# EDGAR Filing Document

**Accession Number:** 0001750735
**File Stem:** 0001750735-23-000008
**Filing Date:** 2023-1
**Character Count:** 53072
**Document Hash:** 8beb21e675b70683cc930b84cccd02b3
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001750735-23-000008.hdr.sgml**: 20230130

**ACCESSION NUMBER**: 0001750735-23-000008

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 15

**CONFORMED PERIOD OF REPORT**: 20230130

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Other Events

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230130

**DATE AS OF CHANGE**: 20230130

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Meridian Corp
- **CENTRAL INDEX KEY:** 0001750735
- **STANDARD INDUSTRIAL CLASSIFICATION:** NATIONAL COMMERCIAL BANKS [6021]
- **IRS NUMBER:** 831561918
- **STATE OF INCORPORATION:** PA
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-55983
- **FILM NUMBER:** 23568561

**BUSINESS ADDRESS:**
- **STREET 1:** 9 OLD LINCOLN HIGHWAY
- **CITY:** MALVERN
- **STATE:** PA
- **ZIP:** 19355
- **BUSINESS PHONE:** 484-568-5000

**MAIL ADDRESS:**
- **STREET 1:** 9 OLD LINCOLN HIGHWAY
- **CITY:** MALVERN
- **STATE:** PA
- **ZIP:** 19355

?xml version="1.0" ? mrbk-20230130

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 8-K**

**CURRENT REPORT**

**Pursuant to Section 13 or 15(d) of**

**The Securities Exchange Act of 1934**

**January 30, 2023**

Date of Report (Date of earliest event reported)

![mrbk-20230130_g1.jpg](mrbk-20230130_g1.jpg)

(Exact name of registrant as specified in its charter)

---

| | | |
|:---|:---|:---|
| **Pennsylvania** | **000-55983** | **83-1561918** |
| (State or other jurisdiction<br>of incorporation) | (Commission<br>File Number) | (IRS Employer<br>Ident. No.) |
| **9 Old Lincoln Highway, Malvern, Pennsylvania** | **9 Old Lincoln Highway, Malvern, Pennsylvania** | **19355** |
| (Address of principal executive offices) | (Address of principal executive offices) | (Zip Code) |
| **(484) 568-5000**<br>Registrant's telephone number, including area code | **(484) 568-5000**<br>Registrant's telephone number, including area code | **(484) 568-5000**<br>Registrant's telephone number, including area code |
| **Not Applicable** | **Not Applicable** | **Not Applicable** |
| (Former name or former address, if changed since last report.) | (Former name or former address, if changed since last report.) | (Former name or former address, if changed since last report.) |

---

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class:** | **Trading Symbol(s)** | **Name of each exchange on which registered:** |
| Common Stock, $1 par value | MRBK | The NASDAQ Stock Market |

---

------

**Item 2.02.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Results of Operations and Financial Condition.**

On January 30, 2023 Meridian Corporation issued a press release discussing the Corporation's Fourth Quarter 2022 Results. A copy is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information in this Current Report on Form 8-K, including Exhibit 99.1 attached hereto and incorporated by reference into Item 2.02 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities under that Section. Furthermore, such information, including the exhibit attached hereto, shall not be deemed incorporated by reference into any of the Corporation's reports or filings with the SEC, whether made before or after the date hereof, except as expressly set forth by specific reference in such report or filing. The information in this Current Report on Form 8-K, including the exhibit attached hereto, shall not be deemed an admission as to the materiality of any information in this Current Report on Form 8-K that is required to be disclosed solely to satisfy the requirements of Regulation FD.

**Item 8.01.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other Events.**

**Quarterly Dividend**

On January 26, 2023, Meridian Corporation's Board of Directors declared a quarterly cash dividend of $0.25 per common share, payable February 21, 2023, to shareholders of record as of February 14, 2023.

**Item 9.01.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial Statements and Exhibits.**

(d)&nbsp;&nbsp;&nbsp;&nbsp;Exhibits. The following exhibit is furnished herewith:

99.1 Press Release, issued January 30, 2023 by Meridian Corporation

**EXHIBIT INDEX**

---

| | |
|:---|:---|
| **Exhibit No.** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Description of Exhibit** |
| <u>[99.1](q42022-earningsreleasexex9.htm)</u> | <u>[Press Release, issued](q42022-earningsreleasexex9.htm)[January](q42022-earningsreleasexex9.htm)[3](q42022-earningsreleasexex9.htm)[0](q42022-earningsreleasexex9.htm)[, 202](q42022-earningsreleasexex9.htm)[3](q42022-earningsreleasexex9.htm)[by Meridian Corporation](q42022-earningsreleasexex9.htm)</u> |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |

---

<u>SIGNATURES</u>

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

---

| | | |
|:---|:---|:---|
| | **MERIDIAN CORPORATION**<br>(Registrant) | **MERIDIAN CORPORATION**<br>(Registrant) |
| Dated: January 30, 2023 |  |  |
|  | By: | /s/ Denise Lindsay |
|  |  | Denise Lindsay |
|  |  | Executive Vice President and Chief Financial Officer |

---

## Exhibit 99.1

**Exhibit 99.1**

![image_0a.jpg](image_0a.jpg)

Meridian Corporation Reports Fourth Quarter and Year End 2022 Results and Announces an Increase in the Quarterly Dividend to $0.25 per Common Share.

