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CARMEL, Ind., Oct. 28, 2020 /PRNewswire/ -- Merchants Bancorp (the "Company" or "Merchants") (Nasdaq: MBIN), parent company of Merchants Bank of Indiana, today reported third quarter 2020 net income of $55.0 million, or $1.79 per common share. This compared to $20.3 million, or $0.60 per common share, in the third quarter of 2019, and $41.2 million, or $1.31 per common share, in the second quarter of 2020. The $34.7 million, or 171%, increase in net income for the third quarter 2020, compared to the third quarter of 2019 was driven by a $32.7 million, or 100%, increase in net interest income that reflected significant growth in mortgage warehouse loans, and a 255% increase in gain on sale of loans, primarily from higher growth in both single-family and multi-family mortgages. The $13.8 million, or 34%, increase in net income for the third quarter 2020, compared to the second quarter of 2020 was primarily driven by a $14.1 million, or 27%, increase in net interest income that also reflected significant growth in mortgage warehouse loans and a 39 basis point increase in the net interest margin. "Against a backdrop of economic uncertainty and lower interest rates, Merchants has delivered another record-setting level of net income during the third quarter. Our commitment to conservative credit underwriting, effective cost management, and our entrepreneurial approach to serving customers has contributed to earnings per share growth of 198% and asset growth of 50% compared to the prior year's quarter. By also managing our capital well, we delivered a return on average assets of 2.34%, a return on average tangible shareholders' equity of 41.0%, a tangible book value of $18.30 per share, and an efficiency ratio of 25.4%," said Michael F. Petrie, Chairman and CEO of Merchants. Michael J. Dunlap, President and Chief Operating Officer of Merchants, added, "The safety of our employees and customers remains our first priority. I am proud of our team and our ability to execute in a challenging environment." Total AssetsTotal assets of $9.5 billion at September 30, 2020 increased $3.2 billion, or 50%, compared to December 31, 2019, and increased $91.1 million, or 1%, compared to June 30, 2020. The 50% increase compared to December 31, 2019 was primarily due to growth in loans held for sale and loans receivable, which increased a combined total of $3.1 billion, or 60%. The increase reflected the significant loan growth generated from mortgage warehouse business, primarily resulting from lower interest rates that increased the origination volume and refinancing in the single-family mortgage market, as well as higher loan volume generated in multi-family business. Return on average assets was 2.34% for the third quarter of 2020 compared to 1.35% for the third quarter of 2019 and 1.89% for the second quarter of 2020. Asset QualityThe allowance for loan losses of $23.4 million at September 30, 2020 increased $7.6 million compared to December 31, 2019 and increased $2.9 million compared to June 30, 2020. The increases were primarily based on growth in the loan portfolio, but also reflected uncertainties surrounding the COVID-19 pandemic. Approximately 85% of the $7.6 million increase compared to December 31, 2019, was related primarily to loan growth, while additional provision associated with the COVID-19 pandemic represented approximately $628,000, or 8%, of the increase. Because it is still too early to know the full extent of potential future losses associated with the impact of COVID-19, the Company continues to monitor the situation and may need to adjust future expectations as developments occur throughout the remainder of 2020. Merchants believes it has minimal direct exposure to consumer, commercial and other small businesses that may be negatively impacted by COVID-19 but continues to assist customers facing financial setbacks. As of September 30, 2020, the