10q10k10q10k.net

What changed in Meridian Corp's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Meridian Corp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+198 added−220 removedSource: 10-K (2025-03-17) vs 10-K (2024-03-15)

Top changes in Meridian Corp's 2024 10-K

198 paragraphs added · 220 removed · 166 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

39 edited+3 added−5 removed150 unchanged
Biggest changeA portion of our workforce continues to work remotely or on a hybrid work schedule. Meridian is committed to giving back to our communities. In 2023, we donated $503 thousand to over 100 organizations throughout the various communities that we serve in Pennsylvania, New Jersey, Delaware, Maryland, and Florida.
Biggest changeIn 2024, we donated $546 thousand to over 100 organizations throughout the various communities that we serve in Pennsylvania, New Jersey, Delaware, Maryland, and Florida. Meridian also sponsors individual / group service days and provides time off to employees to participate in charitable activities in the communities we serve.
These laws include the ECOA, the Fair Credit Reporting Act, the TILA, the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Home Mortgage Disclosure Act, the Fair Housing Act, the Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act, Fair Credit Reporting Act, the Service Members Civil Relief Act, the Right to 11 Financial Privacy Act, Telephone Consumer Protection Act, CAN-SPAM Act, and these laws’ respective state-law counterparts, as well as state usury laws and laws regarding unfair and deceptive acts and practices.
These laws include the ECOA, the Fair Credit Reporting Act, the TILA, the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Home Mortgage Disclosure Act, the Fair Housing Act, the Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act, Fair Credit Reporting Act, the Service Members Civil Relief Act, the Right to Financial Privacy Act, Telephone Consumer Protection Act, CAN-SPAM Act, and these laws’ respective state-law counterparts, as well as state usury laws and laws regarding unfair and deceptive acts and practices.
Safety and Soundness Standards The FDIA requires the federal banking agencies to prescribe standards, by regulations or guidelines, relating to internal controls, information systems and internal audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, asset quality, earnings, stock valuation and compensation, fees and benefits, and such other operational and managerial standards as the agencies deem appropriate.
Safety and Soundness Standards The FDIA requires the federal banking agencies to prescribe standards, by regulations or guidelines, relating to internal controls, information systems and internal audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, asset quality, earnings, stock valuation and compensation, fees and benefits, and such other operational and managerial standards as the 10 agencies deem appropriate.
This framework may materially affect our growth potential and financial performance and is intended primarily for the protection of depositors, customers, federal deposit insurance funds and the banking system as a whole, not for the protection of our shareholders and creditors. The following discussion summarizes certain laws, regulations and policies to which Corporation and the Bank are subject.
This framework may materially affect our growth potential and financial performance and is intended primarily for the protection of depositors, customers, federal deposit insurance funds and the banking system as a whole, not for the protection of our shareholders and creditors. The following discussion summarizes certain laws, regulations and policies to which Corporation and the Bank are currently subject to.
Federal law permits state and national banks to merge with banks in other states subject to: (i) regulatory approval; (ii) federal and state deposit concentration limits; and (iii) any state law limitations requiring the merging bank to have been in existence for a minimum period of time (not to exceed five years) prior to the merger.
Federal law permits state and national banks to merge with banks in other states subject to: (i) regulatory approval; (ii) federal and state deposit concentration limits; and (iii) any state law limitations requiring the merging bank to have been in existence for a minimum 11 period of time (not to exceed five years) prior to the merger.
If, after being so notified, an institution fails to submit an acceptable compliance plan or fails in any material respect to implement an acceptable compliance plan, the banking regulator must issue an order directing 10 action to correct the deficiency and may issue an order directing other actions of the types to which an undercapitalized institution may be subject under the FDIA.
If, after being so notified, an institution fails to submit an acceptable compliance plan or fails in any material respect to implement an acceptable compliance plan, the banking regulator must issue an order directing action to correct the deficiency and may issue an order directing other actions of the types to which an undercapitalized institution may be subject under the FDIA.
Under the Basel III Capital Rules, the minimum capital ratios are (i) 4.5% CET1 to risk-weighted assets, (ii) 6% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk-weighted assets, (iii) 8% total capital (that is, Tier 1 capital plus Tier 2 capital) to risk- 9 weighted assets and (iv) 4% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (known as the “leverage ratio”).
Under the Basel III Capital Rules, the minimum capital ratios are (i) 4.5% CET1 to risk-weighted assets, (ii) 6% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk-weighted assets, (iii) 8% total capital (that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets and (iv) 4% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (known as the “leverage ratio”).
These final rules prohibit creditors, such as the Bank, from extending residential mortgage loans without regard for the consumer’s ability to repay and add restrictions and requirements to residential mortgage origination and servicing practices. In addition, these rules restrict the imposition of prepayment penalties and restrict compensation practices relating to residential mortgage loan origination.
These final rules prohibit creditors, such as the Bank, from extending residential mortgage loans without regard for the consumer’s ability to repay 12 and add restrictions and requirements to residential mortgage origination and servicing practices. In addition, these rules restrict the imposition of prepayment penalties and restrict compensation practices relating to residential mortgage loan origination.
On January 31, 2020, the Federal Reserve Board approved the issuance of a final rule (which became effective April 1, 2020) that clarifies and codifies the Federal Reserve’s standards for determining whether one company has control over another.
On January 31, 2020, the Federal Reserve Board 8 approved the issuance of a final rule (which became effective April 1, 2020) that clarifies and codifies the Federal Reserve’s standards for determining whether one company has control over another.
The failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing could have serious legal and reputational consequences for the financial institution. 13 Office of Foreign Assets Control Regulation The U.S.
The failure of a financial institution to maintain and implement adequate programs to combat money laundering and terrorist financing could have serious legal and reputational consequences for the financial institution. Office of Foreign Assets Control Regulation The U.S.
During 2023 Meridian invested throughout the organization in terms of in-house and external training programs to help our employees develop leadership skills, stay current on professional development topic in their area of focus, as well as to keep up to date on cybersecurity, and risk & compliance matters that impact the organization overall.
During 2024 Meridian invested throughout the organization in terms of in-house and external training programs to help our employees develop leadership skills, stay current on professional development topic in their area of focus, as well as to keep up to date on cybersecurity, and risk & compliance matters that impact the organization overall.
The mortgage division operates and originates mortgage loans in the Delaware Valley tri-state market, and Maryland markets, most typically for 1-4 family dwellings, with the intention of selling substantially all of these loans in the secondary market to qualified investors, while often retaining the servicing rights on these loans.
The mortgage segment operates and originates mortgage loans in the Delaware Valley tri-state market, and Maryland markets, most typically for 1-4 family dwellings, with the intention of selling substantially all of these loans in the secondary market to qualified investors, while often retaining the servicing rights on these loans.
These branches provide “Relationship Hubs” for our regional lending groups and allow Meridian to serve markets at or near the county seat of counties in and surrounding Philadelphia. In addition to our deposit taking branches, there are currently 12 other locations, including Corporate headquarters, that serve as loan production offices.
Our sixth branch is in Philadelphia. These branches provide “Relationship Hubs” for our regional lending groups and allow Meridian to serve markets at or near the county seat of counties in and surrounding Philadelphia. In addition to our deposit taking branches, there are currently 12 other locations, including Corporate headquarters, that serve as loan production offices.
Census Data – 2020 (2) Source: U.S. Bureau of Labor Statistics – December 2023 Competition Overall, the banking business in our market area is highly competitive. The Bank faces substantial competition both in attracting deposits and in originating loans. The Bank competes with local, regional and national commercial banks, savings banks, and savings and loan associations.
Census Data – 2020 (2) Source: U.S. Bureau of Labor Statistics –December 2024 6 Competition Overall, the banking business in our market area is highly competitive. The Bank faces substantial competition both in attracting deposits and in originating loans. The Bank competes with local, regional and national commercial banks, savings banks, and savings and loan associations.
(dollars in thousands / population actual) United States Pennsylvania Maryland Population (1) 308,449,281 13,002,700 6,177,224 Median household income (1) $ 63 $ 62 $ 85 Unemployment rate (2) 3.70 % 3.50 % 2.00 % Philadelphia Metropolitan Area Counties (dollars in thousands / population actual) Bucks County Montgomery County Delaware County Chester County Philadelphia County Total Population (1) 645,054 864,683 575,182 545,823 1,567,258 4,198,000 Median household income (1) $ 99 $ 99 $ 80 $ 110 $ 53 $ 88 Unemployment rate (2) 2.50 % 2.40 % 2.70 % 2.10 % 3.70 % Baltimore Metropolitan Area Counties (dollars in thousands / population actual) Howard County Montgomery County Anne Arundel County Prince George's County Baltimore County Total Population (1) 335,411 1,052,521 593,286 946,971 846,161 3,774,350 Median household income (1) $ 130 $ 117 $ 108 $ 91 $ 82 $ 106 Unemployment rate (2) 1.60 % 1.80 % 1.70 % 2.10 % 2.10 % Delaware Counties Florida County (dollars in thousands / population actual) Kent County Sussex County New Castle County Total Lee County Population (1) 188,946 255,956 575,494 1,020,396 822,453 Median household income (1) $ 64 $ 69 $ 78 $ 70 $ 63 Unemployment rate (2) 4.1 % 3.9 % 3.5 % 3.7 % 3.0 % (1) Source: U.S.
(dollars in thousands / population actual) United States Pennsylvania Maryland Population (1) 308,449,281 13,002,700 6,177,224 Median household income (1) $ 63 $ 62 $ 85 Unemployment rate (2) 4.20 % 3.60 % 3.10 % Philadelphia Metropolitan Area Counties (dollars in thousands / population actual) Bucks County Montgomery County Delaware County Chester County Philadelphia County Total Population (1) 645,054 864,683 575,182 545,823 1,567,258 4,198,000 Median household income (1) $ 99 $ 99 $ 80 $ 110 $ 53 $ 88 Unemployment rate (2) 2.90 % 2.70 % 3.10 % 2.40 % 4.40 % Baltimore Metropolitan Area Counties (dollars in thousands / population actual) Howard County Montgomery County Anne Arundel County Prince George's County Baltimore County Total Population (1) 335,411 1,052,521 593,286 946,971 846,161 3,774,350 Median household income (1) $ 130 $ 117 $ 108 $ 91 $ 82 $ 106 Unemployment rate (2) 2.10 % 2.40 % 2.30 % 3.10 % 2.70 % Delaware Counties Florida County (dollars in thousands / population actual) Kent County Sussex County New Castle County Total Lee County Population (1) 188,946 255,956 575,494 1,020,396 822,453 Median household income (1) $ 64 $ 69 $ 78 $ 70 $ 63 Unemployment rate (2) 3.6 % 3.2 % 3.0 % 3.1 % (1) Source: U.S.
With these subsidiaries, the Corporation is organized into the following three lines of business. Commercial Banking The first line of business is our traditional banking operations, serving both commercial and consumer customers. We have a strong credit culture that promotes diversity of lending products with a focus on commercial businesses.
With these subsidiaries, the Corporation is organized into the following three lines of business, or segments. Commercial Banking The first line of business, or segment, is our traditional banking operations, serving both commercial and consumer customers. We have a strong credit culture that promotes diversity of lending products with a focus on commercial businesses.
The extensive backgrounds of our commercial real estate lending team, not only in banking, but also directly in the builder/developer fields, bring a unique perspective and ability to communicate and consider all elements of a project and related risk from the clients’ viewpoint as well as ours. Mortgage Banking The second line of business is mortgage banking.
The extensive backgrounds of our commercial real estate lending team, not only in banking, but also directly in the builder/developer fields, bring a unique perspective and ability to communicate and consider all elements of a project and related risk from the clients’ viewpoint as well as ours.
Human Capital Resources At December 31, 2023, we employed 324 individuals, nearly all of whom are full-time and of which 56% are women. Women make up 32% of all officers throughout the Meridian organization. None of these employees are covered by collective bargaining agreements, and Meridian believes it enjoys good relations with its personnel.
Human Capital Resources At December 31, 2024, we employed 322 individuals, nearly all of whom are full-time and of which 48% are women. Women make up 32% of all officers throughout the Meridian organization. None of these employees are covered by collective bargaining agreements, and Meridian believes it enjoys good relations with its personnel.
Our Current Capital Stock Structure As of December 31, 2023, Meridian had 13,186,198 shares of common stock, $1 par value, issued and 11,183,015 shares outstanding. There are 2,003,183 shares held in treasury. Information about Meridian Our executive offices are located at 9 Old Lincoln Highway, Malvern, PA 19355 and our telephone number is (484) 568-5000.
Our Current Capital Stock Structure As of December 31, 2024, Meridian had 13,243,258 shares of common stock, $1 par value, issued and 11,240,075 shares outstanding. There are 2,003,183 shares held in treasury. Information about Meridian Our executive offices are located at 9 Old Lincoln Highway, Malvern, PA 19355 and our telephone number is (484) 568-5000.
In addition, to be a qualified mortgage, the points and fees paid by a consumer cannot exceed 3% of the total loan amount and the borrower’s total debt-to-income ratio must be no higher than 43% (subject to certain limited exceptions for loans eligible for purchase, guarantee or insurance by a government sponsored enterprise or a federal agency). 12 Commercial Real Estate Guidance In December 2023, the FDIC released a statement entitled “Managing Commercial Real Estate Concentrations in a Challenging Economic Environment” (the “Updated CRE Guidance”).
In addition, to be a qualified mortgage, the points and fees paid by a consumer cannot exceed 3% of the total loan amount and the borrower’s total debt-to-income ratio must be no higher than 43% (subject to certain limited exceptions for loans eligible for purchase, guarantee or insurance by a government sponsored enterprise or a federal agency).
Reports of the Bank’s condition and income, known as “Call Reports,” are filed with the FDIC and the Parent Company Only Financial Statement for Small Holding Companies known as the “FR Y-9SP” with the Federal Reserve. These reports are available on the FFIEC Central Data Repository’s Public Data Distribution website at cdr.ffiec.gov/public.
Reports of the Bank’s condition and income, known as “Call Reports,” are filed with the FDIC and the Parent Company Only Financial Statement for Small Holding Companies known as the “FR Y-9SP” with the Federal Reserve.
The risk-based capital guidelines applicable to us are based on capital framework, known as Basel III, as implemented by the federal banking regulators.
The banking regulators use a combination of risk-based guidelines and a leverage ratio to evaluate capital adequacy. The risk-based capital guidelines applicable to us are based on capital framework, known as Basel III, as implemented by the federal banking regulators.
As a Pennsylvania banking institution, the Bank is subject to certain restrictions on its ability to pay dividends under applicable banking laws and regulations.
Dividends The Corporation is a legal entity separate and distinct from the Bank and the Bank’s wholly-owned subsidiaries. As a Pennsylvania banking institution, the Bank is subject to certain restrictions on its ability to pay dividends under applicable banking laws and regulations.
In the event of our bankruptcy, any commitment by us to a federal banking regulatory agency to maintain the capital of the Bank will be assumed by the bankruptcy trustee and entitled to priority of payment.
In the event of our bankruptcy, any commitment by us to a federal banking regulatory agency to maintain the capital of the Bank will be assumed by the bankruptcy trustee and entitled to priority of payment. 9 Regulatory Capital Requirements The Federal Reserve monitors the capital adequacy of the holding company on a consolidated basis, and the FDIC and the PDBS monitor the capital adequacy of the Bank.
The holding company, Meridian Corporation, is subject to supervision and examination by, and the regulations and reporting requirements of, the FRB, and is subject to the disclosure and regulatory requirements of the Exchange Act.
The Bank is an FDIC-insured commercial bank chartered under the laws of Pennsylvania with regulatory oversight from the FDIC and the PDBS. The holding company, Meridian Corporation, is subject to supervision and examination by, and the regulations and reporting requirements of, the FRB, and is subject to the disclosure and regulatory requirements of the Exchange Act.
