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As a result, the trading price of our common stock could decline, and you could lose some or all of your investment.
−Removed: Further, to the extent that any of the information in this Annual Report on Form 10-K constitutes forward-looking statements, the risk factors below are cautionary statements identifying important factors that could cause actual results to differ materially from those expressed in any forward-looking statements made by us or on our behalf.
+Added: Further, to the extent that any of the information in this Annual Report on Form 10-K constitutes forward-looking statements, the risk factors
+Added: below are cautionary statements identifying important factors that could cause actual results to differ materially from those expressed in any forward-looking statements made by us or on our behalf.
See “Cautionary Note Regarding Forward-Looking Statements”.
Our Annual Report is subject to Section 404(b) of the Sarbanes-Oxley Act, which requires that our independent registered public accounting firm provide an attestation report on the effectiveness of our internal control over financial reporting.
−Removed: Compliance with Section 404 is expensive and time consuming for management and could result in the detection of internal control deficiencies of which
−Removed: we are currently unaware.
+Added: Compliance with Section 404 is expensive and time consuming for management and could result in the detection of internal control deficiencies of which we are currently unaware.
The loss of “emerging growth company” status and compliance with the additional requirements substantially increases our legal and financial compliance costs and make some activities more time consuming and costly.
Risks Related to Our Business / Operations
−Removed: Recent and future bank failures may adversely affect the national, regional, and local business environment, results of operation, and capital.
−Removed: Past and future bank failures may have a profound impact on the national, regional, and local business environment in which Meridian operates.
−Removed: These impacts can range from business disruptions to adversely affecting their customers and customers withdrawing their deposits from the Bank.
−Removed: Management currently does expect that one result of the events in connection with the closure of Silicon Valley Bank in California and Signature Bank in New York by regulators is that FDIC assessments will more likely than not increase as a cost of doing business to the Bank.
−Removed: These possible impacts may adversely affect the Bank’s future operating results, including net income, and negatively impact capital.
−Removed: While the Bank currently does not expect the Government takeovers of Silicon Valley Bank and Signature Bank to have such a negative effect, the Bank continues to monitor the ongoing events concerning these two banks and any future banks failures if and when they may occur.
Our business and operations may be materially adversely affected by national and local market economic conditions.
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government and government-sponsored enterprises and federal agency obligations, mortgage and asset-backed securities, corporate bonds, and municipal securities.
−Removed: As a result of inflationary pressures and the resulting rapid increases in interest rates in 2023, the trading value of previously issued government and other fixed income securities has declined significantly.
+Added: As a result of inflationary pressures and the resulting rapid increases in interest rates in 2023 and early 2024, the trading value of previously issued government and other fixed income securities has declined significantly.
The Corporation conducts a periodic review of the securities portfolio to determine if any decline in the estimated fair value of any security below its cost basis is considered impaired.
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Our acquisition activities could be material to us.
−Removed: For example, we
−Removed: could issue additional shares of common stock in a merger transaction, which could dilute current shareholders' ownership interest.
+Added: For example, we could issue additional shares of common stock in a merger transaction, which could dilute current shareholders' ownership interest.
An acquisition could require us to use a substantial amount of cash, other liquid assets, and/or incur debt.
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• Failing to realize related revenue synergies and/or cost savings within expected time frames;
−Removed: • Losing key employees and customers or a reduction in our stock price as a result of an acquisition that is poorly.
+Added: • Losing key employees and customers or a reduction in our stock price as a result of an acquisition that is integrated poorly.
We may not be successful in overcoming these risks or any other problems encountered in connection with potential acquisitions.
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Other primary sources of funds consist of cash from operations and investment maturities, redemptions and sales.
−Removed: To a lesser extent, proceeds from the issuance and sale of securities to investors has become a source of funds.
+Added: To a lesser extent, proceeds from the issuance and sale of securities to investors can become a source of funds.
Additional liquidity is provided by wholesale funding such as brokered deposits and borrowings from the FRB, and the FHLB.
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Any decline in available funding could adversely impact our ability to continue to implement our business plan, including originating loans, investing in securities, meeting our expenses or fulfilling obligations such as repaying our borrowings and meeting deposit withdrawal demands, any of which could have a material adverse impact on our liquidity, business, financial condition and results of operations.
