Merchants Bancorp Reports 50% Decline in Net Income for Q2 2025

Merchants Bancorp reported a significant decline in its financial performance for the second quarter of 2025, with net income of $37.98 million, a decrease of 50% from $76.39 million in the same period last year. This drop was primarily attributed to a substantial increase in the provision for credit losses, which rose to $53.03 million from $9.97 million a year earlier. The increase in provisions was largely due to estimated declines in multi-family property values and ongoing investigations into mortgage fraud. Diluted earnings per share also fell to $0.60, down from $1.50 in the prior year.

In terms of overall financial health, Merchants Bancorp's total assets increased to $19.14 billion as of June 30, 2025, up from $18.81 billion at the end of 2024. The company saw a modest increase in loans receivable, which rose to $10.43 billion, reflecting a $78.1 million increase compared to the previous period. Core deposits also grew significantly, reaching $11.43 billion, a 22% increase from December 31, 2024, while brokered deposits decreased by 50% to $1.25 billion.

Strategically, the company completed a $373.3 million securitization of multi-family mortgage loans in June 2025, which contributed to its noninterest income. The volume of warehouse loans funded during the quarter was $16.3 billion, a 49% increase compared to the same period last year, indicating strong operational performance in the mortgage warehousing segment. Additionally, the company reported a 61% increase in noninterest income, totaling $50.48 million, driven by higher gains on loan sales and syndication fees.

Operationally, Merchants Bancorp's employee headcount has increased to support its growth initiatives, particularly in the multi-family mortgage banking segment. The company continues to focus on maintaining a strong capital base, with total shareholders' equity at $2.18 billion, despite a 3% decrease from the previous period due to preferred stock redemptions and dividend payments. The company remains well-capitalized under regulatory standards, with a total capital ratio of 13.4% as of June 30, 2025.

Looking ahead, Merchants Bancorp anticipates continued challenges related to credit losses and market conditions but remains optimistic about its strategic initiatives and operational efficiencies. The company is committed to managing its credit risk and enhancing its capital position while pursuing growth opportunities in its core business segments.