What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-03-16 compared with 2021-03-29 · 300 added, 289 removed, 1269 unchanged (32% of the section changed)

1 unchanged sentence

The consolidated financial statements are set forth in this Annual Report on Form 10-K as follows:

Report of Crowe LLP, Independent Registered Public Accounting Firm (PCAOB ID 173 )

Consolidated Balance Sheets

5 unchanged sentences

Report of Independent Registered Public Accounting Firm

Shareholders and the Board of Directors of Meridian Corporation

Shareholders and the Board of Directors of Meridian Corporation and Subsidiaries

Malvern, Pennsylvania

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Meridian Corporation (the "Company") as of December 31, 2020, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for the year ended December 31, 2020, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the year ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheets of Meridian Corporation and Subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for years then ended, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ Crowe LLP

2 unchanged sentences

March 16, 2022

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Meridian Corporation:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Meridian Corporation and subsidiaries (the Company) as of December 31, 2019, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and the results of its operations and its cash flows for the year ended December 31, 2019, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

We have served as the Company’s auditor from 2011 to 2020.

Philadelphia, Pennsylvania

March 30, 2020

Meridian Corporation and Subsidiaries

15 unchanged sentences

Accrued interest receivable

Other real estate owned

Deferred income taxes

Servicing assets

Intangible assets

10 unchanged sentences

Common stock, $ 1 par value.

Authorized 10,000,000 shares;

Authorized 25,000,000 and 10,000,000 shares as of December 31, 2021 and December 31, 2020;

issued 6,534,587 and 6,455,566 as of December 31, 2021 and December 31, 2020

Treasury stock - 320,000 and 3,375 shares at December 31, 2020 and December 31, 2019, respectively

Treasury stock - 426,693 and 320,000 shares at December 31, 2021 and December 31, 2020

Unearned common stock held by employee stock ownership plan

Retained earnings

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income

Total stockholders’ equity

21 unchanged sentences

Net change in the fair value of loans held-for-investment

Net loss on hedging activity

Net gain (loss) on hedging activity

Net gain on sale of investment securities available-for-sale

18 unchanged sentences

(dollars in thousands)

Other comprehensive income:

Other comprehensive (loss) income:

Net change in unrealized gains on investment securities available for sale:

Net unrealized gains arising during the period, net of tax expense of $ 1,121 , and $ 154 , respectively

Net unrealized (losses) gains arising during the period, net of tax expense of ($ 485 ), and $ 1,121 , respectively

reclassification adjustment for net gains on sales realized in net income, net of tax expense of ($ 101 ), and ($ 320 ), respectively

Unrealized investment gains, net of tax expense of $ 801 , and $ 116 , respectively

Total other comprehensive income

Unrealized investment (losses) gains, net of tax expense of $( 584 ), and $ 801 , respectively

Total other comprehensive (loss) income

Total comprehensive income

4 unchanged sentences

(dollars in thousands)

Income (Loss)

Balance, January 1, 2020

Comprehensive income:

Change in unrealized gains on securities available-for-sale, net of tax

Net change in unrealized gains on securities available-for-sale, net of tax

Total comprehensive income

Share-based awards and exercises

Dividends paid or accrued, $ 0.250 per share

Shares purchased for ESOP plan ( 133,601 )

Net purchase of treasury stock through publicly announced plans ( 316,625 )

Compensation expense related to stock option grants

Common stock issued through share-based awards and exercises ( 47,881 )

ESOP shares committed to be released ( 13,328 )

Stock based compensation

Balance, December 31, 2020

Comprehensive income:

Change in unrealized gains on securities available-for-sale, net of tax

Net change in unrealized losses on securities available-for-sale, net of tax

Total comprehensive income

Dividends paid or accrued, $ 1.575 per share

Shares purchased for ESOP plan ( 133,601 )

Net purchase of treasury stock through publicly announced plans ( 106,693 )

Common stock issued through share-based awards and exercises ( 47,881 )

Common stock issued through share-based awards and exercises, net of shares withheld ( 79,021 )

ESOP shares committed to be released ( 13,328 )

7 unchanged sentences

Gain on sale of investment securities

Depreciation and amortization

Loss on disposal of premises and equipment

Net amortization of investment premiums and discounts

Net amortization of investment premiums and discounts and change in fair value of equity securities

Depreciation and amortization, net

Provision for loan losses

1 unchanged sentence

Share-based compensation

Net change in fair value of loans held for sale

Net change in fair value of derivative instruments

Net change in fair value of loans held for sale

Net change in fair value of loans held for investment

Gain on sale of OREO

4 unchanged sentences

( 2,270,693 )

( 2,356,821 )

Mortgage banking income

Increase in accrued interest receivable

(Decrease) increase in other assets

Decrease (increase) in accrued interest receivable

(Increase) decrease in other assets

Earnings from investment in life insurance

Deferred income tax

Increase in accrued interest payable

Increase in other liabilities

Net cash (used in) provided by operating activities

(Increase) decrease income in deferred income tax

(Decrease) increase in accrued interest payable

(Decreased) increase in other liabilities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

4 unchanged sentences

Proceeds from sale of OREO

Settlement of forward contracts

(Increase) decrease in restricted stock

Decrease in restricted stock

Net increase in loans

Purchases of premises and equipment

Purchase of bank owned life insurance

Net cash used in investing activities

1 unchanged sentence

Net increase in deposits

(Decrease) increase in short-term borrowings

Decrease in short-term borrowings

Decrease in short-term borrowings with original maturity > 90 days

Repayment of acquisition note payable

Repayment of long-term debt (subordinated debt)

Proceeds from long-term debt, net

(Repayment) proceeds from long-term debt, net

Repayment of acquisition note payable

Issuance costs on subordinated debt

Net purchase of treasury stock through publicly announced plans

Net purchase of treasury stock

Dividends paid

1 unchanged sentence

Share based awards and exercises

Net cash provided by financing activities

Net cash (used in) provided by financing activities

Net change in cash and cash equivalents

4 unchanged sentences

Supplemental disclosure of cash flow information:

Transfers from loans and leases to real estate owned

Transfers from loans held for sale to loans held for investment

Net loans purchased, not settled

Net loans sold, not settled

The accompanying notes are an integral part of these consolidated financial statements .

1 unchanged sentence

(a) Nature of Operations

Meridian Corporation (“Meridian” or the “Corporation”) is a bank holding company engaged in banking activities through its wholly-owned subsidiary, Meridian Bank (the “Bank”), a full-service, state-chartered commercial bank with offices in the Delaware Valley tri-state market, which includes Pennsylvania, New Jersey and Delaware, and Maryland.

We have a financial services business model with significant noninterest income streams from mortgage lending, small business (“SBA”) lending and wealth management services.

4 unchanged sentences

We provide this service through three principal business line distribution channels, described further below.

The Corporation operates in a highly competitive market area that includes local, national and regional banks as competitors along with savings banks, credit unions, insurance companies, trust companies and registered investment advisors.

The Corporation and its subsidiaries are regulated by many regulatory agencies including the Securities and Exchange Commission (“SEC”), Federal Deposit Insurance Corporation (“FDIC”), the Federal Reserve and the Pennsylvania Department of Banking.

The Corporation operates in a highly competitive market areas that includes local, national and regional banks as competitors along with savings banks, credit unions, insurance companies, trust companies and registered investment advisors.

The Bank was incorporated on March 16, 2004 under the laws of the Commonwealth of Pennsylvania and is a Pennsylvania state-chartered bank.

The Bank commenced operations on July 8, 2004 and is a full-service bank providing personal and business lending and deposit services through 6 full-service banking offices in Pennsylvania, 9 mortgage loan production offices throughout the Delaware Valley, and 8 mortgage loan production offices in Maryland.

The Bank and Corporation are headquartered in Malvern, Pennsylvania, located in the western suburbs of Philadelphia and serves southeastern Pennsylvania and the rest of the Delaware Valley.

The Bank and Corporation are headquartered in Malvern, Pennsylvania, located in the western suburbs of Philadelphia.

(b) Basis of Presentation

13 unchanged sentences

Although our current estimates contemplate current conditions and how we expect them to change in the future, due to the continuing impact that the COVID-19 pandemic has had on financial markets and the economy both locally and nationally, it is reasonably possible that this could continue to materially affect these significant estimates and our results of operations and financial condition.

