MALVERN, Pa., Aug. 01, 2022 (GLOBE NEWSWIRE) -- Meridian Corporation (Nasdaq: MRBK) today reported:
- Net income of $5.9 million and diluted earnings per share of $0.96 for the second quarter ended June 30, 2022 compared to net income of $5.5 million and diluted earnings per share of $0.88 for the first quarter ended March 31, 2022
- Return on average assets for the second quarter of 2022 was 1.31% compared to 1.28% for the first quarter of 2022; return on average equity for the second quarter was 15.03% compared to 13.86% for the prior quarter
- Net interest margin increased to 4.07% in the second quarter of 2022 from 3.89% in the first quarter of 2022
- Second quarter commercial loan growth, excluding Paycheck Protection Program ("PPP") loans, was $73.8 million, or 24% annualized; consumer loans increased by $19.1 million, or 36% annualized
- Non-interest income of $10.4 million in the second quarter of 2022 compared to $13.1 million in the prior quarter
- Non-interest expenses decreased by $1.7 million, to $19.7 million in the second quarter of 2022 from $21.4 million in the prior quarter; efficiency ratio at 70% for the second quarter of 2022 compared to 74% for the prior quarter
- The Company repurchased 97,385 shares of its common stock at an average price of $31.14 per share during the second quarter ended June 30, 2022
- On July 28, 2022, the Board of Directors declared a quarterly cash dividend of $0.20 per common share, payable August 22, 2022 to shareholders of record as of August 15, 2022
| 2022 | 2022 | 2021 | 2021 | 2021 | ||||||||||
| (Dollars in thousands, except per share data) | 2nd QTR | 1st QTR | 4th QTR | 3rd QTR | 2nd QTR | |||||||||
| Income: | ||||||||||||||
| Net income | $ | 5,938 | $ | 5,535 | $ | 7,719 | $ | 9,438 | $ | 8,258 | ||||
| Diluted earnings per common share | 0.96 | 0.88 | 1.24 | 1.52 | 1.33 | |||||||||
| Pre-tax, pre-provision income (1) | 8,248 | 7,704 | 9,671 | 12,898 | 10,898 | |||||||||
| Pre-tax, pre-provision income - Bank (1) | 7,458 | 8,778 | 6,829 | 8,896 | 7,811 | |||||||||
| (1) See Non-GAAP reconciliation in the Appendix | ||||||||||||||
Christopher J. Annas, Chairman and CEO commented “Meridian’s second quarter revenue of $30.4 million generated earnings of $5.9 million, or $0.96 per diluted share. The results were very strong despite a break even in the mortgage segment. While we’re not happy with this, it does illuminate the excellent bank returns that sometimes get overshadowed. Exceptional loan growth and a strong margin drove much of the Bank’s success. Loan growth, excluding PPP, was $92.9 million or 25% annualized and all organic. The net interest margin increased to 4.07%, as PPP loans are being replaced by higher yielding commercial loans. The SBA division has consistently delivered loan sale income, and historically has done well in difficult economic times. We expected a decline in mortgage volume with the rate increases, but the lack of homes for sale in the region has made it worse. We continually forecast results in mortgage and make the appropriate adjustments.”
Mr. Annas added, “Despite the economic volatility, we have a strong pipeline of commercial business which should hold through year end. Meridian is the go-to bank for small and medium sized businesses in the Philadelphia metro market, and we will continue to get our opportunities. Our strong credit culture is a safeguard with a possible recession looming, so our scrutiny towards these opportunities will always be our first priority.”
Select Condensed Financial Information
| For the Quarter Ended (Unaudited) | |||||||||||||||||||
| 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||||||
| (Dollars in thousands, except per share data) | 2nd QTR | 1st QTR | 4th QTR | 3rd QTR | 2nd QTR | ||||||||||||||
| Income: | |||||||||||||||||||
| Net income - consolidated | $ | 5,938 | $ | 5,535 | $ | 7,719 | $ | 9,438 | $ | 8,258 | |||||||||
| Basic earnings per common share | 0.99 | 0.92 | 1.29 | 1.56 | 1.37 | ||||||||||||||
| Diluted earnings per common share | 0.96 | 0.88 | 1.24 | 1.52 | 1.33 | ||||||||||||||
| Net interest income - consolidated | 17,551 | 16,035 | 16,322 | 16,257 | 15,412 | ||||||||||||||
| At the Quarter Ended (Unaudited) | |||||||||||||||||||
| 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||||||
| June 30 | March 31 | December 31 | September 30 | June 30 | |||||||||||||||
| Balance Sheet: | |||||||||||||||||||
| Total assets | $ | 1,853,019 | $ | 1,831,589 | $ | 1,713,443 | $ | 1,762,445 | $ | 1,709,010 | |||||||||
| Loans, net of fees and costs | 1,518,893 | 1,431,906 | 1,386,457 | 1,378,670 | 1,362,750 | ||||||||||||||
| Total deposits | 1,568,014 | 1,564,851 | 1,446,413 | 1,439,047 | 1,413,280 | ||||||||||||||
| Non-interest bearing deposits | 291,925 | 291,379 | 274,528 | 265,842 | 261,806 | ||||||||||||||
| Stockholders' Equity | 156,087 | 157,684 | 165,360 | 158,416 | 152,885 | ||||||||||||||
| At the Quarter Ended (Unaudited) | |||||||||||||||||||
| 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||||||
