Merchants Bancorp Reports Full Year and Fourth Quarter 2020 Results

Rhea-AI Summary

Merchants Bancorp (Nasdaq: MBIN) reported a robust fourth quarter 2020 with net income of $59.8 million, or $1.95 per share, marking a 99% increase year-over-year. This growth was largely driven by an 84% rise in net interest income, propelled by significant mortgage warehouse loan growth and an 88% increase in loan sale gains. Total assets surged by 51% to $9.6 billion, reflecting strong increases in loans held for sale. Despite a rise in loan loss provisions due to COVID-19 uncertainties, the company maintained a strong liquidity position with unused credit lines of $2.6 billion.

Positive

• Net income increased by 99% year-over-year to $59.8 million.
• Net interest income rose by 84% to $69.2 million, spurred by loan growth.
• Total assets grew 51% to $9.6 billion, primarily from higher loan volumes.
• Return on average assets improved to 2.57%, up from 1.81% a year ago.
• Efficiency ratio improved to an industry-leading 24.5%.

Negative

• Allowance for loan losses increased by $11.7 million due to loan growth and COVID-19 uncertainties.
• Non-performing loans rose to $6.3 million, accounting for 0.11% of total loans.

CARMEL, Ind., Jan. 28, 2021 /PRNewswire/ -- Merchants Bancorp (the "Company" or "Merchants") (Nasdaq: MBIN), parent company of Merchants Bank of Indiana, today reported fourth quarter 2020 net income of $59.8 million, or diluted earnings per share of $1.95.  This compared to $30.1 million, or diluted earnings per share of $0.92 in the fourth quarter of 2019, and compared to $55.0 million, or diluted earnings per share of $1.79 in the third quarter of 2020.

The $29.7 million, or 99%, increase in net income for the fourth quarter 2020 compared to the fourth quarter of 2019 was driven by a $31.6 million, or 84%, increase in net interest income that reflected significant growth in mortgage warehouse loans, and an 88% increase in gain on sale of loans, primarily from higher growth in both single-family and multi-family mortgages. 

The $4.8 million, or 9%, increase in net income for the fourth quarter 2020 compared to the third quarter of 2020 was primarily driven by a $3.9 million, or 6%, increase in net interest income that also reflected significant growth in mortgage warehouse loans and a 20 basis point increase in the net interest margin.

"The continued strength of our results in the fourth quarter capped off a year of record-setting performance that defied the economic challenges of a global pandemic. Our investments in technology, talent, and home-grown synergistic businesses, along with conservative underwriting, allowed us to capitalize on historically low interest rates to generate a 133% increase in net income during 2020.  We also saw our earnings per share grow by 143% and assets grow by 51% compared to 2019.  Additionally, during the fourth quarter we delivered a return on average assets of 2.57%, a return on average tangible shareholders' equity of 40.6%, a tangible book value of $20.17 per share, and an industry-leading efficiency ratio of 24.5%," said Michael F. Petrie, Chairman and CEO of Merchants.  

Michael J. Dunlap, President and Chief Operating Officer of Merchants, added, "We are entering 2021 in a strong position to deliver financial solutions within our unique and successful business model.  We remain optimistic about our future because of the hard work and dedication of our employees."

Total Assets
Total assets of $9.6 billion at December 31, 2020 increased $3.3 billion, or 51%, compared to December 31, 2019, and increased $114.9 million, or 1%, compared to September 30, 2020.

The 51% increase compared to December 31, 2019 was primarily due to growth in loans held for sale and loans receivable, which increased a combined total of $3.5 billion, or 68%.  The increase reflected the significant loan growth generated from mortgage warehouse business, primarily resulting from lower interest rates that increased the origination volume and refinancing in the single-family mortgage market, as well as higher loan volume generated in multi-family business. 

Return on average assets was 2.57% for the fourth quarter of 2020 compared to 1.81% for the fourth quarter of 2019 and 2.34% for the third quarter of 2020. 

