Merchants Bancorp Announces Redemption of Its Series A Preferred Stock
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Insights
The redemption of Merchants Bancorp's 7.00% Fixed-to-Floating Rate Series A Non-Cumulative Perpetual Preferred Stock represents a significant capital management decision. This action indicates a liquidity position robust enough to allow for the buyback of preferred shares, which can be seen as a positive signal to the market. The company's use of cash on hand for the redemption implies confidence in its operating cash flow and financial stability.
From a financial perspective, the redemption of these preferred shares will eliminate the fixed dividend payments, which could potentially improve Merchants' earnings per share (EPS) going forward. However, it is also important to consider the cost of this redemption in terms of opportunity cost, as the cash used could have been allocated to other investments or growth opportunities.
The delisting of the Series A Preferred Stock from Nasdaq following the redemption is a move that will simplify the company's capital structure and may reduce administrative costs associated with maintaining the listing. For current holders of the preferred stock, the redemption provides a clear exit strategy but removes a fixed-income investment option from their portfolios.
It is essential to analyze the market's reaction to such redemptions, as they can often be interpreted in various ways. While some investors might view it as a sign of financial strength, others could perceive it as a reduction in the diversity of investment choices offered by Merchants Bancorp.
The process of delisting requires adherence to specific regulatory procedures, including the filing of a Notification of Removal from Listing on Form 25 with the Securities and Exchange Commission. Compliance with these procedures is critical to avoid any legal or regulatory issues. The fact that Merchants Bancorp has notified Nasdaq and intends to follow the proper channels is a testament to their commitment to regulatory compliance.
Investors and stakeholders should be aware that the delisting of securities can affect the liquidity and marketability of those securities. The company must ensure that all communications regarding the redemption and delisting are clear and transparent to avoid potential legal complications or shareholder disputes.
Dividends on the Series A Preferred Stock of
Merchants has notified Nasdaq of its intention to voluntarily delist the Series A Preferred Stock and a Notification of Removal from Listing on Form 25 will be filed with Securities and Exchange Commission on or prior to the redemption date. Merchants expects the delisting to become effective on or about April 1, 2024, from which time the Series A Preferred Stock will no longer be traded on Nasdaq.
Merchants has received all necessary regulatory approvals to redeem the Series A Preferred Stock. Payment of the redemption price for the Series A Preferred Stock will be sent to holders by the Merchants' transfer agent, Computershare Trust Company, N.A., on the redemption date.
About Merchants Bancorp
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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. 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 Merchants 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 Merchants' 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 Merchants 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
When will Merchants Bancorp redeem its Series A Preferred Stock?
At what price will the Series A Preferred Stock be redeemed?
What dividends were declared on the Series A Preferred Stock?
Will accrued dividends be included in the redemption price?
How will Merchants Bancorp fund the redemption of the Series A Preferred Stock?
