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home / news releases / MRBK - Meridian Corporation's Fourth Quarter 2019 Earnings Increase 33% Year-Over-Year to $3.1 Million or $0.49 Per Diluted Share


MRBK - Meridian Corporation's Fourth Quarter 2019 Earnings Increase 33% Year-Over-Year to $3.1 Million or $0.49 Per Diluted Share

MALVERN, Pa., Jan. 27, 2020 (GLOBE NEWSWIRE) -- Meridian Corporation (“Meridian”) (Nasdaq: MRBK) today reported net income increased 32.7% to $3.1 million, or $0.49 per diluted share for the fourth quarter of 2019, compared to $2.4 million, or $0.37 per diluted share, in the fourth quarter of 2018, generating a return on average assets and return on average equity of 1.13% and 10.41%, respectively, for the current quarter.  For the year ended December 31, 2019, Meridian’s net income increased $2.3 million or 28.4% to $10.5 million, or $1.63 per diluted share, compared to $8.2 million, or $1.27 per diluted share, for 2018.

“For the fourth quarter and the full year, our stellar performance reflects the successful execution of our strategic growth plan which is supported by the growth in our core commercial loan business and strong results in our SBA loan and mortgage businesses,” said Christopher J. Annas, Chairman and CEO.  “We generated record net income for the fourth quarter and year, and delivered returns on average equity and average assets of 9.09% and 1.01%, respectively for the year.  At the same time, commercial loan balances grew 18% contributing to the increase in net interest income of 11% over prior year.” 

“Our mortgage segment recorded its 8th consecutive profitable year, earning $2.4 million before taxes, with purchase and refinance activity continuing strong through the fourth quarter,” Annas continued.  “As we head into 2020, we feel confident about the opportunity to gain market share across our franchise and our ability to prudently manage our operating expenses as we continue to invest in the future.”

Financial Highlights

  • Net income for the fourth quarter of 2019 and the full year was $3.1 million and $10.5 million, respectively, increases of $773 thousand or 32.7% and $2.3 million or 28.4% as compared to net income for the same periods in 2018.
  • The net interest margin was 3.61%, and 3.65%, for the fourth quarter and the full year, respectively, compared to 3.70% and 3.80% for the same periods in 2018.
  • Net interest income increased $1.2 million or 14.5% and $3.7 million or 11.3% for the three and twelve months ended December 31, 2019 over the same periods in 2018. 
  • Total assets increased $153.5 million, or 15.4% to $1.2 billion as of December 31, 2019 compared to a year ago.
  • Total portfolio loans and leases increased $126.6 million, or 15.1% year-over-year, to $964.7 million as of December 31, 2019.
  • Total deposits grew $99.0 million, or 13.2% to $851.2 million as of December 31, 2019, compared to a year ago.
  • Non-interest bearing deposits increased $13.3 million, or 10.5% year-over-year, to $139.5 million as of December 31, 2019.
  • Meridian raised $40 million in subordinated debt at 5.375% during the fourth quarter of 2019 for growth and retired $7.1 million of 7.25% Meridian Bank (“Bank”) debt.
  • Mortgage segment originated $178.3 million and $603.1 million in loans during the three and twelve months ended December 31, 2019, respectively, resulting in $7.2 million and $26.0 million in revenue for the same periods, respectively.

Select Condensed Financial Information

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Quarter Ended (Unaudited)
 
2019
 
 
2019
 
 
2019
 
 
2019
 
 
2018
 
(Dollars in thousands, except per share data)
December 31
 
September 30
 
June 30
 
March 31
 
December 31
Income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income - consolidated
$
 3,137
 
 
$
 3,317
 
 
$
 2,022
 
 
$
 2,006
 
 
$
 2,364
 
Basic earnings per common share
$
 0.49
 
 
$
 0.52
 
 
$
 0.32
 
 
$
 0.31
 
 
$
 0.37
 
Diluted earnings per common share
$
 0.49
 
 
$
 0.52
 
 
$
 0.31
 
 
$
 0.31
 
 
$
 0.37
 
Net interest income - consolidated
 
 9,664
 
 
 
 9,274
 
 
 
 8,922
 
 
 
 8,477
 
 
 
 8,441
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At the Quarter Ended (Unaudited)
 
2019
 
 
2019
 
 
2019
 
 
2019
 
 
2018
 
 
December 31
 
September 30
 
June 30
 
March 31
 
December 31
Balance Sheet:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets
$
 1,150,961
 
 
$
 1,126,937
 
 
$
 1,055,906
 
 
$
 1,027,514
 
 
$
 997,480
 
Loans, net of fees and costs
 
 964,710
 
 
 
