Merchants Bancorp Reports Second Quarter 2024 Results
- Second quarter 2024 net income of
$76.4 million , increased 17% compared to second quarter of 2023 and decreased 12% compared to the first quarter 2024. - Second quarter 2024 diluted earnings per common share of
$1.49 increased 14% compared to the second quarter of 2023 and decreased 17% compared to the first quarter of 2024. - Total assets of
$18.2 billion surpassed any level previously reported by the Company, increasing 2% compared toMarch 31, 2024 and increasing 7% compared toDecember 31, 2023 . - On
May 13, 2024 , the Company completed a common stock offering of 2.4 million shares, resulting in net proceeds of$97.7 million , which contributed to the estimated 70 basis point increase in the common equity tier I capital ratio that reached 8.7% as ofJune 30, 2024 . - Tangible book value per common share reached a record-high of
$31.27 and increased 30% compared to$24.14 in the second quarter of 2023 and increased 7% compared to$29.26 in the first quarter of 2024. - As of
June 30, 2024 , the Company had$7.0 billion in unused borrowing capacity with theFederal Home Loan Bank and the Federal Reserve Discount window, representing 39% of total assets. - The Company's most liquid assets are in unrestricted cash, short-term investments, including interest-earning 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
$12.6 billion , or 69%, of the$18.2 billion in total assets as ofJune 30, 2024 . - Loans receivable of
$10.9 billion , net of allowance for credit losses on loans, increased$242.7 million , or 2%, compared toMarch 31, 2024 , and increased$805.4 million , or 8%, compared toDecember 31, 2023 . - The efficiency ratio was 31.59% in the second quarter of 2024 compared to 32.71% in the second quarter of 2023 and 29.13% in the first quarter of 2024.
- On
April 30, 2024 , the Company completed a$324.6 million securitization of 13 multi-family mortgage loans through a Freddie Mac-sponsored Q-Series transaction. - The Company redeemed all outstanding shares of the Series A Preferred Stock for
$52 million onApril 1, 2024 , at the liquidation preference of$25.00 per share.
"Results for the second quarter demonstrate our success in serving customers while also increasing shareholder value in any interest rate environment. Loan growth continued as we reached a new record of
Net income of
- a
$22.5 million , or 21%, increase in net interest income, and - a
$12.6 million , or 56%, decrease in the provision for credit losses related to lower loan charge-offs and relative changes to qualitative factors, which were partially offset by - a
$19.5 million , or 594%, increase in the provision for income tax, primarily due to a$13.0 million tax benefit recorded in the second quarter of 2023 that was related to tax refunds and changes in state tax apportionment calculations.
Net income of
- an
$8.9 million lower fair market value positive adjustment to servicing rights. Results for the second quarter of 2024 included a$5.1 million positive fair market value adjustment to servicing rights compared to a$14.0 million positive fair market value adjustment to servicing rights in the first quarter of 2024, and - a
$5.2 million increase in the provision for credit losses that reflected higher loan charge-offs and specific reserves, as well as an increase in qualitative loss factors in the multi-family loan portfolio, which were offset by a decrease in loss rates of other portfolios during the second quarter of 2024.
Total Assets
Total assets of
Return on average assets was 1.72% for the second quarter of 2024 compared to 1.78% for the second quarter of 2023 and 2.07% for the first quarter of 2024.
Asset Quality
The allowance for credit losses on loans of
The Company recorded three charge-offs, primarily in the multi-family portfolio, for
As of
Securities Available for Sale
Total securities available for sale of
As of
Total Deposits
Total deposits of
Core deposits of
Total brokered deposits of
Liquidity
Cash balances of
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
Net Interest Income of
- Net interest margin of 2.99% increased 2 basis points compared to 2.97%. The margin was negatively impacted by approximately 6 basis points in the second quarter of 2024 from the net reversal of
$2.5 million in accrued interest income associated with the movement of loans into nonaccrual status. - Interest rate spread of 2.45% increased 4 basis points compared to 2.41%.
Interest Income of
- Average balances of
$14.3 billion for loans and loans held for sale increased 20% compared to$12.0 billion . - Average yield on loans and loans held for sale of 7.97% increased 30 basis points compared to 7.67%.
- Average balances of
$1.0 billion for securities available for sale increased 54% compared to$672.9 million . - Average yield on securities available for sale of 5.72% increased 240 basis points compared to 3.32%.
Interest Expense of
- Average balances of
$6.5 billion for certificates of deposit increased 38% compared to$4.7 billion . - Average interest rates of 5.43% for certificates of deposit increased 45 basis points compared to 4.98%.
- Average balances of
$4.9 billion for interest-bearing checking increased 15% compared to$4.3 billion . - Average interest rates of 4.74% for interest-bearing checking increased 24 basis points compared to 4.50%.
- Average balances of
$1.0 billion for borrowings increased 74% compared to$591.3 million .
Noninterest Income of
- Loan servicing fees included a
$5.1 million positive fair market value adjustment to servicing rights, with a$0.6 million positive adjustment in the Banking segment and a$4.5 million positive adjustment in the Multi-family Mortgage Banking segment. This compared to a$3.4 million positive fair market value adjustment to mortgage servicing rights in the prior period, of which$1.3 million positive adjustment in the Banking segment and$2.1 million positive adjustment in the Multi-family Mortgage Banking segment.
