PART I [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Merchants Bancorp's unaudited condensed consolidated financial statements for Q3 and 9M 2022 and 2021, including balance sheets, income statements, and cash flows with accompanying notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$12.0 billion** by September 30, 2022, driven by loan growth and a new held-to-maturity security, while liabilities rose due to deposits and shareholders' equity grew to **$1.4 billion** Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2022 | December 31, 2021 | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **$11,978,722** | **$11,278,638** | **+6.2%** | | Cash and cash equivalents | $323,961 | $1,032,614 | -68.6% | | Loans held for sale | $2,844,750 | $3,303,199 | -13.9% | | Loans receivable, net | $6,919,128 | $5,751,319 | +20.3% | | Held to maturity securities | $1,005,487 | $0 | N/A | | **Total Liabilities** | **$10,566,132** | **$10,123,229** | **+4.4%** | | Total deposits | $10,319,479 | $8,982,613 | +14.9% | | Borrowings | $97,279 | $1,033,954 | -90.6% | | **Total Shareholders' Equity** | **$1,412,590** | **$1,155,409** | **+22.3%** | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q3 2022 net income remained flat at **$58.5 million** due to increased net interest income offset by lower noninterest income, while 9M 2022 net income decreased **5%** to **$162.6 million** Q3 Financial Performance (in thousands, except EPS) | Metric | Q3 2022 | Q3 2021 | YoY Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $85,385 | $68,881 | +24.0% | | Provision for credit losses | $2,225 | $1,079 | +106.2% | | Noninterest Income | $29,186 | $40,271 | -27.5% | | Net Income | $58,488 | $58,503 | -0.03% | | Diluted EPS | $1.22 | $1.22 | 0.0% | Nine-Month Financial Performance (in thousands, except EPS) | Metric | 9M 2022 | 9M 2021 | YoY Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $223,141 | $205,251 | +8.7% | | Provision for credit losses | $10,888 | $2,427 | +348.6% | | Noninterest Income | $102,954 | $117,062 | -12.1% | | Net Income | $162,565 | $171,903 | -5.4% | | Diluted EPS | $3.36 | $3.62 | -7.2% | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, including CECL adoption, and provide breakdowns of loan and investment portfolios, asset quality, securitization, capital, and segment performance - The Company adopted the Current Expected Credit Losses (CECL) standard on January 1, 2022, resulting in a **$3.6 million** decrease to retained earnings, net of tax. This adjustment primarily reflects the establishment of an allowance for off-balance sheet credit exposures (ACL-OBCEs)[31](index=31&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk) - In September 2022, the Company completed a private securitization, selling a **$1.2 billion** portfolio of multi-family bridge loans. As part of the transaction, the Company purchased a **$1.0 billion** security from the deal, which is classified as held-to-maturity[105](index=105&type=chunk) - In September 2022, the Company issued **5.7 million** depositary shares of **8.25% Series D Preferred Stock**, raising approximately **$137.4 million** in net proceeds to support capital levels and growth[182](index=182&type=chunk) - As of September 30, 2022, the Company's total loan servicing portfolio had an unpaid principal balance of **$20.6 billion**, which is a significant source of noninterest income and deposits[318](index=318&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q3 and 9M 2022 financial performance, highlighting strong net interest income growth offset by declining noninterest income, and covers financial condition, asset quality, segment performance, and capital [Financial Condition Analysis](index=49&type=section&id=Financial%20Condition%20Analysis) Total assets grew **6%** to **$12.0 billion** by Q3 2022, fueled by a **20%** increase in net loans and a **15%** rise in deposits, while shareholders' equity increased **22%** to **$1.4 billion** - Net loans receivable increased by **$1.2 billion (20%)** since year-end 2021, with significant growth in healthcare financing (**+$603.5 million**), commercial and commercial real estate (**+$290.5 million**), and residential real estate (**+$187.0 million**)[235](index=235&type=chunk) - Servicing rights increased **31%** to **$145.0 million**, benefiting from **$22.7 million** in new originations and a **$19.9 million** positive fair value adjustment due to higher interest rates[244](index=244&type=chunk) - Borrowings decreased **91%** to **$97.3 million** as the company shifted its funding mix towards deposits, which grew by **$1.3 billion**[250](index=250&type=chunk)[254](index=254&type=chunk) [Asset Quality](index=53&type=section&id=Asset%20Quality) Asset quality remains strong despite nonperforming loans increasing to **0.38%** of total loans, primarily due to one fully collateralized healthcare loan, with ACL at **147%** of nonperforming loans - Total nonperforming loans were **$26.6 million (0.38% of total loans)** at Q3 2022, a significant increase from **$0.8 million (0.01% of total loans)** at year-end 2021, mainly due to one healthcare loan[258](index=258&type=chunk) - For the nine months ended September 30, 2022, net charge-offs were **$550,000** (**$1.3 million** in charge-offs and **$750,000** in recoveries), compared to net charge-offs of **$793,000** in the same period of 2021[261](index=261&type=chunk) [Results of Operations](index=53&type=section&id=Results%20of%20Operations) Q3 2022 net interest income grew **24%** to **$85.4 million**, offset by a **28%** drop in noninterest income