 935,858
 
 
 
 885,172
 
 
 
 862,372
 
 
 
 838,106
 
Total deposits
 
 851,168
 
 
 
 858,461
 
 
 
 840,714
 
 
 
 810,713
 
 
 
 752,130
 
Non-interest bearing deposits
 
 139,450
 
 
 
 129,302
 
 
 
 127,158
 
 
 
 115,464
 
 
 
 126,150
 
Stockholders' Equity
 
 120,695
 
 
 
 117,772
 
 
 
 114,379
 
 
 
 111,992
 
 
 
 109,552
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At the Quarter Ended (Unaudited)
 
2019
 
 
2019
 
 
2019
 
 
2019
 
 
2018
 
 
December 31
 
September 30
 
June 30
 
March 31
 
December 31
Balance Sheet (Average Balances):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets
$
 1,105,246
 
 
$
 1,059,456
 
 
$
 1,001,908
 
 
$
 977,205
 
 
$
 944,486
 
Loans, net of fees and costs
 
 956,598
 
 
 
 912,781
 
 
 
 874,836
 
 
 
 849,237
 
 
 
 809,489
 
Total deposits
 
 859,611
 
 
 
 844,568
 
 
 
 836,133
 
 
 
 788,587
 
 
 
 788,796
 
Non-interest bearing deposits
 
 137,578
 
 
 
 126,101
 
 
 
 117,664
 
 
 
 122,729
 
 
 
 128,595
 
Stockholders' Equity
 
 119,575
 
 
 
 116,547
 
 
 
 113,605
 
 
 
 111,197
 
 
 
 108,302
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
At the Quarter Ended (Unaudited)
 
2019
 
 
2019
 
 
2019
 
 
2019
 
 
2018
 
 
December 31
 
September 30
 
June 30
 
March 31
 
December 31
Performance Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets - consolidated
 
1.13
%
 
 
1.24
%
 
 
0.81
%
 
 
0.83
%
 
 
0.99
%
Return on average equity - consolidated
 
10.41
%
 
 
11.29
%
 
 
7.14
%
 
 
7.32
%
 
 
8.66
%

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Quarter Ended (Unaudited)
 
2019
 
2019
 
2019
 
 
2019
 
 
2018
Other Select Condensed Financial Information
December 31
 
September 30
 
June 30
 
March 31
 
December 31
Mortgage:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
 85
 
$
 67
 
$
 41
 
 
$
 58
 
 
$
 160
Non-interest income
 
 7,177
 
 
 7,662
 
 
 5,957
 
 
 
 5,166
 
 
 
 6,061
Non-interest expense
 
 6,105
 
 
 6,393
 
 
 6,195
 
 
 
 5,234
 
 
 
 5,541
Operating Margin
 
 1,157
 
 
 1,336
 
 
 (197
)
 
 
 (10
)
 
 
 680

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.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Net Income and Earnings per Share (Unaudited)
 
 
2019
2019
 
2019
 
2019
 
2018
(Dollars in thousands, except per share data)
 
4th QTR
3rd QTR
 
2nd QTR
 
1st QTR
 
4th QTR
Net income - consolidated
 
$
3,137
 $
3,317
 
$
2,022
 
$
 2,006
 
$
 2,364
Litigation settlement adjustment, net of tax
 
 
 —
 
 —
 
 
 517
 
 
 97
 
 
 —
Adjusted net income - consolidated(1)
 
 
3,137
 
3,317
 
 
2,539
 
 
 2,103
 
 
 2,364
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per common share, diluted
 
$
 0.49
$
 0.52
 
$
 0.31
 
$
 0.31
 
$
 0.37
Litigation settlement adjustment, net of tax
 
 
 —
 
 —
 
 
 0.08
 
 
 0.02
 
 
 —
Adjusted diluted earnings per share(1)
 
$
 0.49
$
 0.52
 
$
 0.39
 
$
 0.33
 
$
 0.37


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Return Ratios (Unaudited)
 
 
2019
2019
 
2019 
 
2019
 
2018
 
 
4th QTR
3rd QTR
 
2nd QTR
 
1st QTR
 
4th QTR
Return on average assets - consolidated
 
 
1.13
%
 
1.24
%
 
 
0.81
%
 
 
0.83
%
 
 
0.99
%
Adjusted return on average assets - consolidated(1)
 
 
1.13
%
 
1.24
%
 
 
1.02
%
 
 
0.87
%
 
 
0.99
%
Return on average equity - consolidated
 
 
10.41
%
 
11.29
%
 
 
7.14
%
 
 
7.32
%
 
 
8.66
%
Adjusted return on average equity - consolidated(1)
 
