Merchants Bancorp(MBINL) - 2025 Q2 - Quarterly Results

Executive Summary & Highlights Q2 2025 net income declined due to credit loss provisions, despite record tangible book value and strong liquidity Second Quarter 2025 Financial Performance Overview Merchants Bancorp reported a significant decrease in Q2 2025 net income and diluted EPS compared to both Q2 2024 and Q1 2025, primarily due to a substantial increase in provision for credit losses. Despite this, tangible book value per common share reached a record high, and the company maintained strong liquidity and saw growth in core deposits Key Financial Highlights (Q2 2025 vs. Prior Periods) | Metric | Q2 2025 | Change vs Q2 2024 | Change vs Q1 2025 | | :-------------------------------- | :-------- | :------------------ | :------------------ | | Net Income | $38.0 million | -$38.4 million | -$20.3 million | | Diluted EPS | $0.60 | -60% | -35% | | Provision for Credit Losses | N/A | +$43.1 million | +$45.3 million | | Tangible Book Value per Common Share | $35.42 | +13% | +1% | | Total Assets | $19.1 billion | +2% (vs Dec 31, 2024) | +2% (vs Mar 31, 2025) | | Core Deposits | $11.4 billion | +22% (vs Dec 31, 2024) | +7% (vs Mar 31, 2025) | | Brokered Deposits | $1.3 billion | -50% (vs Dec 31, 2024) | -27% (vs Mar 31, 2025) | - Completed a $373.3 million securitization of 18 multi-family mortgage loans through a Freddie Mac-sponsored Q-Series transaction[1] Management Commentary Management acknowledged a difficult quarter due to increased credit loss provisions and charge-offs, largely from mortgage fraud, but highlighted underlying earnings resilience, significant gain on sale of loans, and record tangible book value. They also noted a reduction in delinquencies and special mention loans, and outlined strategies to enhance asset quality and risk management - CEO Michael F. Petrie noted the difficult quarter was marked by increased provision for credit losses and charge-offs largely associated with mortgage fraud, but highlighted resilience in underlying earnings, significant increase in gain on sale of loans, and record-high tangible book value[3] - The company saw a 17% reduction in total delinquencies and a 58% decline in loans receivable classified as special mention during the quarter[3] - President and COO Michael J. Dunlap stated that strategies have been implemented to address asset quality issues and enhance overall risk management practices for long-term resilience[4] Financial Position & Asset Quality Total assets grew to $19.1 billion, but asset quality was impacted by increased credit loss allowances, while liquidity remained strong Total Assets Total assets grew to $19.1 billion as of June 30, 2025, driven primarily by higher balances in mortgage warehouse portfolios, despite significant loan sale transactions. Return on average assets declined - Total assets of $19.1 billion at June 30, 2025, increased by $343.4 million (2%) compared to March 31, 2025, and $335.5 million compared to December 31, 2024, primarily driven by higher balances in mortgage warehouse portfolios[7] - Return on average assets was 0.80% for Q2 2025, down from 1.72% for Q2 2024 and 1.31% for Q1 2025[8] Asset Quality The allowance for credit losses increased due to higher provision expenses and charge-offs, mainly from multi-family property value declines and mortgage fraud investigations. While substandard loans increased, special mention loans and total criticized loans decreased, and non-performing loans also declined, partly due to charge-offs. The company continues to use credit protection arrangements to mitigate risk - Allowance for credit losses on loans increased by $8.4 million (10%) to $91.8 million as of June 30, 2025, compared to March 31, 2025, driven by a $54.5 million increase in provision expense partially offset by $46.1 million in loan charge-offs[9] - Charge-offs for Q2 2025 totaled $46.1 million for 14 customers, primarily in the multi-family loan portfolio, with no recoveries[10] - Loans classified as substandard increased to $417.7 million (June 30, 2025) from $323.6 million (March 31, 2025), while loans classified as special mention declined by 58% to $171.5 million[11] - Overall criticized loans declined by 19% to $589.2 million, and total delinquencies declined by 17% compared to March 31, 2025[11] - Non-performing loans were $251.5 million (2.39% of loans receivable) as of June 30, 2025, down from $284.6 million (2.73%) as of March 31, 2025[13] - The Company has credit protection arrangements totaling $3.7 billion in loans to reduce risk, with $2.8 billion subject to these arrangements as of June 30, 2025[14] Total Deposits