Meridian Corp (MRBK)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 delivered higher profitability: net income rose to $5.601M and diluted EPS to $0.49, up 18% QoQ; NIM expanded 9 bps to 3.29% as deposit costs fell 35 bps .
• Non-interest income jumped 22.6% QoQ to $13.280M, aided by a $3.992M gain on sale of residential MSRs and a $317K gain on OREO; offset by lower mortgage banking income and negative FV marks totaling ~$1.9M .
• Credit costs were elevated: provision increased to $3.572M (from $2.282M), and net charge-offs rose to $7.1M (0.34% of average loans) due to a specific commercial advertising exposure, small-ticket leases, and SBA loans; ACL coverage fell to 0.91% .
• Balance sheet growth continued: deposits +$26.4M QoQ to $2.005B and loans +$22.8M QoQ to $2.030B, with business/MMDA mix supporting lower funding costs; quarterly dividend maintained at $0.125/share .
• Key near-term catalyst: deposit repricing runway ($435M of term deposits to reprice over 6 months at ~4.25% vs ~4.90% previously) supports further NIM improvement if credit costs normalize .

What Went Well and What Went Wrong

What Went Well

• Margin expansion: NIM improved to 3.29% as funding costs declined 35 bps; non-interest-bearing deposits increased by $3.7M QoQ and by $14.2M on average .
• Fee momentum and monetization: $3.992M gain on sale of $6.6M residential MSRs and $317K OREO gain lifted non-interest income to $13.280M (+22.6% QoQ) .
• CEO emphasized strong loan growth (+12% YoY ex-leases) and robust deposit growth (~10% YoY), with mortgage segment swing to $4.113M pre-tax income for 2024 and wealth segment nearly doubling to $2.375M pre-tax in 2024 .

What Went Wrong

• Elevated credit costs: Provision rose to $3.572M and net charge-offs spiked to $7.1M (0.34% of average loans), including a $3.5M charge-off in a commercial advertising relationship and $1.7M in SBA charge-offs; ACL coverage decreased to 0.91% .
• Mortgage banking softness: Mortgage banking income fell to $5.516M (-14.8% QoQ) on lower sales volume (-$29.8M) and slightly lower margins; portfolio FV marks were unfavorable (~$1.517M) .
• One-time occupancy hit: Early termination of Blue Bell lease increased occupancy/equipment expense by $1.0M net in Q4; future savings expected ($359K/year) .

Financial Results

Guidance Changes

Note: Company did not issue quantitative revenue/EPS/margin guidance; management provided qualitative commentary on deposit repricing and margin trajectory .

Earnings Call Themes & Trends

Earnings call transcript for Q4 2024 was not available in our document set; themes are derived from press releases and the earnings supplement.

Management Commentary

• “Our fourth quarter earnings showed significant improvement from the third quarter, increasing by 18.1% to $5.6 million, or $0.49 per share... we are still working through the drastic rate shock... our net interest margin is down 50 basis points from 2019 levels. The team is working diligently each day to return to historical spreads.” — Christopher J. Annas, Chairman & CEO .
• “Loan growth of 12% (minus planned lease paydowns) for 2024 was exceptional... Deposits were up nearly 10%, mostly from money market accounts that can be rate-adjusted anytime.” — Christopher J. Annas .
• “The mortgage group had significant improvement... $4.1 million pre-tax income versus a large loss in 2023... operational leverage allows us to pivot quickly based on market conditions.” — Christopher J. Annas .
• “Our wealth segment had a banner year with pre-tax income nearly doubling to $2.4 million... we will devote more resources to wealth in 2025.” — Christopher J. Annas .

Q&A Highlights

Earnings call transcript for Q4 2024 was not available; therefore, Q&A highlights and any guidance clarifications from a live call cannot be provided based on our document set [functions.ListDocuments and ReadDocument results showed no transcript].

Estimates Context

• Wall Street consensus (S&P Global Capital IQ) for Q4 2024 EPS and revenue could not be retrieved due to S&P Global request-limit errors. As a result, estimate comparisons are unavailable in this recap. If needed, we can refresh once access is restored to SPGI systems [functions.GetEstimates error].

Key Takeaways for Investors

• Margin trajectory improving: declining funding costs and deposit repricing support further NIM expansion; watch the pace of term deposit repricing vs asset yields .
• Earnings quality mixed: core NII growth strong, but Q4 benefited from discrete gains (MSRs, OREO); FV marks and lower mortgage banking income partially offset .
• Credit costs elevated: specific commercial and SBA exposures drove higher net charge-offs; monitor ACL adequacy and resolution timelines into 2025 .
• Deposit growth and mix supportive: $26.4M QoQ deposit increase, higher business/MMDA balances, and lower borrowings strengthen funding profile .
• Segment diversification helpful: Mortgage and Wealth contributed materially to pre-tax, pre-provision income; Bank segment remains the core driver .
• Capital and dividend stable: TBV/share rose to $14.93; dividend maintained at $0.125 — signaling confidence while preserving capital .
• Actionable focus: Near-term, the narrative hinges on sustained NIM improvement vs normalization of credit costs; monitor SBA sales volume/margins, lease portfolio runoff, and any incremental disclosures on problem credits .