Related Party Transactions	12 Months Ended
Dec. 31, 2022
Related Party Transactions
Related Party Transactions	Note 20: Related Party Transactions The Company has entered into transactions with certain directors, executive officers, and their affiliates or associates (related parties). Such transactions were made in the ordinary course of business on substantially the same terms and conditions, including interest rates and collateral, as those prevailing at the same time for comparable transactions with other customers, and did not, in the opinion of management, involve more than normal credit risk or present other unfavorable features. The Company held a 44.23% ownership in one of its key loan processing vendors in 2019. On November 9, 2020, Merchants Bancorp exchanged its 44.23% investment in this company for Merchants common shares currently held by the company, plus cash. The shares were then constructively retired by Merchants. This company had owned 15,000 shares of common stock (with no par value) that were issued with a basis of $10 per share, totaling $150,000. The investment was accounted for using the equity method of accounting. Fees paid to this company during the year ended December 31, 2020 were $2.7 million. The Company holds a 30% ownership in a limited liability company (“the LLC”) that provides capital to the senior housing and healthcare sectors. The investment is accounted for using the equity method of accounting. During the years ended December 31, 2022, 2021 and 2020, the Company received $24.8 million, $17.8 million and $6.5 million, respectively, of origination fees paid by borrowers to the Company for loans referred by the LLC. The LLC paid $17.1 million, $14.5 million and $4.5 million of those fees to the Company when the loans were closed during the years ended December 31, 2022, 2021 and 2020, respectively. During the years ended December 31, 2022, 2021 and 2020, the Company also received servicing income of $417,000, $69,000 and $8,000, respectively, of which the Company paid $209,000, $34,000 and $4,000 to the LLC as fees. The Company recorded income of $4.1 million, $1.4 million and $0.4 million at December 31, 2022, 2021 and 2020, respectively, of which $3.8 million, $0.4 million and $0 was paid to the LLC for the years ended December 31, 2022, 2021 and 2020, respectively. Additionally, the Company paid a portion of its interest received to the LLC for certain loans of $6.7 million, $4.5 million, and $1.2 million for the years ended December 31, 2022, 2021 and 2020, respectively. The Company retained a law firm of which a Board member of Merchants Bank is a partner. Services rendered are primarily related to documentation of current loan originations, and loan collections from Merchants Bank’s borrowers. Fees paid to the law firm, both directly and indirectly, totaled $9.4 million, $6.6 million, and $5.3 million for the years ended December 31, 2022, 2021 and 2020 respectively. The Company purchased technology equipment and services for its new corporate headquarters building from a company previously owned until 2020 by a Board member of Merchants Bancorp. Fees paid directly and indirectly to this company totaled $13,000 for the year ended December 31, 2020. In 2020 the Company launched a low-income housing tax credit syndication business through one of its subsidiaries and serves as a general partner. This business is generally funded through capital investments from external investors and in some cases by the Bank, in the form of limited partnership interests and bridge loans. The Bank also serves as a warehouse to acquire certain low-income housing tax credit projects until they are sold into the syndicated funds. Due to the short time between purchase and sale, no gain or loss was recognized on the sales during 2022, 2021 or 2020. For the years ended December 31, 2022, 2021 and 2020, the Company received $8.8 million, $6.4 million and $1.2 million in fees to syndicate these funds. At December 31, 2022, 2021 and 2020, the Company also had loans outstanding, net of participations sold, to the syndicated funds of $49.0 million, $18.6 million and $4.7 million, respectively. The Company recorded $1.2 million, $189,000 and $20,000 in interest income for loans to the syndicated funds for the years ended December 31, 2022, 2021 and 2020, respectively. In addition, the Company received financing fees of $1.1 million, $1.4 million and $65,000 during 2022, 2021 and 2020, respectively. These financing fees, net of costs to originate are deferred as recognized in income over the life of the loan. The Company has invested in single-family and multi-family debt financing entities (debt funds) through its subsidiaries. This business is funded through capital investments from external investors and by the Company, in the form of limited partnership interests. During 2020, one of the debt funds was wholly owned by the Company. During 2021, this debt fund was deconsolidated see Note 1: Nature of Operations and Summary of Significant Accounting Policies. The Company also serves as a warehouse to acquire certain loans until they are sold into the debt funds. These loans were sold into the debt funds shortly after closing; therefore, the Company did not recognize any gain or loss on the sales. The Company recorded income of $4.5 million and $0.7 million at December 31, 2022 and 2021, respectively, of which $512,000 and $0 was distributed to the company for the years ended December 31, 2022 and 2021, respectively. At December 31, 2022 and 2021, respectively, the Company also had loans outstanding, net of participations sold, to the debt funds of $35.7 million and $20.7 million. The Company recorded $50,000 and $456,000 in interest income for loans to the debt funds for the years ended December 31, 2022 and 2021, respectively. The Company sold loans to the debt funds totaling $884.2 million and $273.9 million for the years ended December 31, 2022 and 2021, respectively. No gains or losses were recognized. Additionally, the Company purchased a security held to maturity with a carrying value of $248.4 million for the year ended December 31, 2022 as part of a securitization completed by one of these debt funds.

