Merchants Bancorp Reports Fourth Quarter 2025 Results

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

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

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

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

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

Total Assets

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

Asset Quality

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

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

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

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

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

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

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

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

Total Deposits

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

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

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

Preferred Stock Redemption

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

Liquidity

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

The Company's most liquid assets are in cash, short-term investments, including interest-earning demand deposits, mortgage loans in process of securitization, loans held for sale, and warehouse lines of credit included in loans receivable. Taken together with its unused borrowing capacity of $5.3 billion described above, these totaled $11.6 billion, or 60%, of its $19.4 billion total assets as of December 31, 2025.

This liquidity enhances the Company's ability to effectively manage interest expense and asset levels in the future. Additionally, the Company's business model is designed to continuously sell or securitize a significant portion of its loans, which provides flexibility in managing its liquidity.

Comparison of Operating Results for the Three Months Ended

December 31, 2025 and 2024

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

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

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

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

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

Comparison of Operating Results for the Three Months Ended

December 31, 2025 and September 30, 2025

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

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

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

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

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

About Merchants Bancorp

Ranked as a top performing U.S. public bank by S&P Global Market Intelligence, Merchants Bancorp is a diversified bank holding company headquartered in Carmel, Indiana operating multiple segments, including Multi-family Mortgage Banking that primarily offers multi-family housing and healthcare facility financing and servicing (through this segment it also serves as a syndicator of low-income housing tax credit and debt funds); Mortgage Warehousing that offers mortgage warehouse financing, commercial loans, and deposit services; and Banking that offers retail and correspondent residential mortgage banking, agricultural lending, and traditional community banking. Merchants Bancorp, with $19.4 billion in assets and $13.0 billion in deposits as of December 31, 2025, conducts its business primarily through its direct and indirect subsidiaries, Merchants Bank of Indiana, Merchants Capital Corp., Merchants Capital Investments, LLC, Merchants Capital Servicing, LLC, Merchants Investment Partners, LLC, and Merchants Mortgage, a division of Merchants Bank of Indiana. For more information and financial data, please visit Merchants' Investor Relations page at investors.merchantsbancorp.com.

Forward-Looking Statements

This press release contains forward-looking statements which reflect management's current views with respect to, among other things, future events and financial performance. These statements are often, but not always, made through the use of words or phrases such as "may," "might," "should," "could," "predict," "potential," "believe," "expect," "continue," "will," "anticipate," "seek," "estimate," "intend," "plan," "projection," "goal," "target," "outlook," "aim," "would," "annualized" and "outlook," or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about the industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, management cautions that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated in these forward-looking statements, including the impacts of factors identified in "Risk Factors" or "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K and other periodic filings with the Securities and Exchange Commission. Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)

December 31,

September 30,

June 30,

March 31,

December 31,

2025

2024

Assets

Cash and due from banks

$ 15,844

$ 11,566

$ 15,419

$ 15,609

$ 10,989

Interest-earning demand accounts

196,358

586,470

631,746

505,687

465,621

Cash and cash equivalents

212,202

598,036

647,165

521,296

476,610

Securities purchased under agreements to resell

1,520

1,529

1,539

1,550

1,559

Mortgage loans in process of securitization

620,094

414,786

402,427

389,797

428,206

Securities available for sale (includes $571,314, $591,379, $602,962,

$626,271 and $635,946 at fair value)

865,058

885,070

936,343

961,183

980,050

Securities held to maturity (fair value of $1,543,554, $1,670,306,

$1,547,525, $1,605,151 and $1,664,674)

1,543,659

1,670,555

1,548,211

1,606,286

1,664,686

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

227,589

217,850

217,804

Loans held for sale (includes $76,980, $112,832, $91,930, $75,920

and $78,170 at fair value)

