Merchants Bancorp Reports Second Quarter of 2026 Results

PR Newswire

CARMEL, Ind., July 28, 2026

CARMEL, Ind., July 28, 2026 /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.

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.

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.

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.    

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.

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.

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.

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.

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

 

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SOURCE Merchants Bancorp