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Meridian Corporation Reports Third Quarter 2024 Results and Announces a Quarterly Dividend of $0.125 per Common Share
Источник: Nasdaq GlobeNewswire / 24 окт 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,
2024June 30,
2024September 30,
2023Income: 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,
2024June 30,
2024March 31,
2024December 31,
2023September 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 $1.5 million, or 8.0%, due primarily to an increase in salaries and employee benefits expense, professional fees and other expense. These increases were partially offset by a decrease in advertising and promotion expense. Detailed explanations of the major categories of income and expense follow below.
Net Interest income
The rate/volume analysis table below analyzes dollar changes in the components of interest income and interest expense as they relate to the change in balances (volume) and the change in interest rates (rate) of tax-equivalent net interest income for the periods indicated and allocated by rate and volume. Changes in interest income and/or expense related to changes attributable to both volume and rate have been allocated proportionately based on the relationship of the absolute dollar amount of the change in each category.
Quarter Ended (dollars in thousands) September 30,
2024June 30,
2024$ Change % Change Change due
to rateChange due
to volumeInterest 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 $1.9 million in net charge-offs and was positively impacted by favorable changes in certain portfolio baseline loss rates.
Non-interest income
The following table presents the components of non-interest income for the periods indicated:
Quarter Ended (Dollars in thousands) September 30,
2024June 30,
2024$ 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 $246 thousand, or 2.0%, compared to the quarter-ended June 30, 2024. The gross margin on SBA sales was 7.9% for the quarter, down from 8.8% for the previous quarter.
Non-interest expense
The following table presents the components of non-interest expense for the periods indicated:
Quarter Ended (Dollars in thousands) September 30,
2024June 30,
2024$ 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,
2024June 30,
2024March 31,
2024December 31,
2023September 30,
2023Earnings 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,
2024June 30,
2024September 30,
2023September 30,
2024September 30,
2023Interest 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,
2024June 30,
2024March 31,
2024December 31,
2023September 30,
2023Assets: 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,
2024June 30,
2024March 31,
2024December 31,
2023September 30,
2023Interest 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,
2024June 30,
2024September 30,
2023September 30,
2024September 30,
2023Income 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,
2024June 30,
2024September 30,
2023September 30,
2024September 30,
2023Bank $ 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,
2024June 30,
2024March 31,
2024December 31,
2023September 30,
2023Allowance 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,
2024June 30,
2024March 31,
2024December 31,
2023September 30,
2023Total 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,
2024June 30,
2024March 31,
2024December 31,
2023September 30,
2023Total 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,
2024June 30,
2024March 31,
2024December 31,
2023September 30,
2023Book 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
