Merchants Bancorp Reports First Quarter 2024 Results

Merchants Bancorp +0.69%

Merchants Bancorp

MBIN

43.94

+0.69%

  • First quarter 2024 net income of $87.1 million was the Company's highest quarterly earnings ever recorded, increasing 58% compared to first quarter of 2023 and increasing 12% compared to the fourth quarter 2023.
  • First quarter 2024 diluted earnings per common share of $1.80 increased 68% compared to the first quarter of 2023 and increased 14% compared to the fourth quarter of 2023.
  • Total assets of $17.8 billion surpassed any level previously reported by the Company, increasing 25% compared to March 31, 2023 and increasing 5% compared to December 31, 2023.
  • Tangible book value per common share of $29.26 increased 28% compared to $22.88 in the first quarter of 2023 and increased 7% compared to $27.40 in the fourth quarter of 2023.
  • As of March 31, 2024, the Company had $5.6 billion in unused borrowing capacity with the Federal Home Loan Bank and the Federal Reserve Discount window, representing 32% of total assets.
  • The Company's most liquid assets are in unrestricted cash, short-term investments, including interest-bearing demand deposits, mortgage loans in process of securitization, loans held for sale, and warehouse repurchase agreements included in loans receivable. Taken together, with unused borrowing capacity, these totaled $10.9 billion, or 61%, of the $17.8 billion in total assets as of March 31, 2024.
  • Loans receivable of $10.7 billion, net of allowance for credit losses on loans, increased $2.1 billion, or 25%, compared to March 31, 2023, and increased $562.7 million, or 6%, compared to December 31, 2023.
  • The efficiency ratio was 29.1% in the first quarter of 2024 compared to 30.3% in the first quarter of 2023 and 33.1% in the fourth quarter of 2023.
  • Quarterly dividends of $0.09 per common share increased 13% compared to the first quarter of 2023.
  • The previously announced agreement to sell several Illinois bank branches was completed on January 26, 2024, resulting in a gain of $0.7 million.
  • The Company redeemed all outstanding shares of the Series A Preferred Stock for approximately $52 million on April 1, 2024, at the liquidation preference of $25.00 per share.
  • On March 27, 2024, the Company executed a credit default swap on a $544 million pool of its multi-family mortgage loans, to provide credit protection for the loan pool and reduce risk-based capital requirements.

CARMEL, Ind., April 29, 2024 /PRNewswire/ -- Merchants Bancorp (the "Company" or "Merchants") (Nasdaq: MBIN), parent company of Merchants Bank, today reported first quarter 2024 net income of $87.1 million, or diluted earnings per common share of $1.80.  This compared to $55.0 million, or diluted earnings per common share of $1.07 in the first quarter of 2023, and compared to $77.5 million, or diluted earnings per common share of $1.58 in the fourth quarter of 2023.

(PRNewsfoto/Merchants Bancorp)

"Our financial results are off to a strong start in 2024, as we achieved the highest quarterly earnings in Company history.  Loan growth continued to accelerate, with total assets reaching a record level of nearly $18 billion at the end of the quarter. The momentum of our profitability continued, as we grew net income by 58% compared to the same period in 2023, all while decreasing our efficiency ratio to 29.1%, increasing our return on average assets to 2.07%, and increasing our tangible book value by 28%, to $29.26 per share," said Michael F. Petrie, Chairman and CEO of Merchants. 

Michael J. Dunlap, President and Chief Operating Officer of Merchants, added, "We are proud of the culture we have established at Merchants and believe it has contributed to the entrepreneurial creativity and successes we have had since becoming a public company in 2017.  We have created a unique business model, with a focus on well-collateralized, affordable multi-family housing that is underwritten to agency guidelines.  We can operate in any interest rate environment, and we are managing our capital and strong liquidity to maximize future growth opportunities."

Net income of $87.1 million for the first quarter 2024 increased by $32.1 million, or 58%, compared to the first quarter of 2023.  The higher net income was primarily driven by a $26.4 million increase in net interest income and a higher fair market value adjustment to servicing rights, which was partially offset by a $14.1 million increase in noninterest expenses. Results for the first quarter 2024 included a $14.0 million positive fair market value adjustment to servicing rights compared to a $2.9 million negative adjustment in the first quarter of 2023.