3,873,012

4,129,329

4,105,765

3,983,452

3,771,510

Loans receivable (includes $47,318, $0, $0, $0 and $0 at fair value),

net of allowance for credit losses on loans of $83,301, $93,330,

$91,811, $83,413 and $84,386

10,951,381

10,515,221

10,432,117

10,343,724

10,354,002

Premises and equipment, net

73,929

75,148

71,050

67,787

58,617

Servicing rights

217,296

213,156

193,037

189,711

189,935

Interest receivable

81,807

82,445

82,391

82,811

83,409

Goodwill

8,014

Other real estate owned

60,145

4,347

7,049

8,209

Other assets and receivables

713,237

539,161

488,246

417,290

563,121

Total assets

$ 19,448,943

$ 19,354,647

$19,141,204

$18,797,800

$ 18,805,732

Liabilities and Shareholders' Equity

Liabilities

Deposits

Noninterest-bearing

$ 604,081

$ 399,814

$ 315,523

$ 313,296

$ 239,005

Interest-bearing

12,437,111

13,534,891

12,371,312

12,092,869

11,680,971

Total deposits

13,041,192

13,934,705

12,686,835

12,406,165

11,919,976

Borrowings

3,842,592

2,902,631

4,009,474

4,001,744

4,386,122

Deferred and current tax liabilities, net

33,900

28,973

29,228

35,740

25,289

Other liabilities

250,500

262,904

231,035

193,416

231,035

Total liabilities

17,168,184

17,129,213

16,956,572

16,637,065

16,562,422

Commitments and Contingencies

Shareholders' Equity

Common stock, without par value

Authorized - 75,000,000 shares

Issued and outstanding - 45,893,172 shares, 45,889,238 shares,

45,885,458 shares, 45,881,706 shares and 45,767,166 shares

243,310

242,371

241,452

240,512

240,313

Preferred stock, without par value - 5,000,000 total shares

authorized

6% Series B Preferred stock - $1,000 per share liquidation

preference

Authorized - no shares at December 31, 2025, September 30,

2025, June 30, 2025 and March 31, 2025, and 125,000 shares at

December 31, 2024

Issued and outstanding - no shares at December 31, 2025,

September 30, 2025, June 30, 2025 and March 31, 2025, and

125,000 shares at December 31, 2024 (equivalent to 5,000,000

depositary shares)

—

120,844

6% Series C Preferred stock - $1,000 per share liquidation

preference

Authorized - 200,000 shares

Issued and outstanding - 196,181 shares (equivalent to

7,847,233 depositary shares)

191,084

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

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

Retained earnings

1,486,191

1,431,983

1,392,136

1,369,009

1,330,995

Accumulated other comprehensive loss

(33)

(211)

(247)

(77)

(133)

Total shareholders' equity

2,280,759

2,225,434

2,184,632

2,160,735

2,243,310

Total liabilities and shareholders' equity

$ 19,448,943

$ 19,354,647

$19,141,204

$18,797,800

$ 18,805,732

Consolidated Statement of Income

(Unaudited)

(In thousands, except share data)

Three Months Ended

Change

December 31,

September 30,

December 31,

4Q25

2025

2024

vs. 3Q25

vs. 4Q24

Interest Income

Loans

258,090

254,101

266,719

2 %

-3 %

Mortgage loans in process of securitization

6,719

5,308

5,662

27 %

19 %

Investment securities:

Available for sale

11,178

11,880

13,453

-6 %

-17 %

Held to maturity

23,182

22,427

27,673

3 %

-16 %

FHLB stock and other equity securities (dividends)

