Merchants Bancorp Reports Record Second Quarter 2020 Results

Rhea-AI Summary

Merchants Bancorp reported a remarkable second quarter with a net income of $41.2 million ($1.31 per share), a significant increase from $16.4 million ($0.51 per share) year-on-year and $24.6 million ($0.73 per share) from Q1 2020. The surge in net income, up 150% year-on-year, was fueled by an 83% rise in net interest income driven by mortgage warehouse loans and an 88% increase in loan sales. Total assets reached $9.4 billion, reflecting a strong growth in loans due to lower interest rates. The allowance for loan losses rose to $20.5 million amid COVID-19 uncertainties.

Positive

• Net income of $41.2 million, a 150% year-over-year increase.
• 83% increase in net interest income, driven by mortgage warehouse loans.
• Total assets rose to $9.4 billion, up 48% from December 2019.
• Return on average assets increased to 1.89%.
• Total deposits increased to $6.9 billion, a 26% rise from December 2019.

Negative

• Allowance for loan losses increased to $20.5 million due to COVID-19 uncertainties.
• Non-performing loans rose to $6.7 million, 0.16% of total loans.

CARMEL, Ind., July 28, 2020 /PRNewswire/ -- Merchants Bancorp (the "Company" or "Merchants") (Nasdaq: MBIN), parent company of Merchants Bank of Indiana, today reported second quarter 2020 net income of $41.2 million, or $1.31 per common share.  This compared to $16.4 million, or $0.51 per common share in the second quarter of 2019, and $24.6 million, or $0.73 per common share, in the first quarter of 2020.

The $24.7 million, or 150%, increase in net income for the second quarter 2020 compared to the second quarter of 2019 was driven by an 83% 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 single-family mortgages. 

The $16.6 million, or 67%, increase in net income for the second quarter 2020 compared to the first quarter of 2020 was primarily driven by a $12.9 million, or 34%, increase in net interest income that also reflected significant growth in mortgage warehouse loans and a 2 basis point increase in the net interest margin.

"During the second quarter, the unique, low-risk nature of our business model was a catalyst to delivering the highest asset levels and quarterly net income ever reported in the history of our company, despite being in the middle of an unprecedented  global pandemic and an environment of historically low interest rates," said Michael F. Petrie, Chairman and CEO of Merchants.  

Michael J. Dunlap, President and Chief Operating Officer of Merchants, added, "Our team has worked tirelessly to support our customers with their financing needs during the quarter, resulting in a 57% increase in total loans and loans held for sale since the end of December 2019 and a return on average assets of 1.89%.  All our businesses delivered growth in loan volume that contributed significantly to our bottom line. Our Small Business Administration team also financed $88 million in loans during the second quarter through the Paycheck Protection Program ("PPP")."

Total Assets
Total assets of $9.4 billion at June 30, 2020 increased $3.1 billion, or 48%, compared to December 31, 2019, and increased $1.5 billion, or 19%, compared to $7.9 billion at March 31, 2020.

The increase compared to December 31, 2019 was primarily due to growth in loans held for sale and net loans receivable, which increased a combined total of $2.9 billion.  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 1.89% for the second quarter of 2020 compared to 1.41% for the second quarter of 2019 and 1.49% for the first quarter of 2020. 

Asset Quality
The allowance for loan losses of $20.5 million at June 30, 2020 increased $4.7 million compared to December 31, 2019 and increased $1.6 million compared to March 31, 2020.  The increases were primarily based on growth in the loan portfolio, but also reflected uncertainties surrounding the COVID-19 pandemic.  Approximately 79% of the $4.7 million increase compared to December 31, 2019, was related primarily to loan growth, while additional provision associated with the COVID-19 pandemic represented approximately $595,000, or 13%, of the increase.   An additional $48,000 of COVID-19 related provision was added during the second quarter of 2020. 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 throughout the remainder of 2020.