During the quarter-ended March 31, 2019, the Corporation identified and corrected an immaterial error related to Maryland state licensing requirements for mortgage loan originations by our Mortgage division.

As the result of our mortgage operations not being fully compliant with Maryland licensing law, we agreed to reimburse

consumers approximately $ 474 thousand in interest and certain fees on loans originated, in addition to paying a fine of $ 12 thousand to resolve the matter.

Most of the Corporation’s activities are with customers located in the Delaware Valley tri-state market and Maryland.

Most of the Corporation’s activities are with customers located in the Delaware Valley tri-state market and the central Maryland market area.

Note 4 discusses the types of securities that the Corporation invests in.

Note 5 discusses types of lending that the Corporation engages in.

discusses types of lending that the Corporation engages in.

Although the Corporation has a diversified loan portfolio, its debtors’ ability to honor their contracts is influenced by the region’s economy.

4 unchanged sentences

The Federal Reserve Board removed cash minimum reserve requirements in March 2020.

Net cash flows are reported for customer loan and deposit transactions, interest bearing depsoits in other financial institutions, and the federal funds purchased and repurchased agreements.

Net cash flows are reported for customer loan and deposit transactions, interest bearing deposits in other financial institutions, and the federal funds purchased and repurchased agreements.

(e) Securities

9 unchanged sentences

Equity securities are carried at fair value, with changes in fair value reported in net income.

At December 31, 2020 and 2019, investments in equity securities consisted of an investment in mutual funds with a fair value of $ 1 million.

At December 31, 2021 and 2020, investments in equity securities consisted of an investment in mutual funds with a fair value of $ 2.4 million, and $ 1 million, respectively.

The Corporation’s accounting policy specifies that (a) if the Corporation does not have the intent to sell a debt security prior to recovery and (b) it is more likely than not that it will not have to sell the debt security prior to recovery, the security would not be considered other-than-temporarily impaired, unless there is a credit loss.

29 unchanged sentences

Another key assumption is the look-back period (“LBP”), which represents the historical data period utilized to calculate loss rates.

We used 10 years for our LBP for all portfolio segments which encompasses our loss experience during the Financial Crisis, and our more recent improved loss experience.

Our LBP goes back to Q1 2010 for all portfolio segments, as applicable, which encompasses our loss experience during the Financial Crisis, and our more recent improved loss experience.

After consideration of the historic loss calculations, management applies qualitative adjustments so that the Allowance is reflective of the inherent losses that exist in the loan portfolio at the balance sheet date.

8 unchanged sentences

Accordingly, the Corporation does not separately identify individual loans of this nature for impairment disclosures, unless such loans become impaired or are troubled and the subject of a restructuring agreement.

Loans whose terms are modified are classified as TDR’s if the Corporation grants such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty.

Loans whose terms are modified are classified as TDRs if the Corporation grants such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty.

Concessions granted under a TDR generally involve a temporary reduction in interest rate or an extension of a loan’s stated maturity date.

TDR’s are considered impaired loans

TDRs are considered impaired loans

No portion of the Allowance is restricted to any individual loan or groups of loans, and the entire Allowance is available to absorb any and all loan and lease losses.

The Corporation has identified the following portfolio segments with similar risk characteristics for measuring credit losses:

Commercial mortgage – Our commercial real estate loans are secured by real estate that is both owner-occupied and investor owned.

Owner-occupied commercial real estate loans generally involve less risk than an investment property and are distinctly reported from non-owner occupied commercial real estate loans for measuring loan concentrations for regulatory purposes.

Repayment of commercial real estate loans depends on the cash flow of the borrower and the net operating income of the property, the borrower’s profitability, and the value of the underlying property.

Of primary concern in commercial real estate lending is the borrower’s creditworthiness and the cash flows from the property.

Payments on loans secured by income properties often depend on successful operation and management of the properties.

As a result, repayment of such loans may be subject, to a greater extent than residential real estate loans, to adverse conditions in the real estate market or the economy.

Commercial real estate is also subject to adverse market conditions that cause a decrease in market value or lease rates, obsolescence in location or function and market conditions associated with oversupply of units in a specific region.

Residential mortgage – Residential loans held in portfolio are primarily secured by single-family homes located in our market areas.

Residential loans are generally made on the basis of the borrower’s ability to make repayment from employment income or other income, and are secured by real property whose value tends to be more easily ascertainable.

Repayment of single-family loans are subject to adverse employment conditions in the local economy leading to increased default rates and decreased market values, including from oversupply in a geographic area.

In general, these loans depend on the borrower’s continuing financial stability and, therefore, are likely to be adversely affected by various factors, including job loss, divorce, illness, or personal bankruptcy.

Furthermore, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount that can be recovered on such loans.

Construction – Construction financing is generally considered to involve a higher degree of risk of loss than long-term financing on improved, occupied real estate.

Risk of loss on a construction loan depends largely upon the accuracy of the initial estimate of the property’s value at completion of construction and the estimated cost of construction.

During the construction phase, a number of factors could result in delays and cost overruns.

If the estimate of construction costs proves to be inaccurate, additional funds may be required to be advanced in excess of the amount originally committed to permit completion of the building.

Commercial and Industrial – We provide a variety of variable and fixed rate commercial business loans and lines of credit.

These loans and lines of credit are made to small and medium-sized manufacturers and wholesale, retail and service-related businesses.

Commercial business loans generally include lines of credit and term loans with a maturity of five years or less.

The primary source of repayment for commercial business loans is generally operating cash flows of the business and may also include collateralization of inventory, accounts receivable, equipment and/or personal guarantees.

As a result, the availability of funds for the repayment of commercial loans may depend substantially on the success of the business itself.

Furthermore, any collateral securing such loans may depreciate over time, may be difficult to appraise, and may fluctuate in value.

Leases – Meridian Equipment Finance (“MEF”) specializes in small ticket equipment leases for small and mid-sized businesses nationally and through a broad range of industries.

The Bank’s credit risk generally results from the potential default of borrowers which may be driven by customer specific or broader industry related conditions.

Consumer, including home equity – Our consumer-lending department principally originates home equity based products for our clients and prospects.

These loans typically fund completely at closing.

Additional products include smaller dollar personal loans and our student loan refinance product, designed to provide additional flexibility in repayment terms desired in the marketplace.

Most consumer loans are originated in Meridian’s primary market and surrounding areas.

The largest component of Meridian’s consumer loan portfolio consists of fixed rate home equity loans and variable rate home equity lines of credit.

Substantially all home equity loans and lines of credit are secured by junior lien mortgages on principal residences.

The Bank will lend amounts, which, together with all prior liens, typically may be up to 90 percent of the appraised value of the property securing the loan.

Home equity term loans may have maximum terms up to 20 years , while home equity lines of credit generally have maximum terms of 15 years .

Credit risk on such loans is mitigated through prudent underwriting standards, including evaluation of the creditworthiness of the borrower through credit scores and debt-to-income ratios and, if secured, the collateral value of the assets.

h) Mortgage Banking Activities and Mortgage Loans Held for Sale

21 unchanged sentences

Mortgage servicing rights (“MSRs") are recognized when a loan’s servicing rights are retained upon sale of a loan.

When mortgage loans are sold with servicing retained, MSR’s are initially recorded at fair value with the income effect recorded in non-interest income.

When mortgage loans are sold with servicing retained, MSRs are initially recorded at fair value with the income effect recorded in non-interest income.

The Corporation also sells the guaranteed portion of certain Small Business Administration (“SBA”) loans to third parties and retains servicing rights and receives servicing fees.

1 unchanged sentence

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.

These servicing assets amortize to noninterest expense in proportion to, and over the period of, the estimated future net servicing life of the underlying loans.

These servicing assets amortize in proportion to, and over the period of, the estimated future net servicing life of the underlying loans.

The servicing assets are evaluated quarterly for impairment based upon the fair value of the rights as compared to their amortized cost.

7 unchanged sentences

Revenues, such as rental income, and holding expenses are included in other income and other expenses, respectively.