During the hiring process Meridian looks to bring onboard well-qualified individuals, without bias to race or gender. As we are currently in a very competitive hiring market, we utilize various methods to find well-qualified talent including third party search firms, social media, internal candidates already in our organization and on campus recruiting at local universities.
As we are currently in a very competitive hiring market, we utilize various methods to find well-qualified talent including third party search firms, social media, internal candidates already in our organization and on campus recruiting at local universities. During 2024, we hired 65 professionals, 55% of which were women, and 31% of which were ethnically diverse.
We believe our culture, our effort to maintain a meritocracy in terms of opportunity and our continued evolution and growth contribute to our success in attracting and retaining strong talent.
For 2024, our turnover rate was approximately 2%, which makes our overall retention rate very high compared to peers. We believe our culture, our effort to maintain a meritocracy in terms of opportunity and our continued evolution and growth contribute to our success in attracting and retaining strong talent.
The proposed rule is intended to give consumers control over their financial data, including with whom it is shared, and encourage competition in the provision of consumer financial products or services. For banks with less than $50 billion in total assets, compliance would be required approximately 2.5 years after adoption of the final rule.
The proposed rule is intended to give consumers control over their financial data, including with whom it is shared, and encourage competition in the provision of consumer financial products or services.
Its main branch, in Wayne, serves the Main Line. The West Chester and Media branches serve Chester and Delaware counties, respectively, while the Doylestown and Blue Bell branches serve Bucks and Montgomery counties, respectively. Our sixth branch is in Philadelphia.
Market Area Meridian is headquartered in Malvern, PA, and has an operations center in Exton, PA, and six full-service branches in Philadelphia and surrounding counties. Its main branch, in Wayne, serves the Main Line. The West Chester and Media branches serve Chester and Delaware counties, respectively, while the Doylestown and Blue Bell branches serve Bucks and Montgomery counties, respectively.
It does not address all applicable laws, regulations and policies that affect us currently or might affect us in the future.
It does not address all applicable laws, regulations and policies that affect us currently or might affect us in the future. This discussion is qualified in its entirety by reference to the full texts of the laws, regulations and policies described.
Supervision and Regulation Meridian and its subsidiaries are subject to extensive regulation under federal and state banking laws that establish a comprehensive framework for our operations.
These reports are available on the FFIEC Central Data Repository’s Public Data Distribution website at cdr.ffiec.gov/public. 7 Supervision and Regulation Meridian and its subsidiaries are subject to extensive regulation under federal and state banking laws that establish a comprehensive framework for our operations.
Anti-Money Laundering and the USA PATRIOT ACT The USA PATRIOT Act of 2001, which was enacted in the wake of the September 11, 2001 attacks, includes provisions designed to combat international money laundering and advance the U.S. government’s war against terrorism.
For banks with less than $50 billion in total assets, compliance would be required approximately 2.5 years after adoption of the final rule. 13 Anti-Money Laundering and the USA PATRIOT ACT The USA PATRIOT Act of 2001, which was enacted in the wake of the September 11, 2001 attacks, includes provisions designed to combat international money laundering and advance the U.S. government’s war against terrorism.
Other competitors include non-bank fintech and finance companies, money market mutual funds, mortgage bankers, insurance companies, securities brokerage firms, regulated small loan companies, credit unions, and issuers of commercial paper and other securities. 6 The Bank seeks to compete for business principally on the basis of high quality, personal service to customers, customer access to our decision-makers, and customer preferred electronic delivery channels while providing an attractive banking platform and competitive interest rates and services.
The Bank seeks to compete for business principally on the basis of high quality, personal service to customers, customer access to our decision-makers, and customer preferred electronic delivery channels while providing an attractive banking platform and competitive interest rates and services.
The mortgage division performs origination, processing, underwriting, closing and post-closing functions both from our Blue Bell mortgage headquarters with 5 other loan production offices in the Delaware Valley tri-state market, and from Maryland through our footprint of 3 other production/processing offices in the state. 5 Wealth Management and Advisory Services Meridian Wealth, a registered investment advisor and wholly-owned subsidiary of the Bank, provides a comprehensive array of wealth management services and products and the trusted guidance to help its clients and our banking customers prepare for the future.
The mortgage division performs origination, processing, underwriting, closing and post-closing functions both from our Blue Bell mortgage headquarters with 5 other loan production offices in the Delaware Valley tri-state market, and from Maryland through our footprint of 3 other production/processing offices in the state.
Meridian Wealth offers a significant enhancement to both our capacity and the variety of tools we can use to help bring effective financial planning and wealth management services to a broad segment of customers. Market Area Meridian is headquartered in Malvern, PA, and has an operations center in Exton, PA, and six full-service branches in Philadelphia and surrounding counties.
Meridian Wealth offers a significant enhancement to both our capacity and the variety of tools we can use to help bring effective financial planning and wealth management services to a broad segment of customers. 5 Mortgage Banking The third line of business is mortgage banking.
In the Updated CRE Guidance, the FDIC conveys several key risk management practices to consider in managing CRE loan concentrations in the current challenging economic environment. The advisory also continues to emphasize the importance of effectively managing liquidity and funding risks, which can compound lending risks, particularly for CRE concentrated institutions.
The advisory also continues to emphasize the importance of effectively managing liquidity and funding risks, which can compound lending risks, particularly for CRE concentrated institutions. This advisory does not create new risk management principles; however, it does update and build upon previously issued guidance.
Under the final rule, investors can hold up to 24.9% of the voting securities and up to 33% of the total equity of a company without necessarily having a controlling influence. 8 Dividends The Corporation is a legal entity separate and distinct from the Bank and the Bank’s wholly-owned subsidiaries.
These indicia of control include nonvoting equity ownership, director representation, management interlocks, business relationship and restrictive contractual covenants. Under the final rule, investors can hold up to 24.9% of the voting securities and up to 33% of the total equity of a company without necessarily having a controlling influence.
As an integrated full-service financial institution, approximately 60% of our employees are employed through our banking segment, 37% through our mortgage segment, and 3% for our wealth segment. The safety of our employees has always been our top priority over the last few years due to the COVID-19 pandemic and this priority continues today.
As an integrated full-service financial institution, approximately 61% of our employees are employed through our banking segment, 36% through our mortgage segment, and 3% for our wealth segment. Meridian is committed to giving back to our communities.
Meridian also sponsors individual / group service days and provides time off to employees to participate in charitable activities in the communities we serve. In order to compete effectively and continue to provide excellent service to our clients, we must attract, retain, and motivate qualified professionals.
In order to compete effectively and continue to provide excellent service to our clients, we must attract, retain, and motivate qualified professionals. During the hiring process Meridian looks to bring onboard well-qualified individuals, without bias to race or gender.
Removed
During 2023, we hired 83 professionals, 41% of which were women, and 23% of which were ethnically diverse. For 2023, our turnover rate was approximately 3%, which makes our overall retention rate very high compared to peers.
Added
Wealth Management and Advisory Services Meridian Wealth, a registered investment advisor and wholly-owned subsidiary of the Bank, provides a comprehensive array of wealth management services and products and the trusted guidance to help its clients and our banking customers prepare for the future.
Removed
This discussion is qualified in its entirety by reference to the full texts of the laws, regulations and policies described. 7 The Bank is an FDIC-insured commercial bank chartered under the laws of Pennsylvania with regulatory oversight from the FDIC and the PDBS.
Added
Other competitors include non-bank fintech and finance companies, money market mutual funds, mortgage bankers, insurance companies, securities brokerage firms, regulated small loan companies, credit unions, and issuers of commercial paper and other securities.
Removed
These indicia of control include nonvoting equity ownership, director representation, management interlocks, business relationship and restrictive contractual covenants.
Added
Commercial Real Estate Guidance In December 2023, the FDIC released a statement entitled “Managing Commercial Real Estate Concentrations in a Challenging Economic Environment” (the “Updated CRE Guidance”). In the Updated CRE Guidance, the FDIC conveys several key risk management practices to consider in managing CRE loan concentrations in the current challenging economic environment.
Removed
Regulatory Capital Requirements The Federal Reserve monitors the capital adequacy of the holding company on a consolidated basis, and the FDIC and the PDBS monitor the capital adequacy of the Bank. The banking regulators use a combination of risk-based guidelines and a leverage ratio to evaluate capital adequacy.
Removed
This advisory does not create new risk management principles; however, it does update and build upon previously issued guidance.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

35 edited+16 added−20 removed152 unchanged
Biggest changeWe depend on information technology and telecommunications systems of third parties, and any systems failures, interruptions or data breaches involving these systems could adversely affect our operations and financial condition. We are dependent for the majority of our technology, including our core operating system, on third-party providers.
Biggest changeAs a result, our business, financial condition or results of operations could be adversely affected. 17 We depend on information technology and telecommunications systems of third parties, and any systems failures, interruptions or data breaches involving these systems could adversely affect our operations and financial condition.
Although management believes it has implemented effective asset and liability management strategies, including the potential use of derivatives as hedging instruments, to reduce the potential effects of changes in interest rates on our results of operations, any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on our financial condition and results of operations, and any related economic downturn, especially domestically and in the regions in which we operate, may adversely affect our asset quality, deposit levels, loan demand and results of operations.
Although management believes it has implemented effective asset and liability management strategies, including the use of derivatives as hedging instruments, to reduce the potential effects of changes in interest rates on our results of operations, any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on our financial condition and results of operations, and any related economic downturn, especially domestically and in the regions in which we operate, may adversely affect our asset quality, deposit levels, loan demand and results of operations.
Some of these parties have in the past been the target of security breaches and cyberattacks, and because the transactions involve third parties and environments such as the point of sale that we do not control or secure, future security breaches 17 or cyberattacks affecting any of these third parties could affect us through no fault of our own, and in some cases we may have exposure and suffer losses for breaches or attacks relating to them, including costs to replace compromised debit cards and address fraudulent transactions.
Some of these parties have in the past been the target of security breaches and cyberattacks, and because the transactions involve third parties and environments such as the point of sale that we do not control or secure, future security breaches or cyberattacks affecting any of these third parties could affect us through no fault of our own, and in some cases we may have exposure and suffer losses for breaches or attacks relating to them, including costs to replace compromised debit cards and address fraudulent transactions.
An inability to raise additional capital on acceptable terms when needed could have a material adverse effect on our business, financial condition or results of operations and could be dilutive to both tangible book value and our share price. We may not be able to implement our growth strategy or manage costs effectively, resulting in lower earnings or profitability.
An inability to raise additional capital on acceptable terms when needed could have a material adverse effect on our business, financial condition or results of operations and could be dilutive to both tangible book value and our share price. 16 We may not be able to implement our growth strategy or manage costs effectively, resulting in lower earnings or profitability.
Further, to the extent that any of the information in this Annual Report on Form 10-K constitutes forward-looking statements, the risk factors below are cautionary statements identifying important factors that could cause actual results to differ materially from those expressed in any forward-looking statements made by us or on our behalf. See “Cautionary Note Regarding Forward-Looking Statements”.
Further, to the extent that any of the information in this Annual Report on Form 10-K constitutes forward-looking statements, the risk factors 14 below are cautionary statements identifying important factors that could cause actual results to differ materially from those expressed in any forward-looking statements made by us or on our behalf. See “Cautionary Note Regarding Forward-Looking Statements”.
Compliance with Section 404 is expensive and time consuming for management and could result in the detection of internal control deficiencies of which 14 we are currently unaware. The loss of “emerging growth company” status and compliance with the additional requirements substantially increases our legal and financial compliance costs and make some activities more time consuming and costly.
Compliance with Section 404 is expensive and time consuming for management and could result in the detection of internal control deficiencies of which we are currently unaware. The loss of “emerging growth company” status and compliance with the additional requirements substantially increases our legal and financial compliance costs and make some activities more time consuming and costly.
We maintain change in control agreements with certain executive officers to aid in our retention of these individuals. Our success depends on our ability to continue to attract, manage, and retain other qualified management personnel. 18 New lines of business, products, product enhancements or services may subject us to additional risks.
We maintain change in control agreements with certain executive officers to aid in our retention of these individuals. Our success depends on our ability to continue to attract, manage, and retain other qualified management personnel. New lines of business, products, product enhancements or services may subject us to additional risks.
We generally sell the guaranteed portion of our SBA 7(a) program loans in the secondary market. These sales have resulted in premium income for us at the time of sale and created a stream of future servicing income. We may not be able to continue originating 21 these loans or selling them in the secondary market.
We generally sell the guaranteed portion of our SBA 7(a) program loans in the secondary market. These sales have resulted in premium income for us at the time of sale and created a stream of future servicing income. We may not be able to continue originating these loans or selling them in the secondary market.
Increases in or negative adjustments in the value of these problem assets, the underlying collateral, or in the borrowers' performance or financial 20 condition, could adversely affect the Corporation's business, results of operations and financial condition.
Increases in or negative adjustments in the value of these problem assets, the underlying collateral, or in the borrowers' performance or financial condition, could adversely affect the Corporation's business, results of operations and financial condition.
Larger institutions have greater resources and access to capital markets, with higher lending limits, more advanced technology and broader suites of services. Competition at times requires increases in deposit rates and decreases in loan rates, and adversely impact our net interest margin. Our ability to maintain, attract and retain customer relationships is highly dependent on our reputation.
Larger institutions have greater resources and access to capital markets, with higher lending limits, more advanced technology and broader suites of services. Competition at times requires increases in deposit rates and decreases in loan rates, and may adversely impact our net interest margin. 18 Our ability to maintain, attract and retain customer relationships is highly dependent on our reputation.
To a lesser extent, proceeds from the issuance and sale of securities to investors has become a source of funds. Additional liquidity is provided by wholesale funding such as brokered deposits and borrowings from the FRB and the FHLB. We also may borrow from correspondent banks or third party lenders from time to time.
To a lesser extent, proceeds from the issuance and sale of securities to investors can become a source of funds. Additional liquidity is provided by wholesale funding such as brokered deposits and borrowings from the FRB, and the FHLB. We also may borrow from correspondent banks or third party lenders from time to time.
The adoption of CECL may result in greater volatility in the level of the allowance for credit losses, depending on various factors and assumptions applied in the model, such as the reasonable and supportable forecasted economic conditions and loan payment behaviors.
The CECL framework may result in greater volatility in the level of the allowance for credit losses, depending on various factors and assumptions applied in the model, such as the reasonable and supportable forecasted economic conditions and loan payment behaviors.
Our business is significantly dependent on the real estate markets in which we operate, as a significant percentage of our loan portfolio is secured by real estate or mortgage loans originated for sale.
Our business is significantly dependent on the real estate markets in which we operate, as a large percentage of our loan portfolio is secured by real estate or mortgage loans originated for sale.
As a result of inflationary pressures and the resulting rapid increases in interest rates in 2023, the trading value of previously issued government and other fixed income securities has declined significantly.
As a result of inflationary pressures and the resulting rapid increases in interest rates in 2023 and early 2024, the trading value of previously issued government and other fixed income securities has declined significantly.
Whole loan sale agreements require repurchase or substitute mortgage loans, or indemnify buyers against losses, in the event we breach these representations or warranties.
Whole loan sale agreements require that we repurchase or substitute mortgage loans, or indemnify buyers against losses, in the event we breach these 21 representations or warranties.
However, due to elevated levels of inflation and corresponding pressure to raise interest rates, the Federal Reserve announced in January of 2022 that it would be slowing the pace of its bond purchasing and increasing the target range for the federal funds rate over time. The FDIC since has increased the target range eleven times throughout 2022 to July 2023.
However, due to elevated levels of inflation and corresponding pressure to raise interest rates, the Federal Reserve announced in January of 2022 that it would be slowing the pace of its bond purchasing and increasing the target range for the federal funds rate over time. The Federal Reserve then increased the target range eleven times throughout 2022 to July 2023.
