Merchants Bancorp Reports First Quarter 2023 Results

• First quarter 2023 net income of $55.0 million increased 10% compared to first quarter of 2022 and decreased 4% compared to the fourth quarter 2022.
• First quarter 2023 diluted earnings per common share of $1.07 increased 5% compared to the first quarter of 2022 and decreased 4% compared to the fourth quarter of 2022.
• Total assets of $14.2 billion increased 48% compared to March 31, 2022, and increased 13% compared to December 31, 2022.
• Loans receivable of $8.6 billion, net of allowance for credit losses on loans, increased $2.6 billion, or 43%, compared to March 31, 2022, and increased $1.1 billion, or 15% compared to December 31, 2022.
• Net interest margin was 3.27% in the first quarter of 2023 compared to 2.62% in the first quarter of 2022 and 3.13% in the fourth quarter of 2022.
• Efficiency ratio was 30.3% in the first quarter of 2023 compared to 30.9% in the first quarter of 2022 and 31.3% in the fourth quarter of 2022.
• As of March 31, 2023, the Company had $4.0 billion in unused borrowing capacity with the Federal Home Loan Bank and the Federal Reserve Discount window, based on available collateral.
• The Company's most liquid assets are in unrestricted cash, short-term investments, including interest-bearing demand deposits, mortgage loans in process of securitization, loans held for sale, and warehouse lines of credit included in loans receivable. Taken together, with unused borrowing capacity, these totaled $7.8 billion, or 55%, of the $14.2 billion in total assets as of March 31, 2023.
• Uninsured deposits totaled approximately $2 billion as of March 31, 2023, representing less than 25% of total deposits.
• Tangible book value per common share of $22.88 increased 22% compared to $18.70 in the first quarter of 2022 and increased 5% compared to $21.88 in the fourth quarter of 2022.
• Quarterly dividends were increased by 14%, to $.08 per common share.
• On March 30, 2023, the Company issued and sold $158.1 million senior credit linked notes, due May 26, 2028. The net proceeds of the offering were approximately $153.5 million and resulted in a reduction of risk-weighted assets, which will benefit regulatory capital ratios as the loan pipeline continues to expand.

CARMEL, Ind., April 27, 2023 /PRNewswire/ -- Merchants Bancorp (the "Company" or "Merchants") (Nasdaq: MBIN), parent company of Merchants Bank of Indiana, today reported first quarter 2023 net income of $55.0 million, or diluted earnings per common share of $1.07.  This compared to $50.1 million, or diluted earnings per common share of $1.02 in the first quarter of 2022, and compared to $57.2 million, or diluted earnings per common share of $1.12 in the fourth quarter of 2022.

"We continued to deliver superior results in the first quarter by consistently minimizing interest rate and credit risk in a way that has differentiated Merchants though many economic cycles.  Our strategy continues to focus on originating and selling adjustable-rate loans that typically reprice within 30 days.  We have stayed short to the yield curve to conservatively match the duration of our assets and liabilities.  We have also created a natural hedge between our lines of business to ensure we do well in rising or falling rate environments," said Michael F. Petrie, Chairman and CEO of Merchants. 

Michael J. Dunlap, President and Chief Operating Officer of Merchants, added, "Recent bank failures have had minimal impact to our deposit base or operations.  Our liquidity continued to expand organically during the quarter, without the need to utilize the Fed's Bank Term Funding Program.  Our unused borrowing capacity increased to $4.0 billion.  Although more than 75% of our deposit balances were already insured through the FDIC as of March 31, 2023, we have also seen an elevated interest in our Insured Cash Sweep, or ICS, program that extends FDIC protection up to $100 million."  

Net income of $55.0 million for the first quarter 2023 increased by $4.8 million, or 10% compared to the first quarter of 2022, primarily driven by a $35.0 million, or 53% increase in net interest income that was partially offset by a $11.2 million, or 63%, decrease in gain on sale of loans, a $7.4 million, or 76%, decrease in loan servicing fees, and a $4.4 million, or 180%, increase in provision for credit losses.  Results for the first quarter 2023 included a $2.9 million negative fair market value adjustment to servicing rights compared to a $7.6 million positive adjustment in the first quarter of 2022.