Noninterest Expense of
- The efficiency ratio of 31.59% decreased 112 basis points compared to 32.71%.
Comparison of Operating Results for the Three Months Ended
Net Interest Income of
- Net interest margin of 2.99% decreased 15 basis points compared to 3.14%, primarily due to a shift in business mix that reflected significant growth in the mortgage warehouse portfolio. The margin was also negatively impacted by approximately 6 basis points in the second quarter of 2024 from the net reversal of
$2.5 million in accrued interest income associated with the movement of loans into nonaccrual status. - Interest rate spread of 2.45% decreased 13 basis points compared to 2.58%.
Interest Income of
- Average balances of
$14.3 billion for loans and loans held for sale increased 6% compared to$13.5 billion . - Average balances of
$438.4 million on interest earning deposits increased 27% compared to$346.2 million . - Average balances of
$234.7 million for mortgage loans in process of securitization increased 70% compared to$137.9 million . - Average yields on loans and loans held for sale of 7.97% decreased 14 basis points compared to 8.11%, reflecting a net
$2.5 million reversal of accrued interest income associated with the movement of loans into nonaccrual status during the quarter.
Interest Expense of
- Average balances of
$6.5 billion for certificate of deposit accounts increased 15% compared to$5.7 billion . - Average balances of
$1.0 billion for borrowings increased 44% compared to$716.9 million . - Average interest rates of 8.00% for borrowings decreased 103 basis points compared to 9.03%.
- Average balances of
$4.9 billion for interest-bearing checking accounts decreased 3% compared to$5.1 billion .
Noninterest Income of
- Loan servicing fees included a
$5.1 million positive fair market value adjustment to servicing rights, with a$0.6 million positive adjustment in the Banking segment and a$4.5 million positive adjustment in the Multi-family Mortgage Banking segment. This compared to a$14.0 million positive fair market value adjustment to servicing rights in the prior period, 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.
Noninterest Expense of
- The efficiency ratio of 31.59% increased 246 basis points compared to 29.13%.
About
Ranked as a top performing
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
Consolidated Balance Sheets |
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(Unaudited) |
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(In thousands, except share data) |
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2024 |
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2024 |
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2023 |
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2023 |
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2023 |
Assets |
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Cash and due from banks |
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$ 10,242 |
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$ 17,924 |
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$ 15,592 |
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$ 10,633 |
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$ 15,390 |
Interest-earning demand accounts |
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530,640 |
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490,831 |
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568,830 |
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396,605 |
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361,920 |
Cash and cash equivalents |
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540,882 |
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508,755 |
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584,422 |
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407,238 |
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377,310 |
Securities purchased under agreements to resell |
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3,304 |
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3,329 |
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3,349 |
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3,385 |
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3,412 |
Mortgage loans in process of securitization |
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209,244 |
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142,629 |
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110,599 |
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476,047 |
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298,907 |
Securities available for sale ( |
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1,017,019 |
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1,061,288 |
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1,113,687 |
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624,586 |
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648,003 |
Securities held to maturity ( |
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1,291,110 |
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1,175,167 |
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1,204,217 |
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1,012,801 |
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1,062,017 |
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67,499 |
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64,215 |
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48,578 |
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48,219 |
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39,130 |
Loans held for sale (includes |
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3,483,076 |
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3,503,131 |
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3,144,756 |
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3,477,036 |
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3,058,013 |
Loans receivable, net of allowance for credit losses on loans of |
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10,933,189 |
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10,690,513 |
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10,127,801 |
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9,910,681 |
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9,854,018 |
Premises and equipment, net |
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46,833 |
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42,450 |
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42,342 |
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36,730 |
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36,947 |
