Merchants Bancorp(MBIN) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1 Interim Financial Statements (Unaudited) The unaudited condensed consolidated financial statements detail the company's financial position and performance Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (In thousands) | Metric | June 30, 2025 | December 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total assets | $19,141,204 | $18,805,732 | 1.8% | | Loans receivable, net | $10,432,117 | $10,354,002 | 0.8% | | Total deposits | $12,686,835 | $11,919,976 | 6.4% | | Total liabilities | $16,956,572 | $16,562,422 | 2.4% | | Total shareholders' equity | $2,184,632 | $2,243,310 | -2.6% | - Total assets increased by 1.8% to $19.1 billion, driven by growth in loans held for sale and loan portfolios[12] Condensed Consolidated Statements of Income Condensed Consolidated Statements of Income Highlights (In thousands, except share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Interest Income | $128,719 | $128,119 | 0.5% | | Provision for credit losses | $53,027 | $9,965 | 432.0% | | Noninterest Income | $50,480 | $31,351 | 61.0% | | Noninterest Expense | $77,337 | $50,380 | 53.5% | | Net Income | $37,981 | $76,393 | -50.3% | | Basic Earnings Per Share | $0.60 | $1.50 | -60.0% | | Diluted Earnings Per Share | $0.60 | $1.49 | -59.7% | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Interest Income | $250,915 | $255,175 | -1.7% | | Provision for credit losses | $60,754 | $14,691 | 313.5% | | Noninterest Income | $74,173 | $72,225 | 2.7% | | Noninterest Expense | $139,001 | $99,292 | 40.0% | | Net Income | $96,220 | $163,447 | -41.1% | | Basic Earnings Per Share | $1.53 | $3.30 | -53.6% | | Diluted Earnings Per Share | $1.53 | $3.29 | -53.5% | - Net income for the three months ended June 30, 2025, decreased by 50.3% to $38.0 million, primarily due to a 432.0% increase in the provision for credit losses[15][334] - Diluted earnings per share decreased by 59.7% to $0.60 for the three months ended June 30, 2025[15][282] Condensed Consolidated Statements of Comprehensive Income Condensed Consolidated Statements of Comprehensive Income Highlights (In thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Income | $37,981 | $76,393 | -50.3% | | Net unrealized (losses) gains on investment securities available for sale, net of tax | $(170) | $663 | -125.6% | | Comprehensive Income | $37,811 | $77,056 | -50.9% | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Income | $96,220 | $163,447 | -41.1% | | Net unrealized (losses) gains on investment securities available for sale, net of tax | $(114) | $1,896 | -106.0% | | Comprehensive Income | $96,106 | $165,425 | -41.9% | - Comprehensive income for the three months ended June 30, 2025, decreased by 50.9% to $37.8 million, primarily reflecting the decrease in net income and net unrealized losses on investment securities available for sale[17] Condensed Consolidated Statements of Shareholders' Equity Condensed Consolidated Statements of Shareholders' Equity Highlights (In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Common stock | $241,452 | $240,313 | | Preferred stock (Series C, D, E) | $551,291 | $551,291 | | Retained earnings | $1,392,136 | $1,330,995 | | Accumulated other comprehensive loss | $(247) | $(133) | | Total shareholders' equity | $2,184,632 | $2,243,310 | - Total shareholders' equity decreased by $58.7 million, or 2.6%, to $2.18 billion at June 30, 2025, primarily due to the redemption of 6% Series B Preferred Stock ($125.0 million) and dividends paid ($29.7 million), partially offset by net income ($96.2 million)[20][323] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, In thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $26,886 | $(332,653) | | Net cash used in investing activities | $(27,229) | $(1,012,173) | | Net cash provided by financing activities | $170,898 | $1,301,286 | | Net Change in Cash and Cash Equivalents | $170,555 | $(43,540) | | Cash and Cash Equivalents, End of Period | $647,165 | $540,882 | - Net cash provided by operating activities significantly improved to $26.9 million for the six months ended June 30, 2025, compared to a net cash used of $332.7 million in the prior year[23][439] - Net cash provided by financing activities decreased to $170.9 million for the six months ended June 30, 2025, from $1.3 billion in the prior year[23][439] Notes to Condensed Consolidated Financial Statements Note 1: Basis of Presentation - The financial statements are unaudited and prepared in accordance with Form 10-Q and Article 10 of Regulation S-X, consolidating Merchants Bancorp and its wholly owned subsidiaries[27][29] - Material estimates are particularly susceptible to significant change related to the determination of the allowance for credit losses on loans and fair values of servicing rights and financial instruments[35] Restricted Cash for Senior Credit Linked Notes (In thousands) | Date | Balance | | :--- | :--- | | June 30, 2025 | $43,800 | | December 31, 2024 | $33,500 | - FASB ASU 2023-09 (Income Taxes) is effective for annual periods beginning after December 15, 2024, and FASB ASU 2024-03 (Expense Disaggregation) is effective for annual periods beginning after December 15, 2026[40][42][43][44] Note 2: Investment Securities Investment Securities Summary (In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Securities available for sale (Fair Value) | $936,343 | $980,050 | | Securities held to maturity (Amortized Cost) | $1,548,211 | $1,664,686 | | FHLB stock and other equity securities | $217,850 | $217,804 | - Unrealized losses on investment securities available for sale are primarily attributable to changes in the prevailing interest rate environment, not credit-related factors[58] - One held-to-maturity mortgage-backed security ($550.9 million amortized cost) was classified as Special Mention at June 30, 2025, due to delinquencies in underlying loans, but no credit losses are expected[61] Note 3: Mortgage Loans in Process of Securitization Mortgage Loans in Process of Securitization (In thousands) | Date | Balance | | :--- | :--- | | June 30, 2025 | $402,427 | | December 31, 2024 | $428,206 | - The aggregate positive fair value adjustment recorded in mortgage loans in process of securitization decreased to $3.0 million at June 30, 2025, from $4.1 million at December 31, 2024[64] Note 4: Loans and Allowance for Credit Losses on Loans Loans Receivable, Net and ACL-Loans (In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Loans Receivable | $10,523,928 | $10,438,388 | | Less: ACL-Loans | $91,811 | $84,386 | | Loans Receivable, net | $10,432,117 | $10,354,002 | - The ACL-Loans increased by $7.4 million, or 9%, to $91.8 million at June 30, 2025, driven by a $64.0 million increase in provision expense, partially offset by $56.6 million in charge-offs[86][308] Provision for Credit Losses and Charge-offs (In thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Provision for credit losses (ACL-Loans) | $54,461 | $8,753 | | Loans charged to the allowance | $(46,063) | $(3,452) | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Provision for credit losses (ACL-Loans) | $63,967 | $14,230 | | Loans charged to the allowance | $(56,570) | $(4,377) | - Total collateral dependent loans increased to $417.7 million at June 30, 2025, from $317.3 million at December 31, 2024[100][101] Delinquent Loans (In thousands) | Status | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | 30-59 Days Past Due | $32,191 | $10,460 | | 60-89 Days Past Due | $160 | $15,633 | | 90+ Days Past Due | $246,658 | $266,170 | | Total Past Due | $279,009 | $292,263 | | Nonaccrual loans | $250,818 | $279,716 | - The Company completed a $373.3 million securitization of multi-family mortgage loans (gain $5.9 million) and a $312.1 million sale of All-in-One© HELOCs (gain $2.2 million) in June 2025[134][135] Note 5: Qualified Affordable Housing and Other Tax Credits Qualified Affordable Housing Investments (In thousands) | Investment Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | LIHTC (Proportional amortization) | $153,596 | $123,574 | | LIHTC (Lower of cost or market) | $45,580 | $56,533 | | Joint Venture (Consolidated) | $10,937 | $10,937 | | Total Investments | $210,113 | $191,044 | | Unfunded Commitments | $91,904 | $93,929 | Amortization Expense and Expected Tax Credits (In thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Amortization expense | $7,559 | $5,145 | | Expected tax credits | $8,369 | $5,418 | - The Company advanced LIHTC funds $81.4 million as of June 30, 2025, for investment projects, expecting repayment over a similar period[145] Note 6: Leases Lease Information (In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Operating lease ROU asset | $7,429 | $8,332 | | Operating lease liability | $8,325 | $9,303 | | Weighted average remaining lease term (years) | 4.1 | 4.6 | | Weighted average discount rate | 3.44% | 3.43% | Operating Lease Cost (Six Months Ended June 30, In thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Operating lease cost | $1,432 | $1,369 | Note 7: Other Assets and Receivables Other Assets and Receivables (In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total other assets and receivables | $495,295 | $571,330 | | Joint venture investments | $50,900 | $42,200 | | CDS recovery asset | $445 | $0 | | Total loan pool balances for CDS | $2,000,000 | $1,200,000 | - The decrease in other assets and receivables was primarily due to a $125.0 million prepaid asset at December 31, 2024, that was released for the January 2, 2025, redemption of Series B Preferred Stock[313] Note 8: Variable Interest Entities Unconsolidated VIEs Maximum Exposure to Loss (In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Investments in VIEs | $266,541 | $257,499 | | Loans to VIEs | $606,689 | $415,628 | | Securities for VIEs | $1,536,441 | $1,652,833 | | Total Maximum Exposure to Loss | $2,409,671 | $2,325,960 | - The Company determined it was not the primary beneficiary for most of its VIEs at June 30, 2025, primarily due to not having control or the obligation to absorb losses/rights to receive benefits that could be significant[160] Note 9: Deposits Deposits Summary (In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Noninterest-bearing deposits | $315,523 | $239,005 | | Interest-bearing deposits | $12,371,312 | $11,680,971 | | Total deposits | $12,686,835 | $11,919,976 | | Total core deposits | $11,432,356 | $9,385,898 | | Total brokered deposits | $1,254,479 | $2,534,078 | - Core deposits increased by $2.0 billion, or 22%, to $11.4 billion, representing 90% of total deposits at June 30, 2025[315] - Brokered deposits decreased by 50% to $1.3 billion, representing 10% of total deposits at June 30, 2025[316] - Uninsured deposits totaled approximately $3.1 billion, or 24% of total Bank deposits, as of June 30, 2025[318] Note 10: Borrowings Borrowings Summary (In thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Federal Reserve discount window borrowings | $175,000 | $50,000 | | FHLB advances | $3,680,588 | $4,172,030 | | Total borrowings | $4,009,474 | $4,386,122 | - Total borrowings decreased by $376.6 million, or 9%, primarily due to a reduction of $491.4 million in FHLB advances, partially offset by a $125.0 million increase in Federal Reserve discount window usage[319] - The Company entered into new FHLB variable-rate debt agreements totaling $3.7 billion in June 2025, with maturities in September 2025[168][169] Note 11: Derivative Financial Instruments Derivative Financial Instruments Fair Value (In thousands) | Metric | June 30, 2025 Asset | June 30, 2025 Liability | December 31, 2024 Asset | December 31, 2024 Liability | | :--- | :--- | :--- | :--- | :--- | | Interest rate lock commitments | $270 | $8 | $30 | $176 | | Forward contracts | — | $427 | $229 | $1 | | Interest rate swaps | $2,484 | — | $4,199 | — | | Put options | $45,055 | — | $43,777 | — | | Interest rate floors | $6,118 | — | $4,043 | — | | Credit derivatives | — | — | — | — | | Total | $53,927 | $435 | $52,278 | $177 | Derivative (Loss) Gain in Income Statement (Three Months Ended June 30, In thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net (loss) gain in gain on sale of loans | $(382) | $423 | | Net gain in other income | $11,855 | $3,681 | - The Company purchased