Net income of $87.1 million for the first quarter 2024 increased by $9.6 million, or 12%, compared to the fourth quarter of 2023.  The increase in net income was primarily driven by a $21.6 million higher fair market value adjustment to servicing rights, which was partially offset by a $10.0 million decrease in gain on sale of loans.  Results for the first quarter of 2024 included $14.0 million positive fair market value adjustment to servicing rights compared to a $7.6 million negative fair market value adjustment to servicing rights in the fourth quarter 2023.

Total Assets

Total assets of $17.8 billion at March 31, 2024 increased $3.6 billion, or 25%, compared to March 31, 2023, and increased $870 million, or 5%, compared to December 31, 2023.  The increase compared to December 31, 2023 was primarily due to growth in the warehouse, healthcare, and multi-family loan portfolios as well as loans held for sale. 

Return on average assets was 2.07% for the first quarter of 2024 compared to 1.71% for the first quarter of 2023 and 1.86% for the fourth quarter of 2023.

Asset Quality

The allowance for credit losses on loans of $75.7 million, as of March 31, 2024, increased $23.9 million, or 46%, compared to March 31, 2023 and increased $4.0 million, or 6%, compared to December 31, 2023.  The increase compared to both periods was primarily due to loan growth in the multi-family and healthcare portfolios, as well as changes in specific reserves and loss factors to reflect industry conditions.  The Company experienced one charge-off of a commercial loan for $0.9 million and $1,000 of recoveries during the first quarter 2024.

As of March 31, 2024, non-performing loans were $131.8 million, or 1.22% of loans receivable before the allowance for credit losses on loans, compared to $65.3 million, or 0.76%, as of March 31, 2023, and $82.0 million, or 0.80%, as of December 31, 2023.  The increase in non-performing loans compared to December 31, 2023 was primarily due to 3 customers with delinquent payments of 90 days or more.  As of March 31, 2024, there were 13 customers classified in nonaccrual status and 8 customers delinquent by 90 or more days, but still accruing interest with full repayment expected.

Securities Available for Sale

Total securities available for sale of $1.1 billion as of March 31, 2024 increased $381.8 million, or 56%, compared to March 31, 2023, and decreased $52.4 million, or 5%, compared to December 31, 2023.  The increase compared to March 31, 2023 was primarily associated with the acquisition of certain securities from a warehouse customer that provides protective put options and interest rate floor derivatives to prevent losses in value.  The decrease in securities from December 31, 2023 was partially due to the sale of securities held by Farmers-Merchants Bank of Illinois ("FMBI") prior to the completion of the sale of its branches.

As of March 31, 2024, Accumulated Other Comprehensive Losses ("AOCL") of $1.2 million, related to securities available for sale, decreased $6.6 million, or 85%, compared to March 31, 2023, and decreased $1.3 million, or 53%, compared to December 31, 2023.  The $1.2 million of AOCL as of March 31, 2024 represented less than 1% of total equity and less than 1% of total investment securities.

Total Deposits

Total deposits of $14.0 billion at March 31, 2024 increased $2.6 billion compared to March 31, 2023, and decreased $85.8 million, or 1%, compared to December 31, 2023. The change compared to March 31, 2023 was primarily due to increases in brokered certificates of deposit and brokered demand deposit accounts.  The change compared to December 31, 2023 was primarily due to decreases in brokered demand deposit accounts that were partially offset by increases in brokered certificates of deposit.

Total brokered deposits of $5.8 billion at March 31, 2024 increased $2.0 billion, or 54%, from March 31, 2023 and decreased $0.2 million, or 4%, from December 31, 2023.   Brokered deposits represented 41% of total deposits at March 31, 2024 compared to 33% of total deposits at March 31, 2023 and 42% of total deposits at December 31, 2023.  As of March 31, 2024, brokered certificates of deposit had a weighted average remaining duration of 57 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 short duration characteristics of its deposit and loan portfolios.  Additionally, the Company has offered an insured cash sweep program since 2018, which extends FDIC protection up to $100 million per depositor. The balance of deposits in this program was $1.7 billion as of March 31, 2024 compared to $1.5 billion at March 31, 2023 and $1.6 billion at December 31, 2023, and has contributed to the Company's low level of uninsured deposits, which were below 15% of total deposits.

