Merchants Bancorp Reports Third Quarter 2020 Results

CARMEL, Ind., Oct. 28, 2020 /PRNewswire/ -- Merchants Bancorp (the "Company" or "Merchants") (Nasdaq: MBIN), parent company of Merchants Bank of Indiana, today reported third quarter 2020 net income of $55.0 million, or $1.79 per common share.  This compared to $20.3 million, or $0.60 per common share, in the third quarter of 2019, and $41.2 million, or $1.31 per common share, in the second quarter of 2020.

The $34.7 million, or 171%, increase in net income for the third quarter 2020, compared to the third quarter of 2019 was driven by a $32.7 million, or 100%, increase in net interest income that reflected significant growth in mortgage warehouse loans, and a 255% increase in gain on sale of loans, primarily from higher growth in both single-family and multi-family mortgages. 

The $13.8 million, or 34%, increase in net income for the third quarter 2020, compared to the second quarter of 2020 was primarily driven by a $14.1 million, or 27%, increase in net interest income that also reflected significant growth in mortgage warehouse loans and a 39 basis point increase in the net interest margin.

"Against a backdrop of economic uncertainty and lower interest rates, Merchants has delivered another record-setting level of net income during the third quarter.  Our commitment to conservative credit underwriting, effective cost management, and our entrepreneurial approach to serving customers has contributed to earnings per share growth of 198% and asset growth of 50% compared to the prior year's quarter.  By also managing our capital well, we delivered a return on average assets of 2.34%, a return on average tangible shareholders' equity of 41.0%, a tangible book value of $18.30 per share, and an efficiency ratio of 25.4%," said Michael F. Petrie, Chairman and CEO of Merchants.  

Michael J. Dunlap, President and Chief Operating Officer of Merchants, added, "The safety of our employees and customers remains our first priority.  I am proud of our team and our ability to execute in a challenging environment."

Total Assets
Total assets of $9.5 billion at September 30, 2020 increased $3.2 billion, or 50%, compared to December 31, 2019, and increased $91.1 million, or 1%, compared to June 30, 2020.

The 50% increase compared to December 31, 2019 was primarily due to growth in loans held for sale and loans receivable, which increased a combined total of $3.1 billion, or 60%.  The increase reflected the significant loan growth generated from mortgage warehouse business, primarily resulting from lower interest rates that increased the origination volume and refinancing in the single-family mortgage market, as well as higher loan volume generated in multi-family business. 

Return on average assets was 2.34% for the third quarter of 2020 compared to 1.35% for the third quarter of 2019 and 1.89% for the second quarter of 2020. 

Asset Quality
The allowance for loan losses of $23.4 million at September 30, 2020 increased $7.6 million compared to December 31, 2019 and increased $2.9 million compared to June 30, 2020.  The increases were primarily based on growth in the loan portfolio, but also reflected uncertainties surrounding the COVID-19 pandemic.  Approximately 85% of the $7.6 million increase compared to December 31, 2019, was related primarily to loan growth, while additional provision associated with the COVID-19 pandemic represented approximately $628,000, or 8%, of the increase.   Because it is still too early to know the full extent of potential future losses associated with the impact of COVID-19, the Company continues to monitor the situation and may need to adjust future expectations as developments occur 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 September 30, 2020, the Company had only 11 loans remaining in payment deferral arrangements, with unpaid balances of $1.6 million that represented less than 0.02% of total loans and loans held for sale. This compared favorably to the unpaid balances of $80.6 million at June 30, 2020.

Non-performing loans were $7.9 million, or 0.16% of loans receivable at September 30, 2020, compared to $4.7 million, or 0.15% of loans receivable at December 31, 2019, and compared to $6.7 million, or 0.16% of loans receivable at June, 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 $7.1 billion at September 30, 2020 increased $1.6 billion, or 29%, compared to December 31, 2019, and increased $176.0 million, or 3%, compared to June 30, 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 $1.7 billion at September 30, 2020 decreased $429.1 million from December 31, 2019 and decreased $627.0 million from June 30, 2020.   Brokered deposits represented 24% of total deposits at September 30, 2020 compared to 39% of total deposits at December 31, 2019 and 34% of total deposits at June 30, 2020.

