Merchants Bancorp · NASDAQ:MBIN
Merchants Bancorp — Raymond James U.S. Bank Conference 2023
40 slides from Merchants Bancorp's conference presentation, September 2023
Slide 1: Raymond James U.S. Bank Conference September 2023
Raymond James U.S. Bank Conference September 2023
Slide 2: Forward-Looking Statements / Disclaimers
Forward-Looking Statements / Disclaimers ar 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
$ Va 1 LTM Revenues refers to net interest income plus noninterest income, less provision for loan losses for the last twelve months ended June 30, 2023 and LTM Net Income refers to the same period. 2- As of oF for twelve months ended June 30, 2023; Market Cap includes preferred shares. 3-2022 Ranki
Slide 4: Exceptional Performance
Exceptional Performance -Year Compound Annual Growth Rates (CAGRs) vs. 44 peers MBIN Peer Average* MBIN Ranking? Net Income 38% 10% #4 Highest Assets 30% 13% #1 Highest Goss Loans? 30% 11% #1 Highest Deposits 28% 13% #2 Highest Earnings Per Common Share 29% 5% #1 Highest PE Multiples df MBIN Peer Av
Slide 5: Tangible Book Value and Dividends Per Share
ar r T T T T 7 2019 2020 2021 2022 6/30/23 20199 2020 2021 2022 2023 Tangible Book Value Per Share Annual Dividends Per Share | ‘1- Peer group includes publicly held US banks and thrifts with assets of $10B to $208, and excludes results deemed as “not meaningful” or “not available” by S&P Global - s
Slide 6: Share Price Change Since Merchants Bancorp IPO
Share Price Change SinceMerchants Bancorp IPO on 10/26/2017 —MBIN (+174%) = ——NASDAQBankindex(-14%) |= ——KBW Nasdag Bank index (-8%) 292018 = 8/9/2018 2eRoig §=8/8R0 §=—2/6/2020 5/2020 2/3/2021 /3/2021 1/31/2022 ‘Source - S&P Global as of july 28, 2023. Price Change (%)
Slide 7: Unique Operating Model
s . ar~ Unique Operating Model > Consistent Profitablity and Growth That is Less Dependent on Interest Rate Cycles Than Peers >» Diverse Business Mix With Growth Opportunities > Maximizing Operating Efficiency with Minimal Branch Network and Higher Concentration of Variable Costs >» Enviable Funding
Slide 8: P/E Multiple vs EPS Growth Peers
, 40% 5 | 30% s § > L 20% £ = ° 2 oO + 10% » e ww e 0.0 5.0 P/E Multiple 109ice/LTM EPS? 15. 20.0 1 Peer group includes publicty held US banks and thrifts with assets of $108 to $208, and excludes results deemed as “not meaningful” or “not available” by S&P Global - source S&P Global. Peers with ear
Slide 9: Business Segments and Net Income
Primarily from gain on sale of loans resold to federal agencies such as GNMA, FHLMC, or FNMA, as well as plier hte servicing fees on the loans sold or retained. Mortgage Banking Mortgage Warehousing Primarily from interest income and fees earned during pxniieg the time that loans originated by mortg
Slide 10: Net Interest Margin and Net Income
ar 2 2019 2020 2021 2022 2Q23-YTD _——MBIN Net interest Margin —— Market Yield Curve Spread’ ——-1-Month LIBOR/SOFR ~——~ MBIN Net income 1- Market yield curve spread reflects the difference between the average 30-year mortgage (source: http://www. freddiemac.com) and the average 1-month LIBOR/SOFR rat
Slide 11: Financial Highlights
Financial Highlights Balance Sheet - High Growth June 30,2022 - YTD Dec. 31, 2022 - YTD (ollrs in millions) June 30, 2022 December 31,2022 june 30, 2023 Total Assets $1,086 $12,615 $15,875 Total Loans ' net $9792 $10,337 $12,912 Total Deposits $8,300 $10,071 $8,060 Total Equity $1,229 $1,460 $1,560
Slide 12: What is Unique About Merchants Bancorp?
What is Unique About Merchants Bancorp?