−Removed: The Corporation’s liquidity is dependent on dividends from the Bank.
−Removed: The Corporation is a legal entity separate and distinct from the Bank, which is a wholly-owned banking subsidiary.
−Removed: A substantial portion of our cash flow from operating activities, including cash flow to pay principal and interest on any debt we may incur, will come from dividends from the Bank.
−Removed: Various federal and state laws and regulations limit the amount of dividends that the Bank may pay to our shareholders.
−Removed: For example, Pennsylvania law only permits the Bank to pay dividends out of its net profits then on hand, after first deducting the Bank’s losses and any debts owed to the Bank on which interest is past due and unpaid for a period of six months or more, unless the same are well secured and in the process of collection.
−Removed: Also, our right to participate in a distribution of assets upon a subsidiary’s liquidation or reorganization is subject to the prior claims of the subsidiary’s creditors.
−Removed: Our shareholders are only entitled to receive such dividends as our Board of Directors may declare out of funds legally available for such payments.
−Removed: Although we currently pay quarterly dividends on our common stock, we are not required to do so and may reduce or eliminate our common stock dividend in the future.
−Removed: Our ability to pay dividends to our shareholders is subject to the restrictions set forth in Pennsylvania law, by the Federal Reserve, and depends on, among other things, our results of operations, financial condition, debt service requirements, other cash needs and any other factors our Board of Directors deems relevant.
−Removed: Notification to the Federal Reserve is also required prior to our declaring and paying a cash dividend to our shareholders during any period in which our quarterly and/or cumulative twelve-month net earnings are insufficient to fund the dividend amount, among other requirements.
−Removed: We may not pay a dividend if the Federal Reserve objects or until such time as we receive approval from the Federal Reserve or we no longer need to provide notice under applicable regulations.
−Removed: In addition, we may be restricted by applicable law or regulation or actions taken by our regulators, now or in the future, from paying dividends to our shareholders.
−Removed: We cannot provide assurance that we will continue paying dividends on our common stock at current levels or at all.
−Removed: A reduction or discontinuance of dividends on our common stock could have a material adverse effect on our business, including the market price of our common stock.
Loss of deposits could increase our funding costs.
−Removed: As do many banking companies, we rely on customer deposits to meet a considerable portion of our funding needs, and we continue to seek customer deposits to maintain this funding base.
+Added: As do many banking institutions, we rely on customer deposits to meet a considerable portion of our funding needs, and we continue to seek customer deposits to maintain this funding base.
We accept deposits directly from consumer and commercial customers and, as of December 31, 2024, we had $2.0 billion in deposits.
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We also face risks related to cyberattacks and other security breaches in connection with debit card transactions that typically involve the transmission of sensitive information regarding our customers through various third parties, including retailers and payment processors.
−Removed: Some of these parties have in the past been the target of security breaches and cyberattacks, and because the transactions involve third parties and environments such as the point of sale that we do not control or secure, future security breaches
−Removed: or cyberattacks affecting any of these third parties could affect us through no fault of our own, and in some cases we may have exposure and suffer losses for breaches or attacks relating to them, including costs to replace compromised debit cards and address fraudulent transactions.
+Added: Some of these parties have in the past been the target of security breaches and cyberattacks, and because the transactions involve third parties and environments such as the point of sale that we do not control or secure, future security breaches or cyberattacks affecting any of these third parties could affect us through no fault of our own, and in some cases we may have exposure and suffer losses for breaches or attacks relating to them, including costs to replace compromised debit cards and address fraudulent transactions.
Information pertaining to us and our customers is maintained, and transactions are executed, on networks and systems maintained by us and certain third party partners, such as our online and cloud-based banking systems or third party services.
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intelligence (AI) could adversely affect our business, results of operations, and financial condition.
−Removed: Our business increasingly relies on AI, machine learning and automated decision making to improve our services and our customer’s experience.
+Added: Our business increasingly relies on AI to improve our services and our customer’s experience.
The regulatory framework around the development and use of these emerging technologies is rapidly evolving, and many federal, state and foreign government bodies and agencies have introduced and/or are currently considering additional laws and regulations.
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and improve our services, require additional compliance measures and changes to our operations and processes, and result in increased compliance costs and potential increases in civil claims against us.
