Merchants Bancorp Reports Second Quarter of 2026 Results

Rhea-AI Summary

Merchants Bancorp (Nasdaq: MBIN) reported second quarter 2026 net income of $78.3 million, up 106% from a year earlier and 16% from the first quarter. Diluted EPS rose to $1.48, up 147% year-over-year and 18% sequentially. The company cited an 83% year-over-year reduction in the provision for credit losses to $9.2 million as a primary driver of earnings growth.

Total assets reached a record $21.2 billion, up 4% from March 31, 2026 and 9% from year-end 2025. Tangible book value per common share increased to $39.93, 13% above June 30, 2025 and marking the 30th consecutive quarterly high. Asset quality strengthened, with criticized loans down 12% since March 31, 2026 to $444.7 million, nonperforming loans down 17% to $205.6 million, and total delinquent loans down 14% to $208.0 million. Loans receivable, net, rose to $12.3 billion, up 8% sequentially and 12% since year-end, while total deposits grew to $14.3 billion, up 10% from March 31, 2026. Liquidity totaled $13.0 billion, or 61% of assets, supported by $5.5 billion in unused borrowing capacity and a large pool of highly liquid assets. The company executed a credit default swap on a $169.9 million multi-family mortgage loan pool, providing credit protection and reducing risk-based capital requirements.

Positive

• Net income $78.3M, up 106% YoY and 16% QoQ in Q2 2026
• Diluted EPS $1.48, up 147% YoY and 18% QoQ
• Provision for credit losses $9.2M, down 83% YoY and 40% QoQ
• Total assets $21.2B, up 9% vs Dec 31, 2025
• Loans receivable, net $12.3B, up 12% since year-end 2025
• Liquidity $13.0B, equal to 61% of total assets

Negative

• Net interest margin 2.81%, down from 2.83% YoY and 2.92% QoQ
• Noninterest income $45.7M, down 10% YoY and 2% QoQ
• Gain on sale of loans decreased $10.2M, or 44% YoY
• Q2 2026 charge-offs $16.5M, though below prior-year $46.1M
• Interest income $294.1M, down 3% YoY
• Interest expense up 11% QoQ to $157.5M

News Explained

The second-quarter report adds that credit-default-swap protection covered 6% of criticized loans and 10% of delinquent loans at June 30, 2026, while $2.2 billion of loans remained protected. The company says these arrangements reduce potential loss exposure, but it must still carry an allowance for protected loans held for investment.

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• Net income of $78.3 million in the second quarter of 2026 increased $40.3 million, or 106%, compared to the second quarter of 2025, and increased $10.6 million, or 16%, compared to the first quarter of 2026.
• Diluted earnings per common share of $1.48 in the second quarter of 2026 increased 147% compared to the second quarter of 2025 and increased 18% compared to the first quarter of 2026.
• Total assets reached $21.2 billion, marking the fifth consecutive quarter of new highs, while increasing 4% compared to March 31, 2026, and increasing 9% compared to December 31, 2025.
• Tangible book value per common share increased to $39.93, its 30th consecutive quarterly high, rising 13% from $35.42 at June 30, 2025, and 4% from $38.55 at March 31, 2026.
• Asset quality improved meaningfully, as criticized loans receivable of $444.7 million decreased $60.8 million, or 12%, from March 31, 2026, and decreased $63.5 million, or 12%, from December 31, 2025. 
• Nonperforming loans of $205.6 million decreased $41.8 million, or 17%, and total delinquent loans of $208.0 million decreased $34.6 million, or 14%, compared to March 31, 2026.
• The provision for credit losses of $9.2 million decreased 83% compared to the second quarter of 2025 and decreased 40% compared to the first quarter of 2026. 
• Capital ratios remained strong, with a total capital ratio of 12.5%, reflecting the Company's continued emphasis on financial strength and balance sheet resilience.
• Liquidity remained strong at $13.0 billion, or 61% of total assets, supported by $5.5 billion of unused borrowing capacity with the Federal Home Loan Bank and Federal Reserve Discount Window and a diversified mix of highly liquid assets, including cash and cash equivalents, short-term investments, mortgage loans in process of securitization, loans held for sale, and warehouse lines of credit.
• Loans receivable, net of allowance for credit losses, totaled $12.3 billion, increasing $862.9 million, or 8%, from March 31, 2026, and increasing $1.3 billion, or 12%, from December 31, 2025.
• Total deposits of $14.3 billion increased $1.3 billion, or 10%, from March 31, 2026, and increased $1.2 billion, or 9%, compared to December 31, 2025. Core deposits of $13.0 billion increased $891.3 million compared to March 31, 2026, and represent 91% of total deposits.
• The Company executed a credit default swap on a $169.9 million pool of multi-family mortgage loans in June 2026, providing credit protection for the loan pool and reducing risk-based capital requirements.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Comparison of Operating Results for the Three Months Ended

June 30, 2026 and 2025

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

• Net interest margin of 2.81% decreased two basis points compared to 2.83%. 
• Interest rate spread of 2.43% increased ten basis points compared to 2.33%.

