Merchants Bancorp (MBIN): Business Model Canvas [Dec-2025 Updated]

You're trying to figure out what really makes Merchants Bancorp tick, and honestly, it's not the usual regional bank playbook; it's a specialized engine built on complex, government-backed financing. As an analyst, I see a firm with $\mathbf{\$19.4 \text{ billion}}$ in assets as of late 2025, whose real juice comes from originating multi-family and healthcare loans, plus generating significant fee income from activities like tax credit syndication and mortgage warehousing. They fund this with a solid $\mathbf{\$12.8 \text{ billion}}$ in core deposits, which is key to their stability. This model is defintely different. Dive into the full Business Model Canvas below to see exactly how their key partnerships, like with Fannie Mae, translate into their $\mathbf{\$54.7 \text{ million}}$ net income for Q3 2025.

Merchants Bancorp (MBIN) - Canvas Business Model: Key Partnerships

You're looking at the core relationships that keep Merchants Bancorp (MBIN) running smoothly, especially in its specialized lending and capital markets segments. These partnerships are critical for funding growth and managing risk.

Freddie Mac and Fannie Mae for multi-family loan securitization and origination

Merchants Capital, a key subsidiary, is an active issuer with government-sponsored entities (GSEs). Merchants Capital completed its sixth Freddie Mac-sponsored Q-Series transaction on June 5, 2025, which was a $373.3 million securitization of 18 stabilized multifamily mortgage loans. This was Merchants Capital's largest Q-Series closing to date. Since entering the program in April 2021, Merchants has securitized 87 loans totaling $1.76 billion through Freddie Mac. Merchants Bancorp's business includes multi-family rental real estate loan originations pending settlement under firm investor commitments to purchase securities from Fannie Mae and Freddie Mac, typically within 30 days as of March 31, 2025.

Institutional investors for syndicating low-income housing tax credit (LIHTC) equity funds

The syndication of tax credit equity directly supports more originations and noninterest income for Merchants Bancorp (MBIN). The firm closed Merchants Capital Tax Credit Equity Fund 21, LLC, a $131.2 million multi-investor fund with eight bank investors in January 2025. As of June 17, 2025, Merchants Capital has raised over $2.4B in equity since inception. The capital raise for the year ended December 31, 2024, totaled $1.08 billion across multi-investor, proprietary, and state credit offerings.

Here's a quick look at the scale of the LIHTC equity platform:

• Equity Raised Since Inception (as of 6/17/2025): Over $2.4B
• Active Investors: 40+
• 2024 Total Fund Investments Closed: $1.08 billion
• Fund 19 Capital Raise (Sept 2024): $293 million

Federal Home Loan Bank (FHLB) for liquidity and borrowing capacity

The Federal Home Loan Bank is a primary source of contingent liquidity. As of June 30, 2025, Merchants Bancorp had $5.0 billion in unused borrowing capacity with the FHLB and the Federal Reserve Discount window, which was 26% of total assets. This compares to $4.7 billion, or 25% of total assets, as of March 31, 2025.

The borrowing capacity data shows Merchants Bancorp's available liquidity:

Correspondent mortgage lenders utilizing warehouse lines of credit

Merchants Bank acts as a warehouse and commercial lender to independent mortgage banks. The growth in the mortgage warehouse portfolios was a primary driver for the increase in total assets to $19.1 billion as of June 30, 2025. Furthermore, custodial deposit relationships, which help match fund warehouse lines, contributed to core deposits reaching $11.4 billion at June 30, 2025, an increase of $744.6 million from March 31, 2025.

Developers and owners of multi-family and healthcare facilities

Merchants Capital is recognized as a top affordable housing lender, pairing debt offerings with in-house tax credit equity for developers. The $1.08 billion in tax credit equity raised in 2024 provided capital for the construction and preservation of safe, quality affordable housing for more than 19,000 families in 26 states. Merchants Capital works with the nation's top affordable housing developers, and its equity executions are not limited by size or location, executing nationwide.

Merchants Bancorp (MBIN) - Canvas Business Model: Key Activities

You're looking at the core engine of Merchants Bancorp (MBIN), the set of actions they must perform exceptionally well to make their business model work. Honestly, it's a blend of specialized finance and traditional banking, which is key to their diversified revenue.

