Merchants Bancorp
For the period ended Dec 31, 2025. Filed Feb 27, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Feb 27, 2026
MBIN$51.76-0.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-02-28.
0001558370-25-001941
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-02-27.
0001104659-26-021549
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 195 previous paragraphs and 215 current paragraphs.
56 unchanged; 107 reworded; 46 added; 25 removed; 7 previous and 6 current paragraphs rearranged.
Tables are not compared: 61 previous and 66 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (46)
Current report
From 2023 through 2025, the mortgage and housing markets experienced substantial rate volatility driven by shifts in Federal Reserve policy. After aggressive tightening pushed the federal funds rate to a 5.25%-5.50% peak in 2023, which contributed to 30-year mortgage rates exceeding 7%, the Federal Reserve began easing in late 2024 and continued rate cuts throughout 2025, lowering the target range to 3.50%-3.75% by year-end. As monetary policy shifted, long-term yields stabilized, with the 10-year Treasury at approximately 4.18% on December 31, 2025, and mortgage pricing improved as the Freddie Mac PMMS 30-year rate averaged 6.10% in January 2026. Inflation also moderated during this period, with the Consumer Price Index rising 2.7% year-over-year in December 2025.
Current report
These moderating interest rates have strengthened warehouse line utilization, as single-family lenders have experienced improved origination and refinance volumes, while retail mortgage demand has begun to recover and multi-family borrowers benefit from a more stable rate environment that supports clearer underwriting economics. Nonetheless, regional supply constraints, elevated home prices, and shifting agency credit parameters continue to influence transaction activity and demand.
Current report
Looking forward, the MBA projects a gradual rebound in single-family residential mortgage activity, a key driver for our warehouse and retail mortgage businesses. The MBA forecasts total single-family purchase and refinance originations to increase approximately 7% in 2026, rising from about $2.050 trillion in 2025 to roughly $2.203 trillion in 2026, reflecting stable refinancing activity and modest growth. These totals correspond to approximately 6% purchase growth and approximately 10% refinance growth in 2026. The MBA also expects 30-year mortgage rates to remain in the 6%-6.5% range and the 10-year Treasury, which is a key benchmark for permanent multi-family mortgages, to stay above 4% through 2026. While these trends support improving volume expectations across our lending platforms, risks tied to inflation, global market uncertainty, mortgage-backed securities spread volatility, and evolving GSE credit parameters remain important considerations.
Current report
Regulatory Environment. During 2025, the federal regulatory environment shifted toward a more pro-banking posture, with newly appointed leadership at the FDIC, the OCC, and the CFPB withdrawing or reconsidering several prior-era regulatory proposals and signaling a broader easing of supervisory and compliance burdens for financial institutions. In parallel, the Trump-appointed leaders of federal banking agencies have advanced efforts to reduce capital requirements for larger institutions, including proposals to relax the supplementary leverage ratio, representing a material recalibration of post-crisis prudential standards. Consistent with this deregulatory trend, the Federal Housing Finance Agency significantly expanded the government-sponsored enterprises’ footprint by increasing the 2026 multifamily loan-purchase caps to a combined $176 billion, the largest infusion of GSE purchasing authority in recent years, while maintaining exemptions that allow additional volumes for workforce housing transactions. These actions collectively indicate a regulatory environment that is generally more supportive of credit availability and liquidity across mortgage markets than in prior years.
Current report
Memorandum of Understanding. On June 30, 2025, Merchants Bank entered into a confidential MOU with the FDIC and IDFI. While the contents of the MOU are confidential under IDFI and FDIC regulations, certain provisions, with the authorization of the IDFI and FDIC, are summarized below. The MOU is an informal administrative agreement among Merchants Bank, FDIC, and IDFI pursuant to which Merchants Bank has agreed to take various actions and enhance specific areas of Merchants Bank’s operations. In particular, Merchants Bank has agreed to maintain certain capital thresholds, manage asset concentrations, and implement certain plans regarding Merchants Bank’s operations and strategy to mitigate risk of certain assets, which it has already implemented. As of December 31, 2025, and as of each of the reporting periods beginning on or after December 31, 2024, Merchants Bank’s capital exceeded the levels agreed to in the MOU and Merchants Bank was within the asset concentration limits agreed to in the MOU. The MOU will remain in effect until modified or terminated by the FDIC and IDFI.
Current report
The Company’s principal source of funds for dividend payments to shareholders is dividends received from Merchants Bank. Banking statutes and regulations limit the maximum amount of dividends that a bank may pay without requesting prior approval of regulatory agencies. Under Indiana law, Merchants Bank may not pay a dividend if such dividend would be greater than retained net income (as defined) for the current year plus those for the previous two years. Additionally, under its MOU, if Merchants Bank’s capital ratios fall below the minimums agreed to, Merchants Bank may not pay dividends without the FDIC and IDFI’s prior consent.
Current report
Management does not expect the actions called for by these regulatory actions to have a material adverse impact on the Company’s financial performance or Merchants Bank’s ongoing day-to-day operations, although they may have the effect of limiting or delaying the Company’s or Merchants Bank’s ability or plans to expand.
Current report
General. Net income of $218.8 million for the year ended December 31, 2025 decreased by $101.6 million, or 32%, compared to net income of $320.4 million for the year ended December 31, 2024. The decrease was primarily driven by a $93.5 million, or 385%, increase in provision for credit losses, a $76.1 million, or 34%, increase in noninterest expense, and a $5.6 million, or 1%, decrease in net interest income, partially offset by a $57.2 million decrease in provision for income taxes and a $16.3 million, or 11%, increase in noninterest income.
Current report
Net Interest Income. Net interest income of $517.1 million for the year ended December 31, 2025 decreased $5.6 million, or 1%, compared to the year ended December 31, 2024. The 1% decrease reflected a $101.9 million, or 8% decrease in interest income from lower average yields on higher average balances on loans and loans held for sale. The decrease in interest income was partially offset by a $96.3 million, or 12%, decrease in interest expense, primarily due to lower average balances on certificates of deposit at lower rates, as well as higher average balances at lower rates on borrowings.
Current report
Interest income of $47.5 million on securities available for sale decreased $10.0 million, or 17%, during 2025. The average balance of securities available for sale decreased $102.8 million, or 10%, to $927.4 million for the year ended December 31, 2025, from $1.0 billion for the year ended December 31, 2024. The average yield decreased 46 basis points, to 5.12% for the year ended December 31, 2025, compared to 5.58% for the year ended December 31, 2024. The decrease in average balances of securities available for sale was primarily associated with proceeds from calls, maturities and paydowns, partially offset by purchases of new securities.
Current report
Interest expense on borrowings increased $42.7 million, or 36%, to $162.4 million for the year ended December 31, 2025 from $119.7 million for the year ended December 31, 2024. The increase in interest was primarily
Current report
Provision for Credit Losses. We recorded a provision for credit losses of $117.8 million for the year ended December 31, 2025, an increase of $93.5 million, compared to the year ended December 31,2024. The increases in provision expense was primarily associated with declines on certain multi-family property values, after receiving new appraisals, and the ongoing investigation of borrowers involved in mortgage fraud or suspected fraud, as well as portfolio growth and mix. The 2025 increase was also attributable to certain types of subordinated loans that the Company generally no longer offers to borrowers. Losses on underperforming loans have been largely identified and have either been included in ACL-Loans as specific reserves or charged-off.
Current report
Noninterest Income.
Current report
Noninterest Expense.
Current report
The allowance for credit losses on loans of $83.3 million, as of December 31, 2025, decreased by $1.1 million, or 1%, compared to $84.4 million as of December 31, 2024. The $1.1 million decrease compared to December 31, 2024 was driven by $124.1 million in charge-offs, partially offset by $122.9 million in provision expense. These changes were primarily associated with declines on certain multi-family property values, after receiving new appraisals, and the ongoing investigation of borrowers involved in mortgage fraud or suspected fraud. Additionally, the changes were attributable to certain types of subordinated loans that the Company no longer offers to borrowers. These underperforming loans have been largely identified and evaluated for potential losses that have either been included in the ACL-Loans as specific reserves or charged-off.
Current report
Overall, criticized loans receivable of $508.2 million declined by $189.1 million, or 27%, compared to December 31, 2024. This decline reinforces the view that the frequency of migration to criticized status would subside, driven by favorable market conditions and our efforts with proactive portfolio management.
