BOSTON, July 23, 2019 (GLOBE NEWSWIRE) -- Meridian Bancorp, Inc. (the “Company” or “Meridian”) (NASDAQ: EBSB), the holding company for East Boston Savings Bank (the “Bank”), announced net income of $15.2 million, or $0.29 per diluted share, for the quarter ended June 30, 2019, up from $15.1 million, or $0.29 per diluted share, for the quarter ended March 31, 2019 and $14.1 million, or $0.27 per diluted share, for the quarter ended June 30, 2018. For the six months ended June 30, 2019, net income was $30.2 million, or $0.59 per diluted share, up from $26.1 million, or $0.49 per diluted share, for the six months ended June 30, 2018. The Company’s return on average assets was 0.97% for the quarter ended June 30, 2019, unchanged from the quarter ended March 31, 2019 and down from 1.01% for the quarter ended June 30, 2018. For the six months ended June 30, 2019 the Company’s return on average assets was 0.97%, up from 0.96% for the six months ended June 30, 2018. The Company’s return on average equity was 8.75% for the quarter ended June 30, 2019, down from 8.84% for the quarter ended March 31, 2019 and up from 8.50% for the quarter ended June 30, 2018. For the six months ended June 30, 2019, the Company’s return on average equity was 8.79%, up from 7.93% for the six months ended June 30, 2018.
Richard J. Gavegnano, Chairman, President and Chief Executive Officer, said, “I am pleased to report record net income of $15.2 million for the second quarter of 2019, up $1.1 million, or 8%, from the prior second quarter record in 2018, and $30.2 million for the first half of 2019, up $4.2 million, or 16%, from the prior first half record in 2018. Our net loan growth was $57 million, or 1%, in the second quarter of 2019 following an anticipated $70 million commercial real estate loan pay-off, and $172 million or 3%, in the first half. Since our loan pipeline remains robust, we expect our growth in the second half of 2019 to rise beyond our current annualized rate of 6%. Following the opening of our 39th branch in Cambridge earlier in July, we remain on track to open our 40th branch in Boston’s Brighton neighborhood by year end as we continue to attract new business and consumer relationships and work to further expand our market share in the metropolitan Boston area.”
The Company’s net interest income was $42.5 million for the quarter ended June 30, 2019, down $127,000, or 0.3%, from the quarter ended March 31, 2019 and up $1.4 million, or 3.5%, from the quarter ended June 30, 2018. The interest rate spread and net interest margin on a tax-equivalent basis were 2.48% and 2.82%, respectively, for the quarter ended June 30, 2019 compared to 2.57% and 2.89%, respectively, for the quarter ended March 31, 2019 and 2.81% and 3.07%, respectively, for the quarter ended June 30, 2018. For the six months ended June 30, 2019, net interest income increased $4.2 million, or 5.2%, to $85.1 million from the six months ended June 30, 2018. The interest rate spread and net interest margin on a tax-equivalent basis were 2.53% and 2.85%, respectively, for the six months ended June 30, 2019, compared to 2.87% and 3.11% for the six months ended June 30, 2018. The increases in net interest income were primarily due to growth in average loan balances and yields on interest-earning assets, partially offset by increases in the average balances of total deposits and borrowings and the cost of funds for the quarter and six months ended June 30, 2019 compared to the respective prior periods.
Total interest and dividend income increased to $66.3 million for the quarter ended June 30, 2019, up $1.8 million, or 2.8%, from the quarter ended March 31, 2019 and $10.4 million, or 18.7%, from the quarter ended June 30, 2018, primarily due to growth in the Company’s average loan balances to $5.810 billion. The Company’s yield on loans on a tax-equivalent basis was 4.47% for the quarter ended June 30, 2019, up three basis points from the quarter ended March 31, 2019 and up 14 basis points from the quarter ended June 30, 2018. The Company’s yield on interest-earning assets on a tax-equivalent basis was 4.38% for the quarter ended June 30, 2019, up four basis points from the quarter ended March 31, 2019 and up 22 basis points from the quarter ended June 30, 2018. For the six months ended June 30, 2019 the Company’s total interest and dividend income increased $22.9 million, or 21.2%, to $130.7 million from the six months ended June 30, 2018, primarily due to growth in the Company’s average loan balances of $841.7 million, or 17.1%, to $5.753 billion and by an increase in the yield on loans on a tax-equivalent basis of 14 basis points to 4.45% for the six months ended June 30, 2019 compared to the six months ended June 30, 2018. The Company’s yield on interest-earning assets on a tax-equivalent basis increased 22 basis points to 4.36% for the six months ended June 30, 2019 compared to the same period in 2018.
Total interest expense increased to $23.8 million for the quarter ended June 30, 2019, up $1.9 million, or 8.8%, from the quarter ended March 31, 2019 and $9.0 million, or 60.8%, from the quarter ended June 30, 2018. Interest expense on deposits increased to $20.7 million for the quarter ended June 30, 2019, up $1.5 million, or 7.8%, from the quarter ended March 31, 2019 and $7.9 million, or 62.0%, from the quarter ended June 30, 2018 primarily due to growth in average total deposits to $5.001 billion and increases in the cost of average total deposits to 1.66% from 1.58% for the quarter ended March 31, 2019, and 1.19% for the quarter ended June 30, 2018. Interest expense on borrowings increased to $3.2 million for the quarter ended June 30, 2019, up $426,000, or 15.6%, from the quarter ended March 31, 2019 and $1.1 million, or 53.8%, from the quarter ended June 30, 2018 primarily due to increases in the average cost of borrowings to 2.37% from 1.91% for the quarter ended March 31, 2019, and 1.39% for the quarter ended June 30, 2018. The Company’s total cost of funds was 1.73% for the quarter ended June 30, 2019, up 11 basis points from the quarter ended March 31, 2019 and 51 basis points from the quarter ended June 30, 2018. Total interest expense increased $18.7 million, or 69.5%, to $45.7 million for the six months ended June 30, 2019 from the six months ended June 30, 2018. Interest expense on deposits increased $16.5 million, or 71.1%, to $39.8 million for the six months ended June 30, 2019 from the six months ended June 30, 2018 due to growth in average total deposits of $759.1 million, or 18.1%, to $4.958 billion and an increases in the cost of average total deposits of 50 basis points to 1.62%. Interest expense on borrowings increased $2.2 million, or 59.2%, to $5.9 million for the six months ended June 30, 2019 from the six months ended June 30, 2018 due to an increase in the cost of average total borrowings of 79 basis points to 2.13%, partially offset by a decrease in average total borrowings of $1.6 million, or 0.3%, to $555.1 million. The Company’s cost of funds increased 53 basis points to 1.67% for the six months ended June 30, 2019 compared to the six months ended June 30, 2018.
