Company Quick10K Filing
Meridian
Price17.69 EPS1
Shares6 P/E15
MCap113 P/FCF26
Net Debt-41 EBIT24
TEV73 TEV/EBIT3
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-06-30 Filed 2020-08-10
10-Q 2020-03-31 Filed 2020-05-11
10-K 2019-12-31 Filed 2020-03-30
10-Q 2019-09-30 Filed 2019-11-13
10-Q 2019-06-30 Filed 2019-08-14
10-Q 2019-03-31 Filed 2019-05-29
10-K 2018-12-31 Filed 2019-04-01
8-K 2020-08-31 Other Events
8-K 2020-07-29 Regulation FD, Exhibits
8-K 2020-07-27 Earnings, Other Events, Exhibits
8-K 2020-06-11
8-K 2020-05-05
8-K 2020-04-27
8-K 2020-03-12
8-K 2020-02-05
8-K 2020-02-03
8-K 2020-01-27
8-K 2019-12-18
8-K 2019-10-24
8-K 2019-07-29
8-K 2019-05-29
8-K 2019-05-23
8-K 2019-05-23
8-K 2019-05-17
8-K 2019-04-11
8-K 2019-03-07
8-K 2019-01-25

MRBK 10Q Quarterly Report

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits.
EX-31.1 mrbk-20200630xex31d1.htm
EX-31.2 mrbk-20200630xex31d2.htm
EX-32 mrbk-20200630xex32.htm

Meridian Earnings 2020-06-30

Balance SheetIncome StatementCash Flow

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

Or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to               

Commission File Number: 000-55983

Graphic

(Exact name of registrant as specified in its charter)

Pennsylvania

83-1561918

(State or other jurisdiction of

(I.R.S. Employer Identification No.)

incorporation or organization)

9 Old Lincoln Highway, Malvern, Pennsylvania 19355

(Address of principal executive offices) (Zip Code)

(484) 568-5000

(Registrant’s telephone number, including area code)

Title of class

Trading Symbol

Name of exchange on which registered

Common Stock, $1 par value

MRBK

The NASDAQ Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer 

Accelerated Filer 

Non-accelerated Filer 

Smaller Reporting Company 

Emerging Growth Company    

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of August 10, 2020 there were 6,095,030 outstanding shares of the issuer’s common stock, par value $1.00 per share.

Table of Contents

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION

Item 1 Financial Statements (Unaudited)

3

Consolidated Balance Sheets – June 30, 2020 and December 31, 2019

3

Consolidated Statements of Income – Three and Six Months Ended June 30, 2020 and 2019

4

Consolidated Statements of Comprehensive Income – Three and Six Months Ended June 30, 2020 and 2019

5

Consolidated Statements of Stockholders’ Equity – Three and Six Months Ended June 30, 2020 and 2019

6

Consolidated Statements of Cash Flows – Six Months Ended June 30, 2020 and 2019

7

Notes to Consolidated Financial Statements (Unaudited)

8

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations

35

Item 3 Quantitative and Qualitative Disclosures about Market Risk

55

Item 4 Controls and Procedures

55

PART II OTHER INFORMATION

Item 1 Legal Proceedings

56

Item 1A Risk Factors

56

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds

58

Item 3 Defaults Upon Senior Securities

58

Item 4 Mine Safety Disclosures

58

Item 5 Other Information

58

Item 6 Exhibits

58

Signatures

60

Table of Contents

MERIDIAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

June 30, 

December 31, 

(dollars in thousands, except per share data)

    

2020

    

2019

Cash and due from banks

$

45,029

19,106

Federal funds sold

1,712

20,265

Cash and cash equivalents

46,741

39,371

Securities available-for-sale (amortized cost of $94,371 and $58,874 as of June 30, 2020 and December 31, 2019)

97,100

58,856

Securities held-to-maturity (fair value of $6,926 and $9,003 as of June 30, 2020 and December 31, 2019)

6,578

8,780

Equity investments

1,034

1,009

Mortgage loans held for sale (amortized cost of $115,853 and $33,363 as of June 30, 2020 and December 31, 2019), at fair value

117,691

33,704

Loans, net of fees and costs (includes $10,350 and $10,546 of loans at fair value, amortized cost of $9,925 and $10,186 as of June 30, 2020 and December 31, 2019)

1,262,968

964,710

Allowance for loan and lease losses

(12,706)

(9,513)