Our stock price may fluctuate significantly in response to a variety of factors including, among other things: • actual or anticipated variations in our quarterly results of operations; • the failure of securities analysts to cover, or continue to cover, us after this offering; • operating and stock price performance of other companies that investors deem comparable to us; • news reports relating to trends, concerns and other issues in the financial services industry; • perceptions in the marketplace regarding us, our competitors or other financial institutions; • future sales of our common stock; • departure of our management team or other key personnel; • new technology used, or services offered, by competitors; • significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors; • changes or proposed changes in laws or regulations, or differing interpretations thereof affecting our business, or enforcement of these laws and regulations; • litigation and governmental investigations; and • geopolitical conditions such as acts or threats of terrorism or military conflicts. 23 Certain banking laws and certain provisions of our articles of incorporation may have an anti-takeover effect.
Our stock price may fluctuate significantly in response to a variety of factors including, among other things: • actual or anticipated variations in our quarterly results of operations; • the failure of securities analysts to cover, or continue to cover, us after this offering; • operating and stock price performance of other companies that investors deem comparable to us; • news reports relating to trends, concerns and other issues in the financial services industry; • perceptions in the marketplace regarding us, our competitors or other financial institutions; • future sales of our common stock; • departure of our management team or other key personnel; • new technology used, or services offered, by competitors; • significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving us or our competitors; 23 • changes or proposed changes in laws or regulations, or differing interpretations thereof affecting our business, or enforcement of these laws and regulations; • litigation and governmental investigations; and • geopolitical conditions such as acts or threats of terrorism or military conflicts.
Any actual or perceived failure to comply with evolving regulatory frameworks around the development and use of AI, machine learning and automated decision making could adversely affect our business, results of operations, and financial condition. We may not be able to attract and retain key personnel and other skilled employees.
Any actual or perceived failure to comply with evolving regulatory frameworks around the development and use of AI could adversely affect our business, results of operations, and financial condition. We may not be able to attract and retain key personnel and other skilled employees.
Any actual or perceived failure to comply with evolving regulatory frameworks around the development and use of artificial intelligence (AI) could adversely affect our business, results of operations, and financial condition. Our business increasingly relies on AI, machine learning and automated decision making to improve our services and our customer’s experience.
Any actual or perceived failure to comply with evolving regulatory frameworks around the development and use of artificial intelligence (AI) could adversely affect our business, results of operations, and financial condition. Our business increasingly relies on AI to improve our services and our customer’s experience.
Our acquisition activities could involve a number of additional risks, including the risks of: • Incurring time and expense associated with identifying and evaluating potential acquisitions and negotiating potential transactions; • Using inaccurate estimates and judgments to evaluate credit, operations, management, and market risks with respect to the target institution or its assets; • The time and expense required to integrate the operations and personnel of the combined businesses; • Creating an adverse short-term effect on our results of operations; • Failing to realize related revenue synergies and/or cost savings within expected time frames; and • Losing key employees and customers or a reduction in our stock price as a result of an acquisition that is poorly.
An acquisition could require us to use a substantial amount of cash, other liquid assets, and/or incur debt. 15 Our acquisition activities could involve a number of additional risks, including the risks of: • Incurring time and expense associated with identifying and evaluating potential acquisitions and negotiating potential transactions; • Using inaccurate estimates and judgments to evaluate credit, operations, management, and market risks with respect to the target institution or its assets; • The time and expense required to integrate the operations and personnel of the combined businesses; • Creating an adverse short-term effect on our results of operations; • Failing to realize related revenue synergies and/or cost savings within expected time frames; and • Losing key employees and customers or a reduction in our stock price as a result of an acquisition that is integrated poorly.
Our business and operations may be materially adversely affected by national and local market economic conditions.
Risks Related to Our Business / Operations Our business and operations may be materially adversely affected by national and local market economic conditions.
As of December 31, 2023 , we owned $181.8 million of investment securities, which consisted primarily of our positions in U.S. government and government-sponsored enterprises and federal agency obligations, mortgage and asset-backed securities, corporate bonds, and municipal securities.
As of December 31, 2024, we owned $208.1 million of investment securities, which consisted primarily of our positions in U.S. government and government-sponsored enterprises and federal agency obligations, mortgage and asset-backed securities, corporate bonds, and municipal securities.
More generally, publicized information concerning security and cyber-related problems could inhibit the use or growth of electronic or web-based applications or solutions as a means of conducting commercial transactions. Such publicity may also cause damage to our reputation as a financial institution. As a result, our business, financial condition or results of operations could be adversely affected.
More generally, publicized information concerning security and cyber-related problems could inhibit the use or growth of electronic or web-based applications or solutions as a means of conducting commercial transactions. Such publicity may also cause damage to our reputation as a financial institution.
Deterioration in the credit quality of third parties whose securities or obligations we hold, including the Federal Home Loan Mortgage Corporation, Government National Mortgage Corporation and municipalities, could result in significant losses. Our mortgage lending business may not provide us with significant non-interest income.
Deterioration in the credit quality of third parties whose securities or obligations we hold, including the FHLMC, GNMA and municipalities, could result in significant losses. Our mortgage lending business may not provide us with significant non-interest income.
Failures in our risk management policies, procedures and controls could adversely affect our ability to manage this portfolio going forward and could result in an increased rate of delinquencies in, and increased losses from, this portfolio, which, accordingly, could have a material adverse effect on our business, financial condition and results of operations. 22 Risks Related our Wealth Management Business An economic slowdown could impact Meridian Wealth division revenues.
Failures in our risk management policies, procedures and controls could adversely affect our ability to manage this portfolio going forward and could result in an increased rate of delinquencies in, and increased losses from, this portfolio, which, accordingly, could have a material adverse effect on our business, financial condition and results of operations.
In recent years, commercial real estate markets have been particularly impacted by the economic disruption resulting from the COVID-19 pandemic. The COVID-19 pandemic has also been a catalyst for the evolution of various remote work options which could impact the long-term performance of some types of office properties within our commercial real estate portfolio.
Commercial real estate markets were particularly impacted by the economic disruption resulting from the COVID-19 pandemic which was a catalyst for the evolution of various remote work options which may still have an impact the long-term performance of some types of office properties within our commercial real estate portfolio.
If these companies were to discontinue providing services to us, we may experience significant disruption to our business. In addition, each of these third parties faces the risk of cyber attack, information breach or loss, or technology failure.
We are dependent for the majority of our technology, including our core operating system, on third-party providers. If these companies were to discontinue providing services to us, we may experience significant disruption to our business. In addition, each of these third parties faces the risk of cyber attack, information breach or loss, or technology failure.
Provisions of federal banking laws, including regulatory approval requirements, could make it difficult for a third party to acquire us, even if doing so would be perceived to be beneficial to our shareholders.
Certain banking laws and certain provisions of our articles of incorporation may have an anti-takeover effect. Provisions of federal banking laws, including regulatory approval requirements, could make it difficult for a third party to acquire us, even if doing so would be perceived to be beneficial to our shareholders.
As do many banking companies, we rely on customer deposits to meet a considerable portion of our funding needs, and we continue to seek customer deposits to maintain this funding base. We accept deposits directly from consumer and commercial customers and, as of December 31, 2023 , we had $1.8 billion in deposits.
Loss of deposits could increase our funding costs. As do many banking institutions, we rely on customer deposits to meet a considerable portion of our funding needs, and we continue to seek customer deposits to maintain this funding base. We accept deposits directly from consumer and commercial customers and, as of December 31, 2024, we had $2.0 billion in deposits.
As of December 31, 2023, our real estate loans, excluding mortgages held for sale, included $737.9 million of CRE loans (38.6% of total portfolio loans), $246.4 million of construction and development loans (12.9% of total portfolio loans), and for consumer loans, $260.6 million of residential mortgage loans, and $76.3 million of home equity loans (17.6% of total portfolio loans), with the majority of these real estate loans concentrated in the southeast Pennsylvania, Delaware, Maryland, southern New Jersey, and to a lesser degree in southwest Florida.
As of December 31, 2024, our real estate loans, excluding mortgages held for sale, included $824.0 million of CRE loans (40.0% of total portfolio loans), $259.6 million of construction and development loans (12.6% of total portfolio loans), and for consumer loans, $252.6 million of residential mortgage loans, and $90.7 million of home equity loans (16.7% of total portfolio loans), with the majority of these real estate loans concentrated in the southeast Pennsylvania, Delaware, Maryland, southern New Jersey, and to a lesser degree in southwest Florida.
Our acquisition activities could be material to us. For example, we 15 could issue additional shares of common stock in a merger transaction, which could dilute current shareholders' ownership interest. An acquisition could require us to use a substantial amount of cash, other liquid assets, and/or incur debt.
Our acquisition activities could be material to us. For example, we could issue additional shares of common stock in a merger transaction, which could dilute current shareholders' ownership interest.
Our business, profitability and liquidity may be adversely affected by deterioration in the credit quality of, or defaults by, third parties who owe us money, securities or other assets or whose securities or obligations we hold.
Any increases in provisions will result in a decrease in net income and capital and may have a material adverse effect on our financial condition and results of operations. 20 Our business, profitability and liquidity may be adversely affected by deterioration in the credit quality of, or defaults by, third parties who owe us money, securities or other assets or whose securities or obligations we hold.
These provisions may effectively inhibit a non-negotiated merger or other business combination, which, in turn, could have a material adverse effect on the market price of our common stock. Item 1B. Unresolved Staff Comments None.
These provisions may effectively inhibit a non-negotiated merger or other business combination, which, in turn, could have a material adverse effect on the market price of our common stock. Natural disasters, acts of war or terrorism, outbreaks or escalations of hostilities and other external events could negatively impact the Corporation.
See “Supervision and Regulation—Regulatory Capital Requirements” for more information on the capital adequacy standards that we must meet and maintain. While we currently meet the requirements of the Basel III-based Capital Rules, we may fail to do so in the future.
See “Supervision and Regulation—Regulatory Capital Requirements” for more information on the capital adequacy standards that we must meet and maintain.
Also, our interest rate risk modeling techniques and assumptions likely may not fully predict or capture the impact of actual interest rate changes on our balance sheet. Like all financial institutions, the Corporation's consolidated statement of financial condition is affected by fluctuations in interest rates.
Also, our interest rate risk modeling techniques and assumptions likely may not fully predict or capture the impact of actual interest rate changes on our balance sheet. 19 The impact of interest rates on our mortgage banking business can have a significant impact on revenues.
Removed
Risks Related to Our Business / Operations Recent and future bank failures may adversely affect the national, regional, and local business environment, results of operation, and capital. Past and future bank failures may have a profound impact on the national, regional, and local business environment in which Meridian operates.
Added
In further reassessment of inflation and other factors, the Federal Reserve decreased the range three times in late 2024. As of December 31, 2024, the target range for the federal funds rate had been decreased to 4.25% from 4.50% at September 30, 2024.
Removed
These impacts can range from business disruptions to adversely affecting their customers and customers withdrawing their deposits from the Bank.
Added
Our interest rate spread, net interest margin and net interest income improved during this period as our interest-bearing liabilities repriced at a faster pace than interest-earning assets.
Removed
Management currently does expect that one result of the events in connection with the closure of Silicon Valley Bank in California and Signature Bank in New York by regulators is that FDIC assessments will more likely than not increase as a cost of doing business to the Bank.
Added
Risks Related our Wealth Management Business Revenues and profitability from our wealth management business may be adversely affected by any reduction in assets under management, which could reduce fees earned. The majority of the revenue from the wealth management business consists of investment advisory. Substantial revenues are generated from investment advisory contracts with clients.
Removed
These possible impacts may adversely affect the Bank’s future operating results, including net income, and negatively impact capital.
Added
Under these contracts, the investment advisory fees paid to us are typically based on the market value of assets under management.
Removed
While the Bank currently does not expect the Government takeovers of Silicon Valley Bank and Signature Bank to have such a negative effect, the Bank continues to monitor the ongoing events concerning these two banks and any future banks failures if and when they may occur.
Added
Assets under management may decline for various reasons including declines in the market value of the assets in the funds and accounts managed, which could be caused by price declines in the securities markets generally or by price declines in specific market segments.
Removed
The Corporation’s liquidity is dependent on dividends from the Bank. The Corporation is a legal entity separate and distinct from the Bank, which is a wholly-owned banking subsidiary. A substantial portion of our cash flow from operating activities, including cash flow to pay principal and interest on any debt we may incur, will come from dividends from the Bank.
Added
Assets under management may also decrease due to redemptions and other withdrawals by clients or termination of contracts. This could be in response to adverse market conditions or in pursuit of other investment opportunities. If our assets under management decline and there is a related decrease in fees, it will negatively affect our results of operations.
Removed
Various federal and state laws and regulations limit the amount of dividends that the Bank may pay to our shareholders.
Added
The wealth management business is subject to extensive regulation, supervision and examination by regulators, and any enforcement action or adverse changes in the laws or regulations governing our business could decrease our revenues and profitability.
Removed
For example, Pennsylvania law only permits the Bank to pay dividends out of its net profits then on hand, after first deducting the Bank’s losses and any debts owed to the Bank on which interest is past due and unpaid for a period of six months or more, unless the same are well secured and in the process of collection.
Added
The wealth management business is subject to regulation by regulatory agencies that are charged with safeguarding the integrity of the securities and other financial markets and with protecting the interests of customers participating in those markets.
Removed
Also, our right to participate in a distribution of assets upon a subsidiary’s liquidation or reorganization is subject to the prior claims of the subsidiary’s creditors. Our shareholders are only entitled to receive such dividends as our Board of Directors may declare out of funds legally available for such payments.
Added
In the event of non-compliance with regulation, governmental regulators, including the SEC and the Financial Industry Regulatory Authority, may institute administrative or judicial proceedings that may result in censure, fines, civil money penalties, the issuance of cease-and-desist orders, the deregistration or suspension of the non-compliant introducing broker-dealer or investment adviser or other adverse consequences.
Removed
Although we currently pay quarterly dividends on our common stock, we are not required to do so and may reduce or eliminate our common stock dividend in the future.
Added
The imposition of any such penalties or orders could have a material adverse effect on the wealth management segment's operating results and financial condition. The wealth management business also may be adversely affected as a result of new or revised legislation or regulations.
Removed
Our ability to pay dividends to our shareholders is subject to the restrictions set forth in Pennsylvania law, by the Federal Reserve, and depends on, among other things, our results of operations, financial condition, debt service requirements, other cash needs and any other factors our Board of Directors deems relevant.
Added
Regulatory changes have imposed and may continue to impose additional costs, which could adversely impact our profitability. 22 We may not be able to attract and retain wealth management clients. Due to strong competition, our wealth management business may not be able to attract and retain clients.
Removed
Notification to the Federal Reserve is also required prior to our declaring and paying a cash dividend to our shareholders during any period in which our quarterly and/or cumulative twelve-month net earnings are insufficient to fund the dividend amount, among other requirements.
Added
Competition is strong because there are numerous well-established and successful investment management and wealth advisory firms with which we compete, including commercial banks and trust companies, investment advisory firms, mutual fund companies, stock brokerage firms, and other financial companies. Many of our competitors have greater resources than we have.
Removed
We may not pay a dividend if the Federal Reserve objects or until such time as we receive approval from the Federal Reserve or we no longer need to provide notice under applicable regulations.
Added
Our ability to successfully attract and retain wealth management clients is dependent upon our ability to compete with competitors' investment products, our level of investment performance, our client services, our fees and marketing and distribution capabilities. If we are not successful, our results of operations and financial condition may be negatively impacted.
Removed
In addition, we may be restricted by applicable law or regulation or actions taken by our regulators, now or in the future, from paying dividends to our shareholders. We cannot provide assurance that we will continue paying dividends on our common stock at current levels or at all.
Added
Natural disasters, acts of war or terrorism, outbreaks or escalations of hostilities, the emergence of widespread health emergencies or pandemics and other adverse external events could have a significant impact on the Corporation's ability to conduct business.
Removed
A reduction or discontinuance of dividends on our common stock could have a material adverse effect on our business, including the market price of our common stock. 16 Loss of deposits could increase our funding costs.
Added
In addition, such events could affect the stability of the Corporation's deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue and/or cause the Corporation to incur additional expenses.
