BOSTON, Jan. 24, 2017 (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 $11.3 million, or $0.22 per diluted share, for the quarter ended December 31, 2016, up from $9.5 million, or $0.18 per diluted share, for the quarter ended September 30, 2016 and $6.9 million, or $0.13 per diluted share, for the quarter ended December 31, 2015. For the year ended December 31, 2016, net income was $34.2 million, or $0.65 per diluted share, up from $24.6 million, or $0.46 per diluted share, for the year ended December 31, 2015. The Company’s return on average assets was 1.05% for the quarter ended December 31, 2016, up from 0.94% for the quarter ended September 30, 2016 and 0.80% for the quarter ended December 31, 2015. For the year ended December 31, 2016, the Company’s return on average assets was 0.87%, up from 0.74% for the year ended December 31, 2015. The Company’s return on average equity was 7.51% for the quarter ended December 31, 2016, up from 6.39% for the quarter ended September 30, 2016 and 4.67% for the quarter ended December 31, 2015. For the year ended December 31, 2016, the Company’s return on average equity was 5.77%, up from 4.19% for the year ended December 31, 2015.

Richard J. Gavegnano, Chairman, President and Chief Executive Officer, said, “It is my great pleasure to report record net income of $34.2 million for the year 2016, up $9.6 million, or 39%, from 2015. Our net income of $11.3 million for the fourth quarter of 2016, a new quarterly record, was up $1.8 million, or 19%, from the third quarter of 2016 and $4.4 million, or 64%, from the fourth quarter of 2015. Our earnings momentum over the past year resulted from rising net interest income, driven by our strong organic growth in loans and deposits, along with increasingly favorable trends in asset quality and operating efficiency. These results are also directly related to the hard work of the entire East Boston Savings Bank team, and all of us remain committed to building on these accomplishments to further strengthen our franchise and enhance shareholder value.”

The Company’s net interest income was $33.4 million for the quarter ended December 31, 2016, up $2.1 million, or 6.8%, from the quarter ended September 30, 2016 and $6.1 million, or 22.2%, from the quarter ended December 31, 2015. The interest rate spread and net interest margin on a tax-equivalent basis were 3.09% and 3.31%, respectively, for the quarter ended December 31, 2016 compared to 3.11% and 3.32%, respectively, for the quarter ended September 30, 2016 and 3.17% and 3.39%, respectively, for the quarter ended December 31, 2015. For the year ended December 31, 2016, net interest income increased $19.7 million, or 19.1%, to $122.6 million from the year ended December 31, 2015. The net interest rate spread and net interest margin on a tax-equivalent basis were 3.13% and 3.34%, respectively, for the year ended December 31, 2016 compared to 3.09% and 3.31%, respectively, for the year ended December 31, 2015. The increases in net interest income were due primarily to loan growth, partially offset by increases in the average balances and costs of total deposits and borrowings for the quarter and year ended December 31, 2016 compared to the respective prior periods.

Total interest and dividend income increased to $41.2 million for the quarter ended December 31, 2016, up $2.8 million, or 7.4%, from the quarter ended September 30, 2016 and $8.6 million, or 26.4%, from the quarter ended December 31, 2015, primarily due to growth in the Company’s average loan balances to $3.793 billion. The Company’s yield on interest-earning assets on a tax-equivalent basis was 4.05% for the quarter ended December 31, 2016, up one basis point from the quarter ended September 30, 2016 and up two basis points from the quarter ended December 31, 2015.

Total interest expense increased to $7.8 million for the quarter ended December 31, 2016, up $712,000, or 10.0%, from the quarter ended September 30, 2016 and $2.5 million, or 47.7%, from the quarter ended December 31, 2015. Interest expense on deposits increased to $7.0 million for the quarter ended December 31, 2016, up $689,000, or 11.0%, from the quarter ended September 30, 2016 and $2.2 million, or 45.0%, from the quarter ended December 31, 2015 primarily due to growth in average total deposits to $3.343 billion and an increase in the cost of average total deposits to 0.83%. Interest expense on borrowings increased to $868,000 for the quarter ended December 31, 2016, up $23,000, or 2.7%, from the quarter ended September 30, 2016 and $368,000, or 73.6%, from the quarter ended December 31, 2015 primarily due to growth in average total borrowings to $325.4 million, partially offset by a decrease in the cost of average total borrowings to 1.06%. The Company’s cost of funds was 0.85% for the quarter ended December 31, 2016, up two basis points from the quarter ended September 30, 2016 and 10 basis points from the quarter ended December 31, 2015.

