Core Points - Merchants Bancorp reported a net income of $38.0 million for Q2 2025, a decrease of 50% compared to $76.4 million in Q2 2024 and a decrease of 35% from $58.2 million in Q1 2025 [1][12] - The decrease in net income was primarily due to a significant increase in the provision for credit losses, which rose by $43.1 million, or 432%, year-over-year and $45.3 million, or 586%, quarter-over-quarter [3][4][12] - Despite the challenges, the company noted a 17% reduction in total delinquencies and a 58% decline in loans classified as special mention during the quarter, indicating some improvement in asset quality [2][9] Financial Performance - The diluted earnings per common share for Q2 2025 were $0.60, down 60% from $1.49 in Q2 2024 and down 35% from $0.93 in Q1 2025 [1][12] - Total assets increased to $19.1 billion, up 2% from both March 31, 2025, and December 31, 2024, driven by higher balances in mortgage warehouse portfolios [5][12] - Noninterest income rose by $19.1 million, or 61%, compared to the previous year, primarily due to a robust gain on sale of loans [3][23] Asset Quality - The allowance for credit losses on loans increased to $91.8 million, reflecting a 10% increase from March 31, 2025, and a 9% increase from December 31, 2024 [7][12] - Charge-offs for the quarter totaled $46.1 million, primarily in the multi-family loan portfolio, compared to $3.5 million in Q2 2024 [8][12] - Loans classified as substandard increased to $417.7 million, while criticized loans overall declined by 19% compared to March 31, 2025 [9][10] Deposits and Liquidity - Total deposits reached $12.7 billion, an increase of 2% from March 31, 2025, and 6% from December 31, 2024, with core deposits representing 90% of total deposits [14][15] - Cash balances increased to $647.2 million, up 24% from March 31, 2025, and 36% from December 31, 2024, indicating strong liquidity [17][18] - The company had $5.0 billion in unused borrowing capacity, representing 26% of total assets, enhancing its liquidity position [12][17] Operating Results - Net interest income for Q2 2025 was $128.7 million, essentially unchanged from Q2 2024, while interest income decreased by 7% to $304.4 million [20][21] - Noninterest expense increased by 54% to $77.3 million, driven by higher salaries and employee benefits as well as other operational costs [24][30] - The net interest margin decreased to 2.83%, down 16 basis points from the previous year, impacted by a shift in business mix [25][34]

Financial Performance - Noninterest expense increased to $61,664 thousand in Q1 2025 from $48,912 thousand in Q1 2024, reflecting a rise of 26%[395] - Net interest income before provision for credit losses decreased to $122,196 thousand in Q1 2025 from $127,056 thousand in Q1 2024, a decline of 3%[395] - Total income fell to $145,889 thousand in Q1 2025 compared to $167,930 thousand in Q1 2024, representing a decrease of 13%[395] - The efficiency ratio worsened to 42.27% in Q1 2025 from 29.13% in Q1 2024, indicating increased operational costs relative to income[395] Equity and Assets - Total equity rose to $2,160,735 thousand in Q1 2025 from $1,776,468 thousand in Q1 2024, an increase of 22%[395] - Tangible common shareholders' equity increased to $1,601,376 thousand in Q1 2025 from $1,268,697 thousand in Q1 2024, a growth of 26%[395] - Assets grew to $18,797,800 thousand in Q1 2025 from $17,822,576 thousand in Q1 2024, reflecting an increase of 5.5%[395] - Tangible book value per common share increased to $34.90 in Q1 2025 from $29.26 in Q1 2024, a rise of 19%[395] Interest Rate Sensitivity - The company aims to limit the change in net interest income to 20% for a +/-100 basis point move in interest rates and 30% for a +/-200 basis point move[388] - Economic Value of Equity (EVE) results indicate that as interest rates rise, the economic value of equity is expected to decrease, with a projected change of -0.5% for a +200 basis point shift in rates as of March 31, 2025[390]

