Merchants Bancorp Reports Fourth Quarter 2024 Results

— Full year 2024 net income of $320.4 million set a new Company record, increasing 15% compared to 2023.

— Full year 2024 diluted earnings per common share of $6.30 reached the highest level in Company history and increased 12% compared to 2023.

— Fourth quarter 2024 net income of $95.7 million, increased 23% compared to fourth quarter of 2023 and increased 56% compared to the third quarter 2024, which reflected a $42.4 million, or 253%, increase in noninterest income.

— Fourth quarter 2024 diluted earnings per common share of $1.85 increased 17% compared to the fourth quarter of 2023 and increased 58% compared to the third quarter of 2024.

— Favorable fair market value adjustments to servicing rights on loans and interest rate floor derivatives of $10.4 million and $2.6 million, respectively, positively impacted results during the fourth quarter of 2024 by approximately $0.21 per diluted common share, essentially reversing the $0.24 per share impact of negative fair market value adjustments in the third quarter of 2024.

— Total assets of $18.8 billion surpassed any level previously reported by the Company, increasing 1% compared to September 30, 2024, and increasing 11% compared to December 31, 2023.

— Tangible book value per common share reached a record-high of $34.15 and increased 25% compared to $27.40 in the fourth quarter of 2023 and increased 5% compared to $32.38 in the third quarter of 2024.

— As of December 31, 2024, the Company had $4.3 billion in unused borrowing capacity with the Federal Home Loan Bank and the Federal Reserve Discount window, representing 23% of total assets.

— Loans receivable of $10.4 billion, net of allowance for credit losses on loans, increased $92.1 million, or 1%, compared to September 30, 2024, and increased $226.2 million, or 2%, compared to December 31, 2023.

— Core deposits increased $1.3 billion, to $9.4 billion, compared to December 31, 2023, while brokered deposits decreased $3.4 billion, to $2.5 billion.

— On November 25, 2024, the Company completed a 7.625% Series E Preferred Stock offering resulting in proceeds of $222.7 million, net of $7.3 million in offering costs.

— On December 27, 2024, the Company executed a credit default swap on a $1.2 billion pool of warehouse loans, to reduce risk-based capital requirements and provide credit protection for the loan pool.

— The Company redeemed all outstanding shares of the Series B Preferred Stock for approximately $125.0 million on January 2, 2025, at the liquidation preference of $1,000 per share (equivalent to $25 per depositary share).

MerchantsBancorp (the “Company” or “Merchants”) (Nasdaq: MBIN), parent company of Merchants Bank, today reported fourth quarter 2024 net income of $95.7 million, or diluted earnings per common share of $1.85. This compared to $77.5 million, or diluted earnings per common share of $1.58 in the fourth quarter of 2023, and compared to $61.3 million, or diluted earnings per common share of $1.17 in the third quarter of 2024.

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“Our record-breaking performance in 2024, with net income of $320.4 million and earnings per share of $6.30, demonstrates that our superior business model provides for growth and higher earnings in any environment. With total assets reaching the highest levels in company history, at $18.8 billion, and tangible book value per share increasing 25%, to an all-time high of $34.15 per share, we have remained focused on effectively managing capital and delivering exceptional value to our shareholders and stakeholders,” said Michael F. Petrie, Chairman and CEO of Merchants.

Michael J. Dunlap, President and Chief Operating Officer of Merchants, added, “Looking ahead, we remain focused on leveraging our financial flexibility to drive sustainable growth. Despite increases in nonperforming loans over the last few quarters, delinquencies have declined, and charge-offs have been minimal. Our strategic initiatives, including the recent credit risk transfer transactions, as well as common and preferred stock offerings, strengthened our capital position and further mitigated risk. We are confident in our exceptional team's ability to continue delivering profitable growth in the coming years.”

Net income of $95.7 million for the fourth quarter of 2024 increased by $18.2 million, or 23%, compared to the fourth quarter of 2023, primarily driven by a $24.7 million, or 72%, increase in noninterest income and a $10.3 million, or 8%, increase in net interest income, which was partially offset by a $10.6 million, or 20%, increase in noninterest expense. Noninterest income included a $10.4 million positive fair market value adjustment to servicing rights and a $2.6 million positive fair market value adjustment to derivatives, which compared to a $7.6 million negative fair market value adjustment to servicing rights and a positive fair market value adjustment of $6.6 million to derivatives in the fourth quarter of 2023.

Net income of $95.7 million for the fourth quarter 2024 increased by $34.4 million, or 56%, compared to the third quarter of 2024, primarily driven by a $42.4 million, or 253%, increase in noninterest income that reflected higher gain on sale of loans, loan servicing fees, syndication and asset management fees, and other income. Noninterest income included a $10.4 million positive fair market value adjustment to servicing rights and a $2.6 million positive fair market value adjustment to derivatives, which compared to negative adjustments of $6.7 million and $7.7 million, respectively, in the third quarter of 2024.

Total Assets Total assets of $18.8 billion at December 31, 2024 increased by $152.8 million, or 1%, compared to September 30, 2024, and increased by $1.9 billion, or 11%, compared to December 31, 2023. The increase compared to December 31, 2023 was primarily due to growth in loans held for sale and in the warehouse, and multi-family loan portfolios. There was also an increase in securities held to maturity compared to December 31, 2023, reflecting the purchase of a security representing healthcare loans sold into a securitization in the third quarter of 2024 that was offset by a decline in loans in the healthcare portfolio that were sold into the securitization.

