Merchants Bancorp Reports Third Quarter of 2026 Results

Merchants Bancorp Reports Third Quarter of 2026 Results CARMEL, Ind., Oct. 28, 2026 /PRNewswire/ -- Merchants Bancorp (the "Company" or "Merchants") (Nasdaq: MBIN), parent company of Merchants Bank, today reported third quarter of 2026 net income of $105.2 million, or diluted earnings per common share of $2.06. This compared to $54.7 million, or diluted earnings per common share of $0.97 in the third quarter of 2025, and compared to $78.3 million, or diluted earnings per common share of $1.48 in the second quarter of 2026.

"Our third-quarter results demonstrate the strength of our diversified business model and disciplined execution across the Company. Earnings increased significantly, tangible book value per common share reached a record high for the 31st consecutive quarter, and we reported lower nonperforming loans and substantially lower charge-offs. While we remain focused on the migration within criticized loan classifications, our strong capital and liquidity position provides the flexibility to support our clients and pursue disciplined growth," said Michael F. Petrie, Chairman and CEO of Merchants.

Michael J. Dunlap, President and Chief Operating Officer of Merchants, added, "We delivered strong operating performance during the quarter, with higher servicing rights and derivative valuations that provide an earnings hedge to pressure on gain on sale revenue in the current interest rate environment. Our recently completed acquisition expands our single-family mortgage production capabilities and presence in jumbo lending, creating additional opportunities to generate gain on sale revenue as the platform scales. Although the acquired operations may be dilutive during the initial ramp-up period, we remain focused on effective integration and believe the transaction will support earnings growth over time."

Net income for the third quarter of 2026 was $105.2 million, an increase of $50.5 million, or 92%, compared to $54.7 million in the third quarter of 2025. The increase was driven by a $37.8 million, or 88%, increase in noninterest income, and a $33.3 million, or 34%, increase in net interest income after provision for credit losses. These were partially offset by an $18.4 million, or 186%, increase in provision for income taxes, and a $2.3 million, or 3% increase in noninterest expense.

Net income for the third quarter of 2026 increased $26.9 million, or 34%, from $78.3 million in the second quarter of 2026. The improvement was primarily driven by a $35.1 million, or 77%, increase in noninterest income, which was partially offset by a $6.8 million, or 31%, increase in provision for income taxes, and a $6.3 million, or 9%, increase in noninterest expense.

Total Assets

Total assets of $20.9 billion at September 30, 2026 decreased $346.5 million, or 2%, compared to June 30, 2026, and increased $1.4 billion, or 7%, compared to December 31, 2025. The increase compared to December 31, 2025 was primarily due to higher balances in the multi-family portfolio, revolving lines of credit collateralized by mortgage servicing rights that are included in the commercial and commercial real estate portfolio, and the warehouse portfolio.

Asset Quality

As of September 30, 2026, the allowance for credit losses on loans was $82.1 million. The allowance increased $6.3 million, or 8%, from June 30, 2026, primarily due to higher specific reserves and adjustments to qualitative factors related to rising interest rates. Compared with December 31, 2025, the allowance decreased $1.2 million, or 1%.

During the third quarter of 2026, the Company recorded $3.9 million of charge-offs and $0.2 million of recoveries, compared with $16.5 million of charge-offs and $4.8 million of recoveries in the second quarter of 2026 and $29.5 million of charge-offs and $23,000 of recoveries in the third quarter of 2025.

As of September 30, 2026, nonperforming loans were $180.3 million, or 1.47% of loans receivable, compared with $205.6 million, or 1.67%, as of June 30, 2026, and $197.8 million, or 1.79%, as of December 31, 2025. Nonperforming loans decreased $25.4 million, or 12%, from June 30, 2026, primarily due to loan payoffs and the transfer of one loan to other real estate owned.

Overall, criticized loans receivable of $460.1 million increased $15.4 million, or 3%, compared to June 30, 2026, and decreased $48.1 million, or 9%, compared to December 31, 2025. As of September 30, 2026, 6% of the criticized loans were covered by credit default swaps.

