Merchants Bancorp [MBINO] Filings

10-Q 1 mbin-20240630x10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

(Mark One)


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


For the quarterly period ended	June 30, 2024


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

For the transition period from ____________ to _______________

Commission File No. 001-38258


	MERCHANTS BANCORP
	(Exact name of registrant as specified in its charter)


Indiana		20-5747400
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

410 Monon Blvd. Carmel, Indiana		46032
(Address of principal		(Zip Code)
executive office)

(317) 569-7420

(Registrant’s telephone number, including area code)

N/A

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

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

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

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



Large accelerated filer ☐	Accelerated filer ☒	Non-accelerated filer ☐	Smaller reporting company ☐
			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, without par value	MBIN	NASDAQ
Depositary Shares, each representing a 1/40^th interest in a share of Series B Preferred Stock, without par value	MBINO	NASDAQ
Depositary Shares, each representing a 1/40^th interest in a share of Series C Preferred Stock, without par value	MBINN	NASDAQ
Depositary Shares, each representing a 1/40^th interest in a share of Series D Preferred Stock, without par value	MBINM	NASDAQ

As of August 1, 2024, the latest practicable date, 45,757,567 shares of the registrant’s common stock, without par value, were issued and outstanding.

Table of Contents

Merchants Bancorp

Index to Quarterly Report on Form 10-Q

PART I – FINANCIAL INFORMATION

Item 1 Interim Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	3

Condensed Consolidated Statements of Income for the Three and Six Months Ended June 30, 2024 and 2023	4

Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2024 and 2023	5

Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended June 30, 2024 and 2023	6

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023	7

Notes to Condensed Consolidated Financial Statements	8

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations	49

Item 3 Quantitative and Qualitative Disclosures About Market Risk	72

Item 4 Controls and Procedures	73

PART II – OTHER INFORMATION	74

Item 1 Legal Proceedings	74

Item 1A Risk Factors	74

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds	74

Item 3 Defaults Upon Senior Securities	74

Item 4 Mine Safety Disclosures	74

Item 5 Other Information	74

Item 6 Exhibits	75

SIGNATURES	76

Table of Contents

Part I – Financial Information

Item 1. Financial Statements

Merchants Bancorp

Condensed Consolidated Balance Sheets

June 30, 2024 (Unaudited) and December 31, 2023

(In thousands, except share data)


	June 30,		December 31,
	2024		2023*
Assets
Cash and due from banks	$	10,242	$	15,592
Interest-earning demand accounts		530,640		568,830
Cash and cash equivalents		540,882		584,422
Securities purchased under agreements to resell		3,304		3,349
Mortgage loans in process of securitization		209,244		110,599
Securities available for sale ($682,774 and $722,497 utilizing fair value option, respectively)		1,017,019		1,113,687
Securities held to maturity ($1,291,960 and $1,203,535 at fair value, respectively)		1,291,110		1,204,217
Federal Home Loan Bank (FHLB) stock		67,499		48,578
Loans held for sale (includes $102,873 and $86,663 at fair value, respectively)		3,483,076		3,144,756
Loans receivable, net of allowance for credit losses on loans of $81,028 and $71,752, respectively		10,933,189		10,127,801
Premises and equipment, net		46,833		42,342
Servicing rights		178,776		158,457
Interest receivable		90,360		91,346
Goodwill		8,014		15,845
Other assets and receivables		343,116		307,117
Total assets	$	18,212,422	$	16,952,516
Liabilities and Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing	$	383,260	$	520,070
Interest-bearing		14,533,807		13,541,390
Total deposits		14,917,067		14,061,460
Borrowings		1,159,206		964,127
Deferred and current tax liabilities, net		25,098		19,923
Other liabilities		222,904		205,922
Total liabilities		16,324,275		15,251,432
Commitments and Contingencies
Shareholders' Equity
Common stock, without par value
Authorized - 75,000,000 shares
Issued and outstanding - 45,757,567 shares at June 30, 2024 and 43,242,928 shares at December 31, 2023		238,492		140,365
Preferred stock, without par value - 5,000,000 total shares authorized
7% Series A Preferred stock - $25 per share liquidation preference
Authorized - no shares at June 30, 2024 and 3,500,000 shares at December 31, 2023
Issued and outstanding - no shares at June 30, 2024 and 2,081,800 shares at December 31, 2023		—		50,221
6% Series B Preferred stock - $1,000 per share liquidation preference
Authorized - 125,000 shares
Issued and outstanding - 125,000 shares (equivalent to 5,000,000 depositary shares)		120,844		120,844
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
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
Retained earnings		1,200,778		1,063,599
Accumulated other comprehensive loss		(510)		(2,488)
Total shareholders' equity		1,888,147		1,701,084
Total liabilities and shareholders' equity	$	18,212,422	$	16,952,516

*Derived from audited consolidated financial statements

See notes to condensed consolidated financial statements.

