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Meridian Corporation Reports First Quarter 2024 Results and Announces a Quarterly Dividend of $0.125 per Common Share
Source: Nasdaq GlobeNewswire / 26 Apr 2024 09:42:10 America/Chicago
MALVERN, Pa., April 26, 2024 (GLOBE NEWSWIRE) -- Meridian Corporation (Nasdaq: MRBK) today reported:
Three Months Ended (Dollars in thousands, except per share data)((Unaudited) March 31,
2024December 31,
2023March 31,
2023Income: Net income $ 2,676 $ 571 $ 4,021 Diluted earnings per common share $ 0.24 $ 0.05 $ 0.34 Pre-tax, pre-provision income (1) $ 6,419 $ 5,356 $ 6,526 Pre-tax, pre-provision income - Bank (1) $ 6,406 $ 5,757 $ 8,358 (1) See Non-GAAP reconciliation in the Appendix - Commercial loans, excluding leases, increased $71.6 million, or 5%, for the quarter and $137.1 million, or 10%, year over year.
- Total assets at March 31, 2024 were $2.3 billion, compared to $2.2 billion at December 31, 2023 and March 31, 2023.
- Pre-tax, pre-provision income for the Bank was $6.4 million for the quarter.
- Net interest margin was 3.09% for the first quarter of 2024, with a loan yield of 7.24%.
- On April 25, 2024, the Board of Directors declared a quarterly cash dividend of $0.125 per common share, payable May 20, 2024 to shareholders of record as of May 13, 2024.
Christopher J. Annas, Chairman and CEO commented, “Our first quarter earnings improved measurably from last quarter, totaling $2.7 million and $0.24 cents per share. We continue to manage through the dramatic rate rise effects, both with our bank and with our customers. The net interest margin contracted to 3.09% for the quarter, but shows signs of stabilizing.
The economic environment in the Philadelphia metro region remains healthy, and growth continues around 10% over the prior year across our main commercial business lines. The housing market is still tight with low inventory, so home construction financing is strong with quick settlements. There has been some disruption with larger banks closing branches and a few mid-size banks with management changes, which gives us continued customer acquisition opportunities.
Meridian is a credit driven bank, with a broad product line to service all but the biggest customers. This segment is credit dependent, and the businesses have been adjusting to the change. Provisioning reflects the strain on our customers, particularly small businesses, and was still elevated in 1Q due mostly to our SBA and equipment leasing divisions.
The mortgage segment had a seasonal loss for the quarter, but achieved higher volumes than in the prior year comparable quarter. Despite the headwinds of higher rates and low inventory, housing turnover happens for many reasons such as retirements and transfers. This volume should follow the typical seasonality, and our prior year’s expense reductions should allow for some profitability.
Meridian continues to grow and earn a higher market share in our region. Navigating through the rate rise has created some obstacles but our core businesses remain healthy. We’re excited about our prospects and a generally improving economic landscape."