Liquidity
The Company increased its available borrowing capacity, with unused lines of credit at $2.5 billion at September 30, 2020, compared to $1.9 billion at June 30, 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 and the Paycheck Protection Program Liquidity Facility ("PPPLF") during the third quarter of 2020, which has contributed to lower interest expenses and increased borrowing capacity.

Net Interest Income
Net interest income of $65.3 million in the third quarter of 2020 increased $32.7 million, or 100%, compared to the third quarter of 2019 and increased $14.1 million, or 27%, compared to the second quarter of 2020. 

The 100% increase in net interest income compared to the third quarter of 2019 reflected significantly higher loan growth and a higher net interest margin.  The interest rate spread of 2.74% for the third quarter of 2020 increased 76 basis points compared to 1.98% in the third quarter of 2019. The net interest margin of 2.81% for the third quarter of 2020 increased 59 basis points compared to 2.22% for the third quarter of 2019. The increase in net interest margin compared to the third quarter of 2019 reflected lower funding costs that outpaced the lower interest rates on loans.

The 27% increase in net interest income compared to the second quarter of 2020 reflected an interest rate spread of 2.74% that increased 43 basis points compared to 2.31% in the second quarter of 2020.  The net interest margin of 2.81% for the third quarter of 2020 also increased 39 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 that outpaced the lower interest rates on loans.

Interest Income
Interest income of $76.3 million in the third quarter of 2020 increased $16.5 million, or 28%, compared to the third quarter of 2019 and increased $8.1 million, or 12%, compared to the second quarter of 2020. 

The 28% increase in interest income compared to the third quarter of 2019 was primarily due to significant loan growth that was partially offset by lower rates.  The higher interest income reflected a $3.2 billion, or 68%, increase in the average balance of loans, including loans held for sale, which reached $7.9 billion for the third quarter of 2020. The average yield on loans and loans held for sale of 3.61% for the third quarter of 2020 decreased 83 basis points compared to 4.44% for the third quarter of 2019. The decline in average yields reflected higher loan volume and lower overall interest rates in the third quarter of 2020.

The 12% increase in interest income compared to the second quarter of 2020 reflected a $987.4 million, or 14%, increase in the average balance of loans, including loans held for sale, which reached $7.9 billion for the third quarter of 2020. The average yield on loans and loans held for sale of 3.61% for the third quarter of 2020 also decreased 10 basis points compared to 3.71% for the second quarter of 2020. 

Interest Expense
Total interest expense of $10.9 million for the third quarter of 2020 decreased $16.2 million, or 60%, compared to the third quarter of 2019 and decreased $6.0 million, or 36%, compared to the second quarter of 2020. Interest expense on deposits of $9.1 million for the third quarter of 2020 decreased $16.9 million, or 65%, compared to the third quarter of 2019 and decreased $6.3 million, or 41%, compared to the second quarter of 2020.

The 65% decrease in interest expense on deposits compared to the third 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 $7.2 billion for the third quarter of 2020 increased $2.1 billion, or 42%, compared to the third quarter of 2019. The average cost of interest-bearing deposits was 0.50% for the third quarter of 2020, which was a 152 basis point decrease compared to 2.02% for the third quarter of 2019. 

The 41% decrease in interest expense on deposits compared to the second 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 0.50% for the third quarter of 2020, which was a 38 basis point decrease compared to 0.88% in the second quarter of 2020.  The average balance of interest-bearing deposits of $7.2 billion for the third quarter of 2020 also increased $241.5 million, or 3%, compared to the second quarter of 2020.

Noninterest Income
Noninterest income of $38.7 million for the third quarter of 2020 increased $27.8 million, or 256%, compared to the third quarter of 2019 and increased $12.5 million, or 48%, compared to the second quarter of 2020.

The 256% increase in noninterest income compared to the third quarter of 2019 was primarily due to a $21.2 million, or 255%, increase in gain on sale of loans and a $4.1 million increase in mortgage warehouse fees. Noninterest income for the second quarter of 2020 included a $971,000 negative fair market value adjustment to mortgage servicing rights, which compared to a $1.5 million negative fair market value adjustment for the third quarter of 2019.

The 48% increase in noninterest income compared to the second quarter of 2020 was primarily due to a $12.4 million, or 73%, increase in gain on sale of loans, that were partially offset by a $2.2 million decrease in loan servicing fees.   Included in loan servicing fees for the second quarter of 2020 was a $971,000 negative fair market value adjustment to mortgage servicing rights, which compared to a $500,000 negative fair market value adjustment for the second quarter of 2020.

