Meridian Corporation (Nasdaq: MRBK) today reported:
- Net income of
$4.0 million and diluted earnings per share of $0.34 for the first
quarter ended March 31, 2023.
- Return on
average assets and return on average equity for the first quarter
of 2023 were 0.78% and 10.65%, respectively.
- Net interest
margin was 3.61% for the first quarter of 2023.
- Total assets at
March 31, 2023 were $2.2 billion, compared to $2.1 billion at
December 31, 2022 and $1.8 billion at March 31, 2022.
- First quarter
commercial loan growth was $61.3 million, or 16.9% annualized;
residential and home equity loans increased by $19.6 million.
- First quarter
deposit growth was $57.9 million, or 13.6% annualized.
- Upon adoption
ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326)
(“CECL”) effective January 1, 2023, we recorded an increase to our
allowance for credit losses of $1.6 million and an adjustment to
the reserve for unfunded commitments of $1.3 million. The after-tax
retained earnings impact of this adoption was $2.2 million.
- The Company
repurchased 184,598 shares of its common stock at an average price
of $15.63 per share during the first quarter.
- Performed a
two-for-one stock split in the form of a 100% stock dividend on
outstanding shares of common stock. After the close of business on
March 20, 2023, shareholders of record on March 14, 2023, received
one additional share of Corporation stock for each share then held.
All share and per share amounts have been adjusted to reflect the
stock split.
- On
April 27, 2023, the Board of Directors declared a quarterly
cash dividend of $0.125 per common share, payable May 22, 2023
to shareholders of record as of May 15, 2023.
Christopher J. Annas, Chairman and CEO commented
“Meridian’s first quarter revenue of $37.6 million generated
earnings of $4.0 million, or $0.34 per diluted share. The bank
segment had strong performance with loan growth of 4.3% for the
quarter while achieving net interest margin of 3.61%. The margin
was down from the prior quarter as we could no longer delay raising
deposit rates. The first quarter banking market turmoil with SVB
and others alerted most customers on deposit insurance and we
offered insured sweep accounts as needed. Our deposit base is
diversified with generally larger average balances due to our
commercial orientation. During this period deposit outflows were
monitored closely, while capital remains strong."
"Annual loan growth of 15%, which we’ve done
over the past few years, is achievable. There continues to be a
lack of homes for sale in our region, and builders are selling
everything out of construction loans very quickly. We have very
little office or warehouse exposure, preferring to do generally
smaller development or multi-family projects. We are winning our
share of commercial/industrial and SBA opportunities and have not
seen any measurable deterioration in credits. Some banks in the
region are pulling back or tightening underwriting which will
create further opportunities. As always, we remain diligent in our
lending."
"The mortgage segment has slowed considerably,
and we have made cuts and adjustments as necessary. It’s always
been a seasonable business with first quarter being the worst, but
we see volume improvement as rates stabilize and inventory improves
and we forecast a profitable year. The historical lack of homes for
sale doesn’t get fixed quickly, and we see no slowdown in
residential construction until demand is satisfied. Recruiting new
loan officers from less stable firms has also helped improve
volume."
Mr. Annas added, "We have always preferred
diversification of risk and earnings, over pursuing cyclical niches
that look so promising for profitability. We will continue to
pursue being the best bank in our markets, delivering the standard
bank products in an efficient and responsive manner."
Select Condensed Financial
Information
| |
As of or
for the quarter ended (Unaudited) |
| |
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
|
June 30,2022 |
|
March 31,2022 |
| |
(Dollars in thousands, except per share data) |
| Income: |
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
4,021 |
|
|
$ |
4,557 |
|
|
$ |
5,798 |
|
|
$ |
5,938 |
|
|
$ |
5,535 |
|
| Basic earnings per common
share |
|
0.36 |
|
|
|
0.40 |
|
|
|
0.49 |
|
|
|
0.49 |
|
|
|
0.46 |
|
| Diluted earnings per common
share |
|
0.34 |
|
|
|
0.39 |
|
|
|
0.48 |
|
|
|
0.48 |
|
|
|
0.44 |
|
| Net interest income |
|
17,677 |
|
|
|
18,518 |
|
|
|
18,026 |
|
|
|
17,551 |
|
|
|
16,035 |
|
| |
|
|
|
|
|
|
|
|
|
| Balance
Sheet: |
|
|
|
|
|
|
|
|
|
| Total assets |
$ |
2,229,783 |
|
|
$ |
2,062,228 |
|
|
$ |
1,921,924 |
|
|
$ |
1,853,019 |
|
|
$ |
1,831,589 |
|
| Loans, net of fees and
costs |
|
1,818,189 |
|
|
|
1,743,682 |
|
|
|
1,610,349 |
|
|
|
1,518,893 |
|
|
|
1,431,906 |
|
| Total deposits |
|
1,770,413 |
|
|
|
1,712,479 |
|
|
|
1,673,553 |
|
|
|
1,568,014 |
|
|
|
1,564,851 |
|
| Non-interest bearing
deposits |
|
262,636 |
|
|
|
301,727 |
|
|
|
290,169 |
|
|
|
291,925 |
|
|
|
291,379 |
|
| Stockholders' equity |
|
153,049 |
|
|
|
153,280 |
|
|
|
151,161 |
|
|
|
156,087 |
|
|
|
157,684 |
|
| |
|
|
|
|
|
|
|
|
|
| Balance Sheet (Average
Balances): |
|
|
|
|
|
|
|
|
|
| Total assets |
$ |
2,088,599 |
|
|
$ |
1,962,915 |
|
|
$ |
1,868,194 |
|
|
$ |
1,811,335 |
|
|
$ |
1,752,643 |
|
| Total interest earning
assets |
|
1,995,460 |
|
|
|
1,877,967 |
|
|
|
1,791,255 |
|
|
|
1,736,547 |
|
|
|
1,680,070 |
|
| Loans, net of fees and
costs |
|
1,783,322 |
|
|
|
1,674,215 |
|
|
|
1,565,861 |
|
|
|
1,484,696 |
|
|
|
1,415,831 |
|
| Total deposits |
|
1,759,571 |
|
|
|
1,698,597 |
|
|
|
1,597,648 |
|
|
|
1,567,325 |
|
|
|
1,504,241 |
|
| Non-interest bearing
deposits |
|
296,037 |
|
|
|
312,297 |
|
|
|
295,975 |
|
|
|
296,521 |
|
|
|
281,123 |
|
| Stockholders' equity |
|
153,179 |
|
|
|
151,791 |
|
|
|
157,614 |
|
|
|
158,420 |
|
|
|
161,939 |
|
| |
|
|
|
|
|
|
|
|
|
| Performance Ratios
(Annualized): |
|
|
|
|
|
|
|
|
|
| Return on average assets |
|
0.78 |
% |
|
|
0.92 |
% |
|
|
1.23 |
% |
|
|
1.31 |
% |
|
|
1.28 |
% |
| Return on average equity |
|
10.65 |
% |
|
|
11.91 |
% |
|
|
14.59 |
% |
|
|
15.03 |
% |
|
|
13.86 |
% |
Current Expected Credit
Losses ("CECL")
The Corporation adopted ASU No. 2016-13,
“Financial Instruments - Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments” (“CECL”) effective January
1, 2023. Upon adoption, the reserve for credit losses on loans and
leases increased by $1.6 million, and the reserve for unfunded
commitments increased by $1.3 million. This resulted in an
after-tax retained earnings adjustment of $2.2 million. During the
quarter ended March 31, 2023 the Corporation recorded a provision
for credit losses of $1.4 million. $1.5 million of the provision
was made to cover net charge-offs mainly on small ticket equipment
leases, while the first quarter CECL related charges were $55
thousand, including a provision for credit losses on loans and
leases of $18 thousand, and a reduction to the reserve for unfunded
commitments of $73 thousand.