Servicing rights |
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178,776 |
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172,200 |
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158,457 |
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162,141 |
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147,288 |
Interest receivable |
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90,360 |
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90,303 |
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91,346 |
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78,401 |
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70,509 |
Goodwill |
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8,014 |
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8,014 |
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15,845 |
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15,845 |
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15,845 |
Other assets and receivables |
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343,116 |
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360,582 |
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307,117 |
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242,126 |
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263,473 |
Total assets |
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$ 16,952,516 |
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$ 16,495,236 |
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Liabilities and Shareholders' Equity |
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Liabilities |
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Deposits |
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Noninterest-bearing |
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$ 383,260 |
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$ 319,872 |
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$ 520,070 |
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$ 287,846 |
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$ 349,387 |
Interest-bearing |
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14,533,807 |
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13,655,789 |
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13,541,390 |
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12,719,492 |
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12,710,477 |
Total deposits |
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14,917,067 |
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13,975,661 |
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14,061,460 |
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13,007,338 |
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13,059,864 |
Borrowings |
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1,159,206 |
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1,835,985 |
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964,127 |
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1,654,075 |
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1,016,836 |
Deferred and current tax liabilities, net |
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25,098 |
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43,935 |
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19,923 |
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18,006 |
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16,084 |
Other liabilities |
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222,904 |
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190,527 |
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205,922 |
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183,102 |
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221,788 |
Total liabilities |
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16,324,275 |
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16,046,108 |
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15,251,432 |
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14,862,521 |
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14,314,572 |
Commitments and Contingencies |
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Shareholders' Equity |
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Common stock, without par value |
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Authorized - 75,000,000 shares |
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Issued and outstanding - 45,757,567 shares, 43,354,718 shares, 43,242,928 shares, 43,240,212 shares and 43,237,300 shares |
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238,492 |
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139,950 |
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140,365 |
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139,609 |
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138,853 |
Preferred stock, without par value - 5,000,000 total shares authorized |
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7% Series A Preferred stock - |
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Authorized - no shares at |
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Issued and outstanding - no shares at |
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— |
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50,221 |
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50,221 |
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50,221 |
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50,221 |
6% Series B Preferred stock - |
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Authorized - 125,000 shares |
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Issued and outstanding - 125,000 shares (equivalent to 5,000,000 depositary shares) |
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120,844 |
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120,844 |
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120,844 |
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120,844 |
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120,844 |
6% Series C Preferred stock - |
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Authorized - 200,000 shares |
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Issued and outstanding - 196,181 shares (equivalent to 7,847,233 depositary shares) |
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191,084 |
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191,084 |
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191,084 |
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191,084 |
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191,084 |
