Merchants Bancorp (MBIN)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s discussion and analysis of the financial condition at March 31, 2026 and results of operations for the three months ended March 31, 2026 and 2025, is intended to assist in understanding the financial condition and results of operations of the Company. The information contained in this section should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto, appearing in Part I, Item 1 of this Form 10-Q.

The words “the Company,” “we,” “our,” and “us” refer to Merchants Bancorp and its consolidated subsidiaries, unless we indicate otherwise.

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Financial Highlights for the Three Months Ended March 31, 2026

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Merchants Bancorp

Business Overview

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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.

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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, brokered deposits, and short-term borrowings. 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.

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Critical Accounting Policies and Estimates

The preparation of our unaudited condensed consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses. These estimates are based upon historical experience and on various other assumptions that management believes are reasonable under the current circumstances. These estimates and assumptions form the basis for making judgments about the carrying value of certain assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The estimates and judgments that management believes have the most effect on its reported financial position and results of operations are set forth within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. There have been no significant changes in critical accounting policies or the assumptions and judgments utilized in applying these policies since those reported for the year ended December 31, 2025.

Financial Condition

As of March 31, 2026, we had approximately $20.3 billion in total assets, $13.0 billion in deposits, and $2.3 billion in total shareholders’ equity. Total assets as of March 31, 2026 included $11.4 billion of loans receivable, net of

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Merchants Bancorp

ACL-Loans and $4.7 billion of loans held for sale. Assets also included $1.4 billion in securities held to maturity and $843.9 million in securities available for sale, the majority of which were acquired from a warehouse customer. There are some restrictions on the types of securities we hold, particularly for those that are funded by certain multi-family custodial deposits where we set the cost of deposits based on the yield of the related security. Additionally, we had $437.0 million of mortgage loans in process of securitization that represent pre-sold multi-family rental real estate loan originations in primarily Ginnie Mae, Fannie Mae, and Freddie Mac mortgage-backed securities pending settlements that typically occur within 30 days, as well as other assets of $744.2 million, which primarily related to low-income housing tax credits, and $83.2 million of cash and cash equivalents. Servicing rights at March 31, 2026 were $229.6 million based on the fair value of the loan servicing, which primarily includes Ginnie Mae multi-family servicing rights with 10-year call protection.

Comparison of Financial Condition at March 31, 2026 and December 31, 2025

Total Assets. Total assets of $20.3 billion at March 31, 2026 increased $872.8 million, or 4%, compared to $19.4 billion at December 31, 2025. 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 healthcare 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.

Cash and Cash Equivalents. Cash and cash equivalents of $83.2 million at March 31, 2026 decreased $129.0 million, or 61%, compared to $212.2 million at December 31, 2025. The decrease was primarily attributable to growth in the loan portfolio.

Mortgage Loans in Process of Securitization. Mortgage loans in process of securitization of $437.0 million at March 31, 2026 decreased $183.1 million, or 30%, compared to $620.1 million at December 31, 2025. These represent loans that our banking subsidiary, Merchants Bank, has funded and are held in the loan portfolio pending settlement, as primarily Ginnie Mae, Fannie Mae, and Freddie Mac mortgage-backed securities with a firm investor commitment to purchase the securities.

Securities Available for Sale. Securities available for sale of $843.9 million at March 31, 2026 decreased $21.2 million, or 2%, compared to $865.1 million at December 31, 2025. The decrease in securities available for sale was primarily due to $225.5 million in calls, maturities, repayments, sales and other adjustments, partially offset by purchases of $204.3 million during the period.

Included in securities available for sale were $550.2 million and $571.3 million of investments for which a fair value option was elected at March 31, 2026 and December 31, 2025, respectively. Fair value option securities represent securities which the Company has elected to carry at fair value and are separately identified on the unaudited condensed consolidated balance sheets with changes in the fair value recognized in earnings as they occur.

As of March 31, 2026, AOCL of $0.8 million, related to securities available for sale increased $771,000 from December 31, 2025. The $0.8 million of AOCL as of March 31, 2026 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.

Securities Held to Maturity. Securities held to maturity of $1.4 billion at March 31, 2026 decreased $117.7 million, or 8%, compared to $1

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Item 7. Management’s Discussion and Analysis of Financial Condition and the Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with “Selected Consolidated Financial Data” and our audited consolidated financial statements and the accompanying notes included elsewhere in this report.

