Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2022 | Aug. 01, 2022 | |
Document Information | ||
Entity Registrant Name | MERCHANTS BANCORP | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-38258 | |
Amendment Flag | false | |
Entity Incorporation, State or Country Code | IN | |
Entity Tax Identification Number | 20-5747400 | |
Entity Address, Address Line One | 410 Monon Blvd | |
Entity Address, City or Town | Carmel | |
Entity Address, State or Province | IN | |
Entity Address, Postal Zip Code | 46032 | |
City Area Code | 317 | |
Local Phone Number | 569-7420 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 43,106,505 | |
Entity Central Index Key | 0001629019 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Common Stock. | ||
Document Information | ||
Title of 12(b) Security | Common Stock, without par value | |
Trading Symbol | MBIN | |
Security Exchange Name | NASDAQ | |
Series A Preferred Stock | ||
Document Information | ||
Title of 12(b) Security | Series A Preferred Stock, without par value | |
Trading Symbol | MBINP | |
Security Exchange Name | NASDAQ | |
Series B Preferred Stock | ||
Document Information | ||
Title of 12(b) Security | Depositary Shares, each representing a 1/40th interest in a share of Series B Preferred Stock, without par value | |
Trading Symbol | MBINO | |
Security Exchange Name | NASDAQ | |
Series C Preferred Stock | ||
Document Information | ||
Title of 12(b) Security | Depositary Shares, each representing a 1/40th interest in a share of Series C Preferred Stock, without par value | |
Trading Symbol | MBINN | |
Security Exchange Name | NASDAQ |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Assets | ||
Cash and due from banks | $ 10,714 | $ 14,030 |
Interest-earning demand accounts | 247,432 | 1,018,584 |
Cash and cash equivalents | 258,146 | 1,032,614 |
Securities purchased under agreements to resell | 3,520 | 5,888 |
Mortgage loans in process of securitization | 323,046 | 569,239 |
Available for sale securities | 336,814 | 310,629 |
Federal Home Loan Bank (FHLB) stock | 39,130 | 29,588 |
Loans held for sale (includes $41,991 and $48,583, respectively at fair value) | 2,759,116 | 3,303,199 |
Loans receivable, net of allowance for credit losses on loans of $37,474 and $31,344, respectively | 7,033,203 | |
Loans receivable, net of allowance for credit losses on loans of $37,474 and $31,344, respectively | 5,751,319 | |
Premises and equipment, net | 35,085 | 31,212 |
Servicing rights | 130,710 | 110,348 |
Interest receivable | 26,184 | 24,103 |
Goodwill | 15,845 | 15,845 |
Intangible assets, net | 1,441 | 1,707 |
Other assets and receivables | 123,815 | 92,947 |
Total assets | 11,086,055 | 11,278,638 |
Deposits | ||
Noninterest-bearing | 444,461 | 641,442 |
Interest-bearing | 7,855,277 | 8,341,171 |
Total deposits | 8,299,738 | 8,982,613 |
Borrowings | 1,440,904 | 1,033,954 |
Deferred and current tax liabilities, net | 19,414 | 19,170 |
Other liabilities | 97,460 | 87,492 |
Total liabilities | 9,857,516 | 10,123,229 |
Commitments and Contingencies | ||
Shareholders' Equity | ||
Common stock, without par value(1) Authorized - 75,000,000 shares at June 30, 2022 and 50,000,000 shares at December 31, 2021 Issued and outstanding - 43,106,505 shares at June 30, 2022 and 43,180,079 shares at December 31, 2021 | 136,671 | 137,565 |
Retained earnings | 737,789 | 657,149 |
Accumulated other comprehensive loss | (8,070) | (1,454) |
Total shareholders' equity | 1,228,539 | 1,155,409 |
Total liabilities and shareholders' equity | 11,086,055 | 11,278,638 |
7% Preferred Stock | ||
Shareholders' Equity | ||
Preferred stock | 50,221 | 50,221 |
6% Series B Preferred Stock | ||
Shareholders' Equity | ||
Preferred stock | 120,844 | 120,844 |
6% Series C Preferred Stock | ||
Shareholders' Equity | ||
Preferred stock | $ 191,084 | $ 191,084 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
Loans held for sale at fair value | $ 41,991 | $ 48,583 |
Allowance for credit losses on loans | $ 37,474 | |
Allowance for credit losses on loans | $ 31,344 | |
Stockholders' Equity: | ||
Common stock, without par value (in dollars per share) | ||
Common stock, shares authorized | 75,000,000 | 50,000,000 |
Common stock, shares issued | 43,106,505 | 43,180,079 |
Common stock, shares outstanding | 43,106,505 | 43,180,079 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
7% Preferred Stock | ||
Stockholders' Equity: | ||
Preferred stock, dividend rate (as a percent) | 7% | 7% |
Preferred stock liquidation preference (in dollars per share) | $ 25 | $ 25 |
Preferred stock, shares authorized | 3,500,000 | 3,500,000 |
Preferred stock, shares issued | 2,081,800 | 2,081,800 |
Preferred stock, shares outstanding | 2,081,800 | 2,081,800 |
6% Series B Preferred Stock | ||
Stockholders' Equity: | ||
Preferred stock, dividend rate (as a percent) | 6% | 6% |
Preferred stock liquidation preference (in dollars per share) | $ 1,000 | $ 1,000 |
Preferred stock, shares authorized | 125,000 | 125,000 |
Preferred stock, shares issued | 125,000 | 125,000 |
Preferred stock, shares outstanding | 125,000 | 125,000 |
Depositary shares | 5,000,000 | 5,000,000 |
6% Series C Preferred Stock | ||
Stockholders' Equity: | ||
Preferred stock, dividend rate (as a percent) | 6% | 6% |
Preferred stock liquidation preference (in dollars per share) | $ 1,000 | $ 1,000 |
Preferred stock, shares authorized | 250,000 | 250,000 |
Preferred stock, shares issued | 196,181 | 196,181 |
Preferred stock, shares outstanding | 196,181 | 196,181 |
Depositary shares | 7,847,233 | 7,847,233 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |||
Interest Income | ||||||
Loans | $ 85,994 | $ 68,276 | $ 158,190 | $ 143,793 | ||
Mortgage loans in process of securitization | 1,449 | 2,724 | 3,694 | 5,860 | ||
Investment securities: | ||||||
Available for sale - taxable | 917 | 833 | 1,618 | 1,187 | ||
Available for sale - tax exempt | 9 | 20 | ||||
Federal Home Loan Bank stock | 284 | 392 | 553 | 776 | ||
Other | 626 | 204 | 1,227 | 351 | ||
Total interest income | 89,270 | 72,438 | 165,282 | 151,987 | ||
Interest Expense | ||||||
Deposits | 14,768 | 6,683 | 23,581 | 12,783 | ||
Borrowed funds | 2,471 | 1,348 | 3,945 | 2,834 | ||
Total interest expense | 17,239 | 8,031 | 27,526 | 15,617 | ||
Net Interest Income | 72,031 | 64,407 | 137,756 | 136,370 | ||
Provision (credit) for credit losses | 6,212 | (315) | 8,663 | 1,348 | ||
Net Interest Income After Provision for Credit Losses | 65,819 | 64,722 | 129,093 | 135,022 | ||
Noninterest Income | ||||||
Gain on sale of loans | 21,564 | 25,122 | 39,529 | 53,742 | ||
Loan servicing fees, net | 9,607 | 1,727 | 19,338 | 9,678 | ||
Mortgage warehouse fees | 1,350 | 3,079 | 3,208 | 7,195 | ||
Syndication and asset management fees | 1,599 | 480 | 2,213 | 535 | ||
Other income | 5,051 | 2,447 | 9,480 | 5,641 | ||
Total noninterest income | 39,171 | 32,855 | 73,768 | 76,791 | ||
Noninterest Expense | ||||||
Salaries and employee benefits | 22,475 | 18,869 | 43,768 | 40,143 | ||
Loan expenses | 1,184 | 1,921 | 2,395 | 4,444 | ||
Occupancy and equipment | 2,011 | 1,808 | 3,825 | 3,435 | ||
Professional fees | 1,594 | 779 | 2,897 | 1,201 | ||
Deposit insurance expense | 670 | 651 | 1,429 | 1,322 | ||
Technology expense | 1,304 | 971 | 2,540 | 1,908 | ||
Other expense | 3,719 | 3,184 | 7,136 | 5,814 | ||
Total noninterest expense | 32,957 | 28,183 | 63,990 | 58,267 | ||
Income Before Income Taxes | 72,033 | 69,394 | 138,871 | 153,546 | ||
Provision for income taxes | 18,098 | 17,977 | 34,794 | 40,146 | ||
Net Income | 53,935 | 51,417 | 104,077 | 113,400 | ||
Dividends on preferred stock | (5,729) | (5,659) | (11,457) | (9,416) | ||
Net Income Allocated to Common Shareholders | $ 48,206 | $ 45,758 | $ 92,620 | $ 103,984 | ||
Basic Earnings Per Share | $ 1.12 | [1] | $ 1.06 | [1] | $ 2.14 | $ 2.41 |
Diluted Earnings Per Share | $ 1.11 | [1] | $ 1.06 | [1] | $ 2.14 | $ 2.40 |
Basic (in Shares) | 43,209,824 | [1] | 43,174,220 | [1] | 43,220,198 | 43,166,223 |
Diluted (in Shares) | 43,335,211 | [1] | 43,311,488 | [1] | 43,367,875 | 43,293,599 |
[1] The number of shares and per share amounts have been restated to reflect the 3 -for-2 common stock split, effective on January 17, 2022 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Condensed Consolidated Statements of Comprehensive Income | ||||
Net Income | $ 53,935 | $ 51,417 | $ 104,077 | $ 113,400 |
Other Comprehensive Loss: | ||||
Net change in unrealized losses on investment securities available for sale, net of tax benefits of $553, $87, $2,203 and $130, respectively | (1,766) | (253) | (6,616) | (378) |
Other comprehensive loss for the period | (1,766) | (253) | (6,616) | (378) |
Comprehensive Income | $ 52,169 | $ 51,164 | $ 97,461 | $ 113,022 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Condensed Consolidated Statements of Comprehensive Income | ||||
Tax benefits on net change in unrealized gains/(losses) on investment securities available for sale | $ 553 | $ 87 | $ 2,203 | $ 130 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Shareholders' Equity - USD ($) $ in Thousands | Common stock | Preferred stock 8% Preferred Stock | Preferred stock 7% Preferred Stock | Preferred stock 6% Series B Preferred Stock | Preferred stock 6% Series C Preferred Stock Common Stock Offering | Preferred stock 6% Series C Preferred Stock Private Placement | Preferred stock 6% Series C Preferred Stock | Retained Earnings Impact from adoption of ASU | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
Balance at beginning of the period at Dec. 31, 2020 | $ 135,857 | $ 41,581 | $ 50,221 | $ 461,744 | $ 374 | ||||||
Balance at beginning of the period (in shares) at Dec. 31, 2020 | 43,120,625 | 41,625 | 2,081,800 | 125,000 | |||||||
Condensed Consolidated Statements of Shareholders' Equity | |||||||||||
Net income | 113,400 | $ 113,400 | |||||||||
Distribution to employee stock ownership plan | $ 537 | ||||||||||
Distribution to employee stock ownership plan (in shares) | 29,149 | ||||||||||
Shares issued for stock compensation plans, net of taxes withheld to satisfy tax obligations | $ 442 | ||||||||||
Shares issued for stock compensation plans, net of taxes withheld to satisfy tax obligations (in shares) | 25,625 | ||||||||||
Issuance of shares, net of offering expenses | $ 144,926 | $ 46,158 | |||||||||
Issuance of shares, net of offering expenses (in shares) | 150,000 | 46,181 | |||||||||
Dividends on 8% preferred stock, annually | (833) | ||||||||||
Final dividend for redemption of 8% preferred stock | (139) | ||||||||||
Dividends on 7% preferred stock, annually | (1,821) | ||||||||||
Dividends on 6% Series B preferred stock, annually | (3,750) | ||||||||||
Dividends on 6% Series C preferred stock, annually | (2,873) | ||||||||||
Dividends on common stock, annually | (5,181) | ||||||||||
Deconsolidation of entities | (419) | ||||||||||
Redemption of 8% preferred stock | $ (41,581) | (45) | |||||||||
Redemption of 8% preferred stock (in shares) | (41,625) | ||||||||||
Other comprehensive loss | (378) | (378) | |||||||||
Balance at end of the period at Jun. 30, 2021 | $ 136,836 | $ 50,221 | $ 120,844 | $ 191,084 | 560,083 | (4) | $ 1,059,064 | ||||
Balance at end of the period (in shares) at Jun. 30, 2021 | 43,175,399 | 2,081,800 | 125,000 | 196,181 | |||||||
Balance at beginning of the period at Mar. 31, 2021 | $ 136,474 | $ 41,581 | $ 50,221 | $ 120,844 | $ 144,925 | 516,961 | 249 | ||||
Balance at beginning of the period (in shares) at Mar. 31, 2021 | 43,173,209 | 41,625 | 2,081,800 | 125,000 | 150,000 | ||||||
Condensed Consolidated Statements of Shareholders' Equity | |||||||||||
Repurchase of common Stock (in shares) | 0 | ||||||||||
Net income | 51,417 | $ 51,417 | |||||||||
Shares issued for stock compensation plans, net of taxes withheld to satisfy tax obligations | $ 362 | ||||||||||
Shares issued for stock compensation plans, net of taxes withheld to satisfy tax obligations (in shares) | 2,190 | ||||||||||
Issuance of shares, net of offering expenses | $ 1 | $ 46,158 | |||||||||
Issuance of shares, net of offering expenses (in shares) | 46,181 | ||||||||||
Dividends on 7% preferred stock, annually | (911) | ||||||||||
Dividends on 6% Series B preferred stock, annually | (1,875) | ||||||||||
Dividends on 6% Series C preferred stock, annually | (2,873) | ||||||||||
Dividends on common stock, annually | (2,591) | ||||||||||
Redemption of 8% preferred stock | $ (41,581) | (45) | |||||||||
Redemption of 8% preferred stock (in shares) | (41,625) | ||||||||||
Other comprehensive loss | (253) | (253) | |||||||||
Balance at end of the period at Jun. 30, 2021 | $ 136,836 | $ 50,221 | $ 120,844 | $ 191,084 | 560,083 | (4) | 1,059,064 | ||||
Balance at end of the period (in shares) at Jun. 30, 2021 | 43,175,399 | 2,081,800 | 125,000 | 196,181 | |||||||
Balance at beginning of the period at Dec. 31, 2021 | $ 137,565 | $ 50,221 | $ 120,844 | $ 191,084 | 657,149 | (1,454) | 1,155,409 | ||||
Balance at beginning of the period (in shares) at Dec. 31, 2021 | 43,180,079 | 2,081,800 | 125,000 | 196,181 | |||||||
Condensed Consolidated Statements of Shareholders' Equity | |||||||||||
Repurchase of common stock | $ (1,761) | (2,174) | |||||||||
Repurchase of common Stock (in shares) | (165,037) | ||||||||||
Net income | 104,077 | 104,077 | |||||||||
Cash paid in lieu of fractional shares for stock split | $ (1) | ||||||||||
Cash paid in lieu of fractional shares for stock split (in shares) | (29) | ||||||||||
Distribution to employee stock ownership plan | $ 653 | ||||||||||
Distribution to employee stock ownership plan (in shares) | 20,709 | ||||||||||
Shares issued for stock compensation plans, net of taxes withheld to satisfy tax obligations | $ 215 | ||||||||||
Shares issued for stock compensation plans, net of taxes withheld to satisfy tax obligations (in shares) | 70,783 | ||||||||||
Dividends on 7% preferred stock, annually | (1,821) | ||||||||||
Dividends on 6% Series B preferred stock, annually | (3,750) | ||||||||||
Dividends on 6% Series C preferred stock, annually | (5,886) | ||||||||||
Dividends on common stock, annually | (6,048) | ||||||||||
Other comprehensive loss | (6,616) | (6,616) | |||||||||
Balance at end of the period (ASU 2016-13) at Jun. 30, 2022 | $ (3,648) | ||||||||||
Balance at end of the period (ASU 2016-02) at Jun. 30, 2022 | (110) | ||||||||||
Balance at end of the period at Jun. 30, 2022 | $ 136,671 | $ 50,221 | $ 120,844 | $ 191,084 | 737,789 | (8,070) | 1,228,539 | ||||
Balance at end of the period (in shares) at Jun. 30, 2022 | 43,106,505 | 2,081,800 | 125,000 | 196,181 | |||||||
Balance at beginning of the period at Mar. 31, 2022 | $ 137,882 | $ 50,221 | $ 120,844 | $ 191,084 | 694,776 | (6,304) | |||||
Balance at beginning of the period (in shares) at Mar. 31, 2022 | 43,267,776 | 2,081,800 | 125,000 | 196,181 | |||||||
Condensed Consolidated Statements of Shareholders' Equity | |||||||||||
Repurchase of common stock | $ (1,761) | (2,174) | |||||||||
Repurchase of common Stock (in shares) | (165,037) | ||||||||||
Net income | 53,935 | 53,935 | |||||||||
Shares issued for stock compensation plans, net of taxes withheld to satisfy tax obligations | $ 550 | ||||||||||
Shares issued for stock compensation plans, net of taxes withheld to satisfy tax obligations (in shares) | 3,766 | ||||||||||
Dividends on 7% preferred stock, annually | (911) | ||||||||||
Dividends on 6% Series B preferred stock, annually | (1,875) | ||||||||||
Dividends on 6% Series C preferred stock, annually | (2,943) | ||||||||||
Dividends on common stock, annually | (3,019) | ||||||||||
Other comprehensive loss | (1,766) | (1,766) | |||||||||
Balance at end of the period (ASU 2016-13) at Jun. 30, 2022 | (3,648) | ||||||||||
Balance at end of the period (ASU 2016-02) at Jun. 30, 2022 | $ (110) | ||||||||||
Balance at end of the period at Jun. 30, 2022 | $ 136,671 | $ 50,221 | $ 120,844 | $ 191,084 | $ 737,789 | $ (8,070) | $ 1,228,539 | ||||
Balance at end of the period (in shares) at Jun. 30, 2022 | 43,106,505 | 2,081,800 | 125,000 | 196,181 |
Condensed Consolidated Statem_5
Condensed Consolidated Statement of Shareholders' Equity (Parenthetical) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Dividends on common stock per share | $ 0.28 | $ 0.24 | $ 0.28 | $ 0.24 |
8% Preferred Stock | Preferred stock | ||||
Preferred stock, dividend rate (as a percent) | 8% | 8% | 8% | 8% |
Dividends on preferred stock per share | $ 80 | |||
Final dividend for redemption of preferred stock per share | $ 3.33 | |||
7% Preferred Stock | ||||
Preferred stock, dividend rate (as a percent) | 7% | |||
7% Preferred Stock | Preferred stock | ||||
Preferred stock, dividend rate (as a percent) | 7% | 7% | 7% | 7% |
Dividends on preferred stock per share | $ 1.75 | $ 1.75 | $ 1.75 | $ 1.75 |
6% Series B Preferred Stock | ||||
Preferred stock, dividend rate (as a percent) | 6% | |||
6% Series B Preferred Stock | Preferred stock | ||||
Preferred stock, dividend rate (as a percent) | 6% | 6% | 6% | 6% |
Dividends on preferred stock per share | $ 60 | $ 60 | $ 60 | $ 60 |
6% Series C Preferred Stock | ||||
Preferred stock, dividend rate (as a percent) | 6% | |||
6% Series C Preferred Stock | Preferred stock | ||||
Preferred stock, dividend rate (as a percent) | 6% | 6% | 6% | 6% |
Dividends on preferred stock per share | $ 60 | $ 60 | $ 60 | $ 60 |
Offering expenses on issuance of stock | $ 5,100,000 | |||
6% Series C Preferred Stock | Private Placement | Preferred stock | ||||
Preferred stock, dividend rate (as a percent) | 6% | 6% | 6% | 6% |
Offering expenses on issuance of stock | $ 23,000 | $ 23,000 |
Condensed Consolidated Statem_6
Condensed Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Operating activities: | ||
Net income | $ 104,077,000 | $ 113,400,000 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 1,204,000 | 1,061,000 |
Provision for credit losses | 8,663,000 | 1,348,000 |
Gain on sale of loans | (39,529,000) | (53,742,000) |
Proceeds from sales of loans | 14,491,319,000 | 30,088,479,000 |
Loans and participations originated and purchased for sale | (13,918,978,000) | (29,764,386,000) |
Purchases of low-income housing tax credits for sale | (9,829,000) | |
Change in mortgage servicing rights for paydowns and fair value adjustments | (9,367,000) | 543,000 |
Net change in: | ||
Mortgage loans in process of securitization | 246,193,000 | (123,181,000) |
Other assets and receivables | (17,738,000) | (4,072,000) |
Other liabilities | 18,389,000 | 12,071,000 |
Other | 371,000 | (906,000) |
Net cash provided by operating activities | 874,775,000 | 270,615,000 |
Investing activities: | ||
Net change in securities purchased under agreements to resell | 2,368,000 | 73,000 |
Purchases of available for sale securities | (47,866,000) | (130,204,000) |
Proceeds from the sale of available for sale securities | 0 | 34,469,000 |
Proceeds from calls, maturities and paydowns of available for sale securities | 12,206,000 | 49,444,000 |
Purchases of loans | (92,533,000) | (250,678,000) |
Net change in loans receivable | (1,199,040,000) | (126,810,000) |
Proceeds from sale of loans receivable | 262,086,000 | |
Purchase of FHLB stock | (10,326,000) | (111,000) |
Proceeds from sale of FHLB stock | 784,000 | |
Proceeds from sale of servicing rights | 438,000 | |
Purchases of premises and equipment | (5,113,000) | (2,686,000) |
Purchase of servicing rights | (2,057,000) | |
Purchase of limited partnership interests | (13,225,000) | (1,603,000) |
Cash paid in deconsolidation of subsidiary | (464,000) | |
Other investing activities | 2,924,000 | 366,000 |
Net cash used in investing activities | (1,351,878,000) | (165,680,000) |
Financing activities: | ||
Net change in deposits | (682,875,000) | 629,407,000 |
Proceeds from borrowings | 21,595,000,000 | 20,406,224,000 |
Repayment of borrowings | (21,190,050,000) | (21,053,107,000) |
Proceeds from notes payable | 2,000,000 | |
Proceeds from issuance of preferred stock | 191,084,000 | |
Repurchase of preferred stock | (41,625,000) | |
Repurchase of common stock | (3,935,000) | |
Dividends | (17,505,000) | (14,597,000) |
Net cash provided by (used in) financing activities | (297,365,000) | 117,386,000 |
Net Change in Cash and Cash Equivalents | (774,468,000) | 222,321,000 |
Cash and Cash Equivalents, Beginning of Period | 1,032,614,000 | 179,728,000 |
Cash and Cash Equivalents, End of Period | 258,146,000 | 402,049,000 |
Supplemental Cash Flows Information: | ||
Interest paid | 25,191,000 | 14,622,000 |
Income taxes paid, net of refunds | 28,331,000 | 41,667,000 |
Transfer of loans from loans receivable to loans held for sale | 166,688,000 | |
Deconsolidation of debt fund entities |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2022 | |
Basis of Presentation | |
Basis of Presentation | Note 1: Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Merchants Bancorp, a registered bank holding company (the “Company”) and its wholly owned subsidiaries, Merchants Bank of Indiana (“Merchants Bank”), Farmers-Merchants Bank of Illinois (“FMBI”) and Merchants Asset Management, LLC (“MAM”). Merchants Bank’s primary operating subsidiaries include Merchants Capital Corp. (‘MCC”), Merchants Capital Servicing, LLC (“MCS”), and Merchants Capital Investments, LLC (“MCI”). All direct and indirectly owned subsidiaries owned by Merchants Bancorp are collectively referred to as the “Company”. The accompanying unaudited condensed consolidated balance sheet of the Company as of December 31, 2021, which has been derived from audited financial statements, and unaudited condensed consolidated financial statements of the Company as of June 30, 2022 and for the three and six months ended June 30, 2022 and 2021, were prepared in accordance with the instructions for Form 10-Q and Article 10 of Regulation S-X and, therefore, do not include information or footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America. Accordingly, these condensed financial statements should be read in conjunction with the audited financial statements and notes thereto of the Company as of and for the year ended December 31, 2021 in its Annual Report on Form 10-K. Reference is made to the accounting policies of the Company described in the Notes to the Financial Statements contained in the Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) which are necessary for a fair presentation of the unaudited financial statements have been included to present fairly the financial position as of June 30, 2022 and the results of operations for the three and six months ended June 30, 2022 and 2021, and cash flows for the six months ended June 30, 2022 and 2021. All interim amounts have not been audited and the results of operations for the three and six months ended June 30, 2022, herein are not necessarily indicative of the results of operations to be expected for the entire year. Principles of Consolidation The unaudited condensed consolidated financial statements as of and for the period ended June 30, 2022 and 2021 include results from the Company, and its wholly owned subsidiaries, Merchants Bank, FMBI and MAM. Also included are Merchants Bank’s primary operating subsidiaries, MCC, MCS and MCI, as well as all direct and indirectly owned subsidiaries owned by Merchants Bancorp. In addition, when the Company makes an equity investment in an entity for which it holds a variable interest, it is evaluated for consolidation requirements under Accounting Standards Update of Topic 810. Accordingly, the entity is assessed for potential consolidation under the variable interest entity (“VIE”) model and would only consolidate those entities for which it is a primary beneficiary. A primary beneficiary is defined as the party that has both the power to direct the activities that most significantly impact the entity, and an interest that could be significant to the entity. To determine if an interest could be significant to the entity, both qualitative and quantitative factors regarding the nature, size and form of our involvement with the entity are evaluated. Alternatively, under the voting interest model, it would only consolidate those entities for which it has a controlling interest. Because the variable interest investments held by the Company as of June 30, 2022 are not deemed to be primary beneficiaries or controlling interests, the entities are not consolidated and the equity method or proportional method of accounting has been applied. The Company will analyze whether its entities are the primary beneficiary on an ongoing basis. Changes in facts and circumstances occurring since the previous primary beneficiary determination will be considered as part of this ongoing assessment. See Note 5: Variable Interest Entities (VIEs) for additional information about VIEs. All significant intercompany accounts and transactions have been eliminated in consolidation. Deconsolidation The unaudited condensed consolidated financial statements included consolidated results from certain entities primarily involved in single-family debt financing until January 30, 2021, while the Company was deemed to be a primary beneficiary. On February 1, 2021, the Company’s single-family debt fund entities were restructured in such a way that its ownership and participation was significantly reduced with the inclusion of additional, unrelated investors and the Company was no longer classified as a primary beneficiary. Accordingly, results from these entities were no longer consolidated after this date, in accordance with the consolidation guidelines of the Accounting Standards Update of Topic 810. Following the deconsolidation, the carrying value of assets and liabilities of these entities were removed from the consolidated balance sheet, and the continuing investments were recorded at fair value at the date of deconsolidation. The total amount deconsolidated from the balance sheet included net assets of approximately $10 million, consisting primarily of $66.6 million in loans receivable, and $52.7 million in borrowings with Merchants Bank that was previously eliminated in consolidation. The fair value of its continuing investments was approximately $10 million on the deconsolidation date and has been reported in Other Assets after deconsolidation. The estimated fair value was determined based on third-party evaluations of similar assets in the underlying business. The difference between the fair value of these deconsolidated entities and their carrying value was deemed to be immaterial, resulting in no gain or loss on deconsolidation. These continuing investments after deconsolidation are classified as variable interest entities, have not been consolidated, and are accounted for under the equity method of accounting. See Note 5: Variable Interest Entities (VIEs) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses on loans, servicing rights and fair values of financial instruments. Significant Accounting Policies The significant accounting policies followed by the Company for interim financial reporting are consistent with the accounting policies followed for annual financial reporting. However, on January 1, 2022, the Company adopted FASB Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("CECL"). The Company revised certain accounting policies and implemented certain accounting policy