Regulatory Matters

6 Months Ended

Jun. 30, 2026

Note 18: Regulatory Matters

The Company and Merchants Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by federal and state banking regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and Merchants Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and Merchants Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s and Merchants Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, and other factors. Furthermore, the Company’s and Merchants Bank’s regulators could require adjustments to regulatory capital not reflected in these unaudited condensed consolidated financial statements.

Quantitative measures established by regulation to ensure capital adequacy require the Company and Merchants Bank to maintain minimum amounts and ratios (set forth in the table below). Management believes that, as of June 30, 2026 and December 31, 2025, the Company and Merchants Bank met all capital adequacy requirements.

As of June 30, 2026 and December 31, 2025, the most recent notifications from the Federal Reserve categorized the Company as well capitalized and most recent notifications from the FDIC categorized Merchants Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Company’s or Merchants Bank’s category.

The Company’s and Merchants Bank’s actual capital amounts and ratios are presented in the following tables.


					Minimum
					Amount to be Well				Minimum Amount
					Capitalized with				To Be Well
	Actual				Basel III Buffer⁽¹⁾				Capitalized⁽¹⁾
	Amount		Ratio		Amount		Ratio		Amount		Ratio

	(Dollars in thousands)
June 30, 2026
Total capital⁽¹⁾ (to risk-weighted assets)
Company	$	2,470,123	12.5	%	$	2,073,368	10.5	%	$	—	N/A	%
Merchants Bank		2,398,352	12.2	%		2,067,150	10.5	%		1,968,714	10.0	%
Tier I capital⁽¹⁾ (to risk-weighted assets)
Company		2,386,160	12.1	%		1,678,441	8.5	%		—	N/A	%
Merchants Bank		2,314,389	11.8	%		1,673,407	8.5	%		1,574,971	8.0	%
Common Equity Tier I capital⁽¹⁾ (to risk-weighted assets)
Company		1,834,870	9.3	%		1,382,245	7.0	%		—	N/A	%
Merchants Bank		2,314,389	11.8	%		1,378,100	7.0	%		1,279,664	6.5	%
Tier I capital⁽¹⁾ (to average assets)
Company		2,386,160	11.6	%		1,028,502	5.0	%		—	N/A	%
Merchants Bank		2,314,389	11.3	%		1,025,533	5.0	%		1,025,533	5.0	%

(1)

As defined by regulatory agencies.



					Minimum
					Amount to be Well				Minimum Amount
					Capitalized with				To Be Well
	Actual				Basel III Buffer⁽¹⁾				Capitalized⁽¹⁾
	Amount		Ratio		Amount		Ratio		Amount		Ratio

	(Dollars in thousands)
December 31, 2025
Total capital⁽¹⁾ (to risk-weighted assets)
Company	$	2,365,600	13.6	%	$	1,822,759	10.5	%	$	—	N/A	%
Merchants Bank		2,320,227	13.4	%		1,821,535	10.5	%		1,734,795	10.0	%
Tier I capital⁽¹⁾ (to risk-weighted assets)
Company		2,272,014	13.1	%		1,475,567	8.5	%		—	N/A	%
Merchants Bank		2,226,641	12.8	%		1,474,576	8.5	%		1,387,836	8.0	%
Common Equity Tier I capital⁽¹⁾ (to risk-weighted assets)
Company		1,720,724	9.9	%		1,215,172	7.0	%		—	N/A	%
Merchants Bank		2,226,641	12.8	%		1,214,357	7.0	%		1,127,617	6.5	%
Tier I capital⁽¹⁾ (to average assets)
Company		2,272,014	11.5	%		990,358	5.0	%		—	N/A	%
Merchants Bank		2,226,641	11.3	%		987,284	5.0	%		987,284	5.0	%

(1)

As defined by regulatory agencies.

- Definition

The entire disclosure for regulatory capital requirement for depository and lending institutions. Institutions include, but not are not limited to, finance company, insured depository institution, bank holding company, savings and loan association holding company, bank and savings institution not federally insured, mortgage company, foreign financial institution and credit union.

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