Merchants Bancorp Reports Full Year and Fourth Quarter 2022 Results

Rhea-AI Summary

Merchants Bancorp (MBIN) reported a full-year 2022 net income of $219.7 million, down 3% from 2021, with diluted earnings per share of $4.47, a decrease of 6%. For Q4 2022, net income rose 4% year-over-year to $57.2 million, but dipped 2% sequentially. Total assets grew 5% from Q3 2022 and 12% from the previous year to $12.6 billion. Loans receivable increased by 7% from Q3 2022 and 29% year-over-year. The net interest margin improved to 3.13%. However, the allowance for credit losses rose, indicating potential future risks. Brokered deposits saw significant growth, enhancing liquidity alongside a $284 million securitization deal.

Positive

• Net income for Q4 2022 rose 4% year-over-year.
• Total assets increased 5% from Q3 2022 and 12% year-over-year to $12.6 billion.
• Loans receivable grew by 7% from Q3 2022 and 29% year-over-year.
• Net interest margin improved to 3.13%.
• Tangible book value increased by 22% year-over-year to $21.88.

Negative

• Full-year 2022 net income decreased 3% compared to 2021.
• Diluted earnings per share for Q4 2022 decreased 2% year-over-year and 8% sequentially.
• Increase in allowance for credit losses, up $5.0 million from Q3 2022, indicating potential risk.

• Full year 2022 net income of $219.7 million decreased 3% compared to 2021
• Full year 2022 diluted earnings per common share of $4.47 decreased 6% compared to 2021
• Fourth quarter 2022 net income of $57.2 million increased 4% compared to fourth quarter of 2021 and decreased 2% compared to the third quarter 2022
• Fourth quarter 2022 diluted earnings per common share of $1.12 decreased 2% compared to the fourth quarter of 2021 and decreased 8% compared to the third quarter of 2022
• Total assets of $12.6 billion increased 5% compared to September 30, 2022, and increased 12% compared to December 31, 2021
• Loans receivable of $7.4 billion, net of allowance for credit losses on loans, increased $0.5 billion, or 7%, compared to September 30, 2022, and increased $1.7 billion, or 29% compared to December 31, 2021
• Net interest margin was 3.13% in the fourth quarter of 2022 compared to 2.70% in the fourth quarter of 2021 and 3.05% in the third quarter of 2022
• Efficiency ratio was 31.3% in the fourth quarter of 2022 compared to 33.3% in the fourth quarter of 2021 and 30.5% in the third quarter of 2022
• Tangible book value per common share of $21.88 increased 22% compared to $17.96 in the fourth quarter of 2021 and increased 5% compared to $20.78 in the third quarter of 2022
• On November 3, 2022, the Company completed a $284 million securitization of 16 multi-family mortgage loans through a Freddie Mac-sponsored Q-Series transaction

CARMEL, Ind., Jan. 30, 2023 /PRNewswire/ -- Merchants Bancorp (the "Company" or "Merchants") (Nasdaq: MBIN), parent company of Merchants Bank of Indiana, today reported fourth quarter 2022 net income of $57.2 million, or diluted earnings per common share of $1.12.  This compared to $55.2 million, or diluted earnings per common share of $1.14 in the fourth quarter of 2021, and compared to $58.5 million, or diluted earnings per common share of $1.22 in the third quarter of 2022.

"We had a strong finish to 2022, on the heels of a $1.2 billion multi-family loan securitization and a $142.5 million preferred capital raise in the last quarter to support the loan growth in our pipeline.  We continued our momentum of loan growth and executed our strategy to add shareholder value in any economic or interest rate environment.  Tangible book value grew by 22%, to $21.88 per share during 2022 and our efficiency ratio remained at an industry-leading 31.3% for the year.  The Company continues to enhance its product offerings and is well positioned to continue delivering superior results for the foreseeable future," said Michael F. Petrie, Chairman and CEO of Merchants. 

Michael J. Dunlap, President and Chief Operating Officer of Merchants, added, "Our team has surpassed all expectations in 2022 by providing strong results and new opportunities to add value to our customers.  Their focus and dedication to executing well in a dynamic interest rate environment has led to our continued success and excitement about what is on the horizon in 2023."  