elections, related to the adoption of CECL, which are described below. All adjustments, which are of a normal recurring nature and are, in the opinion of management, necessary for a fair statement of the results for the periods reported, have been included in the accompanying Condensed Consolidated Financial Statements. CECL replaces the previous "allowance for loan and lease losses" model for measuring credit losses, which encompassed allowances for current known and inherent losses within the portfolio, with an "expected loss" model for measuring credit losses, which encompasses allowances for losses expected to be incurred over the life of the included assets. The new CECL model requires the measurement of all expected credit losses for financial assets measured at amortized cost and certain off-balance sheet credit exposures (“OBCEs”) based on historical experiences, current conditions, and reasonable and supportable forecasts. CECL also requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses, as well as credit quality and underwriting standards of an organization's portfolio. In addition, CECL includes certain changes to the accounting for investment securities available for sale depending on whether management intends to sell the securities or believes that it is more likely than not they will be required to sell. As of adoption date on January 1, 2022, the Company recorded a $3.6 million decrease, net of taxes, to retained earnings for the cumulative effect of adopting CECL. The transition adjustment included a $0.3 million increase to retained earnings related to allowance for credit losses on loans (“ACL-Loans”) and a $5.2 million decrease to retained earnings related to allowance for OBCEs (“ACL-OBCEs”). The following table summarizes the impact of the adoption of CECL on the Company’s balance sheet as of January 1, 2022. Impact of January 1, 2022 CECL Post-CECL December 31, 2021 Adoption Adoption Assets: (In thousands) MTG WHLOC $ 1,955 $ 41 $ 1,996 RES RE 4,170 275 4,445 MF FIN 14,084 520 14,604 HC FIN 4,461 139 4,600 CML & CRE 5,879 (1,277) 4,602 AG & AGRE 657 (18) 639 CON & MAR 138 21 159 ACL - Loans $ 31,344 $ (299) $ 31,045 Liabilities: ACL - OBCEs (in Other Liabilities) $ — $ 5,176 $ 5,176 Stockholders' Equity: Retained earnings, net of tax $ 657,149 $ (3,648) $ 653,501 ACL-Loans - the ACL-Loans is a valuation account that is deducted from the loans’ amortized cost basis to present the net amount expected to be collected on loans over the contractual term. Loans are charged off against the allowance when the uncollectibility of the loan is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged off and expected to be charged off. Adjustments to the ACL-Loans are reported in the income statement as a provision for credit loss. Further information regarding the policies and methodology used to estimate the ACL-Loans is detailed in Note 4: Loans and Allowance for credit losses on loans of these Notes to Consolidated Condensed Financial Statements. ACL-OBCEs – the ACL–OBCEs is a liability account representing expected credit losses over the contractual period for which the Company is exposed to credit risk resulting from a contractual obligation to extend credit. No allowance is recognized if the Company has the unconditional right to cancel the obligation. OBCEs primarily consist of amounts available under outstanding lines of credit. For the period of exposure, the estimate of expected credit losses considers both the likelihood that funding will occur and the amount expected to be funded over the estimated remaining life of the commitment. The likelihood and expected amount of funding are based on historical utilization rates. The amount of the allowance represents management’s best estimate of expected credit losses on commitments expected to be funded over the contractual life of the commitment. The ACL–OBCEs is adjusted through the income statement as a component of provision for credit loss. The Company adopted CECL using the modified retrospective method for loans and OBCEs. Therefore, results for reporting periods beginning after January 1, 2022 are presented in accordance with CECL, while prior period amounts continue to be reported in accordance with previously applicable Generally Accepted Accounting Principles (“GAAP”). Reclassifications Certain reclassifications may have been made to the 2021 financial statements to conform to the financial statement presentation as of and for the three and six months ended June 30, 2022. These reclassifications had no effect on net income. |
Securities Available For Sale
Securities Available For Sale | 6 Months Ended |
Jun. 30, 2022 | |
Securities Available For Sale | |
Securities Available For Sale | Note 2: Securities Available For Sale The amortized cost and approximate fair values, together with gross unrealized gains and losses, of securities were as follows: June 30, 2022 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value (In thousands) Available for sale securities: Treasury notes $ 35,111 $ 1 $ 308 $ 34,804 Federal agencies 284,978 — 10,126 274,852 Mortgage-backed - Government-sponsored entity (GSE) 15,774 12 7 15,779 Mortgage-backed - Non-GSE multi-family 11,731 — 352 11,379 Total available for sale securities $ 347,594 $ 13 $ 10,793 $ 336,814 December 31, 2021 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value (In thousands) Available for sale securities: Treasury notes $ 8,232 $ 4 $ 27 $ 8,209 Federal agencies 264,970 — 1,675 263,295 Municipals 4,300 — — 4,300 Mortgage-backed - Government-sponsored entity (GSE) 18,664 32 336 18,360 Mortgage-backed - Non-GSE multi-family 16,424 41 — 16,465 Total available for sale securities $ 312,590 $ 77 $ 2,038 $ 310,629 At June 30, 2022 and December 31, 2021, GSE mortgage-backed securities included in the tables above are primarily backed by multi-family loans. The tables above for June 30, 2022 and December 31, 2021 also include securities purchased from Freddie Mac following the loan sale and securitization arrangement with Freddie Mac described in Note 4: Loans and Allowance for Credit Losses on Loans. Accrued interest on available for sale securities totaled $0.5 million at June 30, 2022 and $0.4 million at December 31, 2021, respectively, and is excluded from the estimate of credit losses. The amortized cost and fair value of available for sale securities at June 30, 2022 and December 31, 2021, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately. June 30, 2022 December 31, 2021 Amortized Fair Amortized Fair Cost Value Cost Value Contractual Maturity (In thousands) Within one year $ 54,247 $ 52,983 $ 6,548 $ 6,551 After one through five years 265,842 256,673 270,954 269,253 After five through ten years — — — — After ten years — — — — 320,089 309,656 277,502 275,804 Mortgage-backed - Government-sponsored entity (GSE) 15,774 15,779 18,664 18,360 Mortgage-backed - Non-GSE multi-family 11,731 11,379 16,424 16,465 $ 347,594 $ 336,814 $ 312,590 $ 310,629 During the three and six months ended June 30, 2022, no securities available for sale were sold. During the three and six months ended June 30, 2021 proceeds from sales of $34.5 million securities available for sale were sold, and no gain or loss was recognized. The following tables show the Company’s investments’ gross unrealized losses and fair value of the Company’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment class and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2022 and December 31, 2021: June 30, 2022 12 Months or Less than 12 Months Longer Total Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses (In thousands) Available for sale securities: Treasury notes $ 32,599 $ 263 $ 1,955 $ 45 $ 34,554 $ 308 Federal agencies 169,115 5,884 105,737 4,242 274,852 10,126 Mortgage-backed - Government-sponsored entity (GSE) 798 7 — — 798 7 Mortgage-backed - Non-GSE multi-family — 352 — — — 352 $ 202,512 $ 6,506 $ 107,692 $ 4,287 $ 310,204 $ 10,793 December 31, 2021 12 Months or Less than 12 Months Longer Total Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses (In thousands) Available for sale securities: Treasury notes $ 7,957 $ 27 $ — $ — $ 7,957 $ 27 Federal agencies 238,489 1,503 24,806 172 263,295 1,675 Mortgage-backed - Government-sponsored entity (GSE) 719 336 — — 719 336 $ 247,165 $ 1,866 $ 24,806 $ 172 $ 271,971 $ 2,038 For available for sale securities with an unrealized loss position, the Company evaluates the securities to determine whether the decline in the fair value below the amortized cost basis (impairment) is due to credit-related factors or non-credit related factors. Any impairment that is not credit-related is recognized in AOCI, net of tax. Credit-related impairment is recognized as an ACL for available for sale securities on the balance sheet, limited to the amount by which the amortized cost basis exceeds the fair value, with a corresponding adjustment to earnings. Accrued interest receivable is excluded from the estimate of credit losses. Both the ACL and the adjustment to net income may be reversed if conditions change. However, if the Company expects, or is required, to sell an impaired available for sale security before recovering its amortized cost basis, the entire impairment amount would be recognized in earnings with a corresponding adjustment to the security’s amortized cost basis. Because the security’s amortized cost basis is adjusted to fair value, there is no ACL in this situation. In evaluating available for sale securities in unrealized loss positions for impairment and the criteria regarding its intent or requirement to sell such securities, the Company considers the extent to which fair value is less than amortized cost, whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuers’ financial condition, among other factors. Unrealized losses on the Company’s investment securities portfolio have not been recognized as an expense because the securities are of high credit quality, and the decline in fair values is attributable to changes in the prevailing interest rate environment since the purchase date. Fair value is expected to recover as securities reach maturity and/or the interest rate environment returns to conditions similar to when these securities were purchased. There were no credit related factors underlying unrealized losses on available for sale debt securities at June 30, 2022 and December 31, 2021. |
Mortgage Loans in Process of Se
Mortgage Loans in Process of Securitization | 6 Months Ended |
Jun. 30, 2022 | |
Mortgage Loans in Process of Securitization. | |
Mortgage Loans in Process of Securitization | Note 3: Mortgage Loans in Process of Securitization Mortgage loans in process of securitization are recorded at fair value with changes in fair value recorded in earnings. These include multi-family rental real estate loan originations to be sold as Government National Mortgage Association (“Ginnie Mae”) mortgage-backed securities and Federal National Mortgage Association (“Fannie Mae”) and Federal Home Loan Mortgage Corporation (“Freddie Mac”) participation certificates, all of which are pending settlement with firm investor commitments to purchase the securities, typically occurring within 30 days. The fair value increases recorded in earnings for mortgage loans in process of securitization totaled $4.9 million and $7.0 million at June 30, 2022 and 2021, respectively. |
Loans and Allowance for Credit
Loans and Allowance for Credit Losses on Loans | 6 Months Ended |
Jun. 30, 2022 | |
Loans and Allowance for Credit Losses on Loans | |
Loans and Allowance for Credit Losses on Loans | Note 4: Loans and Allowance for Credit Losses on Loans Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding principal balances adjusted for unearned income, charge-offs, the ACL-Loans, any unamortized deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans. For loans at amortized cost, interest income is accrued based on the unpaid principal balance. The Company has made a policy election to exclude accrued interest from the amortized cost basis of loans and reports accrued interest separately from the related loan balance in the consolidated balance sheets. Accrued interest on loans totaled $18.0 million and $15.4 million at June 30, 2022 and December 31, 2021, respectively. The Company also elected not to measure an allowance for credit losses for accrued interest receivables. The accrual of interest on loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in process of collection. Past-due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest collected on these loans is applied to the principal balance until the loan can be returned to an accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. For all loan portfolio segments, the Company promptly charges off loans, or portions thereof, when available information confirms that specific loans are uncollectable based on information that includes, but is not limited to, (1) the deteriorating financial condition of the borrower, (2) declining collateral values, and/or (3) legal action, including bankruptcy, that impairs the borrower’s ability to adequately meet its obligations. When cash payments for accrued interest are received on nonaccrual loans in each loan class, the Company records a reduction in principle on the balance of the loan. Troubled debt restructured loans recognize interest income on an accrual basis at the renegotiated rate if the loan is in compliance with the modified terms. The Company offers warehouse lines of credit to fund mortgage loans held for sale from closing until sale to an investor. Under a warehousing arrangement the Company funds a mortgage loan as secured financing. The warehousing arrangement is secured by the underlying mortgages and a combination of deposits, personal guarantees and advance rates. The Company typically holds the collateral until it is sent under a bailee arrangement instructing the investor to send proceeds to the Company. Typical investors are large financial institutions or government agencies. Interest earned from the time of funding to the time of sale is recognized as interest income as accrued. Fees earned agreements are recognized when collected as noninterest income. Loan Portfolio Summary Loans receivable at June 30, 2022 and December 31, 2021 include: June 30, December 31, 2022 2021 (In thousands) Mortgage warehouse lines of credit $ 900,585 $ 781,437 Residential real estate 876,652 843,101 Multi-family financing (1) 3,236,917 2,702,042 Healthcare financing (1) 1,262,424 826,157 Commercial and commercial real estate 695,158 520,199 Agricultural production and real estate 90,070 97,060 Consumer and margin loans 8,871 12,667 7,070,677 5,782,663 Less: ACL-Loans 37,474 31,344 Loans Receivable $ 7,033,203 $ 5,751,319 (1) In 2022, the Company started presenting these two loan types on separate lines for reporting purposes. In response to the COVID-19 global pandemic, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) established the Paycheck Protection Program (“PPP”) to provide loans for eligible business/not-for-profits. These loans qualify for forgiveness when used for qualifying expenses during the appropriate period. Loans funded through the PPP are fully guaranteed by the U.S. government. As of June 30, 2022 all PPP loans have been forgiven. As of December 31, 2021, commercial and commercial real estate loans included PPP loans with principal balances of $7.0 million that had not yet been forgiven. Risk characteristics applicable to each segment of the loan portfolio are described as follows. Mortgage Warehouse Lines of Credit (MTG WHLOC): Under its warehouse program, the Company provides warehouse financing arrangements to approved mortgage companies for the origination and sale of residential mortgage loans and to a lesser extent multi-family loans. Agency eligible, governmental and jumbo residential mortgage loans that are secured by mortgages placed on existing one-to-four family dwellings may be originated or purchased and placed on each mortgage warehouse line. As a secured repurchase agreement, collateral pledged to the Company secures each individual mortgage until the lender sells the loan in the secondary market. A traditional secured warehouse line of credit typically carries a base interest rate of 30-day London Interbank Offered Rate (“LIBOR”) or the Federal Reserve’s Secured Overnight Financing Rate (“SOFR”), or mortgage note rate and a margin. Risk is evident if there is a change in the fair value of mortgage loans originated by mortgage bankers in warehouse, the sale of which is the expected source of repayment of the borrowings under a warehouse line of credit. Residential Real Estate Loans (RES RE): Real estate loans are secured by owner-occupied 1- 4 family residences. Repayment of residential real estate loans is primarily dependent on the personal income and credit rating of the borrowers. First-lien HELOC mortgages included in this segment typically carry a base rate of 30-day LIBOR or the One-Year Constant Maturity Treasury (“CMT”), plus a margin. Multi-Family Financing (MF FIN): Healthcare Financing (HC FIN): The healthcare financing portfolio includes customized loan products for independent living, assisted living, memory care and skilled nursing projects. A variety of loan products are available to accommodate rehabilitation, acquisition, and refinancing of healthcare properties. Credit risk in these loans are primarily driven by local demographics and the expertise of the operators of the facilities. Repayment of these loans may include permanent loans, sales of developed property or an interim loan commitment from the Company until permanent agency-eligible financing is obtained, as well as successful operation of a business or property and the borrower’s cash flows. Loans included in this segment typically carry a base rate of SOFR that adjusts on a monthly basis and a margin. Commercial Lending and Commercial Real Estate Loans (CML & CRE): The commercial lending and commercial real estate portfolio includes loans to commercial customers for use in financing working capital needs, equipment purchases and expansions, as well as loans to commercial customers to finance land and improvements. It also includes loans collateralized by servicing rights and loan sale proceeds of mortgage warehouse customers. The loans in this category are repaid primarily from the cash flow of a borrower’s principal business operation. Credit risk in these loans is driven by creditworthiness of a borrower and the economic conditions that impact the cash flow stability from business operations. PPP loans and Small Business Administration (“SBA”) loans are included in this category. Agricultural Production and Real Estate Loans (AG & AGRE): Agricultural production loans are generally comprised of seasonal operating lines of credit to grain farmers to plant and harvest corn and soybeans and term loans to fund the purchase of equipment. The Company also offers long term financing to purchase agricultural real estate. Specific underwriting standards have been established for agricultural-related loans including the establishment of projections for each operating year based on industry-developed estimates of farm input costs and expected commodity yields and prices. Operating lines are typically written for one year and secured by the crop and other farm assets as considered necessary. The Company is approved to sell agricultural loans in the secondary market through the Federal Agricultural Mortgage Corporation and uses this relationship to manage interest rate risk within the portfolio. Agricultural real estate loans included in this segment are typically structured with a one-year ARM, 3-year ARM or 5-year ARM CMT and a margin. Agriculture production, livestock, and equipment loans are structured with variable rates that are indexed to prime or fixed for terms not exceeding 5 years. Consumer and Margin Loans (CON & MAR): Consumer loans are those loans secured by household assets. Margin loans are those loans secured by marketable securities. The term and maximum amount for these loans are determined by considering the purpose of the loan, the margin (advance percentage against value) in all collateral, the primary source of repayment, and the borrower’s other related cash flow. ACL-Loans The Company adopted CECL on January 1, 2022. CECL replaces the previous “Allowance for Loan and Lease Losses” standard for measuring credit losses. Upon adoption of CECL, the difference in the two measurements was recorded in the ACL-Loans and retained earnings. The ACL-Loans is the Company’s estimate of expected credit losses. Loans receivable is presented net of the allowance to reflect the principal balance expected to be collected over the contractual term of the loans. This life of loan allowance is established through a provision for credit losses charged to net interest income as loans are recorded in the financial statements. The provision for a reporting period also reflects increases or decreases in the allowance related to changes in credit loss expectations. Actual credit losses are charged against the allowance when management believes the uncollectibility of a loan balance, or a portion thereof, is confirmed. Subsequent recoveries, if any, are credited to the allowance. The ACL-Loans is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans considering relevant available information from internal and external sources, including historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. The allowance also incorporates reasonable and supportable forecasts. There have been no changes to the credit quality components used to assess risk during the six months ended June 30, 2022. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The level of the ACL is believed to be adequate to absorb innate expected future losses in the loan portfolio as of the measurement date. The ACL-Loans consists of individually evaluated loans and pooled loan components. The Company’s primary portfolio segmentation is by credit risk grade. Loans risk graded substandard and worse are individually evaluated for expected credit losses. For individually evaluated loans that are collateral dependent, an allowance is established when the fair value of the collateral, the loan’s obtainable market price, or the present value of expected future cash flows discounted at the loan’s effective interest rate, is lower than the carrying value of that loan. A loan is considered to be collateral dependent when repayment is expected to be provided substantially through the operation or the sale of the collateral. To calculate the allowance for expected credit losses on loans risk graded pass through special mention, the loan portfolio is segmented into 14 segments comprised of loans with similar risk characteristics. Loan Portfolio Segment ACL-Loans Methodology Ag loans Remaining Life Method Ag real estate loans Remaining Life Method Commercial loans Discounted Cash Flow Commercial real estate loans Discounted Cash Flow Consumer and margin loans Remaining Life Method HELOC loans Discounted Cash Flow Multi-family healthcare loans Discounted Cash Flow Multi-family non-management loans Discounted Cash Flow Multi-family construction loans Discounted Cash Flow Multi-family loans Discounted Cash Flow Residential real estate loans Discounted Cash Flow SBA commercial loans Discounted Cash Flow SBA real estate commercial loans Discounted Cash Flow Single-family warehouse lines of credit Remaining Life Method Loan characteristics used in determining the segmentation included the underlying collateral, type or purpose of the loan, and expected credit loss patterns. The estimation of expected credit losses for each segment is primarily based on historical credit loss experience. Given the Company’s modest historical credit loss experience, peer and industry data was incorporated into the measurement. Expected life of loan credit losses are quantified using discounted cash flows and remaining life methodologies. For the ten portfolio segments where the discounted cash flow method was employed, econometric models are utilized to determine a Probability of Default (“PD”). Macroeconomic factors utilized in the modeling process include the national unemployment rate and the home price index. A risk index was then utilized to predict the Loss Given Default (“LGD”). The PD is then multiplied by the LGD to determine the expected loss that is incorporated into the discounted cash flow calculations. Within the discount cash flow calculation, an effective yield of the instrument is calculated, net of the impacts of prepayment assumptions, and the instrument expected cash flows are then discounted at that effective yield to produce an instrument-level net present value of expected cash flows. An ACL is established for the difference between the instrument’s net present value and amortized cost basis. The remaining life method applies average loss rates for each segment to estimated loan balances for the remaining life of the segment. The estimate includes a four-quarter reasonable and supportable economic forecast period followed by an eight-quarter, straight-line reversion period to the historical mean for the remaining life of the loans. Model results are supplemented by qualitative adjustments for risk factors relevant in assessing the expected credit losses within the portfolio segments. These adjustments may increase or decrease the estimate of expected credit losses based upon the assessed level of risk for each qualitative factor. The various risks that are considered in making qualitative adjustments include (i) changes in the value of underlying collateral for collateral dependent loans, (ii) the effect of other external factors such as regulatory and legal requirements, the impact of (i) changes in national, regional and local economic conditions, (ii) changes in lending policies and procedures, (iii) changes in the volume and severity of past due loans, (iv) changes in the nature and volume of the loan portfolio, (v) changes in the experience, depth and ability of lending management, (vi) the existence and effect of any concentrations in credit, (vii) changes in the quality of the credit review function, The models utilized and the applicable qualitative adjustments require assumptions and management judgement that can be subjective in nature. The above measurement approach is also used to estimate the expected credit losses associated with unfunded loan commitments, which also incorporates expected utilization rates. The following tables present, by loan portfolio segment, the activity in the ACL-Loans for the three and six months ended June 30, 2022: For the Three Months Ended June 30, 2022 MTG WHLOC RES RE MF FIN HC FIN CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) ACL-Loans Balance, beginning of period $ 1,941 $ 4,547 $ 15,131 $ 5,618 $ 4,102 $ 597 $ 166 $ 32,102 Provision for credit losses 481 363 1,233 2,318 474 (46) (55) 4,768 Loans charged to the allowance — — — — (32) — (15) (47) Recoveries of loans previously charged off — — — — 651 — — 651 Balance, end of period $ 2,422 $ 4,910 $ 16,364 $ 7,936 $ 5,195 $ 551 $ 96 $ 37,474 For the Six Months Ended June 30, 2022 MTG