Merchants believes it has minimal direct exposure to consumer, commercial and other small businesses that may be negatively impacted by COVID-19 but continues to assist customers facing financial setbacks.  As of June 30, 2020, the Company granted customer requests to defer payments on 52 loans with unpaid balances of $80.6 million, representing only 1.0% of total loans and loans held for sale.

Non-performing loans were $6.7 million, or 0.16% of total loans at June 30, 2020, compared to $4.7 million, or 0.15% of total loans at December 31, 2019, and compared to $6.6 million, or 0.19% of total loans at March 31, 2020.  The increase in non-performing loans compared to December 31, 2019 was primarily related to one collateralized agricultural loan that is delinquent greater than 90 days late, with repayment still anticipated.

Total Deposits
Total deposits of $6.9 billion at June 30, 2020 increased $1.4 billion, or 26%, compared to December 31, 2019, and increased $185.9 million, or 3%, compared to March 31, 2020. The increases compared to both periods were primarily due to growth in traditional and brokered demand accounts, while the Company significantly reduced its balances of brokered certificates of deposits.

Total brokered deposits of $2.4 billion at June 30, 2020 increased $197.9 million from December 31, 2019 and decreased $473.3 million from March 31, 2020.   Brokered deposits represented 34% of total deposits at June 30, 2020 compared to 39% of total deposits at December 31, 2019 and 42% of total deposits at March 31, 2020.

Liquidity
The Company increased its available borrowing capacity, with unused lines of credit at $1.9 billion, compared to $1.2 billion at March 31, 2020.  This liquidity enhances the ability to effectively manage interest expense and assets levels in the future.  The Company also began utilizing the Federal Reserve's discount window during the second quarter of 2020, which has contributed to lower interest expenses and increased borrowing capacity.

Net Interest Income
Net interest income of $51.2 million in the second quarter of 2020 increased $23.3 million, or 83%, compared to the second quarter of 2019 and increased $12.9 million, or 34%, compared to the first quarter of 2020. 

The 83% increase in net interest income compared to the second quarter of 2019 reflected significantly higher loan growth and a slightly lower net interest margin.  The interest rate spread of 2.31% for the second quarter of 2020 increased 9 basis points compared to 2.22% in the second quarter of 2019. The net interest margin of 2.42% for the second quarter of 2020 decreased 7 basis points compared to 2.49% for the second quarter of 2019. The decline in net interest margin compared to the second quarter of 2019 reflected lower overall market interest rates.

The 34% increase in net interest income compared to the first quarter of 2020 reflected an interest rate spread of 2.31% that increased 12 basis points compared to 2.19% in the first quarter of 2020.  The net interest margin of 2.42% for the second quarter of 2020 also increased 2 basis points compared to 2.40% for the first quarter of 2020. 

Interest Income
Interest income of $68.2 million in the second quarter of 2020 increased $19.4 million, or 40%, compared to the second quarter of 2019 and increased $7.8 million, or 13%, compared to the first quarter of 2020. 

The 40% increase in interest income compared to the second quarter of 2019 was primarily due to significant loan growth that was partially offset by lower rates.  The higher interest income reflected a $3.4 billion, or 94%, increase in the average balance of loans, including loans held for sale, which reached $6.9 billion for the second quarter of 2020. The average yield on loans and loans held for sale of 3.71% for the second quarter of 2020 decreased 104 basis points compared to 4.75% for the second quarter of 2019. The decline in average yields reflected lower overall interest rates in the second quarter of 2020.

The 13% increase in interest income compared to the first quarter of 2020 reflected a $1.9 billion, or 38%, increase in the average balance of loans, including loans held for sale, which reached $6.9 billion for the second quarter of 2020. The average yield on loans and loans held for sale of 3.71% for the second quarter of 2020 also decreased 59 basis points compared to 4.30% for the first quarter of 2020. 

