Meridian Corp0001750735false00017507352023-10-272023-10-27

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
October 27, 2023
Date of Report (Date of earliest event reported)
Image_0.jpg
(Exact name of registrant as specified in its charter)
Pennsylvania 000-55983 83-1561918
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Ident. No.)
     
9 Old Lincoln Highway, Malvern, Pennsylvania
 19355
(Address of principal executive offices) (Zip Code)
 
(484) 568-5000
Registrant’s telephone number, including area code
 
Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Securities registered pursuant to Section 12(b) of the Act:
Title of each class:
    Trading Symbol(s)    Name of each exchange on which registered:
Common Stock, $1 par value
MRBKThe NASDAQ Stock Market




Item 2.02.            Results of Operations and Financial Condition.
On October 27, 2023 Meridian Corporation issued a press release discussing the Corporation’s Third Quarter 2023 Results. A copy is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information in this Current Report on Form 8-K, including Exhibit 99.1 attached hereto and incorporated by reference into Item 2.02 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities under that Section. Furthermore, such information, including the exhibit attached hereto, shall not be deemed incorporated by reference into any of the Corporation’s reports or filings with the SEC under the Securities Exchange Act of 1933, as amended (the "Securities Act"), or the Exchange Act, whether made before or after the date hereof, except as expressly set forth by specific reference in such report or filing. The information in this Current Report on Form 8-K, including the exhibit attached hereto, shall not be deemed an admission as to the materiality of any information in this Current Report on Form 8-K that is required to be disclosed solely to satisfy the requirements of Regulation FD.
Item 8.01.            Other Events.
Quarterly Dividend
On October 26, 2023, Meridian Corporation’s 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.
Item 9.01.            Financial Statements and Exhibits.
(d)    Exhibits. The following exhibit is furnished herewith:
99.1 Press Release, issued October 27, 2023




EXHIBIT INDEX
Exhibit No. Description of Exhibit
   
 
104Cover Page Interactive Data File (embedded within the Inline XBRL document)




SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
MERIDIAN CORPORATION
(Registrant)
   
Dated:  October 27, 2023
  
   
 By:/s/  Denise Lindsay 
   Denise Lindsay
   Executive Vice President and Chief Financial Officer
   


Exhibit 99.1

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Meridian Corporation Reports Third Quarter 2023 Results and Announces a Quarterly Dividend of $0.125 per Common Share.
MALVERN, PA., October 27, 2023 — 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."





















1
Exhibit 99.1
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 share0.36 0.42 0.36 0.40 0.49 
Diluted earnings per common share0.35 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 deposits1,808,645 1,782,605 1,770,413 1,712,479 1,673,553 
Non-interest bearing deposits244,668 269,174 262,636 301,727 290,169 
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 assets2,086,331 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 deposits1,782,140 1,775,444 1,759,571 1,698,597 1,597,648 
Non-interest bearing deposits253,485 266,675 296,037 312,297 295,975 
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.

2
Exhibit 99.1

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% ChangeChange due to rateChange due to volume
Interest income:
Due from banks$244 $275 $(31)(11.3)%$25 $(56)
Federal funds sold1 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 sale456 407 49 12.0 %40 9 
Loans held for investment (1)
33,526 31,810 1,716 5.4 %1,213 503 
Total loans33,982 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 deposits6,755 5,371 1,384 25.8 %796 588 
Time deposits7,300 6,812 488 7.2 %537 (49)
Total deposits15,543 14,023 1,520 10.8 %1,375 145 
Borrowings2,086 2,129 (43)(2.0)%(103)60 
Subordinated debentures606 586 20 3.4 %6 14 
Total interest expense18,235 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.



3
Exhibit 99.1
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 income1,258 1,235 23 1.9 %
SBA loan income982 1,767 (785)(44.4)%
Earnings on investment in life insurance201 193 8 4.1 %
Net change in the fair value of derivative instruments103 183 (80)(43.7)%
Net change in the fair value of loans held-for-sale111 (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 activity82 (1)83 (8300.0)%
Net loss on sale of investment securities available-for-sale(3)(54)51 (94.4)%
Other1,103 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 equipment1,226 1,140 86 7.5 %
Professional fees1,104 1,004 100 10.0 %
Advertising and promotion848 1,091 (243)(22.3)%
Data processing and software1,652 1,681 (29)(1.7)%
Pennsylvania bank shares tax244 245 (1)(0.4)%
Other2,524 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.