Current report
Loans receivable classified as Special Mention totaled $204.9 million at December 31, 2025 compared to $380.0 million at December 31, 2024. Loans receivable classified as Substandard totaled $303.3 million at December 31, 2025, compared to $317.3 million at December 31, 2024.
Current report
Operating Segment Analysis Comparing the Years Ended December 31, 2025 and 2024
Current report
for the year ended December 31, 2024. The decrease was primarily due to higher salaries and employee benefits, associated with the addition of production staff that are expected to continue to elevate volume, and lower loan servicing fees associated with fair value adjustments to servicing rights. These were partially offset by lower provision for income taxes, reflecting lower pre-tax income and benefits from tax credits.
Current report
Mortgage Warehousing. The Mortgage Warehousing segment reported net income of $96.9 million for the year ended December 31, 2025, an increase of $14.1 million, or 17%, compared to $82.8 million for the year ended December 31,2024. The increase in net income was primarily due to an increase in net interest income and other noninterest income, as well as a decrease in provision for income taxes, reflecting the benefits of tax credits. These were partially offset by an increase in noninterest expense related to premiums for credit risk transfers from higher loan balances.
Current report
Noninterest income for the year ended December 31, 2025 included a positive fair market value adjustment to floor derivatives of $5.5 million compared to a negative fair market value adjustment of $2.5 million for the year ended December 31, 2024.
Current report
Banking. The Banking segment reported net income for the year ended December 31, 2025 of $122.0 million, a decrease of $88.1 million, or 42%, compared to $210.1 million for the year ended December 31, 2024. The decrease was due to a $91.3 million increase in provision for credit losses, a $15.6 million decrease in net interest income, and a $31.7 million rise in noninterest expense. The increase in noninterest expense was primarilydue to collateral preservation expenses associated with taxes, insurance, property expenses, and legal fees related to nonperforming assets, as well as increased deposit insurance expense and credit risk transfer premium expenses. These were partially offset by a $41.1 million decrease in provision for income taxes, resulting from lower pre-tax income and benefits from tax credits, and a $9.5 million increase in other noninterest income, that reflected an increase in gain on sale of loans.
Current report
Total Assets. Total assets of $19.4 billion at December 31, 2025 increased $643.2 million, or 3%, compared to $18.8 billion at December 31, 2024. The increase was due primarily to growth in loans and loans held for sale, specifically in the warehouse and multi-family loan portfolios, which were partially offset by lower balances in the residential loan portfolio. Warehouse loans, including loans held for sale and loans receivable, are exclusively made up of loans to residential and multi-family mortgage bankers that are funding agency-eligible mortgages and commercial loans, which represent all of the Company’s loans to non-depository institutions.
Current report
Cash and Cash Equivalents. Cash and cash equivalents of $212.2 million at December 31, 2025 decreased $264.4 million, or 55%, compared to $476.6 million at December 31, 2024. The decrease reflected intentional cash management.
Current report
December 31,2025 represented less than 0.001% of total equity and total securities available for sale, reflecting our interest rate risk policy of maintaining short duration on assets and liabilities.
Current report
Securities Held to Maturity. Securities held to maturity of $1.5 billion at December 31, 2025 decreased $121.0 million, or 7%, compared to $1.7 billion at December 31, 2024. The decrease was due to $380.6 million in repayments and amortization, net of $259.6 million in purchases, during the period.
Current report
The following table provides the weighted-average yield securities by maturity as of December 31, 2025.
Current report
The ACL-Loans of $83.3 million at December 31, 2025 decreased $1.1 million, or 1%, compared to $84.4 million at December 31, 2024. The decrease compared to December 31, 2024 was driven by $124.1 million in charge-offs, partially offset by $122.9 million in provision expense, primarily related to the multi-family portfolio. These changes were primarily associated with declines on certain multi-family property values, after receiving new appraisals, and the ongoing investigation of borrowers involved in mortgage fraud or suspected fraud, and loan growth. Additionally, the charge-offs were attributable to certain types of subordinated loans that the Company no longer offers to borrowers. Losses on underperforming loans have been largely identified and have either been included in ACL-Loans as specific reserves or charged-off.
Current report
Other Real Estate Owned. Other real estate owned of $60.1 million at December 31, 2025 increased $51.9 million compared to $8.2 million at December 31, 2024. The increase was primarily due to progress with one multi-family property that moved to other real estate owned in December 2025.
Current report
Supplemental Trend Information
Current report
Non-GAAP Financial Measures
Current report
The Company’s accounting and reporting policies conform to GAAP and general practices within the banking industry. As a supplement to GAAP, the Company provides non-GAAP performance results, which the Company believes are useful because they assist users of the financial information in assessing the Company’s operating
Current report
performance. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found.
Current report
These non-GAAP financial measures include presentation of tangible common shareholders’ equity, average tangible common shareholders’ equity, tangible assets, tangible book value per share, return on average tangible common equity, and tangible common equity to tangible assets.
Current report
The reconciliation from shareholders’ equity per GAAP to tangible common shareholders’ equity is comprised of goodwill and intangibles, and preferred stock.
Current report
The reconciliation from consolidated assets per GAAP to tangible assets is comprised solely of consolidated assets less goodwill and intangibles.
Current report
Tangible book value per common share represents tangible common shareholders’ equity divided by ending common shares.
Current report
Return on average tangible common equity represents net income available to common shareholders divided by average shareholders’ equity, less average goodwill, average intangibles, and average preferred stock.
Current report
Although intended to enhance understanding of the Company’s business and performance, these non-GAAP financial measures should not be considered an alternative to GAAP. In addition, these non-GAAP financial measures may differ from those used by other financial institutions to assess their business and performance.
Current report
A reconciliation of GAAP to non-GAAP financial measures is as follows:
Showing the first 40 of 46 passages. Open the source sections for the rest.
Removed paragraphs (25)
Previous report
In response to rising inflation during 2022-2023, the Federal Reserve aggressively increased the federal funds rate. Starting from near-zero levels in early 2022, the rate was raised multiple times, reaching 5.33% by the end of 2023. This was the highest level since January 2008 and was aimed at curbing inflationary pressures. The 10-year Treasury yield, which is a key benchmark for mortgage rates, also saw significant increases. It rose from around 1.5% at the beginning of 2022 to approximately 3.88% by the end of 2023. This increase was driven by expectations of higher inflation and the Federal Reserve’s rate hikes. The 30-year mortgage rate followed a similar trend, rising sharply in response to the Federal Reserve’s rate hikes. It peaked at over 7% in 2022, the highest level since 2002, and remained elevated throughout 2023. The higher interest rates during this period significantly reduced mortgage affordability and refinancing activity, leading to a decline in mortgage volumes across the industry.
Previous report
During 2024, the Federal Reserve began to cut interest rates and by the end of 2024, the federal funds rate had been reduced to around 4.33%. Following suit, the 30-year mortgage rate began to decline and by the end of 2024, it had fallen to approximately 6.85%. The rate cuts in 2024 began to revive the mortgage market. Lower mortgage rates improved affordability and spurred a resurgence in mortgage volumes, particularly in refinancing activity. Conversely, the 10-year Treasury yield had begun to decline, but in late-2024 began to rise on inflation expectations and strong economic growth. By the end of 2024, it had reached 4.58%. The broader economic environment in 2024 was characterized by strong economic growth, moderating inflation, and robust corporate earnings, which further supported the recovery in mortgage volumes.
Previous report
Supporting this expectation are industry forecasts from the Mortgage Bankers Association, which has forecasted a 16% increase in single-family residential mortgage volume, to $2.055 trillion for 2025, from $1.779 trillion in 2024, and an increase of 15%, to $2.369 trillion in 2026, followed by an increase to $2.455 trillion for 2027. The higher rate environment has also slowed multi-family permanent, agency-eligible loan originations and sales to the secondary market, but improved by late 2024.
Previous report
Regulatory Environment. We believe an important trend affecting community banks in the United States over the foreseeable future will be related to heightened regulatory capital requirements, regulatory burdens generally, and interest margin compression. We expect that troubled community banks could face significant challenges when attempting to raise capital. We also believe that heightened regulatory capital requirements will make it more difficult for even well-capitalized, healthy community banks to grow in their communities by taking advantage of opportunities in their markets that result as the economy improves. We believe these trends will favor community banks that have sufficient capital, a diversified business model and a strong deposit franchise.
