Merchants Bancorp · NASDAQ:MBIN
Merchants Bancorp — Truist Financial Services Conference 2021
36 slides from Merchants Bancorp's conference presentation, May 2021
Slide 1: Truist Financial Services Conference May 2021
Truist Financial Services Conference May 2021
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
nique lender with a balanced and diverse revenue stream that lessens volatility through various cycles = Merchants Bancorp Overview #« Multi-family Lendin Warehouse Lending __ Banking > Lending to developers of multi- > Provides warehouse and » Traditional community banking, family and healthcare pr
Slide 4: Financial Highlights - 1Q21
Financial Highl Total Assets Total Loans’, net Total Deposits Total Equity Tangible Equity / Tangible Assets? Nonperforming Loans / Loans Held for investment Allowance / Loans Held for investment Net Charge-offs (Recoveries) / Avg. Total Loans ' Performance Metrics Net Income Per Common Share ROAA R
Slide 5: Exceptional Performance
Exceptional Performance 5-Year Compound Annual Growth Rates (CAGRs) vs. 93 peers MBIN Peer Average* MBIN Ranking®> Net Income 53% 21% #8 Highest Assets 38% 15% #5 Highest Goss Loans? 48% 13% #1 Highest Deposits 36% 17% #6 Highest Earnings Per Common Share 54% 17% #1 Highest P/E Multiples fi MBIN Pee
Slide 6: Share Price Change Since Merchants Bancorp IPO
ar Share Price Change Since Merchants Bancorp IPO BIN (+149.9%) ——NAS DAQ Bank Index (+17.5%) = ——KBW Nasdaq Bank Index (+24.0%) -B0 e $s PI EEF EP EEE ES. FE ELE SE FEES ‘Source - S&P Global as of April 28, 2021.
Slide 7: EPS Growth and P/E Multiple
8 6 &§ 6 8 22 3 2 8 EPS Growth 5 Year CAGR? 3 & 0.0 5.0 10.0 15.0 20.0 P/E Multiple — Price/LTM EPS? 1- Peer group includes publicty held US banks and thrifts with assets of $5B to $1SB, and excludes results deemed as “not meaningful" or “nat available” by S&P Global - source S&P Global. There were
Slide 8: Business Segments and 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. @ Banking Mortgage Warehousing acaveaaay Primarily from interest income and fees earned during Mortgage t
Slide 9: Net Income and Net Interest Margin
: Net Income (in $millions) 2016 2017 2018 2019 2020. =: YTD 20217 —Market Yield Curve Spread' ©§ ——MBINNet Interest Margin — MBIN Net Income 1 Market yield curve spread reflects the difference between the average 30-year mortgage (source: http://www. freddiemac.com/pmms/pmms30 html) and the average
Slide 10: Unique Operating Model
. . ar Unique Operating Model > Consistent Profitablity and Growth That is Less Dependent on Interest Rate Cycles Than Peers > Conservative, Low Risk Underwriting and Track Record of Minimal Loan Losses > Maximizing Efficiency with Minimal Branch Network and National Platform > Enviable Funding Opti
Slide 11: What is Unique About Merchants Bancorp?
What is Unique About Merchants Bancorp?
Slide 12: Consistent Profitability and Growth Less Dependent on Interest Rate Cycles
Consistent Profitablity and Growth That is Less Dependent on Interest Rate Cycles Than Peers ar
Slide 13: Net Income and Return on Average TCE vs Peers
ar een [| BIN’ e=mPeer Average 10.93% 10.28% 13.52% 47.75% T T T T 2020 1@1YTD. Net Income ($M) Return on Average TCE 34 a ‘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 14: Total Assets and Return on Average Assets
ar 0.96% memeMBIN emmmPeer Average 207 2018 =62019 «2020s « 1@21 207 2018 2019 2020 1921 Total Assets (SM) Return on Average Assets a 1- Peer group includes publicly held US banks and thrifts with assets of $5B to $15B, and excludes results deemed as “nat meaningful” or “not available” by SGP Global
Slide 15: Total Gross Loans
ar ™ Loans Held for Investment — Loans Held for Sale Total Gross Loans ($M) 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 S&P Global.
