Merchants Bancorp · NASDAQ:MBIN
Merchants Bancorp — Piper Sandler East Coast Financial Services Conference 2024
28 slides from Merchants Bancorp's conference presentation, Nov 14, 2024
Slide 1: Piper Sandler East Coast Financial Services Conference
Piper Sandler East Coast Financial Services Conference November 2024
Slide 2: Legal Disclaimer
Legal Disclaimer 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. These forward-looking stateme
Slide 3: Overview of Merchants Bancorp (MBIN)
Overview of Merchants Bancorp (MBIN) Overview of Merchants Business Summary (2) • Merchants Bancorp (MBIN) is a diversified bank holding company headquartered in Carmel, IN Assets ($B) $18.7 – $18.7B in assets as of 9/30/2024 Headquarters Carmel, IN – $12.9B in deposits as of 9/30/2024 • Operates 6
Slide 4: Strong Financial Performance Has Driven Significant Shareholder Value
Strong Financial Performance Has Driven Significant Shareholder Value Historical Performance Since 2019 Earnings per Share Tangible Book Value per Share (3) ($, per Share) ($, per share) 32.38 6.03 5.64 27.40 4.76 4.47 21.88 3.85 17.96 13.45 9.79 1.58 (1) 2019 2020 2021 2022 2023 LTM 2019 2020 2021
Slide 5: Merchants Bancorp: Key Franchise Highlights
Merchants Bancorp: Key Franchise Highlights 1 Superior Profitability & Earnings Growth Profile in Every Interest Rate Environment 2 Unique Originate-to-Sell Model with Differentiated Revenue Streams Reduces Earnings Volatility 3 Highly Efficient Cost Structure, Unique Business Model 4 Diversified, S
Slide 6: Superior Profitability & Earnings Growth Profile in Every Interest Rate Environment
1 Superior Profitability & Earnings Growth Profile in Every Interest Rate Environment Profitability Has Been Consistently Above Peers Net Interest Margin Net Income Over Time (%) 4.97% 5.33% ($M) 5.00% $220 $302 $227 3.43% $279 4.00% $181 $302 2.86% 3.00% $279 2.40% 2.69% 3.06% 3.04% $227 2.79% 2.97
Slide 7: Unique Originate-to-Sell Model With Differentiated Revenue Streams
2 Unique Originate-to-Sell Model With Differentiated Revenue Streams Business Mix Revenue Diversification Reduces Earnings Volatility Through the Full Rate Cycle Net Revenue by Business Line (1) ($M) $607 % of Total $523 $430 $427 $321 53% Banking $340 $287 $145 $195 $98 $139 $130 Mortgage $165 $73
Slide 8: Highly Efficient Cost Structure, Unique Business Model
3 Highly Efficient Cost Structure, Unique Business Model Industry Leading Efficiency Driven by a Branch Light Model Non-Interest Expense / Average Assets (1) Efficiency Ratio (1)(2) (%) (%) Since 2019 Merchants’ cost structure has been Since 2020 Merchants has been approximately half of peers relati
Slide 9: Diversified, Short Duration Loan Portfolio with Strong Organic Growth Over Time
4 Diversified, Short Duration Loan Portfolio with Strong Organic Growth Over Time Low-Risk Loan Composition Across Niche Products; Risk Transfer Alternatives Increasing Origination & Balance Sheet Capacity Loan Portfolio Growth Over Time (1) ($B) 2020 - 3Q24 Loan Risk Transfer Activity (2) Loan risk
Slide 10: Highly Disciplined Credit Culture Driving Superior Asset Quality
5 Highly Disciplined Credit Culture Driving Superior Asset Quality Strong Asset Quality Net Charge-Offs (Recoveries) / Avg. Loans (1)(2) (%) Since 2019 Merchants NCO’s / Avg. Loans have been consistently below peer group levels 0.11% 0.10% 0.09% 0.10% 0.08% (2) 0.07% 0.06% 0.03% 0.02% 0.01% 0.01% -%
Slide 11: Growing Deposit Base with Multiple Sources of Funding
6 Growing Deposit Base with Multiple Sources of Funding Deposit Growth Has Supported Loan Growth Over Time; Flexible Funding Options Available Deposit Growth Over Time Liquidity Coverage Relative to Uninsured Deposits ($B, End of Period Deposit Balances) ($B, 3Q24) % of Total Avg. Duration of ~2.1x
Slide 12: Efficient Capital Structure Coupled with Low-Risk Balance Sheet
7 Efficient Capital Structure Coupled with Low-Risk Balance Sheet Capital Optimization via Securitizations; Short Duration Balance Sheet with Optimal Asset-Liability Positioning Tier 1 Leverage Ratio (1) • Low-risk originate to sell business model (%) ‒ Primary focus on funding low-risk loans meetin
Slide 13: High-Quality Securities Portfolio with No Mark-to-Market Impact
8 High-Quality Securities Portfolio with No Mark-to-Market Impact Comparatively Low Composition of Securities with No Accumulated Other Comprehensive Loss Balance Total Securities Portfolio Composition Securities Concentration (1)(2)(3) (%, 3Q24) (%, 3Q24) Accumulated Other Comprehensive Income (AOC
Slide 14: Significant Growth Opportunities
9 Significant Growth Opportunities History of Delivering Industry Leading Performance and Shareholder Returns Historical Price Performance Key Future Growth Drivers Indexed to 100 (%) Sales growth in all segments through existing and new markets, new sales hires Future reductions in interest rat
