Merchants Bancorp has announced a significant new capital return initiative, underscoring management’s confidence in the company’s financial position. The board has authorized a share repurchase program worth up to $100 million, set to run through the end of 2027. This decision coincides with the release of year-end 2025 results that highlight a strengthened balance sheet and markedly improved credit metrics.
Robust Financial Position and Record Book Value
The institution’s financial foundation reached new heights at the close of 2025. Total assets hit a record $19.4 billion. Tangible book value per share also achieved an all-time high, climbing to $37.51. This represents a 10% increase compared to the same quarter in the prior year.
The company’s liquidity position is notably strong, providing operational flexibility. Unused credit capacity stands at $5.3 billion. This liquidity reserve constitutes approximately 27% of total assets and is a substantial increase from the $4.3 billion reported a year ago.
Credit Quality Shows Dramatic Improvement
A key driver behind the capital return decision is a substantial enhancement in asset quality. The bank reported a significant easing of pressure within its loan portfolio. Total criticized loans declined to $508.2 million as of December 31, a 13% drop from the previous quarter.
The most striking improvement was seen in total credit delinquencies, which plummeted by 38% over the same period. This sharp reduction in non-performing assets demonstrates effective risk management.
Should investors sell immediately? Or is it worth buying Merchants?
Earnings Dynamics and Insider Transactions
While the balance sheet strengthened, net income for the final quarter presented a mixed picture. Net income rose to $67.85 million from the third quarter, but this figure remained below the $95.67 million reported for the comparable period last year. Diluted earnings per share for the quarter were $1.28.
The repurchase program is expected to be funded significantly by substantial gains generated from the sale of multi-family housing loans.
Regulatory filings also noted recent activity among insiders. Two days prior to the announcement, the Chairman and CEO disposed of 2,404 Series C Depositary Shares. In a separate, routine filing earlier in the week, shares of another board member were withheld to cover tax obligations related to the vesting of stock options—a standard, non-public procedure in the banking sector.
Key Data Points:
* Share Repurchase: $100 million authorized through December 31, 2027.
* Tangible Book Value: Record $37.51 per share.
* Delinquency Reduction: Total credit delinquencies down 38%.
* Liquidity: $5.3 billion in unused credit capacity.
Ad
Merchants Stock: Buy or Sell?! New Merchants Analysis from February 5 delivers the answer:
The latest Merchants figures speak for themselves: Urgent action needed for Merchants investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from February 5.
Merchants: Buy or sell? Read more here...
