Open the filing on EDGARMerchants Bancorp Reports First Quarter 2026 Results
- First quarter 2026 net income of $67.7 million, increased $9.5 million, or 16%, compared to first quarter of 2025 and was relatively stable compared to the fourth quarter 2025.
- First quarter 2026 diluted earnings per common share of $1.25 increased 34% compared to the first quarter of 2025 and decreased 2% compared to the fourth quarter of 2025.
- Total assets of $20.3 billion reflected the highest level ever reported by the Company, increasing 8% compared to March 31, 2025 and 4% compared to December 31, 2025.
- Tangible book value per common share reached a new record level of $38.55, increasing 10% from $34.90 at March 31, 2025, and 3% from $37.51 at December 31, 2025.
- Asset quality continued to stabilize, as criticized loans receivable of $505.5 million decreased by 31% from March 31, 2025, and 1% from December 31, 2025.
- Capital ratios have remained elevated, with a total capital ratio of 12.8%, reflecting the Company’s continued emphasis on financial strength and balance sheet resilience.
- Liquidity remained strong, with $11.1 billion, or 55% of total assets, comprising of unused borrowing capacity of $3.9 billion through the Federal Home Loan Bank and the Federal Reserve Discount Window, as well as 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.
- Loans receivable, net of allowance for credit losses, totaled $11.4 billion, increasing $1.1 billion, or 10%, from March 31, 2025, and $448.5 million, or 4%, from December 31, 2025.
- Total deposits of $13.0 billion increased 4% from March 31, 2025 and remained relatively flat compared to December 31, 2025. Core deposits of $12.1 billion increased $781.4 million, or 7% during the quarter, while brokered deposits declined $870.8 million, or 50%, to $886.5 million. Core deposits now represent 93% of total deposits.
- The Company repurchased 73,164 shares of common stock for $3.0 million, pursuant to its previously authorized share repurchase program.
- During the quarter, the Company’s Memorandum of Understanding from mid-2025 with the FDIC and IDFI was terminated, following progress made by management in addressing the MOU provisions.
CARMEL, Indiana - (PR Newswire) - Merchants Bancorp (the “Company” or “Merchants”) (Nasdaq: MBIN), parent company of Merchants Bank, today reported first quarter 2026 net income of $67.7 million, or diluted earnings per common share of $1.25. This compared to $58.2 million, or diluted earnings per common share of $0.93 in the first quarter of 2025, and compared to $67.8 million, or diluted earnings per common share of $1.28 in the fourth quarter of 2025.
“Achieving record-high assets of $20.3 billion and a record tangible book value of $38.55 per share in the same quarter underscores the strength of our balance sheet and the momentum we are building. Just as important, asset quality continues to stabilize, positioning us exceptionally well as we move forward with confidence," said Michael F. Petrie, Chairman and CEO of Merchants.
Michael J. Dunlap, President and Chief Operating Officer of Merchants, added, "Our results during the quarter reflected the dedication and resilience of our team. Our people remain accountable, collaborative, and disciplined in their work, reinforcing the culture that defines our organization while supporting the continued execution of our strategic plan."
Net income for the first quarter of 2026 was $67.7 million, representing an increase of $9.5 million, or 16%, compared to the first quarter of 2025. The improvement was primarily attributable to a $22.9 million, or 97%, increase in noninterest income driven principally by higher positive fair value adjustments to mortgage servicing rights and certain derivatives. Net income also benefited from a $6.5 million, or 5%, increase in net interest income. These increases were partially offset by a $14.0 million, or 23%, increase in noninterest expense and a $7.6 million increase in the provision for credit losses.
Net income of $67.7 million for the first quarter of 2026 remained relatively consistent with the fourth quarter of 2025. Results reflected a $12.5 million, or 45%, decrease in the provision for credit losses and an $8.0 million, or 10%, decrease in noninterest expense, primarily attributable to lower costs associated with credit risk transfer premiums and salaries and employee benefits. These increases to net income were offset by a $9.4 million, or 7%, decrease in net interest income, and a $10.5 million, or 175%, increase in the provision for income taxes, reflecting lower utilization of tax credits compared to the prior quarter. While noninterest income was relatively flat during the quarter, a $12.2 million decrease in gain on sale of loans was nearly offset by the $10.9 million increase in loan servicing fees that reflected higher fair market value adjustments for mortgage servicing rights.
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Total Assets
Total assets were $20.3 billion at March 31, 2026, increasing $1.5 billion, or 8%, compared to March 31, 2025, and $872.8 million, or 4%, compared to December 31, 2025. The increases for both periods were primarily due to higher balances in the multi-family and warehouse portfolios, including those held for sale and held for investment. These were partially offset by lower balances in the healthcare loan portfolio.
Asset Quality
The allowance for credit losses on loans of $76.8 million, as of March 31, 2026, decreased by $6.6 million, or 8%, compared to March 31, 2025, and $6.5 million, or 8%, compared to December 31, 2025. The decreases for both periods were primarily attributable to charge-offs on loans with specific reserves.
