MRBK 10-Q Quarterly Report March 31, 2025 | Alphaminr
ALPHAMINR

MRBK 10-Q Quarter ended March 31, 2025

Balance Sheet
Cash Flow
Income Statement
Debt
mrbk-20250331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2025
Or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 000-55983
MeridianCorporation.jpg
(Exact name of registrant as specified in its charter)
Pennsylvania 83-1561918
(State or other jurisdiction of
incorporation or organization) 		(I.R.S. Employer Identification No.)
9 Old Lincoln Highway , Malvern , Pennsylvania 19355
(Address of principal executive offices) (Zip Code)
( 484 ) 568-5000
(Registrant’s telephone number, including area code)
Title of class Trading Symbol Name of exchange on which registered
Common Stock, $1 par value MRBK The NASDAQ Stock Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ☐ Accelerated Filer ☒
Non-accelerated Filer ☐ Smaller Reporting Company ☒
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of May 5, 2025 there were 11,285,278 outstanding shares of the issuer’s common stock, par value $1.00 per share.

TABLE OF CONTENTS
Consolidated Balance Sheets – March 31, 2025 and December 31, 2024
Consolidated Statements of Cash Flows – Three Months Ended March 31, 2025 and 2024


Glossary of Acronyms, Abbreviations, and Terms
The acronyms, abbreviations, and terms listed below are used in various sections of this report. As used throughout this report, the terms "Meridian", “we”, “our”, or “us” refer to Meridian Corporation and its consolidated subsidiaries, unless the context otherwise requires.
Acronym Description
ACBB Atlantic Central Bankers Bank
ACH Automated clearing house
ACL Allowance for credit losses
AFS Available-for-sale
ALCO Asset/Liability Committee
ALLL Allowance for loan and lease losses
ALM Asset / liability management
AOCI Accumulated other comprehensive income
ASC Accounting Standards Codification
ASU Accounting Standards Update
BHC Act Bank Holding Company Act of 1956
BOLI Bank owned life insurance
BSA-AML Bank Secrecy Act - Anti-Money Laundering
BTFP Federal Reserve Bank Term Funding Program
CBCA Change in Bank Control Act
CBLR Community Bank Leverage Ratio
CDARS Certificate of Deposit Account Registry Service
CECL Current expected credit losses
CET1 Common equity tier 1
CFPB Consumer Financial Protection Bureau
CMO Collateralized mortgage obligation
CRE Commercial real estate
DIF FDIC’s deposit insurance fund
ECOA Equal Credit Opportunity Act
ESOP Employee Stock Ownership Plan
FASB Financial Accounting Standards Board
FDIC Federal Deposit Insurance Corporation
FFIEC Federal Financial Institutions Examination Council
FHA Federal Housing Authority
FHFA Federal Housing Finance Agency
FHLB Federal Home Loan Bank of Pittsburgh
FHLMC Federal Home Loan Mortgage Corporation or Freddie Mac
FICO Financing Corporation
FNMA Federal National Mortgage Association or Fannie Mae
FRB Federal Reserve Bank of Philadelphia
FTE Fully taxable equivalent
GAAP U.S. generally accepted accounting principles
GLB Act Gramm-Leach-Bliley Act
GNMA Government National Mortgage Association or Ginnie Mae
GSE Government-sponsored entities
HTM Held-to-maturity
ICBA Independent Community Bankers of America
JOBS Act Jumpstart Our Business Startups Act of 2012
LBP Look-back period
LEP Loss emergence period

LGD Loss given default
LIBOR London Inter-bank Offering Rate
LIHTC Low-income-housing tax credit
MBS Mortgage-backed securities
MSLP Main Street Lending Programs
MSR Mortgage servicing rights
OFAC Office of Foreign Assets Control
OREO Other real estate owned
PCAOB Public Company Accounting Oversight Board
PCD Purchased credit deteriorated
PD Probability of default
PDBS Pennsylvania Department of Banking and Securities
ROU Right-of-use
SBA Small Business Administration
SEC Securities and Exchange Commission
SERP Supplemental Executive Retirement Plan
SNC Shared national credit
SOFR Secure Overnight Financing Rate
TILA Truth in Lending Act
TDR Troubled debt restructuring
USDA U.S. Department of Agriculture
VA U.S. Department of Veteran’s Affairs

MERIDIAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(dollars in thousands, except share data) March 31,
2025 		December 31,
2024
Assets:
Cash and due from banks $ 16,976 $ 5,598
Interest-bearing deposits at other banks 113,620 21,864
Federal funds sold 629 —
Cash and cash equivalents 131,225 27,462
Securities available-for-sale, at fair value (amortized cost of $ 193,783 and $ 183,764 , respectively)
185,221 174,304
Securities held-to-maturity, at amortized cost (fair value of $ 29,357 and $ 30,492 , respectively)
32,720 33,771
Equity investments 2,126 2,086
Mortgage loans held for sale 28,047 32,413
Loans and other finance receivables, net of fees and costs 2,071,675 2,030,437
Allowance for credit losses ( 20,827 ) ( 18,438 )
Loans and other finance receivables, net of the allowance for credit losses 2,050,848 2,011,999
Restricted investment in bank stock 8,369 7,753
Bank premises and equipment, net 12,028 12,151
Bank owned life insurance 29,935 29,712
Accrued interest receivable 10,345 9,958
Other real estate owned 159 159
Deferred income taxes 5,136 4,669
Servicing assets 4,284 4,382
Goodwill 899 899
Intangible assets 2,716 2,767
Other assets 24,830 31,382
Total assets $ 2,528,888 $ 2,385,867
Liabilities:
Deposits:
Non-interest bearing $ 323,485 $ 240,858
Interest bearing 1,805,257 1,764,510
Total deposits 2,128,742 2,005,368
Borrowings 139,590 124,471
Subordinated debentures 49,761 49,743
Accrued interest payable 7,404 6,860
Other liabilities 29,823 27,903
Total liabilities 2,355,320 2,214,345
Stockholders’ equity:
Common stock, $ 1 par value per share. 25,000,000 shares authorized; 13,288,461 and 13,243,258 shares issued and 11,285,278 and 11,240,075 shares outstanding, respectively
13,288 13,243
Surplus 82,026 81,545
Treasury stock, 2,003,183 shares, at cost
( 26,079 ) ( 26,079 )
Unearned common stock held by employee stock ownership plan ( 1,006 ) ( 1,006 )
Retained earnings 112,952 111,961
Accumulated other comprehensive loss ( 7,613 ) ( 8,142 )
Total stockholders’ equity 173,568 171,522
Total liabilities and stockholders’ equity $ 2,528,888 $ 2,385,867
See accompanying notes to the unaudited consolidated financial statements.
3
MERIDIAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three months ended
March 31,
(dollars in thousands, except per share data) 2025 2024
Interest income:
Loans and other finance receivables, including fees $ 36,549 $ 35,339
Securities - taxable 1,693 1,251
Securities - tax-exempt 313 325
Cash and cash equivalents 613 300
Total interest income 39,168 37,215
Interest expense:
Deposits 16,868 17,392
Borrowings and subordinated debentures 2,524 3,214
Total interest expense 19,392 20,606
Net interest income 19,776 16,609
Provision for credit losses 5,212 2,866
Net interest income after provision for credit losses 14,564 13,743
Non-interest income:
Mortgage banking income 3,393 3,634
Wealth management income 1,535 1,317
SBA loan income 748 986
Earnings on investment in life insurance 222 207
Net change in the fair value of derivative instruments 149 75
Net change in the fair value of loans held-for-sale 102 ( 2 )
Net change in the fair value of loans held-for-investment 170 ( 175 )
Net gain (loss) on hedging activity 21 ( 19 )
Other 984 1,961
Total non-interest income 7,324 7,984
Non-interest expense:
Salaries and employee benefits 11,385 10,573
Occupancy and equipment 1,338 1,233
Professional fees 763 1,498
Data processing and software
1,479 1,532
Advertising and promotion 779 748
Pennsylvania bank shares tax 269 274
Other 2,730 2,316
Total non-interest expense 18,743 18,174
Income before income taxes 3,145 3,553
Income tax expense 746 877
Net income $ 2,399 $ 2,676
Basic earnings per common share
$ 0.21 $ 0.24
Diluted earnings per common share
$ 0.21 $ 0.24
Basic weighted average shares outstanding
11,205 11,088
Diluted weighted average shares outstanding
11,446 11,201
See accompanying notes to the unaudited consolidated financial statements.
4
MERIDIAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Three months ended
March 31,
(dollars in thousands) 2025 2024
Net income: $ 2,399 $ 2,676
Net change in unrealized gains (losses) on investment securities available for sale:
Change in fair value of investment securities, net of tax of $ 202 and $( 98 ), respectively
699 ( 298 )
Reclassification adjustment for investment securities transferred to held-to-maturity, net of tax effect of $ 7 and $ 7 , respectively
22 22
Unrealized investment gains (losses), net of tax effect of $ 210 and $( 90 ), respectively
$ 721 $ ( 276 )
Net change in unrealized (losses) gains on interest rate swaps used in cash flow hedges, net of tax effect of $ 192 , and $( 247 ),respectively
( 192 ) 749
Total other comprehensive income $ 529 $ 473
Total comprehensive income $ 2,928 $ 3,149
See accompanying notes to the unaudited consolidated financial statements.
5
MERIDIAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(dollars in thousands, except per share data)
Common
Stock
Surplus Treasury
Stock 		Unearned
ESOP 		Retained
Earnings 		AOCI Total
Three Months Ended March 31, 2025
Balance at January 1, 2025 $ 13,243 $ 81,545 $ ( 26,079 ) $ ( 1,006 ) $ 111,961 $ ( 8,142 ) $ 171,522
Net income — — — — 2,399 — 2,399
Other comprehensive income — — — — — 529 529
Dividends declared ($ 0.125 per share)
— — — — ( 1,408 ) — ( 1,408 )
Common stock issued through share-based awards and exercises 45 363 — — — — 408
Stock based compensation expense — 118 — — — — 118
Balance at March 31, 2025 $ 13,288 $ 82,026 $ ( 26,079 ) $ ( 1,006 ) $ 112,952 $ ( 7,613 ) $ 173,568
(dollars in thousands, except per share data)
Common
Stock
Surplus Treasury
Stock 		Unearned
ESOP 		Retained
Earnings 		AOCI Total
Three Months Ended March 31, 2024
Balance at January 1, 2024 $ 13,186 $ 80,325 $ ( 26,079 ) $ ( 1,204 ) $ 101,216 $ ( 9,422 ) $ 158,022
Net income — — — — 2,676 — 2,676
Other comprehensive income — — — — — 473 473
Dividends declared ($ 0.125 per share)
— — — — ( 1,400 ) — ( 1,400 )
Common stock issued through share-based awards and exercises 3 20 — — — — 23
Stock based compensation expense — 142 — — — — 142
Balance at March 31, 2024 $ 13,189 $ 80,487 $ ( 26,079 ) $ ( 1,204 ) $ 102,492 $ ( 8,949 ) $ 159,936
See accompanying notes to the unaudited consolidated financial statements.
6
MERIDIAN CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Threes Months Ended
March 31,
(dollars in thousands) 2025 2024
Net income $ 2,399 $ 2,676
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Net amortization of investment premiums and discounts and change in fair value of equity securities 1,069 240
Depreciation and amortization (accretion), net 6 1,780
Provision for credit losses 5,212 2,866
Amortization of issuance costs on subordinated debt 31 31
Stock based compensation 118 142
Net change in fair value of derivative instruments ( 149 ) ( 75 )
Net change in fair value of loans held for sale ( 102 ) 2
Net change in fair value of loans held for investment ( 170 ) 175
Amortization and net impairment of servicing rights 326 479
SBA loan income ( 748 ) ( 986 )
Proceeds from sale of loans 148,087 143,457
Loans originated for sale ( 140,455 ) ( 144,437 )
Mortgage banking income ( 3,393 ) ( 3,634 )
Increase in accrued interest receivable ( 387 ) ( 539 )
Decrease (increase) in other assets 4,317 ( 353 )
Earnings from investment in bank owned life insurance ( 222 ) ( 207 )
Increase in deferred income tax ( 646 ) ( 251 )
Increase (decrease) in accrued interest payable 544 ( 1,974 )
Increase (decrease) in other liabilities 2,280 ( 1,098 )
Net cash provided by (used in) operating activities 18,117 ( 1,706 )
Cash flows from investing activities:
Activity in available-for-sale securities:
Maturities, repayments and calls 3,198 3,554
Purchases ( 14,274 ) ( 9,068 )
Activity in held-to-maturity securities:
Maturities, repayments and calls 999 554
Increase in restricted stock ( 616 ) ( 488 )
Net increase in loans ( 40,882 ) ( 71,370 )
Purchases of premises and equipment ( 259 ) ( 1,910 )
Net cash used in investing activities ( 51,834 ) ( 78,728 )
Cash flows from financing activities:
Net increase in deposits 123,374 77,234
Increase (decrease) in short-term borrowings 6,184 ( 29,093 )
Increase in long-term debt 8,935 —
Repayment of subordinated debt ( 13 ) —
Dividends paid ( 1,408 ) ( 1,400 )
Share based awards and exercises 408 23
Net cash provided by financing activities 137,480 46,764
Net change in cash and cash equivalents 103,763 ( 33,670 )
Cash and cash equivalents at beginning of period 27,462 56,697
Cash and cash equivalents at end of period $ 131,225 $ 23,027
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 18,848 $ 22,580
Net loans sold, (settled) not settled ( 1,834 ) 10,631
See accompanying notes to the unaudited consolidated financial statements.
7
MERIDIAN CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Summary of Significant Accounting Policies
Basis of Presentation
The Corporation’s unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. In the opinion of management, all adjustments necessary for a fair presentation of the consolidated financial position and the results of operations for the interim periods presented have been included.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Amounts subject to significant estimates are items such as the allowance for credit losses, lending related commitments and the related unfunded commitment reserve, the fair value of financial instruments, other-than-temporary impairments of investment securities, and the valuations of goodwill, intangible assets, and servicing assets.
These unaudited consolidated financial statements should be read in conjunction with the Corporation’s filings with the SEC (including our Annual Report on Form 10-K for the year ended December 31, 2024), subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K that update or provide information in addition to the information included in Form 10-K and Form 10-Q filings, if any.
Certain prior period amounts have been reclassified to conform with current period presentation. Reclassifications had no effect on net income or stockholders’ equity. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results for the year ending December 31, 2025 or for any other period.

