Merchants Bancorp · NASDAQ:MBIN
Merchants Bancorp — Non-Deal Roadshow (November 2020)
36 slides from Merchants Bancorp's roadshow presentation, November 2020
Slide 1: Third Quarter 2020 Overview
Third Quarter 2020 Overview
Slide 2: Forward-Looking Statements / Disclaimers
Forward-Looking Statements / Disclaimers ae This presentation may contain “forward-looking statements” within the meaning of meaning of Section 27A of the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended, and the U.S. Private Securities Litigation Reform Act of 1995. Th
Slide 3: Merchants Bancorp Overview
Merchants Bancorp Overview 4« S.. lender with a balanced and diverse revenue stream that lessens volatility through various cycles Multi-family Lendin > Lending to developers of multi- family and healthcare properties > Specializing in government agency products a Warehouse Lending Banking > Provide
Slide 4: Financial Highlights - 3Q20
Financial Highlights - 3Q20 September 30, 2019 June30,2020 September 30,2020 Total Assets $6,337,186 $9,439,400 $9,530,475 Total Loans’, net $5,240,626 $8,011,084 $8,177,173 Total Deposits $5,499,649 $6,908,628 $7,084,647 Total Equity $629,439 — = B5 Tangible Equity / Tangible Assets” 9.65% Credit Q
Slide 5: Exceptional Performance
Exceptional Performance 5-Year Compound Annual Growth Rates (CAGRs) vs. 91 peer: MBIN Peer Average* MBIN Ranking? Net Income 50% 10% #3 Highest Revenues After Loss Provision 40% 9% #2 Highest Assets 40% 14% #4 Highest Goss Loans? 52% 15% #2 Highest Deposits 33% 15% #6 Hiahest Earnings Per Common Sha
Slide 6: #3 highest EPS growth; #1 lowest P/E multiple of peers
#3 highest EPS growth; #1 lowest P/E multiple out ss of 91 peers! L 30 25' EPS Growth 5 Year CAGR2 0.0 5.0 10.0 P/E Multiple — Price/LTM EPS? 1 Peer group includes publicly held US banks and thrifts with assets of $5B to $1SB, and excludes results deemed as “not meaningful” or “not available” by S&P
Slide 7: Share Price Change Since Merchants Bancorp IPO
ar Share Price Change Since Merchants Bancorp IPO —=MBIN (+714%) —— NASDAQ Bank Index (-123%) = ——-KBW Nasdaq Bank Index (-6.8%) p EF ES FS PAE EE CO EEE EEE EE EE SF 8 ‘Source - S&P Global as of November 24, 2020.
Slide 8: Net Income and Net Interest Margin vs Yield Curve
PEE Net Income (in $millions) ae ie $0.0 5 , , , T T 1 2015 2016 2017 2018 2019 = YTD 20207 —Market Yield Curve Spread' ©§ ——MBINNet Interest Margin — MBIN Net Income 1- Market yield curve spread reflects the difference between the average 30-year mortgage (source: http://www. freddiemac.com/pmms/pm
Slide 9: Net Income by Segment
Banking - 29% LTM? Net Income Primarily from traditional interest income on loans originated by Multi-family businesses, but also gain on sale of single-family and SBA loans as they are packaged and sold to federal agencies. Mortgage Warehousing Mortgage Warehousing - 58% LTM? Net Income Primarily f
Slide 10: Unique Operating Model
. . ar Unique Operating Model > Consistent Profitablity and Growth That is Less Dependent on Interest Rate Cycles Than Peers > Conservative, Low Risk Underwriting and Track Record of Minimal Loan Losses > Maximizing Efficiency with Minimal Branch Network and National Platform > Enviable Funding Opti
Slide 11: What is Unique About Merchants Bancorp?
What is Unique About Merchants Bancorp?
