Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2019	May 06, 2019
Document and Entity Information
Entity Registrant Name	Merchants Bancorp
Entity Central Index Key	0001629019
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		28,704,163
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Assets
Cash and due from banks	$ 19,554	$ 25,855
Interest-earning demand accounts	293,897	310,669
Cash and cash equivalents	313,451	336,524
Securities purchased under agreements to resell	6,838	6,875
Trading securities	129,914	163,419
Available for sale securities	296,669	331,071
Federal Home Loan Bank (FHLB) stock	18,880	7,974
Loans held for sale (includes $6,307 and $11,886, respectively at fair value)	882,071	832,455
Loans receivable, net of allowance for loan losses of $13,356 and $12,704, respectively	2,168,256	2,045,423
Premises and equipment, net	21,078	15,136
Mortgage servicing rights	76,249	77,844
Interest receivable	14,365	13,827
Goodwill	17,144	17,477
Intangible assets, net	3,381	3,542
Other assets and receivables	28,429	32,596
Total assets	3,976,725	3,884,163
Deposits
Noninterest-bearing	128,029	182,879
Interest-bearing	2,992,998	3,048,207
Total deposits	3,121,027	3,231,086
Borrowings	338,031	195,453
Deferred and current tax liabilities, net	18,274	15,444
Other liabilities	21,562	20,943
Total liabilities	3,498,894	3,462,926
Commitments and Contingencies
Shareholders' Equity
Common stock, without par value Authorized - 50,000,000 shares Issued and outstanding - 28,704,163 shares at March 31, 2019 and 28,694,036 shares at December 31, 2018	135,190	135,057
Retained earnings	252,637	244,909
Accumulated other comprehensive income (loss)	154	(310)
Total shareholders' equity	477,831	421,237
Total liabilities and shareholders' equity	3,976,725	3,884,163
8% Preferred Stock
Shareholders' Equity
Preferred stock	41,581	41,581
Total shareholders' equity	41,581	$ 41,581
7% Preferred Stock \| Series A preferred stock
Shareholders' Equity
Preferred stock	48,269
Total shareholders' equity	$ 48,269

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Loans held for sale at fair value	$ 6,307	$ 11,886
Allowance for loans losses	$ 13,356	$ 12,704
Stockholders' Equity:
Common stock, without par value (in dollars per share)
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	28,704,163	28,694,036
Common stock, shares outstanding	28,704,163	28,694,036
Preferred stock, without par value (in dollars per share)
Preferred stock, shares authorized	5,000,000	5,000,000
8% Preferred Stock
Stockholders' Equity:
Preferred stock, dividend rate (as a percent)	8.00%	8.00%
Preferred stock liquidation preference (in dollars per share)	$ 1,000	$ 1,000
Preferred stock, shares authorized	50,000	50,000
Preferred stock, shares issued	41,625	41,625
Preferred stock, shares outstanding	41,625	41,625
7% Preferred Stock \| Series A preferred stock
Stockholders' Equity:
Preferred stock, dividend rate (as a percent)	7.00%	7.00%
Preferred stock liquidation preference (in dollars per share)	$ 25	$ 25
Preferred stock, shares authorized	3,500,000	3,500,000
Preferred stock, shares issued	2,000,000	2,000,000
Preferred stock, shares outstanding	2,000,000	2,000,000

Condensed Consolidated Statements of Income - USD ($)	3 Months Ended
Condensed Consolidated Statements of Income - USD ($)	Mar. 31, 2019	Mar. 31, 2018
Interest Income
Loans	$ 34,455,000	$ 24,612,000
Investment securities:
Trading	1,045,000	989,000
Available for sale - taxable	1,551,000	1,542,000
Available for sale - tax exempt	96,000
Federal Home Loan Bank stock	223,000	129,000
Other	2,304,000	1,766,000
Total interest income	39,674,000	29,038,000
Interest Expense
Deposits	14,227,000	7,016,000
Borrowed funds	1,316,000	1,914,000
Total interest expense	15,543,000	8,930,000
Net interest income	24,131,000	20,108,000
Provision for loan losses	649,000	1,406,000
Net Interest Income After Provision for Loan Losses	23,482,000	18,702,000
Noninterest Income
Gain on sale of loans	2,643,000	10,892,000
Loan servicing fees, net	(347,000)	(322,000)
Mortgage warehouse fees	753,000	486,000
Gains on sale of investments available for sale (includes $127 and $0, respectively, related to accumulated other comprehensive earnings reclassifications)	127,000
Other income	488,000	257,000
Total noninterest income	3,664,000	11,313,000
Noninterest Expense
Salaries and employee benefits	8,567,000	6,487,000
Loan expenses	934,000	956,000
Occupancy and equipment	876,000	565,000
Professional fees	539,000	488,000
Deposit insurance expense	277,000	246,000
Technology expense	472,000	291,000
Other expense	1,370,000	1,237,000
Total noninterest expense	13,035,000	10,270,000
Income Before Income Taxes	14,111,000	19,745,000
Provision for income taxes (includes $32 and $0, respectively, related to income tax expense for reclassification items)	3,541,000	4,684,000
Net Income	10,570,000	15,061,000
Dividends on preferred stock	(833,000)	(833,000)
Net Income Allocated to Common Shareholders	$ 9,737,000	$ 14,228,000
Basic Earnings Per Share (in dollar per share)	$ 0.34	$ 0.50
Diluted Earnings Per Share (in dollar per share)	$ 0.34	$ 0.50
Weighted-Average Shares Outstanding Basic (in Shares)	28,702,250	28,690,876
Weighted-Average Shares Outstanding Diluted (in Shares)	28,737,439	28,710,480

Condensed Consolidated Statements of Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Consolidated Statements of Income
Reclassifications included in gain on sale of investments	$ 127	$ 0
Provision for income taxes related to income tax expense for reclassification items	$ 32	$ 0

Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Consolidated Statements of Comprehensive Income
Net Income	$ 10,570	$ 15,061
Other Comprehensive Income (Loss):
Net change in unrealized losses on investment securities available for sale, net of (taxes) benefits of $(192), $97 respectively	559	(318)
Less: Reclassification adjustment for gains included in net income, net of $32 tax expense in 2019	95
Other comprehensive income (loss) for the period	464	(318)
Comprehensive Income	$ 11,034	$ 14,743

Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Consolidated Statements of Comprehensive Income
Net change in unrealized losses on investment securities available for sale, net of (taxes) benefits	$ (192)	$ 97
Reclassification adjustment for gains included in net income, tax expense	$ 32

Condensed Consolidated Statement of Shareholders’ Equity - USD ($) $ in Thousands	Common Stock	8% Preferred Stock	7% Preferred Stock Series A preferred stock	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Total
Balance at beginning of the period at Dec. 31, 2017	$ 134,891	$ 41,581		$ 192,008	$ (1,006)	$ 367,474
Balance at beginning of the period (in shares) at Dec. 31, 2017	28,685,167	41,625
Condensed Consolidated Statements of Shareholders’ Equity
Net income				15,061		15,061
Shares issued for stock compensation plans	$ 50					50
Shares issued for stock compensation plans (in shares)	7,039
Dividends on 8% preferred stock, $5.00 per share				(833)		(833)
Dividends on common stock, $0.07 and $0.06 per share for the three month ended 2019 and 2018 respectively				(1,721)		(1,721)
Reclassification of deferred tax asset due to tax reform				243	(243)
Other comprehensive income (loss)					(318)	(318)
Balance at end of the period at Mar. 31, 2018	$ 134,941	$ 41,581		204,758	(1,567)	379,713
Balance at end of the period (in shares) at Mar. 31, 2018	28,692,206	41,625
Balance at beginning of the period at Dec. 31, 2018	$ 135,057	$ 41,581		244,909	(310)	421,237
Balance at beginning of the period (in shares) at Dec. 31, 2018	28,694,036	41,625
Condensed Consolidated Statements of Shareholders’ Equity
Net income				10,570		10,570
Shares issued for stock compensation plans	$ 133					133
Shares issued for stock compensation plans (in shares)	10,127
Issuance of 7% preferred stock, net of offering expenses of $1,731			$ 48,269			48,269
Issuance of 7% preferred stock, net of offering expenses of $1,731 (in shares)			2,000,000
Dividends on 8% preferred stock, $5.00 per share				(833)		(833)
Dividends on common stock, $0.07 and $0.06 per share for the three month ended 2019 and 2018 respectively				(2,009)		(2,009)
Other comprehensive income (loss)					464	464
Balance at end of the period at Mar. 31, 2019	$ 135,190	$ 41,581	$ 48,269	$ 252,637	$ 154	$ 477,831
Balance at end of the period (in shares) at Mar. 31, 2019	28,704,163	41,625	2,000,000

Condensed Consolidated Statement of Shareholders’ Equity (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Dividends on common stock per share	$ 0.07	$ 0.06
7% Preferred Stock
Offering expenses on issuance of stock	$ 1,731
8% Preferred Stock
Dividends on preferred stock per share	$ 5.00	$ 5.00

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Operating activities:
Net income	$ 10,570	$ 15,061
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	137	103
Provision for loan losses	649	1,406
Gain on sale of securities	(127)
Gain on sale of loans	(2,643)	(10,892)
Proceeds from sales of loans	3,729,430	4,020,784
Loans and participations originated and purchased for sale	(3,776,827)	(4,098,115)
Change in mortgage servicing rights for paydowns and fair value adjustments	2,615	2,263
Net change in:
Trading securities	33,505	(59,193)
Other assets and receivables	2,699	(3,407)
Other liabilities	1,933	7,918
Other	798	309
Net cash provided by (used in) operating activities	2,739	(123,763)
Investing activities:
Net change in securities purchased under agreements to resell	37	41
Purchases of available-for-sale securities	(45,000)	(28,224)
Proceeds from the sale of available-for-sale securities	31,086
Proceeds from calls, maturities and paydowns of available-for-sale securities	49,055	25,360
Purchases of loans	(14,233)	(34,273)
Net change in loans receivable	(109,620)	(137,092)
Purchase of Federal Home Loan Bank stock	(11,860)	(118)
Proceeds from sale of Federal Home Loan Bank stock	1,190
Purchases of premises and equipment	(4,206)	(1,055)
Purchases of mortgage servicing rights		(327)
Purchase of limited partnership interests		(13)
Cash (paid) received in acquisition of subsidiary		6,505
Net cash used in investing activities	(103,551)	(169,196)
Financing activities:
Net change in deposits	(110,031)	82,106
Proceeds from Federal Home Loan Bank borrowings	2,348,720	284,189
Repayment of Federal Home Loan Bank borrowings	(2,209,281)	(142,568)
Proceeds from issuance of preferred stock	48,269
Proceeds from notes payable	4,404
Payments on notes payable	(1,500)
Dividends	(2,842)	(2,554)
Net cash provided by financing activities	77,739	221,173
Net Change in Cash and Cash Equivalents	(23,073)	(71,786)
Cash and Cash Equivalents, Beginning of Period	336,524	359,519
Cash and Cash Equivalents, End of Period	313,451	287,733
Additional Cash Flows Information:
Interest paid	14,745	7,751
Income taxes paid	$ 64
The Company purchased all of the capital stock of FMBI on January 2, 2018. In conjunction with the acquisitions, liabilities were assumed as follows:
Fair value of assets acquired		44,217
Cash paid for the capital stock/fair value common stock issued		5,472
Fair value of liabilities assumed		$ 38,745

Basis of Presentation	3 Months Ended
Basis of Presentation	Mar. 31, 2019
Basis of Presentation
Basis of Presentation	Note 1: Basis of Presentation The accompanying consolidated financial statements include the accounts of Merchants Bancorp, a registered bank holding company (the “Company”) and its wholly owned subsidiaries, Merchants Bank of Indiana (“Merchants Bank”) and Farmers-Merchants Bank of Illinois (“FMBI”). Merchants Bank’s direct and indirect subsidiaries include Merchants Capital Corp. (“MCC”), Merchants Capital Servicing, LLC (“MCS”), Ash Realty Holdings, LLC (“Ash Realty”), MBI Midtown West, LLC (“MMW”), Natty Mac Funding, Inc. (“NMF”), and OneTrust Funding, Inc. The Company also acquired Farmers-Merchants National Bank of Paxton (‘FMNBP”) on October 1, 2018 through a merger with FMBI, with FMBI as the surviving entity. All these entities are collectively referred to as the “Company”. The accompanying unaudited condensed consolidated balance sheet of the Company as of December 31, 2018, which has been derived from audited financial statements, and unaudited condensed consolidated financial statements of the Company as of March 31, 2019 and for the three months ended March 31, 2019 and 2018, were prepared in accordance with the instructions for Form 10‑Q and Article 10 of Regulation S-X and, therefore, do not include information or footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America. Accordingly, these condensed financial statements should be read in conjunction with the audited financial statements and notes thereto of the Company as of and for the year ended December 31, 2018 in its Annual Report on Form 10-K. Reference is made to the accounting policies of the Company described in the Notes to the Financial Statements contained in the Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) which are necessary for a fair presentation of the unaudited financial statements have been included to present fairly the financial position as of March 31, 2019 and the results of operations for the three months ended March 31, 2019 and 2018, and cash flows for the three months ended March 31, 2019 and 2018. All interim amounts have not been audited and the results of operations for the three months ended March 31, 2019, herein are not necessarily indicative of the results of operations to be expected for the entire year. Principles of Consolidation The consolidated financial statements as of and for the period ended March 31, 2019 include the Company, and its wholly owned subsidiaries, Merchants Bank, and FMBI. Also included are Merchants Bank’s wholly owned subsidiaries, MCC, MCC’s wholly owned subsidiary, MCS, Ash Realty, NMF, MMW, and OneTrust Funding, Inc. The consolidated financial statements as of and for the period ended March 31, 2018, include the Company and its wholly owned subsidiary, Merchants Bank, and Merchants Bank’s wholly owned subsidiaries, FMBI (after being acquired on January 2, 2018 and excluding results from FMNBP, which was acquired on October 1, 2018), MCC, MCC’s wholly owned subsidiary, MCS, Ash Realty, NMF, and MMW. All significant intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses, loan servicing rights and fair values of financial instruments. Public Offering of Preferred Stock On March 28, 2019 the Company issued 2,000,000 shares of 7.00% Fixed-to-Floating Rate Series A Non-Cumulative Perpetual Preferred Stock, without par value (the “Series A Preferred Stock”), with a liquidation preference of $25.00 per share. The aggregate gross offering proceeds for the shares issued by the Company was $50.0 million, and after deducting underwriting discounts and commissions and offering expenses of approximately $1.7 million paid to third parties, the Company received total net proceeds of $48.3 million. On April 12, 2019, the Company issued an additional 81,800 shares of Series A Preferred Stock to the underwriters related to their exercise of an option to purchase additional shares under the associated underwriting agreement, resulting in an addition $2.0 million in net proceeds, after deducting $41,000 underwriting discounts. The Series A Preferred Stock have no voting rights with respect to matters that generally require the approval of our common shareholders. Dividends on the Series A Preferred Stock, to the extent declared by the Company’s board, are payable quarterly. Recent Acquisitions On May 8, 2017, the Company entered into a Stock Purchase Agreement to acquire FMBI (formerly Joy State Bank). The acquisition closed on January 2, 2018 at a total cost of approximately $5.5 million. At December 31, 2017 Joy State Bank had $43 million in assets. The Company recorded goodwill and intangible assets totaling $988,000 and $478,000, respectively, in connection with the acquisition. The intangible assets consisted of core deposit intangibles that are being amortized over 10 years on an accelerated basis. The acquired time deposits of $16.7 million were recorded at a fair value of $16.9 million. The fair value premium of $185,000 is being accreted against interest expense over 20 months. The acquired loan portfolio of $27.9 million was recorded at a fair value of $27.5 million. The fair value discount of $458,000 is being accreted to interest income on a straight-line basis over an average of 39 months in accordance with ASC 310-20. While there were some loans identified for potential classification under ASC 310-30, they were not material to the transaction. On October 22, 2018, the Company changed the name of Joy State Bank to Farmers-Merchants Bank of Illinois (“FMBI”). As a result of the acquisition, the Company increased its deposit base and benefited from economies of scale. The acquisition did not materially impact the Company’s financial position, results of operations or cash flows. On October 1, 2018, the Company acquired FM Bancorp, Inc., a bank holding company, and its wholly owned subsidiary, Farmers-Merchants National Bank of Paxton (“FMNBP”). On that date, FM Bancorp, Inc. ultimately merged with and into the Company, with the Company as the surviving entity, and FMNBP merged with and into Joy State Bank, with Joy State Bank as the surviving bank. Effective October 22, 2018, Joy State Bank’s name changed to Farmers-Merchants Bank of Illinois (“FMBI”). Under the terms of the merger agreement, shareholders of the 27,537 outstanding shares of FM Bancorp, Inc. were compensated $795.29 per share, for a total purchase price of $21.9 million. As of September 30, 2018, FM Bancorp, Inc. and Farmers-Merchants National Bank of Paxton had total assets of approximately $110.0 million, available for sale securities of $66.3 million, deposits of approximately $95.7 million, and net loan receivables of approximately $35.0 million. As of March 31, 2019, the Company recorded goodwill and intangible assets totaling $6.9 million and $1.9 million. The intangible assets consisted of core deposit intangibles that are being amortized over 10 years on an accelerated basis. The acquired available for sale securities of $66.3 million were recorded at fair value. A fair value discount associated with securities of $1.0 million is being accreted into interest income, in accordance with ASC 310-20. While there were some loans identified for potential classification under ASC 310-30, they were not material to the transaction. The acquired gross loan portfolio of $35.4 million was recorded at a fair value of $34.8 million. The fair value discount of $625,000 includes a discount related to interest assumptions for $279,000 and to credit assumptions for $346,000. The portion related to interest assumptions is being accreted into interest income on a straight-line basis over an average of 72 months in accordance with ASC 310-20. The discount portion related to credit assumptions is being accreted into interest income over the life of the loan. The acquired deposits of $95.7 million were recorded at a fair value of $95.7 million. As a result of the acquisition, the Company increased its deposit base and benefited from economies of scale. The acquisition did not materially impact the Company’s financial position, results of operations or cash flows. On December 31, 2018, the Company acquired the assets of NattyMac, LLC, a warehouse lender operating out of Clearwater, Florida, from Home Point Financial Corporation (“Home Point”). The Company also fully repaid Home Point the balance of, and all interest owed on, the $30 million subordinated debt it had previously invested in the Company. Goodwill totaling $5.0 million was recorded by the Company. Certain fair value measurements, intangibles, and the purchase price allocation are still being evaluated by management and are subject to change during the measurement period. As a result of the acquisition, the Company expects to increase its geographic footprint in the warehouse business, reduce its costs of borrowing, increase the earnings generated from its warehouse business, and benefit from its experienced talent pool. The acquisition did not materially impact the Company’s financial position, results of operations or cash flows. Given the impact of the acquisitions was immaterial to the Company and its results of operations, pro forma information has not been included. Reclassifications Certain reclassifications have been made to the 2018 financial statements to conform to the financial statement presentation as of and for the three months ended March 31, 2019. These reclassifications had no effect net income.