Loans classified as special mention, which often serve as an earlier-stage indicator of potential credit deterioration, declined to $181.4 million as of September 30, 2026, from $214.8 million as of June 30, 2026 and $204.9 million as of December 31, 2025. The decreases of $33.4 million, or 16%, from June 30, 2026 and $23.5 million, or 11%, from December 31, 2025 indicate moderation in earlier-stage criticized classifications. Substandard loans increased $48.8 million from June 30, 2026, primarily reflecting migration within criticized classifications, and contributed to the sequential increase in total criticized loans. Management continues to monitor these relationships individually, including borrower performance, collateral values, and expected resolution strategies.

As of September 30, 2026, all substandard loans have been individually evaluated for expected credit losses, resulting in specific reserves of $6.6 million. Based on its current evaluations, the Company believes the loan portfolio remains well collateralized.

Total delinquent loans of $215.6 million increased $7.6 million, or 4%, compared to June 30, 2026, primarily in the single-family portfolio, while delinquency in the multi-family portfolio declined. As of September 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 also entered into 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. Although these loans are subject to credit protection, the Company is required to maintain an allowance for credit losses on loans held for investment. As of September 30, 2026, the remaining balance of loans protected by credit default swaps was $2.1 billion.

Total Deposits

Total deposits of $15.0 billion at September 30, 2026, increased $787.5 million, or 6%, compared to June 30, 2026, and $2.0 billion, or 15%, compared to December 31, 2025. The increase in both periods primarily reflected the growth in core deposits.

Core deposits of $14.3 billion at September 30, 2026, reflected increases of $1.4 billion, or 11%, from June 30, 2026, and $3.0 billion, or 27%, from December 31, 2025. Core deposits represented 95% of total deposits at September 30, 2026, 91% of total deposits at June 30, 2026, and 87% of total deposits at December 31, 2025.

Brokered deposits of $723.5 million at September 30, 2026 decreased $574.3 million, or 44%, from June 30, 2026, and $1.0 billion, or 59%, from December 31, 2025. As of September 30, 2026, brokered certificates of deposit had a weighted average remaining maturity of 41 days.

Liquidity

The Company maintained strong liquidity, supported by substantial borrowing capacity, including unused lines of credit totaling $6.3 billion as of September 30, 2026, compared to $5.5 billion at June 30, 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 $6.3 billion, these totaled $13.0 billion, or 62%, of its $20.9 billion of total assets as of September 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

September 30, 2026 and 2025

Net Interest Income of $144.2 million increased $16.1 million, or 13%, compared to $128.1 million. The increase reflected a $9.4 million, or 3%, increase in interest income and a $6.7 million, or 4%, decrease in interest expense.

Interest Income of $311.2 million increased $9.4 million, or 3%, from $301.8 million. The increase primarily reflected higher average balances of loans and loans held for sale and of interest-earning deposits, and other interest or dividends, partially offset by lower average yields.

Interest Expense of $167.0 million decreased $6.7 million, or 4%, compared to $173.7 million. The decrease primarily reflected lower average balances on certificates of deposit at lower rates, which were partially offset by higher average balances on interest-bearing checking accounts at lower average rates.

Provision for Credit Losses was $12.0 million, a decrease of $17.2 million, or 59%, compared to $29.2 million, reflecting improved asset quality, including lower charge-offs.

Noninterest Income of $80.8 million increased $37.8 million, or 88%, compared to $43.0 million. The increase was primarily due to an increase of $26.2 million, or 329%, in loan servicing fees, and an increase of $16.0 million, or 426%, in other noninterest income, partially offset by a $5.6 million, or 23%, decrease in gain on sale of loans.

Noninterest Expense of $79.5 million increased $2.3 million, or 3%, from $77.3 million. The increase primarily reflected a $2.9 million increase in credit risk transfer premium expense and higher other noninterest and technology expenses, partially offset by decreases of $3.4 million in deposit insurance expense and $1.6 million in professional fees.