The Corporation had $ 0 thousand of OREO at December 31, 2020 and $ 120 thousand for 2019.

The Corporation had no OREO at December 31, 2021 and 2020.

(k) Restricted Investment in Bank Stock

35 unchanged sentences

The Corporation recorded expense for the Plan and ESOP of $ 1.4 million and $ 1.1 million, respectively for the year ended December 31, 2021 and

$ 636 thousand and $ 325 thousand, respectively for the year ended December 31, 2019.

The expense recorded by the Corporation for the ESOP for the year ended December 31, 2020 included a $ 600 thousand one-time contribution approved by the Board of Directors.

During the year ended December 31, 2020, 161,576 shares were purchased by the ESOP at an average market value of $ 15.06 , while no shares were purchased by the ESOP for 2019.

$ 1.1 million and $ 1.2 million, respectively for the year ended December 31, 2020.

The expense recorded by the Corporation for the ESOP for the year ended December 31, 2021 included a $ 663 thousand employer contribution, in addition to $ 437 thousand in stock compensation related expense.

The expense recorded by the Corporation for the ESOP for the year ended December 31, 2020 included a $ 550 thousand employer contribution, and a $ 600 thousand one-time contribution approved by the Board of Directors.

There was no such contribution made in 2021.

During the year ended December 31, 2021, 45,606 shares were purchased by the ESOP at an average market value of $ 24.30 , while for the year ended December 31, 2020, 161,576 shares were purchased by the ESOP at an average market value of $ 15.06 .

Shares in the ESOP that are committed to be released to employees are treated as outstanding shares in the Corporation’s computation of earnings per share.

On August 31, 2020 the Corporation established a $ 2 million stock purchase authorization with the ESOP.

By the end of 2020 the ESOP had fully utilized the $ 2 million loan to purchase 133,280 Corporation common shares and as of December 31, 2020, 13,328 of these common shares were released to the ESOP and such shares are included in the number of shares purchased in 2020 for the ESOP noted above, leaving 119,952 unallocated shares.

By the end of 2020 the ESOP had fully utilized the $ 2 million loan to purchase 133,280 Corporation common shares and as of December 31, 2021, 26,656 of these common shares were released to the ESOP leaving 106,624 unallocated shares.

The 133,280 common shares purchased using the loan proceeds are included in the 161,576 shares purchased by the ESOP in 2020.

There were 269,904 shares in the ESOP as of December 31, 2021.

19 unchanged sentences

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income.

Although certain changes in assets and liabilities, such as unrealized gains and losses on

available-for-sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income.

Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income, are components of comprehensive income.

The components of other comprehensive income (loss) for the years ended December 31, 2021 and 2020 consist of unrealized holding gains and (losses) arising during the year on available-for-sale securities.

21 unchanged sentences

The Corporation earns wealth management fee income from investment advisory services provided to individual and 401k customers.

Fees that are determined based on the market value of the assets held in their accounts are generally billed quarterly, in advance, based on the market value of assets at the end of the previous billing period.

Fees that are determined based on the market value of the assets held in their accounts are

generally billed quarterly, in advance, based on the market value of assets at the end of the previous billing period.

Other related services that are based on a fixed fee schedule are recognized when the services are rendered.

Fees that are transaction based, including trade execution services, are recognized at the point in time that the

transaction is executed, i.e.

Fees that are transaction based, including trade execution services, are recognized at the point in time that the transaction is executed, i.e.

the trade date.

13 unchanged sentences

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.

5 unchanged sentences

Basic weighted averages shares outstanding

Effect of dilutive common shares

Dilutive effects of assumed exercises of stock options

Dilutive effects of SERP shares

Denominator for diluted earnings per share - adjusted weighted average shares outstanding

11 unchanged sentences

Total Intangible Assets

Accumulated amortization of intangible assets was $ 1 million and $ 750 thousand as of December 31, 2020 and 2019, respectively.

Accumulated amortization of intangible assets was $ 1.2 million and $ 1 million as of December 31, 2021 and 2020, respectively.

In accordance with ASC Topic 350, the Corporation performed a qualitative assessment of goodwill and identifiable intangible assets as of December 31, 2021 and determined it was more likely than not that the fair value of the Corporation, including the wealth reporting unit where the goodwill and identifiable intangible assets are held, was more than its carrying amount.

11 unchanged sentences

State and municipal securities

government agency collateralized mortgage obligations

Corporate bonds

13 unchanged sentences

State and municipal securities

Corporate bonds

Total securities available-for-sale

12 unchanged sentences

asset backed securities

government agency mortgage-backed securities

government agency collateralized mortgage obligations

State and municipal securities

government agency collateralized mortgage obligations

Corporate bonds

6 unchanged sentences

asset backed securities

government agency mortgage-backed securities

government agency collateralized mortgage obligations

State and municipal securities

Corporate bonds

Total securities available-for-sale

14 unchanged sentences

Mortgage-related securities

Proceeds from the sale of available for sale investment securities totaled $ 45.9 million for the year ended December 31, 2020, resulting in a gross gain on sale of $ 1.5 million and a gross loss on sale of $ 196 thousand for the year ended December 31, 2020.

Mutual funds with no stated maturity

Proceeds from the sale of available for sale investment securities totaled $ 23.6 million for the year ended December 31, 2021, resulting in a gross gain on sale of $ 634 thousand and a gross loss on sale of $ 199 thousand for the year ended December 31, 2021.

Proceeds from the sale of available for sale investment securities totaled $ 45.9 million for the year

ended December 31, 2020, resulting in a gross gain on sale of $ 1.5 million and a gross loss on sale of $ 196 thousand for the year ended December 31, 2020.

Loans Receivable

9 unchanged sentences

Small business loans

Paycheck Protection Program loans ("PPP")

Main Street Lending Program Loans ("MSLP")

Paycheck Protection Program ("PPP") loans

Main Street Lending Program ("MSLP") loans

Total portfolio loans and leases

3 unchanged sentences

Total loans and leases

Net deferred loan origination (fees) costs

Net deferred loan origination costs (fees)

(1) Includes $ 17,558 and $ 12,182 of loans at fair value as of December 31, 2021 and 2020, respectively.

16 unchanged sentences

(1) Includes $ 17,558 of loans at fair value as of December 31, 2021 ($ 16,768 of current, $ 189 of 30-89 days past due and $ 601 of nonaccrual).

The increase in nonaccrual loans and leases was largely due to one commercial loan relationship for $ 13.8 million that had been on COVID-19 deferral but became a non-performing loan relationship late in 2021.

December 31, 2020

6 unchanged sentences

Small business loans

Paycheck Protection Program loans

Main Street Lending Program loans

(1) Includes $ 12,182 of loans at fair value as of December 31, 2020 ($ 10,314 of current, $ 958 of 30-89 days past due and $ 910 of nonaccrual).

(6) Allowance for Loan and Lease Losses (the Allowance)

The Allowance is established through provisions for loan and lease losses charged against income.

The Allowance is evaluated on at least a quarterly basis, as losses are estimated to be probable and incurred.

The provision for loan and lease losses increase or decrease the ALLL, if deemed necessary.

Loans deemed to be uncollectible are charged against the Allowance, and subsequent recoveries, if any, are credited to the Allowance.

38 unchanged sentences

(1) Excludes deferred fees and loans carried at fair value.

(2) PPP and MSLP loans are not reserved against as they are 100 % guaranteed.

The following table details the allocation of the Allowance and the carrying value for loans and leases by portfolio segment based on the methodology used to evaluate the loans and leases for impairment as of December 31, 2020 respectively:

12 unchanged sentences

Small business loans

Paycheck Protection Program loans

Main Street Lending Program

(1) Excludes deferred fees and loans carried at fair value.

(2) PPP and MSLP loans are not reserved against as they are 100 % guaranteed.

Loans and Leases by Credit Ratings

20 unchanged sentences

Main Street Lending Program loans

Commercial and industrial loans classified as substandard totaled $ 42.9 million as of December 31, 2021, an increase of $ 33.9 million, from $ 9.0 million as of December 31, 2020.

The increase was driven by the $ 13.8 million commercial loan relationship in the advertising industry that became a non-performing loan relationship late in 2021, discussed above.

