1. MBIN's Q2 2025 net income fell to $38 million, down 50% YoY. 2. Increase in provision for credit losses reached $43.1 million, affecting profitability. 3. Tangible book value hit a record high at $35.42 per share, up 13% YoY. 4. Core deposits increased significantly, reaching $11.4 billion, 90% of total deposits. 5. Brokered deposits decreased 50% YoY, reflecting a shift in funding strategy.
Significant reduction in net income and increased credit loss provisions can negatively influence investor sentiment. Similar past instances in the banking sector often resulted in downward price pressure on affected stocks.
The financial performance metrics reveal critical issues that could affect MBIN's valuation. The broader investor sentiment may shift based on both current results and future risk management outlook.
Immediate concerns over credit losses and lower profitability could impact stock price in the short term. Historical patterns show quick market reactions to declining financial performance.
Merchants Bancorp (the "Company" or "Merchants") (Nasdaq: MBIN), parent company of Merchants Bank, today reported second quarter 2025 net income of $38.0 million, or diluted earnings per common share of $0.60. This compared to $76.4 million, or diluted earnings per common share of $1.49 in the second quarter of 2024, and compared to $58.2 million, or diluted earnings per common share of $0.93 in the first quarter of 2025.
"Despite a difficult second quarter, marked by an increase in our provision for credit losses and charge-offs largely associated with mortgage fraud or suspected fraud that has also impacted a number of other multi-family lenders, we are encouraged by the resilience of our underlying earnings, the significant increase in gain on sale of loans, and the continued growth in our tangible book value that reached an all-time high of $35.42 per share. We were also pleased to see a 17% reduction in total delinquencies and a 58% decline in loans receivable classified as special mention during the quarter," said Michael F. Petrie, Chairman and CEO of Merchants.
Michael J. Dunlap, President and Chief Operating Officer of Merchants, added, "We have implemented strategies to address our asset quality issues and to enhance our overall risk management practices to ensure long-term resilience. We are optimistic about our future and confident that our collective efforts will drive the stability and growth of our institution."
Net income of $38.0 million for the second quarter of 2025 decreased by $38.4 million, or 50%, compared to the second quarter of 2024, reflecting a $43.1 million, or 432%, increase in provision for credit losses. The increase was primarily associated with estimated declines on multi-family property values after receiving new appraisals and the ongoing investigation of borrowers involved in mortgage fraud or suspected fraud.
Partially offsetting the higher provision expense was a $19.1 million, or 61%, increase in noninterest income driven by a robust gain on sale of loans that reached $23.3 million, as well as syndication and asset management fees of $9.7 million during the quarter.
The allowance for credit losses on loans of $91.8 million, as of June 30, 2025, increased by $8.4 million, or 10%, compared to March 31, 2025. The company recorded charge-offs for 14 customers, primarily in the multi-family loan portfolio, totaling $46.1 million, and no recoveries during the second quarter of 2025.
Cash balances of $647.2 million as of June 30, 2025 increased by $125.9 million, or 24%, compared to March 31, 2025. The Company continues to have significant borrowing capacity available, with unused lines of credit totaling $5.0 billion as of June 30, 2025.
Ranked as a top performing U.S. public bank by S&P Global Market Intelligence, Merchants Bancorp is a diversified bank holding company headquartered in Carmel, Indiana, operating multiple segments...
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