Mr. Gavegnano noted, “Our net interest income continues to rise year-over-year on the strength of our organic loan and deposit growth in recent years, while our yields on loans and other interest-earning assets have steadily trended upward. During this challenging interest rate environment, our net interest margin dipped seven basis points to 2.82% for the second quarter from the first quarter of 2019 due to an increase of 11 basis points in our cost of funds. With market interest rates beginning to decline, we continue to believe our margin is poised to expand as our aggregate interest costs are expected to reach a peak in the coming months.”
The Company's provision for loan losses was $78,000 for the quarter ended June 30, 2019, down $765,000 from the quarter ended March 31, 2019 and $1.8 million from the quarter ended June 30, 2018. The allowance for loan losses was $53.9 million or 0.92% of total loans at June 30, 2019, compared to $54.0 million or 0.94% of total loans at March 31, 2019, $53.2 million or 0.94% of total loans at December 31, 2018, and $49.4 million or 0.96% of total loans at June 30, 2018. The changes in the allowance for loan losses coverage ratio were based on management’s assessment of loan portfolio growth and composition changes, declines in historical charge-off trends, reduced levels of problem loans and other improvements in asset quality trends.
Net charge-offs totaled $210,000 for the quarter ended June 30, 2019 compared to net charge-offs of $77,000 for the quarter ended March 31, 2019 and net recoveries of $43,000 for the quarter ended June 30, 2018. For the six months ended June 30, 2019, net charge-offs totaled $287,000 compared to net recoveries of $157,000 for the six months ended June 30, 2018.
Non-accrual loans were $6.0 million, or 0.10% of total loans outstanding, at June 30, 2019; down $1.5 million, or 19.9%, from March 31, 2019; down $860,000, or 12.5% from December 31, 2018 and down $1.9 million, or 23.5%, from June 30, 2018. Non-performing assets were $6.0 million, or 0.09% of total assets, at June 30, 2019, compared to $7.5 million, or 0.12% of total assets, at March 31, 2019, $6.9 million, or 0.11% of total assets at December 31, 2018, and $7.9 million, or 0.14% of total assets, at June 30, 2018.
Non-interest income was $3.0 million for the quarter ended June 30, 2019, down from $3.8 million for the quarter ended March 31, 2019 and up from $2.9 million for the quarter ended June 30, 2018. Non-interest income decreased $874,000, or 22.8%, compared to the quarter ended March 31, 2019, primarily due to a $1.1 million decrease in gain on marketable equity securities, net, partially offset by a $191,000 increase in customer service fees. Compared to the quarter ended June 30, 2018, non-interest income increased $96,000, or 3.4%, primarily due to increases of $211,000 in loan fees and $38,000 in mortgage banking gains, net, partially offset by a $165,000 decrease in gain on marketable equity securities, net. For the six months ended June 30, 2019, non-interest income increased $1.6 million, or 30.6%, to $6.8 million from $5.2 million for the six months ended June 30, 2018, primarily due to a $1.7 million increase in the gain on marketable equity securities, net, reflecting increases in market valuations.
Non-interest expenses were $25.1 million, or 1.60% of average assets for the quarter ended June 30, 2019, compared to $25.8 million, or 1.66% of average assets for the quarter ended March 31, 2019 and $23.5 million, or 1.69% of average assets for the quarter ended June 30, 2018. Non-interest expenses decreased $679,000, or 2.6%, compared to the quarter ended March 31, 2019, due primarily to a decrease of $716,000 in salaries and employee benefits, reflecting seasonal reductions in payroll taxes and employee benefits. Non-interest expenses increased $1.7 million, or 7.0%, compared to the quarter ended June 30, 2018, due primarily to increases of $625,000 in occupancy and equipment, $478,000 in salaries and employee benefits, $356,000 in data processing and $293,000 in marketing and advertising, partially offset by a $216,000 decrease in professional services. For the six months ended June 30, 2019, non-interest expenses increased $2.8 million, or 5.7%, to $50.9 million from $48.2 million for the six months ended June 30, 2018, due primarily to increases of $716,000 in salaries and employee benefits, $682,000 in occupancy and equipment, $643,000 in data processing, $488,000 in marketing and advertising and $362,000 in deposit insurance, partially offset by a $321,000 decrease in professional services. The increases in salaries and employee benefits were primarily due to annual increases in employee compensation, payroll taxes and employee benefits, while the increases in occupancy and equipment expenses and data processing include costs associated with the expansion of our branch network, including one new branch that opened late in the first quarter of 2018, three new branch openings in the fourth quarter of 2018 and one new branch opened in July 2019. The Company’s efficiency ratio was 55.57% for the quarter ended June 30, 2019 compared to 57.20% for the quarter ended March 31, 2019 and 53.89% for the quarter ended June 30, 2018. For the six months ended June 30, 2019, the efficiency ratio was 56.38% compared to 55.74% for the six months ended June 30, 2018.
