[Q2 2025 Financial Highlights](index=1&type=section&id=Q2%202025%20Financial%20Highlights) [Overview of Q2 2025 Performance](index=1&type=section&id=Overview%20of%20Q2%202025%20Performance) Meridian Corporation's Q2 2025 net income surged to **$5.6 million**, a **133% increase**, driven by improved net interest margin and strong loan sales Key Financial Highlights (Dollars in thousands) | (Dollars in thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended March 31, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | | **Net income** | $ 5,592 | $ 2,399 | $ 3,326 | | **Diluted earnings per common share** | $ 0.49 | $ 0.21 | $ 0.30 | | **Pre-provision net revenue (PPNR)** | $ 11,090 | $ 8,357 | $ 7,072 | - CEO Christopher J. Annas highlighted that the strong Q2 earnings were driven by improving margin, SBA loan sales, and mortgage seasonality. PPNR increased **33%** quarter-over-quarter, reflecting healthy business growth and good expense control[2](index=2&type=chunk) - Management is intensely focused on reducing nonperforming loans, though the process is expected to be slow. The company forecasts annual loan growth in the **8-10%** range[2](index=2&type=chunk) - Business unit performance was solid, with Meridian Wealth Partners reporting pre-tax income of **$604 thousand** and the mortgage team showing a significant turnaround from the first quarter despite low housing inventory[3](index=3&type=chunk) [Dividend Declaration](index=1&type=section&id=Dividend%20Declaration) The Board of Directors declared a quarterly cash dividend of **$0.125** per common share, payable in August 2025 - A quarterly cash dividend of **$0.125** per common share was declared on July 24, 2025, payable on August 18, 2025, to shareholders of record as of August 11, 2025[4](index=4&type=chunk) [Financial Performance Analysis (Q2 2025 vs. Q1 2025)](index=3&type=section&id=Financial%20Performance%20Analysis%20(Q2%202025%20vs.%20Q1%202025)) [Income Statement Analysis](index=3&type=section&id=Income%20Statement%20Analysis) Net income for Q2 2025 surged by **$3.2 million (133.1%)** to **$5.6 million**, driven by improved net interest income and reduced credit loss provision - The **$3.2 million (133.1%)** quarter-over-quarter increase in net income was driven by improvements in net interest income (+$1.4 million), a lower provision for credit losses (-$1.4 million), and higher non-interest income (+$4.0 million)[7](index=7&type=chunk) [Net Interest Income](index=4&type=section&id=Net%20Interest%20Income) Net interest income grew by **$1.4 million** QoQ, with net interest margin expanding by **8 basis points** to **3.54%**, driven by increased earning assets - The net interest margin increased by **8 basis points** to **3.54%** in Q2 2025, as the yield on earning assets increased and the cost of funds declined[13](index=13&type=chunk) - Interest income increased by **$2.0 million** QoQ, mainly due to a **$74.7 million** increase in average interest-earning assets, which contributed **$1.7 million** to the rise[10](index=10&type=chunk) - Average total loans grew by **$73.6 million**, led by increases in commercial, commercial real estate, and construction loans[11](index=11&type=chunk) - Interest expense rose by **$660 thousand** due to higher volumes of deposits and borrowings, but the overall cost of deposits dropped by **5 basis points**[12](index=12&type=chunk) [Provision for Credit Losses](index=4&type=section&id=Provision%20for%20Credit%20Losses) The provision for credit losses decreased by **$1.4 million** to **$3.8 million** in Q2 2025, due to lower non-performing loans and slower loan growth - The provision for credit losses decreased from **$5.2 million** in Q1 2025 to **$3.8 million** in Q2 2025, due to a decline in non-performing loans, a decrease in required specific reserves, and lower loan growth during the quarter[14](index=14&type=chunk) [Non-interest Income](index=5&type=section&id=Non-interest%20Income) Non-interest income significantly rose by **$4.0 million (54.1%)** to **$11.3 million**, driven by improved mortgage banking and SBA loan income Non-interest Income (Dollars in thousands) | (Dollars in thousands) | Q2 2025 | Q1 2025 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Mortgage banking income | $ 5,762 | $ 3,393 | $ 2,369 | 69.8% | | SBA loan income | $ 1,988 | $ 748 | $ 1,240 | 165.8% | | Net gain (loss) on sale of MSRs | $ 467 | $ (52) | $ 519 | (998.1)% | | **Total non-interest income** | **$ 11,288** | **$ 7,324** | **$ 3,964** | **54.1%** | - SBA loan income increased by **$1.2 million** as the volume of SBA loans sold rose by **$27.4 million** to **$39.5 million** for the quarter[16](index=16&type=chunk) [Non-interest Expense](index=5&type=section&id=Non-interest%20Expense) Non-interest expense increased by **$2.6 million (13.9%)** to **$21.4 million**, primarily due to higher salaries and benefits Non-interest Expense (Dollars in thousands) | (Dollars in thousands) | Q2 2025 | Q1 2025 