The following excerpt is from the company's SEC filing.
2 Meridian
Corporation
Forward-Looking Statements
Meridian Corporation (the “Corporation”) may from time to time make written or oral “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,” “c
ould,” “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 including, without limitation: the impact of the
current 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, 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, 2020 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.
3 Meridian
Corporation
Company Snapshot
1 Includes home equity loans, residential mortgage loans held in portfolio and individual consumer loans.
Geographic Footprint
Branches Mortgage LPOs
Regional Market
Serves Pennsylvania, New Jersey, Delaware and Maryland
Philadelphia MSA is 8th largest MSA in the US
Expansion into growing central Maryland MSA
Profile and Business Lines
Core Banking: C&I, CRE, construction, SBA, and consumer lending; lease
financing through Meridian Equipment Finance, ® and deposit/treasury services.
Meridian Mortgage: residential lending to homeowners and small scale investors
originated in the PA, NJ, DE, VA, MD and DC markets.
Wealth Management Services through Meridian Wealth Partners, ® a registered
investment advisor and subsidiary of the Bank. Over $1 billion in AUM.
Meridian specializes in business and industrial lending, retail and commercial
real estate lending, electronic payments, along with a broad menu of high-
yield depository products supported by robust online and mobile access.
Cash & investments
10%
C & I loans
24%
PPP loans
11%
CRE loans
32%
Construction loans
7%
Consumer1
loans
6%
Residential
loans HFS
8%
FF & E
< 1%
Other assets
2%
ASSET MIX AT JUNE 30, 2021
4 Meridian
Corporation
2 QTR Review
1) As of and for the quarter ended June 30, 2021, per July 26, 2021 press release.
2) Includes PPP loans, loans held for sale and loans held for investment.
3) Excludes loans at fair value, loans held for sale and PPP loans. A Non-GAAP measure. Refer to Appendix for Non-GAAP to GAAP reconciliation.
4) Excludes PPP loans and PPPLF borrowings. A Non-GAAP measure. Refer to Appendix for Non-GAAP to GAAP reconciliation.
2QTR Overview Financial Highlights 2QTR 2021¹
Balance Sheet ($ in Millions)
Asset Quality (%)
Profitability (%)
Net income was $8.3 million for the quarter, or $1.33
per diluted share, driven by loan and deposit growth.
Total revenues of $39.2 million, resulting in ROE of
22.61% and ROA of 1.92% for 2Q 2021.
5th consecutive quarter of ROA exceeding 1.50% and
ROE exceeding 19.00%
Loan growth for the quarter equaled 4% (ex PPP and
residential held-for-sale), and annualized is 17% year
over year. Growth for the quarter was concentrated in
CRE loans, SBA loans (non-PPP), and originations from
our Meridian Equipment Finance leasing subsidiary.
Active COVID-19 loan modifications increased slightly
to $30.0 million for the quarter, from $28.8 million at
the end of the prior quarter.
5 Meridian
Corporation
Summary Income Statement
(1) See Non-GAAP reconciliation in the Appendix
Bank pre-tax, pre-provision income grew 59%
when comparing 2Q 2021 to 2Q 2020
Bank segment represents 72% of pre-tax, pre-
provision income for 2Q 2021
(dollars in thousands)
Summary Income Statement 2Q 2021 1Q 2021 2Q 2020
Net Interest Income 15,412 $ 15,120 $ 11,597 $
Provision for Loan Loss 96 599 1,631
Non-Interest Income 21,732 27,048 18,691
Non-Interest Expense 26,246 28,263 21,254
Income before Income Taxes 10,802 13,306 7,403
Income Taxes 2,544 3,136 1,690
Net Income 8,258 $ 10,170 $ 5,713 $
Earnings per Share
Basic Earnings per Share 1.37 $ 1.70 $ 0.94 $
Diluted Earnings per Share 1.33 $ 1.65 $ 0.94 $
Pre-tax, Pre-provision Income by Segment:
Bank 7,811 $ 7,891 $ 4,908 $
Wealth 376 227 77
Mortgage 2,711 5,787 4,049
Total pre-tax, pre-provision income (1) 10,898 $ 13,905 $ 9,034 $
72%
3%
25%
Pre-tax, Pre-provision Income
Bank Wealth Mortgage
6 Meridian
Corporation
Net Interest Income Growth Trend
3.97%
3.94%
3.91%
4.01%
3.91%
3.88%
3.72%
3.70%
3.67%
3.72%
3.61%
3.61%
3.49%
3.27% 3.26%
3.59%
3.72%
3.70% 3.48% 3.41%
3.47%
3.52%
3.64%
3.75%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
$1,000
$3,000
$5,000
$7,000
$9,000
$11,000
$13,000
$15,000
$17,000
Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
Net Interest Income Net Interest Margin Net Interest Margin (excl PPP impact)
NIM excl PPP expanded
34bps since 2Q 2020
Net interest income for 2Q 2021 increased $292 thousand, or 1.9%, to $15.4 million from $15.1 million 1Q 2021. Growth quarter over quarter 2021 was due
largely to a $23.9 million increase in average interest earnings assets over this period, combined with a $1.7 million reduction of average interest bearing liabilities.