Loans, net of the allowance for loan and lease losses

1,250,262

955,197

Restricted investment in bank stock

7,234

8,072

Bank premises and equipment, net

8,284

8,636

Bank owned life insurance

11,999

11,859

Accrued interest receivable

4,125

3,148

Other real estate owned

120

Deferred income taxes

621

2,115

Goodwill

899

899

Intangible assets

3,737

3,874

Other assets

22,778

14,379

Total assets

$

1,579,083

1,150,019

Liabilities:

Deposits:

Noninterest bearing

$

214,367

139,450

Interest bearing

952,330

711,718

Total deposits

1,166,697

851,168

Short-term borrowings

87,044

123,676

Long-term debt

145,447

3,123

Subordinated debentures

40,809

40,962

Accrued interest payable

1,605

1,088

Other liabilities

11,963

9,307

Total liabilities

1,453,565

1,029,324

Stockholders’ equity:

Common stock, $1 par value. Authorized 10,000,000 shares; issued 6,414,341 and 6,407,685 as of June 30, 2020 and December 31, 2019

6,414

6,408

Surplus

80,467

80,255

Treasury stock - 320,000 and 3,375 shares at June 30, 2020 and December 31, 2019, respectively

(5,828)

(62)

Retained earnings

42,326

34,097

Accumulated other comprehensive income (loss)

2,139

(3)

Total stockholders’ equity

125,518

120,695

Total liabilities and stockholders’ equity

$

1,579,083

1,150,019

See accompanying notes to the unaudited consolidated financial statements.

3

Table of Contents

MERIDIAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three months ended

Six months ended

June 30, 

June 30, 

(dollars in thousands, except per share data)

2020

    

2019

    

2020

    

2019

Interest income:

Loans, including fees

$

14,457

12,647

27,727

24,534

Securities:

Taxable

305

278

669

556

Tax-exempt

290

100

392

209

Cash and cash equivalents

3

48

61

98

Total interest income

15,055

13,073

28,849

25,397

Interest expense:

Deposits

2,575

3,715

5,829

6,951

Borrowings

883

436

1,757

1,048

Total interest expense

3,458

4,151

7,586

7,999

Net interest income

11,597

8,922

21,263

17,398

Provision for loan losses

1,631

14

3,183

233

Net interest income after provision for loan losses

9,966

8,908

18,080

17,165

Non-interest income:

Mortgage banking income

18,763

6,321

26,665

11,229

Wealth management income

853

912

1,874

1,776

SBA loan income

658

515

1,227

515

Earnings on investment in life insurance

69

72

139

144

Net change in the fair value of derivative instruments

2,364

(32)

3,318

(16)

Net change in the fair value of loans held-for-sale

633

(226)

1,493

(136)

Net change in the fair value of loans held-for-investment

143

90

81

414

Net loss on hedging activity

(3,301)

(218)

(4,726)

(493)

Net gain on sale of investment securities available-for-sale

55

139

55

139

Service charges

21

27

49

54

Other

428

328

866

749

Total non-interest income

20,686

7,928

31,041

14,375

Non-interest expenses:

Salaries and employee benefits

16,198

8,742

26,082

16,469

Occupancy and equipment

1,127

936

2,051

1,899

Loan expenses

2,327

668

3,402

1,136

Professional fees

770

709

1,437

1,180

Advertising and promotion

605

730

1,214

1,196

Data processing

456

324

800

648

Information technology

388

319

706

585

Communications

187

162

317

354

Other

1,191

1,654

2,438

2,893

Total non-interest expenses

23,249

14,244

38,447

26,360

Income before income taxes

7,403

2,592

10,674

5,180

Income tax expense

1,690

570

2,445

1,152

Net income

$

5,713

2,022

8,229

4,028

Basic earnings per common share

$

0.94

0.32

1.33

0.63

Diluted earnings per common share

$

0.94

0.31

1.32

0.63

See accompanying notes to the unaudited consolidated financial statements.

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MERIDIAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

Three months ended

Six months ended

June 30, 

June 30, 

(dollars in thousands)

    

2020

    

2019

2020

    

2019

Net income:

$

5,713

2,022

8,229

4,028

Other comprehensive income:

Net change in unrealized gains on investment securities available for sale:

Net unrealized gains arising during the period, net of tax expense of $515, $95, $617 and $202, respectively

1,756

330

2,185

703

Less: reclassification adjustment for net gains on sales realized in net income, net of tax expense of $12, ($31), $12, and ($31), respectively

(43)

(108)

(43)

(108)

Unrealized investment gains, net of tax expense of $503, $64, $605, and $171, respectively

1,713

222

2,142

595

Total other comprehensive income

1,713

222

2,142

595

Total comprehensive income

$

7,426

2,244

10,371

4,623

See accompanying notes to the unaudited consolidated financial statements.