Select Condensed Financial Information
As of or for the quarter ended (Unaudited) March 31,
2024December 31,
2023September 30,
2023June 30,
2023March 31,
2023(Dollars in thousands, except per share data) Income: Net income $ 2,676 $ 571 $ 4,005 $ 4,645 $ 4,021 Basic earnings per common share 0.24 0.05 0.36 0.42 0.36 Diluted earnings per common share 0.24 0.05 0.35 0.41 0.34 Net interest income 16,609 16,942 17,224 17,098 17,677 Balance Sheet: Total assets $ 2,292,923 $ 2,246,193 $ 2,230,971 $ 2,206,877 $ 2,229,783 Loans, net of fees and costs 1,956,315 1,895,806 1,885,629 1,859,839 1,818,189 Total deposits 1,900,696 1,823,462 1,808,645 1,782,605 1,770,413 Non-interest bearing deposits 220,581 239,289 244,668 269,174 262,636 Stockholders' equity 159,936 158,022 155,114 153,962 153,049 Balance Sheet (Average Balances): Total assets $ 2,269,047 $ 2,219,340 $ 2,184,384 $ 2,166,574 $ 2,088,599 Total interest earning assets 2,173,212 2,121,068 2,086,602 2,070,640 1,995,460 Loans, net of fees and costs 1,944,187 1,891,170 1,876,648 1,847,736 1,783,322 Total deposits 1,823,523 1,820,532 1,782,140 1,775,444 1,759,571 Non-interest bearing deposits 233,255 254,025 253,485 266,675 296,037 Stockholders' equity 159,822 157,210 156,271 154,179 153,179 Performance Ratios (Annualized): Return on average assets 0.47 % 0.10 % 0.73 % 0.86 % 0.78 % Return on average equity 6.73 % 1.44 % 10.17 % 12.08 % 10.65 % Income Statement - First Quarter 2024 Compared to Fourth Quarter 2023
Net income for the first quarter increased by $2.1 million to $2.7 million mainly due to a decline in the quarterly provision for credit losses, combined with a reduction in non-interest expenses. Net interest income decreased $324 thousand, or 2.0%, on a tax equivalent basis as the strong growth in interest income on loans and investments was out-paced by an increase in interest expense on deposits and borrowings. Non-interest income decreased $133 thousand or 1.6%, as fair value changes exceeded the improved level of mortgage banking income and wealth management income. Non-interest expense decreased $1.5 million, or 7.8% due primarily to a decrease in salaries and benefits expense, partially offset by an increase in professional fees. Detailed explanations of the major categories of income and expense follow below.
Net Interest income
The rate/volume analysis table below analyzes dollar changes in the components of interest income and interest expense as they relate to the change in balances (volume) and the change in interest rates (rate) of tax-equivalent net interest income for the periods indicated and allocated by rate and volume. Changes in interest income and/or expense related to changes attributable to both volume and rate have been allocated proportionately based on the relationship of the absolute dollar amount of the change in each category.
Quarter Ended (dollars in thousands) March 31,
2024December 31,
2023$ Change % Change Change due to rate Change due to volume Interest income: Cash and cash equivalents 300 526 $ (226 ) (43.0) % $ (3 ) $ (223 ) Investment securities - taxable 1,251 1,020 231 22.6 % 69 162 Investment securities - tax exempt (1) 405 402 3 0.7 % (6 ) 9 Loans held for sale 323 400 (77 ) (19.3) % (27 ) (50 ) Loans held for investment (1) 35,018 34,071 947 2.8 % (8 ) 955 Total loans 35,341 34,471 870 2.5 % (35 ) 905 Total interest income $ 37,297 $ 36,419 $ 878 2.4 % $ 25 $ 853 Interest expense: Interest-bearing demand deposits $ 1,367 $ 1,476 $ (109 ) (7.4) % $ 37 $ (146 ) Money market and savings deposits 7,855 7,384 471 6.4 % 245 226 Time deposits 8,170 7,946 224 2.8 % 30 194 Total interest - bearing deposits 17,392 16,806 586 3.5 % 312 274 Borrowings 2,435 1,816 619 34.1 % 43 576 Subordinated debentures 779 782 (3 ) (0.4) % 1 (4 ) Total interest expense 20,606 19,404 1,202 6.2 % 356 846 Net interest income differential $ 16,691 $ 17,015 $ (324 ) (1.90) % $ (331 ) $ 7 (1) Reflected on a tax-equivalent basis. Interest income increased $878 thousand quarter-over-quarter, on a tax equivalent basis, driven by the increased levels of average earning assets and the continued improvement in yield on earning assets. Average earning assets increased by $52.1 million as the yield on earnings assets increased 9 basis points during the period.