a Credit Default Swap (CDS) in March 2024 to manage credit risk on specific multi-family mortgage loans, with the protection seller posting $64.8 million in collateral[176] Note 12: Disclosures about Fair Value of Assets and Liabilities Fair Value Measurements (June 30, 2025, In thousands) | Asset/Liability | Fair Value | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | | Mortgage loans in process of securitization | $402,427 | — | $402,427 | — | | Securities available for sale | $936,343 | $70,102 | $866,241 | — | | Loans held for sale | $91,930 | — | $91,930 | — | | Servicing rights | $193,037 | — | — | $193,037 | | Derivative assets | $64,007 | — | $12,500 | $52,598 | | Derivative liabilities | $10,450 | — | $10,442 | $8 | | Collateral dependent loans (nonrecurring) | $194,337 | — | — | $194,337 | - Servicing rights, collateral dependent loans, and certain derivatives (interest rate lock commitments, put options, interest rate floors, credit default swap) are classified within Level 3 due to significant unobservable inputs[195][197][202][203][204][211] Key Unobservable (Level 3) Inputs (June 30, 2025) | Asset/Liability | Unobservable Inputs | Weighted Average | | :--- | :--- | :--- | | Collateral dependent loans | Marketability discount and costs to sell | 14% | | Servicing rights - Multi-family | Discount rate | 9% | | Servicing rights - Multi-family | Constant prepayment rate | 9% | | Interest rate lock commitments | Loan closing rates | 82% | | Put options | Market credit spread | 4% | | Interest rate floors | Discount rate | 7% | Note 13: Common Stock - As of August 1, 2025, 45,885,458 shares of the Company's common stock were issued and outstanding[4] - On May 13, 2024, the Company issued 2,400,000 shares of common stock in a public offering, generating $97.7 million in net proceeds[229] Note 14: Preferred Stock - The Company redeemed all outstanding Series A Preferred Stock on April 1, 2024, for $52.0 million[231] - All outstanding Series B Preferred Stock were redeemed on January 2, 2025, for $125.0 million, resulting in $4.2 million in expenses and a $1.2 million excise tax[233][234] - On November 25, 2024, the Company issued 9,200,000 depositary shares of Series E Preferred Stock, raising $222.7 million in net proceeds[242] Dividends on Preferred Stock (Six Months Ended June 30, In thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Dividends on preferred stock | $(20,531) | $(16,424) | Note 15: Share-Based Payment Plans Share-Based Payment Plan Activity | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Shares issued to non-executive directors | 3,752 | 2,849 | | ESOP expenses (In thousands) | $389 | $286 | | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Shares contributed to ESOP | 30,802 | 23,414 | Note 16: Earnings Per Share Earnings Per Share (Three Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Basic EPS | $0.60 | $1.50 | | Diluted EPS | $0.60 | $1.49 | Earnings Per Share (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Basic EPS | $1.53 | $3.30 | | Diluted EPS | $1.53 | $3.29 | Note 17: Segment Information - The Company operates in three primary reportable business segments: Multi-family Mortgage Banking, Mortgage Warehousing, and Banking, along with an 'Other' segment[250] Net Income (Loss) by Segment (Three Months Ended June 30, In thousands) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | Multi-family Mortgage Banking | $9,269 | $9,037 | | Mortgage Warehousing | $22,986 | $22,270 | | Banking | $14,574 | $52,378 | | Other | $(8,848) | $(7,292) | | Total | $37,981 | $76,393 | Net Income (Loss) by Segment (Six Months Ended June 30, In thousands) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | Multi-family Mortgage Banking | $12,682 | $25,646 | | Mortgage Warehousing | $38,384 | $42,460 | | Banking | $61,681 | $108,803 | | Other | $(16,527) | $(13,462) | | Total | $96,220 | $163,447 | Note 18: Regulatory Matters - The Company and Merchants Bank met all regulatory capital adequacy requirements and were categorized as 'well capitalized' as of June 30, 2025, and December 31, 2024[263][461] Company Capital Ratios (June 30, 2025, In thousands) | Ratio | Actual Amount | Actual Ratio | Minimum Amount to be Well Capitalized with Basel III Buffer | Minimum Ratio to be Well Capitalized with Basel III Buffer | | :--- | :--- | :--- | :--- | :--- | | Total capital (to risk-weighted assets) | $2,280,183 | 13.4% | $1,788,568 | 10.5% | | Tier I capital (to risk-weighted assets) | $2,176,150 | 12.8% | $1,447,889 | 8.5% | | Common Equity Tier I capital (to risk-weighted assets) | $1,624,860 | 9.5% | $1,192,379 | 7.0% | | Tier I capital (to average assets) | $2,176,150 | 11.5% | $948,810 | 5.0% | - Merchants Bank entered into a confidential Memorandum of Understanding (MOU) with the FDIC and DFI on June 30, 2025, agreeing to maintain certain capital thresholds and manage asset concentrations[268][280] - The MOU is not expected to have a material adverse impact on the Company's financial performance or the Bank's day-to-day operations, but may limit or delay expansion[270][281] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition, operational results, asset quality, and liquidity for the reporting period Regulatory Developments Regarding the Bancorp and Bank - Merchants Bank entered into a confidential Memorandum of Understanding (MOU) with the FDIC and DFI on June 30, 2025, requiring the Bank to maintain certain capital thresholds and manage asset concentrations[280] - As of June 30, 2025, the Bank's capital exceeded the levels agreed to in the MOU and was within the asset concentration limits[280] - Management does not expect the MOU to have a material adverse impact on financial performance or day-to-day operations, but it may limit or delay expansion[281] Financial Highlights for the Three Months Ended June 30, 2025 Financial Highlights (Three Months Ended June 30) | Metric | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net income | $38.0 million | $76.4 million | -50% | | Diluted earnings per share | $0.60 | $1.49 | -60% | | Provision for credit losses increase | $43.1 million | N/A | 432% | | Tangible book