Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 01, 2020 | |
Document and Entity Information | ||
Entity Registrant Name | MERCHANTS BANCORP | |
Entity Central Index Key | 0001629019 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Small Business | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 28,742,484 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Assets | ||
Cash and due from banks | $ 8,168 | $ 13,909 |
Interest-earning demand accounts | 559,914 | 492,800 |
Cash and cash equivalents | 568,082 | 506,709 |
Securities purchased under agreements to resell | 6,685 | 6,723 |
Trading securities | 465,157 | 269,891 |
Available for sale securities | 339,053 | 290,243 |
Federal Home Loan Bank (FHLB) stock | 46,156 | 20,369 |
Loans held for sale (includes $18,938 and $19,592, respectively at fair value) | 2,796,008 | 2,093,789 |
Loans receivable, net of allowance for loan losses of $18,883 and $15,842, respectively | 3,501,770 | 3,012,468 |
Premises and equipment, net | 29,415 | 29,274 |
Mortgage servicing rights | 69,978 | 74,387 |
Interest receivable | 18,139 | 18,359 |
Goodwill | 15,845 | 15,845 |
Intangible assets, net | 3,419 | 3,799 |
Other assets and receivables | 48,691 | 30,072 |
Total assets | 7,908,398 | 6,371,928 |
Deposits | ||
Noninterest-bearing | 327,805 | 272,037 |
Interest-bearing | 6,394,900 | 5,206,038 |
Total deposits | 6,722,705 | 5,478,075 |
Borrowings | 444,567 | 181,439 |
Other liabilities | 68,157 | 58,686 |
Total liabilities | 7,235,429 | 5,718,200 |
Commitments and Contingencies | ||
Shareholders' Equity | ||
Common stock, without par value Authorized - 50,000,000 shares Issued and outstanding - 28,742,484 shares at March 31, 2020 and 28,706,438 shares at December 31, 2019 | 135,746 | 135,640 |
Preferred stock | ||
Retained earnings | 323,651 | 304,984 |
Accumulated other comprehensive income | 926 | 458 |
Total shareholders' equity | 672,969 | 653,728 |
Total liabilities and shareholders' equity | 7,908,398 | 6,371,928 |
8% Preferred Stock | ||
Shareholders' Equity | ||
Preferred stock | 41,581 | 41,581 |
7% Preferred Stock | ||
Shareholders' Equity | ||
Preferred stock | 50,221 | 50,221 |
6% Preferred Stock | ||
Shareholders' Equity | ||
Preferred stock | $ 120,844 | $ 120,844 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Loans held for sale at fair value | $ 18,938 | $ 19,592 |
Allowance for loans losses | $ 18,883 | $ 15,842 |
Stockholders' Equity: | ||
Common stock, without par value (in dollars per share) | ||
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 28,742,484 | 28,706,438 |
Common stock, shares outstanding | 28,742,484 | 28,706,438 |
Preferred stock, without par value (in dollars per share) | ||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
8% Preferred Stock | ||
Stockholders' Equity: | ||
Preferred stock, dividend rate (as a percent) | 8.00% | 8.00% |
Preferred stock liquidation preference (in dollars per share) | $ 1,000 | $ 1,000 |
Preferred stock, shares authorized | 50,000 | 50,000 |
Preferred stock, shares issued | 41,625 | 41,625 |
Preferred stock, shares outstanding | 41,625 | 41,625 |
7% Preferred Stock | ||
Stockholders' Equity: | ||
Preferred stock, dividend rate (as a percent) | 7.00% | 7.00% |
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% Preferred Stock | ||
Stockholders' Equity: | ||
Preferred stock, dividend rate (as a percent) | 6.00% | 6.00% |
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 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Interest Income | ||
Loans | $ 53,564,000 | $ 34,455,000 |
Investment securities: | ||
Trading | 2,796,000 | 1,045,000 |
Available for sale - taxable | 1,322,000 | 1,551,000 |
Available for sale - tax exempt | 37,000 | 96,000 |
Federal Home Loan Bank stock | 239,000 | 223,000 |
Other | 2,459,000 | 2,304,000 |
Total interest income | 60,417,000 | 39,674,000 |
Interest Expense | ||
Deposits | 20,630,000 | 14,227,000 |
Borrowed funds | 1,434,000 | 1,316,000 |
Total interest expense | 22,064,000 | 15,543,000 |
Net interest income | 38,353,000 | 24,131,000 |
Provision for loan losses | 2,998,000 | 649,000 |
Net Interest Income After Provision for Loan Losses | 35,355,000 | 23,482,000 |
Noninterest Income | ||
Gain on sale of loans | 21,166,000 | 2,643,000 |
Loan servicing fees, net | (5,824,000) | (347,000) |
Mortgage warehouse fees | 2,746,000 | 753,000 |
Gains on sale of investments available for sale (includes $0 and $127, respectively, related to accumulated other comprehensive earnings reclassifications) | 127,000 | |
Other income | 1,814,000 | 488,000 |
Total noninterest income | 19,902,000 | 3,664,000 |
Noninterest Expense | ||
Salaries and employee benefits | 14,240,000 | 8,567,000 |
Loan expenses | 1,164,000 | 934,000 |
Occupancy and equipment | 1,492,000 | 876,000 |
Professional fees | 569,000 | 539,000 |
Deposit insurance expense | 1,786,000 | 277,000 |
Technology expense | 610,000 | 472,000 |
Other expense | 2,432,000 | 1,370,000 |
Total noninterest expense | 22,293,000 | 13,035,000 |
Income Before Income Taxes | 32,964,000 | 14,111,000 |
Provision for income taxes (includes $0 and $32, respectively, related to income tax expense for reclassification items) | 8,381,000 | 3,541,000 |
Net Income | 24,583,000 | 10,570,000 |
Dividends on preferred stock | (3,618,000) | (833,000) |
Net Income Allocated to Common Shareholders | $ 20,965,000 | $ 9,737,000 |
Basic Earnings Per Share (in dollar per share) | $ 0.73 | $ 0.34 |
Diluted Earnings Per Share (in dollar per share) | $ 0.73 | $ 0.34 |
Weighted-Average Shares Outstanding Basic (in Shares) | 28,734,632 | 28,702,250 |
Weighted-Average Shares Outstanding Diluted (in Shares) | 28,759,412 | 28,737,439 |
Consolidated Statements of In_2
Consolidated Statements of Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Consolidated Statements of Income | ||
Reclassifications included in gains on sale of investment available for sale | $ 0 | $ 127 |
Provision for income taxes related to income tax expense for reclassification items | $ 0 | $ 32 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Consolidated Statements of Comprehensive Income | ||
Net Income | $ 24,583 | $ 10,570 |
Other Comprehensive Income (Loss): | ||
Net change in unrealized gains on investment securities available for sale, net of tax expense of $152 and $192, respectively | 468 | 559 |
Less: Reclassification adjustment for gains included in net income, net of tax expense of $0 and $32, respectively | 95 | |
Other comprehensive income for the period | 468 | 464 |
Comprehensive Income | $ 25,051 | $ 11,034 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Consolidated Statements of Comprehensive Income | ||
Net change in unrealized gains on investment securities available for sale, tax expense | $ 152 | $ 192 |
Reclassification adjustment for gains included in net income, tax expense | $ 0 | $ 32 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Common Stock | Preferred Stock8% Preferred Stock | Preferred Stock7% Preferred Stock | Preferred Stock6% Preferred Stock | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total |
Balance at beginning of the period at Dec. 31, 2018 | $ 135,057 | $ 41,581 | $ 244,909 | $ (310) | $ 421,237 | ||
Balance at beginning of the period (in shares) at Dec. 31, 2018 | 28,694,036 | 41,625 | |||||
Condensed Consolidated Statements of Shareholders’ Equity | |||||||
Net income | 10,570 | 10,570 | |||||
Shares issued for stock compensation plans | $ 133 | 133 | |||||
Shares issued for stock compensation plans (in shares) | 10,127 | ||||||
Issuance of shares | $ 48,269 | 48,269 | |||||
Issuance of shares (in shares) | 2,000,000 | ||||||
Dividends on 8% preferred stock, annually | (833) | (833) | |||||
Dividends on common stock, annually | (2,009) | (2,009) | |||||
Other comprehensive income | 464 | 464 | |||||
Balance at end of the period at Mar. 31, 2019 | $ 135,190 | $ 41,581 | $ 48,269 | 252,637 | 154 | 477,831 | |
Balance at end of the period (in shares) at Mar. 31, 2019 | 28,704,163 | 41,625 | 2,000,000 | ||||
Balance at beginning of the period at Dec. 31, 2019 | $ 135,640 | $ 41,581 | $ 50,221 | $ 120,844 | 304,984 | 458 | 653,728 |
Balance at beginning of the period (in shares) at Dec. 31, 2019 | 28,706,438 | 41,625 | 2,081,800 | 125,000 | |||
Condensed Consolidated Statements of Shareholders’ Equity | |||||||
Net income | 24,583 | 24,583 | |||||
Shares issued for stock compensation plans | $ 106 | 106 | |||||
Shares issued for stock compensation plans (in shares) | 36,046 | ||||||
Dividends on 8% preferred stock, annually | (833) | (833) | |||||
Dividends on 7% preferred stock, annually | (910) | (910) | |||||
Dividends on 6% preferred stock, annually | (1,875) | (1,875) | |||||
Dividends on common stock, annually | (2,298) | (2,298) | |||||
Other comprehensive income | 468 | 468 | |||||
Balance at end of the period at Mar. 31, 2020 | $ 135,746 | $ 41,581 | $ 50,221 | $ 120,844 | $ 323,651 | $ 926 | $ 672,969 |
Balance at end of the period (in shares) at Mar. 31, 2020 | 28,742,484 | 41,625 | 2,081,800 | 125,000 |
Consolidated Statements of Sh_2
Consolidated Statements of Shareholders' Equity (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Dividends on common stock per share | $ 0.32 | $ 0.28 |
8% Preferred Stock | ||
Preferred stock, dividend rate (as a percent) | 8.00% | |
Dividends on preferred stock per share | $ 80 | $ 80 |
7% Preferred Stock | ||
Preferred stock, dividend rate (as a percent) | 7.00% | |
Dividends on preferred stock per share | $ 1.75 | |
Offering expenses on issuance of stock | $ 1,731 | |
6% Preferred Stock | ||
Preferred stock, dividend rate (as a percent) | 6.00% | |
Dividends on preferred stock per share | $ 60 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Operating activities: | ||
Net income | $ 24,583 | $ 10,570 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 453 | 137 |
Provision for loan losses | 2,998 | 649 |
Gain on sale of securities | (127) | |
Gain on sale of loans | (21,166) | (2,643) |
Proceeds from sales of loans | 10,866,020 | 3,729,430 |
Loans and participations originated and purchased for sale | (11,551,090) | (3,776,827) |
Change in mortgage servicing rights for paydowns and fair value adjustments | 8,338 | 2,615 |
Net change in: | ||
Trading securities | (195,266) | 33,505 |
Other assets and receivables | (17,686) | 2,699 |
Other liabilities | 9,822 | 1,933 |
Other | 1,379 | 798 |
Net cash provided by (used in) operating activities | (871,615) | 2,739 |
Investing activities: | ||
Net change in securities purchased under agreements to resell | 38 | 37 |
Purchases of available-for-sale securities | (156,666) | (45,000) |
Proceeds from the sale of available-for-sale securities | 0 | 31,086 |
Proceeds from calls, maturities and paydowns of available-for-sale securities | 107,995 | 49,055 |
Purchases of loans | (32,631) | (14,233) |
Net change in loans receivable | (459,617) | (109,620) |
Purchase of Federal Home Loan Bank stock | (25,787) | (11,860) |
Proceeds from sale of Federal Home Loan Bank stock | 1,190 | |
Purchases of premises and equipment | (594) | (4,206) |
Purchase of limited partnership interests | (1,090) | |
Net cash used in investing activities | (568,352) | (103,551) |
Financing activities: | ||
Net change in deposits | 1,244,630 | (110,031) |
Proceeds from Federal Home Loan Bank borrowings | 5,597,675 | 2,348,720 |
Repayment of Federal Home Loan Bank borrowings | (5,334,998) | (2,209,281) |
Proceeds from issuance of preferred stock | 48,269 | |
Proceeds from notes payable | 450 | 4,404 |
Payments on notes payable | (1,500) | |
Payments of contingent consideration | (501) | |
Dividends | (5,916) | (2,842) |
Net cash provided by financing activities | 1,501,340 | 77,739 |
Net Change in Cash and Cash Equivalents | 61,373 | (23,073) |
Cash and Cash Equivalents, Beginning of Period | 506,709 | 336,524 |
Cash and Cash Equivalents, End of Period | 568,082 | 313,451 |
Additional Cash Flows Information: | ||
Interest paid | 23,782 | 14,745 |
Income taxes paid | $ 46 | $ 64 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
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”) and Farmers-Merchants Bank of Illinois (“FMBI”). Merchants Bank’s direct and indirect subsidiaries include Merchants Capital Corp. (“MCC”), Merchants Capital Servicing, LLC (“MCS”), Ash Realty Holdings, LLC (“Ash Realty”), MBI Midtown West, LLC (“MMW”), Natty Mac Funding, Inc. (“NMF”), which became dormant in the first quarter of 2019 after the Company’s acquisition of the assets of NattyMac, LLC (“NattyMac”), and OneTrust Funding, Inc. In August 2019 the company also formed PR Mortgage Investment, LP (“PRMI”), PRMIGP, LLC (“PRMIGP”), and PR Mortgage Investment Management, LLC (“PRMIM”). All these entities are collectively referred to as the “Company”. The accompanying unaudited condensed consolidated balance sheet of the Company as of December 31, 2019, which has been derived from audited financial statements, and unaudited condensed consolidated financial statements of the Company as of March 31, 2020 and for the three months ended March 31, 2020 and 2019, 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, 2019 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 March 31, 2020 and the results of operations for the three months ended March 31, 2020 and 2019, and cash flows for the three months ended March 31, 2020 and 2019. All interim amounts have not been audited and the results of operations for the three months ended March 31, 2020, 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 March 31, 2020 and 2019 include results from the Company, and its wholly owned subsidiaries, Merchants Bank, and FMBI. Also included are Merchants Bank’s wholly owned subsidiaries, MCC, MCC’s wholly owned subsidiary, MCS, Ash Realty, NMF, MMW, and OneTrust Funding, Inc. The unaudited condensed consolidated financial statements as of and for the period ended March 31, 2020 also include PRMI, PRMIGP, and PRMIM, all of which are 99% owned by Merchants Bank. All significant intercompany accounts and transactions have been eliminated in consolidation. 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 loan losses, loan servicing rights and fair values of financial instruments. The uncertainties related to the COVID-19 pandemic could cause significant changes to these estimates compared to what was known at the time these financial statements were prepared. Reclassifications Certain reclassifications have been made to the 2019 financial statements to conform to the financial statement presentation as of and for the three months ended March 31, 2020. These reclassifications had no effect on net income. |
Securities Available For Sale
Securities Available For Sale | 3 Months Ended |
Mar. 31, 2020 | |