The remaining $ 20.1 million of increase year-over-year was comprised of 18 different loan relationships with no specific industry concentration.

December 31, 2020

4 unchanged sentences

Small business loans

Paycheck Protection Program loans

Main Street Lending Program loans

In addition to credit quality indicators as shown in the above tables, Allowance allocations for residential mortgages, consumer loans and leases are also applied based on their performance status as December 31, 2021 and 2020, respectively.

5 unchanged sentences

Residential mortgage

There were five nonperforming residential mortgage loans at December 31, 2020 and five at December 31, 2019 with a combined outstanding principal balance of $ 910 thousand and $ 839 thousand, respectively, which were carried at fair value and not included in the table above.

There were four nonperforming residential mortgage loans at December 31, 2021 and five at December 31, 2020 with a combined outstanding principal balance of $ 601 thousand and $ 910 thousand, respectively, which were carried at fair value and not included in the table above.

No TDR’s performing according to modified terms are included in performing residential mortgages above for the twelve months ended December 31, 2021 and 2020, respectively.

15 unchanged sentences

Residential mortgage

Interest income recognized on performing impaired loans amounted to $ 328 thousand and $ 206 thousand for the twelve months ended December 31, 2020 and 2019, respectively.

December 31, 2021

December 31, 2020

(dollars in thousands)

Impaired loans with related allowance:

Commercial and industrial

Small business loans

Home equity lines and loans

Residential mortgage

Impaired loans without related allowance:

Commercial mortgage

Commercial and industrial

Small business loans

Home equity lines and loans

Residential mortgage

Troubled Debt Restructuring (“TDR’s”)

10 unchanged sentences

TDRs in compliance with modified terms

There were no loan and lease modifications granted during the years ended December 31, 2020 and 2019 that were categorized as TDRs.

There were 2 loan and lease modifications granted during the year ended December 31, 2021 on commercial mortgages and no loan and lease modifications granted during the year ended December 31, 2020 that were categorized as TDRs.

No loan and lease modifications granted during the twelve months ended December 31, 2021 and 2020 subsequently defaulted during the same time period.

COVID-19 Loan Modifications

The following table details the loan modifications excluding TDR’s that the Corporation provided to loan customers as of December 31, 2020.

December 31, 2020

Loan Portfolio

Modifications

Commercial mortgage

Commercial and industrial, including leases

Construction & land development

Home equity lines and loans

Residential mortgage

Small business loans

In accordance with Section 4013 of the CARES Act, loan deferrals granted to customers that resulted from the impact of COVID-19 and who were not past due at the time of deferral were not considered trouble debt restructurings under ASC 310-40 as of December 31, 2020.

This provision was extended to January 1, 2022 under the Consolidated Appropriations Act, 2021.

COVID-19 Assistance to Customers

During 2021 and 2020 we assisted customers that were impacted by the COVID-19 pandemic through 2 distinct and impactful ways:

the issuance of PPP loans and short-term loan deferrals on a limited basis, in accordance with Section 4103 of the CARES Act.

Throughout the life of the PPP loan program we helped borrowers with the issuance of 1,451 such loans totaling over $ 370 million.

As of March 10, 2022, approximately $ 314 million, or 1,224 loans, had been paid back.

Out of the remaining $ 56.3 million that have yet to be forgiven by the SBA, $ 31.7 million have submitted for forgiveness and are awaiting a response from the SBA, while the remaining $ 24.6 million has not yet submitted a request for forgiveness.

We also provided COVID-19 loan deferrals, typically in 3 month increments, to loan customers that amounted to $ 2.4 million as of December 31, 2021, down $ 21.8 million, or 90 %, from the $ 24.2 million as of December 31, 2020 as detailed by industry concentration of the borrower in the table below:

(dollars in thousands)

C&I building construction

As these modifications related to the COVID-19 pandemic and qualify under the provisions of either Section 4013 of the CARES Act or Interagency Guidance, they are not considered TDR’s.

Management continues to monitor these deferrals and has adequately considered these credits in the December 31, 2021 allowance for loan losses balance.

These modified loans are classified as performing and are not considered past due.

These modified

loans are classified as performing and are not considered past due.

Loans are to be placed on non-accrual when it becomes apparent that payment of interest or recovery of all principal is questionable, and the COVID-19 related modification is no longer considered short-term or the modification is deemed ineffective.

As of January 31, 2022 the $ 2.4 million of deferrals that had existed as of December 31, 2021 expired without further deferral or modification given to these borrowers.

Bank Premises and Equipment

8 unchanged sentences

Total depreciation expense for the years ended December 31, 2021 and 2020 totaled $ 1.3 million and $ 1.6 million, respectively.

In November 2021 Meridian purchased a building for $ 3.8 million that will serve as the future headquarters of our bank operations department, as well as other departments.

As of December 31, 2021 this building was classified as construction in process as it has not yet been put into service, and therefore has not started to be depreciated.

The components of deposits at December 31, 2021 and 2020 are as follows:

8 unchanged sentences

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 Federal Home Loan Bank of Pittsburgh.

The Corporation has two Federal Funds borrowing facilities with correspondent banks:

one of $ 15 million and one of $ 24 million, respectively, which are both unsecured.

The Corporation’s short-term borrowings generally consist of federal funds purchased and short-term borrowings extended under agreements with the Federal Home Loan Bank of Pittsburgh (“FHLB”).

The Corporation has two unsecured Federal Funds borrowing facilities with correspondent banks:

one of $ 24 million and one of $ 15 million.

Federal funds purchased generally represent one-day borrowings.

The Corporation had $ 0 in Federal Funds purchased at December 31, 2020 and 2019, respectively.

The Corporation also has a facility with the Federal Reserve discount window of $ 15.3 million that is fully secured by investment securities and loans.

There were $ 10 million in borrowings under this facility at December 31, 2020.

The Corporation had no Federal Funds purchased at December 31, 2021 and December 31, 2020.

The Corporation also has a facility with the Federal Reserve discount window of $ 3.5 million.

This facility is fully secured by investment securities.

There were no borrowings under this at December 31, 2021 and $ 10 million at December 31, 2020.

Short-term borrowings at December 31, 2021 and December 31, 2020 consisted of the following notes:

2 unchanged sentences

Open Repo Plus Weekly

Federal Reserve Discount Window

Mid-term Repo-fixed

Federal Reserve Discount Window

Mid-term Repo-fixed

3 unchanged sentences

Mid-term Repo-fixed

Acquisition Purchase Note

As part of the CARES Act, the FRB of Philadelphia offered secured discounted borrowings to banks who originated PPP loans through the Paycheck Protection Program Liquidity Facility or PPPLF program.

At December 31, 2020, the Corporation pledged $ 153.3 million of PPP loans to the FRB of Philadelphia to borrow $ 153.3 million of funds at a rate of 0.35 %.

Advances from this facility are secured 100 % by the aggregate face value of pools comprised of loans with common maturity dates.

PPPLF advances mature concurrently with the loans in a given pool.

At December, 2021, the Corporation had no of PPPLF advances with the FRB of Philadelphia.

Advances made on the PPPLF were ended by the FRB on July 30, 2021.

Long-term debt at December 31, 2021 and December 31, 2020 consisted of the following fixed rate notes with the FHLB of Pittsburgh:

1 unchanged sentence

(dollars in thousands)

PPPLF Advance

PPPLF Advances

Mid-term Repo-fixed

The FHLB of Pittsburgh had issued $ 143.0 million of letters of credit to the Corporation for the benefit of the Corporation’s public deposit funds and loan customers.

The FHLB of Pittsburgh has also issued $ 131.5 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 2021.

The Corporation has a maximum borrowing capacity with the FHLB of Pittsburgh of $ 638.9 million and $ 507.3 million as of December 31, 2020 and 2019, respectively.

The Corporation has a maximum borrowing capacity with the FHLB of $ 505.4 million as of December 31, 2021 and $ 638.9 million as of December 31, 2020.

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.

4 unchanged sentences

The 2008 Debentures began to repay principal in eight equal installments which commenced in December of 2016.

As of December 31, 2020, $ 169 thousand of the 2008 Debentures remained outstanding, after pay downs of $ 56 thousand during 2020 and $ 119 thousand during 2019.

