EX-99.1 2 ex-99d1.htm EX-99.1 mrbk_Q3 2019_Earnings Release Exhibit

Exhibit 99.1

Picture 3

Meridian Corporation’s Third Quarter 2019 Earnings Increase 22% Year-Over-Year to $3.3 Million, or $0.52 Per Diluted Share

 

MALVERN, Pa., October 24, 2019 — Meridian Corporation (Nasdaq: MRBK) today reported net income increased 21.6% to $3.3 million, or $0.52 per diluted share for the third quarter of 2019, compared to $2.7 million, or $0.42 per diluted share, in the third quarter of 2018, generating a return on average assets and return on average equity of 1.24% and 11.29%, respectively, for the current quarter.  For the first nine months of 2019, Meridian’s net income increased $1.5 million or 26.6% to $7.3 million, or $1.14 per diluted share, compared to $5.8 million, or $0.90 per diluted share, for the first nine months of 2018.

Meridian achieved record earnings for the third quarter, with annualized return on average equity of 11.29% and annualized return on average assets of 1.24%. This resulted from continued growth in our core commercial loan business, greater SBA loan generation and sale activities, and seasonally-high mortgage production,” said Christopher J. Annas, Chairman and CEO.  “Commercial loan balances are up nearly 12% year-to-date and along with a net interest margin of 3.61%, year-to-date net interest income grew 10% over prior year”.

 

“Our mortgage division profitability was excellent during the third quarter and we see purchase and refinance activity continuing strong in the fourth quarter”, Annas continued. “Our mortgage business has been profitable every year since 2012, and our third quarter is generally the most active.”

 

“Our Pennsylvania, Delaware and New Jersey markets continue to demonstrate strong economic growth.  Additionally, the recent DNB First and Beneficial acquisitions by out-of-market banks, coupled with our consistent outreach efforts, should help us achieve our annualized 15% loan growth target,” Annas concluded.

 

 

 

Financial Highlights

·

Net income for the three and nine months ended September 30, 2019 was $3.3 million and $7.3 million, respectively, increases of $590 thousand or 21.6% and $1.5 million or 26.6% as compared to net income for the same periods in 2018.

·

Total assets of $1.1 billion as of September 30, 2019 increased $129.5 million, or 13.0% year-to-date and $167.0 million or 17.4% year-over-year.

·

Total portfolio loans and leases of $935.9 million as of September 30, 2019 increased $97.8 million, or 11.7% year-to-date and $129.1 million or 16.0% year-over-year.

·

Total deposits of $858.5 million as of September 30, 2019 increased $106.3 million, or 14.1% year-to-date and $76.5 million or 9.8% year-over-year.

·

Non-interest bearing deposits of $129.3 million as of September 30, 2019 increased $3.2 million, or 2.5% year-to-date and $4.4 million or 3.6% year-over-year.

·

Net interest income increased $896 thousand or 10.7% and $2.5 million or 10.1% for the three and nine months ended September 30, 2019 over the same periods in 2018. 

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·

The net interest margin was 3.61%, and 3.66%, for the three and nine months ended September 30, 2019, respectively, compared to 3.72% and 3.83% for the same periods in 2018

·

Meridian Bank was ranked 4th  , by total dollars of SBA loans originated, in the Eastern Pennsylvania District. Our SBA team originated $25.4 million in loans for the nine months ended September 30, 2019.  SBA revenue amounted to $645 thousand and $1.2 million for the three and nine months ended September 30, 2019, respectively.

·

Mortgage division originated $191 million and $425 million in loans during the three and nine months ended September 30, 2019, respectively, resulting in $7.9 million and $19.1 million in revenue for the same periods, respectively.

Select Condensed Financial Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ended (Unaudited)

 

 

2019

 

2019

 

2019

 

2018

 

2018

(Dollars in thousands, except per share data)

    

September 30

 

June 30

    

March 31

    

December 31

    

September 30

Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income - consolidated

 

$

3,317

 

$

2,022

 

$

2,006

 

$

2,364

 

$

2,727

Basic earnings per common share

 

$

0.52

 

$

0.32

 

$

0.31

 

$

0.37

 

$

0.43

Diluted earnings per common share

 

$

0.52

 

$

0.31

 

$

0.31

 

$

0.37

 

$

0.42

Net income - excluding Mortgage

 

 

2,329

 

 

2,203

 

 

1,969

 