Mr. Gavegnano added, “As expected, our non-interest expenses decreased 3% along with improvement in our efficiency ratio to 55.6% from 57.2% for the second quarter of 2019 from the first quarter, while increases in these expenses over the past year were limited to 6% to 7% for the second quarter and first half of 2019. We controlled our overhead expense growth while expanding our branch network by five locations since the beginning of 2018 by focusing on maintaining flat staffing levels, especially in our retail division, and continuing to negotiate cost-effective branch leases.”
The Company recorded a provision for income taxes of $5.1 million for the quarter ended June 30, 2019, reflecting an effective tax rate of 25.0%, compared to $4.7 million, or an effective tax rate of 23.8%, for the quarter ended March 31, 2019, and $4.5 million, or an effective tax rate of 24.3%, for the quarter ended June 30, 2018. For the six months ended June 30, 2019, the provision for income taxes was $9.8 million, reflecting an effective tax rate of 24.4%, compared to $7.8 million, or an effective tax rate of 23.1%, for the six months ended June 30, 2018.
Total assets were $6.369 billion at June 30, 2019, up $87.2 million, or 1.4%, from $6.281 billion at March 31, 2019 and $189.9 million, or 3.1%, from $6.179 billion at December 31, 2018. Net loans were $5.765 billion at June 30, 2019, up $57.4 million, or 1.0%, from March 31, 2019, and $172.0 million, or 3.1%, from December 31, 2018. Loan originations totaled $285.3 million during the quarter ended June 30, 2019 and $553.5 million during the six months ended June 30, 2019. The net increase in loans for the six months ended June 30, 2019 was primarily due to increases of $61.5 million in construction loans, $51.3 million in multi-family loans, $25.1 million in commercial real estate loans, $21.6 million in one- to four-family loans, and $10.0 million in home equity lines of credit. The increase in commercial real estate loans reflects a $70.0 million loan pay-off that occurred in the second quarter. Cash and due from banks was $361.1 million at June 30, 2019, a decrease of $10.9 million, or 2.9% from December 31, 2018. Securities, at fair value, were $31.3 million at June 30, 2019, an increase of $680,000, or 2.2%, from $30.6 million at December 31, 2018.
Effective January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842). During the six months ended June 30, 2019, premises and equipment, net increased $21.1 million to $66.3 million and accrued expenses and other liabilities increased $21.5 million to $54.5 million at June 30, 2019, reflecting the recognition of operating lease assets and liabilities totaling $18.8 million based on the present value of future minimum lease payments as required by ASU No. 2016-02.
Total deposits were $5.018 billion at June 30, 2019, down $4.7 million, or 0.1%, from $5.023 billion at March 31, 2019 and up $134.1 million, or 2.7%, from $4.884 billion at December 31, 2018. Core deposits, which exclude certificates of deposit, increased $131.0 million, or 4.1%, during the six months ended June 30, 2019 to $3.329 billion, or 66.3% of total deposits. Total borrowings were $600.1 million, up $74.1 million, or 14.1%, from March 31, 2019 and $13.2 million, or 2.3%, from December 31, 2018.
Total stockholders’ equity increased $9.3 million, or 1.4%, to $695.7 million at June 30, 2019 from $686.4 million at March 31, 2019, and $21.0 million, or 3.1%, from $674.7 million at December 31, 2018. The increase for the six months ended June 30, 2019 was primarily due to net income of $30.2 million and $3.4 million related to stock-based compensation plans, partially offset by the repurchase of 341,019 shares of the Company’s common stock related to the stock repurchase programs at a total cost of $5.7 million and dividends of $0.14 per share totaling $7.1 million. Stockholders’ equity to assets was 10.92% at June 30, 2019, compared to 10.93% at March 31, 2019 and 10.92% at December 31, 2018. Book value per share increased to $13.05 at June 30, 2019 from $12.60 at December 31, 2018. Tangible book value per share increased to $12.62 at June 30, 2019 from $12.17 at December 31, 2018. Market price per share increased $3.57 or 24.9%, to $17.89 at June 30, 2019 from $14.32 at December 31, 2018. At June 30, 2019, the Company and the Bank continued to exceed all regulatory capital requirements.
The Company repurchased 236,842 shares of its stock at an average price of $17.21 during the quarter ended June 30, 2019, or 47.35% of the 500,000 shares authorized for repurchase under the Company’s repurchase program adopted in April 2019. The Company has repurchased 3,610,364 shares at an average price of $15.05 per share since August 2015.
Mr. Gavegnano concluded, “We continue to strategically repurchase our stock and issue quarterly dividends to our stockholders while we consider the expansion of these programs and additional opportunities to enhance stockholder value as appropriate. These initiatives support our view that we have built the most valuable and respected community banking franchise in the flourishing Boston market area.”
Meridian Bancorp, Inc. is the holding company for East Boston Savings Bank. East Boston Savings Bank, a Massachusetts-chartered stock savings bank founded in 1848, operates 39 branches in the greater Boston metropolitan area, including 38 full-service locations and one mobile branch. We offer a variety of deposit and loan products to individuals and businesses located in our primary market, which consists of Essex, Middlesex, Norfolk and Suffolk Counties, Massachusetts. For additional information, visit www.ebsb.com.
