Merchants Bancorp Reports Second Quarter of 2026 Results

Merchants Bancorp Reports Second Quarter of 2026 Results CARMEL, Ind., July 28, 2026 /PRNewswire/ -- Merchants Bancorp (the "Company" or "Merchants") (Nasdaq: MBIN), parent company of Merchants Bank, today reported second quarter of 2026 net income of $78.3 million, or diluted earnings per common share of $1.48. This compared to $38.0 million, or diluted earnings per common share of $0.60 in the second quarter of 2025, and compared to $67.7 million, or diluted earnings per common share of $1.25 in the first quarter of 2026.

"Our second quarter results reflected continued strength across our businesses, highlighted by assets reaching a new high of $21.2 billion and tangible book value per share of $39.93, marking our 30th consecutive quarter of record tangible book value. Credit trends also improved during the quarter, with our fifth consecutive quarterly decline in criticized loans, which reached their lowest level since mid-2024, along with decreases in nonperforming loans, delinquencies, charge-offs and provision for credit losses. These results demonstrate the strength of our balance sheet, the benefit of improved credit metrics, and ongoing momentum in our business," said Michael F. Petrie, Chairman and CEO of Merchants.

Michael J. Dunlap, President and Chief Operating Officer of Merchants, added, "With 10-year Treasury rates remaining elevated, our diversified business model continues to create multiple sources of earnings support in the current rate environment. While the higher rates may pressure near-term gain on sale of loans, loans in our robust pipeline are still expected to convert into permanent loans over time. Meanwhile, higher rates continue to support valuations on our servicing rights and derivatives, providing an offset to pressure on gain on sale revenue. Together with strong liquidity, capital, and improving credit trends, this positions us well to continue generating earnings growth and long-term shareholder value."

Net income for the second quarter of 2026 was $78.3 million, an increase of $40.3 million, or 106%, compared to $38.0 million in the second quarter of 2025. The increase was primarily driven by a $43.8 million, or 83%, decrease in the provision for credit losses, reflecting improved asset quality.

Net income for the second quarter of 2026 was $78.3 million, an increase of $10.6 million, or 16%, from $67.7 million in the first quarter of 2026. The improvement was driven by a $14.0 million, or 12%, increase in net interest income after provision for credit losses.

Total Assets

Total assets of $21.2 billion at June 30, 2026 increased $908.2 million, or 4%, compared to March 31, 2026, and increased $1.8 billion, or 9%, compared to December 31, 2025. The increases for both periods were primarily due to higher balances in the multi-family and warehouse portfolios, as well as revolving lines of credit collateralized by mortgage servicing rights that are included in the commercial and commercial real estate portfolio.

Asset Quality

The allowance for credit losses on loans of $75.8 million, as of June 30, 2026, decreased $1.0 million, or 1%, compared to March 31, 2026, and decreased $7.5 million, or 9%, compared to December 31, 2025. The decreases primarily reflected charge-offs on loans that had specific reserves.

During the second quarter of 2026, the Company recorded charge-offs totaling $16.5 million and had $4.8 million in recoveries. Nearly 95% of the charge-offs in the second quarter of 2026 were associated with two multi-family loan relationships. This compared to $46.1 million in charge-offs and no recoveries during the second quarter of 2025 and $23.0 million in charge-offs and $616,000 in recoveries in the first quarter of 2026.

Overall, criticized loans receivable of $444.7 million declined $60.8 million, or 12%, compared to March 31, 2026, and declined $63.5 million, or 12%, compared to December 31, 2025. These declines are consistent with the Company's expectation that migration to criticized status would stabilize and eventually subside, supported by ongoing portfolio management efforts. As of June 30, 2026, 6% of the criticized loans were covered by credit default swaps.

As of June 30, 2026, all substandard loans have been evaluated for impairment, and these loans have specific reserves of $3.9 million. The Company believes the loan portfolio continues to be well collateralized.

Nonperforming loans decreased $41.8 million, or 17%, compared to March 31, 2026, primarily due to loans being paid in full. As of June 30, 2026, nonperforming loans were $205.6 million, or 1.67% of loans receivable, compared to $247.5 million, or 2.16%, as of March 31, 2026, and $197.8 million, or 1.79%, as of December 31, 2025.

Total delinquent loans of $208.0 million decreased $34.6 million, or 14%, compared to March 31, 2026. As of June 30, 2026, 10% of the delinquent loans were covered by credit default swaps.

