Merchants Bancorp Reports Second Quarter 2021 Results

Rhea-AI Summary

Merchants Bancorp (MBIN) reported second quarter 2021 net income of $51.4 million ($1.58 per share), up 25% from Q2 2020. However, this was a 17% decline from Q1 2021, influenced by a 10% dip in net interest income. Interest income rose 6% year-over-year, driven by higher loan balances, but fell 9% from the prior quarter. Total assets reached $9.9 billion, and non-performing loans dropped to 0.05%. Total deposits decreased slightly from Q1 but increased 9% year-over-year. The efficiency ratio stood at 29.0%, reflecting strong cost management.

Positive

• Net income increased 25% year-over-year to $51.4 million.
• Total assets reached $9.9 billion, highest in company history.
• Non-performing loans improved to 0.05% of loans receivable.
• Significant decrease in interest expense on deposits by 57% year-over-year.

Negative

• Net income decreased 17% compared to Q1 2021.
• Net interest income fell 10% sequentially.
• Loan servicing fees dropped by $6.2 million.

CARMEL, Ind., July 28, 2021 /PRNewswire/ -- Merchants Bancorp (the "Company" or "Merchants") (Nasdaq: MBIN), parent company of Merchants Bank of Indiana, today reported second quarter 2021 net income of $51.4 million, or diluted earnings per common share of $1.58.  This compared to $41.2 million, or diluted earnings per common share of $1.31 in the second quarter of 2020, and compared to $62.0 million, or diluted earnings per common share of $2.02 in the first quarter of 2021.

The $10.3 million, or 25%, increase in net income for the second quarter 2021 compared to the second quarter of 2020 was driven by a $13.2 million, or 26%, increase in net interest income that reflected a 57% decrease in the cost of deposits and a 7% increase in interest income from higher loan balances.

The $10.6 million, or 17%, decrease in net income for the second quarter 2021 compared to the first quarter of 2021 was primarily driven by a $7.6 million, or 10%, decrease in net interest income that reflected a 10% decrease in interest income on loans.  The decrease in net income also reflected a $6.2 million decrease in loan servicing fees, which included a $6.2 million lower fair market value adjustment to mortgage servicing rights.  The second quarter of 2021 benefited from a $0.7 million positive fair market value adjustment compared to $6.9 positive fair market value adjustment in the first quarter of 2021.

"Following the record-setting income reported in the first quarter, we continued to effectively manage our capital and resources to reach the highest asset levels achieved in Company history, with $9.9 billion in total assets at June 30, 2021.  During the second quarter we also maintained one of the lowest efficiency ratios in the industry at 29.0%, had nonperforming loans at only .05% of loans receivable, and achieved tangible book value of $23.59 per share, which demonstrates our ongoing commitment to conservative underwriting, capital management and profitable growth," said Michael F. Petrie, Chairman and CEO of Merchants.  

Michael J. Dunlap, President and Chief Operating Officer of Merchants, added, "The entrepreneurial culture at Merchants has provided our team with the product diversity that is enabling our businesses to evolve and expand, regardless of the changing market dynamics."

Total Assets

Total assets of $9.9 billion at June 30, 2021 increased $176.3 million, or 2%, compared to March 31, 2021, and increased $236.2 million, or 2%, compared to December 31, 2020.

The asset levels increased compared to both periods despite a $262.1 million multi-family loan sale to Freddie Mac in May of 2021, which was subsequently securitized. The Company also acquired $28.7 million of those securities.

Return on average assets was 2.14% for the second quarter of 2021 compared to 1.89% for the second quarter of 2020 and 2.49% for the first quarter of 2021. 

Asset Quality

The allowance for loan losses of $28.7 million at June 30, 2021 decreased $0.4 million compared to March 31, 2021 and increased $1.2 million compared to December 31, 2020.  The increase compared to December 31, 2020 was primarily based on growth in the multi-family loan portfolio.  The portion of the allowance associated with the COVID-19 pandemic has remained relatively steady since September 30, 2020, at approximately $0.6 million.   Because it is still too early to know the full extent of potential future losses associated with the impact of COVID-19, the Company continues to monitor the situation and may need to adjust future expectations as developments occur.