Previous report
Issuance and Redemption of Preferred Stock. On September 27, 2022, the Company issued 5,200,000 depositary shares, each representing a 1/40th interest in a share of its 8.25% Fixed Rate Reset Series D Non-Cumulative Perpetual Preferred Stock, without par value, and with a liquidation preference of $1,000 per share (equivalent to $25 per depositary share). The aggregate gross offering proceeds for the shares issued by the Company was $130.0 million, and after deducting underwriting discounts and commissions and offering expenses of approximately $4.6 million paid to third parties, the Company received total net proceeds of $125.4 million. On September 30, 2022, the Company issued an additional 500,000 depositary shares of Series D Preferred Stock to the underwriters related to their exercise of an
Previous report
option to purchase additional shares under the associated underwriting agreement, resulting in an additional $12.1 million in net proceeds, after deducting $0.4 million in underwriting discounts.
Previous report
Issuance of Common Stock. On May 16, 2024, the Company completed a common stock offering of 2.4 million shares, resulting in net proceeds of $97.7 million.
Previous report
General. Net income of $320.4 million for the year ended December 31, 2024 increased by $41.2 million, or 15%, compared to net income of $279.2 million for the year ended December 31, 2023. The increase was primarily driven by a $74.5 million, or 17%, increase in net interest income, a $33.4 million, or 29%, increase in noninterest income, as well as $16.0 million, or 40%, decrease in provision for credit losses. The increases to net income were partially offset by a $49.2 million or 28%, increase in noninterest expense.
Previous report
Net Interest Income. Net interest income of $522.6 million for the year ended December 31, 2024 increased $74.5 million, or 17%, compared to $448.1 million for the year ended December 31, 2023. The 17% increase reflected a $224.9 million, or 21% increase in interest income from higher average balances and yields on loans and loans held for sale, and higher average balances of securities held to maturity, as well as higher yields and average balances on securities available for sale. These increases were partially offset by a $150.4 million, or 24%, increase in interest expense primarily due to higher average balances on borrowings, as well as higher average balances and rates on certificates of deposit and interest-bearing checking.
Previous report
Interest income of $57.5 million on securities available for sale increased $35.9 million, or 166%, during 2024. The average balance of securities available for sale increased $406.6 million, or 65%, to $1.0 billion for the year ended December 31, 2024, from $623.7 million for the year ended December 31, 2023. The average yield increased 211 basis points, to 5.58% for the year ended December 31, 2024, compared to 3.47% for the year ended December 31, 2023. The increase in average yield reflects the acquisition of a private label security from a warehouse customer as part of a securitization in December 2023. The increase in average balances of securities available for sale was primarily associated with the acquisition of certain securities from a warehouse customer that provide protective put options and interest rate floor derivatives to prevent losses in value.
Previous report
December 31, 2023. The increase in certificates of deposit is in part due to the implementation of our new online account opening system which has made it more efficient for existing customers to open accounts as well as broaden our customer base to reach new markets.
Previous report
Provision for Credit Losses. We recorded a total provision for credit losses of $24.3 million for the year ended December 31, 2024, a decrease of $16.0 million, compared to the year ended December 31, 2023.
Previous report
Loans classified as Special Mention totaled $380.0 million at December 31, 2024 compared to $191.3 million at December 31,2023. The increase was primarily due to the increase in interest rates for our borrowers and the related levels of net operating income on certain properties in the multi-family and healthcare financing loan portfolios.
Previous report
Mortgage Warehousing. The Mortgage Warehousing segment reported net income of $82.8 million for the year ended December 31, 2024, an increase of $9.3 million, or 13%, compared to $73.5 million for the year ended December 31, 2023. The higher net income reflected a $37.7 million increase in net interest income, partially offset by an $11.3 million decrease in noninterest income that primarily reflected a negative fair market value adjustment to certain derivatives.
Previous report
Banking. The Banking segment reported net income for the year ended December 31, 2024 of $210.1 million, an increase of $15.7 million, or 8%, compared to $194.4 million for the year ended December 31, 2023. The increase was primarily due to a $33.0 million increase in net interest income from higher balances of multi-family bridge loans and a $4.0 million increase in noninterest income. These were partially offset by a $19.9 million increase in noninterest expense, primarilydue to increases deposit insurance expense and credit risk transfer premium expense related to credit default swap agreements executed during 2024.
Previous report
Total Assets. Total assets of $18.8 billion at December 31, 2024 increased 11%, compared to $17.0 billion at December 31,2023. The increase was due primarily to growth in loans and loans held for sale, as well as an increase in securities held to maturity compared to December 31, 2023, primarily due to the purchase of a security representing healthcare loans sold into a securitization in 2024 that was offset by a decline in loans in the healthcare portfolio that were sold into the securitization. There was also an increase in mortgage loans in process of securitization due to increased activity in the secondary market.
Previous report
Cash and Cash Equivalents. Cash and cash equivalents of $476.6 million at December 31, 2024 decreased $107.8 million, or 18%, compared to December 31, 2023. Included in cash equivalents was $33.5 million in restricted cash associated with senior credit linked notes described inNote 1: Nature of Operations and Summary of Significant Accounting Policies andNote 14: Borrowings.
Previous report
Mortgage Loans in Process of Securitization. Mortgage loans in process of securitization of $428.2 million at December 31, 2024 increased $317.6 million, or 287%, compared to $110.6 million at December 31, 2023. These
Previous report
Securities Held to Maturity. Securities held to maturity of $1.7 billion at December 31, 2024 increased $460.5 million, or 38%, compared to $1.2 billion at December 31, 2023. The increase was primarily due to purchases of $689.8 million, the majority of which was from a security acquired as part of a healthcare loan securitization. This was partially offset by calls, maturities and repayments of securities totaling $229.5 million during the period.
Previous report
The ACL-Loans of $84.4 million at December 31, 2024 increased $12.6 million, or 18%, compared to $71.8 million at December 31, 2023, reflecting an $16.7 million net increase in specific reserves, primarily related to five customers, and loan growth in multi-family loan portfolios. This increase was partially offset by lower loan balances due to the securitization of healthcare loans, which reduced the allowance by approximately $4.4 million.
Previous report
Also influencing the overall level of the ACL-Loans is our differentiated strategy to typically hold loans with shorter durations while maintaining agency underwriting standards that enable us to sell or refinance the majority of our loans under agency and government programs.
Previous report
The $84.4 million allowance for credit losses on loans as of December 31, 2024, compared to the net charge offs of $10.5 million over the last twelve months ended December 31, 2024, could absorb eight years of losses, assuming recent loss levels continue.
Previous report
*Shareholders’ Equity.*Shareholders’ equity was $2.2 billion as of December 31, 2024, compared to $1.7 billion as of December 31, 2023. The $542.2 million, or 32%, increase resulted primarily from net income of $320.4 million, net proceeds of $222.7 million from a preferred stock offering, and $97.7 million from a common stock offering, which was partially offset by redemption of 7% Series A Preferred Stock for $52.0 million and dividends paid on common and preferred shares of $51.2 million during the period.
Previous report
FMBI was subject to these measures prior to the sale of its branches and the merger of its remaining charter into Merchants Bank in January 2024. As of December 31, 2023, FMBI met all capital adequacy requirements (as set forth in the table above). The FDIC categorized FMBI as well capitalized at that time and there are no conditions or events since that notification that management believes would have changed that category.
Previous report
ACL-Loans. The Company adopted CECL on January 1, 2022. CECL replaced the previous “Allowance for Loan and Lease Losses” standard for measuring credit losses. Upon adoption of CECL, the difference in the two measurements was recorded in the ACL-Loans and retained earnings.
Reworded paragraphs (107)
Previous wording
We are a diversified bank holding company headquartered in Carmel, Indiana and registered under the Bank Holding Company Act of 1956, as amended. We currently operate in multiple business segments, including Multi-family Mortgage Banking that offers multi-family housing and healthcare facility financing and servicing, as well as syndicated low-income housing tax credit and debt funds; Mortgage Warehousing that offers mortgage warehouse financing, commercial loans, and deposit services; and Banking that offers portfolio lending for multi-family and healthcare facility loans, retail and correspondent residential mortgage banking, agricultural lending, SBA lending, and traditional community banking.
