FT Markets Data
Merchants Bancorp

Merchants Bancorp Reports Second Quarter 2025 Results

  • Second quarter 2025 net income of $38.0 million, decreased $38.4 million compared to second quarter of 2024 and decreased $20.3 million compared to the first quarter 2025, reflecting an increase in provision for credit losses of $43.1 million and $45.3 million, respectively.
  • An increase in provision for credit losses was primarily associated with estimated declines on multi-family property values after receiving new appraisals and the ongoing investigation of borrowers involved in mortgage fraud or suspected fraud.
  • Second quarter 2025 diluted earnings per common share of $0.60 decreased 60% compared to the second quarter of 2024 and decreased 35% compared to the first quarter of 2025.
  • Tangible book value per common share reached a record-high of $35.42 and increased 13% compared to $31.27 in the second quarter of 2024 and increased 1% compared to $34.90 in the first quarter of 2025.
  • As of June 30, 2025, the Company had $5.0 billion in unused borrowing capacity with the Federal Home Loan Bank and the Federal Reserve Discount window, representing 26% of total assets.
  • Total assets of $19.1 billion increased 2% compared to March 31, 2025 and December 31, 2024.
  • Loans receivable of $10.4 billion, net of allowance for credit losses on loans, increased $88.4 million, or 1%, compared to March 31, 2025, and increased $78.1 million compared to December 31, 2024.
  • Core deposits of $11.4 billion increased $744.6 million, or 7%, compared to March 31, 2025 and increased $2.0 billion, or 22%, compared to December 31, 2024. Core deposits now represent 90% of total deposits, reaching the highest level the Company has reported since March 2022.
  • Brokered deposits of $1.3 billion decreased $463.9 million, or 27%, compared to March 31, 2025, and decreased $1.3 billion, or 50%, compared to December 31, 2024.
  • On June 5, 2025, the Company completed a $373.3 million securitization of 18 multi-family mortgage loans through a Freddie Mac-sponsored Q-Series transaction.

CARMEL, Ind. , July 28, 2025 /PRNewswire/ -- Merchants Bancorp (the "Company" or "Merchants") (Nasdaq: MBIN), parent company of Merchants Bank, today reported second quarter 2025 net income of $38.0 million, or diluted earnings per common share of $0.60. This compared to $76.4 million, or diluted earnings per common share of $1.49 in the second quarter of 2024, and compared to $58.2 million, or diluted earnings per common share of $0.93 in the first quarter of 2025.

"Despite a difficult second quarter, marked by an increase in our provision for credit losses and charge-offs largely associated with mortgage fraud or suspected fraud that has also impacted a number of other multi-family lenders, we are encouraged by the resilience of our underlying earnings, the significant increase in gain on sale of loans, and the continued growth in our tangible book value that reached an all-time high of $35.42 per share.  We were also pleased to see a 17% reduction in total delinquencies and a 58% decline in loans receivable classified as special mention during the quarter," said Michael F. Petrie, Chairman and CEO of Merchants.

Michael J. Dunlap, President and Chief Operating Officer of Merchants, added, "We have implemented strategies to address our asset quality issues and to enhance our overall risk management practices to ensure long-term resilience.  We are optimistic about our future and confident that our collective efforts will drive the stability and growth of our institution."

Net income of $38.0 million for the second quarter of 2025 decreased by $38.4 million, or 50%, compared to the second quarter of 2024, reflecting a $43.1 million, or 432%, increase in provision for credit losses. The increase was primarily associated with estimated declines on multi-family property values after receiving new appraisals and the ongoing investigation of borrowers involved in mortgage fraud or suspected fraud. Partially offsetting the higher provision expense was a $19.1 million, or 61%, increase in noninterest income driven by a robust gain on sale of loans that reached $23.3 million, as well as syndication and asset management fees of $9.7 million during the quarter.

Net income of $38.0 million for the second quarter 2025 decreased by $20.3 million, or 35%, compared to the first quarter of 2025, reflecting a $45.3 million, or 586%, increase in provision for credit losses for the second quarter of 2025.  Partially offsetting the higher provision expense was a $26.8 million, or 113%, increase in noninterest income that was driven by a 101% increase in gain on sale of loans and a 186% increase in syndication and asset management fees. 

Total Assets

Total assets of $19.1 billion at June 30, 2025 increased by $343.4 million, or 2%, compared to March 31, 2025, and $335.5 million compared to December 31, 2024. The increase compared to both periods was primarily driven by higher balances in the mortgage warehouse portfolios. Total loan balances grew by 2% even with two loan sale transactions in the second quarter totaling over $685.4 million related to securitizations.

Return on average assets was 0.80% for the second quarter of 2025 compared to 1.72% for the second quarter of 2024 and 1.31% for the first quarter of 2025. 

Asset Quality

The allowance for credit losses on loans of $91.8 million, as of June 30, 2025, increased by $8.4 million, or 10%, compared to March 31, 2025, and increased by $7.4 million, or 9%, compared to December 31, 2024.  The $8.4 million increase compared to March 31, 2025 was driven by $54.5 million increase in provision expense that was partially offset by $46.1 million in loan charge-offs.  The increases in provision expenses and charge-offs compared to both periods were primarily associated with estimated declines on multi-family property values after receiving new appraisals and the ongoing investigation of borrowers involved in mortgage fraud or suspected fraud.  The increases were also attributable to certain types of subordinated loans that the Company no longer offers to borrowers.  These subordinated loans have been largely identified and evaluated for potential losses that have either been included in the provision for credit losses as specific reserves or charged off.

The Company recorded charge-offs for 14 customers, primarily in the multi-family loan portfolio, totaling $46.1 million, and no recoveries during the second quarter of 2025.   This compares to $3.5 million in charge-offs and $15,000 in recoveries during the second quarter of 2024 and to $10.5 million in charge-offs and $28,000 of recoveries in the first quarter of 2025.

