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, 2024 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, 2023 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 ...

[PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's analysis of financial condition and results of operations [Item 1. Interim Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Interim%20Financial%20Statements%20(Unaudited)) This section presents Merchants Bancorp's unaudited condensed consolidated financial statements, including balance sheets, income, comprehensive income, equity, and cash flow statements, with explanatory notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time - Total assets grew by **31% to $16.5 billion** as of September 30, 2023, from $12.6 billion at December 31, 2022, primarily driven by a **33% increase in net loans receivable**[10](index=10&type=chunk) Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2023 (in thousands) | December 31, 2022 (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Cash and cash equivalents | $407,238 | $226,164 | 80.1% | | Loans receivable, net | $9,910,681 | $7,426,858 | 33.4% | | **Total assets** | **$16,495,236** | **$12,615,227** | **30.8%** | | **Liabilities & Equity** | | | | | Total deposits | $13,007,338 | $10,071,345 | 29.2% | | Borrowings | $1,654,075 | $930,392 | 77.8% | | Total liabilities | $14,862,521 | $11,155,488 | 33.2% | | Total shareholders' equity | $1,632,715 | $1,459,739 | 11.8% | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This statement details the company's revenues, expenses, and net income over specific reporting periods - Net income for Q3 2023 rose **39% year-over-year to $81.5 million**, driven by a **38% increase in Net Interest Income**. Diluted EPS for the quarter was **$1.68**, up from $1.22 in Q3 2022[12](index=12&type=chunk) Consolidated Statements of Income Summary (in thousands, except per share data) | Metric | Q3 2023 (in thousands) | Q3 2022 (in thousands) | YTD 2023 (in thousands) | YTD 2022 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $117,436 | $85,385 | $323,746 | $223,141 | | Provision for credit losses | $4,014 | $2,225 | $33,484 | $10,888 | | Noninterest Income | $36,068 | $29,186 | $80,214 | $102,954 | | Noninterest Expense | $42,930 | $34,951 | $122,022 | $98,941 | | **Net Income** | **$81,504** | **$58,488** | **$201,761** | **$162,565** | | **Diluted EPS** | **$1.68** | **$1.22** | **$4.06** | **$3.36** | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement reports the cash generated and used by operating, investing, and financing activities over specific periods - For the nine months ended September 30, 2023, the company experienced a **net cash outflow from operating activities of $1.1 billion**, a significant shift from the $1.8 billion inflow in the same period of 2022, primarily due to changes in loans originated for sale. Financing activities provided **$3.6 billion in cash**, mainly from a net increase in deposits[17](index=17&type=chunk) Net Cash Flow by Activity (in thousands) | Activity | Nine Months Ended Sep 30, 2023 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(1,070,774) | $1,833,916 | | Net cash used in investing activities | $(2,371,045) | $(3,049,944) | | Net cash provided by financing activities | $3,622,893 | $507,375 | | **Net Change in Cash and Cash Equivalents** | **$181,074** | **$(708,653)** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide additional information and explanations essential for understanding the condensed consolidated financial statements - On September 7, 2023, the Company entered into agreements to sell its Farmers-Merchants Bank of Illinois branch locations, which includes approximately **$219 million in deposits** and **$49 million in loans**, to focus on its core mortgage lending business[25](index=25&type=chunk)[26](index=26&type=chunk) - The company adopted the CECL accounting standard on January 1, 2022, resulting in a **$3.6 million decrease to retained earnings**, net of taxes[33](index=33&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=66&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes the company's financial condition, asset quality, operational results, segment performance, and liquidity and capital resources for the reported periods [Financial Highlights](index=66&type=section&id=Financial%20Highlights) This section summarizes key financial performance indicators and significant achievements for the reporting period - Net income for Q3 2023 increased **39% YoY to $81.5 million**, with diluted EPS up **38% to $1.68**[176](index=176&type=chunk) - Total assets reached **$16.5 billion**, a **31% increase** from December 31, 2022, while tangible book value per common share grew **24% YoY to $25.82**[176](index=176&type=chunk) - The company maintains strong liquidity, with **$5.4 billion in unused borrowing capacity** and uninsured deposits representing **less than 20% of total deposits**[176](index=176&type=chunk) [Financial