BOSTON, Oct. 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 $13.3 million, or $0.25 per diluted share, for the quarter ended September 30, 2017, up from $11.3 million, or $0.22 per diluted share, for the quarter ended June 30, 2017 and $9.5 million, or $0.18 per diluted share, for the quarter ended September 30, 2016. For the nine months ended September 30, 2017, net income was $33.9 million, or $0.65 per diluted share, up from $22.9 million, or $0.44 per diluted share, for the nine months ended September 30, 2016. The Company’s return on average assets was 1.10% for the quarter ended September 30, 2017, up from 0.97% for the quarter ended June 30, 2017 and 0.94% for the quarter ended September 30, 2016. For the nine months ended September 30, 2017, the Company’s return on average assets was 0.97%, up from 0.80% for the nine months ended September 30, 2016. The Company’s return on average equity was 8.40% for the quarter ended September 30, 2017, up from 7.28% for the quarter ended June 30, 2017 and 6.39% for the quarter ended September 30, 2016.  For the nine months ended September 30, 2017, the Company’s return on average equity was 7.25%, up from 5.18% for the nine months ended September 30, 2016.

Richard J. Gavegnano, Chairman, President and Chief Executive Officer, said, “I am proud to report record net income of $13.3 million for the third quarter of 2017, up 18% from the second quarter of 2017 and up 40% from the third quarter of 2016. Our net income was also up 48% to $33.9 million for the first nine months of 2017 from the same period last year. Our total assets grew to over $5 billion during the third quarter. Since Meridian’s second-step stock offering in July 2014, our total assets have increased by $2 billion as driven by the strong organic loan growth that continues to enhance our profitability and operating efficiency.”

Mr. Gavegnano added, “Progress is continuing toward completion of our acquisition of Meetinghouse Bancorp, Inc. and Meetinghouse Bank, with approximately $117 million in assets, $80 million in loans, $98 million in deposits and two branches in Dorchester and Roslindale. Meetinghouse has received shareholder approval for its acquisition by Meridian, with closing of the transaction subject to regulatory approvals and other customary closing conditions. We are also continuing the expansion of our core banking franchise with plans for 2018 to open four new branches in Boston’s Brighton and Mission Hill neighborhoods and in Lynnfield and West Peabody on the North Shore.”

The Company’s net interest income was $38.1 million for the quarter ended September 30, 2017, up $2.6 million or 7.3%, from the quarter ended June 30, 2017 and $6.8 million, or 21.6%, from the quarter ended September 30, 2016. The interest rate spread and net interest margin on a tax-equivalent basis were 3.08% and 3.30%, respectively, for the quarter ended September 30, 2017 compared to 3.01% and 3.24%, respectively, for the quarter ended June 30, 2017 and 3.11% and 3.32%, respectively, for the quarter ended September 30, 2016. For the nine months ended September 30, 2017, net interest income increased $17.7 million, or 19.9%, to $106.9 million from the nine months ended September 30, 2016.  The net interest rate spread and net interest margin on a tax-equivalent basis were 3.03% and 3.25%, respectively, for the nine months ended September 30, 2017 compared to 3.14% and 3.35%, respectively, for the nine months ended September 30, 2016.  The increases in net interest income were primarily due to loan growth, partially offset by increases in the average balances of total deposits and borrowings and the cost of funds for the quarter and nine months ended September 30, 2017 compared to the respective prior periods.

