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Meridian Corporation Reports Second Quarter 2024 Results and Announces a Quarterly Dividend of $0.125 per Common Share
ソース: Nasdaq GlobeNewswire / 26 7 2024 12:09:44 America/Chicago
MALVERN, Pa., July 26, 2024 (GLOBE NEWSWIRE) -- Meridian Corporation (Nasdaq: MRBK) today reported:
Three Months Ended (Dollars in thousands, except per share data)((Unaudited) June 30,
2024March 31,
2024June 30,
2023Income: Net income $ 3,326 $ 2,676 $ 4,645 Diluted earnings per common share $ 0.30 $ 0.24 $ 0.41 Pre-tax, pre-provision income (1) $ 7,072 $ 6,419 $ 6,607 (1) See Non-GAAP reconciliation in the Appendix - Commercial loans, excluding leases, increased $40.7 million, or 3%, for the quarter and $112.3 million, or 8%, year over year.
- Total assets at June 30, 2024 were $2.4 billion, compared to $2.3 billion at March 31, 2024 and $2.2 billion at June 30, 2023.
- Pre-tax, pre-provision income was $7.1 million for the quarter, with $545 thousand from the mortgage division.
- Net interest margin was 3.06% for the second quarter of 2024, with a loan yield of 7.31%.
- On July 25, 2024, the Board of Directors declared a quarterly cash dividend of $0.125 per common share, payable August 19, 2024 to shareholders of record as of August 12, 2024.
Christopher J. Annas, Chairman and CEO commented:
“Our second quarter earnings showed significant improvement from the first quarter, increasing by 24.3% to $3.3 million, or $0.30 per share. Key highlights include a steady net interest margin at 3.06% for the quarter and a quarterly profit in our mortgage segment. Total loan growth in the first half was 6.5% as we continue to bring on new relationships and take advantage of market disruption. Real estate loan growth is particularly strong in residential and multi-family, which are both in high demand.
The Philadelphia metro region remains healthy, with a continued shortage of homes for sale. A recent comment from DR Horton highlighted that the US needs 5 million more homes nationally to meet demand, a deficiency that is evident in our region. Private equity’s significant ownership and rental of homes nationally contributes to this problem. Despite these challenges our volume has improved from 2023, and if rates come down the demand could strengthen.
Meridian continues to gain market share in our region. While navigating the rate rise has presented some obstacles, our core businesses remain healthy. We are excited about our prospects and the generally stable economic landscape.”
Select Condensed Financial Information
As of or for the quarter ended (Unaudited) June 30,
2024March 31,
2024December 31,
2023September 30,
2023June 30,
2023(Dollars in thousands, except per share data) Income: Net income $ 3,326 $ 2,676 $ 571 $ 4,005 $ 4,645 Basic earnings per common share 0.30 0.24 0.05 0.36 0.42 Diluted earnings per common share 0.30 0.24 0.05 0.35 0.41 Net interest income 16,846 16,609 16,942 17,224 17,098 Balance Sheet: Total assets $ 2,351,584 $ 2,292,923 $ 2,246,193 $ 2,230,971 $ 2,206,877 Loans, net of fees and costs 1,988,535 1,956,315 1,895,806 1,885,629 1,859,839 Total deposits 1,915,436 1,900,696 1,823,462 1,808,645 1,782,605 Non-interest bearing deposits 224,040 220,581 239,289 244,668 269,174 Stockholders' equity 162,382 159,936 158,022 155,114 153,962 Balance Sheet Average Balances: Total assets $ 2,319,295 $ 2,269,047 $ 2,219,340 $ 2,184,384 $ 2,166,575 Total interest earning assets 2,222,177 2,173,212 2,121,068 2,086,602 2,070,640 Loans, net of fees and costs 1,972,740 1,944,187 1,891,170 1,876,648 1,847,736 Total deposits 1,919,954 1,823,523 1,820,532 1,782,140 1,775,444 Non-interest bearing deposits 229,040 233,255 254,025 253,485 266,675 Stockholders' equity 162,119 159,822 157,210 156,271 154,183 Performance Ratios (Annualized): Return on average assets 0.58 % 0.47 % 0.10 % 0.73 % 0.86 % Return on average equity 8.25 % 6.73 % 1.44 % 10.17 % 12.08 % Income Statement - Second Quarter 2024 Compared to First Quarter 2024
Net income for the second quarter increased $650 thousand, or 24.3%, to $3.3 million mainly due to a seasonal increase in net operating income from the mortgage division, as well as increased net interest income and lower quarterly provision for credit losses. Net interest income increased $237 thousand, or 1.4%, on a tax equivalent basis, as commercial loan fees of $238 thousand boosted overall interest income and out-paced the increase in interest expense. Non-interest income increased $1.3 million or 15.8%, reflecting the improved level of mortgage banking income. Non-interest expense increased $844 thousand, or 4.6%, due primarily to an increase in salaries and benefits expense, loan expenses and advertising and promotion. These increases were partially offset by a decrease in professional fees. Detailed explanations of the major categories of income and expense follow below.