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: March 31, 2020 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value (In thousands) Available-for-sale securities: Treasury notes $ 1,994 $ 49 $ — $ 2,043 Federal agencies 306,152 423 — 306,575 Municipals 5,566 385 — 5,951 Mortgage-backed - Government-sponsored entity (GSE) - residential 24,142 343 1 24,484 Total available-for-sale securities $ 337,854 $ 1,200 $ 1 $ 339,053 December 31, 2019 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value (In thousands) Available-for-sale securities: Treasury notes $ 4,744 $ 21 $ — $ 4,765 Federal agencies 244,986 24 37 244,973 Municipals 5,577 360 — 5,937 Mortgage-backed - Government-sponsored entity (GSE) - residential 34,357 213 2 34,568 Total available-for-sale securities $ 289,664 $ 618 $ 39 $ 290,243 The amortized cost and fair value of available-for-sale securities at March 31, 2020 and December 31, 2019, 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. March 31, 2020 December 31, 2019 Amortized Fair Amortized Fair Cost Value Cost Value Contractual Maturity (In thousands) Within one year $ 20,500 $ 20,563 $ 23,250 $ 23,233 After one through five years 287,914 288,337 226,748 226,783 After five through ten years — — — — After ten years 5,298 5,669 5,309 5,659 313,712 314,569 255,307 255,675 Mortgage-backed - Government-sponsored entity (GSE) - residential 24,142 24,484 34,357 34,568 $ 337,854 $ 339,053 $ 289,664 $ 290,243 During the three months ended March 31, 2020, no securities available-for-sale were sold. During the three months ended March 31, 2019, $31.1 million of securities available-for-sale were sold, and a net gain of $127,000 was recognized, consisting of $361,000 in gains and $234,000 of losses. 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 March 31, 2020 and December 31, 2019: March 31, 2020 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 $ — $ — $ — $ — $ — $ — Federal agencies — — — — — — Mortgage-backed - Government-sponsored entity (GSE) - residential 1,113 1 — — 1,113 1 $ 1,113 $ 1 $ — $ — $ 1,113 $ 1 December 31, 2019 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 $ — $ — $ — $ — $ — $ — Federal agencies 94,963 37 — — 94,963 $ 37 Municipals — — — — — $ — Mortgage-backed - Government-sponsored entity (GSE) - residential 809 2 — — 809 2 $ 95,772 $ 39 $ — $ — $ 95,772 $ 39 Other-than-temporary Impairment Unrealized losses on securities have not been recognized to income because the Company has the intent and ability to hold the securities for the foreseeable future, and the decline in fair value is primarily due to increased market interest rates. The fair value is expected to recover as the securities approach the maturity date. |
Trading Securities
Trading Securities | 3 Months Ended |
Mar. 31, 2020 | |
Trading Securities. | |
Trading Securities | Note 3: Trading Securities Trading securities are recorded at fair value with changes in fair value recorded in earnings. These include multi-family rental real estate loan originations, primarily in Government National Mortgage Association (“GNMA”) mortgage backed securities, as well as FHA and conventional Fannie Mae and Freddie Mac participation certificates pending settlements that typically occur within 30 days. The unrealized gains included in trading securities totaled $2.2 million and $545,000 at March 31, 2020 and 2019, respectively. |
Loans and Allowance for Loan Lo
Loans and Allowance for Loan Losses | 3 Months Ended |
Mar. 31, 2020 | |
Loans and Allowance for Loan Losses | |
Loans and Allowance for Loan Losses | Note 4: Loans and Allowance for Loan Losses 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 allowance for loan losses, 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 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 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. For impaired loans that are considered to be solely collateral dependent, a partial charge-off is recorded when a loss has been confirmed by an updated appraisal or other appropriate valuation of the collateral. When cash payments are received on impaired loans in each loan class, the Company records the payment as interest income unless collection of the remaining recorded principal amount is doubtful, at which time payments are used to reduce the principal 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. Loans receivable at March 31, 2020 and December 31, 2019 include: March 31, December 31, 2020 2019 (In thousands) Mortgage warehouse lines of credit $ 1,083,776 $ 765,151 Residential real estate 421,978 413,835 Multi-family and healthcare financing 1,435,206 1,347,125 Commercial and commercial real estate 468,668 398,601 Agricultural production and real estate 92,498 85,210 Consumer and margin loans 18,527 18,388 3,520,653 3,028,310 Less Allowance for loan losses 18,883 15,842 Loans Receivable $ 3,501,770 $ 3,012,468 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 line of credit, 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 LIBOR, plus a margin, or mortgage note rate, less 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. All-in-One mortgages included in this segment typically carry a base rate of 30-day LIBOR, plus a margin. Multi-Family and Healthcare Financing (MF RE): The Company engages in multi-family and healthcare financing, including construction loans, specializing in originating and servicing loans for multi-family rental and senior living properties. In addition, the Company originates loans secured by an assignment of federal income tax credits by partnerships invested in multi-family real estate projects. Construction and land loans are generally based upon estimates of costs and estimated value of the completed project and include independent appraisal reviews and a financial analysis of the developers and property owners. Sources of 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. These loans are considered to be higher risk than other real estate loans due to their ultimate repayment being sensitive to interest rate changes, general economic conditions and the availability of long-term financing. Credit risk in these loans may be impacted by the creditworthiness of a borrower, property values and the local economy in the Company’s market area. Repayment of these loans depends on the successful operation of a business or property and the borrower’s cash flows. 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 mortgage 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. 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. 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. Allowance for Loan Losses: The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to net interest income. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of 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. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance consists of allocated and general components. The allocated component relates to loans that are classified as impaired. For those loans that are classified as impaired, an allowance is established when the discounted cash flows (collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers non-impaired loans and is based on historical charge-off experience and expected loss given default derived from the Company’s internal risk rating process. Other adjustments may be made to the allowance for pools of loans after an assessment of internal or external influences on credit quality that are not fully reflected in the historical loss or risk rating data. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis for commercial and construction loans by the fair value of the collateral if the loan is collateral dependent, the loan’s obtainable market price, or either the present value of expected future cash flows discounted at the loan’s effective interest rate. For impaired loans where the Company utilizes discounted cash flows to determine the level of impairment, the Company includes the entire change in the present value of cash flows as bad debt expense. Groups of loans with similar risk characteristics are collectively evaluated for impairment based on the group’s historical loss experience adjusted for changes in trends, conditions and other relevant factors that affect repayment of the loans. Accordingly, the Company does not separately identify individual consumer and residential loans for impairment measurements, unless such loans are the subject of a restructuring agreement due to financial difficulties of the borrower. In the course of working with borrowers, the Company may choose to restructure the contractual terms of certain loans. In restructuring the loan, the Company attempts to work out an alternative payment schedule with the borrower in order to optimize collectability of the loan. A troubled debt restructuring (“TDR)” occurs when, for economic or legal reasons related to a borrower’s financial difficulties, the Company grants a concession to the borrower that it would not otherwise consider. Terms may be modified to fit the ability of the borrower to repay in line with its current financial status, and the restructuring of the loan may include the transfer of assets from the borrower to satisfy the debt, a modification of loan terms, or a combination of the two. 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. With regard to determination of the amount of the allowance for credit losses, restructured loans are considered to be impaired. As a result, the determination of the amount of impaired loans for each loan portfolio segment within troubled debt restructurings is the same as detailed previously above. The following tables present, by loan portfolio segment, the activity in the allowance for loan losses for the three months ended March 31, 2020 and 2019 and the recorded investment in loans and impairment method as of March 31, 2020: At or For the Three Months Ended March 31, 2020 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Allowance for loan losses Balance, beginning of period $ 1,913 $ 2,042 $ 7,018 $ 4,173 $ 523 $ 173 $ 15,842 Provision (credit) for loan losses 796 20 676 1,445 38 23 2,998 Loans charged to the allowance — — — — — (1) (1) Recoveries of loans previously charged off — — — 44 — — 44 Balance, end of period $ 2,709 $ 2,062 $ 7,694 $ 5,662 $ 561 $ 195 $ 18,883 Ending balance: individually evaluated for impairment $ — 29 — 1,167 — 6 $ 1,202 Ending balance: collectively evaluated for impairment $ 2,709 $ 2,033 $ 7,694 $ 4,495 $ 561 $ 189 $ 17,681 Loans Ending balance $ 1,083,776 $ 421,978 $ 1,435,206 $ 468,668 $ 92,498 $ 18,527 $ 3,520,653 Ending balance individually evaluated for impairment $ 230 $ 2,410 $ — $ 9,425 $ 2,043 $ 16 $ 14,124 Ending balance collectively evaluated for impairment $ 1,083,546 $ 419,568 $ 1,435,206 $ 459,243 $ 90,455 $ 18,511 $ 3,506,529 For the Three Months Ended March 31, 2019 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Allowance for loan losses Balance, beginning of period $ 1,068 $ 1,986 $ 6,030 $ 3,051 $ 429 $ 140 $ 12,704 Provision (credit) for loan losses 186 4 347 71 34 7 649 Loans charged to the allowance — — — — — — — Recoveries of loans previously charged off — — — — 3 — 3 Balance, end of period $ 1,254 $ 1,990 $ 6,377 $ 3,122 $ 466 $ 147 $ 13,356 The following table presents the allowance for loan losses and the recorded investment in loans and impairment method as of December 31, 2019: December 31, 2019 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Allowance for loan losses Balance, December 31, 2019 $ 1,913 $ 2,042 $ 7,018 $ 4,173 $ 523 $ 173 $ 15,842 Ending balance: individually evaluated for impairment $ — $ 23 $ — $ 650 $ — $ 8 $ 681 Ending balance: collectively evaluated for impairment $ 1,913 $ 2,019 $ 7,018 $ 3,523 $ 523 $ 165 $ 15,161 Loans Balance, December 31, 2019 $ 765,151 $ 413,835 $ 1,347,125 $ 398,601 $ 85,210 $ 18,388 $ 3,028,310 Ending balance individually evaluated for impairment $ 233 $ 3,109 $ — $ 9,152 $ — $ 23 $ 12,517 Ending balance collectively evaluated for impairment $ 764,918 $ 410,726 $ 1,347,125 $ 389,449 $ 85,210 $ 18,365 $ 3,015,793 Internal Risk Categories In adherence with policy, the Company uses the following internal risk grading categories and definitions for loans: Average or above – Loans to borrowers of satisfactory financial strength or better. Earnings performance is consistent with primary and secondary sources of repayment that are well defined and adequate to retire the debt in a timely and orderly fashion. These businesses would generally exhibit satisfactory asset quality and liquidity with moderate leverage, average performance to their peer group and experienced management in key positions. These loans are disclosed as “Acceptable and Above” in the following table. Acceptable – Loans to borrowers involving more than average risk and which contain certain characteristics that require some supervision and attention by the lender. Asset quality is acceptable, but debt capacity is modest and little excess liquidity is available. The borrower may be fully leveraged and unable to sustain major setbacks. Covenants are structured to ensure adequate protection. Borrower’s management may have limited experience and depth. This category includes loans which are highly leveraged due to regulatory constraints, as well as loans involving reasonable exceptions to policy. These loans are disclosed as “Acceptable and Above” in the following table. Special Mention (Watch) – This is a loan that is sound and collectable but contains considerable 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 - Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The following tables present the credit risk profile of the Company’s loan portfolio based on internal rating category and payment activity as of March 31, 2020 and December 31, 2019: March 31, 2020 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Special Mention (Watch) $ — $ 2,413 $ 30,930 $ 12,961 $ 2,006 $ 30 $ 48,340 Substandard 230 2,410 — 9,425 2,043 16 14,124 Doubtful — — — — — — — Acceptable and Above 1,083,546 417,155 1,404,276 446,282 88,449 18,481 3,458,189 Total $ 1,083,776 $ 421,978 $ 1,435,206 $ 468,668 $ 92,498 $ 18,527 $ 3,520,653 December 31, 2019 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Special Mention (Watch) $ — $ 2,472 $ 41,882 $ 13,806 $ 2,114 $ 31 $ 60,305 Substandard 233 3,109 — 9,152 — 23 12,517 Doubtful — — — — — — — Acceptable and Above 764,918 408,254 1,305,243 375,643 83,096 18,334 2,955,488 Total $ 765,151 $ 413,835 $ 1,347,125 $ 398,601 $ 85,210 $ 18,388 $ 3,028,310 The Company evaluates the loan risk grading system definitions and allowance for loan loss methodology on an ongoing basis. No significant changes were made to either during the past year. The following tables present the Company’s loan portfolio aging analysis of the recorded investment in loans as of March 31, 2020 and December 31, 2019: March 31, 2020 30-59 Days 60-89 Days Greater Than Total Total Past Due Past Due 90 Days Past Due Current Loans (In thousands) MTG WHLOC $ — $ — $ — $ — $ 1,083,776 $ 1,083,776 RES RE 1,002 289 1,972 3,263 418,715 421,978 MF RE — — — — 1,435,206 1,435,206 CML & CRE 274 622 2,180 3,076 465,592 468,668 AG & AGRE 429 152 1,908 2,489 90,009 92,498 CON & MAR 610 36 42 688 17,839 18,527 $ 2,315 $ 1,099 $ 6,102 $ 9,516 $ 3,511,137 $ 3,520,653 December 