WHLOC RES RE MF FIN HC FIN CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) ACL-Loans Balance, beginning of period $ 1,955 $ 4,170 $ 14,084 $ 4,461 $ 5,879 $ 657 $ 138 $ 31,344 Impact of adopting CECL 41 275 520 139 (1,277) (18) 21 (299) Provision for credit losses 426 465 1,760 3,336 905 (88) (55) 6,749 Loans charged to the allowance — — — — (963) — (15) (978) Recoveries of loans previously charged off — — — — 651 — 7 658 Balance, end of period $ 2,422 $ 4,910 $ 16,364 $ 7,936 $ 5,195 $ 551 $ 96 $ 37,474 The Company recorded a provision for credit losses of $6.2 million for the three months ended June 30, 2022. The $6.2 million provision for credit losses consisted of $4.8 million for the ACL-Loans, $0.2 million for the ACL-OBCE’s and $1.2 million for the contingent reserve related to the Freddie Mac-sponsored Q-series securitization transaction. The Company recorded a provision for credit losses of $8.7 million for the six months ended June 30, 2022. The $8.7 million provision for credit losses consisted of $6.7 million for the ACL-Loans, $0.8 million for the ACL-OBCE’s, and $1.2 million for the contingent reserve related to the Freddie Mac-sponsored Q-series securitization transaction. Prior to the adoption of CECL, the Company maintained an allowance for loan losses in accordance with the incurred loss model as disclosed in the Company’s 2021 Annual Report on Form 10-K. The following tables present the allowance for loan losses for the three and six months ended June 30, 2021: For the Three Months Ended June 30, 2021 MTG WHLOC RES RE MF FIN HC FIN CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Allowance for loan losses Balance, beginning of period $ 3,321 $ 3,600 $ 13,396 $ 3,740 $ 4,264 $ 632 $ 138 $ 29,091 Provision for credit losses (386) 371 (1,718) 364 1,059 (21) 16 (315) Loans charged to the allowance — (2) — — (84) — — (86) Recoveries of loans previously charged off — — — — — — 6 6 Balance, end of period $ 2,935 $ 3,969 $ 11,678 $ 4,104 $ 5,239 $ 611 $ 160 $ 28,696 For the Six Months Ended June 30, 2021 MTG WHLOC RES RE MF FIN HC FIN CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Allowance for loan losses Balance, beginning of period $ 4,018 $ 3,334 $ 12,041 $ 2,690 $ 4,641 $ 636 $ 140 $ 27,500 Provision for credit losses (1,083) 637 (363) 1,414 750 (25) 18 1,348 Loans charged to the allowance — (2) — — (152) — (6) (160) Recoveries of loans previously charged off — — — — — — 8 8 Balance, end of period $ 2,935 $ 3,969 $ 11,678 $ 4,104 $ 5,239 $ 611 $ 160 $ 28,696 The following table presents the allowance for loan losses and the recorded investment in loans and impairment method as of December 31, 2021: December 31, 2021 MTG WHLOC RES RE MF FIN HC FIN CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Allowance for loan losses Balance, December 31, 2021 $ 1,955 $ 4,170 $ 14,084 $ 4,461 $ 5,879 $ 657 $ 138 $ 31,344 Ending balance: individually evaluated for impairment $ — $ 16 $ — $ — $ 867 $ — $ 7 $ 890 Ending balance: collectively evaluated for impairment $ 1,955 $ 4,154 $ 14,084 $ 4,461 $ 5,012 $ 657 $ 131 $ 30,454 Loans Balance, December 31, 2021 $ 781,437 $ 843,101 $ 2,702,042 $ 826,157 $ 520,199 $ 97,060 $ 12,667 $ 5,782,663 Ending balance individually evaluated for impairment $ — $ 419 $ 36,760 $ — $ 6,055 $ 158 $ 13 $ 43,405 Ending balance collectively evaluated for impairment $ 781,437 $ 842,682 $ 2,665,282 $ 826,157 $ 514,144 $ 96,902 $ 12,654 $ 5,739,258 The below table presents the amortized cost basis and ACL-Loans allocated for collateral dependent loans, which are individually evaluated to determine expected credit losses: June 30, 2022 Real Estate Accounts Receivable / Equipment Other Total ACL-Loans Allocation (In thousands) RES RE $ 353 $ — $ 6 $ 359 $ 29 MF FIN 36,760 — — 36,760 187 CML & CRE 134 4,935 236 5,305 92 AG & AGRE 158 — — 158 1 CON & MAR — — 3 3 — Total collateral dependent loans $ 37,405 $ 4,935 $ 245 $ 42,585 $ 309 There has been no significant changes to the types of collateral securing the Company’s collateral dependent loans compared to June 30, 2021. Internal Risk Categories In adherence with policy, the Company uses the following internal risk grading categories and definitions for loans: Average or above Acceptable – Special Mention (Watch) – This is a loan that is sound and collectable but contains potential risk. Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Substandard Doubtful The following tables present the credit risk profile of the Company’s loan portfolio based on internal risk rating category as of June 30, 2022 and December 31, 2021: 2022 2021 2020 2019 2018 Prior Revolving Loans TOTAL (In thousands) MTG WHLOC Acceptable and Above $ — $ — $ — $ — $ — $ — $ 900,585 $ 900,585 Total $ — $ — $ — $ — $ — $ — $ 900,585 $ 900,585 RES RE Acceptable and Above 10,316 36,482 49,380 3,327 865 10,439 764,571 875,380 Special Mention (Watch) — — — 61 74 779 — 914 Substandard — — — — — 358 — 358 Total $ 10,316 $ 36,482 $ 49,380 $ 3,388 $ 939 $ 11,576 $ 764,571 $ 876,652 MF FIN Acceptable and Above 874,093 1,049,580 305,633 71,513 12,245 7,739 852,442 3,173,245 Special Mention (Watch) 14,614 12,298 — — — — — 26,912 Substandard 36,760 — — — — — — 36,760 Total $ 925,467 $ 1,061,878 $ 305,633 $ 71,513 $ 12,245 $ 7,739 $ 852,442 $ 3,236,917 HC FIN Acceptable and Above 486,989 331,862 183,035 17,186 — — 144,812 1,163,884 Special Mention (Watch) — 29,462 62,373 6,705 — — — 98,540 Total $ 486,989 $ 361,324 $ 245,408 $ 23,891 $ — $ — $ 144,812 $ 1,262,424 CML & CRE Acceptable and Above 66,173 85,267 31,966 49,946 13,850 15,489 424,308 686,999 Special Mention (Watch) 48 21 1,448 129 — 234 973 2,853 Substandard — 2,000 — 107 175 282 2,742 5,306 Total $ 66,221 $ 87,288 $ 33,414 $ 50,182 $ 14,025 $ 16,005 $ 428,023 $ 695,158 AG & AGRE Acceptable and Above 8,358 7,984 15,952 6,291 3,457 21,141 24,779 87,962 Special Mention (Watch) 14 64 719 431 288 390 44 1,950 Substandard — — — — — 158 — 158 Total $ 8,372 $ 8,048 $ 16,671 $ 6,722 $ 3,745 $ 21,689 $ 24,823 $ 90,070 CON & MAR Acceptable and Above 240 674 394 140 4,743 20 2,638 8,849 Special Mention (Watch) — — 16 — — 3 — 19 Substandard — — — — — 3 — 3 Total $ 240 $ 674 $ 410 $ 140 $ 4,743 $ 26 $ 2,638 $ 8,871 Total Acceptable and Above $ 1,446,169 $ 1,511,849 $ 586,360 $ 148,403 $ 35,160 $ 54,828 $ 3,114,135 $ 6,896,904 Total Special Mention (Watch) $ 14,676 $ 41,845 $ 64,556 $ 7,326 $ 362 $ 1,406 $ 1,017 $ 131,188 Total Substandard $ 36,760 $ 2,000 $ — $ 107 $ 175 $ 801 $ 2,742 $ 42,585 Total Loans $ 1,497,605 $ 1,555,694 $ 650,916 $ 155,836 $ 35,697 $ 57,035 $ 3,117,894 $ 7,070,677 December 31, 2021 MTG WHLOC RES RE MF FIN HC FIN CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Special Mention (Watch) $ — $ 946 $ 27,155 $ 66,406 $ 2,483 $ 3,820 $ 21 $ 100,831 Substandard — 419 36,760 — 6,055 158 13 43,405 Acceptable and Above 781,437 841,736 2,638,127 759,751 511,661 93,082 12,633 5,638,427 Total $ 781,437 $ 843,101 $ 2,702,042 $ 826,157 $ 520,199 $ 97,060 $ 12,667 $ 5,782,663 The Company evaluates the loan risk grading system definitions and ACL-Loans methodology on an ongoing basis. No significant changes were made to either during the past year. Delinquent Loans The following tables present the Company’s loan portfolio aging analysis of the recorded investment in loans as of June 30, 2022 and December 31, 2021. There was June 30, 2022 30-59 Days 60-89 Days Greater Than Total Total Past Due Past Due 90 Days Past Due Current Loans (In thousands) MTG WHLOC $ — $ — $ — $ — $ 900,585 $ 900,585 RES RE 307 216 176 699 875,953 876,652 MF FIN — — — — 3,236,917 3,236,917 HC FIN — — — — 1,262,424 1,262,424 CML & CRE — — 4,083 4,083 691,075 695,158 AG & AGRE — — — — 90,070 90,070 CON & MAR 39 42 3 84 8,787 8,871 $ 346 $ 258 $ 4,262 $ 4,866 $ 7,065,811 $ 7,070,677 December 31, 2021 30-59 Days 60-89 Days Greater Than Total Total Past Due Past Due 90 Days Past Due Current Loans (In thousands) MTG WHLOC $ — $ — $ — $ — $ 781,437 $ 781,437 RES RE 1,252 287 186 1,725 841,376 843,101 MF FIN — — — — 2,702,042 2,702,042 HC FIN — — — — 826,157 826,157 CML & CRE 591 8 149 748 519,451 520,199 AG & AGRE 37 21 — 58 97,002 97,060 CON & MAR 43 5 40 88 12,579 12,667 $ 1,923 $ 321 $ 375 $ 2,619 $ 5,780,044 $ 5,782,663 Impaired Loans The following table presents impaired loans and specific valuation allowance information based on class level as of December 31, 2021: December 31, 2021 MTG WHLOC RES RE MF FIN HC FIN CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Impaired loans without a specific allowance: Recorded investment $ — $ 372 $ 36,760 $ — $ 3,912 $ 158 $ 4 $ 41,206 Unpaid principal balance — 372 36,760 — 3,912 158 4 41,206 Impaired loans with a specific allowance: — — Recorded investment — 47 — — 2,143 — 9 2,199 Unpaid principal balance — 47 — — 2,143 — 9 2,199 Specific allowance — 16 — — 867 — 7 890 Total impaired loans: Recorded investment — 419 36,760 — 6,055 158 13 43,405 Unpaid principal balance — 419 36,760 — 6,055 158 13 43,405 Specific allowance — 16 — — 867 — 7 890 The following table presents by portfolio class, information related to the average recorded investment and interest income recognized on impaired loans for the three and six months ended June 30, 2021: For the Three Months Ended June 30, 2021 MTG WHLOC RES RE MF FIN HC FIN CML & CRE AG & AGRE CON & MAR TOTAL Average recorded investment in impaired loans — $ 2,201 $ — $ — $ 6,113 $ 175 $ 6 $ 8,495 Interest income recognized — 16 — — 55 — — 71 For the Six Months Ended June 30, 2021 CML & AG & CON & RES RE MF RE CRE AGRE MAR TOTAL Average recorded investment in impaired loans — $ 2,442 $ — $ — $ 7,254 $ 1,000 $ 7 $ 10,703 Interest income recognized — 27 — — 259 — — 286 Nonperforming Loans Nonaccrual loans, including TDRs that have not met the six-month minimum performance criterion, are reported as nonperforming loans. For all loan classes, it is the Company’s policy to have any restructured loans which are on nonaccrual status prior to being restructured remain on nonaccrual status until three months of satisfactory borrower performance, at which time management would consider its return to accrual status. A loan is generally classified as nonaccrual when the Company believes that receipt of principal and interest is doubtful under the terms of the loan agreement. Most generally, this is at 90 or more days past due. The amount of interest income recognized on nonaccrual financial assets during the six months ended June 30, 2022 was immaterial. The following table presents the Company’s nonaccrual loans and loans past due 90 days or more and still accruing at June 30, 2022 and December 31, 2021. June 30, December 31, 2022 2021 Total Loans > Total Loans > 90 Days & 90 Days & Nonaccrual Accruing Nonaccrual Accruing (In thousands) RES RE $ 347 $ — $ 362 $ 22 CML & CRE 4,305 — — 149 AG & AGRE 158 — 158 30 CON & MAR 3 — 4 36 $ 4,813 $ — $ 524 $ 237 The Company did not have any nonperforming loans without an estimated ACL at June 30, 2022. No troubled loans were modified during the three or six months ended June 30, 2022 or 2021. restructured loans defaulted during the three or six months ended June 30, 2022 or 2021. Loan modifications or forbearances related to the COVID-19 pandemic will generally not be considered TDRs. The CARES Act included several provisions designed to help financial institutions like the Company in working with their customers. Section 4013 of the CARES Act, as extended, allows a financial institution to elect to suspend generally accepted accounting principles and regulatory determinations with respect to qualifying loan modifications related to COVID-19 that would otherwise be categorized as a TDR until January 1, 2022. The Company has taken advantage of this provision to extend certain payment modifications to loan customers in need. As of June 30, 2022, the Company has only There were no residential loans in process of foreclosure as of June 30, 2022 and December 31, 2021. Loan Sales for Freddie Mac Q Series Securitizations 2022 Activity On May 5, 2022, the Company entered into an arrangement t |
Variable Interest Entities (VIE
Variable Interest Entities (VIEs) | 6 Months Ended |
Jun. 30, 2022 | |
Variable Interest Entities (VIEs). | |
Variable Interest Entities (VIEs) | Note 5: Variable Interest Entities (VIEs) A VIE is a corporation, partnership, limited liability company, or any other legal structure used to conduct activities or hold assets generally that either: ● Does not have equity investors with voting rights that can directly or indirectly make decisions about the entity’s activities through those voting rights or similar rights; or ● Has equity investors that do not provide sufficient equity for the entity to finance its activities without additional subordinated financial support. The Company has invested in single-family, multi-family, and healthcare debt financing entities, as well as low-income housing syndicated funds that are deemed to be VIEs. Accordingly, the entities were assessed for potential consolidation under the VIE model that requires primary beneficiaries to consolidate the entity’s results. A primary beneficiary is defined as the party that has both the power to direct the activities that most significantly impact the entity, and an interest that could be significant to the entity. To determine if an interest could be significant to the entity, both qualitative and quantitative factors regarding the nature, size and form of involvement with the entity are evaluated. At June 30, 2022 the Company determined it was not the primary beneficiary of its VIEs primarily because the Company did not have the obligation to absorb losses or the rights to receive benefits from the VIE that could potentially be significant to the VIE. Evaluation and assessment of VIEs for consolidation is performed on an ongoing basis by management. Any changes in facts and circumstances occurring since the previous primary beneficiary determination will be considered as part of this ongoing assessment. The Company’s maximum exposure to loss associated with its VIEs consists of the capital invested plus any unfunded equity commitments. These investments are recorded in other assets and other liabilities on our consolidated balance sheet. The table below reflects the size of the VIEs as well as our maximum exposure to loss in connection with these investments at June 30, 2022, and December 31, 2021. Total Total Maximum Assets ($ in thousands) Assets Liabilities Exposure to Loss (In thousands) June 30, 2022 Unconsolidated VIEs $ 39,898 $ 14,823 $ 38,414 December 31, 2021 Unconsolidated VIEs $ 36,573 $ 21,014 $ 36,164 |
Regulatory Matters
Regulatory Matters | 6 Months Ended |
Jun. 30, 2022 | |
Regulatory Matters | |
Regulatory Matters | Note 6: Regulatory Matters The Company, Merchants Bank, and FMBI are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by federal and state banking regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company, Merchants Bank, and FMBI must meet specific capital guidelines that involve quantitative measures of the Company’s, Merchants Bank’s, and FMBI’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s, Merchants Bank’s, and FMBI’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, and other factors. Furthermore, the Company’s, Merchants Bank’s, and FMBI’s regulators could require adjustments to regulatory capital not reflected in these financial statements. On November 13, 2019, the federal regulators finalized and adopted a regulatory capital rule establishing a new community bank leverage ratio (“CBLR”), which became effective on January 1, 2020. The intent of CBLR is to provide a simple alternative measure of capital adequacy for electing qualifying depository institutions and depository institution holding companies, as directed under the Economic Growth, Regulatory Relief, and Consumer Protection Act. Under CBLR, if a qualifying depository institution or depository institution holding company elects to use such measure, such institution or holding company will be considered well capitalized if its ratio of Tier 1 capital to average total consolidated assets (i.e., leverage ratio) exceeds a 9% threshold, subject to a limited two quarter grace period, during which the leverage ratio cannot go 100 basis points below the then applicable threshold, and will not be required to calculate and report risk-based capital ratios. Eligibility criteria to utilize CBLR includes the following: ● Total assets of less than $10 billion, ● Total trading assets plus liabilities of 5% or less of consolidated assets, ● Total off-balance sheet exposures of 25% or less of consolidated assets, ● Cannot be an advanced approaches banking organization, and ● Leverage ratio greater than 9%, or temporarily prescribed threshold established in response to COVID-19. The Company, Merchants Bank, and FMBI elected to begin using CBLR in the first quarter of 2020 and all intend to utilize this measure until they no longer meet the eligibility criteria and the applicable grace periods have expired. Accordingly, the Company will not calculate or report risk-based capital ratios at this time. At June 30, 2022 the Company’s off-balance sheets exposures exceeded 25% of total assets. If these exposures remain above 25%, the Company may no longer be eligible to utilize CBLR after September 30, 2022, when the grace periods expire. Additionally, total assets exceeded $10 billion and the Company is prepared to address the additional regulatory requirements and does not expect it to have significant financial implications. Management believes, as of June 30, 2022 and December 31, 2021, that the Company, Merchants Bank, and FMBI met all the regulatory capital adequacy requirements with CBLR to be classified as well-capitalized, and management is not aware of any conditions or events since the most recent regulatory notification that would change the Company’s, Merchants Bank’s, or FMBI’s category. As of June 30, 2022 and December 31, 2021, the most recent notifications from the Board of Governors of the Federal Reserve System (“Federal Reserve”) categorized the Company as well capitalized and most recent notifications from the FDIC categorized Merchants Bank and FMBI as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Company’s, Merchants Bank’s, or FMBI’s category. The Company’s, Merchants Bank’s, and FMBI’s actual capital amounts and ratios are presented in the following tables. Minimum Amount To Be Well Actual Capitalized (1) Amount Ratio Amount Ratio (Dollars in thousands) June 30, 2022 CBLR (Tier 1) capital (1) (i.e., CBLR - leverage ratio) Company $ 1,217,718 12.4 % $ 882,179 > 9 % Merchants Bank 1,171,291 12.3 % 857,175 > 9 % FMBI 31,104 10.3 % 27,088 > 9 % (1) As defined by regulatory agencies. Minimum Amount To Be Well Actual Capitalized (1) Amount Ratio Amount Ratio (Dollars in thousands) December 31, 2021 CBLR (Tier 1) capital (1) (i.e., CBLR - leverage ratio) Company $ 1,138,090 10.4 % $ 928,731 > 8.5 % Merchants Bank 1,088,621 10.3 % 901,188 > 8.5 % FMBI 28,958 9.7 % 25,499 > 8.5 % (1) As defined by regulatory agencies. Failure to exceed the leverage ratio thresholds required under CBLR in the future, subject to any applicable grace period, would require the Company, Merchants Bank, and/or FMBI to return to the risk-based capital ratio thresholds previously utilized under the fully phased-in Basel III Capital Rules to determine capital adequacy. |
Derivative Financial Instrument
Derivative Financial Instruments | 6 Months Ended |
Jun. 30, 2022 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | Note 7: Derivative Financial Instruments The Company uses derivative financial instruments to help manage exposure to interest rate risk and the effects that changes in interest rates may have on net income and the fair value of assets and liabilities. Forward Sales Commitments, Interest Rate Lock Commitments, and Interest Rate Swaps The Company enters into forward contracts for the future delivery of mortgage loans to third party investors and enters into interest rate lock commitments with potential borrowers to fund specific mortgage loans that will be sold into the secondary market. The forward contracts are entered into in order to economically hedge the effect of changes in interest rates resulting from the Company’s commitment to fund the loans. Interest rate swaps are also used by the Company to reduce the risk that significant increases in interest rates may have on the value of certain loans held for sale and the respective loan payments received from borrowers. All changes in the fair market value of these interest rate swaps and loans held for sale have been included in gain on sale of loans. Any difference between the fixed and floating interest rate components of these transactions have been included in interest income. All of these items are considered derivatives, but are not designated as accounting hedges, and are recorded at fair value with changes in fair value reflected in noninterest income on the condensed consolidated statements of income. The fair value of derivative instruments with a positive fair value are reported in other assets in the condensed consolidated balance sheets while derivative instruments with a negative fair value are reported in other liabilities in the condensed consolidated balance sheets. The following table presents the notional amount and fair value of interest rate locks, forward contracts, and interest rate swaps utilized by the Company at June 30, 2022 and December 31, 2021. Notional Fair Value Amount Balance Sheet Location Asset Liability June 30, 2022 (In thousands) (In thousands) Interest rate lock commitments $ 62,301 Other assets/liabilities $ 299 $ 121 Forward contracts $ 49,750 Other assets/liabilities 114 203 Interest rate swaps $ 25,190 Other assets/liabilities 160 — $ 573 $ 324 Notional Fair Value Amount Balance Sheet Location Asset Liability December 31, 2021 (In thousands) (In thousands) Interest rate lock commitments $ 58,701 Other assets/liabilities $ 264 $ 41 Forward contracts $ 81,250 Other assets/liabilities 86 118 $ 350 $ 159 Fair values of these derivative financial instruments were estimated using changes in mortgage interest rates from the date the Company entered into the interest rate lock commitment and the balance sheet date. The following table summarizes the periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income for the three and six months ended June 30, 2022 and 2021. Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 (In thousands) (In thousands) Derivative gain (loss) included in other income: Interest rate lock commitments $ 837 $ 1,046 $ (45) $ (5,698) Forward contracts (includes pair-off settlements) 1,309 (2,289) 4,459 6,107 Net derivative gains (loss) $ 2,146 $ (1,243) $ 4,414 $ 409 Gain (loss) included in gain on sale of loans: Interest rates swaps - change in fair value 160 — 160 — Hedged loans held for sale - change in fair value (165) — (165) — Net gain (loss) $ (5) $ — $ (5) $ — Derivatives on Behalf of Customers The Company offers derivative contracts to some customers in connection with their risk management needs. These derivatives include back-to-back interest rate swaps. The Company manages the risk associated with these contracts by entering into an equal and offsetting derivative with a third-party dealer. These derivatives generally work together as an economic interest rate hedge, but the Company does not designate them for hedge accounting treatment. Consequently, changes in fair value of the corresponding derivative financial asset or liability were recorded as either a charge or credit to current earnings during the period in which the changes occurred, typically resulting in no net earnings impact. The fair values of derivative assets and liabilities related to derivatives for customers with back-to-back interest rate swaps were recorded in the condensed consolidated balance sheets as follows: Notional Fair Value Amount Balance Sheet Location Asset Liability (In thousands) (In thousands) June 30, 2022 $ 181,805 Other assets/liabilities $ 3,662 $ 3,662 December 31, 2021 $ 135,686 Other assets/liabilities $ 1,131 $ 1,131 The gross gains and losses on these derivative assets and liabilities were recorded in other noninterest income and other noninterest expense in the condensed consolidated statements of income as follows: Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 (In thousands) (In thousands) Gross swap gains $ 2,035 $ 195 $ 2,531 $ 1,081 Gross swap losses 2,035 195 2,531 1,081 Net swap gains (losses) $ — $ — $ — $ — The Company pledged $2.9 million and $3.9 million in collateral to secure its obligations under back-to-back swap contracts at June 30, 2022 and December 31, 2021, respectively. |
Disclosures about Fair Value of
Disclosures about Fair Value of Assets and Liabilities | 6 Months Ended |
Jun. 30, 2022 | |
Disclosures about Fair Value of Assets and Liabilities | |
