Meridian Corporation Reports Net Income of $9.2 Million, or $1.51 Per Diluted Share, in 3Q 2020 and Declares Quarterly Cash Dividend of $0.125 Per Share

Rhea-AI Summary

Meridian Corporation (Nasdaq: MRBK) reported historic earnings for Q3 2020, achieving a net income of $9.2 million and a diluted EPS of $1.51, driven by strong mortgage production and growth in core commercial loans. The annualized return on average equity was 29.30%. The company reported double-digit growth in commercial loans despite pandemic challenges and successfully facilitated nearly $260 million in PPP loans for 928 clients. However, they have increased loan loss provisions by $4 million due to economic uncertainties, with a loan loss allowance ratio rising to 1.27%.

Positive

• Q3 2020 net income of $9.2 million.
• Diluted EPS increased to $1.51.
• Annualized return on average equity of 29.30%.
• Strong demand in mortgage and commercial loan growth despite pandemic.

Negative

• Increased loan loss provisions of $4 million due to economic deterioration.
• Loan loss allowance ratio rose to 1.27%, indicating potential risk.

MALVERN, Pa., Oct. 26, 2020 (GLOBE NEWSWIRE) -- Meridian Corporation (Nasdaq: MRBK) today reported:

	2020			2020			2020			2019
(Dollars in thousands, except per share data)	3rd QTR			2nd QTR			1st QTR			3rd QTR
Income:
Net income - consolidated	$	9,212		$	5,713		$	2,516		$	3,317
Diluted earnings per common share	$	1.51		$	0.94		$	0.39		$	0.52

“Meridian achieved historic earnings for the third quarter, with annualized return on average equity of 29.30% and annualized return on average assets of 2.29%. This resulted from cyclical and seasonally-high mortgage production, as well as growth in our core commercial loan business, including SBA loan and sale activities,” said Christopher J. Annas, Chairman and CEO. “The strength in housing throughout our markets in PA/NJ/DE/MD has provided lending opportunities in our construction business, and tremendous demand in mortgage.  Despite the pandemic, our consistent outreach efforts are resulting in double digit commercial loan growth, which includes our new leasing business. We have also benefited from executing PPP loans for non-customers who bring their other business to us.”

“The mortgage business, which we expanded this year by bringing on a high-performing team in the MD/DC region, has been profitable for us each year since inception in 2010. It’s been a good hedge recently, as declining rates boost the refinance and purchase business while it narrowed our net interest margin. With an estimated $10 trillion in refi-eligible mortgage loans remaining, we think the business can stay robust for the next few quarters.”

“We are closely watching certain modified loans and other loans we consider at risk due to the COVID-19 induced economic slowdown.  We added $4.0 million in loan loss provisions during the quarter to address the general deterioration in economic conditions,” Annas continued.  The ratio of allowance for loan losses to total loans held for investment, was 1.27% as of September 30, 2020, up from the 0.98% recorded as of December 31, 2019. The ratio of allowance for loan losses to total loans held for investment, excluding loans at fair value and PPP loans (a non-GAAP measure), was 1.59% as of September 30, 2020, up from the 1.00% recorded as of December 31, 2019.

COVID-19 Pandemic Response Update

• SBA Paycheck Protection Program.  As of September 30, 2020, Meridian has assisted 928 clients in need of short-term funding by providing nearly $260 million in PPP loans. Our PPP team has now moved on to working with borrowers to assist them through the forgiveness process.
• Industry Exposure.  Meridian continues to monitor businesses substantially impacted by the pandemic. Commercial portfolios such as retail trade, hospitality, residential spec co

FAQ

What were Meridian Corporation's earnings for Q3 2020?

Meridian Corporation reported a net income of $9.2 million for Q3 2020.

What is the diluted earnings per share for MRBK in Q3 2020?

The diluted earnings per share for Meridian Corporation in Q3 2020 was $1.51.

How much has Meridian assisted clients with PPP loans?

Meridian has provided nearly $260 million in PPP loans to 928 clients.

What is the loan loss allowance ratio for MRBK as of September 30, 2020?

As of September 30, 2020, the loan loss allowance ratio for Meridian was 1.27%.

What is the primary driver of Meridian's growth in Q3 2020?

The primary drivers of growth were strong mortgage production and growth in the core commercial loan business.