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MERIDIAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

Accumulated

Other

Common

Treasury

Retained

Comprehensive

(dollars in thousands)

    

Stock

    

Surplus

    

Stock

    

Earnings

    

Income (Loss)

    

Total

Balance, January 1, 2019

$

6,407

79,919

23,616

(390)

109,552

Comprehensive income:

Net income

2,006

2,006

Change in unrealized gains on securities available-for-sale, net of tax

373

373

Total comprehensive income

2,379

Compensation expense related to stock option grants

61

61

Balance, March 31, 2019

$

6,407

79,980

25,622

(17)

111,992

Comprehensive income:

Net income

2,022

2,022

Change in unrealized gains on securities available-for-sale, net of tax

222

222

Total comprehensive income

2,244

Compensation expense related to stock option grants

143

143

Balance, June 30, 2019

$

6,407

80,123

27,644

205

114,379

Accumulated

Other

Common

Treasury

Retained

Comprehensive

(dollars in thousands)

    

Stock

    

Surplus

    

Stock

Earnings

    

Income (Loss)

    

Total

Balance, January 1, 2020

$

6,408

80,255

(62)

34,097

(3)

120,695

Comprehensive income:

Net income

2,516

2,516

Change in unrealized gains on securities available-for-sale, net of tax

429

429

Total comprehensive income

2,945

Share-based award exercises

6

26

32

Net purchase of treasury stock through publicly announced plans

63

(5,766)

(5,703)

Compensation expense related to stock option grants

64

64

Balance, March 31, 2020

$

6,414

80,408

(5,828)

36,613

426

118,033

Comprehensive income:

Net income

5,713

5,713

Change in unrealized gains on securities available-for-sale, net of tax

1,713

1,713

Total comprehensive income

7,426

Compensation expense related to stock option grants

59

59

Balance, June 30, 2020

$

6,414

80,467

(5,828)

42,326

2,139

125,518

See accompanying notes to the unaudited consolidated financial statements.

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MERIDIAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Six months ended

June 30, 

(dollars in thousands)

    

2020

    

2019

Net income

$

8,229

4,028

Adjustments to reconcile net income to net cash provided by operating activities:

Gain on sale of investment securities

(55)

(139)

Depreciation and amortization

(281)

(329)

Net amortization of investment premiums and discounts

97

800

Provision for loan losses

3,183

233

Amortization of issuance costs on subordinated debt

53

Compensation expense for stock options

123

204

Net change in fair value of loans held for investment

(81)

(414)

Net change in fair value of loans held for sale

(1,493)

136

Net change in fair value of derivative instruments

(3,318)

16

Gain on sale of OREO

(6)

SBA loan income

(1,227)

(515)

Proceeds from sale of loans

734,718

243,495

Loans originated for sale

(790,546)

(230,393)

Mortgage banking income

(26,665)

(11,229)

Increase in accrued interest receivable

(977)

(455)

Increase in other assets

(3,317)

(295)

Earnings from investment in life insurance

(139)

(144)

Deferred income tax

809

45

Increase in accrued interest payable

517

22

Increase in other liabilities

1,024

1,394

Net cash (used) provided by operating activities

(79,352)

6,460

Cash flows from investing activities:

Activity in available-for-sale securities:

Maturities, repayments and calls

3,733

5,231

Sales

18,212

16,665

Purchases

(57,501)

(18,816)

Activity in held-to-maturity securities:

Maturities, repayments and calls

2,140

Proceeds from sale of OREO

126

Settlement of forward contracts

(61)

Decrease in restricted stock

838

1,130

Net increase in loans

(295,701)

(55,354)

Purchases of premises and equipment

(469)

(487)

Net cash used in investing activities

(328,622)

(51,692)

Cash flows from financing activities:

Net increase in deposits

315,529

88,584

Increase (decrease) in short term borrowings

10,001

(39,321)

Decrease in short term borrowings with original maturity > 90 days

(46,220)

Repayment of long term debt (Acquisition note)

