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Section 1: 10-Q (10-Q)

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Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10‑Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

For the quarterly period ended

June 30, 2018

 

 

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ____________ to _______________

Commission File No. 001-38258

 

MERCHANTS BANCORP

 

 

(Exact name of registrant as specified in its charter)

 

 

 

Indiana

    

20‑5747400

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification Number)

 

 

 

11555 North Meridian Street, Suite 400 Carmel, Indiana

 

46032

(Address of principal

 

(Zip Code)

executive office)

 

 

 

(317) 569‑7420

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes  ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☒

Smaller reporting company ☐

 

 

(Do not check if a smaller reporting company)

Emerging growth company ☒

 

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 7(a)(2)(B) of the Securities Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act.).
Yes ☐    No ☒

As of August 9, 2018, the latest practicable date, 28,694,036 shares of the registrant’s common stock, without par value, were issued and outstanding.

 

 

 


 

Table of Contents

Merchants Bancorp

Index to Quarterly Report on Form 10‑Q

PART I – FINANCIAL INFORMATION 

 

 

 

    Item 1 Interim Financial Statements (Unaudited)

 

 

 

Condensed Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017 

3

 

 

Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2018 and 2017 

4

 

 

Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2018 and 2017 

5

 

 

Condensed Consolidated Statements of Shareholders’ Equity for the Six Months Ended June 30, 2018 

6

 

 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2018 and 2017 

7

 

 

Notes to Condensed Consolidated Financial Statements 

8

 

 

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations 

39

 

 

Item 3 Quantitative and Qualitative Disclosures About Market Risk 

52

 

 

Item 4 Controls and Procedures 

52

 

 

PART II – OTHER INFORMATION 

53

 

 

Item 1  Legal Proceedings 

53

 

 

Item 1A  Risk Factors 

53

 

 

Item 2  Unregistered Sales of Equity Securities and Use of Proceeds 

53

 

 

Item 3  Defaults Upon Senior Securities 

53

 

 

Item 4  Mine Safety Disclosures 

53

 

 

Item 5  Other Information 

53

 

 

Item 6  Exhibits 

54

 

 

SIGNATURES 

55

 

 

2


 

Table of Contents

Part I – Financial Information

Item 1. Financial Statements

Merchants Bancorp

Condensed Consolidated Balance Sheets

June 30, 2018 (Unaudited) and December 31, 2017

(In thousands, except share data)

 

 

 

 

 

 

 

 

 

June 30, 

 

December 31, 

 

    

2018

    

2017

Assets

 

 

  

 

 

  

Cash and due from banks

 

$

18,347

 

$

18,905

Interest-earning demand accounts

 

 

334,056

 

 

340,614

Cash and cash equivalents

 

 

352,403

 

 

359,519

Securities purchased under agreements to resell

 

 

6,954

 

 

7,043

Trading securities

 

 

135,075

 

 

140,837

Available for sale securities

 

 

385,925

 

 

408,371

Federal Home Loan Bank (FHLB) stock

 

 

7,723

 

 

7,539

Loans held for sale (includes $51,768 at fair value for 2018)

 

 

953,150

 

 

995,319

Loans receivable, net of allowance for loan losses of $10,588 and $8,311, respectively

 

 

1,823,691

 

 

1,366,349

Premises and equipment, net

 

 

8,584

 

 

5,354

Mortgage servicing rights

 

 

70,085

 

 

66,079

Interest receivable

 

 

10,306

 

 

8,326

Goodwill

 

 

5,369

 

 

3,902

Intangible assets, net

 

 

1,839

 

 

1,512

Other assets and receivables

 

 

25,578

 

 

22,983

Total assets

 

$

3,786,682

 

$

3,393,133

Liabilities and Shareholders' Equity

 

 

  

 

 

  

Liabilities

 

 

  

 

 

  

Deposits

 

 

  

 

 

  

Noninterest bearing

 

$

585,464

 

$

620,700

Interest bearing

 

 

2,590,886

 

 

2,322,861

Total deposits

 

 

3,176,350

 

 

2,943,561

Borrowings

 

 

189,515

 

 

56,612

Deferred and current tax liabilities, net

 

 

12,563

 

 

12,422

Other liabilities

 

 

15,335

 

 

13,064

Total liabilities

 