Total interest and dividend income increased to $48.0 million for the quarter ended September 30, 2017, up $3.5 million, or 7.8%, from the quarter ended June 30, 2017 and $9.6 million, or 24.9%, from the quarter ended September 30, 2016, primarily due to growth in the Company’s average loan balances to $4.403 billion and a five basis point increase in the yield on loans to 4.31% on a tax-equivalent basis. The Company’s yield on interest-earning assets on a tax-equivalent basis was 4.13% for the quarter ended September 30, 2017, up 10 basis points from the quarter ended June 30, 2017 and up nine basis points from the quarter ended September 30, 2016.  For the nine months ended September 30, 2017, the Company’s total interest and dividend income increased $25.8 million, or 23.8%, to $134.2 million from the nine months ended September 30, 2016 primarily due to growth in the average loan balances of $801.2 million, or 23.6%, to $4.196 billion, partially offset by a decrease in the yield on loans on a tax-equivalent basis of one basis point to 4.27% for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. The Company’s yield on interest-earning assets on a tax-equivalent basis was unchanged at 4.05% for the nine months ended September 30, 2017 and 2016.

Total interest expense increased to $9.9 million for the quarter ended September 30, 2017, up $863,000, or 9.5%, from the quarter ended June 30, 2017 and $2.8 million, or 39.3%, from the quarter ended September 30, 2016. Interest expense on deposits increased to $8.5 million for the quarter ended September 30, 2017, up $593,000, or 7.5%, from the quarter ended June 30, 2017 and $2.3 million, or 35.9%, from the quarter ended September 30, 2016 primarily due to growth in average total deposits to $3.730 billion and increases in the cost of average total deposits to 0.91% from 0.87% for the quarter ended June 30, 2017, and 0.81% for the quarter ended September 30, 2016. Interest expense on borrowings increased to $1.4 million for the quarter ended September 30, 2017, up $270,000, or 24.2%, from the quarter ended June 30, 2017 and $543,000, or 64.3%, from the quarter ended September 30, 2016 primarily due to growth in average total borrowings to $468.6 million. The Company’s total cost of funds was 0.94% for the quarter ended September 30, 2017, up four basis points from the quarter ended June 30, 2017 and 11 basis points from the quarter ended September 30, 2016. Total interest expense increased $8.1 million, or 41.8%, to $27.4 million for the nine months ended September 30, 2017 from the nine months ended September 30, 2016. Interest expense on deposits increased $6.7 million, or 39.2%, to $23.9 million for the nine months ended September 30, 2017 from the nine months ended September 30, 2016 due to the growth in average total deposits of $693.3 million, or 23.5%, to $3.644 billion and an increase in the cost of average total deposits of 10 basis points to 0.88%. Interest expense on borrowings increased $1.3 million, or 62.5%, to $3.5 million for the nine months ended September 30, 2017 from the nine months ended September 30, 2016 due to the growth in average total borrowings of $124.2 million, or 47.5%, to $385.7 million and an increase in the cost of average total borrowings of 11 basis points to 1.21%. The Company’s cost of funds increased 11 basis points to 0.91% for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016.

Mr. Gavegnano noted, “Our earnings have been driven to a new quarterly record by the continuing rise in net interest income, reflecting growth in total loans of $848 million, or 23%, on total loan originations of $1.9 billion since September 30, 2016. Our net interest income rose 7% along with a rise in the net interest margin of six basis points in the third quarter from the second quarter of 2017, on average loan growth of 5% and an increase in the yield on loans of five basis points.”

The Company's provision for loan losses was $2.5 million for the quarter ended September 30, 2017, up $961,000 from the quarter ended June 30, 2017 and $1.6 million from the quarter ended September 30, 2016. The allowance for loan losses was $45.6 million or 1.00% of total loans at September 30, 2017, compared to $43.2 million or 1.00% of total loans at June 30, 2017, $40.1 million or 1.02% of total loans at December 31, 2016, and $38.7 million or 1.04% of total loans at September 30, 2016. 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, reduced levels of problem loans and other improving asset quality trends.

Net charge-offs totaled $44,000 for the quarter ended September 30, 2017, or 0.00% of average loans outstanding on an annualized basis compared to $32,000 for the quarter ended June 30, 2017, and $478,000 for the quarter ended September 30, 2016, or 0.05% of average loans on an annualized basis. For the nine months ended September 30, 2017, net charge-offs totaled $80,000, or 0.00% of average loans outstanding on an annualized basis compared to $584,000 for the nine months ended September 30, 2016, or 0.02% of average loans outstanding on an annualized basis.