Return on average assets was 2.07% for the fourth quarter of 2024 compared to 1.86% for the fourth quarter of 2023 and 1.34% for the third quarter of 2024. Return on average assets was 1.79% for the full year 2024 compared to 1.85% for the full year 2023.

Asset Quality The allowance for credit losses on loans of $84.4 million, as of December 31, 2024, decreased by $163,000 compared to September 30, 2024, and increased by $12.6 million, or 18%, compared to December 31, 2023. The $163,000 decrease compared to September 30, 2024 reflected an increase in provision for credit losses on loans in the multi-family portfolio that was essentially offset by a partial charge-off of one multi-family loan that was previously fully reserved. The increase compared to December 31, 2023 was driven by a $16.7 million increase in specific reserves, primarily related to five customers. This increase was partially offset by lower loan balances due to the securitization of healthcare loans, which reduced the allowance by approximately $4.4 million.

The $84.4 million allowance for credit losses on loans as of December 31, 2024, compared to the net charge-offs of $10.5 million over the last twelve months ended December 31, 2024, could absorb eight years of losses, assuming recent loss levels continue.

The Company recorded charge-offs for three customers, primarily in the multi-family loan portfolio, totaling $4.2 million, and recorded $113,000 of recoveries during the fourth quarter 2024. This compares to $238,000 in charge-offs and $1,000 in recoveries during the fourth quarter of 2023 and to $2.1 million in charge-offs and $7,000 of recoveries in the third quarter of 2024.

As of December 31, 2024, non-performing loans were $279.7 million, or 2.68% of gross loans receivable, compared to $210.9 million, or 2.04%, as of September 30, 2024, and $82.0 million, or 0.80%, as of December 31, 2023. The increase in non-performing loans compared to both periods was primarily driven by multi-family and healthcare customers with delinquent payments on variable rate loans that have required higher payments largely due to higher interest rates since the loans were originated and the financial deterioration of a few sponsors. Delinquency levels on total loans have declined by $56.3 million, to $324.6 million, compared to September 30, 2024.

All substandard loans as of December 31, 2024 have been evaluated for impairment and these loans have specific reserves of $23.4 million, including $4.2 million added during the fourth quarter of 2024. Although there has been an increase in adversely classified loans, underlying asset values remain strong overall and loans are well-collateralized.

In addition to elevated reserves for credit losses on loans compared to December 2023, the Company has been making additional efforts to reduce its credit risk through loan sale and securitization activities since 2019. In April of 2023, as well as March and December of 2024, the Company strategically executed credit protection arrangements through a credit linked note and credit default swaps totaling $2.9 billion in loans to reduce risk of losses, with incremental coverage ranging from 13-14% of the unpaid principal balances for each arrangement. Despite having credit protection on these loans, the Company also continues to carry an allowance for credit losses on loans held for investment. As of December 31, 2024, the balance of loans in credit protection arrangements was $2.3 billion.

Securities Available for Sale Total securities available for sale of $980.0 million as of December 31, 2024 increased by $27.0 million, or 3%, compared to September 30, 2024, and decreased by $133.6 million, or 12%, compared to December 31, 2023. The decrease was primarily due to maturities and repayments, as well as fair value adjustments that were partially offset by purchases.

Securities Held to Maturity Total securities held to maturity of $1.7 billion as of December 31, 2024 decreased by $90.4 million, or 5%, compared to September 30, 2024, and increased $460.5 million, or 38%, compared to December 31, 2023. The decrease compared to September 30, 2024 was primarily due to repayments. The increase from December 31, 2023 was primarily due to purchases of senior investment securities backed by residential and healthcare loans retained as part of credit risk transfer securitization transactions originated by the Company.

Total Deposits Total deposits of $11.9 billion at December 31, 2024 decreased by $971.9 million, or 8%, compared to September 30, 2024, and decreased by $2.1 billion, or 15%, compared to December 31, 2023. The change compared to both periods was driven by decreases in brokered certificates of deposit accounts and demand accounts.

Core deposits of $9.4 billion at December 31, 2024 decreased by $708.1 million, or 7%, from September 30, 2024 and increased by $1.3 billion, or 16%, from December 31, 2023. Core deposits represented 79% of total deposits at December 31, 2024, 78% of total deposits at September 30, 2024, and 58% of total deposits at December 31, 2023.

Total brokered deposits of $2.5 billion at December 31, 2024 decreased $263.8 million, or 9%, from September 30, 2024 and decreased $3.4 billion, or 58%, from December 31, 2023. As of December 31, 2024, brokered certificates of deposit had a weighted average remaining duration of 49 days.

Liquidity Cash balances of $476.6 million as of December 31, 2024 decreased by $125.3 million, or 21%, compared to September 30, 2024 and decreased by $107.8 million, or 18%, compared to December 31, 2023. The Company continues to have significant borrowing capacity, with unused lines of credit totaling $4.3 billion as of December 31, 2024 compared to $5.1 billion at September 30, 2024 and $6.0 billion at December 31, 2023. Furthermore, its $3.1 billion line of credit availability with the Federal Reserve Bank of Chicago alone could fund 111% of its uninsured deposits, which represented approximately 24% of total deposits as of December 31, 2024.

