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Net Income: Q4 net income decreased to $571 thousand from $4.005 million in Q3.
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Diluted EPS: Earnings per share dropped to $0.05 in Q4 from $0.35 in the previous quarter.
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Loan Growth: Commercial loans, excluding leases, grew by $15.7 million for the quarter and $114.6 million year over year.
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Net Interest Margin: Q4 net interest margin was 3.18%, down from 3.35% for the year.
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Dividend: A quarterly cash dividend of $0.125 per common share was declared, payable on February 20, 2024.
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Asset Quality: The ratio of non-performing loans to total loans increased to 1.76% at the end of Q4.
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Capital Ratios: The Tier 1 leverage ratio for the Bank stood at 9.46% at the end of Q4.
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On January 26, 2024, Meridian Corp (NASDAQ:MRBK) released its 8-K filing, detailing the financial results for the fourth quarter of 2023. The company, a full-service state-chartered commercial bank, operates in three business segments: Bank, Wealth, and Mortgage. It primarily generates revenue from its Bank segment, which includes commercial and retail banking, and offers a range of personal, business lending, and deposit services.
Meridian Corp reported a significant decline in net income for the fourth quarter, totaling $571 thousand, a decrease from $4.005 million in the previous quarter. This decline was attributed to an additional provision for a non-performing commercial credit and the impact of historical interest rate rises on its SBA and small-ticket leasing businesses. Despite these challenges, the company experienced a 9% annual loan growth in its core portfolios, reflecting stable business conditions in the Philadelphia metro region.
Financial Performance and Challenges
Meridian Corp's diluted earnings per share (EPS) for Q4 stood at $0.05, down from $0.35 in Q3, and $1.16 for the year, compared to $1.79 in the previous year. The company's pre-tax, pre-provision income for the Bank was $5.8 million for the quarter and $27.8 million for the year. The net interest margin for Q4 was reported at 3.18%, with a loan yield of 7.15%, indicating a decrease from the annual net interest margin of 3.35% and a loan yield of 6.94%.
Christopher J. Annas, Chairman and CEO of Meridian, commented on the quarter's performance, highlighting the impact of higher deposit expenses and the challenging environment created by Federal Reserve interest rate moves. He also noted the downsizing of the mortgage segment to match expected volumes and the ongoing strong demand for housing.