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CARMEL, Ind., July 28, 2022 /PRNewswire/ -- Merchants Bancorp (the "Company" or "Merchants") (Nasdaq: MBIN), parent company of Merchants Bank of Indiana, today reported second quarter 2022 net income of $53.9 million, or diluted earnings per common share of $1.11. This compared to $51.4 million, or diluted earnings per common share of $1.06 in the second quarter of 2021, and compared to $50.1 million, or diluted earnings per common share of $1.02 in the first quarter of 2022.
"We have continued to successfully manage our capital, liquidity, and resources to maximize returns in the second quarter as we expanded the reach of our products and services, while also minimizing our credit risk. With a tangible book value of $19.70 per share, an industry-leading return on average assets of 2.20% and efficiency ratio of 29.6% in the quarter, we have established significant momentum and anticipate continued strength in the second half of 2022 and beyond," said Michael F. Petrie, Chairman and CEO of Merchants.
Michael J. Dunlap, President and Chief Operating Officer of Merchants, added, "Achieving these superior results can be attributable to the tremendous efforts of our employees who operate with an entrepreneurial spirit and focus on continuous improvement. Their successes have led to an expansion of our business platforms in a unique and powerful way that has benefited all our customers. We also believe that we are still in the early stages of reaping all the revenue opportunities from our investments."
Net income of $53.9 million for the second quarter 2022 increased by $2.5 million, or 5%, compared to the second quarter of 2021, primarily driven by a $16.8 million, or 23%, increase in interest income and a $7.0 million higher fair market value adjustment to mortgage servicing rights. These increases were partially offset by a $9.2 million increase in interest expense, a $6.5 million increase in the provision for credit losses, a $4.8 million increase in noninterest expense, and a $3.6 million decrease in gain on sale of loans.
Net income for the second quarter 2022 increased by $3.8 million, or 8%, compared to the first quarter of 2022, primarily driven by a $13.2 million, or 17%, increase in interest income and a $3.6 million increase in gain on sale of loans. These increases were partially offset by a $7.0 million increase in interest expense, a $3.8 million increase in the provision for credit losses, and a $1.9 million increase in noninterest expense.
Total Assets
Total assets of $11.1 billion at June 30, 2022 increased 15%, compared to March 31, 2022, and decreased 2%, compared to December 31, 2021. Both periods reflected significant increases in loans, primarily from growth in the multi-family and healthcare financing portfolio.
Return on average assets was 2.20% for the second quarter of 2022 compared to 1.92% for the first quarter of 2022 and 2.14% for the second quarter of 2021.
Asset Quality
The allowance for credit losses on loans of $37.5 million at June 30, 2022 increased $5.3 million compared to March 31, 2022 and increased $6.1 million compared to December 31, 2021. The increases compared to both periods were primarily from growth in the multi-family and healthcare loan portfolios and also reflected a contingent reserve related to a Freddie Mac-sponsored Q-Series securitization transaction. As of June 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 $4.8 million, or 0.07%, of loans receivable at June 30, 2022, compared to compared to 0.08% at March 31, 2022 and 0.01% at December 31, 2021.
Total Deposits
Total deposits of $8.3 billion at June 30, 2022 increased $823.9 million, or 11%, compared to March 31, 2022, and decreased $682.9 million, or 8%, compared to December 31, 2021. The increase compared to March 31, 2022 was primarily due to an increase in brokered certificates of deposits.
Total brokered deposits of $1.2 billion at June 30, 2022 increased $844.8 million, or 222%, from March 31, 2022 and decreased $935.1 million, or 43%, from December 31, 2021. Brokered deposits represented 15% of total deposits at June 30, 2022 compared to 5% of total deposits at March 31, 2022 and 24% of total deposits at December 31, 2021.
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 $258.1 million at June 30, 2022 decreased by $153.4 million compared to March 31, 2022 and decreased by $774.5 million compared to December 31, 2021. The Company continues to have significant borrowing capacity, with unused lines of credit totaling $1.7 billion at June 30, 2022 compared to $2.2 billion at March 31, 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 June 30, 2022 and 2021
Net Interest Income of $72.0 million increased $7.6 million, or 12% compared to $64.4 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 Income of $89.3 million increased 23% compared to $72.4 million, reflecting an increase in both yields and average balances of loans and loans held for sale, driven by increases in the multi-family and healthcare portfolios.
