• Meridian Corporation Reports Second Quarter 2023 Results and Announces a Quarterly Dividend of $0.125 per Common Share.

    Источник: Nasdaq GlobeNewswire / 28 июл 2023 09:00:01   America/New_York

    MALVERN, Pa., July 28, 2023 (GLOBE NEWSWIRE) -- Meridian Corporation (Nasdaq: MRBK) today reported:

    • Net income of $4.6 million and diluted earnings per share of $0.41 for the second quarter ended June 30, 2023.
    • Return on average assets and return on average equity for the second quarter of 2023 were 0.86% and 12.08%, respectively.
    • Net interest margin was 3.33% for the second quarter of 2023, with loan yield of 6.89%.
    • Total assets at June 30, 2023 were $2.2 billion, compared to $2.2 billion at March 31, 2023 and $1.9 billion at June 30, 2022.
    • Second quarter commercial loan growth was $27.4 million, or 7.2% annualized; residential and home equity loans increased by $14.2 million on a combined basis, or 18.9% annualized.
    • Second quarter deposit growth was $12.2 million, or 2.8% annualized.
    • Non-interest bearing deposits were up $6.5 million, or 10% annualized.
    • The Company repurchased 127,849 shares of its common stock at an average price of $12.21 per share during the second quarter. The repurchase plan expired mid April.
    • On July 27, 2023, the Board of Directors declared a quarterly cash dividend of $0.125 per common share, payable August 21, 2023 to shareholders of record as of August 14, 2023.

    Christopher J. Annas, Chairman and CEO commented, “Meridian’s second quarter revenue of $43.0 million generated earnings of $4.6 million, or $0.41 per diluted share. Annual loan growth in the core CRE, C&I and SBA portfolios are expected to again approach 15%. These groups also bring deposits and other referrals, which enhances overall yields. Construction lending for residential and multi-family is still robust because of high demand, as for-sale homes are at historical lows. Credit has not deteriorated meaningfully in any segment and we remain diligent with our credit process and diversification."

    Mr. Annas added, "Total business deposits increased to 58% of total deposits, with non-interest bearing accounts up in the quarter by 10% on annualized basis. The margin was down from the prior quarter mostly due to higher deposit expense, as customers have increasing awareness of rate moves. The historical lag effect is gone. We have adjusted well to the tumultuous environment created by the historic Federal Reserve interest rate moves, but the impact on margins continues. We are well positioned for a rise or fall and will not bet on either event.

    The mortgage segment is following the historical seasonal pattern, as operations improved throughout the quarter. Despite increased hiring of mortgage loan officers, the lack of homes for sale limits production. Another factor is the thousands of homes purchased by investors and private equity over the past 10 years, being rented and not available for sale. We will continue to monitor the impact of market conditions on our mortgage operations and are prepared to make further adjustments if warranted."

    Mr. Annas concluded, "Our exceptional growth results from being highly visible in our regions, and being the preferred bank in the Delaware Valley. We are focusing less on opportunities that do not bring other business, such as portfolio mortgages or equipment leases."

    Select Condensed Financial Information

     As of or for the quarter ended (Unaudited)
     June 30,
    2023    		 March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022
     (Dollars in thousands, except per share data)
    Income:         
    Net income$4,645  $4,021  $4,557  $5,798  $5,938 
    Basic earnings per common share 0.42   0.36   0.40   0.49   0.49 
    Diluted earnings per common share 0.41   0.34   0.39   0.48   0.48 
    Net interest income 17,098   17,677   18,518   18,026   17,551 
              
    Balance Sheet:         
    Total assets$2,206,877  $2,229,783  $2,062,228  $1,921,924  $1,853,019 
    Loans, net of fees and costs 1,859,839   1,818,189   1,743,682   1,610,349   1,518,893 
    Total deposits 1,782,605   1,770,413   1,712,479   1,673,553   1,568,014 
    Non-interest bearing deposits 269,174   262,636   301,727   290,169   291,925 
    Stockholders' equity 153,962   153,049   153,280   151,161   156,087 
              
    Balance Sheet (Average Balances):         
    Total assets$2,166,575  $2,088,599  $1,962,915  $1,868,194  $1,811,335 
    Total interest earning assets 2,070,640   1,995,460   1,877,967   1,791,255   1,736,547 
    Loans, net of fees and costs 1,847,736   1,783,322   1,674,215   1,565,861   1,484,696 
    Total deposits 1,775,444   1,759,571   1,698,597   1,597,648   1,567,325 
    Non-interest bearing deposits 266,675   296,037   312,297   295,975   296,521 
    Stockholders' equity 154,183   153,179   151,791   157,614   158,420 
              
    Performance Ratios (Annualized):         
    Return on average assets 0.86%  0.78%  0.92%  1.23%  1.31%
    Return on average equity 12.08%  10.65%  11.91%  14.59%  15.03%
                        

    Income Statement - Second Quarter 2023 Compared to First Quarter 2023

    Net income of $4.6 million, increased $624 thousand from $4.0 million for the first quarter driven by higher levels of non-interest income. Net interest income decreased $580 thousand, or 3.3%, on a tax equivalent basis due to a lower interest margin. Non-interest income increased $2.5 million or 37.5%, while non-interest expense increased $1.8 million, or 10.3%. Detailed explanations of the major categories of income and expense follow below.

