Merchants Bancorp Reports Third Quarter 2022 Results

Rhea-AI Summary

Merchants Bancorp (MBIN) reported a net income of $58.5 million for Q3 2022, consistent with Q3 2021, but up 8% from Q2 2022. Diluted earnings per share also held steady at $1.22, marking a 10% increase from Q2 2022. Total assets reached $12.0 billion, up 8% from June 30, 2022. The net interest margin improved to 3.05%, up 32 basis points year-over-year. However, noninterest income fell 28%, reflecting a 24% increase in net interest income partially offset by rising expenses.

Positive

• Net income of $58.5 million in Q3 2022, equal to Q3 2021, with an 8% increase from Q2 2022.
• Diluted earnings per share of $1.22, a 10% increase from Q2 2022.
• Total assets increased 8% to $12.0 billion compared to June 30, 2022.
• Net interest margin improved to 3.05%, showing year-over-year growth.
• Tangible book value per common share rose to $20.78, a 23% increase from Q3 2021.

Negative

• Noninterest income decreased by $11.1 million, or 28%, compared to Q3 2021.
• Noninterest expenses rose by $5.5 million, or 19%, impacting overall profitability.

• Third quarter 2022 net income of $58.5 million was equal to the third quarter of 2021 and increased 8% compared to the second quarter of 2022
• Third quarter 2022 diluted earnings per common share of $1.22 was equal to the third quarter of 2021 and increased 10% compared to the second quarter of 2022
• Total assets of $12.0 billion increased 8% compared to June 30, 2022, and increased 6% compared to December 31, 2021
• Return on average assets was 2.05% in the third quarter of 2022 compared to 2.29% in the third quarter of 2021 and 2.20% in the second quarter of 2022
• Net interest margin was 3.05% in the third quarter of 2022 compared to 2.73% in the third quarter of 2021 and 3.03% in the second quarter of 2022
• Tangible book value per common share of $20.78 increased 23% compared to $16.91 in the third quarter of 2021 and increased 5% compared to $19.70 in the second quarter of 2022
• Completed 8.25% Series D preferred stock offering in September 2022, raising approximately $137.4 million of new capital, net of $5.1 million in offering costs
• Sold $1.2 billion of multi-family bridge loans into a private securitization via a real estate mortgage investment conduit (REMIC). As part of the transaction, purchased a $1.0 billion senior investment security that is expected to be held to maturity.

CARMEL, Ind., Oct. 27, 2022 /PRNewswire/ --  Merchants Bancorp (the "Company" or "Merchants") (Nasdaq: MBIN), parent company of Merchants Bank of Indiana, today reported third quarter 2022 net income of $58.5 million, or diluted earnings per common share of $1.22. This compared to $58.5 million, or diluted earnings per common share of $1.22 in the third quarter of 2021, and compared to $53.9 million, or diluted earnings per common share of $1.11 in the second quarter of 2022.

"We thrived during the third quarter, as our business model allowed us to quickly adapt to the changing interest rate landscape and we prepared ourselves with the additional capital and resources to continue our trajectory of profitable growth. With a tangible book value of $20.78 per share, an industry-leading return on average assets of 2.05% and efficiency ratio of 30.5% in the quarter, our momentum remains strong, and we are optimistic about the remainder of 2022 and beyond," said Michael F. Petrie, Chairman and CEO of Merchants. 

Michael J. Dunlap, President and Chief Operating Officer of Merchants, added, "As our company has continued to expand, we have made it a priority to ensure our team has the necessary tools and freedom to execute effectively for our customers.  Their efforts have been the backbone of our company and their creativity and dedication will continue to be a leading factor in our ongoing success." 

Net income of $58.5 million for the third quarter 2022 was equal to the third quarter of 2021, but reflected a $16.5 million, or 24%, increase in net interest income that was offset by an $11.1 million, or 28%, decrease in noninterest income and a $5.5 million, or 19%, increase in noninterest expenses.