 

1,826

 

 

1,973

Net income - Mortgage

 

 

988

 

 

(181)

 

 

37

 

 

538

 

 

754

Net interest income - consolidated

 

 

9,274

 

 

8,922

 

 

8,477

 

 

8,441

 

 

8,378

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At the Quarter Ended (Unaudited)

 

 

2019

 

2019

 

2019

 

2018

 

2018

 

    

September 30

 

June 30

    

March 31

    

December 31

    

September 30

Balance Sheet:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

1,126,937

 

$

1,055,906

 

$

1,027,514

 

$

997,480

 

$

959,921

Loans, net of fees and costs

 

 

935,858

 

 

885,172

 

 

862,372

 

 

838,106

 

 

806,788

Total deposits

 

 

858,461

 

 

840,714

 

 

810,713

 

 

752,130

 

 

781,927

Non-interest bearing deposits

 

 

129,302

 

 

127,158

 

 

115,464

 

 

126,150

 

 

124,855

Stockholders' Equity

 

 

117,772

 

 

114,379

 

 

111,992

 

 

109,552

 

 

106,703

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At the Quarter Ended (Unaudited)

 

 

2019

 

2019

 

2019

 

2018

 

2018

 

    

September 30

 

June 30

    

March 31

    

December 31

    

September 30

Balance Sheet (Average Balances):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

1,059,456

 

$

1,001,908

 

$

977,205

 

$

944,486

 

$

936,329

Loans, net of fees and costs

 

 

912,781

 

 

874,836

 

 

849,237

 

 

809,489

 

 

801,914

Total deposits

 

 

844,568

 

 

836,133

 

 

788,587

 

 

788,796

 

 

722,647

Non-interest bearing deposits

 

 

126,101

 

 

117,664

 

 

122,729

 

 

128,595

 

 

122,454

Stockholders' Equity

 

 

116,547

 

 

113,605

 

 

111,197

 

 

108,302

 

 

106,505

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At the Quarter Ended (Unaudited)

 

 

2019

 

2019

 

2019

 

2018

 

2018

 

    

September 30

 

June 30

    

March 31

    

December 31

    

September 30

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets - consolidated

 

 

1.24%

 

 

0.81%

 

 

0.83%

 

 

0.99%

 

 

1.16%

Return on average equity - consolidated

 

 

11.29%

 

 

7.14%

 

 

7.32%

 

 

8.66%

 

 

10.19%

 

 

2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Quarter Ended (Unaudited)

Other Select Condensed Financial Information

 

2019

 

2019

 

2019

 

2018

 

2018

 

 

September 30

 

June 30

    

March 31

    

December 31

    

September 30

Bank, excluding Mortgage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income after provision for loan losses

 

$

8,502

 

$

8,867

 

$

8,200

 

$

7,962

 

$

7,887

Non-interest income

 

 

2,152

 

 

1,971

 

 

1,270

 

 

1,403

 

 

1,397

Non-interest expense

 

 

7,759

 

 

8,049

 

 

6,987

 

 

7,018

 

 

6,843

Net income / (loss)

 

 

2,329

 

 

2,203

 

 

1,969

 

 

1,826

 

 

1,973

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

67

 

$

41

 

$

58

 

$

160

 

$

200

Non-interest income

 

 

7,662

 

 

5,957

 

 

5,177

 

 

6,061

 

 

7,770

Non-interest expense

 

 

6,393

 

 

6,195

 

 

5,130

 

 

5,538

 

 

6,910

Net income / (loss)

 

 

988

 

 

(181)

 

 

37

 

 

538

 

 

754

 

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 to evaluate performance trends and the adequacy of common equity. 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.

Meridian believes adjusted net income, adjusted earnings per common share, adjusted ROAA and adjusted ROAE provide a greater understanding of ongoing operations and enhances comparability of results with prior periods. Because management believes that these adjustments are not incurred as a result of ongoing operations, they are not as helpful a measure of the performance of our underlying business, particularly in light of their unpredictable nature and are difficult to forecast. This supplemental presentation should not be construed as an inference that Meridian’s future results will be unaffected by similar adjustments to these measures determined in accordance with GAAP.

