Meridian Corporation Reports First Quarter 2026 Results and Announces a Quarterly Dividend of $0.14 per Common Share

MALVERN, Pa., April 23, 2026 (GLOBE NEWSWIRE) -- Meridian Corporation (Nasdaq: MRBK) today reported:

• Net income for the quarter ended March 31, 2026 was $4.7 million, or $0.39 per diluted share, down $2.5 million, or 34%, from prior quarter.
  
  

• Pre-provision net revenue¹ for the quarter was $10.1 million, an improvement of $1.7 million, or 21%, from Q1'2025.
  
  

• Net interest margin improved to 3.82% for the first quarter of 2026 compared to the prior quarter, while the loan yield declined to 7.03%, and cost of funds declined to 3.04% over the same period.
  
  

• Return on average assets and return on average equity for the first quarter of 2026 were 0.74% and 9.44%, respectively.
  
  

• Total assets at March 31, 2026 were $2.6 billion, compared to $2.6 billion at December 31, 2025 and $2.5 billion at March 31, 2025.
  
  

• Commercial loans, excluding leases, increased $17.9 million, or 1% from prior quarter.
  
  

• On April 23, 2026, the Board of Directors declared a quarterly cash dividend of $0.14 per common share, payable May 11, 2026 to shareholders of record as of May 4, 2026.
  
  

Christopher J. Annas, Chairman and CEO commented:

“Meridian’s first quarter 2026 earnings totaled $4.7 million, nearly doubling from Q1'2025, resulting from continued improvement in the net interest margin to 3.82% for the first quarter 2026 from 3.46% in Q1'2025. The margin improvement is coming from deposit repricing and some repositioning in the deposit base. SBA loan sale income was down significantly after a management change, but we expect a rebound towards year end. Mortgage banking income (loss) was similar to Q1'2025 with seasonality, and if housing inventory continues to improve we’ll achieve increased originations this year. Pre‑provision net revenue increased nearly 20% year over year, underscoring the durability of our underlying operating performance.

Credit costs remained elevated during the quarter, driven largely by charge‑offs in our SBA and leasing portfolios that trace back to loans originated during the low‑rate environment of 2020 and 2021. We are actively working these credits through restructurings, liquidations, and recoveries, and more than half of our non‑performing SBA balances carry government guarantees. While the remediation process is neither fast nor linear, we have a focused approach to addressing these exposures.

Commercial loan growth was slower during the quarter, as our C&I group experienced some big payoffs, but we remain confident in achieving another year of double digit growth. Our capital position strengthened further, tangible book value increased, and our balance sheet remains well positioned to absorb credit normalization while continuing to invest in disciplined growth and return capital to shareholders.”

Select Condensed Financial Information

Income Statement - First Quarter 2026 Compared to Fourth Quarter 2025
First quarter net income decreased $2.5 million, or 34.4%, to $4.7 million due largely to a decrease in non-interest income of $3.6 million, a decrease in net interest income of $425 thousand, and an increase of $712 thousand in the provision for credit losses, while non-interest expense decreased $1.5 million over the prior quarter. Income tax expense decreased $743 thousand over the prior quarter. Detailed explanations of the major categories of income and expense follow below.

Net Interest income
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 periods indicated and allocated by rate and volume. Changes in interest income and/or expense related to changes 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.

Interest income decreased $2.1 million quarter-over-quarter on a tax equivalent basis, driven by lower yields and average balances of interest earning assets. The yield on interest-earnings assets decreased 13 basis points and negatively impacted interest income by $1.3 million, while the average balance of interest earning assets decreased by $23.2 million, impacting interest income by $850 thousand.

Average total loans, excluding residential loans for sale, decreased $24.7 million. The largest driver was a $26.7 million decrease in the average balance of residential loans held for investment due to the sale of mortgages in the prior quarter, along with a decrease in average leases of $4.5 million, and a decrease in SBA loan average balances of $4.0 million. These decreases were partially offset by increases in construction, commercial loans, commercial real estate loans and home equity loans, which on a combined basis increased $11.3 million on average.

