8-K
Merchants Bancorp (MBIN)
United
States
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest eventreported): July 28, 2021
Merchants Bancorp
(Exact Name of Registrant as Specifiedin its Charter)
| Indiana | 001-38258 | 20-5747400 |
|---|---|---|
| (State or Other Jurisdiction<br><br> <br>of Incorporation) | (Commission<br><br> <br>File Number) | (IRS Employer<br><br> <br>Identification No.) |
410 Monon BoulevardCarmel, Indiana 46032
(Address of Principal Executive Offices) (Zip Code)
(317) 569-7420
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title<br> of each class | Trading<br> <br><br> Symbol(s) | Name<br> of each exchange on which registered |
|---|---|---|
| Common Stock, without par value | MBIN | NASDAQ |
| Series A Preferred Stock, without par value | MBINP | NASDAQ |
| Depositary Shares, each representing a 1/40th interest in a share of Series B Preferred Stock, without par value | MBINO | NASDAQ |
| Depositary Shares, each representing a 1/40th interest in a share of Series C Preferred Stock, without par value | MBINN | NASDAQ |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging growth company | x |
|---|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 2.02. Results of Operations and Financial Condition.
On July 28, 2021, Merchants Bancorp issued a press release reporting its financial results for the second quarter of 2021. The press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release dated July 28, 2021 issued by Merchants Bancorp. |
| 104 | Cover Page Interactive Data File. The cover page XBRL tags are embedded within the inline XBRL document. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MERCHANTS BANCORP | ||
|---|---|---|
| Date: July 28, 2021 | By: | /s/ John F. Macke |
| Name: John F. Macke | ||
| Title: Chief Financial Officer |
Exhibit 99.1
PRESS RELEASE
Merchants Bancorp Reports SecondQuarter 2021 Results
For Release July 28, 2021
| · | Second quarter 2021 net income of $51.4 million increased 25% compared to the second quarter of 2020 and decreased 17% compared to<br>the first quarter of 2021 |
|---|---|
| · | Second quarter 2021 diluted earnings per common share of $1.58 increased 21% compared to the second quarter of 2020 and decreased<br>22% compared to the first quarter of 2021 |
| --- | --- |
| · | Assets reached a record level of $9.9 billion, increasing 2% compared to March 31, 2021 and December 31, 2020. |
| --- | --- |
| · | Return on average assets was 2.14% in the second quarter of 2021 compared to 1.89% in the second quarter of 2020 and 2.49% in the<br>first quarter of 2021 |
| --- | --- |
| · | Credit quality remained strong, as nonperforming loans decreased to 0.05% of loans receivable compared to 0.08% at March 31, 2021<br>and 0.11% at December 31, 2020 |
| --- | --- |
| · | All of the outstanding shares of the Company’s 8% preferred stock were redeemed for $41.6 million and were replaced with a $46.2<br>million private offering of its 6% Series C preferred stock for those 8% preferred shareholders. |
| --- | --- |
CARMEL,Indiana – (PR Newswire) - Merchants Bancorp (the “Company” or “Merchants”) (Nasdaq: MBIN), parent company of Merchants Bank of Indiana, today reported second quarter 2021 net income of $51.4 million, or diluted earnings per common share of $1.58. This compared to $41.2 million, or diluted earnings per common share of $1.31 in the second quarter of 2020, and compared to $62.0 million, or diluted earnings per common share of $2.02 in the first quarter of 2021.
The $10.3 million, or 25%, increase in net income for the second quarter 2021 compared to the second quarter of 2020 was driven by a $13.2 million, or 26%, increase in net interest income that reflected a 57% decrease in the cost of deposits and a 7% increase in interest income from higher loan balances.
The $10.6 million, or 17%, decrease in net income for the second quarter 2021 compared to the first quarter of 2021 was primarily driven by a $7.6 million, or 10%, decrease in net interest income that reflected a 10% decrease in interest income on loans. The decrease in net income also reflected a $6.2 million decrease in loan servicing fees, which included a $6.2 million lower fair market value adjustment to mortgage servicing rights. The second quarter of 2021 benefited from a $0.7 million positive fair market value adjustment compared to $6.9 positive fair market value adjustment in the first quarter of 2021.
“Following the record-setting income reported in the first quarter, we continued to effectively manage our capital and resources to reach the highest asset levels achieved in Company history, with $9.9 billion in total assets at June 30, 2021. During the second quarter we also maintained one of the lowest efficiency ratios in the industry at 29.0%, had nonperforming loans at only .05% of loans receivable, and achieved tangible book value of $23.59 per share, which demonstrates our ongoing commitment to conservative underwriting, capital management and profitable growth,” said Michael F. Petrie, Chairman and CEO of Merchants.
Michael J. Dunlap, President and Chief Operating Officer of Merchants, added, “The entrepreneurial culture at Merchants has provided our team with the product diversity that is enabling our businesses to evolve and expand, regardless of the changing market dynamics.”
Total Assets
Total assets of $9.9 billion at June 30, 2021 increased $176.3 million, or 2%, compared to March 31, 2021, and increased $236.2 million, or 2%, compared to December 31, 2020.
The asset levels increased compared to both periods despite a $262.1 million multi-family loan sale to Freddie Mac in May of 2021, which was subsequently securitized. The Company also acquired $28.7 million of those securities.
