Merchants Bancorp Reports Second Quarter of 2026 Results

View all news Company Release - 07/28/2026 Net income of $78.3 million in the second quarter of 2026 increased $40.3 million, or 106%, compared to the second quarter of 2025, and increased $10.6 million, or 16%, compared to the first quarter of 2026.Diluted earnings per common share of $1.48 in the second quarter of 2026 increased 147% compared to the second quarter of 2025 and increased 18% compared to the first quarter of 2026.Total assets reached $21.2 billion, marking the fifth consecutive quarter of new highs, while increasing 4% compared to March 31, 2026, and increasing 9% compared to December 31, 2025.Tangible book value per common share increased to $39.93, its 30th consecutive quarterly high, rising 13% from $35.42 at June 30, 2025, and 4% from $38.55 at March 31, 2026.Asset quality improved meaningfully, as criticized loans receivable of $444.7 million decreased $60.8 million, or 12%, from March 31, 2026, and decreased $63.5 million, or 12%, from December 31, 2025. Nonperforming loans of $205.6 million decreased $41.8 million, or 17%, and total delinquent loans of $208.0 million decreased $34.6 million, or 14%, compared to March 31, 2026.The provision for credit losses of $9.2 million decreased 83% compared to the second quarter of 2025 and decreased 40% compared to the first quarter of 2026. Capital ratios remained strong, with a total capital ratio of 12.5%, reflecting the Company's continued emphasis on financial strength and balance sheet resilience.Liquidity remained strong at $13.0 billion, or 61% of total assets, supported by $5.5 billion of unused borrowing capacity with the Federal Home Loan Bank and Federal Reserve Discount Window and a diversified mix of highly liquid assets, including cash and cash equivalents, short-term investments, mortgage loans in process of securitization, loans held for sale, and warehouse lines of credit.Loans receivable, net of allowance for credit losses, totaled $12.3 billion, increasing $862.9 million, or 8%, from March 31, 2026, and increasing $1.3 billion, or 12%, from December 31, 2025.Total deposits of $14.3 billion increased $1.3 billion, or 10%, from March 31, 2026, and increased $1.2 billion, or 9%, compared to December 31, 2025. Core deposits of $13.0 billion increased $891.3 million compared to March 31, 2026, and represent 91% of total deposits.The Company executed a credit default swap on a $169.9 million pool of multi-family mortgage loans in June 2026, providing credit protection for the loan pool and reducing risk-based capital requirements. , /PRNewswire/ -- Merchants Bancorp (the "Company" or "Merchants") (Nasdaq: MBIN), parent company of Merchants Bank, today reported second quarter of 2026 net income of $78.3 million, or diluted earnings per common share of $1.48. This compared to $38.0 million, or diluted earnings per common share of $0.60 in the second quarter of 2025, and compared to $67.7 million, or diluted earnings per common share of $1.25 in the first quarter of 2026. "Our second quarter results reflected continued strength across our businesses, highlighted by assets reaching a new high of $21.2 billion and tangible book value per share of $39.93, marking our 30th consecutive quarter of record tangible book value. Credit trends also improved during the quarter, with our fifth consecutive quarterly decline in criticized loans, which reached their lowest level since mid-2024, along with decreases in nonperforming loans, delinquencies, charge-offs and provision for credit losses. These results demonstrate the strength of our balance sheet, the benefit of improved credit metrics, and ongoing momentum in our business," said Michael F. Petrie, Chairman and CEO of Merchants. Michael J. Dunlap, President and Chief Operating Officer of Merchants, added, "With 10-year Treasury rates remaining elevated, our diversified business model continues to create multiple sources of earnings support in the current rate environment. While the higher rates may pressure near-term gain on sale of loans, loans in our robust pipeline are still expected to convert into permanent loans over time. Meanwhile, higher rates continue to support valuations on our servicing rights and derivatives, providing an offset to pressure on gain on sale revenue. Together with strong liquidity, capital, and improving credit trends, this positions us well to continue generating earnings growth and long-term shareholder value." Net income for the second quarter of 2026 was $78.3 million, an increase of $40.3 million, or 106%, compared to $38.0 million in the second quarter of 2025. The increase was primarily driven by a $43.8 million, or 83%, decrease in the provision for credit losses, reflecting improved asset quality. Net income for the second quarter of 2026 was $78.3 million, an