Merchants Bancorp Announces Pricing of Common Stock Offering

Rhea-AI Summary

Merchants Bancorp (Nasdaq: MBIN) has announced the pricing for its public offering of 2,400,000 shares of common stock at $43.00 per share. The bank expects to generate approximately $98,040,000 in gross proceeds, after deducting underwriting discounts and commissions. An additional 360,000 shares may be sold if underwriters exercise their 30-day option. Morgan Stanley leads the offering, with Piper Sandler and Raymond James as joint managers. Proceeds will support general corporate purposes and balance sheet growth. The offering is set to close around May 16, 2024, subject to customary conditions.

Positive

• Successful pricing of 2,400,000 shares at $43.00 per share.
• Expected gross proceeds of approximately $98,040,000.
• Option for underwriters to purchase an additional 360,000 shares.
• Proceeds will support general corporate purposes and balance sheet growth.
• Lead bookrunning manager is Morgan Stanley, with Piper Sandler and Raymond James as joint managers.
• Expected close date of May 16, 2024.

Negative

• Potential shareholder dilution due to the issuance of new shares.
• Offering expenses are yet to be deducted from the gross proceeds.
• Dependence on underwriters exercising their option for additional shares to maximize proceeds.

Insights

Financial Analyst

Merchants Bancorp's common stock offering is indicative of the bank's strategic moves to bolster its balance sheet, a critical financial metric for any banking institution. The pricing of $43.00 per share and expected proceeds of approximately $98,040,000 represent a significant capital injection. This is especially relevant given the backdrop of current economic conditions where liquidity and capital adequacy are paramount.

From an investor's perspective, the underwritten public offering being led by major financial entities like Morgan Stanley, Piper Sandler and Raymond James underscores a robust confidence in Merchants Bancorp's financial health and growth potential. The participation of such reputable underwriters typically signals stability and reliability to the market.

Moreover, the explicit mention of using proceeds for general corporate purposes, including balance sheet growth, suggests an intention to strengthen the bank's financial position further. This could imply future capacity for increased lending, investment in technology, or other strategic initiatives that could drive profitability.

Short-term implications include potential dilution of current shares, which existing shareholders should consider. However, the long-term outlook appears positive given this strategic capital raise aimed at supporting growth.

In simple terms, a balance sheet grows when the bank has more assets than liabilities, reflecting increased financial strength and operational capacity. Given current economic volatility, this move by Merchants Bancorp could be seen as a prudent step in safeguarding and enhancing its financial position.

Market Research Analyst

This public stock offering by Merchants Bancorp signifies a strategic decision to tap into public markets for raising capital. The offering price of $43.00 per share aligns with the market's valuation, suggesting the pricing is attractive to investors and is likely to be well-received. This action can be interpreted as a confidence signal to both current and potential investors, indicating that the company anticipates favorable market conditions and growth opportunities.

Moreover, the participation of prestigious underwriters such as Morgan Stanley helps bolster the credibility of the offering and might attract significant institutional interest. This could enhance liquidity and potentially improve the market perception of Merchants Bancorp.

The move to use proceeds for general corporate purposes, including balance sheet growth, is noteworthy. It suggests that the company is focused on maintaining a healthy financial base, possibly preparing for expansion or absorbing potential economic shocks. For retail investors, understanding that balance sheet growth can lead to increased lending capacity and potentially higher returns on investment is crucial.

In the broader banking industry, this offering might prompt other banks to consider similar capital-raising strategies, especially if they are poised for growth or need to solidify their financial positions in a potentially volatile market environment.

CARMEL, Ind., May 13, 2024 /PRNewswire/ -- Merchants Bancorp (Nasdaq: MBIN) ("Merchants" or the "Company"), a holding company that operates through its wholly owned banking subsidiary, Merchants Bank of Indiana (the "Bank"), announced today the pricing of the previously announced underwritten public offering of 2,400,000 shares of its common stock, without par value, at a public offering price of $43.00 per share. The expected proceeds to the Company, after deducting underwriting discounts and commissions but before deducting offering expenses payable by the Company, are approximately $98,040,000. In addition, the Company has granted the underwriters a 30-day right to purchase up to an additional 360,000 shares of Company common stock at the public offering price, less underwriting discounts and commissions.

Morgan Stanley is serving as the lead bookrunning manager, and Piper Sandler and Raymond James are serving as joint bookrunning managers for the offering.

The Company intends to use the net proceeds of this offering of common stock for general corporate purposes including to support balance sheet growth of the Bank.