Return on average assets was 2.14% for the second quarter of 2021 compared to 1.89% for the second quarter of 2020 and 2.49% for the first quarter of 2021.
Asset Quality
The allowance for loan losses of $28.7 million at June 30, 2021 decreased $0.4 million compared to March 31, 2021 and increased $1.2 million compared to December 31, 2020. The increase compared to December 31, 2020 was primarily based on growth in the multi-family loan portfolio. The portion of the allowance associated with the COVID-19 pandemic has remained relatively steady since September 30, 2020, at approximately $0.6 million. Because it is still too early to know the full extent of potential future losses associated with the impact of COVID-19, the Company continues to monitor the situation and may need to adjust future expectations as developments occur.
Merchants believes it has minimal direct exposure to consumer, commercial and other small businesses that may be negatively impacted by COVID-19 but continues to assist customers facing financial setbacks. As of June 30, 2021, the Company had only 4 loans remaining in payment deferral arrangements, with unpaid balances of $37.0 million.
Non-performing loans were $3.0 million, or 0.05%, of loans receivable at June 30, 2021, compared to $4.7 million, or 0.08% of loans receivable at March 31, 2021, and compared to $6.3 million, or 0.11% of loans receivable at December 31, 2020.
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Total Deposits
Total deposits of $8.0 billion at June 30, 2021 decreased $23.6 million compared to March 31, 2021, and increased $631.5 million, or 9%, compared to December 31, 2020. The increase compared to December 31, 2020 was primarily due to growth in savings accounts.
Total brokered deposits of $853.1 million at June 30, 2021 decreased $5.0 million, or 1%, from March 31, 2021 and decreased $320.6 million, or 27%, from December 31, 2020. Brokered deposits represented 11% of total deposits at June 30, 2021 compared to 11% of total deposits at March 31, 2021 and 16% of total deposits at December 31, 2020.
Liquidity
The Company continues to have significant borrowing capacity, with unused lines of credit at $3.3 billion at June 30, 2021 compared to $3.7 billion at March 31, 2021 and $2.6 billion at December 31, 2020. This liquidity enhances the ability to effectively manage interest expense and asset levels in the future. The Company began utilizing the Federal Reserve’s discount window and the Paycheck Protection Program Liquidity Facility (“PPPLF”) during 2020, which have contributed to lower interest expenses and increased borrowing capacity. Participation in the American Financial Exchange began during the first quarter of 2021 and is also contributing to lower interest expense and increased borrowing capacity.
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Net Interest Income
Net interest income of $64.4 million in the second quarter of 2021 increased $13.2 million, or 26%, compared to the second quarter of 2020 and decreased $7.6 million, or 10%, compared to the first quarter of 2021.
The 26% increase in net interest income compared to the second quarter of 2020 reflected a 57% decrease in the cost of deposits and a 7% increase in interest income from higher loan balances. The interest rate spread of 2.68% for the second quarter of 2021 increased 37 basis points compared to 2.31% in the second quarter of 2020. The net interest margin of 2.75% for the second quarter of 2021 increased 33 basis points compared to 2.42% for the second quarter of 2020. The increase in net interest margin compared to the second quarter of 2020 reflected lower funding costs and higher loan balances that outpaced lower interest rates on loans.
The 10% decrease in net interest income compared to the first quarter of 2021 reflected lower balances and lower rates on loans. The interest rate spread of 2.68% for the second quarter of 2021 decreased 25 basis points compared to 2.93% in the first quarter of 2021. The net interest margin of 2.75% for the second quarter of 2021 also decreased 24 basis points compared to 2.99% for the first quarter of 2021.
Interest Income
Interest income of $72.4 million in the second quarter of 2021 increased $4.2 million, or 6%, compared to the second quarter of 2020 and decreased $7.1 million, or 9%, compared to the first quarter of 2021.
The 6% increase in interest income compared to the second quarter of 2020 was primarily due to significant loan growth that was partially offset by lower rates. The higher interest income reflected a $969.4 million, or 14%, increase in the average balance of loans, including loans held for sale, which reached $7.9 billion for the second quarter of 2021. The average yield on loans and loans held for sale of 3.46% for the second quarter of 2021 decreased 25 basis points compared to 3.71% for the second quarter of 2020. The decline in average yields reflected higher loan volume and lower overall interest rates in the second quarter of 2021.
The 9% decrease in interest income compared to the first quarter of 2021 reflected a $473.5 million, or 6%, decrease in the average balance of loans, including loans held for sale, which reached $7.9 billion for the second quarter of 2021. The average yield on loans and loans held for sale of 3.46% for the second quarter of 2021 decreased 20 basis points compared to 3.66% for the first quarter of 2021.
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Interest Expense
Total interest expense decreased $8.9 million, or 53%, to $8.0 million for the second quarter of 2021 compared to the second quarter of 2020 and increased $0.4 million, or 6%, compared to the first quarter of 2021. Interest expense on deposits of $6.7 million for the second quarter of 2021 decreased $8.7 million, or 57%, compared to the second quarter of 2020 and increased $0.6 million, or 10%, compared to the first quarter of 2021.