31, 2019 30-59 Days 60-89 Days Greater Than Total Total Past Due Past Due 90 Days Past Due Current Loans (In thousands) MTG WHLOC $ — $ — $ — $ — $ 765,151 $ 765,151 RES RE 3,089 562 2,324 5,975 407,860 413,835 MF RE — — — — 1,347,125 1,347,125 CML & CRE 2,293 335 1,663 4,291 394,310 398,601 AG & AGRE 2,047 — 195 2,242 82,968 85,210 CON & MAR 50 31 19 100 18,288 18,388 $ 7,479 $ 928 $ 4,201 $ 12,608 $ 3,015,702 $ 3,028,310 A loan is considered impaired, in accordance with the impairment accounting guidance (ASC 310-10-35-16), when based on current information and events, it is probable the Company will be unable to collect all amounts due from the borrower in accordance with the contractual terms of the loan. Impaired loans include nonperforming commercial loans but also include loans modified in TDRs. The following tables present impaired loans and specific valuation allowance information based on class level as of March 31, 2020 and December 31, 2019: March 31, 2020 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Impaired loans without a specific allowance: Recorded investment $ 230 $ 2,179 $ — $ 7,028 $ 2,043 $ 7 $ 11,487 Unpaid principal balance 230 2,179 — 7,028 2,043 7 11,487 Impaired loans with a specific allowance: Recorded investment — 231 — 2,397 — 9 2,637 Unpaid principal balance — 231 — 2,397 — 9 2,637 Specific allowance — 29 — 1,167 — 6 1,202 Total impaired loans: Recorded investment 230 2,410 — 9,425 2,043 16 14,124 Unpaid principal balance 230 2,410 — 9,425 2,043 16 14,124 Specific allowance — 29 — 1,167 — 6 1,202 December 31, 2019 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Impaired loans without a specific allowance: Recorded investment $ 233 $ 2,899 $ — $ 6,662 $ — $ 12 $ 9,806 Unpaid principal balance 233 2,899 — 6,662 — 12 9,806 Impaired loans with a specific allowance: Recorded investment — 210 — 2,490 — 11 2,711 Unpaid principal balance — 210 — 2,490 — 11 2,711 Specific allowance — 23 — 650 — 8 681 Total impaired loans: Recorded investment 233 3,109 — 9,152 — 23 12,517 Unpaid principal balance 233 3,109 — 9,152 — 23 12,517 Specific allowance — 23 — 650 — 8 681 The following tables present by portfolio class, information related to the average recorded investment and interest income recognized on impaired loans for the three months ended March 31, 2020 and 2019: MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Three Months Ended March 31, 2020 Average recorded investment in impaired loans $ 231 $ 3,088 $ — $ 9,502 $ 2,043 $ 20 $ 14,884 Interest income recognized — 16 — 131 — — 147 Three Months Ended March 31, 2019 Average recorded investment in impaired loans $ 574 $ 2,806 $ — $ 8,468 $ 364 $ 48 $ 12,260 Interest income recognized — 15 — 140 — — 155 The following table presents the Company’s nonaccrual loans and loans past due 90 days or more and still accruing at March 31, 2020 and December 31, 2019. March 31, December 31, 2020 2019 Total Loans > Total Loans > 90 Days & 90 Days & Nonaccrual Accruing Nonaccrual Accruing (In thousands) MTG WHLOC $ 230 $ — $ 233 $ — RES RE 664 1,551 740 1,851 MF RE — — — — CML & CRE 1,766 396 1,118 486 AG & AGRE — 1,908 — 231 CON & MAR 16 26 18 1 $ 2,676 $ 3,881 $ 2,109 $ 2,569 No troubled loans were restructured during the three months ended March 31, 2020 or 2019. No restructured loans defaulted during the three months ended March 31, 2020 or 2019. Loan modifications or forbearances related to the COVID-19 pandemic will generally not be considered TDRs. There was one customer with a residential loan balance of $725,000 in the process of foreclosure at December 31, 2019 that was paid in full at March 31, 2020 and there were no residential loans in process of foreclosure as of March 31, 2020. |
Regulatory Matters
Regulatory Matters | 3 Months Ended |
Mar. 31, 2020 | |
Regulatory Matters | |
Regulatory Matters | Note 5: 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. Quantitative measures established by regulation to ensure capital adequacy require the Company, Merchants Bank, and FMBI to maintain minimum amounts and ratios (set forth in the table below). Management believes, as of March 31, 2020 and December 31, 2019, that the Company, Merchants Bank, and FMBI met all capital adequacy requirements to which they were subject. As of March 31, 2020 and December 31, 2019, 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 Federal Deposit Insurance Corporation (“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. 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 9%, 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. In April 2020, under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act”), the 9% leverage ratio threshold was temporarily reduced to 8% in response to the COVID-19 pandemic. The threshold will increase to 8.5% in 2021 and return to 9% in 2022. The Company, Merchants Bank, and FMBI elected to begin using CBLR for the first quarter of 2020. 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) March 31, 2020 Tier 1 capital (1) (to average assets) (i.e., leverage ratio) Company $ 652,781 9.9 % $ 592,662 > 9 % Merchants Bank 642,891 10.1 % 574,263 > 9 % FMBI 21,969 10.7 % 18,397 > 9 % Minimum Minimum Amount Required Amount To Be for Adequately Well Actual Capitalized (1) Capitalized (1) Amount Ratio Amount Ratio Amount Ratio (Dollars in thousands) December 31, 2019 Total capital (1) (to risk-weighted assets) Company $ 637,472 11.6 % $ 440,063 8.0 % $ — N/A Merchants Bank 639,104 12.0 % 426,748 8.0 % 533,435 10.0 % FMBI 21,726 13.1 % 13,306 8.0 % 16,632 10.0 % Tier 1 capital (1) (to risk-weighted assets) Company 621,630 11.3 % 330,047 6.0 % — N/A Merchants Bank 623,716 11.7 % 320,061 6.0 % 426,748 8.0 % FMBI 21,272 12.8 % 9,979 6.0 % 13,306 8.0 % Common Equity Tier 1 capital (1) (to risk-weighted assets) Company 408,984 7.4 % 247,536 4.5 % — N/A Merchants Bank 623,716 11.7 % 240,046 4.5 % 346,733 6.5 % FMBI 21,272 12.8 % 7,484 4.5 % 10,811 6.5 % Tier 1 capital (1) (to average assets) Company 621,630 9.4 % 264,324 4.0 % — N/A Merchants Bank 623,716 9.7 % 257,487 4.0 % 321,859 5.0 % FMBI 21,272 11.7 % 7,302 4.0 % 9,128 5.0 % 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 | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | Note 6: 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 and Interest Rate Lock Commitments 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. Each 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 and forward contracts utilized by the Company at March 31, 2020 and December 31, 2019. Notional Fair Value Amount Balance Sheet Location Asset Liability March 31, 2020 (In thousands) (In thousands) Interest rate lock commitments $ 162,228 Other assets/liabilities $ 2,079 $ 80 Forward contracts 122,706 Other assets/liabilities 96 1,273 $ 2,175 $ 1,353 Notional Fair Value Amount Balance Sheet Location Asset Liability December 31, 2019 (In thousands) (In thousands) Interest rate lock commitments $ 17,826 Other assets/liabilities $ 186 $ — Forward contracts 34,268 Other assets/liabilities — 27 $ 186 $ 27 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 months ended March 31, 2020 and 2019. Three Months Ended March 31, 2020 2019 (In thousands) Interest rate lock commitments $ 1,813 $ — Forward contracts (includes pair-off settlements) (1,844) (5) Net derivative gains (losses) $ (31) $ (5) Derivatives on Behalf of Customers The Company offers derivative contracts to some customers in connection with their risk management needs. These derivatives include 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 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) March 31, 2020 $ 62,470 Other assets/liabilities $ 3,214 $ 3,214 December 31, 2019 58,067 Other assets/liabilities $ 511 $ 511 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 March 31, 2020 2019 (In thousands) Gross swap gains $ 2,703 $ — Gross swap losses (2,703) — Net swap gains (losses) — $ — The Company pledged $3.1 million and $590,000 in collateral to secure its obligations under swap contracts at March 31, 2020 and December 31, 2019, respectively. |
Disclosures about Fair Value of
Disclosures about Fair Value of Assets and Liabilities | 3 Months Ended |
Mar. 31, 2020 | |
Disclosures about Fair Value of Assets and Liabilities | |
Disclosures about Fair Value of Assets and Liabilities | Note 7: 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 Quoted prices in active markets for identical assets or liabilities Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities Level 3 Unobservable inputs supported by little or no market activity and are significant to the fair value of the assets or liabilities 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 March 31, 2020 and December 31, 2019: 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) March 31, 2020 Trading securities $ 465,157 $ — $ 465,157 $ — Available-for-sale securities: Treasury notes 2,043 2,043 — — Federal agencies 306,575 — 306,575 — Municipals 5,951 — 5,951 — Mortgage-backed - Government-sponsored entity (GSE) - residential 24,484 — 24,484 — Loans held for sale 18,938 — 18,938 — Mortgage servicing rights 69,978 — — 69,978 Derivative assets - interest rate lock commitments 2,079 — — 2,079 Derivative assets - forward contracts 96 — 96 — Derivative assets - interest rate swaps 3,214 — 3,214 — Derivative liabilities - interest rate lock commitments 80 — — 80 Derivative liabilities - forward contracts 1,273 — 1,273 — Derivative liabilities - interest rate swaps 3,214 — 3,214 — December 31, 2019 Trading securities $ 269,891 $ — $ 269,891 $ — Available-for-sale securities: Treasury notes 4,765 4,765 — — Federal agencies 244,973 — 244,973 — Municipals 5,937 — 5,937 — Mortgage-backed - Government-sponsored entity (GSE) - residential 34,568 — 34,568 — Loans held for sale 19,592 — 19,592 — Mortgage servicing rights 74,387 — — 74,387 Derivative assets - interest rate lock commitments 186 — — 186 Derivative asset - interest rate swap 511 — 511 — Derivative liabilities - forward contracts 27 — 27 — Derivative liabilities - interest rate swap 511 — 511 — 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 three months ended March 31, 2020 and the year ended December 31, 2019. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below. Trading 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, U.S. Treasuries, 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. Mortgage Servicing Rights Mortgage 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, and default rate. Due to the nature of the valuation inputs, mortgage 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 mortgage 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 March 31, 2020 2019 (In thousands) Mortgage servicing rights Balance, beginning of period $ 74,387 $ 77,844 Additions Originated and purchased servicing 3,929 1,020 Subtractions Paydowns (1,858) (1,110) Changes in fair value due to changes in valuation inputs or assumptions used in the valuation model (6,480) (1,505) Balance, end of period $ 69,978 $ 76,249 Derivative Assets - interest rate lock commitments Balance, beginning of period $ 186 $ 70 Changes in fair value 1,893 1 Balance, end of period $ 2,079 $ 71 Derivative Liabilities - interest rate lock commitments Balance, beginning of period $ — $ — Changes in fair value 80 1 Balance, end of period $ 80 $ 1 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 March 31, 2020 and December 31, 2019. 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) March 31, 2020 Impaired loans (collateral-dependent) $ 1,306 $ — $ — $ 1,306 December 31, 2019 Impaired loans (collateral-dependent) $ 1,570 $ — $ — $ 1,570 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 Impaired Loans, Net of Allowance for Loan Losses The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral, less estimated cost to sell. Collateral-dependent impaired 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 Company’s Chief Credit Officer’s (CCO) office. Appraisals 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 Fair Value Technique Unobservable Inputs Range (In thousands) At March 31, 2020: Collateral-dependent impaired loans $ 1,306 Market comparable properties Marketability discount 44% - 75% Mortgage servicing rights $ 69,978 Discounted cash flow Discount rate 8% - 13% Constant prepayment rate 2% - 43% Derivative assets - interest rate lock commitments $ 2,079 Discounted cash flow loan closing rates 56-99% Derivative liabilities - interest rate lock commitments $ 80 Discounted cash flow loan closing rates 56-99% At December 31, 2019: Collateral-dependent impaired loans $ 1,570 Market comparable properties Marketability discount 37%-55% Mortgage servicing rights $ 74,387 Discounted cash flow Discount rate 8% - 13% Constant prepayment rate 1% - 39% Derivative assets - interest rate lock commitments $ 186 Discounted cash flow loan closing rates 73-99% 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. Mortgage Servicing Rights The significant unobservable inputs used in the fair value measurement of the Company’s mortgage servicing rights are discount rates and constant prepayment rates. Significant increases or decreases in any of those inputs in isolation would result in a significantly different fair value measurement. 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 March 31, 2020 and December 31, 2019. 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) March 31, 2020 Financial assets: Cash and cash equivalents $ 568,082 $ 568,082 $ 568,082 $ — $ — Securities purchased under agreements to resell 6,685 6,685 — 6,685 — FHLB stock 46,156 46,156 — 46,156 — Loans held for sale 2,777,070 2,777,070 — 2,777,070 — Loans, net 3,501,770 3,475,393 — — 3,475,393 Interest receivable 18,139 18,139 — 18,139 — Financial liabilities: Deposits 6,722,705 6,730,101 3,967,232 2,762,869 — Lines of credit — — — — — Short-term subordinated debt 12,650 12,650 — 12,650 — FHLB advances 431,917 431,283 — 431,283 — Interest payable 10,219 10,219 — 10,219 — December 31, 2019 Financial assets: Cash and cash equivalents $ 506,709 $ 506,709 $ 506,709 $ — $ — Securities purchased under agreements to resell 6,723 6,723 — 6,723 — FHLB stock 20,369 20,369 — 20,369 — Loans held for sale 2,074,197 2,074,197 — 2,074,197 — Loans, net 3,012,468 2,999,580 — — 2,999,580 Interest receivable 18,359 18,359 — 18,359 — Financial liabilities: Deposits 5,478,075 5,478,682 3,303,736 2,174,946 — Lines of credit 6,540 6,540 — 6,540 — Short-term subordinated debt 12,200 12,200 — 12,200 — FHLB advances 162,699 162,803 — 162,803 — Interest payable 11,938 11,938 — 11,938 — |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share | |
Earnings Per Share | Note 8: Earnings Per Share Earnings per share were computed as follows: Three Month Periods Ended March 31, 2020 2019 Weighted- Per Weighted- Per Net Average Share Net Average Share Income Shares Amount Income Shares Amount (In thousands) (In thousands) Net income $ 24,583 $ 10,570 Dividends on preferred stock (3,618) (833) Net income allocated to common shareholders $ 20,965 $ 9,737 Basic earnings per share 28,734,632 $ 0.73 28,702,250 $ 0.34 Effect of dilutive securities-restricted stock awards 24,780 35,189 Diluted earnings per share 28,759,412 $ 0.73 28,737,439 $ 0.34 |