 
10.41
%
 
11.29
%
 
 
8.96
%
 
 
7.67
%
 
 
8.66
%

(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), and $28 thousand (first quarter of 2019), respectively,

Income Statement Summary

Net income was $3.1 million, or $0.49 per diluted share for the fourth quarter of  2019 compared to net income of $2.4 million, or $0.37 per diluted share, for the same period in 2018. The increase was attributable to the expansion of net interest income of $1.2 million, an increase in non-interest income of $1.5 million as well as a reduction of $357 thousand in provision for loan loss, partially offset by an increase of $2.0 million in non-interest expense as well as an increase of $301 thousand in income taxes period over period. Net income was $10.5 million, or $1.63 per diluted share, for the twelve months of 2019 compared to $8.2 million, or $1.27 per diluted share, for the same period in 2018. The increase was attributable to the expansion of net interest income of $3.7 million, an increase in non-interest income of $743 thousand as well as a reduction of $676 thousand in provision for loan loss, partially offset by an increase of $2.1 million in non-interest expense as well as an increase of $706 thousand in income taxes period over period.

Net interest income increased $1.2 million, or 14.5%, to $9.7 million for the fourth quarter 2019, from $8.5 million for the same period in 2018. The growth in interest income for the fourth quarter of 2019 compared to the fourth quarter a year ago reflects an increase in average interest earning assets of $157.3 million. Net interest income increased $3.7 million, or 11.3%, to $36.3 million for the twelve months of 2019, from $32.7 million for the same period in 2018. The growth in interest income for 2019 reflects an increase in average interest earning assets of $136.1 million. Increases over both periods were partially offset by the decrease in the net interest margin. The net interest margin was 3.61%, and 3.65%, for the three and twelve months ended December 31, 2019, respectively, compared to 3.70% and 3.80% for the same periods in 2018. The decrease in net interest margin reflects pressure from cost of funds during both periods which did not reprice at the same level as variable related assets. 

Reflecting strong asset quality and significant recoveries, Meridian’s provision for loan losses decreased $357 thousand in the fourth quarter of 2019, compared to the fourth quarter a year ago.  In the twelve months ended December 31, 2019, the provision for loan losses decreased $676 thousand to $901 thousand, compared to the same period in 2018. The decrease for both periods is a result of significant net loan recoveries of $256 thousand for the fourth quarter as well as $560 thousand for the year.

Total non-interest income for the fourth quarter of 2019 was $8.9 million, up $1.4 million or 19.4%, from the comparable period in 2018. Total non-interest income for the year ended December 31, 2019 was $33.1 million, up $743 thousand or 2.3%, from 2018. The increase in non-interest income for both periods was the result of increased mortgage revenue as well as SBA income recognized on the sales of SBA loans.  For the fourth quarter of 2019, $288 thousand of revenue was recognized from SBA loan sales and $1.4 million was recognized during the twelve months ended December 31, 2019. There were no SBA loan sales in the prior year. Mortgage revenue for the fourth quarter of 2019 was $7.0 million, up $1.2 million or 21.6%, from the same period in 2018 due to higher levels of loan originations and sales. Mortgage revenue for the year ended December 31, 2019 was $26.2 million, relatively unchanged from the same period in 2018. In addition, fair value gains, up $92 thousand or 88.5%, increased non-interest income by $196 thousand for the fourth quarter of 2019. Fair value gains were $489 thousand for the twelve months of 2019, compared to fair value losses of $368 thousand for the twelve months in 2018. 

Wealth management revenue was up $5 thousand for the fourth quarter 2019 compared to the fourth quarter of 2018. For the twelve month period of 2019, wealth management revenue was down $293 thousand to $3.6 million reflecting the market value changes in assets under management largely from the first quarter. Included in other non-interest income is fee income as well as hedging gains and losses.  For the fourth quarter of 2019 fee income was $435 thousand compared to $464 thousand for the fourth quarter of 2018 and $1.6 million for the full year of 2019 compared to $1.6 million for the same period in 2018.  Fee income is comprised mainly of FHLB stock dividend income, wire transfer fee income, title fee income, as well as various other less significant income sources.  Hedging losses for the fourth quarter 2019 were $24 thousand compared to hedging gains of $93 thousand for the fourth quarter of 2018.  Hedging losses were $816 thousand for the full year of 2019 compared to hedging gains of $627 thousand for the same period in 2018.

