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Section 1: 8-K (FORM 8-K)

 

 

  

United States 

SECURITIES AND EXCHANGE COMMISSION  

WASHINGTON, D.C. 20549  

 

 

FORM 8-K 

 

 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(d) OF THE  

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): January 30, 2020

 

 

Merchants Bancorp

(Exact Name of Registrant as Specified in its Charter)

 

 

Indiana   001-38258   20-5747400
(State or Other Jurisdiction
of Incorporation)
 
  (Commission
File Number)  
  (IRS Employer
Identification No.)
 

 

410 Monon Boulevard
Carmel, Indiana 46032

(Address of Principal Executive Offices) (Zip Code) 

 

(317) 569-7420

(Registrant’s Telephone Number, Including Area Code)

 

Not Applicable
(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

 ¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

 ¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

 ¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

 ¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

       
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, without par value
Series A Preferred Stock, without par value  
MBIN
MBINP
NASDAQ
NASDAQ
Depositary Shares, each representing a 1/40th interest in a share of Series B Preferred Stock, without par value MBINO NASDAQ

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth companyx

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ 

 

 

 

 

 

 

Item 2.02. Results of Operations and Financial Condition.

 

On January 30, 2020, Merchants Bancorp issued a press release reporting its financial results for the 2019 fourth quarter and fiscal year. The press release is furnished as Exhibit 99.1 hereto and is incorporated herein by reference.

 

Item 9.01. Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit
No.

 

 

Description

 

 99.1   Press Release dated January 30, 2020 issued by Merchants Bancorp

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

  MERCHANTS BANCORP
     
     
Date: January 30, 2020 By:   /s/ John F. Macke
    Name: John F. Macke
    Title: Chief Financial Officer

 

 

 

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

 

Exhibit 99.1

 

 

PRESS RELEASE

 

Merchants Bancorp Reports Record Full Year and Fourth Quarter 2019 Results

 

For Release January 30, 2020

 

·Full year 2019 record net income of $77.3 million increased 23% compared to 2018

 

·Full year 2019 net income per common share of $2.37 increased 14% compared to 2018

 

·Fourth quarter 2019 net income of $30.1 million increased 95% compared to the fourth quarter of 2018 and increased 48% compared to the third quarter of 2019

 

·Fourth quarter net income per common share of $0.92 increased 80% compared to the fourth quarter of 2018 and increased 53% compared to the third quarter of 2019

 

·Total assets of $6.4 billion increased $2.5 billion, or 64%, compared to December 31, 2018, driven by record-setting loan growth

 

·Return on average assets reached 1.81% in the fourth quarter of 2019 compared to 1.61% in the fourth quarter of 2018 and 1.35% compared to the third quarter of 2019

 

·Return on average tangible common shareholders’ equity reached 25.65% in the fourth quarter of 2019 compared to 16.24% in the fourth quarter of 2018 and 18.17% in the third quarter of 2019

 

CARMEL, Indiana – (PR Newswire) - Merchants Bancorp (the “Company” or “Merchants”) (Nasdaq: MBIN), parent company of Merchants Bank of Indiana, today reported fourth quarter 2019 net income of $30.1 million, or $0.92 per common share. This compared to $15.4 million, or $0.51 per common share, in the fourth quarter of 2018 and $20.3 million, or $0.60 per common share, in the third quarter of 2019.

 

The 95% increase in net income for the fourth quarter 2019 compared to the fourth quarter of 2018 was primarily driven by a 56% increase in net interest income that reflected significant growth in mortgage warehouse loans, and a 31% increase in gain on sale of loans from significantly higher growth in multi-family loans.

 

The 48% increase in net income for the fourth quarter 2019 compared to the third quarter of 2019 was primarily driven by an 85% increase in gain on sale of loans from the multi-family business as well as a 15% increase in net interest income that benefited from 10% higher average loan balances and a 9 basis point increase in net interest margin.