    Net Interest income

    The rate/volume analysis table below analyzes dollar changes in the components of interest income and interest expense as they relate to the change in balances (volume) and the change in interest rates (rate) of tax-equivalent net interest income for the periods indicated and allocated by rate and volume. Changes in interest income and/or expense 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)June 30,
    2023    		 March 31,
    2023    		 $ Change % Change Change due to rate Change due to volume
    Interest income:           
    Due from banks$275 $215 $60  27.9% $35  $25 
    Federal funds sold 3  2  1  50.0%  1   — 
    Investment securities - taxable (1) 992  959  33  3.4%  28   5 
    Investment securities - tax exempt (1) 426  430  (4) (0.9)%  22   (26)
    Loans held for sale 407  217  190  87.6%  15   175 
    Loans held for investment (1) 31,810  29,202  2,608  8.9%  1,531   1,077 
    Total loans 32,217  29,419  2,798  9.5%  1,546   1,252 
    Total interest income 33,913  31,025  2,888  9.3%  1,632   1,256 
    Interest expense:           
    Interest-bearing demand deposits$1,840 $1,855 $(15) (0.8)% $227  $(242)
    Money market and savings deposits 5,371  4,477  894  20.0%  874   20 
    Time deposits 6,812  5,115  1,697  33.2%  1,029   668 
    Total deposits 14,023  11,447  2,576  22.5%  2,130   446 
    Borrowings 2,129  1,237  892  72.1%  72   820 
    Subordinated debentures 586  586  —  —%  —   — 
    Total interest expense 16,738  13,270  3,468  26.1%  2,202   1,266 
    Net interest income differential$17,175 $17,755 $(580) (3.27)% $(570) $(10)
    (1) Reflected on a tax-equivalent basis.          

    Interest income increased $2.9 million on a tax equivalent basis, quarter-over-quarter, due to an extra day of interest earned in the period, as well as a higher yield on earning assets and higher levels of average earning assets. The yield on earnings assets rose 26 basis points during the period, while average earning assets increased by $75.2 million.

    The yield on total loans increased 26 basis points and the yield on cash and investments increased 5 basis points combined, reflecting the impact on rates caused by the Federal Reserve’s monetary policy. Nearly $682 million in loans repriced during the quarter with an average increase of 41 basis points. Average total loans, excluding residential loans for sale, increased $64.4 million. Construction, commercial real estate, and small business loans, which increased $47.9 million on average, combined, made up the majority of the increase. Home equity loans and residential real estate loans held in portfolio increased $44.8 million on average, combined. Residential loans for sale increased $11.7 million.

    Total interest expense increased $3.5 million, quarter-over-quarter, due primarily to market interest rate rises, and increases in both deposit and borrowing balances, as well as an extra day of interest. Interest expense on deposits increased $2.6 million as total average deposits increased $45.2 million and the cost of interest-bearing deposits increased 56 basis points to 3.73%. Interest expense on borrowings increased $892 thousand as total average short-term borrowings increased $63.1 million and the cost increased 22 basis points.

    Net interest margin decreased 28 basis points to 3.33% for the second quarter from 3.61% for the first quarter, 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 although have increased from March 31, 2023, were down on average by $29.4 million for the quarter.

    The provision for credit losses decreased to $705 thousand for the second quarter from $1.4 million for the first quarter. The favorable decline of $694 thousand was largely due to a $467 thousand decline in charge-offs period over period, as well as the improvement in certain qualitative factors considered in our allowance for credit losses. As we are focusing on loan portfolios that provide other business opportunities and higher yields, we have put less emphasize on growing other portfolios and therefore certain qualitative factors were adjusted as growth in and concentration of our lease portfolio has diminished.

