First quarter 2025 net income of $58.2 million, decreased $28.8 million compared to first quarter of 2024 and decreased $37.4 million compared to the fourth quarter 2024, reflecting market uncertainty that delayed origination closings and permanent loan conversions in a growing pipeline, which negatively impacted the recognition of gain on sale and net interest margin. The decrease in net income was also impacted by unfavorable fair market value adjustments to servicing rights and derivatives compared to prior periods. First quarter 2025 diluted earnings per common share of $0.93 decreased 48% compared to the first quarter of 2024 and decreased 50% compared to the fourth quarter of 2024. Unfavorable fair market value adjustments to servicing rights on loans and interest rate floor derivatives negatively impacted results during the first quarter of 2025 by approximately $0.05 per diluted common share, compared to the $0.29 per share impact of positive fair market value adjustments in the first quarter of 2024 and $0.21 in the fourth quarter of 2024. Tangible book value per common share reached a record-high of $34.90 and increased 19% compared to $29.26 in the first quarter of 2024 and increased 2% compared to $34.15 in the fourth quarter of 2024. As of March 31, 2025, the Company had $4.7 billion in unused borrowing capacity with the Federal Home Loan Bank and the Federal Reserve Discount window, representing 25% of total assets. Total assets of $18.8 billion increased 5% compared to March 31, 2024, and was essentially unchanged compared to December 31, 2024. Loans receivable of $10.3 billion, net of allowance for credit losses on loans, decreased $346.8 million, or 3%, compared to March 31, 2024, and decreased $10.3 million compared to December 31, 2024. Core deposits of $10.7 billion increased $2.5 billion, or 30%, compared to March 31, 2024 and increased $1.3 billion, or 14%, compared to December 31, 2024. Core deposits now represent 86% of total deposits, reaching the highest level the Company has reported since March 2022. Brokered deposits of $1.7 billion decreased $4.0 billion, or 70%, compared to March 31, 2024, and decreased $815.7 million compared to December 31, 2024. The Company redeemed all outstanding shares of the Series B Preferred Stock for approximately $125.0 million on January 2, 2025, at the liquidation preference of $1,000 per share (equivalent to $25 per depositary share).

CARMEL, Ind., April 28, 2025 /PRNewswire/ -- Merchants Bancorp (the "Company" or "Merchants") (Nasdaq: MBIN), parent company of Merchants Bank, today reported first quarter 2025 net income of $58.2 million, or diluted earnings per common share of $0.93. This compared to $87.1 million, or diluted earnings per common share of $1.80 in the first quarter of 2024, and compared to $95.7 million, or diluted earnings per common share of $1.85 in the fourth quarter of 2024.

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(PRNewsfoto/Merchants Bancorp)

"Despite some challenges this quarter, we remain confident in our strategic direction and outlook for future performance. The lower gain on sale of loans and recent deterioration in asset quality are temporary setbacks. Our ongoing efforts to optimize loan workouts and to invest in growth opportunities position us for a stronger and more resilient future.  Our loan pipeline remains strong, and we are well-positioned to execute when the uncertain interest rate environment becomes clearer for our borrowers," said Michael F. Petrie, Chairman and CEO of Merchants.

Michael J. Dunlap, President and Chief Operating Officer of Merchants, added, "Our team has shown remarkable dedication and resilience in navigating new challenges. We are proud of our culture of collaboration and innovation, which drives us to continuously improve and adapt to an ever-changing environment. As we move forward, we are focused on enhancing our operations and investing in our people and processes to ensure long-term success. Together, we are committed to building a stronger foundation for future growth and delivering value to our stakeholders and communities."

Net income of $58.2 million for the first quarter of 2025 decreased by $28.8 million, or 33%, compared to the first quarter of 2024, reflecting market uncertainty that delayed origination closings and permanent loan conversions in a growing pipeline, which negatively impacted the recognition of gain on sale and net interest margin.  The decrease in net income was primarily driven by a $17.2 million, or 42%, decrease in noninterest income, a $12.8 million, or 26%, increase in noninterest expense, a $4.9 million, or 4%, decrease in net interest income, and a $3.0 million, or 63%, increase in provision for credit losses on loans, which was partially offset by a $9.0 million, or 33%, decrease in provision for income tax. Of the $28.8 million decrease in net income, $19.3 million, or $0.34 per diluted common share, was attributable to changes in valuation adjustments. Noninterest income included a $754,000 negative fair market value adjustment to servicing rights and a $2.3 million negative fair market value adjustment to derivatives, which compared to positive fair market value adjustments of $14.0 million to servicing rights and $2.3 million to derivatives, in the first quarter of 2024.

