Le Lézard
Classified in: Business, Covid-19 virus
Subject: ERN

Merchants Bancorp Reports Full Year and Fourth Quarter 2022 Results


CARMEL, Ind., Jan. 30, 2023 /PRNewswire/ -- Merchants Bancorp (the "Company" or "Merchants") (Nasdaq: MBIN), parent company of Merchants Bank of Indiana, today reported fourth quarter 2022 net income of $57.2 million, or diluted earnings per common share of $1.12.  This compared to $55.2 million, or diluted earnings per common share of $1.14 in the fourth quarter of 2021, and compared to $58.5 million, or diluted earnings per common share of $1.22 in the third quarter of 2022.

"We had a strong finish to 2022, on the heels of a $1.2 billion multi-family loan securitization and a $142.5 million preferred capital raise in the last quarter to support the loan growth in our pipeline.  We continued our momentum of loan growth and executed our strategy to add shareholder value in any economic or interest rate environment.  Tangible book value grew by 22%, to $21.88 per share during 2022 and our efficiency ratio remained at an industry-leading 31.3% for the year.  The Company continues to enhance its product offerings and is well positioned to continue delivering superior results for the foreseeable future," said Michael F. Petrie, Chairman and CEO of Merchants. 

Michael J. Dunlap, President and Chief Operating Officer of Merchants, added, "Our team has surpassed all expectations in 2022 by providing strong results and new opportunities to add value to our customers.  Their focus and dedication to executing well in a dynamic interest rate environment has led to our continued success and excitement about what is on the horizon in 2023."  

Net income for the fourth quarter 2022 increased by $2.0 million, or 4% compared to the fourth quarter of 2021, primarily driven by a $22.7 million, or 31% increase in net interest income that was partially offset by a $17.2 million, or 60%, decrease in gain on sale of loans and a $3.8 million, or 148%, increase in provision for credit losses.

Net income for the fourth quarter 2022 decreased by $1.3 million, or 2%, compared to the third quarter of 2022, primarily driven by a $6.2 million, or 21%, decrease in noninterest income, a $4.2 million increase in provision for credit losses, and a $2.2 million, or 6%, increase in noninterest expense that was partially offset by a $10.0 million, or 12% increase in net interest income.  

Total Assets
Total assets of $12.6 billion at December 31, 2022 increased 5%, compared to September 30, 2022, and increased 12%, compared to December 31, 2021.  Increases compared to both periods were primarily due to significant growth in the multi-family and healthcare loan portfolios, as well as an increase in held to maturity securities that were acquired in connection with the Company's loan sales and securitizations.

Return on average assets was 1.84% for the fourth quarter of 2022 compared to 2.02% for the fourth quarter of 2021 and 2.05% for the third quarter of 2022.

Asset Quality
The allowance for credit losses on loans of $44.0 million at December 31, 2022 increased $5.0 million compared to September 30, 2022 and increased $12.7 million compared to December 31, 2021.  The increases were primarily due to growth in the multi-family, commercial, residential, and healthcare loan portfolios, as well as revisions to market forecasts for unemployment and home price indices. 

Non-performing loans were $26.7 million, or 0.38%, of loans receivable at December 31, 2022, compared to 0.38% at September 30, 2022 and 0.01% at December 31, 2021.  The increase compared to both periods was primarily due to the delinquency of one healthcare customer that is fully collateralized and full payment is expected.

Total Deposits
Total deposits of $10.1 billion at December 31, 2022 decreased $248.1 million, or 2%, compared to September 30, 2022, and increased $1.1 billion, or 12%, compared to December 31, 2021. The decrease compared September 30, 2022, was primarily due to a decrease in demand deposit accounts that was partially offset by an increase in certificates of deposits.  The increase compared to December 31, 2021, was primarily due to an increase in brokered certificates of deposit that was partially offset by a decrease in demand accounts.