| June 30 | March 31 | December 31 | September 30 | June 30 | |||||||||||||||
| Balance Sheet (Average Balances): | |||||||||||||||||||
| Total assets | $ | 1,811,335 | $ | 1,752,643 | $ | 1,755,263 | $ | 1,739,848 | $ | 1,723,421 | |||||||||
| Total interest earning assets | 1,736,547 | 1,680,070 | 1,696,473 | 1,691,641 | 1,678,721 | ||||||||||||||
| Loans, net of fees and costs | 1,465,891 | 1,397,002 | 1,449,361 | 1,351,634 | 1,345,672 | ||||||||||||||
| Total deposits | 1,567,325 | 1,504,241 | 1,468,575 | 1,409,534 | 1,385,250 | ||||||||||||||
| Non-interest bearing deposits | 296,521 | 281,123 | 287,801 | 254,843 | 255,964 | ||||||||||||||
| Stockholders' Equity | 158,420 | 161,939 | 159,921 | 155,580 | 146,497 | ||||||||||||||
| At the Quarter Ended (Unaudited) | |||||||||||||||||||
| 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||||||
| June 30 | March 31 | December 31 | September 30 | June 30 | |||||||||||||||
| Performance Ratios (Annualized): | |||||||||||||||||||
| Return on average assets - consolidated | 1.31 | % | 1.28 | % | 1.74 | % | 2.15 | % | 1.92 | % | |||||||||
| Return on average equity - consolidated | 15.03 | % | 13.86 | % | 19.15 | % | 24.07 | % | 22.61 | % | |||||||||
Income Statement Summary
Second Quarter 2022 Compared to First Quarter 2022
Net income was $5.9 million, or $0.96 per diluted share, for the second quarter of 2022 compared to net income of $5.5 million, or $0.88 per diluted share, for the first quarter of 2022. The $403 thousand increase in net income quarter-over-quarter was driven by continued strong loan portfolio growth, which helped improve net interest income by $1.5 million. Non-interest expense decreased $1.7 million, but was offset by a decrease of $2.7 million in non-interest income.
Interest income increased $2.0 million, or 11.5%, to $20.0 million from $18.0 million, for the second quarter of 2022. Quarter-over-quarter, there was combined average balance growth of $57.4 million on commercial loans and leases, small business loans, and residential real estate loans. In addition, the yield on loans rose 28 basis points, to 4.99% for the second quarter of 2022. This yield increase is partially due to these portfolios realizing the impact of interest rate rises in the market, combined with the positive impact of PPP loan balances being paid off and replaced by higher yielding commercial loans and leases.
Interest expense increased $557 thousand, or 28.9%, to $2.5 million as interest rates rose during the period. The cost of deposits increased 12 basis points over the prior quarter, as rates in interest checking, money market accounts, and time deposits moved up 21, 12, and 13 basis points, respectively.
The net interest margin was 4.07% for the second quarter of 2022 compared to 3.89% for the first quarter of 2022. Excluding the impact from PPP, the net interest margin increased 13 basis points to 3.95% for the second quarter 2022 from 3.82% for the first quarter of 2022. A reconciliation of this non-GAAP measure is included in the Appendix. Overall, net interest income increased $1.5 million, or 9.5%, to $17.6 million from $16.0 million for the first quarter of 2022.
The provision for loan losses was $602 thousand for the second quarter of 2022, compared to a $615 thousand provision for the first quarter of 2022. The second quarter provision was the result of new loan growth as well as covering $695 thousand in charge-offs on small ticket equipment leases, partially offset by decreases in specific reserves on non-performing loans as the underlying credit quality improved.
Total non-interest income for the second quarter of 2022 was $10.4 million, down $2.7 million or 20.6%, from the first quarter of 2022. Non-interest income was primarily down as a result of lower SBA loan income, which decreased $2.1 million. Mortgage banking revenue and wealth management revenue also decreased slightly, down $154 thousand or 2.2%, and $50 thousand, or 3.8%, respectively.
SBA loan income for the second quarter of 2022 was $437 thousand, a decline of $2.1 million, or 82.7%, from the first quarter of 2022. The decline was the result of a lower level of SBA loans sold ($12.8 million in the second quarter of 2022 compared to $25.2 million in loans sold in the first quarter of 2022), as well as lower margins on the sale.
The mortgage segment originated $332.4 million in loans during the second quarter of 2022, an increase of $8.6 million, or 2.6%, from the prior quarter, but the gain on sale margin declined 73 basis points. Refinance activity was down as interest rates continue to rise, representing 15% of the total residential mortgage loans originated for the second quarter of 2022, compared to 36% for the first quarter of 2022. The changes in the fair value of derivative instruments and loans held for sale increased a combined $884 thousand during the second quarter of 2022 compared to the first quarter of 2022, while there was a $1.7 million gain on hedging activity for the second quarter of 2022, compared to a $2.8 million gain for the first quarter of 2022.