    Non-interest income

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

     Quarter Ended    
    (Dollars in thousands)June 30,
    2023    		 March 31,
    2023    		 $ Change % Change
    Mortgage banking income$5,050  $3,272  $1,778  54.3%
    Wealth management income 1,235   1,196   39  3.3%
    SBA loan income 1,767   713   1,054  147.8%
    Earnings on investment in life insurance 193   192   1  0.5%
    Net change in the fair value of derivative instruments 183   (69)  252  (365.2)%
    Net change in the fair value of loans held-for-sale (199)  (1)  (198) 19800.0%
    Net change in the fair value of loans held-for-investment (219)  117   (336) (287.2)%
    Net gain on hedging activity (1)  —   (1) (100.0)%
    Net loss on sale of investment securities available-for-sale (54)  —   (54) (100.0)%
    Service charges 37   35   2  5.7%
    Other 1,132   1,183   (51) (4.3)%
    Total non-interest income$9,124  $6,638  $2,486  37.5%

    Total non-interest income increased $2.5 million, or 37.5%, quarter-over-quarter. Mortgage banking income increased $1.8 million or 54.3% quarter-over-quarter, due to higher levels of loan originations. Although interest rates remain high, seasonality is a key factor in the increase in loan originations, which were $59 million over the prior quarter. Partially offsetting the increase in loan volume, the gain on sale margins decreased 25 basis points over the prior quarter. The fair value of loans held for sale, derivatives instruments and net gain on hedging activity increased $53 thousand in total.

    SBA loan income increased $1.1 million, or 147.8%, over the prior quarter as more than double the amount of SBA loans were sold into the secondary market in the second quarter. $27.8 million of loans were sold in the quarter-ending June 30, 2023 at a gross margin of 7.0%, compared to $10.9 million in loans sold in the quarter-ending March 31, 2023 at a gross margin of 7.7%.

    Wealth management income increased $39 thousand, or 3.3%, for the quarter-ended June 30, 2023 over the prior quarter due to an increase in the number of individual account customers, combined with the effect of market conditions on assets under management. Other non-interest income decreased $51 thousand, or 4.3%, over the prior quarter due largely to swap fee income recorded in the prior quarter that was not repeated in the current quarter.

    Non-interest expense

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

     Quarter Ended    
    (Dollars in thousands)June 30,
    2023    		 March 31,
    2023    		 $ Change % Change
    Salaries and employee benefits$12,152 $11,061 $1,091  9.9%
    Occupancy and equipment 1,140  1,244  (104) (8.4)%
    Professional fees 1,004  823  181  22.0%
    Advertising and promotion 1,091  861  230  26.7%
    Data processing and software 1,681  1,432  249  17.4%
    Pennsylvania bank shares tax 245  245  —  —%
    Other 2,302  2,123  179  8.4%
    Total non-interest expense$19,615 $17,789 $1,826  10.3%

    Salaries and employee benefits increased $1.1 million overall, with bank and wealth segments combined having increased $665 thousand, and the mortgage segment increased $426 thousand. Bank and wealth segment salaries and employee benefits were up due to incentive and stock based compensation. Mortgage related salaries and benefits were up quarter-over-quarter due to the variable nature of such expenses at this segment related to origination volume.

    Professional fees increased $181 thousand during the current quarter as we incurred OREO expense relating to the expected disposition and sale of the property and non-performing loan workout expenses. Advertising and promotion expense increased $230 thousand from the prior quarter as community outreach efforts, business development activities and related promotional costs were higher in the second quarter. Data processing and software costs were up quarter-over-quarter driven by an increase in customer account volume. Other non-interest expense increased $179 thousand over the prior quarter due largely to an increase in FDIC insurance expense, which reflected the new 2 basis point increase in assessment.

    Balance Sheet - June 30, 2023 Compared to March 31, 2023

    As of June 30, 2023, total assets decreased $22.9 million, or 1.0%, to $2.2 billion from March 31, 2023. This decline in assets was due to a reduction in cash and investments in support if higher yielding loans. Interest-bearing cash decreased $63.7 million, or 63.7%, to $36.3 million as of June 30, 2023 from March 31, 2023. Investments available for sale decreased $16.3 million, or 11.4%, as we sold $15.4 million in investments available for sale in the second quarter.

    Portfolio loan growth was $41.7 million, or 2.3% quarter-over-quarter. Commercial mortgage loans increased $31.2 million, or 5.1%, construction loans increased $18.7 million, or 7.0%, residential real estate loans held in portfolio increased $9.0 million, or 3.8%, while home equity lines and loans increased $5.2 million, or 8.3% as well. Partially offsetting portfolio loan growth were commercial loans which decreased $20.8 million, or 6.3%, due to the sale of $21.8 million in shared national credits, and lease financings that decreased $1.0 million, or 0.7% from March 31, 2023. Both decreases were the result of reallocation of funds to higher yielding and relationship- based portfolios.

    Total deposits increased $12.2 million, or 0.7%, quarter-over-quarter. Noninterest-bearing deposits and money market accounts increased $6.5 million, and $62.6 million, respectively, during the period, while interest-bearing demand deposits decreased $76.7 million during the period. Most of the changes in the interest-bearing checking and the money market accounts came from municipal deposits. Time deposits increased $19.7 million, or 3.1%, from retail and wholesale efforts as customers opt for higher term interest rates.