Discussion and Analysis of the Company’s financial condition and the results of operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 is contained in Item 7 of Form 10-K for the year ended December 31, 2024 filed with the SEC on February 28, 2025.

This discussion and analysis contains forward-looking statements that are subject to known and unknown risks and uncertainties that could cause our results to differ materially from our expectations. Actual results and the timing of events may differ significantly from those expressed or implied by such forward-looking statements due to a number of factors, including those set forth under Item 1 - “ Special Note Regarding Forward Looking Statements,” Item 1A - “Risk Factors,” and elsewhere in this report. We assume no obligation to update any of these forward-looking statements.

Financial Highlights for the Year Ended December 31, 2025

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Company and Business Segment Overview

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.

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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.

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See “Company Overview and Our Business Segments,” in Item 1 “Business”, “Operating Segment Analysis for the Years Ended December 31, 2025 and 2024” in Item 7 “Management’s Discussion and Analysis of Financial Condition and the Results of Operations”, and “Segment Information,” in Note 23: Segment Information for further information about our segments.

Primary Factors We Use to Evaluate Our Business

As a financial institution, we manage and evaluate various aspects of both our results of operations and our financial condition. We evaluate the comparative levels and trends of the line items on our consolidated balance sheets and statements of income, as well as various financial ratios that are commonly used in our industry. We analyze these ratios and financial trends against our own historical performance, our budgeted performance, and the financial condition and performance of comparable financial institutions in our region.

Results of operations

In addition to net income, the primary factors we use to evaluate and manage our results of operations include net interest income, noninterest income, noninterest expense, and return on average equity.

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.

Changes in market interest rates, the slope of the yield curve, and interest we earn on interest-earning assets or pay on interest-bearing liabilities, as well as the volume and types of interest-earning assets, interest-bearing and noninterest-bearing liabilities and shareholders’ equity, usually have the largest impact on changes in our net interest spread, net interest margin, and net interest income during a reporting period.

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.

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.

Noninterest expense. Noninterest expense includes, among other things: (a) salaries and employee benefits, including commissions; (b) loan origination and servicing expenses; (c) occupancy and equipment expense; (d) professional fees; (e) FDIC insurance expense; (f) technology expense; (g) credit risk transfer premium expense; and (h) other general and administrative expenses.

Salaries and employee benefits includes commissions, other compensation, employee benefits, and employer tax expenses for our personnel.

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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.

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.

Return on Average Equity.  Return on average equity is the measure of annual net income divided by the value of our total shareholders’ equity, expressed as a percentage. It reflects how efficiently equity investments are turned into profits. Changes in profitability and the ability to effectively manage levels of capital can influence this measure. The higher the ratio, the more profitable our Company becomes.

Financial Condition

The primary factors we use to evaluate and manage our financial condition are asset levels, liquidity, capital and asset quality.

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.

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.

Capital. We manage our regulatory capital based upon factors that include: (a) the level and quality of capital and our overall financial condition; (b) risk weighting of our assets; (c) the trend and volume of problem assets; (d) the dollar amount of servicing rights as a percentage of capital; (e) the level and quality of earnings; (f) the risk exposures on our balance sheet as well as off-balance sheet exposures; and (g) other factors. In addition, we have continually increased our capital through net income less dividends and equity issuances. Our regulatory capital ratios can be influenced by various factors including levels of delinquency on loans.

Asset Quality. We manage the diversification and quality of our assets based upon factors that include: (a) the level, distribution, severity and trend of problem, classified, delinquent, nonaccrual, nonperforming and restructured assets; (b) the adequacy of our ACL-Loans; (c) the diversification and quality of loan and investment portfolios; (d) the extent of counterparty risks; (e) credit risk concentrations; (f) the liquidity of our assets; and (g) other factors.

Recent Developments and Material Trends

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.

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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.

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.

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.

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.

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.

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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.

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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.

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.

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.

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.

On November 25, 2024, the Company issued 9,200,000 depositary shares, each representing a 1/40th 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.

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.

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 see Note 5: Loans and Allowance for Credit Losses on Loans.

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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.

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Comparison of Operating Results for the Years Ended December 31, 2025 and 2024

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.