increase of $10.6 million, or 16%, from $67.7 million in the first quarter of 2026. The improvement was driven by a $14.0 million, or 12%, increase in net interest income after provision for credit losses. Total Assets Total assets of $21.2 billion at June 30, 2026 increased $908.2 million, or 4%, compared to March 31, 2026, and increased $1.8 billion, or 9%, compared to December 31, 2025. The increases for both periods were primarily due to higher balances in the multi-family and warehouse portfolios, as well as revolving lines of credit collateralized by mortgage servicing rights that are included in the commercial and commercial real estate portfolio. Asset Quality The allowance for credit losses on loans of $75.8 million, as of June 30, 2026, decreased $1.0 million, or 1%, compared to March 31, 2026, and decreased $7.5 million, or 9%, compared to December 31, 2025. The decreases primarily reflected charge-offs on loans that had specific reserves. During the second quarter of 2026, the Company recorded charge-offs totaling $16.5 million and had $4.8 million in recoveries. Nearly 95% of the charge-offs in the second quarter of 2026 were associated with two multi-family loan relationships. This compared to $46.1 million in charge-offs and no recoveries during the second quarter of 2025 and $23.0 million in charge-offs and $616,000 in recoveries in the first quarter of 2026. Overall, criticized loans receivable of $444.7 million declined $60.8 million, or 12%, compared to March 31, 2026, and declined $63.5 million, or 12%, compared to December 31, 2025. These declines are consistent with the Company's expectation that migration to criticized status would stabilize and eventually subside, supported by ongoing portfolio management efforts. As of June 30, 2026, 6% of the criticized loans were covered by credit default swaps. As of June 30, 2026, all substandard loans have been evaluated for impairment, and these loans have specific reserves of $3.9 million. The Company believes the loan portfolio continues to be well collateralized. Nonperforming loans decreased $41.8 million, or 17%, compared to March 31, 2026, primarily due to loans being paid in full. As of June 30, 2026, nonperforming loans were $205.6 million, or 1.67% of loans receivable, compared to $247.5 million, or 2.16%, as of March 31, 2026, and $197.8 million, or 1.79%, as of December 31, 2025. Total delinquent loans of $208.0 million decreased $34.6 million, or 14%, compared to March 31, 2026. As of June 30, 2026, 10% of the delinquent loans were covered by credit default swaps. The Company has taken additional steps to reduce credit risk through loan sale and securitization activities since 2019. Since 2023, the Company has executed credit protection arrangements through credit default swaps and a credit-linked note to reduce potential loss exposure, with coverage ranging from 13% to 15% of the unpaid principal balance 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 June 30, 2026, the remaining balance of loans protected by credit default swaps was $2.2 billion. Total Deposits Total deposits of $14.3 billion at June 30, 2026, increased $1.3 billion, or 10%, compared to March 31, 2026, and $1.2 billion, or 9%, compared to December 31, 2025. The increase in both periods primarily reflected the growth in core deposits. Core deposits of $13.0 billion at June 30, 2026, reflected increases of $891.3 million, or 7%, from March 31, 2026, and $1.7 billion, or 15%, from December 31, 2025. Core deposits represented 91% of total deposits at June 30, 2026, 93% of total deposits at March 31, 2026, and 87% of total deposits at December 31, 2025. Brokered deposits of $1.3 billion at June 30, 2026, increased $411.3 million, or 46%, from March 31, 2026, and decreased $459.5 million, or 26%, from December 31, 2025. As of June 30, 2026, brokered certificates of deposit had a weighted average remaining duration of 51 days. Liquidity The Company maintained strong liquidity, supported by substantial borrowing capacity, including unused lines of credit totaling $5.5 billion as of June 30, 2026, compared to $3.9 billion at March 31, 2026, and $5.3 billion at December 31, 2025. The Company's most liquid assets include cash and cash equivalents, 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. Combined with unused borrowing capacity of $5.5 billion, these totaled $13.0 billion, or 61%, of its $21.2 billion total assets as of June 30, 2026. This liquidity position provides the Company with flexibility to manage funding costs, interest expense, and asset levels. In addition, the Company's business model is designed to continuously sell or securitize a significant portion of its loans, which provides flexibility in managing its liquidity. Comparison of Operating Results for the Three Months Ended June 30, 2026 and 2025 