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
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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-20190331ex3116f1132.htm
EX-31.2 mrbk-20190331ex3123f7096.htm
EX-32 mrbk-20190331xex32.htm

Meridian Earnings 2019-03-31

Balance SheetIncome StatementCash Flow

10-Q 1 mrbk-20190331x10q.htm 10-Q mrbk_Current_Folio_10Q

 

 

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 March 31, 2019

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

 

Picture 1

 

(Exact name of registrant as specified in its charter)

 

Pennsylvania

32-0116054

(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 May 28, 2019 there were 6,406,996 outstanding shares of the issuer’s common stock, par value $1.00 per share.

 

 

 

 

TABLE OF CONTENTS

PART I FINANCIAL INFORMATION 

 

 

 

Item 1 Financial Statements (Unaudited) 

3

 

 

Consolidated Balance Sheets – March 31, 2019 and December 31, 2018 

3

 

 

Consolidated Statements of Income – Three Months Ended March 31, 2019 and 2018 

4

 

 

Consolidated Statements of Comprehensive Income – Three Months Ended March 31, 2019 and 2018 

5

 

 

Consolidated Statements of Stockholders’ Equity – Three Months Ended March 31, 2019 and 2018 

6

 

 

Consolidated Statements of Cash Flows – Three Months Ended March 31, 2019 and 2018 

7

 

 

Notes to Consolidated Financial Statements (Unaudited) 

8

 

 

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

31

 

 

Item 3 Quantitative and Qualitative Disclosures about Market Risk 

44

 

 

Item 4 Controls and Procedures 

44

 

 

PART II OTHER INFORMATION 

 

 

 

Item 1 Legal Proceedings 

46

 

 

Item 1A Risk Factors 

46

 

 

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 

46

 

 

Item 3 Defaults Upon Senior Securities 

46

 

 

Item 4 Mine Safety Disclosures 

46

 

 

Item 5 Other Information 

46

 

 

Item 6 Exhibits 

46

 

 

Signatures 

48

 

 

 

 

MERIDIAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

 

 

 

 

 

March 31, 

 

December 31, 

(dollars in thousands, except per share data)

    

2019

    

2018

Cash and due from banks

 

$

38,940

 

23,159

Federal funds sold

 

 

 —

 

793

Cash and cash equivalents

 

 

38,940

 

23,952

Securities available-for-sale (amortized cost of $50,472 and $50,942 as of March 31, 2019 and December 31, 2018)

 

 

50,440

 

50,428

Securities held-to-maturity (fair value of $12,814 and $12,655 as of March 31, 2019 and December 31, 2018)

 

 

12,712

 

12,741

Mortgage loans held for sale (amortized cost of $29,163 and $37,337 as of March 31, 2019 and December 31, 2018)

 

 

29,612

 

37,695

Loans, net of fees and costs (includes $12,751 and $11,422 of loans at fair value, amortized cost of $12,472 and $11,466 as of March 31, 2019 and December 31, 2018)

 

 

862,372

 

838,106

Allowance for loan and lease losses

 

 

(8,376)

 

(8,053)

Loans, net of the allowance for loan and lease losses

 

 

853,996

 

830,053

Restricted investment in bank stock

 

 

6,179

 

7,002

Bank premises and equipment, net

 

 

9,276

 

9,638

Bank owned life insurance

 

 

11,641

 

11,569

Accrued interest receivable

 

 

3,001

 

2,889

Other real estate owned

 

 

120

 

 —

Deferred income taxes (Footnote 1)

 

 

1,569

 

1,728

Goodwill and intangible assets

 

 

4,978

 

5,046

Other assets

 

 

5,050

 

4,739

Total assets

 

$

1,027,514

 

997,480

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

Deposits:

 

 

 

 

 

Noninterest bearing

 

$

115,464

 

126,150

Interest-bearing

 

 

695,249

 

625,980

Total deposits

 