Net income of $55.0 million for the first quarter 2023 decreased by $2.2 million, or 4%, compared to the fourth quarter of 2022, primarily driven by a $4.5 million, or 40%, decrease in gain on sale of loans and a $3.0 million decrease in syndication and asset management fees that were partially offset by a $5.3 million, or 6% increase in net interest income. Results for the first quarter of 2023 included a $2.9 million negative fair market value adjustment to servicing rights compared to a $0.2 million negative adjustment in the fourth quarter of 2022.

Total Assets

Total assets of $14.2 billion at March 31, 2023 increased $4.6 billion, or 48%, compared to March 31, 2022, and increased $1.6 billion, or 13%, compared to December 31, 2022.  Increases compared to both periods were primarily due to significant growth in the multi-family and healthcare loan portfolios.  Additionally, the increase compared to March 31, 2022 reflected new balances in securities held to maturity.

Return on average assets was 1.71% for the first quarter of 2023 compared to 1.92% for the first quarter of 2022 and 1.84% for the fourth quarter of 2022.

Asset Quality

The allowance for credit losses on loans of $51.8 million as of March 31, 2023 increased $19.7 million, or 61%, compared to March 31, 2022 and increased $7.8 million, or 18%, compared to December 31, 2022.  The increases were primarily due to growth in the multi-family, commercial and commercial real estate, and healthcare loan portfolios. 

Non-performing loans were $65.3 million, or 0.76%, of loans receivable at March 31, 2023, compared to 0.08% at March 31, 2022 and 0.36% at December 31, 2022.  The increase compared to March 31, 2022 was due to the delinquency of one multi-family customer and one healthcare customer.

Securities Available for Sale

Total securities available for sale of $679.5 million as of March 31, 2023 increased $365.3 million, or 116%, compared to March 31, 2022, and increased $356.2 million, or 110%, compared to December 31, 2022.

As of March 31, 2023, Accumulated Other Comprehensive Losses ("AOCI") of $7.7 million, related to securities available for sale, increased $1.4 million compared to March 31, 2022, and decreased $2.8 million, or 28%, compared to December 31, 2022.  The $7.7 million of AOCI as of March 31, 2023 represented less than 1% of total equity and less than 1% of total investment securities.

Total Deposits

Total deposits of $11.3 billion at March 31, 2023 increased $3.9 billion, or 52%, compared to March 31, 2022, and increased $1.3 billion, or 13%, compared to December 31, 2022. The increase for both periods was primarily due to an increase in brokered certificates of deposit.

Total brokered deposits of $3.7 billion at March 31, 2023 increased $3.4 billion, or 882%, from March 31, 2022 and increased $967.4 million, or 35%, from December 31, 2022.   Brokered deposits represented 33% of total deposits at March 31, 2023 compared to 5% of total deposits at March 31, 2022 and 27% of total deposits at December 31, 2022.  As of March 31, 2023, brokered certificates of deposit had a weighted average remaining duration of 70 days.

The Company continues to offer new products, such as adjustable-rate certificates of deposits, to minimize interest rate risks by aligning the rate and short duration characteristics of its deposit and loan portfolios.  Additionally, the Company has offered its ICS program since 2018, which extends FDIC protection up to $100 million.  This program has contributed to its low level of uninsured deposits, which were below 25% of total deposits as of March 31, 2023.

Liquidity

Cash balances of $369.6 million as of March 31, 2023 decreased by $41.9 million compared to March 31, 2022 and increased by $143.4 million compared to December 31, 2022.  The Company continues to have significant borrowing capacity, with unused lines of credit totaling $4.0 billion as of March 31, 2023 compared to $2.2 billion at March 31, 2022 and $3.1 billion at December 31, 2022. 

This liquidity enhances the ability to effectively manage interest expense and asset levels in the future. Additionally, the Company's business model is designed to continuously sell a significant portion of its loans, which provides flexibility in managing its liquidity.

Comparison of Operating Results for the Three Months Ended

March 31, 2023 and 2022

Net Interest Income of $100.7 million increased $35.0 million, or 53% compared to $65.7 million, reflecting higher yields and average balances on loans and loans held for sale, and new balances of securities held to maturity, which were partially offset by higher interest rates on deposits and borrowings. 

• Interest rate spread of 2.76% increased 21 basis points compared to 2.55%.
• Net interest margin of 3.27% increased 65 basis points compared to 2.62%.

Interest Income of $211.3 million increased 178% compared to $76.0 million, reflecting an increase in both yields and average balances of loans and loans held for sale, as well as new balances in securities held to maturity. 