Table of Contents

Merchants Bancorp

Condensed Consolidated Statements of Income (Unaudited)

For the Three and Six Months Ended June 30, 2024 and 2023

(In thousands, except share data)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Interest Income
Loans	$	284,421	$	228,732	$	556,419	$	418,182
Mortgage loans in process of securitization		3,044		3,127		4,764		4,775
Investment securities:
Available for sale		14,784		5,564		29,172		7,830
Held to maturity		19,799		17,311		40,321		33,065
Federal Home Loan Bank stock		1,277		471		2,121		898
Other		4,948		2,864		9,649		4,613
Total interest income		328,273		258,069		642,446		469,363
Interest Expense
Deposits		179,651		137,801		350,673		242,243
Borrowed funds		20,503		14,651		36,598		20,810
Total interest expense		200,154		152,452		387,271		263,053
Net Interest Income		128,119		105,617		255,175		206,310
Provision for credit losses		9,965		22,603		14,691		29,470
Net Interest Income After Provision for Credit Losses		118,154		83,014		240,484		176,840
Noninterest Income
Gain on sale of loans		11,168		11,350		20,524		18,083
Loan servicing fees, net		10,827		8,616		30,229		10,976
Mortgage warehouse fees		1,524		2,865		2,506		3,893
Loss on sale of investments available for sale (includes $0, $0, $(108) and $0, respectively, related to accumulated other comprehensive loss reclassifications)		—		—		(108)		—
Syndication and asset management fees		3,233		3,896		8,536		5,108
Other income		4,599		3,155		10,538		6,086
Total noninterest income		31,351		29,882		72,225		44,146
Noninterest Expense
Salaries and employee benefits		28,373		25,724		57,969		47,870
Loan expenses		993		907		1,949		1,711
Occupancy and equipment		2,239		2,456		4,476		4,688
Professional fees		3,556		3,723		7,655		5,992
Deposit insurance expense		5,579		3,806		10,704		5,984
Technology expense		1,859		1,571		3,713		3,148
Other expense		7,781		6,133		12,826		9,699
Total noninterest expense		50,380		44,320		99,292		79,092
Income Before Income Taxes		99,125		68,576		213,417		141,894
Provision for income taxes (includes $0, $0, $26 and $0, respectively, related to income tax benefit for reclassification items)		22,732		3,274		49,970		21,637
Net Income	$	76,393	$	65,302	$	163,447	$	120,257
Dividends on preferred stock		(7,757)		(8,668)		(16,424)		(17,335)
Impact of preferred stock redemption		(1,823)		—		(1,823)		—
Net Income Available to Common Shareholders		66,813		56,634		145,200		102,922
Basic Earnings Per Share	$	1.50	$	1.31	$	3.30	$	2.38
Diluted Earnings Per Share	$	1.49	$	1.31	$	3.29	$	2.38
Weighted-Average Shares Outstanding
Basic		44,569,345		43,235,398		43,937,665		43,207,655
Diluted		44,698,324		43,309,393		44,082,485		43,300,240

See notes to condensed consolidated financial statements.

Table of Contents

Merchants Bancorp

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

For the Three and Six Months Ended June 30, 2024 and 2023

(In thousands)


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2024		2023		2024		2023
Net Income	$	76,393	$	65,302	$	163,447	$	120,257
Other Comprehensive Income:
Net unrealized gain on investment securities available for sale, net of tax expense of $(209), $(402), $(593) and $(1,336), respectively		663		693		1,896		3,485
Add: Reclassification adjustment for losses included in net income, net of tax benefit of $0, $0, $26 and $0, respectively		—		—		82		—
Other comprehensive income for the period		663		693		1,978		3,485
Comprehensive Income	$	77,056	$	65,995	$	165,425	$	123,742

See notes to condensed consolidated financial statements.

Table of Contents

Merchants Bancorp

Condensed Consolidated Statement of Shareholders’ Equity (Unaudited)

For the Three and Six Months Ended June 30, 2024 and 2023

(In thousands, except share data)



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2024			2023			2024			2023
	Shares		Amount	Shares		Amount	Shares		Amount	Shares		Amount
Common Stock
Balance beginning of period	43,354,718	$	139,950	43,233,618	$	138,105	43,242,928	$	140,365	43,113,127	$	137,781
Distribution to employee stock ownership plan	-		-	-		-	23,414		997	33,293		810
Issuance of common stock, net of $5.5 million in offering expenses	2,400,000		97,655	-		-	2,400,000		97,655	-		-
Shares issued for stock compensation plans, net of taxes withheld to satisfy tax obligations	2,849		887	3,682		748	91,225		(525)	90,880		262
Balance end of period	45,757,567		238,492	43,237,300		138,853	45,757,567		238,492	43,237,300		138,853

7% Series A Preferred Stock

Merchants Bancorp [MBINO] Filings
Merchants Bancorp [MBIN] Filings
Merchants Bancorp [MBINM] Filings
Merchants Bancorp [MBINN] Filings
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10-K	[2024-03-12]
10-Q	[2023-11-09]
10-Q	[2023-08-09]
10-Q	[2023-05-10]
10-K	[2023-03-16]
10-Q	[2022-11-08]
10-Q	[2022-08-08]
10-Q	[2022-05-09]
10-K	[2022-03-04]
10-Q	[2021-11-08]
10-Q	[2021-08-09]
10-Q	[2021-05-10]
10-K	[2021-03-05]
10-Q	[2020-11-09]
10-Q	[2020-08-10]
10-Q	[2020-05-04]
10-K	[2020-03-16]
10-Q	[2019-11-08]
10-Q	[2019-08-09]
10-Q	[2019-05-10]
10-K	[2019-03-15]
10-Q	[2018-11-14]
10-Q	[2018-08-14]
10-Q	[2018-05-15]
10-K	[2018-03-28]
10-Q	[2017-12-07]
S-1	[2017-09-25]

Merchants Bancorp [MBINO] Filings

Merchants Bancorp [MBIN] Filings

Merchants Bancorp [MBINM] Filings

Merchants Bancorp [MBINN] Filings