Merchants Bancorp Reports Third Quarter 2021 Results

CARMEL, Indiana, Oct. 28, 2021 /PRNewswire/ -- Merchants Bancorp (the "Company" or "Merchants") (Nasdaq: MBIN), parent company of Merchants Bank of Indiana, today reported third quarter 2021 net income of $58.5 million, or diluted earnings per common share of $1.83.  This compared to $55.0 million, or diluted earnings per common share of $1.79 in the third quarter of 2020, and compared to $51.4 million, or diluted earnings per common share of $1.58 in the second quarter of 2021.

"As total assets surpassed the $10 billion mark during the third quarter, Merchants continued to effectively manage its capital by organically growing its product offerings and expanding its customer base to deliver profitable growth, all while minimizing credit and interest rate risk. During the quarter our tangible book value reached $25.36 per common share, return on assets reached 2.29%, and our return on average tangible common equity was 29.8%," said Michael F. Petrie, Chairman and CEO of Merchants.  

Michael J. Dunlap, President and Chief Operating Officer of Merchants, added, "The demand for affordable housing continues to grow and we have never been better positioned to offer both debt and equity products to support our multi-family customers.   Our low-income housing tax credit syndication business was launched late last year and has already closed several funds. We also started a new multi-family debt fund during the third quarter.  Warehouse and single-family have performed well despite an industry decline, and our SBA platform has shown significant growth and expanded nationally.  The breadth, diversity, and risk levels of our product offerings have positioned us well for profitable growth."

Net income for the third quarter 2021 increased by $3.5 million, or 6%, compared to the third quarter of 2020, driven by a $3.6 million, or 5%, increase in net interest income that reflected a 23% decrease in the cost of deposits and a 1% increase in interest income from higher loan balances.  Also contributing to the increase was a $1.6 million, or 4%, increase in noninterest income. Noninterest income for the third quarter of 2021 benefited from a $3.0 million positive fair market value adjustment to servicing rights that compared to $1.0 negative fair market value adjustment in the third quarter of 2020.

Net income for the third quarter 2021 increased by $7.1 million, or 14%, compared to the second quarter of 2021, primarily driven by a $7.4 million, or 23%, increase in noninterest income, as gain on sale of loans increased by 15% and loan servicing fees more than doubled.  Loan servicing fees for the third quarter of 2021 benefited from a $3.0 million positive fair market value adjustment compared to $0.7 positive fair market value adjustment in the second quarter of 2021. Net interest income also contributed to the growth in net income, as it grew 7% compared to the second quarter of 2021.

Total Assets

Total assets of $11.0 billion at September 30, 2021 increased $1.1 billion, or 11%, compared to June 30, 2021, and increased $1.3 billion, or 14%, compared to December 31, 2020.

Return on average assets was 2.29% for the third quarter of 2021 compared to 2.34% for the third quarter of 2020 and 2.14% for the second quarter of 2021. 

Asset Quality

The allowance for loan losses of $29.1 million at September 30, 2021 increased $0.4 million compared to June 30, 2021 and increased $1.6 million compared to December 31, 2020.  The increases compared to December 31, 2020 were 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 $0.7 million.   As of September 30, 2021, the Company had only 3 loans remaining in payment deferral arrangements, with unpaid balances of $37.0 million.

Non-performing loans were $2.9 million, or 0.05%, of loans receivable at September 30, 2021, compared to $3.0 million, or 0.05% of loans receivable at June 30, 2021, and compared to $6.3 million, or 0.11% of loans receivable at December 31, 2020. 

Total Deposits

Total deposits of $8.9 billion at September 30, 2021 increased $907.7 million compared to June 30, 2021, and increased $1.5 billion, or 21%, compared to December 31, 2020. The increase compared to December 31, 2020 was primarily due to growth in brokered certificates of deposits.