MALVERN, PA., January 30, 2023 — Meridian Corporation (Nasdaq: MRBK) today reported:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Net income of $21.8 million and diluted earnings per share of $3.58 for the year ended December 31, 2022, and net income of $4.6 million and diluted earnings per share of $0.77 for the fourth quarter ended December 31, 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Return on average assets and return on average equity for the year ended December 31, 2022 were 1.18% and 13.87%, respectively; while the return on average assets and return on average equity for the fourth quarter of 2022 were 0.92% and 11.91%, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Net interest margin was 3.98% for the year ended December 31, 2022 and 3.93% for the fourth quarter of 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Total assets at December 31, 2022 were $2.1 billion, compared to $1.9 billion at September 30, 2022 and $1.7 billion at December 31, 2021.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Fourth quarter commercial loan growth, excluding Paycheck Protection Program ("PPP") loans, was $61.3 million, or 17.6% annualized; residential and home equity loans increased by $70.1 million.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Fourth quarter deposit growth was $38.9 million with an $11.6 million increase in non-interest bearing deposits.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Non-interest income of $41.7 million for the year ended December 31, 2022, and $8.0 million in the fourth quarter of 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Non-interest expenses of $81.4 million for the year ended December 31, 2022, and $20.0 million in the fourth quarter of 2022.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Company repurchased 123,441 shares of its common stock at an average price of $30.82 per share during the fourth quarter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• On January 26, 2023, the Board of Directors declared a quarterly cash dividend of $0.25 per common share, payable February 21, 2023 to shareholders of record as of February 14, 2023.

Christopher J. Annas, Chairman and CEO commented "Meridian's fourth quarter revenue of $35.8 million generated earnings of $4.6 million, or $0.77 per diluted share. The bank fundamentals were very strong, with net interest margin of 3.93% and quarterly loan growth of 8%. Loan demand has been consistent within our customer base, and we also won a number of relationships from competitors. Reduced income from our ancillary businesses, mortgage (down 46%) and SBA (down 47%) hurt bottom line results."

"On an annual basis, we fared well in a tumultuous year. Loans grew 26%, led by commercial real estate and commercial/industrial. We also generated adjustable rate mortgages for the portfolio, in shorter maturity buckets. I'm very pleased with a 3.98% net interest margin for the year. The change from a flush deposit environment to rapid rate increases and deposit outflows has been a challenge. Credit quality is good, and we experienced some non-performing loan payoffs. Our branch lite and customer self-service model helps control expenses."

"Our mortgage segment experienced a 67% decline in revenue year-over-year, resulting from the rate increases and a lack of homes for sale. The low inventory has plagued the business for the last two years and is only now showing signs of subsiding. We made dramatic cuts in expense throughout the year but still ended with a $2.6 million pretax loss, our first negative year. We are monitoring applications daily and are ready to cut further if sales don't improve."

"The SBA business was impacted by rates, as gain on sale margins reduced and transactions slowed. We have added some new lenders and expect economic conditions to be ripe for more opportunities."

Mr. Annas added, "The Meridian team managed through a difficult year with the historic rate rise and other economic factors. Ironically, this year helped to illuminate the basic loan/deposit bank operations that are the engine of MRBK. Recognizing this, we will continue to grow organically, while seeking revenue diversification to make Meridian resilient against varied economic conditions."

------

**Select Condensed Financial Information**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **As of or for the quarter ended (Unaudited)** | **As of or for the quarter ended (Unaudited)** | **As of or for the quarter ended (Unaudited)** | **As of or for the quarter ended (Unaudited)** | **As of or for the quarter ended (Unaudited)** |
| | **December 31,<br>2022** | **September 30,<br>2022** | **June 30,<br>2022** | **March 31,<br>2022** | **December 31,<br>2021** |
| | **(Dollars in thousands, except per share data)** | **(Dollars in thousands, except per share data)** | **(Dollars in thousands, except per share data)** | **(Dollars in thousands, except per share data)** | **(Dollars in thousands, except per share data)** |
| **Income:** | | | | | |
| Net income  | $4557 | $5798 | $5938 | $5535 | $7719 |
| Basic earnings per common share | 0.80 | 0.99 | 0.99 | 0.92 | 1.29 |
| Diluted earnings per common share | 0.77 | 0.96 | 0.96 | 0.88 | 1.24 |
| Net interest income  | 18518 | 18026 | 17551 | 16035 | 16322 |
| **Balance Sheet:** |  |  |  |  |  |
| Total assets | $2062228 | $1921924 | $1853019 | $1831589 | $1713443 |
| Loans, net of fees and costs | 1743682 | 1610349 | 1518893 | 1431906 | 1386457 |
| Total deposits | 1712479 | 1673553 | 1568014 | 1564851 | 1446413 |
| Non-interest bearing deposits | 301727 | 290169 | 291925 | 291379 | 274528 |
| Stockholders' equity | 153280 | 151161 | 156087 | 157684 | 165360 |
| **Balance Sheet (Average Balances):** |  |  |  |  |  |
| Total assets | $1962915 | $1868194 | $1811335 | $1752643 | $1755263 |
| Total interest earning assets | 1877967 | 1791255 | 1736547 | 1680070 | 1696473 |
| Loans, net of fees and costs | 1674215 | 1565861 | 1484696 | 1415831 | 1383511 |
| Total deposits | 1698597 | 1597648 | 1567325 | 1504241 | 1409534 |
| Non-interest bearing deposits | 312297 | 295975 | 296521 | 281123 | 287801 |
| Stockholders' equity | 151791 | 157614 | 158420 | 161939 | 159921 |
| **Performance Ratios (Annualized):** |  |  |  |  |  |
| Return on average assets  | 0.92% | 1.23% | 1.31% | 1.28% | 1.74% |
| Return on average equity | 11.91% | 14.59% | 15.03% | 13.86% | 19.15% |