Net income for the third quarter 2022 increased by $4.6 million, or 8%, compared to the second quarter of 2022, primarily driven by a $13.4 million, or 19%, increase in net interest income that was partially offset by a $10.0 million, or 25%, decrease in noninterest income and a $2.0 million, or 6%, increase in noninterest expense.

Total Assets
Total assets of $12.0 billion at September 30, 2022 increased 8%, compared to June 30, 2022, and increased 6%, compared to December 31, 2021.  Increases compared to both periods were primarily due to significant growth in the multi-family loan portfolio, some of which were sold during the quarter.   On September 22, 2022, $1.2 billion in loans were sold as part of a securitization transaction that was partially offset by the purchase of a $1.0 billion held to maturity senior investment security that was established as part of the securitization transaction.

Return on average assets was 2.05% for the third quarter of 2022 compared to 2.29% for the third quarter of 2021 and 2.20% for the second quarter of 2022.

Asset Quality
The allowance for credit losses on loans of $39.0 million at September 30, 2022 increased $1.5 million compared to June 30, 2022 and increased $7.7 million compared to December 31, 2021.  The increase compared to June 30, 2022 was primarily due to growth in the multi-family, commercial, residential, and healthcare loan portfolios, partially offset by the decrease in the multi-family portfolio associated with the $1.2 billion loan sale and securitization.  As of September 30, 2022, the Company had one loan remaining in a COVID-19 payment deferral arrangement, with an unpaid balance of $36.8 million.

Non-performing loans were $26.6 million, or 0.38%, of loans receivable at September 30, 2022, compared to 0.07% at June 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 $10.3 billion at September 30, 2022 increased $2.0 billion, or 24%, compared to June 30, 2022, and increased $1.3 billion, or 15%, compared to December 31, 2021. The increase compared to both periods was primarily due to an increase in certificates of deposit and demand accounts.  

Total brokered deposits of $2.2 billion at September 30, 2022 increased $994.0 million, or 81%, from June 30, 2022 and increased $58.9 million, or 3%, from December 31, 2021. Brokered deposits represented 22% of total deposits at September 30, 2022 compared to 15% of total deposits at June 30, 2022 and 24% of total deposits at December 31, 2021. As of September 30, 2022, brokered certificates of deposit had a weighted average remaining duration of 84 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 $324.0 million at September 30, 2022 increased by $65.8 million compared to June 30, 2022 and decreased by $708.7 million compared to December 31, 2021. The Company continues to have significant borrowing capacity, with unused lines of credit totaling $2.8 billion at September 30, 2022 compared to $1.7 billion at June 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 September 30, 2022 and 2021

Net Interest Income of $85.4 million increased $16.5 million, or 24% compared to $68.9 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 of deposits and borrowings. 

• Interest rate spread of 2.77% increased 10 basis points compared to 2.67%.
• Net interest margin of 3.05% increased 32 basis points compared to 2.73%.

Interest Income of $134.1 million increased 73% compared to $77.3 million, reflecting an increase in both yields and average balances of loans and loans held for sale. 

• Average balances of $10.2 billion for loans and loans held for sale increased 18% compared to $8.7 billion.
• Average yield on loans and loans held for sale of 5.00% increased 167 basis points compared to 3.33%.

Interest Expense of $48.7 million increased $40.3 million, or 478%, compared to $8.4 million.  Interest expense on deposits of $45.0 million increased $38.0 million, or 545%, compared $7.0 million, primarily reflecting higher rates on interest bearing checking, money market, and certificates of deposit accounts.

• Average balances of $9.0 billion for interest-bearing deposits increased 15% compared to $7.8 billion.
• Average interest rates of 1.98% for interest-bearing deposits increased 163 basis points compared to 0.35%.

Noninterest Income of $29.2 million decreased $11.1 million, or 28%, compared to $40.3 million, primarily due to a $15.7 million decrease in gain on sale of loans, partially offset by a $2.9 million increase in loan servicing rights, which included adjustments for higher values of servicing rights.