Net income for the fourth quarter 2022 increased by $2.0 million, or 4% compared to the fourth quarter of 2021, primarily driven by a $22.7 million, or 31% increase in net interest income that was partially offset by a $17.2 million, or 60%, decrease in gain on sale of loans and a $3.8 million, or 148%, increase in provision for credit losses.

Net income for the fourth quarter 2022 decreased by $1.3 million, or 2%, compared to the third quarter of 2022, primarily driven by a $6.2 million, or 21%, decrease in noninterest income, a $4.2 million increase in provision for credit losses, and a $2.2 million, or 6%, increase in noninterest expense that was partially offset by a $10.0 million, or 12% increase in net interest income.  

Total Assets
Total assets of $12.6 billion at December 31, 2022 increased 5%, compared to September 30, 2022, and increased 12%, compared to December 31, 2021.  Increases compared to both periods were primarily due to significant growth in the multi-family and healthcare loan portfolios, as well as an increase in held to maturity securities that were acquired in connection with the Company's loan sales and securitizations.

Return on average assets was 1.84% for the fourth quarter of 2022 compared to 2.02% for the fourth quarter of 2021 and 2.05% for the third quarter of 2022.

Asset Quality
The allowance for credit losses on loans of $44.0 million at December 31, 2022 increased $5.0 million compared to September 30, 2022 and increased $12.7 million compared to December 31, 2021.  The increases were primarily due to growth in the multi-family, commercial, residential, and healthcare loan portfolios, as well as revisions to market forecasts for unemployment and home price indices. 

Non-performing loans were $26.7 million, or 0.38%, of loans receivable at December 31, 2022, compared to 0.38% at September 30, 2022 and 0.01% at December 31, 2021.  The increase compared to both periods was primarily due to the delinquency of one healthcare customer that is fully collateralized and full payment is expected.

Total Deposits
Total deposits of $10.1 billion at December 31, 2022 decreased $248.1 million, or 2%, compared to September 30, 2022, and increased $1.1 billion, or 12%, compared to December 31, 2021. The decrease compared September 30, 2022, was primarily due to a decrease in demand deposit accounts that was partially offset by an increase in certificates of deposits.  The increase compared to December 31, 2021, was primarily due to an increase in brokered certificates of deposit that was partially offset by a decrease in demand accounts.

Total brokered deposits of $2.8 billion at December 31, 2022 increased $544.1 million, or 25%, from September 30, 2022 and increased $603.0 million, or 28%, from December 31, 2021. Brokered deposits represented 27% of total deposits at December 31, 2022 compared to 22% of total deposits at September 30, 2022 and 24% of total deposits at December 31, 2021.  As of December 31, 2022, brokered certificates of deposit had a weighted average remaining duration of 73 days, with none exceeding 180 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 duration characteristics of its deposit and loan portfolios.

Liquidity
Cash balances of $226.2 million at December 31, 2022 decreased by $97.8 million compared to September 30, 2022 and decreased by $806.5 million compared to December 31, 2021.  The Company continues to have significant borrowing capacity, with unused lines of credit totaling $3.1 billion at December 31, 2022 compared to $2.8 billion at September 30, 2022 and $2.4 billion at December 31, 2021.  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
December 31, 2022 and 2021

Net Interest Income of $95.4 million increased $22.7 million, or 31% compared to $72.7 million, reflecting higher yields and average balances on loans and loans held for sale, as well as securities held to maturity, which were partially offset by higher interest rates on deposits and borrowings. 

• Interest rate spread of 2.69% increased 7 basis points compared to 2.62%.
• Net interest margin of 3.13% increased 43 basis points compared to 2.70%.

Interest Income of $181.4 million increased 120% compared to $82.6 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 $10.3 billion for loans and loans held for sale increased 14% compared to $9.1 billion.
• Average yield on loans and loans held for sale of 6.34% increased 297 basis points compared to 3.37%.

Interest Expense of $86.0 million increased $76.2 million, or 774%, compared to $9.8 million.  Interest expense on deposits of $81.1 million increased $72.6 million, or 855%, compared $8.5 million, primarily reflecting higher rates on interest bearing checking, money market, and certificates of deposit accounts.

• Average balances of $10.0 billion for interest-bearing deposits increased 20% compared to $8.3 billion.
• Average interest rates of 3.22% for interest-bearing deposits increased 281 basis points compared to 0.41%.