    Consolidated stockholders’ equity of the Corporation increased by $913 thousand from March 31, 2023, to $154.0 million as of June 30, 2023. Changes to equity for the current quarter included net income of $4.6 million, partially offset by a $952 thousand decline in other comprehensive income, dividends paid of $1.4 million, and share repurchases of $1.6 million. The Community Bank Leverage Ratio for the Bank was 9.22% at June 30, 2023.

    The following table presents capital ratios of the Bank, unless otherwise noted, at the dates indicated:

     June 30,
    2023    		 March 31,
    2023
    Stockholders' equity to total assets - Corporation6.98% 6.86%
    Tangible common equity to tangible assets - Corporation (1)6.81% 6.70%
    Tier 1 leverage ratio - Bank9.22% 7.65%
    Common tier 1 risk-based capital ratio - Bank10.35% 8.44%
    Tier 1 risk-based capital ratio - Bank10.35% 8.44%
    Total risk-based capital ratio - Bank11.43% 11.63%
    (1) See Non-GAAP reconciliation in the Appendix  

    Asset Quality Summary

    The ratio of non-performing loans to total loans increased to 1.44% as of June 30, 2023, from 1.25% at March 31, 2023, while non-performing assets to total assets was 1.32% as of June 30, 2023, compared to 1.11% at March 31, 2023. There was $1.7 million in other real estate owned included in non-performing assets, the result of taking possession of a well collateralized residential real estate property at the prior year end. Total non-performing loans of $27.4 million as of June 30, 2023, increased $4.3 million from $23.1 million as March 31, 2023 due to downgrades of 4 SBA loans, 1 commercial loan and several small balance equipment leases as of June 30, 2023.

    Meridian realized net charge-offs of 0.05% of total average loans for the quarter ended June 30, 2023, down from the quarter ended March 31, 2023 level of 0.08%. Net charge-offs for the quarter ended June 30, 2023 were $986 thousand, comprised of $1.2 million in charge-offs, with $169 thousand in recoveries for the quarter. While nearly all of the charge-offs for the quarter ended June 30, 2023 continue to be from small ticket equipment leases, the level of charge-offs in this portfolio declined by $689 thousand, while we also realized $149 thousand of recoveries related to the small ticket equipment lease portfolio.

    The ratio of allowance for credit losses to total loans held for investment, excluding loans at fair value and PPP loans (a non-GAAP measure, see reconciliation in the Appendix), was 1.10% as of June 30, 2023 compared to 1.13% as of March 31, 2023. As of June 30, 2023 there were specific reserves of $2.6 million against non-performing loans, an increase from $2.5 million as of March 31, 2023 due to the establishment of a specific reserve on a commercial loan that was classified as a non-performing loan during the current quarter.

    Bank Sector Concerns

    Meridian is a regional community bank with loans and deposits that are well diversified in size, type, location and industry. We manage this diversification carefully, while avoiding concentrations in business lines. Meridian’s model continues to build on our strong and stable financial position, which serves our regional customers and communities with the banking products and services needed to help build their prosperity.

    As a commercial bank, the majority of Meridian's deposit base is comprised of business deposits (58%), with consumer deposits amounting to 11% at June 30, 2023. Municipal deposits (8%) and brokered deposits (23%) provide growth funding. Historically, business deposits lag loan fundings. A typical business relationship maintains operating accounts, investment accounts or sweep accounts and business owners may also have personal savings or wealth accounts. Deposit balances in business accounts have a tendency to be higher on average than consumer accounts. At June 30, 2023, 63% of business accounts and 87% 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 June 30, 2023.

    Total balance sheet liquidity, which is derived from cash and investments, as well as salable commercial loans and residential mortgage loans held for sale, was $276.8 million at June 30, 2023, down from $317.8 million at March 31, 2023. Meridian maintains a high-quality investment bond portfolio comprised of U.S Treasuries, government agencies, government agency mortgage-backed securities, and general obligation municipal securities with an average duration of 4 years. Meridian’s investment portfolio represented 7.5% of total assets at June 30, 2023, compared to 8.1% at March 31, 2023. Total cash at June 30, 2023 was $47 million compared to $109 million at March 31, 2023 and $37.1 million at June 30, 2022.

    Meridian also maintains borrowing arrangements with various correspondent banks to meet short-term liquidity needs and has access to approximately $853.3 million in liquidity from numerous sources, including its borrowing capacity with the FHLB and other financial institutions, as well as funding through the CDARS program or through brokered CD arrangements. In addition, the Bank is eligible to receive funds under the new Bank Term Funding Program ("BTFP") announced by the Federal Reserve. At June 30, 2023 Meridian elected to secure $33 million in borrowings from the Federal Reserve under the BTFP due to the favorable rate. Management believes that the above sources of liquidity provide Meridian with the necessary resources to meet its short-term and long-term funding requirements.