value per common share | $35.42 | $31.27 | 13% | | Total assets | $19.1 billion | $18.8 billion (Dec 31, 2024) | 2% | | Loans receivable, net | $10.4 billion | $10.35 billion (Dec 31, 2024) | 1% | | Core deposits | $11.4 billion | $9.4 billion (Dec 31, 2024) | 22% | | Brokered deposits | $1.3 billion | $2.5 billion (Dec 31, 2024) | -50% | | Net interest margin | 2.83% | 2.99% | -16 bps | | Efficiency ratio | 43.16% | 31.59% | 1157 bps | | Warehouse loans funded volume | $16.3 billion | $10.9 billion | 49% | | Multi-family loan origination/acquisition volume | $1.4 billion | $1.1 billion | 33% | - The $43.1 million increase in provision for credit losses was primarily associated with estimated declines on multi-family property values and ongoing investigations of mortgage fraud[282] Business Overview - Merchants Bancorp is a diversified bank holding company operating in Multi-family Mortgage Banking, Mortgage Warehousing, and Banking segments[284] - The Company's business model focuses on originating and selling low-risk, government-program-eligible loans, retaining adjustable-rate loans, and utilizing diverse funding sources to maximize net income and shareholder return[285] Critical Accounting Policies and Estimates - Key estimates include the allowance for credit losses on loans and fair values of servicing rights and financial instruments[289] - There have been no significant changes in critical accounting policies or the assumptions and judgments utilized since December 31, 2024[290] Financial Condition Comparison of Financial Condition at June 30, 2025 and December 31, 2024 - Total assets increased by $335.5 million, or 2%, to $19.1 billion at June 30, 2025, compared to December 31, 2024[292] - The increase was primarily due to growth in loans held for sale and in the warehouse and multi-family loan portfolios, despite two loan sales totaling over $685.4 million[292] Total Assets Total Assets (In thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $19,141,204 | | December 31, 2024 | $18,805,732 | - Total assets increased by $335.5 million, or 2%, primarily driven by growth in loans held for sale and the warehouse and multi-family loan portfolios[292] Cash and Cash Equivalents Cash and Cash Equivalents (In thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $647,165 | | December 31, 2024 | $476,610 | - Cash and cash equivalents increased by $170.6 million, or 36%, including $43.8 million in restricted cash associated with senior credit linked notes[293] Mortgage Loans in Process of Securitization Mortgage Loans in Process of Securitization (In thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $402,427 | | December 31, 2024 | $428,206 | - Mortgage loans in process of securitization decreased by $25.8 million, or 6%, representing loans pending settlement as mortgage-backed securities[294] Securities Available for Sale Securities Available for Sale (In thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $936,343 | | December 31, 2024 | $980,050 | - Securities available for sale decreased by $43.7 million, or 4%, primarily due to $391.8 million in calls, maturities, and repayments, partially offset by $348.1 million in purchases[295][297] - Accumulated other comprehensive loss (AOCL) related to securities available for sale increased by $0.1 million, or 86%, to $0.2 million at June 30, 2025[299] Securities Held to Maturity Securities Held to Maturity (In thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $1,548,211 | | December 31, 2024 | $1,664,686 | - Securities held to maturity decreased by $116.5 million, or 7%, due to repayments and amortization[300] Loans Held for Sale Loans Held for Sale (In thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $4,105,765 | | December 31, 2024 | $3,771,510 | - Loans held for sale increased by $334.3 million, or 9%, primarily due to an increase in warehouse participations from higher volume[301] Loans Receivable, Net Loans Receivable, Net (In thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $10,432,117 | | December 31, 2024 | $10,354,002 | - Loans receivable, net of ACL-Loans, increased by $78.1 million, or 1%, driven by increases in mortgage warehouse repurchase agreements (up 28%) and multi-family financing loans (up 5%), partially offset by a decrease in residential real estate loans (down 25%) due to a loan sale[302][303] - Approximately 95% of total loans reprice within three months, reducing interest rate risk[302] Top 5 Geographic Concentrations for Multi-family and Healthcare Financing (June 30, 2025, In thousands) | Multi-family State | Amount | % of Total | Healthcare State | Amount | % of Total | | :--- | :--- | :--- | :--- | :--- | :--- | | Indiana | $1,244,946 | 26% | Michigan | $347,464 | 24% | | New York | $650,800 | 13% | Ohio | $254,783 | 18% | | Ohio | $251,923 | 5% | Texas | $124,152 | 9% | | Georgia | $233,565 | 5% | South Carolina | $102,500 | 7% | | California | $233,409 | 5% | New Jersey | $88,668 | 6% | ACL-Loans ACL-Loans (In thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $91,811 | | December 31, 2024 | $84,386 | - The ACL-Loans increased by $7.4 million, or 9%, primarily due to a $64.0 million increase in provision expense, largely related to estimated declines in multi-family property values and mortgage fraud investigations, partially offset by $56.6 million in charge-offs[308] Goodwill Goodwill (In thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $8,014 | | December 31, 2024 | $8,014 | - Goodwill remained unchanged at $8.0 million at June 30, 2025, compared to December 31, 2024[309] Servicing Rights Servicing Rights (In thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $193,037 | | December 31, 2024 | $189,935 | - Servicing rights increased by $3.1 million, or 2%, with $8.7 million in originated and purchased servicing partially offset by $5.1 million in paydowns and a $0.5 million negative fair market value adjustment due to lower interest rates[310][312] Other Assets and Receivables Other Assets and Receivables (In thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $495,295 | | December 31, 2024 | $571,330 | - Other assets and receivables decreased