Merchants Bancorp confirms ‘liquidity remains strong’

Merchants Bancorp, parent company and registered bank holding company of Merchants Bank of Indiana, confirmed that its "liquidity remains strong despite recent market concerns facing other financial institutions." At December 31, 2022, Merchants had $3.1B in unused borrowing capacity with the Federal Home Loan Bank and the Federal Reserve discount window, based on available collateral. Merchants’ most liquid assets are in cash, short-term investments, including interest-bearing demand deposits, mortgage loans in process of securitization, loans held for sale, and warehouse lines of credit included in loans receivable. Taken together with its unused borrowing capacity, these totaled 54% of its $12.6B total assets at December 31, 2022. As of December 31, 2022, approximately 93% of Merchants’ loan portfolio reprices within 30 days. Additionally, approximately 79% of its investment securities reprice within 30 days, with none maturing in more than 2 years. Merchants reported minimal Accumulated Other Comprehensive Losses, or "AOCI," of $10.5M as of December 31, 2022, related to unrealized losses in its securities portfolio. This represented less than 1% of its total investment securities and only 3% of its securities available for sale, which is significantly lower than industry averages. In addition to the $250,000 of insurance available to depositors through the Federal Deposit Insurance Corporation, Merchants also offers its customers an opportunity to insure up to $100 million through its Insured Cash Sweep program that extends FDIC protection. Michael Petrie, Chairman and CEO of Merchants, stated: "Merchants’ business model is truly unique and positions us well to withstand rapidly changing market dynamics. Not only do we have significant sources of liquidity, the vast majority of our loan and securities portfolio have variable rates that reprice within 30 days to constantly reflect current market values. Our model intentionally minimizes interest rate risk by conservatively matching the duration of assets and liabilities."