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Salaries and employee benefits | $ 13,179 | $ 11,385 | $ 1,794 | 15.8% | | Professional fees | $ 1,164 | $ 763 | $ 401 | 52.6% | | Advertising and promotion | $ 1,277 | $ 779 | $ 498 | 63.9% | | Occupancy and equipment | $ 1,037 | $ 1,338 | $ (301) | (22.5)% | | **Total non-interest expense** | **$ 21,357** | **$ 18,743** | **$ 2,614** | **13.9%** | [Balance Sheet Analysis](index=6&type=section&id=Balance%20Sheet%20Analysis) Total assets slightly decreased by **$18.0 million** to **$2.5 billion**, primarily due to a cash reduction, despite growth in portfolio loans - Total assets decreased by **$18.0 million (0.7%)** to **$2.5 billion**, primarily due to an **$84.7 million** decrease in cash after a temporary deposit of **$103 million** was withdrawn[18](index=18&type=chunk) - Portfolio loans grew by **$36.2 million (1.7%)**, led by a **$32.0 million** increase in commercial & industrial loans, partially offset by a **$16.4 million** decrease in SBA loan balances due to sales[19](index=19&type=chunk) - Total deposits decreased by **$18.4 million (0.9%)**, as an **$86.4 million** decline in non-interest bearing deposits was largely offset by a **$68.1 million** increase in interest-bearing deposits[20](index=20&type=chunk) - Total stockholders' equity increased by **$4.5 million** to **$178.0 million**, driven by net income of **$5.6 million** less dividends paid of **$1.4 million**[21](index=21&type=chunk) [Asset Quality](index=6&type=section&id=Asset%20Quality) Asset quality improved as non-performing loans decreased by **$1.7 million** to **$50.5 million**, lowering the NPL to total loans ratio to **2.35%** - Non-performing loans decreased by **$1.7 million** to **$50.5 million** at June 30, 2025, improving the ratio of non-performing loans to total loans to **2.35%** from **2.49%**[22](index=22&type=chunk) - Net charge-offs increased to **$3.6 million (0.17% of total average loans)** for Q2 2025, compared to **$2.8 million (0.14%)** in the previous quarter, mainly from SBA loans and equipment leases[23](index=23&type=chunk) - The allowance for credit losses to total loans held for investment was **1.00%**, relatively flat from the prior quarter, with specific reserves decreasing by **$1.7 million** to **$3.3 million**[24](index=24&type=chunk) [Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Consolidated%20Financial%20Statements%20(Unaudited)) [Select Condensed Financial Information](index=3&type=section&id=Select%20Condensed%20Financial%20Information) This section provides a five-quarter overview of key financial data, highlighting Q2 2025 net income of **$5.6 million** as a significant recovery Select Condensed Financial Information (Dollars in thousands) | (Dollars in thousands) | Jun 30, 2025 | Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Net income** | $ 5,592 | $ 2,399 | $ 5,600 | $ 4,743 | $ 3,326 | | **Total assets** | $ 2,510,938 | $ 2,528,888 | $ 2,385,867 | $ 2,387,721 | $ 2,351,584 | | **Loans, net** | $ 2,108,250 | $ 2,071,675 | $ 2,030,437 | $ 2,008,396 | $ 1,988,535 | | **Total deposits** | $ 2,110,374 | $ 2,128,742 | $ 2,005,368 | $ 1,978,927 | $ 1,915,436 | | **Stockholders' equity** | $ 178,020 | $ 173,568 | $ 171,522 | $ 167,450 | $ 162,382 | | **Return on average assets** | 0.90 % | 0.40 % | 0.92 % | 0.80 % | 0.58 % | | **Return on average equity** | 12.68 % | 5.57 % | 13.01 % | 11.41 % | 8.25 % | [Financial Ratios](index=9&type=section&id=Financial%20Ratios) This section presents detailed performance, asset quality, and capital ratios, showing improvements in net interest margin to **3.54%** and efficiency ratio to **65.82%** Key Financial Ratios | Ratio | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | | :--- | :--- | :--- | :--- | | **Return on average assets** | 0.90 % | 0.40 % | 0.58 % | | **Return on average equity** | 12.68 % | 5.57 % | 8.25 % | | **Net interest margin (tax-equivalent)** | 3.54 % | 3.46 % | 3.06 % | | **Efficiency ratio** | 65.82 % | 69.16 % | 72.89 % | | **Non-performing loans to total loans** | 2.35 % | 2.49 % | 1.84 % | | **Book value per common share** | $ 15.76 | $ 15.38 | $ 14.51 | [Condensed Consolidated Statements of Income](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Presents detailed income statements for Q2 2025 and Q2 2024, showing Q2 2025 net income of **$5.6 million** Condensed Consolidated Statements of Income (Dollars in thousands) | (Dollars in thousands) | Three Months Ended Jun 30, 2025 | Three Months Ended Jun 30, 2024 | Six Months Ended Jun 30, 2025 | Six Months Ended Jun 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net interest income** | $ 21,159 | $ 16,846 | $ 40,935 | $ 33,455 | | **Provision for credit losses** | $ 3,803 | $ 2,680 | $ 9,015 | $ 5,546 | | **Total non-interest income** | $ 11,288 | $ 9,244 | $ 18,612 | $ 17,228 | | **Total non-interest expense** | $ 21,357 | $ 19,018 | $ 40,100 | $ 37,192 | | **Net income** | $ 5,592 | $ 3,326 | $ 