    About Meridian Corporation

    Meridian Bank, the wholly owned subsidiary of Meridian Corporation, is an innovative community bank serving Pennsylvania, New Jersey, Delaware and Maryland. Through more than 20 offices, including banking branches and mortgage locations, Meridian offers a full suite of financial products and services. Meridian specializes in business and industrial lending, retail and commercial real estate lending, electronic payments, and wealth management solutions through Meridian Wealth Partners. Meridian also offers a broad menu of high-yield depository products supported by robust online and mobile access. For additional information, visit our website at www.meridianbanker.com. Member FDIC.

    “Safe Harbor” Statement

    In addition to historical information, this press release may contain “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to Meridian Corporation’s strategies, goals, beliefs, expectations, estimates, intentions, capital raising efforts, financial condition and results of operations, future performance and business. Statements preceded by, followed by, or that include the words “may,” “could,” “should,” “pro forma,” “looking forward,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” or similar expressions generally indicate a forward-looking statement. These forward-looking statements involve risks and uncertainties that are subject to change based on various important factors (some of which, in whole or in part, are beyond Meridian Corporation’s control). Numerous competitive, economic, regulatory, legal and technological factors, risks and uncertainties that could cause actual results to differ materially include, without limitation, the impact of the COVID-19 pandemic and government responses thereto; on the U.S. economy, including the markets in which we operate; actions that we and our customers take in response to these factors and the effects such actions have on our operations, products, services and customer relationships; and the risk that the Small Business Administration may not fund some or all Paycheck Protection Program (PPP) loan guaranties; increased competitive pressures; changes in the interest rate environment; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes; and the effects of inflation, a potential recession, among others, could cause Meridian Corporation’s financial performance to differ materially from the goals, plans, objectives, intentions and expectations expressed in such forward-looking statements. Meridian Corporation cautions that the foregoing factors are not exclusive, and neither such factors nor any such forward-looking statement takes into account the impact of any future events. All forward-looking statements and information set forth herein are based on management’s current beliefs and assumptions as of the date hereof and speak only as of the date they are made. For a more complete discussion of the assumptions, risks and uncertainties related to our business, you are encouraged to review Meridian Corporation’s filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2022 and subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K that update or provide information in addition to the information included in the Form 10-K and Form 10-Q filings, if any. Meridian Corporation does not undertake to update any forward-looking statement whether written or oral, that may be made from time to time by Meridian Corporation or by or on behalf of Meridian Bank.

    Contact:
    Christopher Annas
    cannas@meridianbanker.com 
    484-568-5000


    MERIDIAN CORPORATION AND SUBSIDIARIES
    FINANCIAL RATIOS (Unaudited)
    (Dollar amounts and shares in thousands, except per share amounts)

     Quarter Ended
     June 30,
    2023    		 March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022
    Earnings and Per Share Data:         
    Net income$4,645  $4,021  $4,557  $5,798  $5,938 
    Basic earnings per common share$0.42  $0.36  $0.40  $0.49  $0.49 
    Diluted earnings per common share$0.41  $0.34  $0.39  $0.48  $0.48 
    Common shares outstanding 11,178   11,305   11,466   11,689   12,074 
              
    Performance Ratios:         
    Return on average assets 0.86%  0.78%  0.92%  1.23%  1.31%
    Return on average equity 12.08   10.65   11.91   14.59   15.03 
    Net interest margin (tax-equivalent) 3.33   3.61   3.93   4.01   4.07 
    Yield on earning assets (tax-equivalent) 6.57   6.31   5.88   5.10   4.65 
    Cost of funds 3.39   2.83   2.07   1.17   0.61 
    Efficiency ratio 74.80%  73.16%  75.61%  71.72%  70.49%
              
    Asset Quality Ratios:         
    Net charge-offs (recoveries) to average loans 0.05%  0.08%  0.05%  0.02%  0.04%
    Non-performing loans to total loans 1.44   1.25   1.20   1.40   1.46 
    Non-performing assets to total assets 1.32   1.11   1.11   1.20   1.24 
    Allowance for credit losses to:         
    Total loans held for investment 1.09   1.12   1.08   1.18   1.24 
    Total loans held for investment (excluding loans at fair value and PPP loans) (1) 1.10   1.13   1.09   1.20   1.27 
    Non-performing loans 73.97%  88.41%  88.66%  82.20%  81.82%
              