For the year ended December 31, 2016, the Company’s total interest and dividend income increased $26.4 million, or 21.4%, to $149.7 million from the year ended December 31, 2015 primarily due to growth in the average loan balances of $693.1 million, or 24.7%, to $3.495 billion, partially offset by a decrease in the yield on loans on a tax-equivalent basis of five basis points to 4.30% for the year ended December 31, 2016 compared to 4.35% for the year ended December 31, 2015. The Company’s yield on interest-earning assets on a tax-equivalent basis increased 11 basis points to 4.05% for the year ended December 31, 2016 compared to 3.94% for the year ended December 31, 2015.

Total interest expense increased $6.7 million, or 32.7%, to $27.1 million for the year ended December 31, 2016 compared to $20.5 million for the year ended December 31, 2015. Interest expense on deposits increased $5.6 million, or 30.5%, to $24.1 million for the year ended December 31, 2016 from the year ended December 31, 2015 primarily due to growth in average total deposits of $462.1 million, or 17.9%, to $3.049 billion and an increase in the cost of average total deposits of eight basis points to 0.79%. Interest expense on borrowings increased $1.0 million, or 52.8%, to $3.0 million for the year ended December 31, 2016 from the year ended December 31, 2015 primarily due to growth in average total borrowings of $131.2 million, or 89.7%, to $277.6 million, partially offset by a decrease in the cost of average total borrowings of 26 basis points to 1.09%. The Company’s cost of funds increased seven basis points to 0.82% for the year ended December 31, 2016 compared to 0.75% for the year ended December 31, 2015.

Mr. Gavegnano noted, “The robust increases in net interest income have been driven by our proven capabilities to attract and retain high quality commercial loan and core deposit relationships. Over the past five years, our net interest income has steadily risen each consecutive quarter as our total loan portfolio increased $2.6 billion, for a compounded annual growth rate of 24%, and core deposits increased $1.4 billion, for a compounded annual growth rate of 20%.”

The Company's provision for loan losses was $1.3 million for the quarter ended December 31, 2016, up from $858,000 for the quarter ended September 30, 2016 and $544,000 for the quarter ended December 31, 2015. For the year ended December 31, 2016, the provision for loan losses was $7.2 million compared to $6.7 million for the year ended December 31, 2015. The allowance for loan losses was $40.1 million or 1.02% of total loans at December 31, 2016, compared to $38.7 million or 1.04% of total loans at September 30, 2016 and $33.4 million or 1.08% of total loans at December 31, 2015. The changes in the provision and the allowance for loan losses were based on management’s assessment of loan portfolio growth and composition changes, declines in historical charge-off trends, reductions in problem loans and other improving asset quality trends, partially offset by growth in the multi-family, commercial real estate, construction, and commercial and industrial loan categories. The changes also reflected provisions and charge-offs on a multi-family construction loan relationship of $486,000 during the third quarter of 2016 and $2.3 million during the second quarter of 2015.

Net recoveries totaled $147,000 for the quarter ended December 31, 2016, or 0.02% of average loans outstanding on an annualized basis compared to net charge-offs of $478,000 for the quarter ended September 30, 2016, or 0.05% of average loans outstanding on an annualized basis and net recoveries of $274,000 for the quarter ended December 31, 2015, or 0.04% of average loans outstanding on an annualized basis. For the year ended December 31, 2016, net charge-offs totaled $436,000, or 0.01% of average loans outstanding compared to net charge-offs of $1.7 million for the year ended December 31, 2015, or 0.06% of average loans outstanding.

