Meridian Corporation (Nasdaq: MRBK) today reported:
- Net income of $4.0 million and
diluted earnings of $0.35 per share for the third quarter ended
September 30, 2023.
- Return on average assets and return
on average equity for the third quarter of 2023 were 0.73% and
10.17%, respectively.
- Net interest margin was 3.29% for
the third quarter of 2023, with a loan yield of 7.08%.
- Total assets at September 30, 2023
and June 30, 2023 were $2.2 billion, compared to $1.9 billion at
September 30, 2022.
- Third quarter overall commercial
loan growth was $21.3 million, or 6.1% annualized; residential and
home equity loans increased by $15.1 million on a combined basis,
or 19.2% annualized.
- Third quarter deposit growth was
$26.0 million, or 6.0% annualized.
- Raised $9.7 million in subordinated
debt at 8.00% during the quarter for growth and capital
purposes.
- On October 26, 2023, the Board
of Directors declared a quarterly cash dividend of $0.125 per
common share, payable November 20, 2023 to shareholders of
record as of November 13, 2023.
Total assets remained relatively flat quarter
over quarter, however our portfolio loans increased $25.3 million,
or 1.4% and total deposits increased $26.0 million, or 1.5%, during
the period. "We were pleased with our growth in the third quarter
as we prioritize our asset mix to emphasize relationship-based
credits," said Christopher J. Annas, Chairman and CEO. "We continue
to show growth in deposits, reduction in borrowings, and
strengthening of our capital position. While our margin compressed
slightly, we remain focused on high quality assets and prudent
management of the balance sheet."
Mortgage banking revenue was down $231 thousand
over the prior quarter reflecting lower than anticipated loan
production along with lower gain on sale margins. "With the
seasonal slowdown and increasing mortgage rates, mortgage
origination decreased $14.5 million. The increase in the ten year
Treasury and the lack of homes for sale continue to plague the
division as we are simultaneously working to tailor operations to
reasonable levels," Mr. Annas added.
Mr. Annas concluded, "Our growth this year in
such a challenging environment is a strong indicator of our success
in and our commitment to the regions we serve. We remain focused on
opportunities that provide us with additional business and help
foster long-term customer connections."
Select Condensed Financial
Information
| |
As of or
for the quarter ended (Unaudited) |
| |
September 30,2023 |
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
| |
(Dollars in thousands, except per share data) |
|
Income: |
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
4,005 |
|
|
$ |
4,645 |
|
|
$ |
4,021 |
|
|
$ |
4,557 |
|
|
$ |
5,798 |
|
| Basic
earnings per common share |
|
0.36 |
|
|
|
0.42 |
|
|
|
0.36 |
|
|
|
0.40 |
|
|
|
0.49 |
|
|
Diluted earnings per common share |
|
0.35 |
|
|
|
0.41 |
|
|
|
0.34 |
|
|
|
0.39 |
|
|
|
0.48 |
|
| Net
interest income |
|
17,224 |
|
|
|
17,098 |
|
|
|
17,677 |
|
|
|
18,518 |
|
|
|
18,026 |
|
| |
|
|
|
|
|
|
|
|
|
|
Balance Sheet: |
|
|
|
|
|
|
|
|
|
| Total
assets |
$ |
2,230,971 |
|
|
$ |
2,206,877 |
|
|
$ |
2,229,783 |
|
|
$ |
2,062,228 |
|
|
$ |
1,921,924 |
|
|
Loans, net of fees and costs |
|
1,885,629 |
|
|
|
1,859,839 |
|
|
|
1,818,189 |
|
|
|
1,743,682 |
|
|
|
1,610,349 |
|
| Total
deposits |
|
1,808,645 |
|
|
|
1,782,605 |
|
|
|
1,770,413 |
|
|
|
1,712,479 |
|
|
|
1,673,553 |
|
|
Non-interest bearing deposits |
|
244,668 |
|
|
|
269,174 |
|
|
|
262,636 |
|
|
|
301,727 |
|
|
|
290,169 |
|
|
Stockholders' equity |
|
155,114 |
|
|
|
153,962 |
|
|
|
153,049 |
|
|
|
153,280 |
|
|
|
151,161 |
|
| |
|
|
|
|
|
|
|
|
|
|
Balance Sheet (Average Balances): |
|
|
|
|
|
|
|
|
|
| Total
assets |
$ |
2,184,385 |
|
|
$ |
2,166,574 |
|
|
$ |
2,088,599 |
|
|
$ |
1,962,915 |
|
|
$ |
1,868,194 |
|
| Total
interest earning assets |
|
2,086,331 |
|
|
|
2,070,640 |
|
|
|
1,995,460 |
|
|
|
1,877,967 |
|
|
|
1,791,255 |
|
|
Loans, net of fees and costs |
|
1,876,648 |
|
|
|
1,847,736 |
|
|
|
1,783,322 |
|
|
|
1,674,215 |
|
|
|
1,565,861 |
|
| Total
deposits |
|
1,782,140 |
|
|
|
1,775,444 |
|
|
|
1,759,571 |
|
|
|
1,698,597 |
|
|
|
1,597,648 |
|
|
Non-interest bearing deposits |
|
253,485 |
|
|
|
266,675 |
|
|
|
296,037 |
|
|
|
312,297 |
|
|
|
295,975 |
|
|
Stockholders' equity |
|
156,271 |
|
|
|
154,179 |
|
|
|
153,179 |
|
|
|
151,791 |
|
|
|
157,614 |
|
| |
|
|
|
|
|
|
|
|
|
|
Performance Ratios (Annualized): |
|
|
|
|
|
|
|
|
|
| Return on average assets |
|
0.73 |
% |
|
|
0.86 |
% |
|
|
0.78 |
% |
|
|
0.92 |
% |
|
|
1.23 |
% |
| Return on average equity |
|
10.17 |
% |
|
|
12.08 |
% |
|
|
10.65 |
% |
|
|
11.91 |
% |
|
|
14.59 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Statement -
Third Quarter
2023 Compared to
Second Quarter
2023
Net income of $4.0 million, decreased $640
thousand from $4.6 million for the second quarter driven by a lower
level of non-interest income and a higher level of non-interest
expense, partially offset by an increase in net interest income and
lower loan loss provision. Non-interest income decreased $1.0
million or 11.4%, due to lower levels of gains on sale of mortgage
and SBA loans. Non-interest expense increased $403 thousand, or
2.1% due primarily to increased salaries and benefits expense and
professional fees. Net interest income increased $128 thousand, or
0.7%, on a tax equivalent basis due to an increase in earnings
assets. 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 related to changes
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) |
September 30,2023 |
|
June 30,2023 |
|
$ Change |
|
% Change |
|
Change due to rate |
|
Change due to volume |
|
Interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
Due from banks |
$ |
244 |
|
$ |
275 |
|
$ |
(31 |
) |
|
|
(11.3 |
)% |
|
$ |
25 |
|
|
$ |
(56 |
) |
| Federal
funds sold |
|
1 |
|
|
3 |
|
|
(2 |
) |
|
|
(66.7 |
)% |
|
|
1 |
|
|
|
(3 |
) |
|
