased $133.6 million, or 12%, compared to $1.1 billion at December 31, 2023. The decrease in securities available for sale was primarily due to $917.8 million in calls, maturities, repayments, sales and other adjustments, partially offset by purchases of $784.2 million during the period.
Securities available for sale of $865.1 million at December 31, 2025 decreased $115.0 million, or 12%, compared to $980.1 million at December 31, 2024. The decrease in securities available for sale was primarily due to $862.3 million in calls, maturities, repayments and other adjustments, partially offset by purchases of $747.3 million during the period.
Interest income of $90.1 million for securities held to maturity increased $20.1 million, or 29%, during 2024. The average balance of securities held to maturity, during the year ended December 31, 2024 increased $240.2 million, to $1.3 billion compared to $1.1 billion for the year ended December 31, 2023.
Interest income of $93.1 million for securities held to maturity increased $3.1 million, or 3%, during 2025. The average balance of securities held to maturity, during the year ended December 31, 2025 increased $250.7 million, to $1.6 billion compared to $1.3 billion for the year ended December 31, 2024.
The volume of loans funded during the year ended December 31, 2024 amounted to $45.6 billion, an increase of $12.6 billion, or 38%, compared to $33.0 billion for the same period in 2023.
The volume of loans funded during the year ended December 31, 2025 amounted to $66.3 billion, an increase of $20.7 billion, or 46%, compared to $45.6 billion for the same period in 2024.
The following table shows our allocation of loans receivable as of the dates presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ December 31, 2023 ​ December 31, 2022 ​ ​ ​ ​ % of ​ ​ ​ % of ​ ​ ​ % of (Dollars in thousands) Amount Total Amount Total Amount Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mortgage warehouse repurchase agreements ​ $ 1,446,068 14 % $ 752,468 7 % $ 464,785 6 % Residential real estate (1) ​ 1,322,853 13 % 1,324,305 13 % 1,178,401 16 % Multi-family financing ​ 4,624,299 44 % 4,006,160 40 % 3,135,535 43 % Healthcare financing ​ ​ 1,484,483 ​ 14 % ​ 2,356,689 ​ 23 % ​ 1,604,341 ​ 21 % Commercial and commercial real estate (2)(3) ​ 1,476,211 14 % 1,643,081 16 % 978,661 13 % Agricultural production and real estate ​ 77,631 1 % 103,150 1 % 95,651 1 % Consumer and margin ​ 6,843 — % 13,700 — % 13,498 — % Loans receivable ​ 10,438,388 ​ 10,199,553 ​ 7,470,872 ​ ACL-Loans ​ (84,386) ​ (71,752) ​ (44,014) ​ Loans receivable, net ​ $ 10,354,002 100 % $ 10,127,801 100 % $ 7,426,858 100 % (1) Includes $1.2 billion, $1.2 billion, and $1.1 billion of All-in-One© first-lien home equity lines of credit at December 31, 2024, 2023, and 2022, respectively.
The following table shows our allocation of loans receivable as of the dates presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2025 ​ December 31, 2024 ​ December 31, 2023 ​ ​ ​ ​ % of ​ ​ ​ % of ​ ​ ​ % of ​ ​ ​ ​ Amount ​ ​ ​ Total ​ ​ ​ Amount ​ ​ ​ Total ​ ​ ​ Amount ​ ​ ​ Total ​ ​ (Dollars in thousands) Mortgage warehouse repurchase agreements (4) ​ $ 1,600,285 14 % $ 1,446,068 14 % $ 752,468 7 % Residential real estate (1) ​ 1,018,780 9 % 1,322,853 13 % 1,324,305 13 % Multi-family financing ​ 5,332,680 48 % 4,624,299 44 % 4,006,160 40 % Healthcare financing ​ ​ 1,385,359 ​ 13 % ​ 1,484,483 ​ 14 % ​ 2,356,689 ​ 23 % Commercial and commercial real estate (2)(3)(4) ​ 1,603,551 15 % 1,476,211 14 % 1,643,081 16 % Agricultural production and real estate ​ 92,077 1 % 77,631 1 % 103,150 1 % Consumer and margin ​ 1,950 — % 6,843 — % 13,700 — % Loans receivable ​ 11,034,682 ​ ​ 10,438,388 ​ ​ 10,199,553 ​ ​ ACL-Loans ​ (83,301) ​ ​ (84,386) ​ ​ (71,752) ​ ​ Loans receivable, net ​ $ 10,951,381 100 % $ 10,354,002 100 % $ 10,127,801 100 % (1) Includes $832.2 million, $1.2 billion, and $1.2 billion of All-in-One© first-lien home equity lines of credit at December 31, 2025, 2024, and 2023, respectively.