Securities

3 Months Ended

Mar. 31, 2019

Securities

Securities

Note 2: Securities

Trading Securities

Securities that are held principally for resale in the near term are recorded as trading securities at fair value with changes in fair value recorded in earnings. Trading securities include FHA and conventional Fannie Mae and Freddie Mac participation certificates. The unrealized gains included in trading securities totaled $545,000 and $1.5 million at March 31, 2019 and 2018, respectively.

Securities Available-For-Sale

The amortized cost and approximate fair values, together with gross unrealized gains and losses, of securities are as follows:


	March 31, 2019
			Gross		Gross		Approximate
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(In thousands)
Available-for-sale securities:
Treasury notes	$	10,740	$	8	$	5	$	10,743
Federal agencies		235,621		2		423		235,200
Municipals		12,050		430		—		12,480
Mortgage-backed - Government-sponsored entity (GSE) - residential		38,092		155		1		38,246
Total available-for-sale securities	$	296,503	$	595	$	429	$	296,669


	December 31, 2018
			Gross		Gross		Approximate
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(In thousands)
Available-for-sale securities:
Treasury notes	$	11,928	$	26	$	13	$	11,941
Federal agencies		237,894		8		972		236,930
Municipals		21,014		336		18		21,332
Mortgage-backed - Government-sponsored entity (GSE) - residential		60,693		254		79		60,868
Total available-for-sale securities	$	331,529	$	624	$	1,082	$	331,071

The amortized cost and fair value of available-for-sale securities at March 31, 2019 and December 31, 2018, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.


	March 31, 2019				December 31, 2018
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Contractual Maturity	(In thousands)
Within one year	$	149,649	$	149,318	$	179,323	$	178,581
After one through five years		98,685		98,643		72,470		72,282
After five through ten years		2,120		2,210		7,087		7,203
After ten years		7,957		8,252		11,956		12,137
		258,411		258,423		270,836		270,203
Mortgage-backed - Government-sponsored entity (GSE) - residential		38,092		38,246		60,693		60,868
	$	296,503	$	296,669	$	331,529	$	331,071

During the three months ended March 31, 2019, $31.1 million of securities available-for-sale were sold, and a net gain of $127,000 was recognized, consisting of $361,000 in gains and $234,000 of losses. During the three months ended March 31, 2018, no securities available-for-sale were sold.

The following tables show the Company’s investments’ gross unrealized losses and fair value of the Company’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2019 and December 31, 2018:


	March 31, 2019
					12 Months or
	Less than 12 Months				Longer				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(In thousands)
Available-for-sale securities:
Treasury notes	$	—	$	—	$	2,243	$	5	$	2,243	$	5
Federal agencies		—		—		180,198		423		180,198		423
Municipals		—		—		—		—		—		—
Mortgage-backed - Government-sponsored entity (GSE) - residential		914		1		—		—		914		1
	$	914	$	1	$	182,441	$	428	$	183,355	$	429


	December 31, 2018
					12 Months or
	Less than 12 Months				Longer				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(In thousands)
Available-for-sale securities:
Treasury notes	$	1,990	$	8	$	995	$	5	$	2,985	$	13
Federal agencies		28,296		97		191,280		875		219,576	$	972
Municipals		2,051		18		—		—		2,051	$	18
Mortgage-backed - Government-sponsored entity (GSE) - residential		15,543		79		—		—		15,543		79
	$	47,880	$	202	$	192,275	$	880	$	240,155	$	1,082

Other-than-temporary Impairment

Unrealized losses on securities have not been recognized to income because the Company has the intent and ability to hold the securities for the foreseeable future, and the decline in fair value is primarily due to increased market interest rates. The fair value is expected to recover as the bonds approach the maturity date.

Loans and Allowance for Loan Losses

3 Months Ended

Mar. 31, 2019

Loans and Allowance for Loan Losses

Loans and Allowance for Loan Losses

Note 3: Loans and Allowance for Loan Losses

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding principal balances adjusted for unearned income, charge-offs, the allowance for loan losses, any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans.

For loans amortized at cost, interest income is accrued based on the unpaid principal balance.

The accrual of interest on loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Past-due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these loans is applied to the principal balance until the loan can be returned to an accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

For all loan portfolio segments, the Company promptly charges off loans, or portions thereof, when available information confirms that specific loans are uncollectable based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. For impaired loans that are considered to be solely collateral dependent, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral.

When cash payments are received on impaired loans in each loan class, the Company records the payment as interest income unless collection of the remaining recorded principal amount is doubtful, at which time payments are used to reduce the principal balance of the loan. Troubled debt restructured loans recognize interest income on an accrual basis at the renegotiated rate if the loan is in compliance with the modified terms.

Interest earned from the time of funding to the time of sale is recognized as interest income as accrued. Fees earned agreements are recognized when collected as noninterest income.

Loans receivable at March 31, 2019 and December 31, 2018 include:


	March 31,		December 31,
	2019		2018
	(In thousands)

Mortgage warehouse lines of credit	$	412,171	$	337,332
Residential real estate		409,172		410,871
Multi-family and healthcare financing		965,363		914,393
Commercial and commercial real estate		296,483		299,194
Agricultural production and real estate		81,063		79,255
Consumer and margin loans		17,360		17,082
		2,181,612		2,058,127
Less
Allowance for loan losses		13,356		12,704

Loans Receivable	$	2,168,256	$	2,045,423

Risk characteristics applicable to each segment of the loan portfolio are described as follows.

Mortgage Warehouse Lines of Credit (MTG WHLOC): Under its warehouse program, the Company provides warehouse financing arrangements to approved mortgage companies for the origination and sale of residential mortgage loans and to a lesser extent multi-family loans. Agency eligible, governmental and jumbo residential mortgage loans that are secured by mortgages placed on existing one to four family dwellings may be originated or purchased and placed on each mortgage warehouse line.

As a secured line of credit, collateral pledged to the Company secures each individual mortgage until the lender sells the loan in the secondary market. A traditional secured warehouse line of credit typically carries a base interest rate of 30-day LIBOR, plus a margin, or mortgage note rate, less a margin.

Risk is evident if there is a change in the fair value of mortgage loans originated by mortgage bankers in warehouse, the sale of which is the expected source of repayment of the borrowings under a warehouse line of credit.

Residential Real Estate Loans (RES RE): Real estate loans are secured by owner-occupied 1‑4 family residences. Repayment of residential real estate loans is primarily dependent on the personal income and credit rating of the borrowers. All-in-One mortgages included in this segment typically carry a base rate of 30-day LIBOR, plus a margin.

Multi-Family and Healthcare Financing (MF RE): The Company engages in multi-family and healthcare financing, including construction loans, specializing in originating and servicing loans for multi-family rental and senior living properties. In addition, the Company originates loans secured by an assignment of federal income tax credits by partnerships invested in multi-family real estate projects. Construction and land loans are generally based upon estimates of costs and estimated value of the completed project and include independent appraisal reviews and a financial analysis of the developers and property owners. Sources of repayment of these loans may include permanent loans, sales of developed property or an interim loan commitment from the Company until permanent agency-eligible financing is obtained. These loans are considered to be higher risk than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, general economic conditions and the availability of long-term financing. Credit risk in these loans may be impacted by the creditworthiness of a borrower, property values and the local economy in the Company’s market area. Repayment of these loans depends on the successful operation of a business or property and the borrower’s cash flows.

Commercial Lending and Commercial Real Estate Loans (CML & CRE): The commercial lending and commercial real estate portfolio includes loans to commercial customers for use in financing working capital needs, equipment purchases and expansions, as well as loans to commercial customers to finance land and improvements. It also includes loans collateralized by mortgage servicing rights of mortgage warehouse customers. The loans in this category are repaid primarily from the cash flow of a borrower’s principal business operation. Credit risk in these loans is driven by creditworthiness of a borrower and the economic conditions that impact the cash flow stability from business operations.

Agricultural Production and Real Estate Loans (AG & AGRE): Agricultural production loans are generally comprised of seasonal operating lines of credit to grain farmers to plant and harvest corn and soybeans and term loans to fund the purchase of equipment. The Company also offers long term financing to purchase agricultural real estate. Specific underwriting standards have been established for agricultural-related loans including the establishment of projections for each operating year based on industry-developed estimates of farm input costs and expected commodity yields and prices. Operating lines are typically written for one year and secured by the crop and other farm assets as considered necessary. The Company is approved to sell agricultural loans in the secondary market through the Federal Agricultural Mortgage Corporation and uses this relationship to manage interest rate risk within the portfolio.

Consumer and Margin Loans (CON & MAR): Consumer loans are those loans secured by household assets. Margin loans are those loans secured by marketable securities. The term and maximum amount for these loans are determined by considering the purpose of the loan, the margin (advance percentage against value) in all collateral, the primary source of repayment, and the borrower’s other related cash flow.

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to net interest income. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

The allowance consists of allocated and general components. The allocated component relates to loans that are classified as impaired. For those loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers non-classified loans and is based on historical charge-off experience and expected loss given default derived from the Company’s internal risk rating process. Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent. For impaired loans where the Company utilizes discounted cash flows to determine the level of impairment, the Company includes the entire change in the present value of cash flows as bad debt expense.

Groups of loans with similar risk characteristics are collectively evaluated for impairment based on the group’s historical loss experience adjusted for changes in trends, conditions and other relevant factors that affect repayment of the loans. Accordingly, the Company does not separately identify individual consumer and residential loans for impairment measurements, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower.

In the course of working with borrowers, the Company may choose to restructure the contractual terms of certain loans. In restructuring the loan, the Company attempts to work out an alternative payment schedule with the borrower in order to optimize collectability of the loan. A troubled debt restructuring (TDR) occurs when, for economic or legal reasons related to a borrower’s financial difficulties, the Company grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status, and the restructuring of the loan may include the transfer of assets from the borrower to satisfy the debt, a modification of loan terms, or a combination of the two.

Nonaccrual loans, including TDRs that have not met the six-month minimum performance criterion, are reported as non-performing loans. For all loan classes, it is the Company’s policy to have any restructured loans which are on nonaccrual status prior to being restructured remain on nonaccrual status until three months of satisfactory borrower performance, at which time management would consider its return to accrual status. A loan is generally classified as nonaccrual when the Company believes that receipt of principal and interest is questionable under the terms of the loan agreement. Most generally, this is at 90 or more days past due.

With regard to determination of the amount of the allowance for credit losses, restructured loans are considered to be impaired. As a result, the determination of the amount of impaired loans for each portfolio segment within troubled debt restructurings is the same as detailed previously above.

The following tables present, by portfolio segment, the activity in the allowance for loan losses for the three months ended March 31, 2019 and 2018 and the recorded investment in loans and impairment method as of March 31, 2019:


	At or For the Three Months Ended March 31, 2019
	MTG WHLOC		RES RE		MF RE		CML & CRE		AG & AGRE		CON & MAR		TOTAL
	(In thousands)
Allowance for loan losses
Balance, beginning of period	$	1,068	$	1,986	$	6,030	$	3,051	$	429	$	140	$	12,704
Provision (credit) for loan losses		186		4		347		71		34		7		649
Loans charged to the allowance		—		—		—		—		—		—		—
Recoveries of loans previously charged off		—		—		—		—		3		—		3
Balance, end of period	$	1,254	$	1,990	$	6,377	$	3,122	$	466	$	147	$	13,356
Ending balance: individually evaluated for impairment	$	225	$	—	$	—	$	500	$	20	$	—	$	745
Ending balance: collectively evaluated for impairment	$	1,029	$	1,990	$	6,377	$	2,622	$	446	$	147	$	12,611
Loans
Ending balance	$	412,171	$	409,172	$	965,363	$	296,483	$	81,063	$	17,360	$	2,181,612
Ending balance individually evaluated for impairment	$	572	$	4,255	$	—	$	8,186	$	347	$	50	$	13,410
Ending balance collectively evaluated for impairment	$	411,599	$	404,917	$	965,363	$	288,297	$	80,716	$	17,310	$	2,168,202


	For the Three Months Ended March 31, 2018
	MTG WHLOC		RES RE		MF RE		CML & CRE		AG & AGRE		CON & MAR		TOTAL
	(In thousands)
Allowance for loan losses
Balance, beginning of period	$	283	$	1,587	$	3,502	$	2,362	$	320	$	257	$	8,311
Provision (credit) for loan losses		223		76		748		323		13		23		1,406
Loans charged to the allowance		—		—		—		—		—		(17)		(17)
Recoveries of loans previously charged off		—		1		—		—		—		4		5
Balance, end of period	$	506	$	1,664	$	4,250	$	2,685	$	333	$	267	$	9,705

The following table presents the allowance for loan losses and the recorded investment in loans and impairment method as of December 31, 2018:


	December 31, 2018
	MTG WHLOC		RES RE		MF RE		CML & CRE		AG & AGRE		CON & MAR		TOTAL
	(In thousands)
Allowance for loan losses
Balance, December 31, 2018	$	1,068	$	1,986	$	6,030	$	3,051	$	429	$	140	$	12,704
Ending balance: individually evaluated for impairment	$	225	$	—	$	—	$	400	$	20	$	—	$	645
Ending balance: collectively evaluated for impairment	$	843	$	1,986	$	6,030	$	2,651	$	409	$	140	$	12,059
Loans
Balance, December 31, 2018	$	337,332	$	410,871	$	914,393	$	299,194	$	79,255	$	17,082	$	2,058,127
Ending balance individually evaluated for impairment	$	575	$	1,606	$	—	$	8,576	$	370	$	58	$	11,185
Ending balance collectively evaluated for impairment	$	336,757	$	409,265	$	914,393	$	290,618	$	78,885	$	17,024	$	2,046,942

Internal Risk Categories

In adherence with policy, the Company uses the following internal risk grading categories and definitions for loans:

Average or above – Loans to borrowers of satisfactory financial strength or better. Earnings performance is consistent with primary and secondary sources of repayment that are well defined and adequate to retire the debt in a timely and orderly fashion. These businesses would generally exhibit satisfactory asset quality and liquidity with moderate leverage, average performance to their peer group and experienced management in key positions. These loans are disclosed as “Acceptable and Above” in the following table.

Acceptable – Loans to borrowers involving more than average risk and which contain certain characteristics that require some supervision and attention by the lender. Asset quality is acceptable, but debt capacity is modest and little excess liquidity is available. The borrower may be fully leveraged and unable to sustain major setbacks. Covenants are structured to ensure adequate protection. Borrower’s management may have limited experience and depth. This category includes loans which are highly leveraged due to regulatory constraints, as well as loans involving reasonable exceptions to policy. These loans are disclosed as “Acceptable and Above” in the following table.

Special Mention (Watch) – This is a loan that is sound and collectable but contains considerable risk. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard - Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

The following tables present the credit risk profile of the Company’s loan portfolio based on internal rating category and payment activity as of March 31, 2019 and December 31, 2018:


	March 31, 2019
	MTG WHLOC		RES RE		MF RE		CML & CRE		AG & AGRE		CON & MAR		TOTAL
	(In thousands)

Special Mention (Watch)	$	—	$	590	$	56,962	$	12,451	$	2,791	$	381	$	73,175
Substandard		572		4,255		—		8,186		347		50		13,410
Doubtful		—		—		—		—		—		—		—
Acceptable and Above		411,599		404,327		908,401		275,846		77,925		16,929		2,095,027
Total	$	412,171	$	409,172	$	965,363	$	296,483	$	81,063	$	17,360	$	2,181,612


	December 31, 2018
	MTG WHLOC		RES RE		MF RE		CML & CRE		AG & AGRE		CON & MAR		TOTAL
	(In thousands)

Special Mention (Watch)	$	—	$	443	$	71,734	$	14,650	$	3,096	$	681	$	90,604
Substandard		575		1,606		—		8,576		370		58		11,185
Doubtful		—		—		—		—		—		—		—
Acceptable and Above		336,757		408,822		842,659		275,968		75,789		16,343		1,956,338
Total	$	337,332	$	410,871	$	914,393	$	299,194	$	79,255	$	17,082	$	2,058,127

The Company evaluates the loan risk grading system definitions and allowance for loan loss methodology on an ongoing basis. No significant changes were made to either during the past year.