Income Statement -
First Quarter
2023 Compared to
Fourth Quarter
2022
Net income was $4.0 million, down $536 thousand
from $4.6 million for the fourth quarter. Net interest income
decreased $841 thousand, or 4.5%, on a tax equivalent basis due to
fewer days in the quarter and a lower interest margin.
Additionally, non-interest income decreased $1.4 million or 17.0%.
Partially offsetting these lower levels of income, non-interest
expense decreased $2.3 million, or 11.3%. Detailed explanations of
the major categories of income and expense follow below.
Net Interest income
The rate/volume analysis table below analyzes
dollar changes in the components of interest income and interest
expense as they relate to the change in balances (volume) and the
change in interest rates (rate) of tax-equivalent net interest
income for the periods indicated and allocated by rate and volume.
Changes in interest income and/or expense attributable to both
volume and rate have been allocated proportionately based on the
relationship of the absolute dollar amount of the change in each
category.
| |
Quarter Ended |
|
|
|
|
|
|
|
|
| (dollars in thousands) |
March 31,2023 |
|
December 31,2022 |
|
$ Change |
|
% Change |
|
Change dueto rate |
|
Change dueto volume |
| Interest
income: |
|
|
|
|
|
|
|
|
|
|
|
|
Due from banks |
$ |
215 |
|
$ |
126 |
|
$ |
89 |
|
|
70.6 |
% |
|
$ |
27 |
|
|
$ |
62 |
|
| Federal funds sold |
|
2 |
|
|
3 |
|
|
(1 |
) |
|
(33.3 |
)% |
|
|
— |
|
|
|
(1 |
) |
| Investment securities -
taxable(1) |
|
959 |
|
|
821 |
|
|
138 |
|
|
16.8 |
% |
|
|
88 |
|
|
|
50 |
|
| Investment securities - tax
exempt(1) |
|
430 |
|
|
449 |
|
|
(19 |
) |
|
(4.2 |
)% |
|
|
(24 |
) |
|
|
5 |
|
| Loans held for sale |
|
217 |
|
|
292 |
|
|
(75 |
) |
|
(25.7 |
)% |
|
|
(13 |
) |
|
|
(62 |
) |
| Loans held for investment(1) |
|
29,202 |
|
|
26,150 |
|
|
3,052 |
|
|
11.7 |
% |
|
|
1,301 |
|
|
|
1,751 |
|
|
Total loans |
|
29,419 |
|
|
26,442 |
|
|
2,977 |
|
|
11.3 |
% |
|
|
1,288 |
|
|
|
1,689 |
|
|
Total interest income |
|
31,025 |
|
|
27,841 |
|
|
3,184 |
|
|
11.4 |
% |
|
|
1,379 |
|
|
|
1,805 |
|
| Interest
expense: |
|
|
|
|
|
|
|
|
|
|
|
| Interest-bearing demand
deposits |
$ |
1,855 |
|
$ |
1,388 |
|
$ |
467 |
|
|
33.6 |
% |
|
$ |
400 |
|
|
$ |
67 |
|
| Money market and savings
deposits |
|
4,477 |
|
|
3,851 |
|
|
626 |
|
|
16.3 |
% |
|
|
957 |
|
|
|
(331 |
) |
| Time deposits |
|
5,115 |
|
|
2,976 |
|
|
2,139 |
|
|
71.9 |
% |
|
|
1,209 |
|
|
|
930 |
|
|
Total deposits |
|
11,447 |
|
|
8,215 |
|
|
3,232 |
|
|
39.3 |
% |
|
|
2,566 |
|
|
|
666 |
|
| Borrowings |
|
1,237 |
|
|
439 |
|
|
798 |
|
|
181.8 |
% |
|
|
14 |
|
|
|
784 |
|
| Subordinated debentures |
|
586 |
|
|
591 |
|
|
(5 |
) |
|
(0.8 |
)% |
|
|
(1 |
) |
|
|
(4 |
) |
|
Total interest expense |
|
13,270 |
|
|
9,245 |
|
|
4,025 |
|
|
43.5 |
% |
|
|
2,579 |
|
|
|
1,446 |
|
|
Net interest income differential |
$ |
17,755 |
|
$ |
18,596 |
|
$ |
(841 |
) |
|
(4.52 |
)% |
|
$ |
(1,200 |
) |
|
$ |
359 |
|
| (1) Reflected on a
tax-equivalent basis. |
|
|
|
|
|
|
|
|
|
|
Interest income increased $3.2 million on a tax
equivalent basis, quarter over quarter, due to a higher yield on
earning assets, in addition to a higher level of average earning
assets, partially offset by there being two less days in the
current quarter compared to the fourth quarter. The yield on
earnings assets rose 43 basis points during the period, while
average earning assets increased by $117.5 million.
The yield on total loans increased 44 basis
points and the yield on cash and investments increased 6 basis
points in total, reflecting the impact in rates caused by the
Federal Reserve’s monetary policy. Nearly $700 million in loans
repriced during the quarter with an average increase of 69 basis
points. Average total loans, excluding residential loans for sale,
increased $109.1 million, most notably in commercial real estate
and construction, commercial loans and leases and small business
loans, which increased $47.9 million on average, combined. Home
equity loans and residential real estate loans held in portfolio
increased $44.8 million on average, combined. Residential loans for
sale and PPP loans decreased $4.3 million, and $5.8 million on
average, respectively.
Total interest expense increased $4.0 million,
quarter over quarter, due primarily to market interest rate rises,
and increases in both deposit and borrowing balances, partially
offset by there being two less days in the current quarter.
Interest expense on deposits increased $3.2 million as total
average deposits increased $77.2 million. with the cost of
interest-bearing deposits increased 82 basis points to 3.17%. Total
cost of deposits increased 72 basis points, taking into account
that average non-interest deposits decreased $16.3 million.
Interest expense on borrowings increased $793 thousand as total
average short-term borrowings increased $63.5 million and the cost
increased 25 basis points.
Net interest margin decreased 32 basis points to
3.61% for the first quarter from 3.93% for fourth the quarter, as
wholesale funding and borrowing sources repriced quicker than the
increase in rates on loans, in addition to the impact of interest
recoveries and certain fees of $253 thousand recorded in the prior
quarter, not repeated in the current quarter.
The provision for credit losses increased $653
thousand to $1.4 million for the first quarter. While the first
quarter provision shows the impact of CECL reserving as well as
accounting for loan growth, the largest portion of the provision
relates to covering $1.5 million in charge-offs on small ticket
equipment leases.
