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Merchants Bancorp

Merchants Bancorp Reports Fourth Quarter 2025 Results

  • The Company reported another sequential quarter of higher net income and improved asset quality, reinforcing a positive trajectory for 2026.
  • Total assets ended the year at $19.4 billion, slightly higher than September 30, 2025, and up $643.2 million, or 3%, compared to December 31, 2024 - setting a new Company milestone.
  • Tangible book value per common share reached a new record-high of $37.51 and increased 10% compared to $34.15 in the fourth quarter of 2024 and increased 3% compared to $36.31 in the third quarter of 2025.
  • Asset quality improved meaningfully, as criticized loans receivable of $508.2 million decreased by 13% compared to September 30, 2025, and decreased by 27% compared to December 31, 2024.
  • Total loan delinquencies of $206.8 million decreased by 38% compared to September 30, 2025, and decreased by 36% compared to December 31, 2024.
  • Capital ratios have reached exceptionally high levels, underscoring the Company's financial strength and stability.
  • Liquidity remained strong, with $5.3 billion in unused borrowing capacity through the Federal Home Loan Bank and Federal Reserve Discount Window, representing 27% of total assets, and up from $4.3 billion as of December 31, 2024.
  • Full year 2025 net income of $218.8 million, decreased $101.6 million, or 32% compared to 2024.
  • Full year 2025 diluted earnings per common share of $3.78 decreased 40% compared to 2024.
  • Fourth quarter 2025 net income of $67.8 million, decreased $27.8 million compared to fourth quarter of 2024 and increased $13.1 million compared to the third quarter 2025.
  • Fourth quarter 2025 diluted earnings per common share of $1.28 decreased 31% compared to the fourth quarter of 2024 and increased 32% compared to the third quarter of 2025.
  • Gain on sale of multi-family loans reached its highest level in Company history during the quarter, underscoring accelerating momentum throughout 2025.
  • Loans receivable of $11.0 billion, net of allowance for credit losses on loans, increased $436.2 million, or 4%, compared to September 30, 2025, and increased $597.4 million, or 6%, compared to December 31, 2024.
  • Deposits grew 9% in 2025, reaching $13.0 billion and outpacing the 6% growth in loans receivable. Core deposits of $11.3 billion increased $1.9 billion, up 20% during the year, while brokered deposits declined $776.8 million, or 31%, to $1.8 billion. Core deposits now represent 87% of total deposits.

CARMEL, Ind. , Jan. 28, 2026 /PRNewswire/ -- Merchants Bancorp (the "Company" or "Merchants") (Nasdaq: MBIN), parent company of Merchants Bank, today reported fourth quarter 2025 net income of $67.8 million, or diluted earnings per common share of $1.28. This compared to $95.7 million, or diluted earnings per common share of $1.85 in the fourth quarter of 2024, and compared to $54.7 million, or diluted earnings per common share of $0.97 in the third quarter of 2025.

"This quarter reflects a decisive shift for Merchants. Asset quality improved meaningfully, with criticized loans down 13% and nonperforming loans reduced by nearly one-third during the quarter. We also achieved a record tangible book value of $37.51 per share and the strongest quarterly gain on sale of multi-family loans in our history. While total assets increased to $19.4 billion—the highest level reported in company history—the real story is the progress we've made in strengthening credit quality and positioning the company for growth in 2026," said Michael F. Petrie, Chairman and CEO of Merchants.

Michael J. Dunlap, President and Chief Operating Officer of Merchants, added, "Our team's disciplined execution and commitment to excellence have driven meaningful progress. The improvement in credit quality, combined with strong liquidity and operational performance, reinforces our confidence in the year ahead. We remain focused on harnessing this momentum to deliver strategic, sustainable growth and long-term value for our shareholders and communities."

Net income of $67.8 million for the fourth quarter of 2025 increased by $13.1 million, or 24%, compared to the third quarter of 2025.  The improvement was primarily driven by an $11.5 million, or 12%, increase in net interest income after provision for credit losses, reflecting increased net interest income and lower provision expenses associated with asset quality improvements.  Results also reflected a $4.2 million, or 10%, increase in noninterest income reflecting higher positive fair value adjustments for derivatives, and a $3.8 million decrease in provision for income taxes, which benefited primarily from the utilization of tax credits. These increases to net income were partially offset by a $6.4 million, or 8%, increase in noninterest expense.

Net income of $67.8 million for the fourth quarter of 2025 decreased by $27.8 million, or 29%, compared to the fourth quarter of 2024. The decline was primarily driven by a $21.6 million, or 16%, decrease in net interest income after provision for credit losses, reflecting higher provision expenses. Results also reflected a $20.4 million, or 32%, increase in noninterest expense, largely attributable to increased costs associated with credit risk transfer premiums, higher salaries and employee benefits, as well as collateral preservation expenses. Also contributing to the decline was an $11.9 million, or 20%, decrease in noninterest income, reflecting lower fair value adjustments for servicing rights included in loan servicing fees. These decreases to net income were partially offset by a $26.2 million, or 81%, decrease in the provision for income taxes, which reflected lower net income and the utilization of tax credits.