The Company has taken additional steps to reduce credit risk through loan sale and securitization activities since 2019. Since 2023, the Company has executed credit protection arrangements through credit default swaps and a credit-linked note to reduce potential loss exposure, with coverage ranging from 13% to 15% of the unpaid principal balance for each arrangement. Despite having credit protection on these loans, the Company is required to carry an allowance for credit losses on loans held for investment. As of June 30, 2026, the remaining balance of loans protected by credit default swaps was $2.2 billion.

Total Deposits

Total deposits of $14.3 billion at June 30, 2026, increased $1.3 billion, or 10%, compared to March 31, 2026, and $1.2 billion, or 9%, compared to December 31, 2025. The increase in both periods primarily reflected the growth in core deposits.

Core deposits of $13.0 billion at June 30, 2026, reflected increases of $891.3 million, or 7%, from March 31, 2026, and $1.7 billion, or 15%, from December 31, 2025. Core deposits represented 91% of total deposits at June 30, 2026, 93% of total deposits at March 31, 2026, and 87% of total deposits at December 31, 2025.

Brokered deposits of $1.3 billion at June 30, 2026, increased $411.3 million, or 46%, from March 31, 2026, and decreased $459.5 million, or 26%, from December 31, 2025. As of June 30, 2026, brokered certificates of deposit had a weighted average remaining duration of 51 days.

Liquidity

The Company maintained strong liquidity, supported by substantial borrowing capacity, including unused lines of credit totaling $5.5 billion as of June 30, 2026, compared to $3.9 billion at March 31, 2026, and $5.3 billion at December 31, 2025.

The Company's most liquid assets include cash and cash equivalents, short-term investments, including interest-earning demand deposits, mortgage loans in process of securitization, loans held for sale, and warehouse lines of credit included in loans receivable. Combined with unused borrowing capacity of $5.5 billion, these totaled $13.0 billion, or 61%, of its $21.2 billion total assets as of June 30, 2026.

This liquidity position provides the Company with flexibility to manage funding costs, interest expense, and asset levels. In addition, the Company's business model is designed to continuously sell or securitize a significant portion of its loans, which provides flexibility in managing its liquidity.

Comparison of Operating Results for the Three Months Ended

June 30, 2026 and 2025

Net Interest Income of $136.5 million increased $7.8 million, or 6%, compared to $128.7 million. The increase reflected lower interest expense on certificates of deposit, partially offset by higher interest expense on interest-bearing checking accounts and lower interest income on securities held to maturity.

Interest Income of $294.1 million decreased $10.3 million, or 3%, compared to $304.4 million. The decrease was primarily attributable to lower average balances and yields on securities held to maturity, as well as lower average yields on higher average balances on loans and loans held for sale.

Interest Expense of $157.5 million decreased 10% compared to $175.7 million. The decrease reflected lower average balances and rates on certificates of deposit, partially offset by higher average balances on interest-bearing checking accounts.

Provision for Credit Losses was $9.2 million, a decrease of 83% compared to $53.0 million, reflecting improved asset quality, including lower charge-offs and lower specific reserves.

Noninterest Income of $45.7 million decreased $4.8 million, or 10%, compared to $50.5 million. The decline was primarily due to a decrease of $10.2 million, or 44%, in gain on sale of loans, partially offset by $5.9 million, or 95%, increase in loan servicing fees.

Noninterest Expense of $73.2 million decreased $4.1 million, or 5%, compared to $77.3 million. The lower expenses were primarily due to a $4.2 million decrease in salaries and employee benefits from lower commissions and bonuses.

Comparison of Operating Results for the Three Months Ended

June 30, 2026 and March 31, 2026

Net Interest Income of $136.5 million increased $7.9 million, or 6%, compared to $128.6 million. The increase reflected higher interest income on loans and loans held for sale, partially offset by higher interest expense on borrowings and deposits.

The 11 basis point decline in net interest margin was primarily driven by changes in loan mix, as growth was weighted more toward loans held for sale and warehouse lending than the higher-yielding multi-family and healthcare portfolios. While this mix shift lowered the reported margin, the growth remained profitable and contributed to higher net interest income and overall earnings.

Interest Income of $294.1 million increased $23.6 million, or 9%, compared to $270.5 million, primarily reflecting higher average balances at lower average yields on loans and loans held for sale.