Interest Expense
Total interest expense of $17.0 million for the second quarter of 2020 decreased $3.9 million, or 19%, compared to the second quarter of 2019 and decreased $5.1 million, or 23%, compared to the first quarter of 2020. Interest expense on deposits of $15.4 million for the second quarter of 2020 decreased $3.9 million, or 20%, compared to the second quarter of 2019 and decreased $5.2 million, or 25%, compared to the first quarter of 2020.

The 20% decrease in interest expense on deposits compared to the second quarter of 2019 was primarily due to custodial interest-bearing checking accounts that are tied to short-term LIBOR rates, which declined significantly. Also contributing significantly to the decline were lower rates on brokered certificates of deposits.  The average balance of interest-bearing deposits of $7.0 billion for the second quarter of 2020 increased $3.2 billion, or 84%, compared to the second quarter of 2019. The average cost of interest-bearing deposits was 0.88% for the second quarter of 2020, which was a 116 basis point decrease compared to 2.04% for the second quarter of 2019. 

The 25% decrease in interest expense on deposits compared to the first quarter of 2020 was also primarily due to custodial interest-bearing checking accounts that are tied to short-term LIBOR rates, which declined significantly.  The average cost of interest-bearing deposits was 0.88% for the second quarter of 2020, which was a 67 basis point decrease compared to 1.55% in the first quarter of 2020.  The average balance of interest-bearing deposits of $7.0 billion for the second quarter of 2020 also increased $1.7 billion, or 31%, compared to the first quarter of 2020.

Noninterest Income
Noninterest income of $26.2 million for the second quarter of 2020 increased $16.3 million, or 165%, compared to the second quarter of 2019 and increased $6.3 million, or 32%, compared to the first quarter of 2020.

The 165% increase in noninterest income compared to the second quarter of 2019 was primarily due to an $8.0 million increase in gain on sale of loans and a $4.3 million increase in mortgage warehouse fees. Also included in noninterest income for the second quarter of 2020 was a $500,000 negative fair market value adjustment to mortgage servicing rights, which compared to a $2.9 million negative fair market value adjustment for the second quarter of 2019.

The 32% increase in noninterest income compared to the first quarter of 2020 was primarily due to a $7.4 million increase in loan servicing fees and $2.7 million increase in mortgage warehouse fees, that were partially offset by a $4.1 million decrease in gain on sale of loans.   Included in loan servicing fees for the second quarter of 2020 was a $500,000 negative fair market value adjustment to mortgage servicing rights, which compared to a $6.5 million negative fair market value adjustment for the first quarter of 2020.

At June 30, 2020, the mortgage servicing rights asset was valued at $72.9 million, a decrease of 2% compared to both June 30, 2019 and December 31, 2019.  The value of mortgage servicing rights generally declines in falling interest rate environments and increases in rising interest rate environments.

Noninterest Expense
Noninterest expense of $20.3 million for the second quarter of 2020 increased $4.4 million, or 27%, compared to the second quarter of 2019 and decreased $2.0 million, or 9%, compared to the first quarter of 2020. 

The 27% increase in noninterest expense compared to the second quarter of 2019 was due primarily to a $1.9 million, or 19%, increase in salaries and employee benefits to support business growth and a $1.6 million, or 749%, increase in deposit insurance related to the growth in deposits and assets.    The efficiency ratio of 26.2% for the second quarter of 2020 compared to 42.1% for the second quarter of 2019.

The 9% decrease in noninterest expense compared to the first quarter of 2020 was primarily due to a $2.4 million, or 17%, decrease in salaries and employee benefits that reflected lower commissions on lower gain on sale of loans.  The efficiency ratio of 26.2% for the second quarter of 2020 compared to 38.3% for the first quarter of 2020.

Segments
For the second quarter of 2020, net income for Mortgage Warehousing increased 338% compared to the second quarter of 2019, and increased 123% compared to the first quarter of 2020, reflecting significant growth in net interest income from higher loan volume. 