Non-accrual loans were $9.2 million, or 0.20% of total loans outstanding, at September 30, 2017; down $2.3 million, or 20.1%, from June 30, 2017; down $4.3 million, or 31.7%, from December 31, 2016; and down $6.0 million, or 39.6%, from September 30, 2016. Non-performing assets were $10.9 million, or 0.21% of total assets, at September 30, 2017, compared to $11.5 million, or 0.24% of total assets, at June 30, 2017, $13.4 million, or 0.30% of total assets at December 31, 2016, and $15.2 million, or 0.36% of total assets, at September 30, 2016.

Mr. Gavegnano commented, “Our non-performing assets declined to a new historic low of 0.21% of total assets with only minor loan charge-off activity during the third quarter of 2017. Maintaining a disciplined underwriting process and outstanding asset quality remains a top priority as we continue to grow at a strong pace.”

Non-interest income was $5.3 million for the quarter ended September 30, 2017, up from $5.0 million for the quarter ended June 30, 2017 and up from $3.3 million for the quarter ended September 30, 2016. Non-interest income increased $223,000, or 4.4%, as compared to the quarter ended June 30, 2017, primarily due to a $1.7 million gain on a life insurance distribution, partially offset by a decrease of $1.5 million in loan fees. As compared to the quarter ended September 30, 2016, non-interest income increased $2.0 million, or 59.1%, primarily due to the $1.7 million gain on a life insurance distribution and a $599,000 increase in gain on sales of securities, net. For the nine months ended September 30, 2017, non-interest income increased $5.8 million, or 67.4%, to $14.4 million from $8.6 million for the nine months ended September 30, 2016, primarily due to a $2.9 million increase in gain on sale of securities, net, the $1.7 million gain on a life insurance distribution, and a $1.3 million increase in loan fees. The gain on life insurance distribution is related to a banked-owned life insurance claim recognized during the third quarter of 2017.  The increases in loan fees are primarily due to $1.3 million of loan swap fee income recognized in the second quarter of 2017.

Non-interest expenses were $20.8 million, or 1.71% of average assets for the quarter ended September 30, 2017, compared to $21.4 million, or 1.83% of average assets for the quarter ended June 30, 2017 and $19.2 million, or 1.90% of average assets for the quarter ended September 30, 2016.  Non-interest expenses increased $1.6 million, or 8.6%, compared to the quarter ended September 30, 2016, due primarily to increases of $804,000 in salaries and employee benefits, $309,000 in other general and administrative expenses, $271,000 in merger and acquisition expenses, and $235,000 in data processing.  For the nine months ended September 30, 2017, non-interest expenses increased $6.4 million, or 11.1%, to $64.1 million from $57.7 million for the nine months ended September 30, 2016, due to increases of $2.7 million in salaries and employee benefits, $869,000 in professional services, $807,000 in occupancy and equipment expenses, $608,000 in deposit insurance premiums, $577,000 in data processing expenses, $271,000 in merger and acquisition expenses,  $231,000 in other general and administrative expenses, and $278,000 in marketing and advertising expenses.  The increases in salaries and employee benefits expenses reflect annual increases in employee compensation and health benefits during the first quarter of 2017.  In addition, the increases in salaries and employee benefits, and occupancy and equipment expenses include costs associated with the expansion of our branch and regulatory compliance staff.  Professional services increased primarily due to additional costs related to regulatory compliance projects.  The Company’s efficiency ratio improved to 49.04% for the quarter ended September 30, 2017 compared to 53.95% for the quarter ended June 30, 2017 and 55.81% for the quarter ended September 30, 2016.  For the nine months ended September 30, 2017, the efficiency ratio was 54.33% compared to 59.31% for the nine months ended September 30, 2016.