Disclosures about Fair Value of Assets and Liabilities | Note 8: Disclosures about Fair Value of Assets and Liabilities Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that may be used to measure fair value: Level 1 Level 2 Level 3 Recurring Measurements The following tables present the fair value measurements of assets and liabilities recognized in the accompanying balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2022 and December 31, 2021: Fair Value Measurements Using Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Fair Assets Inputs Inputs Assets Value (Level 1) (Level 2) (Level 3) (In thousands) June 30, 2022 Mortgage loans in process of securitization $ 323,046 $ — $ 323,046 $ — Available for sale securities: Treasury notes 34,804 34,804 — — Federal agencies 274,852 — 274,852 — Mortgage-backed - Government-sponsored entity (GSE) 15,779 — 15,779 — Mortgage-backed - Non-GSE multi-family 11,379 — 11,379 — Loans held for sale 41,991 — 41,991 — Servicing rights 130,710 — — 130,710 Derivative assets - interest rate lock commitments 299 — — 299 Derivative assets - forward contracts 114 — 114 — Derivative assets - interest rate swaps 160 — 160 — Derivative assets - interest rate swaps (back-to-back) 3,662 — 3,662 — Derivative liabilities - interest rate lock commitments 121 — — 121 Derivative liabilities - forward contracts 203 — 203 — Derivative liabilities - interest rate swaps (back-to-back) 3,662 — 3,662 — December 31, 2021 Mortgage loans in process of securitization $ 569,239 $ — $ 569,239 $ — Available for sale securities: Treasury notes 8,209 8,209 — — Federal agencies 263,295 — 263,295 — Municipals 4,300 — 4,300 — Mortgage-backed - Government-sponsored entity (GSE) 18,360 — 18,360 — Mortgage-backed - Non-GSE multi-family 16,465 — 16,465 — Loans held for sale 48,583 — 48,583 — Servicing rights 110,348 — — 110,348 Derivative assets - interest rate lock commitments 264 — — 264 Derivative assets - forward contracts 86 — 86 — Derivative assets - interest rate swaps (back-to-back) 1,131 — 1,131 — Derivative liabilities - interest rate lock commitments 41 — — 41 Derivative liabilities - forward contracts 118 — 118 — Derivative liabilities - interest rate swaps (back-to-back) 1,131 — 1,131 — Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the six months ended June 30, 2022 and the year ended December 31, 2021. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below. Mortgage Loans in Process of Securitization and Available for Sale Securities Where quoted market prices are available in an active market, securities such as U.S. Treasuries are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using quoted prices of securities with similar characteristics or independent asset pricing services and pricing models, the inputs of which are market-based or independently sourced market parameters, including, but not limited to, yield curves, interest rates, volatilities, prepayments, defaults, cumulative loss projections and cash flows. Such securities are classified in Level 2 of the valuation hierarchy including federal agencies, mortgage-backed securities, municipal securities and Federal Housing Administration participation certificates. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy. Loans Held for Sale Certain loans held for sale at fair value are saleable into the secondary mortgage markets and their fair values are estimated using observable quoted market or contracted prices, or market price equivalents, which would be used by other market participants. These saleable loans are considered Level 2. Servicing Rights Servicing rights do not trade in an active, open market with readily observable prices. Accordingly, fair value is estimated using discounted cash flow models having significant inputs of discount rate, prepayment speed, cost of servicing, interest rates, and default rate. Due to the nature of the valuation inputs, servicing rights are classified within Level 3 of the hierarchy. The Chief Financial Officer’s (CFO) office contracts with a pricing specialist to generate fair value estimates on a quarterly basis. The CFO’s office challenges the reasonableness of the assumptions used and reviews the methodology to ensure the estimated fair value complies with accounting standards generally accepted in the United States. Derivative Financial Instruments The Company estimates the fair value of interest rate lock commitments based on the value of the underlying mortgage loan, quoted mortgage backed security prices, estimates of the fair value of the servicing rights, and an estimate of the probability that the mortgage loan will fund within the terms of the interest rate lock commitment, net of expenses. With respect to its interest rate lock commitments, management determined that a Level 3 classification was most appropriate based on the various significant unobservable inputs utilized in estimating the fair value of its interest rate lock commitments. The Company estimates the fair value of forward sales commitments based on market quotes of mortgage backed security prices for securities similar to the ones used, which are considered Level 2. The fair value of interest rate swaps is based on prices that are obtained from a third party that uses observable market inputs, thereby supporting a Level 2 classification. Changes in fair value of the Company’s derivative financial instruments are recognized through noninterest income and/or noninterest expenses on its condensed consolidated statement of income. Level 3 Reconciliation The following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying balance sheets using significant unobservable (Level 3) inputs: Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 (In thousands) (In thousands) Servicing rights Balance, beginning of period $ 121,036 $ 96,215 $ 110,348 $ 82,604 Additions Originated servicing 5,203 6,527 10,995 16,708 Subtractions Paydowns (3,268) (4,627) (6,017) (8,075) Sales of servicing — (438) — (438) Changes in fair value due to changes in valuation inputs or assumptions used in the valuation model 7,739 654 15,384 7,532 Balance, end of period $ 130,710 $ 98,331 $ 130,710 $ 98,331 Derivative Assets - interest rate lock commitments Balance, beginning of period $ 112 $ 467 $ 264 $ 6,131 Changes in fair value 187 20 35 (5,644) Balance, end of period $ 299 $ 487 $ 299 $ 487 Derivative Liabilities - interest rate lock commitments Balance, beginning of period $ 771 $ 1,080 $ 41 $ — Changes in fair value (650) (1,026) 80 54 Balance, end of period $ 121 $ 54 $ 121 $ 54 Nonrecurring Measurements The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2022 and December 31, 2021. Fair Value Measurements Using Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Fair Assets Inputs Inputs Assets Value (Level 1) (Level 2) (Level 3) (In thousands) June 30, 2022 Collateral dependent loans $ 4,275 $ — $ — $ 4,275 December 31, 2021 Impaired loans (collateral-dependent) $ 4,263 $ — $ — $ 4,263 Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying balance sheet, as well as the general classification of such assets pursuant to the valuation hierarchy. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below. Collateral Dependent Loans, Net of ACL-Loans The estimated fair value of collateral dependent loans is based on the appraised fair value of the collateral, less estimated cost to sell. Collateral dependent loans are classified within Level 3 of the fair value hierarchy. The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value. Appraisals of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by the Chief Credit Officer’s (“CCO)” office. Appraisals and evaluations are reviewed for accuracy and consistency by the CCO’s office. Appraisers are selected from the list of approved appraisers maintained by management. The appraised values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral. These discounts and estimates are developed by the CCO’s office by comparison to historical results. Unobservable (Level 3) Inputs: The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements other than goodwill. Valuation Weighted Fair Value Technique Unobservable Inputs Range Average (In thousands) At June 30, 2022: Collateral dependent loans $ 4,275 Market comparable properties Marketability discount 82% 82% Servicing rights - Multi-family $ 97,059 Discounted cash flow Discount rate 8% - 13% 8% Constant prepayment rate 0% - 50% 3% Servicing rights - Single-family $ 29,632 Discounted cash flow Discount rate 9% - 10% 9% Constant prepayment rate 7% - 9% 7% Servicing rights - SBA $ 4,019 Discounted cash flow Discount rate 16% 16% Constant prepayment rate 3% - 16% 8% Derivative assets - interest rate lock commitments $ 299 Discounted cash flow Loan closing rates 50% - 99% 81% Derivative liabilities - interest rate lock commitments $ 121 Discounted cash flow Loan closing rates 50% - 99% 81% At December 31, 2021: Collateral-dependent impaired loans $ 4,263 Market comparable properties Marketability discount 44% - 76% 73% Servicing rights - Multi-family $ 84,567 Discounted cash flow Discount rate 8% - 13% 9% Constant prepayment rate 0 - 50% 4% Servicing rights - Single-family $ 23,012 Discounted cash flow Discount rate 9% - 10% 9% Constant prepayment rate 10 - 13% 11% Servicing rights - SBA $ 2,769 Discounted cash flow Discount rate 16% 16% Constant prepayment rate 10% - 13% 12% Derivative assets - interest rate lock commitments $ 264 Discounted cash flow Loan closing rates 63% - 99% 83% Derivative liabilities - interest rate lock commitments $ 41 Discounted cash flow Loan closing rates 63% - 99% 83% Sensitivity of Significant Unobservable Inputs The following is a discussion of the sensitivity of significant unobservable inputs, the interrelationships between those inputs and other unobservable inputs used in recurring fair value measurement, and of how those inputs might magnify or mitigate the effect of changes in the unobservable inputs on the fair value measurement. Servicing Rights The significant unobservable inputs used in the fair value measurement of the Company’s servicing rights are discount rates and constant prepayment rates. These two inputs can drive a significant amount of a market participant’s valuation of servicing rights. Significant increases (decreases) in the discount rate or assumed constant prepayment rates used to value servicing rights would decrease (increase) the value derived. Fair Value of Financial Instruments The following table presents the carrying amount and estimated fair values of the Company’s financial instruments not carried at fair value and the level within the fair value hierarchy in which the fair value measurements fall at June 30, 2022 and December 31, 2021. Fair Value Measurements Using Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Carrying Fair Assets Inputs Inputs Assets Value Value (Level 1) (Level 2) (Level 3) (In thousands) June 30, 2022 Financial assets: Cash and cash equivalents $ 258,146 $ 258,146 $ 258,146 $ — $ — Securities purchased under agreements to resell 3,520 3,520 — 3,520 — FHLB stock 39,130 39,130 — 39,130 — Loans held for sale 2,717,125 2,717,125 — 2,717,125 — Loans receivable, net 7,033,203 7,046,313 — — 7,046,313 Interest receivable 26,184 26,184 — 26,184 — Financial liabilities: Deposits 8,299,738 8,294,601 6,829,667 1,464,934 — Short-term subordinated debt 19,000 19,000 — 19,000 — FHLB advances 851,904 851,711 — 851,711 — Other borrowing 570,000 570,000 — 570,000 — Interest payable 3,805 3,805 — 3,805 — December 31, 2021 Financial assets: Cash and cash equivalents $ 1,032,614 $ 1,032,614 $ 1,032,614 $ — $ — Securities purchased under agreements to resell 5,888 5,888 — 5,888 — FHLB stock 29,588 29,588 — 29,588 — Loans held for sale 3,254,616 3,254,616 — 3,254,616 — Loans receivable, net 5,751,319 5,731,500 — — 5,731,500 Interest receivable 24,103 24,103 — 24,103 — Financial liabilities: Deposits 8,982,613 8,982,680 7,783,553 1,199,127 — Short-term subordinated debt 17,000 17,000 — 17,000 — FHLB advances 556,954 556,925 — 556,925 — Other borrowing 460,000 460,000 — 460,000 — Interest payable 1,469 1,469 — 1,469 — |
Leases
Leases | 6 Months Ended |
Jun. 30, 2022 | |
Leases. | |
Leases | Note 9: Leases The Company has operating leases for various locations with terms ranging from two The Company has operating lease right-of-use assets of $9.2 million and operating lease liabilities of $9.9 million as of June 30, 2022. Balance sheet, income statement and cash flow detail regarding operating leases follows: June 30, 2022 Balance Sheet (In thousands) Operating lease right-of-of use asset (in other assets) $ 9,189 Operating lease liability (in other liabilities) 9,920 Weighted average remaining lease term (years) 7.2 Weighted average discount rate 2.09% Maturities of lease liabilities: 2022 remaining $ 864 2023 1,812 2024 1,638 2025 1,246 2026 1,277 Thereafter 3,857 Total future minimum lease payments 10,694 Less: imputed interest 774 Total $ 9,920 Three Months Ended June 30, 2022 Income Statement (In thousands) Components of lease expense: Operating lease cost (in occupancy and equipment expense) $ 425 Six Months Ended June 30, 2022 Income Statement (In thousands) Components of lease expense: Operating lease cost (in occupancy and equipment expense) $ 792 Six Months Ended June 30, 2022 Cash Flow Statement (In thousands) Supplemental cash flow information: Operating cash flows from operating leases $ 597 |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2022 | |
Earnings Per Share | |
Earnings Per Share | Note 10: Earnings Per Share Earnings per share were computed as follows: Three Month Periods Ended June 30, 2022 2021 Weighted- Per Weighted- Per Net Average Share Net Average Share Income Shares Amount Income Shares Amount (In thousands) (In thousands) Net income $ 53,935 $ 51,417 Dividends on preferred stock (5,729) (5,659) Net income allocated to common shareholders $ 48,206 $ 45,758 Basic earnings per share (1) 43,209,824 $ 1.12 43,174,220 $ 1.06 Effect of dilutive securities-restricted stock awards (1) 125,387 137,268 Diluted earnings per share (1) 43,335,211 $ 1.11 43,311,488 $ 1.06 Six Month Periods Ended June 30, 2022 2021 Weighted- Per Weighted- Per Net Average Share Net Average Share Income Shares Amount Income Shares Amount (In thousands) (In thousands) Net income $ 104,077 $ 113,400 Dividends on preferred stock (11,457) (9,416) Net income allocated to common shareholders $ 92,620 $ 103,984 Basic earnings per share 43,220,198 $ 2.14 43,166,223 $ 2.41 Effect of dilutive securities-restricted stock awards 147,677 127,376 Diluted earnings per share 43,367,875 $ 2.14 43,293,599 $ 2.40 (1) The number of shares and per share amounts have been restated to reflect the 3 -for-2 common stock split, effective on January 17, 2022 . |
Common Stock
Common Stock | 6 Months Ended |
Jun. 30, 2022 | |
Common Stock | |
Common Stock | Note 11: Common Stock Stock Splits: On November 17, 2021, the Company approved a 3 one Repurchase of Common Stock: During the three months ended June 30, 2022, the Company repurchased 165,037 shares for $3.9 million at an average price of per share of common stock. The Company did t have any repurchases of common stock during the three months ended June 30, 2021. The following table presents our repurchase activity on a cash basis: Three Months Ended June 30, 2022 Dollar value of shares repurchased $ 3,935,333 Shares repurchased (1) 165,037 Average price paid per share $ 23.85 (1) On November 17, 2021, the Company announced an increase in authorization for its stock repurchase program, up to $75,000,000 of common stock, expiring December 31, 2023. On April 29, 2022, the Company entered into a Rule 10b5-1 plan (the “10b5-1 Plan”) with a broker for the repurchase of shares of its common stock commencing on May 3, 2022. The details of this repurchase plan were provided in the Form 8-K filed by the Company on May 24, 2022. |
Share-Based Payment Plans
Share-Based Payment Plans | 6 Months Ended |
Jun. 30, 2022 | |
Share-Based Payment Plans | |
Share-Based Payment Plans | Note 12: Share-Based Payment Plans Equity-based incentive awards for Company officers are currently issued pursuant to the 2017 Equity Incentive Plan (the “2017 Incentive Plan”). During the three months ended June 30, 2022 and 2021, the Company did no t issue any shares. During the six months ended June 30, 2022 and 2021, the Company issued During 2018, the Compensation Committee of the Board of Directors approved a plan for non-executive directors to receive a portion of their annual retainer fees in the form of shares of common stock equal to $10,000 , rounded up to the nearest whole share. In January 2021, the Board of Directors amended the plan for nonexecutive directors to receive a portion of their annual fees, issued quarterly, in the form of restricted common stock equal to shares issued to non-executive directors during the three and six months ended June 30, 2021, respectively. |
Preferred Stock
Preferred Stock | 6 Months Ended |
Jun. 30, 2022 | |
Preferred Stock | |
Preferred Stock | Note 13: Preferred Stock Public Offerings of Preferred Stock: On March 28, 2019, the Company issued 2,000,000 shares of 7.00% Fixed-to-Floating Rate Series A Non-Cumulative Perpetual Preferred Stock, without par value, and with a liquidation preference of $25.00 per share (the “Series A Preferred Stock”). The aggregate gross offering proceeds for the shares issued by the Company was $50.0 million, and after deducting underwriting discounts and commissions and offering expenses of approximately $1.7 million paid to third parties, the Company received total net proceeds of $48.3 million. On April 12, 2019, the Company issued an additional 81,800 shares of Series A Preferred Stock to the underwriters related to their exercise of an option to purchase additional shares under the associated underwriting agreement, resulting in an additional $2.0 million in net proceeds, after deducting $41,000 in underwriting discounts. The Series A Preferred Stock have no voting rights with respect to matters that generally require the approval of our common shareholders. Dividends on the Series A Preferred Stock, to the extent declared by the Company’s board, are payable quarterly. approval of the appropriate federal banking agency, at the liquidation preference, plus any declared and unpaid dividends (without regard to any undeclared dividends) to, but excluding, the date of redemption. On August 19, 2019, the Company issued 5,000,000 depositary shares, each representing a 1/40 th On March 23, 2021, the Company issued 6,000,000 depositary shares, each representing a 1/40 th per depositary share). The aggregate gross offering proceeds for the shares issued by the Company was million. The Series C Preferred Stock have no voting rights with respect to matters that generally require the approval of our common shareholders. Dividends on the Series C Preferred Stock, to the extent declared by the Company’s board, are payable quarterly. The Company may redeem the Series C Preferred Stock, in whole or in part, at its option, on any dividend payment date on or after April 1, 2026, subject to the approval of the appropriate federal banking agency, at the liquidation preference, plus any declared and unpaid dividends (without regard to any undeclared dividends) to, but excluding, the date of redemption. Private Placement Offerings of Preferred Stock The Company previously issued a total of 41,625 shares of 8% Non-Cumulative, Perpetual Preferred Stock, without par value, with a liquidation preference of $1,000.00 per share (8% Preferred Stock”) in private placement offerings. On June 27, 2019 the Company issued an additional 874,000 shares of its 7.00% Series A Preferred Stock, without par value and with a liquidation preference of $25.00 per share, for aggregate proceeds of $21.85 million. No underwriter or placement agent was involved in this private placement and the Company did not pay any brokerage or underwriting fees or discounts in connection with the issuance of such shares. The shares were purchased primarily by related parties, including Michael Petrie, Chairman and Chief Executive Officer; Randall Rogers, Vice Chairman and a director and members of his family; Michael Dury, President and Chief Executive Officer of MCC; and other accredited investors. On April 15, 2021, all 41,625 shares of the Company’s 8% preferred stock were redeemed for $41.6 million, plus unpaid dividends of $139,000. On May 6, 2021 these 8% preferred shareholders participated in a private offering to replace their redeemed shares with Series C Preferred Stock. Accordingly, 46,181 shares (1,847,233 depositary shares) of Series C Preferred Stock were issued at a price of $25 per depositary share. The total capital raised from the private offering was $46.2 million, net of $23,000 in expenses. Repurchase of Preferred Stock: On September 23, 2019 the Company repurchased and subsequently retired 874,000 shares of its 7.00% Series A Preferred Stock, for its liquidation preference of $25 per share, at an aggregate cost of $21.85 million. There were no brokerage fees in connection with the transaction. On April 15, 2021, all 41,625 shares of the 8% Preferred Stock were redeemed for $41.6 million, plus unpaid dividends of $139,000, as noted above. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2022 | |
Segment Information | |
Segment Information | Note 14: Segment Information Our Company’s business segments are defined as Multi-family Mortgage Banking, Mortgage Warehousing, and Banking. The reportable business segments are consistent with the internal reporting and evaluation of the principal lines of business of the Company. The Multi-family Mortgage Banking segment originates and services government sponsored mortgages for multi-family and healthcare facilities. The Mortgage Warehousing segment funds agency eligible residential loans from the date of origination or purchase, until the date of sale in the secondary market, as well as commercial loans to non-depository financial institutions. The Banking segment provides a wide range of financial products and services to consumers and businesses, including retail banking, commercial lending, agricultural lending, retail and correspondent residential mortgage banking, and Small Business Administration (“SBA”) lending. Other includes general and administrative expenses that provide services to all segments; internal funds transfer pricing offsets resulting from allocations to/from the other segments, certain elimination entries and investments in qualified affordable housing limited partnerships. All operations are domestic. The tables below present selected business segment financial information for the three and six months ended June 30, 2022 and 2021. Multi-family Mortgage Mortgage Banking Warehousing Banking Other Total (In thousands) Three Months Ended June 30, 2022 Interest income $ 383 $ 23,247 $ 63,578 $ 2,062 $ 89,270 Interest expense — 5,576 12,036 (373) 17,239 Net interest income 383 17,671 51,542 2,435 72,031 Provision for credit losses 1,153 834 4,225 — 6,212 Net interest income after provision for credit losses (770) 16,837 47,317 2,435 65,819 Noninterest income 49,430 1,350 (10,252) (1,357) 39,171 Noninterest expense 21,959 2,441 2,634 5,923 32,957 Income before income taxes 26,701 15,746 34,431 (4,845) 72,033 Income taxes 7,145 3,878 8,499 (1,424) 18,098 Net income (loss) $ 19,556 $ 11,868 $ 25,932 $ (3,421) $ 53,935 Total assets $ 330,676 $ 2,836,998 $ 7,835,152 $ 83,229 $ 11,086,055 Multi-family Mortgage Mortgage Banking Warehousing Banking Other Total (In thousands) Three Months Ended June 30, 2021 Interest income $ 204 $ 29,935 $ 40,983 $ 1,316 $ 72,438 Interest expense — 1,599 7,216 (784) 8,031 Net interest income 204 28,336 33,767 2,100 64,407 Provision for credit losses — (40) (275) — (315) Net interest income after provision for credit losses 204 28,376 34,042 2,100 64,722 Noninterest income 28,572 3,079 2,613 (1,409) 32,855 Noninterest expense 13,626 2,703 7,496 4,358 28,183 Income before income taxes 15,150 28,752 29,159 (3,667) 69,394 Income taxes 4,179 7,304 7,418 (924) 17,977 Net income (loss) $ 10,971 $ 21,448 $ 21,741 $ (2,743) $ 51,417 Total assets $ 238,165 $ 4,265,162 $ 5,328,684 $ 49,521 $ 9,881,532 Multi-family Mortgage Mortgage Banking Warehousing Banking Other Total (In thousands) Six Months Ended June 30, 2022 Interest income $ 640 $ 43,576 117,303 $ 3,763 $ 165,282 Interest expense — 7,597 20,553 (624) 27,526 Net interest income 640 35,979 96,750 4,387 137,756 Provision for credit losses 1,153 627 6,883 — 8,663 Net interest income after provision for credit losses (513) 35,352 89,867 4,387 129,093 Noninterest income 81,616 3,210 (8,063) (2,995) 73,768 Noninterest expense 38,490 5,367 9,208 10,925 63,990 Income before income taxes 42,613 33,195 72,596 (9,533) 138,871 Income taxes 11,565 8,168 17,900 (2,839) 34,794 Net income $ 31,048 $ 25,027 $ 54,696 $ (6,694) $ 104,077 Total assets $ 330,676 $ 2,836,998 $ 7,835,152 $ 83,229 $ 11,086,055 Multi-family Mortgage Mortgage Banking Warehousing Banking Other Total (In thousands) Six Months Ended June 30, 2021 Interest income $ 411 $ 68,522 $ 80,523 $ 2,531 $ 151,987 Interest expense — 3,323 13,655 (1,361) 15,617 Net interest income 411 65,199 66,868 3,892 136,370 Provision for credit losses — (1,124) 2,472 — 1,348 Net interest income after provision for credit losses 411 66,323 64,396 3,892 135,022 Noninterest income 61,806 7,196 10,291 (2,502) 76,791 Noninterest expense 30,070 5,599 14,621 7,977 58,267 Income before income taxes 32,147 67,920 60,066 (6,587) 153,546 Income taxes 9,215 17,289 15,300 (1,658) 40,146 Net income $ 22,932 $ 50,631 $ 44,766 $ (4,929) $ 113,400 Total assets $ 238,165 $ 4,265,162 $ 5,328,684 $ 49,521 $ 9,881,532 |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2022 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | Note 15: Recent Accounting Pronouncements The Company is an emerging growth company and as such will be subject to the effective dates noted for private companies if they differ from the effective dates noted for public companies. FASB ASU 2016-13, Financial Instruments—Credit Losses The Company adopted FASB Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments As of the adoption date on January 1, 2022, the Company recorded a $3.6 million decrease, net of taxes, to retained earnings for the cumulative effect of adopting CECL. The transition adjustment included a $0.3 million increase to retained earnings related to ACL-Loans and a $5.2 million decrease to retained earnings related to ACL-OBCEs. FASB ASU 2016-02, Leases In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU 2016-02, “Leases.” Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: ● A lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and ● A right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, “Revenue from Contracts with Customers.” The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees will no longer be provided with a source of off-balance sheet financing. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. The Company adopted this new guidance on January 1, 2022 and has elected the alternative transition method whereby comparative periods will not be restated. The Company also elected the package of practical expedients permitted under the transition guidance within the new standard. At the adoption date, the Company reported increased assets of approximately $7.1 million, liabilities of approximately $7.2 million, and retained earnings, net of tax of $110,000 on its consolidated balance sheets as a result of recognizing right-of-use assets and lease liabilities related to non-cancelable operating lease agreements. FASB ASU 2020-04 - Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ● A change in a contract’s reference interest rate would be accounted for as a continuation of that contract rather than as the creation of a new one for contracts, including loans, debt, leases, and other arrangements, that meet specific criteria. ● When updating its hedging strategies in response to reference rate reform, an entity would be allowed to preserve its hedge accounting. Entities may apply this ASU as of the beginning of an interim period that includes the March 12, 2020 issuance date of the ASU, through December 31, 2022. The Company has organized a committee and implemented a transition plan to identify and modify its loans and other financial instruments with attributes that are either directly or indirectly influenced by LIBOR. All new contracts have incorporated language to address any required transition from LIBOR. The Company will continue to monitor and evaluate existing contracts throughout 2022. The Company believes the adoption of this guidance will not have a material impact on the consolidated financial statements. FASB ASU 2022-02 - Financial Instruments — Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures In February 2022, the FASB issued an ASU update to eliminate the recognition and measurement guidance on troubled debt restructurings for creditors that have adopted CECL and require enhanced disclosures about loan modifications for borrowers experiencing financial difficulty. The new guidance also requires public business entities to present current-period gross write-offs (on a current year-to-date basis for interim-period disclosures) by year of origination in their vintage disclosures. These changes would be applied on a prospective basis. Disclosure would not be required to prior period comparative periods. The updates in ASU 2022-02 are effective for interim and annual periods beginning after December 15, 2022. The Company is continuing to evaluate the impact of adopting this new guidance but does not expect it to have a material impact on the Company’s financial position or results of operations. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2022 | |
