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☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number: 000-55983
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Pennsylvania | 83-1561918 | ||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
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(484)568-5000
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Title of class | Trading Symbol | Name of exchange on which registered | ||||||
Common Stock, $1 par value | MRBK | The NASDAQ Stock Market |
Large Accelerated Filer | ☐ | Accelerated Filer | ||||||||||||
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Non-accelerated Filer | ☐ | Smaller Reporting Company | ☒ | |||||||||||
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Emerging Growth Company |
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| | September 30, | | December 31, | |
(dollars in thousands, except per share data) |
| 2021 |
| 2020 | |
Cash and due from banks | | $ | 45,875 | | 34,190 |
Federal funds sold | | | 17,246 | | 2,554 |
Cash and cash equivalents | | | 63,121 | | 36,744 |
Securities available-for-sale (amortized cost of $145,129 and $120,215 as of September 30, 2021 and December 31, 2020) | | | 146,149 | | 123,562 |
Securities held-to-maturity (fair value of $6,660 and $6,857 as of September 30, 2021 and December 31, 2020) | | | 6,406 | | 6,510 |
Equity investments | | | 1,011 | | 1,031 |
Mortgage loans held for sale (amortized cost of $116,968 and $225,007 as of September 30, 2021 and December 31, 2020), at fair value | | | 117,996 | | 229,199 |
Loans, net of fees and costs (includes $17,142 and $12,182 of loans at fair value, amortized cost of $16,515 and $11,514 as of September 30, 2021 and December 31, 2020) | | | 1,378,670 | | 1,284,764 |
Allowance for loan and lease losses | | | (18,976) | | (17,767) |
Loans, net of the allowance for loan and lease losses | | | 1,359,694 | | 1,266,997 |
Restricted investment in bank stock | | | 4,162 | | 7,861 |
Bank premises and equipment, net | | | 8,242 | | 7,777 |
Bank owned life insurance | | | 22,362 | | 12,138 |
Accrued interest receivable | | | 5,080 | | 5,482 |
Deferred income taxes | | | 1,457 | | 62 |
Servicing assets | | | 11,932 | | 5,617 |
Goodwill | | | 899 | | 899 |
Intangible assets | | | 3,430 | | 3,601 |
Other assets | | | 10,504 | | 12,717 |
Total assets | | $ | 1,762,445 | | 1,720,197 |
Liabilities: | | | | | |
Deposits: | | | | | |
Non-interest bearing | | $ | 265,842 | | 203,843 |
Interest bearing | | | 1,173,205 | | 1,037,492 |
Total deposits | | | 1,439,047 | | 1,241,335 |
Short-term borrowings | | | 22,278 | | 106,862 |
Long-term debt | | | 78,405 | | 165,546 |
Subordinated debentures | | | 40,760 | | 40,671 |
Accrued interest payable | | | 663 | | 1,154 |
Other liabilities | | | 22,876 | | 23,007 |
Total liabilities | | | 1,604,029 | | 1,578,575 |
Stockholders’ equity: | | | | | |
Common stock, $1 par value. Authorized 25,000,000 and 10,000,000 shares as of September 30, 2021 and December 31, 2020; issued 6,506,028 and 6,455,566 as of September 30, 2021 and December 31, 2020 | | | 6,506 | | 6,456 |
Surplus | | | 82,508 | | 81,196 |
Treasury stock - 398,491 and 320,000 shares at September 30, 2021 and December 31, 2020 | | | (8,025) | | (5,828) |
Unearned common stock held by employee stock ownership plan | | | (1,768) | | (1,768) |
Retained earnings | | | 78,408 | | 59,010 |
Accumulated other comprehensive income | | | 787 | | 2,556 |
Total stockholders’ equity | | | 158,416 | | 141,622 |
Total liabilities and stockholders’ equity | | $ | 1,762,445 | | 1,720,197 |
(dollars in thousands, except per share data) | March 31, 2022 | December 31, 2021 | |||||||||
Cash and due from banks | $ | 56,022 | $ | 23,480 | |||||||
Federal funds sold | 12,866 | — | |||||||||
Cash and cash equivalents | 68,888 | 23,480 | |||||||||
Securities available-for-sale (amortized cost of $136,745 and $158,387 as of March 31, 2022 and December 31, 2021) | 130,653 | 159,302 | |||||||||
Securities held-to-maturity (fair value of $33,556 and $6,591 as of March 31, 2022 and December 31, 2021) | 34,977 | 6,372 | |||||||||
Equity investments | 2,240 | 2,354 | |||||||||
Mortgage loans held for sale (amortized cost of $81,502 and $80,002 as of March 31, 2022 and December 31, 2021), at fair value | 81,258 | 80,882 | |||||||||
Loans, net of fees and costs (includes $17,375 and $17,558 of loans at fair value, amortized cost of $17,375 and $17,106 as of March 31, 2022 and December 31, 2021) | 1,431,906 | 1,386,457 | |||||||||
Allowance for loan and lease losses | (18,826) | (18,758) | |||||||||
Loans, net of the allowance for loan and lease losses | 1,413,080 | 1,367,699 | |||||||||
Restricted investment in bank stock | 4,330 | 5,117 | |||||||||
Bank premises and equipment, net | 11,883 | 11,806 | |||||||||
Bank owned life insurance | 22,641 | 22,503 | |||||||||
Accrued interest receivable | 4,848 | 5,009 | |||||||||
Deferred income taxes | 3,190 | 1,413 | |||||||||
Servicing assets | 13,396 | 12,765 | |||||||||
Goodwill | 899 | 899 | |||||||||
Intangible assets | 3,328 | 3,379 | |||||||||
Other assets | 35,978 | 10,463 | |||||||||
Total assets | $ | 1,831,589 | 1,713,443 | ||||||||
Liabilities: | |||||||||||
Deposits: | |||||||||||
Non-interest bearing | $ | 291,379 | 274,528 | ||||||||
Interest bearing | 1,273,472 | 1,171,885 | |||||||||
Total deposits | 1,564,851 | 1,446,413 | |||||||||
Short-term borrowings | 36,136 | 41,344 | |||||||||
Subordinated debentures | 40,538 | 40,508 | |||||||||
Accrued interest payable | 575 | 31 | |||||||||
Other liabilities | 31,805 | 19,787 | |||||||||
Total liabilities | 1,673,905 | 1,548,083 | |||||||||
Stockholders’ equity: | |||||||||||
Common stock, $1 par value. Authorized 25,000,000 shares as of March 31, 2022 and December 31, 2021; issued 6,555,909 and 6,534,587 as of March 31, 2022 and December 31, 2021 | 6,556 | 6,535 | |||||||||
Surplus | 84,177 | 83,663 | |||||||||
Treasury stock - 426,693 shares at March 31, 2022 and December 31, 2021 | (8,860) | (8,860) | |||||||||
Unearned common stock held by employee stock ownership plan | (1,602) | (1,602) | |||||||||
Retained earnings | 83,104 | 84,916 | |||||||||
Accumulated other comprehensive (loss) income | (5,691) | 708 | |||||||||
Total stockholders’ equity | 157,684 | 165,360 | |||||||||
Total liabilities and stockholders’ equity | $ | 1,831,589 | 1,713,443 |
| | | | | | | | | |
| Three months ended | | | Nine months ended | |||||
| September 30, | | | September 30, | |||||
(dollars in thousands, except per share data) | 2021 |
| 2020 | |
| 2021 |
| 2020 | |
Interest income: | | | | | | | | | |
Loans, including fees | $ | 17,626 | | 15,321 | | $ | 51,287 | | 43,048 |
Securities: | | | | | | | | | |
Taxable | | 284 | | 251 | | | 837 | | 920 |
Tax-exempt | | 379 | | 305 | | | 1,125 | | 698 |
Cash and cash equivalents | | 17 | | 3 | | | 25 | | 63 |
Total interest income | | 18,306 | | 15,880 | | | 53,274 | | 44,729 |
Interest expense: | | | | | | | | | |
Deposits | | 1,327 | | 2,235 | | | 4,261 | | 8,064 |
Borrowings | | 722 | | 930 | | | 2,224 | | 2,687 |
Total interest expense | | 2,049 | | 3,165 | | | 6,485 | | 10,751 |
Net interest income | | 16,257 | | 12,715 | | | 46,789 | | 33,978 |
Provision for loan losses | | 597 | | 3,956 | | | 1,292 | | 7,139 |
Net interest income after provision for loan losses | | 15,660 | | 8,759 | | | 45,497 | | 26,839 |
Non-interest income: | | | | | | | | | |
Mortgage banking income | | 18,726 | | 21,812 | | | 62,293 | | 45,395 |
Wealth management income | | 1,232 | | 951 | | | 3,531 | | 2,825 |
SBA loan income | | 2,688 | | 641 | | | 5,423 | | 1,821 |
Earnings on investment in life insurance | | 93 | | 70 | | | 224 | | 210 |
Net change in the fair value of derivative instruments | | (339) | | 3,028 | | | (3,431) | | 6,346 |
Net change in the fair value of loans held-for-sale | | (532) | | 2,932 | | | (3,164) | | 4,424 |
Net change in the fair value of loans held-for-investment | | 37 | | 93 | | | (24) | | 174 |
Net gain (loss) on hedging activity | | (1,189) | | (2,637) | | | 2,397 | | (7,363) |
Net gain on sale of investment securities available-for-sale | | 314 | | 1,290 | | | 362 | | 1,345 |
Service charges | | 35 | | 28 | | | 99 | | 77 |
Other | | 1,057 | | 852 | | | 3,192 | | 1,718 |
Total non-interest income | | 22,122 | | 29,060 | | | 70,902 | | 56,972 |
Non-interest expenses: | | | | | | | | | |
Salaries and employee benefits | | 19,472 | | 20,447 | | | 61,824 | | 46,529 |
Occupancy and equipment | | 1,133 | | 1,108 | | | 3,460 | | 3,159 |
Professional fees | | 873 | | 681 | | | 2,629 | | 2,118 |
Advertising and promotion | | 1,089 | | 781 | | | 2,795 | | 1,996 |
Data processing | | 530 | | 460 | | | 1,666 | | 1,260 |
Information technology | | 476 | | 394 | | | 1,365 | | 1,100 |
Pennsylvania bank shares tax | | 152 | | 254 | | | 478 | | 734 |
Other | | 1,756 | | 1,709 | | | 5,773 | | 4,256 |
Total non-interest expenses | | 25,481 | | 25,834 | | | 79,990 | | 61,152 |
Income before income taxes | | 12,301 | | 11,985 | | | 36,409 | | 22,659 |
Income tax expense | | 2,863 | | 2,773 | | | 8,543 | | 5,218 |
Net income | $ | 9,438 | | 9,212 | | $ | 27,866 | | 17,441 |
Basic earnings per common share | $ | 1.56 | | 1.51 | | $ | 4.62 | | 2.83 |
Diluted earnings per common share | $ | 1.52 | | 1.51 | | $ | 4.49 | | 2.82 |
Three months ended March 31, | |||||||||||||||||||||||
(dollars in thousands, except per share data) | 2022 | 2021 | |||||||||||||||||||||
Interest income: | |||||||||||||||||||||||
Loans, including fees | 17,219 | 16,822 | |||||||||||||||||||||
Securities: | |||||||||||||||||||||||
Taxable | 336 | 273 | |||||||||||||||||||||
Tax-exempt | 396 | 353 | |||||||||||||||||||||
Cash and cash equivalents | 13 | 3 | |||||||||||||||||||||
Total interest income | 17,964 | 17,451 | |||||||||||||||||||||
Interest expense: | |||||||||||||||||||||||
Deposits | 1,289 | 1,566 | |||||||||||||||||||||
Borrowings | 640 | 765 | |||||||||||||||||||||
Total interest expense | 1,929 | 2,331 | |||||||||||||||||||||
Net interest income | 16,035�� | 15,120 | |||||||||||||||||||||
Provision for loan losses | 615 | 599 | |||||||||||||||||||||
Net interest income after provision for loan losses | 15,420 | 14,521 | |||||||||||||||||||||
Non-interest income: | |||||||||||||||||||||||
Mortgage banking income | 7,096 | 24,100 | |||||||||||||||||||||
Wealth management income | 1,304 | 1,136 | |||||||||||||||||||||
SBA loan income | 2,520 | 1,245 | |||||||||||||||||||||
Earnings on investment in life insurance | 138 | 66 | |||||||||||||||||||||
Net change in the fair value of derivative instruments | (166) | (944) | |||||||||||||||||||||
Net change in the fair value of loans held-for-sale | (1,124) | (3,867) | |||||||||||||||||||||
Net change in the fair value of loans held-for-investment | (778) | (102) | |||||||||||||||||||||
Net gain on hedging activity | 2,827 | 4,261 | |||||||||||||||||||||
Net gain on sale of investment securities available-for-sale | — | 48 | |||||||||||||||||||||
Service charges | 27 | 32 | |||||||||||||||||||||
Other | 1,258 | 1,073 | |||||||||||||||||||||
Total non-interest income | 13,102 | 27,048 | |||||||||||||||||||||
Non-interest expenses: | |||||||||||||||||||||||
Salaries and employee benefits | 15,298 | 22,139 | |||||||||||||||||||||
Occupancy and equipment | 1,252 | 1,152 | |||||||||||||||||||||
Professional fees | 848 | 940 | |||||||||||||||||||||
Advertising and promotion | 986 | 785 | |||||||||||||||||||||
Data processing | 479 | 616 | |||||||||||||||||||||
Information technology | 710 | 425 | |||||||||||||||||||||
Pennsylvania bank shares tax | 199 | 163 | |||||||||||||||||||||
Other | 1,661 | 2,043 | |||||||||||||||||||||
Total non-interest expenses | 21,433 | 28,263 | |||||||||||||||||||||
Income before income taxes | 7,089 | 13,306 | |||||||||||||||||||||
Income tax expense | 1,554 | 3,136 | |||||||||||||||||||||
Net income | $ | 5,535 | 10,170 | ||||||||||||||||||||
Basic earnings per common share | $ | 0.92 | 1.70 | ||||||||||||||||||||
Diluted earnings per common share | $ | 0.88 | 1.65 |
| | | | | | | | | |
| | | Three months ended | | Nine months ended | ||||
| | | September 30, | | September 30, | ||||
(dollars in thousands) |
| | 2021 |
| 2020 | | 2021 |
| 2020 |
Net income: | | $ | 9,438 | | 9,212 | | 27,866 | | 17,441 |
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Other comprehensive (loss) income: | | | | | | | | | |
Net change in unrealized gains on investment securities available for sale: | | | | | | | | | |
Net unrealized (losses) gains arising during the period, net of tax expense of ($312), $144, ($475), and $761, respectively | | | (1,021) | | 304 | | (1,490) | | 2,489 |
Less: reclassification adjustment for net gains on sales realized in net income, net of tax expense of ($71), ($301), ($83), and ($313), respectively | | | (243) | | (989) | | (279) | | (1,032) |
Unrealized investment (losses) gains, net of tax expense of $(383), $(157), $(558), and $448, respectively | | | (1,264) | | (685) | | (1,769) | | 1,457 |
Total other comprehensive (loss) income | | | (1,264) | | (685) | | (1,769) | | 1,457 |
Total comprehensive income | | $ | 8,174 | | 8,527 | | 26,097 | | 18,898 |
Three months ended March 31, | |||||||||||||||||||||||
(dollars in thousands) | 2022 | 2021 | |||||||||||||||||||||
Net income: | $ | 5,535 | 10,170 | ||||||||||||||||||||
Other comprehensive (loss) income: | |||||||||||||||||||||||
Net change in unrealized gains on investment securities available for sale: | |||||||||||||||||||||||
Net unrealized losses arising during the period, net of tax benefit of $1,626, and $592, respectively | (5,369) | (1,883) | |||||||||||||||||||||
Less: reclassification adjustment for net gains realized in net income, net of tax expense of $3, and $12, respectively | (9) | (36) | |||||||||||||||||||||
Reclassification adjustment for securities transferred from available-for-sale to held-to-maturity, net of tax benefit of $308, and $0, respectively | (1,021) | — | |||||||||||||||||||||
Unrealized investment losses, net of tax benefit of $1,936, and $604, respectively | (6,399) | (1,919) | |||||||||||||||||||||
Total other comprehensive loss | (6,399) | (1,919) | |||||||||||||||||||||
Total comprehensive (loss) income | $ | (864) | 8,251 |
(Unaudited)
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| | | | | | | | Unearned | | | | Accumulated | | |
| | | | | | | | Common | | | | Other | | |
| | Common | | | | Treasury | | Stock - | | Retained | | Comprehensive | | |
(dollars in thousands) |
| Stock |
| Surplus |
| Stock |
| ESOP | | Earnings |
| Income |
| Total |
Balance, January 1, 2020 | $ | 6,408 | | 80,255 | | (62) | | — | | 34,097 | | (3) | | 120,695 |
Comprehensive income: | | | | | | | | | | | | | | |
Net income | | | | | | | | | | 2,516 | | | | 2,516 |
Change in unrealized gains on securities available-for-sale, net of tax | | | | | | | | | | | | 429 | | 429 |
Total comprehensive income | | | | | | | | | | | | | | 2,945 |
Share-based awards and exercises | | 6 | | 26 | | | | | | | | | | 32 |
Net purchase of treasury stock through publicly announced plans | | | | 63 | | (5,766) | | | | | | | | (5,703) |
Compensation expense related to stock option grants | | | | 64 | | | | | | | | | | 64 |
Balance, March 31, 2020 | $ | 6,414 | | 80,408 | | (5,828) | | — | | 36,613 | | 426 | | 118,033 |
Comprehensive income: | | | | | | | | | | | | | | |
Net income | | | | | | | | | | 5,713 | | | | 5,713 |
Change in unrealized gains on securities available-for-sale, net of tax | | | | | | | | | | | | 1,713 | | 1,713 |
Total comprehensive income | | | | | | | | | | | | | | 7,426 |
Compensation expense related to stock option grants | | | | 59 | | | | | | | | | | 59 |
Balance, June 30, 2020 | $ | 6,414 | | 80,467 | | (5,828) | | — | | 42,326 | | 2,139 | | 125,518 |
Comprehensive income: | | | | | | | | | | | | | | |
Net income | | | | | | | | | | 9,212 | | | | 9,212 |
Change in unrealized gains on securities available-for-sale, net of tax | | | | | | | | | | | | (685) | | (685) |
Total comprehensive income | | | | | | | | | | | | | | 8,527 |
Dividends paid or accrued, $0.125 per share | | | | | | | | | | (763) | | | | (763) |
Shares purchased for ESOP plan (133,601) | | | | | | | | (2,000) | | | | | | (2,000) |
Common stock issued through share-based awards and exercises | | 36 | | 337 | | | | | | | | | | 373 |
Stock based compensation | | | | 177 | | | | | | | | | | 177 |
Balance, September 30, 2020 | $ | 6,450 | | 80,981 | | (5,828) | | (2,000) | | 50,775 | | 1,454 | | 131,832 |
6
(dollars in thousands) | Common Stock | Surplus | Treasury Stock | Unearned Common Stock ESOP | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Total | ||||||||||||||||||||||||||||||||||
Balance, January 1, 2021 | $ | 6,456 | 81,196 | (5,828) | (1,768) | 59,010 | 2,556 | 141,622 | |||||||||||||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||||||||||||
Net income | 10,170 | 10,170 | |||||||||||||||||||||||||||||||||||||||
Net change in unrealized investment losses, net of tax | (1,919) | (1,919) | |||||||||||||||||||||||||||||||||||||||
Total comprehensive income | 8,251 | ||||||||||||||||||||||||||||||||||||||||
Dividends declared, $1.125 per share | (6,931) | (6,931) | |||||||||||||||||||||||||||||||||||||||
Common stock issued through share-based awards and exercises | 32 | 302 | 334 | ||||||||||||||||||||||||||||||||||||||
Stock based compensation | 229 | 229 | |||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2021 | $ | 6,488 | 81,727 | (5,828) | (1,768) | 62,249 | 637 | 143,505 |
(dollars in thousands) | Common Stock | Surplus | Treasury Stock | Unearned Common Stock ESOP | Retained Earnings | Accumulated Other Comprehensive (Loss) Income | Total | ||||||||||||||||||||||||||||||||||
Balance, January 1, 2022 | $ | 6,535 | 83,663 | (8,860) | (1,602) | 84,916 | 708 | 165,360 | |||||||||||||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||||||||||||||||||
Net income | 5,535 | 5,535 | |||||||||||||||||||||||||||||||||||||||
Net change in unrealized investment losses, net of tax | (6,399) | (6,399) | |||||||||||||||||||||||||||||||||||||||
Total comprehensive loss | (864) | ||||||||||||||||||||||||||||||||||||||||
Dividends declared, $1.20 per share | (7,347) | (7,347) | |||||||||||||||||||||||||||||||||||||||
Common stock issued through share-based awards and exercises | 21 | 254 | 275 | ||||||||||||||||||||||||||||||||||||||
Stock based compensation | 260 | 260 | |||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2022 | $ | 6,556 | 84,177 | (8,860) | (1,602) | 83,104 | (5,691) | 157,684 |
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| | | | | | | | Unearned | | | | Accumulated | | |
| | | | | | | | Common | | | | Other | | |
| | Common | | | | Treasury | | Stock - | | Retained | | Comprehensive | | |
(dollars in thousands) |
| Stock |
| Surplus |
| Stock | | ESOP | | Earnings |
| Income |
| Total |
Balance, January 1, 2021 | $ | 6,456 | | 81,196 | | (5,828) | | (1,768) | | 59,010 | | 2,556 | | 141,622 |
Comprehensive income: | | | | | | | | | | | | | | |
Net income | | | | | | | | | | 10,170 | | | | 10,170 |
Net change in unrealized losses on securities available-for-sale, net of tax | | | | | | | | | | | | (1,919) | | (1,919) |
Total comprehensive income | | | | | | | | | | | | | | 8,251 |
Dividends paid or accrued, $1.125 per share | | | | | | | | | | (6,931) | | | | (6,931) |
Common stock issued through share-based awards and exercises | | 32 | | 302 | | | | | | | | | | 334 |
Stock based compensation | | | | 229 | | | | | | | | | | 229 |
Balance, March 31, 2021 | $ | 6,488 | | 81,727 | | (5,828) | | (1,768) | | 62,249 | | 637 | | 143,505 |
Comprehensive income: | | | | | | | | | | | | | | |
Net income | | | | | | | | | | 8,258 | | | | 8,258 |
Change in unrealized gains on securities available-for-sale, net of tax | | | | | | | | | | | | 1,414 | | 1,414 |
Total comprehensive income | | | | | | | | | | | | | | 9,672 |
Dividends paid or accrued, $0.125 per share | | | | | | | | | | (768) | | | | (768) |
Common stock issued through share-based awards and exercises | | 5 | | 52 | | | | | | | | | | 57 |
Stock based compensation | | | | 419 | | | | | | | | | | 419 |
Balance, June 30, 2021 | $ | 6,493 | | 82,198 | | (5,828) | | (1,768) | | 69,739 | | 2,051 | | 152,885 |
Comprehensive income: | | | | | | | | | | | | | | |
Net income | | | | | | | | | | 9,438 | | | | 9,438 |
Change in unrealized gains on securities available-for-sale, net of tax | | | | | | | | | | | | (1,264) | | (1,264) |
Total comprehensive income | | | | | | | | | | | | | | 8,174 |
Dividends paid or accrued, $0.125 per share | | | | | | | | | | (769) | | | | (769) |
Net purchase of treasury stock through publicly announced plans (78,491) | | | | | | (2,197) | | | | | | | | (2,197) |
Common stock issued through share-based awards and exercises | | 13 | | 167 | | | | | | | | | | 180 |
Stock based compensation | | | | 143 | | | | | | | | | | 143 |
Balance, September 30, 2021 | $ | 6,506 | | 82,508 | | (8,025) | | (1,768) | | 78,408 | | 787 | | 158,416 |
See accompanying notes to the unaudited consolidated financial statements.
