— 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.
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 AssetsTotal 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 QualityThe 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 DepositsTotal 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 RedemptionWhen 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.
LiquidityThe 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, 865,058 885,070 936,343 961,183 980,050
$626,271 and $635,946 at fair value)
Securities held to maturity (fair value of $1,543,554, $1,670,306, 1,543,659 1,670,555 1,548,211 1,606,286 1,664,686
$1,547,525, $1,605,151 and $1,664,674)
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 3,873,012 4,129,329 4,105,765 3,983,452 3,771,510
and $78,170 at fair value)
Loans receivable (includes $47,318, $0, $0, $0 and $0 at fair value), 10,951,381 10,515,221 10,432,117 10,343,724 10,354,002
net of allowance for credit losses on loans of $83,301, $93,330,
$91,811, $83,413 and $84,386
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, 243,310 242,371 241,452 240,512 240,313
45,885,458 shares, 45,881,706 shares and 45,767,166 shares
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, 120,844
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)
6% Series C Preferred stock - $1,000 per share liquidation
preference
Authorized - 200,000 shares
Issued and outstanding - 196,181 shares (equivalent to 191,084 191,084 191,084 191,084 191,084
7,847,233 depositary shares)
8.25% Series D Preferred stock - $1,000 per share liquidation
preference
Authorized - 300,000 shares
Issued and outstanding - 142,500 shares (equivalent to 137,459 137,459 137,459 137,459 137,459
5,700,000 depositary shares)
7.625% Series E Preferred stock - $1,000 per share liquidation
preference
Authorized - 230,000 shares
Issued and outstanding - 230,000 shares (equivalent to 222,748 222,748 222,748 222,748 222,748
9,200,000 depositary shares)
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 $556,453 $8,300 5.92 % $556,894 $8,063 5.74 % $499,308 $7,839 6.25 %
or dividends
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 $2,038,094
Net interest margin 2.89 % 2.82 % 2.99 %
Average interest-earning assets to 112.55 % 112.95 % 112.86 %
average interest-bearing liabilities
Supplemental Results
(Unaudited)
($ 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 (C) 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
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