Originating and servicing multi-family and healthcare facility loans is a major driver. This activity feeds directly into their securitization and capital markets efforts. As of September 30, 2025, Merchants Bancorp had total assets of $19.4 billion, and loans receivable, net of allowance for credit losses, stood at $10.5 billion. Looking at the composition of gross loans held for investment as of 3Q25, the multi-family portion was 33%, while Healthcare Other was 10%. The success in this area is visible in the gain on sale of loans, which increased 47% compared to the third quarter of 2024. They actively manage this portfolio, completing a $373.3 million securitization of 18 multi-family mortgage loans in the second quarter of 2025.

The next activity is providing mortgage warehouse financing to other bankers. This is a balance sheet-intensive business that supports the residential and multi-family origination ecosystem. As of 3Q25, the Mortgage Warehouse segment represented 11% of Gross Loans Held for Investment. This portfolio balance has been a primary driver for asset growth in recent quarters.

To manage the capital strain from these lending activities, Merchants Bancorp focuses heavily on executing credit risk transfers (CRTs), like credit default swaps, for capital efficiency. This is a crucial risk mitigation and capital optimization function. As of September 30, 2025, the balance of loans subject to credit protection arrangements was $2.4 billion. This follows previous arrangements totaling $2.9 billion as of March 31, 2025, and a total of $3.7 billion by June 30, 2025, which included an upsized credit default swap in June 2025. These arrangements provide incremental coverage ranging from 13-14% of the unpaid principal balances. A specific example from the third quarter was a $557 million healthcare loan pool CRT executed to enhance capital efficiency.

The syndication and management of tax credit equity and debt funds is another specialized activity, primarily housed within Merchants Capital Corp. This business generates non-interest income and fee revenue. Merchants Capital raised $1.08 billion in tax credit equity for the year ended December 31, 2024. Since the platform launched in 2021, the total investment portfolio managed surpassed $2.1 billion by the end of 2024. This focus on syndication is paying off, as evidenced by a 186% increase in syndication and asset management fees in the second quarter of 2025.

Finally, the core community banking functions-deposit gathering and agricultural lending-provide the stable funding base. This segment is the foundation for the other activities. As of September 30, 2025, Merchants Bancorp held $13.9 billion in total deposits. Critically, core deposits reached $12.8 billion, making up 92% of total deposits, the highest level since March 2022. For context on segment contribution, the Banking segment accounted for 45% of net income before preferred distributions, while representing 60% of assets as of Q3 2025.

Here's a quick look at the scale of the key lending and funding components as of late 2025:

The operational focus areas for Merchants Bancorp include:

• Originate and service multi-family and healthcare facility loans.
• Provide mortgage warehouse financing lines of credit.
• Execute credit risk transfers up to $3.7 billion in underlying loans.
• Syndicate low-income housing tax credit and debt funds.
• Gather core deposits, which reached $12.8 billion.

If onboarding production staff takes longer than expected, loan closing volumes could lag, defintely impacting the gain on sale recognition, as seen in Q1 2025 results.

Finance: draft 13-week cash view by Friday.

Merchants Bancorp (MBIN) - Canvas Business Model: Key Resources

You're looking at the foundational assets that power Merchants Bancorp's diversified banking and lending model as of late 2025. These are the tangible and intangible things the company absolutely must have to make its value proposition work.

The balance sheet strength provides a solid base. As of September 30, 2025, Merchants Bancorp reported total assets of $19.4 billion, which was the highest level ever reported by the Company at that time. This asset base supports its multi-segment operations.

Funding stability is a key resource, marked by a significant shift in deposit composition. Core deposits totaled $12.8 billion as of the third quarter of 2025, representing 92% of total deposits. This is up substantially from 79% of total deposits at the end of 2024. Total deposits stood at $13.9 billion on September 30, 2025.

Liquidity is actively managed through readily available credit lines. As of June 30, 2025, Merchants Bancorp had $5.0 billion in unused borrowing capacity with the Federal Home Loan Bank and the Federal Reserve Discount window, which represented 26% of total assets then. By the end of Q3 2025, this capacity had grown to $5.9 billion, or 30% of total assets.