At September 30, 2020, the mortgage servicing rights asset was valued at $75.8 million, an increase of 2% compared to December 31, 2019 and an increase of 5% compared to September 30, 2019.  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 $26.4 million for the third quarter of 2020 increased $10.9 million, or 70%, compared to the third quarter of 2019 and increased $6.1 million, or 30%, compared to the second quarter of 2020. 

The 70% increase in noninterest expense compared to the third quarter of 2019 was due primarily to a $7.4 million, or 81%, increase in salaries and employee benefits to support business growth and a $1.7 million, or 136%, increase in loan expenses.    The efficiency ratio of 25.4% for the third quarter of 2020 compared to 35.7% for the third quarter of 2019.

The 30% increase in noninterest expense compared to the second quarter of 2020 was primarily due to a $4.7 million, or 40%, increase in salaries and employee benefits to support business growth and a $905,000, or 44%, increase in loan expenses.  The efficiency ratio of 25.4% for the third quarter of 2020 compared to 26.2% for the second quarter of 2020.

Segments
For the third quarter of 2020, net income for Mortgage Warehousing increased 209% compared to the third quarter of 2019, and increased 22% compared to the second quarter of 2020, reflecting significant growth in net interest income from higher loan volume. 

For the third quarter of 2020, net income for Multi-family Mortgage Banking increased 115% compared with the third quarter of 2019, and increased 61% compared to the second quarter of 2020, primarily due to higher gain on sale of loans for both periods that was partially offset by higher salaries and benefit expenses to support growth.

For the third quarter of 2020, net income for Banking increased 129% compared to the third quarter of 2019, and increased 48% compared to the second quarter of 2020, reflecting higher net interest income and 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 $9.5 billion in assets and $7.1 billion in deposits as of September 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.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)
		September 30,		June 30,		March 31,		December 31,		September 30,
		2020		2020		2020		2019		2019
Assets
Cash and due from banks		$                  9,276		$                13,830		$                  8,168		$                13,909		$                15,614
Interest-earning demand accounts		419,926		389,357		559,914		492,800		349,362
Cash and cash equivalents		429,202		403,187		568,082		506,709		364,976
Securities purchased under agreements to resell		6,616		6,651		6,685		6,723		6,760
Mortgage loans in process of securitization		374,721		518,788		465,157		269,891		227,914
Available for sale securities		278,861		259,656		339,053		290,243		308,673
Federal Home Loan Bank (FHLB) stock		70,656		53,224		46,156		20,369		18,808
Loans held for sale (includes $41,418, $42,000, $18,938, $19,592 and $23,357, respectively, at fair value)		3,319,619		3,877,769		2,796,008		2,093,789		2,498,538
Loans receivable, net of allowance for loan losses of $23,436, $20,497, $18,883, $15,842 and $13,705, respectively		4,857,554		4,133,315		3,501,770		3,012,468		2,742,088
Premises and equipment, net		29,261		29,362		29,415		29,274		29,211
Mortgage servicing rights		75,772		72,889		69,978		74,387		71,989
Interest receivable		19,130		18,574		18,139		18,359		18,780
Goodwill		15,845		15,845		15,845		15,845		15,574
Intangible assets, net		2,657		3,038		3,419		3,799		4,182
Other assets and receivables		50,581		47,102		48,691		30,072		29,693
Total assets		$           9,530,475		$           9,439,400		$           7,908,398		$           6,371,928		$           6,337,186
Liabilities and Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing		$              666,081		$              601,265		$              327,805		$              272,037		$              198,843
Interest-bearing		6,418,566		6,307,363		6,394,900		5,206,038		5,300,806
Total deposits		7,084,647		6,908,628		6,722,705		5,478,075		5,499,649
Borrowings		1,618,201		1,761,113		444,567		181,439		159,673
Other liabilities		70,492		61,461		68,157		58,686		48,425
Total liabilities		8,773,340		8,731,202		7,235,429		5,718,200		5,707,747
Commitments and  Contingencies
Shareholders' Equity
Common stock, without par value
Authorized - 50,000,000 shares
Issued and outstanding - 28,745,614 shares, 28,745,614 shares, 28,742,484 shares, 28,706,438 shares, and 28,706,438 shares, respectively		136,103		135,949		135,746		135,640		135,507
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 2,081,800 shares, respectively		50,221		50,221		50,221		50,221		50,245
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,  125,000 shares and 125,000 shares (all equivalent to 5,000,000 depositary shares)		120,844		120,844		120,844		120,844		120,863
Retained earnings		407,979		358,895		323,651		304,984		280,551
Accumulated other comprehensive income		407		708		926		458		692
Total shareholders' equity		757,135		708,198		672,969		653,728		629,439
Total liabilities and shareholders' equity		$           9,530,475		$           9,439,400		$           7,908,398		$           6,371,928		$           6,337,186