During the first quarter of 2026, the Company recorded charge-offs across seven relationships, primarily in the healthcare and multi-family loan portfolios, totaling $23.0 million, and had $616,000 in recoveries. Nearly 75% of the charge-offs in the first quarter of 2026 were associated with two loan relationships. This compares to $10.5 million in charge-offs and $28,000 in recoveries during the first quarter of 2025 and $38.0 million in charge-offs and $76,000 in recoveries in the fourth quarter of 2025.
The increases to provision for credit losses for the last several 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 $505.5 million declined by $226.0 million, or 31%, compared to March 31, 2025, and declined by $2.7 million, or 1% compared to December 31, 2025. This decline reinforces the view that the frequency of migration to criticized status would stabilize and eventually subside, driven by favorable market conditions and the Company’s efforts with proactive portfolio management. As of March 31, 2026, 6% of the criticized loans were covered by credit default swaps.
As of March 31, 2026, all substandard loans have been evaluated for impairment, and these loans have specific reserves of $11.7 million. The Company believes that the remaining loan portfolio remains well collateralized. Non-performing loans increased $50.0 million, or 25%, during the quarter, primarily attributable to four relationships in the multi-family portfolio. As of March 31, 2026, non-performing loans were $247.5 million, or 2.16% of loans receivable, compared to $284.6 million, or 2.73%, as of March 31, 2025, and $197.8 million, or 1.79%, as of December 31, 2025.
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Total delinquent loans declined 28%, from $334.7 million as of March 31, 2025, to $242.5 million as of March 31, 2026 and increased 17% from December 31, 2025. As of March 31, 2026, 11% of the delinquent loans were covered by credit default swaps.
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 March 31, 2026, the credit- linked note was repaid in full and the remaining balance of loans protected by credit default swaps was $2.5 billion.
Total Deposits
Total deposits of $13.0 billion at March 31, 2026 increased by $545.6 million, or 4%, compared to March 31, 2025, and remained relatively unchanged compared to December 31, 2025. The increase compared to March 31, 2025 primarily reflects the growth in core deposits.
Core deposits of $12.1 billion at March 31, 2026 reflected increases of $1.4 billion, or 13%, from March 31, 2025 and $781.4 million, or 7%, from December 31, 2025. Core deposits represented 93% of total deposits at March 31, 2026, 86% of total deposits at March 31, 2025, and 87% of total deposits at December 31, 2025.
Brokered deposits of $886.5 million at March 31, 2026 decreased $831.9 million, or 48%, from March 31, 2025 and $870.8 million, or 50%, from December 31, 2025. As of March 31, 2026, brokered certificates of deposit had a weighted average remaining duration of 88 days.
Liquidity
The Company maintains exceptional liquidity, supported by substantial borrowing capacity, including unused lines of credit totaling $3.9 billion as of March 31, 2026, compared to $4.7 billion at March 31, 2025 and $5.3 billion at December 31, 2025.
The Company’s most liquid assets are in 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 $3.9 billion, these totaled $11.1 billion, or 55%, of its $20.3 billion total assets as of March 31, 2026.
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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
March 31, 2026 and 2025
Net Interest Income of $128.6 million increased $6.5 million, or 5%, reflecting lower interest expense on certificates of deposits and borrowings, partially offset by higher interest expense on interest-bearing checking accounts and lower interest income on loans and loans held for sale.
- Net interest margin of 2.92% increased three basis points compared to 2.89%.
- Interest rate spread of 2.50% increased 12 basis points compared to 2.38%.
Interest Income of $270.5 million decreased $16.7 million, or 6%, compared to $287.2 million. The decrease was primarily attributable to lower average yields on higher average balances on loans and loans held for sale, as well as lower average yields on lower average balances on securities held to maturity.
- Average yields on loans and loans held for sale of 6.34% decreased 72 basis points compared to 7.06%.
- Average balances of $14.7 billion for loans and loans held for sale increased by $990.1 million, or 7%, compared to $13.8 billion.
- Average yields on securities held to maturity of 5.29% decreased 72 basis points compared to 6.01%.
- Average balances of $1.5 billion for securities held to maturity decreased by $150.5 million, or 9%, compared to $1.6 billion.
Interest Expense of $141.9 million decreased $23.1 million, or 14%, compared to $165.0 million. The decrease reflected lower average balances at lower average rates on certificates of deposit, and lower average rates on borrowings, which were partially offset by higher average balances at lower average rates on interest-bearing checking accounts.
- Average balances of $1.6 billion for certificates of deposit decreased by $1.8 billion, or 54%, compared to $3.4 billion.
- Average interest rates of 3.92% for certificates of deposit decreased by 75 basis points compared to 4.67%.
- Average interest rates of 4.14% for borrowings decreased by 119 basis points compared to 5.33%.
