Merchants Bancorp Reports 15% Increase in Net Income to $320.4 Million for 2024

Merchants Bancorp (Merchants) reported a net income of $320.4 million for the year ended December 31, 2024, a 15% increase compared to the $279.2 million reported in 2023. This increase stemmed primarily from a 17% rise in net interest income to $522.6 million, a 29% increase in noninterest income to $148.1 million, and a 40% decrease in the provision for credit losses to $24.3 million. These gains were partially offset by a 28% increase in noninterest expense to $223.8 million and a 49% increase in the provision for income taxes to $102.3 million. Diluted earnings per share increased 12% to $6.30. Tangible book value per common share rose 25% to $34.15.

Significant changes compared to the previous year included a 38% increase in the volume of warehouse loans funded, reaching $45.6 billion, exceeding the 9% industry increase reported by the Mortgage Bankers Association. The volume of loans originated and acquired through the multi-family business remained unchanged at $6.2 billion, although bridge loans decreased by 36% to $1.9 billion, while loans for sale in the secondary market increased by 29% to $2.5 billion. The company also completed several strategic developments, including a common stock offering raising net proceeds of $97.7 million, the redemption of Series A Preferred Stock for $52.0 million, and several securitization transactions totaling $324.6 million and $628.9 million. The company also executed credit default swaps on loan pools totaling $1.7 billion to reduce risk-based capital requirements.

Operational developments included the sale of Illinois branches and the merger of Farmers-Merchants Bank of Illinois' charter into Merchants Bank in January 2024. The company's LIHTC syndications business raised $1.1 billion in equity during 2024. As of December 31, 2024, Merchants had approximately 663 employees, with 388 located in Central Indiana. No employees are represented by collective bargaining units. The company's total assets increased by 11% to $18.8 billion, while loans receivable, net of allowance for credit losses, increased by 2% to $10.4 billion. Deposits decreased by 15% to $11.9 billion, primarily due to decreases in certificates of deposit and demand deposits.

The increase in nonperforming loans to 2.68% of total loans receivable was attributed to multi-family and healthcare customers with delinquent payments on variable-rate loans, largely due to elevated interest rates. The company attributed the overall positive financial performance to its diversified business model, which includes net interest income and noninterest income from the sale of low-risk assets, resulting in lower-than-industry charge-offs and a lower expense base. The company intends to continue paying quarterly dividends to common stockholders, subject to various factors including results of operations, financial condition, and regulatory requirements. The company's outlook anticipates continued growth, but acknowledges risks related to business and economic conditions, credit risk, regulatory compliance, and competition.