Net income of $58.2 million for the first quarter 2025 decreased by $37.4 million, or 39%, compared to the fourth quarter of 2024, reflecting market uncertainty that delayed origination closings and permanent loan conversions in a growing pipeline, which negatively impacted the recognition of gain on sale and net interest margin.  The decrease in net income was primarily driven by a $35.5 million, or 60%, decrease in noninterest income, a $12.4 million, or 9% decrease in net interest income, and a $5.0 million, or 187%, increase in provision for credit losses on loans, which was partially offset by a $14.0 million, or 43%, decrease in provision for income taxes. Of the $37.4 million decrease in net income, $16.0 million, or $0.26 per diluted common share, was attributable to changes in valuation adjustments.  The decrease in noninterest income reflected lower gain on sale of loans, loan servicing fees, syndication and asset management fees, and other income. Noninterest income included a $754,000 negative fair market value adjustment to servicing rights and a $2.3 million negative fair market value adjustment to derivatives, which compared to positive adjustments of $10.4 million and $2.6 million, respectively, in the fourth quarter of 2024.

Preferred Stock Redemption

The Company redeemed all outstanding shares of the Series B Preferred Stock for approximately $125.0 million on January 2, 2025, at the liquidation preference of $1,000 per share (equivalent to $25 per depositary share). The $4.2 million expenses associated with the original issuance, which were capitalized in 2019, were recognized through retained earnings upon redemption, thus reducing net income available to common shareholders. Similarly, the redemption resulted in an excise tax of $1.2 million that will not be payable until 2025 taxes are due in 2026, and any future issuance of shares until one year after the redemption can offset the amount of excise tax that will be paid.

Total Assets

Total assets of $18.8 billion at March 31, 2025 increased by $975.2 million, or 5%, compared to March 31, 2024, and remained essentially unchanged compared to December 31, 2024. The increase compared to March 31, 2024 was primarily driven by higher balances in the mortgage warehouse portfolios, as well as securities held to maturity.

Return on average assets was 1.31% for the first quarter of 2025 compared to 2.07% for both the first quarter of 2024 and the fourth quarter of 2024.

Asset Quality

The allowance for credit losses on loans of $83.4 million, as of March 31, 2025, increased by $7.7 million, or 10%, compared to March 31, 2024, and decreased by $973,000, or 1%, compared to December 31, 2024.  The $7.7 million increase compared to March 31, 2024 was primarily related to loans in the multi-family portfolio, which were partially offset by charge-offs. The decrease compared to December 31, 2024 was driven by $10.5 million in charge-offs that were partially offset by a $9.5 million increase in provision expense on loans, primarily related to the multi-family portfolio.

The $83.4 million allowance for credit losses on loans as of March 31, 2025, compared to the net charge-offs of $20.2 million over the last twelve months ended March 31, 2025, could absorb four years of losses, assuming recent loss levels continue.

The Company recorded charge-offs for five customers, primarily in the multi-family loan portfolio, totaling $10.5 million, and recorded $28,000 of recoveries during the first quarter 2025. This compares to $925,000 in charge-offs and $1,000 in recoveries during the first quarter of 2024 and to $10.6 million in charge-offs and $136,000 of recoveries in the fourth quarter of 2024.

As of March 31, 2025, non-performing loans were $284.6 million, or 2.73% of loans receivable, compared to $131.8 million, or 1.22%, as of March 31, 2024, and $279.7 million, or 2.68%, as of December 31, 2024.  The increase in non-performing loans compared to March 31, 2024 was primarily driven by multi-family and healthcare customers with delinquent payments on variable rate loans that have required higher payments, as well as the financial deterioration of a few sponsors.  The higher payments are associated with the floating nature of the loan terms, which has resulted in elevated interest rates relative to when the loans were originated. The $4.9 million increase compared to December 31, 2024 was primarily due to one multi-family customer. Delinquency levels on total loans have modestly increased by $10.1 million, to $334.7 million, compared to December 31, 2024.

As of March 31, 2025, all substandard loans have been evaluated for impairment and these loans have specific reserves of $20.9 million. Although there has been an increase in adversely classified loans, underlying asset values remain strong overall and loans are well-collateralized.

The Company has been making additional efforts to reduce its credit risk through loan sale and securitization activities since 2019.  In April of 2023, as well as March and December of 2024, the Company strategically executed credit protection arrangements through a credit linked note and credit default swaps totaling $2.9 billion in loans to reduce risk of losses, with incremental coverage ranging from 13-14% of the unpaid principal balances for each arrangement.  Despite having credit protection on these loans, the Company also continues to carry an allowance for credit losses on loans held for investment. As of March 31, 2025, the balance of loans subject to credit protection arrangements was $2.2 billion.

Securities Available for Sale

Total securities available for sale of $961.2 million as of March 31, 2025 decreased by $100.1 million, or 9%, compared to March 31, 2024, and decreased by $18.9 million, or 2%, compared to December 31, 2024. The decrease compared to March 31, 2024 was primarily due to maturities and repayments, as well as fair value adjustments that were partially offset by purchases.