    Capital Ratios:         
    Book value per common share$13.77  $13.54  $13.37  $12.93  $12.93 
    Tangible book value per common share$13.42  $13.18  $13.01  $12.58  $12.58 
    Total equity/Total assets 6.98%  6.86%  7.43%  7.87%  8.42%
    Tangible common equity/Tangible assets - Corporation (1) 6.81   6.70   7.25   7.67   8.22 
    Tangible common equity/Tangible assets - Bank (1) 8.54   8.26   8.80   9.61   10.17 
    Tier 1 leverage ratio - Corporation 7.46   7.65   8.13   8.54   8.87 
    Tier 1 leverage ratio - Bank 9.22   9.32   9.95   10.52   10.86 
    Common tier 1 risk-based capital ratio - Corporation 8.38   8.44   8.77   9.28   9.79 
    Common tier 1 risk-based capital ratio - Bank 10.35   10.27   10.73   11.44   11.98 
    Tier 1 risk-based capital ratio - Corporation 8.38   8.44   8.77   9.28   9.79 
    Tier 1 risk-based capital ratio - Bank 10.35   10.27   10.73   11.44   11.98 
    Total risk-based capital ratio - Corporation 11.49   11.63   12.05   12.80   13.50 
    Total risk-based capital ratio - Bank 11.43%  11.41%  11.87%  12.70%  13.33%
    (1) See Non-GAAP reconciliation in the Appendix        


    MERIDIAN CORPORATION AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
    (Dollar amounts and shares in thousands, except per share amounts)

     Three Months Ended Six Months Ended
     June 30,
    2023    		 March 31,
    2023    		 June 30,
    2022    		 June 30,
    2023    		 June 30,
    2022
    Interest income:         
    Loans and other finance receivables, including fees$32,215  $29,417  $19,120  $61,632  $36,339 
    Securities - taxable 992   959   525   1,951   951 
    Securities - tax-exempt 351   354   340   705   646 
    Cash and cash equivalents 278   217   52   495   65 
    Total interest income 33,836   30,947   20,037   64,783   38,001 
    Interest expense:         
    Deposits 14,023   11,447   1,818   25,470   3,107 
    Borrowings 2,715   1,823   668   4,538   1,308 
    Total interest expense 16,738   13,270   2,486   30,008   4,415 
    Net interest income 17,098   17,677   17,551   34,775   33,586 
    Provision for credit losses 705   1,399   602   2,104   1,217 
    Net interest income after provision for credit losses 16,393   16,278   16,949   32,671   32,369 
    Non-interest income:         
    Mortgage banking income 5,050   3,272   6,942   8,322   14,038 
    Wealth management income 1,235   1,196   1,254   2,431   2,558 
    SBA loan income 1,767   713   437   2,480   2,957 
    Earnings on investment in life insurance 193   192   137   385   275 
    Net change in the fair value of derivative instruments 183   (69)  (674)  114   (840)
    Net change in the fair value of loans held-for-sale (199)  (1)  268   (200)  (856)
    Net change in the fair value of loans held-for-investment (219)  117   (835)  (102)  (1,613)
    Net gain on hedging activity (1)  —   1,715   (1)  4,542 
    Net gain (loss) on sale of investment securities available-for-sale (54)  —   —   (54)  — 
    Service charges 37   35   31   72   58 
    Other 1,132   1,183   1,128   2,315   2,386 
    Total non-interest income 9,124   6,638   10,403   15,762   23,505 
    Non-interest expense:         
    Salaries and employee benefits 12,152   11,061   12,926   23,213   28,224 
    Occupancy and equipment 1,140   1,244   1,176   2,384   2,428 
    Professional fees 1,004   823   913   1,827   1,761 
    Advertising and promotion 1,091   861   1,189   1,952   2,175 
    Data processing and software 1,681   1,432   1,308   3,113   2,497 
    Pennsylvania bank shares tax 245   245   212   490   411 
    Other 2,302   2,123   1,982   4,425   3,643 
    Total non-interest expense 19,615   17,789   19,706   37,404   41,139 
    Income before income taxes 5,902   5,127   7,646   11,029   14,735 
    Income tax expense 1,257   1,106   1,708   2,363   3,262 
    Net income$4,645  $4,021  $5,938  $8,666  $11,473 
              
    Basic earnings per common share$0.42  $0.36  $0.49  $0.78  $0.95 
    Diluted earnings per common share$0.41  $0.34  $0.48  $0.75  $0.92 
              
    Basic weighted average shares outstanding 11,062   11,272   11,998   11,167   12,022 
    Diluted weighted average shares outstanding 11,304   11,656   12,398   11,494   12,458 
                        

    MERIDIAN CORPORATION AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF CONDITION (Unaudited)
    (Dollar amounts and shares in thousands, except per share amounts)