---

**Income Statement - Fourth Quarter 2022 Compared to Third Quarter 2022**

Net income was $4.6 million, down $1.2 million from $5.8 million for the third quarter. Net interest income increased $486 thousand, or 2.7%, on a tax equivalent basis driven by continued strong loan portfolio growth. Offsetting the increase in net interest income, non-interest income decreased $2.2 million or 21.8%, while non-interest expense decreased $214 thousand, or 1.1%. 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 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.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Quarter Ended** | **Quarter Ended** | | | | |
| *(dollars in thousands)* | **December 31,<br>2022** | **September 30,<br>2022** | **$ Change** | **% Change** | **Change due to rate** | **Change due to volume** |
| **Interest income:** |  |  |  |  |  |  |
| Due from banks | $126 | $92 | $34 | 37.0% | $49 | $(15) |
| Federal funds sold | 3 | 1 | 2 | 200.0% | 1 | 1 |
| Investment securities - taxable (1) | 821 | 648 | 173 | 26.7% | 172 | 1 |
| Investment securities - tax exempt (1) | 449 | 451 | (2) | (0.4)% | 9 | (11) |
| Loans held for sale | 292 | 479 | (187) | (39.0)% | 71 | (258) |
| Loans held for investment (1) | 26150 | 21371 | 4779 | 22.4% | 3231 | 1548 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total loans | 26442 | 21850 | 4592 | 21.0% | 3302 | 1290 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest income | 27841 | 23042 | 4799 | 20.8% | 3533 | 1266 |
| **Interest expense:** |  |  |  |  |  |  |
| Interest-bearing demand deposits | $1388 | $798 | $590 | 73.9% | $589 | $1 |
| Money market and savings deposits | 3851 | 2075 | 1776 | 85.6% | 1813 | (37) |
| Time deposits | 2976 | 1202 | 1774 | 147.6% | 1385 | 389 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total deposits | 8215 | 4075 | 4140 | 101.6% | 3787 | 353 |

---

------

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| Borrowings | 439 | 266 | 173 | 65.0% | 206 | (33) |
| Subordinated debentures | 591 | 591 |  | —% |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest expense | 9245 | 4932 | 4313 | 87.4% | 3993 | 320 |
| Net interest income differential | $18596 | $18110 | $486 | 2.68% | $(460) | $946 |
| (1) Reflected on a tax-equivalent basis. | (1) Reflected on a tax-equivalent basis. |  |  |  |  |  |

---

Interest income increased $4.8 million on a tax equivalent basis, quarter over quarter, due to a higher yield on earning assets, which went up 78 basis points, in addition to a higher level of average earning assets, which increased by $86.7 million. Included in interest income was approximately $280 thousand of one-time fees and interest recapture. The yield on total loans increased 78 basis points and the yield on cash and investments increased 50 basis points in total, reflecting the impact in rates caused by the Federal Reserve's monetary policy. Over $718 million in loans repriced during the quarter with an average increase of 129 basis points. Average total loans, excluding PPP loans and residential loans for sale, increased $113.9 million, most notably in commercial real estate and construction, commercial loans and leases and small business loans, which increased $47.9 million on average, combined. Home equity loans and residential real estate loans held in portfolio increased $44.8 million on average, combined. Residential loans for sale and PPP loans decreased $18.1 million, and $5.6 million on average, respectively.

Interest expense increased $4.3 million, quarter over quarter, due primarily to market interest rate rises, as well as an increase of $84.6 million in average deposits. Interest expense on deposits increased $4.1 million with the cost of interest-bearing deposits increasing 111 basis points to 2.35%. Total cost of deposits increased 91 basis points reflecting an increase of $16.3 million in average non-interest bearing deposits. Interest expense on borrowings increased $173 thousand as total average short-term borrowings decreased $4.7 million and the cost increased 221 basis points.

Net interest margin decreased 8 basis points to 3.93% for the fourth quarter from 4.01% for third the quarter, as retail deposits experienced pent-up repricing and wholesale funding repriced quicker than loans at the tail end of the quarter. Excluding the impact from PPP, net interest margin decreased 7 basis points to 3.92% from 3.99%. A reconciliation of this non-GAAP measure is included in the Appendix.

*Provision for loans losses*

The provision for loan losses increased $220 thousand to $746 thousand for the fourth quarter. The fourth quarter provision was the result of new loan growth as well as covering $933 thousand in charge-offs on small ticket equipment leases, partially offset by improvements in certain qualitative factors and decreases in specific reserves due to payoffs on non-performing loans and other underlying credit quality improvements.

*Non-interest income*

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

---

| | | | | |
|:---|:---|:---|:---|:---|
| | **Quarter Ended** | **Quarter Ended** | | |
| *(Dollars in thousands)* | **December 31,<br>2022** | **September 30,<br>2022** | **$ Change** | **% Change** |
| Mortgage banking income | $3958 | $7329 | $(3371) | (46.0)% |
| Wealth management income | 1061 | 1114 | (53) | (4.8)% |
| SBA loan income | 522 | 989 | (467) | (47.2)% |
| Earnings on investment in life insurance | 140 | 138 | 2 | 1.4% |
| Net change in the fair value of derivative instruments | 10 | 127 | (117) | (92.1)% |
| Net change in the fair value of loans held-for-sale | 249 | (237) | 486 | (205.1)% |
| Net change in the fair value of loans held-for-investment | 91 | (886) | 977 | (110.3)% |
| Net gain on hedging activity | 498 | 399 | 99 | 24.8% |
| Service charges | 35 | 32 | 3 | 9.4% |
| Other | 1432 | 1219 | 213 | 17.5% |
| Total non-interest income | $7996 | $10224 | $(2228) | (21.8)% |

---

Total non-interest income decreased $2.2 million, or 21.8%, quarter over quarter due primarily to impact from the rising rate environment. Mortgage banking income was negatively impacted by rising rates, higher home values and record low home inventory which resulted in a decline in loan originations of $70.6 million over the prior quarter. Gain on sale margins remained flat at 267 basis points, as mortgage banking income decreased $3.4 million. The fair value of loans held for sale, derivatives instruments and net gain on hedging activity increased $468 thousand in total, helping offset the decline in mortgage banking income.

SBA loan income decreased $467 thousand, or 47.2%, over the prior quarter as a lower volume of SBA loans were sold into the secondary market in the fourth quarter. $17.2 million of loans were sold in the quarter-ending December 31, 2022 compared to $20.8 million in loans sold in the quarter-ending September 30, 2022. The upward movement in interest rates had a negative impact on gross margins on the SBA loan sales, which declined 8 basis points to 5.0%, while also contributing to the decline in income was increased amortization and impairment of $128 thousand on SBA servicing assets.

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Wealth management income decreased $53 thousand, or 4.8%, for the quarter-ended December 31, 2022 over the prior quarter due to the effect of market conditions on assets under management. Other non-interest income increased $213 thousand, or 17.5%, over the prior quarter due largely to an increase in swap fee income and FHLB stock dividend income.