Total brokered deposits of $2.8 billion at December 31, 2022 increased $544.1 million, or 25%, from September 30, 2022 and increased $603.0 million, or 28%, from December 31, 2021. Brokered deposits represented 27% of total deposits at December 31, 2022 compared to 22% of total deposits at September 30, 2022 and 24% of total deposits at December 31, 2021.  As of December 31, 2022, brokered certificates of deposit had a weighted average remaining duration of 73 days, with none exceeding 180 days.

The Company continues to offer new products, such as adjustable-rate certificates of deposits, to minimize interest rate risks by aligning the rate and duration characteristics of its deposit and loan portfolios.

Liquidity
Cash balances of $226.2 million at December 31, 2022 decreased by $97.8 million compared to September 30, 2022 and decreased by $806.5 million compared to December 31, 2021.  The Company continues to have significant borrowing capacity, with unused lines of credit totaling $3.1 billion at December 31, 2022 compared to $2.8 billion at September 30, 2022 and $2.4 billion at December 31, 2021.  This liquidity enhances the ability to effectively manage interest expense and asset levels in the future. Additionally, the Company's business model is designed to continuously sell a significant portion of its loans, which provides flexibility in managing its liquidity.

Comparison of Operating Results for the Three Months Ended
December 31, 2022 and 2021

Net Interest Income of $95.4 million increased $22.7 million, or 31% compared to $72.7 million, reflecting higher yields and average balances on loans and loans held for sale, as well as securities held to maturity, which were partially offset by higher interest rates on deposits and borrowings. 

Interest Income of $181.4 million increased 120% compared to $82.6 million, reflecting an increase in both yields and average balances of loans and loans held for sale, as well as new balances in securities held to maturity. 

Interest Expense of $86.0 million increased $76.2 million, or 774%, compared to $9.8 million.  Interest expense on deposits of $81.1 million increased $72.6 million, or 855%, compared $8.5 million, primarily reflecting higher rates on interest bearing checking, money market, and certificates of deposit accounts.

Noninterest Income of $23.0 million decreased $17.3 million, or 43%, compared to $40.3 million, primarily due to a $17.2 million decrease in gain on sale of loans, partially offset by a $1.3 million increase in loan servicing fees.

Noninterest Expense of $37.1 million decreased $0.5 million, or 1%, compared to $37.6 million, primarily due to decreases in salaries and employee benefits from lower commissions on gain on sale of loans. 

Comparison of Operating Results for the Three Months Ended
December 31, 2022 and September 30, 2022

Net Interest Income of $95.4 million increased $10.0 million, or 12% compared to $85.4 million, reflecting higher yields and average balances on loans and loans held for sale that were partially offset by higher interest rates and average balances on deposits and borrowings.

Interest Income of $181.4 million increased $47.3 million, or 35%, compared to $134.1 million, reflecting an increase in yields and average balances of loans and loans held for sale, as well as an increase in balances of securities held to maturity.

Interest Expense of $86.0 million increased $37.3 million, or 77%, compared to $48.7 million.  Interest expense on deposits of $81.1 million increased $36.1 million, or 80%, compared to $45.0 million, reflecting higher interest rates on interest bearing checking, money market, and certificates of deposit accounts.

Noninterest Income of $23.0 million decreased $6.2 million, or 21%, compared $29.2 million, primarily due to a $5.5 million, or 67% decrease in loan servicing fees related to lower fair market value adjustments to mortgage servicing rights, and a $2.1 million, or 16%, decrease in gain on sale of loans.

Noninterest Expense of $37.1 million increased $2.2 million, or 6%, compared to $35.0 million, primarily due to increases in professional fees related to growth in the low-income housing tax credit syndication business.