This liquidity enhances the 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, 2024 and 2023

Net Interest Income of $134.6 million increased $10.3 million, or 8%, compared to $124.3 million, primarily due to higher interest income reflecting increases in average balances in loans and loans held for sale, as well as securities held to maturity, which were partially offset by lower average yields on loans and loans held for sale.

— Net interest margin of 2.99% decreased 6 basis points compared to 3.05%. The margin was negatively impacted by 5 basis points in the fourth quarter of 2024 from the net reversal of $2.1 million in accrued interest income associated with the movement of loans into nonaccrual status.

— Interest rate spread of 2.46% decreased 2 basis points compared to 2.48%.

Interest Income of $321.3 million increased $9.6 million, or 3%, primarily reflecting an increase in average balances of loans and loans held for sale, securities held to maturity, partially offset by lower average yields on loans and loans held for sale.

— Average balances of $14.3 billion for loans and loans held for sale increased $611.1 million, or 4% compared to $13.7 billion.

— Average balances of $1.7 billion for securities held to maturity increased $559.9 million, or 49%, compared to $1.1 billion.

— Average yields on loans and loans held for sale of 7.43% decreased 55 basis points compared to 7.98%.

Interest Expense of $186.7 million decreased $0.7 million compared to $187.4 million. The decrease reflected higher average balances on borrowings atlower average rates and lower average balances on certificates of deposit at lower average rates.

— Average balances of $3.0 billion for borrowings increased by $2.3 billion, or 323%, compared to $720.5 million.

— Average interest rates of 5.58% for borrowings decreased by 288 basis points compared to 8.46%.

— Average balances of $4.1 billion for certificates decreased by $908.0 million, or 18%, compared to $5.0 billion.

— Average interest rates of 5.02% for certificates of deposit decreased by 41 basis points compared to 5.43%.

Noninterest Income of $59.1 million increased $24.7 million, or 72%, primarily due to a $17.1 million, or 792%, increase in net loan servicing fees, a $5.7 million, or 29%, increase in gain on sale of loans, and a $4.4 million, or 91%, increase in syndication and asset management fees.

— Loan servicing fees included a $10.4 million positive fair market value adjustment to servicing rights, 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. This compared to a $7.6 million negative fair market value adjustment to servicing rights in the prior period with a $1.1 million negative adjustment in the Banking segment and a $6.5 million negative adjustment in the Multi-family Mortgage Banking segment. The value of servicing rights generally increases in rising 10-year interest rate environments and declines in falling interest rate environments due to expected prepayments and earning rates on escrow deposits.

— Gain on sale of loans increased $5.7 million, or 29%, reflecting higher volume in the multi-family loan portfolio.

— Other income included a $2.6 million positive fair market value adjustment to derivatives compared to a $6.6 million positive fair market value adjustment in the prior period.

Noninterest Expenseof $63.2 million increased $10.6 million, or 20%, compared to $52.6 million, primarily due to increases in salaries and employee benefits to support business growth, as well as a $2.4 million, or 61%, increase in deposit insurance expenses. The higher noninterest expense also reflected a $1.9 million increase in credit risk transfer premium expense associated with ongoing credit default swaps that were executed in March and December 2024.

— The efficiency ratio of 32.62% decreased 49 basis points compared to 33.11%.

Comparison of Operating Results for the Three Months Ended

December 31, 2024 and September 30, 2024

Net Interest Income of $134.6 million increased $1.8 million, or 1%, compared to $132.8 million, primarily due to higher average balances on borrowings at lower average interest rates. Lower average balances on loans and loans held for sale and certificates of deposit continued to reprice at lower rates, which also contributed to higher net interest income.

— Net interest margin of 2.99% remain unchanged. The margin was negatively impacted by 5 basis points in the fourth quarter of 2024 from the net reversal of $2.1 million in accrued interest income associated with the movement of loans into nonaccrual status. This compared to 6 basis points, or $2.9 million in accrued interest income in the third quarter of 2024.

— Interest rate spread of 2.46% increased 3 basis points compared to 2.43%.

Interest Income of $321.3 million decreased $17.6 million, or 5%, compared to $338.9 million, primarily reflecting a decrease in average yield and balances on loans and loans held for sale, partially offset by increased average balances on securities held to maturity.

— Average yields on loans and loans held for sale of 7.43% decreased 48 basis points compared to 7.91%.

— Average balances of $14.3 billion for loans and loans held for sale decreased $317.9 million, or 2%, compared to $14.6 billion.

— Average balances of $1.7 billion for securities held to maturity increased 413.1 million, or 32%, compared to $1.3 billion.

Interest Expense of $186.7 million decreased $19.4 million, or 9% compared to $206.1 million. The decrease was primarily driven by lower average balances and rates on certificates of deposit, as well as lower average rates on interest-bearing checking accounts. The decreases were partially offset by higher average balances on borrowings at lower average rates.

— Average balances of $4.1 billion for certificate of deposit accounts decreased $916.7 million, or 18%, compared to $5.0 billion.

— Average interest rates of 5.02% for certificate of deposit accounts decreased 45 basis points compared to 5.47%.