Non-accrual loans were $13.4 million, or 0.34% of total loans outstanding, at December 31, 2016, down $1.8 million, or 11.6%, from September 30, 2016 and $17.9 million, or 57.1%, from December 31, 2015. The reductions in non-accrual loans were primarily due to the sale at foreclosure during the third quarter of 2016 of an $11.5 million multi-family construction loan in Boston that was originally placed on non-accrual status during the second quarter of 2015, along with steady reductions across all categories of non-accrual loans. Non-performing assets, comprised entirely of non-accrual loans, were $13.4 million, or 0.30% of total assets, at December 31, 2016, down from $15.2 million, or 0.36% of total assets, at September 30, 2016 and $31.3 million, or 0.89% of total assets, at December 31, 2015.

Mr. Gavegnano commented, “During 2016, we successfully reduced our non-performing assets to the lowest levels since before the Great Recession, while our loan charge-off rates have remained at historic lows. These results were achieved through highly selective loan underwriting, diligent credit monitoring and effective collection processes.”

Non-interest income was $5.6 million for the quarter ended December 31, 2016, up from $3.3 million for the quarter ended September 30, 2016 and $2.7 million for the quarter ended December 31, 2015 primarily due to an increase in gain on sale of securities, net. For the year ended December 31, 2016, non-interest income increased $1.2 million, or 8.8%, to $14.2 million from $13.0 million for the year ended December 31, 2015 primarily due to increases of $561,000 in customer service fees and $588,000 in gain on sales of securities, net.

Non-interest expenses were $19.8 million, or 1.84% of average assets for the quarter ended December 31, 2016, compared to $19.2 million, or 1.90% of average assets for the quarter ended September 30, 2016 and $19.2 million, or 2.24% of average assets for the quarter ended December 31, 2015. As compared to the quarter ended December 31, 2015, non-interest expenses increased $591,000, or 3.1%, primarily due to increases of $549,000 in salaries and employee benefits, $399,000 in occupancy and equipment expenses and $317,000 in professional fees, partially offset by decreases of $187,000 in marketing and advertising expenses, $107,000 in foreclosed real estate expenses and $348,000 in other general and administrative expenses. For the year ended December 31, 2016, non-interest expenses increased $4.8 million, or 6.6%, to $77.5 million from $72.7 million for the year ended December 31, 2015, primarily due to increases of $4.1 million in salaries and employee benefits, $933,000 in occupancy and equipment expenses, $332,000 in professional services and $170,000 in other general and administrative expenses, partially offset by decreases of $498,000 in marketing and advertising expenses and $204,000 in foreclosed real estate expenses. The increases in salaries and employee benefits expenses were primarily due to annual increases in employee compensation and health benefits, and expenses associated with the November 2015 grant of restricted stock and stock options to the Company’s directors, officers and employees. In addition, increases in salaries and employee benefits expenses, occupancy and equipment expenses and other general and administrative expenses reflect costs associated with two new branches opened over the past year. The decreases in marketing and advertising expenses reflect lower advertising production and direct mail costs and cost savings associated with the 2015 rebranding of the former Mt. Washington Bank Division into the East Boston Savings Bank brand. The Company’s efficiency ratio improved to 54.33% for the quarter ended December 31, 2016 from 55.81% for the quarter ended September 30, 2016 and 63.81% for the quarter ended December 31, 2015. For the year ended December 31, 2016, the efficiency ratio was 57.95% compared to 64.05% for the year ended December 31, 2015.

Mr. Gavegnano added, “Our efficiency ratio has steadily improved over the past four years from a high of 77.96% for the year 2012 to 57.95% for the year 2016, with further improvement in the ratio to 54.33% for the fourth quarter, reflecting our growth-driven rise in net interest income and prudent management of non-interest expenses. These improvements were realized during a period when we expanded our core banking franchise in the lucrative metropolitan Boston market area to 31 branches. We have opened eight new branches since the end of 2011, including the March opening in Boston’s Chinatown neighborhood, the June roll-out of our innovative mobile branch and the December addition of a second Brookline location during 2016. This expansion has enabled the Bank to attract new business and consumer relationships with the resulting gains in market share of loans and deposits.”