7,991 | $ 6,002 | | **Diluted EPS** | $ 0.49 | $ 0.30 | $ 0.70 | $ 0.54 | [Condensed Consolidated Statements of Condition (Balance Sheet)](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Condition%20(Balance%20Sheet)) Details assets, liabilities, and equity, showing **$2.51 billion** in total assets and **$178.0 million** in stockholders' equity as of June 30, 2025 Condensed Consolidated Statements of Condition (Dollars in thousands) | (Dollars in thousands) | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | | :--- | :--- | :--- | :--- | | **Total assets** | $ 2,510,938 | $ 2,528,888 | $ 2,351,584 | | Cash and cash equivalents | $ 50,174 | $ 131,225 | $ 24,058 | | Loans, net of allowance | $ 2,087,399 | $ 2,050,848 | $ 1,966,832 | | **Total liabilities** | $ 2,332,918 | $ 2,355,320 | $ 2,189,202 | | Total deposits | $ 2,110,374 | $ 2,128,742 | $ 1,915,436 | | **Total stockholders' equity** | $ 178,020 | $ 173,568 | $ 162,382 | [Segment Information](index=13&type=section&id=Segment%20Information) Breaks down financial performance by Bank, Wealth, and Mortgage segments, with the Bank segment contributing **$5.2 million** to pre-tax income in Q2 2025 Segment Performance (Dollars in thousands) | (dollars in thousands) | Bank | Wealth | Mortgage | Total | | :--- | :--- | :--- | :--- | :--- | | **Three Months Ended June 30, 2025** | | | | | | Net interest income | $ 21,025 | $ 63 | $ 71 | $ 21,159 | | Non-interest income | $ 3,029 | $ 1,492 | $ 6,767 | $ 11,288 | | Non-interest expense | $ 15,049 | $ 951 | $ 5,357 | $ 21,357 | | **Income before income taxes** | **$ 5,202** | **$ 604** | **$ 1,481** | **$ 7,287** | | **Three Months Ended June 30, 2024** | | | | | | **Income before income taxes** | **$ 3,171** | **$ 676** | **$ 545** | **$ 4,392** | [Appendix: Non-GAAP Measures](index=15&type=section&id=Appendix%3A%20Non-GAAP%20Measures) [Pre-Provision Net Revenue (PPNR) Reconciliation](index=15&type=section&id=Pre-Provision%20Net%20Revenue%20(PPNR)%20Reconciliation) Reconciles income before income tax expense to PPNR, showing Q2 2025 PPNR of **$11.1 million**, a significant increase from the prior quarter Pre-Provision Net Revenue (PPNR) Reconciliation (Dollars in thousands) | (Dollars in thousands) | Three Months Ended Jun 30, 2025 | Three Months Ended Mar 31, 2025 | Three Months Ended Jun 30, 2024 | | :--- | :--- | :--- | :--- | | Income before income tax expense | $ 7,287 | $ 3,145 | $ 4,392 | | Provision for credit losses | $ 3,803 | $ 5,212 | $ 2,680 | | **Pre-provision net revenue** | **$ 11,090** | **$ 8,357** | **$ 7,072** | [Tangible Capital & Book Value Reconciliations](index=15&type=section&id=Tangible%20Capital%20%26%20Book%20Value%20Reconciliations) Reconciles GAAP measures to non-GAAP tangible counterparts, showing a tangible common equity to tangible assets ratio of **6.96%** and tangible book value per common share of **$15.44** Tangible Capital & Book Value Reconciliations | (Corporation) | Jun 30, 2025 | Mar 31, 2025 | Jun 30, 2024 | | :--- | :--- | :--- | :--- | | **Tangible common equity to tangible assets ratio** | 6.96 % | 6.73 % | 6.76 % | | **Tangible book value per common share** | $ 15.44 | $ 15.06 | $ 14.17 |

Group 1: Maternity Healthcare Challenges - In Illinois, 34.3% of counties are classified as maternity healthcare deserts, requiring residents to travel between 47 and 59 miles to reach a birthing hospital [1] - Many rural hospitals in Illinois have closed their labor and delivery units, exacerbating the issue of maternity care deserts [3] Group 2: OSF OnCall Connect Program - The OSF OnCall Connect program aims to provide pregnancy and postpartum care to women on Medicaid in Central Illinois, particularly in underserved counties [2][3] - The program includes a mobile clinic that will offer prenatal and postpartum services, including sonograms, lab work, vaccinations, and blood pressure monitoring [1][3] Group 3: Operational Details - The mobile unit is set to begin operations in July 2025, with eligible patients able to self-enroll or be referred by their healthcare provider [3] - The OSF OnCall Connect team will assist with program enrollment and scheduling appointments for the mobile clinic [3] Group 4: Services Offered - Services provided by the mobile clinic include education and information for each week of pregnancy, regular check-ins, 24/7 virtual access to a care team, blood pressure monitoring, lab work, screening for postpartum depression, and breastfeeding support [8]