Interest expense decreased $1.7 million, quarter-over-quarter, due to a decline in the cost of deposits and borrowings. Interest expense on total deposits decreased $1.4 million, interest expense on borrowings decreased $275 thousand, and interest expense on subordinated debentures decreased by $55 thousand as well. During the period, interest-bearing checking accounts decreased $3.4 million, time deposits increased $11.3 million, while money market and savings deposit balances decreased $3.0 million on average. Borrowings decreased $21.5 million on average. On a rate basis, money market accounts and time deposits experienced a decrease in the cost, with the overall cost of deposits having declined 19 basis points.

Overall the net interest margin improved to 3.82%, compared to the prior quarter, as the decline in cost of funds offset the decline in yield on earning assets.

Provision for Credit Losses
The overall provision for credit losses for the first quarter increased $712 thousand to $4.0 million, from $3.3 million in the fourth quarter. The higher level of provision was largely due to a $373 thousand increase in net charge-offs, combined with an increase in the baseline ACL and qualitative reserve factors on certain loan portfolios.

Non-interest income

The following table presents the components of non-interest income for the periods indicated:

Total non-interest income decreased $3.6 million, or 33.7%, quarter-over-quarter largely due to a $1.2 million decrease in mortgage banking income, and a $1.1 million decline in SBA loan income. Despite a quarter-over-quarter increase of 9 basis points in the margin on mortgage banking, mortgage loan sales decreased by $40.6 million, or 20% from the prior quarter, resulting in a lower level of mortgage banking income for the quarter-ended March 31, 2026. In addition, mortgage segment related fair value and derivative & hedging items declined in total by $701 thousand quarter-over-quarter.

SBA loan income decreased $1.1 million as the volume of SBA loans sold was down $14.1 million to $6.7 million, for the quarter-ended March 31, 2026 compared to the quarter-ended December 31, 2025, while the gross margin on SBA loan sales was 8.5% for the quarter-ended March 31, 2026 compared to 7.4% for the quarter-ended December 31, 2025.

In the prior quarter we recorded a gain on sale of investment securities of $453 thousand, which was not repeated in the quarter ended March 31, 2026. Other non-interest income was down $90 thousand from the prior quarter due to smaller declines in several accounts including ATM, wire transfer and other customer account fees.

Non-interest expense
The following table presents the components of non-interest expense for the periods indicated:

Salaries and benefits overall decreased $717 thousand, primarily due to the variable nature of the mortgage segment along with timing of certain incentive expense, in addition to lower incentive compensation within the banking and wealth management segments compared to the previous quarter-end. Advertising and promotion costs decreased $252 thousand, reflecting a decrease in business development efforts and special events since year-end. Furthermore, other expense decreased $428 thousand mainly because OREO related activities in the prior quarter did not recur in the quarter-ended March 31, 2026.

Balance Sheet - March 31, 2026 Compared to December 31, 2025
Total assets increased $17.3 million, or 0.7%, to $2.6 billion as of March 31, 2026 from $2.6 billion as of December 31, 2025.

Portfolio loans grew $15.0 million, or 0.7% quarter-over-quarter. This growth was generated from commercial & industrial loans which increased $15.4 million, or 3.6%, construction loans increased $12.8 million, or 3.9%, while commercial mortgage loans decreased $5.0 million, or 0.6%, and SBA loan balances decreased $5.3 million, or 3.8%. Lease financings also decreased $4.7 million, or 10.2% from December 31, 2025, partially offsetting the above noted loan growth.

Total deposits increased $11.8 million, or 0.5% quarter-over-quarter, led by an increase of $13.8 million in interest-bearing deposits. Money market accounts and savings accounts decreased a combined $9.8 million, non-interest bearing accounts decreased $1.9 million or 0.8%, while interest bearing demand deposits decreased $209 thousand. While borrowings increased $3.5 million, or 3.0% quarter-over-quarter.

Total stockholders’ equity increased by $3.2 million from December 31, 2025, to $202.9 million as of March 31, 2026. Changes to equity for the quarter included net income of $4.7 million, an increase of $424 thousand in other comprehensive income, partially offset by dividends paid of $1.7 million. The Community Bank Leverage Ratio for the Bank was 9.69% at March 31, 2026.

