• Meridian Corporation Reports Third Quarter 2024 Results and Announces a Quarterly Dividend of $0.125 per Common Share

    Source: Nasdaq GlobeNewswire / 24 Oct 2024 18:42:37   America/New_York

    MALVERN, Pa., Oct. 24, 2024 (GLOBE NEWSWIRE) -- Meridian Corporation (Nasdaq: MRBK) today reported:

     Three Months Ended
    (Dollars in thousands, except per share data) (Unaudited)September 30,
    2024    		 June 30,
    2024    		 September 30,
    2023
    Income:     
    Net income$4,743 $3,326 $4,005
    Diluted earnings per common share$0.42 $0.30 $0.35
    Pre-tax, pre-provision income (1)$8,527 $7,072 $5,292
    (1) See Non-GAAP reconciliation in the Appendix     
          
    • Net income for the quarter ended September 30, 2024 was $4.7 million and pre-tax, pre-provision income was $8.5 million1.
    • Return on average assets and return on average equity for the third quarter of 2024 were 0.80% and 11.41%, respectively.
    • Net interest margin was 3.20% for the third quarter of 2024, with a loan yield of 7.41%.
    • Total assets at September 30, 2024 were $2.4 billion, compared to $2.4 billion at June 30, 2024 and $2.2 billion at September 30, 2023.
    • Commercial loans, excluding leases, increased $30.0 million, or 2% for the quarter and $158.0 million, or 11% year over year.
    • Third quarter deposit growth was $63.5 million, or 3%, and $170.3 million, or 9.4% year over year.
    • Non-interest-bearing deposits were up $13.2 million or 6%, quarter over quarter.
    • On October 22, 2024, the Board of Directors declared a quarterly cash dividend of $0.125 per common share, payable November 19, 2024 to shareholders of record as of November 12, 2024.

    Christopher J. Annas, Chairman and CEO commented:

    “Our third quarter earnings showed significant improvement from the second quarter, increasing by 42.6% to $4.7 million, or $0.42 per share. Key highlights include an improving net interest margin at 3.20% for the quarter, and strong results from our wealth and mortgage segments. Robust loan growth of 7.2% for the first nine months of the year reflects our strong sales culture and healthy economic conditions in our primary market areas.  We have great systems for lenders to be more effective, and that same technology for our customers to bank entirely online, which leads to better efficiencies. Deposit growth is consistent, and we are evaluating deposit-rich segments to accelerate growth that is less reliant on branch networks.

    Our wealth segment is benefiting from local disruption and the cross-selling from our commercial/industrial and CRE lending units. A recent hire from a large local bank has accelerated growth and has a pipeline for adding advisors. The mortgage segment has recovered from the rate shock, and despite a continued lack of homes for sale, is hitting volume levels similar to pre-2019. The hard decisions made to cut back expenses and reposition the business are paying off. And if mortgage rates fall in 2025, there are many refinance opportunities.  

    Since starting the bank in 2004, Meridian has built a great reputation for responsiveness and consistency. The business community heavily relies on these qualities in a bank to build and grow themselves. We are the go-to bank in the Philadelphia metro market, and in a great position to build ever larger market share."

    Select Condensed Financial Information

     As of or for the quarter ended (Unaudited)
     September 30, 
    2024    		 June 30, 
    2024    		 March 31, 
    2024    		 December 31, 
    2023    		 September 30, 
    2023
     (Dollars in thousands, except per share data)
    Income:         
    Net income$4,743  $3,326  $2,676  $571  $4,005 
    Basic earnings per common share 0.43   0.30   0.24   0.05   0.36 
    Diluted earnings per common share 0.42   0.30   0.24   0.05   0.35 
    Net interest income 18,242   16,846   16,609   16,942   17,224 
              
    Balance Sheet:         
    Total assets$2,387,721  $2,351,584  $2,292,923  $2,246,193  $2,230,971 
    Loans, net of fees and costs 2,008,396   1,988,535   1,956,315   1,895,806   1,885,629 
    Total deposits 1,978,927   1,915,436   1,900,696   1,823,462   1,808,645 
    Non-interest bearing deposits 237,207   224,040   220,581   239,289   244,668 
    Stockholders' equity 167,450   162,382   159,936   158,022   155,114 
              