Total Assets
Total assets of $19.4 billion at December 31, 2025 increased by $94.3 million compared to September 30, 2025, and $643.2 million, or 3%, compared to December 31, 2024. The increase compared to December 31, 2024 was primarily due to higher balances in the multi-family and warehouse portfolios, including those held for sale, in process of securitization, or held for investment. These were partially offset by lower balances in the residential loan portfolio.

Asset Quality
The allowance for credit losses on loans of $83.3 million, as of December 31, 2025, decreased by $10.0 million, or 11%, compared to September 30, 2025, and decreased by $1.1 million, or 1%, compared to December 31, 2024.  The decreases for both periods were driven by charge-offs on loans with specific reserves, partially offset by provision for credit losses.

The Company recorded charge-offs for 12 relationships, primarily in the multi-family loan portfolio, totaling $38.0 million, and $76,000 in recoveries during the fourth quarter of 2025.   Approximately 75% of the charge-offs were associated with three relationships.  This compares to $4.2 million in charge-offs and $113,000 in recoveries during the fourth quarter of 2024 and $29.5 million in charge-offs and $23,000 in recoveries in the third quarter of 2025.

The charge-offs and increases to provision for credit losses for the third and fourth quarters were largely associated with declines on certain multi-family property values after receiving new appraisals and the ongoing investigation of borrowers involved in mortgage fraud or suspected fraud, as well as loan growth. The increases were also attributable to certain types of subordinated loans that the Company no longer offers to borrowers.  These underperforming loans have been largely identified and evaluated for potential losses that have either been included in the allowance for credit losses on loans as specific reserves or charged-off.

Overall, criticized loans receivable of $508.2 million declined by $74.0 million, or 13%, compared to September 30, 2025, and declined by $189.1 million, or 27% compared to December 31, 2024. This decline reinforces the view that the frequency of migration to criticized status would subside, driven by favorable market conditions and the Company's efforts with proactive portfolio management.  

As of December 31, 2025, all substandard loans have been evaluated for impairment, and these loans have specific reserves of $16.0 million.  The Company believes that the remaining loan portfolio remains well collateralized.

Non-performing loans decreased 34% during the quarter, primarily attributable to progress with one multi-family relationship that was moved to other real estate owned, and several charge-offs.  As of December 31, 2025, non-performing loans were $197.8 million, or 1.79% of loans receivable, compared to $298.3 million, or 2.81%, as of September 30, 2025, and $279.7 million, or 2.68%, as of December 31, 2024. 

Total delinquent loans also declined 38%, from $336.2 million as of September 30, 2025, to $206.8 million as of December 31, 2025.

The Company has been making additional efforts to reduce its credit risk through loan sale and securitization activities since 2019.  Since 2023, the Company has strategically executed credit protection arrangements through credit default swaps and a credit-linked note to reduce risk of losses, with coverage ranging from 13-15% of the unpaid principal balances for each arrangement.  Despite having credit protection on these loans, the Company is required to carry an allowance for credit losses on loans held for investment. As of December 31, 2025, the credit- linked note was repaid in full and the remaining balance of loans protected by credit default swaps was $2.8 billion.

Total Deposits
Total deposits of $13.0 billion at December 31, 2025 decreased by $893.5 million, or 6%, compared to September 30, 2025, and increased by $1.1 billion, or 9%, compared to December 31, 2024. The decrease compared to September 30, 2025 primarily reflects the expected seasonal fluctuations in core deposits.

Core deposits of $11.3 billion at December 31, 2025 decreased by $1.5 billion, or 12%, from September 30, 2025 and increased by $1.9 billion, or 20%, from December 31, 2024. Core deposits represented 87% of total deposits at December 31, 2025, 92% of total deposits at September 30, 2025, and 79% of total deposits at December 31, 2024.

Total brokered deposits of $1.8 billion at December 31, 2025 increased $613.3 million, or 54%, from September 30, 2025 and decreased $776.8 million, or 31%, from December 31, 2024.   As of December 31, 2025, brokered certificates of deposit had a weighted average remaining duration of 59 days.

Preferred Stock Redemption
When the Company redeemed its Series B preferred stock on January 2, 2025, it was anticipated that there would be $1.2 million in excise tax that would be due in 2026.  However, the Internal Revenue Service finalized rules in November 2025, which exempted this transaction from excise tax.  Accordingly, $1.2 million was reversed during the fourth quarter of 2025.

Liquidity
The Company maintains exceptional liquidity, supported by substantial borrowing capacity available, including unused lines of credit totaling $5.3 billion as of December 31, 2025, compared to $5.9 billion at September 30, 2025 and $4.3 billion at December 31, 2024. 

The Company's most liquid assets are in cash, short-term investments, including interest-earning 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 $5.3 billion described above, these totaled $11.6 billion, or 60%, of its $19.4 billion total assets as of December 31, 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

December 31, 2025 and 2024

Net Interest Income of $138.1 million increased $3.5 million, or 3%, compared to $134.6 million, reflecting lower interest expense on certificates of deposit, partially offset by lower interest income on loans.

  • Net interest margin of 2.89% decreased 10 basis points compared to 2.99%.
  • Interest rate spread of 2.44% decreased two basis points compared to 2.46%.
  • While the spread between asset yields and funding costs remained relatively stable, the overall margin declined due primarily to lower asset yields and changes in balance sheet mix, including loan growth supported by the Company's strong capital and liquidity position rather than additional interest-bearing funding. The margin was also negatively impacted by the remaining unamortized debt discount associated with the credit-linked notes that were fully repaid during the current quarter.