During the quarter, after months of seeking legal remedies, the Company obtained additional access and information, such as through court appointed receivers, to assess the collateral supporting its challenged loans.  The evaluation of this information contributed to an increase in loans classified as substandard, bringing the total to $417.7 million compared to $323.6 million as of March 31, 2025.  However, during the same period, loans classified as special mention declined by $236.4 million, or 58%, falling to $171.5 million.  This decline reinforces the view that the frequency of migration to criticized status has subsided.  Overall, criticized loans of $589.2 million declined by $142.4 million, or 19%, compared to March 31, 2025.  Furthermore, total delinquencies declined by 17% compared to March 31, 2025.

As of June 30, 2025, all substandard loans have been evaluated for impairment and these loans have specific reserves of $30.8 million, of which $9.9 million was added during the second quarter of 2025, net of charge-offs.  The Company believes that its loan portfolio remains well collateralized.

Non-performing loans also declined during the quarter, largely attributable to charge-offs.  As of June 30, 2025, non-performing loans were $251.5 million, or 2.39% of loans receivable, compared to $284.6 million, or 2.73%, as of March 31, 2025, and $279.7 million, or 2.68%, as of December 31, 2024. 

The Company has been making additional efforts to reduce its credit risk through loan sale and securitization activities since 2019.  In 2023 and 2024, the Company strategically executed credit protection arrangements through a credit linked note and credit default swaps. The Company also upsized an existing credit default swap in June 2025. These credit protection arrangements totaled $3.7 billion in loans to reduce risk of losses, with incremental coverage ranging from 13-14% of the unpaid principal balances for each arrangement.  Despite having credit protection on these loans, the Company also continues to carry an allowance for credit losses on loans held for investment. As of June 30, 2025, the balance of loans subject to credit protection arrangements was $2.8 billion.

Total Deposits

Total deposits of $12.7 billion at June 30, 2025 increased by $280.7 million, or 2%, compared to March 31, 2025, and increased by $766.9 million, or 6%, compared to December 31, 2024. The increase compared to both periods was primarily due to growth in core demand deposits and savings.  

Core deposits of $11.4 billion at June 30, 2025 increased by $744.6 million, or 7%, from March 31, 2025 and increased by $2.0 billion, or 22%, from December 31, 2024. The increases were attributable primarily to growth in custodial deposits from warehouse customers.  Core deposits represented 90% of total deposits at June 30, 2025, 86% of total deposits at March 31, 2025, and 79% of total deposits at December 31, 2024.

Total brokered deposits of $1.3 billion at June 30, 2025 decreased $463.9 million, or 27%, from March 31, 2025 and decreased $1.3 billion, or 50%, from December 31, 2024.   As of June 30, 2025, brokered certificates of deposit had a weighted average remaining duration of 48 days.

Liquidity

Cash balances of $647.2 million as of June 30, 2025 increased by $125.9 million, or 24%, compared to March 31, 2025 and increased by $170.6 million, or 36%, compared to December 31, 2024.  The Company continues to have significant borrowing capacity available, with unused lines of credit totaling $5.0 billion as of June 30, 2025 compared to $4.7 billion at March 31, 2025 and $4.3 billion at December 31, 2024. 

The Company's 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 of $5.0 billion described above, these totaled $11.9 billion, or 62%, of its $19.1 billion total assets at June 30, 2025. Furthermore, its $3.3 billion line of credit availability with the Federal Reserve Bank of Chicago alone could fund 106% of its uninsured deposits, which represented approximately 24% of total bank deposits as of June 30, 2025.

This liquidity enhances the Company's ability to effectively manage interest expense and asset levels in the future. Additionally, the Company's business model is designed to continuously sell or securitize a significant portion of its loans, which provides flexibility in managing its liquidity. 

Comparison of Operating Results for the Three Months Ended

June 30, 2025 and 2024

Net Interest Income of $128.7 million remained essentially unchanged, compared to $128.1 million, reflecting lower interest expense on deposits that was partially offset by lower interest income and higher interest expense on borrowings.

  • Net interest margin of 2.83% decreased 16 basis points compared to 2.99%. The margin was negatively impacted by a significant shift in business mix, as highly profitable but lower-margin loans held for sale balances, consisting of primarily warehouse loans, grew by $622.7 million, or 18%, and warehouse repurchase agreements grew by $473.8 million, or 35%, while other higher-margin loans receivable balances contracted by a net of $964.1 million.
  • Interest rate spread of 2.33% decreased 12 basis points compared to 2.45%.

Interest Income of $304.4 million decreased $23.9 million, or 7%, compared to $328.3 million. The decrease primarily reflected lower average yields on higher average balances on loans and loans held for sale.

  • Average yields on loans and loans held for sale of 6.92% decreased 105 basis points compared to 7.97%.
  • Average balances of $14.8 billion for loans and loans held for sale increased $479.0 million, or 3% compared to $14.3 billion.

Interest Expense of $175.7 million decreased $24.5 million, or 12%, compared to $200.2 million.  The decrease reflected lower average balances at lower average rates on certificates of deposit that were partially offset by higher average balances at lower average rates on borrowings.

  • Average interest rates on total interest-bearing liabilities of 4.35% decreased by 87 basis points compared to 5.22%.
  • Average balances of $3.1 billion for certificates of deposit decreased by $3.4 billion, or 53%, compared to $6.5 billion.
  • Average interest rates of 4.59% for certificates of deposit decreased by 84 basis points compared to 5.43%.
  • Average balances of $3.5 billion for borrowings increased by 235%, compared to $1.0 billion.
  • Average interest rates of 5.15% for borrowings decreased by 285 basis points compared to 8.00%.

Noninterest Income of $50.5 million increased $19.1 million, or 61%, compared to $31.4 million. The $19.1 increase reflected a $12.2 million, or 109%, increase in gain on sale of loans, a $6.5 million, or 200%, increase in syndication and asset management fees, and a $4.7 million, or 101%, increase in other income, partially offset by a $4.7 million, or 43%, decrease in loan servicing fees.    