4,723

4,265

4,123

11 %

15 %

Other

3,577

3,798

3,716

-6 %

-4 %

Total interest income

307,469

301,779

321,346

2 %

-4 %

Interest Expense

Deposits

126,288

139,744

144,009

-10 %

-12 %

Short-term borrowings

34,283

25,926

34,263

32 %

—

Long-term borrowings

8,812

8,051

8,450

9 %

4 %

Total interest expense

169,383

173,721

186,722

-2 %

-9 %

Net Interest Income

138,086

128,058

134,624

8 %

3 %

Provision for credit losses

27,761

29,239

2,689

-5 %

932 %

Net Interest Income After Provision for Credit Losses

110,325

98,819

131,935

12 %

-16 %

Noninterest Income

Gain on sale of loans

25,730

24,671

25,020

4 %

3 %

Loan servicing fees, net

4,235

7,986

14,953

-47 %

-72 %

Mortgage warehouse fees

1,801

1,736

1,413

4 %

27 %

Syndication and asset management fees

5,680

4,864

9,323

17 %

-39 %

Other income

9,755

3,757

8,436

160 %

16 %

Total noninterest income

47,201

43,014

59,145

10 %

-20 %

Noninterest Expense

Salaries and employee benefits

42,375

44,152

37,536

-4 %

13 %

Loan expense

1,004

1,263

704

-21 %

43 %

Occupancy and equipment

3,382

2,453

2,284

38 %

48 %

Professional fees

3,436

3,371

5,135

2 %

-33 %

Deposit insurance expense

8,040

9,376

6,473

-14 %

24 %

Technology expense

2,611

2,608

2,038

—

28 %

Credit risk transfer premium expense

8,198

4,194

1,947

95 %

321 %

Other expense

14,596

9,833

7,085

48 %

106 %

Total noninterest expense

83,642

77,250

63,202

8 %

32 %

Income Before Income Taxes

73,884

64,583

127,878

14 %

-42 %

Provision for income taxes

6,035

9,882

32,212

-39 %

-81 %

Net Income

67,849

54,701

95,666

24 %

-29 %

Dividends on preferred stock

(10,266)

(10,265)

(10,728)

—

-4 %

Impact of preferred stock redemption

1,215

—

100 %

Net Income Available to Common Shareholders

58,798

44,436

84,938

32 %

-31 %

Basic Earnings Per Share

1.28

0.97

1.86

32 %

-31 %

Diluted Earnings Per Share

1.28

0.97

1.85

32 %

-31 %

Weighted-Average Shares Outstanding

Basic

45,891,077

45,887,143

45,765,458

Diluted

45,976,153

45,950,216

45,924,176

Consolidated Statement of Income

(Unaudited)

(In thousands, except share data)

Year Ended

December 31,

2025

2024

Change

Interest Income

Loans

1,007,112

1,113,397

-10 %

Mortgage loans in process of securitization

21,074

14,488

45 %

Investment securities:

Available for sale

47,511

57,480

-17 %

Held to maturity

93,133

90,075

3 %

FHLB stock and other equity securities (dividends)

18,001

9,372

92 %

Other

14,020

17,908

-22 %

Total interest income

1,200,851

1,302,720

-8 %

Interest Expense

Deposits

521,348

660,357

-21 %

Short-term borrowings

130,554

84,698

54 %

Long-term borrowings

31,890

35,045

-9 %

Total interest expense

683,792

780,100

-12 %

Net Interest Income

517,059

522,620

-1 %

Provision for credit losses

117,754

24,278

385 %

Net Interest Income After Provision for Credit Losses

399,305

498,342

-20 %

Noninterest Income

Gain on sale of loans

85,362

62,275

37 %

Loan servicing fees, net

22,369

43,673

-49 %

Mortgage warehouse fees

7,089

5,539

28 %

Loss on sale of investments available for sale (1)

—

(108)

100 %

Syndication and asset management fees

23,640

19,693

20 %

Other income

25,928

17,040

52 %

Total noninterest income

164,388

148,112

11 %

Noninterest Expense

Salaries and employee benefits

166,512

130,723

27 %

Loan expense

4,207

3,767

12 %

Occupancy and equipment

10,680

8,991

19 %

Professional fees

12,860

16,229

-21 %

Deposit insurance expense

31,796

26,158

22 %

Technology expense

10,039

7,819

28 %

Credit risk transfer premium expense

21,021

6,320

233 %

Other expense

42,778

23,805

80 %

Total noninterest expense

299,893

223,812

34 %

Income Before Income Taxes

263,800

422,642

-38 %

Provision for income taxes (2)

45,030

102,256

-56 %

Net Income

218,770

320,386

-32 %

Dividends on preferred stock

(41,062)

(34,909)

18 %

Impact of preferred stock redemption

(4,156)

(1,823)

128 %

Net Income Available to Common Shareholders

173,552

283,654

-39 %

Basic Earnings Per Share

3.78

6.32

-40 %

Diluted Earnings Per Share

3.78

6.30

-40 %

Weighted-Average Shares Outstanding

Basic

45,871,698

44,855,100

Diluted

45,942,730

45,004,786

(1) Includes $0 and $(108) respectively, related to accumulated other comprehensive earnings reclassifications.