Subsequent Events | |
Subsequent Events | Note 16: Subsequent Events No material events were noted. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
Basis of Presentation | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements include the accounts of Merchants Bancorp, a registered bank holding company (the “Company”) and its wholly owned subsidiaries, Merchants Bank of Indiana (“Merchants Bank”), Farmers-Merchants Bank of Illinois (“FMBI”) and Merchants Asset Management, LLC (“MAM”). Merchants Bank’s primary operating subsidiaries include Merchants Capital Corp. (‘MCC”), Merchants Capital Servicing, LLC (“MCS”), and Merchants Capital Investments, LLC (“MCI”). All direct and indirectly owned subsidiaries owned by Merchants Bancorp are collectively referred to as the “Company”. The accompanying unaudited condensed consolidated balance sheet of the Company as of December 31, 2021, which has been derived from audited financial statements, and unaudited condensed consolidated financial statements of the Company as of June 30, 2022 and for the three and six months ended June 30, 2022 and 2021, were prepared in accordance with the instructions for Form 10-Q and Article 10 of Regulation S-X and, therefore, do not include information or footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America. Accordingly, these condensed financial statements should be read in conjunction with the audited financial statements and notes thereto of the Company as of and for the year ended December 31, 2021 in its Annual Report on Form 10-K. Reference is made to the accounting policies of the Company described in the Notes to the Financial Statements contained in the Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) which are necessary for a fair presentation of the unaudited financial statements have been included to present fairly the financial position as of June 30, 2022 and the results of operations for the three and six months ended June 30, 2022 and 2021, and cash flows for the six months ended June 30, 2022 and 2021. All interim amounts have not been audited and the results of operations for the three and six months ended June 30, 2022, herein are not necessarily indicative of the results of operations to be expected for the entire year. |
Principles of Consolidation | Principles of Consolidation The unaudited condensed consolidated financial statements as of and for the period ended June 30, 2022 and 2021 include results from the Company, and its wholly owned subsidiaries, Merchants Bank, FMBI and MAM. Also included are Merchants Bank’s primary operating subsidiaries, MCC, MCS and MCI, as well as all direct and indirectly owned subsidiaries owned by Merchants Bancorp. In addition, when the Company makes an equity investment in an entity for which it holds a variable interest, it is evaluated for consolidation requirements under Accounting Standards Update of Topic 810. Accordingly, the entity is assessed for potential consolidation under the variable interest entity (“VIE”) model and would only consolidate those entities for which it is a primary beneficiary. A primary beneficiary is defined as the party that has both the power to direct the activities that most significantly impact the entity, and an interest that could be significant to the entity. To determine if an interest could be significant to the entity, both qualitative and quantitative factors regarding the nature, size and form of our involvement with the entity are evaluated. Alternatively, under the voting interest model, it would only consolidate those entities for which it has a controlling interest. Because the variable interest investments held by the Company as of June 30, 2022 are not deemed to be primary beneficiaries or controlling interests, the entities are not consolidated and the equity method or proportional method of accounting has been applied. The Company will analyze whether its entities are the primary beneficiary on an ongoing basis. Changes in facts and circumstances occurring since the previous primary beneficiary determination will be considered as part of this ongoing assessment. See Note 5: Variable Interest Entities (VIEs) for additional information about VIEs. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Deconsolidation | Deconsolidation The unaudited condensed consolidated financial statements included consolidated results from certain entities primarily involved in single-family debt financing until January 30, 2021, while the Company was deemed to be a primary beneficiary. On February 1, 2021, the Company’s single-family debt fund entities were restructured in such a way that its ownership and participation was significantly reduced with the inclusion of additional, unrelated investors and the Company was no longer classified as a primary beneficiary. Accordingly, results from these entities were no longer consolidated after this date, in accordance with the consolidation guidelines of the Accounting Standards Update of Topic 810. Following the deconsolidation, the carrying value of assets and liabilities of these entities were removed from the consolidated balance sheet, and the continuing investments were recorded at fair value at the date of deconsolidation. The total amount deconsolidated from the balance sheet included net assets of approximately $10 million, consisting primarily of $66.6 million in loans receivable, and $52.7 million in borrowings with Merchants Bank that was previously eliminated in consolidation. The fair value of its continuing investments was approximately $10 million on the deconsolidation date and has been reported in Other Assets after deconsolidation. The estimated fair value was determined based on third-party evaluations of similar assets in the underlying business. The difference between the fair value of these deconsolidated entities and their carrying value was deemed to be immaterial, resulting in no gain or loss on deconsolidation. These continuing investments after deconsolidation are classified as variable interest entities, have not been consolidated, and are accounted for under the equity method of accounting. See Note 5: Variable Interest Entities (VIEs) |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses on loans, servicing rights and fair values of financial instruments. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Basis of Presentation | |
Schedule of impact of the adoption of CECL | Impact of January 1, 2022 CECL Post-CECL December 31, 2021 Adoption Adoption Assets: (In thousands) MTG WHLOC $ 1,955 $ 41 $ 1,996 RES RE 4,170 275 4,445 MF FIN 14,084 520 14,604 HC FIN 4,461 139 4,600 CML & CRE 5,879 (1,277) 4,602 AG & AGRE 657 (18) 639 CON & MAR 138 21 159 ACL - Loans $ 31,344 $ (299) $ 31,045 Liabilities: ACL - OBCEs (in Other Liabilities) $ — $ 5,176 $ 5,176 Stockholders' Equity: Retained earnings, net of tax $ 657,149 $ (3,648) $ 653,501 |
Securities Available For Sale (
Securities Available For Sale (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Securities Available For Sale | |
Schedule of amortized cost and approximate fair values, together with gross unrealized gains and losses | June 30, 2022 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value (In thousands) Available for sale securities: Treasury notes $ 35,111 $ 1 $ 308 $ 34,804 Federal agencies 284,978 — 10,126 274,852 Mortgage-backed - Government-sponsored entity (GSE) 15,774 12 7 15,779 Mortgage-backed - Non-GSE multi-family 11,731 — 352 11,379 Total available for sale securities $ 347,594 $ 13 $ 10,793 $ 336,814 December 31, 2021 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value (In thousands) Available for sale securities: Treasury notes $ 8,232 $ 4 $ 27 $ 8,209 Federal agencies 264,970 — 1,675 263,295 Municipals 4,300 — — 4,300 Mortgage-backed - Government-sponsored entity (GSE) 18,664 32 336 18,360 Mortgage-backed - Non-GSE multi-family 16,424 41 — 16,465 Total available for sale securities $ 312,590 $ 77 $ 2,038 $ 310,629 |
Schedule of amortized cost and fair value of available-for-sale securities by contractual maturity | June 30, 2022 December 31, 2021 Amortized Fair Amortized Fair Cost Value Cost Value Contractual Maturity (In thousands) Within one year $ 54,247 $ 52,983 $ 6,548 $ 6,551 After one through five years 265,842 256,673 270,954 269,253 After five through ten years — — — — After ten years — — — — 320,089 309,656 277,502 275,804 Mortgage-backed - Government-sponsored entity (GSE) 15,774 15,779 18,664 18,360 Mortgage-backed - Non-GSE multi-family 11,731 11,379 16,424 16,465 $ 347,594 $ 336,814 $ 312,590 $ 310,629 |
Schedule of gross unrealized losses and fair value of investments with unrealized losses have been in continuous | June 30, 2022 12 Months or Less than 12 Months Longer Total Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses (In thousands) Available for sale securities: Treasury notes $ 32,599 $ 263 $ 1,955 $ 45 $ 34,554 $ 308 Federal agencies 169,115 5,884 105,737 4,242 274,852 10,126 Mortgage-backed - Government-sponsored entity (GSE) 798 7 — — 798 7 Mortgage-backed - Non-GSE multi-family — 352 — — — 352 $ 202,512 $ 6,506 $ 107,692 $ 4,287 $ 310,204 $ 10,793 December 31, 2021 12 Months or Less than 12 Months Longer Total Gross Gross Gross Fair Unrealized Fair Unrealized Fair Unrealized Value Losses Value Losses Value Losses (In thousands) Available for sale securities: Treasury notes $ 7,957 $ 27 $ — $ — $ 7,957 $ 27 Federal agencies 238,489 1,503 24,806 172 263,295 1,675 Mortgage-backed - Government-sponsored entity (GSE) 719 336 — — 719 336 $ 247,165 $ 1,866 $ 24,806 $ 172 $ 271,971 $ 2,038 |
Loans and Allowance for Credi_2
Loans and Allowance for Credit Losses on Loans (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Loans and Allowance for Credit Losses on Loans | |
Summary of loans | June 30, December 31, 2022 2021 (In thousands) Mortgage warehouse lines of credit $ 900,585 $ 781,437 Residential real estate 876,652 843,101 Multi-family financing (1) 3,236,917 2,702,042 Healthcare financing (1) 1,262,424 826,157 Commercial and commercial real estate 695,158 520,199 Agricultural production and real estate 90,070 97,060 Consumer and margin loans 8,871 12,667 7,070,677 5,782,663 Less: ACL-Loans 37,474 31,344 Loans Receivable $ 7,033,203 $ 5,751,319 (1) In 2022, the Company started presenting these two loan types on separate lines for reporting purposes. |
Schedule of allowance for credit loss on loan methodology by loan portfolio segment | Loan Portfolio Segment ACL-Loans Methodology Ag loans Remaining Life Method Ag real estate loans Remaining Life Method Commercial loans Discounted Cash Flow Commercial real estate loans Discounted Cash Flow Consumer and margin loans Remaining Life Method HELOC loans Discounted Cash Flow Multi-family healthcare loans Discounted Cash Flow Multi-family non-management loans Discounted Cash Flow Multi-family construction loans Discounted Cash Flow Multi-family loans Discounted Cash Flow Residential real estate loans Discounted Cash Flow SBA commercial loans Discounted Cash Flow SBA real estate commercial loans Discounted Cash Flow Single-family warehouse lines of credit Remaining Life Method |
Summary of the activity in the ACL-Loans by portfolio segment | For the Three Months Ended June 30, 2022 MTG WHLOC RES RE MF FIN HC FIN CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) ACL-Loans Balance, beginning of period $ 1,941 $ 4,547 $ 15,131 $ 5,618 $ 4,102 $ 597 $ 166 $ 32,102 Provision for credit losses 481 363 1,233 2,318 474 (46) (55) 4,768 Loans charged to the allowance — — — — (32) — (15) (47) Recoveries of loans previously charged off — — — — 651 — — 651 Balance, end of period $ 2,422 $ 4,910 $ 16,364 $ 7,936 $ 5,195 $ 551 $ 96 $ 37,474 For the Six Months Ended June 30, 2022 MTG WHLOC RES RE MF FIN HC FIN CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) ACL-Loans Balance, beginning of period $ 1,955 $ 4,170 $ 14,084 $ 4,461 $ 5,879 $ 657 $ 138 $ 31,344 Impact of adopting CECL 41 275 520 139 (1,277) (18) 21 (299) Provision for credit losses 426 465 1,760 3,336 905 (88) (55) 6,749 Loans charged to the allowance — — — — (963) — (15) (978) Recoveries of loans previously charged off — — — — 651 — 7 658 Balance, end of period $ 2,422 $ 4,910 $ 16,364 $ 7,936 $ 5,195 $ 551 $ 96 $ 37,474 |
Summary of activity in the allowance for loan losses | For the Three Months Ended June 30, 2021 MTG WHLOC RES RE MF FIN HC FIN CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Allowance for loan losses Balance, beginning of period $ 3,321 $ 3,600 $ 13,396 $ 3,740 $ 4,264 $ 632 $ 138 $ 29,091 Provision for credit losses (386) 371 (1,718) 364 1,059 (21) 16 (315) Loans charged to the allowance — (2) — — (84) — — (86) Recoveries of loans previously charged off — — — — — — 6 6 Balance, end of period $ 2,935 $ 3,969 $ 11,678 $ 4,104 $ 5,239 $ 611 $ 160 $ 28,696 For the Six Months Ended June 30, 2021 MTG WHLOC RES RE MF FIN HC FIN CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Allowance for loan losses Balance, beginning of period $ 4,018 $ 3,334 $ 12,041 $ 2,690 $ 4,641 $ 636 $ 140 $ 27,500 Provision for credit losses (1,083) 637 (363) 1,414 750 (25) 18 1,348 Loans charged to the allowance — (2) — — (152) — (6) (160) Recoveries of loans previously charged off — — — — — — 8 8 Balance, end of period $ 2,935 $ 3,969 $ 11,678 $ 4,104 $ 5,239 $ 611 $ 160 $ 28,696 |
Summary of activity in the allowance for loans and recorded investment by loan portfolio | December 31, 2021 MTG WHLOC RES RE MF FIN HC FIN CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Allowance for loan losses Balance, December 31, 2021 $ 1,955 $ 4,170 $ 14,084 $ 4,461 $ 5,879 $ 657 $ 138 $ 31,344 Ending balance: individually evaluated for impairment $ — $ 16 $ — $ — $ 867 $ — $ 7 $ 890 Ending balance: collectively evaluated for impairment $ 1,955 $ 4,154 $ 14,084 $ 4,461 $ 5,012 $ 657 $ 131 $ 30,454 Loans Balance, December 31, 2021 $ 781,437 $ 843,101 $ 2,702,042 $ 826,157 $ 520,199 $ 97,060 $ 12,667 $ 5,782,663 Ending balance individually evaluated for impairment $ — $ 419 $ 36,760 $ — $ 6,055 $ 158 $ 13 $ 43,405 Ending balance collectively evaluated for impairment $ 781,437 $ 842,682 $ 2,665,282 $ 826,157 $ 514,144 $ 96,902 $ 12,654 $ 5,739,258 |
Schedule of allowance for credit loss allocated to collateral dependent loans | June 30, 2022 Real Estate Accounts Receivable / Equipment Other Total ACL-Loans Allocation (In thousands) RES RE $ 353 $ — $ 6 $ 359 $ 29 MF FIN 36,760 — — 36,760 187 CML & CRE 134 4,935 236 5,305 92 AG & AGRE 158 — — 158 1 CON & MAR — — 3 3 — Total collateral dependent loans $ 37,405 $ 4,935 $ 245 $ 42,585 $ 309 |
Schedule of credit risk profile of loan portfolio | 2022 2021 2020 2019 2018 Prior Revolving Loans TOTAL (In thousands) MTG WHLOC Acceptable and Above $ — $ — $ — $ — $ — $ — $ 900,585 $ 900,585 Total $ — $ — $ — $ — $ — $ — $ 900,585 $ 900,585 RES RE Acceptable and Above 10,316 36,482 49,380 3,327 865 10,439 764,571 875,380 Special Mention (Watch) — — — 61 74 779 — 914 Substandard — — — — — 358 — 358 Total $ 10,316 $ 36,482 $ 49,380 $ 3,388 $ 939 $ 11,576 $ 764,571 $ 876,652 MF FIN Acceptable and Above 874,093 1,049,580 305,633 71,513 12,245 7,739 852,442 3,173,245 Special Mention (Watch) 14,614 12,298 — — — — — 26,912 Substandard 36,760 — — — — — — 36,760 Total $ 925,467 $ 1,061,878 $ 305,633 $ 71,513 $ 12,245 $ 7,739 $ 852,442 $ 3,236,917 HC FIN Acceptable and Above 486,989 331,862 183,035 17,186 — — 144,812 1,163,884 Special Mention (Watch) — 29,462 62,373 6,705 — — — 98,540 Total $ 486,989 $ 361,324 $ 245,408 $ 23,891 $ — $ — $ 144,812 $ 1,262,424 CML & CRE Acceptable and Above 66,173 85,267 31,966 49,946 13,850 15,489 424,308 686,999 Special Mention (Watch) 48 21 1,448 129 — 234 973 2,853 Substandard — 2,000 — 107 175 282 2,742 5,306 Total $ 66,221 $ 87,288 $ 33,414 $ 50,182 $ 14,025 $ 16,005 $ 428,023 $ 695,158 AG & AGRE Acceptable and Above 8,358 7,984 15,952 6,291 3,457 21,141 24,779 87,962 Special Mention (Watch) 14 64 719 431 288 390 44 1,950 Substandard — — — — — 158 — 158 Total $ 8,372 $ 8,048 $ 16,671 $ 6,722 $ 3,745 $ 21,689 $ 24,823 $ 90,070 CON & MAR Acceptable and Above 240 674 394 140 4,743 20 2,638 8,849 Special Mention (Watch) — — 16 — — 3 — 19 Substandard — — — — — 3 — 3 Total $ 240 $ 674 $ 410 $ 140 $ 4,743 $ 26 $ 2,638 $ 8,871 Total Acceptable and Above $ 1,446,169 $ 1,511,849 $ 586,360 $ 148,403 $ 35,160 $ 54,828 $ 3,114,135 $ 6,896,904 Total Special Mention (Watch) $ 14,676 $ 41,845 $ 64,556 $ 7,326 $ 362 $ 1,406 $ 1,017 $ 131,188 Total Substandard $ 36,760 $ 2,000 $ — $ 107 $ 175 $ 801 $ 2,742 $ 42,585 Total Loans $ 1,497,605 $ 1,555,694 $ 650,916 $ 155,836 $ 35,697 $ 57,035 $ 3,117,894 $ 7,070,677 December 31, 2021 MTG WHLOC RES RE MF FIN HC FIN CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Special Mention (Watch) $ — $ 946 $ 27,155 $ 66,406 $ 2,483 $ 3,820 $ 21 $ 100,831 Substandard — 419 36,760 — 6,055 158 13 43,405 Acceptable and Above 781,437 841,736 2,638,127 759,751 511,661 93,082 12,633 5,638,427 Total $ 781,437 $ 843,101 $ 2,702,042 $ 826,157 $ 520,199 $ 97,060 $ 12,667 $ 5,782,663 |
Schedule of aging analysis of the recorded investment in loans | June 30, 2022 30-59 Days 60-89 Days Greater Than Total Total Past Due Past Due 90 Days Past Due Current Loans (In thousands) MTG WHLOC $ — $ — $ — $ — $ 900,585 $ 900,585 RES RE 307 216 176 699 875,953 876,652 MF FIN — — — — 3,236,917 3,236,917 HC FIN — — — — 1,262,424 1,262,424 CML & CRE — — 4,083 4,083 691,075 695,158 AG & AGRE — — — — 90,070 90,070 CON & MAR 39 42 3 84 8,787 8,871 $ 346 $ 258 $ 4,262 $ 4,866 $ 7,065,811 $ 7,070,677 December 31, 2021 30-59 Days 60-89 Days Greater Than Total Total Past Due Past Due 90 Days Past Due Current Loans (In thousands) MTG WHLOC $ — $ — $ — $ — $ 781,437 $ 781,437 RES RE 1,252 287 186 1,725 841,376 843,101 MF FIN — — — — 2,702,042 2,702,042 HC FIN — — — — 826,157 826,157 CML & CRE 591 8 149 748 519,451 520,199 AG & AGRE 37 21 — 58 97,002 97,060 CON & MAR 43 5 40 88 12,579 12,667 $ 1,923 $ 321 $ 375 $ 2,619 $ 5,780,044 $ 5,782,663 |
Schedule of components of impaired loans and specific valuation allowance | December 31, 2021 MTG WHLOC RES RE MF FIN HC FIN CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Impaired loans without a specific allowance: Recorded investment $ — $ 372 $ 36,760 $ — $ 3,912 $ 158 $ 4 $ 41,206 Unpaid principal balance — 372 36,760 — 3,912 158 4 41,206 Impaired loans with a specific allowance: — — Recorded investment — 47 — — 2,143 — 9 2,199 Unpaid principal balance — 47 — — 2,143 — 9 2,199 Specific allowance — 16 — — 867 — 7 890 Total impaired loans: Recorded investment — 419 36,760 — 6,055 158 13 43,405 Unpaid principal balance — 419 36,760 — 6,055 158 13 43,405 Specific allowance — 16 — — 867 — 7 890 |
Schedule of average recorded investment and interest income recognized in impaired loans | For the Three Months Ended June 30, 2021 MTG WHLOC RES RE MF FIN HC FIN CML & CRE AG & AGRE CON & MAR TOTAL Average recorded investment in impaired loans — $ 2,201 $ — $ — $ 6,113 $ 175 $ 6 $ 8,495 Interest income recognized — 16 — — 55 — — 71 For the Six Months Ended June 30, 2021 CML & AG & CON & RES RE MF RE CRE AGRE MAR TOTAL Average recorded investment in impaired loans — $ 2,442 $ — $ — $ 7,254 $ 1,000 $ 7 $ 10,703 Interest income recognized — 27 — — 259 — — 286 |
Schedule of nonaccrual loans and loans past due 90 days or more and still accruing | June 30, December 31, 2022 2021 Total Loans > Total Loans > 90 Days & 90 Days & Nonaccrual Accruing Nonaccrual Accruing (In thousands) RES RE $ 347 $ — $ 362 $ 22 CML & CRE 4,305 — — 149 AG & AGRE 158 — 158 30 CON & MAR 3 — 4 36 $ 4,813 $ — $ 524 $ 237 |
Variable Interest Entities (V_2
Variable Interest Entities (VIEs) (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Variable Interest Entities (VIEs). | |
Schedule reflects the size of VIEs as well as maximum exposure to loss in connection with investments | Total Total Maximum Assets ($ in thousands) Assets Liabilities Exposure to Loss (In thousands) June 30, 2022 Unconsolidated VIEs $ 39,898 $ 14,823 $ 38,414 December 31, 2021 Unconsolidated VIEs $ 36,573 $ 21,014 $ 36,164 |
Regulatory Matters (Tables)
Regulatory Matters (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Regulatory Matters | |
Summary of bank's actual capital amounts and ratios | The Company’s, Merchants Bank’s, and FMBI’s actual capital amounts and ratios are presented in the following tables. Minimum Amount To Be Well Actual Capitalized (1) Amount Ratio Amount Ratio (Dollars in thousands) June 30, 2022 CBLR (Tier 1) capital (1) (i.e., CBLR - leverage ratio) Company $ 1,217,718 12.4 % $ 882,179 > 9 % Merchants Bank 1,171,291 12.3 % 857,175 > 9 % FMBI 31,104 10.3 % 27,088 > 9 % (1) As defined by regulatory agencies. Minimum Amount To Be Well Actual Capitalized (1) Amount Ratio Amount Ratio (Dollars in thousands) December 31, 2021 CBLR (Tier 1) capital (1) (i.e., CBLR - leverage ratio) Company $ 1,138,090 10.4 % $ 928,731 > 8.5 % Merchants Bank 1,088,621 10.3 % 901,188 > 8.5 % FMBI 28,958 9.7 % 25,499 > 8.5 % (1) As defined by regulatory agencies. |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Derivative Financial Instruments | |
Summary of notional amount and fair value of derivative assets and liabilities | Notional Fair Value Amount Balance Sheet Location Asset Liability June 30, 2022 (In thousands) (In thousands) Interest rate lock commitments $ 62,301 Other assets/liabilities $ 299 $ 121 Forward contracts $ 49,750 Other assets/liabilities 114 203 Interest rate swaps $ 25,190 Other assets/liabilities 160 — $ 573 $ 324 Notional Fair Value Amount Balance Sheet Location Asset Liability December 31, 2021 (In thousands) (In thousands) Interest rate lock commitments $ 58,701 Other assets/liabilities $ 264 $ 41 Forward contracts $ 81,250 Other assets/liabilities 86 118 $ 350 $ 159 |
Summarizes the periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income | Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 (In thousands) (In thousands) Derivative gain (loss) included in other income: Interest rate lock commitments $ 837 $ 1,046 $ (45) $ (5,698) Forward contracts (includes pair-off settlements) 1,309 (2,289) 4,459 6,107 Net derivative gains (loss) $ 2,146 $ (1,243) $ 4,414 $ 409 Gain (loss) included in gain on sale of loans: Interest rates swaps - change in fair value 160 — 160 — Hedged loans held for sale - change in fair value (165) — (165) — Net gain (loss) $ (5) $ — $ (5) $ — |
Interest rate swaps | |
Derivative Financial Instruments | |
Summary of notional amount and fair value of derivative assets and liabilities | Notional Fair Value Amount Balance Sheet Location Asset Liability (In thousands) (In thousands) June 30, 2022 $ 181,805 Other assets/liabilities $ 3,662 $ 3,662 December 31, 2021 $ 135,686 Other assets/liabilities $ 1,131 $ 1,131 |
Summarizes the periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income | Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 (In thousands) (In thousands) Gross swap gains $ 2,035 $ 195 $ 2,531 $ 1,081 Gross swap losses 2,035 195 2,531 1,081 Net swap gains (losses) $ — $ — $ — $ — |
Disclosures about Fair Value _2
Disclosures about Fair Value of Assets and Liabilities (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Disclosures about Fair Value of Assets and Liabilities | |
Schedule of fair value measurement of assets measured at fair value on recurring basis | Fair Value Measurements Using Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Fair Assets Inputs Inputs Assets Value (Level 1) (Level 2) (Level 3) (In thousands) June 30, 2022 Mortgage loans in process of securitization $ 323,046 $ — $ 323,046 $ — Available for sale securities: Treasury notes 34,804 34,804 — — Federal agencies 274,852 — 274,852 — Mortgage-backed - Government-sponsored entity (GSE) 15,779 — 15,779 — Mortgage-backed - Non-GSE multi-family 11,379 — 11,379 — Loans held for sale 41,991 — 41,991 — Servicing rights 130,710 — — 130,710 Derivative assets - interest rate lock commitments 299 — — 299 Derivative assets - forward contracts 114 — 114 — Derivative assets - interest rate swaps 160 — 160 — Derivative assets - interest rate swaps (back-to-back) 3,662 — 3,662 — Derivative liabilities - interest rate lock commitments 121 — — 121 Derivative liabilities - forward contracts 203 — 203 — Derivative liabilities - interest rate swaps (back-to-back) 3,662 — 3,662 — December 31, 2021 Mortgage loans in process of securitization $ 569,239 $ — $ 569,239 $ — Available for sale securities: Treasury notes 8,209 8,209 — — Federal agencies 263,295 — 263,295 — Municipals 4,300 — 4,300 — Mortgage-backed - Government-sponsored entity (GSE) 18,360 — 18,360 — Mortgage-backed - Non-GSE multi-family 16,465 — 16,465 — Loans held for sale 48,583 — 48,583 — Servicing rights 110,348 — — 110,348 Derivative assets - interest rate lock commitments 264 — — 264 Derivative assets - forward contracts 86 — 86 — Derivative assets - interest rate swaps (back-to-back) 1,131 — 1,131 — Derivative liabilities - interest rate lock commitments 41 — — 41 Derivative liabilities - forward contracts 118 — 118 — Derivative liabilities - interest rate swaps (back-to-back) 1,131 — 1,131 — |
Schedule of Level 3 reconciliation of recurring fair value measurements | Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 (In thousands) (In thousands) Servicing rights Balance, beginning of period $ 121,036 $ 96,215 $ 110,348 $ 82,604 Additions Originated servicing 5,203 6,527 10,995 16,708 Subtractions Paydowns (3,268) (4,627) (6,017) (8,075) Sales of servicing — (438) — (438) Changes in fair value due to changes in valuation inputs or assumptions used in the valuation model 7,739 654 15,384 7,532 Balance, end of period $ 130,710 $ 98,331 $ 130,710 $ 98,331 Derivative Assets - interest rate lock commitments Balance, beginning of period $ 112 $ 467 $ 264 $ 6,131 Changes in fair value 187 20 35 (5,644) Balance, end of period $ 299 $ 487 $ 299 $ 487 Derivative Liabilities - interest rate lock commitments Balance, beginning of period $ 771 $ 1,080 $ 41 $ — Changes in fair value (650) (1,026) 80 54 Balance, end of period $ 121 $ 54 $ 121 $ 54 |
Schedule of fair value measurement of assets and liabilities measured at fair value on nonrecurring basis | Fair Value Measurements Using Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Fair Assets Inputs Inputs Assets Value (Level 1) (Level 2) (Level 3) (In thousands) June 30, 2022 Collateral dependent loans $ 4,275 $ — $ — $ 4,275 December 31, 2021 Impaired loans (collateral-dependent) $ 4,263 $ — $ — $ 4,263 |