Core Insights - Merchants Bancorp reported a revenue of $145.89 million for the quarter ended March 2025, reflecting a 13.1% decline year-over-year and falling short of the Zacks Consensus Estimate of $167.04 million by 12.66% [1] - The company's earnings per share (EPS) was $0.93, down from $1.80 in the same quarter last year, and also below the consensus estimate of $1.25, resulting in an EPS surprise of -25.60% [1] Financial Performance Metrics - Efficiency Ratio was reported at 42.3%, higher than the three-analyst average estimate of 38% [4] - Net interest margin stood at 2.9%, slightly below the estimated 3% by three analysts [4] - Average Earning Assets were $17.14 billion, lower than the average estimate of $18.15 billion [4] - Tier I capital/risk-weighted assets Ratio was 12.4%, exceeding the two-analyst average estimate of 12% [4] - Total capital/risk-weighted assets Ratio was 13%, slightly above the estimated 12.9% by two analysts [4] - Loan servicing fees (costs), net, were $4.01 million, higher than the average estimate of $3.17 million [4] - Syndication and asset management fees were $3.39 million, below the average estimate of $5.08 million [4] - Other income was reported at $3.16 million, compared to the average estimate of $4.80 million [4] - Mortgage warehouse fees were $1.51 million, exceeding the average estimate of $1.24 million [4] - Total Noninterest Income was $23.69 million, significantly lower than the average estimate of $34.95 million [4] - Gain on Sale of Loans was $11.62 million, compared to the average estimate of $20.67 million [4] - Net Interest Income was reported at $122.20 million, below the average estimate of $132.11 million [4] Stock Performance - Shares of Merchants Bancorp have declined by 12.4% over the past month, while the Zacks S&P 500 composite decreased by 4.3% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Group 1: Earnings Performance - Merchants Bancorp reported quarterly earnings of $0.93 per share, missing the Zacks Consensus Estimate of $1.25 per share, and down from $1.80 per share a year ago, representing an earnings surprise of -25.60% [1] - The company posted revenues of $145.89 million for the quarter, missing the Zacks Consensus Estimate by 12.66%, and down from $167.93 million year-over-year [2] Group 2: Stock Performance and Outlook - Merchants Bancorp shares have declined approximately 11.1% since the beginning of the year, compared to a decline of -6.1% for the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $1.36 on revenues of $171.38 million, and for the current fiscal year, it is $5.42 on revenues of $692.7 million [7] Group 3: Industry Context - The Banks - Northeast industry, to which Merchants Bancorp belongs, is currently in the top 23% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Camden National, another bank in the same industry, is expected to report quarterly earnings of $0.99 per share, reflecting a year-over-year increase of +15.1%, with revenues expected to be $57.16 million, up 37.4% from the previous year [9]

Financial Performance - First quarter 2025 net income was $58.2 million, a decrease of $28.8 million or 33% compared to the first quarter of 2024, and a decrease of $37.4 million or 39% compared to the fourth quarter of 2024[1][5] - Diluted earnings per common share for the first quarter 2025 were $0.93, down 48% from $1.80 in the first quarter of 2024 and down 50% from $1.85 in the fourth quarter of 2024[2] - Net income available to common shareholders decreased by 50% to $42,603,000, reflecting a 46% decline year-over-year[54] - Net income for the three months ended March 31, 2025, was $58.24 million, down from $95.67 million in the previous quarter[59] Asset and Deposit Growth - Total assets increased by $975.2 million or 5% year-over-year to $18.8 billion as of March 31, 2025, remaining essentially unchanged from December 31, 2024[8] - Total deposits increased to $12,406,165 as of March 31, 2025, compared to $11,919,976 on December 31, 2024, representing a growth of approximately 4.1%[46] - Core deposits rose to $10.7 billion, an increase of $2.5 billion or 30% compared to March 31, 2024, and $1.3 billion or 14% compared to December 31, 2024, representing 86% of total deposits[21] - Cash and cash equivalents increased to $521,296 as of March 31, 2025, up from $476,610 on December 31, 2024, reflecting a growth of about 9.3%[46] Loan Performance - Non-performing loans increased to $284.6 million or 2.73% of loans receivable, compared to $131.8 million or 1.22% a year earlier[14] - Loans receivable, net of allowance for credit losses, stood at $10,343,724 