Investment securities - taxable (1) |
|
901 |
|
|
992 |
|
|
(91 |
) |
|
|
(9.2 |
)% |
|
|
(18 |
) |
|
|
(73 |
) |
|
Investment securities - tax exempt (1) |
|
410 |
|
|
426 |
|
|
(16 |
) |
|
|
(3.8 |
)% |
|
|
(9 |
) |
|
|
(7 |
) |
| Loans
held for sale |
|
456 |
|
|
407 |
|
|
49 |
|
|
|
12.0 |
% |
|
|
40 |
|
|
|
9 |
|
| Loans
held for investment (1) |
|
33,526 |
|
|
31,810 |
|
|
1,716 |
|
|
|
5.4 |
% |
|
|
1,213 |
|
|
|
503 |
|
|
Total loans |
|
33,982 |
|
|
32,217 |
|
|
1,765 |
|
|
|
5.5 |
% |
|
|
1,253 |
|
|
|
512 |
|
|
Total interest income |
$ |
35,538 |
|
$ |
33,913 |
|
$ |
1,625 |
|
|
|
4.8 |
% |
|
$ |
1,252 |
|
|
$ |
373 |
|
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing demand deposits |
$ |
1,488 |
|
$ |
1,840 |
|
$ |
(352 |
) |
|
|
(19.1 |
)% |
|
$ |
42 |
|
|
$ |
(394 |
) |
| Money
market and savings deposits |
|
6,755 |
|
|
5,371 |
|
|
1,384 |
|
|
|
25.8 |
% |
|
|
796 |
|
|
|
588 |
|
| Time
deposits |
|
7,300 |
|
|
6,812 |
|
|
488 |
|
|
|
7.2 |
% |
|
|
537 |
|
|
|
(49 |
) |
|
Total deposits |
|
15,543 |
|
|
14,023 |
|
|
1,520 |
|
|
|
10.8 |
% |
|
|
1,375 |
|
|
|
145 |
|
|
Borrowings |
|
2,086 |
|
|
2,129 |
|
|
(43 |
) |
|
|
(2.0 |
)% |
|
|
(103 |
) |
|
|
60 |
|
|
Subordinated debentures |
|
606 |
|
|
586 |
|
|
20 |
|
|
|
3.4 |
% |
|
|
6 |
|
|
|
14 |
|
|
Total interest expense |
|
18,235 |
|
|
16,738 |
|
|
1,497 |
|
|
|
8.9 |
% |
|
|
1,278 |
|
|
|
219 |
|
|
Net interest income differential |
$ |
17,303 |
|
$ |
17,175 |
|
$ |
128 |
|
|
|
0.75 |
% |
|
$ |
(26 |
) |
|
$ |
154 |
|
| (1) Reflected on a
tax-equivalent basis. |
| |
Interest income increased $1.6 million on a tax
equivalent basis, quarter-over-quarter, due to a higher yield on
earning assets and higher levels of average earning assets. The
yield on earnings assets rose 19 basis points during the period,
while average earning assets increased by $15.7 million.
The yield on total loans increased 19 basis
points and the yield on cash and investments decreased 1 basis
point combined, reflecting the impact on rates from the Federal
Reserve’s monetary policy. Nearly $713.5 million in loans repriced
during the quarter with an average increase of 25 basis points.
Average total loans, excluding residential loans for sale,
increased $28.9 million. Construction, commercial real estate, and
small business loans increased $19.3 million on average, combined,
while home equity loans and residential real estate loans held in
portfolio increased $15.9 million on average, combined.
Total interest expense increased $1.5 million,
quarter-over-quarter, due primarily to market interest rate rises,
and increases in both deposit and borrowing average balances.
Interest expense on deposits increased $1.5 million as total
average deposits increased $19.9 million and the cost of
interest-bearing deposits increased 30 basis points to 4.03%.
Interest expense on borrowings decreased $43 thousand as the cost
of borrowings decreased 30 basis points due to the positive carry
on a $75 million pay fixed swap, partially offset by the increase
in average borrowings for the period.
Although net interest income increased quarter
over quarter, the net interest margin decreased 4 basis points to
3.29% as the cost of funds outpaced the increase in yield on
earnings assets. The margin was also affected by a reduction in
average non-interest bearing deposits, which were down on average
by $13.2 million for the quarter.
Provision for Credit Losses
The overall provision for credit losses is
comprised of provisioning for funded loans as well as unfunded
commitments. The combined provision decreased to $82 thousand for
the third quarter from $705 thousand for the second quarter. The
reduction was due in part to a decline in the overall exposure to
unfunded loan balances at the end of the third quarter, causing a
reduction in the unfunded reserve of $192 thousand. The remaining
decrease in provisioning was due largely to favorable changes in
some baseline loss rates and certain macroeconomic factors
underlying the funded loss model.
Non-interest income
The following table presents the components of
non-interest income for the periods indicated:
| |
Quarter Ended |
|
|
|
|
| (Dollars in thousands) |
September 30,2023 |
|
June 30,2023 |
|
$ Change |
|
% Change |
|
Mortgage banking income |
$ |
4,819 |
|
|
$ |
5,050 |
|
|
$ |
(231 |
) |
|
|
(4.6 |
)% |
| Wealth management income |
|
1,258 |
|
|
|
1,235 |
|
|
|
23 |
|
|
|
1.9 |
% |
| SBA loan income |
|
982 |
|
|
|
1,767 |
|
|
|
(785 |
) |
|
|
(44.4 |
)% |
| Earnings on investment in life
insurance |
|
201 |
|
|
|
193 |
|
|
|
8 |
|
|
|
4.1 |
% |
| Net change in the fair value
of derivative instruments |
|
103 |
|
|
|
183 |
|
|
|
(80 |
) |
|
|
(43.7 |
)% |
| Net change in the fair value
of loans held-for-sale |
|
111 |
|
|
|
(199 |
) |
|
|
310 |
|
|
|
(155.8 |
)% |
| Net change in the fair value
of loans held-for-investment |
|
(570 |
) |
|
|
(219 |
) |
|
|
(351 |
) |
|
|
160.3 |
% |
| Net (loss) gain on hedging
activity |
|
82 |
|
|
|
(1 |
) |
|
|
83 |
|
|
|
(8300.0 |
)% |
| Net loss
on sale of investment securities available-for-sale |
|
(3 |
) |
|
|
(54 |
) |
|
|
51 |
|
|
|
(94.4 |
)% |
| Other |
|
1,103 |
|
|
|
1,169 |
|
|
|
(66 |
) |
|
|
(5.6 |
)% |
| Total non-interest income |
$ |
8,086 |
|
|
$ |
9,124 |
|
|
$ |
(1,038 |
) |
|
|
(11.4 |
)% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-interest income decreased $1.0
million, or 11.4%, quarter-over-quarter as a result of lower
mortgage banking income and lower SBA loan income. Mortgage banking
income decreased $231 thousand, or 4.6% quarter-over-quarter, due
to lower levels of mortgage loan originations, which decreased
$14.5 million. In addition to lower volume, the gain on sale margin
decreased 18 basis points over the prior quarter. The fair value of
loans held for sale and loans held for investment, along with the
fair value of derivatives instruments and net gain on hedging
activity, decreased $38 thousand in total.