Forward Looking Statements
Certain statements herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by words such as “believes,” “will,” “expects,” “project,” “may,” “could,” “developments,” “strategic,” “launching,” “opportunities,” “anticipates,” “estimates,” “intends,” “plans,” “targets” and similar expressions. These statements are based upon the current beliefs and expectations of Meridian Bancorp, Inc.’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements as a result of numerous factors. Factors that could cause such differences to exist include, but are not limited to, general economic conditions, changes in interest rates, regulatory considerations, and competition and the risk factors described in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Meridian Bancorp, Inc.’s actual results could differ materially from those discussed. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release.
| MERIDIAN BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||||||
| (Unaudited) | |||||||||||||||
| June 30, 2019 | March 31, 2019 | December 31, 2018 | June 30, 2018 | ||||||||||||
| (Dollars in thousands) | |||||||||||||||
| ASSETS | |||||||||||||||
| Cash and due from banks | $ | 361,050 | $ | 344,259 | $ | 371,995 | $ | 329,588 | |||||||
| Certificates of deposit | 5,247 | 5,247 | 5,247 | 23,885 | |||||||||||
| Securities available for sale, at fair value | 16,500 | 16,890 | 17,159 | 18,437 | |||||||||||
| Marketable equity securities, at fair value | 14,776 | 14,763 | 13,437 | 15,428 | |||||||||||
| Federal Home Loan Bank stock, at cost | 27,469 | 26,377 | 29,187 | 29,546 | |||||||||||
| Loans held for sale | 2,105 | 989 | 409 | 1,052 | |||||||||||
| Loans: | |||||||||||||||
| One- to four-family | 668,997 | 660,551 | 647,367 | 635,708 | |||||||||||
| Home equity lines of credit | 60,040 | 50,960 | 50,087 | 45,812 | |||||||||||
| Multi-family | 1,061,839 | 1,036,331 | 1,010,521 | 911,562 | |||||||||||
| Commercial real estate | 2,647,033 | 2,660,916 | 2,621,979 | 2,386,926 | |||||||||||
| Construction | 748,457 | 726,061 | 686,948 | 610,946 | |||||||||||
| Commercial and industrial | 627,718 | 622,431 | 625,018 | 568,897 | |||||||||||
| Consumer | 11,445 | 11,095 | 10,953 | 10,455 | |||||||||||
| Total loans | 5,825,529 | 5,768,345 | 5,652,873 | 5,170,306 | |||||||||||
| Allowance for loan losses | (53,865 | ) | (53,997 | ) | (53,231 | ) | (49,401 | ) | |||||||
| Net deferred loan origination fees | (6,292 | ) | (6,336 | ) | (6,239 | ) | (6,045 | ) | |||||||
| Loans, net | 5,765,372 | 5,708,012 | 5,593,403 | 5,114,860 | |||||||||||
| Bank-owned life insurance | 41,295 | 41,015 | 40,734 | 40,885 | |||||||||||
| Premises and equipment, net | 66,280 | 62,279 | 45,140 | 41,584 | |||||||||||
| Accrued interest receivable | 15,436 | 14,979 | 14,267 | 12,699 | |||||||||||
| Deferred tax asset, net | 18,301 | 18,210 | 18,196 | 15,896 | |||||||||||
| Goodwill | 20,378 | 20,378 | 20,378 | 19,638 | |||||||||||
| Core deposit intangible | 2,385 | 2,517 | 2,653 | 2,948 | |||||||||||
| Other assets | 11,978 | 5,441 | 6,478 | 11,142 | |||||||||||
| Total assets | $ | 6,368,572 | $ | 6,281,356 | $ | 6,178,683 | $ | 5,677,588 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||
| Deposits: | |||||||||||||||
| Non interest-bearing demand deposits | $ | 505,679 | $ | 499,536 | $ | 483,777 | $ | 486,334 | |||||||
| Interest-bearing demand deposits | 1,161,835 | 1,215,105 | 1,190,346 | 1,129,657 | |||||||||||
| Money market deposits | 675,452 | 685,078 | 729,174 | 865,349 | |||||||||||
| Regular savings and other deposits | 986,112 | 958,348 | 794,813 | 337,796 | |||||||||||
| Certificates of deposit | 1,689,226 | 1,664,943 | 1,686,074 | 1,570,435 | |||||||||||
| Total deposits | 5,018,304 | 5,023,010 | 4,884,184 | 4,389,571 | |||||||||||
| Short-term borrowings | — | — | 50,000 | — | |||||||||||
| Long-term debt | 600,088 | 525,985 | 536,880 | 591,660 | |||||||||||
| Accrued expenses and other liabilities | 54,479 | 45,973 | 32,965 | 31,691 | |||||||||||
| Total liabilities | 5,672,871 | 5,594,968 | 5,504,029 | 5,012,922 | |||||||||||
| Stockholders' equity: | |||||||||||||||
| Preferred stock, $0.01 par value, 50,000,000 shares authorized; none issued | — | — | — | — | |||||||||||
| Common stock, $0.01 par value, 100,000,000 shares authorized; 53,321,805, 53,542,646, 53,541,429 and 53,905,279 shares issued at June 30, 2019, March 31, 2019, December 31, 2018 and June 30, 2018, respectively | 533 | 535 | 535 | 539 | |||||||||||
| Additional paid-in capital | 375,760 | 378,410 | 378,583 | 392,955 | |||||||||||
| Retained earnings | 336,628 | 325,023 | 313,521 | 289,949 | |||||||||||
| Accumulated other comprehensive loss | (24 | ) | (164 | ) | (348 | ) | (699 | ) | |||||||