7 Meridian
Corporation
Non-Interest Income
Non-Interest Income decreased $5.3 million or 19.7% from 1Q2021
Decrease primarily from our mortgage segment as mortgage
banking net revenue (including fair value and hedging
impacts) decreased $5.7 million. Decrease driven by lower
levels of mortgage loan originations compared to 1Q 2021.
Wealth management revenue increased $27 thousand, or
2.4%, due to the more favorable market conditions that
existed in 2Q 2021. AUM grew above $1 billion for first time.
Net revenue from the sale of SBA 7(a) loans was up $245
thousand as the value of loans sold increased to $13.5
million in 2Q2021 compared to $13.0 million in loans sold in
the 1Q2021.
82%
5%
7%
6%
Quarter ended June 30, 2021
(% of total non-interest income)
Mortgage banking income (including FV changes)
Wealth management income
SBA income
Other income
(Dollars in thousands) 2Q 2021 1Q 2021 Change
Mortgage banking income (including FV changes) 17,880 23,550 (5,670)
Wealth management income 1,163 1,136 27
SBA income 1,490 1,245 245
Other income 1,199 1,117 82
Total 21,732 $ 27,048 $ ($5,316)
8 Meridian
Corporation
Non-Interest Expense
77%
4%
3%
4%
12%
Quarter ended June 30, 2021
(% of total non-interest expense)
Salaries and employee benefits
Occupancy and equipment
Professional fees
Data processing and information technology
Other
Non-Interest Expense decreased $2.0 million or 7.1% from 1Q2021
Total salaries and employee benefits expense was $20.2
million, a net decrease of $1.9 million or 8.7%, for the
period. $2.2 million related to the mortgage segment,
which recognizes variable compensation based on
originations.
Professional fees decreased $124 thousand or 13.2%, due
to the timing of certain year-end legal, consulting and
audit costs in 1Q2021 that were not repeated in the
2Q2021.
(Dollars in thousands) 2Q 2021 1Q 2021 Change
Salaries and employee benefits 20,213 22,139 (1,926)
Occupancy and equipment 1,175 1,152 23
Professional fees 816 940 (124)
Data processing and information technology 984 1,041 (57)
Other 3,058 2,991 67
Total $26,246 $28,263 ($2,017)
9 Meridian
Corporation
Asset Quality
June 30, 2021
1) Excludes loans held for sale and, for 2Q 2020 to 2Q 2021, PPP loans. A Non-GAAP measure. See Appendix for Non-GAAP to GAAP reconciliation.
2) Includes loans held for sale and held for investment.
Nonaccrual Loans / Loans2 (%)
Net Chargeoffs / Average Loans (%)
0.43%
0.45%
0.34%
0.58%
0.54%
0.52%
0.52%
0.56%
0.55%
2017 2018 2019 1Q 20 2Q 20 3Q 20 4Q 20 1Q 21 2Q 21
0.13%
0.03%
(0.06%)
0.00% 0.00% 0.01% 0.00% 0.00% 0.01%
2017 2018 2019 1Q 20 2Q 20 3Q 20 4Q 20 1Q 21 2Q 21
0.96%
0.97%
1.00%
1.10%
1.27%
1.59% 1.65% 1.65%
1.58%
2017 2018 2019 1Q 20 2Q 20 3Q 20 4Q 20 1Q 21 2Q 21
2Q 2021 Highlights:
Nonaccrual loans to total loans2 declined in 2Q 2021
Near historic high for reserves to total loans
COVID modifications remain less than 2% of total loans2
Hospitality and advertising portfolios are being closely
monitored
Reserves / Loans1 (%)
COVID-19 Impact to ALLL
10 Meridian
Corporation
Strong Capital Position
All capital ratios significantly
exceed well capitalized
regulatory requirements
Bank level -
Community Banking
Leverage Ratio of
11.4% compared to
minimum of 8.5% -
$44.3M excess capital
2Q 2021 quarterly dividend
$0.125
Paid $1.00 special dividend
in 1Q 2021
In April 2021 announced
new $6 million share
repurchase program
-
50,000
100,000
150,000
200,000
250,000
Tier 1 Leverage Tier 1 Risk
Based
CE Tier 1 Total Risk Based
64,862
31,089 52,720
60,952
Regulatory Minimums Excess
9.0% 10.2% 10.2%
14.2%
Excess Capital (000s)
11 Meridian
Corporation
Time Deposit Repricing Opportunities
June 30, 2021
Source: Company documents
$48M in time deposits
matured during Q2 2021
Cost of CDs and cost of
funds declined by 20
bps and 8 bps,
respectively
$54M in time deposits
with a blended cost of
41 bps maturing over
next 3 months
Potential to renew
upcoming brokered CD
maturities to longer
terms, shrink gap in LT-
liabilities
12 Meridian
Corporation
Appendix
13 Meridian
Corporation
Historical Financial Highlights
1) Includes loans held for sale and held for investment.