About Merchants Bancorp

Ranked as a top performing U.S. public bank by S&P Global Market Intelligence, Merchants Bancorp is a diversified bank holding company headquartered in Carmel, Indiana operating multiple segments, including Multi-family Mortgage Banking that offers multi-family housing and healthcare facility financing and servicing; Mortgage Warehousing that offers mortgage warehouse financing; and Banking that offers retail and correspondent residential mortgage banking, agricultural lending, and traditional community banking.  Merchants Bancorp, with $12.6 billion in assets and $10.1 billion in deposits as of December 31, 2022, conducts its business primarily through its direct and indirect subsidiaries, Merchants Bank of Indiana, Merchants Capital Corp., Merchants Capital Investments, LLC, Merchants Capital Servicing, LLC, Merchants Asset Management, LLC, Farmers-Merchants Bank of Illinois, and Merchants Mortgage, a division of Merchants Bank of Indiana. For more information and financial data, please visit Merchants' Investor Relations page at investors.merchantsbancorp.com.

Forward-Looking Statements
This press release contains forward-looking statements which reflect management's current views with respect to, among other things, future events and 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 the industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control, such as the potential impacts of the COVID-19 pandemic. Accordingly, management cautions 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 the Company believes 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 actual results to differ materially from those indicated in these forward-looking statements, including the impacts of the COVID-19 pandemic, such as the severity, magnitude, duration and businesses' and governments' responses thereto, on the Company's operations and personnel, and on activity and demand across its businesses, and other factors identified in "Risk Factors" or "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's 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 the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

 

Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)














December 31,


September 30,


June 30,


March 31,


December 31,



2022


2022


2022


2022


2021

Assets











Cash and due from banks


$              22,170


$              13,796


$              10,714


$                9,853


$              14,030

Interest-earning demand accounts


203,994


310,165


247,432


401,668


1,018,584

Cash and cash equivalents


226,164


323,961


258,146


411,521


1,032,614

Securities purchased under agreements to resell


3,464


3,497


3,520


4,798


5,888

Mortgage loans in process of securitization


154,194


137,448


323,046


324,280


569,239

Securities available for sale


323,337


322,069


336,814


314,266


310,629

Securities held to maturity 


1,119,078


1,005,487


?


?


?

Federal Home Loan Bank (FHLB) stock


39,130


39,130


39,130


28,804


29,588

Loans held for sale (includes $82,192, $68,785, $41,991, $14,567
and $48,583, respectively, at fair value)


2,910,576


2,844,750


2,759,116


2,289,094


3,303,199

Loans receivable, net of allowance for credit losses on loans of
$44,014, $38,996,  $37,474, $32,102 and $31,344, respectively


7,426,858


6,919,128


7,033,203


5,976,960


5,751,319

Premises and equipment, net


35,438


35,492


35,085


34,559


31,212

Servicing rights


146,248


144,984


130,710


121,036


110,348

Interest receivable


56,262


40,170


26,184


23,499


24,103

Goodwill 


15,845


15,845


15,845


15,845


15,845

Intangible assets, net


1,186


1,307


1,441


1,574


1,707

Other assets and receivables


157,447


145,454


123,815


104,356


92,947

Total assets


$       12,615,227


$       11,978,722


$       11,086,055


$         9,650,592


$       11,278,638

Liabilities and Shareholders' Equity











  Liabilities











Deposits











Noninterest-bearing


$            326,875


$            315,868


$            444,461


$            461,193


$            641,442

Interest-bearing


9,744,470


10,003,611


7,855,277


7,014,628


8,341,171

Total deposits


10,071,345


10,319,479


8,299,738


7,475,821


8,982,613

Borrowings 


930,392


97,279


1,440,904


879,929


1,033,954

Deferred and current tax liabilities, net


19,613


19,124


19,414


30,695


19,170

Other liabilities


134,138


130,250


97,460


75,644


87,492

Total liabilities


11,155,488


10,566,132


9,857,516


8,462,089


10,123,229

Commitments and  Contingencies











Shareholders' Equity











Common stock, without par value











Authorized - 75,000,000 shares, 75,000,000 shares, 75,000,000
shares, 50,000,000 shares and 50,000,000 shares











Issued and outstanding  - 43,113,127 shares, 43,109,578 shares,
43,106,505 shares, 43,267,776 shares and 43,180,079 shares