    Balance Sheet Average Balances:         
    Total assets$2,373,261  $2,319,295  $2,269,047  $2,219,340  $2,184,385 
    Total interest earning assets 2,277,523   2,222,177   2,173,212   2,121,068   2,086,331 
    Loans, net of fees and costs 1,997,574   1,972,740   1,944,187   1,891,170   1,876,648 
    Total deposits 1,960,145   1,919,954   1,823,523   1,820,532   1,782,140 
    Non-interest bearing deposits 246,310   229,040   233,255   254,025   253,485 
    Stockholders' equity 165,309   162,119   159,822   157,210   156,271 
              
    Performance Ratios (Annualized):         
    Return on average assets 0.80%  0.58%  0.47%  0.10%  0.73%
    Return on average equity 11.41%  8.25%  6.73%  1.44%  10.17%
                        

    Income Statement - Third Quarter 2024 Compared to Second Quarter 2024

    Third quarter net income increased $1.4 million, or 42.6%, to $4.7 million led by increased net interest income and a lower quarterly provision for credit losses, combined with an increase in net operating income from the mortgage division.  Net interest income increased $1.4 million, or 8.3%, as the increase in interest income out-paced the increase in interest expense. Non-interest income increased $1.6 million or 17.2%, reflecting higher levels of mortgage banking income and an improvement in fair value changes of the pipeline as well as fair valued portfolio loans.  Non-interest expense increased $1.5 million, or 8.0%, due primarily to an increase in salaries and employee benefits expense, professional fees and other expense.  These increases were partially offset by a decrease in advertising and promotion expense. 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,
    2024    		 June 30,
    2024    		 $ Change % Change Change due
    to rate    		 Change due
    to volume
    Interest income:           
    Cash and cash equivalents$416 $331 $85  25.7% $3  $82 
    Investment securities - taxable 1,480  1,324  156  11.8%  28   128 
    Investment securities - tax exempt (1) 397  403  (6) (1.5)%  (3)  (3)
    Loans held for sale 766  572  194  33.9%  (5)  199 
    Loans held for investment (1) 37,339  35,916  1,423  4.0%  967   456 
    Total loans 38,105  36,488  1,617  4.4%  962   655 
    Total interest income$40,398 $38,546 $1,852  4.8% $990  $862 
    Interest expense:           
    Interest-bearing demand deposits$1,390 $1,279 $111  8.7% $118  $(7)
    Money market and savings deposits 8,391  8,265  126  1.5%  (494)  620 
    Time deposits 9,532  9,447  85  0.9%  (406)  491 
    Total interest - bearing deposits 19,313  18,991  322  1.7%  (782)  1,104 
    Borrowings 1,985  1,851  134  7.2%  21   113 
    Subordinated debentures 779  777  2  0.3%  —   2 
    Total interest expense 22,077  21,619  458  2.1%  (761)  1,219 
    Net interest income differential$18,321 $16,927 $1,394  8.24% $1,751  $(357)
    (1) Reflected on a tax-equivalent basis.          
               

    Interest income increased $1.9 million quarter-over-quarter on a tax equivalent basis, driven by the level of average earning assets which increased by $55.3 million contributing $862 thousand to the interest income increase. In addition, the yield on earnings assets increased 8 basis points during the period.

    Average total loans, excluding residential loans for sale, increased $25.0 million resulting in an increase due to volume in interest income of $456 thousand. The largest drivers of this increase were commercial, commercial real estate, and small business loans which on a combined basis increased $34.4 million on average, partially offset by a decrease in average leases of $11.6 million. Home equity, residential real estate, consumer and other loans held in portfolio increased on a combined basis $2.1 million on average.  The yield on total loans increased 10 basis points, helped by loan fees of $509 thousand, and the yield on cash and investments increased 3 basis points on a combined basis. 

    Total interest expense increased $458 thousand, quarter-over-quarter, due to higher levels of deposits, particularly money market and time deposits having a bigger impact than rate changes. Interest expense on total deposits increased $322 thousand and interest expense on borrowings increased $134 thousand. During the period, money market accounts and time deposits increased $15.1 million and $8.6 million on average, respectively, while interest-bearing demand deposits decreased $640 thousand on average. Borrowings increased $9.1 million on average. Overall increase in interest expense on deposits due to volume changes was $1.1 million. 