SBA loan income decreased $785 thousand, or
44.4%, due to a combination of a decrease in the gain on sale of
SBA loans and an increase in servicing asset impairment quarter
over quarter. While the value of SBA loans sold for the
quarter-ended September 30, 2023 was only slightly less than the
volume sold for the quarter-ended June 30, 2023 ($26.2 million vs
$27.8 million), the gross margin on sale was 6.2% for the
quarter-ended September 30, 2023 compared to 7.0% for the
quarter-ended June 30, 2023. Also contributing to the decrease in
SBA loan income was an increase in servicing asset impairment, led
by an increase in the prepayment assumption that drives the
servicing asset valuation.
Non-interest expense
The following table presents the components of
non-interest expense for the periods indicated:
| |
Quarter Ended |
|
|
|
|
| (Dollars in thousands) |
September 30,2023 |
|
June 30,2023 |
|
$ Change |
|
% Change |
|
Salaries and employee benefits |
$ |
12,420 |
|
|
$ |
12,152 |
|
|
$ |
268 |
|
|
|
2.2 |
% |
| Occupancy and equipment |
|
1,226 |
|
|
|
1,140 |
|
|
|
86 |
|
|
|
7.5 |
% |
| Professional fees |
|
1,104 |
|
|
|
1,004 |
|
|
|
100 |
|
|
|
10.0 |
% |
| Advertising and promotion |
|
848 |
|
|
|
1,091 |
|
|
|
(243 |
) |
|
|
(22.3 |
)% |
| Data processing and
software |
|
1,652 |
|
|
|
1,681 |
|
|
|
(29 |
) |
|
|
(1.7 |
)% |
| Pennsylvania bank shares
tax |
|
244 |
|
|
|
245 |
|
|
|
(1 |
) |
|
|
(0.4 |
)% |
| Other |
|
2,524 |
|
|
|
2,302 |
|
|
|
222 |
|
|
|
9.6 |
% |
| Total non-interest
expense |
$ |
20,018 |
|
|
$ |
19,615 |
|
|
$ |
403 |
|
|
|
2.1 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and employee benefits increased $268
thousand overall, with bank and wealth segments combined having
increased $234 thousand, and the mortgage segment increased $34
thousand. Bank and wealth segment salaries and employee benefits
were up due to one-time payment of severance to a former Meridian
Equipment Finance officer as well as stock based compensation.
Professional fees increased $100 thousand during
the current quarter due to an increase in loan and lease workout
expenses which has helped lead to an increase in recoveries when
compared to the prior year. Professional fees were also impacted by
system conversion fees for a new loan servicing platform for our
mortgage segment. Occupancy expenses were up due to branch
re-locations, equipment and some repairs/maintenance. Advertising
and promotion expense decreased $243 thousand from the prior
quarter as a result of a decrease in business development expense
and certain advertising expense due to seasonality. Other
non-interest expense increased $222 thousand over the prior quarter
due largely to an increase in FDIC insurance expense, an increase
in certain commercial and consumer related loan expenses due to
portfolio growth, and an increase in our mortgage related
representations and warranties reserves, offset by a reduction in
the unfunded allowance for credit losses.
Balance Sheet -
September 30, 2023 Compared to
June 30, 2023
As of September 30, 2023, total assets increased
$24.1 million, or 1.1%, to $2.2 billion from June 30, 2023. This
increase was due to an increase in cash and cash equivalents and an
increase in loans. Interest-bearing cash increased $9.7 million, or
26.8%, to $46.0 million as of September 30, 2023, from June 30,
2023.
Portfolio loan growth was $25.3 million, or 1.4%
quarter-over-quarter. Commercial mortgage loans increased $47.9
million, or 7.4%, residential real estate loans held in portfolio
increased $8.5 million, or 3.4%, while home equity lines and loans
increased $6.6 million, or 9.8% as well. Partially offsetting
portfolio loan growth were commercial & industrial loans which
decreased $10.4 million, or 3.4%, construction loans which
decreased $9.5 million, or 3.3%, small business loans which
decreased $6.7 million, or 4.5%, due to loan sales during the
period, and lease financings that decreased $11.1 million, or 7.4%
from June 30, 2023.
Total deposits increased $26.0 million, or 1.5%
quarter-over-quarter, due largely to higher levels of money market
deposits which increased $36.1 million. Much of the increase came
from business accounts as well as some seasonal deposits related to
school tuition and taxes. Noninterest-bearing deposits decreased
$24.5 million, during the period. Servicing deposits of
approximately $7.2 million also paid out seasonally, with much of
the rest of the change in non-interest bearing accounts migrating
to other accounts. Time deposits increased $13.9 million, or 2.1%,
from retail and wholesale efforts as customers opt for higher term
interest rates.
In September, Meridian Corporation raised $9.7
million in subordinated debt at 8.00% with a term of 10 years. The
funds will be used for general corporate purposes, including
providing capital to Meridian Bank and supporting organic
growth.
Consolidated stockholders’ equity of the
Corporation increased by $1.2 million from June 30, 2023, to $155.1
million as of September 30, 2023. Changes to equity for the current
quarter included net income of $4.0 million, partially offset by a
$1.5 million decline in other comprehensive income and prior
quarter dividends paid of $1.4 million. The Community Bank Leverage
Ratio for the Bank was 9.65% at September 30, 2023.
Asset Quality Summary
The ratio of non-performing loans to total loans
increased to 1.53% as of September 30, 2023, from 1.44% as of June
30, 2023, while non-performing assets to total assets was up to
1.38% as of September 30, 2023, compared to 1.32% at June 30, 2023.
Total non-performing loans of $29.1 million as of September 30,
2023, increased $1.7 million from $27.4 million as of June 30, 2023
due to downgrades of several SBA loans and residential real estate
loans, offset somewhat by the impact of returning a residential
real estate loan to accrual status, and charge-offs in commercial
and SBA loans as of September 30, 2023.
Meridian realized net charge-offs of 0.05% of
total average loans for the quarter ended September 30, 2023,
consistent with the quarter ended June 30, 2023 level of 0.05%. Net
charge-offs for the quarter ended September 30, 2023 were $913
thousand, comprised of $1.0 million in charge-offs, with $95
thousand in recoveries for the quarter. While a large percentage of
charge-offs for the quarter ended September 30, 2023 continue to
come from small ticket equipment leases, the level of charge-offs
in this portfolio declined by $169 thousand, while we also realized
$90 thousand of recoveries related to the small ticket equipment
lease portfolio. There were also charge-offs of $272 thousand on
SBA loans that had previously been classified as non-performing
loans in a prior period.
The ratio of allowance for credit losses to
total loans held for investment, excluding loans at fair value (a
non-GAAP measure, see reconciliation in the Appendix), was 1.05% as
of September 30, 2023 compared to 1.10% as of June 30, 2023. As of
September 30, 2023 there were specific reserves of $2.6 million
against non-performing loans, an increase from $2.5 million as of
June 30, 2023 due to the increase of the existing specific reserve
on a commercial loan relationship classified as a non-performing,
combined with the impact of establishing a new specific reserve on
an SBA loan relationship during the current quarter.
