By Marisa Wong
Los Angeles, March 30 – Merchants Bank of Indiana, a wholly owned subsidiary of Merchants Bancorp, issued and sold on Thursday $158.14 million of senior credit-linked notes due May 26, 2028, according to an 8-K filing with the Securities and Exchange Commission.
The series 2023-1, class M-1 notes accrue interest at SOFR plus 1,550 basis points.
The repayment of principal on the notes is linked to a roughly $1.13 billion reference pool of loans originated under the bank’s health care commercial real estate lending program, but the notes are not secured by the loans.
The principal amount of the notes will be reduced by a portion of the bank’s loss on those loans if one of the following occurs with respect to a loan: the bank experiences a realized loss or an expected loss is determined for any delinquent loan at the stated maturity date or upon early redemption. However, such reduction will not occur until aggregate realized or expected losses reach more than 1% of the principal balance of the loans.
The bank has the right to redeem the notes in full upon the occurrence of certain regulatory events.
Bank and Computershare Trust Co., NA is the securities administrator.
Proceeds will be used for general corporate purposes.
The transaction will result in a reduction in the Carmel, Ind.-based bank’s risk-weighted assets and will benefit its regulatory capital ratios. The bank’s main motivation for completing this transaction was to support future growth of its balance sheet.
| Issuer: | Merchants Bank of Indiana
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| Amount: | $158.14 million
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| Issue: | Series 2023-1, class M-1 notes
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| Maturity: | May 26, 2028
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| Securities administrator: | Bank and Computershare Trust Co., NA
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| Coupon: | SOFR plus 1,550 bps
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| Settlement date: | March 30
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