 

 

 

“On many fronts, 2019 was an exceptional year at Merchants for record-setting results, as we grew total assets by 64%, raised over $171 million in net new capital, grew net income by 23%, and grew earnings per common share by 14%, compared to 2018. The robust increases were fueled by significant growth in mortgage warehouse and multi-family loans, while we also maintained our reputation for high credit quality metrics and conservatively managed our expenses. We continue to demonstrate that our business model, with its complementary portfolio of businesses, allows us to operate profitably across various interest rate environments and sets us apart from many of our peers,” said Michael F. Petrie, Chairman and CEO of Merchants. “As we move into 2020 with a top-notch team in place, I am optimistic that our model will continue to meet customer and community needs, which will lead us to achieve our growth and profit goals that will provide enhanced shareholder value,” added Petrie.

 

Total Assets

 

Total assets of $6.4 billion at December 31, 2019 increased $2.5 billion, or 64%, compared to $3.9 billion at December 31, 2018 and increased $34.7 million, or 1%, compared to September 30, 2019.

 

The increase compared to December 31, 2018 was primarily due to growth in loans held for sale and net loans receivable, which increased a combined total of $2.2 billion. The increase reflected the significant loan growth generated from mortgage warehouse business, primarily resulting from lower interest rates that increased the origination volume and refinancing in the single-family mortgage market, as well as higher loan volume generated in multi-family business.

 

Return on average assets was 1.81% for the fourth quarter of 2019 compared to 1.61% for the fourth quarter of 2018 and 1.35% for the third quarter of 2019.

 

Asset Quality

 

The allowance for loan losses of $15.8 million at December 31, 2019 increased $3.1 million compared to December 31, 2018 and increased $2.1 million compared to September 30, 2019, primarily reflecting increases associated with loan growth. Non-performing loans were $4.7 million, or 0.15% of total loans at December 31, 2019, compared to $2.4 million, or 0.12% of total loans at December 31, 2018 and compared to $6.1 million, or 0.22% of total loans at September 30, 2019.

 

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Total Deposits

 

Total deposits of $5.5 billion at December 31, 2019 increased $2.2 billion, or 70%, compared to December 31, 2018 and decreased $21.6 million, compared to September 30, 2019.

 

The 70% increase in deposits compared to December 31, 2018 was primarily due to higher brokered certificates of deposits to support the significant growth in loans and to match their expected duration. Total brokered deposits increased $1.2 billion, to $2.2 billion at December 31, 2019 from $988.2 million at December 31, 2018. Brokered deposits represented 39% of total deposits at December 31, 2019 compared to 31% of total deposits at December 31, 2018.

 

The modest decrease in deposits compared to September 30, 2019 was primarily due to the reduced need for brokered certificates of deposits, matching the decrease in loans held for sale. Total brokered deposits of $2.2 billion at December 31, 2019 decreased $108.0 million from $2.3 billion at September 30, 2019. Brokered deposits represented 39% of total deposits at December 31, 2019 compared to 41% of total deposits at September 30, 2019.

 

The Company increased its borrowing capacity, with unused lines of credit increasing from $634.6 million at September 30, 2019 to $1.5 billion at December 31, 2019. This increase in liquidity further enhances the ability to effectively manage interest expense and assets levels in the future.

 

Net Interest Income

 

Net interest income of $37.6 million in the fourth quarter of 2019 increased $13.5 million, or 56%, compared to the fourth quarter of 2018 and increased $5.0 million, or 15%, compared to the third quarter of 2019.

 

The 56% increase in net interest income compared to the fourth quarter of 2018 reflected significantly higher loan growth that offset lower margins. The interest rate spread of 2.07% for the fourth quarter of 2019 decreased 21 basis points compared to 2.28% in the fourth quarter of 2018. The net interest margin of 2.31% for the fourth quarter of 2019 declined 29 basis points compared to 2.60% for the fourth quarter of 2018. The decline in net interest margin compared to the fourth quarter of 2018 reflected the flattening and inversion of the yield curve, and reflects the shift in business mix to a higher concentration of warehouse loans that typically are funded for a shorter duration and earn interest based on longer term rates. Profitability in this business, which also includes fees classified as noninterest income, made the most significant contribution to net income for the fourth quarter of 2019.

