Meridian Bancorp, Inc. Announces Results for the Quarter and Six Months Ended June 30, 2021

July 22, 2021 4:05 PM EDT

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BOSTON, July 22, 2021 (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 $16.5 million, or $0.32 per diluted share, for the quarter ended June 30, 2021, compared to $24.3 million, or $0.48 per diluted share for the quarter ended March 31, 2021, and $17.3 million, or $0.34 per diluted share, for the quarter ended June 30, 2020. For the six months ended June 30, 2021, net income was $40.9 million, or $0.81 per diluted share, up from $30.3 million, or $0.60 per diluted share, for the six months ended June 30, 2020. The Company’s return on average assets was 1.03% for the quarter ended June 30, 2021, compared to 1.46% for the quarter ended March 31, 2021, and 1.08% for the quarter ended June 30, 2020. For the six months ended June 30, 2021, the Company’s return on average assets was 1.25%, up from 0.95% for the six months ended June 30, 2020. The Company’s return on average equity was 8.32% for the quarter ended June 30, 2021, compared to 12.45% for the quarter ended March 31, 2021, and 9.45% for the quarter ended June 30, 2020. For the six months ended June 30, 2021, the Company’s return on average equity was 10.36%, up from 8.27% for the six months ended June 30, 2020.

Richard J. Gavegnano, Chairman, President and Chief Executive Officer, said, “I am pleased to report net income of $16.5 million for the second quarter of 2021 and $40.9 million for the six months ended June 30, 2021, a 35.1% increase over the six months ended June 30, 2020. These earnings reflect a 4.0% increase in net interest income and an improvement in the net interest margin to 3.08%, from 3.05%, for the six months ended June 30, 2021 compared to the same period in 2020. Also affecting the 2021 results was the recognition of an expense of $3.3 million with respect to a previously disclosed legal judgment related to a loan assumed in the Mt. Washington Bank acquisition over ten years ago. The Company also incurred $1.1 million in merger-related expenses associated with the Company’s proposed transaction with Independent Bank Corp.”

The Company’s net interest income was $47.8 million for the quarter ended June 30, 2021, an increase of $397,000, or 0.8%, from the quarter ended June 30, 2020. The interest rate spread and net interest margin on a tax-equivalent basis were 2.95% and 3.10%, respectively, for the quarter ended June 30, 2021 compared to 2.86% and 3.10%, respectively, for the quarter ended June 30, 2020. For the six months ended June 30, 2021 net interest income increased $3.7 million, or 4.0%, to $96.2 million from the six months ended June 30, 2020. The interest rate spread and net interest margin on a tax-equivalent basis were 2.93% and 3.08% for the six months ended June 30, 2021 compared to 2.76% and 3.05% for the six months ended June 30, 2020.

Total interest and dividend income totaled $55.4 million for the quarter ended June 30, 2021, a decrease of $6.7 million, or 10.8% from the quarter ended June 30, 2020, primarily due to a 9.8% decrease in the Company’s average loan balances to $5.161 billion. The Company’s yield on interest-earning assets on a tax-equivalent basis was 3.59% for the quarter ended June 30, 2021, down 47 basis points from the quarter ended June 30, 2020. For the six months ended June 30, 2021 the Company’s total interest and dividend income totaled $113.2 million, a decrease of $15.0 million, or 11.7%, from the six months ended June 30, 2020, primarily due to a decrease in the Company’s average loan balances of $437.8 million, or 7.6%, to $5.294 billion.

Total interest expense totaled $7.7 million for the quarter ended June 30, 2021, a decrease of $7.2 million, or 48.2%, from the quarter ended June 30, 2020. Interest expense on deposits decreased to $4.2 million for the quarter ended June 30, 2021, a decrease of $6.4 million, or 60.3%, from the quarter ended June 30, 2020, primarily due to a decrease in the cost of average total deposits to 0.34% from 0.88% for the quarter ended June 30, 2020. The Company’s total cost of funds was 0.55% for the quarter ended June 30, 2021, a decrease of 51 basis points from 1.06% for the quarter ended June 30, 2020. For the six months ended June 30, 2021, total interest expense totaled $17.0 million, a decrease of $18.7 million, or 52.4%, from the six months ended June 30, 2020, primarily due to a decrease in the cost of average total deposits to 0.39% from 1.13% for the six months ended June 30, 2020. The Company’s total cost of funds was 0.60% for the six months ended June 30, 2021, down 69 basis points from the six months ended June 30, 2020.

