Merchants Bancorp reported third quarter 2026 results that substantially beat analyst expectations, with total revenue of $225.0 million and diluted EPS of $2.06. Profitability was significantly enhanced by $47.3 million in positive fair value adjustments on servicing rights and derivatives, which provided a natural hedge against interest rate pressure on mortgage production.
Key Highlights
- Net income rose 92% year-over-year to $105.2 million, primarily driven by a surge in noninterest income.
- Net interest margin (NIM) expanded to 2.83%, up two basis points sequentially from 2.81% in the second quarter.
- Tangible book value per common share increased 15% year-over-year to a record high of $41.64.
- Asset quality improved as nonperforming loans decreased 12% sequentially to $180.3 million, with charge-offs dropping to $3.9 million from $16.5 million in the prior quarter.