 

3,393,763

 

 

3,025,659

Commitments and Contingencies

 

 

  

 

 

  

Shareholders' Equity

 

 

  

 

 

  

Common stock, without par value

 

 

  

 

 

  

Authorized - 50,000,000 shares

 

 

  

 

 

  

Issued and outstanding - 28,694,036 shares at June 30, 2018 and 28,685,167 shares at December 31, 2017

 

 

134,952

 

 

134,891

Preferred stock - $1,000 per share, without par value

 

 

 

 

 

  

Authorized - 5,000,000 shares

 

 

 

 

 

  

Issued and outstanding - 41,625 shares

 

 

41,581

 

 

41,581

Retained earnings

 

 

217,856

 

 

192,008

Accumulated other comprehensive loss

 

 

(1,470)

 

 

(1,006)

Total shareholders' equity

 

 

392,919

 

 

367,474

Total liabilities and shareholders' equity

 

$

3,786,682

 

$

3,393,133

 

See notes to condensed consolidated financial statements.

 

3


 

Table of Contents

Merchants Bancorp

Condensed Consolidated Statements of Income (Unaudited)

For the Three and Six Months Ended June 30, 2018 and 2017

(In thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30, 

 

June 30, 

 

    

2018

    

2017

    

2018

    

2017

Interest Income

 

 

  

 

 

  

 

 

  

 

 

 

Loans

 

$

28,790

 

$

19,022

 

$

53,402

 

$

34,805

Investment securities:

 

 

  

 

 

  

 

 

 

 

 

  

Trading

 

 

1,489

 

 

1,448

 

 

2,478

 

 

2,824

Available for sale

 

 

1,625

 

 

1,022

 

 

3,167

 

 

1,916

Federal Home Loan Bank stock

 

 

81

 

 

79

 

 

210

 

 

160

Other

 

 

2,138

 

 

893

 

 

3,904

 

 

1,766

Total interest income

 

 

34,123

 

 

22,464

 

 

63,161

 

 

41,471

Interest Expense

 

 

  

 

 

  

 

 

  

 

 

  

Deposits

 

 

9,741

 

 

4,740

 

 

16,757

 

 

8,511

Borrowed funds

 

 

2,176

 

 

2,000

 

 

4,090

 

 

3,705

Total interest expense

 

 

11,917

 

 

6,740

 

 

20,847

 

 

12,216

Net interest income

 

 

22,206

 

 

15,724

 

 

42,314

 

 

29,255

Provision for loan losses

 

 

998

 

 

240

 

 

2,404

 

 

480

Net Interest Income After Provision for Loan Losses

 

 

21,208

 

 

15,484

 

 

39,910

 

 

28,775

Noninterest Income

 

 

  

 

 

  

 

 

  

 

 

  

Gain on sale of loans

 

 

7,831

 

 

15,167

 

 

18,723

 

 

20,609

Loan servicing fees, net

 

 

2,555

 

 

395

 

 

2,233

 

 

2,384

Mortgage warehouse fees

 

 

684

 

 

662

 

 

1,170

 

 

1,258

Other income

 

 

560

 

 

402

 

 

817

 

 

466

Total noninterest income

 

 

11,630

 

 

16,626

 

 

22,943

 

 

24,717

Noninterest Expense

 

 

  

 

 

  

 

 

  

 

 

  

Salaries and employee benefits

 

 

7,268

 

 

5,175

 

 

13,755

 

 

9,067

Loan expenses

 

 

1,302

 

 

1,069

 

 

2,258

 

 

1,953

Occupancy and equipment

 

 

761

 

 

398

 

 

1,326

 

 

754

Professional fees

 

 

677

 

 

315

 

 

1,165

 

 

530

Deposit insurance expense

 

 

236

 

 

210

 

 

482

 

 

474

Technology expense

 

 

293

 

 

261

 

 

584

 

 

506

Other expense

 

 

1,463

 

 

833

 

 

2,700

 

 

1,618

Total noninterest expense

 

 

12,000

 

 

8,261

 

 

22,270

 

 

14,902

Income Before Income Taxes

 

 

20,838

 

 

23,849

 

 

40,583

 

 

38,590

Provision for Income Taxes

 

 

5,186

 

 

9,091

 

