Regulatory Matters

3 Months Ended

Mar. 31, 2023

Regulatory Matters

Regulatory Matters

Note 6:   Regulatory Matters

The Company, Merchants Bank, and FMBI are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by federal and state banking regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for

prompt corrective action, the Company, Merchants Bank, and FMBI must meet specific capital guidelines that involve quantitative measures of the Company’s, Merchants Bank’s, and FMBI’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s, Merchants Bank’s, and FMBI’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, and other factors. Furthermore, the Company’s, Merchants Bank’s, and FMBI’s regulators could require adjustments to regulatory capital not reflected in these financial statements.

Quantitative measures established by regulation to ensure capital adequacy require the Company, Merchants Bank, and FMBI to maintain minimum amounts and ratios (set forth in the table below). Management believes, as of March 31, 2023 and December 31, 2022, that the Company, Merchants Bank, and FMBI met all capital adequacy requirements to which they were subject.

As of March 31, 2023 and December 31, 2022, the most recent notifications from the Federal Reserve categorized the Company as well capitalized and most recent notifications from the FDIC categorized Merchants Bank and FMBI as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Company’s, Merchants Bank’s, or FMBI’s category.

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

					Minimum				Minimum
					Amount Required				Amount To Be
					for Adequately				Well
	Actual				Capitalized(1)				Capitalized(1)
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in thousands)
March 31, 2023
Total capital(1) (to risk-weighted assets)
Company	$	1,558,187	12.4	%	$	1,006,425	8.0	%	$	—	N/A	%
Merchants Bank		1,488,469	12.1	%		986,980	8.0	%		1,233,725	10.0
FMBI		36,044	11.4	%		25,309	8.0	%		31,636	10.0	%
Tier I capital(1) (to risk-weighted assets)
Company		1,495,800	11.9	%		754,818	6.0	%		—	N/A	%
Merchants Bank		1,426,815	11.6	%		740,235	6.0	%		986,980	8.0
FMBI		35,311	11.2	%		18,981	6.0	%		25,309	8.0	%
Common Equity Tier I capital(1) (to risk-weighted assets)
Company		996,192	7.9	%		566,114	4.5	%		—	N/A	%
Merchants Bank		1,426,815	11.6	%		555,176	4.5	%		801,921	6.5
FMBI		35,311	11.2	%		14,236	4.5	%		20,563	6.5	%
Tier I capital(1) (to average assets)
Company		1,495,800	11.6	%		514,725	4.0	%		—	N/A	%
Merchants Bank		1,426,815	11.3	%		503,987	4.0	%		629,983	5.0
FMBI		35,311	10.6	%		13,347	4.0	%		16,684	5.0	%

(1) As defined by regulatory agencies.

					Minimum				Minimum
					Amount Required				Amount To Be
					for Adequately				Well
	Actual				Capitalized(1)				Capitalized(1)
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in thousands)
December 31, 2022
Total capital(1) (to risk-weighted assets)
Company	$	1,507,968	12.2	%	$	992,883	8.0	%	$	—	N/A	%
Merchants Bank		1,427,738	11.7	%		975,853	8.0	%		1,219,817	10.0	%
FMBI		34,769	11.3	%		24,703	8.0	%		30,878	10.0	%
Tier I capital(1) (to risk-weighted assets)
Company		1,452,456	11.7	%		744,662	6.0	%		—	N/A	%
Merchants Bank		1,372,941	11.3	%		731,890	6.0	%		975,853	8.0	%
FMBI		34,054	11.0	%		18,527	6.0	%		24,703	8.0	%
Common Equity Tier I capital(1) (to risk-weighted assets)
Company		952,848	7.7	%		558,497	4.5	%		—	N/A	%
Merchants Bank		1,372,941	11.3	%		548,917	4.5	%		792,881	6.5	%
FMBI		34,054	11.0	%		13,895	4.5	%		20,071	6.5	%
Tier I capital(1) (to average assets)
Company		1,452,456	11.7	%		497,604	4.0	%		—	N/A	%
Merchants Bank		1,372,941	11.3	%		487,511	4.0	%		609,389	5.0	%
FMBI		34,054	10.7	%		12,702	4.0	%		15,878	5.0	%

(1) As defined by regulatory agencies.