• The decrease in gain on sale of loans was associated with a business mix shift in multi-family lending, from volumes sold in the secondary market towards those maintained on the balance sheet.
• Loan servicing fees included a $4.6 million positive fair market value adjustment to mortgage servicing rights, of which $0.9 million was in the Banking segment and $3.7 million was in the Multi-family Mortgage Banking segment.  This compared to a $3.0 million positive fair market value adjustment to mortgage servicing rights, of which $2.3 million was in the Banking segment and $0.7 million was in the Multi-family Mortgage Banking segment.
• Syndication and asset management fees of $3.1 million increased 378% and are becoming a meaningful source of noninterest income growth.

Noninterest Expense of $35.0 million increased $5.5 million, or 19%, compared to $29.5 million, primarily due to increases in salaries and employee benefits to support business growth. 

• The efficiency ratio of 30.51% increased 351 basis points compared to 27.00%.

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

Net Interest Income of $85.4 million increased $13.4 million, or 19% compared to $72.0 million, reflecting higher yields and average balances on loans and loans held for sale that were partially offset by higher interest rates on deposits and borrowings.

• Interest rate spread of 2.77% decreased 13 basis points compared to 2.90%.
• Net interest margin of 3.05% increased 2 basis points compared to 3.03%.

Interest Income of $134.1 million increased $44.8 million, or 50%, compared to $89.3 million, reflecting an increase in yields and average balances of loans and loans held for sale.

• Average balances of $10.2 billion for loans and loans held for sale increased $1.6 billion, or 19%, compared to $8.6 billion.
• Average yield on loans and loans held for sale of 5.00% increased 101 basis points compared to 3.99%.

Interest Expense of $48.7 million increased $31.5 million, or 183%, compared to $17.2 million. Interest expense on deposits of $45.0 million increased $30.2 million, or 205%, compared to $14.8 million, reflecting higher interest rates on interest bearing checking, money market, and certificates of deposit accounts.

• Average balances of $9.0 billion for interest-bearing deposits increased $1.6 billion, or 22%, compared to $7.4 billion.
• Average interest rates of 1.98% for interest-bearing deposits increased 117 basis points compared to 0.81%.

Noninterest Income of $29.2 million decreased $10.0 million, or 25%, compared $39.2 million, primarily due to a $8.2 million, or 38%, decrease in gain on sale of loans. 

• The decrease in gain on sale of loans was associated with lower volume in the multi-family loan portfolios.
• Loan servicing fees included 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. This compared to a $7.7 million positive fair market value adjustment to servicing rights, of which $1.1 million was in the Banking segment and $6.6 million was in the Multi-family Mortgage Banking segment.
• Syndication and asset management fees of $3.1 million nearly doubled and are becoming a meaningful source of noninterest income growth.

Noninterest Expense of $35.0 million increased $2.0 million, or 6%, compared to $33.0 million, primarily due to increases in professional fees as well as salaries and employee benefits to support business growth.

• The efficiency ratio of 30.51% increased 87 basis points compared to 29.64%.