Removed
As of December 31, 2023, the target range for the federal funds rate had been increased to 5.25% to 5.50%. Our interest rate spread, net interest margin 19 and net interest income increased during this period of rising interest rates as our interest earning assets generally reprice more quickly than our interest earning liabilities.
Added
We have established disaster recovery policies and procedures that are expected to support our operations if events related to natural or man-made disasters occur; however, the occurrence of any such event and the impact of an overall economic decline resulting from such a disaster could have a material adverse effect on the Corporation's financial condition and results of operations.
Removed
See the section entitled “Quantitative and Qualitative Disclosures About Market Risk” in Management’s Discussion and Analysis of Financial Condition, for the Corporation’s position on interest earning assets and interest bearing liabilities. The impact of interest rates on our mortgage banking business can have a significant impact on revenues.
Removed
Any increases in provisions will result in a decrease in net income and capital and may have a material adverse effect on our financial condition and results of operations.
Removed
In fact, as rates rise, we expect increasing industry-wide competitive pressures related to changing market conditions to reduce our pricing margins and mortgage revenues generally.
Removed
A general economic slowdown may cause current clients to seek alternative investment opportunities with other providers, which would decrease the value of Meridian Wealth’s assets under management resulting in lower fee income to the Corporation.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+0 added−1 removed15 unchanged
Biggest changeFurther, at least annually, the Board receives updates on the Corporation’s Incident Response Plan, which covers, among other things, potential cybersecurity incidents, data privacy and its compliance programs.
Biggest changeFurther, at least annually, the Board receives updates on the Corporation’s Incident Response Plan, which covers, among other things, potential cybersecurity incidents, data privacy and its compliance programs. To aid the Board with its cybersecurity and data privacy oversight responsibilities, the Board periodically hosts experts for presentations on these topics.
If a third-party vendor is not able to provide a SOC 1 or SOC 2 report, we take additional steps to assess their cybersecurity preparedness and assess our relationship on that basis. Our assessment of risks associated with use of third-party providers is part of our overall cybersecurity risk management framework.
If a third-party vendor is not able 24 to provide a SOC 1 or SOC 2 report, we take additional steps to assess their cybersecurity preparedness and assess our relationship on that basis. Our assessment of risks associated with use of third-party providers is part of our overall cybersecurity risk management framework.
Although such risks have not materially affected us, including our business strategy, results of operations or financial condition, to date, we have, from time to time, experienced threats to and breaches of our data and systems, including malware and computer virus attacks.
We face a number of cybersecurity risks in connection with our business. Although such risks have not materially affected us, including our business strategy, results of operations or financial condition, to date, we have, from time to time, experienced threats to and breaches of our data and systems, including malware and computer virus attacks.
Removed
To aid the Board with its cybersecurity and data privacy oversight responsibilities, the Board periodically hosts experts for presentations on these topics. 24 We face a number of cybersecurity risks in connection with our business.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed4 unchanged
Biggest changeTamiami Trail, Suite 3, Bonita Springs, FL 34134 • Commercial Loan Office / Mortgage Loan Production Office – 8894 Stanford Boulevard, #203, Columbia, MD 21045 • Mortgage Loan Production Office – 5301 Limestone Road, Suite 202, Wilmington, DE 19801 • Mortgage Loan Production Office – 22128 Sussex Highway, Seaford, DE 19973 • Mortgage Loan Production Office – 350 Highland Drive, Suite 160, Mountville, PA 17554 • Mortgage Loan Production Office – 2330 New Road, Northfield, NJ 08225 • Mortgage Loan Production Office – 1221 College Park Drive, Suite 118, Dover, DE 19904 • Mortgage Loan Production Office – 110 West Road, Towson, MD 21204 • Mortgage Loan Production Office – 9515 Deereco Road, Timonium, MD 21093 • Mortgage Loan Production Office – 4940 Campbell Blvd., Baltimore, MD 21236 Item 3.
Biggest changeTamiami Trail, Suite 3, Bonita Springs, FL 34134 • Commercial Loan / Mortgage Loan Production Office – 8894 Stanford Boulevard, Suite 203, Columbia, MD 21045 • Mortgage Loan Production Office – 5301 Limestone Road, Suite 202, Wilmington, DE 19801 • Mortgage Loan Production Office – 22128 Sussex Highway, Seaford, DE 19973 • Mortgage Loan Production Office – 350 Highland Drive, Suite 160, Mountville, PA 17554 • Mortgage Loan Production Office – 2330 New Road, Northfield, NJ 08225 • Mortgage Loan Production Office – 1221 College Park Drive, Suite 118, Dover, DE 19904 • Mortgage Loan Production Office – 110 West Road, Towson, MD 21204 • Mortgage Loan Production Office – 8894 Stanford Boulevard, Suite 201, Columbia, MD 21045 • Mortgage Loan Production Office – 4940 Campbell Blvd., Baltimore, MD 21236 Item 3.
In addition to our deposit taking branches, there are currently 18 other offices, including headquarters for Corporate and Operations, the Wealth Division and the Mortgage Division. Other than our corporate and operations headquarters, all of our offices are leased. The Bank had a net book value of $10.8 million for all locations at December 31, 2023.
In addition to our deposit taking branches, there are currently 12 other offices, including headquarters for Corporate and Operations, the Wealth Division and the Mortgage Division. Other than our corporate and operations headquarters, all of our offices are leased. The Bank had a net book value of $10.1 million for all locations at December 31, 2024.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−1 removed0 unchanged
Biggest changeDuring 2023, and 2022, the Board of Directors paid cash dividends as follows: Date Declared Date of Record Date Paid Quarterly Dividend $ Special Dividend $ January 27, 2022 February 14, 2022 February 21, 2022 $ — $ 0.50 April 28, 2022 May 16, 2022 May 23, 2022 $ 0.10 $ — July 28, 2022 August 15, 2022 August 22, 2022 $ 0.10 $ — October 27, 2022 November 14, 2022 November 21, 2022 $ 0.10 $ — January 26, 2023 February 14, 2023 February 21, 2023 $ 0.125 $ — April 27, 2023 May 15, 2023 May 22, 2023 $ 0.125 $ — July 27, 2023 August 14, 2023 August 21 2023 $ 0.125 $ — October 26, 2023 November 13, 2023 November 20, 2023 $ 0.125 $ — Item 6.
Biggest changeDuring 2024, and 2023, the Board of Directors paid cash dividends as follows: Date Declared Date of Record Date Paid Quarterly Dividend $ January 26, 2023 February 14, 2023 February 21, 2023 $0.125 April 27, 2023 May 15, 2023 May 22, 2023 0.125 July 27, 2023 August 14, 2023 August 21 2023 0.125 October 26, 2023 November 13, 2023 November 20, 2023 0.125 January 26, 2024 February 12, 2024 February 20, 2024 0.125 April 25. 2024 May 13, 2024 May 20, 2024 0.125 July 25, 2024 August 12, 2024 August 19, 2024 0.125 October 22, 2024 November 12, 2024 November 19, 2024 0.125 Item 6.
Stock is purchased under the plan from time to time in the open market or through privately negotiated transactions, or otherwise, at the discretion of management of the company in accordance with legal requirements. On April 22, 2023, the stock repurchase plan expired. The total amount of stock repurchased under the plan was $19.6 million in total.
Stock was purchased under the plan from time to time in the open market or through privately negotiated transactions, or otherwise, at the discretion of management of the company in accordance with legal requirements. On April 22, 2023, the stock repurchase plan expired. The total amount of stock repurchased under the plan was $19.6 million in total.
Also, the Corporation and the Bank are subject to restrictions on the amount of dividends that may be paid without approval of banking regulatory authorities. 25 Dividend amounts have been adjusted to reflect the two-for-one stock split effective February 28, 2023.
Also, the Corporation and the Bank are subject to restrictions on the amount of dividends that may be paid without approval of banking regulatory authorities. Dividend amounts have been adjusted to reflect the two-for-one stock split effective February 28, 2023.
Dividend Policy In 2020 the Corporation commenced quarterly cash dividends on its common stock. Future dividend payments will depend upon maintenance of a strong financial condition, future earnings and capital and regulatory requirements.
We did not repurchase any shares of the Corporation during 2024. Dividend Policy In 2020 the Corporation commenced quarterly cash dividends on its common stock. Future dividend payments will depend upon maintenance of a strong financial condition, future earnings and capital and regulatory requirements.
Share Repurchases We did not repurchase any shares of the Corporation during the fourth quarter of 2023. On August 30, 2021, the Corporation announced a stock repurchase plan pursuant to which the Corporation may repurchase up to $20 million of the company’s outstanding common stock, par value $1.00 per share.
Certain shares are held in “nominee” or “street” name and accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number. 25 Share Repurchases On August 30, 2021, the Corporation announced a stock repurchase plan which allowed the Corporation to repurchase up to $20 million of the company’s outstanding common stock, par value $1.00 per share.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Shares of our common stock trade on the NASDAQ Global Select Market under the symbol "MRBK". All share and per share amounts have been adjusted to reflect the two-for-one stock split effective February 28, 2023.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Shares of our common stock trade on the NASDAQ Global Select Market under the symbol "MRBK". As of March 10, 2025, there were approximately 1,898 registered shareholders of the Corporation's common stock.
Removed
As of March 11, 2024, there were approximately 1,602 registered shareholders of the Corporation's common stock. Certain shares are held in “nominee” or “street” name and accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

73 edited+12 added−25 removed30 unchanged
Biggest changeThe following table provides information on net (charge-offs) and recoveries by loan category for the years ended: December 31, 2023 December 31, 2022 Home equity lines and loans $ (82) $ 31 Residential mortgage — 2 Commercial and industrial (209) 97 Small business loans (1,483) — Consumer 2 4 Leases (3,779) (2,552) Total Net Charge-offs $ (5,551) $ (2,418) 35 Deposits The following table presents the major categories of deposits at the dates indicated: (Dollars in thousands) December 31, 2023 December 31, 2022 $ Change % Change Noninterest-bearing deposits $ 239,289 $ 301,727 $ (62,438) (20.7) % Interest-bearing deposits: Interest-bearing demand deposits 150,898 219,838 (68,940) (31.4) % Money market and savings deposits 747,803 697,564 50,239 7.2 % Time deposits 685,472 493,350 192,122 38.9 % Total interest-bearing deposits 1,584,173 1,410,752 173,421 12.3 % Total deposits $ 1,823,462 $ 1,712,479 $ 110,983 6.5 % Total deposits were $1.8 billion as of December 31, 2023, up $111.0 million, or 6.5%, from December 31, 2022.
Biggest change(dollars in thousands) December 31, 2024 % of Loan Type to Total Loans December 31, 2023 % of Loan Type to Total Loans Commercial mortgage $ 3,469 41% $ 4,375 39% Home equity lines and loans 1,147 4% 998 4% Residential mortgage 1,021 12% 1,020 14% Construction 923 13% 485 13% Commercial and industrial 3,098 18% 4,518 16% Small business loans 6,304 8% 7,005 8% Leases 2,476 4% 3,706 6% Total $ 18,438 100% $ 22,107 100% 35 The following table provides information on net (charge-offs) and recoveries by loan category for the years ended: December 31, 2024 December 31, 2023 Home equity lines and loans $ (56) $ (82) Residential mortgage 13 — Commercial and industrial (6,304) (209) Small business loans (4,164) (1,483) Consumer (1) 2 Leases (5,324) (3,779) Total Net Charge-offs $ (15,836) $ (5,551) Deposits The following table presents the major categories of deposits at the dates indicated: (Dollars in thousands) December 31, 2024 December 31, 2023 $ Change % Change Noninterest-bearing deposits $ 240,858 $ 239,289 $ 1,569 0.7 % Interest-bearing deposits: Interest-bearing demand deposits 141,439 150,898 (9,459) (6.3) % Money market and savings deposits 913,536 747,803 165,733 22.2 % Time deposits 709,535 685,472 24,063 3.5 % Total interest-bearing deposits 1,764,510 1,584,173 180,337 11.4 % Total deposits $ 2,005,368 $ 1,823,462 $ 181,906 10.0 % Total deposits were $2.0 billion as of December 31, 2024, up $181.9 million, or 10.0%, from December 31, 2023.
The evaluation process combines several factors: historical loan loss experience, managements ongoing review of lending policies and practices, experience and depth of staff, quality of the loan grading system, the fair value of underlying collateral, concentration of loans to specific borrowers or industries, existing economic conditions and forecasts, segment specific risks and other quantitative and qualitative factors which could affect future credit losses.
The evaluation process combines several factors: historical loan loss experience, managements ongoing review of lending policies and practices, experience and depth of staff, quality of the loan grading system, the fair value of underlying collateral, concentration of loans to specific borrowers or industries, existing 26 economic conditions and forecasts, segment specific risks and other quantitative and qualitative factors which could affect future credit losses.
Capital Resources Meridian meets the definition of “well capitalized” for regulatory purposes on December 31, 2023. Our capital category is determined for the purposes of applying the bank regulators’ “prompt corrective action” regulations and for determining levels of deposit insurance assessments and may not constitute an accurate representation of Meridian’s overall financial condition or prospects.
Capital Resources Meridian meets the definition of “well capitalized” for regulatory purposes on December 31, 2024. Our capital category is determined for the purposes of applying the bank regulators’ “prompt corrective action” regulations and for determining levels of deposit insurance assessments and may not constitute an accurate representation of Meridian’s overall financial condition or prospects.
The information contained in this section should be read together with the December 31, 2023 audited Consolidated Financial Statements and the accompanying Notes included in Item 8. Financial Statements And Supplementary Data of this Form 10-K. This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
The information contained in this section should be read together with the December 31, 2024 audited Consolidated Financial Statements and the accompanying Notes included in Item 8. Financial Statements And Supplementary Data of this Form 10-K. This section of this Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
NET INTEREST INCOME Net interest income is an integral source of the Corporation’s income. The tables below present a summary for the years ended December 31, 2023 and 2022, of the Corporation’s average balances and yields earned on its interest-earning assets and the rates paid on its interest-bearing liabilities.
NET INTEREST INCOME Net interest income is an integral source of the Corporation’s income. The tables below present a summary for the years ended December 31, 2024 and 2023, of the Corporation’s average balances and yields earned on its interest-earning assets and the rates paid on its interest-bearing liabilities.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion is intended to assist in understanding the financial condition and results of operations of Meridian as of and for the year ended December 31, 2023.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion is intended to assist in understanding the financial condition and results of operations of Meridian as of and for the year ended December 31, 2024.
Meridian’s available liquidity, which totaled $273.4 million at December 31, 2023, compared to $264.4 million at December 31, 2022, includes investments, SNCs, Federal funds sold, mortgages held-for-sale and cash and cash equivalents, less the amount of securities required to be pledged for certain liabilities. Meridian also anticipates scheduled payments and prepayments on its loan and mortgage-backed securities portfolios.
Meridian’s available liquidity, which totaled $315.8 million at December 31, 2024, compared to $273.4 million at December 31, 2023, includes investments, SNCs, Federal funds sold, mortgages held-for-sale and cash and cash equivalents, less the amount of securities required to be pledged for certain liabilities. Meridian also anticipates scheduled payments and prepayments on its loan and mortgage-backed securities portfolios.
Executive Overview The following items highlight the Corporation’s changes in its financial condition as of December 31, 2023 compared to December 31, 2022 and the results of operations for the year ended December 31, 2023 compared to the same periods in 2022. More detailed information related to these highlights can be found in the sections that follow.
Executive Overview The following items highlight the Corporation’s changes in its financial condition as of December 31, 2024 compared to December 31, 2023 and the results of operations for the year ended December 31, 2024 compared to the same period in 2023. More detailed information related to these highlights can be found in the sections that follow.
In addition, as part of its liquidity management, Meridian maintains a segment of commercial loan assets that are 37 comprised of SNCs, which have a national market and can be sold in a timely manner.
In addition, as part of its liquidity management, Meridian maintains a portion of commercial loan assets that are comprised of SNCs, which have a national market and can be sold in a timely manner.