Liquidity

Cash balances of $508.8 million as of March 31, 2024 increased by $139.2 million compared to March 31, 2023 and decreased by $75.7 million compared to December 31, 2023.  The Company continues to have significant borrowing capacity, with unused lines of credit totaling $5.6 billion as of March 31, 2024 compared to $4.0 billion at March 31, 2023 and $6.0 billion at December 31, 2023. 

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 or securitize a significant portion of its loans, which provides flexibility in managing its liquidity.

Comparison of Operating Results for the Three Months Ended

March 31, 2024 and 2023 

Net Interest Income of $127.1 million increased $26.4 million, or 26%, compared to $100.7 million, primarily reflecting an increase in both average balances and yields on loans and loans held for sale, as well as higher average yields and balances of securities available for sale, which were partially offset by higher average balances and interest rates on deposits, as well as higher rates on borrowings.

  • Interest rate spread of 2.58% decreased 18 basis points compared to 2.76%.
  • Net interest margin of 3.14% decreased 13 basis points compared to 3.27%.

Interest Income of $314.2 million increased $102.9 million, or 49%, compared to $211.3 million, reflecting an increase in both average balances and higher yields of loans and loans held for sale, as well as securities available for sale.

  • Average balances of $13.5 billion for loans and loans held for sale increased 27% compared to $10.6 billion.
  • Average yield on loans and loans held for sale of 8.11% increased 86 basis points compared to 7.25%.
  • Average balances of $1.1 billion for securities available for sale increased 144% compared to $445.6 million.
  • Average yield on securities available for sale of 5.33% increased 327 basis points compared to 2.06%.

Interest Expense of $187.1 million increased $76.5 million, or 69%, compared to $110.6 million.  The increase was primarily due to higher average balances and rates on certificates of deposit and interest-bearing checking, as well as higher rates on borrowings.

  • Average balances of $5.7 billion for certificates of deposit increased 71% compared to $3.3 billion.
  • Average interest rates of 5.40% for certificates of deposit increased 114 basis points compared to 4.26%.
  • Average balances of $5.1 billion for interest-bearing deposits increased 25% compared to $4.1 billion.
  • Average interest rates of 4.81% for interest-bearing deposits increased 74 basis points compared to 4.07%.

Noninterest Income of $40.9 million increased $26.6 million, or 187%, compared to $14.3 million, primarily due to a $17.0 million, or 722%, increase in loan servicing fees, a $4.1 million, or 338% increase in syndication and asset management fees, a $3.0 million, or 103%, increase in other income and a $2.6 million, or 39%, increase in gain on sale of loans.   

  • Loan servicing fees included a $14.0 million positive fair market value adjustment to servicing rights, with a $0.8 million positive adjustment in the Banking segment and a $13.2 million positive adjustment in the Multi-family Mortgage Banking segment. This compared to a $2.9 million negative fair market value adjustment to mortgage servicing rights in the prior period, of which $0.7 million negative adjustment in the Banking segment and $2.2 million negative adjustment in the Multi-family Mortgage Banking segment.

Noninterest Expense of $48.9 million increased $14.1 million, or 41%, compared to $34.8 million partially due to increases in salaries and employee benefits associated with higher commissions on higher production volume, as well as increases in deposit insurance expense.

  • The efficiency ratio of 29.1% decreased 112 basis points compared to 30.3%.

Comparison of Operating Results for the Three Months Ended

March 31, 2024 and December 31, 2023 

Net Interest Income of $127.1 million increased 2% compared to $124.3 million, reflecting higher yields and average balances of securities available for sale, partially offset by a decrease in average balances on loans and loans held for sale, while interest expense held relatively unchanged.

