Meridian Corporation Reports First Quarter 2025 Financial Results with Decrease in Net Income and Significant Growth in Pre-Provision Net Revenue

Meridian Corporation reports first quarter 2025 net income of $2.4 million; PPNR up 30% year-over-year, despite increased provisions.

Quiver AI Summary

Meridian Corporation reported its financial results for the first quarter ended March 31, 2025, revealing a net income of $2.4 million, or $0.21 per diluted share, which was a decrease compared to $2.7 million from the same period in 2024. However, the pre-provision net revenue showed a significant increase of 30.2%, reaching $8.4 million. The total assets grew to $2.5 billion, with commercial lending increasing by 3% sequentially. Despite a rise in non-performing loans attributed mainly to higher provisions due to distressed SBA loans, the company maintained a net interest margin of 3.46%. The Board declared a quarterly cash dividend of $0.125 per common share. The CEO noted strong business growth and loan demand, particularly in the Delaware Valley, while also highlighting the challenges brought about by rising interest rates impacting loan performance.

Potential Positives

• Pre-provision net revenue (PPNR) increased by 30.2% year-over-year, indicating strong operational performance.
• Total assets grew by 6.0% from the previous quarter, reflecting solid overall growth for the company.
• First quarter deposit growth was 6%, with significant increases in non-interest-bearing deposits, which rose by 34% quarter-over-quarter.
• The Board of Directors declared a quarterly cash dividend of $0.125 per common share, demonstrating commitment to returning value to shareholders.

Potential Negatives

• Net income for the first quarter of 2025 decreased by 57.2% compared to the prior quarter, highlighting significant financial challenges.
• Provision for credit losses increased by $1.6 million due to a rise in non-performing loans, indicating potential risks in the company's loan portfolio.
• Total non-interest income dropped by 44.8% quarter-over-quarter, primarily impacted by the lack of a significant gain on sale of mortgage servicing rights, suggesting a decline in business activity and revenue generation capabilities.

FAQ

What were Meridian Corporation's net earnings for Q1 2025?

Meridian Corporation reported net earnings of $2.4 million for the first quarter of 2025.

How did pre-provision net revenue change in Q1 2025?

Pre-provision net revenue increased by 30.2%, reaching $8.4 million compared to Q1 2024.

When will the quarterly dividend be paid to shareholders?

The quarterly cash dividend of $0.125 per common share will be paid on May 19, 2025.

What is Meridian Corporation's net interest margin?

As of Q1 2025, Meridian Corporation's net interest margin stood at 3.46%.

What factors impacted net income in Q1 2025?

Net income was affected by decreased non-interest income and higher provisioning due to distressed SBA loans.

Disclaimer: This is an AI-generated summary of a press release distributed by GlobeNewswire. The model used to summarize this release may make mistakes. See the full release here.

$MRBK Hedge Fund Activity

We have seen 29 institutional investors add shares of $MRBK stock to their portfolio, and 13 decrease their positions in their most recent quarter.

Here are some of the largest recent moves:

• WICK CAPITAL PARTNERS, LLC removed 143,232 shares (-99.1%) from their portfolio in Q4 2024, for an estimated $1,963,710
• BANC FUNDS CO LLC removed 67,844 shares (-8.2%) from their portfolio in Q4 2024, for an estimated $930,141
• MILLENNIUM MANAGEMENT LLC added 42,004 shares (+410.2%) to their portfolio in Q4 2024, for an estimated $575,874
• GOLDMAN SACHS GROUP INC added 38,847 shares (+inf%) to their portfolio in Q4 2024, for an estimated $532,592
• SUSQUEHANNA INTERNATIONAL GROUP, LLP added 35,871 shares (+61.8%) to their portfolio in Q4 2024, for an estimated $491,791
• MENDON CAPITAL ADVISORS CORP added 30,000 shares (+161.4%) to their portfolio in Q4 2024, for an estimated $411,300
• CONNOR, CLARK & LUNN INVESTMENT MANAGEMENT LTD. added 26,835 shares (+265.1%) to their portfolio in Q4 2024, for an estimated $367,907

To track hedge funds' stock portfolios, check out Quiver Quantitative's institutional holdings dashboard.