Condition](index=67&type=section&id=Financial%20Condition) This section details changes in the company's assets, liabilities, and equity over the reporting period - Total assets increased by **$3.9 billion (31%) to $16.5 billion** at September 30, 2023, compared to year-end 2022, driven by significant growth in healthcare, commercial, multi-family, and mortgage warehouse loan portfolios[187](index=187&type=chunk) - Loans receivable grew by **$2.5 billion (33%)** since year-end 2022, with notable increases in mortgage warehouse lines of credit (**+120%**), commercial and commercial real estate (**+59%**), and healthcare financing (**+38%**)[194](index=194&type=chunk)[203](index=203&type=chunk) - Total deposits rose by **$2.9 billion (29%) to $13.0 billion**, supported by a **$1.6 billion increase in brokered deposits**. Uninsured deposits were **under 20% of total deposits**[207](index=207&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk) - The Allowance for Credit Losses on Loans (ACL-Loans) increased to **$66.9 million** from $44.0 million at year-end 2022, primarily due to loan growth and changes in economic forecasts[200](index=200&type=chunk) [Asset Quality](index=75&type=section&id=Asset%20Quality) This section assesses the quality of the company's loan portfolio and its exposure to credit risk - Total nonperforming loans increased to **$60.2 million, or 0.60% of total loans**, at September 30, 2023, up from $26.7 million (0.36%) at year-end 2022, primarily due to three specific customers[218](index=218&type=chunk) - The ACL-Loans coverage of nonperforming loans was **111%** at September 30, 2023, a decrease from 165% at year-end 2022, reflecting the increase in nonperforming loans[219](index=219&type=chunk) - For the nine months ended September 30, 2023, net charge-offs were **$9.56 million**, a significant increase from $0.5 million in the prior-year period, primarily related to one customer[222](index=222&type=chunk) [Results of Operations](index=75&type=section&id=Results%20of%20Operations) This section analyzes the company's revenues, expenses, and profitability for the reported periods Q3 2023 vs Q3 2022 Performance | Metric | Q3 2023 (in millions) | Q3 2022 (in millions) | Change (%) | | :--- | :--- | :--- | :--- | | Net Interest Income | $117.4M | $85.4M | +38% | | Provision for Credit Losses | $4.0M | $2.2M | +82% | | Noninterest Income | $36.1M | $29.2M | +24% | | Noninterest Expense | $42.9M | $35.0M | +23% | | **Net Income** | **$81.5M** | **$58.5M** | **+39%** | - For Q3 2023, the net interest margin decreased by **6 basis points to 2.99%** compared to Q3 2022, as the **268% increase in interest expense** outpaced the **121% increase in interest income**[226](index=226&type=chunk)[227](index=227&type=chunk) YTD 2023 vs YTD 2022 Performance | Metric | YTD 2023 (in millions) | YTD 2022 (in millions) | Change (%) | | :--- | :--- | :--- | :--- | | Net Interest Income | $323.7M | $223.1M | +45% | | Provision for Credit Losses | $33.5M | $10.9M | +208% | | Noninterest Income | $80.2M | $103.0M | -22% | | Noninterest Expense | $122.0M | $98.9M | +23% | | **Net Income** | **$201.8M** | **$162.6M** | **+24%** | - For YTD 2023, the net interest margin increased by **17 basis points to 3.07%** compared to YTD 2022. The **22% decrease in noninterest income** was primarily due to a **$24.0 million (45%) decline in gain on sale of loans**[258](index=258&type=chunk)[282](index=282&type=chunk) [Segment Analysis](index=91&type=section&id=Segment%20Analysis) This section provides a detailed breakdown of financial performance across the company's distinct business segments Net Income by Segment (in thousands) | Segment | Q3 2023 (in thousands) | Q3 2022 (in thousands) | YTD 2023 (in thousands) | YTD 2022 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Multi-family Mortgage Banking | $14,685 | $13,366 | $27,893 | $44,414 | | Mortgage Warehousing | $19,926 | $11,801 | $47,163 | $36,828 | | Banking | $52,445 | $39,344 | $144,402 | $94,040 | - **Multi-family Mortgage Banking:** Q3 net income rose **10% YoY**, despite a **39% decrease in total loan origination volume**. For YTD, net income fell **37%** due to a significant decrease in gain on sale of loans[296](index=296&type=chunk)[300](index=300&type=chunk)[301](index=301&type=chunk) - **Mortgage Warehousing:** Q3 net income surged **69% YoY**, driven by a **$11.5 million increase in net interest income**. Warehouse loan volume grew **23% in Q3**, outperforming the industry[305](index=305&type=chunk)[307](index=307&type=chunk) - **Banking:** Q3 net income increased **33% YoY**, fueled by a **$19.2 million rise in net interest income**. YTD net income grew **54% to $144.4 million**[310](index=310&type=chunk)[312](index=312&type=chunk) [Liquidity and Capital Resources](index=97&type=section&id=Liquidity%20and%20Capital%20Resources) This section evaluates the company's ability to meet its short-term obligations and maintain adequate capital levels - The company maintains a strong