Pronouncements Adopted/Effective during the three months ended March 31, 2025:

FASB ASU 2024-01 Stock Compensation - Scope Application of Profits Interest and Similar Awards
The amendments in this update improve the understandability of paragraph 718-10-15-3 apply to all entities that enter into share-based payments transactions and are effective for fiscal years beginning after December 15, 2024 and are to be applied on a prospective basis. The adoption of this amendment did not have a material impact on the Corporation's consolidated financial statements.

Pronouncements Not Yet Effective as of March 31, 2025:

FASB ASU No. 2023-06, "Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative".
This ASU amends the disclosure or presentation requirements related to various subtopics in the FASB ASC. The amendments in this ASU are expected to clarify or improve disclosure and presentation requirements of a variety of Codification Topics, allow users to more easily compare entities subject to the SEC's existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC's regulations. For entities subject to the SEC's existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC removes that related disclosure from its rules. For all other entities, the amendments will be effective two years later. However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective for any entity.

FASB ASU 2023-09, “Income Taxes (Topic 740) Improvements to Income Tax Disclosures”
The amendments in this update address investor requests for more transparency about income tax information through improvements to annual income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The amendments in this update are effective for our annual reporting period ended December 31, 2025 and are to be applied on a prospective basis. Early adoption is permitted.The Corporation is currently evaluating the impact on its annual disclosures.

FASB ASU 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures"
This amendment requires enhanced disaggregation of certain expense categories within the income statement to provide more detailed information about the nature and function of expenses. The objective is to improve the transparency and usefulness of financial statements for users by offering greater insight into the components of operating expenses. The amendments in this update are effective for fiscal years beginning after December 15, 2026. These changes may be applied prospectively or retroactively. Early adoption is permitted. The Corporation is currently evaluating the impact on its disclosures.
FASB ASU 2025-01, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date"
This amendment addresses questions that were raised regarding the effective date of ASU 2024-03 for public business entities with non-calendar year ends. The amendment clarifies that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted.
8
(2) Earnings per Common Share
Basic earnings per common share excludes dilution and is computed by dividing income available to common shareholders by the weighted-average common shares outstanding during the period reduced by unearned ESOP Plan shares and treasury shares. Diluted earnings per common share takes into account the potential dilution computed pursuant to the treasury stock method that could occur if stock options were exercised and converted into common stock, and if restricted stock awards were vested. The effects of stock options are excluded from the computation of diluted earnings per share in periods in which the effect would be anti-dilutive.
Three months ended
March 31,
(dollars in thousands, except per share data) 2025 2024
Numerator for earnings per share:
Net income available to common stockholders $ 2,399 $ 2,676
Denominators for earnings per share:
Weighted average shares outstanding 11,336 11,245
Average unearned ESOP shares ( 131 ) ( 157 )
Basic weighted averages shares outstanding 11,205 11,088
Dilutive effects of assumed exercises of stock options 241 113
Diluted weighted averages shares outstanding 11,446 11,201
Basic earnings per share $ 0.21 $ 0.24
Diluted earnings per share $ 0.21 $ 0.24
Antidilutive shares excluded from computation of average dilutive earnings per share 364 585

(3) Securities
The following tables presents the amortized cost, allowance for credit losses, and fair value of securities at the dates indicated:
March 31, 2025
(dollars in thousands) Amortized cost Gross unrealized gains Gross unrealized losses Allowance for credit losses Fair value # of Securities in unrealized loss position
Securities available-for-sale:
U.S. asset backed securities $ 29,077 $ 57 $ ( 214 ) $ — $ 28,920 16
U.S. government agency MBS 21,243 135 ( 458 ) — 20,920 12
U.S. government agency CMO 55,854 139 ( 2,001 ) — 53,992 38
State and municipal securities 41,874 28 ( 4,567 ) — 37,335 31
U.S. Treasuries 17,039 — ( 1,296 ) — 15,743 16
Non-U.S. government agency CMO 11,314 45 ( 297 ) — 11,062 9
Corporate bonds 17,382 542 ( 675 ) — 17,249 14
Total securities available-for-sale $ 193,783 $ 946 $ ( 9,508 ) $ — $ 185,221 136
Amortized cost Gross unrecognized gains Gross unrecognized losses Allowance for credit losses Fair value # of Securities in unrecognized loss position
Securities held to maturity:
State and municipal securities $ 32,720 $ 2 $ ( 3,365 ) $ — $ 29,357 19
Total securities held-to-maturity $ 32,720 $ 2 $ ( 3,365 ) $ — $ 29,357 19


9
December 31, 2024
Amortized cost Gross unrealized gains Gross unrealized losses Allowance for credit losses Fair value # of Securities in unrealized loss position
Securities available-for-sale:
U.S. asset backed securities $ 29,931 $ 73 $ ( 160 ) $ — $ 29,844 12
U.S. government agency MBS 21,392 96 ( 617 ) — 20,871 14
U.S. government agency CMO 48,051 23 ( 2,461 ) — 45,613 42
State and municipal securities 40,854 1 ( 4,159 ) — 36,696 31
U.S. Treasuries 17,039 — ( 1,589 ) — 15,450 16
Non-U.S. government agency CMO 12,082 59 ( 412 ) — 11,729 9
Corporate bonds 14,415 448 ( 762 ) — 14,101 15
Total securities available-for-sale $ 183,764 $ 700 $ ( 10,160 ) $ — $ 174,304 139
Amortized cost Gross unrecognized gains Gross unrecognized losses Allowance for credit losses Fair value # of Securities in unrecognized loss position
Securities held to maturity:
State and municipal securities $ 33,771 $ 7 $ ( 3,286 ) $ — $ 30,492 19
Total securities held-to-maturity $ 33,771 $ 7 $ ( 3,286 ) $ — $ 30,492 19
Although the Corporation’s investment portfolio overall is in a net unrealized loss position at March 31, 2025, the temporary impairment in the above noted securities is primarily the result of changes in market interest rates subsequent to purchase 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, no securities warranted an ACL.
The following table shows the Corporation’s investment gross unrealized losses and fair value aggregated by investment category and length of time that individual securities have been in continuous unrealized loss position at the dates indicated:
March 31, 2025
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 $ 15,331 $ ( 114 ) $ 6,453 $ ( 100 ) $ 21,784 $ ( 214 )
U.S. government agency MBS 3,407 ( 92 ) 9,090 ( 366 ) 12,497 ( 458 )
U.S. government agency CMO 18,631 ( 318 ) 17,935 ( 1,683 ) 36,566 ( 2,001 )
State and municipal securities — — 34,605 ( 4,567 ) 34,605 ( 4,567 )
U.S. Treasuries — — 15,743 ( 1,296 ) 15,743 ( 1,296 )
Non-U.S. government agency CMO 1,372 ( 22 ) 5,110 ( 275 ) 6,482 ( 297 )
Corporate bonds 916 ( 13 ) 7,541 ( 662 ) 8,457 ( 675 )
Total securities available-for-sale $ 39,657 $ ( 559 ) $ 96,477 $ ( 8,949 ) $ 136,134 $ ( 9,508 )
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 $ 2,040 $ ( 34 ) $ 26,145 $ ( 3,331 ) $ 28,185 $ ( 3,365 )
Total securities held-to-maturity $ 2,040 $ ( 34 ) $ 26,145 $ ( 3,331 ) $ 28,185 $ ( 3,365 )
10
December 31, 2024
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 $ 12,708 $ ( 56 ) $ 3,568 $ ( 104 ) $ 16,276 $ ( 160 )
U.S. government agency MBS 5,773 ( 183 ) 9,050 ( 434 ) 14,823 ( 617 )
U.S. government agency CMO 22,351 ( 506 ) 18,876 ( 1,955 ) 41,227 ( 2,461 )
State and municipal securities — — 35,199 ( 4,159 ) 35,199 ( 4,159 )
U.S. Treasuries — — 15,450 ( 1,589 ) 15,450 ( 1,589 )
Non-U.S. government agency CMO 1,403 ( 12 ) 5,204 ( 400 ) 6,607 ( 412 )
Corporate bonds 1,688 ( 41 ) 7,479 ( 721 ) 9,167 ( 762 )
Total securities available-for-sale $ 43,923 $ ( 798 ) $ 94,826 $ ( 9,362 ) $ 138,749 $ ( 10,160 )
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 $ 1,048 $ ( 15 ) $ 27,271 $ ( 3,271 ) $ 28,319 $ ( 3,286 )
Total securities held-to-maturity $ 1,048 $ ( 15 ) $ 27,271 $ ( 3,271 ) $ 28,319 $ ( 3,286 )
As of March 31, 2025, substantially all of the Corporation’s available-for-sale investment securities were mortgage-backed securities or collateral mortgage obligations which were issued or guaranteed by U.S. government-sponsored entities and agencies. As of March 31, 2025 and December 31, 2024, there were no holdings of securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10 % of stockholders’ equity.
The amortized cost and carrying value of securities are shown below by contractual maturities at the dates indicated. Actual maturities may differ from contractual maturities as issuers may have the right to call or repay obligations with or without call or prepayment penalties.
March 31, 2025
Available-for-sale Held-to-maturity
(dollars in thousands) Amortized cost Fair value Amortized cost Fair value
Due in one year or less $ — $ — $ — $ —
Due after one year through five years 18,039 16,643 1,000 1,002
Due after five years through ten years 23,150 22,679 5,793 5,018
Due after ten years 64,183 59,925 25,927 23,337
Subtotal 105,372 99,247 32,720 29,357
Mortgage-related securities 88,411 85,974 — —
Total $ 193,783 $ 185,221 $ 32,720 $ 29,357
There were no sales of investment securities available for sale for the three months ended March 31, 2025 or March 31, 2024.
ACL on Securities AFS and HTM
We use credit ratings quarterly and the most recent financial information of securities' issuers annually to help evaluate the credit quality of our securities AFS and HTM portfolios on a quarterly basis. The securities portfolio consists primarily of U.S. government treasuries and U.S. government agency asset backed securities which have no probability of default. The remaining portfolio consists of highly rated municipal bonds, non-agency CMO, and corporate bonds that have a low probability of default.
For the three months ended March 31, 2025 and 2024, we had no significant ACL or provision expense and no charge-offs or recoveries on AFS or HTM securities.
Pledged Securities
As of March 31, 2025 and December 31, 2024, securities having a carrying value of $ 56.1 million and $ 43.3 million, respectively, were specifically pledged as collateral for public funds, the FRB discount window program, FHLB borrowings and other purposes. The FHLB has a blanket lien on non-pledged, mortgage-related loans and securities as part of the Corporation’s borrowing agreement with the FHLB.
11
(4) Loans and Other Finance Receivables
The following table presents loans and other finance receivables detailed by category at the dates indicated:
(dollars in thousands) March 31,
2025 		December 31,
2024
Real estate loans:
Commercial mortgage $ 845,215 $ 823,976
Home equity lines and loans 94,179 90,721
Residential mortgage 250,684 252,565
Construction 277,895 259,553
Total real estate loans 1,467,973 1,426,815
Commercial and industrial 371,980 367,366
Small business loans 161,104 155,775
Consumer 376 349
Leases, net 66,813 75,987
Total loans and other finance receivables $ 2,068,246 $ 2,026,292
Balances included in loans and other finance receivables, net of fees and costs:
Residential mortgage real estate loans accounted under fair value option, at fair value $ 14,182 $ 14,501
Residential mortgage real estate loans accounted under fair value option, at amortized cost 16,425 16,543
Unearned lease income included in leases, net ( 7,502 ) ( 9,057 )
Unamortized deferred loan origination costs, net of deferred fees $ 3,429 $ 4,145
Fair Value Option for Residential Mortgage Real Estate Loans
Residential mortgage real estate loans that were originated by the Corporation and intended for sale in the secondary market to permanent investors, but were either repurchased or unsalable due to defect, and that the Corporation has the ability and intent to hold for the foreseeable future or until maturity or payoff are carried at fair value pursuant to the Corporation's election of the fair value option for these loans. The remaining loans, net of fees and costs are stated at their outstanding unpaid principal balances, net of deferred fees or costs, since the original intent for these loans was to hold them until payoff or maturity.
Nonaccrual and Past Due Loans and Leases
The following tables present an aging of the Corporation’s loans and leases at the dates indicated:
March 31, 2025
(dollars in thousands) 30-59 days past due 60-89 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 % Delinquent
Commercial mortgage $ 1,167 $ — $ — $ 1,167 $ 843,264 $ 844,431 $ 784 $ 845,215 0.23 %
Home equity lines and loans 20 — — 20 92,483 92,503 1,676 94,179 1.80
Residential mortgage (1)
3,546 — — 3,546 238,830 242,376 8,308 250,684 4.73
Construction — 10,055 — 10,055 259,334 269,389 8,506 277,895 6.68
Commercial and industrial 213 — — 213 360,721 360,934 11,046 371,980 3.03
Small business loans (2)
655 377 359 1,391 140,923 142,314 18,790 161,104 12.53
Consumer — — — — 376 376 — 376 —
Leases, net 882 619 — 1,501 62,580 64,081 2,732 66,813 6.34 %
Total $ 6,483 $ 11,051 $ 359 $ 17,893 $ 1,998,511 $ 2,016,404 $ 51,842 $ 2,068,246 3.37 %
(1) Includes $ 14.2 million of loans at fair value of which $ 13.4 million are current, $ 308 thousand are 30-89 days past due and $ 506 thousand are nonaccrual.
(2) Includes $ 9.9 million of loans within nonaccrual loans and leases that are guaranteed by the SBA.




12
December 31, 2024
(dollars in thousands) 30-59 days past due 60-89 days past due Total past due Current Total accruing loans and leases Nonaccrual loans and leases Total loans portfolio and leases % Delinquent
Commercial mortgage $ 1,290 $ — $ 1,290 $ 821,877 $ 823,167 $ 809 $ 823,976 0.25 %
Home equity lines and loans 176 154 330 88,675 89,005 1,716 90,721 2.26
Residential mortgage (1)
3,259 — 3,259 241,406 244,665 7,900 252,565 4.42
Construction 1,000 — 1,000 249,940 250,940 8,613 259,553 3.70
Commercial and industrial — — — 355,400 355,400 11,966 367,366 3.26
Small business loans (2)
1,351 — 1,351 142,154 143,505 12,270 155,775 8.74
Consumer — — — 349 349 — 349 —
Leases, net 1,046 457 1,503 72,633 74,136 1,851 75,987 4.41
Total $ 8,122 $ 611 $ 8,733 $ 1,972,434 $ 1,981,167 $ 45,125 $ 2,026,292 2.66 %
(1) Includes $ 14.5 million of loans at fair value of which $ 13.7 million are current, $ 473 thousand are 30-89 days past due and $ 340 thousand are nonaccrual.
(2) Includes $ 6.2 million of loans within nonaccrual loans and leases that are guaranteed by the SBA.