Company had only 11 loans remaining in payment deferral arrangements, with unpaid balances of $1.6 million that represented less than 0.02% of total loans and loans held for sale. This compared favorably to the unpaid balances of $80.6 million at June 30, 2020. Non-performing loans were $7.9 million, or 0.16% of loans receivable at September 30, 2020, compared to $4.7 million, or 0.15% of loans receivable at December 31, 2019, and compared to $6.7 million, or 0.16% of loans receivable at June, 2020. The increase in non-performing loans compared to December 31, 2019 was primarily related to one collateralized agricultural loan that is delinquent greater than 90 days late, with repayment still anticipated. Total DepositsTotal deposits of $7.1 billion at September 30, 2020 increased $1.6 billion, or 29%, compared to December 31, 2019, and increased $176.0 million, or 3%, compared to June 30, 2020. The increases compared to both periods were primarily due to growth in traditional and brokered demand accounts, while the Company significantly reduced its balances of brokered certificates of deposits. Total brokered deposits of $1.7 billion at September 30, 2020 decreased $429.1 million from December 31, 2019 and decreased $627.0 million from June 30, 2020. Brokered deposits represented 24% of total deposits at September 30, 2020 compared to 39% of total deposits at December 31, 2019 and 34% of total deposits at June 30, 2020. LiquidityThe Company increased its available borrowing capacity, with unused lines of credit at $2.5 billion at September 30, 2020, compared to $1.9 billion at June 30, 2020. This liquidity enhances the ability to effectively manage interest expense and assets levels in the future. The Company also began utilizing the Federal Reserve's discount window during the second quarter of 2020 and the Paycheck Protection Program Liquidity Facility ("PPPLF") during the third quarter of 2020, which has contributed to lower interest expenses and increased borrowing capacity. Net Interest IncomeNet interest income of $65.3 million in the third quarter of 2020 increased $32.7 million, or 100%, compared to the third quarter of 2019 and increased $14.1 million, or 27%, compared to the second quarter of 2020. The 100% increase in net interest income compared to the third quarter of 2019 reflected significantly higher loan growth and a higher net interest margin. The interest rate spread of 2.74% for the third quarter of 2020 increased 76 basis points compared to 1.98% in the third quarter of 2019. The net interest margin of 2.81% for the third quarter of 2020 increased 59 basis points compared to 2.22% for the third quarter of 2019. The increase in net interest margin compared to the third quarter of 2019 reflected lower funding costs that outpaced the lower interest rates on loans. The 27% increase in net interest income compared to the second quarter of 2020 reflected an interest rate spread of 2.74% that increased 43 basis points compared to 2.31% in the second quarter of 2020. The net interest margin of 2.81% for the third quarter of 2020 also increased 39 basis points compared to 2.42% for the second quarter of 2020. The increase in net interest margin compared to the second quarter of 2020 reflected lower funding costs that outpaced the lower interest rates on loans. Interest IncomeInterest income of $76.3 million in the third quarter of 2020 increased $16.5 million, or 28%, compared to the third quarter of 2019 and increased $8.1 million, or 12%, compared to the second quarter of 2020. The 28% increase in interest income compared to the third quarter of 2019 was primarily due to significant loan growth that was partially offset by lower rates. The higher interest income reflected a $3.2 billion, or 68%, increase in the average balance of loans, including loans held for sale, which reached $7.9 billion for the third quarter of 2020. The average yield on loans and loans held for sale of 3.61% for the