Merchants Bancorp Q3 net income jumps 92% on valuation gains

By Reuters News


Overview

  • U.S. diversified bank's Q3 net income rose 92% yr/yr and 34% sequentially

  • Q3 diluted EPS increased 112% yr/yr and 39% from prior quarter

  • Results boosted by higher servicing rights and derivative valuations amid higher interest rates


Outlook

  • Company expects elevated operating expenses and possible earnings dilution from recent acquisition ramp-up

  • Company says acquisition may be dilutive initially but is expected to support earnings growth over time

  • Company expects acquisition to expand mortgage production and create opportunities for gain on sale revenue


Result Drivers

  • VALUATION GAINS - Co said positive fair value adjustments to servicing rights and floor derivatives boosted noninterest income

  • NONINTEREST INCOME - Co attributed earnings growth to higher noninterest income, mainly from loan servicing fees and other income

  • LOWER FUNDING COSTS - Co said lower interest expense on certificates of deposit contributed to improved net interest income


Company press release:


Key Details

Metric

Beat/Miss

Actual

Consensus Estimate

Q3 EPS

$2.06

Q3 Net Income

$105.18 mln

Q3 Net Interest Income

$144.17 mln

Q3 Credit Loss Provision

$12.003 mln


Analyst Coverage

  • The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 1 "strong buy" or "buy", 2 "hold" and no "sell" or "strong sell"

  • The average consensus recommendation for the banks peer group is "buy."

  • Wall Street's median 12-month price target for Merchants Bancorp is $64.00, about 28.7% above its October 27 closing price of $49.72

  • The stock recently traded at 8 times the next 12-month earnings vs. a P/E of 9 three months ago


Reuters Recommended Reads

  • Oct 28 - Hope Bancorp Q3 net income rises 16% year over year

  • Oct 28 - Stock Yards Bancorp Q3 profit rises 20% on merger boost

  • Oct 28 - John Marshall Bancorp Q3 profit up on core deposit growth


For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.


(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)

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