7
| | | | | |
| | Nine months ended | |||
| | September 30, | |||
(dollars in thousands) |
| 2021 |
| 2020 | |
Net income | | $ | 27,866 | | 17,441 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | | | | | |
Gain on sale of investment securities | | | (362) | | (1,345) |
Depreciation and amortization, net | | | (4,677) | | (992) |
Net amortization of investment premiums and discounts and change in fair value of equity securities | | | 991 | | 238 |
Provision for loan losses | | | 1,292 | | 7,139 |
Amortization of issuance costs on subordinated debt | | | 88 | | 83 |
Share-based compensation | | | 791 | | 300 |
Net change in fair value of derivative instruments | | | 3,431 | | (6,346) |
Net change in fair value of loans held for sale | | | 3,164 | | (4,424) |
Net change in fair value of loans held for investment | | | 24 | | (174) |
Gain on sale of OREO | | | — | | (6) |
Amortization and net impairment of servicing rights | | | 707 | | 350 |
Capitalization of servicing rights, net | | | (7,021) | | (2,992) |
SBA loan income | | | (5,423) | | (1,821) |
Proceeds from sale of loans | | | 2,034,464 | | 1,356,637 |
Loans originated for sale | | | (1,864,132) | | (1,498,614) |
Mortgage banking income | | | (62,293) | | (45,395) |
Decrease (increase) in accrued interest receivable | | | 402 | | (1,518) |
(Increase) decrease in other assets | | | (2,648) | | 8,503 |
Earnings from investment in life insurance | | | (224) | | (210) |
(Increase) decrease income in deferred income tax | | | (817) | | 1,274 |
(Decrease) increase in accrued interest payable | | | (490) | | 1,170 |
Increase in other liabilities | | | 1,299 | | 9,054 |
Net cash provided by (used in) operating activities | | | 126,432 | | (161,648) |
Cash flows from investing activities: | | | | | |
Activity in available-for-sale securities: | | | | | |
Maturities, repayments and calls | | | 6,173 | | 6,319 |
Sales | | | 20,855 | | 44,592 |
Purchases | | | (52,468) | | (92,476) |
Activity in held-to-maturity securities: | | | | | |
Maturities, repayments and calls | | | — | | 2,140 |
Proceeds from sale of OREO | | | — | | 126 |
Decrease in restricted stock | | | 3,699 | | 422 |
Net increase in loans | | | (82,711) | | (339,459) |
Purchases of premises and equipment | | | (1,496) | | (651) |
Purchase of bank owned life insurance | | | (10,000) | | — |
Net cash used in investing activities | | | (115,948) | | (378,987) |
Cash flows from financing activities: | | | | | |
Net increase in deposits | | | 197,712 | | 357,856 |
(Decrease) increase in short-term borrowings | | | (3,187) | | (31,928) |
Decrease in short-term borrowings with original maturity > 90 days | | | (81,397) | | 12,902 |
(Repayment) proceeds from long-term debt, net | | | (87,141) | | 247,008 |
Repayment of acquisition note payable | | | — | | (413) |
Issuance costs on subordinated debt | | | — | | (231) |
Net purchase of treasury stock | | | (2,197) | | (5,703) |
Dividends paid | | | (8,468) | | (763) |
Purchase of common shares for ESOP | | | — | | (2,000) |
Share based awards and exercises | | | 571 | | 405 |
Net cash provided by financing activities | | | 15,893 | | 577,133 |
Net change in cash and cash equivalents | | | 26,377 | | 36,498 |
Cash and cash equivalents at beginning of period | | | 36,744 | | 39,371 |
Cash and cash equivalents at end of period | | $ | 63,121 | | 75,869 |
Supplemental disclosure of cash flow information: | | | | | |
Cash paid during the period for: | | | | | |
Interest | | $ | 6,976 | | 9,581 |
Income taxes | | | 11,354 | | 2,490 |
Supplemental disclosure of cash flow information: | | | | | |
Transfers from loans held for sale to loans held for investment | | | 7,116 | | — |
Net loans sold, not settled | | | — | | (1,657) |
Three months ended March 31, | |||||||||||
(dollars in thousands) | 2022 | 2021 | |||||||||
Net income | $ | 5,535 | 10,170 | ||||||||
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||||||||||
Gain on sale of investment securities | — | (48) | |||||||||
Net amortization of investment premiums and discounts and change in fair value of equity securities | (27) | 331 | |||||||||
Depreciation and amortization, net | 50 | (1,709) | |||||||||
Provision for loan losses | 615 | 599 | |||||||||
Amortization of issuance costs on subordinated debt | 30 | 30 | |||||||||
Stock based compensation | 260 | 229 | |||||||||
Net change in fair value of derivative instruments | 166 | 944 | |||||||||
Net change in fair value of loans held for sale | 1,124 | 3,867 | |||||||||
Net change in fair value of loans held for investment | 778 | 102 | |||||||||
Amortization and net impairment of servicing rights | 494 | (2,661) | |||||||||
SBA loan income | (2,520) | (1,245) | |||||||||
Proceeds from sale of loans | 319,610 | 803,858 | |||||||||
Loans originated for sale | (313,485) | (724,675) | |||||||||
Mortgage banking income | (7,096) | (24,100) | |||||||||
Decrease (increase) in accrued interest receivable | 161 | (85) | |||||||||
Increase in other assets | (9,962) | (5,246) | |||||||||
Earnings from investment in life insurance | (138) | (66) | |||||||||
Increase (decrease) in deferred income tax | 159 | (1,865) | |||||||||
Increase (decrease) in accrued interest payable | 544 | (411) | |||||||||
Increase in other liabilities | 10,156 | 4,745 | |||||||||
Net cash provided by operating activities | 6,454 | 62,764 | |||||||||
Cash flows from investing activities: | |||||||||||
Activity in available-for-sale securities: | |||||||||||
Maturities, repayments and calls | 3,843 | 2,343 | |||||||||
Sales | — | 13,639 | |||||||||
Purchases | (9,885) | (28,151) | |||||||||
Activity in held-to-maturity securities: | |||||||||||
Maturities, repayments and calls | 390 | — | |||||||||
Purchases | (2,500) | — | |||||||||
Decrease in restricted stock | 787 | 2,747 | |||||||||
Net increase in loans | (59,762) | (70,915) | |||||||||
Purchases of premises and equipment | (77) | (677) | |||||||||
Net cash used in investing activities | (67,204) | (81,014) | |||||||||
Cash flows from financing activities: | |||||||||||
Net increase in deposits | 118,438 | 142,255 | |||||||||
Decrease in short-term borrowings | (5,208) | (5,465) | |||||||||
Decrease in short-term borrowings with original maturity > 90 days | — | (75,021) | |||||||||
(Repayment) proceeds from long-term debt, net | — | (42,662) | |||||||||
Dividends paid | (7,347) | (6,931) | |||||||||
Share based awards and exercises | 275 | 334 | |||||||||
Net cash provided by financing activities | 106,158 | 12,510 | |||||||||
Net change in cash and cash equivalents | 45,408 | (5,740) | |||||||||
Cash and cash equivalents at beginning of period | 23,480 | 36,744 | |||||||||
Cash and cash equivalents at end of period | $ | 68,888 | 31,004 | ||||||||
Supplemental disclosure of cash flow information: | |||||||||||
Cash paid during the period for: | |||||||||||
Interest | $ | 1,386 | 2,742 | ||||||||
Supplemental disclosure of cash flow information: | |||||||||||
Transfers from loans held for sale to loans held for investment | 1,653 | 2,390 | |||||||||
Net loans sold, not settled | (13,857) | (4,432) | |||||||||
Investment security purchases, not settled | (2,761) | (1,188) | |||||||||
Transfer of securities from AFS to HTM | 23,522 | — | |||||||||
Lease liabilities arising from obtaining right-of-use assets | 10,995 | — |
8
Estimates for the allowance for loan and lease losses at September 30, 2021 include probable losses related to the COVID-19 pandemic. While there have been signals of economic recovery and a resumption of many types of business activity, there remains significant uncertainty involved in the measurement of these losses. If economic conditions deteriorate further, then additional provision for loan losses may be required in future periods. It is unknown how long these conditions will last and what the ultimate financial impact will be to the Corporation.
9
Three Months Ended March 31, | |||||||||||||||||||||||
(dollars in thousands, except per share data) | 2022 | 2021 | |||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net income available to common stockholders | $ | 5,535 | 10,170 | ||||||||||||||||||||
Denominator for basic earnings per share | |||||||||||||||||||||||
Weighted average shares outstanding | 6,128 | 6,119 | |||||||||||||||||||||
Average unearned ESOP shares | (105) | (119) | |||||||||||||||||||||
Basic weighted averages shares outstanding | 6,023 | 6,000 | |||||||||||||||||||||
Dilutive effects of assumed exercises of stock options | 173 | 93 | |||||||||||||||||||||
Dilutive effects of SERP shares | 66 | 53 | |||||||||||||||||||||
Denominator for diluted earnings per share - adjusted weighted average shares outstanding | 6,262 | 6,146 | |||||||||||||||||||||
Basic earnings per share | $ | 0.92 | 1.70 | ||||||||||||||||||||
Diluted earnings per share | $ | 0.88 | 1.65 | ||||||||||||||||||||
Antidilutive shares excluded from computation of average dilutive earnings per share | 21 | 22 |
| | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | ||||||||
| | September 30, | | September 30, | ||||||||
(dollars in thousands, except per share data) |
| 2021 |
| 2020 | | 2021 |
| 2020 | ||||
Numerator: | | | | | | | | | | | | |
Net income available to common stockholders | | $ | 9,438 | | | 9,212 | | $ | 27,866 | | | 17,441 |
Denominator for basic earnings per share | | | | | | | | | | | | |
Weighted average shares outstanding | | | 6,157 | | | 6,099 | | | 6,148 | | | 6,172 |
Average unearned ESOP shares | | | (112) | | | — | | | (115) | | | — |
Basic weighted averages shares outstanding | | | 6,045 | | | 6,099 | | | 6,033 | | | 6,172 |
Effect of dilutive common shares | | | 186 | | | 11 | | | 168 | | | 21 |
Denominator for diluted earnings per share - adjusted weighted average shares outstanding | | | 6,231 | | | 6,110 | | | 6,201 | | | 6,193 |
Basic earnings per share | | $ | 1.56 | | | 1.51 | | $ | 4.62 | | | 2.83 |
Diluted earnings per share | | $ | 1.52 | | | 1.51 | | $ | 4.49 | | | 2.82 |
Antidilutive shares excluded from computation of average dilutive earnings per share | | | 140 | | | 265 | | | 140 | | | 192 |
| | | | | | | | | | | |
| | September 30, 2021 | |||||||||
| | | | | Gross | | Gross | | | | # of Securities |
| | Amortized | | unrealized | | unrealized | | Fair | | in unrealized | |
(dollars in thousands) |
| cost |
| gains |
| losses |
| value | | loss position | |
Securities available-for-sale: | | | | | | | | | | | |
U.S. asset backed securities | | $ | 21,120 | | 199 | | (26) | | 21,293 | | 4 |
U.S. government agency mortgage-backed securities | | | 5,351 | | 137 | | (29) | | 5,459 | | 1 |
U.S. government agency collateralized mortgage obligations | | | 23,712 | | 483 | | (142) | | 24,053 | | 7 |
State and municipal securities | | | 72,415 | | 874 | | (461) | | 72,828 | | 23 |
U.S. Treasuries | | | 15,082 | | 6 | | (78) | | 15,010 | | 11 |
Non-U.S. government agency collateralized mortgage obligations | | | 999 | | — | | — | | 999 | | 1 |
Corporate bonds | | | 6,450 | | 73 | | (16) | | 6,507 | | 4 |
Total securities available-for-sale | | $ | 145,129 | | 1,772 | | (752) | | 146,149 | | 51 |
Securities held-to-maturity: | | | | | | | | | | | |
State and municipal securities | | | 6,406 | | 254 | | ─ | | 6,660 | | — |
Total securities held-to-maturity | | $ | 6,406 | | 254 | | — | | 6,660 | | — |
10
March 31, 2022 | |||||||||||||||||||||||||||||
(dollars in thousands) | Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | # of Securities in unrealized loss position | ||||||||||||||||||||||||
Securities available-for-sale: | |||||||||||||||||||||||||||||
U.S. asset backed securities | $ | 14,664 | 35 | (177) | 14,522 | 10 | |||||||||||||||||||||||
U.S. government agency mortgage-backed securities | 9,352 | 2 | (221) | 9,133 | 8 | ||||||||||||||||||||||||
U.S. government agency collateralized mortgage obligations | 22,037 | 30 | (871) | 21,196 | 21 | ||||||||||||||||||||||||
State and municipal securities | 45,385 | 107 | (2,832) | 42,660 | 31 | ||||||||||||||||||||||||
U.S. Treasuries | 32,978 | — | (1,881) | 31,097 | 25 | ||||||||||||||||||||||||
Non-U.S. government agency collateralized mortgage obligations | 5,879 | — | (165) | 5,714 | 5 | ||||||||||||||||||||||||
Corporate bonds | 6,450 | 24 | (143) | 6,331 | 9 | ||||||||||||||||||||||||
Total securities available-for-sale | $ | 136,745 | 198 | (6,290) | 130,653 | 109 | |||||||||||||||||||||||
March 31, 2022 | |||||||||||||||||||||||||||||
Amortized cost | Gross unrecognized gains | Gross unrecognized losses | Fair value | # of Securities in unrecognized loss position | |||||||||||||||||||||||||
Securities held-to-maturity: | |||||||||||||||||||||||||||||
State and municipal securities | 34,977 | 25 | (1,446) | 33,556 | 15 | ||||||||||||||||||||||||
Total securities held-to-maturity | $ | 34,977 | 25 | (1,446) | 33,556 | 15 |
December 31, 2021 | |||||||||||||||||||||||||||||
(dollars in thousands) | Amortized cost | Gross unrealized gains | Gross unrealized losses | Fair value | # of Securities in unrealized loss position | ||||||||||||||||||||||||
Securities available-for-sale: | |||||||||||||||||||||||||||||
U.S. asset backed securities | $ | 16,850 | 55 | (68) | 16,837 | 10 | |||||||||||||||||||||||
U.S. government agency mortgage-backed securities | 9,749 | 124 | (60) | 9,813 | 3 | ||||||||||||||||||||||||
U.S. government agency collateralized mortgage obligations | 22,276 | 358 | (253) | 22,381 | 10 | ||||||||||||||||||||||||
State and municipal securities | 72,099 | 1,379 | (496) | 72,982 | 12 | ||||||||||||||||||||||||
U.S. Treasuries | 29,973 | 1 | (246) | 29,728 | 21 | ||||||||||||||||||||||||
Non-U.S. government agency collateralized mortgage obligations | 990 | — | (15) | 975 | 1 | ||||||||||||||||||||||||
Corporate bonds | 6,450 | 154 | (18) | 6,586 | 5 | ||||||||||||||||||||||||
Total securities available-for-sale | $ | 158,387 | 2,071 | (1,156) | 159,302 | 62 | |||||||||||||||||||||||
Securities held-to-maturity: | |||||||||||||||||||||||||||||
State and municipal securities | 6,372 | 219 | — | 6,591 | — | ||||||||||||||||||||||||
Total securities held-to-maturity | $ | 6,372 | 219 | — | 6,591 | — |
| | | | | | | | | | | |
| | December 31, 2020 | |||||||||
| | | | | Gross | | Gross | | | | # of Securities |
| | Amortized | | unrealized | | unrealized | | Fair | | in unrealized | |
(dollars in thousands) |
| cost |
| gains |
| losses |
| value | | loss position | |
Securities available-for-sale: | | | | | | | | | | | |
U.S. asset backed securities | | $ | 25,303 | | 364 | | (75) | | 25,592 | | 8 |
U.S. government agency mortgage-backed securities | | | 3,854 | | 192 | | — | | 4,046 | | — |
U.S. government agency collateralized mortgage obligations | | | 23,010 | | 916 | | (17) | | 23,909 | | 1 |
State and municipal securities | | | 63,848 | | 2,025 | | (63) | | 65,810 | | 3 |
Corporate bonds | | | 4,200 | | 7 | | (2) | | 4,205 | | 2 |
Total securities available-for-sale | | $ | 120,215 | | 3,504 | | (157) | | 123,562 | | 14 |
Securities held-to-maturity: | | | | | | | | | | | |
State and municipal securities | | | 6,510 | | 347 | | — | | 6,857 | | — |
Total securities held-to-maturity | | $ | 6,510 | | 347 | | — | | 6,857 | | — |
Although the Corporation’s investment portfolio overall is in a net unrealized gainloss position at September 30, 2021,March 31, 2022, the temporary impairment in the above noted securities is primarily the result of changes in market interest rates subsequent to purchase and the Corporation does not intend to sell these securities prior to recovery and it is more likely than not that the Corporation will not be required to sell these securities prior to recovery to satisfy liquidity needs, and therefore, 0no securities are deemed to be other-than-temporarily impaired.
| | | | | | | | | | | | | |
| | September 30, 2021 | |||||||||||
| | Less than 12 Months | | 12 Months or more | | Total | |||||||
| | Fair | | Unrealized | | Fair | | Unrealized | | Fair | | Unrealized | |
(dollars in thousands) |
| value |
| losses |
| value |
| losses |
| value |
| losses | |
Securities available-for-sale: | | | | | | | | | | | | | |
U.S. asset backed securities | | $ | 4,158 | | (26) | | — | | — | | 4,158 | | (26) |
U.S. government agency mortgage-backed securities | | | 1,614 | | (29) | | — | | — | | 1,614 | | (29) |
U.S. government agency collateralized mortgage obligations | | | 7,315 | | (142) | | — | | — | | 7,315 | | (142) |
State and municipal securities | | | 34,808 | | (451) | | 568 | | (10) | | 35,376 | | (461) |
U.S. Treasuries | | | 12,049 | | (78) | | — | | — | | 12,049 | | (78) |
Corporate bonds | | | 2,244 | | (6) | | 439 | | (10) | | 2,683 | | (16) |
Total securities available-for-sale | | $ | 62,188 | | (732) | | 1,007 | | (20) | | 63,195 | | (752) |
11
March 31, 2022 | |||||||||||||||||||||||||||||||||||
Less than 12 Months | 12 Months or more | Total | |||||||||||||||||||||||||||||||||
(dollars in thousands) | Fair value | Unrealized losses | Fair value | Unrealized losses | Fair value | Unrealized losses | |||||||||||||||||||||||||||||
Securities available-for-sale: | |||||||||||||||||||||||||||||||||||
U.S. asset backed securities | $ | 10,458 | (177) | — | — | 10,458 | (177) | ||||||||||||||||||||||||||||
U.S. government agency mortgage-backed securities | 8,979 | (221) | — | — | 8,979 | (221) | |||||||||||||||||||||||||||||
U.S. government agency collateralized mortgage obligations | 13,740 | (513) | 4,196 | (358) | 17,936 | (871) | |||||||||||||||||||||||||||||
State and municipal securities | 37,982 | (2,794) | 535 | (38) | 38,517 | (2,832) | |||||||||||||||||||||||||||||
U.S. Treasuries | 31,097 | (1,881) | — | — | 31,097 | (1,881) | |||||||||||||||||||||||||||||
Non-U.S. government agency collateralized mortgage obligations | 4,741 | (165) | — | — | 4,741 | (165) | |||||||||||||||||||||||||||||
Corporate bonds | 4,807 | — | (143) | — | — | 4,807 | (143) | ||||||||||||||||||||||||||||
Total securities available-for-sale | $ | 111,804 | (5,894) | 4,731 | (396) | 116,535 | (6,290) | ||||||||||||||||||||||||||||
March 31, 2022 | |||||||||||||||||||||||||||||||||||
Less than 12 Months | 12 Months or more | Total | |||||||||||||||||||||||||||||||||
Fair value | Unrecognized losses | Fair value | Unrecognized losses | Fair value | Unrecognized losses | ||||||||||||||||||||||||||||||
Securities held-to-maturity: | |||||||||||||||||||||||||||||||||||
State and municipal securities | — | — | 24,955 | (1,446) | 24,955 | (1,446) | |||||||||||||||||||||||||||||
Total securities held-to-maturity | $ | — | — | 24,955 | (1,446) | 24,955 | (1,446) | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | |
| | December 31, 2020 | |||||||||||
| | Less than 12 Months | | 12 Months or more | | Total | |||||||
| | Fair | | Unrealized | | Fair | | Unrealized | | Fair | | Unrealized | |
(dollars in thousands) |
| value |
| losses |
| value |
| losses |
| value |
| losses | |
Securities available-for-sale: | | | | | | | | | | | | | |
U.S. asset backed securities | | $ | 2,884 | | (4) | | 7,443 | | (71) | | 10,327 | | (75) |
U.S. government agency collateralized mortgage obligations | | | 2,284 | | (17) | | — | | — | | 2,284 | | (17) |
State and municipal securities | | | 4,163 | | (63) | | — | | — | | 4,163 | | (63) |
Corporate bonds | | | 1,198 | | (2) | | — | | — | | 1,198 | | (2) |
Total securities available-for-sale | | $ | 10,529 | | (86) | | 7,443 | | (71) | | 17,972 | | (157) |
December 31, 2021 Less than 12 Months 12 Months or more Total (dollars in thousands) Fair
valueUnrealized
lossesFair
valueUnrealized
lossesFair
valueUnrealized
lossesSecurities available-for-sale: U.S. asset backed securities $ 12,330 (68) — — 12,330 (68) U.S. government agency mortgage-backed securities 3,852 (60) — — 3,852 (60) U.S. government agency collateralized mortgage obligations 8,836 (187) 1,657 (66) 10,493 (253) State and municipal securities 14,994 (427) 2,019 (69) 17,013 (496) U.S. Treasuries 28,750 (246) — — 28,750 (246) Non-U.S. government agency collateralized mortgage obligations 975 (15) — — 975 (15) Corporate bonds 2,232 (18) — — 2,232 (18) Total securities available-for-sale $ 71,969 (1,021) 3,676 (135) 75,645 (1,156)
| | | | | | | | | | | | | | | | | | |
| | September 30, 2021 | | December 31, 2020 | ||||||||||||||
| | Available-for-sale | | Held-to-maturity | | Available-for-sale | | Held-to-maturity | ||||||||||
| | Amortized | | Fair | | Amortized | | Fair | | Amortized | | Fair | | Amortized | | Fair | ||
(dollars in thousands) |
| cost |
| value |
| cost |
| value |
| cost |
| value |
| cost |
| value | ||
Investment securities: | | | | | | | | | | | | | | | | | | |
Due in one year or less | | $ | — | | — | | — | | — | | $ | — | | — | | — | | — |
Due after one year through five years | | | — | | — | | 3,133 | | 3,197 | | | — | | — | | 3,181 | | 3,288 |
Due after five years through ten years | | | 28,999 | | 29,010 | | 3,273 | | 3,463 | | | 12,035 | | 12,095 | | 3,329 | | 3,569 |
Due after ten years | | | 86,068 | | 86,628 | | — | | — | | | 81,316 | | 83,512 | | — | | — |
Subtotal | | | 115,067 | | 115,638 | | 6,406 | | 6,660 | | | 93,351 | | 95,607 | | 6,510 | | 6,857 |
Mortgage-related securities | | | 30,062 | | 30,511 | | — | | — | | | 26,864 | | 27,955 | | — | | — |
Total | | $ | 145,129 | | 146,149 | | 6,406 | | 6,660 | | $ | 120,215 | | 123,562 | | 6,510 | | 6,857 |
March 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||
Available-for-sale | Held-to-maturity | Available-for-sale | Held-to-maturity | ||||||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | Amortized cost | Fair value | Amortized cost | Fair value | Amortized cost | Fair value | Amortized cost | Fair value | |||||||||||||||||||||||||||||||||||||||
Investment securities: | |||||||||||||||||||||||||||||||||||||||||||||||
Due in one year or less | $ | — | — | — | — | $ | — | — | 763 | 769 | |||||||||||||||||||||||||||||||||||||
Due after one year through five years | 15,939 | 15,242 | 3,789 | 3,789 | 12,934 | 12,885 | 2,354 | 2,397 | |||||||||||||||||||||||||||||||||||||||
Due after five years through ten years | 28,909 | 27,323 | 3,969 | 3,866 | 30,890 | 30,798 | 3,255 | 3,425 | |||||||||||||||||||||||||||||||||||||||
Due after ten years | 54,629 | 52,045 | 27,219 | 25,901 | 81,548 | 82,450 | — | — | |||||||||||||||||||||||||||||||||||||||
Subtotal | 99,477 | 94,610 | 34,977 | 33,556 | 125,372 | 126,133 | 6,372 | 6,591 | |||||||||||||||||||||||||||||||||||||||
Mortgage-related securities | 37,268 | 36,043 | — | — | 33,015 | 33,169 | — | — | |||||||||||||||||||||||||||||||||||||||
Total | $ | 136,745 | 130,653 | 34,977 | 33,556 | $ | 158,387 | 159,302 | 6,372 | 6,591 |
12
(dollars in thousands) | March 31, 2022 | December 31, 2021 | |||||||||
Mortgage loans held for sale | $ | 81,258 | 80,882 | ||||||||
Real estate loans: | |||||||||||
Commercial mortgage | 531,157 | 516,928 | |||||||||
Home equity lines and loans | 50,657 | 52,299 | |||||||||
Residential mortgage (1) | 78,504 | 68,175 | |||||||||