third quarter of 2020 decreased 83 basis points compared to 4.44% for the third quarter of 2019. The decline in average yields reflected higher loan volume and lower overall interest rates in the third quarter of 2020. The 12% increase in interest income compared to the second quarter of 2020 reflected a $987.4 million, or 14%, increase in the average balance of loans, including loans held for sale, which reached $7.9 billion for the third quarter of 2020. The average yield on loans and loans held for sale of 3.61% for the third quarter of 2020 also decreased 10 basis points compared to 3.71% for the second quarter of 2020. Interest ExpenseTotal interest expense of $10.9 million for the third quarter of 2020 decreased $16.2 million, or 60%, compared to the third quarter of 2019 and decreased $6.0 million, or 36%, compared to the second quarter of 2020. Interest expense on deposits of $9.1 million for the third quarter of 2020 decreased $16.9 million, or 65%, compared to the third quarter of 2019 and decreased $6.3 million, or 41%, compared to the second quarter of 2020. The 65% decrease in interest expense on deposits compared to the third quarter of 2019 was primarily due to custodial interest-bearing checking accounts that are tied to short-term LIBOR rates, which declined significantly. Also contributing significantly to the decline were lower rates on brokered certificates of deposits. The average balance of interest-bearing deposits of $7.2 billion for the third quarter of 2020 increased $2.1 billion, or 42%, compared to the third quarter of 2019. The average cost of interest-bearing deposits was 0.50% for the third quarter of 2020, which was a 152 basis point decrease compared to 2.02% for the third quarter of 2019. The 41% decrease in interest expense on deposits compared to the second quarter of 2020 was also primarily due to custodial interest-bearing checking accounts that are tied to short-term LIBOR rates, which declined significantly. The average cost of interest-bearing deposits was 0.50% for the third quarter of 2020, which was a 38 basis point decrease compared to 0.88% in the second quarter of 2020. The average balance of interest-bearing deposits of $7.2 billion for the third quarter of 2020 also increased $241.5 million, or 3%, compared to the second quarter of 2020. Noninterest Income Noninterest income of $38.7 million for the third quarter of 2020 increased $27.8 million, or 256%, compared to the third quarter of 2019 and increased $12.5 million, or 48%, compared to the second quarter of 2020. The 256% increase in noninterest income compared to the third quarter of 2019 was primarily due to a $21.2 million, or 255%, increase in gain on sale of loans and a $4.1 million increase in mortgage warehouse fees. Noninterest income for the second quarter of 2020 included a $971,000 negative fair market value adjustment to mortgage servicing rights, which compared to a $1.5 million negative fair market value adjustment for the third quarter of 2019. The 48% increase in noninterest income compared to the second quarter of 2020 was primarily due to a $12.4 million, or 73%, increase in gain on sale of loans, that were partially offset by a $2.2 million decrease in loan servicing fees. Included in loan servicing fees for the second quarter of 2020 was a $971,000 negative fair market value adjustment to mortgage servicing rights, which compared to a $500,000 negative fair market value adjustment for the second quarter of 2020. At September 30, 2020, the mortgage servicing rights asset was valued at $75.8 million, an increase of 2% compared to December 31, 2019 and an increase of 5% compared to September 30, 2019. The value of mortgage servicing rights generally increases in rising interest rate environments and declines in falling interest rate environments. Noninterest ExpenseNoninterest expense of $26.4 million for the third quarter of 2020 increased $10.9 million, or 70%, compared to the