— Average interest rates of 4.19% for interest-bearing checking accounts decreased 51 basis points compared to 4.70%.

— Average balances of $3.0 billion for borrowings increased $529.2 million, or 21%, compared to $2.5 billion.

— Average interest rates of 5.58% for borrowings decreased 81 basis points compared to 6.39%.

Noninterest Income of $59.1 million increased $42.4 million, or 253%, compared $16.7 million, primarily due to a $16.5 million, or 1091%, increase in net loan servicing fees, a $10.4 million, or 536%, increase in other income, an $8.3 million, or 50%, increase in gain on sale of loans, and a $7.5 million, or 408%, increase in syndication and asset management fees.

— Loan servicing fees included a $10.4 million positive fair market value adjustment to servicing rights, 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. This compared to a $6.7 million negative fair market value adjustment to servicing rights in the prior period, with a $1.6 million negative adjustment in the Banking segment and a $5.1 million negative adjustment in the Multi-family Mortgage Banking segment. The value of servicing rights generally increases in rising 10-year interest rate environments and declines in falling interest rate environments due to expected prepayments and earning rates on escrow deposits.

— Other income included a $2.6 million positive fair market value adjustment to derivatives compared to a $7.7 million negative fair market value adjustment to derivatives in the third quarter of 2024.

— Gain on sale of loans increased $8.3 million reflecting higher volume in the multi-family loan portfolio.

Noninterest Expenseof $63.2 million increased $1.9 million, or 3%, compared to $61.3 million, primarily driven by a $2.3 million, or 7%, increase in salaries and employee benefits reflecting higher commissions on higher production volume and a 49% increase in professional fees, which was partially offset by a 28% decrease in deposit insurance expense.

— The efficiency ratio of 32.62% decreased 838 basis points compared to 41.00%.