Mr. Gavegnano said, “The improvement in our efficiency ratio to 49.04% in the third quarter of 2017 from 53.95% in the second quarter reflected the 7% rise in net interest income, the $1.7 million gain on a distribution from a bank-owned life insurance policy and a $591,000 decline in non-interest expenses. With enhancements to our regulatory compliance infrastructure virtually completed, the related overhead expenses levels are stabilizing. Non-interest expenses in the third quarter included $271,000 related to our pending acquisition of Meetinghouse Bank, with additional merger-related expenses to be incurred as we move forward with the transaction.”

The Company recorded a provision for income taxes of $6.7 million for the quarter ended September 30, 2017, reflecting an effective tax rate of 33.5%, compared to $6.2 million, or an effective tax rate of 35.5%, for the quarter ended June 30, 2017, and $5.1 million, or an effective tax rate of 34.9%, for the quarter ended September 30, 2016. For the nine months ended September 30, 2017, the provision for income taxes was $17.6 million, reflecting an effective tax rate of 34.2%, compared to $11.2 million, or an effective tax rate of 32.9%, for the nine months ended September 30, 2016. 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 $5.086 billion at September 30, 2017, up $299.0 million, or 6.2%, from $4.787 billion at June 30, 2017 and $650.4 million, or 14.7%, from $4.436 billion at December 31, 2016.  Net loans were $4.502 billion at September 30, 2017, up $246.0 million, or 5.8%, from June 30, 2017, and $603.2 million, or 15.5%, from December 31, 2016. Loan originations totaled $483.1 million during the quarter ended September 30, 2017 and $1.310 billion during the nine months ended September 30, 2017. The net increase in loans for the nine months ended September 30, 2017 was primarily due to increases of $294.2 million in commercial real estate loans, $139.7 million in multi-family loans, $101.7 million in construction loans, $46.3 million in commercial and industrial loans, and $27.9 million in one- to four-family loans.  Cash and due from banks was $300.3 million at September 30, 2017, an increase of $63.9 million, or 27.0% from December 31, 2016.  Securities available for sale were $44.7 million at September 30, 2017, a decrease of $23.0 million, or 34.0%, from $67.7 million at December 31, 2016.

Total deposits were $3.945 billion at September 30, 2017, an increase of $285.6 million, or 7.8%, from $3.660 billion at June 30, 2017 and an increase of $469.6 million, or 13.5%, from $3.476 billion at December 31, 2016.  Core deposits, which exclude certificate of deposits, increased $304.6 million, or 13.0%, during the nine months ended September 30, 2017 to $2.652 billion, or 67.2% of total deposits. Total borrowings were $471.1 million, down $2.9 million, or 0.6%, from June 30, 2017 and up $148.6 million, or 46.1%, from December 31, 2016.

Total stockholders’ equity increased $13.7 million, or 2.2%, to $640.4 million at September 30, 2017 from $626.7 million at June 30, 2017, and $33.1 million, or 5.5%, from $607.3 million at December 31, 2016. The increase for the nine months ended September 30, 2017 was primarily due to net income of $33.9 million, $4.5 million related to stock-based compensation plans and $816,000 in accumulated other comprehensive income, reflecting an increase in the fair value of available-for-sale securities, partially offset by dividends of $0.12 per share totaling $6.1 million. Stockholders’ equity to assets was 12.59% at September 30, 2017, compared to 13.09% at June 30, 2017 and 13.69% at December 31, 2016. Book value per share increased to $11.87 at September 30, 2017 from $11.33 at December 31, 2016. Tangible book value per share increased to $11.62 at September 30, 2017 from $11.08 at December 31, 2016. Market price per share decreased $0.25, or 1.3%, to $18.65 at September 30, 2017 from $18.90 at December 31, 2016. At September 30, 2017, the Company and the Bank continued to exceed all regulatory capital requirements.

As of September 30, 2017, 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 adopted in August 2015. The Company did not repurchase any of its shares during the nine months ended September 30, 2017.