due to lower mortgage volumes, while 9M 2022 net interest income rose **9%** to **$223.1 million** - Q3 2022 net interest margin increased **32 basis points** year-over-year to **3.05%**, benefiting from higher average loan balances at higher yields[264](index=264&type=chunk) - Q3 2022 noninterest income fell by **$11.1 million**, primarily due to a **$15.7 million** decrease in gain on sale of loans, reflecting lower volumes in multi-family, single-family, and SBA lending[284](index=284&type=chunk)[286](index=286&type=chunk) - Noninterest expense for Q3 2022 increased **19%** to **$35.0 million**, driven by higher salaries and professional fees, leading to an efficiency ratio of **30.51%** compared to **27.00%** in Q3 2021[287](index=287&type=chunk) [Segment Performance](index=61&type=section&id=Segment%20Performance) Q3 2022 saw Banking segment net income grow **68%** to **$39.3 million**, while Mortgage Warehousing net income fell **49%** to **$11.8 million** due to lower volumes, and Multi-family Mortgage Banking net income decreased **7%** to **$13.4 million** Net Income by Segment - Q3 (in thousands) | Segment | Q3 2022 | Q3 2021 | Change | | :--- | :--- | :--- | :--- | | Multi-family Mortgage Banking | $13,366 | $14,448 | -7.5% | | Mortgage Warehousing | $11,801 | $23,217 | -49.2% | | Banking | $39,344 | $23,463 | +67.7% | Net Income by Segment - 9 Months (in thousands) | Segment | 9M 2022 | 9M 2021 | Change | | :--- | :--- | :--- | :--- | | Multi-family Mortgage Banking | $44,414 | $37,380 | +18.8% | | Mortgage Warehousing | $36,828 | $73,848 | -50.1% | | Banking | $94,040 | $68,229 | +37.8% | [Liquidity and Capital Resources](index=64&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$2.8 billion** in unused borrowing capacity and capital ratios well above minimums, transitioning to Basel III reporting after exceeding **$10 billion** in assets - The company had **$2.8 billion** in available unused borrowing capacity with the FHLB and Federal Reserve discount window as of September 30, 2022[345](index=345&type=chunk) - The company switched from the Community Bank Leverage Ratio (CBLR) framework to fully phased-in Basel III risk-based capital ratios at September 30, 2022, as total assets surpassed the **$10 billion** threshold[374](index=374&type=chunk) Key Capital Ratios (Company) - September 30, 2022 | Ratio | Actual | Minimum for Adequacy | | :--- | :--- | :--- | | Total capital to risk-weighted assets | 12.5% | 8.0% | | Tier I capital to risk-weighted assets | 12.1% | 6.0% | | Common Equity Tier I to risk-weighted assets | 7.8% | 4.5% | | Tier I capital to average assets | 12.3% | 4.0% | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=71&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages interest rate risk using NII at Risk and EVE models, showing asset sensitivity with NII projected to increase **7.4%** in a **+100 bps** rate shock, while EVE remains within policy limits Net Interest Income (NII) Sensitivity Analysis (12 Months Forward) | Rate Change (bps) | % Change in NII (Sep 30, 2022) | | :--- | :--- | | +200 | +18.6% | | +100 | +7.4% | | -100 | -15.6% | | -200 | -26.0% | Economic Value of Equity (EVE) Sensitivity Analysis | Rate Change (bps) | % Change in EVE (Sep 30, 2022) | | :--- | :--- | | +200 | -5.8% | | +100 | -5.4% | | -100 | -4.8% | | -200 | -3.6% | [Item 4. Controls and Procedures](index=71&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2022, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of September 30, 2022, the Company's disclosure controls and procedures were effective[394](index=394&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, these controls[395](index=395&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=72&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no material legal proceedings - There are no legal proceedings to report[398](index=398&type=chunk) [Item 1A. Risk Factors](index=72&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the 2021 Form 10-K were reported - No material changes from the risk factors disclosed in the 2021 Form 10-K were reported[399](index=399&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=72&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities - There were no unregistered sales of equity securities during the period[400](index=400&type=chunk) [Item 6. Exhibits](index=73&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including articles, bylaws, and CEO/CFO certifications required by Sarbanes-Oxley Act - Exhibits filed include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, and XBRL data files[405](index=405&type=chunk)

Interest Rate Risk Management - The company reported a net interest income sensitivity of $41,524 thousand for a +100 basis point shift in interest rates as of June 30, 2022, reflecting a 10.4% increase [361]. - For the same period, the company projected a dollar change of $(63,986) thousand for a -200 basis point shift, indicating a 16.0% decrease in net interest income [362]. - The Economic Value of Equity (EVE) sensitivity showed a dollar change of $60,871 thousand for a -200 basis point shift, representing a 5.0% increase [364]. - The company maintains a policy limit that restricts changes in net interest income to 20% for a +/- 100 basis point move in interest rates [362]. - As of June 30, 2022, the company was within policy limits for all interest rate scenarios analyzed [362]. - The Asset-Liability Committee (ALCO) meets quarterly to monitor interest rate risk sensitivity and ensure compliance with established risk limits [354]. - The company utilizes two approaches to model interest rate risk: Net Interest Income at Risk (NII at Risk) and Economic Value of Equity (EVE) [360]. - The company emphasizes the importance of effective management of interest rate risk to minimize the impact on net interest income and asset values [355]. Market Risks - The company faces market risks primarily from interest rate changes and price risks related to market demand [352]. - The company is subject to various risks, including impacts from the COVID-19 pandemic and changes in economic conditions affecting the financial services industry [196].