by $76.0 million, or 13%, primarily due to the release of a $125.0 million prepaid asset for the Series B Preferred Stock redemption[313] Deposits Deposits (In thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $12,686,835 | | December 31, 2024 | $11,919,976 | - Total deposits increased by $766.9 million, or 6%, driven by a $2.1 billion increase in demand deposits and $260.7 million in savings deposits, partially offset by a $1.6 billion decrease in certificates of deposit[314] - Core deposits increased by $2.0 billion, or 22%, to $11.4 billion, representing 90% of total deposits, while brokered deposits decreased by 50% to $1.3 billion, representing 10% of total deposits[315][316] - Uninsured deposits totaled approximately $3.1 billion, or 24% of total Bank deposits, at June 30, 2025[318] Borrowings Borrowings (In thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $4,009,474 | | December 31, 2024 | $4,386,122 | - Borrowings decreased by $376.6 million, or 9%, primarily due to a $491.4 million reduction in FHLB advances, partially offset by a $125.0 million increase in Federal Reserve discount window usage[319] - The Company maintains $5.0 billion in unused borrowing capacity with the FHLB and Federal Reserve discount window, up from $4.3 billion at December 31, 2024[320] Other Liabilities Other Liabilities (In thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $231,035 | | December 31, 2024 | $231,035 | - Other liabilities remained essentially unchanged at $231.0 million[320] Total Shareholders' Equity Total Shareholders' Equity (In thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $2,184,632 | | December 31, 2024 | $2,243,310 | - Total shareholders' equity decreased by $58.7 million, or 3%, primarily due to the $125.0 million redemption of 6% Series B Preferred Stock and $29.7 million in dividends, partially offset by $96.2 million in net income[323] Asset Quality - The allowance for credit losses on loans increased by $7.4 million, or 9%, to $91.8 million at June 30, 2025, driven by a $64.0 million provision expense and $56.6 million in charge-offs[325] - The increase in provision expenses and charge-offs was primarily associated with estimated declines on multi-family property values, new appraisals, and investigations of mortgage fraud[325] Charge-offs and Recoveries (Six Months Ended June 30, In thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Charge-offs | $(56,570) | $(4,377) | | Recoveries | $28 | $16 | - Substandard loans increased to $417.7 million at June 30, 2025, from $317.3 million at December 31, 2024, following additional access to information to assess collateral[327] - Nonperforming loans (nonaccrual and >90 days past due) decreased to $251.5 million (2.39% of total loans) at June 30, 2025, from $279.7 million (2.68%) at December 31, 2024[330] - The ACL-Loans as a percentage of nonperforming loans increased to 37% at June 30, 2025, from 30% at December 31, 2024[331] - The Company has $2.8 billion in loans subject to credit protection arrangements (up from $2.3 billion at December 31, 2024), with incremental coverage ranging from 13-14%[333] Comparison of Operating Results for the Three Months Ended June 30, 2025 and 2024 General Operating Results - Net income decreased by $38.4 million, or 50%, to $38.0 million, primarily due to a $43.1 million (432%) increase in provision for credit losses[334] - The decrease in net income also reflected a $27.0 million (54%) increase in noninterest expense, partially offset by a $19.1 million (61%) increase in noninterest income and an $11.9 million (52%) decrease in provision for income tax[334] Net Interest Income Net Interest Income and Margin (Three Months Ended June 30) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Net interest income | $128,719 | $128,119 | $600 | | Interest rate spread | 2.33% | 2.45% | -12 bps | | Net interest margin | 2.83% | 2.99% | -16 bps | - Net interest income increased slightly by $0.6 million, reflecting lower interest expense on deposits partially offset by lower interest income and higher interest expense on borrowings[340] - The net interest margin decreased by 16 basis points to 2.83%, negatively impacted by a significant shift in business mix towards lower-margin loans held for sale and warehouse repurchase agreements[341] Interest Income Interest Income (Three Months Ended June 30, In thousands) | Source | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Loans | $255,641 | $284,421 | -10.1% | | Mortgage loans in process of securitization | $5,304 | $3,044 | 74.3% | | Investment securities available for sale | $12,095 | $14,784 | -18.2% | | Investment securities held to maturity | $23,166 | $19,799 | 17.0% | | Total interest income | $304,399 | $328,273 | -7.3% | - Interest income on loans and loans held for sale decreased by $28.8 million, or 10%, due to a 105 basis point decrease in average yield to 6.92%, despite a 3% increase in average loan balance[343] - Interest income on mortgage loans in process of securitization increased by $2.3 million, or 74%, due to a 61% increase in average balance and a 42 basis point increase in average yield[348] Interest Expense Interest Expense (Three Months Ended June 30, In thousands) | Source | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Deposits | $131,375 | $179,651 | -26.8% | | Short-term borrowings | $36,981 | $11,612 | 218.5% | | Long-term borrowings | $7,324 | $8,891 | -17.6% | | Total interest expense | $175,680 | $200,154 | -12.2% | - Interest expense on deposits decreased by $48.3 million, or 27%, primarily due to lower average balances and rates on certificates of deposit[350] - Interest expense on borrowings increased by $23.8 million, or 116%, due to a 235% increase in overall average borrowings, despite a 285 basis point decrease in the average interest rate to 5.15%[353] Provision for Credit Losses Provision for Credit Losses (Three Months Ended June 30, In thousands) | Metric | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Provision for credit losses | $53,027 | $9,965 | 432.0% | - The $53.0 million provision for credit losses consisted of $54.5 million for ACL-Loans, net