$MRBK Price Targets

Multiple analysts have issued price targets for $MRBK recently. We have seen 2 analysts offer price targets for $MRBK in the last 6 months, with a median target of $16.0.

Here are some recent targets:

• Manuel Navas from D.A. Davidson set a target price of $17.0 on 10/29/2024
• Frank Schiraldi from Piper Sandler set a target price of $15.0 on 10/29/2024

Full Release

MALVERN, Pa., April 25, 2025 (GLOBE NEWSWIRE) -- Meridian Corporation (Nasdaq: MRBK) today reported:

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  Net income for the quarter ended March 31, 2025 was $2.4 million, or $0.21 per diluted share.
  
  
  
  
  


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  Pre-provision net revenue
  
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  for the quarter was $8.4 million, up $1.9 million or 30.2% from 1Q 2024.
  
  
  
  
  


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  Net interest margin was 3.46% for the first quarter of 2025, with a loan yield of 7.19%.
  
  
  
  
  


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  Return on average assets and return on average equity for the first quarter of 2025 were 0.40% and 5.57%, respectively.
  
  
  
  
  


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  Total assets at March 31, 2025 were $2.5 billion, compared to $2.4 billion at December 31, 2024 and $2.3 billion at March 31, 2024.
  
  
  
  
  


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  Commercial loans, excluding leases, increased $49.5 million, or 3% for the quarter.
  
  
  
  
  


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  First quarter deposit growth was $123.4 million, or 6%.
  
  
  
  
  


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  Non-interest-bearing deposits were up $82.6 million or 34%, quarter over quarter.
  
  
  
  
  


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  On April 24, 2025, the Board of Directors declared a quarterly cash dividend of $0.125 per common share, payable May 19, 2025 to shareholders of record as of May 12, 2025.
  
  
  

Christopher J. Annas, Chairman and CEO commented:

Meridian’s first quarter 2025 earnings of $2.4 million were slightly below the first quarter 2024 net income of $2.7 million however PPNR was up 30%, reflecting overall healthy growth in our business units and good expense control. Our earnings were negatively affected by higher provisioning resulting mainly from distressed SBA loans, which have been impacted by the dramatic rate rise. The remediation process for SBA loans is lengthy due to procedural requirements, which we follow diligently to assure the government guaranty, but we are making progress. On a positive note, our net interest margin was 3.46% and has shown consistent improvement over the last four quarters.

Loan growth in the first quarter was 12% annualized (minus expected lease paydowns) and all commercial groups contributed. The Delaware Valley region is plagued by a lack of homes for sale, so construction and other residential building is in demand. Our commercial/industrial lending has benefited from disruption in a recent local bank combination, from where we hired a senior lender with a deep list of contacts throughout the region. We expect many opportunities from this individual and his future hires.

Meridian Wealth Partners continued its strong performance with pre-tax income of $726 thousand for the quarter. A slight increase in assets under management combined with overall better fee percentages contributed to the gain. We are poised for better growth in this segment as our expanded loan customer base provides referral business, and with the recent hiring of a senior wealth professional to help focus on other opportunities.

The mortgage group had a larger pre-tax loss in 1Q25 vs 1Q24, mainly due to lower volume and a lesser loan officer count. The first quarter is seasonally weaker, but we are encouraged by the forecast for greater home inventory in both our Delaware Valley and Maryland markets. That has been a much bigger factor for loan originations than mortgage rates.

Our solid growth in PPNR has enabled us to manage the spike in non-performing loans, as we work intensely to remediate these credits. The growth in first quarter loan volume and expansion in net interest margin should continue to help drive further improvement in profitability.

Select Condensed Financial Information

Income Statement -


First


Quarter


2025


Compared to


Fourth


Quarter


2024

First quarter net income decreased $3.2 million, or 57.2%, to $2.4 million due to decreased non-interest income as the prior quarter included a $4.0 million gain on sale of MSR's and a $317 thousand gain on sale of OREO, partially offset by a $1.0 million charge for early lease termination. The first quarter provision for credit losses increased over the prior quarter by $1.6 million. Net interest income increased $477 thousand and non-interest expenses decreased $2.7 million. Detailed explanations of the major categories of income and expense follow below.

