Merchants Bancorp Q2 profit doubles on lower provisions, higher interest income
MBIN•Outlook
The company expects elevated 10-year Treasury rates to pressure near-term gain on sale of loans.
It said higher rates support valuations on servicing rights and derivatives, offsetting revenue pressure.
Merchants Bancorp cited strong liquidity, capital, and improving credit trends as supporting future earnings growth.
Quarterly results
Merchants Bancorp's second-quarter net income more than doubled year over year, driven by lower credit losses.
Diluted EPS for the quarter rose 147% year over year to $1.48.
Tangible book value per share hit a 30th consecutive quarterly high, up 13% year over year.
What drove the results
- Credit loss provision - Net income increase was primarily driven by an 83% year-over-year decrease in provision for credit losses, reflecting improved asset quality.
- Net interest income - Higher net interest income, up 6% year over year, was supported by increased loan balances, though net interest margin declined due to loan mix shift.
- Noninterest income - Noninterest income fell 10% year over year, mainly due to a 44% decline in gain on sale of loans, partially offset by a 95% increase in loan servicing fees.