137,781


137,226


136,671


137,882


137,565

Preferred stock, without par value - 5,000,000 total shares authorized











7% Series A Preferred stock - $25 per share liquidation preference











Authorized - 3,500,000 shares











Issued and outstanding - 2,081,800 shares


50,221


50,221


50,221


50,221


50,221

6% Series B Preferred stock - $1,000 per share liquidation
preference











Authorized - 125,000 shares











Issued and outstanding - 125,000 shares (equivalent to
5,000,000 depositary shares)


120,844


120,844


120,844


120,844


120,844

6% Series C Preferred stock - $1,000 per share liquidation
preference











Authorized - 200,000 shares











Issued and outstanding - 196,181 shares (equivalent to
7,847,233 depositary shares) 


191,084


191,084


191,084


191,084


191,084

8.25% Series D Preferred stock - $1,000 per share liquidation
preference











Authorized - 300,000 shares











Issued and outstanding - 142,500 shares (equivalent to
5,700,000 depositary shares) 


137,459


137,371


?


?


?

Retained earnings


832,871


787,530


737,789


694,776


657,149

Accumulated other comprehensive loss


(10,521)


(11,686)


(8,070)


(6,304)


(1,454)

Total shareholders' equity


1,459,739


1,412,590


1,228,539


1,188,503


1,155,409

Total liabilities and shareholders' equity


$       12,615,227


$       11,978,722


$       11,086,055


$         9,650,592


$       11,278,638

 

Consolidated Statement of Income

(Unaudited)

(In thousands, except share data)

















Three Months Ended


Change



December 31, 


September 30,


December 31, 


4Q22


4Q22



2022


2022


2021


vs. 3Q22


vs. 4Q21

Interest Income














Loans


$

164,682


$

129,101


$

77,113


28 %


114 %

Mortgage loans in process of securitization



2,551



2,162



4,018


18 %


-37 %

Investment securities:














Available for sale - taxable



704



485



1,007


45 %


-30 %

Available for sale - tax exempt



?



?



9


?


-100 %

Held to maturity



11,412



970



?


1076 %


100 %

Federal Home Loan Bank stock



288



379



177


-24 %


63 %

Other



1,802



1,015



261


78 %


590 %

Total interest income



181,439



134,112



82,585


35 %


120 %

Interest Expense














Deposits



81,062



45,002



8,492


80 %


855 %

Borrowed funds



4,967



3,725



1,350


33 %


268 %

Total interest expense



86,029



48,727



9,842


77 %


774 %

Net Interest Income



95,410



85,385



72,743


12 %


31 %

Provision for credit losses



6,407



2,225



2,585


188 %


148 %

Net Interest Income After Provision for Credit Losses



89,003



83,160



70,158


7 %


27 %

Noninterest Income














Gain on sale of loans



11,267



13,354



28,430


-16 %


-60 %

Loan servicing fees, net



2,691



8,169



1,382


-67 %


95 %

Mortgage warehouse fees



1,081



1,105



2,469


-2 %


-56 %

Gains on sale of investments available for sale (1)



?



?



191


?


-100 %

Syndication and asset management fees



4,207



3,073



5,329


37 %


-21 %

Other income



3,736



3,485



2,470


7 %


51 %

Total noninterest income



22,982



29,186



40,271


-21 %


-43 %

Noninterest Expense














Salaries and employee benefits



22,290



23,027



25,387


-3 %


-12 %

Loan expenses



1,082



1,226



1,479


-12 %


-27 %

Occupancy and equipment



2,377



1,967



2,069


21 %


15 %

Professional fees



3,739



2,429



3,325


54 %


12 %

Deposit insurance expense



1,279



755



705


69 %


81 %

Technology expense



1,417



1,325



1,123


7 %


26 %

Other expense



4,925



4,222



3,558


17 %


38 %

Total noninterest expense



37,109



34,951



37,646


6 %


-1 %

Income Before Income Taxes



74,876



77,395



72,783


-3 %


3 %

Provision for income taxes (2)



