Merchants Bancorp(MBIN) - 2019 Q1 - Quarterly Report

Financial Performance - Net income decreased to $10,570 thousand for Q1 2019, down 29.8% from $15,061 thousand in Q1 2018[10]. - Basic earnings per share for Q1 2019 was $0.34, down from $0.50 in Q1 2018, reflecting a decrease of 32.0%[9]. - Comprehensive income for Q1 2019 was $11,034 thousand, down from $14,743 thousand in Q1 2018, indicating a decrease of 25.0%[10]. - Net income for the three months ended March 31, 2019, was $10.57 million, a decrease of 29.8% from $15.06 million in the same period of 2018[17]. - Total interest income for Q1 2019 was $39,674,000, an increase of 36.6% from $29,038,000 in Q1 2018[156]. - Total noninterest income for Q1 2019 was $3,664,000, compared to $11,313,000 in Q1 2018, reflecting a significant decline of 67.6%[156]. - Total noninterest expense for Q1 2019 was $13,035,000, an increase from $10,270,000 in Q1 2018, marking a rise of 26.8%[156]. Assets and Liabilities - Total assets increased to $3,976,725 thousand as of March 31, 2019, up from $3,884,163 thousand at December 31, 2018, representing a growth of 2.4%[8]. - Total liabilities increased to $3,498,894 thousand as of March 31, 2019, compared to $3,462,926 thousand at December 31, 2018, marking a rise of 1.0%[8]. - Shareholders' equity increased to $477,831 thousand as of March 31, 2019, up from $421,237 thousand at December 31, 2018, representing a growth of 13.4%[8]. - Cash and cash equivalents at the end of the period were $313.45 million, compared to $287.73 million at the end of the same period in 2018[17]. - Total available-for-sale securities amounted to $296,503,000, with a fair value of $296,669,000, reflecting a gross unrealized gain of $595,000 and unrealized losses of $429,000[35]. Deposits and Borrowings - Total deposits decreased to $3,121,027 thousand as of March 31, 2019, down 3.4% from $3,231,086 thousand at December 31, 2018[8]. - The Company recorded a net change in deposits of $(110.03) million, contrasting with an increase of $82.11 million in the same period last year[17]. - Demand deposits decreased by $156.0 million, or 10%, to $1.4 billion at March 31, 2019, while brokered demand accounts decreased by $250.1 million, or 83%[204]. - Borrowings increased by $142.6 million, or 73%, to $338.0 million at March 31, 2019, to maintain an appropriate level of cash for business funding[206]. Loan Performance - The provision for loan losses was $649 thousand for Q1 2019, a decrease of 53.8% from $1,406 thousand in Q1 2018[9]. - The allowance for loan losses increased from $12,704,000 at the beginning of the period to $13,356,000 at the end of the period, reflecting a provision for loan losses of $649,000[71]. - The total recorded investment in loans as of March 31, 2019, was $2,181,612,000, with a significant portion in mortgage loans (MTG) at $412,171,000[71]. - The total amount of substandard loans was $13,410,000 as of March 31, 2019, highlighting loans that are inadequately protected by the borrower's financial capacity[79]. - The total impaired loans recorded investment was $13,410 thousand, with a specific allowance of $745 thousand[83]. Capital Adequacy - The Company met all capital adequacy requirements as of March 31, 2019, and was categorized as well capitalized by regulatory authorities[91]. - The total capital to risk-weighted assets ratio for the Company was 13.3%, with total capital amounting to $453,361 thousand, exceeding the adequately capitalized requirement of 8.0%[95]. - The Tier 1 capital to risk-weighted assets ratio for the Company was 12.9%, with Tier 1 capital amounting to $440,007 thousand, surpassing the minimum requirement of 6.0%[95]. - The Common Equity Tier 1 capital to risk-weighted assets ratio for the Company was 10.3%, with Common Equity Tier 1 capital of $350,157 thousand, well above the minimum requirement of 4.5%[95]. Business Segments - The Multi-family Mortgage Banking segment reported a net loss of $712,000 in Q1 2019, compared to a net income of $5,484,000 in Q1 2018[155]. - The Mortgage Warehousing segment generated net income of $3,832,000 in Q1 2019, up from $4,630,000 in Q1 2018, a decrease of 17.3%[155]. - The Banking segment contributed $8,769,000 to net income in Q1 2019, down from $5,980,000 in Q1 2018, reflecting a 46.5% increase[155]. Regulatory Changes - The Company expects the adoption of ASU 2016-01 to have no material impact on its financial position or results of operations[163]. - The new lease guidance under ASU 2016-02 requires lessees to recognize a lease liability and a right-of-use asset for all leases, effective after December 15, 2019[167]. - ASU 2016-13 introduces a new methodology for estimating expected credit losses over the life of loans, effective for fiscal years beginning after December 15, 2021[169]. - The Company is developing a project plan to ensure compliance with ASU 2016-13, which may increase the allowance for loan losses[169].