Comparison of Operating Results for the Three Months Ended

September 30, 2026 and June 30, 2026

Net Interest Income of $144.2 million increased $7.7 million, or 6%, compared to $136.5 million. The increase reflected a $17.1 million, or 6%, increase in interest income, partially offset by a $9.5 million, or 6%, increase in interest expense.

Interest Income of $311.2 million increased $17.1 million, or 6%, from $294.1 million. The increase primarily reflected higher average yields on loans and loans held for sale, as well as higher average balances at lower yields on interest-earning deposits and other interest or dividends.

Interest Expense of $167.0 million increased $9.5 million, or 6%, compared to $157.5 million. The increase was primarily driven by higher average balances at higher average rates on interest-bearing checking accounts.

Provision for Credit Losses increased $2.8 million, or 31%, to $12.0 million from $9.2 million, primarily due to higher specific reserves.

Noninterest Income of $80.8 million increased $35.1 million, or 77%, from $45.7 million. The increase reflected a $22.2 million, or 185%, increase in loan servicing fees, an $8.0 million, or 68%, increase in other noninterest income, and a $5.9 million, or 45%, increase in gain on sale of loans.

Noninterest Expense of $79.5 million increased $6.3 million, or 9%, from $73.2 million, primarily due to a $5.7 million increase in salaries and employee benefits, including higher commissions associated with increased production volume.

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 $20.9 billion in assets and $15.0 billion in deposits as of September 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)

September 30,

June 30,

March 31,

December 31,

September 30,

2026

2025

Assets

Cash and due from banks

11,906

17,875

19,642

15,844

11,566

Interest-earning demand accounts

307,938

296,828

63,573

196,358

586,470

Cash and cash equivalents

319,844

314,703

83,215

212,202

598,036

Securities purchased under agreements to resell

1,489

1,501

1,511

1,520

1,529

Mortgage loans in process of securitization

447,905

407,418

437,001

620,094

414,786

Securities available for sale (includes $496,567, $527,676,

$550,207, $571,314 and $591,379 at fair value)

787,423

820,105

843,896

865,058

885,070

Securities held to maturity (fair value of $1,535,615, $1,353,543,

$1,426,444, $1,543,554 and $1,670,306)

1,535,361

1,354,885

1,425,982

1,543,659

1,670,555

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

227,589

217,850

Loans held for sale (includes $169,774, $148,368, $163,426,

$76,980 and $112,832 at fair value)

4,043,914

4,615,894

4,709,688

3,873,012

4,129,329

Loans receivable (includes $41,548, $46,024, $46,427, $47,318

and $0 at fair value), net of allowance for credit losses on loans of

$82,130, $75,803, $76,831, $83,301 and $93,330

12,184,623

12,262,800

11,399,882

10,951,381

10,515,221

Premises and equipment, net

76,704

74,664

73,695

73,929

75,148

Servicing rights

267,613

236,949

229,576

217,296

213,156

Interest receivable

81,042

82,078

77,326

81,807

82,445

Goodwill

19,144

8,014

Other real estate owned

91,696

72,389

60,226

60,145

4,347

Other assets and receivables

799,152

750,993

744,181

713,237

539,161

Total assets

20,883,499

21,229,982

20,321,782

19,448,943

19,354,647

Liabilities and Shareholders' Equity

Liabilities

Deposits

Noninterest-bearing

531,108

606,682

501,864

604,081

399,814

Interest-bearing

14,510,687

13,647,632

12,449,889

12,437,111

13,534,891

Total deposits

15,041,795

14,254,314

12,951,753

13,041,192

13,934,705

Borrowings

3,017,581

4,282,597

4,773,490

3,842,592

2,902,631

Deferred and current tax liabilities, net

60,462

50,140

46,403

33,900

28,973

Other liabilities

280,364

249,127

219,833

250,500

262,904

Total liabilities

18,400,202

18,836,178

17,991,479

17,168,184

17,129,213

Commitments and Contingencies

Shareholders' Equity

Common stock, without par value

Authorized - 75,000,000 shares

Issued and outstanding - 45,940,371 shares, 45,938,075 shares,

45,935,408 shares, 45,893,172 shares and 45,889,238 shares

245,265

244,345

243,433

243,310

242,371

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

1,689,230

1,599,367

1,536,383

1,486,191

1,431,983

Accumulated other comprehensive loss

(2,489)