There was 1 loan of $ 359 thousand in the table above as of March 31, 2025, and no loans and leases as of December 31, 2024, that were 90+days past due and still accruing interest.
Foreclosed and Repossessed Assets
At March 31, 2025 and December 31, 2024, there were 3 and 4 consumer mortgage loans, respectively, secured by residential real estate properties (included in loans, net of fees and costs on the Consolidated Balance Sheets) totaling $ 1.5 million and $ 1.3 million, respectively, for which formal foreclosure proceedings were in process.
Risks and Uncertainties
Our commercial loans have been proactively managed in an effort to achieve a balanced portfolio with no unusual exposure to one industry. Additionally, most of our lending activity occurs within our primary market areas which are concentrated in southeastern Pennsylvania, Delaware, and Maryland as well as other contiguous markets and represents a geographic concentration. Commercial loans are generally viewed as having more inherent risk of default than residential real estate loans or other consumer loans. Also, the commercial loan balance per borrower is typically larger than that for residential real estate loans and consumer loans, implying higher potential losses on an individual loan basis.
Past Due and Nonaccrual Status
The following tables presents the amortized costs basis of loans and leases on nonaccrual status and loans 90 days or more past due and still accruing, net of fees and costs as of March 31, 2025 and December 31, 2024. As of this date here were no loans 90 days or more past due and still accruing.
March 31, 2025
December 31, 2024
(dollars in thousands) Nonaccrual without ACL Nonaccrual with ACL Total nonaccrual Nonaccrual without ACL Nonaccrual with ACL Total nonaccrual
Commercial mortgage $ 784 $ — $ 784 $ 809 $ — $ 809
Home equity lines and loans 1,676 — 1,676 1,716 — 1,716
Residential mortgage 7,927 381 8,308 7,518 382 7,900
Construction 6,392 2,114 8,506 8,613 — 8,613
Commercial and industrial 8,246 2,800 11,046 9,166 2,800 11,966
Small business loans 8,356 10,434 18,790 8,179 4,091 12,270
Leases, net 2,732 — 2,732 1,851 — 1,851
Total $ 36,113 $ 15,729 $ 51,842 $ 37,852 $ 7,273 $ 45,125
The decrease in commercial and industrial nonaccrual loans with ACL relates to the charge-off on a protracted commercial advertising loan relationship, while the increase in nonaccrual SBA loans with ACL relates to additional risk rating downgrades leading to non-performing loan classification in the SBA loan portfolio.
13
Collateral-dependent Loans
The following tables presents the amortized cost basis of non-accruing collateral-dependent loans by class or loans as of March 31, 2025 and December 31, 2024 under the current expected credit loss model:
March 31, 2025 December 31, 2024
(dollars in thousands) Real estate Equipment and other Total Real estate Equipment and other Total
Commercial mortgage $ 784 $ — $ 784 $ 809 $ — $ 809
Home equity lines and loans 1,676 — 1,676 1,716 — 1,716
Residential mortgage 8,308 — 8,308 7,900 — 7,900
Construction 8,506 — 8,506 8,613 — 8,613
Commercial and industrial 1,344 9,702 11,046 1,344 10,622 11,966
Small business loans 16,865 1,925 18,790 10,164 2,106 12,270
Leases, net — 2,732 2,732 — 1,851 1,851
Total $ 37,483 $ 14,359 $ 51,842 $ 30,546 $ 14,579 $ 45,125
(5) Allowance for Credit Losses
The ACL is maintained at a level considered adequate to provide for estimated expected credit losses within the loan portfolio over the
contractual life of an instrument that considers our historical loss experience, current conditions and forecasts of future economic conditions as of the balance sheet date. Management’s periodic evaluation of the adequacy of the ACL is based on known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is subjective as it requires material estimates that may be susceptible to significant revisions as more information becomes available.

Roll-Forward of ACL by Portfolio Segment
The following tables provide the activity of our allowance for credit losses for the three months ended March 31, 2025 and March 31, 2024 under the CECL model in accordance with ASC 326:
Three Months Ended March 31, 2025
(dollars in thousands) Beginning Balance Charge-offs Recoveries Provision (recovery of provision) for credit losses Ending balance
Commercial mortgage $ 3,469 $ — $ — $ ( 87 ) $ 3,382
Home equity lines and loans 1,147 — 2 16 1,165
Residential mortgage 1,021 — — 6 1,027
Construction 923 ( 738 ) — 1,456 1,641
Commercial and industrial 3,098 ( 1,430 ) 17 1,080 2,765
Small business loans 6,304 ( 277 ) 29 2,555 8,611
Consumer — — 1 ( 1 ) —
Leases 2,476 ( 553 ) 126 187 2,236
Total $ 18,438 $ ( 2,998 ) $ 175 $ 5,212 $ 20,827

14
Three Months Ended March 31, 2024
(dollars in thousands) Beginning Balance Charge-offs Recoveries Provision (recovery of provision) for credit losses Ending balance
Commercial mortgage $ 4,375 $ — $ — $ ( 196 ) $ 4,179
Home equity lines and loans 998 — 2 ( 42 ) 958
Residential mortgage 1,020 — — 157 1,177
Construction 485 — — 98 583
Commercial and industrial 4,518 ( 208 ) 2 771 5,083
Small business loans 7,005 ( 87 ) 3 884 7,805
Consumer — ( 1 ) 1 1 1
Leases 3,706 ( 2,148 ) 126 1,701 3,385
Total $ 22,107 $ ( 2,444 ) $ 134 $ 3,374 $ 23,171
Reconciliation of Provision for Credit Losses
The following table provides a reconciliation of the provision for credit losses on the consolidated statements of income between the funded and unfunded components at the dates indicated:
Three Months Ended
March 31,
(dollars in thousands) 2025 2024
Provision for credit losses - funded loans $ 5,212 $ 3,374
Recovery for credit losses - unfunded loans — ( 508 )
Total provision for credit losses $ 5,212 $ 2,866


15
Allowance Allocated by Portfolio Segment
The following tables detail the allocation of the ACL and the carrying value for loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases at the dates indicated:
March 31, 2025
Allowance for credit losses Carrying value of loans and leases
(dollars in thousands) Individually evaluated Collectively evaluated Total Individually evaluated Collectively evaluated Total
Commercial mortgage $ — $ 3,382 $ 3,382 $ 784 $ 844,431 $ 845,215
Home equity lines and loans — 1,165 1,165 1,676 92,503 94,179
Residential mortgage 27 1,000 1,027 7,802 228,700 236,502
Construction 535 1,106 1,641 8,506 269,389 277,895
Commercial and industrial 1,028 1,737 2,765 11,046 360,934 371,980
Small business loans 3,407 5,204 8,611 18,790 142,314 161,104
Consumer — — — — 376 376
Leases, net — 2,236 2,236 2,732 64,081 66,813
Total $ 4,997 $ 15,830 $ 20,827 $ 51,336 $ 2,002,728 $ 2,054,064
( 1) Excludes deferred fees and loans carried at fair value.


December 31, 2024
Allowance for credit losses Carrying value of loans and leases
(dollars in thousands) Individually evaluated Collectively evaluated Total Individually evaluated Collectively evaluated Total
Commercial mortgage $ — $ 3,469 $ 3,469 $ 809 $ 823,167 $ 823,976
Home equity lines and loans — 1,147 1,147 1,716 89,005 90,721
Residential mortgage 29 992 1,021 7,560 230,504 238,064
Construction — 923 923 8,613 250,940 259,553
Commercial and industrial 855 2,243 3,098 11,966 355,400 367,366
Small business loans 1,808 4,496 6,304 12,270 143,505 155,775
Consumer — — — — 349 349
Leases, net — 2,476 2,476 1,851 74,136 75,987
Total $ 2,692 $ 15,746 $ 18,438 $ 44,785 $ 1,967,006 $ 2,011,791
( 1) Excludes deferred fees and loans carried at fair value.

Credit Quality Indicators
As part of the process of determining the ACL to the different segments of the loan and lease portfolio, Management considers certain credit quality indicators. For the commercial mortgage, construction and commercial and industrial loan segments, periodic reviews of the individual loans are performed by Management. The results of these reviews are reflected in the risk grade assigned to each loan. These internally assigned grades are as follows:
• Pass – Loans considered to be satisfactory with no indications of deterioration.
• Special mention – Loans classified as special mention have a potential weakness that deserves Management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.
• Substandard – Loans classified as substandard are inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any. Substandard loans have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
• Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. Loan balances classified as doubtful have been reduced by partial charge-offs and are carried at their net realizable values.

16
The following tables detail the carrying value of loans and leases by portfolio segment based on year of origination and the credit quality indicators used to determine the allowance for credit losses at the dates indicated:

March 31, 2025 Revolving Loans Converted to Term Loans Revolving Loans Total
Term Loans
(dollars in thousands) 2025 2024 2023 2022 2021 Prior
Commercial mortgage
Pass/Watch $ 34,156 $ 119,252 $ 103,002 $ 156,573 $ 139,983 $ 265,250 $ 511 $ 188 $ 818,915
Special Mention — — 3,454 12,456 964 776 667 — 18,317
Substandard — — 200 30 — 7,753 — — 7,983
Total $ 34,156 $ 119,252 $ 106,656 $ 169,059 $ 140,947 $ 273,779 $ 1,178 $ 188 $ 845,215
Year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Construction
Pass/Watch $ 18,306 $ 107,369 $ 54,063 $ 30,007 $ 4,861 $ 10,567 $ 123 $ 32,656 $ 257,952
Special Mention — 197 1,185 — — — — — 1,382
Substandard — — — 10,368 2,181 3,105 — 2,907 18,561
Total $ 18,306 $ 107,566 $ 55,248 $ 40,375 $ 7,042 $ 13,672 $ 123 $ 35,563 $ 277,895
Year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ ( 738 ) $ ( 738 )
Commercial and industrial
Pass/Watch $ 20,680 $ 71,949 $ 19,927 $ 13,166 $ 15,048 $ 26,149 $ — $ 171,405 $ 338,324
Special Mention — — 850 2,556 342 — — 2,019 5,767
Substandard — — 115 3,813 2,365 9,899 — 11,697 27,889
Total $ 20,680 $ 71,949 $ 20,892 $ 19,535 $ 17,755 $ 36,048 $ — $ 185,121 $ 371,980
Year-to-date gross charge-offs $ — $ ( 484 ) $ ( 95 ) $ — $ — $ — $ — $ ( 851 ) $ ( 1,430 )
Small business loans
Pass/Watch $ 14,768 $ 30,301 $ 25,308 $ 24,231 $ 20,305 $ 11,345 $ — $ 12,387 $ 138,645
Special Mention — — 288 — — 31 — 190 509
Substandard — — 2,163 525 10,572 5,528 — 3,162 21,950
Total $ 14,768 $ 30,301 $ 27,759 $ 24,756 $ 30,877 $ 16,904 $ — $ 15,739 $ 161,104
Year-to-date gross charge-offs $ — $ — $ — $ ( 233 ) $ ( 2 ) $ ( 42 ) $ — $ — $ ( 277 )
Total by risk rating
Pass/Watch $ 87,910 $ 328,871 $ 202,300 $ 223,977 $ 180,197 $ 313,311 $ 634 $ 216,636 $ 1,553,836
Special Mention — 197 5,777 15,012 1,306 807 667 2,209 25,975
Substandard — — 2,478 14,736 15,118 26,285 — 17,766 76,383
Total $ 87,910 $ 329,068 $ 210,555 $ 253,725 $ 196,621 $ 340,403 $ 1,301 $ 236,611 $ 1,656,194
Total year-to-date gross charge-offs $ — $ ( 484 ) $ ( 95 ) $ ( 233 ) $ ( 2 ) $ ( 42 ) $ — $ ( 1,589 ) $ ( 2,445 )



17
December 31, 2024 Revolving Loans Converted to Term Loans Revolving Loans Total
Term Loans
(dollars in thousands) 2024 2023 2022 2021 2020 Prior
Commercial mortgage
Pass/Watch $ 118,289 $ 99,971 $ 162,831 $ 140,046 $ 92,705 $ 184,157 $ 511 $ 189 $ 798,699
Special Mention — 3,471 11,258 972 47 767 667 — 17,182
Substandard — 200 30 — 4,681 3,184 — — 8,095
Total $ 118,289 $ 103,642 $ 174,119 $ 141,018 $ 97,433 $ 188,108 $ 1,178 $ 189 $ 823,976
Year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Construction
Pass/Watch $ 89,417 $ 61,040 $ 38,315 $ 10,935 $ 7,015 $ 4,229 $ 123 $ 34,613 $ 245,687
Special Mention 160 1,185 2,948 — — — — — 4,293
Substandard — — 1,277 1,605 516 2,608 — 3,567 9,573
Total $ 89,577 $ 62,225 $ 42,540 $ 12,540 $ 7,531 $ 6,837 $ 123 $ 38,180 $ 259,553
Year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ — $ —
Commercial and industrial
Pass/Watch $ 81,352 $ 23,658 $ 16,844 $ 15,634 $ 8,499 $ 23,220 $ — $ 162,980 $ 332,187
Special Mention — 850 2,599 438 — — — 2,455 6,342
Substandard — 115 3,813 2,365 — 9,978 — 12,566 28,837
Total $ 81,352 $ 24,623 $ 23,256 $ 18,437 $ 8,499 $ 33,198 $ — $ 178,001 $ 367,366
Year-to-date gross charge-offs $ ( 351 ) $ ( 1,136 ) $ ( 41 ) $ — $ — $ ( 1,324 ) $ — $ ( 3,515 ) $ ( 6,367 )
Small business loans
Pass/Watch $ 35,720 $ 23,714 $ 24,446 $ 22,800 $ 6,699 $ 6,226 $ — $ 13,818 $ 133,423
Special Mention — 425 507 2,335 1,332 — — — 4,599
Substandard — 1,804 1,294 8,481 4,085 — — 2,089 17,753
Total $ 35,720 $ 25,943 $ 26,247 $ 33,616 $ 12,116 $ 6,226 $ — $ 15,907 $ 155,775
Year-to-date gross charge-offs $ — $ ( 118 ) $ ( 1,986 ) $ ( 1,064 ) $ ( 352 ) $ — $ — $ ( 780 ) $ ( 4,300 )
Total by risk rating
Pass/Watch $ 324,778 $ 208,383 $ 242,436 $ 189,415 $ 114,918 $ 217,832 $ 634 $ 211,600 $ 1,509,996
Special Mention 160 5,931 17,312 3,745 1,379 767 667 2,455 32,416
Substandard — 2,119 6,414 12,451 9,282 15,770 — 18,222 64,258
Total $ 324,938 $ 216,433 $ 266,162 $ 205,611 $ 125,579 $ 234,369 $ 1,301 $ 232,277 $ 1,606,670
Total year-to-date gross charge-offs $ ( 351 ) $ ( 1,254 ) $ ( 2,027 ) $ ( 1,064 ) $ ( 352 ) $ ( 1,324 ) $ — $ ( 4,295 ) $ ( 10,667 )

The Corporation had no loans with a risk rating of Doubtful included within recorded investment in loans and leases held for investment at March 31, 2025 and December 31, 2024.