Total non-interest expense was $14.5 million for the fourth quarter of 2019, up $1.9 million, or 15.5%, from $12.6 million for the fourth quarter a year ago and $55.0 million for the year, up $2.1 million or 3.9%, from $52.9 million for the same period in the 2018.   Salaries and employee benefits expense as well as loan expenses are affected by variable expenses related to residential loan originations in the mortgage segment.  Loan originations for the fourth quarter of 2019 were higher than the same period in 2018 due to a favorable rate environment which allowed for greater than normal refinance activity.  Overall, loan originations for the year were down from the prior year, so these expenses were down in the year over year comparison. There was a $1.3 million or 16.0% increase in salaries and employee benefits for the fourth quarter of 2019 compared to the same period in 2018 due to an increase in corporate employees as well as an increase in incentive-based and commission-based compensation. For the twelve-month year over year comparison, mortgage segment salaries expense decreased $2.0 million (as originations levels were down from prior year) largely offsetting increased corporate salaries expense.  Variable loan expenses increased by $120 thousand, or 20.6%, over the three-month period ended December 31, 2019, compared to the same period in 2018 reflecting the higher level of mortgage originations in the fourth quarter year-over-year. Variable loan expense decreased $64 thousand, or 2.4%, for the twelve months of 2019 compared to the same period in 2018 due to lower level of mortgage originations overall for the year. 

Occupancy and equipment expense was up $52 thousand or 5.7% for the last three months of 2019 due to increased rental space for Philadelphia offices and relatively flat for the twelve month periods. Professional fees were up $122 thousand, or 24.8%, and $452 thousand, or 20.9%, for the three and twelve month periods ended December 31, 2019 compared to the same periods in 2018.  For the fourth quarter of 2019, professional fees were up due to accounting and compliance fees related to public reporting requirements and mortgage compliance.  For the twelve month period, the higher professional fees were due largely 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 up $153 thousand, or 27.7%, and $120 thousand, or 5.1%, for the three and twelve month periods ended December 31, 2019 compared to the same periods in 2018. Increased advertising and promotion for the quarter reflects timing of promotional events.  Increased advertising year over year was specifically related business development efforts and outdoor advertising, both which reflect the growth of the company/market expansion.  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 increased $184 thousand, or 16.2%, to $1.3 million for the fourth quarter of 2019, compared to the fourth quarter a year ago.  The increase was primarily due to software, employee expenses as well as the amortization of mortgage and SBA loan servicing rights. In the twelve months of 2019, other non-interest expenses increased $1.2 million, or 29.6%, to $5.1 million when compared to the prior year period. The settlement of the outstanding litigation matter contributed $790 thousand to other non-interest expense, along with $79 thousand of other expense incurred for the previously disclosed Maryland mortgage licensing issue.  Increases in the PA shares tax assessment, FDIC insurance due to the growth of the Bank also contributed to higher other non-interest expenses during the year-to-date period, from the same period in the prior year.

Balance Sheet Summary

As of December 31, 2019, total assets were $1.2 billion compared with $997.5 million as of December 31, 2018. Total assets increased $153.5 million, or 15.4%, on a year-over-year basis primarily due to 15.1% loan growth.

Total loans, excluding mortgage loans held for sale, grew $126.6 million, or 15.1%, to $964.7 million as of December 31, 2019, from $838.1 million as of December 31, 2018. The increase in loans 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 $19.3 million, or 7.6%, year-over-year.  Commercial real estate and commercial construction loans combined increased $92.0 million, or 20.9%, year-over-year. SBA loans increased $16.0 million or 278.6%, as a result of the new lending team hired in the fourth quarter of 2018.  Residential loans held in portfolio and home equity loans remained relatively flat year-over-year at $54 million and $82 million, respectively. Residential mortgage loans held for sale decreased $4.0 million, or 10.6%, to $33.7 million as of December 31, 2019 from December 31, 2018 as loan originations were lower in 2019 compared to 2018, combined with the timing of when such loans are actually sold.

Deposits were $851.2 million as of December 31, 2019, up $99.0 million, or 13.2%, from December 31, 2018. Non-interest bearing deposits increased $13.3 million, or 10.5%, from December 31, 2018. Money market accounts/savings accounts increased $72.8 million, or 31.3%, since December 31, 2018 due to new or increased business money market accounts.  Interest-bearing checking accounts decreased $20.2 million, or 17.6%, year-over-year.  Municipal checking deposits accounted for most of the change.  Certificates of deposit increased $33.1 million, or 11.9%, since December 31, 2018.  Borrowings were $126.8 million as of December 31, 2019, up $6.3 million, or 5.2%, 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. Meridian also raised $40 million in subordinated debt at 5.375% during the fourth quarter of 2019 for growth and retired $7.1 million of 7.25% Bank debt.

