MALVERN, PA — Meridian Corporation (Nasdaq: MRBK) announced first-quarter 2025 results, reporting net income of $2.4 million, slightly below the $2.7 million earned during the same period in 2024. Despite the decrease in earnings, Pre-Provision Net Revenue (PPNR) grew by 30%, reflecting healthy growth across business units and disciplined expense management.
“Our earnings were negatively affected by higher provisioning resulting mainly from distressed SBA loans, which have been impacted by the dramatic rate rise,” said Christopher J. Annas, Chairman and CEO. “However, our net interest margin of 3.46% has improved consistently over the past four quarters, positioning us for future profitability.”
Loan Growth and Segment Performance
Meridian achieved annualized loan growth of 12% in Q1 2025, excluding expected lease paydowns, with contributions from all commercial groups. The company noted that residential construction demand remains robust due to a limited housing supply in the Delaware Valley region. Additionally, new commercial lending opportunities have arisen from local bank consolidations, with the hiring of a senior lender expected to drive further regional gains.
Meridian Wealth Partners reported strong pre-tax income of $726,000, bolstered by higher assets under management and improved fee structures. CEO Annas highlighted plans for further expansion, including leveraging an expanded loan customer base for referral business.
Conversely, the mortgage division posted a larger pre-tax loss compared to the same period in 2024, citing lower volumes and reduced loan officer staffing. However, the company anticipates increased activity as housing inventory rises in key markets later this year.
Asset Quality and Financial Highlights
The provision for credit losses rose to $5.2 million, reflecting $7.1 million in additional non-performing loans, primarily SBA loans. Of these, 53% are guaranteed by the SBA, mitigating overall risk. The allowance for credit losses climbed to 1.01% of total loans, driven by an increase in reserves on affected loans.
Meridian’s net interest margin improved 17 basis points quarter-over-quarter to 3.46%, aided by lower funding costs and slightly higher asset yields. Total deposits grew by 6.2%, driven by a temporary $103 million deposit from a longstanding customer, and total assets rose 6% to $2.5 billion as of March 31, 2025.
The company declared a quarterly dividend of $0.125 per common share, underscoring its commitment to returning value to shareholders.
Outlook
With continued focus on loan growth, disciplined cost management, and net interest margin improvement, Meridian is positioned to address near-term challenges and enhance profitability. “The growth in first-quarter loan volume and expansion in net interest margin should continue to help drive further improvement in profitability,” Annas concluded.
Meridian’s dedication to strengthening its core lending and wealth management segments, while addressing non-performing loans, reflects an ongoing effort to deliver long-term value to both customers and shareholders.
For the latest news on everything happening in Chester County and the surrounding area, be sure to follow MyChesCo on Google News and MSN.