The increase was comprised primarily of: ● an increase of $693.6 million, or 92%, in mortgage warehouse repurchase agreements, to $1.4 billion at December 31, 2024, reflecting higher loan volume from increased sales efforts and market exits or reductions of competitors. ● an increase of $618.1 million, or 15%, in multi-family financing loans, to $4.6 billion at December 31, 2024, reflecting higher origination volume for construction loans generated through multi-family segment that will remain on our balance sheet until they convert to permanent financing or are otherwise paid off over an average of one to three years. ● a decrease of $872.2 million, or 37%, in healthcare financing loans, to $1.5 billion at December 31, 2024, primarily due to the sale of $628.9 million in healthcare loans into a securitization. ● a decrease of $166.9 million, or 10%, in commercial and commercial real estate loans, to $1.5 billion at December 31, 2024. ● residential real estate loans remain unchanged at $1.3 billion at December 31, 2024.
The increase was comprised primarily of: ● an increase of $708.4 million, or 15%, in multi-family financing loans, to $5.3 billion at December 31, 2025, reflecting higher origination volume for loans generated through multi-family segment that will remain on our balance sheet until they convert to permanent financing or are otherwise paid off over an average of one to three years. ● an increase of $154.2 million, or 11%, in mortgage warehouse repurchase agreements, to $1.6 billion at December 31, 2025, reflecting higher loan volume from increased sales efforts and market exits or reductions of competitors. ● an increase of $127.3 million, or 9%, in commercial and commercial real estate loans, to $1.6 billion at December 31, 2025. ● a decrease of $304.1 million, or 23%, in residential real estate loans, to $1.0 billion at December 31, 2025, primarily driven by the sale of loans into third-party securitizations, with the Company acquiring a security issued by the securitization trust reflected in securities held to maturity. ● a decrease of $99.1 million, or 7%, in healthcare financing loans, to $1.4 billion at December 31, 2025.
The percentage of commercial real estate loans as a percentage of total Tier I risk-based capital, including the ACL-Loans, has decreased from 455% to 348% for the years ended December 31, 2023 and 2024, respectively.
For additional information see Note 15: Derivative Financial Instruments. The percentage of commercial real estate loans as a percentage of total Tier I risk-based capital, including the ACL-Loans, has declined from 348% to 324% for the years ended December 31, 2024 and 2025, respectively.
The following table sets forth certain information regarding our borrowings at the dates and for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At or For the Years ​ ​ Ended ​ ​ December 31, (Dollars in thousands) 2024 2023 2022 ​ ​ ​ Balance at end of period ​ $ 4,386,122 ​ $ 964,127 ​ $ 930,392 ​ Average balance during period ​ 1,833,722 ​ 627,516 ​ 594,423 ​ Maximum outstanding at any month end ​ 4,386,122 ​ 1,654,075 ​ 1,440,904 ​ Weighted average interest rate at end of period (1) ​ 4.82 % 7.51 % 4.06 % Average interest rate during period ​ 6.53 % 8.37 % 2.13 % (1) The weighted-average interest rate at the end of the period reflects the stated interest rates on the borrowings. ​ 62 Table of Contents Other Liabilities.
The following table sets forth certain information regarding our borrowings at the dates and for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of and For the Year Ended ​ ​ December 31, ​ ​ ​ ​ 2025 ​ ​ ​ 2024 ​ ​ ​ 2023 ​ ​ (Dollars in thousands) Balance at end of period ​ $ 3,842,592 ​ $ 4,386,122 ​ $ 964,127 ​ Average balance during period ​ 3,139,762 ​ 1,833,722 ​ 627,516 ​ Maximum outstanding at any month end ​ 4,558,254 ​ 4,386,122 ​ 1,654,075 ​ Weighted average interest rate at end of period (1) ​ 3.84 % 4.82 % 7.51 % Average interest rate during period ​ 5.17 % 6.53 % 8.37 % (1) The weighted-average interest rate at the end of the period reflects the stated interest rates on the borrowings.
Additionally, we had $476.6 million of cash and cash equivalents, $428.2 million of mortgage loans in process of securitization that represent pre-sold multi-family rental real estate loan originations in primarily Ginnie Mae, Fannie Mae, and Freddie Mac mortgage backed securities pending settlements that typically occur within 30 days.
