Merchants Bancorp reported a significant decrease in net income for the second quarter of 2025 compared to the same period in 2024 and the first quarter of 2025. Net income decreased by $38.4 million or 50% compared to the second quarter of 2024, and by $20.3 million or 35% compared to the first quarter of 2025. This decrease was primarily driven by an increase in provision for credit losses, which rose by $43.1 million or 432% compared to the second quarter of 2024, and by $45.3 million or 586% compared to the first quarter of 2025.
Diluted earnings per common share for the second quarter of 2025 were $0.60, showing a 60% decrease compared to the second quarter of 2024 and a 35% decrease compared to the first quarter of 2025.
Tangible book value per common share reached a record-high of $35.42, representing a 13% increase compared to the second quarter of 2024 and a 1% increase compared to the first quarter of 2025.
Total assets increased by 2% compared to March 31, 2025, reaching $19.1 billion. Loans receivable, net of allowance for credit losses, increased by 1% compared to March 31, 2025, standing at $10.4 billion. Core deposits saw significant growth, reaching $11.4 billion, a 7% increase compared to March 31, 2025, and a 22% increase compared to December 31, 2024. Brokered deposits decreased by 27% compared to March 31, 2025.
The company completed a $373.3 million securitization of 18 multi-family mortgage loans through a Freddie Mac-sponsored Q-series transaction on June 5, 2025.
Asset quality saw significant changes, with an increase in the allowance for credit losses on loans of $8.4 million, a 10% increase compared to March 31, 2025. The company recorded charge-offs for 14 customers, primarily in the multi-family loan portfolio, totaling $46.1 million.
Total deposits increased by 2% compared to March 31, 2025, reaching $12.7 billion. Core deposits represented 90% of total deposits at June 30, 2025, reflecting an 86% increase compared to March 31, 2025, and a 79% increase compared to December 31, 2024. Brokered deposits decreased by 27% compared to March 31, 2025.
Cash balances increased by 24% compared to March 31, 2025, totaling $647.2 million. The company had $5.0 billion in unused borrowing capacity with the Federal Home Loan Bank and the Federal Reserve discount window as of June 30, 2025.
In terms of operating results, net interest income remained essentially unchanged at $128.7 million compared to the same period last year. However, net interest margin and interest rate spread decreased by 16 basis points and 12 basis points, respectively.
Interest income decreased by 7% compared to the second quarter of 2024, while interest expense decreased by 12%. Noninterest income increased by 61%, primarily driven by a significant increase in gain on sale of loans.
As a result of these announcements, the company's shares have moved 1.07% on the market, and are now trading at a price of $35.06. Check out the company's full 8-K submission here.