As of December 31, 2021, $ 113 thousand of the 2008 Debentures remained outstanding, after pay downs of $ 56 thousand for 2021 and 2020 combined.

In December 2011, the Bank issued $ 1.4 million of mandatory convertible unsecured subordinated debentures (2011 Debentures).

6 unchanged sentences

The 2013 Debentures are convertible into 1 share of the Corporation’s common stock for every $22 in principal amount of the 2013 Debentures automatically on such date, if any, as accumulated losses of the Bank first exceed the sum of the retained earnings and capital surplus accounts of the Bank.

As of December 31, 2020 and 2019, $ 870 thousand of the 2013 Debentures remained outstanding, after no pay downs during 2020 or 2019.

As of December 31, 2021, $ 761 thousand of the 2013 Debentures remained outstanding, after pay downs of $ 109 thousand during 2021 and no payments during 2020.

In June, August and September 2014, the Bank issued $ 3 million, $ 100 thousand, and $ 7 million of non-convertible unsecured subordinated debentures (2014 Debentures).

6 unchanged sentences

The debt issuance costs are included as a direct deduction from the debt liability and these costs are amortized to interest expense using the effective yield method.

During 2020 the Corporation made interest payments of $ 2.2 million on the 2019 Debentures.

During 2021 and 2020 the Corporation made interest payments of $ 2.2 million and $ 2.2 million on the 2019 Debentures, respectively.

The 2008, 2011, and 2013 Debentures are includable as Tier 2 capital for determining the Bank’s compliance with regulatory capital requirements (see footnote 19).

11 unchanged sentences

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 $ 506.0 million and $ 60.3 million of residential mortgage loans as of December 31, 2020 and 2019, respectively.

During the twelve months ended December 31, 2020, the Corporation recognized servicing fee income of $ 498 thousand, compared to $ 91 thousand during the twelve months ended December 31, 2019, respectively.

The Corporation serviced $ 1.0 billion and $ 506.0 million of residential mortgage loans as of December 31, 2021 and 2020, respectively.

During the twelve months ended December 31, 2021, the Corporation recognized servicing fee income of $ 2.0 million, compared to $ 498 thousand during the twelve months ended December 31, 2020, respectively.

Changes in the MSR balance are summarized as follows:

21 unchanged sentences

Fair value of residential mortgage servicing rights

Weighted average life (years)

Weighted average life (months)

Prepayment speed

57 unchanged sentences

(dollars in thousands)

Refer to footnote 23 for discussion of ASU 2016-02 Leases, which the Corporation adopted as of January 1, 2022.

Stock-Based Compensation

4 unchanged sentences

The shares granted under the 2004 Plan to officers and other employees are incentive stock options, and are subject to the limitations under Section 422 of the Internal Revenue Code.

The Meridian Bank 2016 Equity Incentive Plan (2016 Plan) was amended on May 24, 2019 to authorize the Board of Directors to grant up to an aggregate of 686,900 stock awards that can take different forms, as adjusted for the 2016 5 % stock dividend.

A total of 438,750 stock options and 43,208 shares of restricted stock have been granted under the 2016 Plan through December 31, 2021.

17 unchanged sentences

The fair value of each option granted in 2021 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

dividend yield of 0.0 %, risk-free interest rate of between 0.47 % and 1.68 %, expected life of 5.75 years, and expected volatility of between 21.81 % and 39.65 % based on an average of the Corporation’s share price since going public and the expected volatility of similar public financial institutions in the Corporation’s market area for the period before the Corporation went public.

dividend yield of 0.0 %, risk-free interest rate of between 1.02 % and 1.54 %, expected life of 5.75 years, and expected volatility of between 39.25 % and 40.97 % based on an average of the Corporation’s share price since going public.

The weighted average fair value of options granted in 2021 was $ 8.14 to $ 9.57 per share.

The fair value of each option granted in 2020 was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

dividend yield of 0.0 %, risk-free interest rate of between 1.95 % and 2.61 %, expected life of 5.75 years, and expected volatility of 22.44 % and 22.48 % based on an average of the Corporation’s share price since going public and the expected volatility of similar public financial institutions in the Corporation’s market area.

dividend yield of 0.0 %, risk-free interest rate of between 0.47 % and 1.68 %, expected life of 5.75 years, and expected volatility of 21.81 % and 39.65 % based on an average of the Corporation’s share price since going public.

The weighted average fair value of options granted in 2020 was $ 4.47 to $ 5.87 per share.

Total stock compensation cost for the twelve months ended December 31, 2020 and December 31, 2019 was $ 451 thousand and $ 272 thousand, respectively.

During the twelve months ended December 31, 2020 and December 31, 2019, the Corporation received $ 200 thousand and $ 128 thousand from the exercise of stock options, respectively.

Total stock option compensation cost for the twelve months ended December 31, 2021 and December 31, 2020 was $ 803 thousand and $ 451 thousand, respectively.

During the twelve months ended December 31, 2021 and December 31, 2020, the Corporation received $ 1.0 million and $ 200 thousand from the exercise of stock options, respectively.

There were no tax benefits recognized related to stock compensation cost for the twelve months ended December 31, 2021 and 2020.

1 unchanged sentence

For purposes of the determination of stock-based compensation expense for the year ended December 31, 2021, we recognized the forfeiture of 4,148 of shares of stock options that were previously granted to officers and other employees.

As of December 31, 2020, there was $ 401 thousand of unrecognized compensation cost related to nonvested stock options.

As of December 31, 2021, there was $ 1.3 million of unrecognized compensation cost related to nonvested stock options.

This cost will be recognized over a weighted average period of 1.24 years.

During 2021, the intrinsic value of options exercised was $ 1.2 million.

Restricted Stock

The restricted stock granted under the 2016 Plan vest according to each award’s specific vesting schedule.

All awards granted in 2020 vest 50 % one year from the grant date and the remaining 50 % on the second anniversary of the grant date.

All awards granted in 2021 vest 100 % one year from the grant date, while all awards granted in 2020 vest 50 % one year from the grant date and the remaining 50 % on the second anniversary of the grant date.

The grant date fair value of the restricted stock is based on the closing price on the date prior to the grant.

1 unchanged sentence

Outstanding at December 31, 2020

Outstanding at December 31, 2021

Nonvested at December 31, 2021

Compensation expense for restricted stock is measured based on the market price of the stock on the day prior to the grant date and is recognized on a straight-line basis over the vesting period.

For the year ended December 31, 2020, the Corporation recognized $ 80 thousand of expense related to the restricted stock.

For the years ended December 31, 2021 and 2020, the Corporation recognized $ 460 thousand and $ 80 thousand of expense related to the restricted stock, respectively.

As of December 31, 2021, there was $ 189 thousand in unrecognized compensation costs related to restricted stock.

This cost will be recognized over a weighted average period of 0.23 years.

The components of the federal and state income tax expense for the years ended December 31, 2020 and 2019 are as follows:

The components of the federal and state income tax expense for the years ended December 31, 2021 and 2020 were:

(dollars in thousands)

Total federal income tax expense

Total state income tax expense

Total income tax expense

A reconciliation of the statutory income tax at 21 % to the income tax expense included in the statement of operations is as follows for 2021 and 2020, respectively:

10 unchanged sentences

Allowance for loan and lease losses

Litigation reserve

Accrued incentive compensation

Accrued retirement

Unrealized loss on available for sale securities

Deferred rent

12 unchanged sentences

The effective tax rates for the twelve-month periods ended December 31, 2021 and 2020 were 23.1 % and 23.4 % respectively.

The increase in rate from 22.4 % to 23.4 % between 2019 and 2020 was primarily related to the increase in state income tax expense as Meridian’s mortgage division expanded into Maryland in 2020.

The decrease in rate from 23.4 % to 23.1 % between 2020 and 2021 was primarily related to the decrease in state income tax expense from Meridian’s mortgage division, specifically in Maryland.

Under ASC 740, Income Taxes, the effect of income tax law changes on deferred taxes should be recognized as a component of income tax expense related to continuing operations in the period in which the law is enacted.