Asset Quality Summary
Non-performing loans increased $656 thousand, to $55.7 million at March 31, 2026 compared to $55.1 million at December 31, 2025, with increases coming from commercial mortgage, land development, and commercial non-performing loans, partially offset by a decrease in non-performing SBA loans, residential mortgage loans, and construction loans. Of the total non-performing loans, $23.9 million were SBA loans, with $12.9 million, or 54.0%, guaranteed by the SBA. The SBA portfolio was subject to the Fed's rapid rate increase with slightly more than half, 53.7%, of total non-performing SBA loans having been originated in 2020-2021 when rates were lower by over 500 basis points. Despite these changes in non-performing loans, the ratio of non-performing loans to total loans as of March 31, 2026 was unchanged from December 31, 2025 at 2.50%. The ratio of non-performing loans to total loans, excluding the guaranteed portion of the SBA portfolio was 1.92%. As of March 31, 2026 there were specific reserves of $2.8 million against individually evaluated loans, a decrease of $613 thousand from the level of specific reserves as of December 31, 2025.

Net charge-offs increased to $3.9 million, or 0.18% of total average loans for the quarter ended March 31, 2026, compared to net charge-offs of $3.5 million, or 0.16%, for the quarter ended December 31, 2025. First quarter charge-offs consisted of $2.5 million in SBA loans, $149 thousand in commercial loans, $856 thousand in finance receivables, and $745 thousand of small ticket equipment leases. Partially offsetting first quarter charge-offs were recoveries of $407 thousand, mainly related to leases.

The ratio of allowance for credit losses to total loans held for investment was 1.00% as of March 31, 2026, consistent with the 1.00% reported as of December 31, 2025, due to the increase in provision for credit losses discussed above, combined with portfolio loan growth being below 1% for the current quarter.

About Meridian Corporation
Meridian Bank, the wholly owned subsidiary of Meridian Corporation, is an innovative community bank serving Pennsylvania, New Jersey, Delaware, Maryland, and Florida. Through its 17 offices, including banking branches and mortgage locations, Meridian offers a full suite of financial products and services. Meridian specializes in business and industrial lending, retail and commercial real estate lending, electronic payments, and wealth management solutions through Meridian Wealth Partners. Meridian also offers a broad menu of high-yield depository products supported by robust online and mobile access. For additional information, visit our website at www.meridianbanker.com. Member FDIC.

“Safe Harbor” Statement
In addition to historical information, this press release may contain “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to Meridian Corporation’s strategies, goals, beliefs, expectations, estimates, intentions, capital raising efforts, financial condition and results of operations, future performance and business. Statements preceded by, followed by, or that include the words “may,” “could,” “should,” “pro forma,” “looking forward,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” or similar expressions generally indicate a forward-looking statement. These forward-looking statements involve risks and uncertainties that are subject to change based on various important factors (some of which, in whole or in part, are beyond Meridian Corporation’s control). Numerous competitive, economic, regulatory, legal and technological factors, risks and uncertainties that could cause actual results to differ materially include, without limitation, credit losses and the credit risk of our commercial and consumer loan products; changes in the level of charge-offs and changes in estimates of the adequacy of the allowance for credit losses, or ACL; cyber-security concerns; rapid technological developments and changes; increased competitive pressures; changes in spreads on interest-earning assets and interest-bearing liabilities; changes in general economic conditions and conditions within the securities markets; escalating tariff and other trade policies and the resulting impacts on market volatility and global trade; the impact of uncertain or changing political conditions or any current or future federal government shutdown and uncertainty regarding the federal government's debt limit; unanticipated changes in our liquidity position; unanticipated changes in regulatory and governmental policies impacting interest rates and financial markets; legislation affecting the financial services industry as a whole, and Meridian Corporation, in particular; changes in accounting policies, practices or guidance; developments affecting the industry and the soundness of financial institutions and further disruption to the economy and U.S. banking system; among others, could cause Meridian Corporation’s financial performance to differ materially from the goals, plans, objectives, intentions and expectations expressed in such forward-looking statements. Meridian Corporation cautions that the foregoing factors are not exclusive, and neither such factors nor any such forward-looking statement takes into account the impact of any future events. All forward-looking statements and information set forth herein are based on management’s current beliefs and assumptions as of the date hereof and speak only as of the date they are made. For a more complete discussion of the assumptions, risks and uncertainties related to our business, you are encouraged to review Meridian Corporation’s filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2025 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 the Form 10-K and Form 10-Q filings, if any. Meridian Corporation does not undertake to update any forward-looking statement whether written or oral, that may be made from time to time by Meridian Corporation or by or on behalf of Meridian Bank.