Total brokered deposits of $1.7 billion at September 30, 2021 increased $813.3 million, or 95%, from June 30, 2021 and increased $492.7 million, or 42%, from December 31, 2020.   Brokered deposits represented 19% of total deposits at September 30, 2021 compared to 11% of total deposits at June 30, 2021 and 16% of total deposits at December 31, 2020.  The increases reflected a shift from borrowing at the Federal Home Loan Bank of Indianapolis during the third quarter of 2021 after a change in their collateral policy to eliminate certain agency eligible mortgage loan participations.

Liquidity

Cash balances of $802.6 million at September 30, 2021 increased by $400.5 million compared to June 30, 2021 and increased by $622.8 million compared to December 31, 2020.  The Company also continues to have significant borrowing capacity, with unused lines of credit at $2.1 billion at September 30, 2021 compared to $3.3 billion at June 30, 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 decrease in borrowing capacity compared to prior periods reflected the change in collateral policy at the Federal Home Loan Bank of Indianapolis to eliminate certain agency eligible mortgage loan participations.

Net Interest Income

Net interest income of $68.9 million in the third quarter of 2021 increased $3.6 million, or 5%, compared to the third quarter of 2020 and increased $4.5 million, or 7%, compared to the second quarter of 2021. 

The 5% increase in net interest income compared to the third quarter of 2020 reflected a 23% decrease in the cost of deposits and a 1% increase in interest income from higher loan balances. The interest rate spread of 2.67% for the third quarter of 2021 decreased 7 basis points compared to 2.74% in the third quarter of 2020. The net interest margin of 2.73% for the third quarter of 2021 decreased 8 basis points compared to 2.81% for the third quarter of 2020. The modest decrease in net interest margin compared to the third quarter of 2020 reflected lower funding costs and higher loan balances that were outpaced by lower interest rates on loans.

The 7% increase in net interest income compared to the second quarter of 2021 reflected higher loan balances and lower rates on loans.  The interest rate spread of 2.67% for the third quarter of 2021 decreased 1 basis point compared to 2.68% in the second quarter of 2021.  The net interest margin of 2.73% for the third quarter of 2021 also decreased 2 basis points compared to 2.75% for the second quarter of 2021. 

Interest Income

Interest income of $77.3 million in the third quarter of 2021 increased $1.1 million, or 1%, compared to the third quarter of 2020 and increased $4.9 million, or 7%, compared to the second quarter of 2021. 

The 1% increase in interest income compared to the third quarter of 2020 was primarily due to significant loan growth that was partially offset by lower rates.  The higher interest income reflected a $765.4 million, or 10%, increase in the average balance of loans, including loans held for sale, which reached $8.7 billion for the third quarter of 2021. The average yield on loans and loans held for sale of 3.33% for the third quarter of 2021 decreased 28 basis points compared to 3.61% for the third quarter of 2020.

The 7% increase in interest income compared to the second quarter of 2021 reflected a $783.4 million, or 10%, increase in the average balance of loans, including loans held for sale, which reached $8.7 billion for the third quarter of 2021. The average yield on loans and loans held for sale of 3.33% for the third quarter of 2021 decreased 13 basis points compared to 3.46% for the second quarter of 2021. 

Interest Expense

Total interest expense decreased $2.5 million, or 23%, to $8.4 million for the third quarter of 2021 compared to the third quarter of 2020 and increased $0.4 million, or 5%, compared to the second quarter of 2021. Interest expense on deposits of $7.0 million for the third quarter of 2021 decreased $2.1 million, or 23%, compared to the third quarter of 2020 and increased $0.3 million, or 4%, compared to the second quarter of 2021.

The 23% decrease in interest expense on deposits compared to the third quarter of 2020 was primarily due to significant decreases in average balances and rates of certificates of deposits. The average balance of interest-bearing deposits of $7.8 billion for the third quarter of 2021 increased $576.4 million, or 8%, compared to the third quarter of 2020. The average yield of interest-bearing deposits was 0.35% for the third quarter of 2021, which was a 15 basis point decrease compared to 0.50% for the third quarter of 2020. 