Bank Sector Considerations
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 (58%), with consumer
deposits amounting to 12% at September 30, 2023. Municipal deposits
(8%) and brokered deposits (22%) 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 September 30, 2023, 63% of business accounts and 88%
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 September 30, 2023.
Meridian also maintains borrowing arrangements
with various correspondent banks to meet short-term liquidity needs
and has access to approximately $1.0 billion 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 September 30,
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 its 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,
credit losses and the credit risk of our commercial and consumer
loan products; changes in the level of charge-offs and changes in
estimates of the adequacy of the allowance for credit losses, or
ACL; cyber-security concerns; rapid technological developments and
changes; increased competitive pressures; changes in spreads on
interest-earning assets and interest-bearing liabilities; changes
in general economic conditions and conditions within the securities
markets; unanticipated changes in our liquidity position;
unanticipated changes in regulatory and governmental policies
impacting interest rates and financial markets; legislation
affecting the financial services industry as a whole, and Meridian
Corporation, in particular; changes in accounting policies,
practices or guidance; developments affecting the industry and the
soundness of financial institutions and further disruption to the
economy and U.S. banking system; 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.
Contact:Christopher
Annascannas@meridianbanker.com484-568-5000
MERIDIAN CORPORATION AND
SUBSIDIARIESFINANCIAL RATIOS
(Unaudited)(Dollar amounts and shares in
thousands, except per share amounts)
| |
Quarter Ended |
| |
September 30,2023 |
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
| Earnings and Per Share
Data: |
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
4,005 |
|
|
$ |
4,645 |
|
|
$ |
4,021 |
|
|
$ |
4,557 |
|
|
$ |
5,798 |
|
| Basic earnings per common
share |
$ |
0.36 |
|
|
$ |
0.42 |
|
|
$ |
0.36 |
|
|
$ |
0.40 |
|
|
$ |
0.49 |
|
| Diluted earnings per common
share |
$ |
0.35 |
|
|
$ |
0.41 |
|
|
$ |
0.34 |
|
|
$ |
0.39 |
|
|
$ |
0.48 |
|
| Common shares outstanding |
|
11,178 |
|
|
|
11,178 |
|
|
|
11,305 |
|
|
|
11,466 |
|
|
|
11,689 |
|
| |
|
|
|
|
|
|
|
|
|
| Performance
Ratios: |
|
|
|
|
|
|
|
|
|
| Return on average assets |
|
0.73 |
% |
|
|
0.86 |
% |
|
|
0.78 |
% |
|
|
0.92 |
% |
|
|
1.23 |
% |
| Return on average equity |
|
10.17 |
|
|
|
12.08 |
|
|
|
10.65 |
|
|
|
11.91 |
|
|
|
14.59 |
|
| Net interest margin
(tax-equivalent) |
|
3.29 |
|
|
|
3.33 |
|
|
|
3.61 |
|
|
|
3.93 |
|
|
|
4.01 |
|
| Yield on earning assets
(tax-equivalent) |
|
6.76 |
|
|
|
6.57 |
|
|
|
6.31 |
|
|
|
5.88 |
|
|
|
5.10 |
|
| Cost of funds |
|
3.63 |
|
|
|
3.39 |
|
|
|
2.83 |
|
|
|
2.07 |
|
|
|
1.17 |
|
| Efficiency ratio |
|
79.09 |
% |
|
|
74.80 |
% |
|
|
73.16 |
% |
|
|
75.61 |
% |
|
|
71.72 |
% |
| |
|
|
|
|
|
|
|
|
|
| Asset Quality
Ratios: |
|
|
|
|
|
|
|
|
|
| Net charge-offs (recoveries)
to average loans |
|
0.05 |
% |
|
|
0.05 |
% |
|
|
0.08 |
% |
|
|
0.05 |
% |
|
|
0.02 |
% |
| Non-performing loans to total
loans |
|
1.53 |
|
|
|
1.44 |
|
|
|
1.25 |
|
|
|
1.20 |
|
|
|
1.40 |
|
| Non-performing assets to total
assets |
|
1.38 |
|
|
|
1.32 |
|
|
|
1.11 |
|
|
|
1.11 |
|
|
|
1.20 |
|
|
Allowance for credit losses to: |
|
|
|
|
|
|
|
|
|
|
Total loans held for investment |
|
1.04 |
|
|
|
1.09 |
|
|
|
1.12 |
|
|
|
1.08 |
|
|
|
1.18 |
|
|
Total loans held for investment (excluding loans at fair value)
(1) |
|
1.05 |
|
|
|
1.10 |
|
|
|
1.13 |
|
|
|
1.09 |
|
|
|
1.20 |
|
|
Non-performing loans |
|
67.61 |
% |
|
|
73.97 |
% |
|
|
88.41 |
% |
|
|
88.66 |
% |
|
|
82.20 |
% |
| |
|
|
|
|
|
|
|
|
|
| Capital
Ratios: |
|
|
|
|
|
|
|
|
|
| Book value per common
share |
$ |
13.88 |
|
|
$ |
13.77 |
|
|
$ |
13.54 |
|
|
$ |
13.37 |
|
|
$ |
12.93 |
|
| Tangible book value per common
share |
$ |
13.53 |
|
|
$ |
13.42 |
|
|
$ |
13.18 |
|
|
$ |
13.01 |
|
|
$ |
12.58 |
|
| Total equity/Total assets |
|
6.95 |
% |
|
|
6.98 |
% |
|
|
6.86 |
% |
|
|
7.43 |
% |
|
|
7.87 |
% |
| Tangible common
equity/Tangible assets - Corporation (1) |
|
6.79 |
|
|
|
6.81 |
|
|
|
6.70 |
|
|
|
7.25 |
|
|
|
7.67 |
|
| Tangible common
equity/Tangible assets - Bank (1) |
|
8.89 |
|
|
|
8.54 |
|
|
|
8.26 |
|
|
|
8.80 |
|
|
|
9.61 |
|