Net Interest income
The rate/volume analysis table below analyzes dollar changes in the components of interest income and interest expense as they relate to the change in balances (volume) and the change in interest rates (rate) of tax-equivalent net interest income for the periods indicated and allocated by rate and volume. Changes in interest income and/or expense related to changes attributable to both volume and rate have been allocated proportionately based on the relationship of the absolute dollar amount of the change in each category.
Quarter Ended (dollars in thousands) June 30,
2024March 31,
2024$ Change % Change Change due
to rateChange due
to volumeInterest income: Cash and cash equivalents 331 300 $ 31 10.3 % $ (2 ) $ 33 Investment securities - taxable 1,324 1,251 73 5.8 % 38 35 Investment securities - tax exempt (1) 403 405 (2 ) (0.5)% 5 (7 ) Loans held for sale 572 323 249 77.1 % (3 ) 252 Loans held for investment (1) 35,916 35,018 898 2.6 % 381 517 Total loans 36,488 35,341 1,147 3.2 % 378 769 Total interest income $ 38,546 $ 37,297 $ 1,249 3.3 % $ 419 $ 830 Interest expense: Interest-bearing demand deposits $ 1,279 $ 1,367 $ (88 ) (6.4)% $ (28 ) $ (60 ) Money market and savings deposits 8,265 7,855 410 5.2 % 284 126 Time deposits 9,447 8,170 1,277 15.6 % 121 1,156 Total interest - bearing deposits 18,991 17,392 1,599 9.2 % 377 1,222 Borrowings 1,851 2,435 (584 ) (24.0)% (20 ) (564 ) Subordinated debentures 777 779 (2 ) (0.3)% (2 ) — Total interest expense 21,619 20,606 1,013 4.9 % 355 658 Net interest income differential $ 16,927 $ 16,691 $ 236 1.41 % $ 64 $ 172 (1) Reflected on a tax-equivalent basis. Interest income increased $1.2 million quarter-over-quarter on a tax equivalent basis, driven by the increased levels of average earning assets. Average earning assets increased by $49.0 million contributing $830 thousand to the increase. In addition, the yield on earnings assets increased 8 basis points during the period, which benefited from commercial loan fees.
Average total loans, excluding residential loans for sale, increased $28.5 million resulting in an increase in interest income of $517 thousand. The largest drivers of this increase were commercial, commercial real estate, and small business loans which on a combined basis increased $36.0 million on average, partially offset by a decrease in average leases of $13.2 million. Home equity, residential real estate, consumer and other loans held in portfolio increased on a combined basis $5.9 million on average. The yield on total loans increased 7 basis points and the yield on cash and investments increased 13 basis points on a combined basis.
Total interest expense increased $1.0 million, quarter-over-quarter, due to higher levels of deposits, particularly time deposits. Interest expense on total deposits increased $1.6 million while interest expense on borrowings decreased $584 thousand. Non-interest bearing balances decreased $6.7 million on average, while time deposits increased $94.7 million on average. The cost of deposits increased 14 basis points to 3.98% causing an increase of $377 thousand in interest expense. Interest expense on borrowings decreased $564 thousand due to volume changes as average borrowings decreased $46.0 million for the period, while the cost of borrowings were relatively flat period over period.