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- Average balances on interest-bearing checking accounts of $7.2 billion increased by $2.1 billion, or 41%, compared to $5.1 billion.
- Average interest rates of 3.42% for interest-bearing checking accounts decreased by 59 basis points compared to 4.01%.
Noninterest Income of $46.6 million increased $22.9 million, or 97%, compared to $23.7 million. The $22.9 million increase reflected an $11.1 million, or 277%, increase in loan servicing fees, a $10.1 million, or 319% increase in other noninterest income, and a $1.9 million, or 16%, increase in gain on sale of loans.
- Loan servicing fees included an $8.9 million positive fair market value adjustment to servicing rights, with a $1.6 million positive adjustment in the Banking segment and a $7.4 positive adjustment in the Multi-family Mortgage Banking segment. This is compared to a $754,000 negative fair market value adjustment to servicing rights in the prior period with a $1.2 million negative adjustment in the Banking segment and a $449,000 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 income included a $2.7 million positive fair market value adjustment to floor derivatives, reflected in the Warehouse segment, compared to a $2.3 million negative fair market value adjustment in the prior period.
Noninterest Expense of $75.6 million increased $14.0 million, or 23%, primarily due to a $7.5 million increase in other noninterest expense that included $3.1 million in collateral preservation expenses associated with taxes, insurance, property expenses, and legal fees related to nonperforming assets. The increase also reflects a $2.1 million, or 6%, increase in salaries and employee benefits to support business growth, a $1.9 million increase in credit risk transfer premium expense associated with credit default swaps, as well as $1.2 million, or 16%, increase in deposit insurance expense primarily associated with asset quality.
Comparison of Operating Results for the Three Months Ended
March 31, 2026 and December 31, 2025
Net Interest Income of $128.6 million decreased $9.4 million, or 7%, reflecting lower interest income on loans and loans held for sale, partially offset by lower interest expense on deposits and borrowing.
- Net interest margin of 2.92% increased three basis points compared to 2.89%.
- Interest rate spread of 2.50% increased six basis points compared to 2.44%.
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Interest Income of $270.5 million decreased $37.0 million, or 12%, compared to $307.5 million, primarily reflecting lower average yields on lower average balances on loans and loans held for sale.
- Average yields on loans and loans held for sale of 6.34% decreased 32 basis points compared to 6.66%.
- Average balances of $14.7 billion for loans and loans held for sale decreased 4% compared to $15.4 billion.
Interest Expense of $141.9 million decreased $27.5 million, or 16% compared to $169.4 million. The decrease was primarily driven by lower average rates on lower average balances on interest-bearing checking accounts and borrowings.
- Average interest rates on interest-bearing checking accounts of 3.42% decreased by 31 basis points compared to 3.73%.
- Average balances of $7.2 billion for interest-bearing checking accounts decreased $426.1 million, or 6%, compared to $7.6 billion.
- Average interest rates on borrowings of 4.14% decreased by 74 basis points compared to 4.88%.
- Average balances of $3.1 billion for borrowings decreased $368.5 million, or 11%, compared to $3.5 billion.
Noninterest Income of $46.6 million declined slightly compared to $47.2 million. Results reflected a $12.2 million, or 48%, decrease in gain on sale of loans and a $2.6 million, or 45%, decrease in syndication and asset management fees. This was partially offset by a $10.9 million, or 257%, increase in loan servicing fees and a $3.5 million, or 36%, increase in other income.
- Gain on sale of loans decreased $12.2 million, or 48%, primarily due to higher 10-year interest rates, which delayed borrower decisions to transition to permanent fixed-rate loans. This impact was partially offset by the increase in the fair value adjustments of mortgage servicing rights and floor derivatives as detailed below.
- Loan servicing fees included an $8.9 million positive fair market value adjustment to servicing rights, 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. This compared to a $179,000 negative fair market value adjustment to servicing rights in the prior period, with a $275,000 negative adjustment in the Banking segment and a $96,000 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.
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- Other income included a $2.7 million positive fair market value adjustment to floor derivatives, reflected in the Warehouse segment, compared to a $4.2 million positive fair market value adjustment to derivatives in the prior period. The prior quarter also reflected an impairment of $4.1 million for an investment in a joint venture that was not repeated in the first quarter 2026.
Noninterest Expense of $75.6 million decreased $8.0 million, or 10%, compared to $83.6 million, primarily due to a $3.8 million, or 9%, decrease in salaries and employee benefits that reflected lower commissions on lower noninterest income, a $2.4 million, or 30%, decrease in credit risk transfer premium expense associated with credit default swaps, and a $1.4 million, or 10%, decrease in other expenses.
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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 $20.3 billion in assets and $13.0 billion in deposits as of March 31, 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
Forward-looking statements notice
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.