Construction | 187,756 | 160,905 | |||||||||
Total real estate loans | 848,074 | 798,307 | |||||||||
Commercial and industrial | 318,692 | 293,771 | |||||||||
Small business loans | 109,627 | 114,158 | |||||||||
Paycheck Protection Program loans ("PPP") | 50,883 | 90,194 | |||||||||
Main Street Lending Program Loans ("MSLP") | 597 | 597 | |||||||||
Consumer | 478 | 419 | |||||||||
Leases, net | 101,413 | 88,242 | |||||||||
Total portfolio loans and leases | 1,429,764 | 1,385,688 | |||||||||
Total loans and leases | $ | 1,511,022 | 1,466,570 | ||||||||
Loans with predetermined rates | $ | 467,840 | 488,220 | ||||||||
Loans with adjustable or floating rates | 1,043,182 | 978,350 | |||||||||
Total loans and leases | $ | 1,511,022 | 1,466,570 | ||||||||
Net deferred loan origination costs | $ | 2,142 | 769 |
| | | | | |
| | September 30, | | December 31, | |
(dollars in thousands) |
| 2021 |
| 2020 | |
Mortgage loans held for sale | | $ | 117,996 | | 229,199 |
Real estate loans: | | | | | |
Commercial mortgage | | | 542,473 | | 485,103 |
Home equity lines and loans | | | 52,819 | | 64,987 |
Residential mortgage (1) | | | 59,295 | | 52,454 |
Construction | | | 162,192 | | 140,246 |
Total real estate loans | | | 816,779 | | 742,790 |
| | | | | |
Commercial and industrial | | | 278,976 | | 261,750 |
Small business loans | | | 90,477 | | 49,542 |
Paycheck Protection Program loans ("PPP") | | | 118,585 | | 203,543 |
Main Street Lending Program Loans ("MSLP") | | | 592 | | 580 |
Consumer | | | 427 | | 511 |
Leases, net | | | 73,993 | | 31,040 |
Total portfolio loans and leases | | | 1,379,829 | | 1,289,756 |
Total loans and leases | | $ | 1,497,825 | | 1,518,955 |
| | | | | |
Loans with predetermined rates | | $ | 542,289 | | 658,458 |
Loans with adjustable or floating rates | | | 955,536 | | 860,497 |
Total loans and leases | | $ | 1,497,825 | | 1,518,955 |
| | | | | |
Net deferred loan origination (fees) costs | | $ | (1,159) | | (4,992) |
| | | | | |
| | September 30, | | December 31, | |
(dollars in thousands) |
| 2021 |
| 2020 | |
Minimum lease payments receivable | | $ | 89,051 | | 37,919 |
Unearned lease income | | | (15,058) | | (6,879) |
Total | | $ | 73,993 | | 31,040 |
13
(dollars in thousands) | March 31, 2022 | December 31, 2021 | |||||||||
Minimum lease payments receivable | $ | 120,695 | 105,608 | ||||||||
Unearned lease income | (19,282) | (17,366) | |||||||||
Total | $ | 101,413 | 88,242 |
March 31, 2022 | 30-89 days past due | 90+ days past due and still accruing | Total past due | Current | Total Accruing Loans and leases | Nonaccrual loans and leases | Total loans portfolio and leases | Delinquency percentage | ||||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial mortgage | $ | — | — | — | 531,157 | 531,157 | — | 531,157 | — | % | ||||||||||||||||||||||||||||||||||||||||
Home equity lines and loans | 299 | — | 299 | 49,359 | 49,658 | 999 | 50,657 | 2.56 | ||||||||||||||||||||||||||||||||||||||||||
Residential mortgage (1) | 1,176 | — | 1,176 | 74,916 | 76,092 | 2,412 | 78,504 | 4.57 | ||||||||||||||||||||||||||||||||||||||||||
Construction | — | — | — | 187,756 | 187,756 | — | 187,756 | — | ||||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | — | — | — | 299,943 | 299,943 | 18,749 | 318,692 | 5.88 | ||||||||||||||||||||||||||||||||||||||||||
Small business loans | — | — | — | 108,961 | 108,961 | 666 | 109,627 | 0.61 | ||||||||||||||||||||||||||||||||||||||||||
Paycheck Protection Program loans | — | — | — | 50,883 | 50,883 | — | 50,883 | — | ||||||||||||||||||||||||||||||||||||||||||
Main Street Lending Program loans | — | — | — | 597 | 597 | — | 597 | — | ||||||||||||||||||||||||||||||||||||||||||
Consumer | — | — | — | 478 | 478 | — | 478 | — | ||||||||||||||||||||||||||||||||||||||||||
Leases, net | 1,322 | — | 1,322 | 100,091 | 101,413 | — | 101,413 | 1.30 | ||||||||||||||||||||||||||||||||||||||||||
Total | $ | 2,797 | — | 2,797 | 1,404,141 | 1,406,938 | 22,826 | 1,429,764 | 1.79 | % |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Total | | | | | | | |
| | | | 90+ days | | | | | | Accruing | | Nonaccrual | | Total loans | | | | |
September 30, 2021 | | 30-89 days | | past due and | | Total past | | | | Loans and | | loans and | | portfolio | | Delinquency | | |
(dollars in thousands) |
| past due |
| still accruing |
| due |
| Current |
| leases |
| leases |
| and leases |
| percentage |
| |
Commercial mortgage | | $ | — | | — | | — | | 542,473 | | 542,473 | | — | | 542,473 | | — | % |
Home equity lines and loans | | | 65 | | — | | 65 | | 51,844 | | 51,909 | | 910 | | 52,819 | | 1.85 | |
Residential mortgage (1) | | | 143 | | — | | 143 | | 56,874 | | 57,017 | | 2,278 | | 59,295 | | 4.08 | |
Construction | | | — | | — | | — | | 162,192 | | 162,192 | | — | | 162,192 | | — | |
Commercial and industrial | | | 770 | | — | | 770 | | 273,117 | | 273,887 | | 5,089 | | 278,976 | | 2.10 | |
Small business loans | | | — | | — | | — | | 89,561 | | 89,561 | | 916 | | 90,477 | | 1.01 | |
Paycheck Protection Program loans | | | 2,422 | | — | | 2,422 | | 116,163 | | 118,585 | | — | | 118,585 | | 2.04 | |
Main Street Lending Program loans | | | — | | — | | — | | 592 | | 592 | | — | | 592 | | — | |
Consumer | | | — | | — | | — | | 427 | | 427 | | — | | 427 | | — | |
Leases, net | | | 263 | | — | | 263 | | 73,730 | | 73,993 | | — | | 73,993 | | 0.36 | |
Total | | $ | 3,663 | | — | | 3,663 | | 1,366,973 | | 1,370,636 | | 9,193 | | 1,379,829 | | 0.93 | % |
(1) Includes $17,142$17,375 of loans at fair value as of September 30, 2021March 31, 2022 ($16,52316,276 are current, $143$482 are 30-89 days past due, and $475$617 are nonaccrual).
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | Total | | | | | | | |
| | | | 90+ days | | | | | | Accruing | | Nonaccrual | | Total loans | | | | |
December 31, 2020 | | 30-89 days | | past due and | | Total past | | | | Loans and | | loans and | | portfolio | | Delinquency | | |
(dollars in thousands) |
| past due |
| still accruing |
| due |
| Current |
| leases |
| leases |
| and leases |
| percentage |
| |
Commercial mortgage | | $ | — | | — | | — | | 482,042 | | 482,042 | | 3,061 | | 485,103 | | 0.63 | % |
Home equity lines and loans | | | — | | — | | — | | 64,128 | | 64,128 | | 859 | | 64,987 | | 1.32 | |
Residential mortgage (1) | | | 3,595 | | — | | 3,595 | | 46,134 | | 49,729 | | 2,725 | | 52,454 | | 12.05 | |
Construction | | | — | | — | | — | | 140,246 | | 140,246 | | — | | 140,246 | | — | |
Commercial and industrial | | | — | | — | | — | | 260,465 | | 260,465 | | 1,285 | | 261,750 | | 0.49 | |
Small business loans | | | — | | — | | — | | 49,542 | | 49,542 | | — | | 49,542 | | — | |
Paycheck Protection Program loans | | | — | | — | | — | | 203,543 | | 203,543 | | — | | 203,543 | | — | |
Main Street Lending Program loans | | | — | | — | | — | | 580 | | 580 | | — | | 580 | | — | |
Consumer | | | — | | — | | — | | 511 | | 511 | | — | | 511 | | — | |
Leases, net | | | 109 | | — | | 109 | | 30,931 | | 31,040 | | — | | 31,040 | | 0.35 | |
Total | | $ | 3,704 | | — | | 3,704 | | 1,278,122 | | 1,281,826 | | 7,930 | | 1,289,756 | | 0.90 | % |
14
December 31, 2021 | 30-89 days past due | 90+ days past due and still accruing | Total past due | Current | Total Accruing Loans and leases | Nonaccrual loans and leases | Total loans portfolio and leases | Delinquency percentage | ||||||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial mortgage | $ | — | — | — | 516,928 | 516,928 | — | 516,928 | — | % | ||||||||||||||||||||||||||||||||||||||||
Home equity lines and loans | 103 | — | 103 | 51,285 | 51,388 | 911 | 52,299 | 1.94 | ||||||||||||||||||||||||||||||||||||||||||
Residential mortgage (1) | 600 | — | 600 | 65,177 | 65,777 | 2,398 | 68,175 | 4.40 | ||||||||||||||||||||||||||||||||||||||||||
Construction | — | — | — | 160,905 | 160,905 | — | 160,905 | — | ||||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | — | — | — | 274,970 | 274,970 | 18,801 | 293,771 | 6.40 | ||||||||||||||||||||||||||||||||||||||||||
Small business loans | — | — | — | 113,492 | 113,492 | 666 | 114,158 | 0.58 | ||||||||||||||||||||||||||||||||||||||||||
Paycheck Protection Program loans | — | — | — | 90,194 | 90,194 | — | 90,194 | — | ||||||||||||||||||||||||||||||||||||||||||
Main Street Lending Program loans | — | — | — | 597 | 597 | — | 597 | — | ||||||||||||||||||||||||||||||||||||||||||
Consumer | — | — | — | 419 | 419 | — | 419 | — | ||||||||||||||||||||||||||||||||||||||||||
Leases, net | 390 | — | 390 | 87,640 | 88,030 | 212 | 88,242 | 0.68 | ||||||||||||||||||||||||||||||||||||||||||
Total | $ | 1,093 | — | 1,093 | 1,361,607 | 1,362,700 | 22,988 | 1,385,688 | 1.74 | % |
| | | | | | | | | | | |
| | Balance, | | | | | | | | Balance, | |
(dollars in thousands) |
| June 30, 2021 |
| Charge-offs |
| Recoveries |
| Provision |
| September 30, 2021 | |
Commercial mortgage | | $ | 7,146 | | — | | — | | (604) | | 6,542 |
Home equity lines and loans | | | 281 | | — | | 1 | | (9) | | 273 |
Residential mortgage | | | 324 | | — | | 1 | | (49) | | 276 |
Construction | | | 2,241 | | — | | — | | 44 | | 2,285 |
Commercial and industrial | | | 5,360 | | — | | 15 | | 239 | | 5,614 |
Small business loans | | | 2,235 | | — | | — | | 864 | | 3,099 |
Consumer | | | 4 | | — | | 1 | | (2) | | 3 |
Leases | | | 770 | | — | | — | | 114 | | 884 |
Total | | $ | 18,361 | | — | | 18 | | 597 | | 18,976 |
| | | | | | | | | | | |
| | Balance, | | | | | | | | Balance, | |
(dollars in thousands) |
| December 31, 2020 |
| Charge-offs |
| Recoveries |
| Provision |
| September 30, 2021 | |
Commercial mortgage | | $ | 7,451 | | — | | — | | (909) | | 6,542 |
Home equity lines and loans | | | 434 | | — | | 5 | | (166) | | 273 |
Residential mortgage | | | 385 | | — | | 5 | | (114) | | 276 |
Construction | | | 2,421 | | — | | — | | (136) | | 2,285 |
Commercial and industrial | | | 5,431 | | — | | 33 | | 150 | | 5,614 |
Small business loans | | | 1,259 | | — | | — | | 1,840 | | 3,099 |
Consumer | | | 4 | | — | | 3 | | (4) | | 3 |
Leases | | | 382 | | (129) | | — | | 631 | | 884 |
Total | | $ | 17,767 | | (129) | | 46 | | 1,292 | | 18,976 |
| | | | | | | | | | | |
| | Balance, | | | | | | | | Balance, | |
(dollars in thousands) |
| June 30, 2020 |
| Charge-offs |
| Recoveries |
| Provision |
| September 30, 2020 | |
Commercial mortgage | | $ | 5,277 | | — | | — | | 1,658 | | 6,935 |
Home equity lines and loans | | | 672 | | (75) | | 2 | | (82) | | 517 |
Residential mortgage | | | 346 | | — | | 1 | | (13) | | 334 |
Construction | | | 2,019 | | — | | — | | 463 | | 2,482 |
Commercial and industrial | | | 3,606 | | (22) | | 4 | | 1,450 | | 5,038 |
Small business loans | | | 747 | | — | | — | | 360 | | 1,107 |
Consumer | | | 4 | | — | | 1 | | (1) | | 4 |
Leases | | | 35 | | — | | — | | 121 | | 156 |
Total | | $ | 12,706 | | (97) | | 8 | | 3,956 | | 16,573 |
15
(dollars in thousands) | Balance, December 31, 2021 | Charge-offs | Recoveries | Provision (Credit) | Balance, March 31, 2022 | ||||||||||||||||||||||||
Commercial mortgage | $ | 4,950 | — | — | (800) | 4,150 | |||||||||||||||||||||||
Home equity lines and loans | 224 | — | 6 | (22) | 208 | ||||||||||||||||||||||||
Residential mortgage | 283 | — | 2 | 72 | 357 | ||||||||||||||||||||||||
Construction | 2,042 | — | — | 215 | 2,257 | ||||||||||||||||||||||||
Commercial and industrial | 6,533 | — | 11 | 825 | 7,369 | ||||||||||||||||||||||||
Small business loans | 3,737 | — | — | (365) | 3,372 | ||||||||||||||||||||||||
Consumer | 3 | — | — | — | 3 | ||||||||||||||||||||||||
Leases | 986 | (566) | — | 690 | 1,110 | ||||||||||||||||||||||||
Total | $ | 18,758 | (566) | 19 | 615 | 18,826 |
(dollars in thousands) | Balance, December 31, 2020 | Charge-offs | Recoveries | Provision (Credit) | Balance, March 31, 2021 | ||||||||||||||||||||||||
Commercial mortgage | $ | 7,451 | — | — | 204 | 7,655 | |||||||||||||||||||||||
Home equity lines and loans | 434 | — | 2 | (126) | 310 | ||||||||||||||||||||||||
Residential mortgage | 385 | — | 2 | (73) | 314 | ||||||||||||||||||||||||
Construction | 2,421 | — | — | (110) | 2,311 | ||||||||||||||||||||||||
Commercial and industrial | 5,431 | — | 5 | (150) | 5,286 | ||||||||||||||||||||||||
Small business loans | 1,259 | — | — | 661 | 1,920 | ||||||||||||||||||||||||
Consumer | 4 | — | 1 | (1) | 4 | ||||||||||||||||||||||||
Leases | 382 | — | — | 194 | 576 | ||||||||||||||||||||||||
Total | $ | 17,767 | — | 10 | 599 | 18,376 |
| | | | | | | | | | | |
| | Balance, | | | | | | | | Balance, | |
(dollars in thousands) |
| December 31, 2019 |
| Charge-offs |
| Recoveries |
| Provision |
| September 30, 2020 | |
Commercial mortgage | | $ | 3,426 | | — | | — | | 3,509 | | 6,935 |
Home equity lines and loans | | | 342 | | (89) | | 6 | | 258 | | 517 |
Residential mortgage | | | 179 | | — | | 5 | | 150 | | 334 |
Construction | | | 2,362 | | — | | — | | 120 | | 2,482 |
Commercial and industrial | | | 2,684 | | (31) | | 37 | | 2,348 | | 5,038 |
Small business loans | | | 509 | | — | | — | | 598 | | 1,107 |
Consumer | | | 6 | | (10) | | 3 | | 5 | | 4 |
Leases | | | 5 | | — | | — | | 151 | | 156 |
Total | | $ | 9,513 | | (130) | | 51 | | 7,139 | | 16,573 |
Allowance Allocated by Portfolio Segment
| | | | | | | | | | | | | | | |
| | Allowance on loans and leases | | Carrying value of loans and leases | | ||||||||||
| | Individually | | Collectively | | | | Individually | | Collectively | | | | ||
September 30, 2021 | | evaluated | | evaluated | | | | evaluated | | evaluated | | | | ||
(dollars in thousands) |
| for impairment |
| for impairment |
| Total |
| for impairment |
| for impairment |
| Total | | ||
Commercial mortgage | | $ | — | | 6,542 | | 6,542 | | $ | 2,568 | | 539,905 | | 542,473 | |
Home equity lines and loans | | | 2 | | 271 | | 273 | | | 910 | | 51,909 | | 52,819 | |
Residential mortgage | | | 12 | | 264 | | 276 | | | 1,802 | | 40,351 | | 42,153 | |
Construction | | | — | | 2,285 | | 2,285 | | | 1,206 | | 160,986 | | 162,192 | |
Commercial and industrial | | | 1,526 | | 4,088 | | 5,614 | | | 3,651 | | 275,325 | | 278,976 | |
Small business loans | | | 376 | | 2,723 | | 3,099 | | | 1,057 | | 89,420 | | 90,477 | |
Paycheck Protection Program loans | | | — | | — | | — | | | — | | 118,585 | | 118,585 | (2) |
Main Street Lending Program | | | — | | — | | — | | | — | | 592 | | 592 | (2) |
Consumer | | | — | | 3 | | 3 | | | — | | 427 | | 427 | |
Leases, net | | | — | | 884 | | 884 | | | — | | 73,993 | | 73,993 | |
Total | | $ | 1,916 | | 17,060 | | 18,976 | | $ | 11,194 | | 1,351,493 | | 1,362,687 | (1) |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | Allowance on loans and leases | | Carrying value of loans and leases | | ||||||||||
| | Individually | | Collectively | | | | Individually | | Collectively | | | | ||
December 31, 2020 | | evaluated | | evaluated | | | | evaluated | | evaluated | | | | ||
(dollars in thousands) |
| for impairment |
| for impairment |
| Total |
| for impairment |
| for impairment |
| Total | | ||
Commercial mortgage | | $ | — | | 7,451 | | 7,451 | | $ | 1,606 | | 483,497 | | 485,103 | |
Home equity lines and loans | | | 9 | | 425 | | 434 | | | 921 | | 64,066 | | 64,987 | |
Residential mortgage | | | 73 | | 312 | | 385 | | | 1,817 | | 38,455 | | 40,272 | |
Construction | | | — | | 2,421 | | 2,421 | | | 1,206 | | 139,040 | | 140,246 | |
Commercial and industrial | | | 1,563 | | 3,868 | | 5,431 | | | 4,645 | | 257,105 | | 261,750 | |
Small business loans | | | — | | 1,259 | | 1,259 | | | 185 | | 49,357 | | 49,542 | |
Paycheck Protection Program loans | | | — | | — | | — | | | — | | 203,543 | | 203,543 | (2) |
Main Street Lending Program | | | — | | — | | — | | | — | | 580 | | 580 | (2) |
Consumer | | | — | | 4 | | 4 | | | — | | 511 | | 511 | |
Leases, net | | | — | | 382 | | 382 | | | — | | 31,040 | | 31,040 | |
Total | | $ | 1,645 | | 16,122 | | 17,767 | | $ | 10,380 | | 1,267,194 | | 1,277,574 | (1) |
Allowance on loans and leases | Carrying value of loans and leases | |||||||||||||||||||||||||||||||||||||
March 31, 2022 | Individually evaluated for impairment | Collectively evaluated for impairment | Total | Individually evaluated for impairment | Collectively evaluated for impairment | Total | ||||||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||||||||
Commercial mortgage | $ | — | 4,150 | 4,150 | 3,540 | 527,617 | 531,157 | |||||||||||||||||||||||||||||||
Home equity lines and loans | — | 208 | 208 | 999 | 49,658 | 50,657 | ||||||||||||||||||||||||||||||||
Residential mortgage | — | 357 | 357 | 1,795 | 59,334 | 61,129 | ||||||||||||||||||||||||||||||||
Construction | — | 2,257 | 2,257 | 1,206 | 186,550 | 187,756 | ||||||||||||||||||||||||||||||||
Commercial and industrial | 3,804 | 3,565 | 7,369 | 16,900 | 301,792 | 318,692 | ||||||||||||||||||||||||||||||||
Small business loans | 376 | 2,996 | 3,372 | 776 | 108,851 | 109,627 | ||||||||||||||||||||||||||||||||
Paycheck Protection Program loans | — | — | — | — | 50,883 | 50,883 | (2) | |||||||||||||||||||||||||||||||
Main Street Lending Program | — | — | — | — | 597 | 597 | (2) | |||||||||||||||||||||||||||||||
Consumer | — | 3 | 3 | — | 478 | 478 | ||||||||||||||||||||||||||||||||
Leases, net | — | 1,110 | 1,110 | — | 101,413 | 101,413 | ||||||||||||||||||||||||||||||||
Total | $ | 4,180 | 14,646 | 18,826 | 25,216 | 1,387,173 | 1,412,389 | (1) |
Allowance on loans and leases | Carrying value of loans and leases | |||||||||||||||||||||||||||||||||||||
December 31, 2021 | Individually evaluated for impairment | Collectively evaluated for impairment | Total | Individually evaluated for impairment | Collectively evaluated for impairment | Total | ||||||||||||||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||||||||||||||||||||
Commercial mortgage | $ | — | 4,950 | 4,950 | 3,556 | 513,372 | 516,928 | |||||||||||||||||||||||||||||||
Home equity lines and loans | — | 224 | 224 | 905 | 51,394 | 52,299 | ||||||||||||||||||||||||||||||||
Residential mortgage | — | 283 | 283 | 1,797 | 48,820 | 50,617 | ||||||||||||||||||||||||||||||||
Construction | — | 2,042 | 2,042 | 1,206 | 159,699 | 160,905 | ||||||||||||||||||||||||||||||||
Commercial and industrial | 2,900 | 3,633 | 6,533 | 17,361 | 276,410 | 293,771 | ||||||||||||||||||||||||||||||||
Small business loans | 376 | 3,361 | 3,737 | 792 | 113,366 | 114,158 | ||||||||||||||||||||||||||||||||
Paycheck Protection Program loans | — | — | — | — | 90,194 | 90,194 | (2) | |||||||||||||||||||||||||||||||
Main Street Lending Program | — | — | — | — | 597 | 597 | (2) | |||||||||||||||||||||||||||||||
Consumer | — | 3 | 3 | — | 419 | 419 | ||||||||||||||||||||||||||||||||
Leases, net | — | 986 | 986 | 212 | 88,030 | 88,242 | ||||||||||||||||||||||||||||||||
Total | $ | 3,276 | 15,482 | 18,758 | 25,829 | 1,342,301 | 1,368,130 | (1) |
16
2021:
March 31, 2022 | Pass | Special mention | Substandard | Doubtful | Total | ||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||
Commercial mortgage | $ | 494,850 | 30,543 | 5,764 | — | 531,157 | |||||||||||||||||||||||
Home equity lines and loans | 49,177 | — | 1,480 | — | 50,657 | ||||||||||||||||||||||||
Construction | 178,728 | 9,028 | — | — | 187,756 | ||||||||||||||||||||||||
Commercial and industrial | 261,848 | 11,056 | 45,788 | — | 318,692 | ||||||||||||||||||||||||
Small business loans | 108,961 | — | 666 | — | 109,627 | ||||||||||||||||||||||||
Paycheck Protection Program loans | 50,883 | — | — | — | 50,883 | ||||||||||||||||||||||||
Main Street Lending Program loans | 597 | — | — | — | 597 | ||||||||||||||||||||||||
Total | $ | 1,145,044 | 50,627 | 53,698 | — | 1,249,369 |
| | | | | | | | | | | |
September 30, 2021 |
| | |
| Special |
| |
| |
| |
(dollars in thousands) | | Pass | | mention | | Substandard | | Doubtful | | Total | |
Commercial mortgage | | $ | 505,355 | | 31,464 | | 5,654 | | — | | 542,473 |
Home equity lines and loans | | | 51,427 | | — | | 1,392 | | — | | 52,819 |
Construction | | | 153,200 | | 8,992 | | — | | — | | 162,192 |
Commercial and industrial | | | 222,041 | | 35,756 | | 21,179 | | — | | 278,976 |
Small business loans | | | 87,161 | | — | | 3,316 | | — | | 90,477 |
Paycheck Protection Program loans | | | 118,585 | | — | | — | | — | | 118,585 |
Main Street Lending Program loans | | | 592 | | — | | — | | — | | 592 |
Total | | $ | 1,138,361 | | 76,212 | | 31,541 | | — | | 1,246,114 |
| | | | | | | | | | | |
December 31, 2020 |
| | |
| Special |
| |
| |
| |
(dollars in thousands) | | Pass | | mention | | Substandard | | Doubtful | | Total | |
Commercial mortgage | | $ | 449,545 | | 32,059 | | 3,499 | | — | | 485,103 |
Home equity lines and loans | | | 63,923 | | — | | 1,064 | | — | | 64,987 |
Construction | | | 132,286 | | 7,960 | | — | | — | | 140,246 |
Commercial and industrial | | | 227,349 | | 21,721 | | 9,000 | | 3,680 | | 261,750 |
Small business loans | | | 46,789 | | — | | 2,753 | | — | | 49,542 |
Paycheck Protection Program loans | | | 203,543 | | — | | — | | — | | 203,543 |
Main Street Lending Program loans | | | 580 | | — | | — | | — | | 580 |
Total | | $ | 1,124,015 | | 61,740 | | 16,316 | | 3,680 | | 1,205,751 |
December 31, 2021 | Pass | Special mention | Substandard | Doubtful | Total | ||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||
Commercial mortgage | $ | 481,551 | 29,452 | 5,925 | — | 516,928 | |||||||||||||||||||||||
Home equity lines and loans | 50,908 | — | 1,391 | — | 52,299 | ||||||||||||||||||||||||
Construction | 151,608 | 9,297 | — | — | 160,905 | ||||||||||||||||||||||||
Commercial and industrial | 236,298 | 14,603 | 42,870 | — | 293,771 | ||||||||||||||||||||||||
Small business loans | 112,096 | — | 2,062 | — | 114,158 | ||||||||||||||||||||||||
Paycheck Protection Program loans | 90,194 | — | — | — | 90,194 | ||||||||||||||||||||||||
Main Street Lending Program loans | 597 | — | — | — | 597 | ||||||||||||||||||||||||
Total | $ | 1,123,252 | 53,352 | 52,248 | — | 1,228,852 |
17
March 31, 2022 December 31, 2021 (dollars in thousands) Performing Nonperforming Total Performing Nonperforming Total $ 59,335 1,795 61,130 $ 48,820 1,797 50,617 Consumer 478 — 478 419 — 419 Leases, net 101,413 — 101,413 88,030 212 88,242 Total $ 161,226 1,795 163,021 $ 137,269 2,009 139,278
| | | | | | | | | | | | | | |
| | September 30, 2021 | | December 31, 2020 | ||||||||||
(dollars in thousands) |
| Performing |
| Nonperforming |
| Total |
| Performing |
| Nonperforming |
| Total | ||
Residential mortgage | | $ | 40,351 | | 1,802 | | 42,153 | | $ | 38,457 | | 1,815 | | 40,272 |
Consumer | | | 427 | | — | | 427 | | | 511 | | — | | 511 |
Leases, net | | | 73,993 | | — | | 73,993 | | | 31,040 | | — | | 31,040 |
Total | | $ | 114,771 | | 1,802 | | 116,573 | | $ | 70,008 | | 1,815 | | 71,823 |
There were 3 nonperforming residential mortgage loans at September 30, 2021 and 5 nonperforming residential mortgage loans at December 31, 2020 with a combined outstanding principal balance of $476 thousand and $910 thousand, respectively, which were carried at fair value and not included in the table above.
