Merchants Bancorp Q3 net income jumps 92% on valuation gains
MBIN•Merchants Bancorp reported third-quarter net income of $105.18 million, up 92% year over year, and diluted EPS of $2.06, up 112%. Results benefited from higher servicing rights and derivative valuations, while the company expects elevated expenses and possible initial earnings dilution from a recent acquisition.
1. Earnings increase
Merchants Bancorp's third-quarter net income rose 92% year over year and 34% sequentially to $105.18 million. Diluted earnings per share increased 112% year over year and 39% from the prior quarter to $2.06.
2. Factors and outlook
Positive fair-value adjustments to servicing rights and floor derivatives boosted noninterest income, which also benefited from higher loan servicing fees and other income. Lower interest expense on certificates of deposit contributed to improved net interest income, which was $144.17 million; the credit loss provision was $12.003 million. The company expects elevated operating expenses and possible initial earnings dilution as it ramps up a recent acquisition, which it expects to support earnings growth over time and expand mortgage production and gain-on-sale opportunities.