Interest Expense of $157.5 million increased 11% compared to $141.9 million. The increase was primarily driven by higher average balances at lower interest rates on borrowings and higher average balances at higher average interest rates on interest-bearing checking accounts.

Provision for Credit Losses was $9.2 million, a decrease of 40% compared to $15.3 million, reflecting improved asset quality, including lower charge-offs and lower specific reserves.

Noninterest Income of $45.7 million decreased 2% compared to $46.6 million. Results reflected a decrease of $3.1 million, or 21%, in loan servicing fees, and a $1.5 million, or 11%, decrease in other noninterest income. Partially offsetting these declines was a $3.8 million, or 122%, increase in syndication and asset management fees.

Noninterest Expense of $73.2 million decreased $2.4 million, 3%, compared to $75.6 million, primarily due to a $2.5 million decrease in deposit insurance expenses from improved asset quality.

About Merchants Bancorp

Merchants Bancorp is a diversified bank holding company headquartered in Carmel, Indiana operating multiple segments, including Multi-family Mortgage Banking that primarily offers multi-family housing and healthcare facility financing and servicing (through this segment it also serves as a syndicator of low-income housing tax credit and debt funds); Mortgage Warehousing that offers mortgage warehouse financing, commercial loans, and deposit services; and Banking that offers retail and correspondent residential mortgage banking, agricultural lending, and traditional community banking. Merchants Bancorp, with $21.2 billion in assets and $14.3 billion in deposits as of June 30, 2026, conducts its business primarily through its direct and indirect subsidiaries, Merchants Bank of Indiana, Merchants Capital Corp., Merchants Capital Investments, LLC, Merchants Capital Servicing, LLC, Merchants Investment Partners, LLC, and Merchants Mortgage, a division of Merchants Bank of Indiana. For more information and financial data, please visit Merchants' Investor Relations page at investors.merchantsbancorp.com.

Forward-Looking Statements

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

Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)

June 30,

March 31,

December 31,

September 30,

June 30,

2026

2025

Assets

Cash and due from banks

$ 17,875

$ 19,642

$ 15,844

$ 11,566

$ 15,419

Interest-earning demand accounts

296,828

63,573

196,358

586,470

631,746

Cash and cash equivalents

314,703

83,215

212,202

598,036

647,165

Securities purchased under agreements to resell

1,501

1,511

1,520

1,529

1,539

Mortgage loans in process of securitization

407,418

437,001

620,094

414,786

402,427

Securities available for sale (includes $527,676, $550,207,

$571,314, $591,379 and $602,962 at fair value)

820,105

843,896

865,058

885,070

936,343

Securities held to maturity (fair value of $1,353,543, $1,426,444,

$1,543,554, $1,670,306 and $1,547,525)

1,354,885

1,425,982

1,543,659

1,670,555

1,548,211

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

227,589

217,850

Loans held for sale (includes $148,368, $163,426, $76,980,

$112,832 and $91,930 at fair value)

4,615,894

4,709,688

3,873,012

4,129,329

4,105,765

Loans receivable (includes $46,024, $46,427, $47,318, $0 and $0

at fair value), net of allowance for credit losses on loans of

$75,803, $76,831, $83,301, $93,330 and $91,811

12,262,800

11,399,882

10,951,381

10,515,221

10,432,117

Premises and equipment, net

74,664

73,695

73,929

75,148

71,050

Servicing rights

236,949

229,576

217,296

213,156

193,037

Interest receivable

82,078

77,326

81,807

82,445

82,391

Goodwill

8,014

Other real estate owned

72,389

60,226

60,145

4,347

7,049

Other assets and receivables

750,993

744,181

713,237

539,161

488,246

Total assets

$ 21,229,982

$ 20,321,782

$ 19,448,943

$ 19,354,647

$ 19,141,204

Liabilities and Shareholders' Equity

Liabilities

Deposits

Noninterest-bearing

$ 606,682

$ 501,864

$ 604,081

$ 399,814

$ 315,523

Interest-bearing

13,647,632

12,449,889

12,437,111

13,534,891

12,371,312

Total deposits

14,254,314

12,951,753

13,041,192

13,934,705

12,686,835

Borrowings

4,282,597

4,773,490

3,842,592

2,902,631

4,009,474

Deferred and current tax liabilities, net

50,140

46,403

33,900

28,973

29,228

Other liabilities

249,127

219,833

250,500

262,904

231,035

Total liabilities

18,836,178

17,991,479

17,168,184

17,129,213

16,956,572

Commitments and Contingencies

Shareholders' Equity

Common stock, without par value

Authorized - 75,000,000 shares

Issued and outstanding - 45,938,075 shares, 45,935,408 shares,

45,893,172 shares, 45,889,238 shares and 45,885,458 shares

244,345

243,433

243,310

242,371

241,452

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

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

preference

Authorized - 200,000 shares

Issued and outstanding - 196,181 shares (equivalent to

7,847,233 depositary shares)