*Non-interest expense*

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

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Quarter Ended** | **Quarter Ended** | | |
| *(Dollars in thousands)* | **December 31,<br>2022** | **September 30,<br>2022** | **$ Change** | **% Change** |
| Salaries and employee benefits | $12794 | $13360 | $(566) | (4.2)% |
| Occupancy and equipment | 1218 | 1191 | 27 | 2.3% |
| Professional fees | 976 | 899 | 77 | 8.6% |
| Advertising and promotion | 996 | 1165 | (169) | (14.5)% |
| Data processing | 677 | 574 | 103 | 17.9% |
| Information technology | 836 | 868 | (32) | (3.7)% |
| Pennsylvania bank shares tax | 181 | 202 | (21) | (10.4)% |
| Other | 2369 | 2002 | 367 | 18.3% |
| Total non-interest expense | $20047 | $20261 | $(214) | (1.1)% |

---

Salaries and employee benefits decreased $566 thousand overall, with an increase of $1.3 million for bank and wealth segments combined, and a decrease of $1.9 million for mortgage segment salaries and employee benefits. The bank and wealth segments salaries and employee benefits were greater due to new hires, as well as increased incentive compensation and stock based compensation quarter-over-quarter. The mortgage segment salary and benefits decreased due to lower levels of variable compensation as well as a general reduction in mortgage segment workforce.

Professional fees increased $77 thousand over the prior quarter due to legal expense incurred related to dealing with non-performing loans and the increase in other real estate owned, discussed below. Advertising and promotion expense decreased $169 thousand from the prior quarter as promotional costs were down in the fourth quarter due to seasonality, while there was also a decline in advertising expense from the mortgage segment. Data processing expense increased $103 thousand over the prior quarter due to an increase in deposit processing fees. Other non-interest expense increased $367 thousand over the prior quarter due to $161 thousand in expenses related to the other real estate owned property recorded in the fourth quarter, combined with an increase in year-end business development costs.

**Balance Sheet - December 31, 2022 Compared to September 30, 2022**

As of December 31, 2022, total assets increased $140.3 million, or 7.3%, to $2.1 billion from $1.9 billion at September 30, 2022. This growth in assets was due to loan portfolio growth partially funded by an increase in deposits and borrowings.

Portfolio loan growth, excluding PPP loans, was $135.5 million, or 8.5% quarter-over-quarter. Construction loans increased $27.5 million, or 11.3%, residential real estate loans held in portfolio increased $68.3 million, or 44.5%, and lease financings increased $9.4, or 7.3% from September 30, 2022. Partially offsetting the growth in portfolio loans were decreases of $4.1 million, or 46.9%, in PPP loan balances as they continue to be forgiven by the SBA.

Total deposits increased $38.9 million, or 2.3%, quarter over quarter, due to an increase of $11.6 million in non-interest bearing deposits and a $27.4 million increase in interest-bearing deposits.

Consolidated stockholders' equity of the Corporation increased as a result of net income of $4.6 million for the quarter, as well as improvement $1.5 million in other comprehensive loss, partially offset by dividends paid of $1.1 million, treasury stock purchases of $3.8 million. Based on capital ratio levels at December 31, 2022, we remain above the Community Bank Leverage Ratio requirement of 9%.

------

The following table presents capital ratios at the dates indicated:

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| | | |
|:---|:---|:---|
| | **December 31,<br>2022** | **September 30,<br>2022** |
| Stockholders' equity to total assets | 7.43% | 7.87% |
| Tangible common equity to tangible assets (1) | 7.25% | 7.67% |
| Tier 1 leverage ratio - Corporation | 8.13% | 8.54% |
| Common tier 1 risk-based capital ratio - Corporation | 8.77% | 9.28% |
| Tier 1 risk-based capital ratio - Corporation | 8.77% | 9.28% |
| Total risk-based capital ratio - Corporation | 12.05% | 12.80% |
| (1) See Non-GAAP reconciliation in the Appendix | (1) See Non-GAAP reconciliation in the Appendix |  |

---

**Asset Quality Summary**

Meridian's strong credit culture remains focused on asset quality, while working with customers to navigate current economic challenges. As a result of continuing work-out process, several non-performing assets moved forward with positive changes in underlying credit position. Three non-performing loans paid down, paid off or moved to OREO during the period. The ratio of non-performing loans to total loans decreased to 1.20% as of December 31, 2022, from 1.40% at September 30, 2022. Non-performing assets to total assets declined to 1.11% as of December 31, 2022 from 1.20% as of September 30, 2022. There was $1.7 million in other real estate owned included in non-performing assets as of December 31, 2022, as the result of taking possession of a well collateralized residential real estate property in the quarter. There was no other real estate owned as of September 30, 2022. Total non-performing loans were $21.2 million as of December 31, 2022, down $1.8 million from $23.1 million as September 30, 2022 due to $3.2 million principal payment on a non-performing loan relationship, payoff of $2.7 million on another non-performing loan, both partially offset by an increase of $3.1 million in SBA loans considered non-performing.

Meridian realized net charge-offs of 0.05% of total average loans for the quarter ended December 31, 2022, up from the quarter ended September 30, 2022 level of 0.02%. Net charge-offs for the quarter ended December 31, 2022 were $891 thousand, comprised of $936 thousand in charge-offs, with $45 thousand in recoveries for the quarter. Nearly all of the charge-offs for the quarter ended December 31, 2022 were from small ticket equipment leases. The ratio of allowance for loan losses to total loans held for investment, excluding loans at fair value and PPP loans (a non-GAAP measure, see reconciliation in the Appendix), was 1.09% as of December 31, 2022 compared to 1.20% as of September 30, 2022. As of December 31, 2022 there were specific reserves of $2.2 million against non-performing loans, down from $2.6 million as of September 30, 2022 due to improvement in the underlying credit quality for certain loans.