 

Consolidated Statement of Income
(Unaudited)
(In thousands, except share data)
		Three Months Ended									Nine Months Ended
		September 30,			June 30,			September 30,			September 30,			September 30,
		2020			2020			2019			2020			2019
Interest Income
Loans		$	71,857		$	63,979		$	52,779		$	189,400		$	129,599
Mortgage loans in process of securitization			3,250			2,534			1,422			8,580			4,434
Investment securities:
Available for sale - taxable			431			972			1,604			2,725			4,632
Available for sale - tax exempt			37			38			68			112			217
Federal Home Loan Bank stock			531			447			262			1,217			742
Other			152			234			3,626			2,845			8,572
Total interest income			76,258			68,204			59,761			204,879			148,196
Interest Expense
Deposits			9,104			15,398			26,039			45,132			59,610
Borrowed funds			1,832			1,572			1,098			4,838			3,909
Total interest expense			10,936			16,970			27,137			49,970			63,519
Net Interest Income			65,322			51,234			32,624			154,909			84,677
Provision for loan losses			2,981			1,745			1,193			7,724			1,947
Net Interest Income After Provision for Loan Losses			62,341			49,489			31,431			147,185			82,730
Noninterest Income
Gain on sale of loans			29,498			17,084			8,312			67,748			20,059
Loan servicing fees, net			(643)			1,597			(1,410)			(4,870)			(3,318)
Mortgage warehouse fees			6,833			5,475			2,699			15,054			4,590
Gains on sale of investments available for sale (1)			441			—			—			441			124
Other income			2,528			2,032			1,251			6,374			2,931
Total noninterest income			38,657			26,188			10,852			84,747			24,386
Noninterest Expense
Salaries and employee benefits			16,567			11,828			9,139			42,635			27,671
Loan expenses			2,944			2,039			1,248			6,147			3,527
Occupancy and equipment			1,420			1,383			994			4,295			2,816
Professional fees			712			726			508			2,007			1,500
Deposit insurance expense			1,404			1,851			859			5,041			1,354
Technology expense			903			716			674			2,229			1,775
Other expense			2,434			1,739			2,100			6,605			5,834
Total noninterest expense			26,384			20,282			15,522			68,959			44,477
Income Before Income Taxes			74,614			55,395			26,761			162,973			62,639
Provision for income taxes (2)			19,612			14,233			6,502			42,226			15,371
Net Income		$	55,002		$	41,162		$	20,259		$	120,747		$	47,268
Dividends on preferred stock			(3,618)			(3,619)			(3,022)			(10,855)			(5,598)
Net Income Allocated to Common Shareholders			51,384			37,543			17,237			109,892			41,670
Basic Earnings Per Share		$	1.79		$	1.31		$	0.60		$	3.82		$	1.45
Diluted Earnings Per Share		$	1.79		$	1.31		$	0.60		$	3.82		$	1.45
Weighted-Average Shares Outstanding
Basic			28,745,614			28,743,894			28,706,438			28,741,395			28,704,682
Diluted			28,778,462			28,762,349			28,744,953			28,766,756			28,742,911

(1)	Includes $441, $0, $0, $441, and $124, respectively, related to accumulated other comprehensive earnings reclassifications.
(2)	Includes $(97), $0, $0, $(97), and $(31), respectively, related to income tax (expense)/benefit for reclassification items.