third quarter of 2019 and increased $6.1 million, or 30%, compared to the second quarter of 2020. The 70% increase in noninterest expense compared to the third quarter of 2019 was due primarily to a $7.4 million, or 81%, increase in salaries and employee benefits to support business growth and a $1.7 million, or 136%, increase in loan expenses. The efficiency ratio of 25.4% for the third quarter of 2020 compared to 35.7% for the third quarter of 2019. The 30% increase in noninterest expense compared to the second quarter of 2020 was primarily due to a $4.7 million, or 40%, increase in salaries and employee benefits to support business growth and a $905,000, or 44%, increase in loan expenses. The efficiency ratio of 25.4% for the third quarter of 2020 compared to 26.2% for the second quarter of 2020. SegmentsFor the third quarter of 2020, net income for Mortgage Warehousing increased 209% compared to the third quarter of 2019, and increased 22% compared to the second quarter of 2020, reflecting significant growth in net interest income from higher loan volume. For the third quarter of 2020, net income for Multi-family Mortgage Banking increased 115% compared with the third quarter of 2019, and increased 61% compared to the second quarter of 2020, primarily due to higher gain on sale of loans for both periods that was partially offset by higher salaries and benefit expenses to support growth. For the third quarter of 2020, net income for Banking increased 129% compared to the third quarter of 2019, and increased 48% compared to the second quarter of 2020, reflecting higher net interest income and gain on sale of loans in the single-family mortgage business for both periods. About Merchants BancorpMerchants Bancorp is a diversified bank holding company headquartered in Carmel, Indiana operating multiple lines of business, including 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 $9.5 billion in assets and $7.1 billion in deposits as of September 30, 2020, conducts its business primarily through its direct and indirect subsidiaries, Merchants Bank of Indiana, Merchants Capital Corp., Farmers-Merchants Bank of Illinois, Merchants Capital Servicing, LLC, and Merchants Mortgage, a division of Merchants Bank of Indiana. For more information and financial data, please visit Merchants' Investor Relations page atinvestors.merchantsbancorp.com. Forward-Looking Statements This press release contains forward-looking statements which reflect management's current views with respect to, among other things, future events and 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 the industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control, such as the potential impacts of the COVID-19 pandemic. Accordingly, management cautions 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 the Company believes 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 actual results to differ materially from those indicated in these forward-looking statements, including the impacts of the COVID-19 pandemic, such as the severity, magnitude, duration and businesses' and governments' responses thereto, on the Company's operations and personnel, and on activity and demand across its businesses, and other factors identified in "Risk Factors" or "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K and other periodic filings with the Securities and Exchange Commission. 