of a $1.1 million release for ACL-OBCE's and a $0.3 million release for ACL-Guarantees[356] - The increase was primarily associated with estimated declines on multi-family property values and ongoing investigations of mortgage fraud[357] Noninterest Income Noninterest Income (Three Months Ended June 30, In thousands) | Source | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Gain on sale of loans | $23,342 | $11,168 | 109% | | Loan servicing fees, net | $6,138 | $10,827 | -43% | | Mortgage warehouse fees | $2,039 | $1,524 | 34% | | Syndication and asset management fees | $9,707 | $3,233 | 200% | | Other income | $9,254 | $4,599 | 101% | | Total noninterest income | $50,480 | $31,351 | 61% | - Gain on sale of loans increased by $12.2 million, or 109%, driven by higher volume in the multi-family loan portfolio[359] - Syndication and asset management fees increased by $6.5 million, or 200%, due to an increase in managed projects and funds, and new equity raises[362] - Other noninterest income increased by $4.7 million, or 101%, including a $4.3 million positive fair value adjustment to floor derivatives[363] Noninterest Expense Noninterest Expense (Three Months Ended June 30, In thousands) | Source | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Salaries and employee benefits | $43,566 | $28,373 | 54% | | Deposit insurance expense | $7,152 | $5,579 | 28% | | Credit risk transfer premium expense | $4,767 | $2,294 | 108% | | Other expense | $12,611 | $5,487 | 130% | | Total noninterest expense | $77,337 | $50,380 | 54% | - Salaries and employee benefits increased by $15.2 million, or 54%, including $5.8 million for the addition of production staff[365] - Other expense increased by $7.1 million, primarily related to taxes, insurance, receiver expenses, and legal fees tied to preserving collateral for nonperforming loans[365] - The efficiency ratio increased to 43.16% from 31.59%, with credit default swap premiums, collateral preservation, and production staff additions negatively impacting it by 941 basis points[367] Income Taxes Income Taxes (Three Months Ended June 30, In thousands) | Metric | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Provision for income taxes | $10,854 | $22,732 | -52% | | Effective tax rate | 22.2% | 22.9% | -0.7 pp | - Income tax expense decreased by $11.9 million, or 52%, primarily due to a 51% decrease in pretax income[368] Comparison of Operating Results for the Six Months Ended June 30, 2025 and 2024 General Operating Results - Net income decreased by $67.2 million, or 41%, to $96.2 million, primarily due to a $46.1 million increase in provision for credit losses and a $39.7 million increase in noninterest expense[369] - These were partially offset by a $20.9 million decrease in the provision for income taxes and a $1.9 million increase in noninterest income[369] Net Interest Income Net Interest Income and Margin (Six Months Ended June 30) | Metric | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Net interest income | $250,915 | $255,175 | -$4,260 | | Interest rate spread | 2.36% | 2.52% | -16 bps | | Net interest margin | 2.86% | 3.07% | -21 bps | - Net interest income decreased by $4.3 million, or 2%, reflecting lower interest income and higher interest expense on borrowings, partially offset by lower interest expense on deposits[374] - The net interest margin decreased by 21 basis points to 2.86%, negatively impacted by a shift in business mix towards lower-margin loans held for sale and warehouse repurchase agreements[375] Interest Income Interest Income (Six Months Ended June 30, In thousands) | Source | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Loans | $494,921 | $556,419 | -11.0% | | Mortgage loans in process of securitization | $9,047 | $4,764 | 89.9% | | Investment securities available for sale | $24,453 | $29,172 | -16.2% | | Investment securities held to maturity | $47,524 | $40,321 | 17.9% | | Total interest income | $591,603 | $642,446 | -7.9% | - Interest income on loans and loans held for sale decreased by $61.5 million, or 11%, due to a 106 basis point decrease in average yield to 6.98%, despite a 3% increase in average loan balance[377] - Interest income on securities held to maturity increased by $7.2 million, or 18%, due to a 36% increase in average balance, partially offset by a 92 basis point decrease in average yield[381] Interest Expense Interest Expense (Six Months Ended June 30, In thousands) | Source | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Deposits | $255,316 | $350,673 | -27.2% | | Short-term borrowings | $70,345 | $18,834 | 273.5% | | Long-term borrowings | $15,027 | $17,764 | -15.4% | | Total interest expense | $340,688 | $387,271 | -12.0% | - Interest expense on deposits decreased by $95.4 million, or 27%, primarily due to lower average balances and rates for certificate of deposit accounts[384] - Interest expense on borrowings increased by $48.8 million, or 133%, due to a 277% increase in average balances, despite a 319 basis point decrease in the average rate to 5.23%[388] Provision for Credit Losses Provision for Credit Losses (Six Months Ended June 30, In thousands) | Metric | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Provision for credit losses | $60,754 | $14,691 | 313.5% | - The $60.8 million provision for credit losses consisted of $64.0 million for ACL-Loans, net of a $2.8 million release for ACL-OBCE's and a $0.4 million release for ACL-Guarantees[392] - The increase was primarily associated with estimated declines on multi-family property values, ongoing investigations of mortgage fraud, and certain types of subordinated loans[391] Noninterest Income Noninterest Income (Six Months Ended June 30, In thousands) | Source | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Gain on sale of loans | $34,961 | $20,524 | 70% | | Loan servicing fees, net | $10,148 | $30,229 | -66% | | Mortgage warehouse fees | $3,552 | $2,506 | 42% | | Syndication and asset management fees | $13,096 | $8,536 | 53% | | Other income | $12,416 | $10,538 | 18% | | Total noninterest income | $74,173 | $72,225 | 3% | - Gain on sale of loans increased by $14.4 million, or 