Share-Based Payment Plan
Share-Based Payment Plan | 3 Months Ended |
Mar. 31, 2020 | |
Share-Based Payment Plan | |
Share-Based Payment Plan | Note 9: Share-Based Payment Plans Equity-based incentive awards are currently issued pursuant to the 2017 Equity Incentive Plan (the “2017 Incentive Plan”). Prior to the adoption of the 2017 Incentive Plan, the equity awards issued historically consisted of restricted stock awards issued pursuant to the Incentive Plan for Merchants Bank Executive Officers (the “Prior Incentive Plan”). As of the effective date of the 2017 Equity Incentive Plan, no further awards will be granted under the Prior Incentive Plan. However, any previously outstanding incentive award granted under the Prior Incentive Plan remains subject to the terms of such plan until the time it is no longer outstanding. During the three months ended March 31, 2020 and March 31, 2019, the Company issued 36,046 and 10,127 shares, respectively, pursuant to these plans . 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. There were no shares issued to non-executive directors during the three months ended March 31, 2020 or March 31, 2019. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2020 | |
Segment Information | |
Segment Information | Note 10: Segment Information Our 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, and 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 months ended March 31, 2020 and 2019. Multi-family Mortgage Mortgage Banking Warehousing Banking Other Total (In thousands) Three Months Ended March 31, 2020 Interest income $ 420 $ 30,099 $ 29,230 $ 668 $ 60,417 Interest expense — 12,085 11,807 (1,828) 22,064 Net interest income 420 18,014 17,423 2,496 38,353 Provision for loan losses — 1,180 1,818 — 2,998 Net interest income after provision for loan losses 420 16,834 15,605 2,496 35,355 Noninterest income 17,364 2,776 683 (921) 19,902 Noninterest expense 10,348 3,019 5,688 3,238 22,293 Income before income taxes 7,436 16,591 10,600 (1,663) 32,964 Income taxes 2,037 4,154 2,650 (460) 8,381 Net income (loss) $ 5,399 $ 12,437 $ 7,950 $ (1,203) $ 24,583 Total assets $ 180,772 $ 4,362,423 $ 3,323,750 $ 41,453 $ 7,908,398 Multi-family Mortgage Mortgage Banking Warehousing Banking Other Total (In thousands) Three Months Ended March 31, 2019 Interest income $ 331 $ 14,380 $ 24,492 $ 471 $ 39,674 Interest expense — 7,529 8,982 (968) 15,543 Net interest income 331 6,851 15,510 1,439 24,131 Provision for loan losses — 133 516 — 649 Net interest income after provision for loan losses 331 6,718 14,994 1,439 23,482 Noninterest income 2,691 753 883 (663) 3,664 Noninterest expense 3,977 2,336 4,120 2,602 13,035 Income before income taxes (955) 5,135 11,757 (1,826) 14,111 Income taxes (243) 1,303 2,988 (507) 3,541 Net income (loss) $ (712) $ 3,832 $ 8,769 $ (1,319) $ 10,570 Total assets $ 160,609 $ 1,554,233 $ 2,223,890 37,993 $ 3,976,725 |
Preferred Stock Offerings
Preferred Stock Offerings | 3 Months Ended |
Mar. 31, 2020 | |
Preferred Stock Offerings | |
Preferred Stock Offerings | Note 11: Preferred Stock Offerings 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. The Company may redeem the Series A Preferred Stock, in whole or in part, at our option, on any dividend payment date on or after April 1, 2024, 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. On August 19, 2019, the Company issued 5,000,000 depositary shares, each representing a 1/40 th interest in a share of its 6.00% Fixed-to-Floating Rate Series B Non-Cumulative Perpetual Preferred Stock, without par value (the “Series B Preferred Stock”), and with a liquidation preference of $1,000.00 per share (equivalent to $25.00 per depositary share). The aggregate gross offering proceeds for the shares issued by the Company was $125.0 million, and after deducting underwriting discounts and commissions and offering expenses of approximately $4.2 million paid to third parties, the Company received total net proceeds of $120.8 million. The Series B Preferred Stock have no voting rights with respect to matters that generally require the approval of our common shareholders. Dividends on the Series B Preferred Stock, to the extent declared by the Company’s board, are payable quarterly. The Company may redeem the Series A Preferred Stock, in whole or in part, at our option, on any dividend payment date on or after October 1, 2024, 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. The Company may redeem this Preferred Stock, in whole or in part, at our option, on any dividend payment date on or after December 31, 2020, 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. 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 of Merchants Capital; and other accredited investors. 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. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2020 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | Note 12: 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 2016‑02, 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. As an emerging growth company, the amendments in ASU 2016-02 are effective for fiscal years beginning after December 15, 2020, and for interim periods for years beginning after January 1, 2021. The Company is continuing to evaluate the impact of adopting this new guidance, but it does not expect the adoption to have a material impact on the Company’s financial position or results of operations. FASB ASU 2016‑13, Financial Instruments—Credit Losses In June 2016, the FASB issued ASU 2016‑13, “Financial Instruments—Credit Losses”, commonly referred to as “CECL”. The amendments in this ASU replace the incurred loss model with a methodology that reflects the “current expected credit losses” over the life of the loan and requires consideration of a broader range of reasonable and supportable information to calculate credit loss estimates. ASU 2016‑13 replaces the incurred loss impairment methodology with a new methodology that reflects expected credit losses over the lives of the loans and requires consideration of a broader range of information to form credit loss estimates. The ASU requires an organization to estimate all expected credit losses for financial assets measured at amortized cost, including loans and held‑to‑maturity debt securities, based on historical experience, current conditions, and reasonable and supportable forecasts. Additional disclosures are required. As an emerging growth company, the amendments in ASU 2016‑13 are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Because the Company’s status as an emerging growth company is expected to expire on December 31, 2022, this standard will likely be implemented by December 31, 2022. The Company has established a cross-functional committee that has developed a project plan to review modeling data currently available and technology needed to ensure compliance with this standard. The committee has contracted with a vendor to assist in generating specific loan level details within our core systems, as well as compiling peer and industry data that would be useful in our modeling forecasts. While the Company generally expects to recognize a one-time cumulative effect adjustment to the allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, the Company cannot yet determine the magnitude of any such one-time adjustment or the overall impact of the new guidance on the Company’s consolidated financial statements. Management continues to recognize that the implementation of this ASU may increase the balance of the allowance for loan losses and is continuing to evaluate the potential impact on the Company’s financial position and results of operations. FASB ASU No. 2017‑04, Intangibles—Goodwill and Other (Topic 350) In January 2017, the FASB issued ASU 2017‑04, “Intangibles—Goodwill and Other (Topic 350).” This ASU simplifies the test for goodwill impairment. Specifically, these amendments eliminate Step 2 from the goodwill impairment test and also eliminate the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. As an emerging growth company, the amendments in this ASU are effective for annual goodwill impairment tests in fiscal years beginning after December 15, 2021. Management continues to believe that the changes will not have a material effect on the Company’s financial position and results of operations. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
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”) and Farmers-Merchants Bank of Illinois (“FMBI”). Merchants Bank’s direct and indirect subsidiaries include Merchants Capital Corp. (“MCC”), Merchants Capital Servicing, LLC (“MCS”), Ash Realty Holdings, LLC (“Ash Realty”), MBI Midtown West, LLC (“MMW”), Natty Mac Funding, Inc. (“NMF”), which became dormant in the first quarter of 2019 after the Company’s acquisition of the assets of NattyMac, LLC (“NattyMac”), and OneTrust Funding, Inc. In August 2019 the company also formed PR Mortgage Investment, LP (“PRMI”), PRMIGP, LLC (“PRMIGP”), and PR Mortgage Investment Management, LLC (“PRMIM”). All these entities are collectively referred to as the “Company”. The accompanying unaudited condensed consolidated balance sheet of the Company as of December 31, 2019, which has been derived from audited financial statements, and unaudited condensed consolidated financial statements of the Company as of March 31, 2020 and for the three months ended March 31, 2020 and 2019, 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, 2019 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 March 31, 2020 and the results of operations for the three months ended March 31, 2020 and 2019, and cash flows for the three months ended March 31, 2020 and 2019. All interim amounts have not been audited and the results of operations for the three months ended March 31, 2020, 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 March 31, 2020 and 2019 include results from the Company, and its wholly owned subsidiaries, Merchants Bank, and FMBI. Also included are Merchants Bank’s wholly owned subsidiaries, MCC, MCC’s wholly owned subsidiary, MCS, Ash Realty, NMF, MMW, and OneTrust Funding, Inc. The unaudited condensed consolidated financial statements as of and for the period ended March 31, 2020 also include PRMI, PRMIGP, and PRMIM, all of which are 99% owned by Merchants Bank. All significant intercompany accounts and transactions have been eliminated in consolidation. |
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 loan losses, loan servicing rights and fair values of financial instruments. The uncertainties related to the COVID-19 pandemic could cause significant changes to these estimates compared to what was known at the time these financial statements were prepared. |
Reclassifications | Reclassifications Certain reclassifications have been made to the 2019 financial statements to conform to the financial statement presentation as of and for the three months ended March 31, 2020. These reclassifications had no effect on net income. |
Securities Available For Sale (
Securities Available For Sale (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Securities Available For Sale | |
Schedule of amortized cost and approximate fair values, together with gross unrealized gains and losses | March 31, 2020 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value (In thousands) Available-for-sale securities: Treasury notes $ 1,994 $ 49 $ — $ 2,043 Federal agencies 306,152 423 — 306,575 Municipals 5,566 385 — 5,951 Mortgage-backed - Government-sponsored entity (GSE) - residential 24,142 343 1 24,484 Total available-for-sale securities $ 337,854 $ 1,200 $ 1 $ 339,053 December 31, 2019 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value (In thousands) Available-for-sale securities: Treasury notes $ 4,744 $ 21 $ — $ 4,765 Federal agencies 244,986 24 37 244,973 Municipals 5,577 360 — 5,937 Mortgage-backed - Government-sponsored entity (GSE) - residential 34,357 213 2 34,568 Total available-for-sale securities $ 289,664 $ 618 $ 39 $ 290,243 |
Schedule of amortized cost and fair value of available-for-sale securities by contractual maturity | March 31, 2020 December 31, 2019 Amortized Fair Amortized Fair Cost Value Cost Value Contractual Maturity (In thousands) Within one year $ 20,500 $ 20,563 $ 23,250 $ 23,233 After one through five years 287,914 288,337 226,748 226,783 After five through ten years — — — — After ten years 5,298 5,669 5,309 5,659 313,712 314,569 255,307 255,675 Mortgage-backed - Government-sponsored entity (GSE) - residential 24,142 24,484 34,357 34,568 $ 337,854 $ 339,053 $ 289,664 $ 290,243 |
Schedule of gross unrealized losses and fair value of investments with unrealized losses have been in continuous | March 31, 2020 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 $ — $ — $ — $ — $ — $ — Federal agencies — — — — — — Mortgage-backed - Government-sponsored entity (GSE) - residential 1,113 1 — — 1,113 1 $ 1,113 $ 1 $ — $ — $ 1,113 $ 1 December 31, 2019 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 $ — $ — $ — $ — $ — $ — Federal agencies 94,963 37 — — 94,963 $ 37 Municipals — — — — — $ — Mortgage-backed - Government-sponsored entity (GSE) - residential 809 2 — — 809 2 $ 95,772 $ 39 $ — $ — $ 95,772 $ 39 |
Loans and Allowance for Loan _2
Loans and Allowance for Loan Losses (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Loans and Allowance for Loan Losses | |
Summary of loans | March 31, December 31, 2020 2019 (In thousands) Mortgage warehouse lines of credit $ 1,083,776 $ 765,151 Residential real estate 421,978 413,835 Multi-family and healthcare financing 1,435,206 1,347,125 Commercial and commercial real estate 468,668 398,601 Agricultural production and real estate 92,498 85,210 Consumer and margin loans 18,527 18,388 3,520,653 3,028,310 Less Allowance for loan losses 18,883 15,842 Loans Receivable $ 3,501,770 $ 3,012,468 |
Summary of activity in the allowance for loans and recorded investment by loan portfolio | At or For the Three Months Ended March 31, 2020 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Allowance for loan losses Balance, beginning of period $ 1,913 $ 2,042 $ 7,018 $ 4,173 $ 523 $ 173 $ 15,842 Provision (credit) for loan losses 796 20 676 1,445 38 23 2,998 Loans charged to the allowance — — — — — (1) (1) Recoveries of loans previously charged off — — — 44 — — 44 Balance, end of period $ 2,709 $ 2,062 $ 7,694 $ 5,662 $ 561 $ 195 $ 18,883 Ending balance: individually evaluated for impairment $ — 29 — 1,167 — 6 $ 1,202 Ending balance: collectively evaluated for impairment $ 2,709 $ 2,033 $ 7,694 $ 4,495 $ 561 $ 189 $ 17,681 Loans Ending balance $ 1,083,776 $ 421,978 $ 1,435,206 $ 468,668 $ 92,498 $ 18,527 $ 3,520,653 Ending balance individually evaluated for impairment $ 230 $ 2,410 $ — $ 9,425 $ 2,043 $ 16 $ 14,124 Ending balance collectively evaluated for impairment $ 1,083,546 $ 419,568 $ 1,435,206 $ 459,243 $ 90,455 $ 18,511 $ 3,506,529 For the Three Months Ended March 31, 2019 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Allowance for loan losses Balance, beginning of period $ 1,068 $ 1,986 $ 6,030 $ 3,051 $ 429 $ 140 $ 12,704 Provision (credit) for loan losses 186 4 347 71 34 7 649 Loans charged to the allowance — — — — — — — Recoveries of loans previously charged off — — — — 3 — 3 Balance, end of period $ 1,254 $ 1,990 $ 6,377 $ 3,122 $ 466 $ 147 $ 13,356 |