    The cost of interest-bearing deposits decreased 3 basis points driven by certain money market funds and wholesale time deposits which repriced at lower costs. The total decrease in interest expense on deposits attributable to rate changes was $782 thousand. Overall the net interest margin increased 14 basis points to 3.20% as the yield on earning assets improved, the cost of funds declined and non-interest bearing balances increased $18.7 million on average.

    Provision for Credit Losses

    The overall provision for credit losses for the third quarter decreased $398 thousand to $2.3 million, from $2.7 million in the second quarter.  The provision for funded loans decreased $670 thousand and the provision on unfunded loan commitments increased $272 thousand during the current quarter.  The third quarter provision for funded loans of $2.0 million declined from the prior quarter due largely to a decrease of $1.9 million in net charge-offs and was positively impacted by favorable changes in certain portfolio baseline loss rates.

    Non-interest income

    The following table presents the components of non-interest income for the periods indicated:

     Quarter Ended    
    (Dollars in thousands)September 30, 
    2024    		 June 30, 
    2024    		 $ Change % Change
    Mortgage banking income$6,474  $5,420  $1,054  19.4%
    Wealth management income 1,447   1,444   3  0.2%
    SBA loan income 544   785   (241) (30.7)%
    Earnings on investment in life insurance 222   215   7  3.3%
    Net change in the fair value of derivative instruments (102)  203   (305) (150.2)%
    Net change in the fair value of loans held-for-sale 169   (29)  198  (682.8)%
    Net change in the fair value of loans held-for-investment 965   (24)  989  (4120.8)%
    Net loss (gain) on hedging activity (197)  (63)  (134) 212.7%
    Net loss on sale of investment securities available-for-sale (57)  —   (57) (100.0)%
    Other 1,366   1,293   73  5.6%
    Total non-interest income$10,831  $9,244  $1,587  17.2%
                   

    Total non-interest income increased $1.6 million, or 17.2%, quarter-over-quarter as mortgage banking income increased $1.1 million, or 19.4%. Mortgage loan sales increased $47.8 million or 24.1% quarter over quarter driving higher gain on sale income at a slightly higher margin.  SBA and other income decreased $168 thousand combined due largely to lower levels of SBA loan sales.  SBA loans sold for the quarter-ended September 30, 2024 totaled $11.9 million, down $246 thousand, or 2.0%, compared to the quarter-ended June 30, 2024. The gross margin on SBA sales was 7.9% for the quarter, down from 8.8% for the previous quarter. 

    Non-interest expense

    The following table presents the components of non-interest expense for the periods indicated:

     Quarter Ended    
    (Dollars in thousands)September 30, 
    2024    		 June 30, 
    2024    		 $ Change % Change
    Salaries and employee benefits$             12,829 $             11,437 $                1,392  12.2%
    Occupancy and equipment                   1,243                    1,230                         13  1.1%
    Professional fees                   1,106                    1,029                         77  7.5%
    Data processing and software                   1,553                    1,506                         47  3.1%
    Advertising and promotion                      717                       989                     (272) (27.5)%
    Pennsylvania bank shares tax                      181                       274                        (93) (33.9)%
    Other                   2,917                    2,553                       365  14.3%
    Total non-interest expense$             20,546 $             19,018 $                1,528  8.0%
                 

    Salaries and employee benefits increased $1.4 million overall, with bank and wealth segments combined having increased $588 thousand, and the mortgage segment increased $804 thousand.  Mortgage segment salaries, commissions, and employee benefits are impacted by volume and therefore increased as originations increased $17.2 million over the prior quarter.

    Professional fees increased $77 thousand during the current quarter due to an increased level of legal expense related to non-performing assets.  Advertising and promotion expense decreased $272 thousand from the prior quarter as a result of a seasonal decrease in business development expenses.  Other expense increased $365 thousand from the prior quarter due to an increase in employee travel and trainings, combined with an increase in loan fees.

    Balance Sheet - September 30, 2024 Compared to June 30, 2024

    Total assets increased $36.1 million, or 1.5%, to $2.4 billion as of September 30, 2024 from $2.4 billion at June 30, 2024. This increase was driven by strong loan growth and an increase in investments.  Interest-bearing cash increased $4.2 million, or 26.9%, to $19.8 million as of September 30, 2024, from June 30, 2024.