MEDIA CONTACT: REBECCA MARSH
Phone: (317) 805-4356
Email: rmarsh@bankmerchants.com
INVESTOR CONTACT: TAMI DURLE
Phone: (317) 324-4556
Email: tdurle@bankmerchants.com
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Consolidated Balance Sheets
(In thousands, except share data)
| March 31, | December 31, | September 30, | June 30, | March 31, |
|---|
| 2026 | 2025 | 2025 | 2025 | 2025 |
|---|
| Assets | | | | | |
| Cash and due from banks | $19,642 | $15,844 | $11,566 | $15,419 | $15,609 |
| Interest-earning demand accounts | 63,573 | 196,358 | 586,470 | 631,746 | 505,687 |
| Cash and cash equivalents | 83,215 | 212,202 | 598,036 | 647,165 | 521,296 |
| Securities purchased under agreements to resell | 1,511 | 1,520 | 1,529 | 1,539 | 1,550 |
| Mortgage loans in process of securitization | 437,001 | 620,094 | 414,786 | 402,427 | 389,797 |
| Securities available for sale (includes $550,207, $571,314, $591,379, $602,962 and $626,271 at fair value) | 843,896 | 865,058 | 885,070 | 936,343 | 961,183 |
| Securities held to maturity (fair value of $1,426,444, $1,543,554, $1,670,306, $1,547,525 and $1,605,151) | 1,425,982 | 1,543,659 | 1,670,555 | 1,548,211 | 1,606,286 |
| Federal Home Loan Bank (FHLB) stock and other equity securities | 227,589 | 227,589 | 217,850 | 217,850 | 217,850 |
| Loans held for sale (includes $163,426, $76,980, $112,832, $91,930 and $75,920 at fair value) | 4,709,688 | 3,873,012 | 4,129,329 | 4,105,765 | 3,983,452 |
| Loans receivable (includes $46,427, $47,318, $0, $0 and $0 at fair value), net of allowance for credit losses on loans of $76,831, $83,301, $93,330, $91,811 and $83,413 | 11,399,882 | 10,951,381 | 10,515,221 | 10,432,117 | 10,343,724 |
| Premises and equipment, net | 73,695 | 73,929 | 75,148 | 71,050 | 67,787 |
| Servicing rights | 229,576 | 217,296 | 213,156 | 193,037 | 189,711 |
| Interest receivable | 77,326 | 81,807 | 82,445 | 82,391 | 82,811 |
| Goodwill | 8,014 | 8,014 | 8,014 | 8,014 | 8,014 |
| Other real estate owned | 60,226 | 60,145 | 4,347 | 7,049 | 7,049 |
| Other assets and receivables | 744,181 | 713,237 | 539,161 | 488,246 | 417,290 |
| Total assets | $20,321,782 | $19,448,943 | $19,354,647 | $19,141,204 | $18,797,800 |
| Liabilities and Shareholders' Equity | | | | | |
| Liabilities | | | | | |
| Deposits | | | | | |
| Noninterest-bearing | $501,864 | $604,081 | $399,814 | $315,523 | $313,296 |
| Interest-bearing | 12,449,889 | 12,437,111 | 13,534,891 | 12,371,312 | 12,092,869 |
| Total deposits | 12,951,753 | 13,041,192 | 13,934,705 | 12,686,835 | 12,406,165 |
| Borrowings | 4,773,490 | 3,842,592 | 2,902,631 | 4,009,474 | 4,001,744 |
| Deferred and current tax liabilities, net | 46,403 | 33,900 | 28,973 | 29,228 | 35,740 |
| Other liabilities | 219,833 | 250,500 | 262,904 | 231,035 | 193,416 |
| Total liabilities | 17,991,479 | 17,168,184 | 17,129,213 | 16,956,572 | 16,637,065 |
| Commitments and Contingencies | | | | | |
| Shareholders' Equity | | | | | |
| Common stock, without par value | | | | | |
| Authorized - 75,000,000 shares | | | | | |
| Issued and outstanding - 45,935,408 shares, 45,893,172 shares, 45,889,238 shares, 45,885,458 shares and 45,881,706 shares | 243,433 | 243,310 | 242,371 | 241,452 | 240,512 |
| 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 | 1,536,383 | 1,486,191 | 1,431,983 | 1,392,136 | 1,369,009 |
| Accumulated other comprehensive loss | (804) | (33) | (211) | (247) | (77) |
| Total shareholders' equity | 2,330,303 | 2,280,759 | 2,225,434 | 2,184,632 | 2,160,735 |
| Total liabilities and shareholders' equity | $20,321,782 | $19,448,943 | $19,354,647 | $19,141,204 | $18,797,800 |
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Consolidated Statement of Income
(In thousands, except share data)
| Three Months Ended | Change |
|---|
| March 31, | December 31, | March 31, | 1Q26 | 1Q26 |
|---|
| 2026 | 2025 | 2025 | vs. 4Q25 | vs. 1Q25 |