10 unchanged sentences

(15) Revenue from Contracts with Customers

All of the Corporation’s revenue from contracts with customers in the scope of FASB ASU 2014-09 (Topic 606), “Revenue for Contracts with Customers” (ASC 606) is recognized within noninterest income.

The following table presents the Corporation’s noninterest income by revenue stream and reportable segment for the year ended December 31, 2020 (in accordance with ASC 606), and for the year ended December 31, 2019 (in accordance with ASC 605 – Revenue Recognition) as the Corporation adopted ASC 606 as of December 31, 2020.

Items for the year ended December 31, 2020 outside the scope of ASC 606 are noted as such.

The following table presents the Corporation’s non-interest income by revenue stream and reportable segment for the years ended December 31, 2021 and 2020.

Year Ended December 31, 2021

4 unchanged sentences

Wealth management income

SBA income (1)

SBA loan income (1)

Net change in fair values (1)

1 unchanged sentence

Earnings on investment in life insurance (1)

Net gain on sale of securities (1)

Net gain on sale of investment securities available-for-sale (1)

Dividends on FHLB stock (1)

Service charges on deposit accounts

Service charges

Non-interest income

(1) Not within the scope of ASC 606.

(2) Within other non-interest income is $ 925 thousand and $ 621 thousand for the years ended December 31, 2020 and 2019, respectively, which are in the scope of ASC 606.

(2) Within other non-interest income is $ 1.2 million and $ 925 thousand for the years ended December 31, 2021 and 2020, respectively, which are in the scope of ASC 606.

These amounts include wire transfer fees, ATM/debit card commissions, and title fee income.

13 unchanged sentences

Service charges on deposits are withdrawn from the customer’s account balance.

Gains/Losses on Sales of OREO:

The Corporation records a gain or loss from the sale of OREO when control of the property transfers to the buyer, which generally occurs at the time of an executed deed.

There was a sale of $ 120 thousand

in OREO for the year ended December 31, 2020, resulting in a gain on sale of $ 6 thousand.

There were no such sales of OREO for the year ended December 31, 2019.

(16) Transactions with Executive Officers, Directors and Principal Stockholders

1 unchanged sentence

Loans receivable from related parties totaled $ 5.1 million and $ 3.3 million at December 31, 2021 and 2020, respectively.

Advances, repayments, and the effect of changes in composition of related parties during 2021 totaled $ 2.8 million, $ 1.3 million, and $ 284 thousand, respectively.

Advances, repayments, and the effect of changes in composition of related parties during 2020 totaled $ 4.9 million, $ 3.8 million, and $ 1.5 million, respectively.

Advances and repayments during 2019 totaled $ 8.7 million and $ 8.5 million respectively.

Deposits of related parties totaled $ 34.7 million and $ 25.6 million at December 31, 2021 and 2020, respectively.

9 unchanged sentences

(dollars in thousands)

Commitments to grant loans and commitments under lines of credit

Commitments to fund loans and commitments under lines of credit

Letters of credit

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract.

Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.

Commitments generally have fixed expiration dates or other termination clauses and may

require payment of a fee.

The Corporation evaluates each customer’s credit worthiness on a case-by-case basis.

1 unchanged sentence

Collateral held varies but may include personal or commercial real estate, accounts receivable, inventory and equipment.

Outstanding letters of credit written are conditional commitments issued by the Corporation to guarantee the performance of a customer to a third party.

The majority of these standby letters of credit expire within the next twelve months .

Outstanding letters of credit are conditional commitments issued by the Corporation to guarantee the performance of a customer to a third party.

The majority of these are standby letters of credit that expire within the next twelve months .

The credit risk involved in issuing letters of credit is essentially the same as that involved in extending other loan commitments.

1 unchanged sentence

Management believes that the proceeds obtained through a liquidation of such collateral would be sufficient to cover the maximum potential amount of future payments required under the corresponding guarantees.

The current amount of the liability as of December 31, 2020 and 2019 for guarantees under standby letters of credit issues is not material.

Not included in commitments to grant loans in the table above are mortgage loan commitments of $ 428.8 million and $ 72.9 million in 2020 and 2019, respectively, which included interest rate lock commitments.

Not included in commitments outstanding, in the table above are mortgage loan commitments of $ 143.9 million and $ 428.8 million in 2021 and 2020, respectively, which included interest rate lock commitments.

These rate lock commitments represent an agreement to extend credit to a mortgage loan applicant whereby the interest rate on the loan is set prior to funding.

The loan commitment binds the Corporation to lend funds to a potential borrower at the specified rate, regardless

of whether interest rates change between the commitment date and the loan funding date.

The loan commitment binds the Corporation to lend funds to a potential borrower at the specified rate, regardless of whether interest rates change between the commitment date and the loan funding date.

The Corporation’s loan commitments generally range between 30 and 120 days ;

6 unchanged sentences

The Corporation’s forward sale commitments generally expire within 90 days .

Loans sold under FHA or investor programs are subject to repurchase or indemnification if they fail to meet the origination criteria of those programs.

In addition, loans sold to investors may be subject to repurchase or indemnification if the loan is two or three months delinquent during a set period that usually varies from the first six months to a year after the loan is sold.

At December 31, 2020 there were no indemnification or repurchase requests pending.

Although repurchases and losses have historically been infrequent, a repurchase reserve of $ 2.7 million was recorded in 2020 due to the significant increase in loan originations.

$ 71 thousand was recorded as of December 31, 2019.

There was one loan repurchased for the year ended December 31, 2020 with an unpaid principle balance of $ 153 thousand.

Loans sold under FHA or investor programs are subject to indemnification or repurchase if they fail to meet the origination criteria of those programs or if the loan is two or three months delinquent during a set period that usually varies from the first six months to a year after the loan is sold.

There was one indemnification signed for the year ended December 31, 2021 for $ 109 thousand, and no indemnifications signed for the year ended December 31, 2020.

A repurchase reserve of $ 3.2 million was recorded at December 31, 2021, as compared to $ 2.7 million as of December 31, 2020.

There were six loans repurchased for the year ended December 31, 2021 with a total unpaid principal balance of $ 1.3 million, as compared to one loan repurchased for the year ended December 31, 2020 with an unpaid principal balance of $ 153 thousand.

(18) Recent Litigation

4 unchanged sentences

In connection with formal and informal inquiries by federal, state, and local agencies, the Corporation and its subsidiaries receive numerous requests, subpoenas and orders for documents, testimony and information in connection with various aspects of their activities.

On November 21, 2017, three former employees of the mortgage-banking division of the Bank filed suit in the United States District Court for the Eastern District of Pennsylvania, Juan Jordan et al.

Meridian Bank, Thomas Campbell and Christopher Annas , against the Bank purporting to be a class and collective action seeking unpaid and overtime wages under the Fair Labor Standards Act of 1938, the New Jersey Wage and Hour Law, and the Pennsylvania Minimum Wage Act of 1968 on behalf of similarly situated plaintiffs.

In September 2019, plaintiffs’ counsel and the Bank agreed to move forward with non-binding mediation.

Although the Bank believes it had strong and meritorious defenses, given the expense and inconvenience of litigation, on July 24, 2019 through mediation, the Bank reached an agreement in principle with the plaintiffs to settle this litigation for $ 990 thousand in total.

The Bank had a litigation reserve of $ 990 thousand at December 31, 2019.

The parties submitted a negotiated settlement agreement to the court, and received final court approval on December 19, 2019.

On February 29, 2020 the Bank made a payment of $ 1.0 million in final settlement of this matter, which included additional minor expenses.

(19) Regulatory Matters

2 unchanged sentences

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank and the Corporation must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices.

The Bank’s and the Corporation’s

capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk-weightings and other factors.

The Bank’s and the Corporation’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk-weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank and the Corporation to maintain minimum amounts and ratios (set forth below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets, and of Tier 1 capital to average assets.

Management believes, as of December 31, 2020, that the Bank and the Corporation meets all capital adequacy requirements to which it is subject.

Management believes, as of December 31, 2021, that the Bank and the Corporation meet all capital adequacy requirements to which it is subject.

Community banks have long raised concerns with bank regulators about the regulatory burden, complexity, and costs associated with certain provisions of the Basel III Rule.

