Core Viewpoint - Meridian Corporation reported strong financial performance for the second quarter of 2025, with significant increases in net income and pre-provision net revenue, driven by improved margins and strong loan sales [2][5][7]. Financial Performance - Net income for Q2 2025 was $5.6 million, or $0.49 per diluted share, representing a 133% increase from the previous quarter [5][30]. - Pre-provision net revenue (PPNR) rose to $11.1 million, up 57% from Q2 2024 [5][30]. - The net interest margin improved to 3.54%, with loan yield increasing to 7.24% [5][30]. Loan and Deposit Growth - Loan growth for the quarter was 2.5%, with management forecasting an annual growth rate of 8-10% [2][5]. - Total assets remained stable at $2.5 billion, with portfolio loans growing by $36.2 million, or 1.7% quarter-over-quarter [19][20]. - Total deposits decreased by $18.4 million, or 0.9%, primarily due to a decline in non-interest bearing deposits [22][23]. Non-Interest Income - Total non-interest income increased by $4.0 million, or 54.1%, driven by a significant rise in mortgage banking income and SBA loan income [15][16]. - Mortgage banking income reached $5.8 million, a 69.8% increase from the previous quarter [15][16]. Non-Interest Expense - Total non-interest expense rose by $2.6 million, or 13.9%, with notable increases in salaries and employee benefits [18][30]. - Salaries and employee benefits increased by $1.8 million, reflecting the hiring of additional staff [18]. Asset Quality - Non-performing loans decreased by $1.7 million to $50.5 million, improving the ratio of non-performing loans to total loans to 2.35% [24][26]. - Net charge-offs increased to $3.6 million, or 0.17% of total average loans, compared to 0.14% in the previous quarter [25][30]. Capital and Equity - Total stockholders' equity increased by $4.5 million to $178.0 million, supported by net income and dividends paid [23][30]. - The Community Bank Leverage Ratio was reported at 9.32% as of June 30, 2025 [23][30].

Financial Data and Key Metrics Changes - The company reported an adjusted EPS of $0.45 per share, reflecting a $0.03 increase from the prior quarter [8] - Pre-provision net revenue (PPNR) grew by $4 million from the first quarter, primarily driven by a $10 million increase in net interest income [8][9] - Total expenses, excluding deferred compensation, increased by only $4 million from the last quarter [16] Business Line Data and Key Metrics Changes - The loan portfolio increased by 2% quarter over quarter, with significant growth in loans to mortgage companies, which rose by $689 million [13] - Fee income decreased by $3 million from the prior quarter, with fixed income performance declining slightly [14] - Non-interest bearing deposits increased by $57 million, supported by successful seasonal marketing promotions [12] Market Data and Key Metrics Changes - Period end balances for both loans and deposits finished 2% higher quarter over quarter [10] - The average rate paid on interest-bearing deposits increased to 2.76%, up from 2.72% in the first quarter [12] - The charge-off ratio remained stable at 22 basis points, in line with expectations [17] Company Strategy and Development Direction - The company aims to achieve a 15% plus return on tangible common equity (ROTCE) over the next two to three years [20] - Focus remains on organic loan growth and enhancing client relationships to drive profitability [20][22] - The company is committed to maintaining capital levels in line with a near-term target of 11% CET1 [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic fundamentals in their southern footprint, expecting stability through 2025 and into 2026 [7] - There is a recognition of increased deposit pressure and competition, but the company remains focused on expense and pricing discipline [8] - Management noted that borrowers are showing resilience and optimism, with expectations for improved activity in the latter half of the year [28] Other Important Information - The company retained approximately 95% of balances associated with clients who had a repricing event in the quarter [12] - The company has a strong credit culture, with years of disciplined underwriting providing stability across economic cycles [17] - The company is exploring opportunities to grow PPNR by $100 million or more through synergies and deepening client relationships [20][78] Q&A Session Summary Question: Client health and loan growth outlook - Management noted that borrowers are resilient and optimistic, with expectations for improved activity as tariff questions settle [28] Question: CET1 target and buyback appetite - Management indicated that they are comfortable with the current CET1 target and will evaluate capital levels based on growth opportunities [30][32] Question: Deposit repricing opportunities - Management acknowledged potential deposit repricing opportunities but noted that competition is heating up, leading to a zigzag pattern in deposit pricing [38] Question: Signs of stress in credit sectors - Management highlighted consumer-facing industries like trucking and auto finance as areas to watch closely for stress [42] Question: Expectations for mortgage warehouse balances - Management expects mortgage warehouse balances to remain stable or increase, depending on the mortgage industry's trends [48] Question: Fee income trends and expense guidance - Management indicated that fee income is under pressure, but they do not expect expenses to exceed a 2% increase [66] Question: Regulatory developments and capital deployment - Management is optimistic about regulatory changes that may allow for greater capital flexibility in the future [100] Question: Trends in loan repricing and spread compression - Management noted increased competition on both deposit and lending sides, with expectations for continued competitive pressures [106]