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 and one mobile location 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, 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)   
    
   September 30, 2017  June 30, 2017  December 31, 2016  September 30, 2016   
                    
  (Dollars in thousands) 
ASSETS                   
Cash and due from banks  $300,297  $234,776  $236,423  $182,852   
Certificates of deposit   75,192   85,323   80,323   30,342   
Securities available for sale, at fair value   44,661   52,362   67,663   145,441   
Federal Home Loan Bank stock, at cost   22,976   22,579   18,175   17,818   
Loans held for sale   3,707   2,257   3,944   2,854   
Loans:                   
One- to four-family   560,393   552,762   532,450   526,828   
Home equity lines of credit   42,042   42,599   42,913   46,249   
Multi-family   702,631   695,602   562,948   522,444   
Commercial real estate   2,070,761   1,927,572   1,776,601   1,607,276   
Construction   604,487   517,471   502,753   490,016   
Commercial and industrial   561,769   557,443   515,430   501,976   
Consumer   10,222   10,058   9,712   9,680   
Total loans   4,552,305   4,303,507   3,942,807   3,704,469   
Allowance for loan losses   (45,643)  (43,229)  (40,149)  (38,697)  
Net deferred loan origination fees   (4,794)  (4,443)  (3,990)  (4,159)  
Loans, net   4,501,868   4,255,835   3,898,668   3,661,613   
Bank-owned life insurance   40,052   41,325   40,745   40,451   
Foreclosed real estate, net   1,690            
Premises and equipment, net   40,077   40,621   41,427   40,747   
Accrued interest receivable   11,580   11,068   10,381   9,209   
Deferred tax asset, net   21,487   21,728   21,461   19,835   
Goodwill   13,687   13,687   13,687   13,687   
Other assets   9,140   5,853   3,105   8,281   
Total assets  $5,086,414  $4,787,414  $4,436,002  $4,173,130   
                    
LIABILITIES AND STOCKHOLDERS' EQUITY                   
Deposits:                   
Non interest-bearing demand deposits  $455,540  $457,009  $431,222  $410,667   
NOW deposits   896,561   779,208   630,413   547,650   
Money market deposits   975,246   972,720   980,344   863,385   
Regular savings and other deposits   324,895   321,674   305,632   301,754   
Certificates of deposit   1,293,227   1,129,306   1,128,226   1,106,113   
Total deposits   3,945,469   3,659,917   3,475,837   3,229,569   
Short-term borrowings      40,000         
Long-term debt   471,069   434,015   322,512   319,820   
Accrued expenses and other liabilities   29,472   26,753   30,356   26,685   
Total liabilities   4,446,010   4,160,685   3,828,705   3,576,074   
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; 53,947,394, 53,649,946, 53,596,105 and 53,714,191 shares issued at September 30, 2017, June 30, 2017, December 31, 2016 and September 30, 2016, respectively   539   537   536   537   
Additional paid-in capital   393,903   392,446   390,065   390,587   
Retained earnings   262,079   250,800   234,290   224,509   
Accumulated other comprehensive income   2,622   1,905   1,806   1,044   
Unearned compensation - ESOP, 2,587,477, 2,617,918, 2,678,800 and 2,709,242 at September 30, 2017, June 30, 2017, December 31, 2016 and September 30, 2016, respectively   (18,739)  (18,959)  (19,400)  (19,621)  
Total stockholders' equity   640,404   626,729   607,297   597,056   
Total liabilities and stockholders' equity  $5,086,414  $4,787,414  $4,436,002  $4,173,130   
                    


MERIDIAN BANCORP, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF NET INCOME
  
(Unaudited)  
   
  Three Months Ended  Nine Months Ended
  
  September 30,
2017
  June 30, 2017   September 30,
2016
  September 30,
2017
  September 30,
2016
  