Non-interest income
The following table presents the components of
non-interest income for the periods indicated:
| |
Quarter Ended |
|
|
|
|
| (Dollars in thousands) |
March 31, 2023 |
|
December 31, 2022 |
|
$ Change |
|
% Change |
|
Mortgage banking income |
$ |
3,272 |
|
|
$ |
3,958 |
|
$ |
(686 |
) |
|
(17.3 |
)% |
| Wealth management income |
|
1,196 |
|
|
|
1,061 |
|
|
135 |
|
|
12.7 |
% |
| SBA loan income |
|
713 |
|
|
|
522 |
|
|
191 |
|
|
36.6 |
% |
| Earnings on investment in life
insurance |
|
192 |
|
|
|
140 |
|
|
52 |
|
|
37.1 |
% |
| Net change in the fair value
of derivative instruments |
|
(69 |
) |
|
|
10 |
|
|
(79 |
) |
|
(790.0 |
)% |
| Net change in the fair value
of loans held-for-sale |
|
(1 |
) |
|
|
249 |
|
|
(250 |
) |
|
(100.4 |
)% |
| Net change in the fair value
of loans held-for-investment |
|
117 |
|
|
|
91 |
|
|
26 |
|
|
28.6 |
% |
| Net gain on hedging
activity |
|
— |
|
|
|
498 |
|
|
(498 |
) |
|
(100.0 |
)% |
| Service charges |
|
35 |
|
|
|
35 |
|
|
— |
|
|
— |
% |
| Other |
|
1,183 |
|
|
|
1,432 |
|
|
(249 |
) |
|
(17.4 |
)% |
| Total non-interest income |
$ |
6,638 |
|
|
$ |
7,996 |
|
$ |
(1,358 |
) |
|
(17.0 |
)% |
Total non-interest income decreased $1.4
million, or 17.0%, quarter over quarter due to seasonality as well
as the continued impact from the rising rate environment. Mortgage
banking income was adversely impacted by shifting mortgage rates
above 6%, somewhat stabilized high home prices and a tight supply
of homes available for sale. Affordable housing continues to be an
issue for potential homebuyers which resulted in a decline in loan
originations of $58.6 million over the prior quarter. Gain on sale
margins increased 41 bps over the prior quarter due to more
favorable investor pricing, however overall mortgage banking income
decreased $686 thousand. The fair value of loans held for sale,
derivatives instruments and net gain on hedging activity decreased
$827 thousand in total.
SBA loan income increased $191 thousand, or
36.6%, over the prior quarter despite a lower volume of SBA loans
that were sold into the secondary market in the first quarter.
$10.9 million of loans were sold in the quarter-ending March 31,
2023 at a gross margin of 7.7%, compared to $17.2 million in loans
sold in the quarter-ending December 31, 2022 at a gross margin of
5.0%. Also contributing to the increase in SBA income was a decline
in impairment on SBA servicing assets.
Wealth management income increased $135
thousand, or 12.7%, for the quarter-ended March 31, 2023 over the
prior quarter due to an increase in the number of individual
account customers, combined with the effect of market conditions on
assets under management. Other non-interest income decreased $249
thousand, or 17.4%, over the prior quarter due largely to swap fee
income recorded in the prior quarter that was not repeated in the
current quarter.
Non-interest expense
The following table presents the components of
non-interest expense for the periods indicated:
| |
Quarter Ended |
|
|
|
|
| (Dollars in thousands) |
March 31,2023 |
|
December 31,2022 |
|
$ Change |
|
% Change |
|
Salaries and employee benefits |
$ |
11,061 |
|
$ |
12,794 |
|
$ |
(1,733 |
) |
|
(13.5 |
)% |
| Occupancy and equipment |
|
1,244 |
|
|
1,218 |
|
|
26 |
|
|
2.1 |
% |
| Professional fees |
|
823 |
|
|
976 |
|
|
(153 |
) |
|
(15.7 |
)% |
| Advertising and promotion |
|
861 |
|
|
996 |
|
|
(135 |
) |
|
(13.6 |
)% |
| Data processing |
|
647 |
|
|
677 |
|
|
(30 |
) |
|
(4.4 |
)% |
| Information technology |
|
785 |
|
|
836 |
|
|
(51 |
) |
|
(6.1 |
)% |
| Pennsylvania bank shares
tax |
|
245 |
|
|
181 |
|
|
64 |
|
|
35.4 |
% |
| Other |
|
2,123 |
|
|
2,369 |
|
|
(246 |
) |
|
(10.4 |
)% |
| Total non-interest
expense |
$ |
17,789 |
|
$ |
20,047 |
|
$ |
(2,258 |
) |
|
(11.3 |
)% |
Salaries and employee benefits decreased $1.7
million overall, with bank and wealth segments combined having
decreased $1.7 million, and the mortgage segment decreased $83
thousand. Bank and wealth segments salaries and employee benefits
were down from the prior quarter as incentive compensation was
highest in the fourth quarter of the year, combined with a decline
in stock based compensation expense.
Professional fees decreased $153 thousand as
legal expense incurred in the prior quarter related to
non-performing loans and other real estate owned was not repeated
in the current quarter. In addition, there were non-recurring
technology related consulting costs incurred during the prior
quarter that were not repeated during the current quarter.
Advertising and promotion expense decreased $135 thousand from the
prior quarter as business development and promotional costs were
higher at year end. Other non-interest expense decreased $246
thousand over the prior quarter due largely to $161 thousand in
other real estate owned expense recorded in the fourth quarter,
combined with a decline in travel and employee related expenses
from the prior period.
Balance Sheet - March
31, 2023 Compared to December 31,
2022
As of March 31, 2023, total assets increased
$167.6 million, or 8.1%, to $2.2 billion from $2.1 billion at
December 31, 2022. This growth in assets was due to an even mix of
growth in cash and investment balances as well as loan portfolio
growth, funded by a mix of deposits and borrowings.
Interest-bearing cash increased $72.9 million,
or 269.2%, to $100.0 million as of March 31, 2023 from December 31,
2022 and investments increased $6.7 million, or 3.8%.
Portfolio loan growth was $80.8 million, or 4.7%
quarter-over-quarter. Commercial mortgage loans increased $51.7
million, or 9.1%, residential real estate loans held in portfolio
increased $17.0 million, or 7.7%, SBA loans increased $12.4
million, or 9.1%, and lease financings increased $12.1 million, or
8.7% from December 31, 2022. Partially offsetting the growth in
portfolio loans, PPP loans decreased $8.4 million, or 95.4%, as
they continue to be forgiven by the SBA, commercial loans decreased
$10.3 million, or 3.0%, and construction loans decreased $4.6
million, or 1.7%,
Total deposits increased $57.9 million, or 3.4%,
quarter over quarter, due to a $97.0 million increase in
interest-bearing deposits, offset by a decrease of $39.1 million in
non-interest bearing deposits. Noninterest-bearing deposits and
money market accounts decreased $39.1 million, and $49.7 million,
respectively, during the period, with notable withdrawals of $19.9
million from 4 separate business customers due to their respective
business sales. In addition, municipal deposits were reduced by
$20.2 million and replaced by brokered deposits due to more
favorable wholesale rates. Two loan relationships with $11.2
million in deposits combined, left Meridian as a result of credit
requirements over our comfort level. Time deposits grew $133.9
million, or 27.1%, from retail and wholesale efforts as customers
opt for higher term interest rates.
Consolidated stockholders’ equity of the
Corporation decreased by $231 thousand from December 31, 2022, to
$153.0 million as of March 31, 2023. Changes to equity for the
current quarter included net income of $4.0 million, and an
improvement of $1.7 million in other comprehensive loss related to
investment securities, partially offset by the $2.2 million Day 1
impact of adopting the CECL standard as of January 1, 2023,
dividends paid of $1.4 million, and share repurchases of $2.7
million. Based on capital ratio levels at March 31, 2023, we remain
above the Community Bank Leverage Ratio requirement of 9%.