Average total loans, excluding residential loans for sale, increased $53.1 million driving an increase in interest income of $870 thousand. The largest drivers of this increase were commercial, commercial real estate, and small business loans which on a combined basis increased $80.6 million on average, partially offset by a decrease in average construction loans of $17.9 million and a decrease in average leases of $12.8 million. Home equity, residential real estate, consumer and other loans held in portfolio increased on a combined basis $3.0 million on average. The yield on total loans increased 9 basis points and the yield on cash and investments was relatively unchanged from the prior period on a combined basis.
Total interest expense increased $1.2 million, quarter-over-quarter, due to both rate and volume. Interest expense on total deposits increased $586 thousand and interest expense on borrowings increased $616 thousand. Non-interest bearing balances decreased $24.4 million on average and were replaced by interest bearing deposits. Interest bearing deposits increased $23.8 million on average causing an increase of $274 thousand in interest expense. The cost of deposits increased 19 basis points to 4.00% causing an increase of $312 thousand in interest expense. Interest expense on borrowings increased $572 thousand due to an average borrowings increase of $46.6 million for the period, and the cost of borrowings increased $44 thousand due to an 18 basis point increase from rates, despite the positive carry on a $75 million pay fixed swap.
Overall the net interest margin decreased 9 basis points to 3.09% as the cost of funds outpaced the increase in yield on earnings assets.
Provision for Credit Losses
The overall provision for credit losses is comprised of provisioning for funded loans as well as unfunded loan commitments. The combined provision for the first quarter decreased to $2.9 million from $4.6 million for the fourth quarter, with the provision for unfunded loan commitments representing a reduction of $508 thousand of the combined provision during the current quarter. The first quarter provision for funded loans of $3.4 million was due to a $2.0 million increase in specific reserves, mainly on small business loans and existing non-accrual loans, combined with provisioning for loan growth and charge-offs. This decline in the overall provision was also positively impacted by favorable changes in certain portfolio baseline loss rates and some macroeconomic factors underlying the funded loss model.
Non-interest income
The following table presents the components of non-interest income for the periods indicated:
Quarter Ended (Dollars in thousands) March 31,
2024December 31,
2023$ Change % Change Mortgage banking income $ 3,634 $ 3,394 $ 240 7.1 % Wealth management income 1,317 1,239 78 6.3 % SBA loan income 986 1,022 (36 ) (3.5)% Earnings on investment in life insurance 207 204 3 1.5 % Net change in the fair value of derivative instruments 75 (126 ) 201 (159.5)% Net change in the fair value of loans held-for-sale (2 ) 120 (122 ) (101.7)% Net change in the fair value of loans held-for-investment (175 ) 805 (980 ) (121.7)% Net gain on hedging activity (19 ) (53 ) 34 (64.2)% Other 1,961 1,512 449 29.7 % Total non-interest income $ 7,984 $ 8,117 $ (133 ) (1.6)% Total non-interest income decreased $133 thousand, or 1.6%, quarter-over-quarter as a result of a decrease in the fair value of loans held for investment, partially offset by an increase in mortgage banking income, fair value of derivative instruments and other income. Mortgage banking income increased $240 thousand, or 7.1% quarter-over-quarter, due to a 20 basis point increase in the gain on sale margin and a decrease in direct loan expenses related to consistent loan volume quarter-over-quarter. Other income increased $449 thousand due to an increase in FHLB stock income, increases in broker fees and other mortgage segment related income, partially offset by a decline in swap fee income as no new swaps were entered into in the current quarter. The fair value of loans held for investment decreased $1.0 million due to the recent decline in interest rates.
While the value of SBA loans sold for the quarter-ended March 31, 2024 was $4.6 million, or 22.9%, less than the quarter-ended December 31, 2023, the gross margin on sale was 8.1% for the quarter-ended March 31, 2024 compared to 6.4% for the quarter-ended December 31, 2023, helping to generate nearly $1 million in SBA loan income for the quarter.