Net Interest Income of $136.5 million increased $7.8 million, or 6%, compared to $128.7 million. The increase reflected lower interest expense on certificates of deposit, partially offset by higher interest expense on interest-bearing checking accounts and lower interest income on securities held to maturity. Net interest margin of 2.81% decreased two basis points compared to 2.83%. Interest rate spread of 2.43% increased ten basis points compared to 2.33%. Interest Income of $294.1 million decreased $10.3 million, or 3%, compared to $304.4 million. The decrease was primarily attributable to lower average balances and yields on securities held to maturity, as well as lower average yields on higher average balances on loans and loans held for sale. Average balances of $1.4 billion for securities held to maturity decreased $174.1 million, or 11%, compared to $1.6 billion.Average yields on securities held to maturity of 5.19% decreased 72 basis points compared to 5.91%.Average yields on loans and loans held for sale of 6.26% decreased 66 basis points compared to 6.92%.Average balances of $16.2 billion for loans and loans held for sale increased $1.4 billion, or 9%, compared to $14.8 billion. Interest Expense of $157.5 million decreased 10% compared to $175.7 million. The decrease reflected lower average balances and rates on certificates of deposit, partially offset by higher average balances on interest-bearing checking accounts. Average balances of $1.4 billion for certificates of deposit decreased $1.7 billion, or 55%, compared to $3.1 billion.Average interest rates of 3.85% for certificates of deposit decreased 74 basis points compared to 4.59%.Average balances on interest-bearing checking accounts of $7.9 billion increased $1.7 billion, or 28%, compared to $6.2 billion.Average interest rates of 3.43% for interest-bearing checking accounts decreased 53 basis points compared to 3.96%. Provision for Credit Losses was $9.2 million, a decrease of 83% compared to $53.0 million, reflecting improved asset quality, including lower charge-offs and lower specific reserves. Noninterest Income of $45.7 million decreased $4.8 million, or 10%, compared to $50.5 million. The decline was primarily due to a decrease of $10.2 million, or 44%, in gain on sale of loans, partially offset by $5.9 million, or 95%, increase in loan servicing fees.  Loan servicing fees included a $6.0 million positive fair market value adjustment to servicing rights, with a $1.4 million positive adjustment in the Banking segment and a $4.6 million positive adjustment in the Multi-family Mortgage Banking segment. This compared to a $258,000 positive fair market value adjustment to servicing rights in the prior period with a $487,000 negative adjustment in the Banking segment and a $745,000 positive adjustment in the Multi-family Mortgage Banking segment. The value of servicing rights generally increases in rising 10-year interest rate environments and declines in falling interest rate environments due to expected prepayments and earning rates that are influenced by projected future interest rates on escrow deposits.Other noninterest income also included a $1.9 million positive fair market value adjustment to floor derivatives, reflected in the Warehouse segment, compared to a $4.3 million positive fair market value adjustment in the prior period. Noninterest Expense of $73.2 million decreased $4.1 million, or 5%, compared to $77.3 million. The lower expenses were primarily due to a $4.2 million decrease in salaries and employee benefits from lower commissions and bonuses. Comparison of Operating Results for the Three Months Ended June 30, 2026 and March 31, 2026 Net Interest Income of $136.5 million increased $7.9 million, or 6%, compared to $128.6 million. The increase reflected higher interest income on loans and loans held for sale, partially offset by higher interest expense on borrowings and deposits. Net interest margin of 2.81% decreased 11 basis points compared to 2.92%.Interest rate spread of 2.43% decreased seven basis points compared to 2.50%. The 11 basis point decline in net interest margin was primarily driven by changes in loan mix, as growth was weighted more toward loans held for sale and warehouse lending than the higher-yielding multi-family and healthcare portfolios. While this mix shift lowered the reported margin, the growth remained profitable and contributed to higher net interest income and overall earnings. Interest Income of $294.1 million increased $23.6 million, or 9%, compared to $270.5 million, primarily reflecting higher average balances at lower average yields on loans and loans held for sale. Average balances of $16.2 billion for loans and loans held for sale increased 10% compared to $14.7 billion.Average yields on loans and loans held for sale of 6.26% decreased eight basis