                       
  (Dollars in thousands, except per share amounts)  
Interest and dividend income:                      
Interest and fees on loans $46,597  $43,195   $37,444  $130,281  $105,369  
Interest on debt securities:                      
Taxable  58   83    203   260   707  
Tax-exempt     8    30   18   95  
Dividends on equity securities  275   291    365   843   1,183  
Interest on certificates of deposit  221   196    75   629   380  
Other interest and dividend income  819   736    303   2,200   709  
Total interest and dividend income  47,970   44,509    38,420   134,231   108,443  
Interest expense:                      
Interest on deposits  8,528   7,935    6,273   23,882   17,162  
Interest on short-term borrowings     4       4   6  
Interest on long-term debt  1,388   1,114    845   3,482   2,139  
Total interest expense  9,916   9,053    7,118   27,368   19,307  
Net interest income  38,054   35,456    31,302   106,863   89,136  
Provision for loan losses  2,458   1,497    858   5,574   5,876  
Net interest income, after provision for loan losses  35,596   33,959    30,444   101,289   83,260  
Non-interest income:                      
Customer service fees  2,081   2,214    2,172   6,347   6,258  
Loan fees  180   1,634    293   1,882   583  
Mortgage banking gains, net  176   82    274   348   448  
Gain on sales of securities, net  865   808    266   3,247   393  
Income from bank-owned life insurance  294   292    296   874   894  
Gain on life insurance distribution  1,657          1,657     
Total non-interest income  5,253   5,030    3,301   14,355   8,576  
Non-interest expenses:                      
Salaries and employee benefits  12,973   12,752    12,169   39,400   36,661  
Occupancy and equipment  2,676   3,036    2,577   8,735   7,928  
Data processing  1,528   1,474    1,293   4,381   3,804  
Marketing and advertising  715   953    832   2,522   2,244  
Professional services  624   1,106    663   2,865   1,996  
Deposit insurance  660   813    572   2,164   1,556  
Merger and acquisition  271          271     
Other general and administrative  1,367   1,271    1,058   3,758   3,527  
Total non-interest expenses  20,814   21,405    19,164   64,096   57,716  
Income before income taxes  20,035   17,584    14,581   51,548   34,120  
Provision for income taxes  6,702   6,237    5,084   17,624   11,239  
Net income $13,333  $11,347   $9,497  $33,924  $22,881  
                       
Earnings per share:                      
Basic $0.26  $0.22   $0.19  $0.66  $0.45  
Diluted $0.25  $0.22   $0.18  $0.65  $0.44  
Weighted average shares:                      
Basic  51,229,203   51,003,967    50,982,633   51,061,959  51,192,332  
Diluted  52,672,962   52,422,486    52,093,009   52,541,752  52,297,367  


MERIDIAN BANCORP, INC. AND SUBSIDIARIES
NET INTEREST INCOME ANALYSIS
(Unaudited)
 