Asset Quality
The allowance for loan losses of $27.5 million at December 31, 2020 increased $11.7 million compared to December 31, 2019 and increased $4.1 million compared to September 30, 2020.  The increases were primarily based on growth in the loan portfolio, but also reflected uncertainties surrounding the COVID-19 pandemic.  Approximately 87% of the $11.7 million increase compared to December 31, 2019, was related primarily to loan growth, while an additional provision associated with the COVID-19 pandemic represented approximately $0.6 million, or 5%, of the increase.   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 December 31, 2020, the Company had only 11 loans remaining in payment deferral arrangements, with unpaid balances of $0.9 million that represented 0.01% of total loans and loans held for sale. This compared favorably to the unpaid balances of $1.6 million at September 30, 2020.

Non-performing loans were $6.3 million, or 0.11%, of loans receivable at December 31, 2020, compared to $4.7 million, or 0.15% of loans receivable at December 31, 2019, and compared to $7.9 million, or 0.16% of loans receivable at September 30, 2020.  The increase in non-performing loans compared to December 31, 2019 was primarily related to one collateralized agricultural loan that was delinquent greater than 90 days, with repayment still anticipated.

Total Deposits
Total deposits of $7.4 billion at December 31, 2020 increased $1.9 billion, or 35%, compared to December 31, 2019, and increased $323.4 million, or 5%, compared to September 30, 2020. The increases compared to both periods were primarily due to growth in traditional demand accounts, as the Company significantly reduced its balances of brokered certificates of deposits.

Total brokered deposits of $1.2 billion at December 31, 2020 decreased $983.3 million, or 46%, from December 31, 2019 and decreased $554.2 million from September 30, 2020.   Brokered deposits represented 16% of total deposits at December 31, 2020 compared to 39% of total deposits at December 31, 2019 and 24% of total deposits at September 30, 2020.

Liquidity
The Company continues to have significant borrowing capacity, with unused lines of credit at $2.6 billion at December 31, 2020.  This liquidity enhances the ability to effectively manage interest expense and assets levels in the future.  The Company began utilizing the Federal Reserve's discount window during the second quarter of 2020 and the Paycheck Protection Program Liquidity Facility ("PPPLF") during the third quarter of 2020, which have contributed to lower interest expenses and increased borrowing capacity.

Net Interest Income
Net interest income of $69.2 million in the fourth quarter of 2020 increased $31.6 million, or 84%, compared to the fourth quarter of 2019 and increased $3.9 million, or 6%, compared to the third quarter of 2020. 

The 84% increase in net interest income compared to the fourth quarter of 2019 reflected significantly higher loan growth and a higher net interest margin.  The interest rate spread of 2.95% for the fourth quarter of 2020 increased 88 basis points compared to 2.07% in the fourth quarter of 2019. The net interest margin of 3.01% for the fourth quarter of 2020 increased 70 basis points compared to 2.31% for the fourth quarter of 2019. The increase in net interest margin compared to the fourth quarter of 2019 reflected lower funding costs that outpaced the lower interest rates on loans.

The 6% increase in net interest income compared to the third quarter of 2020 reflected an interest rate spread of 2.95% that increased 21 basis points compared to 2.74% in the third quarter of 2020.  The net interest margin of 3.01% for the fourth quarter of 2020 also increased 20 basis points compared to 2.81% for the third quarter of 2020.  The increase in net interest margin compared to the third quarter of 2020 reflected lower funding costs and modestly higher interest rates on loans.

Interest Income
Interest income of $77.9 million in the fourth quarter of 2020 increased $14.1 million, or 22%, compared to the fourth quarter of 2019 and increased $1.6 million, or 2%, compared to the third quarter of 2020. 

The 22% increase in interest income compared to the fourth quarter of 2019 was primarily due to significant loan growth that was partially offset by lower rates.  The higher interest income reflected a $3.0 billion, or 57%, increase in the average balance of loans, including loans held for sale, which reached $8.1 billion for the fourth quarter of 2020. The average yield on loans and loans held for sale of 3.64% for the fourth quarter of 2020 decreased 71 basis points compared to 4.35% for the fourth quarter of 2019. The decline in average yields reflected higher loan volume and lower overall interest rates in the fourth quarter of 2020.