Non-interest expense
The following table presents the components of non-interest expense for the periods indicated:
Quarter Ended (Dollars in thousands) March 31,
2024December 31,
2023$ Change % Change Salaries and employee benefits $ 10,573 $ 11,744 $ (1,171 ) (10.0)% Occupancy and equipment 1,233 1,232 1 0.1 % Professional fees 1,498 1,382 116 8.4 % Advertising and promotion 748 931 (183 ) (19.7)% Data processing and software 1,532 1,651 (119 ) (7.2)% Pennsylvania bank shares tax 274 233 41 17.6 % Other 2,316 2,530 (214 ) (8.5)% Total non-interest expense $ 18,174 $ 19,703 $ (1,529 ) (7.8)% Salaries and employee benefits decreased $1.2 million overall, with bank and wealth segments combined having decreased $641 thousand, and the mortgage segment decreased $530 thousand. Bank and wealth segment salaries and employee benefits were down due to a reduction in incentive expense compared to the prior quarter, and mortgage segment salaries and employee benefits were down in the current quarter due to the continuing impact of cost reduction measures put in place in the prior quarter.
Professional fees increased $116 thousand during the current quarter due to an increase in loan and lease workout expenses and other legal expenses. Advertising and promotion expense decreased $183 thousand from the prior quarter as a result of an increase in advertising and business development expense during the year-end holiday season. Other expense decreased $214 thousand from the prior quarter due to a decline in certain loan expenses and employee related expenses.
Balance Sheet - March 31, 2024 Compared to December 31, 2023
Total assets increased $46.7 million, or 2.1%, to $2.3 billion as of March 31, 2024 from $2.2 billion at December 31, 2023. This increase was driven by strong loan growth and an increase in investments, partially offset by a decrease in cash and cash equivalents. Interest-bearing cash decreased $32.5 million, or 69.8%, to $14.1 million as of March 31, 2024, from December 31, 2023.
Portfolio loan growth was $61.6 million, or 3.3% quarter-over-quarter. Commercial mortgage loans increased $25.5 million, or 3.5%, commercial & industrial loans increased $25.3 million, or 8.3%, construction loans increased $16.6 million, or 6.7%, and small business loans increased $4.3 million despite the sale of $15.5 million in small business loan during the quarter. Lease financings decreased $12.7 million, or 10.5% from December 31, 2023, partially offsetting the above noted strong loan growth, but this decline was expected as we continue to refocus away from lease originations. Other assets increased by $11.3 million quarter-over-quarter due to certain SBA loan sales that settled after quarter-end.
Total deposits increased $77.2 million, or 4.2% quarter-over-quarter, due largely to higher levels of certificates of deposits. Time deposits increased $75.9 million, or 11.1%, from largely wholesale efforts, as customers continue to opt for higher rate term deposits. Money market accounts and savings accounts increased a combined $49.7 million while interest bearing demand deposits decreased $29.7 million. Non-interest bearing deposits decreased $18.7 million. Borrowings decreased $29.1 million, or 16.6% quarter-over-quarter, due mainly to the maturity of the Federal Reserve’s BTFP which had a balance of $33 million up until maturity in the current quarter.
Consolidated stockholders’ equity of the Corporation increased by $1.9 million from December 31, 2023, to $159.9 million as of March 31, 2024. Changes to equity for the current quarter included net income of $2.7 million and an improvement of $473 thousand in other comprehensive income as the result of the positive impact that rising interest rates had on the cash flow hedge, offset by a relatively small increase in unrealized losses on the investment portfolio. The Community Bank Leverage Ratio for the Bank was 9.42% at March 31, 2024.
Asset Quality Summary
The ratio of non-performing loans to total loans increased to 1.93% as of March 31, 2024, from 1.76% as of December 31, 2023, while the ratio of non-performing assets to total assets increased to 1.74% as of March 31, 2024, compared to 1.58% at December 31, 2023. The increase in these ratios were due to a higher level of non-performing loans which increased $4.5 million from $33.8 million as of December 31, 2023, to $38.2 million as of March 31, 2024. The changes were the result of risk rating downgrades of several SBA loans and small ticket equipment leases, partially offset by charge-offs as of March 31, 2024.