 

Key Operating Results
(Unaudited)
($ in thousands, except share data)
			Three Months Ended						Nine Months Ended
			September 30,		June 30,		September 30,		September 30,		September 30,
			2020		2020		2019		2020		2019
Noninterest expense			$             26,384		$         20,282		$             15,522		$             68,959		$             44,477
Net interest income (before provision for losses)			65,322		51,234		32,624		154,909		84,677
Noninterest income			38,657		26,188		10,852		84,747		24,386
Total income			$           103,979		$         77,422		$             43,476		$           239,656		$           109,063
Efficiency ratio			25.37%		26.20%		35.70%		28.77%		40.78%
Average assets			$        9,409,450		$    8,689,212		$        6,009,840		$        8,238,641		$        4,798,110
Net income			$             55,002		$         41,162		$             20,259		$           120,747		$             47,268
Return on average assets before annualizing			0.58%		0.47%		0.34%		1.47%		0.99%
Annualization factor			4.00		4.00		4.00		1.33		1.33
Return on average assets			2.34%		1.89%		1.35%		1.95%		1.31%
Return on average tangible common shareholders' equity (1)			41.01%		32.62%		18.17%		31.34%		14.75%
Tangible book value per common share (1)			$               18.30		$           16.58		$               13.83		$               18.30		$               13.83
Tangible common shareholders' equity/tangible assets (1)			5.53%		5.06%		6.28%		5.53%		6.28%

(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						Nine Months Ended
			September 30,		June 30,		September 30,		September 30,		September 30,
			2020		2020		2019		2020		2019
Net income			$             55,002		$         41,162		$             20,259		$           120,747		$             47,268
Less: preferred stock dividends			(3,618)		(3,619)		(3,022)		(10,855)		(5,598)
Net income available to common shareholders			$             51,384		$         37,543		$             17,237		$           109,892		$             41,670
Average shareholders' equity			$           732,533		$       692,132		$           567,732		$           698,071		$           498,091
Less: average goodwill & intangibles			(18,707)		(19,083)		(20,005)		(19,089)		(20,458)
Less: average preferred stock			(212,646)		(212,646)		(168,266)		(212,646)		(101,979)
Tangible common shareholders' equity			$           501,180		$       460,403		$           379,461		$           466,336		$           375,654
Annualization factor			4.00		4.00		4.00		1.33		1.33
Return on average tangible common shareholders' equity			41.01%		32.62%		18.17%		31.34%		14.75%
Total equity			$           757,135		$       708,198		$           629,439		$           757,135		$           629,439
Less: goodwill and intangibles			(18,502)		(18,883)		(19,756)		(18,502)		(19,756)
Less: preferred stock			(212,646)		(212,646)		(212,689)		(212,646)		(212,689)
Tangible common shareholders' equity			$           525,987		$       476,669		$           396,994		$           525,987		$           396,994
Assets			$        9,530,475		$    9,439,400		$        6,337,186		$        9,530,475		$        6,337,186
Less: goodwill and intangibles			(18,502)		(18,883)		(19,756)		(18,502)		(19,756)
Tangible assets			$        9,511,973		$    9,420,517		$        6,317,430		$        9,511,973		$        6,317,430
Ending common shares			28,745,614		28,745,614		28,706,438		28,745,614		28,706,438
Tangible book value per common share			$               18.30		$           16.58		$               13.83		$               18.30		$               13.83
Tangible common shareholders' equity/tangible assets			5.53%		5.06%		6.28%		5.53%		6.28%

 