2021.
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | As of September 30, 2021 | | As of December 31, 2020 | |||||||||
| | Recorded | | Principal | | Related | | Recorded | | Principal | | Related | |
(dollars in thousands) |
| investment |
| balance |
| allowance |
| investment |
| balance |
| allowance | |
Impaired loans with related allowance: | | | | | | | | | | | | | |
Commercial and industrial | | $ | 3,201 | | 3,321 | | 1,526 | | 3,860 | | 3,902 | | 1,563 |
Small business loans | | | 916 | | 916 | | 376 | | — | | — | | — |
Home equity lines and loans | | | 88 | | 102 | | 2 | | 95 | | 105 | | 9 |
Residential mortgage | | | 169 | | 169 | | 12 | | 689 | | 689 | | 73 |
Total | | $ | 4,374 | | 4,508 | | 1,916 | | 4,644 | | 4,696 | | 1,645 |
Impaired loans without related allowance: | | | | | | | | | | | | | |
Commercial mortgage | | $ | 2,568 | | 2,568 | | — | | 1,606 | | 1,642 | | — |
Commercial and industrial | | | 450 | | 515 | | — | | 785 | | 862 | | — |
Small business loans | | | 141 | | 141 | | — | | 185 | | 185 | | — |
Home equity lines and loans | | | 822 | | 836 | | — | | 826 | | 839 | | — |
Residential mortgage | | | 1,633 | | 1,633 | | — | | 1,128 | | 1,128 | | — |
Construction | | | 1,206 | | 1,206 | | — | | 1,206 | | 1,206 | | — |
Total | | | 6,820 | | 6,899 | | — | | 5,736 | | 5,862 | | — |
Grand Total | | $ | 11,194 | | 11,407 | | 1,916 | | 10,380 | | 10,558 | | 1,645 |
18
As of March 31, 2022 | As of December 31, 2021 | ||||||||||||||||||||||||||||||||||
(dollars in thousands) | Recorded investment | Principal balance | Related allowance | Recorded investment | Principal balance | Related allowance | |||||||||||||||||||||||||||||
Impaired loans with related allowance: | |||||||||||||||||||||||||||||||||||
Commercial and industrial | $ | 16,466 | 16,644 | 3,804 | 17,147 | 17,310 | 2,900 | ||||||||||||||||||||||||||||
Small business loans | 666 | 666 | 376 | 666 | 666 | 376 | |||||||||||||||||||||||||||||
Home equity lines and loans | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Residential mortgage | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Total | $ | 17,132 | 17,310 | 4,180 | 17,813 | 17,976 | 3,276 | ||||||||||||||||||||||||||||
Impaired loans without related allowance: | |||||||||||||||||||||||||||||||||||
Commercial mortgage | $ | 3,540 | 3,545 | — | 3,556 | 3,559 | — | ||||||||||||||||||||||||||||
Commercial and industrial | 433 | 505 | — | 214 | 269 | — | |||||||||||||||||||||||||||||
Small business loans | 110 | 110 | — | 126 | 126 | — | |||||||||||||||||||||||||||||
Home equity lines and loans | 999 | 1,033 | — | 905 | 935 | — | |||||||||||||||||||||||||||||
Residential mortgage | 1,795 | 1,795 | — | 1,797 | 1,797 | — | |||||||||||||||||||||||||||||
Construction | 1,206 | 1,206 | — | 1,206 | 1,206 | — | |||||||||||||||||||||||||||||
Leases | — | — | — | 212 | 212 | — | |||||||||||||||||||||||||||||
Total | 8,083 | 8,194 | — | 8,016 | 8,104 | — | |||||||||||||||||||||||||||||
Grand Total | $ | 25,215 | 25,504 | 4,180 | 25,829 | 26,080 | 3,276 |
The following table details the average recorded investment and interest income recognized on impaired loans by portfolio segment.
| | | | | | | | | |
| | | Three Months Ended | | Three Months Ended | ||||
| | | September 30, 2021 | | September 30, 2020 | ||||
| | | Average | | Interest | | Average | | Interest |
| | | recorded | | Income | | recorded | | Income |
(dollars in thousands) |
| | investment | | Recognized | | investment | | Recognized |
Impaired loans with related allowance: | | | | | | | | | |
Commercial and industrial | | $ | 3,242 | | 5 | | 3,907 | | 26 |
Small business loans | | | 916 | | — | | — | | — |
Home equity lines and loans | | | 89 | | — | | 100 | | — |
Residential mortgage | | | 169 | | — | | — | | — |
Total | | $ | 4,416 | | 5 | | 4,007 | | 26 |
Impaired loans without related allowance: | | | | | | | | | |
Commercial mortgage | | $ | 2,573 | | 8 | | 2,080 | | 47 |
Commercial and industrial | | | 473 | | 19 | | 874 | | 6 |
Small business loans | | | 147 | | 3 | | 208 | | 5 |
Home equity lines and loans | | | 823 | | — | | 564 | | — |
Residential mortgage | | | 1,636 | | 6 | | 1,649 | | 41 |
Construction | | | 1,206 | | 17 | | 1,206 | | 14 |
Total | | $ | 6,858 | | 53 | | 6,581 | | 113 |
Grand Total | | $ | 11,274 | | 58 | | 10,588 | | 139 |
| | | | | | | | | |
| | | Nine Months Ended | | Nine Months Ended | ||||
| | | September 30, 2021 | | September 30, 2020 | ||||
| | | Average | | Interest | | Average | | Interest |
| | | recorded | | Income | | recorded | | Income |
(dollars in thousands) | | | investment | | Recognized | | investment | | Recognized |
Impaired loans with related allowance: | | | | | | | | | |
Commercial and industrial | | $ | 3,306 | | 15 | | 1,766 | | 36 |
Small business loans | | | 917 | | — | | — | | — |
Home equity lines and loans | | | 92 | | — | | 103 | | — |
Residential mortgage | | | 170 | | — | | — | | — |
Total | | $ | 4,485 | | 15 | | 1,869 | | 36 |
| | | | | | | | | |
Impaired loans without related allowance: | | | | | | | | | |
Commercial mortgage | | $ | 2,584 | | 24 | | 1,852 | | 89 |
Commercial and industrial | | | 485 | | 19 | | 700 | | 14 |
Small business loans | | | 161 | | 11 | | 220 | | 16 |
Home equity lines and loans | | | 824 | | — | | 575 | | — |
Residential mortgage | | | 1,640 | | 9 | | 1,478 | | 133 |
Construction | | | 1,206 | | 47 | | 1,209 | | 46 |
Leases | | | 53 | | — | | — | | — |
Total | | $ | 6,953 | | 110 | | 6,034 | | 298 |
Grand Total | | $ | 11,438 | | 125 | | 7,903 | | 334 |
Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | ||||||||||||||||||||||||||||||||||
(dollars in thousands) | Average Recorded Investment | Interest Income Recognized | Average recorded investment | Interest income recognized | |||||||||||||||||||||||||||||||
Impaired loans with related allowance: | |||||||||||||||||||||||||||||||||||
Commercial and industrial | $ | 16,487 | — | 3,826 | 5 | ||||||||||||||||||||||||||||||
Small business loans | 666 | — | 918 | — | |||||||||||||||||||||||||||||||
Home equity lines and loans | — | — | 95 | — | |||||||||||||||||||||||||||||||
Residential mortgage | — | — | 688 | — | |||||||||||||||||||||||||||||||
Total | $ | 17,153 | — | 5,527 | 5 | ||||||||||||||||||||||||||||||
Impaired loans without related allowance: | |||||||||||||||||||||||||||||||||||
Commercial mortgage | $ | 3,547 | 19 | 735 | 8 | ||||||||||||||||||||||||||||||
Commercial and industrial | 454 | — | 579 | — | |||||||||||||||||||||||||||||||
Small business loans | 117 | 3 | 176 | 4 | |||||||||||||||||||||||||||||||
Home equity lines and loans | 1,002 | — | 825 | — | |||||||||||||||||||||||||||||||
Residential mortgage | 1,796 | 2 | 1,127 | — | |||||||||||||||||||||||||||||||
Construction | 1,206 | 15 | 1,206 | 15 | |||||||||||||||||||||||||||||||
Leases | — | — | 122 | — | |||||||||||||||||||||||||||||||
Total | $ | 8,122 | 39 | 4,770 | 27 | ||||||||||||||||||||||||||||||
Grand Total | $ | 25,275 | 39 | 10,297 | 32 |
19
The determination of whether a borrower is experiencing financial difficulties takes into account not only the current financial condition of the borrower, but also the potential financial condition of the borrower, were a concession not granted. The determination of whether a concession has been granted is very subjective in nature. For example, simply extending the term of a loan at its original interest rate or even at a higher interest rate could be interpreted as a concession unless the borrower could readily obtain similar credit terms from a different lender.
| | | | | |
| | September 30, | | December 31, | |
(dollars in thousands) |
| 2021 |
| 2020 | |
TDRs included in nonperforming loans and leases | | $ | 367 |
| 244 |
TDRs in compliance with modified terms | |
| 2,476 |
| 3,362 |
Total TDRs | | $ | 2,843 |
| 3,606 |
March 31, 2022 | December 31, 2021 | ||||||||||
(dollars in thousands) | |||||||||||
TDRs included in nonperforming loans and leases | $ | 358 | 361 | ||||||||
TDRs in compliance with modified terms | 3,007 | 3,446 | |||||||||
Total TDRs | $ | 3,365 | 3,807 |
periods.
This provisionMarch 31, 2021.
20
Short-term borrowings at September 30, 2021March 31, 2022 and December 31, 20202021 consisted of the following notes:
| | | | | | | | | |
| | | | | | Balance as of | |||
| | Maturity | | Interest | | September 30, | | December 31, | |
(dollars in thousands) | | date |
| rate |
| 2021 |
| 2020 | |
Open Repo Plus Weekly | | 05/31/2022 | | 0.33 | % | | — | | 60,416 |
Federal Reserve Discount Window | | 03/31/2021 | | 0.25 | | | — | | 10,000 |
Mid-term Repo-fixed | | 01/13/2021 | | 0.36 | | | — | | 4,605 |
Mid-term Repo-fixed | | 06/10/2021 | | 0.10 | | | — | | 6,376 |
Mid-term Repo-fixed | | 09/10/2021 | | 0.11 | | | — | | 10,000 |
Mid-term Repo-fixed | | 12/10/2021 | | 0.16 | | | 10,000 | | 10,000 |
Mid-term Repo-fixed | | 01/27/2021 | | 0.23 | | | — | | 5,465 |
Mid-term Repo-fixed | | 06/29/2022 | | 0.32 | | | 7,392 | | — |
Mid-term Repo-fixed | | 09/12/2022 | | 0.23 | | | 4,886 | | — |
Total | | | | | | $ | 22,278 | | 106,862 |
As part of the CARES Act, the FRB of Philadelphia offered secured discounted borrowings to banks who originated PPP loans through the Paycheck Protection Program Liquidity Facility or PPPLF program. Advances from this facility are secured 100% by the aggregate face value of pools comprised of loans with common maturity dates. PPPLF advances mature concurrently with the loans in a given pool. At September 30, 2021, the Corporation pledged $78.4 million of PPP loans to the FRB of Philadelphia to borrow $78.4 million of funds at a rate of 0.35%. Advances made on the PPPLF were ended by the FRB on July 30, 2021.
Long-term debt at September 30, 2021 and December 31, 2020 consisted of the following notes:
| | | | | | | | | |
| | | | | | Balance as of | |||
| | Maturity | | Interest | | September 30, | | December 31, | |
(dollars in thousands) |
| date |
| rate |
| 2021 |
| 2020 | |
PPPLF Advances | | 2022 | | 0.35 | % | | — | | 153,269 |
PPPLF Advances | | 2026 | | 0.35 | | $ | 78,405 | | — |
Mid-term Repo-fixed | | 06/29/2022 | | 0.32 | | | — | | 7,392 |
Mid-term Repo-fixed | | 09/12/2022 | | 0.23 | | | — | | 4,885 |
Total | | ` | | | | $ | 78,405 | | 165,546 |
Balance as of | |||||||||||||||||||||||
(dollars in thousands) | Maturity date | Interest rate | March 31, 2022 | December 31, 2021 | |||||||||||||||||||
Open Repo Plus Weekly | 05/31/2022 | 0.45 | % | 31,250 | 36,458 | ||||||||||||||||||
Mid-term Repo-fixed | 09/12/2022 | 0.23 | 4,886 | 4,886 | |||||||||||||||||||
Total | $ | 36,136 | 41,344 |
2022.
21
assets in accordance with ASC 860, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities.
Loans
| | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | ||||||
(dollars in thousands) | | 2021 |
| 2020 | | 2021 |
| 2020 | ||
Balance at beginning of the period | | $ | 8,942 | | 1,294 | | $ | 4,647 | | 446 |
Servicing rights capitalized | | | 1,360 | | 1,333 | | | 5,856 | | 2,469 |
Amortization of servicing rights | | | (316) | | (90) | | | (786) | | (173) |
Change in valuation allowance | | | 111 | | 102 | | | 380 | | (103) |
Balance at end of the period | | $ | 10,097 | | 2,639 | | $ | 10,097 | | 2,639 |
Three Months Ended March 31, | ||||||||||||||||||||||||||
(dollars in thousands) | 2022 | 2021 | ||||||||||||||||||||||||
Balance at beginning of the period | $ | 10,756 | 4,647 | |||||||||||||||||||||||
Servicing rights capitalized | 532 | 2,342 | ||||||||||||||||||||||||
Amortization of servicing rights | (404) | (199) | ||||||||||||||||||||||||
Change in valuation allowance | 4 | 328 | ||||||||||||||||||||||||
Balance at end of the period | $ | 10,888 | 7,118 |
| | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | ||||||
(dollars in thousands) | | 2021 |
| 2020 | | 2021 |
| 2020 | ||
Valuation allowance, beginning of period | | $ | (166) | | (303) | | $ | (435) | | (98) |
Impairment | | | — | | — | | | — | | (103) |
Recovery | | | 111 | | 102 | | | 380 | | — |
Valuation allowance, end of period | | $ | (55) | | (201) | | $ | (55) | | (201) |
Three Months Ended March 31, | ||||||||||||||||||||||||||
(dollars in thousands) | 2022 | 2021 | ||||||||||||||||||||||||
Valuation allowance, beginning of period | $ | (8) | (435) | |||||||||||||||||||||||
Impairment | — | — | ||||||||||||||||||||||||
Recovery | 4 | 328 | ||||||||||||||||||||||||
Valuation allowance, end of period | $ | (4) | (107) |
22
At September 30, 2021March 31, 2022 and December 31, 2020,2021, the sensitivity of the current fair value of the residential mortgage servicing rights to immediate 10% and 20% favorable and unfavorable changes in key economic assumptions are included in the following table.
| | | | | | |
| | | | | | |
(dollars in thousands) | | September 30, 2021 |
| December 31, 2020 | ||
Fair value of residential mortgage servicing rights | | $ | 10,296 | | $ | 4,647 |
| | | | | | |
Weighted average life (years) | | | 9.0 | | | 5.0 |
| | | | | | |
Prepayment speed | | | 7.26% | | | 9.39% |
Impact on fair value: | | | | | | |
10% adverse change | | $ | (358) | | $ | (183) |
20% adverse change | | | (695) | | | (354) |
| | | | | | |
Discount rate | | | 9.00% | | | 9.00% |
Impact on fair value: | | | | | | |
10% adverse change | | $ | (397) | | $ | (168) |
20% adverse change | | | (768) | | | (329) |
(dollars in thousands) | March 31, 2022 | December 31, 2021 | ||||||||||||
Fair value of residential mortgage servicing rights | $ | 11,928 | $ | 11,241 | ||||||||||
Weighted average life (months) | 13 | 11 | ||||||||||||
Prepayment speed | 9.72 | % | 7.23 | % | ||||||||||
Impact on fair value: | ||||||||||||||
10% adverse change | $ | (284) | $ | (376) | ||||||||||
20% adverse change | (555) | (731) | ||||||||||||
Discount rate | 9.00 | % | 9.00 | % | ||||||||||
Impact on fair value: | ||||||||||||||
10% adverse change | $ | (418) | $ | (436) | ||||||||||
20% adverse change | (808) | (840) |
Loans
| | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | ||||||
(dollars in thousands) | | 2021 |
| 2020 | | 2021 |
| 2020 | ||
Balance at beginning of the period | | $ | 1,385 | | 632 | | $ | 970 | | 337 |
Servicing rights capitalized | | | 588 | | 183 | | | 1,166 | | 524 |
Amortization of servicing rights | | | (112) | | (42) | | | (266) | | (88) |
Change in valuation allowance | | | (26) | | 14 | | | (35) | | 14 |
Balance at end of the period | | $ | 1,835 | | 787 | | $ | 1,835 | | 787 |
23
Three Months Ended March 31, | ||||||||||||||||||||||||||
(dollars in thousands) | 2022 | 2021 | ||||||||||||||||||||||||
Balance at beginning of the period | $ | 2,009 | 970 | |||||||||||||||||||||||
Servicing rights capitalized | 593 | 274 | ||||||||||||||||||||||||
Amortization of servicing rights | (125) | (67) | ||||||||||||||||||||||||
Change in valuation allowance | 31 | (17) | ||||||||||||||||||||||||
Balance at end of the period | $ | 2,508 | 1,160 |
Activity in the valuation allowance for SBA loan servicing assets was as follows:
| | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, | ||||||
(dollars in thousands) | | 2021 |
| 2020 | | 2021 |
| 2020 | ||
Valuation allowance, beginning of period | | $ | (48) | | (26) | | $ | (39) | | (26) |
Impairment | | | (26) | | — | | | (35) | | — |
Recovery | | | — | | 14 | | | — | | 14 |
Valuation allowance, end of period | | $ | (74) | | (12) | | $ | (74) | | (12) |
Three Months Ended March 31, | ||||||||||||||||||||||||||
(dollars in thousands) | 2022 | 2021 | ||||||||||||||||||||||||
Valuation allowance, beginning of period | $ | (96) | (39) | |||||||||||||||||||||||
Impairment | — | (17) | ||||||||||||||||||||||||
Recovery | 31 | — | ||||||||||||||||||||||||
Valuation allowance, end of period | $ | (65) | (56) |
At September 30, 20212022 and December 31, 2020,2021, the sensitivity of the current fair value of the SBA loan servicing rights to immediate 10% and 20% favorable and unfavorable changes in key economic assumptions are included in the following table.
| | | | | | | |
| | | | | | | |
(dollars in thousands) | | September 30, 2021 |
| December 31, 2020 | |||
Fair value of SBA loan servicing rights | | $ | 1,954 | | $ | 1,010 | |
| | | | | | | |
Weighted average life (years) | | | 3.8 | | | 3.7 | |
| | | | | | | |
Prepayment speed | | | 12.91% | | | 12.73% | |
Impact on fair value: | | | | | | | |
10% adverse change | | $ | (77) | | $ | (37) | |
20% adverse change | | | (148) | | | (71) | |
| | | | | | | |
Discount rate | | | 7.47% | | | 8.33% | |
Impact on fair value: | | | | | | | |
10% adverse change | | $ | (53) | | $ | (25) | |
20% adverse change | | | (103) | | | (49) | |
(dollars in thousands) | March 31, 2022 | December 31, 2021 | ||||||||||||
Fair value of SBA loan servicing rights | $ | 2,629 | $ | 2,107 | ||||||||||
Weighted average life (years) | 3.8 | 3.8 | ||||||||||||
Prepayment speed | 13.03 | % | 12.38 | % | ||||||||||
Impact on fair value: | ||||||||||||||
10% adverse change | $ | (96) | $ | (69) | ||||||||||
20% adverse change | (183) | (132) | ||||||||||||
Discount rate | 8.67 | % | 9.01 | % | ||||||||||
Impact on fair value: | ||||||||||||||
10% adverse change | $ | (71) | $ | (54) | ||||||||||
20% adverse change | (138) | (106) |
24
assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument.