Current wording
We are a diversified bank holding company headquartered in Carmel, Indiana and registered under the Bank Holding Company Act of 1956, as amended. We currently operate in multiple business segments, including Multi-family Mortgage Banking that offers multi-family housing and healthcare facility financing and servicing, as well as syndicated low-income housing tax credit and debt funds; Mortgage Warehousing that offers mortgage warehouse financing, commercial loans, and deposit services; and Banking that offers portfolio lending for multi-family and healthcare facility loans, retail and correspondent residential mortgage banking, jumbo lending, agricultural lending, SBA lending, and traditional community banking.
Previous wording
Our business consists of funding low risk, multi-family, residential, and SBA loans meeting underwriting standards of government programs under an originate to sell model, and retaining adjustable-rate loans as held for investment to reduce interest rate risk. The gain on sale of these loans and servicing fees contribute to noninterest income. The funding source is primarily from mortgage custodial, municipal, retail, commercial, brokered deposits, and short-term borrowing. We believe that the combination of net interest income and noninterest income from the sale of low risk profile assets results in lower than industry charge-offs and a lower expense base, which serves to maximize net income and higher than industry shareholder return.
Current wording
Our business consists of funding low risk, multi-family, residential, and SBA loans meeting underwriting standards of government programs under an originate-to-sell model, and retaining adjustable-rate loans as held for investment to reduce interest rate risk. The gain on sale of these loans and servicing fees contribute to noninterest income. The funding source is primarily from mortgage custodial, retail, commercial and brokered deposits, as well as short-term borrowing. We believe that the combination of net interest income and noninterest income from the sale of low risk profile assets has traditionally resulted in lower than industry charge-offs and a lower expense base, which serves to maximize net income and higher than industry shareholder return.
Previous wording
Net interest income. Net interest income represents interest income less interest expense. We generate interest income from interest (net of deferred origination fees received and costs paid, which are amortized over the expected life of the loans) and fees received on interest-earning assets, including loans, investment securities, cash, and dividends on FHLB stock we own. We incur interest expense from interest paid on interest-bearing liabilities, including interest-bearing deposits and borrowings. Net interest income is the most significant contributor to our revenues and net income. To evaluate net interest income, we measure and monitor: (a) yields on our loans and other interest-earning assets; (b) duration on our loans, deposits, and borrowings; (c) the costs of our deposits and other funding sources; (d) our net interest margin; and (e) the regulatory risk weighting associated with the assets. Net interest margin is calculated as the annualized net interest income divided by average interest-earning assets. Because noninterest-bearing sources of funds, such as noninterest-bearing deposits and shareholders’ equity, also fund interest-earning assets, net interest margin includes the benefit of these noninterest-bearing sources.
Current wording
Net interest income. Net interest income represents interest income less interest expense. We generate interest income from interest (net of deferred origination fees received and costs paid, which are amortized over the expected life of the loans) and fees received on interest-earning assets, including loans, investment securities, cash, and dividends on FHLB stock and other equity securities we own. We incur interest expense from interest paid on interest-bearing liabilities, including interest-bearing deposits and borrowings. Net interest income is the most significant contributor to our revenues and net income. To evaluate net interest income, we measure and monitor: (a) yields on our loans and other interest-earning assets; (b) duration on our loans, deposits, and borrowings; (c) the costs of our deposits and other funding sources; (d) our net interest margin; and (e) the regulatory risk weighting associated with the assets. Net interest margin is calculated as the annualized net interest income divided by average interest-earning assets. Because noninterest-bearing sources of funds, such as noninterest-bearing deposits and shareholders’ equity, also fund interest-earning assets, net interest margin includes the benefit of these noninterest-bearing sources.
Previous wording
Noninterest Income. Noninterest income consists of, among other things: (a) gain on sale of loans; (b) loan servicing fees; (c) fair value adjustments to the value of servicing rights; (d) mortgage warehouse fees; and (e) syndication and asset management fees; and (f) other noninterest income.
Current wording
Noninterest Income. Noninterest income consists of, among other things: (a) gain on sale of loans; (b) loan servicing fees; (c) fair value adjustments to the value of servicing rights, derivatives, and certain loans; (d) mortgage warehouse fees; and (e) syndication and asset management fees; and (f) other noninterest income.
Previous wording
Gain on sale of loans includes placement and origination fees, capitalized servicing rights, trading gains and losses, gains and losses on certain derivatives and other related income. Loan servicing fees are collected as payments are received for loans in the servicing portfolio and reduced by amortization on servicing rights. Fair value adjustments to the value of servicing rights are also included in noninterest income. Mortgage warehouse fees are accrued at the time of funding. Syndication fee income is recognized at the point in time when investor equity capital is obtained primarily to acquire qualifying investments in LIHTC projects for its funds. Related asset management fees for syndicated LIHTC or debt funds are recognized over time. Other noninterest income includes the recognition and changes in value to protective derivatives associated with certain investment securities, as well as income earned on joint ventures.
Current wording
Gain on sale of loans includes origination fees, capitalized servicing rights, trading gains and losses, exit and extension fees, gains and losses on certain derivatives and other related income. Loan servicing fees are collected as payments are received for loans in the servicing portfolio and reduced by amortization on servicing rights. Fair value adjustments to the value of servicing rights are also included in noninterest income. Mortgage warehouse fees are accrued at the time of funding. Syndication fee income is generally recognized at the point in time when investor equity capital is obtained primarily to acquire qualifying investments in LIHTC projects for its funds. Related asset management fees for syndicated LIHTC or debt funds are recognized over time. Other noninterest income includes the recognition and changes in value to protective derivatives associated with certain investment securities and certain loans, as well as income earned on joint ventures.
Previous wording
Loan origination and servicing expenses include third party processing for financing activities and loan-related origination expenses. Occupancy expense includes depreciation expense on our owned properties, lease expense on our leased properties and other occupancy-related expenses. Equipment expense includes furniture, fixtures and equipment related expenses. Professional fees include legal, accounting, consulting and other outsourcing arrangements. FDIC insurance expense represents the assessments that we pay to the FDIC for deposit insurance. Technology expense includes data processing fees paid to our third-party data processing system provider, cybersecurity fees, and other data service providers. Credit risk transfer premium expense includes premiums paid for our credit default swap arrangements. Other general and administrative expenses include expenses associated with servicing expense, advertising, marketing, travel, meals, training, supplies, and postage, among other miscellaneous expenses.
Current wording
Loan origination and servicing expenses include third party processing for financing activities and loan-related origination expenses. Occupancy expense includes depreciation expense on our owned properties, lease expense on our leased properties and other occupancy-related expenses. Equipment expense includes furniture, fixtures and equipment related expenses. Professional fees include legal, accounting, consulting and other outsourcing arrangements. FDIC insurance expense represents the assessments that we pay to the FDIC for deposit insurance. Technology expense includes data processing fees paid to our third-party data processing system provider, cybersecurity fees, and other data service providers. Credit risk transfer premium expense includes premiums paid for our credit default swap arrangements. Other general and administrative expenses include those associated with collateral preservation activities associated with nonperforming loans, servicing, advertising, marketing, sponsorships, insurance, certain derivatives, travel, meals, training, supplies, and postage, among other miscellaneous fees and costs.
Previous wording
Noninterest expenses generally increase as we grow our business. Noninterest expenses have increased significantly over the past few years as we have grown organically, and as we have built out and modernized our operational infrastructure and implemented our plan to build an efficient, technology-driven mortgage banking operation with significant operational capacity for growth.
Current wording
Noninterest expenses generally increase as we grow our business. Noninterest expenses have increased significantly over the past few years as we have grown organically and also experienced challenges with nonperforming loans. Additionally, we have built out and modernized our operational infrastructure and implemented our plan to build an efficient, technology-driven mortgage banking operation with significant operational capacity for growth.
Previous wording
Asset Levels. We manage our asset levels based upon forecasted closings or fundings within our business segments to ensure we have the necessary liquidity and capital to meet the required regulatory capital ratios. Each segment evaluates its funding needs by forecasting the fundings and sales of loans, communicating with customers on their projected funding needs, and reviewing its opportunities to add new customers.
Current wording
Asset Levels. We manage our asset levels based upon forecasted closings within our business segments to ensure we have the necessary liquidity and capital to meet the required regulatory capital ratios. Each segment evaluates its funding needs by forecasting the fundings and sales of loans, communicating with customers on their projected funding needs, and reviewing its opportunities to add new customers.