Financial Data and Key Metrics Changes - The company reported an adjusted EPS of $0.45 per share, reflecting a $0.03 increase from the prior quarter [7] - Pre-provision net revenue (PPNR) grew by $4 million from the first quarter, primarily driven by a $10 million increase in net interest income [7][8] - Total expenses, excluding deferred compensation, increased by only $4 million from the last quarter [15] Business Line Data and Key Metrics Changes - The loan portfolio saw a 2% increase quarter over quarter, with significant growth in loans to mortgage companies, which rose by $689 million [13] - The commercial and industrial (C&I) portfolio also grew, with period-end balances up $316 million quarter over quarter [13] - Fee income performance decreased by $3 million from the prior quarter, with fixed income performance declining slightly [14] Market Data and Key Metrics Changes - Period-end deposit balances increased by $1.4 billion compared to the prior quarter, driven by a $1.6 billion increase in brokered CDs [12] - The average rate paid on interest-bearing deposits increased to 2.76%, up from 2.72% in the first quarter [12] - The charge-off ratio remained stable at 22 basis points, consistent with expectations for the year [16] Company Strategy and Development Direction - The company aims to achieve a return on tangible common equity (ROTCE) of over 15% in the next two to three years, focusing on operational efficiency and profitability [19][22] - There is a strong emphasis on organic loan growth and enhancing client relationships to drive pre-provision net revenue [19][22] - The company is committed to maintaining capital levels in line with a near-term target of 11% CET1, with ongoing discussions about potential adjustments [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic fundamentals in their southern footprint, expecting stability through the latter half of 2025 and into 2026 [6] - There is a recognition of increased competition and deposit pressure, but the company remains focused on profitability and sustainable growth [6][7] - Management noted that borrowers are showing resilience and optimism, which is expected to lead to improved activity in the second half of the year [27] Other Important Information - The company retained over half of its $1 billion share repurchase authorization, using $9 million in the second quarter [17] - The company is seeing opportunities to grow PPNR by $100 million or more over the coming years through synergies and deepening client relationships [19][22] Q&A Session Summary Question: Client health and loan growth outlook - Management noted that borrowers are resilient and optimistic, with expectations for improved activity as tariff questions are settled [27] Question: CET1 target and buyback appetite - Management indicated that they are comfortable with the current CET1 target and will evaluate capital deployment based on loan growth opportunities [30][31] Question: Deposit repricing opportunities - Management sees potential for deposit repricing but expects fluctuations based on market conditions and competition [36][38] Question: Signs of stress in credit sectors - Management highlighted consumer-facing industries like trucking and auto finance as areas to watch closely for stress [42] Question: Expectations for mortgage warehouse balances - Management expects mortgage warehouse balances to remain stable or increase, depending on mortgage industry trends [50] Question: Expense guidance and fee income trends - Management confirmed that the high end of the expense guidance is not expected to exceed 2%, with a focus on maintaining cost discipline [95] Question: Regulatory developments and capital deployment - Management is optimistic about potential regulatory changes that could facilitate M&A opportunities but remains focused on organic growth [102] Question: Trends in loan repricing and margin - Management noted increased competition on both deposit and lending sides, with expectations for continued competitive pressures [106][108]