| Tier 1 leverage ratio -
Corporation |
|
7.52 |
|
|
|
7.46 |
|
|
|
7.65 |
|
|
|
8.13 |
|
|
|
8.54 |
|
| Tier 1 leverage ratio -
Bank |
|
9.65 |
|
|
|
9.22 |
|
|
|
9.32 |
|
|
|
9.95 |
|
|
|
10.52 |
|
| Common tier 1 risk-based
capital ratio - Corporation |
|
8.43 |
|
|
|
8.38 |
|
|
|
8.44 |
|
|
|
8.77 |
|
|
|
9.28 |
|
| Common tier 1 risk-based
capital ratio - Bank |
|
10.82 |
|
|
|
10.35 |
|
|
|
10.27 |
|
|
|
10.73 |
|
|
|
11.44 |
|
| Tier 1 risk-based capital
ratio - Corporation |
|
8.43 |
|
|
|
8.38 |
|
|
|
8.44 |
|
|
|
8.77 |
|
|
|
9.28 |
|
| Tier 1 risk-based capital
ratio - Bank |
|
10.82 |
|
|
|
10.35 |
|
|
|
10.27 |
|
|
|
10.73 |
|
|
|
11.44 |
|
| Total risk-based capital ratio
- Corporation |
|
11.96 |
|
|
|
11.49 |
|
|
|
11.63 |
|
|
|
12.05 |
|
|
|
12.80 |
|
| Total
risk-based capital ratio - Bank |
|
11.85 |
% |
|
|
11.43 |
% |
|
|
11.41 |
% |
|
|
11.87 |
% |
|
|
12.70 |
% |
| (1) See
Non-GAAP reconciliation in the Appendix |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
MERIDIAN CORPORATION AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
INCOME (Unaudited)(Dollar amounts and shares in
thousands, except per share amounts)
| |
Three Months Ended |
|
Nine Months Ended |
| |
September 30,2023 |
|
June 30,2023 |
|
September 30,2022 |
|
September 30,2023 |
|
September 30,2022 |
|
Interest income: |
|
|
|
|
|
|
|
|
|
|
Loans and other finance receivables, including fees |
$ |
33,980 |
|
|
$ |
32,215 |
|
|
$ |
21,848 |
|
|
$ |
95,612 |
|
|
$ |
58,187 |
|
|
Securities - taxable |
|
901 |
|
|
|
992 |
|
|
|
648 |
|
|
|
2,853 |
|
|
|
1,599 |
|
|
Securities - tax-exempt |
|
333 |
|
|
|
351 |
|
|
|
369 |
|
|
|
1,038 |
|
|
|
1,015 |
|
| Cash and
cash equivalents |
|
245 |
|
|
|
278 |
|
|
|
93 |
|
|
|
741 |
|
|
|
157 |
|
|
Total interest income |
|
35,459 |
|
|
|
33,836 |
|
|
|
22,958 |
|
|
|
100,244 |
|
|
|
60,958 |
|
|
Interest expense: |
|
|
|
|
|
|
|
|
|
|
Deposits |
|
15,543 |
|
|
|
14,023 |
|
|
|
4,075 |
|
|
|
41,013 |
|
|
|
7,182 |
|
|
Borrowings |
|
2,692 |
|
|
|
2,715 |
|
|
|
857 |
|
|
|
7,230 |
|
|
|
2,166 |
|
|
Total interest expense |
|
18,235 |
|
|
|
16,738 |
|
|
|
4,932 |
|
|
|
48,243 |
|
|
|
9,348 |
|
|
Net interest income |
|
17,224 |
|
|
|
17,098 |
|
|
|
18,026 |
|
|
|
52,001 |
|
|
|
51,610 |
|
|
Provision for credit losses |
|
82 |
|
|
|
705 |
|
|
|
526 |
|
|
|
2,186 |
|
|
|
1,743 |
|
|
Net interest income after provision for credit losses |
|
17,142 |
|
|
|
16,393 |
|
|
|
17,500 |
|
|
|
49,815 |
|
|
|
49,867 |
|
|
Non-interest income: |
|
|
|
|
|
|
|
|
|
| Mortgage
banking income |
|
4,819 |
|
|
|
5,050 |
|
|
|
7,329 |
|
|
|
13,143 |
|
|
|
21,367 |
|
| Wealth
management income |
|
1,258 |
|
|
|
1,235 |
|
|
|
1,114 |
|
|
|
3,689 |
|
|
|
3,672 |
|
| SBA loan
income |
|
982 |
|
|
|
1,767 |
|
|
|
989 |
|
|
|
3,463 |
|
|
|
3,946 |
|
| Earnings
on investment in life insurance |
|
201 |
|
|
|
193 |
|
|
|
138 |
|
|
|
585 |
|
|
|
413 |
|
| Net
change in the fair value of derivative instruments |
|
103 |
|
|
|
183 |
|
|
|
127 |
|
|
|
217 |
|
|
|
(713 |
) |
| Net
change in the fair value of loans held-for-sale |
|
111 |
|
|
|
(199 |
) |
|
|
(237 |
) |
|
|
(88 |
) |
|
|
(1,094 |
) |
| Net
change in the fair value of loans held-for-investment |
|
(570 |
) |
|
|
(219 |
) |
|
|
(886 |
) |
|
|
(673 |
) |
|
|
(2,499 |
) |
| Net
(loss) gain on hedging activity |
|
82 |
|
|
|
(1 |
) |
|
|
399 |
|
|
|
81 |
|
|
|
4,941 |
|
| Net loss
on sale of investment securities available-for-sale |
|
(3 |
) |
|
|
(54 |
) |
|
|
— |
|
|
|
(58 |
) |
|
|
— |
|
|
Other |
|
1,103 |
|
|
|
1,169 |
|
|
|
1,251 |
|
|
|
3,489 |
|
|
|
3,695 |
|
|
Total non-interest income |
|
8,086 |
|
|
|
9,124 |
|
|
|
10,224 |
|
|
|
23,848 |
|
|
|
33,728 |
|
|
Non-interest expense: |
|
|
|
|
|
|
|
|
|
| Salaries
and employee benefits |
|
12,420 |
|
|
|
12,152 |
|
|
|
13,360 |
|
|
|
35,633 |
|
|
|
41,585 |
|
|
Occupancy and equipment |
|
1,226 |
|
|
|
1,140 |
|
|
|
1,191 |
|
|
|
3,610 |
|
|
|
3,619 |
|
|
Professional fees |
|
1,104 |
|
|
|
1,004 |
|
|
|
899 |
|
|
|
2,930 |
|
|
|
2,659 |
|
|
Advertising and promotion |
|
848 |
|
|
|
1,091 |
|
|
|
1,165 |
|
|
|
2,799 |
|
|
|
3,340 |
|
| Data
processing and software |
|
1,652 |
|
|
|
1,681 |
|
|
|
1,442 |
|
|
|
4,764 |
|
|
|
3,939 |
|
|
Pennsylvania bank shares tax |
|
244 |
|
|
|
245 |
|
|
|
202 |
|
|
|
735 |
|
|
|
612 |
|
|
Other |
|
2,524 |
|
|
|
2,302 |
|
|
|
2,002 |
|
|
|
6,951 |
|
|
|
5,646 |
|
|
Total non-interest expense |
|
20,018 |
|
|
|
19,615 |
|
|
|
20,261 |
|
|
|
57,422 |
|
|
|
61,400 |
|
|
Income before income taxes |
|
5,210 |
|
|
|
5,902 |
|
|
|
7,463 |
|
|
|
16,241 |