Noninterest Income of $23.0 million decreased $17.3 million, or 43%, compared to $40.3 million, primarily due to a $17.2 million decrease in gain on sale of loans, partially offset by a $1.3 million increase in loan servicing fees.

• 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 $0.2 million negative fair market value adjustment to mortgage 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. This compared to a $1.9 million positive fair market value adjustment to mortgage servicing rights, of which $0.9 million was in the Banking segment and $1.0 million was in the Multi-family Mortgage Banking segment.

Noninterest Expense of $37.1 million decreased $0.5 million, or 1%, compared to $37.6 million, primarily due to decreases in salaries and employee benefits from lower commissions on gain on sale of loans. 

• The efficiency ratio of 31.3% decreased 197 basis points compared to 33.3%.

Comparison of Operating Results for the Three Months Ended
December 31, 2022 and September 30, 2022

Net Interest Income of $95.4 million increased $10.0 million, or 12% compared to $85.4 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 2.69% decreased 8 basis points compared to 2.77%.
• Net interest margin of 3.13% increased 8 basis points compared to 3.05%.

Interest Income of $181.4 million increased $47.3 million, or 35%, compared to $134.1 million, reflecting an increase in yields and average balances of loans and loans held for sale, as well as an increase in balances of securities held to maturity.

• Average balances of $10.3 billion for loans and loans held for sale increased $54.5 million, or 1%, compared to $10.2 billion.
• Average yield on loans and loans held for sale of 6.34% increased 134 basis points compared to 5.00%.

Interest Expense of $86.0 million increased $37.3 million, or 77%, compared to $48.7 million.  Interest expense on deposits of $81.1 million increased $36.1 million, or 80%, compared to $45.0 million, reflecting higher interest rates on interest bearing checking, money market, and certificates of deposit accounts.

• Average balances of $10.0 billion for interest-bearing deposits increased $1.0 billion, or 11%, compared to $9.0 billion.
• Average interest rates of 3.22% for interest-bearing deposits increased 124 basis points compared to 1.98%.

Noninterest Income of $23.0 million decreased $6.2 million, or 21%, compared $29.2 million, primarily due to a $5.5 million, or 67% decrease in loan servicing fees related to lower fair market value adjustments to mortgage servicing rights, and a $2.1 million, or 16%, decrease in gain on sale of loans.

• The decrease in gain on sale of loans was associated with lower volume in the secondary market for multi-family loans.
• Loan servicing fees included a $0.2 million negative fair market value adjustment to mortgage 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. This compared to a $4.6 million positive fair market value adjustment to servicing rights, of which $0.9 million was in the Banking segment and $3.7 million was in the Multi-family Mortgage Banking segment.

Noninterest Expense of $37.1 million increased $2.2 million, or 6%, compared to $35.0 million, primarily due to increases in professional fees related to growth in the low-income housing tax credit syndication business.

• The efficiency ratio of 31.3% increased 80 basis points compared to 30.5%.