Merchants believes it has minimal direct exposure to consumer, commercial and other small businesses that may be negatively impacted by COVID-19 but continues to assist customers facing financial setbacks.  As of June 30, 2021, the Company had only 4 loans remaining in payment deferral arrangements, with unpaid balances of $37.0 million.

Non-performing loans were $3.0 million, or 0.05%, of loans receivable at June 30, 2021, compared to $4.7 million, or 0.08% of loans receivable at March 31, 2021, and compared to $6.3 million, or 0.11% of loans receivable at December 31, 2020. 

Total Deposits

Total deposits of $8.0 billion at June 30, 2021 decreased $23.6 million compared to March 31, 2021, and increased $631.5 million, or 9%, compared to December 31, 2020. The increase compared to December 31, 2020 was primarily due to growth in savings accounts.

Total brokered deposits of $853.1 million at June 30, 2021 decreased $5.0 million, or 1%, from March 31, 2021 and decreased $320.6 million, or 27%, from December 31, 2020.   Brokered deposits represented 11% of total deposits at June 30, 2021 compared to 11% of total deposits at March 31, 2021 and 16% of total deposits at December 31, 2020.

Liquidity

The Company continues to have significant borrowing capacity, with unused lines of credit at $3.3 billion at June 30, 2021 compared to $3.7 billion at March 31, 2021 and $2.6 billion at December 31, 2020.  This liquidity enhances the ability to effectively manage interest expense and asset levels in the future.  The Company began utilizing the Federal Reserve's discount window and the Paycheck Protection Program Liquidity Facility ("PPPLF") during 2020, which have contributed to lower interest expenses and increased borrowing capacity. Participation in the American Financial Exchange began during the first quarter of 2021 and is also contributing to lower interest expense and increased borrowing capacity.

Net Interest Income

Net interest income of $64.4 million in the second quarter of 2021 increased $13.2 million, or 26%, compared to the second quarter of 2020 and decreased $7.6 million, or 10%, compared to the first quarter of 2021. 

The 26% increase in net interest income compared to the second quarter of 2020 reflected a 57% decrease in the cost of deposits and a 7% increase in interest income from higher loan balances. The interest rate spread of 2.68% for the second quarter of 2021 increased 37 basis points compared to 2.31% in the second quarter of 2020. The net interest margin of 2.75% for the second quarter of 2021 increased 33 basis points compared to 2.42% for the second quarter of 2020. The increase in net interest margin compared to the second quarter of 2020 reflected lower funding costs and higher loan balances that outpaced lower interest rates on loans.

The 10% decrease in net interest income compared to the first quarter of 2021 reflected lower balances and lower rates on loans.  The interest rate spread of 2.68% for the second quarter of 2021 decreased 25 basis points compared to 2.93% in the first quarter of 2021.  The net interest margin of 2.75% for the second quarter of 2021 also decreased 24 basis points compared to 2.99% for the first quarter of 2021. 

Interest Income

Interest income of $72.4 million in the second quarter of 2021 increased $4.2 million, or 6%, compared to the second quarter of 2020 and decreased $7.1 million, or 9%, compared to the first quarter of 2021. 

The 6% increase in interest income compared to the second quarter of 2020 was primarily due to significant loan growth that was partially offset by lower rates.  The higher interest income reflected a $969.4 million, or 14%, increase in the average balance of loans, including loans held for sale, which reached $7.9 billion for the second quarter of 2021. The average yield on loans and loans held for sale of 3.46% for the second quarter of 2021 decreased 25 basis points compared to 3.71% for the second quarter of 2020. The decline in average yields reflected higher loan volume and lower overall interest rates in the second quarter of 2021.