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

• Average balances of $1.4 billion for securities held to maturity decreased $174.1 million, or 11%, compared to $1.6 billion.
• Average yields on securities held to maturity of 5.19% decreased 72 basis points compared to 5.91%.
• Average yields on loans and loans held for sale of 6.26% decreased 66 basis points compared to 6.92%.
• Average balances of $16.2 billion for loans and loans held for sale increased $1.4 billion, or 9%, compared to $14.8 billion.

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

• Average balances of $1.4 billion for certificates of deposit decreased $1.7 billion, or 55%, compared to $3.1 billion.
• Average interest rates of 3.85% for certificates of deposit decreased 74 basis points compared to 4.59%.
• Average balances on interest-bearing checking accounts of $7.9 billion increased $1.7 billion, or 28%, compared to $6.2 billion.
• Average interest rates of 3.43% for interest-bearing checking accounts decreased 53 basis points compared to 3.96%.

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

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

• Loan servicing fees included a $6.0 million positive fair market value adjustment to servicing rights, with a $1.4 million positive adjustment in the Banking segment and a $4.6 million positive adjustment in the Multi-family Mortgage Banking segment.  This compared to a $258,000 positive fair market value adjustment to servicing rights in the prior period with a $487,000 negative adjustment in the Banking segment and a $745,000 positive adjustment in the Multi-family Mortgage Banking segment. The value of servicing rights generally increases in rising 10-year interest rate environments and declines in falling interest rate environments due to expected prepayments and earning rates that are influenced by projected future interest rates on escrow deposits.
• Other noninterest income also included a $1.9 million positive fair market value adjustment to floor derivatives, reflected in the Warehouse segment, compared to a $4.3 million positive fair market value adjustment in the prior period.

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

Comparison of Operating Results for the Three Months Ended

June 30, 2026 and March 31, 2026

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

• Net interest margin of 2.81% decreased 11 basis points compared to 2.92%.
• Interest rate spread of 2.43% decreased seven basis points compared to 2.50%.

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

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

• Average balances of $16.2 billion for loans and loans held for sale increased 10% compared to $14.7 billion.
• Average yields on loans and loans held for sale of 6.26% decreased eight basis points compared to 6.34%, primarily reflecting the same loan mix shift discussed above.

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

• Average balances of $4.0 billion on borrowings increased $880.5 million, or 28%, compared to $3.1 billion.
• Average interest rates of 4.06% on borrowings decreased by eight basis points compared to 4.14%.
• Average balances of $7.9 billion for interest-bearing checking accounts increased $692.0 million, or 10%, compared to $7.2 billion.
• Average interest rates on interest-bearing checking accounts of 3.43% increased by a basis point compared to 3.42%.

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

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

• Loan servicing fees included a $6.0 million positive fair market value adjustment to servicing rights, with a $1.4 million positive adjustment in the Banking segment and a $4.6 million positive adjustment in the Multi-family Mortgage Banking segment. This compared to an $8.9 million positive fair market value adjustment to servicing rights in the prior period, with a $1.6 million positive adjustment in the Banking segment and a $7.4 million positive adjustment in the Multi-family Mortgage Banking segment. The value of servicing rights generally increases in rising 10-year interest rate environments and declines in falling interest rate environments due to expected prepayments and earning rates that are influenced by projected future interest rates on escrow deposits.
• Other noninterest income included a $1.9 million positive fair market value adjustment to floor derivatives, reflected in the Warehouse segment, compared to a $2.7 million positive fair market value adjustment to derivatives in the prior period.