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 offers multi-family housing and healthcare facility financing and servicing; Mortgage Warehousing that offers mortgage warehouse financing; and Banking that offers retail and correspondent residential mortgage banking, agricultural lending, and traditional community banking.  Merchants Bancorp, with $12.6 billion in assets and $10.1 billion in deposits as of December 31, 2022, 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, 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 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)
		December 31,		September 30,		June 30,		March 31,		December 31,
		2022		2022		2022		2022		2021
Assets
Cash and due from banks		$              22,170		$              13,796		$              10,714		$                9,853		$              14,030
Interest-earning demand accounts		203,994		310,165		247,432		401,668		1,018,584
Cash and cash equivalents		226,164		323,961		258,146		411,521		1,032,614
Securities purchased under agreements to resell		3,464		3,497		3,520		4,798		5,888
Mortgage loans in process of securitization		154,194		137,448		323,046		324,280		569,239
Securities available for sale		323,337		322,069		336,814		314,266		310,629
Securities held to maturity		1,119,078		1,005,487		—		—		—
Federal Home Loan Bank (FHLB) stock		39,130		39,130		39,130		28,804		29,588
Loans held for sale (includes $82,192, $68,785, $41,991, $14,567 and $48,583, respectively, at fair value)		2,910,576		2,844,750		2,759,116		2,289,094		3,303,199
Loans receivable, net of allowance for credit losses on loans of $44,014, $38,996,  $37,474, $32,102 and $31,344, respectively		7,426,858		6,919,128		7,033,203		5,976,960		5,751,319
Premises and equipment, net		35,438		35,492		35,085		34,559		31,212
Servicing rights		146,248		144,984		130,710		121,036		110,348
Interest receivable		56,262		40,170		26,184		23,499		24,103
Goodwill		15,845		15,845		15,845		15,845		15,845
Intangible assets, net		1,186		1,307		1,441		1,574		1,707
Other assets and receivables		157,447		145,454		123,815		104,356		92,947
Total assets		$       12,615,227		$       11,978,722		$       11,086,055		$         9,650,592		$       11,278,638
Liabilities and Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing		$            326,875		$            315,868		$            444,461		$            461,193		$            641,442
Interest-bearing		9,744,470		10,003,611		7,855,277		7,014,628		8,341,171
Total deposits		10,071,345		10,319,479		8,299,738		7,475,821		8,982,613
Borrowings		930,392		97,279		1,440,904		879,929		1,033,954
Deferred and current tax liabilities, net		19,613		19,124		19,414		30,695		19,170
Other liabilities		134,138		130,250		97,460		75,644		87,492
Total liabilities		11,155,488		10,566,132		9,857,516		8,462,089		10,123,229
Commitments and  Contingencies
Shareholders' Equity
Common stock, without par value
Authorized - 75,000,000 shares, 75,000,000 shares, 75,000,000 shares, 50,000,000 shares and 50,000,000 shares
Issued and outstanding  - 43,113,127 shares, 43,109,578 shares, 43,106,505 shares, 43,267,776 shares and 43,180,079 shares		137,781		137,226		136,671		137,882		137,565
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		137,371		—		—		—
Retained earnings		832,871		787,530		737,789		694,776		657,149
Accumulated other comprehensive loss		(10,521)		(11,686)		(8,070)		(6,304)		(1,454)
Total shareholders' equity		1,459,739		1,412,590		1,228,539		1,188,503		1,155,409
Total liabilities and shareholders' equity		$       12,615,227		$       11,978,722		$       11,086,055		$         9,650,592		$       11,278,638

 

Consolidated Statement of Income
(Unaudited)
(In thousands, except share data)
		Three Months Ended									Change
		December 31,			September 30,			December 31,			4Q22		4Q22
		2022			2022			2021			vs. 3Q22		vs. 4Q21
Interest Income
Loans		$	164,682		$	129,101		$	77,113		28 %		114 %
Mortgage loans in process of securitization			2,551			2,162			4,018		18 %		-37 %
Investment securities:
Available for sale - taxable			704			485			1,007		45 %		-30 %
Available for sale - tax exempt			—			—			9		—		-100 %
Held to maturity			11,412			970			—		1076 %		100 %
Federal Home Loan Bank stock			288			379			177		-24 %		63 %
Other			1,802			1,015			261		78 %		590 %
Total interest income			181,439			134,112			82,585		35 %		120 %
Interest Expense
Deposits			81,062			45,002			8,492		80 %		855 %
Borrowed funds			4,967			3,725			1,350		33 %		268 %
Total interest expense			86,029			48,727			9,842		77 %		774 %
Net Interest Income			95,410			85,385			72,743		12 %		31 %
Provision for credit losses			6,407			2,225			2,585		188 %		148 %
Net Interest Income After Provision for Credit Losses			89,003			83,160			70,158		7 %		27 %
Noninterest Income
Gain on sale of loans			11,267			13,354			28,430		-16 %		-60 %
Loan servicing fees, net			2,691			8,169			1,382		-67 %		95 %
Mortgage warehouse fees			1,081			1,105			2,469		-2 %		-56 %
Gains on sale of investments available for sale (1)			—			—			191		—		-100 %
Syndication and asset management fees			4,207			3,073			5,329		37 %		-21 %
Other income			3,736			3,485			2,470		7 %		51 %
Total noninterest income			22,982			29,186			40,271		-21 %		-43 %
Noninterest Expense
Salaries and employee benefits			22,290			23,027			25,387		-3 %		-12 %
Loan expenses			1,082			1,226			1,479		-12 %		-27 %
Occupancy and equipment			2,377			1,967			2,069		21 %		15 %
Professional fees			3,739			2,429			3,325		54 %		12 %
Deposit insurance expense			1,279			755			705		69 %		81 %
Technology expense			1,417			1,325			1,123		7 %		26 %
Other expense			4,925			4,222			3,558		17 %		38 %
Total noninterest expense			37,109			34,951			37,646		6 %		-1 %
Income Before Income Taxes			74,876			77,395			72,783		-3 %		3 %
Provision for income taxes (2)			17,720			18,907			17,582		-6 %		1 %
Net Income		$	57,156		$	58,488		$	55,201		-2 %		4 %
Dividends on preferred stock			(8,797)			(5,729)			(5,728)		54 %		54 %
Net Income Allocated to Common Shareholders		$	48,359		$	52,759		$	49,473		-8 %		-2 %
Basic Earnings Per Share		$	1.12		$	1.22		$	1.15		-8 %		-3 %
Diluted Earnings Per Share		$	1.12		$	1.22		$	1.14		-8 %		-2 %
Weighted-Average Shares Outstanding
Basic			43,111,353			43,107,975			43,179,377
Diluted			43,274,758			43,258,925			43,399,064
(1) Includes $0, $0, and $191 respectively, related to accumulated other comprehensive earnings reclassifications.
(2) Includes $0, $0, and $(46) respectively, related to income tax (expense)/benefit for reclassification items.