|
|
|
22,195 |
|
| Income
tax expense |
|
1,205 |
|
|
|
1,257 |
|
|
|
1,665 |
|
|
|
3,568 |
|
|
|
4,927 |
|
|
Net income |
$ |
4,005 |
|
|
$ |
4,645 |
|
|
$ |
5,798 |
|
|
$ |
12,673 |
|
|
$ |
17,268 |
|
| |
|
|
|
|
|
|
|
|
|
| Basic
earnings per common share |
$ |
0.36 |
|
|
$ |
0.42 |
|
|
$ |
0.49 |
|
|
$ |
1.14 |
|
|
$ |
1.45 |
|
| Diluted
earnings per common share |
$ |
0.35 |
|
|
$ |
0.41 |
|
|
$ |
0.48 |
|
|
$ |
1.11 |
|
|
$ |
1.40 |
|
| |
|
|
|
|
|
|
|
|
|
| Basic
weighted average shares outstanding |
|
11,057 |
|
|
|
11,062 |
|
|
|
11,736 |
|
|
|
11,130 |
|
|
|
11,928 |
|
| Diluted
weighted average shares outstanding |
|
11,363 |
|
|
|
11,304 |
|
|
|
12,118 |
|
|
|
11,449 |
|
|
|
12,344 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MERIDIAN CORPORATION AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
CONDITION (Unaudited)
| (Dollar amounts and
shares in thousands, except per share amounts) |
September 30,2023 |
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
| Assets: |
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
$ |
13,737 |
|
|
$ |
10,576 |
|
|
$ |
8,473 |
|
|
$ |
11,299 |
|
|
$ |
12,114 |
|
|
Interest-bearing deposits at other banks |
|
46,022 |
|
|
|
36,290 |
|
|
|
100,030 |
|
|
|
27,092 |
|
|
|
20,774 |
|
|
Cash and cash equivalents |
|
59,759 |
|
|
|
46,866 |
|
|
|
108,503 |
|
|
|
38,391 |
|
|
|
32,888 |
|
| Securities available-for-sale,
at fair value |
|
122,218 |
|
|
|
126,668 |
|
|
|
142,933 |
|
|
|
135,346 |
|
|
|
127,999 |
|
| Securities held-to-maturity,
at amortized cost |
|
36,232 |
|
|
|
36,463 |
|
|
|
36,525 |
|
|
|
37,479 |
|
|
|
37,922 |
|
| Equity investments |
|
2,019 |
|
|
|
2,097 |
|
|
|
2,110 |
|
|
|
2,086 |
|
|
|
2,092 |
|
| Mortgage loans held for sale,
at fair value |
|
23,144 |
|
|
|
40,422 |
|
|
|
35,701 |
|
|
|
22,243 |
|
|
|
33,800 |
|
| Loans and other finance
receivables, net of fees and costs |
|
1,885,629 |
|
|
|
1,859,839 |
|
|
|
1,818,189 |
|
|
|
1,743,682 |
|
|
|
1,610,349 |
|
| Allowance for credit
losses |
|
(19,683 |
) |
|
|
(20,242 |
) |
|
|
(20,442 |
) |
|
|
(18,828 |
) |
|
|
(18,974 |
) |
|
Loans and other finance receivables, net of the allowance for
credit losses |
|
1,865,946 |
|
|
|
1,839,597 |
|
|
|
1,797,747 |
|
|
|
1,724,854 |
|
|
|
1,591,375 |
|
| Restricted investment in bank
stock |
|
8,309 |
|
|
|
9,157 |
|
|
|
10,173 |
|
|
|
6,931 |
|
|
|
5,217 |
|
| Bank premises and equipment,
net |
|
13,310 |
|
|
|
13,234 |
|
|
|
13,281 |
|
|
|
13,349 |
|
|
|
12,835 |
|
| Bank owned life insurance |
|
28,641 |
|
|
|
28,440 |
|
|
|
28,247 |
|
|
|
28,055 |
|
|
|
22,916 |
|
| Accrued interest
receivable |
|
8,984 |
|
|
|
7,651 |
|
|
|
7,651 |
|
|
|
7,363 |
|
|
|
6,008 |
|
| Other real estate owned |
|
1,703 |
|
|
|
1,703 |
|
|
|
1,703 |
|
|
|
1,703 |
|
|
|
— |
|
| Deferred income taxes |
|
4,993 |
|
|
|
4,258 |
|
|
|
4,017 |
|
|
|
3,936 |
|
|
|
5,722 |
|
| Servicing assets |
|
11,835 |
|
|
|
12,193 |
|
|
|
12,125 |
|
|
|
12,346 |
|
|
|
12,807 |
|
| Goodwill |
|
899 |
|
|
|
899 |
|
|
|
899 |
|
|
|
899 |
|
|
|
899 |
|
| Intangible assets |
|
3,022 |
|
|
|
3,073 |
|
|
|
3,124 |
|
|
|
3,175 |
|
|
|
3,226 |
|
| Other assets |
|
39,957 |
|
|
|
34,156 |
|
|
|
25,044 |
|
|
|
24,072 |
|
|
|
26,218 |
|
|
Total assets |
$ |
2,230,971 |
|
|
$ |
2,206,877 |
|
|
$ |
2,229,783 |
|
|
$ |
2,062,228 |
|
|
$ |
1,921,924 |
|
| |
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
| Deposits: |
|
|
|
|
|
|
|
|
|
| Non-interest bearing |
$ |
244,668 |
|
|
$ |
269,174 |
|
|
$ |
262,636 |
|
|
$ |
301,727 |
|
|
$ |
290,169 |
|
| Interest bearing |
|
|
|
|
|
|
|
|
|
| Interest checking |
|
156,537 |
|
|
|
155,907 |
|
|
|
232,616 |
|
|
|
219,838 |
|
|
|
236,562 |
|
| Money market and savings
deposits |
|
746,599 |
|
|
|
710,546 |
|
|
|
647,904 |
|
|
|
697,564 |
|
|
|
709,127 |
|
| Time deposits |
|
660,841 |
|
|
|
646,978 |
|
|
|
627,257 |
|
|
|
493,350 |
|
|
|
437,695 |
|
| Total
interest-bearing deposits |
|
1,563,977 |
|
|
|
1,513,431 |
|
|
|
1,507,777 |
|
|
|
1,410,752 |
|
|
|
1,383,384 |
|
|
Total deposits |
|
1,808,645 |
|
|
|
1,782,605 |
|
|
|
1,770,413 |
|
|
|
1,712,479 |
|
|
|
1,673,553 |
|
| Borrowings |
|
177,959 |
|
|
|
194,636 |
|
|
|
233,883 |
|
|
|
122,082 |
|
|
|
23,458 |
|
| Subordinated debentures |
|
50,079 |
|
|
|
40,348 |
|
|
|
40,319 |
|
|
|
40,346 |
|
|
|
40,597 |
|
| Accrued interest payable |
|
7,814 |
|
|
|
5,612 |
|
|
|
3,836 |
|
|
|
2,389 |
|
|
|
1,154 |
|
| Other liabilities |
|
31,360 |
|
|
|
29,714 |
|
|
|
28,283 |
|
|
|
31,652 |
|
|
|
32,001 |
|
|
Total liabilities |
|
2,075,857 |
|
|
|
2,052,915 |
|
|
|
2,076,734 |