Previous wording
Liquidity. We manage our liquidity based upon factors that include: (a) our amount of custodial and brokered deposits as a percentage of total deposits (b) the level of diversification of our funding sources (c) the allocation and amount of our deposits among deposit types (d) the short-term funding sources used to fund assets (e) the amount of non-deposit funding used to fund assets (f) the availability of unused funding sources; (g) off-balance sheet obligations; (h) the availability of assets to be readily converted into cash without a material loss on the investment; (i) the amount of cash and cash equivalent; (j) the repricing characteristics of our assets; (k) maturity and duration of our assets when compared to the repricing characteristics of our liabilities; (l) costs of available funding options; and (m) other factors.
Current wording
Liquidity. We manage our liquidity based upon factors that include: (a) the amount of custodial and brokered deposits as a percentage of total deposits (b) the level of diversification of our funding sources (c) the allocation and amount of our deposits among deposit types (d) the short-term funding sources used to fund assets (e) the amount of non-deposit funding used to fund assets (f) the availability of unused funding sources; (g) off-balance sheet obligations; (h) the availability of assets to be readily converted into cash without a material loss on the investment; (i) the amount of cash and cash equivalents; (j) the repricing characteristics of our assets; (k) maturity and duration of our assets when compared to the repricing characteristics of our liabilities; (l) costs of available funding options; and (m) other factors.
Previous wording
Economic and Interest Rate Environment. The results of our operations are highly dependent on economic conditions, mortgage volumes, and market interest rates. Residential mortgage volumes fluctuate based on market interest rates, economic conditions, and the credit parameters set by government agencies, such as Fannie Mae, Freddie Mac, and Ginnie Mae, and other market participants.
Current wording
Economic and Interest Rate Environment. Our operating results remain highly dependent on economic conditions, mortgage volumes, market interest rates, and the credit parameters set by government agencies such as Fannie Mae, Freddie Mac, and Ginnie Mae, as these factors directly influence borrower demand, housing affordability, warehouse line utilization, and the performance of our retail mortgage, multifamily and other lending activities.
Previous wording
ACL-Loans. One of our key operating objectives has been, and continues to be, maintenance of an appropriate level of ACL-Loans in our loan portfolio. The provision for credit losses recorded in prior years was primarily due to growth in our loan portfolio, as our historical loss rates remained very low. As we anticipate that our loan portfolio overall will continue to grow in 2025, we could expect the provision to increase, but could also be influenced by any changes to problem loans in our portfolio or the loan type mix within the portfolio. It could also be influenced by external market factors, such as interest rates and the economic environment. Additional details are provided in the ACL-Loans portion of the Comparison of Financial Condition at December 31, 2024 and December 31, 2023. Because there could be unforeseen future losses, the Company continues to monitor the situation and may need to adjust future expectations as developments occur.
Current wording
ACL-Loans. One of our key operating objectives has been, and continues to be, maintenance of an appropriate level of ACL-Loans for our loan portfolio. The provision for credit losses recorded in prior years was primarily due to growth in our loan portfolio, as our historical loss rates were very low. The provision for credit losses recorded in 2025 was significantly affected by increases in specific reserves associated with certain multi-family loans impacted by declines in property values and the ongoing investigation of borrowers involved in mortgage fraud or suspected fraud. We expect loan growth to continue in 2026; however, we anticipate lower overall provision for credit losses due to a reduction in identified impairments on problem loans. Future provision levels may vary based on the emergence of any new problem loans, changes in our portfolio composition, or shifts in external market conditions, including interest rates and broader economic environment. Additional details are provided in the ACL-Loans portion of the Comparison of Financial Condition at December 31, 2025 and 2024. Because there could be unforeseen future losses, the Company continues to monitor the situation and may need to adjust future expectations as developments occur.
Previous wording
On April 1, 2024, the Company redeemed all outstanding shares of the 7.00% Fixed-to-Floating Rate Series A Non-Cumulative Perpetual Preferred Stock at a price equal to the liquidation preference of $25 per share, or $52.0 million, using cash on hand.
Current wording
Issuance and Redemption of Preferred Stock. On April 1, 2024, the Company redeemed all outstanding shares of the 7.00% Fixed-to-Floating Rate Series A Non-Cumulative Perpetual Preferred Stock at a price equal to the liquidation preference of $25 per share, or $52.0 million, using cash on hand. The $1.8 million of expenses associated with the original issuance, which were capitalized in 2019, were recognized through retained earnings upon redemption, thus reducing net income available to common shareholders.
Previous wording
As of October 1, 2024, the dividends on the Series B Preferred Stock started to accrue at a floating rate of 3-month SOFR plus 4.831% and were to reset quarterly. The rate was 9.42% for the three months ended December 31, 2024.See “Capital Resources” section of “Liquidity”, later in this Item 7 for more information.
Current wording
As of October 1, 2024, the dividends on the 6.00% Fixed-to-Floating Rate Series B Non-Cumulative Perpetual Preferred Stock started to accrue at a floating rate of 3-month SOFR plus 4.831% and were to reset quarterly. The rate was 9.42% for the three months ended December 31, 2024. On January 2, 2025, the Company redeemed all outstanding shares of the Series B Preferred Stock at a price equal to the liquidation preference of $1,000 per share (equivalent to $25 per depositary share), or $125.0 million, using cash on hand. The $4.2 million of expenses associated with the original issuance, which were capitalized in 2019, were recognized through retained earnings upon redemption, thus reducing net income available to common shareholders. Cash to redeem the shares was delivered to the Company’s transfer agent on December 31, 2024, resulting in a prepaid asset reported in other assets. As of the redemption date, the Series B Preferred Stock did not have any accrued, but unpaid dividends.See “Capital Resources” section of “Liquidity”, later in this Item 7 for more information.
Previous wording
On November 25, 2024, the Company issued 9,200,000 depositary shares, each representing a 1/40 th interest in a share of its 7.625% Fixed Rate Reset Series E Non-Cumulative Perpetual Preferred Stock, without par value, and with a liquidation preference of $1,000 per share (equivalent to $25 per depositary share). The aggregate gross offering proceeds for the shares issued by the Company was $230.0 million, and after deducting underwriting discounts and commissions and offering expenses of approximately $7.3 million paid to third parties, the Company received total net proceeds of $222.7 million.
Current wording
On November 25, 2024, the Company issued 9,200,000 depositary shares, each representing a 1/40 th interest in a share of its 7.625% Fixed Rate Series E Non-Cumulative Perpetual Preferred Stock, without par value, and with a liquidation preference of $1,000 per share (equivalent to $25 per depositary share). The aggregate gross offering proceeds for the shares issued by the Company was $230.0 million, and after deducting underwriting discounts and commissions and offering expenses of approximately $7.3 million paid to third parties, the Company received total net proceeds of $222.7 million.
Previous wording
Credit Risk Transfers, Loan Sales and Securitizations. Growth in the loan origination pipeline has prompted the Company to seek additional avenues to effectively manage regulatory capital levels and reduce credit risk, in addition to issuing preferred and common stock. Accordingly, we have completed several loan sale and securitization transactions, as well as credit default swaps and credit linked notes. In doing so, the Company has been able to effectively reduce its risk-weighted assets and maintain well-capitalized capital ratios. Also seeNote 5: Loans and Allowance for Credit Losses on Loans.
Current wording
Credit Risk Transfers, Loan Sales and Securitizations. Growth in the loan origination pipeline has prompted the Company to seek additional avenues to effectively manage regulatory capital levels and reduce credit risk, in addition to issuing preferred and common stock. Accordingly, we have completed several loan sale and securitization transactions, as well as credit default swaps and credit-linked notes. In doing so, the Company has been able to effectively reduce its risk-weighted assets and maintain well-capitalized capital ratios. In December 2025, the Company fully repaid its credit-linked notes. Also seeNote 5: Loans and Allowance for Credit Losses on Loans.
Previous wording
General and Administrative Expenses. We expect to continue incurring increased noninterest expense attributable to general and administrative expenses related to building out and modernizing our operational infrastructure, marketing, and other administrative expenses to execute our strategic initiatives, as well as expenses to hire additional personnel and other costs required to continue our growth. We also expect costs to increase with additional regulatory compliance requirements.