    Portfolio loan growth was $20.3 million, or 1.0% quarter-over-quarter.  The portfolio growth was generated from commercial mortgage loans which increased $25.6 million, or 3.3%, commercial & industrial loans which increased $11.4 million, or 3.2%, and small business loans which increased $5.0 million despite the sale of $11.9 million in small business loan during the quarter.  Lease financings decreased $10.9 million, or 11.2% from June 30, 2024, partially offsetting the above noted loan growth, but this decline was expected as we continue to refocus away from lease originations. Other assets increased by $7.1 million quarter-over-quarter, due largely to certain SBA loan sales that settled after quarter-end. 

    Total deposits increased $63.5 million, or 3.3% quarter-over-quarter, due largely to higher levels of money market accounts and time deposits to a lesser degree.  Money market accounts and savings accounts increased a combined $35.4 million, while time deposits increased $11.6 million from largely wholesale efforts, and interest bearing demand deposits increased $3.4 million.  Non-interest bearing deposits increased $13.2 million. Overall borrowings decreased $42.4 million, or 22.6% quarter-over-quarter.

    Total stockholders’ equity increased by $5.1 million from June 30, 2024, to $167.5 million as of September 30, 2024.  Changes to equity for the current quarter included net income of $4.7 million, less dividends paid of $1.4 million, plus an increase of $1.3 million in other comprehensive income due to the positive impact that declining interest rate environment had on the investment portfolio.  The Community Bank Leverage Ratio for the Bank was 9.32% at September 30, 2024.

    Asset Quality Summary

    Non-performing loans increased $7.5 million to $45.1 million at September 30, 2024 compared to $37.6 million at June 30, 2024. As a result of the increase, the ratio of non-performing loans to total loans increased to 2.20% as of September 30, 2024, from 1.84% as of June 30, 2024, and the ratio of non-performing assets to total assets increased to 1.97% as of September 30, 2024, compared to 1.68% as of June 30, 2024. The increase in non-performing assets was led by a $4.2 million increase in non-performing residential mortgage loans and a $1.8 million increase in non-performing commercial loans as the bank repurchased at a discount of $574 thousand, the remaining balance of a commercial loan participation to another bank. The impact of this loan repurchase increased the balance of non-performing loans by $2.1 million and also increased the ACL by the amount of the discount. 

    Meridian realized net charge-offs of 0.11% of total average loans for the quarter ended September 30, 2024, down from 0.20% for the quarter ended June 30, 2024.  Net charge-offs decreased to $2.3 million for the quarter ended September 30, 2024, compared to net charge-offs of $4.1 million for the quarter ended June 30, 2024.  Third quarter charge-offs were comprised of $1.2 million from small ticket equipment leases which are charged-off after becoming more than 120 days past due, and $1.1 million in SBA loans.  Overall there were recoveries of $153 thousand, largely related to leases and small business loans.

    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 1.10% as of September 30, 2024, consistent with the coverage ratio of 1.10% as of June 30, 2024.  As of September 30, 2024 there were specific reserves of $6.8 million against individually evaluated loans, a decrease of $394 thousand from $7.2 million in specific reserves as of June 30, 2024.  The specific reserve decline over the prior quarter was the result of a drop in SBA loan related reserves driven by charge-offs during the current quarter, partially offset by an increase in specific reserve as the result of repurchasing a commercial loan participation from another bank as discussed above.

    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 17 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, 2023 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
     September 30, 
    2024    		 June 30, 
    2024    		 March 31, 
    2024    		 December 31, 
    2023    		 September 30, 
    2023
    Earnings and Per Share Data:         
    Net income$4,743  $3,326  $2,676  $571  $4,005 
    Basic earnings per common share$0.43  $0.30  $0.24  $0.05  $0.36 
    Diluted earnings per common share$0.42  $0.30  $0.24  $0.05  $0.35 
    Common shares outstanding 11,229   11,191   11,186   11,183   11,178 
              