Interest Expense of $17.2 million increased $9.2 million, or 115%, compared to $8.0 million. Interest expense on deposits of $14.8 million increased $8.1 million, or 121%, compared $6.7 million, reflecting higher rates on interest bearing checking and money market accounts.
Noninterest Income of $39.2 million increased $6.3 million, or 19%, compared to $32.9 million, primarily due to a $7.9 million increase in loan servicing fees, partially offset by a $3.6 million decrease in gain on sale of loans.
Noninterest Expense of $33.0 million increased $4.8 million, or 17%, compared to $28.2 million, primarily due to increases in salaries and employee benefits to support business growth.
Comparison of Operating Results for the Three Months Ended June 30, 2022 and March 31, 2022
Net Interest Income of $72.0 million increased $6.3 million, or 10% compared to $65.7 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 Income of $89.3 million increased $13.3 million, or 17%, compared to $76.0 million, reflecting an increase in yields and average balances of loans and loans held for sale, driven by increases in the multi-family and healthcare portfolios.
Interest Expense of $17.2 million increased 68% compared to $10.3 million. Interest expense on deposits of $14.8 million increased $6.0 million, or 68%, compared to $8.8 million, reflecting higher interest rates on interest bearing checking and money market accounts.
Noninterest Income of $39.2 million increased $4.6 million, or 13%, compared $34.6 million, primarily due to a $3.6 million, or 20%, increase in gain on sale of loans.
Noninterest Expense of $33.0 million increased 6% compared to $31.0 million, primarily due to increases in salaries and employee benefits to support business growth.
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 $11.1 billion in assets and $8.3 billion in deposits as of June 30, 2022, 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 StatementsThis 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) | ||||||||||
June 30 | March 31 | December 31, | September 30, | June 30, | ||||||
2022 | 2022 | 2021 | 2021 | 2021 | ||||||
Assets | ||||||||||
Cash and due from banks | $ 10,714 | $ 9,853 | $ 14,030 | $ 14,352 | $ 13,745 | |||||
Interest-earning demand accounts | 247,432 | 401,668 | 1,018,584 | 788,224 | 388,304 | |||||
Cash and cash equivalents | 258,146 | 411,521 | 1,032,614 | 802,576 | 402,049 | |||||
Securities purchased under agreements to resell | 3,520 | 4,798 | 5,888 | 5,923 | 6,507 | |||||
Mortgage loans in process of securitization | 323,046 | 324,280 | 569,239 | 634,027 | 461,914 | |||||
Available for sale securities | 336,814 | 314,266 | 310,629 | 301,119 | 315,260 | |||||
Federal Home Loan Bank (FHLB) stock | 39,130 | 28,804 | 29,588 | 70,767 | 70,767 | |||||
Loans held for sale (includes $16,801, $14,567, $48,583, $26,296 and $26,623, respectively, at fair value) | 2,759,116 | 2,289,094 | 3,303,199 | 3,453,279 | 2,955,390 | |||||
Loans receivable, net of allowance for credit losses on loans of $37,474, $32,102, $31,344, $29,134 and $28,696, respectively | 7,033,203 | 5,976,960 | 5,751,319 | 5,431,227 | 5,444,227 | |||||