25
will ultimately result in a closed loan, which is a significant unobservable assumption. A significant increase or decrease in the external market price would result in a significantly higher or lower fair value measurement.
For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2021March 31, 2022 and December 31, 20202021 are as follows:
| | | | | | | | | |
| | September 30, 2021 | |||||||
(dollars in thousands) |
| Total |
| Level 1 |
| Level 2 |
| Level 3 | |
Assets | | | | | | | | | |
Securities available for sale: | | | | | | | | | |
U.S. asset backed securities | | $ | 21,293 | | — | | 21,293 | | — |
U.S. government agency mortgage-backed securities | | | 5,459 | | — | | 5,459 | | — |
U.S. government agency collateralized mortgage obligations | | | 24,053 | | — | | 24,053 | | — |
State and municipal securities | | | 72,828 | | — | | 72,828 | | — |
U.S. Treasuries | | | 15,010 | | — | | 15,010 | | — |
Non-U.S. government agency collateralized mortgage obligations | | | 999 | | — | | 999 | | — |
Corporate bonds | | | 6,507 | | — | | 6,507 | | — |
Equity investments | | | 1,011 | | — | | 1,011 | | — |
Mortgage loans held for sale | | | 117,996 | | — | | 117,996 | | — |
Mortgage loans held for investment | | | 17,142 | | — | | 17,142 | | — |
Interest rate lock commitments | | | 1,712 | | — | | — | | 1,712 |
Forward commitments | | | 447 | | — | | 447 | | — |
Customer derivatives - interest rate swaps | | | 1,052 | | — | | 1,052 | | — |
Total | | $ | 285,509 | | — | | 283,797 | | 1,712 |
| | | | | | | | | |
Liabilities | | | | | | | | | |
Interest rate lock commitments | | | 360 | | — | | — | | 360 |
Forward commitments | | | 22 | | — | | 22 | | — |
Customer derivatives - interest rate swaps | | | 1,101 | | — | | 1,101 | | — |
| | $ | 1,483 | | — | | 1,123 | | 360 |
| | | | | | | | | |
| | December 31, 2020 | |||||||
(dollars in thousands) |
| Total |
| Level 1 |
| Level 2 |
| Level 3 | |
Assets | | | | | | | | | |
Securities available for sale: | | | | | | | | | |
U.S. asset backed securities | | $ | 25,592 | | — | | 25,592 | | — |
U.S. government agency mortgage-backed securities | | | 4,046 | | — | | 4,046 | | — |
U.S. government agency collateralized mortgage obligations | | | 23,909 | | — | | 23,909 | | — |
State and municipal securities | | | 65,810 | | — | | 65,810 | | — |
Corporate bonds | | | 4,205 | | — | | 4,205 | | — |
Equity investments | | | 1,031 | | — | | 1,031 | | — |
Mortgage loans held for sale | | | 229,199 | | — | | 229,199 | | — |
Mortgage loans held for investment | | | 12,182 | | — | | 12,182 | | — |
Interest rate lock commitments | | | 6,932 | | — | | — | | 6,932 |
Forward commitments | | | — | | — | | — | | — |
Customer derivatives - interest rate swaps | | | 1,118 | | — | | 1,118 | | — |
Total | | $ | 374,024 | | — | | 367,092 | | 6,932 |
| | | | | | | | | |
Liabilities | | | | | | | | | |
Interest rate lock commitments | | | 100 | | — | | — | | 100 |
Forward commitments | | | 1,572 | | — | | 1,572 | | — |
Customer derivatives - interest rate swaps | | | 1,219 | | — | | 1,219 | | — |
| | $ | 2,891 | | — | | 2,791 | | 100 |
26
March 31, 2022 | |||||||||||||||||||||||
(dollars in thousands) | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
Assets | |||||||||||||||||||||||
Securities available for sale: | |||||||||||||||||||||||
U.S. asset backed securities | $ | 14,522 | — | 14,522 | — | ||||||||||||||||||
U.S. government agency mortgage-backed securities | 9,133 | — | 9,133 | — | |||||||||||||||||||
U.S. government agency collateralized mortgage obligations | 21,196 | — | 21,196 | — | |||||||||||||||||||
State and municipal securities | 42,660 | — | 42,660 | — | |||||||||||||||||||
U.S. Treasuries | 31,097 | 31,097 | — | — | |||||||||||||||||||
Non-U.S. government agency collateralized mortgage obligations | 5,714 | — | 5,714 | 0 | |||||||||||||||||||
Corporate bonds | 6,331 | — | 6,331 | — | |||||||||||||||||||
Equity investments | 2,240 | — | 2,240 | — | |||||||||||||||||||
Mortgage loans held for sale | 81,258 | — | 81,258 | — | |||||||||||||||||||
Mortgage loans held for investment | 17,375 | — | 17,375 | — | |||||||||||||||||||
Interest rate lock commitments | 587 | — | — | 587 | |||||||||||||||||||
Forward commitments | 905 | — | 905 | — | |||||||||||||||||||
Customer derivatives - interest rate swaps | 2,256 | — | 2,256 | — | |||||||||||||||||||
Total | $ | 235,274 | 31,097 | 203,590 | 587 | ||||||||||||||||||
Liabilities | |||||||||||||||||||||||
Interest rate lock commitments | 808 | — | — | 808 | |||||||||||||||||||
Forward commitments | 6 | — | 6 | — | |||||||||||||||||||
Customer derivatives - interest rate swaps | 2,280 | — | 2,280 | — | |||||||||||||||||||
$ | 3,094 | — | 2,286 | 808 |
Financial assets
December 31, 2021 | |||||||||||||||||||||||
(dollars in thousands) | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
Assets | |||||||||||||||||||||||
Securities available for sale: | |||||||||||||||||||||||
U.S. asset backed securities | $ | 16,837 | — | 16,837 | — | ||||||||||||||||||
U.S. government agency mortgage-backed securities | 9,813 | — | 9,813 | — | |||||||||||||||||||
U.S. government agency collateralized mortgage obligations | 22,381 | — | 22,381 | — | |||||||||||||||||||
State and municipal securities | 72,982 | — | 72,982 | — | |||||||||||||||||||
U.S. Treasuries | 29,728 | 29,728 | — | — | |||||||||||||||||||
Non-U.S. government agency collateralized mortgage obligations | 975 | — | 975 | — | |||||||||||||||||||
Corporate bonds | 6,586 | — | 6,586 | — | |||||||||||||||||||
Equity investments | 2,354 | — | 2,354 | — | |||||||||||||||||||
Mortgage loans held for sale | 80,882 | — | 80,882 | — | |||||||||||||||||||
Mortgage loans held for investment | 17,558 | — | 17,558 | — | |||||||||||||||||||
Interest rate lock commitments | 1,122 | — | — | 1,122 | |||||||||||||||||||
Forward commitments | 65 | — | 65 | — | |||||||||||||||||||
Customer derivatives - interest rate swaps | 961 | — | 961 | — | |||||||||||||||||||
Total | $ | 262,244 | 29,728 | 231,394 | 1,122 | ||||||||||||||||||
Liabilities | |||||||||||||||||||||||
Interest rate lock commitments | 203 | — | — | 203 | |||||||||||||||||||
Forward commitments | 106 | — | 106 | — | |||||||||||||||||||
Customer derivatives - interest rate swaps | 1,018 | — | 1,018 | — | |||||||||||||||||||
$ | 1,327 | — | 1,124 | 203 |
March 31, 2022 | December 31, 2021 | ||||||||||
(dollars in thousands) | Fair Value | Fair Value | |||||||||
Mortgage servicing rights | $ | 10,888 | 10,756 | ||||||||
SBA loan servicing rights | 2,508 | 2,009 | |||||||||
Impaired loans (1) | |||||||||||
Commercial and industrial | 3,960 | 1,837 | |||||||||
Small business loans | — | 290 | |||||||||
Total | $ | 17,356 | 14,892 |
| | | | | | |
| | September 30, 2021 | | | December 31, 2020 | |
(dollars in thousands) |
| Fair Value |
|
| Fair Value | |
Mortgage servicing rights | | $ | 10,097 | | | 4,647 |
SBA loan servicing rights | | | 1,835 | | | 970 |
Impaired loans (1) | | | 2,458 | | | 2,998 |
Total | | $ | 14,390 | | | 8,615 |
Valuation | Range of | ||||||||||||||||||||||||||||
(dollars in | Level 3 | Technique | Significant Unobservable Input | Inputs | |||||||||||||||||||||||||
March 31, 2022 | $ | 3,960 | Appraisal of collateral | Management adjustments on | 2%-15% discount | ||||||||||||||||||||||||
December 31, 2021 | $ | 2,127 | Appraisal of | Management adjustments on appraisals | 2%-15% discount |
Below is management’s estimate of the fair value of all financial instruments, whether carried at cost or fair value on the Corporation’s balance sheet. The following information should not be interpreted as an estimate of the fair value of the entire Corporation since a fair value calculation is only provided for a limited portion of the Corporation’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Corporation’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair value of the Corporation’s financial instruments:
Assets Deposit Liabilities The estimated fair values of the Corporation’s financial instruments at September 30, 2021 December 31, 2020 Fair Value Carrying Carrying (dollars in thousands) Hierarchy Level amount Fair value amount Fair value Financial assets: Cash and cash equivalents Level 1 $ 63,121 63,121 36,744 36,744 Securities available-for-sale Level 2 146,149 146,149 123,562 123,562 Securities held-to-maturity Level 2 6,406 6,660 6,510 6,857 Equity investments Level 2 1,011 1,011 1,031 1,031 Mortgage loans held for sale Level 2 117,996 117,996 229,199 229,199 Loans receivable, net of the allowance for loan and lease losses Level 3 1,361,528 1,391,260 1,272,582 1,289,776 Mortgage loans held for investment Level 2 17,142 17,142 12,182 12,182 Interest rate lock commitments Level 3 1,712 1,712 6,932 6,932 Forward commitments Level 2 447 447 — — Restricted investment in bank stock NA 4,162 NA 7,861 NA Accrued interest receivable Level 3 5,080 5,080 5,482 5,482 Customer derivatives - interest rate swaps Level 2 1,052 1,052 1,118 1,118 Financial liabilities: Deposits Level 2 1,439,047 1,552,500 1,241,335 1,392,500 Short-term borrowings Level 2 22,278 22,278 106,862 106,862 Long-term debt Level 2 78,405 79,373 165,546 168,000 Subordinated debentures Level 2 40,760 41,859 40,671 38,375 Accrued interest payable Level 2 663 663 1,154 1,154 Interest rate lock commitments Level 3 360 360 100 100 Forward commitments Level 2 22 22 1,572 1,572 Customer derivatives - interest rate swaps Level 2 1,101 1,101 1,219 1,219 Notional Notional Off-balance sheet financial instruments: amount Fair value amount Fair value Commitments to extend credit Level 2 $ 505,018 1,712 421,399 6,932 Letters of credit Level 2 17,711 — 8,928 — 2021. Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Balance at beginning of the period $ 2,667 4,595 $ 6,932 504 (Decrease) increase in value (955) 3,203 (5,220) 7,294 Balance at end of the period $ 1,712 7,798 $ 1,712 7,798 Significant Fair Value Unobservable Range of Weighted Level 3 Valuation Technique Input Inputs Average September 30, 2021 $ 1,712 Market comparable pricing Pull through 1 - 99 % 87.26 % December 31, 2020 6,932 Market comparable pricing Pull through 1 - 99 83.08 Net realized The following table presents a summary of the notional amounts and fair values of derivative financial instruments: September 30, 2021 December 31, 2020 (dollars in thousands) Balance Sheet Line Item Notional Asset Notional Asset Interest Rate Lock Commitments Positive fair values Other assets $ 159,507 1,712 406,422 6,932 Negative fair values Other liabilities 58,039 (360) 22,406 (100) Total 217,546 1,352 428,828 6,832 Forward Commitments Positive fair values Other assets 86,000 447 — — Negative fair values Other liabilities 11,500 (22) 218,000 (1,572) Total 97,500 425 218,000 (1,572) Customer Derivatives - Interest Rate Swaps Positive fair values Other assets 35,790 1,052 20,979 1,118 Negative fair values Other liabilities 35,790 (1,101) 20,979 (1,219) Total 71,580 (49) 41,958 (101) Total derivative financial instruments $ 386,626 1,728 688,786 5,159 Three Months Ended September 30, Nine Months Ended September 30, (dollars in thousands) 2021 2020 2021 2020 Interest Rate Lock Commitments $ (1,056) 3,161 $ (5,480) 7,226 Forward Commitments 703 (129) 1,997 (801) Customer Derivatives - Interest Rate Swaps 14 (4) 52 (79) Net fair value (losses) gains on derivative financial instruments $ (339) 3,028 $ (3,431) 6,346 consolidated statements of income. Meridian Wealth gains (losses). Segment Information Three Months Ended September 30, 2021 Three Months Ended September 30, 2020 (Dollars in thousands) Bank Wealth Mortgage Total Bank Wealth Mortgage Total Net interest income $ 15,777 2 478 16,257 $ 12,104 (19) 630 12,715 Provision for loan losses 597 — — 597 3,956 — — 3,956 Net interest income after provision 15,180 2 478 15,660 8,148 (19) 630 8,759 Non-interest Income Mortgage banking income 215 — 18,511 18,726 574 — 21,238 21,812 Wealth management income — 1,232 — 1,232 — 951 — 951 SBA income 2,688 — — 2,688 641 — — 641 Net change in fair values 13 — (847) (834) (4) — 6,057 6,053 Net loss on hedging activity — — (1,189) (1,189) — — (2,637) (2,637) Other 836 — 663 1,499 2,045 — 195 2,240 Non-interest income 3,752 1,232 17,138 22,122 3,256 951 24,853 29,060 Non-interest expense 10,633 802 14,046 25,481 8,829 788 16,217 25,834 Income before income taxes $ 8,299 432 3,570 12,301 $ 2,575 144 9,266 11,985 Total Assets $ 1,625,468 6,396 130,581 1,762,445 $ 1,525,883 5,399 227,366 1,758,648 Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020 (Dollars in thousands) Bank Wealth Mortgage Total Bank Wealth Mortgage Total Net interest income $ 45,340 (249) 1,698 46,789 $ 32,725 (24) 1,277 33,978 Provision for loan losses 1,292 — — 1,292 7,139 — — 7,139 Net interest income after provision 44,048 (249) 1,698 45,497 25,586 (24) 1,277 26,839 Non-interest Income Mortgage banking income 892 — 61,401 62,293 973 — 44,422 45,395 Wealth management income — 3,531 — 3,531 — 2,825 — 2,825 SBA income 5,423 — — 5,423 1,821 — — 1,821 Net change in fair values 52 — (6,671) (6,619) (68) — 11,012 10,944 Net gain (loss) on hedging activity — — 2,397 2,397 — — (7,363) (7,363) Other 2,110 — 1,767 3,877 2,931 14 405 3,350 Non-interest income 8,477 3,531 58,894 70,902 5,657 2,839 48,476 56,972 Non-interest expense 28,981 2,486 48,523 79,990 23,341 2,363 35,448 61,152 Income before income taxes $ 23,544 796 12,069 36,409 $ 7,902 452 14,305 22,659 Total Assets $ 1,625,468 6,396 130,581 1,762,445 $ 1,525,883 5,399 227,366 1,758,648 On January 1, 2022, the Corporation adopted ASU 2016-02 (Topic 842), “Leases”, as further explained in Note 12, Recent Accounting Pronouncements. Date Date of Date Quarterly Special Declared Record Paid Dividend Dividend January 28, 2021 February 8, 2021 February 22, 2021 $ 0.125 $ — February 16, 2021 March 1, 2021 March 15, 2021 — 1.00 April 22, 2021 May 10, 2021 May 17, 2021 0.125 — July 22, 2021 August 9, 2021 August 16, 2021 0.125 — have not yet commenced. apply the guidance in this ASU. A prospective transition approach is required for debt securities for which an other-than-temporary impairment has been recognized before the effective date. In October 2019, the FASB approved a delay for the implementation of the ASU. Accordingly, as an emerging growth company, the Corporation’s effective date for the implementation of the ASU will be January 1, 2023. statements cannot be determined. FASB ASU 2020-06, “Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Critical Accounting Policies Changes in Key Performance Ratios Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Annualized return on average equity 24.07 % 29.30 % 25.43 % 18.85 % Annualized return on average assets 2.15 % 2.29 % 2.17 % 1.65 % Net interest margin (tax effected yield) 3.83 % 3.26 % 3.75 % 3.33 % Basic earnings per share $ 1.56 $ 1.51 $ 4.62 $ 2.83 Diluted earnings per share $ 1.52 $ 1.51 $ 4.49 $ 2.82 September 30, December 31, (dollars in thousands, except per share amounts) 2021 2020 Book value per common share $ 25.94 $ 23.08 Tangible book value per common share (1) $ 25.23 $ 22.35 Allowance as a percentage of loans and leases held for investment 1.38 % 1.38 % Allowance as a percentage of loans and leases held for investment (excl. loans at fair value and PPP loans) (1) 1.52 % 1.65 % Tier I capital to risk weighted assets 10.64 % 10.22 % Tangible common equity ratio (1) 8.76 % 7.99 % Loans held for investment $ 1,378,670 $ 1,284,764 Total assets $ 1,762,445 $ 1,720,197 Stockholders' equity $ 158,416 $ 141,622 Our management used the measure of the tangible common equity ratio to assess our capital strength. We believe that this non-GAAP financial measure is useful to investors because, by removing the impact of our goodwill and other intangible assets, it allows investors to more easily assess our capital adequacy. This non-GAAP financial measure should not be considered a substitute for any regulatory capital ratios and may not be comparable to other similarly titled measures used by other companies. (dollars in thousands) September 30, 2021 December 31, 2020 Tangible common equity ratio: Total stockholders' equity 158,416 141,622 Less: Goodwill and intangible assets (4,329) (4,500) Tangible common equity 154,087 137,122 Total assets 1,762,445 1,720,197 Less: Goodwill and intangible assets (4,329) (4,500) Tangible assets $ 1,758,116 $ 1,715,697 Tangible common equity ratio 8.76% 7.99% Reconciliation of tangible book value per common share 2021 2020 September 30 December 31 Book value per common share $ 25.94 $ 23.08 Less: Impact of goodwill and intangible assets 0.71 0.73 Tangible book value per common share $ 25.23 $ 22.35 Reconciliation of Allowance for Loan Losses / Total loans held for investment 2021 2021 2020 September 30 June 30 December 31 Allowance for loan losses / Total loans held for investment 1.38% 1.35% 1.38% Less: Impact of loans held for investment - fair valued 0.01% 0.01% 0.00% Less: Impact of PPP loans 0.13% 0.22% 0.27% Allowance for loan losses / Total loans held for investment (excl. loans at fair value and PPP loans) 1.52% 1.58% 1.65% (Dollars in thousands) Three Months Ended September 30, Nine Months Ended September 30, Reconciliation of pre-tax, pre-provision income 2021 2020 2021 2020 Income before income tax expense $ 12,301 $ 11,985 $ 36,409 $ 22,659 Provision for loan losses 597 3,956 1,292 7,139 Pre-tax, pre-provision income $ 12,898 $ 15,941 $ 37,701 $ 29,798 Components of Net Income off. Analyses of Interest Rates and Interest Differential 2021 2020 Interest Interest For the Three Months Ended September 30, Average Income/ Yields/ Average Income/ Yields/ (dollars in thousands) Balance Expense rates Balance Expense rates Assets Interest-earning assets Due from banks $ 40,249 16 0.16% $ 10,928 2 0.08% Federal funds sold 23,013 1 0.02% 12,655 2 0.02% Investment securities(1) 147,035 734 2.01% 109,106 612 2.27% Loans held for sale 110,905 824 2.97% 150,925 1,100 2.91% Loans held for investment(1) 1,370,439 16,804 4.84% 1,275,046 14,224 4.41% Total loans 1,481,344 17,628 4.72% 1,425,971 15,324 4.28% Total interest-earning assets 1,691,641 18,379 4.31% 1,558,660 15,940 4.07% Noninterest earning assets 48,207 39,647 Total assets $ 1,739,848 $ 1,598,307 Liabilities and stockholders' equity Interest-bearing liabilities Interest-bearing deposits $ 270,518 201 0.29% $ 219,853 392 0.71% Money market and savings deposits 647,093 853 0.52% 454,922 770 0.67% Time deposits 237,080 273 0.46% 312,538 1,073 1.37% Total deposits 1,154,691 1,327 0.46% 987,313 2,235 0.90% Total Borrowings 111,075 126 0.45% 235,455 334 0.56% Subordinated Debentures 40,740 596 5.85% 40,802 596 5.84% Total interest-bearing liabilities 1,306,506 2,049 0.62% 1,263,570 3,165 1.00% Noninterest-bearing deposits 254,843 193,020 Other noninterest-bearing liabilities 22,919 16,664 Total liabilities $ 1,584,268 $ 1,473,254 Total stockholders' equity 155,580 125,053 Total stockholders' equity and liabilities $ 1,739,848 $ 1,598,307 Net interest income (1) $ 16,330 $ 12,775 Net interest spread (1) 3.69% 3.07% Net interest margin (1) 3.83% 3.26% 2021 2020 Interest Interest For the Nine Months Ended September 30, Average Income/ Yields/ Average Income/ Yields/ (dollars in thousands) Balance Expense rates Balance Expense rates Assets Interest-earning assets Due from banks $ 24,340 22 0.12% $ 7,620 27 0.47% Federal funds sold 18,991 3 0.02% 15,692 36 0.30% Investment securities(1) 142,974 2,170 2.06% 95,563 1,735 2.45% Loans held for sale 139,101 2,922 2.80% 99,633 2,301 3.08% Loans held for investment(1) 1,349,780 48,375 4.79% 1,150,662 40,753 4.70% Total loans 1,488,881 51,297 4.61% 1,250,295 43,054 4.60% Total interest-earning assets 1,675,186 53,492 4.27% 1,369,170 44,852 4.38% Noninterest earning assets 44,388 43,940 Total assets $ 1,719,574 $ 1,413,110 Liabilities and stockholders' equity Interest bearing liabilities Interest-bearing deposits $ 252,074 739 0.39% $ 187,987 1,302 0.92% Money market and savings deposits 609,201 2,505 0.55% 392,863 2,736 0.93% Time deposits 258,099 1,017 0.53% 322,574 4,026 1.67% Total deposits 1,119,374 4,261 0.51% 903,424 8,064 1.19% Total Borrowings 139,716 437 0.42% 148,192 900 0.81% Subordinated Debentures 40,711 1,787 5.85% 41,075 1,787 5.80% Total interest-bearing liabilities 1,299,801 6,485 0.67% 1,092,691 10,751 1.31% Non-interest bearing deposits 248,355 184,503 Other non-interest bearing liabilities 24,928 12,349 Total liabilities $ 1,573,084 $ 1,289,543 Total stockholders' equity 146,490 123,567 Total stockholders' equity and liabilities $ 1,719,574 $ 1,413,110 Net interest income (1) $ 47,007 $ 34,101 Net interest spread (1) 3.60% 3.06% Net interest margin (1) 3.75% 3.33% Rate/Volume Analysis 2021 Compared to 2020 Three Months Ended Nine Months Ended September 30, September 30, (dollars in thousands) Rate Volume Total Rate Volume Total Interest income: Due from banks $ 4 10 14 $ (41) 36 (5) Federal funds sold (1) (0) (1) (43) 10 (33) Investment securities(1) (406) 528 122 (790) 1,225 435 Loans held for sale 153 (429) (276) (337) 958 621 Loans held for investment(1) 1,464 1,116 2,580 797 6,825 7,622 Total loans 1,617 687 2,304 460 7,783 8,243 Total interest income $ 1,214 1,225 2,439 $ (414) 9,054 8,640 Interest expense: Interest bearing deposits $ (653) 462 (191) $ (1,093) 530 (563) Money market and savings deposits (852) 935 83 (1,813) 1,582 (231) Time deposits (588) (213) (801) (2,329) (680) (3,009) Total interest bearing deposits (2,093) 1,184 (909) (5,235) 1,432 (3,803) Total borrowings (56) (152) (208) (296) (167) (463) Subordinated debentures 4 (4) — 21 (21) — Total interest expense (2,145) 1,028 (1,117) (5,510) 1,244 (4,266) Interest differential $ 3,359 197 3,556 $ 5,096 7,810 12,906 $255 thousand and $1.8 million, respectively. While a decline in volume on loans held for sale had a negative impact on interest income, the increase in the yield on loans held for sale had a $1.3 million positive impact on interest income. Simulations of net interest income. We use a simulation model on a quarterly basis to measure and evaluate potential changes in our net interest income resulting from various hypothetical interest rate scenarios. Our model incorporates various assumptions that management believes to be reasonable, but which may have a significant impact on results such as: Rate Ramp Estimated increase (decrease) in Net Interest Income For the year ending September 30, Changes in Market Interest Rates 2021 2020 +300 basis points over next 12 months 1.75 % 1.98 % +200 basis points over next 12 months 1.01 % 0.95 % +100 basis points over next 12 months 0.43 % 0.15 % No Change -100 basis points over next 12 months (0.68) % (4.33) % -200 basis points over next 12 months (3.03) % (14.19) % Simulation of economic value of equity. To quantify the amount of capital required to absorb potential losses in value of our interest-earning assets and interest-bearing liabilities resulting from adverse market movements, we calculate economic value of equity on a quarterly basis. We define economic value of equity as the net present value of our balance sheet’s cash flow, and we calculate economic value of equity by discounting anticipated principal and interest cash flows under the prevailing and hypothetical interest rate environments. Potential changes to our economic value of equity between a flat rate scenario and hypothetical rising and declining rate scenarios, measured as of September 30, 2021 and 2020, are presented in the following table. The projections assume shifts upward and downward in the yield curve of 100, 200 and 300 basis points occurring immediately. We would note that starting in the first quarter of 2020 that our simulations in a downward parallel shift of the yield curve, interest and discount rates at the short-end of the yield curve are allowed to decline below 0%. Management has and continues to employ strategies to mitigate risk in these scenarios. Strategies include actively lowering deposit and funding rates as well as adding and maintaining the use of interest rate floors on floating rate loans. Estimated increase (decrease) in Net Economic Value at September 30, Changes in Market Interest Rates 2021 2020 +300 basis points 62 % 129 % +200 basis points 47 % 98 % +100 basis points 28 % 57 % No Change -100 basis points (41) % (83) % -200 basis points (103) % (213) % . To quantify the amount of capital required to absorb potential losses in value of our interest-earning assets and interest-bearing liabilities resulting from adverse market movements, we calculate economic value of equity on a quarterly basis. We define economic value of equity as the net present value of our balance sheet’s cash flow, and we calculate economic value of equity by discounting anticipated principal and interest cash flows under the prevailing and hypothetical interest rate environments. Potential changes to our economic value of equity between a flat rate scenario and hypothetical rising and declining rate scenarios, measured as of March 31, 2022 and 2021, are presented in the following table. The projections assume shifts upward and downward in the yield curve of 100, 200 and 300 basis points occurring immediately. We would note that starting in the first quarter of 2020 that our simulations in a downward parallel shift of the yield curve, interest and discount rates at the short-end of the yield curve are allowed to decline below 0%. Management has and continues to employ strategies to mitigate risk in these scenarios. Strategies include actively lowering deposit and funding rates as well as adding and maintaining the use of interest rate floors on floating rate loans. Finally, these simulation results do not contemplate all the actions that we may undertake in response to changes in interest rates, such as changes to our loan, investment, deposit, funding or other strategies. Management has and continues to employ strategies to mitigate risk in the Net Interest Income and Economic Value simulations. Strategies include actively lowering deposit and funding rates, adding and maintaining interest rate floors on assets and lengthening liabilities in the low rate environment. Greater Than 5 years and As of September 30, 2021 12 Months Not Rate (dollars in thousands) or Less 1-2 Years 2-5 Years Sensitive Total Cash and investments $ 81,095 5,172 19,318 111,102 216,687 Loans (1) 953,683 185,714 330,199 8,094 1,477,690 Other Assets — — — 68,068 68,068 Total Assets $ 1,034,778 190,886 349,517 187,264 1,762,445 Non-interest bearing deposits 9,324 8,994 26,075 221,449 265,842 Interest bearing deposits 949,760 — — — 949,760 Time deposits 142,699 18,786 61,960 — 223,445 Borrowings 65,232 22,704 12,747 — 100,683 Other Liabilities — — — 64,299 64,299 Total stockholders' equity — — — 158,416 158,416 Total liabilities and stockholders' equity $ 1,167,015 50,484 100,782 444,164 1,762,445 Repricing gap: Positive (negative) $ (132,237) 140,402 248,735 (256,900) — Cumulative repricing gap: Dollar amount $ (132,237) 8,165 256,900 — Percent of total assets (7.5)% 0.5% 14.6% — Greater Than 5 years and As of December 31, 2020 Not Rate (dollars in thousands) 12 Months 1-2 Years 2-5 Years Sensitive Total Cash and investments $ 59,739 5,376 20,303 82,429 167,847 Loans (1) 1,041,269 199,978 226,594 10,588 1,478,429 Other Assets — — — 73,921 73,921 Total Assets 1,101,008 205,354 246,897 166,938 1,720,197 Noninterest-bearing deposits 6,871 6,638 19,280 171,054 203,843 Interest-bearing deposits 779,195 — — — 779,195 Time deposits 197,649 41,533 19,115 — 258,297 Borrowings 106,862 165,546 — — 272,408 Other Liabilities — — 169 64,663 64,832 Total stockholders' equity — — — 141,622 141,622 Total liabilities and stockholders' equity $ 1,090,577 213,717 38,564 377,339 1,720,197 Repricing gap: Positive (negative) 10,431 (8,363) 208,333 (210,401) — Cumulative repricing gap: Dollar amount $ 10,431 2,068 210,401 — Percent of total assets 0.6% 0.1% 12.2% — PROVISION FOR LOAN AND LEASE LOSSES 2021. TDRs, Nonperforming Assets and Related Ratios As of September 30, December 31, (dollars in thousands) 2021 2020 Non-performing assets: Nonaccrual loans: Real estate loans: Commercial mortgage $ — 3,061 Shared national commercial credits — — Home equity lines and loans 910 859 Residential mortgage 2,278 2,725 Total real estate loans $ 3,188 6,645 Commercial and industrial 5,089 1,285 Small business loans 916 Total nonaccrual loans $ 9,193 7,930 Total non-performing loans $ 9,193 7,930 Total non-performing assets $ 9,193 7,930 Troubled debt restructurings: TDRs included in non-performing loans 367 244 TDRs in compliance with modified terms 2,476 3,362 Total TDRs $ 2,843 3,606 Asset quality ratios: Non-performing assets to total assets 0.52% 0.46% Non-performing loans to: Total loans and leases 0.61% 0.52% Total loans held-for-investment 0.67% 0.62% Total loans held-for-investment (excluding loans at fair value and PPP loans) (1) 0.74% 0.74% Allowance for loan losses to: Total loans and leases 1.27% 1.17% Total loans held-for-investment 1.38% 1.38% Total loans held-for-investment (excluding loans at fair value and PPP loans) (1) 1.52% 1.65% Non-performing loans 206.42% 224.04% Total loans and leases $ 1,496,666 1,513,963 Total loans and leases held-for-investment $ 1,378,670 1,284,764 Total loans and leases held-for-investment (excluding loans at fair value and PPP loans) $ 1,245,895 1,072,727 Allowance for loan and lease losses $ 18,976 17,767 2021 the period. Net hedging activity 2022. throughout the a reserve for mortgage loan repurchases. 