(1,199)

(804)

(33)

(211)

Total shareholders' equity

2,483,297

2,393,804

2,330,303

2,280,759

2,225,434

Total liabilities and shareholders' equity

20,883,499

21,229,982

20,321,782

19,448,943

19,354,647

Consolidated Statement of Income

(Unaudited)

(In thousands, except share data)

Three Months Ended

Change

September 30,

June 30,

September 30,

3Q26

2026

2025

vs. 2Q26

vs. 3Q25

Interest Income

Loans

261,789

252,546

254,101

4 %

3 %

Mortgage loans in process of securitization

5,240

4,455

5,308

18 %

(1) %

Investment securities:

Available for sale

9,377

9,562

11,880

(2) %

(21) %

Held to maturity

20,056

18,076

22,427

11 %

(11) %

FHLB stock and other equity securities (dividends)

4,866

4,979

4,265

(2) %

14 %

Other

9,858

4,454

3,798

121 %

160 %

Total interest income

311,186

294,072

301,779

6 %

3 %

Interest Expense

Deposits

129,627

116,839

139,744

11 %

(7) %

Short-term borrowings

34,715

37,608

25,926

(8) %

34 %

Long-term borrowings

2,675

3,089

8,051

(13) %

(67) %

Total interest expense

167,017

157,536

173,721

6 %

(4) %

Net Interest Income

144,169

136,536

128,058

6 %

13 %

Provision for credit losses

12,003

9,184

29,239

31 %

(59) %

Net Interest Income After Provision for Credit Losses

132,166

127,352

98,819

4 %

34 %

Noninterest Income

Gain on sale of loans

19,045

13,160

24,671

45 %

(23) %

Loan servicing fees, net

34,225

11,992

7,986

185 %

329 %

Mortgage warehouse fees

1,698

1,857

1,736

(9) %

(2) %

Syndication and asset management fees

6,050

6,933

4,864

(13) %

24 %

Other income

19,754

11,738

3,757

68 %

426 %

Total noninterest income

80,772

45,680

43,014

77 %

88 %

Noninterest Expense

Salaries and employee benefits

44,999

39,345

44,152

14 %

2 %

Loan expense

998

1,177

1,263

(15) %

(21) %

Occupancy and equipment

3,360

3,462

2,453

(3) %

37 %

Professional fees

1,793

3,328

3,371

(46) %

(47) %

Deposit insurance expense

5,972

5,893

9,376

1 %

(36) %

Technology expense

3,959

2,893

2,608

37 %

52 %

Credit risk transfer premium expense

7,106

6,100

4,194

16 %

69 %

Other expense

11,333

11,050

9,833

3 %

15 %

Total noninterest expense

79,520

73,248

77,250

9 %

3 %

Income Before Income Taxes

133,418

99,784

64,583

34 %

107 %

Provision for income taxes

28,237

21,481

9,882

31 %

186 %

Net Income

105,181

78,303

54,701

34 %

92 %

Dividends on preferred stock

(10,265)

(10,266)

(10,265)

—

Net Income Available to Common Shareholders

94,916

68,037

44,436

40 %

114 %

Basic Earnings Per Share

2.07

1.48

0.97

40 %

113 %

Diluted Earnings Per Share

2.06

1.48

0.97

39 %

112 %

Weighted-Average Shares Outstanding

Basic

45,939,123

45,936,610

45,887,143

Diluted

46,032,977

46,005,938

45,950,216

Consolidated Statement of Income

(Unaudited)

(In thousands, except share data)