Overall the total consumer loan portfolio represented 17.6% and 16.0% of our total loan portfolio at December 31, 2023 and 2022, respectively. Leases, net Meridian Equipment Finance specializes in small ticket equipment leases for small and mid-sized businesses nationally and through a broad range of industries.
Overall the total consumer loan portfolio represented 16.7% and 17.6% of our total loan portfolio at December 31, 2024 and 2023, respectively. Leases, net Meridian Equipment Finance specializes in small ticket equipment leases for small and mid-sized businesses nationally and through a broad range of industries.
The remaining commercial real estate loans are managed by our commercial real estate department which offer the following commercial real estate products: • Permanent – Investor Real Estate Loans • Purchase and refinance loan opportunities for a number of product types, including single-family rentals, multi-family residential as well as tenanted income producing properties in a variety of real estate types, including office, retail, industrial, and flex space • Construction Loans • Residential construction loans to finance new construction and renovation of single and 1-4 family homes located within our market area • Commercial construction loans for investment properties, generally with semi-permanent attributes • Construction loans for new, expanded or renovated operations for our owner occupied business clients • Land Development Loans • Meridian considers a limited number of strictly land development oriented loans based upon the risk, merit of the future project and strength of the borrower/guarantor relationship Our commercial real estate loans increased by $172.5 million, or 30.5%, to $737.9 million at December 31, 2023 from $565.4 million at December 31, 2022.
The remaining commercial real estate loans are managed by our commercial real estate department which offer the following commercial real estate products: • Permanent – Investor Real Estate Loans • Purchase and refinance loan opportunities for a number of product types, including single-family rentals, multi-family residential as well as tenanted income producing properties in a variety of real estate types, including office, retail, industrial, and flex space • Construction Loans • Residential construction loans to finance new construction and renovation of single and 1-4 family homes located within our market area • Commercial construction loans for investment properties, generally with semi-permanent attributes • Construction loans for new, expanded or renovated operations for our owner occupied business clients • Land Development Loans • Meridian considers a limited number of strictly land development oriented loans based upon the risk, merit of the future project and strength of the borrower/guarantor relationship Our commercial real estate loans increased by $86.1 million, or 11.7%, to $824.0 million at December 31, 2024 from $737.9 million at December 31, 2023.
Not included in the tables below are equity investments that had fair values of $2.1 million as of December 31, 2023 and 2022. As of December 31, 2023 we also had a held-to-maturity investment portfolio with amortized cost of $35.8 million.
Not included in the tables below are equity investments that had fair values of $2.1 million as of December 31, 2024 and 2023. As of December 31, 2024 we also had a held-to-maturity investment portfolio with amortized cost of $33.8 million.
T he Bank’s CBLR was 9.46% and 9.95% as of December 31, 2023 and 2022, respectively, but reports all ratios for comparative purposes. Tables presenting the Bank’s capital amounts and ratios as of December 31, 2023 and 2022 are included in Note 17 - Regulatory Matters.
T he Bank’s CBLR was 9.21% and 9.46% as of December 31, 2024 and 2023, respectively, but reports all ratios for comparative purposes. Tables presenting the Bank’s capital amounts and ratios as of December 31, 2024 and 2023 are included in Note 17 - Regulatory Matters.
As of December 31, 2023 and 2022, our total loans and leases amounted to $1.9 billion, and $1.8 billion, respectively. Our loan portfolio is comprised of loans originated to be held in portfolio, as well as residential mortgage loans originated for sale.
As of December 31, 2024 and 2023, our total loans and leases amounted to $2.1 billion, and $1.9 billion, respectively. Our loan portfolio is comprised of loans originated to be held in portfolio, as well as residential mortgage loans originated for sale.
As a member of the FHLB, we are eligible to borrow up to a specific credit limit, which is determined by the amount of our residential mortgages, commercial mortgages and other loans that have been pledged as collateral. As of December 31, 2023, Meridian’s maximum borrowing capacity with the FHLB was $626.8 million.
As a member of the FHLB, we are eligible to borrow up to a specific credit limit, which is determined by the amount of our residential mortgages, commercial mortgages and other loans that have been pledged as collateral. As of December 31, 2024, Meridian’s maximum borrowing capacity with the FHLB was $699.3 million.
The ratio of allowance for credit losses to total loans held for investment, excluding loans at fair value (a non-GAAP measure, see reconciliation in the Appendix), was 1.17% as of December 31, 2023 compared to 1.09% as of December 31, 2022.
The ratio of allowance for credit losses to total loans held for investment, excluding loans at fair value (a non-GAAP measure, see reconciliation in the Appendix), was 0.91% as of December 31, 2024 compared to 1.17% as of December 31, 2023.
The average yield on loans held for investment increased 156 basis points and the yield on cash and investments increased 119 basis points in total, reflecting the impact on rates caused by the Federal Reserve’s monetary policy.
The average yield on loans held for investment increased 35 basis points and the yield on cash and investments increased 46 basis points in total, reflecting the impact on rates caused by the Federal Reserve’s monetary policy.
Management believes that Meridian has adequate resources to meet its short-term and long-term funding requirements. Loan Commitments At December 31, 2023, Meridian had $528.7 million in unfunded loan commitments. Management anticipates these commitments will be funded by means of normal cash flows.
Management believes that Meridian has adequate resources to meet its short-term and long-term funding requirements. Loan Commitments At December 31, 2024, Meridian had $618.6 million in unfunded loan commitments. Management anticipates these commitments will be funded by means of normal cash flows.
Construction loans represented 12.9% and 15.5% of our total loan portfolio at December 31, 2023 and 2022, respectively. Commercial and Industrial Loans We provide a variety of variable and fixed rate commercial business loans and lines of credit. These loans and lines of credit are made to small and medium-sized manufacturers and wholesale, retail and service-related businesses.
Construction loans represented 12.6% and 12.9% of our total loan portfolio at December 31, 2024 and 2023, respectively. Commercial and Industrial Loans (C & I) We provide a variety of variable and fixed rate commercial business loans and lines of credit. These loans and lines of credit are made to small and medium-sized manufacturers and wholesale, retail and service-related businesses.
Management believes that the majority of such deposits will be reinvested with Meridian and that certificates that are not renewed will be funded by a reduction in cash and cash equivalents or by pay-downs and maturities of loans and investments. At December 31, 2023, Meridian had a reserve for unfunded loan commitments of $1.0 million.
Management believes that the majority of such deposits will be reinvested with Meridian and that certificates that are not renewed will be funded by a reduction in cash and cash equivalents or by pay-downs and maturities of loans and investments. At December 31, 2024, Meridian had a reserve for unfunded loan commitments of $817 thousand.
In addition, Meridian maintains borrowing arrangements with various correspondent banks, the FHLB and the FRB to meet short-term liquidity needs. Through its relationship at the FRB, Meridian had available credit of approximately $7.8 million at December 31, 2023. At December 31, 2023, Meridian had $33.0 million in borrowings from the Federal Reserve.
In addition, Meridian maintains borrowing arrangements with various correspondent banks, the FHLB and the FRB to meet short-term liquidity needs. Through its relationship at the FRB, Meridian had available credit of approximately $5.4 million at December 31, 2024. At December 31, 2024, Meridian had $0 in borrowings from the Federal Reserve.
This non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for performance and financial condition measures determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of Meridian’s results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. 36 The tables below provides the non-GAAP reconciliation for the Corporation’s pre-tax, pre-provision income.
This non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for performance and financial condition measures determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of Meridian’s results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.
Meridian realized net charge-offs of $5.6 million, or 0.30%, of total average loans for the year ended December 31, 2023, compared to net charge-offs of $2.4 million, or 0.15%, of total average loans for the year ended December 31, 2022.
Meridian realized net charge-offs of $15.8 million, or 0.78%, of total average loans for the year ended December 31, 2024, compared to net charge-offs of $5.6 million, or 0.30%, of total average loans for the year ended December 31, 2023.
Balance Sheet Summary Assets As of December 31, 2023, total assets were $2.2 billion which increased $184.0 million, or 8.9%, from December 31, 2022. This growth in assets over the prior period was due primarily to loan portfolio growth, as detailed in the following section. Loans Our loan portfolio is the largest category of our interest-earning assets.
Balance Sheet Summary Assets As of December 31, 2024, total assets were $2.4 billion which increased $139.7 million, or 6.2%, from December 31, 2023. This growth in assets over the prior period was due primarily to loan portfolio growth, as detailed in the following section. Loans Our loan portfolio is the largest category of our interest-earning assets.
There was $1.7 million in other real estate property included in non-performing assets as of December 31, 2023 and 2022, related to a well secured residential property. Total non-performing loans were $33.8 million and $21.2 million as of December 31, 2023 and December 31, 2022, respectively.
There was $159 thousand in other real estate property included in non-performing assets as of December 31, 2024 and 2023 related to a well secured residential property. Total non-performing loans were $45.1 million and $33.8 million as of December 31, 2024 and December 31, 2023, respectively.
Certificates of deposit greater than or equal to $250 thousand scheduled to mature in one year or less from December 31, 2023 totaled $333.6 million.
Certificates of deposit greater than or equal to $250 thousand scheduled to mature in one year or less from December 31, 2024 totaled $411.2 million.
The increase in stockholders’ equity is the result of year-to-date net income of $13.2 million, and comprehensive income of $2.1 million, partially offset by dividends paid of $5.6 million, common stock repurchases of $4.3 million, and $1.0 million in stock-based compensation and stock options exercised.
The increase in stockholders’ equity is the result of year-to-date net income of $16.3 million, and comprehensive income of $1.3 million, partially offset by dividends paid of $5.6 million, and $456 thousand in stock-based compensation and stock options exercised.
Key Performance Ratios The following table presents key financial performance ratios for the periods indicated: Year Ended December 31, 2023 2022 Return on average assets 0.61 % 1.18 % Return on average equity 8.53 % 13.87 % Net interest margin (tax effected yield) 3.35 % 3.98 % Basic earnings per share $ 1.19 $ 1.85 Diluted earnings per share $ 1.16 $ 1.79 The following table presents certain key period-end balances and ratios at the dates indicated: (dollars in thousands, except per share amounts) December 31, 2023 December 31, 2022 Book value per common share $ 14.13 $ 13.37 Tangible book value per common share (1) $ 13.78 $ 13.01 Allowance as a percentage of loans and leases held for investment 1.17 % 1.08 % Allowance as a percentage of loans and leases held for investment (excl. loans at fair value) (1) 1.17 % 1.09 % Tier I capital to risk weighted assets 7.9 % 8.8 % Tangible common equity to tangible assets ratio (1) 6.9 % 8.1 % Loans and other finance receivables, net of fees and costs $ 1,895,806 $ 1,743,682 Total assets $ 2,246,193 $ 2,062,228 Total stockholders’ equity $ 158,022 $ 153,280 (1) Non-GAAP financial measure.
Key Performance Ratios The following table presents key financial performance ratios for the periods indicated: Year Ended December 31, 2024 2023 Return on average assets 0.70 % 0.61 % Return on average equity 9.93 % 8.53 % Net interest margin (tax effected yield) 3.16 % 3.35 % Basic earnings per share $ 1.47 $ 1.19 Diluted earnings per share $ 1.45 $ 1.16 The following table presents certain key period-end balances and ratios at the dates indicated: (dollars in thousands, except per share amounts) December 31, 2024 December 31, 2023 Book value per common share $ 15.26 $ 14.13 Tangible book value per common share (1) $ 14.93 $ 13.78 Allowance as a percentage of loans and leases held for investment 0.91 % 1.17 % Allowance as a percentage of loans and leases held for investment (excl. loans at fair value) (1) 0.91 % 1.17 % Tier I capital to risk weighted assets - Corporation 8.1 % 7.9 % Tangible common equity to tangible assets ratio (1) 7.0 % 6.9 % Loans and other finance receivables, net of fees and costs $ 2,030,437 $ 1,895,806 Total assets $ 2,385,867 $ 2,246,193 Total stockholders’ equity $ 171,522 $ 158,022 (1) Non-GAAP financial measure.
At December 31, 2023, Meridian also had available $49.0 million of unsecured federal funds lines of credit with other financial institutions as well as $146.1 million of available short or long term funding through the CDARS program and $356.0 million of available short or long term funding through brokered CD arrangements.
At December 31, 2024, Meridian also had available $56.0 million of unsecured federal funds lines of credit with other financial institutions as well as $242.5 million of available short or long term funding through the CDARS program and $334.6 million of available short or long term funding through brokered CD arrangements.
As of December 31, 2023 our available-for-sale investment portfolio had a fair value of $146.0 million, with an effective tax equivalent yield of 3.15% and an estimated duration of approximately 4.2 years. The largest category of this investment portfolio, or 28.9%, consists of municipal securities, along with 24.8% in U.S. agency securities, and 20.8% in U.S. Treasury securities.
As of December 31, 2024 our available-for-sale investment portfolio had a fair value of $174.3 million, with an effective tax equivalent yield of 3.72% and an estimated duration of approximately 3.8 years. The largest category of this investment portfolio, or 38.1%, consists of U.S. agency securities, along with 21.1% in municipal securities, and 8.9% in U.S. Treasury securities.
The primary source of repayment for commercial business loans is generally operating cash flows of the business and may also include collateralization of inventory, accounts receivable, equipment and/or personal guarantees. Our commercial and industrial loans decreased $38.5 million, or 11.3%, to $302.9 million at December 31, 2023 from 32 $341.4 million at December 31, 2022.
The primary source of repayment for commercial business loans is generally operating cash flows of the business and may also include collateralization of inventory, accounts receivable, equipment and/or personal guarantees. Our C & I loans increased $64.5 million, or 21.3%, to $367.4 million at December 31, 2024 from $302.9 million at December 31, 2023.
A majority of charge-offs for the year ended December 31, 2023 were from equipment leases, $4.0 million, and $1.5 million were from small business loans.
A majority of charge-offs for the year ended December 31, 2024 were from equipment leases, $5.9 million, commercial loans, $4.8 million, and small business loans, $4.3 million.
Net interest margin decreased 63 basis points to 3.35% for the year ended December 31, 2023 from 3.98% for the year ended December 31, 2022, as the increase in yield on earnings assets was outpaced by the increase in costs of funds, impacted also by the $29.2 million decrease in average non-interest bearing deposits.
Net interest margin decreased 19 basis points to 3.16% for the year ended December 31, 2024 from 3.35% for the year ended December 31, 2023, as the increase in the volume of interest earning assets outpaced the volume increase in interest-bearing liabilities, while the yield on earnings assets was outpaced by the increase in costs of funds, impacted also by the $25.4 million decrease in average non-interest bearing deposits.
As of December 31, 2023 there were specific reserves of $6.5 million against individually evaluated loans, an increase from $2.2 million as of December 31, 2022.
As of December 31, 2024 there were specific reserves of $2.7 million against individually evaluated loans, a decrease from $6.5 million as of December 31, 2023.
Year Ended (dollars in thousands) December 31, 2023 December 31, 2022 Income before income tax expense $ 16,967 $ 27,920 Provision for credit losses 6,815 2,488 Pre-tax, pre-provision income $ 23,782 $ 30,408 Year Ended (dollars in thousands) December 31, 2023 December 31, 2022 Bank $ 27,751 $ 31,004 Wealth 1,240 2,030 Mortgage (5,209) (2,626) Pre-tax, pre-provision income $ 23,782 $ 30,408 The table below provides the non-GAAP reconciliation for the Corporation’s tangible common equity ratio and tangible book value per common share.
Year Ended (dollars in thousands) December 31, 2024 December 31, 2023 Income before income tax expense $ 21,786 $ 16,967 Provision for credit losses 11,400 6,815 Pre-tax, pre-provision income $ 33,186 $ 23,782 Year Ended (dollars in thousands) December 31, 2024 December 31, 2023 Bank $ 26,698 $ 27,751 Wealth 2,375 1,240 Mortgage 4,113 (5,209) Pre-tax, pre-provision income $ 33,186 $ 23,782 The table below provides the non-GAAP reconciliation for the Corporation’s tangible common equity ratio and tangible book value per common share.