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) September 30, June 30, March 31, December 31, September 30, 2020 2020 2020 2019 2019 Assets Cash and due from banks $ 9,276 $ 13,830 $ 8,168 $ 13,909 $ 15,614 Interest-earning demand accounts 419,926 389,357 559,914 492,800 349,362 Cash and cash equivalents 429,202 403,187 568,082 506,709 364,976 Securities purchased under agreements to resell 6,616 6,651 6,685 6,723 6,760 Mortgage loans in process of securitization 374,721 518,788 465,157 269,891 227,914 Available for sale securities 278,861 259,656 339,053 290,243 308,673 Federal Home Loan Bank (FHLB) stock 70,656 53,224 46,156 20,369 18,808 Loans held for sale (includes $41,418, $42,000, $18,938, $19,592 and $23,357, respectively, at fair value) 3,319,619 3,877,769 2,796,008 2,093,789 2,498,538 Loans receivable, net of allowance for loan losses of $23,436, $20,497, $18,883, $15,842 and $13,705, respectively 4,857,554 4,133,315 3,501,770 3,012,468 2,742,088 Premises and equipment, net 29,261 29,362 29,415 29,274 29,211 Mortgage servicing rights 75,772 72,889 69,978 74,387 71,989 Interest receivable 19,130 18,574 18,139 18,359 18,780 Goodwill 15,845 15,845 15,845 15,845 15,574 Intangible assets, net 2,657 3,038 3,419 3,799 4,182 Other assets and receivables 50,581 47,102 48,691 30,072 29,693 Total assets $ 9,530,475 $ 9,439,400 $ 7,908,398 $ 6,371,928 $ 6,337,186 Liabilities and Shareholders' Equity Liabilities Deposits Noninterest-bearing $ 666,081 $ 601,265 $ 327,805 $ 272,037 $ 198,843 Interest-bearing 6,418,566 6,307,363 6,394,900 5,206,038 5,300,806 Total deposits 7,084,647 6,908,628 6,722,705 5,478,075 5,499,649 Borrowings 1,618,201 1,761,113 444,567 181,439 159,673 Other liabilities 70,492 61,461 68,157 58,686 48,425 Total liabilities 8,773,340 8,731,202 7,235,429 5,718,200 5,707,747 Commitments and Contingencies Shareholders' Equity Common stock, without par value Authorized - 50,000,000 shares Issued and outstanding - 28,745,614 shares, 28,745,614 shares, 28,742,484shares, 28,706,438 shares, and 28,706,438 shares, respectively 136,103 135,949 135,746 135,640 135,507 Preferred stock, without par value - 5,000,000 total shares authorized 8% Preferred stock - $1,000 per share liquidation preference Authorized - 50,000 shares Issued and outstanding - 41,625 shares 41,581 41,581 41,581 41,581 41,581 7% Series A Preferred stock - $25 per share liquidation preference Authorized - 3,500,000 shares Issued and outstanding - 2,081,800 shares, 2,081,800 shares, 2,081,800 shares, 2,081,800 shares, and 2,081,800 shares, respectively 50,221 50,221 50,221 50,221 50,245 6% Series B Preferred stock - $1,000 per share liquidation preference Authorized - 125,000 shares Issued and outstanding - 125,000 shares, 125,000 shares, 125,000 shares, 125,000 shares and 125,000 shares (all equivalent to 5,000,000 depositary shares) 120,844 120,844 120,844 120,844 120,863 Retained earnings 407,979 358,895 323,651 304,984 280,551 Accumulated other comprehensive income 407 708 926 458 692 Total shareholders' equity 757,135 708,198 672,969 653,728 629,439 Total liabilities and shareholders' equity $ 9,530,475 $ 9,439,400 $ 7,908,398 $ 6,371,928 $ 6,337,186 Consolidated Statement of Income (Unaudited) (In thousands, except share data) Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2020 2020 2019 2020 2019 Interest Income Loans $ 71,857 $ 63,979 $ 52,779 $ 189,400 $ 129,599 Mortgage loans in process of securitization 3,250 2,534 1,422 8,580 4,434 Investment securities: Available for sale - taxable 431 972 1,604 2,725 4,632 Available for sale - tax exempt 37 38 68 112 217 Federal Home Loan Bank stock 531 447 262 1,217 742 Other 152 234 3,626 2,845 8,572 Total interest income 76,258 68,204 59,761 204,879 148,196 Interest Expense Deposits 9,104 15,398 26,039 45,132 59,610 Borrowed funds 1,832 1,572 1,098 4,838 3,909 Total interest expense 10,936 16,970 27,137 49,970 63,519 Net Interest Income 65,322 51,234 32,624 154,909 84,677 Provision for loan losses 2,981 1,745 1,193 7,724 1,947 Net Interest Income After Provision for Loan Losses 62,341 49,489 31,431 147,185 82,730 Noninterest Income Gain on sale of loans 29,498 17,084 8,312 67,748 20,059 Loan servicing fees, net (643) 1,597 (1,410) (4,870) (3,318) Mortgage warehouse fees 6,833 5,475 2,699 15,054 4,590 Gains on sale of investments available for sale (1) 441 441 124 Other income 2,528 2,032 1,251 6,374 2,931 Total noninterest income 38,657 26,188 10,852 84,747 24,386 Noninterest Expense Salaries and employee benefits 16,567 