• Average balances of $10.6 billion for loans and loans held for sale increased 32% compared to $8.0 billion.
• Average yield on loans and loans held for sale of 7.25% increased 361 basis points compared to 3.64%.

Interest Expense of $110.6 million increased $100.3 million, or 975%, compared to $10.3 million.  Interest expense on deposits of $104.4 million increased $95.6 million, or 1,085%, compared $8.8 million, primarily reflecting higher rates on interest bearing checking, money market, and certificates of deposit accounts.

• Average balances of $10.5 billion for interest-bearing deposits increased 30% compared to $8.0 billion.
• Average interest rates of 4.05% for interest-bearing deposits increased 361 basis points compared to 0.44%.

Noninterest Income of $14.3 million decreased $20.3 million, or 59%, compared to $34.6 million, primarily due to a $11.2 million, or 63%, decrease in gain on sale of loans, and a $7.4 million, or 76% decrease in loan servicing fees that included a $10.5 million lower fair market value adjustments to mortgage servicing rights.  

• The decrease in gain on sale of loans was associated with a business mix shift in multi-family lending, from volumes sold in the secondary market towards those maintained on the balance sheet.
• Loan servicing fees included a $2.9 million negative fair market value adjustment to servicing rights, with a $0.7 million negative adjustment in the Banking segment and a $2.2 million negative adjustment in the Multi-family Mortgage Banking segment. This compared to a $7.6 million positive fair market value adjustment to mortgage servicing rights, of which $4.3 million was in the Banking segment and $3.3 million was in the Multi-family Mortgage Banking segment.

Noninterest Expense of $34.8 million increased $3.7 million, or 12%, compared to $31.0 million, primarily due to increases in deposit insurance expense and professional fees.

The efficiency ratio of 30.25% decreased 68 basis points compared to 30.93%.

Comparison of Operating Results for the Three Months Ended

March 31, 2023 and December 31, 2022

Net Interest Income of $100.7 million increased $5.3 million, or 6% compared to $95.4 million, reflecting higher yields and average balances on loans and loans held for sale that were partially offset by higher interest rates and average balances on deposits and borrowings.

• Interest rate spread of 2.76% increased 7 basis points compared to 2.69%.
• Net interest margin of 3.27% increased 14 basis points compared to 3.13%.

Interest Income of $211.3 million increased $29.9 million, or 16%, compared to $181.4 million, reflecting an increase in yields and average balances of loans and loans held for sale, as well securities held to maturity.

• Average balances of $10.6 billion for loans and loans held for sale increased $295.9 million, or 3%, compared to $10.3 billion.
• Average yield on loans and loans held for sale of 7.25% increased 91 basis points compared to 6.34%.

Interest Expense of $110.6 million increased $24.6 million, or 29%, compared to $86.0 million.  Interest expense on deposits of $104.4 million increased $23.4 million, or 29%, compared to $81.1 million, primarily due to higher interest rates on certificates of deposit, interest bearing checking, and money market accounts.

• Average balances of $10.5 billion for interest-bearing deposits increased $467.0 million, or 5%, compared to $10.0 billion.
• Average interest rates of 4.05% for interest-bearing deposits increased 83 basis points compared to 3.22%.

Noninterest Income of $14.3 million decreased $8.7 million, or 38%, compared $23.0 million, primarily due to a $4.5 million, or 40%, decrease in gain on sale of loans and a $3.0 million, or 71% decrease in syndication and asset management fees.

• The decrease in gain on sale of loans was associated with lower volume in the secondary market for multi-family loans resulting from higher interest rates across the industry.
• Loan servicing fees included a $2.9 million negative fair market value adjustment to servicing rights, with a $0.7 million negative adjustment in the Banking segment and a $2.2 million negative adjustment in the Multi-family Mortgage Banking segment. This compared to a $0.2 million negative fair market value adjustment to servicing rights, with a $0.6 million negative adjustment in the Banking segment and a $0.4 million positive adjustment in the Multi-family Mortgage Banking segment.

Noninterest Expense of $34.8 million decreased $2.3 million, or 6%, compared to $37.1 million, primarily due to decreases in professional fees and lower commission expenses.

• The efficiency ratio of 30.3% decreased 109 basis points compared to 31.3%.