The 57% decrease in interest expense on deposits compared to the second quarter of 2020 was primarily due to significant decreases in balances and rates of brokered certificates of deposits, as well as higher balances of custodial interest-bearing checking accounts with warehouse customers that are tied to short-term LIBOR rates, which declined significantly. The average balance of interest-bearing deposits of $7.4 billion for the second quarter of 2021 increased $390.1 million, or 6%, compared to the second quarter of 2020. The average yield of interest-bearing deposits was 0.36% for the second quarter of 2021, which was a 52 basis point decrease compared to 0.88% for the second quarter of 2020.
The 10% increase in interest expense on deposits compared to the first quarter of 2021 was primarily due to the higher balances and rates for money market accounts. The average balance of interest-bearing deposits of $7.4 billion for the second quarter of 2021 decreased $91.3 million, or 1%, compared to the first quarter of 2021. The average yield of interest-bearing deposits was 0.36% for the second quarter of 2021, which was a 3 basis point decrease compared to 0.33% in the first quarter of 2021.
Noninterest Income
Noninterest income of $32.9 million for the second quarter of 2021 increased $6.7 million, or 25%, compared to the second quarter of 2020 and decreased $11.1 million, or 25%, compared to the first quarter of 2021.
The 25% increase in noninterest income compared to the second quarter of 2020 was primarily due to a $8.0 million, or 47%, increase in gain on sale of loans reflecting higher volume of multi-family loans.
The 25% decrease in noninterest income compared to the first quarter of 2021 was primarily due to a $6.2 million decrease in loan servicing fees. Included in loan servicing fees for the second quarter of 2021 was a $0.7 million positive fair market value adjustment to mortgage servicing rights, which compared to a $6.9 million positive fair market value adjustment for the first quarter of 2021.
At June 30, 2021, the mortgage servicing rights asset was valued at $98.3 million, an increase of 35% compared to June 30, 2020 and an increase of 2% compared to March 31, 2021. These increases were driven by higher loan balances of mortgages serviced and higher interest rates that impacted fair market value adjustments in the second quarter of 2021. The value of mortgage servicing rights generally increases in rising interest rate environments and declines in falling interest rate environments.
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Noninterest Expense
Noninterest expense of $28.2 million for the second quarter of 2021 increased $7.9 million, or 39%, compared to the second quarter of 2020 and decreased $1.9 million, or 6%, compared to the first quarter of 2021.
The 39% increase in noninterest expense compared to the second quarter of 2020 was due primarily to a $7.0 million, or 60%, increase in salaries and employee benefits, including commissions, to support higher loan production volumes. The efficiency ratio of 29.0% for the second quarter of 2021 compared to 26.2% for the second quarter of 2020.
The 6% decrease in noninterest expense compared to the first quarter of 2021 was primarily due to a $2.4 million, or 11%, decrease in salaries and employee benefits that reflected lower commissions from lower loan volumes. The efficiency ratio of 29.0% for the second quarter of 2021 compared to 26.0% for the first quarter of 2021.
Segments
For the second quarter of 2021, net income of $11.0 million for Multi-familyMortgage Banking increased 200% compared with the second quarter of 2020, primarily due to higher noninterest income from gain on sale of loans. Noninterest income reflected a positive fair market value adjustment of $0.1 million on mortgage servicing rights in the second quarter of 2021 compared to a negative fair market value adjustment of $0.8 million in the second quarter of 2020. Compared to the first quarter of 2021, net income for this segment decreased 8%, reflecting lower gain on sale of loans and loan servicing fees. Included in loan servicing fees was a positive fair market value adjustment of $0.1 million on mortgage servicing rights in the second quarter of 2021 compared to a positive fair market value adjustment of $2.1 million in the first quarter of 2021.
For the second quarter of 2021, net income of $21.7 million for Banking increased 84% from to the second quarter of 2020, reflecting higher net interest income. Net income for this segment decreased 6% from the first quarter of 2021 primarily due to lower loan servicing fees. Included in loan servicing fees for the second quarter of 2021 was a $0.6 million positive fair market value adjustment to mortgage servicing rights, which compared to a $4.7 million positive fair market value adjustment for the first quarter of 2021.
For the second quarter of 2021, net income of $21.4 million for MortgageWarehousing decreased 23% compared to the second quarter of 2020 and decreased 27% compared to the first quarter of 2021. The decreases reflected lower net interest income as warehouse lines of credit and loans held for sale declined.
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About Merchants Bancorp
Merchants Bancorp is a diversified bank holding company headquartered in Carmel, Indiana operating multiple lines of business, including Federal Housing Administration ("FHA") multi-family housing and healthcare facility financing and servicing; mortgage warehouse financing; retail and correspondent residential mortgage banking; agricultural lending; and traditional community banking. Merchants Bancorp, with $9.9 billion in assets and $8.0 billion in deposits as of June 30, 2021, conducts its business primarily through its direct and indirect subsidiaries, Merchants Bank of Indiana, Merchants Capital Corp., Farmers-Merchants Bank of Illinois, Merchants Capital Servicing, LLC, and Merchants Mortgage, a division of Merchants Bank of Indiana. For more information and financial data, please visit Merchants’ Investor Relations page at investors.merchantsbancorp.com.