The firm's specialized structure is a critical resource, built around its key operating entities:

• Merchants Capital, focusing on multi-family housing and healthcare facility financing.
• Merchants Mortgage, a division of Merchants Bank of Indiana, handling residential mortgage banking.
• Merchants Bank of Indiana, providing traditional community banking and agricultural lending.

Intangible resources include deep expertise in complex government-backed lending programs, particularly its role as a syndicator of low-income housing tax credit and debt funds, and its execution of Freddie Mac-sponsored Q-Series securitizations. This expertise allows for effective risk transfer, such as the June 2025 $373.3 million securitization of 18 multi-family loans.

Here's a quick look at some core financial metrics supporting these resources as of late 2025:

The ability to monetize assets through secondary markets is also a key operational resource. Gain on sale of loans reached $24.7 million in Q3 2025. Also, the company has proactively deployed credit protection tools, with a credit default swap upsized in June 2025 and credit protection arrangements totaling $3.7 billion in loans mentioned around that time.

The firm's tangible equity base, which is a resource for absorbing losses, stood at $2.2 billion as of September 29, 2025, with a Debt to Equity ratio of 130.9%. Tangible book value per common share reached a record high of $36.31 in Q3 2025.

Finance: draft 13-week cash view by Friday.

Merchants Bancorp (MBIN) - Canvas Business Model: Value Propositions

You're looking at Merchants Bancorp (MBIN) as of late 2025, and what really stands out in their value proposition is the specialized, integrated financing they offer across key real estate sectors. It's not just one thing; it's the combination of lending, capital, and servicing that locks in clients.

For developers focused on affordable housing, Merchants Bancorp acts as a one-stop-shop. Their Multi-family Mortgage Banking segment doesn't just provide debt; it also handles servicing and acts as a syndicator for low-income housing tax credit and debt funds. This integrated approach simplifies the capital stack for complex projects.

Then there's the high-volume mortgage warehouse financing. This is crucial for non-depository institutions, which are essentially mortgage bankers needing to fund agency-eligible mortgages and commercial loans before they can sell them off. The warehouse portfolio is exclusively made up of these loans to non-depository financial institutions. This segment is a major driver, as total assets grew to $19.4 billion as of September 30, 2025, partly due to higher balances in these warehouse portfolios.

The specialized financing focus is sharp. They concentrate on multi-family housing and healthcare facilities. To manage risk in that healthcare exposure, Merchants Bancorp executed a credit default swap on a $557.1 million pool of healthcare mortgage loans during Q3 2025, which helps reduce risk-based capital requirements.

Liquidity management is another key value point, helping mortgage bankers manage their funding needs. Merchants Bancorp maintains a very liquid position. As of September 30, 2025, liquid assets-cash, short-term investments, loans in process of securitization, loans held for sale, and warehouse lines of credit-totaled $12.6 billion, which is 65% of their total assets. Plus, they have $5.9 billion in unused borrowing capacity. This strong liquidity position enhances the ability to effectively manage asset levels and interest expense going forward, which is a big plus when market conditions shift. Honestly, having that much readily available capital is a significant value driver for their partners.

Underpinning all this activity is a strong balance sheet. Merchants Bancorp maintained a Common Equity Tier 1 (CET1) ratio at 9.8% in Q3 2025. That capital strength, coupled with a tangible book value per common share reaching a record high of $36.31 in Q3 2025, shows they are well-positioned.

Here's a quick look at how the Gross Loans Held for Investment were composed as of the third quarter of 2025:

The bank's core deposit base is also a value proposition for stability, with Core Deposits representing 92% of total deposits at $12.8 billion as of September 30, 2025. This focus on local business and retail customers provides a stable funding source, which is always better than relying heavily on more volatile brokered deposits, which were down to $1.1 billion at that time.

You should check the latest deposit trends by Friday.

Merchants Bancorp (MBIN) - Canvas Business Model: Customer Relationships

You're looking at how Merchants Bancorp (MBIN) manages its connections across its diversified client base, which spans from local community banking customers to national institutional partners. The relationship approach definitely shifts based on the segment you're dealing with. For the commercial and institutional side, which includes the Multi-family Mortgage Banking and Mortgage Warehousing segments, the relationship is deep and personalized.