  For the Three Months Ended
  September 30, 2017 June 30, 2017 September 30, 2016
  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) $4,402,966  $47,855    4.31 % $4,180,602  $44,431    4.26 % $3,614,168  $38,684    4.26 %
Securities and certificates of deposit  132,972   658    1.96    142,159   691    1.95    157,293   823    2.08  
Other interest-earning assets (3)  208,193   819    1.56    239,590   736    1.23    148,425   303    0.81  
Total interest-earning assets  4,744,131   49,332    4.13    4,562,351   45,858    4.03    3,919,886   39,810    4.04  
Noninterest-earning assets  115,491             110,509             117,703           
Total assets $4,859,622            $4,672,860            $4,037,589           
Liabilities and stockholders' equity:                                          
Interest-bearing liabilities:                                          
NOW deposits $819,965   1,874    0.91   $753,839   1,598    0.85   $493,612   816    0.66  
Money market deposits  966,340   2,240    0.92    992,382   2,219    0.90    836,941   1,715    0.82  
Regular savings and other deposits  323,621   113    0.14    317,656   114    0.14    298,799   107    0.14  
Certificates of deposit  1,169,264   4,301    1.46    1,147,440   4,004    1.40    1,085,898   3,635    1.33  
Total interest-bearing deposits  3,279,190   8,528    1.03    3,211,317   7,935    0.99    2,715,250   6,273    0.92  
Borrowings  468,642   1,388    1.18    356,325   1,118    1.26    320,091   845    1.05  
Total interest-bearing liabilities  3,747,832   9,916    1.05    3,567,642   9,053    1.02    3,035,341   7,118    0.93  
Noninterest-bearing demand deposits  450,890             456,447             383,953           
Other noninterest-bearing liabilities  26,228             25,732             23,977           
Total liabilities  4,224,950             4,049,821             3,443,271           
Total stockholders' equity  634,672             623,039             594,318           
Total liabilities and stockholders' equity $4,859,622            $4,672,860            $4,037,589           
Net interest-earning assets $996,299            $994,709            $884,545           
Fully tax-equivalent net interest income      39,416             36,805             32,692       
Less: tax-equivalent adjustments      (1,362)            (1,349)            (1,390)      
Net interest income     $38,054            $35,456            $31,302       
Interest rate spread (1)(4)           3.08 %           3.01 %           3.11 %
Net interest margin (1)(5)           3.30 %           3.24 %           3.32 %
Average interest-earning assets to average                                          
interest-bearing liabilities      126.58 %           127.88 %           129.14 %     
Supplemental Information:                                          
Total deposits, including noninterest-bearing                                          
demand deposits $3,730,080  $8,528    0.91 % $3,667,764  $7,935    0.87 % $3,099,203  $6,273    0.81 %
Total deposits and borrowings, including                                          
noninterest-bearing demand deposits $4,198,722  $9,916    0.94 % $4,024,089  $9,053    0.90 % $3,419,294  $7,118    0.83 %

(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 September 30, 2017, June 30, 2017 and September 30, 2016, yields on loans before tax-equivalent adjustments were 4.20%, 4.14% and 4.12%, respectively, yields on securities and certificates of deposit before tax-equivalent adjustments were 1.65%, 1.63% and 1.70%, respectively, and yield on total interest-earning assets before tax-equivalent adjustments were 4.01%, 3.91% and 3.90%, respectively. Interest rate spread before tax-equivalent adjustments for the three months ended September 30, 2017, June 30, 2017 and September 30, 2016 was 2.96%, 2.89% and 2.97%, respectively, while net interest margin before tax-equivalent adjustments for the three months ended September 30, 2017, June 30, 2017 and September 30, 2016 was 3.18%, 3.12% and 3.18%, 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)
 
  For the Nine Months Ended,
  September 30, 2017 September 30, 2016
  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) $4,196,281  $133,976    4.27 % $3,395,072  $108,788    4.28 %
Securities and certificates of deposit  140,277   2,076    1.98    196,022   2,852    1.94  
Other interest-earning assets (3)  230,291   2,200    1.28    114,064   709    0.83  
Total interest-earning assets  4,566,849   138,252    4.05    3,705,158   112,349    4.05  
Noninterest-earning assets  112,600             118,211           
Total assets $4,679,449            $3,823,369           
                             
