illegal,I belive MBNC continue to be the Comeback kid.
January 31, 2014
Dear Friends and Shareholders,
2013 was a great year for MBank and its holding company, Merchants Bancorp. We’re the Comeback Kid and our turnaround story, as the underdog
everybody roots for, is being discussed nationally.
We are delighted to share financial results for the 4th quarter of 2013 and for the year itself. In the 4th quarter Merchants Bancorp reported net income
of $677 thousand or $0.07 per share compared to a net loss of $87 thousand or ($0.01) per share for the year ago quarter. Net income for 2013 itself was
$1.7 million or $0.07 per share, compared to a net loss of $215 thousand or ($0.02) per share in 2012.
Let’s add some perspective. MBank had $2 million in earnings in 2013! Just four years ago, we posted losses of close to $15 million (tough memories).
Our recovery is well in hand and the trend and trajectory are impressive. This is an exciting time for MBank as we move from survival to strategically
planning for the future!
Here are some MBank highlights for 2013:
• Earnings increased every quarter in 2013
• 2013 brought an earnings turnaround with MBank returning to profitability
• Asset quality improves with legacy troubled assets dropping off one after another
• Liquidity remains strong
• We achieved 7% in our tier 1 leverage ratio, nearly doubling our all-time low of several years ago
• We continue to strive towards the high bar set by the regulators of 10% (regulatory capital to asset size)
Organic earnings, capital raised and intentionally shrinking our size contributed to these improvements. As discussed in a previous letter, we intend
to explore bringing in preferred capital (behaves much like a loan and bears an interest rate). We will act fairly quickly in examining this option, and if
we proceed, you will see correspondence (to all shareholders) seeking to approve the authorization of issuing preferred capital. This will be limited to
accredited investors per SEC guidance. We invite any shareholder who would like to consider participating to call Jef Baker, Merchants Bancorp CEO at
503-674-3401.
2014 will bring an exciting change with the plan to remodel our branch in Gresham. We believe the work will be complete this summer, with a grand re-
opening to follow. We previously shared our decision to close the Hollywood branch on January 31, 2014. That will provide some added efficiency within
the bank as we move forward. While strategically shrinking on one level, we are actively growing on another. MBank is bringing cutting edge technology
to community banking (e.g., online account opening, our mobile banking application, payment systems via email and text, etc). Please spread the word
that with no-fee access to more than 23,000 ATMs nationwide, we offer virtually every service of a large bank, plus personalized customer service. Every
business and consumer alike should bank at MBank!
MBank’s story is truly impressive. We have an amazingly dedicated and loyal group of MBankers who make this possible. The positive results have
energized us even more and reignited our passion for serving our customers and our commitment to make MBank the very best it can be. As an investor,
you are part of our story. If you don’t bank with us, please open an account today and join in our efforts to make your shares more valuable. It is easy;
just call Casey Ryan, Director of Corporate Development, at 503-674-3111, and he will take care of everything for you. We continue to appreciate your
trust and support of MBank, your bank.
Sincerely,
Jefry A. Baker Stanley C. Morris
President & CEO Chairman of the Board