18


In addition to credit quality indicators as shown in the above tables, allowance allocations for home equity lines and loans, residential mortgages, consumer loans and leases are also applied based on their year of origination and performance status at the dates indicated:

March 31, 2025 Revolving Loans Total
Term Loans
(dollars in thousands) 2025 2024 2023 2022 2021 Prior
Home equity lines and loans
Performing $ 68 $ 706 $ 253 $ 615 $ 210 $ 3,558 $ 86,504 $ 91,914
Nonperforming — — — — 91 342 1,832 2,265
Total $ 68 $ 706 $ 253 $ 615 $ 301 $ 3,900 $ 88,336 $ 94,179
Year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ —
Residential mortgage (1)
Performing $ 2,147 $ 13,286 $ 41,302 $ 141,179 $ 16,535 $ 14,379 $ — $ 228,828
Nonperforming — — 253 2,315 747 4,359 — 7,674
Total $ 2,147 $ 13,286 $ 41,555 $ 143,494 $ 17,282 $ 18,738 $ — $ 236,502
Year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ —
Consumer
Performing $ 11 $ 21 $ 29 $ 19 $ — $ 236 $ 60 $ 376
Nonperforming — — — — — — — —
Total $ 11 $ 21 $ 29 $ 19 $ — $ 236 $ 60 $ 376
Year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ —
Leases, net
Performing $ 490 $ 202 $ 14,591 $ 31,644 $ 14,112 $ 3,137 $ — $ 64,176
Nonperforming — — 373 1,386 780 98 — 2,637
Total $ 490 $ 202 $ 14,964 $ 33,030 $ 14,892 $ 3,235 $ — $ 66,813
Year-to-date gross charge-offs $ — $ — $ — $ ( 324 ) $ ( 206 ) $ ( 23 ) $ — $ ( 553 )
Total by Payment Performance
Performing $ 2,716 $ 14,215 $ 56,175 $ 173,457 $ 30,857 $ 21,310 $ 86,564 $ 385,294
Nonperforming — — 626 3,701 1,618 4,799 1,832 12,576
Total $ 2,716 $ 14,215 $ 56,801 $ 177,158 $ 32,475 $ 26,109 $ 88,396 $ 397,870
Total year-to-date gross charge-offs $ — $ — $ — $ ( 324 ) $ ( 206 ) $ ( 23 ) $ — $ ( 553 )
(1) Excludes $ 14.2 million of loans at fair value.




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December 31, 2024 Revolving Loans Total
Term Loans
(dollars in thousands) 2024 2023 2022 2021 2020 Prior
Home equity lines and loans
Performing $ 705 $ 332 $ 620 $ 211 $ 328 $ 3,313 $ 83,016 $ 88,525
Nonperforming — — — 91 — 342 1,763 2,196
Total $ 705 $ 332 $ 620 $ 302 $ 328 $ 3,655 $ 84,779 $ 90,721
Year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ ( 86 ) $ ( 86 )
Residential mortgage (1)
Performing $ 13,878 $ 43,860 $ 140,953 $ 16,761 $ 6,808 $ 8,245 $ — $ 230,505
Nonperforming 129 253 2,323 752 357 3,745 — 7,559
Total $ 14,007 $ 44,113 $ 143,276 $ 17,513 $ 7,165 $ 11,990 $ — $ 238,064
Year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ — $ —
Consumer
Performing $ 14 $ 32 $ 22 $ — $ — $ 241 $ 40 $ 349
Nonperforming — — — — — — — —
Total $ 14 $ 32 $ 22 $ — $ — $ 241 $ 40 $ 349
Year-to-date gross charge-offs $ — $ — $ — $ — $ — $ — $ ( 5 ) $ ( 5 )
Leases, net
Performing $ 741 $ 15,594 $ 36,229 $ 17,253 $ 4,326 $ — $ — $ 74,143
Nonperforming — 298 945 493 108 — — 1,844
Total $ 741 $ 15,892 $ 37,174 $ 17,746 $ 4,434 $ — $ — $ 75,987
Year-to-date gross charge-offs $ — $ ( 968 ) $ ( 3,606 ) $ ( 1,077 ) $ ( 265 ) $ — $ — $ ( 5,916 )
Total by Payment Performance
Performing $ 15,338 $ 59,818 $ 177,824 $ 34,225 $ 11,462 $ 11,799 $ 83,056 $ 393,522
Nonperforming 129 551 3,268 1,336 465 4,087 1,763 11,599
Total $ 15,467 $ 60,369 $ 181,092 $ 35,561 $ 11,927 $ 15,886 $ 84,819 $ 405,121
Total year-to-date gross charge-offs $ — $ ( 968 ) $ ( 3,606 ) $ ( 1,077 ) $ ( 265 ) $ — $ ( 91 ) $ ( 6,007 )
(1) Excludes $ 14.5 million of fair value loans.


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Modifications to Borrowers Experiencing Financial Difficulty
An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification. Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the ACL on loans and leases, a change to the allowance for credit losses is generally not recorded upon modification. However, when principal forgiveness is provided, the amortized cost basis of the asset is written off against the ACL on loans and leases. The amount of the principal forgiveness is deemed to be uncollectible; therefore, that portion of the loan is written off, resulting in a reduction of the amortized cost basis and a corresponding adjustment to the allowance for credit losses.
The following presents, by class of loans, information regarding accruing and nonaccrual modified loans to borrowers experiencing financial difficulty during the three months ended March 31, 2025 and 2024.
Three Months Ended March 31, 2025
Three Months Ended March 31, 2024
Number of Loans Amortized Cost Basis % of Total Class of Financing Receivable Related Reserve Number of Loans Amortized Cost Basis % of Total Class of Financing Receivable Related Reserve
(dollars in thousands)
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty:
Small business loans 3 $ 1,948 1.2 % $ — 1 $ 165 0.1 % $ —
Construction 3 2,869 1.0 % — — — — % —
Commercial mortgage 1 959 0.1 % — — — — % —
Commercial & industrial 1 1,095 0.3 % — 2 1,097 0.3 % —
Total 8 $ 6,871 $ — 3 $ 1,262 $ —
Nonaccrual Modified Loans to Borrowers Experiencing Financial Difficulty:
Small business loans 1 $ 565 0.4 % $ 434 — $ — — % $ —
Construction 1 2,907 1.0 % — — — — % —
Total 2 $ 3,472 $ 434 — $ — $ —
The following presents, by class of loans, information regarding accruing and nonaccrual modified loans to borrowers experiencing financial difficulty during the three months ended March 31, 2025 and 2024.
Three Months Ended March 31, 2025
Three Months Ended March 31, 2024
Number of Loans Financial Effect Number of Loans Financial Effect
(dollars in thousands)
Accruing Modified Loans to Borrowers Experiencing Financial Difficulty:
Small business loans 3 Extend maturity date 1 Extend maturity date
Construction 3 Extend maturity date —
Commercial mortgage 1 Extend maturity date/payment concession —
Commercial & industrial 1 Extend maturity date 2 Extend maturity date and allow additional lender funding
Total 8 3
Nonaccrual Modified Loans to Borrowers Experiencing Financial Difficulty:
Small business loans 1 Extend maturity date —
Construction 1 Extend maturity date —
Total 2 —
There were 10 and 3 modifications granted to borrowers experiencing financial difficulty during the three months ended March 31, 2025 and March 31, 2024, respectively. The increase period over period in assistance provided to borrowers experiencing financial difficulty was largely focused in the small business loan, construction, residential mortgage, and commercial mortgage loan portfolios and due to the increase in non-performing loans.

There were zero loans that had payment defaults during the three months ended March 31, 2025, respectively, and zero during the three months ended March 31, 2024, that were modified in the 12 months before default to borrowers experiencing financial difficulty. There were $ 882 thousand in commitments to lend additional funds to the borrowers experiencing financial difficulty that had modifications during the three months ended March 31, 2025 and no commitments to lend additional funds to such borrowers during the three months ended March 31, 2024.





21

The following presents, by class of loans, the amortized cost and performance status of accruing and nonaccrual modified loans to borrowers experiencing financial difficulty that have been modified in the last 12 months as of March 31, 2025 and 2024.

March 31, 2025
Current 30-59 days past due 60-89 days past due 90+ days past due and still accruing Nonaccrual loans and leases Total
(dollars in thousands)
Small business loans $ 2,505 $ — $ — $ — $ 2,328 $ 4,833
Construction 2,869 — — — 4,763 7,632
Commercial mortgage 1,388 — 959 — — 2,347
Commercial & industrial 1,897 — — — 2,772 4,669
Residential mortgage — — — — 545 545
Total $ 8,659 $ — $ 959 $ — $ 10,408 $ 20,026

March 31, 2024
Current 30-59 days past due 60-89 days past due 90+ days past due and still accruing Nonaccrual loans and leases Total
(dollars in thousands)
Small business loans $ 165 $ 194 $ — $ — $ 895 $ 1,254
Commercial & industrial 1,097 — — — — 1,097
Total $ 1,262 $ 194 $ — $ — $ 895 $ 2,351


(6) Short-Term Borrowings and Long-Term Debt
The Corporation’s short-term borrowings generally consist of federal funds purchased and short-term borrowings extended under agreements with the FHLB or other correspondent banks. The Corporation has 4 unsecured borrowing facilities with correspondent banks for up to $ 56 million in total. Federal funds purchased generally represent one-day borrowings. The Corporation had $ 0 and $ 0 in Federal funds purchased at March 31, 2025 and December 31, 2024. The Corporation also has a facility with the Federal Reserve Bank discount window of $ 5 million. This facility is fully secured by investment securities and pledged loans. There were no borrowings under this at March 31, 2025 and December 31, 2024. The Holding Company has a revolving line of credit with ACBB of $ 5 million that is used to fund operating activities of the Corporation.

The following table presents short-term borrowings at the dates indicated:
(dollars in thousands) Maturity
date 		Interest
rate 		March 31,
2025 		December 31,
2024
FHLB Open Repo Plus Weekly 6/16/2025 4.69 % $ 90,624 $ 75,205
ACBB Holding Company Revolving LOC 6/25/2025 7.75 % 4,700 5,000
FHLB Mid-term Repo Fixed 10/14/2025 5.16 % 9,492 9,492
FHLB Mid-term Repo Fixed 12/22/2025 4.23 % — 8,935
Total Short-Term Borrowings $ 104,816 $ 98,632

The following table presents long-term borrowings at the dates indicated:
(dollars in thousands) Maturity
date 		Interest
rate 		March 31,
2025 		December 31,
2024
FHLB Mid-term Repo Fixed 5/20/2027 4.70 % 10,594 10,594
FHLB Mid-term Repo Fixed 7/14/2026 4.57 % 15,245 15,245
Total Long-Term Borrowings $ 34,774 $ 25,839

The FHLB has also issued $ 190.2 million of letters of credit to the Corporation for the benefit of the Corporation’s public deposit funds and loan customers. These letters of credit expire throughout the remainder of 2025.
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The Corporation has a maximum borrowing capacity with the FHLB of $ 698.2 million as of March 31, 2025 and $ 699.3 million as of December 31, 2024. All advances and letters of credit from the FHLB are secured by a blanket lien on non-pledged, mortgage-related loans and securities as part of the Corporation’s borrowing agreement with the FHLB.

(7) Servicing Assets
The Corporation sells certain residential mortgage loans and the guaranteed portion of certain SBA loans to third parties and retains servicing rights and receives servicing fees. All such transfers are accounted for as sales. When the Corporation sells a residential mortgage loan, it does not retain any portion of that loan and its continuing involvement in such transfers is limited to certain servicing responsibilities. While the Corporation may retain a portion of certain sold SBA loans, its continuing involvement in the portion of the loan that was sold is limited to certain servicing responsibilities. When the contractual servicing fees on loans sold with servicing retained are expected to be more than adequate compensation to a servicer for performing the servicing, a capitalized servicing asset is recognized.
Residential Mortgage Loans
The related MSR asset is amortized over the period of the estimated future net servicing life of the underlying assets. MSRs are evaluated quarterly for impairment based upon the fair value of the rights as compared to their amortized cost. Impairment is recognized on the income statement to the extent the fair value is less than the capitalized amount of the MSR. The Corporation serviced $ 120 million and $ 122 million of residential mortgage loans as of March 31, 2025 and December 31, 2024, respectively. During the three months ended March 31, 2025, the Corporation recognized servicing fee income of $ 48 thousand, compared to $ 636 thousand, during the three months ended March 31, 2024.
Changes in the MSR balance are summarized as follows:
Three months ended
March 31,
(dollars in thousands) 2025 2024
Balance at beginning of the period $ 1,124 $ 8,622
Servicing rights capitalized — 10
Amortization of servicing rights ( 45 ) ( 318 )
Balance at end of the period $ 1,079 $ 8,314

