Meridian Corp (MRBK)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 EPS of $0.21 and net income of $2.4M reflected solid core PPNR but higher provisioning tied to SBA credits; NIM improved to 3.46% for the fourth straight quarter while deposits grew 6% QoQ .
• Results missed S&P Global Wall Street consensus: EPS $0.21 vs $0.325 estimate; “Revenue” $21.9M vs $27.9M estimate (thin coverage: 2 EPS and 2 revenue estimates); note S&P’s revenue taxonomy can differ for banks and may not equal NII + noninterest income [Values retrieved from S&P Global].*
• Credit costs rose: provision increased to $5.2M (+$1.6M QoQ) as NPLs climbed to $52.2M (2.49% of loans), largely SBA-related exposures affected by rapid rate hikes; ACL/loans increased to 1.01% .
• Deposit mix improved with noninterest-bearing balances up $82.6M QoQ; management highlighted PPNR strength and continued NIM tailwinds as drivers for profitability improvement through 2025 .
• Board maintained the $0.125 quarterly dividend; near-term stock catalysts include continued NIM expansion, deposit mix migration, and visibility on SBA remediation timelines .

What Went Well and What Went Wrong

• What Went Well

  • Core earnings power: PPNR rose to $8.4M, up $1.9M or 30.2% YoY, with Bank segment PPNR of $8.9M and ongoing cost control (efficiency 69.2%) .
  • NIM trajectory: Net interest margin improved 17 bps QoQ to 3.46% as deposit costs declined and earning-asset yields inched up; management noted NIM improvement across the last four quarters .
  • Funding and balance sheet: Deposits +$123.4M QoQ (+6.2%), with noninterest-bearing +$82.6M; total assets +$142.7M QoQ (+6.0%); equity +$1.7M QoQ .

• What Went Wrong

  • Credit costs/SBA stress: Provision rose to $5.2M (+$1.6M QoQ) as NPLs increased $7.1M to $52.2M (2.49% of loans); SBA non-performers rose $6.9M (53% guaranteed), with rate-shock vintages from 2020–2021 a key driver .
  • Fee income normalization: Noninterest income fell $6.0M QoQ to $7.3M, driven by absence of prior-quarter $4.0M MSR sale gain and lower mortgage volume/margins; SBA sales volumes also declined QoQ .
  • Mortgage segment loss: Mortgage posted a $(1.229)M pretax loss on seasonally weaker volumes and fewer loan officers; management remains constructive on inventory outlook .

Financial Results

Segment results (Pretax income by segment)

Key KPIs and balance sheet

Guidance Changes

Earnings Call Themes & Trends

Note: We could not locate a Q1 2025 earnings call transcript in the document library.

Management Commentary

• “PPNR was up 30%, reflecting overall healthy growth in our business units and good expense control… earnings were negatively affected by higher provisioning resulting mainly from distressed SBA loans… our net interest margin was 3.46% and has shown consistent improvement over the last four quarters.” — Christopher J. Annas, Chairman & CEO .
• “Loan growth in the first quarter was 12% annualized… all commercial groups contributed… [we] hired a senior lender with a deep list of contacts… expect many opportunities from this individual and his future hires.” .
• “Meridian Wealth Partners continued its strong performance with pre-tax income of $726 thousand… poised for better growth… with the recent hiring of a senior wealth professional.” .
• “The mortgage group had a larger pre-tax loss… mainly due to lower volume and a lesser loan officer count… encouraged by the forecast for greater home inventory.” .
• “Our solid growth in PPNR has enabled us to manage the spike in non-performing loans… growth in first quarter loan volume and expansion in net interest margin should continue to help drive further improvement in profitability.” .

Q&A Highlights

• We did not locate a Q1 2025 earnings call transcript in the available document set; therefore, Q&A themes and guidance clarifications are not available from a transcript source.

Estimates Context

• S&P Global consensus vs reported: Q1 2025 EPS of $0.21 vs $0.325 consensus (2 ests) — miss; S&P “Revenue” actual $21.9M vs $27.9M consensus (2 ests) — miss. Coverage is thin, and S&P’s “Revenue” definition for banks can differ from NII + noninterest income reported by the company. Values retrieved from S&P Global.*

• Implications: Consensus likely revises modestly lower for near-term quarters to reflect elevated credit costs in SBA and seasonally softer mortgage fees; PPNR strength and NIM trajectory may support outer-quarter estimate stability .

Key Takeaways for Investors

• Core engine healthy: PPNR +30% YoY to $8.4M with better efficiency and rising NIM; this underpins earnings power as credit costs normalize .
• Credit overhang centered on SBA: NPLs up to 2.49% of loans; provision elevated with higher specific reserves; partial SBA guarantees mitigate some loss severity .
• Funding tailwinds: Deposit costs fell 21 bps; NIM +17 bps QoQ to 3.46%; further benefit possible as term deposits reprice and mix shifts to NIB/MMAs continue .
• Mortgage near-term drag, wealth positive: Mortgage loss reflects seasonal and staffing factors; wealth pretax $726K provides diversification .
• Balance sheet momentum: Loans +$42M and deposits +$123M QoQ; temporary $103M deposit inflated period-end cash but mix improvement is real .
• Dividend maintained at $0.125; capital and leverage ratios steady; ACL/loans lifted to 1.01% to address NPLs .
• Trading setup: Near-term stock moves likely tied to updates on SBA remediation and NIM progression; watch noninterest income trends as mortgage seasonality eases and wealth scales .

Notes:

• Prior two quarters used for trend analysis come from MRBK’s Q4 2024 and Q3 2024 earnings materials .
• No quantitative forward guidance was provided; only dividend actions were disclosed .