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

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

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

Consolidated Balance Sheets
(Unaudited)
(In thousands, except share data)
		June 30,		March 31,		December 31,		September 30,		June 30,
		2026		2026		2025		2025		2025
Assets
Cash and due from banks		$             17,875		$             19,642		$             15,844		$             11,566		$             15,419
Interest-earning demand accounts		296,828		63,573		196,358		586,470		631,746
Cash and cash equivalents		314,703		83,215		212,202		598,036		647,165
Securities purchased under agreements to resell		1,501		1,511		1,520		1,529		1,539
Mortgage loans in process of securitization		407,418		437,001		620,094		414,786		402,427
Securities available for sale (includes $527,676, $550,207, $571,314, $591,379 and $602,962 at fair value)		820,105		843,896		865,058		885,070		936,343
Securities held to maturity (fair value of $1,353,543, $1,426,444, $1,543,554, $1,670,306 and $1,547,525)		1,354,885		1,425,982		1,543,659		1,670,555		1,548,211
Federal Home Loan Bank (FHLB) stock and other equity securities		227,589		227,589		227,589		217,850		217,850
Loans held for sale (includes $148,368, $163,426, $76,980, $112,832 and $91,930 at fair value)		4,615,894		4,709,688		3,873,012		4,129,329		4,105,765
Loans receivable (includes $46,024, $46,427, $47,318, $0 and $0 at fair value), net of allowance for credit losses on loans of $75,803, $76,831, $83,301, $93,330 and $91,811		12,262,800		11,399,882		10,951,381		10,515,221		10,432,117
Premises and equipment, net		74,664		73,695		73,929		75,148		71,050
Servicing rights		236,949		229,576		217,296		213,156		193,037
Interest receivable		82,078		77,326		81,807		82,445		82,391
Goodwill		8,014		8,014		8,014		8,014		8,014
Other real estate owned		72,389		60,226		60,145		4,347		7,049
Other assets and receivables		750,993		744,181		713,237		539,161		488,246
Total assets		$     21,229,982		$     20,321,782		$     19,448,943		$     19,354,647		$     19,141,204
Liabilities and Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing		$           606,682		$           501,864		$           604,081		$           399,814		$           315,523
Interest-bearing		13,647,632		12,449,889		12,437,111		13,534,891		12,371,312
Total deposits		14,254,314		12,951,753		13,041,192		13,934,705		12,686,835
Borrowings		4,282,597		4,773,490		3,842,592		2,902,631		4,009,474
Deferred and current tax liabilities, net		50,140		46,403		33,900		28,973		29,228
Other liabilities		249,127		219,833		250,500		262,904		231,035
Total liabilities		18,836,178		17,991,479		17,168,184		17,129,213		16,956,572
Commitments and  Contingencies
Shareholders' Equity
Common stock, without par value
Authorized - 75,000,000 shares
Issued and outstanding  - 45,938,075 shares, 45,935,408 shares, 45,893,172 shares, 45,889,238 shares and 45,885,458 shares		244,345		243,433		243,310		242,371		241,452
Preferred stock, without par value - 5,000,000 total shares authorized
6% Series C Preferred stock - $1,000 per share liquidation preference
Authorized - 200,000 shares
Issued and outstanding - 196,181 shares (equivalent to 7,847,233 depositary shares)		191,084		191,084		191,084		191,084		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		137,459		137,459		137,459		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		222,748		222,748		222,748		222,748
Retained earnings		1,599,367		1,536,383		1,486,191		1,431,983		1,392,136
Accumulated other comprehensive loss		(1,199)		(804)		(33)		(211)		(247)
Total shareholders' equity		2,393,804		2,330,303		2,280,759		2,225,434		2,184,632
Total liabilities and shareholders' equity		$     21,229,982		$     20,321,782		$     19,448,943		$     19,354,647		$     19,141,204

 

Consolidated Statement of Income
(Unaudited)
(In thousands, except share data)
		Three Months Ended									Change
		June 30,			March 31,			June 30,			2Q26		2Q26
		2026			2026			2025			vs. 1Q26		vs. 2Q25
Interest Income
Loans		$	252,546		$	230,269		$	255,641		10 %		-1 %
Mortgage loans in process of securitization			4,455			4,387			5,304		2 %		-16 %
Investment securities:
Available for sale			9,562			9,942			12,095		-4 %		-21 %
Held to maturity			18,076			19,479			23,166		-7 %		-22 %
FHLB stock and other equity securities (dividends)			4,979			4,394			4,641		13 %		7 %
Other			4,454			2,040			3,552		118 %		25 %
Total interest income			294,072			270,511			304,399		9 %		-3 %
Interest Expense
Deposits			116,839			109,849			131,375		6 %		-11 %
Short-term borrowings			37,608			28,937			36,981		30 %		2 %
Long-term borrowings			3,089			3,077			7,324		—		-58 %
Total interest expense			157,536			141,863			175,680		11 %		-10 %
Net Interest Income			136,536			128,648			128,719		6 %		6 %
Provision for credit losses			9,184			15,299			53,027		-40 %		-83 %
Net Interest Income After Provision for Credit Losses			127,352			113,349			75,692		12 %		68 %
Noninterest Income
Gain on sale of loans			13,160			13,506			23,342		-3 %		-44 %
Loan servicing fees, net			11,992			15,099			6,138		-21 %		95 %
Mortgage warehouse fees			1,857			1,620			2,039		15 %		-9 %
Syndication and asset management fees			6,933			3,117			9,707		122 %		-29 %
Other income			11,738			13,257			9,254		-11 %		27 %
Total noninterest income			45,680			46,599			50,480		-2 %		-10 %
Noninterest Expense
Salaries and employee benefits			39,345			38,565			43,566		2 %		-10 %
Loan expense			1,177			1,185			1,142		-1 %		3 %
Occupancy and equipment			3,462			3,081			2,494		12 %		39 %
Professional fees			3,328			2,767			3,159		20 %		5 %
Deposit insurance expense			5,893			8,408			7,152		-30 %		-18 %
Technology expense			2,893			2,679			2,446		8 %		18 %
Credit risk transfer premium expense			6,100			5,764			4,767		6 %		28 %
Other expense			11,050			13,193			12,611		-16 %		-12 %
Total noninterest expense			73,248			75,642			77,337		-3 %		-5 %
Income Before Income Taxes			99,784			84,306			48,835		18 %		104 %
Provision for income taxes			21,481			16,574			10,854		30 %		98 %
Net Income		$	78,303		$	67,732		$	37,981		16 %		106 %
Dividends on preferred stock			(10,266)			(10,265)			(10,266)		—		—
Net Income Available to Common Shareholders		$	68,037		$	57,467		$	27,715		18 %		145 %
Basic Earnings Per Share		$	1.48		$	1.25		$	0.60		18 %		147 %
Diluted Earnings Per Share		$	1.48		$	1.25		$	0.60		18 %		147 %
Weighted-Average Shares Outstanding
Basic			45,936,610			45,929,936			45,883,644
Diluted			46,005,938			45,997,744			45,929,563

