What Happened?

Shares of diversified bank holding company Merchants Bancorp (NASDAQCM:MBIN) jumped 16.3% in the afternoon session after the company reported fourth-quarter 2025 results that surpassed Wall Street's expectations for both earnings and revenue. 

The bank posted earnings per share of $1.28, easily clearing the analyst consensus of $0.97. Revenue for the quarter came in at $185.3 million, topping the $171.9 million analysts had forecast, though this represented a 4.4% decline from the previous year. The strong performance was driven by better-than-expected net interest income, a key measure of a bank's core lending profitability. Additionally, the company's tangible book value per share, a critical metric for bank valuation, grew by 9.8% year-over-year to $37.51, reflecting underlying value creation for shareholders.

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What Is The Market Telling Us

Merchants Bancorp’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. Moves this big are rare for Merchants Bancorp and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 6 months ago when the stock dropped 8.9% on the news that the company reported disappointing second-quarter 2025 earnings that fell significantly short of analyst expectations. 

The bank posted diluted earnings per share of $0.60, missing the consensus analyst estimate of $1.12. Net income for the quarter came in at $38.0 million, a significant drop from the $76.4 million earned in the same period a year earlier. The company attributed the decline primarily to a large increase in its provision for credit losses. This provision was linked to lower appraised values on multi-family properties and an ongoing investigation into borrower mortgage fraud. In response to the results, analysts at Raymond James lowered their price target on the stock, highlighting the earnings miss and increased net charge-offs.

Merchants Bancorp is up 21.3% since the beginning of the year, and at $40.26 per share, it is trading close to its 52-week high of $43.49 from February 2025. Investors who bought $1,000 worth of Merchants Bancorp’s shares 5 years ago would now be looking at an investment worth $2,025.

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