Securities Held to Maturity

Total securities held to maturity of $1.6 billion as of March 31, 2025 increased by $431.1 million, or 37%, compared to March 31, 2024, and decreased $58.4 million, or 4%, compared to December 31, 2024. The increase compared to March 31, 2024 was primarily due to purchases of senior investment securities backed by residential and healthcare loans retained as part of credit risk transfer securitization transactions originated by the Company. The lower-risk, senior certificates represent nearly 90% of the beneficial interests, while the remaining subordinated certificates are held by third parties, thereby minimizing the risk of loss to the Company.

Total Deposits

Total deposits of $12.4 billion at March 31, 2025 decreased by $1.6 billion, or 11%, compared to March 31, 2024, and increased by $486.2 million, or 4%, compared to December 31, 2024. The decrease compared to March 31, 2024 was driven by reductions in brokered certificates of deposit accounts, in favor of additional cost-effective borrowing. The change compared to December 31, 2024 was primarily due to growth in core deposits.

Core deposits of $10.7 billion at March 31, 2025 increased by $2.5 billion, or 30%, from March 31, 2024 and increased by $1.3 billion, or 14%, from December 31, 2024. Core deposits represented 86% of total deposits at March 31, 2025, 59% of total deposits at March 31, 2024, and 79% of total deposits at December 31, 2024.

Total brokered deposits of $1.7 billion at March 31, 2025 decreased $4.0 billion, or 70%, from March 31, 2024 and decreased $815.7 million, or 32%, from December 31, 2024.   As of March 31, 2025, brokered certificates of deposit had a weighted average remaining duration of 67 days.

Liquidity

Cash balances of $521.3 million as of March 31, 2025 increased by $12.5 million, or 2%, compared to March 31, 2024 and increased by $44.7 million, or 9%, compared to December 31, 2024.  The Company continues to have significant borrowing capacity, with unused lines of credit totaling $4.7 billion as of March 31, 2025 compared to $5.6 billion at March 31, 2024 and $4.3 billion at December 31, 2024.  Furthermore, its $3.3 billion line of credit availability with the Federal Reserve Bank of Chicago alone could fund 107% of its uninsured deposits, which represented approximately 24% of total bank deposits as of March 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

March 31, 2025 and 2024

Net Interest Income of $122.2 million decreased $4.9 million, or 4%, compared to $127.1 million, reflecting lower interest income and higher interest expense on borrowings, which were partially offset by lower interest expense on deposits.

Net interest margin of 2.89% decreased 25 basis points compared to 3.14%. The margin was negatively impacted by a significant shift in business mix, as lower-margin loans held for sale balances, consisting of primarily warehouse loans, grew by $480.3 million, or 14%, and warehouse repurchase agreements grew by $265.3 million, or 23%, while higher-margin loans receivable balances contracted by $339.1, or 3%. Interest rate spread of 2.38% decreased 20 basis points compared to 2.58%.

Interest Income of $287.2 million decreased $27.0 million, or 9%, compared to $314.2 million. The decrease primarily reflected lower average yields on loans and loans held for sale, partially offset by higher average balances on securities held to maturity.

Average yields on loans and loans held for sale of 7.06% decreased 105 basis points compared to 8.11%. Average balances of $13.8 billion for loans and loans held for sale increased $256.2 million, or 2% compared to $13.5 billion. Average balances of $1.6 billion for securities held to maturity increased $447.1 million, or 37%, compared to $1.2 billion.

Interest Expense of $165.0 million decreased $22.1 million, or 12%, compared to $187.1 million.  The decrease reflected lower average balances at lower average rates on certificates of deposit that were partially offset by higher average balances at lower average rates on borrowings.

Average balances of $3.4 billion for certificates of deposit decreased by $2.3 billion, or 41%, compared to $5.7 billion. Average interest rates of 4.67% for certificates of deposit decreased by 73 basis points compared to 5.40%. Average balances of $3.1 billion for borrowings increased by $2.4 billion, or 336%, compared to $716.9 million. Average interest rates of 5.33% for borrowings decreased by 370 basis points compared to 9.03%.

Noninterest Income of $23.7 million decreased $17.2 million, or 42%, compared to $40.9 million, primarily due to a $19.3 million change in valuation adjustments. The $17.2 million decrease reflected a $15.4 million, or 79%, decrease in loan servicing fees and a $2.8 million, or 47%, decrease other income, partially offset by a $2.3 million, or 24%, increase in gain on sale of loans.

Loan servicing fees included a $754,000 negative fair market value adjustment to servicing rights, with a $1.2 million negative adjustment in the Banking segment and a $449,000 positive adjustment in the Multi-family Mortgage Banking segment. This compared to a $14.0 million positive fair market value adjustment to servicing rights in the prior period with a $0.8 million positive adjustment in the Banking segment and a $13.2 million positive adjustment in the Multi-family Mortgage Banking segment. The value of servicing rights generally increases in rising 10-year interest rate environments and declines in falling interest rate environments due to expected prepayments and earning rates on escrow deposits. Other income included a $2.3 million negative fair market value adjustment to the floor derivatives compared to a $2.3 million positive fair market value adjustment in the prior period. Gain on sale of loans increased $2.3 million, or 24%, reflecting higher volume in the multi-family loan portfolio.