 

Consolidated Statement of Income
(Unaudited)
(In thousands, except share data)
		Six Months Ended
		June 30,			June 30,
		2026			2025			Change
Interest Income
Loans		$	482,815		$	494,921		-2 %
Mortgage loans in process of securitization			8,842			9,047		-2 %
Investment securities:
Available for sale			19,504			24,453		-20 %
Held to maturity			37,555			47,524		-21 %
FHLB stock and other equity securities (dividends)			9,373			9,013		4 %
Other			6,494			6,645		-2 %
Total interest income			564,583			591,603		-5 %
Interest Expense
Deposits			226,688			255,316		-11 %
Short-term borrowings			66,545			70,345		-5 %
Long-term borrowings			6,166			15,027		-59 %
Total interest expense			299,399			340,688		-12 %
Net Interest Income			265,184			250,915		6 %
Provision for credit losses			24,483			60,754		-60 %
Net Interest Income After Provision for Credit Losses			240,701			190,161		27 %
Noninterest Income
Gain on sale of loans			26,666			34,961		-24 %
Loan servicing fees, net			27,091			10,148		167 %
Mortgage warehouse fees			3,477			3,552		-2 %
Syndication and asset management fees			10,050			13,096		-23 %
Other income			24,995			12,416		101 %
Total noninterest income			92,279			74,173		24 %
Noninterest Expense
Salaries and employee benefits			77,910			79,985		-3 %
Loan expense			2,362			1,940		22 %
Occupancy and equipment			6,543			4,845		35 %
Professional fees			6,095			6,053		1 %
Deposit insurance expense			14,301			14,380		-1 %
Technology expense			5,572			4,820		16 %
Credit risk transfer premium expense			11,864			8,629		37 %
Other expense			24,243			18,349		32 %
Total noninterest expense			148,890			139,001		7 %
Income Before Income Taxes			184,090			125,333		47 %
Provision for income taxes			38,055			29,113		31 %
Net Income		$	146,035		$	96,220		52 %
Dividends on preferred stock			(20,531)			(20,531)		—
Impact of preferred stock redemption			—			(5,371)		-100 %
Net Income Available to Common Shareholders		$	125,504		$	70,318		78 %
Basic Earnings Per Share		$	2.73		$	1.53		78 %
Diluted Earnings Per Share		$	2.73		$	1.53		78 %
Weighted-Average Shares Outstanding
Basic			45,933,291			45,853,998
Diluted			46,001,859			45,921,988

 