Premises and equipment, net | 35,085 | 34,559 | 31,212 | 31,423 | 31,384 | |||||
Servicing rights | 130,710 | 121,036 | 110,348 | 105,473 | 98,331 | |||||
Interest receivable | 26,184 | 23,499 | 24,103 | 21,894 | 22,068 | |||||
Goodwill | 15,845 | 15,845 | 15,845 | 15,845 | 15,845 | |||||
Intangible assets, net | 1,441 | 1,574 | 1,707 | 1,843 | 1,990 | |||||
Other assets and receivables | 123,815 | 104,356 | 92,947 | 76,637 | 55,800 | |||||
Total assets | $11,086,055 | $9,650,592 | $ 11,278,638 | $ 10,952,033 | $9,881,532 | |||||
Liabilities and Shareholders' Equity | ||||||||||
Liabilities | ||||||||||
Deposits | ||||||||||
Noninterest-bearing | $ 444,461 | $ 461,193 | $ 641,442 | $ 824,118 | $ 814,567 | |||||
Interest-bearing | 7,855,277 | 7,014,628 | 8,341,171 | 8,123,201 | 7,225,011 | |||||
Total deposits | 8,299,738 | 7,475,821 | 8,982,613 | 8,947,319 | 8,039,578 | |||||
Borrowings | 1,440,904 | 879,929 | 1,033,954 | 809,136 | 701,373 | |||||
Deferred and current tax liabilities, net | 19,414 | 30,695 | 19,170 | 21,681 | 18,819 | |||||
Other liabilities | 97,460 | 75,644 | 87,492 | 64,019 | 62,698 | |||||
Total liabilities | 9,857,516 | 8,462,089 | 10,123,229 | 9,842,155 | 8,822,468 | |||||
Commitments and Contingencies | ||||||||||
Shareholders' Equity | ||||||||||
Common stock, without par value | ||||||||||
Authorized - 75,000,000 shares, 50,000,000 shares, 50,000,000 shares, 50,000,000 shares and 50,000,000 shares | ||||||||||
Issued and outstanding - 43,106,505 shares, 43,267,776 shares, 43,180,079 shares, 43,178,061 shares and 43,175,399 shares | 136,671 | 137,882 | 137,565 | 137,200 | 136,836 | |||||
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 - 250,000 shares | ||||||||||
Issued and outstanding - 196,181 shares (equivalent to 7,847,233 depositary share) | 191,084 | 191,084 | 191,084 | 191,084 | 191,084 | |||||
Retained earnings | 737,789 | 694,776 | 657,149 | 610,267 | 560,083 | |||||
Accumulated other comprehensive income | (8,070) | (6,304) | (1,454) | 262 | (4) | |||||
Total shareholders' equity | 1,228,539 | 1,188,503 | 1,155,409 | 1,109,878 | 1,059,064 | |||||
Total liabilities and shareholders' equity | $11,086,055 | $9,650,592 | $ 11,278,638 | $ 10,952,033 | $9,881,532 | |||||
Consolidated Statement of Income | |||||||||||||
(Unaudited) | |||||||||||||
(In thousands, except share data) | |||||||||||||
Three Months Ended | Change | ||||||||||||
June 30, | March 31, | June 30, | 2Q22 | 2Q22 | |||||||||
2022 | 2022 | 2021 | vs. 1Q22 | vs. 2Q21 | |||||||||
Interest Income | |||||||||||||
Loans | $ | 85,994 | $ | 72,196 | $ | 68,276 | 19 % | 26 % | |||||
Mortgage loans in process of securitization | 1,449 | 2,245 | 2,724 | -35 % | -47 % | ||||||||
Investment securities: | |||||||||||||
Available for sale - taxable | 917 | 701 | 833 | 31 % | 10 % | ||||||||
Available for sale - tax exempt | — | — | 9 | — | -100 % | ||||||||
Federal Home Loan Bank stock | 284 | 269 | 392 | 6 % | -28 % | ||||||||
Other | 626 | 601 | 204 | 4 % | 207 % | ||||||||
Total interest income | 89,270 | 76,012 | 72,438 | 17 % | 23 % | ||||||||
Interest Expense | |||||||||||||
Deposits | 14,768 | 8,813 | 6,683 | 68 % | 121 % | ||||||||