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 lines of business, including 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 $12.0 billion in assets and $10.3 billion in deposits as of September 30, 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)
		September 30,		June 30		March 31		December 31,		September 30,
		2022		2022		2022		2021		2021
Assets
Cash and due from banks		$              13,796		$              10,714		$                9,853		$              14,030		$              14,352
Interest-earning demand accounts		310,165		247,432		401,668		1,018,584		788,224
Cash and cash equivalents		323,961		258,146		411,521		1,032,614		802,576
Securities purchased under agreements to resell		3,497		3,520		4,798		5,888		5,923
Mortgage loans in process of securitization		137,448		323,046		324,280		569,239		634,027
Available for sale securities		322,069		336,814		314,266		310,629		301,119
Held to maturity securities		1,005,487		—		—		—		—
Federal Home Loan Bank (FHLB) stock		39,130		39,130		28,804		29,588		70,767
Loans held for sale (includes $68,785, $41,991, $14,567, $48,583 and $26,296, respectively, at fair value)		2,844,750		2,759,116		2,289,094		3,303,199		3,453,279
Loans receivable, net of allowance for credit losses on loans of $38,996,  $37,474, $32,102, $31,344 and $29,134, respectively		6,919,128		7,033,203		5,976,960		5,751,319		5,431,227
Premises and equipment, net		35,492		35,085		34,559		31,212		31,423
Servicing rights		144,984		130,710		121,036		110,348		105,473
Interest receivable		40,170		26,184		23,499		24,103		21,894
Goodwill		15,845		15,845		15,845		15,845		15,845
Intangible assets, net		1,307		1,441		1,574		1,707		1,843
Other assets and receivables		145,454		123,815		104,356		92,947		76,637
Total assets		$       11,978,722		$       11,086,055		$         9,650,592		$       11,278,638		$       10,952,033
Liabilities and Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing		$            315,868		$            444,461		$            461,193		$            641,442		$            824,118
Interest-bearing		10,003,611		7,855,277		7,014,628		8,341,171		8,123,201
Total deposits		10,319,479		8,299,738		7,475,821		8,982,613		8,947,319
Borrowings		97,279		1,440,904		879,929		1,033,954		809,136
Deferred and current tax liabilities, net		19,124		19,414		30,695		19,170		21,681
Other liabilities		130,250		97,460		75,644		87,492		64,019
Total liabilities		10,566,132		9,857,516		8,462,089		10,123,229		9,842,155
Commitments and  Contingencies
Shareholders' Equity
Common stock, without par value
Authorized - 75,000,000 shares, 75,000,000 shares, 50,000,000 shares, 50,000,000 shares and 50,000,000 shares
Issued and outstanding  - 43,109,578 shares, 43,106,505 shares, 43,267,776 shares, 43,180,079 shares and 43,178,061 shares		137,226		136,671		137,882		137,565		137,200
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)		137,371		—		—		—		—
Retained earnings		787,530		737,789		694,776		657,149		610,267
Accumulated other comprehensive income (loss)		(11,686)		(8,070)		(6,304)		(1,454)		262
Total shareholders' equity		1,412,590		1,228,539		1,188,503		1,155,409		1,109,878
Total liabilities and shareholders' equity		$       11,978,722		$       11,086,055		$         9,650,592		$       11,278,638		$       10,952,033

 

Consolidated Statement of Income
(Unaudited)
(In thousands, except share data)
		Three Months Ended									Change
		September 30,			June 30,			September 30,			3Q22		3Q22
		2022			2022			2021			vs. 2Q22		vs. 3Q21
Interest Income
Loans		$	129,101		$	85,994		$	72,924		50 %		77 %
Mortgage loans in process of securitization			2,162			1,449			2,868		49 %		-25 %
Investment securities:
Available for sale - taxable			485			917			1,115		-47 %		-57 %
Available for sale - tax exempt			—			—			12		—		-100 %
Held to maturity			970			—			—		100 %		100 %
Federal Home Loan Bank stock			379			284			190		33 %		99 %
Other			1,015			626			205		62 %		395 %
Total interest income			134,112			89,270			77,314		50 %		73 %
Interest Expense
Deposits			45,002			14,768			6,981		205 %		545 %
Borrowed funds			3,725			2,471			1,452		51 %		157 %
Total interest expense			48,727			17,239			8,433		183 %		478 %
Net Interest Income			85,385			72,031			68,881		19 %		24 %
Provision for credit losses			2,225			6,212			1,079		-64 %		106 %
Net Interest Income After Provision for Credit Losses			83,160			65,819			67,802		26 %		23 %
Noninterest Income
Gain on sale of loans			13,354			21,564			29,013		-38 %		-54 %
Loan servicing fees, net			8,169			9,607			5,313		-15 %		54 %
Mortgage warehouse fees			1,105			1,350			2,732		-18 %		-60 %
Syndication and asset management fees			3,073			1,599			643		92 %		378 %
Other income			3,485			5,051			2,570		-31 %		36 %
Total noninterest income			29,186			39,171			40,271		-25 %		-28 %
Noninterest Expense
Salaries and employee benefits			23,027			22,475			20,197		2 %		14 %
Loan expenses			1,226			1,184			1,734		4 %		-29 %
Occupancy and equipment			1,967			2,011			1,861		-2 %		6 %
Professional fees			2,429			1,594			901		52 %		170 %
Deposit insurance expense			755			670			664		13 %		14 %
Technology expense			1,325			1,304			1,169		2 %		13 %
Other expense			4,222			3,719			2,946		14 %		43 %
Total noninterest expense			34,951			32,957			29,472		6 %		19 %
Income Before Income Taxes			77,395			72,033			78,601		7 %		-2 %
Provision for income taxes			18,907			18,098			20,098		4 %		-6 %
Net Income		$	58,488		$	53,935		$	58,503		8 %		—
Dividends on preferred stock			(5,729)			(5,729)			(5,729)		—		—
Net Income Allocated to Common Shareholders		$	52,759		$	48,206		$	52,774		9 %		—
Basic Earnings Per Share		$	1.22		$	1.12		$	1.22		9 %		—
Diluted Earnings Per Share		$	1.22		$	1.11		$	1.22		10 %		—
Weighted-Average Shares Outstanding
Basic			43,107,975			43,209,824			43,176,296
Diluted			43,258,925			43,335,211			43,314,755