The 9% decrease in interest income compared to the first quarter of 2021 reflected a $473.5 million, or 6%, decrease in the average balance of loans, including loans held for sale, which reached $7.9 billion for the second quarter of 2021. The average yield on loans and loans held for sale of 3.46% for the second quarter of 2021 decreased 20 basis points compared to 3.66% for the first quarter of 2021. 

Interest Expense

Total interest expense decreased $8.9 million, or 53%, to $8.0 million for the second quarter of 2021 compared to the second quarter of 2020 and increased $0.4 million, or 6%, compared to the first quarter of 2021. Interest expense on deposits of $6.7 million for the second quarter of 2021 decreased $8.7 million, or 57%, compared to the second quarter of 2020 and increased $0.6 million, or 10%, compared to the first quarter of 2021.

The 57% decrease in interest expense on deposits compared to the second quarter of 2020 was primarily due to significant decreases in balances and rates of brokered certificates of deposits, as well as higher balances of custodial interest-bearing checking accounts with warehouse customers that are tied to short-term LIBOR rates, which declined significantly. The average balance of interest-bearing deposits of $7.4 billion for the second quarter of 2021 increased $390.1 million, or 6%, compared to the second quarter of 2020. The average yield of interest-bearing deposits was 0.36% for the second quarter of 2021, which was a 52 basis point decrease compared to 0.88% for the second quarter of 2020. 

The 10% increase in interest expense on deposits compared to the first quarter of 2021 was primarily due to the higher balances and rates for money market accounts.  The average balance of interest-bearing deposits of $7.4 billion for the second quarter of 2021 decreased $91.3 million, or 1%, compared to the first quarter of 2021. The average yield of interest-bearing deposits was 0.36% for the second quarter of 2021, which was a 3 basis point decrease compared to 0.33% in the first quarter of 2021. 

Noninterest Income

Noninterest income of $32.9 million for the second quarter of 2021 increased $6.7 million, or 25%, compared to the second quarter of 2020 and decreased $11.1 million, or 25%, compared to the first quarter of 2021.

The 25% increase in noninterest income compared to the second quarter of 2020 was primarily due to a $8.0 million, or 47%, increase in gain on sale of loans reflecting higher volume of multi-family loans. 

The 25% decrease in noninterest income compared to the first quarter of 2021 was primarily due to a $6.2 million decrease in loan servicing fees.   Included in loan servicing fees for the second quarter of 2021 was a $0.7 million positive fair market value adjustment to mortgage servicing rights, which compared to a $6.9 million positive fair market value adjustment for the first quarter of 2021.

At June 30, 2021, the mortgage servicing rights asset was valued at $98.3 million, an increase of 35% compared to June 30, 2020 and an increase of 2% compared to March 31, 2021.  These increases were driven by higher loan balances of mortgages serviced and higher interest rates that impacted fair market value adjustments in the second quarter of 2021.  The value of mortgage servicing rights generally increases in rising interest rate environments and declines in falling interest rate environments.

Noninterest Expense

Noninterest expense of $28.2 million for the second quarter of 2021 increased $7.9 million, or 39%, compared to the second quarter of 2020 and decreased $1.9 million, or 6%, compared to the first quarter of 2021. 

The 39% increase in noninterest expense compared to the second quarter of 2020 was due primarily to a $7.0 million, or 60%, increase in salaries and employee benefits, including commissions, to support higher loan production volumes.    The efficiency ratio of 29.0% for the second quarter of 2021 compared to 26.2% for the second quarter of 2020.

The 6% decrease in noninterest expense compared to the first quarter of 2021 was primarily due to a $2.4 million, or 11%, decrease in salaries and employee benefits that reflected lower commissions from lower loan volumes.  The efficiency ratio of 29.0% for the second quarter of 2021 compared to 26.0% for the first quarter of 2021.