Wealth management revenue from our wealth segment decreased $50 thousand, or 3.8%, quarter-over-quarter due to impacts from unfavorable market conditions.
Total non-interest expense for the second quarter of 2022 was $19.7 million, down $1.7 million or 8.1%, from the first quarter of 2022. Total salaries and employee benefits expense was $12.9 million, a net decrease of $2.4 million or 15.5%, compared to the first quarter of 2022. Of this decrease, $1.9 million related to the mortgage segment, which recognizes variable compensation based on loan origination volume, as well as a general reduction in workforce. Salary and employee benefits were down $442 thousand for the bank and wealth segments due to a decline in the value of stock based compensation quarter-over-quarter.
Partially offsetting the decrease in salaries and benefits, advertising expense was up $203 thousand, or 20.6%, and other non-interest expense increased $321 thousand, or 19.3%. Increases in other expense related to employee business and travel expenses, communications and other lesser expenses related to growth.
Balance Sheet Summary
As of June 30, 2022, total assets were $1.9 billion, an increase of $21.4 million, or 1.2%, from March 31, 2022. This growth in assets was due to loan portfolio growth, partially funded by a reduction in cash and investments of $31.1 million.
Portfolio loans grew $87.0 million, or 6.1%, to $1.5 billion as of June 30, 2022, from $1.4 billion as of March 31, 2022. Portfolio loan growth, excluding PPP loans, was $115.2 million, or 8% quarter-over-quarter. Commercial loans increased $16.9 million, or 7.7%, commercial real estate loans increased $17.5 million, or 3.2%, construction loans increased $13.0 million, or 7.9%, residential real estate loans held in portfolio increased $35.4 million, or 45.0%, and lease financings increased $15.1 million, or 14.1% from March 31, 2022. Partially offsetting the growth in portfolio loans was a decrease of $66.8 million, or 75.7%, in PPP loan balances as they continue to be forgiven by the SBA.
Deposits were $1.6 billion as of June 30, 2022, up $3.2 million, or 0.2%, from March 31, 2022. Non-interest bearing deposits increased $546 thousand, or 0.2%, from March 31, 2022. Interest-bearing checking accounts decreased $47.0 million, or 18.6%, while money market accounts/savings accounts combined increased $40.8 million, or 5.9%, since March 31, 2022. Certificates of deposits increased $8.8 million, or 2.7%, from March 31, 2022, as some wholesale deposits shifted from interest-bearing checking due to more favorable interest rates.
Consolidated stockholders’ equity of the Corporation was $156.1 million, or 8.4% of total assets as of June 30, 2022, as compared to $157.7 million, or 8.6% of total assets as of March 31, 2022. The change in stockholders’ equity is the result of net income of $5.9 million for the quarter, offset by dividends of $1.2 million paid during the second quarter, as well as $3.0 million in treasury share purchases, and a $3.5 million decline in accumulated other comprehensive income from the investment security portfolio due to changes in interest rates over this period.
As of June 30, 2022, the Tier 1 leverage ratio was 8.87% for the Corporation and 10.86% for the Bank, the Tier 1 risk-based capital and common equity ratios were 9.79% for the Corporation and 11.98% for the Bank, and total risk-based capital was 13.50% for the Corporation and 13.33% for the Bank. Based on these capital ratio levels, we remain above the Community Bank Leverage Ratio ("CBLR") requirement of 8%. Quarter-end numbers show a tangible common equity to tangible assets ratio (a non-GAAP measure) of 8.22% for the Corporation and 10.18% for the Bank. A reconciliation of this non-GAAP measure is included in the Appendix. Tangible book value per share was $25.16 as of June 30, 2022, compared with $25.04 as of March 31, 2022.
Asset Quality Summary
Meridian credit culture is strong and asset quality remains a primary focus of management. Total non-performing loans were $23.0 million as of June 30, 2022, relatively flat over the prior period. The ratio of non-performing assets to total assets declined to 1.24% as of June 30, 2022, from 1.25% as of March 31, 2022. There was no other real estate property included in non-performing assets for either period.
Meridian realized net charge-offs of 0.03% of total average loans for the quarter ended June 30, 2022, down from the quarter ended March 31, 2022 level of 0.04%. Net charge-offs for the quarter ended June 30, 2022 were $622 thousand, comprised of $695 thousand in charge-offs, with $73 thousand in recoveries for the quarter. Nearly all of the charge-offs for the quarter ended June 30, 2022 were from small ticket equipment leases. The ratio of allowance for loan 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 1.27% as of June 30, 2022 compared to 1.38% as of March 31, 2022. As of June 30, 2022 there were specific reserves of $2.8 million against non-performing loans, down from $4.2 million as of March 31, 2022 due to improvement in the underlying credit quality for certain 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 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, 2021 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.