At December 31, 2023, Meridian had borrowed $141.9 million and the FHLB had issued letters of credit, on Meridian’s behalf, totaling $104.3 million against its available credit lines.
At December 31, 2024, Meridian had borrowed $119.5 million and the FHLB had issued letters of credit, on Meridian’s behalf, totaling $183.5 million against its available credit lines.
Interest expense increased $49.1 million, year over year, due primarily to market interest rate rises, as well as an increase of $221.2 million in average interest bearing deposits. Interest expense on deposits increased $42.4 million with the cost of interest-bearing deposits increasing 262 basis points to 3.81%.
Interest expense increased $17.4 million, year over year, due primarily to market interest rate rises, as well as an increase of $178.0 million in average interest bearing deposits. Interest expense on deposits increased $16.2 million with the cost of interest-bearing deposits increasing 56 basis points to 4.37%.
Average total loans held for investment increased $314.1 million, most notably in commercial real estate and construction, commercial loans and small business loans, which increased $191.5 million on average, combined. Home equity loans and residential real estate loans held in portfolio increased $157.1 million on average, combined. Residential loans for sale decreased $21.0 million on average.
Average total loans held for investment increased $136.1 million, most notably in commercial real estate and construction, commercial loans and small business loans, which increased $158.7 million on average, combined. Home equity loans and residential real estate loans held in portfolio increased $33.6 million on average, combined. Residential loans for sale increased $11.6 million on average.
Total cost of deposits increased 227 basis points reflecting a decrease of $29.2 million in average non-interest bearing deposits. Interest expense on borrowings increased $6.4 million as the cost increased 199 basis points, and total average short-term borrowings increased $117.9 million.
Total cost of deposits increased 58 basis points reflecting a decrease of $25.4 million in average non-interest bearing deposits. Interest expense on borrowings increased $612 thousand as the cost decreased 5 basis points, and total average short-term borrowings increased $13.9 million.
Investments in our securities portfolio may change over time based on our funding needs and interest rate risk management objectives. Our liquidity levels take into account anticipated future cash flows and other available sources of funds and are maintained at levels that we believe are appropriate to provide the necessary flexibility to meet our anticipated funding requirements.
Our liquidity levels take into account anticipated future cash flows and other available sources of funds and are maintained at levels that we believe are appropriate to provide the necessary flexibility to meet our anticipated funding requirements.
(dollars in thousands) December 31, 2023 December 31, 2022 Total stockholders' equity (GAAP) $ 158,022 $ 153,280 Less: Goodwill and intangible assets 3,870 4,074 Tangible common equity (non-GAAP) 154,152 149,206 Total assets (GAAP) 2,246,193 2,062,228 Less: Goodwill and intangible assets 3,870 4,074 Tangible assets (non-GAAP) $ 2,242,323 $ 2,058,154 Stockholders' equity to total assets (GAAP) 7.04 % 7.43 % Tangible common equity to tangible assets (non-GAAP) 6.87 % 7.25 % Shares outstanding 11,183 11,466 Book value per share (GAAP) $ 14.13 $ 13.37 Tangible book value per share (non-GAAP) $ 13.78 $ 13.01 The following is a reconciliation of the allowance for credit losses to total loans held for investment ratio at December 31, 2023.
(dollars in thousands) December 31, 2024 December 31, 2023 Total stockholders' equity (GAAP) $ 171,522 $ 158,022 Less: Goodwill and intangible assets 3,666 3,870 Tangible common equity (non-GAAP) $ 167,856 $ 154,152 Total assets (GAAP) 2,385,867 2,246,193 Less: Goodwill and intangible assets 3,666 3,870 Tangible assets (non-GAAP) $ 2,382,201 $ 2,242,323 Stockholders' equity to total assets (GAAP) 7.19 % 7.04 % Tangible common equity to tangible assets (non-GAAP) 7.05 % 6.87 % Shares outstanding 11,240 11,183 Book value per share (GAAP) $ 15.26 $ 14.13 Tangible book value per share (non-GAAP) $ 14.93 $ 13.78 The following is a reconciliation of the allowance for credit losses to total loans held for investment ratio at December 31, 2024.
Our total commercial real estate loan portfolio represented 38.6% and 32.2% of our total loan portfolio at December 31, 2023 and 2022, respectively. Construction loans decreased $25.5 million, or 9.4%, to $246.4 million at December 31, 2023 from $272.0 million at December 31, 2022.
Our commercial real estate loan portfolio represented 40.0% and 38.6% of our total loan portfolio at December 31, 2024 and 2023, respectively. Construction loans increased $13.1 million, or 5.3%, to $259.6 million at December 31, 2024 from $246.4 million at December 31, 2023.
(dollars in thousands) December 31, 2023 December 31, 2022 Allowance for credit losses (GAAP) $ 22,107 $ 18,828 Loans, net of fees and costs (GAAP) 1,895,806 1,743,682 Less: Loans fair valued (13,726) (14,502) Loans, net of fees and costs, excluding loans at fair value (non-GAAP) $ 1,882,080 $ 1,729,180 Allowance for credit losses to loans, net of fees and costs (GAAP) 1.17 % 1.08 % Allowance for credit losses to loans, net of fees and costs, excluding loans at fair value (non-GAAP) 1.17 % 1.09 % Liquidity Management maintains liquidity to meet depositors’ needs for funds, to satisfy or fund loan commitments, and for other operating purposes.
(dollars in thousands) December 31, 2024 December 31, 2023 Allowance for credit losses (GAAP) $ 18,438 $ 22,107 Loans and other finance receivables (GAAP) 2,030,437 1,895,806 Less: Loans at fair value (14,501) (13,726) Loans and other finance receivables, excluding loans at fair value (non-GAAP) $ 2,015,936 $ 1,882,080 ACL to loans and other finance receivables (GAAP) 0.91 % 1.17 % ACL to loans and other finance receivables, excluding loans at fair value (non-GAAP) 0.91 % 1.17 % 37 Liquidity Management maintains liquidity to meet depositors’ needs for funds, to satisfy or fund loan commitments, and for other operating purposes.
Additional information about these policies can be found in Note 1 - Summary of Significant Accounting Policies, to the Corporation’s Consolidated Financial Statements as of and for the years ended December 31, 2023 and 2022. 26 Provision and allowance for credit losses Beginning on January 1, 2023, we adopted ASC 326, which replaced the former incurred loss methodology with an expected credit loss methodology that requires consideration of a broader range of information to estimate expected credit losses over the lifetime of an asset.
Provision and allowance for credit losses Beginning on January 1, 2023, we adopted ASC 326, which replaced the former incurred loss methodology with an expected credit loss methodology that requires consideration of a broader range of information to estimate expected credit losses over the lifetime of an asset.
Interest income increased $47.9 million on a tax equivalent basis, year over year, due to a higher yield on earning assets, which increased 160 basis points, in addition to a higher level of average earning assets, which increased by $296.8 million.
Interest income increased $19.5 million on a tax equivalent basis, year over year, due to a higher level of average earning assets, which increased by $185.4 million, combined with a higher yield on earning assets, which increased 32 basis points.
The increase in non-performing loans over the period was due to increases in non-performing small business loans, commercial loans, residential real estate loans and construction loans of $5.0 million, $2.9 million, $2.5 million, and $1.2 million, respectively.
The increase in non-performing loans over the period was due to increases in non-performing construction loans, residential real estate loans, and small business loans of $6.0 million, $3.4 million, $2.8 million, respectively, partially offset by a decrease of $3.4 million in non-performing commercial loans due to a $3.5 million partial charge-off of a commercial loan relationship.
Treasuries 32,982 — (2,560) — 30,422 25 Non-U.S. government agency CMO 13,605 102 (552) — 13,155 9 Corporate bonds 8,200 — (1,005) — 7,195 13 Total securities available-for-sale $ 156,492 $ 491 $ (10,964) $ — $ 146,019 133 Amortized cost Gross unrecognized gains Gross unrecognized losses Allowance for Credit Losses Fair value # of Securities in unrecognized loss position Securities held to maturity: State and municipal securities $ 35,781 $ 52 $ (3,103) $ — $ 32,730 21 Total securities held-to-maturity $ 35,781 $ 52 $ (3,103) $ — $ 32,730 21 33 December 31, 2022 (dollars in thousands) Amortized cost Gross unrealized gains Gross unrealized losses Fair Value # of Securities in unrealized loss position Securities available-for-sale: U.S. asset backed securities $ 15,581 $ 14 $ (314) $ 15,281 12 U.S. government agency MBS 12,272 5 (538) 11,739 12 U.S. government agency CMO 25,520 40 (2,242) 23,318 29 State and municipal securities 44,700 — (5,862) 38,838 34 U.S.
Treasuries 32,982 — (2,560) 30,422 25 Non-U.S. government agency CMO 13,605 102 (552) 13,155 9 Corporate bonds 8,200 — (1,005) 7,195 13 Total securities available-for-sale $ 156,492 $ 491 $ (10,964) $ 146,019 133 Amortized cost Gross unrecognized gains Gross unrecognized losses Fair value # of Securities in unrecognized loss position Securities held to maturity: State and municipal securities $ 35,781 $ 52 $ (3,103) $ 32,730 21 Total securities held-to-maturity $ 35,781 $ 52 $ (3,103) $ 32,730 21 Asset Quality Summary The ratio of non-performing assets to total assets increased to 1.90% as of December 31, 2024, from 1.58% as of December 31, 2023.
Time deposits of $250 thousand or more had remaining maturities as follows: Year Ended December 31, 2023 (Dollars in thousands) Amount % 3 months or less $ 101,332 22.1% Over 3 months through 6 months 73,971 16.1% Over 6 months through 12 months 158,321 34.5% Over 12 months 125,164 27.3% Total $ 458,788 100.0% Equity Consolidated stockholders’ equity of the Corporation was $158.0 million, or 7.0% of total assets as of December 31, 2023 as compared to $153.3 million, or 7.4% of total assets as of December 31, 2022.
Time deposits of $250 thousand or more had remaining maturities as follows: Year Ended December 31, 2024 (Dollars in thousands) Amount % 3 months or less $ 133,853 24.5% Over 3 months through 6 months 122,574 22.5% Over 6 months through 12 months 154,789 28.4% Over 12 months 134,443 24.6% Total $ 545,659 100.0% Equity Consolidated stockholders’ equity of the Corporation was $171.5 million, or 7.2% of total assets as of December 31, 2024 as compared to $158.0 million, or 7.0% of total assets as of December 31, 2023.
Home equity lines and loans increased $16.9 million, or 28.4%, to $76.3 million at December 31, 2023 from $59.4 million at December 31, 2022, while residential mortgage loans increased by $38.8 million, or 17.5%, to $260.6 million at December 31, 2023 from $221.8 million at December 31, 2022.
Home equity lines and loans increased $14.4 million, or 18.9%, to $90.7 million at December 31, 2024 from $76.3 million at December 31, 2023, while residential mortgage loans decreased by $8.0 million, or 3.1%, to $252.6 million at December 31, 2024 from $260.6 million at December 31, 2023.
Non-GAAP Financial Measures Meridian believes that non-GAAP measures are meaningful because they reflect adjustments commonly made by management, investors, regulators and analysts to evaluate performance trends and the adequacy of common equity.
All share and per share amounts reported in the consolidated financial statements have been adjusted to reflect the two-for-one stock split effective February 28, 2023. 36 Non-GAAP Financial Measures Meridian believes that non-GAAP measures are meaningful because they reflect adjustments commonly made by management, investors, regulators and analysts to evaluate performance trends and the adequacy of common equity.
The following table presents the amortized cost and fair value of securities at the dates indicated: December 31, 2023 (dollars in thousands) Amortized cost Gross unrealized gains Gross unrealized losses Allowance for Credit Losses Fair value # of Securities in unrealized loss position Securities available-for-sale: U.S. asset backed securities $ 17,012 $ 25 $ (213) $ — $ 16,824 11 U.S. government agency MBS 22,750 364 (480) — 22,634 14 U.S. government agency CMO 21,850 — (2,277) — 19,573 30 State and municipal securities 40,093 — (3,877) — 36,216 31 U.S.
Treasuries 17,039 — (1,589) — 15,450 16 Non-U.S. government agency CMO 12,082 59 (412) — 11,729 9 Corporate bonds 14,415 448 (762) — 14,101 15 Total securities available-for-sale $ 183,764 $ 700 $ (10,160) $ — $ 174,304 139 33 Amortized cost Gross unrecognized gains Gross unrecognized losses Allowance for credit losses Fair value # of Securities in unrecognized loss position State and municipal securities Total securities held-to-maturity $ 33,771 $ 7 $ (3,286) $ — $ 30,492 19 $ 33,771 $ 7 $ (3,286) $ — $ 30,492 19 December 31, 2023 (dollars in thousands) Amortized cost Gross unrealized gains Gross unrealized losses Fair value # of Securities in unrealized loss position Securities available-for-sale: U.S. asset backed securities $ 17,012 $ 25 $ (213) $ 16,824 11 U.S. government agency MBS 22,750 364 (480) 22,634 14 U.S. government agency CMO 21,850 — (2,277) 19,573 30 State and municipal securities 40,093 — (3,877) 36,216 31 U.S.
Allowance for Credit Losses The following is a summary of the allocation of the allowance for credit losses by loan category for the periods presented.
See “Non-GAAP Financial Measures” for a reconciliation of this measure to its most comparable GAAP measure. Allowance for Credit Losses The following is a summary of the allocation of the allowance for credit losses by loan category for the periods presented.
Our owner-occupied commercial real estate loans are originated and managed within our commercial loan department and comprise d 33.8% of our total commercial real estate loan portfolio at December 31, 2023.
Our owner-occupied commercial real estate loans are originated and managed within our commercial loan department and amounted to $335 million at December 31, 2024.
The provision for unfunded loan commitments decreased $419 thousand during the year due to the impact of favorable changes in certain portfolio baseline loss rates and some macroeconomic factors underlying the unfunded loss model. 29 NON-INTEREST INCOME The following table presents the components of non-interest income for the periods indicated: Year Ended December 31, (Dollars in thousands) 2023 2022 $ Change % Change Mortgage banking income $ 16,537 $ 25,325 $ (8,788) (34.7) % Wealth management income 4,928 4,733 195 4.1 % SBA loan income 4,485 4,467 18 0.4 % Earnings on investment in life insurance 789 553 236 42.7 % Net change in the fair value of derivative instruments 91 (703) 794 (112.9) % Net change in the fair value of loans held-for-sale 32 (844) 876 (103.8) % Net change in the fair value of loans held-for-investment 132 (2,408) 2,540 (105.5) % Net gain on hedging activity 28 5,439 (5,411) (99.5) % Net loss on sale of investment securities available-for-sale (58) — (58) (100.0) % Other 5,001 5,162 (161) (3.1) % Total non-interest income $ 31,965 $ 41,724 $ (9,759) (23.4) % Total non-interest income decreased $9.8 million largely as a result of lower mortgage banking revenue.
The provision for unfunded loan commitments decreased $226 thousand during the year due to favorable changes in certain portfolio baseline loss rates and some macroeconomic factors underlying the unfunded loss model. 29 NON-INTEREST INCOME The following table presents the components of non-interest income for the periods indicated: Year Ended December 31, (Dollars in thousands) 2024 2023 $ Change % Change Mortgage banking income $ 21,044 $ 16,537 $ 4,507 27.3 % Wealth management income 5,735 4,928 807 16.4 % SBA loan income 3,458 4,485 (1,027) (22.9) % Earnings on investment in life insurance 868 789 79 10.0 % Gain on sale of MSRs 3,992 — 3,992 100.0 % Gain on sale of OREO 317 — 317 100.0 % Net change in the fair value of derivative instruments 30 91 (61) (67.0) % Net change in the fair value of loans held-for-sale (25) 32 (57) (178.1) % Net change in the fair value of loans held-for-investment 214 132 82 62.1 % Net (loss) gain on hedging activity (87) 28 (115) (410.7) % Net loss on sale of investment securities available-for-sale (57) (58) 1 (1.7) % Other 5,850 5,001 849 17.0 % Total non-interest income $ 41,339 $ 31,965 $ 9,374 29.3 % Total non-interest income increased $9.4 million as a result of higher mortgage banking revenue, the gain of $4.0 million on the sale of $6.6 million in residential loan servicing rights and an increase in wealth management revenue of $807 thousand.