Core Viewpoint - Meridian Mining UK S has reported significant drilling results from its Cabaçal Au-Cu-Ag VMS project, indicating the presence of multiple stacked layers of high-grade Au-Cu-Ag ore, which are expected to enhance the project's overall resource quality and density modeling as the DFS infill drilling program approaches completion [3][5][6]. Group 1: Drilling Results - The recent drilling results include CD-702, which returned 28.6m at 3.5g/t AuEq (2.6% CuEq) from 127.6m, with notable high-grade intervals [3][7][10]. - Additional intersections include multiple high-grade copper zones with peak grades of 11.0% Cu and 10.6% Cu, indicating strong mineralization potential [7][11]. - The ongoing drill program is focused on the first five-year production area, with results expected to improve grade and density modeling for the Cabaçal DFS [6][9]. Group 2: Exploration Licenses and New Targets - The company has been granted two exploration licenses, opening up the Alvorada target for modern exploration, which has shown promising historical copper anomalies [4][13]. - The Alvorada target has a peak copper-in-stream geochemical value of 164ppm Cu, surpassing previous anomalies in the Cabaçal and Santa Helena areas [13]. - The company is mobilizing staff to commence land access agreements for the newly granted areas, indicating a strategic expansion of exploration efforts [13][16]. Group 3: Cabaçal Project Development - The Cabaçal project has a pre-production capital cost of USD 248 million, with an after-tax NPV5 of USD 984 million and an IRR of 61.2%, highlighting its economic viability [27][30]. - The project is expected to produce 141,000 ounces of gold equivalent over its life, driven by high metallurgical recovery and low operating costs [30]. - The company is advancing its DFS program, including shipping diamond core samples to SGS Canada for metallurgical studies, which will aid in refining the project's development strategy [25][26].

Core Insights - Meridian Corporation (NASDAQ: MRBK) was downgraded from a 'buy' to a 'hold' at the end of December, following an 18% increase in its share price prior to the downgrade [1] Company Analysis - The decision to downgrade was made after a significant rise in the company's stock, indicating a potential reassessment of its valuation and future growth prospects [1] Industry Context - Crude Value Insights provides an investment service focused on oil and natural gas, emphasizing cash flow and the companies that generate it, which are critical for identifying value and growth opportunities in the sector [1]

Group 1 - The company is reducing its mortgage banking income estimate due to a weak housing market [1] - The expected EPS for the company in 2025 has been revised down to $1.43 from a previous estimate of $1.67 [1]

[Part I - Financial Information](index=6&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents the unaudited financial statements, management's discussion, market risk disclosures, and internal controls [Financial Statements (Unaudited)](index=6&type=section&id=Item%201%20Financial%20Statements%20(Unaudited)) This section presents Meridian Corporation's unaudited consolidated financial statements, detailing financial position, performance, and cash flows [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) This section details the company's financial position, including assets, liabilities, and equity, at specific quarter-end dates Consolidated Balance Sheet Highlights (in millions USD) | Financial Metric | March 31, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | **Total Assets** | $2,528.9 million | $2,385.9 million | | **Loans, net of ACL** | $2,050.8 million | $2,012.0 million | | **Total Deposits** | $2,128.7 million | $2,005.4 million | | **Total Liabilities** | $2,355.3 million | $2,214.3 million | | **Total Stockholders' Equity** | $173.6 million | $171.5 million | [Consolidated Statements of Income](index=7&type=section&id=Consolidated%20Statements%20of%20Income) This section presents the company's revenues, expenses, and net income over the quarter, reflecting its operational profitability Consolidated Statements of Income Highlights (in millions USD) | Financial Metric | Q1 2025 (USD) | Q1 2024 (USD) | | :--- | :--- | :--- | | **Net Interest Income** | $19.8 million | $16.6 million | | **Provision for Credit Losses** | $5.2 million | $2.9 million | | **Total Non-interest Income** | $7.3 million | $8.0 million | | **Total Non-interest Expense** | $18.7 million | $18.2 million | | **Net Income** | $2.4 million | $2.7 million | | **Diluted EPS** | $0.21 | $0.24 | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section details the sources and uses of cash across operating, investing, and financing activities for the period - Net cash provided by operating activities was **$18.1 million** in Q1 2025, a significant improvement from a net use of **$1.7 million** in Q1 2024[22](index=22&type=chunk) - Net cash used in investing activities decreased to **$51.8 million** in Q1 2025 from **$78.7 million** in Q1 2024, primarily due to a lower net increase in loans[22](index=22&type=chunk) - Net cash from financing activities increased substantially to **$137.5 million** in Q1 2025 from **$46.8 million** in Q1 2024, driven by a large net increase in deposits[22](index=22&type=chunk) [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on accounting policies, financial statement items, and segment performance, offering