About Merchants Bancorp
Ranked as a top performing U.S. public bank by S&P Global Market Intelligence, Merchants Bancorp is a diversified bank holding company headquartered in Carmel, Indiana operating multiple segments, including Multi-family Mortgage Banking that primarily offers multi-family housing and healthcare facility financing and servicing. Through this segment it also serves as a syndicator of low-income housing tax credit and debt funds; Mortgage Warehousing that offers mortgage warehouse financing, commercial loans, and deposit services; and Banking that offers retail and correspondent residential mortgage banking, agricultural lending, and traditional community banking.  Merchants Bancorp, with $14.2 billion in assets and $11.3 billion in deposits as of March 31, 2023, conducts its business primarily through its direct and indirect subsidiaries, Merchants Bank of Indiana, Merchants Capital Corp., Merchants Capital Investments, LLC, Merchants Capital Servicing, LLC, Merchants Asset Management, LLC, Farmers-Merchants Bank of Illinois, 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. 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 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 the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise. 

 

Consolidated Balance Sheets
(Unaudited)
(In thousands, except share data)
		March 31,		December 31,		September 30,		June 30,		March 31,
		2023		2022		2022		2022		2022
Assets
Cash and due from banks		$       19,002		$          22,170		$           13,796		$       10,714		$       9,853
Interest-earning demand accounts		350,584		203,994		310,165		247,432		401,668
Cash and cash equivalents		369,586		226,164		323,961		258,146		411,521
Securities purchased under agreements to resell		3,438		3,464		3,497		3,520		4,798
Mortgage loans in process of securitization		197,074		154,194		137,448		323,046		324,280
Securities available for sale		679,518		323,337		322,069		336,814		314,266
Securities held to maturity (includes $1,106,582, $1,118,966, $1,005,487, $0 and $0 at fair value, respectively)		1,104,835		1,119,078		1,005,487		—		—
Federal Home Loan Bank (FHLB) stock		39,130		39,130		39,130		39,130		28,804
Loans held for sale (includes $85,516, $82,192, $68,785, $41,991 and $14,567 at fair value, respectively)		2,855,250		2,910,576		2,844,750		2,759,116		2,289,094
Loans receivable, net of allowance for credit losses on loans of $51,838, $44,014, $38,996,  $37,474 and $32,102, respectively		8,575,210		7,426,858		6,919,128		7,033,203		5,976,960
Premises and equipment, net		35,793		35,438		35,492		35,085		34,559
Servicing rights		143,867		146,248		144,984		130,710		121,036
Interest receivable		64,282		56,262		40,170		26,184		23,499
Goodwill		15,845		15,845		15,845		15,845		15,845
Intangible assets, net		1,068		1,186		1,307		1,441		1,574
Other assets and receivables		156,070		157,447		145,454		123,815		104,356
Total assets		$14,240,966		$   12,615,227		$    11,978,722		$11,086,055		$9,650,592
Liabilities and Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing		$     313,733		$        326,875		$         315,868		$     444,461		$   461,193
Interest-bearing		11,031,498		9,744,470		10,003,611		7,855,277		7,014,628
Total deposits		11,345,231		10,071,345		10,319,479		8,299,738		7,475,821
Borrowings		1,233,762		930,392		97,279		1,440,904		879,929
Deferred and current tax liabilities, net		32,827		19,613		19,124		19,414		30,695
Other liabilities		123,462		134,138		130,250		97,460		75,644
Total liabilities		12,735,282		11,155,488		10,566,132		9,857,516		8,462,089
Commitments and  Contingencies
Shareholders' Equity
Common stock, without par value
Authorized - 75,000,000 shares, 75,000,000 shares, 75,000,000 shares, 75,000,000 shares and 50,000,000 shares
Issued and outstanding  - 43,233,618 shares, 43,113,127 shares, 43,109,578 shares, 43,106,505 shares and 43,267,776 shares		138,105		137,781		137,226		136,671		137,882
Preferred stock, without par value - 5,000,000 total shares authorized
7% Series A Preferred stock - $25 per share liquidation preference
Authorized - 3,500,000 shares
Issued and outstanding - 2,081,800 shares		50,221		50,221		50,221		50,221		50,221
6% Series B Preferred stock - $1,000 per share liquidation preference
Authorized - 125,000 shares
Issued and outstanding - 125,000 shares (equivalent to 5,000,000 depositary shares)		120,844		120,844		120,844		120,844		120,844
6% Series C Preferred stock - $1,000 per share liquidation preference
Authorized - 200,000 shares
Issued and outstanding - 196,181 shares (equivalent to 7,847,233 depositary shares)		191,084		191,084		191,084		191,084		191,084
8.25% Series D Preferred stock - $1,000 per share liquidation preference
Authorized - 300,000 shares
Issued and outstanding - 142,500 shares (equivalent to 5,700,000 depositary shares)		137,459		137,459		137,371		—		—
Retained earnings		875,700		832,871		787,530		737,789		694,776
Accumulated other comprehensive loss		(7,729)		(10,521)		(11,686)		(8,070)		(6,304)
Total shareholders' equity		1,505,684		1,459,739		1,412,590		1,228,539		1,188,503
Total liabilities and shareholders' equity		$14,240,966		$   12,615,227		$    11,978,722		$11,086,055		$9,650,592