Nine Months Ended

September 30,

2026

2025

Change

Interest Income

Loans

744,604

749,022

(1) %

Mortgage loans in process of securitization

14,082

14,355

(2) %

Investment securities:

Available for sale

28,881

36,333

(21) %

Held to maturity

57,611

69,951

(18) %

FHLB stock and other equity securities (dividends)

14,239

13,278

7 %

Other

16,352

10,443

57 %

Total interest income

875,769

893,382

(2) %

Interest Expense

Deposits

356,315

395,060

(10) %

Short-term borrowings

101,260

96,271

5 %

Long-term borrowings

8,841

23,078

(62) %

Total interest expense

466,416

514,409

(9) %

Net Interest Income

409,353

378,973

8 %

Provision for credit losses

36,486

89,993

(59) %

Net Interest Income After Provision for Credit Losses

372,867

288,980

29 %

Noninterest Income

Gain on sale of loans

45,711

59,632

(23) %

Loan servicing fees, net

61,316

18,134

238 %

Mortgage warehouse fees

5,175

5,288

(2) %

Syndication and asset management fees

16,100

17,960

(10) %

Other income

44,749

16,173

177 %

Total noninterest income

173,051

117,187

48 %

Noninterest Expense

Salaries and employee benefits

122,909

124,137

(1) %

Loan expense

3,360

3,203

5 %

Occupancy and equipment

9,903

7,298

36 %

Professional fees

7,888

9,424

(16) %

Deposit insurance expense

20,273

23,756

(15) %

Technology expense

9,531

7,428

28 %

Credit risk transfer premium expense

18,970

12,823

48 %

Other expense

35,576

28,182

26 %

Total noninterest expense

228,410

216,251

6 %

Income Before Income Taxes

317,508

189,916

67 %

Provision for income taxes

66,292

38,995

70 %

Net Income

251,216

150,921

66 %

Dividends on preferred stock

(30,796)

—

Impact of preferred stock redemption

—

(5,371)

(100) %

Net Income Available to Common Shareholders

220,420

114,754

92 %

Basic Earnings Per Share

4.80

2.50

92 %

Diluted Earnings Per Share

4.79

2.50

92 %

Weighted-Average Shares Outstanding

Basic

45,935,256

45,865,167

Diluted

46,012,252

45,931,518

Key Operating Results

(Unaudited)

($ in thousands, except share data)

Three Months Ended

Change

September 30,

June 30,

September 30,

3Q26

2026

2025

vs. 2Q26

vs. 3Q25

Noninterest expense

79,520

73,248

77,250

9 %

3 %

Net interest income (before provision for credit losses)

144,169

136,536

128,058

6 %

13 %

Noninterest income

80,772

45,680

43,014

77 %

88 %

Total income

224,941

182,216

171,072

23 %

31 %

Efficiency ratio

35.35

40.20

45.16

(485)

bps

(981)

bps

Average assets

21,389,646

20,578,875

18,813,165

4 %

14 %

Net income

105,181

78,303

54,701

34 %

92 %

Return on average assets before annualizing

0.49

0.38

0.29

Annualization factor

4.00

Return on average assets

1.97

1.52

1.16

bps

Return on average tangible common shareholders' equity (1)

20.11

14.95

10.69

516

bps

942

bps

Tangible book value per common share (1)

41.64

39.93

36.31

4 %

15 %

Tangible common shareholders' equity/tangible assets (1)

9.17

8.64

8.61

bps

Consolidated ratios

Total capital/risk-weighted assets (2)

13.3

12.5

13.6

Tier I capital/risk-weighted assets (2)

12.8

12.1

13.0

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

9.9

9.3

9.8

Tier I capital/average assets (2)

11.5

11.6

11.8

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

(2) As defined by regulatory agencies; September 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

September 30,

June 30,

September 30,

3Q26

2026

2025

vs. 2Q26

vs. 3Q25

Average shareholders' equity

2,447,619

2,379,573

2,221,677

3 %

10 %

Less: average goodwill & intangibles

(8,163)