The Company recorded a provision for income taxes of $6.6 million for the quarter ended December 31, 2016, reflecting an effective tax rate of 37.0%, compared to $5.1 million for the quarter ended September 30, 2016, reflecting an effective tax rate of 34.9% and $3.4 million, or a 33.1% effective tax rate, for the quarter ended December 31, 2015. For the year ended December 31, 2016, the provision for income taxes was $17.9 million, reflecting an effective tax rate of 34.3%, compared to $12.0 million, or 32.7%, for the year ended December 31, 2015. The changes in the income tax provision and effective tax rate were primarily due to changes in the components of pre-tax income.

Total assets were $4.436 billion at December 31, 2016, an increase of $262.9 million, or 6.3%, from $4.173 billion at September 30, 2016 and an increase of $911.5 million, or 25.9%, from $3.525 billion at December 31, 2015. Net loans were $3.899 billion at December 31, 2016, an increase of $237.1 million, or 6.5%, from September 30, 2016 and an increase of $853.4 million, or 28.0% from December 31, 2015. Loan originations totaled $550.3 million during the quarter ended December 31, 2016 and $1.6 billion during the year ended December 31, 2016. The net increase in loans for the year ended December 31, 2016 was primarily due to increases of $482.8 million in commercial real estate loans, $189.9 million in multi-family loans, $115.4 million in commercial and industrial loans and $81.2 million in construction loans, partially offset by a decrease of $4.8 million in one- to four-family loans. These net changes exclude reclassifications during the third quarter of $44.3 million in multi-family loans and $34.5 million in commercial real estate loans to one- to four-family loans in accordance with regulatory guidance. Cash and due from banks was $236.4 million at December 31, 2016, an increase of $53.6 million, or 29.3%, from September 30, 2016 and an increase of $140.1 million, or 145.3% from December 31, 2015. Securities available for sale were $67.7 million at December 31, 2016, a decrease of $74.0 million, or 52.2%, from $141.6 million at December 31, 2015 primarily due to $56.4 million in maturities, calls and principal payments and $35.4 million in sales, partially offset by $12.5 million in purchases and $6.4 million in market value appreciation.

Total deposits were $3.476 billion at December 31, 2016, an increase of $246.3 million, or 7.6%, from $3.230 billion at September 30, 2016 and an increase of $732.8 million, or 26.7%, from $2.743 billion at December 31, 2015. Core deposits, which exclude certificate of deposits, increased $493.2 million, or 26.6%, during the year ended December 31, 2016 to $2.348 billion, or 67.5% of total deposits. Total borrowings were $322.5 million, an increase of $2.7 million, or 0.8%, from September 30, 2016 and an increase of $155.3 million, or 92.9%, from December 31, 2015.

Total stockholders’ equity was $607.3 million, an increase of $10.2 million, or 1.7%, from $597.1 million at September 30, 2016 and an increase of $19.2 million, or 3.3%, from $588.1 million at December 31, 2015. The increase for the year ended December 31, 2016 was primarily due to net income of $34.2 million, $6.0 million related to stock-based compensation plans and $3.9 million in accumulated other comprehensive income, reflecting an increase in the fair value of available-for-sale securities, partially offset by a $18.8 million repurchase of 1,337,507 shares of the Company’s common stock and four quarterly dividends of $0.03 per share totaling $6.1 million. Stockholders’ equity to assets was 13.69% at December 31, 2016, compared to 14.31% at September 30, 2016 and 16.69% at December 31, 2015. Book value per share increased to $11.33 at December 31, 2016 from $10.72 at December 31, 2015. Tangible book value per share increased to $11.08 at December 31, 2016 from $10.47 at December 31, 2015. Market price per share increased $4.80, or 34.0%, to $18.90 at December 31, 2016 from $14.10 at December 31, 2015. At December 31, 2016, the Company and the Bank continued to exceed all regulatory capital requirements.