     June 30,
    2023    		 March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022
    Assets:         
    Cash and due from banks$10,576  $8,473  $11,299  $12,114  $8,280 
    Interest-bearing deposits at other banks 36,290   100,030   27,092   20,774   28,813 
    Cash and cash equivalents 46,866   108,503   38,391   32,888   37,093 
    Securities available-for-sale, at fair value 126,668   142,933   135,346   127,999   129,288 
    Securities held-to-maturity, at amortized cost 36,463   36,525   37,479   37,922   37,111 
    Equity investments 2,097   2,110   2,086   2,092   2,153 
    Mortgage loans held for sale, at fair value 40,422   35,701   22,243   33,800   58,938 
    Loans and other finance receivables, net of fees and costs 1,859,839   1,818,189   1,743,682   1,610,349   1,518,893 
    Allowance for credit losses (20,242)  (20,442)  (18,828)  (18,974)  (18,805)
    Loans and other finance receivables, net of the allowance for credit losses 1,839,597   1,797,747   1,724,854   1,591,375   1,500,088 
    Restricted investment in bank stock 9,157   10,173   6,931   5,217   4,719 
    Bank premises and equipment, net 13,234   13,281   13,349   12,835   12,185 
    Bank owned life insurance 28,440   28,247   28,055   22,916   22,778 
    Accrued interest receivable 7,651   7,651   7,363   6,008   5,108 
    Other real estate owned 1,703   1,703   1,703   —   — 
    Deferred income taxes 4,258   4,017   3,936   5,722   4,467 
    Servicing assets 12,193   12,125   12,346   12,807   12,860 
    Goodwill 899   899   899   899   899 
    Intangible assets 3,073   3,124   3,175   3,226   3,277 
    Other assets 34,156   25,044   24,072   26,218   22,055 
    Total assets$2,206,877  $2,229,783  $2,062,228  $1,921,924  $1,853,019 
              
    Liabilities:         
    Deposits:         
    Non-interest bearing$269,174  $262,636  $301,727  $290,169  $291,925 
    Interest bearing         
    Interest checking 155,907   232,616   219,838   236,562   205,298 
    Money market and savings deposits 710,546   647,904   697,564   709,127   728,886 
    Time deposits 646,978   627,257   493,350   437,695   341,905 
    Total interest-bearing deposits 1,513,431   1,507,777   1,410,752   1,383,384   1,276,089 
    Total deposits 1,782,605   1,770,413   1,712,479   1,673,553   1,568,014 
    Borrowings 194,636   233,883   122,082   23,458   59,136 
    Subordinated debentures 40,348   40,319   40,346   40,597   40,567 
    Accrued interest payable 5,612   3,836   2,389   1,154   146 
    Other liabilities 29,714   28,283   31,652   32,001   29,069 
    Total liabilities 2,052,915   2,076,734   1,908,948   1,770,763   1,696,932 
              
    Stockholders’ equity:         
    Common stock 13,181   13,180   13,156   13,144   13,139 
    Surplus 79,650   79,473   79,072   78,270   77,781 
    Treasury stock (26,079)  (24,512)  (21,821)  (18,033)  (11,896)
    Unearned common stock held by employee stock ownership plan (1,403)  (1,403)  (1,403)  (1,602)  (1,602)
    Retained earnings 99,434   96,180   95,815   92,405   87,815 
    Accumulated other comprehensive loss (10,821)  (9,869)  (11,539)  (13,023)  (9,150)
    Total stockholders’ equity 153,962   153,049   153,280   151,161   156,087 
    Total liabilities and stockholders’ equity$2,206,877  $2,229,783  $2,062,228  $1,921,924  $1,853,019 


    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
     June 30,
    2023    		 March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022
    Interest income$33,836 $30,947 $27,763 $22,958 $20,037
    Interest expense 16,738  13,270  9,245  4,932  2,486
    Net interest income 17,098  17,677  18,518  18,026  17,551
    Provision for credit losses 705  1,399  746  526  602
    Non-interest income 9,124  6,638  7,996  10,224  10,403
    Non-interest expense 19,615  17,789  20,047  20,261  19,706
    Income before income tax expense 5,902  5,127  5,721  7,463  7,646
    Income tax expense 1,257  1,106  1,164  1,665  1,708
    Net Income$4,645 $4,021 $4,557 $5,798 $5,938
              
    Basic weighted average shares outstanding 11,062  11,272  11,389  11,736  11,998
    Basic earnings per common share$0.42 $0.36 $0.40 $0.49 $0.49
              
    Diluted weighted average shares outstanding 11,304  11,656  11,795  12,118  12,398
    Diluted earnings per common share$0.41 $0.34 $0.39 $0.48 $0.48