  • Gain on sale of loans increased $12.2 million, or 109%, reflecting higher volume in the multi-family loan portfolio, including a securitization through a Freddie Mac-sponsored Q-Series transaction.
  • Other income included a $4.3 million positive fair market value adjustment to the floor derivatives compared to a $215,000 positive fair market value adjustment in the prior period.
  • Loan servicing fees included a $258,000 positive fair market value adjustment to servicing rights, with a $487,000 negative adjustment in the Banking segment and a $745,000 positive adjustment in the Multi-family Mortgage Banking segment. This compared to a $5.1 million positive fair market value adjustment to servicing rights in the prior period with a $551,000 positive adjustment in the Banking segment and a $4.5 million positive adjustment in the Multi-family Mortgage Banking segment. The value of servicing rights generally increases in rising 10-year interest rate environments and declines in falling interest rate environments due to expected prepayments and earning rates on escrow deposits.

Noninterest Expense of $77.3 million increased $27.0 million, or 54%, compared to $50.4 million, primarily due to a $15.2 million, or 54%, increase in salaries and employee benefits to support business growth, including $5.8 million for expenses associated with the addition of production staff, which is expected to continue to elevate production, gain on sale, and expenses in future quarters as well.  Also contributing to the higher expenses during the quarter, was a $7.1 million increase in other expenses primarily associated with taxes, insurance, receiver expenses, and legal fees for collateral preservation of nonperforming loans, a $2.5 million increase in credit risk transfer premium expense associated with ongoing credit default swaps that were executed in 2024, in addition to a swap upsize in June 2025, as well as a $1.6 million, or 28%, increase in deposit insurance expense, reflecting an increase in underperforming assets, coupled with an increase in total assets.

Comparison of Operating Results for the Three Months Ended

June 30, 2025 and March 31, 2025

Net Interest Income of $128.7 million increased $6.5 million, or 5%, compared to $122.2 million, primarily due to higher average balances on loans and loans held for sale, partially offset by higher average balances on interest-bearing checking accounts and borrowings.

  • Net interest margin of 2.83% decreased 6 basis points compared to 2.89%. The margin was negatively impacted by a shift in business mix, as highly profitable but lower-margin loans held for sale balances, consisting of primarily warehouse loans, grew by $122.3 million, or 3%, and warehouse repurchase agreements grew by $435.5 million, or 31%, while higher-margin loans receivable balances contracted by a net of $338.7 million during the quarter.
  • Interest rate spread of 2.33% decreased 5 basis points compared to 2.38%.

Interest Income of $304.4 million increased $17.2 million, or 6%, compared to $287.2 million, primarily reflecting an increase in average balances at lower yields on loans and loans held for sale.

  • Average balances of $14.8 billion for loans and loans held for sale increased 8%, compared to $13.8 billion.
  • Average yields on loans and loans held for sale of 6.92% decreased 14 basis points compared to 7.06%.

Interest Expense of $175.7 million increased $10.7 million, or 6% compared to $165.0 million. The increase was primarily driven by higher average balances on interest-bearing checking accounts, and higher average balances at lower rates on borrowings.  

  • Average balances of $6.2 billion for interest-bearing checking accounts increased 20%, compared to $5.1 billion.
  • Average interest rates of 3.96% on interest-bearing checking accounts decreased 5 basis points compared to 4.01%.
  • Average balances of $3.5 billion for borrowings increased $328.0 million, or 10%, compared to $3.1 billion.
  • Average interest rates of 5.15% borrowings decreased 18 basis points compared to 5.33%.

Noninterest Income of $50.5 million increased $26.8 million, or 113%, compared to $23.7 million. The increase was primarily due to an $11.7 million, or 101%, increase in gain on sale of loans, a $6.3 million, or 186%, increase in syndication and asset management fees, a $6.1 million, or 193%, increase in other income, and a $2.1 million, or 53%, increase in loan servicing fees.

  • Gain on sale of loans increased $11.7 million, reflecting higher volume in the multi-family loan portfolio, including a securitization through a Freddie Mac-sponsored Q-Series transaction.
  • Other income included a $4.3 million positive fair market value adjustment to floor derivatives compared to a $2.3 million negative fair market value adjustment to derivatives in the prior period.
  • Loan servicing fees included a $258,000 positive fair market value adjustment to servicing rights, with a $487,000 negative adjustment in the Banking segment and a $745,000 positive adjustment in the Multi-family Mortgage Banking segment. This compared to a $754,000 negative fair market value adjustment to servicing rights in the prior period, with a $1.2 million negative adjustment in the Banking segment and a $449,000 positive adjustment in the Multi-family Mortgage Banking segment. The value of servicing rights generally increases in rising 10-year interest rate environments and declines in falling interest rate environments due to expected prepayments and earning rates on escrow deposits.

Noninterest Expense of $77.3 million increased $15.7 million, or 25%, compared to $61.7 million, primarily driven by a $7.1 million increase in salaries and employee benefits associated with the addition of production staff, which is expected to continue to elevate production, gain on sale, and expenses in future quarters as well. The increase also reflects a $6.9 million increase in other expenses primarily associated with taxes, insurance, receiver expenses, and legal fees for the collateral preservation of nonperforming loans, as well as an increase in credit risk transfer premium expense.

About Merchants Bancorp

Ranked as a top performing U.S. public bank by S&P Global Market Intelligence, Merchants Bancorp is a diversified bank holding company headquartered in Carmel, Indiana operating multiple segments, including Multi-family Mortgage Banking that primarily offers multi-family housing and healthcare facility financing and servicing (through this segment it also serves as a syndicator of low-income housing tax credit and debt funds); Mortgage Warehousing that offers mortgage warehouse financing, commercial loans, and deposit services; and Banking that offers retail and correspondent residential mortgage banking, agricultural lending, and traditional community banking.  Merchants Bancorp, with $19.1 billion in assets and $12.7 billion in deposits as of June 30, 2025, conducts its business primarily through its direct and indirect subsidiaries, Merchants Bank of Indiana, Merchants Capital Corp., Merchants Capital Investments, LLC, Merchants Capital Servicing, LLC, Merchants Asset Management, LLC, and Merchants Mortgage, a division of Merchants Bank of Indiana. For more information and financial data, please visit Merchants' Investor Relations page at investors.merchantsbancorp.com.