 

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The 15% increase in net interest income compared to the third quarter of 2019 reflected an interest rate spread of 2.07% that increased 9 basis points compared to 1.98% in the third quarter of 2019.

 

The net interest margin of 2.31% for the fourth quarter of 2019 also increased 9 basis points compared to 2.22% for the third quarter of 2019.

 

Interest Income

 

Interest income of $63.8 million in the fourth quarter of 2019 increased $24.0 million, or 60%, compared to the fourth quarter of 2018 and increased $4.0 million, or 7%, compared to the third quarter of 2019. The increases for both periods were primarily due to loan growth.

 

The 60% increase in interest income compared to the fourth quarter of 2018 reflected a $2.5 billion, or 89%, increase in the average balance of loans, including loans held for sale, which reached $5.2 billion for the fourth quarter of 2019. The average yield on loans and loans held for sale of 4.35% for the fourth quarter of 2019 decreased 58 basis points compared to 4.93% for the fourth quarter of 2018. The decline in average yields reflected the higher concentration of warehouse loans for the fourth quarter of 2019.

 

The 7% increase in interest income compared to the third quarter of 2019 reflected a $463.8 million, or 10%, increase in the average balance of loans, including loans held for sale, which reached $5.2 billion for the fourth quarter of 2019. The average yield on loans and loans held for sale of 4.35% for the fourth quarter of 2019 decreased 9 basis points compared to 4.44% for the third quarter of 2019.

 

Interest Expense

 

Total interest expense of $26.2 million for the fourth quarter of 2019 increased $10.5 million, or 67%, compared to the fourth quarter of 2018 and decreased $1.0 million, or 4%, compared to the third quarter of 2019. Interest expense on deposits of $25.1 million for the fourth quarter of 2019 increased $11.3 million, or 82%, compared to the fourth quarter of 2018 and decreased $1.0 million, or 4%, compared to the third quarter of 2019.

 

The 82% increase in interest expense on deposits compared to the fourth quarter of 2018 was primarily due to the higher volume of custodial interest-bearing checking and brokered certificates of deposits. The average balance of interest-bearing deposits of $5.6 billion for the fourth quarter of 2019 increased $2.6 billion, or 85%, compared to the fourth quarter of 2018. The average cost of interest-bearing deposits was 1.78% for the fourth quarter of 2019, which was a 3 basis point decrease compared to 1.81% for the fourth quarter of 2018.

 

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The 4% decrease in interest expense on deposits compared to the third quarter of 2019 was primarily due to lower costs of deposits. The average cost of interest-bearing deposits was 1.78% for the fourth quarter of 2019, which was a 24 basis point decrease compared to 2.02% in the third quarter of 2019. The average balance of interest-bearing deposits of $5.6 billion for the fourth quarter of 2019 increased $466.9 million, or 9%, compared to the third quarter of 2019.

 

Noninterest Income

 

Noninterest income of $22.7 million for the fourth quarter of 2019 increased $8.0 million, or 54%, compared to the fourth quarter of 2018 and increased $11.9 million, or 109%, compared to the third quarter of 2019.

 

The 54% increase in noninterest income compared to the fourth quarter of 2018 was primarily due to a $3.6 million increase in gain on sale of loans and a $2.0 million increase in mortgage warehouse fees, reflecting the significant loan growth for these lines of business. Included in noninterest income for the fourth quarter of 2019 was a $1.1 million positive fair market value adjustment in mortgage servicing rights, which compared to a $436,000 positive fair market value adjustment for the fourth quarter of 2018.

 

The 109% increase in noninterest income compared to the third quarter of 2019 was primarily due to a $7.0 million, or 85%, increase in gain on sale of loans, and a $3.6 million increase in loan servicing fees. Included in loan servicing fees for the fourth quarter of 2019 was a $1.1 million positive fair market value adjustment in mortgage servicing rights, which compared to a $1.5 million negative fair market value adjustment for the fourth quarter of 2018.