 

Consolidated Statement of Income
(Unaudited)
(In thousands, except share data)
		Twelve Months Ended
		December 31,			December 31,
		2022			2021			Change
Interest Income
Loans		$	451,973		$	293,830		54 %
Mortgage loans in process of securitization			8,407			12,746		-34 %
Investment securities:
Available for sale - taxable			2,807			3,309		-15 %
Available for sale - tax exempt			—			41		-100 %
Held to maturity			12,382			—		100 %
Federal Home Loan Bank stock			1,220			1,143		7 %
Other			4,044			817		395 %
Total interest income			480,833			311,886		54 %
Interest Expense
Deposits			149,645			28,256		430 %
Borrowed funds			12,637			5,636		124 %
Total interest expense			162,282			33,892		379 %
Net Interest Income			318,551			277,994		15 %
Provision for credit losses			17,295			5,012		245 %
Net Interest Income After Provision for Credit Losses			301,256			272,982		10 %
Noninterest Income
Gain on sale of loans			64,150			111,185		-42 %
Loan servicing fees, net			30,198			16,373		84 %
Mortgage warehouse fees			5,394			12,396		-56 %
Gains on sale of investments available for sale (1)			—			191		-100 %
Syndication and asset management fees			9,493			6,507		46 %
Other income			16,701			10,681		56 %
Total noninterest income			125,936			157,333		-20 %
Noninterest Expense
Salaries and employee benefits			89,085			85,727		4 %
Loan expenses			4,703			7,657		-39 %
Occupancy and equipment			8,169			7,365		11 %
Professional fees			9,065			5,427		67 %
Deposit insurance expense			3,463			2,691		29 %
Technology expense			5,282			4,200		26 %
Other expense			16,283			12,318		32 %
Total noninterest expense			136,050			125,385		9 %
Income Before Income Taxes			291,142			304,930		-5 %
Provision for income taxes (2)			71,421			77,826		-8 %
Net Income		$	219,721		$	227,104		-3 %
Dividends on preferred stock			(25,983)			(20,873)		24 %
Net Income Allocated to Common Shareholders		$	193,738		$	206,231		-6 %
Basic Earnings Per Share		$	4.49		$	4.78		-6 %
Diluted Earnings Per Share		$	4.47		$	4.76		-6 %
Weighted-Average Shares Outstanding
Basic			43,164,477			43,172,078
Diluted			43,316,904			43,325,303
(1) Includes $0 and $191 respectively, related to accumulated other comprehensive earnings reclassifications.
(2) Includes $0 and $(46) respectively, related to income tax (expense)/benefit for reclassification items.

