What changed in this filing

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Item 1. Business

2024-03-15 compared with 2023-03-16 · 52 added, 54 removed, 338 unchanged (24% of the section changed)

12 unchanged sentences

Meridian Wealth Partners, LLC, a registered investment advisory firm, (“Meridian Wealth”);

and Meridian Equipment Finance, LLC, an equipment leasing company.

and Meridian Equipment Finance, LLC, an equipment leasing and other finance receivables company.

With these subsidiaries, the Corporation is organized into the following three lines of business.

19 unchanged sentences

Mortgages are originated through sales and marketing initiatives, as well as realtor, builder, bank, advertising and customer referral resources.

The mortgage division performs origination, processing, underwriting, closing and post-closing functions both from our Blue Bell mortgage headquarters with 6 other production/processing offices in the Delaware Valley tri-state market, and from Maryland through our expanded footprint of 6 other production/processing offices in the state.

The mortgage division performs origination, processing, underwriting, closing and post-closing functions both from our Blue Bell mortgage headquarters with 5 other loan production offices in the Delaware Valley tri-state market, and from Maryland through our footprint of 3 other production/processing offices in the state.

Wealth Management and Advisory Services

2 unchanged sentences

Acquiring and sustaining wealth is a gradual progression, one that requires a considerable amount of thought and planning.

Our process takes a comprehensive approach to financial planning and encompasses all aspects of retirement, with an emphasis on

sustainability.

Our process takes a comprehensive approach to financial planning and encompasses all aspects of retirement, with an emphasis on sustainability.

Meridian Wealth offers a significant enhancement to both our capacity and the variety of tools we can use to help bring effective financial planning and wealth management services to a broad segment of customers.

Meridian is headquartered in Malvern, PA, and has an operations center in Exton, PA, and six full-service branches in Philadelphia and surrounding counties.

Its main branch, in Paoli, serves the Main Line.

Its main branch, in Wayne, serves the Main Line.

The West Chester and Media branches serve Chester and Delaware counties, respectively, while the Doylestown and Blue Bell branches serve Bucks and Montgomery counties, respectively.

2 unchanged sentences

In addition to our deposit taking branches, there are currently 12 other locations, including Corporate headquarters, that serve as loan production offices.

These offices extend from the Philadelphia market area to Central Maryland, and Florida.

These offices extend from the Delaware Valley/Philadelphia market area to Delaware, Central Maryland, and Florida.

Demographic information for the five county Philadelphia metropolitan area (Philadelphia County, Chester County, Delaware County, Montgomery County, Bucks County) shows our primary market to be stable, with moderate population growth.

4 unchanged sentences

Census Bureau – 2020, the median household income in the Baltimore metropolitan area is $105,582 compared to the national average of $62,843, while the total population in this market was 3,774,350.

The Delaware and Florida markets were serve are also stable with moderate population growth.

(dollars in thousands / population actual) United States Pennsylvania Maryland

6 unchanged sentences

Philadelphia Metropolitan Area Counties

Bucks County Montgomery County Delaware County Chester County Philadelphia County Total

(dollars in thousands / population actual) Bucks County Montgomery County Delaware County Chester County Philadelphia County Total

Population (1)

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Baltimore Metropolitan Area Counties

Howard County Montgomery County Anne Arundel County Prince George's County Baltimore County Total

(dollars in thousands / population actual) Howard County Montgomery County Anne Arundel County Prince George's County Baltimore County Total

Population (1)

4 unchanged sentences

1.60 % 1.80 % 1.70 % 2.10 % 2.10 %

Delaware Counties Florida County

(dollars in thousands / population actual) Kent County Sussex County New Castle County Total Lee County

Population (1)

188,946 255,956 575,494 1,020,396 822,453

Median household income (1)

$ 64 $ 69 $ 78 $ 70 $ 63

Unemployment rate (2)

4.1 % 3.9 % 3.5 % 3.7 % 3.0 %

Census Data – 2020

9 unchanged sentences

None of these employees are covered by collective bargaining agreements, and Meridian believes it enjoys good relations with its personnel.

The Bank was named to American Bankers 2022 Top 200 Community Banks and in December of 2020, the Bank was named by the ICBA as one of their ‘Best Community Banks to Work For’.