Core Insights - The company reported an expansion in Net Interest Margin (NIM) by six basis points in Q2 2025, indicating improved profitability [2][15] - Adjusted Return on Assets (ROA) was 1.37% for Q2 2025, reflecting transaction expenses related to the Sable Trust acquisition [3][20] - Adjusted net income decreased slightly to $118 million, or $1.37 per share, compared to $120 million, or $1.38 per share, in the previous quarter [3][20] - Pre-Provision Net Revenue (PPNR) increased by $5 million, or 3%, reaching 1.95% of assets [3][20] - Fee income rose by $4 million, or 4%, primarily driven by trust fees from the Sable Trust acquisition [4][20] Financial Performance - Net Interest Income (NII) increased by $7 million, or 2%, quarter-over-quarter [3][20] - Expenses rose by $5 million, or 2%, after adjusting for one-time items, with $2.5 million attributed to the Sable Trust acquisition [4][20] - Efficiency Ratio improved to 54.91% from 55.22% in the previous quarter, indicating better cost management [5][21] - Loans grew by $364 million, representing 6% annualized linked-quarter growth, with guidance for low single-digit annual growth remaining unchanged [5][15] Deposits and Funding - Deposit balances decreased by $148 million, primarily due to certificate of deposit (CD) run-off and reduced public funds [5][16] - Demand Deposit Account (DDA) mix increased to 37%, with management guiding for 37%-38% by year-end 2025 [5][24] - CD maturities repriced from 3.85% to 3.59%, with an 86% renewal rate; an additional $3.6 billion is expected to mature in the second half of 2025 [6][23] Capital and Shareholder Returns - Tangible common equity (TCE) stood at 9.84% and common equity Tier 1 at 14.03% post-acquisition [7][25] - The company repurchased 750,000 shares, spending approximately $40 million, with plans to maintain this capital return pace [8][26] - Management expects a common equity Tier 1 operating level of 11%-11.5% and a TCE comfort zone near 8% [9][29] Credit Quality - Allowance for Credit Losses (ACL) was maintained at 1.45% of loans, down four basis points from the last quarter [7][25] - Net charge-offs increased to 31 basis points, with full-year 2025 guidance unchanged at 15-25 basis points [7][25] - Criticized commercial loans declined by 4% to $594 million, and nonaccrual loans fell by 9% to $95 million, indicating stable credit quality [7][25] Growth Initiatives - The company added ten new bankers and finalized five new financial center locations in the Dallas area, with three openings slated for late 2025 and the remainder in early 2026 [8][17] - Management expects continued CD repricing at lower rates, forecasting at least an 81% renewal rate in the second half of 2025 [12][24] - The organic hiring plan targets a compounded 10% increase in bankers annually, with flexibility to exceed this if high-quality talent becomes available [12][76]

Core Viewpoint - NewtekOne, Inc. reported strong financial results for the first quarter of 2025, with diluted earnings per share (EPS) of $0.35, exceeding the projected range of $0.28 to $0.32, despite a challenging economic environment and increased loan loss provisions [1][4]. Financial Highlights for 1Q25 - Basic EPS was $0.36 and diluted EPS was $0.35, compared to $0.38 for both in 1Q24 [5]. - Book value per common share increased to $10.73, reflecting a year-over-year growth of 13.2% and a quarter-over-quarter growth of 2.0% [5]. - Tangible book value per common share rose to $10.17, up 23.0% year-over-year and 8.3% quarter-over-quarter [5]. - Net income before taxes for 1Q25 was approximately $11.6 million, down 11.1% from $13.1 million in 1Q24 [5]. - Pre-provision net revenue (PPNR) was approximately $25.2 million, an increase of 47.0% year-over-year from $17.1 million in 1Q24 [5]. - The efficiency ratio improved to 62.1%, down from 70.6% in 1Q24 [5]. - Return on average assets (ROAA) was 1.81%, with EPS guidance implying a 2025 ROAA range of 2.2%-2.7% [5]. - Return on average equity (ROAE) was 12.7%, with guidance suggesting a 2025 ROAE range of 17.2%-20.2% [5]. - Return on average tangible common equity (ROTCE) was 13.9%, with guidance indicating a 2025 ROTCE range of 18.7%-22.0% [5]. Lending and Other Select Highlights for 1Q25 - SBA 7(a) loan originations were approximately $213.4 million, compared to $211.5 million in 1Q24 [5]. - Alternative Loan Program (ALP) loan originations totaled $68.5 million for 1Q25 [5]. - SBA 504 loan originations were roughly $16.9 million, with $12.9 million in SBA 504 loan sales executed [5]. - Newtek Bank originated $41.2 million in commercial real estate (CRE) loans and $22.7 million in commercial and industrial (C&I) loans held for investment in 1Q25 [5]. - Commercial deposits at Newtek Bank increased by $28 million, or 12% quarter-over-quarter, while core consumer deposits grew by $17 million, or 2% quarter-over-quarter [5]. Post 1Q25 Highlights and 2025 Forecasts - The company forecasts annual EPS in a range of $2.10 to $2.50 for 2025, implying a 17% growth in EPS despite a projected near-doubling of the loan loss provision [4]. - The company continues to expect a material reduction in the drag from its Newtek Small Business Finance (NSBF) subsidiary, with losses decreasing more than 50% quarter-over-quarter [6]. - The NSBF portfolio now constitutes 21% of total loans, down from 41% a year ago, indicating a positive trend in loan quality [6]. - The company emphasizes its unique approach as a financial holding company, leveraging non-bank subsidiaries to generate significant earnings [6].