Total deposits increased, driven by growth in core demand and savings deposits. Core deposits now represent a higher percentage of total deposits, while brokered deposits significantly decreased - Total deposits of $12.7 billion at June 30, 2025, increased by $280.7 million (2%) compared to March 31, 2025, and by $766.9 million (6%) compared to December 31, 2024, primarily due to growth in core demand deposits and savings[15] - Core deposits increased by $744.6 million (7%) to $11.4 billion from March 31, 2025, and by $2.0 billion (22%) from December 31, 2024, representing 90% of total deposits at June 30, 2025[16] - Total brokered deposits decreased by $463.9 million (27%) to $1.3 billion from March 31, 2025, and by $1.3 billion (50%) from December 31, 2024[17] Liquidity The company maintained strong liquidity with increased cash balances and significant unused borrowing capacity, which, combined with other liquid assets, represents a substantial portion of total assets. Its Federal Reserve Bank line of credit alone could fund a large portion of uninsured deposits - Cash balances increased by $125.9 million (24%) to $647.2 million as of June 30, 2025, compared to March 31, 2025[18] - Unused borrowing capacity totaled $5.0 billion as of June 30, 2025, an increase from $4.7 billion at March 31, 2025[18] - The Company's most liquid assets, combined with unused borrowing capacity, totaled $11.9 billion, or 62% of its $19.1 billion total assets at June 30, 2025[20] - The $3.3 billion line of credit availability with the Federal Reserve Bank of Chicago alone could fund 106% of its uninsured deposits[20] Operating Results Analysis Operating results showed stable net interest income year-over-year, increased quarter-over-quarter, and significant noninterest income growth Comparison: Three Months Ended June 30, 2025 vs. June 30, 2024 Net interest income remained stable year-over-year, but interest income decreased due to lower yields, while interest expense decreased due to lower deposit rates. Noninterest income saw a significant increase, primarily from gain on sale of loans and syndication fees, but noninterest expense also rose substantially due to increased salaries, legal fees, and credit risk transfer premiums - Net Interest Income of $128.7 million remained essentially unchanged compared to $128.1 million in Q2 2024[23] - Interest Income decreased by $23.9 million (7%) to $304.4 million, primarily reflecting lower average yields on higher average balances on loans and loans held for sale[24] - Net interest margin decreased 16 basis points to 2.83%, negatively impacted by a shift in business mix towards lower-margin warehouse loans[25] - Interest Expense decreased by $24.5 million (12%) to $175.7 million, reflecting lower average balances at lower average rates on certificates of deposit[26] - Noninterest Income increased by $19.1 million (61%) to $50.5 million, driven by a 109% increase in gain on sale of loans and a 200% increase in syndication and asset management fees[27] - Noninterest Expense increased by $27.0 million (54%) to $77.3 million, primarily due to a $15.2 million increase in salaries and employee benefits, a $7.1 million increase in other expenses (taxes, legal fees for nonperforming loans), and a $2.5 million increase in credit risk transfer premium expense[28] Comparison: Three Months Ended June 30, 2025 vs. March 31, 2025 Net interest income increased quarter-over-quarter, driven by higher interest income from increased loan balances, despite a slight decrease in net interest margin. Noninterest income significantly surged, primarily from gain on sale of loans and syndication fees, but noninterest expense also rose due to increased staffing and costs related to nonperforming loans - Net Interest Income increased by $6.5 million (5%) to $128.7 million, primarily due to higher average balances on loans and loans held for sale[31] - Interest Income increased by $17.2 million (6%) to $304.4 million, reflecting an increase in average balances at lower yields on loans and loans held for sale[32] - Net interest margin decreased 6 basis points to 2.83%, impacted by a shift in business mix towards lower-margin warehouse loans[34] - Interest Expense increased by $10.7 million (6%) to $175.7 million, driven by higher average balances on interest-bearing checking accounts and borrowings[33] - Noninterest Income increased by $26.8 million (113%) to $50.5 million, primarily due to a 101% increase in gain on sale of loans and a 186% increase in syndication and asset management fees[35] - Noninterest Expense increased by $15.7 million (25%) to $77.3 million, primarily driven by