 

At December 31, 2019, the mortgage servicing rights asset was valued at $74.4 million, a decrease of 4% compared to December 31, 2018 and an increase of 3% compared to September 30, 2019. The value of mortgage servicing rights generally declines in falling interest rate environments and increases in rising interest rate environments.

 

Noninterest Expense

 

Noninterest expense of $18.8 million for the fourth quarter of 2019 increased $2.7 million, or 16%, compared to the fourth quarter of 2018 and increased $3.3 million, or 21%, compared to the third quarter of 2019.

 

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The 16% increase in noninterest expense compared to the fourth quarter of 2018 was due primarily to a $1.1 million, or 410%, increase in deposit insurance related to the growth in deposits and assets and a $1.1 million increase in occupancy and equipment costs associated with the Company’s move to its new corporate headquarters. The efficiency ratio of 31.2% for the fourth quarter of 2019 compared to 41.6% for the fourth quarter of 2018.

 

The 21% increase in noninterest expense compared to the third quarter of 2019 was primarily due to a $1.3 million, or 14%, increase in salaries and employee benefits and a $799,000, or 80%, increase in occupancy and equipment costs associated with the company’s move to its new corporate headquarters. The increase in salaries and employee benefits was primarily due to the addition of new employees to support business growth, along with higher commission expense associated with higher loan growth during the fourth quarter of 2019. The efficiency ratio of 31.2% for the fourth quarter of 2019 compared to 35.7% for the third quarter of 2019.

 

Segments

 

For the fourth quarter of 2019, net income for Mortgage Warehousing increased 177% compared to the fourth quarter of 2018 and increased 25% compared to the third quarter of 2019, primarily reflecting significant growth in net interest income during both periods.

 

For the fourth quarter of 2019, net income for Multi-family Mortgage Banking increased 117% compared with the fourth quarter of 2018 and increased 273% compared to the third quarter of 2019. The increases reflected higher gains on sale of loans for both periods. The comparative performance was impacted by fair market value adjustments to mortgage servicing rights. The fourth quarter of 2019 included a positive fair market value adjustment of $1.1 million, which compared to a positive fair value adjustment of $436,000 for the fourth quarter of 2018 and a negative fair market value adjustment of $1.5 million for the third quarter of 2019.

 

For the fourth quarter of 2019, net income for Banking increased 5% compared to the fourth quarter of 2018 and decreased 8% compared to the third quarter of 2019, reflecting higher deposit insurance expense.

 

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About Merchants Bancorp

 

Merchants Bancorp is a diversified bank holding company headquartered in Carmel, Indiana operating multiple lines of business, including Federal Housing Administration ("FHA") multi-family housing and healthcare facility financing and servicing; mortgage warehouse financing; retail and correspondent residential mortgage banking; agricultural lending; and traditional community banking. Merchants Bancorp, with $6.4 billion in assets and $5.5 billion in deposits as of December 31, 2019, conducts its business through its direct and indirect subsidiaries, Merchants Bank of Indiana, Merchants Capital Corp., Farmers-Merchants Bank of Illinois, Merchants Capital Servicing, LLC, and Merchants Mortgage, a division of Merchants Bank of Indiana. For more information and financial data, please visit Merchants’ Investor Relations page at investors.merchantsbankofindiana.com.