The Company’s provision for credit losses was $749,000 for the quarter ended June 30, 2021, compared to a provision of $9.6 million for the quarter ended June 30, 2020. For the six months ended June 30, 2021 the Company recognized a provision reversal of $4.5 million compared to a provision of $10.4 million for the six months ended June 30, 2020. The allowance for credit losses on loans was $64.3 million, or 1.28%, of total loans at June 30, 2021, compared to $68.8 million, or 1.25%, of total loans at December 31, 2020. Non-performing assets were $10.5 million, or 0.17% of total assets, at June 30, 2021, compared to $3.8 million, or 0.06% of total assets, at June 30, 2020.

Non-interest income was $3.0 million for the quarter ended June 30, 2021, a decrease of $5.6 million, or 64.8%, from the quarter ended June 30, 2020, primarily due to a $4.2 million gain on sale of asset recognized in the second quarter of 2020, and a $1.8 million valuation decrease on marketable equity securities, net. For the six months ended June 30, 2021, non-interest income increased $154,000, or 2.0%, to $8.0 million from $7.8 million for the six months ended June 30, 2020, primarily due to a $3.0 million valuation increase on marketable equity securities, net, a $1.3 million increase in gain on sale of equity securities, net, partially offset by a $4.2 million gain on sale of asset realized in 2020.

Non-interest expenses were $28.0 million, or 1.74% of average assets for the quarter ended June 30, 2021, compared to $23.3 million, or 1.46% of average assets for the quarter ended June 30, 2020. The Company’s efficiency ratio was 53.18% for the quarter ended June 30, 2021 compared to 46.79% for the quarter ended June 30, 2020. For the six months ended June 30, 2021, non-interest expenses increased $4.0 million, or 8.0%, to $53.6 million from $49.6 million for the six months ended June 30, 2020, due primarily to $3.3 million in expense for a legal judgment related to a loan assumed in the Mt. Washington Bank acquisition included in other general and administrative and $1.1 million in merger and acquisition related expenses realized in the second quarter of 2021. For the six months ended June 30, 2021 the efficiency ratio is 51.35% compared to 50.44% for the six months ended June 30, 2020.

The Company recorded a provision for income taxes of $5.5 million for the quarter ended June 30, 2021, reflecting an effective tax rate of 24.9%, compared to $5.8 million, or an effective rate of 25.2%, for the quarter ended June 30, 2020. For the six months ended June 30, 2021 the provision for income taxes was $14.2 million, reflecting an effective tax rate of 25.8%, compared to $10.1 million, reflecting an effective rate of 24.9% for the six months ended June 30, 2020.

Total assets were $6.287 billion at June 30, 2021, down $332.7 million, or 5.0%, from $6.620 billion at December 31, 2020. Net loans were $4.937 billion at June 30, 2021, down $507.2 million, or 9.3%, from December 31, 2020, despite loan originations of $449.7 million during the six months ended June 30, 2021. The allowance for credit losses on loans decreased $4.5 million, or 6.6%, to $64.3 million during the six months ended June 30, 2021 from $68.8 million at December 31, 2020, primarily due to changes in the volume and mix of the loan portfolio.

Total deposits were $4.864 billion at June 30, 2021, down $217.4 million, or 4.3%, from $5.081 billion at December 31, 2020. Core deposits, which exclude certificates of deposit, decreased $60.1 million, or 1.6%, during the six months ended June 30, 2021 to $3.802 billion, or 78.2% of total deposits, compared to 76.0% at December 31, 2020. The decrease in core deposits included the payoff of $175.6 million in brokered interest-bearing demand deposits. Certificates of deposit decreased $157.3 million during the six months ended June 30, 2021, inclusive of a $68.3 million decrease in brokered certificates of deposit. Total borrowings were $560.6 million at June 30, 2021, down $147.6 million, or 20.8%, from December 31, 2020, primarily due to $50.0 million in matured advances from the FHLB and paying down all borrowings from the Federal Reserve’s PPPLF program.

