Meridian Corporation · NASDAQ:MRBK
Meridian — Q4 2020 Earnings Presentation
28 slides from Meridian's earnings presentation, Feb 8, 2021
Slide 1: 4th QTR 2020 Investor Presentation
4th QTR 2020 Investor Presentation NASDAQ: MRBK ®
Slide 2: Forward-Looking Statements
2 Meridian Corporation Forward-Looking Statements Meridian Corporation (the “Corporation”) may from time to time make written or oral “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking stateme
Slide 3: Company Snapshot
3 Meridian Corporation Company Snapshot 1) As of and for the quarter ended December 31, 2020, per February 1, 2021 press release. 2) Includes PPP loans, loans held for sale and loans held for investment. 3) Excludes loans at fair value, loans held for sale and PPP loans. A Non-GAAP measure. Refer to
Slide 4: Current Meridian Franchise Footprint
4 Meridian Corporation Current Meridian Franchise Footprint Geographic Footprint Branches Mortgage LPOs Meridian Corporation Holding Company Meridian Bank 100% Owned Subsidiary Organizational Structure Meridian Wealth Partners 100% Owned Subsidiary Apex Realty 100% Owned OREO Subsidiary Meridian Lan
Slide 5: Overview of Business Lines
5 Meridian Corporation Overview of Business Lines Commercial & Industrial Lending – Lines of credit, term loans – Owner-occupied commercial mortgages – Leasing through Meridian Equipment Finance® Commercial Real Estate Lending – Commercial mortgages – Construction loans – Land development loans Cons
Slide 6: Deep and Experienced Leadership
6 Meridian Corporation Deep and Experienced Leadership Meridian Executive Management Chris Annas Chairman of the Board President & CEO Founder, Chairman, President and Chief Executive Officer of the Bank since its opening in 2004 Held executive positions with various regional banks in the Delaware V
Slide 7: 4QTR 2020 Highlights
7 Meridian Corporation 4QTR 2020 Highlights Net income was $9.0 million for the quarter, or $1.48 per diluted share, driven by continued strong loan and deposit growth, and robust refinance activity in the mortgage segment. For the year, Meridian generated revenues of $149.6 million and net income o
Slide 8: Consistent Balance Sheet Growth
8 Meridian Corporation Consistent Balance Sheet Growth 1) Includes loans held for sale and held for investment. Total Assets ($M) Loans and Leases1 ($M) Total Deposits ($M) Consolidated Equity ($M) $856 $998 $1,151 $1,303 $1,579 $1,759 $1,720 2017 2018 2019 1Q 20 2Q 20 3Q 20 4Q 20 $730 $876 $998 $1,
Slide 9: Summary Income Statement
9 Meridian Corporation Summary Income Statement1 1) Decrease in 2017 profitability due to a decrease in net operating profit from mortgage division ($1.8M); 2017 tax reform resulted in a one-time charge to tax expense of $737K. Net Interest Income ($M) Non-interest Income ($M) Non-interest Expense (
Slide 10: Consistent Revenue Growth
10 Meridian Corporation Consistent Revenue Growth ($M) $2.6 $3.7 $3.5 $3.9 $31.0 $26.2 $25.1 $79.0 $36.3 $44.7 $55.3 $66.7 $- $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 $90.0 2017 2018 2019 2020 Bank Mortgage Wealth Total Revenue: FY 2020 - $149.6 FY 2019 - $83.9 FY 2018 - $74.6 FY 2017 - $70.0
Slide 11: Capital Summary
11 Meridian Corporation Capital Summary Bank Holding Company Regulatory Minimum 2 Tangible Common Equity / Tangible Common Assets (%)1 Tier 1 Leverage Ratio (%) Tier 1 Capital Ratio (%) Total Capital Ratio (%) 1) A Non-GAAP measure. Refer to Appendix for Non-GAAP to GAAP reconciliation. 2) To be wel
Slide 12: Segment Information
12 Meridian Corporation Segment Information 1) A Non-GAAP measure. Refer to Appendix for Non-GAAP to GAAP reconciliation. Pre-tax/pre-provision income by segment percentage for three months ended December 31, 2020 Pre-tax/pre-provision (PTPP)1 income decreased 18.2% over 3Q 2020, due mostly to a low
Slide 13: Mortgage Division Historical Performance
13 Meridian Corporation Mortgage Division Historical Performance ($M) Source: Company documents Historically profitable 2020 expansion into MD market, hired team 2020 originations $2.4B 4Q originations $868 million 4Q MTG revenue $31 million; 2020 YR MTG revenue $76 million 2020 YR net earnings $14.
