merce Bancshares(CBSH) - 2025 Q4 - Annual Report

Financial Performance - In 2025, the Commercial, Retail Banking, and Wealth segments contributed 48%, 28%, and 24% of total segment pre-tax income, respectively[18]. Deposit Insurance and Regulatory Changes - The Company's deposit insurance expense was $33.2 million in 2023, compared to $10.6 million in 2022[31]. - The FDIC increased base deposit insurance assessment rates by 2 basis points, effective January 1, 2023[30]. - The minimum designated reserve ratio for the FDIC's Deposit Insurance Fund was raised from 1.15% to 1.35% of estimated insured deposits[30]. Capital and Regulatory Compliance - The Company maintains regulatory capital ratios above the "well-capitalized" standards as defined by Basel III[35]. - The capital conservation buffer under Basel III is 2.5% of risk-weighted assets, intended to absorb losses during economic stress[34]. - The Company is not required to perform stress testing under the Dodd-Frank Act due to its asset size, but continues to conduct periodic internal stress tests[36]. - The Company is subject to various federal and state laws and regulations that control its activities, including capital and reserve requirements[20]. Transactions and Affiliates - The Company is subject to the Federal Reserve Act and Regulation W, limiting covered transactions with affiliates to 10% of the banking subsidiary's capital stock and surplus[38]. - The aggregate amount of covered transactions with all affiliates may not exceed 20% of the capital stock and surplus of the banking subsidiary[38]. - Covered transactions include loans, purchases of securities, and acceptance of collateral from affiliates[39]. - Loans to directors, officers, or controlling persons must be on terms similar to those for unaffiliated individuals[40]. Community Engagement and Reporting - The Company has a current CRA rating of "outstanding," reflecting its commitment to meeting the credit needs of the communities it serves[21]. - The Company provides free access to reports filed with the SEC on its website, including annual and quarterly reports[41]. - The Interest Rate Sensitivity section contains disclosures about market risk, as required by regulations[321]. Economic Environment - The Federal Reserve Board's monetary policies significantly affect the interest rate environment, impacting the Company's operating results[22].