Total stockholders’ equity increased $32.3 million, or 4.2%, to $801.2 million at June 30, 2021 from $768.9 million at December 31, 2020. The increase for the six months ended June 30, 2021 was primarily due to net income of $40.9 million, partially offset by dividends of $0.20 per share totaling $10.1 million. Stockholders’ equity to assets was 12.74% at June 30, 2021, compared to 12.13% at March 31, 2021 and 11.61% at December 31, 2020. Tangible book value per share increased to $14.81 at June 30, 2021 from $14.25 at December 31, 2020. Market price per share increased 37.2% to $20.46 at June 30, 2021 from $14.91 at December 31, 2020. The Company and the Bank exceeded the minimum requirement to be considered well capitalized at June 30, 2021.

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 43 branches in the greater Boston metropolitan area, including 42 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, the effects of any health pandemic, 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,  March 31,  December 31,  June 30, 
 2021  2021  2020  2020 
 (Dollars in thousands) 
ASSETS                       
Cash and due from banks$1,101,359  $1,034,107  $914,586  $508,627 
Securities available for sale, at fair value 9,810   10,518   11,326   13,022 
Marketable equity securities, at fair value 9,112   8,900   12,189   16,401 
Federal Home Loan Bank stock, at cost 26,184   28,447   30,658   33,282 
Loans held for sale 5,711   7,422   8,224   3,682 
Loans:               
One- to four-family 489,310   517,442   564,146   635,683 
Home equity lines of credit 56,032   64,370   68,721   74,246 
Multi-family 809,317   878,331   880,552   941,922 
Commercial real estate 2,295,030   2,419,715   2,499,660   2,556,088 
Construction 645,622   625,961   731,432   742,845 
Commercial and industrial 703,745   779,603   765,195   760,546 
Consumer 9,749   10,307   10,707   11,867 
Total loans 5,008,805   5,295,729   5,520,413   5,723,197 
Allowance for credit losses on loans (64,300)  (63,436)  (68,824)  (60,547)
Net deferred loan origination fees (7,930)  (8,298)  (7,784)  (8,340)
Loans, net 4,936,575   5,223,995   5,443,805   5,654,310 
Bank-owned life insurance 42,402   42,138   41,877   41,334 
Premises and equipment, net 64,649   65,394   66,850   67,098 
Accrued interest receivable 19,932   22,498   23,173   17,300 
Deferred tax asset, net 21,437   21,418   21,355   16,873 
Goodwill 20,378   20,378   20,378   20,378 
Core deposit intangible 1,445   1,548   1,651   1,887 
Other assets 28,147   17,162   23,776   23,776 
Total assets$6,287,141  $6,503,925  $6,619,848  $6,417,970 
                
LIABILITIES AND STOCKHOLDERS' EQUITY               
Deposits:               
Non interest-bearing demand deposits$801,612  $751,809  $711,573  $709,924 
Interest-bearing demand deposits 1,270,484   1,461,236   1,364,548   1,291,458 
Money market deposits 863,526   852,747   930,507   753,980 
Regular savings and other deposits 866,191   870,961   855,329   833,951 
Certificates of deposit 1,061,914   1,160,616   1,219,210   1,231,084 
Total deposits 4,863,727   5,097,369   5,081,167   4,820,397 
Short-term borrowings          25,000 
Long-term debt 560,625   560,625   708,245   779,101 
Accrued expenses and other liabilities 61,575   56,847   61,551   59,199 
Total liabilities 5,485,927   5,714,841   5,850,963   5,683,697 
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; 52,608,747, 52,430,554, 52,415,061 and 52,407,179 shares issued at June 30, 2021, March 31, 2021, December 31, 2020 and June 30, 2020, respectively 526   524   524   524 
Additional paid-in capital 365,607   364,751   363,995   361,980 
Retained earnings 451,100   439,593   420,297   387,983 
Accumulated other comprehensive (loss) income (146)  (131)  (58)  100 
Unearned compensation - ESOP; 2,191,745, 2,161,304 , 2,191,745 and 2,252,627 shares at June 30, 2021, March 31, 2021, December 31, 2020 and June 30, 2020, respectively (15,873)  (15,653)  (15,873)  (16,314)
Total stockholders' equity 801,214   789,084   768,885   734,273 
Total liabilities and stockholders' equity$6,287,141  $6,503,925  $6,619,848  $6,417,970 
 
 

MERIDIAN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF NET INCOME
(Unaudited)