as of March 31, 2025, showing a decrease from $10,354,002 on December 31, 2024[46] - The allowance for credit losses on loans increased by $7.7 million or 10% year-over-year to $83.4 million as of March 31, 2025[10] - The percentage of special mention loans rose to 3.9% from 3.6% in the previous quarter[63] Interest Income and Expense - Net interest income decreased by $4.9 million or 4% to $122.2 million, reflecting lower interest income and higher interest expense on borrowings[27] - Interest Expense decreased by $22.1 million, or 12%, to $165.0 million compared to $187.1 million, reflecting lower average balances at lower rates on certificates of deposit[30] - Interest Income decreased by $34.1 million, or 11%, to $287.2 million, reflecting a decrease in average yield and balances on loans[36] - Total interest income decreased by 11% to $287,204,000 compared to the previous quarter and by 9% year-over-year[49] Noninterest Income and Expense - Noninterest Income decreased by $17.2 million, or 42%, to $23.7 million, primarily due to a $19.3 million change in valuation adjustments[31] - Noninterest Income decreased by $35.5 million, or 60%, primarily due to a $13.4 million decrease in gain on sale of loans[39] - Noninterest Expense increased by $12.8 million, or 26%, to $61.7 million, driven by a $6.8 million increase in salaries and employee benefits[32] Equity and Liabilities - Total liabilities increased to $16,637,065 as of March 31, 2025, compared to $16,562,422 on December 31, 2024[46] - Shareholders' equity remained stable at $2,160,735 as of March 31, 2025, compared to $2,243,310 on December 31, 2024[46] - Total shareholders' equity stands at $2,160,735,000, indicating a strong financial position[47] Operational Efficiency - The efficiency ratio worsened to 42.27%, up from 32.62% in the previous quarter and 29.13% a year ago, reflecting increased operational costs[52] - Return on average tangible common shareholders' equity fell to 10.65%, down from 22.10% in the previous quarter and 25.34% a year ago[52] Miscellaneous - The company redeemed all outstanding shares of Series B Preferred Stock for approximately $125.0 million on January 2, 2025[7] - The accumulated other comprehensive loss in income is noted at $77,000,000, which may impact future earnings[47] - The company has issued and outstanding shares equivalent to 5,700,000,000 depositary shares[47]

Core Financial Performance - Merchants Bancorp reported a net income of $58.2 million for Q1 2025, a decrease of $28.8 million or 33% compared to Q1 2024, and a decrease of $37.4 million or 39% compared to Q4 2024 [1][4][9] - Diluted earnings per common share for Q1 2025 were $0.93, down 48% from $1.80 in Q1 2024 and down 50% from $1.85 in Q4 2024 [1][9] - 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, and a $4.9 million or 4% decrease in net interest income [3][4][25] Income and Expense Analysis - Noninterest income for Q1 2025 was $23.7 million, a decrease of $17.2 million or 42% compared to Q1 2024, mainly due to a $19.3 million change in valuation adjustments [25][30] - Noninterest expense increased to $61.7 million, up $12.8 million or 26% compared to Q1 2024, driven by higher salaries and employee benefits and increased credit risk transfer premium expenses [26][30] - Net interest income for Q1 2025 was $122.2 million, a decrease of $4.9 million or 4% compared to Q1 2024, reflecting lower interest income and higher interest expense on borrowings [21][27] Asset Quality and Credit Losses - The allowance for credit losses on loans increased to $83.4 million as of March 31, 2025, up $7.7 million or 10% compared to March 31, 2024 [7][8] - Non-performing loans rose to $284.6 million, or 2.73% of loans receivable, compared to $131.8 million or 1.22% a year earlier, primarily due to multi-family and healthcare customers facing delinquent payments [11][12] - The company recorded charge-offs totaling $10.5 million in Q1 2025, primarily in the multi-family loan portfolio, compared to $925,000 in charge-offs in Q1 2024 [10] Deposits and Liquidity - Total deposits were $12.4 billion as of March 31, 2025, a decrease of $1.6 billion or 11% compared to March 31, 2024, but an increase of $486.2 million or 4% compared to December 31, 2024 [16][17] - Core deposits increased to $10.7 billion, up $2.5 billion or 30% from March 31, 2024, representing 86% of total deposits [17][19] - The company had $4.7 billion in unused borrowing capacity with the Federal Home Loan Bank and the Federal Reserve Discount window, which is 25% of total assets [9][19] Securities and Investments - Total securities available for sale decreased to $961.2 million as of March 31, 2025, down $100.1 million or 9% compared to March 31, 2024 [14] - Total securities held to maturity increased to $1.6 billion, up $431.1 million or 37% compared to March 31, 2024, primarily due to purchases of senior investment securities [15]