Net Interest income

Interest income decreased $869 thousand quarter-over-quarter on a tax equivalent basis, driven by both two less days in the period as well as a lower level of average earning assets, which decreased by $12.4 million. On a rate basis, the yield on earnings assets increased 2 basis points.

Average total loans, excluding residential loans for sale, increased $10.0 million. The largest drivers of this increase were commercial, commercial real estate, and small business loans which on a combined basis increased $21.2 million on average, partially offset by a decrease in average leases of $10.6 million. Home equity, residential real estate, consumer and other loans held in portfolio decreased on a combined basis $602 thousand on average.

Total interest expense decreased $1.3 million, quarter-over-quarter, also driven by two fewer days in the period and a lower volume of time deposits and borrowings. On a rate basis, all deposit types experienced a decrease in the cost, with the overall cost of deposits dropping 21 basis points. Interest expense on total deposits decreased $1.5 million and interest expense on borrowings decreased $139 thousand. During the period, interest-bearing checking accounts and money market accounts increased $9.9 million and $37.9 million on average, respectively, while time deposits decreased $40.2 million on average. Borrowings decreased $6.7 million on average.

Overall the net interest margin increased 17 basis points to 3.46% as the cost of funds declined and the yield on earning assets increased slightly.

Provision for Credit Losses

The overall provision for credit losses for the first quarter increased $1.6 million to $5.2 million, from $3.6 million in the fourth quarter. The first quarter provision increased due to an increase of $7.1 million in non-performing loans which led to an increase of $2.3 million in specific reserves on such loans. SBA loans make up $6.9 million of these additional non-performing loans, of which $3.8 million are guaranteed by the SBA.   The increase in provision was also partially impacted by unfavorable changes in certain macro-economic factors used in the model due to current economic and market uncertainty.

Non-interest income

The following table presents the components of non-interest income for the periods indicated:

Total non-interest income decreased $6.0 million, or 44.8%, quarter-over-quarter largely due to recognizing a gain on sale of MSRs of $4.0 million in the prior quarter, combined with a $2.1 million decline in mortgage banking income, and a change in gains of $171 thousand in hedging activity. These declines in income were partially offset by favorable derivative and loan related fair value changes. Mortgage loan sales decreased $68.1 million or 31.5% quarter over quarter driving lower gain on sale income in addition to a lower overall margin, leading to the lower level of mortgage banking income.

SBA loan income decreased $395 thousand due to a lower level of SBA loan sales. SBA loans sold for the quarter-ended March 31, 2025 totaled $12.1 million, down $7.8 million, or 39.1%, compared to the quarter-ended December 31, 2024. The gross margin on SBA sales was 8.7% for the quarter, up from 7.5% for the previous quarter.

Non-interest expense

The following table presents the components of non-interest expense for the periods indicated:

Overall salaries and benefits decreased $1.0 million. Bank and wealth segments combined decreased $245 thousand, while the mortgage segment decreased $799 thousand. Mortgage segment salaries, commissions, and employee benefits expense are impacted by volume and decreased commensurate with the lower levels of originations, which were down $63.5 million from the prior quarter. Occupancy and equipment expense decreased $932 thousand, net, due to fees, credits and other disposal costs for the early termination of the Blue Bell lease that occurred in the prior quarter. Professional fees decreased $371 thousand over the prior period mainly due to the results of cost control efforts on certain internal audit fees, legal fees and consulting fees, while other non-interest expense decreased $213 thousand due to a decline in certain business development costs, other loan related fees, and OREO related expenses.

Balance Sheet -


March 31, 2025


Compared to


December 31, 2024

Total assets increased $142.7 million, or 6.0%, to $2.5 billion as of March 31, 2025 from $2.4 billion at December 31, 2024. Interest-earning cash increased $91.8 million, or 419.7%, to $113.6 million as of March 31, 2025 from December 31, 2024, as a temporary deposit of $103 million from a long standing customer was on hand for several weeks. In addition, loan growth contributed to the overall increase in total assets over this period.