The following tables present the Company’s loan portfolio aging analysis of the recorded investment in loans as of March 31, 2019 and December 31, 2018:


	March 31, 2019
	30-59 Days		60-89 Days		Greater Than		Total				Total
	Past Due		Past Due		90 Days		Past Due		Current		Loans
	(In thousands)
MTG WHLOC	$	—	$	—	$	324	$	324	$	411,847	$	412,171
RES RE		3,431		237		998		4,666		404,506		409,172
MF RE		—		—		—		—		965,363		965,363
CML & CRE		191		306		175		672		295,811		296,483
AG & AGRE		53		—		577		630		80,433		81,063
CON & MAR		13		—		21		34		17,326		17,360
	$	3,688	$	543	$	2,095	$	6,326	$	2,175,286	$	2,181,612


	December 31, 2018
	30-59 Days		60-89 Days		Greater Than		Total				Total
	Past Due		Past Due		90 Days		Past Due		Current		Loans
	(In thousands)
MTG WHLOC	$	—	$	—	$	324	$	324	$	337,008	$	337,332
RES RE		579		178		825		1,582		409,289		410,871
MF RE		—		—		—		—		914,393		914,393
CML & CRE		245		52		253		550		298,644		299,194
AG & AGRE		91		—		588		679		78,576		79,255
CON & MAR		2		52		28		82		17,000		17,082
	$	917	$	282	$	2,018	$	3,217	$	2,054,910	$	2,058,127

A loan is considered impaired, in accordance with the impairment accounting guidance (ASC 310-10-35-16), when based on current information and events, it is probable the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include nonperforming commercial loans but also include loans modified in troubled debt restructurings.

The following tables present impaired loans and specific valuation allowance information based on class level as of March 31, 2019 and December 31, 2018:


	March 31, 2019
	MTG WHLOC		RES RE		MF RE		CML & CRE		AG & AGRE		CON & MAR		TOTAL
	(In thousands)
Impaired loans without a specific allowance:
Recorded investment	$	248	$	4,255	$	—	$	5,907	$	88	$	50	$	10,548
Unpaid principal balance		248		4,255		—		5,907		88		50		10,548
Impaired loans with a specific allowance:
Recorded investment		324		—		—		2,279		259		—		2,862
Unpaid principal balance		324		—		—		2,279		259		—		2,862
Specific allowance		225		—		—		500		20		—		745
Total impaired loans:
Recorded investment		572		4,255		—		8,186		347		50		13,410
Unpaid principal balance		572		4,255		—		8,186		347		50		13,410
Specific allowance		225		—		—		500		20		—		745


	December 31, 2018
	MTG WHLOC		RES RE		MF RE		CML & CRE		AG & AGRE		CON & MAR		TOTAL
	(In thousands)
Impaired loans without a specific allowance:
Recorded investment	$	251	$	1,606	$	—	$	5,636	$	88	$	58	$	7,639
Unpaid principal balance		251		1,606		—		5,636		88		58		7,639
Impaired loans with a specific allowance:
Recorded investment		324		—		—		2,940		282		—		3,546
Unpaid principal balance		324		—		—		2,940		282		—		3,546
Specific allowance		225		—		—		400		20		—		645
Total impaired loans:
Recorded investment		575		1,606		—		8,576		370		58		11,185
Unpaid principal balance		575		1,606		—		8,576		370		58		11,185
Specific allowance		225		—		—		400		20		—		645

The following tables present by portfolio class, information related to the average recorded investment and interest income recognized on impaired loans for the three months ended March 31, 2019 and 2018:


	MTG WHLOC		RES RE		MF RE		CML & CRE		AG & AGRE		CON & MAR		TOTAL
	(In thousands)
Three months ended March 31, 2019:
Average recorded investment in impaired loans	$	574	$	2,806	$	—	$	8,468	$	364	$	48	$	12,260
Interest income recognized		—		15		—		140		—		—		155

Three months ended March 31, 2018:
Average recorded investment in impaired loans	$	1,352	$	729	$	117	$	6,587	$	635	$	146	$	9,566
Interest income recognized		19		3		3		46		—		—		71

The following table presents the Company’s nonaccrual loans and loans past due 90 days or more and still accruing at March 31, 2019 and December 31, 2018.


	March 31,				December 31,
	2019				2018
			Total Loans >				Total Loans >
			90 Days &				90 Days &
	Nonaccrual		Accruing		Nonaccrual		Accruing
	(In thousands)
MTG WHLOC	$	572	$	—	$	575	$	—
RES RE		702		454		893		74
MF RE		—		—		—		—
CML & CRE		228		—		136		117
AG & AGRE		259		317		282		307
CON & MAR		13		8		18		9

	$	1,774	$	779	$	1,904	$	507

No troubled loans were restructured during the three months ended March 31, 2019 or 2018. No restructured loans defaulted during the three months ended March 31, 2019 or 2018. There were no residential loans in process of foreclosure at March 31, 2019 or December 31, 2018.

Regulatory Matters

3 Months Ended

Mar. 31, 2019

Regulatory Matters

Regulatory Matters

Note 4: 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, 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, risk weightings 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, 2019 and December 31, 2018, that the Company, Merchants Bank, and FMBI met all capital adequacy requirements to which they were subject.

As of March 31, 2019 and December 31, 2018, the most recent notifications from the Board of Governors of the Federal Reserve System (“Federal Reserve”) categorized the Company as well capitalized and most recent notifications from the Federal Deposit Insurance Corporation (“FDIC”) categorized Merchants Bank and FMBI as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, a company must maintain minimum total risk-based, Tier I risk-based and Tier I leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the Company, Merchants Bank, or FMBI’s category.

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


					Minimum Amount
					Required for				Minimum Amount
					Adequately				To Be Well
	Actual				Capitalized(1)				Capitalized(1)
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in thousands)
March 31, 2019
Total capital(1) (to risk-weighted assets)
Company	$	453,361	13.3	%	$	272,136	8.0	%	$	—	N/A
Merchants Bank		478,574	14.6	%		262,223	8.0	%		327,778	10.0	%
FMBI		19,384	15.7	%		9,876	8.0	%		12,345	10.0	%
Tier 1 capital(1) (to risk-weighted assets)
Company		440,007	12.9	%		204,102	6.0	%		—	N/A
Merchants Bank		465,636	14.2	%		196,667	6.0	%		262,223	8.0	%
FMBI		18,966	15.4	%		7,407	6.0	%		9,876	8.0	%
Common Equity Tier 1 capital(1) (to risk-weighted assets)
Company		350,157	10.3	%		153,077	4.5	%		—	N/A
Merchants Bank		465,636	14.2	%		147,500	4.5	%		213,056	6.5	%
FMBI		18,966	15.4	%		5,555	4.5	%		8,025	6.5	%
Tier 1 capital(1) (to average assets)
Company		440,007	12.0	%		146,417	4.0	%		—	N/A
Merchants Bank		465,636	13.3	%		140,344	4.0	%		175,430	5.0	%
FMBI		18,966	11.9	%		6,384	4.0	%		7,980	5.0	%


					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, 2018
Total capital(1) (to risk-weighted assets)
Company	$	393,654	12.3	%	$	255,884	8.0	%	$	—	N/A
Merchants Bank		412,386	13.3	%		248,290	8.0	%		310,363	10.0	%
FMBI		17,537	18.6	%		7,559	8.0	%		9,448	10.0	%
Tier 1 capital(1) (to risk-weighted assets)
Company		380,950	11.9	%		191,913	6.0	%		—	N/A
Merchants Bank		399,815	12.9	%		186,218	6.0	%		248,290	8.0	%
FMBI		17,404	18.4	%		5,669	6.0	%		7,559	8.0	%
Common Equity Tier 1 capital(1) (to risk-weighted assets)
Company		339,369	10.6	%		143,935	4.5	%		—	N/A
Merchants Bank		399,815	12.9	%		139,663	4.5	%		201,736	6.5	%
FMBI		17,404	18.4	%		4,252	4.5	%		6,141	6.5	%
Tier 1 capital(1) (to average assets)
Company		380,950	10.0	%		152,081	4.0	%		—	N/A
Merchants Bank		399,815	11.0	%		145,723	4.0	%		182,154	5.0	%
FMBI		17,404	10.8	%		6,453	4.0	%		8,066	5.0	%

1

As defined by regulatory agencies.

Beginning January 1, 2015, a new Basel III Capital Rule applied to Merchants Bank. The following table lists the capital categories and ratios determined by the Board of Governors of the Federal Reserve System and the FDIC.


					Common Equity
	Total Risk-based		Tier 1 Risk-based		Tier 1 Risk-based		Tier 1
Capital Category	Capital ratio		Capital ratio		Capital ratio		Leverage ratio
Well capitalized	10	%	8	%	6.5	%	5	%
Adequately capitalized	8		6		4.5		4
Undercapitalized	<8		<6		<4.5		<4
Significantly undercapitalized	<6		<4		<3		<3
Critically undercapitalized	Tangible Equity/Total Assets </= 2%

The Basel III Capital Rules, among other things, (i) introduced a new capital measure called “Common Equity Tier 1” (CET1), (ii) specified that Tier 1 capital consist of CET1 and “Additional Tier 1 Capital” instruments meeting specified requirements, (iii) defined CET1 narrowly by requiring that most deductions/adjustments to regulatory capital measures be made to CET1 and not to the other components of capital and (iv) expanded the scope of the deductions/adjustments as compared to existing regulations.

Implementation of the deductions and other adjustments to CET1 began on January 1, 2015 and are being phased in over a four-year period (beginning on January 1, 2015, and an additional 20% per year thereafter.) Under the new Basel III Capital Rules, in order to avoid limitations on capital distributions of dividend payments and certain discretionary bonus payments to executive officers, a banking organization must hold a capital conservation buffer composed of capital above its minimum risk-based capital requirements. The implementation of the capital conservation buffer began on January 1, 2016, at the 0.625% level and was phased in over a four‑year period (increasing by that amount on each subsequent January 1 until it reached 2.5% on January 1, 2019).

- Definition

The entire disclosure for banks, savings institutions, and credit unions, for regulatory capital requirements imposed by the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS) or for any state imposed capital requirements, as applicable. The disclosure may include (1) a description of regulatory capital requirements (a) for capital adequacy purposes and (b) established by the prompt corrective action provisions of Section 38 of the Federal Depository Insurance Act; (2) the actual or possible material effects of noncompliance with such requirements; (3) whether the entity is in compliance with the regulatory capital requirements including (a) required and actual ratios and amounts of Tier 1 leverage, Tier 1 risk-based, and total risk-based capital, tangible capital (for savings institutions), and Tier 3 capital for market risk (for certain banks and bank holding companies), (b) factors that may significantly affect capital adequacy; (4) the prompt corrective action category in which the entity was classified as of its most recent notification; (5) whether management believes any conditions or events since notification have changed the entity's category. Also may include additional information that might be disclosed in situations where substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1G
-URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958577-112826

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1C
-URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958572-112826

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1E
-URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958574-112826

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1H
-URI http://asc.fasb.org/extlink&oid=84167132&loc=d3e65071-112826

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958569-112826

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1B
-URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958570-112826

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1F
-URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958575-112826

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958568-112826

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 942
-SubTopic 505
-Section 50
-Paragraph 1D
-URI http://asc.fasb.org/extlink&oid=84167132&loc=SL5958573-112826

+ Details

Derivative Financial Instruments

3 Months Ended

Mar. 31, 2019

Derivative Financial Instruments

Derivative Financial Instruments

Note 5: Derivative Financial Instruments

The Company uses derivative financial instruments to help manage exposure to interest rate risk and the effects that changes in interest rates may have on net income and the fair value of assets and liabilities. The Company enters into forward contracts for the future delivery of mortgage loans to third party investors and enters into interest rate locks with potential borrowers to fund specific mortgage loans that will be sold into the secondary market. The forward contracts are entered into in order to economically hedge the effect of changes in interest rates resulting from the Company’s commitment to fund the loans.

Each of these items are considered derivatives, but are not designated as accounting hedges, and are recorded at fair value with changes in fair value reflected in noninterest income on the condensed consolidated statements of income. The fair value of derivative instruments with a positive fair value are reported in other assets in the condensed consolidated balance sheets while derivative instruments with a negative fair value are reported in other liabilities in the condensed consolidated balance sheets.

The following table presents the notional amount and fair value of interest rate locks and forward contracts utilized by the Company at March 31, 2019 and December 31, 2018.


		Notional			Fair Value
		Amount	Balance Sheet Location		Asset		(Liability)
March 31, 2019		(In thousands)			(In thousands)
Interest rate lock commitments	$	9,706	Derivative assets/liabilities	$	71	$	1
Forward contracts		15,260	Derivative assets/liabilities		—		18
				$	71	$	19


		Notional			Fair Value
		Amount	Balance Sheet Location		Asset		(Liability)
December 31, 2018		(In thousands)			(In thousands)
Interest rate lock commitments	$	8,812	Derivative assets/liabilities	$	70	$	—
Forward contracts		19,640	Derivative assets/liabilities		—		9
				$	70	$	9

Fair values of derivative financial instruments were estimated using changes in mortgage interest rates from the date the Company entered into the interest rate lock commitment and the balance sheet date. The following table summarizes the periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income for the three months ended March 31, 2019 and 2018.


	Three Months Ended
	March 31,
	2019		2018
	(In thousands)
Interest rate lock commitments	$	—	$	114
Forward contracts (1)		(5)		105
Net derivative gains (losses)	$	(5)	$	219
_____________________________________ ⁽¹⁾ Amount includes pair-off settlements.

Disclosures about Fair Value of Assets and Liabilities

3 Months Ended

Mar. 31, 2019

Disclosures about Fair Value of Assets and Liabilities

Disclosures about Fair Value of Assets and Liabilities

Note 6: Disclosures about Fair Value of Assets and Liabilities

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value:

Level 1 Quoted prices in active markets for identical assets or liabilities

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities

Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities

Recurring Measurements

The following tables present the fair value measurements of assets and liabilities recognized in the accompanying balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2019 and December 31, 2018:


	Fair Value Measurements Using
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Fair		Assets		Inputs		Inputs
Assets	Value		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
March 31, 2019
Trading securities	$	129,914	$	—	$	129,914	$	—
Available-for-sale securities:
Treasury notes		10,743		10,743		—		—
Federal agencies		235,200		—		235,200		—
Municipals		12,480		—		12,480		—
Mortgage-backed - Government-sponsored entity (GSE) - residential		38,246		—		38,246		—
Loans held for sale		6,307		—		6,307		—
Mortgage servicing rights		76,249		—		—		76,249
Derivative assets - interest rate lock commitments		71		—		—		71
Derivative liabilities - interest rate lock commitments		1		—		—		1
Derivative liabilities - forward contracts		18		—		18		—


December 31, 2018
Trading securities	$	163,419	$	—	$	163,419	$	—
Available-for-sale securities:
Treasury notes		11,941		11,941		—		—
Federal agencies		236,930		—		236,930		—
Municipals		21,332		—		21,332		—
Mortgage-backed - Government-sponsored entity (GSE) - residential		60,868		—		60,868		—
Loans held for sale		11,886		—		11,886		—
Mortgage servicing rights		77,844		—		—		77,844
Derivative assets - interest rate lock commitments		70		—		—		70
Derivative liabilities - forward contracts		9		—		9		—

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the three months ended March 31, 2019 and the year ended December 31, 2018. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

Trading and Available-for-Sale Securities

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using quoted prices of securities with similar characteristics or independent asset pricing services and pricing models, the inputs of which are market-based or independently sourced market parameters, including, but not limited to, yield curves, interest rates, volatilities, prepayments, defaults, cumulative loss projections and cash flows. Such securities are classified in Level 2 of the valuation hierarchy including federal agencies, mortgage-backed securities, U.S. Treasuries, Equities, and Federal Housing Administration participation certificates. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy.

Loans Held for Sale

Certain loans held for sale at fair value are saleable into the secondary mortgage markets and their fair values are estimated using observable quoted market or contracted prices, or market price equivalents, which would be used by other market participants. These saleable loans are considered Level 2.

Mortgage Servicing Rights

Mortgage servicing rights do not trade in an active, open market with readily observable prices. Accordingly, fair value is estimated using discounted cash flow models having significant inputs of discount rate, prepayment speed and default rate. Due to the nature of the valuation inputs, mortgage servicing rights are classified within Level 3 of the hierarchy.

The Chief Financial Officer’s (CFO) office contracts with a pricing specialist to generate fair value estimates on a quarterly basis. The CFO’s office challenges the reasonableness of the assumptions used and reviews the methodology to ensure the estimated fair value complies with accounting standards generally accepted in the United States.

Derivative Financial Instruments

The Company estimates the fair value of interest rate lock commitments based on the value of the underlying mortgage loan, quoted mortgage backed security prices, estimates of the fair value of the mortgage servicing rights, and an estimate of the probability that the mortgage loan will fund within the terms of the interest rate lock commitment, net of expenses. The Company estimates the fair value of forward sales commitments based on market quotes of mortgage backed security prices for securities similar to the ones used, which are considered Level 2. With respect to its interest rate lock commitments, management determined that a Level 3 classification was most appropriate based on the various significant unobservable inputs utilized in estimating the fair value of its interest rate lock commitments. Changes in fair value of the Company’s derivative financial instruments are recognized through noninterest income on its condensed consolidated statement of income.