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**About Meridian Corporation**

Meridian Bank, the wholly owned subsidiary of Meridian Corporation, is an innovative community bank serving Pennsylvania, New Jersey, Delaware and Maryland. Through more than 20 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, the impact of the COVID-19 pandemic and government responses thereto; on the U.S. economy, including the markets in which we operate; actions that we and our customers take in response to these factors and the effects such actions have on our operations, products, services and customer relationships; and the risk that the Small Business Administration may not fund some or all Paycheck Protection Program (PPP) loan guaranties; increased competitive pressures; changes in the interest rate environment; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes; and the effects of inflation, a potential recession, 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, 2021 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.

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**MERIDIAN CORPORATION AND SUBSIDIARIES**

**FINANCIAL RATIOS (Unaudited)**

**(Dollar amounts and shares in thousands, except per share amounts)**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Quarter Ended** | **Quarter Ended** | **Quarter Ended** | **Quarter Ended** | **Quarter Ended** |
| | **December 31,<br>2022** | **September 30,<br>2022** | **June 30,<br>2022** | **March 31,<br>2022** | **December 31,<br>2021** |
| **Earnings and Per Share Data:** | | | | | |
| Net income | $4557 | $5798 | $5938 | $5535 | $7719 |
| Basic earnings per common share | $0.80 | $0.99 | $0.99 | $0.92 | $1.29 |
| Diluted earnings per common share | $0.77 | $0.96 | $0.96 | $0.88 | $1.24 |
| Common shares outstanding | 5733 | 5844 | 6037 | 6129 | 6108 |
| **Performance Ratios:** |  |  |  |  |  |
| Return on average assets  | 0.92% | 1.23% | 1.31% | 1.28% | 1.74% |
| Return on average equity  | 11.91 | 14.59 | 15.03 | 13.86 | 19.15 |
| Net interest margin (tax-equivalent) | 3.93 | 4.01 | 4.07 | 3.89 | 3.83 |
| Net interest margin (tax-equivalent, excluding PPP loans and borrowings) (1) | 3.92 | 3.99 | 3.95 | 3.82 | 3.76 |
| Yield on earning assets (tax-equivalent) | 5.88 | 5.10 | 4.65 | 4.35 | 4.28 |
| Yield on earning assets (tax-equivalent, excluding PPP loans) (1) | 5.88 | 5.09 | 4.54 | 4.31 | 4.23 |
| Cost of funds | 2.07 | 1.17 | 0.61 | 0.50 | 0.49 |
| Efficiency ratio  | 75.61% | 71.72% | 70.49% | 73.56% | 71.05% |
| **Asset Quality Ratios:** |  |  |  |  |  |
| Net charge-offs (recoveries) to average loans | 0.05% | 0.02% | 0.03% | 0.04% | 0.00% |
| Non-performing loans to total loans | 1.20 | 1.40 | 1.46 | 1.51 | 1.57 |
| Non-performing assets to total assets | 1.11 | 1.20 | 1.24 | 1.25 | 1.34 |
| Allowance for loan losses to: |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total loans held for investment | 1.08 | 1.18 | 1.24 | 1.31 | 1.35 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total loans held for investment (excluding loans at fair value and PPP loans) (1) | 1.09 | 1.20 | 1.27 | 1.38 | 1.46 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-performing loans | 88.66% | 82.20% | 81.82% | 82.48% | 81.60% |
| **Capital Ratios:** |  |  |  |  |  |
| Book value per common share | $26.74 | $25.86 | $25.85 | $25.73 | $27.07 |
| Tangible book value per common share | $26.03 | $25.16 | $25.16 | $25.04 | $26.37 |
| Total equity/Total assets | 7.43% | 7.87% | 8.42% | 8.61% | 9.65% |
| Tangible common equity/Tangible assets - Corporation (1) | 7.25 | 7.67 | 8.22 | 8.40 | 9.42 |
| Tangible common equity/Tangible assets - Bank (1) | 8.80 | 9.61 | 10.17 | 10.40 | 11.54 |
| Tier 1 leverage ratio - Corporation | 8.13 | 8.54 | 8.87 | 9.10 | 9.39 |
| Tier 1 leverage ratio - Bank | 9.95 | 10.52 | 10.86 | 11.20 | 11.51 |
| Common tier 1 risk-based capital ratio - Corporation | 8.77 | 9.28 | 9.79 | 10.09 | 10.83 |
| Common tier 1 risk-based capital ratio - Bank | 10.73 | 11.44 | 11.98 | 12.41 | 13.27 |
| Tier 1 risk-based capital ratio - Corporation | 8.77 | 9.28 | 9.79 | 10.09 | 10.83 |
| Tier 1 risk-based capital ratio - Bank | 10.73 | 11.44 | 11.98 | 12.41 | 13.27 |
| Total risk-based capital ratio - Corporation | 12.05 | 12.80 | 13.50 | 13.91 | 14.81 |
| Total risk-based capital ratio - Bank | 11.87% | 12.70% | 13.33% | 13.76% | 14.63% |
| (1) See Non-GAAP reconciliation in the Appendix | (1) See Non-GAAP reconciliation in the Appendix |  |  |  |  |

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**MERIDIAN CORPORATION AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)**