The Bank was named to American Bankers 2022 Top 200 Community Banks as well as being listed by the Philadelphia Inquirer in their '’Top Work Places of 2022.” In December of 2020, the Bank was named by the ICBA as one of their ‘Best Community Banks to Work For’.

As an integrated full-service financial institution, approximately 60% of our employees are employed through our banking segment, 37% through our mortgage segment, and 3% for our wealth segment.

The safety of our employees has always been our top priority over the last few years due to the COVID-19 pandemic and this priority continues today.

A portion of our workforce continues to work remotely and we still provide appointment-only lobby hours when requested.

A portion of our workforce continues to work remotely or on a hybrid work schedule.

Meridian is committed to giving back to our communities.

13 unchanged sentences

As of December 31, 2023, Meridian had 13,186,198 shares of common stock, $1 par value, issued and 11,183,015 shares outstanding.

There is 1,690,736 shares held in treasury.

All share and per share amounts have been adjusted to reflect the two-for-one stock split effective February 28, 2023.

Update on Emerging Growth Company Status

We qualified as an “emerging growth company” as defined by the JOBS Act, until December 31, 2022, the end of the fiscal year following the fifth anniversary of the completion of our initial public offering.

An emerging growth company is able to take advantage of reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies.

While we are no longer considered an emerging growth company, we still qualify as a “smaller reporting company” under Item 10(f)(1) of Regulation S-K, and as such are still able to present only two years of audited financial statements, as well as including less extensive narrative disclosures around executive compensation arrangements.

There are 2,003,183 shares held in treasury.

Information about Meridian

18 unchanged sentences

The holding company, Meridian Corporation, is subject to supervision and examination by, and the regulations and reporting requirements of, the FRB, and is subject to the disclosure and regulatory requirements of the Exchange Act.

In order to adhere to regulatory expectations on an ongoing basis and to successfully prepare for the normal examination processes, Meridian maintains numerous internal controls including policies and programs appropriate to maintain the Bank’s safety and soundness, under such key areas as lending, compliance, BSA-AML, information security, human resources, deposit and cash management products, enterprise

risk, merchant services, finance, title services, branch security and wealth management.

As a public company, the Corporation also files reports with the SEC and is subject to its regulatory authority, as well as the disclosure and regulatory requirements of the Securities Act, as amended, and the Exchange Act, as amended, with respect to the Corporation’s securities, financial reporting and certain governance matters.

23 unchanged sentences

Apex Realty, a real estate holding company;

Meridian Wealth, a registered investment advisory firm, and Meridian Equipment Finance, an equipment leasing company.

Meridian Wealth, a registered investment advisory firm, and Meridian Equipment Finance, an equipment leasing and other finance receivables company.

Pennsylvania law also imposes restrictions on the Bank’s activities intended to ensure the safety and soundness of the Bank.

13 unchanged sentences

Federal banking regulators are authorized to determine under certain circumstances relating to the financial condition of a bank holding company or a bank that the payment of dividends would be an unsafe or unsound practice and to prohibit payment thereof.

In particular, federal banking regulators have stated that paying dividends that deplete a banking organization’s capital base to an inadequate level

would be an unsafe and unsound banking practice and that banking organizations should generally pay dividends only out of current operating earnings.

In particular, federal banking regulators have stated that paying dividends that deplete a banking organization’s capital base to an inadequate level would be an unsafe and unsound banking practice and that banking organizations should generally pay dividends only out of current operating earnings.

In addition, in the current financial and economic environment, the federal banking regulators have indicated that banks should carefully review their dividend policy and have discouraged payment ratios that are at maximum allowable levels unless both asset quality and capital are very strong.

28 unchanged sentences

The risk-based guidelines are intended to make regulatory capital requirements sensitive to differences in credit and market risk profiles among banks and bank holding companies, to account for off-balance sheet exposure and to minimize disincentives for holding liquid assets.

Under the Basel III Capital Rules, the minimum capital ratios are (i) 4.5% CET1 to risk-weighted assets, (ii) 6% Tier 1 capital (that is, CET1 plus Additional Tier 1 capital) to risk-weighted assets, (iii) 8% total capital (that is, Tier 1 capital plus Tier 2 capital) to risk-weighted assets and (iv) 4% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (known as the “leverage ratio”).

weighted assets and (iv) 4% Tier 1 capital to average consolidated assets as reported on consolidated financial statements (known as the “leverage ratio”).

