Meridian Corporation Reports Third Quarter 2025 Results and Announces a Quarterly Dividend of $0.125 per Common Share

MALVERN, Pa., Oct. 23, 2025 (GLOBE NEWSWIRE) -- Meridian Corporation (Nasdaq: MRBK) today reported:

• Net income for the quarter ended September 30, 2025 was $6.7 million, or $0.58 per diluted share, up $1.1 million, or 19%, from prior quarter.
  
  
• Pre-provision net revenue¹ for the quarter was $11.5 million, an improvement of $3.0 million, or 35%. from Q3'2024.
  
  
• Net interest margin was 3.77% for the third quarter of 2025, while loan yield improved to 7.37%, from prior quarter.
  
  
• Return on average assets and return on average equity for the third quarter of 2025 were 1.04% and 14.42%, respectively.
  
  
• Total assets at September 30, 2025 were $2.5 billion, compared to $2.5 billion at June 30, 2025 and $2.4 billion at September 30, 2024.
  
  
• Commercial loans, excluding leases, increased $54.2 million, or 3% from prior quarter.
  
  
• On October 23, 2025, the Board of Directors declared a quarterly cash dividend of $0.125 per common share, payable November 17, 2025 to shareholders of record as of November 10, 2025.
  
  

Christopher J. Annas, Chairman and CEO commented:

"We are pleased to report that Meridian's third quarter 2025 earnings rose 19% over the prior quarter to $6.7 million, benefiting from an improved margin and continued strong loan growth. The net interest margin rose to 3.77% for the quarter, and has steadily risen from 3.20% in the third quarter 2024. Loan growth in our principal commercial/industrial and real estate segments remains strong, and offsets loan sales in SBA and lease paydowns. We are challenged with elevated nonperforming loans and leases, but working these hard through consistent monitoring.

Our wealth and mortgage units had profitable quarters in line with expectations, as we benefit from outreach and consistent referral opportunities from our existing customers. Expenses were generally flat from prior quarter, despite seasonal commissions/bonuses in the mortgage group.

There have been numerous acquisitions in our market over the past year, and we will capitalize on the turmoil for both customers and new lenders. Our branding and outreach in this metro market is unparalleled and we hope to benefit from this and the reduced competition."

Select Condensed Financial Information

Income Statement - Third Quarter 2025 Compared to Second Quarter 2025

Third quarter net income increased $1.1 million, or 19.1%, to $6.7 million as net interest income increased $2.0 million and the provision for credit losses decreased $1.0 million. These improvements to net income were partially offset by a $1.3 million decrease in non-interest income, and a $189 thousand increase to non-interest expense over the prior quarter. Detailed explanations of the major categories of income and expense follow below.

Net Interest income

The rate/volume analysis table below analyzes dollar changes in the components of interest income and interest expense as they relate to the change in balances (volume) and the change in interest rates (rate) of tax-equivalent net interest income for the periods indicated and allocated by rate and volume. Changes in interest income and/or expense related to changes attributable to both volume and rate have been allocated proportionately based on the relationship of the absolute dollar amount of the change in each category.

Interest income increased $1.9 million quarter-over-quarter on a tax equivalent basis, driven by higher yields and increased average balances of interest earning assets. The yield on interest-earnings assets increased 12 basis points and contributed $1.0 million to interest income, aided in part by an increase in loan fees of $181 thousand, while the average balance of interest earning assets increased by $38.3 million, and contributed $899 thousand to the increase in interest income.

Average total loans, excluding residential loans for sale, increased $33.3 million. The largest drivers of this increase were commercial, commercial real estate, construction, and small business loans which on a combined basis increased $29.1 million on average, partially offset by a decrease in average leases of $9.0 million. Home equity, residential real estate, consumer and other loans held in portfolio increased on a combined basis $13.1 million on average.

Interest expense decreased $59 thousand, quarter-over-quarter, due to a decline in the cost of deposits and borrowings, partially offset by a higher volume of interest-bearing deposits and borrowings. Interest expense on total deposits increased $117 thousand and interest expense on borrowings decreased $177 thousand. During the period, interest-bearing checking accounts and money market accounts increased $1.3 million and $35.9 million on average, respectively, while time deposits increased $7.9 million on average. Borrowings decreased $14.5 million on average. On a rate basis, interest-bearing checking accounts, money market accounts, and time deposits experienced a decrease in the cost, with the overall cost of deposits dropping 9 basis points.

Overall the net interest margin increased 23 basis points to 3.77% as the cost of funds declined and the yield on earning assets increased. Absent the increase in loan fees, the net interest margin would have been 3.68%.

Provision for Credit Losses

The overall provision for credit losses for the third quarter decreased $953 thousand to $2.9 million, from $3.8 million in the second quarter. The lower provisioning was positively impacted by a $1.7 million decrease in net charge-offs.