liquidity position with **$5.4 billion in unused borrowing capacity** from the FHLB and Federal Reserve as of September 30, 2023[315](index=315&type=chunk) - Liquid assets combined with unused borrowing capacity totaled **$10.7 billion**, representing **65% of total assets** and significantly exceeding the approximately **$2 billion in uninsured deposits**[318](index=318&type=chunk)[319](index=319&type=chunk) - Shareholders' equity increased by **$173.0 million (12%) to $1.6 billion** since year-end 2022, primarily from net income of **$201.8 million**, partially offset by **$36.4 million in dividends**[330](index=330&type=chunk) - The Company, Merchants Bank, and FMBI all met the requirements to be categorized as **well capitalized** under regulatory frameworks as of September 30, 2023[351](index=351&type=chunk)[352](index=352&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=107&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company actively manages interest rate risk through its Asset-Liability Committee (ALCO), with NII being asset-sensitive and EVE liability-sensitive within policy limits Net Interest Income (NII) Sensitivity Analysis (Twelve Months Forward) | Rate Change (bps) | Dollar Change (in thousands) | Percent Change | | :--- | :--- | :--- | | -200 | $(82,126) | (16.7)% | | -100 | $(40,859) | (8.3)% | | +100 | $26,931 | 5.5% | | +200 | $51,728 | 10.5% | Economic Value of Equity (EVE) Sensitivity Analysis (Immediate Shock) | Rate Change (bps) | Dollar Change (in thousands) | Percent Change | | :--- | :--- | :--- | | -200 | $34,279 | 2.2% | | -100 | $19,426 | 1.2% | | +100 | $(25,408) | (1.6)% | | +200 | $(65,764) | (4.2)% | [Item 4. Controls and Procedures](index=112&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of September 30, 2023, the Company's disclosure controls and procedures were **effective**[371](index=371&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[372](index=372&type=chunk) [PART II – OTHER INFORMATION](index=113&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section provides disclosures on legal proceedings, risk factors, equity sales, and other relevant information [Item 1. Legal Proceedings](index=113&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no legal proceedings for the period - There are **no legal proceedings** to report[375](index=375&type=chunk) [Item 1A. Risk Factors](index=113&type=section&id=Item%201A.%20Risk%20Factors) No material changes occurred from the risk factors disclosed in the prior Annual Report on Form 10-K - **No material changes** from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022[376](index=376&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=113&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities or use of proceeds for the period - There were **no unregistered sales of equity securities**[377](index=377&type=chunk) [Item 5. Other Information](index=113&type=section&id=Item%205.%20Other%20Information) The company reports no other information for the period - There is **no other information** to report[380](index=380&type=chunk) [Item 6. Exhibits](index=114&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents and required certifications - The report includes CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, along with XBRL data files[381](index=381&type=chunk)

PART I – FINANCIAL INFORMATION [Interim Financial Statements (Unaudited)](index=4&type=section&id=Item%201%20Interim%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for the periods ended June 30, 2023 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to $15.9 billion, driven by increases in loans and funded by a significant rise in total deposits **Condensed Consolidated Balance Sheets (in thousands)** | | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total assets** | **$ 15,874,872** | **$ 12,615,227** | | Cash and cash equivalents | $ 377,310 | $ 226,164 | | Loans held for sale | $ 3,058,013 | $ 2,910,576 | | Loans receivable, net | $ 9,854,018 | $ 7,426,858 | | **Total liabilities** | **$ 14,314,572** | **$ 11,155,488** | | Total deposits | $ 13,059,864 | $ 10,071,345 | | Borrowings | $ 1,016,836 | $ 930,392 | | **Total shareholders' equity** | **$ 1,560,300** | **$ 1,459,739** | [Condensed Consolidated Statements of Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Net income rose for Q2 and the six-month period, driven by higher net interest income despite increased credit loss provisions **Financial Performance Summary (in thousands, except per share data)** | | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $ 105,617 | $ 72,031 | $ 206,310 | $ 137,756 | | Provision for credit losses | $ 22,603 | $ 6,212 | $ 29,470 | $ 8,663 | | Total noninterest income | $ 29,882 | $ 39,171 | $ 44,146 | $ 73,768 | | Total noninterest expense | $ 44,320 | $ 32,957 | $ 79,092 | $ 63,990 | | **Net Income** | **$ 65,302** | **$ 53,935** | **$ 120,257** | **$ 104,077** | | **Diluted Earnings Per Share** | **$ 1.31** | **$ 1.11** | **$ 