FINANCIAL TABLES FOLLOW
APPENDIX - FINANCIAL RATIOS
| Quarterly | ||||||||||||||||||||
| 2022 | 2022 | 2021 | 2021 | 2021 | ||||||||||||||||
| (Dollars in thousands, except per share data) | 2nd QTR | 1st QTR | 4th QTR | 3rd QTR | 2nd QTR | |||||||||||||||
| Earnings and Per Share Data | ||||||||||||||||||||
| Net income | $ | 5,938 | $ | 5,535 | $ | 7,719 | $ | 9,438 | $ | 8,258 | ||||||||||
| Basic earnings per common share | 0.99 | 0.92 | 1.29 | 1.56 | 1.37 | |||||||||||||||
| Diluted earnings per common share | 0.96 | 0.88 | 1.24 | 1.52 | 1.33 | |||||||||||||||
| Common shares outstanding | 6,037 | 6,129 | 6,108 | 6,108 | 6,173 | |||||||||||||||
| Performance Ratios | ||||||||||||||||||||
| Return on average assets - consolidated | 1.31 | % | 1.28 | % | 1.74 | % | 2.15 | % | 1.92 | % | ||||||||||
| Return on average equity - consolidated | 15.03 | % | 13.86 | % | 19.15 | % | 24.07 | % | 22.61 | % | ||||||||||
| Net interest margin (TEY) | 4.07 | % | 3.89 | % | 3.83 | % | 3.83 | % | 3.70 | % | ||||||||||
| Net interest margin (TEY, excluding PPP loans and borrowings) (1) | 3.95 | % | 3.82 | % | 3.76 | % | 3.73 | % | 3.75 | % | ||||||||||
| Yield on earning assets (TEY) | 4.65 | % | 4.35 | % | 4.28 | % | 4.31 | % | 4.20 | % | ||||||||||
| Yield on earning assets (TEY, excluding PPP loans) (1) | 4.54 | % | 4.31 | % | 4.23 | % | 4.24 | % | 4.30 | % | ||||||||||
| Cost of funds | 0.61 | % | 0.50 | % | 0.49 | % | 0.52 | % | 0.54 | % | ||||||||||
| Efficiency ratio - consolidated | 70 | % | 74 | % | 71 | % | 66 | % | 71 | % | ||||||||||
| Asset Quality Ratios | ||||||||||||||||||||
| Net charge-offs (recoveries) to average loans | 0.03 | % | 0.04 | % | — | % | — | % | 0.01 | % | ||||||||||
| Non-performing loans/Total loans | 1.46 | % | 1.51 | % | 1.57 | % | 0.61 | % | 0.55 | % | ||||||||||
| Non-performing assets/Total assets | 1.24 | % | 1.25 | % | 1.34 | % | 0.52 | % | 0.48 | % | ||||||||||
| Allowance for loan losses/Total loans held for investment | 1.24 | % | 1.31 | % | 1.35 | % | 1.38 | % | 1.35 | % | ||||||||||
| Allowance for loan losses/Total loans held for investment (excluding loans at fair value and PPP loans) (1) | 1.27 | % | 1.38 | % | 1.46 | % | 1.52 | % | 1.58 | % | ||||||||||
| Allowance for loan losses/Non-performing loans | 81.82 | % | 82.41 | % | 81.47 | % | 206.42 | % | 224.63 | % | ||||||||||
| Capital Ratios | ||||||||||||||||||||
| Book value per common share | $ | 25.85 | $ | 25.73 | $ | 27.07 | $ | 25.94 | $ | 24.77 | ||||||||||
| Tangible book value per common share | $ | 25.16 | $ | 25.04 | $ | 26.37 | $ | 25.23 | $ | 24.06 | ||||||||||
| Total equity/Total assets | 8.42 | % | 8.61 | % | 9.65 | % | 8.99 | % | 8.95 | % | ||||||||||
| Tangible common equity/Tangible assets - Corporation (1) | 8.22 | % | 8.40 | % | 9.42 | % | 8.76 | % | 8.71 | % | ||||||||||
| Tangible common equity/Tangible assets - Bank (1) | 10.18 | % | 10.40 | % | 11.54 | % | 10.90 | % | 10.92 | % | ||||||||||
| Tier 1 leverage ratio - Corporation | 8.87 | % | 9.10 | % | 9.39 | % | 9.28 | % | 8.97 | % | ||||||||||
| Tier 1 leverage ratio - Bank | 10.86 | % | 11.20 | % | 11.51 | % | 11.55 | % | 11.28 | % | ||||||||||
| Common tier 1 risk-based capital ratio - Corporation | 9.79 | % | 10.09 | % | 10.83 | % | 10.64 | % | 10.16 | % | ||||||||||
| Common tier 1 risk-based capital ratio - Bank | 11.98 | % | 12.41 | % | 13.27 | % | 13.25 | % | 12.80 | % | ||||||||||
| Tier 1 risk-based capital ratio - Corporation | 9.79 | % | 10.09 | % | 10.83 | % | 10.64 | % | 10.16 | % | ||||||||||
| Tier 1 risk-based capital ratio - Bank | 11.98 | % | 12.41 | % | 13.27 | % | 13.25 | % | 12.80 | % | ||||||||||
| Total risk-based capital ratio - Corporation | 13.50 | % | 13.91 | % | 14.81 | % | 14.72 | % | 14.23 | % | ||||||||||
| Total risk-based capital ratio - Bank | 13.33 | % | 13.76 | % | 14.63 | % | 14.62 | % | 14.18 | % | ||||||||||
(1) Non-GAAP measure. See reconciliation in the Appendix.
