55

MBIN

Merchants Bancorp($MBIN) CEO and President Buy Shares Following Stock Plunge After Disappointing Q1 Results

05/01/2025 12:47

Sentiment

C-Level

Summary

  • Merchants Bancorp ($MBIN) CEO and President purchased a combined 9,200 shares (worth approximately $280,000) following the stock's sharp decline after disappointing Q1 results.
  • Q1 performance showed EPS of $1.04 (down 42% YoY) and revenue of $145.89M (down 13.1% YoY), significantly missing market expectations.
  • CEO Michael Dury has consistently purchased shares during price dips since July 2024, demonstrating management's confidence in the company's value at current price levels.

POSITIVE

  • The purchase of company shares by Merchants Bancorp's CEO and President immediately after the stock price decline demonstrates management's confidence that the current price undervalues the company.
  • CEO Dury has consistently purchased shares during price dips since July 2024, showing a pattern of conviction in the company's value.
  • Analysts maintain a 'buy' rating on MBIN with a median target price of $51, suggesting approximately 70% upside potential from current levels.
  • The Tier I Capital/Risk-Weighted Assets Ratio of 12.4% exceeds regulatory requirements, indicating fundamental capital soundness.

NEGATIVE

  • Q1 2025 results showed EPS of $1.04 and revenue of $145.89M, representing declines of 42% and 13.1% YoY respectively, significantly missing market expectations.
  • Senior executives (Vice Chairman and Chairman) sold shares totaling over $10 million in August 2024 at prices approximately 50% higher than current levels.
  • NINGI Research disclosed a short position in October 2024, citing concerns about the bank's commercial real estate loan portfolio.
  • Wells Fargo identified Merchants Bancorp as a potential candidate for additional capital raising in November 2024.
  • J.P. Morgan raised its probability of a U.S. and global recession by year-end to 60%, contributing to broader concerns about the banking sector.

Expert

Regional banks currently face dual challenges from commercial real estate exposure and net interest margin pressure due to the changing rate environment. Despite Merchants Bancorp's strengths in multi-family mortgage banking, its recent performance decline raises concerns. While insider purchases send a positive signal, the limited purchase volume and ongoing real estate market uncertainties warrant a cautious approach in the near term.

Previous Closing Price

$32.02

-0.74(2.26%)

Average Insider Trading Data Over the Past Year

$37

Purchase Average Price

$45.03

Sale Average Price

$854.8K

Purchase Amount

$11.12M

Sale Amount

Transaction related to News

Trading Date

Filing Date

Insider

Title

Type

Avg. Price

Trans. Value

05/31/2025

05/31/2025

Sale

$

Merchants Bancorp ($MBIN) has seen its top executives purchasing shares following a significant stock price decline after the company's recent quarterly earnings report. The stock, now trading in the low $30s, has fallen over 40% from its 52-week high of $52.21. On April 28, 2025, $MBIN reported its Q1 2025 results with earnings per share (EPS) of $1.04, significantly down from $1.80 in the same period last year. Revenue also decreased by 13.1% to $145.89 million, falling well short of analyst expectations of $168.50 million. The stock price plummeted immediately following this disappointing announcement. In what appears to be a vote of confidence, company President Michael Dunlap purchased 4,000 shares at an average price of $30.68 for a total of $122,720 on April 29, just one day after the earnings release. The following day, CEO Michael Dury acquired an additional 5,200 shares at an average price of $30.13, investing $156,676. These consecutive purchases by senior executives signal management's belief in the company's value at current price levels. Notably, CEO Dury has established a pattern of buying shares during price dips over the past year. He purchased 6,000 shares at $44.63 on July 31, 2024, another 5,200 shares at $38.80 on August 5, 2024, and 2,700 shares at $39.21 on November 21, 2024. This consistent buying behavior suggests the CEO's enduring confidence in the company's long-term prospects. In contrast, August 2024 saw significant selling by other executives. Vice Chairman Randall Rogers sold a total of 225,000 shares in two separate transactions, while Chairman Michael Petrie divested 22,050 shares. These sales occurred at prices between $44 and $46 per share, approximately 50% higher than current levels. Merchants Bancorp, headquartered in Indiana, is a diversified bank holding company operating across three main segments: Multi-family Mortgage Banking, Mortgage Warehousing, and Banking. With a market capitalization of approximately $1.6 billion, this small-cap bank primarily provides services related to government-sponsored mortgages. The company's recent performance challenges appear to be influenced by changes in the interest rate environment and a slowdown in the real estate market. In October 2024, NINGI Research disclosed a short position in Merchants Bancorp, raising concerns about "reckless expansion" and the bank's commercial real estate loan portfolio. Furthermore, in November 2024, Wells Fargo identified Merchants Bancorp as a potential candidate for additional capital raising. From a financial perspective, Merchants Bancorp reported a net interest margin of 2.9% in the recent quarter, below the expected 3%, and an efficiency ratio of 42.3%, higher than the anticipated average of 38%. Nevertheless, the company maintains a Tier I Capital/Risk-Weighted Assets Ratio of 12.4%, exceeding regulatory requirements and indicating fundamental capital soundness. In the broader context, the banking sector as a whole has been under pressure since early April 2025, amid a sharp decline in the U.S. dollar and growing recession concerns. J.P. Morgan recently raised its probability of a U.S. and global recession by year-end to 60%, creating overall downward pressure on banking stocks. Analysts continue to maintain a "buy" rating on $MBIN with a 12-month target price of $51, suggesting an upside potential of approximately 70% from current levels. However, given the recent earnings disappointment and broader concerns about the banking sector, volatility is likely to persist in the near term. While the recent insider purchases demonstrate management's conviction that the current stock price undervalues the company's long-term potential, investors should note that the purchase volume (approximately $280,000) is relatively small compared to the previous executive sales (over $10 million). Merchants Bancorp's future performance will largely depend on the recovery of the mortgage market and the health of its commercial real estate portfolio. The Federal Reserve's interest rate decision on May 1 and the subsequent rate trajectory will be crucial variables. While management's buying activity shows confidence in the company's long-term outlook, investors should balance this against overall banking sector health and economic uncertainties.

You can receive notifications when news is published.

news-alarmnews-alarm

Sign up and access more data free.

Sign up and access more data free.

  • Access advanced features of insider transaction screener.

  • Read insider transaction news without any limits.