The Company expects to close the offering, subject to customary conditions, on or about May 16, 2024.

Additional Information Regarding the Offering

The offering of common stock is being made pursuant to a registration statement on Form S-3 (File No. 333-266672) that was declared effective by the Securities and Exchange Commission (the "SEC") on August 17, 2022. A preliminary prospectus supplement to which this communication relates has been filed with the SEC. Prospective investors should read the preliminary prospectus supplement and the accompanying prospectus and other documents the Company has filed with the SEC for more complete information about the Company and the offering. Copies of these documents are available at no charge by visiting the SEC's website at www.sec.gov. Alternatively, when available, copies of the preliminary prospectus supplement, the prospectus supplement and accompanying prospectus related to the offering may be obtained by contacting Morgan Stanley & Co. LLC, Attention: Prospectus Department, 180 Varick Street, 2nd Floor, New York, NY 10014; Piper Sandler & Co., Attention: Prospectus Department, 800 Nicollet Mall, J12S03, Minneapolis, Minnesota, 55402, by telephone at 1-800-747-3924 or by email at prospectus@psc.com; or Raymond James & Associates, Inc., Attention: Equity Syndicate, 880 Carillon Parkway, St. Petersburg, FL, 33716, or by telephone at (800) 248-8863, or by e-mail at prospectus@raymondjames.com. 

No Offer or Solicitation

This press release does not constitute an offer to sell, a solicitation of an offer to sell, or the solicitation of an offer to buy any securities. There will be no sale of securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. 

About Merchants Bancorp

Ranked as a top performing U.S. public bank by S&P Global Market Intelligence, Merchants is a diversified bank holding company headquartered in Carmel, Indiana operating multiple business segments, including Multi-family Mortgage Banking that offers multi-family housing and healthcare facility financing and servicing (through this segment Merchants also serves as a syndicator of low-income housing tax credit and debt funds); Mortgage Warehouse Financing that offers mortgage warehouse financing, commercial loans, and deposit services; and Banking that offers portfolio lending for multi-family and healthcare facility loans, retail and correspondent residential mortgage banking, agricultural lending, Small Business Administration lending, and traditional community banking. Merchants, with $17.8 billion in assets and $14.0 billion in deposits as of March 31, 2024, conducts its business primarily through its direct and indirect subsidiaries, Merchants Bank of Indiana, Merchants Capital Corp., Merchants Asset Management, LLC, Merchants Capital Investments, LLC, Merchants Capital Servicing, LLC, and Merchants Mortgage, a division of Merchants Bank of Indiana.

Forward-Looking Statements

This press release contains forward-looking statements which reflect management's current views with respect to, among other things, future events and financial performance. These statements are often, but not always, made through the use of words or phrases such as "may," "might," "should," "could," "predict," "potential," "believe," "expect," "continue," "will," "anticipate," "seek," "estimate," "intend," "plan," "projection," "goal," "target," "outlook," "aim," "would," "annualized" and "outlook," or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. Forward-looking statements in this press release include, but are not limited to, statements regarding the offering, including the expected closing of the offering. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about the industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, management cautions that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions, estimates and uncertainties that are difficult to predict. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. A number of important factors could cause actual results to differ materially from those indicated in these forward-looking statements, including the impacts of factors identified in "Risk Factors" or "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K and other periodic filings with the Securities and Exchange Commission. Any forward-looking statements presented herein are made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

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SOURCE Merchants Bancorp

FAQ

What is the pricing of Merchants Bancorp's public offering?

Merchants Bancorp is pricing its public offering at $43.00 per share.

How many shares is Merchants Bancorp offering?

Merchants Bancorp is offering 2,400,000 shares of common stock.

What are the expected proceeds from Merchants Bancorp's offering?

The expected proceeds are approximately $98,040,000 after underwriting discounts and commissions.

Is there an option for underwriters to purchase additional shares in Merchants Bancorp's offering?

Yes, underwriters have a 30-day option to purchase up to an additional 360,000 shares.

When is the expected closing date for Merchants Bancorp's offering?

The offering is expected to close around May 16, 2024, subject to customary conditions.

Who are the managers for Merchants Bancorp's offering?

Morgan Stanley is the lead bookrunning manager, with Piper Sandler and Raymond James as joint bookrunning managers.

What will the proceeds from Merchants Bancorp's offering be used for?

The proceeds will be used for general corporate purposes, including supporting the Bank's balance sheet growth.