Segments

For the second quarter of 2021, net income of $11.0 million for Multi-family Mortgage Banking increased 200% compared with the second quarter of 2020, primarily due to higher noninterest income from gain on sale of loans. Noninterest income reflected a positive fair market value adjustment of $0.1 million on mortgage servicing rights in the second quarter of 2021 compared to a negative fair market value adjustment of $0.8 million in the second quarter of 2020.  Compared to the first quarter of 2021, net income for this segment decreased 8%, reflecting lower gain on sale of loans and loan servicing fees.  Included in loan servicing fees was a positive fair market value adjustment of $0.1 million on mortgage servicing rights in the second quarter of 2021 compared to a positive fair market value adjustment of $2.1 million in the first quarter of 2021.

For the second quarter of 2021, net income of $21.7 million for Banking increased 84% from to the second quarter of 2020, reflecting higher net interest income.  Net income for this segment decreased 6% from the first quarter of 2021 primarily due to lower loan servicing fees.  Included in loan servicing fees for the second quarter of 2021 was a $0.6 million positive fair market value adjustment to mortgage servicing rights, which compared to a $4.7 million positive fair market value adjustment for the first quarter of 2021.

For the second quarter of 2021, net income of $21.4 million for Mortgage Warehousing decreased 23% compared to the second quarter of 2020 and decreased 27% compared to the first quarter of 2021.  The decreases reflected lower net interest income as warehouse lines of credit and loans held for sale declined. 

About Merchants Bancorp

Merchants Bancorp is a diversified bank holding company headquartered in Carmel, Indiana operating multiple lines of business, including Federal Housing Administration ("FHA") multi-family housing and healthcare facility financing and servicing; mortgage warehouse financing; retail and correspondent residential mortgage banking; agricultural lending; and traditional community banking.  Merchants Bancorp, with $9.9 billion in assets and $8.0 billion in deposits as of June 30, 2021, conducts its business primarily through its direct and indirect subsidiaries, Merchants Bank of Indiana, Merchants Capital Corp., Farmers-Merchants Bank of Illinois, Merchants Capital Servicing, LLC, and Merchants Mortgage, a division of Merchants Bank of Indiana. For more information and financial data, please visit Merchants' Investor Relations page at investors.merchantsbancorp.com.