 

Key Operating Results
(Unaudited)
($ in thousands, except share data)
			Three Months Ended						Change
			December 31,		September 30,		December 31,		4Q22		4Q22
			2022		2022		2021		vs. 3Q22		vs. 4Q21
Noninterest expense			$                  37,109		$                    34,951		$           37,646		6 %		-1 %
Net interest income (before provision for credit losses)			95,410		85,385		72,743		12 %		31 %
Noninterest income			22,982		29,186		40,271		-21 %		-43 %
Total income			$                118,392		$                  114,571		$         113,014		3 %		5 %
Efficiency ratio			31.34 %		30.51 %		33.31 %		83	bps	(197)	bps
Average assets			$           12,457,893		$             11,437,805		$    10,945,026		9 %		14 %
Net income			57,156		58,488		55,201		-2 %		4 %
Return on average assets before annualizing			0.46 %		0.51 %		0.50 %
Annualization factor			4.00		4.00		4.00
Return on average assets			1.84 %		2.05 %		2.02 %		(21)	bps	(18)	bps
Return on average tangible common shareholders' equity (1)			20.81 %		23.92 %		26.04 %		(311)	bps	(523)	bps
Tangible book value per common share (1)			$                    21.88		$                      20.78		$             17.96		5 %		22 %
Tangible common shareholders' equity/tangible assets (1)			7.49 %		7.49 %		6.89 %		-	bps	60	bps
Consolidated ratios
Total capital/risk-weighted assets(2)			12.0	%	12.5	%	N/A
Tier I capital/risk-weighted assets(2)			11.6	%	12.1	%	N/A
Common Equity Tier I capital/risk-weighted assets(2)			7.6	%	7.8	%	N/A
Tier I capital/average assets(2)			11.7	%	12.3	%	10.4	%
(1) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Measures" below:
(2) As defined by regulatory agencies; December 31, 2022 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
			December 31,		September 30,		December 31,		4Q22		4Q22
			2022		2022		2021		vs. 3Q22		vs. 4Q21
Net income			$                  57,156		$                    58,488		$           55,201		-2 %		4 %
Less: preferred stock dividends			(8,797)		(5,729)		(5,728)		54 %		54 %
Net income available to common shareholders			$                  48,359		$                    52,759		$           49,473		-8 %		-2 %
Average shareholders' equity			$             1,445,995		$               1,267,160		$      1,139,714		14 %		27 %
Less: average goodwill & intangibles			(17,094)		(17,228)		(17,626)		-1 %		-3 %
Less: average preferred stock			(499,529)		(367,726)		(362,149)		36 %		38 %
Average tangible common shareholders' equity			$                929,372		$                  882,206		$         759,939		5 %		22 %
Annualization factor			4.00		4.00		4.00
Return on average tangible common shareholders' equity			20.81 %		23.92 %		26.04 %		(311)	bps	(523)	bps
Total equity			$             1,459,739		$               1,412,590		$      1,155,409		3 %		26 %
Less: goodwill and intangibles			(17,031)		(17,152)		(17,552)		-1 %		-3 %
Less: preferred stock			(499,608)		(499,520)		(362,149)		—		38 %
Tangible common shareholders' equity			$                943,100		$                  895,918		$         775,708		5 %		22 %
Assets			$           12,615,227		$             11,978,722		$    11,278,638		5 %		12 %
Less: goodwill and intangibles			(17,031)		(17,152)		(17,552)		-1 %		-3 %
Tangible assets			$           12,598,196		$             11,961,570		$    11,261,086		5 %		12 %
Ending common shares			43,113,127		43,109,578		43,180,079
Tangible book value per common share			$                    21.88		$                      20.78		$             17.96		5 %		22 %
Tangible common shareholders' equity/tangible assets			7.49 %		7.49 %		6.89 %		-	bps	60	bps

 

