Merchants Bancorp · NASDAQ:MBIN
Merchants Bancorp — IPO Roadshow (October 2017)
32 slides from Merchants Bancorp's IPO roadshow presentation, Oct 16, 2017
Slide 1: Disclaimers
Disclaimers This presentation contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements express management’s current expectations, forecasts of future events or long-term goals and, by their nature, are subject to assumptions, risks and uncerta
Slide 2: Offering Summary
3 Offering Summary Issuer: Merchants Bancorp Proposed Exchange / Ticker: Nasdaq / “MBIN” Shares Offered: 5,555,555 shares (100% Primary) Offering Size: $100 million (at the midpoint) Filing Range: $17 – $19 per share Overallotment Option: 15% (100% Primary) Lock-Up: 180 Days for directors, executive
Slide 3: Experienced Management Team
4 Experienced Management Team Executive & Title Years in Industry Relevant Experience Michael Petrie Chairman & CEO of Merchants Bancorp 38 Mr. Petrie has served as the Chairman and Chief Executive Officer of Merchants and Merchants Bank since October 2006 and March 2002, respectively, and President
Slide 4: Merchants Bancorp – Selected History
Merchants Bancorp – Selected History 5 PR Mortgage is founded by Michael Petrie and Randall Rogers in August 1990 1990 Acquisition of Symphony Bancorp in January 2009 ($55.0MM in total assets) 2009 Bank changes name to “Merchants Bank of Indiana” in April 2009 and launches mortgage warehouse busines
Slide 5: Who We Are and What We Do
Who We Are and What We Do Who We Are Diversified financial services company headquartered in Carmel, Indiana with $3.1B in assets as of June 30, 2017 and a history dating to 1990 Three principal business lines offer a balanced and diverse revenue stream that lessens earnings volatility through vario
Slide 6: Recent Company Awards / Accolades
Recent Company Awards / Accolades 2016: Merchants Bancorp is #25 of 546 total banks on the list of top-performing banks with assets between $1.0B and $10.0B, according to SNL Financial a subsidiary of S&P Global Market Intelligence 7 June 2017: Indiana Chamber of Commerce recognizes Merchants Bancor
Slide 7: Financial Highlights
Financial Highlights 8 Financial Highlights¹ Balance Sheet (Dollars in thousands) Total Assets $3,091,500 Cash and Securities ² $952,779 Total Loans, net ³ $2,047,421 Total Deposits $2,771,501 Total Equity $226,513 Tangible Equity / Tangible Assets 7.31% Asset Quality NPAs / Assets 0.10% NPLs / Loan
Slide 8: Executive Summary
Executive Summary Experienced management team that averages over 30 years’ experience in financial services has a long-term track record of performance, growth and industry involvement Founders come from a loan review and workout background and have built both credit and interest rate risk managemen
Slide 9: Three Main Business Lines Overview
10 Three Main Business Lines Overview Multi-family Mortgage Banking Strategy Started in 1990 Top tier FHA multi-family lender focused on affordable and workforce housing, not luxury or higher end market Originated $906MM in loans for YTD 6/30/2017 versus $332MM for YTD 6/30/2016 Servicing portfolio
Slide 10: Balanced Business Model
Balanced Business Model 11 Net revenues equal to net interest income plus noninterest income. Note: Percentages in pie charts do not sum to 100.0% because they are not inclusive of “Other,” which can be found in Segment Reporting on slides 27 – 29. Net Revenues (1) Net Income YTD Q2 2017 2016 2015 M
Slide 11: Multi-family Mortgage Banking
Multi-family Mortgage Banking 42% Net Revenue Contribution YTD June 30, 2017 PR Mortgage is engaged in multi-family mortgage banking, specializing in originating and servicing loans for rental housing and healthcare facility financing Differentiated focus on the affordable and workforce housing nich
Slide 12: Mortgage Warehousing
Mortgage Warehousing 33% of Net Revenue Contribution YTD June 30, 2017 Merchants Bank saw an opportunity to start its warehouse lending business in 2009 amid significant market turmoil Despite being capital constrained over the last five years, outstanding balances have grown to $1.2B from warehouse
Slide 13: Banking: MBI-Indianapolis and MBI-Lynn
MBI-Indianapolis serves the Indianapolis market as a community bank and provides funding arrangements for the multi-family mortgage banking segment. It also generates SBA and C&I loans Holds loans comprised of multi-family construction and bridge loans referred by PR Mortgage, C&I loans, SBA loans,
Slide 14: Diversified Revenue Base
Diversified Revenue Base 15 Balance of Net Interest and Noninterest Income ($MM) Chart is not inclusive of “Other,” which can be found in Segment Reporting on slides 27 – 29. LTM represents last twelve months results ending June 30, 2017. Note: Financial information as of June 30, 2017. LTM 2017 Bal
Slide 15: Loans and Securities Portfolio
Loans and Securities Portfolio 16 Note: Financial information as of or for the period ended June 30, 2017. Loans are predominantly agency eligible with variable rates or short maturities Average yield on loans (YTD): 4.08% 79% of Merchants Bank’s assets reprice in 90 days or less Nonperforming asset
Slide 16: Funding Strategy