points compared to 6.34%, primarily reflecting the same loan mix shift discussed above. Interest Expense of $157.5 million increased 11% compared to $141.9 million. The increase was primarily driven by higher average balances at lower interest rates on borrowings and higher average balances at higher average interest rates on interest-bearing checking accounts. Average balances of $4.0 billion on borrowings increased $880.5 million, or 28%, compared to $3.1 billion.Average interest rates of 4.06% on borrowings decreased by eight basis points compared to 4.14%.Average balances of $7.9 billion for interest-bearing checking accounts increased $692.0 million, or 10%, compared to $7.2 billion.Average interest rates on interest-bearing checking accounts of 3.43% increased by a basis point compared to 3.42%. Provision for Credit Losses was $9.2 million, a decrease of 40% compared to $15.3 million, reflecting improved asset quality, including lower charge-offs and lower specific reserves. Noninterest Income of $45.7 million decreased 2% compared to $46.6 million. Results reflected a decrease of $3.1 million, or 21%, in loan servicing fees, and a $1.5 million, or 11%, decrease in other noninterest income. Partially offsetting these declines was a $3.8 million, or 122%, increase in syndication and asset management fees. Loan servicing fees included a $6.0 million positive fair market value adjustment to servicing rights, with a $1.4 million positive adjustment in the Banking segment and a $4.6 million positive adjustment in the Multi-family Mortgage Banking segment. This compared to an $8.9 million positive fair market value adjustment to servicing rights in the prior period, with a $1.6 million positive adjustment in the Banking segment and a $7.4 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 noninterest income included a $1.9 million positive fair market value adjustment to floor derivatives, reflected in the Warehouse segment, compared to a $2.7 million positive fair market value adjustment to derivatives in the prior period. Noninterest Expense of $73.2 million decreased $2.4 million, 3%, compared to $75.6 million, primarily due to a $2.5 million decrease in deposit insurance expenses from improved asset quality. About Merchants Bancorp 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 $21.2 billion in assets and $14.3 billion in deposits as of June 30, 2026, 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," "aim," "would," "annualized" and "outlook," or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about the industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, management cautions that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated in these forward-looking statements, including the impacts of factors identified in "Risk Factors" or "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K and other periodic filings with the Securities and Exchange Commission. Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise. Consolidated Balance Sheets (Unaudited) (In thousands, except share data) June 30, March 31, December 31, September 30, June 30, 2026 2026 2025 2025 2025 Assets Cash and due from banks $ 17,875 $ 19,642 $ 15,844 $ 11,566 $ 15,419 Interest-earning demand accounts 296,828 63,573 196,358 586,470 631,746 Cash and cash equivalents 314,703 83,215 212,202 598,036 647,165 Securities purchased under agreements to resell 1,501 1,511 1,520 1,529 1,539 Mortgage loans in process of securitization 407,418 437,001 620,094 414,786 402,427 Securities available for sale (includes $527,676, $550,207, $571,314, $591,379 and $602,962 at fair value) 820,105 843,896 865,058 885,070 936,343 Securities held to maturity (fair value of $1,353,543, $1,426,444, $1,543,554, $1,670,306 and $1,547,525) 1,354,885 1,425,982 1,543,659 1,670,555 1,548,211 Federal Home Loan Bank (FHLB) stock and other equity securities 227,589 227,589 227,589 217,850 217,850 Loans held for sale (includes $148,368, $163,426, $76,980, $112,832 and $91,930 at fair value) 4,615,894 4,709,688 3,873,012 4,129,329 4,105,765 Loans receivable (includes $46,024, $46,427, $47,318, $0 and $0 at fair value), net of allowance for credit losses on loans of $75,803, $76,831, $83,301, $93,330 and $91,811 12,262,800 11,399,882 10,951,381 10,515,221 10,432,117 Premises and equipment, net 74,664 73,695 73,929 75,148 71,050 Servicing rights 236,949 229,576 217,296 213,156 193,037 Interest receivable 82,078 77,326 81,807 82,445 82,391 Goodwill 8,014 8,014 8,014 8,014 8,014 Other real estate owned 72,389 60,226 60,145 4,347 7,049 Other assets and receivables 750,993 744,181 713,237 539,161 488,246 Total assets $ 21,229,982 $ 20,321,782 $ 19,448,943 $ 19,354,647 $ 19,141,204 Liabilities and Shareholders' Equity Liabilities Deposits Noninterest-bearing $ 606,682 $ 501,864 $ 604,081 $ 399,814 $ 315,523 