a $7.1 million increase in salaries and employee benefits associated with the addition of production staff, and a $6.9 million increase in other expenses related to nonperforming loans[36] Company Information Merchants Bancorp is a diversified bank holding company with $19.1 billion in assets, operating through segments, and provides forward-looking statements About Merchants Bancorp Merchants Bancorp is a diversified bank holding company headquartered in Carmel, Indiana, with $19.1 billion in assets and $12.7 billion in deposits as of June 30, 2025. It operates through segments including Multi-family Mortgage Banking, Mortgage Warehousing, and Banking, offering a range of financial services - Merchants Bancorp is a diversified bank holding company headquartered in Carmel, Indiana[38] - As of June 30, 2025, the company had $19.1 billion in assets and $12.7 billion in deposits[38] - Operating segments include Multi-family Mortgage Banking, Mortgage Warehousing, and Banking, offering various financing, servicing, and traditional banking services[38] Forward-Looking Statements The press release contains forward-looking statements based on management's current views, which are subject to inherent uncertainties and risks. Actual results may differ materially, and the company does not undertake to update these statements - Forward-looking statements reflect management's current views and are based on expectations, estimates, and projections about the industry, management's beliefs, and certain assumptions[39] - These statements are not guarantees of future performance and are subject to risks, assumptions, estimates, and uncertainties that are difficult to predict[39] - The Company does not undertake any obligation to update or revise any forward-looking statements[39] Contacts Provides contact information for media and investor relations - Media Contact: Rebecca Marsh, Phone: (317) 805-4356, Email: rmarsh@bankmerchants.com[40] - Investor Contact: Sean Sievers, Phone: (317) 663-5197, Email: ssievers@bankmerchants.com[40] Consolidated Financial Statements Consolidated balance sheets and income statements for various periods detail assets, liabilities, equity, revenues, expenses, and earnings per share Consolidated Balance Sheets Presents the company's consolidated balance sheet data as of June 30, 2025, March 31, 2025, December 31, 2024, September 30, 2024, and June 30, 2024, detailing assets, liabilities, and shareholders' equity Consolidated Balance Sheets (Unaudited, In thousands) | | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | --- | --- | --- | --- | --- | --- | | Assets | | | | | | | Cash and cash equivalents | $647,165 | $521,296 | $476,610 | $601,906 | $540,882 | | Securities purchased under agreements to resell | 1,539 | 1,550 | 1,559 | 3,279 | 3,304 | | Mortgage loans in process of securitization | 402,427 | 389,797 | 428,206 | 430,966 | 209,244 | | Securities available for sale | 936,343 | 961,183 | 980,050 | 953,063 | 1,017,019 | | Securities held to maturity | 1,548,211 | 1,606,286 | 1,664,686 | 1,755,047 | 1,291,110 | | FHLB stock and other equity securities | 217,850 | 217,850 | 217,804 | 184,050 | 67,499 | | Loans held for sale | 4,105,765 | 3,983,452 | 3,771,510 | 3,808,234 | 3,483,076 | | Loans receivable, net of allowance for credit losses | 10,432,117 | 10,343,724 | 10,354,002 | 10,261,890 | 10,933,189 | | Premises and equipment, net | 71,050 | 67,787 | 58,617 | 53,161 | 46,833 | | Servicing rights | 193,037 | 189,711 | 189,935 | 177,327 | 178,776 | | Interest receivable | 82,391 | 82,811 | 83,409 | 86,612 | 90,360 | | Goodwill | 8,014 | 8,014 | 8,014 | 8,014 | 8,014 | | Other assets and receivables | 495,295 | 424,339 | 571,330 | 329,427 | 343,116 | | Total assets | $19,141,204 | $18,797,800 | $18,805,732 | $18,652,976 | $18,212,422 | | Liabilities and Shareholders' Equity | | | | | | | Liabilities | | | | | | | Total deposits | 12,686,835 | 12,406,165 | 11,919,976 | 12,891,887 | 14,917,067 | | Borrowings | 4,009,474 | 4,001,744 | 4,386,122 | 3,568,721 | 1,159,206 | | Deferred tax liabilities | 29,228 | 35,740 | 25,289 | 19,530 | 25,098 | | Other liabilities | 231,035 | 193,416 | 231,035 | 233,731 | 222,904 | | Total liabilities | 16,956,572 | 16,637,065 | 16,562,422 | 16,713,869 | 16,324,275 | | Shareholders' Equity | | | | | | | Common stock | 241,452 | 240,512 | 240,313 | 239,448 | 238,492 | | Preferred stock (Series C, D, E) | 551,291 | 551,291 | 551,291 | 328,543 | 328,543 | | Retained earnings | 1,392,136 | 1,369,009 | 1,330,995 | 1,250,176 | 1,200,778 | | Accumulated other comprehensive (loss) income | (247) | (77) | (133) | 96 | (510) | | Total