Overall the net interest margin decreased 3 basis points to 3.06% 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 expected loan loss recorded for funded loans as well as unfunded loan commitments. The overall expense for the second quarter decreased $186 thousand to $2.7 million, from $2.9 million in the first quarter, with the provision for unfunded loan commitments representing an increase of $34 thousand of the combined provision during the current quarter. The second quarter provision for funded loans of $2.6 million was driven by an increase in overall loan portfolio growth as well as an increase in net charge-offs during the quarter, offset somewhat by a decrease in specific reserves on individually evaluated loans. This decline in the overall provision was also positively impacted by favorable changes in certain portfolio baseline loss rates and some macroeconomic factors underlying the funded loss model.
Non-interest income
The following table presents the components of non-interest income for the periods indicated:
Quarter Ended (Dollars in thousands) June 30,
2024March 31,
2024$ Change % Change Mortgage banking income $ 5,420 $ 3,634 $ 1,786 49.1 % Wealth management income 1,444 1,317 127 9.6 % SBA loan income 785 986 (201 ) (20.4)% Earnings on investment in life insurance 215 207 8 3.9 % Net change in the fair value of derivative instruments 203 75 128 170.7 % Net change in the fair value of loans held-for-sale (29 ) (2 ) (27 ) 1350.0 % Net change in the fair value of loans held-for-investment (24 ) (175 ) 151 (86.3)% Net loss on hedging activity (63 ) (19 ) (44 ) 231.6 % Other 1,293 1,961 (668 ) (34.1)% Total non-interest income $ 9,244 $ 7,984 $ 1,260 15.8 % Total non-interest income increased $1.3 million, or 15.8%, quarter-over-quarter as mortgage banking income increased $1.8 million, or 49.1%. Mortgage loan sales increased $68.3 million or 52.6% quarter over quarter driving higher gain on sale income at a slightly lower margin. SBA and other income decreased $869 thousand combined due to lower levels of SBA loan sales and other mortgage related fees. SBA loans sold for the quarter-ended June 30, 2024 totaled $12.1 million, down $3.4 million, or 21.7%, compared to the quarter-ended March 31, 2024. The gross margin on SBA sales was 8.8% for the quarter, up from 8.1% for the previous quarter. Contributing to the increased margin on sale was an increase in the average yield on loans sold over the prior quarter.
Non-interest expense
The following table presents the components of non-interest expense for the periods indicated:
Quarter Ended (Dollars in thousands) June 30,
2024March 31,
2024$ Change % Change Salaries and employee benefits $ 11,437 $ 10,573 $ 864 8.2 % Occupancy and equipment 1,230 1,233 (3 ) (0.2)% Professional fees 1,029 1,498 (469 ) (31.3)% Advertising and promotion 989 748 241 32.2 % Data processing and software 1,506 1,532 (26 ) (1.7)% Pennsylvania bank shares tax 274 274 — — % Other 2,553 2,316 237 10.2 % Total non-interest expense $ 19,018 $ 18,174 $ 844 4.6 % Salaries and employee benefits increased $864 thousand overall, with bank and wealth segments combined having increased $80 thousand, and the mortgage segment increased $784 thousand. Mortgage segment salaries, commissions, and employee benefits are impacted by volume and therefore increased as originations increased $85.4 million over the prior quarter.
Professional fees decreased $469 thousand during the current quarter due to lower legal expenses. Advertising and promotion expense increased $241 thousand from the prior quarter as a result of an increase in business development expenses. Other expense increased $237 thousand from the prior quarter due to an increase in employee travel and trainings, combined with an increase in FDIC premiums.
Balance Sheet - June 30, 2024 Compared to March 31, 2024
Total assets increased $58.7 million, or 2.6%, to $2.4 billion as of June 30, 2024 from $2.3 billion at March 31, 2024. This increase was driven by strong loan growth and an increase in investments. Interest-bearing cash increased $1.5 million, or 10.7%, to $15.6 million as of June 30, 2024, from March 31, 2024.