Meridian realized net charge-offs of 0.12% of total average loans for the quarter ended March 31, 2024, compared with 0.11% for the quarter ended December 31, 2023. The level of net charge-offs increased slightly to $2.3 million for the quarter ended March 31, 2024, compared to net-charge-offs of $2.2 million for the quarter ended December 31, 2023. First quarter charge-offs were comprised of $2.1 million from small ticket equipment leases which are charged-off after becoming more than 120 days past due, and $87 thousand for an SBA loan. There were recoveries of $133 thousand, largely related to leases.
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 1.19% as of March 31, 2024 compared to 1.17% as of December 31, 2023. As of March 31, 2024 there were specific reserves of $8.5 million against individually evaluated loans, an increase of $2.0 million from $6.5 million in specific reserves as of December 31, 2023. During the quarter $1.6 million in specific reserves were established for SBA loan relationships along with smaller increases in specific reserves for other commercial loans.
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 16 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 March 31,
2024December 31,
2023September 30,
2023June 30,
2023March 31,
2023Earnings and Per Share Data: Net income $ 2,676 $ 571 $ 4,005 $ 4,645 $ 4,021 Basic earnings per common share $ 0.24 $ 0.05 $ 0.36 $ 0.42 $ 0.36 Diluted earnings per common share $ 0.24 $ 0.05 $ 0.35 $ 0.41 $ 0.34 Common shares outstanding 11,186 11,183 11,178 11,178 11,305 Performance Ratios: Return on average assets 0.47 % 0.10 % 0.73 % 0.86 % 0.78 % Return on average equity 6.73 1.44 10.17 12.08 10.65 Net interest margin (tax-equivalent) 3.09 3.18 3.29 3.33 3.61 Yield on earning assets (tax-equivalent) 6.90 6.81 6.76 6.57 6.31 Cost of funds 4.00 3.81 3.63 3.39 2.83 Efficiency ratio 73.90 % 78.63 % 79.09 % 74.80 % 73.16 % Asset Quality Ratios: Net charge-offs (recoveries) to average loans 0.12 % 0.11 % 0.05 % 0.05 % 0.08 % Non-performing loans to total loans 1.93 1.76 1.53 1.44 1.25 Non-performing assets to total assets 1.74 1.58 1.38 1.32 1.11 Allowance for credit losses to: Total loans held for investment 1.18 1.17 1.04 1.09 1.12 Total loans held for investment (excluding loans at fair value) (1) 1.19 1.17 1.05 1.10 1.13 Non-performing loans 60.59 % 65.48 % 67.61 % 73.97 % 88.41 % Capital Ratios: Book value per common share $ 14.30 $ 14.13 $ 13.88 $ 13.77 $ 13.54 Tangible book value per common share $ 13.96 $ 13.78 $ 13.53 $ 13.42 $ 13.18 Total equity/Total assets 6.98 % 7.04 % 6.95 % 6.98 % 6.86 % Tangible common equity/Tangible assets - Corporation (1) 6.82 6.87 6.79 6.81 6.70 Tangible common equity/Tangible assets - Bank (1) 8.93 8.94 8.89 8.54 8.26 Tier 1 leverage ratio - Bank 9.42 9.46 9.65 9.22 9.32 Common tier 1 risk-based capital ratio - Bank 9.87 10.10 10.82 10.35 10.27 Tier 1 risk-based capital ratio - Bank 9.87 10.10 10.82 10.35 10.27 Total risk-based capital ratio - Bank 10.95 % 11.17 % 11.85 % 11.43 % 11.41 % (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 March 31,
2024December 31,
2023March 31,