Dedicated relationship managers for commercial and institutional clients are key here, supporting the large loan portfolios. As of September 30, 2025, Merchants Bancorp managed total assets of $19.4 billion, with loans receivable standing at $10.5 billion. These clients, which include warehouse customers and commercial real estate borrowers, rely on this dedicated support for complex financing structures. The relationship is built on the ability to execute nationally while leveraging local market knowledge.

For the most complex deals, you see a high-touch, expert consultation for complex multi-family and tax credit transactions. Merchants Bank is a syndicator of low-income housing tax credit (LIHTC) and debt funds. This specialized service drives significant fee income; for instance, syndication and asset management fees saw a massive increase of $6.3 million, or 186%, in the second quarter of 2025 compared to the prior year period. That kind of growth suggests strong, high-value relationships with developers and investors in affordable and market-rate housing projects.

On the other end of the spectrum, for the retail and correspondent mortgage banking clients within the Banking segment, the focus shifts to efficiency. You get transactional and digital service for retail and correspondent mortgage banking. Merchants Bank emphasizes its digital banking platforms alongside its community-oriented approach. This is supported by a strong core deposit base, which reached $12.8 billion as of September 30, 2025, representing 92% of total deposits. The retail side is about making banking easy, which they state is the core of Merchants Bank.

The servicing side supports the national scale of the mortgage operations. You maintain long-term servicing relationships for securitized loan portfolios. Merchants Bancorp continuously sells or securitizes a significant portion of its loans. The value of these relationships is reflected in loan servicing fees; for example, the fair market value adjustment to servicing rights positively impacted results by $7.9 million in the Multi-family Mortgage Banking segment in the fourth quarter of 2024. They actively manage this portfolio, having completed a $373.3 million securitization of 18 multi-family mortgage loans in June 2025.

Finally, for the largest developer and investor partners, there's a clear line to the top. You have direct access to senior leadership for large developer and investor partners. The leadership team, including Chairman Michael Petrie and President & CEO Dennis P. Geary, guides the strategic direction. This access is crucial when dealing with complex, multi-year financing commitments in the multi-family and healthcare sectors, where Merchants Capital provided over $7 billion in debt and equity financing in 2024.

Here's a quick look at the scale of the customer relationships across the key segments as of late 2025:

The customer relationship strategy is clearly bifurcated: high-touch, consultative service for the high-value, complex commercial/institutional side, and efficient, digital-enabled service for the broader retail base. The growth in fees from syndication shows the high-touch model is defintely paying off in the specialized areas.

• Focus on multi-family housing and healthcare facility financing.
• Emphasis on personalized customer service and local decision-making.
• Warehouse portfolio exclusively serves residential and multi-family mortgage bankers.
• Loan sale gains increased 101% in Q2 2025, reflecting higher multi-family volume.

Finance: draft 13-week cash view by Friday.

Merchants Bancorp (MBIN) - Canvas Business Model: Channels

You're looking at how Merchants Bancorp (MBIN) gets its value propositions to its customers across its distinct business lines. It's not one single path; it's a mix of physical presence, national digital reach, and specialized sales forces. Honestly, the channel strategy reflects the diversified nature of their business, moving from local deposits to national capital markets execution.

The physical footprint for traditional community banking is quite focused. Merchants Bank of Indiana uses its brick-and-mortar locations as the primary channel for local deposit gathering and relationship management. This contrasts sharply with the national scale of its capital markets activities.

• Merchants Bank of Indiana branch network for traditional community banking: Operates 7 bank branches as of the third quarter of 2025.
• Digital platforms for deposit services and correspondent banking: Core deposits grew to $12.8 billion as of September 30, 2025, representing 92% of total deposits.

For the specialized lending businesses, the channels are about direct access and platform scale. Merchants Capital Corp. operates a national platform, which means their reach isn't limited by the seven physical branches. They use direct sales forces and loan officers to originate the complex, large-scale loans that feed into their securitization pipeline.