The 4% increase in interest expense on deposits compared to the second quarter of 2021 was primarily due to higher balances of money market and certificates of deposit that were partially offset by lower rates on certificates of deposit.  The average balance of interest-bearing deposits of $7.8 billion for the third quarter of 2021 increased $427.8 million, or 6%, compared to the second quarter of 2021. The average yield of interest-bearing deposits was 0.35% for the third quarter of 2021, which was a 1 basis point decrease compared to 0.36% in the second quarter of 2021. 

Noninterest Income

Noninterest income of $40.3 million for the third quarter of 2021 increased $1.6 million, or 4%, compared to the third quarter of 2020 and increased $7.4 million, or 23%, compared to the second quarter of 2021.

The 4% increase in noninterest income compared to the third quarter of 2020 was primarily due to a $6.0 million increase in loan servicing fees that was partially offset by a $4.1 million decrease in mortgage warehouse fees. Included in loan servicing fees for the third quarter of 2021 was a $3.0 million positive fair market value adjustment to servicing rights, which compared to a $1.0 million negative fair market value adjustment for the third quarter of 2020.

The 23% increase in noninterest income compared to the second quarter of 2021 was primarily due to a $3.9 million increase in gain on sale of loans and a $3.6 million increase in loan servicing fees.   Included in loan servicing fees for the third quarter of 2021 was a $3.0 million positive fair market value adjustment to servicing rights, which compared to a $0.7 million positive fair market value adjustment for the second quarter of 2021.

At September 30, 2021, servicing rights were valued at $105.5 million, an increase of 39% compared to September 30, 2020 and an increase of 7% compared to June 30, 2021.  These increases were driven by higher loan balances of serviced assets and higher interest rates that impacted fair market value adjustments in the third quarter of 2021.  The value of servicing rights generally increases in rising interest rate environments and declines in falling interest rate environments.

Noninterest Expense

Noninterest expense of $29.5 million for the third quarter of 2021 increased $3.1 million, or 12%, compared to the third quarter of 2020 and increased $1.3 million, or 5%, compared to the second quarter of 2021. 

The 12% increase in noninterest expense compared to the third quarter of 2020 was due primarily to a $3.6 million, or 22%, increase in salaries and employee benefits, including commissions, to support higher loan production volumes.    The efficiency ratio of 27.0% for the third quarter of 2021 compared to 25.4% for the third quarter of 2020.

The 5% increase in noninterest expense compared to the second quarter of 2021 was primarily due to a $1.3 million, or 7%, increase in salaries and employee benefits that reflected higher commissions from higher loan volumes.  The efficiency ratio of 27.0% for the third quarter of 2021 compared to 29.0% for the second quarter of 2021.

Segments

Multi-family Mortgage Banking 

For the third quarter of 2021, net income of $14.5 million for Multi-family Mortgage Banking increased 145% compared with the third 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 $0.7 million on servicing rights in the third quarter of 2021 compared to a negative fair market value adjustment of $0.7 million in the third quarter of 2020. 

Compared to the second quarter of 2021, net income for this segment increased 32%, reflecting higher gain on sale of loans and loan servicing fees.  Included in loan servicing fees was a positive fair market value adjustment of $0.7 million on servicing rights in the third quarter of 2021 compared to a positive fair market value adjustment of $0.1 million in the second quarter of 2021.

Banking 

For the third quarter of 2021, net income of $23.5 million for Banking increased 34% from to the third quarter of 2020, reflecting higher net interest income that was partially offset by lower gains on sale of loans.  Included in noninterest income for the third quarter of 2021 was a $2.3 million positive fair market value adjustment to servicing rights, which compared to a $0.2 million negative fair market value adjustment for the third quarter of 2020. 

Net income for this segment increased 8% from the second quarter of 2021 primarily due to higher net interest income and higher loan servicing fees that were partially offset by an increase in the provision for loan losses.  Included in loan servicing fees for the third quarter of 2021 was a $2.3 million positive fair market value adjustment to servicing rights, which compared to a $0.6 million positive fair market value adjustment for the second quarter of 2021.