Noninterest Expense of $61.7 million increased $12.8 million, or 26%, compared to $48.9 million, primarily due to a $6.8 million, or 23%, increase in salaries and employee benefits to support business growth, including $2.5 million associated with the addition of production staff, which is expected to elevate production, gain on sale and expenses in future quarters as well.  Also contributing to the higher expenses during the quarter, was a $3.9 million increase in credit risk transfer premium expense associated with ongoing credit default swaps that were executed in March and December 2024, as well as a $2.1 million, or 41%, increase in deposit insurance expense, reflecting an increase in underperforming assets, coupled with an increase in total assets.

Comparison of Operating Results for the Three Months Ended

March 31, 2025 and December 31, 2024

Net Interest Income of $122.2 million decreased $12.4 million, or 9%, compared to $134.6 million, primarily due to lower average yields on lower average balances on loans and loans held for sale. These decreases were partially offset by lower average balances on certificates of deposit at lower rates.

Net interest margin of 2.89% decreased 10 basis points compared to 2.99%. The margin was negatively impacted by a shift in business mix, as lower-margin loans held for sale balances, consisting of primarily warehouse loans, grew by $211.9 million, or 6%, and higher-margin loans receivable balances contracted by $11.3 million during the quarter. Interest rate spread of 2.38% decreased 8 basis points compared to 2.46%.

Interest Income of $287.2 million decreased $34.1 million, or 11%, compared to $321.3 million, primarily reflecting a decrease in average yield and balances on loans and loans held for sale and a decrease in average yield on securities held to maturity.

Average yields on loans and loans held for sale of 7.06% decreased 37 basis points compared to 7.43%. Average balances of $13.8 billion for loans and loans held for sale decreased $534.7 million, or 4%, compared to $14.3 billion. Average yields on securities held to maturity of 6.01% decreased 46 basis points compared to 6.47%.

Interest Expense of $165.0 million decreased $21.7 million, or 12% compared to $186.7 million. The decrease was primarily driven by lower average balances at lower rates on certificates of deposit and partially offset by higher average balances on money market accounts.

Average balances of $3.4 billion for certificate of deposit accounts decreased $746.2 million, or 18%, compared to $4.1 billion. Average interest rates of 4.67% for certificate of deposit accounts decreased 35 basis points compared to 5.02%. Average balances of $5.1 billion for interest-bearing checking accounts decreased $458.3 million, or 8%, compared to $5.6 billion. Average interest rates of 4.01% for interest-bearing checking accounts decreased 18 basis points compared to 4.19%.

Noninterest Income of $23.7 million decreased $35.5 million, or 60%, primarily due to an $13.4 million, or 54%, decrease in gain on sale of loans, a $10.9 million, or 73%, decrease in loan servicing fees, a $5.9 million, or 64%, decrease in syndication and asset management fees, and a $5.3 million, or 63%, decrease in other income.

Gain on sale of loans decreased $13.4 million, as elevated interest rates have contributed to delays in borrowers converting to permanent loans. Loan servicing fees included a $754,000 negative fair market value adjustment to servicing rights, with a $1.2 million negative adjustment in the Banking segment and a $449,000 positive adjustment in the Multi-family Mortgage Banking segment. This compared to a $10.4 million positive fair market value adjustment to servicing rights in the prior period, with a $2.5 million positive adjustment in the Banking segment and a $7.9 million positive adjustment in the Multi-family Mortgage Banking segment. The value of servicing rights generally increases in rising 10-year interest rate environments and declines in falling interest rate environments due to expected prepayments and earning rates on escrow deposits. Other income included a $2.3 million negative fair market value adjustment to floor derivatives compared to a $2.6 million positive fair market value adjustment to derivatives in the fourth quarter of 2024.

Noninterest Expense of $61.7 million decreased $1.5 million, or 2%, compared to $63.2 million, primarily driven by a $2.2 million, or 44%, decrease in professional fees, which was partially offset by a $1.9 million, or 98%, increase in credit risk transfer premium expense.