2) Includes loans held for investment (excluding loans at fair value and PPP loans).
3) A Non-GAAP measure. See Appendix for Non-GAAP to GAAP reconciliation.
Note: 2017 Financials are at bank level; Meridian Corporation Holding Company formed 3Q2018.
Dollar Values in Thousands, Except Per Share Amounts 2017Y 2018Y 2019Y 2020Y 1Q 2021 2Q 2021
Balance Sheet
Total Assets $ 856,035 $ 997,480 $ 1,150,019 1,720,197 $ 1,743,977 $ 1,709,010 $
Loans1 729,661 875,801 998,414 1,513,963 $ 1,524,799 1,495,098
Deposits 627,109 752,130 851,168 1,241,335 $ 1,383,590 1,413,280
Gross Loans / Deposits 116.35% 116.44% 117.30% 121.96% 110.21% 105.79%
Capital
Total Equity $ 101,363 $ 109,552 $ 120,695 141,622 $ 143,505 $ 152,885 $
Tangible Common Equity / Tangible Assets - HC 3 11.27% 10.53% 10.11% 7.99% 7.99% 8.71%
Tangible Common Equity / Tangible Assets - Bank 3 11.27% 10.53% 13.52% 10.25% 10.22% 10.92%
Tier 1 Leverage Ratio - HC 12.37% 11.16% 10.55% 8.96% 8.86% 8.97%
Tier 1 Leverage Ratio - Bank 12.37% 11.16% 14.08% 11.54% 11.34% 11.28%
Total Capital Ratio - HC 15.53% 13.66% 16.10% 14.55% 14.05% 14.23%
Total Capital Ratio - Bank 15.53% 13.66% 16.09% 14.54% 14.03% 14.18%
Commercial Real Estate Loans / Total RBC 155.83% 183.80% 176.97% 172.15% 171.74% 174.09%
Earnings & Profitability
Net Income $ 3,032 $ 8,163 $ 10,481 26,438 $ 10,170 $ 8,258 $
ROA 0.39% 0.90% 1.01% 1.78% 2.43% 1.92%
ROE 3.97% 7.77% 9.09% 21.33% 30.06% 22.61%
Net Interest Margin (NIM)(TEY) 3.93% 3.80% 3.65% 3.40% 3.72% 3.70%
NIM (TEY, excluding PPP loans and PPPLF borrowings)3 3.93% 3.80% 3.65% 3.47% 3.64% 3.75%
Non-Int Inc. / Avg. Assets 4.69% 3.58% 3.19% 5.85% 6.47% 5.06%
Efficiency Ratio 87.8% 81.4% 79.2% 68.5% 67.0% 70.7%
Asset Quality
Nonaccrual Loans / Loans1 0.43% 0.45% 0.34% 0.62% 0.56% 0.55%
NPAs / Assets 0.42% 0.39% 0.30% 0.46% 0.49% 0.48%
Reserves / Loans2, 3 0.96% 0.97% 1.00% 1.65% 1.65% 1.58%
NCOs / Average Loans 0.13% 0.03% (0.06%) 0.00% 0.00% 0.01%
Yield and Cost
Yield on Earning Assets (TEY) 4.83% 5.14% 5.30% 4.35% 4.29% 4.20%
Yield on Earning Assets (TEY), excluding PPP loans)3 4.83% 5.14% 5.30% 4.51% 4.26% 4.30%
Cost of Deposits 0.79% 1.29% 1.67% 1.07% 0.49% 0.40%
Cost of Interest-Bearing Liabilities 1.16% 1.69% 2.10% 1.18% 0.77% 0.67%
For the Year Ended
14 Meridian
Corporation
Reconciliation of Non-GAAP Financial Measures
Tangible common equity to tangible assets
Management uses the measure tangible common equity to tangible assets to assess our capital strength. We believe that this non-GAAP financial measure is useful to
investors because, by removing the impact of our preferred stock, goodwill and other intangible assets, it allows investors to more easily assess our capital adequacy.