    Performance Ratios:         
    Return on average assets (2) 0.80%  0.58%  0.47%  0.10%  0.73%
    Return on average equity (2) 11.41   8.25   6.73   1.44   10.17 
    Net interest margin (tax-equivalent) (2) 3.20   3.06   3.09   3.18   3.29 
    Yield on earning assets (tax-equivalent) (2) 7.06   6.98   6.90   6.81   6.76 
    Cost of funds (2) 4.05   4.10   4.00   3.81   3.63 
    Efficiency ratio 70.67%  72.89%  73.90%  78.63%  79.09%
              
    Asset Quality Ratios:         
    Net charge-offs (recoveries) to average loans 0.11%  0.20%  0.12%  0.11%  0.05%
    Non-performing loans to total loans 2.20   1.84   1.93   1.76   1.53 
    Non-performing assets to total assets 1.97   1.68   1.74   1.58   1.38 
    Allowance for credit losses to:         
    Total loans and other finance receivables 1.09   1.09   1.18   1.17   1.04 
    Total loans and other finance receivables (excluding loans at fair value) (1) 1.10   1.10   1.19   1.17   1.05 
    Non-performing loans 48.66%  57.66%  60.59%  65.48%  67.61%
              
    Capital Ratios:         
    Book value per common share$14.91  $14.51  $14.30  $14.13  $13.88 
    Tangible book value per common share$14.58  $14.17  $13.96  $13.78  $13.53 
    Total equity/Total assets 7.01%  6.91%  6.98%  7.04%  6.95%
    Tangible common equity/Tangible assets - Corporation (1) 6.87   6.76   6.82   6.87   6.79 
    Tangible common equity/Tangible assets - Bank (1) 8.95   8.85   8.93   8.94   8.89 
    Tier 1 leverage ratio - Bank 9.32   9.33   9.42   9.46   9.65 
    Common tier 1 risk-based capital ratio - Bank 10.17   9.84   9.87   10.10   10.82 
    Tier 1 risk-based capital ratio - Bank 10.17   9.84   9.87   10.10   10.82 
    Total risk-based capital ratio - Bank 11.22%  10.84%  10.95%  11.17%  11.85%
    (1) See Non-GAAP reconciliation in the Appendix        
    (2) Annualized         
              


    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, 
    2024    		 June 30, 
    2024    		 September 30, 
    2023    		 September 30, 
    2024    		 September 30, 
    2023
    Interest income:         
    Loans and other finance receivables, including fees$38,103  $36,486  $33,980  $109,928  $95,612 
    Securities - taxable 1,480   1,324   901   4,055   2,853 
    Securities - tax-exempt 320   324   333   969   1,038 
    Cash and cash equivalents 416   331   245   1,047   741 
    Total interest income 40,319   38,465   35,459   115,999   100,244 
    Interest expense:         
    Deposits 19,313   18,991   15,543   55,696   41,013 
    Borrowings and subordinated debentures 2,764   2,628   2,692   8,606   7,230 
    Total interest expense 22,077   21,619   18,235   64,302   48,243 
    Net interest income 18,242   16,846   17,224   51,697   52,001 
    Provision for credit losses 2,282   2,680   82   7,828   2,186 
    Net interest income after provision for credit losses 15,960   14,166   17,142   43,869   49,815 
    Non-interest income:         
    Mortgage banking income 6,474   5,420   4,819   15,528   13,143 
    Wealth management income 1,447   1,444   1,258   4,208   3,689 
    SBA loan income 544   785   982   2,315   3,463 
    Earnings on investment in life insurance 222   215   201   644   585 
    Net change in the fair value of derivative instruments (102)  203   103   176   217 
    Net change in the fair value of loans held-for-sale 169   (29)  111   138   (88)
    Net change in the fair value of loans held-for-investment 965   (24)  (570)  766   (673)
    Net loss (gain) on hedging activity (197)  (63)  82   (279)  81 
    Net loss on sale of investment securities available-for-sale (57)  —   (3)  (57)  (58)
    Other 1,366   1,293   1,103   4,620   3,489 
    Total non-interest income 10,831   9,244   8,086   28,059   23,848 
    Non-interest expense:         
    Salaries and employee benefits 12,829   11,437   12,420   34,839   35,633 
    Occupancy and equipment 1,243   1,230   1,226   3,706   3,610 
    Professional fees 1,106   1,029   1,104   3,633   2,930 
    Data processing and software 1,553   1,506   1,652   4,591   4,764 
    Advertising and promotion 717   989   848   2,454   2,799 
    Pennsylvania bank shares tax 181   274   244   729   735 
    Other 2,917   2,553   2,524   7,786   6,951 
    Total non-interest expense 20,546   19,018   20,018   57,738   57,422 
    Income before income taxes 6,245   4,392   5,210   14,190   16,241 
    Income tax expense 1,502   1,066   1,205   3,445   3,568 
    Net income$4,743  $3,326  $4,005  $10,745  $12,673 
              