Forward-Looking Statements 

This press release contains forward-looking statements which reflect management's current views with respect to, among other things, future events and financial performance. These statements are often, but not always, made through the use of words or phrases such as "may," "might," "should," "could," "predict," "potential," "believe," "expect," "continue," "will," "anticipate," "seek," "estimate," "intend," "plan," "projection," "goal," "target," "outlook," "aim," "would," "annualized" and "outlook," or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about the industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, management cautions that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.  A number of important factors could cause actual results to differ materially from those indicated in these forward-looking statements, including the impacts of factors identified in "Risk Factors" or "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K and other periodic filings with the Securities and Exchange Commission.  Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)














June 30,


March 31,


December 31,


September 30,


June 30,



2025


2025


2024


2024


2024

Assets











Cash and due from banks


$              15,419


$              15,609


$              10,989


$              12,214


$              10,242

Interest-earning demand accounts


631,746


505,687


465,621


589,692


530,640

Cash and cash equivalents


647,165


521,296


476,610


601,906


540,882

Securities purchased under agreements to resell


1,539


1,550


1,559


3,279


3,304

Mortgage loans in process of securitization


402,427


389,797


428,206


430,966


209,244

Securities available for sale ($602,962, $626,271, $635,946,
$682,975 and $682,774 utilizing fair value option, respectively)


936,343


961,183


980,050


953,063


1,017,019

Securities held to maturity ($1,547,525, $1,605,151, $1,664,674,
$1,756,203 and $1,291,960 at fair value, respectively)


1,548,211


1,606,286


1,664,686


1,755,047


1,291,110

Federal Home Loan Bank (FHLB) stock and other equity securities


217,850


217,850


217,804


184,050


67,499

Loans held for sale (includes $91,930, $75,920, $78,170, $91,084
and $102,873 at fair value, respectively)


4,105,765


3,983,452


3,771,510


3,808,234


3,483,076

Loans receivable, net of allowance for credit losses on loans
of $91,811,  $83,413, $84,386, $84,549 and $81,028, respectively


10,432,117


10,343,724


10,354,002


10,261,890


10,933,189

Premises and equipment, net


71,050


67,787


58,617


53,161


46,833

Servicing rights


193,037


189,711


189,935


177,327


178,776

Interest receivable


82,391


82,811


83,409


86,612


90,360

Goodwill 


8,014


8,014


8,014


8,014


8,014

Other assets and receivables 


495,295


424,339


571,330


329,427


343,116

Total assets


$       19,141,204


$       18,797,800


$       18,805,732


$       18,652,976


$       18,212,422

Liabilities and Shareholders' Equity











  Liabilities











Deposits











Noninterest-bearing


$            315,523


$            313,296


$            239,005


$            311,386


$            383,260

Interest-bearing


12,371,312


12,092,869


11,680,971


12,580,501


14,533,807

Total deposits


12,686,835


12,406,165


11,919,976


12,891,887


14,917,067

Borrowings 


4,009,474


4,001,744


4,386,122


3,568,721


1,159,206

Deferred tax liabilities


29,228


35,740


25,289


19,530


25,098

Other liabilities


231,035


193,416


231,035


233,731


222,904

Total liabilities


16,956,572


16,637,065


16,562,422


16,713,869


16,324,275

Commitments and  Contingencies











Shareholders' Equity











Common stock, without par value











Authorized - 75,000,000 shares











Issued and outstanding  - 45,885,458 shares, 45,881,706
shares, 45,767,166 shares, 45,764,023 shares and 45,757,567
shares


241,452


240,512


240,313


239,448


238,492

Preferred stock, without par value - 5,000,000 total shares
authorized











6% Series B Preferred stock - $1,000 per share liquidation
preference











Authorized - no shares at June 30, 2025 and March 31,
2025, and 125,000 shares for all prior periods











Issued and outstanding - no shares at June 30, 2025 and
March 31, 2025, and 125,000 shares for all prior periods
presented (equivalent to 5,000,000 depositary shares)


—


—


120,844


120,844


120,844

6% Series C Preferred stock - $1,000 per share liquidation
preference











Authorized - 200,000 shares











Issued and outstanding - 196,181 shares (equivalent to
7,847,233 depositary shares) 


191,084


191,084


191,084


191,084


191,084

8.25% Series D Preferred stock - $1,000 per share liquidation
preference











Authorized - 300,000 shares











Issued and outstanding - 142,500 shares (equivalent to
5,700,000 depositary shares) 


137,459


137,459


137,459


137,459


137,459

7.625% Series E Preferred stock - $1,000 per share
liquidation preference











Authorized - 230,000 shares











Issued and outstanding - 230,000 shares (equivalent to
9,200,000 depositary shares) at June 30, 2025, March 31,
2025, December 31, 2024, and no shares for all prior
periods. 


222,748


222,748


222,748


—


—

Retained earnings


1,392,136


1,369,009


1,330,995


1,250,176


1,200,778

Accumulated other comprehensive (loss) income


(247)


(77)


(133)


96


(510)

Total shareholders' equity


2,184,632


2,160,735


2,243,310


1,939,107


1,888,147

Total liabilities and shareholders' equity


$       19,141,204


$       18,797,800


$       18,805,732


$       18,652,976


$       18,212,422

 

Consolidated Statement of Income

(Unaudited)

(In thousands, except share data)

















Three Months Ended


Change



June 30,


March 31,


June 30,


2Q25


2Q25



2025


2025


2024


vs. 1Q25


vs. 2Q24

Interest Income














Loans


$

255,641


$

239,280


$

284,421


7 %


-10 %

Mortgage loans in process of securitization



5,304



3,743



3,044


42 %


74 %

Investment securities:














Available for sale



12,095



12,358



14,784


-2 %


-18 %

Held to maturity



23,166



24,358



19,799


-5 %


17 %

FHLB stock and other equity securities (dividends)



4,641



4,372



1,277


6 %


263 %

Other



3,552



3,093



4,948


15 %


-28 %

Total interest income



304,399



287,204



328,273


6 %


-7 %

Interest Expense














Deposits



131,375



123,941



179,651


6 %


-27 %

Short-term borrowings



36,981



33,364



11,612


11 %


218 %

Long-term borrowings



7,324



7,703



8,891


-5 %


-18 %

Total interest expense



175,680



165,008



200,154


6 %


-12 %

Net Interest Income



128,719



122,196



128,119


5 %


—

Provision for credit losses



53,027



7,727



9,965


586 %


432 %

Net Interest Income After Provision for Credit
Losses



75,692



114,469



118,154


-34 %


-36 %

Noninterest Income














Gain on sale of loans



23,342



11,619



11,168


101 %


109 %

Loan servicing fees, net



6,138



4,010



10,827


53 %


-43 %

Mortgage warehouse fees



2,039



1,513



1,524


35 %


34 %

Syndication and asset management fees



9,707



3,389



3,233


186 %


200 %

Other income



9,254



3,162



4,599


193 %


101 %

Total noninterest income



50,480



23,693



31,351


113 %


61 %

Noninterest Expense














Salaries and employee benefits



43,566



36,419



28,373


20 %


54 %

Loan expense



1,142



798



993


43 %


15 %

Occupancy and equipment



2,494



2,351



2,239


6 %


11 %

Professional fees



3,159



2,894



3,556


9 %


-11 %

Deposit insurance expense



7,152



7,228



5,579


-1 %


28 %

Technology expense



2,446



2,374



1,859


3 %


32 %

Credit risk transfer premium expense



4,767



3,862



2,294


23 %


108 %

Other expense



12,611



5,738



5,487


120 %


130 %

Total noninterest expense



77,337



61,664



50,380


25 %


54 %

Income Before Income Taxes



48,835



76,498



99,125


-36 %


-51 %

Provision for income taxes



10,854



18,259



22,732


-41 %


-52 %

Net Income


$

37,981


$

58,239


$

76,393


-35 %


-50 %

   Dividends on preferred stock



(10,266)



(10,265)



(7,757)


—


32 %

   Impact of preferred stock redemption



—



(5,371)



(1,823)


-100 %


-100 %

Net Income Available to Common
Shareholders


$

27,715


$

42,603


$

66,813


-35 %


-59 %

Basic Earnings Per Share


$

0.60


$

0.93


$

1.50


-35 %


-60 %

Diluted Earnings Per Share


$

0.60


$

0.93


$

1.49


-35 %


-60 %

Weighted-Average Shares Outstanding














Basic



45,883,644



45,824,022



44,569,345





Diluted



45,929,563



45,914,083



44,698,324





 

Consolidated Statement of Income

(Unaudited)

(In thousands, except share data)












Six Months Ended





June 30,


June 30,





2025


2024


Change

Interest Income









Loans


$

494,921


$

556,419


-11 %

Mortgage loans in process of securitization



9,047



4,764


90 %

Investment securities:









Available for sale



24,453



29,172


-16 %

Held to maturity



47,524



40,321


18 %

FHLB stock and other equity securities (dividends)



9,013



2,121


325 %

Other



6,645



9,649


-31 %

Total interest income



591,603



642,446


-8 %

Interest Expense









Deposits



255,316



350,673


-27 %

Short-term borrowings



70,345



18,834


274 %

Long-term borrowings



15,027



17,764


-15 %

Total interest expense



340,688



387,271


-12 %

Net Interest Income



250,915



255,175


-2 %

Provision for credit losses



60,754



14,691


314 %

Net Interest Income After Provision for Credit Losses



190,161



240,484


-21 %

Noninterest Income









Gain on sale of loans



34,961



20,524


70 %

Loan servicing fees, net



10,148



30,229


-66 %

Mortgage warehouse fees



3,552



2,506


42 %

Loss on sale of investments available for sale (1)



—



(108)


100 %

Syndication and asset management fees



13,096



8,536


53 %

Other income



12,416



10,538


18 %

Total noninterest income



74,173



72,225


3 %

Noninterest Expense









Salaries and employee benefits



79,985



57,969


38 %

Loan expense



1,940



1,949


—

Occupancy and equipment



4,845



4,476


8 %

Professional fees



6,053



7,655


-21 %

Deposit insurance expense



14,380



10,704


34 %

Technology expense



4,820



3,713


30 %

Credit risk transfer premium expense



8,629



2,294


276 %

Other expense



18,349



10,532


74 %

Total noninterest expense



139,001



99,292


40 %

Income Before Income Taxes



125,333



213,417


-41 %

Provision for income taxes (2)



29,113



49,970


-42 %

Net Income


$

96,220


$

163,447


-41 %

   Dividends on preferred stock



(20,531)



(16,424)


25 %

   Impact of preferred stock redemption



(5,371)



(1,823)


195 %

Net Income Available to Common Shareholders


$

70,318


$

145,200


-52 %

Basic Earnings Per Share


$

1.53


$

3.30


-54 %

Diluted Earnings Per Share


$

1.53


$

3.29


-53 %

Weighted-Average Shares Outstanding









Basic



45,853,998



43,937,665



Diluted



45,921,988



44,082,485












(1) Includes $0 and $(108) respectively, related to accumulated other comprehensive earnings reclassifications.

(2) Includes $0 and $26 respectively, related to income tax benefit for reclassification items.