Forward-Looking Statements
This press release contains forward-looking statements which reflect management’s current views with respect to, among other things, future events and financial performance. These statements are often, but not always, made through the use of words or phrases such as "may," "might," "should," "could," "predict," "potential," "believe," "expect," "continue," "will," "anticipate," "seek," "estimate," "intend," "plan," "projection," "goal," "target," "outlook," "aim," "would," "annualized" and "outlook," or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about the industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control, such as the potential impacts of the COVID-19 pandemic. Accordingly, management cautions that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated in these forward-looking statements, including the impacts of the COVID-19 pandemic, such as the severity, magnitude, duration and businesses’ and governments’ responses thereto, on the Company’s operations and personnel, and on activity and demand across its businesses, and other factors identified in "Risk Factors" or "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company’s Annual Report on Form 10-K and other periodic filings with the Securities and Exchange Commission. Any forward-looking statements presented herein are made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.
MEDIA CONTACT: REBECCA MARSH
Merchants Bancorp
Phone: (317) 805-4356
Email: rmarsh@merchantsbankofindiana.com
INVESTOR CONTACT: JOHN MACKE
Merchants Bancorp
Phone: (317) 536-7421
Email: jmacke@merchantsbankofindiana.com
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| Consolidated<br> Balance Sheets | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited) | ||||||||||
| (In<br> thousands, except share data) | ||||||||||
| March<br> 31, | December<br> 31, | September<br> 30, | June<br> 30, | |||||||
| 2021 | 2020 | 2020 | 2020 | |||||||
| Assets | ||||||||||
| Cash<br> and due from banks | 13,745 | $ | 12,003 | $ | 10,063 | $ | 9,276 | $ | 13,830 | |
| Interest-earning<br> demand accounts | 388,304 | 257,436 | 169,665 | 419,926 | 389,357 | |||||
| Cash<br> and cash equivalents | 402,049 | 269,439 | 179,728 | 429,202 | 403,187 | |||||
| Securities<br> purchased under agreements to resell | 6,507 | 6,544 | 6,580 | 6,616 | 6,651 | |||||
| Mortgage<br> loans in process of securitization | 461,914 | 432,063 | 338,733 | 374,721 | 518,788 | |||||
| Available<br> for sale securities | 315,260 | 241,691 | 269,802 | 278,861 | 259,656 | |||||
| Federal<br> Home Loan Bank (FHLB) stock | 70,767 | 70,656 | 70,656 | 70,656 | 53,224 | |||||
| Loans<br> held for sale (includes 26,623, 57,998, 40,044, 41,418 and 42,000, respectively, at fair value) | 2,955,390 | 2,749,662 | 3,070,154 | 3,319,619 | 3,877,769 | |||||
| Loans<br> receivable, net of allowance for loan losses of 28,696, 29,091, 27,500, 23,436 and 20,497, respectively | 5,444,227 | 5,710,291 | 5,507,926 | 4,857,554 | 4,133,315 | |||||
| Premises<br> and equipment, net | 31,384 | 31,261 | 29,761 | 29,261 | 29,362 | |||||
| Mortgage<br> servicing rights | 98,331 | 96,215 | 82,604 | 75,772 | 72,889 | |||||
| Interest<br> receivable | 22,068 | 22,111 | 21,770 | 19,130 | 18,574 | |||||
| Goodwill | 15,845 | 15,845 | 15,845 | 15,845 | 15,845 | |||||
| Intangible<br> assets, net | 1,990 | 2,136 | 2,283 | 2,657 | 3,038 | |||||
| Other<br> assets and receivables | 55,800 | 57,346 | 49,533 | 50,581 | 47,102 | |||||
| Total<br> assets | 9,881,532 | $ | 9,705,260 | $ | 9,645,375 | $ | 9,530,475 | $ | 9,439,400 | |
| Liabilities<br> and Shareholders' Equity | ||||||||||
| Liabilities | ||||||||||
| Deposits | ||||||||||
| Noninterest-bearing | 814,567 | $ | 818,621 | $ | 853,648 | $ | 666,081 | $ | 601,265 | |
| Interest-bearing | 7,225,011 | 7,244,560 | 6,554,418 | 6,418,566 | 6,307,363 | |||||
| Total<br> deposits | 8,039,578 | 8,063,181 | 7,408,066 | 7,084,647 | 6,908,628 | |||||
| Borrowings | 701,373 | 545,160 | 1,348,256 | 1,618,201 | 1,761,113 | |||||
| Deferred<br> and current tax liabilities, net | 18,819 | 41,610 | 20,405 | 22,405 | 21,020 | |||||
| Other<br> liabilities | 62,698 | 44,054 | 58,027 | 48,087 | 40,441 | |||||