(8,043)

(8,059)

1 %

Less: average preferred stock

(551,291)

—

Average tangible common shareholders' equity

1,888,165

1,820,239

1,662,327

4 %

14 %

Annualization factor

4.00

Return on average tangible common shareholders' equity

20.11

14.95

10.69

516

bps

942

bps

Total equity

2,483,297

2,393,804

2,225,434

4 %

12 %

Less: goodwill and intangibles

(19,179)

(8,040)

(8,056)

139 %

138 %

Less: preferred stock

(551,291)

—

Tangible common shareholders' equity

1,912,827

1,834,473

1,666,087

4 %

15 %

Assets

20,883,499

21,229,982

19,354,647

(2) %

8 %

Less: goodwill and intangibles

(19,179)

(8,040)

(8,056)

139 %

138 %

Tangible assets

20,864,320

21,221,942

19,346,591

(2) %

8 %

Ending common shares

45,940,371

45,938,075

45,889,238

Tangible book value per common share

41.64

39.93

36.31

4 %

15 %

Tangible common shareholders' equity/tangible assets

9.17

8.64

8.61

bps

Key Operating Results

(Unaudited)

($ in thousands, except share data)

Nine Months Ended

September 30,

2026

2025

Change

Noninterest expense

228,410

216,251

6 %

Net interest income (before provision for credit losses)

409,353

378,973

8 %

Noninterest income

173,051

117,187

48 %

Total income

582,404

496,160

17 %

Efficiency ratio

39.22

43.58

(436)

bps

Average assets

20,316,082

18,546,941

10 %

Net income

251,216

150,921

66 %

Return on average assets before annualizing

1.24

0.81

Annualization factor

1.33

Return on average assets

1.64

1.08

bps

Return on average tangible common shareholders' equity (1)

16.06

9.33

673

bps

Tangible book value per common share (1)

41.64

36.31

15 %

Tangible common shareholders' equity/tangible assets (1)

9.17

8.61

bps

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

Nine Months Ended

September 30,

2026

2025

Change

Average shareholders' equity

2,384,971

2,194,786

9 %

Less: average goodwill & intangibles

(8,085)

(8,065)

—

Less: average preferred stock

(551,291)

(551,733)

—

Average tangible common shareholders' equity

1,825,595

1,634,988

12 %

Annualization factor

1.33

Return on average tangible common shareholders' equity

16.06

9.33

673

bps

Total equity

2,483,297

2,225,434

12 %

Less: goodwill and intangibles

(19,179)

(8,056)

138 %

Less: preferred stock

(551,291)

—

Tangible common shareholders' equity

1,912,827

1,666,087

15 %

Assets

20,883,499

19,354,647

8 %

Less: goodwill and intangibles

(19,179)

(8,056)

138 %

Tangible assets

20,864,320

19,346,591

8 %

Ending common shares

45,940,371

45,889,238

Tangible book value per common share

41.64

36.31

15 %

Tangible common shareholders' equity/tangible assets

9.17

8.61

bps

Merchants Bancorp

Average Balance Analysis

($ in thousands)

(Unaudited)

Three Months Ended

September 30, 2026

June 30, 2026

September 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

1,261,259

14,724

4.63 %

689,479

9,433

5.49 %

556,894

8,063

5.74 %

Securities available for sale

811,347

9,377

4.59 %

832,715

9,562

4.61 %

923,603

11,880

5.10 %

Securities held to maturity

1,547,486

20,056

5.14 %

1,398,098

18,076

5.19 %

1,510,857

22,427

5.89 %

Mortgage loans in process of securitization

385,028

5,240

5.40 %

353,297

4,455

5.06 %

395,388

5,308

5.33 %

Loans and loans held for sale

16,223,620

261,789

6.40 %

16,185,486

252,546

6.26 %

14,654,535

254,101

6.88 %

Total interest-earning assets

20,228,740

311,186

6.10 %

19,459,075

294,072

6.06 %

18,041,277

301,779

6.64 %

Allowance for credit losses on loans

(75,220)

