On Tuesday, Piper Sandler adjusted its outlook on Meridian Bank (NASDAQ: NASDAQ:), increasing the price target to $15.00 from the previous $14.00, while keeping a Neutral rating on the stock. The adjustment follows Meridian Bank’s third-quarter earnings report, which revealed earnings per share (EPS) of $0.42. After accounting for minor securities losses, the core EPS was calculated at $0.43, surpassing both Piper Sandler’s estimate of $0.34 and the consensus estimate of $0.35.
The bank’s financial performance for the quarter was notable for its robust revenue, with net interest income (NII) exceeding expectations by $0.09, driven by strong net interest margin (NIM) results of 3.20%, compared to 3.06% in the last quarter. Additionally, fee revenues outperformed the analyst’s predictions by $0.08, although this was balanced by an $0.08 increase in expenses, both largely attributed to heightened mortgage banking activity.
Credit provisioning for the quarter was aligned with projections, and net charge-offs (NCOs) were reported at 46 basis points. Non-performing asset (NPA) balances showed a slight uptick to 1.97% of assets from 1.68% in the previous quarter. However, average loan growth did not meet expectations, posting a modest increase of 1.3% from the last quarter.
In light of these results, Piper Sandler has modestly raised its earnings estimate for Meridian Bank. This revision primarily reflects an improved NIM forecast, though it is partially tempered by anticipated increases in credit costs. The analyst’s comments highlight the factors contributing to the bank’s performance, including the impact of mortgage banking on revenue and expenses and the status of credit provisions and asset quality.
In other recent news, Meridian Bank saw its price target raised to $13.00 from $11.00 by Piper Sandler, which maintained a Neutral rating on the company’s stock. This adjustment followed Meridian Bank’s second-quarter earnings report, where it posted earnings per share (EPS) of $0.30, marginally missing the consensus estimate of $0.31 by a cent. Despite the slight miss in EPS, Meridian Bank reported robust revenue, exceeding expectations by $0.04, primarily driven by strong net interest income and mortgage revenue.
However, these positive developments were partially offset by higher-than-expected provisioning costs and misses on expenses and tax rates. On the credit quality front, Meridian Bank saw non-performing asset balances decline compared to the previous quarter, attributed to non-current operating losses within the equipment leasing portfolio and commercial loan paydowns.
Furthermore, the bank experienced loan growth slightly above 6% on an annualized basis, in line with market expectations. Piper Sandler, after reviewing the earnings details, indicated that Meridian Bank’s latest financial results did not necessitate significant changes to their existing model or outlook for the company.
InvestingPro Insights
Meridian Bank’s recent performance aligns with several InvestingPro metrics and tips. The bank’s P/E ratio of 13.32 suggests a relatively attractive valuation, especially considering its recent strong performance. This is further supported by the Price to Book ratio of 0.91, indicating the stock may be undervalued relative to its book value.
One InvestingPro Tip notes that Meridian Bank has shown a “Strong return over the last three months,” which is corroborated by the impressive 19.02% price total return over the same period. This positive momentum is also reflected in the 51.56% price total return over the past six months, underscoring the “Large price uptick over the last six months” tip.
Despite these positive indicators, investors should be aware that Meridian Bank “Suffers from weak gross profit margins,” according to another InvestingPro Tip. This could be a factor to watch in future earnings reports.
For investors seeking a more comprehensive analysis, InvestingPro offers 6 additional tips for Meridian Bank, providing a deeper understanding of the company’s financial health and market position.
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