Interest-bearing 13,647,632 12,449,889 12,437,111 13,534,891 12,371,312 Total deposits 14,254,314 12,951,753 13,041,192 13,934,705 12,686,835 Borrowings 4,282,597 4,773,490 3,842,592 2,902,631 4,009,474 Deferred and current tax liabilities, net 50,140 46,403 33,900 28,973 29,228 Other liabilities 249,127 219,833 250,500 262,904 231,035 Total liabilities 18,836,178 17,991,479 17,168,184 17,129,213 16,956,572 Commitments and Contingencies Shareholders' Equity Common stock, without par value Authorized - 75,000,000 shares Issued and outstanding - 45,938,075 shares, 45,935,408 shares, 45,893,172 shares, 45,889,238 shares and 45,885,458 shares 244,345 243,433 243,310 242,371 241,452 Preferred stock, without par value - 5,000,000 total shares authorized 6% Series C Preferred stock - $1,000 per share liquidation preference Authorized - 200,000 shares Issued and outstanding - 196,181 shares (equivalent to 7,847,233 depositary shares) 191,084 191,084 191,084 191,084 191,084 8.25% Series D Preferred stock - $1,000 per share liquidation preference Authorized - 300,000 shares Issued and outstanding - 142,500 shares (equivalent to 5,700,000 depositary shares) 137,459 137,459 137,459 137,459 137,459 7.625% Series E Preferred stock - $1,000 per share liquidation preference Authorized - 230,000 shares Issued and outstanding - 230,000 shares (equivalent to 9,200,000 depositary shares) 222,748 222,748 222,748 222,748 222,748 Retained earnings 1,599,367 1,536,383 1,486,191 1,431,983 1,392,136 Accumulated other comprehensive loss (1,199) (804) (33) (211) (247) Total shareholders' equity 2,393,804 2,330,303 2,280,759 2,225,434 2,184,632 Total liabilities and shareholders' equity $ 21,229,982 $ 20,321,782 $ 19,448,943 $ 19,354,647 $ 19,141,204 Consolidated Statement of Income (Unaudited) (In thousands, except share data) Three Months Ended Change June 30, March 31, June 30, 2Q26 2Q26 2026 2026 2025 vs. 1Q26 vs. 2Q25 Interest Income Loans $ 252,546 $ 230,269 $ 255,641 10 % -1 % Mortgage loans in process of securitization 4,455 4,387 5,304 2 % -16 % Investment securities: Available for sale 9,562 9,942 12,095 -4 % -21 % Held to maturity 18,076 19,479 23,166 -7 % -22 % FHLB stock and other equity securities (dividends) 4,979 4,394 4,641 13 % 7 % Other 4,454 2,040 3,552 118 % 25 % Total interest income 294,072 270,511 304,399 9 % -3 % Interest Expense Deposits 116,839 109,849 131,375 6 % -11 % Short-term borrowings 37,608 28,937 36,981 30 % 2 % Long-term borrowings 3,089 3,077 7,324 — -58 % Total interest expense 157,536 141,863 175,680 11 % -10 % Net Interest Income 136,536 128,648 128,719 6 % 6 % Provision for credit losses 9,184 15,299 53,027 -40 % -83 % Net Interest Income After Provision for Credit Losses 127,352 113,349 75,692 12 % 68 % Noninterest Income Gain on sale of loans 13,160 13,506 23,342 -3 % -44 % Loan servicing fees, net 11,992 15,099 6,138 -21 % 95 % Mortgage warehouse fees 1,857 1,620 2,039 15 % -9 % Syndication and asset management fees 6,933 3,117 9,707 122 % -29 % Other income 11,738 13,257 9,254 -11 % 27 % Total noninterest income 45,680 46,599 50,480 -2 % -10 % Noninterest Expense Salaries and employee benefits 39,345 38,565 43,566 2 % -10 % Loan expense 1,177 1,185 1,142 -1 % 3 % Occupancy and equipment 3,462 3,081 2,494 12 % 39 % Professional fees 3,328 2,767 3,159 20 % 5 % Deposit insurance expense 5,893 8,408 7,152 -30 % -18 % Technology expense 2,893 2,679 2,446 8 % 18 % Credit risk transfer premium expense 6,100 5,764 4,767 6 % 28 % Other expense 11,050 13,193 12,611 -16 % -12 % Total noninterest expense 73,248 75,642 77,337 -3 % -5 % Income Before Income Taxes 99,784 84,306 48,835 18 % 104 % Provision for income taxes 21,481 16,574 10,854 30 % 98 % Net Income $ 78,303 $ 67,732 $ 37,981 16 % 106 % Dividends on preferred stock (10,266) (10,265) (10,266) — — Net Income Available to Common Shareholders $ 68,037 $ 57,467 $ 27,715 18 % 145 % Basic Earnings Per Share $ 1.48 $ 1.25 $ 0.60 18 % 147 % Diluted Earnings Per Share $ 1.48 $ 1.25 $ 0.60 18 % 147 % Weighted-Average Shares Outstanding Basic 45,936,610 45,929,936 45,883,644 Diluted 46,005,938 45,997,744 45,929,563 Consolidated Statement of Income (Unaudited) (In thousands, except share data) Six Months Ended June 30, June 30, 2026 2025 Change Interest Income Loans $ 482,815 $ 494,921 -2 % Mortgage loans in process of securitization 8,842 9,047 -2 % Investment securities: Available for sale 19,504 24,453 -20 % Held to maturity 37,555 47,524 -21 % FHLB stock and other equity securities (dividends) 9,373 9,013 4 % Other 6,494 6,645 -2 % Total interest income 564,583 591,603 -5 % Interest Expense Deposits 226,688 255,316 -11 % Short-term borrowings 66,545 70,345 -5 % Long-term borrowings 6,166 15,027 -59 % Total interest expense 299,399 340,688 -12 % Net Interest Income 265,184 250,915 6 % Provision for credit losses 