17,720



18,907



17,582


-6 %


1 %

Net Income


$

57,156


$

58,488


$

55,201


-2 %


4 %

   Dividends on preferred stock



(8,797)



(5,729)



(5,728)


54 %


54 %

Net Income Allocated to Common Shareholders


$

48,359


$

52,759


$

49,473


-8 %


-2 %

Basic Earnings Per Share


$

1.12


$

1.22


$

1.15


-8 %


-3 %

Diluted Earnings Per Share


$

1.12


$

1.22


$

1.14


-8 %


-2 %

Weighted-Average Shares Outstanding














Basic



43,111,353



43,107,975



43,179,377





Diluted



43,274,758



43,258,925



43,399,064



















(1) Includes $0, $0, and $191 respectively, related to accumulated other comprehensive earnings reclassifications.








(2) Includes $0, $0, and $(46) respectively, related to income tax (expense)/benefit for reclassification items.








 

Consolidated Statement of Income

(Unaudited)

(In thousands, except share data)












Twelve Months Ended





December 31,


December 31,





2022


2021


Change

Interest Income









Loans


$

451,973


$

293,830


54 %

Mortgage loans in process of securitization



8,407



12,746


-34 %

Investment securities:









Available for sale - taxable



2,807



3,309


-15 %

Available for sale - tax exempt



?



41


-100 %

Held to maturity



12,382



?


100 %

Federal Home Loan Bank stock



1,220



1,143


7 %

Other



4,044



817


395 %

Total interest income



480,833



311,886


54 %

Interest Expense









Deposits



149,645



28,256


430 %

Borrowed funds



12,637



5,636


124 %

Total interest expense



162,282



33,892


379 %

Net Interest Income



318,551



277,994


15 %

Provision for credit losses



17,295



5,012


245 %

Net Interest Income After Provision for Credit Losses



301,256



272,982


10 %

Noninterest Income









Gain on sale of loans



64,150



111,185


-42 %

Loan servicing fees, net



30,198



16,373


84 %

Mortgage warehouse fees



5,394



12,396


-56 %

Gains on sale of investments available for sale (1)



?



191


-100 %

Syndication and asset management fees



9,493



6,507


46 %

Other income



16,701



10,681


56 %

Total noninterest income



125,936



157,333


-20 %

Noninterest Expense









Salaries and employee benefits



89,085



85,727


4 %

Loan expenses



4,703



7,657


-39 %

Occupancy and equipment



8,169



7,365


11 %

Professional fees



9,065



5,427


67 %

Deposit insurance expense



3,463



2,691


29 %

Technology expense



5,282



4,200


26 %

Other expense



16,283



12,318


32 %

Total noninterest expense



136,050



125,385


9 %

Income Before Income Taxes



291,142



304,930


-5 %

Provision for income taxes (2)



71,421



77,826


-8 %

Net Income


$

219,721


$

227,104


-3 %

   Dividends on preferred stock



(25,983)



(20,873)


24 %

Net Income Allocated to Common Shareholders


$

193,738


$

206,231


-6 %

Basic Earnings Per Share


$

4.49


$

4.78


-6 %

Diluted Earnings Per Share


$

4.47


$

4.76


-6 %

Weighted-Average Shares Outstanding









Basic



43,164,477



43,172,078



Diluted



43,316,904



43,325,303












(1) Includes $0 and $191 respectively, related to accumulated other comprehensive earnings reclassifications.



(2) Includes $0 and $(46) respectively, related to income tax (expense)/benefit for reclassification items.