Portfolio loan growth was $33.1 million, or 1.7% quarter-over-quarter. The portfolio growth was generated from commercial & industrial loans which increased $24.3 million, or 7.4%, commercial mortgage loans which increased $11.9 million, or 1.6%, and small business loans which increased $4.9 million despite the sale of $12.1 million in small business loan during the quarter. Lease financings decreased $11.3 million, or 10.3% from March 31, 2024, partially offsetting the above noted loan growth, but this decline was expected as we continue to refocus away from lease originations. Other assets decreased by $10.2 million quarter-over-quarter due to certain SBA loan sales that settled after quarter-end.
Total deposits increased $14.7 million, or 0.8% quarter-over-quarter, due largely to higher levels of certificates of deposits. Time deposits increased $12.5 million, or 1.6%, from largely wholesale efforts, as customers continue to opt for higher rate term deposits. Money market accounts and savings accounts decreased a combined $10.0 million while interest bearing demand deposits increased $8.9 million. Non-interest bearing deposits increased $3.5 million. Overnight borrowings increased $41.5 million, or 28.4% quarter-over-quarter, in support of loan growth, particularly residential mortgage loans available for sale which are up over $25 million seasonally.
Total stockholders’ equity increased by $2.4 million from March 31, 2024, to $162.4 million as of June 30, 2024. Changes to equity for the current quarter included net income of $3.3 million, less dividends paid of $1.4 million, plus an increase of $361 thousand in other comprehensive income as the result of the positive impact that rising interest rates had on the investment portfolio. The Community Bank Leverage Ratio for the Bank was 9.33% at June 30, 2024.
Asset Quality Summary
Non-performing assets decreased $604 thousand to $37.6 million at June 30, 2024 compared to $38.2 million at March 31, 2024. As a result of the decrease, the ratio of non-performing loans to total loans decreased to 1.84% as of June 30, 2024, from 1.93% as of March 31, 2024, and the ratio of non-performing assets to total assets decreased to 1.68% as of June 30, 2024, compared to 1.74% as of March 31, 2024. The changes were primarily the result of charge-offs in addition to principal paydowns of $645 thousand on 2 commercial loans classified as non-performing.
Meridian realized net charge-offs of 0.20% of total average loans for the quarter ended June 30, 2024, compared with 0.12% for the quarter ended March 31, 2024. The level of net charge-offs increased to $4.1 million for the quarter ended June 30, 2024, compared to net charge-offs of $2.3 million for the quarter ended March 31, 2024. Second quarter charge-offs were comprised of $1.3 million from small ticket equipment leases which are charged-off after becoming more than 120 days past due, a $1.3 million charge off of 1 commercial loan, and $1.4 million for SBA loans. There were recoveries of $237 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 1.10% as of June 30, 2024 compared to 1.19% as of March 31, 2024. As of June 30, 2024 there were specific reserves of $7.2 million against individually evaluated loans, a decrease of $1.3 million from $8.5 million in specific reserves as of March 31, 2024. The specific reserve decline over the prior quarter was the result of a drop in both commercial and SBA loan related reserves driven by charge-offs.
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.