Level 3 Reconciliation

The following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying balance sheets using significant unobservable (Level 3) inputs:


	Three Months Ended March 31,
	2019		2018
	(In thousands)
Mortgage servicing rights
Balance, beginning of period	$	77,844	$	66,079
Additions
Originated and purchased servicing		1,020		3,452
Subtractions
Paydowns		(1,110)		(1,370)
Changes in fair value due to changes in valuation inputs or assumptions used in the valuation model		(1,505)		(893)
Balance, end of period	$	76,249	$	67,268

Available-for-sale securities - Municipals
Balance, beginning of period	$	—	$	6,688
Additions
Purchased securities		—		—
Subtractions
Paydowns		—		(258)
Sales		—		—
Unrealized gains (losses) included in other comprehensive income		—		—
Balance, end of period	$	—	$	6,430

Derivative Assets - interest rate lock commitments
Balance, beginning of period	$	70	$	—
Purchases		—		—
Changes in fair value		1		116
Balance, end of period	$	71	$	116

Derivative Liabilities - interest rate lock commitments
Balance, beginning of period	$	—	$	—
Purchases		—		—
Changes in fair value		1		2
Balance, end of period	$	1	$	2

Nonrecurring Measurements

The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2019 and December 31, 2018.


	Fair Value Measurements Using
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Fair		Assets		Inputs		Inputs
Assets	Value		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
March 31, 2019
Impaired loans (collateral-dependent)	$	1,600	$	—	$	—	$	1,600
December 31, 2018
Impaired loans (collateral-dependent)	$	2,639	$	—	$	—	$	2,639

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying balance sheet, as well as the general classification of such assets pursuant to the valuation hierarchy. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

Collateral-Dependent Impaired Loans, Net of Allowance for Loan Losses

The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral, less estimated cost to sell. Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy.

The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value. Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Company’s Chief Credit Officer’s (CCO) office. Appraisals are reviewed for accuracy and consistency by the CCO’s office. Appraisers are selected from the list of approved appraisers maintained by management. The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral. These discounts and estimates are developed by the CCO’s office by comparison to historical results.

Unobservable (Level 3) Inputs:

The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements other than goodwill.


			Valuation
	Fair Value		Technique	Unobservable Inputs	Range
	(In thousands)
At March 31, 2019:
Collateral-dependent impaired loans	$	1,600	Market comparable properties	Marketability discount	32%
Mortgage servicing rights	$	76,249	Discounted cash flow	Discount rate	8% - 13%
				Constant prepayment rate	1% - 30%
Derivative assets - interest rate lock commitments	$	71	Discounted cash flow	loan closing rates	63-99%
Derivative liabilities - interest rate lock commitments	$	1	Discounted cash flow	loan closing rates	63-99%

At December 31, 2018:
Collateral-dependent impaired loans	$	2,639	Market comparable properties	Marketability discount	17%-59%
Mortgage servicing rights	$	77,844	Discounted cash flow	Discount rate	8% - 13%
				Constant prepayment rate	1% - 30%
Derivative assets - interest rate lock commitments	$	70	Discounted cash flow	loan closing rates	95-100%

Sensitivity of Significant Unobservable Inputs

The following is a discussion of the sensitivity of significant unobservable inputs, the interrelationships between those inputs and other unobservable inputs used in recurring fair value measurement and of how those inputs might magnify or mitigate the effect of changes in the unobservable inputs on the fair value measurement.

Mortgage Servicing Rights

The significant unobservable inputs used in the fair value measurement of the Company’s mortgage servicing rights are discount rates and constant prepayment rates. Significant increases or decreases in any of those inputs in isolation would result in a significantly different fair value measurement.

Fair Value of Financial Instruments

The following table presents the carrying amount and estimated fair values of the Company’s financial instruments not carried at fair value and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2019 and December 31, 2018.


			Fair Value Measurements Using
					Quoted Prices in		Significant
					Active Markets		Other		Significant
					for Identical		Observable		Unobservable
	Carrying		Fair		Assets		Inputs		Inputs
Assets	Value		Value		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
March 31, 2019
Financial assets:
Cash and cash equivalents	$	313,451	$	313,451	$	313,451	$	—	$	—
Securities purchased under agreements to resell		6,838		6,838		—		6,838		—
FHLB stock		18,880		18,880		—		18,880		—
Loans held for sale		875,764		875,764		—		875,764		—
Loans, net		2,168,256		2,170,521		—		—		2,170,521
Interest receivable		14,365		14,365		—		14,365		—
Financial liabilities:
Deposits		3,121,027		3,120,546		2,438,323		682,223		—
Lines of credit		31,605		31,605		—		31,605		—
Short-term subordinated debt		13,486		13,486		—		13,486		—
FHLB advances		292,940		292,823		—		292,823		—
Interest payable		4,930		4,930		—		4,930		—


December 31, 2018
Financial assets:
Cash and cash equivalents	$	336,524	$	336,524	$	336,524	$	—	$	—
Securities purchased under agreements to resell		6,875		6,875		—		6,875		—
FHLB stock		7,974		7,974		—		7,974		—
Loans held for sale		820,569		820,569		—		820,569		—
Loans, net		2,045,423		2,041,772		—		—		2,041,772
Interest receivable		13,827		13,827		—		13,827		—
Financial liabilities:
Deposits		3,231,086		3,230,397		2,550,632		679,765		—
Lines of credit		33,150		33,150		—		33,150		—
Short-term subordinated debt		10,582		10,582		—		10,582		—
FHLB advances		151,721		151,723		—		151,723		—
Interest payable		4,132		4,132		—		4,132		—

The following methods were used to estimate the fair value of all other financial instruments recognized in the accompanying balance sheets at amounts other than fair value.

Cash and Cash Equivalents and Securities Purchased Under Agreement to Resell

The carrying amount approximates fair value.

Federal Home Loan Bank Stock

The fair value of Federal Home Loan Bank of Indianapolis and Federal Home Loan Bank of Chicago (“FHLB”) stock is based on the price at which it may be sold to the FHLB.

Loans Held For Sale

The carrying amount approximates fair value due to the insignificant time between origination and date of sale.

Loans

Fair value is estimated by discounting the future cash flows using the market rates at which similar notes would be made to borrowers with similar credit ratings and for the same remaining maturities. The market rates used are based on current rates the Company would impose for similar loans and reflect a market participant assumption about risks associated with nonperformance, illiquidity, and the structure and term of the loans along with local economic and market conditions.

Interest Receivable and Payable

The carrying amount approximates fair value. The carrying amount is determined using the interest rate, balance and last payment date.

Deposits

The fair values of noninterest-bearing demand and savings accounts are equal to the amount payable on demand at the balance sheet date. Fair values for fixed-rate certificates and time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of expected monthly maturities on such time deposits.

Line of Credit and Short-term Subordinated Debt

The carrying amount approximates fair value.

Federal Home Loan Bank Advances

Fair value is estimated by discounting the future cash flows using rates of similar advances with similar maturities. These rates were obtained from current rates offered by the FHLB.

Off-Balance Sheet Commitments

Commitments include commitments to purchase and originate mortgage loans, commitments to sell mortgage loans and standby letters of credit and are generally of a short-term nature. The fair value of such commitments are based on fees currently charged to similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of commitments to extend credit and letters of credit is not presented in the previous table since the fair value is considered to be insignificant.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Earnings Per Share

3 Months Ended

Mar. 31, 2019

Earnings Per share

Earnings Per share

Note 7: Earnings Per Share

Earnings per share were computed as follows:


	Three Month Periods Ended March 31,
	2019					2018
			Weighted-	Per				Weighted-	Per
	Net		Average	Share		Net		Average	Share
	Income		Shares	Amount		Income		Shares	Amount
	(In thousands)					(In thousands)
Net income	$	10,570				$	15,061
Dividends on preferred stock		(833)					(833)
Net income allocated to common shareholders	$	9,737				$	14,228
Basic earnings per share			28,702,250	$	0.34			28,690,876	$	0.50
Effect of dilutive securities-restricted stock awards			35,189					19,604
Diluted earnings per share			28,737,439	$	0.34			28,710,480	$	0.50

Share-Based Payment Plans	3 Months Ended
Share-Based Payment Plans	Mar. 31, 2019
Share-Based Payment Plans
Share-Based Payment Plans	Note 8: Share-Based Payment Plans Equity-based incentive awards are currently made though our 2017 Equity Incentive Plan (the “2017 Incentive Plan”). Prior to the adoption of the 2017 Incentive Plan, the equity awards we issued historically consisted of restricted stock awards issued pursuant to the Incentive Plan for Merchants Bank of Indiana Executive Officers (the “Prior Incentive Plan”). As of the effective date of the 2017 Equity Incentive Plan, no further awards will be granted under the Prior Incentive Plan. However, any previously outstanding incentive award granted under the Prior Incentive Plan remains subject to the terms of such plans until the time it is no longer outstanding. During the three months ended March 31, 2019 and March 31, 2018, the Company issued 10,127 and 7,039 shares, respectively, pursuant to the Prior Incentive Plan. As of March 31, 2019, the Company has not issued any shares pursuant to the 2017 Equity Incentive Plan. During 2018, the Compensation Committee of the Board of Directors approved a plan for non-executive directors to receive a portion of their annual retainer fees in the form of common stock equal to $10,000, rounded up to the nearest whole share. No shares were issued to directors during the three months ended March 31, 2019 or March 31, 2018.

Segment Information

3 Months Ended

Mar. 31, 2019

Segment Information

Segment Information

Note 9: Segment Information

Our business segments are defined as Multi-family Mortgage Banking, Mortgage Warehousing, and Banking. The reportable business segments are consistent with the internal reporting and evaluation of the principal lines of business of the Company. The Multi-family Mortgage Banking segment originates and services government sponsored mortgages for multi-family and healthcare facilities. The Mortgage Warehousing segment funds agency eligible residential loans from origination or purchase to sale in the secondary market, as well as commercial loans to non-depository financial institutions. The Banking segment provides a wide range of financial products and services to consumers and businesses, including retail banking, commercial lending, agricultural lending, retail and correspondent residential mortgage banking, and Small Business Administration (“SBA”) lending. Other includes general and administrative expenses that provide services to all segments; internal funds transfer pricing offsets resulting from allocations to/from the other segments; certain elimination entries and investments in qualified affordable housing limited partnerships. All operations are domestic.

The tables below present selected business segment financial information for the three months ended March 31, 2019 and 2018.


	Multi-family
	Mortgage		Mortgage
	Banking		Warehousing		Banking		Other		Total
	(In thousands)
Three Months Ended March 31, 2019
Total interest income	$	331	$	14,380	$	24,492	$	471	$	39,674
Total interest expense		—		7,529		8,982		(968)		15,543
Net interest income		331		6,851		15,510		1,439		24,131
Provision for loan losses		—		133		516		—		649
Net interest income after provision for loan losses		331		6,718		14,994		1,439		23,482
Total noninterest income		2,691		753		883		(663)		3,664
Total noninterest expense		3,977		2,336		4,120		2,602		13,035
Income before income taxes		(955)		5,135		11,757		(1,826)		14,111
Income taxes		(243)		1,303		2,988		(507)		3,541
Net income (loss)	$	(712)	$	3,832	$	8,769	$	(1,319)	$	10,570
Total assets	$	160,609	$	1,554,233	$	2,223,890	$	37,993	$	3,976,725


	Multi-family
	Mortgage		Mortgage
	Banking		Warehousing		Banking		Other		Total
	(In thousands)
Three Months Ended March 31, 2018
Total interest income	$	163	$	11,857	$	16,753	$	265	$	29,038
Total interest expense		—		3,797		5,593		(460)		8,930
Net interest income		163		8,060		11,160		725		20,108
Provision for loan losses		—		674		732		—		1,406
Net interest income after provision for loan losses		163		7,386		10,428		725		18,702
Total noninterest income		10,511		486		652		(336)		11,313
Noninterest expense		3,382		1,736		3,169		1,983		10,270
Income before income taxes		7,292		6,136		7,911		(1,594)		19,745
Income taxes		1,808		1,506		1,931		(561)		4,684
Net income (loss)	$	5,484	$	4,630	$	5,980	$	(1,033)	$	15,061
Total assets	$	141,703	$	1,603,584	$	1,908,823		21,739	$	3,675,849

Recent Accounting Pronouncements

3 Months Ended

Mar. 31, 2019

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Note 10: Recent Accounting Pronouncements

The Company is an emerging growth company and as such will be subject to the effective dates noted for the private companies if they differ from the effective dates noted for public companies.

FASB ASU 2014‑09, Revenue from Contracts with Customers

In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014‑09, “Revenue from Contracts with Customers,” which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In March 2016 the FASB issued ASU 2016‑08, “Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” which clarifies the guidance in determining revenue recognition as principal versus agent. In April 2016, the FASB issued ASU 2016‑10, “Identifying Performance Obligations and Licensing,” which provides guidance in accounting for immaterial performance obligations and shipping and handling. In May 2016, the FASB issued ASU 2016‑12, “Narrow‑Scope Improvements and Practical Expedients,” which provides clarification on assessing the collectability criterion, presentation of sales taxes, measurement date for noncash consideration and completed contracts at transition. This ASU also provides a practical expedient for contract modifications.

As an emerging growth company, these amendments are effective for annual reporting periods beginning after December 15, 2018, and for interim periods within annual periods beginning after December 15, 2019. The Company’s revenue is primarily comprised of net interest income on financial assets and financial liabilities, which is explicitly excluded from the scope of ASU 2014-09. The Company has evaluated the impact of adopting ASU 2014-09, but does not expect the impact to have a material impact on the Company’s financial position or results of operations.

FASB ASU 2016‑01, Recognition and Measurement of Financial Assets and Financial Liabilities

In January 2016, the FASB issued ASU 2016‑01, “Recognition and Measurement of Financial Assets and Financial Liabilities.” For public business entities, the amendments in this update include the elimination of the requirement to disclose the method(s) and significant assumptions used to estimate fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, the requirement to use the exit price notion when measuring fair value of financial instruments for disclosure purposes, the requirement to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument‑specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments, the requirement for separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or accompanying notes to the financial statements, and the amendments clarify that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available‑for‑sale securities in combination with the entity’s other deferred tax assets. An entity should apply the amendments to this update by means of a cumulative‑effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption.

As an emerging growth company, the amendments in this update are effective for fiscal years beginning after December 15, 2018, and interim periods within years beginning after December 15, 2019. Early adoption of the amendments in the update is not permitted, except that early application by public business entities to financial statements of fiscal years or interim periods that have not yet been issued or, by all other entities, that have not yet been made available for issuance, are permitted as of the beginning of the fiscal year of adoption for the following amendment: An entity should present separately in other comprehensive income the portion of the total change in the fair value of a liability at fair value in accordance with the fair value option for financial instruments. An entity should apply the amendments to this update by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Company is continuing to evaluate the impact of adopting this new guidance on its consolidated financial statements, but the adoption of ASU 2016-01 is not expected to have a material impact on the Company’s financial position or results of operation.

FASB ASU 2016‑02, Leases

In February 2016, the FASB issued ASU 2016‑02, “Leases.” Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short‑term leases) at the commencement date:

·

A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and

·

A right‑of‑use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.

Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, “Revenue from Contracts with Customers.” The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off‑balance sheet financing. Lessees (for capital and operating leases) and lessors (for sales‑type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach.

As an emerging growth company, the amendments in ASU 2016‑02 are effective, as an emerging growth company, beginning after December 15, 2019, and for interim periods for years beginning after January 1, 2020. Management is in the process of gathering documentation on current lease agreements to assess the impact of adopting this guidance on the Company’s financial statements, but its impact is not expected to be material.

FASB ASU 2016‑13, Financial Instruments—Credit Losses

In June 2016, the FASB issued ASU 2016‑13, “Financial Instruments—Credit Losses”. The amendments in this ASU replace the incurred loss model with a methodology that reflects expected credit losses over the life of the loan and requires consideration of a broader range of reasonable and supportable information to calculate credit loss estimates. ASU 2016‑13 replaces the incurred loss impairment methodology with a new methodology that reflects expected credit losses over the lives of the loans and requires consideration of a broader range of information to form credit loss estimates. The ASU requires an organization to estimate all expected credit losses for financial assets measured at amortized cost, including loans and held‑to‑maturity debt securities, based on historical experience, current conditions, and reasonable and supportable forecasts. Additional disclosures are required.

As an emerging growth company, the amendments in ASU 2016‑13 are effective, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company has established a cross-functional committee that is developing a project plan to review modeling data currently available and technology needed to ensure compliance of this standard. The committee has also met with multiple vendors to potentially assist in generating specific loan level details within our core systems, as well as compiling peer and industry data that would be useful in our modeling forecasts. While the Company generally expects to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, the Company cannot yet determine the magnitude of any such one-time adjustment or the overall impact of the new guidance on the Company’s consolidated financial statements. Management continues to expect that the implementation of this ASU may increase the balance of the allowance for loan losses and is continuing to evaluate the potential impact on the Company’s financial position and results of operations.

FASB ASU No. 2017‑04, Intangibles—Goodwill and Other (Topic 350)

In January 2017, the FASB issued ASU 2017‑04, “Intangibles—Goodwill and Other (Topic 350).” This ASU simplifies the test for goodwill impairment. Specifically, these amendments eliminate Step 2 from the goodwill impairment test, and also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test.

As an emerging growth company, the amendments in this ASU are effective for annual goodwill impairment tests in fiscal years beginning after December 15, 2021. Management continues to believe that the changes will not have a material effect on the Company’s financial position and results of operations.

FASB ASU 2017‑08, Premium Amortization of Purchased Callable Debt

In March 2017, the FASB issued ASU 2017‑08, “Premium Amortization of Purchased Callable Debt.” This ASU applies to all entities that hold investments in callable debt securities that have an amortized cost basis in excess of the amount that is repayable by the issuer at the earliest call date (that is, at a premium). The ASU requires the premium to be amortized to the earliest call date, not the maturity date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity.