Interest Income of $307.5 million decreased 4%, compared to $321.3 million. The decrease primarily reflected lower average yields on higher average balances on loans and loans held for sale, as well as lower average yields on securities held to maturity.

  • Average yields on loans and loans held for sale of 6.66% decreased 77 basis points compared to 7.43%.
  • Average balances of $15.4 billion for loans and loans held for sale increased by $1.1 billion, or 8%, compared to $14.3 billion.
  • Average yields on securities held to maturity of 5.65% decreased 82 basis points compared to 6.47%.

Interest Expense of $169.4 million decreased $17.3 million, or 9%, compared to $186.7 million.  The decrease reflected lower average balances at lower average rates on certificates of deposit, which were partially offset by higher average balances at lower average rates on interest-bearing checking accounts as well as money market/savings deposits.

  • Average balances of $1.8 billion for certificates of deposit decreased by $2.3 billion, or 56%, compared to $4.1 billion.
  • Average interest rates of 4.13% for certificates of deposit decreased by 89 basis points compared to 5.02%.
  • Average balances on interest-bearing checking accounts of $7.6 billion increased by $2.0 billion, or 37%, compared to $5.6 billion.
  • Average balances on money market/savings accounts of $3.9 billion increased by $0.8 billion, or 25%, compared to $3.1 billion.

Noninterest Income of $47.2 million decreased $11.9 million, or 20%, compared to $59.1 million. The $11.9 million decrease reflected a $10.7 million, or 72%, decrease in loan servicing fees and a $3.6 million, or 39%, decrease in syndication and asset management fees, partially offset by an increase in other noninterest income of $1.3 million, or 16%.    

  • Loan servicing fees included a $179,000 negative fair market value adjustment to servicing rights, with a $275,000 negative adjustment in the Banking segment and a $96,000 positive adjustment in the Multi-family Mortgage Banking segment. This is compared to a $10.4 million positive fair market value adjustment to servicing rights in the prior period with a $2.5 million positive adjustment in the Banking segment and a $7.9 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 that are influenced by projected future interest rates on escrow deposits.
  • Other income included a $4.2 million positive fair market value adjustment to floor derivatives compared to a $2.6 million positive fair market value adjustment in the prior period. The current quarter also reflected an impairment of $4.1 million for an investment in a joint venture.

Noninterest Expense of $83.6 million increased $20.4 million, or 32%, compared to $63.2 million, primarily due to a $6.3 million increase in credit risk transfer premium expense associated with credit default swaps, a $4.8 million, or 13%, increase in salaries and employee benefits to support business growth, as well as $3.8 million in collateral preservation expenses associated with taxes, insurance, property expenses, and legal fees related to nonperforming assets.

Comparison of Operating Results for the Three Months Ended

December 31, 2025 and September 30, 2025

Net Interest Income of $138.1 million increased $10.0 million, or 8%, compared to $128.1 million, reflecting higher interest income and lower interest expense on deposits, partially offset by higher interest expense on borrowings.

  • Net interest margin of 2.89% increased 7 basis points compared to 2.82%. The improvement primarily reflected a more rapid decline in funding costs relative to asset yields and fewer reversals of interest income on nonaccrual loans. This improvement was partially offset by the impact of the unamortized debt discount associated with the credit-linked notes that were fully repaid during the current quarter.
  • Interest rate spread of 2.44% increased 11 basis points compared to 2.33%.

Interest Income of $307.5 million increased $5.7 million, or 2%, compared to $301.8 million, primarily reflecting higher average balances at lower average yields on loans and loans held for sale, as well as mortgage loans in process of securitization.

  • Average balances of $15.4 billion for loans and loans held for sale increased $714.2 million, or 5% compared to $14.7 billion.
  • Average yields on loans and loans held for sale of 6.66% decreased 22 basis points compared to 6.88%.
  • Average balances of $506.7 million for mortgage loans in process of securitization increased $111.3 million, or 28%, compared to $395.4 million.
  • Average yields on mortgage loans in process of securitization of 5.26% declined 7 basis points compared to 5.33%

Interest Expense of $169.4 million decreased $4.3 million, or 2% compared to $173.7 million. The decrease was primarily driven by lower average rates on deposit accounts and lower average balances on certificates of deposit, partially offset by higher average balances at lower rates on borrowings.  

  • Average interest rates on interest-bearing deposit accounts of 3.76% decreased by 35 basis points compared to 4.11%.
  • Average balances of $1.8 billion for certificates of deposit decreased $420.3 million, or 19%, compared to $2.2 billion.
  • Average balances of $3.5 billion for borrowings increased $1.0 billion, or 42%, compared to $2.5 billion.
  • Average interest rates on borrowings of 4.88% decreased by 56 basis points compared to 5.44%.

Noninterest Income of $47.2 million increased $4.2 million, or 10%, compared to $43.0 million. The increase was primarily due to a $6.0 million, or 160%, increase in other income, and a $1.1 million, or 4%, increase in gain on sale of loans, partially offset by a $3.8 million, or 47%, decrease in loan servicing fees.