This non-GAAP financial measure should not be considered a substitute for any regulatory capital ratios and may not be comparable to other similarly titled measures
used by other companies. The table below provides the non-GAAP reconciliation for our tangible common equity to tangible assets:
(dollars in thousands)
Meridian Corporation 2017Y 2018Y 2019Y 2020 Y 1Q 2021 2Q 2021
Tangible common equity ratio:
Total stockholders' equity 101,363 109,552 120,695 141,622 143,505 152,885
Less:
Goodwill 899 899 899 899 899 899
Intangible assets 4,596 4,147 3,874 3,601 3,533 3,481
Tangible common equity 95,869 104,507 115,922 137,122 139,073 148,505
Total assets 856,035 997,480 1,150,019 1,720,197 1,743,977 1,709,010
Less:
Goodwill 899 899 899 899 899 899
Intangible assets 4,596 4,147 3,874 3,601 3,533 3,481
Tangible assets $ 850,540 992,434 1,145,246 1,715,697 1,739,545 1,704,630
Tangible common equity ratio 11.27% 10.53% 10.12% 7.99% 7.99% 8.71%
(dollars in thousands)
Meridian Bank 2017Y 2018Y 2019Y 2020 Y 1Q 2021 2Q 2021
Tangible common equity ratio:
Total stockholders' equity 101,363 109,552 159,643 180,288 182,171 190,477
Less:
Goodwill 899 899 899 899 899 899
Intangible assets 4,596 4,147 3,874 3,601 3,533 3,481
Tangible common equity 95,869 104,507 154,870 175,788 177,739 186,097
Total assets 856,035 997,480 1,149,979 1,720,166 1,743,945 1,709,006
Less:
Goodwill 899 899 899 899 899 899
Intangible assets 4,596 4,147 3,874 3,601 3,533 3,481
Tangible assets $ 850,540 992,434 1,145,206 1,715,666 1,739,513 1,704,626
Tangible common equity ratio 11.27% 10.53% 13.52% 10.25% 10.22% 10.92%
15 Meridian
Corporation
Reconciliation of Non-GAAP Financial Measures
Dollar Values in Thousands
2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 2021
Reconciliation of Net Interest Margin (TEY, exluding PPP loans and PPPLF borrowings)
Net interest margin (TEY) 3.27% 3.26% 3.59% 3.72% 3.70%
Impact of PPP loans and PPPLF borrowings 0.14% 0.21% (0.07%) (0.08%) 0.05%
Net interest margin (TEY, excluding PPP loans and PPPLF borrowings) 3.41% 3.47% 3.52% 3.64% 3.75%
Reconciliation of Reserves / Loans
Allowance for loan losses / Total loans held for investment 1.01% 1.27% 1.38% 1.36% 1.35%
Less: Impact of loans held for investment - fair valued 0.00% 0.00% 0.00% 0.00% 0.00%
Less: Impact of PPP loans 0.26% 0.32% 0.27% 0.29% 0.23%
Allowance / Total loans held for investment (excl. loans at fair value and PPP loans) 1.27% 1.59% 1.65% 1.65% 1.58%
Reconciliation of Yield on Earning Assets
Yield on earning assets (TEY) 4.24% 4.07% 4.28% 4.29% 4.20%
Impact of PPP loans 0.26% 0.32% (0.01%) (0.03%) 0.10%
Yield on earning assets (TEY, excluding PPP loans) 4.50% 4.39% 4.27% 4.26% 4.30%
2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 2021
Income before inocme tax expense 7,403 11,985 11,877 13,306 10,802
Add: Provision for loan losses 1,631 3,956 1,163 599 96
Pre-tax, pre-provision income $9,034 $15,941 $13,040 $13,905 $10,898
Reconciliation of PPP Related Non-GAAP Measures
Reconciliation of Pre-tax, Pre-Provision Non-GAAP Measure
For the Quarter Ended
For the Quarter Ended
The above information was disclosed in a filing to the SEC. To see the filing, click here.
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