|---|
| Interest Income | | | | | |
| Loans | $230,269 | $258,090 | $239,280 | -11% | -4% |
| Mortgage loans in process of securitization | 4,387 | 6,719 | 3,743 | -35% | 17% |
| Investment securities: | | | | | |
| Available for sale | 9,942 | 11,178 | 12,358 | -11% | -20% |
| Held to maturity | 19,479 | 23,182 | 24,358 | -16% | -20% |
| FHLB stock and other equity securities (dividends) | 4,394 | 4,723 | 4,372 | -7% | 1% |
| Other | 2,040 | 3,577 | 3,093 | -43% | -34% |
| Total interest income | 270,511 | 307,469 | 287,204 | -12% | -6% |
| Interest Expense | | | | | |
| Deposits | 109,849 | 126,288 | 123,941 | -13% | -11% |
| Short-term borrowings | 28,937 | 34,283 | 33,364 | -16% | -13% |
| Long-term borrowings | 3,077 | 8,812 | 7,703 | -65% | -60% |
| Total interest expense | 141,863 | 169,383 | 165,008 | -16% | -14% |
| Net Interest Income | 128,648 | 138,086 | 122,196 | -7% | 5% |
| Provision for credit losses | 15,299 | 27,761 | 7,727 | -45% | 98% |
| Net Interest Income After Provision for Credit Losses | 113,349 | 110,325 | 114,469 | 3% | -1% |
| Noninterest Income | | | | | |
| Gain on sale of loans | 13,506 | 25,730 | 11,619 | -48% | 16% |
| Loan servicing fees, net | 15,099 | 4,235 | 4,010 | 257% | 277% |
| Mortgage warehouse fees | 1,620 | 1,801 | 1,513 | -10% | 7% |
| Syndication and asset management fees | 3,117 | 5,680 | 3,389 | -45% | -8% |
| Other income | 13,257 | 9,755 | 3,162 | 36% | 319% |
| Total noninterest income | 46,599 | 47,201 | 23,693 | -1% | 97% |
| Noninterest Expense | | | | | |
| Salaries and employee benefits | 38,565 | 42,375 | 36,419 | -9% | 6% |
| Loan expense | 1,185 | 1,004 | 798 | 18% | 48% |
| Occupancy and equipment | 3,081 | 3,382 | 2,351 | -9% | 31% |
| Professional fees | 2,767 | 3,436 | 2,894 | -19% | -4% |
| Deposit insurance expense | 8,408 | 8,040 | 7,228 | 5% | 16% |
| Technology expense | 2,679 | 2,611 | 2,374 | 3% | 13% |
| Credit risk transfer premium expense | 5,764 | 8,198 | 3,862 | -30% | 49% |
| Other expense | 13,193 | 14,596 | 5,738 | -10% | 130% |
| Total noninterest expense | 75,642 | 83,642 | 61,664 | -10% | 23% |
| Income Before Income Taxes | 84,306 | 73,884 | 76,498 | 14% | 10% |
| Provision for income taxes | 16,574 | 6,035 | 18,259 | 175% | -9% |
| Net Income | $67,732 | $67,849 | $58,239 | - | 16% |
| Dividends on preferred stock | (10,265) | (10,266) | (10,265) | - | - |
| Impact of preferred stock redemption | - | 1,215 | (5,371) | -100% | -100% |
| Net Income Available to Common Shareholders | $57,467 | $58,798 | $42,603 | -2% | 35% |
| Basic Earnings Per Share | $1.25 | $1.28 | $0.93 | -2% | 34% |
| Diluted Earnings Per Share | $1.25 | $1.28 | $0.93 | -2% | 34% |
| Weighted-Average Shares Outstanding | | | | | |
| Basic | 45,929,936 | 45,891,077 | 45,824,022 | | |
| Diluted | 45,997,744 | 45,976,153 | 45,914,083 | | |
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Key Operating Results
($ in thousands, except share data)
| Three Months Ended | Change |
|---|
| March 31, | December 31, | March 31, | 1Q26 | | 1Q26 |
|---|
| 2026 | 2025 | 2025 | vs. 4Q25 | | vs. 1Q25 |
|---|
| Noninterest expense | $75,642 | $83,642 | $61,664 | -10% | | 23% |
| Net interest income (before provision for credit losses) | 128,648 | 138,086 | 122,196 | -7% | | 5% |
| Noninterest income | 46,599 | 47,201 | 23,693 | -1% | | 97% |
| Total income | $175,247 | $185,287 | $145,889 | -5% | | 20% |
| Efficiency ratio | 43.16% | 45.14% | 42.27% | (198 | )bps | 89bps |
| Average assets | $18,952,948 | $19,815,940 | $17,831,950 | -4% | | 6% |
| Net income | 67,732 | 67,849 | 58,239 | - | | 16% |
| Return on average assets before annualizing | 0.36% | 0.34% | 0.33% | | | |
| Annualization factor | 4.00 | 4.00 | 4.00 | | | |
| Return on average assets | 1.43% | 1.37% | 1.31% | 6bps | | 12bps |
| Return on average tangible common shareholders' equity | 13.01% | 13.76% | 10.65% | (75 | )bps | 236bps |