24,483 60,754 -60 % Net Interest Income After Provision for Credit Losses 240,701 190,161 27 % Noninterest Income Gain on sale of loans 26,666 34,961 -24 % Loan servicing fees, net 27,091 10,148 167 % Mortgage warehouse fees 3,477 3,552 -2 % Syndication and asset management fees 10,050 13,096 -23 % Other income 24,995 12,416 101 % Total noninterest income 92,279 74,173 24 % Noninterest Expense Salaries and employee benefits 77,910 79,985 -3 % Loan expense 2,362 1,940 22 % Occupancy and equipment 6,543 4,845 35 % Professional fees 6,095 6,053 1 % Deposit insurance expense 14,301 14,380 -1 % Technology expense 5,572 4,820 16 % Credit risk transfer premium expense 11,864 8,629 37 % Other expense 24,243 18,349 32 % Total noninterest expense 148,890 139,001 7 % Income Before Income Taxes 184,090 125,333 47 % Provision for income taxes 38,055 29,113 31 % Net Income $ 146,035 $ 96,220 52 % Dividends on preferred stock (20,531) (20,531) — Impact of preferred stock redemption — (5,371) -100 % Net Income Available to Common Shareholders $ 125,504 $ 70,318 78 % Basic Earnings Per Share $ 2.73 $ 1.53 78 % Diluted Earnings Per Share $ 2.73 $ 1.53 78 % Weighted-Average Shares Outstanding Basic 45,933,291 45,853,998 Diluted 46,001,859 45,921,988 Key Operating Results (Unaudited) ($ in thousands, except share data) Three Months Ended Change June 30, March 31, June 30, 2Q26 2Q26 2026 2026 2025 vs. 1Q26 vs. 2Q25 Noninterest expense $ 73,248 $ 75,642 $ 77,337 -3 % -5 % Net interest income (before provision for credit losses) 136,536 128,648 128,719 6 % 6 % Noninterest income 45,680 46,599 50,480 -2 % -10 % Total income $ 182,216 $ 175,247 $ 179,199 4 % 2 % Efficiency ratio 40.20 % 43.16 % 43.16 % (296) bps (296) bps Average assets $ 20,578,875 $ 18,952,948 $ 18,984,925 9 % 8 % Net income 78,303 67,732 37,981 16 % 106 % Return on average assets before annualizing 0.38 % 0.36 % 0.20 % Annualization factor 4.00 4.00 4.00 Return on average assets 1.52 % 1.43 % 0.80 % 9 bps 72 bps Return on average tangible common shareholders' equity(1) 14.95 % 13.01 % 6.75 % 194 bps 820 bps Tangible book value per common share (1) $ 39.93 $ 38.55 $ 35.42 4 % 13 % Tangible common shareholders' equity/tangible assets(1) 8.64 % 8.72 % 8.49 % (8) bps 15 bps Consolidated ratios Total capital/risk-weighted assets(2) 12.5 % 12.8 % 13.4 % Tier I capital/risk-weighted assets(2) 12.1 % 12.3 % 12.8 % Common Equity Tier I capital/risk-weighted assets(2) 9.3 % 9.4 % 9.5 % Tier I capital/average assets(2) 11.6 % 12.3 % 11.5 % (1) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Measures" below: (2) As defined by regulatory agencies; June 30, 2026 shown as estimates and prior periods shown as reported.  Certain non-GAAP financial measures provide useful information to management and investors that is supplementary to the Company's financial condition, results of operations and cash flows computed in accordance with GAAP; however, they do have a number of limitations. As such, the reader should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use. A reconciliation of GAAP to non-GAAP financial measures is below. Net Income Available to Common Shareholders excludes preferred stock dividends. Tangible common shareholders' equity is calculated by excluding the balance of goodwill and other intangible assets and preferred stock from the calculation of total equity. Tangible assets is calculated by excluding the balance of goodwill and intangible assets. Tangible book value per share is calculated by dividing tangible common shareholders' equity by the number of shares outstanding.  Three Months Ended Change June 30, March 31, June 30, 2Q26 2Q26 2026 2026 2025 vs. 1Q26 vs. 2Q25 Average shareholders' equity $ 2,379,573 $ 2,326,390 $ 2,201,836 2 % 8 % Less: average goodwill & intangibles (8,043) (8,048) (8,065) — — Less: average preferred stock (551,291) (551,291) (551,290) — — Average tangible common shareholders' equity $ 1,820,239 $ 1,767,051 $ 1,642,481 3 % 11 % Annualization factor 4.00 4.00 4.00 Return on average tangible common shareholders' equity 14.95 % 13.01 % 6.75 % 194 bps 820 bps Total equity $ 2,393,804 $ 2,330,303 $ 2,184,632 3 % 10 % Less: goodwill and intangibles (8,040) (8,045) (8,062) — — Less: preferred stock (551,291) (551,291) (551,291) — — Tangible common shareholders' equity $ 1,834,473 $ 1,770,967 $ 1,625,279 4 % 13 % Assets $ 21,229,982 $ 20,321,782 $ 19,141,204 4 % 11 % Less: goodwill and intangibles (8,040) (8,045) (8,062) — — Tangible assets $ 21,221,942 $ 20,313,737 $ 19,133,142 4 % 11 % Ending common shares 45,938,075 45,935,408 45,885,458 Tangible book value per common share $ 39.93 $ 38.55 $ 35.42 4 % 13 % Tangible common shareholders' equity/tangible assets 8.64 % 8.72 % 8.49 % (8) bps 15 bps Key Operating Results (Unaudited) ($ in thousands, except share data) Six Months Ended June 30, June 