2023Interest income: Loans and other finance receivables, including fees $ 35,339 $ 34,469 $ 29,417 Securities - taxable 1,251 1,020 959 Securities - tax-exempt 325 331 354 Cash and cash equivalents 300 526 217 Total interest income 37,215 36,346 30,947 Interest expense: Deposits 17,392 16,806 11,447 Borrowings 3,214 2,598 1,823 Total interest expense 20,606 19,404 13,270 Net interest income 16,609 16,942 17,677 Provision for credit losses 2,866 4,628 1,399 Net interest income after provision for credit losses 13,743 12,314 16,278 Non-interest income: Mortgage banking income 3,634 3,394 3,272 Wealth management income 1,317 1,239 1,196 SBA loan income 986 1,022 713 Earnings on investment in life insurance 207 204 192 Net change in the fair value of derivative instruments 75 (126 ) (69 ) Net change in the fair value of loans held-for-sale (2 ) 120 (1 ) Net change in the fair value of loans held-for-investment (175 ) 805 117 Net gain on hedging activity (19 ) (53 ) — Other 1,961 1,512 1,218 Total non-interest income 7,984 8,117 6,638 Non-interest expense: Salaries and employee benefits 10,573 11,744 11,061 Occupancy and equipment 1,233 1,232 1,244 Professional fees 1,498 1,382 823 Advertising and promotion 748 931 861 Data processing and software 1,532 1,651 1,432 Pennsylvania bank shares tax 274 233 245 Other 2,316 2,530 2,123 Total non-interest expense 18,174 19,703 17,789 Income before income taxes 3,553 728 5,127 Income tax expense 877 157 1,106 Net income $ 2,676 $ 571 $ 4,021 Basic earnings per common share $ 0.24 $ 0.05 $ 0.36 Diluted earnings per common share $ 0.24 $ 0.05 $ 0.34 Basic weighted average shares outstanding 11,088 11,070 11,272 Diluted weighted average shares outstanding 11,201 11,206 11,656 MERIDIAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION (Unaudited)
(Dollar amounts and shares in thousands, except per share amounts)March 31,
2024December 31,
2023September 30,
2023June 30,
2023March 31,
2023Assets: Cash and due from banks $ 8,935 $ 10,067 $ 12,734 $ 10,576 $ 8,473 Interest-bearing deposits at other banks 14,092 46,630 47,025 36,290 100,030 Cash and cash equivalents 23,027 56,697 59,759 46,866 108,503 Securities available-for-sale, at fair value 150,996 146,019 122,218 126,668 142,933 Securities held-to-maturity, at amortized cost 35,157 35,781 36,232 36,463 36,525 Equity investments 2,092 2,121 2,019 2,097 2,110 Mortgage loans held for sale, at fair value 29,124 24,816 23,144 40,422 35,701 Loans and other finance receivables, net of fees and costs 1,956,315 1,895,806 1,885,629 1,859,839 1,818,189 Allowance for credit losses (23,171 ) (22,107 ) (19,683 ) (20,242 ) (20,442 ) Loans and other finance receivables, net of the allowance for credit losses 1,933,144 1,873,699 1,865,946 1,839,597 1,797,747 Restricted investment in bank stock 8,560 8,072 8,309 9,157 10,173 Bank premises and equipment, net 13,451 13,557 13,310 13,234 13,281 Bank owned life insurance 29,051 28,844 28,641 28,440 28,247 Accrued interest receivable 9,864 9,325 8,984 7,651 7,651 Other real estate owned 1,703 1,703 1,703 1,703 1,703 Deferred income taxes 4,339 4,201 4,993 4,258 4,017 Servicing assets 11,573 11,748 11,835 