shareholders' equity | 2,184,632 | 2,160,735 | 2,243,310 | 1,939,107 | 1,888,147 | | Total liabilities and shareholders' equity | $19,141,204 | $18,797,800 | $18,805,732 | $18,652,976 | $18,212,422 | Consolidated Statement of Income (Three Months Ended) Provides the consolidated statement of income for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024, including interest income, interest expense, net interest income, provision for credit losses, noninterest income, noninterest expense, net income, and earnings per share Consolidated Statement of Income (Unaudited, In thousands, except share data) | | June 30, 2025 | March 31, 2025 | June 30, 2024 | Change vs. 1Q25 | Change vs. 2Q24 | | :--------------------------------------- | :------------ | :------------- | :------------ | :-------------- | :-------------- | | Interest Income | | | | | | | Loans | $255,641 | $239,280 | $284,421 | 7% | -10% | | Mortgage loans in process of securitization | 5,304 | 3,743 | 3,044 | 42% | 74% | | Investment securities: Available for sale | 12,095 | 12,358 | 14,784 | -2% | -18% | | Investment securities: Held to maturity | 23,166 | 24,358 | 19,799 | -5% | 17% | | FHLB stock and other equity securities (dividends) | 4,641 | 4,372 | 1,277 | 6% | 263% | | Other | 3,552 | 3,093 | 4,948 | 15% | -28% | | Total interest income | 304,399 | 287,204 | 328,273 | 6% | -7% | | Interest Expense | | | | | | | Deposits | 131,375 | 123,941 | 179,651 | 6% | -27% | | Short-term borrowings | 36,981 | 33,364 | 11,612 | 11% | 218% | | Long-term borrowings | 7,324 | 7,703 | 8,891 | -5% | -18% | | Total interest expense | 175,680 | 165,008 | 200,154 | 6% | -12% | | Net Interest Income | 128,719 | 122,196 | 128,119 | 5% | — | | Provision for credit losses | 53,027 | 7,727 | 9,965 | 586% | 432% | | Net Interest Income After Provision for Credit Losses | 75,692 | 114,469 | 118,154 | -34% | -36% | | Noninterest Income | | | | | | | Gain on sale of loans | 23,342 | 11,619 | 11,168 | 101% | 109% | | Loan servicing fees, net | 6,138 | 4,010 | 10,827 | 53% | -43% | | Mortgage warehouse fees | 2,039 | 1,513 | 1,524 | 35% | 34% | | Syndication and asset management fees | 9,707 | 3,389 | 3,233 | 186% | 200% | | Other income | 9,254 | 3,162 | 4,599 | 193% | 101% | | Total noninterest income | 50,480 | 23,693 | 31,351 | 113% | 61% | | Noninterest Expense | | | | | | | Salaries and employee benefits | 43,566 | 36,419 | 28,373 | 20% | 54% | | Loan expense | 1,142 | 798 | 993 | 43% | 15% | | Occupancy and equipment | 2,494 | 2,351 | 2,239 | 6% | 11% | | Professional fees | 3,159 | 2,894 | 3,556 | 9% | -11% | | Deposit insurance expense | 7,152 | 7,228 | 5,579 | -1% | 28% | | Technology expense | 2,446 | 2,374 | 1,859 | 3% | 32% | | Credit risk transfer premium expense | 4,767 | 3,862 | 2,294 | 23% | 108% | | Other expense | 12,611 | 5,738 | 5,487 | 120% | 130% | | Total noninterest expense | 77,337 | 61,664 | 50,380 | 25% | 54% | | Income Before Income Taxes | 48,835 | 76,498 | 99,125 | -36% | -51% | | Provision for income taxes | 10,854 | 18,259 | 22,732 | -41% | -52% | | Net Income | $37,981 | $58,239 | $76,393 | -35% | -50% | | Dividends on preferred stock | (10,266) | (10,265) | (7,757) | — | 32% | | Impact of preferred stock redemption | — | (5,371) | (1,823) | -100% | -100% | | Net Income Available to Common Shareholders | $27,715 | $42,603 | $66,813 | -35% | -59% | | Basic Earnings Per Share | $0.60 | $0.93 | $1.50 | -35% | -60% | | Diluted Earnings Per Share | $0.60 | $0.93 | $1.49 | -35% | -60% | Consolidated Statement of Income (Six Months Ended) Presents the consolidated statement of income for the six months ended June 30, 2025, and June 30, 2024, detailing interest income, interest expense, net interest income, provision for credit losses, noninterest income, noninterest expense, net income, and earnings per share Consolidated Statement of Income (Unaudited, In thousands, except share data) | | June 30, 2025 | June 30, 2024 | Change | | :--------------------------------------- | :------------ | :------------ | :----- | | Interest Income | | | | | Loans | $494,921 | $556,419 | -11% | | Mortgage loans in process of securitization | 9,047 | 4,764 | 90% | | Investment securities: Available for sale | 24,453 | 29,172 | -16% | | Investment securities: Held to maturity | 47,524 | 40,321 | 18% | | FHLB stock and other equity securities (dividends) | 9,013 | 2,121 | 325% | | Other | 6,645 | 9,649 | -31% | | Total interest income | 591,603 | 642,446 | -8% | | Interest Expense | | | | | Deposits | 255,316 | 350,673 | -27% | | Short-term borrowings | 70,345 | 18,834 | 274% | | Long-term borrowings | 15,027 | 17,764 | -15% | | Total interest