During the quarter ended December 31, 2016, the Company repurchased 116,796 shares of its stock at an average price of $15.79 per share. As of December 31, 2016, the Company had repurchased 2,059,611 shares of its stock at an average price of $13.71 per share, or 75.2% of the 2,737,334 shares authorized for repurchase under the Company’s repurchase program as adopted in August 2015.

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 31 full-service locations in the greater Boston metropolitan area. We offer a variety of deposit and loan products to individuals and businesses located in our primary market, which consists of Essex, Middlesex 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)  
              
  December 31, 2016  September 30, 2016  December 31, 2015  
              
  (Dollars in thousands)  
ASSETS             
Cash and due from banks $236,423  $182,852  $96,363  
Certificates of deposit  80,323   30,342   99,062  
Securities available for sale, at fair value  67,663   145,441   141,646  
Federal Home Loan Bank stock, at cost  18,175   17,818   10,931  
Loans held for sale  3,944   2,854   4,669  
Loans:             
One- to four-family  532,450   526,828   458,423  
Home equity lines of credit  42,913   46,249   46,660  
Multi-family  562,948   522,444   417,388  
Commercial real estate  1,776,601   1,607,276   1,328,344  
Construction  502,753   490,016   421,531  
Commercial and industrial  515,430   501,976   400,051  
Consumer  9,712   9,680   10,028  
Total loans  3,942,807   3,704,469   3,082,425  
Allowance for loan losses  (40,149)  (38,697)  (33,405) 
Net deferred loan origination fees  (3,990)  (4,159)  (3,778) 
Loans, net  3,898,668   3,661,613   3,045,242  
Bank-owned life insurance  40,745   40,451   39,557  
Premises and equipment, net  41,427   40,747   40,248  
Accrued interest receivable  10,381   9,209   8,574  
Deferred tax asset, net  21,461   19,835   21,246  
Goodwill  13,687   13,687   13,687  
Other assets  3,105   8,281   3,284  
Total assets $4,436,002  $4,173,130  $3,524,509  
              
LIABILITIES AND STOCKHOLDERS' EQUITY             
Deposits:             
Non interest-bearing demand deposits $431,222  $410,667  $370,546  
NOW deposits  630,413   547,650   334,753  
Money market deposits  980,344   863,385   860,957  
Regular savings and other deposits  305,632   301,754   288,180  
Certificates of deposit  1,128,226   1,106,113   888,582  
Total deposits  3,475,837   3,229,569   2,743,018  
Short-term borrowings        20,000  
Long-term debt  322,512   319,820   147,226  
Accrued expenses and other liabilities  30,356   26,685   26,139  
Total liabilities  3,828,705   3,576,074   2,936,383  
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; 53,596,105, 53,714,191 and 54,875,237 shares issued at December 31, 2016, September 30, 2016 and December 31, 2015, respectively  536   537   549  
Additional paid-in capital  390,065   390,587   403,737  
Retained earnings  234,290   224,509   206,214  
Accumulated other comprehensive income (loss)  1,806   1,044   (2,092) 
Unearned compensation - ESOP, 2,678,800, 2,709,242 and 2,800,564 at December 31, 2016, September 30, 2016 and December 31, 2015, respectively  (19,400)  (19,621)  (20,282) 
Total stockholders' equity  607,297   597,056   588,126  
Total liabilities and stockholders' equity $4,436,002  $4,173,130  $3,524,509  
              

 

MERIDIAN BANCORP, INC. AND SUBSIDIARIES 
CONSOLIDATED STATEMENTS OF NET INCOME 
(Unaudited) 
                     
  Three Months Ended  Years Ended 
  December 31,
2016
  September 30,
2016
  December 31,
2015
  December 31,
2016
  December 31,
2015
 
