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]