Current wording
General and Administrative Expenses. We expect to continue incurring increased noninterest expense attributable to general and administrative expenses related to building out and modernizing our operational infrastructure, marketing, and other administrative expenses to execute our strategic initiatives, as well as expenses to hire additional personnel and other costs required to continue our growth.
Previous wording
Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in weighted average interest rates. The following table sets forth the effects of changing rates and volumes on our net interest income during the periods shown. Information is provided with respect to (i) effects on interest income attributable to changes in volume (changes in volume multiplied by prior rate) and (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume). Yields have been calculated on a pre-tax basis.
Current wording
Increases and decreases in interest income and interest expense result from changes in average balances (volume) of interest-earning assets and interest-bearing liabilities, as well as changes in weighted average interest rates. The following table sets forth the effects of changing rates and volumes on our net interest income during the periods shown. Information is provided with respect to (i) effects on interest income attributable to changes in volume (changes
Previous wording
The interest rate spread of 2.47% for the year ended December 31, 2024, decreased 4 basis points compared to 2.51% for the year ended December 31, 2023. Our net interest margin decreased 3 basis points, to 3.03%, for the year ended December 31, 2024 from 3.06% for the year ended December 31, 2023.
Current wording
The interest rate spread of 2.37% for the year ended December 31, 2025, decreased 10 basis points compared to 2.47% for the year ended December 31, 2024. Our net interest margin decreased 17 basis points, to 2.86%, for the year ended December 31, 2025 from 3.03% for the year ended December 31, 2024. Factors impacting net interest margin were the decline in interest rate spread, along with shifts in balance sheet mix.
Previous wording
Interest Income. Interest income of $1.3 billion for the year ended December 31, 2024 increased $224.9 million, or 21%, compared to $1.1 billion for the year ended December 31,2023. This increase was primarily attributable to higher average balances and yields on loans and loans held for sale, and higher average balances of securities held to maturity, as well as higher yields and average balances on securities available for sale. The higher yields were in response to higher interest rates set by the Federal Reserve.
Current wording
Interest Income. Interest income of $1.2 billion for the year ended December 31, 2025 decreased $101.9 million, or 8%, compared to $1.3 billion for the year ended December 31,2024. This decrease was primarily attributable to lower yields on higher average balances for loans and loans held for sale. The lower yields were in response to lower interest rates set by the Federal Reserve and changes in balance sheet mix.
Previous wording
Interest income of $1.1 billion for loans and loans held for sale increased $153.7 million, or 16%, during 2024. The average balance of loans, including loans held for sale, during the year ended December 31, 2024 increased $1.8 billion, or 14%, to $14.2 billion compared to $12.4 billion for the year ended December 31, 2023. The average yield on loans increased 12 basis points, to 7.85% for the year ended December 31, 2024, compared to 7.73% for the year ended December 31, 2023. The increase in average balances of loans and loans held for sale was primarily due to increases in the mortgage warehouse and multi-family portfolios, partially offset by a decrease in the healthcare portfolio associated with a sale of loans as part of a securitization transaction. The higher average yield reflected the impact of the Federal Reserve increase in market rates.
Current wording
Interest income of $1.0 billion for loans and loans held for sale decreased $106.3 million, or 10%, during 2025. The average balance of loans, including loans held for sale, during the year ended December 31, 2025 increased $470.2 million, or 3%, to $14.7 billion compared to $14.2 billion for the year ended December 31, 2024. The average yield on loans decreased 98 basis points, to 6.87% for the year ended December 31, 2025, compared to 7.85% for the year ended December 31,2024. The lower average yield reflected the impact of the Federal Reserve decrease in short-term market rates and changes in balance sheet mix. The increase in average balances of loans and loans held for sale was primarily due to increases in the mortgage warehouse and multi-family portfolios, including those held for sale and held for investment, partially offset by a decrease in the residential real estate portfolio.
Previous wording
Interest income of $14.5 million for mortgage loans in process or securitization increased $1.8 million, or 15%, during 2024. The average balance of mortgage loans in process of securitization increased $16.8 million, or 7%, to $274.4 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. The average yield increased 37 basis points, to 5.28% for the year ended December 31, 2024, compared to 4.91% for the year ended December 31, 2023. The increase in average balances was primarily due to a higher origination volume of loans pending settlement for sale on the secondary market.
Current wording
Interest income of $21.1 million for mortgage loans in process or securitization increased $6.6 million, or 45%, during 2025. The average balance of mortgage loans in process of securitization increased $115.3 million, or 42%, to $389.8 million for the year ended December 31, 2025 compared to the year ended December 31, 2024. The average yield increased 13 basis points, to 5.41% for the year ended December 31, 2025, compared to 5.28% for the year ended December 31, 2024. The increase in average balances was primarily due to a higher origination volume of loans pending settlement for sale on the secondary market.
Previous wording
Interest income of $27.3 million on interest-earning deposits and other interest or dividends increased $13.5 million, or 97%, during 2024. The average balance of interest-earning deposits and other increased $201.7 million, or 84%, to $442.4 million for the year ended December 31, 2024, from $240.8 million for the year ended December 31, 2023. The average yield increased 43 basis points, to 6.17% for the year ended December 31, 2024, compared to 5.74% for the year ended December 31, 2023. The increase in average balances reflected higher dividends associated with the purchase of additional shares of FHLB stock and the purchase of other equity securities.
Current wording
Interest income of $32.0 million on interest-earning deposits, and other interest or dividends increased $4.7 million, or 17%, during 2025. The average balance of interest-earning deposits, and other interest or dividends increased $98.7 million, or 22%, to $541.1 million for the year ended December 31, 2025, from $442.4 million for the year ended December 31, 2024. The average yield decreased 25 basis points, to 5.92% for the year ended December 31, 2025, compared to 6.17% for the year ended December 31, 2024. The increase in average balances reflected the purchase of other equity securities and the purchase of FHLB stock.
Previous wording
Interest income of $90.1 million for securities held to maturity increased $20.1 million, or 29%, during 2024. The average balance of securities held to maturity, during the year ended December 31, 2024 increased $240.2 million, to $1.3 billion compared to $1.1 billion for the year ended December 31, 2023. The average yield on securities held to maturity increased 35 basis points, to 6.73 % for the year ended December 31, 2024, compared to 6.38% for the year ended December 31, 2023. The increase in average balance of securities held to maturity was primarily related to held to maturity securities acquired as part of loan securitizations that the Company originated.
Current wording
Interest income of $93.1 million for securities held to maturity increased $3.1 million, or 3%, during 2025. The average balance of securities held to maturity, during the year ended December 31, 2025 increased $250.7 million, to $1.6 billion compared to $1.3 billion for the year ended December 31, 2024. The average yield on securities held to maturity decreased 87 basis points, to 5.86% for the year ended December 31, 2025, compared to 6.73% for the year ended December 31, 2024. The increase in average balance of securities held to maturity was primarily related to held to maturity securities acquired as part of loan securitizations that the Company originated.
Previous wording
Interest Expense. Total interest expense of $780.1 million for the year ended December 31, 2024 increased $150.4 million or 24%, compared to $629.7 million for the year ended December 31, 2023.
Current wording
Interest Expense. Total interest expense of $683.8 million for the year ended December 31, 2025 decreased $96.3 million, or 12%, compared to $780.1 million for the year ended December 31, 2024.
Previous wording
Interest expense on deposits increased $83.1 million, or 14%, to $660.4 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. The increase was primarily due to higher average balances and rates on certificates of deposit and higher average balances on interest-bearing checking accounts. The higher rates on our deposits were primarily due to the change in market rates.
Current wording
Interest expense on deposits decreased $139.0 million, or 21%, to $521.3 million for the year ended December 31, 2025 compared to the year ended December 31, 2024. The decrease was primarily due to lower average balances at lower rates on certificates of deposit, partially offset by higher average balances at lower rates on interest bearing checking. The higher rates on our deposits were primarily due to the change in market rates.