     Segment Information
     Three Months Ended June 30, 2023 Three Months Ended June 30, 2022
    (dollars in thousands)Bank Wealth Mortgage Total Bank Wealth Mortgage Total
    Net interest income$17,102  $(29) $25  $17,098  $16,923  $317  $311  $17,551 
    Provision for credit losses 705   —   —   705   602   —   —   602 
    Net interest income after provision 16,397   (29)  25   16,393   16,321   317   311   16,949 
    Non-interest income 2,508   1,235   5,381   9,124   1,159   1,254   7,990   10,403 
    Non-interest expense 12,325   889   6,401   19,615   10,624   822   8,260   19,706 
    Income (loss) before income taxes$6,580  $317  $(995) $5,902  $6,856  $749  $41  $7,646 
    Efficiency ratio 63%  74%  118%  75%  59%  52%  100%  70%
                    
     SixMonths EndedJune 30, 2023 SixMonths EndedJune 30, 2022
    (dollars in thousands)Bank Wealth Mortgage Total Bank Wealth Mortgage Total
    Net interest income$34,721  $3  $51  $34,775  $32,533  $411  $642  $33,586 
    Provision for credit losses 2,104   —   —   2,104   1,217   —   —   1,217 
    Net interest income after provision 32,617   3   51   32,671   31,316   411   642   32,369 
    Non-interest income 3,938   2,431   9,393   15,762   4,535   2,558   16,412   23,505 
    Non-interest expense 23,024   1,877   12,503   37,404   20,833   1,700   18,606   41,139 
    Income (loss) before income taxes$13,531  $557  $(3,059) $11,029  $15,018  $1,269  $(1,552) $14,735 
    Efficiency ratio 60%  77%  132%  74%  56%  57%  109%  72%
                    

    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
     June 30,
    2023    		 March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022
    Allowance for credit losses (GAAP)$20,242  $20,442  $18,828  $18,974  $18,805 
              
    Loans, net of fees and costs (GAAP) 1,859,839   1,818,189   1,743,682   1,610,349   1,518,893 
    Less: PPP loans (187)  (238)  (4,579)  (8,610)  (21,460)
    Less: Loans fair valued (14,403)  (14,434)  (14,502)  (14,702)  (16,212)
    Loans, net of fees and costs, excluding loans at fair value and PPP loans (non-GAAP)$1,845,249  $1,803,517  $1,724,601  $1,587,037  $1,481,221 
              
    Allowance for credit losses to loans, net of fees and costs (GAAP) 1.09%  1.12%  1.08%  1.18%  1.24%
    Allowance for credit losses to loans, net of fees and costs, excluding PPP loans and loans at fair value (non-GAAP) 1.10%  1.13%  1.09%  1.20%  1.27%
                        


     Tangible Common Equity Ratio Reconciliation - Corporation
     June 30,
    2023    		 March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022
    Total stockholders' equity (GAAP)$153,962  $153,049  $153,280  $151,161  $156,087 
    Less: Goodwill and intangible assets (3,972)  (4,023)  (4,074)  (4,125)  (4,176)
    Tangible common equity (non-GAAP) 149,990   149,026   149,206   147,036   151,911 
              
    Total assets (GAAP) 2,206,877   2,229,783   2,062,228   1,921,924   1,853,019 
    Less: Goodwill and intangible assets (3,972)  (4,023)  (4,074)  (4,125)  (4,176)
    Tangible assets (non-GAAP)$2,202,905  $2,225,760  $2,058,154  $1,917,799  $1,848,843 
    Tangible common equity to tangible assets ratio - Corporation (non-GAAP) 6.81%  6.70%  7.25%  7.67%  8.22%


     Tangible Common Equity Ratio Reconciliation - Bank
     June 30,
    2023    		 March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022
    Total stockholders' equity (GAAP)$192,209  $187,954  $185,039  $188,386  $192,212 
    Less: Goodwill and intangible assets (3,972)  (4,023)  (4,074)  (4,125)  (4,176)
    Tangible common equity (non-GAAP) 188,237   183,931   180,965   184,261   188,036 
              
    Total assets (GAAP) 2,208,252   2,229,721   2,059,557   1,921,714   1,852,998 
    Less: Goodwill and intangible assets (3,972)  (4,023)  (4,074)  (4,125)  (4,176)
    Tangible assets (non-GAAP)$2,204,280  $2,225,698  $2,055,483  $1,917,589  $1,848,822 
    Tangible common equity to tangible assets ratio - Bank (non-GAAP) 8.54%  8.26%  8.80%  9.61%  10.17%
              
     Tangible Book Value Reconciliation
     June 30,
    2023    		 March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022
    Book value per common share$13.77  $13.54  $13.37  $12.93  $12.93 
    Less: Impact of goodwill /intangible assets 0.35   0.36   0.36   0.35   0.35 
    Tangible book value per common share$13.42  $13.18  $13.01  $12.58  $12.58 


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