Merchants Bancorp (MBIN) investor relations material

Executive summary

• Net income for Q2 2025 was $38.0 million, down 50% year-over-year, mainly due to a sharp increase in provision for credit losses tied to multi-family property value declines and borrower fraud investigations.

• Diluted EPS was $0.60, a 60% decrease year-over-year; tangible book value per common share rose 13% to a record $35.42.

• Total assets reached $19.1 billion, up 2% from both March 31, 2025 and December 31, 2024; loans receivable net of allowance increased 1% sequentially and year-to-date.

• Core deposits grew 22% year-to-date to $11.4 billion, now 90% of total deposits, while brokered deposits fell 50% year-to-date.

• The company entered into a Memorandum of Understanding (MOU) with regulators to maintain capital thresholds and manage asset concentrations; capital levels remain above MOU requirements.

Financial highlights

• Net interest income for Q2 2025 was $128.7 million, up $0.6 million year-over-year; net interest margin declined to 2.83% from 2.99%.

• Provision for credit losses surged to $53.0 million, up 432% from Q2 2024, mainly due to multi-family portfolio issues and mortgage fraud.

• Noninterest income rose 61% to $50.5 million, driven by gains on sale of loans and syndication fees.

• Noninterest expense increased 54% year-over-year, reflecting higher salaries, legal, credit risk transfer premiums, and costs related to nonperforming loans.

• Efficiency ratio deteriorated to 43.16% from 31.59% year-over-year.

Outlook and guidance

• Management does not expect regulatory actions under the MOU to materially impact financial performance or day-to-day operations but may limit or delay expansion plans.

• Management expressed optimism about future stability and growth, citing enhanced risk management and asset quality strategies.

• The company maintains $5.0 billion in unused borrowing capacity and liquid assets and borrowing capacity totaling $11.9 billion, or 62% of total assets.

• Forward-looking statements caution that actual results may differ due to industry and economic uncertainties.