For the second quarter of 2020, net income for Multi-family Mortgage Banking increased 45% compared with the second quarter of 2019, primarily due to a lower negative fair market value adjustment to mortgage servicing rights.  Net income decreased 32% compared to the first quarter of 2020, primarily due to lower gains on sale of loans that were partially offset by a lower negative fair market adjustment to mortgage servicing rights. The second quarter of 2020 included a smaller negative fair market value adjustment than the negative fair value adjustment of $2.9 million for the second quarter of 2019 and the negative fair market value adjustment of $6.5 million for the first quarter of 2020.  

For the second quarter of 2020, net income for Banking increased 40% compared to the second quarter of 2019, and increased 49% compared to the first quarter of 2020, reflecting higher gain on sale of loans in the single-family mortgage business for both periods.

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 $9.4 billion in assets and $6.9 billion in deposits as of June 30, 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.merchantsbankofindiana.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)
		June 30,		March 31,		December 31,		September 30,		June 30,
		2020		2020		2019		2019		2019
Assets
Cash and due from banks		$                13,830		$                  8,168		$                13,909		$                15,614		$                15,176
Interest-earning demand accounts		389,357		559,914		492,800		349,362		445,713
Cash and cash equivalents		403,187		568,082		506,709		364,976		460,889
Securities purchased under agreements to resell		6,651		6,685		6,723		6,760		6,798
Mortgage loans in process of securitization		518,788		465,157		269,891		227,914		101,514
Available for sale securities		259,656		339,053		290,243		308,673		261,485
Federal Home Loan Bank (FHLB) stock		53,224		46,156		20,369		18,808		18,820
Loans held for sale (includes $42,000, $18,938, $19,592, $23,357, and $9,592, respectively, at fair value)		3,877,769		2,796,008		2,093,789		2,498,538		1,918,118
Loans receivable, net of allowance for loan losses of $20,497, $18,883, $15,842, $13,705, and $12,604, respectively		4,133,315		3,501,770		3,012,468		2,742,088		2,347,906
Premises and equipment, net		29,362		29,415		29,274		29,211		26,580
Mortgage servicing rights		72,889		69,978		74,387		71,989		74,550
Interest receivable		18,574		18,139		18,359		18,780		17,415
Goodwill		15,845		15,845		15,845		15,574		15,574
Intangible assets, net		3,038		3,419		3,799		4,182		4,567
Other assets and receivables		47,102		48,691		30,072		29,693		33,174
Total assets		$           9,439,400		$           7,908,398		$           6,371,928		$           6,337,186		$           5,287,390
Liabilities and Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing		$              601,265		$              327,805		$              272,037		$              198,843		$              192,521
Interest-bearing		6,307,363		6,394,900		5,206,038		5,300,806		4,463,469
Total deposits		6,908,628		6,722,705		5,478,075		5,499,649		4,655,990
Borrowings		1,761,113		444,567		181,439		159,673		62,225
Other liabilities		61,461		68,157		58,686		48,425		54,162
Total liabilities		8,731,202		7,235,429		5,718,200		5,707,747		4,772,377
Commitments and  Contingencies
Shareholders' Equity
Common stock, without par value
Authorized - 50,000,000 shares
Issued and outstanding - 28,745,614 shares, 28,742,484 shares, 28,706,438 shares, 28,706,438 shares, and 28,706,438 shares, respectively		135,949		135,746		135,640		135,507		135,374
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, 2,081,800 shares, 2,081,800 shares, 2,081,800 shares, and 2,955,800 shares, respectively		50,221		50,221		50,221		50,245		72,095
6% Series B Preferred stock - $1,000 per share liquidation preference
Authorized - 125,000 shares
Issued and outstanding - 125,000 shares, 125,000 shares, 125,000 shares, and 125,000 shares (all equivalent to 5,000,000 depositary shares)		120,844		120,844		120,844		120,863		—
Retained earnings		358,895		323,651		304,984		280,551		265,323
Accumulated other comprehensive income		708		926		458		692		640
Total shareholders' equity		708,198		672,969		653,728		629,439		515,013
Total liabilities and shareholders' equity		$           9,439,400		$           7,908,398		$           6,371,928		$           6,337,186		$           5,287,390