Funding Strategy 17 Deposit Mix¹ Funding Sources $2.8B in total deposits at June 30, 2017 Mortgage Custodial Deposits: $1.5B Commercial Deposits: $383MM Consumer Deposits: $905MM $633MM in noninterest bearing deposits (included in the deposit balances above) Weighted average cost of deposits of 0.70
Slide 17: Highly Disciplined Credit Culture
Net Charge-Offs (Recoveries) / Average Loans Reserves/ Loans Held For Investment Highly Disciplined Credit Culture Nonperforming Assets / Total Assets Nonperforming Loans / Total Loans 18 ALLL/NPLs as of 6/30/17: 213%
Slide 18: Significant Growth Across Various Cycles
Net Income ($MM) (1) Total Deposits ($MM) Significant Growth Across Various Cycles Total Gross Loans ($MM) Total Assets ($MM) 19 In 2014, for federal income tax purposes, Merchants converted from a Subchapter S corporation to a C corporation. The 2012 and 2013 performance metrics reflect adjustments
Slide 19: Track Record of Strong Profitability
Efficiency Ratio(2) Noninterest Income / Net Revenue Track Record of Strong Profitability Pro Forma Return on Average TCE (1) Pro Forma Return on Average Assets(1) 20 In 2014, for federal income tax purposes, Merchants converted from a Subchapter S corporation to a C corporation. The 2012 and 2013 p
Slide 20: Capital Position to Support Future Growth
Capital Position to Support Future Growth 21 Each $1.00 increase or (decrease) in the assumed initial public offering price of $18.00 per share (the midpoint of the price range set forth on the cover page of this prospectus) would increase or (decrease), respectively, the amount of cash and cash equ
Slide 21: Investment Highlights
Investment Highlights Strong profitability driven by an integrated platform and diverse revenue stream History of strong performance with June 30, 2017 year-to-date ROAA of 1.74% and ROATCE of 25.40% #1 ranked performer among Indiana-based banks according to SNL Financial’s “Top Performing Banks” of
Slide 22: Investment Highlights
v Investment Highlights os ‘Strong profitability driven by an integrated platform and diverse revenue stream + History of strong performance with June 30, 2017 year-to-date ROAA of 1.74% and ROATCE of 25.40% + #1 ranked performer among Indiana-based banks according to SNL Financial's “Top Performing
Slide 23: Experienced Management Team
24 Experienced Management Team Executive & Title Years in Industry Relevant Experience Michael Petrie Chairman & CEO of Merchants Bancorp 38 Mr. Petrie has served as the Chairman and Chief Executive Officer of Merchants and Merchants Bank since October 2006 and March 2002, respectively, and Presiden
Slide 24: Experienced Management Team
25 Experienced Management Team Name Title Age Years in Financial Services Years with the Company Ownership Michael F. Petrie Chairman and CEO of Merchants and Merchants Bank 63 38 27 46.53% (1) Randall D. Rogers President and COO of Merchants, Vice Chairman of Merchants Bank 71 48 27 44.84% (2) Mich
Slide 25: Organizational Structure
Organizational Structure 26
Slide 26: YTD 2017 Segment Reporting
YTD 2017 Segment Reporting 27 Merchants has three reportable segments: Multi-family Mortgage Banking Mortgage Warehousing Banking Multi-family Mortgage Banking: Originates and services predominantly government sponsored mortgages for multi-family and healthcare facilities Mortgage Warehousing: Funds
Slide 27: YTD 2017 Segment Reporting
YTD 2017 Segment Reporting v eos eaforsnte 3 Bows ¢ Sis Nonaie warehouse inet oei at cat Residential ene a a iter eate sm sm sere praduton and eaenite ost uty Consmead manos 0 nw - twesnent secs andthe yun sa6 sss Texter cone masa iam wan Talnerestapese ee etre cone a ee) Proven frteanteses ‘os wy e
Slide 28: 2016 Segment Reporting
2016 Segment Reporting ar Toanshelatorsie $ . mas § ¢ sma Mortgage warehouse nes fret eet) a (Commer ee commercial estate a0 408 Agta production and realestate 203 203 Investment securities and other 6 23759 10376 “Total iterestncome BB B30 _ nse Totalinterest pense Cert ee) Netinterest income wma (
Slide 29: Historical Financial Performance
30 Historical Financial Performance 2012 and 2013 pro forma net income represents the pro forma effects of income taxes using 40% income tax rate, as Merchants was a Subchapter S corporation in years prior to 2014. 2014 pro forma net income represents the recognition of deferred tax liabilities reco
Slide 30: Infrastructure
Infrastructure Merchants Bancorp currently has 163 employees Including Merchants’ principal executive offices, the Company operates a total of five branches, consisting of three branches in the Indianapolis, Indiana metropolitan area and two branches in Lynn, Indiana Merchants plans to relocate its
Slide 31: Reconciliation of Non-GAAP Measures
32 Reconciliation of Non-GAAP Measures Represents the recognition of deferred tax liabilities recorded upon conversion from a Subchapter S corporation to a regular C corporation. Represents the pro forma effects of income taxes using a 40% income tax rate, as Merchants was a Subchapter S corporation
Slide 32: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ar Netincome, as previously reported S057 $ 389M § 38 $ RH S| BINT SRT S| 28.88 ‘Pro Forma Adjustments [Add back of tax effect of Corp toC-Corp conversion : - 1681" : : Less provision forincome taxes 3723? 155782 : : ro Forma Net income Bee 3366 OH 337 Rm B88 Less