Consolidated stockholders’ equity of the Corporation was $120.7 million, or 10.5% of total assets as of December 31, 2019, as compared to $109.6 million, or 11.0% of total assets as of December 31, 2018. As of December 31, 2019, the Tier 1 leverage ratio was 14.08%, the Tier 1 risk-based capital and common equity ratios were 14.98%, and total risk-based capital was 16.09%. Year-end numbers show a tangible common equity to tangible assets ratio of 13.52%. Tangible book value per share was $18.09 as of December 31, 2019, compared with $16.31 as of December 31, 2018.

Asset Quality Summary

Asset quality remains strong year-over-year. The Bank had net recoveries to total average loans of 0.03% and 0.00% for the quarters ended December 31, 2019, and 2018, respectively.  The Bank had net recoveries to total average loans of 0.06% for the year ended December 31, 2019 and net charge-offs of 0.03% for the same period in 2018.  Total non-performing assets were $3.5 million as of December 31, 2019, compared to $4.0 million as of December 31, 2018. The ratio of non-performing assets to total assets as of December 31, 2019 was 0.30% compared to 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 1.00% as of December 31, 2019, compared to 0.97% recorded as of December 31, 2018.

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 segment 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

FINANCIAL RATIOS

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarterly
 
2019
 
 
2019
 
 
2019
 
 
2019
 
 
2018
 
(Dollars in thousands, except per share data)
4th QTR
 
3rd QTR
 
2nd QTR
 
1st QTR
 
4th QTR
Earnings and Per Share Data
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
$
 3,137
 
 
$
 3,317
 
 
$
 2,022
 
 
$
 2,006
 
 
$
 2,364
 
Basic earnings per common share
 
 0.49
 
 
 
 0.52
 
 
 
 0.32
 
 
 
 0.31
 
 
 
 0.37
 
Diluted earnings per common share
 
 0.49
 
 
 
 0.52
 
 
 
 0.31
 
 
 
 0.31
 
 
 
 0.37
 
Common shares outstanding
 
 6,404
 
 
 
 6,408
 
 
 
 6,407
 
 
 
 6,407
 
 
 
 6,407
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Performance Ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets - consolidated
 
1.13
%
 
 
1.24
%
 
 
0.81
%
 
 
0.83
%
 
 
0.99
%
Return on average equity - consolidated
 
10.41
%
 
 
11.29
%
 
 
7.14
%
 
 
7.32
%
 
 
8.66
%
Net interest margin (TEY)
 
3.61
%
 
 
3.61
%
 
 
3.72
%
 
 
3.67
%
 
 
3.70
%
Yield on earnings assets
 
5.18
%
 
 
5.29
%
 
 
5.44
%
 
 
5.33
%
 
 
5.19
%
Cost of funds
 
1.71
%
 
 
1.83
%
 
 
1.89
%
 
 
1.81
%
 
 
1.65
%
Efficiency ratio - consolidated
 
78
%
 
 
74
%
 
 
85
%
 
 
81
%
 
 
79
%
Adjusted efficiency ratio - consolidated (non-GAAP)
 
78
%
 
 
74
%
 
 
81
%
 
 
80
%
 
 
79
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset Quality Ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net charge-offs (recoveries) to average loans
 
(0.03
%)
 
 
0.00
%
 
 
(0.03
%)
 
 
(0.01
%)
 
 
0.00
%
Non-performing loans/Total loans
 
0.34
%
 
 
0.40
%
 
 
0.45
%
 
 
0.43
%
 
 
0.45
%
Non-performing assets/Total assets
 
0.30
%
 
 
0.36
%
 
 
0.40
%
 
 
0.38
%
 
 
0.39
%
Allowance for loan losses/Total loans
 
0.95
%
 
 
0.95
%
 
 
0.93
%
 
 
0.94
%
 
 
0.92
%
Allowance for loan losses/Total loans held for investment (excluding loans at fair value)
 
1.00
%
 
 
1.01
%
 
 
0.99
%
 
 
0.99
%
 
 
0.97
%
Allowance for loan losses/Non-performing loans
 
281.20
%
 
 
236.95
%
 
 
208.28
%
 
 
218.64
%
 
 
204.85
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital Ratios
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Book value per common share
$
 18.84
 