(80,566)

(105,347)

Noninterest-earning assets

1,236,126

1,200,366

877,235

Total assets

21,389,646

20,578,875

18,813,165

Liabilities & Shareholders' Equity:

Interest-bearing checking

9,374,540

83,186

3.52 %

7,891,368

67,395

3.43 %

7,451,868

75,415

4.02 %

Money market/savings deposits

3,966,775

35,540

3.55 %

4,117,113

36,120

3.52 %

3,806,731

38,547

4.02 %

Certificates of deposit

1,123,002

10,901

3.85 %

1,386,717

13,324

3.85 %

2,238,401

25,782

4.57 %

Total interest-bearing deposits

14,464,317

129,627

3.56 %

13,395,198

116,839

3.50 %

13,497,000

139,744

4.11 %

Borrowings

3,641,885

37,390

4.07 %

4,017,881

40,697

4.06 %

2,476,365

33,977

5.44 %

Total interest-bearing liabilities

18,106,202

167,017

3.66 %

17,413,079

157,536

3.63 %

15,973,365

173,721

4.31 %

Noninterest-bearing deposits

562,897

542,526

392,569

Noninterest-bearing liabilities

272,928

243,697

225,554

Total liabilities

18,942,027

18,199,302

16,591,488

Shareholders' equity

2,447,619

2,379,573

2,221,677

Total liabilities and shareholders' equity

21,389,646

20,578,875

18,813,165

Net interest income

144,169

136,536

128,058

Net interest spread

2.44 %

2.43 %

2.33 %

Net interest-earning assets

2,122,538

2,045,996

2,067,912

Net interest margin

2.83 %

2.81 %

2.82 %

Average interest-earning assets to

average interest-bearing liabilities

111.72 %

111.75 %

112.95 %

Supplemental Results

(Unaudited)

($ in thousands)

Net Income

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

2026

2025

2026

2025

Segment

Multi-family Mortgage Banking

30,817

10,336

12,076

52,167

24,758

Mortgage Warehousing

44,550

30,599

23,564

103,797

61,948

Banking

43,774

47,337

29,551

129,091

91,232

Other

(13,960)

(9,969)

(10,490)

(33,839)

(27,017)

Total

105,181

78,303

54,701

251,216

150,921

Total Assets

September 30, 2026

June 30, 2026

December 31, 2025

Amount

Segment

Multi-family Mortgage Banking

579,955

3 %

567,941

2 %

526,423

3 %

Mortgage Warehousing

8,086,866

39 %

8,647,738

41 %

7,251,653

37 %

Banking

11,760,899

56 %

11,581,635

55 %

11,307,401

58 %

Other

455,779

2 %

432,668

2 %

363,466

2 %

Total

20,883,499

100 %

21,229,982

100 %

19,448,943

100 %

Gain on Sale of Loans

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

2026

2025

2026

2025

Loan Type

Multi-family

18,583

11,755

22,458

41,760

52,398

Single-family

(403)

489

775

474

3,409

Small Business Association (SBA)

865

916

1,438

3,477

3,825

Total

19,045

13,160

24,671

45,711

59,632

Servicing Rights

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

2026

2025

2026

2025

Balance, beginning of period

236,949

229,576

193,037

217,296

189,935

Additions

Purchased servicing

110

12,858

235

12,928

Originated servicing

5,422

4,010

7,588

15,181

16,170

Subtractions

Paydowns

(3,019)

(2,652)

(2,450)

(8,203)

(7,504)

Changes in fair value

28,151

6,015

2,123

43,104

1,627

Balance, end of period

267,613

236,949

213,156

267,613

213,156

Supplemental Results

(Unaudited)

($ in thousands)

Loans Receivable and Loans Held for Sale

September 30,

June 30,

December 31,

2026

2025

Mortgage warehouse repurchase agreements (4)

1,901,659

2,168,175

1,600,285

Residential real estate (1)