|
|
|
1,908,948 |
|
|
|
1,770,763 |
|
| |
|
|
|
|
|
|
|
|
|
| Stockholders’
equity: |
|
|
|
|
|
|
|
|
|
| Common stock |
|
13,181 |
|
|
|
13,181 |
|
|
|
13,180 |
|
|
|
13,156 |
|
|
|
13,101 |
|
| Surplus |
|
79,731 |
|
|
|
79,650 |
|
|
|
79,473 |
|
|
|
79,072 |
|
|
|
78,313 |
|
| Treasury stock |
|
(26,079 |
) |
|
|
(26,079 |
) |
|
|
(24,512 |
) |
|
|
(21,821 |
) |
|
|
(18,033 |
) |
| Unearned common stock held by
employee stock ownership plan |
|
(1,403 |
) |
|
|
(1,403 |
) |
|
|
(1,403 |
) |
|
|
(1,403 |
) |
|
|
(1,602 |
) |
| Retained earnings |
|
102,043 |
|
|
|
99,434 |
|
|
|
96,180 |
|
|
|
95,815 |
|
|
|
92,405 |
|
| Accumulated other
comprehensive loss |
|
(12,359 |
) |
|
|
(10,821 |
) |
|
|
(9,869 |
) |
|
|
(11,539 |
) |
|
|
(13,023 |
) |
|
Total stockholders’ equity |
|
155,114 |
|
|
|
153,962 |
|
|
|
153,049 |
|
|
|
153,280 |
|
|
|
151,161 |
|
|
Total liabilities and stockholders’ equity |
$ |
2,230,971 |
|
|
$ |
2,206,877 |
|
|
$ |
2,229,783 |
|
|
$ |
2,062,228 |
|
|
$ |
1,921,924 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MERIDIAN CORPORATION AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
INCOME AND SEGMENT INFORMATION (Unaudited)(Dollar
amounts and shares in thousands, except per share
amounts)
| |
Three Months Ended |
| |
September 30,2023 |
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
|
Interest income |
$ |
35,459 |
|
|
$ |
33,836 |
|
|
$ |
30,947 |
|
|
$ |
27,763 |
|
|
$ |
22,958 |
|
| Interest
expense |
|
18,235 |
|
|
|
16,738 |
|
|
|
13,270 |
|
|
|
9,245 |
|
|
|
4,932 |
|
| Net
interest income |
|
17,224 |
|
|
|
17,098 |
|
|
|
17,677 |
|
|
|
18,518 |
|
|
|
18,026 |
|
|
Provision for credit losses |
|
82 |
|
|
|
705 |
|
|
|
1,399 |
|
|
|
746 |
|
|
|
526 |
|
|
Non-interest income |
|
8,086 |
|
|
|
9,124 |
|
|
|
6,638 |
|
|
|
7,996 |
|
|
|
10,224 |
|
|
Non-interest expense |
|
20,018 |
|
|
|
19,615 |
|
|
|
17,789 |
|
|
|
20,047 |
|
|
|
20,261 |
|
| Income
before income tax expense |
|
5,210 |
|
|
|
5,902 |
|
|
|
5,127 |
|
|
|
5,721 |
|
|
|
7,463 |
|
| Income
tax expense |
|
1,205 |
|
|
|
1,257 |
|
|
|
1,106 |
|
|
|
1,164 |
|
|
|
1,665 |
|
| Net
Income |
$ |
4,005 |
|
|
$ |
4,645 |
|
|
$ |
4,021 |
|
|
$ |
4,557 |
|
|
$ |
5,798 |
|
| |
|
|
|
|
|
|
|
|
|
| Basic
weighted average shares outstanding |
|
11,057 |
|
|
|
11,062 |
|
|
|
11,272 |
|
|
|
11,389 |
|
|
|
11,736 |
|
| Basic
earnings per common share |
$ |
0.36 |
|
|
$ |
0.42 |
|
|
$ |
0.36 |
|
|
$ |
0.40 |
|
|
$ |
0.49 |
|
| |
|
|
|
|
|
|
|
|
|
| Diluted
weighted average shares outstanding |
|
11,363 |
|
|
|
11,304 |
|
|
|
11,656 |
|
|
|
11,795 |
|
|
|
12,118 |
|
| Diluted
earnings per common share |
$ |
0.35 |
|
|
$ |
0.41 |
|
|
$ |
0.34 |
|
|
$ |
0.39 |
|
|
$ |
0.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Segment Information |
| |
Three Months Ended
September 30, 2023 |
|
Three Months Ended
September 30, 2022 |
| (dollars in thousands) |
Bank |
|
Wealth |
|
Mortgage |
|
Total |
|
Bank |
|
Wealth |
|
Mortgage |
|
Total |
|
Net interest income |
$ |
17,205 |
|
|
$ |
(15 |
) |
|
$ |
34 |
|
|
$ |
17,224 |
|
|
$ |
17,664 |
|
|
$ |
218 |
|
|
$ |
144 |
|
|
$ |
18,026 |
|
|
Provision for credit losses |
|
82 |
|
|
|
— |
|
|
|
— |
|
|
|
82 |
|
|
|
526 |
|
|
|
— |
|
|
|
— |
|
|
|
526 |
|
| Net
interest income after provision |
|
17,123 |
|
|
|
(15 |
) |
|
|
34 |
|
|
|
17,142 |
|
|
|
17,138 |
|
|
|
218 |
|
|
|
144 |
|
|
|
17,500 |
|
|
Non-interest income |
|
1,758 |
|
|
|
1,258 |
|
|
|
5,070 |
|
|
|
8,086 |
|
|
|
1,730 |
|
|
|
1,114 |
|
|
|
7,380 |
|
|
|
10,224 |
|
|
Non-interest expense |
|
12,564 |
|
|
|
826 |
|
|
|
6,628 |
|
|
|
20,018 |
|
|
|
11,354 |
|
|
|
780 |
|
|
|
8,127 |
|
|
|
20,261 |
|
| Income
(loss) before income taxes |
$ |
6,317 |
|
|
$ |
417 |
|
|
$ |
(1,524 |
) |
|
$ |
5,210 |
|
|
$ |
7,514 |
|
|
$ |
552 |
|
|
$ |
(603 |
) |
|
$ |
7,463 |
|
|
Efficiency ratio |
|
66 |
% |
|
|
66 |
% |
|
|
130 |
% |
|
|
79 |
% |
|
|
59 |
% |
|
|
59 |
% |
|
|
108 |
% |
|
|
72 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Nine Months Ended
September 30, 2023 |
|
Nine Months Ended
September 30, 2022 |
| (dollars in thousands) |
Bank |
|
Wealth |
|
Mortgage |
|
Total |
|
Bank |
|
Wealth |
|
Mortgage |
|
Total |
| Net
interest income |
$ |
51,928 |
|
|
$ |
(12 |
) |
|
$ |
85 |
|
|
$ |
52,001 |
|
|
$ |
50,197 |
|
|
$ |
628 |
|
|
$ |
785 |
|
|
$ |
51,610 |
|
|
Provision for credit losses |
|
2,186 |
|
|
|
— |
|
|
|
— |
|
|
|
2,186 |
|
|
|
1,743 |
|
|
|
— |
|
|
|
— |
|
|
|
1,743 |
|
| Net
interest income after provision |
|
49,742 |
|
|
|
(12 |
) |
|
|
85 |
|
|
|
49,815 |
|
|
|
48,454 |
|
|
|