Contact: Christopher J. Annas
484.568.5001
CAnnas@meridianbanker.comMERIDIAN CORPORATION AND SUBSIDIARIES
FINANCIAL RATIOS (Unaudited)
(Dollar amounts and shares in thousands, except per share amounts)Quarter Ended June 30,
2024March 31,
2024December 31,
2023September 30,
2023June 30,
2023Earnings and Per Share Data: Net income $ 3,326 $ 2,676 $ 571 $ 4,005 $ 4,645 Basic earnings per common share $ 0.30 $ 0.24 $ 0.05 $ 0.36 $ 0.42 Diluted earnings per common share $ 0.30 $ 0.24 $ 0.05 $ 0.35 $ 0.41 Common shares outstanding 11,191 11,186 11,183 11,178 11,178 Performance Ratios: Return on average assets (2) 0.58 % 0.47 % 0.10 % 0.73 % 0.86 % Return on average equity (2) 8.25 6.73 1.44 10.17 12.08 Net interest margin (tax-equivalent) (2) 3.06 3.09 3.18 3.29 3.33 Yield on earning assets (tax-equivalent) (2) 6.98 6.90 6.81 6.76 6.57 Cost of funds (2) 4.10 4.00 3.81 3.63 3.39 Efficiency ratio 72.89 % 73.90 % 78.63 % 79.09 % 74.80 % Asset Quality Ratios: Net charge-offs (recoveries) to average loans 0.20 % 0.12 % 0.11 % 0.05 % 0.05 % Non-performing loans to total loans 1.84 1.93 1.76 1.53 1.44 Non-performing assets to total assets 1.68 1.74 1.58 1.38 1.32 Allowance for credit losses to: Total loans held for investment 1.09 1.18 1.17 1.04 1.09 Total loans held for investment (excluding loans at fair value) (1) 1.10 1.19 1.17 1.05 1.10 Non-performing loans 57.66 % 60.59 % 65.48 % 67.61 % 73.97 % Capital Ratios: Book value per common share $ 14.51 $ 14.30 $ 14.13 $ 13.88 $ 13.77 Tangible book value per common share $ 14.17 $ 13.96 $ 13.78 $ 13.53 $ 13.42 Total equity/Total assets 6.91 % 6.98 % 7.04 % 6.95 % 6.98 % Tangible common equity/Tangible assets - Corporation (1) 6.76 6.82 6.87 6.79 6.81 Tangible common equity/Tangible assets - Bank (1) 8.85 8.93 8.94 8.89 8.54 Tier 1 leverage ratio - Bank 9.33 9.42 9.46 9.65 9.22 Common tier 1 risk-based capital ratio - Bank 9.84 9.87 10.10 10.82 10.35 Tier 1 risk-based capital ratio - Bank 9.84 9.87 10.10 10.82 10.35 Total risk-based capital ratio - Bank 10.84 % 10.95 % 11.17 % 11.85 % 11.43 % (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 Six Months Ended June 30,
2024March 31,
2024June 30,
2023June 30,
2024June 30,
2023Interest income: Loans and other finance receivables, including fees $ 36,486 $ 35,339 $ 32,215 $ 71,825 $ 61,632 Securities - taxable 1,324 1,251 992 2,575 1,951 Securities - tax-exempt 324 325 351 649 705 Cash and cash equivalents 331 300 278 631 495 Total interest income 38,465 37,215 33,836 75,680 64,783 Interest expense: Deposits 18,991 17,392 14,023 36,383 25,470 Borrowings 2,628 3,214 2,715 5,842 4,538 Total interest expense 21,619 20,606 16,738 42,225 30,008 Net interest income 16,846 16,609 17,098 33,455 34,775 Provision for credit losses 2,680 2,866 705 5,546 2,104 Net interest income after provision for credit losses 14,166 13,743 16,393 27,909 32,671 Non-interest income: Mortgage banking income 5,420 3,634 5,050 9,054 8,322 Wealth management income 1,444 1,317 1,235 2,761 2,431 SBA loan income 785 986 1,767 1,771 2,480 Earnings on investment in life insurance 215 207 193 422 385 Net change in the fair value of derivative instruments 203 75 183 278 114 Net change in the fair value of loans