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _______________ Commission File No. 001-38258 MERCHANTS BANCORP (Exact name of registrant as specified in its charter) Indi ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [Mark One] ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number 001-38258 MERCHANTS BANCORP (Exact name of Registrant as specified in its charter) | INDIANA | 20-57474 ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _______________ Commission File No. 001-38258 MERCHANTS BANCORP (Exact name of registrant as specified in its charter) ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _______________ Commission File No. 001-38258 MERCHANTS BANCORP (Exact name of registrant as specified in its charter) India ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to _______________ Commission File No. 001-38258 MERCHANTS BANCORP (Exact name of registrant as specified in its charter) Indi ...

Employee and Workplace Culture - As of December 31, 2020, the company had approximately 404 full-time employees with a turnover rate of 9.49% in 2020[37] - The company has been recognized as one of the "Best Places to Work in Indiana" every year since 2016[38] - The company established an Employee Stock Ownership Plan (ESOP) in 2020, funded entirely by the company, to align employee interests with shareholders[38] Regulatory Environment - The company is subject to extensive regulation under federal and state laws, which can impact growth and earnings performance[44] - The Federal Reserve requires bank holding companies to serve as a source of financial and managerial strength to their subsidiary banks[59] - The company maintains an anti-money laundering program in compliance with the Bank Secrecy Act and the USA Patriot Act[65] - The company is regulated by various agencies, including the FDIC and the Federal Reserve, which evaluate its operations and compliance with applicable laws[46] - The Company, Merchants Bank, and FMBI met all regulatory capital requirements with the Community Bank Leverage Ratio (CBLR) to be classified as well capitalized as of December 31, 2020[80] - The minimum capital requirements under Basel III, effective since 2015, apply to all covered banking organizations, including the Company[72] - The Dodd-Frank Act imposed more stringent capital requirements on bank holding companies, affecting the Company's operations[90] - The company is subject to legal limitations on the extent to which Merchants Bank or FMBI can supply funds, primarily through dividends[86] - The company is required to comply with SEC rules regarding internal controls over financial reporting, and failure to maintain effective controls could adversely affect business and stock price[145] - The company is required to maintain effective anti-money laundering programs, with potential penalties for noncompliance that could restrict its business operations[206][207] Financial Performance and Risks - The company’s allowance for loan losses may prove insufficient to absorb potential losses, requiring additional provisions in the future[139] - The company’s goodwill totaled $15.8 million as of December 31, 2020, and future evaluations may result in impairment charges that could adversely affect financial results[143] - Economic downturns may impair the ability of small to midsized business borrowers to repay loans, adversely affecting the company’s financial condition[140] - Increased competition from non-bank competitors, which are not subject to the same regulations, may further challenge the company’s market position[121] - Nonperforming assets adversely affect net income and increase loan administration costs, impacting overall financial performance[135] - The company is exposed to risks from large mortgage non-depository financial institutions, which could impact funding and revenue[178] - An increase in nonperforming assets could adversely impact net interest income, affecting overall financial performance[173] - Liquidity risks could adversely affect operations, with potential negative impacts from fluctuations in customer deposits and competitive pressures[177] - The company raised $171.1 million through preferred stock offerings in 2019, indicating a need for additional capital to meet business commitments[186] - Regulatory capital requirements could increase, necessitating additional capital raises or operational contractions[186] Market Competition - The company faces strong competition in various sectors, including commercial and retail banking, residential mortgages, and multi-family loan originations[36] - The company faces strong competition from various financial institutions, including national, regional, and community banks, as well as online businesses, which may adversely affect its ability to attract and retain customers[120] - Changes in interest rates and competitor pricing decisions may adversely affect the profitability of the mortgage banking business[112] - The profitability of mortgage banking is highly dependent