 Three Months Ended  Six Months Ended 
 June 30,  March 31,  June 30,  June 30,  June 30, 
 2021  2021  2020  2021  2020 
 (Dollars in thousands, except per share amounts) 
Interest and dividend income:                   
Interest and fees on loans$54,918  $57,162  $61,445  $112,080  $125,482 
Interest on debt securities 61   65   87   126   187 
Dividends on marketable equity securities 90   124   145   214   239 
Interest on certificates of deposit             1 
Other interest and dividend income 361   370   473   731   2,259 
Total interest and dividend income 55,430   57,721   62,150   113,151   128,168 
Interest expense:                   
Interest on deposits 4,209   5,729   10,591   9,938   27,360 
Interest on short-term borrowings       52      60 
Interest on borrowings 3,453   3,591   4,136   7,044   8,279 
Total interest expense 7,662   9,320   14,779   16,982   35,699 
Net interest income 47,768   48,401   47,371   96,169   92,469 
Provision (reversal) for credit losses 749   (5,236)  9,641   (4,487)  10,366 
Net interest income, after provision (reversal) for credit losses 47,019   53,637   37,730   100,656   82,103 
Non-interest income:                   
Customer service fees 2,485   2,199   1,948   4,684   4,045 
Loan fees (costs) 39   95   (35)  134   639 
Mortgage banking gains, net 45   582   118   627   529 
Gain on sale of asset       4,195      4,195 
Gain (loss) on marketable equity securities, net 200   1,785   2,025   1,985   (2,319)
Income from bank-owned life insurance 264   261   273   525   570 
Other income 17   9   134   26   168 
Total non-interest income 3,050   4,931   8,658   7,981   7,827 
Non-interest expenses:                   
Salaries and employee benefits 13,939   15,516   13,858   29,455   29,772 
Occupancy and equipment 3,900   4,231   3,739   8,131   7,663 
Data processing 2,273   2,241   2,133   4,514   4,270 
Marketing and advertising 1,032   896   1,030   1,928   2,260 
Professional services 691   730   695   1,421   1,692 
Deposit insurance 345   513   606   858   1,275 
Merger and acquisition 1,115         1,115    
Other general and administrative 4,738   1,416   1,240   6,154   2,689 
Total non-interest expenses 28,033   25,543   23,301   53,576   49,621 
Income before income taxes 22,036   33,025   23,087   55,061   40,309 
Provision for income taxes 5,490   8,705   5,808   14,195   10,053 
Net income$16,546  $24,320  $17,279  $40,866  $30,256 
                    
Earnings per share:                   
Basic$0.33  $0.48  $0.34  $0.81  $0.60 
Diluted$0.32  $0.48  $0.34  $0.81  $0.60 
Weighted average shares outstanding:                   
Basic 50,375,468   50,239,611   50,131,249   50,307,961   50,383,116 
Diluted 50,943,160   50,565,459   50,211,234   50,754,731   50,565,747 
                    
                    

MERIDIAN BANCORP, INC. AND SUBSIDIARIES
NET INTEREST INCOME ANALYSIS
(Unaudited)