  • Other income included a $4.2 million positive fair market value adjustment to floor derivatives compared to a $770,000 negative fair market value adjustment to derivatives in the prior period. The current quarter also reflected an impairment of $4.1 million for an investment in a joint venture.
  • Gain on sale of loans increased $1.1 million, or 4%, reflecting continued strength of secondary market sales in the multi-family loan portfolio, including Freddie Mac-sponsored Q-Series securitization transactions.
  • Loan servicing fees included a $179,000 negative fair market value adjustment to servicing rights, with a $275,000 negative adjustment in the Banking segment and a $96,000 positive adjustment in the Multi-family Mortgage Banking segment. This compared to a $2.1 million positive fair market value adjustment to servicing rights in the prior period, with a $394,000 negative adjustment in the Banking segment and a $2.5 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 that are influenced by projected future interest rates on escrow deposits.

Noninterest Expense of $83.6 million increased $6.4 million, or 8%, primarily reflecting a $4.8 million, or 48%, increase in other expenses and a $4.0 million, or 95%, increase in credit risk transfer premium expense associated with credit default swaps.

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 $19.4 billion in assets and $13.0 billion in deposits as of December 31, 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 Investment Partners, 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)














December 31,


September 30,


June 30,


March 31,


December 31,



2025


2025


2025


2025


2024

Assets











Cash and due from banks


$          15,844


$           11,566


$       15,419


$       15,609


$          10,989

Interest-earning demand accounts


196,358


586,470


631,746


505,687


465,621

Cash and cash equivalents


212,202


598,036


647,165


521,296


476,610

Securities purchased under agreements to resell


1,520


1,529


1,539


1,550


1,559

Mortgage loans in process of securitization


620,094


414,786


402,427


389,797


428,206

Securities available for sale (includes $571,314, $591,379, $602,962,
$626,271 and $635,946 at fair value)


865,058


885,070


936,343


961,183


980,050

Securities held to maturity (fair value of $1,543,554, $1,670,306,
$1,547,525, $1,605,151 and $1,664,674)


1,543,659


1,670,555


1,548,211


1,606,286


1,664,686

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


227,589


217,850


217,850


217,850


217,804

Loans held for sale (includes $76,980, $112,832, $91,930, $75,920
and $78,170 at fair value)


3,873,012


4,129,329


4,105,765


3,983,452


3,771,510

Loans receivable (includes $47,318, $0, $0, $0 and $0 at fair value),
net of allowance for credit losses on loans of $83,301, $93,330,
$91,811,  $83,413 and $84,386


10,951,381


10,515,221


10,432,117


10,343,724


10,354,002

Premises and equipment, net


73,929


75,148


71,050


67,787


58,617

Servicing rights


217,296


213,156


193,037


189,711


189,935

Interest receivable


81,807


82,445


82,391


82,811


83,409

Goodwill 


8,014


8,014


8,014


8,014


8,014

Other real estate owned


60,145


4,347


7,049


7,049


8,209

Other assets and receivables 


713,237


539,161


488,246


417,290


563,121

Total assets


$   19,448,943


$    19,354,647


$19,141,204


$18,797,800


$   18,805,732

Liabilities and Shareholders' Equity











  Liabilities











Deposits











Noninterest-bearing


$        604,081


$         399,814


$     315,523


$     313,296


$        239,005

Interest-bearing


12,437,111


13,534,891


12,371,312


12,092,869


11,680,971

Total deposits


13,041,192


13,934,705


12,686,835


12,406,165


11,919,976

Borrowings 


3,842,592


2,902,631


4,009,474


4,001,744


4,386,122

Deferred and current tax liabilities, net


33,900


28,973


29,228


35,740


25,289

Other liabilities


250,500


262,904


231,035


193,416


231,035

Total liabilities


17,168,184


17,129,213


16,956,572


16,637,065


16,562,422

Commitments and  Contingencies











Shareholders' Equity











Common stock, without par value











Authorized - 75,000,000 shares











Issued and outstanding  - 45,893,172 shares, 45,889,238 shares,
45,885,458 shares, 45,881,706 shares and 45,767,166 shares


243,310


242,371


241,452


240,512


240,313

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 December 31, 2025, September 30,
2025, June 30, 2025 and March 31, 2025, and 125,000 shares at
December 31, 2024











Issued and outstanding - no shares at December 31, 2025,
September 30, 2025, June 30, 2025 and March 31, 2025, and
125,000 shares at December 31, 2024 (equivalent to 5,000,000
depositary shares)


—


—


—


—


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)


222,748


222,748


222,748


222,748


222,748

Retained earnings


1,486,191


1,431,983


1,392,136


1,369,009


1,330,995

Accumulated other comprehensive loss


(33)


(211)


(247)


(77)


(133)

Total shareholders' equity


2,280,759


2,225,434


2,184,632


2,160,735


2,243,310

Total liabilities and shareholders' equity


$   19,448,943


$    19,354,647


$19,141,204


$18,797,800


$   18,805,732

 

Consolidated Statement of Income

(Unaudited)

(In thousands, except share data)

















Three Months Ended


Change



December 31,


September 30, 


December 31,


4Q25


4Q25



2025


2025


2024


vs. 3Q25


vs. 4Q24

Interest Income














Loans


$

258,090


$

254,101


$

266,719


2 %


-3 %

Mortgage loans in process of securitization



6,719



5,308



5,662


27 %


19 %

Investment securities:














Available for sale



11,178



11,880



13,453


-6 %


-17 %

Held to maturity



23,182



22,427



27,673


3 %


-16 %

FHLB stock and other equity securities (dividends)



4,723



4,265



4,123


11 %


15 %

Other



3,577



3,798



3,716


-6 %


-4 %

Total interest income



307,469



301,779



321,346


2 %


-4 %

Interest Expense














Deposits



126,288



139,744



144,009


-10 %


-12 %

Short-term borrowings



34,283



25,926



34,263


32 %


—

Long-term borrowings



8,812



8,051



8,450


9 %


4 %

Total interest expense



169,383



173,721



186,722


-2 %


-9 %

Net Interest Income



138,086



128,058



134,624


8 %


3 %

Provision for credit losses



27,761



29,239



2,689


-5 %


932 %

Net Interest Income After Provision for Credit Losses



110,325



98,819



131,935


12 %


-16 %

Noninterest Income














Gain on sale of loans



25,730



24,671



25,020


4 %


3 %

Loan servicing fees, net



4,235



7,986



14,953


-47 %


-72 %

Mortgage warehouse fees



1,801



1,736



1,413


4 %


27 %

Syndication and asset management fees



5,680



4,864



9,323


17 %


-39 %

Other income



9,755



3,757



8,436


160 %


16 %

Total noninterest income



47,201



43,014



59,145


10 %


-20 %

Noninterest Expense














Salaries and employee benefits



42,375



44,152



37,536


-4 %


13 %

Loan expense



1,004



1,263



704


-21 %


43 %

Occupancy and equipment



3,382



2,453



2,284


38 %


48 %

Professional fees



3,436



3,371



5,135


2 %


-33 %

Deposit insurance expense



8,040



9,376



6,473


-14 %


24 %

Technology expense



2,611



2,608



2,038


—


28 %

Credit risk transfer premium expense



8,198



4,194



1,947


95 %


321 %

Other expense



14,596



9,833



7,085


48 %


106 %

Total noninterest expense



83,642



77,250



63,202


8 %


32 %

Income Before Income Taxes



73,884



64,583



127,878


14 %


-42 %

Provision for income taxes



6,035



9,882



32,212


-39 %


-81 %

Net Income


$

67,849


$

54,701


$

95,666


24 %


-29 %

   Dividends on preferred stock



(10,266)



(10,265)



(10,728)


—


-4 %

   Impact of preferred stock redemption



1,215



—



—


100 %


100 %

Net Income Available to Common Shareholders


$

58,798


$

44,436


$

84,938


32 %


-31 %

Basic Earnings Per Share


$

1.28


$

0.97


$

1.86


32 %


-31 %

Diluted Earnings Per Share


$

1.28


$

0.97


$

1.85


32 %


-31 %

Weighted-Average Shares Outstanding














Basic



45,891,077



45,887,143



45,765,458





Diluted



45,976,153



45,950,216



45,924,176





 

Consolidated Statement of Income

(Unaudited)

(In thousands, except share data)












Year Ended





December 31,


December 31,





2025


2024


Change

Interest Income









Loans


$

1,007,112


$

1,113,397


-10 %

Mortgage loans in process of securitization



21,074



14,488


45 %

Investment securities:









Available for sale



47,511



57,480


-17 %

Held to maturity



93,133



90,075


3 %

FHLB stock and other equity securities (dividends)



18,001



9,372


92 %

Other



14,020



17,908


-22 %

Total interest income



1,200,851



1,302,720


-8 %

Interest Expense









Deposits



521,348



660,357


-21 %

Short-term borrowings



130,554



84,698


54 %

Long-term borrowings



31,890



35,045


-9 %

Total interest expense



683,792



780,100


-12 %

Net Interest Income



517,059



522,620


-1 %

Provision for credit losses



117,754



24,278


385 %

Net Interest Income After Provision for Credit Losses



399,305



498,342


-20 %

Noninterest Income









Gain on sale of loans



85,362



62,275


37 %

Loan servicing fees, net



22,369



43,673


-49 %

Mortgage warehouse fees



7,089



5,539


28 %

Loss on sale of investments available for sale (1)



—



(108)


100 %

Syndication and asset management fees



23,640



19,693


20 %

Other income



25,928



17,040


52 %

Total noninterest income



164,388



148,112


11 %

Noninterest Expense









Salaries and employee benefits



166,512



130,723


27 %

Loan expense



4,207



3,767


12 %

Occupancy and equipment



10,680



8,991


19 %

Professional fees



12,860



16,229


-21 %

Deposit insurance expense



31,796



26,158


22 %

Technology expense



10,039



7,819


28 %

Credit risk transfer premium expense



21,021



6,320


233 %

Other expense



42,778



23,805


80 %

Total noninterest expense



299,893



223,812


34 %

Income Before Income Taxes



263,800



422,642


-38 %

Provision for income taxes (2)



45,030



102,256


-56 %

Net Income


$

218,770


$

320,386


-32 %

   Dividends on preferred stock



(41,062)



(34,909)


18 %

   Impact of preferred stock redemption



(4,156)



(1,823)