deeper insights - The investment portfolio's unrealized loss position of **$9.5 million** on available-for-sale securities is primarily due to changes in market interest rates, and management does not believe an allowance for credit losses is warranted for these securities[35](index=35&type=chunk)[36](index=36&type=chunk) - Nonaccrual loans increased to **$51.8 million** as of March 31, 2025, from **$45.1 million** at December 31, 2024, mainly due to risk rating downgrades in the SBA loan portfolio[54](index=54&type=chunk) - The Allowance for Credit Losses (ACL) increased to **$20.8 million** at March 31, 2025, from **$18.4 million** at year-end 2024, with a provision of **$5.2 million** recorded for the quarter[57](index=57&type=chunk) - The company utilizes interest rate swaps as cash flow hedges to manage interest rate risk on borrowings and as fair value hedges on certain residential mortgage loans[124](index=124&type=chunk)[125](index=125&type=chunk) Segment Income (Loss) Before Taxes (Q1 2025, in millions USD) | Segment (Q1 2025) | Income (Loss) Before Taxes (USD) | | :--- | :--- | | Banking | $3.6 million | | Wealth Management | $0.7 million | | Mortgage | ($1.2 million) | [Management's Discussion and Analysis (MD&A)](index=39&type=section&id=Item%202%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, operational results, asset quality, and capital, highlighting key drivers and trends [Financial Condition](index=39&type=section&id=Financial%20Condition) This section analyzes the company's balance sheet, focusing on changes in assets, liabilities, and equity over the period - Total assets increased by **$143.0 million (6.0%)** to **$2.5 billion** from December 31, 2024, to March 31, 2025[141](index=141&type=chunk) - Portfolio loans grew by **$42.0 million (2.1%)**, driven by increases in commercial real estate (**$21.2 million**) and construction loans (**$18.3 million**)[141](index=141&type=chunk)[164](index=164&type=chunk) - Total deposits grew by **$123.4 million (6.2%)**, highlighted by a significant **$82.6 million (34.3%)** increase in non-interest bearing deposits[141](index=141&type=chunk)[166](index=166&type=chunk) [Results of Operations](index=40&type=section&id=Results%20of%20Operations) This section analyzes the company's income statement, detailing revenue, expenses, and profitability drivers for the quarter Key Operating Results (in millions USD, except EPS and percentages) | Metric | Q1 2025 (USD) | Q1 2024 (USD) | | :--- | :--- | :--- | | **Net Income** | $2.4 million | $2.7 million | | **Diluted EPS** | $0.21 | $0.24 | | **Return on Average Assets** | 0.40% | 0.47% | | **Return on Average Equity** | 5.57% | 6.73% | - Net interest income increased **19.1%** YoY to **$19.8 million**, and the net interest margin expanded to **3.46%** from **3.09%**, largely due to lower deposit and borrowing costs[145](index=145&type=chunk)[155](index=155&type=chunk) - The provision for credit losses increased by **$2.3 million** YoY, driven by loan growth, charge-offs, and unfavorable changes in macroeconomic forecasts[157](index=157&type=chunk) - Non-interest income decreased **8.3%** YoY to **$7.3 million**, primarily due to declines in mortgage banking income (**-$0.241 million**) and SBA loan income (**-$0.238 million**)[145](index=145&type=chunk)[159](index=159&type=chunk) - Non-interest expense increased **3.1%** YoY to **$18.7 million**, mainly from a **$0.812 million** rise in salaries and employee benefits[145](index=145&type=chunk)[161](index=161&type=chunk) [Asset Quality](index=49&type=section&id=Asset%20Quality) This section assesses the quality of the company's loan portfolio and other assets, including non-performing assets and credit loss allowances - The ratio of non-performing assets to total assets increased to **2.07%** at March 31, 2025, from **1.90%** at December 31, 2024[172](index=172&type=chunk)[177](index=177&type=chunk) - Total non-performing loans rose by **$7.1 million** to **$52.2 million** since year-end, largely due to downgrades in the SBA loan portfolio[172](index=172&type=chunk) - The allowance for credit losses as a percentage of total loans (excluding fair value loans) increased to **1.01%** from **0.91%** at year-end 2024[174](index=174&type=chunk) [Capital and Liquidity](index=49&type=section&id=Capital%20and%20Liquidity) This section evaluates the company's capital adequacy and liquidity position, crucial for financial stability and operational resilience - The Bank remains well-capitalized, with a Tier 1 leverage ratio of **9.30%** as of March 31, 2025, well above the **5.00%** regulatory minimum[171](index=171&type=chunk) - Stockholders' equity was **$173.6 million**, representing **6.9%** of total assets[169](index=169&type=chunk) - The company maintains access to approximately **$640.5 million** in liquidity from various sources, including the FHLB and other correspondent banks[179](index=179&type=chunk) [Market Risk