Borrowed funds | 2,471 | 1,474 | 1,348 | 68 % | 83 % | ||||||||
Total interest expense | 17,239 | 10,287 | 8,031 | 68 % | 115 % | ||||||||
Net Interest Income | 72,031 | 65,725 | 64,407 | 10 % | 12 % | ||||||||
Provision (credit) for credit losses | 6,212 | 2,451 | (315) | 153 % | -2072 % | ||||||||
Net Interest Income After Provision for Credit Losses | 65,819 | 63,274 | 64,722 | 4 % | 2 % | ||||||||
Noninterest Income | |||||||||||||
Gain on sale of loans | 21,564 | 17,965 | 25,122 | 20 % | -14 % | ||||||||
Loan servicing fees, net | 9,607 | 9,731 | 1,727 | -1 % | 456 % | ||||||||
Mortgage warehouse fees | 1,350 | 1,858 | 3,079 | -27 % | -56 % | ||||||||
Syndication and asset management fees | 1,599 | 614 | 480 | 160 % | 233 % | ||||||||
Other income | 5,051 | 4,429 | 2,447 | 14 % | 106 % | ||||||||
Total noninterest income | 39,171 | 34,597 | 32,855 | 13 % | 19 % | ||||||||
Noninterest Expense | |||||||||||||
Salaries and employee benefits | 22,475 | 21,293 | 18,869 | 6 % | 19 % | ||||||||
Loan expenses | 1,184 | 1,211 | 1,921 | -2 % | -38 % | ||||||||
Occupancy and equipment | 2,011 | 1,814 | 1,808 | 11 % | 11 % | ||||||||
Professional fees | 1,594 | 1,303 | 779 | 22 % | 105 % | ||||||||
Deposit insurance expense | 670 | 759 | 651 | -12 % | 3 % | ||||||||
Technology expense | 1,304 | 1,236 | 971 | 6 % | 34 % | ||||||||
Other expense | 3,719 | 3,417 | 3,184 | 9 % | 17 % | ||||||||
Total noninterest expense | 32,957 | 31,033 | 28,183 | 6 % | 17 % | ||||||||
Income Before Income Taxes | 72,033 | 66,838 | 69,394 | 8 % | 4 % | ||||||||
Provision for income taxes | 18,098 | 16,696 | 17,977 | 8 % | 1 % | ||||||||
Net Income | $ | 53,935 | $ | 50,142 | $ | 51,417 | 8 % | 5 % | |||||
Dividends on preferred stock | (5,729) | (5,728) | (5,659) | — | 1 % | ||||||||
Net Income Allocated to Common Shareholders | $ | 48,206 | $ | 44,414 | $ | 45,758 | 9 % | 5 % | |||||
Basic Earnings Per Share | $ | 1.12 | $ | 1.03 | $ | 1.06 | 9 % | 6 % | |||||
Diluted Earnings Per Share | $ | 1.11 | $ | 1.02 | $ | 1.06 | 9 % | 5 % | |||||
Weighted-Average Shares Outstanding | |||||||||||||
Basic | 43,209,824 | 43,190,066 | 43,174,220 | ||||||||||
Diluted | 43,335,211 | 43,360,034 | 43,311,488 | ||||||||||
Consolidated Statement of Income | ||||||||
(Unaudited) | ||||||||
(In thousands, except share data) | ||||||||
Six Months Ended | ||||||||
June 30, | June 30, | |||||||
2022 | 2021 | Change | ||||||
Interest Income | ||||||||
Loans | $ | 158,190 | $ | 143,793 | 10 % | |||
Mortgage loans in process of securitization | 3,694 | 5,860 | -37 % | |||||
Investment securities: | ||||||||
Available for sale - taxable | 1,618 | 1,187 | 36 % | |||||
Available for sale - tax exempt | — | 20 | -100 % | |||||
Federal Home Loan Bank stock | 553 | 776 | -29 % | |||||
Other | 1,227 | 351 | 250 % | |||||
Total interest income | 165,282 | 151,987 | 9 % | |||||
Interest Expense | ||||||||
Deposits | 23,581 | 12,783 | 84 % | |||||
Borrowed funds | 3,945 | 2,834 | 39 % | |||||
Total interest expense | 27,526 | 15,617 | 76 % | |||||
Net Interest Income | 137,756 | 136,370 | 1 % | |||||
Provision for credit losses | 8,663 | 1,348 | 543 % | |||||
Net Interest Income After Provision for Credit Losses | 129,093 | 135,022 | -4 % | |||||
