Merchants Bancorp Reports 32% Decrease in Net Income for 2025

Merchants Bancorp reported a decrease in net income for the year ended December 31, 2025, totaling $218.8 million, a 32% decrease compared to $320.4 million in 2024. This decline was primarily attributed to a significant increase in the provision for credit losses, which rose by 385% to $117.8 million, alongside a 34% increase in noninterest expense, reaching $299.9 million. These factors were partially offset by an 11% increase in noninterest income, which amounted to $164.4 million, and a decrease in the provision for income taxes. Despite the decrease in net income, the company's total assets reached $19.4 billion, a 3% increase from the previous year.

The company experienced notable shifts in its deposit composition, with core deposits increasing by 20% to $11.3 billion, now representing 87% of total deposits. Conversely, brokered deposits decreased by 31% to $1.8 billion. The volume of warehouse loans funded during the year increased by 46% to $66.3 billion, while the total volume of loans originated and acquired through the multi-family business increased by 4% to $6.5 billion. These changes reflect the company's strategic efforts to optimize its funding sources and expand its lending activities.

Strategic developments during the year included the redemption of all outstanding shares of the Series B Preferred Stock for $125.0 million and the completion of multiple securitizations of multi-family mortgage loans through Freddie Mac-sponsored Q-Series transactions, totaling $782.1 million. Additionally, the company executed a credit default swap on a $557.1 million pool of healthcare mortgage loans to reduce risk-based capital requirements. These actions demonstrate the company's proactive approach to managing its capital position and mitigating credit risk.

Looking ahead, the company anticipates continued loan growth in 2026, although at a potentially lower overall provision for credit losses due to a reduction in identified impairments on problem loans. The company also expects to continue incurring increased noninterest expense related to general and administrative expenses, as well as expenses to hire additional personnel and other costs required to continue its growth. The company's strategic plan includes diversifying the net income of Merchants Bank and providing synergies across its business segments, with a focus on funding low-risk loans and generating noninterest income through loan sales and servicing fees.