held-for-sale (29 ) (2 ) (199 ) (31 ) (200 ) Net change in the fair value of loans held-for-investment (24 ) (175 ) (219 ) (199 ) (102 ) Net loss on hedging activity (63 ) (19 ) (1 ) (82 ) (1 ) Net loss on sale of investment securities available-for-sale — — (54 ) — (54 ) Other 1,293 1,961 1,169 3,254 2,387 Total non-interest income 9,244 7,984 9,124 17,228 15,762 Non-interest expense: Salaries and employee benefits 11,437 10,573 12,152 22,010 23,213 Occupancy and equipment 1,230 1,233 1,140 2,463 2,384 Professional fees 1,029 1,498 1,004 2,527 1,827 Advertising and promotion 989 748 1,091 1,737 1,952 Data processing and software 1,506 1,532 1,681 3,038 3,113 Pennsylvania bank shares tax 274 274 245 548 490 Other 2,553 2,316 2,302 4,869 4,425 Total non-interest expense 19,018 18,174 19,615 37,192 37,404 Income before income taxes 4,392 3,553 5,902 7,945 11,029 Income tax expense 1,066 877 1,257 1,943 2,363 Net income $ 3,326 $ 2,676 $ 4,645 $ 6,002 $ 8,666 Basic earnings per common share $ 0.30 $ 0.24 $ 0.42 $ 0.54 $ 0.78 Diluted earnings per common share $ 0.30 $ 0.24 $ 0.41 $ 0.54 $ 0.75 Basic weighted average shares outstanding 11,096 11,088 11,062 11,092 11,167 Diluted weighted average shares outstanding 11,150 11,201 11,304 11,178 11,494 MERIDIAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION (Unaudited)
(Dollar amounts and shares in thousands, except per share amounts)June 30,
2024March 31,
2024December 31,
2023September 30,
2023June 30,
2023Assets: Cash and due from banks $ 8,457 $ 8,935 $ 10,067 $ 12,734 $ 10,576 Interest-bearing deposits at other banks 15,601 14,092 46,630 47,025 36,290 Cash and cash equivalents 24,058 23,027 56,697 59,759 46,866 Securities available-for-sale, at fair value 159,141 150,996 146,019 122,218 126,668 Securities held-to-maturity, at amortized cost 35,089 35,157 35,781 36,232 36,463 Equity investments 2,088 2,092 2,121 2,019 2,097 Mortgage loans held for sale, at fair value 54,278 29,124 24,816 23,144 40,422 Loans and other finance receivables, net of fees and costs 1,988,535 1,956,315 1,895,806 1,885,629 1,859,839 Allowance for credit losses (21,703 ) (23,171 ) (22,107 ) (19,683 ) (20,242 ) Loans and other finance receivables, net of the allowance for credit losses 1,966,832 1,933,144 1,873,699 1,865,946 1,839,597 Restricted investment in bank stock 10,044 8,560 8,072 8,309 9,157 Bank premises and equipment, net 13,114 13,451 13,557 13,310 13,234 Bank owned life insurance 29,267 29,051 28,844 28,641 28,440 Accrued interest receivable 9,973 9,864 9,325 8,984 7,651 Other real estate owned 1,862 1,703 1,703 1,703 1,703 Deferred income taxes 3,950 4,339 4,201 4,993 4,258 Servicing assets 11,341 11,573 11,748 11,835 12,193 Goodwill 899 899 899 899 899 Intangible assets 2,869 2,920 2,971 3,022 3,073 Other assets 26,779 37,023 25,740 39,957 34,156 Total assets $ 2,351,584 $ 2,292,923 $ 2,246,193 $ 2,230,971 $ 2,206,877 Liabilities: Deposits: Non-interest bearing $ 224,040 $ 220,581 $ 239,289 $ 244,668 $ 269,174 Interest bearing Interest checking 130,062 121,204 150,898 156,537 155,907 Money market and savings deposits 787,479 797,525 747,803 746,599 710,546 Time deposits 773,855 761,386 685,472 660,841 646,978 Total