Noninterest Income | ||||||||
Gain on sale of loans | 39,529 | 53,742 | -26 % | |||||
Loan servicing fees, net | 19,338 | 9,678 | 100 % | |||||
Mortgage warehouse fees | 3,208 | 7,195 | -55 % | |||||
Syndication and asset management fees | 2,213 | 535 | 314 % | |||||
Other income | 9,480 | 5,641 | 68 % | |||||
Total noninterest income | 73,768 | 76,791 | -4 % | |||||
Noninterest Expense | ||||||||
Salaries and employee benefits | 43,768 | 40,143 | 9 % | |||||
Loan expenses | 2,395 | 4,444 | -46 % | |||||
Occupancy and equipment | 3,825 | 3,435 | 11 % | |||||
Professional fees | 2,897 | 1,201 | 141 % | |||||
Deposit insurance expense | 1,429 | 1,322 | 8 % | |||||
Technology expense | 2,540 | 1,908 | 33 % | |||||
Other expense | 7,136 | 5,814 | 23 % | |||||
Total noninterest expense | 63,990 | 58,267 | 10 % | |||||
Income Before Income Taxes | 138,871 | 153,546 | -10 % | |||||
Provision for income taxes | 34,794 | 40,146 | -13 % | |||||
Net Income | $ | 104,077 | $ | 113,400 | -8 % | |||
Dividends on preferred stock | (11,457) | (9,416) | 22 % | |||||
Net Income Allocated to Common Shareholders | $ | 92,620 | $ | 103,984 | -11 % | |||
Basic Earnings Per Share | $ | 2.14 | $ | 2.41 | -11 % | |||
Diluted Earnings Per Share | $ | 2.14 | $ | 2.40 | -11 % | |||
Weighted-Average Shares Outstanding | ||||||||
Basic | 43,220,198 | 43,166,223 | ||||||
Diluted | 43,367,875 | 43,293,599 | ||||||
Key Operating Results | ||||||||||||
(Unaudited) | ||||||||||||
($ in thousands, except share data) | ||||||||||||
Three Months Ended | Change | |||||||||||
June 30, | March 31, | June 30, | 2Q22 | 2Q22 | ||||||||
2022 | 2022 | 2021 | vs. 1Q22 | vs. 2Q21 | ||||||||
Noninterest expense | $ 32,957 | $ 31,033 | $ 28,183 | 6 % | 17 % | |||||||
Net interest income (before provision for credit losses) | 72,031 | 65,725 | 64,407 | 10 % | 12 % | |||||||
Noninterest income | 39,171 | 34,597 | 32,855 | 13 % | 19 % | |||||||
Total income | $ 111,202 | $ 100,322 | $ 97,262 | 11 % | 14 % | |||||||
Efficiency ratio | 29.64 % | 30.93 % | 28.98 % | (129) | bps | 66 | bps | |||||
Average assets | $ 9,820,878 | $ 10,436,448 | $ 9,609,957 | -6 % | 2 % | |||||||
Net income | $ 53,935 | $ 50,142 | $ 51,417 | 8 % | 5 % | |||||||
Return on average assets before annualizing | 0.55 % | 0.48 % | 0.54 % | |||||||||
Annualization factor | 4.00 | 4.00 | 4.00 | |||||||||
Return on average assets | 2.20 % | 1.92 % | 2.14 % | 28 | bps | 6 | bps | |||||
Return on average tangible common shareholders' equity (1) | 23.05 % | 22.37 % | 27.61 % | 68 | bps | (456) | bps | |||||
Tangible book value per common share (1) | $ 19.70 | $ 18.70 | $ 15.73 | 5 % | 25 % | |||||||
Tangible common shareholders' equity/tangible assets (1) | 7.67 % | 8.40 % | 6.88 % | (73) | bps | 79 | 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 | |||||||||||
June 30, | March 31, | June 30, | 2Q22 | 2Q22 | ||||||||
2022 | 2022 | 2021 | vs. 1Q22 | vs. 2Q21 | ||||||||
Net income | $ 53,935 | $ 50,142 | $ 51,417 | 8 % | 5 % | |||||||
Less: preferred stock dividends | (5,729) | (5,728) | (5,659) | — | 1 % | |||||||
Net income available to common shareholders | $ 48,206 | $ 44,414 | $ 45,758 | 9 % | 5 % | |||||||