Liabilities and stockholders' equity:                            
Interest-bearing liabilities:                            
NOW deposits $743,531   4,691    0.84   $432,729   1,962    0.61  
Money market deposits  988,884   6,689    0.90    841,430   5,070    0.80  
Regular savings and other deposits  316,463   335    0.14    295,313   316    0.14  
Certificates of deposit  1,150,472   12,167    1.41    1,009,724   9,814    1.30  
Total interest-bearing deposits  3,199,350   23,882    1.00    2,579,196   17,162    0.89  
Borrowings  385,696   3,486    1.21    261,524   2,145    1.10  
Total interest-bearing liabilities  3,585,046   27,368    1.02    2,840,720   19,307    0.91  
Noninterest-bearing demand deposits  444,324             371,204           
Other noninterest-bearing liabilities  26,421             22,841           
Total liabilities  4,055,791             3,234,765           
Total stockholders' equity  623,658             588,604           
Total liabilities and stockholders' equity $4,679,449            $3,823,369           
Net interest-earning assets $981,803            $864,438           
Fully tax-equivalent net interest income      110,884             93,042       
Less: tax-equivalent adjustments      (4,021)            (3,906)      
Net interest income     $106,863            $89,136       
Interest rate spread (1)(4)           3.03 %           3.14 %
Net interest margin (1)(5)           3.25 %           3.35 %
Average interest-earning assets to average                            
interest-bearing liabilities      127.39 %           130.43 %     
                             
Supplemental Information:                            
Total deposits, including noninterest-bearing                            
demand deposits $3,643,674  $23,882    0.88 % $2,950,400  $17,162    0.78 %
Total deposits and borrowings, including                            
noninterest-bearing demand deposits $4,029,370  $27,368    0.91 % $3,211,924  $19,307    0.80 %

(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 September 30, 2017, and 2016, yields on loans before tax-equivalent adjustments were 4.15% and 4.15%, respectively, yields on securities and certificates of deposit before tax-equivalent adjustments were 1.67% and 1.61%, respectively, and yield on total interest-earning assets before tax-equivalent adjustments were 3.93% and 3.91%, respectively. Interest rate spread before tax-equivalent adjustments for the six months ended September 30, 2017, and 2016 was 2.91% and 3.00%, respectively, while net interest margin before tax-equivalent adjustments for the six months ended September 30, 2017, and 2016 was 3.13% and 3.21%, 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 EndedNine Months Ended 
  September 30,
2017
 June 30, 2017 September 30,
2016
 September 30,
2017
 September 30,
2016
 
                           
Key Performance Ratios                          
Return on average assets (1)  1.10 %  0.97 %  0.94 %  0.97 %  0.80 % 
Return on average equity (1)  8.40    7.28    6.39    7.25    5.18   
Interest rate spread  (1) (2)  3.08    3.01    3.11    3.03    3.14   
Net interest margin  (1) (3)  3.30    3.24    3.32    3.25    3.35   
Non-interest expense to average assets  (1)  1.71    1.83    1.90    1.83    2.01   
Efficiency ratio (4)  49.04    53.95    55.81    54.33    59.31   


  September 30, 2017 June 30, 2017 December 31, 2016 September 30, 2016  
                     
  (Dollars in thousands)  
Asset Quality                    
Non-accrual loans:                    
One- to four-family $7,055   $7,667   $8,487   $8,828  
Home equity lines of credit  563    619    674    746  
Commercial real estate  862    2,666    2,807    2,871  
Construction  173    -    815    2,031  
Commercial and industrial  525    529    653    730  
Total non-accrual loans  9,178    11,481    13,436    15,206  
Foreclosed assets  1,690              
Total non-performing assets $10,868   $11,481   $13,436   $15,206  
                     
Allowance for loan losses/total loans  1.00 %  1.00 %  1.02 %  1.04 %
Allowance for loan losses/non-accrual loans  497.31    376.53    298.82    254.49  
Non-accrual loans/total loans  0.20    0.27    0.34    0.41  
Non-accrual loans/total assets  0.18    0.24    0.30    0.36  
Non-performing assets/total assets  0.21    0.24    0.30    0.36  
                     
Capital and Share Related                    
Stockholders' equity to total assets  12.59 %  13.09 %  13.69 %  14.31 %
Book value per share $11.87   $11.68   $11.33   $11.12  
Tangible book value per share $11.62   $11.43   $11.08   $10.86  
Market value per share $18.65   $16.90   $18.90   $15.57  
Shares outstanding 53,947,394   53,649,946   53,596,105   53,714,191  

(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