| Statements of Income (Unaudited) | Statements of Income (Unaudited) | ||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| (Dollars in thousands, except per share data) | June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | |||||||||||
| Interest Income | |||||||||||||||
| Interest and fees on loans | $ | 19,120 | $ | 16,839 | $ | 36,339 | $ | 33,662 | |||||||
| Investments and cash | 917 | 678 | 1,662 | 1,307 | |||||||||||
| Total interest income | 20,037 | 17,517 | 38,001 | 34,969 | |||||||||||
| Interest Expense | |||||||||||||||
| Deposits | 1,818 | 1,368 | 3,107 | 2,934 | |||||||||||
| Borrowings | 668 | 737 | 1,308 | 1,502 | |||||||||||
| Total interest expense | 2,486 | 2,105 | 4,415 | 4,436 | |||||||||||
| Net interest income | 17,551 | 15,412 | 33,586 | 30,533 | |||||||||||
| Provision for loan losses | 602 | 96 | 1,217 | 695 | |||||||||||
| Net interest income after provision for loan losses | 16,949 | 15,316 | 32,369 | 29,838 | |||||||||||
| Non-Interest Income | |||||||||||||||
| Mortgage banking income | 6,942 | 19,467 | 14,038 | 43,567 | |||||||||||
| Wealth management income | 1,254 | 1,163 | 2,558 | 2,299 | |||||||||||
| SBA income | 437 | 1,490 | 2,957 | 2,735 | |||||||||||
| Earnings on investment in life insurance | 137 | 65 | 275 | 131 | |||||||||||
| Net change in fair value of derivative instruments | (674 | ) | (2,148 | ) | (840 | ) | (3,092 | ) | |||||||
| Net change in fair value of loans held for sale | 268 | 1,235 | (856 | ) | (2,632 | ) | |||||||||
| Net change in fair value of loans held for investment | (835 | ) | 41 | (1,613 | ) | (61 | ) | ||||||||
| Net gain (loss) on hedging activity | 1,715 | (674 | ) | 4,542 | 3,587 | ||||||||||
| Net gain on sale of investment securities available-for-sale | — | — | — | 48 | |||||||||||
| Service charges | 31 | 33 | 58 | 64 | |||||||||||
| Other | 1,128 | 1,060 | 2,386 | 2,134 | |||||||||||
| Total non-interest income | 10,403 | 21,732 | 23,505 | 48,780 | |||||||||||
| Non-Interest Expenses | |||||||||||||||
| Salaries and employee benefits | 12,926 | 20,213 | 28,224 | 42,352 | |||||||||||
| Occupancy and equipment | 1,176 | 1,175 | 2,428 | 2,326 | |||||||||||
| Professional fees | 913 | 816 | 1,761 | 1,756 | |||||||||||
| Advertising and promotion | 1,189 | 921 | 2,175 | 1,707 | |||||||||||
| Data processing | 580 | 520 | 1,059 | 1,136 | |||||||||||
| Information technology | 728 | 464 | 1,438 | 889 | |||||||||||
| Pennsylvania bank shares tax | 212 | 163 | 411 | 326 | |||||||||||
| Other | 1,982 | 1,974 | 3,643 | 4,018 | |||||||||||
| Total non-interest expenses | 19,706 | 26,246 | 41,139 | 54,510 | |||||||||||
| Income before income taxes | 7,646 | 10,802 | 14,735 | 24,108 | |||||||||||
| Income tax expense | 1,708 | 2,544 | 3,262 | 5,680 | |||||||||||
| Net Income | $ | 5,938 | $ | 8,258 | $ | 11,473 | $ | 18,428 | |||||||
| Weighted-average basic shares outstanding | 5,999 | 6,032 | 6,011 | 6,018 | |||||||||||
| Basic earnings per common share | $ | 0.99 | $ | 1.37 | $ | 1.91 | $ | 3.06 | |||||||
| Adjusted weighted-average diluted shares outstanding | 6,199 | 6,203 | 6,229 | 6,177 | |||||||||||
| Diluted earnings per common share | $ | 0.96 | $ | 1.33 | $ | 1.84 | $ | 2.98 | |||||||
| Statement of Condition (Unaudited) | |||||||||||||||||||
| (Dollars in thousands) | June 30, 2022 | March 31, 2022 | December 31, 2021 | September 30, 2021 | June 30, 2021 | ||||||||||||||
| Assets | |||||||||||||||||||
| Cash & cash equivalents | $ | 37,093 | $ | 68,888 | $ | 23,480 | $ | 63,121 | $ | 26,902 | |||||||||
| Investment securities | 168,552 | 167,870 | 168,028 | 153,566 | 149,366 | ||||||||||||||
| Mortgage loans held for sale | 58,938 | 81,258 | 80,882 | 117,996 | 132,348 | ||||||||||||||