70%, driven by higher volume in the multi-family loan portfolio[394] - Loan servicing fees decreased by $20.1 million, or 66%, including a $0.5 million negative fair market value adjustment to servicing rights (compared to a $19.0 million positive adjustment in 2024)[400] - Syndication and asset management fees increased by $4.6 million, or 53%, due to an increase in managed projects and funds, and new equity raises[398] Noninterest Expense Noninterest Expense (Six Months Ended June 30, In thousands) | Source | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Salaries and employee benefits | $79,985 | $57,969 | 38% | | Deposit insurance expense | $14,380 | $10,704 | 34% | | Credit risk transfer premium expense | $8,629 | $2,294 | 276% | | Other expense | $18,349 | $10,532 | 74% | | Total noninterest expense | $139,001 | $99,292 | 40% | - Salaries and employee benefits increased by $22.0 million, or 38%, including $8.3 million for the addition of production staff[403] - Credit risk transfer premium expense increased by $6.3 million, or 276%, stemming from credit default swaps[403] - The efficiency ratio increased to 42.76% from 30.33%, with credit default swap premiums, collateral preservation, and production staff additions negatively impacting it by 714 basis points[404] Income Taxes Income Taxes (Six Months Ended June 30, In thousands) | Metric | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Provision for income taxes | $29,113 | $49,970 | -42% | | Effective tax rate | 23.2% | 23.4% | -0.2 pp | - Income tax expense decreased by $20.9 million, or 42%, reflecting a 41% lower pre-tax income[405] Our Segments - The Company's three primary segments are Multi-family Mortgage Banking, Mortgage Warehousing, and Banking, which offer distinct but complementary products and services and provide synergies across the Bank[250][251][252] Net Income (Loss) by Segment (Three Months Ended June 30, In thousands) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | Multi-family Mortgage Banking | $9,269 | $9,037 | | Mortgage Warehousing | $22,986 | $22,270 | | Banking | $14,574 | $52,378 | | Other | $(8,848) | $(7,292) | Net Income (Loss) by Segment (Six Months Ended June 30, In thousands) | Segment | 2025 | 2024 | | :--- | :--- | :--- | | Multi-family Mortgage Banking | $12,682 | $25,646 | | Mortgage Warehousing | $38,384 | $42,460 | | Banking | $61,681 | $108,803 | | Other | $(16,527) | $(13,462) | Multi-family Mortgage Banking - Net income for the three months ended June 30, 2025, increased by 3% to $9.3 million, driven by a $9.0 million increase in gain on sale of loans and a $6.5 million increase in syndication and asset management fees, despite a $12.9 million increase in noninterest expense[416] - Loan volume originated and acquired increased by 33% to $1.4 billion for the three months ended June 30, 2025[419] - Net income for the six months ended June 30, 2025, decreased by 51% to $12.7 million, primarily due to a $17.9 million increase in noninterest expense and a $15.3 million decrease in loan servicing fees[420] - The total servicing portfolio had an unpaid principal balance of $31.0 billion at June 30, 2025, primarily Ginnie Mae multi-family servicing rights[407] Mortgage Warehousing - Net income for the three months ended June 30, 2025, increased by 3% to $23.0 million, reflecting an increase in other noninterest income (including a $4.3 million positive fair market value adjustment to derivatives)[423][424] - The volume of loans funded increased by 49% to $16.3 billion for the three months ended June 30, 2025[425] - Net income for the six months ended June 30, 2025, decreased by 10% to $38.4 million, primarily due to an increase in noninterest expense related to premiums for credit risk transfers[427] - The volume of loans funded increased by 49% to $28.1 billion for the six months ended June 30, 2025[429] Banking - Net income for the three months ended June 30, 2025, decreased by 72% to $14.6 million, primarily due to an increase in provision for credit losses[430] - Net income for the six months ended June 30, 2025, decreased by 43% to $61.7 million, also primarily due to the increase in provision for credit losses[432] - The Bank has established a limit not to increase its commercial real estate portfolio by more than 10% from the prior calendar year-end[433] Other Segment - The 'Other' segment includes general and administrative expenses, internal funds transfer pricing offsets, elimination entries, and investments in low-income housing tax credit limited partnerships or LLCs[414] Liquidity and Capital Resources Liquidity - The Company had $5.0 billion in available unused borrowing capacity with the FHLB and Federal Reserve discount window at June 30, 2025, up from $4.3 billion at December 31, 2024[436] - Liquid assets (cash, short-term investments, mortgage loans in process of securitization, loans held for sale, and warehouse lines of credit) totaled $11.9 billion, or 62% of total assets, at June 30, 2025[437] - Uninsured deposits totaled approximately $3.1 billion, or 24% of total Bank deposits, which are well-covered by the Company's liquidity, including a Federal Reserve line of credit that could fund 106% of uninsured deposits[438] - Net cash provided by operating activities was $26.9 million for the six months ended June 30, 2025, a significant improvement from $(332.7) million used in the prior year[439] Off-Balance Sheet Arrangements - The Company had $3.9 billion in outstanding commitments to extend credit and $3.6 billion in commitments subject to certain performance criteria and cancellation at June 30, 2025[442] - The business model is designed to continuously sell a significant portion of its loans, providing flexibility in managing liquidity[444] Capital Resources - The Company filed a shelf registration statement on Form S-3, effective June 4, 2025, to issue up to $500 million in registered securities to finance growth objectives[445] - The Company aims to maintain a strong capital base to support growth, provide stability, and promote public confidence[446] Shareholders' Equity Total Shareholders' Equity (In thousands) | Date | Amount | | :--- | :--- | | June 30, 2025 | $2,184,632 | | December 31, 2024 | $2,243,310 | - Total shareholders' equity decreased by $58.7 million, or 3%, primarily due to the $125.0 million redemption of 6% Series B Preferred Stock and $29.7 million in dividends, partially offset by $96.2 million in net income[447] Preferred Stock/Dividends - The Company redeemed all outstanding Series A Preferred Stock on April 1, 2024, for $52 million[448] - All outstanding Series B Preferred Stock were redeemed on January 2, 2025, for $125.0 million, resulting in $4.2 million in expenses and a $1.2 million excise tax[449] - On November 25, 2024, the Company issued 9,200,000 depositary shares of 7.625% Series E Preferred Stock, raising $222.7 million in net proceeds[451] - Dividends declared to preferred shareholders for the six months ended June 30, 2025, totaled $10.3 million[454] Common Shares/Dividends - As of June 30, 2025, the Company had 45,885,458 common shares issued and outstanding[455] - The Board declared a quarterly dividend of $0.10 per share for the first two quarters of 2025[455] Capital Adequacy - Both the Company and Merchants Bank met all capital adequacy requirements and were categorized as 'well capitalized' as of June 30, 2025, and December 31, 2024[460][461] - The Bank's capital exceeded the levels agreed to in the MOU as of June 30, 2025[461] - Merchants Bank has established a minimum leverage ratio of 9.0% and a minimum total capital ratio of 12.5%[462] - Dividend payments to shareholders are limited by Indiana law (retained net income) and the MOU (if capital ratios fall below minimums)[463][465] Quantitative and Qualitative Disclosures About Market Risk Market Risk Overview - Market risk is the risk of loss due to changes in market values of assets and liabilities, primarily from interest rate risk and price risk related to market demand[466] - Interest rate risk arises from reprice risk, option risk, yield curve risk, and changes in spread relationships[467] Interest Rate Risk Management - The Company manages interest rate risk by funding low-risk, government-backed loans (originate-to-sell model) and retaining adjustable-rate loans as held for investment[468] - The Asset-Liability Committee (ALCO) manages interest rate risk within board-established policy limits, meeting quarterly to monitor sensitivity and ensure compliance[469] Income Simulation and Economic Value Analysis - The Company uses Net Interest Income at Risk (NII at Risk) and Economic Value of Equity (EVE) models to measure interest rate risk[473] Net Interest Income Sensitivity (Twelve Months Forward, June 30, 2025, In thousands) | Scenario | Dollar change | Percent change | | :--- | :--- | :--- | | -200 bps | $(84,289) | -15.9% | | -100 bps | $(44,357) | -8.3% | | +100 bps | $42,895 | 8.1% | | +200 bps | $85,982 | 16.2% | Economic Value of Equity Sensitivity (Immediate Change in Rates, June 30, 2025, In thousands) | Scenario | Dollar change | Percent change | | :--- | :--- | :--- | | -200 bps | $54,849 | 2.6% | | -100 bps | $36,112 | 1.7% | | +100 bps | $2,604 | 0.1% | | +200 bps | $4,897 | 0.2% | - At June 30, 2025, the Company was within policy limits for both NII at Risk (20% for +/- 100 bps, 30% for +/- 200 bps) and EVE (15% for +/- 100 bps, 20% for +/- 200 bps)[478][480] Non-GAAP Financial Measures - The Company provides non-GAAP financial measures, such as tangible book value per common share, to supplement GAAP reporting and assist users in assessing operating performance[483] Non-GAAP Financial Measures (In thousands, except share data) | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total equity | $2,184,632 | $1,888,147 | | Less: goodwill and intangibles | $(8,062) | $(8,108) | | Less: preferred stock | $(551,291) | $(449,387) | | Tangible common shareholders' equity | $1,625,279 | $1,430,652 | | Assets | $19,141,204 | $18,212,422 | | Less: goodwill and intangibles | $(8,062) | $(8,108) | | Tangible assets | $19,133,142 | $18,204,314 | | Ending common shares | 45,885,458 | 45,757,567 | | Tangible book value per common share | $35.42 | $31.27 | Item 3 Quantitative and Qualitative Disclosures About Market Risk This section refers to the detailed discussion of market risk within Item 2 of this Form 10-Q - The required information is included in Item 2 under the headings "Liquidity and Capital Resources" and "Interest Rate Risk"[486] Item 4 Controls and Procedures Management concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025 - The Company's disclosure controls and procedures were effective as of June 30, 2025[486] - There have been no material changes in the Company's internal control over financial reporting during the period[487] PART II – OTHER INFORMATION Item 1 Legal Proceedings There are no legal proceedings to report for the period - None[490] Item 1A Risk Factors There have been no material changes from risk factors previously disclosed in the Company's Annual Report - No material changes from the risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[491] Item 2 Unregistered Sales of Equity Securities and Use of Proceeds There are no unregistered sales of equity securities or use of proceeds to report for the period - None[492] Item 3 Defaults Upon Senior Securities There are no defaults upon senior securities to report for the period - None[493] Item 4 Mine Safety Disclosures This item is not applicable to the Company - Not applicable[494] Item 5 Other Information There is no other information to report for the period - None[495] Item 6 Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications and XBRL data files - Exhibits include Second Amended and Restated Articles of Incorporation, Articles of Amendment for Preferred Stock, Second Amended and Restated By-Laws, CEO and CFO Certifications (Sarbanes-Oxley Act), and XBRL Instance, Schema, Calculation, Definition, Label, and Presentation Linkbase Documents[497] SIGNATURES SIGNATURES The report is duly signed by the Chairman & CEO and the CFO as of August 11, 2025 - The report was signed by Michael F. Petrie (Chairman & Chief Executive Officer) and Sean A. Sievers (Chief Financial Officer) on August 11, 2025[501]