 

810,713

 

752,130

Short-term borrowings

 

 

82,233

 

114,300

Long-term debt

 

 

6,031

 

6,238

Subordinated debentures

 

 

9,239

 

9,239

Accrued interest payable

 

 

434

 

305

Other liabilities (Footnote 1)

 

 

6,872

 

5,716

Total liabilities

 

 

915,522

 

887,928

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common stock, $1 par value. Authorized 10,000,000 shares; issued and outstanding 6,406,996 and 6,406,795 as of March 31, 2019 and December 31, 2018

 

 

6,407

 

6,407

Surplus

 

 

79,980

 

79,919

Retained earnings (Footnote 1)

 

 

25,622

 

23,616

Accumulated other comprehensive loss

 

 

(17)

 

(390)

Total stockholders’ equity

 

 

111,992

 

109,552

Total liabilities and stockholders’ equity

 

$

1,027,514

 

997,480

 

See accompanying notes to the unaudited consolidated financial statements.

3

MERIDIAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

 

 

 

 

 

 

 

Three months ended

 

 

March 31, 

(dollars in thousands, except per share data)

    

2019

    

2018

Interest income:

 

 

 

 

 

Loans, including fees

 

$

11,887

 

9,493

Securities:

 

 

 

 

 

Taxable

 

 

278

 

168

Tax-exempt

 

 

109

 

112

Cash and cash equivalents

 

 

50

 

23

Total interest income

 

 

12,324

 

9,796

Interest expense:

 

 

 

 

 

Deposits

 

 

3,236

 

1,659

Borrowings

 

 

611

 

445

Total interest expense

 

 

3,847

 

2,104

Net interest income

 

 

8,477

 

7,692

Provision for loan losses

 

 

219

 

554

Net interest income after provision for loan losses

 

 

8,258

 

7,138

Non-interest income:

 

 

 

 

 

Mortgage banking income

 

 

4,908

 

4,821

Wealth management income

 

 

864

 

1,078

Earnings on investment in life insurance

 

 

72

 

78

Net change in the fair value of derivative instruments

 

 

16

 

207

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

 

 

90

 

(3)

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

 

 

324

 

(171)

Service charges

 

 

27

 

32

Other

 

 

146

 

1,014

Total non-interest income

 

 

6,447

 

7,056

Non-interest expenses:

 

 

 

 

 

Salaries and employee benefits

 

 

7,727

 

8,436

Occupancy and equipment

 

 

963

 

960

Loan expenses

 

 

468

 

532

Professional fees

 

 

472

 

479

Advertising and promotion

 

 

465

 

581

Data processing

 

 

324

 

288

Information technology

 

 

266

 

325

Communications

 

 

192

 

246

Other

 

 

1,240

 

715

Total non-interest expenses

 

 

12,117

 

12,562

Income before income taxes

 

 

2,588

 

1,632

Income tax expense

 

 

582

 

362

Net income

 

$

2,006

 

1,270

 

 

 

 

 

 

Basic earnings per common share

 

$

0.31

 

0.20

 

 

 

 

 

 

Diluted earnings per common share

 

$

0.31

 

0.20

 

See accompanying notes to the unaudited consolidated financial statements.

4

MERIDIAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

March 31, 

 

(dollars in thousands)

    

2019

    

2018

 

Net income:

 

$

2,006

 

1,270

 

 

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

 

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

 

 

 

 

 

 

Net unrealized (losses) gains arising during the period, net of tax (benefit) expense of $108 and ($87), respectively

 

 

373

 

(276)

 

Less: reclassification adjustment for net gains on sales realized in net income, net of tax (benefit) expense of $0 and $0, respectively

 

 

 —

 

 —

 

Unrealized investment gains (losses), net of tax expense (benefit) of $108 and ($87), respectively

 

 

373

 

(276)

 

Total other comprehensive income

 

 

373

 

(276)

 

Total comprehensive income

 

$

2,379

 

994

 

 

See accompanying notes to the unaudited consolidated financial statements.