  • Interest rate spread of 2.58% increased 10 basis points compared to 2.48%.
  • Net interest margin of 3.14% increased 9 basis points compared to 3.05%.

Interest Income of $314.2 million increased $2.4 million, or 1%, compared to $311.8 million, reflecting an increase in average yields and  balances of securities available for sale, partially offset by a decrease in average balances on loans and loans held for sale, as well as decreases in average balances of mortgage loans in process of securitization.

  • Average yields of 5.33% for securities available for sale increased 112 basis points compared to 4.21%.
  • Average balances of $1.1 billion for securities available for sale increased 51% compared to $716.3 million.
  • Average balances of $13.5 billion for loans and loans held for sale decreased 1% compared to $13.7 billion.
  • Average balances of $137.9 million for mortgage loans in process of securitization decreased 64% compared to $380.6 million.

Interest Expense of $187.1 million decreased $0.3 million, compared to $187.4 million. The decrease was primarily driven by lower rates on interest-bearing checking and certificate of deposit accounts, as well as lower average balances of interest-bearing checking accounts, which were partially offset by higher average certificate of deposit balances.  

  • Average interest rates of 4.81% for interest-bearing checking accounts decreased 6 basis points compared to 4.87%.
  • Average interest rates of 5.40% for certificate of deposit accounts decreased 3 basis points compared to 5.43%.
  • Average balances of $5.1 billion for interest-bearing checking accounts decreased 10% compared to $5.6 billion.
  • Average balances of $5.7 billion for certificate of deposit accounts increased 13% compared to $5.0 billion.

Noninterest Income of $40.9 million increased $6.4 million, or 19%, compared $34.5 million, primarily due to a $21.6 million, or 997%, increase in loan servicing fees, partially offset by a decrease of $10.0 million, or 52%, in gain on sale of loans and a $4.5 million, or 43%, decrease in other income.

  • Loan servicing fees included a $14.0 million positive fair market value adjustment to servicing rights, with a $0.8 million positive adjustment in the Banking segment and a $13.2 million positive adjustment in the Multi-family Mortgage Banking segment. This compared to a $7.6 million negative fair market value adjustment to servicing rights in the prior period, with a $1.1 million negative adjustment in the Banking segment and a $6.5 million negative adjustment in the Multi-family Mortgage Banking segment.
  • The decrease in gain on sale of loans was associated with decrease in production volume of multi-family loans that were sold in the secondary market.

Noninterest Expense of $48.9 million decreased $3.7 million, or 7%, compared to $52.6 million, primarily due to decreases in salaries and employee benefits associated with lower commissions on lower production volume.

  • The efficiency ratio of 29.1% decreased 398 basis points compared to 33.1%.

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 primarily offers multi-family housing and healthcare facility financing and servicing (through this segment it also serves as a syndicator of low-income housing tax credit and debt funds); Mortgage Warehousing that offers mortgage warehouse financing, commercial loans, and deposit services; and Banking that offers retail and correspondent residential mortgage banking, agricultural lending, and traditional community banking.  Merchants Bancorp, with $17.8 billion in assets and $14.0 billion in deposits as of March 31, 2024, 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, 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. 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 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)



























March 31,



December 31,



September 30,



June 30,



March 31,





2024



2023



2023



2023



2023

Assets





















Cash and due from banks



$       17,924



$         15,592



$           10,633



$       15,390



$       19,002

Interest-earning demand accounts



490,831



568,830



396,605



361,920



350,584

Cash and cash equivalents



508,755



584,422



407,238



377,310



369,586

Securities purchased under agreements to resell



3,329



3,349



3,385



3,412



3,438

Mortgage loans in process of securitization



142,629



110,599



476,047



298,907



197,074

Securities available for sale ($700,640 and $722,497 utilizing fair value option at March 31,

2024 and December 31, 2023)



1,061,288



1,113,687



624,586



648,003



679,518

Securities held to maturity ($1,176,178, $1,203,535, $1,010,745, $1,058,590 and $1,106,582

at fair value, respectively)