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Adjusted Net Income and Earnings per Share (Unaudited)

 

 

2019

 

2019

 

2019

 

2018

 

2018

(Dollars in thousands, except per share data)

    

3rd QTR

 

2nd QTR

 

1st QTR

    

4th QTR

    

3rd QTR

Net income - consolidated

 

$

3,317

 

$

2,022

 

$

2,006

 

$

2,364

 

$

2,727

Litigation settlement adjustment, net of tax

 

 

 —

 

 

517

 

 

97

 

 

 —

 

 

 —

Holding company formation cost adjustment, net of tax

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

179

Contingent asset fair value adjustment, net of tax

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

138

Adjusted net income - consolidated(1)

 

 

3,317

 

 

2,539

 

 

2,103

 

 

2,364

 

 

3,044

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income - excluding Mortgage

 

 

2,329

 

 

2,203

 

 

1,969

 

 

1,826

 

 

1,973

Adjusted net income - excluding Mortgage(1)

 

 

2,329

 

 

2,720

 

 

2,066

 

 

1,826

 

 

2,290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share, diluted

 

$

0.52

 

$

0.31

 

$

0.31

 

$

0.37

 

$

0.42

Litigation settlement adjustment, net of tax

 

 

 —

 

 

0.08

 

 

0.02

 

 

 —

 

 

 —

Holding company formation cost adjustment, net of tax

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

0.03

Contingent asset fair value adjustment, net of tax

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

0.02

Adjusted diluted earnings per share(1)

 

$

0.52

 

$

0.39

 

$

0.33

 

$

0.37

 

$

0.47

Adjusted diluted earnings per share- excluding Mortgage(1)

 

$

0.36

 

$

0.42

 

$

0.32

 

$

0.28

 

$

0.36

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Return Ratios (Unaudited)

 

 

2019

 

2019

 

2019

 

2018

 

2018

 

 

3rd QTR

 

2nd QTR

 

1st QTR

    

4th QTR

    

3rd QTR

Return on average assets - consolidated

 

 

1.24%

 

 

0.81%

 

 

0.83%

 

 

0.99%

 

 

1.16%

Adjusted return on average assets - consolidated(1)

 

 

1.24%

 

 

1.02%

 

 

0.87%

 

 

0.99%

 

 

1.29%

Return on average equity - consolidated

 

 

11.29%

 

 

7.14%

 

 

7.32%

 

 

8.66%

 

 

10.19%

Adjusted return on average equity - consolidated(1)

 

 

11.29%

 

 

8.96%

 

 

7.67%

 

 

8.66%

 

 

11.34%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets - excluding Mortgage

 

 

0.90%

 

 

0.54%

 

 

0.83%

 

 

0.79%

 

 

0.87%

Adjusted return on average assets - excluding Mortgage(1)

 

 

0.90%

 

 

1.11%

 

 

0.88%

 

 

0.79%

 

 

0.97%

Return on average equity - excluding Mortgage

 

 

7.93%

 

 

4.68%

 

 

7.18%

 

 

6.69%

 

 

7.37%

Adjusted return on average equity - excluding Mortgage(1)

 

 

7.93%

 

 

9.60%

 

 

7.54%

 

 

6.69%

 

 

8.53%

(1)

Adjusted net income, adjusted earnings per common share, adjusted ROAA and adjusted ROAE are non-GAAP measures and remove the tax effect of the charges to earnings for the settlement of outstanding litigation of $148 thousand (second quarter of 2019), $28 thousand (first quarter of 2019), and $44 thousand (second quarter of 2018), respectively,  as well as for the holding company formation costs of $51 thousand, and the fair value adjustment to contingent assets of $39 thousand in the third quarter of 2018.

Income Statement Summary

Net income was $3.3 million, or $0.52 per diluted share for the third quarter of  2019 compared to net income of $2.7 million, or $0.42 per diluted share, for the same period in 2018. The increase was attributable to the expansion of net interest income of $896 thousand partially offset by a higher level of provision for loan losses of $414 thousand as well as an increase of $647 thousand of non-interest income partially offset by an increase in non-interest expense of $399 thousand period over period. Net income was $7.3 million, or $1.14 per diluted share for the first nine months of  2019 compared to $5.8 million, or $0.90 per diluted share, for the same period in 2018.