| Unearned compensation - ESOP, 2,374,390, 2,404,831, 2,435,272 and 2,496,154 shares at June 30, 2019, March 31, 2019, December 31, 2018 and June 30, 2018, respectively | (17,196 | ) | (17,416 | ) | (17,637 | ) | (18,078 | ) | |||||||
| Total stockholders' equity | 695,701 | 686,388 | 674,654 | 664,666 | |||||||||||
| Total liabilities and stockholders' equity | $ | 6,368,572 | $ | 6,281,356 | $ | 6,178,683 | $ | 5,677,588 | |||||||
| MERIDIAN BANCORP, INC. AND SUBSIDIARIES | |||||||||||||||||||
| CONSOLIDATED STATEMENTS OF NET INCOME | |||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||
| June 30, 2019 | March 31, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | |||||||||||||||
| (Dollars in thousands, except per share amounts) | |||||||||||||||||||
| Interest and dividend income: | |||||||||||||||||||
| Interest and fees on loans | $ | 64,040 | $ | 61,641 | $ | 53,904 | $ | 125,681 | $ | 103,889 | |||||||||
| Interest on debt securities: | |||||||||||||||||||
| Taxable | 108 | 110 | 126 | 218 | 252 | ||||||||||||||
| Tax-exempt | 13 | 13 | 15 | 26 | 30 | ||||||||||||||
| Dividends on equity securities | 142 | 105 | 134 | 247 | 282 | ||||||||||||||
| Interest on certificates of deposit | 28 | 27 | 141 | 55 | 344 | ||||||||||||||
| Other interest and dividend income | 1,943 | 2,577 | 1,527 | 4,520 | 3,049 | ||||||||||||||
| Total interest and dividend income | 66,274 | 64,473 | 55,847 | 130,747 | 107,846 | ||||||||||||||
| Interest expense: | |||||||||||||||||||
| Interest on deposits | 20,653 | 19,151 | 12,751 | 39,804 | 23,260 | ||||||||||||||
| Interest on short-term borrowings | — | 295 | — | 295 | — | ||||||||||||||
| Interest on long-term debt | 3,151 | 2,430 | 2,049 | 5,581 | 3,691 | ||||||||||||||
| Total interest expense | 23,804 | 21,876 | 14,800 | 45,680 | 26,951 | ||||||||||||||
| Net interest income | 42,470 | 42,597 | 41,047 | 85,067 | 80,895 | ||||||||||||||
| Provision for loan losses | 78 | 843 | 1,870 | 921 | 4,059 | ||||||||||||||
| Net interest income, after provision for loan losses | 42,392 | 41,754 | 39,177 | 84,146 | 76,836 | ||||||||||||||
| Non-interest income: | |||||||||||||||||||
| Customer service fees | 2,288 | 2,097 | 2,282 | 4,385 | 4,452 | ||||||||||||||
| Loan fees | 53 | 77 | (158 | ) | 130 | 137 | |||||||||||||
| Mortgage banking gains, net | 101 | 40 | 63 | 141 | 196 | ||||||||||||||
| Gain (loss) on marketable equity securities, net | 223 | 1,326 | 388 | 1,549 | (149 | ) | |||||||||||||
| Income from bank-owned life insurance | 280 | 281 | 277 | 561 | 549 | ||||||||||||||
| Other income | 9 | 7 | 6 | 16 | 6 | ||||||||||||||
| Total non-interest income | 2,954 | 3,828 | 2,858 | 6,782 | 5,191 | ||||||||||||||
| Non-interest expenses: | |||||||||||||||||||
| Salaries and employee benefits | 14,916 | 15,632 | 14,438 | 30,548 | 29,832 | ||||||||||||||
| Occupancy and equipment | 3,650 | 3,596 | 3,025 | 7,246 | 6,564 | ||||||||||||||
| Data processing | 2,009 | 1,970 | 1,653 | 3,979 | 3,336 | ||||||||||||||
| Marketing and advertising | 1,299 | 1,162 | 1,006 | 2,461 | 1,973 | ||||||||||||||
| Professional services | 784 | 860 | 1,000 | 1,644 | 1,965 | ||||||||||||||
| Deposit insurance | 929 | 1,012 | 782 | 1,941 | 1,579 | ||||||||||||||
| Merger and acquisition | — | — | 14 | — | 88 | ||||||||||||||
| Other general and administrative | 1,530 | 1,564 | 1,547 | 3,094 | 2,817 | ||||||||||||||
| Total non-interest expenses | 25,117 | 25,796 | 23,465 | 50,913 | 48,154 | ||||||||||||||
| Income before income taxes | 20,229 | 19,786 | 18,570 | 40,015 | 33,873 | ||||||||||||||
| Provision for income taxes | 5,061 | 4,715 | 4,508 | 9,776 | 7,817 | ||||||||||||||
| Net income | $ | 15,168 | $ | 15,071 | $ | 14,062 | $ | 30,239 | $ | 26,056 | |||||||||
| Earnings per share: | |||||||||||||||||||
| Basic | $ | 0.30 | $ | 0.29 | $ | 0.27 | $ | 0.59 | $ | 0.51 | |||||||||
| Diluted | $ | 0.29 | $ | 0.29 | $ | 0.27 | $ | 0.59 | $ | 0.49 | |||||||||
| Weighted average shares outstanding: | |||||||||||||||||||
| Basic | 51,051,880 | 51,120,599 | 51,437,726 | 51,086,050 | 51,484,521 | ||||||||||||||
| Diluted | 51,511,678 | 51,467,917 | 52,867,787 | 51,489,608 | 52,975,541 | ||||||||||||||
| MERIDIAN BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||||||||||||
| NET INTEREST INCOME ANALYSIS | ||||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||||||||||||||||||
| June 30, 2019 | March 31, 2019 | June 30, 2018 | ||||||||||||||||||||||||||||||||||||||||
| Average | Interest | Yield/ | Average | Interest | Yield/ | Average | Interest | Yield/ | ||||||||||||||||||||||||||||||||||
| Balance | (1) | Cost (1)(6) | Balance | (1) | Cost (1)(6) | Balance | (1) | Cost (1)(6) | ||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||||||||||||||||||||
| Loans (2) | $ | 5,809,827 | $ | 64,740 | 4.47 | % | $ | 5,694,639 | $ | 62,325 | 4.44 | % | $ | 5,043,367 | $ | 54,491 | 4.33 | % | ||||||||||||||||||||||||