 

Consolidated Statement of Income
(Unaudited)
(In thousands, except share data)
		Nine Months Ended
		September 30,			September 30,
		2022			2021			Change
Interest Income
Loans		$	287,291		$	216,717		33 %
Mortgage loans in process of securitization			5,856			8,728		-33 %
Investment securities:
Available for sale - taxable			2,103			2,302		-9 %
Available for sale - tax exempt			—			32		-100 %
Held to maturity			970			—		100 %
Federal Home Loan Bank stock			932			966		-4 %
Other			2,242			556		303 %
Total interest income			299,394			229,301		31 %
Interest Expense
Deposits			68,583			19,764		247 %
Borrowed funds			7,670			4,286		79 %
Total interest expense			76,253			24,050		217 %
Net Interest Income			223,141			205,251		9 %
Provision for credit losses			10,888			2,427		349 %
Net Interest Income After Provision for Credit Losses			212,253			202,824		5 %
Noninterest Income
Gain on sale of loans			52,883			82,755		-36 %
Loan servicing fees, net			27,507			14,991		83 %
Mortgage warehouse fees			4,313			9,927		-57 %
Syndication and asset management fees			5,286			1,178		349 %
Other income			12,965			8,211		58 %
Total noninterest income			102,954			117,062		-12 %
Noninterest Expense
Salaries and employee benefits			66,795			60,340		11 %
Loan expenses			3,621			6,178		-41 %
Occupancy and equipment			5,792			5,296		9 %
Professional fees			5,326			2,102		153 %
Deposit insurance expense			2,184			1,986		10 %
Technology expense			3,865			3,077		26 %
Other expense			11,358			8,760		30 %
Total noninterest expense			98,941			87,739		13 %
Income Before Income Taxes			216,266			232,147		-7 %
Provision for income taxes			53,701			60,244		-11 %
Net Income		$	162,565		$	171,903		-5 %
Dividends on preferred stock			(17,186)			(15,145)		13 %
Net Income Allocated to Common Shareholders		$	145,379		$	156,758		-7 %
Basic Earnings Per Share		$	3.37		$	3.63		-7 %
Diluted Earnings Per Share		$	3.36		$	3.62		-7 %
Weighted-Average Shares Outstanding
Basic			43,182,380			43,169,618
Diluted			43,331,148			43,300,688

 