 

9,870

 

 

14,702

Net Income

 

$

15,652

 

$

14,758

 

$

30,713

 

$

23,888

  Dividends on Preferred Stock

 

 

(832)

 

 

(832)

 

 

(1,665)

 

 

(1,664)

Net Income allocated to Common Shareholders

 

 

14,820

 

 

13,926

 

 

29,048

 

 

22,224

Basic earnings per share

 

$

0.52

 

$

0.66

 

$

1.01

 

$

1.05

Diluted earnings per share

 

$

0.52

 

$

0.66

 

$

1.01

 

$

1.05

Weighted-average shares outstanding

 

 

  

 

 

  

 

 

  

 

 

  

Basic

 

 

28,692,749

 

 

21,114,400

 

 

28,691,857

 

 

21,114,400

Diluted

 

 

28,720,805

 

 

21,127,923

 

 

28,715,687

 

 

21,125,590

Dividends per share

 

$

0.06

 

$

0.05

 

$

0.12

 

$

0.10

 

See notes to condensed consolidated financial statements.

 

 

 

4


 

Table of Contents

Merchants Bancorp

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

For the Three and Six Months Ended June 30, 2018 and 2017

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30, 

 

June 30, 

 

    

2018

    

2017

    

2018

    

2017

Net Income

 

$

15,652

 

$

14,758

 

$

30,713

 

$

23,888

Other Comprehensive Income (Loss):

 

 

  

 

 

 

 

 

  

 

 

  

Net change in unrealized losses on investment securities available for sale, net of (taxes) benefits of $(54), $46, $43, and $(50) respectively

 

 

97

 

 

(67)

 

 

(221)

 

 

71

Comprehensive Income

 

$

15,749

 

$

14,691

 

$

30,492

 

$

23,959

 

See notes to condensed consolidated financial statements.

 

 

5


 

Table of Contents

Merchants Bancorp

Condensed Consolidated Statement of Shareholders’ Equity (Unaudited)

For the Six Months Ended June 30, 2018

(In thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

Common Stock

 

Preferred Stock

 

Retained

 

Comprehensive

 

 

 

 

    

Shares

    

Amount

    

Shares

    

Amount

    

Earnings

    

Income (Loss)

    

Total

Balance, January 1, 2018

 

28,685,167

 

$

134,891

 

41,625

 

$

41,581

 

$

192,008

 

$

(1,006)

 

$

367,474

Net income

 

 —

 

 

 —

 

 —

 

 

 —

 

 

30,713

 

 

 —

 

 

30,713

Shares issued for stock compensation plans

 

8,869

 

 

61

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

61

Dividends on preferred stock

 

 —

 

 

 —

 

 —

 

 

 —

 

 

(1,665)

 

 

 —

 

 

(1,665)

Dividends on common stock, $0.12 per share

 

 —

 

 

 —

 

 —

 

 

 —

 

 

(3,443)

 

 

 —

 

 

(3,443)

Reclassification of deferred tax asset due to tax reform

 

 —

 

 

 —

 

 —

 

 

 —

 

 

243

 

 

(243)

 

 

 —

Other comprehensive loss

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

(221)

 

 

(221)

Balance, June 30, 2018

 

28,694,036

 

$

134,952

 

41,625

 

$

41,581

 

$

217,856

 

$

(1,470)

 

$

392,919

 

See notes to condensed consolidated financial statements.

 

 

 

6


 

Table of Contents

Merchants Bancorp

Condensed Consolidated Statements of Cash Flows (Unaudited)

Six Months Ended June 30, 2018 and 2017

(In thousands)

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

 

June 30, 

 

    

2018

    

2017

Operating activities:

 

 

  

 

 

  

Net income

 

$

30,713

 

$

23,888

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

  

 

 

  

Depreciation

 

 

213

 

 

131

Provision for loan losses

 

 

2,404

 

 

480

Gain on sale of loans

 

 

(18,723)

 

 

(20,609)

Proceeds from sales of loans

 

 

11,497,484

 

 

9,343,295

Loans and participations originated and purchased for sale

 

 

(11,440,254)

 

 

(9,546,607)

Change in mortgage servicing rights for paydowns and fair value adjustments

 

 

1,696

 

 

2,082

Net change in:

 

 

 

 

 

  

Trading securities

 

 

5,762

 

 

(7,381)

Other assets and receivables

 

 

(4,272)

 

 

10,890

Other liabilities

 

 

1,860

 

 

10,208

Other

 

 

680

 

 

50

Net cash provided by (used in) operating activities

 

 

77,563

 

 

(183,573)

Investing activities:

 

 

 

 

 

  

Net change in securities purchased under agreements to resell

 

 

89

 

 

57

Purchases of available-for-sale securities

 

 

(36,049)

 

 

(94,988)

Proceeds from calls, maturities and paydowns of available-for-sale securities

 

 

60,963

 

 

42,679

Purchases of loans

 

 

(77,884)

 

 

(69,970)

Net change in loans receivable

 

 

(355,094)

 

 

(58,965)

Purchase of Federal Home Loan Bank stock

 

 

(130)

 

 

 —

Purchases of premises and equipment

 

 

(3,045)

 

 

(218)

Purchases of mortgage servicing rights

 

 

(790)

 

 

(1,134)

Purchase of limited partnership interests

 

 

(1,706)

 

 

(1,829)

Cash received in acquisition of subsidiary

 

 

6,505

 

 

 —

Other investing activities

 

 

(72)

 

 

63

Net cash used in investing activities

 

 

(407,213)

 

 

(184,305)

Financing activities:

 

 

  

 

 

 

Net change in deposits

 

 

195,884

 

 

342,880

Proceeds from Federal Home Loan Bank advances

 

 

411,317

 

 

239,250

Repayment of Federal Home Loan Bank advances

 

 

(283,759)

 

 

(239,623)

Proceeds from notes payable

 

 

4,200

 

 

 —

Dividends

 

 

(5,108)

 

 

(3,776)

Net cash provided by financing activities

 

 

322,534

 

 

338,731

Net Change in Cash and Cash Equivalents

 

 

(7,116)

 

 

(29,147)

Cash and Cash Equivalents, Beginning of Period

 

 

359,519

 

 

445,701

Cash and Cash Equivalents, End of Period

 

$

352,403

 

$

416,554

Additional Cash Flows Information:

 

 

 

 

 

  

Interest paid

 

$

18,097

 

$

11,910

Income taxes paid

 

 

6,075

 

 

13,499

The Company purchased all of the capital stock of Joy State Bank for $5,472 on January 2, 2018.  In conjunction with the acquisition, liabilities were assumed as follows:

 

 

 

 

 

 

Fair value of assets acquired

 

$

44,217

 

$

 —

Cash paid for the capital stock

 

 

5,472

 

 

 —

Liabilities assumed

 

 

38,745

 

 

 —

 

See notes to condensed consolidated financial statements.

 

 

 

7


 

Table of Contents

Merchants Bancorp

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 1:   Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of Merchants Bancorp, a registered bank holding company (the “Company”) and its wholly owned subsidiaries,  Joy State Bank, Merchants Bank of Indiana (the “Bank”), and the Bank’s subsidiaries, P/R Mortgage and Investment Corp. (“P/RMIC”), Ash Realty Holdings, LLC (“Ash Realty”), Natty Mac Funding, Inc. (“NMF”), MBI Midtown West, LLC (“MMW”), and P/RMIC’s subsidiary RICHMAC Funding LLC (“RICHMAC”), (collectively referred to as the “Company”).

The accompanying unaudited condensed consolidated balance sheet of the Company as of December 31, 2017, which has been derived from audited financial statements, and unaudited condensed consolidated financial statements of the Company as of June 30, 2018 and for the three and six months ended June 30, 2018 and 2017, were prepared in accordance with the instructions for Form 10‑Q and Article 10 of Regulation S-X and, therefore, do not include information or footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America. Accordingly, these condensed financial statements should be read in conjunction with the audited financial statements and notes thereto of the Company as of and for the year ended December 31, 2017 in its Annual Report on Form 10-K. Reference is made to the accounting policies of the Company described in the Notes to the Financial Statements contained in the Annual Report on Form 10-K.