(2) Includes $0 and $26 respectively, related to income tax benefit for reclassification items.

Key Operating Results

(Unaudited)

($ in thousands, except share data)

Three Months Ended

Change

December 31,

September 30,

December 31,

4Q25

2025

2024

vs. 3Q25

vs. 4Q24

Noninterest expense

$ 83,642

$ 77,250

$ 63,202

8 %

32 %

Net interest income (before provision for credit losses)

138,086

128,058

134,624

8 %

3 %

Noninterest income

47,201

43,014

59,145

10 %

-20 %

Total income

$ 185,287

$ 171,072

$ 193,769

8 %

-4 %

Efficiency ratio

45.14

45.16

32.62

(2)

bps

1,252

bps

Average assets

$ 19,815,940

$ 18,813,165

$ 18,512,380

5 %

7 %

Net income

67,849

54,701

95,666

24 %

-29 %

Return on average assets before annualizing

0.34

0.29

0.52

Annualization factor

4.00

Return on average assets

1.37

1.16

2.07

bps

(70)

bps

Return on average tangible common shareholders' equity (1)

13.76

10.69

22.10

307

bps

(834)

bps

Tangible book value per common share (1)

$ 37.51

$ 36.31

$ 34.15

3 %

10 %

Tangible common shareholders' equity/tangible assets (1)

8.85

8.61

8.32

bps

Consolidated ratios

Total capital/risk-weighted assets (2)

13.6

13.9

Tier I capital/risk-weighted assets (2)

13.1

13.0

13.3

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

9.9

9.8

9.3

Tier I capital/average assets (2)

11.5

11.8

12.1

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

(2) As defined by regulatory agencies; December 31, 2025 shown as estimates and prior periods shown as reported.

Certain non-GAAP financial measures provide useful information to management and investors that is supplementary to the Company's financial condition, results of operations and cash flows computed in accordance with GAAP; however, they do have a number of limitations. As such, the reader should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use. A reconciliation of GAAP to non-GAAP financial measures is below. Net Income Available to Common Shareholders excludes preferred stock dividends. Tangible common shareholders' equity is calculated by excluding the balance of goodwill and other intangible assets and preferred stock from the calculation of total equity. Tangible Assets is calculated by excluding the balance of goodwill and intangible assets. Tangible book value per share is calculated by dividing tangible common shareholders' equity by the number of shares outstanding.

Three Months Ended

Change

December 31,

September 30,

December 31,

4Q25

2025

2024

vs. 3Q25

vs. 4Q24

Average shareholders' equity

$ 2,268,832

$ 2,221,677

$ 2,084,627

2 %

9 %

Less: average goodwill & intangibles

(8,054)

(8,059)

(8,076)

—

Less: average preferred stock

(551,291)

(538,970)

—

2 %

Average tangible common shareholders' equity

$ 1,709,487

$ 1,662,327

$ 1,537,581

3 %

11 %

Annualization factor

4.00

Return on average tangible common shareholders' equity

13.76

10.69

22.10

307

bps

(834)

bps

Total equity

$ 2,280,759

$ 2,225,434

$ 2,243,310

2 %

Less: goodwill and intangibles

(8,051)

(8,056)

(8,073)

—

Less: preferred stock

(551,291)

(672,135)

—

-18 %

Tangible common shareholders' equity

$ 1,721,417

$ 1,666,087

$ 1,563,102

3 %

10 %

Assets

$ 19,448,943

$ 19,354,647

$ 18,805,732

—

3 %

Less: goodwill and intangibles

(8,051)

(8,056)

(8,073)

—

Tangible assets

$ 19,440,892

$ 19,346,591

$ 18,797,659

—

3 %

Ending common shares

45,893,172

45,889,238

45,767,166

Tangible book value per common share

$ 37.51

$ 36.31

$ 34.15

3 %

10 %

Tangible common shareholders' equity/tangible assets

8.85

8.61

8.32

bps

Key Operating Results

(Unaudited)