191,084

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

1,599,367

1,536,383

1,486,191

1,431,983

1,392,136

Accumulated other comprehensive loss

(1,199)

(804)

(33)

(211)

(247)

Total shareholders' equity

2,393,804

2,330,303

2,280,759

2,225,434

2,184,632

Total liabilities and shareholders' equity

$ 21,229,982

$ 20,321,782

$ 19,448,943

$ 19,354,647

$ 19,141,204

Consolidated Statement of Income

(Unaudited)

(In thousands, except share data)

Three Months Ended

Change

June 30,

March 31,

June 30,

2Q26

2026

2025

vs. 1Q26

vs. 2Q25

Interest Income

Loans

252,546

230,269

255,641

10 %

-1 %

Mortgage loans in process of securitization

4,455

4,387

5,304

2 %

-16 %

Investment securities:

Available for sale

9,562

9,942

12,095

-4 %

-21 %

Held to maturity

18,076

19,479

23,166

-7 %

-22 %

FHLB stock and other equity securities (dividends)

4,979

4,394

4,641

13 %

7 %

Other

4,454

2,040

3,552

118 %

25 %

Total interest income

294,072

270,511

304,399

9 %

-3 %

Interest Expense

Deposits

116,839

109,849

131,375

6 %

-11 %

Short-term borrowings

37,608

28,937

36,981

30 %

2 %

Long-term borrowings

3,089

3,077

7,324

—

-58 %

Total interest expense

157,536

141,863

175,680

11 %

-10 %

Net Interest Income

136,536

128,648

128,719

6 %

Provision for credit losses

9,184

15,299

53,027

-40 %

-83 %

Net Interest Income After Provision for Credit Losses

127,352

113,349

75,692

12 %

68 %

Noninterest Income

Gain on sale of loans

13,160

13,506

23,342

-3 %

-44 %

Loan servicing fees, net

11,992

15,099

6,138

-21 %

95 %

Mortgage warehouse fees

1,857

1,620

2,039

15 %

-9 %

Syndication and asset management fees

6,933

3,117

9,707

122 %

-29 %

Other income

11,738

13,257

9,254

-11 %

27 %

Total noninterest income

45,680

46,599

50,480

-2 %

-10 %

Noninterest Expense

Salaries and employee benefits

39,345

38,565

43,566

2 %

-10 %

Loan expense

1,177

1,185

1,142

-1 %

3 %

Occupancy and equipment

3,462

3,081

2,494

12 %

39 %

Professional fees

3,328

2,767

3,159

20 %

5 %

Deposit insurance expense

5,893

8,408

7,152

-30 %

-18 %

Technology expense

2,893

2,679

2,446

8 %

18 %

Credit risk transfer premium expense

6,100

5,764

4,767

6 %

28 %

Other expense

11,050

13,193

12,611

-16 %

-12 %

Total noninterest expense

73,248

75,642

77,337

-3 %

-5 %

Income Before Income Taxes

99,784

84,306

48,835

18 %

104 %

Provision for income taxes

21,481

16,574

10,854

30 %

98 %

Net Income

78,303

67,732

37,981

16 %

106 %

Dividends on preferred stock

(10,266)

(10,265)

(10,266)

—

Net Income Available to Common Shareholders

68,037

57,467

27,715

18 %

145 %

Basic Earnings Per Share

1.48

1.25

0.60

18 %

147 %

Diluted Earnings Per Share

1.48

1.25

0.60

18 %

147 %

Weighted-Average Shares Outstanding

Basic

45,936,610

45,929,936

45,883,644

Diluted

46,005,938

45,997,744

45,929,563

Consolidated Statement of Income

(Unaudited)

(In thousands, except share data)

Six Months Ended

June 30,

2026

2025

Change

Interest Income

Loans

482,815

494,921

-2 %

Mortgage loans in process of securitization

8,842

9,047

-2 %

Investment securities:

Available for sale

19,504

24,453

-20 %

Held to maturity

37,555

47,524

-21 %

FHLB stock and other equity securities (dividends)

9,373

9,013

4 %

Other

6,494

6,645

-2 %

Total interest income

564,583

591,603

-5 %

Interest Expense

Deposits

226,688

255,316

-11 %

Short-term borrowings

66,545

70,345

-5 %

Long-term borrowings

6,166

15,027

-59 %

Total interest expense

299,399

340,688

-12 %

Net Interest Income

265,184

250,915

6 %

Provision for credit losses

24,483

60,754

-60 %

Net Interest Income After Provision for Credit Losses

240,701

190,161

27 %

Noninterest Income

Gain on sale of loans

26,666

34,961

-24 %

Loan servicing fees, net

27,091

10,148

167 %

Mortgage warehouse fees

3,477

3,552

-2 %

Syndication and asset management fees

10,050

13,096

-23 %

Other income

24,995

12,416

101 %

Total noninterest income

92,279

74,173

24 %

Noninterest Expense

Salaries and employee benefits

77,910

79,985

-3 %

Loan expense

2,362

1,940

22 %

Occupancy and equipment

6,543

4,845

35 %

Professional fees

6,095

6,053

1 %

Deposit insurance expense

14,301

14,380

-1 %

Technology expense

5,572

4,820

16 %

Credit risk transfer premium expense

11,864

8,629

37 %

Other expense

24,243

18,349

32 %

Total noninterest expense

148,890

139,001

7 %

Income Before Income Taxes

184,090

125,333

47 %

Provision for income taxes

38,055

29,113

31 %

Net Income

146,035

96,220

52 %

Dividends on preferred stock

(20,531)

—

Impact of preferred stock redemption

—

(5,371)

-100 %

Net Income Available to Common Shareholders

125,504

70,318

78 %

Basic Earnings Per Share

2.73

1.53

78 %

Diluted Earnings Per Share

2.73

1.53

78 %

Weighted-Average Shares Outstanding

Basic

45,933,291

45,853,998

Diluted

46,001,859

45,921,988

Key Operating Results

(Unaudited)

($ in thousands, except share data)

Three Months Ended

Change

June 30,

March 31,

June 30,

2Q26

2026

2025

vs. 1Q26

vs. 2Q25

Noninterest expense

$ 73,248

$ 75,642

$ 77,337

-3 %

-5 %

Net interest income (before provision for credit losses)

136,536

128,648

128,719

6 %

Noninterest income

45,680

46,599

50,480

-2 %

-10 %

Total income

$ 182,216

$ 175,247

$ 179,199

4 %

2 %

Efficiency ratio

40.20

43.16

(296)

bps

(296)

bps

Average assets

$ 20,578,875

$ 18,952,948

$ 18,984,925

9 %

8 %

Net income

78,303

67,732

37,981

16 %

106 %

Return on average assets before annualizing

0.38

0.36

0.20

Annualization factor

4.00

Return on average assets

1.52

1.43

0.80

bps

Return on average tangible common shareholders' equity (1)

14.95

13.01

6.75

194

bps

820

bps

Tangible book value per common share (1)

$ 39.93

$ 38.55

$ 35.42

4 %

13 %

Tangible common shareholders' equity/tangible assets (1)

8.64

8.72

8.49

(8)

bps

Consolidated ratios

Total capital/risk-weighted assets (2)

12.5

12.8

13.4

Tier I capital/risk-weighted assets (2)

12.1

12.3

12.8

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

9.3

9.4

9.5

Tier I capital/average assets (2)

11.6

12.3

11.5

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

(2) As defined by regulatory agencies; June 30, 2026 shown as estimates and prior periods shown as reported.

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

Three Months Ended

Change

June 30,

March 31,

June 30,

2Q26

2026

2025

vs. 1Q26

vs. 2Q25

Average shareholders' equity

$ 2,379,573

$ 2,326,390

$ 2,201,836

2 %

8 %

Less: average goodwill & intangibles

(8,043)

(8,048)

(8,065)

—

Less: average preferred stock

(551,291)

(551,290)

—

Average tangible common shareholders' equity

$ 1,820,239

$ 1,767,051

$ 1,642,481

3 %

11 %

Annualization factor

4.00

Return on average tangible common shareholders' equity

14.95

13.01

6.75

194

bps

820

bps

Total equity

$ 2,393,804

$ 2,330,303

$ 2,184,632

3 %

10 %

Less: goodwill and intangibles

(8,040)