Slide 12: Consistent Profitability and Growth Less Dependent on Interest Rate Cycles
Consistent Profitablity and Growth That is Less Dependent on Interest Rate Cycles Than Peers ar
Slide 13: Net Income and Return on Average TCE vs Peers
een [| BIN’ e=mPeer Average 25.20% 20.50% 17.29% 17.83! 12.93% 11.14% 10.80% 9.28% 13.67% 2019 © 3Q20LTM* 2019 3020YTD Net Income ($M) Return on Average TCE 34 ‘1- Peer group includes publicly held US banks and thrifts with assets of $5B to $15B, and excludes results deemed as “not meaningful” or “n
Slide 14: Total Assets and Return on Average Assets
ar #1 out of 91. peers 1.95% 1.84% ey 1.23% 1.19% 0.95% 0.96 0.70% memeMBIN emmmPeer Average 2019 + 3Q20YTD Total Assets (SM) Return on Average Assets 1- Peer group includes publicly held US banks and thrifts with assets of $5B to $15B, and excludes results deemed as “nat meaningful” or “not availab
Slide 15: Total Gross Loans and Total Deposits
ar ™ Loans Held for Investment — Loans Held for Sale 2016 207 2018 2019 3Q20 | Total Gross Loans ($M) | Total Deposits (SM) 1- Peer group includes publicly held US banks and thrifts with assets of $5B to $15B, and excludes results deemed as “not meaningful” or “not available" by S&P Global - source
Slide 16: Conservative, Low Risk Underwriting and Minimal Loan Losses
ar. Conservative, Low Risk Underwriting and Track Record of Minimal Loan Losses
Slide 17: Loan Portfolio by Type
(Dollars in thousands) As of September 30, 2020 Loan Type Balance % Total Total Loans Held for Sale 3,319,619 40.5% Loans Held for Investment Multi-family Real Estate and Healthcare Financing $2,125,516 25.9% Mortgage Warehouse Lines of Credit $1,647,521 20.1% Residential Real Estate (primarily 1st
Slide 18: Minimal Charge-Offs, Minimal Nonperforming Loans, Well Reserved
ar Minimal Charge-Offs, Minimal Nonperforming Loans, Well Reserved MBIN «==Peer'Average MBIN ===Peer Average MBIN’ «==Peer Average 0.69% 0.73% 0.61% g 57% O56 0.16% 0.17% _ 0.14% 9434, 0.14% . k # : eers! = ar a F 01% 0.00% —_ pak _ 0.00% = . = 206 =6©207 862018 )3=— 2019 3Q20 YTD 20% 207 2019 3020
Slide 19: Maximizing Efficiency with Minimal Branch Network and National Platform
Maximizing Efficiency with Minimal Branch Network and National Platform
Slide 20: Low Branch Model / Efficiency Ratio
Low Branch Model (11) / 391 Employees om MBIN «Peer'Average 61.0% = 58.7% 58.1% 58.2% 2019 + 3Q20YTD Efficiency Ratio? 1- Peer group includes publicly held US banks and thrifts with assets of $58 to $15B, and excludes results deemed as “not meaningful” or “not available” by S&P Global - source S&P G
Slide 21: Enviable Funding Options and Liquidity
ar Enviable Funding Options and Liquidity to Support Fast- Turning, Short Duration Lending Model
Slide 22: Flexible Options to Obtain Lowest Cost
ar Flexible Options to Obtain Lowest Cost Make use of lines at the Federal Home Loan Bank and Federal Reserve to lower interest expense Grow multi-family custodial deposits from Merchants Capital Corp. originations and subservicing relationships Expand custodial escrow relationships from warehouse c
Slide 23: Deposit Balances and Average Rates
For the Nine Months Ended Avg. Balance Weighted September 30, 2020 (Sinthousands) Avg. Rate Noninterest-Bearing Demand $396,124 0.00% Interest-Bearing Demand $2,874,370 0.49% Money Market Savings $1,375,667 120% Savings $173,570 0.09% Certificates of Deposit $2,104,225 1.40% Total Deposits $6,923,95
Slide 24: Multiple Funding Sources and Options