 

 

Consolidated Statement of Income
(Unaudited)
(In thousands, except share data)
		Three Months Ended									Six Months Ended
		June 30,			March 31,			June 30,			June 30,			June 30,
		2020			2020			2019			2020			2019
Interest Income
Loans		$	63,979		$	53,564		$	42,365		$	117,543		$	76,820
Mortgage loans in process of securitization			2,534			2,796			1,967			5,330			3,012
Investment securities:
Available for sale - taxable			972			1,322			1,477			2,294			3,028
Available for sale - tax exempt			38			37			53			75			149
Federal Home Loan Bank stock			447			239			257			686			480
Other			234			2,459			2,642			2,693			4,946
Total interest income			68,204			60,417			48,761			128,621			88,435
Interest Expense
Deposits			15,398			20,630			19,344			36,028			33,571
Borrowed funds			1,572			1,434			1,495			3,006			2,811
Total interest expense			16,970			22,064			20,839			39,034			36,382
Net Interest Income			51,234			38,353			27,922			89,587			52,053
Provision for loan losses			1,745			2,998			105			4,743			754
Net Interest Income After Provision for Loan Losses			49,489			35,355			27,817			84,844			51,299
Noninterest Income
Gain on sale of loans			17,084			21,166			9,104			38,250			11,747
Loan servicing fees, net			1,597			(5,824)			(1,561)			(4,227)			(1,908)
Mortgage warehouse fees			5,475			2,746			1,138			8,221			1,891
Gains/(losses) on sale of investments available for sale (1)			—			—			(3)			—			124
Other income			2,032			1,814			1,192			3,846			1,680
Total noninterest income			26,188			19,902			9,870			46,090			13,534
Noninterest Expense
Salaries and employee benefits			11,828			14,240			9,965			26,068			18,532
Loan expenses			2,039			1,164			1,345			3,203			2,279
Occupancy and equipment			1,383			1,492			946			2,875			1,822
Professional fees			726			569			453			1,295			992
Deposit insurance expense			1,851			1,786			218			3,637			495
Technology expense			716			610			629			1,326			1,101
Other expense			1,739			2,432			2,364			4,171			3,734
Total noninterest expense			20,282			22,293			15,920			42,575			28,955
Income Before Income Taxes			55,395			32,964			21,767			88,359			35,878
Provision for income taxes (2)			14,233			8,381			5,328			22,614			8,869
Net Income		$	41,162		$	24,583		$	16,439		$	65,745		$	27,009
Dividends on preferred stock			(3,619)			(3,618)			(1,743)			(7,237)			(2,576)
Net Income Allocated to Common Shareholders			37,543			20,965			14,696			58,508			24,433
Basic Earnings Per Share		$	1.31		$	0.73		$	0.51		$	2.04		$	0.85
Diluted Earnings Per Share		$	1.31		$	0.73		$	0.51		$	2.03		$	0.85
Weighted-Average Shares Outstanding
Basic			28,743,894			28,734,632			28,705,313			28,739,263			28,703,790
Diluted			28,762,349			28,759,412			28,746,297			28,760,880			28,741,877
(1)Includes $0, $0, $(3), $0, and $124, respectively, related to accumulated other comprehensive earnings reclassifications.
(2) Includes $0, $0, $1, $0, and $(31), respectively, related to income tax (expense)/benefit for reclassification items.