Key Operating Results
(Unaudited)
($ in thousands, except share data)
			Three Months Ended						Change
			September 30,		June 30,		September 30,		3Q22		3Q22
			2022		2022		2021		vs. 2Q22		vs. 3Q21
Noninterest expense			$           34,951		$          32,957		$           29,472		6 %		19 %
Net interest income (before provision for credit losses)			85,385		72,031		68,881		19 %		24 %
Noninterest income			29,186		39,171		40,271		-25 %		-28 %
Total income			$         114,571		$        111,202		$         109,152		3 %		5 %
Efficiency ratio			30.51 %		29.64 %		27.00 %		87	bps	351	bps
Average assets			$    11,437,805		$     9,820,878		$    10,236,491		16 %		12 %
Net income			$           58,488		$          53,935		$           58,503		8 %		—
Return on average assets before annualizing			0.51 %		0.55 %		0.57 %
Annualization factor			4.00		4.00		4.00
Return on average assets			2.05 %		2.20 %		2.29 %		(15)	bps	(24)	bps
Return on average tangible common shareholders' equity (1)			23.92 %		23.05 %		29.83 %		87	bps	(591)	bps
Tangible book value per common share (1)			$             20.78		$            19.70		$             16.91		5 %		23 %
Tangible common shareholders' equity/tangible assets (1)			7.49 %		7.67 %		6.68 %		(18)	bps	81	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.
			Three Months Ended						Change
			September 30,		June 30,		September 30,		3Q22		3Q22
			2022		2022		2021		vs. 2Q22		vs. 3Q21
Net income			$           58,488		$          53,935		$           58,503		8 %		—
Less: preferred stock dividends			(5,729)		(5,729)		(5,729)		—		—
Net income available to common shareholders			$           52,759		$          48,206		$           52,774		9 %		—
Average shareholders' equity			$      1,267,160		$     1,215,891		$      1,087,675		4 %		17 %
Less: average goodwill & intangibles			(17,228)		(17,361)		(17,770)		-1 %		-3 %
Less: average preferred stock			(367,726)		(362,149)		(362,149)		2 %		2 %
Tangible common shareholders' equity			$         882,206		$        836,381		$         707,756		5 %		25 %
Annualization factor			4.00		4.00		4.00
Return on average tangible common shareholders' equity			23.92 %		23.05 %		29.83 %		87	bps	(590)	bps
Total equity			$      1,412,590		$     1,228,539		$      1,109,878		15 %		27 %
Less: goodwill and intangibles			(17,152)		(17,286)		(17,688)		-1 %		-3 %
Less: preferred stock			(499,520)		(362,149)		(362,149)		38 %		38 %
Tangible common shareholders' equity			$         895,918		$        849,104		$         730,041		6 %		23 %
Assets			$    11,978,722		$   11,086,055		$    10,952,033		8 %		9 %
Less: goodwill and intangibles			(17,152)		(17,286)		(17,688)		-1 %		-3 %
Tangible assets			$    11,961,570		$   11,068,769		$    10,934,345		8 %		9 %
Ending common shares			43,109,578		43,106,505		43,178,061		—		—
Tangible book value per common share			$             20.78		$            19.70		$             16.91		5 %		23 %
Tangible common shareholders' equity/tangible assets			7.49 %		7.67 %		6.68 %		(18)	bps	81	bps

 