(413)

(413)

Repayment of long term debt (Subordinated debt)

(63)

Proceeds from long term debt

142,324

3,123

Issuance costs on subordinated debt

(206)

Net purchase of treasury stock through publicly announced plans

(5,703)

Share based awards and exercises

32

Net cash provided by financing activities

415,344

51,910

Net change in cash and cash equivalents 

7,370

6,678

Cash and cash equivalents at beginning of period

39,371

23,952

Cash and cash equivalents at end of period

$

46,741

30,630

Supplemental disclosure of cash flow information:

Cash paid during the period for:

Interest

$

7,069

7,977

Income taxes

1,195

737

Supplemental disclosure of cash flow information:

Transfers from loans and leases to real estate owned

120

Transfers from loans held for sale to loans held for investment

3,602

Net loans sold, not settled

6,439

See accompanying notes to the unaudited consolidated financial statements.

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MERIDIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(1)      Basis of Presentation

The Corporation’s unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated financial position and the results of operations for the interim periods presented have been included.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Amounts subject to significant estimates are items such as the allowance for loan losses and lending related commitments, the fair value of financial instruments, other-than-temporary impairments of investment securities, and the valuations of goodwill and intangible assets, and servicing assets.  

These unaudited consolidated financial statements should be read in conjunction with the Corporation’s filings with the Securities and Exchange Commission (including our Annual Report on Form 10-K for the year ended December 31, 2019) and, subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K that update or provide information in addition to the information included in Form 10-K and Form 10-Q filings, if any.   For periods prior to the completion of the holding company reorganization, the Bank’s filings with the FDIC, including the Bank’s annual report on Form 10-K for the year ended December 31, 2017.  Certain prior period amounts have been reclassified to conform with current period presentation. Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of the results for the year ending December 31, 2020 or for any other period.

Impact of COVID-19

The outbreak of COVID-19 has adversely impacted a broad range of industries in which the Corporation’s customers operate and could impair their ability to fulfill their financial obligations to the Corporation.  The spread of the outbreak has caused significant disruptions in the U.S. economy and has disrupted banking and other financial activity in the areas in which the Corporation operates.

Although the Corporation’s current estimates contemplate current conditions and how we expect them to change in the future, due to the impact that the COVID-19 has had on financial markets and the economy both locally and nationally, it is reasonably possible that this could materially affect these significant estimates and the Corporation’s results of operations and financial condition.

The Corporation has been working with customers directly affected by COVID-19 since it was declared a pandemic, to provide short-term assistance in accordance with regulatory guidelines.  Should economic conditions continue to worsen, the Corporation could experience further increases in its required allowance for loan loss and record additional provision for loan loss expense. It is possible that the Corporation’s asset quality measures could worsen at future measurement periods due to the continuing effects of COVID-19 may have on borrowers.

COVID-19 could cause a further and sustained decline in the Corporation’s stock price or the occurrence of what management would deem to be a triggering event that could, under certain circumstances, cause us to perform goodwill and intangible asset impairment tests and result in an impairment charge being recorded for that period. In the event that the Corporation concludes that all or a portion of its goodwill or intangible assets are impaired, a non-cash charge for the amount of such impairment would be recorded to earnings. Such a charge would have no impact on tangible capital or regulatory capital.

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(2)      Earnings per Common Share

Basic earnings per common share excludes dilution and is computed by dividing income available to common shareholders by the weighted-average common shares outstanding during the period. Diluted earnings per common share takes into account the potential dilution computed pursuant to the treasury stock method that could occur if stock options were exercised and converted into common stock. The effects of stock options are excluded from the computation of diluted earnings per share in periods in which the effect would be anti-dilutive.

Three Months Ended

Six Months Ended

June 30, 

June 30, 

(dollars in thousands, except per share data)

    

2020

    

2019

2020

    

2019

Numerator:

Net income available to common stockholders

$

5,713

2,022

$

8,229

4,028

Denominator for basic earnings per share - weighted average shares outstanding

6,094

6,407

6,210

6,407

Effect of dilutive common shares

13

29

25

29

Denominator for diluted earnings per share - adjusted weighted average shares outstanding

6,107

6,436

6,235

6,436

Basic earnings per share

$

0.94

0.32

$

1.33

0.63

Diluted earnings per share

$

0.94

0.31

$

1.32

0.63

Antidilutive shares excluded from computation of average dilutive earnings per share