                     
  (Dollars in thousands, except per share amounts) 
Interest and dividend income:                    
Interest and fees on loans $40,172  $37,444  $31,555  $145,541  $118,586 
Interest on debt securities:                    
Taxable  159   203   297   866   1,608 
Tax-exempt  19   30   38   114   162 
Dividends on equity securities  346   365   422   1,529   1,638 
Interest on certificates of deposit  115   75   168   495   624 
Other interest and dividend income  438   303   159   1,147   724 
Total interest and dividend income  41,249   38,420   32,639   149,692   123,342 
Interest expense:                    
Interest on deposits  6,962   6,273   4,800   24,124   18,479 
Interest on short-term borrowings        5   6   5 
Interest on long-term debt  868   845   495   3,007   1,967 
Total interest expense  7,830   7,118   5,300   27,137   20,451 
Net interest income  33,419   31,302   27,339   122,555   102,891 
Provision for loan losses  1,304   858   544   7,180   6,667 
Net interest income, after provision for loan losses  32,115   30,444   26,795   115,375   96,224 
Non-interest income:                    
Customer service fees  2,231   2,170   2,114   8,484   7,923 
Loan fees  282   293   203   865   917 
Mortgage banking gains, net  125   274   119   573   535 
Gain (loss) on sales of securities, net  2,627   266   (57)  3,020   2,432 
Income from bank-owned life insurance  294   296   295   1,188   1,225 
Other income  55   2      60   8 
Total non-interest income  5,614   3,301   2,674   14,190   13,040 
Non-interest expenses:                    
Salaries and employee benefits  12,167   12,169   11,618   48,828   44,737 
Occupancy and equipment  2,881   2,577   2,482   10,809   9,876 
Data processing  1,331   1,293   1,317   5,135   5,204 
Marketing and advertising  973   832   1,160   3,217   3,715 
Professional services  969   663   652   2,965   2,633 
Foreclosed real estate  2   (11)  109   30   234 
Deposit insurance  481   572   527   2,037   1,989 
Other general and administrative  974   1,069   1,322   4,473   4,303 
Total non-interest expenses  19,778   19,164   19,187   77,494   72,691 
Income before income taxes  17,951   14,581   10,282   52,071   36,573 
Provision for income taxes  6,642   5,084   3,407   17,881   11,966 
Net income $11,309  $9,497  $6,875  $34,190  $24,607 
                     
Earnings per share:                    
Basic $0.22  $0.19  $0.13  $0.67  $0.47 
Diluted $0.22  $0.18  $0.13  $0.65  $0.46 
Weighted average shares:                    
Basic  50,940,037   50,982,633   51,982,009   51,128,914   51,965,036 
Diluted  52,102,511   52,093,009   53,092,652   52,248,308   53,071,932 
                     

 

MERIDIAN BANCORP, INC. AND SUBSIDIARIES
NET INTEREST INCOME ANALYSIS
(Unaudited)
                                       
 Three Months Ended
 December 31, 2016 September 30, 2016 December 31, 2015
          Yield/           Yield/           Yield/
 Average
Balance
  Interest (1)   Cost
(1)(6)
 
 Average
Balance
  Interest (1)   Cost
(1)(6)

 Average
Balance
  Interest (1)   Cost
(1)(6)
 