8.25% Series D Preferred stock - |
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Authorized - 300,000 shares |
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Issued and outstanding - 142,500 shares (equivalent to 5,700,000 depositary shares) |
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137,459 |
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137,459 |
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137,459 |
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137,459 |
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137,459 |
Retained earnings |
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1,200,778 |
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1,138,083 |
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1,063,599 |
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998,252 |
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928,875 |
Accumulated other comprehensive loss |
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(510) |
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(1,173) |
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(2,488) |
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(4,754) |
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(7,036) |
Total shareholders' equity |
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1,888,147 |
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1,776,468 |
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1,701,084 |
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1,632,715 |
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1,560,300 |
Total liabilities and shareholders' equity |
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$ 16,952,516 |
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$ 16,495,236 |
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Consolidated Statement of Income |
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(Unaudited) |
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(In thousands, except share data) |
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Three Months Ended |
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Change |
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2Q24 |
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2Q24 |
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2024 |
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2024 |
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2023 |
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vs. 1Q24 |
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vs. 2Q23 |
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Interest Income |
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Loans |
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$ |
284,421 |
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$ |
271,998 |
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$ |
228,732 |
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5 % |
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24 % |
Mortgage loans in process of securitization |
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3,044 |
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1,720 |
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3,127 |
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77 % |
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-3 % |
Investment securities: |
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Available for sale |
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14,784 |
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14,388 |
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5,564 |
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3 % |
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166 % |
Held to maturity |
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19,799 |
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20,522 |
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17,311 |
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-4 % |
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14 % |
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1,277 |
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|
844 |
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|
471 |
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51 % |
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171 % |
Other |
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4,948 |
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4,701 |
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2,864 |
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5 % |
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73 % |
Total interest income |
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328,273 |
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314,173 |
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|
258,069 |
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4 % |
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27 % |
Interest Expense |
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Deposits |
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179,651 |
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|
171,022 |
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|
137,801 |
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5 % |
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30 % |
Borrowed funds |
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20,503 |
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16,095 |
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|
14,651 |
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27 % |
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40 % |
Total interest expense |
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200,154 |
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187,117 |
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152,452 |
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7 % |
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31 % |
Net Interest Income |
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128,119 |
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127,056 |
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105,617 |
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1 % |
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21 % |
Provision for credit losses |
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9,965 |
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4,726 |
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22,603 |
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111 % |