Mortgage Warehousing 

For the third quarter of 2021, net income of $23.2 million for Mortgage Warehousing decreased 31% compared to the third quarter of 2020 and increased 8% compared to the second quarter of 2021.  The decreases compared to the prior year period reflected lower net interest income as industry volumes 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 $11.0 billion in assets and $8.9 billion in deposits as of September 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)
		September 30,		June 30,		March 31,		December 31,		September 30,
		2021		2021		2021		2020		2020
Assets
Cash and due from banks		$              14,352		$              13,745		$              12,003		$              10,063		$                9,276
Interest-earning demand accounts		788,224		388,304		257,436		169,665		419,926
Cash and cash equivalents		802,576		402,049		269,439		179,728		429,202
Securities purchased under agreements to resell		5,923		6,507		6,544		6,580		6,616
Mortgage loans in process of securitization		634,027		461,914		432,063		338,733		374,721
Available for sale securities		301,119		315,260		241,691		269,802		278,861
Federal Home Loan Bank (FHLB) stock		70,767		70,767		70,656		70,656		70,656
Loans held for sale (includes $26,296, $26,623, $57,998, $40,044 and $41,418, respectively, at fair value)		3,453,279		2,955,390		2,749,662		3,070,154		3,319,619
Loans receivable, net of allowance for loan losses of $29,134, $28,696, $29,091, $27,500 and $23,436, respectively		5,431,227		5,444,227		5,710,291		5,507,926		4,857,554
Premises and equipment, net		31,423		31,384		31,261		29,761		29,261
Servicing rights		105,473		98,331		96,215		82,604		75,772
Interest receivable		21,894		22,068		22,111		21,770		19,130
Goodwill		15,845		15,845		15,845		15,845		15,845
Intangible assets, net		1,843		1,990		2,136		2,283		2,657
Other assets and receivables		76,637		55,800		57,346		49,533		50,581
Total assets		$       10,952,033		$         9,881,532		$         9,705,260		$         9,645,375		$         9,530,475
Liabilities and Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing		$            824,118		$            814,567		$            818,621		$            853,648		$            666,081
Interest-bearing		8,123,201		7,225,011		7,244,560		6,554,418		6,418,566
Total deposits		8,947,319		8,039,578		8,063,181		7,408,066		7,084,647
Borrowings		809,136		701,373		545,160		1,348,256		1,618,201
Deferred and current tax liabilities, net		21,681		18,819		41,610		20,405		22,405
Other liabilities		64,019		62,698		44,054		58,027		48,087
Total liabilities		9,842,155		8,822,468		8,694,005		8,834,754		8,773,340
Commitments and  Contingencies
Shareholders' Equity
Common stock, without par value
Authorized - 50,000,000 shares
Issued and outstanding - 28,785,374 shares, 28,783,599 shares, 28,782,139 shares, 28,747,083 shares and 28,745,614 shares, respectively		137,200		136,836		136,474		135,857		136,103
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, 0 shares, 41,625 shares, 41,625 shares and 41,625 shares.		—		—		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 Septmeber 30, 2021, 196,181 shares at June 30, 2021 and 150,000 shares at March 31, 2021 (equivalent to 7,847,233 depositary shares at September 30, 2021, 7,847,233 depositary shares at June 30, 2021 and 6,000,000 depositary shares at March 31, 2021)		191,084		191,084		144,925		—		—
Retained earnings		610,267		560,083		516,961		461,744		407,979
Accumulated other comprehensive income		262		(4)		249		374		407
Total shareholders' equity		1,109,878		1,059,064		1,011,255		810,621		757,135
Total liabilities and shareholders' equity		$       10,952,033		$         9,881,532		$         9,705,260		$         9,645,375		$         9,530,475

 

 