Key Operating Results
(Unaudited)
($ in thousands, except share data)
			Nine Months Ended
			September 30,		September 30,
			2022		2021		Change
Noninterest expense			$           98,941		$          87,739		13 %
Net interest income (before provision for credit losses)			223,141		205,251		9 %
Noninterest income			102,954		117,062		-12 %
Total income			$         326,095		$        322,313		1 %
Efficiency ratio			30.34 %		27.22 %		312	bps
Average assets			$    10,568,712		$     9,934,157		6 %
Net income			$         162,565		$        171,903		-5 %
Return on average assets before annualizing			1.54 %		1.73 %
Annualization factor			1.33		1.33
Return on average assets			2.05 %		2.30 %		(25)	bps
Return on average tangible common shareholders' equity (1)			23.08 %		31.60 %		(852)	bps
Tangible book value per common share (1)			$             20.78		$            16.91		23 %
Tangible common shareholders' equity/tangible assets (1)			7.49 %		6.68 %		81	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.
			Nine Months Ended
			September 30,		September 30,
			2022		2021		Change
Net income			$         162,565		$        171,903		-5 %
Less: preferred stock dividends			(17,186)		(15,145)		13 %
Net income available to common shareholders			$         145,379		$        156,758		-7 %
Average shareholders' equity			$      1,219,305		$        991,467		23 %
Less: average goodwill & intangibles			(17,360)		(17,913)		-3 %
Less: average preferred stock			(364,028)		(313,689)		16 %
Tangible common shareholders' equity			$         837,917		$        659,865		27 %
Annualization factor			1.33		1.33
Return on average tangible common shareholders' equity			23.08 %		31.60 %		(852)	bps
Total equity			$      1,412,590		$     1,109,878		27 %
Less: goodwill and intangibles			(17,152)		(17,688)		-3 %
Less: preferred stock			(499,520)		(362,149)		38 %
Tangible common shareholders' equity			$         895,918		$        730,041		23 %
Assets			$    11,978,722		$   10,952,033		9 %
Less: goodwill and intangibles			(17,152)		(17,688)		-3 %
Tangible assets			$    11,961,570		$   10,934,345		9 %
Ending common shares			43,109,578		43,178,061		—
Tangible book value per common share			$             20.78		$            16.91		23 %
Tangible common shareholders' equity/tangible assets			7.49 %		6.68 %		81	bps

 

	Merchants Bancorp
	Average Balance Analysis
	($ in thousands)
	(Unaudited)
		Three Months Ended				Three Months Ended				Three Months Ended
		September 30, 2022				June 30, 2022				September 30, 2021
		Average		Yield/		Average		Yield/		Average		Yield/
		Balance	Interest	Rate		Balance	Interest	Rate		Balance	Interest	Rate
	Assets:
	Interest-bearing deposits, and other	$       211,653	$    1,394	2.61 %		$      367,540	$       910	0.99 %		$        580,397	$       395	0.27 %
	Securities available for sale - taxable	331,796	485	0.58 %		330,759	917	1.11 %		308,476	1,115	1.43 %
	Securities available for sale - tax exempt	—	—			—	—			1,361	12	3.50 %
	Held to maturity securities	98,363	970	3.91 %		—	—			—	—
	Mortgage loans in process of securitization	235,230	2,162	3.65 %		198,349	1,449	2.93 %		437,601	2,868	2.60 %
	Loans and loans held for sale	10,245,294	129,101	5.00 %		8,643,276	85,994	3.99 %		8,689,144	72,924	3.33 %
	Total interest-earning assets	11,122,336	134,112	4.78 %		9,539,924	89,270	3.75 %		10,016,979	77,314	3.06 %
	Allowance for credit losses on loans	(39,325)				(33,401)				(28,679)
	Noninterest-earning assets	354,794				314,355				248,191
	Total assets	$  11,437,805				$    9,820,878				$    10,236,491
	Liabilities & Shareholders' Equity:
	Interest-bearing checking	4,207,217	21,980	2.07 %		3,849,876	6,945	0.72 %		4,754,633	1,561	0.13 %
	Savings deposits	239,262	162	0.27 %	#	238,944	62	0.10 %		211,494	39	0.07 %
	Money market	2,523,315	13,094	2.06 %	#	2,626,973	6,567	1.00 %		2,259,786	4,394	0.77 %
	Certificates of deposit	2,030,152	9,766	1.91 %	#	639,556	1,194	0.75 %		591,093	987	0.66 %
	Total interest-bearing deposits	8,999,946	45,002	1.98 %		7,355,349	14,768	0.81 %		7,817,006	6,981	0.35 %
	Borrowings	588,582	3,725	2.51 %		749,628	2,471	1.32 %		677,201	1,452	0.85 %
	Total interest-bearing liabilities	9,588,528	48,727	2.02 %		8,104,977	17,239	0.85 %		8,494,207	8,433	0.39 %
	Noninterest-bearing deposits	474,925				402,328				586,981
	Noninterest-bearing liabilities	107,192				97,682				67,628
	Total liabilities	10,170,645				8,604,987				9,148,816
	Shareholders' equity	1,267,160				1,215,891				1,087,675
	Total liabilities and shareholders' equity	$  11,437,805				$    9,820,878				$    10,236,491
	Net interest income		$  85,385				$   72,031				$   68,881
	Net interest spread			2.77 %				2.90 %				2.67 %
	Net interest-earning assets	$    1,533,808				$    1,434,947				$     1,522,772
	Net interest margin			3.05 %				3.03 %				2.73 %
	Average interest-earning assets to average interest-bearing liabilities			116.00 %				117.70 %				117.93 %