4
Exhibit 99.1
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.
5
Exhibit 99.1

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.
6
Exhibit 99.1
MERIDIAN CORPORATION AND SUBSIDIARIES
FINANCIAL 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 outstanding11,178 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 funds3.63 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 loans0.05 %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 assets6.95 %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 - Corporation7.52 7.46 7.65 8.13 8.54 
Tier 1 leverage ratio - Bank9.65 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 - Bank10.82 10.35 10.27 10.73 11.44 
Tier 1 risk-based capital ratio - Corporation8.43 8.38 8.44 8.77 9.28 
Tier 1 risk-based capital ratio - Bank10.82 10.35 10.27 10.73 11.44 
Total risk-based capital ratio - Corporation11.96 11.49 11.63 12.05 12.80 
Total risk-based capital ratio - Bank11.85 %11.43 %11.41 %11.87 %12.70 %
(1) See Non-GAAP reconciliation in the Appendix
7
Exhibit 99.1
MERIDIAN CORPORATION AND SUBSIDIARIES
CONDENSED 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 - taxable901 992 648 2,853 1,599 
Securities - tax-exempt333 351 369 1,038 1,015 
Cash and cash equivalents245 278 93 741 157 
Total interest income35,459 33,836 22,958 100,244 60,958 
Interest expense:
Deposits15,543 14,023 4,075 41,013 7,182 
Borrowings2,692 2,715 857 7,230 2,166 
       Total interest expense18,235 16,738 4,932 48,243 9,348 
Net interest income17,224 17,098 18,026 52,001 51,610 
Provision for credit losses82 705 526 2,186 1,743 
Net interest income after provision for credit losses17,142 16,393 17,500 49,815 49,867 
Non-interest income:
Mortgage banking income4,819 5,050 7,329 13,143 21,367 
Wealth management income1,258 1,235 1,114 3,689 3,672 
SBA loan income982 1,767 989 3,463 3,946 
Earnings on investment in life insurance201 193 138 585 413 
Net change in the fair value of derivative instruments103 183 127 217 (713)
Net change in the fair value of loans held-for-sale111 (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 activity82 (1)399 81 4,941 
Net loss on sale of investment securities available-for-sale(3)(54)— (58)— 
Other1,103 1,169 1,251 3,489 3,695 
Total non-interest income8,086 9,124 10,224 23,848 33,728 
Non-interest expense:
Salaries and employee benefits12,420 12,152 13,360 35,633 41,585 
Occupancy and equipment1,226 1,140 1,191 3,610 3,619 
Professional fees1,104 1,004 899 2,930 2,659 
Advertising and promotion848 1,091 1,165 2,799 3,340 
Data processing and software1,652 1,681 1,442 4,764 3,939 
Pennsylvania bank shares tax244 245 202 735 612 
Other2,524 2,302 2,002 6,951 5,646 
Total non-interest expense20,018 19,615 20,261 57,422 61,400 
        Income before income taxes5,210 5,902 7,463 16,241 22,195 
Income tax expense1,205 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 outstanding11,057 11,062 11,736 11,130 11,928 
Diluted weighted average shares outstanding11,363 11,304 12,118 11,449 12,344 
8
Exhibit 99.1
MERIDIAN CORPORATION AND SUBSIDIARIES
CONDENSED 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 banks46,022 36,290 100,030 27,092 20,774 
Cash and cash equivalents59,759 46,866 108,503 38,391 32,888 
Securities available-for-sale, at fair value122,218 126,668 142,933 135,346 127,999 
Securities held-to-maturity, at amortized cost36,232 36,463 36,525 37,479 37,922 
Equity investments2,019 2,097 2,110 2,086 2,092 
Mortgage loans held for sale, at fair value23,144 40,422 35,701 22,243 33,800 
Loans and other finance receivables, net of fees and costs1,885,629 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 losses1,865,946 1,839,597 1,797,747 1,724,854 1,591,375 
Restricted investment in bank stock8,309 9,157 10,173 6,931 5,217 
Bank premises and equipment, net13,310 13,234 13,281 13,349 12,835 
Bank owned life insurance28,641 28,440 28,247 28,055 22,916 