128 %

Net Income Available to Common Shareholders


$

173,552


$

283,654


-39 %

Basic Earnings Per Share


$

3.78


$

6.32


-40 %

Diluted Earnings Per Share


$

3.78


$

6.30


-40 %

Weighted-Average Shares Outstanding









Basic



45,871,698



44,855,100



Diluted



45,942,730



45,004,786




(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





December 31,



September 30,



December 31,



4Q25


4Q25





2025



2025



2024



vs. 3Q25


vs. 4Q24


















Noninterest expense



$          83,642



$           77,250



$          63,202



8 %


32 %


















Net interest income (before provision for credit losses)



138,086



128,058



134,624



8 %


3 %


Noninterest income



47,201



43,014



59,145



10 %


-20 %


Total income



$        185,287



$         171,072



$        193,769



8 %


-4 %


















Efficiency ratio



45.14

%

45.16

%

32.62

%

(2)

bps

1,252

bps

































Average assets



$   19,815,940



$    18,813,165



$   18,512,380



5 %


7 %


Net income



67,849



54,701



95,666



24 %


-29 %


Return on average assets before annualizing



0.34

%

0.29

%

0.52

%





Annualization factor



4.00



4.00



4.00







Return on average assets



1.37

%

1.16

%

2.07

%

21

bps

(70)

bps

















Return on average tangible common shareholders' equity (1)



13.76

%

10.69

%

22.10

%

307

bps

(834)

bps

















Tangible book value per common share (1)



$            37.51



$             36.31



$            34.15



3 %


10 %


















Tangible common shareholders' equity/tangible assets (1)



8.85

%

8.61

%

8.32

%

24

bps

53

bps

















Consolidated ratios
















Total capital/risk-weighted assets(2)



13.6

%

13.6

%

13.9

%





Tier I capital/risk-weighted assets(2)



13.1

%

13.0

%

13.3

%





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



9.9

%

9.8

%

9.3

%





Tier I capital/average assets(2)



11.5

%

11.8

%

12.1

%






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


(2) As defined by regulatory agencies; December 31, 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





December 31,



September 30,



December 31,



4Q25


4Q25





2025



2025



2024



vs. 3Q25


vs. 4Q24


















Average shareholders' equity



$     2,268,832



$      2,221,677



$     2,084,627



2 %


9 %


Less: average goodwill & intangibles



(8,054)



(8,059)



(8,076)



—


—


Less: average preferred stock



(551,291)



(551,291)



(538,970)



—


2 %


Average tangible common shareholders' equity



$     1,709,487



$      1,662,327



$     1,537,581



3 %


11 %


















Annualization factor



4.00



4.00



4.00







Return on average tangible common shareholders' equity



13.76

%


10.69

%


22.10

%


307

bps

(834)

bps

















Total equity



$     2,280,759



$      2,225,434



$     2,243,310



2 %


2 %


Less: goodwill and intangibles



(8,051)



(8,056)



(8,073)



—


—


Less: preferred stock



(551,291)



(551,291)



(672,135)



—


-18 %


Tangible common shareholders' equity



$     1,721,417



$      1,666,087



$     1,563,102



3 %


10 %


















Assets



$   19,448,943



$    19,354,647



$   18,805,732



—


3 %


Less: goodwill and intangibles



(8,051)



(8,056)



(8,073)



—


—


Tangible assets



$   19,440,892



$    19,346,591



$   18,797,659



—


3 %


















Ending common shares



45,893,172



45,889,238



45,767,166























Tangible book value per common share



$            37.51



$             36.31



$            34.15



3 %


10 %


Tangible common shareholders' equity/tangible assets



8.85

%


8.61

%


8.32

%


24

bps

53

bps

 

Key Operating Results

(Unaudited)

($ in thousands, except share data)















Year Ended








December 31,



December 31,








2025



2024



Change













Noninterest expense



$        299,893



$        223,812



34 %













Net interest income (before provision for credit losses)



517,059



522,620



-1 %


Noninterest income



164,388



148,112



11 %


Total income



$        681,447



$        670,732



2 %













Efficiency ratio



44.01

%


33.37

%


1,064

bps























Average assets



$   18,866,798



$   17,860,787



6 %


Net income



218,770



320,386



-32 %


Return on average assets before annualizing



1.16

%


1.79

%




Annualization factor



1.00



1.00





Return on average assets



1.16

%


1.79

%


(63)

bps












Return on average tangible common shareholders' equity (1)



10.49

%


20.16

%


(967)

bps












Tangible book value per common share (1)



$            37.51



$            34.15



10 %













Tangible common shareholders' equity/tangible assets (1)



8.85

%


8.32

%


53

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.     