In the opinion of management, all adjustments (consisting only of normal recurring adjustments) which are necessary for a fair presentation of the unaudited financial statements have been included to present fairly the financial position as of June 30, 2018 and the results of operations for the three and six months ended June 30, 2018 and 2017, and cash flows for the six months ended June 30, 2018 and 2017. All interim amounts have not been audited and the results of operations for the three and six months ended June 30, 2018, herein are not necessarily indicative of the results of operations to be expected for the entire year.

Principles of Consolidation

The consolidated financial statements as of and for the period ended June 30, 2017, include the Company and its wholly owned subsidiary, the Bank, and its wholly owned subsidiaries, P/RMIC, Ash Realty, NMF, and MMW.  The consolidated financial statements as of and for the period ended June 30, 2018 also include the Company’s wholly owned subsidiaries Joy State Bank, and P/RMIC’s wholly owned subsidiary, RICHMAC.  All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses, loan servicing rights and fair values of financial instruments.

Stock Split

On July 5, 2017, the Company’s shareholders approved an increase of authorized common shares to 50.0 million shares, and the Company declared a 2.5-for-1 stock split effective July 6, 2017.  The presentation of authorized common shares has been retrospectively adjusted to give effect to the increase, and all share and per share amounts have been retrospectively adjusted to give effect to the stock split. 

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Table of Contents

Merchants Bancorp

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Acquisitions

Effective August 15, 2017, the Bank acquired 100% of the equity interests of RICHMAC Funding, LLC, which is a national multifamily housing mortgage lender and servicer. The purchase price was paid in shares of Company common stock with a value of $8.1 million. The Company recorded goodwill and intangible assets totaling $3.9 million and $1.6 million, respectively, in connection with the acquisition.  Certain fair value measurements and the purchase price allocation are still being evaluated by management and are subject to change during the measurement period.  The acquisition did not materially impact the Company’s financial position, results of operations or cash flows. 

On May 8, 2017, the Company entered into a Stock Purchase Agreement to acquire Joy State Bank.  The acquisition closed on January 2, 2018 at a total cost of approximately $5.5 million.  At December 31, 2017 Joy State Bank had $43 million in assets.  The Company recorded goodwill and intangible assets totaling  $967,000 and $478,000, respectively, in connection with the acquisition.  The intangibles consisted of core deposit intangibles that are being amortized over 10 years on an accelerated basis.    The acquired time deposits of $16.7 million were recorded at a fair value of $16.9 million.  The fair value premium of $185,000 is being accreted against interest expense over 20 months. The acquired loan portfolio of $27.9 million was recorded at a fair value of $27.5 million.  The fair value discount of $458,000 is being accreted to interest income on a straight-line basis over an average of 39 months in accordance with ASC 310-20.  While there were some loans identified for potential classification under ASC 310-30, they were not material to the transaction.  Certain fair value measurements and the purchase price allocation are still being evaluated by management and are subject to change during the measurement period.  The acquisition did not materially impact the Company’s financial position, results of operations or cash flows.

On June 13, 2018, the Company entered into an agreement and plan of merger whereby FM Bancorp and its subsidiary, Farmers-Merchants National Bank of Paxton (“Farmers-Merchants”), will merge with and into the Company and Joy State Bank, respectively. The transaction is expected to close in the fourth quarter of 2018 and is subject to customary closing conditions, including regulatory approvals and the approval of FM Bancorp’s shareholders.  As of March 31, 2018, FM Bancorp had total assets of $114.6 million, which included gross loans of $33.6 million and deposits of $99.3 million. 

Reclassifications

 

Certain reclassifications have been made to the 2017 financial statements to conform to the financial statement presentation as of and for the three and six months ended June 30, 2018.  These reclassifications had no effect on net income. 

Note 2:   Securities

Trading Securities

 

Securities that are held principally for resale in the near term are recorded as trading securities at fair value with changes in fair value recorded in earnings.  Trading securities include FHA and conventional participation certificates.  The unrealized gains included in trading securities totaled $493,000 and $1.9 million at June 30, 2018 and 2017, respectively.