Key Operating Results
(Unaudited)
($ in thousands, except share data)
			Three Months Ended									Change
			June 30,			March 31,			June 30,			2Q26		2Q26
			2026			2026			2025			vs. 1Q26		vs. 2Q25
Noninterest expense			$                 73,248			$                75,642			$               77,337			-3 %		-5 %
Net interest income (before provision for credit losses)			136,536			128,648			128,719			6 %		6 %
Noninterest income			45,680			46,599			50,480			-2 %		-10 %
Total income			$               182,216			$              175,247			$             179,199			4 %		2 %
Efficiency ratio			40.20	%		43.16	%		43.16	%		(296)	bps	(296)	bps
Average assets			$          20,578,875			$        18,952,948			$       18,984,925			9 %		8 %
Net income			78,303			67,732			37,981			16 %		106 %
Return on average assets before annualizing			0.38	%		0.36	%		0.20	%
Annualization factor			4.00			4.00			4.00
Return on average assets			1.52	%		1.43	%		0.80	%		9	bps	72	bps
Return on average tangible common shareholders' equity (1)			14.95	%		13.01	%		6.75	%		194	bps	820	bps
Tangible book value per common share (1)			$                    39.93			$                  38.55			$                 35.42			4 %		13 %
Tangible common shareholders' equity/tangible assets (1)			8.64	%		8.72	%		8.49	%		(8)	bps	15	bps
Consolidated ratios
Total capital/risk-weighted assets(2)			12.5	%		12.8	%		13.4	%
Tier I capital/risk-weighted assets(2)			12.1	%		12.3	%		12.8	%
Common Equity Tier I capital/risk-weighted assets(2)			9.3	%		9.4	%		9.5	%
Tier I capital/average assets(2)			11.6	%		12.3	%		11.5	%
(1) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Measures" below:
(2) As defined by regulatory agencies; June 30, 2026 shown as estimates and prior periods shown as reported.
Certain non-GAAP financial measures provide useful information to management and investors that is supplementary to the Company's financial condition, results of operations and cash flows computed in accordance with GAAP; however, they do have a number of limitations.  As such, the reader should not view these disclosures as a substitute for results determined in accordance with GAAP, and they are not necessarily comparable  to non-GAAP financial measures that other companies use.  A reconciliation of GAAP to non-GAAP financial measures is below.  Net Income Available to Common Shareholders excludes preferred stock dividends.  Tangible common shareholders' equity is calculated by excluding the balance of goodwill and other intangible assets and preferred stock from the calculation of total equity.  Tangible assets is calculated by excluding the balance of goodwill and intangible assets.  Tangible book value per share is calculated by dividing tangible common shareholders' equity by the number of shares outstanding.
			Three Months Ended									Change
			June 30,			March 31,			June 30,			2Q26		2Q26
			2026			2026			2025			vs. 1Q26		vs. 2Q25
Average shareholders' equity			$            2,379,573			$           2,326,390			$         2,201,836			2 %		8 %
Less: average goodwill & intangibles			(8,043)			(8,048)			(8,065)			—		—
Less: average preferred stock			(551,291)			(551,291)			(551,290)			—		—
Average tangible common shareholders' equity			$            1,820,239			$           1,767,051			$         1,642,481			3 %		11 %
Annualization factor			4.00			4.00			4.00
Return on average tangible common shareholders' equity			14.95	%		13.01	%		6.75	%		194	bps	820	bps
Total equity			$            2,393,804			$           2,330,303			$         2,184,632			3 %		10 %
Less: goodwill and intangibles			(8,040)			(8,045)			(8,062)			—		—
Less: preferred stock			(551,291)			(551,291)			(551,291)			—		—
Tangible common shareholders' equity			$            1,834,473			$           1,770,967			$         1,625,279			4 %		13 %
Assets			$          21,229,982			$        20,321,782			$       19,141,204			4 %		11 %
Less: goodwill and intangibles			(8,040)			(8,045)			(8,062)			—		—
Tangible assets			$          21,221,942			$        20,313,737			$       19,133,142			4 %		11 %
Ending common shares			45,938,075			45,935,408			45,885,458
Tangible book value per common share			$                    39.93			$                  38.55			$                 35.42			4 %		13 %
Tangible common shareholders' equity/tangible assets			8.64	%		8.72	%		8.49	%		(8)	bps	15	bps

     