The 2% increase in interest income compared to the third quarter of 2020 reflected a $217.8 million, or 3%, increase in the average balance of loans, including loans held for sale, which reached $8.1 billion for the fourth quarter of 2020. The average yield on loans and loans held for sale of 3.64% for the fourth quarter of 2020 increased 3 basis points compared to 3.61% for the third quarter of 2020. 

Interest Expense
Total interest expense of $8.7 million for the fourth quarter of 2020 decreased $17.5 million, or 67%, compared to the fourth quarter of 2019 and decreased $2.3 million, or 21%, compared to the third quarter of 2020. Interest expense on deposits of $7.1 million for the fourth quarter of 2020 decreased $17.9 million, or 72%, compared to the fourth quarter of 2019 and decreased $2.0 million, or 22%, compared to the third quarter of 2020.

The 72% decrease in interest expense on deposits compared to the fourth quarter of 2019 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 $6.8 billion for the fourth quarter of 2020 increased $1.3 billion, or 23%, compared to the fourth quarter of 2019. The average cost of interest-bearing deposits was 0.41% for the fourth quarter of 2020, which was a 137 basis point decrease compared to 1.78% for the fourth quarter of 2019. 

The 22% decrease in interest expense on deposits compared to the third quarter of 2020 was primarily due to the decreases in balances of brokered certificates of deposits.  The average balance of interest-bearing deposits of $6.8 billion for the fourth quarter of 2020 decreased $402.7 million, or 6%, compared to the third quarter of 2020. The average cost of interest-bearing deposits was 0.41% for the fourth quarter of 2020, which was a 9 basis point decrease compared to 0.50% in the third quarter of 2020. 

Noninterest Income
Noninterest income of $42.7 million for the fourth quarter of 2020 increased $20.0 million, or 88%, compared to the fourth quarter of 2019 and increased $4.1 million, or 11%, compared to the third quarter of 2020.

The 88% increase in noninterest income compared to the fourth quarter of 2019 was primarily due to a $13.5 million, or 88%, increase in gain on sale of loans and a $3.4 million increase in mortgage warehouse fees. Noninterest income for the fourth quarter of 2020 included a $2.1 million positive fair market value adjustment to mortgage servicing rights, which compared to a $1.1 million positive fair market value adjustment for the fourth quarter of 2019.

The 11% increase in noninterest income compared to the third quarter of 2020 was primarily due to a $3.7 million increase in loan servicing fees.   Included in loan servicing fees for the fourth quarter of 2020 was a $2.1 million positive fair market value adjustment to mortgage servicing rights, which compared to a $1.0 million negative fair market value adjustment for the third quarter of 2020.

At December 31, 2020, the mortgage servicing rights asset was valued at $82.6 million, an increase of 11% compared to December 31, 2019 and an increase of 9% compared to September 30, 2020.  The value of mortgage servicing rights generally increases in rising interest rate environments and declines in falling interest rate environments.

Noninterest Expense
Noninterest expense of $27.5 million for the fourth quarter of 2020 increased $8.6 million, or 46%, compared to the fourth quarter of 2019 and increased $1.1 million, or 4%, compared to the third quarter of 2020. 

The 46% increase in noninterest expense compared to the fourth quarter of 2019 was due primarily to a $6.1 million, or 59%, increase in salaries and employee benefits to support business growth and a $1.9 million, or 192%, increase in loan expenses.    The efficiency ratio of 24.5% for the fourth quarter of 2020 compared to 31.2% for the fourth quarter of 2019.

The 4% increase in noninterest expense compared to the third quarter of 2020 was primarily due to a $0.9 million, or 133%, increase in professional fees.  The efficiency ratio of 24.5% for the fourth quarter of 2020 compared to 25.4% for the third quarter of 2020.

Segments
For the fourth quarter of 2020, net income for Mortgage Warehousing increased 137% compared to the fourth quarter of 2019, reflecting significant growth in net interest income from higher loan volume.