 

Key Operating Results

(Unaudited)

($ in thousands, except share data)

















Three Months Ended


Change





December 31,


September 30,


December 31,


4Q22


4Q22 





2022


2022


2021


vs. 3Q22


vs. 4Q21















Noninterest expense



$                  37,109


$                    34,951


$           37,646


6 %


-1 %















Net interest income (before provision for credit losses)



95,410


85,385


72,743


12 %


31 %


Noninterest income



22,982


29,186


40,271


-21 %


-43 %


Total income



$                118,392


$                  114,571


$         113,014


3 %


5 %















Efficiency ratio



31.34 %


30.51 %


33.31 %


83

bps

(197)

bps



























Average assets



$           12,457,893


$             11,437,805


$    10,945,026


9 %


14 %


Net income



57,156


58,488


55,201


-2 %


4 %


Return on average assets before annualizing



0.46 %


0.51 %


0.50 %






Annualization factor



4.00


4.00


4.00






Return on average assets



1.84 %


2.05 %


2.02 %


(21)

bps

(18)

bps














Return on average tangible common shareholders' equity (1)



20.81 %


23.92 %


26.04 %


(311)

bps

(523)

bps














Tangible book value per common share (1)



$                    21.88


$                      20.78


$             17.96


5 %


22 %















Tangible common shareholders' equity/tangible assets (1)



7.49 %


7.49 %


6.89 %


-

bps

60

bps














Consolidated ratios













Total capital/risk-weighted assets(2)



12.0

%

12.5

%

N/A






Tier I capital/risk-weighted assets(2)



11.6

%

12.1

%

N/A






Common Equity Tier I capital/risk-weighted assets(2)



7.6

%

7.8

%

N/A






Tier I capital/average assets(2)



11.7

%

12.3

%

10.4

%

















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










(2) As defined by regulatory agencies; December 31, 2022 shown as estimates and prior periods shown as reported.  















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


Change





December 31,


September 30,


December 31,


4Q22


4Q22





2022


2022


2021


vs. 3Q22


vs. 4Q21















Net income



$                  57,156


$                    58,488


$           55,201


-2 %


4 %


Less: preferred stock dividends  



(8,797)


(5,729)


(5,728)


54 %


54 %


Net income available to common shareholders



$                  48,359


$                    52,759


$           49,473


-8 %


-2 %















Average shareholders' equity



$             1,445,995


$               1,267,160


$      1,139,714


14 %


27 %


Less: average goodwill & intangibles



(17,094)


(17,228)


(17,626)


-1 %


-3 %


Less: average preferred stock



(499,529)


(367,726)


(362,149)


36 %


38 %


Average tangible common shareholders' equity



$                929,372


$                  882,206


$         759,939


5 %


22 %















Annualization factor



4.00


4.00


4.00






Return on average tangible common shareholders' equity



20.81 %


23.92 %


26.04 %


(311)

bps

(523)

bps














Total equity



$             1,459,739


$               1,412,590


$      1,155,409


3 %


26 %


Less: goodwill and intangibles



(17,031)


(17,152)


(17,552)


-1 %


-3 %


Less: preferred stock



(499,608)


(499,520)


(362,149)


?


38 %


Tangible common shareholders' equity



$                943,100


$                  895,918


$         775,708


5 %


22 %















Assets



$           12,615,227


$             11,978,722


$    11,278,638


5 %


12 %


Less: goodwill and intangibles



(17,031)


(17,152)


(17,552)


-1 %


-3 %


Tangible assets



$           12,598,196


$             11,961,570


$    11,261,086


5 %


12 %















Ending common shares



43,113,127


43,109,578


43,180,079



















Tangible book value per common share



$                    21.88


$                      20.78


$             17.96


5 %


22 %


Tangible common shareholders' equity/tangible assets



7.49 %


7.49 %


6.89 %


-

bps

60

bps

 

Key Operating Results

(Unaudited)

($ in thousands, except share data)













Twelve Months Ended







December 31,


December 31,







2022


2021


Change











Noninterest expense



$         136,050


$        125,385


9 %











Net interest income (before provision for credit losses)



318,551


277,994


15 %


Noninterest income



125,936


157,333


-20 %


Total income



$         444,487


$        435,327


2 %











Efficiency ratio



30.61 %


28.80 %


181

bps



















Average assets



$    11,044,889


$   10,188,953


8 %


Net income



219,721


227,104


-3 %


Return on average assets before annualizing



1.99 %


2.23 %




Annualization factor



1.00


1.00




Return on average assets



1.99 %


2.23 %


(24)

bps










Return on average tangible common shareholders' equity (1)



22.50 %


30.10 %


(760)

bps










Tangible book value per common share (1)



$             21.88


$            17.96


22 %











Tangible common shareholders' equity/tangible assets (1)



7.49 %


6.89 %


60

bps










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
















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.     