1,175,167



1,204,217



1,012,801



1,062,017



1,104,835

Federal Home Loan Bank (FHLB) stock



64,215



48,578



48,219



39,130



39,130

Loans held for sale (includes $84,513, $86,663, $90,875, $82,931 and $85,516 at fair value,

respectively)



3,503,131



3,144,756



3,477,036



3,058,013



2,855,250

Loans receivable, net of allowance for credit losses on loans of $75,712, $71,752, $66,864,

$62,986 and $51,838, respectively



10,690,513



10,127,801



9,910,681



9,854,018



8,575,210

Premises and equipment, net



42,450



42,342



36,730



36,947



35,793

Servicing rights



172,200



158,457



162,141



147,288



143,867

Interest receivable



90,303



91,346



78,401



70,509



64,282

Goodwill 



8,014



15,845



15,845



15,845



15,845

Intangible assets, net



149



742



831



949



1,068

Other assets and receivables



360,433



306,375



241,295



262,524



156,070

Total assets



$17,822,576



$   16,952,516



$   16,495,236



$15,874,872



$14,240,966

Liabilities and Shareholders' Equity





















  Liabilities





















Deposits





















Noninterest-bearing



$     319,872



$       520,070



$         287,846



$     349,387



$     313,733

Interest-bearing



13,655,789



13,541,390



12,719,492



12,710,477



11,031,498

Total deposits



13,975,661



14,061,460



13,007,338



13,059,864



11,345,231

Borrowings 



1,835,985



964,127



1,654,075



1,016,836



1,233,762

Deferred and current tax liabilities, net



43,935



19,923



18,006



16,084



32,827

Other liabilities



190,527



205,922



183,102



221,788



123,462

Total liabilities



16,046,108



15,251,432



14,862,521



14,314,572



12,735,282

Commitments and  Contingencies





















Shareholders' Equity





















Common stock, without par value





















Authorized - 75,000,000 shares





















Issued and outstanding  - 43,354,718 shares, 43,242,928 shares, 43,240,212 shares,

43,237,300 shares and 43,233,618 shares



139,950



140,365



139,609



138,853



138,105

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

(All shares were redeemed as of April 1, 2024)





















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



137,459



137,459



137,459



137,459

Retained earnings



1,138,083



1,063,599



998,252



928,875



875,700

Accumulated other comprehensive loss



(1,173)



(2,488)



(4,754)



(7,036)



(7,729)

Total shareholders' equity



1,776,468



1,701,084



1,632,715



1,560,300



1,505,684

Total liabilities and shareholders' equity



$17,822,576



$   16,952,516



$   16,495,236



$15,874,872



$14,240,966

 

Consolidated Statement of Income

(Unaudited)

(In thousands, except share data)

































Three Months Ended



Change





March 31, 



December 31,



March 31, 



1Q24



1Q24





2024



2023



2023



vs. 4Q23



vs. 1Q23

Interest Income



























Loans



$

271,998



$

274,971



$

189,450



-1 %



44 %

Mortgage loans in process of securitization





1,720





5,294





1,648



-68 %



4 %

Investment securities:



























Available for sale





14,388





7,609





2,266



89 %



535 %

Held to maturity





20,522





19,491





15,754



5 %



30 %

Federal Home Loan Bank stock





844





735





427



15 %



98 %

Other





4,701





3,659





1,749



28 %



169 %

Total interest income





314,173





311,759





211,294



1 %



49 %

Interest Expense



























Deposits





171,022





172,061





104,442



-1 %



64 %

Borrowed funds





16,095





15,373





6,159



5 %



161 %

Total interest expense





187,117





187,434





110,601



-0 %



69 %

Net Interest Income





127,056





124,325





100,693



2 %



26 %

Provision for credit losses





4,726





6,747





6,867



-30 %



-31 %

Net Interest Income After Provision for Credit Losses





122,330





117,578





93,826



4 %



30 %

Noninterest Income



























Gain on sale of loans





9,356





19,342





6,733



-52 %



39 %

Loan servicing fees, net





19,402





(2,162)