16 unchanged sentences

December 31, 2020

To be well capitalized under

For capital adequacy

prompt corrective action

To Be Well Capitalized

Under CBLR Framework

(dollars in thousands)

Total capital (to risk-weighted assets)

Common equity tier 1 capital (to risk-weighted assets)

Tier 1 capital (to risk-weighted assets)

Tier 1 capital (to average assets)

* Prompt corrective action requirements do not apply to Meridian Corporation but are included as information only

(20) Fair Value Measurements and Disclosures

17 unchanged sentences

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.

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.

For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at December 31, 2021 and 2020 are as follows:

6 unchanged sentences

State and municipal securities

government agency collateralized mortgage obligations

Corporate bonds

15 unchanged sentences

State and municipal securities

Investments in mutual funds

Corporate bonds

Equity investments

Mortgage loans held for sale

13 unchanged sentences

Impaired loans (1)

Other real estate owned (2)

Commercial and industrial

Small business loans

Home equity lines and loans

Residential mortgage

(1) Impaired 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.

These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

(2) Real estate properties acquired through, or in lieu of, foreclosure are to be sold and are carried at fair value less estimated cost to sell.

Fair value is based upon independent market prices or appraised value of the property.

These assets are included in Level 3 fair value based upon the lowest level of input that is significant to the fair value measurement.

Appraised values may be discounted based on management’s expertise, historical knowledge, changes in market conditions from the time of valuation and/or estimated costs to sell.

Refer to the following page for further qualitative discussion around impaired loans.

The following table details the valuation techniques for Level 3 impaired loans.

(dollars in thousands)

Valuation Technique

Range of Inputs

December 31, 2021

Appraisal of collateral

Management adjustments on appraisals for property type and recent activity

2 - 15 % discount

December 31, 2020

Appraisal of collateral

Management adjustments on appraisals for property type and recent activity

2 - 15 % discount

Below is management’s estimate of the fair value of all financial instruments, whether carried at cost or fair value on the Corporation’s balance sheet.

5 unchanged sentences

(b) 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.

The fair value of securities are determined by quoted market prices, if available (Level 1).

For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2), using matrix pricing, 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.

Treasuries includes in the available for sale portfolio are the only securities considered Level 1, while all other securities are considered Level 2.

15 unchanged sentences

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 are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements.

Impaired loans are evaluated on a quarterly basis for additional impairment and adjusted in accordance with the Allowance policy.

(h) Restricted Investment in Bank Stock

51 unchanged sentences

Letters of credit

Treasuries within securities available-for-sale are classified as Level 1.

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 years ended December 31, 2021 and 2020.

1 unchanged sentence

Balance at beginning of the period

Increase in value

(Decrease) increase in value

Balance at end of the period

The following table details the valuation techniques for Level 3 interest rate lock commitments.

(dollars in thousands)

Valuation Technique

3 unchanged sentences

Market comparable pricing

Net realized gains of $ 6.5 million and $ 78 thousand due to changes in the fair value of interest rate lock commitments which are classified as Level 3 assets and liabilities for the twelve months ended December 31, 2020 and 2019, respectively, are recorded in non-interest income as net change in the fair value of derivative instruments in the Corporation’s consolidated statements of income.

Net realized losses of $ 5.9 million and gains of $ 6.5 million due to changes in the fair value of interest rate lock commitments which are classified as Level 3 assets and liabilities for the twelve months ended December 31, 2021 and 2020, respectively, are recorded in non-interest income as net change in the fair value of derivative instruments in the Corporation’s consolidated statements of income.

(21) Derivative Financial Instruments

41 unchanged sentences

Customer Derivatives - Interest Rate Swaps

Net fair value gains (losses) on derivative financial instruments

Net realized losses on derivatives were $( 9.4 ) million and $( 816 ) thousand for the year ended December 31, 2020 and 2019, respectively, and are included in other non-interest income in the consolidated statements of income.

Net fair value (losses) gains on derivative financial instruments

Net realized gains on derivative hedging activities were $ 3.0 million and net realized losses were $ 9.4 million for the year ended December 31, 2021 and 2020, respectively, and are included in non-interest income in the consolidated statements of income.

(22) Segments

11 unchanged sentences

The table below summarizes income and expenses, directly attributable to each business line, which has been included in the statement of operations.

Total assets for each segment is also provided.

Year Ended December 31, 2021

7 unchanged sentences

Wealth management income

SBA loan income

Net change in fair values

Net (loss) on hedging activity

Net gain (loss) on hedging activity

Non-interest income

3 unchanged sentences

As an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), the Bank is permitted an extended transition period for complying with new or revised accounting standards affecting public companies.

the previous three-year period, issued more than $1.0 billion in non-convertible debt and (iv) the end of the fiscal year in which the market value of our equity securities that are held by non-affiliates exceeds $700 million as of June 30 of that year.

We will remain an emerging growth company until the earliest of (i) the end of the fiscal year during which we have total annual gross revenues of $1,070,000,000 or more, (ii) the end of the fiscal year following the fifth anniversary of the completion of our initial public offering (December 31, 2022), (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt and (iv) the end of the fiscal year in which the market value of our equity securities that are held by non-affiliates exceeds $700 million as of June 30 of that year.

We have elected to take advantage of this extended transition period, which means that the financial statements included herein, as well as any financial statements that we file in the future, will not be subject to all new or revised accounting standards generally applicable to public companies for the transition period for so long as we remain an emerging growth company or until we affirmatively and irrevocably opt out of the extended transition period under the JOBS Act.

2 unchanged sentences

Adopted Pronouncements in 2021:

FASB ASU 2017-01 (Topic 805), “Business Combinations”

Issued in January 2017, ASU 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses.

The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation.

ASU 2017-01 is effective for public companies for annual periods beginning after December 15, 2017 including interim periods within those periods, while for non-public companies the ASU is effective for annual periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019.

The adoption of this standard on January 1, 2020 did not have a material impact on the Corporation’s consolidated financial statements and related disclosures.

FASB ASU 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting”

Issued in June 2018, ASU 2018-07:

Compensation - Stock Compensation (Topic 718), “ Improvements to Nonemployee Share-Based Payment Accounting ” expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees.

An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period).

The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards.

The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers.

The amendments in this update became effective for us January 1, 2020.

The adoption did not have an impact on our consolidated financial statements and related disclosures as the Corporation did not and has not historically granted share based payment awards to nonemployees other than to the Corporation’s Board of Directors, who are treated as employees for share-based payment accounting.

FASB ASU 2018-13, "Fair Value Measurement Disclosure Framework"

Issued in August 2018, ASU 2018-13 modifies, adds and removes certain disclosures aimed to improve the overall usefulness of the disclosure requirements for fair value measurements.

ASU 2018-13 was effective for the Corporation on January 1, 2020.

Adoption is required on both a prospective and retrospective basis depending on the amendment.

FASB ASU 2018-15 (Topic 350), "Intangibles - Goodwill and Other - Internal-Use Software"

Issued in August 2018, ASU 2018-15 provides clarity on capitalizing and expensing implementation costs for cloud computing arrangements in a service contract.

If an implementation cost is capitalized, the cost should be recognized over the noncancellable term and periodically assessed for impairment.

The guidance is effective in annual and interim periods in fiscal years beginning after December 15, 2020 and interim periods within annual periods beginning after December 15, 2021.

Adoption should be applied retrospectively or prospectively to all implementation costs incurred after the date of adoption.

The adoption of this ASU did not have a material impact on our consolidated financial statements and related disclosures.

FASB ASU 2017-08 (Subtopic 310-20), “Nonrefundable Fees and Other Costs (Subtopic 310-20):

Premium Amortization on Purchased Callable Debt Securities”

Issued in March 2017, ASU 2017-08 shortens the amortization period for certain callable debt securities held at a premium.

Specifically, the amendment requires the premium to be amortized to the earliest call date.

The amendment does not require an accounting change for securities held at a discount;

the discount continues to be amortized to maturity.

For public business entities, the amendments in this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.

Early adoption is permitted, including adoption in an interim period.

For non-public companies the ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within the fiscal years beginning after December 31, 2020.