 
$
 18.38
 
 
$
 17.85
 
 
$
 17.48
 
 
$
 17.10
 
Tangible book value per common share
$
 18.09
 
 
$
 17.62
 
 
$
 17.09
 
 
$
 16.70
 
 
$
 16.31
 
Total equity/Total assets
 
10.49
%
 
 
10.45
%
 
 
10.83
%
 
 
10.90
%
 
 
10.98
%
Tangible common equity/Tangible assets
 
13.52
%
 
 
10.06
%
 
 
10.42
%
 
 
10.47
%
 
 
10.53
%
Tier 1 leverage ratio
 
14.08
%
 
 
10.69
%
 
 
10.96
%
 
 
11.01
%
 
 
11.16
%
Common tier 1 risk-based capital ratio
 
14.98
%
 
 
11.25
%
 
 
11.37
%
 
 
11.71
%
 
 
11.72
%
Tier 1 risk-based capital ratio
 
14.98
%
 
 
11.25
%
 
 
11.37
%
 
 
11.71
%
 
 
11.72
%
Total risk-based capital ratio
 
16.09
%
 
 
13.11
%
 
 
13.23
%
 
 
13.65
%
 
 
13.66
%


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Income (Unaudited)
 
Statements of Income (Unaudited)
 
 
Quarter Ended
 
Twelve Months Ended
(Dollars in Thousands)
 
December 31, 2019
 
December 31, 2018
 
December 31, 2019
 
December 31, 2018
Interest Income
 
 
 
 
 
 
 
 
 
 
 
 
Interest and fees on loans
 
$
 13,441
 
 
$
 11,476
 
$
51,127
 
$
42,694
 
Investments and cash
 
 
 436
 
 
 
 410
 
 
 1,736
 
 
 1,370
 
Total interest income
 
 
 13,877
 
 
 
 11,886
 
 
 52,863
 
 
 44,064
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest Expense
 
 
 
 
 
 
 
 
 
 
 
 
Deposits
 
 
 3,323
 
 
 
 3,056
 
 
 13,907
 
 
 9,227
 
Borrowings
 
 
 890
 
 
 
 389
 
 
 2,620
 
 
 2,180
 
  Total interest expense
 
 
 4,213
 
 
 
 3,445
 
 
 16,527
 
 
 11,407
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
 9,664
 
 
 
 8,441
 
 
 36,336
 
 
 32,657
 
Provision for loan losses
 
 
 (38
)
 
 
 319
 
 
 901
 
 
 1,577
 
Net interest income after provision for loan losses
 
 
 9,702
 
 
 
 8,122
 
 
 35,435
 
 
 31,080
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Interest Income
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage banking income
 
 
 7,028
 
 
 
 5,780
 
 
 26,167
 
 
 26,187
 
Wealth management income
 
 
 926
 
 
 
 921
 
 
 3,624
 
 
 3,917
 
SBA income
 
 
 288
 
 
 
 —
 
 
 1,448
 
 
 —
 
Earnings on investment in life insurance
 
 
 72
 
 
 
 74
 
 
 290
 
 
 300
 
Net change in fair value of mortgage related financial instruments
 
 
 196
 
 
 
 104
 
 
 489
 
 
 (368
)
Gain (loss) on sale of investment securities available-for-sale
 
 
 (47
)
 
 
 —
 
 
 165
 
 
 
Service charges
 
 
 29
 
 
 
 28
 
 
 110
 
 
 115
 
Other
 
 
 417
 
 
 
 557
 
 
 805
 
 
 2,204
 
Total non-interest income
 
 
 8,909
 
 
 
 7,464
 
 
 33,098
 
 
 32,355
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-Interest Expenses
 
 
 
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
 
 
 9,368
 
 
 
 8,075
 
 
 35,157
 
 
 34,794
 
Occupancy and equipment
 
 
 961
 
 
 
 909
 
 
 3,806
 
 
 3,779
 
Loan expenses
 
 
 703
 
 
 
 583
 
 
 2,579
 
 
 2,643
 
Professional fees
 
 
 614
 
 
 
 492
 
 
 2,614
 
 
 2,162
 
Advertising and promotion
 
 
 706
 
 
 
 553
 
 
 2,475
 
 
 2,355
 
Data processing
 
 
 336
 
 
 
 337
 
 
 1,327
 
 
 1,261
 
Information technology
 
 
 337
 
 
 
 271
 
 
 1,256
 
 
 1,107
 
Communications
 
 
 165
 
 
 
 203
 
 
 675
 
 
 886
 
Other
 
 
 1,317
 
 
 
 1,133
 
 
 5,130
 
 
 3,958
 
Total non-interest expenses
 
 
 14,507
 
 
 
 12,556
 
 
 55,019
 
 
 52,945
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income before income taxes
 
 
 4,104
 
 
 
 3,030
 
 
 13,514
 
 
 10,490
 
Income tax expense
 
 
 967
 
 
 
