CARMEL, Ind., April 30, 2018 /PRNewswire/ --
- Net income of $15.1 million increased by 65% compared with March 31, 2017
- Earnings of $0.50 per common share increased by 28% compared with March 31, 2017
- Total assets of $3.7 billion increased by $282.7 million, or 8% compared to December 31, 2017
- Return on average assets of 1.79% for three months ended March 31, 2018
- Multi-family mortgage closings of $453.1 million for three months ended March 31, 2018
- Closed its acquisition of Joy State Bank on January 2, 2018
- Previously announced a 20% increase in dividends, to $.06 per common share
Merchants Bancorp (the "Company" or "Merchants") (Nasdaq: MBIN), parent company of Merchants Bank of Indiana, today reported first quarter 2018 net income of $15.1 million, or $0.50 per common share. This compared with $9.1 million, or $0.39 per common share, in the first quarter of 2017.
Each of the Company's business segments' net income increased in the first quarter, compared with the first quarter of 2017. Multi-family Mortgage Banking income increased by 56%, Mortgage Warehousing increased by 22%, and Banking increased by 148%.
"Our businesses once again delivered strong results in the first quarter of 2018 with solid loan and deposit growth, while maintaining an industry-leading efficiency ratio and an innovative, consistent approach to loan origination that has built deep, long-term customer relationships. We have also continued to implement our strategic plans to make Merchants even more successful into the future," said Michael Petrie, Chairman and CEO of Merchants.
Total Assets
Total assets increased $282.7 million, or 8%, to $3.7 billion at March 31, 2018, compared with $3.4 billion at December 31, 2017. The increase was due primarily to increases in loans, loans held for sale, and trading securities. Return on average assets was 1.79% for the three months ended March 31, 2018, compared with 1.39% at March 31, 2017.
Total loans receivable before allowance for loan losses increased $198.5 million, or 14%, to $1.6 billion at March 31, 2018, compared with $1.4 billion at December 31, 2017. This increase was primarily due to growth in multi-family and healthcare financing, as well as residential real estate loans.
Asset Quality
The allowance for loan losses increased by $1.4 million, to $9.7 million, at March 31, 2018, compared with $8.3 million at December 31, 2017. The increase reflected higher loans held for investment, while non-performing loans increased to $4.9 million, or 0.31% of total loans at March 31, 2018, compared with $3.1 million, or .23% of total loans, at December 31, 2017.
Total Deposits
Total deposits increased $119.0 million, or 4%, to $3.1 billion at March 31, 2018, compared with $2.9 billion at December 31, 2017. The increase was due primarily to growth in certificates of deposit and demand deposits during the quarter, while total brokered deposits declined by 5% to $897.4 million, or 29% of total deposits.
Interest Income
Interest income increased $10.0 million, or 53%, to $29.0 million for the three months ended March 31, 2018, compared with $19.0 million for the three months ended March 31, 2017. This increase was due to both loan growth and higher loan yields. The average balance of loans, including loans held for sale, during the three months ended March 31, 2018, increased by $658.0 million, or 41%, to $2.2 billion, compared with $1.6 billion for the three months ended March 31, 2017. The average yield on loans increased 41 basis points, to 4.44%, for the three months ended March 31, 2018, compared with 4.03% for the three months ended March 31, 2017. Net interest margin increased to 2.52% for the three months ended March 31, 2018, compared with 2.17% for the three months ended March 31, 2017.
Interest Expense
Total interest expense increased $3.5 million, or 63%, to $8.9 million for the three months ended March 31, 2018, compared with the three months ended March 31, 2017. Interest expense on deposits increased $3.2 million, or 86%, to $7.0 million for the three months ended March 31, 2018, compared with the three months ended March 31, 2017. The increase was primarily due to a 41 basis point increase in the average cost of interest-bearing deposits, to 1.27%, for the three months ended March 31, 2018, compared with 0.86% for the same period in 2017, and an increase in the average balance of interest-bearing deposits of $467.8 million, or 26%, to $2.2 billion for the three months ended March 31, 2018. The increase in deposits was primarily due to growth in certificate of deposits and demand deposits, as well as custodial accounts of existing warehouse customers. The increase in the cost of deposits was due to the overall increase in interest rates since last year.