| Securities and certificates of deposit | 36,447 | 312 | 3.43 | 36,510 | 272 | 3.02 | 70,155 | 443 | 2.53 | |||||||||||||||||||||||||||||||||
| Other interest-earning assets (3) | 290,092 | 1,943 | 2.69 | 353,201 | 2,577 | 2.96 | 328,659 | 1,527 | 1.86 | |||||||||||||||||||||||||||||||||
| Total interest-earning assets | 6,136,366 | 66,995 | 4.38 | 6,084,350 | 65,174 | 4.34 | 5,442,181 | 56,461 | 4.16 | |||||||||||||||||||||||||||||||||
| Noninterest-earning assets | 136,159 | 117,927 | 118,324 | |||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 6,272,525 | $ | 6,202,277 | $ | 5,560,505 | ||||||||||||||||||||||||||||||||||||
| Liabilities and stockholders' equity: | ||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing demand deposits | $ | 1,215,832 | $ | 5,584 | 1.84 | $ | 1,189,166 | $ | 4,940 | 1.68 | $ | 1,104,003 | $ | 3,486 | 1.27 | |||||||||||||||||||||||||||
| Money market deposits | 674,851 | 2,158 | 1.28 | 699,807 | 2,148 | 1.24 | 849,177 | 2,326 | 1.10 | |||||||||||||||||||||||||||||||||
| Regular savings and other deposits | 954,811 | 3,961 | 1.66 | 920,579 | 3,802 | 1.67 | 339,004 | 118 | 0.14 | |||||||||||||||||||||||||||||||||
| Certificates of deposit | 1,660,373 | 8,950 | 2.16 | 1,621,436 | 8,261 | 2.07 | 1,504,883 | 6,821 | 1.82 | |||||||||||||||||||||||||||||||||
| Total interest-bearing deposits | 4,505,867 | 20,653 | 1.84 | 4,430,988 | 19,151 | 1.75 | 3,797,067 | 12,751 | 1.35 | |||||||||||||||||||||||||||||||||
| Borrowings | 532,449 | 3,151 | 2.37 | 577,954 | 2,725 | 1.91 | 591,862 | 2,049 | 1.39 | |||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 5,038,316 | 23,804 | 1.90 | 5,008,942 | 21,876 | 1.77 | 4,388,929 | 14,800 | 1.35 | |||||||||||||||||||||||||||||||||
| Noninterest-bearing demand deposits | 495,090 | 482,634 | 482,903 | |||||||||||||||||||||||||||||||||||||||
| Other noninterest-bearing liabilities | 45,506 | 29,048 | 27,018 | |||||||||||||||||||||||||||||||||||||||
| Total liabilities | 5,578,912 | 5,520,624 | 4,898,850 | |||||||||||||||||||||||||||||||||||||||
| Total stockholders' equity | 693,613 | 681,653 | 661,655 | |||||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 6,272,525 | $ | 6,202,277 | $ | 5,560,505 | ||||||||||||||||||||||||||||||||||||
| Net interest-earning assets | $ | 1,098,050 | $ | 1,075,408 | $ | 1,053,252 | ||||||||||||||||||||||||||||||||||||
| Fully tax-equivalent net interest income | 43,191 | 43,298 | 41,661 | |||||||||||||||||||||||||||||||||||||||
| Less: tax-equivalent adjustments | (721 | ) | (701 | ) | (614 | ) | ||||||||||||||||||||||||||||||||||||
| Net interest income | $ | 42,470 | $ | 42,597 | $ | 41,047 | ||||||||||||||||||||||||||||||||||||
| Interest rate spread (1)(4) | 2.48 | % | 2.57 | % | 2.81 | % | ||||||||||||||||||||||||||||||||||||
| Net interest margin (1)(5) | 2.82 | % | 2.89 | % | 3.07 | % | ||||||||||||||||||||||||||||||||||||
| Average interest-earning assets to average | ||||||||||||||||||||||||||||||||||||||||||
| interest-bearing liabilities | 121.79 | % | 121.47 | % | 124.00 | % | ||||||||||||||||||||||||||||||||||||
| Supplemental Information: | ||||||||||||||||||||||||||||||||||||||||||
| Total deposits, including noninterest-bearing | ||||||||||||||||||||||||||||||||||||||||||
| demand deposits | $ | 5,000,957 | $ | 20,653 | 1.66 | % | $ | 4,913,622 | $ | 19,151 | 1.58 | % | $ | 4,279,970 | $ | 12,751 | 1.19 | % | ||||||||||||||||||||||||
| Total deposits and borrowings, including | ||||||||||||||||||||||||||||||||||||||||||
| noninterest-bearing demand deposits | $ | 5,533,406 | $ | 23,804 | 1.73 | % | $ | 5,491,576 | $ | 21,876 | 1.62 | % | $ | 4,871,832 | $ | 14,800 | 1.22 | % | ||||||||||||||||||||||||
| (1) | Income on debt securities, equity securities and revenue bonds included in commercial real estate loans, as well as resulting yields, interest rate spread and net interest margin, are presented on a tax-equivalent basis. The tax-equivalent adjustments are deducted from tax-equivalent net interest income to agree to amounts reported in the consolidated statements of net income. For the three months ended June 30, 2019, March 31, 2019 and June 30, 2018, yields on loans before tax-equivalent adjustments were 4.42%, 4.39% and 4.29%, respectively, yields on securities and certificates of deposit before tax-equivalent adjustments were 3.20%, 2.83% and 2.38%, respectively, and yield on total interest-earning assets before tax-equivalent adjustments were 4.33%, 4.30% and 4.12%, respectively. Interest rate spread before tax-equivalent adjustments for the three months ended June 30, 2019, March 31, 2019 and June 30, 2018 was 2.43%, 2.53% and 2.77%, respectively, while net interest margin before tax-equivalent adjustments for the three months ended June 30, 2019, March 31, 2019 and June 30, 2018 was 2.78%, 2.84% and 3.03%, respectively. | ||