**(Dollar amounts and shares in thousands, except per share amounts)**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Year Months Ended** | **Year Months Ended** |
| | **December 31,<br>2022** | **September 30,<br>2022** | **December 31,<br>2021** | **December 31,<br>2022** | **December 31,<br>2021** |
| **Interest income:** | | | | | |
| Loans and other finance receivables, including fees | $26440 | $21848 | $17535 | $84627 | $68822 |
| Securities - taxable | 821 | 648 | 387 | 2420 | 1463 |
| Securities - tax-exempt | 373 | 369 | 303 | 1388 | 1189 |
| Cash and cash equivalents | 129 | 93 | 23 | 286 | 48 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total interest income | 27763 | 22958 | 18248 | 88721 | 71522 |
| **Interest expense:** |  |  |  |  |  |
| Deposits | 8215 | 4075 | 1233 | 15397 | 5494 |
| Borrowings | 1030 | 857 | 693 | 3196 | 2917 |
| Total interest expense | 9245 | 4932 | 1926 | 18593 | 8411 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net interest income | 18518 | 18026 | 16322 | 70128 | 63111 |
| Provision for loan losses | 746 | 526 | (222) | 2488 | 1070 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net interest income after provision for loan losses | 17772 | 17500 | 16544 | 67640 | 62041 |
| **Non-interest income:** |  |  |  |  |  |
| Mortgage banking income | 3958 | 7329 | 13639 | 25325 | 75932 |
| Wealth management income | 1061 | 1114 | 1270 | 4733 | 4801 |
| SBA loan income | 522 | 989 | 1475 | 4467 | 6898 |
| Earnings on investment in life insurance | 140 | 138 | 141 | 553 | 365 |
| Net change in the fair value of derivative instruments | 10 | 127 | (907) | (703) | (4338) |
| Net change in the fair value of loans held-for-sale | 249 | (237) | (147) | (844) | (3311) |
| Net change in the fair value of loans held-for-investment | 91 | (886) | (165) | (2408) | (189) |
| Net gain on hedging activity | 498 | 399 | 563 | 5439 | 2961 |
| Net gain on sale of investment securities available-for-sale |  |  | 73 |  | 435 |
| Service charges | 35 | 32 | 29 | 125 | 129 |
| Other | 1432 | 1219 | 1115 | 5037 | 4305 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total non-interest income | 7996 | 10224 | 17086 | 41724 | 87988 |
| **Non-interest expense:** |  |  |  |  |  |
| Salaries and employee benefits | 12794 | 13360 | 17042 | 54378 | 78866 |
| Occupancy and equipment | 1218 | 1191 | 1085 | 4837 | 4545 |
| Professional fees | 976 | 899 | 929 | 3635 | 3558 |
| Advertising and promotion | 996 | 1165 | 919 | 4336 | 3714 |
| Data processing | 677 | 574 | 484 | 2310 | 2150 |
| Information technology | 836 | 868 | 867 | 3142 | 2232 |
| Pennsylvania bank shares tax | 181 | 202 | 131 | 793 | 609 |
| Other | 2369 | 2002 | 2280 | 8014 | 8053 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total non-interest expense | 20047 | 20261 | 23737 | 81445 | 103727 |
| Income before income taxes | 5721 | 7463 | 9893 | 27919 | 46302 |
| Income tax expense | 1164 | 1665 | 2174 | 6091 | 10717 |
| Net income | $4557 | $5798 | $7719 | $21828 | $35585 |
| Basic earnings per common share | $0.80 | $0.99 | $1.29 | $3.70 | $5.91 |
| Diluted earnings per common share | $0.77 | $0.96 | $1.24 | $3.58 | $5.73 |
| Basic weighted average shares outstanding | 5695 | 5868 | 5978 | 5896 | 6019 |
| Diluted weighted average shares outstanding | 5898 | 6059 | 6210 | 6102 | 6206 |

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**MERIDIAN CORPORATION AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED STATEMENTS OF CONDITION (Unaudited)**

**(Dollar amounts and shares in thousands, except per share amounts)**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **December 31,<br>2022** | **September 30,<br>2022** | **June 30,<br>2022** | **March 31,<br>2022** | **December 31,<br>2021** |
| **Assets:** | | | | | |
| Cash and due from banks | $11299 | $12114 | $8280 | $11155 | $3966 |
| Interest-bearing deposits at other banks | 27092 | 20774 | 28813 | 44867 | 19514 |
| Federal funds sold |  |  |  | 12866 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | 38391 | 32888 | 37093 | 68888 | 23480 |
| Securities available-for-sale, at fair value | 135346 | 127999 | 129288 | 130653 | 159302 |
| Securities held-to-maturity, at amortized cost | 37479 | 37922 | 37111 | 34977 | 6372 |
| Equity investments | 2086 | 2092 | 2153 | 2240 | 2354 |
| Mortgage loans held for sale, at fair value | 22243 | 33800 | 58938 | 81258 | 80882 |
| Loans, net of fees and costs | 1743682 | 1610349 | 1518893 | 1431906 | 1386457 |
| Allowance for loan and lease losses | (18828) | (18974) | (18805) | (18826) | (18758) |
| &nbsp;&nbsp;&nbsp;&nbsp;Loans, net of the allowance for loan and lease losses | 1724854 | 1591375 | 1500088 | 1413080 | 1367699 |
| Restricted investment in bank stock | 6931 | 5217 | 4719 | 4330 | 5117 |
| Bank premises and equipment, net | 13349 | 12835 | 12185 | 11883 | 11806 |
| Bank owned life insurance | 28055 | 22916 | 22778 | 22641 | 22503 |
| Accrued interest receivable | 7363 | 6008 | 5108 | 4848 | 5009 |
| Other real estate owned | 1703 |  |  |  |  |
| Deferred income taxes | 3936 | 5722 | 4467 | 3190 | 1413 |
| Servicing assets | 12346 | 12807 | 12860 | 13396 | 12765 |
| Goodwill | 899 | 899 | 899 | 899 | 899 |
| Intangible assets | 3175 | 3226 | 3277 | 3328 | 3379 |
| Other assets | 24072 | 26218 | 22055 | 35978 | 10463 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $2062228 | $1921924 | $1853019 | $1831589 | $1713443 |
| **Liabilities:** |  |  |  |  |  |
| Deposits: |  |  |  |  |  |
| Non-interest bearing | $301727 | $290169 | $291925 | $291379 | $274528 |
| Interest bearing |  |  |  |  |  |
| Interest checking | 219838 | 236562 | 205298 | 252298 | 268248 |
| Money market and savings deposits | 697564 | 709127 | 728886 | 688117 | 697628 |
| Time deposits | 493350 | 437695 | 341905 | 333057 | 206009 |
| Total interest-bearing deposits | 1410752 | 1383384 | 1276089 | 1273472 | 1171885 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total deposits | 1712479 | 1673553 | 1568014 | 1564851 | 1446413 |
| Short-term borrowings | 122082 | 23458 | 59136 | 36136 | 41344 |
| Subordinated debentures | 40346 | 40597 | 40567 | 40538 | 40508 |
| Accrued interest payable | 2389 | 1154 | 146 | 575 | 31 |
| Other liabilities | 31652 | 32001 | 29069 | 31805 | 19787 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 1908948 | 1770763 | 1696932 | 1673905 | 1548083 |
| **Stockholders' equity:** |  |  |  |  |  |
| Common stock | 6578 | 6566 | 6561 | 6556 | 6535 |
| Surplus | 85650 | 84848 | 84359 | 84177 | 83663 |
| Treasury stock | (21821) | (18033) | (11896) | (8860) | (8860) |
| Unearned common stock held by employee stock ownership plan | (1403) | (1602) | (1602) | (1602) | (1602) |
| Retained earnings | 95815 | 92405 | 87815 | 83104 | 84916 |
| Accumulated other comprehensive (loss) income | (11539) | (13023) | (9150) | (5691) | 708 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' equity | 153280 | 151161 | 156087 | 157684 | 165360 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and stockholders' equity | $2062228 | $1921924 | $1853019 | $1831589 | $1713443 |