| Total<br> liabilities | 8,822,468 | 8,694,005 | 8,834,754 | 8,773,340 | 8,731,202 | |||||
| Commitments<br> and Contingencies | ||||||||||
| Shareholders'<br> Equity | ||||||||||
| Common<br> stock, without par value | ||||||||||
| Authorized<br> - 50,000,000 shares | ||||||||||
| Issued<br> and outstanding - 28,783,599 shares, 28,782,139 shares, 28,747,083 shares, 28,745,614 shares and 28,745,614 shares, respectively | 136,836 | 136,474 | 135,857 | 136,103 | 135,949 | |||||
| Preferred<br> stock, without par value - 5,000,000 total shares authorized | ||||||||||
| 8%<br> Preferred stock - 1,000 per share liquidation preference | ||||||||||
| Authorized<br> - 50,000 shares | ||||||||||
| Issued<br> and outstanding - 0 shares, 41,625 shares, 41,625 shares, 41,625 shares and 41,625 shares | — | 41,581 | 41,581 | 41,581 | 41,581 | |||||
| 7%<br> Series A Preferred stock - 25 per share liquidation preference | ||||||||||
| Authorized<br> - 3,500,000 shares | ||||||||||
| Issued<br> and outstanding - 2,081,800 shares | 50,221 | 50,221 | 50,221 | 50,221 | 50,221 | |||||
| 6%<br> Series B Preferred stock - 1,000 per share liquidation preference | ||||||||||
| Authorized<br> - 125,000 shares | ||||||||||
| Issued<br> and outstanding - 125,000 shares (equivalent to 5,000,000 depositary shares) | 120,844 | 120,844 | 120,844 | 120,844 | 120,844 | |||||
| 6%<br> Series C Preferred stock - 1,000 per share liquidation preference | ||||||||||
| Authorized<br> - 250,000 shares | ||||||||||
| Issued<br> and outstanding - 196,181 shares at June 30, 2021 and 150,000 shares at March 31, 2021 (equivalent to 7,847,233 depositary shares<br> at June 30, 2021 and 6,000,000 depositary shares at March 31, 2021) | 191,084 | 144,925 | — | — | — | |||||
| Retained<br> earnings | 560,083 | 516,961 | 461,744 | 407,979 | 358,895 | |||||
| Accumulated<br> other comprehensive income | (4 | ) | 249 | 374 | 407 | 708 | ||||
| Total<br> shareholders' equity | 1,059,064 | 1,011,255 | 810,621 | 757,135 | 708,198 | |||||
| Total<br> liabilities and shareholders' equity | 9,881,532 | $ | 9,705,260 | $ | 9,645,375 | $ | 9,530,475 | $ | 9,439,400 |
All values are in US Dollars.
| Consolidated<br> Statement of Income | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited) | |||||||||||||||
| (In<br> thousands, except share data) | |||||||||||||||
| Three<br> Months Ended | Six<br> Months Ended | ||||||||||||||
| June<br> 30, | March<br> 31, | June<br> 30, | June<br> 30, | June<br> 30, | |||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | |||||||||||
| Interest<br> Income | |||||||||||||||
| Loans | $ | 68,276 | $ | 75,517 | $ | 63,979 | $ | 143,793 | $ | 117,543 | |||||
| Mortgage<br> loans in process of securitization | 2,724 | 3,136 | 2,534 | 5,860 | 5,330 | ||||||||||
| Investment<br> securities: | |||||||||||||||
| Available<br> for sale - taxable | 833 | 354 | 972 | 1,187 | 2,294 | ||||||||||
| Available<br> for sale - tax exempt | 9 | 11 | 38 | 20 | 75 | ||||||||||
| Federal<br> Home Loan Bank stock | 392 | 384 | 447 | 776 | 686 | ||||||||||
| Other | 204 | 147 | 234 | 351 | 2,693 | ||||||||||
| Total<br> interest income | 72,438 | 79,549 | 68,204 | 151,987 | 128,621 | ||||||||||
| Interest<br> Expense | |||||||||||||||
| Deposits | 6,683 | 6,100 | 15,398 | 12,783 | 36,028 | ||||||||||
| Borrowed<br> funds | 1,348 | 1,486 | 1,572 | 2,834 | 3,006 | ||||||||||
| Total<br> interest expense | 8,031 | 7,586 | 16,970 | 15,617 | 39,034 | ||||||||||
| Net<br> Interest Income | 64,407 | 71,963 | 51,234 | 136,370 | 89,587 | ||||||||||
| Provision<br> (credit) for loan losses | (315 | ) | 1,663 | 1,745 | 1,348 | 4,743 | |||||||||
| Net<br> Interest Income After Provision for Loan Losses | 64,722 | 70,300 | 49,489 | 135,022 | 84,844 | ||||||||||
| Noninterest<br> Income | |||||||||||||||
| Gain<br> on sale of loans | 25,122 | 28,620 | 17,084 | 53,742 | 38,250 | ||||||||||
| Loan<br> servicing fees, net | 1,727 | 7,951 | 1,597 | 9,678 | (4,227 | ) | |||||||||
| Mortgage<br> warehouse fees | 3,079 | 4,116 | 5,475 | 7,195 | 8,221 | ||||||||||
| Other<br> income | 2,927 | 3,249 | 2,032 | 6,176 | 3,846 | ||||||||||
| Total<br> noninterest income | 32,855 | 43,936 | 26,188 | 76,791 | 46,090 | ||||||||||