30, 2026 2025 Change Noninterest expense $ 148,890 $ 139,001 7 % Net interest income (before provision for credit losses) 265,184 250,915 6 % Noninterest income 92,279 74,173 24 % Total income $ 357,463 $ 325,088 10 % Efficiency ratio 41.65 % 42.76 % (111) bps Average assets $ 19,770,403 $ 18,411,623 7 % Net income 146,035 96,220 52 % Return on average assets before annualizing 0.74 % 0.52 % Annualization factor 2.00 2.00 Return on average assets 1.48 % 1.05 % 43 bps Return on average tangible common shareholders' equity(1) 13.99 % 8.68 % 531 bps Tangible book value per common share(1) $ 39.93 $ 35.42 13 % Tangible common shareholders' equity/tangible assets(1) 8.64 % 8.49 % 15 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 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.  Six Months Ended June 30, June 30, 2026 2025 Change Average shareholders' equity $ 2,353,128 $ 2,181,117 8 % Less: average goodwill & intangibles (8,045) (8,067) — Less: average preferred stock (551,291) (551,958) — Average tangible common shareholders' equity $ 1,793,792 $ 1,621,092 11 % Annualization factor 2.00 2.00 Return on average tangible common shareholders' equity 13.99 % 8.68 % 531 bps Total equity $ 2,393,804 $ 2,184,632 10 % Less: goodwill and intangibles (8,040) (8,062) — Less: preferred stock (551,291) (551,291) — Tangible common shareholders' equity $ 1,834,473 $ 1,625,279 13 % Assets $ 21,229,982 $ 19,141,204 11 % Less: goodwill and intangibles (8,040) (8,062) — Tangible assets $ 21,221,942 $ 19,133,142 11 % Ending common shares 45,938,075 45,885,458 Tangible book value per common share $ 39.93 $ 35.42 13 % Tangible common shareholders' equity/tangible assets 8.64 % 8.49 % 15 bps Merchants Bancorp Average Balance Analysis ($ in thousands) (Unaudited) Three Months Ended June 30, 2026 March 31, 2026 June 30, 2025 Average Yield/ Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate Balance Interest Rate Assets: Interest-earning deposits, and other interest or dividends $ 689,479 $ 9,433 5.49 % $ 433,306 $ 6,434 6.02 % $ 539,357 $ 8,193 6.09 % Securities available for sale 832,715 9,562 4.61 % 856,846 9,942 4.71 % 955,186 12,095 5.08 % Securities held to maturity 1,398,098 18,076 5.19 % 1,493,185 19,479 5.29 % 1,572,186 23,166 5.91 % Mortgage loans in process of securitization 353,297 4,455 5.06 % 338,052 4,387 5.26 % 376,904 5,304 5.64 % Loans and loans held for sale 16,185,486 252,546 6.26 % 14,741,304 230,269 6.34 % 14,826,151 255,641 6.92 % Total interest-earning assets 19,459,075 294,072 6.06 % 17,862,693 270,511 6.14 % 18,269,784 304,399 6.68 % Allowance for credit losses on loans (80,566) (85,226) (90,860) Noninterest-earning assets 1,200,366 1,175,481 806,001 Total assets $ 20,578,875 $ 18,952,948 $ 18,984,925 Liabilities & Shareholders' Equity: Interest-bearing checking $ 7,891,368 67,395 3.43 % $ 7,199,340 60,763 3.42 % $ 6,161,736 60,845 3.96 % Money market /savings deposits 4,117,113 36,120 3.52 % 3,925,326 34,000 3.51 % 3,499,982 35,145 4.03 % Certificates of deposit 1,386,717 13,324 3.85 % 1,562,186 15,086 3.92 % 3,090,250 35,385 4.59 % Total interest-bearing deposits 13,395,198 116,839 3.50 % 12,686,852 109,849 3.51 % 12,751,968 131,375 4.13 % Borrowings 4,017,881 40,697 4.06 % 3,137,379 32,014 4.14 % 3,453,960 44,305 5.15 % Total interest-bearing liabilities 17,413,079 157,536 3.63 % 15,824,231 141,863 3.64 % 16,205,928 175,680 4.35 % Noninterest-bearing deposits 542,526 560,176 376,217 Noninterest-bearing liabilities 243,697 242,151 200,944 Total liabilities 18,199,302 16,626,558 16,783,089 Shareholders' equity 2,379,573 2,326,390 2,201,836 Total liabilities and shareholders' equity $ 20,578,875 $ 18,952,948 $ 18,984,925 Net interest income $ 136,536 $ 128,648 $ 128,719 Net interest spread 2.43 % 2.50 % 2.33 % Net interest-earning assets $ 2,045,996 $ 2,038,462 $ 2,063,856 Net interest margin 2.81 % 2.92 % 2.83 % Average interest-earning assets to average interest-bearing liabilities 111.75 % 112.88 % 112.74 % Supplemental Results (Unaudited) ($ in thousands) Net Income Net Income Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, 2026 2026 2025 2026 2025 Segment Multi-family Mortgage Banking $ 10,336 $ 11,014 $ 9,269 $ 21,350 $ 12,682 Mortgage Warehousing 30,599 28,648 22,986 59,247 38,384 Banking 47,337 37,980 14,574 85,317 61,681 Other (9,969) (9,910) (8,848) (19,879) (16,527) Total $ 78,303 $ 67,732 $ 37,981 $ 146,035 $ 96,220 Total Assets June 30, 2026 March 31, 2026 December 31, 2025 Amount % Amount % Amount % Segment Multi-family Mortgage Banking $ 567,941 2 % $ 522,976 3 % $ 526,423 3 % Mortgage Warehousing 8,647,738 41 % 8,544,107 42 % 7,251,653 37 % Banking 11,581,635 55 % 10,850,657 53 % 11,307,401 58 % Other 432,668 2 % 404,042 2 % 363,466 2 % Total $ 21,229,982 100 % $ 20,321,782 100 % $ 19,448,943 100 % Gain on Sale of Loans Gain on Sale