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 March 31, 2021 Loan Type Balance % Total Total Loans Held for Sale 2,749,662 32.4% Loans Held for Investment Multi-family Real Estate and Healthcare Financing $3,206,633 37.8% Mortgage Warehouse Lines of Credit $1,334,548 15.7% Residential Real Estate (primarily 1st lien
Slide 18: Credit Quality Metrics vs Peers
MBIN ===Peer Average MBIN —==Peer Average MBIN’ ==Peer Average 0.74% 0.77% oe 0.63% 0.61% og 0.02% 9,919 0.02% , 4 — seme, 0:00% 0.00% -_ 207 2018 = 2019S 2020: 1@21YTD 2077 2018 20199 2020 1Q21YTD 207 2018 2019 = 2020 1Q1YTD | z= “Reserves/Nonperforming?* | Assets | Net Charge-offs/Average Loans |
Slide 19: Maximizing Efficiency with Minimal Branch Network
Maximizing Efficiency with Minimal Branch Network and National Platform
Slide 20: Low Branch Model / Employees
Low Branch Model / 421 Employees om MBIN «Peer'Average 59.0% 58.3% 584% seem se 195 36.5% 37.4% sates 30.3% il = - 207 2018 2019 2020 1Q21YTD 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 “no
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 Funding
ar Flexible Options to Obtain Lowest Cost Make use of lines at the Federal Home Loan Bank, Federal Reserve, and AFX to lower interest expense Grow multi-family custodial deposits from Merchants Capital Corp. originations and subservicing relationships Expand custodial escrow relationships from wareh
Slide 23: Deposit Balances and Cost of Deposits
For the Three Months Ended March 31, 2021 Noninterest-Bearing Demand Interest-Bearing Demand Money Market Savings Savings Certificates of Deposit Total Deposits Cost of Deposits': 0.30% 1- Deposit balances and related costs are based on average deposits for the three months ended March 31, 2021 Avg.
Slide 24: Multiple Funding Sources and Options
Multiple Funding Sources and Options > Self-funding mechanisms in place. In the first quarter of 2021, $4.2B average warehouse deposits funded $4.4B average loans and mortgages in process of securitization 1- Duration is typically overnight to less than 3 months. > Supplement funding with short dura
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
*% States with Offices/Branches Warehouse Customers Merchants Capital Customers ; Top 5 States — MCC Servicing & Loan Top 5 States ox Balances Warehouse Loan Q > at 3/31/21 Fundings - YTD at 3/31/21 a aa NY B% CA 27% IL 12% TX 8% TX 7% FL 5% OH 6% NJ 5% IL 4%
Slide 27: Growth Drivers Across Lines of Business
>» Additional capital raised during 2019 and 2021 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 and 2020 > Online/mobile
Slide 28: Compelling Shareholder Value Proposition
Compelling Shareholder Value Proposition
Slide 29: Nonperforming Assets / Total Assets
Nonperforming? Assets/Total Assets 0.56% 0.55% 0.52% 0.49% 0.48% MBIN - #3 lowest out of 93 peers! 0.09% 0.06% 0.08% 0.07% 0.05% 207 2018 2019 2020 1Q21 s==eMBIN e==Peer Average 1- Peer group includes publicly held US banks and thrifts with assets of $58 to $158, and excludes results deemed as “not
Slide 30: Share Price Change Since Merchants Bancorp IPO
ar Share Price Change Since Merchants Bancorp IPO BIN (+149.9%) ——NAS DAQ Bank Index (+17.5%) = ——KBW Nasdaq Bank Index (+24.0%) -B0 e $s PI EEF EP EEE ES. FE ELE SE FEES ‘Source - S&P Global as of April 28, 2021.
Slide 31: EPS Growth and P/E Multiple
8 6 &§ 6 8 22 3 2 8 EPS Growth 5 Year CAGR? 3 & 0.0 5.0 10.0 15.0 20.0 P/E Multiple — Price/LTM EPS? 1- Peer group includes publicty held US banks and thrifts with assets of $5B to $1SB, and excludes results deemed as “not meaningful" or “nat available” by S&P Global - source S&P Global. There were
Slide 32: Tangible Book Value and Dividends Per Share
ar r T T T T 1 r T T T T 1 2020 1921 2020 Tangible Book Value Per Share Annual Dividends Per Share a 1- Peer group includes publicly held US banks and thrifts with assets of $5B to S1SB, and excludes results deemed as “not meaningful” or “not available” by S&P Global - source S&P Global.
Slide 33: Unique Operating Model
. . ar Unique Operating Model > Consistent Profitablity and Growth That is Less Dependent on Interest Rate Cycles Than Peers > Conservative, Low Risk Underwriting and Track Record of Minimal Loan Losses > Maximizing Efficiency with Minimal Branch Network and National Platform > Enviable Funding Opti
Slide 34: Appendix
Appendix
Slide 35: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ar (Dollars in thousands, except per share amounts} At or for the Three Ator for the Year Ended December 31, Months Ended March 31, 2021 2018 2019 2020 2021 AAP Reconaliation: Net Income Net income as reported per GAAP 54,684 §$ 62874 § 2 $ 24,583 § 61,983 Less: p
Slide 36: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ar housands, except per si Ator for the Three Ator for the Year Ended December 31, Months Ended March 31, 2021 2018 2019 2020 2021 Non-GAAP Reconciliation: Return on Average Tangible Common Equity Average shareholders’ equity per GAAP $ 248515 $ 396350 $ 53,946 S$
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