| Noninterest<br> Expense | |||||||||||||||
| Salaries<br> and employee benefits | 18,869 | 21,274 | 11,828 | 40,143 | 26,068 | ||||||||||
| Loan<br> expenses | 1,921 | 2,523 | 2,039 | 4,444 | 3,203 | ||||||||||
| Occupancy<br> and equipment | 1,808 | 1,627 | 1,383 | 3,435 | 2,875 | ||||||||||
| Professional<br> fees | 779 | 422 | 726 | 1,201 | 1,295 | ||||||||||
| Deposit<br> insurance expense | 651 | 671 | 1,851 | 1,322 | 3,637 | ||||||||||
| Technology<br> expense | 971 | 937 | 716 | 1,908 | 1,326 | ||||||||||
| Other<br> expense | 3,184 | 2,630 | 1,739 | 5,814 | 4,171 | ||||||||||
| Total<br> noninterest expense | 28,183 | 30,084 | 20,282 | 58,267 | 42,575 | ||||||||||
| Income<br> Before Income Taxes | 69,394 | 84,152 | 55,395 | 153,546 | 88,359 | ||||||||||
| Provision<br> for income taxes | 17,977 | 22,169 | 14,233 | 40,146 | 22,614 | ||||||||||
| Net<br> Income | $ | 51,417 | $ | 61,983 | $ | 41,162 | $ | 113,400 | $ | 65,745 | |||||
| Dividends<br> on preferred stock | (5,659 | ) | (3,757 | ) | (3,619 | ) | (9,416 | ) | (7,237 | ) | |||||
| Net<br> Income Allocated to Common Shareholders | 45,758 | 58,226 | 37,543 | 103,984 | 58,508 | ||||||||||
| Basic<br> Earnings Per Share | $ | 1.59 | $ | 2.02 | $ | 1.31 | $ | 3.61 | $ | 2.04 | |||||
| Diluted<br> Earnings Per Share | $ | 1.58 | $ | 2.02 | $ | 1.31 | $ | 3.60 | $ | 2.03 | |||||
| Weighted-Average<br> Shares Outstanding | |||||||||||||||
| Basic | 28,782,813 | 28,772,092 | 28,743,894 | 28,777,482 | 28,739,263 | ||||||||||
| Diluted | 28,874,325 | 28,850,414 | 28,762,349 | 28,862,399 | 28,760,880 |
KeyOperating Results
(Unaudited)
($ in thousands, except share data)
| Three<br> Months Ended | Six<br> Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June<br> 30, | March<br> 31, | June<br> 30, | June<br> 30, | June<br> 30, | |||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | |||||||||||
| Noninterest<br> expense | $ | 28,183 | $ | 30,084 | $ | 20,282 | $ | 58,267 | $ | 42,575 | |||||
| Net<br> interest income (before provision for losses) | 64,407 | 71,963 | 51,234 | 136,370 | 89,587 | ||||||||||
| Noninterest<br> income | 32,855 | 43,936 | 26,188 | 76,791 | 46,090 | ||||||||||
| Total<br> income | $ | 97,262 | $ | 115,899 | $ | 77,422 | $ | 213,161 | $ | 135,677 | |||||
| Efficiency<br> ratio | 28.98 | % | 25.96 | % | 26.20 | % | 27.33 | % | 31.38 | % | |||||
| Average<br> assets | $ | 9,609,957 | $ | 9,952,911 | $ | 8,689,212 | $ | 9,780,487 | $ | 7,646,803 | |||||
| Net<br> income | $ | 51,417 | $ | 61,983 | $ | 41,162 | $ | 113,400 | $ | 65,745 | |||||
| Return<br> on average assets before annualizing | 0.54 | % | 0.62 | % | 0.47 | % | 1.16 | % | 0.86 | % | |||||
| Annualization<br> factor | 4.00 | 4.00 | 4.00 | 2.00 | 2.00 | ||||||||||
| Return<br> on average assets | 2.14 | % | 2.49 | % | 1.89 | % | 2.32 | % | 1.72 | % | |||||
| Return<br> on average tangible common shareholders' equity (1) | 27.61 | % | 38.32 | % | 32.62 | % | 32.72 | % | 26.08 | % | |||||
| Tangible<br> book value per common share (1) | $ | 23.59 | $ | 22.09 | $ | 16.58 | $ | 23.59 | $ | 16.58 | |||||
| Tangible<br> common shareholders' equity/tangible assets (1) | 6.88 | % | 6.56 | % | 5.06 | % | 6.88 | % | 5.06 | % |
(1) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Measures"
(1) Reconciliation of Non-GAAP Financial Measures
Certain non-GAAP financial measures provide useful information to management and investors that is supplementary to the company's financial condition, results of operations and cash flows computed in accordance with GAAP; however, they do have a number of limitations. As such, the reader should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use. A reconciliation of GAAP to non-GAAP financial measures is below. Net Income Available to Common Shareholders excludes preferred stock. Tangible common equity is calculated by excluding the balance of goodwill and other intangible assets and preferred stock from the calculation of total assets. Tangible Assets is calculated by excluding the balance of goodwill and intangible assets. Tangible book value per share is calculated by dividing tangible common equity by the number of shares outstanding.