Key Operating Results
(Unaudited)
($ in thousands, except share data)
			Twelve Months Ended
			December 31,		December 31,
			2022		2021		Change
Noninterest expense			$         136,050		$        125,385		9 %
Net interest income (before provision for credit losses)			318,551		277,994		15 %
Noninterest income			125,936		157,333		-20 %
Total income			$         444,487		$        435,327		2 %
Efficiency ratio			30.61 %		28.80 %		181	bps
Average assets			$    11,044,889		$   10,188,953		8 %
Net income			219,721		227,104		-3 %
Return on average assets before annualizing			1.99 %		2.23 %
Annualization factor			1.00		1.00
Return on average assets			1.99 %		2.23 %		(24)	bps
Return on average tangible common shareholders' equity (1)			22.50 %		30.10 %		(760)	bps
Tangible book value per common share (1)			$             21.88		$            17.96		22 %
Tangible common shareholders' equity/tangible assets (1)			7.49 %		6.89 %		60	bps
(1) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Measures" below:
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.
			Twelve Months Ended
			December 31,		December 31,
			2022		2021		Change
Net income			$         219,721		$        227,104		-3 %
Less: preferred stock dividends			(25,983)		(20,873)		24 %
Net income available to common shareholders			$         193,738		$        206,231		-6 %
Average shareholders' equity			$      1,276,443		$     1,028,834		24 %
Less: average goodwill & intangibles			(17,293)		(17,841)		-3 %
Less: average preferred stock			(398,182)		(325,904)		22 %
Average tangible common shareholders' equity			$         860,968		$        685,089		26 %
Annualization factor			1.00		1.00
Return on average tangible common shareholders' equity			22.50 %		30.10 %		(760)	bps
Total equity			$      1,459,739		$     1,155,409		26 %
Less: goodwill and intangibles			(17,031)		(17,552)		-3 %
Less: preferred stock			(499,608)		(362,149)		38 %
Tangible common shareholders' equity			$         943,100		$        775,708		22 %
Assets			$    12,615,227		$   11,278,638		12 %
Less: goodwill and intangibles			(17,031)		(17,552)		-3 %
Tangible assets			$    12,598,196		$   11,261,086		12 %
Ending common shares			43,113,127		43,180,079
Tangible book value per common share			$             21.88		$            17.96		22 %
Tangible common shareholders' equity/tangible assets			7.49 %		6.89 %		60	bps

 

Merchants Bancorp
Average Balance Analysis
($ in thousands)
(Unaudited)
	Three Months Ended				Three Months Ended				Three Months Ended
	December 31, 2022				September 30, 2022				December 31, 2021
	Average		Yield/		Average		Yield/		Average		Yield/
	Balance	Interest	Rate		Balance	Interest	Rate		Balance	Interest	Rate
Assets:
Interest-bearing deposits, and other	$       225,274	$    2,090	3.68 %		$      211,653	$     1,394	2.61 %		$        698,263	$       438	0.25 %
Securities available for sale - taxable	323,510	704	0.86 %		331,796	485	0.58 %		308,581	1,007	1.29 %
Securities available for sale - tax exempt	—	—			—	—			1,204	9	2.97 %
Securities held to maturity	1,002,446	11,412	4.52 %		98,363	970	3.91 %		—	—
Mortgage loans in process of securitization	234,248	2,551	4.32 %		235,230	2,162	3.65 %		621,946	4,018	2.56 %
Loans and loans held for sale	10,299,795	164,682	6.34 %		10,245,294	129,101	5.00 %		9,064,880	77,113	3.37 %
Total interest-earning assets	12,085,273	181,439	5.96 %		11,122,336	134,112	4.78 %		10,694,874	82,585	3.06 %
Allowance for credit losses on loans	(40,339)				(39,325)				(29,801)
Noninterest-earning assets	412,959				354,794				279,953
Total assets	$  12,457,893				$  11,437,805				$    10,945,026
Liabilities & Shareholders' Equity:
Interest-bearing checking	4,520,785	37,929	3.33 %		4,207,217	21,980	2.07 %		4,325,991	2,094	0.19 %
Savings deposits	252,787	304	0.48 %		239,262	162	0.27 %		223,912	35	0.06 %
Money market	2,745,904	23,958	3.46 %		2,523,315	13,094	2.06 %		2,528,453	5,018	0.79 %
Certificates of deposit	2,474,427	18,871	3.03 %		2,030,152	9,766	1.91 %		1,220,392	1,345	0.44 %
Total interest-bearing deposits	9,993,903	81,062	3.22 %		8,999,946	45,002	1.98 %		8,298,748	8,492	0.41 %
Borrowings	451,467	4,967	4.36 %		588,582	3,725	2.51 %		620,173	1,350	0.86 %
Total interest-bearing liabilities	10,445,370	86,029	3.27 %		9,588,528	48,727	2.02 %		8,918,921	9,842	0.44 %
Noninterest-bearing deposits	419,008				474,925				795,704
Noninterest-bearing liabilities	147,520				107,192				90,687
Total liabilities	11,011,898				10,170,645				9,805,312
Shareholders' equity	1,445,995				1,267,160				1,139,714
Total liabilities and shareholders' equity	$  12,457,893				$  11,437,805				$    10,945,026
Net interest income		$  95,410				$   85,385				$   72,743
Net interest spread			2.69 %				2.77 %				2.62 %
Net interest-earning assets	$    1,639,903				$    1,533,808				$     1,775,953
Net interest margin			3.13 %				3.05 %				2.70 %
Average interest-earning assets to average interest-bearing liabilities			115.70 %				116.00 %				119.91 %