The following table presents capital ratios at
the dates indicated:
| |
March 31, 2023 |
|
December 31, 2022 |
|
Stockholders' equity to total assets |
6.86 |
% |
|
7.43 |
% |
| Tangible common equity to
tangible assets (1) |
6.70 |
% |
|
7.25 |
% |
| Tier 1 leverage ratio -
Corporation |
7.65 |
% |
|
8.13 |
% |
| Common tier 1 risk-based
capital ratio - Corporation |
8.44 |
% |
|
8.77 |
% |
| Tier 1 risk-based capital
ratio - Corporation |
8.44 |
% |
|
8.77 |
% |
| Total
risk-based capital ratio - Corporation |
11.63 |
% |
|
12.05 |
% |
| (1) See Non-GAAP
reconciliation in the Appendix |
|
|
Asset Quality Summary
The ratio of non-performing loans to total loans
increased to 1.25% as of March 31, 2023, from 1.20% at December 31,
2022. Non-performing assets to total assets was unchanged at 1.11%
as of March 31, 2023 and December 31, 2022. There was $1.7 million
in other real estate owned included in non-performing assets, the
result of taking possession of a well collateralized residential
real estate property in the prior quarter. Total non-performing
loans of $23.1 million as of March 31, 2023, increased $1.9 million
from $21.2 million as December 31, 2022 due to a $1.5 million
commercial loan relationship that was reclassified to
non-performing as of March 31, 2023.
Meridian realized net charge-offs of 0.08% of
total average loans for the quarter ended March 31, 2023, increased
from the quarter ended December 31, 2022 level of 0.05%. Net
charge-offs for the quarter ended March 31, 2023 were $1.5 million,
comprised of $1.5 million in charge-offs, with $44 thousand in
recoveries for the quarter. Nearly all of the charge-offs for the
quarter ended March 31, 2023 were from small ticket equipment
leases. The ratio of allowance for credit losses to total loans
held for investment, excluding loans at fair value and PPP loans (a
non-GAAP measure, see reconciliation in the Appendix), was 1.13% as
of March 31, 2023 compared to 1.09% as of December 31, 2022. As
noted above, the Corporation adopted the CECL accounting standard
as of January 1, 2023, which was a leading factor in the increase
in this ratio. As of March 31, 2023 there were specific reserves of
$2.5 million against non-performing loans, an increase from $2.2
million as of December 31, 2022 due to an increase in the reserve
for one commercial loan and one SBA loan.
Bank Sector Concerns
Meridian is a regional community bank with loans
and deposits that are well diversified in size, type, location and
industry. We manage this diversification carefully, while avoiding
concentrations in business lines. Meridian’s model continues to
build on our strong and stable financial position, which serves our
regional customers and communities with the banking products and
services needed to help build their prosperity.
As a commercial bank, the majority of Meridian's
deposit base is comprised of business deposits (57%), with consumer
deposits amounting to 11% at March 31, 2023. Municipal deposits
(9%) and brokered deposits (23%) provide growth funding.
Historically, business deposits lag loan fundings. A typical
business relationship maintains operating accounts, investment
accounts or sweep accounts and business owners may also have
personal savings or wealth accounts. Deposit balances in business
accounts have a tendency to be higher on average than consumer
accounts. At March 31, 2023, 64% of business accounts and 73% of
consumer accounts were fully insured by the FDIC. The municipal
deposits are 100% collateralized and brokered deposits are 100%
FDIC insured. The level of uninsured deposits for the entire
deposit base was 23% at March 31, 2023.
Total balance sheet liquidity, which is derived
from cash and investments, as well as saleable commercial loans and
residential mortgage loans held for sale, was $317.8 million at
March 31, 2023, up from $264.4 million at December 31, 2022.
Meridian maintains a high-quality investment bond portfolio
comprised of U.S Treasuries, government agencies, government agency
mortgage-backed securities, and general obligation municipal
securities with an average duration of 4 years. Meridian’s
investment portfolio represented 8.1% of total assets at March 31,
2023, compared to 8.5% at December 31, 2022. Total cash at March
31, 2023 was $109 million compared to $38 million at December 31,
2022 and $69 million at March 31, 2022.
Meridian also maintains borrowing arrangements
with various correspondent banks to meet short-term liquidity needs
and has access to approximately $817.9 million in liquidity from
numerous sources, including its borrowing capacity with the FHLB
and other financial institutions, as well as funding through the
CDARS program or through brokered CD arrangements. In addition, the
Bank is eligible to receive funds under the new Bank Term Funding
Program ("BTFP") announced by the Federal Reserve. At March 31,
2023 Meridian elected to secure $33 million in borrowings from the
Federal Reserve under the BTFP due to the favorable rate.
Management believes that the above sources of liquidity provide
Meridian with the necessary resources to meet its short-term and
long-term funding requirements.
About Meridian Corporation
Meridian Bank, the wholly owned subsidiary of
Meridian Corporation, is an innovative community bank serving
Pennsylvania, New Jersey, Delaware and Maryland. Through more than
20 offices, including banking branches and mortgage locations,
Meridian offers a full suite of financial products and services.
Meridian specializes in business and industrial lending, retail and
commercial real estate lending, electronic payments, and wealth
management solutions through Meridian Wealth Partners. Meridian
also offers a broad menu of high-yield depository products
supported by robust online and mobile access. For additional
information, visit our website at www.meridianbanker.com. Member
FDIC.
“Safe Harbor” Statement
In addition to historical information, this
press release may contain “forward-looking statements” within the
meaning of the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements
include statements with respect to Meridian Corporation’s
strategies, goals, beliefs, expectations, estimates, intentions,
capital raising efforts, financial condition and results of
operations, future performance and business. Statements preceded
by, followed by, or that include the words “may,” “could,”
“should,” “pro forma,” “looking forward,” “would,” “believe,”
“expect,” “anticipate,” “estimate,” “intend,” “plan,” or similar
expressions generally indicate a forward-looking statement. These
forward-looking statements involve risks and uncertainties that are
subject to change based on various important factors (some of
which, in whole or in part, are beyond Meridian Corporation’s
control). Numerous competitive, economic, regulatory, legal and
technological factors, risks and uncertainties that could cause
actual results to differ materially include, without limitation,
the impact of the COVID-19 pandemic and government responses
thereto; on the U.S. economy, including the markets in which we
operate; actions that we and our customers take in response to
these factors and the effects such actions have on our operations,
products, services and customer relationships; and the risk that
the Small Business Administration may not fund some or all Paycheck
Protection Program (PPP) loan guaranties; increased competitive
pressures; changes in the interest rate environment; changes in
general economic conditions and conditions within the securities
markets; legislative and regulatory changes; and the effects of
inflation, a potential recession, among others, could cause
Meridian Corporation’s financial performance to differ materially
from the goals, plans, objectives, intentions and expectations
expressed in such forward-looking statements. Meridian Corporation
cautions that the foregoing factors are not exclusive, and neither
such factors nor any such forward-looking statement takes into
account the impact of any future events. All forward-looking
statements and information set forth herein are based on
management’s current beliefs and assumptions as of the date hereof
and speak only as of the date they are made. For a more complete
discussion of the assumptions, risks and uncertainties related to
our business, you are encouraged to review Meridian Corporation’s
filings with the Securities and Exchange Commission, including our
Annual Report on Form 10-K for the year ended December 31, 2022 and
subsequently filed quarterly reports on Form 10-Q and current
reports on Form 8-K that update or provide information in
addition to the information included in the Form 10-K and
Form 10-Q filings, if any. Meridian Corporation does not
undertake to update any forward-looking statement whether written
or oral, that may be made from time to time by Meridian Corporation
or by or on behalf of Meridian Bank.