 

 

Key Operating Results
(Unaudited)
($ in thousands)
			Three Months Ended						Six Months Ended
			June 30,		March 31,		June 30,		June 30,		June 30,
			2020		2020		2019		2020		2019
Noninterest expense			20,282		22,293		15,920		42,575		28,955
Net interest income (before provision for losses)			51,234		38,353		27,922		89,587		52,053
Noninterest income			26,188		19,902		9,870		46,090		13,534
Total income			77,422		58,255		37,792		135,677		65,587
Efficiency ratio			26.20%		38.27%		42.13%		31.38%		44.15%
Average assets			8,689,212		6,604,394		4,661,138		7,646,803		4,182,203
Net income			41,162		24,583		16,439		65,745		27,009
Return on average assets before annualizing			0.47%		0.37%		0.35%		0.86%		0.65%
Annualization factor			4.00		4.00		4.00		2.00		2.00
Return on average assets			1.89%		1.49%		1.41%		1.72%		1.29%
Return on average tangible common shareholders' equity (1)			32.62%		19.19%		15.38%		26.08%		13.08%
Tangible book value per common share (1)			$           16.58		$           15.35		$           13.28		$           16.58		$           13.28
Tangible common shareholders' equity/tangible assets (1)			5.06%		5.59%		7.24%		5.06%		7.24%
(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						Six Months Ended
			June 30,		March 31,		June 30,		June 30,		June 30,
			2020		2020		2019		2020		2019
Net income			41,162		24,583		16,439		65,745		27,009
Less: preferred stock dividends			(3,619)		(3,618)		(1,743)		(7,237)		(2,576)
Net income available to common shareholders			37,543		20,965		14,696		58,508		24,433
Average shareholders' equity			692,132		669,169		495,789		680,651		462,694
Less: average goodwill & intangibles			(19,083)		(19,483)		(20,396)		(19,283)		(20,688)
Less: average preferred stock			(212,646)		(212,646)		(93,108)		(212,646)		(68,287)
Tangible common shareholders' equity			460,403		437,040		382,285		448,722		373,719
Annualization factor			4.00		4.00		4.00		2.00		2.00
Return on average tangible common shareholders' equity			32.62%		19.19%		15.38%		26.08%		13.08%
Total equity			708,198		672,969		515,013		708,198		515,013
Less: goodwill and intangibles			(18,883)		(19,264)		(20,141)		(18,883)		(20,141)
Less: preferred stock			(212,646)		(212,646)		(113,676)		(212,646)		(113,676)
Tangible common shareholders' equity			476,669		441,059		381,196		476,669		381,196
Assets			9,439,400		7,908,398		5,287,390		9,439,400		5,287,390
Less: goodwill and intangibles			(18,883)		(19,264)		(20,141)		(18,883)		(20,141)
Tangible assets			9,420,517		7,889,134		5,267,249		9,420,517		5,267,249
Ending common shares			28,745,614		28,742,484		28,706,438		28,745,614		28,706,438
Tangible book value per common share			$           16.58		$           15.35		$           13.28		$           16.58		$           13.28
Tangible common shareholders' equity/tangible assets			5.06%		5.59%		7.24%		5.06%		7.24%

 

 