expense | 340,688 | 387,271 | -12% | | Net Interest Income | 250,915 | 255,175 | -2% | | Provision for credit losses | 60,754 | 14,691 | 314% | | Net Interest Income After Provision for Credit Losses | 190,161 | 240,484 | -21% | | Noninterest Income | | | | | Gain on sale of loans | 34,961 | 20,524 | 70% | | Loan servicing fees, net | 10,148 | 30,229 | -66% | | Mortgage warehouse fees | 3,552 | 2,506 | 42% | | Loss on sale of investments available for sale | — | (108) | 100% | | Syndication and asset management fees | 13,096 | 8,536 | 53% | | Other income | 12,416 | 10,538 | 18% | | Total noninterest income | 74,173 | 72,225 | 3% | | Noninterest Expense | | | | | Salaries and employee benefits | 79,985 | 57,969 | 38% | | Loan expense | 1,940 | 1,949 | — | | Occupancy and equipment | 4,845 | 4,476 | 8% | | Professional fees | 6,053 | 7,655 | -21% | | Deposit insurance expense | 14,380 | 10,704 | 34% | | Technology expense | 4,820 | 3,713 | 30% | | Credit risk transfer premium expense | 8,629 | 2,294 | 276% | | Other expense | 18,349 | 10,532 | 74% | | Total noninterest expense | 139,001 | 99,292 | 40% | | Income Before Income Taxes | 125,333 | 213,417 | -41% | | Provision for income taxes | 29,113 | 49,970 | -42% | | Net Income | $96,220 | $163,447 | -41% | | Dividends on preferred stock | (20,531) | (16,424) | 25% | | Impact of preferred stock redemption | (5,371) | (1,823) | 195% | | Net Income Available to Common Shareholders | $70,318 | $145,200 | -52% | | Basic Earnings Per Share | $1.53 | $3.30 | -54% | | Diluted Earnings Per Share | $1.53 | $3.29 | -53% | Key Operating Results & Non-GAAP Reconciliation Key operating metrics and non-GAAP reconciliations for three and six-month periods cover efficiency ratios, returns on assets and equity, tangible book value, and capital ratios Key Operating Results (Three Months Ended) Details key operating metrics for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024, including efficiency ratio, return on average assets, return on average tangible common shareholders' equity, tangible book value per common share, and capital ratios, along with a reconciliation of non-GAAP measures Key Operating Results (Unaudited, $ in thousands, except share data) | | June 30, 2025 | March 31, 2025 | June 30, 2024 | Change vs. 1Q25 | Change vs. 2Q24 | | :--------------------------------------- | :------------ | :------------- | :------------ | :-------------- | :-------------- | | Noninterest expense | $77,337 | $61,664 | $50,380 | 25% | 54% | | Net interest income (before provision for credit losses) | 128,719 | 122,196 | 128,119 | 5% | — | | Noninterest income | 50,480 | 23,693 | 31,351 | 113% | 61% | | Total income | $179,199 | $145,889 | $159,470 | 23% | 12% | | Efficiency ratio | 43.16% | 42.27% | 31.59% | 89bps | 1,157bps | | Average assets | $18,984,925 | $17,831,950 | $17,814,191 | 6% | 7% | | Net income | 37,981 | 58,239 | 76,393 | -35% | -50% | | Return on average assets | 0.80% | 1.31% | 1.72% | (51)bps | (92)bps | | Return on average tangible common shareholders' equity | 6.75% | 10.65% | 19.55% | (390)bps | (1,280)bps | | Tangible book value per common share | $35.42 | $34.90 | $31.27 | 1% | 13% | | Tangible common shareholders' equity/tangible assets | 8.49% | 8.52% | 7.86% | (3)bps | 63bps | | Total capital/risk-weighted assets | 13.4% | 13.0% | 12.0% | | | | Tier I capital/risk-weighted assets | 12.8% | 12.4% | 11.4% | | | | Common Equity Tier I capital/risk-weighted assets | 9.5% | 9.2% | 8.7% | | | | Tier I capital/average assets | 11.5% | 12.1% | 10.6% | | | Reconciliation of Non-GAAP Measures (Three Months Ended) | | June 30, 2025 | March 31, 2025 | June 30, 2024 | Change vs. 1Q25 | Change vs. 2Q24 | | :--------------------------------------- | :------------ | :------------- | :------------ | :-------------- | :-------------- | | Net income | $37,981 | $58,239 | $76,393 | -35% | -50% | | Less: preferred stock dividends | (10,266) | (10,265) | (7,757) | — | 32% | | Less: impact of preferred stock redemption | - | (5,371) | (1,823) | -100% | -100% | | Net income available to common shareholders | $27,715 | $42,603 | $66,813 | -35% | -59% | | Average shareholders' equity | $2,201,836 | $2,160,169 | $1,824,730 | 2% | 21% | | Less: average goodwill & intangibles | (8,065) | (8,070) | (8,140) | — | -1% | | Less: average preferred stock | (551,290) | (552,633) | (449,387) | — | 23% | | Average tangible common shareholders' equity | $1,642,481 | $1,599,466 | $1,367,203 | 3% | 20% | | Return on average tangible common shareholders' equity | 6.75% | 10.65% | 19.55% | (390)bps | (1,280)bps | | Total equity | $2,184,632 | $2,160,735 | $1888,147 | 1% | 16% | | Less: goodwill and intangibles | (8,062) | (8,068) | (8,108) | — | -1% | | Less: preferred stock | (551,291) | (551,291) | (449,387) | — | 23% | | Tangible common shareholders' equity | $1,625,279 | $1,601,376 | $1,430,652 | 1% | 14% | | Assets | $19,141,204 | $18,797,800 | $18,212,422 | 2% | 5% | | Less: goodwill and intangibles | (8,062) | (8,068) | (8,108) | — | -1% | | Tangible assets | $19,133,142 | $18,789,732 | $18,204,314 | 2% | 5% | | Ending common shares | 45,885,458 | 45,881,706 | 45,757,567 | | | | Tangible book value per common share | $35.42 | $34.90 | $31.27 | 1% | 13% | | Tangible common shareholders' equity/tangible assets | 8.49% | 8.52% | 7.86% | (3)bps | 63bps | Key Operating Results (Six Months Ended) Presents key operating metrics for the six months ended June 30, 2025, and June 30, 2024, including efficiency ratio, return on average assets, return on average tangible common shareholders' equity, tangible book value per common share, and capital ratios, along with a reconciliation of non-GAAP measures Key Operating Results (Unaudited, $ in thousands, except share data) | | June 30, 2025 | June 30, 2024 | Change | | :--------------------------------------- | :------------ | :------------ | :----- | | Noninterest expense | $139,001 | $99,292 | 40% | | Net interest income (before provision for credit losses) | 250,915 | 255,175 | -2% | | Noninterest income | 74,173 | 72,225 | 3% | | Total income | $325,088 | $327,400 | -1% | | Efficiency ratio | 42.76% | 30.33% | 1,243bps | | Average assets | $18,411,623 | $17,303,632 | 6% | | Net income | 96,220 | 163,447 | -41% | | Return on average assets | 1.05% | 1.89% | (84)bps | | Return on average tangible common shareholders' equity | 8.68% | 22.30% | (1,362)bps | | Tangible book value per common share | $35.42 | $31.27 | 13% | | Tangible common shareholders' equity/tangible assets | 8.49% | 7.86% | 63bps | Reconciliation of Non-GAAP Measures (Six Months Ended) | | June 30, 2025 | June 30, 2024 | Change | | :--------------------------------------- | :------------ | :------------ | :----- | | Net income | $96,220 | $163,447 | -41% | | Less: preferred stock dividends | (20,531) | (16,424) | 25% | | Less: impact of preferred stock redemption | (5,371) | (1,823) | 195% | | Net income available to common shareholders | $70,318 | $145,200 | -52% | | Average shareholders' equity | $2,181,117 | $1,786,195 | 22% | | Less: average goodwill & intangibles | (8,067) | (9,317) | -13% | | Less: average preferred stock | (551,958) | (474,497) | 16% | | Average tangible common shareholders' equity | $1,621,092 | $1,302,381 | 24% | | Return on average tangible common shareholders' equity | 8.68% | 22.30% | (1,362)bps | | Total equity | $2,184,632 | $1,888,147 | 16% | | Less: goodwill and intangibles | (8,062) | (8,108) | -1% | | Less: preferred stock | (551,291) | (449,387) | 23% | | Tangible common shareholders' equity | $1,625,279 | $1,430,652 | 14% | | Assets | $19,141,204 | $18,212,422 | 5% | | Less: goodwill and intangibles | (8,062) | (8,108) | -1% | | Tangible assets | $19,133,142 | $18,204,314 | 5% | | Ending common shares | 45,885,458 | 45,757,567 | | | | Tangible book value per common share | $35.42 | $31.27 | 13% | | Tangible common shareholders' equity/tangible assets | 8.49% | 7.86% | 63bps | Supplemental Financial Data Detailed average balance analysis, segment performance, loan portfolio specifics including credit risk and nonperforming assets, and deposit composition are provided Average Balance Analysis Provides a detailed average balance analysis for interest-earning assets and interest-bearing liabilities for the three months ended June 30, 2025, March 31, 2025, and June 30, 2024, including average balances, interest income/expense, and rates, as well as net interest spread and margin Average Balance Analysis (Unaudited, $ in thousands) | | June 30, 2025 | | | March 31, 2025 | | | June 30, 2024 | | | | :--------------------------------------- | :------------ | :-------- | :----- | :------------- | :-------- | :----- | :------------ | :-------- | :----- | | | Average Balance | Interest | Yield/Rate | Average Balance | Interest | Yield/Rate | Average Balance | Interest | Yield/Rate | | Assets: | | | | | | | | | | | Interest-earning deposits, and other interest or dividends | $539,357 | $8,193 | 6.09% | $511,077 | $7,465 | 5.92% | $438,445 | $6,225 | 5.71% | | Securities available for sale | 955,186 | 12,095 | 5.08% | 961,065 | 12,358 | 5.21% | 1,039,388 | 14,784 | 5.72% | | Securities held to maturity | 1,572,186 | 23,166 | 5.91% | 1,643,703 | 24,358 | 6.01% | 1,160,170 | 19,799 | 6.86% | | Mortgage loans in