Summary of activity in the allowance for loan losses | December 31, 2019 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Allowance for loan losses Balance, December 31, 2019 $ 1,913 $ 2,042 $ 7,018 $ 4,173 $ 523 $ 173 $ 15,842 Ending balance: individually evaluated for impairment $ — $ 23 $ — $ 650 $ — $ 8 $ 681 Ending balance: collectively evaluated for impairment $ 1,913 $ 2,019 $ 7,018 $ 3,523 $ 523 $ 165 $ 15,161 Loans Balance, December 31, 2019 $ 765,151 $ 413,835 $ 1,347,125 $ 398,601 $ 85,210 $ 18,388 $ 3,028,310 Ending balance individually evaluated for impairment $ 233 $ 3,109 $ — $ 9,152 $ — $ 23 $ 12,517 Ending balance collectively evaluated for impairment $ 764,918 $ 410,726 $ 1,347,125 $ 389,449 $ 85,210 $ 18,365 $ 3,015,793 |
Schedule of credit risk profile of loan portfolio | March 31, 2020 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Special Mention (Watch) $ — $ 2,413 $ 30,930 $ 12,961 $ 2,006 $ 30 $ 48,340 Substandard 230 2,410 — 9,425 2,043 16 14,124 Doubtful — — — — — — — Acceptable and Above 1,083,546 417,155 1,404,276 446,282 88,449 18,481 3,458,189 Total $ 1,083,776 $ 421,978 $ 1,435,206 $ 468,668 $ 92,498 $ 18,527 $ 3,520,653 December 31, 2019 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Special Mention (Watch) $ — $ 2,472 $ 41,882 $ 13,806 $ 2,114 $ 31 $ 60,305 Substandard 233 3,109 — 9,152 — 23 12,517 Doubtful — — — — — — — Acceptable and Above 764,918 408,254 1,305,243 375,643 83,096 18,334 2,955,488 Total $ 765,151 $ 413,835 $ 1,347,125 $ 398,601 $ 85,210 $ 18,388 $ 3,028,310 |
Schedule of aging analysis of the recorded investment in loans | March 31, 2020 30-59 Days 60-89 Days Greater Than Total Total Past Due Past Due 90 Days Past Due Current Loans (In thousands) MTG WHLOC $ — $ — $ — $ — $ 1,083,776 $ 1,083,776 RES RE 1,002 289 1,972 3,263 418,715 421,978 MF RE — — — — 1,435,206 1,435,206 CML & CRE 274 622 2,180 3,076 465,592 468,668 AG & AGRE 429 152 1,908 2,489 90,009 92,498 CON & MAR 610 36 42 688 17,839 18,527 $ 2,315 $ 1,099 $ 6,102 $ 9,516 $ 3,511,137 $ 3,520,653 December 31, 2019 30-59 Days 60-89 Days Greater Than Total Total Past Due Past Due 90 Days Past Due Current Loans (In thousands) MTG WHLOC $ — $ — $ — $ — $ 765,151 $ 765,151 RES RE 3,089 562 2,324 5,975 407,860 413,835 MF RE — — — — 1,347,125 1,347,125 CML & CRE 2,293 335 1,663 4,291 394,310 398,601 AG & AGRE 2,047 — 195 2,242 82,968 85,210 CON & MAR 50 31 19 100 18,288 18,388 $ 7,479 $ 928 $ 4,201 $ 12,608 $ 3,015,702 $ 3,028,310 |
Schedule of components of impaired loans and specific valuation allowance | March 31, 2020 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Impaired loans without a specific allowance: Recorded investment $ 230 $ 2,179 $ — $ 7,028 $ 2,043 $ 7 $ 11,487 Unpaid principal balance 230 2,179 — 7,028 2,043 7 11,487 Impaired loans with a specific allowance: Recorded investment — 231 — 2,397 — 9 2,637 Unpaid principal balance — 231 — 2,397 — 9 2,637 Specific allowance — 29 — 1,167 — 6 1,202 Total impaired loans: Recorded investment 230 2,410 — 9,425 2,043 16 14,124 Unpaid principal balance 230 2,410 — 9,425 2,043 16 14,124 Specific allowance — 29 — 1,167 — 6 1,202 December 31, 2019 MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Impaired loans without a specific allowance: Recorded investment $ 233 $ 2,899 $ — $ 6,662 $ — $ 12 $ 9,806 Unpaid principal balance 233 2,899 — 6,662 — 12 9,806 Impaired loans with a specific allowance: Recorded investment — 210 — 2,490 — 11 2,711 Unpaid principal balance — 210 — 2,490 — 11 2,711 Specific allowance — 23 — 650 — 8 681 Total impaired loans: Recorded investment 233 3,109 — 9,152 — 23 12,517 Unpaid principal balance 233 3,109 — 9,152 — 23 12,517 Specific allowance — 23 — 650 — 8 681 |
Schedule of average recorded investment and interest income recognized in impaired loans | MTG WHLOC RES RE MF RE CML & CRE AG & AGRE CON & MAR TOTAL (In thousands) Three Months Ended March 31, 2020 Average recorded investment in impaired loans $ 231 $ 3,088 $ — $ 9,502 $ 2,043 $ 20 $ 14,884 Interest income recognized — 16 — 131 — — 147 Three Months Ended March 31, 2019 Average recorded investment in impaired loans $ 574 $ 2,806 $ — $ 8,468 $ 364 $ 48 $ 12,260 Interest income recognized — 15 — 140 — — 155 |
Schedule of nonaccrual loans and loans past due 90 days or more and still accruing | March 31, December 31, 2020 2019 Total Loans > Total Loans > 90 Days & 90 Days & Nonaccrual Accruing Nonaccrual Accruing (In thousands) MTG WHLOC $ 230 $ — $ 233 $ — RES RE 664 1,551 740 1,851 MF RE — — — — CML & CRE 1,766 396 1,118 486 AG & AGRE — 1,908 — 231 CON & MAR 16 26 18 1 $ 2,676 $ 3,881 $ 2,109 $ 2,569 |
Regulatory Matters (Tables)
Regulatory Matters (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
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) March 31, 2020 Tier 1 capital (1) (to average assets) (i.e., leverage ratio) Company $ 652,781 9.9 % $ 592,662 > 9 % Merchants Bank 642,891 10.1 % 574,263 > 9 % FMBI 21,969 10.7 % 18,397 > 9 % Minimum Minimum Amount Required Amount To Be for Adequately Well Actual Capitalized (1) Capitalized (1) Amount Ratio Amount Ratio Amount Ratio (Dollars in thousands) December 31, 2019 Total capital (1) (to risk-weighted assets) Company $ 637,472 11.6 % $ 440,063 8.0 % $ — N/A Merchants Bank 639,104 12.0 % 426,748 8.0 % 533,435 10.0 % FMBI 21,726 13.1 % 13,306 8.0 % 16,632 10.0 % Tier 1 capital (1) (to risk-weighted assets) Company 621,630 11.3 % 330,047 6.0 % — N/A Merchants Bank 623,716 11.7 % 320,061 6.0 % 426,748 8.0 % FMBI 21,272 12.8 % 9,979 6.0 % 13,306 8.0 % Common Equity Tier 1 capital (1) (to risk-weighted assets) Company 408,984 7.4 % 247,536 4.5 % — N/A Merchants Bank 623,716 11.7 % 240,046 4.5 % 346,733 6.5 % FMBI 21,272 12.8 % 7,484 4.5 % 10,811 6.5 % Tier 1 capital (1) (to average assets) Company 621,630 9.4 % 264,324 4.0 % — N/A Merchants Bank 623,716 9.7 % 257,487 4.0 % 321,859 5.0 % FMBI 21,272 11.7 % 7,302 4.0 % 9,128 5.0 % 1 As defined by regulatory agencies. |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Financial Instruments | |
Summary of notional amount and fair value of derivative assets and liabilities | Notional Fair Value Amount Balance Sheet Location Asset Liability March 31, 2020 (In thousands) (In thousands) Interest rate lock commitments $ 162,228 Other assets/liabilities $ 2,079 $ 80 Forward contracts 122,706 Other assets/liabilities 96 1,273 $ 2,175 $ 1,353 Notional Fair Value Amount Balance Sheet Location Asset Liability December 31, 2019 (In thousands) (In thousands) Interest rate lock commitments $ 17,826 Other assets/liabilities $ 186 $ — Forward contracts 34,268 Other assets/liabilities — 27 $ 186 $ 27 |
Summarizes the periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income | Three Months Ended March 31, 2020 2019 (In thousands) Interest rate lock commitments $ 1,813 $ — Forward contracts (includes pair-off settlements) (1,844) (5) Net derivative gains (losses) $ (31) $ (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) March 31, 2020 $ 62,470 Other assets/liabilities $ 3,214 $ 3,214 December 31, 2019 58,067 Other assets/liabilities $ 511 $ 511 |
Summarizes the periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income | Three Months Ended March 31, 2020 2019 (In thousands) Gross swap gains $ 2,703 $ — Gross swap losses (2,703) — Net swap gains (losses) — $ — |
Disclosures about Fair Value _2
Disclosures about Fair Value of Assets and Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
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) March 31, 2020 Trading securities $ 465,157 $ — $ 465,157 $ — Available-for-sale securities: Treasury notes 2,043 2,043 — — Federal agencies 306,575 — 306,575 — Municipals 5,951 — 5,951 — Mortgage-backed - Government-sponsored entity (GSE) - residential 24,484 — 24,484 — Loans held for sale 18,938 — 18,938 — Mortgage servicing rights 69,978 — — 69,978 Derivative assets - interest rate lock commitments 2,079 — — 2,079 Derivative assets - forward contracts 96 — 96 — Derivative assets - interest rate swaps 3,214 — 3,214 — Derivative liabilities - interest rate lock commitments 80 — — 80 Derivative liabilities - forward contracts 1,273 — 1,273 — Derivative liabilities - interest rate swaps 3,214 — 3,214 — December 31, 2019 Trading securities $ 269,891 $ — $ 269,891 $ — Available-for-sale securities: Treasury notes 4,765 4,765 — — Federal agencies 244,973 — 244,973 — Municipals 5,937 — 5,937 — Mortgage-backed - Government-sponsored entity (GSE) - residential 34,568 — 34,568 — Loans held for sale 19,592 — 19,592 — Mortgage servicing rights 74,387 — — 74,387 Derivative assets - interest rate lock commitments 186 — — 186 Derivative asset - interest rate swap 511 — 511 — Derivative liabilities - forward contracts 27 — 27 — Derivative liabilities - interest rate swap 511 — 511 — |
Schedule of Level 3 reconciliation of recurring fair value measurements | Three Months Ended March 31, 2020 2019 (In thousands) Mortgage servicing rights Balance, beginning of period $ 74,387 $ 77,844 Additions Originated and purchased servicing 3,929 1,020 Subtractions Paydowns (1,858) (1,110) Changes in fair value due to changes in valuation inputs or assumptions used in the valuation model (6,480) (1,505) Balance, end of period $ 69,978 $ 76,249 Derivative Assets - interest rate lock commitments Balance, beginning of period $ 186 $ 70 Changes in fair value 1,893 1 Balance, end of period $ 2,079 $ 71 Derivative Liabilities - interest rate lock commitments Balance, beginning of period $ — $ — Changes in fair value 80 1 Balance, end of period $ 80 $ 1 |
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) March 31, 2020 Impaired loans (collateral-dependent) $ 1,306 $ — $ — $ 1,306 December 31, 2019 Impaired loans (collateral-dependent) $ 1,570 $ — $ — $ 1,570 |
Schedule of quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements other than goodwill | Valuation Fair Value Technique Unobservable Inputs Range (In thousands) At March 31, 2020: Collateral-dependent impaired loans $ 1,306 Market comparable properties Marketability discount 44% - 75% Mortgage servicing rights $ 69,978 Discounted cash flow Discount rate 8% - 13% Constant prepayment rate 2% - 43% Derivative assets - interest rate lock commitments $ 2,079 Discounted cash flow loan closing rates 56-99% Derivative liabilities - interest rate lock commitments $ 80 Discounted cash flow loan closing rates 56-99% At December 31, 2019: Collateral-dependent impaired loans $ 1,570 Market comparable properties Marketability discount 37%-55% Mortgage servicing rights $ 74,387 Discounted cash flow Discount rate 8% - 13% Constant prepayment rate 1% - 39% Derivative assets - interest rate lock commitments $ 186 Discounted cash flow loan closing rates 73-99% |
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) March 31, 2020 Financial assets: Cash and cash equivalents $ 568,082 $ 568,082 $ 568,082 $ — $ — Securities purchased under agreements to resell 6,685 6,685 — 6,685 — FHLB stock 46,156 46,156 — 46,156 — Loans held for sale 2,777,070 2,777,070 — 2,777,070 — Loans, net 3,501,770 3,475,393 — — 3,475,393 Interest receivable 18,139 18,139 — 18,139 — Financial liabilities: Deposits 6,722,705 6,730,101 3,967,232 2,762,869 — Lines of credit — — — — — Short-term subordinated debt 12,650 12,650 — 12,650 — FHLB advances 431,917 431,283 — 431,283 — Interest payable 10,219 10,219 — 10,219 — December 31, 2019 Financial assets: Cash and cash equivalents $ 506,709 $ 506,709 $ 506,709 $ — $ — Securities purchased under agreements to resell 6,723 6,723 — 6,723 — FHLB stock 20,369 20,369 — 20,369 — Loans held for sale 2,074,197 2,074,197 — 2,074,197 — Loans, net 3,012,468 2,999,580 — — 2,999,580 Interest receivable 18,359 18,359 — 18,359 — Financial liabilities: Deposits 5,478,075 5,478,682 3,303,736 2,174,946 — Lines of credit 6,540 6,540 — 6,540 — Short-term subordinated debt 12,200 12,200 — 12,200 — FHLB advances 162,699 162,803 — 162,803 — Interest payable 11,938 11,938 — 11,938 — |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share | |
Schedule of computation of earnings per share | Three Month Periods Ended March 31, 2020 2019 Weighted- Per Weighted- Per Net Average Share Net Average Share Income Shares Amount Income Shares Amount (In thousands) (In thousands) Net income $ 24,583 $ 10,570 Dividends on preferred stock (3,618) (833) Net income allocated to common shareholders $ 20,965 $ 9,737 Basic earnings per share 28,734,632 $ 0.73 28,702,250 $ 0.34 Effect of dilutive securities-restricted stock awards 24,780 35,189 Diluted earnings per share 28,759,412 $ 0.73 28,737,439 $ 0.34 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Information | |
Schedule of business segment financial information | Multi-family Mortgage Mortgage Banking Warehousing Banking Other Total (In thousands) Three Months Ended March 31, 2020 Interest income $ 420 $ 30,099 $ 29,230 $ 668 $ 60,417 Interest expense — 12,085 11,807 (1,828) 22,064 Net interest income 420 18,014 17,423 2,496 38,353 Provision for loan losses — 1,180 1,818 — 2,998 Net interest income after provision for loan losses 420 16,834 15,605 2,496 35,355 Noninterest income 17,364 2,776 683 (921) 19,902 Noninterest expense 10,348 3,019 5,688 3,238 22,293 Income before income taxes 7,436 16,591 10,600 (1,663) 32,964 Income taxes 2,037 4,154 2,650 (460) 8,381 Net income (loss) $ 5,399 $ 12,437 $ 7,950 $ (1,203) $ 24,583 Total assets $ 180,772 $ 4,362,423 $ 3,323,750 $ 41,453 $ 7,908,398 Multi-family Mortgage Mortgage Banking Warehousing Banking Other Total (In thousands) Three Months Ended March 31, 2019 Interest income $ 331 $ 14,380 $ 24,492 $ 471 $ 39,674 Interest expense — 7,529 8,982 (968) 15,543 Net interest income 331 6,851 15,510 1,439 24,131 Provision for loan losses — 133 516 — 649 Net interest income after provision for loan losses 331 6,718 14,994 1,439 23,482 Noninterest income 2,691 753 883 (663) 3,664 Noninterest expense 3,977 2,336 4,120 2,602 13,035 Income before income taxes (955) 5,135 11,757 (1,826) 14,111 Income taxes (243) 1,303 2,988 (507) 3,541 Net income (loss) $ (712) $ 3,832 $ 8,769 $ (1,319) $ 10,570 Total assets $ 160,609 $ 1,554,233 $ 2,223,890 37,993 $ 3,976,725 |
Securities Available For Sale -
Securities Available For Sale - Amortized Cost to Approximate Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Available-for-sale securities: | ||
Amortized Cost | $ 337,854 | $ 289,664 |
Gross Unrealized Gains | 1,200 | 618 |
Gross Unrealized Losses | 1 | 39 |
Fair Value of available for sale securities | 339,053 | 290,243 |
Treasury notes. | ||
Available-for-sale securities: | ||
Amortized Cost | 1,994 | 4,744 |