Slide 14: Balanced Loan Portfolio
14 Meridian Corporation $1.5 Billion total gross loans and leases as of December 31, 20201 – $198.6 M net PPP loans CRE concentration of 172% of capital as of December 31, 2020 Average yield on loans of 4.56% for 4Q 2020 Average yield on loans, excluding PPP loans, of 4.59% for 4Q 2020 Balanced Loan
Slide 15: Commercial Loans by Industry
Commercial Loans by Industry December 31, 2020 Meridian Corporation Note: Balances do not include consumer loans; HELoC, and 1st mortgages. Source: Company documents 15
Slide 16: Commercial Real Estate Loans by Industry
16 Meridian Corporation Commercial Real Estate Loans by Industry December 31, 2020
Slide 17: Construction and Land Development
17 Meridian Corporation Construction and Land Development Source: Company documents $139.5 M in construction and land development loans as of December 31, 2020 – $25.3 M land development Average yield on loans of 6.33% for 4Q 2020 73% of total capital as of December 31, 2020 19% 43% 8% 17% 12% 1% Pr
Slide 18: Shared National Credits
18 Meridian Corporation Shared National Credits December 31, 2020 Source: Company documents Managed by experienced (30 yrs) large corporate lender Buy/participate in more secure, less yielding facilities Purposeful industry diversification Provides added liquidity on balance sheet Yielded 3.02% in 4
Slide 19: Asset Quality
19 Meridian Corporation Asset Quality 1) Nonperforming assets defined as loans 90+ days past due and still accruing, nonaccrual loans and leases and OREO, excluding performing TDRs. 2) Excludes loans held for sale and, for 2Q to 4Q 2020, PPP loans. A Non-GAAP measure. See Appendix for Non-GAAP to GA
Slide 20: Industry Exposure & Loan Assistance Update
20 Meridian Corporation Industry Exposure & Loan Assistance Update Source: Company documents Overall program represents $150.5 million or 14.0% of total loans1 at December 31, 2020 At December 31, 2020, $24.2 million, or 2.3% of total loans1 are still in active relief By December 31, 2020, $126.3 mi
Slide 21: Allowance for Loan Losses
21 Meridian Corporation Allowance for Loan Losses December 31, 2020 ALLL Coverage by Portfolio ALLL Coverage Ratios •Provision for loan losses was $1.2 million for 4Q 2020 • ALLL to non-performing loans ratio increased to 224.8% • ALLL to total loans* ratio increased to 1.65% at December 31, 2020, u
Slide 22: Investment Portfolio Composition
22 Meridian Corporation Investment Portfolio Composition December 31, 2020 Source: Company documents $131.1 million total investments as of December 31, 2020 – 95.0% available-for-sale – 5.0% held-to-maturity Average TEY of 2.35% year-to-date Realized gains of $1.3 million in 3Q Unrealized gain $2.3
Slide 23: Deposit Composition
23 Meridian Corporation $1.2B total deposits as of December 31, 2020 Diversified deposit mix – 33% transaction accounts – 16% noninterest-bearing deposits to total deposits – Average cost of total deposits of 0.61% for 4Q 2020 Deposit Composition December 31, 2020 Source: Company documents Total Dep
Slide 24: Time Deposit Repricing Opportunities
24 Meridian Corporation Time Deposit Repricing Opportunities December 31, 2020 Source: Company documents $96M time deposits matured during Q4 2020 Cost of CDs and cost of funds improved by 39 bps and 11 bps, respectively $73M time deposits with a blended cost of 1.47% is maturing over next 3 months
Slide 25: Appendix
25 Meridian Corporation Appendix
Slide 26: Historical Financial Highlights
26 Meridian Corporation Historical Financial Highlights 1) Includes loans held for sale and held for investment. 2) Includes loans held for investment (excluding loans at fair value and PPP loans). 3) A Non-GAAP measure. See Appendix for Non-GAAP to GAAP reconciliation. Note: 2015-2017 Financials ar
Slide 27: Reconciliation of Non-GAAP Financial Measures
27 Meridian Corporation Reconciliation of Non-GAAP Financial Measures Tangible common equity to tangible assets Management uses the measure tangible common equity to tangible assets to assess our capital strength. We believe that this non-GAAP financial measure is useful to investors because, by rem
Slide 28: Reconciliation of Non-GAAP Financial Measures
28 Meridian Corporation Reconciliation of Non-GAAP Financial Measures Dollar Values in Thousands 1Q 20 2Q 20 3Q 20 4Q 20 Reconciliation of Net Interest Margin (TEY, exluding PPP loans and PPPLF borrowings) Net interest margin (TEY) 3.49% 3.27% 3.26% 3.59% Impact of PPP loans and PPPLF borrowings — 0