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**MERIDIAN CORPORATION AND SUBSIDIARIES**

**CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND SEGMENT INFORMATION (Unaudited)**

**(Dollar amounts and shares in thousands, except per share amounts)**

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** |
| | **December 31,<br>2022** | **September 30,<br>2022** | **June 30,<br>2022** | **March 31,<br>2022** | **December 31,<br>2021** |
| Interest income | $27763 | $22958 | $20037 | $17964 | $18248 |
| Interest expense | 9245 | 4932 | 2486 | 1929 | 1926 |
| Net interest income | 18518 | 18026 | 17551 | 16035 | 16322 |
| Provision (credit) for loan losses | 746 | 526 | 602 | 615 | (222) |
| Non-interest income | 7996 | 10224 | 10403 | 13102 | 17086 |
| Non-interest expense | 20047 | 20261 | 19706 | 21433 | 23737 |
| Income before income tax expense | 5721 | 7463 | 7646 | 7089 | 9893 |
| Income tax expense | 1164 | 1665 | 1708 | 1554 | 2174 |
| Net Income | $4557 | $5798 | $5938 | $5535 | $7719 |
| Basic weighted average shares outstanding | 5695 | 5868 | 5999 | 6023 | 5978 |
| Basic earnings per common share | $0.80 | $0.99 | $0.99 | $0.92 | $1.29 |
| Diluted weighted average shares outstanding | 5898 | 6059 | 6199 | 6262 | 6210 |
| Diluted earnings per common share | $0.77 | $0.96 | $0.96 | $0.88 | $1.24 |

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Segment Information** | **Segment Information** | **Segment Information** | **Segment Information** | **Segment Information** | **Segment Information** | **Segment Information** | **Segment Information** |
| | **Three Months Ended December 31, 2022** | **Three Months Ended December 31, 2022** | **Three Months Ended December 31, 2022** | **Three Months Ended December 31, 2022** | **Three Months Ended December 31, 2021** | **Three Months Ended December 31, 2021** | **Three Months Ended December 31, 2021** | **Three Months Ended December 31, 2021** |
| *(dollars in thousands)* | **Bank** | **Wealth** | **Mortgage** | **Total** | **Bank** | **Wealth** | **Mortgage** | **Total** |
| Net interest income | $18376 | $68 | $74 | $18518 | $15931 | $25 | $366 | $16322 |
| Provision for loan losses | 746 |  |  | 746 | (222) |  |  | (222) |
| Net interest income after provision | 17630 | 68 | 74 | 17772 | 16153 | 25 | 366 | 16544 |
| Non-interest income | 1291 | 1061 | 5644 | 7996 | 2305 | 1270 | 13511 | 17086 |
| Non-interest expense | 12939 | 918 | 6190 | 20047 | 11407 | 1009 | 11321 | 23737 |
| Income (loss) before income taxes | $5982 | $211 | $(472) | $5721 | $7051 | $286 | $2556 | $9893 |
| Efficiency ratio | 65.79% | 81.31% | 108.25% | 75.61% | 62.55% | 77.92% | 81.58% | 71.05% |

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Year Months Ended December 31, 2022** | **Year Months Ended December 31, 2022** | **Year Months Ended December 31, 2022** | **Year Months Ended December 31, 2022** | **Year Months Ended December 31, 2021** | **Year Months Ended December 31, 2021** | **Year Months Ended December 31, 2021** | **Year Months Ended December 31, 2021** |
| *(dollars in thousands)* | **Bank** | **Wealth** | **Mortgage** | **Total** | **Bank** | **Wealth** | **Mortgage** | **Total** |
| Net interest income | $68570 | $697 | $861 | $70128 | $61032 | $15 | $2064 | $63111 |
| Provision for loan losses | 2488 |  |  | 2488 | 1070 |  |  | 1070 |
| Net interest income after provision | 66082 | 697 | 861 | 67640 | 59962 | 15 | 2064 | 62041 |
| Non-interest income | 7556 | 4732 | 29436 | 41724 | 10779 | 4802 | 72407 | 87988 |
| Non-interest expense | 45123 | 3399 | 32923 | 81445 | 40392 | 3496 | 59839 | 103727 |
| Income (loss) before income taxes | $28515 | $2030 | $(2626) | $27919 | $30349 | $1321 | $14632 | $46302 |
| Efficiency ratio | 59.27% | 62.61% | 108.67% | 72.81% | 56.25% | 72.58% | 80.35% | 68.65% |