Average Balance Analysis
($ in thousands)
(Unaudited)
	Three Months Ended				Three Months Ended				Three Months Ended
	September 30, 2020				June 30, 2020				September 30, 2019
	Average		Yield/		Average		Yield/		Average		Yield/
	Balance	Interest	Rate		Balance	Interest	Rate		Balance	Interest	Rate
Assets:
Interest-bearing deposits, and other	$      587,804	$      683	0.46%		$      971,350	$       681	0.28%		$        670,399	$    3,888	2.30%
Securities available for sale - taxable	269,896	431	0.64%		276,928	972	1.41%		278,314	1,604	2.29%
Securities available for sale - tax exempt	5,145	37	2.86%		5,294	38	2.89%		9,032	68	2.99%
Mortgage loans in process of securitization	449,336	3,250	2.88%		328,089	2,534	3.11%		162,915	1,422	3.46%
Loans and loans held for sale	7,923,726	71,857	3.61%		6,936,368	63,979	3.71%		4,718,771	52,779	4.44%
Total interest-earning assets	9,235,907	76,258	3.28%		8,518,029	68,204	3.22%		5,839,431	59,761	4.06%
Allowance for loan losses	(21,585)				(19,474)				(12,990)
Noninterest-earning assets	195,128				190,657				183,399
Total assets	$    9,409,450				$   8,689,212				$     6,009,840
Liabilities & Shareholders' Equity:
Interest-bearing checking	3,890,865	1,368	0.14%		2,656,105	2,327	0.35%		1,951,613	9,253	1.88%
Savings deposits	180,931	34	0.07%		176,546	27	0.06%		152,509	85	0.22%
Money market	1,578,956	3,861	0.97%		1,402,562	3,966	1.14%		977,228	4,698	1.91%
Certificates of deposit	1,589,852	3,841	0.96%		2,763,853	9,078	1.32%		2,032,619	12,003	2.34%
Total interest-bearing deposits	7,240,604	9,104	0.50%		6,999,066	15,398	0.88%		5,113,969	26,039	2.02%
Borrowings	800,021	1,832	0.91%		518,207	1,572	1.22%		59,585	1,098	7.31%
Total interest-bearing liabilities	8,040,625	10,936	0.54%		7,517,273	16,970	0.91%		5,173,554	27,137	2.08%
Noninterest-bearing deposits	579,145				372,195				198,832
Noninterest-bearing liabilities	57,147				107,612				69,722
Total liabilities	8,676,917				7,997,080				5,442,108
Shareholders' equity	732,533				692,132				567,732
Total liabilities and shareholders' equity	$    9,409,450				$   8,689,212				$     6,009,840
Net interest income		$  65,322				$   51,234				$   32,624
Net interest spread			2.74%				2.31%				1.98%
Net interest-earning assets	$    1,195,282				$   1,000,756				$        665,877
Net interest margin			2.81%				2.42%				2.22%
Average interest-earning assets to average interest-bearing liabilities			114.87%				113.31%				112.87%

 

Supplemental Results
(Unaudited)
($ in thousands)
				Net Income						Net Income
				Three Months Ended						Nine Months Ended
				September 30,		June 30,		September 30,		September 30,
				2020		2020		2019		2020		2019
Segment
Multi-family Mortgage Banking				$                5,891		$            3,651		$                 2,741		$          14,941		$            4,546
Mortgage Warehousing				33,793		27,712		10,924		73,942		21,076
Banking				17,486		11,812		7,649		37,248		24,826
Other				(2,168)		(2,013)		(1,055)		(5,384)		-3,180
Total				$              55,002		$          41,162		$               20,259		$        120,747		$          47,268
				Total Assets
				September 30,		June 30,		December 31,
				2020		2020		2019
Segment
Multi-family Mortgage Banking				$            194,624		$        182,072		$             188,866
Mortgage Warehousing				5,179,664		5,575,169		3,124,684
Banking				4,111,984		3,639,638		3,018,568
Other				44,203		42,521		39,810
Total				$         9,530,475		$     9,439,400		$          6,371,928
				Gain on Sale of Loans						Gain on Sale of Loans
				Three Months Ended						Nine Months Ended
				September 30,		June 30,		September 30,		September 30,
				2020		2020		2019		2020		2019
Loan Type
Multi-family				$              14,872		$            6,839		$                 7,582		$          40,563		$          18,714
Single-family				14,093		10,059		724		26,225		1,280
Small Business Association (SBA)				533		186		6		960		65
Total				$              29,498		$          17,084		$                 8,312		$          67,748		$          20,059
				Loans Receivable and Loans Held for Investment
				September 30,		June 30,		December 31,
				2020		2020		2019
Mortgage warehouse lines of credit				$         1,647,521		$     1,287,246		$             765,151
Residential real estate				572,527		471,807		413,835
Multi-family and healthcare financing				2,125,516		1,848,811		1,347,125
Commercial and commercial real estate				419,812		432,222		398,601
Agricultural production and real estate				101,636		99,035		85,210
Consumer and margin loans				13,978		14,691		18,388
				4,880,990		4,153,812		3,028,310
Less: Allowance for loan losses				23,436		20,497		15,842
Loans receivable				$         4,857,554		$     4,133,315		$          3,012,468
Loans held for sale				3,319,619		3,877,769		2,093,789
Total loans, net of allowance				$         8,177,173		$     8,011,084		$          5,106,257

 

 

 

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SOURCE Merchants Bancorp