Employee Relations and Engagement - As of December 31, 2024, the company had approximately 663 employees, with 388 located in Central Indiana[46] - The company achieved a turnover rate of only 9% in 2024, reflecting positive employee relations[47] - The company was recognized as one of the "Best Places to Work in Indiana" from 2016 to 2023 and as a "Top Workplace" by The Indianapolis Star in 2023 and 2024[47] - The company has established an Employee Stock Ownership Plan (ESOP) to align employee interests with shareholders, contributing 3% of eligible compensation under the 401(k) plan[47] - The company is committed to employee engagement and inclusion initiatives, fostering creativity and innovation[53] Financial Performance - Net income for 2024 reached $320,386, an increase of 14.7% compared to $279,234 in 2023[472] - Total interest income increased to $1,302,720 in 2024, up 20.8% from $1,077,798 in 2023[470] - Net interest income after provision for credit losses was $498,342, reflecting a 22.2% increase from $407,840 in 2023[470] - Noninterest income rose to $148,112, a 29.1% increase compared to $114,668 in 2023[470] - Total noninterest expense increased to $223,812, up 28.2% from $174,601 in 2023[470] - Basic earnings per share for 2024 was $6.32, compared to $5.66 in 2023, representing an increase of 11.6%[470] - Comprehensive income for 2024 was $322,741, an increase from $287,267 in 2023, reflecting an increase of 12.4%[472] Asset and Liability Management - The total assets of Merchants Bancorp as of December 31, 2024, were $18.81 billion, an increase from $16.95 billion in 2023, representing a growth of approximately 10.9%[467] - The loan portfolio totaled $10.4 billion as of December 31, 2024, with an allowance for credit losses (ACL) of $84.4 million, indicating a ratio of approximately 0.81%[460] - Total deposits decreased to $11.92 billion in 2024 from $14.06 billion in 2023, reflecting a decline of about 15.2%[467] - Shareholders' equity increased to $2.24 billion in 2024, up from $1.70 billion in 2023, marking a growth of approximately 31.9%[467] - The total borrowings increased significantly to $4.39 billion in 2024 from $964.1 million in 2023, reflecting a rise of approximately 355.5%[467] Regulatory Environment - The company is subject to extensive regulation under federal and state laws, impacting its growth and earnings performance[56] - The company has been continuously monitored since exceeding $10 billion in total assets, affecting its operations and results[58] - Merchants Bank was categorized as "well capitalized" as of December 31, 2024, meeting all regulatory capital requirements[86] - The bank's total risk-based capital ratio is at least 10.5%, with a Tier 1 risk-based capital ratio of at least 8.5% under Basel III standards[85] - The Dodd-Frank Act has imposed more stringent capital requirements on bank holding companies, affecting operational practices and potential revenue[99] Interest Rate Risk Management - Interest rate risk management is a priority, with the objective to limit changes in net interest income to 20% for +/- 100 basis points and 30% for +/- 200 basis points[447] - As of December 31, 2024, the projected dollar change in net interest income sensitivity for a +200 basis point shift is $68,263, reflecting a 13.1% increase[447] - The Economic Value of Equity (EVE) is projected to decrease by $2,990 for a +200 basis point shift in interest rates as of December 31, 2024[449] - The company’s Asset-Liability Committee meets quarterly to monitor interest rate risk sensitivity and ensure compliance with board-approved limits[442] - The company has identified two primary sources of market risk: interest