The following table presents nonperforming assets and related ratios for the periods indicated: (dollars in thousands) December 31, 2023 December 31, 2022 Non-performing assets: Nonaccrual loans: Real estate loans: Commercial mortgage $ — $ 140 Home equity lines and loans 1,037 1,097 Residential mortgage 4,536 2,085 Construction 1,206 — Total real estate loans 6,779 3,322 34 Commercial and industrial 15,413 12,547 Small business loans 9,440 4,465 Leases 2,131 902 Total nonaccrual loans 33,763 21,236 Other real estate owned 1,703 1,703 Total non-performing assets $ 35,466 $ 22,939 Asset quality ratios: Non-performing assets to total assets 1.58 % 1.11 % Non-performing loans to: Total loans and leases 1.76 % 1.20 % Total loans held-for-investment 1.78 % 1.22 % Total loans held-for-investment (excluding loans at fair value) (1) 1.79 % 1.23 % Allowance for credit losses to: (2) Total loans and leases 1.15 % 1.07 % Total loans held-for-investment 1.17 % 1.08 % Total loans held-for-investment (excluding loans at fair value) (1) 1.17 % 1.09 % Non-performing loans 65.48 % 88.66 % Total loans and leases $ 1,920,622 $ 1,765,925 Total loans and leases held-for-investment $ 1,895,806 $ 1,743,682 Total loans and leases held-for-investment (excluding loans at fair value) $ 1,882,080 $ 1,729,180 Allowance for credit losses (2) $ 22,107 $ 18,828 (1) The allowance for credit losses to total loans held-for-investment (excluding loans at fair value) ratio is a non-GAAP financial measure.
The Corporation believes that timely identification of credit issues and appropriate actions early in the process serve to mitigate overall risk of loss. 34 The following table presents nonperforming assets and related ratios for the periods indicated: (dollars in thousands) December 31, 2024 December 31, 2023 Non-performing assets: Nonaccrual loans: Real estate loans: Commercial mortgage $ 809 $ — Home equity lines and loans 1,716 1,037 Residential mortgage 7,900 4,536 Construction 8,613 1,206 Total real estate loans 19,038 6,779 Commercial and industrial 11,966 15,413 Small business loans 12,270 9,440 Leases 1,851 2,131 Total nonaccrual loans 45,125 33,763 Other real estate owned 159 1,703 Total non-performing assets $ 45,284 $ 35,466 Asset quality ratios: Non-performing assets to total assets 1.90 % 1.58 % Non-performing loans to: Total loans and other finance receivables 2.22 % 1.78 % Total loans and other finance receivables (excluding loans at fair value) (1) 2.24 % 1.79 % Allowance for credit losses to: (2) Total loans and other finance receivables 0.91 % 1.17 % Total loans and other finance receivables (excluding loans at fair value) (1) 0.91 % 1.17 % Non-performing loans 40.86 % 65.48 % Total loans and leases $ 2,062,850 $ 1,920,622 Total loans and other finance receivables $ 2,030,437 $ 1,895,806 Total loans and other finance receivables (excluding loans at fair value) $ 2,015,936 $ 1,882,080 Allowance for credit losses $ 18,438 $ 22,107 (1) The allowance for credit losses to total loans held-for-investment (excluding loans at fair value) ratio is a non-GAAP financial measure.
Additional products include smaller dollar personal loans and our student loan refinance product, designed to provide additional flexibility in repayment terms desired in the marketplace.
Consumer and Personal Loans Our consumer-lending department principally originates residential mortgage and home equity based products for our clients and prospects. These loans typically fund completely at closing. Additional products include smaller dollar personal loans and our student loan refinance product, designed to provide additional flexibility in repayment terms desired in the marketplace.
For the Year Ended December 31, (dollars in thousands) 2023 2022 Average Balance Interest Income/ Expense Yields/ Rates Average Balance Interest Income/ Expense Yields/ Rates Assets: Cash and cash equivalents $ 24,218 $ 1,259 5.20 % $ 21,045 $ 279 1.33 % Federal funds sold 136 7 5.15 1,160 7 0.60 Investment securities - taxable 112,045 3,873 3.46 106,246 2,420 2.28 Investment securities - tax exempt (1) 59,147 1,669 2.82 63,425 1,691 2.67 Loans held for sale 23,202 1,480 6.38 44,238 1,872 4.23 Loans held for investment (1) 1,850,088 128,609 6.95 1,535,943 82,764 5.39 Total loans 1,873,290 130,089 6.94 1,580,181 84,636 5.36 Total interest-earning assets 2,068,836 136,897 6.62 % 1,772,057 89,033 5.02 % Noninterest earning assets 95,979 76,983 Total assets $ 2,164,815 $ 1,849,040 Liabilities and stockholders' equity: Interest-bearing demand deposits $ 187,404 $ 6,659 3.55 % $ 237,554 $ 2,570 1.08 % Money market and savings deposits 692,933 23,987 3.46 703,561 7,854 1.12 Time deposits 636,843 27,173 4.27 354,822 4,972 1.40 Total deposits 1,517,180 57,819 3.81 1,295,937 15,396 1.19 Borrowings 145,545 7,266 4.99 27,637 830 3.00 Subordinated debentures 43,035 2,562 5.95 40,560 2,366 5.83 Total interest-bearing liabilities 1,705,760 67,647 3.97 1,364,134 18,592 1.36 Noninterest-bearing deposits 267,402 296,563 Other noninterest-bearing liabilities 36,421 30,929 Total liabilities 2,009,583 1,691,626 Total stockholders' equity 155,232 157,414 Total stockholders' equity and liabilities $ 2,164,815 $ 1,849,040 Net interest income and spread (1) $ 69,250 2.65 $ 70,441 3.66 Net interest margin (1) 3.35 % 3.98 % (1) Yields and net interest income are reflected on a tax-equivalent basis. 28 Rate/Volume Analysis 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 year ended December 31, 2023 as compared to the year ended December 31, 2022, allocated by rate and volume.
For the Year Ended December 31, (dollars in thousands) 2024 2023 Average Balance Interest Income/ Expense Yields/ Rates Average Balance Interest Income/ Expense Yields/ Rates Assets: Cash and cash equivalents $ 35,915 $ 1,848 5.14 % $ 24,354 $ 1,266 5.20 % Investment securities - taxable 140,602 5,739 4.08 112,045 3,873 3.46 Investment securities - tax exempt (1) 56,698 1,604 2.83 59,147 1,669 2.82 Loans held for sale 34,775 2,226 6.40 23,202 1,480 6.38 Loans held for investment (1) 1,986,211 144,940 7.30 1,850,088 128,609 6.95 Total loans 2,020,986 147,166 7.28 1,873,290 130,089 6.94 Total interest-earning assets 2,254,201 156,357 6.94 % 2,068,836 136,897 6.62 % Noninterest earning assets 95,069 95,979 Total assets $ 2,349,270 $ 2,164,815 Liabilities and stockholders' equity: Interest-bearing demand deposits $ 136,387 $ 5,280 3.87 % $ 187,404 $ 6,659 3.55 % Money market and savings deposits 810,344 32,778 4.04 692,933 23,987 3.46 Time deposits 748,417 35,979 4.81 636,843 27,173 4.27 Total interest - bearing deposits 1,695,148 74,037 4.37 1,517,180 57,819 3.81 Borrowings 159,483 7,878 4.94 145,545 7,266 4.99 Subordinated debentures 49,892 3,116 6.25 43,035 2,562 5.95 Total interest-bearing liabilities 1,904,523 85,031 4.46 1,705,760 67,647 3.97 Noninterest-bearing deposits 241,990 267,402 Other noninterest-bearing liabilities 38,121 36,421 Total liabilities 2,184,634 2,009,583 Total stockholders' equity 164,636 155,232 Total stockholders' equity and liabilities $ 2,349,270 $ 2,164,815 Net interest income and spread (1) $ 71,326 2.48 $ 69,250 2.65 Net interest margin (1) 3.16 % 3.35 % (1) Yields and net interest income are reflected on a tax-equivalent basis. 28 Rate/Volume Analysis 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 year ended December 31, 2024 as compared to the year ended December 31, 2023, allocated by rate and volume.
Commercial and industrial loans overall represented 15.8% and 19.4% of our total loan portfolio at December 31, 2023 and 2022, respectively. Small Business Loans We provide financing to small businesses in various industries that include guarantees under the Small Business Administration’s (SBA’s) loan programs.
Small Business Loans We provide financing to small businesses in various industries that include guarantees under the Small Business Administration’s (SBA’s) loan programs. Our small business loans increased by $13.4 million, or 9.4%, to $155.8 million at December 31, 2024 from $142.3 million at December 31, 2023.
The overall provision for credit losses for 2023 is comprised of provisioning for funded loans as well as unfunded loan commitments.
PROVISION FOR CREDIT LOSSES The provision for credit losses was $11.4 million for the year ended December 31, 2024, compared to a $6.8 million provision for the year ended December 31, 2023, an increase of $4.6 million. The overall provision for credit losses is comprised of provisioning for funded loans as well as unfunded loan commitments.
Proactive steps that are taken include the procurement of additional collateral (preferably outside the current loan structure) whenever possible and frequent contact with the borrower. The Corporation believes that timely identification of credit issues and appropriate actions early in the process serve to mitigate overall risk of loss.
The Corporation is proactive with its loan review process that utilizes the engagement of an independent outside loan review firm, which helps identify developing credit issues. Proactive steps that are taken include the procurement of additional collateral (preferably outside the current loan structure) whenever possible and frequent contact with the borrower.
Changes in Financial Condition • Total assets increased $184.0 million, or 8.9%, to $2.2 billion as of December 31, 2023. • Portfolio loans, increased $152.9 million, or 8.8%, to $1.9 billion as of December 31, 2023, Results of Operations • Consolidated net income decreased $8.6 million, or 39.3%, driven by a lower level of non-interest revenue from mortgage banking activity, and a decline in net interest income after provision for credit losses, due to increased interest expense on deposits and an increase in the provision for credit losses. • The return on average assets and return on average equity was 0.61% and 8.53%, respectively, for the year ended December 31, 2023, compared to 1.18% and 13.87%, respectively, for the year ended December 31, 2022. • Provision for credit losses increased $4.3 million, or 173.9%, due to an increase in specific reserves on a commercial loan relationship and small business loans, combined with provisioning for loan growth and charge-offs.
Changes in Financial Condition • Total assets increased $139.7 million, or 6.2%, to $2.4 billion as of December 31, 2024. • Portfolio loans, increased $137.8 million, or 7.3%, to $2.0 billion as of December 31, 2024, Results of Operations • Consolidated net income increased $3.1 million, or 23.4%. • The return on average assets and return on average equity was 0.70% and 9.93%, respectively, for the year ended December 31, 2024, compared to 0.61% and 8.53%, respectively, for the year ended December 31, 2023. • Net interest income was up $2.1 million, or 3.0% due to higher levels of earning assets. • Non-interest income increased $9.4 million or 29.3% due largely to an improved mortgage banking environment.
The par value of the Corporation's stock was not affected by the split and remained at $1.00 per share. All share and per share amounts reported in the consolidated financial statements have been adjusted to reflect the two-for-one stock split effective February 28, 2023.
The par value of the Corporation's stock was not affected by the split and remained at $1.00 per share.
The following is a discussion of the critical accounting policies and significant estimates that require us to make complex and subjective judgments.
The following is a discussion of the critical accounting policies and significant estimates that require us to make complex and subjective judgments. Additional information about these policies can be found in Note 1 - Summary of Significant Accounting Policies, to the Corporation’s Consolidated Financial Statements as of and for the years ended December 31, 2024 and 2023.
Investments Our securities portfolio is used to make various term investments, maintain a source of liquidity and serve as collateral for certain types of deposits and borrowings. We manage our investment portfolio according to written investment policies approved by our board of directors.
Leases decreased $45.6 million, or 37.5% to $76.0 million at December 31, 2024 as we continue to shift focus to commercial relationship lending. Investments Our securities portfolio is used to make various term investments, maintain a source of liquidity and serve as collateral for certain types of deposits and borrowings.
Our small business loans increased by $6.2 million, or 4.5%, to $142.3 million at December 31, 2023 from $136.2 million at December 31, 2022. During 2023 we sold $85.0 million in SBA loans, an increase of $9.1 million, or 12.0%, from $75.9 million in SBA loans sold in 2022.
During 2024 we sold $59.4 million in SBA loans, a decrease of $25.6 million, or 30.1%, from $85.0 million in SBA loans sold in 2023. The small business loans portfolio represented 7.6% and 7.4% of our total loan portfolio at December 31, 2024 and 2023, respectively.
NON-INTEREST EXPENSE The following table presents the components of non-interest expense for the periods indicated: Year Ended December 31, (Dollars in thousands) 2023 2022 $ Change % Change Salaries and employee benefits $ 47,377 $ 54,378 $ (7,001) (12.9) % Occupancy and equipment 4,842 4,837 5 0.1 % Professional fees 4,312 3,635 677 18.6 % Advertising and promotion 3,730 4,336 (606) (14.0) % Data processing and software 6,415 5,451 964 17.7 % FDIC premiums 2,929 1,247 1,682 134.9 % Other 7,520 7,560 (40) (0.5) % Total non-interest expense $ 77,125 $ 81,444 $ (4,319) (5.3) % Total non-interest expense decreased $4.3 million mainly due to a decrease in salaries and employee benefits expense at the mortgage segment, which recognized decreased fixed and variable compensation as the volume of loan originations and sales were both down year-over-year.
NON-INTEREST EXPENSE The following table presents the components of non-interest expense for the periods indicated: Year Ended December 31, (Dollars in thousands) 2024 2023 $ Change % Change Salaries and employee benefits $ 47,268 $ 47,377 $ (109) (0.2) % Occupancy and equipment 5,976 4,842 1,134 23.4 % Professional fees 4,767 4,312 455 10.6 % Data processing and software 6,144 6,415 (271) (4.2) % Advertising and promotion 3,293 3,730 (437) (11.7) % Pennsylvania bank shares tax 972 968 4 0.4 % Other 10,729 9,481 1,248 13.2 % Total non-interest expense $ 79,149 $ 77,125 $ 2,024 2.6 % Total non-interest expense increased $2.0 million, or 2.6% to $79.1 million for the year ended December 31, 2024.
The following table presents our loan and lease portfolio at the dates indicated: (Dollars in thousands) December 31, 2023 December 31, 2022 $ Change % Change Mortgage loans held for sale $ 24,816 $ 22,243 $ 2,573 11.6 % Real estate loans: Commercial mortgage 737,863 565,400 172,463 30.5 % Home equity lines and loans 76,287 59,399 16,888 28.4 % Residential mortgage 260,604 221,837 38,767 17.5 % Construction 246,440 271,955 (25,515) (9.4) % Total real estate loans 1,321,194 1,118,591 202,603 18.1 % Commercial and industrial 302,891 341,378 (38,487) (11.3) % Small business loans 142,342 136,155 6,187 4.5 % Consumer 389 488 (99) (20.3) % Leases, net 121,632 138,986 (17,354) (12.5) % Total portfolio loans and leases $ 1,888,448 $ 1,735,598 $ 152,850 8.8 % Total loans and leases $ 1,913,264 $ 1,757,841 $ 155,423 8.8 % Portfolio loans increased $152.9 million, or 8.8% to $1.9 billion as of December 31, 2023, from $1.7 billion as of December 31, 2022. 31 The following table shows the amounts of loans outstanding as of December 31, 2023 which, based on remaining scheduled repayments of principal, are due in the periods indicated: (dollars in thousands) 12 months or Less 1 - 5 years 5 - 15 years After 15 years Total Commercial mortgage $ 39,903 $ 205,960 $ 484,840 $ 7,160 $ 737,863 Home equity lines and loans 1,467 3,779 66,441 4,600 76,287 Residential mortgage — 1,251 1,605 257,748 260,604 Construction 129,116 62,500 54,824 — 246,440 Commercial and industrial 31,171 138,982 25,612 107,126 302,891 Small business loans — 8,775 85,314 48,253 142,342 Consumer 26 100 240 23 389 Leases, net 1,219 116,184 4,229 — 121,632 Total $ 202,902 $ 537,531 $ 723,105 $ 424,910 $ 1,888,448 The amounts have been classified according to sensitivity to changes in interest rates for amounts due after one year, as of December 31, 2023.