interest-bearing deposits 1,691,396 1,680,115 1,584,173 1,563,977 1,513,431 Total deposits 1,915,436 1,900,696 1,823,462 1,808,645 1,782,605 Borrowings 187,260 145,803 174,896 177,959 194,636 Subordinated debentures 49,897 49,867 49,836 50,079 40,348 Accrued interest payable 7,709 8,350 10,324 7,814 5,612 Other liabilities 28,900 28,271 29,653 31,360 29,714 Total liabilities 2,189,202 2,132,987 2,088,171 2,075,857 2,052,915 Stockholders’ equity: Common stock 13,194 13,189 13,186 13,181 13,181 Surplus 80,639 80,487 80,325 79,731 79,650 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 ) (1,403 ) (1,403 ) Retained earnings 104,420 102,492 101,216 102,043 99,434 Accumulated other comprehensive loss (8,588 ) (8,949 ) (9,422 ) (12,359 ) (10,821 ) Total stockholders’ equity 162,382 159,936 158,022 155,114 153,962 Total liabilities and stockholders’ equity $ 2,351,584 $ 2,292,923 $ 2,246,193 $ 2,230,971 $ 2,206,877 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,
2024March 31,
2024December 31,
2023September 30,
2023June 30,
2023Interest income $ 38,465 $ 37,215 $ 36,346 $ 35,459 $ 33,836 Interest expense 21,619 20,606 19,404 18,235 16,738 Net interest income 16,846 16,609 16,942 17,224 17,098 Provision for credit losses 2,680 2,866 4,628 82 705 Non-interest income 9,244 7,984 8,117 8,086 9,124 Non-interest expense 19,018 18,174 19,703 20,018 19,615 Income before income tax expense 4,392 3,553 728 5,210 5,902 Income tax expense 1,066 877 157 1,205 1,257 Net Income $ 3,326 $ 2,676 $ 571 $ 4,005 $ 4,645 Basic weighted average shares outstanding 11,096 11,088 11,070 11,057 11,062 Basic earnings per common share $ 0.30 $ 0.24 $ 0.05 $ 0.36 $ 0.42 Diluted weighted average shares outstanding 11,150 11,201 11,206 11,363 11,304 Diluted earnings per common share $ 0.30 $ 0.24 $ 0.05 $ 0.35 $ 0.41 Segment Information Three Months Ended June 30, 2024 Three Months Ended June 30, 2023 (dollars in thousands) Bank Wealth Mortgage Total Bank Wealth Mortgage Total Net interest income $ 16,784 $ 36 $ 26 $ 16,846 $ 17,102 $ (29 ) $ 25 $ 17,098 Provision for credit losses 2,680 — — 2,680 705 — — 705 Net interest income after provision 14,104 36 26 14,166 16,397 (29 ) 25 16,393 Non-interest income 1,673 1,444 6,127 9,244 2,508 1,235 5,381 9,124 Non-interest expense 12,606 804 5,608 19,018 12,325 889 6,401 19,615 Income (loss) before income taxes $ 3,171 $ 676 $ 545 $ 4,392 $ 6,580 $ 317 $ (995 ) $ 5,902 Efficiency ratio 68 % 54 % 91 % 73 % 63 % 74 % 118 % 75 % SixMonths EndedJune 30, 2024 SixMonths EndedJune 30, 2023 (dollars in thousands) Bank Wealth Mortgage Total Bank Wealth Mortgage Total Net interest income $ 33,376 $ 30 $ 49 $ 33,455 $ 34,721 $ 3 $ 51 $ 34,775 Provision for credit losses 5,546 — — 5,546 2,104 — — 2,104 Net interest income after provision 27,830 30 49 27,909 32,617 3 51 32,671 Non-interest income 3,550 2,760 10,918 17,228 3,938 2,431 9,393 15,762 Non-interest expense 24,669 1,636 10,887 37,192 23,024 1,877 12,503 37,404 Income (loss) before income taxes $ 6,711 $ 1,154 $ 80 $ 7,945 $ 13,531 $ 557 $ (3,059 ) $ 11,029 Efficiency ratio 67 % 59 % 99 % 73 % 60 % 77 % 132 % 74 % 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 Six Months Ended (Dollars in thousands, except per share data, Unaudited) June 30,