Net Interest Income
Net interest income increased $6.6 million, or 49%, to $20.1 million for the three months ended March 31, 2018 compared to the three months ended March 31, 2017. The increase was due to a 23 basis point increase in our interest rate spread, to 2.06%, for the three months ended March 31, 2018 from 1.83% for the three months ended March 31, 2017, coupled with the overall growth in our interest-earning assets, particularly in loans and loans held for sale, period to period. Our net interest margin increased 35 basis points to 2.52% for the three months ended March 31, 2018 from 2.17% for the three months ended March 31, 2017.
Noninterest Income
Noninterest income increased by $3.2 million, or 40%, to $11.3 million for the three months ended March 31, 2018, compared with the three months ended March 31, 2017. The increase was due to an increase of $5.5 million, or 100%, in the gain on sale of loans, primarily associated with an increase in the volume of multi-family loan sales in the secondary market. These increases were partially offset by a $2.3 million decrease in loan servicing fees that were negatively impacted by a $893,000 fair market value adjustment in mortgage servicing rights.
Noninterest Expense
Noninterest expense increased $3.6 million, or 55%, to $10.3 million for the three months ended March 31, 2018, compared with $6.6 million for the three months ended March 31, 2017. The increase was due primarily to a $2.6 million, or 67%, increase in salaries and employee benefits. The increase in salaries and employee benefits was due primarily to an increase in the number of employees resulting from business growth, higher commissions related to higher multi-family volume, and additional hiring associated with becoming a publicly traded company. Despite the increase in salaries and benefits, the efficiency ratio remained relatively stable at 32.7% in the first quarter of 2018, compared with 30.7% the first quarter of 2017.
Income Taxes
Income tax expense decreased $927,000, or 17%, to $4.7 million for the three months ended March 31, 2018, compared with the three months ended March 31, 2017. The decrease was due primarily to the lower tax rates under the recent federal income tax reform legislation, partially offset by a 34% increase in pre-tax income over the same period. The effective tax rate was 23.7% for the three months ended March 31, 2018 compared with 38.1% for the three months ended March 31, 2017.
About Merchants Bancorp
Merchants Bancorp is a diversified bank holding company headquartered in Carmel, Indiana operating multiple lines of business with a focus on Federal Housing Administration ("FHA") multi-family housing and healthcare facility financing and servicing, mortgage warehouse financing, retail and correspondent residential mortgage banking, agricultural lending and traditional community banking. Merchants Bancorp, with $3.7 billion in assets and $3.1 billion in deposits as of March 31, 2018, conducts its business through its direct and indirect subsidiaries, Merchants Bank of Indiana, P/R Mortgage and Investment Corp., Joy State Bank, RICHMAC Funding LLC and Merchants Mortgage, a division of Merchants Bank of Indiana. For more information and financial data, please visit Merchants' Investor Relations page at investors.merchantsbankofindiana.com.
Forward-Looking Statements
This press release contains forward-looking statements which reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as "may," "might," "should," "could," "predict," "potential," "believe," "expect," "continue," "will," "anticipate," "seek," "estimate," "intend," "plan," "projection," "goal," "target," "outlook," "aim," "would," "annualized" and "outlook," or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. A number of important factors could cause our actual results to differ materially from those indicated in these forward-looking statements, including those factors identified in "Risk Factors" or "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K. Any forward-looking statements presented herein are made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.