2,360



-997 %



722 %

Mortgage warehouse fees





982





1,950





1,028



-50 %



-4 %

Losses on sale of investments available for sale (1)





(108)











-100 %



-100 %

Syndication and asset management fees





5,303





4,879





1,212



9 %



338 %

Other income





5,939





10,445





2,931



-43 %



103 %

Total noninterest income





40,874





34,454





14,264



19 %



187 %

Noninterest Expense



























Salaries and employee benefits





29,596





33,259





22,146



-11 %



34 %

Loan expenses





956





660





804



45 %



19 %

Occupancy and equipment





2,237





2,336





2,232



-4 %



0 %

Professional fees





4,099





4,157





2,269



-1 %



81 %

Deposit insurance expense





5,125





4,030





2,178



27 %



135 %

Technology expense





1,854





1,758





1,577



5 %



18 %

Other expense





5,045





6,379





3,566



-21 %



41 %

Total noninterest expense





48,912





52,579





34,772



-7 %



41 %

Income Before Income Taxes





114,292





99,453





73,318



15 %



56 %

Provision for income taxes (2)





27,238





21,980





18,363



24 %



48 %

Net Income



$

87,054



$

77,473



$

54,955



12 %



58 %

  Dividends on preferred stock





(8,667)





(8,667)





(8,667)





Net Income Allocated to Common Shareholders



$

78,387



$

68,806



$

46,288



14 %



69 %

Basic Earnings Per Share



$

1.81



$

1.59



$

1.07



14 %



69 %

Diluted Earnings Per Share



$

1.80



$

1.58



$

1.07



14 %



68 %

Weighted-Average Shares Outstanding



























Basic





43,305,985





43,241,600





43,179,604









Diluted





43,466,647





43,430,973





43,290,779











(1) Includes $(108), $0, and $0 respectively, related to accumulated other comprehensive losses reclassifications.

(2) Includes $26, $0, and $0 respectively, related to income tax benefit for reclassification items.

 

Key Operating Results

(Unaudited)

($ in thousands, except share data)

































Three Months Ended



Change









March 31,



December 31, 



March 31,



1Q24



1Q24









2024



2023



2023



vs. 4Q23



vs. 1Q23





























Noninterest expense





$       48,912



$           52,579



$       34,772



-7 %



41 %





























Net interest income (before provision for credit losses)





127,056



124,325



100,693



2 %



26 %



Noninterest income





40,874



34,454



14,264



19 %



187 %



Total income





$     167,930



$         158,779



$     114,957



6 %



46 %





























Efficiency ratio





29.13 %



33.11 %



30.25 %



(398)

bps

(112)

bps





















































Average assets





$ 16,793,072



$   16,671,484



$ 12,885,735



1 %



30 %



Net income





87,054



77,473



54,955



12 %



58 %



Return on average assets before annualizing





0.52 %



0.46 %



0.43 %











Annualization factor





4.00



4.00



4.00











Return on average assets





2.07 %



1.86 %



1.71 %



21

bps

36

bps



























Return on average tangible common shareholders' equity (1)





25.34 %



23.60 %



18.89 %



174

bps

645

bps



























Tangible book value per common share (1)





$         29.26



$             27.40



$         22.88



7 %



28 %





























Tangible common shareholders' equity/tangible assets (1)





7.12 %



7.00 %



6.95 %



12

bps

17

bps



























Consolidated ratios

























Total capital/risk-weighted assets(2)





11.6

%

11.6

%

12.4

%







Tier I capital/risk-weighted assets(2)





11.1

%

11.1

%

11.9

%







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





7.9

%

7.8

%

7.9

%







Tier I capital/average assets(2)





10.5

%

10.1

%

11.6

%









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

(2) As defined by regulatory agencies; March 31, 2024 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 shareholders' equity is calculated by excluding the balance of goodwill and other intangible assets and preferred stock from the calculation of total equity.  Tangible Assets is calculated by excluding the balance of goodwill and intangible assets.  Tangible book value per share is calculated by dividing tangible common shareholders' equity by the number of shares outstanding.