|
MERIDIAN CORPORATION AND SUBSIDIARIES |
|
FINANCIAL RATIOS (Unaudited) |
|
(Dollar amounts and shares in thousands, except per share
amounts) |
| |
|
| |
Quarter Ended |
| |
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
March 31, 2022 |
| Earnings and Per Share
Data: |
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
4,021 |
|
|
$ |
4,557 |
|
|
$ |
5,798 |
|
|
$ |
5,938 |
|
|
$ |
5,535 |
|
| Basic earnings per common
share |
$ |
0.36 |
|
|
$ |
0.40 |
|
|
$ |
0.49 |
|
|
$ |
0.49 |
|
|
$ |
0.46 |
|
| Diluted earnings per common
share |
$ |
0.34 |
|
|
$ |
0.39 |
|
|
$ |
0.48 |
|
|
$ |
0.48 |
|
|
$ |
0.44 |
|
| Common shares outstanding |
|
11,305 |
|
|
|
11,466 |
|
|
|
11,689 |
|
|
|
12,074 |
|
|
|
12,258 |
|
| |
|
|
|
|
|
|
|
|
|
| Performance
Ratios: |
|
|
|
|
|
|
|
|
|
| Return on average assets |
|
0.78 |
% |
|
|
0.92 |
% |
|
|
1.23 |
% |
|
|
1.31 |
% |
|
|
1.28 |
% |
| Return on average equity |
|
10.65 |
|
|
|
11.91 |
|
|
|
14.59 |
|
|
|
15.03 |
|
|
|
13.86 |
|
| Net interest margin
(tax-equivalent) |
|
3.61 |
|
|
|
3.93 |
|
|
|
4.01 |
|
|
|
4.07 |
|
|
|
3.89 |
|
| Yield on earning assets
(tax-equivalent) |
|
6.31 |
|
|
|
5.88 |
|
|
|
5.10 |
|
|
|
4.65 |
|
|
|
4.35 |
|
| Cost of funds |
|
2.83 |
|
|
|
2.07 |
|
|
|
1.17 |
|
|
|
0.61 |
|
|
|
0.50 |
|
| Efficiency ratio |
|
73.16 |
% |
|
|
75.61 |
% |
|
|
71.72 |
% |
|
|
70.49 |
% |
|
|
73.56 |
% |
| |
|
|
|
|
|
|
|
|
|
| Asset Quality
Ratios: |
|
|
|
|
|
|
|
|
|
| Net charge-offs (recoveries)
to average loans |
|
0.08 |
% |
|
|
0.05 |
% |
|
|
0.02 |
% |
|
|
0.03 |
% |
|
|
0.04 |
% |
| Non-performing loans to total
loans |
|
1.25 |
|
|
|
1.20 |
|
|
|
1.40 |
|
|
|
1.46 |
|
|
|
1.51 |
|
| Non-performing assets to total
assets |
|
1.11 |
|
|
|
1.11 |
|
|
|
1.20 |
|
|
|
1.24 |
|
|
|
1.25 |
|
|
Allowance for credit losses to: |
|
|
|
|
|
|
|
|
|
|
Total loans held for investment |
|
1.12 |
|
|
|
1.08 |
|
|
|
1.18 |
|
|
|
1.24 |
|
|
|
1.31 |
|
|
Total loans held for investment (excluding loans at fair value and
PPP loans)(1) |
|
1.13 |
|
|
|
1.09 |
|
|
|
1.20 |
|
|
|
1.27 |
|
|
|
1.38 |
|
|
Non-performing loans |
|
88.41 |
% |
|
|
88.66 |
% |
|
|
82.20 |
% |
|
|
81.82 |
% |
|
|
82.48 |
% |
| |
|
|
|
|
|
|
|
|
|
| Capital
Ratios: |
|
|
|
|
|
|
|
|
|
| Book value per common
share |
$ |
13.54 |
|
|
$ |
13.37 |
|
|
$ |
12.93 |
|
|
$ |
12.93 |
|
|
$ |
12.86 |
|
| Tangible book value per common
share |
$ |
13.18 |
|
|
$ |
13.01 |
|
|
$ |
12.58 |
|
|
$ |
12.58 |
|
|
$ |
12.52 |
|
| Total equity/Total assets |
|
6.86 |
% |
|
|
7.43 |
% |
|
|
7.87 |
% |
|
|
8.42 |
% |
|
|
8.61 |
% |
| Tangible common
equity/Tangible assets - Corporation(1) |
|
6.70 |
|
|
|
7.25 |
|
|
|
7.67 |
|
|
|
8.22 |
|
|
|
8.40 |
|
| Tangible common
equity/Tangible assets - Bank(1) |
|
8.08 |
|
|
|
8.80 |
|
|
|
9.61 |
|
|
|
10.17 |
|
|
|
10.40 |
|
| Tier 1 leverage ratio -
Corporation |
|
7.65 |
|
|
|
8.13 |
|
|
|
8.54 |
|
|
|
8.87 |
|
|
|
9.10 |
|
| Tier 1 leverage ratio -
Bank |
|
9.32 |
|
|
|
9.95 |
|
|
|
10.52 |
|
|
|
10.86 |
|
|
|
11.20 |
|
| Common tier 1 risk-based
capital ratio - Corporation |
|
8.44 |
|
|
|
8.77 |
|
|
|
9.28 |
|
|
|
9.79 |
|
|
|
10.09 |
|
| Common tier 1 risk-based
capital ratio - Bank |
|
10.27 |
|
|
|
10.73 |
|
|
|
11.44 |
|
|
|
11.98 |
|
|
|
12.41 |
|
| Tier 1 risk-based capital
ratio - Corporation |
|
8.44 |
|
|
|
8.77 |
|
|
|
9.28 |
|
|
|
9.79 |
|
|
|
10.09 |
|
| Tier 1 risk-based capital
ratio - Bank |
|
10.27 |
|
|
|
10.73 |
|
|
|
11.44 |
|
|
|
11.98 |
|
|
|
12.41 |
|
| Total risk-based capital ratio
- Corporation |
|
11.63 |
|
|
|
12.05 |
|
|
|
12.80 |
|
|
|
13.50 |
|
|
|
13.91 |
|
| Total
risk-based capital ratio - Bank |
|
11.41 |
% |
|
|
11.87 |
% |
|
|
12.70 |
% |
|
|
13.33 |
% |
|
|
13.76 |
% |
| (1) See Non-GAAP
reconciliation in the Appendix |
|
|
|
|
|
|
|
|
|
MERIDIAN CORPORATION AND SUBSIDIARIES |
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) |
|
(Dollar amounts and shares in thousands, except per share
amounts) |
| |
|
| |
Three Months Ended |
| |
March 31,2023 |
|
December 31,2022 |
|
March 31,2022 |
| Interest
income: |
|
|
|
|
|
|
Loans and other finance receivables, including fees |
$ |
29,417 |
|
|
$ |
26,440 |
|
$ |
17,219 |
|
| Securities - taxable |
|
959 |
|
|
|
821 |
|
|
426 |
|
| Securities - tax-exempt |
|
354 |
|
|
|
373 |
|
|
306 |
|
| Cash and cash equivalents |
|
217 |
|
|
|
129 |
|
|
13 |
|
|
Total interest income |
|
30,947 |
|
|
|
27,763 |
|
|
17,964 |
|
| Interest
expense: |
|
|
|
|
|
| Deposits |
|
11,447 |
|
|
|
8,215 |
|
|
1,289 |
|
| Borrowings |
|
1,823 |
|
|
|
1,030 |
|
|
640 |
|
|
Total interest expense |
|
13,270 |
|
|
|
9,245 |
|
|
1,929 |
|
|
Net interest income |
|
17,677 |
|
|
|
18,518 |
|
|
16,035 |
|
| Provision for credit losses |
|
1,399 |
|
|
|
746 |
|
|
615 |
|
|
Net interest income after provision for loan losses |
|
16,278 |
|
|
|
17,772 |
|
|
15,420 |
|
| Non-interest
income: |
|
|
|
|
|
| Mortgage banking income |
|
3,272 |
|
|
|
3,958 |
|
|
7,096 |
|
| Wealth management income |
|
1,196 |
|
|
|
1,061 |
|
|
1,304 |
|
| SBA loan income |
|
713 |
|
|
|
522 |
|