| (2) | Loans on non-accrual status are included in average balances. | ||
| (3) | Includes Federal Home Loan Bank stock and associated dividends. | ||
| (4) | Interest rate spread represents the difference between the tax-equivalent yield on interest-earning assets and the cost of interest-bearing liabilities. | ||
| (5) | Net interest margin represents net interest income (tax-equivalent basis) divided by average interest-earning assets. | ||
| (6) | Annualized. | ||
| MERIDIAN BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||
| NET INTEREST INCOME ANALYSIS | ||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||
| Six Months Ended | ||||||||||||||||||||||||||||
| June 30, 2019 | June 30, 2018 | |||||||||||||||||||||||||||
| Average | Yield/ | Average | Yield/ | |||||||||||||||||||||||||
| Balance | Interest (1) | Cost (1)(6) | Balance | Interest (1) | Cost (1)(6) | |||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||||||
| Loans (2) | $ | 5,752,551 | $ | 127,065 | 4.45 | % | $ | 4,910,858 | $ | 105,064 | 4.31 | % | ||||||||||||||||
| Securities and certificates of deposit | 36,478 | 584 | 3.23 | 83,260 | 966 | 2.34 | ||||||||||||||||||||||
| Other interest-earning assets (3) | 321,472 | 4,520 | 2.84 | 323,301 | 3,049 | 1.90 | ||||||||||||||||||||||
| Total interest-earning assets | 6,110,501 | 132,169 | 4.36 | 5,317,419 | 109,079 | 4.14 | ||||||||||||||||||||||
| Noninterest-earning assets | 127,095 | 121,096 | ||||||||||||||||||||||||||
| Total assets | $ | 6,237,596 | $ | 5,438,515 | ||||||||||||||||||||||||
| Liabilities and stockholders' equity: | ||||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||
| Interest-bearing demand deposits | $ | 1,202,572 | $ | 10,524 | 1.76 | $ | 1,068,456 | $ | 6,277 | 1.18 | ||||||||||||||||||
| Money market deposits | 687,260 | 4,306 | 1.26 | 866,268 | 4,383 | 1.02 | ||||||||||||||||||||||
| Regular savings and other deposits | 937,789 | 7,763 | 1.67 | 337,156 | 232 | 0.14 | ||||||||||||||||||||||
| Certificates of deposit | 1,641,012 | 17,211 | 2.11 | 1,440,854 | 12,368 | 1.73 | ||||||||||||||||||||||
| Total interest-bearing deposits | 4,468,633 | 39,804 | 1.80 | 3,712,734 | 23,260 | 1.26 | ||||||||||||||||||||||
| Borrowings | 555,076 | 5,876 | 2.13 | 556,672 | 3,691 | 1.34 | ||||||||||||||||||||||
| Total interest-bearing liabilities | 5,023,709 | 45,680 | 1.83 | 4,269,406 | 26,951 | 1.27 | ||||||||||||||||||||||
| Noninterest-bearing demand deposits | 488,897 | 485,665 | ||||||||||||||||||||||||||
| Other noninterest-bearing liabilities | 32,324 | 26,136 | ||||||||||||||||||||||||||
| Total liabilities | 5,544,930 | 4,781,207 | ||||||||||||||||||||||||||
| Total stockholders' equity | 687,666 | 657,308 | ||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 6,232,596 | $ | 5,438,515 | ||||||||||||||||||||||||
| Net interest-earning assets | $ | 1,086,792 | $ | 1,048,013 | ||||||||||||||||||||||||
| Fully tax-equivalent net interest income | 86,489 | 82,128 | ||||||||||||||||||||||||||
| Less: tax-equivalent adjustments | (1,422 | ) | (1,233 | ) | ||||||||||||||||||||||||
| Net interest income | $ | 85,067 | $ | 80,895 | ||||||||||||||||||||||||
| Interest rate spread (1)(4) | 2.53 | % | 2.87 | % | ||||||||||||||||||||||||
| Net interest margin (1)(5) | 2.85 | % | 3.11 | % | ||||||||||||||||||||||||
| Average interest-earning assets to average | ||||||||||||||||||||||||||||
| interest-bearing liabilities | 121.63 | % | 124.55 | % | ||||||||||||||||||||||||
| Supplemental Information: | ||||||||||||||||||||||||||||
| Total deposits, including noninterest-bearing | ||||||||||||||||||||||||||||
| demand deposits | $ | 4,957,530 | $ | 39,804 | 1.62 | % | $ | 4,198,399 | $ | 23,260 | 1.12 | % | ||||||||||||||||
| Total deposits and borrowings, including | ||||||||||||||||||||||||||||
| noninterest-bearing demand deposits | $ | 5,512,606 | $ | 45,680 | 1.67 | % | $ | 4,755,071 | $ | 26,951 | 1.14 | % | ||||||||||||||||
| (1) | Income on debt securities, equity securities and revenue bonds included in commercial real estate loans, as well as resulting yields, interest rate spread and net interest margin, are presented on a tax-equivalent basis. The tax-equivalent adjustments are deducted from tax-equivalent net interest income to agree to amounts reported in the consolidated statements of net income. For the six months ended June 30, 2019, and 2018, yields on loans before tax-equivalent adjustments were 4.41% and 4.27%, respectively, yields on securities and certificates of deposit before tax-equivalent adjustments were 3.02% and 2.20%, respectively, and yield on total interest-earning assets before tax-equivalent adjustments were 4.31% and 4.09%, respectively. Interest rate spread before tax-equivalent adjustments for the six months ended June 30, 2019 and 2018 was 2.48% and 2.82%, respectively, while net interest margin before tax-equivalent adjustments for the six months ended June 30, 2019 and 2018 was 2.81% and 3.07%, respectively. | ||