Year Ended








December 31,



December 31,








2025



2024



Change













Average shareholders' equity



$     2,213,449



$     1,900,130



16 %


Less: average goodwill & intangibles



(8,062)



(8,697)



-7 %


Less: average preferred stock



(551,622)



(484,391)



14 %


Average tangible common shareholders' equity



$     1,653,765



$     1,407,042



18 %













Annualization factor



1.00



1.00





Return on average tangible common shareholders' equity



10.49

%


20.16

%


(967)

bps












Total equity



$     2,280,759



$     2,243,310



2 %


Less: goodwill and intangibles



(8,051)



(8,073)



—


Less: preferred stock



(551,291)



(672,135)



-18 %


Tangible common shareholders' equity



$     1,721,417



$     1,563,102



10 %













Assets



$   19,448,943



$   18,805,732



3 %


Less: goodwill and intangibles



(8,051)



(8,073)



—


Tangible assets



$   19,440,892



$   18,797,659



3 %













Ending common shares



45,893,172



45,767,166
















Tangible book value per common share



$            37.51



$            34.15



10 %


Tangible common shareholders' equity/tangible assets



8.85

%


8.32

%


53

bps

 

Merchants Bancorp

Average Balance Analysis

($ in thousands)

(Unaudited)














Three Months Ended


December 31, 2025


September 30, 2025


December 31, 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

$      556,453

$     8,300

5.92 %


$      556,894

$     8,063

5.74 %


$      499,308

$     7,839

6.25 %

Securities available for sale

870,949

11,178

5.09 %


923,603

11,880

5.10 %


986,063

13,453

5.43 %

Securities held to maturity

1,627,341

23,182

5.65 %


1,510,857

22,427

5.89 %


1,701,595

27,673

6.47 %

Mortgage loans in process of securitization

506,704

6,719

5.26 %


395,388

5,308

5.33 %


414,883

5,662

5.43 %

Loans and loans held for sale

15,368,719

258,090

6.66 %


14,654,535

254,101

6.88 %


14,285,852

266,719

7.43 %

     Total interest-earning assets

18,930,166

307,469

6.44 %


18,041,277

301,779

6.64 %


17,887,701

321,346

7.15 %

Allowance for credit losses on loans

(99,349)




(105,347)




(85,772)



Noninterest-earning assets

985,123




877,235




710,451















Total assets

$ 19,815,940




$ 18,813,165




$ 18,512,380



























Liabilities & Shareholders' Equity:
























Interest-bearing checking

$   7,625,489

71,599

3.73 %


$   7,451,868

75,415

4.02 %


$   5,579,688

58,781

4.19 %

Money market /savings deposits

3,870,411

35,743

3.66 %


3,806,731

38,547

4.02 %


3,106,871

33,303

4.26 %

Certificates of deposit

1,818,058

18,946

4.13 %


2,238,401

25,782

4.57 %


4,115,462

51,925

5.02 %

    Total interest-bearing deposits

13,313,958

126,288

3.76 %


13,497,000

139,744

4.11 %


12,802,021

144,009

4.48 %













Borrowings

3,505,903

43,095

4.88 %


2,476,365

33,977

5.44 %


3,047,586

42,713

5.58 %

    Total interest-bearing liabilities

16,819,861

169,383

4.00 %


15,973,365

173,721

4.31 %


15,849,607

186,722

4.69 %













Noninterest-bearing deposits

492,650




392,569




352,374



Noninterest-bearing liabilities

234,597




225,554




225,772















    Total liabilities

17,547,108




16,591,488




16,427,753















    Shareholders' equity

2,268,832




2,221,677




2,084,627















Total liabilities and shareholders' equity

$ 19,815,940




$ 18,813,165




$ 18,512,380















Net interest income


$ 138,086




$ 128,058




$ 134,624














Net interest spread



2.44 %




2.33 %




2.46 %













Net interest-earning assets

$   2,110,305




$   2,067,912




$   2,038,094















Net interest margin



2.89 %




2.82 %




2.99 %













Average interest-earning assets to
average interest-bearing liabilities



112.55 %




112.95 %




112.86 %

 

Supplemental Results

(Unaudited)

($ in thousands)


















Net Income



Net Income




Three Months Ended



Year Ended




December 31,



September 30,



December 31,



December 31,




2025



2025



2024



2025


2024


Segment















Multi-family Mortgage Banking


$            15,397



$             12,076



$               22,183



$     40,155


$     55,897


Mortgage Warehousing


34,996



23,564



24,402



96,944


82,802


Banking


30,773



29,551



56,287



122,005


210,073


Other


(13,317)



(10,490)



(7,206)



(40,334)


(28,386)


Total


$            67,849



$             54,701



$               95,666



$   218,770


$   320,386


































Total Assets









December 31, 2025


September 30, 2025


December 31, 2024








Amount

%


Amount

%


Amount

%






Segment















Multi-family Mortgage Banking


$          526,423

3 %


$           513,039

2 %


$             479,099

2 %






Mortgage Warehousing


7,251,653

37 %


6,993,817

36 %


6,000,624

32 %






Banking


11,307,401

58 %


11,522,375

60 %


11,761,202

63 %






Other


363,466

2 %


325,416

2 %


564,807

3 %






Total


$     19,448,943

100 %


$      19,354,647

100 %


$        18,805,732

100 %






































Gain on Sale of Loans



Gain on Sale of Loans




Three Months Ended



Year Ended




December 31,



September 30,



December 31,



December 31,




2025



2025



2024



2025


2024


Loan Type















Multi-family


$            24,823



$             22,458



$               24,026



$     77,221


$     56,834


Single-family


(328)



775



413



3,081


1,907


Small Business Association (SBA)