Gross Unrealized Gains | 49 | 21 |
Fair Value of available for sale securities | 2,043 | 4,765 |
Federal agencies | ||
Available-for-sale securities: | ||
Amortized Cost | 306,152 | 244,986 |
Gross Unrealized Gains | 423 | 24 |
Gross Unrealized Losses | 37 | |
Fair Value of available for sale securities | 306,575 | 244,973 |
Municipals | ||
Available-for-sale securities: | ||
Amortized Cost | 5,566 | 5,577 |
Gross Unrealized Gains | 385 | 360 |
Fair Value of available for sale securities | 5,951 | 5,937 |
Mortgage-backed - Government-sponsored entity (GSE) - residential | ||
Available-for-sale securities: | ||
Amortized Cost | 24,142 | 34,357 |
Gross Unrealized Gains | 343 | 213 |
Gross Unrealized Losses | 1 | 2 |
Fair Value of available for sale securities | $ 24,484 | $ 34,568 |
Securities Available For Sale_2
Securities Available For Sale - Contractual Maturities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Contractual Maturities, Amortized Cost | ||
Within one year | $ 20,500 | $ 23,250 |
After one through five years | 287,914 | 226,748 |
After ten years | 5,298 | 5,309 |
Amortized Costs, Gross | 313,712 | 255,307 |
Amortized Costs, Net | 337,854 | 289,664 |
Contractual Maturities, Fair Value | ||
Within one year | 20,563 | 23,233 |
After one through five years | 288,337 | 226,783 |
After ten years | 5,669 | 5,659 |
Fair Value, Gross | 314,569 | 255,675 |
Available-for-sale Securities, Debt Securities, Total | 339,053 | 290,243 |
Mortgage-backed - Government-sponsored entity (GSE) - residential | ||
Contractual Maturities, Amortized Cost | ||
Amortized Costs, Mortgage-backed - Government-sponsored entity (GSE) - residential | 24,142 | 34,357 |
Amortized Costs, Net | 24,142 | 34,357 |
Contractual Maturities, Fair Value | ||
Fair Value, Mortgage-backed - Government-sponsored entity (GSE) - residential | 24,484 | 34,568 |
Available-for-sale Securities, Debt Securities, Total | $ 24,484 | $ 34,568 |
Securities Available For Sale_3
Securities Available For Sale - Sale of securities (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Securities Available For Sale | ||
Proceeds from the sale of available-for-sale securities | $ 0 | $ 31,086,000 |
Net gain on sale of securities available for sale | 127,000 | |
Gains on sale of securities available for sale | 361,000 | |
Losses on sale of securities available for sale | $ 234,000 |
Securities - Continuous Unreali
Securities - Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | $ 1,113 | $ 95,772 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value, Total | 1,113 | 95,772 |
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 | 1 | 39 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | 1 | 39 |
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 | 94,963 | |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value, Total | 94,963 | |
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 | 37 | |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | 37 | |
Mortgage-backed - Government-sponsored entity (GSE) - residential | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value | ||
Available-for-sale securities, Continuous Unrealized Loss Position, Fair Value, Less than 12 Months | 1,113 | 809 |
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value, Total | 1,113 | 809 |
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 | 1 | 2 |
Available-for-sale securities, Continuous Unrealized Loss Position, Gross Unrealized Losses, Total | $ 1 | $ 2 |
Trading Securities (Details)
Trading Securities (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Trading Securities. | ||
Unrealized gains included in trading securities | $ 2,200,000 | $ 545,000 |
Loans and Allowance for Loan _3
Loans and Allowance for Loan Losses - Summary of Loans By Classification (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Loans and Allowance for Loan Losses | ||||
Loans | $ 3,520,653 | $ 3,028,310 | ||
Allowance for loan losses | 18,883 | 15,842 | $ 13,356 | $ 12,704 |
Loans and Leases Receivable, Net Amount, Total | 3,501,770 | 3,012,468 | ||
Mortgage warehouse lines of credit | ||||
Loans and Allowance for Loan Losses | ||||
Loans | 1,083,776 | 765,151 | ||
Allowance for loan losses | 2,709 | 1,913 | 1,254 | 1,068 |
Residential real estate | ||||
Loans and Allowance for Loan Losses | ||||
Loans | 421,978 | 413,835 | ||
Allowance for loan losses | 2,062 | 2,042 | 1,990 | 1,986 |
Multi-family and healthcare financing | ||||
Loans and Allowance for Loan Losses | ||||
Loans | 1,435,206 | 1,347,125 | ||
Allowance for loan losses | 7,694 | 7,018 | 6,377 | 6,030 |
Commercial and commercial real estate | ||||
Loans and Allowance for Loan Losses | ||||
Loans | 468,668 | 398,601 | ||
Allowance for loan losses | 5,662 | 4,173 | 3,122 | 3,051 |
Agricultural production and real estate | ||||
Loans and Allowance for Loan Losses | ||||
Loans | 92,498 | 85,210 | ||
Allowance for loan losses | 561 | 523 | 466 | 429 |
Consumer and margin loans | ||||
Loans and Allowance for Loan Losses | ||||
Loans | 18,527 | 18,388 | ||
Allowance for loan losses | $ 195 | $ 173 | $ 147 | $ 140 |
Loans and Allowance for Loan _4
Loans and Allowance for Loan Losses - Allowance For Loan Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Allowance for loan losses | |||
Balance, beginning of period | $ 15,842 | $ 12,704 | |
Provision (credit) for loan losses | 2,998 | 649 | |
Loans charged to the allowance | (1) | ||
Recoveries of loans previously charged off | 44 | 3 | |
Balance, end of period | 18,883 | 13,356 | |
Ending balance: individually evaluated for impairment | 1,202 | $ 681 | |
Ending balance: collectively evaluated for impairment | 17,681 | 15,161 | |
Loans | |||
Ending balance | 3,520,653 | 3,028,310 | |
Ending balance individually evaluated for impairment | 14,124 | 12,517 | |
Ending balance: collectively evaluated for impairment | 3,506,529 | 3,015,793 | |
Mortgage warehouse lines of credit | |||
Allowance for loan losses | |||
Balance, beginning of period | 1,913 | 1,068 | |
Provision (credit) for loan losses | 796 | 186 | |
Balance, end of period | 2,709 | 1,254 | |
Ending balance: collectively evaluated for impairment | 2,709 | 1,913 | |
Loans | |||
Ending balance | 1,083,776 | 765,151 | |
Ending balance individually evaluated for impairment | 230 | 233 | |
Ending balance: collectively evaluated for impairment | 1,083,546 | 764,918 | |
Residential real estate | |||
Allowance for loan losses | |||
Balance, beginning of period | 2,042 | 1,986 | |
Provision (credit) for loan losses | 20 | 4 | |
Balance, end of period | 2,062 | 1,990 | |
Ending balance: individually evaluated for impairment | 29 | 23 | |
Ending balance: collectively evaluated for impairment | 2,033 | 2,019 | |
Loans | |||
Ending balance | 421,978 | 413,835 | |
Ending balance individually evaluated for impairment | 2,410 | 3,109 | |
Ending balance: collectively evaluated for impairment | 419,568 | 410,726 | |
Multi-family and healthcare financing | |||
Allowance for loan losses | |||
Balance, beginning of period | 7,018 | 6,030 | |
Provision (credit) for loan losses | 676 | 347 | |
Balance, end of period | 7,694 | 6,377 | |
Ending balance: collectively evaluated for impairment | 7,694 | 7,018 | |
Loans | |||
Ending balance | 1,435,206 | 1,347,125 | |
Ending balance: collectively evaluated for impairment | 1,435,206 | 1,347,125 | |
Commercial and commercial real estate | |||
Allowance for loan losses | |||
Balance, beginning of period | 4,173 | 3,051 | |
Provision (credit) for loan losses | 1,445 | 71 | |
Recoveries of loans previously charged off | 44 | ||
Balance, end of period | 5,662 | 3,122 | |
Ending balance: individually evaluated for impairment | 1,167 | 650 | |
Ending balance: collectively evaluated for impairment | 4,495 | 3,523 | |
Loans | |||
Ending balance | 468,668 | 398,601 | |
Ending balance individually evaluated for impairment | 9,425 | 9,152 | |
Ending balance: collectively evaluated for impairment | 459,243 | 389,449 | |
Agricultural production and real estate | |||
Allowance for loan losses | |||
Balance, beginning of period | 523 | 429 | |
Provision (credit) for loan losses | 38 | 34 | |
Recoveries of loans previously charged off | 3 | ||
Balance, end of period | 561 | 466 | |
Ending balance: collectively evaluated for impairment | 561 | 523 | |
Loans | |||
Ending balance | 92,498 | 85,210 | |
Ending balance individually evaluated for impairment | 2,043 | ||
Ending balance: collectively evaluated for impairment | 90,455 | 85,210 | |
Consumer and margin loans | |||
Allowance for loan losses | |||
Balance, beginning of period | 173 | 140 | |
Provision (credit) for loan losses | 23 | 7 | |
Loans charged to the allowance | (1) | ||
Balance, end of period | 195 | $ 147 | |
Ending balance: individually evaluated for impairment | 6 | 8 | |
Ending balance: collectively evaluated for impairment | 189 | 165 | |
Loans | |||
Ending balance | 18,527 | 18,388 | |
Ending balance individually evaluated for impairment | 16 | 23 | |
Ending balance: collectively evaluated for impairment | $ 18,511 | $ 18,365 |
Loans and Allowance for Loan _5
Loans and Allowance for Loan Losses - Credit Risk Profile of Loan Portfolio (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Credit risk profile of portfolio | ||
Loans | $ 3,520,653 | $ 3,028,310 |
Special Mention (Watch) | ||
Credit risk profile of portfolio | ||
Loans | 48,340 | 60,305 |
Substandard | ||
Credit risk profile of portfolio | ||
Loans | 14,124 | 12,517 |
Acceptable and Above | ||
Credit risk profile of portfolio | ||
Loans | 3,458,189 | 2,955,488 |
Mortgage warehouse lines of credit | ||
Credit risk profile of portfolio | ||
Loans | 1,083,776 | 765,151 |
Mortgage warehouse lines of credit | Substandard | ||
Credit risk profile of portfolio | ||
Loans | 230 | 233 |
Mortgage warehouse lines of credit | Acceptable and Above | ||
Credit risk profile of portfolio | ||
Loans | 1,083,546 | 764,918 |
Residential real estate | ||
Credit risk profile of portfolio | ||
Loans | 421,978 | 413,835 |
Residential real estate | Special Mention (Watch) | ||
Credit risk profile of portfolio | ||
Loans | 2,413 | 2,472 |
Residential real estate | Substandard | ||
Credit risk profile of portfolio | ||
Loans | 2,410 | 3,109 |
Residential real estate | Acceptable and Above | ||
Credit risk profile of portfolio | ||
Loans | 417,155 | 408,254 |
Multi-family and healthcare financing | ||
Credit risk profile of portfolio | ||
Loans | 1,435,206 | 1,347,125 |
Multi-family and healthcare financing | Special Mention (Watch) | ||
Credit risk profile of portfolio | ||
Loans | 30,930 | 41,882 |
Multi-family and healthcare financing | Acceptable and Above | ||
Credit risk profile of portfolio | ||
Loans | 1,404,276 | 1,305,243 |
Commercial and commercial real estate | ||
Credit risk profile of portfolio | ||
Loans | 468,668 | 398,601 |
Commercial and commercial real estate | Special Mention (Watch) | ||
Credit risk profile of portfolio | ||
Loans | 12,961 | 13,806 |
Commercial and commercial real estate | Substandard | ||
Credit risk profile of portfolio | ||
Loans | 9,425 | 9,152 |
Commercial and commercial real estate | Acceptable and Above | ||
Credit risk profile of portfolio | ||
Loans | 446,282 | 375,643 |
Agricultural production and real estate | ||
Credit risk profile of portfolio | ||
Loans | 92,498 | 85,210 |
Agricultural production and real estate | Special Mention (Watch) | ||
Credit risk profile of portfolio | ||
Loans | 2,006 | 2,114 |
Agricultural production and real estate | Substandard | ||
Credit risk profile of portfolio | ||
Loans | 2,043 | |
Agricultural production and real estate | Acceptable and Above | ||
Credit risk profile of portfolio | ||
Loans | 88,449 | 83,096 |
Consumer and margin loans | ||
Credit risk profile of portfolio | ||
Loans | 18,527 | 18,388 |
Consumer and margin loans | Special Mention (Watch) | ||
Credit risk profile of portfolio | ||
Loans | 30 | 31 |
Consumer and margin loans | Substandard | ||
Credit risk profile of portfolio | ||
Loans | 16 | 23 |
Consumer and margin loans | Acceptable and Above | ||
Credit risk profile of portfolio | ||
Loans | $ 18,481 | $ 18,334 |
Loans and Allowance for Loan _6
Loans and Allowance for Loan Losses - Aging Analysis Of The Recorded Investment In Loans (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Aging analysis of loan portfolio | ||
Past due loans | $ 9,516 | $ 12,608 |
Current loans | 3,511,137 | 3,015,702 |
Loans and Leases Receivable, Net of Deferred Income, Total | 3,520,653 | 3,028,310 |
30-59 Days Past Due | ||
Aging analysis of loan portfolio | ||
Past due loans | 2,315 | 7,479 |
60-89 Days Past Due | ||
Aging analysis of loan portfolio | ||
Past due loans | 1,099 | 928 |
Greater Than 90 Days | ||
Aging analysis of loan portfolio | ||
Past due loans | 6,102 | 4,201 |
Mortgage warehouse lines of credit | ||
Aging analysis of loan portfolio | ||
Current loans | 1,083,776 | 765,151 |
Loans and Leases Receivable, Net of Deferred Income, Total | 1,083,776 | 765,151 |
Residential real estate | ||
Aging analysis of loan portfolio | ||
Past due loans | 3,263 | 5,975 |
Current loans | 418,715 | 407,860 |
Loans and Leases Receivable, Net of Deferred Income, Total | 421,978 | 413,835 |
Residential real estate | 30-59 Days Past Due | ||
Aging analysis of loan portfolio | ||
Past due loans | 1,002 | 3,089 |
Residential real estate | 60-89 Days Past Due | ||
Aging analysis of loan portfolio | ||
Past due loans | 289 | 562 |
Residential real estate | Greater Than 90 Days | ||
Aging analysis of loan portfolio | ||
Past due loans | 1,972 | 2,324 |
Multi-family and healthcare financing | ||
Aging analysis of loan portfolio | ||
Current loans | 1,435,206 | 1,347,125 |
Loans and Leases Receivable, Net of Deferred Income, Total | 1,435,206 | 1,347,125 |
Commercial and commercial real estate | ||
Aging analysis of loan portfolio | ||
Past due loans | 3,076 | 4,291 |
Current loans | 465,592 | 394,310 |
Loans and Leases Receivable, Net of Deferred Income, Total | 468,668 | 398,601 |
Commercial and commercial real estate | 30-59 Days Past Due | ||
Aging analysis of loan portfolio | ||
Past due loans | 274 | 2,293 |
Commercial and commercial real estate | 60-89 Days Past Due | ||
Aging analysis of loan portfolio | ||
Past due loans | 622 | 335 |
Commercial and commercial real estate | Greater Than 90 Days | ||
Aging analysis of loan portfolio | ||
Past due loans | 2,180 | 1,663 |
Agricultural production and real estate | ||
Aging analysis of loan portfolio | ||
Past due loans | 2,489 | 2,242 |
Current loans | 90,009 | 82,968 |
Loans and Leases Receivable, Net of Deferred Income, Total | 92,498 | 85,210 |
Agricultural production and real estate | 30-59 Days Past Due | ||
Aging analysis of loan portfolio | ||
Past due loans | 429 | 2,047 |
Agricultural production and real estate | 60-89 Days Past Due | ||
Aging analysis of loan portfolio | ||
Past due loans | 152 | |
Agricultural production and real estate | Greater Than 90 Days | ||
Aging analysis of loan portfolio | ||
Past due loans | 1,908 | 195 |
Consumer and margin loans | ||
Aging analysis of loan portfolio | ||