For the fourth quarter of 2020, net income for Multi-family Mortgage Banking increased 39% compared with the fourth quarter of 2019, primarily due to higher gain on sale of loans that was partially offset by higher salaries and benefit expenses to support growth. The segment increased 142% compared to the third quarter of 2020, primarily due to higher noninterest income from gain on sale of loans and loan servicing fees that reflected a positive fair market value adjustment. 

For the fourth quarter of 2020, net income for Banking increased 133% compared to the fourth quarter of 2019, reflecting higher net interest income and gain on sale of loans in the single-family mortgage business.

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 $9.6 billion in assets and $7.4 billion in deposits as of December 31, 2020, 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.

 

Consolidated Balance Sheets
(Unaudited)
(In thousands, except share data)
		December 31,		September 30,		June 30,		March 31,		December 31,
		2020		2020		2020		2020		2019
Assets
Cash and due from banks		$                10,063		$                  9,276		$                13,830		$                  8,168		$                13,909
Interest-earning demand accounts		169,665		419,926		389,357		559,914		492,800
Cash and cash equivalents		179,728		429,202		403,187		568,082		506,709
Securities purchased under agreements to resell		6,580		6,616		6,651		6,685		6,723
Mortgage loans in process of securitization		338,733		374,721		518,788		465,157		269,891
Available for sale securities		269,802		278,861		259,656		339,053		290,243
Federal Home Loan Bank (FHLB) stock		70,656		70,656		53,224		46,156		20,369
Loans held for sale (includes $40,044, $41,418, $42,000,     $18,938 and $19,592, respectively, at fair value)		3,070,154		3,319,619		3,877,769		2,796,008		2,093,789
Loans receivable, net of allowance for loan losses of $27,500,     $23,436, $20,497, $18,883 and $15,842, respectively		5,507,926		4,857,554		4,133,315		3,501,770		3,012,468
Premises and equipment, net		29,761		29,261		29,362		29,415		29,274
Mortgage servicing rights		82,604		75,772		72,889		69,978		74,387
Interest receivable		21,770		19,130		18,574		18,139		18,359
Goodwill		15,845		15,845		15,845		15,845		15,845
Intangible assets, net		2,283		2,657		3,038		3,419		3,799
Other assets and receivables		49,533		50,581		47,102		48,691		30,072
Total assets		$           9,645,375		$           9,530,475		$           9,439,400		$           7,908,398		$           6,371,928
Liabilities and Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing		$              853,648		$              666,081		$              601,265		$              327,805		$              272,037
Interest-bearing		6,554,418		6,418,566		6,307,363		6,394,900		5,206,038
Total deposits		7,408,066		7,084,647		6,908,628		6,722,705		5,478,075
Borrowings		1,348,256		1,618,201		1,761,113		444,567		181,439
Deferred and current tax liabilities, net		20,405		22,405		21,020		25,013		16,917
Other liabilities		58,027		48,087		40,441		43,144		41,769
Total liabilities		8,834,754		8,773,340		8,731,202		7,235,429		5,718,200
Commitments and  Contingencies
Shareholders' Equity
Common stock, without par value
Authorized - 50,000,000 shares
Issued and outstanding - 28,747,083 shares, 28,745,614          shares, 28,745,614 shares, 28,742,484 shares and          28,706,438 shares, respectively		135,857		136,103		135,949		135,746		135,640
Preferred stock, without par value - 5,000,000 total shares     authorized
8% Preferred stock - $1,000 per share liquidation         preference
Authorized - 50,000 shares
Issued and outstanding - 41,625 shares		41,581		41,581		41,581		41,581		41,581
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 (all equivalent  to 5,000,000 depositary shares)		120,844		120,844		120,844		120,844		120,844
Retained earnings		461,744		407,979		358,895		323,651		304,984
Accumulated other comprehensive income		374		407		708		926		458
Total shareholders' equity		810,621		757,135		708,198		672,969		653,728
Total liabilities and shareholders' equity		$           9,645,375		$           9,530,475		$           9,439,400		$           7,908,398		$           6,371,928

 