process of securitization | 376,904 | 5,304 | 5.64% | 277,426 | 3,743 | 5.47% | 234,706 | 3,044 | 5.22% | | Loans and loans held for sale | 14,826,151 | 255,641 | 6.92% | 13,751,197 | 239,280 | 7.06% | 14,347,165 | 284,421 | 7.97% | | Total interest-earning assets | 18,269,784 | 304,399 | 6.68% | 17,144,468 | 287,204 | 6.79% | 17,219,874 | 328,273 | 7.67% | | Allowance for credit losses on loans | (90,860) | | | (86,711) | | | (76,456) | | | | Noninterest-earning assets | 806,001 | | | 774,193 | | | 670,773 | | | | Total assets | $18,984,925 | | | $17,831,950 | | | $17,814,191 | | | | Liabilities & Shareholders' Equity: | | | | | | | | | | | Interest-bearing checking | $6,161,736 | 60,845 | 3.96% | $5,121,343 | 50,609 | 4.01% | $4,935,123 | 58,128 | 4.74% | | Savings deposits | 145,162 | 8 | 0.02% | 146,359 | 15 | 0.04% | 145,262 | 19 | 0.05% | | Money market | 3,354,820 | 35,137 | 4.20% | 3,398,469 | 34,506 | 4.12% | 2,788,335 | 33,207 | 4.79% | | Certificates of deposit | 3,090,250 | 35,385 | 4.59% | 3,369,269 | 38,811 | 4.67% | 6,535,651 | 88,297 | 5.43% | | Total interest-bearing deposits | 12,751,968 | 131,375 | 4.13% | 12,035,440 | 123,941 | 4.18% | 14,404,371 | 179,651 | 5.02% | | Borrowings | 3,453,960 | 44,305 | 5.15% | 3,125,935 | 41,067 | 5.33% | 1,031,180 | 20,503 | 8.00% | | Total interest-bearing liabilities | 16,205,928 | 175,680 | 4.35% | 15,161,375 | 165,008 | 4.41% | 15,435,551 | 200,154 | 5.22% | | Noninterest-bearing deposits | 376,217 | | | 294,248 | | | 331,246 | | | | Noninterest-bearing liabilities | 200,944 | | | 216,158 | | | 222,664 | | | | Total liabilities | 16,783,089 | | | 15,671,781 | | | 15,989,461 | | | | Shareholders' equity | 2,201,836 | | | 2,160,169 | | | 1,824,730 | | | | Total liabilities and shareholders' equity | $18,984,925 | | | $17,831,950 | | | $17,814,191 | | | | Net interest income | | $128,719 | | | $122,196 | | | $128,119 | | | Net interest spread | | | 2.33% | | | 2.38% | | | 2.45% | | Net interest-earning assets | $2,063,856 | | | $1,983,093 | | | $1,784,323 | | | | Net interest margin | | | 2.83% | | | 2.89% | | | 2.99% | Segment Performance Breaks down net income and total assets by segment (Multi-family Mortgage Banking, Mortgage Warehousing, Banking, Other) for various periods, and provides gain on sale of loans by loan type Net Income by Segment (Unaudited, $ in thousands) | Segment | Three Months Ended June 30, 2025 | Three Months Ended March 31, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Multi-family Mortgage Banking | $9,269 | $3,413 | $9,037 | $12,682 | $25,646 | | Mortgage Warehousing | 22,986 | 15,398 | 22,270 | 38,384 | 42,460 | | Banking | 14,574 | 47,107 | 52,378 | 61,681 | 108,803 | | Other | (8,848) | (7,679) | (7,292) | (16,527) | (13,462) | | Total | $37,981 | $58,239 | $76,393 | $96,220 | $163,447 | Total Assets by Segment (Unaudited, $ in thousands) | Segment | June 30, 2025 Amount (%) | March 31, 2025 Amount (%) | December 31, 2024 Amount (%) | | :-------------------------- | :----------------------- | :------------------------ | :------------------------- | | Multi-family Mortgage Banking | $487,853 (2%) | $460,441 (3%) | $479,099 (2%) | | Mortgage Warehousing | 6,999,701 (37%) | 5,902,165 (31%) | 6,000,624 (32%) | | Banking | 11,404,488 (60%) | 12,002,564 (64%) | 11,761,202 (63%) | | Other | 249,162 (1%) | 432,630 (2%) | 564,807 (3%) | | Total | $19,141,204 (100%) | $18,797,800 (100%) | $18,805,732 (100%) | Gain on Sale of Loans by Loan Type (Unaudited, $ in thousands) | Loan Type | Three Months Ended June 30, 2025 | Three Months Ended March 31, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Multi-family | $19,815 | $10,125 | $9,083 | $29,940 | $17,506 | | Single-family | 2,428 | 206 | 524 | 2,634 | 804 | | Small Business Association (SBA) | 1,099 | 1,288 | 1,561 | 2,387 | 2,214 | | Total | $23,342 | $11,619 | $11,168 | $34,961 | $20,524 | Servicing Rights (Unaudited, $ in thousands) | | June 30, 2025 | March 31, 2025 | June 30, 2024 | June 30, 2025 (6 Months) | June 30, 2024 (6 Months) | | :-------------------------- | :------------ | :------------- | :------------ | :----------------------- | :----------------------- | | Balance, beginning of period | $189,711 | $189,935 | $172,200 | $189,935 | $158,457 | | Additions: Purchased servicing | 70 | - | - | 70 | - | | Additions: Originated servicing | 5,244 | 3,338 | 3,761 | 8,582 | 5,927 | | Subtractions: Paydowns | (2,246) | (2,808) | (2,252) | (5,054) | (4,639) | | Subtractions: Changes in fair value | 258 | (754) | 5,067 | (496) | 19,031 | | Balance, end of period | $193,037 | $189,711 | $178,776 | $193,037 | $178,776 | Loan Portfolio Details