 







Three Months Ended



Change









March 31,



December 31, 



March 31,



1Q24



1Q24









2024



2023



2023



vs. 4Q23



vs. 1Q23





























Net income





$       87,054



$           77,473



$       54,955



12 %



58 %



Less: preferred stock dividends  





(8,667)



(8,667)



(8,667)







Net income available to common shareholders





$       78,387



$           68,806



$       46,288



14 %



69 %





























Average shareholders' equity





$   1,747,660



$     1,682,270



$   1,496,610



4 %



17 %



Less: average goodwill & intangibles





(10,494)



(16,629)



(16,980)



-37 %



-38 %



Less: average preferred stock





(499,608)



(499,608)



(499,608)







Average tangible common shareholders' equity





$   1,237,558



$     1,166,033



$     980,022



6 %



26 %





























Annualization factor





4.00



4.00



4.00











Return on average tangible common shareholders' equity





25.34 %



23.60 %



18.89 %



174

bps

645

bps



























Total equity





$   1,776,468



$     1,701,084



$   1,505,684



4 %



18 %



Less: goodwill and intangibles





(8,163)



(16,587)



(16,913)



-51 %



-52 %



Less: preferred stock





(499,608)



(499,608)



(499,608)







Tangible common shareholders' equity





$   1,268,697



$     1,184,889



$     989,163



7 %



28 %





























Assets





$ 17,822,576



$   16,952,516



$ 14,240,966



5 %



25 %



Less: goodwill and intangibles





(8,163)



(16,587)



(16,913)



-51 %



-52 %



Tangible assets





$ 17,814,413



$   16,935,929



$ 14,224,053



5 %



25 %





























Ending common shares





43,354,718



43,242,928



43,233,618





































Tangible book value per common share





$         29.26



$             27.40



$         22.88



7 %



28 %



Tangible common shareholders' equity/tangible assets





7.12 %



7.00 %



6.95 %



12

bps

17

bps

 

Merchants Bancorp

Average Balance Analysis

($ in thousands)

(Unaudited)



























Three Months Ended



Three Months Ended



Three Months Ended



March 31, 2024



December 31, 2023



March 31, 2023



Average



Yield/



Average



Yield/



Average



Yield/



Balance

Interest

Rate 



Balance

Interest

Rate 



Balance

Interest

Rate 

Assets:















































Interest-bearing deposits, and other

$     346,150

$   5,545

6.44 %



$     268,083

$   4,394

6.50 %



$     184,470

$   2,176

4.78 %

Securities available for sale

1,085,114

14,388

5.33 %



716,315

7,609

4.21 %



445,614

2,266

2.06 %

Securities held to maturity

1,196,633

20,522

6.90 %



1,141,664

19,491

6.77 %



1,115,243

15,754

5.73 %

Mortgage loans in process of securitization

137,890

1,720

5.02 %



380,645

5,294

5.52 %



159,333

1,648

4.19 %

Loans and loans held for sale

13,494,961

271,998

8.11 %



13,674,793

274,971

7.98 %



10,595,669

189,450

7.25 %

    Total interest-earning assets

16,260,748

314,173

7.77 %



16,181,500

311,759

7.64 %



12,500,329

211,294

6.86 %

Allowance for credit losses on loans

(71,544)







(67,114)







(45,190)





Noninterest-earning assets

603,868







557,098







430,596





























Total assets

$ 16,793,072







$ 16,671,484







$ 12,885,735





















































Liabilities & Shareholders' Equity:















