Consolidated Statement of Income
(Unaudited)
(In thousands, except share data)
		Three Months Ended									Twelve Months Ended
		December 31,			September 30,			December 31,			December 31,			December 31,
		2020			2020			2019			2020			2019
Interest Income
Loans		$	74,515		$	71,857		$	56,829		$	263,915		$	186,428
Mortgage loans in process of securitization			2,542			3,250			2,256			11,122			6,690
Investment securities:
Available for sale - taxable			422			431			1,576			3,147			6,208
Available for sale - tax exempt			11			37			55			123			272
Federal Home Loan Bank stock			341			531			190			1,558			932
Other			80			152			2,893			2,925			11,465
Total interest income			77,911			76,258			63,799			282,790			211,995
Interest Expense
Deposits			7,106			9,104			25,051			52,238			84,661
Borrowed funds			1,568			1,832			1,127			6,406			5,036
Total interest expense			8,674			10,936			26,178			58,644			89,697
Net Interest Income			69,237			65,322			37,621			224,146			122,298
Provision for loan losses			4,114			2,981			1,993			11,838			3,940
Net Interest Income After Provision for Loan Losses			65,123			62,341			35,628			212,308			118,358
Noninterest Income
Gain on sale of loans			28,830			29,498			15,352			96,578			35,411
Loan servicing fees, net			3,069			(643)			2,200			(1,801)			(1,118)
Mortgage warehouse fees			5,926			6,833			2,555			20,980			7,145
Gains on sale of investments available for sale (1)			—			441			352			441			476
Other income			4,901			2,528			2,244			11,275			5,175
Total noninterest income			42,726			38,657			22,703			127,473			47,089
Noninterest Expense
Salaries and employee benefits			16,565			16,567			10,422			59,200			38,093
Loan expenses			2,938			2,944			1,007			9,085			4,534
Occupancy and equipment			1,438			1,420			1,793			5,733			4,609
Professional fees			1,657			712			826			3,664			2,326
Deposit insurance expense			759			1,404			1,393			5,800			2,747
Technology expense			832			903			848			3,061			2,623
Other expense			3,276			2,434			2,547			9,881			8,381
Total noninterest expense			27,465			26,384			18,836			96,424			63,313
Income Before Income Taxes			80,384			74,614			39,495			243,357			102,134
Provision for income taxes (2)			20,598			19,612			9,434			62,824			24,805
Net Income		$	59,786		$	55,002		$	30,061		$	180,533		$	77,329
Dividends on preferred stock			(3,618)			(3,618)			(3,618)			(14,473)			(9,216)
Net Income Allocated to Common Shareholders			56,168			51,384			26,443			166,060			68,113
Basic Earnings Per Share		$	1.95		$	1.79		$	0.92		$	5.78		$	2.37
Diluted Earnings Per Share		$	1.95		$	1.79		$	0.92		$	5.77		$	2.37
Weighted-Average Shares Outstanding
Basic			28,745,767			28,745,614			28,706,438			28,742,494			28,705,125
Diluted			28,812,009			28,778,462			28,754,078			28,778,075			28,745,707
(1) Includes $0, $441, $352, $441, and $476, respectively, related to accumulated other comprehensive earnings reclassifications.
(2) Includes $0, $(97), $(86), $(97), and $(117), respectively, related to income tax (expense)/benefit for reclassification items.

 