|
2,520 |
|
| Earnings on investment in life
insurance |
|
192 |
|
|
|
140 |
|
|
138 |
|
| Net change in the fair value of
derivative instruments |
|
(69 |
) |
|
|
10 |
|
|
(166 |
) |
| Net change in the fair value of
loans held-for-sale |
|
(1 |
) |
|
|
249 |
|
|
(1,124 |
) |
| Net change in the fair value of
loans held-for-investment |
|
117 |
|
|
|
91 |
|
|
(778 |
) |
| Net gain on hedging activity |
|
— |
|
|
|
498 |
|
|
2,827 |
|
| Service charges |
|
35 |
|
|
|
35 |
|
|
27 |
|
| Other |
|
1,183 |
|
|
|
1,432 |
|
|
1,258 |
|
|
Total non-interest income |
|
6,638 |
|
|
|
7,996 |
|
|
13,102 |
|
| Non-interest
expense: |
|
|
|
|
|
| Salaries and employee
benefits |
|
11,061 |
|
|
|
12,794 |
|
|
15,298 |
|
| Occupancy and equipment |
|
1,244 |
|
|
|
1,218 |
|
|
1,252 |
|
| Professional fees |
|
823 |
|
|
|
976 |
|
|
848 |
|
| Advertising and promotion |
|
861 |
|
|
|
996 |
|
|
986 |
|
| Data processing and software |
|
1,432 |
|
|
|
1,513 |
|
|
1,189 |
|
| Pennsylvania bank shares tax |
|
245 |
|
|
|
181 |
|
|
199 |
|
| Other |
|
2,123 |
|
|
|
2,369 |
|
|
1,661 |
|
|
Total non-interest expense |
|
17,789 |
|
|
|
20,047 |
|
|
21,433 |
|
|
Income before income taxes |
|
5,127 |
|
|
|
5,721 |
|
|
7,089 |
|
| Income tax expense |
|
1,106 |
|
|
|
1,164 |
|
|
1,554 |
|
|
Net income |
$ |
4,021 |
|
|
$ |
4,557 |
|
$ |
5,535 |
|
| |
|
|
|
|
|
| Basic earnings per common
share |
$ |
0.36 |
|
|
$ |
0.40 |
|
$ |
0.46 |
|
| Diluted earnings per common
share |
$ |
0.34 |
|
|
$ |
0.39 |
|
$ |
0.44 |
|
| |
|
|
|
|
|
| Basic weighted average shares
outstanding |
|
11,272 |
|
|
|
11,389 |
|
|
12,046 |
|
| Diluted weighted average shares
outstanding |
|
11,656 |
|
|
|
11,795 |
|
|
12,524 |
|
| MERIDIAN
CORPORATION AND SUBSIDIARIES |
| CONDENSED
CONSOLIDATED STATEMENTS OF CONDITION (Unaudited) |
| (Dollar
amounts and shares in thousands, except per share
amounts) |
| |
|
|
|
|
|
|
|
|
|
| |
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
March 31, 2022 |
| Assets: |
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
$ |
8,473 |
|
|
$ |
11,299 |
|
|
$ |
12,114 |
|
|
$ |
8,280 |
|
|
$ |
11,155 |
|
| Interest-bearing deposits at
other banks |
|
100,030 |
|
|
|
27,092 |
|
|
|
20,774 |
|
|
|
28,813 |
|
|
|
44,867 |
|
| Federal funds sold |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12,866 |
|
|
Cash and cash equivalents |
|
108,503 |
|
|
|
38,391 |
|
|
|
32,888 |
|
|
|
37,093 |
|
|
|
68,888 |
|
| Securities available-for-sale,
at fair value |
|
142,933 |
|
|
|
135,346 |
|
|
|
127,999 |
|
|
|
129,288 |
|
|
|
130,653 |
|
| Securities held-to-maturity,
at amortized cost |
|
36,525 |
|
|
|
37,479 |
|
|
|
37,922 |
|
|
|
37,111 |
|
|
|
34,977 |
|
| Equity investments |
|
2,110 |
|
|
|
2,086 |
|
|
|
2,092 |
|
|
|
2,153 |
|
|
|
2,240 |
|
| Mortgage loans held for sale,
at fair value |
|
35,701 |
|
|
|
22,243 |
|
|
|
33,800 |
|
|
|
58,938 |
|
|
|
81,258 |
|
| Loans and other finance
receivables, net of fees and costs |
|
1,818,189 |
|
|
|
1,743,682 |
|
|
|
1,610,349 |
|
|
|
1,518,893 |
|
|
|
1,431,906 |
|
| Allowance for credit
losses |
|
(20,442 |
) |
|
|
(18,828 |
) |
|
|
(18,974 |
) |
|
|
(18,805 |
) |
|
|
(18,826 |
) |
|
Loans and other finance receivables, net of the allowance for
credit losses |
|
1,797,747 |
|
|
|
1,724,854 |
|
|
|
1,591,375 |
|
|
|
1,500,088 |
|
|
|
1,413,080 |
|
| Restricted investment in bank
stock |
|
10,173 |
|
|
|
6,931 |
|
|
|
5,217 |
|
|
|
4,719 |
|
|
|
4,330 |
|
| Bank premises and equipment,
net |
|
13,281 |
|
|
|
13,349 |
|
|
|
12,835 |
|
|
|
12,185 |
|
|
|
11,883 |
|
| Bank owned life insurance |
|
28,247 |
|
|
|
28,055 |
|
|
|
22,916 |
|
|
|
22,778 |
|
|
|
22,641 |
|
| Accrued interest
receivable |
|
7,651 |
|
|
|
7,363 |
|
|
|
6,008 |
|
|
|
5,108 |
|
|
|
4,848 |
|
| Other real estate owned |
|
1,703 |
|
|
|
1,703 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Deferred income taxes |
|
4,017 |
|
|
|
3,936 |
|
|
|
5,722 |
|
|
|
4,467 |
|
|
|
3,190 |
|
| Servicing assets |
|
12,125 |
|
|
|
12,346 |
|
|
|
12,807 |
|
|
|
12,860 |
|
|
|
13,396 |
|
| Goodwill |
|
899 |
|
|
|
899 |
|
|
|
899 |
|
|
|
899 |
|
|
|
899 |
|
| Intangible assets |
|
3,124 |
|
|
|
3,175 |
|
|
|
3,226 |
|
|
|
3,277 |
|
|
|
3,328 |
|
| Other assets |
|
25,044 |
|
|
|
24,072 |
|
|
|
26,218 |
|
|
|
22,055 |
|
|
|
35,978 |
|
|
Total assets |
$ |
2,229,783 |
|
|
$ |
2,062,228 |
|
|
$ |
1,921,924 |
|
|
$ |
1,853,019 |
|
|
$ |
1,831,589 |
|
| |
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
| Deposits: |
|
|
|
|
|
|
|
|
|
| Non-interest bearing |
$ |
262,636 |
|
|
$ |
301,727 |
|
|
$ |
290,169 |
|
|
$ |
291,925 |
|
|
$ |
291,379 |
|
| Interest bearing |
|
|
|
|
|
|
|
|
|
| Interest checking |
|
232,616 |
|
|
|
219,838 |
|
|
|
236,562 |
|
|
|
205,298 |
|
|
|
252,298 |
|
| Money market and savings
deposits |
|
647,904 |
|
|
|
697,564 |
|
|
|
709,127 |
|
|
|
728,886 |
|
|
|
688,117 |
|
| Time deposits |
|
627,257 |
|
|
|
493,350 |
|
|
|
437,695 |
|
|
|
341,905 |
|
|
|
333,057 |
|
| Total interest-bearing
deposits |
|
1,507,777 |
|
|
|
1,410,752 |
|
|
|
1,383,384 |
|
|
|
1,276,089 |