rate risk and price risk related to market demand[439] Mortgage and Loan Operations - The company reported a significant increase in mortgage loans in process of securitization, rising to $428.2 million in 2024 from $110.6 million in 2023[467] - Provision for credit losses decreased to $24,278 in 2024 from $40,231 in 2023, a reduction of 39.7%[470] - The company recognizes gains on loan sales in noninterest income, which may include placement and origination fees, capitalized servicing rights, and trading gains[505] - The Company holds mortgage loans at the lower of cost or fair value, with net unrealized losses recognized through a valuation allowance included in noninterest income[504] Compliance and Legal Matters - The company must comply with various federal consumer protection laws, including the Fair Debt Collection Practices Act and the Truth in Lending Act, which regulate consumer interactions and disclosures[110] - The company does not anticipate significant operational impacts from the CFPB's rules, aside from increased compliance costs[105] - The company has emphasized the importance of maintaining strong internal controls over financial reporting as of December 31, 2024, to ensure compliance and accuracy[455] Cash Flow and Financing Activities - Net cash used in operating activities was $(835,278) in 2024, compared to $(356,402) in 2023, indicating a decline in cash flow from operations[1] - The company reported a net cash provided by financing activities of $1,601,741 in 2024, down from $3,974,741 in 2023[1] - Cash and cash equivalents at the end of the period decreased to $476,610 in 2024 from $584,422 in 2023, a decline of 18.4%[1] Tax and Accounting Policies - The Company adopted the Current Expected Credit Loss (CECL) model on January 1, 2022, which replaced the previous standard for measuring credit losses[514] - The Company recognizes interest and penalties related to uncertain tax positions as other noninterest expense[545] - The updates in FASB ASU 2023-09 regarding income tax disclosures will be effective for annual periods beginning after December 15, 2024[558]

Core Insights - Merchants Bancorp (MBIN) reported a revenue of $193.77 million for the quarter ended December 2024, marking a 22% increase year-over-year, with an EPS of $1.85 compared to $1.58 in the same quarter last year [1] - The revenue exceeded the Zacks Consensus Estimate of $159.8 million by 21.26%, and the EPS surpassed the consensus estimate of $1.27 by 45.67% [1] Financial Performance Metrics - Net interest margin was reported at 3%, above the average estimate of 2.9% from three analysts [4] - Average earning assets totaled $17.89 billion, slightly higher than the $17.76 billion average estimate from three analysts [4] - Total capital/risk-weighted assets ratio was 13.6%, exceeding the average estimate of 11.5% from two analysts [4] - Tier I capital/risk-weighted assets ratio stood at 13%, above the average estimate of 11.1% from two analysts [4] - Loan servicing fees (costs), net, were $14.95 million, significantly higher than the average estimate of $6.60 million from three analysts [4] - Syndication and asset management fees reached $9.32 million, compared to the average estimate of $3.12 million from three analysts [4] - Other income was reported at $8.44 million, exceeding the average estimate of $4.77 million from three analysts [4] - Total noninterest income was $59.15 million, far surpassing the average estimate of $28.96 million from three analysts [4] - Gain on sale of loans was $25.02 million, compared to the average estimate of $12.83 million from three analysts [4] - Net interest income was reported at $134.62 million, above the average estimate of $131.17 million from three analysts [4] Stock Performance - Shares of Merchants Bancorp have returned +11.1% over the past month, outperforming the Zacks S&P 500 composite's +0.8% change [3] - The stock currently holds a Zacks Rank 5 (Strong Sell), indicating potential underperformance in the near term [3]