Past due loans | 688 | 100 |
Current loans | 17,839 | 18,288 |
Loans and Leases Receivable, Net of Deferred Income, Total | 18,527 | 18,388 |
Consumer and margin loans | 30-59 Days Past Due | ||
Aging analysis of loan portfolio | ||
Past due loans | 610 | 50 |
Consumer and margin loans | 60-89 Days Past Due | ||
Aging analysis of loan portfolio | ||
Past due loans | 36 | 31 |
Consumer and margin loans | Greater Than 90 Days | ||
Aging analysis of loan portfolio | ||
Past due loans | $ 42 | $ 19 |
Loans and Allowance for Loan _7
Loans and Allowance for Loan Losses - Impaired Loans and Specific Valuation Allowance (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Impaired loans without a specific allowance: | ||
Recorded investment | $ 11,487 | $ 9,806 |
Unpaid principal balance | 11,487 | 9,806 |
Impaired loans with a specific allowance: | ||
Recorded investment | 2,637 | 2,711 |
Unpaid principal balance | 2,637 | 2,711 |
Specific allowance | 1,202 | 681 |
Total impaired loans: | ||
Recorded investments | 14,124 | 12,517 |
Unpaid principal balance | 14,124 | 12,517 |
Specific allowance | 1,202 | 681 |
Mortgage warehouse lines of credit | ||
Impaired loans without a specific allowance: | ||
Recorded investment | 230 | 233 |
Unpaid principal balance | 230 | 233 |
Total impaired loans: | ||
Recorded investments | 230 | 233 |
Unpaid principal balance | 230 | 233 |
Residential real estate | ||
Impaired loans without a specific allowance: | ||
Recorded investment | 2,179 | 2,899 |
Unpaid principal balance | 2,179 | 2,899 |
Impaired loans with a specific allowance: | ||
Recorded investment | 231 | 210 |
Unpaid principal balance | 231 | 210 |
Specific allowance | 29 | 23 |
Total impaired loans: | ||
Recorded investments | 2,410 | 3,109 |
Unpaid principal balance | 2,410 | 3,109 |
Specific allowance | 29 | 23 |
Commercial and commercial real estate | ||
Impaired loans without a specific allowance: | ||
Recorded investment | 7,028 | 6,662 |
Unpaid principal balance | 7,028 | 6,662 |
Impaired loans with a specific allowance: | ||
Recorded investment | 2,397 | 2,490 |
Unpaid principal balance | 2,397 | 2,490 |
Specific allowance | 1,167 | 650 |
Total impaired loans: | ||
Recorded investments | 9,425 | 9,152 |
Unpaid principal balance | 9,425 | 9,152 |
Specific allowance | 1,167 | 650 |
Agricultural production and real estate | ||
Impaired loans without a specific allowance: | ||
Recorded investment | 2,043 | |
Unpaid principal balance | 2,043 | |
Total impaired loans: | ||
Recorded investments | 2,043 | |
Unpaid principal balance | 2,043 | |
Consumer and margin loans | ||
Impaired loans without a specific allowance: | ||
Recorded investment | 7 | 12 |
Unpaid principal balance | 7 | 12 |
Impaired loans with a specific allowance: | ||
Recorded investment | 9 | 11 |
Unpaid principal balance | 9 | 11 |
Specific allowance | 6 | 8 |
Total impaired loans: | ||
Recorded investments | 16 | 23 |
Unpaid principal balance | 16 | 23 |
Specific allowance | $ 6 | $ 8 |
Loans and Allowance for Loan _8
Loans and Allowance for Loan Losses - Average Recorded Investment and Interest Income Recognized (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Impaired Loans | ||
Average recorded investment in impaired loans | $ 14,884 | $ 12,260 |
Interest income recognized | 147 | |
Interest income recognized | 155 | |
Mortgage warehouse lines of credit | ||
Impaired Loans | ||
Average recorded investment in impaired loans | 231 | 574 |
Residential real estate | ||
Impaired Loans | ||
Average recorded investment in impaired loans | 3,088 | 2,806 |
Interest income recognized | 16 | |
Interest income recognized | 15 | |
Commercial and commercial real estate | ||
Impaired Loans | ||
Average recorded investment in impaired loans | 9,502 | 8,468 |
Interest income recognized | 131 | |
Interest income recognized | 140 | |
Agricultural production and real estate | ||
Impaired Loans | ||
Average recorded investment in impaired loans | 2,043 | 364 |
Consumer and margin loans | ||
Impaired Loans | ||
Average recorded investment in impaired loans | $ 20 | $ 48 |
Loans and Allowance for Loan _9
Loans and Allowance for Loan Losses - Non Accrual Loans and Loans Past Due 90 Days Or More and Still Accruing (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Loan portfolio past due loans | ||
Nonaccrual | $ 2,676 | $ 2,109 |
Total Loans Greater than 90 Days & Accruing | 3,881 | 2,569 |
Mortgage warehouse lines of credit | ||
Loan portfolio past due loans | ||
Nonaccrual | 230 | 233 |
Residential real estate | ||
Loan portfolio past due loans | ||
Nonaccrual | 664 | 740 |
Total Loans Greater than 90 Days & Accruing | 1,551 | 1,851 |
Commercial and commercial real estate | ||
Loan portfolio past due loans | ||
Nonaccrual | 1,766 | 1,118 |
Total Loans Greater than 90 Days & Accruing | 396 | 486 |
Agricultural production and real estate | ||
Loan portfolio past due loans | ||
Total Loans Greater than 90 Days & Accruing | 1,908 | 231 |
Consumer and margin loans | ||
Loan portfolio past due loans | ||
Nonaccrual | 16 | 18 |
Total Loans Greater than 90 Days & Accruing | $ 26 | $ 1 |
Loans and Allowance for Loan_10
Loans and Allowance for Loan Losses - Troubled Debt and Modifications (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020itemloan | Mar. 31, 2019item | Dec. 31, 2019USD ($)loan | |
Troubled debt and modifications | |||
Number of troubled debt restructuring | 0 | 0 | |
Number of loans restructured during the last twelve months that defaulted during the period | 0 | 0 | |
Residential real estate | |||
Troubled debt and modifications | |||
Number of loans in the process of foreclosure | loan | 0 | 1 | |
Value of residential loans in process of foreclosure | $ | $ 725,000 |
Regulatory Matters (Details)
Regulatory Matters (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Company | ||
Total Capital (to risk-weighted assets) | ||
Total Capital (to risk-weighted assets), Actual, Capital Amount | $ 637,472 | |
Total Capital (to risk weighted assets), Actual, Ratio (as a percent) | 11.60% | |
Total Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount | $ 440,063 | |
Total Capital (to risk weighted assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent) | 8.00% | |
Tier I Capital (to risk-weighted assets) | ||
Tier I Capital, (to risk-weighted assets), Actual, Capital Amount | $ 621,630 | |
Tier I Capital (to risk weighted assets), Actual, Ratio (as a percent) | 11.30% | |
Tier I Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount | $ 330,047 | |
Tier I Capital (to risk weighted assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent) | 6.00% | |
Common Equity Tier I Capital 1 (to risk-weighted assets) | ||
Common Equity Tier I Capital 1, Actual, Capital Amount | $ 408,984 | |
Common Equity Tier I Capital 1 (to risk weighted assets), Ratio (as a percent) | 7.40% | |
Common Equity Tier I Capital 1, Minimum Amount Required for Adequately Capitalized, Capital Amount | $ 247,536 | |
Common Equity Tier I Capital 1 (to risk weighted assets, Minimum Amount Required for Adequately Capitalized, Ratio (as a percent) | 4.50% | |
Tier 1 Capital (to average assets) | ||
Tier 1 Capital, Actual, Capital Amount | $ 652,781 | $ 621,630 |
Tier 1 Capital (to average assets), Actual, Ratio (as a percent) | 9.90% | 9.40% |
Tier 1 Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount | $ 264,324 | |
Tier 1 Capital (to average assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent) | 4.00% | |
Tier 1 Capital, Minimum Amount To Be Well Capitalized, Capital Amount | $ 592,662 | |
Tier 1 Capital (to average assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent) | 9.00% | |
Merchants Bank | ||
Total Capital (to risk-weighted assets) | ||
Total Capital (to risk-weighted assets), Actual, Capital Amount | $ 639,104 | |
Total Capital (to risk weighted assets), Actual, Ratio (as a percent) | 12.00% | |
Total Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount | $ 426,748 | |
Total Capital (to risk weighted assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent) | 8.00% | |
Total capital, Minimum Amount To Be Well Capitalized, Capital Amount | $ 533,435 | |
Total Capital (to risk weighted assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent) | 10.00% | |
Tier I Capital (to risk-weighted assets) | ||
Tier I Capital, (to risk-weighted assets), Actual, Capital Amount | $ 623,716 | |
Tier I Capital (to risk weighted assets), Actual, Ratio (as a percent) | 11.70% | |
Tier I Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount | $ 320,061 | |
Tier I Capital (to risk weighted assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent) | 6.00% | |
Tier I Capital, Minimum Amount To Be Well Capitalized, Capital Amount | $ 426,748 | |
Tier I Capital (to risk weighted assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent) | 8.00% | |
Common Equity Tier I Capital 1 (to risk-weighted assets) | ||
Common Equity Tier I Capital 1, Actual, Capital Amount | $ 623,716 | |
Common Equity Tier I Capital 1 (to risk weighted assets), Ratio (as a percent) | 11.70% | |
Common Equity Tier I Capital 1, Minimum Amount Required for Adequately Capitalized, Capital Amount | $ 240,046 | |
Common Equity Tier I Capital 1 (to risk weighted assets, Minimum Amount Required for Adequately Capitalized, Ratio (as a percent) | 4.50% | |
Common Equity Tier I Capital 1, Minimum Amount To Be Well Capitalized, Capital Amount | $ 346,733 | |
Common Equity Tier I Capital 1 (to risk weighted assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent) | 6.50% | |
Tier 1 Capital (to average assets) | ||
Tier 1 Capital, Actual, Capital Amount | $ 642,891 | $ 623,716 |
Tier 1 Capital (to average assets), Actual, Ratio (as a percent) | 10.10% | 9.70% |
Tier 1 Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount | $ 257,487 | |
Tier 1 Capital (to average assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent) | 4.00% | |
Tier 1 Capital, Minimum Amount To Be Well Capitalized, Capital Amount | $ 574,263 | $ 321,859 |
Tier 1 Capital (to average assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent) | 9.00% | 5.00% |
FMBI | ||
Total Capital (to risk-weighted assets) | ||
Total Capital (to risk-weighted assets), Actual, Capital Amount | $ 21,726 | |
Total Capital (to risk weighted assets), Actual, Ratio (as a percent) | 13.10% | |
Total Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount | $ 13,306 | |
Total Capital (to risk weighted assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent) | 8.00% | |
Total capital, Minimum Amount To Be Well Capitalized, Capital Amount | $ 16,632 | |
Total Capital (to risk weighted assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent) | 10.00% | |
Tier I Capital (to risk-weighted assets) | ||
Tier I Capital, (to risk-weighted assets), Actual, Capital Amount | $ 21,272 | |
Tier I Capital (to risk weighted assets), Actual, Ratio (as a percent) | 12.80% | |
Tier I Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount | $ 9,979 | |
Tier I Capital (to risk weighted assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent) | 6.00% | |
Tier I Capital, Minimum Amount To Be Well Capitalized, Capital Amount | $ 13,306 | |
Tier I Capital (to risk weighted assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent) | 8.00% | |
Common Equity Tier I Capital 1 (to risk-weighted assets) | ||
Common Equity Tier I Capital 1, Actual, Capital Amount | $ 21,272 | |
Common Equity Tier I Capital 1 (to risk weighted assets), Ratio (as a percent) | 12.80% | |
Common Equity Tier I Capital 1, Minimum Amount Required for Adequately Capitalized, Capital Amount | $ 7,484 | |
Common Equity Tier I Capital 1 (to risk weighted assets, Minimum Amount Required for Adequately Capitalized, Ratio (as a percent) | 4.50% | |
Common Equity Tier I Capital 1, Minimum Amount To Be Well Capitalized, Capital Amount | $ 10,811 | |
Common Equity Tier I Capital 1 (to risk weighted assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent) | 6.50% | |
Tier 1 Capital (to average assets) | ||
Tier 1 Capital, Actual, Capital Amount | $ 21,969 | $ 21,272 |
Tier 1 Capital (to average assets), Actual, Ratio (as a percent) | 10.70% | 11.70% |
Tier 1 Capital, Minimum Amount Required for Adequately Capitalized, Capital Amount | $ 7,302 | |
Tier 1 Capital (to average assets), Minimum Amount Required for Adequately Capitalized, Ratio (as a percent) | 4.00% | |
Tier 1 Capital, Minimum Amount To Be Well Capitalized, Capital Amount | $ 18,397 | $ 9,128 |
Tier 1 Capital (to average assets), Minimum Amount To Be Well Capitalized, Ratio (as a percent) | 9.00% | 5.00% |
Derivative Financial Instrume_3
Derivative Financial Instruments (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
The periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income | |||
Net gains (losses) | $ (31,000) | $ (5,000) | |
Pledged in collateral | 3,100,000 | $ 590,000 | |
Derivative assets | |||
Derivative Financial Instruments | |||
Derivative assets, fair value | 2,175,000 | 186,000 | |
Derivative liabilities | |||
Derivative Financial Instruments | |||
Derivative liabilities, fair value | 1,353,000 | 27,000 | |
Interest Rate Lock Commitments | |||
Derivative Financial Instruments | |||
Notional amount | 162,228,000 | 17,826,000 | |
The periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income | |||
Net gains (losses) | 1,813,000 | ||
Interest Rate Lock Commitments | Derivative assets | |||
Derivative Financial Instruments | |||
Derivative assets, fair value | 2,079,000 | 186,000 | |
Interest Rate Lock Commitments | Derivative liabilities | |||
Derivative Financial Instruments | |||
Derivative liabilities, fair value | 80,000 | ||
Forward Contracts | |||
Derivative Financial Instruments | |||
Notional amount | 122,706,000 | 34,268,000 | |
The periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income | |||
Net gains (losses) | (1,844,000) | $ (5,000) | |
Forward Contracts | Derivative assets | |||
Derivative Financial Instruments | |||
Derivative assets, fair value | 96,000 | ||
Forward Contracts | Derivative liabilities | |||
Derivative Financial Instruments | |||
Derivative liabilities, fair value | 1,273,000 | 27,000 | |
Interest rate swaps | |||
Derivative Financial Instruments | |||
Notional amount | 62,470,000 | 58,067,000 | |
The periodic changes in the fair value of the derivative financial instruments on the condensed consolidated statements of income | |||
Gross swap gains | 2,703,000 | ||
Gross swap losses | (2,703,000) | ||
Interest rate swaps | Derivative assets | |||
Derivative Financial Instruments | |||
Derivative assets, fair value | 3,214,000 | 511,000 | |
Interest rate swaps | Derivative liabilities | |||
Derivative Financial Instruments | |||
Derivative liabilities, fair value | $ 3,214,000 | $ 511,000 |
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 | Mar. 31, 2020 | Dec. 31, 2019 |
Disclosures about Fair Value of Assets and Liabilities | ||
Mortgage loans in process of securitization | $ 465,157 | $ 269,891 |
Available for sale securities | 339,053 | 290,243 |
Loans held for sale | 18,938 | 19,592 |
