New: Introducing the Finviz Crypto Map

Learn More

Merchants Bancorp Reports Second Quarter 2025 Results

By PR Newswire | July 28, 2025, 4:05 PM
  • 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

 

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/merchants-bancorp-reports-second-quarter-2025-results-302515176.html

SOURCE Merchants Bancorp

Mentioned In This Article

Latest News