Consolidated Balance Sheets |
||||
(Unaudited) |
||||
(In thousands, except share data) |
||||
March 31, |
December 31, |
|||
2018 |
2017 |
|||
Assets |
||||
Cash and due from banks |
$ 21,592 |
$ 18,905 |
||
Interest-earning demand accounts |
266,141 |
340,614 |
||
Cash and cash equivalents |
287,733 |
359,519 |
||
Securities purchased under agreements to resell |
7,003 |
7,043 |
||
Trading securities |
200,030 |
140,837 |
||
Available for sale securities |
413,457 |
408,371 |
||
Federal Home Loan Bank (FHLB) stock |
7,711 |
7,539 |
||
Loans held for sale |
1,081,376 |
995,319 |
||
Loans receivable, net of allowance for loan losses |
||||
of $9,705 and $8,311, respectively |
1,563,485 |
1,366,349 |
||
Premises and equipment, net |
6,705 |
5,354 |
||
Mortgage servicing rights |
67,268 |
66,079 |
||
Interest receivable |
9,627 |
8,326 |
||
Goodwill |
5,139 |
3,902 |
||
Intangible assets |
1,915 |
1,512 |
||
Other assets and receivables |
24,400 |
22,983 |
||
Total assets |
$ 3,675,849 |
$ 3,393,133 |
||
Liabilities and Shareholders' Equity |
||||
Liabilities |
||||
Deposits |
||||
Noninterest bearing |
$ 653,124 |
$ 620,700 |
||
Interest bearing |
2,409,476 |
2,322,861 |
||
Total deposits |
3,062,600 |
2,943,561 |
||
Borrowings |
199,378 |
56,612 |
||
Deferred and current tax liabilities, net |
15,555 |
12,422 |
||
Other liabilities |
18,603 |
13,064 |
||
Total liabilities |
3,296,136 |
3,025,659 |
||
Commitments and Contingencies |
||||
Shareholders' Equity |
||||
Common stock, without par value |
||||
Authorized - 50,000,000 shares |
||||
Issued and outstanding - 28,692,206 shares at March 31, 2018 |
||||
and 28,685,167 shares at December 31, 2017 |
134,941 |
134,891 |
||
Preferred stock - $1,000 per share, without par value |
||||
Authorized - 5,000,000 shares |
||||
Issued and outstanding - 41,625 shares |
41,581 |
41,581 |
||
Retained earnings |
204,758 |
192,008 |
||
Accumulated other comprehensive loss |
(1,567) |
(1,006) |
||
Total shareholders' equity |
379,713 |
367,474 |
||
Total liabilities and shareholders' equity |
$ 3,675,849 |
$ 3,393,133 |
||
Consolidated Statement of Income |
|||||||
(Unaudited) |
|||||||
(In thousands, except share data) |
|||||||
Three Months Ended March 31, |
|||||||
2018 |
2017 |
||||||
Interest Income |
|||||||
Loans |
$ 24,612 |
$ 15,783 |
|||||
Investment securities: |
|||||||
Trading |
989 |
1,376 |
|||||
Available for sale |
1,542 |
894 |
|||||
Federal Home Loan Bank stock |
129 |
81 |
|||||
Other |
1,766 |
873 |
|||||
Total interest income |
29,038 |
19,007 |
|||||
Interest Expense |
|||||||
Deposits |
7,016 |
3,771 |
|||||
Borrowed funds |
1,914 |
1,705 |
|||||
Total interest expense |
8,930 |
5,476 |
|||||
Net interest income |
20,108 |
13,531 |
|||||
Provision for loan losses |
1,406 |
240 |
|||||
Net Interest Income After Provision for Loan Losses |
18,702 |
13,291 |
|||||
Noninterest Income |
|||||||
Gain on sale of loans |
10,892 |
5,442 |
|||||
Loan servicing fees (costs), net |
(322) |
1,989 |
|||||
Mortgage warehouse fees |
486 |
596 |
|||||
Other income |
257 |
64 |
|||||
Total noninterest income |
11,313 |
8,091 |
|||||
Noninterest Expense |
|||||||
Salaries and employee benefits |
6,487 |
3,892 |
|||||
Loan expenses |
956 |
884 |
|||||
Occupancy and equipment |
565 |
356 |
|||||
Professional fees |
488 |
215 |
|||||
Deposit insurance expense |
246 |
264 |
|||||
Technology expense |
291 |
245 |
|||||
Other expense |
1,237 |
785 |
|||||
Total noninterest expense |
10,270 |
6,641 |
|||||
Income Before Income Taxes |
19,745 |
14,741 |
|||||
Provision for Income Taxes |
4,684 |
5,611 |
|||||
Net Income |
$ 15,061 |