Average shareholders' equity | $ 1,215,891 | $ 1,173,837 | $ 1,031,246 | 4 % | 18 % | |||||||
Less: average goodwill & intangibles | (17,361) | (17,495) | (17,916) | -1 % | -3 % | |||||||
Less: average preferred stock | (362,149) | (362,149) | (350,320) | — | 3 % | |||||||
Tangible common shareholders' equity | $ 836,381 | $ 794,193 | $ 663,010 | 5 % | 26 % | |||||||
Annualization factor | 4.00 | 4.00 | 4.00 | |||||||||
Return on average tangible common shareholders' equity | 23.05 % | 22.37 % | 27.61 % | 69 | bps | (455) | bps | |||||
Total equity | $ 1,228,539 | $ 1,188,503 | $ 1,059,064 | 3 % | 16 % | |||||||
Less: goodwill and intangibles | (17,286) | (17,419) | (17,835) | -1 % | -3 % | |||||||
Less: preferred stock | (362,149) | (362,149) | (362,149) | — | — | |||||||
Tangible common shareholders' equity | $ 849,104 | $ 808,935 | $ 679,080 | 5 % | 25 % | |||||||
Assets | $ 11,086,055 | $ 9,650,592 | $ 9,881,532 | 15 % | 12 % | |||||||
Less: goodwill and intangibles | (17,286) | (17,419) | (17,835) | -1 % | -3 % | |||||||
Tangible assets | $ 11,068,769 | $ 9,633,173 | $ 9,863,697 | 15 % | 12 % | |||||||
Ending common shares | 43,106,505 | 43,267,776 | 43,175,399 | — | — | |||||||
Tangible book value per common share | $ 19.70 | $ 18.70 | $ 15.73 | 5 % | 25 % | |||||||
Tangible common shareholders' equity/tangible assets | 7.67 % | 8.40 % | 6.88 % | (73) | bps | 79 | bps | |||||
Key Operating Results | ||||||||
(Unaudited) | ||||||||
($ in thousands, except share data) | ||||||||
Six Months Ended | ||||||||
June 30, | June 30, | |||||||
2022 | 2021 | Change | ||||||
Noninterest expense | $ 63,990 | $ 58,267 | 10 % | |||||
Net interest income (before provision for credit losses) | 137,756 | 136,370 | 1 % | |||||
Noninterest income | 73,768 | 76,791 | -4 % | |||||
Total income | $ 211,524 | $ 213,161 | -1 % | |||||
Efficiency ratio | 30.25 % | 27.33 % | 292 | bps | ||||
Average assets | $ 10,126,963 | $ 9,780,487 | 4 % | |||||
Net income | $ 104,077 | $ 113,400 | -8 % | |||||
Return on average assets before annualizing | 1.03 % | 1.16 % | ||||||
Annualization factor | 2.00 | 2.00 | ||||||
Return on average assets | 2.06 % | 2.32 % | (26) | bps | ||||
Return on average tangible common shareholders' equity (1) | 22.72 % | 32.72 % | (1,000) | bps | ||||
Tangible book value per common share (1) | $ 19.70 | $ 15.73 | 25 % | |||||
Tangible common shareholders' equity/tangible assets (1) | 7.67 % | 6.88 % | 79 | 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. | ||||||||
Six Months Ended | ||||||||
June 30, | June 30, | |||||||
2022 | 2021 | Change | ||||||
Net income | $ 104,077 | $ 113,400 | -8 % | |||||
Less: preferred stock dividends | (11,457) | (9,416) | 22 % | |||||
Net income available to common shareholders | $ 92,620 | $ 103,984 | -11 % | |||||
Average shareholders' equity | $ 1,194,981 | $ 942,566 | 27 % | |||||
Less: average goodwill & intangibles | (17,428) | (17,986) | -3 % | |||||
Less: average preferred stock | (362,149) | (289,058) | 25 % | |||||
Tangible common shareholders' equity | $ 815,404 | $ 635,522 | 28 % | |||||
Annualization factor | 2.00 | 2.00 | ||||||