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-56 % |
Net Interest Income After Provision for Credit Losses |
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118,154 |
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122,330 |
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83,014 |
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-3 % |
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42 % |
Noninterest Income |
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Gain on sale of loans |
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11,168 |
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9,356 |
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11,350 |
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19 % |
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-2 % |
Loan servicing fees, net |
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10,827 |
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|
19,402 |
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|
8,616 |
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-44 % |
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26 % |
Mortgage warehouse fees |
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1,524 |
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|
982 |
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2,865 |
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55 % |
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-47 % |
Loss on sale of investments available for sale (1) |
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— |
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(108) |
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— |
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-100 % |
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— |
Syndication and asset management fees |
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3,233 |
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5,303 |
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3,896 |
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-39 % |
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-17 % |
Other income |
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4,599 |
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5,939 |
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3,155 |
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-23 % |
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46 % |
Total noninterest income |
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31,351 |
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40,874 |
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29,882 |
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-23 % |
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5 % |
Noninterest Expense |
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Salaries and employee benefits |
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28,373 |
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29,596 |
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25,724 |
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-4 % |
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10 % |
Loan expenses |
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|
993 |
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|
956 |
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|
907 |
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4 % |
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9 % |
Occupancy and equipment |
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2,239 |
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2,237 |
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2,456 |
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— |
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-9 % |
Professional fees |
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3,556 |
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|
4,099 |
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3,723 |
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-13 % |
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-4 % |
Deposit insurance expense |
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|
5,579 |
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|
5,125 |
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|
3,806 |
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9 % |
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47 % |
Technology expense |
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|
1,859 |
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|
1,854 |
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|
1,571 |
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— |
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18 % |
Other expense |
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|
7,781 |
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5,045 |
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|
6,133 |
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54 % |
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27 % |
Total noninterest expense |
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50,380 |
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48,912 |
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44,320 |
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3 % |
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14 % |
Income Before Income Taxes |
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99,125 |
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114,292 |
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68,576 |
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-13 % |
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45 % |
Provision for income taxes (2) |
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|
22,732 |
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27,238 |
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|
3,274 |
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-17 % |
|
594 % |
Net Income |
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$ |
76,393 |
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$ |
87,054 |
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$ |
65,302 |
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-12 % |
|
17 % |
Dividends on preferred stock |
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|
(7,757) |
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|
(8,667) |
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|
(8,668) |
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-10 % |
