Meridian Corporation Reports 1Q 2022 Net Income of $5.5
Meridian Corporation Reports Second Quarter 2022 Results

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        

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