The decrease in MSR balance in the table above was the result of the Corporation's sale of approximately $ 6.6 million of residential mortgage loan servicing rights associated with $ 777.2 million of serviced loans during the year ended December 31, 2024.
The Corporation uses assumptions and estimates in determining the fair value of MSRs. These assumptions include prepayment speeds and discount rates. The assumptions used in the valuation were based on input from buyers, brokers and other qualified personnel, as well as market knowledge. At March 31, 2025, the key assumptions used to determine the fair value of the Corporation’s MSRs included a lifetime constant prepayment rate equal to 12.10 % and a discount rate equal to 9.50 %. At December 31, 2024, the key assumptions used to determine the fair value of the Corporation’s MSRs included a lifetime constant prepayment rate equal to 10.97 % and a discount rate equal to 9.50 %.
The sensitivity of the current fair value of the residential mortgage servicing rights to immediate 10% and 20% adverse changes in key economic assumptions are included in the following table.
(dollars in thousands) March 31,
2025 		December 31,
2024
Fair value of residential mortgage servicing rights $ 1,467 $ 1,494
Weighted average life (months) 45 43
Prepayment speed 12.10 % 10.97 %
Impact on fair value:
10% adverse change $ ( 65 ) $ ( 63 )
20% adverse change ( 125 ) ( 121 )
Discount rate 9.50 % 9.50 %
Impact on fair value:
10% adverse change $ ( 50 ) $ ( 53 )
20% adverse change ( 96 ) ( 102 )
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The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of an adverse variation in a particular assumption on the fair value of the MSRs is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or counteract the effect of the change.
SBA Loans
SBA loan servicing assets are amortized over the period of the estimated future net servicing life of the underlying assets. SBA loan servicing assets are evaluated quarterly for impairment based upon the fair value of the rights as compared to their amortized cost. Impairment is recognized on the income statement to the extent the fair value is less than the capitalized amount of the SBA loan servicing asset. The Corporation serviced $ 246.7 million and $ 246.7 million of SBA loans, as of March 31, 2025 and December 31, 2024, respectively.
Changes in the SBA loan servicing asset balance are summarized as follows:
Three months ended
March 31,
(dollars in thousands) 2025 2024
Balance at beginning of the period $ 3,258 $ 3,127
Servicing rights capitalized 228 197
Amortization of servicing rights ( 310 ) ( 241 )
Change in valuation allowance 29 176
Balance at end of the period $ 3,205 $ 3,259
Activity in the valuation allowance for SBA loan servicing assets was as follows:
Three months ended
March 31,
(dollars in thousands) 2025 2024
Valuation allowance, beginning of period $ ( 74 ) $ ( 268 )
Recovery 29 176
Valuation allowance, end of period $ ( 45 ) $ ( 92 )
The Corporation uses assumptions and estimates in determining the fair value of SBA loan servicing rights. These assumptions include prepayment speeds, discount rates, and other assumptions. The assumptions used in the valuation were based on input from buyers, brokers and other qualified personnel, as well as market knowledge. At March 31, 2025, the key assumptions used to determine the fair value of the Corporation’s SBA loan servicing rights included a lifetime constant prepayment rate equal to 17.52 % and a discount rate equal to 13.40 %. At December 31, 2024, the key assumptions used to determine the fair value of the Corporation’s SBA loan servicing rights included a lifetime constant prepayment rate equal to 17.18 % and a discount rate equal to 13.40 %.
The sensitivity of the current fair value of the SBA loan servicing rights to immediate 10% and 20% adverse changes in key economic assumptions are included in the following table.
(dollars in thousands) March 31,
2025 		December 31,
2024
Fair value of SBA loan servicing rights $ 3,688 $ 3,670
Weighted average life (years) 3.2 3.5
Prepayment speed 17.52 % 17.18 %
Impact on fair value:
10% adverse change $ ( 169 ) $ ( 166 )
20% adverse change ( 324 ) ( 317 )
Discount rate 13.40 % 13.40 %
Impact on fair value:
10% adverse change $ ( 82 ) $ ( 81 )
20% adverse change ( 160 ) ( 159 )
The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the
24
change in assumption to the change in fair value may not be linear. Also, in this table, the effect of an adverse variation in a particular assumption on the fair value of the SBA servicing rights is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or counteract the effect of the change.

(8) Fair Value Measurements and Disclosures
The Corporation uses fair value measurements to record fair value adjustments to certain assets and liabilities. The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Corporation’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the 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.
The fair value guidance provides a consistent definition of fair value, which focuses on exit price in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. If there has been a significant decrease in the volume and level of activity for the asset or liability, a change in valuation techniques or the use of multiple valuation techniques may be appropriate. In such instances, determining the price at which willing market participants would transact at the measurement date under current market conditions depends on the facts and circumstances and requires the use of significant judgment. The fair value is a reasonable point within the range that is most representative of fair value under current market conditions.
In accordance with this guidance, the Corporation groups its financial assets and financial liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.
Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 – Valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. The valuation may be based on quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.
Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which determination of fair value requires significant management judgment or estimation.
Following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis.
Securities
The fair value of securities available-for-sale (carried at fair value) and held to maturity (carried at amortized cost) are determined by matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices.
Mortgage Loans Held for Sale
The fair value of loans held for sale is based on secondary market prices.
Mortgage Loans Held for Investment
The fair value of mortgage loans held for investment is based on the price secondary markets are currently offering for similar loans using observable market data.
Derivative Financial Instruments
The fair values of forward commitments and interest rate swaps are based on market pricing and therefore are considered Level 2. Derivatives classified as Level 3 consist of interest rate lock commitments related to mortgage loan commitments. The determination of fair value includes assumptions related to the likelihood that a commitment 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.
25

The following table presents the fair value of financial assets measured at fair value on a recurring basis by level within the fair value hierarchy at the dates indicated :
March 31, 2025
(dollars in thousands) Total Level 1 Level 2 Level 3
Assets
Securities available for sale:
U.S. asset backed securities $ 28,920 $ — $ 28,920 $ —
U.S. government agency MBS 20,920 — 20,920 —
U.S. government agency CMO 53,992 — 53,992 —
State and municipal securities 37,335 — 37,335 —
U.S. Treasuries 15,743 15,743 — —
Non-U.S. government agency CMO 11,062 — 11,062
Corporate bonds 17,249 — 17,249 —
Equity investments 2,126 — 2,126 —
Mortgage loans held for sale 28,047 — 28,047 —
Mortgage loans held for investment 14,182 — 14,182 —
Interest rate lock commitments 364 — — 364
Customer derivatives - interest rate swaps 2,286 — 2,286 —
Fair Value Hedge 2 — 2 —
Total $ 232,228 $ 15,743 $ 216,121 $ 364
Liabilities
Interest rate lock commitments $ 81 $ — $ — $ 81
Customer derivatives - interest rate swaps 2,309 — 2,309 —
Risk Participation Agreements 11 — 11 —
Interest rate swaps 305 — 305 —
Total $ 2,706 $ — $ 2,625 $ 81
December 31, 2024
(dollars in thousands) Total Level 1 Level 2 Level 3
Assets
Securities available for sale:
U.S. asset backed securities $ 29,844 $ — $ 29,844 $ —
U.S. government agency MBS 20,871 — 20,871 —
U.S. government agency CMO 45,613 — 45,613 —
State and municipal securities 36,696 — 36,696 —
U.S. Treasuries 15,450 15,450 — —
Non-U.S. government agency CMO 11,729 — 11,729 —
Corporate bonds 14,101 — 14,101 —
Equity investments 2,086 — 2,086 —
Mortgage loans held for sale 32,413 — 32,413 —
Mortgage loans held for investment 14,501 — 14,501 —
Interest rate lock commitments 216 — — 216
Forward commitments 30 — 30 —
Customer derivatives - interest rate swaps 2,755 — 2,755 —
Fair Value Hedge 3 — 3 —
Interest rate swaps 9 — 9 —
Total $ 226,317 $ 15,450 $ 210,651 $ 216
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Liabilities
Interest rate lock commitments $ 35 $ — $ — $ 35
Forward commitments 2,745 — 2,745 —
Customer derivatives - interest rate swaps 91 — 91 —
Risk Participation Agreements 61 — 61 —
Total $ 2,932 $ — $ 2,897 $ 35
The following table presents assets measured at fair value on a nonrecurring basis at the dates indicated:
(dollars in thousands) March 31,
2025 		December 31,
2024
Mortgage servicing rights $ 1,079 $ 1,124
SBA loan servicing rights 3,205 3,258
Individually evaluated loans (1)
Commercial and industrial 1,737 1,944
Construction 1,579 —
Small business loans 7,027 2,284
Total $ 14,627 $ 8,610
(1) Individually evaluated loans are those in which the Corporation has measured impairment generally based on the fair value of the loan’s collateral. The increase in individually evaluated commercial and industrial loans noted above was due to reassessing how we evaluate the impairment on a loan relationship to now be based on the fair value of collateral.
The following table details the valuation techniques for Level 3 individually evaluated loans.
(dollars in thousands) Fair Value Valuation Technique Significant Unobservable Input Range of Inputs
March 31, 2025 $ 10,343 Appraisal of collateral Management adjustments on appraisals for property type and recent activity
2 %- 33 % discount
December 31, 2024 4,228 Appraisal of collateral Management adjustments on appraisals for property type and recent activity
2 %- 33 % 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:
Cash and Cash Equivalents
The carrying amounts reported in the balance sheet for cash and short-term instruments approximate those assets’ fair values.
Loans Receivable
The fair value of loans receivable is estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the loans. Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. The fair value below is reflective of an exit price.
Servicing Assets
The Corporation estimates the fair value of mortgage servicing rights and SBA loan servicing rights using discounted cash flow models that calculate the present value of estimated future net servicing income. The model uses readily available prepayment speed assumptions for the interest rates of the portfolios serviced. These servicing rights are classified within Level 3 in the fair value hierarchy based upon management’s assessment of the inputs. The Corporation reviews the servicing rights portfolios on a quarterly basis for impairment.
Individually Evaluated Loans
Individually evaluated loans are those in which the Corporation has measured impairment generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third 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
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are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. Individually evaluated loans are evaluated on a quarterly basis for additional impairment and adjusted in accordance with the ACL policy.
Accrued Interest Receivable and Payable
The carrying amount of accrued interest receivable and accrued interest payable approximates its fair value.
Deposit Liabilities
The fair values disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits.
Short-Term Borrowings
The carrying amounts of short-term borrowings approximate their fair values.
Long-Term Debt
Fair values of FHLB advances and the acquisition purchase note payable 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.

Subordinated Debt
Fair values of junior subordinated debt are estimated using discounted cash flow analysis, based on market rates currently offered on such debt with similar credit risk characteristics, terms and remaining maturity.
Off-Balance Sheet Financial Instruments
Off-balance sheet instruments are primarily comprised of loan commitments, which are generally priced at market at the time of funding. Fees on commitments to extend credit and stand-by letters of credit are deemed to be immaterial and these instruments are expected to be settled at face value or expire unused. It is impractical to assign any fair value to these instruments and as a result they are not included in the table below. Fair values assigned to the notional value of interest rate lock commitments and forward sale contracts are based on market quotes.
Derivative Financial Instruments
The fair value of forward commitments and interest rate swaps is based on market pricing and therefore are considered Level 2. Derivatives classified as Level 3 consist of interest rate lock commitments related to mortgage loan commitments. The determination of fair value includes assumptions related to the likelihood that a commitment 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.
The following table presents the estimated fair values of the Corporation’s financial instruments at the dates indicated:
Fair Value
Hierarchy Level 		March 31, 2025 December 31, 2024
(dollars in thousands) Carrying
amount 		Fair value Carrying
amount 		Fair value
Financial assets:
Cash and cash equivalents Level 1 $ 131,225 $ 131,225 $ 27,462 $ 27,462
Mortgage loans held for sale Level 2 28,047 28,047 32,413 32,413
Loans and other finance receivables, net of ACL Level 3 2,057,493 2,003,971 2,015,936 1,967,986
Mortgage loans held for investment Level 2 14,182 14,182 14,501 14,501
Financial liabilities:
Deposits Level 2 $ 2,128,742 $ 2,136,000 $ 2,005,368 $ 2,014,200
Borrowings Level 2 139,590 140,100 124,471 133,200
Subordinated debentures Level 2 49,761 48,841 49,743 48,572
The following table includes a rollforward of interest rate lock commitments for which the Corporation utilized Level 3 inputs to determine fair value on a recurring basis for the periods indicated.
Three months ended
March 31,
(dollars in thousands) 2025 2024
Balance at beginning of the period $ 216 $ 214
Increase in value 148 74
Balance at end of the period $ 364 $ 288
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The following table details the valuation techniques for Level 3 interest rate lock commitments.
(dollars in thousands) Fair Value Valuation Technique Significant Unobservable Input Range of Inputs Weighted Average
March 31, 2025 $ 364 Market comparable pricing Pull through
1 - 99 %
84.26 %
December 31, 2024 216 Market comparable pricing Pull through
1 - 99 %
83.27 %

(9) Derivative Financial Instruments
Risk Management Objective of Using Derivatives
The Corporation is exposed to certain risk arising from both its business operations and economic conditions. The Corporation principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Corporation manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Corporation enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Corporation’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Corporation’s known or expected cash receipts and its known or expected cash payments principally related to the Corporation’s loan portfolio.
Interest Rate Swaps
The Corporation uses interest rate swap agreements to modify interest rate characteristics from variable to fixed or fixed to variable in order to reduce the impact of interest rate changes on future net interest income. The Corporation’s credit exposure on interest rate swaps includes changes in fair value and any collateral that is held by a third party.
In June 2023 the Corporation entered into three interest rate swaps classified as cash flow hedges with notional amounts of $ 25 million each, to hedge the interest payments received on short term borrowings. Under the terms of the three swap agreements, the Corporation pays average fixed rates of 4.070 %, 4.027 % and 4.117 %, and receives variable rates in return indexed to SOFR. The swaps mature between May, June, and December 2026. The Corporation performed an assessment of the hedge for effectiveness at the inception of the hedge and performs an assessment on a recurring basis and determined that the derivative currently is and is expected to be highly effective in offsetting changes in cash flows of the hedged item. For the three months ended March 31, 2025, approximately $ 192 thousand, net of tax, is recorded in total comprehensive income as unrealized losses, while for the three months ended March 31, 2024, approximately $ 749 thousand, net of tax, is recorded in total comprehensive income as unrealized gains. These amounts could differ from amounts actually recognized due to changes in interest rates, hedge de-designations and the addition of other hedges subsequent to March 31, 2025. At March 31, 2025 and December 31, 2024, the combined notional amount of the interest rate swaps was $ 75 million and $ 75 million, respectively, and the fair value was a liability of $ 305 thousand and $ 52 thousand, respectively.
In August 2024 the Corporation entered into an interest rate swap classified as a fair value hedge with a notional amount of $ 40 million, to hedge the interest payments received on a pool of residential mortgage loans held in portfolio. Under the terms of the swap agreement, the Corporation pays an average fixed rate of 3.60 % and receives a variable rate in return indexed to SOFR. The swap matures August 2027. The Corporation performed an assessment of the hedge for effectiveness at the inception of the hedge and performs an assessment on a recurring basis and determined that the derivative currently is and is expected to be highly effective in offsetting changes in fair value of the hedged item. For the three months ended March 31, 2025, approximately $ — thousand respectively, net of tax, is recorded as a fair values adjustment. These amounts could differ from amounts actually recognized due to changes in interest rates, hedge de-designations and the addition of other hedges subsequent to March 31, 2025.