2.38** | **$ 2.14** | [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income increased year-over-year, primarily due to higher net income and smaller other comprehensive losses **Comprehensive Income (in thousands)** | | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $ 65,302 | $ 53,935 | $120,257 | $104,077 | | Other comprehensive income (loss) | 693 | (1,766) | 3,485 | (6,616) | | **Comprehensive Income** | **$ 65,995** | **$ 52,169** | **$123,742** | **$ 97,461** | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash from financing activities increased significantly, offsetting cash used in operating and investing activities **Cash Flow Summary (in thousands)** | | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $ (543,020) | $ 874,775 | | Net cash used in investing activities | $ (2,356,545) | $ (1,351,878) | | Net cash provided by (used in) financing activities | $ 3,050,711 | $ (297,365) | | **Net Change in Cash and Cash Equivalents** | **$ 151,146** | **$ (774,468)** | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section details accounting policies, segment information, and data composition for the financial statements - The Company adopted the Current Expected Credit Losses (CECL) standard on January 1, 2022, which resulted in a **$3.6 million decrease to retained earnings**, net of taxes[28](index=28&type=chunk)[30](index=30&type=chunk) - The company's loan portfolio is segmented into Mortgage warehouse, Residential real estate, Multi-family, Healthcare, Commercial, Agricultural, and Consumer loans[58](index=58&type=chunk)[77](index=77&type=chunk) - The company operates in three primary business segments: **Multi-family Mortgage Banking, Mortgage Warehousing, and Banking**[169](index=169&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=54&type=section&id=Item%202%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strong growth in net income and assets, driven by increased net interest income [Financial Highlights](index=57&type=section&id=Financial%20Highlights) Q2 2023 net income and total assets grew significantly, supported by strong liquidity and manageable uninsured deposit levels - Net income for Q2 2023 rose **21% YoY to $65.3 million**, with diluted EPS up 18% to $1.31[186](index=186&type=chunk) - Total assets reached **$15.9 billion**, a 26% increase from December 31, 2022[186](index=186&type=chunk) - The company maintained strong liquidity with **$5.3 billion in unused borrowing capacity** and uninsured deposits accounting for less than 20% of total deposits[186](index=186&type=chunk) [Financial Condition](index=58&type=section&id=Financial%20Condition) Asset growth was driven by a $2.4 billion increase in loans receivable, funded by a $3.0 billion rise in deposits - Total assets increased by **$3.3 billion (26%) to $15.9 billion** at June 30, 2023, from December 31, 2022, driven by loan growth[196](index=196&type=chunk) - Loans receivable grew by **$2.4 billion (33%)**, with significant increases in mortgage warehouse lines of credit (+$737.1M), multi-family financing (+$610.8M), and healthcare financing (+$524.0M)[203](index=203&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk) - Total deposits increased by **$3.0 billion (30%)**, fueled by a $2.2 billion increase in certificates of deposit, including a $2.0 billion rise in brokered deposits[215](index=215&type=chunk)[217](index=217&type=chunk)[222](index=222&type=chunk) - The Allowance for Credit Losses on Loans (ACL-Loans) increased by **$19.0 million to $63.0 million**, mainly due to loan growth and economic forecasts[208](index=208&type=chunk)[212](index=212&type=chunk) [Asset Quality](index=65&type=section&id=Asset%20Quality) Asset quality metrics showed some deterioration, with an increase in nonperforming loans and net charge-offs - Total nonperforming loans rose to **$68.4 million (0.69% of total loans)** at June 30, 2023, up from $26.7 million (0.36%) at Dec 31, 2022, mainly attributed to 3 customers[225](index=225&type=chunk) - Net charge-offs for Q2 2023 were **$9.5 million**, compared to net recoveries of $604,000 in Q2 2022[227](index=227&type=chunk) - Special Mention (Watch) loans increased to **$188.5 million** from $137.8 million at year-end 2022[227](index=227&type=chunk) [Results of Operations](index=65&type=section&id=Results%20of%20Operations) Net income growth was driven by higher net interest income, partially offset by lower noninterest income and a higher credit provision - For Q2 2023, net income increased **21% YoY to $65.3 million**, driven by a 47% rise in net interest income to $105.6 million[229](index=229&type=chunk)[230](index=230&type=chunk) - The provision for credit losses for Q2 2023 was **$22.6 million**, a significant increase from $6.2 million in Q2 2022, due to loan growth and specific reserves[253](index=253&type=chunk)[256](index=256&type=chunk) - Noninterest income for Q2 2023 decreased **24% to $29.9 million**, mainly due to a $10.2 million (47%) drop in gain on sale of