 

Key Operating Results

(Unaudited)

($ in thousands, except share data)

















Three Months Ended


Change





June 30,


March 31,


June 30,


2Q25


2Q25





2025


2025


2024


vs. 1Q25


vs. 2Q24















Noninterest expense



$                  77,337


$                    61,664


$           50,380


25 %


54 %















Net interest income (before provision for credit losses)



128,719


122,196


128,119


5 %


—


Noninterest income



50,480


23,693


31,351


113 %


61 %


Total income



$                179,199


$                  145,889


$         159,470


23 %


12 %















Efficiency ratio



43.16 %


42.27 %


31.59 %


89

bps

1,157

bps



























Average assets



$           18,984,925


$             17,831,950


$    17,814,191


6 %


7 %


Net income



37,981


58,239


76,393


-35 %


-50 %


Return on average assets before annualizing



0.20 %


0.33 %


0.43 %






Annualization factor



4.00


4.00


4.00






Return on average assets



0.80 %


1.31 %


1.72 %


(51)

bps

(92)

bps














Return on average tangible common shareholders' equity (1)



6.75 %


10.65 %


19.55 %


(390)

bps

(1,280)

bps














Tangible book value per common share (1)



$                    35.42


$                      34.90


$             31.27


1 %


13 %















Tangible common shareholders' equity/tangible assets (1)



8.49 %


8.52 %


7.86 %


(3)

bps

63

bps














Consolidated ratios













Total capital/risk-weighted assets(2)



13.4

%

13.0

%

12.0

%





Tier I capital/risk-weighted assets(2)



12.8

%

12.4

%

11.4

%





Common Equity Tier I capital/risk-weighted assets(2)



9.5

%

9.2

%

8.7

%





Tier I capital/average assets(2)



11.5

%

12.1

%

10.6

%


















(1) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Measures" below:



















(2) As defined by regulatory agencies; June 30, 2025 shown as estimates and prior periods shown as reported.  


















Certain non-GAAP financial measures provide useful information to management and investors that is supplementary to the Company's financial condition, results of operations and cash flows computed in accordance with GAAP; however, they do have a number of limitations.  As such, the reader should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable  to non-GAAP financial measures that other companies use.  A reconciliation of GAAP to non-GAAP financial measures is below.  Net Income Available to Common Shareholders excludes preferred stock dividends.  Tangible common shareholders' equity is calculated by excluding the balance of goodwill and other intangible assets and preferred stock from the calculation of total equity.  Tangible Assets is calculated by excluding the balance of goodwill and intangible assets.  Tangible book value per share is calculated by dividing tangible common shareholders' equity by the number of shares outstanding.     































Three Months Ended


Change





June 30,


March 31,


June 30,


2Q25


2Q25





2025


2025


2024


vs. 1Q25


vs. 2Q24















Net income



$                  37,981


$                    58,239


$           76,393


-35 %


-50 %


Less: preferred stock dividends  



(10,266)


(10,265)


(7,757)


—


32 %


Less: impact of preferred stock redemption



-


(5,371)


(1,823)


-100 %


-100 %


Net income available to common shareholders



$                  27,715


$                    42,603


$           66,813


-35 %


-59 %















Average shareholders' equity



$             2,201,836


$               2,160,169


$      1,824,730


2 %


21 %


Less: average goodwill & intangibles



(8,065)


(8,070)


(8,140)


—


-1 %


Less: average preferred stock



(551,290)


(552,633)


(449,387)


—


23 %


Average tangible common shareholders' equity



$             1,642,481


$               1,599,466


$      1,367,203


3 %


20 %















Annualization factor



4.00


4.00


4.00






Return on average tangible common shareholders' equity



6.75 %


10.65 %


19.55 %


(390)

bps

(1,280)

bps














Total equity



$             2,184,632


$               2,160,735


$      1,888,147


1 %


16 %


Less: goodwill and intangibles



(8,062)


(8,068)


(8,108)


—


-1 %


Less: preferred stock



(551,291)


(551,291)


(449,387)


—


23 %


Tangible common shareholders' equity



$             1,625,279


$               1,601,376


$      1,430,652


1 %


14 %















Assets



$           19,141,204


$             18,797,800


$    18,212,422


2 %


5 %


Less: goodwill and intangibles



(8,062)


(8,068)


(8,108)


—


-1 %


Tangible assets



$           19,133,142


$             18,789,732


$    18,204,314


2 %


5 %















Ending common shares



45,885,458


45,881,706


45,757,567



















Tangible book value per common share



$                    35.42


$                      34.90


$             31.27


1 %


13 %


Tangible common shareholders' equity/tangible assets



8.49 %


8.52 %


7.86 %


(3)

bps

63

bps

 

Key Operating Results

(Unaudited)

($ in thousands, except share data)













Six Months Ended







June 30,


June 30,







2025


2024


Change











Noninterest expense



$         139,001


$          99,292


40 %











Net interest income (before provision for credit losses)



250,915


255,175


-2 %


Noninterest income



74,173


72,225


3 %


Total income



$         325,088


$        327,400


-1 %











Efficiency ratio



42.76 %


30.33 %


1,243

bps



















Average assets



$    18,411,623


$   17,303,632


6 %


Net income



96,220


163,447


-41 %


Return on average assets before annualizing



0.52 %


0.94 %




Annualization factor



2.00


2.00




Return on average assets



1.05 %


1.89 %


(84)

bps










Return on average tangible common shareholders' equity (1)



8.68 %


22.30 %


(1,362)

bps










Tangible book value per common share (1)



$             35.42


$            31.27


13 %











Tangible common shareholders' equity/tangible assets (1)



8.49 %


7.86 %


63

bps










(1) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Measures" below:











Certain non-GAAP financial measures provide useful information to management and investors that is supplementary to the Company's financial condition, results of operations and cash flows computed in accordance with GAAP; however, they do have a number of limitations.  As such, the reader should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable  to non-GAAP financial measures that other companies use.  A reconciliation of GAAP to non-GAAP financial measures is below.  Net Income Available to Common Shareholders excludes preferred stock dividends.  Tangible common equity is calculated by excluding the balance of goodwill and other intangible assets and preferred stock from the calculation of total assets.  Tangible Assets is calculated by excluding the balance of goodwill and intangible assets.  Tangible book value per share is calculated by dividing tangible common equity by the number of shares outstanding.     