| Tangible book value per common share | $38.55 | $37.51 | $34.90 | 3% | | 10% |
| Tangible common shareholders' equity/tangible assets | 8.72% | 8.85% | 8.52% | (13 | )bps | 20bps |
| Consolidated ratios | | | | | | |
| Total capital/risk-weighted assets | 12.8% | 13.6% | 13.0% | | | |
| Tier I capital/risk-weighted assets | 12.3% | 13.1% | 12.4% | | | |
| Common Equity Tier I capital/risk-weighted assets | 9.4% | 9.9% | 9.2% | | | |
| Tier I capital/average assets | 12.3% | 11.5% | 12.1% | | | |
Non-GAAP financial measure - see "Reconciliation of Non-GAAP Measures" below:
As defined by regulatory agencies; March 31, 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 |
|---|
| March 31, | December 31, | March 31, | 1Q26 | | 1Q26 |
|---|
| 2026 | 2025 | 2025 | vs. 4Q25 | | vs. 1Q25 |
|---|
| Average shareholders' equity | $2,326,390 | $2,268,832 | $2,160,169 | 3% | | 8% |
| Less: average goodwill & intangibles | (8,048) | (8,054) | (8,070) | - | | - |
| Less: average preferred stock | (551,291) | (551,291) | (552,633) | - | | - |
| Average tangible common shareholders' equity | $1,767,051 | $1,709,487 | $1,599,466 | 3% | | 10% |
| Annualization factor | 4.00 | 4.00 | 4.00 | | | |
| Return on average tangible common shareholders' equity | 13.01% | 13.76% | 10.65% | (75 | )bps | 236bps |
| Total equity | $2,330,303 | $2,280,759 | $2,160,735 | 2% | | 8% |
| Less: goodwill and intangibles | (8,045) | (8,051) | (8,068) | - | | - |
| Less: preferred stock | (551,291) | (551,291) | (551,291) | - | | - |
| Tangible common shareholders' equity | $1,770,967 | $1,721,417 | $1,601,376 | 3% | | 11% |
| Assets | $20,321,782 | $19,448,943 | $18,797,800 | 4% | | 8% |
| Less: goodwill and intangibles | (8,045) | (8,051) | (8,068) | - | | - |
| Tangible assets | $20,313,737 | $19,440,892 | $18,789,732 | 4% | | 8% |
| Ending common shares | 45,935,408 | 45,893,172 | 45,881,706 | | | |
| Tangible book value per common share | $38.55 | $37.51 | $34.90 | 3% | | 10% |
| Tangible common shareholders' equity/tangible assets | 8.72% | 8.85% | 8.52% | (13 | )bps | 20bps |
Page | 12
Merchants Bancorp
Average Balance Analysis
($ in thousands)
(Unaudited)
| Three Months Ended |
|---|
| March 31, 2026 | December 31, 2025 | March 31, 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 | $433,306 | $6,434 | 6.02% | $556,453 | $8,300 | 5.92% | $511,077 | $7,465 | 5.92% |
| Securities available for sale | 856,846 | 9,942 | 4.71% | 870,949 | 11,178 | 5.09% | 961,065 | 12,358 | 5.21% |
| Securities held to maturity | 1,493,185 | 19,479 | 5.29% | 1,627,341 | 23,182 | 5.65% | 1,643,703 | 24,358 | 6.01% |
| Mortgage loans in process of securitization | 338,052 | 4,387 | 5.26% | 506,704 | 6,719 | 5.26% | 277,426 | 3,743 | 5.47% |
| Loans and loans held for sale | 14,741,304 | 230,269 | 6.34% | 15,368,719 | 258,090 | 6.66% | 13,751,197 | 239,280 | 7.06% |
| Total interest-earning assets | 17,862,693 | 270,511 | 6.14% | 18,930,166 | 307,469 | 6.44% | 17,144,468 | 287,204 | 6.79% |
| Allowance for credit losses on loans | (85,226) | | | (99,349) | | | (86,711) | | |
| Noninterest-earning assets | 1,175,481 | | | 985,123 | | | 774,193 | | |
| Total assets | $18,952,948 | | | $19,815,940 | | | $17,831,950 | | |
| Liabilities & Shareholders' Equity: | | | | | | | | | |
| Interest-bearing checking | $7,199,340 | 60,763 | 3.42% | $7,625,489 | 71,599 | 3.73% | $5,121,343 | 50,609 | 4.01% |
| Money market /savings deposits | 3,925,326 | 34,000 | 3.51% | 3,870,411 | 35,743 | 3.66% | 3,544,828 | 34,521 | 3.95% |
| Certificates of deposit | 1,562,186 | 15,086 | 3.92% | 1,818,058 | 18,946 | 4.13% | 3,369,269 | 38,811 | 4.67% |
| Total interest-bearing deposits | 12,686,852 | 109,849 | 3.51% | 13,313,958 | 126,288 | 3.76% | 12,035,440 | 123,941 | 4.18% |
| Borrowings | 3,137,379 | 32,014 | 4.14% | 3,505,903 | 43,095 | 4.88% | 3,125,935 | 41,067 | 5.33% |