2021. funding. investment security portfolio due to changes in interest rates over this period. A reconciliation of these non-GAAP measures is included above. September 30, 2021 To Be Well Capitalized Actual Under CBLR Framework (dollars in thousands) Amount Ratio Amount Ratio Tier 1 capital (to average assets) Corporation $ 153,300 9.28% $ 132,220 8.00% Bank 190,892 11.55% 132,219 8.00% December 31, 2020 To Be Well Capitalized Actual Under CBLR Framework (dollars in thousands) Amount Ratio Amount Ratio Tier 1 capital (to average assets) Corporation $ 134,564 8.96% $ 120,082 8.00% Bank 173,231 11.54% 120,080 8.00% 2021: Management maintains liquidity to meet depositors’ needs for funds, to satisfy or fund loan commitments, and for other operating purposes. Meridian’s foundation for liquidity is a stable and loyal customer deposit base, cash and cash equivalents, and a marketable investment portfolio that provides periodic cash flow through regular maturities and amortization or that can be used as collateral to secure funding. In addition, as part of its liquidity management, Meridian maintains a segment of commercial loan assets that are comprised of shared national credits (“SNCs”), which have a national market and can be sold in a timely manner. Meridian’s 2021. 2021. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the loan agreement. Total commitments to extend credit at 2021. 2021. March 31, 2021. Changes inInternal Control Over Financial Reporting 2021. Issuer Purchases of Equity Securities Total Number of Maximum Number Shares Purchased of Shares that May as Part of Publicly Yet Be Purchased Total Number of Average Price Paid Announced Plans or Under the Plan or Period Shares Purchased Per Share Programs (1) Programs July 1, 2021 - July 31, 2021 4,427 $ 27.11 4,427 132,486 August 1, 2021 - August 31, 2021 19,316 27.15 19,316 132,486 September 1, 2021 - September 30, 2021 54,748 28.02 54,748 132,486 Total 78,491 $ 27.41 78,491 132,486 Description 3.1 3.2 4.2 4.3 31.1 31.2 32 101.INS XBRL Instance Document – The instance document does not appear in the interactive Data File because its XBRL tags are embedded within the Inline XBRL document 101.SCH Inline XBRL Taxonomy Extension Schema Document 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document Exhibit 104 Cover Page Interactive Data File – The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document Christopher J. Annas By: /s/ Denise Lindsay Denise LindsayLoan Rightsthird-partythird‑party appraisals of the properties, or discounted cash flows based upon the expected proceeds. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted in accordance with the Allowance policy.27Long-Term DebtFair values of FHLB advances are estimated using discounted cash flow analysis, based on quoted prices for new FHLB advances with similar credit risk characteristics, terms and remaining maturity. These prices obtained from this active market represent a market value that is deemed to represent the transfer price if the liability were assumed by a third party.28September 30, 2021March 31, 2022 and December 31, 20202021 are as follows:March 31, 2022 December 31, 2021 (dollars in thousands) Fair Value
Hierarchy LevelCarrying
amountFair value Carrying
amountFair value Financial assets: Cash and cash equivalents Level 1 $ 68,888 68,888 23,480 23,480 Securities available-for-sale (1) Level 2 130,653 130,653 159,302 159,302 Securities held-to-maturity Level 2 34,977 33,556 6,372 6,591 Equity investments Level 2 2,240 2,240 2,354 2,354 Mortgage loans held for sale Level 2 81,258 81,258 80,882 80,882 Loans receivable, net of the allowance for loan and lease losses Level 3 1,414,531 1,403,767 1,368,899 1,370,885 Mortgage loans held for investment Level 2 17,375 17,375 17,558 17,558 Interest rate lock commitments Level 3 587 587 1,122 1,122 Forward commitments Level 2 905 905 65 65 Restricted investment in bank stock NA 4,330 NA 5,117 NA Accrued interest receivable Level 3 4,848 4,848 5,009 5,009 Customer derivatives - interest rate swaps Level 2 2,256 2,256 961 961 Financial liabilities: Deposits Level 2 1,564,851 1,574,600 1,446,413 1,549,100 Short-term borrowings Level 2 36,136 36,136 41,344 41,344 Subordinated debentures Level 2 40,538 38,490 40,508 40,803 Accrued interest payable Level 2 575 575 31 31 Interest rate lock commitments Level 3 808 808 203 203 Forward commitments Level 2 6 6 106 106 Customer derivatives - interest rate swaps Level 2 2,280 2,280 1,018 1,018 Notional Notional Off-balance sheet financial instruments: amount Fair value amount Fair value Commitments to extend credit Level 2 $ 475,176 — 486,632 — Letters of credit Level 2 23,226 — 25,986 — nine month peiods ended September 30, 2021 and 2020.Three Months Ended March 31, 2022 2021 Balance at beginning of the period $ 1,122 6,932 Decrease in value (535) (3,647) Balance at end of the period $ 587 3,285 29Fair Value
Level 3Valuation Technique Significant
Unobservable
InputRange of
InputsMarch 31, 2022 $ 587 Market comparable pricing Pull through 1 - 99 93.26% December 31, 2021 1,122 Market comparable pricing Pull through 1 - 99 87.66 gainslosses of $1.1 million and losses$4.4 million due to changes in the fair value of interest rate lock commitments which are classified as Level 3 assets and liabilities for the three months ended March 31, 2022, and 2021, respectively, are recorded in non-interest income as net changechanges in the fair value of derivative instruments in the Corporation’sCorporation's consolidated statements of income. Net realized losses of $1.1 million and $5.5 million were recorded for the three and nine months ended September 30, 2021, respectively, while net realized gains of $3.2 million and $7.2 million were recorded for the three and nine months ended September 30, 2020, respectively.The fair value of interestInterest rate lock commitments and forward commitments are recorded within other assets/liabilities on the consolidated balance sheets, with changes in fair values during the period recorded within net change in the fair value of derivative instruments on the unaudited consolidated statements of income. The fair value of interest rate derivatives are recorded within other assets/liabilities on the consolidated balance sheets. As the interest rate derivatives associated with this program do not meet the strict hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings.30
Amount
(Liability)
Fair Value
Amount
(Liability)
Fair ValueMarch 31, 2022 December 31, 2021 (dollars in thousands) Balance Sheet Line Item Interest Rate Lock Commitments Positive fair values Other assets $ 71,681 587 108,653 1,122 Negative fair values Other liabilities 66,501 (808) 35,264 (203) Total 138,182 (221) 143,917 919 Forward Commitments Positive fair values Other assets 49,000 905 30,500 65 Negative fair values Other liabilities 2,500 (6) 45,500 (106) Total 51,500 899 76,000 (41) Customer Derivatives - Interest Rate Swaps Positive fair values Other assets 42,117 2,256 35,447 961 Negative fair values Other liabilities 42,117 (2,280) 35,447 (1,018) Total 84,234 (24) 70,894 (57) Total derivative financial instruments $ 273,916 654 290,811 821 Three Months Ended March 31, (dollars in thousands) 2022 2021 Interest Rate Lock Commitments $ (1,140) (4,437) Forward Commitments 940 3,396 Customer Derivatives - Interest Rate Swaps 33 97 Net fair value losses on derivative financial instruments $ (167) (944) lossesgains on derivativesderivative hedging activities were $1.2$2.8 million and net realized gains were $2.4$4.3 million for the three and nine months ended September 30,March 31, 2022 and 2021, respectively, and net realized losses on derivatives were $2.6 million and $7.4 million forare included in non-interest income in the three and nine months ended September 30, 2020, respectively.including leasing,(including leasing) and investing activities and is dependent on the gathering of lower cost deposits from its branch network or borrowed funds from other sources for funding its loans, resulting in the generation of net interest income. The Banking segment also derives revenues from other sources including gains on the sale of available for sale investment securities, gains on the sale of loans, SBA income, service charges on deposit accounts, cash sweep fees, overdraft fees, BOLI income, title insurance fees, and other less significant non-interest income.31Partners (“Wealth”), is a registered investment advisor and wholly-owned subsidiary of the Bank, that provides a comprehensive array of wealth management services and products and the trusted guidance to help its clients and our banking customers prepare for the future. The unit generates non-interest income through advisory fees.Meridian Mortgage16one central loan production facility and several retail and profit sharing loan production offices located throughout the Delaware Valleysuburban Philadelphia and Maryland. The Mortgage segment originates 1 – 4 family residential mortgages and sells nearly all of its production to third party investors. The unit generates net interest income on the loans it originates and holds temporarily, then earns fee income (primarily gain on sales) at the time of the sale.The unit also recognizes income from document preparation fees, changes in portfolio pipeline fair values and related net hedging gains. Total assets for each segment is also provided.32Segment Information Three Months Ended March 31, 2022 Three Months Ended March 31, 2021 (Dollars in thousands) Bank Wealth Mortgage Total Bank Wealth Mortgage Total Net interest income $ 15,610 94 331 16,035 $ 14,500 (14) 634 15,120 Provision for loan losses 615 — — 615 599 — — 599 Net interest income after provision 14,995 94 331 15,420 13,901 (14) 634 14,521 Non-interest Income Mortgage banking income 196 — 6,900 7,096 268 — 23,832 24,100 Wealth management income — 1,304 — 1,304 — 1,136 — 1,136 SBA income 2,520 — — 2,520 1,245 — — 1,245 Net change in fair values 32 — (2,100) (2,068) 98 — (5,011) (4,913) Net gain on hedging activity — — 2,827 2,827 — — 4,261 4,261 Other 628 (1) 796 1,423 712 — 507 1,219 Non-interest income 3,376 1,303 8,423 13,102 2,323 1,136 23,589 27,048 Non-interest expense 10,208 878 10,347 21,433 8,932 895 18,436 28,263 Income (loss) before income taxes $ 8,163 519 (1,593) 7,089 7,292 227 5,787 13,306 Total Assets $ 1,728,329 7,251 96,009 1,831,589 $ 1,578,721 6,092 159,164 1,743,977 (dollars in thousands) Three Months Ended March 31, 2022 Operating lease expense $ 585 Short term lease expense 1 Variable lease expense — Total lease expense $ 586 (dollars in thousands) Three Months Ended March 31, 2022 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ 560 ROU asset obtained in exchange for lease liabilities $ 10,995 (dollars in thousands) March 31, 2022 2022 $ 548 2023 1,892 2024 1,746 2025 1,456 2026 1,436 2027 and thereafter 3,134 Total operating lease liabilities $ 10,212 nine months ended September 30, 2021weighted-average remaining lease term, including extension options that the Corporation is reasonably certain will be exercised, for all operating leases is 6.63 years.the following dividend activity:On April 26, 2021, the Corporation announcednot entered into any material leases that its Board of Directors has authorized a stock repurchase plan pursuant to which the Corporation may repurchase up to $6 million of the company’s outstanding common stock, par value $1.00 per share. Stock will be purchased from time to time in the open market or through privately negotiated transactions, or otherwise, at the discretion of management of the company in accordance with legal requirements. This program is subject to applicable regulatory protocol. There were 78,491 shares purchased during the three months ended September 30, 2021 at an average price of $27.41, for an aggregate purchase price of $2.2 million.At the Annual Meeting of Shareholders held on June 17, 2021, the shareholders of the Corporation approved to amend the Corporation’s Articles of Incorporation to increase the authorized numbers of shares of common stock of the Corporation from 10,000,000 shares to 25,000,000 shares. The Articles of Amendment of the Corporation were filed with the Secretary of State of the Commonwealth of Pennsylvania on June 21, 2021.will remain an emerging growth company until the earliest of (i) the end of the fiscal year during which we have total annual gross revenues of $1,070,000,000 or more, (ii) the end of the fiscal year following the fifth anniversary of the completion of our initial public offering (December 31, 2022), (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt and (iv) the end of the fiscal year in which the market value of our equity securities that are held by non-affiliates exceeds $700 million as of June 30 of that year. We have elected to take advantage of this extended transition period, which means that the financial statements included herein, as well as any financial statements that we file inup to the future,date we lose this designation (December 31, 2022) will not be subject to all new or revised accounting standards generally applicable to public companies for the transition period for so long as we remain an emerging growth company or until we affirmatively and irrevocably opt out of the extended transition period under the JOBS Act. If we do so, we will prominently disclose this decision in the first periodic report following our decision, and such decision is irrevocable.period. As a filer under the JOBS Act, we will implement new accounting standards subject to the effective dates required for non-public entities.33The CorporationManagement is currently determining under which method we will adopt this ASU. The CorporationManagement has assembled a cross-functional team from Finance, Credit, and IT that is leading the implementation efforts to evaluate the impact of this guidance on the Corporation's consolidated financial statements and related disclosures, internal systems, accounting policies, processes and related internal controls. At this time the Corporation cannot yetan estimate of the impact to the Corporation's consolidated financial statements.FASB ASU 2016-02 (Topic 842), “Leases”Issued in February 2016, ASU 2016-02 revises the accounting related to lessee accounting. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases. The new lease guidance also simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. In June 2020, the FASB approved a delay for the implementation of the ASU. Accordingly, the amendments in this update are effective for the Corporation for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Under ASU 2016-02, the Corporation will recognize a right-of-use asset and a lease obligation liability on the consolidated statement of financial condition, which will increase the Corporation’s assets and liabilities. The Corporation is evaluating the impacts that ASU 2016-02 will have on its consolidated financial statements when adopted as of January 1, 2022.FASB ASU 2018-15 (Topic 350), "Intangibles - Goodwill and Other - Internal-Use Software"Issued in August 2018, ASU 2018-15 provides clarity on capitalizing and expensing implementation costs for cloud computing arrangements in a service contract. If an implementation cost is capitalized, the cost should be recognized over the noncancellable term and periodically assessed for impairment. The guidance is effective in annual and interim periods in fiscal years beginning after December 15, 2020 and interim periods within annual periods beginning after December 15, 2021. Adoption should be applied retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Corporation does not expect the adoption of this ASU to have a material impact on our consolidated financial statements and related disclosures.34FASB ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”Issued in December 2019, ASU 2019-12 adds new guidance to simplify accounting for income taxes, changes the accounting for certain income tax transactions and makes minor improvements to the codification. The guidance is effective for annual periods beginning after December 15, 2020. Early adoption is permitted. The adoption of this ASU did not have a material impact on our consolidated financial statements and related disclosures.Equity”Equity”20202021 included in Meridian Corporation’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”).20202021 and subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K that update or provide35Judgments and Estimates While certain valuation assumptions and judgments will change to account for COVID-19 pandemic-related circumstances such as widening credit spreads, the Corporation does not anticipate significant changes in methodology used to determine the fair value of assets measured in accordance with GAAP. In particular, management has identified the provision and allowance for loan and lease losses as the accounting policy that, due to the estimates, assumptions and judgements inherent in that policy, is critical in understanding our financial statements. Management has presented the application of this policy to the audit committee of our board of directors.20202021 and 20192020 included in the Annual Report on Form 10-K.and nine months ended September 30, 2021,March 31, 2022, as compared to the same periods in 2020,2021, and the changes in its financial condition as of September 30, 2021March 31, 2022 as compared to December 31, 2020.2021. More detailed information related to these highlights can be found in the sections that follow.●Net income was $9.4 million or $1.52 per diluted share, compared to net income of $9.2 million, or $1.51 per diluted share, for the third quarter of 2020. The increase of $226 thousand, or 2.5%, was driven largely by the bank segment’s continued improvement from interest income on portfolio loans, combined with an increase in SBA 7(a) loan sales and wealth management revenue, partially offset by a decline in mortgage banking activity.●ROE and ROA were 24.07% and 2.15%, respectively, for the third quarter 2021, compared to 29.30% and 2.29%, respectively, for the third quarter 2020.●Pre-tax, pre-provision income (a non-GAAP measure) for the third quarter of 2021 was $12.9 million, a decrease of $3.0 million or 19.1%. A reconciliation of this non-GAAP measure is included in the Non-GAAP Financial Measures section below.●Total revenue was $40.4 million, a decrease of $4.5 million or 10.0%.●Net interest income increased $3.5 million, or 27.9%, with interest expense down $1.1 million or 35.3%.●Non-interest income decreased $6.9 million or 23.9%, driven by a decline in mortgage banking net revenue.oMortgage banking net revenue decreased $3.1 million or 14.2% over the third quarter of 2020. The decrease in third quarter 2021 came from decreased levels of mortgage loan originations. Our mortgage segment originated $522.9 million in loans during the third quarter of 2021, a decrease of $185.3 million, or 26.2%, from the third quarter of 2020. The fair value of derivative instruments and loans held for sale decreased a combined $6.8 million over the period. Net hedging activity improved as the net loss decreased $1.5 million to a net loss of $1.2 million for the third quarter of 2021.oWealth management revenue increased $281 thousand year-over-year due to an increase of $340.0 million in assets under management over this period.oNet revenue from the sales of SBA 7(a) loans increased $2.0 million as $25.0 million in loans were sold in the third quarter of 2021 compared to $9.5 million in loans sold in the third quarter of 2020, an increase of nearly 162.0%.36Contentsmortgage banking revenue, which declined $6.5 million, or 48%, partially offset by increased hedging gains of $2.3 million.oOther fee income was up $205 thousand or 24.1% from the third quarter of 2020, to $1.1 million, due to increases in wire fees, title fee income, and servicing fee income.●The provision for loan losses of $597 thousand for the third quarter of 2021 decreased $3.4 million, or 84.9%, from the provision for loan losses recorded for the third quarter of 2020.●Total non-interest expense for the third quarter of 2021 was $25.5 million, down $353 thousand or 1.4%, from the comparable period in 2020. The decrease in non-interest expense is largely attributable to a decrease in salaries and employee benefits expense, which decreased $975 thousand or 4.8%, from the comparable period in 2020.Nine Month Results•An increase in SBA loan sale revenue of Operations●$1.0 million, or 70.8%. Net income was $27.9 million, or $4.49 per diluted share, for the nine months ended September 30, 2021 compared to net income of $17.4 million, or $2.82 per diluted share, for the nine months ended September 30, 2020. The increase was due largely to the increase in net interest income of $12.8 million, combined with a $13.9 million increase in non-interest income and a $5.8 million decline in the provision for loan losses, partially offset by increases in non-interest expense and income taxes of $18.8 million and $3.3 million, respectively. ●ROE and ROA were 25.43% and 2.17%, respectively, for the nine months ended September 30, 2021, compared to 18.85% and 1.65%, respectively, for the nine months ended September 30, 2020.●Pre-tax, pre-provision income (a non-GAAP measure) for the nine months ended September 30, 2021 was $37.7 million, an increase of $7.9 million or 26.5%. A reconciliation of this non-GAAP measure is included in the Non-GAAP Financial Measures section below.●Total revenue was $124.2 million, an increase of $22.5 million or 22.1%.●Net interest income increased $12.8 million, or 37.7%, to $46.8 million from $34.0 million, for the nine months ended September 30, 2021.●Non-interest income increased $13.9 million or 24.5%, driven by mortgage banking revenue, wealth management income, SBA income, and other fee income.oOur mortgage segment originated $1.9 billion in loans during the nine months ended September 30, 2021, an increase of $365.4 million, or 24.4%, from the prior year period. Refinance activity represented 50% of the total residential mortgage loans originated for the nine months ended September 30, 2021, compared to 59% for the nine months ended September 30, 2020. The changes in the mortgage pipeline as a result of the expansion and the refinance activity generated significant fair value changes in derivative instruments and loans held-for-sale. These fair value changes decreased non-interest income a combined $17.4 million during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. These changes were offset by increases in net hedging gains of $9.8 million.oWealth management revenue increased $706 thousand, or 25.0%, year-over-year due to an increase in assets under management of $315.7 million over this period.oNet revenue from the sales of SBA 7(a) loans increased $3.6 million, or 197.8%, from the prior year period, to $5.4 million, as the bank sold $22.1 million, or 74.9% more loans in the current year period. Other fee income increased $1.5 million, or 85.8%.