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,
		2021			2021			2020			2021			2020
Interest Income
Loans		$	72,924		$	68,276		$	71,857		$	216,717		$	189,400
Mortgage loans in process of securitization			2,868			2,724			3,250			8,728			8,580
Investment securities:
Available for sale - taxable			1,115			833			431			2,302			2,725
Available for sale - tax exempt			12			9			37			32			112
Federal Home Loan Bank stock			190			392			531			966			1,217
Other			205			204			152			556			2,845
Total interest income			77,314			72,438			76,258			229,301			204,879
Interest Expense
Deposits			6,981			6,683			9,104			19,764			45,132
Borrowed funds			1,452			1,348			1,832			4,286			4,838
Total interest expense			8,433			8,031			10,936			24,050			49,970
Net Interest Income			68,881			64,407			65,322			205,251			154,909
Provision (credit) for loan losses			1,079			(315)			2,981			2,427			7,724
Net Interest Income After Provision for Loan Losses			67,802			64,722			62,341			202,824			147,185
Noninterest Income
Gain on sale of loans			29,013			25,122			29,498			82,755			67,748
Loan servicing fees, net			5,313			1,727			(643)			14,991			(4,870)
Mortgage warehouse fees			2,732			3,079			6,833			9,927			15,054
Gains on sale of investments available for sale (1)			—			—			441			—			441
Other income			3,213			2,927			2,528			9,389			6,374
Total noninterest income			40,271			32,855			38,657			117,062			84,747
Noninterest Expense
Salaries and employee benefits			20,197			18,869			16,567			60,340			42,635
Loan expenses			1,734			1,921			2,944			6,178			6,147
Occupancy and equipment			1,861			1,808			1,420			5,296			4,295
Professional fees			901			779			712			2,102			2,007
Deposit insurance expense			664			651			1,404			1,986			5,041
Technology expense			1,169			971			903			3,077			2,229
Other expense			2,946			3,184			2,434			8,760			6,605
Total noninterest expense			29,472			28,183			26,384			87,739			68,959
Income Before Income Taxes			78,601			69,394			74,614			232,147			162,973
Provision for income taxes (2)			20,098			17,977			19,612			60,244			42,226
Net Income		$	58,503		$	51,417		$	55,002		$	171,903		$	120,747
Dividends on preferred stock			(5,729)			(5,659)			(3,618)			(15,145)			(10,855)
Net Income Allocated to Common Shareholders			52,774			45,758			51,384			156,758			109,892
Basic Earnings Per Share		$	1.83		$	1.59		$	1.79		$	5.45		$	3.82
Diluted Earnings Per Share		$	1.83		$	1.58		$	1.79		$	5.43		$	3.82
Weighted-Average Shares Outstanding
Basic			28,784,197			28,782,813			28,745,614			28,779,745			28,741,395
Diluted			28,876,503			28,874,325			28,778,462			28,867,125			28,766,756
(1)Includes $0, $0, $441, $0, and $441, respectively, related to accumulated other comprehensive earnings reclassifications.
(2) Includes $0, $0, $(97), $0 and $(97), 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,
			2021		2021		2020		2021		2020
Noninterest expense			$           29,472		$          28,183		$           26,384		$           87,739		$           68,959
Net interest income (before provision for losses)			68,881		64,407		65,322		205,251		154,909
Noninterest income			40,271		32,855		38,657		117,062		84,747
Total income			$         109,152		$          97,262		$         103,979		$         322,313		$         239,656
Efficiency ratio			27.00%		28.98%		25.37%		27.22%		28.77%
Average assets			$    10,236,491		$     9,609,957		$      9,409,450		$      9,934,159		$      8,238,641
Net income			$           58,503		$          51,417		$           55,002		$         171,903		$         120,747
Return on average assets before annualizing			0.57%		0.54%		0.58%		1.73%		1.47%
Annualization factor			4.00		4.00		4.00		1.33		1.33
Return on average assets			2.29%		2.14%		2.34%		2.30%		1.95%
Return on average tangible common shareholders' equity (1)			29.83%		27.61%		41.01%		31.60%		31.34%
Tangible book value per common share (1)			$             25.36		$            23.59		$             18.30		$             25.36		$             18.30
Tangible common shareholders' equity/tangible assets (1)			6.68%		6.88%		5.53%		6.68%		5.53%
(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,
			2021		2021		2020		2021		2020
Net income			$           58,503		$          51,417		$           55,002		$         171,903		$         120,747
Less: preferred stock dividends			(5,729)		(5,659)		(3,618)		(15,145)		(10,855)
Net income available to common shareholders			$           52,774		$          45,758		$           51,384		$         156,758		$         109,892
Average shareholders' equity			$      1,087,675		$     1,031,246		$         732,533		$         991,467		$         698,071
Less: average goodwill & intangibles			(17,770)		(17,916)		(18,707)		(17,913)		(19,089)
Less: average preferred stock			(362,149)		(350,320)		(212,646)		(313,689)		(212,646)
Tangible common shareholders' equity			$         707,756		$        663,010		$         501,180		$         659,865		$         466,336
Annualization factor			4.00		4.00		4.00		1.33		1.33
Return on average tangible common shareholders' equity			29.83%		27.61%		41.01%		31.60%		31.34%
Total equity			$      1,109,878		$     1,059,064		$         757,135		$      1,109,878		$         757,135
Less: goodwill and intangibles			(17,688)		(17,835)		(18,502)		(17,688)		(18,502)
Less: preferred stock			(362,149)		(362,149)		(212,646)		(362,149)		(212,646)
Tangible common shareholders' equity			$         730,041		$        679,080		$         525,987		$         730,041		$         525,987
Assets			$    10,952,033		$     9,881,532		$      9,530,475		$    10,952,033		$      9,530,475
Less: goodwill and intangibles			(17,688)		(17,835)		(18,502)		(17,688)		(18,502)
Tangible assets			$    10,934,345		$     9,863,697		$      9,511,973		$    10,934,345		$      9,511,973
Ending common shares			28,785,374		28,783,599		28,745,614		28,785,374		28,745,614
Tangible book value per common share			$             25.36		$            23.59		$             18.30		$             25.36		$             18.30
Tangible common shareholders' equity/tangible assets			6.68%		6.88%		5.53%		6.68%		5.53%