About Merchants Bancorp

Ranked as a top performing U.S. public bank by S&P Global Market Intelligence, Merchants Bancorp is a diversified bank holding company headquartered in Carmel, Indiana operating multiple segments, including Multi-family Mortgage Banking that primarily offers multi-family housing and healthcare facility financing and servicing (through this segment it also serves as a syndicator of low-income housing tax credit and debt funds); Mortgage Warehousing that offers mortgage warehouse financing, commercial loans, and deposit services; and Banking that offers retail and correspondent residential mortgage banking, agricultural lending, and traditional community banking.  Merchants Bancorp, with $18.8 billion in assets and $12.4 billion in deposits as of March 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 Asset Management, LLC, and Merchants Mortgage, a division of Merchants Bank of Indiana. For more information and financial data, please visit Merchants' Investor Relations page 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)  March 31,  December 31,  September 30,  June 30,  March 31, 2025  2024  2024  2024  2024 Assets  Cash and due from banks  $              15,609  $              10,989  $              12,214  $              10,242  $              17,924 Interest-earning demand accounts  505,687  465,621  589,692  530,640  490,831 Cash and cash equivalents  521,296  476,610  601,906  540,882  508,755 Securities purchased under agreements to resell  1,550  1,559  3,279  3,304  3,329 Mortgage loans in process of securitization  389,797  428,206  430,966  209,244  142,629 Securities available for sale ($626,271, $635,946, $682,975, $682,774 
and $700,640 utilizing fair value option, respectively)  961,183  980,050  953,063  1,017,019  1,061,288 Securities held to maturity ($1,605,151, $1,664,674, $1,756,203, 
$1,291,960 and $1,176,178 at fair value, respectively)  1,606,286  1,664,686  1,755,047  1,291,110  1,175,167 Federal Home Loan Bank (FHLB) stock and other equity securities  217,850  217,804  184,050  67,499  64,215 Loans held for sale (includes $75,920, $78,170, $91,084, $102,873 and 
$84,513 at fair value, respectively)  3,983,452  3,771,510  3,808,234  3,483,076  3,503,131 Loans receivable, net of allowance for credit losses on loans of 
$83,413, $84,386, $84,549, $81,028 and $75,712, respectively  10,343,724  10,354,002  10,261,890  10,933,189  10,690,513 Premises and equipment, net  67,787  58,617  53,161  46,833  42,450 Servicing rights  189,711  189,935  177,327  178,776  172,200 Interest receivable  82,811  83,409  86,612  90,360  90,303 Goodwill   8,014  8,014  8,014  8,014  8,014 Other assets and receivables   424,339  571,330  329,427  343,116  360,582 Total assets  $       18,797,800  $       18,805,732  $       18,652,976  $       18,212,422  $       17,822,576 Liabilities and Shareholders' Equity  Liabilities  Deposits  Noninterest-bearing  $            313,296  $            239,005  $            311,386  $            383,260  $            319,872 Interest-bearing  12,092,869  11,680,971  12,580,501  14,533,807  13,655,789 Total deposits  12,406,165  11,919,976  12,891,887  14,917,067  13,975,661 Borrowings   4,001,744  4,386,122  3,568,721  1,159,206  1,835,985 Deferred tax liabilities  35,740  25,289  19,530  25,098  43,935 Other liabilities  193,416  231,035  233,731  222,904  190,527 Total liabilities  16,637,065  16,562,422  16,713,869  16,324,275  16,046,108 Commitments and  Contingencies  Shareholders' Equity  Common stock, without par value  Authorized - 75,000,000 shares  Issued and outstanding  - 45,881,706 shares, 45,767,166 shares, 
45,764,023 shares, 45,757,567 shares and 43,354,718 shares  240,512  240,313  239,448  238,492  139,950 Preferred stock, without par value - 5,000,000 total shares authorized  7% Series A Preferred stock - $25 per share liquidation preference  Authorized - no shares at March 31, 2025, December 31, 2024, 
September 30, 2024 or June 30, 2024 and 3,500,000 shares at 
March 31, 2024  Issued and outstanding - no shares at March 31, 2025, 
December 31, 2024, September 30, 2024 or June 30, 2024 and 
2,081,800 shares at March 31, 2024  —  —  —  —  50,221 6% Series B Preferred stock - $1,000 per share liquidation 
preference  Authorized - no shares at March 31, 2025, and 125,000 shares 
for all prior periods  Issued and outstanding - no shares at March 31, 2025, and 
125,000 shares for all prior periods presented (equivalent to 
5,000,000 depositary shares)  —  120,844  120,844  120,844  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  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  —  —  — Retained earnings  1,369,009  1,330,995  1,250,176  1,200,778  1,138,083 Accumulated other comprehensive (loss) income  (77)  (133)  96  (510)  (1,173) Total shareholders' equity  2,160,735  2,243,310  1,939,107  1,888,147  1,776,468 Total liabilities and shareholders' equity  $       18,797,800  $       18,805,732  $       18,652,976  $       18,212,422  $       17,822,576

Consolidated Statement of Income (Unaudited) (In thousands, except share data)  Three Months Ended  Change March 31,  December 31,  March 31,   1Q25  1Q25 2025  2024  2024  vs. 4Q24  vs. 1Q24 Interest Income  Loans  $ 239,280  $ 266,719  $ 271,998  -10 %  -12 % Mortgage loans in process of securitization   3,743   5,662   1,720  -34 %  118 % Investment securities:  Available for sale   12,358   13,453   14,388  -8 %  -14 % Held to maturity   24,358   27,673   20,522  -12 %  19 % FHLB stock and other equity securities (dividends)   4,372   4,123   844  6 %  418 % Other   3,093   3,716   4,701  -17 %  -34 % Total interest income   287,204   321,346   314,173  -11 %  -9 % Interest Expense  Deposits   123,941   144,009   171,022  -14 %  -28 % Short-term borrowings   33,364   34,263   ...