The current Capital Rules also include a capital conservation buffer designed to absorb losses during periods of economic stress.

16 unchanged sentences

Under the final rule, a community banking organization is eligible to elect the new framework if it has:

less than $10 billion in total consolidated assets, limited amounts of certain assets and off-balance sheet exposures, and a CBLR greater than 9%.The bank regulatory agencies temporarily lowered the CBLR to 8% as a result of the COVID-19 pandemic.

less than $10 billion in total consolidated assets, limited amounts of certain assets and off-balance sheet exposures, and a CBLR greater than 9%.

During the first quarter of 2020, the Bank adopted the community bank leverage ratio framework as its primary regulatory capital ratio.

19 unchanged sentences

In addition, the agencies adopted regulations that authorize, but do not require, an agency to order an institution that has been given notice by an agency that it is not satisfying all safety and soundness standards to submit a compliance plan.

If, after being so notified, an institution fails to submit an acceptable compliance plan or fails in any material respect to implement an acceptable compliance plan, the banking regulator must issue an order directing action to correct the deficiency and may issue an order directing other actions of the types to which an undercapitalized institution may be subject under the FDIA.

action to correct the deficiency and may issue an order directing other actions of the types to which an undercapitalized institution may be subject under the FDIA.

See “—Prompt Corrective Action Framework”.

14 unchanged sentences

As a result of the new rule, the FDIC insurance costs of insured depository institutions, including Meridian Bank, would generally increase.

The FDIC adopted a final rule effective June 26, 2020, and applied as of April 1, 2020, to mitigate the effect on deposit insurance assessments of a bank’s participation in the Paycheck Protection Program, the Paycheck Protection Program Liquidity Facility and the Money Market Mutual Fund Liquidity Facility in connection with the COVID-19 pandemic.

In November, 2023, the FDIC issued a final rule to implement a special assessment to recover the loss to the DIF associated with protecting uninsured depositors following the closure of Silicon Valley Bank and Signature Bank, at a quarterly rate of 3.36 basis points of an institution’s uninsured deposits in excess of $5 billion as of December 31, 2022, to be paid over eight quarterly assessment periods beginning in the first quarter of 2024.

Under the final rule, the estimated loss pursuant to the systemic risk determination will be periodically adjusted and the FDIC has retained the ability to cease collection early, extend the special assessment collection period and impose a final shortfall assessment on a one time basis.

Since the Bank’s uninsured deposits were less than $5 billion as of December 31, 2022, the final rule doesn’t apply to the Bank, but the extent to which any similar future assessments will impact our future deposit insurance expense is currently uncertain.

Under the FDIA, the FDIC may terminate deposit insurance upon a finding that an institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.

16 unchanged sentences

The Bank is subject to a number of federal and state consumer protection laws that extensively govern our relationship with our customers.

These laws include the ECOA, the Fair Credit Reporting Act, the TILA, the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Home Mortgage Disclosure Act, the Fair Housing Act, the Real Estate Settlement Procedures Act, the Fair Debt Collection Practices Act, Fair Credit Reporting Act, the Service Members Civil Relief Act, the Right to Financial Privacy Act, Telephone Consumer Protection Act, CAN-SPAM Act, and these laws’ respective state-law counterparts, as well as state usury laws and laws regarding unfair and deceptive acts and practices.

Financial Privacy Act, Telephone Consumer Protection Act, CAN-SPAM Act, and these laws’ respective state-law counterparts, as well as state usury laws and laws regarding unfair and deceptive acts and practices.

These and other federal laws, among other things, require disclosures of the cost of credit and terms of deposit accounts, provide substantive consumer rights, prohibit discrimination in credit transactions, regulate the use of credit report information, provide financial privacy protections, restrict our ability to raise interest rates on extensions of credit and subject us to substantial regulatory oversight.

Violations of applicable consumer protection laws can result in significant potential liability from litigation brought by customers, including actual damages, restitution and attorneys’ fees.

action by the state and local attorneys general in each jurisdiction in which we operate and civil money penalties.