−Removed: Any actual or perceived failure to comply with evolving regulatory frameworks around the development and use of AI, machine learning and automated decision making could adversely affect our business, results of operations, and financial condition.
+Added: Any actual or perceived failure to comply with evolving regulatory frameworks around the development and use of AI could adversely affect our business, results of operations, and financial condition.
We may not be able to attract and retain key personnel and other skilled employees.
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Larger institutions have greater resources and access to capital markets, with higher lending limits, more advanced technology and broader suites of services.
−Removed: Competition at times requires increases in deposit rates and decreases in loan rates, and adversely impact our net interest margin.
+Added: Competition at times requires increases in deposit rates and decreases in loan rates, and may adversely impact our net interest margin.
Our ability to maintain, attract and retain customer relationships is highly dependent on our reputation.
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However, due to elevated levels of inflation and corresponding pressure to raise interest rates, the Federal Reserve announced in January of 2022 that it would be slowing the pace of its bond purchasing and increasing the target range for the federal funds rate over time.
−Removed: The FDIC since has increased the target range eleven times throughout 2022 to July 2023.
−Removed: As of December 31, 2023, the target range for the federal funds rate had been increased to 5.25% to 5.50%.
−Removed: Our interest rate spread, net interest margin
−Removed: and net interest income increased during this period of rising interest rates as our interest earning assets generally reprice more quickly than our interest earning liabilities.
+Added: The Federal Reserve then increased the target range eleven times throughout 2022 to July 2023.
+Added: In further reassessment of inflation and other factors, the Federal Reserve decreased the range three times in late 2024.
+Added: As of December 31, 2024, the target range for the federal funds rate had been decreased to 4.25% from 4.50% at September 30, 2024.
+Added: Our interest rate spread, net interest margin and net interest income improved during this period as our interest-bearing liabilities repriced at a faster pace than interest-earning assets.
If the interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received on loans and other investments, our net interest income, and therefore earnings, could be adversely affected.
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As a result, the Corporation may need to seek other sources of funds that may be more expensive to obtain, which could increase the cost of funds and decrease profitability.
−Removed: Although management believes it has implemented effective asset and liability management strategies, including the potential use of derivatives as hedging instruments, to reduce the potential effects of changes in interest rates on our results of operations, any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on our financial condition and results of operations, and any related economic downturn, especially domestically and in the regions in which we operate, may adversely affect our asset quality, deposit levels, loan demand and results of operations.
+Added: Although management believes it has implemented effective asset and liability management strategies, including the use of derivatives as hedging instruments, to reduce the potential effects of changes in interest rates on our results of operations, any substantial, unexpected, prolonged change in market interest rates could have a material adverse effect on our financial condition and results of operations, and any related economic downturn, especially domestically and in the regions in which we operate, may adversely affect our asset quality, deposit levels, loan demand and results of operations.
Also, our interest rate risk modeling techniques and assumptions likely may not fully predict or capture the impact of actual interest rate changes on our balance sheet.
−Removed: Like all financial institutions, the Corporation's consolidated statement of financial condition is affected by fluctuations in interest rates.
−Removed: See the section entitled “Quantitative and Qualitative Disclosures About Market Risk” in Management’s Discussion and Analysis of Financial Condition, for the Corporation’s position on interest earning assets and interest bearing liabilities.
The impact of interest rates on our mortgage banking business can have a significant impact on revenues.
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The Corporation utilizes various techniques such as workouts, restructurings, and loan sales to manage problem assets.
−Removed: Increases in or negative adjustments in the value of these problem assets, the underlying collateral, or in the borrowers' performance or financial
−Removed: condition, could adversely affect the Corporation's business, results of operations and financial condition.
+Added: Increases in or negative adjustments in the value of these problem assets, the underlying collateral, or in the borrowers' performance or financial condition, could adversely affect the Corporation's business, results of operations and financial condition.
In addition, the resolution of nonperforming assets requires significant commitments of time from management and staff, which can be detrimental to the performance of their other responsibilities, including generation of new loans.
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The change to the CECL framework required us to greatly increase the data we collect and review to determine the appropriate level of the allowance for credit losses.
−Removed: The adoption of CECL may result in greater volatility in the level of the allowance for credit losses, depending on various factors and assumptions applied in the model, such as the reasonable and supportable forecasted economic conditions and loan payment behaviors.