Schedule of quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements other than goodwill | Valuation Weighted Fair Value Technique Unobservable Inputs Range Average (In thousands) At June 30, 2022: Collateral dependent loans $ 4,275 Market comparable properties Marketability discount 82% 82% Servicing rights - Multi-family $ 97,059 Discounted cash flow Discount rate 8% - 13% 8% Constant prepayment rate 0% - 50% 3% Servicing rights - Single-family $ 29,632 Discounted cash flow Discount rate 9% - 10% 9% Constant prepayment rate 7% - 9% 7% Servicing rights - SBA $ 4,019 Discounted cash flow Discount rate 16% 16% Constant prepayment rate 3% - 16% 8% Derivative assets - interest rate lock commitments $ 299 Discounted cash flow Loan closing rates 50% - 99% 81% Derivative liabilities - interest rate lock commitments $ 121 Discounted cash flow Loan closing rates 50% - 99% 81% At December 31, 2021: Collateral-dependent impaired loans $ 4,263 Market comparable properties Marketability discount 44% - 76% 73% Servicing rights - Multi-family $ 84,567 Discounted cash flow Discount rate 8% - 13% 9% Constant prepayment rate 0 - 50% 4% Servicing rights - Single-family $ 23,012 Discounted cash flow Discount rate 9% - 10% 9% Constant prepayment rate 10 - 13% 11% Servicing rights - SBA $ 2,769 Discounted cash flow Discount rate 16% 16% Constant prepayment rate 10% - 13% 12% Derivative assets - interest rate lock commitments $ 264 Discounted cash flow Loan closing rates 63% - 99% 83% Derivative liabilities - interest rate lock commitments $ 41 Discounted cash flow Loan closing rates 63% - 99% 83% |
Schedule of carrying amount and estimated fair value of financial instruments | Fair Value Measurements Using Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Carrying Fair Assets Inputs Inputs Assets Value Value (Level 1) (Level 2) (Level 3) (In thousands) June 30, 2022 Financial assets: Cash and cash equivalents $ 258,146 $ 258,146 $ 258,146 $ — $ — Securities purchased under agreements to resell 3,520 3,520 — 3,520 — FHLB stock 39,130 39,130 — 39,130 — Loans held for sale 2,717,125 2,717,125 — 2,717,125 — Loans receivable, net 7,033,203 7,046,313 — — 7,046,313 Interest receivable 26,184 26,184 — 26,184 — Financial liabilities: Deposits 8,299,738 8,294,601 6,829,667 1,464,934 — Short-term subordinated debt 19,000 19,000 — 19,000 — FHLB advances 851,904 851,711 — 851,711 — Other borrowing 570,000 570,000 — 570,000 — Interest payable 3,805 3,805 — 3,805 — December 31, 2021 Financial assets: Cash and cash equivalents $ 1,032,614 $ 1,032,614 $ 1,032,614 $ — $ — Securities purchased under agreements to resell 5,888 5,888 — 5,888 — FHLB stock 29,588 29,588 — 29,588 — Loans held for sale 3,254,616 3,254,616 — 3,254,616 — Loans receivable, net 5,751,319 5,731,500 — — 5,731,500 Interest receivable 24,103 24,103 — 24,103 — Financial liabilities: Deposits 8,982,613 8,982,680 7,783,553 1,199,127 — Short-term subordinated debt 17,000 17,000 — 17,000 — FHLB advances 556,954 556,925 — 556,925 — Other borrowing 460,000 460,000 — 460,000 — Interest payable 1,469 1,469 — 1,469 — |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Leases. | |
Schedule of balance sheet, income statement and cash flow detail regarding operating leases | June 30, 2022 Balance Sheet (In thousands) Operating lease right-of-of use asset (in other assets) $ 9,189 Operating lease liability (in other liabilities) 9,920 Weighted average remaining lease term (years) 7.2 Weighted average discount rate 2.09% Maturities of lease liabilities: 2022 remaining $ 864 2023 1,812 2024 1,638 2025 1,246 2026 1,277 Thereafter 3,857 Total future minimum lease payments 10,694 Less: imputed interest 774 Total $ 9,920 Three Months Ended June 30, 2022 Income Statement (In thousands) Components of lease expense: Operating lease cost (in occupancy and equipment expense) $ 425 Six Months Ended June 30, 2022 Income Statement (In thousands) Components of lease expense: Operating lease cost (in occupancy and equipment expense) $ 792 Six Months Ended June 30, 2022 Cash Flow Statement (In thousands) Supplemental cash flow information: Operating cash flows from operating leases $ 597 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Earnings Per Share | |
Schedule of computation of earnings per share | Three Month Periods Ended June 30, 2022 2021 Weighted- Per Weighted- Per Net Average Share Net Average Share Income Shares Amount Income Shares Amount (In thousands) (In thousands) Net income $ 53,935 $ 51,417 Dividends on preferred stock (5,729) (5,659) Net income allocated to common shareholders $ 48,206 $ 45,758 Basic earnings per share (1) 43,209,824 $ 1.12 43,174,220 $ 1.06 Effect of dilutive securities-restricted stock awards (1) 125,387 137,268 Diluted earnings per share (1) 43,335,211 $ 1.11 43,311,488 $ 1.06 Six Month Periods Ended June 30, 2022 2021 Weighted- Per Weighted- Per Net Average Share Net Average Share Income Shares Amount Income Shares Amount (In thousands) (In thousands) Net income $ 104,077 $ 113,400 Dividends on preferred stock (11,457) (9,416) Net income allocated to common shareholders $ 92,620 $ 103,984 Basic earnings per share 43,220,198 $ 2.14 43,166,223 $ 2.41 Effect of dilutive securities-restricted stock awards 147,677 127,376 Diluted earnings per share 43,367,875 $ 2.14 43,293,599 $ 2.40 |
Common Stock (Tables)
Common Stock (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Common Stock | |
Schedule of repurchase activity on a cash basis | Three Months Ended June 30, 2022 Dollar value of shares repurchased $ 3,935,333 Shares repurchased (1) 165,037 Average price paid per share $ 23.85 (1) On November 17, 2021, the Company announced an increase in authorization for its stock repurchase program, up to $75,000,000 of common stock, expiring December 31, 2023. On April 29, 2022, the Company entered into a Rule 10b5-1 plan (the “10b5-1 Plan”) with a broker for the repurchase of shares of its common stock commencing on May 3, 2022. The details of this repurchase plan were provided in the Form 8-K filed by the Company on May 24, 2022. |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Segment Information | |
Schedule of business segment financial information | Multi-family Mortgage Mortgage Banking Warehousing Banking Other Total (In thousands) Three Months Ended June 30, 2022 Interest income $ 383 $ 23,247 $ 63,578 $ 2,062 $ 89,270 Interest expense — 5,576 12,036 (373) 17,239 Net interest income 383 17,671 51,542 2,435 72,031 Provision for credit losses 1,153 834 4,225 — 6,212 Net interest income after provision for credit losses (770) 16,837 47,317 2,435 65,819 Noninterest income 49,430 1,350 (10,252) (1,357) 39,171 Noninterest expense 21,959 2,441 2,634 5,923 32,957 Income before income taxes 26,701 15,746 34,431 (4,845) 72,033 Income taxes 7,145 3,878 8,499 (1,424) 18,098 Net income (loss) $ 19,556 $ 11,868 $ 25,932 $ (3,421) $ 53,935 Total assets $ 330,676 $ 2,836,998 $ 7,835,152 $ 83,229 $ 11,086,055 Multi-family Mortgage Mortgage Banking Warehousing Banking Other Total (In thousands) Three Months Ended June 30, 2021 Interest income $ 204 $ 29,935 $ 40,983 $ 1,316 $ 72,438 Interest expense — 1,599 7,216 (784) 8,031 Net interest income 204 28,336 33,767 2,100 64,407 Provision for credit losses — (40) (275) — (315) Net interest income after provision for credit losses 204 28,376 34,042 2,100 64,722 Noninterest income 28,572 3,079 2,613 (1,409) 32,855 Noninterest expense 13,626 2,703 7,496 4,358 28,183 Income before income taxes 15,150 28,752 29,159 (3,667) 69,394 Income taxes 4,179 7,304 7,418 (924) 17,977 Net income (loss) $ 10,971 $ 21,448 $ 21,741 $ (2,743) $ 51,417 Total assets $ 238,165 $ 4,265,162 $ 5,328,684 $ 49,521 $ 9,881,532 Multi-family Mortgage Mortgage Banking Warehousing Banking Other Total (In thousands) Six Months Ended June 30, 2022 Interest income $ 640 $ 43,576 117,303 $ 3,763 $ 165,282 Interest expense — 7,597 20,553 (624) 27,526 Net interest income 640 35,979 96,750 4,387 137,756 Provision for credit losses 1,153 627 6,883 — 8,663 Net interest income after provision for credit losses (513) 35,352 89,867 4,387 129,093 Noninterest income 81,616 3,210 (8,063) (2,995) 73,768 Noninterest expense 38,490 5,367 9,208 10,925 63,990 Income before income taxes 42,613 33,195 72,596 (9,533) 138,871 Income taxes 11,565 8,168 17,900 (2,839) 34,794 Net income $ 31,048 $ 25,027 $ 54,696 $ (6,694) $ 104,077 Total assets $ 330,676 $ 2,836,998 $ 7,835,152 $ 83,229 $ 11,086,055 Multi-family Mortgage Mortgage Banking Warehousing Banking Other Total (In thousands) Six Months Ended June 30, 2021 Interest income $ 411 $ 68,522 $ 80,523 $ 2,531 $ 151,987 Interest expense — 3,323 13,655 (1,361) 15,617 Net interest income 411 65,199 66,868 3,892 136,370 Provision for credit losses — (1,124) 2,472 — 1,348 Net interest income after provision for credit losses 411 66,323 64,396 3,892 135,022 Noninterest income 61,806 7,196 10,291 (2,502) 76,791 Noninterest expense 30,070 5,599 14,621 7,977 58,267 Income before income taxes 32,147 67,920 60,066 (6,587) 153,546 Income taxes 9,215 17,289 15,300 (1,658) 40,146 Net income $ 22,932 $ 50,631 $ 44,766 $ (4,929) $ 113,400 Total assets $ 238,165 $ 4,265,162 $ 5,328,684 $ 49,521 $ 9,881,532 |
Basis of Presentation - Princip
Basis of Presentation - Principles of Consolidation (Details) | Feb. 01, 2021 USD ($) |
Net assets deconsolidated | $ 10,000,000 |
Loans receivable deconsolidated | 66,600,000 |
Borrowings deconsolidated | 52,700,000 |
Gain or loss on deconsolidation | 0 |
Other assets, net | |
Fair value of continuing investments after deconsolidation | $ 10,000,000 |
Basis of Presentation - Impact
Basis of Presentation - Impact of the Adoption of CECL (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Jan. 01, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
Allowance for loan losses | $ 31,344 | $ 28,696 | $ 29,091 | $ 27,500 | ||
Retained earnings, net of tax | $ 737,789 | 657,149 | ||||
Impact from adoption of ASU | ASU 2016-13 | ||||||
Allowance for loan losses | $ (299) | (299) | ||||
ACL - OBCEs (in Other Liabilities) | 5,176 | |||||
Retained earnings, net of tax | (3,648) | |||||
Post ASU Adoption | ASU 2016-13 | ||||||
Allowance for loan losses | 31,045 | |||||
ACL - OBCEs (in Other Liabilities) | 5,176 | |||||
Retained earnings, net of tax | 653,501 | |||||
Mortgage warehouse lines of credit | ||||||
Allowance for loan losses | 1,955 | 2,935 | 3,321 | 4,018 | ||
Mortgage warehouse lines of credit | Impact from adoption of ASU | ASU 2016-13 | ||||||
Allowance for loan losses | 41 | 41 | ||||
Mortgage warehouse lines of credit | Post ASU Adoption | ASU 2016-13 | ||||||
Allowance for loan losses | 1,996 | |||||
Residential real estate | ||||||
Allowance for loan losses | 4,170 | 3,969 | 3,600 | 3,334 | ||
Residential real estate | Impact from adoption of ASU | ASU 2016-13 | ||||||
Allowance for loan losses | 275 | 275 | ||||
Residential real estate | Post ASU Adoption | ASU 2016-13 | ||||||
Allowance for loan losses | 4,445 | |||||
Multi-family financing | ||||||
Allowance for loan losses | 14,084 | 11,678 | 13,396 | 12,041 | ||
Multi-family financing | Impact from adoption of ASU | ASU 2016-13 | ||||||
Allowance for loan losses | 520 | 520 | ||||
Multi-family financing | Post ASU Adoption | ASU 2016-13 | ||||||
Allowance for loan losses | 14,604 | |||||
Healthcare financing | ||||||
Allowance for loan losses | 4,461 | 4,104 | 3,740 | 2,690 | ||
Healthcare financing | Impact from adoption of ASU | ASU 2016-13 | ||||||
Allowance for loan losses | 139 | 139 | ||||
Healthcare financing | Post ASU Adoption | ASU 2016-13 | ||||||
Allowance for loan losses | 4,600 | |||||
Commercial and commercial real estate | ||||||
Allowance for loan losses | 5,879 | 5,239 | 4,264 | 4,641 | ||
Commercial and commercial real estate | Impact from adoption of ASU | ASU 2016-13 | ||||||
Allowance for loan losses | (1,277) | (1,277) | ||||
Commercial and commercial real estate | Post ASU Adoption | ASU 2016-13 | ||||||
Allowance for loan losses | 4,602 | |||||
Agricultural production and real estate | ||||||
Allowance for loan losses | 657 | 611 | 632 | 636 | ||
Agricultural production and real estate | Impact from adoption of ASU | ASU 2016-13 | ||||||
Allowance for loan losses | (18) | (18) | ||||
Agricultural production and real estate | Post ASU Adoption | ASU 2016-13 | ||||||
Allowance for loan losses | 639 | |||||
Consumer and margin loans | ||||||
Allowance for loan losses | 138 | $ 160 | $ 138 | $ 140 | ||
Consumer and margin loans | Impact from adoption of ASU | ASU 2016-13 | ||||||
Allowance for loan losses | 21 | $ 21 | ||||
Consumer and margin loans | Post ASU Adoption | ASU 2016-13 | ||||||
Allowance for loan losses | $ 159 |
Securities Available For Sale -
Securities Available For Sale - Amortized Cost to Approximate Fair Value (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Available-for-sale securities: | ||
Amortized Cost | $ 347,594 | $ 312,590 |
Gross Unrealized Gains | 13 | 77 |
Gross Unrealized Losses | 10,793 | 2,038 |
Fair Value | 336,814 | 310,629 |
Accrued interest on available for sale securities | 500 | 400 |
Treasury notes | ||
Available-for-sale securities: | ||
Amortized Cost | 35,111 | 8,232 |
Gross Unrealized Gains | 1 | 4 |
Gross Unrealized Losses | 308 | 27 |
Fair Value | 34,804 | 8,209 |
Federal agencies | ||
Available-for-sale securities: | ||
Amortized Cost | 284,978 | 264,970 |
Gross Unrealized Losses | 10,126 | 1,675 |
Fair Value | 274,852 | 263,295 |
Municipals | ||
Available-for-sale securities: | ||
Amortized Cost | 4,300 | |
Fair Value | 4,300 | |
Mortgage-backed - Government-sponsored entity (GSE) | ||
Available-for-sale securities: | ||
Amortized Cost | 15,774 | 18,664 |
Gross Unrealized Gains | 12 | 32 |
Gross Unrealized Losses | 7 | 336 |
Fair Value | 15,779 | 18,360 |
Mortgage-backed - Non-GSE multi-family | ||
Available-for-sale securities: | ||
Amortized Cost | 11,731 | 16,424 |
Gross Unrealized Gains | 41 | |
Gross Unrealized Losses | 352 | |
Fair Value | $ 11,379 | $ 16,465 |
Securities Available For Sale_2
Securities Available For Sale - Contractual Maturities (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Contractual Maturities, Amortized Cost | ||
Within one year | $ 54,247 | $ 6,548 |
After one through five years | 265,842 | 270,954 |
Amortized Costs, Gross | 320,089 | 277,502 |
Amortized Costs, Net | 347,594 | 312,590 |
Contractual Maturities, Fair Value | ||
Within one year | 52,983 | 6,551 |
After one through five years | 256,673 | 269,253 |
Fair Value, Gross | 309,656 | 275,804 |
Available-for-sale Securities, Debt Securities, Total | 336,814 | 310,629 |
Mortgage-backed - Government-sponsored entity (GSE) | ||
Contractual Maturities, Amortized Cost | ||
Amortized Costs, Mortgage-backed | 15,774 | 18,664 |
Amortized Costs, Net | 15,774 | 18,664 |
Contractual Maturities, Fair Value | ||
Fair Value, Mortgage-backed | 15,779 | 18,360 |
Available-for-sale Securities, Debt Securities, Total | 15,779 | 18,360 |
Mortgage-backed - Non-GSE multi-family | ||
Contractual Maturities, Amortized Cost | ||
Amortized Costs, Mortgage-backed | 11,731 | 16,424 |
Amortized Costs, Net | 11,731 | 16,424 |
Contractual Maturities, Fair Value | ||
Fair Value, Mortgage-backed | 11,379 | 16,465 |
Available-for-sale Securities, Debt Securities, Total | $ 11,379 | $ 16,465 |
Securities Available For Sale_3
Securities Available For Sale - Sale of securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Securities Available For Sale | ||||
Proceeds from the sale of available for sale securities | $ 0 | $ 34,500 | $ 0 | $ 34,469 |
Gain loss recognized | $ 0 | $ 0 |
Securities Available For Sale_4
Securities Available For Sale - Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | $ 202,512 | $ 247,165 |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, 12 Months or Longer | 107,692 | 24,806 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value, Total | 310,204 | 271,971 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months | 6,506 | 1,866 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, 12 Months or Longer | 4,287 | 172 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | 10,793 | 2,038 |
Treasury notes | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | 32,599 | 7,957 |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, 12 Months or Longer | 1,955 | |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value, Total | 34,554 | 7,957 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months | 263 | 27 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, 12 Months or Longer | 45 | |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | 308 | 27 |
Federal agencies | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | 169,115 | 238,489 |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, 12 Months or Longer | 105,737 | 24,806 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value, Total | 274,852 | 263,295 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months | 5,884 | 1,503 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, 12 Months or Longer | 4,242 | 172 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | 10,126 | 1,675 |
Mortgage-backed - Government-sponsored entity (GSE) | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | 798 | 719 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value, Total | 798 | 719 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months | 7 | 336 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | 7 | $ 336 |
Mortgage-backed - Non-GSE multi-family | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Less than 12 Months | 352 | |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | $ 352 |
Mortgage Loans in Process of _2
Mortgage Loans in Process of Securitization (Details) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Mortgage Loans in Process of Securitization | ||
Unrealized gains included in mortgage loans | $ 4.9 | $ 7 |
Loans and Allowance for Credi_3
Loans and Allowance for Credit Losses on Loans - Summary of Loans By Classification (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
Loans and Allowance for Loan Losses | ||||||
Loans | $ 7,070,677 | |||||
Less: ACL-Loans | 37,474 | $ 32,102 | ||||
Loans receivable | 7,033,203 | |||||
Loans | $ 5,782,663 | |||||
Allowance for loan losses | 31,344 | $ 28,696 | $ 29,091 | $ 27,500 | ||
Loans Receivable | 5,751,319 | |||||
Accrued interest on loans, excluded from amortized cost of loans | 18,000 | 15,400 | ||||
Mortgage warehouse lines of credit | ||||||
Loans and Allowance for Loan Losses | ||||||
Loans | 900,585 | |||||
Less: ACL-Loans | 2,422 | 1,941 | ||||
Loans | 781,437 | |||||
Allowance for loan losses | 1,955 | 2,935 | 3,321 | 4,018 | ||
Residential real estate | ||||||
Loans and Allowance for Loan Losses | ||||||
Loans | 876,652 | |||||
Less: ACL-Loans | 4,910 | 4,547 | ||||
Loans | 843,101 | |||||
Allowance for loan losses | 4,170 | 3,969 | 3,600 | 3,334 | ||
Healthcare financing | ||||||
Loans and Allowance for Loan Losses | ||||||
Loans | 1,262,424 | |||||
Less: ACL-Loans | 7,936 | 5,618 | ||||
Loans | 826,157 | |||||
Allowance for loan losses | 4,461 | 4,104 | 3,740 | 2,690 | ||
Multi-family financing | ||||||
Loans and Allowance for Loan Losses | ||||||
Loans | 3,236,917 | |||||
Less: ACL-Loans | 16,364 | 15,131 | ||||
Loans | 2,702,042 | |||||
Allowance for loan losses | 14,084 | 11,678 | 13,396 | 12,041 | ||
Commercial and commercial real estate | ||||||
Loans and Allowance for Loan Losses | ||||||
Loans | 695,158 | |||||
Less: ACL-Loans | 5,195 | 4,102 | ||||
Loans | 520,199 | |||||
Allowance for loan losses | 5,879 | 5,239 | 4,264 | 4,641 | ||
Commercial and commercial real estate | Loans funded through PPP, CARES Act | ||||||
Loans and Allowance for Loan Losses | ||||||
Loans | 7,000 | |||||
Agricultural production and real estate | ||||||
Loans and Allowance for Loan Losses | ||||||
Loans | 90,070 | |||||
Less: ACL-Loans | 551 | 597 | ||||
Loans | 97,060 | |||||
Allowance for loan losses | 657 | 611 | 632 | 636 | ||
Consumer and margin loans | ||||||
Loans and Allowance for Loan Losses | ||||||
Loans | 8,871 | |||||
Less: ACL-Loans | $ 96 | $ 166 | ||||
Loans | 12,667 | |||||
Allowance for loan losses | $ 138 | $ 160 | $ 138 | $ 140 |
Loans and Allowance for Credi_4
Loans and Allowance for Credit Losses on Loans - Allowance For Credit-Loan Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Allowance for credit losses | |||||
Balance, beginning of period | $ 32,102 | ||||
Provision for credit losses | 4,768 | $ 6,749 | |||
Loans charged to the allowance | (47) | (978) | |||
Recoveries of loans previously charged off | 651 | 658 | |||
Balance, end of period | 37,474 | 37,474 | |||
Allowance for loan losses | |||||
Balance, beginning of period | $ 29,091 | 31,344 | $ 27,500 | ||
Provision for credit losses | (315) | 1,348 | |||
Loans charged to the allowance | 86 | 160 | |||
Recoveries of loans previously charged off | (6) | 8 | |||
Balance, end of period | 28,696 | 28,696 | |||
Ending balance: individually evaluated for impairment | $ 890 | ||||
Ending balance: collectively evaluated for impairment | 30,454 | ||||
Loans | |||||
Ending balance | 5,782,663 | ||||
Ending balance individually evaluated for impairment | 43,405 | ||||
Ending balance: collectively evaluated for impairment | 5,739,258 | ||||
ACL Loans | |||||
Provision for credit losses | 6,212 | (315) | 8,663 | 1,348 | |
Provision for credit losses, ACL Loans | 4,768 | 6,749 | |||
Provision for credit losses, ACL-OBCE's | 200 | 800 | |||
Provision for credit losses, Freddie Mac-sponsored Q-series securitization transaction | 1,200 | 1,200 | |||
ASU 2016-13 | Impact from adoption of ASU | |||||
Allowance for loan losses | |||||
Balance, beginning of period | (299) | ||||
Mortgage warehouse lines of credit | |||||
Allowance for credit losses | |||||
Balance, beginning of period | 1,941 | ||||
Provision for credit losses | 481 | 426 | |||
Balance, end of period | 2,422 | 2,422 | |||
Allowance for loan losses | |||||
Balance, beginning of period | 3,321 | 1,955 | 4,018 | ||
Provision for credit losses | (386) | (1,083) | |||
Balance, end of period | 2,935 | 2,935 | |||
Ending balance: collectively evaluated for impairment | 1,955 | ||||
Loans | |||||
Ending balance | 781,437 | ||||
Ending balance: collectively evaluated for impairment | 781,437 | ||||
ACL Loans | |||||
Provision for credit losses, ACL Loans | 481 | 426 | |||
Mortgage warehouse lines of credit | ASU 2016-13 | Impact from adoption of ASU | |||||
Allowance for loan losses | |||||
Balance, beginning of period | 41 | ||||
Residential real estate | |||||
Allowance for credit losses | |||||
Balance, beginning of period | 4,547 | ||||
Provision for credit losses | 363 | 465 | |||
Balance, end of period | 4,910 | 4,910 | |||
Allowance for loan losses | |||||
Balance, beginning of period | 3,600 | 4,170 | 3,334 | ||
Provision for credit losses | 371 | 637 | |||
Loans charged to the allowance | 2 | 2 | |||
Balance, end of period | 3,969 | 3,969 | |||
Ending balance: individually evaluated for impairment | 16 | ||||
Ending balance: collectively evaluated for impairment | 4,154 | ||||
Loans | |||||
Ending balance | 843,101 | ||||
Ending balance individually evaluated for impairment | 419 | ||||
Ending balance: collectively evaluated for impairment | 842,682 | ||||
ACL Loans | |||||
Provision for credit losses, ACL Loans | 363 | 465 | |||
Residential real estate | ASU 2016-13 | Impact from adoption of ASU | |||||
Allowance for loan losses | |||||
Balance, beginning of period | 275 | ||||
Multi-family financing | |||||
Allowance for credit losses | |||||
Balance, beginning of period | 15,131 | ||||
Provision for credit losses | 1,233 | 1,760 | |||
Balance, end of period | 16,364 | 16,364 | |||
Allowance for loan losses | |||||
Balance, beginning of period | 13,396 | 14,084 | 12,041 | ||
Provision for credit losses | (1,718) | (363) | |||
Balance, end of period | 11,678 | 11,678 | |||
Ending balance: collectively evaluated for impairment | 14,084 | ||||
Loans | |||||
Ending balance | 2,702,042 | ||||
Ending balance individually evaluated for impairment | 36,760 | ||||
Ending balance: collectively evaluated for impairment | 2,665,282 | ||||
ACL Loans | |||||
Provision for credit losses, ACL Loans | 1,233 | 1,760 | |||
Multi-family financing | ASU 2016-13 | Impact from adoption of ASU | |||||
Allowance for loan losses | |||||
Balance, beginning of period | 520 | ||||
Healthcare financing | |||||
Allowance for credit losses | |||||
Balance, beginning of period | 5,618 | ||||
Provision for credit losses | 2,318 | 3,336 | |||
Balance, end of period | 7,936 | 7,936 | |||
Allowance for loan losses | |||||
Balance, beginning of period | 3,740 | 4,461 | 2,690 | ||
Provision for credit losses | 364 | 1,414 | |||
Balance, end of period | 4,104 | 4,104 | |||
Ending balance: collectively evaluated for impairment | 4,461 | ||||
Loans | |||||
Ending balance | 826,157 | ||||
Ending balance: collectively evaluated for impairment | 826,157 | ||||
ACL Loans | |||||
Provision for credit losses, ACL Loans | 2,318 | 3,336 | |||
Healthcare financing | ASU 2016-13 | Impact from adoption of ASU | |||||
Allowance for loan losses | |||||
Balance, beginning of period | 139 | ||||
Commercial and commercial real estate | |||||
Allowance for credit losses | |||||
Balance, beginning of period | 4,102 | ||||
Provision for credit losses | 474 | 905 | |||
Loans charged to the allowance | (32) | (963) | |||
Recoveries of loans previously charged off | 651 | 651 | |||
Balance, end of period | 5,195 | 5,195 | |||
Allowance for loan losses | |||||
Balance, beginning of period | 4,264 | 5,879 | 4,641 | ||
Provision for credit losses | 1,059 | 750 | |||
Loans charged to the allowance | 84 | 152 | |||
Balance, end of period | 5,239 | 5,239 | |||
Ending balance: individually evaluated for impairment | 867 | ||||
Ending balance: collectively evaluated for impairment | 5,012 | ||||
Loans | |||||
Ending balance | 520,199 | ||||
Ending balance individually evaluated for impairment | 6,055 | ||||
Ending balance: collectively evaluated for impairment | 514,144 | ||||
ACL Loans | |||||
Provision for credit losses, ACL Loans | 474 | 905 | |||
Commercial and commercial real estate | ASU 2016-13 | Impact from adoption of ASU | |||||
Allowance for loan losses | |||||
Balance, beginning of period | (1,277) | ||||
Commercial and commercial real estate | Loans funded through PPP, CARES Act | |||||
Loans | |||||
Ending balance | 7,000 | ||||
Agricultural production and real estate | |||||
Allowance for credit losses | |||||
Balance, beginning of period | 597 | ||||
Provision for credit losses | (46) | (88) | |||
Balance, end of period | 551 | 551 | |||
Allowance for loan losses | |||||
Balance, beginning of period | 632 | 657 | 636 | ||
Provision for credit losses | (21) | (25) | |||
Balance, end of period | 611 | 611 | |||
Ending balance: collectively evaluated for impairment | 657 | ||||
Loans | |||||
Ending balance | 97,060 | ||||
Ending balance individually evaluated for impairment | 158 | ||||
Ending balance: collectively evaluated for impairment | 96,902 | ||||
ACL Loans | |||||
Provision for credit losses, ACL Loans | (46) | (88) | |||
Agricultural production and real estate | ASU 2016-13 | Impact from adoption of ASU | |||||
Allowance for loan losses | |||||
Balance, beginning of period | (18) | ||||
Consumer and margin loans | |||||
Allowance for credit losses | |||||
Balance, beginning of period | 166 | ||||
Provision for credit losses | (55) | (55) | |||
Loans charged to the allowance | (15) | (15) | |||
Recoveries of loans previously charged off | 7 | ||||
Balance, end of period | 96 | 96 | |||