7,222  -3 %  362 % Long-term borrowings   7,703   8,450   8,873  -9 %  -13 % Total interest expense   165,008   186,722   187,117  -12 %  -12 % Net Interest Income   122,196   134,624   127,056  -9 %  -4 % Provision for credit losses   7,727   2,689   4,726  187 %  63 % Net Interest Income After Provision for Credit Losses   114,469   131,935   122,330  -13 %  -6 % Noninterest Income  Gain on sale of loans   11,619   25,020   9,356  -54 %  24 % Loan servicing fees, net   4,010   14,953   19,402  -73 %  -79 % Mortgage warehouse fees   1,513   1,413   982  7 %  54 % Loss on sale of investments available for sale (1)   —   —   (108)  —  100 % Syndication and asset management fees   3,389   9,323   5,303  -64 %  -36 % Other income   3,162   8,436   5,939  -63 %  -47 % Total noninterest income   23,693   59,145   40,874  -60 %  -42 % Noninterest Expense  Salaries and employee benefits   36,419   37,536   29,596  -3 %  23 % Loan expense   798   704   956  13 %  -17 % Occupancy and equipment   2,351   2,284   2,237  3 %  5 % Professional fees   2,894   5,135   4,099  -44 %  -29 % Deposit insurance expense   7,228   6,473   5,125  12 %  41 % Technology expense   2,374   2,038   1,854  16 %  28 % Credit risk transfer premium expense   3,862   1,947   —  98 %  100 % Other expense   5,738   7,085   5,045  -19 %  14 % Total noninterest expense   61,664   63,202   48,912  -2 %  26 % Income Before Income Taxes   76,498   127,878   114,292  -40 %  -33 % Provision for income taxes (2)   18,259   32,212   27,238  -43 %  -33 % Net Income  $ 58,239  $ 95,666  $ 87,054  -39 %  -33 % Dividends on preferred stock   (10,265)   (10,728)   (8,667)  -4 %  18 % Impact of preferred stock redemption   (5,371)   —   —  100 %  100 % Net Income Available to Common Shareholders  $ 42,603  $ 84,938  $ 78,387  -50 %  -46 % Basic Earnings Per Share  $ 0.93  $ 1.86  $ 1.81  -50 %  -49 % Diluted Earnings Per Share  $ 0.93  $ 1.85  $ 1.80  -50 %  -48 % Weighted-Average Shares Outstanding  Basic   45,824,022   45,765,458   43,305,985  Diluted   45,914,083   45,924,176   43,466,647   (1) Includes $0, $0, and $(108) respectively, related to accumulated other comprehensive losses reclassifications.  (2) Includes $0, $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  March 31,  December 31,  March 31,  1Q25  1Q25  2025  2024  2024  vs. 4Q24  vs. 1Q24   Noninterest expense   $                  61,664  $                    63,202  $           48,912  -2 %  26 %   Net interest income (before provision for credit losses)   122,196  134,624  127,056  -9 %  -4 %  Noninterest income   23,693  59,145  40,874  -60 %  -42 %  Total income   $                145,889  $                  193,769  $         167,930  -25 %  -13 %   Efficiency ratio   42.27 %  32.62 %  29.13 %  965 bps 1,314 bps   Average assets   $           17,831,950  $             18,512,380  $    16,793,072  -4 %  6 %  Net income   58,239  95,666  87,054  -39 %  -33 %  Return on average assets before annualizing   0.33 %  0.52 %  0.52 %  Annualization factor   4.00  4.00  4.00  Return on average assets   1.31 %  2.07 %  2.07 %  (76) bps (76) bps  Return on average tangible common shareholders' equity (1)   10.65 %  22.10 %  25.34 %  (1,145) bps (1,469) bps  Tangible book value per common share (1)   $                    34.90  $                      34.15  $             29.26  2 %  19 %   Tangible common shareholders' equity/tangible assets (1)   8.52 %  8.32 %  7.12 %  20 bps 140 bps  Consolidated ratios  Total capital/risk-weighted assets(2)   13.0 % 13.9 % 11.7 %  Tier I capital/risk-weighted assets(2)   12.4 % 13.3 % 11.2 %  Common Equity Tier I capital/risk-weighted assets(2)   9.2 % 9.3 % 8.0 %  Tier I capital/average assets(2)   12.1 % 12.1 % 10.5 %   (1) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Measures" below:   (2) As defined by regulatory agencies; March 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  March 31,  December 31,  March 31,  1Q25  1Q25  2025  2024  2024  vs. 4Q24  vs. 1Q24   Net income   $                  58,239  $                    95,666  $           87,054  -39 %  -33 %  Less: preferred stock dividends    (10,265)  (10,728)  (8,667)  -4 %  18 %  Less: preferred stock redemption   (5,371)  -  -  100 %  100 %  Net income available to common shareholders   $                  42,603  $                    84,938  $           78,387  -50 %  -46 %   Average shareholders' equity   $             2,160,169  $               2,084,627  $      1,747,660  4 %  24 %  Less: average goodwill & intangibles   (8,070)  (8,076)  (10,494)  —  -23 %  Less: average preferred stock   (552,633)  (538,970)  (499,608)  3 %  11 %  Average tangible common shareholders' equity   $             1,599,466  $               1,537,581  $      1,237,558  4 %  29 %   Annualization factor   4.00  4.00  4.00  Return on average tangible common shareholders' equity   10.65 %  22.10 %  25.34 %  (1,145) bps (1,469) bps  Total equity   $             2,160,735  $               2,243,310  $      1,776,468  -4 %  22 %  Less: goodwill and intangibles   (8,068)  (8,073)  (8,163)  —  -1 %  Less: preferred stock   (551,291)  (672,135)  (499,608)  -18 %  10 %  Tangible common shareholders' equity   $             1,601,376  $               1,563,102  $      1,268,697  2 %  26 %   Assets   $           18,797,800  $             18,805,732  $    17,822,576  —  5 %  Less: goodwill and intangibles   (8,068)  (8,073)  (8,163)  —  -1 %  Tangible assets   $           18,789,732  $             18,797,659  $    17,814,413  —  5 %   Ending common shares   45,881,706  45,767,166  43,354,718   Tangible book value per common share   $                    34.90  $                      34.15  $             29.26  2 %  19 %  Tangible common shareholders' equity/tangible assets   8.52 %  8.32 %  7.12 %  20 bps 140 bps