5

MERIDIAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

Common

 

 

 

Retained

 

Comprehensive

 

 

(dollars in thousands)

    

Stock

    

Surplus

    

Earnings

    

Income (Loss)

    

Total

Balance, January 1, 2018 (Footnote 1)

$

6,392

 

79,501

 

15,453

 

(298)

 

101,048

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

1,270

 

 

 

1,270

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

 

 

 

 

 

 

 

(276)

 

(276)

Total comprehensive income

 

 

 

 

 

 

 

 

 

994

Compensation expense related to stock option grants

 

 

 

 3

 

 

 

 

 

 3

Balance, March 31, 2018

$

6,392

 

79,504

 

16,723

 

(574)

 

102,045

 

 

 

 

 

 

 

 

 

 

 

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

 

See accompanying notes to the unaudited consolidated financial statements.

6

MERIDIAN CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

 

 

 

 

 

Three months ended

 

 

March 31, 

(dollars in thousands)

    

2019

    

2018

Net income

 

$

2,006

 

1,270

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

 

 

 

 

 

Depreciation and amortization

 

 

291

 

285

Provision for loan losses

 

 

219

 

554

Compensation expense for stock options

 

 

61

 

 3

Net change in fair value of loans held for sale

 

 

(90)

 

 3

Net change in fair value of derivative instruments

 

 

(16)

 

(207)

Proceeds from sale of loans

 

 

112,948

 

136,321

Loans originated for sale

 

 

(96,265)

 

(127,337)

Mortgage banking income

 

 

(4,908)

 

(4,821)

Increase in accrued interest receivable

 

 

(112)

 

172

Increase in other assets

 

 

(161)

 

(1,177)

Earnings from investment in life insurance

 

 

(72)

 

(78)

Deferred income tax benefit (Footnote 1)

 

 

45

 

(40)

Increase in accrued interest payable

 

 

129

 

130

Increase in other liabilities (Footnote 1)

 

 

1,064

 

367

Net cash provided by operating activities

 

 

15,139

 

5,445

Cash flows from investing activities:

 

 

 

 

 

Activity in available-for-sale securities:

 

 

 

 

 

Maturities, repayments and calls

 

 

2,390

 

1,006

Purchases

 

 

(1,944)

 

 —

Proceeds from sale of OREO

 

 

 —

 

10

Settlement of forward contracts

 

 

(36)

 

(6)

Acquisition of wealth management company

 

 

 —

 

 —

Decrease in restricted stock

 

 

823

 

982

Net increase in loans

 

 

(27,607)

 

(45,576)

Purchases of premises and equipment

 

 

(86)

 

(1,116)

Proceeds from settlement of loans

 

 

 —

 

2,766

Net cash used in investing activities

 

 

(26,460)

 

(41,934)

Cash flows from financing activities:

 

 

 

 

 

Net increase in deposits

 

 

58,583

 

52,194

Decrease in short term borrowings

 

 

(32,068)

 

(22,040)

Repayment of long term debt (Acquisition note)

 

 

(206)

 

(207)

Repayment of long term debt (Subordinated debt)

 

 

 —

 

(4,000)

Net cash provided by financing activities

 

 

26,309

 

25,947

Net change in cash and cash equivalents 

 

 

14,988

 

(10,542)

Cash and cash equivalents at beginning of period

 

 

23,952

 

35,506

Cash and cash equivalents at end of period

 

$

38,940

 

24,964

Supplemental disclosure of cash flow information:

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

Interest

 

$

3,718

 

1,974

Income taxes

 

 

2,735

 

 —

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

 

 —

 

See accompanying notes to the unaudited consolidated financial statements.