| Total interest-bearing liabilities | 15,824,231 | 141,863 | 3.64% | 16,819,861 | 169,383 | 4.00% | 15,161,375 | 165,008 | 4.41% |
| Noninterest-bearing deposits | 560,176 | | | 492,650 | | | 294,248 | | |
| Noninterest-bearing liabilities | 242,151 | | | 234,597 | | | 216,158 | | |
| Total liabilities | 16,626,558 | | | 17,547,108 | | | 15,671,781 | | |
| Shareholders' equity | 2,326,390 | | | 2,268,832 | | | 2,160,169 | | |
| Total liabilities and shareholders' equity | $18,952,948 | | | $19,815,940 | | | $17,831,950 | | |
| Net interest income | | $128,648 | | | $138,086 | | | $122,196 | |
| Net interest spread | | | 2.50% | | | 2.44% | | | 2.38% |
| Net interest-earning assets | $2,038,462 | | | $2,110,305 | | | $1,983,093 | | |
| Net interest margin | | | 2.92% | | | 2.89% | | | 2.89% |
| Average interest-earning assets to average interest-bearing liabilities | | | 112.88% | | | 112.55% | | | 113.08% |
Page | 13
Supplemental Results
| Net Income |
|---|
| Three Months Ended |
|---|
| March 31, | December 31, | March 31, |
|---|
| 2026 | 2025 | 2025 |
|---|
| Segment | | | |
| Multi-family Mortgage Banking | $11,014 | $15,397 | $3,413 |
| Mortgage Warehousing | 28,648 | 34,996 | 15,398 |
| Banking | 37,980 | 30,773 | 47,107 |
| Other | (9,910) | (13,317) | (7,679) |
| Total | $67,732 | $67,849 | $58,239 |
| Total Assets |
|---|
| March 31, 2026 | December 31, 2025 | March 31, 2025 |
|---|
| Amount | % | Amount | % | Amount | % |
|---|
| Segment | | | | | | |
| Multi-family Mortgage Banking | $522,976 | 3% | $526,423 | 3% | $460,441 | 3% |
| Mortgage Warehousing | 8,544,107 | 42% | 7,251,653 | 37% | 5,902,165 | 31% |
| Banking | 10,850,657 | 53% | 11,307,401 | 58% | 12,002,564 | 64% |
| Other | 404,042 | 2% | 363,466 | 2% | 432,630 | 2% |
| Total | $20,321,782 | 100% | $19,448,943 | 100% | $18,797,800 | 100% |
| Gain on Sale of Loans |
|---|
| Three Months Ended |
|---|
| March 31, | December 31, | March 31, |
|---|
| 2026 | 2025 | 2025 |
|---|
| Loan Type | | | |
| Multi-family | $11,422 | $24,823 | $10,125 |
| Single-family | 388 | (328) | 206 |
| Small Business Association (SBA) | 1,696 | 1,235 | 1,288 |
| Total | $13,506 | $25,730 | $11,619 |
| Servicing Rights |
|---|
| Three Months Ended |
|---|
| March 31, | December 31, | March 31, |
|---|
| 2026 | 2025 | 2025 |
|---|
| Balance, beginning of period | $217,296 | $213,156 | $189,935 |
| Additions | | | |
| Purchased servicing | 125 | 1,554 | - |
| Originated servicing | 5,749 | 7,484 | 3,338 |
| Subtractions | | | |
| Paydowns | (2,532) | (4,719) | (2,808) |
| Changes in fair value | 8,938 | (179) | (754) |
| Balance, end of period | $229,576 | $217,296 | $189,711 |
Page | 14
Supplemental Results
| Loans Receivable and Loans Held for Sale |
|---|
| March 31, | December 31, | March 31, |
|---|
| 2026 | 2025 | 2025 |
|---|
| Mortgage warehouse repurchase agreements | $1,982,411 | $1,600,285 | $1,408,239 |
| Residential real estate | 1,038,724 | 1,018,780 | 1,332,601 |
| Multi-family financing | 5,537,711 | 5,332,680 | 4,600,117 |
| Healthcare financing | 1,260,821 | 1,385,359 | 1,583,290 |
| Commercial and commercial real estate (2)(3)(4) | 1,560,788 | 1,603,551 | 1,418,741 |
| Agricultural production and real estate | 92,527 | 92,077 | 79,190 |
| Consumer and margin loans | 3,731 | 1,950 | 4,959 |
| Loans receivable | 11,476,713 | 11,034,682 | 10,427,137 |
| Less: Allowance for credit losses on loans | 76,831 | 83,301 | 83,413 |
| Loans receivable, net | $11,399,882 | $10,951,381 | $10,343,724 |
| Loans held for sale | 4,709,688 | 3,873,012 | 3,983,452 |
| Total loans, net of allowance | $16,109,570 | $14,824,393 | $14,327,176 |
Includes $0.8 billion, $0.8 billion and $1.2 billion of All-In-One © first-lien home equity lines of credit as of March 31, 2026, December 31, 2025 and March 31, 2025, respectively.