Disclosures](index=53&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company assesses interest rate risk through simulations of Net Interest Income (NII) and Economic Value of Equity (EVE), indicating sensitivity to rate changes Net Interest Income (NII) Sensitivity Simulation (12-month ramp) | NII Simulation (12-month ramp) | % Change in NII | | :--- | :--- | | +100 basis points | +0.94% | | -100 basis points | -1.12% | Economic Value of Equity (EVE) Sensitivity Simulation (Immediate shock) | EVE Simulation (Immediate shock) | % Change in EVE | | :--- | :--- | | +100 basis points | +5% | | -100 basis points | -9% | [Controls and Procedures](index=54&type=section&id=Item%204%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2025[204](index=204&type=chunk) - No changes in internal control over financial reporting were identified that have materially affected, or are reasonably likely to materially affect, the Corporation's internal controls[205](index=205&type=chunk) [Part II - Other Information](index=55&type=section&id=PART%20II%20OTHER%20INFORMATION) This section confirms no new legal proceedings, no material changes to risk factors, and no unregistered equity sales or senior security defaults - The company reports no legal proceedings for the period[207](index=207&type=chunk) - There have been no material changes in risk factors from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[207](index=207&type=chunk)

Company Performance - Meridian Bank reported quarterly earnings of $0.21 per share, missing the Zacks Consensus Estimate of $0.33 per share, and down from $0.24 per share a year ago, representing an earnings surprise of -36.36% [1] - The bank posted revenues of $27.1 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 4.24%, compared to year-ago revenues of $24.59 million [2] - Over the last four quarters, the company has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [2] Stock Performance - Meridian Bank shares have increased by approximately 3.4% since the beginning of the year, contrasting with the S&P 500's decline of -6.8% [3] - The current consensus EPS estimate for the upcoming quarter is $0.44, with expected revenues of $30.32 million, and for the current fiscal year, the EPS estimate is $1.72 on revenues of $121.52 million [7] Industry Outlook - The Zacks Industry Rank for Banks - Northeast is currently in the top 26% of over 250 Zacks industries, indicating a favorable outlook for the industry [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that the industry outlook can significantly impact stock performance [5][8]

[Financial Highlights and CEO Commentary](index=1&type=section&id=Financial%20Highlights%20and%20CEO%20Commentary) The company reported Q1 2025 results, highlighting strong PPNR growth despite lower net income and providing CEO commentary on key business drivers [Q1 2025 Financial Highlights](index=1&type=section&id=Q1%202025%20Financial%20Highlights) The company reported Q1 2025 net income of $2.4 million, with strong PPNR growth offset by lower earnings compared to prior periods **Q1 2025 Key Financial Metrics** | (Dollars in thousands, except per share data) | March 31, 2025 | December 31, 2024 | March 31, 2024 | |---|---|---|---| | Net income | $2,399 | $5,600 | $2,676 | | Diluted earnings per common share | $0.21 | $0.49 | $0.24 | | Pre-provision net revenue (PPNR) (Non-GAAP) | $8,357 | $11,167 | $6,419 | - The Board of Directors declared a quarterly cash dividend of **$0.125 per common share**, payable May 19, 2025[7](index=7&type=chunk) - Key performance metrics for Q1 2025 include a **3.46% net interest margin**, **$2.5 billion in total assets**, **3% quarterly commercial loan growth**, and **6% quarterly deposit growth**[7](index=7&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) The CEO noted strong PPNR growth and improved net interest margin, despite earnings being impacted by higher provisions for distressed SBA loans - Q1 2025 earnings were negatively affected by higher provisioning for distressed SBA loans, which have been impacted by dramatic rate rises[2](index=2&type=chunk) - The net interest margin showed consistent improvement, reaching **3.46% in Q1 2025**[2](index=2&type=chunk) - Annualized loan growth was **12% in the first quarter**, with commercial/industrial lending benefiting from strategic hiring[3](index=3&type=chunk) - Meridian Wealth Partners continued its strong performance, with pre-tax income of **$726 thousand** for the quarter[4](index=4&type=chunk) - The mortgage group experienced a larger pre-tax loss compared to Q1 2024, primarily due to lower volume and a reduced number of loan officers[5](index=5&type=chunk) [Financial Performance Analysis](index=3&type=section&id=Financial%20Performance%20Analysis) This section details the quarter-over-quarter changes in the income statement and balance sheet, analyzing key drivers of performance [Income Statement Analysis (Q1 2025 vs Q4 2024)](index=3&type=section&id=Income%20Statement%20Analysis%20(Q1%202025%20vs%20Q4%202024)) Net