Twelve Months Ended







December 31,


December 31,







2022


2021


Change











Net income



$         219,721


$        227,104


-3 %


Less: preferred stock dividends  



(25,983)


(20,873)


24 %


Net income available to common shareholders



$         193,738


$        206,231


-6 %











Average shareholders' equity



$      1,276,443


$     1,028,834


24 %


Less: average goodwill & intangibles



(17,293)


(17,841)


-3 %


Less: average preferred stock



(398,182)


(325,904)


22 %


Average tangible common shareholders' equity



$         860,968


$        685,089


26 %











Annualization factor



1.00


1.00




Return on average tangible common shareholders' equity



22.50 %


30.10 %


(760)

bps










Total equity



$      1,459,739


$     1,155,409


26 %


Less: goodwill and intangibles



(17,031)


(17,552)


-3 %


Less: preferred stock



(499,608)


(362,149)


38 %


Tangible common shareholders' equity



$         943,100


$        775,708


22 %











Assets



$    12,615,227


$   11,278,638


12 %


Less: goodwill and intangibles



(17,031)


(17,552)


-3 %


Tangible assets



$    12,598,196


$   11,261,086


12 %











Ending common shares



43,113,127


43,180,079













Tangible book value per common share



$             21.88


$            17.96


22 %


Tangible common shareholders' equity/tangible assets



7.49 %


6.89 %


60

bps

 

Merchants Bancorp

Average Balance Analysis

($ in thousands)

(Unaudited)














Three Months Ended


Three Months Ended


Three Months Ended


December 31, 2022


September 30, 2022


December 31, 2021


Average


Yield/


Average


Yield/


Average


Yield/


Balance

Interest

Rate 


Balance

Interest

Rate 


Balance

Interest

Rate 

Assets:
























Interest-bearing deposits, and other

$       225,274

$    2,090

3.68 %


$      211,653

$     1,394

2.61 %


$        698,263

$       438

0.25 %

Securities available for sale - taxable

323,510

704

0.86 %


331,796

485

0.58 %


308,581

1,007

1.29 %

Securities available for sale - tax exempt

?

?



?

?



1,204

9

2.97 %

Securities held to maturity

1,002,446

11,412

4.52 %


98,363

970

3.91 %


?

?


Mortgage loans in process of securitization

234,248

2,551

4.32 %


235,230

2,162

3.65 %


621,946

4,018

2.56 %

Loans and loans held for sale

10,299,795

164,682

6.34 %


10,245,294

129,101

5.00 %


9,064,880

77,113

3.37 %

     Total interest-earning assets

12,085,273

181,439

5.96 %


11,122,336

134,112

4.78 %


10,694,874

82,585

3.06 %

Allowance for credit losses on loans

(40,339)




(39,325)




(29,801)



Noninterest-earning assets

412,959




354,794




279,953















Total assets

$  12,457,893




$  11,437,805




$    10,945,026



























Liabilities & Shareholders' Equity:
