|
-11 % |
Impact of preferred stock redemption |
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(1,823) |
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— |
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— |
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-100 % |
|
-100 % |
Net Income Available to Common Shareholders |
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$ |
66,813 |
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$ |
78,387 |
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$ |
56,634 |
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-15 % |
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18 % |
Basic Earnings Per Share |
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$ |
1.50 |
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$ |
1.81 |
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$ |
1.31 |
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-17 % |
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15 % |
Diluted Earnings Per Share |
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$ |
1.49 |
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$ |
1.80 |
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$ |
1.31 |
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-17 % |
|
14 % |
Weighted-Average Shares Outstanding |
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Basic |
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44,569,345 |
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43,305,985 |
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|
43,235,398 |
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Diluted |
|
|
44,698,324 |
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|
43,466,647 |
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|
43,309,393 |
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(1) Includes |
(2) Includes |
Consolidated Statement of Income |
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(Unaudited) |
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(In thousands, except share data) |
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Six Months Ended |
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2024 |
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2023 |
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Change |
||
Interest Income |
|
|
|
|
|
|
|
|
Loans |
|
$ |
556,419 |
|
$ |
418,182 |
|
33 % |
Mortgage loans in process of securitization |
|
|
4,764 |
|
|
4,775 |
|
— |
Investment securities: |
|
|
|
|
|
|
|
|
Available for sale |
|
|
29,172 |
|
|
7,830 |
|
273 % |
Held to maturity |
|
|
40,321 |
|
|
33,065 |
|
22 % |
|
|
|
2,121 |
|
|
898 |
|
136 % |
Other |
|
|
9,649 |
|
|
4,613 |
|
109 % |
Total interest income |
|
|
642,446 |
|
|
469,363 |
|
37 % |
Interest Expense |
|
|
|
|
|
|
|
|
Deposits |
|
|
350,673 |
|
|
242,243 |
|
45 % |
Borrowed funds |
|
|
36,598 |
|
|
20,810 |
|
76 % |
Total interest expense |
|
|
387,271 |
|
|
263,053 |
|
47 % |
Net Interest Income |
|
|
255,175 |
|
|
206,310 |
|
24 % |
Provision for credit losses |
|
|
14,691 |
|
|
29,470 |
|
-50 % |
Net Interest Income After Provision for Credit Losses |
|
|
240,484 |
|
|
176,840 |
|
36 % |
Noninterest Income |
|
|
|
|
|
|
|
|
Gain on sale of loans |
|
|
20,524 |
|
|
18,083 |
|
13 % |
Loan servicing fees, net |
|
|
30,229 |
|
|
10,976 |
|
175 % |
Mortgage warehouse fees |
|
|
2,506 |
|
|
3,893 |
|
-36 % |
Loss on sale of investments available for sale (1) |
|
|
(108) |
|
|
— |
|
-100 % |
Syndication and asset management fees |
|
|
8,536 |
|
|
5,108 |
|
67 % |
Other income |
|
|
10,538 |
|
|
6,086 |
|
73 % |
Total noninterest income |
|
|
72,225 |
|
|
44,146 |
|
64 % |
Noninterest Expense |
|
|
|
|
|
|
|
|
Salaries and employee benefits |
|
|
57,969 |
|
|
47,870 |
|
21 % |
Loan expenses |
|
|
1,949 |
|
|
1,711 |
|
14 % |
Occupancy and equipment |
|
|
4,476 |
|
|
4,688 |
|
-5 % |
Professional fees |
|
|
7,655 |
|
|
5,992 |
|
28 % |
Deposit insurance expense |
|
|
10,704 |
|
|
5,984 |
|
79 % |
Technology expense |
|
|
3,713 |
|
|
3,148 |
|
18 % |
Other expense |
|
|
12,826 |
|
|
9,699 |
|
32 % |
Total noninterest expense |
|
|
99,292 |
|
|
79,092 |
|
26 % |
Income Before Income Taxes |
|
|
213,417 |
|
|
141,894 |
|
50 % |
Provision for income taxes (2) |
|
|
49,970 |
|
|
21,637 |
|
131 % |
Net Income |
|
$ |
163,447 |
|
$ |
120,257 |
|
36 % |
Dividends on preferred stock |
|
|
(16,424) |
|
|
(17,335) |
|
-5 % |
Impact of preferred stock redemption |
|
|
(1,823) |
|
|
— |
|
-100 % |
Net Income Available to Common Shareholders |
|
$ |
145,200 |
|
$ |
102,922 |
|
41 % |
Basic Earnings Per Share |
|
$ |
3.30 |
|
$ |
2.38 |
|
39 % |
Diluted Earnings Per Share |
|
$ |
3.29 |
|
$ |
2.38 |
|
38 % |
Weighted-Average Shares Outstanding |
|
|
|
|
|
|
|
|
Basic |
|
|
43,937,665 |
|
|
43,207,655 |
|
|
Diluted |
|
|
44,082,485 |
|
|
43,300,240 |
|
|
|
(1) Includes |
(2) Includes |
Key Operating Results |
||||||||||||
(Unaudited) |
||||||||||||
($ in thousands, except share data) |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Change |
|
||||||
|
|
|
|
|
|
|
|
|
2Q24 |
|
2Q24 |
|
|
|
|
2024 |
|
2024 |
|
2023 |
|
vs. 1Q24 |
|
vs. 2Q23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest expense |
|
|
$ 50,380 |
|
$ 48,912 |
|
$ 44,320 |
|
3 % |
|
14 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income (before provision for credit losses) |
|
|
128,119 |
|
127,056 |
|
105,617 |
|
1 % |
|
21 % |
|
Noninterest income |
|
|
31,351 |
|
40,874 |
|
29,882 |
|
-23 % |
|
5 % |
|
Total income |
|
|
$ 159,470 |
|
$ 167,930 |
|
$ 135,499 |
|
-5 % |
|
18 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Efficiency ratio |
|
|
31.59 % |
|
29.13 % |
|
32.71 % |
|
246 |
bps |
(112) |
bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets |
|
|
|
|
|
|
|
|
6 % |
|
21 % |
|
Net income |
|
|
76,393 |
|
87,054 |
|
65,302 |
|
-12 % |
|
17 % |
|
Return on average assets before annualizing |
|
|
0.43 % |
|
0.52 % |
|
0.45 % |
|
|
|
|
|
Annualization factor |
|
|
4.00 |
|
4.00 |
|
4.00 |
|
|
|
|
|
Return on average assets |
|
|
1.72 % |
|
2.07 % |
|
1.78 % |
|
(35) |
bps |
(6) |
bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average tangible common shareholders' equity (1) |
|
|
19.55 % |
|
25.34 % |
|
22.03 % |
|
(579) |
bps |
(248) |
bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible book value per common share (1) |
|
|
$ 31.27 |
|
$ 29.26 |
|
$ 24.14 |
|
7 % |
|
30 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible common shareholders' equity/tangible assets (1) |
|
|
7.86 % |
|
7.12 % |
|
6.58 % |
|
74 |
bps |
128 |
bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated ratios |
|
|
|
|
|
|
|
|
|
|
|
|
Total capital/risk-weighted assets(2) |
|
|
12.0 |