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 $18.8 billion in assets and $11.9 billion in deposits as of December 31, 2024, conducts its business primarily through its direct and indirect subsidiaries, Merchants Bank of Indiana, Merchants Capital Corp., Merchants Capital Investments, LLC, Merchants Capital Servicing, LLC, Merchants Asset Management, LLC, and Merchants Mortgage, a division of Merchants Bank of Indiana. For more information and financial data, please visit Merchants' Investor Relations page atinvestors.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, 2024 2024 2024 2024 2023AssetsCash and due from banks $ 10,989 $ 12,214 $ 10,242 $ 17,924 $ 15,592Interest-earning demand accounts 465,621 589,692 530,640 490,831 568,830Cash and cash equivalents 476,610 601,906 540,882 508,755 584,422Securities purchased under agreements to resell 1,559 3,279 3,304 3,329 3,349Mortgage loans in process of securitization 428,206 430,966 209,244 142,629 110,599Securities available for sale ($635,946, $682,975, $682,774, 980,050 953,063 1,017,019 1,061,288 1,113,687$700,640 and $722,497 utilizing fair value option, respectively)Securities held to maturity ($1,664,674, $1,756,203, $1,291,960, 1,664,686 1,755,047 1,291,110 1,175,167 1,204,217$1,176,178 and $1,203,535 at fair value, respectively)Federal Home Loan Bank (FHLB) stock and other equity securities 217,804 184,050 67,499 64,215 48,578Loans held for sale (includes $78,170, $91,084, $102,873, 3,771,510 3,808,234 3,483,076 3,503,131 3,144,756$84,513 and $86,663 at fair value, respectively)Loans receivable, net of allowance for credit losses on loans 10,354,002 10,261,890 10,933,189 10,690,513 10,127,801of $84,386, $84,549, $81,028, $75,712 and $71,752, respectivelyPremises and equipment, net 58,617 53,161 46,833 42,450 42,342Servicing rights 189,935 177,327 178,776 172,200 158,457Interest receivable 83,409 86,612 90,360 90,303 91,346Goodwill 8,014 8,014 8,014 8,014 15,845Other assets and receivables 571,330 329,427 343,116 360,582 307,117Total assets $ 18,805,732 $ 18,652,976 $ 18,212,422 $ 17,822,576 $ 16,952,516Liabilities and Shareholders' EquityLiabilitiesDepositsNoninterest-bearing $ 239,005 $ 311,386 $ 383,260 $ 319,872 $ 520,070Interest-bearing 11,680,971 12,580,501 14,533,807 13,655,789 13,541,390Total deposits 11,919,976 12,891,887 14,917,067 13,975,661 14,061,460Borrowings 4,386,122 3,568,721 1,159,206 1,835,985 964,127Deferred tax liabilities 25,289 19,530 25,098 43,935 19,923Other liabilities 231,035 233,731 222,904 190,527 205,922Total liabilities 16,562,422 16,713,869 16,324,275 16,046,108 15,251,432Commitments and ContingenciesShareholders' EquityCommon stock, without par valueAuthorized – 75,000,000 sharesIssued and outstanding – 45,767,166 shares, 45,764,023 shares, 240,313 239,448 238,492 139,950 140,36545,757,567 shares, 43,354,718 shares and 43,242,928 sharesPreferred stock, without par value – 5,000,000 total shares authorized7% Series A Preferred stock – $25 per share liquidation preferenceAuthorized – no shares at December 31, 2024, September 30, 2024or June 30, 2024 and 3,500,000 shares at March 31, 2024 and December 31, 2023Issued and outstanding – no shares at December 31, 2024, September 30, 2024 – – – 50,221 50,221or June 30, 2024 and 2,081,800 shares at March 31, 2024 and December 31, 20236% Series B Preferred stock – $1,000 per share liquidation preferenceAuthorized – 125,000 sharesIssued and outstanding – 125,000 shares (equivalent to 5,000,000 120,844 120,844 120,844 120,844 120,844depositary shares)6% Series C Preferred stock – $1,000 per share liquidation preferenceAuthorized – 200,000 sharesIssued and outstanding – 196,181 shares (equivalent to 7,847,233 191,084 191,084 191,084 191,084 191,084depositary shares)8.25% Series D Preferred stock – $1,000 per share liquidation preferenceAuthorized – 300,000 sharesIssued and outstanding – 142,500 shares (equivalent to 5,700,000 137,459 137,459 137,459 137,459 137,459depositary shares)7.625% Series E Preferred stock – $1,000 per share liquidation preferenceAuthorized – 230,000 sharesIssued and outstanding – 230,000 shares (equivalent to 9,200,000 222,748 – – – -depositary shares)Retained earnings 1,330,995 1,250,176 1,200,778 1,138,083 1,063,599Accumulated other comprehensive (loss) income (133) 96 (510) (1,173) (2,488)Total shareholders' equity 2,243,310 1,939,107 1,888,147 1,776,468 1,701,084Total liabilities and shareholders' equity $ 18,805,732 $ 18,652,976 $ 18,212,422 $ 17,822,576 $ 16,952,516Consolidated Statement of Income(Unaudited)(In thousands, except share data) Three Months Ended Change December 31, September 30, December 31, 4Q24 4Q24 2024 2024 2023 vs. 3Q24 vs. 4Q23Interest IncomeLoans $ 266,719 $ 290,259 $ 274,971 -8% -3%Mortgage loans in process of securitization 5,662 4,062 5,294 39% 7%Investment securities:Available for sale 13,453 14,855 7,609 -9% 77%Held to maturity 27,673 22,081 19,491 25% 42%FHLB stock and other equity securities (dividends) 4,123 3,128 735 32% 461%Other 3,716 4,543 3,659 -18% 2%Total interest income 321,346 338,928 