| Loans, net of fees and costs | 1,518,893 | 1,431,906 | 1,386,457 | 1,378,670 | 1,362,750 | ||||||||||||||
| Allowance for loan losses | (18,805 | ) | (18,826 | ) | (18,758 | ) | (18,976 | ) | (18,361 | ) | |||||||||
| Bank premises and equipment, net | 12,185 | 11,883 | 11,806 | 8,242 | 8,160 | ||||||||||||||
| Bank owned life insurance | 22,778 | 22,641 | 22,503 | 22,362 | 12,269 | ||||||||||||||
| Servicing assets | 12,860 | 13,396 | 12,765 | 11,932 | 10,327 | ||||||||||||||
| Goodwill and intangible assets | 4,176 | 4,227 | 4,278 | 4,329 | 4,380 | ||||||||||||||
| Other assets | 36,349 | 48,346 | 22,002 | 21,203 | 20,869 | ||||||||||||||
| Total Assets | $ | 1,853,019 | $ | 1,831,589 | $ | 1,713,443 | $ | 1,762,445 | $ | 1,709,010 | |||||||||
| Liabilities & Stockholders’ Equity | |||||||||||||||||||
| Liabilities | |||||||||||||||||||
| Non-interest bearing deposits | $ | 291,925 | $ | 291,379 | $ | 274,528 | $ | 265,842 | $ | 261,806 | |||||||||
| Interest bearing deposits | |||||||||||||||||||
| Interest checking | 205,298 | 252,298 | 268,248 | 279,659 | 257,939 | ||||||||||||||
| Money market / savings accounts | 728,886 | 688,117 | 697,628 | 670,101 | 631,604 | ||||||||||||||
| Certificates of deposit | 341,905 | 333,057 | 206,009 | 223,445 | 261,931 | ||||||||||||||
| Total interest bearing deposits | 1,276,089 | 1,273,472 | 1,171,885 | 1,173,205 | 1,151,474 | ||||||||||||||
| Total deposits | 1,568,014 | 1,564,851 | 1,446,413 | 1,439,047 | 1,413,280 | ||||||||||||||
| Borrowings | 59,136 | 36,136 | 41,344 | 100,683 | 82,156 | ||||||||||||||
| Subordinated debt | 40,567 | 40,538 | 40,508 | 40,760 | 40,730 | ||||||||||||||
| Other liabilities | 29,215 | 32,380 | 19,818 | 23,539 | 19,959 | ||||||||||||||
| Total Liabilities | 1,696,932 | 1,673,905 | 1,548,083 | 1,604,029 | 1,556,125 | ||||||||||||||
| Stockholders' Equity | 156,087 | 157,684 | 165,360 | 158,416 | 152,885 | ||||||||||||||
| Total Liabilities & Stockholders’ Equity | $ | 1,853,019 | $ | 1,831,589 | $ | 1,713,443 | $ | 1,762,445 | $ | 1,709,010 | |||||||||
| Condensed Statements of Income (Unaudited) | |||||||||||||||
| Three Months Ended | |||||||||||||||
| (Dollars in thousands, except per share data) | June 30, 2022 | March 31, 2022 | December 31, 2021 | September 30, 2021 | June 30, 2021 | ||||||||||
| Interest income | $ | 20,037 | $ | 17,964 | $ | 18,248 | $ | 18,306 | $ | 17,517 | |||||
| Interest expense | 2,486 | 1,929 | 1,926 | 2,049 | 2,105 | ||||||||||
| Net interest income | 17,551 | 16,035 | 16,322 | 16,257 | 15,412 | ||||||||||
| Provision (credit) for loan losses | 602 | 615 | (222 | ) | 597 | 96 | |||||||||
| Non-interest income | 10,403 | 13,102 | 17,086 | 22,122 | 21,732 | ||||||||||
| Non-interest expense | 19,706 | 21,433 | 23,737 | 25,481 | 26,246 | ||||||||||
| Income before income tax expense | 7,646 | 7,089 | 9,893 | 12,301 | 10,802 | ||||||||||
| Income tax expense | 1,708 | 1,554 | 2,174 | 2,863 | 2,544 | ||||||||||
| Net Income | $ | 5,938 | $ | 5,535 | $ | 7,719 | $ | 9,438 | $ | 8,258 | |||||
| Weighted-average basic shares outstanding | 5,999 | 6,023 | 5,978 | 6,045 | 6,032 | ||||||||||
| Basic earnings per common share | $ | 0.99 | $ | 0.92 | $ | 1.29 | $ | 1.56 | $ | 1.37 | |||||
| Adjusted weighted-average diluted shares outstanding | 6,199 | 6,262 | 6,210 | 6,231 | 6,203 | ||||||||||
| Diluted earnings per common share | $ | 0.96 | $ | 0.88 | $ | 1.24 | $ | 1.52 | $ | 1.33 | |||||
| Segment Information | ||||||||||||||||||||||||||
| Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | |||||||||||||||||||||||||
| (Dollars in thousands) | Bank | Wealth | Mortgage | Total | Bank | Wealth | Mortgage | Total | ||||||||||||||||||