    Basic earnings per common share$0.43  $0.30  $0.36  $0.97  $1.14 
    Diluted earnings per common share$0.42  $0.30  $0.35  $0.96  $1.11 
              
    Basic weighted average shares outstanding 11,110   11,096   11,058   11,098   11,129 
    Diluted weighted average shares outstanding 11,234   11,150   11,363   11,198   11,449 
                        


    MERIDIAN CORPORATION AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF CONDITION (Unaudited)
    (Dollar amounts and shares in thousands, except per share amounts)
              
     September 30, 
    2024    		 June 30, 
    2024    		 March 31, 
    2024    		 December 31, 
    2023    		 September 30, 
    2023
    Assets:         
    Cash and due from banks$12,542  $8,457  $8,935  $10,067  $12,734 
    Interest-bearing deposits at other banks 19,805   15,601   14,092   46,630   47,025 
    Cash and cash equivalents 32,347   24,058   23,027   56,697   59,759 
    Securities available-for-sale, at fair value 171,568   159,141   150,996   146,019   122,218 
    Securities held-to-maturity, at amortized cost 33,833   35,089   35,157   35,781   36,232 
    Equity investments 2,166   2,088   2,092   2,121   2,019 
    Mortgage loans held for sale, at fair value 46,602   54,278   29,124   24,816   23,144 
    Loans and other finance receivables, net of fees and costs 2,008,396   1,988,535   1,956,315   1,895,806   1,885,629 
    Allowance for credit losses (21,965)  (21,703)  (23,171)  (22,107)  (19,683)
    Loans and other finance receivables, net of the allowance for credit losses 1,986,431   1,966,832   1,933,144   1,873,699   1,865,946 
    Restricted investment in bank stock 8,542   10,044   8,560   8,072   8,309 
    Bank premises and equipment, net 12,807   13,114   13,451   13,557   13,310 
    Bank owned life insurance 29,489   29,267   29,051   28,844   28,641 
    Accrued interest receivable 10,012   9,973   9,864   9,325   8,984 
    Other real estate owned 1,862   1,862   1,703   1,703   1,703 
    Deferred income taxes 3,537   3,950   4,339   4,201   4,993 
    Servicing assets 4,364   11,341   11,573   11,748   11,835 
    Servicing assets held for sale 6,609   —   —   —   — 
    Goodwill 899   899   899   899   899 
    Intangible assets 2,818   2,869   2,920   2,971   3,022 
    Other assets 33,835   26,779   37,023   25,740   39,957 
    Total assets$2,387,721  $2,351,584  $2,292,923  $2,246,193  $2,230,971 
              
    Liabilities:         
    Deposits:         
    Non-interest bearing$237,207  $224,040  $220,581  $239,289  $244,668 
    Interest bearing         
    Interest checking 133,429   130,062   121,204   150,898   156,537 
    Money market and savings deposits 822,837   787,479   797,525   747,803   746,599 
    Time deposits 785,454   773,855   761,386   685,472   660,841 
    Total interest-bearing deposits 1,741,720   1,691,396   1,680,115   1,584,173   1,563,977 
    Total deposits 1,978,927   1,915,436   1,900,696   1,823,462   1,808,645 
    Borrowings 144,880   187,260   145,803   174,896   177,959 
    Subordinated debentures 49,928   49,897   49,867   49,836   50,079 
    Accrued interest payable 7,017   7,709   8,350   10,324   7,814 
    Other liabilities 39,519   28,900   28,271   29,653   31,360 
    Total liabilities 2,220,271   2,189,202   2,132,987   2,088,171   2,075,857 
              