 666
 
 
 3,033
 
 
 2,327
 
Net Income
 
$
 3,137
 
 
$
 2,364
 
$
 10,481
 
$
 8,163
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average basic shares outstanding
 
 
 6,407
 
 
 
 6,407
 
 
 6,407
 
 
 6,397
 
Basic earnings per common share
 
$
 0.49
 
 
$
 0.37
 
$
 1.64
 
$
 1.28
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted weighted-average diluted shares outstanding
 
 
 6,443
 
 
 
 6,433
 
 
 6,438
 
 
 6,427
 
Diluted earnings per common share
 
$
 0.49
 
 
$
 0.37
 
$
 1.63
 
$
 1.27
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statement of Condition (Unaudited)
(Dollars in Thousands)
 
December 31, 2019
 
September 30, 2019
 
June 30, 2019
 
March 31, 2019
 
December 31, 2018
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash & cash equivalents
 
$
 39,371
 
 
$
 40,532
 
 
$
 30,630
 
 
$
 38,940
 
 
$
 23,952
 
Investment securities
 
 
 68,645
 
 
 
 61,571
 
 
 
 60,816
 
 
 
 63,152
 
 
 
 63,169
 
Mortgage loans held for sale
 
 
 33,704
 
 
 
 48,615
 
 
 
 39,288
 
 
 
 29,612
 
 
 
 37,695
 
Loans, net of fees and costs
 
 
 964,710
 
 
 
 935,858
 
 
 
 885,172
 
 
 
 862,372
 
 
 
 838,106
 
Allowance for loan losses
 
 
 (9,513
)
 
 
 (9,312
)
 
 
 (8,625
)
 
 
 (8,376
)
 
 
 (8,053
)
Bank premises and equipment, net
 
 
 8,636
 
 
 
 8,929
 
 
 
 9,225
 
 
 
 9,276
 
 
 
 9,638
 
Bank owned life insurance
 
 
 11,859
 
 
 
 11,787
 
 
 
 11,713
 
 
 
 11,641
 
 
 
 11,569
 
Other real estate owned
 
 
 120
 
 
 
 120
 
 
 
 120
 
 
 
 120
 
 
 
 —
 
Goodwill and intangible assets
 
 
 4,773
 
 
 
 4,841
 
 
 
 4,909
 
 
 
 4,978
 
 
 
 5,046
 
Other assets
 
 
 28,656
 
 
 
 23,996
 
 
 
 22,658
 
 
 
 15,799
 
 
 
 16,358
 
Total Assets
 
$
 1,150,961
 
 
$
 1,126,937
 
 
$
 1,055,906
 
 
$
 1,027,514
 
 
$
 997,480
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities & Stockholders’ Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest bearing deposits
 
$
 139,450
 
 
$
 129,302
 
 
$
 127,158
 
 
$
 115,464
 
 
$
 126,150
 
Interest bearing deposits
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest checking
 
 
 94,416
 
 
 
 80,588
 
 
 
 88,055
 
 
 
 112,484
 
 
 
 114,610
 
Money market / savings accounts
 
 
 305,472
 
 
 
 327,643
 
 
 
 284,666
 
 
 
 286,463
 
 
 
 232,653
 
Certificates of deposit
 
 
 311,830
 
 
 
 320,928
 
`
 
 340,835
 
 
 
 296,302
 
 
 
 278,717
 
Total interest bearing deposits
 
 
 711,718
 
 
 
 729,159
 
 
 
 713,556
 
 
 
 695,249
 
 
 
 625,980
 
Total deposits
 
 
 851,168
 
 
 
 858,461
 
 
 
 840,714
 
 
 
 810,713
 
 
 
 752,130
 
Borrowings
 
 
 126,799
 
 
 
 131,588
 
 
 
 83,927
 
 
 
 88,264
 
 
 
 120,538
 
Subordinated debt
 
 
 41,904
 
 
 
 9,176
 
 
 
 9,176
 
 
 
 9,239
 
 
 
 9,239
 
Other liabilities
 
 
 10,395
 
 
 
 9,940
 
 
 
 7,710
 
 
 
 7,306
 
 
 
 6,021
 
Total Liabilities
 
 
 1,030,266
 
 
 
 1,009,165
 
 
 
 941,527
 
 
 
 915,522
 
 
 
 887,928
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stockholders' Equity
 
 
 120,695
 
 
 
 117,772
 
 
 
 114,379
 
 
 
 111,992
 
 
 
 109,552
 
Total Liabilities & Stockholders’ Equity
 
$
 1,150,961
 
 
$
 1,126,937
 
 
$
 1,055,906
 
 
$
 1,027,514
 
 
$
 997,480
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Condensed Statements of Income (Unaudited)
 