 

Forward-Looking Statements

 

This press release contains forward-looking statements which reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as "may," "might," "should," "could," "predict," "potential," "believe," "expect," "continue," "will," "anticipate," "seek," "estimate," "intend," "plan," "projection," "goal," "target," "outlook," "aim," "would," "annualized" and "outlook," or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. A number of important factors could cause our actual results to differ materially from those indicated in these forward-looking statements, including those factors identified in "Risk Factors" or "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K and other periodic filings with the Securities and Exchange Commission. Any forward-looking statements presented herein are made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

 

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MEDIA CONTACT: REBECCA MARSH

Merchants Bancorp

Phone: (317) 805-4356

Email: [email protected]

 

INVESTOR CONTACT: JOHN MACKE

Merchants Bancorp

Phone: (317) 536-7421

Email: [email protected]

 

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Consolidated Balance Sheets
(Unaudited)
(In thousands, except share data)
                     
   December 31,   September 30,   June 30,   March 31,   December 31, 
   2019   2019   2019   2019   2018 
Assets                         
Cash and due from banks  $13,909   $15,614   $15,176   $19,554   $25,855 
Interest-earning demand accounts   492,800    349,362    445,713    293,897    310,669 
Cash and cash equivalents   506,709    364,976    460,889    313,451    336,524 
Securities purchased under agreements to resell   6,723    6,760    6,798    6,838    6,875 
Trading securities   269,891    227,914    101,514    129,914    163,419 
Available for sale securities   290,243    308,673    261,485    296,669    331,071 
Federal Home Loan Bank (FHLB) stock   20,369    18,808    18,820    18,880    7,974 
Loans held for sale (includes $19,592, $23,357, $9,592, $6,307, and $11,886 respectively, at fair value)   2,093,789    2,498,538    1,918,118    882,071    832,455 
Loans receivable, net of allowance for loan losses of $15,842, $13,705, $12,604, $13,356, and $12,704, respectively   3,012,468    2,742,088    2,347,906    2,168,256    2,045,423 
Premises and equipment, net   29,274    29,211    26,580    21,078    15,136 
Mortgage servicing rights   74,387    71,989    74,550    76,249    77,844 
Interest receivable   18,359    18,780    17,415    14,365    13,827 
Goodwill   15,845    15,574    15,574    17,144    17,477 
Intangible assets, net   3,799    4,182    4,567    3,381    3,542 
Other assets and receivables   30,072    29,693    33,174    28,429    32,596 
Total assets  $6,371,928   $6,337,186   $5,287,390   $3,976,725   $3,884,163 
Liabilities and Shareholders' Equity                         
  Liabilities                         
Deposits                         
Noninterest-bearing  $272,037   $198,843   $192,521   $128,029   $182,879 
Interest-bearing   5,206,038    5,300,806    4,463,469    2,992,998    3,048,207 
Total deposits   5,478,075    5,499,649    4,655,990    3,121,027    3,231,086 
Borrowings   181,439    159,673    62,225    338,031    195,453 
Deferred and current tax liabilities, net   16,917    15,347    16,716    18,274    15,444 
Other liabilities   41,769    33,078    37,446    21,562    20,943 
Total liabilities   5,718,200    5,707,747    4,772,377    3,498,894    3,462,926 
Commitments and  Contingencies                         
Shareholders' Equity                         
Common stock, without par value                         
Authorized - 50,000,000 shares                         
Issued and outstanding - 28,706,438 shares, 28,706,438 shares, 28,706,438 shares, 28,704,163 shares, and 28,694,036 shares, respectively   135,640    135,507    135,374    135,190    135,057 
Preferred stock, without par value - 5,000,000 total shares authorized                         
8% Preferred stock - $1,000 per share liquidation preference                         
Authorized - 50,000 shares                         
Issued and outstanding - 41,625 shares   41,581    41,581    41,581    41,581    41,581 
7% Series A Preferred stock - $25 per share liquidation preference                         
Authorized - 3,500,000 shares                         
Issued and outstanding - 2,081,800 shares, 2,081,800 shares, 2,955,800 shares, and 2,000,000 shares, respectively   50,221    50,245    72,095    48,269     
6% Series B Preferred stock - $1,000 per share liquidation preference                         
Authorized - 125,000 shares                         
Issued and outstanding - 125,000 shares and 125,000 shares, respectively (both equivalent to 5,000,000 depositary shares)   120,844    120,863             
Retained earnings   304,984    280,551    265,323    252,637    244,909 
Accumulated other comprehensive income (loss)   458    692    640    154    (310)
Total shareholders' equity   653,728    629,439    515,013    477,831    421,237 
Total liabilities and shareholders' equity  $6,371,928   $6,337,186   $5,287,390   $3,976,725   $3,884,163 