of Loans Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, 2026 2026 2025 2026 2025 Loan Type Multi-family $ 11,755 $ 11,422 $ 19,815 $ 23,177 $ 29,940 Single-family 489 388 2,428 877 2,634 Small Business Administration (SBA) 916 1,696 1,099 2,612 2,387 Total $ 13,160 $ 13,506 $ 23,342 $ 26,666 $ 34,961 Servicing Rights Servicing Rights Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, 2026 2026 2025 2026 2025 Balance, beginning of period $ 229,576 $ 217,296 $ 189,711 $ 217,296 $ 189,935 Additions Purchased servicing - 125 70 125 70 Originated servicing 4,010 5,749 5,244 9,759 8,582 Subtractions Paydowns (2,652) (2,532) (2,246) (5,184) (5,054) Changes in fair value 6,015 8,938 258 14,953 (496) Balance, end of period $ 236,949 $ 229,576 $ 193,037 $ 236,949 $ 193,037 Supplemental Results (Unaudited) ($ in thousands) Loans Receivable and Loans Held for Sale June 30, March 31, December 31, 2026 2026 2025 Mortgage warehouse repurchase agreements(4) $ 2,168,175 $ 1,982,411 $ 1,600,285 Residential real estate(1) 1,078,358 1,038,724 1,018,780 Multi-family financing 5,855,477 5,537,711 5,332,680 Healthcare financing 1,303,597 1,260,821 1,385,359 Commercial and commercial real estate(2)(3)(4) 1,837,427 1,560,788 1,603,551 Agricultural production and real estate 91,609 92,527 92,077 Consumer and margin loans 3,960 3,731 1,950 Loans receivable 12,338,603 11,476,713 11,034,682 Less: Allowance for credit losses on loans 75,803 76,831 83,301 Loans receivable, net $ 12,262,800 $ 11,399,882 $ 10,951,381 Loans held for sale(4) 4,615,894 4,709,688 3,873,012 Total loans, net of allowance $ 16,878,694 $ 16,109,570 $ 14,824,393 (1) Includes $0.8 billion, $0.8 billion and $0.8 billion of All-In-One © first-lien home equity lines of credit as of June 30, 2026, March 31, 2026 and December 31, 2025, respectively. (2) Includes $1.2 billion, $0.9 billion and $0.9 billion of revolving lines of credit collateralized primarily by mortgage servicing rights as of June 30, 2026, March 31, 2026 and December 31, 2025, respectively. (3) Includes only $19.0 million, $19.7 million and $19.5 million of non-owner occupied commercial real estate as of June 30, 2026, March 31, 2026 and December 31, 2025, 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 June 30, 2026 March 31, 2026 December 31, 2025 Amount % Amount % Amount % Pass $ 11,893,874 96.4 % $ 10,971,183 95.6 % $ 10,526,493 95.4 % Special mention 214,786 1.7 % 234,346 2.0 % 204,918 1.9 % Substandard 229,943 1.9 % 271,184 2.4 % 303,271 2.7 % Criticized loans 444,729 3.6 % 505,530 4.4 % 508,189 4.6 % Total loans receivable $ 12,338,603 100.0 % $ 11,476,713 100.0 % $ 11,034,682 100.0 % Charge-offs (year-to-date) $ 39,511 $ 22,979 $ 124,116 Recoveries (year-to-date) $ 5,405 $ 616 $ 127 Nonperforming Loans June 30, March 31, December 31, 2026 2026 2025 Nonaccrual loans $ 205,545 $ 239,108 $ 197,812 90 days past due and still accruing 87 8,350 — Total nonperforming loans $ 205,632 $ 247,458 $ 197,812 Other real estate owned 72,389 60,226 60,145 Total nonperforming assets $ 278,021 $ 307,684 $ 257,957 Nonperforming loans to total loans receivable 1.67 % 2.16 % 1.79 % Nonperforming assets to total assets 1.31 % 1.51 % 1.33 % Delinquent Loans June 30, March 31, December 31, 2026 2026 2025 Delinquent loans: Loans receivable $ 207,700 $ 242,271 $ 206,561 Loans held for sale 263 264 265 Total delinquent loans $ 207,963 $ 242,535 $ 206,826 Total loans receivable and loans held for sale $ 16,954,497 $ 16,186,401 $ 14,907,694 Delinquent loans to total loans 1.23 % 1.50 % 1.39 % Supplemental Results (Unaudited) ($ in thousands) Deposits June 30, March 31, December 31, 2026 2026 2025 Noninterest-bearing deposits Core demand deposits $ 606,682 $ 501,864 $ 604,081 Interest-bearing deposits Demand deposits: Core demand deposits $ 7,820,104 $ 6,949,611 $ 6,207,814 Brokered demand deposits 503,257 301,111 600,000 Total interest-bearing demand deposits 8,323,361 7,250,722 6,807,814 Money market/savings deposits: Core money market/savings deposits 3,944,677 3,872,344 3,566,523 Brokered money market/savings deposits 2,912 200,867 201,010 Total money market/savings deposits 3,947,589 4,073,211 3,767,533 Certificates of deposit: Core certificates of deposit 585,061 741,452 905,448 Brokered certificates of deposit 791,621 384,504 956,316 Total certificates of deposit 1,376,682 1,125,956 1,861,764 Total interest-bearing deposits 13,647,632 12,449,889 12,437,111 Total deposits $ 14,254,314 $ 12,951,753 $ 13,041,192 Total core deposits $ 12,956,524 $ 12,065,271 $ 11,283,866 Total brokered deposits 1,297,790 886,482 1,757,326 Total deposits $ 14,254,314 $ 12,951,753 $ 13,041,192 View original content to download multimedia:https://www.prnewswire.com/news-releases/merchants-bancorp-reports-second-quarter-of-2026-results-302836726.html SOURCE Merchants Bancorp View all news