Non-interest income

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

Total non-interest income decreased $1.3 million, or 11.8%, quarter-over-quarter largely due to a $557 thousand decline in SBA loan income, and a $467 thousand decline in net gain on sale of MSRs. Partially offsetting these decreases were a $152 thousand positive improvement in mortgage banking income, and an increase of $118 thousand in wealth management income. Mortgage loan sales experienced a minor decline quarter-over-quarter, with a drop of $5.5 million or 2.6%. Despite this decrease in overall sales, margin increased 13 basis points resulting in a higher level of mortgage banking income.

SBA loan income decreased $557 thousand as the volume of SBA loans sold were down $14.2 million to $25.3 million, for the quarter-ended September 30, 2025 compared to the quarter-ended June 30, 2025. The gross margin on SBA sales was 7.4% for the quarter, an improvement from 6.2% 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 increased $434 thousand, largely attributable to the variable nature of the mortgage segment. Data processing and software expense increased $159 thousand due to an increase in customer transaction volume, while advertising and promotion expenses decreased $400 thousand as the level of business development activities and special events declined from the prior quarter.

Balance Sheet - September 30, 2025 Compared to June 30, 2025

Total assets increased $30.2 million, or 1.2%, to $2.5 billion as of September 30, 2025 from $2.5 billion at June 30, 2025.

Portfolio loans grew $54.8 million, or 2.6% quarter-over-quarter. This growth was generated from commercial & industrial loans which increased $14.1 million, or 3.5%, commercial mortgage loans which increased $17.0 million, or 2.0%, and construction loans which increased $29.9 million, or 10.5%. SBA loan balances decreased $6.8 million, or 4.7%, from June 30, 2025, due to the level of SBA loan sales outpacing new loan growth in the third quarter as discussed above in the non-interest income section. Lease financings also decreased $8.1 million, or 13.9% from June 30, 2025, partially offsetting the above noted loan growth, but this decline was expected.

Total deposits increased $20.7 million, or 1.0% quarter-over-quarter, led by an increase of $18.2 million in interest-bearing deposits. Money market accounts and savings accounts increased a combined $39.7 million, non-interest bearing accounts increased $2.6 million or 1.1%, while interest bearing demand deposits decreased $21.9 million. Overall borrowings decreased $1.7 million, or 1.2% quarter-over-quarter.

Total stockholders’ equity increased by $10.0 million from June 30, 2025, to $188.0 million as of September 30, 2025. Changes to equity for the quarter included net income of $6.7 million, a net increase of $2.8 million due to stock issuance under an ATM offering, dividends paid of $1.4 million, and an increase of $1.6 million in other comprehensive income. The Community Bank Leverage Ratio for the Bank was 9.41% at September 30, 2025.

Asset Quality Summary

Non-performing loans increased $4.8 million, to $55.4 million at September 30, 2025 compared to $50.5 million at June 30, 2025, with increases coming from SBA loans, construction loans, commercial loans, and residential loans. Included in non-performing loans are $21.3 million of SBA loans of which $11.8 million, or 56%, are guaranteed by the SBA. The SBA portfolio was subject to the Fed's rapid rate increase and $12.8 million, or 60% of these non-performing loans originated in 2020-2021 when rates were lower by over 500 basis points. As a result of these changes in non-performing loans, the ratio of non-performing loans to total loans increased 18 bps to 2.53% as of September 30, 2025, from 2.35% as of June 30, 2025. The ratio of non-performing loans to total loans, excluding the guaranteed portion of the SBA portfolio was 1.99%.

Net charge-offs decreased to $1.9 million, or 0.09% of total average loans for the quarter ended September 30, 2025, compared to net charge-offs of $3.6 million, or 0.17%, for the quarter ended June 30, 2025. Third quarter charge-offs mainly consisted of $997 thousand in SBA loans, $273 thousand of small ticket equipment leases, and $185 thousand in commercial loans. Overall there were recoveries of $214 thousand, mainly related to leases.

The ratio of allowance for credit losses to total loans held for investment was 1.01% as of September 30, 2025, slightly up from 1.00% reported as of June 30, 2025, as qualitative reserve factors increased in the third quarter ACL calculation. As of September 30, 2025 there were specific reserves of $3.3 million against individually evaluated loans, a slight increase of $85 thousand from the level of specific reserves as of June 30, 2025.

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; the impact of uncertain or changing political conditions or any current or future federal government shutdown and uncertainty regarding the federal government's debt limit; 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.

MERIDIAN CORPORATION AND SUBSIDIARIES
APPENDIX: NON-GAAP MEASURES (Unaudited)
(Dollar amounts and shares in thousands, except per share amounts)

Meridian believes that non-GAAP measures are meaningful because they reflect adjustments commonly made by management, investors, regulators and analysts. The non-GAAP disclosure have 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.

Contact:
Christopher J. Annas
484.568.5001
[email protected]