% |
11.7 |
% |
11.3 |
% |
|
|
|
|
Tier I capital/risk-weighted assets(2) |
|
|
11.4 |
% |
11.2 |
% |
10.8 |
% |
|
|
|
|
Common Equity Tier I capital/risk-weighted assets(2) |
|
|
8.7 |
% |
8.0 |
% |
7.3 |
% |
|
|
|
|
Tier I capital/average assets(2) |
|
|
10.6 |
% |
10.5 |
% |
10.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Measures" below: |
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) As defined by regulatory agencies; |
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
||||||
|
|
|
|
|
|
|
|
|
2Q24 |
|
2Q24 |
|
|
|
|
2024 |
|
2024 |
|
2023 |
|
vs. 1Q24 |
|
vs. 2Q23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
$ 76,393 |
|
$ 87,054 |
|
$ 65,302 |
|
-12 % |
|
17 % |
|
Less: preferred stock dividends |
|
|
(7,757) |
|
(8,667) |
|
(8,668) |
|
-10 % |
|
-11 % |
|
Less: preferred stock redemption |
|
|
(1,823) |
|
- |
|
- |
|
-100 % |
|
-100 % |
|
Net income available to common shareholders |
|
|
$ 66,813 |
|
$ 78,387 |
|
$ 56,634 |
|
-15 % |
|
18 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average shareholders' equity |
|
|
$ 1,824,730 |
|
$ 1,747,660 |
|
$ 1,544,976 |
|
4 % |
|
18 % |
|
Less: average goodwill & intangibles |
|
|
(8,140) |
|
(10,494) |
|
(16,858) |
|
-22 % |
|
-52 % |
|
Less: average preferred stock |
|
|
(449,387) |
|
(499,608) |
|
(499,608) |
|
-10 % |
|
-10 % |
|
Average tangible common shareholders' equity |
|
|
$ 1,367,203 |
|
$ 1,237,558 |
|
$ 1,028,510 |
|
10 % |
|
33 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annualization factor |
|
|
4.00 |
|
4.00 |
|
4.00 |
|
|
|
|
|
Return on average tangible common shareholders' equity |
|
|
19.55 % |
|
25.34 % |
|
22.03 % |
|
(579) |
bps |
(248) |
bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
|
|
$ 1,888,147 |
|
$ 1,776,468 |
|
$ 1,560,300 |
|
6 % |
|
21 % |
|
Less: goodwill and intangibles |
|
|
(8,108) |
|
(8,163) |
|
(16,794) |
|
-1 % |
|
-52 % |
|
Less: preferred stock |
|
|
(449,387) |
|
(499,608) |
|
(499,608) |
|
-10 % |
|
-10 % |
|
Tangible common shareholders' equity |
|
|
$ 1,430,652 |
|
$ 1,268,697 |
|
$ 1,043,898 |
|
13 % |
|
37 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
2 % |
|
15 % |
|
Less: goodwill and intangibles |
|
|
(8,108) |
|
(8,163) |
|
(16,794) |
|
-1 % |
|
-52 % |
|
Tangible assets |
|
|
|
|
|
|
|
|
2 % |
|
15 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending common shares |
|
|
45,757,567 |
|
43,354,718 |
|
43,237,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible book value per common share |
|
|
$ 31.27 |
|
$ 29.26 |
|
$ 24.14 |
|
7 % |
|
30 % |
|
Tangible common shareholders' equity/tangible assets |
|
|
7.86 % |
|
7.12 % |
|
6.58 % |
|
74 |
bps |
128 |
bps |
Key Operating Results |
||||||||
(Unaudited) |
||||||||
($ in thousands, except share data) |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
|
2023 |
|
Change |
|
|
|
|
|
|
|
|
|
|
Noninterest expense |
|
|
$ 99,292 |
|
$ 79,092 |
|
26 % |
|
|
|
|
|
|
|
|
|
|
Net interest income (before provision for credit losses) |
|
|
255,175 |
|
206,310 |
|
24 % |
|
Noninterest income |
|
|
72,225 |
|
44,146 |
|
64 % |
|
Total income |
|
|
$ 327,400 |
|
$ 250,456 |
|
31 % |
|
|
|
|
|
|
|
|
|
|
Efficiency ratio |
|
|
30.33 % |
|
31.58 % |
|
(125) |
bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets |
|
|
|
|
|
|
26 % |
|
Net income |
|
|
163,447 |
|
120,257 |
|
36 % |
|
Return on average assets before annualizing |
|
|
0.94 % |
|
0.87 % |
|
|
|
Annualization factor |
|
|
2.00 |
|
2.00 |
|
|
|
Return on average assets |
|
|
1.89 % |
|
1.74 % |
|
15 |
bps |
|
|
|
|
|
|
|
|
|
Return on average tangible common shareholders' equity (1) |
|
|
22.30 % |
|
20.49 % |
|
181 |
bps |
|
|
|
|
|
|
|
|
|
Tangible book value per common share (1) |
|
|
$ 31.27 |
|
$ 24.14 |
|
30 % |
|
|
|
|
|
|
|
|
|
|
Tangible common shareholders' equity/tangible assets (1) |
|
|
7.86 % |
|
6.58 % |
|
128 |
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. |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
|
2023 |
|
Change |
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
$ 163,447 |
|
$ 120,257 |
|
36 % |
|
Less: preferred stock dividends |
|
|
(16,424) |
|
(17,335) |
|
-5 % |
|
Less: preferred stock redemption |
|
|
(1,823) |
|
- |
|
-100 % |
|
Net income available to common shareholders |
|
|
$ 145,200 |
|
$ 102,922 |
|
41 % |
|
|
|
|
|
|
|
|
|
|
Average shareholders' equity |
|
|
$ 1,786,195 |
|
$ 1,520,927 |
|
17 % |
|
Less: average goodwill & intangibles |
|
|
(9,317) |
|
(16,918) |
|
-45 % |
|
Less: average preferred stock |
|
|
(474,497) |
|
(499,608) |
|
-5 % |
|
Average tangible common shareholders' equity |
|
|
$ 1,302,381 |
|
$ 1,004,401 |
|
30 % |
|
|
|
|
|
|
|
|
|
|
Annualization factor |
|
|
2.00 |
|
2.00 |
|
|
|
Return on average tangible common shareholders' equity |
|
|
22.30 % |
|
20.49 % |
|
181 |
bps |
|
|
|
|
|
|
|
|
|
Total equity |
|
|
$ 1,888,147 |
|
$ 1,560,300 |
|
21 % |
|
Less: goodwill and intangibles |
|
|
(8,108) |
|
(16,794) |
|
-52 % |
|
Less: preferred stock |
|
|
(449,387) |
|
(499,608) |
|
-10 % |
|
Tangible common shareholders' equity |
|
|
$ 1,430,652 |
|
$ 1,043,898 |
|
37 % |
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
15 % |
|
Less: goodwill and intangibles |
|
|
(8,108) |
|
(16,794) |
|
-52 % |
|
Tangible assets |
|
|
|
|
|
|
15 % |
|
|
|
|
|
|
|
|
|
|
Ending common shares |
|
|
45,757,567 |
|
43,237,300 |
|
|
|
|
|
|
|
|
|
|
|
|
Tangible book value per common share |
|
|
$ 31.27 |
|
$ 24.14 |
|
30 % |
|
Tangible common shareholders' equity/tangible assets |
|
|
7.86 % |
|
6.58 % |
|
128 |
bps |
|
|||||||||||
Average Balance Analysis |
|||||||||||
($ in thousands) |
|||||||||||
(Unaudited) |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Three Months Ended |
|
Three Months Ended |
||||||
|
|
|
|
|
|
||||||
|
Average |
|
Yield/ |
|
Average |
|
Yield/ |
|
Average |
|
Yield/ |
|
Balance |
Interest |
Rate |
|
Balance |
Interest |
Rate |
|
Balance |
Interest |
Rate |
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing deposits, and other |
$ 438,445 |
$ 6,225 |
5.71 % |
|
$ 346,150 |
$ 5,545 |
6.44 % |
|
$ 249,722 |
$ 3,335 |
5.36 % |
Securities available for sale |
1,039,388 |
14,784 |
5.72 % |
|
1,085,114 |
14,388 |
5.33 % |
|
672,887 |
5,564 |
3.32 % |
Securities held to maturity |
1,160,170 |
19,799 |
6.86 % |
|
1,196,633 |
20,522 |
6.90 % |
|
1,093,018 |
17,311 |
6.35 % |
Mortgage loans in process of securitization |
234,706 |
3,044 |
5.22 % |
|
137,890 |
1,720 |
5.02 % |
|
280,092 |
3,127 |
4.48 % |
Loans and loans held for sale |
14,347,165 |
284,421 |
7.97 % |
|
13,494,961 |
271,998 |
8.11 % |
|
11,968,565 |
228,732 |
7.67 % |
Total interest-earning assets |
17,219,874 |
328,273 |
7.67 % |
|
16,260,748 |
314,173 |
7.77 % |
|
14,264,284 |
