What Happened?
Shares of diversified bank holding company Merchants Bancorp (NASDAQCM:MBIN) fell 8.9% in the afternoon session after 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.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Merchants Bancorp? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Merchants Bancorp’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
Merchants Bancorp is down 11.2% since the beginning of the year, and at $31.99 per share, it is trading 38.6% below its 52-week high of $52.10 from July 2024. Investors who bought $1,000 worth of Merchants Bancorp’s shares 5 years ago would now be looking at an investment worth $2,530.
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