+Added: The CECL framework may result in greater volatility in the level of the allowance for credit losses, depending on various factors and assumptions applied in the model, such as the reasonable and supportable forecasted economic conditions and loan payment behaviors.
Determination of the allowance is inherently subjective as it requires significant estimates and management’s judgment of credit risks and future trends, all of which may undergo material changes.
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We are also subject to the risk that our rights against third parties may not be enforceable in all circumstances.
−Removed: Deterioration in the credit quality of third parties whose securities or obligations we hold, including the Federal Home Loan Mortgage Corporation, Government National Mortgage Corporation and municipalities, could result in significant losses.
+Added: Deterioration in the credit quality of third parties whose securities or obligations we hold, including the FHLMC, GNMA and municipalities, could result in significant losses.
Our mortgage lending business may not provide us with significant non-interest income.
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Because we sell substantially all of the mortgage loans we originate, the profitability of our mortgage banking business also depends in large part on our ability to aggregate a high volume of loans and sell them in the secondary market at a gain.
−Removed: In fact, as rates rise, we expect increasing industry-wide competitive pressures related to changing market conditions to reduce our pricing margins and mortgage revenues generally.
Thus, in addition to our dependence on the interest rate environment, we are dependent upon (i) the existence of an active secondary market and (ii) our ability to profitably sell loans or securities into that market.
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These sales have resulted in premium income for us at the time of sale and created a stream of future servicing income.
−Removed: We may not be able to continue originating
−Removed: these loans or selling them in the secondary market.
+Added: We may not be able to continue originating these loans or selling them in the secondary market.
Furthermore, even if we are able to continue originating and selling SBA 7(a) program loans in the secondary market, we might not continue to realize premiums upon the sale of the guaranteed portion of these loans.
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When mortgage loans are sold, whether as whole loans or pursuant to a securitization, we are required to make customary representations and warranties to purchasers, guarantors and insurers, including the GSEs, about the mortgage loans and the manner in which they were originated.
−Removed: Whole loan sale agreements require repurchase or substitute mortgage loans, or indemnify buyers against losses, in the event we breach these representations or warranties.
+Added: Whole loan sale agreements require that we repurchase or substitute mortgage loans, or indemnify buyers against losses, in the event we breach these
+Added: representations or warranties.
In addition, we may be required to repurchase mortgage loans as a result of early payment default of the borrower on a mortgage loan, resulting in these mortgage loans being placed on our books and subjecting us to the risk of a potential default.
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Possible remediation costs and liabilities could have a material adverse effect on our financial condition.
−Removed: Our business is significantly dependent on the real estate markets in which we operate, as a significant percentage of our loan portfolio is secured by real estate or mortgage loans originated for sale.
+Added: Our business is significantly dependent on the real estate markets in which we operate, as a large percentage of our loan portfolio is secured by real estate or mortgage loans originated for sale.
As of December 31, 2024, our real estate loans, excluding mortgages held for sale, included $824.0 million of CRE loans (40.0% of total portfolio loans), $259.6 million of construction and development loans (12.6% of total portfolio loans), and for consumer loans, $252.6 million of residential mortgage loans, and $90.7 million of home equity loans (16.7% of total portfolio loans), with the majority of these real estate loans concentrated in the southeast Pennsylvania, Delaware, Maryland, southern New Jersey, and to a lesser degree in southwest Florida.
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Because payments on loans secured by commercial real estate often depend upon the successful operation and management of the properties and the businesses which operate from within them, repayment of such loans may be affected by factors outside the borrower’s control, such as adverse conditions in the real estate market or the economy or changes in government regulations.
−Removed: In recent years, commercial real estate markets have been particularly impacted by the economic disruption resulting from the COVID-19 pandemic.
−Removed: The COVID-19 pandemic has also been a catalyst for the evolution of various remote work options which could impact the long-term performance of some types of office properties within our commercial real estate portfolio.
+Added: Commercial real estate markets were particularly impacted by the economic disruption resulting from the COVID-19 pandemic which was a catalyst for the evolution of various remote work options which may still have an impact the long-term performance of some types of office properties within our commercial real estate portfolio.
Accordingly, the federal banking regulatory agencies have expressed concerns about weaknesses in the current commercial real estate market.
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Risks Related our Wealth Management Business
−Removed: An economic slowdown could impact Meridian Wealth division revenues.