Mortgage Banking Derivatives
In connection with its mortgage banking activities, the Corporation enters into commitments to originate certain fixed rate residential mortgage loans for customers, also referred to as interest rate locks. In addition, the Corporation may enter into forward commitments for the future sales or purchases of mortgage-backed securities to or from third-party counterparties to hedge the effect of changes in interest rates on the values of both the interest rate locks and mortgage loans held for sale. Forward sales commitments may also be in the form of commitments to sell individual mortgage loans or interest rate locks at a fixed price at a future date. The amount necessary to settle each interest rate lock is based on the price that secondary market investors would pay for loans with similar characteristics, including interest rate and term, as of the date fair value is measured. Interest 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 consolidated statements of income.
Customer Derivatives
Derivatives not designated as hedges are not speculative and result from a service the Corporation provides to certain customers to swap a fixed rate product for a variable rate product, or vice versa. The Corporation executes interest rate derivatives with commercial banking customers to facilitate their respective risk management strategies. Those interest rate derivatives are simultaneously hedged by offsetting derivatives that the Corporation executes with a third party, such that the Corporation minimizes its net interest rate risk exposure resulting from such transactions. As the interest rate derivatives associated with this program do not meet the strict hedge
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accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings.
The following table presents a summary of notional amounts and fair values of derivative financial instruments at the dates indicated:
March 31, 2025 December 31, 2024
(dollars in thousands) Balance Sheet Line Item Notional Amount Asset (Liability) Fair Value Notional Amount Asset (Liability) Fair Value
Interest Rate Lock Commitments
Positive fair values Other assets $ 59,688 $ 364 $ 35,820 $ 216
Negative fair values Other liabilities 17,373 ( 81 ) 9,049 ( 35 )
Total $ 77,061 $ 283 $ 44,869 $ 181
Forward Commitments
Positive fair values Other assets $ — $ — $ 4,250 $ 30
Negative fair values Other liabilities — — 500 —
Total $ — $ — $ 4,750 $ 30
Customer Derivatives - Interest Rate Swaps
Positive fair values Other assets $ 55,553 $ 2,286 $ 47,676 $ 2,755
Negative fair values Other liabilities 55,553 ( 2,309 ) 47,676 ( 2,745 )
Total $ 111,106 $ ( 23 ) $ 95,352 $ 10
Customer Derivatives - Risk Participation Agreements
Positive fair values Other assets $ — $ — $ — $ —
Negative fair values Other liabilities 7,384 ( 11 ) 7,382 ( 91 )
Total $ 7,384 $ ( 11 ) $ 7,382 $ ( 91 )
Fair Value Hedge
Positive fair values Other assets $ 40,000 $ 2 $ 40,000 $ 3
Negative fair values Other liabilities — — — —
Total $ 40,000 $ 2 $ 40,000 $ 3
Interest Rate Swaps
Positive fair values Other assets $ — $ — $ 25,000 $ 9
Negative fair values Other liabilities 75,000 ( 305 ) 50,000 ( 61 )
Total $ 75,000 $ ( 305 ) $ 75,000 $ ( 52 )
Total derivative financial instruments $ 310,551 $ ( 54 ) $ 267,353 $ 81
Interest rate lock commitments are considered Level 3 in the fair value hierarchy, while the forward commitments and interest rate swaps are considered Level 2 in the fair value hierarchy.
The following table presents a summary of the fair value gains and (losses) on derivative financial instruments:
Three months ended
March 31,
(dollars in thousands) 2025 2024
Interest Rate Lock Commitments $ 102 $ 7
Forward Commitments ( 30 ) 41
Customer Derivatives - Interest Rate Swaps ( 33 ) 21
Customer Derivatives - Risk Participation Agreements 80 6
Net fair value gains (losses) on derivative financial instruments $ 119 $ 75
Net realized gains on derivative hedging activities were $ 21 thousand for the three months ended March 31, 2025, and net realized losses of $ 19 thousand for the three months ended March 31, 2024, and are included in non-interest income in the consolidated statements of income.
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(10) Segments
ASC Topic 280 – Segment Reporting identifies operating segments as components of an enterprise which are evaluated regularly by the Corporation’s Chief Operating Decision Maker, our Chief Executive Officer, in deciding how to allocate resources and assess performance. The Corporation has applied the aggregation criterion set forth in this codification to the results of its operations.
Our Banking segment (“Bank”) consists of commercial and retail banking. The Banking segment generates interest income from its lending 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, service charges on deposit accounts, cash sweep fees, overdraft fees, BOLI income, title insurance fees, and other less significant non-interest income.
Meridian Wealth (“Wealth”), a registered investment advisor and wholly-owned subsidiary of the Bank, 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’s mortgage banking segment (“Mortgage”) consists of 8 loan production offices throughout suburban 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 net hedging gains (losses), if any.
The table below summarizes income and expenses, directly attributable to each business line, which have been included in the statement of operations. Total assets for each segment is also provided.
Segment Information
Three Months Ended March 31, 2025
Three Months Ended March 31, 2024
(dollars in thousands) Bank Wealth Mortgage Total Bank Wealth Mortgage Total
Interest income $ 38,835 $ — $ 333 $ 39,168 $ 36,903 $ — $ 312 $ 37,215
Interest expense 19,129 ( 9 ) 272 19,392 20,311 6 289 20,606
Net interest income $ 19,706 $ 9 $ 61 $ 19,776 $ 16,592 $ ( 6 ) $ 23 $ 16,609
Provision for credit losses 5,212 — — 5,212 2,866 — — 2,866
Net interest income after provision 14,494 9 61 14,564 13,726 ( 6 ) 23 13,743
Non-interest Income:
Mortgage banking income 18 — 3,375 3,393 88 — 3,546 3,634
Wealth management income — 1,535 — 1,535 — 1,317 — 1,317
SBA loan income 748 — — 748 986 — — 986
Net change in fair values 77 — 344 421 28 — ( 130 ) ( 102 )
Net gain (loss) on hedging activity — — 21 21 — — ( 19 ) ( 19 )
Other 1,069 — 137 1,206 772 — 1,396 2,168
Non-interest income 1,912 1,535 3,877 7,324 1,874 1,317 4,793 7,984
Non-interest expense:
Salaries and employee benefits 7,049 560 3,776 11,385 6,609 572 3,392 10,573
Occupancy and equipment 795 7 536 1,338 733 33 467 1,233
Professional fees 677 11 75 763 760 8 730 1,498
Data processing and software
1,065 43 371 1,479 1,231 35 266 1,532
Advertising and promotion 591 93 95 779 570 82 96 748
Pennsylvania bank shares tax 264 5 — 269 269 5 — 274
Other 2,317 99 314 2,730 1,888 98 330 2,316
Non-interest expense 12,758 818 5,167 18,743 12,060 833 5,281 18,174
Income (loss) before income taxes $ 3,648 $ 726 $ ( 1,229 ) $ 3,145 $ 3,540 $ 478 $ ( 465 ) $ 3,553
Total Assets $ 2,483,477 $ 11,243 $ 34,168 $ 2,528,888 $ 2,219,626 $ 9,335 $ 63,962 $ 2,292,923

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis in conjunction with the unaudited consolidated interim financial statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the year ended December 31, 2024 included in Meridian Corporation’s Annual Report on Form 10-K filed with the SEC.
Forward-Looking Statements
Meridian Corporation may from time to time make written or oral “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements with respect to Meridian Corporation’s strategies, goals, beliefs, expectations, estimates, intentions, capital raising efforts, financial condition and results of operations, future performance and business. Statements preceded by, followed by, or that include the words “may,” “could,” “should,” “pro forma,” “looking forward,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” or similar expressions generally indicate a forward-looking statement. These forward-looking statements involve risks and uncertainties that are subject to change based on various important factors (some of which, in whole or in part, are beyond Meridian Corporation’s control). Numerous competitive, economic, regulatory, legal and technological factors, risks and uncertainties that could cause actual results to differ materially include, without limitation: credit losses and the credit risk of our commercial and consumer loan products; changes in the level of charge-offs and changes in estimates of the adequacy of the allowance for credit losses, or ACL; cyber-security concerns; rapid technological developments and changes; increased competitive pressures; changes in spreads on interest-earning assets and interest-bearing liabilities; changes in general economic conditions and conditions within the securities markets; escalating tariff and other trade policies and the resulting impacts on market volatility and global trade; unanticipated changes in our liquidity position; unanticipated changes in regulatory and governmental policies impacting interest rates and financial markets; legislation affecting the financial services industry as a whole, and Meridian Corporation, in particular; changes in accounting policies, practices or guidance; developments affecting the industry and the soundness of financial institutions and further disruption to the economy and U.S. banking system; among others, could cause Meridian Corporation’s financial performance to differ materially from the goals, plans, objectives, intentions and expectations expressed in such forward-looking statements.
Meridian Corporation cautions that the foregoing factors are not exclusive, and neither such factors nor any such forward-looking statement takes into account the impact of any future events. All forward-looking statements and information set forth herein are based on management’s current beliefs and assumptions as of the date hereof and speak only as of the date they are made. For a more complete discussion of the assumptions, risks and uncertainties related to our business, you are encouraged to review Meridian Corporation’s filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2024 and subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K that update or provide information in addition to the information included in the Form 10-K and Form 10-Q filings, if any. Meridian Corporation does not undertake to update any forward-looking statement whether written or oral, that may be made from time to time by Meridian Corporation or by or on behalf of Meridian Bank.

Critical Accounting Policies and Estimates
Our critical accounting policies are described in detail in the "Critical Accounting Policies" section within Item 7 of our 2024 Annual Form 10-K. The SEC defines "critical accounting policies" as those that require application of management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in future periods. See Note 1, "Summary of Significant Accounting Policies" for additional information on the adoption of ASC 326, which changes the methodology under which management calculates its reserve for loans and leases, now referred to as the allowance for credit losses. Management considers the measurement of the allowance for credit losses to be a critical accounting policy.

Executive Overview
The following items highlight the Corporation’s changes in its financial condition as of March 31, 2025 compared to December 31, 2024 and the results of operations for the three months ended March 31, 2025 compared to the same periods in 2024. More detailed information related to these highlights can be found in the sections that follow.

Changes in Financial Condition - March 31, 2025 Compared to December 31, 2024
• Total assets increased $143.0 million, or 6.0%, to $2.5 billion as of March 31, 2025.

• Portfolio loans increased $42.0 million, or 2.1%, to $2.0 billion as of March 31, 2025.

• Mortgage loans held for sale decreased $4.4 million, or 13.5%, to $28.0 million as of March 31, 2025.

• Total deposits increased $123.4 million or 6.2% to $2.1 billion as of March 31, 2025.

• Non-interest bearing deposits increased $82.6 million, or 34.3%, to $323.5 million as of March 31, 2025.
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• The Corporation returned $1.4 million of capital to Meridian shareholders during the three months ended March 31, 2025 through a $0.125 dividend per share.

Three Month Results of Operations - March 31, 2025 Compared to the Same Period in 2024
• Net income was $2.4 million, or $0.21 per diluted share, down $277 thousand, or 10.4%, driven by a higher provision for credit losses and lower non-interest income, offset somewhat by higher net interest income.

• The return on average assets and return on average equity were 0.40% and 5.57%, respectively, for the first quarter 2025, compared to 0.47% and 6.73%, respectively, for the first quarter 2024.

• Net interest income increased $3.2 million, or 19.1%, to $19.8 million and the net interest margin increased to 3.46% from 3.09%, largely due to the impact of deposit and borrowing cost declines over the period.

• The overall provision for credit losses increased $2.3 million when comparing the first quarter 2025 to the first quarter 2024. The provision increase was largely due to the impact of charge-offs, an increase in non-performing loans, combined with providing for loan growth over this period and the impact of unfavorable changes in certain macro-economic factors used in the model due to current economic and market uncertainty.

• Non-interest income decreased $660 thousand, or 8.3%, to $7.3 million driven by a $241 thousand decline in mortgage banking income, a $238 thousand decline in SBA loan income, and a $977 thousand decline in other non-interest income, partially offset by an overall $564 thousand positive impact of fair value changes related to mortgage banking activities, and a $218 thousand increase in wealth management fee income.

• Non-interest expense increased $569 thousand, or 3.1%, to $18.7 million due to a $812 thousand increase in salaries and employee benefits, and an increase of $414 thousand in other non-interest expense, partially offset by a decrease of $735 thousand in professional fees.

Key Performance Ratios
The following table presents key financial performance ratios for the periods indicated:
Three months ended
March 31,
2025 2024
Return on average assets, annualized 0.40 % 0.47 %
Return on average equity, annualized 5.57 % 6.73 %
Net interest margin (tax effected yield) 3.46 % 3.09 %
Basic earnings per share $ 0.21 $ 0.24
Diluted earnings per share $ 0.21 $ 0.24
The following table presents certain key period-end balances and ratios at the dates indicated:
(dollars in thousands, except per share amounts) March 31,
2025 		December 31,
2024
Book value per common share $ 15.38 $ 15.26
Tangible book value per common share (1)
$ 15.06 $ 14.93
Allowance as a percentage of loans and other finance receivables 1.01 % 0.91 %
Tier I capital to risk weighted assets 7.99 % 8.13 %
Tangible common equity to tangible assets ratio (1)
6.73 % 7.05 %
Loans and other finance receivables, net of fees and costs $ 2,071,675 $ 2,030,437
Total assets $ 2,528,888 $ 2,385,867
Total stockholders’ equity $ 173,568 $ 171,522
(1) Non-GAAP financial measure. See “Non-GAAP Financial Measures” below for Non-GAAP to GAAP reconciliation.
Components of Net Income
Net income is comprised of five major elements:
• 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 Credit Losses , or the amount added to the Allowance to provide for current expected credit losses on portfolio loans and leases;
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• 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.