Interest-bearing checking

5,070,393

60,688

4.81 %



5,607,744

68,899

4.87 %



4,052,081

40,647

4.07 %

Savings deposits

201,860

219

0.44 %



242,788

346

0.57 %



237,289

265

0.45 %

Money market 

2,817,382

33,644

4.80 %



2,825,051

34,058

4.78 %



2,848,500

28,608

4.07 %

Certificates of deposit

5,694,933

76,471

5.40 %



5,023,434

68,758

5.43 %



3,322,991

34,922

4.26 %

  Total interest-bearing deposits

13,784,568

171,022

4.99 %



13,699,017

172,061

4.98 %



10,460,861

104,442

4.05 %

























Borrowings

716,853

16,095

9.03 %



720,521

15,373

8.46 %



482,723

6,159

5.17 %

  Total interest-bearing liabilities

14,501,421

187,117

5.19 %



14,419,538

187,434

5.16 %



10,943,584

110,601

4.10 %

























Noninterest-bearing deposits

332,172







366,152







304,119





Noninterest-bearing liabilities

211,819







203,524







141,422





























  Total liabilities

15,045,412







14,989,214







11,389,125





























  Shareholders' equity

1,747,660







1,682,270







1,496,610





























Total liabilities and shareholders' equity

$ 16,793,072







$ 16,671,484







$ 12,885,735





























Net interest income



$ 127,056







$ 124,325







$ 100,693



























Net interest spread





2.58 %







2.48 %







2.76 %

























Net interest-earning assets

$  1,759,327







$  1,761,962







$  1,556,745





























Net interest margin





3.14 %







3.05 %







3.27 %

























Average interest-earning assets to average interest-bearing liabilities





112.13 %







112.22 %







114.23 %

 

Supplemental Results

(Unaudited)

($ in thousands)





























Net Income











Three Months Ended











March 31,



December 31,



March 31,











2024



2023



2023



Segment



















Multi-family Mortgage Banking







$       16,609



$           8,580



$         1,966



Mortgage Warehousing







20,190



26,362



8,641



Banking







56,425



49,996



49,307



Other







(6,170)



(7,465)



(4,959)



Total







$       87,054



$         77,473



$       54,955



















































Total Assets











March 31,



December 31,



March 31,











2024



2023



2023



Segment



















Multi-family Mortgage Banking







$     416,454



$       411,097



$     341,487



Mortgage Warehousing







5,369,299



4,522,175



3,318,491



Banking







11,760,028



11,760,943



10,430,293



Other







276,795



258,301



150,695



Total







$ 17,822,576



$   16,952,516



$ 14,240,966



















































Gain on Sale of Loans











Three Months Ended











March 31,



December 31,



March 31,











2024



2023



2023



Loan Type



















Multi-family







8,423



$         19,082



$         4,920



Single-family







280



(183)



277



Small Business Association (SBA)







653



443



1,536



Total







$         9,356



$         19,342



$         6,733



















































Loans Receivable and Loans Held for Sale











March 31,



December 31,



March 31,











2024



2023



2023























Mortgage warehouse repurchase agreements







$   1,142,994



$       752,468



$     604,445



Residential real estate (1)







1,321,300



1,324,305



1,215,252



Multi-family financing







4,096,606



4,006,160



3,566,530



Healthcare financing







2,464,685



2,356,689



1,941,204



Commercial and commercial real estate (2)(3)







1,666,751



1,643,081



1,194,320



Agricultural production and real estate







65,977



103,150



89,516



Consumer and margin loans







7,912



13,700



15,781











10,766,225



10,199,553



8,627,048



  Less: Allowance for credit losses on loans







75,712



71,752



51,838



Loans receivable







$ 10,690,513



$   10,127,801



$   8,575,210























Loans held for sale







3,503,131



3,144,756



2,855,250



Total loans, net of allowance







$ 14,193,644



$   13,272,557



$ 11,430,460





(1)  Includes $1.2 billion, $1.2 billion and $1.1 billion of All-In-One © first-lien home equity lines of credit as of March 31, 2024, December 31, 2023 and March 31, 2023, respectively. 

(2)  Includes $1.1 billion, $1.1 billion and $672.9 million of revolving  lines of credit collateralized primarily by mortgage servicing rights as of March 31, 2024, December 31, 2023 and March 31, 2023, respectively.

(3)  Includes only $6.8 million, $8.4 million and $9.1 million of non-owner occupied commerical real estate as of March 31, 2024, December 31, 2023 and March 31, 2023, respectively.

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/merchants-bancorp-reports-first-quarter-2024-results-302130586.html

SOURCE Merchants Bancorp

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