| Net interest income | $ | 16,923 | 317 | 311 | 17,551 | $ | 14,824 | 2 | 586 | 15,412 | ||||||||||||||||
| Provision for loan losses | 602 | — | — | 602 | 96 | — | — | 96 | ||||||||||||||||||
| Net interest income after provision | 16,321 | 317 | 311 | 16,949 | 14,728 | 2 | 586 | 15,316 | ||||||||||||||||||
| Non-interest income | 1,159 | 1,254 | 7,990 | 10,403 | 2,402 | 1,163 | 18,167 | 21,732 | ||||||||||||||||||
| Non-interest expense | 10,624 | 822 | 8,260 | 19,706 | 9,415 | 789 | 16,042 | 26,246 | ||||||||||||||||||
| Income before income taxes | $ | 6,856 | 749 | 41 | 7,646 | $ | 7,715 | 376 | 2,711 | 10,802 | ||||||||||||||||
| Efficiency ratio | 59 | % | 52 | % | 100 | % | 70 | % | 55 | % | 68 | % | 86 | % | 71 | % | ||||||||||
| Segment Information | ||||||||||||||||||||||||||
| Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | |||||||||||||||||||||||||
| (Dollars in thousands) | Bank | Wealth | Mortgage | Total | Bank | Wealth | Mortgage | Total | ||||||||||||||||||
| Net interest income | $ | 32,533 | 411 | 642 | 33,586 | $ | 29,324 | (11 | ) | 1,220 | 30,533 | |||||||||||||||
| Provision for loan losses | 1,217 | — | — | 1,217 | 695 | — | — | 695 | ||||||||||||||||||
| Net interest income after provision | 31,316 | 411 | 642 | 32,369 | 28,629 | (11 | ) | 1,220 | 29,838 | |||||||||||||||||
| Non-interest income | 4,535 | 2,558 | 16,412 | 23,505 | 4,724 | 2,299 | 41,757 | 48,780 | ||||||||||||||||||
| Non-interest expense | 20,833 | 1,700 | 18,606 | 41,139 | 18,348 | 1,684 | 34,478 | 54,510 | ||||||||||||||||||
| Income before income taxes | $ | 15,018 | 1,269 | (1,552 | ) | 14,735 | $ | 15,005 | 604 | 8,499 | 24,108 | |||||||||||||||
| Efficiency ratio | 56 | % | 57 | % | 109 | % | 72 | % | 54 | % | 74 | % | 80 | % | 69 | % | ||||||||||
Reconciliation of Non-GAAP Financial Measures
Meridian believes that non-GAAP measures are meaningful because they reflect adjustments commonly made by management, investors, regulators and analysts. This non-GAAP disclosure has 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 (Unaudited) | ||||||||||||||||
| 2022 | 2022 | 2021 | 2021 | 2021 | ||||||||||||
| (Dollars in thousands) | 2nd QTR | 1st QTR | 4th QTR | 3rd QTR | 2nd QTR | |||||||||||
| Income before income tax expense | $ | 7,646 | $ | 7,089 | $ | 9,893 | $ | 12,301 | $ | 10,802 | ||||||
| Provision for loan losses | 602 | 615 | (222 | ) | 597 | 96 | ||||||||||
| Pre-tax, pre-provision income | $ | 8,248 | $ | 7,704 | $ | 9,671 | $ | 12,898 | $ | 10,898 | ||||||
| Pre-tax, Pre-provision Income by Segment (Unaudited) | ||||||||||||||||
| 2022 | 2022 | 2021 | 2021 | 2021 | ||||||||||||
| (Dollars in thousands) | 2nd QTR | 1st QTR | 4th QTR | 3rd QTR | 2nd QTR | |||||||||||
| Bank | $ | 7,458 | $ | 8,778 | $ | 6,829 | $ | 8,896 | $ | 7,811 | ||||||
| Wealth | 749 | 519 | 286 | 432 | 376 | |||||||||||
| Mortgage | 41 | (1,593 | ) | 2,556 | 3,570 | 2,711 | ||||||||||
| Pre-tax, pre-provision income | $ | 8,248 | $ | 7,704 | $ | 9,671 | $ | 12,898 | $ | 10,898 | ||||||
| Reconciliation of PPP / PPPLF Impacted Yields (Unaudited) | |||||||||||||||||||
| 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||||||
| 2nd QTR | 1st QTR | 4th QTR | 3rd QTR | 2nd QTR | |||||||||||||||
| Net interest margin (TEY) | 4.07 | % | 3.89 | % | 3.83 | % | 3.83 | % | 3.70 | % | |||||||||
| Impact of PPP loans and PPPLF borrowings | (0.12) % | (0.07) % | (0.07) % | (0.10) % | 0.05 | % | |||||||||||||
| Net interest margin (TEY, excluding PPP loans and PPPLF borrowings) | 3.95 | % | 3.82 | % | 3.76 | % | 3.73 | % | 3.75 | % | |||||||||
| Yield on earning assets (TEY) | 4.65 | % | 4.35 | % | 4.28 | % | 4.31 | % | 4.20 | % | |||||||||