| Three<br> Months Ended | Six<br> Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June<br> 30, | March<br> 31, | June<br> 30, | June<br> 30, | June<br> 30, | |||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | |||||||||||
| Net<br> income | $ | 51,417 | $ | 61,983 | $ | 41,162 | $ | 113,400 | $ | 65,745 | |||||
| Less:<br> preferred stock dividends | (5,659 | ) | (3,757 | ) | (3,619 | ) | (9,416 | ) | (7,237 | ) | |||||
| Net<br> income available to common shareholders | $ | 45,758 | $ | 58,226 | $ | 37,543 | $ | 103,984 | $ | 58,508 | |||||
| Average<br> shareholders' equity | $ | 1,031,246 | $ | 852,900 | $ | 692,132 | $ | 942,566 | $ | 680,651 | |||||
| Less:<br> average goodwill & intangibles | (17,916 | ) | (18,057 | ) | (19,083 | ) | (17,986 | ) | (19,283 | ) | |||||
| Less:<br> average preferred stock | (350,320 | ) | (227,115 | ) | (212,646 | ) | (289,058 | ) | (212,646 | ) | |||||
| Tangible<br> common shareholders' equity | $ | 663,010 | $ | 607,728 | $ | 460,403 | $ | 635,522 | $ | 448,722 | |||||
| Annualization<br> factor | 4.00 | 4.00 | 4.00 | 2.00 | 2.00 | ||||||||||
| Return<br> on average tangible common shareholders' equity | 27.61 | % | 38.32 | % | 32.62 | % | 32.72 | % | 26.08 | % | |||||
| Total<br> equity | $ | 1,059,064 | $ | 1,011,255 | $ | 708,198 | $ | 1,059,064 | $ | 708,198 | |||||
| Less:<br> goodwill and intangibles | (17,835 | ) | (17,981 | ) | (18,883 | ) | (17,835 | ) | (18,883 | ) | |||||
| Less:<br> preferred stock | (362,149 | ) | (357,571 | ) | (212,646 | ) | (362,149 | ) | (212,646 | ) | |||||
| Tangible<br> common shareholders' equity | $ | 679,080 | $ | 635,703 | $ | 476,669 | $ | 679,080 | $ | 476,669 | |||||
| Assets | $ | 9,881,532 | $ | 9,705,260 | $ | 9,439,400 | $ | 9,881,532 | $ | 9,439,400 | |||||
| Less:<br> goodwill and intangibles | (17,835 | ) | (17,981 | ) | (18,883 | ) | (17,835 | ) | (18,883 | ) | |||||
| Tangible<br> assets | $ | 9,863,697 | $ | 9,687,279 | $ | 9,420,517 | $ | 9,863,697 | $ | 9,420,517 | |||||
| Ending<br> common shares | 28,783,599 | 28,782,139 | 28,745,614 | 28,783,599 | 28,745,614 | ||||||||||
| Tangible<br> book value per common share | $ | 23.59 | $ | 22.09 | $ | 16.58 | $ | 23.59 | $ | 16.58 | |||||
| Tangible<br> common shareholders' equity/tangible assets | 6.88 | % | 6.56 | % | 5.06 | % | 6.88 | % | 5.06 | % |
Merchants Bancorp
AverageBalance Analysis
($ in thousands)
(Unaudited)
| Three<br> Months Ended | Three<br> Months Ended | Three<br> Months Ended | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June<br> 30, 2021 | March<br> 31, 2021 | June<br> 30, 2020 | ||||||||||||||||||||||
| Average | Yield/ | Average | Yield/ | Average | Yield/ | |||||||||||||||||||
| Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | ||||||||||||||||
| Assets: | ||||||||||||||||||||||||
| Interest-bearing<br> deposits, and other | $ | 788,002 | $ | 596 | 0.30 | % | $ | 610,884 | $ | 531 | 0.35 | % | $ | 971,350 | $ | 681 | 0.28 | % | ||||||
| Securities<br> available for sale - taxable | 285,536 | 833 | 1.17 | % | 267,428 | 354 | 0.54 | % | 276,928 | 972 | 1.41 | % | ||||||||||||
| Securities<br> available for sale - tax exempt | 1,363 | 9 | 2.65 | % | 1,366 | 11 | 3.27 | % | 5,294 | 38 | 2.89 | % | ||||||||||||
| Mortgage<br> loans in process of securitization | 416,559 | 2,724 | 2.62 | % | 500,234 | 3,136 | 2.54 | % | 328,089 | 2,534 | 3.11 | % | ||||||||||||
| Loans<br> and loans held for sale | 7,905,766 | 68,276 | 3.46 | % | 8,379,227 | 75,517 | 3.66 | % | 6,936,368 | 63,979 | 3.71 | % | ||||||||||||
| Total<br> interest-earning assets | 9,397,226 | 72,438 | 3.09 | % | 9,759,139 | 79,549 | 3.31 | % | 8,518,029 | 68,204 | 3.22 | % | ||||||||||||
| Allowance<br> for loan losses | (28,778 | ) | (28,308 | ) | (19,474 | ) | ||||||||||||||||||
| Noninterest-earning<br> assets | 241,509 | 222,080 | 190,657 | |||||||||||||||||||||
| Total<br> assets | $ | 9,609,957 | $ | 9,952,911 | $ | 8,689,212 | ||||||||||||||||||
| Liabilities<br> & Shareholders' Equity: | ||||||||||||||||||||||||
| Interest-bearing<br> checking | 4,473,251 | 1,362 | 0.12 | % | 4,806,665 | 1,210 | 0.10 | % | 2,656,105 | 2,327 | 0.35 | % | ||||||||||||
| Savings<br> deposits | 205,884 | 38 | 0.07 | % | 192,196 | 37 | 0.08 | % | 176,546 | 27 | 0.06 | % | ||||||||||||
| Money<br> market | 2,197,750 | 4,175 | 0.76 | % | 2,065,218 | 3,738 | 0.73 | % | 1,402,562 | 3,966 | 1.14 | % | ||||||||||||