1,235



1,438



581



5,060


3,534


Total


$            25,730



$             24,671



$               25,020



$     85,362


$     62,275


































Servicing Rights



Servicing Rights




Three Months Ended



Year Ended




December 31,



September 30,



December 31,



December 31,




2025



2025



2024



2025


2024

















Balance, beginning of period


$          213,156



$           193,037



$             177,327



$   189,935


$   158,457


Additions















Purchased servicing


1,554



12,858



—



14,482


—


Originated servicing


7,484



7,588



5,373



23,654


18,670


Subtractions















Paydowns


(4,719)



(2,450)



(3,172)



(12,223)


(9,901)


Changes in fair value


(179)



2,123



10,407



1,448


22,709


Balance, end of period


$          217,296



$           213,156



$             189,935



$   217,296


$   189,935


 

Supplemental Results

(Unaudited)

($ in thousands)




Loans Receivable and Loans Held for Sale





December 31,




September 30,




December 31,





2025




2025




2024
















Mortgage warehouse repurchase agreements (4)


$       1,600,285




$        1,645,884




$        1,446,068



Residential real estate (1)


1,018,780




1,008,979




1,322,853



Multi-family financing


5,332,680




4,877,477




4,624,299



Healthcare financing


1,385,359




1,476,046




1,484,483



Commercial and commercial real estate (2)(3)(4)


1,603,551




1,514,445




1,476,211



Agricultural production and real estate


92,077




84,824




77,631



Consumer and margin loans


1,950




896




6,843



Loans receivable


11,034,682




10,608,551




10,438,388



    Less: Allowance for credit losses on loans


83,301




93,330




84,386



Loans receivable, net


$     10,951,381




$      10,515,221




$      10,354,002
















Loans held for sale (4)


3,873,012




4,129,329




3,771,510



Total loans, net of allowance


$     14,824,393




$      14,644,550




$      14,125,512




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

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

(3) Includes only $19.5 million, $19.6 million and $18.7 million of non-owner occupied commercial real estate as of December 31, 2025, September 30, 2025 and December 31, 2024, respectively.  

(4) The warehouse portfolio is exclusively made up of loans to residential and multi-family mortgage bankers that are funding agency-eligible mortgages and commercial loans, which represent all of the Company's loans to non-depository institutions.  




Loan Credit Risk Profile



December 31, 2025


September 30, 2025


December 31, 2024



Amount


%


Amount


%


Amount


%














Pass 


$     10,526,493


95.4 %


$      10,026,354


94.5 %


$        9,741,087


93.4 %









%





Special mention


204,918


1.9 %


155,716


1.5 %


379,969


3.6 %

Substandard


303,271


2.7 %


426,481


4.0 %


317,332


3.0 %

Critcized loans


508,189


4.6 %


582,197


5.5 %


697,301


6.6 %

Total loans receivable


$     11,034,682


100.0 %


$      10,608,551


100.0 %


$      10,438,388


100.0 %

Charge-offs (year-to-date)


$          124,116




$             86,070




$             10,587



Recoveries (year-to-date)


$                 127




$                    51




$                  136


















Nonperforming Loans





December 31,




September 30,




December 31,





2025




2025




2024
















Nonaccrual loans


$          197,812




$           282,168




$           279,716



90 days past due and still accruing


-




16,100




6



Total nonperforming loans


$          197,812




$           298,268




$           279,722



Other real estate owned


60,145




4,347




8,209



Total nonperforming assets


$          257,957




$           302,615




$           287,931



Nonperforming loans to total loans receivable


1.79

%



2.81

%



2.68

%


Nonperforming assets to total assets


1.33

%



1.56

%



1.53

%

















Delinquent Loans





December 31,




September 30,




December 31,





2025




2025




2024
















Delinquent loans: 













    Loans receivable


$          206,561




$           324,580




$           292,263



    Loans held for sale


265




11,665




32,343



Total delinquent loans


$          206,826




$           336,245




$           324,606



Total loans receivable and loans held for sale


$     14,907,694




$      14,737,880




$      14,209,898



   Delinquent loans to total loans 


1.39

%



2.28

%



2.28

%


 

Supplemental Results

(Unaudited)

($ in thousands)












Deposits



December 31,



September 30,



December 31,



2025



2025



2024










Noninterest-bearing deposits









   Core demand deposits


$          604,081



$           399,814



$          239,005










Interest-bearing deposits









   Demand deposits:









      Core demand deposits


$       6,207,814



$        7,681,422



$       4,319,512

      Brokered demand deposits


600,000



—



—

        Total interest-bearing demand deposits


6,807,814



7,681,422



4,319,512

   Money market/savings deposits:









      Core money market/savings deposits


3,566,523



3,788,707



3,442,111

      Brokered money market/savings deposits


201,010



660



859

        Total money market/savings deposits


3,767,533



3,789,367



3,442,970

   Certificates of deposit:









      Core certificates of deposits


905,448



920,689



1,385,270

      Brokered certificates of deposits


956,316



1,143,413



2,533,219

         Total certificates of deposits


1,861,764



2,064,102



3,918,489










   Total interest-bearing deposits


12,437,111



13,534,891



11,680,971










Total deposits


$     13,041,192



$      13,934,705



$     11,919,976










Total core deposits


$     11,283,866



$      12,790,632



$       9,385,898

Total brokered deposits


$       1,757,326



$        1,144,073



$       2,534,078

Total deposits


$     13,041,192



$      13,934,705



$     11,919,976

 

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SOURCE Merchants Bancorp