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Net interest income increased $896 thousand, or 10.7%, to $9.3 million for the third quarter 2019, from $8.4 million for the same period in 2018. Net interest income increased $2.5 million, or 10.1%, to $26.7 million for the first nine months of 2019, from $24.2 million for the same period in 2018. The growth in interest income for the third quarter of 2019 compared to the third quarter a year ago reflects an increase in average interest earning assets of $124.9 million. The growth in interest income for the third quarter of 2019 compared to the third quarter a year ago reflects an increase in average interest earning assets of $128.3 million.  Increases over both periods were partially offset by the decrease in the net interest margin. The net interest margin was 3.61%, and 3.66%, for the three and nine months ended September 30, 2019, respectively, compared to 3.72% and 3.83% for the same periods in 2018. The decrease in net interest margin reflects pressure from cost of funds during the three and nine month periods which did not reprice at the same level as variable related assets. 

Reflecting strong loan growth, Meridian’s provision for loan losses increased $414 thousand to $705 thousand in the third quarter of 2019, compared to the third quarter a year ago.  In the first nine months of the year, the provision for loan losses decreased $320 thousand to $938 thousand, compared to the same period in 2018. The decrease was primarily a result of significant net loan recoveries in the first and second quarters of 2019.

Total non-interest income for the third quarter of 2019 was $9.8 million, up $647 thousand, or 7.1%, from the comparable period in 2018. Total non-interest income for the nine months ended September 30, 2019 was $24.2 million, down $703 thousand, or 2.8%, from the comparable period in 2018. The increase in non-interest income for the third quarter of 2019 compared to the third quarter in 2018 was primarily the result of SBA income recognized on the sales of SBA loans.  The decrease in non-interest income for the nine month period came primarily from our mortgage division, as lower levels of mortgage originations reduced banking income $1.3 million. This lower revenue along with hedging losses ($1.3 million decrease reflected in other income) were partially offset by fair value gains (up $763 thousand) combined to reduce non-interest income by $1.8 million.  Also affecting non-interest income for the nine month period, wealth management revenue was down $298 thousand reflecting the market value changes in assets under management, which decreased correspondingly to changes in the stock market.  These decreases in non-interest income for the nine month period were partially offset by $1.2 million in SBA income as well as $212 thousand in gains recognized on the sale of investment securities.  There were no SBA loan sales or sales of securities in the prior year comparable periods.

Total non-interest expense was $14.2 million for the third quarter of 2019, up $399 thousand, or 2.9%, from $13.8 million for the third quarter a year ago and $40.5 million for first nine months of the year, up $123 thousand, or 0.30%, from $40.4 million for the same period in the 2018.  There was a $418 thousand or 4.7% increase in salaries and employee benefits for the third quarter of 2019 compared to the same period in 2018 due to the increase in corporate employees. There was a reduction in salaries and employee benefits expense of $930 thousand or 3.5% for the nine months ended September 30, 2019 compared to prior year, as full-time equivalent employees, particularly in the mortgage division declined. Occupancy and equipment expense was up $26 thousand or 2.8% for the three month due to increased rental space for Philadelphia offices and relatively flat (down 0.9%) for the nine  month periods. In addition, variable loan expenses decreased by $11 thousand and $85 thousand over the three and nine month periods ended September 30, 2019, respectively, reflecting the lower level of mortgage originations year-over-year. Professional fees were up $106 thousand,  or 14.8%, and $330 thousand, or 19.8%, for the three and nine month periods ended September 30, 2019.  For the third quarter of 2019, professional fees were up due to accounting and compliance fees related to public reporting requirements and mortgage compliance.  For the nine month period, the higher professional fee were due largely attributable to legal and accounting fees incurred as part of the Maryland mortgage licensing issue in the first quarter, in addition to legal fees incurred related to the litigation matter discussed below.  Advertising and promotion expenses were down slightly over these same periods due to the timing and number of promotional events held.  Data processing and information technology expenses were up over these same periods due to increased customer transaction volume.  Communications expense decreased over these same periods as the number of office locations declined from the prior year. 

Other non-interest expenses decreased $157 thousand to $903 thousand for the third quarter of 2019, compared to the third quarter a year ago.  The decrease was primarily related to a $199 thousand credit of FDIC insurance related to the Small Bank Assessment Credit.  In the first nine months of 2019, non-interest expenses increased $890 thousand to $3.8 million when compared to the prior year period. The settlement of the outstanding litigation matter contributed $790 thousand to other non-interest expense for the first nine months of 2019, along with $79 thousand of other expense

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incurred for the previously disclosed Maryland mortgage licensing issue.  Increase in the PA shares tax assessment due to the growth of the Bank also contributed to higher non-interest expenses during the year-to-date period, from the same period in the prior year.