7

MERIDIAN CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(1)      Basis of Presentation

Meridian Corporation (the “Corporation”)  was incorporated on June 8, 2009, by and at the direction of the board of directors of Meridian Bank (the “Bank”) for the sole purpose of acquiring the Bank and serving as the Bank’s parent bank holding company.  On August 24, 2018, the Corporation acquired the Bank in a merger and reorganization effected under Pennsylvania law and in accordance with the terms of a Plan of Merger and Reorganization dated April 26, 2018 (the “Agreement”).  Pursuant to the Agreement, on August 24, 2018 at 5:00 p.m. all of the outstanding shares of the Bank’s $1.00 par value common stock formerly held by its shareholders was converted into and exchanged for one newly issued share of the Corporation’s par value common stock, and the Bank became a subsidiary of the Corporation. Because the Bank and the Corporation were entities under common control, this exchange of shares between entities under common control resulted in the retrospective combination of the Bank and the Corporation for all periods presented as if the combination had been in effect since inception of common control.  As the Corporation had no assets, liabilities, revenues, expenses or operations prior to August 24, 2018, the historical financial statements of the Bank are the historical financial statements of the combined entity. 

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.

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, 2018) and, 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, 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.   Certain prior period amounts have been reclassified to conform with current period presentation. Operating results for the three months ended March 31, 2019 are not necessarily indicative of the results for the year ended December 31, 2019 or for any other period.

During the quarter, the Corporation identified and corrected an immaterial error related to Maryland state licensing requirements for mortgage loan originations by our Mortgage division. As the result of our mortgage operations not being fully compliant with Maryland licensing law, we have agreed to reimburse consumers approximately $474 thousand in interest and fees on loans originated, in addition to paying a fine of $12 thousand to resolve the matter. The Corporation has revised its comparative consolidated financial statements in the amount of $407 thousand, $315 thousand net of tax, for periods prior to January 1, 2018 related to interest and fees on loans. The error correction impacted beginning retained earnings, deferred tax assets and other liabilities as of January 1, 2018, as shown below.

8

The following table summarizes the impacts of the correction on the consolidated balance sheet as of January 1, 2018:

 

 

 

 

 

 

 

 

 

 

 

 

(dollars in thousands, except per share data)

    

 

Reported

 

Corrections

 

Revised

Deferred income taxes

 

$

1,312

 

92

 

1,404

Other liabilities

 

 

5,426

 

407

 

5,833

Retained earnings

 

 

15,768

 

(315)

 

15,453

 

 

 

 

 

 

 

 

 

 

 

The following table summarizes the impacts of the correction on the consolidated balance sheet as of December 31, 2018:

 

 

 

 

 

 

 

 

(dollars in thousands, except per share data)

    

 

Reported

 

Corrections

 

Revised

Deferred income taxes

 

$

1,636

 

92

 

1,728

Other liabilities

 

 

5,309

 

407

 

5,716

Retained earnings

 

 

23,931

 

(315)

 

23,616

 

The following table summarizes the impacts of the corrections to our capital ratios as of December 31, 2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018 - as presented

 

 

 

 

 

 

 

 

 

 

 

 

To be well capitalized under

 

 

 

 

 

 

 

For capital adequacy

 

prompt corrective action

 

 

Actual

 

purposes *

 

provisions

(dollars in thousands):

    

Amount

    

Ratio

    

Amount

    

Ratio

    

Amount

    

Ratio

Total capital (to risk-weighted assets)

 

$

122,577

 

13.70%

 

$

71,577

 

8.00%

 

$

89,472

 

10.00%

Common equity tier 1 capital (to risk-weighted assets)

 

 

105,196

 

11.76%

 

 

40,262

 

4.50%

 

 

58,157

 

6.50%

Tier 1 capital (to risk-weighted assets)

 

 

105,196

 

11.76%

 

 

53,683

 

6.00%

 

 

71,577

 

8.00%

Tier 1 capital (to average assets)

 

 

105,196

 

11.20%

 

 

37,578

 

