What Happened?
Shares of diversified bank holding company Merchants Bancorp (NASDAQCM:MBIN) jumped 7.7% in the morning session after S&P Dow Jones Indices announced the company would be added to the S&P SmallCap 600 index.
The inclusion was scheduled to take effect before the market opened on February 11, 2026, with Merchants Bancorp replacing TreeHouse Foods. When a company is added to a major stock index, investment funds that track that index are then required to buy the company's shares to properly mirror the index's holdings. This expected increase in demand from passive funds and ETFs often drives a stock's price higher as investors anticipate the new wave of buying. The announcement signaled a positive development for the company's visibility and investor base.
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What Is The Market Telling Us
Merchants Bancorp’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 11 days ago when the stock gained 16.3% on the news that the company reported fourth-quarter 2025 results that surpassed Wall Street's expectations for both earnings and revenue.
The bank posted earnings per share of $1.28, easily clearing the analyst consensus of $0.97. Revenue for the quarter came in at $185.3 million, topping the $171.9 million analysts had forecast, though this represented a 4.4% decline from the previous year. The strong performance was driven by better-than-expected net interest income, a key measure of a bank's core lending profitability. Additionally, the company's tangible book value per share, a critical metric for bank valuation, grew by 9.8% year-over-year to $37.51, reflecting underlying value creation for shareholders.
Merchants Bancorp is up 36.3% since the beginning of the year, and at $45.22 per share, has set a new 52-week high. Investors who bought $1,000 worth of Merchants Bancorp’s shares 5 years ago would now be looking at an investment worth $2,087.
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