($ in thousands, except share data)

Year Ended

December 31,

2025

2024

Change

Noninterest expense

$ 299,893

$ 223,812

34 %

Net interest income (before provision for credit losses)

517,059

522,620

-1 %

Noninterest income

164,388

148,112

11 %

Total income

$ 681,447

$ 670,732

2 %

Efficiency ratio

44.01

33.37

1,064

bps

Average assets

$ 18,866,798

$ 17,860,787

6 %

Net income

218,770

320,386

-32 %

Return on average assets before annualizing

1.16

1.79

Annualization factor

1.00

Return on average assets

1.16

1.79

(63)

bps

Return on average tangible common shareholders' equity (1)

10.49

20.16

(967)

bps

Tangible book value per common share (1)

$ 37.51

$ 34.15

10 %

Tangible common shareholders' equity/tangible assets (1)

8.85

8.32

bps

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

Certain non-GAAP financial measures provide useful information to management and investors that is supplementary to the Company's financial condition, results of operations and cash flows computed in accordance with GAAP; however, they do have a number of limitations. As such, the reader should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable to non-GAAP financial measures that other companies use. A reconciliation of GAAP to non-GAAP financial measures is below. Net Income Available to Common Shareholders excludes preferred stock dividends. Tangible common equity is calculated by excluding the balance of goodwill and other intangible assets and preferred stock from the calculation of total assets. Tangible Assets is calculated by excluding the balance of goodwill and intangible assets. Tangible book value per share is calculated by dividing tangible common equity by the number of shares outstanding.

Year Ended

December 31,

2025

2024

Change

Average shareholders' equity

$ 2,213,449

$ 1,900,130

16 %

Less: average goodwill & intangibles

(8,062)

(8,697)

-7 %

Less: average preferred stock

(551,622)

(484,391)

14 %

Average tangible common shareholders' equity

$ 1,653,765

$ 1,407,042

18 %

Annualization factor

1.00

Return on average tangible common shareholders' equity

10.49

20.16

(967)

bps

Total equity

$ 2,280,759

$ 2,243,310

2 %

Less: goodwill and intangibles

(8,051)

(8,073)

—

Less: preferred stock

(551,291)

(672,135)

-18 %

Tangible common shareholders' equity

$ 1,721,417

$ 1,563,102

10 %

Assets

$ 19,448,943

$ 18,805,732

3 %

Less: goodwill and intangibles

(8,051)

(8,073)

—

Tangible assets

$ 19,440,892

$ 18,797,659

3 %

Ending common shares

45,893,172

45,767,166

Tangible book value per common share

$ 37.51

$ 34.15

10 %

Tangible common shareholders' equity/tangible assets

8.85

8.32

bps

Merchants Bancorp

Average Balance Analysis

($ in thousands)

(Unaudited)

Three Months Ended

December 31, 2025

September 30, 2025

December 31, 2024

Average

Yield/

Average

Yield/

Average

Yield/

Balance

Interest

Rate

Balance

Interest

Rate

Balance

Interest

Rate

Assets:

Interest-earning deposits, and other interest

or dividends

$ 556,453

$ 8,300

5.92 %

$ 556,894

$ 8,063

5.74 %

$ 499,308

$ 7,839

6.25 %

Securities available for sale

870,949

11,178

5.09 %

923,603

11,880

5.10 %

986,063

13,453

5.43 %

Securities held to maturity

1,627,341

23,182

5.65 %

1,510,857

22,427

5.89 %

1,701,595

27,673

6.47 %

Mortgage loans in process of securitization

506,704

6,719

5.26 %

395,388

5,308

5.33 %

414,883

5,662

5.43 %

Loans and loans held for sale

15,368,719

258,090

6.66 %

14,654,535

254,101

6.88 %

14,285,852

266,719

7.43 %

Total interest-earning assets

18,930,166

307,469

6.44 %

18,041,277

301,779

6.64 %

17,887,701

321,346

7.15 %

Allowance for credit losses on loans

(99,349)

(105,347)