−Removed: A general economic slowdown may cause current clients to seek alternative investment opportunities with other providers, which would decrease the value of Meridian Wealth’s assets under management resulting in lower fee income to the Corporation.
+Added: Revenues and profitability from our wealth management business may be adversely affected by any reduction in assets under management, which could reduce fees earned.
+Added: The majority of the revenue from the wealth management business consists of investment advisory.
+Added: Substantial revenues are generated from investment advisory contracts with clients.
+Added: Under these contracts, the investment advisory fees paid to us are typically based on the market value of assets under management.
+Added: Assets under management may decline for various reasons including declines in the market value of the assets in the funds and accounts managed, which could be caused by price declines in the securities markets generally or by price declines in specific market segments.
+Added: Assets under management may also decrease due to redemptions and other withdrawals by clients or termination of contracts.
+Added: This could be in response to adverse market conditions or in pursuit of other investment opportunities.
+Added: If our assets under management decline and there is a related decrease in fees, it will negatively affect our results of operations.
+Added: The wealth management business is subject to extensive regulation, supervision and examination by regulators, and any enforcement action or adverse changes in the laws or regulations governing our business could decrease our revenues and profitability.
+Added: The wealth management business is subject to regulation by regulatory agencies that are charged with safeguarding the integrity of the securities and other financial markets and with protecting the interests of customers participating in those markets.
+Added: In the event of non-compliance with regulation, governmental regulators, including the SEC and the Financial Industry Regulatory Authority, may institute administrative or judicial proceedings that may result in censure, fines, civil money penalties, the issuance of cease-and-desist orders, the deregistration or suspension of the non-compliant introducing broker-dealer or investment adviser or other adverse consequences.
+Added: The imposition of any such penalties or orders could have a material adverse effect on the wealth management segment's operating results and financial condition.
+Added: The wealth management business also may be adversely affected as a result of new or revised legislation or regulations.
+Added: Regulatory changes have imposed and may continue to impose additional costs, which could adversely impact our profitability.
+Added: We may not be able to attract and retain wealth management clients.
+Added: Due to strong competition, our wealth management business may not be able to attract and retain clients.
+Added: Competition is strong because there are numerous well-established and successful investment management and wealth advisory firms with which we compete, including commercial banks and trust companies, investment advisory firms, mutual fund companies, stock brokerage firms, and other financial companies.
+Added: Many of our competitors have greater resources than we have.
+Added: Our ability to successfully attract and retain wealth management clients is dependent upon our ability to compete with competitors' investment products, our level of investment performance, our client services, our fees and marketing and distribution capabilities.
+Added: If we are not successful, our results of operations and financial condition may be negatively impacted.
Risks Related to Regulation
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See “Supervision and Regulation—Regulatory Capital Requirements” for more information on the capital adequacy standards that we must meet and maintain.
−Removed: While we currently meet the requirements of the Basel III-based Capital Rules, we may fail to do so in the future.
The failure to meet applicable regulatory capital requirements could result in one or more of our regulators placing limitations or conditions on our activities, including our growth initiatives, or restricting the commencement of new activities, and could affect customer and investor confidence, our costs of funds and level of required deposit insurance assessments to the FDIC, our ability to pay dividends on our capital stock, our ability to make acquisitions, and our business, results of operations and financial conditions, generally.
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These provisions may effectively inhibit a non-negotiated merger or other business combination, which, in turn, could have a material adverse effect on the market price of our common stock.
+Added: Natural disasters, acts of war or terrorism, outbreaks or escalations of hostilities and other external events could negatively impact the Corporation.
+Added: Natural disasters, acts of war or terrorism, outbreaks or escalations of hostilities, the emergence of widespread health emergencies or pandemics and other adverse external events could have a significant impact on the Corporation's ability to conduct business.
+Added: In addition, such events could affect the stability of the Corporation's deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of collateral securing loans, cause significant property damage, result in loss of revenue and/or cause the Corporation to incur additional expenses.
+Added: We have established disaster recovery policies and procedures that are expected to support our operations if events related to natural or man-made disasters occur;
+Added: however, the occurrence of any such event and the impact of an overall economic decline resulting from such a disaster could have a material adverse effect on the Corporation's financial condition and results of operations.
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.