    Stockholders’ equity:         
    Common stock 13,232   13,194   13,189   13,186   13,181 
    Surplus 81,002   80,639   80,487   80,325   79,731 
    Treasury stock (26,079)  (26,079)  (26,079)  (26,079)  (26,079)
    Unearned common stock held by employee stock ownership plan (1,204)  (1,204)  (1,204)  (1,204)  (1,403)
    Retained earnings 107,765   104,420   102,492   101,216   102,043 
    Accumulated other comprehensive loss (7,266)  (8,588)  (8,949)  (9,422)  (12,359)
    Total stockholders’ equity 167,450   162,382   159,936   158,022   155,114 
    Total liabilities and stockholders’ equity$2,387,721  $2,351,584  $2,292,923  $2,246,193  $2,230,971 
                        


    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,
    2024    		 June 30,
    2024    		 March 31,
    2024    		 December 31,
    2023    		 September 30,
    2023
    Interest income$40,319 $38,465 $37,215 $36,346 $35,459
    Interest expense 22,077  21,619  20,606  19,404  18,235
    Net interest income 18,242  16,846  16,609  16,942  17,224
    Provision for credit losses 2,282  2,680  2,866  4,628  82
    Non-interest income 10,831  9,244  7,984  8,117  8,086
    Non-interest expense 20,546  19,018  18,174  19,703  20,018
    Income before income tax expense 6,245  4,392  3,553  728  5,210
    Income tax expense 1,502  1,066  877  157  1,205
    Net Income$4,743 $3,326 $2,676 $571 $4,005
              
    Basic weighted average shares outstanding 11,110  11,096  11,088  11,070  11,058
    Basic earnings per common share$0.43 $0.30 $0.24 $0.05 $0.36
              
    Diluted weighted average shares outstanding 11,234  11,150  11,201  11,206  11,363
    Diluted earnings per common share$0.42 $0.30 $0.24 $0.05 $0.35
                   


     Segment Information
     Three Months Ended September 30, 2024 Three Months Ended September 30, 2023
    (dollars in thousands)Bank Wealth Mortgage Total Bank Wealth Mortgage Total
    Net interest income$18,151  $46  $45  $18,242  $17,205  $(15) $34  $17,224 
    Provision for credit losses 2,282   —   —   2,282   82   —   —   82 
    Net interest income after provision 15,869   46   45   15,960   17,123   (15)  34   17,142 
    Non-interest income 1,358   1,447   8,026   10,831   1,758   1,258   5,070   8,086 
    Non-interest expense 13,287   840   6,419   20,546   12,564   826   6,628   20,018 
    Income (loss) before income taxes$3,940  $653  $1,652  $6,245  $6,317  $417  $(1,524) $5,210 
    Efficiency ratio 68%  56%  80%  71%  66%  66%  130%  79%
                    
     Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023
    (dollars in thousands)Bank Wealth Mortgage Total Bank Wealth Mortgage Total
    Net interest income$51,528  $76  $93  $51,697  $51,928  $(12) $85  $52,001 
    Provision for credit losses 7,828   —   —   7,828   2,186   —   —   2,186 
    Net interest income after provision 43,700   76   93   43,869   49,742   (12)  85   49,815 
    Non-interest income 4,908   4,207   18,944   28,059   5,696   3,689   14,463   23,848 
    Non-interest expense 37,962   2,479   17,297   57,738   35,608   2,704   19,110   57,422 
    Income (loss) before income taxes$10,646  $1,804  $1,740  $14,190  $19,830  $973  $(4,562) $16,241 
    Efficiency ratio 67%  58%  91%  72%  62%  74%  131%  76%
                    

    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.