|
|
|
1,273,472 |
|
|
Total deposits |
|
1,770,413 |
|
|
|
1,712,479 |
|
|
|
1,673,553 |
|
|
|
1,568,014 |
|
|
|
1,564,851 |
|
| Borrowings |
|
233,883 |
|
|
|
122,082 |
|
|
|
23,458 |
|
|
|
59,136 |
|
|
|
36,136 |
|
| Subordinated debentures |
|
40,319 |
|
|
|
40,346 |
|
|
|
40,597 |
|
|
|
40,567 |
|
|
|
40,538 |
|
| Accrued interest payable |
|
3,836 |
|
|
|
2,389 |
|
|
|
1,154 |
|
|
|
146 |
|
|
|
575 |
|
| Other liabilities |
|
28,283 |
|
|
|
31,652 |
|
|
|
32,001 |
|
|
|
29,069 |
|
|
|
31,805 |
|
|
Total liabilities |
|
2,076,734 |
|
|
|
1,908,948 |
|
|
|
1,770,763 |
|
|
|
1,696,932 |
|
|
|
1,673,905 |
|
| |
|
|
|
|
|
|
|
|
|
| Stockholders’
equity: |
|
|
|
|
|
|
|
|
|
| Common stock |
|
13,180 |
|
|
|
13,156 |
|
|
|
13,144 |
|
|
|
13,139 |
|
|
|
13,134 |
|
| Surplus |
|
79,473 |
|
|
|
79,072 |
|
|
|
78,270 |
|
|
|
77,781 |
|
|
|
77,599 |
|
| Treasury stock |
|
(24,512 |
) |
|
|
(21,821 |
) |
|
|
(18,033 |
) |
|
|
(11,896 |
) |
|
|
(8,860 |
) |
| Unearned common stock held by
employee stock ownership plan |
|
(1,403 |
) |
|
|
(1,403 |
) |
|
|
(1,602 |
) |
|
|
(1,602 |
) |
|
|
(1,602 |
) |
| Retained earnings |
|
96,180 |
|
|
|
95,815 |
|
|
|
92,405 |
|
|
|
87,815 |
|
|
|
83,104 |
|
| Accumulated other
comprehensive loss |
|
(9,869 |
) |
|
|
(11,539 |
) |
|
|
(13,023 |
) |
|
|
(9,150 |
) |
|
|
(5,691 |
) |
|
Total stockholders’ equity |
|
153,049 |
|
|
|
153,280 |
|
|
|
151,161 |
|
|
|
156,087 |
|
|
|
157,684 |
|
|
Total liabilities and stockholders’ equity |
$ |
2,229,783 |
|
|
$ |
2,062,228 |
|
|
$ |
1,921,924 |
|
|
$ |
1,853,019 |
|
|
$ |
1,831,589 |
|
| MERIDIAN
CORPORATION AND SUBSIDIARIES |
| CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND SEGMENT INFORMATION
(Unaudited) |
| (Dollar
amounts and shares in thousands, except per share
amounts) |
| |
|
| |
Three Months Ended |
| |
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
March 31, 2022 |
|
Interest income |
$ |
30,947 |
|
$ |
27,763 |
|
$ |
22,958 |
|
$ |
20,037 |
|
$ |
17,964 |
| Interest expense |
|
13,270 |
|
|
9,245 |
|
|
4,932 |
|
|
2,486 |
|
|
1,929 |
| Net interest income |
|
17,677 |
|
|
18,518 |
|
|
18,026 |
|
|
17,551 |
|
|
16,035 |
| Provision for credit losses |
|
1,399 |
|
|
746 |
|
|
526 |
|
|
602 |
|
|
615 |
| Non-interest income |
|
6,638 |
|
|
7,996 |
|
|
10,224 |
|
|
10,403 |
|
|
13,102 |
| Non-interest expense |
|
17,789 |
|
|
20,047 |
|
|
20,261 |
|
|
19,706 |
|
|
21,433 |
| Income before income tax
expense |
|
5,127 |
|
|
5,721 |
|
|
7,463 |
|
|
7,646 |
|
|
7,089 |
| Income tax expense |
|
1,106 |
|
|
1,164 |
|
|
1,665 |
|
|
1,708 |
|
|
1,554 |
| Net Income |
$ |
4,021 |
|
$ |
4,557 |
|
$ |
5,798 |
|
$ |
5,938 |
|
$ |
5,535 |
| |
|
|
|
|
|
|
|
|
|
| Basic weighted average shares
outstanding |
|
11,272 |
|
|
11,389 |
|
|
11,736 |
|
|
11,998 |
|
|
12,046 |
| Basic earnings per common
share |
$ |
0.36 |
|
$ |
0.40 |
|
$ |
0.49 |
|
$ |
0.49 |
|
$ |
0.46 |
| |
|
|
|
|
|
|
|
|
|
| Diluted weighted average shares
outstanding |
|
11,656 |
|
|
11,795 |
|
|
12,118 |
|
|
12,398 |
|
|
12,524 |
| Diluted earnings per common
share |
$ |
0.34 |
|
$ |
0.39 |
|
$ |
0.48 |
|
$ |
0.48 |
|
$ |
0.44 |
| |
Segment Information |
| |
Three Months Ended March 31,
2023 |
|
Three Months Ended March 31,
2022 |
| (dollars in thousands) |
Bank |
|
Wealth |
|
Mortgage |
|
Total |
|
Bank |
|
Wealth |
|
Mortgage |
|
Total |
|
Net interest income |
$ |
17,627 |
|
|
$ |
24 |
|
|
$ |
26 |
|
|
$ |
17,677 |
|
|
$ |
15,610 |
|
|
$ |
94 |
|
|
$ |
331 |
|
|
$ |
16,035 |
|
| Provision for credit losses |
|
1,399 |
|
|
|
— |
|
|
|
— |
|
|
|
1,399 |
|
|
|
615 |
|
|
|
— |
|
|
|
— |
|
|
|
615 |
|
| Net interest income after
provision |
|
16,228 |
|
|
|
24 |
|
|
|
26 |
|
|
|
16,278 |
|
|
|
14,995 |
|
|
|
94 |
|
|
|
331 |
|
|
|
15,420 |
|
| Non-interest income |
|
1,429 |
|
|
|
1,196 |
|
|
|
4,013 |
|
|
|
6,638 |
|
|
|
3,376 |
|
|
|
1,303 |
|
|
|
8,423 |
|
|
|
13,102 |
|
| Non-interest expense |
|
10,698 |
|
|
|
989 |
|
|
|
6,102 |
|
|
|
17,789 |
|
|
|
10,208 |
|
|
|
878 |
|
|
|
10,347 |
|
|
|
21,433 |
|
| Income (loss) before income
taxes |
$ |
6,959 |
|
|
$ |
231 |
|
|
$ |
(2,063 |
) |
|
$ |
5,127 |
|
|
$ |
8,163 |
|
|
$ |
519 |
|
|
$ |
(1,593 |
) |
|
$ |
7,089 |
|
| Efficiency ratio |
|
56.14 |
% |
|
|
81.07 |
% |
|
|
151.08 |
% |
|
|
73.16 |
% |
|
|
53.77 |
% |
|
|
62.85 |
% |
|
|
118.20 |
% |
|
|
73.56 |
% |
|
MERIDIAN CORPORATION AND SUBSIDIARIES |
|
APPENDIX: NON-GAAP MEASURES (Unaudited) |
|
(Dollar amounts and shares in thousands, except per share
amounts) |
Meridian believes that non-GAAP measures are
meaningful because they reflect adjustments commonly made by
management, investors, regulators and analysts. The non-GAAP
disclosure have limitations as an analytical tool, should not be
viewed as a substitute for performance and financial condition
measures determined in accordance with GAAP, and should not be
considered in isolation or as a substitute for analysis of
Meridian’s results as reported under GAAP, nor is it necessarily
comparable to non-GAAP performance measures that may be presented
by other companies.