Key Operating Results
(Unaudited)
($ in thousands, except share data)
			Three Months Ended						Twelve Months Ended
			December 31,		September 30,		December 31,		December 31,		December 31,
			2020		2020		2019		2020		2019
Noninterest expense			$             27,465		$            26,384		$             18,836		$             96,424		$             63,313
Net interest income (before provision for losses)			69,237		65,322		37,621		224,146		122,298
Noninterest income			42,726		38,657		22,703		127,473		47,089
Total income			$           111,963		$          103,979		$             60,324		$           351,619		$           169,387
Efficiency ratio			24.53%		25.37%		31.22%		27.42%		37.38%
Average assets			$        9,317,570		$       9,409,450		$        6,639,736		$        8,509,847		$        5,262,300
Net income			$             59,786		$            55,002		$             30,061		$           180,533		$             77,329
Return on average assets before annualizing			0.64%		0.58%		0.45%		2.12%		1.47%
Annualization factor			4.00		4.00		4.00		1.00		1.00
Return on average assets			2.57%		2.34%		1.81%		2.12%		1.47%
Return on average tangible common shareholders' equity (1)			40.64%		41.01%		25.65%		34.02%		17.56%
Tangible book value per common share (1)			$               20.17		$              18.30		$               14.68		$               20.17		$               14.68
Tangible common shareholders' equity/tangible assets (1)			6.02%		5.53%		6.63%		6.02%		6.63%
(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 Months Ended						Twelve Months Ended
			December 31,		September 30,		December 31,		December 31,		December 31,
			2020		2020		2019		2020		2019
Net income			$             59,786		$            55,002		$             30,061		$           180,533		$             77,329
Less: preferred stock dividends			(3,618)		(3,618)		(3,618)		(14,473)		(9,216)
Net income available to common shareholders			$             56,168		$            51,384		$             26,443		$           166,060		$             68,113
Average shareholders' equity			$           783,837		$          732,533		$           644,588		$           719,630		$           537,946
Less: average goodwill & intangibles			(18,334)		(18,707)		(19,607)		(18,899)		(20,243)
Less: average preferred stock			(212,646)		(212,646)		(212,675)		(212,646)		(129,881)
Tangible common shareholders' equity			$           552,857		$          501,180		$           412,306		$           488,085		$           387,822
Annualization factor			4.00		4.00		4.00		1.00		1.00
Return on average tangible common shareholders' equity			40.64%		41.01%		25.65%		34.02%		17.56%
Total equity			$           810,621		$          757,135		$           653,728		$           810,621		$           653,728
Less: goodwill and intangibles			(18,128)		(18,502)		(19,644)		(18,128)		(19,644)
Less: preferred stock			(212,646)		(212,646)		(212,646)		(212,646)		(212,646)
Tangible common shareholders' equity			$           579,847		$          525,987		$           421,438		$           579,847		$           421,438
Assets			$        9,645,375		$       9,530,475		$        6,371,928		$        9,645,375		$        6,371,928
Less: goodwill and intangibles			(18,128)		(18,502)		(19,644)		(18,128)		(19,644)
Tangible assets			$        9,627,247		$       9,511,973		$        6,352,284		$        9,627,247		$        6,352,284
Ending common shares			28,747,083		28,745,614		28,706,438		28,747,083		28,706,438
Tangible book value per common share			$               20.17		$              18.30		$               14.68		$               20.17		$               14.68
Tangible common shareholders' equity/tangible assets			6.02%		5.53%		6.63%		6.02%		6.63%

 