We had other assets of $713.2 million, which primarily related to low-income housing tax credits, and $620.1 million of mortgage loans in process of securitization that represent pre-sold multi-family rental real estate loan originations primarily Ginnie Mae, Fannie Mae, and Freddie Mac mortgage backed securities pending settlements that typically occur within 30 days.
Total assets in the Banking segment remain unchanged at $11.8 billion at December 31, 2024, compared to December 31, 2023. See “Our Business Segments,” in Item 1 “Business”, and Note 23: Segment Information, for further information about our segments.
Total assets in the Banking segment decreased $453.8 million, or 4%, to $11.3 billion at December 31, 2025, compared to $11.8 billion at December 31, 2024. See Item 1 “Business – Our Business Segments”, and Note 23: Segment Information, for further information about our segments.
The average balance of mortgage loans in process of securitization increased $16.8 million, or 7%, to $274.4 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. The average yield increased 37 basis points, to 5.28% for the year ended December 31, 2024, compared to 4.91% for the year ended December 31, 2023.
The average balance of mortgage loans in process of securitization increased $115.3 million, or 42%, to $389.8 million for the year ended December 31, 2025 compared to the year ended December 31, 2024. The average yield increased 13 basis points, to 5.41% for the year ended December 31, 2025, compared to 5.28% for the year ended December 31, 2024.
The interest rate spread of 2.47% for the year ended December 31, 2024, decreased 4 basis points compared to 2.51% for the year ended December 31, 2023. Our net interest margin decreased 3 basis points, to 3.03%, for the year ended December 31, 2024 from 3.06% for the year ended December 31, 2023. 45 Table of Contents Interest Income.
The interest rate spread of 2.37% for the year ended December 31, 2025, decreased 10 basis points compared to 2.47% for the year ended December 31, 2024. Our net interest margin decreased 17 basis points, to 2.86%, for the year ended December 31, 2025 from 3.03% for the year ended December 31, 2024.
Interest income of $1.1 billion for loans and loans held for sale increased $153.7 million, or 16%, during 2024. The average balance of loans, including loans held for sale, during the year ended December 31, 2024 increased $1.8 billion, or 14%, to $14.2 billion compared to $12.4 billion for the year ended December 31, 2023.
The average balance of loans, including loans held for sale, during the year ended December 31, 2025 increased $470.2 million, or 3%, to $14.7 billion compared to $14.2 billion for the year ended December 31, 2024.
This compared to the 9% industry 53 Table of Contents increase in single-family residential loan volumes from the year ended December 31, 2024 to the year ended December 31, 2023, according to the Mortgage Bankers Association. Total assets in the Mortgage Warehousing segment increased 33%, to $6.0 billion, at December 31, 2024, compared to $4.5 billion at December 31, 2023.
This compared to the 22% industry increase in single-family residential loan volumes from the year ended December 31, 2025 to the year ended December 31, 2024, according to the Mortgage Bankers Association. Total assets in the Mortgage Warehousing segment increased $1.3 billion, or 21%, to $7.3 billion at December 31, 2025, compared to $6.0 billion at December 31, 2024. Banking.
Servicing rights of $189.9 million at December 31, 2024 increased $31.5 million, or 20%, compared to December 31, 2023. During the year ended December 31, 2024, originated servicing of $18.7 million and a positive fair market value adjustment of $22.7 million were partially offset by paydowns of $9.9 million.
Servicing rights of $217.3 million at December 31, 2025 increased $27.4 million, or 14%, compared to $189.9 million at December 31, 2024. During the year ended December 31, 2025, originated and purchased servicing of $38.1 million and a positive fair market value adjustment of $1.4 million were partially offset by paydowns of $12.2 million.
Information is provided with respect to (i) effects on interest income attributable to changes in volume (changes in volume multiplied by prior rate) and (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume).