Multiple Funding Sources and Options > Self-funding mechanisms in place. In the third quarter of 2020, $2.6B aaor warehouse deposits funded $5.2B average loans and mortgages in process of securitization 1- Duration is typically overnight to less than 3 months. > Supplement funding with short duratio
Slide 25: Diverse Business Mix With Opportunity for Additional Growth
ar. Diverse Business Mix With Opportunity for Additional Growth
Slide 26: States with Offices/Branches and Customers
HB states with offices/Branches Warehouse Customers @ Merchants Capital Customers Top 5 States Warehouse Loan Fundings YTD at 9/30/20 CA 38% ™ FL N) AZ 6% 4% 4% 3% Top 5 States Servicing & Loan Balances at 9/30/20 IN 31% NY 13% IL 12% TX 8% OH 6%
Slide 27: Growth Opportunities Across Lines of Business
> Additional capital raised during 2019 being utilized to generate revenues across all lines of business > Refinance activity continuing longer than industry expected > Low Income Housing Tax Credit (LIHTC) platform enhanced in 2020 > SBA platform enhanced in 2019 >» Online/mobile banking presence i
Slide 28: Compelling Shareholder Value Proposition
Compelling Shareholder Value Proposition
Slide 29: #3 highest EPS growth; #1 lowest P/E multiple of peers
#3 highest EPS growth; #1 lowest P/E multiple out ss of 91 peers! L 30 25' EPS Growth 5 Year CAGR2 r T T ad T 0% 0.0 5.0 10.0 15.0 20.0 P/E Multiple — Price/LTM EPS? 1 Peer group includes publicly held US banks and thrifts with assets of $5B to $1SB, and excludes results deemed as “not meaningful” o
Slide 30: Share Price Change Since Merchants Bancorp IPO
ar. Share Price Change Since Merchants Bancorp IPO = MBIN (+71.4%) — NASDAQ Bank index (-12.3%) —KBW Nasdaq Bank index (-6.8%) Ss ao FF & s & ge F 9 er Fr Fr S&F vv # s ry & & € #* s rs & & £ * ss re & & € * ‘Source - S&P Global as of November 24, 2020.
Slide 31: Nonperforming Assets / Total Assets
> Conservative underwriting ensures loans Nonperforming? Assets/Total Assets can be sold to Federal Agencies > Shorter duration lending minimizes 0.59% nies interest rate risk 0.51% Lh 0.7 >» Fast-turning loan portfolio reprices ~ 95% EErE of loans within 90 days and multiple lowest out of funding s
Slide 32: Tangible Book Value Per Share and Annual Dividends Per Share
ar 2019 3Q20 2016 207 2018 2019 2020 Tangible Book Value Per Share Annual Dividends Per Share a 1- Peer group includes publicly held US banks and thrifts with assets of $5B to S1SB, and excludes results deemed as “not meaningful” or “not available” by S&P Global - source S&P Global.
Slide 33: Unique Operating Model
. . ar Unique Operating Model > Consistent Profitablity and Growth That is Less Dependent on Interest Rate Cycles Than Peers > Conservative, Low Risk Underwriting and Track Record of Minimal Loan Losses > Maximizing Efficiency with Minimal Branch Network and National Platform > Enviable Funding Opti
Slide 34: Appendix
Appendix
Slide 35: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ar (Dollars in thousands, except per share amounts) Ator for the Nine Ator for the Year Ended December 31, Months Ended September 30, 2017 2018 2019 2020 No! AP Reconciliation: Net Income Net income as reported per GAAP 3317 $ 54,684 $ @g74 $ 7138 47,268 $ 120747
Slide 36: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures thousands, except per share amounts) Ator for the Nine Ator for the Year Ended December 31, Months Ended September 30, 2017 2018 2019 2020 Non-GAAP Reconciliation: Return on Average Tangible Common Equity ‘Average shareholders’ equity per GAAP $ 177370 § 248,515 §
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