 

Supplemental Results
(Unaudited)
($ in thousands)
				Net Income						Net Income
				Three Months Ended						Twelve Months Ended
				December 31,		September 30,		December 31,		December 31,
				2022		2022		2021		2022		2021
Segment
Multi-family Mortgage Banking				$            10,228		$          13,366		$             14,124		$         54,642		$         51,504
Mortgage Warehousing				11,776		11,801		21,311		48,604		95,159
Banking				40,181		39,344		22,629		134,221		90,858
Other				(5,029)		(6,023)		(2,863)		(17,746)		(10,417)
Total				$            57,156		$          58,488		$             55,201		$       219,721		$       227,104
				Total Assets
				December 31,		September 30,		December 31,
				2022		2022		2021
Segment
Multi-family Mortgage Banking				$          351,274		$        343,443		$           296,129
Mortgage Warehousing				2,519,810		2,735,278		3,977,537
Banking				9,587,544		8,760,416		6,929,565
Other				156,599		139,585		75,407
Total				$     12,615,227		$   11,978,722		$      11,278,638
				Gain on Sale of Loans						Gain on Sale of Loans
				Three Months Ended						Twelve Months Ended
				December 31,		September 30,		December 31,		December 31,
				2022		2022		2021		2022		2021
Loan Type
Multi-family				10,241		$          12,002		$             24,797		$         56,819		$         93,350
Single-family				132		138		1,086		1,133		8,763
Small Business Association (SBA)				894		1,214		2,547		6,198		9,072
Total				$            11,267		$          13,354		$             28,430		$         64,150		$       111,185
				Loans Receivable and Loans Held for Sale
				December 31,		September 30,		December 31,
				2022		2022		2021
Mortgage warehouse lines of credit				$          464,785		$        815,084		$           781,437
Residential real estate				1,178,401		1,030,075		843,101
Multi-family financing				3,135,535		2,766,950		2,702,042
Healthcare financing				1,604,341		1,429,675		826,157
Commercial and commercial real estate (1)				978,661		810,731		520,199
Agricultural production and real estate				95,651		91,913		97,060
Consumer and margin loans				13,498		13,696		12,667
				7,470,872		6,958,124		5,782,663
Less: Allowance for credit losses on loans				44,014		38,996		31,344
Loans receivable				$       7,426,858		$     6,919,128		$        5,751,319
Loans held for sale				2,910,576		2,844,750		3,303,199
Total loans, net of allowance				$     10,337,434		$     9,763,878		$        9,054,518
(1)     Includes $497.0 million and $209.8 million of revolving  lines of credit collateralized primarily by single-family mortgage servicing rights as of December 31, 2022 and 2021, respectively.

 

 

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SOURCE Merchants Bancorp

FAQ

What was Merchants Bancorp's net income for 2022?

Merchants Bancorp reported a net income of $219.7 million for the full year 2022.

How did Merchants Bancorp perform in Q4 2022?

In Q4 2022, Merchants Bancorp achieved a net income of $57.2 million, a 4% increase compared to Q4 2021.

What is the total assets figure for Merchants Bancorp as of December 31, 2022?

As of December 31, 2022, Merchants Bancorp's total assets were $12.6 billion.

What was the net interest margin for Merchants Bancorp in Q4 2022?

The net interest margin for Merchants Bancorp in Q4 2022 was 3.13%.

How much did the allowance for credit losses increase in Q4 2022 for Merchants Bancorp?

The allowance for credit losses increased by $5.0 million in Q4 2022 compared to Q3 2022.