Here's a look at the scale of activity across these channels, focusing on the financing and capital markets execution as of late 2025 data points:

The direct sales force and loan officers are critical for the Mortgage Warehousing and Agricultural Lending segments, as these require specialized origination and relationship management. The growth in warehouse portfolios is evident, as total assets increased from $18.8 billion at the end of 2024 to $19.4 billion by Q3 2025, primarily due to higher balances in the warehouse portfolios.

For the capital markets desk, the channel is about executing complex risk transfer and distribution. The sheer volume of securitization activity shows this channel is highly active:

• Since April 2021, Merchants Capital has securitized 87 loans totaling $1.76 billion through the Freddie Mac Q-Series program.
• The capital markets platform has executed over $5 billion in total securitizations.
• Loan sale transactions related to securitizations totaled over $685.4 million in Q2 2025 alone.

The digital platforms are used heavily for deposit services, evidenced by the growth in core deposits, which increased $3.4 billion or 36% from December 31, 2024, to September 30, 2025. This growth was attributable primarily to custodial deposits from warehouse customers and strategic liquidity solutions, showing a strong digital/operational link to the warehouse channel.

Merchants Bancorp (MBIN) - Canvas Business Model: Customer Segments

You're looking at the core groups Merchants Bancorp (MBIN) serves, which are quite specialized across their three main operating segments: Multi-family Mortgage Banking, Mortgage Warehousing, and Banking. Honestly, the breakdown shows a clear focus on real estate finance and institutional capital deployment.

As of September 30, 2025, Merchants Bancorp held total assets of $19.4 billion, with loans receivable, net of allowance for credit losses, at $10.5 billion. The customer segments map directly to how they generate that loan volume and manage their syndication business.

Here's how the key customer groups fit into the structure:

• Multi-family and affordable housing developers and property owners
• Residential and multi-family mortgage bankers (warehouse customers)
• Institutional investors in LIHTC and debt funds (over 40 investors)
• Healthcare facility operators (independent living, skilled nursing)
• Retail and correspondent residential mortgage customers and agricultural businesses

The Multi-family Mortgage Banking segment is key here, as it handles multi-family housing and healthcare facility financing, plus it acts as a syndicator for the Low-Income Housing Tax Credit (LIHTC) and debt funds. The Banking segment supports the retail side, including agricultural lending.

To give you a clearer picture of the scale related to these segments, look at the latest asset and portfolio figures:

The Mortgage Warehousing segment is a major funding provider for residential and multi-family mortgage bankers, offering them financing for agency-eligible mortgages and commercial loans. Growth in core deposits, up 36% from December 31, 2024, was attributable primarily to growth in custodial deposits from these warehouse customers.

For the institutional side, Merchants Bancorp serves as a syndicator for LIHTC and debt funds, working with institutional investors. While the prompt notes over 40 investors, the Q3 2025 peer group comparison sample included 46 publicly-traded banks between $10-$25B in assets.

The Banking segment's customer base includes retail and correspondent residential mortgage customers, alongside agricultural businesses. This segment also contributes to the overall deposit base, which reached $13.9 billion in total deposits as of September 30, 2025.

You'll want Finance to track the growth in custodial deposits from warehouse customers closely; that's a direct indicator of activity in that specific segment.

Merchants Bancorp (MBIN) - Canvas Business Model: Cost Structure

You're looking at the core outflows that fund Merchants Bancorp (MBIN)'s operations as of late 2025. The cost structure is heavily influenced by funding costs and provisions tied to its specialized lending focus.

Interest expense on deposits and borrowings remains a major component. For the third quarter of 2025, Merchants Bancorp reported that its Net Interest Income decreased 4% compared to the third quarter of 2024, reflecting lower interest income partially offset by lower interest expense on deposits and borrowings. The company's cost of funds totaled 1.13% during the third quarter of 2025, which was significantly below industry averages, though this figure was almost exclusively linked to variable rate Federal Home Loan Bank borrowings funding a specific balance sheet strategy. The cost of interest bearing deposits, however, remained exceptionally low, totaling just 46 basis points through the first nine months of 2025.