●The provision for loan losses was $1.3 million for the nine months ended September 30, 2021, compared to a $7.1 million provision for the nine months ended September 30, 2020.●Total non-interest expense for the nine months ended September 30, 2021 was $80.0 million, up $18.8 million or 30.8%, from the nine months ended September 30, 2020.Financial Condition●Total assets increased $42.2 million to $1.8 billion as of September 30, 2021, compared to December 31, 2020.fair value related to mortgage banking activities were down $236 thousand over the period.●Cash and cash equivalents and investments increased a combined $48.8 million or 29.1%, compared to December 31, 2020, due predominantly to liquidity from PPP loan forgiveness.●Total loans, net of allowance, increased $92.7 million, or 7.3%, to $1.4 billion as of September 30, 2021. There was growth in several commercial categories from December 31, 2020, as we continue to expand our presence in the Philadelphia market region. Small business loans increased $41.2 million, or 82.7%, commercial real37estate loans increased $60.7 million, or 12.1%, and lease financings increased $45.2 million, or 136.8%, as our Meridian Equipment Finance (“MEF”) leasing team continued their strong growth pattern after starting up in early 2020.●Residential real estate loans held for sale decreased $111.2 million, or 48.5%, to $118.0 million as of September 30, 2021, while PPP loans decreased $83.0 million, or 41.8%, over this period.●Mortgage segment originated $1.9 billion in loans for the nine months ended September 30, 2021.●Total deposits grew $197.7 million, or 15.9%, to $1.4 billion as of September 30, 2021.●Non-interest bearing deposits increased $62.0 million, or 30.4%, from December 31, 2020.●Borrowings from the Federal Reserve’s Paycheck Protection Program Liquidity Facility (“PPPLF”) were $78.4 million as of September 30, 2021, a decrease of $87.1 million, or 52.6% from December 31, 2020. Other borrowings were down $84.6 million or 79.2%.●Returned $8.5 million of capital to Meridian shareholders for the nine months ended September 30, 2021 through dividends, including a $1.00 special dividend.●Meridian repurchased 78,491 shares of its common stock in the third quarter of 2021, at an average price of $27.41.and nine months ended September 30,March 31, 2022 and 2021 and 2020 are shown in the table below:Three Months Ended March 31, 2022 2021 Annualized return on average equity 13.86% 30.06 % Annualized return on average assets 1.28% 2.43 % Net interest margin (tax effected yield) 3.89% 3.72 % Basic earnings per share $ 0.92 $ 1.70 Diluted earnings per share $ 0.88 $ 1.65 September 30, 2021March 31, 2022 and December 31, 2020:2021:(dollars in thousands, except per share amounts) March 31, 2022 December 31, 2021 Book value per common share $ 25.73 $ 27.07 Tangible book value per common share (1) $ 25.04 $ 26.37 Allowance as a percentage of loans and leases held for investment 1.31 % 1.35 % Allowance as a percentage of loans and leases held for investment (excl. loans at fair value and PPP loans) (1) 1.38 % 1.46 % Tier I capital to risk weighted assets 10.09 % 10.83 % Tangible common equity ratio (1) 8.40 % 9.42 % Loans held for investment $ 1,431,906 $ 1,386,457 Total assets $ 1,831,589 $ 1,713,443 Stockholders' equity $ 157,684 $ 165,360 38(dollars in thousands) March 31, 2022 December 31, 2021 Tangible common equity ratio: Total stockholders' equity 157,684 165,360 Less: Goodwill and intangible assets (4,227) (4,278) Tangible common equity 153,457 161,082 Total assets 1,831,589 1,713,443 Less: Goodwill and intangible assets (4,227) (4,278) Tangible assets $ 1,827,363 $ 1,709,165 Tangible common equity ratio 8.40 % 9.42 % Reconciliation of tangible book value per common share March 31, 2022 December 31, 2021 Book value per common share $ 25.73 $ 27.07 Less: Impact of goodwill and intangible assets 0.69 0.70 Tangible book value per common share $ 25.04 $ 26.37 September 30, 2021.March 31, 2022. This is considered a non-GAAP measure as the calculation excludes the impact of loans held for investment that are fair valued and the impact of PPP loans as these loan types are not included in the allowance for loan losses calculation.2022 2021 Reconciliation of Allowance for Loan Losses / Total loans held for investment March 31 December 31 Allowance for loan losses / Total loans held for investment 1.31 % 1.35 % Less: Impact of loans held for investment - fair valued 0.02 % 0.02 % Less: Impact of PPP loans 0.05 % 0.09 % Allowance for loan losses / Total loans held for investment (excl. loans at fair value and PPP loans) 1.38 % 1.46 % (Dollars in thousands) Three Months Ended March 31, Reconciliation of pre-tax, pre-provision income 2022 2021 Income before income tax expense $ 7,089 $ 13,306 Provision for loan losses 615 599 Pre-tax, pre-provision income $ 7,704 $ 13,905 and nine months ended September 30, 2021,March 31, 2022, as compared to the same periods in 2020,2021, and the changes in its financial condition as of September 30, 2021March 31, 2022 as compared to December 31, 2020.2021.39●Net Interest Income, or the difference between the interest income earned on loans, leases and investments and the interest expense paid on deposits and borrowed funds;●Provision For Loan and Lease Losses, or the amount added to the Allowance to provide for estimated inherent losses on portfolio loans and leases;●Non-interest Income, which is made up primarily of mortgage banking income, wealth management income, SBA loan sale income, fair value adjustments, gains and losses from the sale of loans, gains and losses from the sale of investment securities available for sale and other fees from loan and deposit services;●Non-interest Expense, which consists primarily of salaries and employee benefits, occupancy, professional fees, advertising & promotion, data processing, information technology, loan expenses, and other operating expenses; and●Income Taxes, which include state and federal jurisdictions.nine months ended September 30, 2021, and 2020, of the Corporation’s average balances and yields earned on its interest-earning assets and the rates paid on its interest-bearing liabilities. The net interest margin is the net interest income as a percentage of average interest-earning assets. The net interest spread is the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities. The difference between the net interest margin and the net interest spread is the result of net free funding sources such as non-interest bearing deposits and stockholders’ equity.Total interestthree months ending September 30,first quarter of 2021 largely due to increases in average balances. There was $18.3 million (and $18.4 million on a tax equivalent basis), which represented a $2.4 million, or 15.3%, increase compared with the three months ending September 30, 2020. The increase in interest income was attributable to a $133.0$25.3 million increase in average interest earning assets, year over year, led by increases of $48.7 million, $111.9 million and $65.6$101.8 million in average balances of small business loans commercial real estate loansheld for investment, a $32.3 million increase in investment securities, and leases, respectively. The yield ona $14.7 million increase in interest earning assets increased 24 basis points over the same period in 2020, ledcash balances, offset partially by a 43$106.6 million decrease in the average balance of loans held for sale. These average balance increases helped to offset the negative impact to interest income that a 9 basis point increasedecline in the yield on loans held for investment. Partially offsetting the loan yield expansion wasinvestment and a 13 basis point decline in the yield on cash, cash equivalents and investments, which declined 26investment securities had. Overall the yield on interest-earning assets increased 6 basis points to 4.35% over the period.prior quarter.Total interest expense declined $1.1average balance on money market and savings deposits were up $113.0 million, or 35.3% to $2.0down 8 basis points. Offsetting these average balance increases slightly was a $8.6 million decline in time deposit average balances, with a 20 basis point decline. The average balance of borrowings was down $167.6 million for the three months ending September 30, 2021, compared with $3.2 million for the three months ending September 30, 2020. Total interest-bearing deposit balances increased $50.7 million in total from September 30, 2020ended March 31, 2022, compared to September 30, 2021, whichMarch 31, 2021. This decline was offset bylargely due to the decline in the cost of all deposit types of 44 basis points. The cost of money market and savings deposits declined 15 basis points and the cost of time deposits decreased by 91 basis points over the period. Interest expense on borrowings declined $208 thousand or 62.3% to $126 thousand for the three months ended September 30, 2021. The average balance of borrowings decreased $124.4 million due largely to a decline in PPPLF advances used to fund PPP loans as such loans continue to pay off, while the cost of borrowings declined 11 basis points over this period.$3.5 million,$918 thousand, or 27.8%6.1%, to $16.3$$16.1 million on a tax-equivalent basis for the three months ended September 30, 2021,March 31, 2022, compared to $12.8$15.2 million for the three months ended September 30, 2020.March 31, 2021. The net-interestnet interest margin increased 57 basis pointswas 3.89% for the three months ending September 30, 2021 at 3.83%,first quarter of 2022 compared with 3.26%to 3.72% for the three month ending September 30, 2020.first quarter of 2021. The increase in net interest margin reflects the increased yield on interest earnings assets, combined with the declining interest rates paid on deposits and borrowings loan portfolios overall. Contributing to40the decline in interest expense on deposits over this period was the $61.8 million increase in average non-interest bearing deposits.Total interest income for the nine months ending September 30, 2021 was $53.5 million on a tax-equivalent basis, which represented a $8.6 million, or 19.3%, increase compared with the nine months ending September 30, 2020. The increase in interest income was attributable to a $306.0 million increase in average interest earning assets, year over year, led by increases of $36.0 million, $47.0 million, $119.3 million, and $54.2 million in the average balances of small business loans, PPP loans, commercial real estate loans and leases, respectively, as well as an increase of $67.4 million of average interest earning cash and cash equivalents and investments. Overall the loans held for investment yield increased 9 basis points over the same period in 2020, but this expansion was partially offset by a lower yield on cash, cash equivalents and investments.Total interest expense declined $4.3 million or 39.7% to $6.5 million for the nine months ending September 30, 2021, compared with $10.8 million for the nine months ending September 30, 2020. While all interest-bearing deposit balances increased $216.0 million from September 30, 2020 compared to September 30, 2021, the cost of all deposit types declined sharply over this period. The cost of interest-bearing deposits declined 53 basis points, while the cost of money market and savings deposits declined 38 basis points and the cost of time deposits decreased by 114 basis points over the period. Interest expense on borrowings declined $463 thousand or 51.4% to $437 thousand for the nine months ended September 30, 2021. The average balance of borrowings decreased $8.5 million due largely to PPPLF advances used to fund PPP loans, while the cost of borrowings increased 46 basis points over this period.Net interest income increased $12.9 million, or 37.8%, to $47.0 million on a tax-equivalent basis for the nine months ended September 30, 2021, compared to $34.1 million for the nine months ended September 30, 2020. The net-interest margin increased 42 basis points for the nine months ending September 30, 2021 at 3.75%, compared with 3.33% for the nine month ending September 30, 2020. The increase in net interest margin reflects declining interest rates paid on deposits and borrowings overall, out-pacing the declines in the yields on interest earning assets during the year-over-year period presented. Contributing to the decline in interest expense on deposits over this period was the $63.9 million increase in non-interest bearing deposits.41422022 2021 Average Balance Interest Income/ Expense Yields/ Rates Average Balance Interest Income/ Expense Yields/ Rates Assets Interest-earning assets Due from banks $ 28,389 13 0.18 % $ 13,647 2 0.09 % Federal funds sold 877 — 0.12 % 17,791 1 0.02 % 167,881 799 1.93 % 135,612 688 2.06 % Loans held for sale 67,092 536 3.20 % 173,664 1,131 2.61 % 1,415,831 16,685 4.75 % 1,314,077 15,695 4.84 % Total loans 1,482,923 17,221 4.71 % 1,487,741 16,826 4.59 % Total interest-earning assets 1,680,070 18,033 4.35 % 1,654,791 17,517 4.29 % Noninterest earning assets 72,573 40,170 Total assets $ 1,752,643 $ 1,694,961 Liabilities and stockholders' equity Interest-bearing liabilities Interest-bearing deposits $ 269,864 137 0.21 % $ 224,362 298 0.54 % Money market and savings deposits 690,475 852 0.50 % 577,472 829 0.58 % Time deposits 262,779 300 0.46 % 271,416 439 0.66 % Total deposits 1,223,118 1,289 0.43 % 1,073,250 1,566 0.59 % Borrowings 15,708 49 1.28 % 183,336 172 0.38 % Subordinated debentures 40,519 591 5.84 % 40,682 593 5.83 % Total interest-bearing liabilities 1,279,345 1,929 0.61 % 1,297,268 2,331 0.73 % Noninterest-bearing deposits 281,123 234,030 Other noninterest-bearing liabilities 30,236 26,474 Total liabilities $ 1,590,704 $ 1,557,772 Total stockholders' equity 161,939 137,189 Total stockholders' equity and liabilities $ 1,752,643 $ 1,694,961 $ 16,104 $ 15,186 3.74 % 3.56 % 3.89 % 3.72 % (1)Yields and net interest income are reflected on a tax-equivalent basis.43and nine months ended September 30, 2021March 31, 2022 as compared to the same periods in 2020,2021, 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.(dollars in thousands) March 31, 2022 Compared to 2021 Change in interest rate due to: Rate Volume Total Interest income: Due from banks $ 5 6 11 Federal funds sold 5 (6) (1) (255) 366 111 Loans held for sale 1,331 (1,926) (595) (1,767) 2,757 990 Total loans (436) 831 395 Total interest income $ (681) 1,197 516 Interest expense: Interest bearing deposits $ (491) 330 (161) Money market and savings deposits (532) 555 23 Time deposits (125) (14) (139) Total interest bearing deposits (1,148) 871 (277) Total borrowings 830 (953) (123) Subordinated debentures 4 (6) (2) Total interest expense (314) (88) (402) Interest differential $ (367) 1,285 918 (1)Yields and net interest income are reflected on a tax-equivalent basis.September 30, 2021March 31, 2022 as compared to the same period in 2020,2021, tax-equivalent interest income increased $2.4 million$516 thousand as volume changes in average earning assets contributed $1.2 million and favorableunfavorable rate changes increasedreduced interest income by $1.2 million.$681 thousand. The favorable change in interest income due to volume changes was driven mostly from growth in the loans held for investment portfolio, which increased $95.4$101.8 million on average over the three month periods, along with an increase in investment securities of $37.9 million on average. Thewhile the loans held for sale portfolio decreased $40.0$106.6 million on average over this period. Within the loans held for investment portfolio, average balances on commercial loans and leases were up $170.5 million, and commercial real estate/construction loans were up $62.0 million, while the average balance on small business loans, commercial real estate loans and leases increased $48.7 million, $111.9 million, and $65.6 million, respectively, whileof PPP loans decreased $109.5 million.were down $142.1 million as such loans continue to be forgiven by the SBA. Partially off-setting these favorable volume changes was anwere unfavorable rate changechanges of 2613 basis points and 9 basis points on investment securities and loans held for investment, reducing interest income by $406 thousand.$1.1 million$402 thousand due to the impact from rate declines which offset the impact from volume increases. The cost of deposits and borrowings were down across the board, having a $2.1$1.1 million positive effect on interest expense. The cost of interest-bearing deposits, money market and savings accounts and time deposits declined 4233 basis points, 158 basis points and 9120 basis points, respectively, while the cost of borrowings declined 11increased 85 basis points. Interest-bearing deposits, and money market and savings accounts increased $50.7$45.5 million, and $192.2$113.0 million on average, while time deposits decreased $75.5$8.6 million on average, and borrowings overall were down $124.4$167.6 million on average. These average balance changes led to a $1.0 million increase$88 thousand decrease in interest expense.net interest income from rate changes contributed $3.4 million while volume changes contributed $197 thousand$1.2 million and out-paced the unfavorable rate changes to improve tax-equivalent net interest income by $3.6 million.44For the nine months ended September 30, 2021 as compared to the same period in 2020, tax-equivalent interest income increased $8.6 million as volume changes in average earning assets contributed $9.1 million and unfavorable rate changes reduced interest income by $414 thousand. The favorable change in interest income due to volume changes was driven by growth in all asset portfolios, most notably the loans held for investment portfolio, which increased $199.1 million on average over the nine month periods. The loans held for sale portfolio increased $39.5 million and the investment securities portfolio increased $47.4 million on average over this period. Within the loans held for investment portfolio, the average balance on small business loans, PPP loans, commercial real estate loans and leases increased $36.0 million, $47.0 million, $119.3 million, and $54.2 million, respectively. Partially off-setting these favorable volume changes were unfavorable rate changes of 87 basis points and 28 basis points on investment securities and loans held for sale, reducing interest income by $790 thousand and $337 thousand, respectively.On the funding side, interest expense decreased $4.3 million due to the impact from rate declines which offset the impact from volume increases. The cost of deposits and borrowings were down across the board, having a $5.5 million positive effect on interest expense. The cost of interest-bearing deposits, money market and savings accounts and time deposits declined 53 basis points, 38 basis points and 114 basis points, respectively, while the cost of borrowings increased 46 basis points. Interest-bearing deposits, and money market and savings accounts increased $64.1 million, and $216.3 million on average, while time deposits decreased $64.5 million on average, and borrowings overall were down $8.5 million on average. These average balance changes led to a $1.2 million increase in interest expense. Overall, the increase in net interest income from volume changes contributed $7.8 million while rate changes contributed $5.1 million to improve tax-equivalent net interest income by $12.9 million.●The timing of changes in interest rates;●Shifts or rotations in the yield curve;●Repricing characteristics for market rate sensitive instruments on the balance sheet;●Differing sensitivities of financial instruments due to differing underlying rate indices;●Varying timing of loan prepayments for different interest rate scenarios;●The effect of interest rate floors, periodic loan caps and lifetime loan caps;●Overall growth rates and product mix of interest-earning assets and interest-bearing liabilities.September 30,March 31, 2022 and 2021 and 2020 are presented in the following table. The simulation assumes rate shifts occur upward and downward on the yield curve in even increments over the first twelve months (ramp), followed by rates held constant thereafter.45Changes in Market Interest Rates 2022 2021 +300 basis points over next 12 months 0.93 % 3.83 % +200 basis points over next 12 months 0.44 % 2.28 % +100 basis points over next 12 months (0.10) % 1.06 % No Change -100 basis points over next 12 months (0.15) % (1.56) % -200 basis points over next 12 months (1.29) % (5.01) % assetliability sensitive as of September 30, 2021.March 31, 2022. In its current position, the table indicates that a 100 200 or 300 basis point increase in interest rates would have a positivemodestly negative impact from rising rates on net interest income over the next 12 months.months and a more significant positive impact in a 200 and 300 basis point increase as rates move above the loan floors. The simulated exposure to a change in interest rates is contained, manageable and well within policy guidelines. The results continue to drive our funding strategy of increasing relationship-based accounts (core deposits) and utilizing term deposits to fund short to medium duration assets.Simulation of economic value of equityChanges in Market Interest Rates 2022 2021 +300 basis points 28 % 64 % +200 basis points 22 % 48 % +100 basis points 14 % 27 % No Change -100 basis points (21) % (39) % -200 basis points (55) % (97) % September 30, 2021March 31, 2022 suggests that we would experience a positive effect from an increase in rates, and that the impact would become greater as rates continue to rise due to the duration of our interest-earning assets and converselyassets. Conversely, we would experience a negative effect from a decrease in rates. While an instantaneous shift in interest rates is used in this analysis to provide an estimate of exposure, we believe that a gradual shift in interest rates would have a much more modest impact. Since economic value of equity measures the discounted present value of cash flows over the estimated lives of instruments, the change in economic value of equity does not directly correlate to the degree that earnings would be impacted over a shorter time horizon.46Gap AnalysisManagement measures and evaluates the potential effects of interest rate movements on earnings through an interest rate sensitivity “gap” analysis. Given the size and turnover rate of the originated mortgage loans held for sale, these loans are treated as having a maturity of 12 months or less. Interest rate sensitivity reflects the potential effect on net interest income when there is movement in interest rates. An institution is considered to be asset sensitive, or having a positive gap, when the amount of its interest-earning assets repricing within a given period exceeds the amount of its interest-bearing liabilities also repricing within that time period. Conversely, an institution is considered to be liability sensitive, or having a negative gap, when the amount of its interest-bearing liabilities repricing within a given period exceeds the amount of its interest-earning assets also within that time period. During a period of rising interest rates, a negative gap would tend to decrease net interest income, while a positive gap would tend to increase net interest income. During a period of falling interest rates, a negative gap would tend to result in an increase in net interest income, while a positive gap would tend to decrease net interest income.The following tables present the interest rate gap analysis of our assets and liabilities as of September 30, 2021 and December 31, 2020.