loans[255](index=255&type=chunk) - A tax benefit of **$13.0 million** was recorded in Q2 2023 related to changes in state tax apportionment calculations, reducing the effective tax rate for the quarter to 4.8%[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk) [Segment Analysis](index=79&type=section&id=Segment%20Analysis) The Banking and Mortgage Warehousing segments reported strong net income growth, while the Multi-family Mortgage Banking segment declined **Net Income by Segment (in thousands)** | Segment | Q2 2023 | Q2 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | Multi-family Mortgage Banking | $ 11,242 | $ 19,556 | $ 13,208 | $ 31,048 | | Mortgage Warehousing | $ 18,596 | $ 11,868 | $ 27,237 | $ 25,027 | | Banking | $ 42,650 | $ 25,932 | $ 91,957 | $ 54,696 | | Other | $ (7,186) | $ (3,421) | $ (12,145) | $ (6,694) | | **Total** | **$ 65,302** | **$ 53,935** | **$ 120,257** | **$ 104,077** | - **Multi-family Mortgage Banking:** Net income **fell 43% in Q2 2023** due to a $19.2 million decrease in gain on sale of loans, despite a 64% increase in loan origination volume[304](index=304&type=chunk)[306](index=306&type=chunk) - **Mortgage Warehousing:** Net income **grew 57% in Q2 2023**, driven by a $41.0 million increase in interest income from higher yields and volumes[310](index=310&type=chunk)[312](index=312&type=chunk) - **Banking:** Net income **surged 64% in Q2 2023**, fueled by a $28.6 million increase in net interest income and a $9.0 million increase in gain on sale of loans[315](index=315&type=chunk) [Liquidity and Capital Resources](index=83&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position and capital ratios well above regulatory requirements - At June 30, 2023, the company had **$5.3 billion in unused borrowing capacity** with the FHLB and Federal Reserve[322](index=322&type=chunk) - Uninsured deposits totaled approximately **$2.0 billion**, representing less than 20% of total deposits[324](index=324&type=chunk) - Shareholders' equity increased by **$100.6 million** since year-end 2022 to $1.6 billion, primarily from net income[333](index=333&type=chunk) **Company Capital Ratios as of June 30, 2023** | Ratio | Actual | Minimum for Adequately Capitalized | | :--- | :--- | :--- | | Total capital (to risk-weighted assets) | 11.3 % | 8.0 % | | Tier I capital (to risk-weighted assets) | 10.8 % | 6.0 % | | Common Equity Tier I capital (to risk-weighted assets) | 7.3 % | 4.5 % | | Tier I capital (to average assets) | 10.6 % | 4.0 % | [Quantitative and Qualitative Disclosures About Market Risk](index=92&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, which is managed within established policy limits - The company's primary market risk is **interest rate risk**, arising from timing differences in repricing assets and liabilities[356](index=356&type=chunk) **Net Interest Income (NII) Sensitivity Analysis (June 30, 2023)** | Rate Shock | Dollar Change (in thousands) | Percent Change | | :--- | :--- | :--- | | +200 bps | $ 60,629 | 13.7 % | | +100 bps | $ 32,156 | 7.3 % | | -100 bps | $ (46,622) | (10.5)% | | -200 bps | $ (93,023) | (21.0)% | **Economic Value of Equity (EVE) Sensitivity Analysis (June 30, 2023)** | Rate Shock | Dollar Change (in thousands) | Percent Change | | :--- | :--- | :--- | | +200 bps | $ (23,514) | (1.6)% | | +100 bps | $ (3,703) | (0.3)% | | -100 bps | $ 1,024 | 0.1 % | | -200 bps | $ 1,101 | 0.1 % | [Controls and Procedures](index=94&type=section&id=Item%204%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - Based on an evaluation by management, the Chief Executive Officer and Chief Financial Officer concluded that the Company's **disclosure controls and procedures were effective** as of June 30, 2023[371](index=371&type=chunk) - **No material changes** in the Company's internal control over financial reporting occurred during the quarter[372](index=372&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=95&type=section&id=Item%201%20Legal%20Proceedings) The company reports no legal proceedings - None[375](index=375&type=chunk) [Risk Factors](index=95&type=section&id=Item%201A%20Risk%20Factors) No material changes to risk factors have been identified since the last annual report - **No material changes** from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022[376](index=376&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=95&type=section&id=Item%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities or use of proceeds - None[377](index=377&type=chunk) [Exhibits](index=96&type=section&id=Item%206%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications - Exhibits filed include **CEO and CFO certifications** under Sarbanes-Oxley Sections 302 and 906, and XBRL interactive data files[380](index=380&type=chunk)

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, 2023 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 ...

OR 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, 2022 ☐ 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 ...