Slide 13: Maximizing Operating Efficiency
Maximizing Operating Effidency 1 MBIN @=™—@Peer Average ——Top 10 Peers’ Efficiency driven by low ee ae ee eee fixed costs and 45.8% 43.4% 43.9% 7 #1 lowest a be a ¢ . lowes 42.7% 7% concentration 37.4% peers! of variable wa 28.8% 30.6% 31.696 costs that adjust with revenue and 2019 2020 2021 202 YTD
Slide 14: Consistent Profitability and Growth Less Dependent on Interest Rate Cycles
Consistent Profitablity and Growth That is Less Dependent on Interest Rate Cycles Than Peers y a
Slide 15: Net Income and Return on Average TCE
2019 2020 1 2022 LTM-2Q237 2019 2020 2021 2022 YTD-2023 202 Net Income ($M) Return on Average TCE 34 = 1- Peer group includes publicly held US banks and thrifts with assets of $10B to $20B, and excludes results deemed as “not meaningful” or “not available” by S&P Global - source S&P Global. 2- LTM r
Slide 16: Total Assets and Return on Average Assets
ar #3 out of 44 223% peers 1.99% 1.74% 1.33% 1.21% 0.96% em BIN eeempPeer Average 2022 YTD-2923 2020 2022 = YTD-2Q23 Total Assets (SM) Return on Average Assets 1- Peer group includes publicly held US banks and thrifts with assets of $10B to $208, and excludes results deemed as “not meaningful” or “n
Slide 17: Total Gross Loans
ar Loans Held for Investment ~ Loans Held for Sale | Total Gross Loans (5M) 1- Peer group includes publicly held US banks and thrifts with assets of $10B to $208, and excludes results deemed as “not meaningful" or “not available” by S&P Global - source S&P Global.
Slide 18: Diverse Business Mix With Opportunity for Additional Growth
ar. Diverse Business Mix With Opportunity for Additional Growth
Slide 19: National Reach - Employees in Many States
National Reach - Employees in Many States s#« ~*~ gq Top 5 States ‘ MCC Servicing & Loan Top 5 States : > Balances Warehouse Loan “ Fundings ’ ae NY 13% CA 11% TX 9% TX 10% IL 8% FL 9% OH 8% NC 5% N) 4% (1) Estimated as of Juby 31, 2023. i 19
Slide 20: Consolidated Net Revenue
$4653 $247.7 Noninterest Income Net Interest $273.0 Se Income T T hs 9 $201 2019 2020 2021 2022 LTM-2923 Multi-family Warehouse Mortgage _—‘- Financing Net Interest Income Noninterest Income Banking Consolidated Net Revenue? ($M) LTM-2Q23° Net Revenue? (SM) 1 The sum of the individual segments will
Slide 21: Capital raised being utilized across all lines of business
ar. Raised nearly $500 million of additional capital, net of expenses, since 2019 that is being utilized to generate revenues across all lines of business Low Income Housing Tax Credit (LIHTC) and Debt Financing platform enhanced in 2021 and 2022 to generate ongoing asset management and servicing fe
Slide 22: Maximizing Efficiency with Minimal Branch Network and Variable Costs
with Minimal Branch Network and Higher Concentration of Variable Costs
Slide 23: Maximizing Operating Efficiency
Maximizing Operating Effidency 1 MBIN @=™—@Peer Average ——Top 10 Peers’ Efficiency driven by low ee ae ee eee fixed costs and 45.8% 43.4% 43.9% 7 #1 lowest a gue ¢ . lowes 42.7% 7% concentration 37.4% peers! of variable wa 28.8% 30.6% 31.696 costs that adjust with revenue and 2019 2020 2021 2022 YTD
Slide 24: Enviable Funding Options and Liquidity
ar Enviable Funding Options and Liquidity to Support Fast- Turning, Short Duration Lending Model
Slide 25: Flexible Options to Obtain Lowest Cost Funding
V VVVV V WV ar Flexible Options to Obtain Lowest Cost Make use of lines at the Federal Home Loan Bank, Federal Reserve, and AFX to lower interest expense Grow multi-family custodial deposits from Merchants Capital Corp. originations and subservicing relationships Expand custodial escrow relationship
Slide 26: Deposit Mix and Cost of Deposits
Nonint For the Six Months Ended Avg. Balance Weighted Li. ... Demand June 30, 2023 ($inmillions) Avg. Rate 2.8% Noninterest-Bearing Demand $327 0.00% Interest-Bearing Demand $4,181 4.29% Money Market Savings $2,799 4.26% Certificates of Deposit $4,030 4.68% Savings $237 0.48% Total Deposits $1,573 4
Slide 27: Multiple Funding Sources and Options
