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

MALVERN, Pa., July 30, 2026 (GLOBE NEWSWIRE) -- Meridian Corporation (Nasdaq: MRBK) today reported:

• Net income for the quarter ended June 30, 2026 was $5.8 million, or $0.48 per diluted share, an increase of $3.8 million, or 189.5%, from the prior quarter.
  
  
• Pre-provision net revenue¹ for the quarter was $10.4 million, an increase of $366 thousand, or 3.6%, from the prior quarter.
  
  
• Return on average assets and return on average equity for the second quarter of 2026 were 0.90% and 11.42%, respectively.
  
  
• Total assets at June 30, 2026 were $2.6 billion, compared to $2.6 billion at March 31, 2026 and $2.5 billion at June 30, 2025.
  
  
• Commercial loans, excluding leases, increased $4.6 million, or 0.3% from prior quarter.
  
  
• On July 30, 2026, the Board of Directors declared a quarterly cash dividend of $0.14 per common share, payable August 17, 2026 to shareholders of record as of August 10, 2026.
  
  

Christopher J. Annas, Chairman and CEO commented:

“The Meridian team delivered a strong second quarter performance, earning $5.8 million vs $2.0 million in the prior quarter. Net interest margin was steady at 3.69%, and the provision was markedly lower against an elevated provision in the prior quarter. Pre-provision net revenue of $10.4 million was up nearly 3.6% from prior quarter. Commercial loan growth for the quarter would have been $54 million, or 3.0%, if not for commercial loan and CRE loan payoffs of $38 million, as well as SBA loan sales in the current quarter of $11.9 million. SBA loan sale income of $615 thousand is up from last quarter and should be more consistent as we adjust that business model. The mortgage group is still impacted by low inventory, but mortgage banking income was up 6% from Q2 2025. Mortgage third quarter originations look promising, but refi activity has fallen as rates have ticked up.

We had a large increase in the non-performing loans due to three real estate relationships, but our substantial collateral position in these three loans negated the need for any current provisioning. We are working tirelessly to resolve the non-performing loans, but also recognize that our historical loan growth rate and small/medium business focus can often lead to periods of elevated non-performing loans. Our task is to keep the charge-off percentage low, which we have. We also have two businesses, SBA and equipment finance, that have generally higher charge-offs than normal commercial/industrial lending, but we earn higher yields on those assets that offset the charge-offs.

We have hired an experienced payments team that has strong background in merchant acquiring, health savings accounts and the new capabilities of FedNow and RTP. With their industry contacts and qualifications, we are hoping to build a stronger deposit franchise and build fee income in that space. Payment methods are evolving rapidly and we are excited about the unique opportunities they could provide."

Select Condensed Financial Information

Income Statement - Second Quarter 2026 Compared to First Quarter 2026

Second quarter net income increased $3.8 million, or 189.5%, to $5.8 million due largely to an increase in non-interest income of $2.8 million, and a decrease of $4.5 million in the provision for credit losses, while non-interest expense increased $2.1 million over the prior quarter, and income tax expense increased $1.1 million over the prior quarter as well. 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 increased $67 thousand quarter-over-quarter on a tax equivalent basis, driven mainly by an increase in loans held for sale and loans held for investment average balances. The yield on interest-earnings assets decreased 10 basis points and negatively impacted interest income by $256 thousand, while the average balance of interest earning assets increased by $12.7 million, having a positive impact to interest income of $323 thousand. The yield on loans dropped 14 basis points due to an interest reversal of $885 thousand related to new nonaccrual loans in the quarter.

Average total loans, excluding residential loans for sale, increased $4.9 million. The largest drivers were increases in commercial loans, commercial real estate loans and home equity loans, which on a combined basis increased $21.2 million on average. Partially offsetting these increases were decreases of $7.1 million in SBA loan average balances, a $2.7 million decrease in the average balance of residential loans held for investment, along with a decrease in average leases of $4.6 million. Also contributing to the increase in interest income was a $16.9 million increase in the average balance of loans held for sale.

Interest expense increased $479 thousand, quarter-over-quarter, due largely to an increase in the cost of interest-bearing deposits. Interest expense on total deposits increased $526 thousand, as interest expense on borrowings decreased $60 thousand. During the period average balances of interest-bearing checking accounts increased $11.8 million, time deposits increased $18.2 million, while money market and savings deposit balances decreased $15.6 million on average and borrowings decreased $5.0 million on average. The cost of deposits increased 5 basis points as interest-bearing demand deposits and money market accounts had a cost increase, partially offset by the decrease in the cost of time deposits.

Overall the net interest margin decreased to 3.69%, compared to the prior quarter, drive by the decline in yield on interest-earning assets and an increase in cost of funds.

Provision for Credit Losses

In the second quarter the overall provision for credit losses fell by $4.5 million to $3.0 million, compared with $7.5 million in the first quarter. The primary reason for the lower level of provision expense was less loan charge-offs and lower loan growth quarter over quarter. Excluding the prior quarter’s $3.9 million charge-off and related provision on a single commercial mortgage, charge-offs in the second quarter declined by $1.3 million driving down the provision. SBA and lease net charge-offs were together down $2.3 million compared to prior quarter.