As an emerging growth company, ASU 2017‑08 is effective as to the Company for years beginning after December 15, 2019 and interim periods within years beginning after December 15, 2020. Early adoption is permitted. Management is still in the process of evaluating the impact of adopting this guidance, but does not expect the ASU to have a material effect on the Company’s financial position or results of operations.

Basis of Presentation (Policies)	3 Months Ended
Basis of Presentation (Policies)	Mar. 31, 2019
Basis of Presentation
Basis of Presentation	The accompanying consolidated financial statements include the accounts of Merchants Bancorp, a registered bank holding company (the “Company”) and its wholly owned subsidiaries, Merchants Bank of Indiana (“Merchants Bank”) and Farmers-Merchants Bank of Illinois (“FMBI”). Merchants Bank’s direct and indirect subsidiaries include Merchants Capital Corp. (“MCC”), Merchants Capital Servicing, LLC (“MCS”), Ash Realty Holdings, LLC (“Ash Realty”), MBI Midtown West, LLC (“MMW”), Natty Mac Funding, Inc. (“NMF”), and OneTrust Funding, Inc. The Company also acquired Farmers-Merchants National Bank of Paxton (‘FMNBP”) on October 1, 2018 through a merger with FMBI, with FMBI as the surviving entity. All these entities are collectively referred to as the “Company”. The accompanying unaudited condensed consolidated balance sheet of the Company as of December 31, 2018, which has been derived from audited financial statements, and unaudited condensed consolidated financial statements of the Company as of March 31, 2019 and for the three months ended March 31, 2019 and 2018, were prepared in accordance with the instructions for Form 10‑Q and Article 10 of Regulation S-X and, therefore, do not include information or footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America. Accordingly, these condensed financial statements should be read in conjunction with the audited financial statements and notes thereto of the Company as of and for the year ended December 31, 2018 in its Annual Report on Form 10-K. Reference is made to the accounting policies of the Company described in the Notes to the Financial Statements contained in the Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) which are necessary for a fair presentation of the unaudited financial statements have been included to present fairly the financial position as of March 31, 2019 and the results of operations for the three months ended March 31, 2019 and 2018, and cash flows for the three months ended March 31, 2019 and 2018. All interim amounts have not been audited and the results of operations for the three months ended March 31, 2019, herein are not necessarily indicative of the results of operations to be expected for the entire year.
Principles of Consolidation	Principles of Consolidation The consolidated financial statements as of and for the period ended March 31, 2019 include the Company, and its wholly owned subsidiaries, Merchants Bank, and FMBI. Also included are Merchants Bank’s wholly owned subsidiaries, MCC, MCC’s wholly owned subsidiary, MCS, Ash Realty, NMF, MMW, and OneTrust Funding, Inc. The consolidated financial statements as of and for the period ended March 31, 2018, include the Company and its wholly owned subsidiary, Merchants Bank, and Merchants Bank’s wholly owned subsidiaries, FMBI (after being acquired on January 2, 2018 and excluding results from FMNBP, which was acquired on October 1, 2018), MCC, MCC’s wholly owned subsidiary, MCS, Ash Realty, NMF, and MMW. All significant intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses, loan servicing rights and fair values of financial instruments.
Reclassifications	Reclassifications Certain reclassifications have been made to the 2018 financial statements to conform to the financial statement presentation as of and for the three months ended March 31, 2019. These reclassifications had no effect net income.

Securities (Tables)

3 Months Ended

Mar. 31, 2019

Securities

Schedule of amortized cost and approximate fair values, together with gross unrealized gains and losses


	March 31, 2019
			Gross		Gross		Approximate
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(In thousands)
Available-for-sale securities:
Treasury notes	$	10,740	$	8	$	5	$	10,743
Federal agencies		235,621		2		423		235,200
Municipals		12,050		430		—		12,480
Mortgage-backed - Government-sponsored entity (GSE) - residential		38,092		155		1		38,246
Total available-for-sale securities	$	296,503	$	595	$	429	$	296,669


	December 31, 2018
			Gross		Gross		Approximate
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(In thousands)
Available-for-sale securities:
Treasury notes	$	11,928	$	26	$	13	$	11,941
Federal agencies		237,894		8		972		236,930
Municipals		21,014		336		18		21,332
Mortgage-backed - Government-sponsored entity (GSE) - residential		60,693		254		79		60,868
Total available-for-sale securities	$	331,529	$	624	$	1,082	$	331,071

Schedule of amortized cost and fair value of available-for-sale securities by contractual maturity


	March 31, 2019				December 31, 2018
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Contractual Maturity	(In thousands)
Within one year	$	149,649	$	149,318	$	179,323	$	178,581
After one through five years		98,685		98,643		72,470		72,282
After five through ten years		2,120		2,210		7,087		7,203
After ten years		7,957		8,252		11,956		12,137
		258,411		258,423		270,836		270,203
Mortgage-backed - Government-sponsored entity (GSE) - residential		38,092		38,246		60,693		60,868
	$	296,503	$	296,669	$	331,529	$	331,071

Schedule of gross unrealized losses and fair value of investments with unrealized losses have been in continuous


	March 31, 2019
					12 Months or
	Less than 12 Months				Longer				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(In thousands)
Available-for-sale securities:
Treasury notes	$	—	$	—	$	2,243	$	5	$	2,243	$	5
Federal agencies		—		—		180,198		423		180,198		423
Municipals		—		—		—		—		—		—
Mortgage-backed - Government-sponsored entity (GSE) - residential		914		1		—		—		914		1
	$	914	$	1	$	182,441	$	428	$	183,355	$	429


	December 31, 2018
					12 Months or
	Less than 12 Months				Longer				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(In thousands)
Available-for-sale securities:
Treasury notes	$	1,990	$	8	$	995	$	5	$	2,985	$	13
Federal agencies		28,296		97		191,280		875		219,576	$	972
Municipals		2,051		18		—		—		2,051	$	18
Mortgage-backed - Government-sponsored entity (GSE) - residential		15,543		79		—		—		15,543		79
	$	47,880	$	202	$	192,275	$	880	$	240,155	$	1,082

Loans and Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2019

Loans and Allowance for Loan Losses

Summary of loans


	March 31,		December 31,
	2019		2018
	(In thousands)

Mortgage warehouse lines of credit	$	412,171	$	337,332
Residential real estate		409,172		410,871
Multi-family and healthcare financing		965,363		914,393
Commercial and commercial real estate		296,483		299,194
Agricultural production and real estate		81,063		79,255
Consumer and margin loans		17,360		17,082
		2,181,612		2,058,127
Less
Allowance for loan losses		13,356		12,704

Loans Receivable	$	2,168,256	$	2,045,423

Summary of activity in the allowance for loans and recorded investment by loan portfolio


	At or For the Three Months Ended March 31, 2019
	MTG WHLOC		RES RE		MF RE		CML & CRE		AG & AGRE		CON & MAR		TOTAL
	(In thousands)
Allowance for loan losses
Balance, beginning of period	$	1,068	$	1,986	$	6,030	$	3,051	$	429	$	140	$	12,704
Provision (credit) for loan losses		186		4		347		71		34		7		649
Loans charged to the allowance		—		—		—		—		—		—		—
Recoveries of loans previously charged off		—		—		—		—		3		—		3
Balance, end of period	$	1,254	$	1,990	$	6,377	$	3,122	$	466	$	147	$	13,356
Ending balance: individually evaluated for impairment	$	225	$	—	$	—	$	500	$	20	$	—	$	745
Ending balance: collectively evaluated for impairment	$	1,029	$	1,990	$	6,377	$	2,622	$	446	$	147	$	12,611
Loans
Ending balance	$	412,171	$	409,172	$	965,363	$	296,483	$	81,063	$	17,360	$	2,181,612
Ending balance individually evaluated for impairment	$	572	$	4,255	$	—	$	8,186	$	347	$	50	$	13,410
Ending balance collectively evaluated for impairment	$	411,599	$	404,917	$	965,363	$	288,297	$	80,716	$	17,310	$	2,168,202


	For the Three Months Ended March 31, 2018
	MTG WHLOC		RES RE		MF RE		CML & CRE		AG & AGRE		CON & MAR		TOTAL
	(In thousands)
Allowance for loan losses
Balance, beginning of period	$	283	$	1,587	$	3,502	$	2,362	$	320	$	257	$	8,311
Provision (credit) for loan losses		223		76		748		323		13		23		1,406
Loans charged to the allowance		—		—		—		—		—		(17)		(17)
Recoveries of loans previously charged off		—		1		—		—		—		4		5
Balance, end of period	$	506	$	1,664	$	4,250	$	2,685	$	333	$	267	$	9,705

Summary of activity in the allowance for loan losses


	December 31, 2018
	MTG WHLOC		RES RE		MF RE		CML & CRE		AG & AGRE		CON & MAR		TOTAL
	(In thousands)
Allowance for loan losses
Balance, December 31, 2018	$	1,068	$	1,986	$	6,030	$	3,051	$	429	$	140	$	12,704
Ending balance: individually evaluated for impairment	$	225	$	—	$	—	$	400	$	20	$	—	$	645
Ending balance: collectively evaluated for impairment	$	843	$	1,986	$	6,030	$	2,651	$	409	$	140	$	12,059
Loans
Balance, December 31, 2018	$	337,332	$	410,871	$	914,393	$	299,194	$	79,255	$	17,082	$	2,058,127
Ending balance individually evaluated for impairment	$	575	$	1,606	$	—	$	8,576	$	370	$	58	$	11,185
Ending balance collectively evaluated for impairment	$	336,757	$	409,265	$	914,393	$	290,618	$	78,885	$	17,024	$	2,046,942

Schedule of credit risk profile of loan portfolio


	March 31, 2019
	MTG WHLOC		RES RE		MF RE		CML & CRE		AG & AGRE		CON & MAR		TOTAL
	(In thousands)

Special Mention (Watch)	$	—	$	590	$	56,962	$	12,451	$	2,791	$	381	$	73,175
Substandard		572		4,255		—		8,186		347		50		13,410
Doubtful		—		—		—		—		—		—		—
Acceptable and Above		411,599		404,327		908,401		275,846		77,925		16,929		2,095,027
Total	$	412,171	$	409,172	$	965,363	$	296,483	$	81,063	$	17,360	$	2,181,612


	December 31, 2018
	MTG WHLOC		RES RE		MF RE		CML & CRE		AG & AGRE		CON & MAR		TOTAL
	(In thousands)

Special Mention (Watch)	$	—	$	443	$	71,734	$	14,650	$	3,096	$	681	$	90,604
Substandard		575		1,606		—		8,576		370		58		11,185
Doubtful		—		—		—		—		—		—		—
Acceptable and Above		336,757		408,822		842,659		275,968		75,789		16,343		1,956,338
Total	$	337,332	$	410,871	$	914,393	$	299,194	$	79,255	$	17,082	$	2,058,127

Schedule of aging analysis of the recorded investment in loans


	March 31, 2019
	30-59 Days		60-89 Days		Greater Than		Total				Total
	Past Due		Past Due		90 Days		Past Due		Current		Loans
	(In thousands)
MTG WHLOC	$	—	$	—	$	324	$	324	$	411,847	$	412,171
RES RE		3,431		237		998		4,666		404,506		409,172
MF RE		—		—		—		—		965,363		965,363
CML & CRE		191		306		175		672		295,811		296,483
AG & AGRE		53		—		577		630		80,433		81,063
CON & MAR		13		—		21		34		17,326		17,360
	$	3,688	$	543	$	2,095	$	6,326	$	2,175,286	$	2,181,612


	December 31, 2018
	30-59 Days		60-89 Days		Greater Than		Total				Total
	Past Due		Past Due		90 Days		Past Due		Current		Loans
	(In thousands)
MTG WHLOC	$	—	$	—	$	324	$	324	$	337,008	$	337,332
RES RE		579		178		825		1,582		409,289		410,871
MF RE		—		—		—		—		914,393		914,393
CML & CRE		245		52		253		550		298,644		299,194
AG & AGRE		91		—		588		679		78,576		79,255
CON & MAR		2		52		28		82		17,000		17,082
	$	917	$	282	$	2,018	$	3,217	$	2,054,910	$	2,058,127

Schedule of components of impaired loans and specific valuation allowance


	March 31, 2019
	MTG WHLOC		RES RE		MF RE		CML & CRE		AG & AGRE		CON & MAR		TOTAL
	(In thousands)
Impaired loans without a specific allowance:
Recorded investment	$	248	$	4,255	$	—	$	5,907	$	88	$	50	$	10,548
Unpaid principal balance		248		4,255		—		5,907		88		50		10,548
Impaired loans with a specific allowance:
Recorded investment		324		—		—		2,279		259		—		2,862
Unpaid principal balance		324		—		—		2,279		259		—		2,862
Specific allowance		225		—		—		500		20		—		745
Total impaired loans:
Recorded investment		572		4,255		—		8,186		347		50		13,410
Unpaid principal balance		572		4,255		—		8,186		347		50		13,410
Specific allowance		225		—		—		500		20		—		745


	December 31, 2018
	MTG WHLOC		RES RE		MF RE		CML & CRE		AG & AGRE		CON & MAR		TOTAL
	(In thousands)
Impaired loans without a specific allowance:
Recorded investment	$	251	$	1,606	$	—	$	5,636	$	88	$	58	$	7,639
Unpaid principal balance		251		1,606		—		5,636		88		58		7,639
Impaired loans with a specific allowance:
Recorded investment		324		—		—		2,940		282		—		3,546
Unpaid principal balance		324		—		—		2,940		282		—		3,546
Specific allowance		225		—		—		400		20		—		645
Total impaired loans:
Recorded investment		575		1,606		—		8,576		370		58		11,185
Unpaid principal balance		575		1,606		—		8,576		370		58		11,185
Specific allowance		225		—		—		400		20		—		645

Schedule of average recorded investment and interest income recognized in impaired loans


	MTG WHLOC		RES RE		MF RE		CML & CRE		AG & AGRE		CON & MAR		TOTAL
	(In thousands)
Three months ended March 31, 2019:
Average recorded investment in impaired loans	$	574	$	2,806	$	—	$	8,468	$	364	$	48	$	12,260
Interest income recognized		—		15		—		140		—		—		155

Three months ended March 31, 2018:
Average recorded investment in impaired loans	$	1,352	$	729	$	117	$	6,587	$	635	$	146	$	9,566
Interest income recognized		19		3		3		46		—		—		71

Schedule of nonaccrual loans and loans past due 90 days or more and still accruing


	March 31,				December 31,
	2019				2018
			Total Loans >				Total Loans >
			90 Days &				90 Days &
	Nonaccrual		Accruing		Nonaccrual		Accruing
	(In thousands)
MTG WHLOC	$	572	$	—	$	575	$	—
RES RE		702		454		893		74
MF RE		—		—		—		—
CML & CRE		228		—		136		117
AG & AGRE		259		317		282		307
CON & MAR		13		8		18		9

	$	1,774	$	779	$	1,904	$	507

Regulatory Matters (Tables)

3 Months Ended

Mar. 31, 2019

Regulatory Matters

Summary of bank's actual capital amounts and ratios

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


					Minimum Amount
					Required for				Minimum Amount
					Adequately				To Be Well
	Actual				Capitalized(1)				Capitalized(1)
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in thousands)
March 31, 2019
Total capital(1) (to risk-weighted assets)
Company	$	453,361	13.3	%	$	272,136	8.0	%	$	—	N/A
Merchants Bank		478,574	14.6	%		262,223	8.0	%		327,778	10.0	%
FMBI		19,384	15.7	%		9,876	8.0	%		12,345	10.0	%
Tier 1 capital(1) (to risk-weighted assets)
Company		440,007	12.9	%		204,102	6.0	%		—	N/A
Merchants Bank		465,636	14.2	%		196,667	6.0	%		262,223	8.0	%
FMBI		18,966	15.4	%		7,407	6.0	%		9,876	8.0	%
Common Equity Tier 1 capital(1) (to risk-weighted assets)
Company		350,157	10.3	%		153,077	4.5	%		—	N/A
Merchants Bank		465,636	14.2	%		147,500	4.5	%		213,056	6.5	%
FMBI		18,966	15.4	%		5,555	4.5	%		8,025	6.5	%
Tier 1 capital(1) (to average assets)
Company		440,007	12.0	%		146,417	4.0	%		—	N/A
Merchants Bank		465,636	13.3	%		140,344	4.0	%		175,430	5.0	%
FMBI		18,966	11.9	%		6,384	4.0	%		7,980	5.0	%


					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, 2018
Total capital(1) (to risk-weighted assets)
Company	$	393,654	12.3	%	$	255,884	8.0	%	$	—	N/A
Merchants Bank		412,386	13.3	%		248,290	8.0	%		310,363	10.0	%
FMBI		17,537	18.6	%		7,559	8.0	%		9,448	10.0	%
Tier 1 capital(1) (to risk-weighted assets)
Company		380,950	11.9	%		191,913	6.0	%		—	N/A
Merchants Bank		399,815	12.9	%		186,218	6.0	%		248,290	8.0	%
FMBI		17,404	18.4	%		5,669	6.0	%		7,559	8.0	%
Common Equity Tier 1 capital(1) (to risk-weighted assets)
Company		339,369	10.6	%		143,935	4.5	%		—	N/A
Merchants Bank		399,815	12.9	%		139,663	4.5	%		201,736	6.5	%
FMBI		17,404	18.4	%		4,252	4.5	%		6,141	6.5	%
Tier 1 capital(1) (to average assets)
Company		380,950	10.0	%		152,081	4.0	%		—	N/A
Merchants Bank		399,815	11.0	%		145,723	4.0	%		182,154	5.0	%
FMBI		17,404	10.8	%		6,453	4.0	%		8,066	5.0	%

1

As defined by regulatory agencies.

