Merchants Bancorp(MBIN) - 2019 Q3 - Quarterly Report

Financial Performance - Net income for the three months ended September 30, 2019, was $20,259 thousand, compared to $16,739 thousand for the same period in 2018, reflecting a growth of 21.0%[12]. - Net income for the nine months ended September 30, 2019, was $47.268 million, a slight decrease from $47.452 million in the same period of 2018[17]. - Comprehensive income for the three months ended September 30, 2019, was $20,311 thousand, compared to $16,912 thousand in the same period of 2018, representing an increase of 20.8%[12]. - Net income for the three months ended September 30, 2019, was $20,259,000, compared to $16,739,000 for the same period in 2018, representing a year-over-year increase of approximately 21.0%[152]. - Net income rose by $3.5 million, or 21%, compared to the same period in 2018, primarily due to a $9.1 million, or 39%, increase in net interest income[188]. Assets and Deposits - Total assets increased to $6,337,186 thousand as of September 30, 2019, up from $3,884,163 thousand at December 31, 2018, representing a growth of approximately 63.2%[10]. - Total deposits rose to $5,499,649 thousand as of September 30, 2019, from $3,231,086 thousand at December 31, 2018, marking an increase of 70.5%[10]. - Cash and cash equivalents at the end of the period were $364.976 million, down from $410.756 million at the end of the previous year[17]. - Total deposits increased from $3,231,086,000 at December 31, 2018, to $5,499,649,000 at September 30, 2019, representing an increase of approximately 70.5%[139]. - Total shareholders' equity increased by $208.2 million, or 49%, to $629.4 million at September 30, 2019, driven by the issuance of $171.1 million in preferred stock and net income of $47.3 million[208]. Income and Expenses - Net interest income for the three months ended September 30, 2019, was $32,624 thousand, a 38.8% increase from $23,482 thousand in the same period of 2018[11]. - Total noninterest expense for the three months ended September 30, 2019, was $15,522 thousand, an increase of 24.0% from $12,449 thousand in the same period of 2018[11]. - Total noninterest income for the three months ended September 30, 2019, was $10,852,000, up from $11,907,000 in 2018, indicating a decrease of 9%[159]. - Total noninterest expense for the nine months ended September 30, 2019, was $44,477,000, compared to $34,719,000 in 2018, indicating an increase of 28%[161]. Loans and Credit Quality - Loans receivable reached $2.742 billion as of September 30, 2019, up from $2.045 billion at the end of 2018, with a notable increase in mortgage warehouse lines of credit to $796.344 million[51]. - The allowance for loan losses was $13.705 million as of September 30, 2019, compared to $12.704 million at the end of 2018[51]. - The total recorded investment in loans was $2,755,793,000 as of September 30, 2019, with a significant portion in commercial real estate (CRE) loans amounting to $1,145,646,000[72]. - Nonperforming loans represented only 0.22% of total loans, indicating strong asset quality[188]. - The loan portfolio aging analysis showed that total past due loans amounted to $9,244,000, with $3,065,000 past due for 30-59 days and $5,498,000 for greater than 90 days[83]. Capital and Equity - The total shareholders' equity as of September 30, 2019, was $629,439,000, up from $515,013,000 at the end of June 2019[14]. - Merchants Bank's Tier 1 capital ratio was reported at 10.9% as of September 30, 2019, above the required minimum of 6.0%[97]. - The Company reported a Common Equity Tier 1 capital ratio of 6.8% as of September 30, 2019, surpassing the minimum requirement of 4.5%[97]. - The Company, Merchants Bank, and FMBI maintained a total capital ratio of 10.8% as of September 30, 2019, exceeding the minimum requirement of 8.0% for being well capitalized[97]. Stock and Shareholder Information - The company issued 125,000 shares of 6% preferred stock, raising $120,863,000 net of offering expenses[14]. - Dividends on common stock were $2,009,000 for the quarter, maintaining a dividend of $0.07 per share[14]. - The company issued 10,127 shares under the Prior Incentive Plan during the nine months ended September 30, 2019, compared to 7,039 shares in the same period of 2018, indicating a 43.5% increase in share issuance[153]. - The company did not issue any shares under the 2017 Equity Incentive Plan as of September 30, 2019, indicating a focus on prior plans for equity compensation[153]. Acquisitions and Investments - The acquisition of FM Bancorp, Inc. was completed for a total purchase price of $21.9 million, with the acquired entities having total assets of approximately $110 million[33]. - The Company acquired the assets of NattyMac, LLC for an undisclosed amount, recording goodwill of $3.4 million and intangible assets of $1.6 million, expected to enhance its warehouse business and geographic footprint[34]. Market and Economic Conditions - The company continues to evaluate the impact of adopting new accounting standards but does not expect them to have a material impact on its financial position or results of operations[166]. - The company expects to benefit from reduced borrowing costs and increased earnings from the warehouse business due to the acquisition of NattyMac[34].