Merchants Bancorp Average Balance Analysis ($ in thousands) (Unaudited)  Three Months Ended March 31, 2025  December 31, 2024  March 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 $       511,077 $     7,465 5.92 %  $      499,308 $     7,839 6.25 %  $        346,150 $     5,545 6.44 % Securities available for sale 961,065 12,358 5.21 %  986,063 13,453 5.43 %  1,085,114 14,388 5.33 % Securities held to maturity 1,643,703 24,358 6.01 %  1,701,595 27,673 6.47 %  1,196,633 20,522 6.90 % Mortgage loans in process of securitization 277,426 3,743 5.47 %  414,883 5,662 5.43 %  137,890 1,720 5.02 % Loans and loans held for sale 13,751,197 239,280 7.06 %  14,285,852 266,719 7.43 %  13,494,961 271,998 8.11 % Total interest-earning assets 17,144,468 287,204 6.79 %  17,887,701 321,346 7.15 %  16,260,748 314,173 7.77 % Allowance for credit losses on loans (86,711)    (85,772)    (71,544)  Noninterest-earning assets 774,193    710,451    603,868   Total assets $  17,831,950    $  18,512,380    $    16,793,072    Liabilities & Shareholders' Equity:   Interest-bearing checking $    5,121,343 50,609 4.01 %  $    5,579,688 58,781 4.19 %  5,070,393 60,688 4.81 % Savings deposits 146,359 15 0.04 % # 145,599 15 0.04 %  201,860 219 0.44 % Money market  3,398,469 34,506 4.12 % # 2,961,272 33,288 4.47 %  2,817,382 33,644 4.80 % Certificates of deposit 3,369,269 38,811 4.67 % # 4,115,462 51,925 5.02 %  5,694,933 76,471 5.40 % Total interest-bearing deposits 12,035,440 123,941 4.18 %  12,802,021 144,009 4.48 %  13,784,568 171,022 4.99 %  Borrowings 3,125,935 41,067 5.33 %  3,047,586 42,713 5.58 %  716,853 16,095 9.03 % Total interest-bearing liabilities 15,161,375 165,008 4.41 %  15,849,607 186,722 4.69 %  14,501,421 187,117 5.19 %  Noninterest-bearing deposits 294,248    352,374    332,172  Noninterest-bearing liabilities 216,158    225,772    211,819   Total liabilities 15,671,781    16,427,753    15,045,412   Shareholders' equity 2,160,169    2,084,627    1,747,660   Total liabilities and shareholders' equity $  17,831,950    $  18,512,380    $    16,793,072   Net interest income  $  122,196    $ 134,624    $ 127,056   Net interest spread   2.38 %    2.46 %    2.58 %  Net interest-earning assets $    1,983,093    $    2,038,094    $     1,759,327   Net interest margin   2.89 %    2.99 %    3.14 %  Average interest-earning assets to 
average interest-bearing liabilities   113.08 %    112.86 %    112.13 %