Beginning January 1, 2015, a new Basel III Capital Rule applied to Merchants Bank. The following table lists the capital categories and ratios determined by the Board of Governors of the Federal Reserve System and the FDIC.


					Common Equity
	Total Risk-based		Tier 1 Risk-based		Tier 1 Risk-based		Tier 1
Capital Category	Capital ratio		Capital ratio		Capital ratio		Leverage ratio
Well capitalized	10	%	8	%	6.5	%	5	%
Adequately capitalized	8		6		4.5		4
Undercapitalized	<8		<6		<4.5		<4
Significantly undercapitalized	<6		<4		<3		<3
Critically undercapitalized	Tangible Equity/Total Assets </= 2%

Derivative Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2019

Derivative Financial Instruments

Summary of notional amount and fair value of interest rate locks and forward contracts utilized

		Notional			Fair Value
		Amount	Balance Sheet Location		Asset		(Liability)
March 31, 2019		(In thousands)			(In thousands)
Interest rate lock commitments	$	9,706	Derivative assets/liabilities	$	71	$	1
Forward contracts		15,260	Derivative assets/liabilities		—		18
				$	71	$	19


		Notional			Fair Value
		Amount	Balance Sheet Location		Asset		(Liability)
December 31, 2018		(In thousands)			(In thousands)
Interest rate lock commitments	$	8,812	Derivative assets/liabilities	$	70	$	—
Forward contracts		19,640	Derivative assets/liabilities		—		9
				$	70	$	9

Summarizes the periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income


	Three Months Ended
	March 31,
	2019		2018
	(In thousands)
Interest rate lock commitments	$	—	$	114
Forward contracts (1)		(5)		105
Net derivative gains (losses)	$	(5)	$	219
_____________________________________ ⁽¹⁾ Amount includes pair-off settlements.

- Definition

Tabular disclosure of pertinent information about a derivative or group of derivatives on a disaggregated basis, such as for individual instruments, or small groups of similar instruments. May include a combination of the type of instrument, risks being hedged, notional amount, hedge designation, related hedged item, inception date, maturity date, or other relevant item.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=84234895&loc=d3e41641-113959

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4B
-URI http://asc.fasb.org/extlink&oid=84234895&loc=SL5624163-113959

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=84234895&loc=d3e41678-113959

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=84234895&loc=d3e41638-113959

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 1B
-URI http://asc.fasb.org/extlink&oid=84234895&loc=SL5580258-113959

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 1A
-URI http://asc.fasb.org/extlink&oid=84234895&loc=SL5579245-113959

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 4C
-URI http://asc.fasb.org/extlink&oid=84234895&loc=SL5624171-113959

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=84234895&loc=SL5579240-113959

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=84234895&loc=d3e41620-113959

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(n)(2))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

+ Details

Disclosures about Fair Value of Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2019

Disclosures about Fair Value of Assets and Liabilities

Schedule of fair value measurement of assets measured at fair value on recurring basis


	Fair Value Measurements Using
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Fair		Assets		Inputs		Inputs
Assets	Value		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
March 31, 2019
Trading securities	$	129,914	$	—	$	129,914	$	—
Available-for-sale securities:
Treasury notes		10,743		10,743		—		—
Federal agencies		235,200		—		235,200		—
Municipals		12,480		—		12,480		—
Mortgage-backed - Government-sponsored entity (GSE) - residential		38,246		—		38,246		—
Loans held for sale		6,307		—		6,307		—
Mortgage servicing rights		76,249		—		—		76,249
Derivative assets - interest rate lock commitments		71		—		—		71
Derivative liabilities - interest rate lock commitments		1		—		—		1
Derivative liabilities - forward contracts		18		—		18		—


December 31, 2018
Trading securities	$	163,419	$	—	$	163,419	$	—
Available-for-sale securities:
Treasury notes		11,941		11,941		—		—
Federal agencies		236,930		—		236,930		—
Municipals		21,332		—		21,332		—
Mortgage-backed - Government-sponsored entity (GSE) - residential		60,868		—		60,868		—
Loans held for sale		11,886		—		11,886		—
Mortgage servicing rights		77,844		—		—		77,844
Derivative assets - interest rate lock commitments		70		—		—		70
Derivative liabilities - forward contracts		9		—		9		—

Schedule of Level 3 reconciliation of recurring fair value measurements


	Three Months Ended March 31,
	2019		2018
	(In thousands)
Mortgage servicing rights
Balance, beginning of period	$	77,844	$	66,079
Additions
Originated and purchased servicing		1,020		3,452
Subtractions
Paydowns		(1,110)		(1,370)
Changes in fair value due to changes in valuation inputs or assumptions used in the valuation model		(1,505)		(893)
Balance, end of period	$	76,249	$	67,268

Available-for-sale securities - Municipals
Balance, beginning of period	$	—	$	6,688
Additions
Purchased securities		—		—
Subtractions
Paydowns		—		(258)
Sales		—		—
Unrealized gains (losses) included in other comprehensive income		—		—
Balance, end of period	$	—	$	6,430

Derivative Assets - interest rate lock commitments
Balance, beginning of period	$	70	$	—
Purchases		—		—
Changes in fair value		1		116
Balance, end of period	$	71	$	116

Derivative Liabilities - interest rate lock commitments
Balance, beginning of period	$	—	$	—
Purchases		—		—
Changes in fair value		1		2
Balance, end of period	$	1	$	2

Schedule of fair value measurement of assets and liabilities measured at fair value on nonrecurring basis


	Fair Value Measurements Using
			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Fair		Assets		Inputs		Inputs
Assets	Value		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
March 31, 2019
Impaired loans (collateral-dependent)	$	1,600	$	—	$	—	$	1,600
December 31, 2018
Impaired loans (collateral-dependent)	$	2,639	$	—	$	—	$	2,639

Schedule of quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements other than goodwill


			Valuation
	Fair Value		Technique	Unobservable Inputs	Range
	(In thousands)
At March 31, 2019:
Collateral-dependent impaired loans	$	1,600	Market comparable properties	Marketability discount	32%
Mortgage servicing rights	$	76,249	Discounted cash flow	Discount rate	8% - 13%
				Constant prepayment rate	1% - 30%
Derivative assets - interest rate lock commitments	$	71	Discounted cash flow	loan closing rates	63-99%
Derivative liabilities - interest rate lock commitments	$	1	Discounted cash flow	loan closing rates	63-99%

At December 31, 2018:
Collateral-dependent impaired loans	$	2,639	Market comparable properties	Marketability discount	17%-59%
Mortgage servicing rights	$	77,844	Discounted cash flow	Discount rate	8% - 13%
				Constant prepayment rate	1% - 30%
Derivative assets - interest rate lock commitments	$	70	Discounted cash flow	loan closing rates	95-100%

Schedule of carrying amount and estimated fair value of financial instruments


			Fair Value Measurements Using
					Quoted Prices in		Significant
					Active Markets		Other		Significant
					for Identical		Observable		Unobservable
	Carrying		Fair		Assets		Inputs		Inputs
Assets	Value		Value		(Level 1)		(Level 2)		(Level 3)
	(In thousands)
March 31, 2019
Financial assets:
Cash and cash equivalents	$	313,451	$	313,451	$	313,451	$	—	$	—
Securities purchased under agreements to resell		6,838		6,838		—		6,838		—
FHLB stock		18,880		18,880		—		18,880		—
Loans held for sale		875,764		875,764		—		875,764		—
Loans, net		2,168,256		2,170,521		—		—		2,170,521
Interest receivable		14,365		14,365		—		14,365		—
Financial liabilities:
Deposits		3,121,027		3,120,546		2,438,323		682,223		—
Lines of credit		31,605		31,605		—		31,605		—
Short-term subordinated debt		13,486		13,486		—		13,486		—
FHLB advances		292,940		292,823		—		292,823		—
Interest payable		4,930		4,930		—		4,930		—


December 31, 2018
Financial assets:
Cash and cash equivalents	$	336,524	$	336,524	$	336,524	$	—	$	—
Securities purchased under agreements to resell		6,875		6,875		—		6,875		—
FHLB stock		7,974		7,974		—		7,974		—
Loans held for sale		820,569		820,569		—		820,569		—
Loans, net		2,045,423		2,041,772		—		—		2,041,772
Interest receivable		13,827		13,827		—		13,827		—
Financial liabilities:
Deposits		3,231,086		3,230,397		2,550,632		679,765		—
Lines of credit		33,150		33,150		—		33,150		—
Short-term subordinated debt		10,582		10,582		—		10,582		—
FHLB advances		151,721		151,723		—		151,723		—
Interest payable		4,132		4,132		—		4,132		—

Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2019

Earnings Per share

Schedule of computation of earnings per share


	Three Month Periods Ended March 31,
	2019					2018
			Weighted-	Per				Weighted-	Per
	Net		Average	Share		Net		Average	Share
	Income		Shares	Amount		Income		Shares	Amount
	(In thousands)					(In thousands)
Net income	$	10,570				$	15,061
Dividends on preferred stock		(833)					(833)
Net income allocated to common shareholders	$	9,737				$	14,228
Basic earnings per share			28,702,250	$	0.34			28,690,876	$	0.50
Effect of dilutive securities-restricted stock awards			35,189					19,604
Diluted earnings per share			28,737,439	$	0.34			28,710,480	$	0.50

Segment Information (Tables)

3 Months Ended

Mar. 31, 2019

Segment Information

Schedule of business segment financial information

	Multi-family
	Mortgage		Mortgage
	Banking		Warehousing		Banking		Other		Total
	(In thousands)
Three Months Ended March 31, 2019
Total interest income	$	331	$	14,380	$	24,492	$	471	$	39,674
Total interest expense		—		7,529		8,982		(968)		15,543
Net interest income		331		6,851		15,510		1,439		24,131
Provision for loan losses		—		133		516		—		649
Net interest income after provision for loan losses		331		6,718		14,994		1,439		23,482
Total noninterest income		2,691		753		883		(663)		3,664
Total noninterest expense		3,977		2,336		4,120		2,602		13,035
Income before income taxes		(955)		5,135		11,757		(1,826)		14,111
Income taxes		(243)		1,303		2,988		(507)		3,541
Net income (loss)	$	(712)	$	3,832	$	8,769	$	(1,319)	$	10,570
Total assets	$	160,609	$	1,554,233	$	2,223,890	$	37,993	$	3,976,725


	Multi-family
	Mortgage		Mortgage
	Banking		Warehousing		Banking		Other		Total
	(In thousands)
Three Months Ended March 31, 2018
Total interest income	$	163	$	11,857	$	16,753	$	265	$	29,038
Total interest expense		—		3,797		5,593		(460)		8,930
Net interest income		163		8,060		11,160		725		20,108
Provision for loan losses		—		674		732		—		1,406
Net interest income after provision for loan losses		163		7,386		10,428		725		18,702
Total noninterest income		10,511		486		652		(336)		11,313
Noninterest expense		3,382		1,736		3,169		1,983		10,270
Income before income taxes		7,292		6,136		7,911		(1,594)		19,745
Income taxes		1,808		1,506		1,931		(561)		4,684
Net income (loss)	$	5,484	$	4,630	$	5,980	$	(1,033)	$	15,061
Total assets	$	141,703	$	1,603,584	$	1,908,823		21,739	$	3,675,849

Basis of Presentation - Public Offering of Preferred Stock (Details) - USD ($)			3 Months Ended	12 Months Ended
	Apr. 12, 2019	Mar. 28, 2019	Mar. 31, 2019	Dec. 31, 2018
Public Offering of Preferred Stock
Net proceeds			$ 48,269,000
Series A preferred stock
Public Offering of Preferred Stock
Net proceeds		$ 48,300,000
7% Preferred Stock
Public Offering of Preferred Stock
Preferred stock, dividend rate (as a percent)		7.00%
Offering costs			$ 1,731,000
7% Preferred Stock \| Series A preferred stock
Public Offering of Preferred Stock
Shares issued (in shares)	81,800	2,000,000	2,000,000
Preferred stock, dividend rate (as a percent)			7.00%	7.00%
Preferred stock liquidation preference (in dollars per share)		$ 25.00	$ 25	$ 25
Aggregate gross offering proceeds for the shares issued		$ 50,000,000
Offering costs		$ 1,700,000
Net proceeds	$ 2,000,000
Underwriting discounts	$ 41,000

Basis of Presentation - Recent Acquisitions (Details) - USD ($)			12 Months Ended
	Oct. 01, 2018	Jan. 02, 2018	Dec. 31, 2018	Mar. 31, 2019	Sep. 30, 2018	Mar. 31, 2018	Dec. 31, 2017
Acquisitions
Goodwill			$ 17,477,000	$ 17,144,000
Total assets			3,884,163,000	3,976,725,000		$ 3,675,849,000
Fair Value of available for sale securities			331,071,000	296,669,000
Deposits			3,231,086,000	3,121,027,000
Loans Receivable, Net			2,045,423,000	$ 2,168,256,000
FMBI
Acquisitions
Total assets							$ 43,000,000
FMBI \| Stock Purchase Agreement
Acquisitions
Total cost		$ 5,500,000
Goodwill		988,000
Intangible assets		478,000
Time deposits		16,700,000
Time deposits at fair value		16,900,000
Fair value premium of acquired time deposits		$ 185,000
Time deposits, fair value premium, accretion period		20 months
Acquired loan portfolio		$ 27,900,000
Acquired loan portfolio at fair value		27,500,000
Fair value discount on acquired loan portfolio		$ 458,000
Acquired loan portfolio, fair value discount, accretion period		39 years
FMBI \| Core Deposits \| Stock Purchase Agreement
Acquisitions
Useful life		10 years
FM Bancorp, Inc
Acquisitions
Outstanding shares of the acquiree	27,537
Share price per share	$ 795.29
Total cost	$ 21,900,000
Goodwill	6,900,000
Intangible assets	1,900,000
Fair Value of available for sale securities	66,300,000
Fair value discount on available for sale securities	1,000,000
Time deposits	95,700,000
Time deposits at fair value	95,700,000
Acquired loan portfolio	35,400,000
Acquired loan portfolio at fair value	34,800,000
Fair value discount on acquired loan portfolio	625,000
Discount related to interest assumption	279,000
Discount related to credit assumption	$ 346,000
Acquired loan portfolio, fair value discount, accretion period	72 months
FM Bancorp, Inc \| Core Deposits
Acquisitions
Useful life	10 years
NattyMac, LLC
Acquisitions
Goodwill			5,000,000
Repayments of subordinated debt			$ 30,000,000
FM Bancorp
Acquisitions
Total assets					$ 110,000,000
Fair Value of available for sale securities					66,300,000
Time deposits					95,700,000
Loans Receivable, Net					$ 35,000,000

Securities - Trading Securities (Details) - USD ($)	3 Months Ended
Securities - Trading Securities (Details) - USD ($)	Mar. 31, 2019	Mar. 31, 2018
Trading Securities
Unrealized gains included in trading securities	$ 545,000	$ 1,500,000

Securities - Amortized Cost to Approximate Fair Value (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Available-for-sale securities:
Amortized Cost	$ 296,503	$ 331,529
Gross Unrealized Gains	595	624
Gross Unrealized Losses	429	1,082
Fair Value of available for sale securities	296,669	331,071
Treasury notes
Available-for-sale securities:
Amortized Cost	10,740	11,928
Gross Unrealized Gains	8	26
Gross Unrealized Losses	5	13
Fair Value of available for sale securities	10,743	11,941
Federal agencies
Available-for-sale securities:
Amortized Cost	235,621	237,894
Gross Unrealized Gains	2	8
Gross Unrealized Losses	423	972
Fair Value of available for sale securities	235,200	236,930
Municipals
Available-for-sale securities:
Amortized Cost	12,050	21,014
Gross Unrealized Gains	430	336
Gross Unrealized Losses		18
Fair Value of available for sale securities	12,480	21,332
Mortgage-backed - Government-sponsored entity (GSE) - residential
Available-for-sale securities:
Amortized Cost	38,092	60,693
Gross Unrealized Gains	155	254
Gross Unrealized Losses	1	79
Fair Value of available for sale securities	$ 38,246	$ 60,868

Securities - Contractual Maturities (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Contractual Maturities, Amortized Cost
Within one year	$ 149,649	$ 179,323
After one through five years	98,685	72,470
After five through ten years	2,120	7,087
After ten years	7,957	11,956
Amortized Costs, Gross	258,411	270,836
Amortized Costs, Net	296,503	331,529
Contractual Maturities, Fair Value
Within one year	149,318	178,581
After one through five years	98,643	72,282
After five through ten years	2,210	7,203
After ten years	8,252	12,137
Fair Value, Gross	258,423	270,203
Fair Value, Net	296,669	331,071
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	183,355	240,155
Mortgage-backed - Government-sponsored entity (GSE) - residential
Contractual Maturities, Amortized Cost
Amortized Costs, Mortgage-backed - Government-sponsored entity (GSE) - residential	38,092	60,693
Amortized Costs, Net	38,092	60,693
Contractual Maturities, Fair Value
Fair Value, Mortgage-backed - Government-sponsored entity (GSE) - residential	38,246	60,868
Fair Value, Net	38,246	60,868
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	$ 914	$ 15,543

Securities - Sale of securities (Details)	3 Months Ended
Securities - Sale of securities (Details)	Mar. 31, 2019 USD ($)
Securities
Proceeds from the sale of available-for-sale securities	$ 31,086,000
Net gain on sale of securities available for sale	127,000
Gains on sale of securities available for sale	361,000
Losses on sale of securities available for sale	$ 234,000