Forward-Looking Statements 

This press release contains forward-looking statements which reflect management's current views with respect to, among other things, future events and financial performance. These statements are often, but not always, made through the use of words or phrases such as "may," "might," "should," "could," "predict," "potential," "believe," "expect," "continue," "will," "anticipate," "seek," "estimate," "intend," "plan," "projection," "goal," "target," "outlook," "aim," "would," "annualized" and "outlook," or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about the industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control, such as the potential impacts of the COVID-19 pandemic. Accordingly, management cautions that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.  A number of important factors could cause actual results to differ materially from those indicated in these forward-looking statements, including the impacts of the COVID-19 pandemic, such as the severity, magnitude, duration and businesses' and governments' responses thereto, on the Company's operations and personnel, and on activity and demand across its businesses, and other factors identified in "Risk Factors" or "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K and other periodic filings with the Securities and Exchange Commission.  Any forward-looking statements presented herein are made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Consolidated Balance Sheets
(Unaudited)
(In thousands, except share data)
		June 30,		March 31,		December 31,		September 30,		June 30,
		2021		2021		2020		2020		2020
Assets
Cash and due from banks		$                13,745		$                12,003		$                10,063		$                  9,276		$                13,830
Interest-earning demand accounts		388,304		257,436		169,665		419,926		389,357
Cash and cash equivalents		402,049		269,439		179,728		429,202		403,187
Securities purchased under agreements to resell		6,507		6,544		6,580		6,616		6,651
Mortgage loans in process of securitization		461,914		432,063		338,733		374,721		518,788
Available for sale securities		315,260		241,691		269,802		278,861		259,656
Federal Home Loan Bank (FHLB) stock		70,767		70,656		70,656		70,656		53,224
Loans held for sale (includes $26,623, $57,998, $40,044, $41,418 and $42,000, respectively, at fair value)		2,955,390		2,749,662		3,070,154		3,319,619		3,877,769
Loans receivable, net of allowance for loan losses of $28,696, $29,091, $27,500, $23,436 and $20,497, respectively		5,444,227		5,710,291		5,507,926		4,857,554		4,133,315
Premises and equipment, net		31,384		31,261		29,761		29,261		29,362
Mortgage servicing rights		98,331		96,215		82,604		75,772		72,889
Interest receivable		22,068		22,111		21,770		19,130		18,574
Goodwill		15,845		15,845		15,845		15,845		15,845
Intangible assets, net		1,990		2,136		2,283		2,657		3,038
Other assets and receivables		55,800		57,346		49,533		50,581		47,102
Total assets		$           9,881,532		$           9,705,260		$           9,645,375		$           9,530,475		$           9,439,400
Liabilities and Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing		$              814,567		$              818,621		$              853,648		$              666,081		$              601,265
Interest-bearing		7,225,011		7,244,560		6,554,418		6,418,566		6,307,363
Total deposits		8,039,578		8,063,181		7,408,066		7,084,647		6,908,628
Borrowings		701,373		545,160		1,348,256		1,618,201		1,761,113
Deferred and current tax liabilities, net		18,819		41,610		20,405		22,405		21,020
Other liabilities		62,698		44,054		58,027		48,087		40,441
Total liabilities		8,822,468		8,694,005		8,834,754		8,773,340		8,731,202
Commitments and  Contingencies
Shareholders' Equity
Common stock, without par value
Authorized - 50,000,000 shares
Issued and outstanding - 28,783,599 shares, 28,782,139 shares, 28,747,083 shares, 28,745,614 shares and 28,745,614 shares, respectively		136,836		136,474		135,857		136,103		135,949
Preferred 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 - 0 shares, 41,625 shares, 41,625 shares, 41,625 shares and 41,625 shares		—		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 (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 - 250,000 shares
Issued and outstanding - 196,181 shares at June 30, 2021 and 150,000 shares at March 31, 2021 (equivalent to 7,847,233 depositary shares at June 30, 2021 and 6,000,000 depositary shares at March 31, 2021)		191,084		144,925		—		—		—
Retained earnings		560,083		516,961		461,744		407,979		358,895
Accumulated other comprehensive income		(4)		249		374		407		708
Total shareholders' equity		1,059,064		1,011,255		810,621		757,135		708,198
Total liabilities and shareholders' equity		$           9,881,532		$           9,705,260		$           9,645,375		$           9,530,475		$           9,439,400

 

 

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,
		2021			2021			2020			2021			2020
Interest Income
Loans		$	68,276		$	75,517		$	63,979		$	143,793		$	117,543
Mortgage loans in process of securitization			2,724			3,136			2,534			5,860			5,330
Investment securities:
Available for sale - taxable			833			354			972			1,187			2,294
Available for sale - tax exempt			9			11			38			20			75
Federal Home Loan Bank stock			392			384			447			776			686
Other			204			147			234			351			2,693
Total interest income			72,438			79,549			68,204			151,987			128,621
Interest Expense
Deposits			6,683			6,100			15,398			12,783			36,028
Borrowed funds			1,348			1,486			1,572			2,834			3,006
Total interest expense			8,031			7,586			16,970			15,617			39,034
Net Interest Income			64,407			71,963			51,234			136,370			89,587
Provision (credit) for loan losses			(315)			1,663			1,745			1,348			4,743
Net Interest Income After Provision for Loan Losses			64,722			70,300			49,489			135,022			84,844
Noninterest Income
Gain on sale of loans			25,122			28,620			17,084			53,742			38,250
Loan servicing fees, net			1,727			7,951			1,597			9,678			(4,227)
Mortgage warehouse fees			3,079			4,116			5,475			7,195			8,221
Other income			2,927			3,249			2,032			6,176			3,846
Total noninterest income			32,855			43,936			26,188			76,791			46,090
Noninterest Expense
Salaries and employee benefits			18,869			21,274			11,828			40,143			26,068
Loan expenses			1,921			2,523			2,039			4,444			3,203
Occupancy and equipment			1,808			1,627			1,383			3,435			2,875
Professional fees			779			422			726			1,201			1,295
Deposit insurance expense			651			671			1,851			1,322			3,637
Technology expense			971			937			716			1,908			1,326
Other expense			3,184			2,630			1,739			5,814			4,171
Total noninterest expense			28,183			30,084			20,282			58,267			42,575
Income Before Income Taxes			69,394			84,152			55,395			153,546			88,359
Provision for income taxes			17,977			22,169			14,233			40,146			22,614
Net Income		$	51,417		$	61,983		$	41,162		$	113,400		$	65,745
Dividends on preferred stock			(5,659)			(3,757)			(3,619)			(9,416)			(7,237)
Net Income Allocated to Common Shareholders			45,758			58,226			37,543			103,984			58,508
Basic Earnings Per Share		$	1.59		$	2.02		$	1.31		$	3.61		$	2.04
Diluted Earnings Per Share		$	1.58		$	2.02		$	1.31		$	3.60		$	2.03
Weighted-Average Shares Outstanding
Basic			28,782,813			28,772,092			28,743,894			28,777,482			28,739,263
Diluted			28,874,325			28,850,414			28,762,349			28,862,399			28,760,880