                                       
 (Dollars in thousands)                                     
Assets:                                      
Interest-earning assets:                                      
Loans (2)$3,792,961  $41,394    4.34% $3,614,168  $38,684    4.26% $2,995,593  $32,427    4.29%
Securities and certificates of deposit 147,509   778    2.10   157,293   823    2.08   242,945   1,100    1.80 
Other interest-earning assets (3) 244,241   438    0.71   148,425   303    0.81   78,836   159    0.80 
Total interest-earning assets 4,184,711   42,610    4.05   3,919,886   39,810    4.04   3,317,374   33,686    4.03 
Noninterest-earning assets 113,336            117,703            114,080          
Total assets$4,298,047           $4,037,589           $3,431,454          
Liabilities and stockholders' equity:                                      
Interest-bearing liabilities:                                      
NOW deposits$577,419  $1,025    0.71  $493,612   816    0.66  $308,105  $455    0.59 
Money market deposits 907,157   1,955    0.86   836,941   1,715    0.82   873,355   1,762    0.80 
Regular savings and other deposits 301,832   108    0.14   298,799   107    0.14   284,085   102    0.14 
Certificates of deposit 1,139,816   3,874    1.35   1,085,898   3,635    1.33   831,152   2,481    1.18 
Total interest-bearing deposits 2,926,224   6,962    0.95   2,715,250   6,273    0.92   2,296,697   4,800    0.83 
Borrowings 325,421   868    1.06   320,091   845    1.05   151,416   500    1.31 
Total interest-bearing liabilities 3,251,645   7,830    0.96   3,035,341   7,118    0.93   2,448,113   5,300    0.86 
Noninterest-bearing demand deposits 416,727            383,953            370,061          
Other noninterest-bearing liabilities 26,977            23,977            24,285          
Total liabilities 3,695,349            3,443,271            2,842,459          
Total stockholders' equity 602,698            594,318            588,995          
Total liabilities and stockholders' equity$4,298,047           $4,037,589           $3,431,454          
Net interest-earning assets$933,066           $884,545           $869,261          
Fully tax-equivalent net interest income     34,780            32,692            28,386      
Less: tax-equivalent adjustments     (1,361)           (1,390)           (1,047)     
Net interest income    $33,419           $31,302           $27,339      
Interest rate spread (1)(4)          3.09%           3.11%           3.17%
Net interest margin (1)(5)          3.31%           3.32%           3.39%
Average interest-earning assets to average                                      
interest-bearing liabilities     128.70 %          129.14 %          135.51 %    
Supplemental Information:                                      
Total deposits, including noninterest-bearing                                      
demand deposits$3,342,951  $6,962    0.83% $3,099,203  $6,273    0.81% $2,666,758  $4,800    0.71%
Total deposits and borrowings, including                                      
noninterest-bearing demand deposits$3,668,372  $7,830    0.85% $3,419,294  $7,118    0.83% $2,818,174  $5,300    0.75%
                                       
(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 December 31, 2016, September 30, 2016 and December 31, 2015, yields on loans before tax-equivalent adjustments were 4.21%, 4.12% and 4.18%, respectively, yields on securities and certificates of deposit before tax-equivalent adjustments were 1.72%, 1.70% and 1.51%, respectively, and yield on total interest-earning assets before tax-equivalent adjustments were 3.92%, 3.90% and 3.90%, respectively. Interest rate spread before tax-equivalent adjustments for the three months ended December 31, 2016, September 30, 2016 and December 31, 2015 was 2.96%, 2.97% and 3.04%, respectively, while net interest margin before tax-equivalent adjustments for the three months ended December 31, 2016, September 30, 2016 and December 31, 2015 was 3.18%, 3.18% and 3.27%, 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)
                          
 Years Ended December 31,
 2016 2015
 Average
Balance
  Interest (1)   Yield
Cost (1)
 Average
Balance
  Interest (1)   Yield
Cost (1)
                          
 (Dollars in thousands)
Assets:                         
Interest-earning assets:                         
Loans (2)$3,495,088  $150,182    4.30% $2,801,970  $121,859    4.35%
Securities and certificates of deposit 183,828   3,629    1.97   268,398   4,719    1.76 
Other interest-earning assets (3) 146,786   1,147    0.78   158,463   724    0.46 
Total interest-earning assets 3,825,702   154,958    4.05   3,228,831   127,302    3.94 
Noninterest-earning assets 116,985            114,081          
Total assets$3,942,687           $3,342,912          
                          