 
 
 
 
Three Months Ended
(Dollars in Thousands)
 
December 31, 2019
 
September 30, 2019
 
June 30, 2019
 
March 31, 2019
 
December 31, 2018
Interest income
 
$
 13,877
 
 
$
 13,590
 
$
 13,073
 
$
 12,324
 
$
 11,886
Interest expense
 
 
 4,213
 
 
 
 4,316
 
 
 4,151
 
 
 3,847
 
 
 3,445
Net interest income
 
 
 9,664
 
 
 
 9,274
 
 
 8,922
 
 
 8,477
 
 
 8,441
Provision for loan losses
 
 
 (38
)
 
 
 705
 
 
 14
 
 
 219
 
 
 319
Non-interest income
 
 
 8,909
 
 
 
 9,814
 
 
 7,928
 
 
 6,447
 
 
 7,464
Non-interest expense
 
 
 14,507
 
 
 
 14,152
 
 
 14,244
 
 
 12,117
 
 
 12,556
Income before income tax expense
 
 
 4,104
 
 
 
 4,231
 
 
 2,592
 
 
 2,588
 
 
 3,030
Income tax expense
 
 
 967
 
 
 
 914
 
 
 570
 
 
 582
 
 
 666
Net Income
 
$
 3,137
 
 
$
 3,317
 
$
 2,022
 
$
 2,006
 
$
 2,364
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average basic shares outstanding
 
 
 6,407
 
 
 
 6,407
 
 
 6,407
 
 
 6,407
 
 
 6,407
Basic earnings per common share
 
$
 0.49
 
 
$
 0.52
 
$
 0.32
 
$
 0.31
 
$
 0.37
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted weighted-average diluted shares outstanding
 
 
 6,443
 
 
 
 6,436
 
 
 6,436
 
 
 6,436
 
 
 6,433
Diluted earnings per common share
 
$
 0.49
 
 
$
 0.52
 
$
 0.31
 
$
 0.31
 
$
 0.37


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment Information
 
 
Three Months Ended December 31, 2019
 
Three Months Ended December 31, 2018
(Dollars in thousands)
 
Bank
 
Wealth
 
Mortgage
 
Total
 
Bank
 
Wealth
 
Mortgage
 
Total
Net interest income
 
$
 9,582
 
 
 (3
)
 
 85
 
 9,664
 
 
$
 8,208
 
 73
 
 160
 
 8,441
Provision for loan losses
 
 
 (38
)
 
 —
 
 
 —
 
 (38
)
 
 
 319
 
 —
 
 —
 
 319
Net interest income after provision
 
 
 9,620
 
 
 (3
)
 
 85
 
 9,702
 
 
 
 7,889
 
 73
 
 160
 
 8,122
Non-interest income
 
 
 789
 
 
 943
 
 
 7,177
 
 8,909
 
 
 
 532
 
 871
 
 6,061
 
 7,464
Non-interest expense
 
 
 7,608
 
 
 794
 
 
 6,105
 
 14,507
 
 
 
 6,204
 
 811
 
 5,541
 
 12,556
Operating Margin
 
$
 2,801
 
 
 146
 
 
 1,157
 
 4,104
 
 
$
 2,217
 
 133
 
 680
 
 3,030


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2019
 
Year Ended December 31, 2018
(Dollars in thousands)
 
Bank
 
Wealth
 
Mortgage
 
Total
 
Bank
 
Wealth
 
Mortgage
 
Total
Net interest income
 
$
 36,019
 
 65
 
 252
 
 36,336
 
$
 31,807
 
 289
 
 561
 
 32,657
Provision for loan losses
 
 
 901
 
 —
 
 —
 
 901
 
 
 1,577
 
 —
 
 —
 
 1,577
Net interest income after provision
 
 
 35,118
 
 65
 
 252
 
 35,435
 
 
 30,230
 
 289
 
 561
 
 31,080
Non-interest income
 
 
 3,593
 
 3,532
 
 25,973
 
 33,098
 
 
 1,965
 
 3,717
 
 26,673
 
 32,355
Non-interest expense
 
 
 27,931
 
 3,266
 
 23,822
 
 55,019
 
 
 24,108
 
 3,233
 
 25,604
 
 52,945
Operating Margin
 
$
 10,780
 
 331
 
 2,403
 
 13,514
 
$
 8,087
 
 773
 
 1,630
 
 10,490


Christopher Annas
President & CEO
484-568-5001

Stock Information

Company Name: Meridian Corporation
Stock Symbol: MRBK
Market: NASDAQ
Website: meridianbanker.com

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