$ 9,130 |
|||||
Dividends on preferred stock |
$ (833) |
$ (832) |
|||||
Net income allocated to common shareholders |
$ 14,228 |
$ 8,298 |
|||||
Basic earnings per common share |
$ 0.50 |
$ 0.39 |
|||||
Diluted earnings per common share |
$ 0.50 |
$ 0.39 |
|||||
Weighted-average common shares outstanding |
|||||||
Basic |
28,690,876 |
21,114,400 |
|||||
Diluted |
28,710,480 |
21,123,257 |
|||||
Dividends per common share |
$ 0.06 |
$ 0.05 |
|||||
Key Operating Results |
|||||||||
(Unaudited) |
|||||||||
($ in thousands) |
|||||||||
Three Months Ended |
|||||||||
March 31, |
Dec. 31, |
March 31, |
|||||||
2018 |
2017 |
2017 |
|||||||
Noninterest Expense |
10,270 |
10,800 |
6,641 |
||||||
Net Interest Income (before provision for losses) |
20,108 |
18,952 |
13,531 |
||||||
Noninterest Income |
11,313 |
14,907 |
8,091 |
||||||
Total Interest Income |
31,421 |
33,859 |
21,622 |
||||||
Efficiency Ratio |
32.69% |
31.90% |
30.71% |
||||||
Average Assets |
3,364,165 |
3,204,660 |
2,630,108 |
||||||
Net Income |
15,061 |
20,329 |
9,130 |
||||||
Return on Average Assets before annualizing |
0.45% |
0.63% |
0.35% |
||||||
Annualization factor |
4.00 |
4.00 |
4.00 |
||||||
Return on Average Assets |
1.79% |
2.54% |
1.39% |
||||||
Return on Average Tangible Common Equity (1) |
17.38% |
28.43% |
19.49% |
||||||
Tangible Book Value Per Common Share (1) |
$ 11.54 |
$ 11.17 |
$ 8.13 |
||||||
Tangible Common Equity/Tangible Assets (1) |
9.02% |
9.46% |
6.13% |
||||||
(1) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Measures" |
|||||||||
(1) Reconciliation of Non-GAAP Financial Measures |
|||||||||
Certain non-GAAP financial measures provide useful information to management and investors that is supplementary to the company's financial condition, results of operations and cash flows computed in accordance with GAAP; however, they do have a number of limitations. As such, the reader should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use. A reconciliation of GAAP to non-GAAP financial measures is below. Net Income Available to Common Shareholders excludes preferred stock. Tangible common equity is calculated by excluding the balance of goodwill and other intangible assets and preferred stock from the calculation of total assets. Tangible Assets is calculated by excluding the balance of goodwill and intangible assets. Tangible book value per share is calculated by dividing tangible common equity by the number of shares outstanding. |
|||||||||
Three Months Ended |
|||||||||
March 31, |
Dec. 31, |
March 31, |
|||||||
2018 |
2017 |
2017 |
|||||||
Net Income |
15,061 |
20,329 |
9,130 |
||||||
Less: Preferred Stock Dividends |
(833) |
(833) |
(832) |
||||||
Net Income Available to Common Shareholders |
14,228 |
19,496 |
8,298 |
||||||
Average Shareholders Equity |
375,687 |
321,785 |
212,415 |
||||||
Less: Average Goodwill & Intangibles |
(6,616) |
(5,950) |
(523) |
||||||
Less: Average Preferred stock |
(41,581) |
(41,581) |
(41,581) |
||||||
Average Tangible Common Shareholder's Equity |
327,490 |
274,254 |
170,311 |
||||||
Annualization Factor |
4.00 |
4.00 |
4.00 |
||||||
Return on Average Tangible Common Equity |
17.38% |
28.43% |
19.49% |
||||||
Total Equity |
379,713 |
367,474 |
213,711 |
||||||
Less: Goodwill and Intangibles |
(7,054) |
(5,414) |
(523) |
||||||
Less: Preferrd Stock |
(41,581) |
(41,581) |
(41,581) |
||||||
Tangible Common Equity |
331,078 |
320,479 |
171,607 |
||||||
Assets |
3,675,849 |
3,393,133 |
2,800,681 |
||||||
Less: Goodwill and Intangibles |
(7,054) |
(5,414) |
(523) |
||||||
Tangible Assets |
3,668,795 |
3,387,719 |
2,800,158 |