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NET INTEREST INCOME
Net interest income is an integral source of the Corporation’s revenue. The tables below present a summary for the three months ended March 31, 2025 and 2024, 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.
Analyses of Interest Rates and Interest Differential
The table below present the major asset and liability categories on an average daily balance basis for the periods presented, along with interest income, interest expense and key rates and yields on a tax equivalent basis.
For the Three Months Ended March 31,
(dollars in thousands) 2025 2024
Average Balance Interest Income/ Expense Yields/ Rates Average Balance Interest Income/ Expense Yields/ Rates
Assets:
Cash and cash equivalents $ 56,170 $ 613 4.43 % $ 22,059 $ 300 5.47 %
Investment securities - taxable 159,051 1,693 4.32 129,660 1,251 3.88
Investment securities - tax exempt (1)
54,723 387 2.87 57,797 405 2.82
Loans held for sale 20,604 333 6.55 19,509 323 6.66
Loans held for investment (1)
2,039,676 36,218 7.20 1,944,187 35,018 7.24
Total loans 2,060,280 36,551 7.19 1,963,696 35,341 7.24
Total interest-earning assets 2,330,224 39,244 6.83 % 2,173,212 37,297 6.90 %
Noninterest earning assets 90,347 95,835
Total assets $ 2,420,571 $ 2,269,047
Liabilities and stockholders' equity:
Interest-bearing demand deposits $ 150,980 $ 1,229 3.30 % $ 139,225 $ 1,367 3.95 %
Money market and savings deposits 919,731 7,808 3.44 773,123 7,855 4.09
Time deposits 721,336 7,831 4.40 677,920 8,170 4.85
Total interest - bearing deposits 1,792,047 16,868 3.82 1,590,268 17,392 4.40
Borrowings 123,677 1,469 4.82 196,909 2,435 4.97
Subordinated debentures 49,749 1,055 8.60 49,847 779 6.29
Total interest-bearing liabilities 1,965,473 19,392 4.00 1,837,024 20,606 4.51
Noninterest-bearing deposits 244,161 233,255
Other noninterest-bearing liabilities 36,203 38,946
Total liabilities 2,245,837 2,109,225
Total stockholders' equity 174,734 159,822
Total stockholders' equity and liabilities $ 2,420,571 $ 2,269,047
Net interest income and spread (1)
$ 19,852 2.83 $ 16,691 2.39
Net interest margin (1)
3.46 % 3.09 %
(1) Yields and net interest income are reflected on a tax-equivalent basis.









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Rate / Volume Analysis
The rate/volume analysis table below analyzes dollar changes in the components of interest income and interest expense as they relate to the change in balances (volume) and the change in interest rates (rate) of tax-equivalent net interest income for the three months ended March 31, 2025 as compared to the same period in 2024, allocated by rate and volume. Changes in interest income and/or expense attributable to both rate and volume have been allocated proportionately based on the relationship of the absolute dollar amount of the change in each category.
Three Months Ended March 31,
2025 Compared to 2024
(dollars in thousands) Rate Volume Total
Interest income:
Cash and cash equivalents $ (69) $ 382 $ 313
Investment securities - taxable 138 304 442
Investment securities - tax exempt (1)
4 (22) (18)
Loans held for sale (8) 18 10
Loans held for investment (1)
(501) 1,701 1,200
Total loans (509) 1,719 1,210
Total interest income $ (436) $ 2,383 $ 1,947
Interest expense:
Interest-bearing demand deposits $ (247) $ 109 $ (138)
Money market and savings deposits (1,405) 1,358 (47)
Time deposits (842) 503 (339)
Total interest - bearing deposits (2,494) 1,970 (524)
Borrowings (93) (873) (966)
Subordinated debentures 278 (2) 276
Total interest expense $ (2,309) $ 1,095 $ (1,214)
Interest differential $ 1,873 $ 1,288 $ 3,161
(1) Yields and net interest income are reflected on a tax-equivalent basis.

Three Months Ended March 31, 2025 Compared to the Same Period in 2024
For the three months ended March 31, 2025 as compared to the same period in 2024, tax-equivalent interest income increased $1.9 million as favorable volume changes contributed $2.4 million to interest income, partially offset by rate changes that had a $436 thousand unfavorable impact on interest income. The loans held for investment average balances increased $95.5 million, leading to a favorable volume impact on interest income of $1.7 million, while the increase in loans held for sale average balances of $1.1 million had an small but favorable impact to interest income of $18 thousand. Growth in the loans held for investment portfolio was led by average balance increases in commercial mortgage loans ($59.5 million), home equity lines and loans ($13.2 million), commercial and industrial loans ($33.5 million), and SBA loans ($5.7 million). The change in rates led to decreased yields on loans held for sale (down 11 basis points) and loans held for investment (down 4 basis points) that unfavorably impact interest income by $509 thousand, overall.

On the funding side, overall interest expense decreased $1.2 million, largely driven by the impact that the Fed's rate cuts in the later part of 2024 have had on the cost of deposits and borrowings. The cost of deposits were down across the board, leading to a $524 thousand decrease to interest expense. The cost of interest-bearing demand deposits, money market and savings accounts and time deposits decreased 65 basis points, 65 basis points and 45 basis points, respectively. These deposit cost declines were partially offset by volume increases as the average balances on money market and savings accounts increased $146.6 million, while time deposit average balances increased $43.4 million, and the average balances on interest-bearing demand deposits increased $11.8 million,

Additionally, the cost of borrowings decreased by 15 basis points, while the cost of subordinated debentures increased 231 basis points as the $40 million in 2019 Debentures converted to a floating rate instrument as of December 31, 2024, contributing a $278 thousand increase to interest expense. Borrowings decreased $73.2 million on average.

Overall, the $3.2 million increase in net interest income over this period was driven by both rate and volume changes.

PROVISION FOR CREDIT LOSSES
Three Months Ended March 31, 2025 Compared to the Same Period in 2024
The total provision for credit losses increased $2.3 million on a net basis for the three months ended March 31, 2025. The provision on funded loans increased $1.8 million over the three month comparable period in 2024 driven by provisioning for loan growth and charge-offs, as well as an increase in specific reserves, mainly on small business loans and existing non-accrual loans. The increase in provision was also impacted by unfavorable changes in certain macro-economic factors used in the model due to current economic and market uncertainty. There was no provision on unfunded loan commitments for three months ended March 31, 2025, while for the three months March 31, 2024 there was an unfunded provision reversal of $508 thousand.
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NON-INTEREST INCOME
Three Months Ended March 31, 2025 Compared to the Same Period in 2024
The following table presents the components of non-interest income for the periods indicated:
Three Months Ended
(Dollars in thousands) March 31,
2025 		March 31,
2024 		$ Change % Change
Mortgage banking income $ 3,393 $ 3,634 $ (241) (6.6) %
Wealth management income 1,535 1,317 218 16.6 %
SBA loan income 748 986 (238) (24.1) %
Earnings on investment in life insurance 222 207 15 7.2 %
Net change in the fair value of derivative instruments 149 75 74 98.7 %
Net change in the fair value of loans held-for-sale 102 (2) 104 NM
Net change in the fair value of loans held-for-investment 170 (175) 345 (197.1) %
Net gain (loss) on hedging activity 21 (19) 40 (210.5) %
Other 984 1,961 (977) (49.8) %
Total non-interest income $ 7,324 $ 7,984 $ (660) (8.3) %
Total non-interest income decreased $660 thousand due in part to a decline in mortgage banking income from our mortgage segment. While mortgage loan originations increased $8.0 million when comparing the quarter ended March 31, 2025 to the quarter ended March 31, 2024, the sales margin declined over this period as well, leading to the decline in mortgage banking income. SBA loan income decreased $238 thousand over this period as the value of SBA loans sold for the quarter-ended March 31, 2025 was $3.4 million, or 21.7%, lower than the quarter-ended March 31, 2024, while the gross margin on sale was 8.7% for the quarter-ended March 31, 2025 compared to 8.1% for the quarter-ended March 31, 2024.
The net change in the fair value of loans held-for-investment improved to a gain of $170 thousand for the quarter ended March 31, 2025, compared to a loss of $175 thousand for the comparable prior year quarter, due to the impact of the changing interest rate environment and the impact this has had on loans in portfolio that are held at fair value. Other non-interest income decreased $925 thousand due to higher levels of FHLB stock dividend income, broker fees and other mortgage segment related income in the prior period, partially offset by an increase in business credit card fee income and swap fee income.
NON-INTEREST EXPENSE
Three Months Ended March 31, 2025 Compared to the Same Period in 2024
The following table presents the components of non-interest expense for the periods indicated:
Three Months Ended
(Dollars in thousands) March 31,
2025 		March 31,
2024 		$ Change % Change
Salaries and employee benefits $ 11,385 $ 10,573 $ 812 7.7 %
Occupancy and equipment 1,338 1,233 105 8.5 %
Professional fees 763 1,498 (735) (49.1) %
Data processing and software 1,479 1,532 (53) (3.5) %
Advertising and promotion 779 748 31 4.1 %
Pennsylvania bank shares tax 269 274 (5) (1.8) %
Other 2,730 2,316 414 17.9 %
Total non-interest expense $ 18,743 $ 18,174 $ 569 3.1 %
Total non-interest expense increased $569 thousand, or 3.1%, largely attributable to an increase in salaries and employee benefits and other non-interest expense. Salaries and employee benefits increased $812 thousand due largely to overall employee merit, benefit, and tax related increases, combined with an increase in mortgage segment related commissions and other benefits. Other non-interest expense increased $414 thousand due to an increase in certain commercial and consumer related loan expenses due to portfolio growth, partially offset with a decrease in loan servicing fees resulting from the MSR sale in 2024, combined with a decline in OREO expense as a $1.7 million residential OREO property was sold in 2024 . Professional fees decreased $735 thousand over the period mainly due to the results of cost control efforts on legal and consulting fees, combined with savings realized from switching internal audit outsourcing firms.
INCOME TAX EXPENSE
Income tax expense for the three months ended March 31, 2025 was $746 thousand, as compared to $877 thousand for the same period in 2024. Our effective tax rates were 23.7% for the three months ended March 31, 2025, compared to 24.7% for the same period
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in 2024. While income tax expense decreased primarily due to the decrease in income before income taxes, the effective tax rate increased due to the impact of additional nondeductible expense, partially offset by an increase in tax-free bank owned life insurance income.

BALANCE SHEET ANALYSIS
As of March 31, 2025, total assets were $2.5 billion which increased $143.0 million, or 6.0%, from December 31, 2024. This increase in assets over the prior period was due primarily to loan portfolio growth, as detailed in the following table:
(Dollars in thousands) March 31,
2025 		December 31,
2024 		$ Change % Change
Mortgage loans held for sale $ 28,047 $ 32,413 $ (4,366) (13.5) %
Real estate loans:
Commercial mortgage 845,215 823,976 21,239 2.6
Home equity lines and loans 94,179 90,721 3,458 3.8
Residential mortgage 250,684 252,565 (1,881) (0.7)
Construction 277,895 259,553 18,342 7.1
Total real estate loans 1,467,973 1,426,815 41,158 2.9
Commercial and industrial 371,980 367,366 4,614 1.3
Small business loans 161,104 155,775 5,329 3.4
Consumer 376 349 27 7.7
Leases, net 66,813 75,987 (9,174) (12.1)
Total loans and other finance receivables $ 2,068,246 $ 2,026,292 $ 41,954 2.1
Total loans and leases $ 2,096,293 $ 2,058,705 $ 37,588 1.8 %
Portfolio loans increased $42.0 million, to $2.1 billion as of March 31, 2025, from $2.0 billion as of December 31, 2024. Overall portfolio loan growth was 2.1% since December 31, 2024, or 8.3% on an annualized basis for 2025. Commercial real estate loans increased $21.2 million, or 2.6%, construction loans increased $18.3 million, or 7.1%, SBA loans increased $5.3 million, or 3.4%, and commercial and industrial loans increased $4.6 million, or 1.3%.
As of March 31, 2025, included within the commercial real estate loans total of $845.2 million was $272.5 million of owner-occupied commercial loans, as well as $121.5 million of multi-family loans. Nearly all of the multi-family real estate loans are on properties located in Philadelphia and surrounding counties we service.

The following table presents the major categories of deposits at the dates indicated:
(Dollars in thousands) March 31,
2025 		December 31,
2024 		$ Change % Change
Noninterest-bearing deposits $ 323,485 $ 240,858 $ 82,627 34.3 %
Interest-bearing deposits:
Interest-bearing demand deposits 161,055 141,439 19,616 13.9 %
Money market and savings deposits 947,795 913,536 34,259 3.8 %
Time deposits 696,407 709,535 (13,128) (1.9) %
Total interest-bearing deposits $ 1,805,257 $ 1,764,510 $ 40,747 2.3 %
Total deposits $ 2,128,742 $ 2,005,368 $ 123,374 6.2 %
Total deposits increased $123.4 million, or 6.2%, since December 31, 2024. Noninterest-bearing deposits and interest-bearing accounts increased $82.6 million, and $19.6 million, respectively, during the period. The increase in noninterest-bearing deposits was the result of a large late in the quarter deposit from a long-standing customer that sold a business. The deposit remained with the bank for several weeks. The increase in interest-bearing accounts was largely due to customer preference for money market deposits which carry higher interest rates than demand deposits. Time deposits decreased $13.1 million, or 1.9%, largely due to wholesale funding as customers prefer the higher term interest rates offered by these products.
The majority of Meridian's deposit base is comprised of business deposits, 52%, with consumer deposits amounting to 12% at March 31, 2025. Municipal deposits at 12% and brokered deposits at 24% provide growth funding. Historically, business deposits lag loan fundings. A typical business relationship maintains operating accounts, investment accounts or sweep accounts and business owners may also have personal savings or wealth accounts. Deposit balances in business accounts have a tendency to be higher on average than consumer accounts. At March 31, 2025, 56% of business accounts and 86% of consumer accounts were fully insured by the
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FDIC. The municipal deposits are 100% collateralized and brokered deposits are 100% FDIC insured. The level of uninsured deposits for the entire deposit base was 25% at March 31, 2025.

Capital
Consolidated stockholders’ equity of the Corporation was $173.6 million, or 6.9% of total assets as of March 31, 2025, as compared to $171.5 million, or 7.2% of total assets as of December 31, 2024. On April 24, 2025, the Board of Directors declared a quarterly cash dividend of $0.125 per common share payable May 19, 2025 to shareholders of record as of May 12, 2025.
Under the Community Bank Leverage Ratio framework, a community banking organization that is less than $10 billion in total consolidated assets, and has limited amounts of certain assets and off-balance sheet exposures, and a CBLR greater than 9% can elect to report a single regulatory capital ratio. The Corporation has elected to be measured under this framework for Bank capital adequacy and had ratios of 9.30% and 9.21% at March 31, 2025 and December 31, 2024, respectively. The Corporation is exempt from CBLR.
The following table presents the Bank’s capital ratios and the minimum capital requirements to be considered “well capitalized” by regulators at the periods indicated:
Bank Well-capitalized minimum
March 31,
2025 		December 31,
2024
Tier 1 leverage ratio 9.30 % 9.21 % 5.00 %
Common tier 1 risk-based capital ratio 10.15 % 10.33 % 6.50 %
Tier 1 risk-based capital ratio 10.15 % 10.33 % 8.00 %
Total risk-based capital ratio 11.14 % 11.20 % 10.00 %

In December 2018, the Federal Reserve announced that a banking organization that experiences a reduction in retained earnings due to the CECL adoption as of the beginning of the fiscal year in which CECL is adopted may elect to phase in the regulatory capital impact of adopting CECL. Transitional amounts are calculated for the following items: retained earnings, temporary difference deferred tax assets and credit loss allowances eligible for inclusion in regulatory capital. When calculating regulatory capital ratios, 25% of the transitional amounts are phased in during the first year. An additional 25% of the transitional amounts are phased in over each of the next two years and at the beginning of the fourth year, the day-one effects of CECL are completely reflected in regulatory capital. As of March 31, 2025, Meridian has phased in 75% of the day-one effects of CECL.