4.00%

 

 

46,972

 

5.00%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018 - as revised

 

 

 

 

 

 

 

 

 

 

 

 

 

To be well capitalized under

 

 

 

 

 

 

 

 

For capital adequacy

 

prompt corrective action

 

 

 

Actual

 

purposes *

 

provisions

 

(dollars in thousands):

    

Amount

    

Ratio

    

Amount

    

Ratio

    

Amount

    

Ratio

 

Total capital (to risk-weighted assets)

 

$

122,262

 

13.66%

 

$

71,585

 

8.00%

 

$

89,481

 

10.00%

 

Common equity tier 1 capital (to risk-weighted assets)

 

 

104,881

 

11.72%

 

 

40,266

 

4.50%

 

 

58,163

 

6.50%

 

Tier 1 capital (to risk-weighted assets)

 

 

104,881

 

11.72%

 

 

53,689

 

6.00%

 

 

71,585

 

8.00%

 

Tier 1 capital (to average assets)

 

 

104,881

 

11.16%

 

 

37,581

 

4.00%

 

 

46,977

 

5.00%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

(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

 

 

March 31, 

(dollars in thousands, except per share data)

    

2019

    

2018

Numerator:

 

 

 

 

 

 

Net income available to common stockholders

 

$

2,006

 

 

1,270

Denominator for basic earnings per share - weighted average shares outstanding

 

 

6,407

 

 

6,392

Effect of dilutive common shares

 

 

29

 

 

34

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

 

 

6,436

 

 

6,426

Basic earnings per share

 

$

0.31

 

 

0.20

Diluted earnings per share

 

$

0.31

 

 

0.20

Antidilutive shares excluded from computation of average dilutive earnings per share

 

 

126

 

 

47

 

 

(3)      Goodwill and Other Intangibles

The Corporation’s goodwill and intangible assets related to the acquisition of HJ Wealth in April 2017 are detailed below:

 

 

 

 

 

 

 

 

 

 

 

 

Balance

 

 

 

Balance

 

Amortization

 

 

December 31, 

 

Amortization

 

March 31, 

 

Period

(dollars in thousands)

    

2018

    

Expense

    

2019

    

(in years)

Goodwill - Wealth

 

$

899

 

 —

 

899

 

Indefinite

Total Goodwill

 

 

899

 

 —

 

899

 

 

 

 

 

 

 

 

 

 

 

 

Intangible assets - trade name

 

 

266

 

 —

 

266

 

Indefinite

Intangible assets - customer relationships

 

 

3,727

 

(51)

 

3,676

 

20

Intangible assets - non competition agreements

 

 

154

 

(17)

 

137

 

4

Total Intangible Assets

 

 

4,147

 

(68)

 

4,079

 

 

Total 

 

$

5,046

 

(68)

 

4,978

 

 

 

Accumulated amortization on intangible assets was $545 thousand and $273 thousand as of March 31, 2019 and 2018, respectively.

The Corporation performed its annual review of goodwill and identifiable intangible assets in accordance with ASC 350, “Intangibles - Goodwill and Other” as of December 31, 2018. For the period from January 1, 2019 through March 31, 2019, the Corporation determined there were no events that would necessitate impairment testing of goodwill and other intangible assets.

10

(4)      Securities

The amortized cost and fair value of securities as of March 31, 2019 and December 31, 2018 are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2019

 

 

 

 

 

Gross

 

Gross

 

 

 

 

Amortized

 

unrealized

 

unrealized

 

Fair

(dollars in thousands)

    

cost

    

gains

    

losses

    

value

Securities available-for-sale:

 

 

 

 

 

 

 

 

 

U.S. government agency mortgage-backed securities

 

$

23,005

 

69

 

(156)

 

22,918

U.S. government agency collateralized mortgage obligations

 

 

15,419

 

100

 

(114)

 

15,405

State and municipal securities

 

 