(8,045)

(8,062)

—

Less: preferred stock

(551,291)

—

Tangible common shareholders' equity

$ 1,834,473

$ 1,770,967

$ 1,625,279

4 %

13 %

Assets

$ 21,229,982

$ 20,321,782

$ 19,141,204

4 %

11 %

Less: goodwill and intangibles

(8,040)

(8,045)

(8,062)

—

Tangible assets

$ 21,221,942

$ 20,313,737

$ 19,133,142

4 %

11 %

Ending common shares

45,938,075

45,935,408

45,885,458

Tangible book value per common share

$ 39.93

$ 38.55

$ 35.42

4 %

13 %

Tangible common shareholders' equity/tangible assets

8.64

8.72

8.49

(8)

bps

Key Operating Results

(Unaudited)

($ in thousands, except share data)

Six Months Ended

June 30,

2026

2025

Change

Noninterest expense

$ 148,890

$ 139,001

7 %

Net interest income (before provision for credit losses)

265,184

250,915

6 %

Noninterest income

92,279

74,173

24 %

Total income

$ 357,463

$ 325,088

10 %

Efficiency ratio

41.65

42.76

(111)

bps

Average assets

$ 19,770,403

$ 18,411,623

7 %

Net income

146,035

96,220

52 %

Return on average assets before annualizing

0.74

0.52

Annualization factor

2.00

Return on average assets

1.48

1.05

bps

Return on average tangible common shareholders' equity (1)

13.99

8.68

531

bps

Tangible book value per common share (1)

$ 39.93

$ 35.42

13 %

Tangible common shareholders' equity/tangible assets (1)

8.64

8.49

bps

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

Six Months Ended

June 30,

2026

2025

Change

Average shareholders' equity

$ 2,353,128

$ 2,181,117

8 %

Less: average goodwill & intangibles

(8,045)

(8,067)

—

Less: average preferred stock

(551,291)

(551,958)

—

Average tangible common shareholders' equity

$ 1,793,792

$ 1,621,092

11 %

Annualization factor

2.00

Return on average tangible common shareholders' equity

13.99

8.68

531

bps

Total equity

$ 2,393,804

$ 2,184,632

10 %

Less: goodwill and intangibles

(8,040)

(8,062)

—

Less: preferred stock

(551,291)

—

Tangible common shareholders' equity

$ 1,834,473

$ 1,625,279

13 %

Assets

$ 21,229,982

$ 19,141,204

11 %

Less: goodwill and intangibles

(8,040)

(8,062)

—

Tangible assets

$ 21,221,942

$ 19,133,142

11 %

Ending common shares

45,938,075

45,885,458

Tangible book value per common share

$ 39.93

$ 35.42

13 %

Tangible common shareholders' equity/tangible assets

8.64

8.49

bps

Merchants Bancorp

Average Balance Analysis

($ in thousands)

(Unaudited)

Three Months Ended

June 30, 2026

March 31, 2026

June 30, 2025

Average

Yield/

Average

Yield/

Average

Yield/

Balance

Interest

Rate

Balance

Interest

Rate

Balance

Interest

Rate

Assets:

Interest-earning deposits, and other interest or

dividends

$ 689,479

$ 9,433

5.49 %

$ 433,306

$ 6,434

6.02 %

$ 539,357

$ 8,193

6.09 %

Securities available for sale

832,715

9,562

4.61 %

856,846

9,942

4.71 %

955,186

12,095

5.08 %

Securities held to maturity

1,398,098

18,076

5.19 %

1,493,185

19,479

5.29 %

1,572,186

23,166

5.91 %

Mortgage loans in process of securitization

353,297

4,455

5.06 %

338,052

4,387

5.26 %

376,904

5,304

5.64 %

Loans and loans held for sale

16,185,486

252,546

6.26 %

14,741,304

230,269

6.34 %

14,826,151

255,641

6.92 %

Total interest-earning assets

19,459,075

294,072

6.06 %

17,862,693

270,511

6.14 %

18,269,784

304,399

6.68 %

Allowance for credit losses on loans

(80,566)

(85,226)

(90,860)

Noninterest-earning assets

1,200,366

1,175,481

806,001

Total assets

$ 20,578,875

$ 18,952,948

$ 18,984,925

Liabilities & Shareholders' Equity:

Interest-bearing checking

$ 7,891,368

67,395

3.43 %

$ 7,199,340

60,763

3.42 %

$ 6,161,736

60,845

3.96 %

Money market /savings deposits

4,117,113

36,120

3.52 %

3,925,326

34,000

3.51 %

3,499,982

35,145

4.03 %

Certificates of deposit

1,386,717

13,324

3.85 %

1,562,186

15,086

3.92 %

3,090,250

35,385

4.59 %

Total interest-bearing deposits

13,395,198

116,839

3.50 %

12,686,852

109,849

3.51 %

12,751,968

131,375

4.13 %

Borrowings

4,017,881

40,697

4.06 %

3,137,379

32,014

4.14 %

3,453,960

44,305

5.15 %

Total interest-bearing liabilities

17,413,079

157,536

3.63 %

15,824,231

141,863

3.64 %

16,205,928

175,680

4.35 %

Noninterest-bearing deposits

542,526

560,176

376,217

Noninterest-bearing liabilities

243,697

242,151

200,944

Total liabilities

18,199,302

16,626,558

16,783,089

Shareholders' equity

2,379,573

2,326,390

2,201,836

Total liabilities and shareholders' equity

$ 20,578,875

$ 18,952,948

$ 18,984,925

Net interest income

$ 136,536

$ 128,648

$ 128,719

Net interest spread

2.43 %

2.50 %

2.33 %

Net interest-earning assets

$ 2,045,996

$ 2,038,462

$ 2,063,856

Net interest margin

2.81 %

2.92 %

2.83 %

Average interest-earning assets to

average interest-bearing liabilities

111.75 %

112.88 %

112.74 %

Supplemental Results

(Unaudited)

($ in thousands)

Net Income

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

2026

2025

2026

2025

Segment

Multi-family Mortgage Banking

$ 10,336

$ 11,014

$ 9,269

$ 21,350

$ 12,682

Mortgage Warehousing

30,599

28,648

22,986

59,247

38,384

Banking

47,337

37,980

14,574

85,317

61,681

Other

(9,969)

(9,910)

(8,848)

(19,879)

(16,527)

Total

$ 78,303

$ 67,732

$ 37,981

$ 146,035

$ 96,220

Total Assets

June 30, 2026

March 31, 2026

December 31, 2025

Amount

Segment

Multi-family Mortgage Banking

$ 567,941

2 %

$ 522,976

3 %

$ 526,423

3 %

Mortgage Warehousing

8,647,738

41 %

8,544,107

42 %

7,251,653

37 %

Banking

11,581,635

55 %

10,850,657

53 %

11,307,401

58 %

Other

432,668

2 %

404,042

2 %

363,466

2 %

Total

$ 21,229,982

100 %

$ 20,321,782

100 %

$ 19,448,943

100 %

Gain on Sale of Loans

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

2026

2025

2026

2025

Loan Type

Multi-family

$ 11,755

$ 11,422

$ 19,815

$ 23,177

$ 29,940

Single-family

489

388

2,428

877

2,634

Small Business Administration (SBA)

916

1,696

1,099

2,612

2,387

Total

$ 13,160

$ 13,506

$ 23,342

$ 26,666

$ 34,961

Servicing Rights

Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

2026

2025

2026

2025

Balance, beginning of period

$ 229,576

$ 217,296

$ 189,711

$ 217,296

$ 189,935

Additions

Purchased servicing

125

Originated servicing

4,010

5,749

5,244

9,759

8,582

Subtractions

Paydowns

(2,652)

(2,532)

(2,246)

(5,184)

(5,054)

Changes in fair value

6,015

8,938

258

14,953

(496)

Balance, end of period

$ 236,949

$ 229,576

$ 193,037

$ 236,949

$ 193,037

Supplemental Results

(Unaudited)

($ in thousands)

Loans Receivable and Loans Held for Sale

June 30,

March 31,

December 31,

2026

2025

Mortgage warehouse repurchase agreements (4)

$ 2,168,175

$ 1,982,411

$ 1,600,285

Residential real estate (1)

1,078,358

1,038,724

1,018,780

Multi-family financing

5,855,477

5,537,711

5,332,680

Healthcare financing

1,303,597

1,260,821

1,385,359

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

1,837,427

1,560,788

1,603,551

Agricultural production and real estate

91,609

92,527

92,077

Consumer and margin loans

3,960

3,731

1,950

Loans receivable

12,338,603

11,476,713

11,034,682

Less: Allowance for credit losses on loans

75,803

76,831

83,301

Loans receivable, net

$ 12,262,800

$ 11,399,882

$ 10,951,381

Loans held for sale (4)

4,615,894

4,709,688

3,873,012

Total loans, net of allowance

$ 16,878,694

$ 16,109,570

$ 14,824,393

(1) Includes $0.8 billion, $0.8 billion and $0.8 billion of All-In-One © first-lien home equity lines of credit as of June 30, 2026, March 31, 2026

and December 31, 2025, respectively.