628 |
|
|
|
785 |
|
|
|
49,867 |
|
|
Non-interest income |
|
5,696 |
|
|
|
3,689 |
|
|
|
14,463 |
|
|
|
23,848 |
|
|
|
6,267 |
|
|
|
3,671 |
|
|
|
23,790 |
|
|
|
33,728 |
|
|
Non-interest expense |
|
35,608 |
|
|
|
2,704 |
|
|
|
19,110 |
|
|
|
57,422 |
|
|
|
32,186 |
|
|
|
2,480 |
|
|
|
26,734 |
|
|
|
61,400 |
|
| Income
(loss) before income taxes |
$ |
19,830 |
|
|
$ |
973 |
|
|
$ |
(4,562 |
) |
|
$ |
16,241 |
|
|
$ |
22,535 |
|
|
$ |
1,819 |
|
|
$ |
(2,159 |
) |
|
$ |
22,195 |
|
|
Efficiency ratio |
|
62 |
% |
|
|
74 |
% |
|
|
131 |
% |
|
|
76 |
% |
|
|
57 |
% |
|
|
58 |
% |
|
|
109 |
% |
|
|
72 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MERIDIAN CORPORATION AND
SUBSIDIARIESAPPENDIX: 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 |
| |
September 30,2023 |
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
|
Allowance for credit losses (GAAP) |
$ |
19,683 |
|
|
$ |
20,242 |
|
|
$ |
20,442 |
|
|
$ |
18,828 |
|
|
$ |
18,974 |
|
| |
|
|
|
|
|
|
|
|
|
| Loans, net of fees and costs
(GAAP) |
|
1,885,629 |
|
|
|
1,859,839 |
|
|
|
1,818,189 |
|
|
|
1,743,682 |
|
|
|
1,610,349 |
|
| Less: PPP loans |
|
(289 |
) |
|
|
(187 |
) |
|
|
(238 |
) |
|
|
(4,579 |
) |
|
|
(8,610 |
) |
| Less: Loans fair valued |
|
(13,231 |
) |
|
|
(14,403 |
) |
|
|
(14,434 |
) |
|
|
(14,502 |
) |
|
|
(14,702 |
) |
| Loans, net of fees and costs,
excluding loans at fair value and PPP loans (non-GAAP) |
$ |
1,872,109 |
|
|
$ |
1,845,249 |
|
|
$ |
1,803,517 |
|
|
$ |
1,724,601 |
|
|
$ |
1,587,037 |
|
| |
|
|
|
|
|
|
|
|
|
| Allowance for credit losses to
loans, net of fees and costs (GAAP) |
|
1.04 |
% |
|
|
1.09 |
% |
|
|
1.12 |
% |
|
|
1.08 |
% |
|
|
1.18 |
% |
| Allowance for credit losses to
loans, net of fees and costs, excluding PPP loans and loans at fair
value (non-GAAP) |
|
1.05 |
% |
|
|
1.10 |
% |
|
|
1.13 |
% |
|
|
1.09 |
% |
|
|
1.20 |
% |
| |
Tangible Common Equity Ratio Reconciliation -
Corporation |
| |
September 30,2023 |
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
|
Total stockholders' equity (GAAP) |
$ |
155,114 |
|
|
$ |
153,962 |
|
|
$ |
153,049 |
|
|
$ |
153,280 |
|
|
$ |
151,161 |
|
| Less: Goodwill and intangible
assets |
|
(3,921 |
) |
|
|
(3,972 |
) |
|
|
(4,023 |
) |
|
|
(4,074 |
) |
|
|
(4,125 |
) |
| Tangible common equity
(non-GAAP) |
|
151,193 |
|
|
|
149,990 |
|
|
|
149,026 |
|
|
|
149,206 |
|
|
|
147,036 |
|
| |
|
|
|
|
|
|
|
|
|
| Total assets (GAAP) |
|
2,230,971 |
|
|
|
2,206,877 |
|
|
|
2,229,783 |
|
|
|
2,062,228 |
|
|
|
1,921,924 |
|
| Less: Goodwill and intangible
assets |
|
(3,921 |
) |
|
|
(3,972 |
) |
|
|
(4,023 |
) |
|
|
(4,074 |
) |
|
|
(4,125 |
) |
| Tangible assets
(non-GAAP) |
$ |
2,227,050 |
|
|
$ |
2,202,905 |
|
|
$ |
2,225,760 |
|
|
$ |
2,058,154 |
|
|
$ |
1,917,799 |
|
| Tangible common equity to
tangible assets ratio - Corporation (non-GAAP) |
|
6.79 |
% |
|
|
6.81 |
% |
|
|
6.70 |
% |
|
|
7.25 |
% |
|
|
7.67 |
% |
| |
Tangible Common Equity Ratio Reconciliation -
Bank |
| |
September 30,2023 |
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
|
Total stockholders' equity (GAAP) |
$ |
201,996 |
|
|
$ |
192,209 |
|
|
$ |
187,954 |
|
|
$ |
185,039 |
|
|
$ |
188,386 |
|
| Less: Goodwill and intangible
assets |
|
(3,921 |
) |
|
|
(3,972 |
) |
|
|
(4,023 |
) |
|
|
(4,074 |
) |
|
|
(4,125 |
) |
| Tangible common equity
(non-GAAP) |
|
198,075 |
|
|
|
188,237 |
|
|
|
183,931 |
|
|
|
180,965 |
|
|
|
184,261 |
|
| |
|
|
|
|
|
|
|
|
|
| Total assets (GAAP) |
|
2,232,297 |
|
|
|
2,208,252 |
|
|
|
2,229,721 |
|
|
|
2,059,557 |
|
|
|
1,921,714 |
|
| Less: Goodwill and intangible
assets |
|
(3,921 |
) |
|
|
(3,972 |
) |
|
|
(4,023 |
) |
|
|
(4,074 |
) |
|
|
(4,125 |
) |
| Tangible assets
(non-GAAP) |
$ |
2,228,376 |
|
|
$ |
2,204,280 |
|
|
$ |
2,225,698 |
|
|
$ |
2,055,483 |
|
|
$ |
1,917,589 |
|
| Tangible common equity to
tangible assets ratio - Bank (non-GAAP) |
|
8.89 |
% |
|
|
8.54 |
% |
|
|
8.26 |
% |
|
|
8.80 |
% |
|
|
9.61 |
% |
| |
|
|
|
|
|
|
|
|
|
| |
Tangible Book Value Reconciliation |
| |
September 30,2023 |
|
June 30,2023 |
|
March 31,2023 |
|
December 31,2022 |
|
September 30,2022 |
| Book value per common
share |
$ |
13.88 |
|
|
$ |
13.77 |
|
|
$ |
13.54 |
|
|
$ |
13.37 |
|
|
$ |
12.93 |
|
| Less: Impact of goodwill
/intangible assets |
|
0.35 |
|
|
|
0.35 |
|
|
|
0.36 |
|
|
|
0.36 |
|
|
|
0.35 |
|
| Tangible book value per common
share |
$ |
13.53 |
|
|
$ |
13.42 |
|
|
$ |
13.18 |
|
|
$ |
13.01 |
|
|
$ |
12.58 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Meridian (NASDAQ:MRBK)
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