Portfolio loan growth was $42.0 million, or 2.1% quarter-over-quarter. The portfolio growth was generated from commercial mortgage loans which increased $21.2 million, or 2.6%, construction loans which increased $18.3 million, or 7.1%, small business loans which increased $5.3 million, or 3.4%, and commercial & industrial loans which increased $4.6 million, or 1.3%. Lease financings decreased $9.2 million, or 12.1% from December 31, 2024, partially offsetting the above noted loan growth, but this decline was expected as we continue to refocus away from lease originations.

Total deposits increased $123.4 million, or 6.2% quarter-over-quarter, led by non-interest bearing deposit growth of $82.6 million. Non-interest bearing deposits benefited from a late quarter deposit of $103 million from a long standing customer that sold a business. This deposit was on hand for several weeks. Money market accounts and savings accounts also increased a combined $34.3 million, while interest bearing demand deposits increased $19.6 million, and time deposits decreased $13.1 million from largely wholesale efforts. Overall borrowings increased $15.1 million, or 12.1% quarter-over-quarter.

Total stockholders’ equity increased by $1.7 million from December 31, 2024, to $173.3 million as of March 31, 2025. Changes to equity for the current quarter included net income of $2.4 million, less dividends paid of $1.4 million, offset by a decrease of $529 thousand in other comprehensive income. The Community Bank Leverage Ratio for the Bank was 9.30% at March 31, 2025.

Asset Quality Summary

Non-performing loans increased $7.1 million to $52.2 million at March 31, 2025 compared to $45.1 million at December 31, 2024. Included in non-performing loans are $19.1 million of SBA loans of which $9.9 million, or 53%, are guaranteed by the SBA. The SBA portfolio was subject to the Fed's rapid rate increase and $15.0 million, or 80% of these non-performing loans originated in 2020-2021 where their rates rose over 500 basis points.

The ratio of non-performing loans to total loans increased 30 bps to 2.49% as of March 31, 2025, from 2.19% as of December 31, 2024. The increase in non-performing loans was led by a $6.9 million increase in non-performing SBA loans, and $881 thousand in leases.

Net charge-offs as a % of total average loans of 0.14% for the quarter ended March 31, 2025, decreased from 0.34% for the quarter ended December 31, 2024. Net charge-offs decreased to $2.8 million for the quarter ended March 31, 2025, compared to net charge-offs of $7.1 million for the quarter ended December 31, 2024. First quarter charge-offs consisted of $851 thousand on a protracted commercial advertising loan relationship, $738 thousand related to construction loans, $553 thousand of small ticket equipment leases which are charged-off after becoming more than 120 days past due, and $277 thousand in SBA loans. Overall there were recoveries of $175 thousand, largely related to leases and SBA loans.

The ratio of allowance for credit losses to total loans held for investment was 1.01% as of March 31, 2025, an increase from the coverage ratio of 0.91% as of December 31, 2024 due largely to the increase in specific reserves on non-performing loans in the quarter discussed above.   As of March 31, 2025 there were specific reserves of $5.0 million against individually evaluated loans, an increase of $2.3 million from $2.7 million in specific reserves as of December 31, 2024. The specific reserve increase over the prior quarter was led by a $1.6 million increase in specific reserves on SBA loans, as well as increases of $535 thousand in commercial real estate loan specifics reserves and a $174 thousand increase in commercial loan specific reserves.

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 its 17 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, credit losses and the credit risk of our commercial and consumer loan products; changes in the level of charge-offs and changes in estimates of the adequacy of the allowance for credit losses, or ACL; cyber-security concerns; rapid technological developments and changes; increased competitive pressures; changes in spreads on interest-earning assets and interest-bearing liabilities; changes in general economic conditions and conditions within the securities markets; escalating tariff and other trade policies and the resulting impacts on market volatility and global trade; unanticipated changes in our liquidity position; unanticipated changes in regulatory and governmental policies impacting interest rates and financial markets; legislation affecting the financial services industry as a whole, and Meridian Corporation, in particular; changes in accounting policies, practices or guidance; developments affecting the industry and the soundness of financial institutions and further disruption to the economy and U.S. banking system; 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, 2024 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.