Core Viewpoint - Merchants Bancorp (MBIN) reported quarterly earnings of $1.85 per share, significantly exceeding the Zacks Consensus Estimate of $1.27 per share, marking a 45.67% earnings surprise [1][2] Financial Performance - The company achieved revenues of $193.77 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 21.26%, compared to $158.78 million in the same quarter last year [2] - Over the last four quarters, Merchants Bancorp has exceeded consensus EPS estimates two times and revenue estimates two times [2] Stock Performance - Merchants Bancorp shares have increased approximately 11% since the beginning of the year, outperforming the S&P 500's gain of 2.2% [3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $1.16 on revenues of $157.34 million, and for the current fiscal year, it is $5.17 on revenues of $655.2 million [7] - The estimate revisions trend for Merchants Bancorp is currently unfavorable, resulting in a Zacks Rank 5 (Strong Sell), indicating expected underperformance in the near future [6] Industry Context - The Banks - Northeast industry, to which Merchants Bancorp belongs, is currently ranked in the top 9% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Financial Performance - Full year 2024 net income reached $320.4 million, a 15% increase compared to 2023[1] - Fourth quarter 2024 net income was $95.7 million, up 23% from the fourth quarter of 2023 and 56% from the third quarter of 2024[2] - Net income for Q4 2024 reached $95,666, representing a 56% increase from Q3 2024 and a 23% increase from Q4 2023[47] - Net income available to common shareholders for the twelve months ended December 31, 2024, was $283,654,000, reflecting a 16% increase compared to $244,564,000 in 2023[56] - Total net income for the three months ended December 31, 2024, was $95,666 thousand, an increase from $61,273 thousand in the previous quarter[60] Assets and Liabilities - Total assets increased to $18.8 billion, an 11% rise compared to December 31, 2023[1] - Total assets increased to $18,805,732 thousand as of December 31, 2024, up from $16,952,516 thousand a year earlier, representing a growth of 10.9%[44] - Total liabilities decreased slightly to $16,562,422 thousand from $15,251,432 thousand, indicating a year-over-year increase of 8.6%[44] - Shareholders' equity increased to $2,243,310 thousand, up from $1,701,084 thousand, marking a growth of 31.9% year-over-year[45] Deposits and Loans - Core deposits increased by $1.3 billion to $9.4 billion compared to December 31, 2023, while brokered deposits decreased by $3.4 billion to $2.5 billion[1] - Total deposits decreased to $11,919,976 thousand from $14,061,460 thousand, a decline of 15.3% compared to the previous year[44] - Non-performing loans increased to $279.7 million, or 2.68% of gross loans receivable, compared to 0.80% as of December 31, 2023[12] - Loans receivable, net of allowance, increased to $10,354,002 thousand as of December 31, 2024, from $10,261,890 thousand in the previous quarter[62] Income and Expenses - Noninterest income for the fourth quarter of 2024 increased by $24.7 million, or 72%, primarily driven by higher loan servicing fees and gains on loan sales[4] - Noninterest Expense increased by $10.6 million, or 20%, to $63.2 million, primarily due to higher salaries and a 61% increase in deposit insurance expenses[30] - Net Interest Income rose by $1.8 million, or 1%, to $134.6 million, driven by higher average balances on borrowings at lower interest rates[32] - Total interest income for Q4 2024 was $321,346, a decrease of 5% from Q3 2024 but an increase of 3% from Q4 2023[47] - Total interest expense decreased to $186,722 in Q4 2024, down 9% from Q3 2024[47] Efficiency and Ratios - The efficiency ratio improved to 32.62%, a decrease of 838 basis points compared to 41.00%[38] - Return on average tangible common shareholders' equity for the twelve months ended December 31, 2024, was 20.16%, down 276 basis points from 22.92% in 2023[56] - Efficiency ratio for the twelve months ended December 31, 2024, was 33.37%, an increase of 234 basis points from 31.03% in 2023[55] Other Key Metrics - Tangible book value per common share reached $34.15, a 25% increase from $27.40 in the fourth quarter of 2023[1] - Noninterest income surged to $59,145 in Q4 2024, a 253% increase from Q3 2024 and a 72% increase from Q4 2023[51] - Provision for credit losses significantly decreased by 61% to $2,689 in Q4 2024 compared to Q3 2024[47] - The company executed a credit default swap on a $1.2 billion pool of warehouse loans to reduce risk-based capital requirements[5]