Balance Sheet Summary

As of September 30, 2019, total assets were $1.1 billion compared with $959.9 million as of September 30, 2018 and $997.5 million as of December 31, 2018. Total assets increased $167.0 million, or 17.4%, on a year-over-year basis primarily due to 16.0% loan growth. Total assets increased $129.5 million, or 13.0%, from year-end, as a result of an increase in loans and loans held for sale of $108.7 million or 12.4% combined.

Total loans, excluding mortgage loans held for sale, grew $129.1 million, or 16.0%, to $935.9 million as of September 30, 2019, from $806.8 million as of September 30, 2018. For the nine month period ending September 30, 2019, loans, excluding mortgages held for sale increased $97.8 million, or 11.7%, from $838.1 million as of December 31, 2018. The increase in loans for both periods is attributable to our expanding presence in the Philadelphia market area, which continues to show growth in real estate investments. Commercial loans increased a net $23.8 million, or 9.7%, year-over-year.  Commercial real estate and commercial construction loans combined increased $90.3 million, or 21.6%, year-over-year. SBA loans increased $7.6 million or 108.2%, as a result of the new lending team hired in the fourth quarter of 2018.  Residential loans held in portfolio increased $6.0 million, or 11.8%, year-over-year as certain loan products or terms were targeted to hold in portfolio. Residential mortgage loans held for sale increased $14.6 million, or 42.8%, to $48.6 million as of September 30, 2019 from September 30, 2018 fuled by the recent lower rates.

Deposits were $858.5 million as of September 30, 2019, up $76.5 million, or 9.8%, from September 30, 2018, and up $106.3 million, or 14.1%, from December 31, 2018. Non-interest bearing deposits increased $4.4 million, or 3.6%, from September 30, 2018 and increased $3.2 million, or 2.5%, from December 31, 2018. Money market accounts/savings accounts increased $51.4 million, or 18.6%, since September 30, 2018 and $95.0 million, or 40.8%, since December 31, 2018 due to new or increased business money market accounts.  Interest-bearing checking accounts decreased $22.8 million, or 22.0%, year-over-year, and decreased $34.0 million or 29.7% from December 31, 2018.  Municipal checking accounts declined $20.5 million during the first nine months 2019, which accounted for most of the change.  Certificates of deposit increased $43.5 million, or 15.7%, since September 30, 2018 and $42.2 million, or 15.1%, since December 31, 2018.  Borrowings were $131.6 million as of September 30, 2019, up $81.4 million, or 162.1%, from September 30, 2018, and up $11.1 million, or 9.2%, from December 31, 2018. These increases, led by short-term borrowings, were used to help fund loan growth, along with the deposit growth noted above.

 

Consolidated stockholders’ equity of the Corporation was $117.8 million, or 10.45% of total assets as of September 30, 2019, as compared to $106.7 million, or 11.12% of total assets as of September 30, 2018. As of September 30, 2019, the Tier 1 leverage ratio was 10.69%, the Tier 1 risk-based capital and common equity ratios were 11.25%, and total risk-based capital was 13.11%. Quarter-end numbers show a tangible common equity to tangible assets ratio of 10.06%. Tangible book value per share was $17.62 as of September 30, 2019, compared with $15.86 as of September 30, 2018.

Asset Quality Summary

Asset quality remains strong year-over-year. The Bank had net charge-offs to total average loans of 0.00% for the quarters ended September 30, 2019, and 2018.  The Bank had net recoveries to total average loans of 0.04% for the first nine months of 2019 and 0.03% for the same period in 2018.  Total non-performing assets were $4.0 million as of September 30, 2019, compared to $2.9 million as of September 30, 2018, and $3.9 million as of December 31, 2018. The ratio of non-performing assets to total assets as of September 30, 2019 was 0.36% compared to 0.30% as of September 30, 2018 and 0.39% as of December 31, 2018. The ratio of allowance for loan losses to total loans held for investment, excluding loans at fair value, was 1.01% as of September 30, 2019, compared to 0.97% recorded as of September 30, 2018 and December 31, 2018.