income decreased to $2.4 million, driven by lower non-interest income and higher credit provisions, partially offset by improved net interest income [Net Interest Income](index=3&type=section&id=Net%20Interest%20Income) Net interest income rose to $19.8 million, with the net interest margin expanding to 3.46% due to a lower cost of deposits - Net interest income increased by **$477 thousand** quarter-over-quarter[10](index=10&type=chunk) - The net interest margin increased by **17 basis points to 3.46%** as the cost of funds declined[14](index=14&type=chunk) - The overall cost of deposits dropped by **21 basis points**, and total interest expense decreased by $1.3 million[13](index=13&type=chunk) [Provision for Credit Losses](index=4&type=section&id=Provision%20for%20Credit%20Losses) The provision for credit losses increased by $1.6 million to $5.2 million, driven by a rise in non-performing SBA loans - The provision for credit losses increased by **$1.6 million to $5.2 million** in Q1 2025[15](index=15&type=chunk) - The increase was driven by a **$7.1 million rise in non-performing loans**, leading to a $2.3 million increase in specific reserves[15](index=15&type=chunk) [Non-interest Income](index=4&type=section&id=Non-interest%20Income) Non-interest income fell by 44.8% to $7.3 million, primarily due to a non-recurring gain on MSR sales in the prior quarter **Non-interest Income Breakdown** | (Dollars in thousands) | Q1 2025 | Q4 2024 | $ Change | % Change | |---|---|---|---|---| | Mortgage banking income | $3,393 | $5,516 | $(2,123) | (38.5)% | | Net (loss) gain on sale of MSRs | $(52) | $3,992 | $(4,044) | (101.3)% | | SBA loan income | $748 | $1,143 | $(395) | (34.6)% | | **Total non-interest income** | **$7,324** | **$13,279** | **$(5,955)** | **(44.8)%** | - SBA loan sales totaled **$12.1 million**, a decrease of $7.8 million (39.1%) from the previous quarter, leading to lower SBA loan income[17](index=17&type=chunk) [Non-interest Expense](index=4&type=section&id=Non-interest%20Expense) Non-interest expense decreased by 12.5% to $18.7 million, driven by lower salary and occupancy costs **Non-interest Expense Breakdown** | (Dollars in thousands) | Q1 2025 | Q4 2024 | $ Change | % Change | |---|---|---|---|---| | Salaries and employee benefits | $11,385 | $12,429 | $(1,044) | (8.4)% | | Occupancy and equipment | $1,338 | $2,270 | $(932) | (41.1)% | | Professional fees | $763 | $1,134 | $(371) | (32.7)% | | **Total non-interest expense** | **$18,743** | **$21,411** | **$(2,668)** | **(12.5)%** | [Balance Sheet Analysis (March 31, 2025 vs Dec 31, 2024)](index=6&type=section&id=Balance%20Sheet%20Analysis%20(March%2031%2C%202025%20vs%20Dec%2031%2C%202024)) Total assets grew 6.0% to $2.5 billion, driven by loan growth and a significant temporary customer deposit - Total assets increased by **$142.7 million (6.0%) to $2.5 billion**, partly due to a temporary $103 million deposit from a customer[20](index=20&type=chunk) - Portfolio loan growth was **$42.0 million (2.1%)**, driven by increases in commercial mortgage ($21.2M), construction ($18.3M), and small business loans ($5.3M)[21](index=21&type=chunk) - Total deposits grew by **$123.4 million (6.2%)**, led by an $82.6 million increase in non-interest bearing deposits[22](index=22&type=chunk) - Total stockholders' equity increased by **$1.7 million to $173.3 million**, after accounting for net income of $2.4 million and dividends paid of $1.4 million[23](index=23&type=chunk) [Asset Quality](index=6&type=section&id=Asset%20Quality) Asset quality deteriorated as non-performing loans rose to 2.49% of total loans, though net charge-offs decreased - Non-performing loans increased by **$7.1 million to $52.2 million** at March 31, 2025, compared to the prior quarter[24](index=24&type=chunk) - The ratio of non-performing loans to total loans rose to **2.49% from 2.19%** quarter-over-quarter, led by a $6.9 million increase in non-performing SBA loans[25](index=25&type=chunk) - Net charge-offs as a percentage of total average loans decreased to **0.14%** for Q1 2025, down from 0.34% in Q4 2024[26](index=26&type=chunk) - The allowance for credit losses to total loans increased to **1.01% from 0.91%** at the end of the prior quarter[27](index=27&type=chunk) [Financial Statements and Ratios](index=3&type=section&id=Financial%20Statements%20and%20Ratios) This section presents key financial statements and performance ratios for the company over recent periods [Key Financial Data and Ratios](index=3&type=section&id=Key%20Financial%20Data%20and%20Ratios) Key ratios for Q1 2025 show decreased profitability and deteriorating asset quality, but an improved net interest margin **Selected Financial Ratios** | (Annualized Ratios) | Q1 2025 | Q4 2024 | Q1 2024 | |---|---|---|---| | Return on average assets | 0.40% | 0.92% | 0.47% | | Return on average equity | 5.57% | 13.01% | 6.73% | | Net interest margin (tax-equivalent) | 