| Certificates<br> of deposit | 512,316 | 1,108 | 0.87 | % | 416,426 | 1,115 | 1.09 | % | 2,763,853 | 9,078 | 1.32 | % | ||||||||||||
| Total<br> interest-bearing deposits | 7,389,201 | 6,683 | 0.36 | % | 7,480,505 | 6,100 | 0.33 | % | 6,999,066 | 15,398 | 0.88 | % | ||||||||||||
| Borrowings | 523,942 | 1,348 | 1.03 | % | 810,856 | 1,486 | 0.74 | % | 518,207 | 1,572 | 1.22 | % | ||||||||||||
| Total<br> interest-bearing liabilities | 7,913,143 | 8,031 | 0.41 | % | 8,291,361 | 7,586 | 0.37 | % | 7,517,273 | 16,970 | 0.91 | % | ||||||||||||
| Noninterest-bearing<br> deposits | 590,886 | 740,807 | 372,195 | |||||||||||||||||||||
| Noninterest-bearing<br> liabilities | 74,682 | 67,843 | 107,612 | |||||||||||||||||||||
| Total<br> liabilities | 8,578,711 | 9,100,011 | 7,997,080 | |||||||||||||||||||||
| Shareholders'<br> equity | 1,031,246 | 852,900 | 692,132 | |||||||||||||||||||||
| Total<br> liabilities and shareholders' equity | $ | 9,609,957 | $ | 9,952,911 | $ | 8,689,212 | ||||||||||||||||||
| Net<br> interest income | $ | 64,407 | $ | 71,963 | $ | 51,234 | ||||||||||||||||||
| Net<br> interest spread | 2.68 | % | 2.93 | % | 2.31 | % | ||||||||||||||||||
| Net<br> interest-earning assets | $ | 1,484,083 | $ | 1,467,778 | $ | 1,000,756 | ||||||||||||||||||
| Net<br> interest margin | 2.75 | % | 2.99 | % | 2.42 | % | ||||||||||||||||||
| Average<br> interest-earning assets to average interest-bearing liabilities | 118.75 | % | 117.70 | % | 113.31 | % |
SupplementalResults
(Unaudited)
($ in thousands)
| Net Income | Net Income | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, | March 31, | June 30, | June 30, | ||||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | |||||||||||
| Segment | |||||||||||||||
| Multi-family Mortgage Banking | $ | 10,971 | $ | 11,961 | $ | 3,651 | $ | 22,932 | $ | 9,050 | |||||
| Mortgage Warehousing | 21,448 | 29,183 | 27,712 | 50,631 | 40,149 | ||||||||||
| Banking | 21,741 | 23,025 | 11,812 | 44,766 | 19,762 | ||||||||||
| Other | (2,743 | ) | (2,186 | ) | (2,013 | ) | (4,929 | ) | (3,216 | ) | |||||
| Total | $ | 51,417 | $ | 61,983 | $ | 41,162 | $ | 113,400 | $ | 65,745 | |||||
| Total Assets | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | |||||||||
| June 30, | March 31, | December 31, | |||||||||||||
| 2021 | 2021 | 2020 | |||||||||||||
| Segment | |||||||||||||||
| Multi-family Mortgage Banking | $ | 238,165 | $ | 219,954 | $ | 210,714 | |||||||||
| Mortgage Warehousing | 4,265,162 | 4,383,759 | 4,893,513 | ||||||||||||
| Banking | 5,328,684 | 5,010,799 | 4,498,880 | ||||||||||||
| Other | 49,521 | 90,748 | 42,268 | ||||||||||||
| Total | $ | 9,881,532 | $ | 9,705,260 | $ | 9,645,375 | |||||||||
| Gain on Sale of Loans | Gain on Sale of Loans | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, | March 31, | June 30, | June 30, | ||||||||||||
| 2021 | 2021 | 2020 | 2021 | 2020 | |||||||||||
| Loan Type | |||||||||||||||
| Multi-family | $ | 21,408 | $ | 22,836 | $ | 6,839 | $ | 44,244 | $ | 25,691 | |||||
| Single-family | 1,872 | 4,213 | 10,059 | 6,085 | 12,133 | ||||||||||
| Small Business Association (SBA) | 1,842 | 1,571 | 186 | 3,413 | 426 | ||||||||||
| Total | $ | 25,122 | $ | 28,620 | $ | 17,084 | $ | 53,742 | $ | 38,250 | |||||
| Loans Receivable and Loans Held for Sale | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | |||||||||
| June 30, | March 31, | December 31, | |||||||||||||
| 2021 | 2021 | 2020 | |||||||||||||
| Mortgage warehouse lines of credit | $ | 1,177,940 | $ | 1,334,548 | $ | 1,605,745 | |||||||||
| Residential real estate | 806,325 | 731,334 | 678,848 | ||||||||||||
| Multi-family and healthcare financing | 2,970,770 | 3,206,633 | 2,749,020 | ||||||||||||
| Commercial and commercial real estate | 409,710 | 357,682 | 387,294 | ||||||||||||
| Agricultural production and real estate | 92,786 | 96,108 | 101,268 | ||||||||||||
| Consumer and margin loans | 15,392 | 13,077 | 13,251 | ||||||||||||
| 5,472,923 | 5,739,382 | 5,535,426 | |||||||||||||
| Less: Allowance for loan losses | 28,696 | 29,091 | 27,500 | ||||||||||||
| Loans receivable | $ | 5,444,227 | $ | 5,710,291 | $ | 5,507,926 | |||||||||
| Loans held for sale | 2,955,390 | 2,749,662 | 3,070,154 | ||||||||||||
| Total loans, net of allowance | $ | 8,399,617 | $ | 8,459,953 | $ | 8,578,080 |