Merchants Bancorp
Average Balance Analysis
($ in thousands)
(Unaudited)
	Three Months Ended				Three Months Ended				Three Months Ended
	June 30, 2020				March 31, 2020				June 30, 2019
	Average		Yield/		Average		Yield/		Average		Yield/
	Balance	Interest	Rate		Balance	Interest	Rate		Balance	Interest	Rate
Assets:
Interest-bearing deposits, and other	$      971,350	$      681	0.28%		$      777,820	$    2,698	1.40%		$        440,502	$    2,899	2.64%
Securities available for sale - taxable	276,928	972	1.41%		293,964	1,322	1.81%		266,950	1,477	2.22%
Securities available for sale - tax exempt	5,294	38	2.89%		5,305	37	2.81%		9,052	53	2.35%
Mortgage loans in process of securitization	328,089	2,534	3.11%		349,746	2,796	3.22%		194,411	1,967	4.06%
Loans and loans held for sale	6,936,368	63,979	3.71%		5,012,324	53,564	4.30%		3,580,620	42,365	4.75%
Total interest-earning assets	8,518,029	68,204	3.22%		6,439,159	60,417	3.77%		4,491,535	48,761	4.35%
Allowance for loan losses	(19,474)				(15,841)				(13,466)
Noninterest-earning assets	190,657				181,076				183,069
Total assets	$    8,689,212				$   6,604,394				$     4,661,138
Liabilities & Shareholders' Equity:
Interest-bearing checking	2,656,105	2,327	0.35%		2,064,967	6,891	1.34%		1,527,971	7,567	1.99%
Savings deposits	176,546	27	0.06%		163,154	58	0.14%		144,315	81	0.23%
Money market	1,402,562	3,966	1.14%		1,143,249	4,575	1.61%		959,296	4,725	1.98%
Certificates of deposit	2,763,853	9,078	1.32%		1,964,622	9,106	1.86%		1,174,106	6,971	2.38%
Total interest-bearing deposits	6,999,066	15,398	0.88%		5,335,992	20,630	1.55%		3,805,688	19,344	2.04%
Borrowings	518,207	1,572	1.22%		289,263	1,434	1.99%		117,647	1,495	5.10%
Total interest-bearing liabilities	7,517,273	16,970	0.91%		5,625,255	22,064	1.58%		3,923,335	20,839	2.13%
Noninterest-bearing deposits	372,195				235,020				194,530
Noninterest-bearing liabilities	107,612				74,950				47,484
Total liabilities	7,997,080				5,935,225				4,165,349
Shareholders' equity	692,132				669,169				495,789
Total liabilities and shareholders' equity	$    8,689,212				$   6,604,394				$     4,661,138
Net interest income		$  51,234				$   38,353				$   27,922
Net interest spread			2.31%				2.19%				2.22%
Net interest-earning assets	$    1,000,756				$      813,904				$        568,200
Net interest margin			2.42%				2.40%				2.49%
Average interest-earning assets to average interest-bearing liabilities			113.31%				114.47%				114.48%

 

 

Segment Results
(Unaudited)
($ in thousands)
				Net Income						Net Income
				Three Months Ended						Six Months Ended				Total Assets
				June 30,		March 31,		June 30,		June 30,				June 30,		March 31,		December 31,
				2020		2020		2019		2020		2019		2020		2020		2019
Segment
Multi-family Mortgage Banking				$       3,651		$       5,399		$       2,517		$       9,050		$       1,805		$    182,072		$    180,772		$    188,866
Mortgage Warehousing				27,712		12,437		6,320		40,149		10,152		5,575,169		4,362,423		3,124,684
Banking				11,812		7,950		8,408		19,762		17,177		3,639,638		3,323,750		3,018,568
Other				(2,013)		(1,203)		(806)		(3,216)		(2,125)		42,521		41,453		39,810
Total				$      41,162		$      24,583		$      16,439		$      65,745		$      27,009		$ 9,439,400		$ 7,908,398		$ 6,371,928

 

 

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SOURCE Merchants Bancorp

FAQ

What was Merchants Bancorp's net income for the second quarter of 2020?

Merchants Bancorp reported a net income of $41.2 million, or $1.31 per common share.

How much did net interest income increase for Merchants Bancorp in Q2 2020?

Net interest income increased by 83% year-over-year.

What are the total assets of Merchants Bancorp as of June 30, 2020?

Total assets reached $9.4 billion as of June 30, 2020.

How did COVID-19 affect Merchants Bancorp's loan losses?

The allowance for loan losses increased to $20.5 million due to uncertainties related to COVID-19.

What percentage of total loans were non-performing at Merchants Bancorp?

Non-performing loans were $6.7 million, or 0.16% of total loans.