 

 

Key Operating Results
(Unaudited)
($ in thousands, except share data)
			Three Months Ended						Six Months Ended
			June 30,		March 31,		June 30,		June 30,		June 30,
			2021		2021		2020		2021		2020
Noninterest expense			$             28,183		$            30,084		$             20,282		$             58,267		$             42,575
Net interest income (before provision for losses)			64,407		71,963		51,234		136,370		89,587
Noninterest income			32,855		43,936		26,188		76,791		46,090
Total income			$             97,262		$          115,899		$             77,422		$           213,161		$           135,677
Efficiency ratio			28.98%		25.96%		26.20%		27.33%		31.38%
Average assets			$        9,609,957		$       9,952,911		$        8,689,212		$        9,780,487		$        7,646,803
Net income			$             51,417		$            61,983		$             41,162		$           113,400		$             65,745
Return on average assets before annualizing			0.54%		0.62%		0.47%		1.16%		0.86%
Annualization factor			4.00		4.00		4.00		2.00		2.00
Return on average assets			2.14%		2.49%		1.89%		2.32%		1.72%
Return on average tangible common shareholders' equity (1)			27.61%		38.32%		32.62%		32.72%		26.08%
Tangible book value per common share (1)			$               23.59		$              22.09		$               16.58		$               23.59		$               16.58
Tangible common shareholders' equity/tangible assets (1)			6.88%		6.56%		5.06%		6.88%		5.06%
(1) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Measures"
(1) Reconciliation of Non-GAAP Financial Measures
Certain non-GAAP financial measures provide useful information to management and investors that is supplementary to the company's financial condition, results of operations and cash flows computed in accordance with GAAP; however, they do have a number of limitations.  As such, the reader should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable  to non-GAAP financial measures that other companies use.  A reconciliation of GAAP to non-GAAP financial measures is below.  Net Income Available to Common Shareholders excludes preferred stock.  Tangible common equity is calculated by excluding the balance of goodwill and other intangible assets and preferred stock from the calculation of total assets.  Tangible Assets is calculated by excluding the balance of goodwill and intangible assets.  Tangible book value per share is calculated by dividing tangible common equity by the number of shares outstanding.
			Three Months Ended						Six Months Ended
			June 30,		March 31,		June 30,		June 30,		June 30,
			2021		2021		2020		2021		2020
Net income			$             51,417		$            61,983		$             41,162		$           113,400		$             65,745
Less: preferred stock dividends			(5,659)		(3,757)		(3,619)		(9,416)		(7,237)
Net income available to common shareholders			$             45,758		$            58,226		$             37,543		$           103,984		$             58,508
Average shareholders' equity			$        1,031,246		$          852,900		$           692,132		$           942,566		$           680,651
Less: average goodwill & intangibles			(17,916)		(18,057)		(19,083)		(17,986)		(19,283)
Less: average preferred stock			(350,320)		(227,115)		(212,646)		(289,058)		(212,646)
Tangible common shareholders' equity			$           663,010		$          607,728		$           460,403		$           635,522		$           448,722
Annualization factor			4.00		4.00		4.00		2.00		2.00
Return on average tangible common shareholders' equity			27.61%		38.32%		32.62%		32.72%		26.08%
Total equity			$        1,059,064		$       1,011,255		$           708,198		$        1,059,064		$           708,198
Less: goodwill and intangibles			(17,835)		(17,981)		(18,883)		(17,835)		(18,883)
Less: preferred stock			(362,149)		(357,571)		(212,646)		(362,149)		(212,646)
Tangible common shareholders' equity			$           679,080		$          635,703		$           476,669		$           679,080		$           476,669
Assets			$        9,881,532		$       9,705,260		$        9,439,400		$        9,881,532		$        9,439,400
Less: goodwill and intangibles			(17,835)		(17,981)		(18,883)		(17,835)		(18,883)
Tangible assets			$        9,863,697		$       9,687,279		$        9,420,517		$        9,863,697		$        9,420,517
Ending common shares			28,783,599		28,782,139		28,745,614		28,783,599		28,745,614
Tangible book value per common share			$               23.59		$              22.09		$               16.58		$               23.59		$               16.58
Tangible common shareholders' equity/tangible assets			6.88%		6.56%		5.06%		6.88%		5.06%