Key Operating Results
(Unaudited)
($ in thousands, except share data)
			Six Months Ended
			June 30,			June 30,
			2026			2025			Change
Noninterest expense			$           148,890			$           139,001			7 %
Net interest income (before provision for credit losses)			265,184			250,915			6 %
Noninterest income			92,279			74,173			24 %
Total income			$           357,463			$           325,088			10 %
Efficiency ratio			41.65	%		42.76	%		(111)	bps
Average assets			$     19,770,403			$     18,411,623			7 %
Net income			146,035			96,220			52 %
Return on average assets before annualizing			0.74	%		0.52	%
Annualization factor			2.00			2.00
Return on average assets			1.48	%		1.05	%		43	bps
Return on average tangible common shareholders' equity (1)			13.99	%		8.68	%		531	bps
Tangible book value per common share (1)			$               39.93			$               35.42			13 %
Tangible common shareholders' equity/tangible assets (1)			8.64	%		8.49	%		15	bps
(1) Non-GAAP financial measure - see "Reconciliation of Non-GAAP Measures" below:
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.
			Six Months Ended
			June 30,			June 30,
			2026			2025			Change
Average shareholders' equity			$        2,353,128			$        2,181,117			8 %
Less: average goodwill & intangibles			(8,045)			(8,067)			—
Less: average preferred stock			(551,291)			(551,958)			—
Average tangible common shareholders' equity			$        1,793,792			$        1,621,092			11 %
Annualization factor			2.00			2.00
Return on average tangible common shareholders' equity			13.99	%		8.68	%		531	bps
Total equity			$        2,393,804			$        2,184,632			10 %
Less: goodwill and intangibles			(8,040)			(8,062)			—
Less: preferred stock			(551,291)			(551,291)			—
Tangible common shareholders' equity			$        1,834,473			$        1,625,279			13 %
Assets			$     21,229,982			$     19,141,204			11 %
Less: goodwill and intangibles			(8,040)			(8,062)			—
Tangible assets			$     21,221,942			$     19,133,142			11 %
Ending common shares			45,938,075			45,885,458
Tangible book value per common share			$               39.93			$               35.42			13 %
Tangible common shareholders' equity/tangible assets			8.64	%		8.49	%		15	bps

 

Merchants Bancorp
Average Balance Analysis
($ in thousands)
(Unaudited)
	Three Months Ended
	June 30, 2026				March 31, 2026				June 30, 2025
	Average		Yield/		Average		Yield/		Average		Yield/
	Balance	Interest	Rate		Balance	Interest	Rate		Balance	Interest	Rate
Assets:
Interest-earning deposits, and other interest or dividends	$        689,479	$          9,433	5.49 %		$           433,306	$       6,434	6.02 %		$        539,357	$    8,193	6.09 %
Securities available for sale	832,715	9,562	4.61 %		856,846	9,942	4.71 %		955,186	12,095	5.08 %
Securities held to maturity	1,398,098	18,076	5.19 %		1,493,185	19,479	5.29 %		1,572,186	23,166	5.91 %
Mortgage loans in process of securitization	353,297	4,455	5.06 %		338,052	4,387	5.26 %		376,904	5,304	5.64 %
Loans and loans held for sale	16,185,486	252,546	6.26 %		14,741,304	230,269	6.34 %		14,826,151	255,641	6.92 %
Total interest-earning assets	19,459,075	294,072	6.06 %		17,862,693	270,511	6.14 %		18,269,784	304,399	6.68 %
Allowance for credit losses on loans	(80,566)				(85,226)				(90,860)
Noninterest-earning assets	1,200,366				1,175,481				806,001
Total assets	$   20,578,875				$      18,952,948				$   18,984,925
Liabilities & Shareholders' Equity:
Interest-bearing checking	$     7,891,368	67,395	3.43 %		$        7,199,340	60,763	3.42 %		$     6,161,736	60,845	3.96 %
Money market /savings deposits	4,117,113	36,120	3.52 %		3,925,326	34,000	3.51 %		3,499,982	35,145	4.03 %
Certificates of deposit	1,386,717	13,324	3.85 %		1,562,186	15,086	3.92 %		3,090,250	35,385	4.59 %
Total interest-bearing deposits	13,395,198	116,839	3.50 %		12,686,852	109,849	3.51 %		12,751,968	131,375	4.13 %
Borrowings	4,017,881	40,697	4.06 %		3,137,379	32,014	4.14 %		3,453,960	44,305	5.15 %
Total interest-bearing liabilities	17,413,079	157,536	3.63 %		15,824,231	141,863	3.64 %		16,205,928	175,680	4.35 %
Noninterest-bearing deposits	542,526				560,176				376,217
Noninterest-bearing liabilities	243,697				242,151				200,944
Total liabilities	18,199,302				16,626,558				16,783,089
Shareholders' equity	2,379,573				2,326,390				2,201,836
Total liabilities and shareholders' equity	$   20,578,875				$      18,952,948				$   18,984,925
Net interest income		$      136,536				$   128,648				$ 128,719
Net interest spread			2.43 %				2.50 %				2.33 %
Net interest-earning assets	$     2,045,996				$        2,038,462				$     2,063,856
Net interest margin			2.81 %				2.92 %				2.83 %
Average interest-earning assets to average interest-bearing liabilities			111.75 %				112.88 %				112.74 %

 