9


 

Table of Contents

Merchants Bancorp

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Securities Available-For-Sale

 

The amortized cost and approximate fair values, together with gross unrealized gains and losses, of securities are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2018

 

 

 

 

 

Gross

 

Gross

 

Approximate

 

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

    

Cost

    

Gains

    

Losses

    

Value

 

 

(In thousands)

Available-for-sale securities:

 

 

  

 

 

  

 

 

  

 

 

  

Treasury notes

 

$

3,495

 

$

 —

 

$

20

 

$

3,475

Federal agencies

 

 

352,145

 

 

 —

 

 

1,955

 

 

350,190

Equities

 

 

69

 

 

20

 

 

 —

 

 

89

Municipals

 

 

6,431

 

 

 —

 

 

 —

 

 

6,431

Mortgage-backed - Government-sponsored entity (GSE) - residential

 

 

25,740

 

 

 —

 

 

 —

 

 

25,740

Total available-for-sale securities

 

$

387,880

 

$

20

 

$

1,975

 

$

385,925

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

 

 

 

 

Gross

 

Gross

 

Approximate

 

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

    

Cost

    

Gains

    

Losses

    

Value

 

 

(In thousands)

Available-for-sale securities:

 

 

  

 

 

  

 

 

  

 

 

  

Treasury notes

 

$

1,000

 

$

 —

 

$

 8

 

$

992

Federal agencies

 

 

376,414

 

 

 —

 

 

1,683

 

 

374,731

Municipals

 

 

6,688

 

 

 —

 

 

 —

 

 

6,688

Mortgage-backed - Government-sponsored entity (GSE) - residential

 

 

25,960

 

 

 —

 

 

 —

 

 

25,960

Total available-for-sale securities

 

$

410,062

 

$

 —

 

$

1,691

 

$

408,371

 

The amortized cost and fair value of available-for-sale securities at June 30, 2018 and December 31, 2017, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2018

 

December 31, 2017

 

 

Amortized

 

Fair

 

Amortized

 

Fair

 

    

Cost

    

Value

    

Cost

    

Value

Contractual Maturity

 

(In thousands)

Within one year

 

$

206,397

 

$

205,538

 

$

164,997

 

$

164,321

After one through five years

 

 

149,474

 

 

148,358

 

 

212,905

 

 

211,890

After five through ten years

 

 

 —

 

 

 —

 

 

 —

 

 

 —

After ten years

 

 

6,200

 

 

6,200

 

 

6,200

 

 

6,200

 

 

 

362,071

 

 

360,096

 

 

384,102

 

 

382,411

Mortgage-backed - Government-sponsored entity (GSE) - residential

 

 

25,740

 

 

25,740

 

 

25,960

 

 

25,960

Equities

 

 

69

 

 

89

 

 

 —

 

 

 —

 

 

$

387,880

 

$

385,925

 

$

410,062

 

$

408,371

 

No securities available-for-sale were sold during the six months ended June 30, 2018.

10


 

Table of Contents

Merchants Bancorp

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

 

The following tables show the Company’s investments’ gross unrealized losses and fair value of the Company’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2018 and December 31, 2017:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2018

 

 

 

 

 

 

 

 

12 Months or

 

 

 

 

 

 

 

 

Less than 12 Months

 

 Longer

 

Total

 

 

 

 

 

Gross

 

 

 

 

Gross

 

 

 

 

Gross

 

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

    

Value

    

Losses

    

Value

    

Losses

    

Value

    

Losses

 

 

(In thousands)

Available-for-sale securities:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Treasury notes

 

$

3,475

 

$

20

 

$

 —

 

$

 —

 

$

3,475

 

$

20

Federal agencies

 

 

171,379

 

 

1,317

 

 

178,811

 

 

638

 

 

350,190

 

 

1,955

 

 

$

174,854

 

$

1,337

 

$

178,811

 

$

638

 

$

353,665

 

$

1,975

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2017

 

 

 

 

 

 

 

 

12 Months or

 

 

 

 

 

 

 

 

Less than 12 Months

 

Longer

 

Total

 

    

 

 

    

Gross

    

 

 

    

Gross

    

 

 

    

Gross

 

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

 

Value

 

Losses

 

Value

 

Losses

 

Value

 

Losses

 

 

(In thousands)

Available-for-sale securities:

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

Treasury notes

 

$

992

 

$

 8

 

$

 —

 

$

 —

 

$

992

 

$

 8

Federal agencies

 

 

191,064

 

 

903

 

 

183,667

 

 

780

 

 

374,731

 

 

1,683

 

 

$

192,056

 

$