     Pre-tax, Pre-provision Reconciliation
     Three Months Ended Nine Months Ended
    (Dollars in thousands, except per share data, Unaudited)September 30, 
    2024    		 June 30, 
    2024    		 September 30, 
    2023    		 September 30, 
    2024    		 September 30, 
    2023
    Income before income tax expense$6,245 $4,392 $5,210 $14,190 $16,241
    Provision for credit losses 2,282  2,680  82  7,828  2,186
    Pre-tax, pre-provision income$8,527 $7,072 $5,292 $22,018 $18,427
                   


     Pre-tax, Pre-provision Reconciliation
     Three Months Ended Nine Months Ended
    (Dollars in thousands, except per share data, Unaudited)September 30,
    2024    		 June 30,
    2024    		 September 30,
    2023    		 September 30,
    2024    		 September 30,
    2023
    Bank$6,222 $5,851 $6,399  $18,474 $22,016 
    Wealth 653  676  417   1,804  973 
    Mortgage 1,652  545  (1,524)  1,740  (4,562)
    Pre-tax, pre-provision income$8,527 $7,072 $5,292  $22,018 $18,427 
                     


     Allowance For Credit Losses (ACL) to Loans and Other Finance Receivables, Excluding and Loans at Fair Value
     September 30,
    2024    		 June 30,
    2024    		 March 31,
    2024    		 December 31,
    2023    		 September 30,
    2023
    Allowance for credit losses (GAAP)$21,965  $21,703  $23,171  $22,107  $19,683 
              
    Loans and other finance receivables (GAAP) 2,008,396   1,988,535   1,956,315   1,895,806   1,885,629 
    Less: Loans at fair value (13,965)  (12,900)  (13,139)  (13,726)  (13,231)
    Loans and other finance receivables, excluding loans at fair value  (non-GAAP)$1,994,431  $1,975,635  $1,943,176  $1,882,080  $1,872,398 
              
    ACL to loans and other finance receivables (GAAP) 1.09%  1.09%  1.18%  1.17%  1.04%
    ACL to loans and other finance receivables, excluding loans at fair value (non-GAAP) 1.10%  1.10%  1.19%  1.17%  1.05%
                        


     Tangible Common Equity Ratio Reconciliation - Corporation
     September 30, 
    2024    		 June 30, 
    2024    		 March 31, 
    2024    		 December 31, 
    2023    		 September 30, 
    2023
    Total stockholders' equity (GAAP)$167,450  $162,382  $159,936  $158,022  $155,114 
    Less: Goodwill and intangible assets (3,717)  (3,768)  (3,819)  (3,870)  (3,921)
    Tangible common equity (non-GAAP) 163,733   158,614   156,117   154,152   151,193 
              
    Total assets (GAAP) 2,387,721   2,351,584   2,292,923   2,246,193   2,230,971 
    Less: Goodwill and intangible assets (3,717)  (3,768)  (3,819)  (3,870)  (3,921)
    Tangible assets (non-GAAP)$2,384,004  $2,347,816  $2,289,104  $2,242,323  $2,227,050 
    Tangible common equity to tangible assets ratio - Corporation (non-GAAP) 6.87%  6.76%  6.82%  6.87%  6.79%
                        


     Tangible Common Equity Ratio Reconciliation - Bank
     September 30, 
    2024    		 June 30, 
    2024    		 March 31, 
    2024    		 December 31, 
    2023    		 September 30, 
    2023
    Total stockholders' equity (GAAP)$217,028  $211,308  $208,319  $204,132  $201,996 
    Less: Goodwill and intangible assets (3,717)  (3,768)  (3,819)  (3,870)  (3,921)
    Tangible common equity (non-GAAP) 213,311   207,540   204,500   200,262   198,075 
              
    Total assets (GAAP) 2,385,994   2,349,600   2,292,894   2,244,893   2,232,297 
    Less: Goodwill and intangible assets (3,717)  (3,768)  (3,819)  (3,870)  (3,921)
    Tangible assets (non-GAAP)$2,382,277  $2,345,832  $2,289,075  $2,241,023  $2,228,376 
    Tangible common equity to tangible assets ratio - Bank (non-GAAP) 8.95%  8.85%  8.93%  8.94%  8.89%
              
     Tangible Book Value Reconciliation
     September 30, 
    2024    		 June 30, 
    2024    		 March 31, 
    2024    		 December 31, 
    2023    		 September 30, 
    2023
    Book value per common share$14.91  $14.51  $14.30  $14.13  $13.88 
    Less: Impact of goodwill /intangible assets 0.33   0.34   0.34   0.35   0.35 
    Tangible book value per common share$14.58  $14.17  $13.96  $13.78  $13.53 
     

    Contact:
    Christopher J. Annas
    484.568.5001
    CAnnas@meridianbanker.com


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