8-K: Merchants Bancorp Announces Redemption of Series B Preferred Stock and Declares Initial Dividend on Series E Preferred Stock

Merchants Bancorp will redeem all outstanding Series B Preferred Stock on January 2, 2025, and has declared an initial quarterly dividend on its Series E Preferred Stock.

Summary

• Merchants Bancorp has announced the redemption of all outstanding shares of its Series B Preferred Stock on January 2, 2025, at a price of $25.00 per share.
• The company will use cash on hand to fund the redemption.
• Dividends of $0.59 per share on the Series B Preferred Stock, declared on November 20, 2024, will be paid separately on January 2, 2025.
• Following the redemption date, dividends on the Series B Preferred Stock will cease to accrue.
• Merchants has notified Nasdaq of its intention to delist the Series B Preferred Stock, with delisting expected to be effective on or about January 2, 2025.
• The company has also declared an initial quarterly cash dividend of $7.84 per share (equivalent to $0.196 per depositary share) on its Series E Preferred Stock.
• The dividend on the Series E Preferred Stock is payable on January 2, 2025, to shareholders of record on December 13, 2024.
• Merchants Bancorp has $18.7 billion in assets and $12.9 billion in deposits as of September 30, 2024.

Sentiment

Score: 7

Explanation: The announcement is positive overall, with the redemption of preferred stock and the declaration of a new dividend. The company is managing its capital structure and providing returns to shareholders. There are no significant negative aspects.

Positives

• The redemption of Series B Preferred Stock simplifies the company's capital structure.
• The declaration of an initial dividend on Series E Preferred Stock provides income to shareholders.
• Merchants has received all necessary regulatory approvals to redeem the Series B Preferred Stock.
• The company is using cash on hand for the redemption, indicating a strong liquidity position.

Negatives

• The Series B Preferred Stock will no longer be traded on Nasdaq after the delisting.
• Dividends on the Series B Preferred Stock will cease to accrue after the redemption date.

Risks

• The delisting of the Series B Preferred Stock may reduce trading liquidity for those shares.
• The company's future financial performance could impact its ability to maintain dividend payments on the Series E Preferred Stock.

Future Outlook

The company will redeem all outstanding shares of its Series B Preferred Stock on January 2, 2025, and will pay the initial quarterly dividend on its Series E Preferred Stock on the same date.

Management Comments

• Merchants Bancorp announced that on January 2, 2025 it will redeem all outstanding shares of its Series B Preferred Stock.
• Merchants also announced that its Board of Directors declared an initial quarterly cash dividend on the Companys outstanding shares of its Series E preferred stock.

Industry Context

The redemption of preferred stock and declaration of dividends are common capital management activities for financial institutions. This announcement reflects Merchants Bancorp's ongoing efforts to manage its capital structure and provide returns to shareholders.

Comparison to Industry Standards

• Many banks use preferred stock as a form of capital, and the redemption of such stock is not uncommon when market conditions or the bank's capital structure warrants it.
• The dividend yield on the Series E preferred stock is in line with other preferred stock offerings in the financial sector.
• Companies like JPMorgan Chase and Bank of America also issue preferred stock and periodically redeem them based on their capital needs and market conditions.

Stakeholder Impact

• Shareholders of Series B Preferred Stock will receive $25.00 per share plus a final dividend of $0.59 per share.
• Shareholders of Series E Preferred Stock will receive an initial quarterly dividend of $7.84 per share.
• The delisting of Series B Preferred Stock may impact trading liquidity for those shares.

Next Steps

• Merchants will redeem all outstanding shares of Series B Preferred Stock on January 2, 2025.
• Merchants will pay the initial quarterly dividend on Series E Preferred Stock on January 2, 2025.
• Merchants will file a Notification of Removal from Listing on Form 25 with the Securities and Exchange Commission on or prior to the redemption date.

Key Dates

Keywords

Preferred Stock, Redemption, Dividend, Delisting, Merchants Bancorp, Series B Preferred Stock, Series E Preferred Stock, Nasdaq