Federal banking regulators, state attorneys general and state and local consumer protection agencies may also seek to enforce consumer protection requirements and obtain these and other remedies, including regulatory sanctions, customer rescission rights, action by the state and local attorneys general in each jurisdiction in which we operate and civil money penalties.

Failure to comply with consumer protection requirements may also result in our failure to obtain any required bank regulatory approval for merger or acquisition transactions we may wish to pursue or our prohibition from engaging in such transactions even if approval is not required.

14 unchanged sentences

State regulation of financial products and potential enforcement actions could also adversely affect our business, financial condition or results of operations.

In October 2023, the Federal Reserve issued a proposal under which the maximum permissible interchange fee for an electronic debit transaction would be the sum of 14.4 cents per transaction and 4 basis points multiplied by the value of the transaction.

Furthermore, the fraud-prevention adjustment would increase from a maximum of 1 cent to 1.3 cents.

The proposal would adopt an approach for future adjustments to the interchange fee cap, which would occur every other year based on issuer cost data gathered by the Federal Reserve from large debit card issuers.

Federal Home Loan Bank Membership

13 unchanged sentences

Commercial Real Estate Guidance

In December 2015, the federal banking regulators released a statement entitled “Interagency Statement on Prudent Risk Management for Commercial Real Estate Lending” (the “CRE Guidance”).

In the CRE Guidance, the federal banking regulators (i) expressed concerns with institutions that ease commercial real estate underwriting standards, (ii) directed financial institutions to maintain underwriting discipline and exercise risk management practices to identify, measure and monitor lending risks, and (iii) indicated that they will continue to pay special attention to commercial real estate lending activities and concentrations going forward.

The federal banking regulators previously issued guidance in December 2006, entitled “Interagency Guidance on Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices”, which stated that an institution is potentially exposed to significant commercial real estate concentration risk, and should employ enhanced risk management practices, where (1) total commercial real estate loans represent 300% or more of its total capital and (2) the outstanding balance of such institution’s commercial real estate loan portfolio has increased by 50% or more during the prior 36 months.

In December 2023, the FDIC released a statement entitled “Managing Commercial Real Estate Concentrations in a Challenging Economic Environment” (the “Updated CRE Guidance”).

In the Updated CRE Guidance, the FDIC conveys several key risk management practices to consider in managing CRE loan concentrations in the current challenging economic environment.

The advisory also continues to emphasize the importance of effectively managing liquidity and funding risks, which can compound lending risks, particularly for CRE concentrated institutions.

This advisory does not create new risk management principles;

however, it does update and build upon previously issued guidance.

The federal banking regulators previously issued guidance in December 2006, entitled “Interagency Guidance on Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices” (the “2006 CRE Guidance”) which stated that an institution is potentially exposed to significant commercial real estate concentration risk, and should employ enhanced risk management practices, where (1) total commercial real estate loans represent 300% or more of its total capital and (2) the outstanding balance of such institution’s commercial real estate loan portfolio has increased by 50% or more during the prior 36 months.

In the Updated CRE Guidance, the FDIC noted that Institutions with significant CRE concentrations are reminded that strong risk management, governance, capital, and appropriate ACL levels are needed to help mitigate risks.

Institutions with overall credit risk management processes that reflect consideration of the principles of the 2006 CRE Guidance are better positioned to manage through adverse economic environments.

The principles in the 2006 CRE Guidance remain relevant, particularly in challenging economic environments, and particularly for institutions engaged in significant CRE lending strategies to help them remain healthy and profitable while continuing to serve the credit needs of the community.

Leveraged Lending Guidance

6 unchanged sentences

The Bank will continue to evaluate the impact of any changes to the regulations implementing the CRA and their impact to the Bank’s financial condition, results of operations, and/or liquidity, which cannot be predicted at this time.

Our bank received a rating of “Satisfactory” in its most recently completed CRA examination in 2020 that was as of February 11, 2020.

Our bank received a rating of “Satisfactory” in its most recently completed CRA examination in 2023 that was as of November 19, 2022.

Financial Privacy

2 unchanged sentences

These regulations affect how consumer information is transmitted through diversified financial companies and conveyed to outside vendors.