11,828 9,139 42,635 27,671 Loan expenses 2,944 2,039 1,248 6,147 3,527 Occupancy and equipment 1,420 1,383 994 4,295 2,816 Professional fees 712 726 508 2,007 1,500 Deposit insurance expense 1,404 1,851 859 5,041 1,354 Technology expense 903 716 674 2,229 1,775 Other expense 2,434 1,739 2,100 6,605 5,834 Total noninterest expense 26,384 20,282 15,522 68,959 44,477 Income Before Income Taxes 74,614 55,395 26,761 162,973 62,639 Provision for income taxes (2) 19,612 14,233 6,502 42,226 15,371 Net Income $ 55,002 $ 41,162 $ 20,259 $ 120,747 $ 47,268 Dividends on preferred stock (3,618) (3,619) (3,022) (10,855) (5,598) Net Income Allocated to Common Shareholders 51,384 37,543 17,237 109,892 41,670 Basic Earnings Per Share $ 1.79 $ 1.31 $ 0.60 $ 3.82 $ 1.45 Diluted Earnings Per Share $ 1.79 $ 1.31 $ 0.60 $ 3.82 $ 1.45 Weighted-Average Shares Outstanding Basic 28,745,614 28,743,894 28,706,438 28,741,395 28,704,682 Diluted 28,778,462 28,762,349 28,744,953 28,766,756 28,742,911 (1) Includes $441, $0, $0, $441, and $124, respectively, related to accumulated other comprehensive earnings reclassifications. (2) Includes $(97), $0, $0, $(97), and $(31), respectively, related to income tax (expense)/benefit for reclassification items. Key Operating Results (Unaudited) ($ in thousands, except share data) Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2020 2020 2019 2020 2019 Noninterest expense $ 26,384 $ 20,282 $ 15,522 $ 68,959 $ 44,477 Net interest income (before provision for losses) 65,322 51,234 32,624 154,909 84,677 Noninterest income 38,657 26,188 10,852 84,747 24,386 Total income $ 103,979 $ 77,422 $ 43,476 $ 239,656 $ 109,063 Efficiency ratio 25.37% 26.20% 35.70% 28.77% 40.78% Average assets $ 9,409,450 $ 8,689,212 $ 6,009,840 $ 8,238,641 $ 4,798,110 Net income $ 55,002 $ 41,162 $ 20,259 $ 120,747 $ 47,268 Return on average assets before annualizing 0.58% 0.47% 0.34% 1.47% 0.99% Annualization factor 4.00 4.00 4.00 1.33 1.33 Return on average assets 2.34% 1.89% 1.35% 1.95% 1.31% Return on average tangible common shareholders' equity (1) 41.01% 32.62% 18.17% 31.34% 14.75% Tangible book value per common share (1) $ 18.30 $ 16.58 $ 13.83 $ 18.30 $ 13.83 Tangible common shareholders' equity/tangible assets (1) 5.53% 5.06% 6.28% 5.53% 6.28% (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 Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2020 2020 2019 2020 2019 Net income $ 55,002 $ 41,162 $ 20,259 $ 120,747 $ 47,268 Less: preferred stock dividends (3,618) (3,619) (3,022) (10,855) (5,598) Net income available to common shareholders $ 51,384 $ 37,543 $ 17,237 $ 109,892 $ 41,670 Average shareholders' equity $ 732,533 $ 692,132 $ 567,732 $ 698,071 $ 498,091 Less: average goodwill & intangibles (18,707) (19,083) (20,005) (19,089) (20,458) Less: average preferred stock (212,646) (212,646) (168,266) (212,646) (101,979) Tangible common shareholders' equity $ 501,180 $ 460,403 $ 379,461 $ 466,336 $ 375,654 Annualization factor 4.00 4.00 4.00 1.33 1.33 Return on average tangible common shareholders' equity 41.01% 32.62% 18.17% 31.34% 14.75% Total equity $ 757,135 $ 708,198 $ 629,439 $ 757,135 $ 629,439 Less: goodwill and intangibles (18,502) (18,883) (19,756) (18,502) (19,756) Less: preferred stock (212,646) (212,646) (212,689) (212,646) (212,689) Tangible common shareholders' equity $ 525,987 $ 476,669 $ 396,994 $ 525,987 $ 396,994 Assets $ 9,530,475 $ 9,439,400 $ 6,337,186 $ 9,530,475 $ 6,337,186 Less: goodwill and intangibles (18,502) (18,883) (19,756) (18,502) (19,756) Tangible assets $ 9,511,973 $ 9,420,517 $ 6,317,430 $ 9,511,973 $ 6,317,430 Ending common shares 28,745,614 28,745,614 28,706,438 28,745,614 28,706,438 Tangible book value per common share $ 18.30 $ 16.58 $ 13.83 $ 18.30 $ 13.83 Tangible common shareholders' equity/tangible assets 5.53% 5.06% 6.28% 5.53% 6.28% Average Balance Analysis ($ in thousands) (Unaudited) Three Months Ended Three Months Ended Three Months Ended September 30, 2020 