Liabilities and stockholders' equity:                         
Interest-bearing liabilities:                         
NOW deposits$469,103  $2,988    0.64  $295,958  $1,709    0.58 
Money market deposits 857,952   7,025    0.82   928,712   7,663    0.83 
Regular savings and other deposits 296,951   424    0.14   281,389   459    0.16 
Certificates of deposit 1,042,425   13,687    1.31   745,866   8,648    1.16 
Total interest-bearing deposits 2,666,431   24,124    0.90   2,251,925   18,479    0.82 
Borrowings 277,586   3,013    1.09   146,364   1,972    1.35 
Total interest-bearing liabilities 2,944,017   27,137    0.92   2,398,289   20,451    0.85 
Noninterest-bearing demand deposits 382,644            335,060          
Other noninterest-bearing liabilities 23,879            22,605          
Total liabilities 3,350,540            2,755,954          
Total stockholders' equity 592,147            586,958          
Total liabilities and stockholders' equity$3,942,687           $3,342,912          
Net interest-earning assets$881,685           $830,542          
Fully tax-equivalent net interest income     127,821            106,851      
Less: tax-equivalent adjustments     (5,266)           (3,960)     
Net interest income    $122,555           $102,891      
Interest rate spread (1)(4)          3.13%           3.09%
Net interest margin (1)(5)          3.34%           3.31%
Average interest-earning assets to average                         
interest-bearing liabilities     129.95 %          134.63 %    
                          
Supplemental Information:                         
Total deposits, including noninterest-bearing                         
demand deposits$3,049,075  $24,124    0.79% $2,586,985  $18,479    0.71%
Total deposits and borrowings, including                         
noninterest-bearing demand deposits$3,326,661  $27,137    0.82% $2,733,349  $20,451    0.75%
                          
(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 years ended December 31, 2016 and 2015, yields on loans before tax-equivalent adjustments were 4.16% and 4.23%, respectively, yields on securities and certificates of deposit before tax-equivalent adjustments were 1.63% and 1.50%, respectively, and yield on total interest-earning assets before tax-equivalent adjustments were 3.91% and 3.82%, respectively. Interest rate spread before tax-equivalent adjustments for the years ended December 31, 2016 and 2015 was 2.99% and 2.97%, respectively, while net interest margin before tax-equivalent adjustments for the years ended December 31, 2016 and 2015 was 3.20% and 3.19%, 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.
                          

 

MERIDIAN BANCORP, INC. AND SUBSIDIARIES 
SELECTED FINANCIAL HIGHLIGHTS 
(Unaudited) 
                      
  Three Months Ended Years Ended 
  December 31,
2016
 September 30,
2016
 December 31,
2015
 December 31,
2016
 December 31,
2015
 
                      
Key Performance Ratios                     
Return on average assets (1)  1.05%  0.94%  0.80%  0.87%  0.74% 
Return on average equity (1)  7.51   6.39   4.67   5.77   4.19  
Interest rate spread  (1) (2)  3.09   3.11   3.17   3.13   3.09  
Net interest margin  (1) (3)  3.31   3.32   3.39   3.34   3.31  
Non-interest expense to average assets  (1)  1.84   1.90   2.24   1.97   2.17  
Efficiency ratio (4)  54.33   55.81   63.81   57.95   64.05  

 

  December 31, 2016 September 30, 2016 December 31, 2015 
              
  (Dollars in thousands) 
Asset Quality             
Non-accrual loans:             
One- to four-family $8,487  $8,828  $9,264  
Home equity lines of credit  674   746   1,763  
Multi-family          
Commercial real estate  2,807   2,871   3,663  
Construction  815   2,031   15,849  
Commercial and industrial  653   730   805  
Consumer          
Total non-accrual loans  13,436   15,206   31,344  
Foreclosed assets          
Total non-performing assets $13,436  $15,206  $31,344  
              
Allowance for loan losses/total loans  1.02%  1.04%  1.08% 
Allowance for loan losses/non-accrual loans  298.82   254.49   106.58  
Non-accrual loans/total loans  0.34   0.41   1.02  
Non-accrual loans/total assets  0.30   0.36   0.89  
Non-performing assets/total assets  0.30   0.36   0.89  
              
Capital and Share Related             
Stockholders' equity to total assets  13.69%  14.31%  16.69% 
Book value per share $11.33  $11.12  $10.72  
Tangible book value per share $11.08  $10.86  $10.47  
Market value per share $18.90  $15.57  $14.10  
Shares outstanding  53,596,105   53,714,191   54,875,237  
              
(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 or losses on sales of securities. The efficiency ratio is a common measure used by banks to understand expenses related to the generation of revenue. We have removed gains or losses on sales of securities as management deems them to be discretionary and not representative of operating performance. 


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