Previous wording
Interest expense of $285.9 million for certificate of deposit accounts increased $52.8 million during 2024. The average balance of certificates of deposit of $5.3 billion for the year ended December 31, 2024 increased $751.0 million, or 16%, compared to $4.6 billion for the year ended December 31, 2023. The average rate on certificates of deposit was 5.35% for the year ended December 31, 2024, which was a 27 basis point increase compared to 5.08% for year ended
Current wording
Interest expense of $118.9 million for certificate of deposit accounts decreased $167.0 million, or 58%, during 2025. The average balance of certificates of deposit of $2.6 billion for the year ended December 31, 2025 decreased $2.7 billion, or 51%, compared to $5.3 billion for the year ended December 31, 2024. The average rate on certificates of deposit was 4.53% for the year ended December 31, 2025, which was an 82 basis point decrease compared to 5.35% for year ended December 31, 2024. The decrease in certificates of deposit is primarily due to the decrease in use of brokered deposits.
Previous wording
Interest expense of $240.2 million for interest-bearing checking accounts increased $23.7 million during 2024. The average balance of interest-bearing checking accounts of $5.2 billion for the year ended December 31, 2024 increased $505.2 million, or 11%, compared to $4.7 billion for the year ended December 31, 2023. The average yield of interest-bearing checking accounts was 4.60% for the year ended December 31, 2024, which was a 1 basis point increase compared to 4.59% for year ended December 31, 2023.
Current wording
Interest expense of $258.5 million for interest-bearing checking accounts increased $18.3 million, or 8%, during 2025. The average balance of interest-bearing checking accounts of $6.6 billion for the year ended December 31, 2025 increased $1.4 billion, or 26%, compared to $5.2 billion for the year ended December 31, 2024. The average rate on interest-bearing checking accounts was 3.92% for the year ended December 31, 2025, which was a 68 basis point decrease compared to 4.60% for year ended December 31, 2024.
Previous wording
Interest expense of $134.0 million for money market accounts increased $7.6 million during 2024. The average balance of money market accounts of $2.8 billion for the year ended December 31, 2024 increased $40.4 million, or 1%, compared to the year ended December 31, 2023. The average yield of money market accounts was 4.71% for the year ended December 31, 2024, which was a 20 basis point increase compared to 4.51% for year ended December 31, 2023.
Current wording
Interest expense of $144.0 million for money market/savings accounts increased $9.7 million, or 7%, during 2025. The average balance of money market/savings accounts of $3.7 billion for the year ended December 31, 2025 increased $676.6 million, or 23%, compared to $3.0 billion for the year ended December 31, 2024. The average rate on money market accounts was 3.91% for the year ended December 31, 2025, which was a 56 basis point decrease compared to 4.47% for year ended December 31, 2024.
Previous wording
Interest expense on borrowings increased $67.2 million, or 128%, to $119.7 million for the year ended December 31, 2024 from $52.5 million for the year ended December 31, 2023. The increase in interest was primarily due to an increase of $1.2 billion, or 192%, in the average balance of borrowings of $1.8 billion compared to $627.5 million for the year ended December 31, 2023. The higher level of collateralized borrowing, largely from the FHLB, was primarily due to it being a more cost-effective funding option than utilizing brokered deposits. There was a 184 basis point decrease in the average cost of borrowings to 6.53%, compared to 8.37% for the year ended December 31, 2023.
Current wording
due to an increase of $1.3 billion, or 71%, in the average balance of borrowings of $3.1 billion compared to $1.8 billion for the year ended December 31, 2024. There was also a 136 basis point decrease in the average cost of borrowings to 5.17%, compared to 6.53% for the year ended December 31, 2024. The higher level of collateralized borrowing, largely from the FHLB, was primarily to fund asset growth.
Previous wording
Included in interest expense on borrowings, our warehouse structured financing agreements provide for additional interest payments for a portion of the earnings generated. As a result, the cost of borrowings increased from a base rate of 6.25% and 8.36%, to an effective rate of 6.53% and 8.37% for the year ended December 31, 2024 and 2023, respectively.
Current wording
Included in interest expense on borrowings, our warehouse structured financing agreements provide for an additional interest payment for a portion of the earnings generated from the interest-earning assets. As a result, the cost of borrowings increased from a base rate of 4.93% and 6.25%, to an effective rate of 5.17% and 6.53% for the year ended December 31, 2025 and 2024, respectively.
Previous wording
The $24.3 million total provision for credit losses consisted of $23.7 million for the ACL-Loans, $2.2 million for the ACL-OBCEs, net of $1.0 million for the ACL-Guarantees for the release of reserves related to a loan securitization and $0.6 million for the release of FMBI’s ACL-Loans for loans sold.
Current wording
The $117.8 million provision for credit losses consisted of $122.9 million for the ACL-Loans, net of a $4.7 million release for the ACL-OBCEs, and net of a $0.4 million release for the ACL-Guarantees related to a loan securitization.
Previous wording
The ACL-Loans was $84.4 million, or 0.81% of loans receivable at December 31, 2024, compared to $71.8 million, or 0.70% of loans receivable at December 31, 2023. The higher ACL-Loans reflected increases associated with specific reserves, loan growth, and adjustments to qualitative loss factors that were partially offset by charge-offs. Additional details are provided in the ACL-Loans portion of the Comparison of Financial Condition at December 31, 2024 and 2023, and inNote 1: Nature of Operations and Significant Accounting PoliciesandNote 5: Loans and Allowance for Credit Losses.** **
Current wording
The ACL-Loans was $83.3 million, or 0.75% of total loans, at December 31, 2025, compared to $84.4 million, or 0.81% of loans receivable at December 31, 2024. Although only a slight decrease compared to prior year, the balance reflects higher charge-offs, increases to provision expense, and loan growth. Additional details are provided in the ACL-Loans portion of theComparison of Financial Condition at December 31, 2025 and 2024, and inNote 1: Nature of Operations and Significant Accounting PoliciesandNote 5: Loans and Allowance for Credit Losses.** **
Previous wording
Noninterest Income. Noninterest income of $148.1 million for the year ended December 31, 2024 increased $33.4 million, or 29%, compared to $114.7 million for the year ended December 31, 2023. The increase was primarily due to higher gain on sale, increased loan servicing fees, and higher syndication and asset management fees. The increases were partially offset by a decrease in other noninterest income.
Current wording
Noninterest income of $164.4 million for the year ended December 31, 2025 increased $16.3 million, or 11%, compared to $148.1 million for the year ended December 31, 2024. The increase was primarily due to higher gain on sale of loans, other noninterest income, and syndication and asset management fees. The increases were partially offset by a decrease in loan servicing fees.
Previous wording
Gain on sale of loans of $62.3 million for the year ended December 31, 2024 increased $14.1 million, or 29%, compared to $48.2 million for the year ended December 31, 2023. The increase in gain on sale of loans reflects the successful execution of the Company’s strategy to grow the business segment and to increase non-interest income.
Current wording
Gain on sale of loans of $85.4 million for the year ended December 31, 2025 increased $23.1 million, or 37%, compared to $62.3 million for the year ended December 31, 2024. The increase in gain on sale of loans reflects the successful execution of the Company’s strategy to grow the multi-family business segment and highlights the strength of underlying earnings in our core business.
Previous wording
Other noninterest income of $17.0 million for the year ended December 31, 2024 decreased $3.2 million, or 16%, compared to the year ended December 31, 2023. Other noninterest income included a $2.5 million negative adjustment to the fair value of floor derivatives for the year ended December 31, 2024 compared to a $6.6 million positive fair value adjustment for the year ended December 31,2023. The floor derivatives are associated with arrangements whereby there is a guaranteed minimum interest rate the Company will receive on certain assets bearing variable interest rates. The change in value was driven largely by the change in market interest rates during the period. Also included in other noninterest income were changes in fair value on certain securities available for sale that the Company elected to account for under the fair value option, with changes in fair value reflected in earnings. The Company also has put options associated with these securities that provide protection against any change in value. By design, the fair value adjustments of the securities and the put options should be substantially equal and offsetting. For the year ended December 31, 2024 there was a $17.9 million negative fair value adjustment on the securities that were offset by a $17.9 million positive fair value adjustment on the put options, hence having no net gain or loss recognized. Also seeNote 3: Investment Securities, Note 15: Derivative Financial Instruments, andNote 16: Disclosures about Fair Value of Assets and Liabilities.