| (2) | Loans on non-accrual status are included in average balances. | ||
| (3) | Includes Federal Home Loan Bank stock and associated dividends. | ||
| (4) | Interest rate spread represents the difference between the tax-equivalent yield on interest-earning assets and the cost of interest-bearing liabilities. | ||
| (5) | Net interest margin represents net interest income (tax-equivalent basis) divided by average interest-earning assets. | ||
| (6) | Annualized. | ||
| MERIDIAN BANCORP, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||
| SELECTED FINANCIAL HIGHLIGHTS | ||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||
| June 30, 2019 | March 31, 2019 | June 30, 2018 | June 30, 2019 | June 30, 2018 | ||||||||||||||||||||
| Key Performance Ratios | ||||||||||||||||||||||||
| Return on average assets (1) | 0.97 | % | 0.97 | % | 1.01 | % | 0.97 | % | 0.96 | % | ||||||||||||||
| Return on average equity (1) | 8.75 | 8.84 | 8.50 | 8.79 | 7.93 | |||||||||||||||||||
| Interest rate spread (1) (2) | 2.48 | 2.57 | 2.81 | 2.53 | 2.87 | |||||||||||||||||||
| Net interest margin (1) (3) | 2.82 | 2.89 | 3.07 | 2.85 | 3.11 | |||||||||||||||||||
| Non-interest expense to average assets (1) | 1.60 | 1.66 | 1.69 | 1.63 | 1.77 | |||||||||||||||||||
| Efficiency ratio (4) | 55.57 | 57.20 | 53.89 | 56.38 | 55.74 | |||||||||||||||||||
| June 30, 2019 | March 31, 2019 | December 31, 2018 | June 30, 2018 | |||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
| Asset Quality | ||||||||||||||||||||
| Non-accrual loans: | ||||||||||||||||||||
| One- to four-family | $ | 5,378 | $ | 6,115 | $ | 5,888 | $ | 6,457 | ||||||||||||
| Home equity lines of credit | — | — | — | 563 | ||||||||||||||||
| Multi-family | — | 252 | — | — | ||||||||||||||||
| Commercial real estate | 318 | 640 | 342 | 366 | ||||||||||||||||
| Commercial and industrial | 350 | 537 | 676 | 519 | ||||||||||||||||
| Total non-accrual loans | 6,046 | 7,544 | 6,906 | 7,905 | ||||||||||||||||
| Foreclosed assets | — | — | — | — | ||||||||||||||||
| Total non-performing assets | $ | 6,046 | $ | 7,544 | $ | 6,906 | $ | 7,905 | ||||||||||||
| Allowance for loan losses/total loans | 0.92 | % | 0.94 | % | 0.94 | % | 0.96 | % | ||||||||||||
| Allowance for loan losses/non-accrual loans | 890.92 | 715.76 | 770.79 | 624.93 | ||||||||||||||||
| Non-accrual loans/total loans | 0.10 | 0.13 | 0.12 | 0.15 | ||||||||||||||||
| Non-accrual loans/total assets | 0.09 | 0.12 | 0.11 | 0.14 | ||||||||||||||||
| Non-performing assets/total assets | 0.09 | 0.12 | 0.11 | 0.14 | ||||||||||||||||
| Capital and Share Related | ||||||||||||||||||||
| Stockholders' equity to total assets | 10.92 | % | 10.93 | % | 10.92 | % | 11.71 | % | ||||||||||||
| Book value per share | $ | 13.05 | $ | 12.82 | $ | 12.60 | $ | 12.33 | ||||||||||||
| Tangible book value per share (5) | $ | 12.62 | $ | 12.39 | $ | 12.17 | $ | 11.91 | ||||||||||||
| Market value per share | $ | 17.89 | $ | 15.69 | $ | 14.32 | $ | 19.15 | ||||||||||||
| Shares outstanding | 53,321,805 | 53,542,646 | 53,541,429 | 53,905,279 | ||||||||||||||||
| (1) | Annualized. | ||
| (2) | Interest rate spread represents the difference between the tax-equivalent yield on interest-earning assets and the cost of interest-bearing liabilities. | ||
| (3) | Net interest margin represents net interest income (tax-equivalent basis) divided by average interest-earning assets. | ||
| (4) | The efficiency ratio is a non-GAAP measure representing non-interest expense, excluding merger and acquisition expenses, divided by the sum of net interest income and non-interest income excluding gains and losses on marketable equity securities. The efficiency ratio is a common measure used by banks to understand expenses related to the generation of revenue. We have removed gains and losses on marketable equity securities as management deems them to be either discretionary or market driven and not representative of operating performance. We have removed merger and acquisition expenses as management deems them to be not representative of operating performance. Presented on a basis including merger and acquisition expenses and gains and losses on marketable equity securities, the efficiency ratio was 55.29%, 55.56% and 53.44% for the quarters ended June 30, 2019, March 31, 2019, and June 30, 2018, respectively and 55.43% and 55.94% for the six months ended June 30, 2019 and 2018, respectively. | ||
| (5) | Tangible book value per share represents total stockholders’ equity less goodwill and other intangible assets divided by the number of shares outstanding. | ||