 

Merchants Bancorp
Average Balance Analysis
($ in thousands)
(Unaudited)
	Three Months Ended				Three Months Ended				Three Months Ended
	June 30, 2021				March 31, 2021				June 30, 2020
	Average		Yield/		Average		Yield/		Average		Yield/
	Balance	Interest	Rate		Balance	Interest	Rate		Balance	Interest	Rate
Assets:
Interest-bearing deposits, and other	$      788,002	$      596	0.30%		$      610,884	$       531	0.35%		$        971,350	$       681	0.28%
Securities available for sale - taxable	285,536	833	1.17%		267,428	354	0.54%		276,928	972	1.41%
Securities available for sale - tax exempt	1,363	9	2.65%		1,366	11	3.27%		5,294	38	2.89%
Mortgage loans in process of securitization	416,559	2,724	2.62%		500,234	3,136	2.54%		328,089	2,534	3.11%
Loans and loans held for sale	7,905,766	68,276	3.46%		8,379,227	75,517	3.66%		6,936,368	63,979	3.71%
Total interest-earning assets	9,397,226	72,438	3.09%		9,759,139	79,549	3.31%		8,518,029	68,204	3.22%
Allowance for loan losses	(28,778)				(28,308)				(19,474)
Noninterest-earning assets	241,509				222,080				190,657
Total assets	$    9,609,957				$   9,952,911				$     8,689,212
Liabilities & Shareholders' Equity:
Interest-bearing checking	4,473,251	1,362	0.12%		4,806,665	1,210	0.10%		2,656,105	2,327	0.35%
Savings deposits	205,884	38	0.07%		192,196	37	0.08%		176,546	27	0.06%
Money market	2,197,750	4,175	0.76%		2,065,218	3,738	0.73%		1,402,562	3,966	1.14%
Certificates of deposit	512,316	1,108	0.87%		416,426	1,115	1.09%		2,763,853	9,078	1.32%
Total interest-bearing deposits	7,389,201	6,683	0.36%		7,480,505	6,100	0.33%		6,999,066	15,398	0.88%
Borrowings	523,942	1,348	1.03%		810,856	1,486	0.74%		518,207	1,572	1.22%
Total interest-bearing liabilities	7,913,143	8,031	0.41%		8,291,361	7,586	0.37%		7,517,273	16,970	0.91%
Noninterest-bearing deposits	590,886				740,807				372,195
Noninterest-bearing liabilities	74,682				67,843				107,612
Total liabilities	8,578,711				9,100,011				7,997,080
Shareholders' equity	1,031,246				852,900				692,132
Total liabilities and shareholders' equity	$    9,609,957				$   9,952,911				$     8,689,212
Net interest income		$  64,407				$   71,963				$   51,234
Net interest spread			2.68%				2.93%				2.31%
Net interest-earning assets	$    1,484,083				$   1,467,778				$     1,000,756
Net interest margin			2.75%				2.99%				2.42%
Average interest-earning assets to average interest-bearing liabilities			118.75%				117.70%				113.31%

