Insider Buying at Merchants Bancorp: A Strong Signal for Shareholder Value

In the world of value investing, few signals are as compelling as insider buying. When executives and directors of a company use their own capital to purchase shares, it often signals confidence in the business's long-term prospects. For long-term investors, this behavior—coupled with strong financial fundamentals and a concentrated ownership structure—can form the bedrock of a high-conviction investment case. Merchants Bancorp (NASDAQ: MBIN) has emerged as a standout example of this dynamic, offering a compelling mix of insider confidence, disciplined capital management, and robust performance metrics.

A Surge in Insider Buying: Confidence in Action

Merchants Bancorp's insider transactions in 2025 reveal a clear pattern of strategic accumulation. The most notable event occurred on July 30, 2025, when Michael R. Dury, President & CEO of Merchants Capital Corp, purchased 16,000 shares at an average price of $31.45 per share, totaling $504,936. This purchase marked a 14% increase in insider ownership, bringing the total to 36% of the company, valued at $484 million.

Dury's actions were not an isolated event. Earlier in 2025, he acquired 101,992 shares at $30.86 on May 1 and 157,002 shares at $29.89–$30.37 on April 30. Meanwhile, President Michael J. Dunlap purchased 122,377 shares in early May. These purchases, combined with stock awards to directors at prices ranging from $32.71 to $42.82 in 2025, underscore a consistent willingness by leadership to invest in the company's future.

Net insider buying in 2025 totaled 36,410 shares for $1.2 million, far outpacing sales of 22,050 shares worth $1 million. This net buying, even as the stock price has declined from $45.34 in August 2024 to $29.18 as of August 2025, suggests that insiders view the current valuation as attractive.

Ownership Concentration: A Stable Foundation

Merchants Bancorp's ownership structure further reinforces its appeal for long-term investors. The CEO, Michael Petrie, holds 27% of shares outstanding, while Randall Rogers owns 7.2%. Together with other insiders and directors, this group controls a significant portion of the company's equity, creating a strong alignment of interests with shareholders.

Institutional investors also play a role, with BlackRock, Inc. owning 3.3% of the stock. Notably, the company lacks hedge fund ownership, which often signals a preference for long-term value creation over short-term speculation. The general public holds 31% of shares, ensuring a broad base of support and reducing the risk of sudden, destabilizing sell-offs.

The top 10 shareholders collectively own over half of the share register, indicating a concentrated yet balanced ownership structure. This concentration, combined with recurring stock awards to directors and executives, suggests a long-term commitment to the company's success.

Financial Performance: A Model of Resilience

Merchants Bancorp's Q2 2025 results highlight a company in strong financial health. Net income surged 35.7% year-over-year to $7.7 million, driven by a 51-basis-point expansion in the net interest margin to 3.22%. Total revenue growth accelerated to 18.2%, outpacing rising noninterest expenses and improving the efficiency ratio to 64.93% from 69.03%.

The loan portfolio grew by $67.2 million to $2.63 billion, with deposits expanding by $69.2 million to $2.71 billion. Nonperforming loans remain low at 0.14% of total loans, and the allowance for credit losses to total loans stands at 1.08%, reflecting prudent risk management.

Capital strength is another key pillar. Stockholders' equity increased 8.7% to $350.8 million, and the Tier 1 leverage ratio improved to 8.50%. The company's 30-year tradition of dividend increases continued, with a $0.44250 per share payout in the first half of 2025, supported by a reduced payout ratio of 40.90%.

Why This Matters for Long-Term Investors

The convergence of insider confidence, stable ownership, and financial resilience paints a compelling picture for long-term investors. Insider buying at a time of market volatility—when the stock has lost roughly 35% of its value since August 2024—indicates that management sees value in the company's fundamentals. The strategic shift toward core deposits (now 90% of total deposits) and a 26% reduction in brokered deposits since December 2024 further strengthens the balance sheet.

For investors, the key takeaway is this: Merchants Bancorp is a company with a strong alignment of interests between management and shareholders, a disciplined approach to capital allocation, and a track record of navigating economic cycles with stability. The recent insider purchases and financial performance suggest that the company is undervalued relative to its intrinsic metrics, making it an attractive addition to a long-term portfolio.

Final Thoughts

While no investment is without risk, the case for Merchants Bancorp is bolstered by a rare combination of insider confidence, financial discipline, and strategic clarity. For those willing to look beyond short-term market noise, this company offers a compelling opportunity to participate in a well-managed, asset-light business with a strong foundation. As the CEO and directors continue to buy shares, it's a signal worth heeding for investors seeking long-term value.