Mortgage servicing rights | 69,978 | 74,387 |
Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Mortgage loans in process of securitization | 465,157 | 269,891 |
Loans held for sale | 18,938 | 19,592 |
Mortgage servicing rights | 69,978 | 74,387 |
Recurring | Interest Rate Lock Commitments | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Derivative assets | 2,079 | 186 |
Derivative liabilities | 80 | |
Recurring | Forward Contracts | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Derivative assets | 96 | |
Derivative liabilities | 1,273 | 27 |
Recurring | Interest rate swaps | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Derivative assets | 3,214 | 511 |
Derivative liabilities | 3,214 | 511 |
Level 2 | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Mortgage loans in process of securitization | 465,157 | 269,891 |
Loans held for sale | 18,938 | 19,592 |
Level 2 | Recurring | Forward Contracts | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Derivative assets | 96 | |
Derivative liabilities | 1,273 | 27 |
Level 2 | Recurring | Interest rate swaps | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Derivative assets | 3,214 | 511 |
Derivative liabilities | 3,214 | 511 |
Level 3 | Interest Rate Lock Commitments | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Derivative assets | 2,079 | 186 |
Derivative liabilities | 80 | |
Level 3 | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Mortgage servicing rights | 69,978 | 74,387 |
Level 3 | Recurring | Interest Rate Lock Commitments | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Derivative assets | 2,079 | 186 |
Derivative liabilities | 80 | |
Treasury notes | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 2,043 | 4,765 |
Treasury notes | Level 1 | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 2,043 | 4,765 |
Federal agencies | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 306,575 | 244,973 |
Federal agencies | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 306,575 | 244,973 |
Federal agencies | Level 2 | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 306,575 | 244,973 |
Municipals | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 5,951 | 5,937 |
Municipals | Level 2 | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 5,951 | 5,937 |
Mortgage-backed - Government-sponsored entity (GSE) - residential | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 24,484 | 34,568 |
Mortgage-backed - Government-sponsored entity (GSE) - residential | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | 24,484 | 34,568 |
Mortgage-backed - Government-sponsored entity (GSE) - residential | Level 2 | Recurring | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Available for sale securities | $ 24,484 | $ 34,568 |
Disclosures about Fair Value _4
Disclosures about Fair Value of Assets and Liabilities - Reconciliation of Unobservable Inputs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Derivative liabilities | Interest Rate Lock Commitments | ||
Reconciliation of significant unobservable inputs, liabilities: | ||
Changes in fair value | $ 80 | $ 1 |
Balance, end of period | 80 | 1 |
Mortgage servicing rights. | ||
Reconciliation of significant unobservable inputs, assets: | ||
Balance, beginning of period | 74,387 | 77,844 |
Additions | ||
Originated and purchased servicing | 3,929 | 1,020 |
Subtractions | ||
Paydowns | (1,858) | (1,110) |
Changes in fair value due to changes in valuation inputs or assumptions used in the valuation model | (6,480) | (1,505) |
Balance, end of period | 69,978 | 76,249 |
Derivative assets | Interest Rate Lock Commitments | ||
Reconciliation of significant unobservable inputs, assets: | ||
Balance, beginning of period | 186 | 70 |
Subtractions | ||
Changes in fair value | 1,893 | 1 |
Balance, end of period | $ 2,079 | $ 71 |
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 | Mar. 31, 2020 | Dec. 31, 2019 |
Disclosures about Fair Value of Assets and Liabilities | ||
Impaired loans (collateral dependent) | $ 1,306 | $ 1,570 |
Level 3 | ||
Disclosures about Fair Value of Assets and Liabilities | ||
Impaired loans (collateral dependent) | $ 1,306 | $ 1,570 |
Disclosures about Fair Value _6
Disclosures about Fair Value of Assets and Liabilities - Quantitative Information about Unobservable Inputs (Details) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Quantitative information about unobservable inputs | ||
Mortgage servicing rights | $ 69,978,000 | $ 74,387,000 |
Available for sale securities | 339,053,000 | 290,243,000 |
Mortgage servicing rights | Level 3 | ||
Quantitative information about unobservable inputs | ||
Mortgage servicing rights | 69,978,000 | 74,387,000 |
Collateral-dependent impaired loans | Level 3 | ||
Quantitative information about unobservable inputs | ||
Collateral-dependent impaired loans | $ 1,306,000 | $ 1,570,000 |
Collateral-dependent impaired loans | Level 3 | Minimum | ||
Quantitative information about unobservable inputs | ||
Marketability discount (as a percent) | 0.44 | 0.37 |
Collateral-dependent impaired loans | Level 3 | Maximum | ||
Quantitative information about unobservable inputs | ||
Marketability discount (as a percent) | 0.75 | 0.55 |
Municipals | ||
Quantitative information about unobservable inputs | ||
Available for sale securities | $ 5,951,000 | $ 5,937,000 |
Discount Rate | Mortgage servicing rights | Minimum | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 0.08 | |
Discount Rate | Mortgage servicing rights | Level 3 | Minimum | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 0.08 | |
Discount Rate | Mortgage servicing rights | Level 3 | Maximum | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 0.13 | 0.13 |
Constant Prepayment Rate | Mortgage servicing rights | Level 3 | Minimum | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 0.02 | 0.01 |
Constant Prepayment Rate | Mortgage servicing rights | Level 3 | Maximum | ||
Quantitative information about unobservable inputs | ||
Servicing asset, measurement input | 0.43 | 0.39 |
Interest Rate Lock Commitments | Level 3 | ||
Quantitative information about unobservable inputs | ||
Derivative assets | $ 2,079,000 | $ 186,000 |
Interest Rate Lock Commitments | Measurement Input, Maturity | Level 3 | Minimum | ||
Quantitative information about unobservable inputs | ||
Loan closing rates (as a percent) | 0.56 | 0.73 |
Loan closing rates (as a percent) | 0.56 | |
Interest Rate Lock Commitments | Measurement Input, Maturity | Level 3 | Maximum | ||
Quantitative information about unobservable inputs | ||
Loan closing rates (as a percent) | 0.99 | 0.99 |
Loan closing rates (as a percent) | 0.99 |
Disclosures about Fair Value _7
Disclosures about Fair Value of Assets and Liabilities - Carrying Value and Estimated Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Financial assets: | ||
Loans held for sale | $ 18,938 | $ 19,592 |
Carrying Value | ||
Financial assets: | ||
Cash and cash equivalents | 568,082 | 506,709 |
Securities purchased under agreements to resell | 6,685 | 6,723 |
FHLB stock | 46,156 | 20,369 |
Loans held for sale | 2,777,070 | 2,074,197 |
Loans, net | 3,501,770 | 3,012,468 |
Interest receivable | 18,139 | 18,359 |
Financial liabilities: | ||
Deposits | 6,722,705 | 5,478,075 |
Lines of credit | 6,540 | |
Short-term subordinated debt | 12,650 | 12,200 |
FHLB advances | 431,917 | 162,699 |
Interest payable | 10,219 | 11,938 |
Fair Value | ||
Financial assets: | ||
Cash and cash equivalents | 568,082 | 506,709 |
Securities purchased under agreements to resell | 6,685 | 6,723 |
FHLB stock | 46,156 | 20,369 |
Loans held for sale | 2,777,070 | 2,074,197 |
Loans, net | 3,475,393 | 2,999,580 |
Interest receivable | 18,139 | 18,359 |
Financial liabilities: | ||
Deposits | 6,730,101 | 5,478,682 |
Lines of credit | 6,540 | |
Short-term subordinated debt | 12,650 | 12,200 |
FHLB advances | 431,283 | 162,803 |
Interest payable | 10,219 | 11,938 |
Level 1 | Fair Value | ||
Financial assets: | ||
Cash and cash equivalents | 568,082 | 506,709 |
Financial liabilities: | ||
Deposits | 3,967,232 | 3,303,736 |
Level 2 | Fair Value | ||
Financial assets: | ||
Securities purchased under agreements to resell | 6,685 | 6,723 |
FHLB stock | 46,156 | 20,369 |
Loans held for sale | 2,777,070 | 2,074,197 |
Interest receivable | 18,139 | 18,359 |
Financial liabilities: | ||
Deposits | 2,762,869 | 2,174,946 |
Lines of credit | 6,540 | |
Short-term subordinated debt | 12,650 | 12,200 |
FHLB advances | 431,283 | 162,803 |
Interest payable | 10,219 | 11,938 |
Level 3 | Fair Value | ||
Financial assets: | ||
Loans, net | $ 3,475,393 | $ 2,999,580 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Net Income | ||
Net income | $ 24,583 | $ 10,570 |
Dividends on preferred stock | (3,618) | (833) |
Net Income Allocated to Common Shareholders | $ 20,965 | $ 9,737 |
Weighted-Average Shares | ||
Weighted average shares - Basic | 28,734,632 | 28,702,250 |
Effect of dilutive securities—restricted stock awards | 24,780 | 35,189 |
Weighted average shares - diluted | 28,759,412 | 28,737,439 |
Per Share Amount | ||
Basic earnings per share | $ 0.73 | $ 0.34 |
Diluted earnings per share | $ 0.73 | $ 0.34 |
Share-Based Payment Plan (Detai
Share-Based Payment Plan (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Non executive directors | |||
Plan disclosures | |||
Shares issued | 0 | 0 | |
Value of shares available for issuance for compensation related to annual fees | $ 10,000 | ||
2016 Plan | Restricted stock | |||
Plan disclosures | |||
Shares issued | 36,046 | 10,127 |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Segment Information | |||
Interest income | $ 60,417 | $ 39,674 | |
Interest expense | 22,064 | 15,543 | |
Net interest income | 38,353 | 24,131 | |
Provision for loan losses | 2,998 | 649 | |
Net Interest Income After Provision for Loan Losses | 35,355 | 23,482 | |
Noninterest income | 19,902 | 3,664 | |
Noninterest expense | 22,293 | 13,035 | |
Income Before Income Taxes | 32,964 | 14,111 | |
Income taxes | 8,381 | 3,541 | |
Net Income | 24,583 | 10,570 | |
Total assets | 7,908,398 | 3,976,725 | $ 6,371,928 |
Other | |||
Segment Information | |||
Interest income | 668 | 471 | |
Interest expense | (1,828) | (968) | |
Net interest income | 2,496 | 1,439 | |
Net Interest Income After Provision for Loan Losses | 2,496 | 1,439 | |
Noninterest income | (921) | (663) | |
Noninterest expense | 3,238 | 2,602 | |
Income Before Income Taxes | (1,663) | (1,826) | |
Income taxes | (460) | (507) | |
Net Income | (1,203) | (1,319) | |
Total assets | 41,453 | 37,993 | |
Multifamily | Operating Segments | |||
Segment Information | |||
Interest income | 420 | 331 | |
Net interest income | 420 | 331 | |
Net Interest Income After Provision for Loan Losses | 420 | 331 | |
Noninterest income | 17,364 | 2,691 | |
Noninterest expense | 10,348 | 3,977 | |
Income Before Income Taxes | 7,436 | (955) | |
Income taxes | 2,037 | (243) | |
Net Income | 5,399 | (712) | |
Total assets | 180,772 | 160,609 | |
Mortgage Warehousing | Operating Segments | |||
Segment Information | |||
Interest income | 30,099 | 14,380 | |
Interest expense | 12,085 | 7,529 | |
Net interest income | 18,014 | 6,851 | |
Provision for loan losses | 1,180 | 133 | |
Net Interest Income After Provision for Loan Losses | 16,834 | 6,718 | |
Noninterest income | 2,776 | 753 | |
Noninterest expense | 3,019 | 2,336 | |
Income Before Income Taxes | 16,591 | 5,135 | |
Income taxes | 4,154 | 1,303 | |
Net Income | 12,437 | 3,832 | |
Total assets | 4,362,423 | 1,554,233 | |
Banking | Operating Segments | |||
Segment Information | |||
Interest income | 29,230 | 24,492 | |
Interest expense | 11,807 | 8,982 | |
Net interest income | 17,423 | 15,510 | |
Provision for loan losses | 1,818 | 516 | |
Net Interest Income After Provision for Loan Losses | 15,605 | 14,994 | |
Noninterest income | 683 | 883 | |
Noninterest expense | 5,688 | 4,120 | |
Income Before Income Taxes | 10,600 | 11,757 | |
Income taxes | 2,650 | 2,988 | |
Net Income | 7,950 | 8,769 | |
Total assets | $ 3,323,750 | $ 2,223,890 |
Preferred Stock Offerings (Deta
Preferred Stock Offerings (Details) | Sep. 23, 2019USD ($)$ / sharesshares | Aug. 19, 2019USD ($)$ / sharesshares | Jun. 27, 2019USD ($)$ / sharesshares | Apr. 12, 2019USD ($)shares | Mar. 28, 2019USD ($)$ / sharesshares | Mar. 31, 2020$ / shares | Mar. 31, 2019USD ($)shares | Dec. 31, 2019$ / shares | Dec. 31, 2016$ / shares | Dec. 31, 2015$ / shares | Dec. 31, 2016$ / sharesshares |
Public Offering of Preferred Stock | |||||||||||
Net proceeds | $ 48,269,000 | ||||||||||
8% Preferred Stock | |||||||||||
Public Offering of Preferred Stock | |||||||||||
Preferred stock, dividend rate (as a percent) | 8.00% | 8.00% | |||||||||
Preferred stock liquidation preference (in dollars per share) | $ / shares | $ 1,000 | $ 1,000 | |||||||||
8% Preferred Stock | Private Placement | |||||||||||
Public Offering of Preferred Stock | |||||||||||
Shares issued (in shares) | shares | 41,625 | ||||||||||
Preferred stock, dividend rate (as a percent) | 8.00% | 8.00% | |||||||||
Preferred stock liquidation preference (in dollars per share) | $ / shares | $ 1,000 | $ 1,000 | $ 1,000 | ||||||||
7% Preferred Stock | |||||||||||
Public Offering of Preferred Stock | |||||||||||
Shares redeemed (in shares) | shares | 874,000 | ||||||||||
Preferred stock, dividend rate (as a percent) | 7.00% | 7.00% | 7.00% | ||||||||
Preferred stock liquidation preference (in dollars per share) | $ / shares | $ 25 | $ 25 | $ 25 | ||||||||
Aggregate cost | $ 21,850,000 | ||||||||||
Offering costs | $ 1,731,000 | ||||||||||
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) | 7.00% | ||||||||||
Preferred stock liquidation preference (in dollars per share) | $ / shares | $ 25 | ||||||||||
Aggregate gross offering proceeds for the shares issued | $ 50,000,000 | ||||||||||
Offering costs | 1,700,000 | ||||||||||
Net proceeds | $ 2,000,000 | $ 48,300,000 | |||||||||
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) | 7.00% | ||||||||||
Preferred stock liquidation preference (in dollars per share) | $ / shares | $ 25 | ||||||||||
Aggregate gross offering proceeds for the shares issued | $ 21,850,000 | ||||||||||
6% Preferred Stock | |||||||||||
Public Offering of Preferred Stock | |||||||||||
Preferred stock, dividend rate (as a percent) | 6.00% | 6.00% | |||||||||
Preferred stock liquidation preference (in dollars per share) | $ / shares | $ 1,000 | $ 1,000 | |||||||||
6% Preferred Stock | Public Offering | |||||||||||
Public Offering of Preferred Stock | |||||||||||
Depositary shares issued (in shares) | shares | 5,000,000 | ||||||||||
Depositary shares equivalent preferred stock interest per share | 0.025 | ||||||||||
Preferred stock, dividend rate (as a percent) | 6.00% | ||||||||||
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 | ||||||||||
Offering costs | 4,200,000 | ||||||||||
Net proceeds | $ 120,800,000 | ||||||||||
Preferred Stock | 7% Preferred Stock | |||||||||||
Public Offering of Preferred Stock | |||||||||||
Shares issued (in shares) | shares | 2,000,000 |