311,759 -5% 3%Interest ExpenseDeposits 144,009 165,675 172,061 -13% -16%Borrowed funds 42,713 40,432 15,373 6% 178%Total interest expense 186,722 206,107 187,434 -9% -Net Interest Income 134,624 132,821 124,325 1% 8%Provision for credit losses 2,689 6,898 6,747 -61% -60%Net Interest Income After Provision for Credit Losses 131,935 125,923 117,578 5% 12%Noninterest IncomeGain on sale of loans 25,020 16,731 19,342 50% 29%Loan servicing fees, net 14,953 (1,509) (2,162) 1091% 792%Mortgage warehouse fees 1,413 1,620 1,950 -13% -28%Syndication and asset management fees 9,323 1,834 4,879 408% 91%Other income 8,436 (1,934) 10,445 536% -19%Total noninterest income 59,145 16,742 34,454 253% 72%Noninterest ExpenseSalaries and employee benefits 37,536 35,218 33,259 7% 13%Loan expense 704 1,114 660 -37% 7%Occupancy and equipment 2,284 2,231 2,336 2% -2%Professional fees 5,135 3,439 4,157 49% 24%Deposit insurance expense 6,473 8,981 4,030 -28% 61%Technology expense 2,038 2,068 1,758 -1% 16%Credit risk transfer premium expense 1,947 2,079 – -6% 100%Other expense 7,085 6,188 6,379 14% 11%Total noninterest expense 63,202 61,318 52,579 3% 20%Income Before Income Taxes 127,878 81,347 99,453 57% 29%Provision for income taxes 32,212 20,074 21,980 60% 47%Net Income $ 95,666 $ 61,273 $ 77,473 56% 23%Dividends on preferred stock (10,728) (7,757) (8,667) 38% 24%Net Income Available to Common Shareholders $ 84,938 $ 53,516 $ 68,806 59% 23%Basic Earnings Per Share $ 1.86 $ 1.17 $ 1.59 59% 17%Diluted Earnings Per Share $ 1.85 $ 1.17 $ 1.58 58% 17%Weighted-Average Shares OutstandingBasic 45,765,458 45,759,667 43,241,600Diluted 45,924,176 45,910,052 43,430,973Consolidated Statement of Income(Unaudited)(In thousands, except share data) Twelve Months Ended December 31, December 31, 2024 2023 ChangeInterest IncomeLoans $ 1,113,397 $ 959,714 16%Mortgage loans in process of securitization 14,488 12,652 15%Investment securities:Available for sale 57,480 21,621 166%Held to maturity 90,075 69,983 29%FHLB stock and other equity securities (dividends) 9,372 2,205 325%Other 17,908 11,623 54%Total interest income 1,302,720 1,077,798 21%Interest ExpenseDeposits 660,357 577,210 14%Borrowed funds 119,743 52,517 128%Total interest expense 780,100 629,727 24%Net Interest Income 522,620 448,071 17%Provision for credit losses 24,278 40,231 -40%Net Interest Income After Provision for Credit Losses 498,342 407,840 22%Noninterest IncomeGain on sale of loans 62,275 48,183 29%Loan servicing fees, net 43,673 26,198 67%Mortgage warehouse fees 5,539 7,701 -28%Loss on sale of investments available for sale (1) (108) – -100%Syndication and asset management fees 19,693 12,355 59%Other income 17,040 20,231 -16%Total noninterest income 148,112 114,668 29%Noninterest ExpenseSalaries and employee benefits 130,723 108,181 21%Loan expense 3,767 3,409 11%Occupancy and equipment 8,991 9,220 -2%Professional fees 16,229 12,704 28%Deposit insurance expense 26,158 13,582 93%Technology expense 7,819 6,515 20%Credit risk transfer premium expense 6,320 – 100%Other expense 23,805 20,990 13%Total noninterest expense 223,812 174,601 28%Income Before Income Taxes 422,642 347,907 21%Provision for income taxes (2) 102,256 68,673 49%Net Income $ 320,386 $ 279,234 15%Dividends on preferred stock (34,909) (34,670) 1%Impact of preferred stock redemption (1,823) – -100%Net Income Available to Common Shareholders $ 283,654 $ 244,564 16%Basic Earnings Per Share $ 6.32 $ 5.66 12%Diluted Earnings Per Share $ 6.30 $ 5.64 12%Weighted-Average Shares OutstandingBasic 44,855,100 43,224,042Diluted 45,004,786 43,345,799(1) Includes $(108) and $0 respectively, related to accumulated other comprehensive earnings reclassifications.(2) Includes $26 and $0 respectively, related to income tax benefit for reclassification items.Key Operating Results(Unaudited)($ in thousands, except share data) Three Months Ended Change December 31, September 30, December 31, 4Q24 4Q24 2024 2024 2023 vs. 3Q24 vs. 4Q23Noninterest expense $ 63,202 $ 61,318 $ 52,579 3% 20%Net interest income (before provision for credit losses) 134,624 132,821 124,325 1% 8%Noninterest income 59,145 16,742 34,454 253% 72%Total income $ 193,769 $ 149,563 $ 158,779 30% 22%Efficiency ratio 32.62% 41.00% 33.11% (838) bps (49) bpsAverage assets $ 18,512,380 $ 18,311,393 $ 16,671,484 1% 11%Net income 95,666 61,273 77,473 56% 23%Return on average assets before annualizing 0.52% 0.33% 0.46%Annualization factor 4.00 4.00 4.00Return on average assets 2.07% 1.34% 1.86% 73 bps 21 bpsReturn on average tangible common shareholders' equity (1) 22.10% 14.43% 23.60% 767 bps (150) bpsTangible book value per common share (1) $ 34.15 $ 32.38 $ 27.40 5% 25%Tangible common shareholders' equity/tangible assets (1) 8.32% 7.95% 7.00% 37 bps 132 bpsConsolidated ratiosTotal capital/risk-weighted assets(2) 13.6 % 12.2 % 11.6 %TierI capital/risk-weighted assets(2) 13.0 % 11.6 % 11.1 %Common Equity TierI capital/risk-weighted assets(2) 9.1 % 8.9 % 7.8 %TierI capital/average assets(2) 12.1 % 10.5 % 10.1 %(1) Non-GAAP financial measure – see “Reconciliation