 

Supplemental Results
(Unaudited)
($ in thousands)
				Net Income						Net Income
				Three Months Ended						Six Months Ended
				June 30,		March 31,		June 30,		June 30,
				2021		2021		2020		2021		2020
Segment
Multi-family Mortgage Banking				$              10,971		$            11,961		$                 3,651		$          22,932		$            9,050
Mortgage Warehousing				21,448		29,183		27,712		50,631		40,149
Banking				21,741		23,025		11,812		44,766		19,762
Other				(2,743)		(2,186)		(2,013)		(4,929)		(3,216)
Total				$              51,417		$            61,983		$               41,162		$        113,400		$          65,745
				Total Assets
				June 30,		March 31,		December 31,
				2021		2021		2020
Segment
Multi-family Mortgage Banking				$            238,165		$          219,954		$             210,714
Mortgage Warehousing				4,265,162		4,383,759		4,893,513
Banking				5,328,684		5,010,799		4,498,880
Other				49,521		90,748		42,268
Total				$         9,881,532		$       9,705,260		$          9,645,375
				Gain on Sale of Loans						Gain on Sale of Loans
				Three Months Ended						Six Months Ended
				June 30,		March 31,		June 30,		June 30,
				2021		2021		2020		2021		2020
Loan Type
Multi-family				$              21,408		$            22,836		$                 6,839		$          44,244		$          25,691
Single-family				1,872		4,213		10,059		6,085		12,133
Small Business Association (SBA)				1,842		1,571		186		3,413		426
Total				$              25,122		$            28,620		$               17,084		$          53,742		$          38,250
				Loans Receivable and Loans Held for Sale
				June 30,		March 31,		December 31,
				2021		2021		2020
Mortgage warehouse lines of credit				$         1,177,940		$       1,334,548		$          1,605,745
Residential real estate				806,325		731,334		678,848
Multi-family and healthcare financing				2,970,770		3,206,633		2,749,020
Commercial and commercial real estate				409,710		357,682		387,294
Agricultural production and real estate				92,786		96,108		101,268
Consumer and margin loans				15,392		13,077		13,251
				5,472,923		5,739,382		5,535,426
Less: Allowance for loan losses				28,696		29,091		27,500
Loans receivable				$         5,444,227		$       5,710,291		$          5,507,926
Loans held for sale				2,955,390		2,749,662		3,070,154
Total loans, net of allowance				$         8,399,617		$       8,459,953		$          8,578,080

 

 

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SOURCE Merchants Bancorp

FAQ

What were Merchants Bancorp's net income figures for Q2 2021?

Merchants Bancorp reported a net income of $51.4 million for Q2 2021.

How did net interest income change for Merchants Bancorp in Q2 2021?

Net interest income decreased by 10% compared to Q1 2021 but increased by 26% year-over-year.

What was the total asset value for Merchants Bancorp as of June 30, 2021?

Total assets were $9.9 billion as of June 30, 2021.

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

Non-performing loans were 0.05% of loans receivable as of June 30, 2021.

How did total deposits change for Merchants Bancorp in Q2 2021?

Total deposits decreased by $23.6 million from Q1 2021 but increased by 9% compared to December 31, 2020.