Merchants Bancorp(MBIN) - 2021 Q2 - Quarterly Report

Financial Performance - Net income for the three months ended June 30, 2021, was $51,417 thousand, a 24.5% increase compared to $41,162 thousand for the same period in 2020[12]. - The company reported a basic earnings per share of $1.59 for the three months ended June 30, 2021, compared to $1.31 for the same period in 2020, indicating a growth of 21.4%[12]. - Comprehensive income for the three months ended June 30, 2021, was $51,164 thousand, compared to $40,944 thousand for the same period in 2020, representing an increase of 24.5%[14]. - Net income for the six months ended June 30, 2021, was $113,400,000, compared to $65,745,000 for the same period in 2020, representing a 72.6% increase[18]. - The diluted earnings per share for the six months ended June 30, 2021, were $3.60, compared to $2.03 for the same period in 2020, marking a significant increase[137]. Asset and Liability Management - Total assets increased to $9,881,532 thousand as of June 30, 2021, up from $9,645,375 thousand at December 31, 2020, representing a growth of 2.45%[10]. - Total liabilities decreased slightly to $8,822,468 thousand as of June 30, 2021, from $8,834,754 thousand at December 31, 2020, a reduction of 0.14%[10]. - The company’s retained earnings increased to $560,083 thousand as of June 30, 2021, up from $461,744 thousand at December 31, 2020, reflecting a growth of 21.3%[10]. - Total shareholders' equity as of June 30, 2021, was $1,059,064,000, compared to $708,198,000 as of June 30, 2020, reflecting a year-over-year increase of 49.4%[16]. Loan and Deposit Activity - Total deposits increased to $8,039,578 thousand as of June 30, 2021, up from $7,408,066 thousand at December 31, 2020, reflecting an increase of 8.5%[10]. - The net change in deposits for the six months ended June 30, 2021, was $629,407,000, compared to $1,430,553,000 in 2020, showing a decrease of 56.0%[18]. - As of June 30, 2021, total loans receivable amounted to $5,472.9 million, a decrease from $5,535.4 million as of December 31, 2020[49]. - Total loans held for sale as of June 30, 2021, amounted to $2.93 billion, a decrease from $3.03 billion as of December 31, 2020[136]. Loan Loss Provisions and Quality - The provision for loan losses was a credit of $315 thousand for the three months ended June 30, 2021, compared to a provision of $1,745 thousand in the same period of 2020, indicating improved asset quality[12]. - The provision for loan losses decreased to $1,348,000 for the six months ended June 30, 2021, from $4,743,000 in 2020, indicating a reduction of 71.6%[18]. - Nonaccrual loans, including troubled debt restructurings (TDRs), are reported as nonperforming loans, with a policy to maintain nonaccrual status until three months of satisfactory performance[70]. - Nonperforming loans decreased to 0.05% of loans receivable at June 30, 2021, down from 0.11% at December 31, 2020[181]. Securities and Investments - The fair value of available-for-sale securities was $315.3 million as of June 30, 2021, compared to $269.8 million as of December 31, 2020, indicating a significant increase[30][33]. - The total fair value of available-for-sale securities was $315,260,000 as of June 30, 2021, compared to $277,632,000 on December 31, 2020, indicating an increase of 13.5%[118]. - The company’s investments in available-for-sale securities showed gross unrealized losses of $415,000 as of June 30, 2021[34]. Capital Management - As of June 30, 2021, the Company reported a Tier 1 capital amount of $1,041,631 thousand, resulting in a leverage ratio of 10.9%, exceeding the required threshold of 8.5%[104]. - The Company, Merchants Bank, and FMBI are classified as well-capitalized by regulatory agencies as of June 30, 2021, with no known conditions affecting this status[100]. Mortgage Servicing and Securitization - The company’s mortgage servicing rights increased to $98,331,000 as of June 30, 2021, from $82,604,000 at the end of 2020, reflecting a growth of 19%[124]. - The fair value of mortgage loans in process of securitization was $461,914,000, an increase from $338,733,000 on December 31, 2020, representing a growth of 36.3%[118]. - The company recognized a net loss of $676,000 on the sale of a $262.0 million portfolio of multi-family loans, which was securitized through Freddie Mac[46]. Operational Highlights - The Banking segment provides a wide range of financial products and services, including retail banking and commercial lending, contributing to the company's diversified revenue streams[142]. - The Multi-family Mortgage Banking segment focuses on originating and servicing government-sponsored mortgages, which is a key area of growth for the company[142]. - The company has established a cross-functional committee to ensure compliance with new accounting standards, particularly regarding credit losses[163].