of Non-GAAP Measures” below:(2) As defined by regulatory agencies; December 31, 2024 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, 4Q24 4Q24 2024 2024 2023 vs. 3Q24 vs. 4Q23Net income $ 95,666 $ 61,273 $ 77,473 56% 23%Less: preferred stock dividends (10,728) (7,757) (8,667) 38% 24%Net income available to common shareholders $ 84,938 $ 53,516 $ 68,806 59% 23%Average shareholders' equity $ 2,084,627 $ 1,941,026 $ 1,682,270 7% 24%Less: average goodwill & intangibles (8,076) (8,092) (16,629) -0% -51%Less: average preferred stock (538,970) (449,387) (499,608) 20% 8%Average tangible common shareholders' equity $ 1,537,581 $ 1,483,547 $ 1,166,033 4% 32%Annualization factor 4.00 4.00 4.00Return on average tangible common shareholders' equity 22.10% 14.43% 23.60% 767 bps (150) bpsTotal equity $ 2,243,310 $ 1,939,107 $ 1,701,084 16% 32%Less: goodwill and intangibles (8,073) (8,079) (16,587) – -51%Less: preferred stock (672,135) (449,387) (499,608) 50% 35%Tangible common shareholders' equity $ 1,563,102 $ 1,481,641 $ 1,184,889 5% 32%Assets $ 18,805,732 $ 18,652,976 $ 16,952,516 1% 11%Less: goodwill and intangibles (8,073) (8,079) (16,587) – -51%Tangible assets $ 18,797,659 $ 18,644,897 $ 16,935,929 1% 11%Ending common shares 45,767,166 45,764,023 43,242,928Tangible book value per common share $ 34.15 $ 32.38 $ 27.40 5% 25%Tangible common shareholders' equity/tangible assets 8.32% 7.95% 7.00% 37 bps 132 bpsKey Operating Results(Unaudited)($ in thousands, except share data) Twelve Months Ended December 31, December 31, 2024 2023 ChangeNoninterest expense $ 223,812 $ 174,601 28%Net interest income (before provision for credit losses) 522,620 448,071 17%Noninterest income 148,112 114,668 29%Total income $ 670,732 $ 562,739 19%Efficiency ratio 33.37% 31.03% 234 bpsAverage assets $ 17,860,787 $ 15,078,390 18%Net income 320,386 279,234 15%Return on average assets before annualizing 1.79% 1.85%Annualization factor 1.00 1.00Return on average assets 1.79% 1.85% (6) bpsReturn on average tangible common shareholders' equity (1) 20.16% 22.92% (276) bpsTangible book value per common share (1) $ 34.15 $ 27.40 25%Tangible common shareholders' equity/tangible assets (1) 8.32% 7.00% 132 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. Twelve Months Ended December 31, December 31, 2024 2023 ChangeNet income $ 320,386 $ 279,234 15%Less: preferred stock dividends (34,909) (34,670) 1%Less: preferred stock redemption (1,823) – -100%Net income available to common shareholders $ 283,654 $ 244,564 16%Average shareholders' equity $ 1,900,130 $ 1,583,485 20%Less: average goodwill & intangibles (8,697) (16,801) -48%Less: average preferred stock (484,391) (499,608) -3%Average tangible common shareholders' equity $ 1,407,042 $ 1,067,076 32%Annualization factor 1.00 1.00Return on average tangible common shareholders' equity 20.16% 22.92% (276) bpsTotal equity $ 2,243,310 $ 1,701,084 32%Less: goodwill and intangibles (8,073) (16,587) -51%Less: preferred stock (672,135) (499,608) 35%Tangible common shareholders' equity $ 1,563,102 $ 1,184,889 32%Assets $ 18,805,732 $ 16,952,516 11%Less: goodwill and intangibles (8,073) (16,587) -51%Tangible assets $ 18,797,659 $ 16,935,929 11%Ending common shares 45,767,166 43,242,928Tangible book value per common share $ 34.15 $ 27.40 25%Tangible common shareholders' equity/tangible assets 8.32% 7.00% 132 bpsMerchants BancorpAverage Balance Analysis($ in thousands)(Unaudited) Three Months Ended Three Months Ended Three Months Ended December 31, 2024 September 30, 2024 December 31, 2023 Average Yield/ Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate Balance Interest RateAssets:Interest-earning deposits, and other interest $ 499,308 $ 7,839 6.25% $ 484,712 $ 7,671 6.30% $ 268,083 $ 4,394 6.50%or dividendsSecurities available for sale 986,063 13,453 5.43% 1,011,146 14,855 5.84% 716,315 7,609 4.21%Securities held to maturity 1,701,595 27,673 6.47% 1,288,466 22,081 6.82% 1,141,664 19,491 6.77%Mortgage loans in process of securitization 414,883 5,662 5.43% 308,362 4,062 5.24% 380,645 5,294 5.52%Loans and loans held for sale 14,285,852 266,719 7.43% 14,603,750 290,259 7.91% 13,674,793 274,971 7.98%Total interest-earning assets 17,887,701 321,346 7.15% 17,696,436 338,928 7.62% 16,181,500 311,759 7.64%Allowance for credit losses on loans (85,772) (81,178) (67,114)Noninterest-earning assets 710,451 696,135 557,098Total assets $ 18,512,380 $ 18,311,393 $ 16,671,484Liabilities & Shareholders' Equity:Interest-bearing checking $ 5,579,688 58,781 4.19% $ 5,297,908 62,603 4.70% 5,607,744 68,899 4.87%Savings deposits 145,599 15 0.04% 145,305 17 0.05% 242,788 346 0.57%Money market 2,961,272 33,288 4.47% 2,816,906 33,858 4.78% 2,825,051 34,058 4.78%Certificates of deposit 4,115,462 51,925 5.02% 5,032,159 69,197 5.47% 5,023,434 68,758 5.43%Total interest-bearing deposits 12,802,021 144,009 4.48% 13,292,278 165,675 4.96% 13,699,017 172,061 4.98%Borrowings 3,047,586 42,713 5.58% 2,518,405 40,432 6.39% 720,521 15,373 8.46%Total interest-bearing liabilities 15,849,607 186,722 4.69% 15,810,683 206,107 