Allowance for loan losses | |||||
Balance, beginning of period | 138 | 138 | 140 | ||
Provision for credit losses | 16 | 18 | |||
Loans charged to the allowance | 6 | ||||
Recoveries of loans previously charged off | (6) | 8 | |||
Balance, end of period | $ 160 | $ 160 | |||
Ending balance: individually evaluated for impairment | 7 | ||||
Ending balance: collectively evaluated for impairment | 131 | ||||
Loans | |||||
Ending balance | 12,667 | ||||
Ending balance individually evaluated for impairment | 13 | ||||
Ending balance: collectively evaluated for impairment | $ 12,654 | ||||
ACL Loans | |||||
Provision for credit losses, ACL Loans | $ (55) | (55) | |||
Consumer and margin loans | ASU 2016-13 | Impact from adoption of ASU | |||||
Allowance for loan losses | |||||
Balance, beginning of period | $ 21 |
Loans and Allowance for Credi_5
Loans and Allowance for Credit Losses on Loans - Amortized cost basis and ACL (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Mar. 31, 2022 |
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | $ 7,070,677 | |
Allowance for credit losses on loans | 37,474 | $ 32,102 |
Collateral Dependent Loans | ||
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | 42,585 | |
Allowance for credit losses on loans | 309 | |
Real Estate | ||
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | 37,405 | |
Accounts Receivable Or Equipment | ||
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | 4,935 | |
Other Collateralized Assets | ||
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | 245 | |
Mortgage warehouse lines of credit | ||
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | 900,585 | |
Allowance for credit losses on loans | 2,422 | 1,941 |
Residential real estate | ||
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | 876,652 | |
Allowance for credit losses on loans | 4,910 | 4,547 |
Residential real estate | Collateral Dependent Loans | ||
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | 359 | |
Allowance for credit losses on loans | 29 | |
Residential real estate | Real Estate | ||
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | 353 | |
Residential real estate | Other Collateralized Assets | ||
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | 6 | |
Multi-family financing | ||
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | 3,236,917 | |
Allowance for credit losses on loans | 16,364 | 15,131 |
Multi-family financing | Collateral Dependent Loans | ||
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | 36,760 | |
Allowance for credit losses on loans | 187 | |
Multi-family financing | Real Estate | ||
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | 36,760 | |
Healthcare financing | ||
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | 1,262,424 | |
Allowance for credit losses on loans | 7,936 | 5,618 |
Commercial and commercial real estate | ||
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | 695,158 | |
Allowance for credit losses on loans | 5,195 | 4,102 |
Commercial and commercial real estate | Collateral Dependent Loans | ||
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | 5,305 | |
Allowance for credit losses on loans | 92 | |
Commercial and commercial real estate | Real Estate | ||
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | 134 | |
Commercial and commercial real estate | Accounts Receivable Or Equipment | ||
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | 4,935 | |
Commercial and commercial real estate | Other Collateralized Assets | ||
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | 236 | |
Agricultural production and real estate | ||
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | 90,070 | |
Allowance for credit losses on loans | 551 | 597 |
Agricultural production and real estate | Collateral Dependent Loans | ||
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | 158 | |
Allowance for credit losses on loans | 1 | |
Agricultural production and real estate | Real Estate | ||
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | 158 | |
Consumer and margin loans | ||
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | 8,871 | |
Allowance for credit losses on loans | 96 | $ 166 |
Consumer and margin loans | Collateral Dependent Loans | ||
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | 3 | |
Consumer and margin loans | Other Collateralized Assets | ||
Loans and Allowance for Credit Losses on Loans | ||
Amortized Cost Basis | $ 3 |
Loans and Allowance for Credi_6
Loans and Allowance for Credit Losses on Loans - Credit Risk Profile of Loan Portfolio (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Credit risk profile of portfolio | ||
2022 | $ 1,497,605 | |
2021 | 1,555,694 | |
2020 | 650,916 | |
2019 | 155,836 | |
2018 | 35,697 | |
Prior | 57,035 | |
Revolving Loans | 3,117,894 | |
Loans | 7,070,677 | |
Loans | $ 5,782,663 | |
Acceptable and Above | ||
Credit risk profile of portfolio | ||
2022 | 1,446,169 | |
2021 | 1,511,849 | |
2020 | 586,360 | |
2019 | 148,403 | |
2018 | 35,160 | |
Prior | 54,828 | |
Revolving Loans | 3,114,135 | |
Loans | 6,896,904 | |
Loans | 5,638,427 | |
Special Mention (Watch) | ||
Credit risk profile of portfolio | ||
2022 | 14,676 | |
2021 | 41,845 | |
2020 | 64,556 | |
2019 | 7,326 | |
2018 | 362 | |
Prior | 1,406 | |
Revolving Loans | 1,017 | |
Loans | 131,188 | |
Loans | 100,831 | |
Substandard | ||
Credit risk profile of portfolio | ||
2022 | 36,760 | |
2021 | 2,000 | |
2019 | 107 | |
2018 | 175 | |
Prior | 801 | |
Revolving Loans | 2,742 | |
Loans | 42,585 | |
Loans | 43,405 | |
Mortgage warehouse lines of credit | ||
Credit risk profile of portfolio | ||
Revolving Loans | 900,585 | |
Loans | 900,585 | |
Loans | 781,437 | |
Mortgage warehouse lines of credit | Acceptable and Above | ||
Credit risk profile of portfolio | ||
Revolving Loans | 900,585 | |
Loans | 900,585 | |
Loans | 781,437 | |
Residential real estate | ||
Credit risk profile of portfolio | ||
2022 | 10,316 | |
2021 | 36,482 | |
2020 | 49,380 | |
2019 | 3,388 | |
2018 | 939 | |
Prior | 11,576 | |
Revolving Loans | 764,571 | |
Loans | 876,652 | |
Loans | 843,101 | |
Residential real estate | Acceptable and Above | ||
Credit risk profile of portfolio | ||
2022 | 10,316 | |
2021 | 36,482 | |
2020 | 49,380 | |
2019 | 3,327 | |
2018 | 865 | |
Prior | 10,439 | |
Revolving Loans | 764,571 | |
Loans | 875,380 | |
Loans | 841,736 | |
Residential real estate | Special Mention (Watch) | ||
Credit risk profile of portfolio | ||
2019 | 61 | |
2018 | 74 | |
Prior | 779 | |
Loans | 914 | |
Loans | 946 | |
Residential real estate | Substandard | ||
Credit risk profile of portfolio | ||
Prior | 358 | |
Loans | 358 | |
Loans | 419 | |
Multi-family financing | ||
Credit risk profile of portfolio | ||
2022 | 925,467 | |
2021 | 1,061,878 | |
2020 | 305,633 | |
2019 | 71,513 | |
2018 | 12,245 | |
Prior | 7,739 | |
Revolving Loans | 852,442 | |
Loans | 3,236,917 | |
Loans | 2,702,042 | |
Multi-family financing | Acceptable and Above | ||
Credit risk profile of portfolio | ||
2022 | 874,093 | |
2021 | 1,049,580 | |
2020 | 305,633 | |
2019 | 71,513 | |
2018 | 12,245 | |
Prior | 7,739 | |
Revolving Loans | 852,442 | |
Loans | 3,173,245 | |
Loans | 2,638,127 | |
Multi-family financing | Special Mention (Watch) | ||
Credit risk profile of portfolio | ||
2022 | 14,614 | |
2021 | 12,298 | |
Loans | 26,912 | |
Loans | 27,155 | |
Multi-family financing | Substandard | ||
Credit risk profile of portfolio | ||
2022 | 36,760 | |
Loans | 36,760 | |
Loans | 36,760 | |
Healthcare financing | ||
Credit risk profile of portfolio | ||
2022 | 486,989 | |
2021 | 361,324 | |
2020 | 245,408 | |
2019 | 23,891 | |
Revolving Loans | 144,812 | |
Loans | 1,262,424 | |
Loans | 826,157 | |
Healthcare financing | Acceptable and Above | ||
Credit risk profile of portfolio | ||
2022 | 486,989 | |
2021 | 331,862 | |
2020 | 183,035 | |
2019 | 17,186 | |
Revolving Loans | 144,812 | |
Loans | 1,163,884 | |
Loans | 759,751 | |
Healthcare financing | Special Mention (Watch) | ||
Credit risk profile of portfolio | ||
2021 | 29,462 | |
2020 | 62,373 | |
2019 | 6,705 | |
Loans | 98,540 | |
Loans | 66,406 | |
Commercial and commercial real estate | ||
Credit risk profile of portfolio | ||
2022 | 66,221 | |
2021 | 87,288 | |
2020 | 33,414 | |
2019 | 50,182 | |
2018 | 14,025 | |
Prior | 16,005 | |
Revolving Loans | 428,023 | |
Loans | 695,158 | |
Loans | 520,199 | |
Commercial and commercial real estate | Acceptable and Above | ||
Credit risk profile of portfolio | ||
2022 | 66,173 | |
2021 | 85,267 | |
2020 | 31,966 | |
2019 | 49,946 | |
2018 | 13,850 | |
Prior | 15,489 | |
Revolving Loans | 424,308 | |
Loans | 686,999 | |
Loans | 511,661 | |
Commercial and commercial real estate | Special Mention (Watch) | ||
Credit risk profile of portfolio | ||
2022 | 48 | |
2021 | 21 | |
2020 | 1,448 | |
2019 | 129 | |
Prior | 234 | |
Revolving Loans | 973 | |
Loans | 2,853 | |
Loans | 2,483 | |
Commercial and commercial real estate | Substandard | ||
Credit risk profile of portfolio | ||
2021 | 2,000 | |
2019 | 107 | |
2018 | 175 | |
Prior | 282 | |
Revolving Loans | 2,742 | |
Loans | 5,306 | |
Loans | 6,055 | |
Agricultural production and real estate | ||
Credit risk profile of portfolio | ||
2022 | 8,372 | |
2021 | 8,048 | |
2020 | 16,671 | |
2019 | 6,722 | |
2018 | 3,745 | |
Prior | 21,689 | |
Revolving Loans | 24,823 | |
Loans | 90,070 | |
Loans | 97,060 | |
Agricultural production and real estate | Acceptable and Above | ||
Credit risk profile of portfolio | ||
2022 | 8,358 | |
2021 | 7,984 | |
2020 | 15,952 | |
2019 | 6,291 | |
2018 | 3,457 | |
Prior | 21,141 | |
Revolving Loans | 24,779 | |
Loans | 87,962 | |
Loans | 93,082 | |
Agricultural production and real estate | Special Mention (Watch) | ||
Credit risk profile of portfolio | ||
2022 | 14 | |
2021 | 64 | |
2020 | 719 | |
2019 | 431 | |
2018 | 288 | |
Prior | 390 | |
Revolving Loans | 44 | |
Loans | 1,950 | |
Loans | 3,820 | |
Agricultural production and real estate | Substandard | ||
Credit risk profile of portfolio | ||
Prior | 158 | |
Loans | 158 | |
Loans | 158 | |
Consumer and margin loans | ||
Credit risk profile of portfolio | ||
2022 | 240 | |
2021 | 674 | |
2020 | 410 | |
2019 | 140 | |
2018 | 4,743 | |
Prior | 26 | |
Revolving Loans | 2,638 | |
Loans | 8,871 | |
Loans | 12,667 | |
Consumer and margin loans | Acceptable and Above | ||
Credit risk profile of portfolio | ||
2022 | 240 | |
2021 | 674 | |
2020 | 394 | |
2019 | 140 | |
2018 | 4,743 | |
Prior | 20 | |
Revolving Loans | 2,638 | |
Loans | 8,849 | |
Loans | 12,633 | |
Consumer and margin loans | Special Mention (Watch) | ||
Credit risk profile of portfolio | ||
2020 | 16 | |
Prior | 3 | |
Loans | 19 | |
Loans | 21 | |
Consumer and margin loans | Substandard | ||
Credit risk profile of portfolio | ||
Prior | 3 | |
Loans | $ 3 | |
Loans | $ 13 |
Loans and Allowance for Credi_7
Loans and Allowance for Credit Losses on Loans - Aging Analysis Of The Recorded Investment In Loans (Details) | Jun. 30, 2022 USD ($) loan | Dec. 31, 2021 USD ($) loan |
Aging analysis of loan portfolio | ||
Loans | $ 7,070,677,000 | |
Loans | $ 5,782,663,000 | |
Number of loans modified in accordance with CARES Act | loan | 1 | 1 |
Amount of outstanding loans modified in accordance with CARES Act | $ 36,800,000 | $ 36,800,000 |
Loans modified in accordance with CARES Act, payments due | 0 | |
Total Past Due | ||
Aging analysis of loan portfolio | ||
Loans | 4,866,000 | |
Loans | 2,619,000 | |
30-59 Days Past Due | ||
Aging analysis of loan portfolio | ||
Loans | 346,000 | |
Loans | 1,923,000 | |
60-89 Days Past Due | ||
Aging analysis of loan portfolio | ||
Loans | 258,000 | |
Loans | 321,000 | |
Greater Than 90 Days | ||
Aging analysis of loan portfolio | ||
Loans | 4,262,000 | |
Loans | 375,000 | |
Current. | ||
Aging analysis of loan portfolio | ||
Loans | 7,065,811,000 | |
Loans | 5,780,044,000 | |
Mortgage warehouse lines of credit | ||
Aging analysis of loan portfolio | ||
Loans | 900,585,000 | |
Loans | 781,437,000 | |
Mortgage warehouse lines of credit | Current. | ||
Aging analysis of loan portfolio | ||
Loans | 900,585,000 | |
Loans | 781,437,000 | |
Residential real estate | ||
Aging analysis of loan portfolio | ||
Loans | 876,652,000 | |
Loans | 843,101,000 | |
Residential real estate | Total Past Due | ||
Aging analysis of loan portfolio | ||
Loans | 699,000 | |
Loans | 1,725,000 | |
Residential real estate | 30-59 Days Past Due | ||
Aging analysis of loan portfolio | ||
Loans | 307,000 | |
Loans | 1,252,000 | |
Residential real estate | 60-89 Days Past Due | ||
Aging analysis of loan portfolio | ||
Loans | 216,000 | |
Loans | 287,000 | |
Residential real estate | Greater Than 90 Days | ||
Aging analysis of loan portfolio | ||
Loans | 176,000 | |
Loans | 186,000 | |
Residential real estate | Current. | ||
Aging analysis of loan portfolio | ||
Loans | 875,953,000 | |
Loans | 841,376,000 | |
Healthcare financing | ||
Aging analysis of loan portfolio | ||
Loans | 1,262,424,000 | |
Loans | 826,157,000 | |
Healthcare financing | Current. | ||
Aging analysis of loan portfolio | ||
Loans | 1,262,424,000 | |
Loans | 826,157,000 | |
Multi-family financing | ||
Aging analysis of loan portfolio | ||
Loans | 3,236,917,000 | |
Loans | 2,702,042,000 | |
Multi-family financing | Current. | ||
Aging analysis of loan portfolio | ||
Loans | 3,236,917,000 | |
Loans | 2,702,042,000 | |
Commercial and commercial real estate | ||
Aging analysis of loan portfolio | ||
Loans | 695,158,000 | |
Loans | 520,199,000 | |
Commercial and commercial real estate | Total Past Due | ||
Aging analysis of loan portfolio | ||
Loans | 4,083,000 | |
Loans | 748,000 | |
Commercial and commercial real estate | 30-59 Days Past Due | ||
Aging analysis of loan portfolio | ||
Loans | 591,000 | |
Commercial and commercial real estate | 60-89 Days Past Due | ||
Aging analysis of loan portfolio | ||
Loans | 8,000 | |
Commercial and commercial real estate | Greater Than 90 Days | ||
Aging analysis of loan portfolio | ||
Loans | 4,083,000 | |
Loans | 149,000 | |
Commercial and commercial real estate | Current. | ||
Aging analysis of loan portfolio | ||
Loans | 691,075,000 | |
Loans | 519,451,000 | |
Commercial and commercial real estate | Government guaranteed SBA loans | 30-59 Days Past Due | ||
Aging analysis of loan portfolio | ||
Loans | 0 | |
Loans | 3,200,000 | |
Commercial and commercial real estate | Government guaranteed SBA loans | Greater Than 90 Days | ||
Aging analysis of loan portfolio | ||
Loans | 0 | |
Loans | 274,000 | |
Agricultural production and real estate | ||
Aging analysis of loan portfolio | ||
Loans | 90,070,000 | |
Loans | 97,060,000 | |
Agricultural production and real estate | Total Past Due | ||
Aging analysis of loan portfolio | ||
Loans | 58,000 | |
Agricultural production and real estate | 30-59 Days Past Due | ||
Aging analysis of loan portfolio | ||
Loans | 37,000 | |
Agricultural production and real estate | 60-89 Days Past Due | ||
Aging analysis of loan portfolio | ||
Loans | 21,000 | |
Agricultural production and real estate | Current. | ||
Aging analysis of loan portfolio | ||
Loans | 90,070,000 | |
Loans | 97,002,000 | |
Consumer and margin loans | ||
Aging analysis of loan portfolio | ||
Loans | 8,871,000 | |
Loans | 12,667,000 | |
Consumer and margin loans | Total Past Due | ||
Aging analysis of loan portfolio | ||
Loans | 84,000 | |
Loans | 88,000 | |
Consumer and margin loans | 30-59 Days Past Due | ||
Aging analysis of loan portfolio | ||
Loans | 39,000 | |
Loans | 43,000 | |
Consumer and margin loans | 60-89 Days Past Due | ||
Aging analysis of loan portfolio | ||
Loans | 42,000 | |
Loans | 5,000 | |
Consumer and margin loans | Greater Than 90 Days | ||
Aging analysis of loan portfolio | ||
Loans | 3,000 | |
Loans | 40,000 | |
Consumer and margin loans | Current. | ||
Aging analysis of loan portfolio | ||
Loans | $ 8,787,000 | |
Loans | $ 12,579,000 |
Loans and Allowance for Credi_8
Loans and Allowance for Credit Losses on Loans - Impaired Loans and Specific Valuation Allowance (Details) $ in Thousands | Dec. 31, 2021 USD ($) |
Impaired loans without a specific allowance: | |
Recorded investment | $ 41,206 |
Unpaid principal balance | 41,206 |
Impaired loans with a specific allowance: | |
Recorded investment | 2,199 |
Unpaid principal balance | 2,199 |
Specific allowance | 890 |
Total impaired loans: | |
Recorded investments | 43,405 |
Unpaid principal balance | 43,405 |
Specific allowance | 890 |
Residential real estate | |
Impaired loans without a specific allowance: | |
Recorded investment | 372 |
Unpaid principal balance | 372 |
Impaired loans with a specific allowance: | |
Recorded investment | 47 |
Unpaid principal balance | 47 |
Specific allowance | 16 |
Total impaired loans: | |
Recorded investments | 419 |
Unpaid principal balance | 419 |
Specific allowance | 16 |
Multi-family financing | |
Impaired loans without a specific allowance: | |
Recorded investment | 36,760 |
Unpaid principal balance | 36,760 |
Total impaired loans: | |
Recorded investments | 36,760 |
Unpaid principal balance | 36,760 |
Commercial and commercial real estate | |
Impaired loans without a specific allowance: | |
Recorded investment | 3,912 |
Unpaid principal balance | 3,912 |
Impaired loans with a specific allowance: | |
Recorded investment | 2,143 |
Unpaid principal balance | 2,143 |
Specific allowance | 867 |
Total impaired loans: | |
Recorded investments | 6,055 |
Unpaid principal balance | 6,055 |
Specific allowance | 867 |
Agricultural production and real estate | |
Impaired loans without a specific allowance: | |
Recorded investment | 158 |
Unpaid principal balance | 158 |
Total impaired loans: | |
Recorded investments | 158 |
Unpaid principal balance | 158 |
Consumer and margin loans | |
Impaired loans without a specific allowance: | |
Recorded investment | 4 |
Unpaid principal balance | 4 |
Impaired loans with a specific allowance: | |
Recorded investment | 9 |
Unpaid principal balance | 9 |
Specific allowance | 7 |
Total impaired loans: | |
Recorded investments | 13 |
Unpaid principal balance | 13 |
Specific allowance | $ 7 |
Loans and Allowance for Credi_9
Loans and Allowance for Credit Losses on Loans - Average Recorded Investment and Interest Income Recognized (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2021 | Jun. 30, 2021 | |
Impaired Loans | ||
Average recorded investment in impaired loans | $ 8,495 | $ 10,703 |
Interest income recognized | 71 | 286 |
Residential real estate | ||
Impaired Loans | ||
Average recorded investment in impaired loans | 2,201 | 2,442 |
Interest income recognized | 16 | 27 |
Commercial and commercial real estate | ||
Impaired Loans | ||
Average recorded investment in impaired loans | 6,113 | 7,254 |
Interest income recognized | 55 | 259 |
Agricultural production and real estate | ||
Impaired Loans | ||
Average recorded investment in impaired loans | 175 | 1,000 |
Consumer and margin loans | ||
Impaired Loans | ||
Average recorded investment in impaired loans | $ 6 | $ 7 |
Loans and Allowance for Cred_10
Loans and Allowance for Credit Losses on Loans - Non Accrual Loans and Loans Past Due 90 Days Or More and Still Accruing (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Loan portfolio past due loans | ||
Nonaccrual | $ 4,813 | $ 524 |
Total Loans Greater than 90 Days & Accruing | 237 | |
Residential real estate | ||
Loan portfolio past due loans | ||
Nonaccrual | 347 | 362 |
Total Loans Greater than 90 Days & Accruing | 22 | |
Commercial and commercial real estate | ||
Loan portfolio past due loans | ||
Nonaccrual | 4,305 | |
Total Loans Greater than 90 Days & Accruing | 149 | |
Agricultural production and real estate | ||
Loan portfolio past due loans | ||
Nonaccrual | 158 | 158 |
Total Loans Greater than 90 Days & Accruing | 30 | |
Consumer and margin loans | ||
Loan portfolio past due loans | ||
Nonaccrual | $ 3 | 4 |
Total Loans Greater than 90 Days & Accruing | $ 36 |
Loans and Allowance for Cred_11
Loans and Allowance for Credit Losses on Loans - Troubled Debt and Modifications (Details) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2022 USD ($) loan item | Jun. 30, 2021 loan item | Jun. 30, 2022 USD ($) loan item | Jun. 30, 2021 item loan | Dec. 31, 2021 USD ($) loan | |
Troubled debt and modifications | |||||
Number of troubled debt restructuring | 0 | 0 | 0 | 0 | |
Number of loans restructured defaulted | item | 0 | 0 | 0 | 0 | |
Number of loans modified in accordance with CARES Act | 1 | 1 | 1 | ||
Amount of outstanding loans modified in accordance with CARES Act | $ | $ 36.8 | $ 36.8 | $ 36.8 | ||
Residential real estate | |||||
Troubled debt and modifications | |||||
Number of loans in the process of foreclosure | 0 | 0 |
Loans and Allowance for Cred_12
Loans and Allowance for Credit Losses on Loans - Narrative (Details) | 6 Months Ended | ||||
May 05, 2022 USD ($) security | May 07, 2021 USD ($) security | Jun. 30, 2022 USD ($) | Jun. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | |
Loans and Leases Receivable Disclosure [Line Items] | |||||
Proceeds from sale of loans receivable | $ 262,086,000 | ||||
Purchases of available for sale securities | $ 47,866,000 | 130,204,000 | |||
Servicing rights | 130,710,000 | $ 110,348,000 | |||
Purchase of loans | $ 92,533,000 | $ 250,678,000 | |||
Loan Sale and Freddie Mac Q Series Securitization | |||||
Loans and Leases Receivable Disclosure [Line Items] | |||||
Net gain (loss) on sale of loans | $ 2,300,000 | $ (676,000) | |||
First loss position in loan portfolio, maximum securitization pool, percentage | 12% | 10% | |||
First loss position in loan portfolio, maximum securitization pool, amount | $ 25,700,000 | $ 26,200,000 | |||
First loss position in loan portfolio, reserves for losses | 1,200,000 | 1,400,000 | |||
Servicing rights | 1,200,000 | $ 730,000 | |||
Loan Sale and Freddie Mac Q Series Securitization | Other liabilities | |||||
Loans and Leases Receivable Disclosure [Line Items] | |||||
Non-contingent reserve | $ 2,500,000 | ||||
Loan Sale and Freddie Mac Q Series Securitization | Mortgage-backed Securities, Purchased from Freddie Mac | |||||
Loans and Leases Receivable Disclosure [Line Items] | |||||
Number of securities purchased | security | 0 | 2 | |||
Purchases of available for sale securities | $ 28,700,000 | ||||
Loan Sale and Freddie Mac Q Series Securitization | US Treasury Securities. | |||||
Loans and Leases Receivable Disclosure [Line Items] | |||||
Purchases of available for sale securities | $ 27,000,000 | ||||
Multi-family financing | Loan Sale and Freddie Mac Q Series Securitization | |||||
Loans and Leases Receivable Disclosure [Line Items] | |||||
Proceeds from sale of loans receivable | $ 214,000,000 | $ 262,000,000 |
Variable Interest Entities (V_3
Variable Interest Entities (VIEs) (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2021 |
Variable Interest Entities (VIEs) | |||
Total Assets | $ 11,086,055 | $ 11,278,638 | $ 9,881,532 |
Total Liabilities | 9,857,516 | 10,123,229 | |
Single Family and Multi-Family Debt Financing Investments | Variable Interest Entity, Not Primary Beneficiary | |||
Variable Interest Entities (VIEs) | |||
Total Assets | 39,898 | 36,573 | |
Total Liabilities | 14,823 | 21,014 | |
Maximum Exposure to Loss | $ 38,414 | $ 36,164 |
Regulatory Matters (Details)
Regulatory Matters (Details) $ in Thousands | Jun. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) |
Company | ||
Tier 1 Capital (to average assets) | ||
Tier 1 Capital, Actual, Capital Amount | $ 1,217,718 | $ 1,138,090 |
Tier 1 Capital (to average assets), Actual, Ratio (as a percent) | 0.124 | 0.104 |
Tier 1 Capital, Minimum Amount To Be Well Capitalized, Capital Amount | $ 882,179 | $ 928,731 |
Company | Minimum | ||
Tier 1 Capital (to average assets) | ||
Tier 1 Capital (to average assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent) | 0.09 | 0.085 |
Merchants Bank | ||
Tier 1 Capital (to average assets) | ||
Tier 1 Capital, Actual, Capital Amount | $ 1,171,291 | $ 1,088,621 |
Tier 1 Capital (to average assets), Actual, Ratio (as a percent) | 0.123 | 0.103 |
Tier 1 Capital, Minimum Amount To Be Well Capitalized, Capital Amount | $ 857,175 | $ 901,188 |
Merchants Bank | Minimum | ||
Tier 1 Capital (to average assets) | ||
Tier 1 Capital (to average assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent) | 0.09 | 0.085 |
FMBI | ||
Tier 1 Capital (to average assets) | ||
Tier 1 Capital, Actual, Capital Amount | $ 31,104 | $ 28,958 |
Tier 1 Capital (to average assets), Actual, Ratio (as a percent) | 0.103 | 0.097 |
Tier 1 Capital, Minimum Amount To Be Well Capitalized, Capital Amount | $ 27,088 | $ 25,499 |
FMBI | Minimum | ||
Tier 1 Capital (to average assets) | ||
Tier 1 Capital (to average assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent) | 0.09 | 0.085 |
Derivative Financial Instrume_3
Derivative Financial Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
The periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income | |||||
Pledged in collateral | $ 2,900 | $ 2,900 | $ 3,900 | ||
Other income | |||||
The periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income | |||||
Net swap gains (losses) | 2,146 | $ (1,243) | 4,414 | $ 409 | |
Loans held for sale | |||||
The periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income | |||||
Net swap gains (losses) | (5) | (5) | |||
Derivative assets | |||||
Derivative Financial Instruments | |||||
Derivative assets, fair value | 573 | 573 | 350 | ||
Derivative liabilities | |||||
Derivative Financial Instruments | |||||
Derivative liabilities, fair value | 324 | 324 | 159 | ||
Interest Rate Lock Commitments | |||||
Derivative Financial Instruments | |||||
Notional amount | 62,301 | 62,301 | 58,701 | ||
Interest Rate Lock Commitments | Other income | |||||
The periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income | |||||
Net swap gains (losses) | 837 | 1,046 | (45) | (5,698) | |
Interest Rate Lock Commitments | Derivative assets | |||||
Derivative Financial Instruments | |||||
Derivative assets, fair value | 299 | 299 | 264 | ||
Interest Rate Lock Commitments | Derivative liabilities | |||||
Derivative Financial Instruments | |||||
Derivative liabilities, fair value | 121 | 121 | 41 | ||
Forward Contracts | |||||
Derivative Financial Instruments | |||||
Notional amount | 49,750 | 49,750 | 81,250 | ||
Forward Contracts | Other income | |||||
The periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income | |||||
Net swap gains (losses) | 1,309 | (2,289) | 4,459 | 6,107 | |
Forward Contracts | Derivative assets | |||||
Derivative Financial Instruments | |||||
Derivative assets, fair value | 114 | 114 | 86 | ||
Forward Contracts | Derivative liabilities | |||||
Derivative Financial Instruments | |||||
Derivative liabilities, fair value | 203 | 203 | 118 | ||
Interest rate swaps | |||||
Derivative Financial Instruments | |||||
Notional amount | 25,190 | 25,190 | |||
The periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income | |||||
Gross swap gains | 2,035 | 195 | 2,531 | 1,081 | |
Gross swap losses | 2,035 | $ 195 | 2,531 | $ 1,081 | |
Interest rate swaps | Loans held for sale | |||||
The periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income | |||||
Net swap gains (losses) | 160 | 160 | |||
Interest rate swaps | Derivative assets | |||||