Information is provided with respect to (i) effects on interest income attributable to changes in volume (changes 45 Table of Contents in volume multiplied by prior rate) and (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume). Yields have been calculated on a pre-tax basis.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+1 added−1 removed6 unchanged
Biggest changeThe following table presents NII at Risk for Merchants Bank as of December 31, 2024, 2023, and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Interest Income Sensitivity ​ Twelve Months Forward ​ - 200 - 100 + 100 + 200 ​ (Dollars in thousands) December 31, 2024: ​ ​ ​ ​ ​ Dollar change $ (63,859) ​ $ (34,202) ​ $ 34,088 ​ $ 68,263 ​ Percent change (12.2) % (6.5) % 6.5 % 13.1 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023: ​ ​ ​ ​ Dollar change $ (73,311) ​ $ (36,576) ​ $ 29,601 ​ $ 57,294 ​ Percent change (15.0) % (7.5) % 6.0 % 11.7 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022: ​ ​ ​ ​ Dollar change $ (96,861) ​ $ (48,581) ​ $ 37,232 ​ $ 74,094 ​ Percent change (23.8) % (11.9) % 9.2 % 18.2 % ​ ​ Our interest rate risk management policy objective is to limit the change in our net interest income to 20% for a +/- 100 basis point move in interest rates, and 30% for a +/- 200 basis point move in rates.
Biggest changeThe following table presents NII at Risk for Merchants Bank as of December 31, 2025, 2024, and 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Interest Income Sensitivity ​ Twelve Months Forward ​ - 200 ​ ​ ​ - 100 ​ ​ ​ + 100 ​ ​ ​ + 200 ​ (Dollars in thousands) December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ Dollar change $ (86,677) ​ $ (45,885) ​ $ 39,011 ​ $ 78,102 ​ Percent change (14.7) % (7.8) % 6.6 % 13.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ Dollar change $ (63,859) ​ $ (34,202) ​ $ 34,088 ​ $ 68,263 ​ Percent change (12.2) % (6.5) % 6.5 % 13.1 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ Dollar change $ (73,311) ​ $ (36,576) ​ $ 29,601 ​ $ 57,294 ​ Percent change (15.0) % (7.5) % 6.0 % 11.7 % ​ Our interest rate risk management policy objective is to limit the change in our net interest income to 20% for a +/- 100 basis point move in interest rates, and 30% for a +/- 200 basis point move in rates.
We are within policy limits set by our board of directors for the −200, −100, +100, and +200 basis point scenarios. The EVE reported at December 31, 2024 projects that as interest rates increase (decrease) immediately, the economic value of equity position will be expected to decrease (increase).
We are within policy limits set by our Board for the −200, −100, +100, and +200 basis point scenarios. The EVE reported at December 31, 2025 projects that as interest rates increase (decrease) immediately, the economic value of equity position will be expected to decrease (increase).
In general, we seek to minimize the impact of changing interest rates on net interest income and the economic values of assets and liabilities. Our ALCO meets quarterly, at a minimum, to monitor the level of interest rate risk sensitivity to ensure compliance with the board of directors’ approved risk limits.
In general, we seek to minimize the impact of changing interest rates on net interest income and the economic values of assets and liabilities. Our ALCO meets quarterly, at a minimum, to monitor the level of interest rate risk sensitivity to ensure compliance with the Board’s approved risk limits.
Additionally, the Risk Committee of our Board meets quarterly, in conjunction with Board meetings, to assess risks associated with interest rate sensitivity. 68 Table of Contents Interest rate risk management is an active process that encompasses monitoring loan and deposit flows complemented by investment and funding activities.
Additionally, the Risk Committee of our Board meets quarterly, in conjunction with Board meetings, to assess risks associated with interest rate sensitivity. Interest rate risk management is an active process that encompasses monitoring loan and deposit flows complemented by investment and funding activities.
When interest rates rise, fixed rate assets generally lose economic value; the longer the duration, the greater the value lost. The opposite is true when interest rates fall. ​ 70 Table of Contents
When interest rates rise, fixed rate assets generally lose economic value; the longer the duration, the greater the value lost. The opposite is true when interest rates fall. ​ 71 Table of Contents
Treasuries or SOFR. ​ Our business consists of funding low risk, multi-family, residential, SBA loans, and warehouse repurchase agreements, meeting underwriting standards of government programs under an originate to sell model, and retaining adjustable-rate loans as held for investment to reduce interest rate risk. ​ Our Asset-Liability Committee, or ALCO, is a management committee that manages our interest rate risk within policy limits established by our board of directors.
Treasuries or SOFR. ​ Our business consists of funding low risk, multi-family, residential, and SBA loans, as well as warehouse repurchase agreements, meeting underwriting standards of government programs under an originate-to-sell model, and retaining adjustable-rate loans as held for investment to reduce interest rate risk. ​ 69 Table of Contents Our Asset-Liability Committee, or ALCO, is a management committee that manages our interest rate risk within policy limits established by our Board.
At the years ended December 31, 2024, 2023, and 2022 we are within policy limits set by our board of directors for the −200, −100, +100, and +200 basis point scenarios. ​ 69 Table of Contents The EVE results for Merchants Bank included in the following table reflect the analysis used quarterly by management.