258,069 |
7.26 % |
Allowance for credit losses on loans |
(76,456) |
|
|
|
(71,544) |
|
|
|
(54,411) |
|
|
Noninterest-earning assets |
670,773 |
|
|
|
603,868 |
|
|
|
463,384 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities & Shareholders' Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing checking |
$ 4,935,123 |
58,128 |
4.74 % |
|
$ 5,070,393 |
60,688 |
4.81 % |
|
$ 4,307,736 |
48,296 |
4.50 % |
Savings deposits |
145,262 |
19 |
0.05 % |
|
201,860 |
219 |
0.44 % |
|
236,012 |
299 |
0.51 % |
Money market |
2,788,335 |
33,207 |
4.79 % |
|
2,817,382 |
33,644 |
4.80 % |
|
2,749,594 |
30,521 |
4.45 % |
Certificates of deposit |
6,535,651 |
88,297 |
5.43 % |
|
5,694,933 |
76,471 |
5.40 % |
|
4,729,242 |
58,685 |
4.98 % |
Total interest-bearing deposits |
14,404,371 |
179,651 |
5.02 % |
|
13,784,568 |
171,022 |
4.99 % |
|
12,022,584 |
137,801 |
4.60 % |
|
|
|
|
|
|
|
|
|
|
|
|
Borrowings |
1,031,180 |
20,503 |
8.00 % |
|
716,853 |
16,095 |
9.03 % |
|
591,333 |
14,651 |
9.94 % |
Total interest-bearing liabilities |
15,435,551 |
200,154 |
5.22 % |
|
14,501,421 |
187,117 |
5.19 % |
|
12,613,917 |
152,452 |
4.85 % |
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing deposits |
331,246 |
|
|
|
332,172 |
|
|
|
346,837 |
|
|
Noninterest-bearing liabilities |
222,664 |
|
|
|
211,819 |
|
|
|
167,527 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
15,989,461 |
|
|
|
15,045,412 |
|
|
|
13,128,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity |
1,824,730 |
|
|
|
1,747,660 |
|
|
|
1,544,976 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and shareholders' equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest spread |
|
|
2.45 % |
|
|
|
2.58 % |
|
|
|
2.41 % |
|
|
|
|
|
|
|
|
|
|
|
|
Net interest-earning assets |
$ 1,784,323 |
|
|
|
$ 1,759,327 |
|
|
|
$ 1,650,367 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin |
|
|
2.99 % |
|
|
|
3.14 % |
|
|
|
2.97 % |
|
|
|
|
|
|
|
|
|
|
|
|
Average interest-earning assets to average interest-bearing liabilities |
|
|
111.56 % |
|
|
|
112.13 % |
|
|
|
113.08 % |
Supplemental Results |
||||||||||||||||
(Unaudited) |
||||||||||||||||
($ in thousands) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
|
Net Income |
|
||||||||
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
2024 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
2023 |
|
Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-family Mortgage Banking |
|
|
|
$ 9,037 |
|
|
$ 16,609 |
|
|
$ 11,242 |
|
|
$ 25,646 |
|
$ 13,208 |
|
Mortgage Warehousing |
|
|
|
22,270 |
|
|
20,190 |
|
|
18,596 |
|
|
42,460 |
|
27,237 |
|
Banking |
|
|
|
52,378 |
|
|
56,425 |
|
|
42,650 |
|
|
108,803 |
|
91,957 |
|
Other |
|
|
|
(7,292) |
|
|
(6,170) |
|
|
(7,186) |
|
|
(13,462) |
|
(12,145) |
|
Total |
|
|
|
$ 76,393 |
|
|
$ 87,054 |
|
|
$ 65,302 |
|
|
$ 163,447 |
|
$ 120,257 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
Amount |
% |
|
Amount |
% |
|
Amount |
% |
|
|
|
|
|
Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-family Mortgage Banking |
|
|
|
$ 428,299 |
2 % |
|
$ 416,454 |
2 % |
|
$ 411,097 |
2 % |
|
|
|
|
|
Mortgage Warehousing |
|
|
|
5,626,055 |
31 % |
|
5,369,299 |
30 % |
|
4,522,175 |
27 % |
|
|
|
|
|
Banking |
|
|
|
11,885,484 |
65 % |
|
11,760,028 |
66 % |
|
11,760,943 |
69 % |
|
|
|
|
|
Other |
|
|
|
272,584 |
2 % |
|
276,795 |
2 % |
|
258,301 |
2 % |
|
|
|
|
|
Total |
|
|
|
$ 18,212,422 |
100 % |
|
$ 17,822,576 |
100 % |
|
$ 16,952,516 |
100 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on Sale of Loans |
|
|
Gain on Sale of Loans |
|
||||||||
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
2024 |
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
2023 |
|
Loan Type |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multi-family |
|
|
|
$ 9,083 |
|
|
$ 8,423 |
|
|
$ 10,361 |
|
|
$ 17,506 |
|
$ 15,281 |
|
Single-family |
|
|
|
524 |
|
|
280 |
|
|
202 |
|
|
804 |
|
479 |
|
|
|
|
1,561 |
|
|
653 |
|
|
787 |
|
|
2,214 |
|
2,323 |
|
|
Total |
|
|
|
$ 11,168 |
|
|
$ 9,356 |
|
|
$ 11,350 |
|
|
$ 20,524 |
|
$ 18,083 |
|
Supplemental Results |
||||||||||||
(Unaudited) |
||||||||||||
($ in thousands) |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans Receivable and Loans Held for Sale |
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage warehouse repurchase agreements |
|
|
|
$ 1,369,965 |
|
|
$ 1,142,994 |
|
|
$ 752,468 |
|
|
Residential real estate (1) |
|
|
|
1,345,656 |
|
|
1,321,300 |
|
|
1,324,305 |
|
|
Multi-family financing |
|
|
|
4,160,420 |
|
|
4,096,606 |
|
|
4,006,160 |
|
|
Healthcare financing |
|
|
|
2,495,910 |
|
|
2,464,685 |
|
|
2,356,689 |
|
|
Commercial and commercial real estate (2)(3) |
|
|
|
1,566,809 |
|
|
1,666,751 |
|
|
1,643,081 |
|
|
Agricultural production and real estate |
|
|
|
70,244 |
|
|
65,977 |
|
|
103,150 |
|
|
Consumer and margin loans |
|
|
|
5,213 |
|
|
7,912 |
|
|
13,700 |
|
|
|
|
|
|
11,014,217 |
|
|
10,766,225 |
|
|
10,199,553 |
|
|
Less: Allowance for credit losses on loans |
|
|
|
81,028 |
|
|
75,712 |
|
|
71,752 |
|
|
Loans receivable |
|
|
|
$ 10,933,189 |
|
|
$ 10,690,513 |
|
|
$ 10,127,801 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for sale |
|
|
|
3,483,076 |
|
|
3,503,131 |
|
|
3,144,756 |
|
|
Total loans, net of allowance |
|
|
|
$ 14,416,265 |
|
|
$ 14,193,644 |
|
|
$ 13,272,557 |
|
|
|
(1) Includes |
(2) Includes |
(3) Includes only |
|
|
|
|
Loan Credit Risk Profile |
|||||||
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
Amount |
% |
|
Amount |
% |
|
Amount |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Pass |
|
|
|
$ 10,523,378 |
95.6 % |
|
$ 10,410,748 |
96.7 % |
|
$ 9,879,659 |
96.9 % |
Special mention |
|
|
|
244,000 |
2.2 % |
|
232,122 |
2.2 % |
|
191,267 |
1.9 % |
Substandard |
|
|
|
246,839 |
2.2 % |
|
123,355 |
1.1 % |
|
128,577 |
1.2 % |
Doubtful |
|
|
|
— |
— |
|
— |
— |
|
50 |
— |
Loans receivable |
|
|
|
$ 11,014,217 |
100.0 % |
|
$ 10,766,225 |
100.0 % |
|
$ 10,199,553 |
100.0 % |
Charge-offs (year-to-date) |
|
|
|
$ 4,377 |
|
|
$ 925 |
|
|
$ 9,791 |
|
Recoveries (year-to-date) |
|
|
|
$ 16 |
|
|
$ 1 |
|
|
$ 41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming Loans |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024 |
|
|
2024 |
|
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonaccrual loans |
|
|
|
$ 143,319 |
|
|
$ 78,804 |
|
|
$ 73,847 |
|
90 days past due and still accruing |
|
|
|
133 |
|
|
52,982 |
|
|
8,168 |
|
Total nonperforming loans |
|
|
|
$ 143,452 |
|
|
$ 131,786 |
|
|
$ 82,015 |
|
As a percentage of loans receivable |
|
|
|
1.30 % |
|
|
1.22 % |
|
|
0.80 % |
|
View original content to download multimedia:https://www.prnewswire.com/news-releases/merchants-bancorp-reports-second-quarter-2024-results-302209008.html
SOURCE