on the ability to aggregate and sell a high volume of loans in the secondary market[113] - The company has voluntarily adopted many servicing and foreclosure standards due to competitive pressures, despite not being a party to certain state settlements[100] Interest Rate and Economic Sensitivity - Fluctuations in interest rates may reduce net interest income, negatively impacting the company's financial condition and results of operations[168] - Interest rate increases may lead to larger payment requirements for borrowers, increasing the potential for defaults[169] - The company’s operations are sensitive to general economic conditions, particularly in Indiana, which could constrain growth and profitability[124] - Interest rate risk management is crucial, with the company aiming to limit changes in net interest income to 20% for a +/- 100 basis point move in interest rates[410] - As of December 31, 2020, the company's net interest income sensitivity showed a dollar change of $50,305 (19.1% increase) for a +200 basis point shift in rates[410] - The Economic Value of Equity (EVE) analysis indicated a dollar change of $100,236 (12.8% increase) for a -200 basis point shift in rates as of December 31, 2020[412] Compliance and Legal Risks - Future legislation and executive orders may significantly impact the banking industry, potentially altering operational costs and permissible activities[104] - The company must comply with various federal consumer protection laws, including the Fair Debt Collection Practices Act and the Truth in Lending Act[106] - The company faces risks related to noncompliance with consumer protection laws, which could result in sanctions and adversely affect its operations and growth prospects[202][204] - The company operates under an approved Community Reinvestment Act (CRA) strategic plan, which evaluates its record in meeting local credit needs[89] - Regulatory actions against the company could include restrictions on growth initiatives and acquisitions, impacting overall business strategy[198][201] Management and Strategic Initiatives - The company is highly dependent on its management team, and the loss of key executives could harm its strategic implementation and growth prospects[152] - The company plans to pursue acquisitions to enhance profitability, but faces risks including competition for merger candidates and potential integration challenges[164] Audit and Financial Reporting - Merchants Bancorp's consolidated financial statements present a fair view of the company's financial position as of December 31, 2020, and 2019[419] - The audit was conducted in accordance with PCAOB standards to ensure reasonable assurance of the financial statements' accuracy[422] - The company is not required to have an audit of its internal control over financial reporting, and no opinion on its effectiveness is expressed[422]

Interest Rate Sensitivity - The company reported a net interest income sensitivity of $(18,684) thousand for a -200 basis point shift, representing a 7.2% decrease [310]. - For a +200 basis point shift, the net interest income is projected to increase by $47,980 thousand, or 18.5% [310]. - The Economic Value of Equity (EVE) is expected to decrease by $(23,327) thousand for a +200 basis point shift, reflecting a 3.2% decline [312]. - The company maintains a policy limit of 20% change in net interest income for a +/- 100 basis point move in interest rates [310]. - The company is within policy limits for all interest rate scenarios as of September 30, 2020 [310]. - The company’s Asset-Liability Committee (ALCO) meets quarterly to monitor interest rate risk sensitivity and compliance with risk limits [304]. Risk Management - The company faces risks from the COVID-19 pandemic, affecting operations and demand across its businesses [149]. - The company emphasizes the importance of managing credit risk and maintaining sufficient loan loss allowances [149]. - The company is subject to regulatory compliance risks, including those related to the Dodd-Frank Act [149]. - The company has identified market risk primarily from interest rate risk and price risk related to market demand [303].

Interest Rate Sensitivity - The company reported a net interest income sensitivity of $25,577 thousand for a +100 basis point shift in interest rates as of June 30, 2020, reflecting a 10.7% increase[304] - For a +200 basis point shift, the net interest income sensitivity increased to $51,574 thousand, representing a 21.6% increase[304] - The company maintains a policy limit that restricts changes in net interest income to 20% for a +/- 100 basis point move in interest rates[304] - The company is within policy limits for both net interest income and EVE under various interest rate scenarios as of June 30, 2020[304][306] Economic Value of Equity (EVE) - The Economic Value of Equity (EVE) decreased by $48,270 thousand, or 6.7%, under a -200 basis point scenario as of June 30, 2020[306] - The EVE management policy limits changes to 15% for a +/- 100 basis point move in interest rates[306] Market Risks - The company has identified interest rate risk and price risk related to market demand as primary sources of market risk[296] - The Asset-Liability Committee (ALCO) meets quarterly to monitor interest rate risk sensitivity and ensure compliance with risk limits[300] Operational Risks - The company faces risks from the COVID-19 pandemic, affecting operations and demand across its businesses[149] - The company is subject to compliance with governmental and regulatory requirements, including the Dodd-Frank Act[149]