Multiple Funding Sources and Options > Self-funding mechanisms in place. $12.9B of loans and securities were funded by $12.4B of deposits. Warehouse segment uses lines of credit and short term brokered deposits to match duration; other businesses are funded by core deposits. > FHLB of Indianapolis a
Slide 28: Conservative, Low Risk Underwriting and Minimal Loan Losses
ar Conservative, Low Risk Underwriting and Track Record of Minimal Loan Losses
Slide 29: Loans predominantly agency eligible with variable rates or short maturities
Y¥ Loans are predominantly agency eligible with variable (Dollars in thousands) rates or short maturities Loan Type Approximately 94% of Merchants Bank's loans reprice in Mortgage Loans in Process of Securitization 30 days or less Total Loans Held for Sale ‘ . Loans Held for Investment pele eis ka t
Slide 30: Minimal Charge-Offs, Minimal Nonperforming Loans, Well Reserved
ar Minimal Charge-Offs, Minimal Nonperforming Loans, Well Reserved om MBIN ===Peer Average’ mn MEIN <mnPeor Avetage’ =MBIN’ «==Peer Average’ 548% 0.70% 0.20% 0.16% 0-17% 0.15% 10% = 0.10% 0.10% 06 0.05% 0.02% - 0,00%0-01%0.01% 0.00% 2019 2020 2021 2022 =YTD-2Q23 2019 2020 2021 2022 YTD-2Q23 2019 202
Slide 31: Compelling Shareholder Value Proposition
Compelling Shareholder Value Proposition
Slide 32: Maximizing Operating Efficiency
Maximizing Operating Effidency 1 MBIN @=™—@Peer Average ——Top 10 Peers’ Efficiency driven by low ee ae ee eee fixed costs and 45.8% 43.4% 43.9% 7 #1 lowest a gue ¢ . lowes 42.7% 7% concentration 37.4% peers! of variable wa 28.8% 30.6% 31.696 costs that adjust with revenue and 2019 2020 2021 2022 YTD
Slide 33: Nonperforming Assets/Total Assets
Nonperforming? Assets/Total Assets 0.53% 0.47% 0.43% 37% 2019 2020 2021 2022 YTD- 2Q23 s=eeMBIN e==Peer Average 1- Peer group includes publicly held US banks and thrifts with assets of $10B to $208, and excludes results deemed as “nat meaningful” or “not available” by SGP Global - source S&P Global.
Slide 34: Unique Operating Model
s . ar~ Unique Operating Model > Consistent Profitablity and Growth That is Less Dependent on Interest Rate Cycles Than Peers >» Diverse Business Mix With Growth Opportunities > Maximizing Operating Efficiency with Minimal Branch Network and Variable Costs >» Enviable Funding Options and Liquidity t
Slide 35: Share Price Change Since Merchants Bancorp IPO
Share Price Change SinceMerchants Bancorp IPO on 10/26/2017 —MBIN (+174%) = ——NASDAQBankindex(-14%) |= ——KBW Nasdag Bank index (-8%) 292018 = 8/9/2018 2eRoig §=8/8R0 §=—2/6/2020 5/2020 2/3/2021 /3/2021 1/31/2022 ‘Source - S&P Global as of july 28, 2023. Price Change (%)
Slide 36: P/E Multiple vs EPS Growth Peers
, 40% 5 | 30% s § > L 20% £ = ° 2 oO + 10% » e ww e 0.0 5.0 P/E Multiple 109ice/LTM EPS? 15. 20.0 1 Peer group includes publicty held US banks and thrifts with assets of $108 to $208, and excludes results deemed as “not meaningful” or “not available” by S&P Global - source S&P Global. Peers with ear
Slide 37: Tangible Book Value and Dividends Per Share
ar r T T T T 7 2019 2020 2021 2022 6/30/23 20199 2020 2021 2022 2023 Tangible Book Value Per Share Annual Dividends Per Share | ‘1- Peer group includes publicly held US banks and thrifts with assets of $10B to $208, and excludes results deemed as “not meaningful” or “not available” by S&P Global - s
Slide 38: Appendix
Appendix
Slide 39: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures ar (Dollars in thousands, except per. umount) At or for the Six Ator for the Year Ended December 31, Months Ended June 30, 2020 2021 2022 2023 No: P Reconciliation: Net Income Net income as reported per GAAP $ 71329 § 18058 $ DIN04 $ 2972 $ 104,07 $ 120257 Less: p
Slide 40: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures aw (Dollars in thousands, except per share amounts) Ator for the Six At or for the Year Ended December 31, Months Ended June 30, 2020 2021 y 2022 2023 Non-GAAP Reconciliation: Return on Average Tangible Common Equity ‘Average shareholders’ equity per GAAP $ 37946
Merchants Bancorp — Raymond James U.S. Bank Conference 2023 on 6ix