 Three Months Ended
 June 30, 2021 March 31, 2021 June 30, 2020
 Average
Balance
  Interest
(1)
 Yield/
Cost (1)(6)
 Average
Balance
  Interest
(1)
 Yield/
Cost (1)(6)
 Average
Balance
  Interest
(1)
 Yield/
Cost (1)(6)
 (Dollars in thousands)
Assets:                                         
Interest-earning assets:                                         
Loans (2)$5,160,579  $55,702    4.33 % $5,429,311  $57,954    4.33 % $5,722,186  $62,164    4.37 %
Securities and certificates of deposit 19,445   171    3.53    20,839   208    4.05    33,282   262    3.17  
Other interest-earning assets (3) 1,099,850   361    0.13    1,057,264   370    0.14    478,725   473    0.40  
Total interest-earning assets 6,279,874   56,234    3.59    6,507,414   58,532    3.65    6,234,193   62,899    4.06  
Noninterest-earning assets 154,470             155,169             153,567           
Total assets$6,434,344            $6,662,583            $6,387,760           
Liabilities and stockholders' equity:                                         
Interest-bearing liabilities:                                         
Interest-bearing demand deposits$1,403,276  $959    0.27   $1,462,239  $1,408    0.39   $1,297,072  $2,293    0.71  
Money market deposits 859,189   471    0.22    877,613   780    0.36    722,148   1,227    0.68  
Regular savings and other deposits 870,508   333    0.15    861,439   536    0.25    841,600   995    0.48  
Certificates of deposit 1,116,928   2,446    0.88    1,223,333   3,005    1.00    1,331,999   6,076    1.83  
Total interest-bearing deposits 4,249,901   4,209    0.40    4,424,624   5,729    0.53    4,192,819   10,591    1.02  
Borrowings 560,625   3,453    2.47    666,856   3,591    2.18    754,426   4,188    2.23  
Total interest-bearing liabilities 4,810,526   7,662    0.64    5,091,480   9,320    0.74    4,947,245   14,779    1.20  
Noninterest-bearing demand deposits 777,688             734,316             651,517           
Other noninterest-bearing liabilities 50,409             55,337             57,922           
Total liabilities 5,638,623             5,881,133             5,656,684           
Total stockholders' equity 795,721             781,450             731,076           
Total liabilities and stockholders' equity$6,434,344            $6,662,583            $6,387,760           
Net interest-earning assets$1,469,348            $1,415,934            $1,286,948           
Fully tax-equivalent net interest income     48,572             49,212             48,120       
Less: tax-equivalent adjustments     (803)            (811)            (749)      
Net interest income    $47,769            $48,401            $47,371       
Interest rate spread (1)(4)          2.95 %           2.91 %           2.86 %
Net interest margin (1)(5)          3.10 %           3.07 %           3.10 %
Average interest-earning assets to average interest-bearing liabilities     130.54 %           127.81 %           126.01 %     
                                          
Supplemental Information:                                         
Total deposits, including noninterest-bearing demand deposits$5,027,589  $4,209    0.34 % $5,158,940  $5,729    0.45 % $4,844,336  $10,591    0.88 %
Total deposits and borrowings, including noninterest-bearing demand deposits$5,588,214  $7,662    0.55 % $5,825,796  $9,320    0.65 % $5,598,762  $14,779    1.06 %


____________________
(1)Income on debt securities, marketable 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, 2021, March 31, 2021, and June 30, 2020, yields on loans before tax-equivalent adjustments were 4.27%, 4.27% and 4.32%, respectively, yields on securities and certificates of deposit before tax-equivalent adjustments were 3.11%, 3.68% and 2.80%, respectively, and yields on total interest-earning assets before tax-equivalent adjustments were 3.54%, 3.60% and 4.01%, respectively. Interest rate spread before tax-equivalent adjustments for the three months ended June 30, 2021, March 31, 2021 and June 30, 2020 was 2.90%, 2.86% and 2.81%, respectively, while net interest margin before tax-equivalent adjustments for the three months ended June 30, 2021, March 31, 2021 and June 30, 2020 was 3.05%, 3.02% and 3.06%, 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, 2021 June 30, 2020
 Average
Balance
  Interest (1) Yield/
Cost (1)
 Average
Balance
  Interest (1) Yield/
Cost (1)
 (Dollars in thousands)
Assets:                           
Interest-earning assets:                           
Loans (2)$5,294,203  $113,656    4.33 % $5,732,019  $126,922    4.45 %
Securities and certificates of deposit 20,138   373    3.74    29,170   464    3.20  
Other interest-earning assets (3) 1,078,675   731    0.14    439,520   2,259    1.03  
Total interest-earning assets 6,393,016   114,760    3.62    6,200,709   129,645    4.20  
Noninterest-earning assets 154,817             157,599           
Total assets$6,547,833            $6,358,308           
                            
Liabilities and stockholders' equity:                           
Interest-bearing liabilities:                           
Interest-bearing demand deposits$1,432,595  $2,368    0.33   $1,288,538  $6,790    1.06  
Money market deposits 868,350   1,251    0.29    707,022   3,281    0.93  
Regular savings and other deposits 865,998   868    0.20    873,850   3,527    0.81  
Certificates of deposit 1,169,837   5,451    0.94    1,403,507   13,762    1.97  
Total interest-bearing deposits 4,336,780   9,938    0.46    4,272,917   27,360    1.29  
Borrowings 613,447   7,044    2.32    704,583   8,339    2.38  
Total interest-bearing liabilities 4,950,227   16,982    0.69    4,977,500   35,699    1.44  
Noninterest-bearing demand deposits 756,122             593,350           
Other noninterest-bearing liabilities 52,859             55,805           
Total liabilities 5,759,208             5,626,655           
Total stockholders' equity 788,625             731,653           
Total liabilities and stockholders' equity$6,547,833            $6,358,308           
Net interest-earning assets$1,442,789            $1,223,209           
Fully tax-equivalent net interest income     97,778             93,946       
Less: tax-equivalent adjustments     (1,609)            (1,477)      
Net interest income    $96,169            $92,469       
Interest rate spread (1)(4)          2.93 %           2.76 %
Net interest margin (1)(5)          3.08 %           3.05 %
Average interest-earning assets to average interest-bearing liabilities     129.15 %           124.57 %     
                            