Slide 15: Additional Materials
APPENDIX Additional Materials
Slide 16: History of Merchants Bank of Indiana
History of Merchants Bank of Indiana Merchants History Driven by a Strong Underlying Culture and Commitment to Firm Values • Merchants Capital Surpasses $1.8B in LIHTC • Rebranded to “ Merchants Bank of Equity Raised since inception Indiana” in April 2009 • Sold Branches of • Launched Mortgage Wareh
Slide 17: Recent Awards and Accolades
Recent Awards and Accolades #2 Top-Performing Bank Top-Performing U.S. Public Bank 2023 ranking of top banks #1 in 2022 and #10 in 2023 ranking of U.S public $10–$50 billion in assets Banks with more than $10 billion in assets #3 Warehouse Lender. Top 10 Correspondent #2 Multifamily Best Regional Ba
Slide 18: Overview of the Management Team
Overview of the Management Team Experienced Leadership with Strong Industry Experience MICHAEL PETRIE RANDALL ROGERS MICHAEL DUNLAP Chairman Vice Chairman President & CEO 45 years in industry 55 years in industry 32 years in industry 34 years with company 34 years with company 15 years with company
Slide 19: Overview of the Board of Directors
Overview of the Board of Directors Strong Governance Structure Name / Role Age Director Since Committee Chair Biography Mr. Petrie has served as Chairman and Chief Executive Officer of the Company since October 2006 and has also served as Chairman of Merchants Bank since March 2002. From March 2002
Slide 20: Financial Position: Key Highlights
Financial Position: Key Highlights Strong Financial Performance As of September 30, As of December 31, (2) 2024 2023 2022 2021 Change Since 2021 Key Items ($M) Total Assets 18,653 16,953 12,615 11,279 65% Loans HFI 10,346 10,200 7,471 5,783 79% Loans HFS 3,808 3,145 2,911 3,303 15% Total Deposits 12
Slide 21: Financial Position: Balance Sheet
Financial Position: Balance Sheet (1) As of September 30, As of December 31, ($M, unless otherwise stated) 2024 2023 2022 2021 Assets Cash and Cash Equivalents 602 584 226 1,033 Securities Purchased Under Agreements to Resell 3 3 3 6 Mortgage Loans In Process Of Securitization 431 111 154 569 Securi
Slide 22: Financial Position: Income Statement
Financial Position: Income Statement (1) Nine Months Ended September 30, Year Ended December 31, ($M, unless otherwise stated) 2024 2023 2022 2021 Income Statement Interest Income 981 1,078 481 312 Interest Expense 593 630 162 34 Net Interest Income 388 448 319 278 Provision for Credit Losses 22 40
Slide 23: Business Segments: Financial Overview
Business Segments: Financial Overview Merchants Operates a Balanced Mix of Businesses Nine Months Ended September 30, 2024 Multi-Family Mortgage Net Revenue by Business Line (2)(3)(4) ($M, unless otherwise stated) Mortgage Banking Warehousing Banking Other Total (%) Multi-Family Mortgage Consolidate
Slide 24: Business Segments: Merchants Capital Overview
Business Segments: Merchants Capital Overview #2 Multifamily Multi-family segment produced 25% of Merchants total net revenues (1) in 3Q24 YTD Fannie and Freddie Affordable Housing Lender Nationally ranked lender to developers of multi-family residential and healthcare properties, 2023 ranking s
Slide 25: Business Segments: Warehouse Overview
Business Segments: Warehouse Overview Warehouse segment produced 20% of Merchants total net revenues in 3Q24 YTD (1) #3 Warehouse Lender. Inside Mortgage Finance 2023 ranking Merchants Bank saw an opportunity to start its warehouse lending business in 2009 and has grown to fund volumes of $111B
Slide 26: Business Segments: Banking Overview (1 of 2)
Business Segments: Banking Overview (1 of 2) Generated 54% of Total Net Revenues in 3Q24 YTD (1) Top National SBA Lender. SBA 2022 ranking 1 Bridge Loans / Multi-family Securitizations Nationally ranked lender to developers of multi-family residential and healthcare properties, offering bridge loa
Slide 27: Business Segments: Banking Overview (2 of 2)
Business Segments: Banking Overview (2 of 2) Generated 54% of Total Net Revenues in 3Q24 YTD (1) Top National SBA Lender. SBA 2022 ranking 2 Merchants Mortgage Full-service retail and correspondent single-family mortgage origination and servicing platform since it began in 2013 Profitable every
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation (1) At September 30, At December 31, (Dollars in thousands) 2024 2023 2022 2021 2020 2019 Net income as reported per GAAP $ 224,720 $ 279,234 $ 219,721 $ 227,104 $ 180,533 $ 77,329 Less: preferred stock dividends (24,181) (34,670) (25,983) (20,873) (14,473) (9,216) Less: pref
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