(85,772)

Noninterest-earning assets

985,123

877,235

710,451

Total assets

$ 19,815,940

$ 18,813,165

$ 18,512,380

Liabilities & Shareholders' Equity:

Interest-bearing checking

$ 7,625,489

71,599

3.73 %

$ 7,451,868

75,415

4.02 %

$ 5,579,688

58,781

4.19 %

Money market /savings deposits

3,870,411

35,743

3.66 %

3,806,731

38,547

4.02 %

3,106,871

33,303

4.26 %

Certificates of deposit

1,818,058

18,946

4.13 %

2,238,401

25,782

4.57 %

4,115,462

51,925

5.02 %

Total interest-bearing deposits

13,313,958

126,288

3.76 %

13,497,000

139,744

4.11 %

12,802,021

144,009

4.48 %

Borrowings

3,505,903

43,095

4.88 %

2,476,365

33,977

5.44 %

3,047,586

42,713

5.58 %

Total interest-bearing liabilities

16,819,861

169,383

4.00 %

15,973,365

173,721

4.31 %

15,849,607

186,722

4.69 %

Noninterest-bearing deposits

492,650

392,569

352,374

Noninterest-bearing liabilities

234,597

225,554

225,772

Total liabilities

17,547,108

16,591,488

16,427,753

Shareholders' equity

2,268,832

2,221,677

2,084,627

Total liabilities and shareholders' equity

$ 19,815,940

$ 18,813,165

$ 18,512,380

Net interest income

$ 138,086

$ 128,058

$ 134,624

Net interest spread

2.44 %

2.33 %

2.46 %

Net interest-earning assets

$ 2,110,305

$ 2,067,912

$ 2,038,094

Net interest margin

2.89 %

2.82 %

2.99 %

Average interest-earning assets to

average interest-bearing liabilities

112.55 %

112.95 %

112.86 %

Supplemental Results

(Unaudited)

($ in thousands)

Net Income

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

2025

2024

2025

2024

Segment

Multi-family Mortgage Banking

$ 15,397

$ 12,076

$ 22,183

$ 40,155

$ 55,897

Mortgage Warehousing

34,996

23,564

24,402

96,944

82,802

Banking

30,773

29,551

56,287

122,005

210,073

Other

(13,317)

(10,490)

(7,206)

(40,334)

(28,386)

Total

$ 67,849

$ 54,701

$ 95,666

$ 218,770

$ 320,386

Total Assets

December 31, 2025

September 30, 2025

December 31, 2024

Amount

Segment

Multi-family Mortgage Banking

$ 526,423

3 %

$ 513,039

2 %

$ 479,099

2 %

Mortgage Warehousing

7,251,653

37 %

6,993,817

36 %

6,000,624

32 %

Banking

11,307,401

58 %

11,522,375

60 %

11,761,202

63 %

Other

363,466

2 %

325,416

2 %

564,807

3 %

Total

$ 19,448,943

100 %

$ 19,354,647

100 %

$ 18,805,732

100 %

Gain on Sale of Loans

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

2025

2024

2025

2024

Loan Type

Multi-family

$ 24,823

$ 22,458

$ 24,026

$ 77,221

$ 56,834

Single-family

(328)

775

413

3,081

1,907

Small Business Association (SBA)

1,235

1,438

581

5,060

3,534

Total

$ 25,730

$ 24,671

$ 25,020

$ 85,362

$ 62,275

Servicing Rights

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

2025

2024

2025

2024

Balance, beginning of period

$ 213,156

$ 193,037

$ 177,327

$ 189,935

$ 158,457

Additions

Purchased servicing

1,554

12,858

—

14,482

—

Originated servicing

7,484

7,588

5,373

23,654

18,670

Subtractions

Paydowns

(4,719)

(2,450)

(3,172)

(12,223)

(9,901)

Changes in fair value

(179)

2,123

10,407

1,448

22,709

Balance, end of period

$ 217,296

$ 213,156

$ 189,935

$ 217,296

$ 189,935

Supplemental Results

(Unaudited)

($ in thousands)