(2) Includes $1.2 billion, $0.9 billion and $0.9 billion of revolving lines of credit collateralized primarily by mortgage servicing rights as of June

30, 2026, March 31, 2026 and December 31, 2025, respectively.

(3) Includes only $19.0 million, $19.7 million and $19.5 million of non-owner occupied commercial real estate as of June 30, 2026, March 31, 2026

and December 31, 2025, respectively.

(4) The warehouse portfolio is exclusively made up of loans to residential and multi-family mortgage bankers that are funding agency-eligible

mortgages and commercial loans, which represent all of the Company's loans to non-depository institutions.

Loan Credit Risk Profile

June 30, 2026

March 31, 2026

December 31, 2025

Amount

Pass

$ 11,893,874

96.4 %

$ 10,971,183

95.6 %

$ 10,526,493

95.4 %

Special mention

214,786

1.7 %

234,346

2.0 %

204,918

1.9 %

Substandard

229,943

1.9 %

271,184

2.4 %

303,271

2.7 %

Criticized loans

444,729

3.6 %

505,530

4.4 %

508,189

4.6 %

Total loans receivable

$ 12,338,603

100.0 %

$ 11,476,713

100.0 %

$ 11,034,682

100.0 %

Charge-offs (year-to-date)

$ 39,511

$ 22,979

$ 124,116

Recoveries (year-to-date)

$ 5,405

$ 616

$ 127

Nonperforming Loans

June 30,

March 31,

December 31,

2026

2025

Nonaccrual loans

$ 205,545

$ 239,108

$ 197,812

90 days past due and still accruing

8,350

—

Total nonperforming loans

$ 205,632

$ 247,458

$ 197,812

Other real estate owned

72,389

60,226

60,145

Total nonperforming assets

$ 278,021

$ 307,684

$ 257,957

Nonperforming loans to total loans receivable

1.67

2.16

1.79

Nonperforming assets to total assets

1.31

1.51

1.33

Delinquent Loans

June 30,

March 31,

December 31,

2026

2025

Delinquent loans:

Loans receivable

$ 207,700

$ 242,271

$ 206,561

Loans held for sale

263

264

265

Total delinquent loans

$ 207,963

$ 242,535

$ 206,826

Total loans receivable and loans held for sale

$ 16,954,497

$ 16,186,401

$ 14,907,694

Delinquent loans to total loans

1.23

1.50

1.39

Supplemental Results

(Unaudited)

($ in thousands)

Deposits

June 30,

March 31,

December 31,

2026

2025

Noninterest-bearing deposits

Core demand deposits

$ 606,682

$ 501,864

$ 604,081

Interest-bearing deposits

Demand deposits:

Core demand deposits

$ 7,820,104

$ 6,949,611

$ 6,207,814

Brokered demand deposits

503,257

301,111

600,000

Total interest-bearing demand deposits

8,323,361

7,250,722

6,807,814

Money market/savings deposits:

Core money market/savings deposits

3,944,677

3,872,344

3,566,523

Brokered money market/savings deposits

2,912

200,867

201,010

Total money market/savings deposits

3,947,589

4,073,211

3,767,533

Certificates of deposit:

Core certificates of deposit

585,061

741,452

905,448

Brokered certificates of deposit

791,621

384,504

956,316

Total certificates of deposit

1,376,682

1,125,956

1,861,764

Total interest-bearing deposits

13,647,632

12,449,889

12,437,111

Total deposits

$ 14,254,314

$ 12,951,753

$ 13,041,192

Total core deposits

$ 12,956,524

$ 12,065,271

$ 11,283,866

Total brokered deposits

1,297,790

886,482

1,757,326

Total deposits

$ 14,254,314

$ 12,951,753

$ 13,041,192

SOURCE Merchants Bancorp