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

Contact:

Christopher Annas

[email protected]

484-568-5000