2024March 31,
2024June 30,
2023June 30,
2024June 30,
2023Income before income tax expense $ 4,392 $ 3,553 $ 5,902 $ 7,945 $ 11,029 Provision for credit losses 2,680 2,866 705 5,546 2,104 Pre-tax, pre-provision income $ 7,072 $ 6,419 $ 6,607 $ 13,491 $ 13,133 Pre-tax, Pre-provision Reconciliation Three Months Ended Six Months Ended (Dollars in thousands, except per share data, Unaudited) June 30,
2024March 31,
2024June 30,
2023June 30,
2024June 30,
2023Bank $ 5,851 $ 6,406 $ 7,285 $ 12,257 $ 15,643 Wealth 676 478 317 1,154 548 Mortgage 545 (465 ) (995 ) 80 (3,058 ) Pre-tax, pre-provision income $ 7,072 $ 6,419 $ 6,607 $ 13,491 $ 13,133 Allowance For Credit Losses to Loans, Net of Fees and Costs, Excluding and Loans at Fair Value June 30,
2024March 31,
2024December 31,
2023September 30,
2023June 30,
2023Allowance for credit losses (GAAP) $ 21,703 $ 23,171 $ 22,107 $ 19,683 $ 20,242 Loans, net of fees and costs (GAAP) 1,988,535 1,956,315 1,895,806 1,885,629 1,859,839 Less: Loans fair valued (12,900 ) (13,139 ) (13,726 ) (13,231 ) (14,403 ) Loans, net of fees and costs, excluding loans at fair value (non-GAAP) $ 1,975,635 $ 1,943,176 $ 1,882,080 $ 1,872,398 $ 1,845,436 Allowance for credit losses to loans, net of fees and costs (GAAP) 1.09 % 1.18 % 1.17 % 1.04 % 1.09 % Allowance for credit losses to loans, net of fees and costs, excluding loans at fair value (non-GAAP) 1.10 % 1.19 % 1.17 % 1.05 % 1.10 % Tangible Common Equity Ratio Reconciliation - Corporation June 30,
2024March 31,
2024December 31,
2023September 30,
2023June 30,
2023Total stockholders' equity (GAAP) $ 162,382 $ 159,936 $ 158,022 $ 155,114 $ 153,962 Less: Goodwill and intangible assets (3,768 ) (3,819 ) (3,870 ) (3,921 ) (3,972 ) Tangible common equity (non-GAAP) 158,614 156,117 154,152 151,193 149,990 Total assets (GAAP) 2,351,584 2,292,923 2,246,193 2,230,971 2,206,877 Less: Goodwill and intangible assets (3,768 ) (3,819 ) (3,870 ) (3,921 ) (3,972 ) Tangible assets (non-GAAP) $ 2,347,816 $ 2,289,104 $ 2,242,323 $ 2,227,050 $ 2,202,905 Tangible common equity to tangible assets ratio - Corporation (non-GAAP) 6.76 % 6.82 % 6.87 % 6.79 % 6.81 % Tangible Common Equity Ratio Reconciliation - Bank June 30,
2024March 31,
2024December 31,
2023September 30,
2023June 30,
2023Total stockholders' equity (GAAP) $ 211,308 $ 208,319 $ 204,132 $ 201,996 $ 192,209 Less: Goodwill and intangible assets (3,768 ) (3,819 ) (3,870 ) (3,921 ) (3,972 ) Tangible common equity (non-GAAP) 207,540 204,500 200,262 198,075 188,237 Total assets (GAAP) 2,349,600 2,292,894 2,244,893 2,232,297 2,208,252 Less: Goodwill and intangible assets (3,768 ) (3,819 ) (3,870 ) (3,921 ) (3,972 ) Tangible assets (non-GAAP) $ 2,345,832 $ 2,289,075 $ 2,241,023 $ 2,228,376 $ 2,204,280 Tangible common equity to tangible assets ratio - Bank (non-GAAP) 8.85 % 8.93 % 8.94 % 8.89 % 8.54 % Tangible Book Value Reconciliation June 30,
2024March 31,
2024December 31,
2023September 30,
2023June 30,
2023Book value per common share $ 14.51 $ 14.30 $ 14.13 $ 13.88 $ 13.77 Less: Impact of goodwill /intangible assets 0.34 0.34 0.35 0.35 0.35 Tangible book value per common share $ 14.17 $ 13.96 $ 13.78 $ 13.53 $ 13.42 