Six Months Ended







June 30,


June 30,







2025


2024


Change











Net income



$           96,220


$        163,447


-41 %


Less: preferred stock dividends  



(20,531)


(16,424)


25 %


Less: impact of preferred stock redemption



(5,371)


(1,823)


195 %


Net income available to common shareholders



$           70,318


$        145,200


-52 %











Average shareholders' equity



$      2,181,117


$     1,786,195


22 %


Less: average goodwill & intangibles



(8,067)


(9,317)


-13 %


Less: average preferred stock



(551,958)


(474,497)


16 %


Average tangible common shareholders' equity



$      1,621,092


$     1,302,381


24 %











Annualization factor



2.00


2.00




Return on average tangible common shareholders' equity



8.68 %


22.30 %


(1,362)

bps










Total equity



$      2,184,632


$     1,888,147


16 %


Less: goodwill and intangibles



(8,062)


(8,108)


-1 %


Less: preferred stock



(551,291)


(449,387)


23 %


Tangible common shareholders' equity



$      1,625,279


$     1,430,652


14 %











Assets



$    19,141,204


$   18,212,422


5 %


Less: goodwill and intangibles



(8,062)


(8,108)


-1 %


Tangible assets



$    19,133,142


$   18,204,314


5 %











Ending common shares



45,885,458


45,757,567













Tangible book value per common share



$             35.42


$            31.27


13 %


Tangible common shareholders' equity/tangible assets



8.49 %


7.86 %


63

bps

 

Merchants Bancorp

Average Balance Analysis

($ in thousands)

(Unaudited)














Three Months Ended


June 30, 2025


March 31, 2025


June 30, 2024


Average


Yield/


Average


Yield/


Average


Yield/


Balance

Interest

Rate 


Balance

Interest

Rate 


Balance

Interest

Rate 

Assets:
























Interest-earning deposits, and other interest or
dividends

$       539,357

$     8,193

6.09 %


$      511,077

$     7,465

5.92 %


$        438,445

$     6,225

5.71 %

Securities available for sale

955,186

12,095

5.08 %


961,065

12,358

5.21 %


1,039,388

14,784

5.72 %

Securities held to maturity

1,572,186

23,166

5.91 %


1,643,703

24,358

6.01 %


1,160,170

19,799

6.86 %

Mortgage loans in process of securitization

376,904

5,304

5.64 %


277,426

3,743

5.47 %


234,706

3,044

5.22 %

Loans and loans held for sale

14,826,151

255,641

6.92 %


13,751,197

239,280

7.06 %


14,347,165

284,421

7.97 %

     Total interest-earning assets

18,269,784

304,399

6.68 %


17,144,468

287,204

6.79 %


17,219,874

328,273

7.67 %

Allowance for credit losses on loans

(90,860)




(86,711)




(76,456)



Noninterest-earning assets

806,001




774,193




670,773















Total assets

$  18,984,925




$  17,831,950




$    17,814,191



























Liabilities & Shareholders' Equity:
























Interest-bearing checking

$    6,161,736

60,845

3.96 %


$    5,121,343

50,609

4.01 %


4,935,123

58,128

4.74 %

Savings deposits

145,162

8

0.02 %


146,359

15

0.04 %


145,262

19

0.05 %

Money market 

3,354,820

35,137

4.20 %


3,398,469

34,506

4.12 %


2,788,335

33,207

4.79 %

Certificates of deposit

3,090,250

35,385

4.59 %


3,369,269

38,811

4.67 %


6,535,651

88,297

5.43 %

    Total interest-bearing deposits

12,751,968

131,375

4.13 %


12,035,440

123,941

4.18 %


14,404,371

179,651

5.02 %













Borrowings

3,453,960

44,305

5.15 %


3,125,935

41,067

5.33 %


1,031,180

20,503

8.00 %

    Total interest-bearing liabilities

16,205,928

175,680

4.35 %


15,161,375

165,008

4.41 %


15,435,551

200,154

5.22 %













Noninterest-bearing deposits

376,217




294,248




331,246



Noninterest-bearing liabilities

200,944




216,158




222,664















    Total liabilities

16,783,089




15,671,781




15,989,461















    Shareholders' equity

2,201,836




2,160,169




1,824,730















Total liabilities and shareholders' equity

$  18,984,925




$  17,831,950




$    17,814,191















Net interest income


$  128,719




$ 122,196




$ 128,119














Net interest spread



2.33 %




2.38 %




2.45 %













Net interest-earning assets

$    2,063,856




$    1,983,093




$     1,784,323















Net interest margin



2.83 %




2.89 %




2.99 %













Average interest-earning assets to
average interest-bearing liabilities



112.74 %




113.08 %




111.56 %

 

Supplemental Results

(Unaudited)

($ in thousands)






















Net Income



Net Income






Three Months Ended



Six Months Ended






June 30,



March 31,



June 30,



June 30,






2025



2025



2024



2025


2024


Segment

















Multi-family Mortgage Banking




$              9,269



$            3,413



$               9,037



$         12,682


$         25,646


Mortgage Warehousing




22,986



15,398



22,270



38,384


42,460


Banking




14,574



47,107



52,378



61,681


108,803


Other




(8,848)



(7,679)



(7,292)



(16,527)


(13,462)


Total




$            37,981



$          58,239



$             76,393



$         96,220


$       163,447








































Total Assets











June 30, 2025


March 31, 2025


December 31, 2024










Amount

%


Amount

%


Amount

%






Segment

















Multi-family Mortgage Banking




$          487,853

2 %


$        460,441

3 %


$           479,099

2 %






Mortgage Warehousing




6,999,701

37 %


5,902,165

31 %


6,000,624

32 %






Banking




11,404,488

60 %


12,002,564

64 %


11,761,202

63 %






Other




249,162

1 %


432,630

2 %


564,807

3 %






Total




$     19,141,204

100 %


$   18,797,800

100 %


$      18,805,732

100 %












































Gain on Sale of Loans



Gain on Sale of Loans






Three Months Ended



Six Months Ended






June 30,



March 31,



June 30,



June 30,






2025



2025



2024



2025


2024


Loan Type

















Multi-family




$            19,815



$          10,125



$               9,083



$         29,940


$         17,506


Single-family




2,428



206



524



2,634


804


Small Business Association (SBA)




