Merchants Bancorp reported net income of $38.0 million, or diluted earnings per common share of $0.60, for the second quarter of 2025. This represents a 50% decrease in net income compared to $76.4 million in Q2 2024 and a 35% decrease from $58.2 million in Q1 2025.
The significant decline was primarily driven by a $43.1 million, or 432%, increase in the provision for credit losses, largely associated with estimated declines in multi-family property values following new appraisals and an ongoing investigation into mortgage fraud. The company recorded $46.1 million in charge-offs for 14 customers, primarily in the multi-family loan portfolio.
Non-performing loans decreased to $251.5 million, or 2.39% of loans receivable, from $284.6 million in Q1 2025, largely due to charge-offs. However, loans classified as substandard increased to $417.7 million from $323.6 million. The company upsized an existing credit default swap in June 2025, bringing total credit protection arrangements to $3.7 billion.
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