Details the composition of loans receivable and loans held for sale, including mortgage warehouse repurchase agreements, residential real estate, multi-family financing, healthcare financing, commercial, agricultural, and consumer loans. It also provides a loan credit risk profile, nonperforming loan data, and delinquent loan information Loans Receivable and Loans Held for Sale (Unaudited, $ in thousands) | | June 30, 2025 | March 31, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :------------- | :---------------- | | Mortgage warehouse repurchase agreements | $1,843,742 | $1,408,239 | $1,446,068 | | Residential real estate | 988,783 | 1,332,601 | 1,322,853 | | Multi-family financing | 4,833,548 | 4,600,117 | 4,624,299 | | Healthcare financing | 1,442,095 | 1,583,290 | 1,484,483 | | Commercial and commercial real estate | 1,328,765 | 1,418,741 | 1,476,211 | | Agricultural production and real estate | 82,425 | 79,190 | 77,631 | | Consumer and margin loans | 4,570 | 4,959 | 6,843 | | Loans receivable | 10,523,928 | 10,427,137 | 10,438,388 | | Less: Allowance for credit losses on loans | 91,811 | 83,413 | 84,386 | | Loans receivable, net | $10,432,117 | $10,343,724 | $10,354,002 | | Loans held for sale | 4,105,765 | 3,983,452 | 3,771,510 | | Total loans, net of allowance | $14,537,882 | $14,327,176 | $14,125,512 | Loan Credit Risk Profile (Unaudited, $ in thousands) | | June 30, 2025 Amount (%) | March 31, 2025 Amount (%) | December 31, 2024 Amount (%) | | :---------------- | :----------------------- | :------------------------ | :------------------------- | | Pass | $9,934,759 (94.4%) | $9,695,595 (93.0%) | $9,741,087 (93.3%) | | Special mention | 171,512 (1.6%) | 407,895 (3.9%) | 379,969 (3.6%) | | Substandard | 417,657 (4.0%) | 323,647 (3.1%) | 317,332 (3.0%) | | Doubtful | — (—) | — (—) | — (—) | | Loans receivable | $10,523,928 (100.0%) | $10,427,137 (100.0%) | $10,438,388 (100.0%) | | Charge-offs (year-to-date) | $56,570 | $10,507 | $10,587 | | Recoveries (year-to-date) | $28 | $28 | $136 | Nonperforming Loans (Unaudited, $ in thousands) | | June 30, 2025 | March 31, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :------------- | :---------------- | | Nonaccrual loans | $250,818 | $284,019 | $279,716 | | 90 days past due and still accruing | 714 | 585 | 6 | | Total nonperforming loans | $251,532 | $284,604 | $279,722 | | Other real estate owned | $7,049 | $7,049 | $8,209 | | Total nonperforming assets | $258,581 | $291,653 | $287,931 | | Nonperforming loans to total loans receivable | 2.39% | 2.73% | 2.68% | | Nonperforming assets to total assets | 1.35% | 1.55% | 1.53% | Delinquent Loans (Unaudited, $ in thousands) | | June 30, 2025 | March 31, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :------------- | :---------------- | | Delinquent loans: Loans receivable | $279,009 | $304,560 | $292,263 | | Delinquent loans: Loans held for sale | - | 30,103 | 32,343 | | Total delinquent loans | $279,009 | $334,663 | $324,606 | | Total loans receivable and loans held for sale | $14,629,693 | $14,410,589 | $14,209,898 | | Delinquent loans to total loans | 1.91% | 2.32% | 2.28% | Deposit Composition Provides a detailed breakdown of deposits, distinguishing between noninterest-bearing and interest-bearing deposits, and further categorizing them into core demand, brokered demand, savings, and certificates of deposit Deposits (Unaudited, $ in thousands) | | June 30, 2025 | March 31, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :------------- | :---------------- | | Noninterest-bearing deposits: Core demand deposits | $315,523 | $313,296 | $239,005 | | Interest-bearing deposits: Core demand deposits | 6,066,933 | 5,432,133 | 4,319,512 | | Interest-bearing deposits: Brokered demand deposits | 250,000 | - | - | | Total interest-bearing demand deposits | 6,316,933 | 5,432,133 | 4,319,512 | | Savings deposits: Core savings deposits | 3,703,270 | 3,618,210 | 3,442,111 | | Savings deposits: Brokered savings deposits | 358 | 353 | 859 | | Total savings deposits | 3,703,628 | 3,618,563 | 3,442,970 | | Certificates of deposit: Core certificates of deposits | 1,346,630 | 1,324,126 | 1,385,270 | | Certificates of deposit: Brokered certificates of deposits | 1,004,121 | 1,718,047 | 2,533,219 | | Total certificates of deposits | 2,350,751 | 3,042,173 | 3,918,489 | | Total interest-bearing deposits | 12,371,312 | 12,092,869 | 11,680,971 | | Total deposits | $12,686,835 | $12,406,165 | $11,919,976 | | Total core deposits | $11,432,356 | $10,687,765 | $9,385,898 | | Total brokered deposits | $1,254,479 | $1,718,400 | $2,534,078 | | Total deposits | $12,686,835 | $12,406,165 | $11,919,976 |