The volatility in credit quality directly impacts the cost structure through the provision for credit losses. The second quarter of 2025 saw a significant hit, reflecting an increase in provision for credit losses of $43.1 million compared to the second quarter of 2024. This spike was primarily associated with estimated declines on multi-family property values after new appraisals and the ongoing investigation of borrowers involved in mortgage fraud. By the third quarter of 2025, this cost moderated, with the total provision for credit losses decreasing 45%, or $23.8 million, compared to June 30, 2025, landing at $29.2 million for the quarter.

General operating expenses, which include salaries, benefits, and compliance costs, are also substantial. Noninterest Expense in the second quarter of 2025 jumped 25% quarter-over-quarter to $77.3 million, driven by growth investments (production staff), legal/receiver costs, deposit insurance, and higher credit risk transfer premiums. For the third quarter of 2025, the efficiency ratio worsened to 45.16% from 43.16% in the second quarter, as salaries/benefits rose 25% year-over-year and other legal/tax/insurance expenses increased. Furthermore, deposit insurance expenses increased by $2.2 million in Q3 2025 due to elevated levels of criticized and underperforming assets.

Here's a quick look at how some of these key expense-related metrics trended between Q2 and Q3 2025:

The costs associated with maintaining the bank's specialized regulatory and technology footprint are embedded within the noninterest expense. You see this clearly in the specific line items that increased:

• Salaries and benefits rose 25% year-over-year in Q3 2025.
• Deposit insurance expenses saw a $2.2 million increase in Q3 2025.
• The total Noninterest Expense in Q2 2025 was $77.3 million.

Finally, the commitment to preferred shareholders is a fixed, non-discretionary cost. Merchants Bancorp paid $10.3 million in Q3 2025 preferred dividends. This payment represented a coverage of about 5.3x relative to the $54.7 million in net income before preferred distributions for that quarter.

Merchants Bancorp (MBIN) - Canvas Business Model: Revenue Streams

You're looking at how Merchants Bancorp (MBIN) is bringing in the money as of late 2025, focusing on the numbers from their latest reported quarter. The revenue mix shows a heavy reliance on traditional banking income, but noninterest income sources are playing a bigger role this year.

The core engine remains the Net Interest Income (NII) from their loan portfolios and investments. For the third quarter of 2025, Merchants Bancorp reported Net Interest Income of $128.1 million. That figure reflects a 4% decrease compared to the third quarter of 2024, even as their net interest income after provision for credit losses showed a 31% rise compared to the second quarter of 2025. Their net interest margin for Q3 2025 settled at 2.82%.

Noninterest income is a key area showing significant movement. The gain on sale of loans, which is income generated from selling loans off their balance sheet, saw a substantial year-over-year jump. This source increased by 47% in Q3 2025 compared to the third quarter of 2024. The absolute dollar amount for this gain in Q3 2025 reached $24.7 million, which was a 6% sequential increase from Q2 2025.

Loan servicing fees also contribute, which is income derived from managing loans for others. This stream saw a large sequential increase of 629% compared to Q2 2025. Specifically within this area, the servicing rights valuation provided a boost, with a $2.5 million positive fair market value adjustment recorded in the Multi-family Mortgage Banking segment for Q3 2025.

Another noninterest component is the fees from syndication and asset management, particularly from their tax credit and debt funds. These fees showed a 165% increase quarter-over-quarter, adding $3.0 million in that period. Still, overall noninterest income for the quarter was $43.0 million, which was actually a 15% decrease compared to the second quarter of 2025, as other components saw declines.

To put the overall profitability in context, the bottom line for Merchants Bancorp in Q3 2025 was a net income of $54.7 million. This was a sequential improvement, up from $38.0 million in the second quarter of 2025, though it was down from $61.3 million in the third quarter of 2024.

Here's a quick look at the major noninterest income drivers for the third quarter of 2025:

• Gain on sale of loans: $24.7 million
• Total Noninterest Income: $43.0 million
• Loan servicing fees: Increased 629% quarter-over-quarter
• Syndication and asset management fees: Increased 165% quarter-over-quarter

You can see the breakdown of the noninterest income components that made up that $43.0 million total for the quarter:

Finance: draft 13-week cash view by Friday.