 

Consolidated Statement of Income
(Unaudited)
(In thousands, except share data)
		Three Months Ended									Change
		March 31,			December 31,			March, 31			1Q23		1Q23
		2023			2022			2022			vs. 4Q22		vs. 1Q22
Interest Income
Loans		$	189,450		$	164,682		$	72,196		15 %		162 %
Mortgage loans in process of securitization			1,648			2,551			2,245		-35 %		-27 %
Investment securities:
Available for sale - taxable			2,266			704			701		222 %		223 %
Held to maturity			15,754			11,412			—		38 %		100 %
Federal Home Loan Bank stock			427			288			269		48 %		59 %
Other			1,749			1,802			601		-3 %		191 %
Total interest income			211,294			181,439			76,012		16 %		178 %
Interest Expense
Deposits			104,442			81,062			8,813		29 %		1085 %
Borrowed funds			6,159			4,967			1,474		24 %		318 %
Total interest expense			110,601			86,029			10,287		29 %		975 %
Net Interest Income			100,693			95,410			65,725		6 %		53 %
Provision for credit losses			6,867			6,407			2,451		7 %		180 %
Net Interest Income After Provision for Credit Losses			93,826			89,003			63,274		5 %		48 %
Noninterest Income
Gain on sale of loans			6,733			11,267			17,965		-40 %		-63 %
Loan servicing fees, net			2,360			2,691			9,731		-12 %		-76 %
Mortgage warehouse fees			1,028			1,081			1,858		-5 %		-45 %
Syndication and asset management fees			1,212			4,207			614		-71 %		97 %
Other income			2,931			3,736			4,429		-22 %		-34 %
Total noninterest income			14,264			22,982			34,597		-38 %		-59 %
Noninterest Expense
Salaries and employee benefits			22,146			22,290			21,293		-1 %		4 %
Loan expenses			804			1,082			1,211		-26 %		-34 %
Occupancy and equipment			2,232			2,377			1,814		-6 %		23 %
Professional fees			2,269			3,739			1,303		-39 %		74 %
Deposit insurance expense			2,178			1,279			759		70 %		187 %
Technology expense			1,577			1,417			1,236		11 %		28 %
Other expense			3,566			4,925			3,417		-28 %		4 %
Total noninterest expense			34,772			37,109			31,033		-6 %		12 %
Income Before Income Taxes			73,318			74,876			66,838		-2 %		10 %
Provision for income taxes			18,363			17,720			16,696		4 %		10 %
Net Income		$	54,955		$	57,156		$	50,142		-4 %		10 %
Dividends on preferred stock			(8,667)			(8,797)			(5,728)		-1 %		51 %
Net Income Allocated to Common Shareholders		$	46,288		$	48,359		$	44,414		-4 %		4 %
Basic Earnings Per Share		$	1.07		$	1.12		$	1.03		-4 %		4 %
Diluted Earnings Per Share		$	1.07		$	1.12		$	1.02		-4 %		5 %
Weighted-Average Shares Outstanding
Basic			43,179,604			43,111,353			43,190,066
Diluted			43,290,779			43,274,758			43,360,034

 