June 30, 2020 September 30, 2019 Average Yield/ Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate Balance Interest Rate Assets: Interest-bearing deposits, and other $ 587,804 $ 683 0.46% $ 971,350 $ 681 0.28% $ 670,399 $ 3,888 2.30% Securities available for sale - taxable 269,896 431 0.64% 276,928 972 1.41% 278,314 1,604 2.29% Securities available for sale - tax exempt 5,145 37 2.86% 5,294 38 2.89% 9,032 68 2.99% Mortgage loans in process of securitization 449,336 3,250 2.88% 328,089 2,534 3.11% 162,915 1,422 3.46% Loans and loans held for sale 7,923,726 71,857 3.61% 6,936,368 63,979 3.71% 4,718,771 52,779 4.44% Total interest-earning assets 9,235,907 76,258 3.28% 8,518,029 68,204 3.22% 5,839,431 59,761 4.06% Allowance for loan losses (21,585) (19,474) (12,990) Noninterest-earning assets 195,128 190,657 183,399 Total assets $ 9,409,450 $ 8,689,212 $ 6,009,840 Liabilities & Shareholders' Equity: Interest-bearing checking 3,890,865 1,368 0.14% 2,656,105 2,327 0.35% 1,951,613 9,253 1.88% Savings deposits 180,931 34 0.07% 176,546 27 0.06% 152,509 85 0.22% Money market 1,578,956 3,861 0.97% 1,402,562 3,966 1.14% 977,228 4,698 1.91% Certificates of deposit 1,589,852 3,841 0.96% 2,763,853 9,078 1.32% 2,032,619 12,003 2.34% Total interest-bearing deposits 7,240,604 9,104 0.50% 6,999,066 15,398 0.88% 5,113,969 26,039 2.02% Borrowings 800,021 1,832 0.91% 518,207 1,572 1.22% 59,585 1,098 7.31% Total interest-bearing liabilities 8,040,625 10,936 0.54% 7,517,273 16,970 0.91% 5,173,554 27,137 2.08% Noninterest-bearing deposits 579,145 372,195 198,832 Noninterest-bearing liabilities 57,147 107,612 69,722 Total liabilities 8,676,917 7,997,080 5,442,108 Shareholders' equity 732,533 692,132 567,732 Total liabilities and shareholders' equity $ 9,409,450 $ 8,689,212 $ 6,009,840 Net interest income $ 65,322 $ 51,234 $ 32,624 Net interest spread 2.74% 2.31% 1.98% Net interest-earning assets $ 1,195,282 $ 1,000,756 $ 665,877 Net interest margin 2.81% 2.42% 2.22% Average interest-earning assets to average interest-bearing liabilities 114.87% 113.31% 112.87% Supplemental Results (Unaudited) ($ in thousands) Net Income Net Income Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30, 2020 2020 2019 2020 2019 Segment Multi-family Mortgage Banking $ 5,891 $ 3,651 $ 2,741 $ 14,941 $ 4,546 Mortgage Warehousing 33,793 27,712 10,924 73,942 21,076 Banking 17,486 11,812 7,649 37,248 24,826 Other (2,168) (2,013) (1,055) (5,384) -3,180 Total $ 55,002 $ 41,162 $ 20,259 $ 120,747 $ 47,268 Total Assets September 30, June 30, December 31, 2020 2020 2019 Segment Multi-family Mortgage Banking $ 194,624 $ 182,072 $ 188,866 Mortgage Warehousing 5,179,664 5,575,169 3,124,684 Banking 4,111,984 3,639,638 3,018,568 Other 44,203 42,521 39,810 Total $ 9,530,475 $ 9,439,400 $ 6,371,928 Gain on Sale of Loans Gain on Sale of Loans Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30, 2020 2020 2019 2020 2019 Loan Type Multi-family $ 14,872 $ 6,839 $ 7,582 $ 40,563 $ 18,714 Single-family 14,093 10,059 724 26,225 1,280 Small Business Association (SBA) 533 186 6 960 65 Total $ 29,498 $ 17,084 $ 8,312 $ 67,748 $ 20,059 Loans Receivable and Loans Held for Investment September 30, June 30, December 31, 2020 2020 2019 Mortgage warehouse lines of credit $ 1,647,521 $ 1,287,246 $ 765,151 Residential real estate 572,527 471,807 413,835 Multi-family and healthcare financing 2,125,516 1,848,811 1,347,125 Commercial and commercial real estate 419,812 432,222 398,601 Agricultural production and real estate 101,636 99,035 85,210 Consumer and margin loans 13,978 14,691 18,388 4,880,990 4,153,812 3,028,310 Less: Allowance for loan losses 23,436 20,497 15,842 Loans receivable $ 4,857,554 $ 4,133,315 $ 3,012,468 Loans held for sale 3,319,619 3,877,769 2,093,789 Total loans, net of allowance $ 8,177,173 $ 8,011,084 $ 5,106,257 SOURCE Merchants Bancorp Related Links http://www.merchantsbankofindiana.com

Answer: Merchants Bancorp Reports Third Quarter 2020 Results