1,099



1,288



1,561



2,387


2,214


Total




$            23,342



$          11,619



$             11,168



$         34,961


$         20,524








































Servicing Rights



Servicing Rights






Three Months Ended



Six Months Ended






June 30,



March 31,



June 30,



June 30,






2025



2025



2024



2025


2024



















Balance, beginning of period




$          189,711



$        189,935



$           172,200



$       189,935


$       158,457


Additions

















Purchased servicing




70



-



-



70


-


Originated servicing




5,244



3,338



3,761



8,582


5,927


Subtractions

















Paydowns




(2,246)



(2,808)



(2,252)



(5,054)


(4,639)


Changes in fair value




258



(754)



5,067



(496)


19,031


Balance, end of period




$          193,037



$        189,711



$           178,776



$       193,037


$       178,776


 

Supplemental Results

(Unaudited)

($ in thousands)

















Loans Receivable and Loans Held for Sale






June 30,



March 31, 



December 31,






2025



2025



2024














Mortgage warehouse repurchase agreements




$       1,843,742



$     1,408,239



$        1,446,068


Residential real estate (1)




988,783



1,332,601



1,322,853


Multi-family financing




4,833,548



4,600,117



4,624,299


Healthcare financing




1,442,095



1,583,290



1,484,483


Commercial and commercial real estate (2)(3)




1,328,765



1,418,741



1,476,211


Agricultural production and real estate




82,425



79,190



77,631


Consumer and margin loans




4,570



4,959



6,843


Loans receivable




10,523,928



10,427,137



10,438,388


    Less: Allowance for credit losses on loans




91,811



83,413



84,386


Loans receivable, net




$     10,432,117



$   10,343,724



$      10,354,002














Loans held for sale




4,105,765



3,983,452



3,771,510


Total loans, net of allowance




$     14,537,882



$   14,327,176



$      14,125,512














(1)     Includes $0.8 billion, $1.2 billion and $1.2 billion of All-In-One © first-lien home equity lines of credit as of June 30, 2025, March 31,
2025 and December 31, 2024, respectively.

(2)    Includes $0.8 billion, $0.8 billion and $0.9 billion of revolving  lines of credit collateralized primarily by mortgage servicing rights as of
June 30, 2025, March 31, 2025 and December 31, 2024, respectively.

(3)     Includes only $19.8 million, $19.5 million and $18.7 million of non-owner occupied commercial real estate as of June 30, 2025,
March 31, 2025 and December 31, 2024, respectively.  

















Loan Credit Risk Profile





June 30, 2025


March 31, 2025


December 31, 2024





Amount

%


Amount

%


Amount

%













Pass 




$       9,934,759

94.4 %


$     9,695,595

93.0 %


$        9,741,087

93.3 %

Special mention




171,512

1.6 %


407,895

3.9 %


379,969

3.6 %

Substandard




417,657

4.0 %


323,647

3.1 %


317,332

3.0 %

Doubtful




—

—


—

—


—

—

Loans receivable




$     10,523,928

100.0 %


$   10,427,137

100.0 %


$      10,438,388

100.0 %

Charge-offs (year-to-date)




$            56,570



$          10,507



$             10,587


Recoveries (year-to-date)




$                   28



$                 28



$                  136


















Nonperforming Loans






June 30,



March 31,



December 31,






2025



2025



2024














Nonaccrual loans




$          250,818



$        284,019



$           279,716


90 days past due and still accruing




714



585



6


Total nonperforming loans




$          251,532



$        284,604



$           279,722


Other real estate owned




$              7,049



$            7,049



$               8,209


Total nonperforming assets




$          258,581



$        291,653



$           287,931


Nonperforming loans to total loans receivable




2.39 %



2.73 %



2.68 %


Nonperforming assets to total assets




1.35 %



1.55 %



1.53 %


















Delinquent Loans






June 30,



March 31,



December 31,






2025



2025



2024














Delinquent loans: 












    Loans receivable




$          279,009



$        304,560



$           292,263


    Loans held for sale




-



30,103



32,343


Total delinquent loans




$          279,009



$        334,663



$           324,606


Total loans receivable and loans held for sale




$     14,629,693



$   14,410,589



$      14,209,898


   Delinquent loans to total loans 




1.91 %



2.32 %



2.28 %


 

Supplemental Results

(Unaudited)

($ in thousands)
















Deposits





June 30,



March 31, 



December 31,





2025



2025



2024












Noninterest-bearing deposits











   Core demand deposits




$           315,523



$           313,296



$           239,005












Interest-bearing deposits











   Demand deposits:











      Core demand deposits




$        6,066,933



$        5,432,133



$        4,319,512

      Brokered demand deposits




250,000



-



-

        Total interest-bearing demand deposits




6,316,933



5,432,133



4,319,512

   Savings deposits:











      Core savings deposits




3,703,270



3,618,210



3,442,111

      Brokered savings deposits




358



353



859

        Total savings deposits




3,703,628



3,618,563



3,442,970

   Certificates of deposit:











      Core certificates of deposits




1,346,630



1,324,126



1,385,270

      Brokered certificates of deposits




1,004,121



1,718,047



2,533,219

         Total certificates of deposits




2,350,751



3,042,173



3,918,489












   Total interest-bearing deposits




12,371,312



12,092,869



11,680,971












Total deposits




$      12,686,835



$      12,406,165



$      11,919,976












Total core deposits




$      11,432,356



$      10,687,765



$        9,385,898

Total brokered deposits




$        1,254,479



$        1,718,400



$        2,534,078

Total deposits




$      12,686,835



$      12,406,165



$      11,919,976

 

 

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SOURCE Merchants Bancorp