| |
Allowance For Loan Losses to Loans, Net of Fees and Costs,
Excluding PPP Loans and Loans at Fair Value |
| |
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
March 31, 2022 |
|
Allowance for credit losses (GAAP) |
$ |
20,442 |
|
|
$ |
18,828 |
|
|
$ |
18,974 |
|
|
$ |
18,805 |
|
|
$ |
18,826 |
|
| |
|
|
|
|
|
|
|
|
|
| Loans, net of fees and costs
(GAAP) |
|
1,818,189 |
|
|
|
1,743,682 |
|
|
|
1,610,349 |
|
|
|
1,518,893 |
|
|
|
1,431,906 |
|
| Less: PPP loans |
|
(238 |
) |
|
|
(4,579 |
) |
|
|
(8,610 |
) |
|
|
(21,460 |
) |
|
|
(49,680 |
) |
| Less: Loans fair valued |
|
(14,434 |
) |
|
|
(14,502 |
) |
|
|
(14,702 |
) |
|
|
(16,212 |
) |
|
|
(17,375 |
) |
| Loans, net of fees and costs,
excluding loans at fair value and PPP loans (non-GAAP) |
$ |
1,803,517 |
|
|
$ |
1,724,601 |
|
|
$ |
1,587,037 |
|
|
$ |
1,481,221 |
|
|
$ |
1,364,851 |
|
| |
|
|
|
|
|
|
|
|
|
| Allowance for credit losses to
loans, net of fees and costs (GAAP) |
|
1.12 |
% |
|
|
1.08 |
% |
|
|
1.18 |
% |
|
|
1.24 |
% |
|
|
1.31 |
% |
| Allowance for credit losses to
loans, net of fees and costs, excluding PPP loans and loans at fair
value (non-GAAP) |
|
1.13 |
% |
|
|
1.09 |
% |
|
|
1.20 |
% |
|
|
1.27 |
% |
|
|
1.38 |
% |
| |
Tangible Common Equity Ratio Reconciliation -
Corporation |
| |
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
March 31, 2022 |
|
Total stockholders' equity (GAAP) |
$ |
153,049 |
|
|
$ |
153,280 |
|
|
$ |
151,161 |
|
|
$ |
156,087 |
|
|
$ |
157,684 |
|
| Less: Goodwill and intangible
assets |
|
(4,023 |
) |
|
|
(4,074 |
) |
|
|
(4,125 |
) |
|
|
(4,176 |
) |
|
|
(4,227 |
) |
| Tangible common equity
(non-GAAP) |
|
149,026 |
|
|
|
149,206 |
|
|
|
147,036 |
|
|
|
151,911 |
|
|
|
153,457 |
|
| |
|
|
|
|
|
|
|
|
|
| Total assets (GAAP) |
|
2,229,783 |
|
|
|
2,062,228 |
|
|
|
1,921,924 |
|
|
|
1,853,019 |
|
|
|
1,831,589 |
|
| Less: Goodwill and intangible
assets |
|
(4,023 |
) |
|
|
(4,074 |
) |
|
|
(4,125 |
) |
|
|
(4,176 |
) |
|
|
(4,227 |
) |
| Tangible assets
(non-GAAP) |
$ |
2,225,760 |
|
|
$ |
2,058,154 |
|
|
$ |
1,917,799 |
|
|
$ |
1,848,843 |
|
|
$ |
1,827,362 |
|
| Tangible common equity to
tangible assets ratio - Corporation (non-GAAP) |
|
6.70 |
% |
|
|
7.25 |
% |
|
|
7.67 |
% |
|
|
8.22 |
% |
|
|
8.40 |
% |
| |
Tangible Common Equity Ratio Reconciliation -
Bank |
| |
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
March 31, 2022 |
|
Total stockholders' equity (GAAP) |
$ |
183,931 |
|
|
$ |
185,039 |
|
|
$ |
188,386 |
|
|
$ |
192,212 |
|
|
$ |
194,347 |
|
| Less: Goodwill and intangible
assets |
|
(4,023 |
) |
|
|
(4,074 |
) |
|
|
(4,125 |
) |
|
|
(4,176 |
) |
|
|
(4,227 |
) |
| Tangible common equity
(non-GAAP) |
|
179,908 |
|
|
|
180,965 |
|
|
|
184,261 |
|
|
|
188,036 |
|
|
|
190,120 |
|
| |
|
|
|
|
|
|
|
|
|
| Total assets (GAAP) |
|
2,229,721 |
|
|
|
2,059,557 |
|
|
|
1,921,714 |
|
|
|
1,852,998 |
|
|
|
1,831,461 |
|
| Less: Goodwill and intangible
assets |
|
(4,023 |
) |
|
|
(4,074 |
) |
|
|
(4,125 |
) |
|
|
(4,176 |
) |
|
|
(4,227 |
) |
| Tangible assets
(non-GAAP) |
$ |
2,225,698 |
|
|
$ |
2,055,483 |
|
|
$ |
1,917,589 |
|
|
$ |
1,848,822 |
|
|
$ |
1,827,234 |
|
| Tangible common equity to
tangible assets ratio - Bank (non-GAAP) |
|
8.08 |
% |
|
|
8.80 |
% |
|
|
9.61 |
% |
|
|
10.17 |
% |
|
|
10.40 |
% |
| |
|
|
|
|
|
|
|
|
|
| |
Tangible Book Value Reconciliation |
| |
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
March 31, 2022 |
| Book value per common
share |
$ |
13.54 |
|
|
$ |
13.37 |
|
|
$ |
12.93 |
|
|
$ |
12.93 |
|
|
$ |
12.86 |
|
| Less: Impact of goodwill
/intangible assets |
|
0.36 |
|
|
|
0.36 |
|
|
|
0.35 |
|
|
|
0.35 |
|
|
|
0.34 |
|
| Tangible book value per common
share |
$ |
13.18 |
|
|
$ |
13.01 |
|
|
$ |
12.58 |
|
|
$ |
12.58 |
|
|
$ |
12.52 |
|
Contact:Christopher
Annascannas@meridianbanker.com484-568-5000
Meridian (NASDAQ:MRBK)
Historical Stock Chart
From Apr 2024 to May 2024
Meridian (NASDAQ:MRBK)
Historical Stock Chart
From May 2023 to May 2024