Return on average tangible common shareholders' equity | 22.72 % | 32.72 % | (1,000) | bps | ||||
Total equity | $ 1,228,539 | $ 1,059,064 | 16 % | |||||
Less: goodwill and intangibles | (17,286) | (17,835) | -3 % | |||||
Less: preferred stock | (362,149) | (362,149) | 0 % | |||||
Tangible common shareholders' equity | $ 849,104 | $ 679,080 | 25 % | |||||
Assets | $ 11,086,055 | $ 9,881,532 | 12 % | |||||
Less: goodwill and intangibles | (17,286) | (17,835) | -3 % | |||||
Tangible assets | $ 11,068,769 | $ 9,863,697 | 12 % | |||||
Ending common shares | 43,106,505 | 43,175,399 | — | |||||
Tangible book value per common share | $ 19.70 | $ 15.73 | 25 % | |||||
Tangible common shareholders' equity/tangible assets | 7.67 % | 6.88 % | 79 | bps | ||||
Merchants Bancorp | |||||||||||
Average Balance Analysis | |||||||||||
($ in thousands) | |||||||||||
(Unaudited) | |||||||||||
Three Months Ended | Three Months Ended | Three Months Ended | |||||||||
June 30, 2022 | March 31, 2022 | June 30, 2021 | |||||||||
Average | Yield/ | Average | Yield/ | Average | Yield/ | ||||||
Balance | Interest | Rate | Balance | Interest | Rate | Balance | Interest | Rate | |||
Assets: | |||||||||||
Interest-bearing deposits, and other | $ 367,540 | $ 910 | 0.99 % | $ 1,460,486 | $ 870 | 0.24 % | $ 788,002 | $ 596 | 0.30 % | ||
Securities available for sale - taxable | 330,759 | 917 | 1.11 % | 305,600 | 701 | 0.93 % | 285,536 | 833 | 1.17 % | ||
Securities available for sale - tax exempt | — | — | — | — | 1,363 | 9 | 2.65 % | ||||
Mortgage loans in process of securitization | 198,349 | 1,449 | 2.93 % | 349,027 | 2,245 | 2.61 % | 416,559 | 2,724 | 2.62 % | ||
Loans and loans held for sale | 8,643,276 | 85,994 | 3.99 % | 8,049,877 | 72,196 | 3.64 % | 7,905,766 | 68,276 | 3.46 % | ||
Total interest-earning assets | 9,539,924 | 89,270 | 3.75 % | 10,164,990 | 76,012 | 3.03 % | 9,397,226 | 72,438 | 3.09 % | ||
Allowance for credit losses on loans | (33,401) | (31,023) | (28,778) | ||||||||
Noninterest-earning assets | 314,355 | 302,481 | 241,509 | ||||||||
Total assets | $9,820,878 | $10,436,448 | $9,609,957 | ||||||||
Liabilities & Shareholders' Equity: | |||||||||||
Interest-bearing checking | 3,849,876 | 6,945 | 0.72 % | 4,015,709 | 2,204 | 0.22 % | 4,473,251 | 1,362 | 0.12 % | ||
Savings deposits | 238,944 | 62 | 0.10 % | 230,702 | 33 | 0.06 % | 205,884 | 38 | 0.07 % | ||
Money market | 2,626,973 | 6,567 | 1.00 % | 2,710,961 | 5,252 | 0.79 % | 2,197,750 | 4,175 | 0.76 % | ||
Certificates of deposit | 639,556 | 1,194 | 0.75 % | 1,080,438 | 1,324 | 0.50 % | 512,316 | 1,108 | 0.87 % | ||
Total interest-bearing deposits | 7,355,349 | 14,768 | 0.81 % | 8,037,810 | 8,813 | 0.44 % | 7,389,201 | 6,683 | 0.36 % | ||
Borrowings | 749,628 | 2,471 | 1.32 % | 589,597 | 1,474 | 1.01 % | 523,942 | 1,348 | 1.03 % | ||
Total interest-bearing liabilities | 8,104,977 | 17,239 | 0.85 % | 8,627,407 | 10,287 | 0.48 % | 7,913,143 | 8,031 | 0.41 % | ||
Noninterest-bearing deposits | 402,328 | 518,140 | 590,886 | ||||||||
Noninterest-bearing liabilities | 97,682 | 117,064 | 74,682 | ||||||||
Total liabilities | 8,604,987 | 9,262,611 | 8,578,711 | ||||||||
Shareholders' equity | 1,215,891 | 1,173,837 | 1,031,246 | ||||||||