 

Supplemental Results
(Unaudited)
($ in thousands)
				Net Income						Net Income
				Three Months Ended						Nine Months Ended
				September 30,		June 30,		September 30,		September 30,
				2022		2022		2021		2022		2021
Segment
Multi-family Mortgage Banking				$            13,366		$          19,556		$             14,448		$         44,414		$         37,380
Mortgage Warehousing				11,801		11,868		23,217		36,828		73,848
Banking				39,344		25,932		23,463		94,040		68,229
Other				(6,023)		(3,421)		(2,625)		(12,717)		(7,554)
Total				$            58,488		$          53,935		$             58,503		$       162,565		$       171,903
				Total Assets
				September 30,		June 30,		December 31,
				2022		2022		2021
Segment
Multi-family Mortgage Banking				$          343,443		$        330,676		$           296,129
Mortgage Warehousing				2,735,278		2,836,998		3,977,537
Banking				8,760,416		7,835,152		6,929,565
Other				139,585		83,229		75,407
Total				$     11,978,722		$   11,086,055		$      11,278,638
				Gain on Sale of Loans						Gain on Sale of Loans
				Three Months Ended						Nine Months Ended
				September 30,		June 30,		September 30,		September 30,
				2022		2022		2021		2022		2021
Loan Type
Multi-family				12,002		$          19,623		$             24,309		$         46,578		$         68,553
Single-family				138		406		1,592		1,001		7,677
Small Business Association (SBA)				1,214		1,535		3,112		5,304		6,525
Total				$            13,354		$          21,564		$             29,013		$         52,883		$         82,755
				Loans Receivable and Loans Held for Sale
				September 30,		June 30,		December 31,
				2022		2022		2021
Mortgage warehouse lines of credit				$          815,084		$        900,585		$           781,437
Residential real estate				1,030,075		876,652		843,101
Multi-family financing				2,766,950		3,236,917		2,702,042
Healthcare financing				1,429,675		1,262,424		826,157
Commercial and commercial real estate				810,731		695,158		520,199
Agricultural production and real estate				91,913		90,070		97,060
Consumer and margin loans				13,696		8,871		12,667
				6,958,124		7,070,677		5,782,663
Less: Allowance for credit losses on loans				38,996		37,474		31,344
Loans receivable				$       6,919,128		$     7,033,203		$        5,751,319
Loans held for sale				2,844,750		2,759,116		3,303,199
Total loans, net of allowance				$       9,763,878		$     9,792,319		$        9,054,518

 

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SOURCE Merchants Bancorp

FAQ

What were Merchants Bancorp's net income results for Q3 2022?

Merchants Bancorp reported a net income of $58.5 million for Q3 2022, which was the same as Q3 2021.

How did diluted earnings per share change for MBIN in Q3 2022?

Diluted earnings per common share for MBIN remained at $1.22 in Q3 2022, an increase of 10% from Q2 2022.

What is the total asset value of Merchants Bancorp as of September 30, 2022?

As of September 30, 2022, Merchants Bancorp's total assets were valued at $12.0 billion.

How did the net interest margin for MBIN perform in Q3 2022?

The net interest margin for MBIN increased to 3.05% in Q3 2022, up 32 basis points from the previous year.

What changes occurred in Merchants Bancorp's noninterest income in Q3 2022?

Noninterest income for Merchants Bancorp decreased by $11.1 million, or 28%, compared to Q3 2021.