12,193 12,125 Goodwill 899 899 899 899 899 Intangible assets 2,920 2,971 3,022 3,073 3,124 Other assets 37,023 25,740 39,957 34,156 25,044 Total assets $ 2,292,923 $ 2,246,193 $ 2,230,971 $ 2,206,877 $ 2,229,783 Liabilities: Deposits: Non-interest bearing $ 220,581 $ 239,289 $ 244,668 $ 269,174 $ 262,636 Interest bearing Interest checking 121,204 150,898 156,537 155,907 232,616 Money market and savings deposits 797,525 747,803 746,599 710,546 647,904 Time deposits 761,386 685,472 660,841 646,978 627,257 Total interest-bearing deposits 1,680,115 1,584,173 1,563,977 1,513,431 1,507,777 Total deposits 1,900,696 1,823,462 1,808,645 1,782,605 1,770,413 Borrowings 145,803 174,896 177,959 194,636 233,883 Subordinated debentures 49,867 49,836 50,079 40,348 40,319 Accrued interest payable 8,350 10,324 7,814 5,612 3,836 Other liabilities 28,271 29,653 31,360 29,714 28,283 Total liabilities 2,132,987 2,088,171 2,075,857 2,052,915 2,076,734 Stockholders’ equity: Common stock 13,189 13,186 13,181 13,181 13,180 Surplus 80,487 80,325 79,731 79,650 79,473 Treasury stock (26,079 ) (26,079 ) (26,079 ) (26,079 ) (24,512 ) Unearned common stock held by employee stock ownership plan (1,204 ) (1,204 ) (1,403 ) (1,403 ) (1,403 ) Retained earnings 102,492 101,216 102,043 99,434 96,180 Accumulated other comprehensive loss (8,949 ) (9,422 ) (12,359 ) (10,821 ) (9,869 ) Total stockholders’ equity 159,936 158,022 155,114 153,962 153,049 Total liabilities and stockholders’ equity $ 2,292,923 $ 2,246,193 $ 2,230,971 $ 2,206,877 $ 2,229,783 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 March 31,
2024December 31,
2023September 30,
2023June 30,
2023March 31,
2023Interest income $ 37,215 $ 36,346 $ 35,459 $ 33,836 $ 30,947 Interest expense 20,606 19,404 18,235 16,738 13,270 Net interest income 16,609 16,942 17,224 17,098 17,677 Provision for credit losses 2,866 4,628 82 705 1,399 Non-interest income 7,984 8,117 8,086 9,124 6,638 Non-interest expense 18,174 19,703 20,018 19,615 17,789 Income before income tax expense 3,553 728 5,210 5,902 5,127 Income tax expense 877 157 1,205 1,257 1,106 Net Income $ 2,676 $ 571 $ 4,005 $ 4,645 $ 4,021 Basic weighted average shares outstanding 11,088 11,070 11,057 11,062 11,272 Basic earnings per common share $ 0.24 $ 0.05 $ 0.36 $ 0.42 $ 0.36 Diluted weighted average shares outstanding 11,201 11,206 11,363 11,304 11,656 Diluted earnings per common share $ 0.24 $ 0.05 $ 0.35 $ 0.41 $ 0.34 Segment Information Three Months Ended March 31, 2024 Three Months Ended March 31, 2023 (dollars in thousands) Bank Wealth Mortgage Total Bank Wealth Mortgage Total Net interest income $ 16,592 $ (6 ) $ 23 $ 16,609 $ 17,627 $ 24 $ 26 $ 17,677 Provision for credit losses 2,866 — — 2,866 1,399 — — 1,399 Net interest income after provision 13,726 (6 ) 23 13,743 16,228 24 26 16,278 Non-interest income 1,874 1,317 4,793 7,984 1,429 1,196 4,013 6,638 Non-interest expense 12,060 833 5,281 18,174 10,698 989 6,102 17,789 Income (loss) before income taxes $ 3,540 $ 478 $ (465 ) $ 3,553 $ 6,959 $ 231 $ (2,063 ) $ 5,127 Efficiency ratio 65 % 64 % 110 % 74 % 56 % 81 % 151 % 73 % 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 (Dollars in thousands, except per share data)((Unaudited) March 31,