Loans Receivable and Loans Held for Sale

December 31,

September 30,

December 31,

2025

2024

Mortgage warehouse repurchase agreements (4)

$ 1,600,285

$ 1,645,884

$ 1,446,068

Residential real estate (1)

1,018,780

1,008,979

1,322,853

Multi-family financing

5,332,680

4,877,477

4,624,299

Healthcare financing

1,385,359

1,476,046

1,484,483

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

1,603,551

1,514,445

1,476,211

Agricultural production and real estate

92,077

84,824

77,631

Consumer and margin loans

1,950

896

6,843

Loans receivable

11,034,682

10,608,551

10,438,388

Less: Allowance for credit losses on loans

83,301

93,330

84,386

Loans receivable, net

$ 10,951,381

$ 10,515,221

$ 10,354,002

Loans held for sale (4)

3,873,012

4,129,329

3,771,510

Total loans, net of allowance

$ 14,824,393

$ 14,644,550

$ 14,125,512

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

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

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

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

Loan Credit Risk Profile

December 31, 2025

September 30, 2025

December 31, 2024

Amount

Pass

$ 10,526,493

95.4 %

$ 10,026,354

94.5 %

$ 9,741,087

93.4 %

Special mention

204,918

1.9 %

155,716

1.5 %

379,969

3.6 %

Substandard

303,271

2.7 %

426,481

4.0 %

317,332

3.0 %

Critcized loans

508,189

4.6 %

582,197

5.5 %

697,301

6.6 %

Total loans receivable

$ 11,034,682

100.0 %

$ 10,608,551

100.0 %

$ 10,438,388

100.0 %

Charge-offs (year-to-date)

$ 124,116

$ 86,070

$ 10,587

Recoveries (year-to-date)

$ 127

$ 51

$ 136

Nonperforming Loans

December 31,

September 30,

December 31,

2025

2024

Nonaccrual loans

$ 197,812

$ 282,168

$ 279,716

90 days past due and still accruing

16,100

Total nonperforming loans

$ 197,812

$ 298,268

$ 279,722

Other real estate owned

60,145

4,347

8,209

Total nonperforming assets

$ 257,957

$ 302,615

$ 287,931

Nonperforming loans to total loans receivable

1.79

2.81

2.68

Nonperforming assets to total assets

1.33

1.56

1.53

Delinquent Loans

December 31,

September 30,

December 31,

2025

2024

Delinquent loans:

Loans receivable

$ 206,561

$ 324,580

$ 292,263

Loans held for sale

265

11,665

32,343

Total delinquent loans

$ 206,826

$ 336,245

$ 324,606

Total loans receivable and loans held for sale

$ 14,907,694

$ 14,737,880

$ 14,209,898

Delinquent loans to total loans

1.39

2.28

Supplemental Results

(Unaudited)

($ in thousands)

Deposits

December 31,

September 30,

December 31,

2025

2024

Noninterest-bearing deposits

Core demand deposits

$ 604,081

$ 399,814

$ 239,005

Interest-bearing deposits

Demand deposits:

Core demand deposits

$ 6,207,814

$ 7,681,422

$ 4,319,512

Brokered demand deposits

600,000

—

Total interest-bearing demand deposits

6,807,814

7,681,422

4,319,512

Money market/savings deposits:

Core money market/savings deposits

3,566,523

3,788,707

3,442,111

Brokered money market/savings deposits

201,010

660

859

Total money market/savings deposits

3,767,533

3,789,367

3,442,970

Certificates of deposit:

Core certificates of deposits

905,448

920,689

1,385,270

Brokered certificates of deposits

956,316

1,143,413

2,533,219

Total certificates of deposits

1,861,764

2,064,102

3,918,489

Total interest-bearing deposits

12,437,111

13,534,891

11,680,971

Total deposits

$ 13,041,192

$ 13,934,705

$ 11,919,976

Total core deposits

$ 11,283,866

$ 12,790,632

$ 9,385,898

Total brokered deposits

$ 1,757,326

$ 1,144,073

$ 2,534,078

Total deposits

$ 13,041,192

$ 13,934,705

$ 11,919,976

SOURCE Merchants Bancorp