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About Meridian Corporation

Meridian Bank, the wholly owned subsidiary of Meridian Corporation, is a full-service commercial bank headquartered in Malvern, Pennsylvania with 20 offices in the greater Philadelphia Metro market. The Bank offers a full range of commercial and retail loan and deposit products, along with wealth management and electronic payment services. Meridian Mortgage, a division of the Bank, is a top tier provider of residential mortgage loans. 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, 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, 2018) and, for periods prior to the completion of the holding company reorganization, Meridian Bank’s filings with the FDIC, including Meridian Bank’s Annual Report on Form 10‑K for the year ended December 31, 2017, 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

 

7

FINANCIAL RATIOS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarterly

 

 

2019

 

2019

 

2019

 

2018

 

2018

(Dollars in thousands, except per share data)

    

3rd QTR

 

2nd QTR

 

1st QTR

    

4th QTR

    

3rd QTR

Earnings and Per Share Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

3,317

 

$

2,022

 

$

2,006

 

$

2,364

 

$

2,727

Basic earnings per common share

 

 

0.52

 

 

0.32

 

 

0.31

 

 

0.37

 

 

0.43

Diluted earnings per common share

 

 

0.52

 

 

0.31

 

 

0.31

 

 

0.37

 

 

0.42

Common shares outstanding

 

 

6,408

 

 

6,407

 

 

6,407

 

 

6,407

 

 

6,407

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performance Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets - consolidated

 

 

1.24%

 

 

0.81%

 

 

0.83%

 

 

0.99%

 

 

1.16%

Return on average assets - excluding Mortgage (non-GAAP)

 

 

0.90%

 

 

0.54%

 

 

0.83%

 

 

0.79%

 

 

0.87%

Return on average equity - consolidated

 

 

11.29%

 

 

7.14%

 

 

7.32%

 

 

8.66%

 

 

10.19%

Return on average equity - excluding Mortgage (non-GAAP)

 

 

7.93%

 

 

4.68%

 

 

7.18%

 

 

6.69%

 

 

7.37%

Net interest margin (TEY)

 

 

3.61%

 

 

3.72%

 

 

3.67%

 

 

3.70%

 

 

3.72%

Yield on earnings assets

 

 

5.29%

 

 

5.44%

 

 

5.33%

 

 

5.19%

 

 

5.12%

Cost of funds

 

 

1.83%

 

 

1.89%

 

 

1.81%

 

 

1.65%

 

 

1.54%

Efficiency ratio - consolidated

 

 

74%

 

 

85%

 

 

81%

 

 

79%

 

 

78%

Adjusted efficiency ratio - consolidated (non-GAAP)

 

 

74%

 

 

81%

 

 

80%

 

 

79%

 

 

76%

Efficiency ratio - excluding Mortgage (non-GAAP)

 

 

68%

 

 

73%

 

 

72%

 

 

73%

 

 

71%

Adjusted efficiency ratio - excluding Mortgage (non-GAAP)

 

 

68%

 

 

68%

 

 

71%

 

 

72%

 

 

67%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset Quality Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net charge-offs to average loans

 

 

0.00%

 

 

(0.03%)

 

 

(0.01%)

 

 

0.00%

 

 

0.00%

Non-performing loans/Total loans

 

 

0.40%

 

 

0.45%

 

 

0.43%

 

 

0.45%

 

 

0.35%

Non-performing assets/Total assets

 

 

0.36%

 

 

0.40%

 

 

0.38%

 

 

0.39%

 

 

0.30%

Allowance for loan losses/Total loans

 

 

0.95%

 

 

0.93%

 

 

0.94%

 

 

0.92%

 

 

0.92%

Allowance for loan losses/Total loans held for investment (excluding loans at fair value)

 

 

1.01%

 

 

0.99%

 

 

0.99%

 

 

0.97%

 

 

0.97%

Allowance for loan losses/Non-performing loans

 

 

236.95%

 

 

208.28%

 

 

218.64%

 

 

204.85%

 

 

263.89%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Ratios

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value per common share

 

$

18.38

 

$

17.85

 

$

17.48

 

$

17.10

 

$

16.65

Tangible book value per common share

 

$

17.62

 

$

17.09

 

$

16.70

 

$

16.31

 

$

15.86

Total equity/Total assets

 

 

10.45%

 

 

10.83%

 

 

10.90%

 

 

10.98%

 

 

11.12%

Tangible common equity/Tangible assets

 

 

10.06%

 

 

10.42%

 

 

10.47%

 

 

10.53%

 

 

10.64%

Tier 1 leverage ratio

 