Asset Quality Summary
The ratio of non-performing assets to total assets was 2.07% as of March 31, 2025, up from 1.90% reported as of December 31, 2024. Total non-performing loans of $52.2 million as of March 31, 2025, increased $7.1 million from $45.1 million as December 31, 2024. The changes were the result of additional risk rating downgrades leading to non-performing loan classification largely in the SBA loan portfolio and to a lesser degree in small equipment leasing and residential mortgages, partially offset the payoff of $323 thousand in SBA loans and by a $920 thousand decline in non-performing commercial loans due to an additional charge-off on a protracted commercial advertising loan relationship.
Meridian realized net charge-offs of 0.14% of total average loans for the three months ending March 31, 2025, which was up slightly from 0.12% reported for the same period in 2024. Net charge-offs for the quarter ended March 31, 2025 were $2.8 million, compared to net charge-offs of $2.3 million for the quarter ended March 31, 2024. Net charge-offs for the current quarter comprised of $3.0 million in charge-offs, with $175 thousand in recoveries, and were split between commercial loans, construction loans, leases, and SBA loans.
The ratio of allowance for credit losses to total loans and other finance receivables, excluding loans at fair value (a non-GAAP measure, see reconciliation in the Appendix), was 1.01% as of March 31, 2025 compared to 0.91% as of December 31, 2024. As of March 31, 2025 there were specific reserves of $5.0 million against non-performing loans, an increase from $2.7 million as of December 31, 2024. The increase over this period was driven by an increase in specific reserves on SBA loan, as well as smaller increases in specific reserves on commercial and commercial real estate loans.
The increase in ACL coverage ratio noted above since December 31, 2024 was the result of an increase in specific reserves on individually evaluated loans, combined with providing for loan growth during the quarter.
The Corporation is proactive with its loan review process that utilizes the engagement of an independent outside loan review firm, which helps identify developing credit issues. Proactive steps that are taken include the procurement of additional collateral (preferably outside the current loan structure) whenever possible and frequent contact with the borrower. The Corporation believes that timely identification of credit issues and appropriate actions early in the process serve to mitigate overall risk of loss.
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Nonperforming Assets and Related Ratios
The following table presents nonperforming assets and related ratios for the periods indicated:
(dollars in thousands) March 31,
2025 		December 31,
2024
Non-performing assets:
Nonaccrual loans and leases:
Real estate loans:
Commercial mortgage $ 784 $ 809
Home equity lines and loans 1,676 1,716
Residential mortgage 8,308 7,900
Construction 8,506 8,613
Total real estate loans 19,274 19,038
Commercial and industrial 11,046 11,966
Small business loans 18,790 12,270
Leases 2,732 1,851
Total nonaccrual loans and leases 51,842 45,125
Loans 90+ days past due and still accruing 359 —
Other real estate owned 159 159
Total non-performing assets $ 52,360 $ 45,284
Asset quality ratios:
Non-performing assets to total assets 2.07 % 1.90 %
Non-performing loans to:
Total loans and other finance receivables 2.52 % 2.22 %
Total loans and other finance receivables (excluding loans at fair value) (1)
2.54 % 2.24 %
Allowance for credit losses to:
Total loans and other finance receivables 1.01 % 0.91 %
Non-performing loans 39.90 % 40.86 %
Total loans and leases $ 2,099,722 $ 2,062,850
Total loans and other finance receivables 2,071,675 2,030,437
Total loans and other finance receivables (excluding loans at fair value) 2,057,493 2,015,936
Allowance for credit losses 20,827 18,438
(1) The allowance for credit losses to total loans and other finance receivables (excluding loans at fair value) ratio is a non-GAAP financial measure. See “Non-GAAP Financial Measures” for a reconciliation of this measure to its most comparable GAAP measure.

Liquidity
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, Meridian maintains borrowing arrangements with various correspondent banks, the FHLB and the Federal Reserve Bank of Philadelphia to meet short-term liquidity needs and has access to approximately $640.5 million in liquidity from these sources. Through its relationship at the Federal Reserve, Meridian had available credit of approximately $5.3 million at March 31, 2025. 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 March 31, 2025, Meridian’s maximum borrowing capacity with the FHLB was $698.2 million. At March 31, 2025, Meridian had borrowed $134.9 million and the FHLB had issued letters of credit, on Meridian’s behalf, totaling $190.2 million against its available credit lines. At March 31, 2025, Meridian also had available $56.0 million of unsecured federal funds lines of credit with other financial institutions as well as $264.2 million of available short or long
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term funding through the CDARS program and $267.8 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.

Discussion of Segments
As of March 31, 2025, 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).
The Banking Segment recorded income before tax of $3.6 million for the three months ended March 31, 2025, as compared to income before tax of $3.5 million for the same period in 2024. The Banking Segment provided 116.0% of the Corporation’s pre-tax profit for the three months ended March 31, 2025, as compared to 99.6% for the same periods in 2024.
The Wealth Management Segment recorded income before tax of $726 thousand for the three months ended March 31, 2025, as compared to income before tax of $478 thousand for the same period in 2024. The increase in income in this segment was the result of an increase in assets under management and improved market conditions over the period.
The Mortgage Banking Segment recorded losses before tax of $1.2 million for the three months ended March 31, 2025, as compared to losses before tax of $465 thousand for the same period in 2024. Mortgage Banking income and expenses related to loan originations and sales increased over the comparable periods due to higher loan origination and sales volume.

Off Balance Sheet Risk
The Corporation is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, standby letters of credit, and loan repurchase commitments.
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 March 31, 2025 were $632.3 million as compared to $603.1 million at December 31, 2024.
Standby letters of credit are conditional commitments issued by the Corporation to a customer for a third party. Such standby letters of credit are issued to support private borrowing arrangements. The credit risk involved in issuing standby letters of credit is similar to that involved in granting loan facilities to customers. The Corporation’s obligation under standby letters of credit at March 31, 2025 amounted to $15.4 million as compared to $15.5 million at December 31, 2024.
Estimated fair values of the Corporation’s off-balance sheet instruments are based on fees and rates currently charged to enter into similar loan agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. Since fees and rates charged for off-balance sheet items are at market levels when set, there is no material difference between the stated amount and the estimated fair value of off-balance sheet instruments.
In certain circumstances the Corporation may be required to repurchase residential mortgage loans from investors under the terms of loan sale agreements. Generally, these circumstances include the breach of representations and warranties made to investors regarding borrower default or early payment, as well as a violation of the applicable federal, state, or local lending laws. The Corporation agrees to repurchase loans if the representations and warranties made with respect to such loans are breached. Based on the obligations described above, the Corporation did not repurchase any loans for the three months ended March 31, 2025, while the Corporation repurchased 3 loans totaling $589 thousand for the three months ended March 31, 2024.

Non-GAAP Financial Measures
Meridian believes that non-GAAP measures are meaningful because they reflect adjustments commonly made by management, investors, regulators and analysts to evaluate performance trends and the adequacy of common equity. This non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for performance and financial condition measures determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of Meridian’s results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.
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.
The table below provides the non-GAAP reconciliation for our tangible common equity ratio and tangible book value per common share:
(dollars in thousands, except share data) March 31,
2025 		December 31,
2024
Total stockholders' equity (GAAP) $ 173,568 $ 171,522
Less: Goodwill and intangible assets (3,615) (3,666)
Tangible common equity (non-GAAP) 169,953 167,856
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(dollars in thousands, except share data) March 31,
2025 		December 31,
2024
Total assets (GAAP) 2,528,888 2,385,867
Less: Goodwill and intangible assets (3,615) (3,666)
Tangible assets (non-GAAP) $ 2,525,273 $ 2,382,201
Stockholders' equity to total assets (GAAP) 6.86 % 7.19 %
Tangible common equity to tangible assets (non-GAAP) 6.73 % 7.05 %
Shares outstanding 11,285 11,240
Book value per share (GAAP) $ 15.38 $ 15.26
Tangible book value per share (non-GAAP) $ 15.06 $ 14.93
The following is a reconciliation of the allowance for credit losses to total loans held for investment ratio at March 31, 2025. This is considered a non-GAAP measure as the calculation excludes the impact of loans held for investment that are fair valued as these loan types are not included in the allowance for credit losses calculation.
(dollars in thousands) March 31,
2025 		December 31,
2024
Allowance for credit losses (GAAP) $ 20,827 $ 18,438
Loans and other finance receivables (GAAP) 2,071,675 2,030,437
Less: Loans at fair value (14,182) (14,501)
Loans and other finance receivables, excluding loans at fair value (non-GAAP) $ 2,057,493 $ 2,015,936
Allowance for credit losses to loans and other finance receivables (GAAP) 1.01 % 0.91 %



Item 3. Quantitative and Qualitative Disclosures About Market Risk.
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:
• 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.
Because of the limitations inherent in any approach used to measure interest rate risk, simulated results are not intended to be used as a forecast of the actual effect of a change in market interest rates on our results, but rather as a means to better plan and execute appropriate ALM strategies.
Potential increase (decrease) to our net interest income between a flat interest rate scenario and hypothetical rising and declining interest rate scenarios, measured over a one-year period as of the dates indicated, are presented in the following table which assuming 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.
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March 31,
Changes in Market Interest Rates 2025 2024
+300 basis points over next 12 months 2.10 % 1.30 %
+200 basis points over next 12 months 1.61 % 1.12 %
+100 basis points over next 12 months 0.94 % 0.73 %
No Change
-100 basis points over next 12 months (1.12) % (1.85) %
-200 basis points over next 12 months (2.05) % (3.23) %
-300 basis points over next 12 months (1.89) % (4.68) %
The above interest rate simulation suggests as of March 31, 2025 that the Corporation’s balance sheet is fairly neutrally positioned at +/- 1% in an up or down 100 basis point environment over the next 12 months. The simulated exposure to a change in interest rates is 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 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 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.
March 31,
Changes in Market Interest Rates 2025 2024
+300 basis points 10 % (5) %
+200 basis points 9 % (2) %
+100 basis points 5 % — %
No Change
-100 basis points (9) % (3) %
-200 basis points (22) % (10) %
-300 basis points (43) % (23) %
This economic value of equity profile at March 31, 2025 suggests that we would experience a negative effect from a decrease of 100 basis points in rates, and the impact would worsen as rates continued to move downward. 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.
The results of our net interest income and economic value of equity simulation analysis are purely hypothetical, and a variety of factors might cause actual results to differ substantially from what is depicted. For example, if the timing and magnitude of interest rate changes differ from that projected, our net interest income might vary significantly. Non-parallel yield curve shifts or changes in interest rate spreads would also cause net interest income to be different from that projected. An increasing interest rate environment could reduce projected net interest income if deposits and other short-term interest-bearing liabilities reprice faster than expected or faster than our interest-earning assets. Actual results could differ from those projected if interest-earning assets and interest-bearing liabilities grow faster or slower than estimated, or otherwise change its mix of products. Actual results could also differ from those projected if actual repayment speeds in the loan portfolio are substantially different than those assumed in the simulation model. Furthermore, the results do not take into account the impact of changes in loan prepayment rates on loan discount accretion. If loan prepayment rates were to increase, any remaining loan discounts would be recognized into interest income. This would result in a current period offset to declining net interest income caused by higher rate loans prepaying. Finally, these simulation results do not contemplate all the actions that management may undertake in response to changes in interest rates, such as changes to 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.

Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our CEO and CFO, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a- 15(e) and 15d- 15(e) under the Exchange Act, as of the end of the period covered by this Quarterly
43
Report on Form 10-Q. Based on this evaluation, the Corporation’s CEO and CFO have concluded that the Corporation’s disclosure controls and procedures were effective as of March 31, 2025 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.
Changes in Internal Control Over Financial Reporting
There was no change in the Corporation’s internal control over financial reporting identified during the quarter ended March 31, 2025 that has materially affected, or is reasonably likely to materially affect, the Corporation’s internal control over financial reporting.






PART II–OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 1A. Risk Factors.

There have been no material changes in the risk factors faced by the Corporation from those disclosed in the Corporation’s Annual
Report on Form 10-K for the year ended December 31, 2024 .
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None .
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Item 6. Exhibits.
EXHIBIT INDEX
Exhibit
Number 		Description
3.1
3.2


4.2


4.3


10.7
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
45

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: May 9, 2025 Meridian Corporation
By: /s/ Christopher J. Annas
Christopher J. Annas
President and Chief Executive Officer
(Principal Executive Officer)
By: /s/ Denise Lindsay
Denise Lindsay
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
46
TABLE OF CONTENTS
Item 2. Management S Discussion and Analysis Of Financial Condition and Results Of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II Other InformationItem 1. Legal ProceedingsItem 1A. Risk FactorsItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Mine Safety DisclosuresItem 5. Other InformationItem 6. Exhibits

Exhibits

3.1 Amended Articles of Incorporation of Registrant, filed herewith. 3.2 Bylaws of Registrant, filed as Exhibit 3.2 to Form 8-K on August 24, 2018 and incorporated herein by reference. 4.2 Indenture, dated as of December 18, 2019, between Meridian Corporation, as Issuer, and U.S. Bank National Association, as Trustee, incorporated by reference to Exhibit 4.1 of the Registrant's Form 8-K filed with the SEC on December 18, 2019. 4.3 Form of 5.375% Subordinated Note due 2029 (included as Exhibit A-1 and Exhibit A-2 to the Indenture incorporated by reference as Exhibit 4.2 hereto), filed with the SEC on December 18, 2019. 10.7 Equity Distribution Agreement between Meridian Corporation and D.A. Davidson & Co., effective February 20, 2025, filed as Exhibit 10.1 to Form 8-K on February 20, 2025 and incorporated herein by reference. 31.1 Rule 13a-14(a)/ 15d-14(a) Certification of the Principal Executive Officer, filed herewith. 31.2 Rule 13a-14(a)/ 15d-14(a) Certification of the Principal Financial Officer, filed herewith. 32 Section 1350 Certifications, filed herewith.