Supplemental Results
(Unaudited)
($ in thousands)
				Net Income									Net Income
				Three Months Ended									Six Months Ended
				June 30,			March 31,			June 30,			June 30,
				2026			2026			2025			2026		2025
Segment
Multi-family Mortgage Banking				$           10,336			$            11,014			$              9,269			$        21,350		$        12,682
Mortgage Warehousing				30,599			28,648			22,986			59,247		38,384
Banking				47,337			37,980			14,574			85,317		61,681
Other				(9,969)			(9,910)			(8,848)			(19,879)		(16,527)
Total				$           78,303			$            67,732			$            37,981			$     146,035		$        96,220
				Total Assets
				June 30, 2026			March 31, 2026			December 31, 2025
				Amount	%		Amount	%		Amount	%
Segment
Multi-family Mortgage Banking				$         567,941	2 %		$          522,976	3 %		$          526,423	3 %
Mortgage Warehousing				8,647,738	41 %		8,544,107	42 %		7,251,653	37 %
Banking				11,581,635	55 %		10,850,657	53 %		11,307,401	58 %
Other				432,668	2 %		404,042	2 %		363,466	2 %
Total				$    21,229,982	100 %		$    20,321,782	100 %		$    19,448,943	100 %
				Gain on Sale of Loans									Gain on Sale of Loans
				Three Months Ended									Six Months Ended
				June 30,			March 31,			June 30,			June 30,
				2026			2026			2025			2026		2025
Loan Type
Multi-family				$           11,755			$            11,422			$            19,815			$        23,177		$        29,940
Single-family				489			388			2,428			877		2,634
Small Business Administration (SBA)				916			1,696			1,099			2,612		2,387
Total				$           13,160			$            13,506			$            23,342			$        26,666		$        34,961
				Servicing Rights									Servicing Rights
				Three Months Ended									Six Months Ended
				June 30,			March 31,			June 30,			June 30,
				2026			2026			2025			2026		2025
Balance, beginning of period				$         229,576			$          217,296			$          189,711			$     217,296		$     189,935
Additions
Purchased servicing				-			125			70			125		70
Originated servicing				4,010			5,749			5,244			9,759		8,582
Subtractions
Paydowns				(2,652)			(2,532)			(2,246)			(5,184)		(5,054)
Changes in fair value				6,015			8,938			258			14,953		(496)
Balance, end of period				$         236,949			$          229,576			$          193,037			$     236,949		$     193,037

 

Supplemental Results
(Unaudited)
($ in thousands)
				Loans Receivable and Loans Held for Sale
				June 30,				March 31,				December 31,
				2026				2026				2025
Mortgage warehouse repurchase agreements (4)				$      2,168,175				$      1,982,411				$      1,600,285
Residential real estate (1)				1,078,358				1,038,724				1,018,780
Multi-family financing				5,855,477				5,537,711				5,332,680
Healthcare financing				1,303,597				1,260,821				1,385,359
Commercial and commercial real estate (2)(3)(4)				1,837,427				1,560,788				1,603,551
Agricultural production and real estate				91,609				92,527				92,077
Consumer and margin loans				3,960				3,731				1,950
Loans receivable				12,338,603				11,476,713				11,034,682
Less: Allowance for credit losses on loans				75,803				76,831				83,301
Loans receivable, net				$    12,262,800				$    11,399,882				$    10,951,381
Loans held for sale (4)				4,615,894				4,709,688				3,873,012
Total loans, net of allowance				$    16,878,694				$    16,109,570				$    14,824,393
(1)     Includes $0.8 billion, $0.8 billion and $0.8 billion of All-In-One © first-lien home equity lines of credit as of June 30, 2026, March 31, 2026 and December 31, 2025, respectively.
(2)    Includes $1.2 billion, $0.9 billion and $0.9 billion of revolving  lines of credit collateralized primarily by mortgage servicing rights as of June 30, 2026, March 31, 2026 and December 31, 2025, respectively.
(3)     Includes only $19.0 million, $19.7 million and $19.5 million of non-owner occupied commercial real estate as of June 30, 2026, March 31, 2026 and December 31, 2025, respectively.
(4)    The warehouse portfolio is exclusively made up of loans to residential and multi-family mortgage bankers that are funding agency-eligible mortgages and commercial loans, which represent all of the Company's loans to non-depository institutions.
				Loan Credit Risk Profile
				June 30, 2026				March 31, 2026				December 31, 2025
				Amount		%		Amount		%		Amount		%
Pass				$    11,893,874		96.4 %		$    10,971,183		95.6 %		$    10,526,493		95.4 %
Special mention				214,786		1.7 %		234,346		2.0 %		204,918		1.9 %
Substandard				229,943		1.9 %		271,184		2.4 %		303,271		2.7 %
Criticized loans				444,729		3.6 %		505,530		4.4 %		508,189		4.6 %
Total loans receivable				$    12,338,603		100.0 %		$    11,476,713		100.0 %		$    11,034,682		100.0 %
Charge-offs (year-to-date)				$           39,511				$            22,979				$          124,116
Recoveries (year-to-date)				$              5,405				$                 616				$                 127
				Nonperforming Loans
				June 30,				March 31,				December 31,
				2026				2026				2025
Nonaccrual loans				$         205,545				$          239,108				$          197,812
90 days past due and still accruing				87				8,350				—
Total nonperforming loans				$         205,632				$          247,458				$          197,812
Other real estate owned				72,389				60,226				60,145
Total nonperforming assets				$         278,021				$          307,684				$          257,957
Nonperforming loans to total loans receivable				1.67	%			2.16	%			1.79	%
Nonperforming assets to total assets				1.31	%			1.51	%			1.33	%
				Delinquent Loans
				June 30,				March 31,				December 31,
				2026				2026				2025
Delinquent loans:
Loans receivable				$         207,700				$          242,271				$          206,561
Loans held for sale				263				264				265
Total delinquent loans				$         207,963				$          242,535				$          206,826
Total loans receivable and loans held for sale				$    16,954,497				$    16,186,401				$    14,907,694
Delinquent loans to total loans				1.23	%			1.50	%			1.39	%