Current wording
Also included in other noninterest income were changes in fair value on certain securities available for sale that the Company elected to account for under the fair value option, with changes in fair value reflected in earnings. The Company also has put options associated with these securities that provide protection against any change in value. By design, the fair value adjustments of the securities and the put options should be substantially equal and offsetting. For the year ended December 31, 2025 there was a $6.2 million positive fair value adjustment on the securities that were offset by a $6.2 million negative fair value adjustment on the put options, hence having no net gain or loss recognized. Similarly, for the year ended December 31, 2024 there was $17.9 million negative fair value adjustment on the securities that were offset by a $17.9 million positive fair value adjustment on the put options, hence having no net gain or loss recognized. Also seeNote 3: Investment Securities, Note 15: Derivative Financial Instruments, andNote 16: Disclosures about Fair Value of Assets and Liabilities.
Previous wording
Syndication and asset management fees of $19.7 million for the year ended December 31, 2024 increased $7.3 million, or 59%, for the year ended December 31, 2024 compared to $12.4 million the year ended December 31, 2023. The increase was attributable to the additional $1.1 billion in equity raised by our LIHTC syndication platform during 2024.
Current wording
Syndication and asset management fees of $23.6 million for the year ended December 31, 2025 increased $3.9 million, or 20%, for the year ended December 31, 2025 compared to $19.7 million the year ended December 31, 2024. The increase was attributable to an increase in the amount of projects and funds managed in combination with new equity raises by our LIHTC syndication platform during 2025.
Previous wording
Loan servicing fees of $43.7 million for the year ended December 31, 2024 increased $17.5 million, or 67%, compared to $26.2 million for the year ended December 31, 2023. Loan servicing fees included a $22.7 million positive adjustment to the fair value of servicing rights for the year ended December 31, 2024, compared to a $4.6 million positive adjustment to the fair value of servicing rights for the year ended December 31, 2023.
Current wording
Loan servicing fees of $22.4 million for the year ended December 31, 2025 decreased $21.3 million, or 49%, compared to $43.7 million for the year ended December 31, 2024. Loan servicing fees included a $1.4 million positive adjustment to the fair value of servicing rights for the year ended December 31, 2025, compared to a $22.7 million positive adjustment to the fair value of servicing rights for the year ended December 31, 2024.
Previous wording
Noninterest Expense. Noninterest expense of $223.8 million for the year ended December 31, 2024 increased $49.2 million, or 28%, compared to $174.6 million for the year ended December 31, 2023. The increase was due primarily to a $22.5 million, or 21%, increase in salaries and employee benefits associated with higher commissions on higher production volume and to support business growth, a $12.6 million, or 93% increase in FDIC deposit insurance expenses that reflected the transition in classification to a large bank exceeding $10 billion in assets, an increase in criticized loans, and the growth in assets that increased our base assessment. Also contributing to the increase was a $6.3 million increase in credit risk transfer premium expense associated with ongoing credit default swaps that were executed in March and December 2024.
Current wording
Noninterest expense of $299.9 million for the year ended December 31, 2025 increased $76.1 million, or 34%, compared to $223.8 million for the year ended December 31, 2024. The increase was due primarily to a $35.8 million, or 27%, increase in salaries and employee benefits to support business growth, including $11.3 million for expenses associated with the addition of production staff that are expected to continue to elevate volume, and higher commissions on higher production volume. Other noninterest expense rose by $19.0 million, driven mainly by collateral preservation expenses of $14.0 million, which included taxes, insurance, receiver expenses, and legal fees tied to preserving collateral for nonperforming loans. The rise also reflects a $14.7 million increase in credit risk transfer premium expense associated with ongoing credit default swaps and a $5.6 million, or 22% increase in FDIC deposit insurance expenses. These increases were partially offset by a decrease of $3.4 million in professional fees.
Previous wording
The efficiency ratio was at 33.37% for the year ended December 31, 2024, compared with 31.03% for the year ended December 31, 2023.
Current wording
The efficiency ratio was at 44.01% for the year ended December 31, 2025, compared with 33.37% for the year ended December 31, 2024. The $46.4 million in total expenses associated with credit default swap premiums, the collateral preservation of nonperforming loans, and the addition of production staff had a negative 680 basis point impact on the efficiency ratio for the year ended December 31, 2025 compared to 94 basis points for the year ended December 31, 2024.
Previous wording
Income Taxes. Provision for income tax of $102.3 million for the year ended December 31, 2024 increased $33.6 million, or 49%, compared to $68.7 million for the year ended December 31, 2023. The increase was primarily due to a $12.2 million tax benefit recorded in 2023 related to tax refunds and changes to state apportionment calculations, as well as higher pre-tax income. The effective tax rate was 24.2% for the year ended December 31, 2024 and 19.7% for the year ended December 31, 2023.
Current wording
Income Taxes. Provision for income tax of $45.0 million for the year ended December 31, 2025 decreased 56%, compared to $102.3 million for the year ended December 31, 2024. The decrease reflected lower pre-tax net income and the utilization of originated and purchased tax credits. The effective tax rate was 17.1% for the year ended December 31, 2025 and 24.2% for the year ended December 31, 2024.
Showing the first 40 of 107 pairs. Open the source sections for the rest.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
Issuance of Common Stock. On May 16, 2024, the Company issued 2.4 million shares of the Company’s common stock, without par value, at a public offering price of $43.00 per share in an underwritten public offering. The aggregate gross offering proceeds for the shares issued by the Company was $103.2 million, and after deducting underwriting discounts, commissions, and offering expenses of $5.5 million paid to third parties, the Company received total net proceeds of $97.7 million.
Current report — wording carried from elsewhere
in volume multiplied by prior rate) and (ii) effects on interest income attributable to changes in rate (changes in rate multiplied by prior volume). Yields have been calculated on a pre-tax basis.
Current report — wording carried from elsewhere
Other noninterest income of $25.9 million for the year ended December 31, 2025 increased $8.9 million, or 52%, compared to $17.0 million for the year ended December 31, 2024. Other noninterest income included a $5.5 million positive adjustment to the fair value of floor derivatives for the year ended December 31, 2025 compared to a $2.5 million negative fair value adjustment for the year ended December 31, 2024. The floor derivatives are associated with arrangements whereby there is a guaranteed minimum interest rate the Company will receive on certain assets bearing variable interest rates. The change in value was driven largely by the change in market interest rates during the period.
Current report — wording carried from elsewhere
Mortgage Warehousing because it provides us with a ready platform to sell the underlying collateral to secure repayment. These and other synergies form a part of our strategic plan.
Current report — wording carried from elsewhere
for multi-family and healthcare mortgages and a positive fair market value adjustment of $2.2 million for single-family mortgages and SBA loans during the year ended December 31, 2024 .
Current report — wording carried from elsewhere
Our primary sources of funds are business and consumer deposits, escrow and custodial deposits, borrowings, brokered deposits, principal and interest payments on loans, principal and interest on investment securities, and proceeds
Rearranged previous paragraphs (7)
Previous report — wording carried elsewhere
On January 2, 2025, the Company redeemed all outstanding shares of the 6.00% Fixed-to-Floating Rate Series B Non-Cumulative Perpetual Preferred Stock at a price equal to the liquidation preference of $1,000 per share (equivalent to $25 per depositary share), or $125.0 million, using cash on hand.
Previous report — wording carried elsewhere
Operating Segment Analysis for the Years Ended December 31, 2024 and 2023
Previous report — wording carried elsewhere
Our segment financial information was compiled utilizing the policies described inNote 1: Nature of Operations and Summary of Significant Accounting Policies, andNote 23: Segment Information,* *included elsewhere in
Previous report — wording carried elsewhere
increase in single-family residential loan volumes from the year ended December 31, 2024 to the year ended December 31, 2023, according to the Mortgage Bankers Association.
Previous report — wording carried elsewhere
Our liquid assets and borrowing capacity significantly exceed our uninsured deposits. Uninsured deposits represent 24% of total deposits. Our line of credit with the Federal Reserve Bank of Chicago, alone, could fund 111% of uninsured deposits. Since 2018, the Company has offered its customers an opportunity to insure balances in excess of $250,000 through our insured cash sweep program that extends FDIC protection up to $100 million. The balance of deposits in this program was $1.6 billion and $1.6 billion as of December 31, 2024 and 2023, respectively.
Previous report — wording carried elsewhere
On October 1, 2024, the dividends on the Series B Preferred Stock started to accrue at a floating rate of 3-month SOFR plus 4.831% and were to reset quarterly. The rate was 9.42% for the three months ended December 31 2024.
Previous report — wording carried elsewhere
carried on the balance sheet at fair value and the changes in fair value are reported in earnings in the period in which the changes occur.