Supplemental Results (Unaudited) ($ in thousands)  Net Income  Three Months Ended  March 31,   December 31,   March 31,  2025   2024   2024  Segment  Multi-family Mortgage Banking    $              3,413   $          22,183   $             16,609  Mortgage Warehousing    15,398   24,402   20,190  Banking    47,107   56,287   56,425  Other    (7,679)   (7,206)   (6,170)  Total    $            58,239   $          95,666   $             87,054    Total Assets  March 31, 2025  December 31, 2024  March 31, 2024  Amount %  Amount %  Amount %  Segment  Multi-family Mortgage Banking    $          460,441 3 %  $        479,099 2 %  $           416,454 2 %  Mortgage Warehousing    5,902,165 31 %  6,000,624 32 %  5,369,299 30 %  Banking    12,002,564 64 %  11,761,202 63 %  11,760,028 66 %  Other    432,630 2 %  564,807 3 %  276,795 2 %  Total    $     18,797,800 100 %  $   18,805,732 100 %  $      17,822,576 100 %    Gain on Sale of Loans  Three Months Ended  March 31,   December 31,   March 31,  2025   2024   2024  Loan Type  Multi-family    $            10,125   $          24,026   $               8,423  Single-family    206   413   280  Small Business Association (SBA)    1,288   581   653  Total    $            11,619   $          25,020   $               9,356    Servicing Rights  Three Months Ended  March 31,   December 31,   March 31,  2025   2024   2024   Balance, beginning of period    $          189,935   $        177,327   $           158,457  Additions  Purchased servicing    -   -   -  Originated servicing    3,338   5,373   2,166  Subtractions  Paydowns    (2,808)   (3,172)   (2,387)  Changes in fair value    (754)   10,407   13,964  Balance, end of period    $          189,711   $        189,935   $           172,200

Supplemental Results (Unaudited) ($ in thousands)  Loans Receivable and Loans Held for Sale  March 31,   December 31,   March 31,  2025   2024   2024   Mortgage warehouse repurchase agreements    $       1,408,239   $     1,446,068   $        1,142,994  Residential real estate (1)    1,332,601   1,322,853   1,321,300  Multi-family financing    4,600,117   4,624,299   4,096,606  Healthcare financing    1,583,290   1,484,483   2,464,685  Commercial and commercial real estate (2)(3)    1,418,741   1,476,211   1,666,751  Agricultural production and real estate    79,190   77,631   65,977  Consumer and margin loans    4,959   6,843   7,912  Loans receivable    10,427,137   10,438,388   10,766,225  Less: Allowance for credit losses on loans    83,413   84,386   75,712  Loans receivable, net    $     10,343,724   $   10,354,002   $      10,690,513   Loans held for sale    3,983,452   3,771,510   3,503,131  Total loans, net of allowance    $     14,327,176   $   14,125,512   $      14,193,644   (1) Includes $1.2 billion, $1.2 billion and $1.2 billion of All-In-One © first-lien home equity lines of credit as of March 31, 2025, 
December 31, 2024 and March 31, 2024, respectively.  (2) Includes $0.8 billion, $0.9 billion and $1.1 billion of revolving  lines of credit collateralized primarily by mortgage servicing rights as of 
March 31, 2025, December 31, 2024 and March 31, 2024, respectively.  (3) Includes only $19.5 million, $18.7 million and $6.8 million of non-owner occupied commercial real estate as of March 31, 2025, 
December 31, 2024 and March 31, 2024, respectively.   Loan Credit Risk Profile March 31, 2025  December 31, 2024  March 31, 2024 Amount %  Amount %  Amount %  Pass     $       9,695,595 93.0 %  $     9,741,087 93.4 %  $      10,410,748 96.7 % Special mention    407,895 3.9 %  379,969 3.6 %  232,122 2.2 % Substandard    323,647 3.1 %  317,332 3.0 %  123,355 1.1 % Doubtful    — —  — —  — — Loans receivable    $     10,427,137 100.0 %  $   10,438,388 100.0 %  $      10,766,225 100.0 % Charge-offs (year-to-date)    $            10,507   $          10,587   $                  925  Recoveries (year-to-date)    $                   28   $               136   $                      1   Nonperforming Loans  March 31,   December 31,   March 31,  2025   2024   2024   Nonaccrual loans    $          284,019   $        279,716   $             78,804  90 days past due and still accruing    585   6   52,982  Total nonperforming loans    $          284,604   $        279,722   $           131,786  Other real estate owned    $              7,049   $            8,209   —  Total nonperforming assets    $          291,653   $        287,931   $           131,786  Nonperforming loans to total loans receivable    2.73 %   2.68 %   1.22 %  Nonperforming assets to total assets    1.55 %   1.53 %   0.74 %   Delinquent Loans  March 31,   December 31,   March 31,  2025   2024   2024   Delinquent loans:  Loans receivable    $          304,560   $        292,263   $           188,742  Loans held for sale    30,103   32,343   30,150  Total delinquent loans    $          334,663   $        324,606   $           218,892  Total loans receivable and loans held for sale    $     14,410,589   $   14,209,898   $      14,269,356  Delinquent loans to total loans     2.32 %   2.28 %   1.53 % Cision

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