The adoption of ASU 2017-08 as of December 31, 2020 did not have a material impact on our consolidated financial statements and related disclosures as all debt securities are currently carried at par value with capitalized issuance costs.

FASB ASU 2017-12 (Subtopic 815), “Derivatives and Hedging:

Targeted Improvements to Accounting for Hedging Activities”

Issued in August 2017, ASU 2017-12 better aligns hedge accounting with an organization’s risk management activities in the financial statements.

In addition, the ASU simplifies the application of hedge accounting guidance in areas where practice issues exist.

Specifically, the proposed ASU eases the requirements for effectiveness testing, hedge documentation and application of the shortcut and the critical terms match methods.

Entities would be permitted to designate contractually specified components as the hedged risk in a cash flow hedge involving the purchase or sale of nonfinancial assets or variable rate financial instruments.

In addition, entities would no longer separately measure and report hedge ineffectiveness.

Also, entities, may choose refined measurement techniques to determine the changes in fair value of the hedged item in fair value hedges of benchmark interest rate risk.

For public business entities, the ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.

For all other entities, the ASU is effective for fiscal years beginning after December 15, 2019, and interim periods beginning after December 15, 2020.

Early application is permitted in any interim period after issuance of the ASU for existing hedging relationships on the date of adoption and the effect of adoption should be reflected as of the beginning of the fiscal year of adoption (that is, the initial application date).

The Corporation has evaluated ASU 2017-12, and has determined it has no current hedging strategies applicable under the ASU but we will consider the impact of the ASU on future hedging strategies that may arise.

The adoption of ASU 2017-12 as of December 31, 2020 did not have a material impact on our consolidated financial statements and related disclosures.

FASB ASU 2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes”

Issued in December 2019, ASU 2019-12 adds new guidance to simplify accounting for income taxes, changes the accounting for certain income tax transactions and makes minor improvements to the codification.

The guidance is effective for annual periods beginning after December 15, 2020.

Early adoption is permitted.

The adoption of this ASU did not have a material impact on our consolidated financial statements and related disclosures.

Pronouncements Not Effective as of December 31, 2021:

10 unchanged sentences

Accordingly, as an emerging growth company, the Corporation’s effective date for the implementation of the ASU will be January 1, 2023.

The Corporation is currently determining under which method we

will adopt this ASU.

The Corporation is currently determining under which method we will adopt this ASU.

The Corporation has assembled a cross-functional team from Finance, Credit, and IT that is leading the implementation efforts to evaluate the impact of this guidance on the Corporation's consolidated financial statements and related disclosures, internal systems, accounting policies, processes and related internal controls.

3 unchanged sentences

The amendments to estimating expected credit losses (ASU 2016-13), in particular, how a company considers recoveries and extension options when estimating expected credit losses, are the most relevant to the Corporation.

The ASU clarifies that (1) the estimate of expected credit losses should include expected recoveries of financial assets, including recoveries of amounts expected to be written off and those previously written off, and (2) that contractual extension or renewal options that are not unconditionally cancellable by the lender are considered when determining the contractual term over which expected credit losses are measured.

cancellable by the lender are considered when determining the contractual term over which expected credit losses are measured.

Management will consider the impact of ASU 2019-04 when considering the impact of ASU 2016-13 as discussed above.

1 unchanged sentence

Issued in February 2016, ASU 2016-02 revises the accounting related to lessee accounting.

Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases.

The new lease guidance also simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities.

In June 2020, the FASB approved a delay for the implementation of the ASU.

Accordingly, the amendments in this update are effective for the Corporation for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.

Under ASU 2016-02, the Corporation will recognize a right-of-use asset and a lease obligation liability on the consolidated statement of financial condition, which will increase the Corporation’s assets and liabilities.

The Corporation is evaluating other potential impacts of ASU 2016-02 on its consolidated financial statements.

Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use (ROU) asset for all leases with a term longer than 12 months.

Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

The new standard became effective for us on January 1, 2022.

A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application.

Management has elected to use the effective date as its date of initial application.

Consequently, financial information will not be updated, and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2022.

The Corporation has implemented a third party lease accounting system to assist with the measurement of lease liabilities and related right-of-use assets, the post-implementation administration aspect of lease accounting, and the preparation of applicable disclosures related to the new guidance.

The new standard provided a number of optional practical expedients in transition.

We have elected the ‘package of practical expedients’, which permitted us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs.

This standard will have a material effect on our Consolidated Balance Sheet and related disclosures but is not expected to have a material impact on our Consolidated Statement of Income.

Any additional assets recorded as a result of adoption is expected to have a negative impact on the Corporation and Bank capital ratios under current regulatory guidance.

On adoption, we recorded approximately $ 10.6 million of operating lease liabilities and $ 10.8 million of related right-of-use assets at January 1, 2022.

The new standard also provides practical expedients for an entity’s ongoing accounting.

We have elected the short-term lease recognition exemption for all leases that qualify.

This means, for those leases that qualify, we will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition.

We also have elected the practical expedient to not separate lease and non-lease components for all of our leases.

FASB ASU 2020-04 (Topic 848), “Reference Rate Reform (“ASC 848”):

4 unchanged sentences

The Corporation expects to adopt the LIBOR transition relief allowed under this standard.

FASB ASU 2018-15 (Topic 350), "Intangibles - Goodwill and Other - Internal-Use Software"

Issued in August 2018, ASU 2018-15 provides clarity on capitalizing and expensing implementation costs for cloud computing arrangements in a service contract.

If an implementation cost is capitalized, the cost should be recognized over the noncancellable term and periodically assessed for impairment.

The guidance is effective in annual and interim periods in fiscal years beginning after December 15, 2020 and interim periods within annual periods beginning after December 15, 2021.

Adoption should be applied retrospectively or prospectively to all implementation costs incurred after the date of adoption.

The Corporation does not expect the adoption of this ASU to have a material impact on our consolidated financial statements and related disclosures.

FASB ASU 2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes”

The guidance is effective for annual periods beginning after December 15, 2020.

Early adoption is permitted.

Management has not yet determined what the impact of the adoption of this ASU will be on our consolidated financial statements and related disclosures.

FASB ASU 2020-06, “Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40):

1 unchanged sentence

This ASU clarifies the accounting for certain financial instruments with characteristics of liabilities and equity.

The amendments in this update reduce the number of accounting models for convertible debt instruments and convertible preferred stock by removing the cash conversion model and the beneficial conversion feature models.

The amendments in this update reduce the number of accounting models for convertible debt instruments and convertible

preferred stock by removing the cash conversion model and the beneficial conversion feature models.

For public business entities that meet the definition of an SEC filer (excluding smaller reporting entities), the amendments are effective for fiscal years beginning after Dec.

2 unchanged sentences

15, 2023, and interim periods within.

Early adoption is permitted, but no earlier than for fiscal years beginning after Dec.

(24) Parent Company Financial Statements

16 unchanged sentences

Retained earnings

Accumulated other comprehensive loss

Accumulated other comprehensive income

Total stockholders’ equity

3 unchanged sentences

Dividends from Bank

Net interest and other income

Non-interest and other income

Total operating income

Interest expense

Other expenses

Income before equity in undistributed income of subsidiaries

2 unchanged sentences

Income tax expense

Total other comprehensive income

Total other comprehensive (loss) income

Total comprehensive income

4 unchanged sentences

Share-based compensation

(Decrease) increase in accrued interest payable

Increase in other assets

Increase in other liabilities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

Investment in subsidiaries

Net cash used in investing activities

Amortization of issuance costs on subordinated debt

(Decrease) in accrued interest payable

Net cash provided by operating activities

Cash flows from financing activities:

Net activity from subordinated debt

Net purchase of treasury stock through publicly announced plans

Issuance cost on subordinated debt

Net purchase of treasury stock

Dividends paid

7 unchanged sentences

Special Dividend

On February 16, 2021, the Corporation’s Board of Directors declared a special dividend of $ 1.00 per share on its Common Stock, payable on March 15, 2021 to shareholders of record as of March 1, 2021.

On January 27, 2022, the Corporation’s Board of Directors declared a special dividend of $ 1.00 per share on its Common Stock, payable on February 21, 2022 to shareholders of record as of February 14, 2022.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data