The following table presents, for the periods indicated, information about (i) average balances, the total dollar amount of interest income from interest-earning assets and the resultant average yields; (ii) average balances, the total dollar amount of interest expense on interest-bearing liabilities and the resultant average rates; (iii) net interest income; (iv) the interest rate spread; and (v) the net interest margin. Yields have been calculated on a pre-tax basis. Nonaccrual loans are included in loans and loans held for sale.

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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

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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.

The following table summarizes the increases and decreases in interest income and interest expense resulting from changes in average balances (volume) and changes in average interest rates:

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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.

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.

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.

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.

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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.

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.

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.

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.

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.

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.

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.

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.

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.

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

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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.

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.

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.

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.

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 the Comparison of Financial Condition at December 31, 2025 and 2024, and in Note 1: Nature of Operations and Significant Accounting Policies and Note 5: Loans and Allowance for Credit Losses.

Noninterest Income.

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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.

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.

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A summary of the gain on sale of loans for the years ended December 31, 2025 and 2024 is below:

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.

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 see Note 3: Investment Securities, Note 15: Derivative Financial Instruments, and Note 16: Disclosures about Fair Value of Assets and Liabilities.

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.

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.

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Noninterest Expense.

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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.

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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.

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.

Asset Quality

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Loans are generally underwritten to strict Freddie Mac, Fannie Mae, HUD, or other agency guidelines. We continually strive to strengthen our various levels of credit and risk management.

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.

For the year ended December 31, 2025, there were $124.1 million of charge-offs and $127,000 of recoveries compared to $10.6 million of charge-offs and $136,000 of recoveries during the year ended December 31, 2024. In 2025, approximately 70% of the charge-offs were associated with five relationships.

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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.

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.

As of December 31, 2025, all Substandard loans have been evaluated for impairment and these loans have specific reserves of $16.0 million. The Company believes that the remaining loans are well collateralized

Total nonperforming loans (nonaccrual and greater than 90 days late but still accruing) decreased 29%, to $197.8 million, or 1.79% of total loans receivable, at December 31, 2025, compared to $279.7 million, or 2.68% of total loans receivable, at December 31, 2024.

Loans receivable greater than 30 days past due were $206.6 million at December 31, 2025 compared to $292.3 million at December 31, 2024.

As a percentage of nonperforming loans, the ACL-Loans was 42% at December 31, 2025 compared to 30% at December 31, 2024. The increase in percentage was due to an decrease in nonperforming loans.

The Company continues to reduce its credit risk through loan sale and securitization activities. Since 2023, the Company has strategically executed credit protection arrangements through credit default swaps and credit-linked notes to reduce risk of losses, with coverage ranging from 13-17% of the unpaid principal balances for each arrangement. Despite having credit protection on these loans, the Company is required to carry an allowance for credit losses on loans receivable. As of December 31, 2025, the credit-linked note was repaid in full and the remaining balance of loans protected by credit default swaps was $2.8 billion, compared to $2.3 billion as of December 31, 2024. For additional information see Note 15: Derivative Financial Instruments.

The percentage of commercial real estate loans as a percentage of total Tier I risk-based capital, including the ACL-Loans, has declined from 348% to 324% for the years ended December 31, 2024 and 2025, respectively.

Operating Segment Analysis Comparing the Years Ended December 31, 2025 and 2024

We operate in three primary segments: Multi-family Mortgage Banking, Mortgage Warehousing, and Banking, as discussed in “Our Business Segments” of Item 1 and Note 23: Segment Information. The reportable segments are consistent with the internal reporting and evaluation of the principal lines of business of the Company.

Our segment financial information was compiled utilizing the policies described in Note 1: Nature of Operations and Summary of Significant Accounting Policies, and Note 23: Segment Information, included elsewhere in this report. As a result, reported segments and the financial information of the reported segments are not necessarily comparable with similar information reported by other financial institutions. Furthermore, changes, if any, in management structure or allocation methodologies and procedures may result in future changes to previously reported segment financial data. Transactions between segments consist primarily of borrowed funds and overhead expense sharing. Intersegment interest expense is allocated to the Mortgage Warehousing and Banking segments based on Merchants Bank’s cost of funds. The provision for credit losses is allocated based on information included in our ACL-Loans analysis and specific loan data for each segment.

