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1. Company Snapshot

1.a. Company Description

Merchants Bancorp operates as the diversified bank holding company in the United States.The company operates through Multi-family Mortgage Banking, Mortgage Warehousing, and Banking segments.The Multi-family Mortgage Banking segment originates and services government sponsored mortgages for multi-family and healthcare facilities.


This segment also offers customized loan products for independent living, assisted living, memory care, and skilled nursing projects; and operates as a syndicator of low-income housing tax credit and debt funds.The Mortgage Warehousing segment funds agency eligible residential loans, including origination, purchase, and sale in the secondary market, as well as commercial loans to non-depository financial institutions.The Banking segment offers a range of financial products and services to consumers and businesses, such as various types of deposit products, as well as multi-family construction and bridge, commercial real estate, commercial and industrial, agricultural, residential mortgage, and consumer loan products.


This segment also provides single-family mortgage lending; construction, bridge, and lot financing; first-lien home equity lines of credit; and small business administration lending products and services.Merchants Bancorp was founded in 1990 and is headquartered in Carmel, Indiana.

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1.b. Last Insights on MBIN

Merchants Bancorp's recent performance was negatively impacted by a decline in loan growth, despite a 15% increase in full-year 2024 net income to a record $320.4 million. The company's diluted earnings per common share of $6.30 reached a new high, but was largely driven by a 12% increase in 2023. Additionally, Merchants Bancorp's revenue and EPS beat expectations in Q4 2024, with earnings of $1.85 per share surpassing the Zacks Consensus Estimate of $1.27 per share.

1.c. Company Highlights

2. Transcript Summary

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3. NewsRoom

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Merchants Bancorp $MBIN Shares Acquired by American Century Companies Inc.

Dec -03

Source: defenseworld.net

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Boston Partners Sells 28,699 Shares of Merchants Bancorp $MBIN

Dec -01

Source: defenseworld.net

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Intech Investment Management LLC Sells 4,172 Shares of Merchants Bancorp $MBIN

Dec -01

Source: defenseworld.net

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Merchants Bancorp (NASDAQ:MBIN) Receives $40.25 Average Price Target from Analysts

Nov -29

Source: defenseworld.net

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Merchants Bancorp Declares Quarterly Common and Preferred Dividends

Nov -19

Source: prnewswire.com

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Merchants Bancorp: Finding Value In The Common And Series E And D Preferred Shares

Oct -29

Source: seekingalpha.com

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Merchants Bancorp (MBIN) Q3 Earnings: Taking a Look at Key Metrics Versus Estimates

Oct -29

Source: zacks.com

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Merchants Bancorp (MBIN) Q3 Earnings and Revenues Top Estimates

Oct -28

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.63%)

6. Segments

Banking

Expected Growth: 7.5%

Merchants Bancorp's 7.5% growth is driven by strategic expansion into new markets, increased commercial lending, and a rise in mortgage banking revenue. Additionally, the company's focus on digital transformation and cost-cutting initiatives have improved operational efficiency, contributing to the growth.

Multi-family Mortgage Banking

Expected Growth: 8.5%

Strong demand for multi-family housing, fueled by demographic shifts and urbanization, drives growth in mortgage banking. Merchants Bancorp's expertise in Freddie Mac and Fannie Mae products, combined with its efficient origination and servicing capabilities, enables it to capitalize on this trend. Additionally, the company's strategic expansion into new markets and increased market share contribute to the 8.5% growth.

Mortgage Warehousing

Expected Growth: 7.0%

Mortgage Warehousing from Merchants Bancorp's 7.0% growth driven by increasing demand for housing, low interest rates, and government-backed loan programs. Additionally, the company's strategic expansion into new markets, improved operational efficiency, and strong relationships with mortgage originators have contributed to its growth.

Other

Expected Growth: 6.5%

Strong loan growth driven by commercial and industrial lending, robust mortgage banking income, and expanding treasury management services. Additionally, strategic acquisitions and organic expansion into new markets contribute to the 6.5% growth rate, solidifying Merchants Bancorp's position in the industry.

7. Detailed Products

Multi-Family Loans

Merchants Bancorp offers multi-family loans for the acquisition, refinance, or rehabilitation of apartment buildings, cooperatives, and condominiums.

Commercial Real Estate Loans

Merchants Bancorp provides commercial real estate loans for the acquisition, construction, or refinance of office buildings, retail centers, and industrial properties.

Construction Loans

Merchants Bancorp offers construction loans for ground-up development, renovation, or redevelopment of commercial and residential properties.

Community Development Loans

Merchants Bancorp provides community development loans for affordable housing, community facilities, and economic development projects.

Mortgage Banking

Merchants Bancorp's mortgage banking division originates, sells, and services residential mortgage loans.

Warehouse Lending

Merchants Bancorp provides warehouse lines of credit to mortgage bankers and other financial institutions.

8. Merchants Bancorp's Porter Forces

Forces Ranking

Threat Of Substitutes

Merchants Bancorp operates in a highly competitive industry, and customers have various alternatives to choose from. However, the company's strong brand reputation and customer loyalty programs help to mitigate the threat of substitutes.

Bargaining Power Of Customers

Merchants Bancorp's customers have significant bargaining power due to the availability of alternative banking services. The company's large customer base and diverse product offerings help to balance this power.

Bargaining Power Of Suppliers

Merchants Bancorp has a diverse supplier base, and no single supplier has significant bargaining power. The company's strong relationships with suppliers and its ability to negotiate favorable terms mitigate the bargaining power of suppliers.

Threat Of New Entrants

The threat of new entrants in the banking industry is moderate, as regulatory barriers and capital requirements can deter new entrants. However, the rise of fintech companies and digital banking platforms poses a threat to traditional banking models.

Intensity Of Rivalry

The banking industry is highly competitive, with many established players competing for market share. Merchants Bancorp's strong brand reputation, diverse product offerings, and customer loyalty programs help the company to compete effectively in this environment.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 36.23%
Debt Cost 6.71%
Equity Weight 63.77%
Equity Cost 9.83%
WACC 8.70%
Leverage 56.82%

11. Quality Control: Merchants Bancorp passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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A-Score: 4.9/10

Value: 8.2

Growth: 6.6

Quality: 5.0

Yield: 2.0

Momentum: 1.5

Volatility: 6.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

34.95$

Current Price

34.95$

Potential

-0.00%

Expected Cash-Flows