 

 

 

 

Consolidated Statement of Income

(Unaudited)

(In thousands, except share data)

 

   Three Months Ended   Twelve Months Ended 
   December 31,   September 30,   December 31,   December 31,   December 31, 
   2019   2019   2018   2019   2018 
Interest Income                         
Loans  $56,829   $52,779   $33,999   $186,428   $119,457 
Investment securities:                         
Trading   2,256    1,422    1,235    6,690    5,012 
Available for sale - taxable   1,576    1,604    1,740    6,208    6,448 
Available for sale - tax exempt   55    68        272     
Federal Home Loan Bank stock   190    262    88    932    385 
Other   2,893    3,626    2,763    11,465    9,261 
Total interest income   63,799    59,761    39,825    211,995    140,563 
Interest Expense                         
Deposits   25,051    26,039    13,789    84,661    42,216 
Borrowed funds   1,127    1,098    1,861    5,036    8,376 
Total interest expense   26,178    27,137    15,650    89,697    50,592 
Net Interest Income   37,621    32,624    24,175    122,298    89,971 
Provision for loan losses   1,993    1,193    1,608    3,940    4,629 
Net Interest Income After Provision for Loan Losses   35,628    31,431    22,567    118,358    85,342 
Noninterest Income                         
Gain on sale of loans   15,352    8,312    11,718    35,411    39,266 
Loan servicing fees, net   2,200    (1,410)   1,657    (1,118)   5,741 
Mortgage warehouse fees   2,555    2,699    602    7,145    2,550 
Gains/(losses) on sale of investments available for sale (1)   352            476     
Other income   2,244    1,251    758    5,175    2,028 
Total noninterest income   22,703    10,852    14,735    47,089    49,585 
Noninterest Expense                         
Salaries and employee benefits   10,422    9,139    10,643    38,093    32,240 
Loan expenses   1,007    1,248    1,109    4,534    4,621 
Occupancy and equipment   1,793    994    726    4,609    2,788 
Professional fees   826    508    830    2,326    2,585 
Deposit insurance expense   1,393    859    273    2,747    1,024 
Technology expense   848    674    548    2,623    1,544 
Other expense   2,547    2,100    2,052    8,381    6,098 
Total noninterest expense   18,836    15,522    16,181    63,313    50,900 
Income Before Income Taxes   39,495    26,761    21,121    102,134    84,027 
Provision for income taxes (2)   9,434    6,502    5,699    24,805    21,153 
Net Income  $30,061   $20,259   $15,422   $77,329   $62,874 
Dividends on preferred stock   (3,618)   (3,022)   (832)   (9,216)   (3,330)
Net Income Allocated to Common Shareholders   26,443    17,237    14,590    68,113    59,544 
Basic Earnings Per Share  $0.92   $0.60   $0.51   $2.37   $2.08 
Diluted Earnings Per Share  $0.92   $0.60   $0.51   $2.37   $2.07 
Weighted-Average Shares Outstanding                         
Basic   28,706,438    28,706,438    28,694,036    28,705,125    28,692,955 
Diluted   28,754,078    28,744,953    28,727,822    28,745,707    28,724,419 

 

(1) Includes $352, $0, $0, $476, and $0, respectively, related to accumulated other comprehensive earnings reclassifications.

(2) Includes $(86), $0, $0, $(117) and $0, respectively, related to income tax (expense)/benefit for reclassification items.