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**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.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Net Interest Margin, (TEY), Excluding PPP Loans & PPPLF Borrowings<br>Yield on Interest Earning Assets, (TEY), Excluding PPP income** | **Net Interest Margin, (TEY), Excluding PPP Loans & PPPLF Borrowings<br>Yield on Interest Earning Assets, (TEY), Excluding PPP income** | **Net Interest Margin, (TEY), Excluding PPP Loans & PPPLF Borrowings<br>Yield on Interest Earning Assets, (TEY), Excluding PPP income** | **Net Interest Margin, (TEY), Excluding PPP Loans & PPPLF Borrowings<br>Yield on Interest Earning Assets, (TEY), Excluding PPP income** | **Net Interest Margin, (TEY), Excluding PPP Loans & PPPLF Borrowings<br>Yield on Interest Earning Assets, (TEY), Excluding PPP income** |
| | **Q4'2022** | **Q3'2022** | **Q2'2022** | **Q1'2022** | **Q4'2021** |
| Net interest margin (TEY) (GAAP) | 3.93% | 4.01% | 4.07% | 3.89% | 3.83% |
| Impact of PPP loans and PPPLF borrowings | (0.01)% | (0.02)% | (0.12)% | (0.07)% | (0.07)% |
| Net interest margin (TEY), excluding PPP loans and PPPLF borrowings | 3.92% | 3.99% | 3.95% | 3.82% | 3.76% |
| Yield on interest earning assets, tax equivalent (GAAP) | 5.88% | 5.10% | 4.65% | 4.35% | 4.28% |
| Impact of PPP loans | —% | (0.01)% | (0.11)% | (0.04)% | (0.05)% |
| Yield on interest earning assets (TEY), excluding PPP income | 5.88% | 5.09% | 4.54% | 4.31% | 4.23% |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Allowance For Loan Losses to Loans, Net of Fees and Costs, Excluding PPP Loans and Loans at Fair Value** | **Allowance For Loan Losses to Loans, Net of Fees and Costs, Excluding PPP Loans and Loans at Fair Value** | **Allowance For Loan Losses to Loans, Net of Fees and Costs, Excluding PPP Loans and Loans at Fair Value** | **Allowance For Loan Losses to Loans, Net of Fees and Costs, Excluding PPP Loans and Loans at Fair Value** | **Allowance For Loan Losses to Loans, Net of Fees and Costs, Excluding PPP Loans and Loans at Fair Value** |
| | **December 31,<br>2022** | **September 30,<br>2022** | **June 30,<br>2022** | **March 31,<br>2022** | **December 31,<br>2021** |
| Allowance for loan losses (GAAP) | $18828 | $18974 | $18805 | $18826 | $18758 |
| Loans, net of fees and costs (GAAP) | 1743682 | 1610349 | 1518893 | 1431906 | 1386457 |
| Less: PPP loans | (4579) | (8610) | (21460) | (49680) | (88245) |
| Less: Loans fair valued | (14502) | (14702) | (16212) | (17375) | (17558) |
| Loans, net of fees and costs, excluding loans at fair value and PPP loans (non-GAAP) | $1724601 | $1587037 | $1481221 | $1364851 | $1280654 |
| Allowance for loan losses to loans, net of fees and costs (GAAP) | 1.08% | 1.18% | 1.24% | 1.31% | 1.35% |
| Allowance for loan losses to loans, net of fees and costs, excluding PPP loans and loans at fair value (non-GAAP) | 1.09% | 1.20% | 1.27% | 1.38% | 1.46% |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Tangible Common Equity Ratio Reconciliation - Corporation** | **Tangible Common Equity Ratio Reconciliation - Corporation** | **Tangible Common Equity Ratio Reconciliation - Corporation** | **Tangible Common Equity Ratio Reconciliation - Corporation** | **Tangible Common Equity Ratio Reconciliation - Corporation** |
| | **December 31,<br>2022** | **September 30,<br>2022** | **June 30,<br>2022** | **March 31,<br>2022** | **December 31,<br>2021** |
| Total stockholders' equity (GAAP) | $153280 | $151161 | $156087 | $157684 | $165360 |
| Less: Goodwill and intangible assets | (4074) | (4125) | (4176) | (4227) | (4278) |
| Tangible common equity (non-GAAP) | 149206 | 147036 | 151911 | 153457 | 161082 |
| Total assets (GAAP) | 2062228 | 1921924 | 1853019 | 1831589 | 1713443 |
| Less: Goodwill and intangible assets | (4074) | (4125) | (4176) | (4227) | (4278) |
| Tangible assets (non-GAAP) | $2058154 | $1917799 | $1848843 | $1827362 | $1709165 |
| Tangible common equity to tangible assets ratio - Corporation (non-GAAP) | 7.25% | 7.67% | 8.22% | 8.40% | 9.42% |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Tangible Common Equity Ratio Reconciliation - Bank** | **Tangible Common Equity Ratio Reconciliation - Bank** | **Tangible Common Equity Ratio Reconciliation - Bank** | **Tangible Common Equity Ratio Reconciliation - Bank** | **Tangible Common Equity Ratio Reconciliation - Bank** |
| | **December 31,<br>2022** | **September 30,<br>2022** | **June 30,<br>2022** | **March 31,<br>2022** | **December 31,<br>2021** |
| Total stockholders' equity (GAAP) | $185039 | $188386 | $192212 | $194347 | $201486 |
| Less: Goodwill and intangible assets | (4074) | (4125) | (4176) | (4227) | (4278) |
| Tangible common equity (non-GAAP) | 180965 | 184261 | 188036 | 190120 | 197208 |
| Total assets (GAAP) | 2059557 | 1921714 | 1852998 | 1831461 | 1713318 |
| Less: Goodwill and intangible assets | (4074) | (4125) | (4176) | (4227) | (4278) |
| Tangible assets (non-GAAP) | $2055483 | $1917589 | $1848822 | $1827234 | $1709040 |
| Tangible common equity to tangible assets ratio - Bank (non-GAAP) | 8.80% | 9.61% | 10.17% | 10.40% | 11.54% |
|  | **Tangible Book Value Reconciliation** | **Tangible Book Value Reconciliation** | **Tangible Book Value Reconciliation** | **Tangible Book Value Reconciliation** | **Tangible Book Value Reconciliation** |
|  | **December 31,<br>2022** | **September 30,<br>2022** | **June 30,<br>2022** | **March 31,<br>2022** | **December 31,<br>2021** |
| Book value per common share | $26.74 | $25.86 | $25.85 | $25.73 | $27.07 |
| Less: Impact of goodwill /intangible assets | 0.71 | 0.70 | 0.69 | 0.69 | 0.70 |
| Tangible book value per common share | $26.03 | $25.16 | $25.16 | $25.04 | $26.37 |

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