Interest-bearing checking

4,520,785

37,929

3.33 %


4,207,217

21,980

2.07 %


4,325,991

2,094

0.19 %

Savings deposits

252,787

304

0.48 %


239,262

162

0.27 %


223,912

35

0.06 %

Money market 

2,745,904

23,958

3.46 %


2,523,315

13,094

2.06 %


2,528,453

5,018

0.79 %

Certificates of deposit

2,474,427

18,871

3.03 %


2,030,152

9,766

1.91 %


1,220,392

1,345

0.44 %

    Total interest-bearing deposits

9,993,903

81,062

3.22 %


8,999,946

45,002

1.98 %


8,298,748

8,492

0.41 %













Borrowings

451,467

4,967

4.36 %


588,582

3,725

2.51 %


620,173

1,350

0.86 %

    Total interest-bearing liabilities

10,445,370

86,029

3.27 %


9,588,528

48,727

2.02 %


8,918,921

9,842

0.44 %













Noninterest-bearing deposits

419,008




474,925




795,704



Noninterest-bearing liabilities

147,520




107,192




90,687















    Total liabilities

11,011,898




10,170,645




9,805,312















    Shareholders' equity

1,445,995




1,267,160




1,139,714















Total liabilities and shareholders' equity

$  12,457,893




$  11,437,805




$    10,945,026















Net interest income


$  95,410




$   85,385




$   72,743














Net interest spread



2.69 %




2.77 %




2.62 %













Net interest-earning assets

$    1,639,903




$    1,533,808




$     1,775,953















Net interest margin



3.13 %




3.05 %




2.70 %













Average interest-earning assets to average
interest-bearing liabilities



115.70 %




116.00 %




119.91 %

 

Supplemental Results

(Unaudited)

($ in thousands)



















Net Income


Net Income






Three Months Ended


Twelve Months Ended






December 31,


September 30,


December 31,


December 31,






2022


2022


2021


2022


2021


Segment














Multi-family Mortgage Banking




$            10,228


$          13,366


$             14,124


$         54,642


$         51,504


Mortgage Warehousing




11,776


11,801


21,311


48,604


95,159


Banking




40,181


39,344


22,629


134,221


90,858


Other




(5,029)


(6,023)


(2,863)


(17,746)


(10,417)


Total




$            57,156


$          58,488


$             55,201


$       219,721


$       227,104


































Total Assets










December 31,


September 30,


December 31,










2022


2022


2021






Segment














Multi-family Mortgage Banking




$          351,274


$        343,443


$           296,129






Mortgage Warehousing




2,519,810


2,735,278


3,977,537






Banking




9,587,544


8,760,416


6,929,565






Other




156,599


139,585


75,407






Total




$     12,615,227


$   11,978,722


$      11,278,638






































Gain on Sale of Loans


Gain on Sale of Loans






Three Months Ended


Twelve Months Ended






December 31,


September 30,


December 31,


December 31,






2022


2022


2021


2022


2021


Loan Type














Multi-family




10,241


$          12,002


$             24,797


$         56,819


$         93,350


Single-family




132


138


1,086


1,133


8,763


Small Business Association (SBA)




894


1,214


2,547


6,198


9,072


Total




$            11,267


$          13,354


$             28,430


$         64,150


$       111,185


































Loans Receivable and Loans Held for Sale










December 31,


September 30,


December 31,










2022


2022


2021




















Mortgage warehouse lines of credit




$          464,785


$        815,084


$           781,437






Residential real estate




1,178,401


1,030,075


843,101






Multi-family financing




3,135,535


2,766,950


2,702,042






Healthcare financing




1,604,341


1,429,675


826,157






Commercial and commercial real estate (1)




978,661


810,731


520,199






Agricultural production and real estate




95,651


91,913


97,060






Consumer and margin loans




13,498


13,696


12,667










7,470,872


6,958,124


5,782,663






    Less: Allowance for credit losses on loans



44,014


38,996


31,344






Loans receivable




$       7,426,858


$     6,919,128


$        5,751,319




















Loans held for sale




2,910,576


2,844,750


3,303,199






Total loans, net of allowance




$     10,337,434


$     9,763,878


$        9,054,518




















(1)     Includes $497.0 million and $209.8 million of revolving  lines of credit collateralized primarily by single-family mortgage servicing rights as of December
31, 2022 and 2021, respectively.


 

 

SOURCE Merchants Bancorp


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