2024December 31,
2023March 31,
2023Income before income tax expense $ 3,553 $ 728 $ 5,127 Provision for credit losses 2,866 4,628 1,399 Pre-tax, pre-provision income $ 6,419 $ 5,356 $ 6,526 Pre-tax, Pre-provision Reconciliation Three Months Ended (Dollars in thousands, except per share data)((Unaudited) March 31,
2024December 31,
2023March 31,
2023Bank $ 6,406 $ 5,757 $ 8,358 Wealth 478 267 231 Mortgage (465 ) (668 ) (2,063 ) Pre-tax, pre-provision income $ 6,419 $ 5,356 $ 6,526 Allowance For Loan Losses to Loans, Net of Fees and Costs, Excluding and Loans at Fair Value March 31,
2024December 31,
2023September 30,
2023June 30,
2023March 31,
2023Allowance for credit losses (GAAP) $ 23,171 $ 22,107 $ 19,683 $ 20,242 $ 20,442 Loans, net of fees and costs (GAAP) 1,956,315 1,895,806 1,885,629 1,859,839 1,818,189 Less: Loans fair valued (13,139 ) (13,726 ) (13,231 ) (14,403 ) (14,434 ) Loans, net of fees and costs, excluding loans at fair value (non-GAAP) $ 1,943,176 $ 1,882,080 $ 1,872,398 $ 1,845,436 $ 1,803,755 Allowance for credit losses to loans, net of fees and costs (GAAP) 1.18 % 1.17 % 1.04 % 1.09 % 1.12 % Allowance for credit losses to loans, net of fees and costs, excluding loans at fair value (non-GAAP) 1.19 % 1.17 % 1.05 % 1.10 % 1.13 % Tangible Common Equity Ratio Reconciliation - Corporation March 31,
2024December 31,
2023September 30,
2023June 30,
2023March 31,
2023Total stockholders' equity (GAAP) $ 159,936 $ 158,022 $ 155,114 $ 153,962 $ 153,049 Less: Goodwill and intangible assets (3,819 ) (3,870 ) (3,921 ) (3,972 ) (4,023 ) Tangible common equity (non-GAAP) 156,117 154,152 151,193 149,990 149,026 Total assets (GAAP) 2,292,923 2,246,193 2,230,971 2,206,877 2,229,783 Less: Goodwill and intangible assets (3,819 ) (3,870 ) (3,921 ) (3,972 ) (4,023 ) Tangible assets (non-GAAP) $ 2,289,104 $ 2,242,323 $ 2,227,050 $ 2,202,905 $ 2,225,760 Tangible common equity to tangible assets ratio - Corporation (non-GAAP) 6.82 % 6.87 % 6.79 % 6.81 % 6.70 % Tangible Common Equity Ratio Reconciliation - Bank March 31,
2024December 31,
2023September 30,
2023June 30,
2023March 31,
2023Total stockholders' equity (GAAP) $ 208,319 $ 204,132 $ 201,996 $ 192,209 $ 187,954 Less: Goodwill and intangible assets (3,819 ) (3,870 ) (3,921 ) (3,972 ) (4,023 ) Tangible common equity (non-GAAP) 204,500 200,262 198,075 188,237 183,931 Total assets (GAAP) 2,292,894 2,244,893 2,232,297 2,208,252 2,229,721 Less: Goodwill and intangible assets (3,819 ) (3,870 ) (3,921 ) (3,972 ) (4,023 ) Tangible assets (non-GAAP) $ 2,289,075 $ 2,241,023 $ 2,228,376 $ 2,204,280 $ 2,225,698 Tangible common equity to tangible assets ratio - Bank (non-GAAP) 8.93 % 8.94 % 8.89 % 8.54 % 8.26 % Tangible Book Value Reconciliation March 31,
2024December 31,
2023September 30,
2023June 30,
2023March 31,
2023Book value per common share $ 14.30 $ 14.13 $ 13.88 $ 13.77 $ 13.54 Less: Impact of goodwill /intangible assets 0.34 0.35 0.35 0.35 0.36 Tangible book value per common share $ 13.96 $ 13.78 $ 13.53 $ 13.42 $ 13.18 Contact:
Christopher J. Annas
484.568.5001
CAnnas@meridianbanker.com