Includes $0.9 billion, $0.9 billion and $0.8 billion of revolving lines of credit collateralized primarily by mortgage servicing rights as of March 31, 2026, December 31, 2025 and March 31, 2025, respectively.
Includes only $19.7 million, $19.5 million and $19.5 million of non-owner occupied commercial real estate as of March 31, 2026, December 31, 2025 and March 31, 2025, respectively.
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 |
|---|
| March 31, 2026 | December 31, 2025 | March 31, 2025 |
|---|
| Amount | % | Amount | % | Amount | % |
|---|
| Pass | $10,971,183 | 95.6% | $10,526,493 | 95.4% | $9,695,595 | 93.0% |
| Special mention | 234,346 | 2.0% | 204,918 | 1.9% | 407,895 | 3.9% |
| Substandard | 271,184 | 2.4% | 303,271 | 2.7% | 323,647 | 3.1% |
| Criticized loans | 505,530 | 4.4% | 508,189 | 4.6% | 731,542 | 7.0% |
| Total loans receivable | $11,476,713 | 100.0% | $11,034,682 | 100.0% | $10,427,137 | 100.0% |
| Charge-offs (year-to-date) | $22,979 | | $124,116 | | $10,507 | |
| Recoveries (year-to-date) | $616 | | $127 | | $28 | |
| Nonperforming Loans |
|---|
| March 31, | December 31, | March 31, |
|---|
| 2026 | 2025 | 2025 |
|---|
| Nonaccrual loans | $239,108 | $197,812 | $284,019 |
| 90 days past due and still accruing | 8,350 | - | 585 |
| Total nonperforming loans | $247,458 | $197,812 | $284,604 |
| Other real estate owned | 60,226 | 60,145 | 7,049 |
| Total nonperforming assets | $307,684 | $257,957 | $291,653 |
| Nonperforming loans to total loans receivable | 2.16% | 1.79% | 2.73% |
| Nonperforming assets to total assets | 1.51% | 1.33% | 1.55% |
| Delinquent Loans |
|---|
| March 31, | December 31, | March 31, |
|---|
| 2026 | 2025 | 2025 |
|---|
| Delinquent loans: | | | |
| Loans receivable | $242,271 | $206,561 | $304,560 |
| Loans held for sale | 264 | 265 | 30,103 |
| Total delinquent loans | $242,535 | $206,826 | $334,663 |
| Total loans receivable and loans held for sale | $16,186,401 | $14,907,694 | $14,410,589 |
| Delinquent loans to total loans | 1.50% | 1.39% | 2.32% |
Page | 15
Supplemental Results
| Deposits |
|---|
| March 31, | December 31, | March 31, |
|---|
| 2026 | 2025 | 2025 |
|---|
| Noninterest-bearing deposits | | | |
| Core demand deposits | $501,864 | $604,081 | $313,296 |
| Interest-bearing deposits | | | |
| Demand deposits: | | | |
| Core demand deposits | $6,949,611 | $6,207,814 | $5,432,133 |
| Brokered demand deposits | 301,111 | 600,000 | - |
| Total interest-bearing demand deposits | 7,250,722 | 6,807,814 | 5,432,133 |
| Money market/savings deposits: | | | |
| Core money market/savings deposits | 3,872,344 | 3,566,523 | 3,618,210 |
| Brokered money market/savings deposits | 200,867 | 201,010 | 353 |
| Total money market/savings deposits | 4,073,211 | 3,767,533 | 3,618,563 |
| Certificates of deposit: | | | |
| Core certificates of deposits | 741,452 | 905,448 | 1,324,126 |
| Brokered certificates of deposits | 384,504 | 956,316 | 1,718,047 |
| Total certificates of deposits | 1,125,956 | 1,861,764 | 3,042,173 |
| Total interest-bearing deposits | 12,449,889 | 12,437,111 | 12,092,869 |
| Total deposits | $12,951,753 | $13,041,192 | $12,406,165 |
| Total core deposits | $12,065,271 | $11,283,866 | $10,687,765 |
| Total brokered deposits | 886,482 | 1,757,326 | 1,718,400 |
| Total deposits | $12,951,753 | $13,041,192 | $12,406,165 |
Page | 16