Terms

Series

7.00% Fixed-to-Floating Rate Series A Non-Cumulative Perpetual Preferred Stock

Liquidation Preference

$25.00

Coupon Rate

7%

Rate Type

Fixed To Floating

Annual Dividend

$1.75

Payment Frequency

Quarterly

Cumulative

No

Perpetual

Yes

Convertible

No

Callable

Yes

First Call Date

April 1, 2024

First Call Price

$25.00

Redemption Notice Period

30 days

Capital Stack Ranking

Junior To: All Existing And Future Indebtedness And Other Liabilities, Any Expressly Designated Senior Preferred Stock; Pari Passu With: 8% Non-Cumulative Perpetual Preferred Stock ($1,000 Liquidation Preference), Any Future Parity Preferred Stock; Senior To: Common Stock, Any Junior Preferred Stock

Regulatory (Basel III) Call

Yes

Tax Classification

Qualified Dividend

Qualifies for QDI

Yes

Qualifies for DRD

Yes

Shares Offered

2,000,000

Prospectus Summary

Merchants Bancorp, an Indiana bank holding company, is offering 2,000,000 shares of its 7.00% Fixed-to-Floating Rate Series A Non-Cumulative Perpetual Preferred Stock at a liquidation preference of $25.00 per share. Dividends are paid quarterly (January 1, April 1, July 1, and October 1) at a fixed 7.00% per annum ($1.75/share annually) through March 31, 2024, then reset quarterly to three-month LIBOR plus 460.5 basis points (with a zero floor). The preferred is callable at par on any dividend payment date on or after April 1, 2024. Critically, this stock is non-cumulative: if the board elects not to declare a dividend in any quarter, that dividend is permanently lost — holders have no right to recover it in future periods. The Series A preferred ranks senior to Merchants Bancorp's common stock and any junior preferred, and pari passu with its existing 8% Non-Cumulative Perpetual Preferred Stock ($1,000 liquidation preference per share). It is junior to all of Merchants Bancorp's indebtedness and other liabilities. As a holding company issue, investors face structural subordination: in a stress scenario, creditors of the bank subsidiary would be satisfied before assets flow up to the holding company to pay preferred holders. Additionally, the issuer holds a regulatory capital treatment call: if the preferred loses its Tier 1 capital qualification under applicable banking regulations, Merchants Bancorp may redeem the entire series at $25 per share within 90 days of that event — potentially forcing redemption at an inopportune time for holders. At the $25 liquidation preference, the fixed-period yield is 7.00% ($0.4375 per quarter). Dividends on Merchants Bancorp preferred stock are expected to qualify as qualified dividend income (QDI) for individual investors (taxed at preferential 15%/20% rates) and should qualify for the dividends-received deduction (DRD) for eligible corporate holders, though investors should confirm tax treatment with their advisors. The record date is the 15th calendar day before each payment date. The dividend stopper provision means that if Merchants Bancorp fails to declare and pay full dividends on the Series A preferred for the most recently completed period, it cannot pay dividends on or repurchase common or junior preferred stock — providing partial protection, though since dividends are non-cumulative, any missed payment is not owed to holders going forward.

Summarized from the SEC prospectus filing.

Distribution History

Floating Rate Terms

Ranking vs. Other Preferreds

Dividend Stopper Provisions

Dividend Stopper Description

If Merchants Bancorp has not paid full dividends on the Series A preferred stock for the most recently completed Dividend Period, it is blocked from paying dividends on or repurchasing common stock and other junior stock, and from repurchasing parity preferred stock, until those dividends are paid or set aside.

Div Score Breakdown

Reinvesty's multi-factor safety analysis for this preferred, composite score: 75 (Strong)