Key Operating Results
(Unaudited)
($ in thousands, except share data)
		Three Months Ended						Change
		March 31,		December 31,		March 31,		1Q23		1Q23
		2023		2022		2022		vs. 4Q22		vs. 1Q22
Noninterest expense		$        34,772		$          37,109		$        31,033		-6 %		12 %
Net interest income (before provision for credit losses)		100,693		95,410		65,725		6 %		53 %
Noninterest income		14,264		22,982		34,597		-38 %		-59 %
Total income		$      114,957		$        118,392		$      100,322		-3 %		15 %
Efficiency ratio		30.25 %		31.34 %		30.93 %		(109)	bps	(68)	bps
Average assets		$ 12,885,735		$   12,457,893		$ 10,436,448		3 %		23 %
Net income		54,955		57,156		50,142		-4 %		10 %
Return on average assets before annualizing		0.43 %		0.46 %		0.48 %
Annualization factor		4.00		4.00		4.00
Return on average assets		1.71 %		1.84 %		1.92 %		(13)	bps	(21)	bps
Return on average tangible common shareholders' equity (1)		18.89 %		20.81 %		22.37 %		(192)	bps	(348)	bps
Tangible book value per common share (1)		$          22.88		$            21.88		$          18.70		5 %		22 %
Tangible common shareholders' equity/tangible assets (1)		6.95 %		7.49 %		8.40 %		(54)	bps	(145)	bps
Consolidated ratios
Total capital/risk-weighted assets(2)		12.3	%	12.2	%	N/A
Tier I capital/risk-weighted assets(2)		11.8	%	11.7	%	N/A
Common Equity Tier I capital/risk-weighted assets(2)		7.9	%	7.7	%	N/A
Tier I capital/average assets(2)		11.6	%	11.7	%	11.3	%

(1)	Non-GAAP financial measure - see "Reconciliation of Non-GAAP Measures" below:
(2)	As defined by regulatory agencies; March 31, 2023 shown as estimates and prior periods shown as reported.
	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 Months Ended						Change
		March 31,		December 31,		March 31,		1Q23		1Q23
		2023		2022		2022		vs. 4Q22		vs. 1Q22
Net income		$        54,955		$          57,156		$        50,142		-4 %		10 %
Less: preferred stock dividends		(8,667)		(8,797)		(5,728)		-1 %		51 %
Net income available to common shareholders		$        46,288		$          48,359		$        44,414		-4 %		4 %
Average shareholders' equity		$   1,496,610		$     1,445,995		$   1,173,837		4 %		27 %
Less: average goodwill & intangibles		(16,980)		(17,094)		(17,495)		-1 %		-3 %
Less: average preferred stock		(499,608)		(499,529)		(362,149)		—		38 %
Average tangible common shareholders' equity		$      980,022		$        929,372		$      794,193		5 %		23 %
Annualization factor		4.00		4.00		4.00
Return on average tangible common shareholders' equity		18.89 %		20.81 %		22.37 %		(192)	bps	(348)	bps
Total equity		$   1,505,684		$     1,459,739		$   1,188,503		3 %		27 %
Less: goodwill and intangibles		(16,913)		(17,031)		(17,419)		-1 %		-3 %
Less: preferred stock		(499,608)		(499,608)		(362,149)		—		38 %
Tangible common shareholders' equity		$      989,163		$        943,100		$      808,935		5 %		22 %
Assets		$ 14,240,966		$   12,615,227		$   9,650,592		13 %		48 %
Less: goodwill and intangibles		(16,913)		(17,031)		(17,419)		-1 %		-3 %
Tangible assets		$ 14,224,053		$   12,598,196		$   9,633,173		13 %		48 %
Ending common shares		43,233,618		43,113,127		43,267,776
Tangible book value per common share		$          22.88		$            21.88		$          18.70		5 %		22 %
Tangible common shareholders' equity/tangible assets		6.95 %		7.49 %		8.40 %		(54)	bps	(145)	bps

 