Derivative Financial Instruments | |||||
Derivative assets, fair value | 160 | 160 | |||
Interest rate swap back to back | |||||
Derivative Financial Instruments | |||||
Notional amount | 181,805 | 181,805 | 135,686 | ||
Interest rate swap back to back | Derivative assets | |||||
Derivative Financial Instruments | |||||
Derivative assets, fair value | 3,662 | 3,662 | 1,131 | ||
Interest rate swap back to back | Derivative liabilities | |||||
Derivative Financial Instruments | |||||
Derivative liabilities, fair value | 3,662 | 3,662 | $ 1,131 | ||
Loans held for sale | Loans held for sale | |||||
The periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income | |||||
Net swap gains (losses) | $ (165) | $ (165) |
Disclosures about Fair Value _3
Disclosures about Fair Value of Assets and Liabilities - Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Disclosures about Fair Value of Assets and Liabilities | ||
Mortgage loans in process of securitization | $ 323,046 | $ 569,239 |
Available for sale securities | 336,814 | 310,629 |
Loans held for sale | 41,991 | 48,583 |
Servicing rights | 130,710 | 110,348 |
Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Mortgage loans in process of securitization | 323,046 | 569,239 |
Loans held for sale | 41,991 | 48,583 |
Servicing rights | 130,710 | 110,348 |
Recurring | Interest Rate Lock Commitments | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Derivative assets | 299 | 264 |
Derivative liabilities | 121 | 41 |
Recurring | Forward Contracts | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Derivative assets | 114 | 86 |
Derivative liabilities | 203 | 118 |
Recurring | Interest rate swaps | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Derivative assets | 160 | |
Recurring | Interest rate swap back to back | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Derivative assets | 3,662 | 1,131 |
Derivative liabilities | 3,662 | 1,131 |
Level 2 | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Mortgage loans in process of securitization | 323,046 | 569,239 |
Loans held for sale | 41,991 | 48,583 |
Level 2 | Recurring | Forward Contracts | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Derivative assets | 114 | 86 |
Derivative liabilities | 203 | 118 |
Level 2 | Recurring | Interest rate swaps | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Derivative assets | 160 | |
Level 2 | Recurring | Interest rate swap back to back | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Derivative assets | 3,662 | 1,131 |
Derivative liabilities | 3,662 | 1,131 |
Level 3 | Interest Rate Lock Commitments | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Derivative assets | 299 | 264 |
Derivative liabilities | 121 | 41 |
Level 3 | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Servicing rights | 130,710 | 110,348 |
Level 3 | Recurring | Interest Rate Lock Commitments | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Derivative assets | 299 | 264 |
Derivative liabilities | 121 | 41 |
Treasury notes | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 34,804 | 8,209 |
Treasury notes | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 34,804 | 8,209 |
Treasury notes | Level 1 | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 34,804 | 8,209 |
Federal agencies | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 274,852 | 263,295 |
Federal agencies | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 274,852 | 263,295 |
Federal agencies | Level 2 | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 274,852 | 263,295 |
Municipals. | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 4,300 | |
Municipals. | Level 2 | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 4,300 | |
Mortgage-backed - Government-sponsored entity (GSE) | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 15,779 | 18,360 |
Mortgage-backed - Government-sponsored entity (GSE) | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 15,779 | 18,360 |
Mortgage-backed - Government-sponsored entity (GSE) | Level 2 | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 15,779 | 18,360 |
Mortgage-backed - Non-GSE multi-family | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 11,379 | 16,465 |
Mortgage-backed - Non-GSE multi-family | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 11,379 | 16,465 |
Mortgage-backed - Non-GSE multi-family | Level 2 | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | $ 11,379 | $ 16,465 |
Disclosures about Fair Value _4
Disclosures about Fair Value of Assets and Liabilities - Reconciliation of Unobservable Inputs (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Derivative liabilities | Interest Rate Lock Commitments | ||||
Reconciliation of significant unobservable inputs, liabilities: | ||||
Balance, beginning of period | $ 771 | $ 1,080 | $ 41 | |
Changes in fair value | (650) | (1,026) | 80 | $ 54 |
Balance, end of period | 121 | 54 | 121 | 54 |
Servicing rights. | ||||
Reconciliation of significant unobservable inputs, assets: | ||||
Balance, beginning of period | 121,036 | 96,215 | 110,348 | 82,604 |
Additions | ||||
Originated servicing | 5,203 | 6,527 | 10,995 | 16,708 |
Subtractions | ||||
Paydowns | (3,268) | (4,627) | (6,017) | (8,075) |
Sales of servicing | (438) | (438) | ||
Changes in fair value due to changes in valuation inputs or assumptions used in the valuation model | 7,739 | 654 | 15,384 | 7,532 |
Balance, end of period | 130,710 | 98,331 | 130,710 | 98,331 |
Derivative assets | Interest Rate Lock Commitments | ||||
Reconciliation of significant unobservable inputs, assets: | ||||
Balance, beginning of period | 112 | 467 | 264 | 6,131 |
Subtractions | ||||
Changes in fair value | 187 | 20 | 35 | (5,644) |
Balance, end of period | $ 299 | $ 487 | $ 299 | $ 487 |
Disclosures about Fair Value _5
Disclosures about Fair Value of Assets and Liabilities - Assets and Liabilities Measured at Fair Value on Nonrecurring Basis (Details) - Nonrecurring - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Disclosures about Fair Value of Assets and Liabilities | ||
Collateral dependent loans | $ 4,275 | $ 4,263 |
Level 3 | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Collateral dependent loans | $ 4,275 | $ 4,263 |
Disclosures about Fair Value _6
Disclosures about Fair Value of Assets and Liabilities - Quantitative Information about Unobservable Inputs (Details) | Jun. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) |
Quantitative information about unobservable inputs | ||
Servicing rights | $ 130,710,000 | $ 110,348,000 |
Weighted average | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 12 | |
Level 3 | Servicing rights | Loans funded through PPP, CARES Act | ||
Quantitative information about unobservable inputs | ||
Servicing rights | $ 4,019,000 | |
Level 3 | Servicing rights | Loans funded through PPP, CARES Act | Discount Rate | ||
Quantitative information about unobservable inputs | ||
Servicing rights | $ 2,769,000 | |
Servicing asset, measurement input | 0.16 | 16 |
Level 3 | Servicing rights | Loans funded through PPP, CARES Act | Discount Rate | Weighted average | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 0.16 | 16 |
Level 3 | Servicing rights | Loans funded through PPP, CARES Act | Constant Prepayment Rate | Minimum | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 0.03 | 10 |
Level 3 | Servicing rights | Loans funded through PPP, CARES Act | Constant Prepayment Rate | Maximum | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 0.16 | 13 |
Level 3 | Servicing rights | Loans funded through PPP, CARES Act | Constant Prepayment Rate | Weighted average | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 0.08 | |
Level 3 | Servicing rights | Single Family | ||
Quantitative information about unobservable inputs | ||
Servicing rights | $ 29,632,000 | $ 23,012,000 |
Level 3 | Servicing rights | Single Family | Discount Rate | Minimum | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 9 | |
Level 3 | Servicing rights | Single Family | Discount Rate | Maximum | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 10 | |
Level 3 | Servicing rights | Single Family | Discount Rate | Weighted average | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 9 | |
Level 3 | Servicing rights | Single Family | Constant Prepayment Rate | Minimum | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 0.07 | 0.10 |
Level 3 | Servicing rights | Single Family | Constant Prepayment Rate | Maximum | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 0.09 | 0.13 |
Level 3 | Servicing rights | Single Family | Constant Prepayment Rate | Weighted average | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 7 | 0.11 |
Level 3 | Servicing rights | Single Family | Mortgage Yield | Minimum | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 0.09 | |
Level 3 | Servicing rights | Single Family | Mortgage Yield | Maximum | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 0.10 | |
Level 3 | Servicing rights | Single Family | Mortgage Yield | Weighted average | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 9 | |
Level 3 | Servicing rights | Multi-family | ||
Quantitative information about unobservable inputs | ||
Servicing rights | $ 97,059,000 | $ 84,567,000 |
Level 3 | Servicing rights | Multi-family | Discount Rate | Minimum | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 0.08 | 0.08 |
Level 3 | Servicing rights | Multi-family | Discount Rate | Maximum | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 0.13 | 0.13 |
Level 3 | Servicing rights | Multi-family | Discount Rate | Weighted average | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 0.08 | 0.09 |
Level 3 | Servicing rights | Multi-family | Constant Prepayment Rate | Minimum | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 0 | 0 |
Level 3 | Servicing rights | Multi-family | Constant Prepayment Rate | Maximum | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 0.50 | 0.50 |
Level 3 | Servicing rights | Multi-family | Constant Prepayment Rate | Weighted average | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 0.03 | 0.04 |
Level 3 | Collateral-dependent impaired loans | ||
Quantitative information about unobservable inputs | ||
Collateral-dependent impaired loans | $ 4,275,000 | $ 4,263,000 |
Marketability discount (as a percent) | 0.82 | |
Level 3 | Collateral-dependent impaired loans | Minimum | ||
Quantitative information about unobservable inputs | ||
Marketability discount (as a percent) | 0.44 | |
Level 3 | Collateral-dependent impaired loans | Weighted average | ||
Quantitative information about unobservable inputs | ||
Marketability discount (as a percent) | 0.82 | 0.73 |
Level 3 | Interest Rate Lock Commitments | ||
Quantitative information about unobservable inputs | ||
Derivative assets | $ 299,000 | $ 264,000 |
Derivative liabilities | $ 121,000 | $ 41,000 |
Level 3 | Interest Rate Lock Commitments | Minimum | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 63 | |
Level 3 | Interest Rate Lock Commitments | Maximum | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 99 | |
Level 3 | Interest Rate Lock Commitments | Measurement Input, Maturity | Minimum | ||
Quantitative information about unobservable inputs | ||
Loan closing rates (as a percent) | 0.50 | 0.63 |
Loan closing rates (as a percent) | 0.50 | |
Level 3 | Interest Rate Lock Commitments | Measurement Input, Maturity | Maximum | ||
Quantitative information about unobservable inputs | ||
Loan closing rates (as a percent) | 0.99 | 0.99 |
Loan closing rates (as a percent) | 0.99 | |
Level 3 | Interest Rate Lock Commitments | Measurement Input, Maturity | Weighted average | ||
Quantitative information about unobservable inputs | ||
Loan closing rates (as a percent) | 81 | 0.83 |
Loan closing rates (as a percent) | 81 | 83 |
Disclosures about Fair Value _7
Disclosures about Fair Value of Assets and Liabilities - Carrying Value and Estimated Fair Value (Details) - USD ($) $ in Thousands | Jun. 30, 2022 | Dec. 31, 2021 |
Financial assets: | ||
Loans held for sale | $ 41,991 | $ 48,583 |
Carrying value per balance sheet | ||
Financial assets: | ||
Cash and cash equivalents | 258,146 | 1,032,614 |
Securities purchased under agreements to resell | 3,520 | 5,888 |
FHLB stock | 39,130 | 29,588 |
Loans held for sale | 2,717,125 | 3,254,616 |
Loans receivable, net | 7,033,203 | 5,751,319 |
Interest receivable | 26,184 | 24,103 |
Financial liabilities: | ||
Deposits | 8,299,738 | 8,982,613 |
Short-term subordinated debt | 19,000 | 17,000 |
FHLB advances | 851,904 | 556,954 |
Other borrowing | 570,000 | 460,000 |
Interest payable | 3,805 | 1,469 |
Estimated fair value | ||
Financial assets: | ||
Cash and cash equivalents | 258,146 | 1,032,614 |
Securities purchased under agreements to resell | 3,520 | 5,888 |
FHLB stock | 39,130 | 29,588 |
Loans held for sale | 2,717,125 | 3,254,616 |
Loans receivable, net | 7,046,313 | 5,731,500 |
Interest receivable | 26,184 | 24,103 |
Financial liabilities: | ||
Deposits | 8,294,601 | 8,982,680 |
Short-term subordinated debt | 19,000 | 17,000 |
FHLB advances | 851,711 | 556,925 |
Other borrowing | 570,000 | 460,000 |
Interest payable | 3,805 | 1,469 |
Level 1 | Estimated fair value | ||
Financial assets: | ||
Cash and cash equivalents | 258,146 | 1,032,614 |
Financial liabilities: | ||
Deposits | 6,829,667 | 7,783,553 |
Level 2 | Estimated fair value | ||
Financial assets: | ||
Securities purchased under agreements to resell | 3,520 | 5,888 |
FHLB stock | 39,130 | 29,588 |
Loans held for sale | 2,717,125 | 3,254,616 |
Interest receivable | 26,184 | 24,103 |
Financial liabilities: | ||
Deposits | 1,464,934 | 1,199,127 |
Short-term subordinated debt | 19,000 | 17,000 |
FHLB advances | 851,711 | 556,925 |
Other borrowing | 570,000 | 460,000 |
Interest payable | 3,805 | 1,469 |
Level 3 | Estimated fair value | ||
Financial assets: | ||
Loans receivable, net | $ 7,046,313 | $ 5,731,500 |
Leases (Details)
Leases (Details) $ in Thousands | Jun. 30, 2022 USD ($) |
Leases | |
Operating lease right-of-use assets | $ 9,189 |
Operating lease liabilities | $ 9,920 |
Maximum | |
Leases | |
Lease period | 11 years |
Minimum | |
Leases | |
Lease period | 2 years |
Leases - Balance sheet, income
Leases - Balance sheet, income statement and cash flow detail regarding operating leases (Details) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2022 USD ($) | Jun. 30, 2022 USD ($) | |
Leases. | ||
Operating lease right-of-of use asset (in Other Assets) | $ 9,189 | $ 9,189 |
Operating lease liability (in Other Liabilities) | $ 9,920 | $ 9,920 |
Weighted average remaining lease term (years) | 7 years 2 months 12 days | 7 years 2 months 12 days |
Weighted average discount rate | 2.09% | 2.09% |
Maturities of lease liabilities | ||
2022 remaining | $ 864 | $ 864 |
2023 | 1,812 | 1,812 |
2024 | 1,638 | 1,638 |
2025 | 1,246 | 1,246 |
2026 | 1,277 | 1,277 |
Thereafter | 3,857 | 3,857 |
Total future minimum lease payments | 10,694 | 10,694 |
Less: imputed interest | 774 | 774 |
Total | 9,920 | 9,920 |
Components of lease expense: | ||
Operating lease cost (in occupancy and equipment expense) | $ 425 | 792 |
Operating cash flows from operating leases | $ 597 |
Earnings Per Share (Details)
Earnings Per Share (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jan. 17, 2022 | Jun. 30, 2022 USD ($) $ / shares shares | Jun. 30, 2021 USD ($) $ / shares shares | Jun. 30, 2022 USD ($) $ / shares shares | Jun. 30, 2021 USD ($) $ / shares shares | |||
Net Income | |||||||
Net income | $ | $ 53,935 | $ 51,417 | $ 104,077 | $ 113,400 | |||
Dividends on preferred stock | $ | (5,729) | (5,659) | (11,457) | (9,416) | |||
Net Income Allocated to Common Shareholders | $ | $ 48,206 | $ 45,758 | $ 92,620 | $ 103,984 | |||
Weighted-Average Shares | |||||||
Weighted average shares - Basic | shares | 43,209,824 | [1] | 43,174,220 | [1] | 43,220,198 | 43,166,223 | |
Effect of dilutive securities-restricted stock awards | shares | 125,387 | [1] | 137,268 | [1] | 147,677 | 127,376 | |
Weighted average shares - diluted | shares | 43,335,211 | [1] | 43,311,488 | [1] | 43,367,875 | 43,293,599 | |
Per Share Amount | |||||||
Basic earnings per share | $ / shares | $ 1.12 | [1] | $ 1.06 | [1] | $ 2.14 | $ 2.41 | |
Diluted earnings per share | $ / shares | $ 1.11 | [1] | $ 1.06 | [1] | $ 2.14 | $ 2.40 | |
Other disclosures | |||||||
Stock split ratio | 1.5 | ||||||
[1] The number of shares and per share amounts have been restated to reflect the 3 -for-2 common stock split, effective on January 17, 2022 |
Common Stock (Details)
Common Stock (Details) | 3 Months Ended | 6 Months Ended | |||
Jan. 17, 2022 | Jun. 30, 2022 USD ($) $ / shares shares | Jun. 30, 2021 shares | Jun. 30, 2022 USD ($) | Nov. 17, 2021 USD ($) | |
Common Stock | |||||
Repurchase of common Stock (in shares) | shares | 0 | ||||
Stock split ratio | 1.5 | ||||
Exchange Ratio of Additional Shares for Every Shares Owned | 0.5 | ||||
Repurchased (in shares) | shares | 165,037 | ||||
Repurchased amount | $ | $ 3,935,333 | $ 3,935,000 | |||
Average price per common share | $ / shares | $ 23.85 | ||||
Repurchase program, Authorized Amount | $ | $ 75,000,000 |
Share-Based Payment Plans (Deta
Share-Based Payment Plans (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jan. 31, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2018 | |
Non executive directors | ||||||
Plan disclosures | ||||||
Shares issued | 3,766 | 2,190 | 5,821 | 4,695 | ||
Value of shares available for issuance for compensation related to annual fees | $ 50,000 | $ 10,000 | ||||
2017 Plan | Restricted Stock | ||||||
Plan disclosures | ||||||
Shares issued | 0 | 0 | 64,962 | 35,056 |
Preferred Stock (Details)
Preferred Stock (Details) | 6 Months Ended | 12 Months Ended | 24 Months Ended | ||||||||||
May 06, 2021 USD ($) $ / shares shares | Apr. 15, 2021 USD ($) shares | Mar. 23, 2021 USD ($) $ / shares shares | Sep. 23, 2019 USD ($) $ / shares shares | Aug. 19, 2019 USD ($) $ / shares shares | Jun. 27, 2019 USD ($) $ / shares shares | Apr. 12, 2019 USD ($) shares | Mar. 28, 2019 USD ($) $ / shares shares | Jun. 30, 2022 $ / shares | Jun. 30, 2021 USD ($) | Dec. 31, 2021 $ / shares | Dec. 31, 2016 $ / shares | Dec. 31, 2016 $ / shares shares | |
Public Offering of Preferred Stock | |||||||||||||
Net proceeds | $ 191,084,000 | ||||||||||||
8% Preferred Stock | |||||||||||||
Public Offering of Preferred Stock | |||||||||||||
Redemption of 8% preferred stock (in shares) | shares | 41,625 | ||||||||||||
Redemption of 8% preferred stock | $ 41,600,000 | ||||||||||||
Preferred stock, dividend rate (as a percent) | 8% | 8% | |||||||||||
Final dividend for redemption of 8% preferred stock | $ 139,000 | ||||||||||||
8% Preferred Stock | Private Placement | |||||||||||||
Public Offering of Preferred Stock | |||||||||||||
Shares issued (in shares) | shares | 41,625 | ||||||||||||
Preferred stock, dividend rate (as a percent) | 8% | ||||||||||||
Preferred stock liquidation preference (in dollars per share) | $ / shares | $ 1,000 | $ 1,000 | |||||||||||
7% Preferred Stock | |||||||||||||
Public Offering of Preferred Stock | |||||||||||||
Redemption of 8% preferred stock (in shares) | shares | 874,000 | ||||||||||||
Preferred stock, dividend rate (as a percent) | 7% | 7% | 7% | ||||||||||
Preferred stock liquidation preference (in dollars per share) | $ / shares | $ 25 | $ 25 | $ 25 | ||||||||||
Redemption of preferred stock | $ 21,850,000 | ||||||||||||
Brokerage fees | $ 0 | ||||||||||||
7% Preferred Stock | Public Offering | |||||||||||||
Public Offering of Preferred Stock | |||||||||||||
Shares issued (in shares) | shares | 81,800 | 2,000,000 | |||||||||||
Preferred stock, dividend rate (as a percent) | 7% | ||||||||||||
Preferred stock liquidation preference (in dollars per share) | $ / shares | $ 25 | ||||||||||||
Aggregate gross offering proceeds for the shares issued | $ 50,000,000 | ||||||||||||
Net proceeds | $ 2,000,000 | 48,300,000 | |||||||||||
Offering costs | $ 1,700,000 | ||||||||||||
Underwriting discounts | $ 41,000 | ||||||||||||
7% Preferred Stock | Private Placement | |||||||||||||
Public Offering of Preferred Stock | |||||||||||||
Shares issued (in shares) | shares | 874,000 | ||||||||||||
Preferred stock, dividend rate (as a percent) | 7% | ||||||||||||
Preferred stock liquidation preference (in dollars per share) | $ / shares | $ 25 | ||||||||||||
Aggregate gross offering proceeds for the shares issued | $ 21,850,000 | ||||||||||||
6% Series B Preferred Stock | |||||||||||||
Public Offering of Preferred Stock | |||||||||||||
Preferred stock, dividend rate (as a percent) | 6% | 6% | |||||||||||
Preferred stock liquidation preference (in dollars per share) | $ / shares | $ 1,000 | $ 1,000 | |||||||||||
6% Series B Preferred Stock | Public Offering | |||||||||||||
Public Offering of Preferred Stock | |||||||||||||
Shares issued (in shares) | shares | 5,000,000 | ||||||||||||
Depositary shares equivalent preferred stock interest per share | 0.250 | ||||||||||||
Preferred stock, dividend rate (as a percent) | 6% | ||||||||||||
Preferred stock liquidation preference (in dollars per share) | $ / shares | $ 1,000 | ||||||||||||
Depositary share, preferred stock liquidation preference (in dollars per share) | $ / shares | $ 25 | ||||||||||||
Aggregate gross offering proceeds for the shares issued | $ 125,000,000 | ||||||||||||
Net proceeds | 120,800,000 | ||||||||||||
Underwriting discounts | $ 4,200,000 | ||||||||||||
6% Series C Preferred Stock | |||||||||||||
Public Offering of Preferred Stock | |||||||||||||
Shares issued (in shares) | shares | 46,181 | ||||||||||||
Depositary shares issued (in shares) | shares | 1,847,233 | ||||||||||||
Depositary share price (in dollars per share) | $ / shares | $ 25 | ||||||||||||
Preferred stock, dividend rate (as a percent) | 6% | 6% | |||||||||||
Preferred stock liquidation preference (in dollars per share) | $ / shares | $ 1,000 | $ 1,000 | |||||||||||
Net proceeds | $ 46,200,000 | ||||||||||||
Offering costs | $ 23,000 | ||||||||||||
6% Series C Preferred Stock | Public Offering | |||||||||||||
Public Offering of Preferred Stock | |||||||||||||
Shares issued (in shares) | shares | 6,000,000 | ||||||||||||
Depositary shares equivalent preferred stock interest per share | 0.250 | ||||||||||||
Preferred stock, dividend rate (as a percent) | 6% | ||||||||||||
Preferred stock liquidation preference (in dollars per share) | $ / shares | $ 1,000 | ||||||||||||
Depositary share, preferred stock liquidation preference (in dollars per share) | $ / shares | $ 25 | ||||||||||||
Aggregate gross offering proceeds for the shares issued | $ 150,000,000 | ||||||||||||
Net proceeds | 144,900,000 | ||||||||||||
Underwriting discounts | $ 5,100,000 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Segment Information | |||||
Interest income | $ 89,270 | $ 72,438 | $ 165,282 | $ 151,987 | |
Interest expense | 17,239 | 8,031 | 27,526 | 15,617 | |
Net Interest Income | 72,031 | 64,407 | 137,756 | 136,370 | |
Provision for credit losses | 4,768 | 6,749 | |||
Provision for credit losses | 6,212 | (315) | 8,663 | 1,348 | |
Net Interest Income After Provision for Credit Losses | 65,819 | 64,722 | 129,093 | 135,022 | |
Noninterest income | 39,171 | 32,855 | 73,768 | 76,791 | |
Noninterest expense | 32,957 | 28,183 | 63,990 | 58,267 | |
Income Before Income Taxes | 72,033 | 69,394 | 138,871 | 153,546 | |
Income taxes | 18,098 | 17,977 | 34,794 | 40,146 | |
Net Income | 53,935 | 51,417 | 104,077 | 113,400 | |
Total assets | 11,086,055 | 9,881,532 | 11,086,055 | 9,881,532 | $ 11,278,638 |
Other | |||||
Segment Information | |||||
Interest income | 2,062 | 1,316 | 3,763 | 2,531 | |
Interest expense | (373) | (784) | (624) | (1,361) | |
Net Interest Income | 2,435 | 2,100 | 4,387 | 3,892 | |
Net Interest Income After Provision for Credit Losses | 2,435 | 2,100 | 4,387 | 3,892 | |
Noninterest income | (1,357) | (1,409) | (2,995) | (2,502) | |
Noninterest expense | 5,923 | 4,358 | 10,925 | 7,977 | |
Income Before Income Taxes | (4,845) | (3,667) | (9,533) | (6,587) | |
Income taxes | (1,424) | (924) | (2,839) | (1,658) | |
Net Income | (3,421) | (2,743) | (6,694) | (4,929) | |
Total assets | 83,229 | 49,521 | 83,229 | 49,521 | |
Multifamily | Operating Segments | |||||
Segment Information | |||||
Interest income | 383 | 204 | 640 | 411 | |
Net Interest Income | 383 | 204 | 640 | 411 | |
Provision for credit losses | 1,153 | 1,153 | |||
Net Interest Income After Provision for Credit Losses | (770) | 204 | (513) | 411 | |
Noninterest income | 49,430 | 28,572 | 81,616 | 61,806 | |
Noninterest expense | 21,959 | 13,626 | 38,490 | 30,070 | |
Income Before Income Taxes | 26,701 | 15,150 | 42,613 | 32,147 | |
Income taxes | 7,145 | 4,179 | 11,565 | 9,215 | |
Net Income | 19,556 | 10,971 | 31,048 | 22,932 | |
Total assets | 330,676 | 238,165 | 330,676 | 238,165 | |
Mortgage Warehousing | Operating Segments | |||||
Segment Information | |||||
Interest income | 23,247 | 29,935 | 43,576 | 68,522 | |
Interest expense | 5,576 | 1,599 | 7,597 | 3,323 | |
Net Interest Income | 17,671 | 28,336 | 35,979 | 65,199 | |
Provision for credit losses | 834 | (40) | 627 | (1,124) | |
Net Interest Income After Provision for Credit Losses | 16,837 | 28,376 | 35,352 | 66,323 | |
Noninterest income | 1,350 | 3,079 | 3,210 | 7,196 | |
Noninterest expense | 2,441 | 2,703 | 5,367 | 5,599 | |
Income Before Income Taxes | 15,746 | 28,752 | 33,195 | 67,920 | |
Income taxes | 3,878 | 7,304 | 8,168 | 17,289 | |
Net Income | 11,868 | 21,448 | 25,027 | 50,631 | |
Total assets | 2,836,998 | 4,265,162 | 2,836,998 | 4,265,162 | |
Banking | Operating Segments | |||||
Segment Information | |||||
Interest income | 63,578 | 40,983 | 117,303 | 80,523 | |
Interest expense | 12,036 | 7,216 | 20,553 | 13,655 | |
Net Interest Income | 51,542 | 33,767 | 96,750 | 66,868 | |
Provision for credit losses | 4,225 | (275) | 6,883 | 2,472 | |
Net Interest Income After Provision for Credit Losses | 47,317 | 34,042 | 89,867 | 64,396 | |
Noninterest income | (10,252) | 2,613 | (8,063) | 10,291 | |
Noninterest expense | 2,634 | 7,496 | 9,208 | 14,621 | |
Income Before Income Taxes | 34,431 | 29,159 | 72,596 | 60,066 | |
Income taxes | 8,499 | 7,418 | 17,900 | 15,300 | |
Net Income | 25,932 | 21,741 | 54,696 | 44,766 | |
Total assets | $ 7,835,152 | $ 5,328,684 | $ 7,835,152 | $ 5,328,684 |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Details) - USD ($) | Jun. 30, 2022 | Jan. 01, 2022 | Dec. 31, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
Recent Accounting Pronouncements | ||||||
Allowance for loan losses | $ 31,344,000 | $ 28,696,000 | $ 29,091,000 | $ 27,500,000 | ||
Retained earnings, net of tax | $ 737,789,000 | 657,149,000 | ||||
Operating lease right-of-use assets | 9,189,000 | |||||
Operating lease liabilities | $ 9,920,000 | |||||
Impact from adoption of ASU | ASU 2016-02 | ||||||
Recent Accounting Pronouncements | ||||||
Retained earnings, net of tax | $ 110,000 | |||||
Operating lease right-of-use assets | 7,100,000 | |||||
Operating lease liabilities | 7,200,000 | |||||
Impact from adoption of ASU | ASU 2016-13 | ||||||
Recent Accounting Pronouncements | ||||||
Allowance for loan losses | (299,000) | $ (299,000) | ||||
ACL - OBCEs (in Other Liabilities) | 5,176,000 | |||||
Retained earnings, net of tax | $ (3,648,000) |