||||||
Ending common shares |
28,692,206 |
28,685,167 |
21,114,400 |
||||||
Tangible Book Value per Common Share |
$ 11.54 |
$ 11.17 |
$ 8.13 |
||||||
Tangible Common Equity/Tangible Assets |
9.02% |
9.46% |
6.13% |
||||||
Merchants Bancorp |
|||||||||||
Average Balance Analysis |
|||||||||||
($ in thousands) |
|||||||||||
(Unaudited) |
|||||||||||
Three Months Ended |
Three Months Ended |
Three Months Ended |
|||||||||
March 31, 2018 |
December 31, 2017 |
March 31, 2017 |
|||||||||
Average |
Yield/ |
Average |
Yield/ |
Average |
Yield/ |
||||||
Balance |
Int. |
Rate |
Balance |
Int. |
Rate |
Balance |
Int. |
Rate |
|||
Assets: |
|||||||||||
Interest bearing deposits |
$ 457,235 |
$ 1,895 |
1.68% |
$ 442,789 |
$ 1,390 |
1.25% |
$ 436,223 |
$ 954 |
0.89% |
||
Securities available for sale |
416,266 |
1,542 |
1.50% |
414,895 |
1,356 |
1.30% |
336,146 |
894 |
1.08% |
||
Trading securities |
121,029 |
989 |
3.31% |
119,429 |
1,063 |
3.53% |
170,038 |
1,376 |
3.28% |
||
Loans and loans held for sale |
2,247,890 |
24,612 |
4.44% |
2,114,048 |
23,101 |
4.34% |
1,589,938 |
15,783 |
4.03% |
||
Total Interest Earning Assets |
3,242,420 |
29,038 |
3.63% |
3,091,161 |
26,910 |
3.45% |
2,532,345 |
19,007 |
3.04% |
||
Allowance for loan losses |
(9,071) |
(7,551) |
(6,400) |
||||||||
Noninterest-earning assets |
130,816 |
121,050 |
104,163 |
||||||||
Total assets |
$ 3,364,165 |
$ 3,204,660 |
$ 2,630,108 |
||||||||
Liabilities/Equity: |
|||||||||||
Interest bearing checking |
645,339 |
2,425 |
1.52% |
612,674 |
2,153 |
1.39% |
507,588 |
1,158 |
0.93% |
||
Savings deposits |
381,749 |
215 |
0.23% |
357,363 |
143 |
0.16% |
301,017 |
183 |
0.25% |
||
Money market |
816,707 |
2,887 |
1.43% |
778,837 |
2,582 |
1.32% |
819,564 |
2,176 |
1.08% |
||
Certificates of deposit |
398,992 |
1,489 |
1.51% |
292,142 |
955 |
1.30% |
146,809 |
254 |
0.70% |
||
Total interest bearing deposits |
2,242,787 |
7,016 |
1.27% |
2,041,016 |
5,833 |
1.13% |
1,774,978 |
3,771 |
0.86% |
||
Borrowings |
65,635 |
1,914 |
11.83% |
76,505 |
2,125 |
11.02% |
64,754 |
1,705 |
10.68% |
||
Total Interest Bearing Liabilities |
2,308,422 |
8,930 |
1.57% |
2,117,521 |
7,958 |
1.49% |
1,839,732 |
5,476 |
1.21% |
||
Noninterest bearing deposits |
656,284 |
730,936 |
550,770 |
||||||||
Noninterest-bearing liabilities |
23,772 |
34,418 |
27,191 |
||||||||
Total liabilities |
2,988,478 |
2,882,875 |
2,417,693 |
||||||||
Equity |
375,687 |
321,785 |
212,415 |
||||||||
Total liabilities and equity |
$ 3,364,165 |
$ 3,204,660 |
$ 2,630,108 |
||||||||
Net Interest Income |
$ 20,108 |
$ 18,952 |
$ 13,531 |
||||||||
Interest Rate Spread |
2.06% |
1.96% |
1.83% |
||||||||
Net interest-earning assets |
$ 933,998 |
$ 973,640 |
$ 692,613 |
||||||||
Net Interst Margin |
2.52% |
2.43% |
2.17% |
||||||||
Average Interest Earning Assets to Average Interest Bearing Liabilities |
140.46% |
145.98% |
137.65% |
||||||||
Segment Results |
|||||||||||
(Unaudited) |
|||||||||||
($ in thousands) |
|||||||||||
Net Income |
Total Assets |
||||||||||
Three Months Ended March 31, |
March 31, |
December 31, |
|||||||||
2018 |
2017 |
2018 |
2017 |
||||||||
Segment |
|||||||||||
Multi-family Mortgage Banking |
5,484 |
3,517 |
141,703 |
134,390 |
|||||||
Mortgage Warehousing |
4,630 |
3,795 |
1,603,584 |
1,352,748 |
|||||||
Banking |
5,980 |
2,413 |
1,908,823 |
1,889,140 |
|||||||
Other |
(1,033) |
(595) |
21,739 |
16,855 |
|||||||
Total |
15,061 |
9,130 |
3,675,849 |
3,393,133 |
|||||||
SOURCE Merchants Bancorp
WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?
Newsrooms &
Influencers
Digital Media
Outlets
Journalists
Opted In
Share this article