The following table presents our loan and lease portfolio at the dates indicated: (Dollars in thousands) December 31, 2024 December 31, 2023 $ Change % Change Mortgage loans held for sale $ 32,413 $ 24,816 $ 7,597 30.6 % Real estate loans: Commercial mortgage 823,976 737,863 86,113 11.7 % Home equity lines and loans 90,721 76,287 14,434 18.9 % Residential mortgage 252,565 260,604 (8,039) (3.1) % Construction 259,553 246,440 13,113 5.3 % Total real estate loans 1,426,815 1,321,194 105,621 8.0 % Commercial and industrial 367,366 302,891 64,475 21.3 % Small business loans 155,775 142,342 13,433 9.4 % Consumer 349 389 (40) (10.3) % Leases, net 75,987 121,632 (45,645) (37.5) % Total portfolio loans and leases $ 2,026,292 $ 1,888,448 $ 137,844 7.3 % Total loans and leases $ 2,058,705 $ 1,913,264 $ 145,441 7.6 % Portfolio loans increased $137.8 million, or 7.3% to $2.0 billion as of December 31, 2024, from $1.9 billion as of December 31, 2023. 31 The following table shows the amounts of loans outstanding as of December 31, 2024 which, based on remaining scheduled repayments of principal, are due in the periods indicated: (dollars in thousands) 12 months or Less 1 - 5 years 5 - 15 years After 15 years Total Commercial mortgage $ 45,409 $ 276,118 $ 495,729 $ 6,720 $ 823,976 Home equity lines and loans 2,154 2,653 83,262 2,652 90,721 Residential mortgage 233 1,548 1,205 249,579 252,565 Construction 113,579 80,495 64,551 928 259,553 Commercial and industrial 88,337 105,376 56,984 116,669 367,366 Small business loans 506 10,519 95,103 49,647 155,775 Consumer 18 95 236 — 349 Leases, net 3,290 72,277 420 — 75,987 Total portfolio loans and leases $ 253,526 $ 549,081 $ 797,490 $ 426,195 $ 2,026,292 The amounts have been classified according to sensitivity to changes in interest rates for amounts due after one year, as of December 31, 2024.
The drivers of the increase related to a $2.3 million increase in a commercial loan relationship specific reserve for which new information became available related to the value of the underlying collateral, combined with the net impact of establishing $2.3 million in specific reserves on SBA loan relationships classified as non-performing, netted with the charge-off an SBA loan.
The drivers of the decrease related to a $2.9 million decrease in a commercial loan relationship specific reserve due to the charge-off note above, combined with a decline of $1 million in SBA loan specific reserves.
Non-interest bearing deposits decreased $62.4 million, or 20.7%, from December 31, 2022. Interest-bearing demand deposits decreased $68.9 million, or 31.4%, from December 31, 2022, while money market accounts/savings accounts increased $50.2 million, or 7.2%, from December 31, 2022.
Non-interest bearing deposits increased $1.6 million, or 0.7%, from December 31, 2023. Interest-bearing demand deposits decreased $9.5 million, or 6.3%, from December 31, 2023, while money market accounts/savings accounts increased $165.7 million, or 22.2%, during the period. Business accounts comprised 50% of all deposits, consumer accounts and municipal deposits comprised 13% and 12%, respectively, and wholesale funding was approximately 25%.
Changes in interest income and/or expense 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. 2023 Compared to 2022 (dollars in thousands) Rate Volume Total Interest income: Cash and cash equivalents $ 932 $ 45 $ 977 Federal funds sold 11 (8) 3 Investment securities - taxable 1,314 139 1,453 Investment securities - tax exempt (1) 97 (118) (22) Loans held for sale 717 (1,109) (392) Loans held for investment (1) 26,887 18,958 45,845 Total loans 27,604 17,849 45,453 Total interest income $ 29,958 $ 17,907 $ 47,864 Interest expense: Interest-bearing demand deposits $ 4,736 $ (647) $ 4,089 Money market and savings deposits 16,253 (120) 16,133 Time deposits 15,987 6,214 22,201 Total deposits 36,976 5,447 42,423 Borrowings 865 5,571 6,436 Subordinated debentures 49 147 196 Total interest expense 37,890 11,165 49,055 Interest differential $ (7,932) $ 6,742 $ (1,190) (1) Yields and net interest income are reflected on a tax-equivalent basis.
Changes in interest income and/or expense 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. 2024 Compared to 2023 (dollars in thousands) Rate Volume Total Interest income: Cash and cash equivalents $ (12) $ 594 $ 582 Investment securities - taxable 774 1,092 1,866 Investment securities - tax exempt (1) 4 (69) (65) Loans held for sale 5 741 746 Loans held for investment (1) 6,588 9,743 16,331 Total loans 6,593 10,484 17,077 Total interest income $ 7,359 $ 12,101 $ 19,460 Interest expense: Interest-bearing demand deposits $ 556 $ (1,935) $ (1,379) Money market and savings deposits 4,383 4,408 8,791 Time deposits 3,695 5,111 8,806 Total interest - bearing deposits 8,634 7,584 16,218 Borrowings (77) 689 612 Subordinated debentures 130 424 554 Total interest expense 8,687 8,697 17,384 Interest differential $ (1,328) $ 3,404 $ 2,076 (1) Yields and net interest income are reflected on a tax-equivalent basis.
SBA loan sale income was relatively unchanged year-over-year, despite an increase of $9.1 million, or 12.0%, in the volume of loans sold in 2023 compared to 2022.
Mortgage banking income increased $4.5 million, due to an increase of $178.0 million, or 28.6% in mortgage loan originations, despite the higher interest rate environment and continued lack of housing inventory. SBA loan sale income decreased $1.0 million due to a decrease of $25.6 million, or 30.1%, in the volume of loans sold in 2024 compared to 2023.
Data processing expense was up over the prior year due to an increase in customer account transaction volume. 30 INCOME TAX EXPENSE The following table presents income tax expense and related metrics for the periods indicated: Year Ended December 31, (Dollars in thousands) 2023 2022 $ Change % Change Income before income taxes $ 16,967 $ 27,920 $ (10,953) (39.2) % Income tax expense $ 3,724 $ 6,091 $ (2,367) (38.9) % Effective tax rate 21.95 % 21.81 % 0.14 % 0.6 % While income tax expense decreased primarily due to the decrease in income before income taxes, the effective tax rate increased slightly due to the impact of additional nondeductible stock based compensation in 2023, partially offset by an increase in tax-free bank owned life insurance income.
Other expense increased $1.2 million due to increases in certain loan expenses and employee related expenses. 30 INCOME TAX EXPENSE The following table presents income tax expense and related metrics for the periods indicated: Year Ended December 31, (Dollars in thousands) 2024 2023 $ Change % Change Income before income taxes $ 21,786 $ 16,967 $ 4,819 28.4 % Income tax expense $ 5,440 $ 3,724 $ 1,716 46.1 % Effective tax rate 24.97 % 21.95 % 3.02 % 13.7 % While income tax expense increased primarily due to the increase in income before income taxes, the effective tax rate also increased.
Professional fees increased $677 thousand as we incurred OREO expense during the year to maintain the one property held, non-performing loan and lease workout expenses increased, and we also incurred system conversion fees for a new loan servicing platform for our mortgage segment.
Professional fees increased $455 thousand as we incurred OREO related legal and professional fees as well as an increase in non-performing loan and lease workout expenses. Advertising and promotion expense decreased $437 thousand as the result of a decline in mortgage related advertising expense and other promotional expense.
Removed
Recent Market Conditions Our financial condition and performance, as well as the ability of our borrowers to repay their loans, the value of collateral securing those loans, and demand for loans and other products and services that we offer, are all highly dependent on the business environment in the primary markets in which we operate and in the United States as a whole.
Added
The increase in provision for funded loans of $4.4 million for the year ended December 31, 2024 was primarily due to an increase in net charge-offs year over year. While net charge-offs increased $10.3 million in 2024 over 2023, nearly half of the loans charged-off were specifically reserved for in prior periods.
Removed
Bank Sector Concerns Meridian is a regional community bank with loans and deposits that are well diversified in size, type, location and industry. We manage this diversification carefully, while avoiding concentrations in business lines.
Added
Despite the decline in SBA loan sales volume, the gross margin on sales in 2024 was 8.0% overall, compared to 6.7% for 2023 sales. The increase in wealth management revenue was due to increased assets under management and better market conditions in general.
Removed
Meridian’s model continues to build on our strong and stable financial position, which serves our regional customers and communities with the banking products and services needed to help build their prosperity.
Added
Occupancy and equipment expense increased $1.1 million overall, with $1.0 million of this increase due to fees, credits and other disposal costs for the early termination of the Blue Bell lease. The lease termination is expected to improve occupancy expense by $359 thousand per year.
Removed
Total balance sheet liquidity, which is derived from cash and investments, as well as salable commercial loans and residential mortgage loans held for sale, was $273.4 million at December 31, 2023. Meridian maintains a high-quality investment bond portfolio comprised of U.S Treasuries, government agencies, government agency mortgage-backed securities, and general obligation municipal securities with an average duration of 4.2 years.

… 30 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+1 added−2 removed20 unchanged
Biggest changeOur board of directors has established a Board Risk Committee that, among other duties, sets broad ALM policy and directives for asset/liability management, as well as establishes review and control procedures to ensure adherence to this policy.
Biggest changeIn recognition of this, we actively manage our assets and liabilities to minimize the impact of changing interest rates on our net interest margin and maximize our net interest income and the return on equity, while maintaining adequate liquidity and capital. 38 Our board of directors has established a Board Risk Committee that, among other duties, sets broad ALM policy and directives for asset/liability management, as well as establishes review and control procedures to ensure adherence to this policy.
Our ALM policy is reviewed by ALCO and 38 the board of directors at least annually, which includes an evaluation of the ALM policy limits and guidelines in light of our risk profile, business strategies, regulatory guidelines and overall market conditions.
Our ALM policy is reviewed by ALCO and the board of directors at least annually, which includes an evaluation of the ALM policy limits and guidelines in light of our risk profile, business strategies, regulatory guidelines and overall market conditions.
Potential changes to our economic value of equity between a flat rate scenario and hypothetical rising and declining rate scenarios, measured as of December 31, 2023 and 2022, are presented in the following table. The projections assume shifts upward and downward in the yield curve of 100, 200 and 300 basis points occurring immediately.
Potential changes to our economic value of equity between a flat rate scenario and hypothetical rising and declining rate scenarios, measured as of December 31, 2024 and 2023, are presented in the following table. The projections assume shifts upward and downward in the yield curve of 100, 200 and 300 basis points occurring immediately.
Potential changes to our net interest income between a flat interest rate scenario and hypothetical rising and declining interest rate scenarios, measured over a one-year period as of December 31, 2023 and 2022 are presented in the following table.
Potential changes to our net interest income between a flat interest rate scenario and hypothetical rising and declining interest rate scenarios, measured over a one-year period as of December 31, 2024 and 2023 are presented in the following table.
The simulated exposure to a change in interest rates is contained, manageable and well within policy guidelines. Simulation of economic value of equity . To quantify the amount of capital required to absorb potential losses in value of our interest-earning assets and interest-bearing liabilities resulting from adverse market movements, we calculate economic value of equity on a quarterly basis.
Simulation of economic value of equity . To quantify the amount of capital required to absorb potential losses in value of our interest-earning assets and interest-bearing liabilities resulting from adverse market movements, we calculate economic value of equity on a quarterly basis.
Strategies include actively lowering deposit and funding rates as well as adding and maintaining the use of interest rate floors on floating rate loans. 39 Changes in Market Interest Rates December 31, 2023 December 31, 2022 +300 basis points over next 12 months (7) % 2 % +200 basis points over next 12 months (3) % 3 % +100 basis points over next 12 months — % 3 % No Change -100 basis points over next 12 months (3) % (8) % -200 basis points over next 12 months (13) % (23) % -300 basis points over next 12 months (31) % NA NA - Downward 300 basis point scenario not considered necessary for period ended December 31, 2022 This economic value of equity profile at December 31, 2023 suggests that we would experience a negative effect from an increase or decrease in rates, and that the impact would become greater as rates continue to rise due to the duration of our interest-earning assets.
Strategies include actively lowering deposit and funding rates as well as adding and maintaining the use of interest rate floors on floating rate loans. 39 Changes in Market Interest Rates December 31, 2024 December 31, 2023 +300 basis points over next 12 months 4 % (7) % +200 basis points over next 12 months 4 % (3) % +100 basis points over next 12 months 3 % — % No Change -100 basis points over next 12 months (6) % (3) % -200 basis points over next 12 months (16) % (13) % -300 basis points over next 12 months (33) % (31) % This economic value of equity profile at December 31, 2024 suggests that we would experience a negative effect from a decrease in rates, and that the impact would become greater as rates continue to fall due to the duration of our interest-earning assets.
In its current position, the table indicates that a 100-300 basis point increase in interest rates would have a modestly positive impact from rising rates on net interest income over the next 12 months and a more negative impact in a falling rate scenario.
In its current position, the table indicates that a 100-300 basis point increase in interest rates would have a positive impact from rising rates on net interest income over the next 12 months and a negative impact in a falling rate scenario. The simulated exposure to a change in interest rates is contained, manageable and well within policy guidelines.
Rate Ramp: Changes in Market Interest Rates December 31, 2023 December 31, 2022 +300 basis points over next 12 months 0.01 % (0.56) % +200 basis points over next 12 months 0.19 % (0.27) % +100 basis points over next 12 months 0.15 % (0.06) % No Change -100 basis points over next 12 months (1.37) % (1.06) % -200 basis points over next 12 months (2.28) % (2.04) % -300 basis points over next 12 months (3.07) % NA NA - Downward 300 basis point scenario not considered necessary for period ended December 31, 2022 The above interest rate simulation suggests that the Corporation’s balance sheet is narrowly asset sensitive as of December 31, 2023.
Rate Ramp: Changes in Market Interest Rates December 31, 2024 December 31, 2023 +300 basis points over next 12 months 1.87 % 0.01 % +200 basis points over next 12 months 1.48 % 0.19 % +100 basis points over next 12 months 0.92 % 0.15 % No Change -100 basis points over next 12 months (1.08) % (1.37) % -200 basis points over next 12 months (1.82) % (2.28) % -300 basis points over next 12 months (1.84) % (3.07) % The above interest rate simulation suggests that the Corporation’s balance sheet is asset sensitive as of December 31, 2024.
Removed
In recognition of this, we actively manage our assets and liabilities to minimize the impact of changing interest rates on our net interest margin and maximize our net interest income and the return on equity, while maintaining adequate liquidity and capital.
Added
Management has and continues to employ strategies to mitigate risk in these scenarios.
Removed
We would note that starting in the first quarter of 2022 that our simulations in a downward parallel shift of the yield curve, interest and discount rates at the short-end of the yield curve are allowed to decline below 0%. Management has and continues to employ strategies to mitigate risk in these scenarios.

Other MRBK 10-K year-over-year comparisons