 

 

 

 

Key Operating Results

(Unaudited)

($ in thousands)

 

   Three Months Ended   Twelve Months Ended 
   December 31,   September 30,   December 31,   December 31,   December 31, 
   2019   2019   2018   2019   2018 
Noninterest expense   18,836    15,522    16,181    63,313    50,900 
                          
Net interest income (before provision for losses)   37,621    32,624    24,175    122,298    89,971 
Noninterest income   22,703    10,852    14,735    47,089    49,585 
Total income   60,324    43,476    38,910    169,387    139,556 
                          
Efficiency ratio   31.22%   35.70%   41.59%   37.38%   36.47%
                          
Average assets   6,639,736    6,009,840    3,839,594    5,262,300    3,680,934 
Net income   30,061    20,259    15,422    77,329    62,874 
Return on average assets before annualizing   0.45%   0.34%   0.40%   1.47%   1.71%
Annualization factor   4.00    4.00    4.00    1.00    1.00 
Return on average assets   1.81%   1.35%   1.61%   1.47%   1.71%
                          
Return on average tangible common shareholders' equity (1)   25.65%   18.17%   16.24%   17.56%   17.23%
                          
Tangible book value per common share (1)  $14.68   $13.83   $12.50   $14.68   $12.50 
                          
Tangible common shareholders' equity/tangible assets (1)   6.63%   6.28%   9.28%   6.63%   9.28%

 

(1) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Measures"

 

(1) Reconciliation of Non-GAAP Financial Measures

 

Certain non-GAAP financial measures provide useful information to management and investors that is supplementary to the company's financial condition, results of operations and cash flows computed in accordance with GAAP; however, they do have a number of limitations.  As such, the reader should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable  to non-GAAP financial measures that other companies use.  A reconciliation of GAAP to non-GAAP financial measures is below.  Net Income Available to Common Shareholders excludes preferred stock.  Tangible common equity is calculated by excluding the balance of goodwill and other intangible assets and preferred stock from the calculation of total assets.  Tangible Assets is calculated by excluding the balance of goodwill and intangible assets.  Tangible book value per share is calculated by dividing tangible common equity by the number of shares outstanding.     

 

   Three Months Ended   Twelve Months Ended 
   December 31,   September 30,   December 31,   December 31,   December 31, 
   2019   2019   2018   2019   2018 
Net income   30,061    20,259    15,422    77,329    62,874 
Less: preferred stock dividends   (3,618)   (3,022)   (832)   (9,216)   (3,330)
Net income available to common shareholders   26,443    17,237    14,590    68,113    59,544 
                          
Average shareholders' equity   644,588    567,732    417,072    537,946    396,350 
Less: average goodwill & intangibles   (19,607)   (20,005)   (16,127)   (20,243)   (9,265)
Less: average preferred stock   (212,675)   (168,266)   (41,581)   (129,881)   (41,581)
Average tangible common shareholders' equity   412,306    379,461    359,364    387,822    345,504 
                          
Annualization factor   4.00    4.00    4.00    1.00    1.00 
Return on average tangible common shareholders' equity   25.65%   18.17%   16.24%   17.56%   17.23%
                          
Total equity   653,728    629,439    421,237    653,728    421,237 
Less: goodwill and intangibles   (19,644)   (19,756)   (21,019)   (19,644)   (21,019)
Less: preferred stock   (212,646)   (212,689)   (41,581)   (212,646)   (41,581)
Tangible common shareholders' equity   421,438    396,994    358,637    421,438    358,637 
                          
Assets   6,371,928    6,337,186    3,884,163    6,371,928    3,884,163 
Less: goodwill and intangibles   (19,644)   (19,756)   (21,019)   (19,644)   (21,019)
Tangible assets   6,352,284    6,317,430    3,863,144    6,352,284    3,863,144 
                          
Ending common shares   28,706,438    28,706,438    28,694,036    28,706,438    28,694,036 
                          
Tangible book value per common share  $14.68   $13.83   $12.50   $14.68   $12.50 
Tangible common shareholders' equity/tangible assets   6.63%   6.28%   9.28%   6.63%   9.28%

 

 

 

 

Merchants Bancorp

Average Balance Analysis

($ in thousands)

(Unaudited)

 