Supplemental Information:                           
Total deposits, including noninterest-bearing demand deposits$5,092,902  $9,938    0.39 % $4,866,267  $27,360    1.13 %
Total deposits and borrowings, including noninterest-bearing demand deposits$5,706,349  $16,982    0.60 % $5,570,850  $35,699    1.29 %


____________________
(1)Income on debt securities, marketable 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, 2021 and 2020, yields on loans before tax-equivalent adjustments were 4.27%, and 4.40%, respectively, yields on securities and certificates of deposit before tax-equivalent adjustments were 3.40% and 2.94%, respectively, and yields on total interest-earning assets before tax-equivalent adjustments were 3.57% and 4.16%, respectively. Interest rate spread before tax-equivalent adjustments for the six months ended June 30, 2021 and 2020 was 2.88% and 2.72%, respectively, while net interest margin before tax-equivalent adjustments for the six months ended June 30, 2021 and 2020 was 3.03%, and 3.00%, 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, March 31, June 30, June 30, June 30,
 2021 2021 2020 2021 2020
Key Performance Ratios                        
Return on average assets (1) 1.03 %  1.46 %  1.08 %  1.25 %  0.95 %
Return on average equity (1) 8.32    12.45    9.45    10.36    8.27  
Interest rate spread (1) (2) 2.95    2.91    2.86    2.93    2.76  
Net interest margin (1) (3) 3.10    3.07    3.10    3.08    3.05  
Non-interest expense to average assets (1) 1.74    1.53    1.46    1.64    1.56  
Efficiency ratio (4) 53.18    49.55    46.79    51.35    50.44  


 June 30, March 31, December 31, June 30,
 2021 2021 2020 2020
 (Dollars in thousands)
Asset Quality                   
Non-accrual loans:                   
One- to four-family$1,633   $2,466   $2,617   $3,074  
Home equity lines of credit 20    20    20    20  
Commercial real estate 8,176            194  
Commercial and industrial 635    635    527    532  
Total non-accrual loans 10,464    3,121    3,164    3,820  
Foreclosed assets               
Total non-performing assets$10,464   $3,121   $3,164   $3,820  
                    
Allowance for credit losses on loans/total loans 1.28 %  1.20 %  1.25 %  1.06 %
Allowance for credit losses on loans/non-accrual loans 614.49    2,032.55    2,175.22    1,585.00  
Non-accrual loans/total loans 0.21    0.06    0.06    0.07  
Non-accrual loans/total assets 0.17    0.05    0.05    0.06  
Non-performing assets/total assets 0.17    0.05    0.05    0.06  
                    
Capital and Share Related                   
Stockholders' equity to total assets 12.74 %  12.13 %  11.61 %  11.44 %
Book value per share$15.23   $15.05   $14.67   $14.01  
Tangible book value per share (5)$14.81   $14.63   $14.25   $13.59  
Market value per share$20.46   $18.42   $14.91   $11.60  
Shares outstanding52,608,747   52,430,554   52,415,061   52,407,179  


____________________
(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 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, gains and losses on sale of assets, and merger and acquisition expenses as management deems them to be either discretionary or market driven and not representative of operating performance. Presented on a basis including gains and losses on marketable equity securities, gains and losses on sale of assets, and merger and acquisition expenses the efficiency ratio was 55.16%, 47.89% and 41.59% for the quarters ended June 30, 2021, March 31, 2021 and June 30, 2020, respectively and 51.44% and 49.47% for the six months ended June 30, 2021 and 2020, respectively.
(5)Tangible book value per share represents total stockholders’ equity less goodwill and other intangible assets divided by the number of shares outstanding.
  

Contact: Richard J. Gavegnano, Chairman, President and Chief Executive Officer
(978) 977-2211




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