Quick Take on 2Q26 Earnings Result: Credit Headed the Right Direction

Research evidence excerpt

Quick Take on 2Q26 Earnings Result: Credit Headed the Right Direction

Update

July 29, 2026 12:59 AM GMT

Morgan Stanley & Co. LLCMMerchants Bancorp | North America Manan Gosalia

Equity Analyst

Quick Take on 2Q26 Earnings Manan.Gosalia@morganstanley.comAlexander L Ward +1 212 761-4092

Research Associate

Alex.Ward@morganstanley.com +1 212 296-3096

Result: Credit Headed the Right

Merchants Bancorp (MBIN.O, MBIN US)

Midcap Banks | United States of AmericaDirection

Stock Rating Equal-weight

Industry View Attractive

Price target $49.00

AlphaSignals Earnings Reaction Shr price, close (Jul 28, 2026) $48.77

Mkt cap, curr (mm) $2,240

Unchanged Modest upside Modest revision higher 52-Week Range $51.47-28.75

Impact to our thesis Financial results versus consensus Direction of next 12-month

consensus EPS

Source: Company data, Morgan Stanley Research

2Q26 EPS beat consensus on better credit, with MBIN reporting

its lowest quarterly NCO ratio since 4Q24. Criticized loans and

NPLs also improved Q/Q. NIM missed, but loan growth was

strong. We raise our 2026/2027 EPS estimates by +8%/+2% on

the 2Q26 beat and lower provision

On the Quarter: Operating EPS of $1.48 beat consensus estimates by 26c (+21%)

on lower provision and expenses.

Credit trends were encouraging

• NCO ratio of 0.29% beat MS/Consensus estimates of 0.45%/0.47%. This was

the lowest NCO ratio MBIN has printed in over 5 quarters.

• Credit migration also continued to improve. Criticized loans declined for the

fifth consecutive quarter, and non-performing loan (NPL) and delinquency

ratios declined 49 bps and 27 bps, respectively.

• We are reducing our 2026/2027 provision estimates 24%/9% (including the

2Q26 beat) as this quarter provides further evidence that the worst of the

credit losses is likely behind MBIN.