 

 

Merchants Bancorp
Average Balance Analysis
($ in thousands)
(Unaudited)
	Three Months Ended				Three Months Ended				Three Months Ended
	September 30, 2021				June 30, 2021				September 30, 2020
	Average		Yield/		Average		Yield/		Average		Yield/
	Balance	Interest	Rate		Balance	Interest	Rate		Balance	Interest	Rate
Assets:
Interest-bearing deposits, and other	$       580,397	$      395	0.27%		$      788,002	$       596	0.30%		$        587,804	$       683	0.46%
Securities available for sale - taxable	308,476	1,115	1.43%		285,536	833	1.17%		269,896	431	0.64%
Securities available for sale - tax exempt	1,361	12	3.50%		1,363	9	2.65%		5,145	37	2.86%
Mortgage loans in process of securitization	437,601	2,868	2.60%		416,559	2,724	2.62%		449,336	3,250	2.88%
Loans and loans held for sale	8,689,144	72,924	3.33%		7,905,766	68,276	3.46%		7,923,726	71,857	3.61%
Total interest-earning assets	10,016,979	77,314	3.06%		9,397,226	72,438	3.09%		9,235,907	76,258	3.28%
Allowance for loan losses	(28,679)				(28,778)				(21,585)
Noninterest-earning assets	248,191				241,509				195,128
Total assets	$  10,236,491				$    9,609,957				$     9,409,450
Liabilities & Shareholders' Equity:
Interest-bearing checking	4,754,633	1,561	0.13%		4,473,251	1,362	0.12%		3,890,865	1,368	0.14%
Savings deposits	211,494	39	0.07%		205,884	38	0.07%		180,931	34	0.07%
Money market	2,259,786	4,394	0.77%		2,197,750	4,175	0.76%		1,578,956	3,861	0.97%
Certificates of deposit	591,093	987	0.66%		512,316	1,108	0.87%		1,589,852	3,841	0.96%
Total interest-bearing deposits	7,817,006	6,981	0.35%		7,389,201	6,683	0.36%		7,240,604	9,104	0.50%
Borrowings	677,201	1,452	0.85%		523,942	1,348	1.03%		800,021	1,832	0.91%
Total interest-bearing liabilities	8,494,207	8,433	0.39%		7,913,143	8,031	0.41%		8,040,625	10,936	0.54%
Noninterest-bearing deposits	586,981				590,886				579,145
Noninterest-bearing liabilities	67,628				74,682				57,147
Total liabilities	9,148,816				8,578,711				8,676,917
Shareholders' equity	1,087,675				1,031,246				732,533
Total liabilities and shareholders' equity	$  10,236,491				$    9,609,957				$     9,409,450
Net interest income		$  68,881				$   64,407				$   65,322
Net interest spread			2.67%				2.68%				2.74%
Net interest-earning assets	$    1,522,772				$    1,484,083				$     1,195,282
Net interest margin			2.73%				2.75%				2.81%
Average interest-earning assets to average interest-bearing liabilities			117.93%				118.75%				114.87%