 

Supplemental Results
(Unaudited)
($ in thousands)
				Deposits
				June 30,			March 31,			December 31,
				2026			2026			2025
Noninterest-bearing deposits
Core demand deposits				$          606,682			$          501,864			$          604,081
Interest-bearing deposits
Demand deposits:
Core demand deposits				$       7,820,104			$       6,949,611			$       6,207,814
Brokered demand deposits				503,257			301,111			600,000
Total interest-bearing demand deposits				8,323,361			7,250,722			6,807,814
Money market/savings deposits:
Core money market/savings deposits				3,944,677			3,872,344			3,566,523
Brokered money market/savings deposits				2,912			200,867			201,010
Total money market/savings deposits				3,947,589			4,073,211			3,767,533
Certificates of deposit:
Core certificates of deposit				585,061			741,452			905,448
Brokered certificates of deposit				791,621			384,504			956,316
Total certificates of deposit				1,376,682			1,125,956			1,861,764
Total interest-bearing deposits				13,647,632			12,449,889			12,437,111
Total deposits				$    14,254,314			$    12,951,753			$    13,041,192
Total core deposits				$    12,956,524			$    12,065,271			$    11,283,866
Total brokered deposits				1,297,790			886,482			1,757,326
Total deposits				$    14,254,314			$    12,951,753			$    13,041,192

 

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SOURCE Merchants Bancorp

FAQ

How did Merchants Bancorp (MBIN) perform in Q2 2026?

Merchants Bancorp reported Q2 2026 net income of $78.3 million, up 106% year-over-year and 16% sequentially. According to Merchants Bancorp, diluted EPS reached $1.48, driven largely by lower credit loss provisions, balance sheet growth, and improved asset quality metrics across its loan portfolio.

What happened to Merchants Bancorp’s net interest margin in Q2 2026?

Merchants Bancorp’s Q2 2026 net interest margin was 2.81%, slightly below 2.83% a year earlier and 2.92% in Q1 2026. According to Merchants Bancorp, the decline mainly reflected a shift toward loans held for sale and warehouse lending versus higher-yielding multi-family and healthcare portfolios.

How strong were Merchants Bancorp’s asset quality metrics in Q2 2026?

Asset quality improved in Q2 2026, with criticized loans down 12% quarter-over-quarter to $444.7 million. According to Merchants Bancorp, nonperforming loans fell 17% to $205.6 million and total delinquent loans declined 14% to $208.0 million, supported by portfolio management and credit protection strategies.

What were Merchants Bancorp’s deposits and liquidity levels as of June 30, 2026?

Total deposits reached $14.3 billion at June 30, 2026, up 10% from March 31, 2026. According to Merchants Bancorp, core deposits were $13.0 billion, 91% of total deposits. Liquidity, including unused borrowing capacity, totaled $13.0 billion, or 61% of total assets.

How did credit loss provisions affect Merchants Bancorp (MBIN) earnings in Q2 2026?

The Q2 2026 provision for credit losses was $9.2 million, down 83% year-over-year and 40% sequentially. According to Merchants Bancorp, this decline reflected improved asset quality, lower charge-offs, and reduced specific reserves, significantly contributing to the quarter’s higher net income and EPS.

What was Merchants Bancorp’s capital position and tangible book value in Q2 2026?

Merchants Bancorp reported a total capital ratio of 12.5% and tangible book value per common share of $39.93 at June 30, 2026. According to Merchants Bancorp, tangible book value rose 13% year-over-year and achieved its 30th consecutive quarterly high, underscoring balance sheet strength.