5.19% 14,419,538 187,434 5.16%Noninterest-bearing deposits 352,374 327,930 366,152Noninterest-bearing liabilities 225,772 231,754 203,524Total liabilities 16,427,753 16,370,367 14,989,214Shareholders' equity 2,084,627 1,941,026 1,682,270Total liabilities and shareholders' equity $ 18,512,380 $ 18,311,393 $ 16,671,484Net interest income $ 134,624 $ 132,821 $ 124,325Net interest spread 2.46% 2.43% 2.48%Net interest-earning assets $ 2,038,094 $ 1,885,753 $ 1,761,962Net interest margin 2.99% 2.99% 3.05%Average interest-earning assets to 112.86% 111.93% 112.22%average interest-bearing liabilitiesSupplemental Results(Unaudited)($ in thousands) Net Income Net Income Three Months Ended Twelve Months Ended December 31, September 30, December 31, December 31, 2024 2024 2023 2024 2023SegmentMulti-family Mortgage Banking $ 22,183 $ 8,068 $ 8,580 $ 55,897 $ 36,473Mortgage Warehousing 24,402 15,940 26,362 82,802 73,525Banking 56,287 44,983 49,996 210,073 194,398Other (7,206) (7,718) (7,465) (28,386) (25,162)Total $ 95,666 $ 61,273 $ 77,473 $ 320,386 $ 279,234 Total Assets December 31, 2024 September 30, 2024 December 31, 2023 Amount % Amount % Amount %SegmentMulti-family Mortgage Banking $ 479,099 2% $ 453,281 2% $ 411,097 2%Mortgage Warehousing 6,000,624 32% 5,842,489 31% 4,522,175 27%Banking 11,761,202 63% 12,035,581 65% 11,760,943 69%Other 564,807 3% 321,625 2% 258,301 2%Total $ 18,805,732 100% $ 18,652,976 100% $ 16,952,516 100% Gain on Sale of Loans Gain on Sale of Loans Three Months Ended Twelve Months Ended December 31, September 30, December 31, December 31, 2024 2024 2023 2024 2023Loan TypeMulti-family $ 24,026 $ 15,302 $ 19,082 $ 56,834 $ 42,979Single-family 413 690 (183) 1,907 1,247Small Business Association (SBA) 581 739 443 3,534 3,957Total $ 25,020 $ 16,731 $ 19,342 $ 62,275 $ 48,183 Servicing Rights Servicing Rights Three Months Ended Twelve Months Ended December 31, September 30, December 31, December 31, 2024 2024 2023 2024 2023Balance, beginning of period $ 177,327 $ 178,776 $ 162,141 $ 158,457 $ 146,248AdditionsPurchased servicing – – 513 $ – $ 513Originated servicing 5,373 7,370 5,591 $ 18,670 $ 14,755SubtractionsPaydowns (3,172) (2,090) (2,190) $ (9,901) $ (7,621)Changes in fair value 10,407 (6,729) (7,598) 22,709 4,562Balance, end of period $ 189,935 $ 177,327 $ 158,457 $ 189,935 $ 158,457Supplemental Results(Unaudited)($ in thousands) Loans Receivable and Loans Held for Sale December 31, September 30, December 31, 2024 2024 2023Mortgage warehouse repurchase agreements $ 1,446,068 $ 1,213,429 $ 752,468Residential real estate (1) 1,322,853 1,317,234 1,324,305Multi-family financing 4,624,299 4,456,129 4,006,160Healthcare financing 1,484,483 1,733,674 2,356,689Commercial and commercial real estate (2)(3) 1,476,211 1,548,689 1,643,081Agricultural production and real estate 77,631 71,391 103,150Consumer and margin loans 6,843 5,893 13,700Loans receivable 10,438,388 10,346,439 10,199,553Less: Allowance for credit losses on loans 84,386 84,549 71,752Loans receivable, net $ 10,354,002 $ 10,261,890 $ 10,127,801Loans held for sale 3,771,510 3,808,234 3,144,756Total loans, net of allowance $ 14,125,512 $ 14,070,124 $ 13,272,557(1) Includes $1.2 billion, $1.2 billion and $1.2 billion of All-In-One © first-lien home equity lines of credit as of December 31, 2024, September 30, 2024 and December 31, 2023, respectively.(2)Includes $0.9 billion, $0.9 billion and $1.1 billion of revolving lines of credit collateralized primarily by mortgage servicing rights as of December 31, 2024, September 30, 2024 and December 31, 2023, respectively.(3) Includes only $18.7 million, $19.3 million and $8.4 million of non-owner occupied commercial real estate as of December 31, 2024, September 30, 2024 and December 31, 2023, respectively. Loan Credit Risk Profile December 31, 2024 September 30, 2024 December 31, 2023 Amount % Amount % Amount %Pass $ 9,741,087 93.4% $ 9,707,205 93.8% $ 9,879,659 96.9%Special mention 379,969 3.6% 351,407 3.4% 191,267 1.9%Substandard 317,332 3.0% 287,827 2.8% 128,577 1.2%Doubtful – – – – 50 -Loans receivable $ 10,438,388 100.0% $ 10,346,439 100.0% $ 10,199,553 100.0%Charge-offs (year-to-date) $ 10,587 $ 6,437 $ 9,791Recoveries (year-to-date) $ 136 $ 23 $ 41 Nonperforming Loans December 31, September 30, December 31, 2024 2024 2023Nonaccrual loans $ 279,716 $ 210,811 $ 73,84790 days past due and still accruing 6 91 8,168Total nonperforming loans $ 279,722 $ 210,902 $ 82,015Other real estate owned $ 8,209 $ 896 -Total nonperforming assets $ 287,931 $ 211,798 $ 82,015Nonperforming loans to total loans receivable 2.68% 2.04% 0.80%Nonperforming assets to total assets 1.53% 1.14% 0.48% Delinquent Loans December 31, September 30, December 31, 2024 2024 2023Delinquent loans:Loans receivable $ 292,263 $ 257,459 $ 183,529Loans held for sale 32,343 123,445 16,500Total delinquent loans $ 324,606 $ 380,904 $ 200,029Total loans receivable and loans held for sale $ 14,209,898 $ 14,154,673 $ 13,344,309Delinquent loans to total loans 2.28% 2.69% 1.50%

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