   Three Months Ended   Three Months Ended   Three Months Ended 
   December 31, 2019   September 30, 2019   December 31, 2018 
   Average       Yield/   Average       Yield/   Average       Yield/ 
   Balance   Interest   Rate   Balance   Interest   Rate   Balance   Interest   Rate 
Assets:                                             
                                              
Interest-bearing deposits, and other  $702,706   $3,083    1.74%  $670,399   $3,888    2.30%  $490,189   $2,851    2.31%
Securities available for sale - taxable   288,935    1,576    2.16%   278,314    1,604    2.29%   331,613    1,740    2.08%
Securities available for sale - tax exempt   7,527    55    2.90%   9,032    68    2.99%   -    -    - 
Trading securities   286,712    2,256    3.12%   162,915    1,422    3.46%   125,582    1,235    3.90%
Loans and loans held for sale   5,182,530    56,829    4.35%   4,718,771    52,779    4.44%   2,736,228    33,999    4.93%
Total interest-earning assets   6,468,410    63,799    3.91%   5,839,431    59,761    4.06%   3,683,612    39,825    4.29%
Allowance for loan losses   (14,126)             (12,990)             (11,495)          
Noninterest-earning assets   185,452              183,399              167,477           
                                              
Total assets  $6,639,736             $6,009,840             $3,839,594           
                                              
                                              
Liabilities & Shareholders' Equity:                                             
                                              
Interest-bearing checking   1,971,710    7,652    1.54%   1,951,613    9,253    1.88%   1,335,051    6,122    1.82%
Savings deposits   154,997    76    0.19%   152,509    85    0.22%   159,724    100    0.25%
Money market   1,000,971    4,339    1.72%   977,228    4,698    1.91%   904,838    4,234    1.86%
Certificates of deposit   2,453,211    12,984    2.10%   2,032,619    12,003    2.34%   617,659    3,333    2.14%
Total interest-bearing deposits   5,580,889    25,051    1.78%   5,113,969    26,039    2.02%   3,017,272    13,789    1.81%
                                              
Borrowings   69,556    1,127    6.43%   59,585    1,098    7.31%   74,072    1,861    9.97%
Total interest-bearing liabilities   5,650,445    26,178    1.84%   5,173,554    27,137    2.08%   3,091,344    15,650    2.01%
                                              
Noninterest-bearing deposits   278,447              198,832              293,197           
Noninterest-bearing liabilities   66,256              69,722              37,981           
                                              
Total liabilities   5,995,148              5,442,108              3,422,522           
                                              
Shareholders' equity   644,588              567,732              417,072           
                                              
Total liabilities and shareholders' equity  $6,639,736             $6,009,840             $3,839,594           
                                              
Net interest income       $37,621             $32,624             $24,175      
                                              
Net interest spread             2.07%             1.98%             2.28%
                                              
Net interest-earning assets  $817,965             $665,877             $592,268           
                                              
Net interest margin             2.31%             2.22%             2.60%
                                              
Average interest-earning assets to average interest-bearing liabilities             114.48%             112.87%             119.16%

 

 

 

 

Segment Results

(Unaudited)

($ in thousands)

 

   Net Income   Net Income     
   Three Months Ended   Twelve Months Ended   Total Assets 
   December 31,   September 30,   December 31,   December 31,   December 31,   September 30,   December 31, 
   2019   2019   2018   2019   2018   2019   2019   2018 
Segment                                        
Multi-family Mortgage Banking  $10,217   $2,741   $4,698   $14,763   $19,810   $188,866   $169,283   $166,102 
Mortgage Warehousing   13,690    10,924    4,942    34,766    21,000    3,124,684    3,529,267    1,430,776 
Banking   7,028    7,649    6,703    31,854    26,269    3,018,568    2,596,313    2,256,687 
Other   (874)   (1,055)   (921)   (4,054)   (4,205)   39,810    42,323    30,598 
Total  $30,061   $20,259   $15,422   $77,329   $62,874   $6,371,928   $6,337,186   $3,884,163 

 

 

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