Merchants Bancorp
Average Balance Analysis
($ in thousands)
(Unaudited)
	Three Months Ended				Three Months Ended				Three Months Ended
	March 31, 2023				December 31, 2022				March 31, 2022
	Average		Yield/		Average		Yield/		Average		Yield/
	Balance	Interest	Rate		Balance	Interest	Rate		Balance	Interest	Rate
Assets:
Interest-bearing deposits, and other	$     184,470	$    2,176	4.78 %		$     225,274	$  2,090	3.68 %		$  1,460,486	$     870	0.24 %
Securities available for sale - taxable	445,614	2,266	2.06 %		323,510	704	0.86 %		305,600	701	0.93 %
Securities held to maturity	1,115,243	15,754	5.73 %		1,002,446	11,412	4.52 %		—	—
Mortgage loans in process of securitization	159,333	1,648	4.19 %		234,248	2,551	4.32 %		349,027	2,245	2.61 %
Loans and loans held for sale	10,595,669	189,450	7.25 %		10,299,795	164,682	6.34 %		8,049,877	72,196	3.64 %
Total interest-earning assets	12,500,329	211,294	6.86 %		12,085,273	181,439	5.96 %		10,164,990	76,012	3.03 %
Allowance for credit losses on loans	(45,190)				(40,339)				(31,023)
Noninterest-earning assets	430,596				412,959				302,481
Total assets	$ 12,885,735				$ 12,457,893				$ 10,436,448
Liabilities & Shareholders' Equity:
Interest-bearing checking	4,052,081	40,647	4.07 %		4,520,785	37,929	3.33 %		4,015,709	2,204	0.22 %
Savings deposits	237,289	265	0.45 %		252,787	304	0.48 %		230,702	33	0.06 %
Money market	2,848,500	28,608	4.07 %		2,745,904	23,958	3.46 %		2,710,961	5,252	0.79 %
Certificates of deposit	3,322,991	34,922	4.26 %		2,474,427	18,871	3.03 %		1,080,438	1,324	0.50 %
Total interest-bearing deposits	10,460,861	104,442	4.05 %		9,993,903	81,062	3.22 %		8,037,810	8,813	0.44 %
Borrowings	482,723	6,159	5.17 %		451,467	4,967	4.36 %		589,597	1,474	1.01 %
Total interest-bearing liabilities	10,943,584	110,601	4.10 %		10,445,370	86,029	3.27 %		8,627,407	10,287	0.48 %
Noninterest-bearing deposits	304,119				419,008				518,140
Noninterest-bearing liabilities	141,422				147,520				117,064
Total liabilities	11,389,125				11,011,898				9,262,611
Shareholders' equity	1,496,610				1,445,995				1,173,837
Total liabilities and shareholders' equity	$ 12,885,735				$ 12,457,893				$ 10,436,448
Net interest income		$ 100,693				$ 95,410				$ 65,725
Net interest spread			2.76 %				2.69 %				2.55 %
Net interest-earning assets	$  1,556,745				$  1,639,903				$  1,537,583
Net interest margin			3.27 %				3.13 %				2.62 %
Average interest-earning assets to average interest-bearing liabilities			114.23 %				115.70 %				117.82 %

 

Supplemental Results
(Unaudited)
($ in thousands)
		Net Income
		Three Months Ended
		March 31,		December 31,		March 31,
		2023		2022		2022
Segment
Multi-family Mortgage Banking		$                1,966		$            10,228		$               11,492
Mortgage Warehousing		8,641		11,776		13,159
Banking		49,307		40,181		28,764
Other		(4,959)		(5,029)		(3,273)
Total		$              54,955		$            57,156		$               50,142
		Total Assets
		March 31,		December 31,		March 31,
		2023		2022		2022
Segment
Multi-family Mortgage Banking		$            341,487		$          351,274		$             293,286
Mortgage Warehousing		3,318,491		2,519,810		2,863,907
Banking		10,430,293		9,587,544		6,409,943
Other		150,695		156,599		83,456
Total		$       14,240,966		$     12,615,227		$          9,650,592
		Gain on Sale of Loans
		Three Months Ended
		March 31,		December 31,		March 31,
		2023		2022		2022
Loan Type
Multi-family		4,920		$            10,241		$               14,953
Single-family		277		132		457
Small Business Association (SBA)		1,536		894		2,555
Total		$                6,733		$            11,267		$               17,965
		Loans Receivable and Loans Held for Sale
		March 31,		December 31,		March 31,
		2023		2022		2022
Mortgage warehouse lines of credit		$            604,445		$          464,785		$             752,447
Residential real estate		1,215,252		1,178,401		858,325
Multi-family financing		3,566,530		3,135,535		2,876,005
Healthcare financing		1,941,204		1,604,341		850,751
Commercial and commercial real estate (1)		1,194,320		978,661		567,971
Agricultural production and real estate		89,516		95,651		90,688
Consumer and margin loans		15,781		13,498		12,875
		8,627,048		7,470,872		6,009,062
Less: Allowance for credit losses on loans		51,838		44,014		32,102
Loans receivable		$         8,575,210		$       7,426,858		$          5,976,960
Loans held for sale		2,855,250		2,910,576		2,289,094
Total loans, net of allowance		$       11,430,460		$     10,337,434		$          8,266,054

(1)	Includes $672.9 million and $497.0 million of revolving  lines of credit collateralized primarily by single-family mortgage servicing rights as of March 31, 2023 and December 31, 2022, respectively.

 

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SOURCE Merchants Bancorp