The Underrated Bank Stock Shaping Up for Long Term Growth

30‑Second Take

Why now? Merchants Bankcorp suffered a rare slip in its Q1 earnings report by missing analyst expectations, but this stock could well have an ace up its sleeve. Or three.

They come in the form of rock-solid foundations built upon the holy trinity of scalability, capital efficiency, and diversification.

The next few months could well see MBIN quietly floating into prime position thanks to a $500 million mixed shelf filing made back in 2022.

It still has more than half that amount waiting in the wings, setting the stage for explosive growth.

Trade Setup

Time frame: Swing to medium-term
Edge type: Momentum breakout

Snapshot Table

Chart

5-Day Synopsis: The last five days have created a compelling case to buy the MBIN dip for investors, with a 4.28% decline in stock prices.

This drop is reflective of a wider decline as markets struggle to find solid ground following further escalation in the Israel and Iran conflict, concern over the long-running trade tariff saga, and uncertainty around what happens next with interest rates.

Bull Case 

Core thesis: Headquartered in Carmel, Indiana, Merchants Bankcorp is a diversified bank holding company.

Its services include Multi-family Mortgage Banking and Mortgage Warehousing.

MBIN has nearly quadrupled its assets and loan portfolio over the past five years, driven by its specialty in multifamily and healthcare bridge financing.

It maintains high liquidity—with around $4.7 billion in unused borrowing capacity—and continues paying consistent quarterly dividends (~1.2% yield).

Catalysts: There are clear signs of increasing investor confidence in MBIN stock with an uptick in institutional buyers in the last two weeks.

Both Two Sigma Advisers LP and Mackenzie Financial Corp have recently increased their MBIN holdings, signalling confidence in Merchants Bankcorp’s upside potential and growth plans.

In addition, a recently completed capital restructuring project – which entailed the redemption of high-cost Series B preferred stock and the issuance of the lower-rate Series E preferred stock – has put MBIN in a favorable strategic position. 

Valuation upside: Analyst expectations range from a low of $39 to a high of $42. The average is $40.67. 

Technical tailwind: Current price levels offer a compelling entry point for investment but near-term volatility remains likely.

Bear Case 

Key risk: Merchants Bancorp’s first quarter earnings call was a mixed bag with a reported net income of $58.2 million, down from $87.1 million in Q1 2024.

This was also $37.5 million lower than the previous quarter. The diluted earnings per share missed analyst expectations with a 48% year-over-year decline.

A loss of profitability and higher rate of loan delinquencies masks a bigger issue; that of increased financial uncertainty due to the wider economic and political situation.

Asset quality has deteriorated in this environment, with non-performing loans almost doubling from Q4 2024 to Q1 2025.

Macro/sector headwinds: Persistently high interest rates and broader economic volatility is a key headwind.

Merchants Bancorp’s position in the multi-family and healthcare lending sectors means it faces the threat of increased defaults as rate increases and inflation take their toll on budgets.

Market uncertainty has also dealt a blow to the lucrative mortgage warehousing side of the business and could continue to weigh heavily on earnings.

Competitive threat: There are a range of regional and national competitors all jostling for position in this highly competitive banking segment. 

Rivals like PNC and Wells Fargo benefit from larger economies of scale and wider reach, while rivals like Midland States (MSBI) and Business First (BFST) offer comparable products, making differentiation problematic. 

Crowded-trade concern: Interest rate increases and ongoing economic uncertainty could provoke additional declines.

Quick Checklist 

✅ Thesis still valid after today’s close
✅ Volume confirms move above key levels
✅ Catalyst date double-checked (June 18, 2025)

Deep‑Dive Links

• Q1 2025 Earnings Report 

• Analyst Ratings and Price Targets

• Short Interest Data

• Company Profile and Investor Relations

That’s all for today’s Everyday Alpha. We’ll have a new pick for you every morning before the market opens, so stay tuned!

Best Regards,
—Noah Zelvis
Everyday Alpha