At the years ended December 31, 2025, 2024, and 2023 were within policy limits set by our Board for the −200, −100, +100, and +200 basis point scenarios. ​ 70 Table of Contents The EVE results for Merchants Bank included in the following table reflect the analysis used quarterly by management.
It models immediate −200, −100, +100, and +200 basis point parallel shifts in market interest rates. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Economic Value of Equity ​ Sensitivity (Shock) ​ Immediate Change in Rates ​ - 200 - 100 + 100 + 200 ​ (Dollars in thousands) December 31, 2024: ​ ​ ​ ​ ​ Dollar change $ 12,188 ​ $ 14,762 ​ $ (1,118) ​ $ (2,990) ​ Percent change 0.6 % 0.7 % (0.1) % (0.1) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023: ​ ​ ​ ​ Dollar change $ 180,864 ​ $ 92,793 ​ $ (34,800) ​ $ (79,455) ​ Percent change 10.8 % 5.5 % (2.1) % (4.7) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022: ​ ​ ​ ​ Dollar change $ 22,855 ​ $ 11,640 ​ $ (10,925) ​ $ (26,385) ​ Percent change 1.6 % 0.8 % (0.8) % (1.9) % ​ Our interest rate risk management policy objective is to limit the change in our EVE to 15% for a +/- 100 basis point move in interest rates, and 20% for a +/- 200 basis point move in rates.
It models immediate −200, −100, +100, and +200 basis point parallel shifts in market interest rates. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Economic Value of Equity ​ Sensitivity (Shock) ​ Immediate Change in Rates ​ - 200 ​ ​ ​ - 100 ​ ​ ​ + 100 ​ ​ ​ + 200 ​ (Dollars in thousands) December 31, 2025: ​ ​ ​ ​ ​ ​ ​ ​ ​ Dollar change $ 62,263 ​ $ 37,217 ​ $ (4,649) ​ $ (8,900) ​ Percent change 2.8 % 1.7 % (0.2) % (0.4) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ Dollar change $ 12,188 ​ $ 14,762 ​ $ (1,118) ​ $ (2,990) ​ Percent change 0.6 % 0.7 % (0.1) % (0.1) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ Dollar change $ 180,864 ​ $ 92,793 ​ $ (34,800) ​ $ (79,455) ​ Percent change 10.8 % 5.5 % (2.1) % (4.7) % ​ Our interest rate risk management policy objective is to limit the change in our EVE to 15% for a +/- 100 basis point move in interest rates, and 20% for a +/- 200 basis point move in rates.
We report NII at Risk to isolate the change in income related solely to interest earning assets and interest-bearing liabilities. The NII at Risk results reflect the analysis used quarterly by management. It models gradual −200, −100, +100 and +200 basis point parallel shifts in market interest rates, implied by the forward yield curve over the next one-year period.
The NII at Risk results reflect the analysis used quarterly by management. It models gradual -200, -100, +100 and +200 basis point parallel shifts in market interest rates, implied by the forward yield curve over the next one-year period.
The information reported includes period-end results and identifies any policy limits exceeded, along with an assessment of the policy limit breach and the action plan and timeline for resolution, mitigation, or assumption of the risk. ​ We use two approaches to model interest rate risk: Net Interest Income at Risk (NII at Risk) and Economic Value of Equity (“EVE”).
Interest rate risk measurement is calculated and reported to the ALCO at least quarterly. The information reported includes period-end results and identifies any policy limits exceeded, along with an assessment of the policy limit breach and the action plan and timeline for resolution, mitigation, or assumption of the risk.
Under NII at Risk, net interest income is modeled utilizing various assumptions for assets, liabilities, and derivatives and excludes non-interest income. EVE measures the period end market value of assets minus the market value of liabilities and the change in this value as rates change. EVE is a period end measurement.
EVE measures the period end market value of assets minus the market value of liabilities and the change in this value as rates change. EVE is a period end measurement. We report NII at Risk to isolate the change in income related solely to interest-earning assets and interest-bearing liabilities.
Removed
Interest rate risk measurement is calculated and reported to the ALCO at least quarterly.
Added
We use two approaches to model interest rate risk: Net Interest Income at Risk (NII at Risk) and Economic Value of Equity (“EVE”). Under NII at Risk, net interest income is modeled for a twelve month period utilizing various assumptions for assets, liabilities, and derivatives and excludes non-interest income.

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