 

Supplemental Results
(Unaudited)
($ in thousands)
				Net Income						Net Income
				Three Months Ended						Nine Months Ended
				September 30,		June 30,		September 30,		September 30,
				2021		2021		2020		2021		2020
Segment
Multi-family Mortgage Banking				$            14,448		$          10,971		$               5,891		$         37,380		$         14,941
Mortgage Warehousing				23,217		21,448		33,793		73,848		73,942
Banking				23,463		21,741		17,486		68,229		37,248
Other				(2,625)		(2,743)		(2,168)		(7,554)		(5,384)
Total				$            58,503		$          51,417		$             55,002		$       171,903		$       120,747
				Total Assets
				September 30,		June 30,		December 31,
				2021		2021		2020
Segment
Multi-family Mortgage Banking				$          280,927		$        238,165		$           210,714
Mortgage Warehousing				4,685,037		4,265,162		4,893,513
Banking				5,950,316		5,328,684		4,498,880
Other				35,753		49,521		42,268
Total				$     10,952,033		$     9,881,532		$        9,645,375
				Gain on Sale of Loans						Gain on Sale of Loans
				Three Months Ended						Nine Months Ended
				September 30,		June 30,		September 30,		September 30,
				2021		2021		2020		2021		2020
Loan Type
Multi-family				$            24,309		$          21,408		$             14,872		$         68,553		$         40,563
Single-family				1,592		1,872		14,093		7,677		26,225
Small Business Association (SBA)				3,112		1,842		533		6,525		960
Total				$            29,013		$          25,122		$             29,498		$         82,755		$         67,748
				Loans Receivable and Loans Held for Sale
				September 30,		June 30,		December 31,
				2021		2021		2020
Mortgage warehouse lines of credit				$          891,605		$     1,177,940		$        1,605,745
Residential real estate				828,950		806,325		678,848
Multi-family and healthcare financing				3,244,442		2,970,770		2,749,020
Commercial and commercial real estate				391,562		409,710		387,294
Agricultural production and real estate				92,113		92,786		101,268
Consumer and margin loans				11,689		15,392		13,251
				5,460,361		5,472,923		5,535,426
Less: Allowance for loan losses				29,134		28,696		27,500
Loans receivable				$       5,431,227		$     5,444,227		$        5,507,926
Loans held for sale				3,453,279		2,955,390		3,070,154
Total loans, net of allowance				$       8,884,506		$     8,399,617		$        8,578,080

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SOURCE Merchants Bancorp