In October 2023, the CFPB proposed a new rule that would require a provider of payment accounts or products, such as a bank, to make data available to consumers upon request regarding the products or services they obtain from the provider.

Any such data provider would also have to make such data available to third parties, with the consumer's express authorization and through an interface that satisfies formatting, performance and security standards, for the purpose of such third parties providing the consumer with financial products or services requested by the consumer.

Data that would be required to be made available under the rule would include transaction information, account balance, account and routing numbers, terms and conditions, upcoming bill information, and certain account verification data.

The proposed rule is intended to give consumers control over their financial data, including with whom it is shared, and encourage competition in the provision of consumer financial products or services.

For banks with less than $50 billion in total assets, compliance would be required approximately 2.5 years after adoption of the final rule.

Anti-Money Laundering and the USA PATRIOT ACT

24 unchanged sentences

In October 2022, the SEC adopted a final rule directing national securities exchanges and associations, including Nasdaq, to implement listing standards that require listed companies to adopt policies mandating the recovery or “clawback” of excess incentive-based compensation earned by a current or former executive officer during the three fiscal years preceding the date the listed company is required to prepare an accounting restatement, including to correct an error that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.

The final rule requires Meridian to adopt a clawback policy within 60 days after such listing standard becomes effective.

Cybersecurity

The GLB Act requires financial institutions to implement a comprehensive information security program that includes administrative, technical, and physical safeguards to ensure the security and confidentiality of client records and information.

The Cybersecurity Information Sharing Act is intended to improve cybersecurity in the U.S.

by enhanced sharing of information about security threats among the U.S.

government and private sector entities, including financial institutions.

The Cybersecurity Information Sharing Act also authorizes companies to monitor their own systems notwithstanding any other provision of law and allows companies to carry out defensive measures on their own systems from cyber-attacks.

The law includes liability protections for companies that share cyber threat information with third parties so long as such sharing activity is conducted in accordance with Cybersecurity Information Sharing Act.

In October 2016, the federal bank regulatory agencies issued an Advanced Notice of Proposed Rulemaking regarding enhanced cyber risk management standards, which would apply to a wide range of large financial institutions and their third-party service providers.

The proposed rules would expand existing cybersecurity regulations and guidance to focus on cyber risk management and governance, management of internal and external dependencies, and incident response, cyber resilience, and situational awareness.

In addition, the proposal contemplates more stringent standards for institutions with systems that are critical to the financial sector.

These enhanced standards would apply only to depository institutions and depository institution holding companies with total consolidated assets of $50 billion or more.

The federal banking agencies have not yet taken further action on these proposed standards.

Separately, in November 2021, the United States federal bank regulatory agencies adopted a rule regarding notification requirements for banking organizations related to significant computer security incidents.

Under the final rule, a bank holding company and a state member bank are required to notify the FRB within 36 hours of incidents that have materially disrupted or degraded, or are reasonably likely to materially disrupt or degrade, the banking organization’s ability to deliver services to a material portion of its client base, jeopardize the viability of key operations of the banking organization, or impact the stability of the financial sector.

In March 2022, the SEC proposed rules that would require disclosure of material cybersecurity incidents, as well as cybersecurity risk management, strategy and governance.

In the ordinary course of business, we rely on electronic communications and information systems to conduct our operations and to store sensitive data.

We employ an in-depth, layered, defensive approach that leverages people, processes and technology to manage and maintain cybersecurity controls.

We employ a variety of preventative and detective tools to monitor, block, and provide alerts regarding suspicious activity, as well as to report on any suspected advanced persistent threats.

Notwithstanding the strength of our defensive measures, the threat from cyberattacks is severe, attacks are sophisticated and increasing in volume, and attackers respond rapidly to changes in defensive measures.

While to date, we have not experienced a significant compromise, significant data loss or any material financial losses related to cybersecurity attacks, our systems and those of our customers and third party service providers are under constant threat and it is possible that we could experience a significant event in the future.

Risks and exposures related to cybersecurity attacks are expected to remain high due to the rapidly evolving nature and sophistication of these threats.

The final rule requires Meridian to adopt a clawback policy within 60 days after such listing standard becomes effective, which Meridian did on November 21, 2023.

Future Legislation and Regulation

4 unchanged sentences

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 1. Business