Merchants Bancorp
Average Balance Analysis
($ in thousands)
(Unaudited)
	Three Months Ended				Three Months Ended				Three Months Ended
	December 31, 2020				September 30, 2020				December 31, 2019
	Average		Yield/		Average		Yield/		Average		Yield/
	Balance	Interest	Rate		Balance	Interest	Rate		Balance	Interest	Rate
Assets:
Interest-bearing deposits, and other	$      328,635	$      421	0.51%		$      587,804	$       683	0.46%		$        702,706	$    3,083	1.74%
Securities available for sale - taxable	276,358	422	0.61%		269,896	431	0.64%		288,935	1,576	2.16%
Securities available for sale - tax exempt	1,368	11	3.20%		5,145	37	2.86%		7,527	55	2.90%
Mortgage loans in process of securitization	397,237	2,542	2.55%		449,336	3,250	2.88%		286,712	2,256	3.12%
Loans and loans held for sale	8,141,559	74,515	3.64%		7,923,726	71,857	3.61%		5,182,530	56,829	4.35%
Total interest-earning assets	9,145,157	77,911	3.39%		9,235,907	76,258	3.28%		6,468,410	63,799	3.91%
Allowance for loan losses	(24,684)				(21,585)				(14,126)
Noninterest-earning assets	197,097				195,128				185,452
Total assets	$    9,317,570				$   9,409,450				$     6,639,736
Liabilities & Shareholders' Equity:
Interest-bearing checking	4,301,607	1,256	0.12%		3,890,865	1,368	0.14%		1,971,710	7,652	1.54%
Savings deposits	185,515	41	0.09%		180,931	34	0.07%		154,997	76	0.19%
Money market	1,734,321	4,312	0.99%		1,578,956	3,861	0.97%		1,000,971	4,339	1.72%
Certificates of deposit	616,493	1,497	0.97%		1,589,852	3,841	0.96%		2,453,211	12,984	2.10%
Total interest-bearing deposits	6,837,936	7,106	0.41%		7,240,604	9,104	0.50%		5,580,889	25,051	1.78%
Borrowings	990,707	1,568	0.63%		800,021	1,832	0.91%		69,556	1,127	6.43%
Total interest-bearing liabilities	7,828,643	8,674	0.44%		8,040,625	10,936	0.54%		5,650,445	26,178	1.84%
Noninterest-bearing deposits	634,231				579,145				278,447
Noninterest-bearing liabilities	70,859				57,147				66,256
Total liabilities	8,533,733				8,676,917				5,995,148
Shareholders' equity	783,837				732,533				644,588
Total liabilities and shareholders' equity	$    9,317,570				$   9,409,450				$     6,639,736
Net interest income		$  69,237				$   65,322				$   37,621
Net interest spread			2.95%				2.74%				2.07%
Net interest-earning assets	$    1,316,514				$   1,195,282				$        817,965
Net interest margin			3.01%				2.81%				2.31%
Average interest-earning assets to average interest-bearing liabilities			116.82%				114.87%				114.48%

 

Supplemental Results
(Unaudited)
($ in thousands)
				Net Income						Net Income
				Three Months Ended						Twelve Months Ended
				December 31,		September 30,		December 31,		December 31,
				2020		2020		2019		2020		2019
Segment
Multi-family Mortgage Banking				$              14,231		$              5,891		$               10,217		$          29,172		$          14,763
Mortgage Warehousing				32,387		33,793		13,690		106,329		34,766
Banking				16,389		17,486		7,028		53,637		31,854
Other				(3,221)		(2,168)		(874)		(8,605)		(4,054)
Total				$              59,786		$            55,002		$               30,061		$        180,533		$          77,329
				Total Assets
				December 31,		September 30,		December 31,
				2020		2020		2019
Segment
Multi-family Mortgage Banking				$            210,714		$          194,624		$             188,866
Mortgage Warehousing				4,893,513		5,179,664		3,124,684
Banking				4,498,880		4,111,984		3,018,568
Other				42,268		44,203		39,810
Total				$         9,645,375		$       9,530,475		$          6,371,928
				Gain on Sale of Loans						Gain on Sale of Loans
				Three Months Ended						Twelve Months Ended
				December 31,		September 30,		December 31,		December 31,
				2020		2020		2019		2020		2019
Loan Type
Multi-family				$              17,070		$            14,872		$               14,177		$          57,633		$          32,891
Single-family				10,902		14,093		1,171		37,127		2,451
Small Business Association (SBA)				858		533		4		1,818		69
Total				$              28,830		$            29,498		$               15,352		$          96,578		$          35,411
				Loans Receivable and Loans Held for Sale
				December 31,		September 30,		December 31,
				2020		2020		2019
Mortgage warehouse lines of credit				$         1,605,745		$       1,647,521		$             765,151
Residential real estate				678,848		572,527		413,835
Multi-family and healthcare financing				2,749,020		2,125,516		1,347,125
Commercial and commercial real estate				387,294		419,812		398,601
Agricultural production and real estate				101,268		101,636		85,210
Consumer and margin loans				13,251		13,978		18,388
				5,535,426		4,880,990		3,028,310
Less: Allowance for loan losses				27,500		23,436		15,842
Loans receivable				$         5,507,926		$       4,857,554		$          3,012,468
Loans held for sale				3,070,154		3,319,619		2,093,789
Total loans, net of allowance				$         8,578,080		$       8,177,173		$          5,106,257

 

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SOURCE Merchants Bancorp