Shares of Merchants Bancorp (NASDAQ: MBIN) plummeted 5.08% in Wednesday's trading session following the release of the company's disappointing first-quarter 2025 financial results. The sharp decline came as the banking firm's earnings and revenue figures fell short of analyst expectations, raising concerns about its performance in a challenging economic environment.

Merchants Bancorp reported a significant drop in both revenue and net income for the quarter. Revenue fell 15% year-over-year to $138.2 million, missing analyst estimates by 14%. Net income declined by a substantial 46% to $42.6 million, resulting in earnings per share (EPS) of $0.93, which was 28% below analyst forecasts. The company's profit margin also contracted from 48% in Q1 2024 to 31% in the current quarter, primarily due to the lower revenue.

The earnings miss has sparked investor concerns about Merchants Bancorp's near-term growth prospects. While the company's revenue is forecast to grow at an average of 6.8% per annum over the next three years, outpacing the 3.5% growth projected for the US Diversified Financial industry, the significant underperformance in Q1 2025 has cast doubt on the firm's ability to meet these expectations. As a result, investors reacted negatively, sending the stock price sharply lower during the trading session.