 

10.69%

 

 

10.96%

 

 

11.01%

 

 

11.16%

 

 

10.98%

Common tier 1 risk-based capital ratio

 

 

11.25%

 

 

11.37%

 

 

11.71%

 

 

11.72%

 

 

11.99%

Tier 1 risk-based capital ratio

 

 

11.25%

 

 

11.37%

 

 

11.71%

 

 

11.72%

 

 

11.99%

Total risk-based capital ratio

 

 

13.11%

 

 

13.23%

 

 

13.65%

 

 

13.66%

 

 

13.99%

 

 

 

 

 

 

 

 

 

 

8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statements of Income (Unaudited)

 

Statements of Income (Unaudited)

 

 

Quarter Ended

 

Nine Months Ended

(Dollars in Thousands)

    

September 30, 2019

    

September 30, 2018

 

September 30, 2019

 

September 30, 2018

Interest Income

 

 

 

 

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

13,152

 

$

11,218

 

$

37,686

 

$

31,217

Investments and cash

 

 

438

 

 

355

 

 

1,301

 

 

960

Total interest income

 

 

13,590

 

 

11,573

 

 

38,987

 

 

32,177

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest Expense

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

3,633

 

 

2,485

 

 

10,584

 

 

6,171

Borrowings

 

 

683

 

 

710

 

 

1,731

 

 

1,790

  Total interest expense

 

 

4,316

 

 

3,195

 

 

12,315

 

 

7,961

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

9,274

 

 

8,378

 

 

26,672

 

 

24,216

Provision for loan losses

 

 

705

 

 

291

 

 

938

 

 

1,258

Net interest income after provision for loan losses

 

 

8,569

 

 

8,087

 

 

25,734

 

 

22,958

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Interest Income

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage banking income

 

 

7,910

 

 

8,274

 

 

19,139

 

 

20,407

Wealth management income

 

 

922

 

 

930

 

 

2,698

 

 

2,996

SBA income

 

 

645

 

 

 —

 

 

1,160

 

 

 —

Earnings on investment in life insurance

 

 

74

 

 

74

 

 

218

 

 

225

Net change in fair value of mortgage related financial instruments

 

 

30

 

 

(333)

 

 

292

 

 

(471)

Gain on sale of investment securities available-for-sale

 

 

74

 

 

 —

 

 

212

 

 

 —

Service charges

 

 

28

 

 

27

 

 

82

 

 

87

Other

 

 

131

 

 

195

 

 

387

 

 

1,647

Total non-interest income

 

 

9,814

 

 

9,167

 

 

24,188

 

 

24,891

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Interest Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

9,319

 

 

8,901

 

 

25,789

 

 

26,719

Occupancy and equipment

 

 

946

 

 

920

 

 

2,845

 

 

2,870

Loan expenses

 

 

758

 

 

769

 

 

1,877

 

 

1,962

Professional fees

 

 

820

 

 

714

 

 

2,000

 

 

1,670

Advertising and promotion

 

 

574

 

 

590

 

 

1,769

 

 

1,802

Data processing

 

 

343

 

 

334

 

 

990

 

 

924

Information technology

 

 

334

 

 

268

 

 

919

 

 

836

Communications

 

 

155

 

 

197

 

 

510

 

 

683

Other

 

 

903

 

 

1,060

 

 

3,813

 

 

2,923

Total non-interest expenses

 

 

14,152

 

 

13,753

 

 

40,512

 

 

40,389

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

4,231

 

 

3,501

 

 

9,410

 

 

7,460

Income tax expense

 

 

914

 

 

774

 

 

2,066

 

 

1,661

Net Income

 

$

3,317

 

$

2,727

 

$

7,344

 

$

5,799

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average basic shares outstanding

 

 

6,407

 

 

6,402

 

 

6,407

 

 

6,393

Basic earnings per common share

 

$

0.52

 

$

0.43

 

$

1.15

 

$

0.91

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted weighted-average diluted shares outstanding

 

 

6,437

 

 

6,430

 

 

6,436

 

 

6,425

Diluted earnings per common share

 

$

0.52

 

$

0.42

 

$

1.14

 

$

0.90

 

9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statement of Condition (Unaudited)

(Dollars in Thousands)

    

September 30, 2019

 

June 30, 2019

 

March 31, 2019

    

December 31, 2018

    

September 30, 2018

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash & cash equivalents