Merchants Bancorp to Sell FTF Preferred Issue

Indiana regional banker Merchants Bancorp (NASDAQ:MBIN) has announced a new fixed-to-floating rate preferred issue. Merchants is a relatively small banker with $5 billion in assets.

Of course being a bank the issue is non-cumulative, but qualified. The early redemption date is in 10/2024 (and of course also when it begins to float)

The bank has announced a permanent ticker of MBINO on NASDAQ after OTC Grey market trading–the OTC ticker has not been announced.

The preliminary paperwork can be read here.

The company has another fixed-to-floating outstanding with a 7% coupon which can be seen here.

George was quick on the draw for a Monday morning on this one and via “Reader Initiated Alerts” alerted me to this issue. George is ‘hearing’ 6-6.125% on the fixed coupon.

16 thoughts on “Merchants Bancorp to Sell FTF Preferred Issue”

  1. MBINP under 5% YTC, if it remain there then this new one compares favorably if trading at par. Good rate for a bank holding company today, though their FHA exposure makes me nervous.

    1. The Egan-Jones rating makes me nervous.

      It is remarkable that a mediocre credit can be priced to yield 5%, that being the YTC on the outstanding issue. 5% used to be the rate on 10-year treasuries.

      World is going MAD.

    1. In a world with $15 trillion in negative debt and more every day, this is the new FLR: “in the event that three-month LIBOR is less than zero, three-month LIBOR shall be deemed to be zero.”
      For me personally, I still find FTF attractive. A year ago, I was at a seminar where a very competent money manager was predicting cash would yield 3% by the end of 2019. Today, everyone is on the other side of the bet. But right now, the global slowdown isn’t severe. If trade tensions are resolved by 2021, why couldn’t there be accelerating global growth by 2024, and rising rates? As the Danish proverb goes, ““It is very hard to predict, especially the future.”

      1. Remember last December? Income stocks were falling because everybody was expecting rates to continue rising. Things can change fast.

  2. Perhaps but I guess 5 years is a long time who can know what rates will be in 2024? …a gamble

      1. We had zirp for 7 years after the last easing cycle. So, five years from now my money would be on this issue paying the minimum rate

        1. What bothers me on this one is on the latest earnings:”FOR LOAN LOSSES INCREASED $6.6 MILLION, OR 31%,” Coupon seems tasty and one could always cash out in 3 or 4 years BEFORE the floating gets in. I learned my sad recent mistake. NRZ-A sold for profit. But the new NRZ-B, NRZEP closed at $24.85 vs. mine bought at $25.01. Yes, NRZ-A was and still is trading at ridiculous $26+. Now dropped to $26.15. This large cap mixed eREIT and MSR player unlikely to fail but certainly not a solid citizen. I bet the new MCSBL might trade above par. Then the risk/reward seems too much IMHO.

          1. JohnKcal-

            NRZEP is a very large offering. Yes you jumped in a little early, but once the initial buying is done, I think you will be happy with your purchase at 25.01. Good luck!

            1. I agree. Bought several large blocks last week @ 24.98 > 25.03, so am in same boat as johnkcal. I flipped NRZ-A @ 26.05 a while back for a $1.08 profit per share. I also own the common.

              Extrapolating off the price/coupon of NRZ-A, I see NRZEP moving to at least $25.30 or more within weeks after getting its permanent ticker and moving to the exchanges.

              Relax and watch!


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