Total liabilities and shareholders' equity | $9,820,878 | $10,436,448 | $9,609,957 | ||||||||
Net interest income | $72,031 | $65,725 | $64,407 | ||||||||
Net interest spread | 2.90 % | 2.55 % | 2.68 % | ||||||||
Net interest-earning assets | $1,434,947 | $ 1,537,583 | $1,484,083 | ||||||||
Net interest margin | 3.03 % | 2.62 % | 2.75 % | ||||||||
Average interest-earning assets to average interest-bearing liabilities | 117.70 % | 117.82 % | 118.75 % | ||||||||
Supplemental Results | |||||||||||||
(Unaudited) | |||||||||||||
($ in thousands) | |||||||||||||
Net Income | Net Income | ||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | March 31, | June 30, | June 30, | ||||||||||
2022 | 2022 | 2021 | 2022 | 2021 | |||||||||
Segment | |||||||||||||
Multi-family Mortgage Banking | $ 19,556 | $ 11,492 | $ 10,971 | $ 31,048 | $ 22,932 | ||||||||
Mortgage Warehousing | 11,868 | 13,159 | 21,448 | 25,027 | 50,631 | ||||||||
Banking | 25,932 | 28,764 | 21,741 | 54,696 | 44,766 | ||||||||
Other | (3,421) | (3,273) | (2,743) | (6,694) | (4,929) | ||||||||
Total | $ 53,935 | $ 50,142 | $ 51,417 | $ 104,077 | $ 113,400 | ||||||||
Total Assets | |||||||||||||
June 30, | March 31, | December 31, | |||||||||||
2022 | 2022 | 2021 | |||||||||||
Segment | |||||||||||||
Multi-family Mortgage Banking | $ 330,676 | $ 293,286 | $ 296,129 | ||||||||||
Mortgage Warehousing | 2,836,998 | 2,863,907 | 3,977,537 | ||||||||||
Banking | 7,835,152 | 6,409,943 | 6,929,565 | ||||||||||
Other | 83,229 | 83,456 | 75,407 | ||||||||||
Total | $ 11,086,055 | $ 9,650,592 | $ 11,278,638 | ||||||||||
Gain on Sale of Loans | Gain on Sale of Loans | ||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | March 31, | June 30, | June 30, | ||||||||||
2022 | 2022 | 2021 | 2022 | 2021 | |||||||||
Loan Type | |||||||||||||
Multi-family | 19,623 | $ 14,953 | $ 21,408 | $ 34,576 | $ 44,244 | ||||||||
Single-family | 406 | 457 | 1,872 | 863 | 6,085 | ||||||||
Small Business Association (SBA) | 1,535 | 2,555 | 1,842 | 4,090 | 3,413 | ||||||||
Total | $ 21,564 | $ 17,965 | $ 25,122 | $ 39,529 | $ 53,742 | ||||||||
Loans Receivable and Loans Held for Sale | |||||||||||||
June 30, | March 31, | December 31, | |||||||||||
2022 | 2022 | 2021 | |||||||||||
Mortgage warehouse lines of credit | $ 900,585 | $ 752,447 | $ 781,437 | ||||||||||
Residential real estate | 876,652 | 858,325 | 843,101 | ||||||||||
Multi-family financing | 3,236,917 | 2,876,005 | 2,702,042 | ||||||||||
Healthcare financing | 1,262,424 | 850,751 | 826,157 | ||||||||||
Commercial and commercial real estate | 695,158 | 567,971 | 520,199 | ||||||||||
Agricultural production and real estate | 90,070 | 90,688 | 97,060 | ||||||||||
Consumer and margin loans | 8,871 | 12,875 | 12,667 | ||||||||||
7,070,677 | 6,009,062 | 5,782,663 | |||||||||||
Less: Allowance for credit losses on loans | 37,474 | 32,102 | 31,344 | ||||||||||
Loans receivable | $ 7,033,203 | $ 5,976,960 | $ 5,751,319 | ||||||||||
Loans held for sale | 2,759,116 | 2,289,094 | 3,303,199 | ||||||||||
Total loans, net of allowance | $ 9,792,319 | $ 8,266,054 | $ 9,054,518 | ||||||||||
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SOURCE Merchants Bancorp