Our segments diversify the net income of Merchants Bank and provide synergies across the segments. Strategic opportunities come from MCC and MCS, where loans are funded by the Banking segment and the Banking segment provides Ginnie Mae custodial services to MCC and MCS. Low-income tax credit syndication and debt fund offerings complement the lending activities of new and existing multi-family mortgage customers. The securities available for sale and held to maturity funded by MCC custodial deposits or purchases of securitized loans originated by MCC are pledged to FHLB to provide advance capacity during periods of high residential loan volume for Mortgage Warehousing. Mortgage Warehousing provides leads to Correspondent Lending in the Banking segment. Retail and commercial customers provide cross selling opportunities within the Banking segment. Merchants Mortgage is a risk mitigant to

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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.

The Other segment presented below, in Note 23: Segment Information, and elsewhere in this report includes general and administrative expenses for provision of services to all segments, internal funds transfer pricing offsets resulting from allocations to or from the other segments, certain elimination entries, and investments in low-income housing tax credit limited partnerships or LLC.

The following table presents our primary operating results for our operating segments for the years ended December 31, 2025 and 2024.

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Multi-family Mortgage Banking. The Multi-family Mortgage Banking segment reported net income of $40.2 million for the year ended December 31, 2025, a decrease of $15.7 million, or 28%, compared to $55.9 million reported

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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.

Noninterest income reflected a $9.1 million increase in gain on sale of loans, as sales to the secondary market increased, a $4.9 million increase in syndication and asset management fees, and a $4.2 million increase in other noninterest income, primarily from investments in joint ventures, partially offset by a $17.3 million decrease in loan servicing fees.

The $9.1 million 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.

Loan servicing fees reflected a positive fair market value adjustment of $3.8 million on servicing rights for the year ended December 31, 2025 compared to a positive fair market value adjustment of $20.5 million for the year ended December 31, 2024.

The $8.5 million decrease in provision for income tax expense reflected lower pre-tax income as well as the benefits of originated and purchased tax credits in 2025 compared to 2024.

The total volume of loans originated and acquired through our Multi-family business was $6.5 billion for the year ended December 31, 2025, an increase of $272.9 million, or 4%, compared to the year ended December 31, 2024. It included construction loans coupled with agreements for future permanent loan refinancing, as well as bridge loans housed in our Banking segment, while borrowers awaited conversion to permanent financing. It also included loans originated and acquired for sale in the secondary market.

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Total assets in the Multi-family segment increased $47.3 million, or 10%, to $526.4 million at December 31, 2025, compared to $479.1 million at December 31, 2024.

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.

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.

The volume of loans funded during the year ended December 31, 2025 amounted to $66.3 billion, an increase of $20.7 billion, or 46%, compared to $45.6 billion for the same period in 2024. This compared to the 22% industry increase in single-family residential loan volumes from the year ended December 31, 2025 to the year ended December 31, 2024, according to the Mortgage Bankers Association.

Total assets in the Mortgage Warehousing segment increased $1.3 billion, or 21%, to $7.3 billion at December 31, 2025, compared to $6.0 billion at December 31, 2024.

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 primarily due 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.

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Noninterest income for the year ended December 31, 2025 included a negative fair market value adjustment of $2.4 million on single-family servicing rights compared to a positive fair market value adjustment of $2.2 million for the year ended December 31, 2024.

Total assets in the Banking segment decreased $453.8 million, or 4%, to $11.3 billion at December 31, 2025, compared to $11.8 billion at December 31, 2024.

See Item 1 “Business – Our Business Segments”, and Note 23: Segment Information, for further information about our segments.

Financial Condition

As of December 31, 2025, we had approximately $19.4 billion in total assets, $13.0 billion in deposits, $3.8 billion in borrowings and $2.3 billion in total shareholders’ equity. Total assets as of December 31, 2025 included approximately $11.0 billion of loans receivable, net of ACL-Loans and $3.9 billion of loans held for sale. There were also $1.5 billion in securities classified as held to maturity. Assets also included $865.1 million in securities available for sale, the majority of which were acquired from a warehouse customer. There are some restrictions on the types of securities we hold, particularly for those that are funded by certain multi-family custodial deposits where we set the cost of deposits based on the yield of the related security. We had other assets of $713.2 million, which primarily related to low-income housing tax credits, and $620.1 million of mortgage loans in process of securitization that represent pre-sold multi-family rental real estate loan originations primarily Ginnie Mae, Fannie Mae, and Freddie Mac mortgage backed securities pending settlements that typically occur within 30 days. FHLB and other equity securities totaled $227.6 million and servicing rights were $217.3 million based on the fair value of the loan servicing, which primarily includes Ginnie Mae multi-family servicing rights with 10-year call protection. Additionally, we had $212.2 million of cash and cash equivalents at December 31, 2025.