1,044,688

1,078,358

1,018,780

Multi-family financing

6,088,475

5,855,477

5,332,680

Healthcare financing

1,160,189

1,303,597

1,385,359

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

1,972,519

1,837,427

1,603,551

Agricultural production and real estate

95,392

91,609

92,077

Consumer and margin loans

3,831

3,960

1,950

Loans receivable

12,266,753

12,338,603

11,034,682

Less: Allowance for credit losses on loans

82,130

75,803

83,301

Loans receivable, net

12,184,623

12,262,800

10,951,381

Loans held for sale (4)

4,043,914

4,615,894

3,873,012

Total loans, net of allowance

16,228,537

16,878,694

14,824,393

(1)

Includes $0.8 billion of All-In-One © first-lien home equity lines of credit as of September 30, 2026, June 30, 2026 and December 31, 2025.

(2)

Includes $1.2 billion, $1.2 billion and $0.9 billion of revolving lines of credit collateralized primarily by mortgage servicing rights as of September 30, June 30, 2026 and December 31, 2025, respectively.

(3)

Includes only $6.9 million, $19.0 million and $19.5 million of non-owner occupied commercial real estate as of September 30, 2026, June 30, 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

September 30, 2026

June 30, 2026

December 31, 2025

Amount

Pass

11,806,653

96.2 %

11,893,874

96.4 %

10,526,493

95.4 %

Special mention

181,402

1.5 %

214,786

1.7 %

204,918

1.9 %

Substandard

278,698

2.3 %

229,943

1.9 %

303,271

2.7 %

Criticized loans

460,100

3.8 %

444,729

3.6 %

508,189

4.6 %

Total loans receivable

12,266,753

100.0 %

12,338,603

100.0 %

11,034,682

100.0 %

Charge-offs (year-to-date)

43,398

39,511

124,116

Recoveries (year-to-date)

5,612

5,405

127

Nonperforming Loans

September 30,

June 30,

December 31,

2026

2025

Nonaccrual loans

177,568

205,545

197,812

90 days past due and still accruing

2,710

—

Total nonperforming loans

180,278

205,632

197,812

Other real estate owned

91,696

72,389

60,145

Total nonperforming assets

271,974

278,021

257,957

Nonperforming loans to total loans receivable

1.47

1.67

1.79

Nonperforming assets to total assets

1.30

1.31

1.33

Delinquent Loans

September 30,

June 30,

December 31,

2026

2025

Delinquent loans:

Loans receivable

215,560

207,700

206,561

Loans held for sale

—

263

265

Total delinquent loans

215,560

207,963

206,826

Total loans receivable and loans held for sale

16,310,667

16,954,497

14,907,694

Delinquent loans to total loans

1.32

1.23

1.39

Supplemental Results

(Unaudited)

($ in thousands)

Deposits

September 30,

June 30,

December 31,

2026

2025

Noninterest-bearing deposits

Core demand deposits

531,108

606,682

604,081

Interest-bearing deposits

Demand deposits:

Core demand deposits

9,329,208

7,820,104

6,207,814

Brokered demand deposits

350,321

503,257

600,000

Total interest-bearing demand deposits

9,679,529

8,323,361

6,807,814

Money market/savings deposits:

Core money market/savings deposits

3,993,613

3,944,677

3,566,523

Brokered money market/savings deposits

381

2,912

201,010

Total money market/savings deposits

3,993,994

3,947,589

3,767,533

Certificates of deposit:

Core certificates of deposits

464,364

585,061

905,448

Brokered certificates of deposits

372,800

791,621

956,316

Total certificates of deposits

837,164

1,376,682

1,861,764

Total interest-bearing deposits

14,510,687

13,647,632

12,437,111

Total deposits

15,041,795

14,254,314

13,041,192

Total core deposits

14,318,293

12,956,524

11,283,866

Total brokered deposits

723,502

1,297,790

1,757,326

Total deposits

15,041,795

14,254,314

13,041,192

SOURCE Merchants Bancorp