Accrued interest receivable8,984 7,651 7,651 7,363 6,008 
Other real estate owned1,703 1,703 1,703 1,703 — 
Deferred income taxes4,993 4,258 4,017 3,936 5,722 
Servicing assets11,835 12,193 12,125 12,346 12,807 
Goodwill899 899 899 899 899 
Intangible assets3,022 3,073 3,124 3,175 3,226 
Other assets39,957 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 checking156,537 155,907 232,616 219,838 236,562 
Money market and savings deposits746,599 710,546 647,904 697,564 709,127 
Time deposits660,841 646,978 627,257 493,350 437,695 
Total interest-bearing deposits1,563,977 1,513,431 1,507,777 1,410,752 1,383,384 
Total deposits1,808,645 1,782,605 1,770,413 1,712,479 1,673,553 
Borrowings177,959 194,636 233,883 122,082 23,458 
Subordinated debentures50,079 40,348 40,319 40,346 40,597 
Accrued interest payable7,814 5,612 3,836 2,389 1,154 
Other liabilities31,360 29,714 28,283 31,652 32,001 
Total liabilities2,075,857 2,052,915 2,076,734 1,908,948 1,770,763 
Stockholders’ equity:
Common stock13,181 13,181 13,180 13,156 13,101 
Surplus79,731 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 earnings102,043 99,434 96,180 95,815 92,405 
Accumulated other comprehensive loss(12,359)(10,821)(9,869)(11,539)(13,023)
Total stockholders’ equity155,114 153,962 153,049 153,280 151,161 
Total liabilities and stockholders’ equity$2,230,971 $2,206,877 $2,229,783 $2,062,228 $1,921,924 
9
Exhibit 99.1
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
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 expense18,235 16,738 13,270 9,245 4,932 
Net interest income17,224 17,098 17,677 18,518 18,026 
Provision for credit losses
82 705 1,399 746 526 
Non-interest income8,086 9,124 6,638 7,996 10,224 
Non-interest expense20,018 19,615 17,789 20,047 20,261 
Income before income tax expense5,210 5,902 5,127 5,721 7,463 
Income tax expense1,205 1,257 1,106 1,164 1,665 
Net Income$4,005 $4,645 $4,021 $4,557 $5,798 
Basic weighted average shares outstanding11,057 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 outstanding11,363 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)BankWealthMortgageTotalBankWealthMortgageTotal
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 income1,758 1,258 5,070 8,086 1,730 1,114 7,380 10,224 
Non-interest expense12,564 826 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 ratio66 %66 %130 %79 %59 %59 %108 %72 %
Nine Months Ended September 30, 2023
Nine Months Ended September 30, 2022
(dollars in thousands)BankWealthMortgageTotalBankWealthMortgageTotal
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 income5,696 3,689 14,463 23,848 6,267 3,671 23,790 33,728 
Non-interest expense35,608 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 ratio62 %74 %131 %76 %57 %58 %109 %72 %

10

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
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 %
11

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 assets0.35 0.35 0.36 0.36 0.35 
Tangible book value per common share$13.53 $13.42 $13.18 $13.01 $12.58 
12
v3.23.3
Cover
Oct. 27, 2023
Cover [Abstract]  
Document Type 8-K
Document Period End Date Oct. 27, 2023
Entity Registrant Name Meridian Corp
Entity Incorporation, State or Country Code PA
Entity File Number 000-55983
Entity Tax Identification Number 83-1561918
Entity Address, Address Line One 9 Old Lincoln Highway, Malvern, Pennsylvania
Entity Address, City or Town Malvern
Entity Address, State or Province PA
Entity Address, Postal Zip Code 19355
City Area Code (484) 568-5000Registrant’s telephone number, including area code
Local Phone Number (484) 568-5000Registrant’s telephone number, including area code
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Title of 12(b) Security Common Stock, $1 par value
Trading Symbol MRBK
Security Exchange Name NASDAQ
Entity Central Index Key 0001750735
Amendment Flag false
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