Comparison of Financial Condition at December 31, 2025 and 2024

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.

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.

Mortgage Loans in Process of Securitization. Mortgage loans in process of securitization of $620.1 million at December 31, 2025 increased $191.9 million, or 45%, compared to $428.2 million at December 31, 2024. These represent loans that our banking subsidiary, Merchants Bank, has originated or funded and are held in the loan portfolio pending settlement, primarily as Ginnie Mae, Fannie Mae, and Freddie Mac mortgage-backed securities with a firm investor commitment to purchase the securities.

Securities Available for Sale. Securities available for sale of $865.1 million at December 31, 2025 decreased $115.0 million, or 12%, compared to $980.1 million at December 31, 2024. The decrease in securities available for sale was primarily due to $862.3 million in calls, maturities, repayments and other adjustments, partially offset by purchases of $747.3 million during the period.

Included in securities available for sale were $571.3 million and $635.9 million of investment at December 31, 2025 and 2024, respectively, for which a fair value option was elected. Fair value option securities represent securities which the Company has elected to carry at fair value and are separately identified on the consolidated balance sheets with changes in the fair value recognized in earnings as they occur.

As of December 31, 2025, AOCL of $33,000, related to securities available for sale, decreased $100,000, or 75%, compared to accumulated losses of $133,000 at December 31, 2024. The $33,000 of AOCL as of

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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.

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.

The following table provides the weighted-average yield securities by maturity as of December 31, 2025.

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Loans Held for Sale. Loans held for sale of $3.9 billion at December 31, 2025 increased $101.5 million, or 3%, compared to $3.8 billion at December 31, 2024. The increase in loans held for sale was due primarily to a significant increase in single-family warehouse participations, as we experienced higher volume which was nearly offset by a decline in multi-family loans. Loans held for sale are comprised primarily of single-family residential real estate loan participations that meet Fannie Mae, Freddie Mac, or Ginnie Mae eligibility. It also includes multi-family loans that are expected to be sold or securitized in the future.

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Loans Receivable, Net. The following table shows our allocation of loans receivable as of the dates presented:

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Loans receivable, net of ACL-Loans, of $11.0 billion at December 31, 2025, increased $597.4 million, or 6%, compared to $10.4 billion at December 31, 2024. The increase was comprised primarily of:

As of December 31, 2025, approximately 96% of the total net loans reprice within three months, which reduces the risk of market rate fluctuations.

The Company is a nationwide lender, especially in our largest portfolios of multi-family and healthcare financing. The tables below provide loans receivable for these two portfolios, including the five highest geographic concentrations.

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The following table presents the contractual maturity distribution of loans receivable at December 31, 2025 and an analysis of these loans that have fixed and floating interest rates. The table does not take into account repricing or other forecast assumptions.

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ACL-Loans. The following table presents an analysis of the ACL-Loans for the periods presented:

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The following table presents an analysis of the ACL-Loans for the periods presented:

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The following table sets forth the amounts of nonperforming loans and nonperforming assets at the dates indicated:

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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.

Premises and Equipment, Net.  Premises and equipment, net, of $73.9 million at December 31, 2025 increased $15.3 million, or 26%, compared to $58.6 million at December 31, 2024. The increase was primarily due construction of the new headquarters for MCC to support business growth.

Goodwill.   Goodwill of $8.0 million at December 31, 2025 was unchanged compared to December 31, 2024.

Servicing Rights. Servicing rights of $217.3 million at December 31, 2025 increased $27.4 million, or 14%, compared to $189.9 million at December 31, 2024. During the year ended December 31, 2025, originated and purchased servicing of $38.1 million and a positive fair market value adjustment of $1.4 million were partially offset by paydowns of $12.2 million. The $1.4 million positive fair market value adjustment consisted of a positive fair market value adjustment of $3.8 million for multi-family and healthcare mortgages and a negative fair market value adjustment of $2.4 million for single-family mortgages and SBA loans during the year ended December 31, 2025 compared to a $22.7 million positive fair market value adjustment which consisted of a positive fair market value adjustment of $20.5 million

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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 .