3.46% | 3.29% | 3.09% | | Non-performing loans to total loans | 2.49% | 2.19% | 1.93% | [Condensed Consolidated Statements of Income](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) The company reported net income of $2.4 million on total revenues of $27.1 million for the first quarter of 2025 **Income Statement Summary** | (Dollars in thousands) | Q1 2025 | Q4 2024 | Q1 2024 | |---|---|---|---| | Net interest income | $19,776 | $19,299 | $16,609 | | Provision for credit losses | $5,212 | $3,572 | $2,866 | | Total non-interest income | $7,324 | $13,279 | $7,984 | | Total non-interest expense | $18,743 | $21,411 | $18,174 | | **Net income** | **$2,399** | **$5,600** | **$2,676** | [Condensed Consolidated Statements of Condition (Balance Sheet)](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Condition%20(Balance%20Sheet)) The balance sheet shows total assets of $2.53 billion and total stockholders' equity of $173.3 million as of March 31, 2025 **Balance Sheet Summary** | (Dollars in thousands) | March 31, 2025 | December 31, 2024 | |---|---|---| | **Total assets** | **$2,528,586** | **$2,385,867** | | Loans and other finance receivables, net | $2,050,848 | $2,011,999 | | Total deposits | $2,128,742 | $2,005,368 | | Total liabilities | $2,355,320 | $2,214,345 | | **Total stockholders' equity** | **$173,266** | **$171,522** | [Segment Information](index=13&type=section&id=Segment%20Information) The Bank and Wealth segments remained profitable in Q1 2025, while the Mortgage segment reported a wider pre-tax loss **Segment Pre-Tax Income** | Income (loss) before income taxes (in thousands) | Q1 2025 | Q1 2024 | |---|---|---| | Bank | $3,648 | $3,540 | | Wealth | $726 | $478 | | Mortgage | $(1,229) | $(465) | | **Total** | **$3,145** | **$3,553** | [Appendix: Non-GAAP Measures](index=14&type=section&id=Appendix%3A%20Non-GAAP%20Measures) This appendix provides reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures [Non-GAAP Reconciliations](index=14&type=section&id=Non-GAAP%20Reconciliations) Reconciliations show Q1 2025 PPNR of $8.4 million and a tangible book value per share of $15.03 **Reconciliation of Pre-Provision Net Revenue (Non-GAAP)** | (Dollars in thousands) | Q1 2025 | Q4 2024 | Q1 2024 | |---|---|---|---| | Income before income tax expense (GAAP) | $3,145 | $7,595 | $3,553 | | Provision for credit losses | $5,212 | $3,572 | $2,866 | | **Pre-provision net revenue (Non-GAAP)** | **$8,357** | **$11,167** | **$6,419** | **Reconciliation of Tangible Book Value per Common Share (Non-GAAP)** | (Per share data) | March 31, 2025 | December 31, 2024 | |---|---|---| | Book value per common share (GAAP) | $15.35 | $15.26 | | **Tangible book value per common share (Non-GAAP)** | **$15.03** | **$14.93** | - The Tangible Common Equity to Tangible Assets ratio for the Corporation was **6.72%** as of March 31, 2025, down from 7.05% at the end of the prior quarter[43](index=43&type=chunk)

Core Insights - Meridian Corporation reported a net income of $2.4 million for Q1 2025, a decrease from $2.7 million in Q1 2024, while pre-provision net revenue (PPNR) increased by 30.2% to $8.4 million [1][2][5] - The company faced challenges due to higher provisioning related to distressed SBA loans, impacted by rising interest rates, but showed improvement in net interest margin, which reached 3.46% [2][5][6] Financial Performance - Net income for Q1 2025 was $2.4 million, or $0.21 per diluted share, down from $5.6 million, or $0.49 per diluted share in Q4 2024 [1][5][31] - PPNR increased by $1.9 million, or 30.2%, compared to Q1 2024 [5][31] - Total assets grew to $2.5 billion, a 6.0% increase from $2.4 billion at the end of Q4 2024 [18][21] Loan and Deposit Growth - Loan growth was annualized at 12%, with commercial loans increasing by $49.5 million, or 3% for the quarter [3][19] - Total deposits increased by $123.4 million, or 6.2%, with non-interest-bearing deposits rising by $82.6 million, or 34% [20][21] Non-Interest Income and Expenses - Total non-interest income decreased by $6.0 million, or 44.8%, primarily due to a lack of gains on the sale of mortgage servicing rights (MSRs) [15][16] - Non-interest expenses decreased by $2.7 million, or 12.5%, driven by reductions in salaries and employee benefits, occupancy costs, and professional fees [17][32] Asset Quality - Non-performing loans increased by $7.1 million to $52.2 million, with a ratio of non-performing loans to total loans rising to 2.49% [22][23] - The provision for credit losses increased to $5.2 million, reflecting the rise in non-performing loans [14][31] Wealth Management Performance - Meridian Wealth Partners reported pre-tax income of $726 thousand for the quarter, supported by a slight increase in assets under management [4]

Group 1 - Meridian Bank, founded in 2004, is a newcomer in the regional banking sector [1] - The bank has experienced growth over the last twenty years, establishing itself as a primary lender in the Delaware Valley [1]