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Letter portraitLegal landscapeQuarterYTD

Merchants Bank, The

Gresham, OR · Cert 34093

FDIC · 5 branches

Q4 2016

$153.0MAssets
$118.2MLoans
$127.3MDeposits
$21.8MEquity
Loan mix
88%RE $80.2M11%C&I $10.4M1%Consumer $1.0MQ4 2015Q4 2016
Deposit mix
75%Interest-bearing $95.7M25%Noninterest $31.6MQ4 2015Q4 2016

NIM

4.55%Q4 ’144.75%Q4 ’154.94%Q4 ’16+11%+4%

Non-interest income vs. expense

3.73%Q4 ’144.73%Q4 ’154.90%Q4 ’16+43%+11%

Market Position · Portland-Vancouver-Hillsboro, OR-WA · 2016 SOD (annual) · 0.3% share · #22 of 37 inst. · $0.1B of $46.4B

0.5% Multnomah
0.1% Washington

Executive Summary

  • Earnings: ROA of 0.38%, down 189 bps year over year; NIM at 4.71%.
  • Asset quality: problem loans at 0.00% of loans (0 bps YoY), with net charge-offs at 0.04%.
  • Capital: tier 1 leverage ratio of 10.46%, up 116 bps from a year ago.
  • Funding: loans stand at 92.87% of deposits as of Q4 2016.

Financial Results

Return on Assets (YTD, annualized)

0.38%-189 bps YoY

Net Interest Margin (YTD, annualized)

4.71%+20 bps YoY

Efficiency Ratio (YTD, annualized)

92.90%+419 bps YoY

Tier 1 Leverage Ratio

10.46%+116 bps YoY

Year to date, annualized, through each quarter.

MetricQ4 2015Q1 2016Q2 2016Q3 2016Q4 2016YoY ΔTrend
Earnings
Return on Assets2.27%0.61%0.46%0.16%0.38%-189 bps
Return on Equity20.80%4.95%3.63%1.27%2.90%-1,790 bps
Net Interest Margin4.51%4.45%4.52%4.60%4.71%+20 bps
Efficiency Ratio88.71%88.23%91.20%97.37%92.90%+419 bps
Non-Interest Burden3.75%3.68%3.89%4.29%4.16%+41 bps
Growth
Asset Growth (YoY)7.82%-0.97%-7.02%-3.80%-12.80%-2,062 bps
Loan Growth (YoY)3.39%-1.82%-5.20%-9.77%-15.37%-1,875 bps
Deposit Growth (YoY)3.12%-5.13%-11.94%-2.10%-10.54%-1,366 bps
Asset Quality
Nonperforming Loans / Loans0.00%0.00%0.00%0.00%0.00%0 bps
Net Charge-Offs / Loans0.09%-0.02%-0.02%-0.03%0.04%-6 bps
Allowance / Loans1.92%1.97%2.08%2.16%2.24%+31 bps
Allowance Coverage of NPLsn/an/an/an/an/an/an/a
Capital
Tier 1 Leverage Ratio9.30%9.30%9.67%9.74%10.46%+116 bps
Total Risk-Based Capital10.71%11.15%11.72%12.05%12.96%+225 bps
Equity / Assets12.03%12.69%13.13%13.56%14.24%+221 bps
Liquidity & Funding
Loans / Deposits98.16%97.53%95.00%95.05%92.87%-530 bps
Liquid Assets / Assets7.19%5.37%8.52%11.87%14.42%+723 bps
CRE / Total Capitaln/an/an/an/an/an/an/a