Securities - Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months	$ 914	$ 47,880
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, 12 Months or Longer	182,441	192,275
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value, Total	183,355	240,155
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months	1	202
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, 12 Months or Longer	428	880
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total	429	1,082
Treasury notes
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months		1,990
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, 12 Months or Longer	2,243	995
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value, Total	2,243	2,985
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months		8
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, 12 Months or Longer	5	5
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total	5	13
Federal agencies
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months		28,296
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, 12 Months or Longer	180,198	191,280
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value, Total	180,198	219,576
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months		97
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, 12 Months or Longer	423	875
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total	423	972
Municipals
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months		2,051
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value, Total		2,051
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months		18
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total		18
Mortgage-backed - Government-sponsored entity (GSE) - residential
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months	914	15,543
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value, Total	914	15,543
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months	1	79
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total	$ 1	$ 79

Loans and Allowance for Loan Losses - Summary of Loans By Classification (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018	Mar. 31, 2018	Dec. 31, 2017
Loans and Allowance for Loan Losses
Loans	$ 2,181,612	$ 2,058,127
Allowance for loan losses	13,356	12,704	$ 9,705	$ 8,311
Loans and Leases Receivable, Net Amount, Total	2,168,256	2,045,423
Mortgage warehouse lines of credit
Loans and Allowance for Loan Losses
Loans	412,171	337,332
Allowance for loan losses	1,254	1,068	506	283
Residential real estate
Loans and Allowance for Loan Losses
Loans	409,172	410,871
Allowance for loan losses	1,990	1,986	1,664	1,587
Multi-family and healthcare financing
Loans and Allowance for Loan Losses
Loans	965,363	914,393
Allowance for loan losses	6,377	6,030	4,250	3,502
Commercial and commercial real estate
Loans and Allowance for Loan Losses
Loans	296,483	299,194
Allowance for loan losses	3,122	3,051	2,685	2,362
Agricultural production and real estate
Loans and Allowance for Loan Losses
Loans	81,063	79,255
Allowance for loan losses	466	429	333	320
Consumer and margin loans
Loans and Allowance for Loan Losses
Loans	17,360	17,082
Allowance for loan losses	$ 147	$ 140	$ 267	$ 257

Loans and Allowance for Loan Losses - Allowance For Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Allowance for loan losses
Balance, beginning of period	$ 12,704	$ 8,311
Provision (credit) for loan losses	649	1,406
Loans charged to the allowance		(17)
Recoveries of loans previously charged off	3	5
Balance, end of period	13,356	9,705
Ending balance: individually evaluated for impairment	745		$ 645
Ending balance: collectively evaluated for impairment	12,611		12,059
Loans
Ending balance	2,181,612		2,058,127
Ending balance individually evaluated for impairment	13,410		11,185
Ending balance: collectively evaluated for impairment	2,168,202		2,046,942
Mortgage warehouse lines of credit
Allowance for loan losses
Balance, beginning of period	1,068	283
Provision (credit) for loan losses	186	223
Balance, end of period	1,254	506
Ending balance: individually evaluated for impairment	225		225
Ending balance: collectively evaluated for impairment	1,029		843
Loans
Ending balance	412,171		337,332
Ending balance individually evaluated for impairment	572		575
Ending balance: collectively evaluated for impairment	411,599		336,757
Residential real estate
Allowance for loan losses
Balance, beginning of period	1,986	1,587
Provision (credit) for loan losses	4	76
Recoveries of loans previously charged off		1
Balance, end of period	1,990	1,664
Ending balance: collectively evaluated for impairment	1,990		1,986
Loans
Ending balance	409,172		410,871
Ending balance individually evaluated for impairment	4,255		1,606
Ending balance: collectively evaluated for impairment	404,917		409,265
Multi-family and healthcare financing
Allowance for loan losses
Balance, beginning of period	6,030	3,502
Provision (credit) for loan losses	347	748
Balance, end of period	6,377	4,250
Ending balance: collectively evaluated for impairment	6,377		6,030
Loans
Ending balance	965,363		914,393
Ending balance: collectively evaluated for impairment	965,363		914,393
Commercial and commercial real estate
Allowance for loan losses
Balance, beginning of period	3,051	2,362
Provision (credit) for loan losses	71	323
Balance, end of period	3,122	2,685
Ending balance: individually evaluated for impairment	500		400
Ending balance: collectively evaluated for impairment	2,622		2,651
Loans
Ending balance	296,483		299,194
Ending balance individually evaluated for impairment	8,186		8,576
Ending balance: collectively evaluated for impairment	288,297		290,618
Agricultural production and real estate
Allowance for loan losses
Balance, beginning of period	429	320
Provision (credit) for loan losses	34	13
Recoveries of loans previously charged off	3
Balance, end of period	466	333
Ending balance: individually evaluated for impairment	20		20
Ending balance: collectively evaluated for impairment	446		409
Loans
Ending balance	81,063		79,255
Ending balance individually evaluated for impairment	347		370
Ending balance: collectively evaluated for impairment	80,716		78,885
Consumer and margin loans
Allowance for loan losses
Balance, beginning of period	140	257
Provision (credit) for loan losses	7	23
Loans charged to the allowance		(17)
Recoveries of loans previously charged off		4
Balance, end of period	147	$ 267
Ending balance: collectively evaluated for impairment	147		140
Loans
Ending balance	17,360		17,082
Ending balance individually evaluated for impairment	50		58
Ending balance: collectively evaluated for impairment	$ 17,310		$ 17,024

Loans and Allowance for Loan Losses - Credit Risk Profile of Loan Portfolio (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Credit risk profile of portfolio
Loans	$ 2,181,612	$ 2,058,127
Special Mention (Watch)
Credit risk profile of portfolio
Loans	73,175	90,604
Substandard
Credit risk profile of portfolio
Loans	13,410	11,185
Acceptable and Above
Credit risk profile of portfolio
Loans	2,095,027	1,956,338
Mortgage warehouse lines of credit
Credit risk profile of portfolio
Loans	412,171	337,332
Mortgage warehouse lines of credit \| Substandard
Credit risk profile of portfolio
Loans	572	575
Mortgage warehouse lines of credit \| Acceptable and Above
Credit risk profile of portfolio
Loans	411,599	336,757
Residential real estate
Credit risk profile of portfolio
Loans	409,172	410,871
Residential real estate \| Special Mention (Watch)
Credit risk profile of portfolio
Loans	590	443
Residential real estate \| Substandard
Credit risk profile of portfolio
Loans	4,255	1,606
Residential real estate \| Acceptable and Above
Credit risk profile of portfolio
Loans	404,327	408,822
Multi-family and healthcare financing
Credit risk profile of portfolio
Loans	965,363	914,393
Multi-family and healthcare financing \| Special Mention (Watch)
Credit risk profile of portfolio
Loans	56,962	71,734
Multi-family and healthcare financing \| Acceptable and Above
Credit risk profile of portfolio
Loans	908,401	842,659
Commercial and commercial real estate
Credit risk profile of portfolio
Loans	296,483	299,194
Commercial and commercial real estate \| Special Mention (Watch)
Credit risk profile of portfolio
Loans	12,451	14,650
Commercial and commercial real estate \| Substandard
Credit risk profile of portfolio
Loans	8,186	8,576
Commercial and commercial real estate \| Acceptable and Above
Credit risk profile of portfolio
Loans	275,846	275,968
Agricultural production and real estate
Credit risk profile of portfolio
Loans	81,063	79,255
Agricultural production and real estate \| Special Mention (Watch)
Credit risk profile of portfolio
Loans	2,791	3,096
Agricultural production and real estate \| Substandard
Credit risk profile of portfolio
Loans	347	370
Agricultural production and real estate \| Acceptable and Above
Credit risk profile of portfolio
Loans	77,925	75,789
Consumer and margin loans
Credit risk profile of portfolio
Loans	17,360	17,082
Consumer and margin loans \| Special Mention (Watch)
Credit risk profile of portfolio
Loans	381	681
Consumer and margin loans \| Substandard
Credit risk profile of portfolio
Loans	50	58
Consumer and margin loans \| Acceptable and Above
Credit risk profile of portfolio
Loans	$ 16,929	$ 16,343

Loans and Allowance for Loan Losses - Aging Analysis Of The Recorded Investment In Loans (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Aging analysis of loan portfolio
Past due loans	$ 6,326	$ 3,217
Current loans	2,175,286	2,054,910
Loans and Leases Receivable, Net of Deferred Income, Total	2,181,612	2,058,127
30-59 Days Past Due
Aging analysis of loan portfolio
Past due loans	3,688	917
60-89 Days Past Due
Aging analysis of loan portfolio
Past due loans	543	282
Greater Than 90 Days
Aging analysis of loan portfolio
Past due loans	2,095	2,018
Mortgage warehouse lines of credit
Aging analysis of loan portfolio
Past due loans	324	324
Current loans	411,847	337,008
Loans and Leases Receivable, Net of Deferred Income, Total	412,171	337,332
Mortgage warehouse lines of credit \| Greater Than 90 Days
Aging analysis of loan portfolio
Past due loans	324	324
Residential real estate
Aging analysis of loan portfolio
Past due loans	4,666	1,582
Current loans	404,506	409,289
Loans and Leases Receivable, Net of Deferred Income, Total	409,172	410,871
Residential real estate \| 30-59 Days Past Due
Aging analysis of loan portfolio
Past due loans	3,431	579
Residential real estate \| 60-89 Days Past Due
Aging analysis of loan portfolio
Past due loans	237	178
Residential real estate \| Greater Than 90 Days
Aging analysis of loan portfolio
Past due loans	998	825
Multi-family and healthcare financing
Aging analysis of loan portfolio
Current loans	965,363	914,393
Loans and Leases Receivable, Net of Deferred Income, Total	965,363	914,393
Commercial and commercial real estate
Aging analysis of loan portfolio
Past due loans	672	550
Current loans	295,811	298,644
Loans and Leases Receivable, Net of Deferred Income, Total	296,483	299,194
Commercial and commercial real estate \| 30-59 Days Past Due
Aging analysis of loan portfolio
Past due loans	191	245
Commercial and commercial real estate \| 60-89 Days Past Due
Aging analysis of loan portfolio
Past due loans	306	52
Commercial and commercial real estate \| Greater Than 90 Days
Aging analysis of loan portfolio
Past due loans	175	253
Agricultural production and real estate
Aging analysis of loan portfolio
Past due loans	630	679
Current loans	80,433	78,576
Loans and Leases Receivable, Net of Deferred Income, Total	81,063	79,255
Agricultural production and real estate \| 30-59 Days Past Due
Aging analysis of loan portfolio
Past due loans	53	91
Agricultural production and real estate \| Greater Than 90 Days
Aging analysis of loan portfolio
Past due loans	577	588
Consumer and margin loans
Aging analysis of loan portfolio
Past due loans	34	82
Current loans	17,326	17,000
Loans and Leases Receivable, Net of Deferred Income, Total	17,360	17,082
Consumer and margin loans \| 30-59 Days Past Due
Aging analysis of loan portfolio
Past due loans	13	2
Consumer and margin loans \| 60-89 Days Past Due
Aging analysis of loan portfolio
Past due loans		52
Consumer and margin loans \| Greater Than 90 Days
Aging analysis of loan portfolio
Past due loans	$ 21	$ 28

Loans and Allowance for Loan Losses - Impaired Loans and Specific Valuation Allowance (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Impaired loans without a specific allowance:
Recorded investment	$ 10,548	$ 7,639
Unpaid principal balance	10,548	7,639
Impaired loans with a specific allowance:
Recorded investment	2,862	3,546
Unpaid principal balance	2,862	3,546
Specific allowance	745	645
Total impaired loans:
Recorded investments	13,410	11,185
Unpaid principal balance	13,410	11,185
Specific allowance	745	645
Mortgage warehouse lines of credit
Impaired loans without a specific allowance:
Recorded investment	248	251
Unpaid principal balance	248	251
Impaired loans with a specific allowance:
Recorded investment	324	324
Unpaid principal balance	324	324
Specific allowance	225	225
Total impaired loans:
Recorded investments	572	575
Unpaid principal balance	572	575
Specific allowance	225	225
Residential real estate
Impaired loans without a specific allowance:
Recorded investment	4,255	1,606
Unpaid principal balance	4,255	1,606
Total impaired loans:
Recorded investments	4,255	1,606
Unpaid principal balance	4,255	1,606
Commercial and commercial real estate
Impaired loans without a specific allowance:
Recorded investment	5,907	5,636
Unpaid principal balance	5,907	5,636
Impaired loans with a specific allowance:
Recorded investment	2,279	2,940
Unpaid principal balance	2,279	2,940
Specific allowance	500	400
Total impaired loans:
Recorded investments	8,186	8,576
Unpaid principal balance	8,186	8,576
Specific allowance	500	400
Agricultural production and real estate
Impaired loans without a specific allowance:
Recorded investment	88	88
Unpaid principal balance	88	88
Impaired loans with a specific allowance:
Recorded investment	259	282
Unpaid principal balance	259	282
Specific allowance	20	20
Total impaired loans:
Recorded investments	347	370
Unpaid principal balance	347	370
Specific allowance	20	20
Consumer and margin loans
Impaired loans without a specific allowance:
Recorded investment	50	58
Unpaid principal balance	50	58
Total impaired loans:
Recorded investments	50	58
Unpaid principal balance	$ 50	$ 58

Loans and Allowance for Loan Losses - Average Recorded Investment and Interest Income Recognized (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Impaired Loans
Average recorded investment in impaired loans	$ 12,260	$ 9,566
Interest income recognized	155
Interest income recognized		71
Mortgage warehouse lines of credit
Impaired Loans
Average recorded investment in impaired loans	574	1,352
Interest income recognized		19
Residential real estate
Impaired Loans
Average recorded investment in impaired loans	2,806	729
Interest income recognized	15
Interest income recognized		3
Multi-family and healthcare financing
Impaired Loans
Average recorded investment in impaired loans		117
Interest income recognized		3
Commercial and commercial real estate
Impaired Loans
Average recorded investment in impaired loans	8,468	6,587
Interest income recognized	140
Interest income recognized		46
Agricultural production and real estate
Impaired Loans
Average recorded investment in impaired loans	364	635
Consumer and margin loans
Impaired Loans
Average recorded investment in impaired loans	$ 48	$ 146

Loans and Allowance for Loan Losses - Non Accrual Loans and Loans Past Due 90 Days Or More and Still Accruing (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Loan portfolio past due loans
Nonaccrual	$ 1,774	$ 1,904
Total Loans Greater than 90 Days & Accruing	779	507
Mortgage warehouse lines of credit
Loan portfolio past due loans
Nonaccrual	572	575
Residential real estate
Loan portfolio past due loans
Nonaccrual	702	893
Total Loans Greater than 90 Days & Accruing	454	74
Commercial and commercial real estate
Loan portfolio past due loans
Nonaccrual	228	136
Total Loans Greater than 90 Days & Accruing		117
Agricultural production and real estate
Loan portfolio past due loans
Nonaccrual	259	282
Total Loans Greater than 90 Days & Accruing	317	307
Consumer and margin loans
Loan portfolio past due loans
Nonaccrual	13	18
Total Loans Greater than 90 Days & Accruing	$ 8	$ 9

Loans and Allowance for Loan Losses - Troubled Debt and Modifications (Details) - item	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Troubled debt and modifications
Number of troubled debt restructuring	0	0
Number of loans restructured during the last twelve months that defaulted during the period	0	0
Residential real estate
Troubled debt and modifications
Number of loans in the process of foreclosure	0		0