Non-interest income

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

Total non-interest income increased $2.8 million, or 40.4%, quarter-over-quarter largely due to a $2.1 million increase in mortgage banking income, and a $465 thousand increase in SBA loan income. Despite a quarter-over-quarter decrease of 33 basis points in the margin on mortgage loan sales, total loans sold increased by $81.1 million, or 20% from the prior quarter, resulting in a higher level of mortgage banking income, and the fair value of loans held for sale improved quarter-over-quarter as the loans available for sale at June 30, 2026 were up $15.9 million over March 31, 2026.

SBA loan income increased $465 thousand due to the increase in SBA loans sold. $11.9 million of loans were sold during the quarter-ended June 30, 2026 compared to $6.7 million for the quarter-ended March 31, 2026. However, the gross margin on SBA loan sales was 7.9% for the quarter-ended June 30, 2026 compared to 8.5% for the quarter-ended March 31, 2026.

Non-interest expense

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

Salaries and benefits increased $807 thousand primarily due to the variable nature of the mortgage segment along with higher incentive compensation overall. Advertising and promotion costs increased $625 thousand, reflecting an increase in business development efforts and special events in the current quarter, which is generally seasonally higher. Other expense increased $425 thousand mainly due to an increase in OREO expenses and non-salary employee expenses in the current quarter. The increase in professional fees was due to expenses related to non-performing loans.

Balance Sheet - June 30, 2026 Compared to March 31, 2026

Total assets increased $16.6 million, or 0.6%, to $2.6 billion as of June 30, 2026 from $2.6 billion as of March 31, 2026.

Total portfolio loans decreased $3.2 million, or 0.1% quarter-over-quarter. While there was growth of $41.2 million in commercial mortgage loans, $1.2 million in commercial & industrial loans, and $3.0 million in home equity lines and loans during the second quarter, these increases were offset by a $27.9 million decrease in construction and land development loans, a $9.9 million decrease in SBA loans, and a $5.7 million decrease in lease financings. Commercial loan growth was impacted by $9.9 million in commercial loan payoffs during the quarter.

Total deposits increased $24.5 million, or 1.1% quarter-over-quarter, led by an increase of $21.6 million in interest-bearing deposits. Money market accounts and savings accounts increased a combined $19.5 million, non-interest bearing accounts increased $2.9 million or 1.2%, while interest bearing demand deposits decreased $5.9 million, and borrowings decreased $12.8 million, or 10.6% quarter-over-quarter.

Total stockholders’ equity increased by $4.6 million from March 31, 2026, to $204.8 million as of June 30, 2026. Changes to equity for the quarter included net income of $5.8 million, and an increase of $146 thousand in other comprehensive income, partially offset by dividends paid of $1.7 million. The Community Bank Leverage Ratio for the Bank was 9.72% at June 30, 2026.

Asset Quality Summary

Non-performing loans increased $23.4 million, to $82.1 million at June 30, 2026 compared to $58.7 million at March 31, 2026, with the largest increases coming from land development loans ($20.0 million) and commercial mortgage loans ($5.5 million) that were downgraded during the current quarter partially offset by payoffs of $3.3 million of several CRE, construction and consumer loans combined. The downgraded land development and commercial mortgage loan relationships were well collateralized and therefore did not require any specific reserve as of June 30, 2026. SBA loans make up $24.6 million of total non-performing loans, with $11.9 million, or 48.4%, guaranteed by the SBA. The SBA portfolio was subject to the Fed's rapid rate increase with 49.7%, of total non-performing SBA loans having been originated in 2020-2021 when rates were lower by over 500 basis points.

The ratio of non-performing loans to total loans as of June 30, 2026 was 3.68%. Due to the increase in non-performing loans, the ratio of non-performing loans to total loans, excluding the guaranteed portion of the SBA portfolio was 3.14%. As of June 30, 2026 there were specific reserves of $3.3 million against individually evaluated loans, an increase of $428 thousand from the level of specific reserves as of March 31, 2026.

Net charge-offs decreased to $2.6 million, or 0.12% of total average loans for the quarter ended June 30, 2026, compared to net charge-offs of $7.8 million, or 0.35%, for the quarter ended March 31, 2026. Second quarter charge-offs consisted of $414 thousand in SBA loans, $1.0 million in commercial loans, $1.2 million in finance receivables, and $455 thousand of small ticket equipment leases. Partially offsetting second quarter charge-offs were recoveries of $467 thousand between commercial loans, finance receivables, home equity loans, and leases.

The ratio of allowance for credit losses to total loans held for investment was 0.99% as of June 30, 2026, compared to 0.98% reported as of March 31, 2026.

Subsequent to June 30, 2026, a property in OREO valued at $719 thousand sold for a recorded gain of $218 thousand.

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, including the timing of third-party appraisals and loan valuations from lead financial institutions in which we are a loan participant; cyber-security concerns; rapid technological developments and changes, including the development and use of artificial intelligence in business processes, services, and products; 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; geopolitical conditions, including acts or threats of terrorism, actions taken by the United States or other governments in response to acts or threats of terrorism and military conflicts, including the ongoing conflict in the Middle East, which could impact economic conditions in the United States; 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.

MERIDIAN CORPORATION AND SUBSIDIARIES
APPENDIX: NON-GAAP MEASURES (Unaudited)
(Dollar amounts and shares in thousands, except per share amounts)

Meridian believes that non-GAAP measures are meaningful because they reflect adjustments commonly made by management, investors, regulators and analysts. The non-GAAP disclosure have limitations as an analytical tool, should not be viewed as a substitute for performance and financial condition measures determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of Meridian’s results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Contact:
Christopher J. Annas
484.568.5001
CAnnas@meridianbanker.com