11,048

 

104

 

(27)

 

11,125

Investments in mutual funds

 

 

1,000

 

 —

 

(8)

 

992

Total securities available-for-sale

 

$

50,472

 

273

 

(305)

 

50,440

Securities held to maturity:

 

 

 

 

 

 

 

 

 

U.S. Treasuries

 

$

1,994

 

 —

 

(7)

 

1,987

State and municipal securities

 

 

10,718

 

113

 

(4)

 

10,827

Total securities held-to-maturity

 

$

12,712

 

113

 

(11)

 

12,814

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

 

 

 

 

Gross

 

Gross

 

 

 

 

Amortized

 

unrealized

 

unrealized

 

Fair

(dollars in thousands)

    

cost

    

gains

    

losses

    

value

Securities available-for-sale:

 

 

 

 

 

 

 

 

 

U.S. government agency mortgage-backed securities

 

$

24,092

 

45

 

(271)

 

23,866

U.S. government agency collateralized mortgage obligations

 

 

14,754

 

52

 

(142)

 

14,664

State and municipal securities

 

 

11,096

 

22

 

(199)

 

10,919

Investments in mutual funds

 

 

1,000

 

 —

 

(21)

 

979

Total securities available-for-sale

 

$

50,942

 

119

 

(633)

 

50,428

Securities held to maturity:

 

 

 

 

 

 

 

 

 

U.S. Treasuries

 

$

1,991

 

 —

 

(13)

 

1,978

State and municipal securities

 

 

10,750

 

17

 

(90)

 

10,677

Total securities held-to-maturity

 

$

12,741

 

17

 

(103)

 

12,655

 

At March 31, 2019, the Corporation had twenty U.S. government sponsored agency mortgage‑backed securities, ten U.S. government sponsored agency collateralized mortgage obligations, twelve state and municipal securities, one mutual fund, and two  U.S. treasuries in unrealized loss positions. At December 31, 2018, the Corporation had twenty-four U.S. government sponsored agency mortgage‑backed securities, twelve U.S. government sponsored agency collateralized mortgage obligations, twenty-six state and municipal securities, one mutual fund, and two U.S. treasurites in unrealized loss positions. At March 31, 2019, the temporary impairment is primarily the result of changes in market interest rates subsequent to purchase and the Corporation does not intend to sell these securities prior to recovery and it is more likely than not that the Corporation will not be required to sell these securities prior to recovery to satisfy liquidity needs, and therefore, no securities are deemed to be other‑than‑temporarily impaired.

11

The following table shows the Corporation’s investment gross unrealized losses and fair value aggregated by investment category and length of time that individual securities have been in continuous unrealized loss position at March 31, 2019 and December 31, 2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2019

 

 

Less than 12 Months

 

12 Months or more

 

Total

 

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

Fair

 

Unrealized

(dollars in thousands)

    

value

    

losses

    

value

    

losses

    

value

    

losses

Securities available-for-sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agency mortgage-backed securities

 

$

 —

 

 —

 

12,625

 

(156)

 

12,625

 

(156)

U.S. government agency collateralized mortgage obligations

 

 

1,258

 

(10)

 

5,614

 

(104)

 

6,872

 

(114)

State and municipal securities

 

 

 —

 

 —

 

5,420

 

(27)

 

5,420

 

(27)

Investments in mutual funds

 

 

 —

 

 —

 

992

 

(8)

 

992

 

(8)

Total securities available-for-sale

 

$

1,258

 

(10)

 

24,651

 

(295)

 

25,909

 

(305)

Securities held-to-maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasuries

 

$

 —

 

 —

 

1,987

 

(7)

 

1,987

 

(7)

State and municipal securities

 

 

 —

 

 —

 

1,098

 

(4)

 

1,098

 

(4)

Total securities held-to-maturity

 

$

 —

 

 —

 

3,085

 

(11)

 

3,085

 

(11)