Servicing rights are recognized in connection with sales of loans when we retain servicing of the sold loans. The servicing rights are recorded and carried at fair value based on the expected future cash flows. The fair value increase recorded during the year ended December 31, 2025 was driven by higher escrow earnings rates in multi-family servicing, which was partially offset by lower interest rates that impacted single-family servicing. The value of servicing rights generally increases in rising interest rate environments and declines in falling interest rate environments due to expected prepayments.

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.

Other Assets and Receivables. Other assets and receivables of $713.2 million at December 31, 2025 increased $150.1 million, or 27%, compared to $563.1 million at December 31, 2024. The 27% increase was primarily due to a $179.0 million increase in income tax receivable related to tax credits purchased during the year, and a $91.7 million increase in investments in LIHTC funds, partially offset by a decrease of $125.0 million in prepaid assets associated with the redemption of Series B Preferred Stock in January 2025.

Deposits. Deposits of $13.0 billion at December 31, 2025 increased $1.1 billion, or 9%, compared to $11.9 billion at December 31, 2024. The 9% increase in total deposits, which outpaced the 6% growth in loans receivable, was primarily due to a $2.9 billion increase in demand deposits, and a $324.6 million increase in money market/savings accounts, partially offset by a $2.1 billion decrease in certificates of deposit. As of December 31, 2025, approximately 83% of the total deposits reprice within three months.

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Core deposits increased by $1.9 billion, or 20%, to $11.3 billion at December 31, 2025 compared to December 31, 2024. Core deposits represented 87% of total deposits at December 31, 2025 compared to 79% of total deposits at December 31, 2024. The increases were attributable primarily to growth in custodial deposits from warehouse customers as well as strategic initiatives focused on delivering innovative liquidity solutions in expanded markets.

We have decreased our use of brokered deposits by 31%, which totaled $1.8 billion at December 31, 2025 compared to $2.5 billion at December 31, 2024. Brokered deposits represented 13% of total deposits at December 31, 2025 compared to 21% of total deposits at December 31, 2024. As of December 31, 2025, brokered certificates of deposit had a weighted average remaining duration of 59 days.

Interest-bearing deposits increased $756.1 million, or 6%, to $12.4 billion at December 31, 2025 compared to December 31, 2024, and noninterest-bearing deposits increased $365.1 million, or 153%, to $604.1 million at December 31, 2025 compared to December 31, 2024.

Uninsured deposits totaled approximately $3.1 billion as of December 31, 2025, representing 23.3% of total 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 $1.4 billion and $1.6 billion as of December 31, 2025 and 2024, respectively.

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The following tables show the average balance amounts and the average contractual rates paid on our deposits for the periods indicated:

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The following table shows time deposits of $250,000 or more by time remaining until maturity:

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Borrowings. Borrowings of $3.8 billion at December 31, 2025 decreased $543.5 million, or 12%, compared to $4.4 billion at December 31, 2024. The lower level of collateralized borrowing was primarily due to less borrowings at FHLB as well as the repayment of the credit-linked notes that were issued in March 2023. The higher levels of core deposits at lower rates reduced the need for borrowing. The Company primarily utilizes borrowing facilities from the FHLB, the Federal Reserve’s discount window, AFX, and Federal Funds, using the most cost-effective options available. See Note 14: Borrowings for further information.

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The Company continues to have significant borrowing capacity based on available collateral. As of December 31, 2025, unused lines of credit totaled $5.3 billion, compared to $4.3 billion at December 31, 2024. The Company’s ratio of total collateralized borrowing capacity to total assets increased from 46% as of December 31, 2024 compared to 47% as of December 31, 2025.

The following table sets forth certain information regarding our borrowings at the dates and for the periods indicated:

Other Liabilities. Other liabilities of $250.5 million at December 31, 2025 increased $19.5 million, or 8%, compared to $231.0 million at December 31, 2024. The 8% increase in other liabilities was primarily due to higher funding commitments for LIHTC investments.

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Total Shareholders’ Equity. Shareholders’ equity was $2.3 billion as of December 31, 2025, compared to $2.2 billion as of December 31, 2024. The $37.4 million, or 2%, increase resulted primarily from net income of $218.8 million, partially offset by the redemption of 6% Series B Preferred Stock for $125.0 million and dividends paid on common and preferred shares of $59.4 million during the period. See Note 18: Preferred Stock for more details on the Series B redemption.

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