Related Party Transactions

12 Months Ended

Dec. 31, 2022

Note 20: Related Party Transactions

The Company has entered into transactions with certain directors, executive officers, and their affiliates or associates (related parties). Such transactions were made in the ordinary course of business on substantially the same terms and conditions, including interest rates and collateral, as those prevailing at the same time for comparable transactions with other customers, and did not, in the opinion of management, involve more than normal credit risk or present other unfavorable features.

The Company held a 44.23% ownership in one of its key loan processing vendors in 2019. On November 9, 2020, Merchants Bancorp exchanged its 44.23% investment in this company for Merchants common shares currently held by the company, plus cash. The shares were then constructively retired by Merchants. This company had owned 15,000 shares of common stock (with no par value) that were issued with a basis of $10 per share, totaling $150,000. The investment was accounted for using the equity method of accounting. Fees paid to this company during the year ended December 31, 2020 were $2.7 million.

The Company holds a 30% ownership in a limited liability company (“the LLC”) that provides capital to the senior housing and healthcare sectors. The investment is accounted for using the equity method of accounting. During the years ended December 31, 2022, 2021 and 2020, the Company received $24.8 million, $17.8 million and $6.5 million, respectively, of origination fees paid by borrowers to the Company for loans referred by the LLC. The LLC paid $17.1 million, $14.5 million and $4.5 million of those fees to the Company when the loans were closed during the years ended December 31, 2022, 2021 and 2020, respectively. During the years ended December 31, 2022, 2021 and 2020, the Company also received servicing income of $417,000, $69,000 and $8,000, respectively, of which the Company paid

$209,000, $34,000 and $4,000 to the LLC as fees. The Company recorded income of $4.1 million, $1.4 million and $0.4 million at December 31, 2022, 2021 and 2020, respectively, of which $3.8 million, $0.4 million and $0 was paid to the LLC for the years ended December 31, 2022, 2021 and 2020, respectively. Additionally, the Company paid a portion of its interest received to the LLC for certain loans of $6.7 million, $4.5 million, and $1.2 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The Company retained a law firm of which a Board member of Merchants Bank is a partner. Services rendered are primarily related to documentation of current loan originations, and loan collections from Merchants Bank’s borrowers. Fees paid to the law firm, both directly and indirectly, totaled $9.4 million, $6.6 million, and $5.3 million for the years ended December 31, 2022, 2021 and 2020 respectively.

The Company purchased technology equipment and services for its new corporate headquarters building from a company previously owned until 2020 by a Board member of Merchants Bancorp. Fees paid directly and indirectly to this company totaled $13,000 for the year ended December 31, 2020.

In 2020 the Company launched a low-income housing tax credit syndication business through one of its subsidiaries and serves as a general partner. This business is generally funded through capital investments from external investors and in some cases by the Bank, in the form of limited partnership interests and bridge loans. The Bank also serves as a warehouse to acquire certain low-income housing tax credit projects until they are sold into the syndicated funds. Due to the short time between purchase and sale, no gain or loss was recognized on the sales during 2022, 2021 or 2020. For the years ended December 31, 2022, 2021 and 2020, the Company received $8.8 million, $6.4 million and $1.2 million in fees to syndicate these funds. At December 31, 2022, 2021 and 2020, the Company also had loans outstanding, net of participations sold, to the syndicated funds of $49.0 million, $18.6 million and $4.7 million, respectively. The Company recorded $1.2 million, $189,000 and $20,000 in interest income for loans to the syndicated funds for the years ended December 31, 2022, 2021 and 2020, respectively. In addition, the Company received financing fees of $1.1 million, $1.4 million and $65,000 during 2022, 2021 and 2020, respectively. These financing fees, net of costs to originate are deferred as recognized in income over the life of the loan.

The Company has invested in single-family and multi-family debt financing entities (debt funds) through its subsidiaries. This business is funded through capital investments from external investors and by the Company, in the form of limited partnership interests. During 2020, one of the debt funds was wholly owned by the Company. During 2021, this debt fund was deconsolidated see Note 1: Nature of Operations and Summary of Significant Accounting Policies. The Company also serves as a warehouse to acquire certain loans until they are sold into the debt funds. These loans were sold into the debt funds shortly after closing; therefore, the Company did not recognize any gain or loss on the sales. The Company recorded income of $4.5 million and $0.7 million at December 31, 2022 and 2021, respectively, of which $512,000 and $0 was distributed to the company for the years ended December 31, 2022 and 2021, respectively. At December 31, 2022 and 2021, respectively, the Company also had loans outstanding, net of participations sold, to the debt funds of $35.7 million and $20.7 million. The Company recorded $50,000 and $456,000 in interest income for loans to the debt funds for the years ended December 31, 2022 and 2021, respectively. The Company sold loans to the debt funds totaling $884.2 million and $273.9 million for the years ended December 31, 2022 and 2021, respectively. No gains or losses were recognized. Additionally, the Company purchased a security held to maturity with a carrying value of $248.4 million for the year ended December 31, 2022 as part of a securitization completed by one of these debt funds.