Regulatory Matters (Details) - USD ($) $ in Thousands	3 Months Ended
Regulatory Matters (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Company
Total Capital (to risk-weighted assets)
Total Capital (to risk-weighted assets), Actual, Capital Amount	$ 453,361	$ 393,654
Total Capital (to risk weighted assets), Actual, Ratio (as a percent)	13.30%	12.30%
Total Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount	$ 272,136	$ 255,884
Total Capital (to risk weighted assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent)	8.00%	8.00%
Tier I Capital (to risk-weighted assets)
Tier I Capital, (to risk-weighted assets), Actual, Capital Amount	$ 440,007	$ 380,950
Tier I Capital (to risk weighted assets), Actual, Ratio (as a percent)	12.90%	11.90%
Tier I Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount	$ 204,102	$ 191,913
Tier I Capital (to risk weighted assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent)	6.00%	6.00%
Common Equity Tier I Capital 1 (to risk-weighted assets)
Common Equity Tier I Capital 1, Actual, Capital Amount	$ 350,157	$ 339,369
Common Equity Tier I Capital 1 (to risk weighted assets), Ratio (as a percent)	10.30%	10.60%
Common Equity Tier I Capital 1, Minimum Amount Required for Adequately Capitalized, Capital Amount	$ 153,077	$ 143,935
Common Equity Tier I Capital 1 (to risk weighted assets, Minimum Amount Required for Adequately Capitalized, Ratio (as a percent)	4.50%	4.50%
Tier 1 Capital (to average assets)
Tier 1 Capital, Actual, Capital Amount	$ 440,007	$ 380,950
Tier 1 Capital (to average assets), Actual, Ratio (as a percent)	12.00%	10.00%
Tier 1 Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount	$ 146,417	$ 152,081
Tier 1 Capital (to average assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent)	4.00%	4.00%
Federal Deposit Corporation And Federal Reserve Board \| Rules Effective January 1, 2015
Tier 1 Capital (to average assets)
Additional deductions and other adjustments to CET1 subsequent years (as a percent)	20.00%
Basel III Capital Rules related to CET1, period (in years)	4 years
Federal Deposit Corporation And Federal Reserve Board \| Rules Phased in beginning January 2016
Tier 1 Capital (to average assets)
New capital conservation buffer requirement beginning Ratio	0.625%
Basel III Capital Rules related to CET1, period (in years)	4 years
Additional capital conservation buffer requirement subsequent years Ratio	2.50%
Merchants Bank
Total Capital (to risk-weighted assets)
Total Capital (to risk-weighted assets), Actual, Capital Amount	$ 478,574	$ 412,386
Total Capital (to risk weighted assets), Actual, Ratio (as a percent)	14.60%	13.30%
Total Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount	$ 262,223	$ 248,290
Total Capital (to risk weighted assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent)	8.00%	8.00%
Total capital, Minimum Amount To Be Well Capitalized, Capital Amount	$ 327,778	$ 310,363
Total Capital (to risk weighted assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent)	10.00%	10.00%
Tier I Capital (to risk-weighted assets)
Tier I Capital, (to risk-weighted assets), Actual, Capital Amount	$ 465,636	$ 399,815
Tier I Capital (to risk weighted assets), Actual, Ratio (as a percent)	14.20%	12.90%
Tier I Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount	$ 196,667	$ 186,218
Tier I Capital (to risk weighted assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent)	6.00%	6.00%
Tier I Capital, Minimum Amount To Be Well Capitalized, Capital Amount	$ 262,223	$ 248,290
Tier I Capital (to risk weighted assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent)	8.00%	8.00%
Common Equity Tier I Capital 1 (to risk-weighted assets)
Common Equity Tier I Capital 1, Actual, Capital Amount	$ 465,636	$ 399,815
Common Equity Tier I Capital 1 (to risk weighted assets), Ratio (as a percent)	14.20%	12.90%
Common Equity Tier I Capital 1, Minimum Amount Required for Adequately Capitalized, Capital Amount	$ 147,500	$ 139,663
Common Equity Tier I Capital 1 (to risk weighted assets, Minimum Amount Required for Adequately Capitalized, Ratio (as a percent)	4.50%	4.50%
Common Equity Tier I Capital 1, Minimum Amount To Be Well Capitalized, Capital Amount	$ 213,056	$ 201,736
Common Equity Tier I Capital 1 (to risk weighted assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent)	6.50%	6.50%
Tier 1 Capital (to average assets)
Tier 1 Capital, Actual, Capital Amount	$ 465,636	$ 399,815
Tier 1 Capital (to average assets), Actual, Ratio (as a percent)	13.30%	11.00%
Tier 1 Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount	$ 140,344	$ 145,723
Tier 1 Capital (to average assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent)	4.00%	4.00%
Tier 1 Capital, Minimum Amount To Be Well Capitalized, Capital Amount	$ 175,430	$ 182,154
Tier 1 Capital (to average assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent)	5.00%	5.00%
FMBI
Total Capital (to risk-weighted assets)
Total Capital (to risk-weighted assets), Actual, Capital Amount	$ 19,384	$ 17,537
Total Capital (to risk weighted assets), Actual, Ratio (as a percent)	15.70%	18.60%
Total Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount	$ 9,876	$ 7,559
Total Capital (to risk weighted assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent)	8.00%	8.00%
Total capital, Minimum Amount To Be Well Capitalized, Capital Amount	$ 12,345	$ 9,448
Total Capital (to risk weighted assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent)	10.00%	10.00%
Tier I Capital (to risk-weighted assets)
Tier I Capital, (to risk-weighted assets), Actual, Capital Amount	$ 18,966	$ 17,404
Tier I Capital (to risk weighted assets), Actual, Ratio (as a percent)	15.40%	18.40%
Tier I Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount	$ 7,407	$ 5,669
Tier I Capital (to risk weighted assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent)	6.00%	6.00%
Tier I Capital, Minimum Amount To Be Well Capitalized, Capital Amount	$ 9,876	$ 7,559
Tier I Capital (to risk weighted assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent)	8.00%	8.00%
Common Equity Tier I Capital 1 (to risk-weighted assets)
Common Equity Tier I Capital 1, Actual, Capital Amount	$ 18,966	$ 17,404
Common Equity Tier I Capital 1 (to risk weighted assets), Ratio (as a percent)	15.40%	18.40%
Common Equity Tier I Capital 1, Minimum Amount Required for Adequately Capitalized, Capital Amount	$ 5,555	$ 4,252
Common Equity Tier I Capital 1 (to risk weighted assets, Minimum Amount Required for Adequately Capitalized, Ratio (as a percent)	4.50%	4.50%
Common Equity Tier I Capital 1, Minimum Amount To Be Well Capitalized, Capital Amount	$ 8,025	$ 6,141
Common Equity Tier I Capital 1 (to risk weighted assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent)	6.50%	6.50%
Tier 1 Capital (to average assets)
Tier 1 Capital, Actual, Capital Amount	$ 18,966	$ 17,404
Tier 1 Capital (to average assets), Actual, Ratio (as a percent)	11.90%	10.80%
Tier 1 Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount	$ 6,384	$ 6,453
Tier 1 Capital (to average assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent)	4.00%	4.00%
Tier 1 Capital, Minimum Amount To Be Well Capitalized, Capital Amount	$ 7,980	$ 8,066
Tier 1 Capital (to average assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent)	5.00%	5.00%

Derivative Financial Instruments (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
The periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income
Net derivative gains (losses)	$ (5)	$ 219
Derivative assets
Derivative Financial Instruments
Derivative assets, fair value	71		$ 70
Derivative liabilities
Derivative Financial Instruments
Derivative liabilities, fair value	19		9
Interest Rate Lock Commitments
Derivative Financial Instruments
Notional amount	9,706		8,812
The periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income
Net derivative gains (losses)		114
Interest Rate Lock Commitments \| Derivative assets
Derivative Financial Instruments
Derivative assets, fair value	71		70
Interest Rate Lock Commitments \| Derivative liabilities
Derivative Financial Instruments
Derivative liabilities, fair value	1
Forward Contracts
Derivative Financial Instruments
Notional amount	15,260		19,640
The periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income
Net derivative gains (losses)	(5)	$ 105
Forward Contracts \| Derivative liabilities
Derivative Financial Instruments
Derivative liabilities, fair value	$ 18		$ 9

Disclosures about Fair Value of Assets and Liabilities - Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Disclosures about Fair Value of Assets and Liabilities
Trading securities	$ 129,914	$ 163,419
Available for sale securities	296,669	331,071
Loans held for sale	6,307	11,886
Mortgage servicing rights	76,249	77,844
Recurring
Disclosures about Fair Value of Assets and Liabilities
Trading securities	129,914	163,419
Loans held for sale	6,307	11,886
Mortgage servicing rights	76,249	77,844
Recurring \| Interest Rate Lock Commitments
Disclosures about Fair Value of Assets and Liabilities
Derivative assets	71	70
Derivative liabilities	1
Recurring \| Forward Contracts
Disclosures about Fair Value of Assets and Liabilities
Derivative liabilities	18	9
Level 2 \| Recurring
Disclosures about Fair Value of Assets and Liabilities
Trading securities	129,914	163,419
Loans held for sale	6,307	11,886
Level 2 \| Recurring \| Forward Contracts
Disclosures about Fair Value of Assets and Liabilities
Derivative liabilities	18	9
Level 3 \| Interest Rate Lock Commitments
Disclosures about Fair Value of Assets and Liabilities
Derivative assets	71	70
Derivative liabilities	1
Level 3 \| Recurring
Disclosures about Fair Value of Assets and Liabilities
Mortgage servicing rights	76,249	77,844
Level 3 \| Recurring \| Interest Rate Lock Commitments
Disclosures about Fair Value of Assets and Liabilities
Derivative assets	71	70
Derivative liabilities	1
Treasury notes \| Recurring
Disclosures about Fair Value of Assets and Liabilities
Available for sale securities	10,743	11,941
Treasury notes \| Level 1 \| Recurring
Disclosures about Fair Value of Assets and Liabilities
Available for sale securities	10,743	11,941
Federal agencies
Disclosures about Fair Value of Assets and Liabilities
Available for sale securities	235,200	236,930
Federal agencies \| Recurring
Disclosures about Fair Value of Assets and Liabilities
Available for sale securities	235,200	236,930
Federal agencies \| Level 2 \| Recurring
Disclosures about Fair Value of Assets and Liabilities
Available for sale securities	235,200	236,930
Municipals \| Recurring
Disclosures about Fair Value of Assets and Liabilities
Available for sale securities	12,480	21,332
Municipals \| Level 2 \| Recurring
Disclosures about Fair Value of Assets and Liabilities
Available for sale securities	12,480	21,332
Mortgage-backed - Government-sponsored entity (GSE) - residential
Disclosures about Fair Value of Assets and Liabilities
Available for sale securities	38,246	60,868
Mortgage-backed - Government-sponsored entity (GSE) - residential \| Recurring
Disclosures about Fair Value of Assets and Liabilities
Available for sale securities	38,246	60,868
Mortgage-backed - Government-sponsored entity (GSE) - residential \| Level 2 \| Recurring
Disclosures about Fair Value of Assets and Liabilities
Available for sale securities	$ 38,246	$ 60,868

Disclosures about Fair Value of Assets and Liabilities - Reconciliation of Unobservable Inputs (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Derivative liabilities \| Interest Rate Lock Commitments
Subtractions
Changes in fair value	$ 1	$ 2
Balance, end of period	1	2
Mortgage servicing rights
Reconciliation of significant unobservable inputs, assets:
Balance, beginning of period	77,844	66,079
Additions
Originated and purchased servicing	1,020	3,452
Subtractions
Paydown	(1,110)	(1,370)
Changes in fair value due to changes in valuation inputs or assumptions used in the valuation model	(1,505)	(893)
Balance, end of period	76,249	67,268
Available-for-sale Securities \| Municipals
Reconciliation of significant unobservable inputs, assets:
Balance, beginning of period		6,688
Subtractions
Paydown		(258)
Balance, end of period		6,430
Derivative assets \| Interest Rate Lock Commitments
Reconciliation of significant unobservable inputs, assets:
Balance, beginning of period	70
Subtractions
Changes in fair value	1	116
Balance, end of period	$ 71	$ 116

Disclosures about Fair Value of Assets and Liabilities - Assets and Liabilities Measured at Fair Value on Nonrecurring Basis (Details) - Nonrecurring - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Disclosures about Fair Value of Assets and Liabilities
Impaired loans (collateral dependent)	$ 1,600	$ 2,639
Level 3
Disclosures about Fair Value of Assets and Liabilities
Impaired loans (collateral dependent)	$ 1,600	$ 2,639

Disclosures about Fair Value of Assets and Liabilities - Quantitative Information about Unobservable Inputs (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Quantitative information about unobservable inputs
Mortgage servicing rights	$ 76,249	$ 77,844
Mortgage servicing rights \| Level 3
Quantitative information about unobservable inputs
Mortgage servicing rights	$ 76,249	$ 77,844
Mortgage servicing rights \| Level 3 \| Minimum
Quantitative information about unobservable inputs
Discount rate (as a percent)	8.00%	8.00%
Constant prepayment rate (as a percent)	1.00%	1.00%
Mortgage servicing rights \| Level 3 \| Maximum
Quantitative information about unobservable inputs
Discount rate (as a percent)	13.00%	13.00%
Constant prepayment rate (as a percent)	30.00%	30.00%
Collateral-dependent impaired loans \| Level 3
Quantitative information about unobservable inputs
Collateral-dependent impaired loans	$ 1,600	$ 2,639
Marketability discount (as a percent)	32.00%
Collateral-dependent impaired loans \| Level 3 \| Minimum
Quantitative information about unobservable inputs
Marketability discount (as a percent)		17.00%
Collateral-dependent impaired loans \| Level 3 \| Maximum
Quantitative information about unobservable inputs
Marketability discount (as a percent)		59.00%
Interest Rate Lock Commitments \| Level 3
Quantitative information about unobservable inputs
Derivative assets	$ 71	$ 70
Derivative liabilities	$ 1
Interest Rate Lock Commitments \| Measurement Input, Maturity \| Level 3 \| Minimum
Quantitative information about unobservable inputs
Loan closing rates (as a percent)	63.00%	95.00%
Loan closing rates (as a percent)	63.00%
Interest Rate Lock Commitments \| Measurement Input, Maturity \| Level 3 \| Maximum
Quantitative information about unobservable inputs
Loan closing rates (as a percent)	99.00%	100.00%
Loan closing rates (as a percent)	99.00%

Disclosures about Fair Value of Assets and Liabilities - Carrying Value and Estimated Fair Value (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Financial assets:
Loans held for sale	$ 6,307	$ 11,886
Carrying Value
Financial assets:
Cash and cash equivalents	313,451	336,524
Securities purchased under agreements to resell	6,838	6,875
FHLB stock	18,880	7,974
Loans held for sale	875,764	820,569
Loans, net	2,168,256	2,045,423
Interest receivable	14,365	13,827
Financial liabilities:
Deposits	3,121,027	3,231,086
Lines of credit	31,605	33,150
Short-term subordinated debt	13,486	10,582
FHLB advances	292,940	151,721
Interest payable	4,930	4,132
Fair Value
Financial assets:
Cash and cash equivalents	313,451	336,524
Securities purchased under agreements to resell	6,838	6,875
FHLB stock	18,880	7,974
Loans held for sale	875,764	820,569
Loans, net	2,170,521	2,041,772
Interest receivable	14,365	13,827
Financial liabilities:
Deposits	3,120,546	3,230,397
Lines of credit	31,605	33,150
Short-term subordinated debt	13,486	10,582
FHLB advances	292,823	151,723
Interest payable	4,930	4,132
Level 1 \| Fair Value
Financial assets:
Cash and cash equivalents	313,451	336,524
Financial liabilities:
Deposits	2,438,323	2,550,632
Level 2 \| Fair Value
Financial assets:
Securities purchased under agreements to resell	6,838	6,875
FHLB stock	18,880	7,974
Loans held for sale	875,764	820,569
Interest receivable	14,365	13,827
Financial liabilities:
Deposits	682,223	679,765
Lines of credit	31,605	33,150
Short-term subordinated debt	13,486	10,582
FHLB advances	292,823	151,723
Interest payable	4,930	4,132
Level 3 \| Fair Value
Financial assets:
Loans, net	$ 2,170,521	$ 2,041,772

Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Net Income
Net income	$ 10,570	$ 15,061
Dividends on preferred stock	(833)	(833)
Net Income Allocated to Common Shareholders	$ 9,737	$ 14,228
Weighted-Average Shares
Weighted average shares - Basic	28,702,250	28,690,876
Effect of dilutive securities-restricted stock awards	35,189	19,604
Weighted average shares - diluted	28,737,439	28,710,480
Per Share Amount
Basic earnings per share	$ 0.34	$ 0.50
Diluted earnings per share	$ 0.34	$ 0.50

Share-Based Payment Plans (Details) - USD ($)	3 Months Ended		12 Months Ended
Share-Based Payment Plans (Details) - USD ($)	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Non executive directors
Plan disclosures
Shares issued	0	0
Value of shares available for issuance for compensation related to annual fees			$ 10,000
2016 Plan \| Restricted stock
Plan disclosures
Shares issued	10,127	7,039
2017 Plan \| Restricted stock
Plan disclosures
Shares issued	0

Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended
Segment Information (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Segment Information
Total interest income	$ 39,674	$ 29,038
Total interest expense	15,543	8,930
Net interest income	24,131	20,108
Provision for loan losses	649	1,406
Net Interest Income After Provision for Loan Losses	23,482	18,702
Total noninterest income	3,664	11,313
Total noninterest expense	13,035	10,270
Income Before Income Taxes	14,111	19,745
Income taxes	3,541	4,684
Net Income	10,570	15,061
Total assets	3,976,725	3,675,849	$ 3,884,163
Other
Segment Information
Total interest income	471	265
Total interest expense	(968)	(460)
Net interest income	1,439	725
Net Interest Income After Provision for Loan Losses	1,439	725
Total noninterest income	(663)	(336)
Total noninterest expense	2,602	1,983
Income Before Income Taxes	(1,826)	(1,594)
Income taxes	(507)	(561)
Net Income	(1,319)	(1,033)
Total assets	37,993	21,739
Multifamily \| Operating Segments
Segment Information
Total interest income	331	163
Net interest income	331	163
Net Interest Income After Provision for Loan Losses	331	163
Total noninterest income	2,691	10,511
Total noninterest expense	3,977	3,382
Income Before Income Taxes	(955)	7,292
Income taxes	(243)	1,808
Net Income	(712)	5,484
Total assets	160,609	141,703
Mortgage Warehousing \| Operating Segments
Segment Information
Total interest income	14,380	11,857
Total interest expense	7,529	3,797
Net interest income	6,851	8,060
Provision for loan losses	133	674
Net Interest Income After Provision for Loan Losses	6,718	7,386
Total noninterest income	753	486
Total noninterest expense	2,336	1,736
Income Before Income Taxes	5,135	6,136
Income taxes	1,303	1,506
Net Income	3,832	4,630
Total assets	1,554,233	1,603,584
Banking \| Operating Segments
Segment Information
Total interest income	24,492	16,753
Total interest expense	8,982	5,593
Net interest income	15,510	11,160
Provision for loan losses	516	732
Net Interest Income After Provision for Loan Losses	14,994	10,428
Total noninterest income	883	652
Total noninterest expense	4,120	3,169
Income Before Income Taxes	11,757	7,911
Income taxes	2,988	1,931
Net Income	8,769	5,980
Total assets	$ 2,223,890	$ 1,908,823