(1)Loans include portfolio loans and loans held for sale47(1)Loans include portfolio loans and loans held for saleUnder the repricing gap analysis for the period ended September 30, 2021, we are liability-sensitive in the short term due mainly to core-deposit growth which has outpacing loan growth. Deposit growth has been strong throughout the year, driven by economic conditions and customer preference for short-term or liquid deposits. Loan growth has been impacted by PPP loan forgiveness. Although PPP loans are contractually longer term loans, the majority are expected to be forgiven in the near term, which will continue to impact asset growth rates. With the strong growth in deposits, management has been able to reduce balances of borrowings and wholesale deposits, lower costs and lengthen maturities. On a cumulative basis through projecting out 2 years our profile is more neutral. We generally manage our interest rate risk profile close to neutral, using a strategy that is focused on increasing our concentration of relationship-based transaction accounts through efforts of our business developers and new branches.The gap results presented could vary substantially if different assumptions are used or if actual experience differs from the assumptions used in the preparation of the gap analysis. Furthermore, the gap analysis provides a static view of interest rate risk exposure at a specific point in time and offers only an approximate estimate of the relative sensitivity of our interest-earning assets and interest-bearing liabilities to changes in market interest rates. In addition, the impact of certain optionality is embedded in our balance sheet such as contractual caps and floors, and trends in asset and liability growth. Accordingly, we combine the use of gap analysis with the use of an earnings simulation model that provides a dynamic assessment of interest rate sensitivity.For the three months ended September 30, 2021, the Corporation recorded aand lease losses (“Provision”) of $597 thousand which was a $3.4 million, or 84.9% decrease from the same period in 2020. For the three months ended September 30, 2021 there was a net recovery of $18 thousand as compared to net charge-offs of $89$615 thousand for the same period in 2020.first quarter of 2022 increased $16 thousand, or 2.67%, from the provision for loan losses recorded for the first quarter of 2021. The thirdfirst quarter 20202021 provision was calculated at the time the COVID-19 pandemic was intensifying locally and nationally and was therefore impacted by increased qualitative provisioning for the economic uncertainty as a result of the pandemic, while the thirdfirst quarter 20212022 provision had less such impact asreflects that certain financial and economic indicators have improved period over period. For the nine months ended September 30, 2021,last few periods, combined with the Corporation recordedimpact of a provisionspecific reserve applied against the non-performing loan relationship discussed below in the Asset Quality Summary section. whichas of March 31, 2022, relatively unchanged from $23.0 million as of December 31, 2021. As of March 31, 2022 there was a $5.8specific reserve of $2.3 million 81.9% decreaseagainst a non-performing commercial loan relationship. Consequently the ratio of non-performing assets to total assets was elevated to 1.25% as of March 31, 2022 and 1.34% as of December 31, 2021. Despite the near-term impact to these ratios resulting from the same periodthis one loan relationship, management feels that overall asset quality remains strong. There were no properties in 2020. For the nine months ended September 30, 2021 there were netOREO as of March 31, 2022 and December 31, 2021.48charge-offs of $83 thousand as compared toMeridian realized net charge-offs of $79 thousand for the same period in 2020. The decline in the provision period over period is the result of an improvement in the trend of certain financial and economic factors used in the allowance for loan losses that had been negatively impacted in 2020 due to the COVID-19 pandemic, which have since started to rebound as the economy continues to recover.The provision for loan and lease losses could increase in future periods based on our belief that the credit quality of our loan portfolio could decline and loan defaults could increase if the COVID-19 pandemic continues for a prolonged period of time.Asset Quality and Analysis of Credit RiskAsset quality remains strong despite the pressures that the COVID-19 pandemic has had on businesses and the economy locally and nationally. COVID-19 loan modifications provided to borrowers amounted to $24.9 million as of September 30, 2021, compared to $29.0 million as of June 30, 2021. Meridian realized net recoveries of 0.00%0.04% of total average loans for the quarter ending September 30, 2021, compared to net charge-offs of 0.00% forMarch 31, 2022, up from the quarter ended December 31, 2020 and net charge-offs2021 level of 0.01%0.00%. Charge-offs amounted to $566 thousand for the quarter ended September 30, 2020. Total non-performing assets, including loans and other real estate property,ending March 31, 2022, while recoveries were $9.2 million as$19 thousand during this quarter. Nearly all of September 30, 2021, compared to $7.9 million as of Decemberthe charge-offs for the quarter ending March 31, 2020 and September 30, 2020. The ratio of non-performing assets to total assets as of September 30, 2021 was 0.52% compared to 0.46% as of December 31, 2020, and 0.45% as of September 30, 2020.2022 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)measure, see reconciliation in the Appendix), was 1.52%1.38% as of September 30, 2021, 1.65%March 31, 2022 and 1.46% as of December 31, 2020, and 1.59% as of September 30, 2020. PPP loans are excluded from calculation of this ratio as they are guaranteed by the SBA and therefore we have not provided for in the allowance for loan losses. A reconciliation of this non-GAAP measure is included in the Non-GAAP Financial Measures section above.There were no properties in OREO as of September 30, 2021 and December 31, 2020.September 30, 2021,March 31, 2022, the Corporation had $2.8$3.4 million of troubled debt restructurings (“TDRs”), of which $2.5$3.0 million were in compliance with the modified terms and excluded from non-performing loans and leases. As of December 31, 2020,2021, the Corporation had $3.6$3.8 million of TDRs, of which $3.4 million were in compliance with the modified terms, and were excluded from non-performing loans and leases. As of September 30, 2020,March 31, 2022, the Corporation had $3.7a recorded investment of $25.2 million of impaired loans and leases which included $3.4 million of TDRs, while as of which $3.4 million were in compliance with the modified terms, and were excluded from non-performing loans and leases. As of September 30,December 31, 2021, the Corporation had a recorded investment of $11.2$25.8 million of impaired loans and leases which included $2.8$3.8 million of TDRs.49As of March 31, December 31, (dollars in thousands) 2022 2021 Non-performing assets: Nonaccrual loans: Real estate loans: Home equity lines and loans 999 911 Residential mortgage 2,412 2,398 Total real estate loans 3,411 3,309 Commercial and industrial 18,749 18,801 Small business loans 666 666 Leases — 212 Total nonaccrual loans $ 22,826 $ 22,988 Total non-performing loans $ 22,826 $ 22,988 Total non-performing assets $ 22,826 $ 22,988 Troubled debt restructurings: TDRs included in non-performing loans 358 361 TDRs in compliance with modified terms 3,007 3,446 Total TDRs $ 3,365 3,807 Asset quality ratios: Non-performing assets to total assets 1.25 % 1.34 % Non-performing loans to: Total loans and leases 1.51 % 1.57 % Total loans held-for-investment 1.59 % 1.66 % Total loans held-for-investment (excluding loans at fair value and PPP loans) (1) 1.67 % 1.80 % Allowance for loan losses to: Total loans and leases 1.24 % 1.28 % Total loans held-for-investment 1.31 % 1.35 % Total loans held-for-investment (excluding loans at fair value and PPP loans) (1) 1.38 % 1.46 % Non-performing loans 82.48 % 81.60 % Total loans and leases $ 1,513,164 1,467,339 Total loans and leases held-for-investment $ 1,431,906 1,386,457 Total loans and leases held-for-investment (excluding loans at fair value and PPP loans) $ 1,364,851 1,280,591 Allowance for loan and lease losses $ 18,826 18,758 PPP loans have only been excluded from this calculation asSeptember 30, 2021March 31, 2022 Compared to the Same Period in 2020thirdfirst quarter of 20212022 was $22.1$13.1 million, down $6.9$13.9 million or 23.9%51.6% from the comparable period in 2020.2021. This overall decrease in non-interest income came largely from our mortgage segment. Mortgage banking net revenue decreased $3.1$17.0 million or 14.2%70.6% over the thirdfirst quarter of 2020. The decrease in third quarter 2021, cameresulting from decreased levels of mortgage loan originations as rate-driven refinancing activity declined.rising interest rates and lack of housing inventory has had an impact on mortgage banking activity. Our mortgage segment originated $522.9$323.8 million in loans during the thirdfirst quarter of 2021,2022, a decrease of $185.3$401.2 million, or 26.2%55.3%, from the thirdfirst quarter of 2020.2021. The changes in the fair value of derivative instruments and loans held for sale decreasedincreased a combined $6.8$3.5 million over50improveddeclined as the net lossgain decreased $1.5 million to a net loss of $1.2$1.4 million for the thirdfirst quarter of 2021.$2.0$1.3 million as $25.0$25.2 million in loans were sold in the thirdfirst quarter of 20212022 compared to $9.5$13.0 million in loans sold in the thirdfirst quarter of 2020,2021, an increase of nearly 162.0%93.0%. This represents the 5th straight quarter of net revenue from the sales of SBA 7(a) loans of at least $1.2 million. Wealth management revenue increased $281$168 thousand year-over-year due to an increase of $340.0$166.8 million in assets under management over this period, due to new clients andwhich benefit from the more favorable market conditions.conditions, as discussed above. Other fee income was up $205$173 thousand or 24.1%16.1% from the thirdfirst quarter of 2020,2021, to $1.1$1.2 million, due to increases in wire fees, title fee income, and servicing fee income.NineSeptember 30, 2021March 31, 2022 Compared to the Same Period in 2020Total non-interest income for the nine months ended September 30, 2021 was $70.9 million, up $13.9 million or 24.5%, from the nine months ended September 30, 2020. This increase in non-interest income came primarily from our mortgage segment as mortgage banking net revenue increased $16.9 million or 37.2% over the prior year period. The significant increase in the current year period came from increased levels of mortgage loan originations due to both the expansion of the segment into Maryland as well as the favorable rate environment. Our mortgage segment originated $1.9 billion in loans during the nine months ended September 30, 2021, an increase of $365.4 million, or 24.4%, from the prior year period. Refinance activity represented 50% of the total residential mortgage loans originated for the nine months ended September 30, 2021, compared to 59% for the nine months ended September 30, 2020. The changes in the mortgage pipeline as a result of the expansion and the refinance activity generated significant fair value changes in derivative instruments and loans held-for-sale. These fair value changes decreased non-interest income a combined $17.4 million during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020. These changes were offset by increases in net hedging gains of $9.8 million.Wealth management revenue increased $706 thousand, or 25.0%, year-over-year due to an increase in assets under management of $315.7 million over this period due to new clients and the more favorable market conditions that existed in the nine months ended September 30, 2021, compared to the prior year period. Net revenue from the sales of SBA 7(a) loans increased $3.6 million, or 197.8%, from the prior year period, to $5.4 million, as the bank sold $22.1 million, or 74.9% more loans in the current year period. Other fee income was up $1.5 million or 85.8% for the nine months ended September 30, 2021, from the nine months ended September 30, 2020 due to increases in wire fees, title fee income, as well as an increase in income recorded on interest rate swaps entered into with several loan customers, and an increase in mortgage and SBA servicing fee income.NON-INTEREST EXPENSEThree Months Ended September 30, 2021 Compared to the Same Period in 2020thirdfirst quarter of 20212022 was $25.5$21.4 million, down $353 thousand$6.8 million or 1.4%24.2%, from the comparable period in 2020.2021. The decrease in non-interest expense is largely attributable to a decrease in salaries and employee benefits expense, which decreased $975 thousand$6.8 million or 4.8%30.9%, from the comparable period in 2020.2021. Of this decrease, $2.5$7.5 million relates to the variable portion of the mortgage segment, while there was an increase of $1.5 million$680 thousand for the bank and wealth segments due to an increase of 3130 in FTE’s and a higher level of incentive and stock -basedstock-based compensation expense.Professional fees increased $192 thousand, or 28.2%, from the comparable period in 2020 largely due to increased consulting costs incurred throughout the organization. As we continue to improve and add to our customer facing and back office IT systems, business intelligence initiatives, software and information systems for loan processing and reporting have been implemented, as well as upgrades to cloud-based file storage and retrieval, desktop operating systems, mail archiving and security.$308$201 thousand, or 39.4%25.6%, fromover the comparable period in 20202021 as the result of an increase in thea renewed and focused priority placed on business development and community outreach efforts that our employees were more able to do in51thirdMeridian organization. In the first quarter of 2021 as2022 the weather improved andeasing of COVID-19 restrictions continuedhas provided our team members with much better opportunities to lessenmeet with customers and allow for more in person gatherings. Nine Months Ended September 30, 2021 Comparedprospective customers as they were accustomed to the Same Period in 2020Total non-interestpre-pandemic.nine months ended September 30, 2021 was $80.0 million, up $18.8 million or 30.8%, from the nine months ended September 30, 2020. The increase is largely attributable to the variable expenses from loan originations overall, particularly mortgage commissions. Total salaries and employee benefits expense was $61.8 million, an increasefirst quarter of $15.3 million or 32.9%, compared to the nine months ended September 30, 2020. Of this increase, $10.9 million relates to the mortgage segment as the number of employees in this segment have increased period over period. Salaries and benefits for the Bank and Wealth segments increased due to an increased level of full-time equivalent employees as well as increase in incentives and stock-based compensation expense.Occupancy and equipment expense increased $301 thousand, or 9.5%, over the period due largely to the expansion of2022. Meridian continued with our physical office footprint into Maryland with 8 mortgage loan production offices having opened since early 2020. Professional fees were up $511 thousand, or 24.1%, over the period due largely to one-time consent fees incurred in 2021 related to the filing of the Corporation’s December 31, 2020 Form 10K, in conjunction with the change in Accountants we made in 2020. This is combined with an increase in consulting fees as Meridian continuesstrategy to invest in various company-wide technology focused projects as discussed above. Advertisingthat focuses on improving back-office efficiencies through automation and promotion expenses were up $799workflow processes. In addition, with a focus on cloud-based computing, IT has improved the scalability of storage; reduced the maintenance process; and eliminated the need and cost for further servers. Other non-interest expense decreased $382 thousand, or 40.1%18.7%, overto $1.7 million for the same periodfirst quarter of 2022, largely due to the improvements to the economy and a pull back on COVID-19 related restrictions that has allowed bank employees to spend more timereduction in business development and community outreach capacity.September 30, 2021March 31, 2022 was $2.9$1.6 million, as compared to $2.8$3.1 million for the same period in 2020.2021. The increasedecrease in income tax expense was attributable to the increasedecrease in earnings, period over period. Our effective tax rate was 23.3% for the third quarter of 2021 and 23.1% for the third quarter of 2020. Income tax expense for the nine months ended September 30, 2021 was $8.5 million, as compared to $5.2 million, for the same periods in 2020. The increase in income tax expense was attributable to the increase in earnings, period over period. Our effective tax rate was 23.5%21.9% for the first nine monthsquarter of 20212022 and 23.0%23.6% for the first nine monthsquarter of 2020. September 30, 2021,March 31, 2022, total assets were $1.8 billion, an increase of $42.2 million from December 31, 2020. Total assets increased $3.8$118.1 million, or 0.2%, from September 30, 2020 due to a higher level of cash, investments, commercial loans and PPP loans on the balance sheet as of September 30, 2020. Cash and cash equivalents increased $26.4 million due to liquidity from mortgage loans held for sale and PPP loan forgiveness. The securities available-for-sale portfolio grew to $146.1 million as of September 30, 2021, up $22.6 million, or 18.3%6.9%, from December 31, 2020. State and municipal securities2021. Total assets increased $7.0$87.6 million and U.S. treasuries were up $15 million.Totalfrom March 31, 2021. This growth in assets over both periods compared was due to loan portfolio growth, as discussed further below.net of allowance, grew $92.7$45.4 million, or 7.3%3.3%, to $1.4 billion as of September 30, 2021,March 31, 2022, from $1.3$1.4 billion as of December 31, 2020. There2021. Overall portfolio loan growth, excluding PPP loans, was growth in several commercial loan categories from December 31, 2020, as we continue to expand our presence in the Philadelphia market region. Small business6.5% quarter-over-quarter, or 26% on an annualized basis for 2022. Commercial loans increased $41.2$25.0 million, or 82.7%8.5%, commercial real estate loans increased $60.7$12.9 million, or 12.1%2.4%, construction loans increased $28.1 million, or 20.8%, residential real estate loans held in portfolio increased $10.3 million, or 15.1%, and lease financings increased $45.2$13.7 million, or 136.8%, as our Meridian Equipment Finance (“MEF”) leasing team continued their strong14.7% from December 31, 2021. Partially offsetting the growth pattern after starting up in early 2020. Residential real estateportfolio loans held for sale decreased $111.2was a decrease of $38.6 million, or 48.5%43.7%, to $118.0 millionin PPP loan balances.September 30, 2021, while PPP loans decreased $83.0March 31, 2022, up $118.4 million, or 41.8%, over this period.Servicing assets were $11.9 million as of September 30, 2021, up $6.3 million, or 112.4%8.2%, from December 31, 2020. $10.1 million of this balance is comprised of mortgage servicing rights, while $1.8 million is comprised of SBA loan servicing assets. The increase in both servicing asset types was the result of the continued strong loan sales markets since December 31, 2020.52Deposits were $1.4 billion as of September 30, 2021, up $197.72021. Non-interest bearing deposits increased $16.9 million, or 15.9%6.1%, from December 31, 2020. Non-interest bearing deposits increased $62.0 million, or 30.4%, from December 31, 2020. 2021 due to strong business development efforts.increased $73.1decreased $16.0 million, or 35.4%5.9%, from December 31, 2020, while money market accounts/savings accounts increased $97.5combined decreased $9.5 million, or 17.0%1.4%, since December 31, 2020. Increases in core deposits were driven from loan customers as part of new business and municipal relationships and also as a result of the PPP loan process.2021. Certificates of deposits decreased $34.9increased $127.0 million, or 13.5%61.7%, from December 31, 2020,2021, as lower levelssuch deposits were utilized as an alternative source of cost effective wholesale funding have been replaced by core deposits. Short-term borrowings were $22.3 million as of September 30, 2021, down $84.6 million, or 79.2%, from December 31, 2020, while long-term debt was $78.4 million as of September 30, 2021, down $87.1 million, or 52.6%, from December 31, 2020. Short-term borrowings declined from December 31, 2020 to September 30, 2021, largely due to the increase in non-interest deposits noted above. As non-interest bearing deposits increased over this period, the need for borrowings to fund loan growth, declined. The decline in long-term debt was due to a decrease in PPPLF advances, which were funding sources for PPP loans.$158.4$157.7 million, or 9.0%8.6% of total assets as of September 30, 2021,March 31, 2022, as compared to $141.6$165.4 million, or 8.2%9.7% of total assets as of December 31, 2020.2021. The change in stockholders’ equity is the result of year-to-date net income of $27.9$5.5 million, partially offset by dividends of $8.5$7.3 million paid during the first nine months of 2021 as well as an increasea $6.4 million decline in treasury stockaccumulated other comprehensive income from the publicly announced share repurchase program. September 30, 2021,March 31, 2022, the Tier 1 leverage ratio was 9.28%9.10% for the Corporation and 11.55%11.20% for the Bank, the Tier 1 risk-based capital and common equity ratios were 10.64%10.09% for the Corporation and 13.25%12.41% for the Bank, and total risk-based capital was 14.72%13.91% for the Corporation and 14.62%13.76% for the Bank. Based on these capital ratio levels, we remain above the Community Bank Leverage Ratio ("CBLR") requirement of 8%. Quarter-end numbers show a tangible common equity to tangible assets ratio (a non-GAAP measure) of 8.76%8.40% for the Corporation and 10.90%10.40% for the Bank. A reconciliation of this non-GAAP measure is included in the Appendix. Tangible book value per share (a non-GAAP measure) was $25.23$25.04 as of September 30, 2021,March 31, 2022, compared with $24.06$26.37 as of June 30,December 31, 2021.September 30, 2021March 31, 2022 and December 31, 2020:March 31, 2022 Actual To Be Well Capitalized Under CBLR Framework (dollars in thousands) Amount Ratio Amount Ratio Tier 1 capital (to average assets) Corporation $ 159,154 9.10 % $ 139,869 8.00 % Bank 195,818 11.20 % 139,867 8.00 % December 31, 2021 (dollars in thousands) Actual To Be Well Capitalized Under CBLR Framework Tier 1 capital (to average assets) Corporation $ 160,379 9.39 % $ 136,621 8.00 % Bank 196,506 11.51 % 136,620 8.00 % During the first53quarter of 2020, the Bank adopted the CBLR framework as its primary regulatory capital ratio, but reports all ratios for comparative purposes.Liquidityprimaryavailable liquidity, which totaled $323.0$331.9 million at September 30, 2021,March 31, 2022, compared to $408.8$263.6 million at December 31, 2020,2021, includes investments, SNCs, Federal funds sold, mortgages held-for-sale and cash and cash equivalents, less the amount of securities required to be pledged for certain liabilities. Meridian also anticipates scheduled payments and prepayments on its loan and mortgage-backed securities portfolios.$3.7$3.2 million at September 30, 2021.March 31, 2022. At September 30, 2021,March 31, 2022, Meridian had no borrowings from the Federal Reserve. As a member of the FHLB, we are eligible to borrow up to a specific credit limit, which is determined by the amount of our residential mortgages, commercial mortgages and other loans that have been pledged as collateral. As of September 30, 2021,March 31, 2022, Meridian’s maximum borrowing capacity with the FHLB was $533.4$524.3 million. At September 30, 2021,March 31, 2022, Meridian had borrowed $22.3$36.1 million and the FHLB had issued letters of credit, on Meridian’s behalf, totaling $128.5$102 million against its available credit lines. At September 30, 2021,March 31, 2022, Meridian also had available $39 million of unsecured federal funds lines of credit with other financial institutions as well as $263.2$162.8 million of available short or long term funding through the Certificate of Deposit Account Registry Service (“CDARS”) program and $397.0$378.3 million of available short or long term funding through brokered CD arrangements. Management believes that Meridian has adequate resources to meet its short-term and long-term funding requirements.September 30, 2021,March 31, 2022, the Corporation has three principal segments as defined by FASB ASC 280, “Segment Reporting.” The segments are Banking, Mortgage Banking and Wealth Management (see Note 10 in the accompanying Notes to Unaudited Consolidated Financial Statements).$8.3 million and $23.5$8.2 million for the three and nine months ended September 30, 2021,March 31, 2022, as compared to income before tax of $2.6 million and $7.9$7.3 million for the same periodsperiod in 2020.2021. The Banking Segment provided 67.5% and 64.7%115.2% of the Corporation’s pre-tax profit for the three and nine month periodsperiod ended September 30, 2021,March 31, 2022, as compared to 21.5% and 34.9%54.8% for the same periodsperiod in 2020.$432 thousand and $796$519 thousand for the three and nine months ended September 30, 2021,March 31, 2022, as compared to income before tax of $144 thousand and $452$227 thousand for the same periodsperiod in 2020.incomeloss before tax of $3.6 million and $12.1$1.6 million for the three and nine months ended September 30, 2021,March 31, 2022, as compared to income before tax of $9.3 million and $14.3$5.8 million for the same periods in 2020.2021. Mortgage Banking income and expenses related to loan originations and sales increased due to higher origination volume.54September 30, 2021March 31, 2022 were $505.0$475.2 million, as compared to $421.4$486.6 million at December 31, 2020.September 30, 2021March 31, 2022 amounted to $17.7$23.2 million, as compared to $8.9$26.0 million at December 31, 2020.one loan in the amount of $115four loans totaling $906 thousand for the three months ended September 30, 2021March 31, 2022, and a total of four loans totaling $561 thousand for the nine months ended September 30, 2021. The Corporation repurchased one loan in the amount of $154 thousand for the three and nine months ended September 30, 2020.Rate Summary,Rates and Interest Differential,” “– Interest Rate Sensitivity,“Rate/Volume Analysis,” and “Gap Analysis”"Rate Ramp" in this Quarterly Report on Form 10-Q.September 30, 2021March 31, 2022 to ensure that the information required to be disclosed by the Corporation in the reports that the Corporation files or submits under the Exchange Act is recorded, processed, summarized, and reported completely and accurately within the time periods specified in SEC rules and forms.September 30, 2021March 31, 2022 that has materially affected, or is reasonably likely to materially affect, the Corporation’s internal control over financial reporting.552020.The following table presents the shares repurchased by the Corporation during the third quarter of 2021.(1)On April 26, 2021, the Corporation announced a stock repurchase plan pursuant to which the Corporation may repurchase up to $6 million of the company’s outstanding common stock, par value $1.00 per share. Stock will be purchased from time to time in the open market or through privately negotiated transactions, or otherwise, at the discretion of management of the company in accordance with legal requirements.(2)As of September 30, 2021, the maximum number of shares remaining authorized for repurchase was approximately 132,486, based on funds remaining under the plan of approximately $3.8 million and a share price of $28.73 as of September 30, 2021.The exhibits filed or incorporated by reference as part of this report are listed in the Exhibit Index, which appears at page 57.56Exhibit
NumberDescription2.12.1 57Date:November 15, 2021Meridian CorporationDate:May 10, 2022Meridian CorporationBy:By: /s/ Christopher J. Annas
President and Chief Executive Officer
(Principal Executive Officer)
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)58