| Impact of PPP loans | (0.11) % | (0.04) % | (0.05) % | (0.07) % | 0.10 | % | |||||||||||||
| Yield on earning assets (TEY, excluding PPP loans) | 4.54 | % | 4.31 | % | 4.23 | % | 4.24 | % | 4.30 | % | |||||||||
| Reconciliation of Allowance for Loan Losses / Total loans (Unaudited) | |||||||||||||||||||
| 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||||||
| June 30 | March 31 | December 31 | September 30 | June 30 | |||||||||||||||
| Allowance for loan losses / Total loans held for investment | 1.24 | % | 1.31 | % | 1.35 | % | 1.38 | % | 1.35 | % | |||||||||
| Less: Impact of loans held for investment - fair valued | 0.01 | % | 0.02 | % | 0.02 | % | 0.01 | % | 0.01 | % | |||||||||
| Less: Impact of PPP loans | 0.02 | % | 0.05 | % | 0.09 | % | 0.13 | % | 0.22 | % | |||||||||
| Allowance for loan losses / Total loans held for investment (excl. loans at fair value and PPP loans) | 1.27 | % | 1.38 | % | 1.46 | % | 1.52 | % | 1.58 | % | |||||||||
| Tangible Common Equity Ratio Reconciliation - Corporation (Unaudited) | |||||||||||||||||||
| 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||||||
| (Dollars in thousands) | June 30 | March 31 | December 31 | September 30 | June 30 | ||||||||||||||
| Total stockholders' equity | $ | 156,087 | $ | 157,684 | $ | 165,360 | $ | 158,416 | $ | 152,885 | |||||||||
| Less: | |||||||||||||||||||
| Goodwill and intangible assets | (4,176 | ) | (4,227 | ) | (4,278 | ) | (4,329 | ) | (4,380 | ) | |||||||||
| Tangible common equity | $ | 151,911 | $ | 153,457 | $ | 161,082 | $ | 154,087 | $ | 148,505 | |||||||||
| Total assets | $ | 1,853,019 | $ | 1,831,589 | $ | 1,713,443 | $ | 1,762,445 | $ | 1,709,010 | |||||||||
| Less: | |||||||||||||||||||
| Goodwill and intangible assets | (4,176 | ) | (4,227 | ) | (4,278 | ) | (4,329 | ) | (4,380 | ) | |||||||||
| Tangible assets | $ | 1,848,843 | $ | 1,827,362 | $ | 1,709,165 | $ | 1,758,116 | $ | 1,704,629 | |||||||||
| Tangible common equity ratio - Corporation | 8.22 | % | 8.40 | % | 9.42 | % | 8.76 | % | 8.71 | % | |||||||||
| Tangible Common Equity Ratio Reconciliation - Bank (Unaudited) | |||||||||||||||||||
| 2022 | 2022 | 2021 | 2021 | 2021 | |||||||||||||||
| (Dollars in thousands) | June 30 | March 31 | December 31 | September 30 | June 30 | ||||||||||||||
| Total stockholders' equity | $ | 192,212 | $ | 194,347 | $ | 201,486 | $ | 196,009 | $ | 190,477 | |||||||||
| Less: | |||||||||||||||||||
| Goodwill and intangible assets | (4,176 | ) | (4,227 | ) | (4,278 | ) | (4,329 | ) | (4,380 | ) | |||||||||
| Tangible common equity | $ | 188,036 | $ | 190,120 | $ | 197,208 | $ | 191,680 | $ | 186,097 | |||||||||
| Total assets | $ | 1,852,998 | $ | 1,831,461 | $ | 1,713,318 | $ | 1,762,415 | $ | 1,709,006 | |||||||||
| Less: | |||||||||||||||||||
| Goodwill and intangible assets | (4,176 | ) | (4,227 | ) | (4,278 | ) | (4,329 | ) | (4,380 | ) | |||||||||
| Tangible assets | $ | 1,848,822 | $ | 1,827,234 | $ | 1,709,040 | $ | 1,758,086 | $ | 1,704,626 | |||||||||
| Tangible common equity ratio - Bank | 10.17 | % | 10.40 | % | 11.54 | % | 10.90 | % | 10.92 | % | |||||||||
| Tangible Book Value Reconciliation (Unaudited) | ||||||||||||||
| 2022 | 2022 | 2021 | 2021 | 2021 | ||||||||||
| June 30 | March 31 | December 31 | September 30 | June 30 | ||||||||||
| Book value per common share | $ | 25.85 | $ | 25.73 | $ | 27.07 | $ | 25.94 | $ | 24.77 | ||||
| Less: Impact of goodwill and intangible assets | 0.69 | 0.69 | 0.70 | 0.71 | 0.71 | |||||||||
| Tangible book value per common share | $ | 25.16 | $ | 25.04 | $ | 26.37 | $ | 25.23 | $ | 24.06 | ||||
Contact:
Christopher Annas
cannas@meridianbanker.com
484-568-5000
