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CARMEL, Ind. - Merchants Bancorp (NASDAQ:MBIN), through its subsidiary Merchants Bank of Indiana, has priced its public offering of 9.2 million depositary shares at $25 each. These shares represent a 1/40th interest in its Series E preferred stock, which carries a 7.625% fixed annual dividend, payable quarterly starting January 1, 2025. The board of directors will determine dividend declarations.
The offering is expected to close around November 25, 2024, subject to customary conditions. Proceeds are slated for redeeming Series B preferred stock and bolstering general corporate initiatives, including supporting Merchants Bank's balance sheet growth.
Morgan Stanley (NYSE:MS) & Co. LLC, UBS Securities LLC, Piper Sandler & Co., and Raymond (NS:RYMD) James & Associates, Inc. are jointly managing the bookrunning.
This offering stems from a shelf registration statement filed with the SEC on August 17, 2022, and is made solely by prospectus supplement and accompanying prospectus, available through the SEC or the bookrunners.
Merchants, a top U.S. bank per S&P Global Market Intelligence, has a diverse portfolio, including multi-family mortgage banking, mortgage warehouse financing, and community banking. As of September 30, 2024, it reported $18.7 billion in assets and $12.9 billion in deposits.
This report is based on a press release statement and does not constitute an offer or solicitation for security sales in jurisdictions where such actions would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
In other recent news, Merchants Bancorp has witnessed several significant developments. Piper Sandler revised its price target for Merchants Bancorp from $56 to $48, while maintaining an Overweight rating on the stock. The firm's analyst cited the bank's recent underperformance in the market as the reason for this adjustment. The analyst, however, expects Merchants Bancorp to continue demonstrating strong profitability, regardless of changes in the interest rate environment.
In addition, the company recently announced the appointment of Sean Sievers as the new Chief Financial Officer, following the retirement of former CFO, John Macke. Sievers, who brings over 25 years of executive banking experience to the role, is expected to provide valuable insights.
Meanwhile, Morgan Stanley initiated coverage on Merchants Bancorp's stock with an Equalweight rating, suggesting a potential 24% upside from the current trading level. The firm's assessment is based on the expectation that the discount in Merchants Bancorp's stock price will decrease over time, contingent on the company's ability to maintain its higher earnings per share level across various macroeconomic conditions. These recent developments highlight an interesting phase for Merchants Bancorp, with changes in leadership and positive analysis from reputable investment firms.
InvestingPro Insights
Merchants Bancorp's recent offering of depositary shares aligns with its strong financial position and growth strategy. According to InvestingPro data, the company boasts a market capitalization of $1.81 billion and has demonstrated impressive revenue growth of 25.9% over the last twelve months as of Q3 2024. This growth trajectory supports the company's decision to raise capital for balance sheet expansion and refinancing existing preferred stock.
The company's financial health is further underscored by its attractive valuation metrics. With a P/E ratio of 6.57 and a price-to-book ratio of 1.22, Merchants Bancorp appears to be trading at a discount relative to its earnings potential. An InvestingPro Tip highlights that the company is trading at a low P/E ratio relative to its near-term earnings growth, suggesting potential upside for investors.
Moreover, Merchants Bancorp has a track record of shareholder-friendly policies. An InvestingPro Tip reveals that the company has raised its dividend for 7 consecutive years, with a current dividend yield of 0.9%. This consistent dividend growth, coupled with a strong return on assets of 1.72%, indicates efficient management and a commitment to returning value to shareholders.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights, with 7 more tips available for Merchants Bancorp on the platform.
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